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the lendingtree loans business is presented as discontinued operations in the accompanying consolidated balance sheets , consolidated statements of operations and comprehensive income ( loss ) and consolidated cash flows for all periods presented . except for the discussion under the heading `` discontinued operations , `` the analysis within management 's discussion and analysis of financial condition and results of operations reflects our continuing operations . economic conditions during march 2020 , a global pandemic was declared by the world health organization related to the rapidly growing outbreak of covid-19 . the pandemic has significantly impacted the economic conditions in the u.s. , as federal , state and local governments react to the public health crisis , creating significant uncertainties in the u.s. economy . the downstream impact of various lockdown orders and related economic pullback are affecting our business and marketplace participants to varying degrees . we are continuously monitoring the impacts of the current economic conditions related to the covid-19 pandemic and the effect on our business , financial condition and results of operations . of our three reportable segments , the consumer segment has been most impacted as unsecured credit and the flow of capital in certain areas of the market have contracted . the impact to our home and insurance segments was much less substantial and these segments recovered by the end of 2020. while forecasting the timeline of full recovery for the consumer segment remains challenging , the momentum of recovery has increased in each quarter subsequent to the onset of the covid-19 pandemic . we are encouraged by the progress made , and continue to view the consumer segment with optimism over the medium to long term . most of our selling and marketing expenses are variable costs that we adjust dynamically in relation to revenue opportunities to profitably meet demand . thus , as our revenue was negatively impacted during the recession , our marketing expenses generally decreased in line with revenue . 35 segment reporting we have three reportable segments : home , consumer and insurance . recent business acquisitions on february 28 , 2020 , we acquired an equity interest in stash for $ 80.0 million . stash is a consumer investing and banking platform . stash brings together banking , investing , and financial services education into one seamless experience offering a full suite of personal investment accounts , traditional and roth iras , custodial investment accounts , and banking services , including checking accounts and debit cards with a stock-back® rewards program . on january 10 , 2019 , we acquired valuepenguin , a personal finance website that offers consumers objective analysis on a variety of financial topics from insurance to credit cards , for $ 106.2 million . combining valuepenguin 's high-quality content and search engine optimization capability with proprietary technology and insurance carrier network from quotewizard enables us to provide immense value to insurance carriers and agents . this strategic acquisition positions us to achieve further scale in the insurance space as well as the broader financial services industry . on october 31 , 2018 , we acquired quotewizard , one of the largest insurance comparison marketplaces in the growing online insurance advertising market , for $ 299.5 million in cash and potential contingent consideration payments of up to $ 70.2 million through october 2021 , subject to achieving specific targets . quotewizard services clients by driving consumers to insurance companies ' websites , providing leads to agents and carriers , as well as phone transfers of consumers into carrier call centers . this acquisition has established lendingtree as a leading player in the online insurance advertising industry , while continuing our ongoing diversification within the financial services category . on july 23 , 2018 , we acquired student loan hero for $ 62.7 million in cash , of which $ 2.3 million was recognized as severance expense in our consolidated statements of operations and comprehensive income ( loss ) . student loan hero , a personal finance website dedicated to helping student loan borrowers manage their student debt , offers current and former students in-depth financial comparison tools , educational resources , and unbiased , personalized advice . this strategic transaction allows us to scale our student loan business and provide consumers with the tools and resources to better understand their personal finances and make smarter financial decisions . on june 11 , 2018 , we acquired ovation , a leading provider of credit services with a strong customer service reputation , for $ 12.1 million in cash and potential contingent consideration payments of up to $ 8.75 million through june 2020 , subject to achieving specified targets . ovation utilizes a proprietary software application that facilitates the credit repair process and is integrated directly with certain credit reporting agencies while educating consumers on credit improvement via ongoing outreach with ovation case advisors . the proprietary software application offers consumers a simple , streamlined process to identify , dispute , and correct inaccuracies within their credit reports . ovation 's experienced management team , strong credit reporting agency relationships and customized software platform enable us to help more consumers achieve their financial goals through the lendingtree platform . these acquisitions continue our diversification strategy . recent mortgage interest rate trends interest rate and market risks can be substantial in the mortgage lead generation business . short-term fluctuations in mortgage interest rates primarily affect consumer demand for mortgage refinancings , while long-term fluctuations in mortgage interest rates , coupled with the u.s. real estate market , affect consumer demand for new mortgages . consumer demand , in turn , affects lender demand for mortgage leads from third-party sources , as well as our own ability to attract online consumers to our website . story_separator_special_tag 41 during 2019 , we recorded aggregate contingent consideration expense of $ 28.4 million due to adjustments in the estimated fair value of the earnout payments related to our recent acquisitions . for 2019 , the contingent consideration expense for the quotewizard and snapcap acquisitions were $ 27.1 million and $ 2.2 million , respectively . this was partially offset by a contingent consideration gain for the depositaccounts acquisition of $ 1.0 million . interest expense interest expense increased in 2020 compared to 2019 due to the issuance of $ 575.0 million of our 2025 notes as well as the repurchase of a portion of our existing 2022 notes in july 2020. in 2020 , interest expense of $ 11.5 million was recognized on the newly-issued 2025 notes . further , a loss on debt extinguishment of $ 7.8 million was recognized within interest expense upon the partial repurchase of the 2022 notes . these increases to interest expense were partially offset by lower interest expense on the 2022 notes subsequent to the repurchase of $ 130.3 million principal amount of the 2022 notes . see note 15—debt for additional information on the issuance of the 2025 notes and the partial repurchase of the 2022 notes . income tax benefit replace_table_token_5_th for 2020 , the effective tax rate varied from the federal statutory rate of 21 % in part due to the benefit derived from excess tax deductions from the vesting of restricted stock and exercise of stock options of $ 2.5 million , including state taxes . the effective tax rate for 2020 was also impacted by a tax benefit of $ 6.1 million for the impact of the cares act , as described below . on march 27 , 2020 , president trump signed into law the cares act . this legislation is an economic relief package in response to the public health and economic impacts of covid-19 and includes various provisions that impact us , including , but not limited to , modifications for net operating losses , accelerated timeframe for refunds associated with prior minimum taxes and modifications of the limitation on business interest . we revalued deferred tax assets related to net operating losses in light of the changes in the cares act and recorded a net tax benefit of $ 6.1 million during 2020. these deferred tax assets are being revalued , as they have been carried back to 2016 and 2017 , which are tax periods prior to the tcja when the federal statutory tax rate was 35 % versus the 21 % federal statutory tax rate in effect after the enactment of the tcja . for 2019 , the effective tax rate varied from the federal statutory rate of 21 % primarily due to the benefit derived from excess tax deductions from the vesting of restricted stock and exercise of stock options of $ 17.1 million , including state taxes and the benefit of an expected 2019 federal research and development tax credit of $ 3.5 million , offset by expense due to incremental valuation allowance on state net operating losses of $ 3.9 million , primarily due to state legislative changes . discontinued operations the results of discontinued operations include the results of the lendingtree loans business formerly operated by our wholly-owned subsidiary , hlc . the sale of substantially all of the assets of hlc , including the lendingtree loans business , was completed on june 6 , 2012. hlc filed a petition under chapter 11 of the united states bankruptcy code on july 21 , 2019 , which was converted to chapter 7 of the united states bankruptcy code on september 16 , 2019. as a result of the voluntary bankruptcy petition , as of the initial july 21 , 2019 bankruptcy petition filing date , hlc and its consolidated subsidiary were deconsolidated from lendingtree 's consolidated financial statements . the effect of such deconsolidation was the elimination of the consolidated assets and liabilities of hlc ( and its consolidated subsidiary ) from lendingtree 's consolidated balance sheets . prior to the bankruptcy filing , losses from the lendingtree loans business were primarily due to litigation settlements and contingencies and legal fees associated with ongoing legal proceedings . the results of discontinued operations include litigation settlements and contingencies and legal fees associated with ongoing legal proceedings against lendingtree , inc. or lendingtree , llc that arose due to the lendingtree loans business or the hlc bankruptcy filing . 42 see note 21—discontinued operations to the consolidated financial statements included elsewhere in this report for more information , including the accounting effect of hlc 's bankruptcy filing on our consolidated financial statements . segment profit replace_table_token_6_th segment profit is our primary segment operating metric . segment profit is calculated as segment revenue less segment selling and marketing expenses attributed to variable costs paid for advertising , direct marketing and related expenses that are directly attributable to the segments ' products . see note 22—segment information in the notes to the consolidated financial statements for additional information on segments and a reconciliation of segment profit to pre-tax income from continuing operations . consumer segment profit decreased $ 106.3 million during 2020 , primarily due to decreases in revenue , partially offset by corresponding decreases in selling and marketing expense due to the impact of economic conditions related to the covid-19 pandemic . while the consumer segment was the most impacted by the covid-19 pandemic , particularly in our credit cards , personal loans and small business loans products , recovery in the segment gained momentum throughout 2020. we are encouraged by increasing credit card issuer budgets , increasing lender demand , and sustained signs of improved consumer health and spending , while continuing to be aware of challenges in consumer demand for unsecured loans . while the timeline of full recovery for the consumer segment remains uncertain , we continue to view the segment with optimism over the medium to long

cash flows from investing activities net cash used in investing activities attributable to continuing operations in 2020 of $ 122.1 million consisted of the purchase of an $ 80.0 million equity interest in stash and capital expenditures of $ 42.1 million primarily related to internally developed software and leasehold improvements for our new principal corporate offices currently under construction . net cash used in investing activities attributable to continuing operations in 2019 of $ 101.1 million consisted primarily of the acquisition of valuepenguin for $ 105.6 million , net of cash acquired , and capital expenditures of $ 20.0 million primarily related to internally developed software . this was partially offset by proceeds of $ 24.1 million on the sale of two office buildings , net of closing expenses . cash flows from financing activities net cash provided by financing activities attributable to continuing operations in 2020 of $ 193.3 million consisted primarily of $ 575.0 million of gross proceeds from the issuance of the 2025 notes , partially offset by $ 233.9 million paid to repurchase a portion of the 2022 notes , a net $ 47.4 million paid for the related convertible note hedge and warrant transactions outlined above , $ 75.0 million of net repayments on our amended revolving credit facility , and $ 16.6 million for the payment of debt issuance costs .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. the lendingtree loans business is presented as discontinued operations in the accompanying consolidated balance sheets , consolidated statements of operations and comprehensive income ( loss ) and consolidated cash flows for all periods presented . except for the discussion under the heading `` discontinued operations , `` the analysis within management 's discussion and analysis of financial condition and results of operations reflects our continuing operations . economic conditions during march 2020 , a global pandemic was declared by the world health organization related to the rapidly growing outbreak of covid-19 . the pandemic has significantly impacted the economic conditions in the u.s. , as federal , state and local governments react to the public health crisis , creating significant uncertainties in the u.s. economy . the downstream impact of various lockdown orders and related economic pullback are affecting our business and marketplace participants to varying degrees . we are continuously monitoring the impacts of the current economic conditions related to the covid-19 pandemic and the effect on our business , financial condition and results of operations . of our three reportable segments , the consumer segment has been most impacted as unsecured credit and the flow of capital in certain areas of the market have contracted . the impact to our home and insurance segments was much less substantial and these segments recovered by the end of 2020. while forecasting the timeline of full recovery for the consumer segment remains challenging , the momentum of recovery has increased in each quarter subsequent to the onset of the covid-19 pandemic . we are encouraged by the progress made , and continue to view the consumer segment with optimism over the medium to long term . most of our selling and marketing expenses are variable costs that we adjust dynamically in relation to revenue opportunities to profitably meet demand . thus , as our revenue was negatively impacted during the recession , our marketing expenses generally decreased in line with revenue . 35 segment reporting we have three reportable segments : home , consumer and insurance . recent business acquisitions on february 28 , 2020 , we acquired an equity interest in stash for $ 80.0 million . stash is a consumer investing and banking platform . stash brings together banking , investing , and financial services education into one seamless experience offering a full suite of personal investment accounts , traditional and roth iras , custodial investment accounts , and banking services , including checking accounts and debit cards with a stock-back® rewards program . on january 10 , 2019 , we acquired valuepenguin , a personal finance website that offers consumers objective analysis on a variety of financial topics from insurance to credit cards , for $ 106.2 million . combining valuepenguin 's high-quality content and search engine optimization capability with proprietary technology and insurance carrier network from quotewizard enables us to provide immense value to insurance carriers and agents . this strategic acquisition positions us to achieve further scale in the insurance space as well as the broader financial services industry . on october 31 , 2018 , we acquired quotewizard , one of the largest insurance comparison marketplaces in the growing online insurance advertising market , for $ 299.5 million in cash and potential contingent consideration payments of up to $ 70.2 million through october 2021 , subject to achieving specific targets . quotewizard services clients by driving consumers to insurance companies ' websites , providing leads to agents and carriers , as well as phone transfers of consumers into carrier call centers . this acquisition has established lendingtree as a leading player in the online insurance advertising industry , while continuing our ongoing diversification within the financial services category . on july 23 , 2018 , we acquired student loan hero for $ 62.7 million in cash , of which $ 2.3 million was recognized as severance expense in our consolidated statements of operations and comprehensive income ( loss ) . student loan hero , a personal finance website dedicated to helping student loan borrowers manage their student debt , offers current and former students in-depth financial comparison tools , educational resources , and unbiased , personalized advice . this strategic transaction allows us to scale our student loan business and provide consumers with the tools and resources to better understand their personal finances and make smarter financial decisions . on june 11 , 2018 , we acquired ovation , a leading provider of credit services with a strong customer service reputation , for $ 12.1 million in cash and potential contingent consideration payments of up to $ 8.75 million through june 2020 , subject to achieving specified targets . ovation utilizes a proprietary software application that facilitates the credit repair process and is integrated directly with certain credit reporting agencies while educating consumers on credit improvement via ongoing outreach with ovation case advisors . the proprietary software application offers consumers a simple , streamlined process to identify , dispute , and correct inaccuracies within their credit reports . ovation 's experienced management team , strong credit reporting agency relationships and customized software platform enable us to help more consumers achieve their financial goals through the lendingtree platform . these acquisitions continue our diversification strategy . recent mortgage interest rate trends interest rate and market risks can be substantial in the mortgage lead generation business . short-term fluctuations in mortgage interest rates primarily affect consumer demand for mortgage refinancings , while long-term fluctuations in mortgage interest rates , coupled with the u.s. real estate market , affect consumer demand for new mortgages . consumer demand , in turn , affects lender demand for mortgage leads from third-party sources , as well as our own ability to attract online consumers to our website . story_separator_special_tag 41 during 2019 , we recorded aggregate contingent consideration expense of $ 28.4 million due to adjustments in the estimated fair value of the earnout payments related to our recent acquisitions . for 2019 , the contingent consideration expense for the quotewizard and snapcap acquisitions were $ 27.1 million and $ 2.2 million , respectively . this was partially offset by a contingent consideration gain for the depositaccounts acquisition of $ 1.0 million . interest expense interest expense increased in 2020 compared to 2019 due to the issuance of $ 575.0 million of our 2025 notes as well as the repurchase of a portion of our existing 2022 notes in july 2020. in 2020 , interest expense of $ 11.5 million was recognized on the newly-issued 2025 notes . further , a loss on debt extinguishment of $ 7.8 million was recognized within interest expense upon the partial repurchase of the 2022 notes . these increases to interest expense were partially offset by lower interest expense on the 2022 notes subsequent to the repurchase of $ 130.3 million principal amount of the 2022 notes . see note 15—debt for additional information on the issuance of the 2025 notes and the partial repurchase of the 2022 notes . income tax benefit replace_table_token_5_th for 2020 , the effective tax rate varied from the federal statutory rate of 21 % in part due to the benefit derived from excess tax deductions from the vesting of restricted stock and exercise of stock options of $ 2.5 million , including state taxes . the effective tax rate for 2020 was also impacted by a tax benefit of $ 6.1 million for the impact of the cares act , as described below . on march 27 , 2020 , president trump signed into law the cares act . this legislation is an economic relief package in response to the public health and economic impacts of covid-19 and includes various provisions that impact us , including , but not limited to , modifications for net operating losses , accelerated timeframe for refunds associated with prior minimum taxes and modifications of the limitation on business interest . we revalued deferred tax assets related to net operating losses in light of the changes in the cares act and recorded a net tax benefit of $ 6.1 million during 2020. these deferred tax assets are being revalued , as they have been carried back to 2016 and 2017 , which are tax periods prior to the tcja when the federal statutory tax rate was 35 % versus the 21 % federal statutory tax rate in effect after the enactment of the tcja . for 2019 , the effective tax rate varied from the federal statutory rate of 21 % primarily due to the benefit derived from excess tax deductions from the vesting of restricted stock and exercise of stock options of $ 17.1 million , including state taxes and the benefit of an expected 2019 federal research and development tax credit of $ 3.5 million , offset by expense due to incremental valuation allowance on state net operating losses of $ 3.9 million , primarily due to state legislative changes . discontinued operations the results of discontinued operations include the results of the lendingtree loans business formerly operated by our wholly-owned subsidiary , hlc . the sale of substantially all of the assets of hlc , including the lendingtree loans business , was completed on june 6 , 2012. hlc filed a petition under chapter 11 of the united states bankruptcy code on july 21 , 2019 , which was converted to chapter 7 of the united states bankruptcy code on september 16 , 2019. as a result of the voluntary bankruptcy petition , as of the initial july 21 , 2019 bankruptcy petition filing date , hlc and its consolidated subsidiary were deconsolidated from lendingtree 's consolidated financial statements . the effect of such deconsolidation was the elimination of the consolidated assets and liabilities of hlc ( and its consolidated subsidiary ) from lendingtree 's consolidated balance sheets . prior to the bankruptcy filing , losses from the lendingtree loans business were primarily due to litigation settlements and contingencies and legal fees associated with ongoing legal proceedings . the results of discontinued operations include litigation settlements and contingencies and legal fees associated with ongoing legal proceedings against lendingtree , inc. or lendingtree , llc that arose due to the lendingtree loans business or the hlc bankruptcy filing . 42 see note 21—discontinued operations to the consolidated financial statements included elsewhere in this report for more information , including the accounting effect of hlc 's bankruptcy filing on our consolidated financial statements . segment profit replace_table_token_6_th segment profit is our primary segment operating metric . segment profit is calculated as segment revenue less segment selling and marketing expenses attributed to variable costs paid for advertising , direct marketing and related expenses that are directly attributable to the segments ' products . see note 22—segment information in the notes to the consolidated financial statements for additional information on segments and a reconciliation of segment profit to pre-tax income from continuing operations . consumer segment profit decreased $ 106.3 million during 2020 , primarily due to decreases in revenue , partially offset by corresponding decreases in selling and marketing expense due to the impact of economic conditions related to the covid-19 pandemic . while the consumer segment was the most impacted by the covid-19 pandemic , particularly in our credit cards , personal loans and small business loans products , recovery in the segment gained momentum throughout 2020. we are encouraged by increasing credit card issuer budgets , increasing lender demand , and sustained signs of improved consumer health and spending , while continuing to be aware of challenges in consumer demand for unsecured loans . while the timeline of full recovery for the consumer segment remains uncertain , we continue to view the segment with optimism over the medium to long Narrative : cash flows from investing activities net cash used in investing activities attributable to continuing operations in 2020 of $ 122.1 million consisted of the purchase of an $ 80.0 million equity interest in stash and capital expenditures of $ 42.1 million primarily related to internally developed software and leasehold improvements for our new principal corporate offices currently under construction . net cash used in investing activities attributable to continuing operations in 2019 of $ 101.1 million consisted primarily of the acquisition of valuepenguin for $ 105.6 million , net of cash acquired , and capital expenditures of $ 20.0 million primarily related to internally developed software . this was partially offset by proceeds of $ 24.1 million on the sale of two office buildings , net of closing expenses . cash flows from financing activities net cash provided by financing activities attributable to continuing operations in 2020 of $ 193.3 million consisted primarily of $ 575.0 million of gross proceeds from the issuance of the 2025 notes , partially offset by $ 233.9 million paid to repurchase a portion of the 2022 notes , a net $ 47.4 million paid for the related convertible note hedge and warrant transactions outlined above , $ 75.0 million of net repayments on our amended revolving credit facility , and $ 16.6 million for the payment of debt issuance costs .

seven of these sites represent new purion customers , and the other eleven locations are first in-fab purion placements by existing purion customers . the company 's gross margin for 2017 was 36.6 % , down from 37.3 % in 2016 . 2017 gross margin was impacted by a $ 6.2 million excess inventory reserve charge taken on legacy tools and parts in the fourth quarter of 2017 , which reduced full year 2017 gross margin by 1.5 percentage points . without the impact of this excess inventory charge , gross margins in 2017 would have been at the company 's highest annual level in 11 years . we also worked diligently to ensure that manufacturing and operating expense levels remain well aligned to business conditions . consolidation and partnering within the semiconductor chip manufacturing industry has resulted in a smaller number of customers . our net revenue from our ten largest customers accounted for 73.3 % of total revenue for the year ended december 31 , 2017 compared to 70.2 % and 76.8 % of revenue for the years ended december 31 , 2016 and 2015 , respectively . for the year ended december 31 , 2017 , the company had two customers representing 24.9 % and 13.1 % of total revenue , respectively . critical accounting estimates management 's discussion and analysis of our financial condition and results of operations are based upon axcelis ' consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states . the preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets , liabilities , revenue and expenses , and related disclosure of contingent assets and liabilities . on an on‑going basis , we evaluate our estimates and assumptions . management 's estimates are based on historical experience and on various other assumptions that are believed to be reasonable under 18 the circumstances , the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources . actual results may differ from these estimates under different assumptions or conditions . we believe the following accounting policies are critical in the portrayal of our financial condition and results of operations and require management 's most significant judgments and estimates in the preparation of our consolidated financial statements . for additional accounting policies see note 2 to the consolidated financial statements for the year ended december 31 , 2017 included in this annual report on form 10-k. revenue recognition our revenue recognition policy involves significant judgment by management . as described below , we consider a broad array of facts and circumstances in determining when to recognize revenue , including contractual service obligations to the customer , the complexity of the customer 's post‑delivery acceptance provisions , payment history , customer creditworthiness and the installation process . our system sales transactions are made up of multiple elements , including the system itself and elements that are not delivered simultaneously with the system . these undelivered elements might include a combination of installation services , extended warranty and support and spare parts , all of which are generally covered by a single sales price . our system revenue arrangements with multiple elements are divided into separate units of accounting if specified criteria are met , including whether the delivered element has stand‑alone value to the customer . if the criteria are met , then the consideration received is allocated among the separate units based on their relative selling price , and the revenue is recognized separately for each of the separate units . we determine selling price for each unit of accounting ( element ) using vendor specific objective evidence ( “ vsoe ” ) or third‑party evidence ( “ tpe ” ) , if they exist , otherwise , we use best estimated selling price ( “ besp ” ) . we generally expect that we will not be able to establish tpe due to the nature of our products , and , as such , we typically will determine selling price using vsoe or besp . where required , we determine besp for an individual element based on consideration of both market and company‑specific factors , including the selling price and profit margin for similar products , the cost to produce the deliverable and the anticipated margin on that deliverable and the characteristics of the markets in which the deliverable is sold . systems are not sold separately and vsoe or tpe is not available for the systems element . therefore the selling price associated with systems is based on besp . the allocated value for installation in the arrangement includes either ( i ) the relative selling price of the installation or ( ii ) the portion of the sales price that will not be received until the installation is completed ( the “ retention ” ) . the selling price of elements such as extended warranty for support , spare parts and support labor is also based on besp . for the majority of regions , the selling price of installation is based upon the fair value of the service performed , including labor , which is based upon the estimated time to complete the installation at hourly rates , and material components , both of which are sold separately , or vsoe . in regions where vsoe does not exist the company uses besp . story_separator_special_tag % , compared with $ 23.3 million in 2015. the increase was primarily due to an increase in new tool evaluation costs . general and administrative replace_table_token_8_th our general and administrative expenses result primarily from the costs associated with our executive , finance , information technology , legal and human resource functions . 2017 compared with 2016 general and administrative expense was $ 30.8 million in 2017 , an increase of $ 6.4 million , or 26.0 % compared with $ 24.5 million in 2016. the increase was primarily due to variable incentive plan expense and to a lesser extent to increased headcount . 26 2016 compared with 2015 general and administrative expense was $ 24.5 million in 2016 , a decrease of $ 0.6 million , or 2.4 % compared with $ 25.1 million in 2015. the decrease was primarily due to a reduction in personnel costs driven by a decrease in variable incentive plan expense . restructuring the company from time to time incurs expenses relating to restructuring . 2017 compared with 2016 during the year ended december 31 , 2016 we recorded $ 0.3 million to restructuring expense due to a consolidation in our customer base . 2016 compared with 2015 during the year ended december 31 , 2016 we recorded $ 0.3 million to restructuring expense due to a consolidation in our customer base . during the year ended december 31 , 2015 , we recorded an immaterial charge to restructuring expense . other ( expense ) income other ( expense ) income consists primarily of interest relating to the lease obligation we incurred in connection with the 2015 sale of our headquarters facility ( “ sale leaseback ” ) and other financing obligations , foreign exchange gains and losses attributable to fluctuations of the u.s. dollar against the local currencies of certain of the countries in which we operate , as well as interest earned on our invested cash balances . 2017 compared with 2016 other expense for the year ended december 31 , 2017 was $ 4.0 million , which includes $ 5.1 million of interest expense related to our sale leaseback obligation and other miscellaneous expense of $ 0.7 million , offset by interest income of $ 0.7 million and $ 1.1 million of foreign currency translation gains . other expense for the year ended december 31 , 2016 was $ 5.6 million and includes interest expense of $ 5.1 million , interest income of $ 0.2 million and $ 0.6 million of foreign currency translation loss . 2016 compared with 2015 other expense for the years ended december 31 , 2016 and 2015 was $ 5.6 million and $ 5.5 million , respectively and includes interest related to our sale leaseback obligation of $ 5.1 million and $ 4.8 million , respectively . income taxes income tax ( benefit ) expense was $ ( 83.1 ) million , $ 0.1 million and $ 0.5 million for the years ended december 31 , 2017 , 2016 and 2015 , respectively . the income tax benefit of $ 83.1 million in 2017 was primarily due to the release of our valuation allowance on our deferred tax assets . our income tax expense for the years ended december 31 , 2016 and 2015 is due to operating results of foreign entities in jurisdictions in europe and asia , where we earn taxable income . we have significant net operating loss carryforwards in the united states and certain european jurisdictions , and , as a result , we do not currently pay significant income taxes in those jurisdictions . at december 31 , 2017 , the company had $ 90.3 million of deferred tax assets worldwide relating to net operating loss carryforwards , tax credit carryforwards and other temporary differences , which are available to reduce income taxes in future years . the company has continued to maintain a $ 7.1 million valuation allowance in the u.s. 27 against certain tax credits and state net operating losses due to the uncertainty of their realization based on long-term company forecasts and the expiration dates on these attributes . in releasing the valuation allowance in 2017 , we considered the weight of all available evidence in determining whether a valuation allowance was required against the company 's deferred tax assets at december 31 , 2017. after consideration of both positive and negative evidence , management concluded that it is more likely than not that a substantial portion of its deferred tax assets will be realized . the positive evidence considered was three year u.s. historical cumulative profitability , projected future taxable income and length of carry-forward periods of net operating losses and tax credits . the primary negative is the volatile semiconductor industry that the company operates in . if future operating results of the u.s. or these foreign jurisdictions significantly exceed expectations it is reasonably possible that there could be a further reduction in the valuation allowance in the future . further reduction of the valuation allowance , in whole or in part , would result in a non-cash income tax benefit during the period of reduction . on december 22 , 2017 , the tax cuts and jobs act ( the “ 2017 tax act ” ) was signed into law . the 2017 tax act eliminates the deferral of u.s. income tax on the historical un-repatriated earnings by imposing the transition toll tax , which is a one-time mandatory deemed repatriation tax on undistributed foreign earnings . as of december 31 , 2017 , we have accrued income tax liabilities of $ 0.4 million under the transition toll tax after utilization of foreign tax credits and research and development credits . the transition toll tax will be paid over an eight-year period , starting in 2018 , and will not accrue interest . the 2017 tax act includes a federal statutory rate reduction from 35 % to 21 % , the elimination or reduction of

liquidity and capital resources our liquidity is affected by many factors . some of these relate specifically to the operations of our business . for example , our sales and other factors relate to the uncertainties of global economies , including the availability of credit and the condition of the overall semiconductor capital equipment industry . our established cost structure does not vary significantly with changes in volume . we experience fluctuations in operating results and cash flows depending on fluctuations in our revenue level . in 2017 , $ 56.3 million of cash was provided by operating activities . this compares to $ 8.8 million of cash used to support operations in 2016. cash and cash equivalents at december 31 , 2017 was $ 133.4 million , compared to $ 70.8 million at december 31 , 2016. approximately $ 16.4 million of cash was located in foreign jurisdictions as of december 31 , 2017. in addition to the cash and cash equivalent balance at december 31 , 2017 , the company had $ 7.5 million in restricted cash which relates to a $ 5.9 million letter of credit associated with the security deposit for the lease on our corporate headquarters in beverly , massachusetts , a $ 0.8 million letter of credit relating to workers ' compensation insurance , a $ 0.7 million letter of credit associated with a bank guarantee and a $ 0.1 million deposit relating to customs activity .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. seven of these sites represent new purion customers , and the other eleven locations are first in-fab purion placements by existing purion customers . the company 's gross margin for 2017 was 36.6 % , down from 37.3 % in 2016 . 2017 gross margin was impacted by a $ 6.2 million excess inventory reserve charge taken on legacy tools and parts in the fourth quarter of 2017 , which reduced full year 2017 gross margin by 1.5 percentage points . without the impact of this excess inventory charge , gross margins in 2017 would have been at the company 's highest annual level in 11 years . we also worked diligently to ensure that manufacturing and operating expense levels remain well aligned to business conditions . consolidation and partnering within the semiconductor chip manufacturing industry has resulted in a smaller number of customers . our net revenue from our ten largest customers accounted for 73.3 % of total revenue for the year ended december 31 , 2017 compared to 70.2 % and 76.8 % of revenue for the years ended december 31 , 2016 and 2015 , respectively . for the year ended december 31 , 2017 , the company had two customers representing 24.9 % and 13.1 % of total revenue , respectively . critical accounting estimates management 's discussion and analysis of our financial condition and results of operations are based upon axcelis ' consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states . the preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets , liabilities , revenue and expenses , and related disclosure of contingent assets and liabilities . on an on‑going basis , we evaluate our estimates and assumptions . management 's estimates are based on historical experience and on various other assumptions that are believed to be reasonable under 18 the circumstances , the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources . actual results may differ from these estimates under different assumptions or conditions . we believe the following accounting policies are critical in the portrayal of our financial condition and results of operations and require management 's most significant judgments and estimates in the preparation of our consolidated financial statements . for additional accounting policies see note 2 to the consolidated financial statements for the year ended december 31 , 2017 included in this annual report on form 10-k. revenue recognition our revenue recognition policy involves significant judgment by management . as described below , we consider a broad array of facts and circumstances in determining when to recognize revenue , including contractual service obligations to the customer , the complexity of the customer 's post‑delivery acceptance provisions , payment history , customer creditworthiness and the installation process . our system sales transactions are made up of multiple elements , including the system itself and elements that are not delivered simultaneously with the system . these undelivered elements might include a combination of installation services , extended warranty and support and spare parts , all of which are generally covered by a single sales price . our system revenue arrangements with multiple elements are divided into separate units of accounting if specified criteria are met , including whether the delivered element has stand‑alone value to the customer . if the criteria are met , then the consideration received is allocated among the separate units based on their relative selling price , and the revenue is recognized separately for each of the separate units . we determine selling price for each unit of accounting ( element ) using vendor specific objective evidence ( “ vsoe ” ) or third‑party evidence ( “ tpe ” ) , if they exist , otherwise , we use best estimated selling price ( “ besp ” ) . we generally expect that we will not be able to establish tpe due to the nature of our products , and , as such , we typically will determine selling price using vsoe or besp . where required , we determine besp for an individual element based on consideration of both market and company‑specific factors , including the selling price and profit margin for similar products , the cost to produce the deliverable and the anticipated margin on that deliverable and the characteristics of the markets in which the deliverable is sold . systems are not sold separately and vsoe or tpe is not available for the systems element . therefore the selling price associated with systems is based on besp . the allocated value for installation in the arrangement includes either ( i ) the relative selling price of the installation or ( ii ) the portion of the sales price that will not be received until the installation is completed ( the “ retention ” ) . the selling price of elements such as extended warranty for support , spare parts and support labor is also based on besp . for the majority of regions , the selling price of installation is based upon the fair value of the service performed , including labor , which is based upon the estimated time to complete the installation at hourly rates , and material components , both of which are sold separately , or vsoe . in regions where vsoe does not exist the company uses besp . story_separator_special_tag % , compared with $ 23.3 million in 2015. the increase was primarily due to an increase in new tool evaluation costs . general and administrative replace_table_token_8_th our general and administrative expenses result primarily from the costs associated with our executive , finance , information technology , legal and human resource functions . 2017 compared with 2016 general and administrative expense was $ 30.8 million in 2017 , an increase of $ 6.4 million , or 26.0 % compared with $ 24.5 million in 2016. the increase was primarily due to variable incentive plan expense and to a lesser extent to increased headcount . 26 2016 compared with 2015 general and administrative expense was $ 24.5 million in 2016 , a decrease of $ 0.6 million , or 2.4 % compared with $ 25.1 million in 2015. the decrease was primarily due to a reduction in personnel costs driven by a decrease in variable incentive plan expense . restructuring the company from time to time incurs expenses relating to restructuring . 2017 compared with 2016 during the year ended december 31 , 2016 we recorded $ 0.3 million to restructuring expense due to a consolidation in our customer base . 2016 compared with 2015 during the year ended december 31 , 2016 we recorded $ 0.3 million to restructuring expense due to a consolidation in our customer base . during the year ended december 31 , 2015 , we recorded an immaterial charge to restructuring expense . other ( expense ) income other ( expense ) income consists primarily of interest relating to the lease obligation we incurred in connection with the 2015 sale of our headquarters facility ( “ sale leaseback ” ) and other financing obligations , foreign exchange gains and losses attributable to fluctuations of the u.s. dollar against the local currencies of certain of the countries in which we operate , as well as interest earned on our invested cash balances . 2017 compared with 2016 other expense for the year ended december 31 , 2017 was $ 4.0 million , which includes $ 5.1 million of interest expense related to our sale leaseback obligation and other miscellaneous expense of $ 0.7 million , offset by interest income of $ 0.7 million and $ 1.1 million of foreign currency translation gains . other expense for the year ended december 31 , 2016 was $ 5.6 million and includes interest expense of $ 5.1 million , interest income of $ 0.2 million and $ 0.6 million of foreign currency translation loss . 2016 compared with 2015 other expense for the years ended december 31 , 2016 and 2015 was $ 5.6 million and $ 5.5 million , respectively and includes interest related to our sale leaseback obligation of $ 5.1 million and $ 4.8 million , respectively . income taxes income tax ( benefit ) expense was $ ( 83.1 ) million , $ 0.1 million and $ 0.5 million for the years ended december 31 , 2017 , 2016 and 2015 , respectively . the income tax benefit of $ 83.1 million in 2017 was primarily due to the release of our valuation allowance on our deferred tax assets . our income tax expense for the years ended december 31 , 2016 and 2015 is due to operating results of foreign entities in jurisdictions in europe and asia , where we earn taxable income . we have significant net operating loss carryforwards in the united states and certain european jurisdictions , and , as a result , we do not currently pay significant income taxes in those jurisdictions . at december 31 , 2017 , the company had $ 90.3 million of deferred tax assets worldwide relating to net operating loss carryforwards , tax credit carryforwards and other temporary differences , which are available to reduce income taxes in future years . the company has continued to maintain a $ 7.1 million valuation allowance in the u.s. 27 against certain tax credits and state net operating losses due to the uncertainty of their realization based on long-term company forecasts and the expiration dates on these attributes . in releasing the valuation allowance in 2017 , we considered the weight of all available evidence in determining whether a valuation allowance was required against the company 's deferred tax assets at december 31 , 2017. after consideration of both positive and negative evidence , management concluded that it is more likely than not that a substantial portion of its deferred tax assets will be realized . the positive evidence considered was three year u.s. historical cumulative profitability , projected future taxable income and length of carry-forward periods of net operating losses and tax credits . the primary negative is the volatile semiconductor industry that the company operates in . if future operating results of the u.s. or these foreign jurisdictions significantly exceed expectations it is reasonably possible that there could be a further reduction in the valuation allowance in the future . further reduction of the valuation allowance , in whole or in part , would result in a non-cash income tax benefit during the period of reduction . on december 22 , 2017 , the tax cuts and jobs act ( the “ 2017 tax act ” ) was signed into law . the 2017 tax act eliminates the deferral of u.s. income tax on the historical un-repatriated earnings by imposing the transition toll tax , which is a one-time mandatory deemed repatriation tax on undistributed foreign earnings . as of december 31 , 2017 , we have accrued income tax liabilities of $ 0.4 million under the transition toll tax after utilization of foreign tax credits and research and development credits . the transition toll tax will be paid over an eight-year period , starting in 2018 , and will not accrue interest . the 2017 tax act includes a federal statutory rate reduction from 35 % to 21 % , the elimination or reduction of Narrative : liquidity and capital resources our liquidity is affected by many factors . some of these relate specifically to the operations of our business . for example , our sales and other factors relate to the uncertainties of global economies , including the availability of credit and the condition of the overall semiconductor capital equipment industry . our established cost structure does not vary significantly with changes in volume . we experience fluctuations in operating results and cash flows depending on fluctuations in our revenue level . in 2017 , $ 56.3 million of cash was provided by operating activities . this compares to $ 8.8 million of cash used to support operations in 2016. cash and cash equivalents at december 31 , 2017 was $ 133.4 million , compared to $ 70.8 million at december 31 , 2016. approximately $ 16.4 million of cash was located in foreign jurisdictions as of december 31 , 2017. in addition to the cash and cash equivalent balance at december 31 , 2017 , the company had $ 7.5 million in restricted cash which relates to a $ 5.9 million letter of credit associated with the security deposit for the lease on our corporate headquarters in beverly , massachusetts , a $ 0.8 million letter of credit relating to workers ' compensation insurance , a $ 0.7 million letter of credit associated with a bank guarantee and a $ 0.1 million deposit relating to customs activity .

we intend to effectuate our initial business combination using cash from the proceeds of our initial public offering and the private placement of the private units , our shares , debt securities or a combination of cash , shares and debt securities . the issuance of additional shares in our initial business combination : ● may significantly dilute the equity interest of investors in our initial public offering who would do not have pre-emption rights in respect of any such issue ; ● may subordinate the rights of holders of ordinary shares if the rights , preferences , designations and limitations attaching to the preferred shares are created by amendment of our memorandum and articles of association by resolution of the board of directors and preferred shares are issued with rights senior to those afforded our ordinary shares ; ● could cause a change in control if a substantial number of ordinary shares is issued , which may affect , among other things , our ability to use our net operating loss carry forwards , if any , and could result in the resignation or removal of our present officers and directors ; ● may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights or a person seeking to obtain control of us ; and ● may adversely affect prevailing market prices for our ordinary shares and or rights . similarly , if we issue debt securities , it could result in : ● default and foreclosure on our assets if our operating revenues after our initial business combination are insufficient to repay our debt obligations ; ● acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant ; ● our immediate payment of all principal and accrued interest , if any , if the debt security is payable on demand ; ● our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding ; 43 ● our inability to pay dividends on our ordinary shares ; ● our using a substantial portion of our cash flow to pay principal and interest on our debt , which will reduce the funds available for dividends on our ordinary shares if declared , expenses , capital expenditures , acquisitions and other general corporate purposes ; ● limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate ; ● increased vulnerability to adverse changes in general economic , industry and competitive conditions and adverse changes in government regulation ; and ● limitations on our ability to borrow additional amounts for expenses , capital expenditures , acquisitions , debt service requirements , execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt . on january 3 , 2016 , dt asia 's board of directors approved the share exchange agreement with china lending group as being in the best interests of dt asia and its shareholders , and on january 11 , 2016 , the parties executed the share exchange agreement . we expect to continue to incur significant costs in the pursuit of our acquisition plans . we can not assure you that our plans to raise capital or to complete our initial business combination will be successful . we presently have no revenue , have had losses since inception through march 31 , 2016 of approximately $ 1,343,249 , primarily from incurring costs related to due diligence , professional , and investor relations related costs , etc . , and we have no other operations other than the active solicitation of a target business with which to complete a business combination . we have relied upon the sale of our securities and loans from our officers , directors and sponsor to fund our operations . on october 6 , 2014 , dt asia consummated its initial public offering of 6,000,000 units , each unit consisting of one ordinary share , one right , and one warrant . each right entitles the holder to receive one-tenth ( 1/10 ) of an ordinary share on the consummation of an initial business combination . each warrant entitles the holder thereof to purchase one-half of one ordinary share , at a price of $ 12.00 per full share . the units were sold at an offering price of $ 10.00 per unit , generating gross proceeds of $ 60.0 million . on october 6 , 2014 , simultaneously with the consummation of the initial public offering , the company completed the private placement of an aggregate of 320,000 private units , at $ 10.00 per unit , among which 290,000 private units were purchased by detiger holdings limited , our sponsor , and 30,000 private units were purchased by earlybirdcapital , generating gross proceeds of $ 3,200,000. each private unit is comprised of one ordinary share , one right , and one warrant . each right entitles the holder to receive one-tenth ( 1/10 ) of an ordinary share on the consummation of an initial business combination . each warrant entitles the holder thereof to purchase one-half of one ordinary share , at a price of $ 12.00 per full share . in addition , our sponsor purchased from us an aggregate of 1,800,000 warrants , or sponsor warrants , at a price of $ 0.50 per warrant ( $ 900,000 ) . story_separator_special_tag further , we have approximately $ 60,000 in payables and $ 45,000 of accrued expenses , both payable before a business combination , and we expect to incur an additional $ 120,000 in expenses to complete the business combination before july 6 , 2016. furthermore , there are an estimated $ 450,000 of payables and contingent expenses which are deferred and are not payable unless there is a closing of a business combination . for the period from april 8 , 2014 ( inception ) to march 31 , 2015 , we had net losses of $ 246,857 , which consisted of operating expenses partially offset by interest income from our trust account . operating expenses generally consisted of the $ 10,000 monthly payment to our sponsor for office and administrative support , monthly professional fees owed to our service providers , travel expenses , nasdaq market listing fees and our directors and officers insurance policy costs . operating expenses after our initial public offering increased dramatically due to our having commenced searching a target company , and professional expenses being expensed in the statement of operations . for the year ended march 31 , 2016 , we had net losses of $ 1,343,249 ( accumulated net losses of $ 1,590,106 since inception ) , which consisted of operating expenses partially offset by interest income from our trust account . operating expenses generally consisted of the $ 10,000 monthly payment to our sponsor for office and administrative support , monthly professional fees owed to our service providers , travel expenses and amortization of our director and officer insurance policy . operating expenses for the year ended march 31 , 2016 increased dramatically as compared to the period ended march 31 , 2015 due to our having commenced operations in the target company after our initial public offering . story_separator_special_tag price of $ 10.00 per unit . these units will be identical to the private units issued in a private placement in connection with our initial public offering . as such , each unit will be comprised of one ordinary share , one right to receive one-tenth of one ordinary share upon consummation of a business combination , and one warrant to purchase one-half of an ordinary share at an exercise price of $ 12.00 per full share . 46 the company had drawn down all of the $ 1,600,000 as of june 15 , 2016. if we are required to seek additional capital , we will need to raise additional capital through loans or additional investments from our sponsor , shareholders , officers , directors , or third parties . none of the sponsors , shareholders , officers or directors are under any obligation to advance funds to , or to invest in , the company . accordingly , we may not be able to obtain additional financing . if the company is unable to raise additional capital , it may be required to take additional measures to conserve liquidity , which could include , but not necessarily be limited to , curtailing operations , suspending the pursuit of its business plan , and reducing overhead expenses . the company can not provide any assurance that new financing will be available to it on commercially acceptable terms , if at all . these conditions raise substantial doubt about the company 's ability to continue as a going concern . these financial statements do not include any adjustments that might result from the outcome of these uncertainties . as of june 20 , 2016 , we have a total of approximately $ 252,000 available ( $ 141,000 cash in bank and $ 111,000 in interest earned from the trust held by continental stock transfer & trust company acting as trustee ) . further , we have approximately $ 60,000 in payables and $ 45,000 of accrued expenses , both payable before a business combination , and we expect to incur an additional $ 120,000 in expenses to complete the business combination before july 6 , 2016. therefore , there should be sufficient cash resources to complete the business combination , assuming it proceeds according to the planned timetable and there are no significant unforeseen costs or claims . there are an estimated $ 450,000 of payables and contingent expenses which are deferred and are not payable unless there is a closing of a business combination . if we were unable to complete the business combination , 100 % of our outstanding public shares will be redeemed for a portion of the funds held in the trust account , each holder will receive a full pro rata portion of the amount then in the trust account ( less up to $ 50,000 to pay dissolution costs ) , plus any pro rata interest earned on the funds held in the trust account and not previously released to us for our working capital requirements or necessary to pay taxes payable on such funds . holders of rights or warrants will receive no proceeds in connection with the liquidation with respect to such rights or warrants , which will expire worthless . further , holders of the founder shares , private units and sponsor warrants will not participate in any redemption distribution with respect to their founder shares , private shares , private rights , private warrants or sponsor warrants . additionally in such circumstance we may not have sufficient funds to pay or provide for all creditors ' claims ( including the sponsor loans ) . although we have entered into valid and enforceable agreements waiving any right , title , interest or claim of any kind in or to any monies held in the trust account with third parties , including vendors and other entities we have engaged , but excluding our independent registered public accounting firm and us gaap reporting consultants , there is no guarantee that the third parties would not challenge the enforceability of these waivers and bring claims

liquidity and capital resources as of march 31 , 2016 , we had cash of $ 53,115. through march 31 , 2016 , our liquidity needs have been satisfied to date primarily through net proceeds from our initial public offering ( including over-allotment units issued in connection with the underwriter 's partial exercise of its over-allotment option ) and all related private placements not held in the trust account and the loan from our sponsor . as of march 31 , 2016 , our sponsor has loaned the company $ 1,187,989 pursuant to a note , which becomes due on the earlier of ( 1 ) july 6 , 2016 ; or ( 2 ) the date the company consummates a business combination . up to $ 500,000 of our sponsor loan is convertible , in whole or in part , at the payee 's election , upon the consummation of the business combination , into units , at a price of $ 10.00 per unit . these units will be identical to the private units issued in a private placement in connection with our initial public offering . 45 we received total gross proceeds of $ 73,152,164 from the sale of units in our initial public offering ( including the private units issued in connection with the underwriters ' partial exercise of their over-allotment option ) and all related private placements on october 6 , 2014 and october 14 , 2014. a total of $ 69,972,643 of net proceeds was deposited in a trust account established for the benefit of the company 's public shareholders and as of march 31 , 2015 , the carrying value of cash and investments held in trust account is $ 70,051,271 ( including earned interest income of $ 111,251 since october 2014 ) . on march 31 , 2016 , the company held a special meeting in lieu of an annual meeting of shareholders ( the “ meeting ” ) .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we intend to effectuate our initial business combination using cash from the proceeds of our initial public offering and the private placement of the private units , our shares , debt securities or a combination of cash , shares and debt securities . the issuance of additional shares in our initial business combination : ● may significantly dilute the equity interest of investors in our initial public offering who would do not have pre-emption rights in respect of any such issue ; ● may subordinate the rights of holders of ordinary shares if the rights , preferences , designations and limitations attaching to the preferred shares are created by amendment of our memorandum and articles of association by resolution of the board of directors and preferred shares are issued with rights senior to those afforded our ordinary shares ; ● could cause a change in control if a substantial number of ordinary shares is issued , which may affect , among other things , our ability to use our net operating loss carry forwards , if any , and could result in the resignation or removal of our present officers and directors ; ● may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights or a person seeking to obtain control of us ; and ● may adversely affect prevailing market prices for our ordinary shares and or rights . similarly , if we issue debt securities , it could result in : ● default and foreclosure on our assets if our operating revenues after our initial business combination are insufficient to repay our debt obligations ; ● acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant ; ● our immediate payment of all principal and accrued interest , if any , if the debt security is payable on demand ; ● our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding ; 43 ● our inability to pay dividends on our ordinary shares ; ● our using a substantial portion of our cash flow to pay principal and interest on our debt , which will reduce the funds available for dividends on our ordinary shares if declared , expenses , capital expenditures , acquisitions and other general corporate purposes ; ● limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate ; ● increased vulnerability to adverse changes in general economic , industry and competitive conditions and adverse changes in government regulation ; and ● limitations on our ability to borrow additional amounts for expenses , capital expenditures , acquisitions , debt service requirements , execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt . on january 3 , 2016 , dt asia 's board of directors approved the share exchange agreement with china lending group as being in the best interests of dt asia and its shareholders , and on january 11 , 2016 , the parties executed the share exchange agreement . we expect to continue to incur significant costs in the pursuit of our acquisition plans . we can not assure you that our plans to raise capital or to complete our initial business combination will be successful . we presently have no revenue , have had losses since inception through march 31 , 2016 of approximately $ 1,343,249 , primarily from incurring costs related to due diligence , professional , and investor relations related costs , etc . , and we have no other operations other than the active solicitation of a target business with which to complete a business combination . we have relied upon the sale of our securities and loans from our officers , directors and sponsor to fund our operations . on october 6 , 2014 , dt asia consummated its initial public offering of 6,000,000 units , each unit consisting of one ordinary share , one right , and one warrant . each right entitles the holder to receive one-tenth ( 1/10 ) of an ordinary share on the consummation of an initial business combination . each warrant entitles the holder thereof to purchase one-half of one ordinary share , at a price of $ 12.00 per full share . the units were sold at an offering price of $ 10.00 per unit , generating gross proceeds of $ 60.0 million . on october 6 , 2014 , simultaneously with the consummation of the initial public offering , the company completed the private placement of an aggregate of 320,000 private units , at $ 10.00 per unit , among which 290,000 private units were purchased by detiger holdings limited , our sponsor , and 30,000 private units were purchased by earlybirdcapital , generating gross proceeds of $ 3,200,000. each private unit is comprised of one ordinary share , one right , and one warrant . each right entitles the holder to receive one-tenth ( 1/10 ) of an ordinary share on the consummation of an initial business combination . each warrant entitles the holder thereof to purchase one-half of one ordinary share , at a price of $ 12.00 per full share . in addition , our sponsor purchased from us an aggregate of 1,800,000 warrants , or sponsor warrants , at a price of $ 0.50 per warrant ( $ 900,000 ) . story_separator_special_tag further , we have approximately $ 60,000 in payables and $ 45,000 of accrued expenses , both payable before a business combination , and we expect to incur an additional $ 120,000 in expenses to complete the business combination before july 6 , 2016. furthermore , there are an estimated $ 450,000 of payables and contingent expenses which are deferred and are not payable unless there is a closing of a business combination . for the period from april 8 , 2014 ( inception ) to march 31 , 2015 , we had net losses of $ 246,857 , which consisted of operating expenses partially offset by interest income from our trust account . operating expenses generally consisted of the $ 10,000 monthly payment to our sponsor for office and administrative support , monthly professional fees owed to our service providers , travel expenses , nasdaq market listing fees and our directors and officers insurance policy costs . operating expenses after our initial public offering increased dramatically due to our having commenced searching a target company , and professional expenses being expensed in the statement of operations . for the year ended march 31 , 2016 , we had net losses of $ 1,343,249 ( accumulated net losses of $ 1,590,106 since inception ) , which consisted of operating expenses partially offset by interest income from our trust account . operating expenses generally consisted of the $ 10,000 monthly payment to our sponsor for office and administrative support , monthly professional fees owed to our service providers , travel expenses and amortization of our director and officer insurance policy . operating expenses for the year ended march 31 , 2016 increased dramatically as compared to the period ended march 31 , 2015 due to our having commenced operations in the target company after our initial public offering . story_separator_special_tag price of $ 10.00 per unit . these units will be identical to the private units issued in a private placement in connection with our initial public offering . as such , each unit will be comprised of one ordinary share , one right to receive one-tenth of one ordinary share upon consummation of a business combination , and one warrant to purchase one-half of an ordinary share at an exercise price of $ 12.00 per full share . 46 the company had drawn down all of the $ 1,600,000 as of june 15 , 2016. if we are required to seek additional capital , we will need to raise additional capital through loans or additional investments from our sponsor , shareholders , officers , directors , or third parties . none of the sponsors , shareholders , officers or directors are under any obligation to advance funds to , or to invest in , the company . accordingly , we may not be able to obtain additional financing . if the company is unable to raise additional capital , it may be required to take additional measures to conserve liquidity , which could include , but not necessarily be limited to , curtailing operations , suspending the pursuit of its business plan , and reducing overhead expenses . the company can not provide any assurance that new financing will be available to it on commercially acceptable terms , if at all . these conditions raise substantial doubt about the company 's ability to continue as a going concern . these financial statements do not include any adjustments that might result from the outcome of these uncertainties . as of june 20 , 2016 , we have a total of approximately $ 252,000 available ( $ 141,000 cash in bank and $ 111,000 in interest earned from the trust held by continental stock transfer & trust company acting as trustee ) . further , we have approximately $ 60,000 in payables and $ 45,000 of accrued expenses , both payable before a business combination , and we expect to incur an additional $ 120,000 in expenses to complete the business combination before july 6 , 2016. therefore , there should be sufficient cash resources to complete the business combination , assuming it proceeds according to the planned timetable and there are no significant unforeseen costs or claims . there are an estimated $ 450,000 of payables and contingent expenses which are deferred and are not payable unless there is a closing of a business combination . if we were unable to complete the business combination , 100 % of our outstanding public shares will be redeemed for a portion of the funds held in the trust account , each holder will receive a full pro rata portion of the amount then in the trust account ( less up to $ 50,000 to pay dissolution costs ) , plus any pro rata interest earned on the funds held in the trust account and not previously released to us for our working capital requirements or necessary to pay taxes payable on such funds . holders of rights or warrants will receive no proceeds in connection with the liquidation with respect to such rights or warrants , which will expire worthless . further , holders of the founder shares , private units and sponsor warrants will not participate in any redemption distribution with respect to their founder shares , private shares , private rights , private warrants or sponsor warrants . additionally in such circumstance we may not have sufficient funds to pay or provide for all creditors ' claims ( including the sponsor loans ) . although we have entered into valid and enforceable agreements waiving any right , title , interest or claim of any kind in or to any monies held in the trust account with third parties , including vendors and other entities we have engaged , but excluding our independent registered public accounting firm and us gaap reporting consultants , there is no guarantee that the third parties would not challenge the enforceability of these waivers and bring claims Narrative : liquidity and capital resources as of march 31 , 2016 , we had cash of $ 53,115. through march 31 , 2016 , our liquidity needs have been satisfied to date primarily through net proceeds from our initial public offering ( including over-allotment units issued in connection with the underwriter 's partial exercise of its over-allotment option ) and all related private placements not held in the trust account and the loan from our sponsor . as of march 31 , 2016 , our sponsor has loaned the company $ 1,187,989 pursuant to a note , which becomes due on the earlier of ( 1 ) july 6 , 2016 ; or ( 2 ) the date the company consummates a business combination . up to $ 500,000 of our sponsor loan is convertible , in whole or in part , at the payee 's election , upon the consummation of the business combination , into units , at a price of $ 10.00 per unit . these units will be identical to the private units issued in a private placement in connection with our initial public offering . 45 we received total gross proceeds of $ 73,152,164 from the sale of units in our initial public offering ( including the private units issued in connection with the underwriters ' partial exercise of their over-allotment option ) and all related private placements on october 6 , 2014 and october 14 , 2014. a total of $ 69,972,643 of net proceeds was deposited in a trust account established for the benefit of the company 's public shareholders and as of march 31 , 2015 , the carrying value of cash and investments held in trust account is $ 70,051,271 ( including earned interest income of $ 111,251 since october 2014 ) . on march 31 , 2016 , the company held a special meeting in lieu of an annual meeting of shareholders ( the “ meeting ” ) .

we have aggregated various operating segments into our reportable segments based on their similar characteristics , including similar long-term financial performance , the nature of services provided , internal processes for delivering those services , and types of customers . prior year amounts have been revised to conform to the current year presentation . our dcs segment delivers planning , consulting , architectural and engineering design services to commercial and government clients worldwide in major end markets such as transportation , facilities , environmental , energy , water and government . our cs segment provides construction services , including building construction and energy , infrastructure and industrial construction , primarily in the americas . our ms segment provides program and facilities management and maintenance , training , logistics , consulting , technical assistance , and systems integration and information technology services , primarily for agencies of the u.s. government and also for national governments around the world . our revenue is dependent on our ability to attract and retain qualified and productive employees , identify business opportunities , integrate and maximize the value of our recent acquisitions , allocate our labor resources to profitable and high growth markets , secure new contracts and renew existing client agreements . demand for our services is cyclical and may be vulnerable to sudden economic downturns and reductions in government and private industry spending , which may result in clients delaying , curtailing or canceling proposed and existing projects . moreover , as a professional services company , maintaining the high quality of the work generated by our employees is integral to our revenue generation and profitability . our costs consist primarily of the compensation we pay to our employees , including salaries , fringe benefits , the costs of hiring subcontractors and other project-related expenses , and sales , general and administrative costs . we define revenue provided by acquired companies as revenue included in the current period up to twelve months subsequent to their acquisition date . throughout this section , we refer to companies we acquired in the last twelve months as `` acquired companies . `` recent commodity price declines have negatively impacted our oil and gas business and have impacted north american oil and gas clients ' investment decisions for projects with higher breakeven costs resulting in some construction contracts being deferred , suspended or terminated . federal highway and public transportation legislation has been subject to uncertainty caused by a number of short term extensions by congress that have negatively impacted the long term transportation investment decisions of our clients ; however , we expect that any passage of a long term federal highway and public transportation bill will positively impact our transportation services business . in january 2015 , we were informed that our joint venture responsible for managing the united kingdom sellafield nuclear site would transition control back to the united kingdom government . 37 we expect to benefit from the return on our aecom capital investments in fiscal year 2016. in addition , we expect to dispose of certain non-core businesses or assets in fiscal year 2016. acquisitions the aggregate value of all consideration for our acquisitions consummated during the year ended september 30 , 2015 , 2014 and 2013 was $ 5,147.9 million , $ 88.5 million , and $ 82.0 million , respectively . all of our acquisitions have been accounted for as business combinations and the results of operations of the acquired companies have been included in our consolidated results since the dates of the acquisitions . components of income and expense replace_table_token_10_th revenue we generate revenue primarily by providing planning , consulting , architectural and engineering design services to commercial and government clients around the world . our revenue consists of both services provided by our employees and pass-through fees from subcontractors and other direct costs . we generally utilize a cost-to-cost approach in applying the percentage-of-completion method of revenue recognition . under this approach , revenue is earned in proportion to total costs incurred , divided by total costs expected to be incurred . cost of revenue cost of revenue reflects the cost of our own personnel ( including fringe benefits and overhead expense ) associated with revenue . amortization expense of acquired intangible assets included in our cost of revenue is amortization of acquired intangible assets . we have ascribed value to identifiable intangible assets other than goodwill in our purchase price allocations for companies we have acquired . these assets include , but are not limited to , backlog and customer relationships . to the extent we ascribe value to identifiable intangible assets that have finite lives , we amortize those values over the estimated useful lives of the assets . such amortization expense , although non-cash in the period expensed , directly impacts our results of operations . it is difficult to predict with any precision the amount of expense we may record relating to acquired intangible assets . 38 equity in earnings of joint ventures equity in earnings of joint ventures includes our portion of fees charged by our unconsolidated joint ventures to clients for services performed by us and other joint venture partners along with earnings we receive from investments in unconsolidated joint ventures . general and administrative expenses general and administrative expenses include corporate overhead expenses , including personnel , occupancy , and administrative expenses . acquisition and integration expenses acquisition and integration expenses are comprised of transaction costs , professional fees , and personnel costs , including due diligence and integration activities , primarily related to the acquisition of urs corporation . goodwill impairment see critical accounting policies and consolidated results below . income tax ( benefit ) expense income tax ( benefit ) /expense varies as a function of pre-tax loss/income and items permanently non-tax deductible or tax exempt . story_separator_special_tag we also use an outside actuarial firm to assist us in estimating our future claims exposure . it is possible that our estimate of loss may be revised based on the actual or revised estimate of liability of the claims . foreign currency translation our functional currency is the u.s. dollar . results of operations for foreign entities are translated to u.s. dollars using the average exchange rates during the period . assets and liabilities for foreign entities are translated using the exchange rates in effect as of the date of the balance sheet . resulting translation adjustments are recorded as a foreign currency translation adjustment into other accumulated comprehensive income/ ( loss ) in stockholders ' equity . 43 we limit exposure to foreign currency fluctuations in most of our contracts through provisions that require client payments in currencies corresponding to the currency in which costs are incurred . as a result of this natural hedge , we generally do not need to hedge foreign currency cash flows for contract work performed . however , we will use foreign exchange derivative financial instruments from time to time to mitigate foreign currency risk . the functional currency of all significant foreign operations is the respective local currency . fiscal year ended september 30 , 2015 compared to the fiscal year ended september 30 , 2014 consolidated results replace_table_token_11_th 44 the following table presents the percentage relationship of certain items to revenue : replace_table_token_12_th revenue our revenue for the year ended september 30 , 2015 increased $ 9,633.1 million , or 115.3 % , to $ 17,989.9 million as compared to $ 8,356.8 million for the corresponding period last year . revenue provided by acquired companies was $ 9,635.4 million for the year ended september 30 , 2015. excluding the revenue provided by acquired companies , revenue decreased $ 2.3 million , or 0.0 % , from the year ended september 30 , 2014. the decrease in revenue , excluding acquired companies , for the year ended september 30 , 2015 was primarily attributable to a negative foreign currency impact of $ 260 million due to the strengthening of the u.s. dollar against the australian and canadian dollars and the british pound , coupled with a decrease in the dcs americas region of $ 220 million across its end markets , a decrease in the ms segment of $ 148.8 million , excluding acquired companies , and a decrease in the dcs asia pacific region of approximately $ 110 million . these decreases were offset by an increase in the cs segment of $ 639.4 million primarily from construction management services provided on high-rise buildings in the city of new york , and an increase in the dcs emea region of approximately $ 100 million . gross profit our gross profit for the year ended september 30 , 2015 increased $ 132.0 million , or 32.7 % , to $ 535.2 million as compared to $ 403.2 million for the corresponding period last year . gross profit provided by acquired companies was $ 206.3 million . for the year ended september 30 , 2015 , gross profit , as a percentage of revenue , decreased to 3.0 % from 4.8 % in the year ended september 30 , 2014. excluding gross profit provided by acquired companies , gross profit decreased $ 74.3 million , or 18.4 % , from the year ended september 30 , 2014. the decreases in gross profit , excluding acquired companies , and gross profit , as a percentage of revenue , for the year ended september 30 , 2015 were primarily due to factors impacting our segments as described below , including a decrease in revenue in the americas region in our dcs segment . 45 equity in earnings of joint ventures our equity in earnings of joint ventures for the year ended september 30 , 2015 was $ 106.2 million as compared to $ 57.9 million in the corresponding period last year . equity in earnings of joint ventures provided by acquired companies was $ 80.1 million . excluding earnings provided by acquired companies , earnings decreased $ 31.8 million , or 54.8 % , from the year ended september 30 , 2014. the decrease in earnings of joint ventures for the year ended september 30 , 2015 , excluding acquisitions , was primarily due to the prior year $ 37.4 million gain on change in control of an unconsolidated joint venture that performs engineering and program management services in the middle east and is included in the company 's dcs segment . the gain related to the excess of fair value over the carrying value of the previously held equity interest in the unconsolidated joint venture . see further discussion in note 7 to the accompanying financial statements . the gain on change in control was partially offset by an impairment of an unrelated joint venture investment . general and administrative expenses our general and administrative expenses for the year ended september 30 , 2015 increased $ 33.1 million , or 40.9 % , to $ 114.0 million as compared to $ 80.9 million for the corresponding period last year . as a percentage of revenue , general and administrative expenses decreased to 0.7 % for the year ended september 30 , 2015 from 1.0 % for the year ended september 30 , 2014. the increase in general and administrative expenses for the year ended september 30 , 2015 was primarily due to increased personnel and related costs associated with the acquisition of urs . acquisition and integration expenses acquisition and integration expenses were comprised of the following ( in millions ) : replace_table_token_13_th other income our other income for the year ended september 30 , 2015 increased $ 16.4 million to $ 19.1 million as compared to $ 2.7 million for the year ended september 30 , 2014. the increase in other income for the year ended september 30 , 2015 was primarily

debt debt consisted of the following : replace_table_token_28_th the following table presents , in millions , our scheduled maturities as of september 30 , 2015 : replace_table_token_29_th 2014 credit agreement in connection with the acquisition of urs , on october 17 , 2014 , we entered into a new credit agreement ( credit agreement ) consisting of ( i ) a term loan a facility in an aggregate principal amount of $ 1.925 billion , ( ii ) a term loan b facility in an aggregate principal amount of $ 0.76 billion , ( iii ) a revolving credit facility in an aggregate principal amount of $ 1.05 billion , and ( iv ) an incremental performance letter of credit facility in an aggregate principal amount of $ 500 million subject to terms outlined in the credit agreement . these facilities under the credit agreement may be increased by an additional amount of up to $ 500 million . the credit agreement replaced the second amended and restated credit agreement , 57 dated as of june 7 , 2013 , and the fourth amended and restated credit agreement , dated as of january 29 , 2014 , which such prior facilities were terminated and repaid in full on october 17 , 2014. in addition , we paid in full , including a pre-payment penalty of $ 55.6 million , our unsecured senior notes ( 5.43 % series a notes due july 2020 and 1.00 % series b senior discount notes due july 2022 ) . the new credit agreement matures on october 17 , 2019 with respect to the revolving credit facility , the term loan a facility , and the incremental performance letter of credit facility . the term loan b facility matures on october 17 , 2021. certain subsidiaries of the company ( guarantors ) have guaranteed the obligations of the borrowers under the credit agreement . the borrowers ' obligations under the credit agreement are secured by a lien on substantially all of the assets of the company and the guarantors pursuant to a security and pledge agreement ( security agreement ) . the collateral under the security agreement is subject to release upon fulfillment of certain conditions specified in the credit agreement and security agreement .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we have aggregated various operating segments into our reportable segments based on their similar characteristics , including similar long-term financial performance , the nature of services provided , internal processes for delivering those services , and types of customers . prior year amounts have been revised to conform to the current year presentation . our dcs segment delivers planning , consulting , architectural and engineering design services to commercial and government clients worldwide in major end markets such as transportation , facilities , environmental , energy , water and government . our cs segment provides construction services , including building construction and energy , infrastructure and industrial construction , primarily in the americas . our ms segment provides program and facilities management and maintenance , training , logistics , consulting , technical assistance , and systems integration and information technology services , primarily for agencies of the u.s. government and also for national governments around the world . our revenue is dependent on our ability to attract and retain qualified and productive employees , identify business opportunities , integrate and maximize the value of our recent acquisitions , allocate our labor resources to profitable and high growth markets , secure new contracts and renew existing client agreements . demand for our services is cyclical and may be vulnerable to sudden economic downturns and reductions in government and private industry spending , which may result in clients delaying , curtailing or canceling proposed and existing projects . moreover , as a professional services company , maintaining the high quality of the work generated by our employees is integral to our revenue generation and profitability . our costs consist primarily of the compensation we pay to our employees , including salaries , fringe benefits , the costs of hiring subcontractors and other project-related expenses , and sales , general and administrative costs . we define revenue provided by acquired companies as revenue included in the current period up to twelve months subsequent to their acquisition date . throughout this section , we refer to companies we acquired in the last twelve months as `` acquired companies . `` recent commodity price declines have negatively impacted our oil and gas business and have impacted north american oil and gas clients ' investment decisions for projects with higher breakeven costs resulting in some construction contracts being deferred , suspended or terminated . federal highway and public transportation legislation has been subject to uncertainty caused by a number of short term extensions by congress that have negatively impacted the long term transportation investment decisions of our clients ; however , we expect that any passage of a long term federal highway and public transportation bill will positively impact our transportation services business . in january 2015 , we were informed that our joint venture responsible for managing the united kingdom sellafield nuclear site would transition control back to the united kingdom government . 37 we expect to benefit from the return on our aecom capital investments in fiscal year 2016. in addition , we expect to dispose of certain non-core businesses or assets in fiscal year 2016. acquisitions the aggregate value of all consideration for our acquisitions consummated during the year ended september 30 , 2015 , 2014 and 2013 was $ 5,147.9 million , $ 88.5 million , and $ 82.0 million , respectively . all of our acquisitions have been accounted for as business combinations and the results of operations of the acquired companies have been included in our consolidated results since the dates of the acquisitions . components of income and expense replace_table_token_10_th revenue we generate revenue primarily by providing planning , consulting , architectural and engineering design services to commercial and government clients around the world . our revenue consists of both services provided by our employees and pass-through fees from subcontractors and other direct costs . we generally utilize a cost-to-cost approach in applying the percentage-of-completion method of revenue recognition . under this approach , revenue is earned in proportion to total costs incurred , divided by total costs expected to be incurred . cost of revenue cost of revenue reflects the cost of our own personnel ( including fringe benefits and overhead expense ) associated with revenue . amortization expense of acquired intangible assets included in our cost of revenue is amortization of acquired intangible assets . we have ascribed value to identifiable intangible assets other than goodwill in our purchase price allocations for companies we have acquired . these assets include , but are not limited to , backlog and customer relationships . to the extent we ascribe value to identifiable intangible assets that have finite lives , we amortize those values over the estimated useful lives of the assets . such amortization expense , although non-cash in the period expensed , directly impacts our results of operations . it is difficult to predict with any precision the amount of expense we may record relating to acquired intangible assets . 38 equity in earnings of joint ventures equity in earnings of joint ventures includes our portion of fees charged by our unconsolidated joint ventures to clients for services performed by us and other joint venture partners along with earnings we receive from investments in unconsolidated joint ventures . general and administrative expenses general and administrative expenses include corporate overhead expenses , including personnel , occupancy , and administrative expenses . acquisition and integration expenses acquisition and integration expenses are comprised of transaction costs , professional fees , and personnel costs , including due diligence and integration activities , primarily related to the acquisition of urs corporation . goodwill impairment see critical accounting policies and consolidated results below . income tax ( benefit ) expense income tax ( benefit ) /expense varies as a function of pre-tax loss/income and items permanently non-tax deductible or tax exempt . story_separator_special_tag we also use an outside actuarial firm to assist us in estimating our future claims exposure . it is possible that our estimate of loss may be revised based on the actual or revised estimate of liability of the claims . foreign currency translation our functional currency is the u.s. dollar . results of operations for foreign entities are translated to u.s. dollars using the average exchange rates during the period . assets and liabilities for foreign entities are translated using the exchange rates in effect as of the date of the balance sheet . resulting translation adjustments are recorded as a foreign currency translation adjustment into other accumulated comprehensive income/ ( loss ) in stockholders ' equity . 43 we limit exposure to foreign currency fluctuations in most of our contracts through provisions that require client payments in currencies corresponding to the currency in which costs are incurred . as a result of this natural hedge , we generally do not need to hedge foreign currency cash flows for contract work performed . however , we will use foreign exchange derivative financial instruments from time to time to mitigate foreign currency risk . the functional currency of all significant foreign operations is the respective local currency . fiscal year ended september 30 , 2015 compared to the fiscal year ended september 30 , 2014 consolidated results replace_table_token_11_th 44 the following table presents the percentage relationship of certain items to revenue : replace_table_token_12_th revenue our revenue for the year ended september 30 , 2015 increased $ 9,633.1 million , or 115.3 % , to $ 17,989.9 million as compared to $ 8,356.8 million for the corresponding period last year . revenue provided by acquired companies was $ 9,635.4 million for the year ended september 30 , 2015. excluding the revenue provided by acquired companies , revenue decreased $ 2.3 million , or 0.0 % , from the year ended september 30 , 2014. the decrease in revenue , excluding acquired companies , for the year ended september 30 , 2015 was primarily attributable to a negative foreign currency impact of $ 260 million due to the strengthening of the u.s. dollar against the australian and canadian dollars and the british pound , coupled with a decrease in the dcs americas region of $ 220 million across its end markets , a decrease in the ms segment of $ 148.8 million , excluding acquired companies , and a decrease in the dcs asia pacific region of approximately $ 110 million . these decreases were offset by an increase in the cs segment of $ 639.4 million primarily from construction management services provided on high-rise buildings in the city of new york , and an increase in the dcs emea region of approximately $ 100 million . gross profit our gross profit for the year ended september 30 , 2015 increased $ 132.0 million , or 32.7 % , to $ 535.2 million as compared to $ 403.2 million for the corresponding period last year . gross profit provided by acquired companies was $ 206.3 million . for the year ended september 30 , 2015 , gross profit , as a percentage of revenue , decreased to 3.0 % from 4.8 % in the year ended september 30 , 2014. excluding gross profit provided by acquired companies , gross profit decreased $ 74.3 million , or 18.4 % , from the year ended september 30 , 2014. the decreases in gross profit , excluding acquired companies , and gross profit , as a percentage of revenue , for the year ended september 30 , 2015 were primarily due to factors impacting our segments as described below , including a decrease in revenue in the americas region in our dcs segment . 45 equity in earnings of joint ventures our equity in earnings of joint ventures for the year ended september 30 , 2015 was $ 106.2 million as compared to $ 57.9 million in the corresponding period last year . equity in earnings of joint ventures provided by acquired companies was $ 80.1 million . excluding earnings provided by acquired companies , earnings decreased $ 31.8 million , or 54.8 % , from the year ended september 30 , 2014. the decrease in earnings of joint ventures for the year ended september 30 , 2015 , excluding acquisitions , was primarily due to the prior year $ 37.4 million gain on change in control of an unconsolidated joint venture that performs engineering and program management services in the middle east and is included in the company 's dcs segment . the gain related to the excess of fair value over the carrying value of the previously held equity interest in the unconsolidated joint venture . see further discussion in note 7 to the accompanying financial statements . the gain on change in control was partially offset by an impairment of an unrelated joint venture investment . general and administrative expenses our general and administrative expenses for the year ended september 30 , 2015 increased $ 33.1 million , or 40.9 % , to $ 114.0 million as compared to $ 80.9 million for the corresponding period last year . as a percentage of revenue , general and administrative expenses decreased to 0.7 % for the year ended september 30 , 2015 from 1.0 % for the year ended september 30 , 2014. the increase in general and administrative expenses for the year ended september 30 , 2015 was primarily due to increased personnel and related costs associated with the acquisition of urs . acquisition and integration expenses acquisition and integration expenses were comprised of the following ( in millions ) : replace_table_token_13_th other income our other income for the year ended september 30 , 2015 increased $ 16.4 million to $ 19.1 million as compared to $ 2.7 million for the year ended september 30 , 2014. the increase in other income for the year ended september 30 , 2015 was primarily Narrative : debt debt consisted of the following : replace_table_token_28_th the following table presents , in millions , our scheduled maturities as of september 30 , 2015 : replace_table_token_29_th 2014 credit agreement in connection with the acquisition of urs , on october 17 , 2014 , we entered into a new credit agreement ( credit agreement ) consisting of ( i ) a term loan a facility in an aggregate principal amount of $ 1.925 billion , ( ii ) a term loan b facility in an aggregate principal amount of $ 0.76 billion , ( iii ) a revolving credit facility in an aggregate principal amount of $ 1.05 billion , and ( iv ) an incremental performance letter of credit facility in an aggregate principal amount of $ 500 million subject to terms outlined in the credit agreement . these facilities under the credit agreement may be increased by an additional amount of up to $ 500 million . the credit agreement replaced the second amended and restated credit agreement , 57 dated as of june 7 , 2013 , and the fourth amended and restated credit agreement , dated as of january 29 , 2014 , which such prior facilities were terminated and repaid in full on october 17 , 2014. in addition , we paid in full , including a pre-payment penalty of $ 55.6 million , our unsecured senior notes ( 5.43 % series a notes due july 2020 and 1.00 % series b senior discount notes due july 2022 ) . the new credit agreement matures on october 17 , 2019 with respect to the revolving credit facility , the term loan a facility , and the incremental performance letter of credit facility . the term loan b facility matures on october 17 , 2021. certain subsidiaries of the company ( guarantors ) have guaranteed the obligations of the borrowers under the credit agreement . the borrowers ' obligations under the credit agreement are secured by a lien on substantially all of the assets of the company and the guarantors pursuant to a security and pledge agreement ( security agreement ) . the collateral under the security agreement is subject to release upon fulfillment of certain conditions specified in the credit agreement and security agreement .

this business combination is targeted to be completed in the second quarter of 2019 , subject to shareholder and regulatory approval . this is 46 viewed as a complementary market extension business combination that expands berkshire 's presence in southeastern new england , adding a stable deposit franchise and targeting attractive earnings accretion . berkshire increased its quarterly common stock cash dividend by 5 % to $ 0.22 per share in january 2018 , and the common stock dividend was further increased by 5 % to $ 0.23 per share in january 2019. in june , berkshire 's stock was added to the s & p 600 smallcap r index ; this index tracks u.s. small cap companies and is included in the s & p composite 1500 r index . this event widened the visibility of berkshire 's stock . during 2018 , the company obtained an investment grade senior debt rating from a recognized credit rating agency . u.s and regional economic growth were elevated in 2018 compared to prior years . u.s. unemployment fell to the lowest rate in nearly 50 years . the company 's asset quality and credit performance remained favorable throughout the year . the federal reserve board increased its target federal funds interest rate by 0.25 % in each quarter , with the target standing at 2.5 % at year-end . the yield curve flattened , with the ten year treasury rate increasing to 2.63 % from 1.76 % over the course of the year . deposit competition intensified and lending spreads remained pressured in this environment . residential mortgage volumes declined and gain on sale margins remained under pressure . while the company 's interest rate risk position was generally neutral in its static models , the growth of its business and focus on the competitive eastern massachusetts markets resulted in margin pressures as it utilized wholesale funding to build scale , market share , and overall efficiencies across its business lines . comparison of financial condition at december 31 , 2018 and 2017 summary : berkshire offers a competitive mix of loan and deposit products to serve the retail and commercial markets in its regions , and in certain national specialty lending markets . net interest income from these products is its primary revenue source ; the related staff , facilities , and systems are its primary operating expenses . the company emphasizes services and fee revenue business to deepen market and wallet share , diversify revenues , and lessen the requirement for balance sheet liquidity and capital resources . the company has expanded its wholesale lending and deposit practices to provide more product and balance sheet flexibility . the company 's current strategic review includes an assessment of the balance sheet structure and capital management to support earnings and profitability metrics while also supporting liquidity , capital , and interest rate sensitivity objectives . total assets increased by $ 641 million , or 6 % , to $ 12.2 billion in 2018. this was driven by a 9 % increase in total loans and was funded primarily by borrowings , together with a 3 % increase in deposits . shareholders ' equity increased by 4 % , and measured $ 33.30 per common share at year-end . the non-gaap measure of tangible equity per common share increased by 7 % to $ 21.15 , with tangible equity growth outpacing the rate of growth in total assets . investment securities . berkshire 's goal is to maintain a high quality portfolio consisting primarily of liquid investment securities with managed durations . the portfolio generates interest income and provides additional liquidity and interest rate risk management flexibility . the portfolio is managed to contribute to earnings per share and return on equity , taking into account regulatory risk classifications . the company continuously evaluates the portfolio 's size , yield , diversification , risk , and duration . the newly initiated strategic review in 2019 will include a reassessment of the contribution of this portfolio towards the company 's portfolio objectives . the securities portfolio was unchanged at $ 1.9 billion in 2018 , with no significant changes in its composition . some agency mortgage backed securities were shifted from pass throughs to collateralized mortgage backed obligations , and tax advantaged securities declined modestly . the fully taxable equivalent yield of municipal securities decreased due to federal tax reform , but the portfolio generally continued to meet the company 's earnings and liquidity objectives . marketable equity securities increased modestly . based on the adoption of asu 2016-01 in 2018 , unrealized equity gains/losses are reported in current period earnings , and are excluded from the company 's non-gaap measure of adjusted earnings . a stock market decline resulted in a $ 4 million unrealized loss on equity securities recorded to 2018 income . the total net unrealized loss on the investment portfolio was 1.2 % of cost at year-end 2018 , compared to a 0.6 % net unrealized gain at year-end 2017. this reflected generally lower bond prices due to the higher interest rates prevailing at the end of 2018 . 47 the fourth quarter portfolio yield decreased year-to-year to 3.38 % from 3.55 % , while the full year yield decreased to 3.33 % from 3.43 % . due to the federal tax reform , the company had estimated that the fully taxable equivalent yield of the securities portfolio would decrease by approximately 0.15 % . this is primarily due to the municipal bond portfolio , which continues to meet the company 's profitability objectives despite the lower taxable equivalent yield . the year-end weighted average life of the bond portfolio increased slightly to 5.8 years from 5.5 years . the company estimates that the average life of the portfolio would increase to 7.9 years in the event of a 300 basis point increase in interest rates . story_separator_special_tag the commercial loan interest rate swap derivatives include back to back hedges with national bank counterparties , along with risk participation agreements with dealer banks . this represents a 43 % increase related to strong customer demand during the year . derivatives related to mortgage banking decreased by $ 115 million during the year due to a lower volume of mortgage originations . the net fair value of derivatives decreased to $ 2 million from $ 3 million during the year due to the lower mortgage pipeline volume at year-end 2018. stockholders ' equity . berkshire pursues a balance of capital to maintain financial soundness while using common equity efficiently with the goal to produce a strong return on equity and a strong return on tangible equity to support opportunities for franchise growth . long run growth in dividends and in both book value and tangible book value per share are also viewed as elements for shareholder value creation . a sound capital structure reduces risk and enhances shareholder return and access to capital markets to support the company 's banking activities and the markets that it serves . in its payment of dividends , management of treasury shares , issuance of equity compensation , and balancing of capital sources , the company strives to achieve a capital structure that is attractive to the investment community and which satisfies the policy and supervision purposes of the company 's regulators . when berkshire negotiates business combinations , it generally targets to use its common shares as a significant component of merger consideration and to balance the mix of cash and stock to arrive at targeted capital metrics based on the characteristics of the combined banks . the company 's common stock is listed on the new york stock exchange . its preferred shares are non-voting conditionally convertible stock owned by one holder which is also the company 's largest non-institutional holder of common stock as a result of the commerce acquisition . these holdings are restricted pursuant to an agreement filed with the sec . total shareholders ' equity increased by $ 57 million ( or 4 % ) to $ 1.6 billion in 2018 primarily due to the benefit of retained earnings . the non-gaap measure of tangible equity increased by 7 % based on internal capital generation , and slightly exceeded the 6 % increase in total assets . the company focuses on its internal generation of tangible equity to support growth and dividends , as well as to support merger and other non-operating charges . the ratio of 51 equity to assets decreased to 12.7 % from 12.9 % , and the non-gaap ratio of tangible equity to assets increased to 8.6 % from 8.5 % . at year-end , the company had a pending agreement to acquire si financial group . if the merger is completed , each outstanding share of si financial common stock will be converted into the right to receive 0.48 shares of the company 's common stock . the company expects to issue approximately 5.7 million shares as merger consideration . comparison of operating results for the years ended december 31 , 2018 and 2017 summary : berkshire achieved record revenue , earnings , and return on assets in 2018. gaap results included significant charges viewed as non-operating . based on its non-gaap adjusted measures , discussed below , berkshire produced improvement in its earnings per share and roa measures , which are its primary strategic focus . net income increased in 2018 by $ 51 million , or 91 % , to $ 106 million . adjusted net income increased by $ 35 million , or 38 % , to $ 125 million . on a per share basis , net income increased by 65 % to $ 2.29 and adjusted net income per share increased by $ 0.42 , or 18 % , to $ 2.71. this adjusted earnings per share result was consistent with the company 's plan at the start of the year . operations in 2018 benefited from the lower federal tax rate , which reduced the company 's effective tax rate by an estimated 10.8 % . this benefited adjusted net income by approximately $ 17 million , or $ 0.37 per share , and contributed significantly to the year-over-year targeted increase in per share results . this target took into account an estimated $ 0.03 per share cost of an increase in the minimum wage to $ 15/hour which was adopted by the company when the federal tax reform was announced . it also considered the impact of the tax reform on market pricing margins and on the supply and demand for tax advantaged revenue sources , both of which were expected to be adversely affected by tax reform . the operating results of the company further benefited from a full year of fully integrated first choice operations in the mid atlantic and a partial year of the fully integrated commerce operations in eastern massachusetts . the successful integrations of these business combinations were a critical focus for the company . operating results also benefited from organic loan growth and improved efficiency resulting from increased business scale . additionally , most restructuring actions were expected to benefit subsequent earnings , including restructuring actions in 2017 and 2018. operating results were negatively impacted by the $ 19 million decrease in mortgage banking revenue due to lower demand and heightened competition . this negative impact was significantly offset by higher purchased loan accretion resulting from unanticipated high levels of recoveries of purchased credit impaired loans . total purchased loan accretion measured $ 23 million in 2018 , compared to $ 15 million in the prior year . the company expects that the contribution from purchased loan accretion will decrease significantly in 2019 and later years . a strategic review has been initiated to identify opportunities to offset the negative impact of this reduction and lower mortgage banking revenue

capital resources the company and the bank target to maintain sufficient capital to qualify for the “ well capitalized ” designation by federal regulators . berkshire 's long term goal is to use capital efficiently to achieve its objective to become a higher performance company with a targeted return on equity exceeding 10 % . a double digit return on equity is used to benchmark all lending and investment programs , together with all acquisition analyses . the company seeks to maintain a competitive cost of capital and capital structure . the company monitors its ratio of tangible equity/tangible assets . this ratio increased slightly to 8.6 % in 2018 due to strong internal capital generation which supported asset growth , a higher dividend , and improvement in this ratio . berkshire views its internal return on tangible capital as the primary capital resource of the company . the return on tangible equity averaged over 12 % for the four years 2015-2018. the company focuses on internal capital generation to support shareholder dividends and targeted organic growth and also to support non-operating charges and or improvement in its capital ratios . the company has maintained a universal shelf registration of capital securities with the sec . the company sometimes uses issuances of unregistered stock for targeted small contractual payments . the company has an approved stock repurchase program for 500,000 shares . the company normally uses common stock as a significant component of consideration for business combinations . the resulting stock issuances have meaningfully increased the float and market capitalization of the company . due to the stock issuances in 2017 , the company had utilized most of its authorized common and preferred shares .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. this business combination is targeted to be completed in the second quarter of 2019 , subject to shareholder and regulatory approval . this is 46 viewed as a complementary market extension business combination that expands berkshire 's presence in southeastern new england , adding a stable deposit franchise and targeting attractive earnings accretion . berkshire increased its quarterly common stock cash dividend by 5 % to $ 0.22 per share in january 2018 , and the common stock dividend was further increased by 5 % to $ 0.23 per share in january 2019. in june , berkshire 's stock was added to the s & p 600 smallcap r index ; this index tracks u.s. small cap companies and is included in the s & p composite 1500 r index . this event widened the visibility of berkshire 's stock . during 2018 , the company obtained an investment grade senior debt rating from a recognized credit rating agency . u.s and regional economic growth were elevated in 2018 compared to prior years . u.s. unemployment fell to the lowest rate in nearly 50 years . the company 's asset quality and credit performance remained favorable throughout the year . the federal reserve board increased its target federal funds interest rate by 0.25 % in each quarter , with the target standing at 2.5 % at year-end . the yield curve flattened , with the ten year treasury rate increasing to 2.63 % from 1.76 % over the course of the year . deposit competition intensified and lending spreads remained pressured in this environment . residential mortgage volumes declined and gain on sale margins remained under pressure . while the company 's interest rate risk position was generally neutral in its static models , the growth of its business and focus on the competitive eastern massachusetts markets resulted in margin pressures as it utilized wholesale funding to build scale , market share , and overall efficiencies across its business lines . comparison of financial condition at december 31 , 2018 and 2017 summary : berkshire offers a competitive mix of loan and deposit products to serve the retail and commercial markets in its regions , and in certain national specialty lending markets . net interest income from these products is its primary revenue source ; the related staff , facilities , and systems are its primary operating expenses . the company emphasizes services and fee revenue business to deepen market and wallet share , diversify revenues , and lessen the requirement for balance sheet liquidity and capital resources . the company has expanded its wholesale lending and deposit practices to provide more product and balance sheet flexibility . the company 's current strategic review includes an assessment of the balance sheet structure and capital management to support earnings and profitability metrics while also supporting liquidity , capital , and interest rate sensitivity objectives . total assets increased by $ 641 million , or 6 % , to $ 12.2 billion in 2018. this was driven by a 9 % increase in total loans and was funded primarily by borrowings , together with a 3 % increase in deposits . shareholders ' equity increased by 4 % , and measured $ 33.30 per common share at year-end . the non-gaap measure of tangible equity per common share increased by 7 % to $ 21.15 , with tangible equity growth outpacing the rate of growth in total assets . investment securities . berkshire 's goal is to maintain a high quality portfolio consisting primarily of liquid investment securities with managed durations . the portfolio generates interest income and provides additional liquidity and interest rate risk management flexibility . the portfolio is managed to contribute to earnings per share and return on equity , taking into account regulatory risk classifications . the company continuously evaluates the portfolio 's size , yield , diversification , risk , and duration . the newly initiated strategic review in 2019 will include a reassessment of the contribution of this portfolio towards the company 's portfolio objectives . the securities portfolio was unchanged at $ 1.9 billion in 2018 , with no significant changes in its composition . some agency mortgage backed securities were shifted from pass throughs to collateralized mortgage backed obligations , and tax advantaged securities declined modestly . the fully taxable equivalent yield of municipal securities decreased due to federal tax reform , but the portfolio generally continued to meet the company 's earnings and liquidity objectives . marketable equity securities increased modestly . based on the adoption of asu 2016-01 in 2018 , unrealized equity gains/losses are reported in current period earnings , and are excluded from the company 's non-gaap measure of adjusted earnings . a stock market decline resulted in a $ 4 million unrealized loss on equity securities recorded to 2018 income . the total net unrealized loss on the investment portfolio was 1.2 % of cost at year-end 2018 , compared to a 0.6 % net unrealized gain at year-end 2017. this reflected generally lower bond prices due to the higher interest rates prevailing at the end of 2018 . 47 the fourth quarter portfolio yield decreased year-to-year to 3.38 % from 3.55 % , while the full year yield decreased to 3.33 % from 3.43 % . due to the federal tax reform , the company had estimated that the fully taxable equivalent yield of the securities portfolio would decrease by approximately 0.15 % . this is primarily due to the municipal bond portfolio , which continues to meet the company 's profitability objectives despite the lower taxable equivalent yield . the year-end weighted average life of the bond portfolio increased slightly to 5.8 years from 5.5 years . the company estimates that the average life of the portfolio would increase to 7.9 years in the event of a 300 basis point increase in interest rates . story_separator_special_tag the commercial loan interest rate swap derivatives include back to back hedges with national bank counterparties , along with risk participation agreements with dealer banks . this represents a 43 % increase related to strong customer demand during the year . derivatives related to mortgage banking decreased by $ 115 million during the year due to a lower volume of mortgage originations . the net fair value of derivatives decreased to $ 2 million from $ 3 million during the year due to the lower mortgage pipeline volume at year-end 2018. stockholders ' equity . berkshire pursues a balance of capital to maintain financial soundness while using common equity efficiently with the goal to produce a strong return on equity and a strong return on tangible equity to support opportunities for franchise growth . long run growth in dividends and in both book value and tangible book value per share are also viewed as elements for shareholder value creation . a sound capital structure reduces risk and enhances shareholder return and access to capital markets to support the company 's banking activities and the markets that it serves . in its payment of dividends , management of treasury shares , issuance of equity compensation , and balancing of capital sources , the company strives to achieve a capital structure that is attractive to the investment community and which satisfies the policy and supervision purposes of the company 's regulators . when berkshire negotiates business combinations , it generally targets to use its common shares as a significant component of merger consideration and to balance the mix of cash and stock to arrive at targeted capital metrics based on the characteristics of the combined banks . the company 's common stock is listed on the new york stock exchange . its preferred shares are non-voting conditionally convertible stock owned by one holder which is also the company 's largest non-institutional holder of common stock as a result of the commerce acquisition . these holdings are restricted pursuant to an agreement filed with the sec . total shareholders ' equity increased by $ 57 million ( or 4 % ) to $ 1.6 billion in 2018 primarily due to the benefit of retained earnings . the non-gaap measure of tangible equity increased by 7 % based on internal capital generation , and slightly exceeded the 6 % increase in total assets . the company focuses on its internal generation of tangible equity to support growth and dividends , as well as to support merger and other non-operating charges . the ratio of 51 equity to assets decreased to 12.7 % from 12.9 % , and the non-gaap ratio of tangible equity to assets increased to 8.6 % from 8.5 % . at year-end , the company had a pending agreement to acquire si financial group . if the merger is completed , each outstanding share of si financial common stock will be converted into the right to receive 0.48 shares of the company 's common stock . the company expects to issue approximately 5.7 million shares as merger consideration . comparison of operating results for the years ended december 31 , 2018 and 2017 summary : berkshire achieved record revenue , earnings , and return on assets in 2018. gaap results included significant charges viewed as non-operating . based on its non-gaap adjusted measures , discussed below , berkshire produced improvement in its earnings per share and roa measures , which are its primary strategic focus . net income increased in 2018 by $ 51 million , or 91 % , to $ 106 million . adjusted net income increased by $ 35 million , or 38 % , to $ 125 million . on a per share basis , net income increased by 65 % to $ 2.29 and adjusted net income per share increased by $ 0.42 , or 18 % , to $ 2.71. this adjusted earnings per share result was consistent with the company 's plan at the start of the year . operations in 2018 benefited from the lower federal tax rate , which reduced the company 's effective tax rate by an estimated 10.8 % . this benefited adjusted net income by approximately $ 17 million , or $ 0.37 per share , and contributed significantly to the year-over-year targeted increase in per share results . this target took into account an estimated $ 0.03 per share cost of an increase in the minimum wage to $ 15/hour which was adopted by the company when the federal tax reform was announced . it also considered the impact of the tax reform on market pricing margins and on the supply and demand for tax advantaged revenue sources , both of which were expected to be adversely affected by tax reform . the operating results of the company further benefited from a full year of fully integrated first choice operations in the mid atlantic and a partial year of the fully integrated commerce operations in eastern massachusetts . the successful integrations of these business combinations were a critical focus for the company . operating results also benefited from organic loan growth and improved efficiency resulting from increased business scale . additionally , most restructuring actions were expected to benefit subsequent earnings , including restructuring actions in 2017 and 2018. operating results were negatively impacted by the $ 19 million decrease in mortgage banking revenue due to lower demand and heightened competition . this negative impact was significantly offset by higher purchased loan accretion resulting from unanticipated high levels of recoveries of purchased credit impaired loans . total purchased loan accretion measured $ 23 million in 2018 , compared to $ 15 million in the prior year . the company expects that the contribution from purchased loan accretion will decrease significantly in 2019 and later years . a strategic review has been initiated to identify opportunities to offset the negative impact of this reduction and lower mortgage banking revenue Narrative : capital resources the company and the bank target to maintain sufficient capital to qualify for the “ well capitalized ” designation by federal regulators . berkshire 's long term goal is to use capital efficiently to achieve its objective to become a higher performance company with a targeted return on equity exceeding 10 % . a double digit return on equity is used to benchmark all lending and investment programs , together with all acquisition analyses . the company seeks to maintain a competitive cost of capital and capital structure . the company monitors its ratio of tangible equity/tangible assets . this ratio increased slightly to 8.6 % in 2018 due to strong internal capital generation which supported asset growth , a higher dividend , and improvement in this ratio . berkshire views its internal return on tangible capital as the primary capital resource of the company . the return on tangible equity averaged over 12 % for the four years 2015-2018. the company focuses on internal capital generation to support shareholder dividends and targeted organic growth and also to support non-operating charges and or improvement in its capital ratios . the company has maintained a universal shelf registration of capital securities with the sec . the company sometimes uses issuances of unregistered stock for targeted small contractual payments . the company has an approved stock repurchase program for 500,000 shares . the company normally uses common stock as a significant component of consideration for business combinations . the resulting stock issuances have meaningfully increased the float and market capitalization of the company . due to the stock issuances in 2017 , the company had utilized most of its authorized common and preferred shares .

historically , the majority of our advertising revenue has been generated by our relationship with google . while google continues to be our primary advertising vendor for advertising monetization , we have been significantly diversifying our monetization partners and expect to continue to do so in the future . google also serves as one of our primary technology platform partners in connection with our programmatic advertising sales offering . any change in the type of services that google provides to us , or to the terms of our agreements with google , could adversely impact our results of operations . sale of cracked business in april 2016 , we completed the sale of substantially all of the assets relating to our cracked business , including the cracked.com humor website , to scripps media , inc. , a subsidiary of the e.w . scripps company , for a cash purchase price of $ 39.0 million . a portion of the purchase price equal to $ 3.9 million was placed into escrow at closing to secure certain of our post-closing indemnification obligations . in july 2017 , the full escrow amount of $ 3.9 million was released and paid to us following the expiration of the indemnification period . revenue for the cracked business for the year ended december 31 , 2016 ( through the sale date of april 12 , 2016 ) was $ 1.8 million . the cracked business had a pre-tax loss of $ 1.9 million for the year ended december 31 , 2016 ( through the sale date of april 12 , 2016 ) , excluding allocations for corporate costs and including stock-based compensation expense resulting from the sale . content studio realignment in june 2016 , we took certain actions to streamline our content publishing studio business and better integrate the business into our broader media segment . as part of this realignment , we reduced the staffing within this business by 35 full-time employees and integrated the remaining employees into our other media businesses . follow-on public offering of common stock on february 12 , 2018 , we completed an underwritten registered public offering of 3,373,332 shares of our common stock , which included full exercise of the underwriter 's option to purchase additional shares of common stock , at a public offering price of $ 7.50 per share . we received aggregate net proceeds from the offering of $ 23.4 million , after deducting the underwriting discounts and commissions and offering expenses . the net proceeds from the offering have been and continue to be used for working capital and general corporate purposes . we may also use a portion of the net proceeds to acquire or invest in complementary businesses , products and technologies . acquisition of well+good on june 5 , 2018 , we acquired 100 % of the issued and outstanding membership interests of well+good llc ( “ well+good ” ) , a health and wellness media company , for an initial payment of $ 12.3 million in cash , comprised of a $ 10.0 million purchase price and an additional $ 2.3 million after giving effect to working capital adjustments as of the closing date . of the aggregate $ 12.3 million in cash paid at closing , $ 0.8 million was held back to secure post-closing indemnification obligations of the sellers and or post-closing adjustments to the purchase price . any remaining portion of the holdback amount not subject to then-pending claims will be paid on the one year anniversary of the closing of the acquisition . in addition , we agreed to pay certain key employees/equity holders of well+good deferred compensation targeted at $ 9.0 million , payable over a three year period upon the achievement of certain operating targets through the end of the 2020 fiscal year , subject to reduction , increase and acceleration in certain circumstances . the deferred compensation is considered post-combination consideration and will be expensed over the service period in the consolidated statements of operations . revenue for the years ended december 31 , 2018 , 2017 and 2016 , we reported revenue of $ 155.0 million , $ 129.0 million and $ 113.5 million , respectively . for the years ended december 31 , 2018 , 2017 and 2016 , our marketplaces revenue 34 accounted for 61 % , 65 % and 58 % of our total revenue , respectively , and our media revenue accounted for 39 % , 35 % and 42 % of our total revenue , respectively . the revenue generated by our marketplaces segment has higher costs associated with it as compared to our media segment due to variable product costs , including outsourced product manufacturing costs , artist payments , marketing costs , and shipping and handling costs . if our revenue sources shift from our media segment to our marketplaces segment , our total costs relative to our revenue will be negatively impacted . key business metrics we regularly review a number of business metrics , including the following key metrics , to evaluate our business , measure the performance of our business model , identify trends impacting our business , determine resource allocations , formulate financial projections and make strategic business decisions . measures which we believe are the primary indicators of our performance are described below . we believe that the number of transactions , gross transaction value , number of visits and revenue per visit are currently the key metrics for understanding our results of operations . in the first quarter of 2018 , we added gross transaction value as a key metric for our marketplaces segment as w e believe that gross transaction value provides a useful measure of the overall volume that flows through our marketplaces in a given period and provides insight into the growth of the business . story_separator_special_tag replace_table_token_7_th 40 as a percentage of revenue : replace_table_token_8_th segment results ( in thousands ) : replace_table_token_9_th ( 1 ) segment operating expenses reflects operating expenses that are directly attributable to the operating segment , not including corporate and unallocated expenses , and also excluding the following : ( a ) depreciation expense ; ( b ) amortization of intangible assets ; ( c ) share-based compensation expense ; ( d ) interest and other income ( expense ) ; ( e ) income taxes ; and ( f ) contingent payments to certain key employees/equity holders of acquired businesses . 41 ( 2 ) corporate expenses include operating expenses that are not directly attributable to the operating segments , including : corporate information technology , marketing , and general and administrative support functions and also excludes the following : ( a ) depreciation expense ; ( b ) amortization of intangible assets ; ( c ) share-based compensation expense ; ( d ) interest and other income ( expense ) ; and ( e ) income taxes . ( 3 ) segment operating contribution reflects segment revenue less segment operating expenses . operating contribution has certain limitations in that it does not take into account the impact to the statements of operations of certain expenses and is not directly comparable to similar measures used by other companies . ( 4 ) represents such items , when applicable , as ( a ) legal , accounting and other professional service fees directly attributable to acquisition , disposition or corporate realignment activities , ( b ) employee severance , ( c ) contingent payments to certain key employees/equity holders of acquired businesses , and ( d ) other payments attributable to acquisition , disposition or corporate realignment activities . ( 5 ) adjusted ebitda reflects net income ( loss ) excluding interest ( income ) expense , income tax expense ( benefit ) , and certain other non-cash or non-recurring items impacting net income ( loss ) from time to time , principally comprised of depreciation and amortization , stock-based compensation , contingent payments to certain key employees/equity holders of acquired businesses and other payments attributable to acquisition , disposition or corporate realignment activities . see note 15 of our notes to consolidated financial statements includes in part iv , item 15 , “ exhibits , financial statement schedules ” of this annual report on form 10-k and “ non-gaap financial measures ” above for more information and reconciliation of segment results to consolidated gaap operating income ( loss ) . marketplaces revenue marketplaces revenue increased by $ 9.8 million , or 12 % , to $ 93.9 million for the year ended december 31 , 2018 , as compared to $ 84.1 million for the year ended december 31 , 2017. for the year ended december 31 , 2018 , marketplaces gross transaction value was $ 117.0 million as compared to $ 105.3 million in the prior year period , reflecting an increase of 11 % , driven by an increase in average order value resulting from a decrease in promotions , growth in saatchi art group , including the hosting of three additional fairs as compared to the prior year period , and the acquisition of deny designs in may 2017. gross transaction value excludes the revenue from certain transactions generated by saatchi art 's the other art fair , such as sales of stand space to artists at fairs , sponsorship fees and ticket sales . the number of transactions remained relatively flat at 1.4 million for each of the years ended december 31 , 2018 and 2017 , primarily due to our decision to focus on sales generated through our platforms directly rather than selling through third-party marketplaces as well as lower international sales on society6 , partially offset by the acquisition of deny designs , increased conversion rates and the hosting of three additional art fairs as compared to the prior year period . marketplaces revenue increased by $ 18.0 million , or 27 % , to $ 84.1 million for the year ended december 31 , 2017 , as compared to $ 66.1 million for the year ended december 31 , 2016. for the year ended december 31 , 2017 , marketplaces gross transaction value was $ 105.3 million as compared to $ 83.7 million in the prior year period , reflecting an increase of 26 % , driven by an increase in average order value and number of transactions , including from the acquisition of deny designs . gross transaction value excludes the revenue from certain transactions generated by saatchi art 's the other art fair , such as sales of stand space to artists at fairs , sponsorship fees and ticket sales . the number of transactions increased 22 % to 1.4 million in the year ended december 31 , 2017 from 1.2 million in the prior year period , primarily due to increased conversion rates and the acquisitions of deny designs . media revenue media revenue increased by $ 16.2 million , or 36 % , to $ 61.1 million for the year ended december 31 , 2018 , as compared to $ 44.9 million for the year ended december 31 , 2017. google analytics data shows that visits remained relatively flat with 2,844 million visits in the year ended december 31 , 2018 as compared to 2,846 million visits in the year ended december 31 , 2017 due to an august 1 , 2018 google search engine update that negatively impacted the volume of referral traffic to many health related sites , including livestrong.com and the removal of content as part of our efforts to refine our content library on livestrong.com , partially offset by traffic growth across certain of our owned and operated properties and the acquisition of well+good . rpv , calculated using visits per google analytics , increased by 42 36 % , to $ 21.48 in the

cash flows from operating activities year ended december 31 , 2018 net cash used in operating activities for the year ended december 31 , 2018 was $ 3.3 million , a decrease of $ 8.4 million compared to the year ended december 31 , 2017. the decrease in net cash used in operating activities is primarily due to improvement in our operating results and lower non-cash charges for depreciation and amortization offsetting operating losses as compared to the year ended december 31 , 2017. our net loss during the period was $ 23.2 million , which included non-cash charges of $ 19.7 million related to depreciation , amortization and stock-based compensation . cash flow from operating activities was also impacted by a decrease in our working capital , including changes in accounts receivable , deferred revenue , prepaid expenses and accounts payable of $ 4.1 million , offset in part by changes in accrued expenses and other long-term assets of $ 4.2 million . the changes in our accounts receivable and deferred revenue were primarily due to ordinary course variances in the timing of collections associated with increased receivables related to our media segment , including from the acquisition of well+good . year ended december 31 , 2017 net cash used in operating activities for the year ended december 31 , 2017 was $ 11.7 million , a decrease of $ 1.4 million compared to the year ended december 31 , 2016. the decrease in net cash used in operating activities is primarily due to improvement in operating results and lower non-cash charges for depreciation and amortization offsetting operating losses as compared to the year ended december 31 , 2016. our net loss during the period was $ 31.1 million , which included non-cash charges of $ 20.4 million related to depreciation , amortization and stock-based compensation .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. historically , the majority of our advertising revenue has been generated by our relationship with google . while google continues to be our primary advertising vendor for advertising monetization , we have been significantly diversifying our monetization partners and expect to continue to do so in the future . google also serves as one of our primary technology platform partners in connection with our programmatic advertising sales offering . any change in the type of services that google provides to us , or to the terms of our agreements with google , could adversely impact our results of operations . sale of cracked business in april 2016 , we completed the sale of substantially all of the assets relating to our cracked business , including the cracked.com humor website , to scripps media , inc. , a subsidiary of the e.w . scripps company , for a cash purchase price of $ 39.0 million . a portion of the purchase price equal to $ 3.9 million was placed into escrow at closing to secure certain of our post-closing indemnification obligations . in july 2017 , the full escrow amount of $ 3.9 million was released and paid to us following the expiration of the indemnification period . revenue for the cracked business for the year ended december 31 , 2016 ( through the sale date of april 12 , 2016 ) was $ 1.8 million . the cracked business had a pre-tax loss of $ 1.9 million for the year ended december 31 , 2016 ( through the sale date of april 12 , 2016 ) , excluding allocations for corporate costs and including stock-based compensation expense resulting from the sale . content studio realignment in june 2016 , we took certain actions to streamline our content publishing studio business and better integrate the business into our broader media segment . as part of this realignment , we reduced the staffing within this business by 35 full-time employees and integrated the remaining employees into our other media businesses . follow-on public offering of common stock on february 12 , 2018 , we completed an underwritten registered public offering of 3,373,332 shares of our common stock , which included full exercise of the underwriter 's option to purchase additional shares of common stock , at a public offering price of $ 7.50 per share . we received aggregate net proceeds from the offering of $ 23.4 million , after deducting the underwriting discounts and commissions and offering expenses . the net proceeds from the offering have been and continue to be used for working capital and general corporate purposes . we may also use a portion of the net proceeds to acquire or invest in complementary businesses , products and technologies . acquisition of well+good on june 5 , 2018 , we acquired 100 % of the issued and outstanding membership interests of well+good llc ( “ well+good ” ) , a health and wellness media company , for an initial payment of $ 12.3 million in cash , comprised of a $ 10.0 million purchase price and an additional $ 2.3 million after giving effect to working capital adjustments as of the closing date . of the aggregate $ 12.3 million in cash paid at closing , $ 0.8 million was held back to secure post-closing indemnification obligations of the sellers and or post-closing adjustments to the purchase price . any remaining portion of the holdback amount not subject to then-pending claims will be paid on the one year anniversary of the closing of the acquisition . in addition , we agreed to pay certain key employees/equity holders of well+good deferred compensation targeted at $ 9.0 million , payable over a three year period upon the achievement of certain operating targets through the end of the 2020 fiscal year , subject to reduction , increase and acceleration in certain circumstances . the deferred compensation is considered post-combination consideration and will be expensed over the service period in the consolidated statements of operations . revenue for the years ended december 31 , 2018 , 2017 and 2016 , we reported revenue of $ 155.0 million , $ 129.0 million and $ 113.5 million , respectively . for the years ended december 31 , 2018 , 2017 and 2016 , our marketplaces revenue 34 accounted for 61 % , 65 % and 58 % of our total revenue , respectively , and our media revenue accounted for 39 % , 35 % and 42 % of our total revenue , respectively . the revenue generated by our marketplaces segment has higher costs associated with it as compared to our media segment due to variable product costs , including outsourced product manufacturing costs , artist payments , marketing costs , and shipping and handling costs . if our revenue sources shift from our media segment to our marketplaces segment , our total costs relative to our revenue will be negatively impacted . key business metrics we regularly review a number of business metrics , including the following key metrics , to evaluate our business , measure the performance of our business model , identify trends impacting our business , determine resource allocations , formulate financial projections and make strategic business decisions . measures which we believe are the primary indicators of our performance are described below . we believe that the number of transactions , gross transaction value , number of visits and revenue per visit are currently the key metrics for understanding our results of operations . in the first quarter of 2018 , we added gross transaction value as a key metric for our marketplaces segment as w e believe that gross transaction value provides a useful measure of the overall volume that flows through our marketplaces in a given period and provides insight into the growth of the business . story_separator_special_tag replace_table_token_7_th 40 as a percentage of revenue : replace_table_token_8_th segment results ( in thousands ) : replace_table_token_9_th ( 1 ) segment operating expenses reflects operating expenses that are directly attributable to the operating segment , not including corporate and unallocated expenses , and also excluding the following : ( a ) depreciation expense ; ( b ) amortization of intangible assets ; ( c ) share-based compensation expense ; ( d ) interest and other income ( expense ) ; ( e ) income taxes ; and ( f ) contingent payments to certain key employees/equity holders of acquired businesses . 41 ( 2 ) corporate expenses include operating expenses that are not directly attributable to the operating segments , including : corporate information technology , marketing , and general and administrative support functions and also excludes the following : ( a ) depreciation expense ; ( b ) amortization of intangible assets ; ( c ) share-based compensation expense ; ( d ) interest and other income ( expense ) ; and ( e ) income taxes . ( 3 ) segment operating contribution reflects segment revenue less segment operating expenses . operating contribution has certain limitations in that it does not take into account the impact to the statements of operations of certain expenses and is not directly comparable to similar measures used by other companies . ( 4 ) represents such items , when applicable , as ( a ) legal , accounting and other professional service fees directly attributable to acquisition , disposition or corporate realignment activities , ( b ) employee severance , ( c ) contingent payments to certain key employees/equity holders of acquired businesses , and ( d ) other payments attributable to acquisition , disposition or corporate realignment activities . ( 5 ) adjusted ebitda reflects net income ( loss ) excluding interest ( income ) expense , income tax expense ( benefit ) , and certain other non-cash or non-recurring items impacting net income ( loss ) from time to time , principally comprised of depreciation and amortization , stock-based compensation , contingent payments to certain key employees/equity holders of acquired businesses and other payments attributable to acquisition , disposition or corporate realignment activities . see note 15 of our notes to consolidated financial statements includes in part iv , item 15 , “ exhibits , financial statement schedules ” of this annual report on form 10-k and “ non-gaap financial measures ” above for more information and reconciliation of segment results to consolidated gaap operating income ( loss ) . marketplaces revenue marketplaces revenue increased by $ 9.8 million , or 12 % , to $ 93.9 million for the year ended december 31 , 2018 , as compared to $ 84.1 million for the year ended december 31 , 2017. for the year ended december 31 , 2018 , marketplaces gross transaction value was $ 117.0 million as compared to $ 105.3 million in the prior year period , reflecting an increase of 11 % , driven by an increase in average order value resulting from a decrease in promotions , growth in saatchi art group , including the hosting of three additional fairs as compared to the prior year period , and the acquisition of deny designs in may 2017. gross transaction value excludes the revenue from certain transactions generated by saatchi art 's the other art fair , such as sales of stand space to artists at fairs , sponsorship fees and ticket sales . the number of transactions remained relatively flat at 1.4 million for each of the years ended december 31 , 2018 and 2017 , primarily due to our decision to focus on sales generated through our platforms directly rather than selling through third-party marketplaces as well as lower international sales on society6 , partially offset by the acquisition of deny designs , increased conversion rates and the hosting of three additional art fairs as compared to the prior year period . marketplaces revenue increased by $ 18.0 million , or 27 % , to $ 84.1 million for the year ended december 31 , 2017 , as compared to $ 66.1 million for the year ended december 31 , 2016. for the year ended december 31 , 2017 , marketplaces gross transaction value was $ 105.3 million as compared to $ 83.7 million in the prior year period , reflecting an increase of 26 % , driven by an increase in average order value and number of transactions , including from the acquisition of deny designs . gross transaction value excludes the revenue from certain transactions generated by saatchi art 's the other art fair , such as sales of stand space to artists at fairs , sponsorship fees and ticket sales . the number of transactions increased 22 % to 1.4 million in the year ended december 31 , 2017 from 1.2 million in the prior year period , primarily due to increased conversion rates and the acquisitions of deny designs . media revenue media revenue increased by $ 16.2 million , or 36 % , to $ 61.1 million for the year ended december 31 , 2018 , as compared to $ 44.9 million for the year ended december 31 , 2017. google analytics data shows that visits remained relatively flat with 2,844 million visits in the year ended december 31 , 2018 as compared to 2,846 million visits in the year ended december 31 , 2017 due to an august 1 , 2018 google search engine update that negatively impacted the volume of referral traffic to many health related sites , including livestrong.com and the removal of content as part of our efforts to refine our content library on livestrong.com , partially offset by traffic growth across certain of our owned and operated properties and the acquisition of well+good . rpv , calculated using visits per google analytics , increased by 42 36 % , to $ 21.48 in the Narrative : cash flows from operating activities year ended december 31 , 2018 net cash used in operating activities for the year ended december 31 , 2018 was $ 3.3 million , a decrease of $ 8.4 million compared to the year ended december 31 , 2017. the decrease in net cash used in operating activities is primarily due to improvement in our operating results and lower non-cash charges for depreciation and amortization offsetting operating losses as compared to the year ended december 31 , 2017. our net loss during the period was $ 23.2 million , which included non-cash charges of $ 19.7 million related to depreciation , amortization and stock-based compensation . cash flow from operating activities was also impacted by a decrease in our working capital , including changes in accounts receivable , deferred revenue , prepaid expenses and accounts payable of $ 4.1 million , offset in part by changes in accrued expenses and other long-term assets of $ 4.2 million . the changes in our accounts receivable and deferred revenue were primarily due to ordinary course variances in the timing of collections associated with increased receivables related to our media segment , including from the acquisition of well+good . year ended december 31 , 2017 net cash used in operating activities for the year ended december 31 , 2017 was $ 11.7 million , a decrease of $ 1.4 million compared to the year ended december 31 , 2016. the decrease in net cash used in operating activities is primarily due to improvement in operating results and lower non-cash charges for depreciation and amortization offsetting operating losses as compared to the year ended december 31 , 2016. our net loss during the period was $ 31.1 million , which included non-cash charges of $ 20.4 million related to depreciation , amortization and stock-based compensation .

in order to more efficiently and effectively identify and serve our customer needs , we classify our worldwide operations into four geographic regions . the north america region is primarily comprised of our operations in the u.s. the latin america region is primarily comprised of our operations in argentina , bolivia , brazil , and mexico . the middle east and africa region is primarily comprised of our operations in bahrain , iraq , oman , nigeria and the united arab emirates . the asia pacific region is primarily comprised of our operations in china , indonesia , singapore and thailand . 30 industry conditions and trends our business environment and corresponding operating results are affected by the level of energy industry spending for the exploration , development and production of oil and natural gas reserves , along with spending within the midstream space . spending by oil and natural gas exploration and production companies and midstream providers is dependent upon these companies ' forecasts regarding the expected future supply , demand and pricing of oil and natural gas products as well as their estimates of risk-adjusted costs to find , develop , produce , transport , and treat these reserves . although we believe our contract operations business is typically less impacted by short-term commodity prices than certain other energy products , solutions , and service providers , changes in oil and natural gas exploration and production spending normally result in changes in demand for our products , solutions and services . beginning in 2019 , there has been a shift in the industry that was exacerbated by the covid-19 pandemic . the industry has seen a structural change in the behavior of exploration and production producers and midstream providers , predominately in the u.s. , but internationally as well , to change their focus from growth to one emphasizing cash flow and returns . this has caused a significant reduction in their capital spending plans in order to drive incremental cash flow and has put constraints on the amount of new projects that customers sanction . we believe this is likely to continue to persist into 2021. the covid-19 pandemic has created a demand shock to the system that further exacerbated the supply demand imbalance that was already taking place . the timing of the rebalancing of supply and demand and improvement of pricing for crude oil and natural gas resulting in increased spending on new projects remains uncertain . our performance trends and outlook our revenue , earnings and financial position are affected by , among other things , market conditions that impact demand and pricing for natural gas compression , oil and natural gas production and processing and produced water treatment solutions along with our customers ' decisions to use our products , solutions and services , use our competitors ' products and services or own and operate the equipment themselves . aggregate booking activity levels for our product sales segment in north america and international markets during the year ended december 31 , 2020 was approximately $ 456.5 million , which represents an increase of 96 % compared to the year ended december 31 , 2019. the increase in bookings was primarily driven by a large processing plant order in the middle east . fluctuations in the size and timing of customers ' requests for bid proposals and awards of new contracts tend to create variability in booking activity levels from period to period . historically , oil , natural gas and natural gas liquids and the level of drilling and exploration activity in north america have been volatile . the henry hub spot price for natural gas was $ 2.36 per mmbtu at december 31 , 2020 , which was 13 % higher than prices at december 31 , 2019 , and the u.s. natural gas liquid composite price was $ 4.97 per mmbtu for the month of october 2020 , which was 7 % lower than prices for the month of december 2019. in addition , the west texas intermediate crude oil spot price as of december 31 , 2020 was 21 % lower than prices at december 31 , 2019. volatility in demand for energy and in commodity prices as well as an industry trend towards disciplined capital spending and improving returns have caused timing uncertainties in demand for our products recently . these uncertainties have caused delays in the timing of new equipment orders and lower bookings in north america in our product sales segment . booking activity levels for our product sales segment in north america during the year ended december 31 , 2020 were $ 3.2 million , which represents a decrease of 95 % compared to the year ended december 31 , 2019. longer-term fundamentals in our international markets partially depend on international oil and gas infrastructure projects , many of which are based on the longer-term plans of our customers that can be driven by their local market demand and local pricing for natural gas . as a result , we believe our international customers make decisions based more on longer-term fundamentals that may be less tied to near term commodity prices than our north american customers . over the long term , we believe the demand for our products , solutions and services in international markets will continue , and we expect to have opportunities to grow our international businesses . booking activity levels for our manufactured products in international markets during the year ended december 31 , 2020 were $ 453.3 million , which represents an increase of 177 % compared to the year ended december 31 , 2019. the timing of customer orders and change in activity levels by our customers is difficult to predict . as a result , our ability to project the anticipated activity booking levels for our business , and particularly our product sales segment , is limited . story_separator_special_tag costs and expenses ( dollars in thousands ) replace_table_token_10_th selling , general and administrative sg & a expense decreased during the year ended december 31 , 2020 compared to the year ended december 31 , 2019 primarily due to a decrease in compensation costs . during the years ended december 31 , 2020 and 2019. sg & a expense as a percentage of revenue was 20 % and 18 % , respectively . depreciation and amortization depreciation and amortization expense during the year ended december 31 , 2020 compared to the year ended december 31 , 2019 decreased primarily due to a decrease in depreciation expense of approximately $ 35.2 million in the current year period resulting from the sale of equipment on a contract operations contract in the fourth quarter of 2019. this decrease was partially offset by an increase of approximately $ 19.2 million in depreciation for installation costs and equipment on contract operations projects that were not operating in the prior year period and an additional depreciation expense of $ 9.8 million recognized during the year ended december 31 , 2020 on a contract operations project due to changes in the remaining term of a contract . 37 impairments during the years ended december 31 , 2020 and 2019 , in an effort to generate cash from idle assets and reduce holding costs , we reviewed the future deployment of our idle assets used in our contract operations segment for units that were not of the type , configuration , condition , make or model that are cost efficient to maintain and operate . based on this review , we determined that certain idle compressor units and other assets would be retired from future service . the retirement of these units from the active fleet triggered a review of these assets for impairment . as a result , we recorded a $ 10.0 million and $ 52.6 million asset impairment to reduce the book value of each unit to its estimated fair value during the years ended december 31 , 2020 and 2019 , respectively . the fair value of each unit was estimated based on either the expected net sale proceeds compared to other fleet units we recently sold and or a review of other units recently offered for sale by third parties , or the estimated component value or scrap value of each compressor unit . during the third quarter of 2020 , we impaired certain assets in argentina due to the termination of a contract operations project where it was not cost effective to move the assets and try to utilize them with a different customer . as a result , we removed them from the fleet and recorded an impairment of $ 1.7 million to write-down these assets to their approximate fair values for the year ended december 31 , 2020. restructuring and other charges the energy industry 's focus on capital discipline and improving returns has caused delays in the timing of new equipment orders . as a result , in the second quarter of 2019 , we announced a cost reduction plan primarily focused on workforce reductions . we incurred restructuring and other charges associated with these activities of $ 3.6 million and $ 5.9 million during the years ended december 31 , 2020 and 2019 , respectively . in the second quarter of 2018 , we initiated a relocation plan in the latin america region to better align our contract operations business with our customers . as a result of this plan , during the year ended december 31 , 2019 , we incurred restructuring and other charges of $ 0.3 million related to relocation costs . see note 13 to the financial statements for further discussion of these charges . interest expense the increase in interest expense during the year ended december 31 , 2020 compared to the year ended december 31 , 2019 was primarily due to a decrease in capitalized interest , partially offset by a lower average effective interest rate on long-term debt . during the years ended december 31 , 2020 and 2019 , the average daily outstanding borrowings of long-term debt were $ 511.0 million and $ 511.3 million , respectively . story_separator_special_tag liabilities , net , a decrease of $ 8.7 million in inventory and a decrease of $ 19.4 million in accounts payable and other liabilities . working capital cash changes during the year ended december 31 , 2019 included a decrease of $ 37.9 million in accounts receivables , a decrease of $ 14.9 million in accounts payable and other liabilities and a decrease of $ 55.5 million in contract assets and contract liabilities , net . investing activities . the decrease in net cash used in investing activities during the year ended december 31 , 2020 compared to the year ended december 31 , 2019 was primarily attributable to a $ 113.4 million decrease in capital expenditures . the decrease in capital expenditures was primarily driven by the timing of awards and growth capital expenditures for new contract operations projects . financing activities . the increase in net cash provided by financing activities during the year ended december 31 , 2020 compared to the year ended december 31 , 2019 was primarily attributable to an increase in net borrowings of $ 82.6 million on our long-term debt and a decrease of $ 44.1 million in purchases of treasury stock . discontinued operations . the increase in net cash used in discontinued operations during the year ended december 31 , 2020 compared to year ended december 31 , 2019 was primarily attributable to working capital changes related to our u.s. compression fabrication business partially offset by proceeds received from the sale of the u.s. compression fabrication business . capital requirements . our contract operations business is capital intensive , requiring significant investment to maintain and upgrade existing operations . our capital spending is primarily dependent on the demand for our contract

extinguishment of debt during the year ended december 31 , 2020 , we purchased and retired $ 25.0 million principal amount of our 8.125 % senior unsecured notes due 2025 ( the “ 2017 notes ” ) for $ 21.5 million including $ 0.3 million of accrued interest . during the year ended december 31 , 2020 , we recognized a gain on extinguishment of debt of $ 3.6 million , which was calculated as the difference between the repurchase price and the carrying amount of the 8.125 % senior unsecured notes due 2025 , partially offset by $ 0.2 million in related deferred financing costs . other ( income ) expense , net the change in other ( income ) expense , net , was primarily due to foreign currency losses of $ 5.9 million during the year ended december 31 , 2020 compared to foreign currency losses of $ 3.8 million during the year ended december 31 , 2019. foreign currency losses included translation gains of $ 4.1 million and $ 0.3 million during the years ended december 31 , 2020 and 2019 , respectively , related to the currency remeasurement of our foreign subsidiaries ' non-functional currency denominated intercompany obligations . during the year ended december 31 , 2020 and 2019 , we recognized losses on foreign currency exchange contracts of $ 0.4 million and $ 0.8 million , respectively . the change in other ( income ) expense , net , also included a decrease of $ 1.3 million in gains on sale of property , plant and equipment in the current year period . 38 income taxes ( dollars in thousands ) replace_table_token_11_th our effective tax rate is affected by recurring items , such as tax rates in foreign jurisdictions and the relative amounts of income we earn , or losses we incur , in those jurisdictions . it is also affected by discrete items that may occur in any given year but are not consistent from year to year . our effective tax rate is also affected by valuation allowances recorded against loss carryforwards in the u.s. and certain other jurisdictions , foreign withholding taxes and changes in foreign currency exchange rates . for the year ended december 31 , 2020 : a $ 11.6

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. in order to more efficiently and effectively identify and serve our customer needs , we classify our worldwide operations into four geographic regions . the north america region is primarily comprised of our operations in the u.s. the latin america region is primarily comprised of our operations in argentina , bolivia , brazil , and mexico . the middle east and africa region is primarily comprised of our operations in bahrain , iraq , oman , nigeria and the united arab emirates . the asia pacific region is primarily comprised of our operations in china , indonesia , singapore and thailand . 30 industry conditions and trends our business environment and corresponding operating results are affected by the level of energy industry spending for the exploration , development and production of oil and natural gas reserves , along with spending within the midstream space . spending by oil and natural gas exploration and production companies and midstream providers is dependent upon these companies ' forecasts regarding the expected future supply , demand and pricing of oil and natural gas products as well as their estimates of risk-adjusted costs to find , develop , produce , transport , and treat these reserves . although we believe our contract operations business is typically less impacted by short-term commodity prices than certain other energy products , solutions , and service providers , changes in oil and natural gas exploration and production spending normally result in changes in demand for our products , solutions and services . beginning in 2019 , there has been a shift in the industry that was exacerbated by the covid-19 pandemic . the industry has seen a structural change in the behavior of exploration and production producers and midstream providers , predominately in the u.s. , but internationally as well , to change their focus from growth to one emphasizing cash flow and returns . this has caused a significant reduction in their capital spending plans in order to drive incremental cash flow and has put constraints on the amount of new projects that customers sanction . we believe this is likely to continue to persist into 2021. the covid-19 pandemic has created a demand shock to the system that further exacerbated the supply demand imbalance that was already taking place . the timing of the rebalancing of supply and demand and improvement of pricing for crude oil and natural gas resulting in increased spending on new projects remains uncertain . our performance trends and outlook our revenue , earnings and financial position are affected by , among other things , market conditions that impact demand and pricing for natural gas compression , oil and natural gas production and processing and produced water treatment solutions along with our customers ' decisions to use our products , solutions and services , use our competitors ' products and services or own and operate the equipment themselves . aggregate booking activity levels for our product sales segment in north america and international markets during the year ended december 31 , 2020 was approximately $ 456.5 million , which represents an increase of 96 % compared to the year ended december 31 , 2019. the increase in bookings was primarily driven by a large processing plant order in the middle east . fluctuations in the size and timing of customers ' requests for bid proposals and awards of new contracts tend to create variability in booking activity levels from period to period . historically , oil , natural gas and natural gas liquids and the level of drilling and exploration activity in north america have been volatile . the henry hub spot price for natural gas was $ 2.36 per mmbtu at december 31 , 2020 , which was 13 % higher than prices at december 31 , 2019 , and the u.s. natural gas liquid composite price was $ 4.97 per mmbtu for the month of october 2020 , which was 7 % lower than prices for the month of december 2019. in addition , the west texas intermediate crude oil spot price as of december 31 , 2020 was 21 % lower than prices at december 31 , 2019. volatility in demand for energy and in commodity prices as well as an industry trend towards disciplined capital spending and improving returns have caused timing uncertainties in demand for our products recently . these uncertainties have caused delays in the timing of new equipment orders and lower bookings in north america in our product sales segment . booking activity levels for our product sales segment in north america during the year ended december 31 , 2020 were $ 3.2 million , which represents a decrease of 95 % compared to the year ended december 31 , 2019. longer-term fundamentals in our international markets partially depend on international oil and gas infrastructure projects , many of which are based on the longer-term plans of our customers that can be driven by their local market demand and local pricing for natural gas . as a result , we believe our international customers make decisions based more on longer-term fundamentals that may be less tied to near term commodity prices than our north american customers . over the long term , we believe the demand for our products , solutions and services in international markets will continue , and we expect to have opportunities to grow our international businesses . booking activity levels for our manufactured products in international markets during the year ended december 31 , 2020 were $ 453.3 million , which represents an increase of 177 % compared to the year ended december 31 , 2019. the timing of customer orders and change in activity levels by our customers is difficult to predict . as a result , our ability to project the anticipated activity booking levels for our business , and particularly our product sales segment , is limited . story_separator_special_tag costs and expenses ( dollars in thousands ) replace_table_token_10_th selling , general and administrative sg & a expense decreased during the year ended december 31 , 2020 compared to the year ended december 31 , 2019 primarily due to a decrease in compensation costs . during the years ended december 31 , 2020 and 2019. sg & a expense as a percentage of revenue was 20 % and 18 % , respectively . depreciation and amortization depreciation and amortization expense during the year ended december 31 , 2020 compared to the year ended december 31 , 2019 decreased primarily due to a decrease in depreciation expense of approximately $ 35.2 million in the current year period resulting from the sale of equipment on a contract operations contract in the fourth quarter of 2019. this decrease was partially offset by an increase of approximately $ 19.2 million in depreciation for installation costs and equipment on contract operations projects that were not operating in the prior year period and an additional depreciation expense of $ 9.8 million recognized during the year ended december 31 , 2020 on a contract operations project due to changes in the remaining term of a contract . 37 impairments during the years ended december 31 , 2020 and 2019 , in an effort to generate cash from idle assets and reduce holding costs , we reviewed the future deployment of our idle assets used in our contract operations segment for units that were not of the type , configuration , condition , make or model that are cost efficient to maintain and operate . based on this review , we determined that certain idle compressor units and other assets would be retired from future service . the retirement of these units from the active fleet triggered a review of these assets for impairment . as a result , we recorded a $ 10.0 million and $ 52.6 million asset impairment to reduce the book value of each unit to its estimated fair value during the years ended december 31 , 2020 and 2019 , respectively . the fair value of each unit was estimated based on either the expected net sale proceeds compared to other fleet units we recently sold and or a review of other units recently offered for sale by third parties , or the estimated component value or scrap value of each compressor unit . during the third quarter of 2020 , we impaired certain assets in argentina due to the termination of a contract operations project where it was not cost effective to move the assets and try to utilize them with a different customer . as a result , we removed them from the fleet and recorded an impairment of $ 1.7 million to write-down these assets to their approximate fair values for the year ended december 31 , 2020. restructuring and other charges the energy industry 's focus on capital discipline and improving returns has caused delays in the timing of new equipment orders . as a result , in the second quarter of 2019 , we announced a cost reduction plan primarily focused on workforce reductions . we incurred restructuring and other charges associated with these activities of $ 3.6 million and $ 5.9 million during the years ended december 31 , 2020 and 2019 , respectively . in the second quarter of 2018 , we initiated a relocation plan in the latin america region to better align our contract operations business with our customers . as a result of this plan , during the year ended december 31 , 2019 , we incurred restructuring and other charges of $ 0.3 million related to relocation costs . see note 13 to the financial statements for further discussion of these charges . interest expense the increase in interest expense during the year ended december 31 , 2020 compared to the year ended december 31 , 2019 was primarily due to a decrease in capitalized interest , partially offset by a lower average effective interest rate on long-term debt . during the years ended december 31 , 2020 and 2019 , the average daily outstanding borrowings of long-term debt were $ 511.0 million and $ 511.3 million , respectively . story_separator_special_tag liabilities , net , a decrease of $ 8.7 million in inventory and a decrease of $ 19.4 million in accounts payable and other liabilities . working capital cash changes during the year ended december 31 , 2019 included a decrease of $ 37.9 million in accounts receivables , a decrease of $ 14.9 million in accounts payable and other liabilities and a decrease of $ 55.5 million in contract assets and contract liabilities , net . investing activities . the decrease in net cash used in investing activities during the year ended december 31 , 2020 compared to the year ended december 31 , 2019 was primarily attributable to a $ 113.4 million decrease in capital expenditures . the decrease in capital expenditures was primarily driven by the timing of awards and growth capital expenditures for new contract operations projects . financing activities . the increase in net cash provided by financing activities during the year ended december 31 , 2020 compared to the year ended december 31 , 2019 was primarily attributable to an increase in net borrowings of $ 82.6 million on our long-term debt and a decrease of $ 44.1 million in purchases of treasury stock . discontinued operations . the increase in net cash used in discontinued operations during the year ended december 31 , 2020 compared to year ended december 31 , 2019 was primarily attributable to working capital changes related to our u.s. compression fabrication business partially offset by proceeds received from the sale of the u.s. compression fabrication business . capital requirements . our contract operations business is capital intensive , requiring significant investment to maintain and upgrade existing operations . our capital spending is primarily dependent on the demand for our contract Narrative : extinguishment of debt during the year ended december 31 , 2020 , we purchased and retired $ 25.0 million principal amount of our 8.125 % senior unsecured notes due 2025 ( the “ 2017 notes ” ) for $ 21.5 million including $ 0.3 million of accrued interest . during the year ended december 31 , 2020 , we recognized a gain on extinguishment of debt of $ 3.6 million , which was calculated as the difference between the repurchase price and the carrying amount of the 8.125 % senior unsecured notes due 2025 , partially offset by $ 0.2 million in related deferred financing costs . other ( income ) expense , net the change in other ( income ) expense , net , was primarily due to foreign currency losses of $ 5.9 million during the year ended december 31 , 2020 compared to foreign currency losses of $ 3.8 million during the year ended december 31 , 2019. foreign currency losses included translation gains of $ 4.1 million and $ 0.3 million during the years ended december 31 , 2020 and 2019 , respectively , related to the currency remeasurement of our foreign subsidiaries ' non-functional currency denominated intercompany obligations . during the year ended december 31 , 2020 and 2019 , we recognized losses on foreign currency exchange contracts of $ 0.4 million and $ 0.8 million , respectively . the change in other ( income ) expense , net , also included a decrease of $ 1.3 million in gains on sale of property , plant and equipment in the current year period . 38 income taxes ( dollars in thousands ) replace_table_token_11_th our effective tax rate is affected by recurring items , such as tax rates in foreign jurisdictions and the relative amounts of income we earn , or losses we incur , in those jurisdictions . it is also affected by discrete items that may occur in any given year but are not consistent from year to year . our effective tax rate is also affected by valuation allowances recorded against loss carryforwards in the u.s. and certain other jurisdictions , foreign withholding taxes and changes in foreign currency exchange rates . for the year ended december 31 , 2020 : a $ 11.6

however , there can be no assurance that more significant revisions will not be necessary in the future . if future significant revisions are necessary that reduce previously estimated reserve quantities , such revisions could result in a write-down of oil and natural gas properties . if reported reserve volumes were revised downward by 5 % at the end of fiscal 2013 , the ceiling limitation would have decreased approximately $ 2,427,000 before income taxes , which would have resulted in a $ 643,000 reduction of the carrying value of oil and gas properties before income taxes . in addition to the impact of the estimates of proved reserves on the calculation of the ceiling , estimated proved reserves are also a significant component of the quarterly calculation of depletion expense . the lower the estimated reserves , the higher the depletion rate per unit of production . conversely , the higher the estimated reserves , the lower the depletion rate per unit of production . if reported reserve volumes were revised downward by 5 % as of the beginning of fiscal 2013 , depletion for fiscal 2013 would have increased by approximately $ 366,000. while the quantities of proved reserves require substantial judgment , the associated prices of oil , natural gas and natural gas liquids reserves are the average first-day-of-the-month prices during the 12-month period ending in the reporting period on a constant basis as prescribed by sec regulations . additionally , the applicable discount rate that is used to calculate the discounted present value of the reserves is mandated at 10 % . costs included in future net revenues are determined in a similar manner . as such , the future net revenues associated with the estimated proved reserves are not based on an assessment of future prices or costs . real estate held for sale and investment in residential parcels policy description real estate held for sale and investment in residential parcels are recorded at the lower of cost or estimated fair value less costs to sell . if an asset 's fair value less costs to sell , based on estimated future cash flows , management estimates or market comparisons , is less than its carrying amount , the asset is written down to its estimated fair value less costs to sell . judgments and assumptions real estate held for sale and investment in residential parcels are reviewed for possible impairment when events or circumstances indicate that the carrying values may not be recoverable . if the evaluation determines that the recorded value will not be recovered , the carrying value of real estate held for sale and investment in residential parcels are written down to its estimated fair value less costs to sell . this evaluation requires management to make assumptions and apply considerable judgment based on market conditions and comparable sales transactions . changes in assumptions may require valuation adjustments that may materially impact the company 's future operating results . 32 income taxes policy description income taxes are determined using the asset and liability method . deferred tax assets and liabilities are recognized for the estimated future tax impacts of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases . deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled . the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date . deferred income tax assets are routinely assessed for realizability . a valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax asset will not be realized . barnwell recognizes the financial statement effects of tax positions when it is more likely than not that the position will be sustained by a taxing authority . judgments and assumptions we make estimates and judgments in determining our income tax expense for each reporting period . significant changes to these estimates could result in an increase or decrease in our tax provision in future periods . we are also required to make judgments about the recoverability of deferred tax assets and when it is more likely than not that all or a portion of deferred tax assets will not be realized , a valuation allowance is provided . we consider available positive and negative evidence when assessing the realizability of deferred tax assets including historic and estimated future taxable earnings and available tax planning strategies . accordingly , changes in our business performance , unforeseen events , and changes in estimates of future taxable income could require a further increase in the valuation allowance or a reversal in the valuation allowance in future periods . this could result in a charge to , or an increase in , income in the period such determination is made , and the impact of these changes could be material . in addition , barnwell operates within the u.s. and canada and is subject to audit by taxing authorities in these jurisdictions . barnwell records accruals for the estimated outcomes of these audits , and the accruals may change in the future due to new developments in each matter . tax benefits are recognized when we determine that it is more likely than not that such benefits will be realized . management evaluates its potential exposures from tax positions taken that have or could be challenged by taxing authorities . these potential exposures result because taxing authorities may take positions that differ from those taken by management in the interpretation and application of statutes , regulations and rules . management considers the possibility of alternative outcomes based upon past experience , previous actions by taxing authorities ( e.g . , actions taken in other jurisdictions ) and advice from tax experts . story_separator_special_tag realized foreign currency transaction gains or losses were inconsequential in fiscal 2013 and 2012 . 38 the impact of fluctuations of the exchange rates between the canadian dollar and the u.s. dollar may be material from period to period . barnwell can not accurately predict future fluctuations between canadian and u.s. dollars . oil and natural gas revenues selected operating statistics the following tables set forth barnwell 's annual average prices per unit of production and annual net production volumes for fiscal 2013 as compared to fiscal 2012. production amounts reported are net of royalties . replace_table_token_5_th replace_table_token_6_th * natural gas price per unit is net of pipeline charges . oil and natural gas revenues decreased $ 3,234,000 ( 13 % ) from $ 24,610,000 in fiscal 2012 to $ 21,376,000 in fiscal 2013 , primarily due to 27 % and 14 % decreases in natural gas and natural gas liquids net production , respectively , largely as a result of natural declines in production , and also due to a scheduled dunvegan plant and pipeline maintenance shutdown during the current year ; there was no such shutdown in the prior year . in addition , net oil production decreased 10 % as compared to the prior year due to natural declines in production from existing wells , partially offset by new oil production from recent drilling activity . declines in oil and natural gas liquids prices of 4 % and 9 % , respectively , as compared to the prior year were more than offset by an increase in natural gas prices , which increased 32 % as compared to the prior year . the company continues to direct the majority of its exploration and development focus on oil rather than natural gas due to the poor outlook for natural gas prices , therefore it is likely that the company 's natural gas and natural gas liquids production will continue to decline as its natural gas properties age . oil and natural gas operating expenses oil and natural gas operating expenses decreased $ 453,000 ( 4 % ) to $ 9,992,000 in fiscal 2013 , as compared to $ 10,445,000 in fiscal 2012. the decrease was due to lower production and $ 561,000 of equalization credits for previously allocated operating expenses received from non-operated properties , partially offset by $ 796,000 of estimated costs incurred to remediate soil contamination from infrastructure issues at the dunvegan and wood river properties and increased repair and workover costs due to a scheduled dunvegan plant and pipeline maintenance shutdown whereas there was no such shutdown in the prior year . 39 sale of interest in leasehold land the following table summarizes the percentage of sales payment revenues received from wb : replace_table_token_7_th wb sold one single-family lot in phase ii of increment i during the year ended september 30 , 2013 as compared to two single-family lots in phase i of increment i during the year ended september 30 , 2012. as of september 30 , 2013 , 31 of the 38 single-family lots in phase i of increment i have been sold by wb . forty-two single-family lots are planned for phase ii of increment i , for a total of 80 single-family lots planned for increment i. the developer began marketing some of the 42 single-family lots in phase ii of increment i in 2012 , and as of september 30 , 2013 , one lot has been sold . the company can not predict when or if wb will complete the remaining single-family lots in phase ii of increment i and there is no assurance with regard to the amounts of future sales from increment i. in november 2013 , kaupulehu developments received a percentage of sales payment totaling $ 140,000 from the sale of one lot within phase i of increment i. financial results from the receipt of this payment will be reflected in barnwell 's quarter ending december 31 , 2013. on november 27 , 2013 , barnwell , through a wholly-owned subsidiary , entered into two limited liability limited partnerships , kd kona 2013 lllp and kkm makai , lllp , and indirectly acquired 19.6 % interests in wb kukio resorts , llc , wb maniniowali , llc , and wb kaupulehu , llc for $ 5,140,000. these entities own certain real estate and development rights interests in the kukio , maniniowali , and kaupulehu portions of kukio resort , a private residential community on the kona coast of the big island of hawaii . wb kaupulehu , llc , which is comprised of wb and wbkd , is the developer of kaupulehu lot 4a increments i and ii , the area in which barnwell has interests in percentage of sales payments . the limited liability limited partnership agreements provide for a priority return of barnwell 's investment prior to profit distributions . barnwell , through affiliated entities , borrowed approximately $ 4,140,000 under a new bank loan to partially fund the acquisition , and barnwell expects that it will pay approximately $ 1,000,000 in the forthcoming months to fund the remainder of the acquisition . the bank loan matures in november 2015 , with an option to extend one year , and accrues interest for the first year at the federal home loan bank 's fixed rate plus 4.00 % and resets annually thereafter . principal payments are due on the receipt of percentage of sales payments from the sale of lots within kaupulehu lot 4a increments i and ii , upon the sale of barnwell 's real estate held for sale and two residential parcels , and on receipt of cash distributions from the entities noted above . barnwell is a guarantor of the loan . 40 as a result of this transaction , whereas barnwell was not affiliated with the aforementioned entities prior to this transaction , henceforth barnwell will have an ownership interest and affiliation with these entities . this transaction will be

liquidity and capital resources barnwell 's primary sources of liquidity are cash on hand , cash flows from operations , land investment segment proceeds and available credit . at september 30 , 2013 , barnwell had $ 7,828,000 in cash and cash equivalents , $ 2,580,000 in working capital , and $ 7,446,000 of available credit under its credit facility with its canadian bank . cash flows cash flows provided by operations totaled $ 3,191,000 for fiscal 2013 , as compared to $ 11,466,000 for the same period in fiscal 2012. the $ 8,275,000 decrease was primarily due to $ 5,477,000 of proceeds from the sale of real estate in the prior year period and lower oil and natural gas segment operating results in the current year . net cash used in investing activities totaled $ 3,778,000 for fiscal 2013 , as compared to $ 6,277,000 for the same period in fiscal 2012. the $ 2,499,000 decrease was primarily due to a $ 2,757,000 decrease in cash outflows for capital expenditures , primarily oil and natural gas , due to differences in the timing of disbursements for capital projects . cash flows used in financing activities totaled $ 319,000 for fiscal 2013 , as compared to $ 6,209,000 for fiscal 2012. the $ 5,890,000 decrease in cash outflows was primarily due to decreased net debt repayments as the prior year period included a pay down in debt resulting from the sale of one luxury residence in june 2012. credit arrangements in march 2013 , barnwell 's credit facility at royal bank of canada was renewed through april 2014 for $ 20,000,000 canadian dollars , unchanged from the prior year amount , or us $ 19,446,000 at the september 30 , 2013 exchange rate of 0.9723. borrowings under this facility were us $ 12,000,000 and unused credit available under this facility was us $ 7,446,000 at september 30 , 2013. the interest rate on the facility at september 30

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. however , there can be no assurance that more significant revisions will not be necessary in the future . if future significant revisions are necessary that reduce previously estimated reserve quantities , such revisions could result in a write-down of oil and natural gas properties . if reported reserve volumes were revised downward by 5 % at the end of fiscal 2013 , the ceiling limitation would have decreased approximately $ 2,427,000 before income taxes , which would have resulted in a $ 643,000 reduction of the carrying value of oil and gas properties before income taxes . in addition to the impact of the estimates of proved reserves on the calculation of the ceiling , estimated proved reserves are also a significant component of the quarterly calculation of depletion expense . the lower the estimated reserves , the higher the depletion rate per unit of production . conversely , the higher the estimated reserves , the lower the depletion rate per unit of production . if reported reserve volumes were revised downward by 5 % as of the beginning of fiscal 2013 , depletion for fiscal 2013 would have increased by approximately $ 366,000. while the quantities of proved reserves require substantial judgment , the associated prices of oil , natural gas and natural gas liquids reserves are the average first-day-of-the-month prices during the 12-month period ending in the reporting period on a constant basis as prescribed by sec regulations . additionally , the applicable discount rate that is used to calculate the discounted present value of the reserves is mandated at 10 % . costs included in future net revenues are determined in a similar manner . as such , the future net revenues associated with the estimated proved reserves are not based on an assessment of future prices or costs . real estate held for sale and investment in residential parcels policy description real estate held for sale and investment in residential parcels are recorded at the lower of cost or estimated fair value less costs to sell . if an asset 's fair value less costs to sell , based on estimated future cash flows , management estimates or market comparisons , is less than its carrying amount , the asset is written down to its estimated fair value less costs to sell . judgments and assumptions real estate held for sale and investment in residential parcels are reviewed for possible impairment when events or circumstances indicate that the carrying values may not be recoverable . if the evaluation determines that the recorded value will not be recovered , the carrying value of real estate held for sale and investment in residential parcels are written down to its estimated fair value less costs to sell . this evaluation requires management to make assumptions and apply considerable judgment based on market conditions and comparable sales transactions . changes in assumptions may require valuation adjustments that may materially impact the company 's future operating results . 32 income taxes policy description income taxes are determined using the asset and liability method . deferred tax assets and liabilities are recognized for the estimated future tax impacts of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases . deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled . the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date . deferred income tax assets are routinely assessed for realizability . a valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax asset will not be realized . barnwell recognizes the financial statement effects of tax positions when it is more likely than not that the position will be sustained by a taxing authority . judgments and assumptions we make estimates and judgments in determining our income tax expense for each reporting period . significant changes to these estimates could result in an increase or decrease in our tax provision in future periods . we are also required to make judgments about the recoverability of deferred tax assets and when it is more likely than not that all or a portion of deferred tax assets will not be realized , a valuation allowance is provided . we consider available positive and negative evidence when assessing the realizability of deferred tax assets including historic and estimated future taxable earnings and available tax planning strategies . accordingly , changes in our business performance , unforeseen events , and changes in estimates of future taxable income could require a further increase in the valuation allowance or a reversal in the valuation allowance in future periods . this could result in a charge to , or an increase in , income in the period such determination is made , and the impact of these changes could be material . in addition , barnwell operates within the u.s. and canada and is subject to audit by taxing authorities in these jurisdictions . barnwell records accruals for the estimated outcomes of these audits , and the accruals may change in the future due to new developments in each matter . tax benefits are recognized when we determine that it is more likely than not that such benefits will be realized . management evaluates its potential exposures from tax positions taken that have or could be challenged by taxing authorities . these potential exposures result because taxing authorities may take positions that differ from those taken by management in the interpretation and application of statutes , regulations and rules . management considers the possibility of alternative outcomes based upon past experience , previous actions by taxing authorities ( e.g . , actions taken in other jurisdictions ) and advice from tax experts . story_separator_special_tag realized foreign currency transaction gains or losses were inconsequential in fiscal 2013 and 2012 . 38 the impact of fluctuations of the exchange rates between the canadian dollar and the u.s. dollar may be material from period to period . barnwell can not accurately predict future fluctuations between canadian and u.s. dollars . oil and natural gas revenues selected operating statistics the following tables set forth barnwell 's annual average prices per unit of production and annual net production volumes for fiscal 2013 as compared to fiscal 2012. production amounts reported are net of royalties . replace_table_token_5_th replace_table_token_6_th * natural gas price per unit is net of pipeline charges . oil and natural gas revenues decreased $ 3,234,000 ( 13 % ) from $ 24,610,000 in fiscal 2012 to $ 21,376,000 in fiscal 2013 , primarily due to 27 % and 14 % decreases in natural gas and natural gas liquids net production , respectively , largely as a result of natural declines in production , and also due to a scheduled dunvegan plant and pipeline maintenance shutdown during the current year ; there was no such shutdown in the prior year . in addition , net oil production decreased 10 % as compared to the prior year due to natural declines in production from existing wells , partially offset by new oil production from recent drilling activity . declines in oil and natural gas liquids prices of 4 % and 9 % , respectively , as compared to the prior year were more than offset by an increase in natural gas prices , which increased 32 % as compared to the prior year . the company continues to direct the majority of its exploration and development focus on oil rather than natural gas due to the poor outlook for natural gas prices , therefore it is likely that the company 's natural gas and natural gas liquids production will continue to decline as its natural gas properties age . oil and natural gas operating expenses oil and natural gas operating expenses decreased $ 453,000 ( 4 % ) to $ 9,992,000 in fiscal 2013 , as compared to $ 10,445,000 in fiscal 2012. the decrease was due to lower production and $ 561,000 of equalization credits for previously allocated operating expenses received from non-operated properties , partially offset by $ 796,000 of estimated costs incurred to remediate soil contamination from infrastructure issues at the dunvegan and wood river properties and increased repair and workover costs due to a scheduled dunvegan plant and pipeline maintenance shutdown whereas there was no such shutdown in the prior year . 39 sale of interest in leasehold land the following table summarizes the percentage of sales payment revenues received from wb : replace_table_token_7_th wb sold one single-family lot in phase ii of increment i during the year ended september 30 , 2013 as compared to two single-family lots in phase i of increment i during the year ended september 30 , 2012. as of september 30 , 2013 , 31 of the 38 single-family lots in phase i of increment i have been sold by wb . forty-two single-family lots are planned for phase ii of increment i , for a total of 80 single-family lots planned for increment i. the developer began marketing some of the 42 single-family lots in phase ii of increment i in 2012 , and as of september 30 , 2013 , one lot has been sold . the company can not predict when or if wb will complete the remaining single-family lots in phase ii of increment i and there is no assurance with regard to the amounts of future sales from increment i. in november 2013 , kaupulehu developments received a percentage of sales payment totaling $ 140,000 from the sale of one lot within phase i of increment i. financial results from the receipt of this payment will be reflected in barnwell 's quarter ending december 31 , 2013. on november 27 , 2013 , barnwell , through a wholly-owned subsidiary , entered into two limited liability limited partnerships , kd kona 2013 lllp and kkm makai , lllp , and indirectly acquired 19.6 % interests in wb kukio resorts , llc , wb maniniowali , llc , and wb kaupulehu , llc for $ 5,140,000. these entities own certain real estate and development rights interests in the kukio , maniniowali , and kaupulehu portions of kukio resort , a private residential community on the kona coast of the big island of hawaii . wb kaupulehu , llc , which is comprised of wb and wbkd , is the developer of kaupulehu lot 4a increments i and ii , the area in which barnwell has interests in percentage of sales payments . the limited liability limited partnership agreements provide for a priority return of barnwell 's investment prior to profit distributions . barnwell , through affiliated entities , borrowed approximately $ 4,140,000 under a new bank loan to partially fund the acquisition , and barnwell expects that it will pay approximately $ 1,000,000 in the forthcoming months to fund the remainder of the acquisition . the bank loan matures in november 2015 , with an option to extend one year , and accrues interest for the first year at the federal home loan bank 's fixed rate plus 4.00 % and resets annually thereafter . principal payments are due on the receipt of percentage of sales payments from the sale of lots within kaupulehu lot 4a increments i and ii , upon the sale of barnwell 's real estate held for sale and two residential parcels , and on receipt of cash distributions from the entities noted above . barnwell is a guarantor of the loan . 40 as a result of this transaction , whereas barnwell was not affiliated with the aforementioned entities prior to this transaction , henceforth barnwell will have an ownership interest and affiliation with these entities . this transaction will be Narrative : liquidity and capital resources barnwell 's primary sources of liquidity are cash on hand , cash flows from operations , land investment segment proceeds and available credit . at september 30 , 2013 , barnwell had $ 7,828,000 in cash and cash equivalents , $ 2,580,000 in working capital , and $ 7,446,000 of available credit under its credit facility with its canadian bank . cash flows cash flows provided by operations totaled $ 3,191,000 for fiscal 2013 , as compared to $ 11,466,000 for the same period in fiscal 2012. the $ 8,275,000 decrease was primarily due to $ 5,477,000 of proceeds from the sale of real estate in the prior year period and lower oil and natural gas segment operating results in the current year . net cash used in investing activities totaled $ 3,778,000 for fiscal 2013 , as compared to $ 6,277,000 for the same period in fiscal 2012. the $ 2,499,000 decrease was primarily due to a $ 2,757,000 decrease in cash outflows for capital expenditures , primarily oil and natural gas , due to differences in the timing of disbursements for capital projects . cash flows used in financing activities totaled $ 319,000 for fiscal 2013 , as compared to $ 6,209,000 for fiscal 2012. the $ 5,890,000 decrease in cash outflows was primarily due to decreased net debt repayments as the prior year period included a pay down in debt resulting from the sale of one luxury residence in june 2012. credit arrangements in march 2013 , barnwell 's credit facility at royal bank of canada was renewed through april 2014 for $ 20,000,000 canadian dollars , unchanged from the prior year amount , or us $ 19,446,000 at the september 30 , 2013 exchange rate of 0.9723. borrowings under this facility were us $ 12,000,000 and unused credit available under this facility was us $ 7,446,000 at september 30 , 2013. the interest rate on the facility at september 30

during the volatile economic environment , which we believe began in the third quarter of 2007 , we have been relying on our deep industry , credit and financial structuring experience , coupled with our strengths as value-oriented , distressed investors , to deploy a significant amount of new capital . as examples of this , from the beginning of the third quarter of 2007 and through december 31 , 2011 , we have deployed approximately $ 28.5 billion of gross invested capital across our private equity and certain capital markets funds , focused on control , distressed and buyout investments , leveraged loan portfolios and mezzanine , non-control distressed and non-performing loans . in addition , from the beginning of the fourth quarter of 2007 through december 31 , 2011 , the funds managed by apollo have acquired approximately $ 15.6 billion in face value of distressed debt at discounts to par value and purchased approximately $ 37.4 billion in face value of leveraged senior loans at discounts to par value from financial institutions . since we purchased these leveraged loan portfolios from highly motivated sellers , we were able to secure , in certain cases , attractive long-term , low cost financing . in addition to deploying capital in new investments , we have been depending on our over 20 years of experience to enhance value in the current investment portfolio of the funds to which we serve as an investment manager . we have been relying on our restructuring and capital markets experience to work proactively with our funds ' portfolio company management teams to generate cost and working capital savings , reduce capital expenditures , and optimize capital structures through several means such as debt exchange offers and the purchase of portfolio company debt at discounts to par value . for example , as of december 31 , 2011 , fund vi and its underlying portfolio companies purchased or retired approximately $ 19.4 billion in face value of debt and captured approximately $ 9.6 billion of discount to par value of debt in portfolio companies such as ceva logistics , caesars entertainment , realogy and momentive performance materials . in certain situations , such as ceva logistics , funds managed by apollo are the largest owner of the total outstanding debt of the portfolio company . in addition to the attractive return profile associated with these portfolio company debt purchases , we believe that building positions as senior creditors within the existing portfolio companies is strategic to the existing equity ownership positions . additionally , the portfolio companies of fund vi have implemented approximately $ 3.1 billion of cost savings programs on an aggregate basis from the date fund vi invested in them through december 31 , 2011 , which we believe will positively impact their operating profitability . regardless of the market or economic environment at any given time , we rely on our contrarian , value-oriented approach to consistently invest capital on behalf of our investors throughout economic cycles by focusing on opportunities that we believe are often overlooked by other investors . we believe that our expertise in capital markets , focus on nine core industry sectors and investment experience allow us to respond quickly to changing environments . for example , in our private equity business , our private equity funds have had success investing in buyouts and credit opportunities during both expansionary and recessionary economic periods . market considerations our revenues consist of the following : management fees , which are calculated based upon any of “net asset value , ” “gross assets , ” “adjusted costs of all unrealized portfolio investments , ” “capital commitments , ” “adjusted assets , ” “invested capital” or “stockholders ' equity , ” each as defined in the applicable management agreement of the unconsolidated funds ; advisory and transaction fees relating to the investments our funds make , or individual monitoring agreements with individual portfolio companies of the private equity funds and capital markets funds as well as advisory services provided to a capital markets fund ; and carried interest with respect to our private equity funds and our capital markets funds . our ability to grow our revenues depends in part on our ability to attract new capital and investors , which in turn depends on our ability to appropriately invest our funds ' capital , and on the conditions in the financial 77 markets , including the availability and cost of leverage , and economic conditions in the united states , western europe , asia , and to some extent , elsewhere in the world . the market factors that impact this include the following : the strength of the alternative investment management industry , including the amount of capital invested and withdrawn from alternative investments . allocations of capital to the alternative investment sector are dependent , in part , on the strength of the economy and the returns available from other investments relative to returns from alternative investments . our share of this capital is dependent on the strength of our performance relative to the performance of our competitors . the capital we attract and our returns are drivers of our assets under management , which , in turn , drive the fees we earn . in light of the current volatile conditions in the financial markets , our funds ' returns may be lower than they have been historically and fundraising efforts may be more challenging . the strength and liquidity of the u.s. and relevant global equity markets generally , and the initial public offering market specifically . the strength of these markets affects the value of , and our ability to successfully exit , our equity positions in our private equity portfolio companies in a timely manner . the strength and liquidity of the u.s. and relevant global debt markets . story_separator_special_tag management fees are normally based on “net asset value , ” “gross assets , ” “adjusted par asset value , ” “adjusted cost of all unrealized portfolio investments , ” “capital commitments , ” “adjusted assets , ” “stockholders ' equity , ” “invested capital” or “capital contributions , ” each as defined in the applicable management agreement . monitoring fees for aum purposes are based on the total value of certain structured portfolio vehicle investments , which normally include leverage , less any portion of such total value that is already considered in fee-generating aum . non-fee generating aum consists of assets that do not produce management fees or monitoring fees . these assets generally consist of the following : ( a ) fair value above invested capital for those funds that earn management fees based on invested capital , ( b ) net asset values related to general partner and co-investment ownership , ( c ) unused credit facilities , ( d ) available commitments on those funds that generate management fees on invested capital , ( e ) structured portfolio vehicle investments that do not generate monitoring fees and ( f ) the difference between gross assets and net asset value for those funds that earn management fees based on net asset value . we use non-fee generating aum combined with fee-generating aum as a performance measurement of our investment activities , as well as to monitor fund size in relation to professional resource and infrastructure needs . non-fee generating aum includes assets on which we could earn carried interest income . 82 the table below displays fee-generating and non-fee generating aum by segment as of december 31 , 2011 , 2010 and 2009. the changes in market conditions , additional funds raised and acquisitions have had significant impacts to our aum : replace_table_token_4_th during the year ended december 31 , 2011 , our total fee-generating aum increased primarily due to acquisitions in our capital markets segment , as well as increases in subscriptions across our three segments . the fee-generating aum of our capital markets funds increased primarily due to acquisitions in 2011 by athene and agm 's gulf stream acquisition , as well as increased subscriptions . the fee-generating aum of our real estate segment increased due to net segment transfers from other segments , subscriptions and increases in leverage , partially offset by losses and distributions . the fee-generating aum of our private equity funds increased due to subscriptions , partially offset by distributions . when the fair value of an investment exceeds invested capital , we are normally entitled to carried interest income on the difference between the fair value once realized and invested capital after also considering certain expenses and preferred return amounts , as specified in the respective partnership agreements ; however , we do not earn management fees on such excess . as a result of the growth in both the size and number of funds that we manage , we have experienced an increase in our management fees and advisory and transaction fees . to support this growth , we have also experienced an increase in operating expenses , resulting from hiring additional personnel , opening new offices to expand our geographical reach and incurring additional professional fees . with respect to our private equity funds and certain of our capital markets and real estate funds , we charge management fees on the amount of committed or invested capital and we generally are entitled to realized carried interest on the realized gains on the dispositions investments . certain funds may have current fair values below invested capital , however , the management fee would still be computed on the invested capital for such funds . with respect to ari and amtg , we receive management fees on stockholders equity as defined in its management agreement . in addition , our fee-generating aum reflects leverage vehicles that generate monitoring fees on value in excess of fund commitments . as of december 31 , 2011 , our total fee-generating aum is comprised of approximately 88 % of assets that earn management fees and the remaining balance of assets earn monitoring fees . 83 the company 's entire fee-generating aum is subject to management or monitoring fees . the components of fee-generating aum by segment as of december 31 , 2011 and 2010 are presented below : replace_table_token_5_th ( 1 ) monitoring fees are normally based on the total value of certain special purpose vehicle investments , which includes leverage , less any portion of such total value that is already considered for fee-generating aum . monitoring fees are typically calculated using a 0.5 % annual rate . ( 2 ) the weighted average remaining life of the private equity funds excluding permanent capital vehicles at december 31 , 2011 is 65 months . ( 3 ) the fee-generating aum for the capital markets funds has no concentration across the investment strategies . ( 4 ) the fee-generating aum for our real estate entities is based on an adjusted equity amount as specified by the respective management agreements . replace_table_token_6_th ( 1 ) monitoring fees are normally based on the total value of certain special purpose vehicle investments , which includes leverage , less any portion of such total value that is already considered for fee-generating aum . monitoring fees are typically calculated using a 0.5 % annual rate . ( 2 ) the weighted average remaining life of the private equity funds excluding permanent capital vehicles at december 31 , 2010 is 76 months . ( 3 ) the fee-generating aum for the capital markets funds has no concentration across the investment strategies . 84 aum as of december 31 , 2011 , 2010 and 2009 was as follows : replace_table_token_7_th the following table presents total assets under management and fee generating assets under management amounts for our private equity segment by strategy : replace_table_token_8_th the following table presents total assets

liquidity and capital resources historical although we have managed our historical liquidity needs by looking at deconsolidated cash flows , our historical consolidated statement of cash flows reflects the cash flows of apollo , as well as those of our consolidated apollo funds . the primary cash flow activities of apollo are : generating cash flow from operations ; making investments in apollo funds ; meeting financing needs through credit agreements ; and distributing cash flow to equity holders and non-controlling interests . primary cash flow activities of the consolidated apollo funds are : raising capital from their investors , which have been reflected historically as non-controlling interests of the consolidated subsidiaries in our financial statements ; using capital to make investments ; generating cash flow from operations through distributions , interest and the realization of investments ; and distributing cash flow to investors . 129 while primarily met by cash flows generated through fee income and carried interest income received , working capital needs have also been met ( to a limited extent ) through borrowings as follows : replace_table_token_36_th ( 1 ) includes the effect of interest rate swaps . we determine whether to make capital commitments to our private equity funds in excess of our minimum required amounts based on a variety of factors , including estimates regarding our liquidity resources over the estimated time period during which commitments will have to be funded , estimates regarding the amounts of capital that may be appropriate for other funds that we are in the process of raising or are considering raising , and our general working capital requirements . we have made one or more distributions to our managing partners and contributing partners , representing all of the undistributed earnings generated by the businesses contributed to the apollo operating group prior to the private offering transactions .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. during the volatile economic environment , which we believe began in the third quarter of 2007 , we have been relying on our deep industry , credit and financial structuring experience , coupled with our strengths as value-oriented , distressed investors , to deploy a significant amount of new capital . as examples of this , from the beginning of the third quarter of 2007 and through december 31 , 2011 , we have deployed approximately $ 28.5 billion of gross invested capital across our private equity and certain capital markets funds , focused on control , distressed and buyout investments , leveraged loan portfolios and mezzanine , non-control distressed and non-performing loans . in addition , from the beginning of the fourth quarter of 2007 through december 31 , 2011 , the funds managed by apollo have acquired approximately $ 15.6 billion in face value of distressed debt at discounts to par value and purchased approximately $ 37.4 billion in face value of leveraged senior loans at discounts to par value from financial institutions . since we purchased these leveraged loan portfolios from highly motivated sellers , we were able to secure , in certain cases , attractive long-term , low cost financing . in addition to deploying capital in new investments , we have been depending on our over 20 years of experience to enhance value in the current investment portfolio of the funds to which we serve as an investment manager . we have been relying on our restructuring and capital markets experience to work proactively with our funds ' portfolio company management teams to generate cost and working capital savings , reduce capital expenditures , and optimize capital structures through several means such as debt exchange offers and the purchase of portfolio company debt at discounts to par value . for example , as of december 31 , 2011 , fund vi and its underlying portfolio companies purchased or retired approximately $ 19.4 billion in face value of debt and captured approximately $ 9.6 billion of discount to par value of debt in portfolio companies such as ceva logistics , caesars entertainment , realogy and momentive performance materials . in certain situations , such as ceva logistics , funds managed by apollo are the largest owner of the total outstanding debt of the portfolio company . in addition to the attractive return profile associated with these portfolio company debt purchases , we believe that building positions as senior creditors within the existing portfolio companies is strategic to the existing equity ownership positions . additionally , the portfolio companies of fund vi have implemented approximately $ 3.1 billion of cost savings programs on an aggregate basis from the date fund vi invested in them through december 31 , 2011 , which we believe will positively impact their operating profitability . regardless of the market or economic environment at any given time , we rely on our contrarian , value-oriented approach to consistently invest capital on behalf of our investors throughout economic cycles by focusing on opportunities that we believe are often overlooked by other investors . we believe that our expertise in capital markets , focus on nine core industry sectors and investment experience allow us to respond quickly to changing environments . for example , in our private equity business , our private equity funds have had success investing in buyouts and credit opportunities during both expansionary and recessionary economic periods . market considerations our revenues consist of the following : management fees , which are calculated based upon any of “net asset value , ” “gross assets , ” “adjusted costs of all unrealized portfolio investments , ” “capital commitments , ” “adjusted assets , ” “invested capital” or “stockholders ' equity , ” each as defined in the applicable management agreement of the unconsolidated funds ; advisory and transaction fees relating to the investments our funds make , or individual monitoring agreements with individual portfolio companies of the private equity funds and capital markets funds as well as advisory services provided to a capital markets fund ; and carried interest with respect to our private equity funds and our capital markets funds . our ability to grow our revenues depends in part on our ability to attract new capital and investors , which in turn depends on our ability to appropriately invest our funds ' capital , and on the conditions in the financial 77 markets , including the availability and cost of leverage , and economic conditions in the united states , western europe , asia , and to some extent , elsewhere in the world . the market factors that impact this include the following : the strength of the alternative investment management industry , including the amount of capital invested and withdrawn from alternative investments . allocations of capital to the alternative investment sector are dependent , in part , on the strength of the economy and the returns available from other investments relative to returns from alternative investments . our share of this capital is dependent on the strength of our performance relative to the performance of our competitors . the capital we attract and our returns are drivers of our assets under management , which , in turn , drive the fees we earn . in light of the current volatile conditions in the financial markets , our funds ' returns may be lower than they have been historically and fundraising efforts may be more challenging . the strength and liquidity of the u.s. and relevant global equity markets generally , and the initial public offering market specifically . the strength of these markets affects the value of , and our ability to successfully exit , our equity positions in our private equity portfolio companies in a timely manner . the strength and liquidity of the u.s. and relevant global debt markets . story_separator_special_tag management fees are normally based on “net asset value , ” “gross assets , ” “adjusted par asset value , ” “adjusted cost of all unrealized portfolio investments , ” “capital commitments , ” “adjusted assets , ” “stockholders ' equity , ” “invested capital” or “capital contributions , ” each as defined in the applicable management agreement . monitoring fees for aum purposes are based on the total value of certain structured portfolio vehicle investments , which normally include leverage , less any portion of such total value that is already considered in fee-generating aum . non-fee generating aum consists of assets that do not produce management fees or monitoring fees . these assets generally consist of the following : ( a ) fair value above invested capital for those funds that earn management fees based on invested capital , ( b ) net asset values related to general partner and co-investment ownership , ( c ) unused credit facilities , ( d ) available commitments on those funds that generate management fees on invested capital , ( e ) structured portfolio vehicle investments that do not generate monitoring fees and ( f ) the difference between gross assets and net asset value for those funds that earn management fees based on net asset value . we use non-fee generating aum combined with fee-generating aum as a performance measurement of our investment activities , as well as to monitor fund size in relation to professional resource and infrastructure needs . non-fee generating aum includes assets on which we could earn carried interest income . 82 the table below displays fee-generating and non-fee generating aum by segment as of december 31 , 2011 , 2010 and 2009. the changes in market conditions , additional funds raised and acquisitions have had significant impacts to our aum : replace_table_token_4_th during the year ended december 31 , 2011 , our total fee-generating aum increased primarily due to acquisitions in our capital markets segment , as well as increases in subscriptions across our three segments . the fee-generating aum of our capital markets funds increased primarily due to acquisitions in 2011 by athene and agm 's gulf stream acquisition , as well as increased subscriptions . the fee-generating aum of our real estate segment increased due to net segment transfers from other segments , subscriptions and increases in leverage , partially offset by losses and distributions . the fee-generating aum of our private equity funds increased due to subscriptions , partially offset by distributions . when the fair value of an investment exceeds invested capital , we are normally entitled to carried interest income on the difference between the fair value once realized and invested capital after also considering certain expenses and preferred return amounts , as specified in the respective partnership agreements ; however , we do not earn management fees on such excess . as a result of the growth in both the size and number of funds that we manage , we have experienced an increase in our management fees and advisory and transaction fees . to support this growth , we have also experienced an increase in operating expenses , resulting from hiring additional personnel , opening new offices to expand our geographical reach and incurring additional professional fees . with respect to our private equity funds and certain of our capital markets and real estate funds , we charge management fees on the amount of committed or invested capital and we generally are entitled to realized carried interest on the realized gains on the dispositions investments . certain funds may have current fair values below invested capital , however , the management fee would still be computed on the invested capital for such funds . with respect to ari and amtg , we receive management fees on stockholders equity as defined in its management agreement . in addition , our fee-generating aum reflects leverage vehicles that generate monitoring fees on value in excess of fund commitments . as of december 31 , 2011 , our total fee-generating aum is comprised of approximately 88 % of assets that earn management fees and the remaining balance of assets earn monitoring fees . 83 the company 's entire fee-generating aum is subject to management or monitoring fees . the components of fee-generating aum by segment as of december 31 , 2011 and 2010 are presented below : replace_table_token_5_th ( 1 ) monitoring fees are normally based on the total value of certain special purpose vehicle investments , which includes leverage , less any portion of such total value that is already considered for fee-generating aum . monitoring fees are typically calculated using a 0.5 % annual rate . ( 2 ) the weighted average remaining life of the private equity funds excluding permanent capital vehicles at december 31 , 2011 is 65 months . ( 3 ) the fee-generating aum for the capital markets funds has no concentration across the investment strategies . ( 4 ) the fee-generating aum for our real estate entities is based on an adjusted equity amount as specified by the respective management agreements . replace_table_token_6_th ( 1 ) monitoring fees are normally based on the total value of certain special purpose vehicle investments , which includes leverage , less any portion of such total value that is already considered for fee-generating aum . monitoring fees are typically calculated using a 0.5 % annual rate . ( 2 ) the weighted average remaining life of the private equity funds excluding permanent capital vehicles at december 31 , 2010 is 76 months . ( 3 ) the fee-generating aum for the capital markets funds has no concentration across the investment strategies . 84 aum as of december 31 , 2011 , 2010 and 2009 was as follows : replace_table_token_7_th the following table presents total assets under management and fee generating assets under management amounts for our private equity segment by strategy : replace_table_token_8_th the following table presents total assets Narrative : liquidity and capital resources historical although we have managed our historical liquidity needs by looking at deconsolidated cash flows , our historical consolidated statement of cash flows reflects the cash flows of apollo , as well as those of our consolidated apollo funds . the primary cash flow activities of apollo are : generating cash flow from operations ; making investments in apollo funds ; meeting financing needs through credit agreements ; and distributing cash flow to equity holders and non-controlling interests . primary cash flow activities of the consolidated apollo funds are : raising capital from their investors , which have been reflected historically as non-controlling interests of the consolidated subsidiaries in our financial statements ; using capital to make investments ; generating cash flow from operations through distributions , interest and the realization of investments ; and distributing cash flow to investors . 129 while primarily met by cash flows generated through fee income and carried interest income received , working capital needs have also been met ( to a limited extent ) through borrowings as follows : replace_table_token_36_th ( 1 ) includes the effect of interest rate swaps . we determine whether to make capital commitments to our private equity funds in excess of our minimum required amounts based on a variety of factors , including estimates regarding our liquidity resources over the estimated time period during which commitments will have to be funded , estimates regarding the amounts of capital that may be appropriate for other funds that we are in the process of raising or are considering raising , and our general working capital requirements . we have made one or more distributions to our managing partners and contributing partners , representing all of the undistributed earnings generated by the businesses contributed to the apollo operating group prior to the private offering transactions .

we completed the phase 1 program for relday in 2015 , and efforts to secure a global strategic development and commercialization partner for relday are ongoing . sale of sumavel dosepro business and contract manufacturing supply agreement divestiture on may 16 , 2014 , the company completed the sale of its sumavel dosepro business to endo international plc , or endo , which included registered trademarks , regulatory and all rights to market , sell and distribute sumavel dosepro under the trademark and commercialization rights under a specified subset of our technology patents . we retained all rights to the dosepro technology patents and know-how for use with other products . we received $ 85.0 million in cash , subject to an escrow holdback of $ 8.5 million , and $ 4.6 million in cash for the purchase of sumavel dosepro finished goods inventory on hand at our standard cost . the escrow period expired in may 2015 . 57 as part of the transaction , we entered into a supply agreement with endo ventures limited for the exclusive right , and contractual obligation , to manufacture and supply sumavel dosepro to endo . endo agreed to purchase all sumavel dosepro from the company at cost , plus a 2.5 % mark-up and reimburse us for the royalty obligations due aradigm corporation on sales of sumavel dosepro . the agreement provides for an initial term of eight years . to support our sumavel dosepro manufacturing operations , endo provided us with an interest-free working capital advance of $ 7.0 million under a promissory note ( see note 9 ) . the working capital advance is collateralized by liens on materials and unreleased finished sumavel dosepro inventory and matures upon termination of the supply agreement . pending termination of contract manufacturing supply agreement we and endo have recently entered into a letter agreement acknowledging endo 's decision to have us discontinue the manufacturing and supply of the sumavel dosepro product under the supply agreement while the parties finalize termination of the supply agreement . we expect to fulfill current open orders during the first half of 2017 and not to supply endo with additional sumavel dosepro following such time . sale of zohydro er business on march 10 , 2015 , we entered into an asset purchase agreement with pernix ireland limited and pernix therapeutics , or collectively , pernix , whereby we agreed to sell our zohydro er business to pernix , and on april 24 , 2015 , we completed the sale to ferrimill , an irish corporation and subsidiary of pernix , as a substitute purchaser . the divested zohydro er business included the registered patents and trademarks , certain contracts , the new drug application , or nda , and other regulatory approvals , documentation and authorizations , the books and records , marketing materials and product data relating to zohydro er . we received consideration of $ 80.0 million in cash , $ 10.0 million of which has been deposited in escrow to fund potential indemnification claims for a period of 12 months , and $ 10.6 million in pernix therapeutics common stock . further , ferrimill purchased $ 0.9 million of zohydro er inventory from us . we agreed to indemnify the purchaser for certain intellectual property matters up to an aggregate amount of $ 5.0 million . in addition to the cash payment paid at closing , we are eligible to receive cash payments of up to $ 283.5 million based on the achievement of certain regulatory and sales milestones . as of december 31 , 2016 , we have not received and do not expect to receive any additional cash payments . critical accounting policies and estimates our management 's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements , which have been prepared in conformity with generally accepted accounting principles in the united states , or gaap . the preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets , liabilities , expenses and related disclosures . we evaluate our estimates and assumptions on an ongoing basis . our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances . actual results could differ from those estimates . we believe that the assumptions and estimates associated with revenue recognition , the impairment assessments related to goodwill , indefinite-lived intangible assets and other long-lived assets , business combinations , discontinued operations , fair value measurements , clinical trials expense accrual and stock-based compensation have the greatest potential impact on our consolidated financial statements . therefore , we consider these to be our critical accounting policies and estimates . for further information on all of our significant accounting policies , see note 2 to our consolidated financial statements included in this form 10-k. revenue recognition we historically generated revenue from contract manufacturing , service fees earned on collaborative arrangements and product revenue related to sumavel dosepro prior to the sale of the business in may 2014. we also generate revenue from the sale of zohydro er , which is included in net income ( loss ) from discontinued operations in the consolidated statement of operations and comprehensive income ( loss ) . revenue is recognized when ( i ) persuasive evidence of an arrangement exists , ( ii ) delivery has occurred and title has passed , ( iii ) the price is fixed or determinable and ( iv ) collectability is reasonably assured . story_separator_special_tag payments under some of the contracts we have with such parties depend on factors such as the milestones accomplished , successful enrollment of certain numbers of patients , site initiation and the completion of clinical trial milestones . in accruing service fees , we estimate the time period over which services will be performed and the level of effort to be expended in each period . if possible , we obtain information regarding unbilled services directly from these service providers . however , we may be required to estimate these services based on information available to our product development or administrative staff . if we underestimate or overestimate the activity associated with a study or service at a given point in time , adjustments to research and development expenses may be necessary in future periods . historically , our estimated accrued liabilities have approximated actual expense incurred . subsequent changes in estimates may result in a material change in our accruals . stock-based compensation stock-based compensation expense is measured at the grant date , based on the estimated fair value of the award , and is recognized as expense over the employee 's requisite service period or estimated time to satisfy the performance criteria , or vesting period , on a straight-line basis . equity awards issued to non-employees are recorded at their fair value on the grant date 61 and are periodically remeasured as the underlying awards vest unless the instruments are fully vested , immediately exercisable and nonforfeitable on the date of grant . results of operations comparison of years ended december 31 , 2016 , 2015 and 2014 revenue replace_table_token_3_th we recognize contract manufacturing revenue in connection with the supply agreement with endo . contract manufacturing revenue includes a portion of deferred revenue recognized under the “ proportional performance ” method . prior to the divestiture of our sumavel dosepro business to endo , we recognized net product sales upon the shipment of product to wholesale pharmaceutical distributors and retail pharmacies . the increase in contract manufacturing revenue in 2016 as compared to 2015 was primarily due to a change in estimate in the performance period under the proportional performance method . as a result of the impending termination of our contract manufacturing supply agreement with endo , the performance period and the total expected products to be delivered under the arrangement were revised , which resulted in an increase to 2016 revenue by $ 4.9 million . once the termination agreement is finalized , we will no longer have a source of recurring revenue and expect to have limited revenue in the foreseeable future . the increase in contract manufacturing revenue in 2015 as compared to 2014 was primarily due to the inclusion of a full year of contract manufacturing revenue in 2015 , while 2014 only included a partial year 's contract manufacturing revenue as the agreement was executed in may 2014. net product revenue in 2014 consisted of sale of sumavel dosepro products , which we divested in may 2014. service and other product revenue was comprised primarily of co-promotion fees earned for our migranal ® nasal spray sales efforts under our agreement with valeant pharmaceuticals north america llc until it was terminated in june 2015 , as well as adjustments to sumavel dosepro returns reserves subsequent to the sale of the business in may 2014. for 2016 , service and other product revenue resulted from the true-up of reserves to reflect actual sumavel dosepro returns . for 2015 , service and other product revenue were comprised of migranal co-promotion fees earned through june 2015 , $ 0.5 million received for a contract termination payment and $ 2.0 million from true-up of reserves to reflect actual returns for product whose return period had lapsed . service and other product revenue in 2014 was comprised primarily of fees generated by migranal co-promotion activity . cost of contract manufacturing and cost of goods sold replace_table_token_4_th costs of contract manufacturing consists primarily of materials , third-party manufacturing costs , freight in and indirect personnel and other overhead costs associated with sumavel dosepro based on units sold to endo , as well as the effect of changes in reserves for excess , dated or obsolete commercial inventories and production manufacturing variances . it represents the cost of units recognized as contract manufacturing revenues in the period and the impact of underutilized production capacity and other manufacturing variances . cost of contract manufacturing in 2016 was flat compared to 2015 while the corresponding contract manufacturing revenue increased . this resulted from a change in estimate under the proportional performance method of revenue recognition , which had no impact to cost of contract manufacturing . the increase in cost of contract manufacturing in 2015 compared to 2014 corresponds to the increase in units delivered . cost of goods sold consisted primarily of materials , third-party manufacturing costs , freight in and indirect personnel and other overhead costs associated with sales of sumavel dosepro based on product dispensed to units sold to patients until the 62 sale of the business to endo in may 2014. subsequent to the divestiture , we no longer sold the sumavel dosepro commercially and manufacturing costs under the supply agreement were recorded as cost of contract manufacturing . royalty expense replace_table_token_5_th prior to our divestiture of the sumavel dosepro business in may 2014 , we incurred royalty expense on product sales of sumavel dosepro , either by us or one of our licensees . royalty expense incurred subsequent to our divestiture represent the amortization of a royalty prepayment over the contractual term to supply sumavel dosepro to endo . in the fourth quarter of 2016 , approximately $ 2.0 million of unamortized prepaid royalties were written off as a result of the impending termination of our supply agreement and were included in impairment charges in operating expense . research and development expenses replace_table_token_6_th research and development expenses consist of expenses incurred in developing , testing and

net cash used in operating activities of $ 72.9 million in 2016 primarily reflects a net loss of $ 69.7 million , adjusted for non-cash charges including a $ 8.4 million impairment charge related to long-lived assets associated with the production of sumavel dosepro and the write-down of prepaid royalties ( see note 6 ) , $ 7.4 million of stock based compensation and $ 1.8 million increase in the fair value of contingent consideration offset by $ 5.4 million change in fair value of warrant liabilities . the primary use of cash from changes in working capital was attributable to an $ 11.2 million increase in trade accounts receivable due to the timing of shipments and collections . other uses of cash in operating activities include personnel-related costs , research and development costs for zx008 , other professional services , including legal and accounting , and increases in our accounts payable and accrued expenses due to the timing of payments . cash provided by changes in working capital items was primarily attributable to lower inventory purchases of sumavel dosepro raw materials due to the anticipated wind down of our manufacturing supply agreement with endo ( see note 6 ) . net cash used in operating activities of $ 64.6 million in 2015 primarily reflects the use of cash for operations , adjusted for non-cash charges including the $ 89.5 million pre-tax gain on the sale of our zohydro er business , a $ 5.7 million loss on our short-term investments , recognition of $ 8.5 million of deferred revenue and $ 7.7 million in stock-based compensation .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we completed the phase 1 program for relday in 2015 , and efforts to secure a global strategic development and commercialization partner for relday are ongoing . sale of sumavel dosepro business and contract manufacturing supply agreement divestiture on may 16 , 2014 , the company completed the sale of its sumavel dosepro business to endo international plc , or endo , which included registered trademarks , regulatory and all rights to market , sell and distribute sumavel dosepro under the trademark and commercialization rights under a specified subset of our technology patents . we retained all rights to the dosepro technology patents and know-how for use with other products . we received $ 85.0 million in cash , subject to an escrow holdback of $ 8.5 million , and $ 4.6 million in cash for the purchase of sumavel dosepro finished goods inventory on hand at our standard cost . the escrow period expired in may 2015 . 57 as part of the transaction , we entered into a supply agreement with endo ventures limited for the exclusive right , and contractual obligation , to manufacture and supply sumavel dosepro to endo . endo agreed to purchase all sumavel dosepro from the company at cost , plus a 2.5 % mark-up and reimburse us for the royalty obligations due aradigm corporation on sales of sumavel dosepro . the agreement provides for an initial term of eight years . to support our sumavel dosepro manufacturing operations , endo provided us with an interest-free working capital advance of $ 7.0 million under a promissory note ( see note 9 ) . the working capital advance is collateralized by liens on materials and unreleased finished sumavel dosepro inventory and matures upon termination of the supply agreement . pending termination of contract manufacturing supply agreement we and endo have recently entered into a letter agreement acknowledging endo 's decision to have us discontinue the manufacturing and supply of the sumavel dosepro product under the supply agreement while the parties finalize termination of the supply agreement . we expect to fulfill current open orders during the first half of 2017 and not to supply endo with additional sumavel dosepro following such time . sale of zohydro er business on march 10 , 2015 , we entered into an asset purchase agreement with pernix ireland limited and pernix therapeutics , or collectively , pernix , whereby we agreed to sell our zohydro er business to pernix , and on april 24 , 2015 , we completed the sale to ferrimill , an irish corporation and subsidiary of pernix , as a substitute purchaser . the divested zohydro er business included the registered patents and trademarks , certain contracts , the new drug application , or nda , and other regulatory approvals , documentation and authorizations , the books and records , marketing materials and product data relating to zohydro er . we received consideration of $ 80.0 million in cash , $ 10.0 million of which has been deposited in escrow to fund potential indemnification claims for a period of 12 months , and $ 10.6 million in pernix therapeutics common stock . further , ferrimill purchased $ 0.9 million of zohydro er inventory from us . we agreed to indemnify the purchaser for certain intellectual property matters up to an aggregate amount of $ 5.0 million . in addition to the cash payment paid at closing , we are eligible to receive cash payments of up to $ 283.5 million based on the achievement of certain regulatory and sales milestones . as of december 31 , 2016 , we have not received and do not expect to receive any additional cash payments . critical accounting policies and estimates our management 's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements , which have been prepared in conformity with generally accepted accounting principles in the united states , or gaap . the preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets , liabilities , expenses and related disclosures . we evaluate our estimates and assumptions on an ongoing basis . our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances . actual results could differ from those estimates . we believe that the assumptions and estimates associated with revenue recognition , the impairment assessments related to goodwill , indefinite-lived intangible assets and other long-lived assets , business combinations , discontinued operations , fair value measurements , clinical trials expense accrual and stock-based compensation have the greatest potential impact on our consolidated financial statements . therefore , we consider these to be our critical accounting policies and estimates . for further information on all of our significant accounting policies , see note 2 to our consolidated financial statements included in this form 10-k. revenue recognition we historically generated revenue from contract manufacturing , service fees earned on collaborative arrangements and product revenue related to sumavel dosepro prior to the sale of the business in may 2014. we also generate revenue from the sale of zohydro er , which is included in net income ( loss ) from discontinued operations in the consolidated statement of operations and comprehensive income ( loss ) . revenue is recognized when ( i ) persuasive evidence of an arrangement exists , ( ii ) delivery has occurred and title has passed , ( iii ) the price is fixed or determinable and ( iv ) collectability is reasonably assured . story_separator_special_tag payments under some of the contracts we have with such parties depend on factors such as the milestones accomplished , successful enrollment of certain numbers of patients , site initiation and the completion of clinical trial milestones . in accruing service fees , we estimate the time period over which services will be performed and the level of effort to be expended in each period . if possible , we obtain information regarding unbilled services directly from these service providers . however , we may be required to estimate these services based on information available to our product development or administrative staff . if we underestimate or overestimate the activity associated with a study or service at a given point in time , adjustments to research and development expenses may be necessary in future periods . historically , our estimated accrued liabilities have approximated actual expense incurred . subsequent changes in estimates may result in a material change in our accruals . stock-based compensation stock-based compensation expense is measured at the grant date , based on the estimated fair value of the award , and is recognized as expense over the employee 's requisite service period or estimated time to satisfy the performance criteria , or vesting period , on a straight-line basis . equity awards issued to non-employees are recorded at their fair value on the grant date 61 and are periodically remeasured as the underlying awards vest unless the instruments are fully vested , immediately exercisable and nonforfeitable on the date of grant . results of operations comparison of years ended december 31 , 2016 , 2015 and 2014 revenue replace_table_token_3_th we recognize contract manufacturing revenue in connection with the supply agreement with endo . contract manufacturing revenue includes a portion of deferred revenue recognized under the “ proportional performance ” method . prior to the divestiture of our sumavel dosepro business to endo , we recognized net product sales upon the shipment of product to wholesale pharmaceutical distributors and retail pharmacies . the increase in contract manufacturing revenue in 2016 as compared to 2015 was primarily due to a change in estimate in the performance period under the proportional performance method . as a result of the impending termination of our contract manufacturing supply agreement with endo , the performance period and the total expected products to be delivered under the arrangement were revised , which resulted in an increase to 2016 revenue by $ 4.9 million . once the termination agreement is finalized , we will no longer have a source of recurring revenue and expect to have limited revenue in the foreseeable future . the increase in contract manufacturing revenue in 2015 as compared to 2014 was primarily due to the inclusion of a full year of contract manufacturing revenue in 2015 , while 2014 only included a partial year 's contract manufacturing revenue as the agreement was executed in may 2014. net product revenue in 2014 consisted of sale of sumavel dosepro products , which we divested in may 2014. service and other product revenue was comprised primarily of co-promotion fees earned for our migranal ® nasal spray sales efforts under our agreement with valeant pharmaceuticals north america llc until it was terminated in june 2015 , as well as adjustments to sumavel dosepro returns reserves subsequent to the sale of the business in may 2014. for 2016 , service and other product revenue resulted from the true-up of reserves to reflect actual sumavel dosepro returns . for 2015 , service and other product revenue were comprised of migranal co-promotion fees earned through june 2015 , $ 0.5 million received for a contract termination payment and $ 2.0 million from true-up of reserves to reflect actual returns for product whose return period had lapsed . service and other product revenue in 2014 was comprised primarily of fees generated by migranal co-promotion activity . cost of contract manufacturing and cost of goods sold replace_table_token_4_th costs of contract manufacturing consists primarily of materials , third-party manufacturing costs , freight in and indirect personnel and other overhead costs associated with sumavel dosepro based on units sold to endo , as well as the effect of changes in reserves for excess , dated or obsolete commercial inventories and production manufacturing variances . it represents the cost of units recognized as contract manufacturing revenues in the period and the impact of underutilized production capacity and other manufacturing variances . cost of contract manufacturing in 2016 was flat compared to 2015 while the corresponding contract manufacturing revenue increased . this resulted from a change in estimate under the proportional performance method of revenue recognition , which had no impact to cost of contract manufacturing . the increase in cost of contract manufacturing in 2015 compared to 2014 corresponds to the increase in units delivered . cost of goods sold consisted primarily of materials , third-party manufacturing costs , freight in and indirect personnel and other overhead costs associated with sales of sumavel dosepro based on product dispensed to units sold to patients until the 62 sale of the business to endo in may 2014. subsequent to the divestiture , we no longer sold the sumavel dosepro commercially and manufacturing costs under the supply agreement were recorded as cost of contract manufacturing . royalty expense replace_table_token_5_th prior to our divestiture of the sumavel dosepro business in may 2014 , we incurred royalty expense on product sales of sumavel dosepro , either by us or one of our licensees . royalty expense incurred subsequent to our divestiture represent the amortization of a royalty prepayment over the contractual term to supply sumavel dosepro to endo . in the fourth quarter of 2016 , approximately $ 2.0 million of unamortized prepaid royalties were written off as a result of the impending termination of our supply agreement and were included in impairment charges in operating expense . research and development expenses replace_table_token_6_th research and development expenses consist of expenses incurred in developing , testing and Narrative : net cash used in operating activities of $ 72.9 million in 2016 primarily reflects a net loss of $ 69.7 million , adjusted for non-cash charges including a $ 8.4 million impairment charge related to long-lived assets associated with the production of sumavel dosepro and the write-down of prepaid royalties ( see note 6 ) , $ 7.4 million of stock based compensation and $ 1.8 million increase in the fair value of contingent consideration offset by $ 5.4 million change in fair value of warrant liabilities . the primary use of cash from changes in working capital was attributable to an $ 11.2 million increase in trade accounts receivable due to the timing of shipments and collections . other uses of cash in operating activities include personnel-related costs , research and development costs for zx008 , other professional services , including legal and accounting , and increases in our accounts payable and accrued expenses due to the timing of payments . cash provided by changes in working capital items was primarily attributable to lower inventory purchases of sumavel dosepro raw materials due to the anticipated wind down of our manufacturing supply agreement with endo ( see note 6 ) . net cash used in operating activities of $ 64.6 million in 2015 primarily reflects the use of cash for operations , adjusted for non-cash charges including the $ 89.5 million pre-tax gain on the sale of our zohydro er business , a $ 5.7 million loss on our short-term investments , recognition of $ 8.5 million of deferred revenue and $ 7.7 million in stock-based compensation .

foreign currency translation rate changes decreased sales $ 6.3 million , or about 5 percent , compared to sales in 2012. excluding foreign currency translation , sales in latin america grew by about 9 percent during 2013. most of the sales growth in latin america occurred in brazil , and most of the growth in brazil came from continued growth in demand for the line of 4 inch groundwater pumps and motors that the company launched in brazil two years ago . in total , sales in brazil grew organically by 21 percent excluding foreign exchange . water systems sales in the middle east and africa were about 12 percent of consolidated sales and increased by about 3 percent compared to 2012. water systems sales in the middle east and africa were reduced by $ 7.2 million or about 6 percent in the year due to foreign currency translation . excluding acquisitions and the impact of foreign currency translation , sales were up about 9 percent compared to 2012. sales in the gulf region increased by about 17 percent as the governments in both saudi arabia and the uae are supporting investments in groundwater based irrigation projects . sales in turkey increased by about 10 percent as growing demand for the value line of impo branded groundwater pumps and motors , produced in the company 's 15 turkish factory , accounted for much of the growth during 2013. sales in local currency were up in south africa and zambia in 2013 offsetting lower sales in botswana . water systems sales in europe were about 8 percent of consolidated sales and grew by about 6 percent compared to the prior year . acquisition related sales during 2013 were about $ 1 million in europe , or about 1 percent . foreign currency translation rate changes had no impact on sales compared to sales in 2012. excluding acquisitions and foreign currency translation , european sales grew by about 5 percent during 2013 led by growing demand for the company 's pioneer branded mobile dewatering equipment . water systems sales in the asia pacific region were 6 percent of consolidated sales and grew by about 2 percent compared to the prior year . acquisition related sales during 2013 increased sales by about 1 percent in asia . foreign currency translation rate changes decreased sales in 2013 in the asia pacific region by about 3 percent . excluding acquisitions and foreign currency translation , sales grew by about 4 percent during 2013. the year-on-year sales increased 22 percent in southeast asia and china , with strong sales in singapore , thailand , philippines , and indonesia . this growth more than offset a modest decline in sales in the more mature asian markets including japan , korea , and australia . net sales-fueling systems fueling systems sales which represented 21 percent of consolidated sales were $ 199.1 million in 2013 , an increase of $ 22.8 million or about 13 percent versus 2012. the incremental impact of sales from acquired businesses was $ 11.1 million or about 6 percent . foreign currency translation rate changes increased sales $ 1.3 million , or about 1 percent , compared to sales in 2012. the sales change in 2013 , excluding acquisitions and foreign currency translation , was an increase of $ 10.4 million or about 6 percent . fueling systems revenue growth was primarily in developing regions where there is an ongoing need for investment in new filling station infrastructure to support the growing number of passenger vehicles on the road . developing regions represented 30 percent of the company 's fueling systems sales and grew by about 26 percent . solid sales gains were achieved in fuel containment product lines across most developing regions and for fuel dispensing product lines in china . fueling systems sales in more developed markets , like the u.s. , canada , and europe grew by about 8 percent driven primarily by the flexing acquisition . cost of sales cost of sales as a percent of net sales for 2013 and 2012 was 65.7 percent and 66.2 percent , respectively . correspondingly , the gross profit margin increased to 34.3 percent from 33.8 percent , a 50 basis point improvement . the gross profit margin improvement was due to leveraging fixed costs on higher sales , lower labor and burden costs , partially offset by higher freight costs . direct materials as a percentage of sales was unchanged compared to last year . the company 's consolidated gross profit was $ 331.5 million for 2013 , up $ 29.8 million from 2012. selling , general and administrative ( “ sg & a ” ) selling , general , and administrative ( sg & a ) expenses were $ 204.0 million in 2013 and increased by $ 15.5 million or about 8 percent in 2013 compared to last year . in 2013 , increases in sg & a attributable to acquisitions were about $ 9 million . additional year over year changes in sg & a costs were increases in marketing and selling-related expenses attributable to sales volume and higher research , development , and engineering expenses . restructuring expenses restructuring expenses for 2013 were $ 3.7 million and reduced diluted earnings per share by approximately $ 0.05. restructuring expenses in 2013 included asset write-downs , severance costs and expenses related to relocation to the new corporate headquarters and engineering center in fort wayne , indiana . there were $ 0.2 million of restructuring expenses in 2012. operating income operating income was $ 123.8 million in 2013 , up $ 10.8 million from $ 113.0 million in 2012 . 16 replace_table_token_7_th there were specific items in 2013 and 2012 that impacted operating income that were not operational in nature . story_separator_special_tag million of acquisition related expenses , primarily professional fees in sg & a , $ 0.4 million for certain legal matters and $ 0.2 million of restructuring charges . 2011 included $ 1.6 million of restructuring charges and $ 0.7 million for certain legal matters . the company refers to these items as “ non-gaap adjustments ” for purposes of presenting the non-gaap financial measures of operating income after non-gaap adjustments and percent operating income to net sales after non-gaap adjustments to net sales ( operating income margin after non-gaap adjustments ) . the company believes this information helps investors understand underlying trends in the company 's business more easily . the differences between these non-gaap financial measures and the most comparable gaap measures are reconciled in the following tables : replace_table_token_13_th operating income-water systems 22 water systems operating income , after non-gaap adjustments , was $ 125.6 million in 2012 , an increase of 18 percent versus 2011. the 2012 operating income margin after non-gaap adjustments was 17.6 percent and increased by 130 basis points compared to 2011. this increased profitability was the result of operating leverage , increases in pricing , and productivity improvements . operating income-fueling systems fueling systems operating income after non-gaap adjustments was $ 37.0 million in 2012 compared to $ 32.1 million after non-gaap adjustments in 2011 , an increase of 15 percent . the 2012 operating income margin after non-gaap adjustments was 21.0 percent and increased by 180 basis points compared to the 19.2 percent of net sales in 2011. this increased profitability was the result of operating leverage , increases in pricing , and productivity improvements . operating income-other operating income-other is composed primarily of unallocated general and administrative expenses . general and administrative expenses were higher due to increases related to information technology expenditures for software , telephone and other erp integration costs as well as to higher performance based and stock based compensation expenses . interest expense interest expense for 2012 and 2011 was $ 10.2 million and $ 10.5 million , respectively . other income or expense other income or expense was a gain of $ 14.9 million in 2012 and a gain of $ 5.7 million in 2011. included in other income in 2012 was a one-time gain on the pioneer transaction worth $ 12.2 million . the gain on the original investment the company held in pioneer arose as a the result of a new enterprise valuation of the pioneer entity compared to the book value of franklin electric 's equity investment in pioneer . also included in other income in 2012 was income from equity investments of $ 0.6 million and interest income of $ 2.3 million , primarily derived from the investment of cash balances in short-term securities . included in other income or expense in 2011 was income from equity investments of $ 2.3 million and interest income of $ 2.6 million , primarily derived from the investment of cash balances in short-term securities . in conjunction with the impo acquisition , the company entered into a forward purchase contract for turkish lira for a portion of the estimated acquisition price . the contract was outstanding as of the end of the first quarter of 2011 and resulted in a pre-tax gain included in other income of approximately $ 0.6 million . foreign exchange foreign currency-based transactions produced a loss for 2012 of $ 1.7 million , primarily due to the mexican peso , the euro , south african rand , brazilian real and czech koruna relative to the u.s. dollar , none of which individually were significant . foreign currency-based transactions produced a loss in 2011 of $ 1.4 million , primarily due to the turkish lira . income taxes the provision for income taxes in 2012 and 2011 was $ 32.2 million and $ 23.4 million , respectively . the tax rate for 2012 was 27.8 percent and 2011 was 26.9 percent . the projected tax rate may differ from the statutory rate primarily due to the indefinite reinvestment of foreign earnings taxed at rates below the u.s. statutory rate as well as recognition of foreign tax credits . the company has the ability to indefinitely reinvest these foreign earnings based on the earnings and cash projections of its other operations as well as cash on hand and available credit . net income net income for 2012 was $ 83.7 million compared to 2011 net income of $ 63.7 million . net income attributable to franklin electric co. , inc. for 2012 was $ 82.9 million , or $ 1.73 per diluted share , compared to 2011 net income attributable to franklin electric co. , inc. of $ 62.9 million or $ 1.33 per diluted share . net income attributable to franklin electric co. , inc. after non-gaap adjustments for 2012 was $ 74.7 million , or $ 1.57 per diluted share , compared to 2011 net income attributable to franklin electric co. , inc. after non-gaap adjustments of $ 64.1 million or $ 1.35 per diluted share . there were specific items in 2012 and 2011 that impacted net income attributable to franklin electric co. , inc. that were not operational in nature . the company refers to these items as “ non-gaap adjustments ” for purposes of presenting the non-gaap financial measures of net income attributable to franklin electric co. , inc. and adjusted eps . the company believes this information helps investors understand underlying trends in the company 's business more easily . the differences between these non-gaap financial measures and the most comparable gaap measures are reconciled in the following tables : 23 replace_table_token_14_th replace_table_token_15_th story_separator_special_tag style= `` line-height:120 % ; text-align : left ; font-size:10pt ; `` > finance activities net cash flows from financing activities were $ 11.1 million in 2013 compared to a use of cash of $ 19.3 million in 2012 and a use of cash of $ 15.5 million in 2011. during 2013

capital resources and liquidity overview the company 's primary sources of liquidity are cash on hand , cash flows from operations and long-term debt funds available . on december 31 , 2012 , the company , allen county , indiana , and certain institutional investors entered into a bond purchase and loan agreement . under the agreement , allen county , indiana issued a series of project bonds entitled “ taxable economic development bonds , series 2012 ( franklin electric co. , inc. project ) . ” the aggregate principal amount of the project bonds issued and authenticated was limited to $ 25.0 million . the company then borrowed the proceeds under the project bonds through the issuance of project notes to partially finance the cost of acquisition , construction , installation and equipping of the new global corporate headquarters and engineering center . the project notes ( tax increment financing debt ) bear interest at 3.6 percent per annum . interest and principal balance of the project notes are due and payable by the company directly to the institutional investors in aggregate semi-annual installments commencing on july 10 , 2013 , and concluding on january 10 , 24 2033. the use of the proceeds from the project notes was limited to assist the financing of the new global corporate headquarters and engineering center . the company also has an amended and restated uncommitted note purchase and private shelf agreement ( the “ prudential agreement ” ) in the amount of $ 200.0 million , with $ 150.0 million of notes issued thereunder beginning to mature in 2015. the company has no scheduled principal payments under the prudential agreement until 2015 at which time it amortizes for 5 years at an amount of $ 30.0 million per year . as of december 28 , 2013 , the company had $ 50.0 million borrowing capacity under the prudential agreement . in addition , the company has a committed , unsecured , revolving credit agreement maturing on december 14 , 2016 ( the “ agreement ” ) in the amount of $ 150.0 million .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. foreign currency translation rate changes decreased sales $ 6.3 million , or about 5 percent , compared to sales in 2012. excluding foreign currency translation , sales in latin america grew by about 9 percent during 2013. most of the sales growth in latin america occurred in brazil , and most of the growth in brazil came from continued growth in demand for the line of 4 inch groundwater pumps and motors that the company launched in brazil two years ago . in total , sales in brazil grew organically by 21 percent excluding foreign exchange . water systems sales in the middle east and africa were about 12 percent of consolidated sales and increased by about 3 percent compared to 2012. water systems sales in the middle east and africa were reduced by $ 7.2 million or about 6 percent in the year due to foreign currency translation . excluding acquisitions and the impact of foreign currency translation , sales were up about 9 percent compared to 2012. sales in the gulf region increased by about 17 percent as the governments in both saudi arabia and the uae are supporting investments in groundwater based irrigation projects . sales in turkey increased by about 10 percent as growing demand for the value line of impo branded groundwater pumps and motors , produced in the company 's 15 turkish factory , accounted for much of the growth during 2013. sales in local currency were up in south africa and zambia in 2013 offsetting lower sales in botswana . water systems sales in europe were about 8 percent of consolidated sales and grew by about 6 percent compared to the prior year . acquisition related sales during 2013 were about $ 1 million in europe , or about 1 percent . foreign currency translation rate changes had no impact on sales compared to sales in 2012. excluding acquisitions and foreign currency translation , european sales grew by about 5 percent during 2013 led by growing demand for the company 's pioneer branded mobile dewatering equipment . water systems sales in the asia pacific region were 6 percent of consolidated sales and grew by about 2 percent compared to the prior year . acquisition related sales during 2013 increased sales by about 1 percent in asia . foreign currency translation rate changes decreased sales in 2013 in the asia pacific region by about 3 percent . excluding acquisitions and foreign currency translation , sales grew by about 4 percent during 2013. the year-on-year sales increased 22 percent in southeast asia and china , with strong sales in singapore , thailand , philippines , and indonesia . this growth more than offset a modest decline in sales in the more mature asian markets including japan , korea , and australia . net sales-fueling systems fueling systems sales which represented 21 percent of consolidated sales were $ 199.1 million in 2013 , an increase of $ 22.8 million or about 13 percent versus 2012. the incremental impact of sales from acquired businesses was $ 11.1 million or about 6 percent . foreign currency translation rate changes increased sales $ 1.3 million , or about 1 percent , compared to sales in 2012. the sales change in 2013 , excluding acquisitions and foreign currency translation , was an increase of $ 10.4 million or about 6 percent . fueling systems revenue growth was primarily in developing regions where there is an ongoing need for investment in new filling station infrastructure to support the growing number of passenger vehicles on the road . developing regions represented 30 percent of the company 's fueling systems sales and grew by about 26 percent . solid sales gains were achieved in fuel containment product lines across most developing regions and for fuel dispensing product lines in china . fueling systems sales in more developed markets , like the u.s. , canada , and europe grew by about 8 percent driven primarily by the flexing acquisition . cost of sales cost of sales as a percent of net sales for 2013 and 2012 was 65.7 percent and 66.2 percent , respectively . correspondingly , the gross profit margin increased to 34.3 percent from 33.8 percent , a 50 basis point improvement . the gross profit margin improvement was due to leveraging fixed costs on higher sales , lower labor and burden costs , partially offset by higher freight costs . direct materials as a percentage of sales was unchanged compared to last year . the company 's consolidated gross profit was $ 331.5 million for 2013 , up $ 29.8 million from 2012. selling , general and administrative ( “ sg & a ” ) selling , general , and administrative ( sg & a ) expenses were $ 204.0 million in 2013 and increased by $ 15.5 million or about 8 percent in 2013 compared to last year . in 2013 , increases in sg & a attributable to acquisitions were about $ 9 million . additional year over year changes in sg & a costs were increases in marketing and selling-related expenses attributable to sales volume and higher research , development , and engineering expenses . restructuring expenses restructuring expenses for 2013 were $ 3.7 million and reduced diluted earnings per share by approximately $ 0.05. restructuring expenses in 2013 included asset write-downs , severance costs and expenses related to relocation to the new corporate headquarters and engineering center in fort wayne , indiana . there were $ 0.2 million of restructuring expenses in 2012. operating income operating income was $ 123.8 million in 2013 , up $ 10.8 million from $ 113.0 million in 2012 . 16 replace_table_token_7_th there were specific items in 2013 and 2012 that impacted operating income that were not operational in nature . story_separator_special_tag million of acquisition related expenses , primarily professional fees in sg & a , $ 0.4 million for certain legal matters and $ 0.2 million of restructuring charges . 2011 included $ 1.6 million of restructuring charges and $ 0.7 million for certain legal matters . the company refers to these items as “ non-gaap adjustments ” for purposes of presenting the non-gaap financial measures of operating income after non-gaap adjustments and percent operating income to net sales after non-gaap adjustments to net sales ( operating income margin after non-gaap adjustments ) . the company believes this information helps investors understand underlying trends in the company 's business more easily . the differences between these non-gaap financial measures and the most comparable gaap measures are reconciled in the following tables : replace_table_token_13_th operating income-water systems 22 water systems operating income , after non-gaap adjustments , was $ 125.6 million in 2012 , an increase of 18 percent versus 2011. the 2012 operating income margin after non-gaap adjustments was 17.6 percent and increased by 130 basis points compared to 2011. this increased profitability was the result of operating leverage , increases in pricing , and productivity improvements . operating income-fueling systems fueling systems operating income after non-gaap adjustments was $ 37.0 million in 2012 compared to $ 32.1 million after non-gaap adjustments in 2011 , an increase of 15 percent . the 2012 operating income margin after non-gaap adjustments was 21.0 percent and increased by 180 basis points compared to the 19.2 percent of net sales in 2011. this increased profitability was the result of operating leverage , increases in pricing , and productivity improvements . operating income-other operating income-other is composed primarily of unallocated general and administrative expenses . general and administrative expenses were higher due to increases related to information technology expenditures for software , telephone and other erp integration costs as well as to higher performance based and stock based compensation expenses . interest expense interest expense for 2012 and 2011 was $ 10.2 million and $ 10.5 million , respectively . other income or expense other income or expense was a gain of $ 14.9 million in 2012 and a gain of $ 5.7 million in 2011. included in other income in 2012 was a one-time gain on the pioneer transaction worth $ 12.2 million . the gain on the original investment the company held in pioneer arose as a the result of a new enterprise valuation of the pioneer entity compared to the book value of franklin electric 's equity investment in pioneer . also included in other income in 2012 was income from equity investments of $ 0.6 million and interest income of $ 2.3 million , primarily derived from the investment of cash balances in short-term securities . included in other income or expense in 2011 was income from equity investments of $ 2.3 million and interest income of $ 2.6 million , primarily derived from the investment of cash balances in short-term securities . in conjunction with the impo acquisition , the company entered into a forward purchase contract for turkish lira for a portion of the estimated acquisition price . the contract was outstanding as of the end of the first quarter of 2011 and resulted in a pre-tax gain included in other income of approximately $ 0.6 million . foreign exchange foreign currency-based transactions produced a loss for 2012 of $ 1.7 million , primarily due to the mexican peso , the euro , south african rand , brazilian real and czech koruna relative to the u.s. dollar , none of which individually were significant . foreign currency-based transactions produced a loss in 2011 of $ 1.4 million , primarily due to the turkish lira . income taxes the provision for income taxes in 2012 and 2011 was $ 32.2 million and $ 23.4 million , respectively . the tax rate for 2012 was 27.8 percent and 2011 was 26.9 percent . the projected tax rate may differ from the statutory rate primarily due to the indefinite reinvestment of foreign earnings taxed at rates below the u.s. statutory rate as well as recognition of foreign tax credits . the company has the ability to indefinitely reinvest these foreign earnings based on the earnings and cash projections of its other operations as well as cash on hand and available credit . net income net income for 2012 was $ 83.7 million compared to 2011 net income of $ 63.7 million . net income attributable to franklin electric co. , inc. for 2012 was $ 82.9 million , or $ 1.73 per diluted share , compared to 2011 net income attributable to franklin electric co. , inc. of $ 62.9 million or $ 1.33 per diluted share . net income attributable to franklin electric co. , inc. after non-gaap adjustments for 2012 was $ 74.7 million , or $ 1.57 per diluted share , compared to 2011 net income attributable to franklin electric co. , inc. after non-gaap adjustments of $ 64.1 million or $ 1.35 per diluted share . there were specific items in 2012 and 2011 that impacted net income attributable to franklin electric co. , inc. that were not operational in nature . the company refers to these items as “ non-gaap adjustments ” for purposes of presenting the non-gaap financial measures of net income attributable to franklin electric co. , inc. and adjusted eps . the company believes this information helps investors understand underlying trends in the company 's business more easily . the differences between these non-gaap financial measures and the most comparable gaap measures are reconciled in the following tables : 23 replace_table_token_14_th replace_table_token_15_th story_separator_special_tag style= `` line-height:120 % ; text-align : left ; font-size:10pt ; `` > finance activities net cash flows from financing activities were $ 11.1 million in 2013 compared to a use of cash of $ 19.3 million in 2012 and a use of cash of $ 15.5 million in 2011. during 2013 Narrative : capital resources and liquidity overview the company 's primary sources of liquidity are cash on hand , cash flows from operations and long-term debt funds available . on december 31 , 2012 , the company , allen county , indiana , and certain institutional investors entered into a bond purchase and loan agreement . under the agreement , allen county , indiana issued a series of project bonds entitled “ taxable economic development bonds , series 2012 ( franklin electric co. , inc. project ) . ” the aggregate principal amount of the project bonds issued and authenticated was limited to $ 25.0 million . the company then borrowed the proceeds under the project bonds through the issuance of project notes to partially finance the cost of acquisition , construction , installation and equipping of the new global corporate headquarters and engineering center . the project notes ( tax increment financing debt ) bear interest at 3.6 percent per annum . interest and principal balance of the project notes are due and payable by the company directly to the institutional investors in aggregate semi-annual installments commencing on july 10 , 2013 , and concluding on january 10 , 24 2033. the use of the proceeds from the project notes was limited to assist the financing of the new global corporate headquarters and engineering center . the company also has an amended and restated uncommitted note purchase and private shelf agreement ( the “ prudential agreement ” ) in the amount of $ 200.0 million , with $ 150.0 million of notes issued thereunder beginning to mature in 2015. the company has no scheduled principal payments under the prudential agreement until 2015 at which time it amortizes for 5 years at an amount of $ 30.0 million per year . as of december 28 , 2013 , the company had $ 50.0 million borrowing capacity under the prudential agreement . in addition , the company has a committed , unsecured , revolving credit agreement maturing on december 14 , 2016 ( the “ agreement ” ) in the amount of $ 150.0 million .

our level of profitability is primarily determined by how adequately our premiums assumed and investment income cover our costs and expenses , which consist primarily of acquisition costs and other underwriting expenses , claim payments and general and administrative expenses . one factor leading to variation in our operational results is the timing and magnitude of any follow-on offerings we undertake ( if any ) , as we are able to deploy new capital to collateralize new reinsurance treaties and consequently , earn additional premium revenue . in addition , our results of operations may be seasonal in that hurricanes and other tropical storms typically occur during the period from june 1 through november 30. further , our results of operations may be subject to significant variations due to factors affecting the property and casualty insurance industry in general , which include competition , legislation , regulation , general economic conditions , judicial trends , and fluctuations in interest rates and other changes in the investment environment . because we employ an opportunistic underwriting and investment philosophy , period-to-period comparisons of our underwriting results may not be meaningful . in addition , our historical investment results may not necessarily be indicative of future performance . due to the nature of our reinsurance and investment strategies , our operating results will likely fluctuate from period to period . 35 due to influx of new risk capital from alternative capital market participants such as hedge funds and pension funds , we believe that the reinsurance industry is currently over-capitalized , and will continue in this trend for the foreseeable future . the over-capitalization of the market is not uniform as there are a number of insurers and reinsurers that have suffered and continue to suffer from capacity issues . we continue to assess the opportunities that may be available to us with insurance and reinsurance companies with this profile . if the reinsurance market continues to soften , our strategy is to reduce premium writings rather than accept mispriced risk , and conserve our capital for a more opportune environment . significant rate increases could occur if financial and credit markets experience adverse shocks that result in the loss of capital of insurers and reinsurers , or if there are major catastrophic events , especially in north america . the persistent low interest rate environment has reduced the earnings of many insurance and reinsurance companies and we believe that the continuation of low interest rates , coupled with the reduction of prior years ' reserve redundancies , could cause the industry to adopt overall higher pricing . principal revenue and expense items revenues we derive our revenues from two principal sources : premiums assumed from reinsurance on property and casualty business ; and income from investments . premiums assumed include all premiums received by a reinsurance company during a specified accounting period , even if the policy provides coverage beyond the end of the period . premiums are earned over the term of the related policies . at the end of each accounting period , the portion of the premiums that are not yet earned are included in the unearned premiums reserve and are realized as revenue in subsequent periods over the remaining term of the policy . our policies typically have a term of twelve months . thus , for example , for a policy that is written on july 1 , 2014 , one-half of the premiums will be earned in 2014 and the other half will be earned during 2015. premiums from reinsurance on property and casualty business assumed are directly related to the number , type and pricing of contracts we write . premiums assumed are recorded net of change in loss experience refund , which consists of changes in amounts due to the cedants under two of our reinsurance contracts . these contracts contain retrospective provisions that adjust premiums in the event losses are minimal or zero . we recognize a liability pro-rata over the period in which the absence of loss experience obligates us to refund premiums under the contracts , and we will derecognize such liability in the period in which a loss experience arises . the change in loss experience refund is negatively correlated to loss and loss adjustment expenses described below . income from our investments is primarily comprised of interest income , dividends and net realized gains on investment securities . such income is primarily from the company 's investment capital , some of which is held in trust accounts that collateralize the reinsurance policies that we write . the investment parameters for capital held in such trust accounts is generally be established by the cedant for the relevant policy . expenses our expenses consist primarily of the following : losses and loss adjustment expenses ; policy acquisition costs and underwriting expenses ; and 36 general and administrative expenses . loss and loss adjustment expenses are a function of the amount and type of reinsurance contracts we write and of the loss experience of the underlying coverage . as described below , loss and loss adjustment expenses are based on the claims reported by our company 's ceding insurers , and where necessary , may include an actuarial analysis of the estimated losses , including losses incurred during the period and changes in estimates from prior periods . depending on the nature of the contract , loss and loss adjustment expenses may be paid over a period of years . policy acquisition costs and underwriting expenses consist primarily of brokerage fees , ceding commissions , premium taxes and other direct expenses that relate to our writing of reinsurance contracts . we amortize deferred acquisition costs over the related contract term . story_separator_special_tag as of december 31 , 2014 , our loss experience refund payable increased by $ 5.7 million , or 422 % , to $ 7.1 million , from $ 1.4 million at december 31 , 2013. the increase is due primarily to the recognition of a pro-rated liability over the year ended december 31 , 2014 , because the absence of loss experience under two of our reinsurance contracts obligates us to refund premium to two of our ceding reinsurers . unearned premiums reserve . as of december 31 , 2014 , our unearned premiums reserve increased by $ 3.7 million , or 182 % , to $ 5.7 million , from $ 2 million at december 31 , 2013. the increase is due primarily to the successful placement of additional and larger reinsurance contracts for the treaty year effective june 1 , 2014. shareholders ' equity . as of december 31 , 2014 , shareholders ' equity increased by $ 29.3 million to $ 36.7 million , or 392 % , from $ 7.5 million at december 31 , 2013. the increase is due to the net proceeds received upon completion of our initial public offering on march 26 , 2014 as well as our net income of $ 4 million for the year ended december 31 , 2014 offset by dividends paid to shareholders of $ 1.7 million . see the disclosure in note 6 of the notes to the consolidated financial statements included within this annual report on form 10-k for additional information . 41 story_separator_special_tag actual catastrophic event or multiple catastrophic events could have a material adverse effect on our 43 financial condition , results of operations and cash flows . as described under “critical accounting policies— reserves for losses and loss adjustment expenses ” below , under united stated generally accepted accounting principles ( “u.s . gaap” ) , we are not permitted to establish loss reserves with respect to losses that may be incurred under reinsurance contracts until the occurrence of an event which may give rise to a claim . as a result , only loss reserves applicable to losses incurred up to the reporting date may be established , with no provision for a contingency reserve to account for expected future losses . critical accounting policies we are required to make estimates and assumptions in certain circumstances that affect amounts reported in our consolidated financial statements and related notes . we evaluate these estimates and assumptions on an on-going basis based on historical developments , market conditions , industry trends and other information that we believe to be reasonable under the circumstances . these accounting policies pertain to premium revenues and risk transfer , reserve for loss and loss adjustment expenses and the reporting of deferred acquisition costs . premium revenue and risk transfer . we record premiums revenue as earned pro-rata over the terms of the reinsurance agreements and the unearned portion at the balance sheet date is recorded as unearned premiums reserve . a reserve is made for estimated premium deficiencies to the extent that estimated losses and loss adjustment expenses exceed related unearned premiums . investment income is not considered in determining whether or not a deficiency exists . we account for reinsurance contracts in accordance with asc 944 , ‘‘financial services – insurance.” assessing whether or not a reinsurance contract meets the conditions for risk transfer requires judgment . the determination of risk transfer is critical to reporting premiums written . if we determine that a reinsurance contract does not transfer sufficient risk , we must account for the contract as a deposit liability . loss experience refund payable . certain contracts include retrospective provisions that adjust premiums or result in profit commissions in the event losses are minimal or zero . under such contracts , the company expects to recognize aggregate liabilities payable to the ceding insurers assuming no losses occur during the contract period . in accordance with u.s. gaap , the company will recognize a liability in the period in which the absence of loss experience obligates the company to pay cash or other consideration under the contract . on the contrary , the company will derecognize such liability in the period in which a loss experience arises . such adjustments to the liability , which accrue throughout the contract term , will reduce the liability should a catastrophic loss event covered by the company occur . reserves for losses and loss adjustment expenses . we determine our reserves for losses and loss adjustment expenses on the basis of the claims reported by our ceding insurers , and for losses incurred but not reported , if any , we will use the assistance of an independent actuary . the reserves for losses and loss adjustment expenses represent management 's best estimate of the ultimate settlement costs of all losses and loss adjustment expenses . we believe that the amounts that are determined by us will be adequate ; however , the inherent impossibility of predicting future events with precision , results in uncertainty as to the amount which will ultimately be required for the settlement of losses and loss expenses , and the differences could be material . under u.s. gaap , we are not permitted to establish loss reserves until the occurrence of an actual loss event . as a result , only loss reserves applicable to losses incurred up to the reporting date may be recorded , with no allowance for the provision of a contingency reserve to account for expected future losses . losses arising from future events , which could be substantial , are estimated and recognized at the time the loss is incurred . deferred acquisition costs . we defer certain expenses that are directly related to and vary with producing reinsurance business , including brokerage fees on gross premiums assumed , premium taxes and certain other costs related to the acquisition of reinsurance contracts . these costs are capitalized

liquidity and capital resources general we are organized as a holding company with substantially no operations of our own . our operations are conducted through our sole reinsurance subsidiary , oxbridge reinsurance limited , which underwrites risks associated with our property and casualty reinsurance programs . we have minimal continuing cash needs which are principally related to the payment of administrative expenses and shareholder dividends . there are restrictions on oxbridge reinsurance limited 's ability to pay dividends which are described in more detail below . sources and uses of funds our sources of funds primarily consist of premium receipts ( net of brokerage fees and federal excise taxes , where applicable ) and investment income , including interest , dividends and realized gains . we use cash to pay losses and loss adjustment expenses , other underwriting expenses , dividends , and general and administrative expenses . substantially all of our surplus funds , net of funds required for cash liquidity purposes , are invested in accordance with our investment guidelines . our investment portfolio is primarily comprised of cash and highly liquid securities , which can be liquidated , if necessary , to meet current liabilities . we believe that we have sufficient flexibility to liquidate any long-term securities that we own in a rising market to generate liquidity . since inception , we have financed our cash flow requirements through the proceeds from the issuance of our securities and net premiums received . in may 2013 , we issued and sold 1,115,350 ordinary shares in a private placement to a group of accredited investors , including certain of our officers and directors , for an aggregate purchase price of approximately $ 6.7 million . during the year ended december 31 , 2014 , our cash positions increased by approximately $ 4.6 million primarily as a result of the completion of our initial public offering on march 26 , 2014 and the use of approximately half of the proceeds from our initial public offering to increase the statutory capital and surplus of our insurance subsidiary and to use as collateral under our new reinsurance contracts .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. our level of profitability is primarily determined by how adequately our premiums assumed and investment income cover our costs and expenses , which consist primarily of acquisition costs and other underwriting expenses , claim payments and general and administrative expenses . one factor leading to variation in our operational results is the timing and magnitude of any follow-on offerings we undertake ( if any ) , as we are able to deploy new capital to collateralize new reinsurance treaties and consequently , earn additional premium revenue . in addition , our results of operations may be seasonal in that hurricanes and other tropical storms typically occur during the period from june 1 through november 30. further , our results of operations may be subject to significant variations due to factors affecting the property and casualty insurance industry in general , which include competition , legislation , regulation , general economic conditions , judicial trends , and fluctuations in interest rates and other changes in the investment environment . because we employ an opportunistic underwriting and investment philosophy , period-to-period comparisons of our underwriting results may not be meaningful . in addition , our historical investment results may not necessarily be indicative of future performance . due to the nature of our reinsurance and investment strategies , our operating results will likely fluctuate from period to period . 35 due to influx of new risk capital from alternative capital market participants such as hedge funds and pension funds , we believe that the reinsurance industry is currently over-capitalized , and will continue in this trend for the foreseeable future . the over-capitalization of the market is not uniform as there are a number of insurers and reinsurers that have suffered and continue to suffer from capacity issues . we continue to assess the opportunities that may be available to us with insurance and reinsurance companies with this profile . if the reinsurance market continues to soften , our strategy is to reduce premium writings rather than accept mispriced risk , and conserve our capital for a more opportune environment . significant rate increases could occur if financial and credit markets experience adverse shocks that result in the loss of capital of insurers and reinsurers , or if there are major catastrophic events , especially in north america . the persistent low interest rate environment has reduced the earnings of many insurance and reinsurance companies and we believe that the continuation of low interest rates , coupled with the reduction of prior years ' reserve redundancies , could cause the industry to adopt overall higher pricing . principal revenue and expense items revenues we derive our revenues from two principal sources : premiums assumed from reinsurance on property and casualty business ; and income from investments . premiums assumed include all premiums received by a reinsurance company during a specified accounting period , even if the policy provides coverage beyond the end of the period . premiums are earned over the term of the related policies . at the end of each accounting period , the portion of the premiums that are not yet earned are included in the unearned premiums reserve and are realized as revenue in subsequent periods over the remaining term of the policy . our policies typically have a term of twelve months . thus , for example , for a policy that is written on july 1 , 2014 , one-half of the premiums will be earned in 2014 and the other half will be earned during 2015. premiums from reinsurance on property and casualty business assumed are directly related to the number , type and pricing of contracts we write . premiums assumed are recorded net of change in loss experience refund , which consists of changes in amounts due to the cedants under two of our reinsurance contracts . these contracts contain retrospective provisions that adjust premiums in the event losses are minimal or zero . we recognize a liability pro-rata over the period in which the absence of loss experience obligates us to refund premiums under the contracts , and we will derecognize such liability in the period in which a loss experience arises . the change in loss experience refund is negatively correlated to loss and loss adjustment expenses described below . income from our investments is primarily comprised of interest income , dividends and net realized gains on investment securities . such income is primarily from the company 's investment capital , some of which is held in trust accounts that collateralize the reinsurance policies that we write . the investment parameters for capital held in such trust accounts is generally be established by the cedant for the relevant policy . expenses our expenses consist primarily of the following : losses and loss adjustment expenses ; policy acquisition costs and underwriting expenses ; and 36 general and administrative expenses . loss and loss adjustment expenses are a function of the amount and type of reinsurance contracts we write and of the loss experience of the underlying coverage . as described below , loss and loss adjustment expenses are based on the claims reported by our company 's ceding insurers , and where necessary , may include an actuarial analysis of the estimated losses , including losses incurred during the period and changes in estimates from prior periods . depending on the nature of the contract , loss and loss adjustment expenses may be paid over a period of years . policy acquisition costs and underwriting expenses consist primarily of brokerage fees , ceding commissions , premium taxes and other direct expenses that relate to our writing of reinsurance contracts . we amortize deferred acquisition costs over the related contract term . story_separator_special_tag as of december 31 , 2014 , our loss experience refund payable increased by $ 5.7 million , or 422 % , to $ 7.1 million , from $ 1.4 million at december 31 , 2013. the increase is due primarily to the recognition of a pro-rated liability over the year ended december 31 , 2014 , because the absence of loss experience under two of our reinsurance contracts obligates us to refund premium to two of our ceding reinsurers . unearned premiums reserve . as of december 31 , 2014 , our unearned premiums reserve increased by $ 3.7 million , or 182 % , to $ 5.7 million , from $ 2 million at december 31 , 2013. the increase is due primarily to the successful placement of additional and larger reinsurance contracts for the treaty year effective june 1 , 2014. shareholders ' equity . as of december 31 , 2014 , shareholders ' equity increased by $ 29.3 million to $ 36.7 million , or 392 % , from $ 7.5 million at december 31 , 2013. the increase is due to the net proceeds received upon completion of our initial public offering on march 26 , 2014 as well as our net income of $ 4 million for the year ended december 31 , 2014 offset by dividends paid to shareholders of $ 1.7 million . see the disclosure in note 6 of the notes to the consolidated financial statements included within this annual report on form 10-k for additional information . 41 story_separator_special_tag actual catastrophic event or multiple catastrophic events could have a material adverse effect on our 43 financial condition , results of operations and cash flows . as described under “critical accounting policies— reserves for losses and loss adjustment expenses ” below , under united stated generally accepted accounting principles ( “u.s . gaap” ) , we are not permitted to establish loss reserves with respect to losses that may be incurred under reinsurance contracts until the occurrence of an event which may give rise to a claim . as a result , only loss reserves applicable to losses incurred up to the reporting date may be established , with no provision for a contingency reserve to account for expected future losses . critical accounting policies we are required to make estimates and assumptions in certain circumstances that affect amounts reported in our consolidated financial statements and related notes . we evaluate these estimates and assumptions on an on-going basis based on historical developments , market conditions , industry trends and other information that we believe to be reasonable under the circumstances . these accounting policies pertain to premium revenues and risk transfer , reserve for loss and loss adjustment expenses and the reporting of deferred acquisition costs . premium revenue and risk transfer . we record premiums revenue as earned pro-rata over the terms of the reinsurance agreements and the unearned portion at the balance sheet date is recorded as unearned premiums reserve . a reserve is made for estimated premium deficiencies to the extent that estimated losses and loss adjustment expenses exceed related unearned premiums . investment income is not considered in determining whether or not a deficiency exists . we account for reinsurance contracts in accordance with asc 944 , ‘‘financial services – insurance.” assessing whether or not a reinsurance contract meets the conditions for risk transfer requires judgment . the determination of risk transfer is critical to reporting premiums written . if we determine that a reinsurance contract does not transfer sufficient risk , we must account for the contract as a deposit liability . loss experience refund payable . certain contracts include retrospective provisions that adjust premiums or result in profit commissions in the event losses are minimal or zero . under such contracts , the company expects to recognize aggregate liabilities payable to the ceding insurers assuming no losses occur during the contract period . in accordance with u.s. gaap , the company will recognize a liability in the period in which the absence of loss experience obligates the company to pay cash or other consideration under the contract . on the contrary , the company will derecognize such liability in the period in which a loss experience arises . such adjustments to the liability , which accrue throughout the contract term , will reduce the liability should a catastrophic loss event covered by the company occur . reserves for losses and loss adjustment expenses . we determine our reserves for losses and loss adjustment expenses on the basis of the claims reported by our ceding insurers , and for losses incurred but not reported , if any , we will use the assistance of an independent actuary . the reserves for losses and loss adjustment expenses represent management 's best estimate of the ultimate settlement costs of all losses and loss adjustment expenses . we believe that the amounts that are determined by us will be adequate ; however , the inherent impossibility of predicting future events with precision , results in uncertainty as to the amount which will ultimately be required for the settlement of losses and loss expenses , and the differences could be material . under u.s. gaap , we are not permitted to establish loss reserves until the occurrence of an actual loss event . as a result , only loss reserves applicable to losses incurred up to the reporting date may be recorded , with no allowance for the provision of a contingency reserve to account for expected future losses . losses arising from future events , which could be substantial , are estimated and recognized at the time the loss is incurred . deferred acquisition costs . we defer certain expenses that are directly related to and vary with producing reinsurance business , including brokerage fees on gross premiums assumed , premium taxes and certain other costs related to the acquisition of reinsurance contracts . these costs are capitalized Narrative : liquidity and capital resources general we are organized as a holding company with substantially no operations of our own . our operations are conducted through our sole reinsurance subsidiary , oxbridge reinsurance limited , which underwrites risks associated with our property and casualty reinsurance programs . we have minimal continuing cash needs which are principally related to the payment of administrative expenses and shareholder dividends . there are restrictions on oxbridge reinsurance limited 's ability to pay dividends which are described in more detail below . sources and uses of funds our sources of funds primarily consist of premium receipts ( net of brokerage fees and federal excise taxes , where applicable ) and investment income , including interest , dividends and realized gains . we use cash to pay losses and loss adjustment expenses , other underwriting expenses , dividends , and general and administrative expenses . substantially all of our surplus funds , net of funds required for cash liquidity purposes , are invested in accordance with our investment guidelines . our investment portfolio is primarily comprised of cash and highly liquid securities , which can be liquidated , if necessary , to meet current liabilities . we believe that we have sufficient flexibility to liquidate any long-term securities that we own in a rising market to generate liquidity . since inception , we have financed our cash flow requirements through the proceeds from the issuance of our securities and net premiums received . in may 2013 , we issued and sold 1,115,350 ordinary shares in a private placement to a group of accredited investors , including certain of our officers and directors , for an aggregate purchase price of approximately $ 6.7 million . during the year ended december 31 , 2014 , our cash positions increased by approximately $ 4.6 million primarily as a result of the completion of our initial public offering on march 26 , 2014 and the use of approximately half of the proceeds from our initial public offering to increase the statutory capital and surplus of our insurance subsidiary and to use as collateral under our new reinsurance contracts .

we have agreed with allergan to share development costs up to an aggregate of $ 75 million through proof-of-concept ( poc ) studies on a ⅔ , ⅓ basis , respectively , and allergan has agreed to assume all post-poc development costs . additionally , we have an option to co-promote the licensed programs in the united states and china , subject to certain conditions set forth in the collaboration agreement . 41 we currently have corporate and administrative offices in carmel , indiana and research facilities in groton , connecticut and san francisco , california . since our inception , we have had no revenue from product sales , and have funded our operations principally through debt financings prior to our initial public offering in 2010 and through equity financings and collaborations since then . our operations to date have been primarily limited to organizing and staffing our company , licensing our product candidates , discovering and developing our product candidates , establishing initial manufacturing capabilities for our product candidates , maintaining and improving our patent portfolio and raising capital . we have generated significant losses to date , and we expect to continue to generate losses as we continue to develop our product candidates . as of december 31 , 2017 , we had an accumulated deficit of approximately $ 251.0 million . because we do not generate revenue from any of our product candidates , our losses will continue as we further develop and seek regulatory approval for , and commercialize , our product candidates . as a result , our operating losses are likely to be substantial over the next several years as we continue the development of our product candidates and thereafter if none is approved or successfully launched . we are unable to predict the extent of any future losses or when we will become profitable , if at all . financial operations overview research and development expense research and development expenses consist primarily of costs incurred for our research activities , including our drug discovery efforts , target validation , lead optimization and the development of our product candidates , which include : employee-related expenses including salaries , benefits , and stock-based compensation expense ; expenses incurred under agreements with third parties , including contract research organizations ( cros ) that conduct research and development , nonclinical and clinical activities on our behalf and the cost of consultants ; the cost of lab supplies and acquiring , developing , and manufacturing nonclinical study materials ; and facilities , depreciation , and other expenses , which include direct and allocated expenses for rent and maintenance of facilities , insurance , and other operating costs . research and development costs are expensed as incurred . nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized . the capitalized amounts are expensed as the related goods are delivered or the services are performed . we use our employee and infrastructure resources across multiple research and development programs , and we allocate internal employee-related and infrastructure costs , as well as certain third-party costs , to each of our programs based on the personnel resources allocated to such program . our research and development expenses , by major program , are outlined in the table below : replace_table_token_4_th diltiazem was a prior product candidate that we are no longer developing . since the merger in july 2014 , the hbv-cure and microbiome programs are the sole focus of our company . the successful discovery and development of our product candidates is highly uncertain . as such , at this time , we can not reasonably estimate , or know the nature , timing and estimated costs , of the efforts that will be necessary to complete the remainder of their development . we are also unable to predict when , if ever , material net cash inflows will commence from our product candidates . this is due to the numerous risks and uncertainties associated with developing medicines , including the uncertainty of : the timing , progress and success of our phase 1 and phase 2 clinical development of abi-h0731 and our nonclinical and planned clinical development activities for abi-h2158 and other product candidates we may identify in each of the hbv-cure and microbiome programs ; establishing an appropriate safety profile with ind-enabling toxicology studies sufficient to advance additional product candidates into clinical development ; 42 successful enrollment in , and completion of , clinical trials ; receipt of marketing approvals from applicable regulatory authorities ; establishing internal commercial manufacturing capabilities or making arrangements with third-party manufacturers ; obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates ; launching commercial sales of the products , if and when approved , whether alone or in collaboration with others ; and maintaining a continued acceptable safety profile of the products following approval and wide use . a change in the outcome of any of these variables or variables discussed in “ item 1a . risk factors ” with respect to the development of any of our product candidates would significantly change the costs and timing associated with the development of that product candidate . research and development activities are central to our business model . product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development , primarily due to the increased size and duration of later-stage clinical trials . we expect research and development costs to increase significantly for the foreseeable future as our product candidate development programs progress . however , we do not believe that it is possible at this time to accurately project total program-specific expenses through commercialization . story_separator_special_tag the fair value of stock options issued to employees and directors with service conditions are typically amortized to expense on a straight-line basis over the requisite service periods of the awards , which is generally the vesting period . we account for stock options granted to non-employees , which primarily consist of consultants and members of our scientific advisory board , using the fair value method . stock options granted to non-employees are subject to periodic revaluation over their vesting terms and stock-based compensation expense is recognized using an accelerated recognition model . the fair value of restricted stock units is determined based on the number of shares granted and the quoted market price of our common stock on the date of grant . the fair value of restricted stock units with performance conditions deemed probable of being achieved and vesting are amortized to expense over the requisite service period using the straight-line method of expense recognition . effective on january 1 , 2017 , we elected to account for forfeited awards as they occur as permitted by accounting standards update ( `` asu `` ) 2016-09. ultimately , the actual expenses recognized over the vesting period will be for those shares that vested . prior to making this election , we estimated a forfeiture rate for awards at 0 % , as we did not have a significant history of forfeitures . off-balance sheet arrangements since our inception , we have not engaged in any off-balance sheet arrangements , including the use of structured finance , special purpose entities or variable interest entities . 46 contractual obligations we have contractual and commercial obligations under our operating leases and other obligations related to research and development activities , purchase commitments and licenses . the following table summarizes our future contractual obligations and commercial commitments at december 31 , 2017. replace_table_token_5_th in general , milestone and royalty payments associated with certain license agreements ( other than contingent performance milestone payments anticipated to be paid in 2018 ) have not been included in the above table of contractual obligations as we can not reasonably estimate if or when they will occur . the milestone payments included in the table of contractual obligations above are payments we believe are reasonably likely to occur during the indicated time periods . excluded from future r & d and purchase commitments is our portion of the potential future shared research and development expenses under the collaboration agreement with allergan of up to $ 25 million . further , we anticipate that our operating lease obligations will be higher than projected as we renew existing real estate leases that expire in 2018 and enter into new or expanded real estate leases . results of operations general during the year ended december 31 , 2017 , we generated approximately $ 9.0 million of collaboration revenue , which included the amortization of deferred revenue and reimbursement revenue in each case incurred under the collaboration agreement . at december 31 , 2017 , we had an accumulated deficit of approximately $ 251.0 million primarily as a result of research and development expenses , purchases of in-process research and development and general and administrative expenses . while we may in the future generate revenue from a variety of sources , including license fees , milestone payments , research and development payments in connection with strategic partnerships and or product sales , our product candidates are at an early stage of development and may never be successfully developed or commercialized . accordingly , we expect to continue to incur substantial losses from operations for the foreseeable future and there can be no assurance that we will ever generate significant revenues . comparison of the years ended december 31 , 2017 and december 31 , 2016 research and development expense research and development expense , excluding stock-based compensation expense , was approximately $ 38.8 million for the year ended december 31 , 2017 , an increase of approximately $ 8.7 million from approximately $ 30.1 million for the same period in 2016. the net increase in research and development expenses was primarily due to an increase of $ 3.2 million in research expenses for our hbv-cure program and an increase of approximately $ 5.6 million for nonclinical development of our microbiome program . stock-based compensation expense was approximately $ 5.4 million for the year ended december 31 , 2017 , an increase of approximately $ 2.4 million from approximately $ 3.0 million for the year ended december 31 , 2016. general and administrative expense general and administrative expense , excluding stock-based compensation expense , was approximately $ 13.8 million for the year ended december 31 , 2017 , an increase of approximately $ 3.6 million from approximately $ 10.2 million for the same period in 2016. the net increase in general and administrative expenses was primarily due to an increase of approximately $ 2.5 million of compensation and bonus expenses , $ 0.4 million in professional expenses and $ 0.3 million in legal expenses . stock-based compensation expense was approximately $ 3.2 million for the year ended december 31 , 2017 , an increase of approximately $ 1.2 million from approximately $ 2.0 million for the year ended december 31 , 2016. interest and other income interest and other income was approximately $ 1.0 million for the year ended december 31 , 2017 compared to approximately $ 1.5 million for the same period in 2016. interest income for the years ended december 31 , 2017 and 2016 was primarily related to interest income on marketable securities - corporation bonds and money market fund . 47 income tax benefit we maintain a valuation allowance on deferred tax assets due to the uncertainty regarding the ability to utilize these deferred tax assets in the future . the deferred tax liability was recorded in connection with the acquisition of assembly pharmaceuticals in 2014 and relates to the difference between the carrying amount of in-process research and

liquidity and capital resources as a result of our significant research and development expenditures and the lack of any fda-approved products to generate product sales revenue , we have not been profitable and have generated operating losses since we were incorporated in october 2005. we have funded our operations through december 31 , 2017 principally with debt prior to our initial public offering , and thereafter with equity financing , raising an aggregate of $ 257.3 million in net proceeds from public offerings and private placements from inception to december 31 , 2017. additionally , in february 2017 , we received a $ 50.0 million upfront payment in connection with the closing of the collaboration agreement with allergan . in january 2014 , we sold an aggregate of 92,472 shares of common stock under the amended at-the-market common equity sales program , resulting in net proceeds of approximately $ 1.8 million . 48 on october 6 , 2014 , we sold to various institutional investors an aggregate of 1,959,000 shares of common stock in a registered direct offering . the purchase price paid by the investors was $ 8.04 per share and an aggregate of approximately $ 15.0 million in net proceeds were received . in connection with the offering , we entered into a placement agent agreement with william blair & company , l.l.c. , who acted as sole placement agent in the offering , and pursuant to which we paid a placement agent fee equal to 5.0 % of the gross proceeds of the offering . on march 19 , 2015 , we sold to various investors an aggregate of 5,555,555 shares of common stock in a public offering . the purchase price paid by investors was $ 13.50 per share and an aggregate of $ 70.4 million ( net of underwriting discounts and commissions and offering expenses ) was received .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we have agreed with allergan to share development costs up to an aggregate of $ 75 million through proof-of-concept ( poc ) studies on a ⅔ , ⅓ basis , respectively , and allergan has agreed to assume all post-poc development costs . additionally , we have an option to co-promote the licensed programs in the united states and china , subject to certain conditions set forth in the collaboration agreement . 41 we currently have corporate and administrative offices in carmel , indiana and research facilities in groton , connecticut and san francisco , california . since our inception , we have had no revenue from product sales , and have funded our operations principally through debt financings prior to our initial public offering in 2010 and through equity financings and collaborations since then . our operations to date have been primarily limited to organizing and staffing our company , licensing our product candidates , discovering and developing our product candidates , establishing initial manufacturing capabilities for our product candidates , maintaining and improving our patent portfolio and raising capital . we have generated significant losses to date , and we expect to continue to generate losses as we continue to develop our product candidates . as of december 31 , 2017 , we had an accumulated deficit of approximately $ 251.0 million . because we do not generate revenue from any of our product candidates , our losses will continue as we further develop and seek regulatory approval for , and commercialize , our product candidates . as a result , our operating losses are likely to be substantial over the next several years as we continue the development of our product candidates and thereafter if none is approved or successfully launched . we are unable to predict the extent of any future losses or when we will become profitable , if at all . financial operations overview research and development expense research and development expenses consist primarily of costs incurred for our research activities , including our drug discovery efforts , target validation , lead optimization and the development of our product candidates , which include : employee-related expenses including salaries , benefits , and stock-based compensation expense ; expenses incurred under agreements with third parties , including contract research organizations ( cros ) that conduct research and development , nonclinical and clinical activities on our behalf and the cost of consultants ; the cost of lab supplies and acquiring , developing , and manufacturing nonclinical study materials ; and facilities , depreciation , and other expenses , which include direct and allocated expenses for rent and maintenance of facilities , insurance , and other operating costs . research and development costs are expensed as incurred . nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized . the capitalized amounts are expensed as the related goods are delivered or the services are performed . we use our employee and infrastructure resources across multiple research and development programs , and we allocate internal employee-related and infrastructure costs , as well as certain third-party costs , to each of our programs based on the personnel resources allocated to such program . our research and development expenses , by major program , are outlined in the table below : replace_table_token_4_th diltiazem was a prior product candidate that we are no longer developing . since the merger in july 2014 , the hbv-cure and microbiome programs are the sole focus of our company . the successful discovery and development of our product candidates is highly uncertain . as such , at this time , we can not reasonably estimate , or know the nature , timing and estimated costs , of the efforts that will be necessary to complete the remainder of their development . we are also unable to predict when , if ever , material net cash inflows will commence from our product candidates . this is due to the numerous risks and uncertainties associated with developing medicines , including the uncertainty of : the timing , progress and success of our phase 1 and phase 2 clinical development of abi-h0731 and our nonclinical and planned clinical development activities for abi-h2158 and other product candidates we may identify in each of the hbv-cure and microbiome programs ; establishing an appropriate safety profile with ind-enabling toxicology studies sufficient to advance additional product candidates into clinical development ; 42 successful enrollment in , and completion of , clinical trials ; receipt of marketing approvals from applicable regulatory authorities ; establishing internal commercial manufacturing capabilities or making arrangements with third-party manufacturers ; obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates ; launching commercial sales of the products , if and when approved , whether alone or in collaboration with others ; and maintaining a continued acceptable safety profile of the products following approval and wide use . a change in the outcome of any of these variables or variables discussed in “ item 1a . risk factors ” with respect to the development of any of our product candidates would significantly change the costs and timing associated with the development of that product candidate . research and development activities are central to our business model . product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development , primarily due to the increased size and duration of later-stage clinical trials . we expect research and development costs to increase significantly for the foreseeable future as our product candidate development programs progress . however , we do not believe that it is possible at this time to accurately project total program-specific expenses through commercialization . story_separator_special_tag the fair value of stock options issued to employees and directors with service conditions are typically amortized to expense on a straight-line basis over the requisite service periods of the awards , which is generally the vesting period . we account for stock options granted to non-employees , which primarily consist of consultants and members of our scientific advisory board , using the fair value method . stock options granted to non-employees are subject to periodic revaluation over their vesting terms and stock-based compensation expense is recognized using an accelerated recognition model . the fair value of restricted stock units is determined based on the number of shares granted and the quoted market price of our common stock on the date of grant . the fair value of restricted stock units with performance conditions deemed probable of being achieved and vesting are amortized to expense over the requisite service period using the straight-line method of expense recognition . effective on january 1 , 2017 , we elected to account for forfeited awards as they occur as permitted by accounting standards update ( `` asu `` ) 2016-09. ultimately , the actual expenses recognized over the vesting period will be for those shares that vested . prior to making this election , we estimated a forfeiture rate for awards at 0 % , as we did not have a significant history of forfeitures . off-balance sheet arrangements since our inception , we have not engaged in any off-balance sheet arrangements , including the use of structured finance , special purpose entities or variable interest entities . 46 contractual obligations we have contractual and commercial obligations under our operating leases and other obligations related to research and development activities , purchase commitments and licenses . the following table summarizes our future contractual obligations and commercial commitments at december 31 , 2017. replace_table_token_5_th in general , milestone and royalty payments associated with certain license agreements ( other than contingent performance milestone payments anticipated to be paid in 2018 ) have not been included in the above table of contractual obligations as we can not reasonably estimate if or when they will occur . the milestone payments included in the table of contractual obligations above are payments we believe are reasonably likely to occur during the indicated time periods . excluded from future r & d and purchase commitments is our portion of the potential future shared research and development expenses under the collaboration agreement with allergan of up to $ 25 million . further , we anticipate that our operating lease obligations will be higher than projected as we renew existing real estate leases that expire in 2018 and enter into new or expanded real estate leases . results of operations general during the year ended december 31 , 2017 , we generated approximately $ 9.0 million of collaboration revenue , which included the amortization of deferred revenue and reimbursement revenue in each case incurred under the collaboration agreement . at december 31 , 2017 , we had an accumulated deficit of approximately $ 251.0 million primarily as a result of research and development expenses , purchases of in-process research and development and general and administrative expenses . while we may in the future generate revenue from a variety of sources , including license fees , milestone payments , research and development payments in connection with strategic partnerships and or product sales , our product candidates are at an early stage of development and may never be successfully developed or commercialized . accordingly , we expect to continue to incur substantial losses from operations for the foreseeable future and there can be no assurance that we will ever generate significant revenues . comparison of the years ended december 31 , 2017 and december 31 , 2016 research and development expense research and development expense , excluding stock-based compensation expense , was approximately $ 38.8 million for the year ended december 31 , 2017 , an increase of approximately $ 8.7 million from approximately $ 30.1 million for the same period in 2016. the net increase in research and development expenses was primarily due to an increase of $ 3.2 million in research expenses for our hbv-cure program and an increase of approximately $ 5.6 million for nonclinical development of our microbiome program . stock-based compensation expense was approximately $ 5.4 million for the year ended december 31 , 2017 , an increase of approximately $ 2.4 million from approximately $ 3.0 million for the year ended december 31 , 2016. general and administrative expense general and administrative expense , excluding stock-based compensation expense , was approximately $ 13.8 million for the year ended december 31 , 2017 , an increase of approximately $ 3.6 million from approximately $ 10.2 million for the same period in 2016. the net increase in general and administrative expenses was primarily due to an increase of approximately $ 2.5 million of compensation and bonus expenses , $ 0.4 million in professional expenses and $ 0.3 million in legal expenses . stock-based compensation expense was approximately $ 3.2 million for the year ended december 31 , 2017 , an increase of approximately $ 1.2 million from approximately $ 2.0 million for the year ended december 31 , 2016. interest and other income interest and other income was approximately $ 1.0 million for the year ended december 31 , 2017 compared to approximately $ 1.5 million for the same period in 2016. interest income for the years ended december 31 , 2017 and 2016 was primarily related to interest income on marketable securities - corporation bonds and money market fund . 47 income tax benefit we maintain a valuation allowance on deferred tax assets due to the uncertainty regarding the ability to utilize these deferred tax assets in the future . the deferred tax liability was recorded in connection with the acquisition of assembly pharmaceuticals in 2014 and relates to the difference between the carrying amount of in-process research and Narrative : liquidity and capital resources as a result of our significant research and development expenditures and the lack of any fda-approved products to generate product sales revenue , we have not been profitable and have generated operating losses since we were incorporated in october 2005. we have funded our operations through december 31 , 2017 principally with debt prior to our initial public offering , and thereafter with equity financing , raising an aggregate of $ 257.3 million in net proceeds from public offerings and private placements from inception to december 31 , 2017. additionally , in february 2017 , we received a $ 50.0 million upfront payment in connection with the closing of the collaboration agreement with allergan . in january 2014 , we sold an aggregate of 92,472 shares of common stock under the amended at-the-market common equity sales program , resulting in net proceeds of approximately $ 1.8 million . 48 on october 6 , 2014 , we sold to various institutional investors an aggregate of 1,959,000 shares of common stock in a registered direct offering . the purchase price paid by the investors was $ 8.04 per share and an aggregate of approximately $ 15.0 million in net proceeds were received . in connection with the offering , we entered into a placement agent agreement with william blair & company , l.l.c. , who acted as sole placement agent in the offering , and pursuant to which we paid a placement agent fee equal to 5.0 % of the gross proceeds of the offering . on march 19 , 2015 , we sold to various investors an aggregate of 5,555,555 shares of common stock in a public offering . the purchase price paid by investors was $ 13.50 per share and an aggregate of $ 70.4 million ( net of underwriting discounts and commissions and offering expenses ) was received .

in part 1 of moxie , at the optimal dose level , omaveloxolone demonstrated a statistically significant improvement in mfars scores of 3.8 points ( p=0.0001 ) versus baseline and a placebo-corrected improvement in mfars scores of 2.3 points ( p=0.06 ) . we expect to have top-line data from the moxie trial in the second half of 2019. if successful , we believe the results from the moxie clinical trial , together with other data from the omaveloxolone program , will be sufficient to form the basis of an nda submission to the fda seeking approval for omaveloxolone in the united states . we are studying bardoxolone methyl in ctd-pah , which is a serious and progressive disease that leads to heart failure and death . ctd-pah patients are less responsive to existing vasodilator therapies than i-pah patients and have a worse prognosis . bardoxolone methyl is being studied for the treatment of ctd-pah in the phase 3 catalyst trial . we initiated catalyst following review of data from our phase 2 clinical trial , lariat , which demonstrated a statistically significant , mean time averaged increase in 6mwd at 16 weeks in ctd-pah patients compared to baseline . we currently expect to have top-line data from the catalyst trial in the second half of 2018. however , the trial is designed to enroll between 130 and 200 patients , and the final sample size will be determined by a pre-specified , blinded sample size re-calculation based on 6mwd variability and baseline characteristics . the timing of data availability may change if the sample size is increased due to the sample size re-calculation . if successful , we believe the results from the catalyst trial , together with other data from the bardoxolone methyl development program , will be sufficient to form the basis of an nda submission to the fda seeking approval for bardoxolone methyl in the united states . in addition to our three registrational programs , we are currently conducting a battery of additional clinical and preclinical programs in serious and life-threatening diseases that may provide expansion opportunities for our drug candidates . we plan to evaluate data from these earlier stage programs to determine which indications to advance into later stage trials . 74 to date , we have focused most of our efforts and resources on developing our product candidates and conducting preclinical studies and clinical trials . we have historically financed our operations primarily through revenue generated from our collaborations with abbvie and khk , from sales of our securities , and secured loans . we have not received any payments or revenue from collaborations other than nonrefundable upfront , milestone , and cost sharing payment s from our collaborations with abbvie and khk and reimbursements of expenses under the terms of our agreement with khk . we have incurred losses in each year since our inception , other than in 2014. as of december 31 , 2017 , we had $ 129.8 million of cash a nd cash equivalents and an accumulated deficit of $ 337.1 million . we continue to incur significant research and development and other expenses related to our ongoing operations . despite contractual product development commitments and the potential to rec eive future payments from our collaborators , we anticipate that we will continue to incur losses for the foreseeable future , and we anticipate that our losses will increase as we continue our development of , and seek regulatory approval for , our product ca ndidates . if we do not successfully develop and obtain regulatory approval of our existing product candidates or any future product candidates and effectively manufacture , market , and sell any products that are approved , we may never generate revenue from product sales . furthermore , even if we do generate revenue from product sales , we may never again achieve or sustain profitability on a quarterly or annual basis . our prior losses , combined with expected future losses , have had and will continue to have an adverse effect on our stockholders ' equity and working capital . our failure to become and remain profitable could depress the market price of our class a common stock and could impair our ability to raise capital , expand our business , diversify our pr oduct offerings , or continue our operations . on august 1 , 2017 , we closed a follow-on underwritten public offering of 3,737,500 shares of our class a common stock , which included 487,500 shares of class a common stock issued pursuant to an option granted to the underwriters , for gross proceeds of $ 115.9 million . the company received total proceeds from the offering of $ 108.5 million , after deducting underwriting discounts and commissions and offering expenses . we intend to use the net proceeds for working capital and general corporate purposes , which include , but are not limited to , advancing the development of bardoxolone methyl through a phase 2/3 program in ckd caused by alport syndrome , phase 2 programs in additional kidney indications , and phase 2 programs in ph-ild and the development of omaveloxolone in fa . the probability of success for each of our product candidates and clinical programs and our ability to generate product revenue and become profitable depend upon a variety of factors , including the quality of the product candidate , clinical results , investment in the program , competition , manufacturing capability , commercial viability , and our collaborators ' ability to successfully execute our development and commercialization plans . we will also require additional capital through equity or debt financings in order to fund our operations and execute on our business plans , and there is no assurance that such financing will be available to us on commercially reasonable terms or at all . story_separator_special_tag we expect to have top-line data from the catalyst trial in the second half of 2018 , assuming the re-calculation of the final sample size does not impact the timing of data release , and one year top-line results from the phase 3 portion of cardinal and top-line data from the moxie trial in the second half of 2019. assuming we meet these current timing expectations from our lead programs , we believe our existing cash and cash equivalents , in combination with anticipated borrowing of $ 20 million under the term b loan and receipt of a milestone payment from khk of $ 30 million during 2018 , will be sufficient to enable us to fund our operating expenses and capital expenditure requirements through the second half of 2019. however , we anticipate opportunistically raising additional capital before that time through equity offerings , collaboration or license agreements , or additional debt in order to maintain adequate capital reserves . in addition , we may choose to raise additional capital at any time for the further development of our existing product candidates and may also need to raise additional funds sooner to pursue other development activities related to additional product candidates . decisions about the timing or nature of any financing will be based on , among other things , our perception of our liquidity and of the market opportunity to raise equity or debt . additional securities may include common stock , preferred stock , or debt securities . until we can generate a sufficient amount of revenue from our product candidates , if ever , we expect to finance future cash needs through public or private equity or debt offerings , commercial loans , and collaboration transactions . additional capital may not be available on reasonable terms , if at all . if we are unable to raise additional capital in sufficient amounts or on terms acceptable to us , we may have to significantly delay , scale back , or discontinue the development or commercialization of one or more of our product candidates . if we raise additional funds through the issuance of additional equity or debt securities , it could result in dilution to our existing stockholders or increased fixed payment obligations , and any such securities may have rights senior to those of our common stock . if we incur indebtedness , we could become subject to covenants that would restrict our operations and potentially impair our competitiveness , such as limitations on our ability to incur additional debt , limitations on our ability to acquire , sell , or license intellectual property rights , and other operating restrictions that could adversely affect our ability to conduct our business , and any such debt could be secured by some or all of our assets . any of these events could significantly harm our business , financial condition , and prospects . our forecast of the period through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties , and actual results could vary as a result of a number of factors . we have based this estimate on assumptions that may prove to be wrong , and we could utilize our available capital resources sooner than we currently expect . our future funding requirements , both near- and long-term , will depend on many factors , including , but not limited to : the scope , rate of progress , results and cost of our clinical trials , preclinical testing , and other activities related to the development of our product candidates ; the number and characteristics of product candidates that we pursue ; the costs of development efforts for our product candidates that are not subject to reimbursement from our collaborators ; 81 the costs necessary to obtain regulatory approvals , if any , for our product candidates in the united states and other jurisdictions , and the costs of post-mar keting studies that could be required by regulatory authorities in jurisdictions where approval is obtained ; the continuation of our existing collaborations and entry into new collaborations and the receipt of any collaboration payments ; the time and unreimbursed costs necessary to commercialize products in territories in which our product candidates are approved for sale ; the revenue from any future sales of our products for which we are entitled to a profit share , royalties , and milestones ; the level of reimbursement or third-party payor pricing available to our products ; the costs of obtaining third-party commercial supplies of our products , if any , manufactured in accordance with regulatory requirements ; the costs associated with being a public company ; and the costs we incur in the filing , prosecution , maintenance , and defense of our extensive patent portfolio and other intellectual property rights . if we can not expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital , our business , financial condition , and results of operations could be materially adversely affected . contractual obligations and commitments contractual obligations as of december 31 , 2017 , our contractual obligations were as follows : replace_table_token_16_th clinical trials as of december 31 , 2017 , we have several on-going clinical trials in various stages . under agreements with various cros and clinical trial sites , we incur expenses related to clinical trials of our product candidates and potential other clinical candidates . the timing and amounts of these disbursements are contingent upon the achievement of certain milestones , patient enrollment , and services rendered or as expenses are incurred by the cros or clinical trial sites . therefore , we can not estimate the potential timing and amount of these payments and they have been excluded from the table above . critical accounting policies and significant judgments and estimates our management 's discussion and analysis of our financial condition and results of

cash flows the following table sets forth the primary sources and uses of cash for the years ended december 31 : replace_table_token_15_th operating activities net cash used in operating activities was $ 83.3 million for the year ended december 31 , 2017 , consisting primarily of net loss of $ 47.7 million adjusted for non-cash items including stock-based compensation expense of $ 6.5 million , depreciation and amortization expense of $ 0.6 million , and a net decrease in operating assets and liabilities of $ 42.7 million . the significant items in the change in operating assets and liabilities include an increase of prepaid expenses and other current assets of $ 1.3 million due to prepayments on trial and other operating expenses and reimbursements due from khk , an increase in accrued direct research and other current liabilities of $ 7.0 million due to clinical trial activities , a decrease in accounts payable of $ 1.8 million due to timing of vendor payment , and a decrease in deferred revenue of $ 46.6 million . the decrease in deferred revenue relates to the timing of upfront payments and ratable recognition of revenue over the expected term of the performance obligations under our collaboration agreements with abbvie and khk , resulting in recognition of $ 46.6 million of license and milestone revenue . net cash used in operating activities was $ 19.3 million for the year ended december 31 , 2016 , consisting primarily of net loss of $ 6.2 million adjusted for non-cash items including stock-based compensation expense of $ 2.4 million , depreciation expense of $ 0.7 million , and a net decrease in operating assets and liabilities of $ 16.2 million .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. in part 1 of moxie , at the optimal dose level , omaveloxolone demonstrated a statistically significant improvement in mfars scores of 3.8 points ( p=0.0001 ) versus baseline and a placebo-corrected improvement in mfars scores of 2.3 points ( p=0.06 ) . we expect to have top-line data from the moxie trial in the second half of 2019. if successful , we believe the results from the moxie clinical trial , together with other data from the omaveloxolone program , will be sufficient to form the basis of an nda submission to the fda seeking approval for omaveloxolone in the united states . we are studying bardoxolone methyl in ctd-pah , which is a serious and progressive disease that leads to heart failure and death . ctd-pah patients are less responsive to existing vasodilator therapies than i-pah patients and have a worse prognosis . bardoxolone methyl is being studied for the treatment of ctd-pah in the phase 3 catalyst trial . we initiated catalyst following review of data from our phase 2 clinical trial , lariat , which demonstrated a statistically significant , mean time averaged increase in 6mwd at 16 weeks in ctd-pah patients compared to baseline . we currently expect to have top-line data from the catalyst trial in the second half of 2018. however , the trial is designed to enroll between 130 and 200 patients , and the final sample size will be determined by a pre-specified , blinded sample size re-calculation based on 6mwd variability and baseline characteristics . the timing of data availability may change if the sample size is increased due to the sample size re-calculation . if successful , we believe the results from the catalyst trial , together with other data from the bardoxolone methyl development program , will be sufficient to form the basis of an nda submission to the fda seeking approval for bardoxolone methyl in the united states . in addition to our three registrational programs , we are currently conducting a battery of additional clinical and preclinical programs in serious and life-threatening diseases that may provide expansion opportunities for our drug candidates . we plan to evaluate data from these earlier stage programs to determine which indications to advance into later stage trials . 74 to date , we have focused most of our efforts and resources on developing our product candidates and conducting preclinical studies and clinical trials . we have historically financed our operations primarily through revenue generated from our collaborations with abbvie and khk , from sales of our securities , and secured loans . we have not received any payments or revenue from collaborations other than nonrefundable upfront , milestone , and cost sharing payment s from our collaborations with abbvie and khk and reimbursements of expenses under the terms of our agreement with khk . we have incurred losses in each year since our inception , other than in 2014. as of december 31 , 2017 , we had $ 129.8 million of cash a nd cash equivalents and an accumulated deficit of $ 337.1 million . we continue to incur significant research and development and other expenses related to our ongoing operations . despite contractual product development commitments and the potential to rec eive future payments from our collaborators , we anticipate that we will continue to incur losses for the foreseeable future , and we anticipate that our losses will increase as we continue our development of , and seek regulatory approval for , our product ca ndidates . if we do not successfully develop and obtain regulatory approval of our existing product candidates or any future product candidates and effectively manufacture , market , and sell any products that are approved , we may never generate revenue from product sales . furthermore , even if we do generate revenue from product sales , we may never again achieve or sustain profitability on a quarterly or annual basis . our prior losses , combined with expected future losses , have had and will continue to have an adverse effect on our stockholders ' equity and working capital . our failure to become and remain profitable could depress the market price of our class a common stock and could impair our ability to raise capital , expand our business , diversify our pr oduct offerings , or continue our operations . on august 1 , 2017 , we closed a follow-on underwritten public offering of 3,737,500 shares of our class a common stock , which included 487,500 shares of class a common stock issued pursuant to an option granted to the underwriters , for gross proceeds of $ 115.9 million . the company received total proceeds from the offering of $ 108.5 million , after deducting underwriting discounts and commissions and offering expenses . we intend to use the net proceeds for working capital and general corporate purposes , which include , but are not limited to , advancing the development of bardoxolone methyl through a phase 2/3 program in ckd caused by alport syndrome , phase 2 programs in additional kidney indications , and phase 2 programs in ph-ild and the development of omaveloxolone in fa . the probability of success for each of our product candidates and clinical programs and our ability to generate product revenue and become profitable depend upon a variety of factors , including the quality of the product candidate , clinical results , investment in the program , competition , manufacturing capability , commercial viability , and our collaborators ' ability to successfully execute our development and commercialization plans . we will also require additional capital through equity or debt financings in order to fund our operations and execute on our business plans , and there is no assurance that such financing will be available to us on commercially reasonable terms or at all . story_separator_special_tag we expect to have top-line data from the catalyst trial in the second half of 2018 , assuming the re-calculation of the final sample size does not impact the timing of data release , and one year top-line results from the phase 3 portion of cardinal and top-line data from the moxie trial in the second half of 2019. assuming we meet these current timing expectations from our lead programs , we believe our existing cash and cash equivalents , in combination with anticipated borrowing of $ 20 million under the term b loan and receipt of a milestone payment from khk of $ 30 million during 2018 , will be sufficient to enable us to fund our operating expenses and capital expenditure requirements through the second half of 2019. however , we anticipate opportunistically raising additional capital before that time through equity offerings , collaboration or license agreements , or additional debt in order to maintain adequate capital reserves . in addition , we may choose to raise additional capital at any time for the further development of our existing product candidates and may also need to raise additional funds sooner to pursue other development activities related to additional product candidates . decisions about the timing or nature of any financing will be based on , among other things , our perception of our liquidity and of the market opportunity to raise equity or debt . additional securities may include common stock , preferred stock , or debt securities . until we can generate a sufficient amount of revenue from our product candidates , if ever , we expect to finance future cash needs through public or private equity or debt offerings , commercial loans , and collaboration transactions . additional capital may not be available on reasonable terms , if at all . if we are unable to raise additional capital in sufficient amounts or on terms acceptable to us , we may have to significantly delay , scale back , or discontinue the development or commercialization of one or more of our product candidates . if we raise additional funds through the issuance of additional equity or debt securities , it could result in dilution to our existing stockholders or increased fixed payment obligations , and any such securities may have rights senior to those of our common stock . if we incur indebtedness , we could become subject to covenants that would restrict our operations and potentially impair our competitiveness , such as limitations on our ability to incur additional debt , limitations on our ability to acquire , sell , or license intellectual property rights , and other operating restrictions that could adversely affect our ability to conduct our business , and any such debt could be secured by some or all of our assets . any of these events could significantly harm our business , financial condition , and prospects . our forecast of the period through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties , and actual results could vary as a result of a number of factors . we have based this estimate on assumptions that may prove to be wrong , and we could utilize our available capital resources sooner than we currently expect . our future funding requirements , both near- and long-term , will depend on many factors , including , but not limited to : the scope , rate of progress , results and cost of our clinical trials , preclinical testing , and other activities related to the development of our product candidates ; the number and characteristics of product candidates that we pursue ; the costs of development efforts for our product candidates that are not subject to reimbursement from our collaborators ; 81 the costs necessary to obtain regulatory approvals , if any , for our product candidates in the united states and other jurisdictions , and the costs of post-mar keting studies that could be required by regulatory authorities in jurisdictions where approval is obtained ; the continuation of our existing collaborations and entry into new collaborations and the receipt of any collaboration payments ; the time and unreimbursed costs necessary to commercialize products in territories in which our product candidates are approved for sale ; the revenue from any future sales of our products for which we are entitled to a profit share , royalties , and milestones ; the level of reimbursement or third-party payor pricing available to our products ; the costs of obtaining third-party commercial supplies of our products , if any , manufactured in accordance with regulatory requirements ; the costs associated with being a public company ; and the costs we incur in the filing , prosecution , maintenance , and defense of our extensive patent portfolio and other intellectual property rights . if we can not expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital , our business , financial condition , and results of operations could be materially adversely affected . contractual obligations and commitments contractual obligations as of december 31 , 2017 , our contractual obligations were as follows : replace_table_token_16_th clinical trials as of december 31 , 2017 , we have several on-going clinical trials in various stages . under agreements with various cros and clinical trial sites , we incur expenses related to clinical trials of our product candidates and potential other clinical candidates . the timing and amounts of these disbursements are contingent upon the achievement of certain milestones , patient enrollment , and services rendered or as expenses are incurred by the cros or clinical trial sites . therefore , we can not estimate the potential timing and amount of these payments and they have been excluded from the table above . critical accounting policies and significant judgments and estimates our management 's discussion and analysis of our financial condition and results of Narrative : cash flows the following table sets forth the primary sources and uses of cash for the years ended december 31 : replace_table_token_15_th operating activities net cash used in operating activities was $ 83.3 million for the year ended december 31 , 2017 , consisting primarily of net loss of $ 47.7 million adjusted for non-cash items including stock-based compensation expense of $ 6.5 million , depreciation and amortization expense of $ 0.6 million , and a net decrease in operating assets and liabilities of $ 42.7 million . the significant items in the change in operating assets and liabilities include an increase of prepaid expenses and other current assets of $ 1.3 million due to prepayments on trial and other operating expenses and reimbursements due from khk , an increase in accrued direct research and other current liabilities of $ 7.0 million due to clinical trial activities , a decrease in accounts payable of $ 1.8 million due to timing of vendor payment , and a decrease in deferred revenue of $ 46.6 million . the decrease in deferred revenue relates to the timing of upfront payments and ratable recognition of revenue over the expected term of the performance obligations under our collaboration agreements with abbvie and khk , resulting in recognition of $ 46.6 million of license and milestone revenue . net cash used in operating activities was $ 19.3 million for the year ended december 31 , 2016 , consisting primarily of net loss of $ 6.2 million adjusted for non-cash items including stock-based compensation expense of $ 2.4 million , depreciation expense of $ 0.7 million , and a net decrease in operating assets and liabilities of $ 16.2 million .

we believe we can achieve profitability because our proprietary technology platform will allow us to maximize efficiencies in the development , production and sales of our products . by leveraging our core technology , we believe we can develop and bring to market products rapidly and greatly reduce our design and development costs . we expect to continue to increase production volume , and to reduce the per unit production cost for the t : slim pump and its disposable cartridge over time . further , due to shared product design features , our production system is adaptable to new products and we intend to leverage our shared manufacturing infrastructure to reduce our product costs and drive operational efficiencies . by expanding our product offerings to address people in all segments of the large and growing insulin-dependent diabetes market , we believe we can increase the productivity of our sales force , thereby improving our operating margin . from inception through december 31 , 2013 , we have primarily financed our operations through sales of equity securities , and , to a lesser extent , debt financings . we expect to continue to incur net losses for the next several years and may require additional capital through equity financings and debt financings in order to fund our operations to a level of revenues adequate to support our cost structure . we have experienced consecutive quarterly revenue growth since the commercial launch of t : slim in the third quarter of 2012 , while incurring quarterly operating losses since our inception . our operating results may fluctuate on a quarterly or annual basis in the future and our growth or operating results may not be consistent with predictions made by securities analysts . we may not be able to achieve profitability in the future . for additional information about the risks and uncertainties associated with our business , see the section entitled “risk factors” in part i , item 1a of this annual report . subsequent event voluntary recall on january 10 , 2014 , we announced a voluntary recall of select lots of cartridges used with the t : slim that may be at risk of leaking . the cause of the recall was identified during our internal product testing . the recall was expanded on january 20 , 2014 to include additional lots of affected cartridges used with the t : slim . we incurred approximately $ 1.6 million in direct costs associated with the recall . we recorded a cost of sales charge of approximately $ 1.3 million in the fourth quarter of 2013 and expect to record a cost of sales charge for the remainder in the first quarter of 2014. we do not currently expect any further direct financial impact of the recall beyond these costs . the total cost of the recall consisted of approximately $ 0.6 million associated with the return and replacement of affected cartridges in the field and approximately $ 1.0 million for the write-off of affected cartridges within our internal inventory . components of results of operations sales we commenced commercial sales of t : slim in the united states in the third quarter of 2012. the t : slim insulin delivery system is comprised of the t : slim pump and pump-related supplies that include disposable cartridges and infusion sets . we also offer accessories including protective cases , belt clips , and power adapters . sales of accessories since commercial launch have not been material . we primarily sell our products through national and regional distributors on a non-exclusive basis . these distributors are generally providers of medical equipment and supplies to individuals with diabetes . our primary end customers are people with insulin-dependent diabetes . similar to other durable medical equipment , the primary payor is generally a third-party insurance carrier and the customer is usually responsible for any medical insurance plan copay or co-insurance requirements . 63 we anticipate our sales will increase as we expand our sales and marketing infrastructure , increase awareness of our products and broaden third party reimbursement for our products . we also expect that our sales will fluctuate on a quarterly basis in the future due to a variety of factors , including seasonality and the impact of the buying patterns of our distributors and other customers . we believe that our sales are subject to seasonal fluctuation due to the impact of annual deductible and coinsurance requirements associated with most medical insurance plans utilized by our individual customers and the individual customers of our distributors . our sales may also be influenced by the summer vacation period . accordingly , we expect sequential growth of sales from the third quarter to the fourth quarter to be relatively higher than for other quarter-to-quarter growth , and we also expect sequential growth of sales from the fourth quarter to the first quarter to be relatively lower than for other quarter-to-quarter growth . it is also possible that we may see a decline in sales from the fourth quarter to the first quarter due to these seasonal fluctuations . cost of sales we manufacture the t : slim pump and its disposable cartridge at our manufacturing facility in san diego , california . infusion sets and t : slim accessories are manufactured by third-party suppliers . cost of sales includes raw materials , labor costs , manufacturing overhead expenses , product training cost and reserves for expected warranty costs , scrap and inventory obsolescence . due to our relatively low production volumes , compared to our potential capacity for our products , the majority of our per unit costs are currently manufacturing overhead expenses . these expenses include quality assurance , manufacturing engineering , material procurement , inventory control , facilities , equipment and information technology and operations supervision and management . story_separator_special_tag we consider the overall creditworthiness and payment history of the distributor , customer and the contracted insurance payor in concluding whether collectability is reasonably assured . prior to the first quarter of 2013 , t : slim pump sales were recorded as deferred revenue until the company 's 30-day right of return expired because we did not have sufficient history to be able to reasonably estimate returns . at december 31 , 2012 , we had $ 1.9 million recorded as deferred revenue . beginning in the first quarter of 2013 , we began recognizing t : slim pump revenue when all the revenue recognition criteria above are met , as we established sufficient history in order to reasonably estimate product returns . as a result of this change , we recorded a one-time adjustment during 2013 , to recognize previously deferred revenue and cost of sales of $ 1.9 million and $ 1.1 million , respectively . revenue recognition for arrangements with multiple deliverables we consider the deliverables in our product offering as separate units of accounting and recognize deliverables as revenue upon delivery only if ( i ) the deliverable has standalone value and ( ii ) if the arrangement includes a general right of return relative to the delivered item ( s ) , delivery or performance of the undelivered item ( s ) is probable and substantially controlled by us . we allocate consideration to the separate units of accounting , unless the undelivered elements were deemed perfunctory and inconsequential . we use the relative 70 selling price method , in which allocation of consideration is based on vendor-specific objective evidence ( vsoe ) if available , third-party evidence ( tpe ) , or if vsoe and tpe are not available , management 's best estimate of a standalone selling price ( esp ) for the undelivered elements . in february 2013 , the fda cleared t : connect , our cloud-based data management application , which is made available upon purchase by t : slim pump customers . this service is deemed an undelivered element at the time of the t : slim sale . because the company has neither vsoe nor tpe for this deliverable , the allocation of revenue is based on the company 's esp . the company establishes its esp based on estimated cost to provide such services , including consideration for a reasonable profit margin and corroborated by comparable market data . the company allocates fair value based on management 's esp to this element at the time of sale and is recognizing the revenue over the four year hosting period . at december 31 , 2013 , $ 0.2 million was recorded as deferred revenue for the t : connect hosting service . all other undelivered elements at the time of sale are deemed inconsequential or perfunctory . product returns we offer a 30-day right of return for our t : slim pump customers from the date of shipment , provided a physician 's confirmation of the medical reason for the return is received . estimated return allowances for sales returns are based on historical returned quantities as compared to t : slim pump shipments in the same period . the return rate is then applied to the sales of the period to establish a reserve at the end of the period . the return rates used in the reserve are adjusted for known or expected changes in the marketplace when appropriate . our allowance for product returns at december 31 , 2013 was $ 0.2 million . actual product returns have not differed materially from estimated amounts reserved . as of december 31 , 2012 , we lacked sufficient historical data to establish an estimated return allowance and as such we deferred our t : slim pump sales of $ 1.9 million that were subject to return as of that date . warranty reserve we provide a four-year warranty on our t : slim pump to end user customers and may replace any pumps that do not function in accordance with the product specifications . any pump returned to us may be refurbished and redeployed . additionally , we offer a six month warranty on t : slim cartridges and infusion sets . estimated warranty costs are recorded at the time of shipment . warranty costs are estimated based on the current product cost , actual experience and expected failure rates from test studies performed in conjunction with the clearance of our product with the fda to support the longevity and reliability of our t : slim pump . we evaluate the reserve quarterly and make adjustments when appropriate . previously , we have estimated the product cost with the current new pump cost . beginning in the fourth quarter of 2013 , we estimated the product cost with a mix of new and refurbished pump costs . this change reduced our liability at december 31 , 2013 by $ 0.5 million , decreased loss from operations and net loss by $ 0.5 million and decreased the loss per share by $ 0.17 per share . at december 31 , 2013 and 2012 , the warranty reserve was $ 1.1 million and $ 0.3 million , respectively . of the $ 1.1 million warranty reserve at december 31 , 2013 , $ 0.5 million was recorded as a component of other current liabilities and $ 0.6 million was recorded in other long-term liabilities . in addition , of the total $ 1.1 million warranty reserve at december 31 , 2013 , $ 0.3 million was related to potential replacement associated with the voluntary product recall of selected lots of cartridges . actual warranty costs have not differed materially from estimated amounts reserved . inventory reserve we periodically review inventories for potential impairment based on quantities on hand , expectations of future use , judgments based on quality control testing data and assessments of the likelihood of scrapping or

liquidity and capital resources at december 31 , 2013 , we had $ 129.5 million in cash and cash equivalents and short-term investments . we believe that our cash on hand , cash available under our term loan agreement and proceeds from the exercise of options and warrants will be sufficient to satisfy our liquidity requirements for at least the next 18 months . we expect that our sales performance and the resulting operating income or loss , as well as the status of each of our new product development programs , will significantly impact our cash management decisions . we have utilized , and may continue to utilize , debt arrangements with debt providers and financial institutions to finance our operations . factors such as interest rates and available cash will impact our decision to continue to utilize debt arrangements as a source of cash . historically , our sources of cash have included private placements and a public offering of equity securities , debt arrangements , and cash generated from operations . our historical cash outflows have primarily been associated with cash used for operating activities such as the purchase of inventory , expansion of our sales and marketing infrastructure , increase in our r & d activities , the acquisition of intellectual property , expenditures related to equipment and improvements used to increase our manufacturing capacity and improve our manufacturing efficiency , overall facility expansion and other working capital needs .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we believe we can achieve profitability because our proprietary technology platform will allow us to maximize efficiencies in the development , production and sales of our products . by leveraging our core technology , we believe we can develop and bring to market products rapidly and greatly reduce our design and development costs . we expect to continue to increase production volume , and to reduce the per unit production cost for the t : slim pump and its disposable cartridge over time . further , due to shared product design features , our production system is adaptable to new products and we intend to leverage our shared manufacturing infrastructure to reduce our product costs and drive operational efficiencies . by expanding our product offerings to address people in all segments of the large and growing insulin-dependent diabetes market , we believe we can increase the productivity of our sales force , thereby improving our operating margin . from inception through december 31 , 2013 , we have primarily financed our operations through sales of equity securities , and , to a lesser extent , debt financings . we expect to continue to incur net losses for the next several years and may require additional capital through equity financings and debt financings in order to fund our operations to a level of revenues adequate to support our cost structure . we have experienced consecutive quarterly revenue growth since the commercial launch of t : slim in the third quarter of 2012 , while incurring quarterly operating losses since our inception . our operating results may fluctuate on a quarterly or annual basis in the future and our growth or operating results may not be consistent with predictions made by securities analysts . we may not be able to achieve profitability in the future . for additional information about the risks and uncertainties associated with our business , see the section entitled “risk factors” in part i , item 1a of this annual report . subsequent event voluntary recall on january 10 , 2014 , we announced a voluntary recall of select lots of cartridges used with the t : slim that may be at risk of leaking . the cause of the recall was identified during our internal product testing . the recall was expanded on january 20 , 2014 to include additional lots of affected cartridges used with the t : slim . we incurred approximately $ 1.6 million in direct costs associated with the recall . we recorded a cost of sales charge of approximately $ 1.3 million in the fourth quarter of 2013 and expect to record a cost of sales charge for the remainder in the first quarter of 2014. we do not currently expect any further direct financial impact of the recall beyond these costs . the total cost of the recall consisted of approximately $ 0.6 million associated with the return and replacement of affected cartridges in the field and approximately $ 1.0 million for the write-off of affected cartridges within our internal inventory . components of results of operations sales we commenced commercial sales of t : slim in the united states in the third quarter of 2012. the t : slim insulin delivery system is comprised of the t : slim pump and pump-related supplies that include disposable cartridges and infusion sets . we also offer accessories including protective cases , belt clips , and power adapters . sales of accessories since commercial launch have not been material . we primarily sell our products through national and regional distributors on a non-exclusive basis . these distributors are generally providers of medical equipment and supplies to individuals with diabetes . our primary end customers are people with insulin-dependent diabetes . similar to other durable medical equipment , the primary payor is generally a third-party insurance carrier and the customer is usually responsible for any medical insurance plan copay or co-insurance requirements . 63 we anticipate our sales will increase as we expand our sales and marketing infrastructure , increase awareness of our products and broaden third party reimbursement for our products . we also expect that our sales will fluctuate on a quarterly basis in the future due to a variety of factors , including seasonality and the impact of the buying patterns of our distributors and other customers . we believe that our sales are subject to seasonal fluctuation due to the impact of annual deductible and coinsurance requirements associated with most medical insurance plans utilized by our individual customers and the individual customers of our distributors . our sales may also be influenced by the summer vacation period . accordingly , we expect sequential growth of sales from the third quarter to the fourth quarter to be relatively higher than for other quarter-to-quarter growth , and we also expect sequential growth of sales from the fourth quarter to the first quarter to be relatively lower than for other quarter-to-quarter growth . it is also possible that we may see a decline in sales from the fourth quarter to the first quarter due to these seasonal fluctuations . cost of sales we manufacture the t : slim pump and its disposable cartridge at our manufacturing facility in san diego , california . infusion sets and t : slim accessories are manufactured by third-party suppliers . cost of sales includes raw materials , labor costs , manufacturing overhead expenses , product training cost and reserves for expected warranty costs , scrap and inventory obsolescence . due to our relatively low production volumes , compared to our potential capacity for our products , the majority of our per unit costs are currently manufacturing overhead expenses . these expenses include quality assurance , manufacturing engineering , material procurement , inventory control , facilities , equipment and information technology and operations supervision and management . story_separator_special_tag we consider the overall creditworthiness and payment history of the distributor , customer and the contracted insurance payor in concluding whether collectability is reasonably assured . prior to the first quarter of 2013 , t : slim pump sales were recorded as deferred revenue until the company 's 30-day right of return expired because we did not have sufficient history to be able to reasonably estimate returns . at december 31 , 2012 , we had $ 1.9 million recorded as deferred revenue . beginning in the first quarter of 2013 , we began recognizing t : slim pump revenue when all the revenue recognition criteria above are met , as we established sufficient history in order to reasonably estimate product returns . as a result of this change , we recorded a one-time adjustment during 2013 , to recognize previously deferred revenue and cost of sales of $ 1.9 million and $ 1.1 million , respectively . revenue recognition for arrangements with multiple deliverables we consider the deliverables in our product offering as separate units of accounting and recognize deliverables as revenue upon delivery only if ( i ) the deliverable has standalone value and ( ii ) if the arrangement includes a general right of return relative to the delivered item ( s ) , delivery or performance of the undelivered item ( s ) is probable and substantially controlled by us . we allocate consideration to the separate units of accounting , unless the undelivered elements were deemed perfunctory and inconsequential . we use the relative 70 selling price method , in which allocation of consideration is based on vendor-specific objective evidence ( vsoe ) if available , third-party evidence ( tpe ) , or if vsoe and tpe are not available , management 's best estimate of a standalone selling price ( esp ) for the undelivered elements . in february 2013 , the fda cleared t : connect , our cloud-based data management application , which is made available upon purchase by t : slim pump customers . this service is deemed an undelivered element at the time of the t : slim sale . because the company has neither vsoe nor tpe for this deliverable , the allocation of revenue is based on the company 's esp . the company establishes its esp based on estimated cost to provide such services , including consideration for a reasonable profit margin and corroborated by comparable market data . the company allocates fair value based on management 's esp to this element at the time of sale and is recognizing the revenue over the four year hosting period . at december 31 , 2013 , $ 0.2 million was recorded as deferred revenue for the t : connect hosting service . all other undelivered elements at the time of sale are deemed inconsequential or perfunctory . product returns we offer a 30-day right of return for our t : slim pump customers from the date of shipment , provided a physician 's confirmation of the medical reason for the return is received . estimated return allowances for sales returns are based on historical returned quantities as compared to t : slim pump shipments in the same period . the return rate is then applied to the sales of the period to establish a reserve at the end of the period . the return rates used in the reserve are adjusted for known or expected changes in the marketplace when appropriate . our allowance for product returns at december 31 , 2013 was $ 0.2 million . actual product returns have not differed materially from estimated amounts reserved . as of december 31 , 2012 , we lacked sufficient historical data to establish an estimated return allowance and as such we deferred our t : slim pump sales of $ 1.9 million that were subject to return as of that date . warranty reserve we provide a four-year warranty on our t : slim pump to end user customers and may replace any pumps that do not function in accordance with the product specifications . any pump returned to us may be refurbished and redeployed . additionally , we offer a six month warranty on t : slim cartridges and infusion sets . estimated warranty costs are recorded at the time of shipment . warranty costs are estimated based on the current product cost , actual experience and expected failure rates from test studies performed in conjunction with the clearance of our product with the fda to support the longevity and reliability of our t : slim pump . we evaluate the reserve quarterly and make adjustments when appropriate . previously , we have estimated the product cost with the current new pump cost . beginning in the fourth quarter of 2013 , we estimated the product cost with a mix of new and refurbished pump costs . this change reduced our liability at december 31 , 2013 by $ 0.5 million , decreased loss from operations and net loss by $ 0.5 million and decreased the loss per share by $ 0.17 per share . at december 31 , 2013 and 2012 , the warranty reserve was $ 1.1 million and $ 0.3 million , respectively . of the $ 1.1 million warranty reserve at december 31 , 2013 , $ 0.5 million was recorded as a component of other current liabilities and $ 0.6 million was recorded in other long-term liabilities . in addition , of the total $ 1.1 million warranty reserve at december 31 , 2013 , $ 0.3 million was related to potential replacement associated with the voluntary product recall of selected lots of cartridges . actual warranty costs have not differed materially from estimated amounts reserved . inventory reserve we periodically review inventories for potential impairment based on quantities on hand , expectations of future use , judgments based on quality control testing data and assessments of the likelihood of scrapping or Narrative : liquidity and capital resources at december 31 , 2013 , we had $ 129.5 million in cash and cash equivalents and short-term investments . we believe that our cash on hand , cash available under our term loan agreement and proceeds from the exercise of options and warrants will be sufficient to satisfy our liquidity requirements for at least the next 18 months . we expect that our sales performance and the resulting operating income or loss , as well as the status of each of our new product development programs , will significantly impact our cash management decisions . we have utilized , and may continue to utilize , debt arrangements with debt providers and financial institutions to finance our operations . factors such as interest rates and available cash will impact our decision to continue to utilize debt arrangements as a source of cash . historically , our sources of cash have included private placements and a public offering of equity securities , debt arrangements , and cash generated from operations . our historical cash outflows have primarily been associated with cash used for operating activities such as the purchase of inventory , expansion of our sales and marketing infrastructure , increase in our r & d activities , the acquisition of intellectual property , expenditures related to equipment and improvements used to increase our manufacturing capacity and improve our manufacturing efficiency , overall facility expansion and other working capital needs .

even with the adverse economic environment and its impact on our industry causing customers to constrain their capital budgets , we launched our bluebird2 gaming machines in the december 2008 quarter with premium features at a significantly higher price , and demand outpaced our expectations . for fiscal 2009 , bluebird2 units accounted for 35 % of our total new units shipped and , with the continuing transition in the market to this new product , accounted for approximately 83 % of new unit shipments in fiscal 2010. we sold slightly more new units in the march and june 2010 quarters than in the march and june 2009 quarters due to the popularity of our products enabling us to increase our share of units shipped in the united states and canada . we believe that as the economy continues to improve , customers will increase their annual capital budgets for replacement units , which will improve the replacement demand in future years , although we can not predict the rate of increase in their capital budgets . in addition , we also expect to experience an increase in demand from casino expansions and new casino openings in new and expanding gaming jurisdictions beginning in calendar 2012. we believe several recent developments fueled by the challenging economic situation will expand our revenue opportunities over the long term . in the united states , legislators have passed or are considering enabling new or expanded gaming legislation in ohio , illinois , kansas , iowa , maryland , california , new hampshire , maine and massachusetts . internationally , singapore opened as a new market in fiscal 2010 and a new vlt market in italy is expected to open in fiscal 2011. in addition , legislation has been discussed in greece , brazil , japan and taiwan that would open new market opportunities . the breadth and timing of these opportunities remains uncertain due to the political process in each of these jurisdictions , as well as the difficult credit environment facing our customers and the risk of continued economic uncertainty . product sales product sales revenue includes the sale to casinos and other gaming machine operators of new and used gaming machines and vlts , parts , conversion kits ( including game theme , hardware or operating system conversions ) , amusement-with-prize ( “awp” ) gaming machines and gaming-related systems for smaller international casino operators . we derive product sales revenue from the sale of the following : ø multi-line , multi-coin video gaming machines , in our bluebird , bluebird2 and bluebird xd and orion financement company ( “orion gaming” ) twinstar , twinstar2 and helios -branded gaming machines ; ø mechanical reel-spinning gaming machines in our bluebird , bluebird2 and bluebird xd -branded gaming machines ; ø video poker machines in our bluebird and bluebird2- branded gaming machines , which are primarily offered as a casino-owned daily fee game , where the casino purchases the base gaming machine and then leases the top box and game for a lower lease price point ; ø replacement parts and conversion kits for our bluebird , bluebird2 , bluebird xd , twinstar , twinstar2 , helios and awp gaming machines , and cpu-nxt and cpu-nxt2 upgrade kits ; ø used gaming machines manufactured by us or our competitors that are acquired on a trade-in basis or that were previously placed on a participation basis ; 30 ø awp gaming machines in certain international markets ; and ø gaming-related systems , including linked progressive systems and slot accounting systems applicable to smaller international casinos . gaming operations we earn gaming operations revenues from leasing participation games , gaming machines and vlts , and earn royalties that we receive from third parties under license agreements to use our game content and intellectual property . our gaming operations include the following product lines : ø participation games , which are gaming machines owned by us that we lease based upon any of the following payment methods : ( 1 ) a percentage of the net win , which is the casino 's earnings generated by casino patrons playing the gaming machine ; ( 2 ) fixed daily fees ; or ( 3 ) a percentage of the amount wagered or a combination of a fixed daily fee plus a percentage of the amount wagered . we have the ability to lease these gaming machines on a participation basis because of the superior performance of the game and or the popularity of the brand , which generates higher wagering and net win to the casinos or gaming machine operators than the gaming machines we sell outright . participation games include : ø wide-area progressive ( “wap” ) participation games ; ø local-area progressive ( “lap” ) participation games ; and ø stand-alone participation games . ø casino-owned daily fee games , where the casino or gaming machine operator purchases the base gaming machine and pays a lower daily lease fee for the top box and game ; ø gaming machines placed at casinos under operating lease arrangements ; ø vlts ; and ø revenues from licensing our game content and intellectual properties to third parties . our focus we continue to operate in a challenging economic environment and the combination of economic uncertainty , lower demand for replacement products and reduced opportunities from new or expanded casinos has negatively impacted our industry . we expect to benefit from certain new and expansion projects currently in process , but the breadth and timing of such opportunities remains uncertain due to the difficult credit environment facing our customers and the risk of continued economic uncertainty . story_separator_special_tag in may 2008 , we received approval from gaming laboratories international , inc. ( “gli” ) on the first-point release of our wage-net networked gaming system , incorporating gsa communication standards and basic networked gaming functionality , which as part of a technical beta test was placed at a popular tribal casino . an updated version of wage-net was further enhanced and is gsa compliant , demonstrating our total commitment to support open architecture and standards-based protocols that our casino customers want and should expect . this version is currently on a field trial at two casinos in las vegas and at a popular casino in canada . we further refined wage-net with additional features and functionality in the commercial launch point release of the software and this version has been submitted to the nevada gaming regulators and gli . we have continued to enhance our wage-net capabilities and in may 2010 received approval from gli of our first value-added application to run over wage-net : ultra hit progressive ® —jackpot explosion ® . this is the first in a series of networked gaming applications that leverage wms ' unique portal technology . jackpot explosion is the first theme within the ultra hit progressive networked gaming application family . before the commercial launch of this version of wage-net and jackpot explosion , we are conducting self imposed beta tests in nine casinos beginning summer 2010 and expect the commercial product launch to occur in the december 2010 quarter . other key fiscal 2010 activities common stock repurchase program see note 10 . “stockholders ' equity—common stock repurchase program” and note 18 . “subsequent events” to our consolidated financial statements . critical accounting estimates our consolidated financial statements were prepared in conformity with accounting principles generally accepted in the united states . accordingly , we are required to make estimates incorporating judgments and assumptions we believe are reasonable based on our experience , contract terms , trends in our company and the industry as a whole , as well as information available from other outside sources . our estimates affect amounts recorded in our consolidated financial statements and actual results may differ from initial estimates . our accounting policies , including those involving critical accounting estimates , are more fully described in note 2 . “principal accounting policies” in our consolidated financial statements . we consider the following accounting estimates to be the most critical to fully understand and evaluate our reported financial results . they require us to make subjective or complex judgments about matters that are inherently uncertain or variable . senior management discussed the development , selection and disclosure of the following accounting estimates , considered most sensitive to changes from external factors , with the audit and ethics committee of our board of directors . 35 revenue recognition we evaluate the recognition of revenue based on the criteria set forth in the following accounting guidance : financial accounting standards board ( “fasb” ) topic 605 , “ revenue recognition ” ( “topic 605” ) , or fasb topic 985 , “ software ” ( “topic 985” ) . recent updates to topics 605 and 985 in october 2009 , the fasb issued accounting standards update ( “asu” ) no . 2009-13 , “multiple-deliverable revenue arrangements” ( “asu no . 2009-13” ) and asu no . 2009-14 “certain revenue arrangements that include software elements” ( “asu no . 2009-14” ) . as permitted under these asu 's , we early adopted both of these asu 's on a prospective basis effective july 1 , 2009 , the beginning of our 2010 fiscal year . accordingly , this guidance is being applied to all new or materially modified revenue arrangements entered into since july 1 , 2009. while the adoption of these two asu 's changed our revenue recognition policies beginning in fiscal 2010 , the impact on our consolidated financial statements was not significant to either the year ended june 30 , 2010 or , had these asu 's been applied retroactively , to the fiscal years ended june 30 , 2009 or 2008 , as we had vendor specific objective evidence ( “vsoe” ) for all elements of our multiple deliverable arrangements and we had not deferred any hardware revenues because an entire customer arrangement had been accounted for as software . these new revenue recognition standards will have more impact on our revenue recognition when we launch our networked gaming system and related software applications in fiscal 2011. asu no . 2009-13 replaces and significantly changes the existing separation criteria for multiple-deliverable revenue arrangements , by eliminating the criteria for objective and reliable evidence of fair value for each deliverable . asu no 2009-13 also eliminates the use of the residual method of allocation of consideration among deliverables and requires , instead , that arrangement consideration be allocated , at the inception of the arrangement , to all deliverables based on their relative selling price ( the “relative selling price method” ) . when applying the relative selling price method , a hierarchy is used for estimating the selling price based first on vsoe , then third-party evidence ( “tpe” ) and finally management 's estimate of the selling price ( “esp” ) . in fiscal 2010 , we used vsoe to value all elements in our multiple deliverable arrangements and did not use either tpe or esp . prior to july 1 , 2009 , when multiple product deliverables were included under a sales arrangement , we allocated revenue to each unit of accounting based upon its respective fair value against the total contract value and deferred revenue recognition on those deliverables where we did not meet all of the requirements of revenue recognition . we allocated revenue to each unit of accounting , which typically consisted of gaming machines and additional game themes the customer can receive in the future , based on fair value as determined by vsoe . vsoe of fair value

cash flows summary cash flows from operating , investing and financing activities , as reflected in our consolidated statements of cash flows , are summarized in the following table ( in millions ) : replace_table_token_11_th operating activities : the $ 48.9 million decrease in cash provided by operating activities in fiscal 2010 compared to the prior year resulted from the factors listed below : ø a positive impact from the $ 20.7 million increase in net income , combined with a $ 3.5 million increase in amortization of intangible and other assets and a $ 2.3 million increase in share-based compensation , partially offset by a $ 1.2 million decrease in depreciation and a $ 13.2 million decrease in deferred income taxes ; more than offset by ø an $ 18.0 million negative impact from lower other non-cash items . our bad debt expense was lower by $ 4.0 million in fiscal 2010 as we had more favorable collection experience , fewer customers filing for protection from bankruptcy and the economy was generally better than in fiscal 2009. we incurred $ 9.5 million lower excess and obsolete inventory charges in fiscal 2010 than in fiscal 2009 as in fiscal 2009 we prepared for customers transitioning to our new bluebird2 gaming cabinet partially offset by higher other non-cash items of $ 0.1 million .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. even with the adverse economic environment and its impact on our industry causing customers to constrain their capital budgets , we launched our bluebird2 gaming machines in the december 2008 quarter with premium features at a significantly higher price , and demand outpaced our expectations . for fiscal 2009 , bluebird2 units accounted for 35 % of our total new units shipped and , with the continuing transition in the market to this new product , accounted for approximately 83 % of new unit shipments in fiscal 2010. we sold slightly more new units in the march and june 2010 quarters than in the march and june 2009 quarters due to the popularity of our products enabling us to increase our share of units shipped in the united states and canada . we believe that as the economy continues to improve , customers will increase their annual capital budgets for replacement units , which will improve the replacement demand in future years , although we can not predict the rate of increase in their capital budgets . in addition , we also expect to experience an increase in demand from casino expansions and new casino openings in new and expanding gaming jurisdictions beginning in calendar 2012. we believe several recent developments fueled by the challenging economic situation will expand our revenue opportunities over the long term . in the united states , legislators have passed or are considering enabling new or expanded gaming legislation in ohio , illinois , kansas , iowa , maryland , california , new hampshire , maine and massachusetts . internationally , singapore opened as a new market in fiscal 2010 and a new vlt market in italy is expected to open in fiscal 2011. in addition , legislation has been discussed in greece , brazil , japan and taiwan that would open new market opportunities . the breadth and timing of these opportunities remains uncertain due to the political process in each of these jurisdictions , as well as the difficult credit environment facing our customers and the risk of continued economic uncertainty . product sales product sales revenue includes the sale to casinos and other gaming machine operators of new and used gaming machines and vlts , parts , conversion kits ( including game theme , hardware or operating system conversions ) , amusement-with-prize ( “awp” ) gaming machines and gaming-related systems for smaller international casino operators . we derive product sales revenue from the sale of the following : ø multi-line , multi-coin video gaming machines , in our bluebird , bluebird2 and bluebird xd and orion financement company ( “orion gaming” ) twinstar , twinstar2 and helios -branded gaming machines ; ø mechanical reel-spinning gaming machines in our bluebird , bluebird2 and bluebird xd -branded gaming machines ; ø video poker machines in our bluebird and bluebird2- branded gaming machines , which are primarily offered as a casino-owned daily fee game , where the casino purchases the base gaming machine and then leases the top box and game for a lower lease price point ; ø replacement parts and conversion kits for our bluebird , bluebird2 , bluebird xd , twinstar , twinstar2 , helios and awp gaming machines , and cpu-nxt and cpu-nxt2 upgrade kits ; ø used gaming machines manufactured by us or our competitors that are acquired on a trade-in basis or that were previously placed on a participation basis ; 30 ø awp gaming machines in certain international markets ; and ø gaming-related systems , including linked progressive systems and slot accounting systems applicable to smaller international casinos . gaming operations we earn gaming operations revenues from leasing participation games , gaming machines and vlts , and earn royalties that we receive from third parties under license agreements to use our game content and intellectual property . our gaming operations include the following product lines : ø participation games , which are gaming machines owned by us that we lease based upon any of the following payment methods : ( 1 ) a percentage of the net win , which is the casino 's earnings generated by casino patrons playing the gaming machine ; ( 2 ) fixed daily fees ; or ( 3 ) a percentage of the amount wagered or a combination of a fixed daily fee plus a percentage of the amount wagered . we have the ability to lease these gaming machines on a participation basis because of the superior performance of the game and or the popularity of the brand , which generates higher wagering and net win to the casinos or gaming machine operators than the gaming machines we sell outright . participation games include : ø wide-area progressive ( “wap” ) participation games ; ø local-area progressive ( “lap” ) participation games ; and ø stand-alone participation games . ø casino-owned daily fee games , where the casino or gaming machine operator purchases the base gaming machine and pays a lower daily lease fee for the top box and game ; ø gaming machines placed at casinos under operating lease arrangements ; ø vlts ; and ø revenues from licensing our game content and intellectual properties to third parties . our focus we continue to operate in a challenging economic environment and the combination of economic uncertainty , lower demand for replacement products and reduced opportunities from new or expanded casinos has negatively impacted our industry . we expect to benefit from certain new and expansion projects currently in process , but the breadth and timing of such opportunities remains uncertain due to the difficult credit environment facing our customers and the risk of continued economic uncertainty . story_separator_special_tag in may 2008 , we received approval from gaming laboratories international , inc. ( “gli” ) on the first-point release of our wage-net networked gaming system , incorporating gsa communication standards and basic networked gaming functionality , which as part of a technical beta test was placed at a popular tribal casino . an updated version of wage-net was further enhanced and is gsa compliant , demonstrating our total commitment to support open architecture and standards-based protocols that our casino customers want and should expect . this version is currently on a field trial at two casinos in las vegas and at a popular casino in canada . we further refined wage-net with additional features and functionality in the commercial launch point release of the software and this version has been submitted to the nevada gaming regulators and gli . we have continued to enhance our wage-net capabilities and in may 2010 received approval from gli of our first value-added application to run over wage-net : ultra hit progressive ® —jackpot explosion ® . this is the first in a series of networked gaming applications that leverage wms ' unique portal technology . jackpot explosion is the first theme within the ultra hit progressive networked gaming application family . before the commercial launch of this version of wage-net and jackpot explosion , we are conducting self imposed beta tests in nine casinos beginning summer 2010 and expect the commercial product launch to occur in the december 2010 quarter . other key fiscal 2010 activities common stock repurchase program see note 10 . “stockholders ' equity—common stock repurchase program” and note 18 . “subsequent events” to our consolidated financial statements . critical accounting estimates our consolidated financial statements were prepared in conformity with accounting principles generally accepted in the united states . accordingly , we are required to make estimates incorporating judgments and assumptions we believe are reasonable based on our experience , contract terms , trends in our company and the industry as a whole , as well as information available from other outside sources . our estimates affect amounts recorded in our consolidated financial statements and actual results may differ from initial estimates . our accounting policies , including those involving critical accounting estimates , are more fully described in note 2 . “principal accounting policies” in our consolidated financial statements . we consider the following accounting estimates to be the most critical to fully understand and evaluate our reported financial results . they require us to make subjective or complex judgments about matters that are inherently uncertain or variable . senior management discussed the development , selection and disclosure of the following accounting estimates , considered most sensitive to changes from external factors , with the audit and ethics committee of our board of directors . 35 revenue recognition we evaluate the recognition of revenue based on the criteria set forth in the following accounting guidance : financial accounting standards board ( “fasb” ) topic 605 , “ revenue recognition ” ( “topic 605” ) , or fasb topic 985 , “ software ” ( “topic 985” ) . recent updates to topics 605 and 985 in october 2009 , the fasb issued accounting standards update ( “asu” ) no . 2009-13 , “multiple-deliverable revenue arrangements” ( “asu no . 2009-13” ) and asu no . 2009-14 “certain revenue arrangements that include software elements” ( “asu no . 2009-14” ) . as permitted under these asu 's , we early adopted both of these asu 's on a prospective basis effective july 1 , 2009 , the beginning of our 2010 fiscal year . accordingly , this guidance is being applied to all new or materially modified revenue arrangements entered into since july 1 , 2009. while the adoption of these two asu 's changed our revenue recognition policies beginning in fiscal 2010 , the impact on our consolidated financial statements was not significant to either the year ended june 30 , 2010 or , had these asu 's been applied retroactively , to the fiscal years ended june 30 , 2009 or 2008 , as we had vendor specific objective evidence ( “vsoe” ) for all elements of our multiple deliverable arrangements and we had not deferred any hardware revenues because an entire customer arrangement had been accounted for as software . these new revenue recognition standards will have more impact on our revenue recognition when we launch our networked gaming system and related software applications in fiscal 2011. asu no . 2009-13 replaces and significantly changes the existing separation criteria for multiple-deliverable revenue arrangements , by eliminating the criteria for objective and reliable evidence of fair value for each deliverable . asu no 2009-13 also eliminates the use of the residual method of allocation of consideration among deliverables and requires , instead , that arrangement consideration be allocated , at the inception of the arrangement , to all deliverables based on their relative selling price ( the “relative selling price method” ) . when applying the relative selling price method , a hierarchy is used for estimating the selling price based first on vsoe , then third-party evidence ( “tpe” ) and finally management 's estimate of the selling price ( “esp” ) . in fiscal 2010 , we used vsoe to value all elements in our multiple deliverable arrangements and did not use either tpe or esp . prior to july 1 , 2009 , when multiple product deliverables were included under a sales arrangement , we allocated revenue to each unit of accounting based upon its respective fair value against the total contract value and deferred revenue recognition on those deliverables where we did not meet all of the requirements of revenue recognition . we allocated revenue to each unit of accounting , which typically consisted of gaming machines and additional game themes the customer can receive in the future , based on fair value as determined by vsoe . vsoe of fair value Narrative : cash flows summary cash flows from operating , investing and financing activities , as reflected in our consolidated statements of cash flows , are summarized in the following table ( in millions ) : replace_table_token_11_th operating activities : the $ 48.9 million decrease in cash provided by operating activities in fiscal 2010 compared to the prior year resulted from the factors listed below : ø a positive impact from the $ 20.7 million increase in net income , combined with a $ 3.5 million increase in amortization of intangible and other assets and a $ 2.3 million increase in share-based compensation , partially offset by a $ 1.2 million decrease in depreciation and a $ 13.2 million decrease in deferred income taxes ; more than offset by ø an $ 18.0 million negative impact from lower other non-cash items . our bad debt expense was lower by $ 4.0 million in fiscal 2010 as we had more favorable collection experience , fewer customers filing for protection from bankruptcy and the economy was generally better than in fiscal 2009. we incurred $ 9.5 million lower excess and obsolete inventory charges in fiscal 2010 than in fiscal 2009 as in fiscal 2009 we prepared for customers transitioning to our new bluebird2 gaming cabinet partially offset by higher other non-cash items of $ 0.1 million .

core earnings can be described as income before taxes , with the exclusion of gain on sale of loans and adjustments to the market value of our loans serviced portfolio . management believes that we will need to continue to focus on increasing net interest margin , other areas of fee income , and control operating expenses to achieve earnings growth going forward . management 's strategy of growing the loan portfolio and deposit base is expected to help achieve these goals : loans typically earn higher rates of return than investments ; a larger deposit base will yield higher fee income ; increasing the asset base will reduce the relative impact of fixed operating costs . the biggest challenge to management 's strategy is funding the growth of our balance sheet in an efficient manner . though deposit growth this last year was steady , it may become more difficult to maintain due to significant competition and possible reduced customer demand for deposits as customers may shift into other asset classes . 21 other than in limited circumstances for certain high-credit-quality customers , we do not offer “ interest only ” mortgage loans on residential ( 1-4 family ) properties ( where the borrower pays interest but no principal for an initial period , after which the loan converts to a fully amortizing loan ) . we also do not offer loans that provide for negative amortization of principal , such as “ option arm ” loans , where the borrower can pay less than the interest owed on their loan , resulting in an increased principal balance during the life of the loan . we do not offer “ subprime loans ” ( loans that generally target borrowers with weakened credit histories typically characterized by payment delinquencies , previous charge-offs , judgments , bankruptcies , or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios ) or alt-a loans ( traditionally defined as loans having less than full documentation ) . the level and movement of interest rates impacts the bank 's earnings as well . the federal open market committee ( “ fomc ” ) changed the federal funds target rate from 0.5 % to 0.75 % in december 2016. from time to time the bank has considered growth through mergers or acquisition as an alternative to its strategy of organic growth . in this regard , the bank has experienced an increase in loan originations due to the sterling branch acquisition which closed in december 2012. deposit fee income has also increased due to the increase in the number of accounts . the addition of the wealth management division from the acquisition has also increased noninterest income and furthered the bank 's strategy to increase fee income to complement its margin . operating expenses , primarily salaries and employee benefits also increased as a result of the acquisition . the bank completed a core systems conversion during the third quarter of 2015. future cost savings are anticipated due to the core systems conversion . recent accounting pronouncements in may 2014 , the fasb issued accounting standards update no . 2014-9 , revenue from contracts with customers ( topic 606 ) . this guidance is a comprehensive new revenue recognition standard that will supersede substantially all existing revenue recognition guidance . the new standard 's core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services . in doing so , companies will need to use more judgment and make more estimates than under existing guidance . these may include identifying performance obligations in the contract , estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation . on july 9 , 2015 , the fasb agreed to delay the effective date of the standard by one year . therefore , the new standard will be effective in the first quarter of 2018 and is not expected to have a significant impact to the company 's consolidated financial statements . in january 2016 , the fasb issued asu no . 2016-01 “ financial instruments – overall : recognition and measurement of financial assets and financial liabilities . ” the amendment has a number of provisions including the requirements that public business entities use the exit price notion when measuring the fair value of financial instruments for disclosure purposes , a separate presentation of financial assets and financial liabilities by measurement category and form of financial asset ( i.e . securities or loans receivables ) , and eliminating the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost . the amendment is effective for annual and interim reporting periods beginning after december 15 , 2017 and is not expected to have a significant impact to the company 's consolidated financial statements . in february 2016 , the fasb issued asu no . 2016-2 , leases ( topic 842 ) intended to improve financial reporting regarding leasing transactions . the new standard affects all companies and organizations that lease assets . the standard will require organizations to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases if the lease terms are more than 12 months . the guidance also will require qualitative and quantitative disclosures providing additional information about the amounts recorded in the financial statements . the amendments in this update are effective for fiscal years beginning after december 15 , 2018 , including interim periods within those fiscal years . the company is evaluating the potential impact of the amendment on the company 's consolidated financial statements . story_separator_special_tag during the year ended december 31 , 2016 , the bank sold five real estate owned and other repossessed assets resulting in a net gain of $ 6,000. there were no write-downs on fair value less cost to sell for foreclosed real estate property and other repossessed during the year ended december 31 , 2016. during the year ended december 31 , 2016 , a minimal amount of interest was recorded on loans previously accounted for on a non-accrual basis . 30 management , in compliance with regulatory guidelines , conducts an internal loan review program , whereby loans are placed or classified in categories depending upon the level of risk of nonpayment or loss . these categories are special mention , substandard , doubtful or loss . when a loan is classified as substandard or doubtful , management is required to establish an allowance for loan loss in an amount that is deemed prudent . when management classifies a loan as a loss asset , an allowance equal up to 100.0 % of the loan balance is required to be established or the loan is required to be charged-off . the allowance for loan losses is composed of an allowance for both inherent risk associated with lending activities and specific problem assets . management 's evaluation of the classification of assets and the adequacy of the allowance for loan losses is reviewed by the board on a regular basis and by regulatory agencies as part of their examination process . in addition , each loan that exceeds $ 750,000 and each group of loans that exceeds $ 750,000 is monitored more closely . the following table reflects our classified assets : replace_table_token_10_th 31 allowance for loan losses and real estate owned . the bank segregates its loan portfolio for loan losses into the following broad categories : real estate loans ( residential mortgages ( 1-4 family ) , real estate construction , commercial real estate and land ) home equity loans , consumer loans and commercial business loans . the bank provides for a general allowance for losses inherent in the portfolio in the categories referenced above . general loss percentages which are calculated based on historical analyses and other factors such as volume and severity of delinquencies , local and national economy , underwriting standards and other factors . this portion of the allowance is calculated for inherent losses which probably exist as of the evaluation date even though they might not have been identified by the more objective processes used . this is due to the risk of error and or inherent imprecision in the process . this portion of the allowance is subjective in nature and requires judgments based on qualitative factors which do not lend themselves to exact mathematical calculations such as : trends in delinquencies and non-accruals ; trends in volume ; terms and portfolio mix ; new credit products ; changes in lending policies and procedures ; and changes in the outlook for the local , regional and national economy . at least quarterly , the management of the bank evaluates the need to establish an allowance against losses on loans based on estimated losses on specific loans when a finding is made that a loss is estimable and probable . such evaluation includes a review of all loans for which full collectability may not be reasonably assured and considers , among other matters : the estimated market value of the underlying collateral of problem loans ; prior loss experience ; economic conditions ; and overall portfolio quality . real estate owned is evaluated annually and recorded at fair value . provisions for , or adjustments to , estimated losses are included in earnings in the period they are established . at december 31 , 2016 , we had $ 4.77 million in allowances for loan losses . while we believe we have established our existing allowance for loan losses in accordance with generally accepted accounting principles , there can be no assurance that bank regulators , in reviewing our loan portfolio , will not request that we significantly increase our allowance for loan losses , or that general economic conditions , a deteriorating real estate market , or other factors will not cause us to significantly increase our allowance for loan losses , therefore negatively affecting our financial condition and earnings . in making loans , we recognize that credit losses will be experienced and that the risk of loss will vary with , among other things , the type of loan being made , the creditworthiness of the borrower over the term of the loan and , in the case of a secured loan , the quality of the security for the loan . it is our policy to review our loan portfolio , in accordance with regulatory classification procedures , on at least a quarterly basis . 32 the following table includes information for allowance for loan losses : replace_table_token_11_th 33 the following table presents allocation of the allowance for loan losses by loan category and the percentage of loans in each category to total loans : replace_table_token_12_th deposits and other sources of funds deposits . deposits are the company 's primary source of funds . core deposits are deposits that are more stable and somewhat less sensitive to rate changes . they also represent a lower cost source of funds than rate sensitive , more volatile accounts such as certificates of deposit . we believe that our core deposits are our checking , savings accounts , money market accounts and ira accounts . based on our historical experience , we include ira accounts funded by certificates of deposit as core deposits because they exhibit the principal features of core deposits in that they are stable and generally are not rate sensitive . core deposits were $ 378.79 million or 73.87 % of the bank 's deposits at december 31 , 2016 ( $ 347.52 million or 67.8 % excluding

liquidity the bank is required to maintain minimum levels of liquid assets as defined by the montana division of banking and frb regulations . the liquidity requirement is retained for safety and soundness purposes , and that appropriate levels of liquidity will depend upon the types of activities in which the company engages . for internal reporting purposes , the bank uses policy minimums of 1.0 % , and 8.0 % for “ basic surplus ” and “ basic surplus with fhlb ” as internally defined . in general , the “ basic surplus ” is a calculation of the ratio of unencumbered short-term assets reduced by estimated percentages of cd maturities and other deposits that may leave the bank in the next 90 days divided by total assets . “ basic surplus with fhlb ” adds to “ basic surplus ” the additional borrowing capacity the bank has with the fhlb of des moines . the bank exceeded those minimum ratios as of december 31 , 2016 and 2015. the bank 's primary sources of funds are deposits , repayment of loans and mortgage-backed securities , maturities of investments , funds provided from operations , advances from the fhlb of des moines and other borrowings . scheduled repayments of loans and mortgage-backed securities and maturities of investment securities are generally predictable . however , other sources of funds , such as deposit flows and loan prepayments , can be greatly influenced by the general level of interest rates , economic conditions and competition . the bank uses liquidity resources principally to fund existing and future loan commitments . it also uses them to fund maturing certificates of deposit , demand deposit withdrawals and to invest in other loans and investments , maintain liquidity , and meet operating expenses . liquidity may be adversely affected by unexpected deposit outflows , higher interest rates paid by competitors , and similar matters .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. core earnings can be described as income before taxes , with the exclusion of gain on sale of loans and adjustments to the market value of our loans serviced portfolio . management believes that we will need to continue to focus on increasing net interest margin , other areas of fee income , and control operating expenses to achieve earnings growth going forward . management 's strategy of growing the loan portfolio and deposit base is expected to help achieve these goals : loans typically earn higher rates of return than investments ; a larger deposit base will yield higher fee income ; increasing the asset base will reduce the relative impact of fixed operating costs . the biggest challenge to management 's strategy is funding the growth of our balance sheet in an efficient manner . though deposit growth this last year was steady , it may become more difficult to maintain due to significant competition and possible reduced customer demand for deposits as customers may shift into other asset classes . 21 other than in limited circumstances for certain high-credit-quality customers , we do not offer “ interest only ” mortgage loans on residential ( 1-4 family ) properties ( where the borrower pays interest but no principal for an initial period , after which the loan converts to a fully amortizing loan ) . we also do not offer loans that provide for negative amortization of principal , such as “ option arm ” loans , where the borrower can pay less than the interest owed on their loan , resulting in an increased principal balance during the life of the loan . we do not offer “ subprime loans ” ( loans that generally target borrowers with weakened credit histories typically characterized by payment delinquencies , previous charge-offs , judgments , bankruptcies , or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios ) or alt-a loans ( traditionally defined as loans having less than full documentation ) . the level and movement of interest rates impacts the bank 's earnings as well . the federal open market committee ( “ fomc ” ) changed the federal funds target rate from 0.5 % to 0.75 % in december 2016. from time to time the bank has considered growth through mergers or acquisition as an alternative to its strategy of organic growth . in this regard , the bank has experienced an increase in loan originations due to the sterling branch acquisition which closed in december 2012. deposit fee income has also increased due to the increase in the number of accounts . the addition of the wealth management division from the acquisition has also increased noninterest income and furthered the bank 's strategy to increase fee income to complement its margin . operating expenses , primarily salaries and employee benefits also increased as a result of the acquisition . the bank completed a core systems conversion during the third quarter of 2015. future cost savings are anticipated due to the core systems conversion . recent accounting pronouncements in may 2014 , the fasb issued accounting standards update no . 2014-9 , revenue from contracts with customers ( topic 606 ) . this guidance is a comprehensive new revenue recognition standard that will supersede substantially all existing revenue recognition guidance . the new standard 's core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services . in doing so , companies will need to use more judgment and make more estimates than under existing guidance . these may include identifying performance obligations in the contract , estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation . on july 9 , 2015 , the fasb agreed to delay the effective date of the standard by one year . therefore , the new standard will be effective in the first quarter of 2018 and is not expected to have a significant impact to the company 's consolidated financial statements . in january 2016 , the fasb issued asu no . 2016-01 “ financial instruments – overall : recognition and measurement of financial assets and financial liabilities . ” the amendment has a number of provisions including the requirements that public business entities use the exit price notion when measuring the fair value of financial instruments for disclosure purposes , a separate presentation of financial assets and financial liabilities by measurement category and form of financial asset ( i.e . securities or loans receivables ) , and eliminating the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost . the amendment is effective for annual and interim reporting periods beginning after december 15 , 2017 and is not expected to have a significant impact to the company 's consolidated financial statements . in february 2016 , the fasb issued asu no . 2016-2 , leases ( topic 842 ) intended to improve financial reporting regarding leasing transactions . the new standard affects all companies and organizations that lease assets . the standard will require organizations to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases if the lease terms are more than 12 months . the guidance also will require qualitative and quantitative disclosures providing additional information about the amounts recorded in the financial statements . the amendments in this update are effective for fiscal years beginning after december 15 , 2018 , including interim periods within those fiscal years . the company is evaluating the potential impact of the amendment on the company 's consolidated financial statements . story_separator_special_tag during the year ended december 31 , 2016 , the bank sold five real estate owned and other repossessed assets resulting in a net gain of $ 6,000. there were no write-downs on fair value less cost to sell for foreclosed real estate property and other repossessed during the year ended december 31 , 2016. during the year ended december 31 , 2016 , a minimal amount of interest was recorded on loans previously accounted for on a non-accrual basis . 30 management , in compliance with regulatory guidelines , conducts an internal loan review program , whereby loans are placed or classified in categories depending upon the level of risk of nonpayment or loss . these categories are special mention , substandard , doubtful or loss . when a loan is classified as substandard or doubtful , management is required to establish an allowance for loan loss in an amount that is deemed prudent . when management classifies a loan as a loss asset , an allowance equal up to 100.0 % of the loan balance is required to be established or the loan is required to be charged-off . the allowance for loan losses is composed of an allowance for both inherent risk associated with lending activities and specific problem assets . management 's evaluation of the classification of assets and the adequacy of the allowance for loan losses is reviewed by the board on a regular basis and by regulatory agencies as part of their examination process . in addition , each loan that exceeds $ 750,000 and each group of loans that exceeds $ 750,000 is monitored more closely . the following table reflects our classified assets : replace_table_token_10_th 31 allowance for loan losses and real estate owned . the bank segregates its loan portfolio for loan losses into the following broad categories : real estate loans ( residential mortgages ( 1-4 family ) , real estate construction , commercial real estate and land ) home equity loans , consumer loans and commercial business loans . the bank provides for a general allowance for losses inherent in the portfolio in the categories referenced above . general loss percentages which are calculated based on historical analyses and other factors such as volume and severity of delinquencies , local and national economy , underwriting standards and other factors . this portion of the allowance is calculated for inherent losses which probably exist as of the evaluation date even though they might not have been identified by the more objective processes used . this is due to the risk of error and or inherent imprecision in the process . this portion of the allowance is subjective in nature and requires judgments based on qualitative factors which do not lend themselves to exact mathematical calculations such as : trends in delinquencies and non-accruals ; trends in volume ; terms and portfolio mix ; new credit products ; changes in lending policies and procedures ; and changes in the outlook for the local , regional and national economy . at least quarterly , the management of the bank evaluates the need to establish an allowance against losses on loans based on estimated losses on specific loans when a finding is made that a loss is estimable and probable . such evaluation includes a review of all loans for which full collectability may not be reasonably assured and considers , among other matters : the estimated market value of the underlying collateral of problem loans ; prior loss experience ; economic conditions ; and overall portfolio quality . real estate owned is evaluated annually and recorded at fair value . provisions for , or adjustments to , estimated losses are included in earnings in the period they are established . at december 31 , 2016 , we had $ 4.77 million in allowances for loan losses . while we believe we have established our existing allowance for loan losses in accordance with generally accepted accounting principles , there can be no assurance that bank regulators , in reviewing our loan portfolio , will not request that we significantly increase our allowance for loan losses , or that general economic conditions , a deteriorating real estate market , or other factors will not cause us to significantly increase our allowance for loan losses , therefore negatively affecting our financial condition and earnings . in making loans , we recognize that credit losses will be experienced and that the risk of loss will vary with , among other things , the type of loan being made , the creditworthiness of the borrower over the term of the loan and , in the case of a secured loan , the quality of the security for the loan . it is our policy to review our loan portfolio , in accordance with regulatory classification procedures , on at least a quarterly basis . 32 the following table includes information for allowance for loan losses : replace_table_token_11_th 33 the following table presents allocation of the allowance for loan losses by loan category and the percentage of loans in each category to total loans : replace_table_token_12_th deposits and other sources of funds deposits . deposits are the company 's primary source of funds . core deposits are deposits that are more stable and somewhat less sensitive to rate changes . they also represent a lower cost source of funds than rate sensitive , more volatile accounts such as certificates of deposit . we believe that our core deposits are our checking , savings accounts , money market accounts and ira accounts . based on our historical experience , we include ira accounts funded by certificates of deposit as core deposits because they exhibit the principal features of core deposits in that they are stable and generally are not rate sensitive . core deposits were $ 378.79 million or 73.87 % of the bank 's deposits at december 31 , 2016 ( $ 347.52 million or 67.8 % excluding Narrative : liquidity the bank is required to maintain minimum levels of liquid assets as defined by the montana division of banking and frb regulations . the liquidity requirement is retained for safety and soundness purposes , and that appropriate levels of liquidity will depend upon the types of activities in which the company engages . for internal reporting purposes , the bank uses policy minimums of 1.0 % , and 8.0 % for “ basic surplus ” and “ basic surplus with fhlb ” as internally defined . in general , the “ basic surplus ” is a calculation of the ratio of unencumbered short-term assets reduced by estimated percentages of cd maturities and other deposits that may leave the bank in the next 90 days divided by total assets . “ basic surplus with fhlb ” adds to “ basic surplus ” the additional borrowing capacity the bank has with the fhlb of des moines . the bank exceeded those minimum ratios as of december 31 , 2016 and 2015. the bank 's primary sources of funds are deposits , repayment of loans and mortgage-backed securities , maturities of investments , funds provided from operations , advances from the fhlb of des moines and other borrowings . scheduled repayments of loans and mortgage-backed securities and maturities of investment securities are generally predictable . however , other sources of funds , such as deposit flows and loan prepayments , can be greatly influenced by the general level of interest rates , economic conditions and competition . the bank uses liquidity resources principally to fund existing and future loan commitments . it also uses them to fund maturing certificates of deposit , demand deposit withdrawals and to invest in other loans and investments , maintain liquidity , and meet operating expenses . liquidity may be adversely affected by unexpected deposit outflows , higher interest rates paid by competitors , and similar matters .

ensuring continuous compliance with these laws and regulations is an operating requirement for all healthcare providers . over the last several years , changes in regulations governing inpatient rehabilitation hospitals have created challenges for inpatient rehabilitation providers with many of these changes resulting in 30 limitations on , and in some cases reductions to , reimbursement from medicare , including reductions to the annual “ market basket update ” ( i.e . , annual adjustment to medicare payment rates ) . on august 7 , 2009 , the centers for medicare and medicaid services ( “ cms ” ) published in the federal register the fiscal year 2010 notice of final rulemaking ( the “ 2010 rule ” ) for irfs under the prospective payment system ( “ irf-pps ” ) . the 2010 rule contains medicare pricing changes as well as new documentation and coverage requirements , as described below . the pricing changes were effective for medicare discharges between october 1 , 2009 and september 30 , 2010 and included a 2.5 % market basket update , which was the first market basket update we had received in 18 months . however , as discussed below , on march 23 , 2010 , president obama signed the patient protection and affordable care act ( the “ ppaca ” ) into law . on march 30 , 2010 , president obama signed into law the health care and education reconciliation act of 2010 , which amended the ppaca ( together , the “ 2010 healthcare reform laws ” ) . these laws include a reduction in annual market basket updates to providers . starting on april 1 , 2010 , the market basket increase of 2.5 % we received on october 1 , 2009 was reduced to 2.25 % . similar reductions to our annual market basket updates are scheduled to occur each year through 2019 , although the amount of each year 's decrease will vary over time and will include to-be-determined productivity adjustments , as discussed below . the 2010 rule includes requirements , referred to as “ coverage requirements , ” for preadmission screening , post-admission evaluations , and individual treatment planning that all delineate the role of physicians in ordering and overseeing patient care . although these changes , that were effective january 1 , 2010 , have not resulted in material modifications to our clinical or business models , they have resulted in significantly increased procedural and documentation requirements for all irfs . in addition , due to the complexity of the changes within the 2010 rule , cms continues to clarify these revised coverage requirements . we have undertaken efforts to educate our employees and affiliated physicians on compliance with these new requirements , and we will continue to train our employees as these requirements are further clarified . in addition , on july 22 , 2010 , cms published in the federal register its irf-pps final rule for fiscal year 2011 ( the “ 2011 rule ” ) . the 2011 rule will be effective for medicare discharges between october 1 , 2010 and september 30 , 2011. the pricing changes in this rule include a 2.5 % market basket update that will be reduced to 2.25 % under the requirements of the 2010 healthcare reform laws discussed above , as well as other pricing changes that impact our hospital-by-hospital base rate for medicare reimbursement . based on our analysis which includes the acuity of our patients over the twelve–month period prior to the rule 's release and incorporates other adjustments of the 2011 rule , we believe the 2011 rule will increase our medicare-related net operating revenues for our irfs by approximately 2.1 % annually . beginning on october 1 , 2011 , the 2010 healthcare reform laws require for the first time a to-be-determined productivity adjustment ( reduction ) to the market basket update on an annual basis . our outpatient services are primarily reimbursed under medicare 's physician fee schedule . by statute , the physician fee schedule is subject to annual automatic adjustment by a sustainable growth rate formula that has resulted in reductions in reimbursement rates every year since 2002. however , in each case , congress has acted to suspend or postpone the effectiveness of these automatic reimbursement reductions . for example , congress passed , and on june 25 , 2010 president obama signed into law , a 2.2 % increase to medicare physician fee schedule payment rates from june 1 , 2010 through november 30 , 2010 , further postponing the statutory reduction of 21.3 % that briefly became effective on june 1 , 2010. subsequently , congress acted to postpone the statutory reduction through december 31 , 2010 and then again through december 31 , 2011. if congress does not extend this relief , as it has done since 2002 , or permanently modify the sustainable growth rate formula by january 1 , 2012 , payment levels for outpatient services under the physician fee schedule will be reduced at that point by more than 25 % . on november 2 , 2010 , cms released its notice of final rulemaking for the medicare physician fee schedule for calendar year 2011. congress further modified this final rule through the physician and therapy relief act of 2010. collectively , these changes would implement a 25 % rate reduction to the practice expense component for reimbursement of therapy expenses for additional procedures when 31 multiple therapy services are provided to the same patient on the same day in a hospital outpatient department . story_separator_special_tag this continued focus on the teamworks initiative , coupled with the dedication and hard work of our employees , allowed us to continue to generate discharge growth throughout 2009 , in spite of the difficult comparisons to 2008 's growth . this growth in discharges helped mitigate the negative impact of the pricing roll-back . decreased outpatient volumes in all periods presented resulted primarily from the closure of outpatient satellite clinics in prior periods . challenges in securing therapy staffing in certain markets and continued competition from physicians offering physical therapy services within their own offices also contributed to the decline . during 2010 , outpatient visit cancellations caused by the severe winter storms in some of our northeast and mid-atlantic markets in the first quarter of 2010 also contributed to the decreased volume . as of december 31 , 2010 , 2009 , and 2008 , we operated 32 , 40 , and 50 outpatient satellite clinics , respectively . as discussed above , the market basket increase of 2.5 % irfs received on october 1 , 2009 was reduced to 2.25 % effective april 1 , 2010. as also discussed above , irfs received a market basket update of 2.5 % under the 2011 rule effective october 1 , 2010. however , this market basket update was reduced to 2.25 % under the requirements of the 2010 healthcare reform laws . salaries and benefits salaries and benefits represent the most significant cost to us and represent an investment in our most important asset : our employees . salaries and benefits include all amounts paid to full- and part-time employees who directly participate in or support the operations of our hospitals , including all related costs of benefits provided to employees . it also includes amounts paid for contract labor . we actively manage the productive portion of our salaries and benefits utilizing certain metrics , including employees per occupied bed , or “ epob . ” this metric is determined by dividing the number of full-time equivalents , including an estimate of full-time equivalents from the utilization of contract labor , by the number of occupied beds during each period . the number of occupied beds is determined by multiplying the number of licensed beds by our occupancy percentage . for the years ended december 31 , 2010 , 2009 , and 2008 , our epob was 3.50 , 3.53 , and 3.62 , respectively , or a year-over-year improvement of 0.8 % and 2.5 % in 2010 and 2009 , respectively . salaries and benefits increased from 2009 to 2010 as a result of an approximate 2.3 % merit increase provided to employees on october 1 , 2009 , an increase in the number of full-time equivalents as a result of our development activities , as discussed above , and a change in the mix of licensed versus non-licensed employees . the process of standardizing our labor practices across all of our hospitals , which we began in 2009 with the roll-out of a new labor management system , and the implementation of the new coverage requirements that became effective january 1 , 2010 have decreased the use of non-licensed employees , which increased our average cost per full-time equivalent . salaries and benefits as a percent of net operating revenues in 2010 continued to be positively impacted by continued improvement in labor productivity , a reduction in self-insured workers ' compensation costs due to revised actuarial estimates , and the medicare pricing changes that became effective on october 1 , 2009. these positive impacts were offset by the decline in outpatient revenues , as discussed above , as well as an increase in the number of full-time equivalents at new or newly acquired hospitals who were ramping up operations during 2010. during late 2008 , we addressed our comprehensive benefits package and made refinements that allowed us , and continue to allow us , to remain competitive in this challenging staffing environment while also being consistent with our goal of being a high-quality , low-cost provider of inpatient rehabilitative services . such refinements included , but were not limited to , passing along a portion of the increased costs associated with medical plan benefits to our employees and reducing certain aspects of our paid-time-off program . also , as a result of our recruiting and retention efforts , costs associated with contract labor decreased in 2009. as a result , salaries and benefits as a percent of net operating revenues decreased from 2008 to 2009. as it is routine to provide merit increases to our employees on october 1 of each year , which normally coincides with our annual medicare pricing adjustment , we provided an approximate 2 % merit increase to our employees effective october 1 , 2010 . 37 other operating expenses other operating expenses include costs associated with managing and maintaining our hospitals . these expenses include such items as contract services , utilities , insurance , professional fees , and repairs and maintenance . other operating expenses in 2010 increased over 2009 due primarily to increased self-insurance costs associated with professional and general liability claims and investments we made in our core business in 2010 , including the investment in our case management function , as discussed above . as a result of the jury verdict discussed in note 22 , contingencies and other commitments , “ other litigation , ” to the accompanying consolidated financial statements , we recorded a $ 4.6 million charge to other operating expenses during the second quarter of 2010. in addition , we update our actuarial estimates surrounding our self-insurance reserves in june and december of each year . during 2010 , we recorded a $ 7.6 million increase in self-insurance costs associated with professional and general liability risks due to revised actuarial estimates that primarily resulted from an increase in expected losses on a subset of claims in our recent claims history . other operating

net cash provided by operating activities was $ 331.0 million and $ 406.1 million in 2010 and 2009 , respectively . net cash provided by operating activities in 2010 included $ 13.5 million of state income tax refunds associated with prior periods . net cash provided by operating activities in 2009 included $ 73.8 million in net cash proceeds related to the ubs settlement and the receipt of $ 63.7 million in federal and state income tax refunds for prior periods . see the “ results of operations ” and “ liquidity and capital resources ” sections of this item for additional information . in anticipation of the continuing capital market volatility throughout 2010 and the significant changes in the broader healthcare regulatory landscape , we focused our 2010 strategy on : further deleveraging our balance sheet , growing organically , providing high-quality , cost-effective care , pursuing acquisitions of inpatient rehabilitation facilities on a disciplined , opportunistic basis , and adapting to regulatory changes affecting our industry . while growth in adjusted ebitda was the focus of our 2010 deleveraging efforts , we also reduced our total debt outstanding by approximately $ 151 million . additionally , we improved our overall debt profile in october 2010 by refinancing our credit agreement . in that refinancing , we extended debt maturities and reduced floating interest rate exposure by replacing our term loans with later maturing fixed rate senior notes . we used cash on hand , a draw under our new revolving credit facility , and the net proceeds from the october 2010 issuance of $ 275.0 million of 7.25 % senior notes due 2018 and $ 250.0 million of 7.75 % senior notes due 2022 to repay all $ 743.1 million of our former term loans . we also improved the flexibility of our capital structure by amending other terms of our credit agreement to provide for a senior secured revolving credit facility of up to $ 500.0 million , including a $ 260.0 million letter of credit subfacility maturing in october 2015 , and to make other changes that are more consistent with our financial position .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. ensuring continuous compliance with these laws and regulations is an operating requirement for all healthcare providers . over the last several years , changes in regulations governing inpatient rehabilitation hospitals have created challenges for inpatient rehabilitation providers with many of these changes resulting in 30 limitations on , and in some cases reductions to , reimbursement from medicare , including reductions to the annual “ market basket update ” ( i.e . , annual adjustment to medicare payment rates ) . on august 7 , 2009 , the centers for medicare and medicaid services ( “ cms ” ) published in the federal register the fiscal year 2010 notice of final rulemaking ( the “ 2010 rule ” ) for irfs under the prospective payment system ( “ irf-pps ” ) . the 2010 rule contains medicare pricing changes as well as new documentation and coverage requirements , as described below . the pricing changes were effective for medicare discharges between october 1 , 2009 and september 30 , 2010 and included a 2.5 % market basket update , which was the first market basket update we had received in 18 months . however , as discussed below , on march 23 , 2010 , president obama signed the patient protection and affordable care act ( the “ ppaca ” ) into law . on march 30 , 2010 , president obama signed into law the health care and education reconciliation act of 2010 , which amended the ppaca ( together , the “ 2010 healthcare reform laws ” ) . these laws include a reduction in annual market basket updates to providers . starting on april 1 , 2010 , the market basket increase of 2.5 % we received on october 1 , 2009 was reduced to 2.25 % . similar reductions to our annual market basket updates are scheduled to occur each year through 2019 , although the amount of each year 's decrease will vary over time and will include to-be-determined productivity adjustments , as discussed below . the 2010 rule includes requirements , referred to as “ coverage requirements , ” for preadmission screening , post-admission evaluations , and individual treatment planning that all delineate the role of physicians in ordering and overseeing patient care . although these changes , that were effective january 1 , 2010 , have not resulted in material modifications to our clinical or business models , they have resulted in significantly increased procedural and documentation requirements for all irfs . in addition , due to the complexity of the changes within the 2010 rule , cms continues to clarify these revised coverage requirements . we have undertaken efforts to educate our employees and affiliated physicians on compliance with these new requirements , and we will continue to train our employees as these requirements are further clarified . in addition , on july 22 , 2010 , cms published in the federal register its irf-pps final rule for fiscal year 2011 ( the “ 2011 rule ” ) . the 2011 rule will be effective for medicare discharges between october 1 , 2010 and september 30 , 2011. the pricing changes in this rule include a 2.5 % market basket update that will be reduced to 2.25 % under the requirements of the 2010 healthcare reform laws discussed above , as well as other pricing changes that impact our hospital-by-hospital base rate for medicare reimbursement . based on our analysis which includes the acuity of our patients over the twelve–month period prior to the rule 's release and incorporates other adjustments of the 2011 rule , we believe the 2011 rule will increase our medicare-related net operating revenues for our irfs by approximately 2.1 % annually . beginning on october 1 , 2011 , the 2010 healthcare reform laws require for the first time a to-be-determined productivity adjustment ( reduction ) to the market basket update on an annual basis . our outpatient services are primarily reimbursed under medicare 's physician fee schedule . by statute , the physician fee schedule is subject to annual automatic adjustment by a sustainable growth rate formula that has resulted in reductions in reimbursement rates every year since 2002. however , in each case , congress has acted to suspend or postpone the effectiveness of these automatic reimbursement reductions . for example , congress passed , and on june 25 , 2010 president obama signed into law , a 2.2 % increase to medicare physician fee schedule payment rates from june 1 , 2010 through november 30 , 2010 , further postponing the statutory reduction of 21.3 % that briefly became effective on june 1 , 2010. subsequently , congress acted to postpone the statutory reduction through december 31 , 2010 and then again through december 31 , 2011. if congress does not extend this relief , as it has done since 2002 , or permanently modify the sustainable growth rate formula by january 1 , 2012 , payment levels for outpatient services under the physician fee schedule will be reduced at that point by more than 25 % . on november 2 , 2010 , cms released its notice of final rulemaking for the medicare physician fee schedule for calendar year 2011. congress further modified this final rule through the physician and therapy relief act of 2010. collectively , these changes would implement a 25 % rate reduction to the practice expense component for reimbursement of therapy expenses for additional procedures when 31 multiple therapy services are provided to the same patient on the same day in a hospital outpatient department . story_separator_special_tag this continued focus on the teamworks initiative , coupled with the dedication and hard work of our employees , allowed us to continue to generate discharge growth throughout 2009 , in spite of the difficult comparisons to 2008 's growth . this growth in discharges helped mitigate the negative impact of the pricing roll-back . decreased outpatient volumes in all periods presented resulted primarily from the closure of outpatient satellite clinics in prior periods . challenges in securing therapy staffing in certain markets and continued competition from physicians offering physical therapy services within their own offices also contributed to the decline . during 2010 , outpatient visit cancellations caused by the severe winter storms in some of our northeast and mid-atlantic markets in the first quarter of 2010 also contributed to the decreased volume . as of december 31 , 2010 , 2009 , and 2008 , we operated 32 , 40 , and 50 outpatient satellite clinics , respectively . as discussed above , the market basket increase of 2.5 % irfs received on october 1 , 2009 was reduced to 2.25 % effective april 1 , 2010. as also discussed above , irfs received a market basket update of 2.5 % under the 2011 rule effective october 1 , 2010. however , this market basket update was reduced to 2.25 % under the requirements of the 2010 healthcare reform laws . salaries and benefits salaries and benefits represent the most significant cost to us and represent an investment in our most important asset : our employees . salaries and benefits include all amounts paid to full- and part-time employees who directly participate in or support the operations of our hospitals , including all related costs of benefits provided to employees . it also includes amounts paid for contract labor . we actively manage the productive portion of our salaries and benefits utilizing certain metrics , including employees per occupied bed , or “ epob . ” this metric is determined by dividing the number of full-time equivalents , including an estimate of full-time equivalents from the utilization of contract labor , by the number of occupied beds during each period . the number of occupied beds is determined by multiplying the number of licensed beds by our occupancy percentage . for the years ended december 31 , 2010 , 2009 , and 2008 , our epob was 3.50 , 3.53 , and 3.62 , respectively , or a year-over-year improvement of 0.8 % and 2.5 % in 2010 and 2009 , respectively . salaries and benefits increased from 2009 to 2010 as a result of an approximate 2.3 % merit increase provided to employees on october 1 , 2009 , an increase in the number of full-time equivalents as a result of our development activities , as discussed above , and a change in the mix of licensed versus non-licensed employees . the process of standardizing our labor practices across all of our hospitals , which we began in 2009 with the roll-out of a new labor management system , and the implementation of the new coverage requirements that became effective january 1 , 2010 have decreased the use of non-licensed employees , which increased our average cost per full-time equivalent . salaries and benefits as a percent of net operating revenues in 2010 continued to be positively impacted by continued improvement in labor productivity , a reduction in self-insured workers ' compensation costs due to revised actuarial estimates , and the medicare pricing changes that became effective on october 1 , 2009. these positive impacts were offset by the decline in outpatient revenues , as discussed above , as well as an increase in the number of full-time equivalents at new or newly acquired hospitals who were ramping up operations during 2010. during late 2008 , we addressed our comprehensive benefits package and made refinements that allowed us , and continue to allow us , to remain competitive in this challenging staffing environment while also being consistent with our goal of being a high-quality , low-cost provider of inpatient rehabilitative services . such refinements included , but were not limited to , passing along a portion of the increased costs associated with medical plan benefits to our employees and reducing certain aspects of our paid-time-off program . also , as a result of our recruiting and retention efforts , costs associated with contract labor decreased in 2009. as a result , salaries and benefits as a percent of net operating revenues decreased from 2008 to 2009. as it is routine to provide merit increases to our employees on october 1 of each year , which normally coincides with our annual medicare pricing adjustment , we provided an approximate 2 % merit increase to our employees effective october 1 , 2010 . 37 other operating expenses other operating expenses include costs associated with managing and maintaining our hospitals . these expenses include such items as contract services , utilities , insurance , professional fees , and repairs and maintenance . other operating expenses in 2010 increased over 2009 due primarily to increased self-insurance costs associated with professional and general liability claims and investments we made in our core business in 2010 , including the investment in our case management function , as discussed above . as a result of the jury verdict discussed in note 22 , contingencies and other commitments , “ other litigation , ” to the accompanying consolidated financial statements , we recorded a $ 4.6 million charge to other operating expenses during the second quarter of 2010. in addition , we update our actuarial estimates surrounding our self-insurance reserves in june and december of each year . during 2010 , we recorded a $ 7.6 million increase in self-insurance costs associated with professional and general liability risks due to revised actuarial estimates that primarily resulted from an increase in expected losses on a subset of claims in our recent claims history . other operating Narrative : net cash provided by operating activities was $ 331.0 million and $ 406.1 million in 2010 and 2009 , respectively . net cash provided by operating activities in 2010 included $ 13.5 million of state income tax refunds associated with prior periods . net cash provided by operating activities in 2009 included $ 73.8 million in net cash proceeds related to the ubs settlement and the receipt of $ 63.7 million in federal and state income tax refunds for prior periods . see the “ results of operations ” and “ liquidity and capital resources ” sections of this item for additional information . in anticipation of the continuing capital market volatility throughout 2010 and the significant changes in the broader healthcare regulatory landscape , we focused our 2010 strategy on : further deleveraging our balance sheet , growing organically , providing high-quality , cost-effective care , pursuing acquisitions of inpatient rehabilitation facilities on a disciplined , opportunistic basis , and adapting to regulatory changes affecting our industry . while growth in adjusted ebitda was the focus of our 2010 deleveraging efforts , we also reduced our total debt outstanding by approximately $ 151 million . additionally , we improved our overall debt profile in october 2010 by refinancing our credit agreement . in that refinancing , we extended debt maturities and reduced floating interest rate exposure by replacing our term loans with later maturing fixed rate senior notes . we used cash on hand , a draw under our new revolving credit facility , and the net proceeds from the october 2010 issuance of $ 275.0 million of 7.25 % senior notes due 2018 and $ 250.0 million of 7.75 % senior notes due 2022 to repay all $ 743.1 million of our former term loans . we also improved the flexibility of our capital structure by amending other terms of our credit agreement to provide for a senior secured revolving credit facility of up to $ 500.0 million , including a $ 260.0 million letter of credit subfacility maturing in october 2015 , and to make other changes that are more consistent with our financial position .

in may 2016 , we acquired imagine easy solutions , llc , a privately held online learning company based in new york that provides a portfolio of online writing tools . we anticipate this acquisition to enhance our ability to acquire new students , increase the value to our existing students , and have a meaningful and positive impact on their outcomes . further , we believe this expanded and deeper penetration of the student demographic will allow us to drive further growth in our existing chegg services . in addition , we believe that these investments we have made to achieve our current scale will allow us to drive increased operating margins over time that , together with increased contributions of chegg services products , will enable us to accomplish profitability and become cash-flow positive for the long-term . our ability to achieve these long-term objectives is subject to numerous risks and uncertainties , including our ability to attract , retain , and increasingly engage the student population , intense competition in our markets , the ability to achieve sufficient contributions to revenue from chegg services and other factors described in greater detail in part i , item 1a , “ risk factors . ” 40 we have presented revenues for our two product lines , chegg services and required materials , based on how students view us and the utilization of our products by them . chegg services includes our products and services we provide to supplement the requirements and help students with their coursework . chegg services also includes our marketing services which help to complete our offering of services to students . required materials includes all products that are essential for students to meet the requirements of their coursework . more detail on our two product lines is discussed in the next two sections titled `` chegg services `` and `` required materials . `` chegg services our chegg services for students primarily includes our chegg study service , our chegg tutors service , and our writing tools service . we offer enrollment marketing services to colleges , through our strategic partnership with nrccua announced in january 2017 , allowing them to reach interested college-bound high school students that use our college admissions and scholarship services . we also work with leading brands , such as proctor & gamble , starbucks , the truth , microsoft , best buy , directtv , bare escentuals , and shutterfly , to provide students with discounts , promotions , and other products that , based on student feedback , delight them . for example , for proctor & gamble , we inserted free laundry care samples and for starbucks , we inserted free drinks in our textbook rental shipments to students . all of our brand advertising services and the discounts , promotions , and other products provided to students are paid for by the brands . we additionally provide internship services and our test prep service currently covering the act and sat exams . students typically pay to access chegg services such as chegg study on a monthly or annual basis , while colleges subscribe to our enrollment marketing services and brands pay us depending on the nature of the campaign . in the aggregate , chegg services revenues were 51 % , 31 % and 22 % of net revenues during the years ended december 31 , 2016 , 2015 and 2014 , respectively . required materials our required materials product line includes the rental and sale of print textbooks and etextbooks as well as the commission we receive from ingram . as of november 2016 , we no longer rent our print textbooks and therefore all revenues from print textbook rentals from this date forward are commission-based . our web-based , multiplatform etextbook reader , etextbooks and supplemental course materials are available from approximately 120 publishers as of december 31 , 2016 . we offer our etextbook reader on a standalone basis or as a rental-equivalent solution and for free to students awaiting the arrival of their print textbook rental . this product line has historically been highly capital intensive due to the resources required to maintain a print textbook rental library . however , as a result of our strategic partnership with ingram , we have exited our warehouse facilities in kentucky and transitioned our print textbook library to ingram 's facilities , which has helped to free up resources historically required by this product line . we have continued to liquidate our print textbook library through the normal course of our operations and maintain a minimal print textbook rental library as of december 31 , 2016 . we will continue to liquidate our remaining print textbook library inventory in the first half of 2017. we have historically capitalized the investment in our print textbook library and recorded depreciation expense in cost of revenues over its useful life using an estimated liquidation value . during the years ended december 31 , 2016 and 2015 , our purchases of print textbooks , net of proceeds from textbook liquidation was an inflow of $ 24.8 million and $ 6.0 million , respectively , and an outflow during the year ended december 31 , 2014 of $ 54.7 million . in the years ended december 31 , 2016 and 2015 , our purchases of print textbooks significantly decreased , and were more than offset by the proceeds received from liquidations of textbooks from our print textbook library . this was a result of our strategic partnership with ingram as we are no longer purchased print textbooks for rental . we use our website to liquidate print textbooks from our remaining print textbook library , which allows us to generate greater recovery on our print textbooks compared to bulk liquidations , while at the same time providing students substantial savings over the retail price of a new book . story_separator_special_tag 45 results of operations the following table summarizes our historical consolidated statements of operations ( in thousands , except percentage of total net revenues ) : replace_table_token_4_th 46 year ended december 31 , 2016 , 2015 and 2014 net revenues net revenues in the year ended december 31 , 2016 decreased $ 47.3 million , or 16 % , compared to the same period in 2015 . rental revenues decreased $ 80.5 million or 67 % , while services revenues increased $ 49.3 million , or 37 % , and sales revenues decreased $ 16.0 million , or 33 % . net revenues in the year ended december 31 , 2015 decreased $ 3.5 million , or 1 % , compared to the same period in 2014. rental revenues decreased $ 61.2 million or 34 % , while services revenues increased $ 44.5 million , or 51 % , and sales revenues increased $ 13.2 million , or 37 % . the decrease in rental revenues during the years ended december 31 , 2016 and 2015 was due to our strategic partnership with ingram . as a result of our strategic partnership , our rental revenues are increasingly classified as services revenues to represent the commission on the total revenues that we earn from ingram upon their fulfillment of a rental transaction using books for which ingram has title and risk of loss rather than recognizing rental revenues from transactions using our print textbooks . the increase in services revenues during the years ended december 31 , 2016 and 2015 was driven primarily from growth across our other offerings for students which included increased revenues from chegg study and our various acquisitions in 2014 and 2016 as well as an increase in the commissions earned from ingram . the decrease in sales revenues during the year ended december 31 , 2016 and the increase in sales revenues during the year ended december 31 , 2015 was driven by sales of print textbooks through our website on a just-in-time basis . the following table sets forth our total net revenues for the periods shown for our chegg services and required materials product lines ( dollars in thousands ) : replace_table_token_5_th chegg services revenues increased $ 35.1 million , or 37 % , in the year ended december 31 , 2016 , compared to the same period in 2015 due to growth in subscribers for our chegg study and chegg tutors services as well as revenues from our acquisition of imagine easy in the second quarter of 2016. chegg services revenues represented 51 % and 31 % of net revenues during the years ended december 31 , 2016 and 2015 , respectively . required materials revenues decreased $ 82.3 million , or 40 % , in the year ended december 31 , 2016 compared to the same period in 2015 primarily due to our strategic partnership with ingram . our required materials revenues are increasingly comprised of a commission earned from ingram rather than the full revenues from a print textbook rental transaction . required materials revenues decreased throughout 2016 and we fully transitioned new investments in the print textbook library and logistics and fulfillment for print textbook rental and sale orders to ingram . required materials revenues represented 49 % and 69 % of net revenues during the years ended december 31 , 2016 and 2015 , respectively . chegg services revenues increased $ 26.2 million , or 38 % , in the year ended december 31 , 2015 , compared to the same period in 2014 due to growth in subscriptions for our chegg study service . chegg services represented 31 % and 22 % of net revenues during the years ended december 31 , 2015 and 2014 , respectively . required materials revenues decreased $ 29.6 million , or 13 % , in the year ended december 31 , 2015 compared to the same period in 2014 primarily due to our partnership with ingram . required materials revenues represented 69 % and 78 % of net revenues during the years ended december 31 , 2015 and 2014 , respectively . 47 cost of revenues the following table sets forth our cost of revenues for the periods shown ( dollars in thousands ) : replace_table_token_6_th cost of revenues in the year ended december 31 , 2016 decreased by $ 70.2 million , or 37 % , compared to the same period in 2015 . the decrease in absolute dollars and as a percentage of revenues for the year ended december 31 , 2016 was primarily due to a decrease in textbook depreciation of $ 34.3 million , lower order fulfillment costs of $ 18.3 million , lower write-offs related to our print textbook library of $ 4.2 million , lower warehouse personnel costs of $ 3.1 million and lower cost of print textbooks sold of $ 16.4 million . these savings were partially offset by higher amortization of digital content of $ 5.3 million . as a result , gross margins increased to 53 % in the year ended december 31 , 2016 , from 37 % in the year ended december 31 , 2015 . cost of revenues in the year ended december 31 , 2015 decreased by $ 21.1 million , or 10 % , compared to the same period in 2014. the decrease in absolute dollars and as a percentage of revenues for the year ended december 31 , 2015 was primarily due to a decrease in textbook depreciation of $ 26.6 million , write-offs related to our print textbook library of $ 5.2 million and lower warehouse personnel costs of $ 5.6 million . these savings were partially offset by higher cost of print textbooks sold of $ 15.5 million and higher amortization of digital content of $ 1.6 million . as a result , gross margins increased to 37 % in the year ended december 31 , 2015 , from 31 % in the year

net cash provided by operating activities during the year ended december 31 , 2016 was $ 24.9 million . our net loss of $ 42.2 million was offset by significant non-cash operating expenses , including print textbook library depreciation expense of 51 $ 9.3 million , other depreciation and amortization expense of $ 14.6 million , share-based compensation expense of $ 41.8 million and loss from write-offs of print textbooks of $ 1.1 million . net cash used in operating activities during the year ended december 31 , 2015 was $ 0.1 million . our net loss of $ 59.2 million was increased by the change in our prepaid expenses and other current assets of $ 27.9 million and partially offset by significant non-cash operating expenses , including print textbook library depreciation expense of $ 43.6 million , other depreciation and amortization expense of $ 11.7 million , share-based compensation expense of $ 38.8 million and loss from write-offs of print textbooks of $ 5.3 million . during the year ended december 31 , 2015 , we saw a decline in our textbook depreciation expense and an increase in the change of our prepaid expenses and other current assets , which was a result of our strategic partnership with ingram , where we are no longer making investments in our print textbook library yet continue to buy books on ingram 's behalf , while providing them with extended payment terms .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. in may 2016 , we acquired imagine easy solutions , llc , a privately held online learning company based in new york that provides a portfolio of online writing tools . we anticipate this acquisition to enhance our ability to acquire new students , increase the value to our existing students , and have a meaningful and positive impact on their outcomes . further , we believe this expanded and deeper penetration of the student demographic will allow us to drive further growth in our existing chegg services . in addition , we believe that these investments we have made to achieve our current scale will allow us to drive increased operating margins over time that , together with increased contributions of chegg services products , will enable us to accomplish profitability and become cash-flow positive for the long-term . our ability to achieve these long-term objectives is subject to numerous risks and uncertainties , including our ability to attract , retain , and increasingly engage the student population , intense competition in our markets , the ability to achieve sufficient contributions to revenue from chegg services and other factors described in greater detail in part i , item 1a , “ risk factors . ” 40 we have presented revenues for our two product lines , chegg services and required materials , based on how students view us and the utilization of our products by them . chegg services includes our products and services we provide to supplement the requirements and help students with their coursework . chegg services also includes our marketing services which help to complete our offering of services to students . required materials includes all products that are essential for students to meet the requirements of their coursework . more detail on our two product lines is discussed in the next two sections titled `` chegg services `` and `` required materials . `` chegg services our chegg services for students primarily includes our chegg study service , our chegg tutors service , and our writing tools service . we offer enrollment marketing services to colleges , through our strategic partnership with nrccua announced in january 2017 , allowing them to reach interested college-bound high school students that use our college admissions and scholarship services . we also work with leading brands , such as proctor & gamble , starbucks , the truth , microsoft , best buy , directtv , bare escentuals , and shutterfly , to provide students with discounts , promotions , and other products that , based on student feedback , delight them . for example , for proctor & gamble , we inserted free laundry care samples and for starbucks , we inserted free drinks in our textbook rental shipments to students . all of our brand advertising services and the discounts , promotions , and other products provided to students are paid for by the brands . we additionally provide internship services and our test prep service currently covering the act and sat exams . students typically pay to access chegg services such as chegg study on a monthly or annual basis , while colleges subscribe to our enrollment marketing services and brands pay us depending on the nature of the campaign . in the aggregate , chegg services revenues were 51 % , 31 % and 22 % of net revenues during the years ended december 31 , 2016 , 2015 and 2014 , respectively . required materials our required materials product line includes the rental and sale of print textbooks and etextbooks as well as the commission we receive from ingram . as of november 2016 , we no longer rent our print textbooks and therefore all revenues from print textbook rentals from this date forward are commission-based . our web-based , multiplatform etextbook reader , etextbooks and supplemental course materials are available from approximately 120 publishers as of december 31 , 2016 . we offer our etextbook reader on a standalone basis or as a rental-equivalent solution and for free to students awaiting the arrival of their print textbook rental . this product line has historically been highly capital intensive due to the resources required to maintain a print textbook rental library . however , as a result of our strategic partnership with ingram , we have exited our warehouse facilities in kentucky and transitioned our print textbook library to ingram 's facilities , which has helped to free up resources historically required by this product line . we have continued to liquidate our print textbook library through the normal course of our operations and maintain a minimal print textbook rental library as of december 31 , 2016 . we will continue to liquidate our remaining print textbook library inventory in the first half of 2017. we have historically capitalized the investment in our print textbook library and recorded depreciation expense in cost of revenues over its useful life using an estimated liquidation value . during the years ended december 31 , 2016 and 2015 , our purchases of print textbooks , net of proceeds from textbook liquidation was an inflow of $ 24.8 million and $ 6.0 million , respectively , and an outflow during the year ended december 31 , 2014 of $ 54.7 million . in the years ended december 31 , 2016 and 2015 , our purchases of print textbooks significantly decreased , and were more than offset by the proceeds received from liquidations of textbooks from our print textbook library . this was a result of our strategic partnership with ingram as we are no longer purchased print textbooks for rental . we use our website to liquidate print textbooks from our remaining print textbook library , which allows us to generate greater recovery on our print textbooks compared to bulk liquidations , while at the same time providing students substantial savings over the retail price of a new book . story_separator_special_tag 45 results of operations the following table summarizes our historical consolidated statements of operations ( in thousands , except percentage of total net revenues ) : replace_table_token_4_th 46 year ended december 31 , 2016 , 2015 and 2014 net revenues net revenues in the year ended december 31 , 2016 decreased $ 47.3 million , or 16 % , compared to the same period in 2015 . rental revenues decreased $ 80.5 million or 67 % , while services revenues increased $ 49.3 million , or 37 % , and sales revenues decreased $ 16.0 million , or 33 % . net revenues in the year ended december 31 , 2015 decreased $ 3.5 million , or 1 % , compared to the same period in 2014. rental revenues decreased $ 61.2 million or 34 % , while services revenues increased $ 44.5 million , or 51 % , and sales revenues increased $ 13.2 million , or 37 % . the decrease in rental revenues during the years ended december 31 , 2016 and 2015 was due to our strategic partnership with ingram . as a result of our strategic partnership , our rental revenues are increasingly classified as services revenues to represent the commission on the total revenues that we earn from ingram upon their fulfillment of a rental transaction using books for which ingram has title and risk of loss rather than recognizing rental revenues from transactions using our print textbooks . the increase in services revenues during the years ended december 31 , 2016 and 2015 was driven primarily from growth across our other offerings for students which included increased revenues from chegg study and our various acquisitions in 2014 and 2016 as well as an increase in the commissions earned from ingram . the decrease in sales revenues during the year ended december 31 , 2016 and the increase in sales revenues during the year ended december 31 , 2015 was driven by sales of print textbooks through our website on a just-in-time basis . the following table sets forth our total net revenues for the periods shown for our chegg services and required materials product lines ( dollars in thousands ) : replace_table_token_5_th chegg services revenues increased $ 35.1 million , or 37 % , in the year ended december 31 , 2016 , compared to the same period in 2015 due to growth in subscribers for our chegg study and chegg tutors services as well as revenues from our acquisition of imagine easy in the second quarter of 2016. chegg services revenues represented 51 % and 31 % of net revenues during the years ended december 31 , 2016 and 2015 , respectively . required materials revenues decreased $ 82.3 million , or 40 % , in the year ended december 31 , 2016 compared to the same period in 2015 primarily due to our strategic partnership with ingram . our required materials revenues are increasingly comprised of a commission earned from ingram rather than the full revenues from a print textbook rental transaction . required materials revenues decreased throughout 2016 and we fully transitioned new investments in the print textbook library and logistics and fulfillment for print textbook rental and sale orders to ingram . required materials revenues represented 49 % and 69 % of net revenues during the years ended december 31 , 2016 and 2015 , respectively . chegg services revenues increased $ 26.2 million , or 38 % , in the year ended december 31 , 2015 , compared to the same period in 2014 due to growth in subscriptions for our chegg study service . chegg services represented 31 % and 22 % of net revenues during the years ended december 31 , 2015 and 2014 , respectively . required materials revenues decreased $ 29.6 million , or 13 % , in the year ended december 31 , 2015 compared to the same period in 2014 primarily due to our partnership with ingram . required materials revenues represented 69 % and 78 % of net revenues during the years ended december 31 , 2015 and 2014 , respectively . 47 cost of revenues the following table sets forth our cost of revenues for the periods shown ( dollars in thousands ) : replace_table_token_6_th cost of revenues in the year ended december 31 , 2016 decreased by $ 70.2 million , or 37 % , compared to the same period in 2015 . the decrease in absolute dollars and as a percentage of revenues for the year ended december 31 , 2016 was primarily due to a decrease in textbook depreciation of $ 34.3 million , lower order fulfillment costs of $ 18.3 million , lower write-offs related to our print textbook library of $ 4.2 million , lower warehouse personnel costs of $ 3.1 million and lower cost of print textbooks sold of $ 16.4 million . these savings were partially offset by higher amortization of digital content of $ 5.3 million . as a result , gross margins increased to 53 % in the year ended december 31 , 2016 , from 37 % in the year ended december 31 , 2015 . cost of revenues in the year ended december 31 , 2015 decreased by $ 21.1 million , or 10 % , compared to the same period in 2014. the decrease in absolute dollars and as a percentage of revenues for the year ended december 31 , 2015 was primarily due to a decrease in textbook depreciation of $ 26.6 million , write-offs related to our print textbook library of $ 5.2 million and lower warehouse personnel costs of $ 5.6 million . these savings were partially offset by higher cost of print textbooks sold of $ 15.5 million and higher amortization of digital content of $ 1.6 million . as a result , gross margins increased to 37 % in the year ended december 31 , 2015 , from 31 % in the year Narrative : net cash provided by operating activities during the year ended december 31 , 2016 was $ 24.9 million . our net loss of $ 42.2 million was offset by significant non-cash operating expenses , including print textbook library depreciation expense of 51 $ 9.3 million , other depreciation and amortization expense of $ 14.6 million , share-based compensation expense of $ 41.8 million and loss from write-offs of print textbooks of $ 1.1 million . net cash used in operating activities during the year ended december 31 , 2015 was $ 0.1 million . our net loss of $ 59.2 million was increased by the change in our prepaid expenses and other current assets of $ 27.9 million and partially offset by significant non-cash operating expenses , including print textbook library depreciation expense of $ 43.6 million , other depreciation and amortization expense of $ 11.7 million , share-based compensation expense of $ 38.8 million and loss from write-offs of print textbooks of $ 5.3 million . during the year ended december 31 , 2015 , we saw a decline in our textbook depreciation expense and an increase in the change of our prepaid expenses and other current assets , which was a result of our strategic partnership with ingram , where we are no longer making investments in our print textbook library yet continue to buy books on ingram 's behalf , while providing them with extended payment terms .

results from operations in our real estate ownership segment benefited from income generated from and gains recognized on the properties we purchased from cpa ® :14 in connection with the cpa ® :14 asset sales as well as income generated from our equity interests in the reits as a result of our $ 121.0 million incremental investment in cpa ® :16 – global in connection with the cpa ® :14/16 merger . w. p. carey 2011 10-k — 24 cash flow from operating activities decreased in 2011 as compared to 2010 , primarily due to a decrease in cash received from providing asset-based management services to the reits as we no longer receive cash asset management fees from cpa ® :14 and cpa ® :16 – global subsequent to the cpa ® :14/16 merger , partially offset by the disposition revenues received , net of income taxes paid , in connection with providing a liquidity event to cpa ® :14 shareholders through the cpa ® :14/16 merger . distributions paid decreased in 2011 as compared to 2010 , primarily due to a special distribution of $ 0.30 per share paid in january 2010 to shareholders of record at december 31 , 2009. our affo supplemental measure increased in 2011 as compared to 2010. affo attributable to our investment management segment benefited from the incentive , termination and subordinated disposition revenue recognized in connection with providing a liquidity event for cpa ® :14 shareholders in may 2011. affo attributable to our real estate ownership segment increased in the current year as a result of increased income generated from our equity interests in the reits due to our $ 121.0 million incremental investment in cpa ® :16 – global in connection with the cpa ® :14/16 merger as well as investments that we entered into during 2011 and 2010 , including the properties that we purchased from cpa ® :14 in connection with the cpa ® :14 asset sales . adjusted cash flow from operating activities increased in 2011 as compared to 2010 as a result of the $ 1.00 per share special distribution received from cpa ® :14 in connection with the cpa ® :14/16 merger , higher cash distributions received from cpa ® :17 – global 's operating partnership as a result of new investments entered into during 2010 and 2011 , and the initial distributions of available cash received from the cpa ® :16 – global 's operating partnership . these increases were partially offset by the fact that we no longer receive cash asset management fees from cpa ® :14 and cpa ® :16 – global subsequent to the cpa ® :14/16 merger . significant developments proposed merger as discussed in note 19 to the consolidated financial statements , on february 17 , 2012 , we and cpa ® :15 entered into a definitive agreement pursuant to which cpa ® :15 will merge with and into one of our subsidiaries for a combination of cash and shares of our common stock as described below . in connection with the proposed merger , we plan to file a registration statement with the sec regarding the shares of our common stock to be issued to shareholders of cpa ® :15 in the proposed merger . special meetings will be scheduled to obtain the approval of cpa ® :15 's shareholders of the proposed merger and the approval of our shareholders of the proposed merger and the proposed reit reorganization . the closing of the proposed merger is also subject to customary closing conditions . if the proposed merger is approved and the other closing conditions are met , we currently expect that the closing will occur by the third quarter of 2012 , although there can be no assurance of such timing . changes in management on january 2 , 2012 , our founder and chairman , wm . polk carey , passed away . following the passing of mr. carey , on january 4 , 2012 , the board of directors elected benjamin h. griswold , iv as non-executive chairman of the board . mr. griswold has been a director since 2006 and served as lead director from 2010. he also serves as chairman of the compensation committee . current trends general economic environment we and our managed funds are impacted by macro-economic environmental factors , the capital markets , and general conditions in the commercial real estate market , both in the u.s. and globally . during 2011 , we saw slow improvement in the u.s. economy following the significant distress experienced in 2008 and 2009. towards the end of 2011 , however , there was an increase in international economic uncertainty as a result of the sovereign debt crisis and a deterioration of economic fundamentals in europe . currently , conditions in the u.s. appear to have stabilized , while the situation in europe remains uncertain . it is not possible to predict with certainty the outcome of these trends . nevertheless , our views of the effects of the current financial and economic trends on our business , as well as our response to those trends , are presented below . foreign exchange rates fluctuations in foreign currency exchange rates impact both our real estate ownership and investment management segments . in our real estate ownership segment , we are impacted through our ownership of properties in the european union , primarily france , and through our equity ownership in the cpa ® reits , which each have significant foreign investments , primarily in euro denominated countries and to a lesser extent in other currencies . in our investment management segment , significant unhedged foreign currency exchange rate fluctuations would impact the asset management revenue we receive for managing the portfolios of the cpa ® reits as well as the quarterly distributions of available cash we receive from the operating partnerships of cpa ® :16 – global and cpa ® :17 – global . w. p. story_separator_special_tag accounting from the existing model . these changes would impact most companies but are particularly applicable to those that are significant users of real estate . the proposal outlines a completely new model for accounting by lessees , whereby their rights and obligations under all leases , existing and new , would be capitalized and recorded on the balance sheet . for some companies , the new accounting guidance may influence whether or not , or the extent to which , they may enter into the type of sale-leaseback transactions in which we specialize . the fasb and iasb met during july 2011 and voted to re-expose the proposed standard . a revised exposure draft for public comment is currently expected to be issued in the first half of 2012 , and a final standard is currently expected to be issued by the end of 2012. the boards also reached decisions , which are tentative and subject to change , on a single lessor accounting model and the accounting for variable lease payments , along with several presentation and disclosure issues . as of the date of this report , the proposed guidance has not yet been finalized , and as such we are unable to determine whether this proposal will have a material impact on our business . in october 2011 , the fasb issued an exposure draft that proposes a new accounting standard for “investment property entities.” currently , an entity that invests in real estate properties , but is not an investment company under the definition set forth by gaap , is required to measure its real estate properties at cost . the proposed amendments would require all entities that meet the criteria to be investment property entities to follow the proposed guidance , under which investment properties acquired by an investment property entity would initially be measured at transaction price , including transaction costs , and subsequently measured at fair value with all changes in fair value recognized in net income . a detailed analysis is required to determine whether an entity is within the scope of the amendments in this proposed update . an entity in which substantially all of its business activities are investing in a real estate property or properties for total return , including an objective to realize capital appreciation ( including certain real estate investment trusts and real estate funds ) would be affected by the proposed amendments . the proposed amendments also would introduce additional presentation and disclosure requirements for an investment property entity . as of the date of this report , the proposed guidance has not yet been finalized , and as such we are unable to determine whether we meet the definition of a real estate property entity and if the proposal will have a material impact on our business . how we evaluate results of operations we evaluate our results of operations with a primary focus on increasing and enhancing the value , quality and amount of assets under management by our investment management segment and seeking to increase value in our real estate ownership segment . we focus our efforts on improving underperforming assets through re-leasing efforts , including negotiation of lease renewals , or selectively selling assets in order to increase value in our real estate portfolio . the ability to increase assets under management by structuring investments on behalf of the reits is affected , among other things , by the reits ' ability to raise capital and our ability to identify and enter into appropriate investments and financing . our evaluation of operating results includes our ability to generate necessary cash flow in order to fund distributions to our shareholders . as a result , our assessment of operating results gives less emphasis to the effects of unrealized gains and losses , which may cause fluctuations in net income for comparable periods but have no impact on cash flows , and to other non-cash charges such as depreciation and impairment charges . we do not consider unrealized gains and losses resulting from short-term foreign currency fluctuations when evaluating our ability to fund distributions . our evaluation of our potential for generating cash flow includes an assessment of the long-term sustainability of both our real estate portfolio and the assets we manage on behalf of the reits . w. p. carey 2011 10-k — 29 we consider cash flows from operating activities , cash flows from investing activities , cash flows from financing activities and certain non-gaap performance metrics to be important measures in the evaluation of our results of operations , liquidity and capital resources . cash flows from operating activities are sourced primarily by revenues earned from structuring investments and providing asset-based management services on behalf of the reits we manage and long-term lease contracts from our real estate ownership . our evaluation of the amount and expected fluctuation of cash flows from operating activities is essential in evaluating our ability to fund operating expenses , service debt and fund distributions to shareholders . we consider adjusted cash flows from operating activities as a supplemental measure of liquidity in evaluating our ability to sustain distributions to shareholders . we consider this measure useful as a supplemental measure to the extent the source of distributions in excess of equity income is the result of non-cash charges , such as depreciation and amortization , because it allows us to evaluate the cash flows from consolidated and unconsolidated investments in a comparable manner . in deriving this measure , we exclude cash distributions from equity investments in real estate and the reits that are sourced from sales of equity investee 's assets or refinancing of debt because they are deemed to be returns on our investment . we focus on measures of cash flows from investing activities and cash flows from financing activities in our evaluation of our capital resources . investing activities typically consist of the acquisition or disposition of investments in real

cash requirements during 2012 , we expect that cash payments will include paying distributions to our shareholders and to our affiliates who hold noncontrolling interests in entities we control and making scheduled mortgage loan principal payments , including mortgage balloon payments totaling $ 28.3 million , as well as other normal recurring operating expenses . we expect to fund future investments , any capital expenditures on existing properties and scheduled debt maturities on non-recourse mortgage loans through cash generated from operations , the use of our cash reserves or unused amount on our line of credit . expected impact of proposed merger if consummated , we currently expect the proposed merger to have the following impact on our liquidity and results of operations by the third quarter of 2012 ; however there can be no assurance that the transaction will be completed during this time frame or at all . the estimated total proposed merger consideration includes the cash of approximately $ 151.8 million and the issuance of approximately 28,241,000 of our shares , based on the total shares of cpa ® :15 outstanding of 131,566,206 , of which 10,153,074 shares were owned by us , on february 17 , 2012. we have obtained a commitment for a $ 175.0 million term loan as part of our credit facility in order to pay for the cash portion of the consideration in the proposed merger .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. results from operations in our real estate ownership segment benefited from income generated from and gains recognized on the properties we purchased from cpa ® :14 in connection with the cpa ® :14 asset sales as well as income generated from our equity interests in the reits as a result of our $ 121.0 million incremental investment in cpa ® :16 – global in connection with the cpa ® :14/16 merger . w. p. carey 2011 10-k — 24 cash flow from operating activities decreased in 2011 as compared to 2010 , primarily due to a decrease in cash received from providing asset-based management services to the reits as we no longer receive cash asset management fees from cpa ® :14 and cpa ® :16 – global subsequent to the cpa ® :14/16 merger , partially offset by the disposition revenues received , net of income taxes paid , in connection with providing a liquidity event to cpa ® :14 shareholders through the cpa ® :14/16 merger . distributions paid decreased in 2011 as compared to 2010 , primarily due to a special distribution of $ 0.30 per share paid in january 2010 to shareholders of record at december 31 , 2009. our affo supplemental measure increased in 2011 as compared to 2010. affo attributable to our investment management segment benefited from the incentive , termination and subordinated disposition revenue recognized in connection with providing a liquidity event for cpa ® :14 shareholders in may 2011. affo attributable to our real estate ownership segment increased in the current year as a result of increased income generated from our equity interests in the reits due to our $ 121.0 million incremental investment in cpa ® :16 – global in connection with the cpa ® :14/16 merger as well as investments that we entered into during 2011 and 2010 , including the properties that we purchased from cpa ® :14 in connection with the cpa ® :14 asset sales . adjusted cash flow from operating activities increased in 2011 as compared to 2010 as a result of the $ 1.00 per share special distribution received from cpa ® :14 in connection with the cpa ® :14/16 merger , higher cash distributions received from cpa ® :17 – global 's operating partnership as a result of new investments entered into during 2010 and 2011 , and the initial distributions of available cash received from the cpa ® :16 – global 's operating partnership . these increases were partially offset by the fact that we no longer receive cash asset management fees from cpa ® :14 and cpa ® :16 – global subsequent to the cpa ® :14/16 merger . significant developments proposed merger as discussed in note 19 to the consolidated financial statements , on february 17 , 2012 , we and cpa ® :15 entered into a definitive agreement pursuant to which cpa ® :15 will merge with and into one of our subsidiaries for a combination of cash and shares of our common stock as described below . in connection with the proposed merger , we plan to file a registration statement with the sec regarding the shares of our common stock to be issued to shareholders of cpa ® :15 in the proposed merger . special meetings will be scheduled to obtain the approval of cpa ® :15 's shareholders of the proposed merger and the approval of our shareholders of the proposed merger and the proposed reit reorganization . the closing of the proposed merger is also subject to customary closing conditions . if the proposed merger is approved and the other closing conditions are met , we currently expect that the closing will occur by the third quarter of 2012 , although there can be no assurance of such timing . changes in management on january 2 , 2012 , our founder and chairman , wm . polk carey , passed away . following the passing of mr. carey , on january 4 , 2012 , the board of directors elected benjamin h. griswold , iv as non-executive chairman of the board . mr. griswold has been a director since 2006 and served as lead director from 2010. he also serves as chairman of the compensation committee . current trends general economic environment we and our managed funds are impacted by macro-economic environmental factors , the capital markets , and general conditions in the commercial real estate market , both in the u.s. and globally . during 2011 , we saw slow improvement in the u.s. economy following the significant distress experienced in 2008 and 2009. towards the end of 2011 , however , there was an increase in international economic uncertainty as a result of the sovereign debt crisis and a deterioration of economic fundamentals in europe . currently , conditions in the u.s. appear to have stabilized , while the situation in europe remains uncertain . it is not possible to predict with certainty the outcome of these trends . nevertheless , our views of the effects of the current financial and economic trends on our business , as well as our response to those trends , are presented below . foreign exchange rates fluctuations in foreign currency exchange rates impact both our real estate ownership and investment management segments . in our real estate ownership segment , we are impacted through our ownership of properties in the european union , primarily france , and through our equity ownership in the cpa ® reits , which each have significant foreign investments , primarily in euro denominated countries and to a lesser extent in other currencies . in our investment management segment , significant unhedged foreign currency exchange rate fluctuations would impact the asset management revenue we receive for managing the portfolios of the cpa ® reits as well as the quarterly distributions of available cash we receive from the operating partnerships of cpa ® :16 – global and cpa ® :17 – global . w. p. story_separator_special_tag accounting from the existing model . these changes would impact most companies but are particularly applicable to those that are significant users of real estate . the proposal outlines a completely new model for accounting by lessees , whereby their rights and obligations under all leases , existing and new , would be capitalized and recorded on the balance sheet . for some companies , the new accounting guidance may influence whether or not , or the extent to which , they may enter into the type of sale-leaseback transactions in which we specialize . the fasb and iasb met during july 2011 and voted to re-expose the proposed standard . a revised exposure draft for public comment is currently expected to be issued in the first half of 2012 , and a final standard is currently expected to be issued by the end of 2012. the boards also reached decisions , which are tentative and subject to change , on a single lessor accounting model and the accounting for variable lease payments , along with several presentation and disclosure issues . as of the date of this report , the proposed guidance has not yet been finalized , and as such we are unable to determine whether this proposal will have a material impact on our business . in october 2011 , the fasb issued an exposure draft that proposes a new accounting standard for “investment property entities.” currently , an entity that invests in real estate properties , but is not an investment company under the definition set forth by gaap , is required to measure its real estate properties at cost . the proposed amendments would require all entities that meet the criteria to be investment property entities to follow the proposed guidance , under which investment properties acquired by an investment property entity would initially be measured at transaction price , including transaction costs , and subsequently measured at fair value with all changes in fair value recognized in net income . a detailed analysis is required to determine whether an entity is within the scope of the amendments in this proposed update . an entity in which substantially all of its business activities are investing in a real estate property or properties for total return , including an objective to realize capital appreciation ( including certain real estate investment trusts and real estate funds ) would be affected by the proposed amendments . the proposed amendments also would introduce additional presentation and disclosure requirements for an investment property entity . as of the date of this report , the proposed guidance has not yet been finalized , and as such we are unable to determine whether we meet the definition of a real estate property entity and if the proposal will have a material impact on our business . how we evaluate results of operations we evaluate our results of operations with a primary focus on increasing and enhancing the value , quality and amount of assets under management by our investment management segment and seeking to increase value in our real estate ownership segment . we focus our efforts on improving underperforming assets through re-leasing efforts , including negotiation of lease renewals , or selectively selling assets in order to increase value in our real estate portfolio . the ability to increase assets under management by structuring investments on behalf of the reits is affected , among other things , by the reits ' ability to raise capital and our ability to identify and enter into appropriate investments and financing . our evaluation of operating results includes our ability to generate necessary cash flow in order to fund distributions to our shareholders . as a result , our assessment of operating results gives less emphasis to the effects of unrealized gains and losses , which may cause fluctuations in net income for comparable periods but have no impact on cash flows , and to other non-cash charges such as depreciation and impairment charges . we do not consider unrealized gains and losses resulting from short-term foreign currency fluctuations when evaluating our ability to fund distributions . our evaluation of our potential for generating cash flow includes an assessment of the long-term sustainability of both our real estate portfolio and the assets we manage on behalf of the reits . w. p. carey 2011 10-k — 29 we consider cash flows from operating activities , cash flows from investing activities , cash flows from financing activities and certain non-gaap performance metrics to be important measures in the evaluation of our results of operations , liquidity and capital resources . cash flows from operating activities are sourced primarily by revenues earned from structuring investments and providing asset-based management services on behalf of the reits we manage and long-term lease contracts from our real estate ownership . our evaluation of the amount and expected fluctuation of cash flows from operating activities is essential in evaluating our ability to fund operating expenses , service debt and fund distributions to shareholders . we consider adjusted cash flows from operating activities as a supplemental measure of liquidity in evaluating our ability to sustain distributions to shareholders . we consider this measure useful as a supplemental measure to the extent the source of distributions in excess of equity income is the result of non-cash charges , such as depreciation and amortization , because it allows us to evaluate the cash flows from consolidated and unconsolidated investments in a comparable manner . in deriving this measure , we exclude cash distributions from equity investments in real estate and the reits that are sourced from sales of equity investee 's assets or refinancing of debt because they are deemed to be returns on our investment . we focus on measures of cash flows from investing activities and cash flows from financing activities in our evaluation of our capital resources . investing activities typically consist of the acquisition or disposition of investments in real Narrative : cash requirements during 2012 , we expect that cash payments will include paying distributions to our shareholders and to our affiliates who hold noncontrolling interests in entities we control and making scheduled mortgage loan principal payments , including mortgage balloon payments totaling $ 28.3 million , as well as other normal recurring operating expenses . we expect to fund future investments , any capital expenditures on existing properties and scheduled debt maturities on non-recourse mortgage loans through cash generated from operations , the use of our cash reserves or unused amount on our line of credit . expected impact of proposed merger if consummated , we currently expect the proposed merger to have the following impact on our liquidity and results of operations by the third quarter of 2012 ; however there can be no assurance that the transaction will be completed during this time frame or at all . the estimated total proposed merger consideration includes the cash of approximately $ 151.8 million and the issuance of approximately 28,241,000 of our shares , based on the total shares of cpa ® :15 outstanding of 131,566,206 , of which 10,153,074 shares were owned by us , on february 17 , 2012. we have obtained a commitment for a $ 175.0 million term loan as part of our credit facility in order to pay for the cash portion of the consideration in the proposed merger .

the following table sets forth , for the periods indicated , the selected statements of operations data as a percentage of total revenue : replace_table_token_4_th results for the year ended december 31 , 2014 compared to results for the year ended december 31 , 2013 revenue increased $ 2.3 million or 9 % to $ 29.2 million in 2014 compared to $ 26.9 million in 2013. this increase was due to an increase in volume from new and existing clients . the increase in volume was primarily driven by new customers which is a result of our recently expanded sales force and several sales initiatives . average revenue per sample remained the same between 2014 and 2013. gross profit decreased $ 256 thousand to $ 15.1 million in 2014 compared to $ 15.4 million in 2013. direct costs increased by 23 % from 2013 to 2014 , driven by the company 's capacity expansion project and higher volume . the capacity expansion costs within cost of sales was approximately $ 1.3 million and included ; $ 0.5 million for hiring and training of additional personnel , $ 0.5 million for building related costs , and $ 0.3 million for information technology and other one-time project costs . the gross profit margin decreased from 57 % in 2013 to 52 % in 2014. general and administrative ( “ g & a ” ) expenses were $ 4.5 million in 2014 compared to $ 4.2 in 2013 , an increase of 8 % . in 2014 , g & a costs included approximately $ 0.2 million related to the company 's capacity expansion project . as a percentage of revenue , g & a expenses were 15.3 % and 15.5 % for 2014 and 2013 , respectively . marketing and selling expenses were $ 4.6 million in 2014 , compared to $ 4.7 million in 2013 , a decrease of 2 % . total marketing and selling expenses represented 15.8 % and 17.5 % of revenue for 2014 and 2013 , respectively . 12 research and development ( “ r & d ” ) expenses were $ 1.3 million in 2014 compared to $ 0.8 million in 2013. r & d expenses increased from additional personnel and supplies used to develop new tests for drugs of abuse as well as process improvements . r & d expenses represented 4.6 % and 3.1 % of revenue for 2014 and 2013 , respectively . other income ( expense ) represented $ 57 thousand of other expenses for 2014 compared to $ 92 thousand of other income for 2013. the expense in 2014 was driven by interest expense related to long term debt incurred in 2014 , while the income in 2013 represented a one- time insurance reimbursement of legal expenses . during the year ended december 31 , 2014 , the company recorded a tax provision of $ 1.4 million , representing an effective tax rate of 30.8 % . during the year ended december 31 , 2013 , the company recorded a tax provision of $ 2.0 million , representing an effective tax rate of 34.4 % . the change in tax rate was driven by r & d tax credits from higher r & d spending and from a california r & d tax credit which was not previously taken . we expect the tax rate to be from 32 % to 34 % for the foreseeable future . results for the year ended december 31 , 2013 compared to results for the year ended december 31 , 2012 revenue increased $ 1.7 million or 7 % to $ 26.9 million in 2013 compared to $ 25.2 million in 2012. this increase was due to an increase in volume from new and existing clients . the increase in volume was primarily driven by new customers which is a result of our recently expanded sales force and several sales initiatives . average revenue per sample decreased 2 % between 2013 and 2012. the revenue per sample decrease was driven primarily from by the mix of customers , with a larger percentage of the business coming from lower priced customers . gross profit increased $ 1.1 million to $ 15.4 million in 2013 compared to $ 14.3 million in 2012. direct costs increased by 5 % from 2012 to 2013 , driven by the higher volume . the gross profit margin remained the same at 57 % in 2013 and 2012. general and administrative ( “ g & a ” ) expenses were $ 4.2 million in 2013 compared to $ 3.9 in 2012 , an increase of 5 % . as a percentage of revenue , g & a expenses were 15.5 % and 15.6 % for 2013 and 2012 , respectively . marketing and selling expenses were $ 4.7 million in 2013 , compared to $ 4.5 million in 2012 , an increase of 4 % . total marketing and selling expenses represented 17.5 % and 18.0 % of revenue for 2013 and 2012 , respectively . research and development ( “ r & d ” ) expenses were $ 0.8 million in 2013 and 2012. r & d expenses represented 3.1 % and 3.3 % of revenue for 2013 and 2012 , respectively . other income increased approximately $ 90 thousand to approximately $ 92 thousand for 2013 compared to $ 2 thousand for 2012. the increase was from an insurance reimbursement of legal expenses . during the year ended december 31 , 2013 , the company recorded a tax provision of $ 2.0 million , representing an effective tax rate of 34.4 % . during the year ended december 31 , 2012 , the company recorded a tax provision of $ 2.0 million , representing an effective tax rate of 39.7 story_separator_special_tag % . the change in tax rate was driven by a new allocation method for calculating income tax in california . this new calculation requires income tax to be paid only on the sales made within california . the old method taxed all income produced in california , and as the company has only one laboratory , which is located in california , 100 % of the income had been subject to california income tax . the rate also benefited from an r & d tax credit from 2012 which was recognized in 2013. we expect the tax rate to be approximately 34 % for the foreseeable future . story_separator_special_tag customer . the company recognizes revenue in accordance with accounting standards codification “ asc ” 605 , “ revenue recognition . ” in accordance with asc 605 , the company considers testing , training and storage elements as one unit of accounting for revenue recognition purposes , as the training and storage costs are de minimis and do not have stand-alone value to the customer . the company recognizes revenue as the service is performed and reported to the customer , since the predominant deliverable in each arrangement is the testing of the units . the company also provides expert testimony , when and if necessary , to support the results of the tests , which is generally billed separately and recognized as the services are provided . estimates the preparation of financial statements in conformity with accounting principles generally accepted in the united states requires management to make estimates , including bad debts , long-lived asset lives , income tax valuation and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period . actual results could differ from those estimates . 14 capitalized development costs we capitalize costs related to significant software projects developed or obtained for internal use in accordance with u.s. generally accepted accounting standards . costs incurred during the preliminary project work stage or conceptual stage , such as determining the performance requirements , system requirements and data conversion , are expensed as incurred . costs incurred in the application development phase , such as coding , testing for new software and upgrades that result in additional functionality , are capitalized and are amortized using the straight-line method over the useful life of the software for 5 years . costs incurred during the post-implementation/operation stage , including training costs and maintenance costs , are expensed as incurred . we capitalized internally developed software costs of approximately $ 403,000 , $ 715,000 and $ 794,000 during the years ended december 31 , 2014 , 2013 and 2012 , respectively . the software development is for primarily for two projects . determining whether particular costs incurred are more properly attributable to the preliminary or conceptual stage , and thus expensed , or to the application development phase , and thus capitalized and amortized , depends on subjective judgments about the nature of the development work , and our judgments in this regard may differ from those made by other companies . general and administrative costs related to developing or obtaining such software are expensed as incurred . allowance for doubtful accounts the allowance for doubtful accounts is based on management 's assessment of the ability to collect amounts owed to it by its customers . management reviews its accounts receivable aging for doubtful accounts and uses a methodology based on calculating the allowance using a combination of factors including the age of the receivable along with management 's judgment to identify accounts that may not be collectible . the company routinely assesses the financial strength of its customers and , as a consequence , believes that its accounts receivable credit risk exposure is limited . the company maintains an allowance for potential credit losses but historically has not experienced any significant losses related to individual customers or groups of customers in any particular industry or geographic area . bad debt expense has been within management 's expectations . income taxes the company accounts for income taxes using the liability method , which requires the company to recognize a current tax liability or asset for current taxes payable or refundable and a deferred tax liability or asset for the estimated future tax effects of temporary differences between the financial statement and tax reporting bases of assets and liabilities to the extent that they are realizable . deferred tax expense ( benefit ) results from the net change in deferred tax assets and liabilities during the year . a deferred tax valuation allowance is required if it is more likely than not that all or a portion of the recorded deferred tax assets will not be realized . the company had net deferred tax liabilities in the amount of $ 2.4 million at december 31 , 2014 , which primarily relate to timing differences . there was an increase of $ 1.4 million from 2013 which was primarily driven by bonus depreciation as part of the tax extender bill passed in december 2014 , for equipment purchases in 2014. in 2014 , the company 's tax rate was reduced as a result of two r & d tax credit items . the first was a california r & d tax credit which had not been previously taken and the company recognized the benefit of prior years as well as 2014 in the current year . the second impact came from the increase in spending in r & d which increased both the california and federal r & d tax credit . the company operates within multiple taxing jurisdictions and could be subject to audit in these jurisdictions . these audits may involve complex issues , which may require an extended period of time to resolve . the company has provided for its estimated taxes

liquidity and capital resources at december 31 , 2014 , the company had $ 3.6 million of cash , compared to $ 4.0 million at december 31 , 2013. the company 's operating activities generated net cash of $ 4.5 million in 2014 , $ 6.0 million in 2013 and $ 3.1 million in 2012. investing activities used $ 7.8 million in 2014 , $ 1.8 million in 2013 and $ 2.3 million in 2012. financing activities generated $ 3.0 million in 2014 , used $ 3.3 million in 2013 and used $ 3.2 million in 2012. operating cash flow of $ 4.5 million in 2014 primarily reflected net income of $ 3.2 million adjusted for depreciation and amortization of $ 1.1 million , stock compensation expense of $ 0.6 million , and an increase in net deferred tax liabilities of $ 1.4 million . this was affected by the following changes in assets and liabilities : a decrease in accounts receivable of $ 0.3 million , an increase in accounts payable of $ 0.3 million , a decrease in accrued expenses of $ 1.2 million , and an increase in prepaid expenses ( and other current assets ) of $ 1.2 million . the decrease in accrued expenses was driven by a $ 1.2 million reduction in the liability for equipment purchases which were paid for in 2014. the change in deferred tax liabilities and other current assets was driven by bonus depreciation on new assets purchased as part of the tax extender bill passed in december 2014. operating cash flow of $ 6.0 million in 2013 primarily reflected net income of $ 3.8 million adjusted for depreciation and amortization of $ 0.9 million , stock compensation expense of $ 0.5 million , and an increase in net deferred tax liabilities of $ 0.4 million . this was affected by the following changes in assets and liabilities : a decrease in accounts receivable of $ 0.3 million , a decrease in accounts payable of $ 0.2 million , a decrease in accrued expenses of $ 0.1 million , and a decrease in prepaid expenses ( and other current assets ) of $ 0.4 million .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. the following table sets forth , for the periods indicated , the selected statements of operations data as a percentage of total revenue : replace_table_token_4_th results for the year ended december 31 , 2014 compared to results for the year ended december 31 , 2013 revenue increased $ 2.3 million or 9 % to $ 29.2 million in 2014 compared to $ 26.9 million in 2013. this increase was due to an increase in volume from new and existing clients . the increase in volume was primarily driven by new customers which is a result of our recently expanded sales force and several sales initiatives . average revenue per sample remained the same between 2014 and 2013. gross profit decreased $ 256 thousand to $ 15.1 million in 2014 compared to $ 15.4 million in 2013. direct costs increased by 23 % from 2013 to 2014 , driven by the company 's capacity expansion project and higher volume . the capacity expansion costs within cost of sales was approximately $ 1.3 million and included ; $ 0.5 million for hiring and training of additional personnel , $ 0.5 million for building related costs , and $ 0.3 million for information technology and other one-time project costs . the gross profit margin decreased from 57 % in 2013 to 52 % in 2014. general and administrative ( “ g & a ” ) expenses were $ 4.5 million in 2014 compared to $ 4.2 in 2013 , an increase of 8 % . in 2014 , g & a costs included approximately $ 0.2 million related to the company 's capacity expansion project . as a percentage of revenue , g & a expenses were 15.3 % and 15.5 % for 2014 and 2013 , respectively . marketing and selling expenses were $ 4.6 million in 2014 , compared to $ 4.7 million in 2013 , a decrease of 2 % . total marketing and selling expenses represented 15.8 % and 17.5 % of revenue for 2014 and 2013 , respectively . 12 research and development ( “ r & d ” ) expenses were $ 1.3 million in 2014 compared to $ 0.8 million in 2013. r & d expenses increased from additional personnel and supplies used to develop new tests for drugs of abuse as well as process improvements . r & d expenses represented 4.6 % and 3.1 % of revenue for 2014 and 2013 , respectively . other income ( expense ) represented $ 57 thousand of other expenses for 2014 compared to $ 92 thousand of other income for 2013. the expense in 2014 was driven by interest expense related to long term debt incurred in 2014 , while the income in 2013 represented a one- time insurance reimbursement of legal expenses . during the year ended december 31 , 2014 , the company recorded a tax provision of $ 1.4 million , representing an effective tax rate of 30.8 % . during the year ended december 31 , 2013 , the company recorded a tax provision of $ 2.0 million , representing an effective tax rate of 34.4 % . the change in tax rate was driven by r & d tax credits from higher r & d spending and from a california r & d tax credit which was not previously taken . we expect the tax rate to be from 32 % to 34 % for the foreseeable future . results for the year ended december 31 , 2013 compared to results for the year ended december 31 , 2012 revenue increased $ 1.7 million or 7 % to $ 26.9 million in 2013 compared to $ 25.2 million in 2012. this increase was due to an increase in volume from new and existing clients . the increase in volume was primarily driven by new customers which is a result of our recently expanded sales force and several sales initiatives . average revenue per sample decreased 2 % between 2013 and 2012. the revenue per sample decrease was driven primarily from by the mix of customers , with a larger percentage of the business coming from lower priced customers . gross profit increased $ 1.1 million to $ 15.4 million in 2013 compared to $ 14.3 million in 2012. direct costs increased by 5 % from 2012 to 2013 , driven by the higher volume . the gross profit margin remained the same at 57 % in 2013 and 2012. general and administrative ( “ g & a ” ) expenses were $ 4.2 million in 2013 compared to $ 3.9 in 2012 , an increase of 5 % . as a percentage of revenue , g & a expenses were 15.5 % and 15.6 % for 2013 and 2012 , respectively . marketing and selling expenses were $ 4.7 million in 2013 , compared to $ 4.5 million in 2012 , an increase of 4 % . total marketing and selling expenses represented 17.5 % and 18.0 % of revenue for 2013 and 2012 , respectively . research and development ( “ r & d ” ) expenses were $ 0.8 million in 2013 and 2012. r & d expenses represented 3.1 % and 3.3 % of revenue for 2013 and 2012 , respectively . other income increased approximately $ 90 thousand to approximately $ 92 thousand for 2013 compared to $ 2 thousand for 2012. the increase was from an insurance reimbursement of legal expenses . during the year ended december 31 , 2013 , the company recorded a tax provision of $ 2.0 million , representing an effective tax rate of 34.4 % . during the year ended december 31 , 2012 , the company recorded a tax provision of $ 2.0 million , representing an effective tax rate of 39.7 story_separator_special_tag % . the change in tax rate was driven by a new allocation method for calculating income tax in california . this new calculation requires income tax to be paid only on the sales made within california . the old method taxed all income produced in california , and as the company has only one laboratory , which is located in california , 100 % of the income had been subject to california income tax . the rate also benefited from an r & d tax credit from 2012 which was recognized in 2013. we expect the tax rate to be approximately 34 % for the foreseeable future . story_separator_special_tag customer . the company recognizes revenue in accordance with accounting standards codification “ asc ” 605 , “ revenue recognition . ” in accordance with asc 605 , the company considers testing , training and storage elements as one unit of accounting for revenue recognition purposes , as the training and storage costs are de minimis and do not have stand-alone value to the customer . the company recognizes revenue as the service is performed and reported to the customer , since the predominant deliverable in each arrangement is the testing of the units . the company also provides expert testimony , when and if necessary , to support the results of the tests , which is generally billed separately and recognized as the services are provided . estimates the preparation of financial statements in conformity with accounting principles generally accepted in the united states requires management to make estimates , including bad debts , long-lived asset lives , income tax valuation and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period . actual results could differ from those estimates . 14 capitalized development costs we capitalize costs related to significant software projects developed or obtained for internal use in accordance with u.s. generally accepted accounting standards . costs incurred during the preliminary project work stage or conceptual stage , such as determining the performance requirements , system requirements and data conversion , are expensed as incurred . costs incurred in the application development phase , such as coding , testing for new software and upgrades that result in additional functionality , are capitalized and are amortized using the straight-line method over the useful life of the software for 5 years . costs incurred during the post-implementation/operation stage , including training costs and maintenance costs , are expensed as incurred . we capitalized internally developed software costs of approximately $ 403,000 , $ 715,000 and $ 794,000 during the years ended december 31 , 2014 , 2013 and 2012 , respectively . the software development is for primarily for two projects . determining whether particular costs incurred are more properly attributable to the preliminary or conceptual stage , and thus expensed , or to the application development phase , and thus capitalized and amortized , depends on subjective judgments about the nature of the development work , and our judgments in this regard may differ from those made by other companies . general and administrative costs related to developing or obtaining such software are expensed as incurred . allowance for doubtful accounts the allowance for doubtful accounts is based on management 's assessment of the ability to collect amounts owed to it by its customers . management reviews its accounts receivable aging for doubtful accounts and uses a methodology based on calculating the allowance using a combination of factors including the age of the receivable along with management 's judgment to identify accounts that may not be collectible . the company routinely assesses the financial strength of its customers and , as a consequence , believes that its accounts receivable credit risk exposure is limited . the company maintains an allowance for potential credit losses but historically has not experienced any significant losses related to individual customers or groups of customers in any particular industry or geographic area . bad debt expense has been within management 's expectations . income taxes the company accounts for income taxes using the liability method , which requires the company to recognize a current tax liability or asset for current taxes payable or refundable and a deferred tax liability or asset for the estimated future tax effects of temporary differences between the financial statement and tax reporting bases of assets and liabilities to the extent that they are realizable . deferred tax expense ( benefit ) results from the net change in deferred tax assets and liabilities during the year . a deferred tax valuation allowance is required if it is more likely than not that all or a portion of the recorded deferred tax assets will not be realized . the company had net deferred tax liabilities in the amount of $ 2.4 million at december 31 , 2014 , which primarily relate to timing differences . there was an increase of $ 1.4 million from 2013 which was primarily driven by bonus depreciation as part of the tax extender bill passed in december 2014 , for equipment purchases in 2014. in 2014 , the company 's tax rate was reduced as a result of two r & d tax credit items . the first was a california r & d tax credit which had not been previously taken and the company recognized the benefit of prior years as well as 2014 in the current year . the second impact came from the increase in spending in r & d which increased both the california and federal r & d tax credit . the company operates within multiple taxing jurisdictions and could be subject to audit in these jurisdictions . these audits may involve complex issues , which may require an extended period of time to resolve . the company has provided for its estimated taxes Narrative : liquidity and capital resources at december 31 , 2014 , the company had $ 3.6 million of cash , compared to $ 4.0 million at december 31 , 2013. the company 's operating activities generated net cash of $ 4.5 million in 2014 , $ 6.0 million in 2013 and $ 3.1 million in 2012. investing activities used $ 7.8 million in 2014 , $ 1.8 million in 2013 and $ 2.3 million in 2012. financing activities generated $ 3.0 million in 2014 , used $ 3.3 million in 2013 and used $ 3.2 million in 2012. operating cash flow of $ 4.5 million in 2014 primarily reflected net income of $ 3.2 million adjusted for depreciation and amortization of $ 1.1 million , stock compensation expense of $ 0.6 million , and an increase in net deferred tax liabilities of $ 1.4 million . this was affected by the following changes in assets and liabilities : a decrease in accounts receivable of $ 0.3 million , an increase in accounts payable of $ 0.3 million , a decrease in accrued expenses of $ 1.2 million , and an increase in prepaid expenses ( and other current assets ) of $ 1.2 million . the decrease in accrued expenses was driven by a $ 1.2 million reduction in the liability for equipment purchases which were paid for in 2014. the change in deferred tax liabilities and other current assets was driven by bonus depreciation on new assets purchased as part of the tax extender bill passed in december 2014. operating cash flow of $ 6.0 million in 2013 primarily reflected net income of $ 3.8 million adjusted for depreciation and amortization of $ 0.9 million , stock compensation expense of $ 0.5 million , and an increase in net deferred tax liabilities of $ 0.4 million . this was affected by the following changes in assets and liabilities : a decrease in accounts receivable of $ 0.3 million , a decrease in accounts payable of $ 0.2 million , a decrease in accrued expenses of $ 0.1 million , and a decrease in prepaid expenses ( and other current assets ) of $ 0.4 million .

we implemented tuition rate increases of up to 2.5 % , 3.0 % and 3.0 % for each of the years ended september 30 , 2018 , 2017 and 2016 , respectively . we regularly evaluate our tuition pricing based on individual campus markets , the competitive environment and ed regulations . most students at our campuses rely on funds received under various government-sponsored student financial aid programs , predominantly title iv programs and various veterans ' benefits programs , to pay a substantial portion of their tuition and other education-related expenses . approximately 65 % of our revenues , on a cash basis , were collected from funds distributed under title iv programs for the year ended september 30 , 2018 . this percentage differs from our title iv percentage as calculated under the 90/10 rule due to the prescribed treatment of certain title iv stipends under the rule . additionally , approximately 17 % of our revenues , on a cash basis , were collected from funds distributed under various veterans ' benefits programs for the year ended september 30 , 2018 . we extend credit for tuition and fees , for a limited period of time , to the majority of our students . our credit risk is mitigated through the students ' participation in federally funded financial aid and veterans ' benefit programs unless students withdraw prior to the receipt by us of title iv or veterans ' benefit funds for those students . the financial aid and veterans ' benefits programs are subject to political and budgetary considerations . there is no assurance that such funding will be maintained at current levels . extensive and complex regulations govern the financial assistance programs in which our students participate . our administration of these programs is periodically reviewed by various regulatory agencies . any regulatory violation could be the basis for the initiation of potential adverse actions , including a suspension , limitation , placement on reimbursement status or termination proceeding , which could have a material adverse effect on our business . if any of our institutions were to lose its eligibility to participate in federal student financial aid or veterans ' benefit programs , the students at that institution , and other locations of that institution , would lose access to funds derived from those programs and would have to seek alternative sources of funds to pay their tuition and fees . the receipt of financial aid and veterans benefit funds reduces the students ' amounts due to us and has no impact on revenue recognition , as the transfer relates to the source of funding for the costs of education which may occur through title iv , veterans benefit or other funds and resources available to the student . additionally , we bear all credit and collection risk for the portion of our student tuition that is funded through our proprietary loan program . we categorize our operating expenses as ( i ) educational services and facilities and ( ii ) selling , general and administrative . major components of educational services and facilities expenses include faculty and other campus administration employees compensation and benefits , facility rent , maintenance , utilities , depreciation and amortization of property and equipment used in the provision of educational services , tools , training aids , royalties under our licensing arrangements and other costs directly associated with teaching our programs and providing educational services to our students . selling , general and administrative expenses include compensation and benefits of employees who are not directly associated with the provision of educational services , such as : executive management ; finance and central accounting ; information technology ; legal ; human resources ; marketing and student enrollment expenses , including compensation and benefits of personnel employed in marketing and student admissions ; costs of professional services ; bad debt expense ; costs associated with the implementation and operation of our student management and reporting system ; rent for our corporate office headquarters ; depreciation and amortization of property and equipment that is not used in the provision of educational services and other costs that are incidental to our operations . all marketing and student enrollment expenses are recognized in the period incurred . costs related to the opening of new facilities , excluding related capital expenditures , are expensed in the period incurred or when services are provided . 71 2018 overview operations lower student population levels as we began 2018 resulted in a 4.3 % decline in our average full-time enrollment to 10,418 students for the year ended september 30 , 2018 . we started 10,705 students during the year ended september 30 , 2018 , which represents an increase of 1.2 % as compared to a decrease of 6.4 % for the year ended september 30 , 2017 . the increase in starts was primarily the result of the transformation plan initiatives and continued execution on the metro campus strategy . several factors continue to challenge our ability to start new students , including the following : unemployment ; during periods when the unemployment rate declines or remains stable as it has in recent years , prospective students have more employment options ; adverse media coverage , legislative hearings , regulatory actions and investigations by attorneys general and various agencies related to allegations of wrongdoing on the part of other companies within the education and training services industry , which have cast the industry in a negative light ; competition for prospective students continues to increase from within our sector and from market employers , as well as with traditional postsecondary educational institutions ; and the state of the general macro-economic environment and its impact on price sensitivity and the ability and willingness of students and their families to incur debt . during 2018 , we announced and began implementation of a multi-year transformation plan . story_separator_special_tag a for-profit institution loses its eligibility to participate in title iv programs if it derives more than 90 % of its revenue from title iv programs for two consecutive fiscal years as calculated under a cash basis formula mandated by ed . the loss of such eligibility would begin on the first day following the conclusion of the second consecutive year in which the institution exceeded the 90 % limit and , as such , any title iv program funds already received by the institution and its students during a period of ineligibility would have to be returned to ed or a lender , if applicable . additionally , if an institution exceeds the 90 % level for a single year , ed will place the institution on provisional certification for a period of at least two years , and could impose other restrictions or conditions on the institution 's title iv eligibility . for the years ended september 30 , 2018 , 2017 and 2016 approximately 71 % , 71 % and 72 % respectively , of our revenues , on a cash basis , were derived from funds distributed under title iv programs , as calculated under the 90/10 rule . 2019 outlook for the year ending september 30 , 2019 , we expect new student starts to grow in the mid to high single digits . the average student population for the year ending september 30 , 2019 is anticipated to be up in the low single digits as a result of the transformation plan initiatives and the bloomfield , new jersey campus . we expect full-year revenue to range between $ 322 million and $ 332 million , as compared to $ 317 million in 2018 due to the expected increase in the average student population . we expect our operating expenses will range between $ 337 million and $ 347 million compared to $ 352.2 million in fiscal 2018. the planned decrease in operating expenses are driven by marketing efficiencies and broad expense management . we expect an operating loss of between $ 10 million and $ 15 million largely due to further investments in marketing and admissions to support start growth and the planned expansion of the company 's welding program . we expect to be free cash flow positive in fiscal 2019 with an ending cash balance at or above the same level as year-end 2018. free cash flow is cash from operating activities less capital expenditures . we believe our strong cash position supports our ability to continue a disciplined capital deployment strategy in high roi investments and our regulatory financial ratio . ebitda , unadjusted , is expected to be positive , and range between $ 5 million and $ 11 million . this figure is unadjusted for the final payment made in october 2018 to the company 's former transformation consultant of $ 4 million . 76 capital expenditures are expected to be between $ 8 million and $ 10 million . results of operations the following table sets forth selected statements of operations data as a percentage of revenues for each of the periods indicated . replace_table_token_6_th year ended september 30 , 2018 compared to year ended september 30 , 2017 revenues . our revenues for the year ended september 30 , 2018 were $ 317.0 million , a decrease of $ 7.3 million , or 2.3 % , as compared to revenues of $ 324.3 million for the year ended september 30 , 2017 . the 4.3 % decrease in our average full-time enrollment resulted in a decrease in revenues of approximately $ 13.7 million . our revenues were impacted by an increase in tuition discounts of $ 2.7 million , primarily attributable to our institutional grant program . we recognized $ 5.7 million on an accrual basis related to revenues and interest under our proprietary loan program for the year ended september 30 , 2018 , as compared to $ 8.0 million recognized on a cash basis for the year ended september 30 , 2017. the decrease in revenue was partially offset by an increase of $ 0.7 million in industry training revenue and tuition rate increases of up to 2.5 % , depending on the program . educational services and facilities expenses . our educational services and facilities expenses for the year ended september 30 , 2018 were $ 182.6 million , representing an increase of $ 1.6 million , or 0.9 % , as compared to $ 181.0 million for the year ended september 30 , 2017 . 77 the following table sets forth the significant components of our educational services and facilities expenses : replace_table_token_7_th compensation and related costs decreased $ 3.1 million for the year ended september 30 , 2018 , as compared to the prior year : salaries expense decreased $ 1.7 million , largely attributable to a decrease in the number of employees needed to support our lower average student population . additionally , severance expense decreased by $ 0.7 million due to expense in the prior year period related to the november 2016 reduction in workforce . the decreases were partially offset by the annual merit increase . bonus expense decreased $ 0.9 million due to an adjustment recorded to reflect anticipated zero attainment on one of our bonus plans . during the prior year period , we paid holiday bonuses to employees in lieu of annual merit increases . student expenses increased $ 1.9 million during the year ended september 30 , 2018 due to increased housing grants offered as part of the transformation plan initiatives . supplies and maintenance expense increased $ 0.9 million during the year ended september 30 , 2018 due to the opening of our bloomfield , new jersey campus and real estate consolidation efforts at our houston , texas campus . occupancy costs increased $ 0.9 million during the year ended september 30 , 2018 primarily due to the addition of our bloomfield ,

liquidity and capital resources based on past performance and current expectations , we believe that our cash flows from operations , cash on hand and investments will satisfy our working capital needs , capital expenditures , commitments and other liquidity requirements associated with our existing commitments and other liquidity requirements associated with our existing operations as well as the expansion of programs at existing campuses through the next 12 months . we believe that the strategic use of our cash resources includes subsidizing funding alternatives for our students . additionally , we evaluate the repurchase of our common stock , consideration of strategic acquisitions , expansion of programs at existing campuses , opening additional campus locations and other potential uses of cash . on june 9 , 2016 , our board of directors voted to eliminate the quarterly cash dividend on our common stock . on june 24 , 2016 , we issued 700,000 shares of series a preferred stock for a total purchase price of $ 70.0 million . the proceeds from the offering are intended to be used to fund strategic long-term growth initiatives , including the expansion to new markets of campuses on a scale similar to our long beach , california , bloomfield , new jersey and dallas/ft . worth , texas campuses and the creation of new programs in existing markets with under-utilized campus facilities . we may use the proceeds to fund strategic acquisitions that complement our core business .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we implemented tuition rate increases of up to 2.5 % , 3.0 % and 3.0 % for each of the years ended september 30 , 2018 , 2017 and 2016 , respectively . we regularly evaluate our tuition pricing based on individual campus markets , the competitive environment and ed regulations . most students at our campuses rely on funds received under various government-sponsored student financial aid programs , predominantly title iv programs and various veterans ' benefits programs , to pay a substantial portion of their tuition and other education-related expenses . approximately 65 % of our revenues , on a cash basis , were collected from funds distributed under title iv programs for the year ended september 30 , 2018 . this percentage differs from our title iv percentage as calculated under the 90/10 rule due to the prescribed treatment of certain title iv stipends under the rule . additionally , approximately 17 % of our revenues , on a cash basis , were collected from funds distributed under various veterans ' benefits programs for the year ended september 30 , 2018 . we extend credit for tuition and fees , for a limited period of time , to the majority of our students . our credit risk is mitigated through the students ' participation in federally funded financial aid and veterans ' benefit programs unless students withdraw prior to the receipt by us of title iv or veterans ' benefit funds for those students . the financial aid and veterans ' benefits programs are subject to political and budgetary considerations . there is no assurance that such funding will be maintained at current levels . extensive and complex regulations govern the financial assistance programs in which our students participate . our administration of these programs is periodically reviewed by various regulatory agencies . any regulatory violation could be the basis for the initiation of potential adverse actions , including a suspension , limitation , placement on reimbursement status or termination proceeding , which could have a material adverse effect on our business . if any of our institutions were to lose its eligibility to participate in federal student financial aid or veterans ' benefit programs , the students at that institution , and other locations of that institution , would lose access to funds derived from those programs and would have to seek alternative sources of funds to pay their tuition and fees . the receipt of financial aid and veterans benefit funds reduces the students ' amounts due to us and has no impact on revenue recognition , as the transfer relates to the source of funding for the costs of education which may occur through title iv , veterans benefit or other funds and resources available to the student . additionally , we bear all credit and collection risk for the portion of our student tuition that is funded through our proprietary loan program . we categorize our operating expenses as ( i ) educational services and facilities and ( ii ) selling , general and administrative . major components of educational services and facilities expenses include faculty and other campus administration employees compensation and benefits , facility rent , maintenance , utilities , depreciation and amortization of property and equipment used in the provision of educational services , tools , training aids , royalties under our licensing arrangements and other costs directly associated with teaching our programs and providing educational services to our students . selling , general and administrative expenses include compensation and benefits of employees who are not directly associated with the provision of educational services , such as : executive management ; finance and central accounting ; information technology ; legal ; human resources ; marketing and student enrollment expenses , including compensation and benefits of personnel employed in marketing and student admissions ; costs of professional services ; bad debt expense ; costs associated with the implementation and operation of our student management and reporting system ; rent for our corporate office headquarters ; depreciation and amortization of property and equipment that is not used in the provision of educational services and other costs that are incidental to our operations . all marketing and student enrollment expenses are recognized in the period incurred . costs related to the opening of new facilities , excluding related capital expenditures , are expensed in the period incurred or when services are provided . 71 2018 overview operations lower student population levels as we began 2018 resulted in a 4.3 % decline in our average full-time enrollment to 10,418 students for the year ended september 30 , 2018 . we started 10,705 students during the year ended september 30 , 2018 , which represents an increase of 1.2 % as compared to a decrease of 6.4 % for the year ended september 30 , 2017 . the increase in starts was primarily the result of the transformation plan initiatives and continued execution on the metro campus strategy . several factors continue to challenge our ability to start new students , including the following : unemployment ; during periods when the unemployment rate declines or remains stable as it has in recent years , prospective students have more employment options ; adverse media coverage , legislative hearings , regulatory actions and investigations by attorneys general and various agencies related to allegations of wrongdoing on the part of other companies within the education and training services industry , which have cast the industry in a negative light ; competition for prospective students continues to increase from within our sector and from market employers , as well as with traditional postsecondary educational institutions ; and the state of the general macro-economic environment and its impact on price sensitivity and the ability and willingness of students and their families to incur debt . during 2018 , we announced and began implementation of a multi-year transformation plan . story_separator_special_tag a for-profit institution loses its eligibility to participate in title iv programs if it derives more than 90 % of its revenue from title iv programs for two consecutive fiscal years as calculated under a cash basis formula mandated by ed . the loss of such eligibility would begin on the first day following the conclusion of the second consecutive year in which the institution exceeded the 90 % limit and , as such , any title iv program funds already received by the institution and its students during a period of ineligibility would have to be returned to ed or a lender , if applicable . additionally , if an institution exceeds the 90 % level for a single year , ed will place the institution on provisional certification for a period of at least two years , and could impose other restrictions or conditions on the institution 's title iv eligibility . for the years ended september 30 , 2018 , 2017 and 2016 approximately 71 % , 71 % and 72 % respectively , of our revenues , on a cash basis , were derived from funds distributed under title iv programs , as calculated under the 90/10 rule . 2019 outlook for the year ending september 30 , 2019 , we expect new student starts to grow in the mid to high single digits . the average student population for the year ending september 30 , 2019 is anticipated to be up in the low single digits as a result of the transformation plan initiatives and the bloomfield , new jersey campus . we expect full-year revenue to range between $ 322 million and $ 332 million , as compared to $ 317 million in 2018 due to the expected increase in the average student population . we expect our operating expenses will range between $ 337 million and $ 347 million compared to $ 352.2 million in fiscal 2018. the planned decrease in operating expenses are driven by marketing efficiencies and broad expense management . we expect an operating loss of between $ 10 million and $ 15 million largely due to further investments in marketing and admissions to support start growth and the planned expansion of the company 's welding program . we expect to be free cash flow positive in fiscal 2019 with an ending cash balance at or above the same level as year-end 2018. free cash flow is cash from operating activities less capital expenditures . we believe our strong cash position supports our ability to continue a disciplined capital deployment strategy in high roi investments and our regulatory financial ratio . ebitda , unadjusted , is expected to be positive , and range between $ 5 million and $ 11 million . this figure is unadjusted for the final payment made in october 2018 to the company 's former transformation consultant of $ 4 million . 76 capital expenditures are expected to be between $ 8 million and $ 10 million . results of operations the following table sets forth selected statements of operations data as a percentage of revenues for each of the periods indicated . replace_table_token_6_th year ended september 30 , 2018 compared to year ended september 30 , 2017 revenues . our revenues for the year ended september 30 , 2018 were $ 317.0 million , a decrease of $ 7.3 million , or 2.3 % , as compared to revenues of $ 324.3 million for the year ended september 30 , 2017 . the 4.3 % decrease in our average full-time enrollment resulted in a decrease in revenues of approximately $ 13.7 million . our revenues were impacted by an increase in tuition discounts of $ 2.7 million , primarily attributable to our institutional grant program . we recognized $ 5.7 million on an accrual basis related to revenues and interest under our proprietary loan program for the year ended september 30 , 2018 , as compared to $ 8.0 million recognized on a cash basis for the year ended september 30 , 2017. the decrease in revenue was partially offset by an increase of $ 0.7 million in industry training revenue and tuition rate increases of up to 2.5 % , depending on the program . educational services and facilities expenses . our educational services and facilities expenses for the year ended september 30 , 2018 were $ 182.6 million , representing an increase of $ 1.6 million , or 0.9 % , as compared to $ 181.0 million for the year ended september 30 , 2017 . 77 the following table sets forth the significant components of our educational services and facilities expenses : replace_table_token_7_th compensation and related costs decreased $ 3.1 million for the year ended september 30 , 2018 , as compared to the prior year : salaries expense decreased $ 1.7 million , largely attributable to a decrease in the number of employees needed to support our lower average student population . additionally , severance expense decreased by $ 0.7 million due to expense in the prior year period related to the november 2016 reduction in workforce . the decreases were partially offset by the annual merit increase . bonus expense decreased $ 0.9 million due to an adjustment recorded to reflect anticipated zero attainment on one of our bonus plans . during the prior year period , we paid holiday bonuses to employees in lieu of annual merit increases . student expenses increased $ 1.9 million during the year ended september 30 , 2018 due to increased housing grants offered as part of the transformation plan initiatives . supplies and maintenance expense increased $ 0.9 million during the year ended september 30 , 2018 due to the opening of our bloomfield , new jersey campus and real estate consolidation efforts at our houston , texas campus . occupancy costs increased $ 0.9 million during the year ended september 30 , 2018 primarily due to the addition of our bloomfield , Narrative : liquidity and capital resources based on past performance and current expectations , we believe that our cash flows from operations , cash on hand and investments will satisfy our working capital needs , capital expenditures , commitments and other liquidity requirements associated with our existing commitments and other liquidity requirements associated with our existing operations as well as the expansion of programs at existing campuses through the next 12 months . we believe that the strategic use of our cash resources includes subsidizing funding alternatives for our students . additionally , we evaluate the repurchase of our common stock , consideration of strategic acquisitions , expansion of programs at existing campuses , opening additional campus locations and other potential uses of cash . on june 9 , 2016 , our board of directors voted to eliminate the quarterly cash dividend on our common stock . on june 24 , 2016 , we issued 700,000 shares of series a preferred stock for a total purchase price of $ 70.0 million . the proceeds from the offering are intended to be used to fund strategic long-term growth initiatives , including the expansion to new markets of campuses on a scale similar to our long beach , california , bloomfield , new jersey and dallas/ft . worth , texas campuses and the creation of new programs in existing markets with under-utilized campus facilities . we may use the proceeds to fund strategic acquisitions that complement our core business .

overview the following discussion and analysis of our financial results , as well as the accompanying unaudited consolidated financial statements and related notes to consolidated financial statements to which they refer , are the responsibility of our management . our accounting and financial reporting fairly reflect our business model which is based on the manufacturing and marketing of specialty petrochemicals products and waxes and providing custom manufacturing services . our preferred supplier position in the specialty petrochemicals market is derived from the combination of our reputation as a reliable supplier established over many years , the very high purity of our products , and a focused approach to customer service . in specialty waxes , we are able to deliver to our customers a performance and price point that is unique to our market ; while the diversity of our custom processing assets and capabilities offers solutions to our customers that we believe are uncommon along the u.s. gulf coast . enabling our success in these businesses is a commitment to operational excellence which establishes a culture that prioritizes the safety of our employees and communities in which we operate , the integrity of our assets and regulatory compliance . this commitment drives a change to an emphasis on forward-looking , leading-indicators of our results and proactive steps to continuously improve our performance . we bring the same commitment to excellence to our commercial activities where we focus on the value proposition to our customers while understanding opportunities to maximize our value capture through service and product differentiation , supply chain and operating cost efficiencies and diversified supply options . we believe over time our focus on execution , meeting the needs of our customers and the prudent control of our costs will create value for our stockholders . business environment and risk assessment we believe we are well-positioned to participate in the us chemical industry growth driven by new investments and overall economic growth . while petrochemical prices are volatile on a short-term basis and depend on the demand of our customers ' products , our investment decisions are based on our long-term business outlook using a disciplined approach in selecting and pursuing the most attractive investment opportunities . specialty petrochemicals operations shr 's specialty petrochemicals sales decreased in 2019 compared to 2018. product sales revenue decreased 9.9 % driven by volume decline of 5.4 % and lower 2019 product prices compared to 2018 primarily due to lower feedstock costs . during 2019 shr continued to emphasize our competitive advantages achieved through our high quality products and outstanding customer service and responsiveness . we also made major strides in improving plant reliability and safety . during 2019 feedstock costs were approximately 20 % lower than 2018 reflecting lower crude oil prices . approximately 68 % of our prime products are sold under formula pricing whereby feedstock costs are passed along to the customer typically with a one month lag . thus , when feedstock prices start falling , we experience higher margins as formula pricing lags feedstock costs . during most of 2019 prime products margins were assisted due to falling feedstock costs and reduced competitive pricing pressure on prime products sales that are based on non-formula pricing . our by-product margins improved significantly compared to 2018 as shr benefited from a full year of reliable operation of the advanced reformer unit which upgrades by-products to higher value products . on october 29 , 2019 , a severe weather event at the silsbee plant caused significant damage to one of the feedstock storage tanks . the damaged tank leaked hydrocarbon product into the tank containment area . spill cleanup was completed promptly and the tank has been taken out of service . the total cost of the cleanup and lost product was approximately $ 2 million and will be substantially covered by insurance . some insurance proceeds were received in december 2019 and we expect the remaining proceeds to be received in 2020 . 24 specialty waxes operations sales revenues for our specialty waxes business decreased approximately 9.1 % in 2019 from 2018 as we had lower wax product revenues and lower custom processing revenues . the decline in revenues was primarily due to operational issues at our pasadena , texas facility as well as wax feed supply constraints from our suppliers . most specialty wax markets are mature . key applications for our specialty polyethylene waxes are in hot melt adhesives ( `` hma `` ) , plastic processing , pvc lubricants and inks , paints and coatings , where they act as surface or rheology modifiers . the hma market is expected to grow at a higher rate than gdp growth due to growth in the developing markets and increases in packaging requirements due to changes in consumer purchasing ( shift to home deliveries via the internet ) in developed economies . road marking paints are also expected to grow at rates exceeding gdp growth based upon an expectation that there will be infrastructure investment in the u.s. the pvc market is expected to grow at gdp rates ; however , we expect to get more traction out of our products within this market with acceptance of our new pvc grade waxes . the global wax market is benefiting from the reduction of paraffin wax availability from large refiners as they move toward more hydrocracking and hydroisomerization to produce group iii lube oils and distillate . restructuring and severance impact during 2018 , the company incurred restructuring and severance expenses of $ 2.3 million which were included in general and administrative expenses . story_separator_special_tag in addition , the company elected the practical expedients related to ( 1 ) certain classes of underlying asset to not separate non-lease components from lease components and ( 2 ) the short-term lease recognition exemption for all leases that qualify . the adoption of asc 842 on january 1 , 2019 resulted in the recognition of right-of-use assets of approximately $ 17.0 million and lease liabilities for operating leases of approximately $ 17.0 million on its consolidated balance sheets , with no material impact to retained earnings or consolidated statements of operations . see note 9 to the consolidated financial statements for further information regarding the impact of the adoption of asc 842 on the company 's consolidated financial statements . in january 2017 , the fasb issued asu no . 2017-04 , intangibles - goodwill and other ( topic 350 ) . the amendments simplify the measurement of goodwill by eliminating step 2 from the goodwill impairment test . instead , under these amendments , an entity should perform its annual , or interim , goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount . an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit 's fair value ; however , the loss should not exceed the total amount of goodwill allocated to that reporting unit . the amendments are effective for public business entities for the first interim and annual reporting periods beginning after december 15 , 2019. early adoption was permitted for interim or annual goodwill impairment tests performed on testing dates after january 1 , 2017. the amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and , if it fails that qualitative test , to perform step 2 of the goodwill impairment test . an entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary . the company elected to early adopt this asu on january 1 , 2019. see note 10 to the consolidated financial statements for a discussion of the results of our goodwill impairment testing . in june 2018 , the fasb issued asu no . 2018-07 , improvements to nonemployee share-based payment accounting . asu 2018-07 simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share- 32 based payments to employees , with certain exceptions . the company adopted this asu on january 1 , 2019 and it did not have a material effect on the company 's consolidated financial statements . recent accounting pronouncements in august 2018 , the fasb issued asu no . 2018-13 , fair value measurement ( topic 820 ) - disclosure framework - changes to the disclosure requirements for fair value measurement , which is designed to improve the effectiveness of disclosures by removing , modifying and adding disclosures related to fair value measurements . asu no . 2018-13 is effective for fiscal years beginning after december 15 , 2019 , including interim periods within those fiscal years , and the asu allows for early adoption in any interim period after issuance of the update . the adoption of this asu is not expected to have a significant impact on the company 's consolidated financial statements . in june 2016 , the fasb issued asu no . 2016-13 , financial instruments - credit losses ( topic 326 ) , to require the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience , current conditions and reasonable forecasts and applies to all financial assets , including trade receivables . the main objective of this asu is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date . asu no . 2016-13 is effective for fiscal years beginning after december 15 , 2019 , including interim periods within those fiscal years , and the asu allows for early adoption as of the beginning of an interim or annual reporting period beginning after december 15 , 2018. the company is currently assessing the impact this asu will have on its consolidated financial statements . in december 2019 , the fasb issued asu no . 2019-12 , income taxes ( topic 740 ) - simplifying the accounting for income taxes . the amendments in this update simplify the accounting for income taxes by removing certain exceptions and clarifying certain requirements regarding franchise taxes , goodwill , consolidated tax expenses , and annual effective tax rate calculations . the asu is effective for fiscal years beginning after december 15 , 2020 , and early adoption is permitted . the company is currently assessing the impact of this asu will have on its consolidated financial statements . critical accounting policies our consolidated financial statements are based on the selection and application of significant accounting policies . the preparation of consolidated financial statements in conformity with gaap requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of net sales , expenses and allocated charges during the reported period . actual results could differ from those estimates . however , we are not currently aware of any reasonably likely events or circumstances that would result in materially different results . we believe the following accounting policies and estimates are critical to understanding the financial reporting risks present currently . these matters , and the judgments and uncertainties affecting them , are essential to understanding our reported results . see note 2 to the consolidated financial statements for further information . discontinued operations assets that are sold or classified as held for sale are classified as discontinued operations provided that the disposal represents a strategic shift

cash and cash equivalents decreased $ 0.6 million during the year ended december 31 , 2019 . the change in cash and cash equivalents is summarized as follows : replace_table_token_10_th 25 operating activities operating activities generated cash of $ 25.1 million during fiscal 2019 as compared with $ 19.9 million of cash provided during fiscal 2018 . net loss increased by $ 12.4 million while cash provided by operations increased by $ 5.2 million from 2018 to 2019 due primarily to the following factors : net loss for 2019 included a non-cash impairment charge for goodwill and certain intangible assets of $ 24.2 million ; and trade receivables increased $ 0.8 million in 2019 as compared to a decrease of $ 1.5 million in 2018. these significant sources of cash were partially offset by the following decreases in cash provided by operations : accounts payable and accrued liabilities decreased $ 4.9 million in 2019 ( primarily due to payoff of catalyst purchased at the end of 2018 ) as compared to an increase of $ 2.2 million in 2018 ( also primarily due to catalyst purchases ) ; income taxes receivable were flat in 2019 , as compared to a decrease of $ 5.4 million in 2018 ( primarily due to collection of federal and state research and development credits , carryback claims , and refunds of tax payments on deposit ) ; and net loss for 2019 included non-cash deferred income tax liability of $ 3.0 million as compared to non-cash deferred income tax liability of $ 1.4 million in 2018. operating activities generated cash of $ 19.9 million during fiscal 2018 as compared with $ 30.8 million of cash provided during fiscal 2017. net income decreased by $ 20.3 million and cash provided by operations decreased by $ 10.9 million from 2017 to 2018 due primarily to the following factors : net loss for 2018 included a non-cash depreciation and amortization charge of $ 14.4 million as compared to 2017 which included a non-cash depreciation and amortization charge of $ 11.0 million ; net loss for 2018 included non-cash deferred income tax liability of $ 1.6 million as compared to non-cash deferred income

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. overview the following discussion and analysis of our financial results , as well as the accompanying unaudited consolidated financial statements and related notes to consolidated financial statements to which they refer , are the responsibility of our management . our accounting and financial reporting fairly reflect our business model which is based on the manufacturing and marketing of specialty petrochemicals products and waxes and providing custom manufacturing services . our preferred supplier position in the specialty petrochemicals market is derived from the combination of our reputation as a reliable supplier established over many years , the very high purity of our products , and a focused approach to customer service . in specialty waxes , we are able to deliver to our customers a performance and price point that is unique to our market ; while the diversity of our custom processing assets and capabilities offers solutions to our customers that we believe are uncommon along the u.s. gulf coast . enabling our success in these businesses is a commitment to operational excellence which establishes a culture that prioritizes the safety of our employees and communities in which we operate , the integrity of our assets and regulatory compliance . this commitment drives a change to an emphasis on forward-looking , leading-indicators of our results and proactive steps to continuously improve our performance . we bring the same commitment to excellence to our commercial activities where we focus on the value proposition to our customers while understanding opportunities to maximize our value capture through service and product differentiation , supply chain and operating cost efficiencies and diversified supply options . we believe over time our focus on execution , meeting the needs of our customers and the prudent control of our costs will create value for our stockholders . business environment and risk assessment we believe we are well-positioned to participate in the us chemical industry growth driven by new investments and overall economic growth . while petrochemical prices are volatile on a short-term basis and depend on the demand of our customers ' products , our investment decisions are based on our long-term business outlook using a disciplined approach in selecting and pursuing the most attractive investment opportunities . specialty petrochemicals operations shr 's specialty petrochemicals sales decreased in 2019 compared to 2018. product sales revenue decreased 9.9 % driven by volume decline of 5.4 % and lower 2019 product prices compared to 2018 primarily due to lower feedstock costs . during 2019 shr continued to emphasize our competitive advantages achieved through our high quality products and outstanding customer service and responsiveness . we also made major strides in improving plant reliability and safety . during 2019 feedstock costs were approximately 20 % lower than 2018 reflecting lower crude oil prices . approximately 68 % of our prime products are sold under formula pricing whereby feedstock costs are passed along to the customer typically with a one month lag . thus , when feedstock prices start falling , we experience higher margins as formula pricing lags feedstock costs . during most of 2019 prime products margins were assisted due to falling feedstock costs and reduced competitive pricing pressure on prime products sales that are based on non-formula pricing . our by-product margins improved significantly compared to 2018 as shr benefited from a full year of reliable operation of the advanced reformer unit which upgrades by-products to higher value products . on october 29 , 2019 , a severe weather event at the silsbee plant caused significant damage to one of the feedstock storage tanks . the damaged tank leaked hydrocarbon product into the tank containment area . spill cleanup was completed promptly and the tank has been taken out of service . the total cost of the cleanup and lost product was approximately $ 2 million and will be substantially covered by insurance . some insurance proceeds were received in december 2019 and we expect the remaining proceeds to be received in 2020 . 24 specialty waxes operations sales revenues for our specialty waxes business decreased approximately 9.1 % in 2019 from 2018 as we had lower wax product revenues and lower custom processing revenues . the decline in revenues was primarily due to operational issues at our pasadena , texas facility as well as wax feed supply constraints from our suppliers . most specialty wax markets are mature . key applications for our specialty polyethylene waxes are in hot melt adhesives ( `` hma `` ) , plastic processing , pvc lubricants and inks , paints and coatings , where they act as surface or rheology modifiers . the hma market is expected to grow at a higher rate than gdp growth due to growth in the developing markets and increases in packaging requirements due to changes in consumer purchasing ( shift to home deliveries via the internet ) in developed economies . road marking paints are also expected to grow at rates exceeding gdp growth based upon an expectation that there will be infrastructure investment in the u.s. the pvc market is expected to grow at gdp rates ; however , we expect to get more traction out of our products within this market with acceptance of our new pvc grade waxes . the global wax market is benefiting from the reduction of paraffin wax availability from large refiners as they move toward more hydrocracking and hydroisomerization to produce group iii lube oils and distillate . restructuring and severance impact during 2018 , the company incurred restructuring and severance expenses of $ 2.3 million which were included in general and administrative expenses . story_separator_special_tag in addition , the company elected the practical expedients related to ( 1 ) certain classes of underlying asset to not separate non-lease components from lease components and ( 2 ) the short-term lease recognition exemption for all leases that qualify . the adoption of asc 842 on january 1 , 2019 resulted in the recognition of right-of-use assets of approximately $ 17.0 million and lease liabilities for operating leases of approximately $ 17.0 million on its consolidated balance sheets , with no material impact to retained earnings or consolidated statements of operations . see note 9 to the consolidated financial statements for further information regarding the impact of the adoption of asc 842 on the company 's consolidated financial statements . in january 2017 , the fasb issued asu no . 2017-04 , intangibles - goodwill and other ( topic 350 ) . the amendments simplify the measurement of goodwill by eliminating step 2 from the goodwill impairment test . instead , under these amendments , an entity should perform its annual , or interim , goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount . an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit 's fair value ; however , the loss should not exceed the total amount of goodwill allocated to that reporting unit . the amendments are effective for public business entities for the first interim and annual reporting periods beginning after december 15 , 2019. early adoption was permitted for interim or annual goodwill impairment tests performed on testing dates after january 1 , 2017. the amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and , if it fails that qualitative test , to perform step 2 of the goodwill impairment test . an entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary . the company elected to early adopt this asu on january 1 , 2019. see note 10 to the consolidated financial statements for a discussion of the results of our goodwill impairment testing . in june 2018 , the fasb issued asu no . 2018-07 , improvements to nonemployee share-based payment accounting . asu 2018-07 simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share- 32 based payments to employees , with certain exceptions . the company adopted this asu on january 1 , 2019 and it did not have a material effect on the company 's consolidated financial statements . recent accounting pronouncements in august 2018 , the fasb issued asu no . 2018-13 , fair value measurement ( topic 820 ) - disclosure framework - changes to the disclosure requirements for fair value measurement , which is designed to improve the effectiveness of disclosures by removing , modifying and adding disclosures related to fair value measurements . asu no . 2018-13 is effective for fiscal years beginning after december 15 , 2019 , including interim periods within those fiscal years , and the asu allows for early adoption in any interim period after issuance of the update . the adoption of this asu is not expected to have a significant impact on the company 's consolidated financial statements . in june 2016 , the fasb issued asu no . 2016-13 , financial instruments - credit losses ( topic 326 ) , to require the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience , current conditions and reasonable forecasts and applies to all financial assets , including trade receivables . the main objective of this asu is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date . asu no . 2016-13 is effective for fiscal years beginning after december 15 , 2019 , including interim periods within those fiscal years , and the asu allows for early adoption as of the beginning of an interim or annual reporting period beginning after december 15 , 2018. the company is currently assessing the impact this asu will have on its consolidated financial statements . in december 2019 , the fasb issued asu no . 2019-12 , income taxes ( topic 740 ) - simplifying the accounting for income taxes . the amendments in this update simplify the accounting for income taxes by removing certain exceptions and clarifying certain requirements regarding franchise taxes , goodwill , consolidated tax expenses , and annual effective tax rate calculations . the asu is effective for fiscal years beginning after december 15 , 2020 , and early adoption is permitted . the company is currently assessing the impact of this asu will have on its consolidated financial statements . critical accounting policies our consolidated financial statements are based on the selection and application of significant accounting policies . the preparation of consolidated financial statements in conformity with gaap requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of net sales , expenses and allocated charges during the reported period . actual results could differ from those estimates . however , we are not currently aware of any reasonably likely events or circumstances that would result in materially different results . we believe the following accounting policies and estimates are critical to understanding the financial reporting risks present currently . these matters , and the judgments and uncertainties affecting them , are essential to understanding our reported results . see note 2 to the consolidated financial statements for further information . discontinued operations assets that are sold or classified as held for sale are classified as discontinued operations provided that the disposal represents a strategic shift Narrative : cash and cash equivalents decreased $ 0.6 million during the year ended december 31 , 2019 . the change in cash and cash equivalents is summarized as follows : replace_table_token_10_th 25 operating activities operating activities generated cash of $ 25.1 million during fiscal 2019 as compared with $ 19.9 million of cash provided during fiscal 2018 . net loss increased by $ 12.4 million while cash provided by operations increased by $ 5.2 million from 2018 to 2019 due primarily to the following factors : net loss for 2019 included a non-cash impairment charge for goodwill and certain intangible assets of $ 24.2 million ; and trade receivables increased $ 0.8 million in 2019 as compared to a decrease of $ 1.5 million in 2018. these significant sources of cash were partially offset by the following decreases in cash provided by operations : accounts payable and accrued liabilities decreased $ 4.9 million in 2019 ( primarily due to payoff of catalyst purchased at the end of 2018 ) as compared to an increase of $ 2.2 million in 2018 ( also primarily due to catalyst purchases ) ; income taxes receivable were flat in 2019 , as compared to a decrease of $ 5.4 million in 2018 ( primarily due to collection of federal and state research and development credits , carryback claims , and refunds of tax payments on deposit ) ; and net loss for 2019 included non-cash deferred income tax liability of $ 3.0 million as compared to non-cash deferred income tax liability of $ 1.4 million in 2018. operating activities generated cash of $ 19.9 million during fiscal 2018 as compared with $ 30.8 million of cash provided during fiscal 2017. net income decreased by $ 20.3 million and cash provided by operations decreased by $ 10.9 million from 2017 to 2018 due primarily to the following factors : net loss for 2018 included a non-cash depreciation and amortization charge of $ 14.4 million as compared to 2017 which included a non-cash depreciation and amortization charge of $ 11.0 million ; net loss for 2018 included non-cash deferred income tax liability of $ 1.6 million as compared to non-cash deferred income

the standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in prior accounting guidance . asu 2014-09 provides alternative methods of initial adoption , and was effective for fiscal years beginning after december 15 , 2016 , and interim periods within those annual periods . early adoption was not permitted . in august , 2015 , the fasb issued asu no . 2015-14 , “ revenue from contracts with customers : deferral of the effective date ” . the amendment in this asu defers the effective date of asu no . 2014-09 for all entities for one year . public business entities , certain not-for-profit entities , and certain employee benefit plans should apply the guidance in asu 2014-09 to fiscal years beginning after december 15 , 2017 , including interim reporting periods within that fiscal year . earlier application is permitted only as of fiscal years beginning after december 31 , 2016 , including interim reporting periods with that fiscal year . we are currently reviewing the revised guidance and assessing the potential impact on our consolidated financial statements . 25 in july 2015 , the fasb issued asu no . 2015-11 , “ simplifying the measurement of inventory , ” that requires inventory be measured at the lower of cost and net realizable value and options that currently exist for market value be eliminated . the standard defines net realizable value as estimated selling prices in the ordinary course of business , less reasonably predictable costs of completion , disposal , and transportation and is effective for fiscal years beginning after december 15 , 2016 and interim periods within those fiscal years with early adoption permitted . the guidance should be applied prospectively . we do not believe that the adoption of asu 2015-11 will have a significant impact on our consolidated financial statements . in november 2015 , the fasb issued asu no . 2015-17 , “ balance sheet classification of deferred taxes , ” that requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position . the current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by this amendment . the new guidance is effective for fiscal years , and interim periods within those years , beginning after december 15 , 2016. early adoption is permitted and the standard may be applied either retrospectively or on a prospective basis to all deferred tax assets and liabilities . we do not believe that the adoption of asu 2015-17 will have a significant impact on our consolidated financial statements . in january 2016 , the fasb issued asu no . 2016-01 , “ recognition and measurement of financial assets and financial liabilities , ” that modifies certain aspects of the recognition , measurement , presentation , and disclosure of financial instruments . the accounting standard update is effective for fiscal years , and interim periods within those years , beginning after december 15 , 2017 , and early adoption is permitted . we are currently assessing the impact that adopting this new accounting guidance will have on our consolidated financial statements . in february 2016 , the fasb issued asu no . 2016-02 , “ leases ” , that discusses how an entity should account for lease assets and lease liabilities . the guidance specifies that an entity who is a lessee under lease agreements should recognize lease assets and lease liabilities for those leases classified as operating leases under previous fasb guidance . accounting for leases by lessors is largely unchanged under the new guidance . the guidance is effective for us beginning in the first quarter of 2019. early adoption is permitted . in transition , lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach . we are evaluating the impact of adopting this guidance on our consolidated financial statements . in march 2016 , the fasb issued asu 2016-08 , “ principal versus agent considerations ( reporting revenue gross versus net ) , ” which clarifies the implementation guidance on principal versus agent considerations . the amendments in this update do not change the core principle of asu 2014-09. the effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of asu 2014-09. as discussed above , asu 2015-14 defers the effective date of asu 2014-09 by one year . we are currently assessing the impact that adopting this new accounting guidance will have on our consolidated financial statements . in march 2016 , the fasb issued asu 2016-09 , “ improvements to employee share-based payment accounting , ” which simplifies several aspects of the accounting for share-based payment transactions , including the income tax consequences , classification of awards as either equity or liabilities , and classification on the statement of cash flows . the guidance is effective for us beginning in the first quarter of fiscal year 2017. early adoption is permitted . we are evaluating the impact of adopting this guidance on our consolidated financial statements . in april 2016 , the fasb issued asu 2016-10 , “ identifying performance obligations and licensing , ” which clarifies the implementation guidance for performance obligations and licensing . the amendments in this update do not change the core principle of asu 2014-09. the effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of asu 2014-09. as discussed above , asu 2015-14 defers the effective date of asu 2014-09 by one year . we are currently assessing the impact that adopting this new accounting guidance will have on our consolidated financial statements . story_separator_special_tag $ 884,000 for the year ended december 31 , 2015. the increase of approximately $ 142,000 , or 16 % , in cost of goods sold was primarily related to an increase in the number of filters sold . research and development research and development expenses were approximately $ 1,079,000 and $ 826,000 for the years ended december 31 , 2016 and december 31 , 2015 , respectively . this increase of approximately $ 253,000 , or 31 % , is primarily due to an increase in full-time research and development employees . depreciation and amortization expense depreciation and amortization expense was approximately $ 230,000 for the year ended december 31 , 2016 compared to approximately $ 212,000 for the year ended december 31 , 2015 , representing an increase of approximately 8 % related to equipment expenditures for the year ended december 31 , 2016. selling , general and administrative expenses selling , general and administrative expenses were approximately $ 2,854,000 for the year ended december 31 , 2016 compared to approximately $ 3,443,000 for the year ended december 31 , 2015 , representing a decrease of $ 589,000 , or 17 % . the decrease was primarily due to a decrease in legal and auditor expenses of approximately $ 280,000 , a decrease in regulatory expenses of approximately $ 220,000 , which were incurred in 2015 related to standard operating procedure updates , a decrease in severance expense of approximately $ 175,000 incurred in 2015 and a decrease of approximately $ 120,000 in direct compensation and investor relations expenses . these decreases were partially offset by an increase in selling , general and administrative personnel of approximately $ 280,000. interest expense the table below summarizes interest expense for the years ended december 31 , 2016 and 2015 : replace_table_token_1_th interest income interest income of approximately $ 5,000 for the year ended december 31 , 2016 is as result of interest income recognized on a lease receivable . 29 change in fair value of warrant liability we classified certain warrants as liabilities at their fair value and adjusted the warrant liability to fair value at each reporting period . this liability was subject to re-measurement at each balance sheet date until exercised , and any change in fair value is recognized in our consolidated statement of operations and comprehensive income ( loss ) . the fair value of such warrants issued was estimated using a binomial options pricing model . the change in fair value of the warrant liability resulted in income of approximately $ 2,099,000 for the year ended december 31 , 2015. these liability classified warrants were exercised in full on september 29 , 2015. warrant modification expense during the year ended december 31 , 2015 , the modification of the exercise price of the liability-classified warrants resulted in an increase in the warrant liability , immediately before exercise , of approximately $ 1,761,000. other income/expense other expense for the year ended december 31 , 2016 of approximately $ 4,000 is related to foreign currency gains of approximately $ 2,000 and miscellaneous other income of approximately $ 2,000. other income of approximately $ 37,000 for the year ended december 31 , 2015 is due to foreign currency gains . off-balance sheet arrangements we did not have any off-balance sheet arrangements as of december 31 , 2016 or 2015. story_separator_special_tag 0 ; margin-bottom : 0 ; text-align : center `` > as of the date of this annual report on form 10-k , we expect that our existing cash balances and projected increase in product sales from the launch of new products , as well as the approximately $ 1.2 million raised in a pipe offering in march 2017 , will allow us to fund our operations at least into 2018 , if not longer , depending on the timing and market acceptance of our new products . this assumption excludes the impact of future cash receipts from recurring operations . our cash flow currently is not , and historically has not been , sufficient to meet our obligations and commitments . we must seek and obtain additional financing to fund our operations . if we can not raise sufficient capital , in connection with offerings of our common stock or through other means , we will be forced to curtail our planned activities and operations or cease operations entirely and you will lose all of your investment in us . there can be no assurance that we could raise sufficient capital on a timely basis or on satisfactory terms or at all . net cash used in operating activities was approximately $ 2,112,000 for the year ended december 31 , 2016 compared to approximately $ 3,815,000 for the year ended december 31 , 2015. our net loss was approximately $ 3,027,000 for the year ended december 31 , 2016 compared to a net loss of approximately $ 3,426,000 , excluding the noncash impacts of the change in fair value of the warrant liability and the warrant modification , for the year ended december 31 , 2015 , a decrease of approximately $ 399,000. the most significant items contributing to the net decrease of approximately $ 1,703,000 in cash used in operating activities during the year ended december 31 , 2016 compared to the year ended december 31 , 2015 are highlighted below : ● our inventory decreased by approximately $ 103,000 during the 2016 period compared to an increase of approximately $ 405,000 during the 2015 period as a result of managing inventory levels ; ● our accounts receivable increased by approximately $ 17,000 during the 2016 period compared to an increase of approximately $ 302,000 during the 2015 period as a result of timing of receipts ; ● our prepaid expenses and other current assets increased by approximately $ 10,000 during the 2016 period compared to an increase of approximately $ 144,000 during the 2015 period as a result of decreased deposits ; ● our accounts

liquidity and capital resources the following table summarizes our liquidity and capital resources as of december 31 , 2016 and 2015 and is intended to supplement the more detailed discussion that follows . the amounts stated are expressed in thousands . replace_table_token_2_th our future liquidity sources and requirements will depend on many factors , including : ● the availability of additional financing , through the sale of equity securities or otherwise , on commercially reasonable terms or at all ; ● the market acceptance of our products , and our ability to effectively and efficiently produce and market our products ; ● the continued progress in , and the costs of , clinical studies and other research and development programs ; ● the costs involved in filing and enforcing patent claims and the status of competitive products ; and ● the cost of litigation , including potential patent litigation and any other actual or threatened litigation . we expect to put our current capital resources to the following uses : ● for the marketing and sales of our water-filtration products ; ● to pursue business development opportunities with respect to our chronic renal treatment system ; and ● for working capital purposes . we operate under an investment , risk management and accounting policy adopted by our board of directors . such policy limits the types of instruments or securities in which we may invest our excess funds : u.s. treasury securities ; certificates of deposit issued by money center banks ; money funds by money center banks ; repurchase agreements ; and eurodollar certificates of deposit issued by money center banks . this policy provides that our primary objectives for investments shall be the preservation of principal and achieving sufficient liquidity to meet our forecasted cash requirements . in addition , provided that such primary objectives are met , we may seek to achieve the maximum yield available under such constraints .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. the standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in prior accounting guidance . asu 2014-09 provides alternative methods of initial adoption , and was effective for fiscal years beginning after december 15 , 2016 , and interim periods within those annual periods . early adoption was not permitted . in august , 2015 , the fasb issued asu no . 2015-14 , “ revenue from contracts with customers : deferral of the effective date ” . the amendment in this asu defers the effective date of asu no . 2014-09 for all entities for one year . public business entities , certain not-for-profit entities , and certain employee benefit plans should apply the guidance in asu 2014-09 to fiscal years beginning after december 15 , 2017 , including interim reporting periods within that fiscal year . earlier application is permitted only as of fiscal years beginning after december 31 , 2016 , including interim reporting periods with that fiscal year . we are currently reviewing the revised guidance and assessing the potential impact on our consolidated financial statements . 25 in july 2015 , the fasb issued asu no . 2015-11 , “ simplifying the measurement of inventory , ” that requires inventory be measured at the lower of cost and net realizable value and options that currently exist for market value be eliminated . the standard defines net realizable value as estimated selling prices in the ordinary course of business , less reasonably predictable costs of completion , disposal , and transportation and is effective for fiscal years beginning after december 15 , 2016 and interim periods within those fiscal years with early adoption permitted . the guidance should be applied prospectively . we do not believe that the adoption of asu 2015-11 will have a significant impact on our consolidated financial statements . in november 2015 , the fasb issued asu no . 2015-17 , “ balance sheet classification of deferred taxes , ” that requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position . the current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by this amendment . the new guidance is effective for fiscal years , and interim periods within those years , beginning after december 15 , 2016. early adoption is permitted and the standard may be applied either retrospectively or on a prospective basis to all deferred tax assets and liabilities . we do not believe that the adoption of asu 2015-17 will have a significant impact on our consolidated financial statements . in january 2016 , the fasb issued asu no . 2016-01 , “ recognition and measurement of financial assets and financial liabilities , ” that modifies certain aspects of the recognition , measurement , presentation , and disclosure of financial instruments . the accounting standard update is effective for fiscal years , and interim periods within those years , beginning after december 15 , 2017 , and early adoption is permitted . we are currently assessing the impact that adopting this new accounting guidance will have on our consolidated financial statements . in february 2016 , the fasb issued asu no . 2016-02 , “ leases ” , that discusses how an entity should account for lease assets and lease liabilities . the guidance specifies that an entity who is a lessee under lease agreements should recognize lease assets and lease liabilities for those leases classified as operating leases under previous fasb guidance . accounting for leases by lessors is largely unchanged under the new guidance . the guidance is effective for us beginning in the first quarter of 2019. early adoption is permitted . in transition , lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach . we are evaluating the impact of adopting this guidance on our consolidated financial statements . in march 2016 , the fasb issued asu 2016-08 , “ principal versus agent considerations ( reporting revenue gross versus net ) , ” which clarifies the implementation guidance on principal versus agent considerations . the amendments in this update do not change the core principle of asu 2014-09. the effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of asu 2014-09. as discussed above , asu 2015-14 defers the effective date of asu 2014-09 by one year . we are currently assessing the impact that adopting this new accounting guidance will have on our consolidated financial statements . in march 2016 , the fasb issued asu 2016-09 , “ improvements to employee share-based payment accounting , ” which simplifies several aspects of the accounting for share-based payment transactions , including the income tax consequences , classification of awards as either equity or liabilities , and classification on the statement of cash flows . the guidance is effective for us beginning in the first quarter of fiscal year 2017. early adoption is permitted . we are evaluating the impact of adopting this guidance on our consolidated financial statements . in april 2016 , the fasb issued asu 2016-10 , “ identifying performance obligations and licensing , ” which clarifies the implementation guidance for performance obligations and licensing . the amendments in this update do not change the core principle of asu 2014-09. the effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of asu 2014-09. as discussed above , asu 2015-14 defers the effective date of asu 2014-09 by one year . we are currently assessing the impact that adopting this new accounting guidance will have on our consolidated financial statements . story_separator_special_tag $ 884,000 for the year ended december 31 , 2015. the increase of approximately $ 142,000 , or 16 % , in cost of goods sold was primarily related to an increase in the number of filters sold . research and development research and development expenses were approximately $ 1,079,000 and $ 826,000 for the years ended december 31 , 2016 and december 31 , 2015 , respectively . this increase of approximately $ 253,000 , or 31 % , is primarily due to an increase in full-time research and development employees . depreciation and amortization expense depreciation and amortization expense was approximately $ 230,000 for the year ended december 31 , 2016 compared to approximately $ 212,000 for the year ended december 31 , 2015 , representing an increase of approximately 8 % related to equipment expenditures for the year ended december 31 , 2016. selling , general and administrative expenses selling , general and administrative expenses were approximately $ 2,854,000 for the year ended december 31 , 2016 compared to approximately $ 3,443,000 for the year ended december 31 , 2015 , representing a decrease of $ 589,000 , or 17 % . the decrease was primarily due to a decrease in legal and auditor expenses of approximately $ 280,000 , a decrease in regulatory expenses of approximately $ 220,000 , which were incurred in 2015 related to standard operating procedure updates , a decrease in severance expense of approximately $ 175,000 incurred in 2015 and a decrease of approximately $ 120,000 in direct compensation and investor relations expenses . these decreases were partially offset by an increase in selling , general and administrative personnel of approximately $ 280,000. interest expense the table below summarizes interest expense for the years ended december 31 , 2016 and 2015 : replace_table_token_1_th interest income interest income of approximately $ 5,000 for the year ended december 31 , 2016 is as result of interest income recognized on a lease receivable . 29 change in fair value of warrant liability we classified certain warrants as liabilities at their fair value and adjusted the warrant liability to fair value at each reporting period . this liability was subject to re-measurement at each balance sheet date until exercised , and any change in fair value is recognized in our consolidated statement of operations and comprehensive income ( loss ) . the fair value of such warrants issued was estimated using a binomial options pricing model . the change in fair value of the warrant liability resulted in income of approximately $ 2,099,000 for the year ended december 31 , 2015. these liability classified warrants were exercised in full on september 29 , 2015. warrant modification expense during the year ended december 31 , 2015 , the modification of the exercise price of the liability-classified warrants resulted in an increase in the warrant liability , immediately before exercise , of approximately $ 1,761,000. other income/expense other expense for the year ended december 31 , 2016 of approximately $ 4,000 is related to foreign currency gains of approximately $ 2,000 and miscellaneous other income of approximately $ 2,000. other income of approximately $ 37,000 for the year ended december 31 , 2015 is due to foreign currency gains . off-balance sheet arrangements we did not have any off-balance sheet arrangements as of december 31 , 2016 or 2015. story_separator_special_tag 0 ; margin-bottom : 0 ; text-align : center `` > as of the date of this annual report on form 10-k , we expect that our existing cash balances and projected increase in product sales from the launch of new products , as well as the approximately $ 1.2 million raised in a pipe offering in march 2017 , will allow us to fund our operations at least into 2018 , if not longer , depending on the timing and market acceptance of our new products . this assumption excludes the impact of future cash receipts from recurring operations . our cash flow currently is not , and historically has not been , sufficient to meet our obligations and commitments . we must seek and obtain additional financing to fund our operations . if we can not raise sufficient capital , in connection with offerings of our common stock or through other means , we will be forced to curtail our planned activities and operations or cease operations entirely and you will lose all of your investment in us . there can be no assurance that we could raise sufficient capital on a timely basis or on satisfactory terms or at all . net cash used in operating activities was approximately $ 2,112,000 for the year ended december 31 , 2016 compared to approximately $ 3,815,000 for the year ended december 31 , 2015. our net loss was approximately $ 3,027,000 for the year ended december 31 , 2016 compared to a net loss of approximately $ 3,426,000 , excluding the noncash impacts of the change in fair value of the warrant liability and the warrant modification , for the year ended december 31 , 2015 , a decrease of approximately $ 399,000. the most significant items contributing to the net decrease of approximately $ 1,703,000 in cash used in operating activities during the year ended december 31 , 2016 compared to the year ended december 31 , 2015 are highlighted below : ● our inventory decreased by approximately $ 103,000 during the 2016 period compared to an increase of approximately $ 405,000 during the 2015 period as a result of managing inventory levels ; ● our accounts receivable increased by approximately $ 17,000 during the 2016 period compared to an increase of approximately $ 302,000 during the 2015 period as a result of timing of receipts ; ● our prepaid expenses and other current assets increased by approximately $ 10,000 during the 2016 period compared to an increase of approximately $ 144,000 during the 2015 period as a result of decreased deposits ; ● our accounts Narrative : liquidity and capital resources the following table summarizes our liquidity and capital resources as of december 31 , 2016 and 2015 and is intended to supplement the more detailed discussion that follows . the amounts stated are expressed in thousands . replace_table_token_2_th our future liquidity sources and requirements will depend on many factors , including : ● the availability of additional financing , through the sale of equity securities or otherwise , on commercially reasonable terms or at all ; ● the market acceptance of our products , and our ability to effectively and efficiently produce and market our products ; ● the continued progress in , and the costs of , clinical studies and other research and development programs ; ● the costs involved in filing and enforcing patent claims and the status of competitive products ; and ● the cost of litigation , including potential patent litigation and any other actual or threatened litigation . we expect to put our current capital resources to the following uses : ● for the marketing and sales of our water-filtration products ; ● to pursue business development opportunities with respect to our chronic renal treatment system ; and ● for working capital purposes . we operate under an investment , risk management and accounting policy adopted by our board of directors . such policy limits the types of instruments or securities in which we may invest our excess funds : u.s. treasury securities ; certificates of deposit issued by money center banks ; money funds by money center banks ; repurchase agreements ; and eurodollar certificates of deposit issued by money center banks . this policy provides that our primary objectives for investments shall be the preservation of principal and achieving sufficient liquidity to meet our forecasted cash requirements . in addition , provided that such primary objectives are met , we may seek to achieve the maximum yield available under such constraints .

in 2013 , we introduced datalert to monitor and alert on sensitive data and file activity . in 2014 , we introduced datanswers , a secure enterprise search solution for enterprise data that delivers highly relevant and secure search results to enterprise employees , greatly improving their productivity . in 2015 , we enhanced our datadvantage , dataprivilege and data classification engine offerings ; with datadvantage support for the following microsoft office 365 data stores : exchange online , sharepoint online , onedrive and active directory hosted in azure ; with dataprivilege for sharepoint ; and with data classification engine for unix , sharepoint online and onedrive . in 2016 , we enhanced our datadvantage offerings with additional office 365 support ; datanswers support for sharepoint online and onedrive ; and introduced a new web ui for datalert for comprehensive security management and threat detection . in that year we also added additional user behavior analytics driven threat models to datalert to significantly enhance our detection of insider threats , including potential disgruntled employees , rogue administrators , hijacked accounts and malware , such as ransomware . we also established a behavioral research laboratory where a dedicated team of security experts and data scientists from varonis continually research the latest threats and emerging security vulnerabilities and introduce new behavior-based threat models to datalert . in 2017 , we introduced the automation engine to allow customers to automatically repair and maintain file systems so that organizations are less vulnerable to attacks and security breaches , more compliant and consistently meeting a least privilege model . we enhanced datalert with datalert analytics rewind to allow customers to analyze past user and data activity to identify security breaches that may have occurred in the past and pre-emptively tune out false positives . we have continued to update our web ui for datalert and added new threat models to detect suspicious mailbox , exchange and exchange online behaviors , password resets , unusual activity from personal devices and more . we introduced a new security dashboard in datalert , along with enhanced behavioral analytics , geolocation and more to make it easier than ever to perform security investigations and forensics . in 2017 , we also released gdpr patterns , part of the data classification engine family , to help enterprises identify data that falls under the gdpr and expanded our offerings that can help enterprises meet compliance and regulation requirements . finally , in early 2018 , we introduced varonis edge to extend our proactive security approach to the perimeter enabling customers to spot signs of attack at the perimeter with telemetry from dns , vpn and web proxies . at the core of our technology is our ability to intelligently extract and analyze metadata from an enterprise 's vast , distributed data stores . the broad applicability of our technology has resulted in our customers deploying our platform for numerous use cases for security , it , operations and business personnel . we currently have six product families , and , as of december 31 , 2017 , approximately 52 % of our customers had purchased products in two or more families , one of which was datadvantage for all of these customers . we believe our existing customer base serves as a strong source of incremental revenues given our broad platform of products , their growing volumes and complexity of enterprise data and associated security concerns . our maintenance renewal rate for each of the years ended december 31 , 2017 , 2016 and 2015 was over 90 % . our key strategies to maintain our renewal rate include focusing on the quality and reliability of our customer service and support to ensure our customers receive value from our products , providing consistent software upgrades and having sufficient dedicated renewal sales personnel . 29 we sell substantially all of our products and services to channel partners , including distributors and resellers , which sell to end-user customers , which we refer to in this report as our customers . we believe that our sales model , which combines the leverage of a channel sales model with our highly trained and professional sales force , has and will continue to play a major role in our ability to grow and to successfully deliver our unique value proposition for enterprise data . while our products serve customers of all sizes , in all industries and all geographies , the marketing focus and majority of our sales focus is on targeting organizations with 1,000 users or more who can make larger purchases with us over time and have a greater potential lifetime value . as of december 31 , 2017 , we had approximately 6,250 customers , spanning leading firms in the financial services , healthcare , public , industrial , insurance , energy and utilities , consumer and retail , education , media and entertainment and technology sectors . we believe our customer count is a key indicator of our market penetration and the value that our products bring to our customer base . we also believe our existing customers represent significant future revenue opportunities for us . we will continue our focus on targeting organizations with 1,000 users or more who can make larger purchases with us over time . the average spending per customer for each of the years ended december 31 , 2017 , 2016 and 2015 was approximately $ 83,000 , $ 65,000 and $ 59,000 , respectively . we believe there is a significant long term growth opportunity in both domestic and foreign markets , which could include any organization that uses file shares , intranets and email for collaboration , regardless of region . story_separator_special_tag cost of revenues and gross margin year ended december 31 , 2017 2016 % change ( in thousands ) cost of revenues $ 20,873 $ 15,843 31.7 % replace_table_token_11_th the increase in cost of revenues was primarily related to an increase of $ 3.7 million in salaries and benefits and stock based compensation expense due to increased headcount for support personnel to support our greater revenues and high renewal rate and a $ 0.9 million increase in facilities and allocated overhead costs . 35 operating costs and expenses replace_table_token_12_th replace_table_token_13_th the increase in research and development expenses was primarily related to an increase of $ 8.7 million in salaries and stock based compensation expense resulting from increased headcount as part of our focus on enhancing and developing our existing and new products . the remainder of the increase was attributable to a $ 1.6 million increase in facilities and allocated overhead costs . the increase in sales and marketing expenses was primarily related to a $ 23.4 million increase in salaries and benefits and stock based compensation expense due to increased headcount to expand our sales force , and commissions on increased customer orders . the remainder of the increase was attributable to a $ 3.3 million increase in facilities and allocated overhead costs and a $ 0.6 million increase in marketing related expenses . the increase in general and administrative expenses was primarily related to an increase of $ 5.0 million in salaries and benefits and stock based compensation expense due to increased headcount to support the overall growth of our business and an increase of $ 1.6 million of other expenses predominately relating to it . financial income ( expenses ) , net replace_table_token_14_th financial income ( expense ) , net for the year ended december 31 , 2017 was primarily comprised of foreign currency gains compared to foreign currency losses for the year ended december 31 , 2016. income taxes year ended december 31 , 2017 2016 % change ( in thousands ) income taxes $ ( 2,459 ) $ ( 1,131 ) ( 117.4 ) % income taxes for the years ended december 31 , 2017 and 2016 were comprised primarily of foreign income taxes and state taxes . 36 comparison of years ended december 31 , 2016 and 2015 revenues replace_table_token_15_th replace_table_token_16_th total revenue growth was achieved due to increased demand for our products and services from existing and new customers , mostly in the domestic market , as well as in international markets . the increase in license revenues was driven by sales to 1,098 new customers in 2016 compared to 1,065 new customers in 2015 , sales to existing customers and sales of new products . as of december 31 , 2016 and 2015 , we had approximately 5,350 and approximately 4,350 customers , respectively . almost all of our license revenues was attributable to sales of perpetual licenses . the increase in maintenance and services revenues was primarily due to an increase in the sale of maintenance agreements resulting from the growth of our installed customer base . in each of 2016 and 2015 , our maintenance renewal rate was over 90 % . of the license and first year maintenance and services revenues recognized in the year ended december 31 , 2016 , 58 % was attributable to revenues from new customers , and 42 % was attributable to revenues from existing customers . of the license and first year maintenance and services revenues recognized in the year ended december 31 , 2015 , 63 % was attributable to revenues from new customers , and 37 % was attributable to revenues from existing customers . as of december 31 , 2016 and 2015 , 48 % and 45 % of our customers , respectively , had purchased two or more product families . cost of revenues and gross margin year ended december 31 , 2016 2015 % change ( in thousands ) cost of revenues $ 15,843 $ 12,019 31.8 % replace_table_token_17_th the increase in cost of revenues was primarily related to an increase of $ 3.7 million in salaries and benefits and stock based compensation expense due to increased headcount for support . 37 operating costs and expenses replace_table_token_18_th replace_table_token_19_th the increase in research and development expenses was primarily related to an increase of $ 4.7 million in salaries and stock based compensation expense resulting from increased headcount as part of our focus on enhancing and developing our existing and new products . the increase in sales and marketing expenses was primarily related to a $ 19.6 million increase in salaries and benefits and stock based compensation expense due to increased headcount to expand our sales force , and commissions on increased customer orders . the remainder of the increase was attributable to a $ 1.3 million increase in marketing related expenses . the increase in general and administrative expenses was primarily related to an increase of $ 3.3 million in salaries and benefits and stock based compensation expense due to increased headcount to support the overall growth of our business and an increase of $ 0.4 million of other expenses predominately relating to it . financial expenses , net replace_table_token_20_th for the years ended december 31 , 2016 and 2015 , financial expenses , net were primarily comprised of foreign exchange losses . income taxes replace_table_token_21_th income taxes for the years ended december 31 , 2016 and 2015 were comprised primarily of foreign income taxes and state taxes . 38 quarterly results of operations the following table sets forth our unaudited quarterly consolidated statement of operations data for each of the eight quarters ended december 31 , 2017. the data presented below has been prepared on the same basis as the audited consolidated financial statements included elsewhere in this annual report and , in the opinion of management , reflects all adjustments , consisting only of normal recurring adjustments , necessary for a fair presentation of this data .

liquidity and capital resources the following table shows our cash flows from operating activities , investing activities and financing activities for the stated periods : replace_table_token_26_th on december 31 , 2017 , our cash and cash equivalents and short-term investments of $ 136.6 million were held for working capital purposes and were invested primarily in short-term investments . we intend to increase our investment in capital expenditures in 2018 to support the growth in our business and operations . we believe that our existing cash and cash equivalents , short-term investments and cash flow from operations will be sufficient to fund our operations and capital expenditures for at least the next 12 months . our future capital requirements will depend on many factors , including our rate of revenue growth , the expansion of our sales and marketing activities , the timing and extent of spending to support product development efforts and expansion into new geographic locations , the timing of introductions of new software products and enhancements to existing software products , the continuing market acceptance of our software offerings and our use of cash to pay for acquisitions , if any . 41 operating activities net cash provided by operating activities is driven by sales of our products less costs and expenses , primarily payroll and related expenses , and adjusted for certain non-cash items , mainly depreciation and stock-based compensation , and changes in operating assets and liabilities . changes in operating assets and liabilities are driven mainly by collection of accounts receivable from the sales of our software products and deferred revenues which represents unearned amounts billed to our channel partners , related to these sales . for 2017 , cash inflows from our operating activities were $ 16.4 million , compared to cash inflows of $ 7.3 million for the prior year . our $ 13.7 million net loss included non-cash charges of $ 23.1 million driven primarily by increased headcount of our sales force and r & d personnel .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. in 2013 , we introduced datalert to monitor and alert on sensitive data and file activity . in 2014 , we introduced datanswers , a secure enterprise search solution for enterprise data that delivers highly relevant and secure search results to enterprise employees , greatly improving their productivity . in 2015 , we enhanced our datadvantage , dataprivilege and data classification engine offerings ; with datadvantage support for the following microsoft office 365 data stores : exchange online , sharepoint online , onedrive and active directory hosted in azure ; with dataprivilege for sharepoint ; and with data classification engine for unix , sharepoint online and onedrive . in 2016 , we enhanced our datadvantage offerings with additional office 365 support ; datanswers support for sharepoint online and onedrive ; and introduced a new web ui for datalert for comprehensive security management and threat detection . in that year we also added additional user behavior analytics driven threat models to datalert to significantly enhance our detection of insider threats , including potential disgruntled employees , rogue administrators , hijacked accounts and malware , such as ransomware . we also established a behavioral research laboratory where a dedicated team of security experts and data scientists from varonis continually research the latest threats and emerging security vulnerabilities and introduce new behavior-based threat models to datalert . in 2017 , we introduced the automation engine to allow customers to automatically repair and maintain file systems so that organizations are less vulnerable to attacks and security breaches , more compliant and consistently meeting a least privilege model . we enhanced datalert with datalert analytics rewind to allow customers to analyze past user and data activity to identify security breaches that may have occurred in the past and pre-emptively tune out false positives . we have continued to update our web ui for datalert and added new threat models to detect suspicious mailbox , exchange and exchange online behaviors , password resets , unusual activity from personal devices and more . we introduced a new security dashboard in datalert , along with enhanced behavioral analytics , geolocation and more to make it easier than ever to perform security investigations and forensics . in 2017 , we also released gdpr patterns , part of the data classification engine family , to help enterprises identify data that falls under the gdpr and expanded our offerings that can help enterprises meet compliance and regulation requirements . finally , in early 2018 , we introduced varonis edge to extend our proactive security approach to the perimeter enabling customers to spot signs of attack at the perimeter with telemetry from dns , vpn and web proxies . at the core of our technology is our ability to intelligently extract and analyze metadata from an enterprise 's vast , distributed data stores . the broad applicability of our technology has resulted in our customers deploying our platform for numerous use cases for security , it , operations and business personnel . we currently have six product families , and , as of december 31 , 2017 , approximately 52 % of our customers had purchased products in two or more families , one of which was datadvantage for all of these customers . we believe our existing customer base serves as a strong source of incremental revenues given our broad platform of products , their growing volumes and complexity of enterprise data and associated security concerns . our maintenance renewal rate for each of the years ended december 31 , 2017 , 2016 and 2015 was over 90 % . our key strategies to maintain our renewal rate include focusing on the quality and reliability of our customer service and support to ensure our customers receive value from our products , providing consistent software upgrades and having sufficient dedicated renewal sales personnel . 29 we sell substantially all of our products and services to channel partners , including distributors and resellers , which sell to end-user customers , which we refer to in this report as our customers . we believe that our sales model , which combines the leverage of a channel sales model with our highly trained and professional sales force , has and will continue to play a major role in our ability to grow and to successfully deliver our unique value proposition for enterprise data . while our products serve customers of all sizes , in all industries and all geographies , the marketing focus and majority of our sales focus is on targeting organizations with 1,000 users or more who can make larger purchases with us over time and have a greater potential lifetime value . as of december 31 , 2017 , we had approximately 6,250 customers , spanning leading firms in the financial services , healthcare , public , industrial , insurance , energy and utilities , consumer and retail , education , media and entertainment and technology sectors . we believe our customer count is a key indicator of our market penetration and the value that our products bring to our customer base . we also believe our existing customers represent significant future revenue opportunities for us . we will continue our focus on targeting organizations with 1,000 users or more who can make larger purchases with us over time . the average spending per customer for each of the years ended december 31 , 2017 , 2016 and 2015 was approximately $ 83,000 , $ 65,000 and $ 59,000 , respectively . we believe there is a significant long term growth opportunity in both domestic and foreign markets , which could include any organization that uses file shares , intranets and email for collaboration , regardless of region . story_separator_special_tag cost of revenues and gross margin year ended december 31 , 2017 2016 % change ( in thousands ) cost of revenues $ 20,873 $ 15,843 31.7 % replace_table_token_11_th the increase in cost of revenues was primarily related to an increase of $ 3.7 million in salaries and benefits and stock based compensation expense due to increased headcount for support personnel to support our greater revenues and high renewal rate and a $ 0.9 million increase in facilities and allocated overhead costs . 35 operating costs and expenses replace_table_token_12_th replace_table_token_13_th the increase in research and development expenses was primarily related to an increase of $ 8.7 million in salaries and stock based compensation expense resulting from increased headcount as part of our focus on enhancing and developing our existing and new products . the remainder of the increase was attributable to a $ 1.6 million increase in facilities and allocated overhead costs . the increase in sales and marketing expenses was primarily related to a $ 23.4 million increase in salaries and benefits and stock based compensation expense due to increased headcount to expand our sales force , and commissions on increased customer orders . the remainder of the increase was attributable to a $ 3.3 million increase in facilities and allocated overhead costs and a $ 0.6 million increase in marketing related expenses . the increase in general and administrative expenses was primarily related to an increase of $ 5.0 million in salaries and benefits and stock based compensation expense due to increased headcount to support the overall growth of our business and an increase of $ 1.6 million of other expenses predominately relating to it . financial income ( expenses ) , net replace_table_token_14_th financial income ( expense ) , net for the year ended december 31 , 2017 was primarily comprised of foreign currency gains compared to foreign currency losses for the year ended december 31 , 2016. income taxes year ended december 31 , 2017 2016 % change ( in thousands ) income taxes $ ( 2,459 ) $ ( 1,131 ) ( 117.4 ) % income taxes for the years ended december 31 , 2017 and 2016 were comprised primarily of foreign income taxes and state taxes . 36 comparison of years ended december 31 , 2016 and 2015 revenues replace_table_token_15_th replace_table_token_16_th total revenue growth was achieved due to increased demand for our products and services from existing and new customers , mostly in the domestic market , as well as in international markets . the increase in license revenues was driven by sales to 1,098 new customers in 2016 compared to 1,065 new customers in 2015 , sales to existing customers and sales of new products . as of december 31 , 2016 and 2015 , we had approximately 5,350 and approximately 4,350 customers , respectively . almost all of our license revenues was attributable to sales of perpetual licenses . the increase in maintenance and services revenues was primarily due to an increase in the sale of maintenance agreements resulting from the growth of our installed customer base . in each of 2016 and 2015 , our maintenance renewal rate was over 90 % . of the license and first year maintenance and services revenues recognized in the year ended december 31 , 2016 , 58 % was attributable to revenues from new customers , and 42 % was attributable to revenues from existing customers . of the license and first year maintenance and services revenues recognized in the year ended december 31 , 2015 , 63 % was attributable to revenues from new customers , and 37 % was attributable to revenues from existing customers . as of december 31 , 2016 and 2015 , 48 % and 45 % of our customers , respectively , had purchased two or more product families . cost of revenues and gross margin year ended december 31 , 2016 2015 % change ( in thousands ) cost of revenues $ 15,843 $ 12,019 31.8 % replace_table_token_17_th the increase in cost of revenues was primarily related to an increase of $ 3.7 million in salaries and benefits and stock based compensation expense due to increased headcount for support . 37 operating costs and expenses replace_table_token_18_th replace_table_token_19_th the increase in research and development expenses was primarily related to an increase of $ 4.7 million in salaries and stock based compensation expense resulting from increased headcount as part of our focus on enhancing and developing our existing and new products . the increase in sales and marketing expenses was primarily related to a $ 19.6 million increase in salaries and benefits and stock based compensation expense due to increased headcount to expand our sales force , and commissions on increased customer orders . the remainder of the increase was attributable to a $ 1.3 million increase in marketing related expenses . the increase in general and administrative expenses was primarily related to an increase of $ 3.3 million in salaries and benefits and stock based compensation expense due to increased headcount to support the overall growth of our business and an increase of $ 0.4 million of other expenses predominately relating to it . financial expenses , net replace_table_token_20_th for the years ended december 31 , 2016 and 2015 , financial expenses , net were primarily comprised of foreign exchange losses . income taxes replace_table_token_21_th income taxes for the years ended december 31 , 2016 and 2015 were comprised primarily of foreign income taxes and state taxes . 38 quarterly results of operations the following table sets forth our unaudited quarterly consolidated statement of operations data for each of the eight quarters ended december 31 , 2017. the data presented below has been prepared on the same basis as the audited consolidated financial statements included elsewhere in this annual report and , in the opinion of management , reflects all adjustments , consisting only of normal recurring adjustments , necessary for a fair presentation of this data . Narrative : liquidity and capital resources the following table shows our cash flows from operating activities , investing activities and financing activities for the stated periods : replace_table_token_26_th on december 31 , 2017 , our cash and cash equivalents and short-term investments of $ 136.6 million were held for working capital purposes and were invested primarily in short-term investments . we intend to increase our investment in capital expenditures in 2018 to support the growth in our business and operations . we believe that our existing cash and cash equivalents , short-term investments and cash flow from operations will be sufficient to fund our operations and capital expenditures for at least the next 12 months . our future capital requirements will depend on many factors , including our rate of revenue growth , the expansion of our sales and marketing activities , the timing and extent of spending to support product development efforts and expansion into new geographic locations , the timing of introductions of new software products and enhancements to existing software products , the continuing market acceptance of our software offerings and our use of cash to pay for acquisitions , if any . 41 operating activities net cash provided by operating activities is driven by sales of our products less costs and expenses , primarily payroll and related expenses , and adjusted for certain non-cash items , mainly depreciation and stock-based compensation , and changes in operating assets and liabilities . changes in operating assets and liabilities are driven mainly by collection of accounts receivable from the sales of our software products and deferred revenues which represents unearned amounts billed to our channel partners , related to these sales . for 2017 , cash inflows from our operating activities were $ 16.4 million , compared to cash inflows of $ 7.3 million for the prior year . our $ 13.7 million net loss included non-cash charges of $ 23.1 million driven primarily by increased headcount of our sales force and r & d personnel .

we will refer to adjusted ebitda throughout the remainder of management 's discussion and analysis of financial condition and results of operations . the table in “ selected financial data ” reconciles net income and income from operations to adjusted ebitda and should be referenced when we discuss adjusted ebitda . 49 summary financial results year ended december 31 , 2017 for the year ended december 31 , 2017 , our net operating revenues increased 3.7 % to $ 4,443.6 million , compared to $ 4,286.0 million for the year ended december 31 , 2016 . income from operations increased 18.7 % to $ 355.9 million for the year ended december 31 , 2017 , compared to $ 299.8 million for the year ended december 31 , 2016 . our adjusted ebitda increased $ 72.2 million , or 15.5 % , to $ 538.0 million for the year ended december 31 , 2017 , compared to $ 465.8 million for the year ended december 31 , 2016 . our adjusted ebitda margin improved to 12.1 % for the year ended december 31 , 2017 , compared to 10.9 % for the year ended december 31 , 2016 . the following table provides a reconciliation of our segment performance measures to our consolidated operating results for the year ended december 31 , 2017 . replace_table_token_11_th _ n/m — not meaningful . the following table provides the change in segment performance measures for the year ended december 31 , 2017 , compared to the year ended december 31 , 2016 . replace_table_token_12_th _ n/m—not meaningful . long term acute care segment . we operated 100 ltchs at december 31 , 2017 , compared to 103 ltchs at december 31 , 2016 . while our bed counts , admissions , and patient days decreased during the year ended december 31 , 2017 due to a decline in the number of hospitals we operated , our revenue per patient day and occupancy rate improved . since fully transitioning to operating under the new medicare patient criteria regulations , our ltchs have experienced improvements in income from operations and adjusted ebitda as a result of increases in net revenue per patient day and lower relative operating expenses . our long term acute care segment contributed to increases in consolidated income from operations of $ 26.2 million and adjusted ebitda of $ 28.1 million for the year ended december 31 , 2017 , compared to the year ended december 31 , 2016 . our adjusted ebitda margin improved to 14.4 % for the year ended december 31 , 2017 , compared to 12.6 % for the year ended december 31 , 2016 . 50 inpatient rehabilitation segment . we operated 24 irfs at december 31 , 2017 , compared to 20 irfs at december 31 , 2016 . our admissions , patient days , net revenue per patient day , and occupancy rate increased during the year ended december 31 , 2017 . these increases are principally due to several of our new inpatient rehabilitation facilities which commenced operations during 2016 and 2017. our inpatient rehabilitation segment contributed to increases in our consolidated net operating revenues of $ 127.5 million , income from operations of $ 25.7 million , and adjusted ebitda of $ 33.1 million for the year ended december 31 , 2017 , compared to the year ended december 31 , 2016 . our adjusted ebitda margin improved to 14.3 % for the year ended december 31 , 2017 , compared to 11.3 % for the year ended december 31 , 2016 . outpatient rehabilitation segment . we operated 1,616 clinics at december 31 , 2017 , compared to 1,611 clinics at december 31 , 2016 . we acquired physiotherapy on march 4 , 2016 , and sold our contract therapy business on march 31 , 2016 , which affects our year-to-year comparisons as of the date for each of these events . our visits and net revenue per visit increased during the year ended december 31 , 2017 , resulting in increases of $ 25.5 million in our consolidated net operating revenues compared to the year ended december 31 , 2016 . our relative operating expenses also increased for the year ended december 31 , 2017 compared to the year ended december 31 , 2016 , resulting in nominal increases in income from operations and adjusted ebitda during the year ended december 31 , 2017 . our adjusted ebitda margin was 13.0 % for both the years ended december 31 , 2017 and december 31 , 2016 . concentra segment . we operated 312 centers at december 31 , 2017 , compared to 300 centers at december 31 , 2016 . visits in our centers increased during the year ended december 31 , 2017 , which contributed to increases in our consolidated net operating revenues of $ 33.4 million , and our relative operating expenses also improved . this resulted in increases to our consolidated income from operations of $ 10.3 million and adjusted ebitda of $ 14.6 million for the year ended december 31 , 2017 , compared to the year ended december 31 , 2016. our adjusted ebitda margin improved to 15.2 % for the year ended december 31 , 2017 , compared to 14.3 % for the year ended december 31 , 2016 . our consolidated net income increased $ 95.4 million , or 76.1 % , to $ 220.6 million for the year ended december 31 , 2017 , compared to $ 125.3 million for the year ended december 31 , 2016 . the increase in our net income is principally due to an increase in income from operations for the year ended december 31 , 2017 , compared to the year ended december 31 , 2016 and the recognition of an income tax benefit for the year ended december 31 , 2017 . story_separator_special_tag the standard federal rate was set at $ 42,476 , an increase from the standard federal rate applicable during fiscal year 2016 of $ 41,763. the update to the standard federal rate for fiscal year 2017 included a market basket increase of 2.8 % , less a productivity adjustment of 0.3 % , and less a reduction of 0.75 % mandated by the aca . the fixed‑loss amount for high cost outlier cases paid under ltch‑pps was set at $ 21,943 , an increase from the fixed‑loss amount in the 2016 fiscal year of $ 16,423. the fixed‑loss amount for high cost outlier cases paid under the site‑neutral payment rate was set at $ 23,573 , an increase from the fixed‑loss amount in the 2016 fiscal year of $ 22,538. fiscal year 2018 . on august 14 , 2017 , cms published the final rule updating policies and payment rates for the ltch-pps for fiscal year 2018 ( affecting discharges and cost reporting periods beginning on or after october 1 , 2017 through september 30 , 2018 ) . certain errors in the final rule were corrected in a final rule published october 4 , 2017. the standard federal rate was set at $ 41,415 , a decrease from the standard federal rate applicable during fiscal year 2017 of $ 42,476. the update to the standard federal rate for fiscal year 2018 included a market basket increase of 2.7 % , less a productivity adjustment of 0.6 % , and less a reduction of 0.75 % mandated by the aca . the update to the standard federal rate for fiscal year 2018 is impacted further by the medicare access and chip reauthorization act of 2015 , which limits the update for fiscal year 2018 to 1.0 % . the fixed-loss amount for high cost outlier cases paid under ltch-pps was set at $ 27,381 , an increase from the fixed-loss amount in the 2017 fiscal year of $ 21,943. the fixed-loss amount for high cost outlier cases paid under the site-neutral payment rate was set at $ 26,537 , an increase from the fixed-loss amount in the 2017 fiscal year of $ 23,573 . 56 patient criteria the bba of 2013 , enacted december 26 , 2013 , establishes a dual‑rate ltch-pps for medicare patients discharged from an ltch . specifically , for medicare patients discharged in cost reporting periods beginning on or after october 1 , 2015 , ltchs will be reimbursed at the ltch-pps standard federal payment rate only if , immediately preceding the patient 's ltch admission , the patient was discharged from a “ subsection ( d ) hospital ” ( generally , a short‑term acute care hospital paid under ipps ) and either the patient 's stay included at least three days in an intensive care unit ( icu ) or coronary care unit ( ccu ) at the subsection ( d ) hospital , or the patient was assigned to an ms-ltc-drg for cases receiving at least 96 hours of ventilator services in the ltch . in addition , to be paid at the ltch-pps standard federal payment rate , the patient 's discharge from the ltch may not include a principal diagnosis relating to psychiatric or rehabilitation services . for any medicare patient who does not meet these criteria , the ltch will be paid a lower “ site neutral ” payment rate , which will be the lower of : ( i ) the ipps comparable per diem payment rate capped at the ms-drg payment rate plus any outlier payments ; or ( ii ) 100 percent of the estimated costs for services . the site neutral payment rate for those patients not paid at the ltch-pps standard federal payment rate is subject to a transition period . during the transition period ( applicable to hospital cost reporting periods beginning on or after october 1 , 2015 through september 30 , 2019 ) , a blended rate will be paid for medicare patients not meeting the new criteria that is equal to 50 % of the site neutral payment rate amount and 50 % of the standard federal payment rate amount . for discharges in cost reporting periods beginning on or after october 1 , 2019 , only the site neutral payment rate will apply for medicare patients not meeting the new criteria . for hospital cost reporting periods beginning on or after october 1 , 2017 through september 30 , 2026 , the ipps comparable per diem payment amount ( including any applicable outlier payment ) used to determine the site neutral payment rate will be reduced by 4.6 % after any annual payment rate update . in addition , for cost reporting periods beginning on or after october 1 , 2019 , qualifying discharges from an ltch will continue to be paid at the ltch-pps standard federal payment rate , unless the number of discharges for which payment is made under the site‑neutral payment rate is greater than 50 % of the total number of discharges from the ltch for that period . if the number of discharges for which payment is made under the site‑neutral payment rate is greater than 50 % , then beginning in the next cost reporting period all discharges from the ltch will be reimbursed at the site‑neutral payment rate . the bba of 2013 requires cms to establish a process for an ltch subject to only the site‑neutral payment rate to be reinstated for payment under the dual-rate ltch‑pps . payment adjustments , including the interrupted stay policy and the 25 percent rule ( discussed below ) , apply to ltch discharges regardless of whether the case is paid at the standard federal payment rate or the site‑neutral payment rate . however , short stay outlier payment adjustments do not apply to cases paid at the site‑neutral payment rate . cms calculates the annual recalibration of the ms-ltc-drg relative payment weighting factors using only

loss on early retirement of debt on march 6 , 2017 , we refinanced select 's 2011 senior secured credit facility which resulted in losses on early retirement of debt of $ 19.7 million during the year ended december 31 , 2017 . on march 4 , 2016 , we refinanced a portion of our term loans under select 's 2011 senior secured credit facility which resulted in a loss on early retirement of debt of $ 0.8 million . on september 26 , 2016 , concentra prepaid the second lien term loan under the concentra credit facilities , resulting in a loss on early retirement of debt of approximately $ 10.9 million . equity in earnings of unconsolidated subsidiaries for the year ended december 31 , 2017 , we had equity in earnings of unconsolidated subsidiaries of $ 21.1 million , compared to $ 19.9 million for the year ended december 31 , 2016 . the increase in our equity in earnings of unconsolidated subsidiaries resulted principally from the improved performance of rehabilitation businesses in which we own a minority interest . non-operating gain we recognized a non-operating gain of $ 42.7 million for the year ended december 31 , 2016 , principally due to the sale of our contract therapy businesses for $ 65.0 million , which resulted in a non-operating gain of $ 33.9 million . interest expense interest expense was $ 154.7 million for the year ended december 31 , 2017 , compared to $ 170.1 million for the year ended december 31 , 2016 . the decrease in interest expense was principally the result of decreases in our interest rates associated with the refinancing of select 's 2011 senior secured credit facility during the quarter ended march 31 , 2017 and the concentra credit facilities during the quarter ended september 30 , 2016. income taxes we recorded an income tax benefit of $ 18.2 million for the year ended december 31 , 2017 . we recorded income tax expense of $ 55.5 million for the year ended december 31 , 2016 , which represented an effective tax rate of 30.7 % .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we will refer to adjusted ebitda throughout the remainder of management 's discussion and analysis of financial condition and results of operations . the table in “ selected financial data ” reconciles net income and income from operations to adjusted ebitda and should be referenced when we discuss adjusted ebitda . 49 summary financial results year ended december 31 , 2017 for the year ended december 31 , 2017 , our net operating revenues increased 3.7 % to $ 4,443.6 million , compared to $ 4,286.0 million for the year ended december 31 , 2016 . income from operations increased 18.7 % to $ 355.9 million for the year ended december 31 , 2017 , compared to $ 299.8 million for the year ended december 31 , 2016 . our adjusted ebitda increased $ 72.2 million , or 15.5 % , to $ 538.0 million for the year ended december 31 , 2017 , compared to $ 465.8 million for the year ended december 31 , 2016 . our adjusted ebitda margin improved to 12.1 % for the year ended december 31 , 2017 , compared to 10.9 % for the year ended december 31 , 2016 . the following table provides a reconciliation of our segment performance measures to our consolidated operating results for the year ended december 31 , 2017 . replace_table_token_11_th _ n/m — not meaningful . the following table provides the change in segment performance measures for the year ended december 31 , 2017 , compared to the year ended december 31 , 2016 . replace_table_token_12_th _ n/m—not meaningful . long term acute care segment . we operated 100 ltchs at december 31 , 2017 , compared to 103 ltchs at december 31 , 2016 . while our bed counts , admissions , and patient days decreased during the year ended december 31 , 2017 due to a decline in the number of hospitals we operated , our revenue per patient day and occupancy rate improved . since fully transitioning to operating under the new medicare patient criteria regulations , our ltchs have experienced improvements in income from operations and adjusted ebitda as a result of increases in net revenue per patient day and lower relative operating expenses . our long term acute care segment contributed to increases in consolidated income from operations of $ 26.2 million and adjusted ebitda of $ 28.1 million for the year ended december 31 , 2017 , compared to the year ended december 31 , 2016 . our adjusted ebitda margin improved to 14.4 % for the year ended december 31 , 2017 , compared to 12.6 % for the year ended december 31 , 2016 . 50 inpatient rehabilitation segment . we operated 24 irfs at december 31 , 2017 , compared to 20 irfs at december 31 , 2016 . our admissions , patient days , net revenue per patient day , and occupancy rate increased during the year ended december 31 , 2017 . these increases are principally due to several of our new inpatient rehabilitation facilities which commenced operations during 2016 and 2017. our inpatient rehabilitation segment contributed to increases in our consolidated net operating revenues of $ 127.5 million , income from operations of $ 25.7 million , and adjusted ebitda of $ 33.1 million for the year ended december 31 , 2017 , compared to the year ended december 31 , 2016 . our adjusted ebitda margin improved to 14.3 % for the year ended december 31 , 2017 , compared to 11.3 % for the year ended december 31 , 2016 . outpatient rehabilitation segment . we operated 1,616 clinics at december 31 , 2017 , compared to 1,611 clinics at december 31 , 2016 . we acquired physiotherapy on march 4 , 2016 , and sold our contract therapy business on march 31 , 2016 , which affects our year-to-year comparisons as of the date for each of these events . our visits and net revenue per visit increased during the year ended december 31 , 2017 , resulting in increases of $ 25.5 million in our consolidated net operating revenues compared to the year ended december 31 , 2016 . our relative operating expenses also increased for the year ended december 31 , 2017 compared to the year ended december 31 , 2016 , resulting in nominal increases in income from operations and adjusted ebitda during the year ended december 31 , 2017 . our adjusted ebitda margin was 13.0 % for both the years ended december 31 , 2017 and december 31 , 2016 . concentra segment . we operated 312 centers at december 31 , 2017 , compared to 300 centers at december 31 , 2016 . visits in our centers increased during the year ended december 31 , 2017 , which contributed to increases in our consolidated net operating revenues of $ 33.4 million , and our relative operating expenses also improved . this resulted in increases to our consolidated income from operations of $ 10.3 million and adjusted ebitda of $ 14.6 million for the year ended december 31 , 2017 , compared to the year ended december 31 , 2016. our adjusted ebitda margin improved to 15.2 % for the year ended december 31 , 2017 , compared to 14.3 % for the year ended december 31 , 2016 . our consolidated net income increased $ 95.4 million , or 76.1 % , to $ 220.6 million for the year ended december 31 , 2017 , compared to $ 125.3 million for the year ended december 31 , 2016 . the increase in our net income is principally due to an increase in income from operations for the year ended december 31 , 2017 , compared to the year ended december 31 , 2016 and the recognition of an income tax benefit for the year ended december 31 , 2017 . story_separator_special_tag the standard federal rate was set at $ 42,476 , an increase from the standard federal rate applicable during fiscal year 2016 of $ 41,763. the update to the standard federal rate for fiscal year 2017 included a market basket increase of 2.8 % , less a productivity adjustment of 0.3 % , and less a reduction of 0.75 % mandated by the aca . the fixed‑loss amount for high cost outlier cases paid under ltch‑pps was set at $ 21,943 , an increase from the fixed‑loss amount in the 2016 fiscal year of $ 16,423. the fixed‑loss amount for high cost outlier cases paid under the site‑neutral payment rate was set at $ 23,573 , an increase from the fixed‑loss amount in the 2016 fiscal year of $ 22,538. fiscal year 2018 . on august 14 , 2017 , cms published the final rule updating policies and payment rates for the ltch-pps for fiscal year 2018 ( affecting discharges and cost reporting periods beginning on or after october 1 , 2017 through september 30 , 2018 ) . certain errors in the final rule were corrected in a final rule published october 4 , 2017. the standard federal rate was set at $ 41,415 , a decrease from the standard federal rate applicable during fiscal year 2017 of $ 42,476. the update to the standard federal rate for fiscal year 2018 included a market basket increase of 2.7 % , less a productivity adjustment of 0.6 % , and less a reduction of 0.75 % mandated by the aca . the update to the standard federal rate for fiscal year 2018 is impacted further by the medicare access and chip reauthorization act of 2015 , which limits the update for fiscal year 2018 to 1.0 % . the fixed-loss amount for high cost outlier cases paid under ltch-pps was set at $ 27,381 , an increase from the fixed-loss amount in the 2017 fiscal year of $ 21,943. the fixed-loss amount for high cost outlier cases paid under the site-neutral payment rate was set at $ 26,537 , an increase from the fixed-loss amount in the 2017 fiscal year of $ 23,573 . 56 patient criteria the bba of 2013 , enacted december 26 , 2013 , establishes a dual‑rate ltch-pps for medicare patients discharged from an ltch . specifically , for medicare patients discharged in cost reporting periods beginning on or after october 1 , 2015 , ltchs will be reimbursed at the ltch-pps standard federal payment rate only if , immediately preceding the patient 's ltch admission , the patient was discharged from a “ subsection ( d ) hospital ” ( generally , a short‑term acute care hospital paid under ipps ) and either the patient 's stay included at least three days in an intensive care unit ( icu ) or coronary care unit ( ccu ) at the subsection ( d ) hospital , or the patient was assigned to an ms-ltc-drg for cases receiving at least 96 hours of ventilator services in the ltch . in addition , to be paid at the ltch-pps standard federal payment rate , the patient 's discharge from the ltch may not include a principal diagnosis relating to psychiatric or rehabilitation services . for any medicare patient who does not meet these criteria , the ltch will be paid a lower “ site neutral ” payment rate , which will be the lower of : ( i ) the ipps comparable per diem payment rate capped at the ms-drg payment rate plus any outlier payments ; or ( ii ) 100 percent of the estimated costs for services . the site neutral payment rate for those patients not paid at the ltch-pps standard federal payment rate is subject to a transition period . during the transition period ( applicable to hospital cost reporting periods beginning on or after october 1 , 2015 through september 30 , 2019 ) , a blended rate will be paid for medicare patients not meeting the new criteria that is equal to 50 % of the site neutral payment rate amount and 50 % of the standard federal payment rate amount . for discharges in cost reporting periods beginning on or after october 1 , 2019 , only the site neutral payment rate will apply for medicare patients not meeting the new criteria . for hospital cost reporting periods beginning on or after october 1 , 2017 through september 30 , 2026 , the ipps comparable per diem payment amount ( including any applicable outlier payment ) used to determine the site neutral payment rate will be reduced by 4.6 % after any annual payment rate update . in addition , for cost reporting periods beginning on or after october 1 , 2019 , qualifying discharges from an ltch will continue to be paid at the ltch-pps standard federal payment rate , unless the number of discharges for which payment is made under the site‑neutral payment rate is greater than 50 % of the total number of discharges from the ltch for that period . if the number of discharges for which payment is made under the site‑neutral payment rate is greater than 50 % , then beginning in the next cost reporting period all discharges from the ltch will be reimbursed at the site‑neutral payment rate . the bba of 2013 requires cms to establish a process for an ltch subject to only the site‑neutral payment rate to be reinstated for payment under the dual-rate ltch‑pps . payment adjustments , including the interrupted stay policy and the 25 percent rule ( discussed below ) , apply to ltch discharges regardless of whether the case is paid at the standard federal payment rate or the site‑neutral payment rate . however , short stay outlier payment adjustments do not apply to cases paid at the site‑neutral payment rate . cms calculates the annual recalibration of the ms-ltc-drg relative payment weighting factors using only Narrative : loss on early retirement of debt on march 6 , 2017 , we refinanced select 's 2011 senior secured credit facility which resulted in losses on early retirement of debt of $ 19.7 million during the year ended december 31 , 2017 . on march 4 , 2016 , we refinanced a portion of our term loans under select 's 2011 senior secured credit facility which resulted in a loss on early retirement of debt of $ 0.8 million . on september 26 , 2016 , concentra prepaid the second lien term loan under the concentra credit facilities , resulting in a loss on early retirement of debt of approximately $ 10.9 million . equity in earnings of unconsolidated subsidiaries for the year ended december 31 , 2017 , we had equity in earnings of unconsolidated subsidiaries of $ 21.1 million , compared to $ 19.9 million for the year ended december 31 , 2016 . the increase in our equity in earnings of unconsolidated subsidiaries resulted principally from the improved performance of rehabilitation businesses in which we own a minority interest . non-operating gain we recognized a non-operating gain of $ 42.7 million for the year ended december 31 , 2016 , principally due to the sale of our contract therapy businesses for $ 65.0 million , which resulted in a non-operating gain of $ 33.9 million . interest expense interest expense was $ 154.7 million for the year ended december 31 , 2017 , compared to $ 170.1 million for the year ended december 31 , 2016 . the decrease in interest expense was principally the result of decreases in our interest rates associated with the refinancing of select 's 2011 senior secured credit facility during the quarter ended march 31 , 2017 and the concentra credit facilities during the quarter ended september 30 , 2016. income taxes we recorded an income tax benefit of $ 18.2 million for the year ended december 31 , 2017 . we recorded income tax expense of $ 55.5 million for the year ended december 31 , 2016 , which represented an effective tax rate of 30.7 % .

we expect to continue to incur losses from operations for the near-term and these losses could be significant as we incur product development , contract consulting and other product development related expenses . we believe that our current working capital position will not be sufficient to meet our estimated cash needs for the remainder of 2012. these factors raise substantial doubt about the company 's ability to continue as a going concern . if the company does not obtain additional capital or financing , then the company would potentially be required to reduce the scope of its research and development and general and administrative expenses and may not be able to continue in business . the accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result in the possible inability of the company to continue as a going concern . the company is actively looking to obtain additional financing ; however , there can be no assurance that the company will be able to obtain sufficient additional financing on terms acceptable to the company , if at all , or that they will not have significantly dilutive effect on the company 's existing shareholders . we are closely monitoring our cash balances , cash needs and expense levels . the company 's ability to continue as a going concern depends on the success of management 's plans to bridge cash shortfalls in 2012 , which includes the following : ▪ aggressively pursuing additional capital raising activities in 2012 ; ▪ continuing to advance development of the company 's products , particularly appyscore ; ▪ continuing to advance the strategic process to monetize the company 's animal health business and related intellectual property ; ▪ continuing to explore prospective partnering or licensing opportunities with complementary opportunities and technologies ; and ▪ continuing to monitor and implement cost control initiatives to conserve cash . revenues year 2011 compared to year 2010 sales of the company 's antigen products for the year ended december 31 , 2011 totaled $ 219,000 , which is a $ 151,000 or 41 % decrease from the 2010 period . this decrease in sales is primarily attributable to the company 's strategic decision in 2010 to suspend antigen production and focus available scientific resources on the acute appendicitis project and single-chain animal product development . two customers accounted for $ 93,000 of the total 2011 sales and individually represented 28 % and 14 % of such sales . antigen sales in 2012 are expected to decline significantly from the 2011 totals . in april 2008 , the company entered into a long term exclusive license and commercialization agreement with novartis to develop and launch the company 's novel recombinant single-chain products for bovine species . the total payments received under this agreement were recorded as deferred revenue and was being recognized over future periods through 2020. in november 2011 , the company entered into a termination agreement with novartis animal health which terminated future revenue related to the license agreement . the company recognized $ 62,000 and $ 68,000 of such license payments in each of years ended december 31 , 2011 and 2010 , respectively . 26 cost of sales for the year ended december 31 , 2011 totaled $ 16,000 , which is a $ 342,000 or 95 % decrease as compared to the 2010 period . as a percentage of sales , 2011 gross profit was 93 % as compared to 3 % in 2010. the improvement in the gross profit percentage resulted from $ 153,000 in inventory write downs recorded in 2010 compared to $ 1,000 in write downs in 2011 , combined with no fixed production cost incurred in the 2011 period . year 2010 compared to year 2009 sales of the company 's antigen products for the year ended december 31 , 2010 totaled $ 370,000 , which is a $ 79,000 or 27 % increase from the 2009 period . four customers accounted for $ 215,000 of the total 2010 sales and individually represented 10 % , 11 % , 18 % and 19 % of such sales . this increase in sales is primarily attributable to the timing of customer orders as they purchased on-hand stock of inventory . in late 2009 , the company made a strategic decision to suspend antigen production and focus available scientific resources on the acute appendicitis project and single-chain animal product development . in april 2008 , the company entered into a long term exclusive license and commercialization agreement with novartis to develop and launch the company 's novel recombinant single-chain products for bovine species . the total payments received under this agreement were recorded as deferred revenue and was being recognized over future periods through 2020 , with $ 68,000 and $ 64,000 of such license fee recognized in each of years ended december 31 , 2010 and 2009 , respectively . in december 2009 , the company entered into a termination agreement for a prior distribution agreement covering a bovine diagnostic blood test . upon execution of the original agreement , the company received $ 200,000 , which had been recorded as deferred revenue . under the termination agreement a refund of 25 % ( $ 50,000 ) of the development payment previously received was paid and the remaining $ 150,000 , which was no longer subject to any conditions was recorded as license fee income in 2009. cost of sales for the year ended december 31 , 2010 totaled $ 358,000 , which is a $ 352,000 or 50 % decrease as compared to the 2009 period . story_separator_special_tag cash was used for additions to intangibles of $ 310,000 for costs incurred from patent filings and equipment additions totaling $ 192,000. net cash inflows from investing activities generated $ 4,533,000 during the year ended december 31 , 2009. marketable securities investments acquired totaled approximately $ 2.3 million and sales of marketable securities totaled approximately $ 7.4 million . cash totaling $ 596,000 was used in additions to intangibles of $ 352,000 for costs incurred from patent filings and equipment additions totaling $ 244,000 for additions and expansion of lab equipment and facilities . financing activities net cash inflows from financing activities generated $ 782,000 during the year ended december 31 , 2011. the company received net proceeds of $ 1,456,000 from the sale of common stock in a december 2011 registered direct offering and repaid $ 674,000 , in scheduled payments under its debt agreements . net cash inflows from financing activities generated $ 9,171,000 during the year ended december 31 , 2010. the company received net proceeds of $ 9,117,000 from the sale of common stock and $ 291,000 in proceeds from the exercise of stock options . the company repaid $ 236,000 , in scheduled payments under its debt agreements . net cash inflows from financing activities generated $ 8,378,000 during the year ended december 31 , 2009. the company received net proceeds of $ 8,260,000 from an offering of common stock and $ 469,000 in proceeds from the exercise of stock warrants and options . the company repaid $ 351,000 in scheduled payments under its debt agreements . critical accounting policies the preparation of financial statements in conformity with accounting principles generally accepted in the united states of america ( gaap ) requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes . future events and their effects can not be determined with absolute certainty . therefore , the determination of estimates requires the exercise of judgment . actual results inevitably will differ from those estimates , and such differences may be material to the financial statements . the most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with revenue recognition , impairment analysis of intangibles and stock-based compensation . the company 's financial position , results of operations and cash flows are impacted by the accounting policies the company has adopted . in order to get a full understanding of the company 's financial statements , one must have a clear understanding of the accounting policies employed . a summary of the company 's critical accounting policies follows : investments : the company invests excess cash from time to time in highly liquid debt and equity securities of highly rated entities which are classified as trading securities . such amounts are recorded at market and are classified as current , as the company does not intend to hold the investments beyond twelve months . such excess funds are invested under the company 's investment policy but an unexpected decline or loss could have an adverse and material effect on the carrying value , recoverability or investment returns of such investments . our board has approved an investment policy covering the investment parameters to be followed with the primary goals being the safety of principal amounts and maintaining liquidity of the fund . the policy provides for minimum investment rating requirements as well as limitations on investment duration and concentrations . 32 intangible assets : intangible assets primarily represent legal costs and filings associated with obtaining patents on the company 's new discoveries . the company amortizes these costs over the shorter of the legal life of the patent or its estimated economic life using the straight-line method . the company tests intangible assets with finite lives upon significant changes in the company 's business environment . the testing resulted in approximately $ 275,000 , $ 107,000 and $ 565,000 of impairment charges during the years ended december 31 , 2011 , 2010 and 2009 , respectively . long-lived assets : the company records property and equipment at cost . depreciation of the assets is recorded on the straight-line basis over the estimated useful lives of the assets . dispositions of property and equipment are recorded in the period of disposition and any resulting gains or losses are charged to income or expense when the disposal occurs . the company reviews for impairment whenever there is an indication of impairment . the required annual testing resulted in no impairment charges being recorded to date . revenue recognition : the company 's revenues are recognized when products are shipped or delivered to unaffiliated customers . the securities and exchange commission 's staff accounting bulletin ( sab ) no . 104 , provides guidance on the application of generally accepted accounting principles to select revenue recognition issues . the company has concluded that its revenue recognition policy is appropriate and in accordance with sab no . 104. revenue is recognized under development and distribution agreements only after the following criteria are met : ( i ) there exists adequate evidence of the transactions ; ( ii ) delivery of goods has occurred or services have been rendered ; and ( iii ) the price is not contingent on future activity and ( iv ) collectability is reasonably assured . stock-based compensation : asc 718 ( formerly - sfas no . 123 ( r ) ) , share-based payment , defines the fair-value-based method of accounting for stock-based employee compensation plans and transactions used by the company to account for its issuances of equity instruments to record compensation cost for stock-based employee compensation plans at fair value as well as to acquire goods or services from non-employees . transactions in which the company issues stock-based compensation to employees , directors and consultants and for goods or services received from non-employees are accounted for based on the fair value of the equity

liquidity and capital resources at december 31 , 2011 , we had working capital of $ 2,249,000 , which included cash , cash equivalents and short term investments of $ 3,971,000. we reported a net loss of $ 10,214,000 during the year ended december 31 , 2011 , which included $ 1,093,000 in net non-cash expenses including , stock-based compensation totaling $ 1,336,000 , depreciation and amortization totaling $ 491,000 , impairment and related charges totaling $ 275,000 , and a $ 939,000 non-cash gain related to the novartis termination agreement . currently , our primary focus is to continue the development activities on our acute appendicitis diagnostic test , including advancement of such test with the fda , and to advance the strategic process to monetize our animal health business and related intellectual property . we expect to continue to incur losses from operations for the near-term and these losses could be significant as we incur product development , contract consulting and other product development related expenses . we believe that our current working capital position will not be sufficient to meet our estimated cash needs for the remainder of 2012. these factors raise substantial doubt about the company 's ability to continue as a going concern . if the company does not obtain additional capital , then the company would potentially be required to reduce the scope of its research and development and general and administrative expenses and may not be able to continue in business . the company is actively looking to obtain additional financing ; however , there can be no assurance that the company will be able to obtain sufficient additional financing . we are closely monitoring our cash balances , cash needs and expense levels . the accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result in the possible inability of the company to continue as a going concern .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we expect to continue to incur losses from operations for the near-term and these losses could be significant as we incur product development , contract consulting and other product development related expenses . we believe that our current working capital position will not be sufficient to meet our estimated cash needs for the remainder of 2012. these factors raise substantial doubt about the company 's ability to continue as a going concern . if the company does not obtain additional capital or financing , then the company would potentially be required to reduce the scope of its research and development and general and administrative expenses and may not be able to continue in business . the accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result in the possible inability of the company to continue as a going concern . the company is actively looking to obtain additional financing ; however , there can be no assurance that the company will be able to obtain sufficient additional financing on terms acceptable to the company , if at all , or that they will not have significantly dilutive effect on the company 's existing shareholders . we are closely monitoring our cash balances , cash needs and expense levels . the company 's ability to continue as a going concern depends on the success of management 's plans to bridge cash shortfalls in 2012 , which includes the following : ▪ aggressively pursuing additional capital raising activities in 2012 ; ▪ continuing to advance development of the company 's products , particularly appyscore ; ▪ continuing to advance the strategic process to monetize the company 's animal health business and related intellectual property ; ▪ continuing to explore prospective partnering or licensing opportunities with complementary opportunities and technologies ; and ▪ continuing to monitor and implement cost control initiatives to conserve cash . revenues year 2011 compared to year 2010 sales of the company 's antigen products for the year ended december 31 , 2011 totaled $ 219,000 , which is a $ 151,000 or 41 % decrease from the 2010 period . this decrease in sales is primarily attributable to the company 's strategic decision in 2010 to suspend antigen production and focus available scientific resources on the acute appendicitis project and single-chain animal product development . two customers accounted for $ 93,000 of the total 2011 sales and individually represented 28 % and 14 % of such sales . antigen sales in 2012 are expected to decline significantly from the 2011 totals . in april 2008 , the company entered into a long term exclusive license and commercialization agreement with novartis to develop and launch the company 's novel recombinant single-chain products for bovine species . the total payments received under this agreement were recorded as deferred revenue and was being recognized over future periods through 2020. in november 2011 , the company entered into a termination agreement with novartis animal health which terminated future revenue related to the license agreement . the company recognized $ 62,000 and $ 68,000 of such license payments in each of years ended december 31 , 2011 and 2010 , respectively . 26 cost of sales for the year ended december 31 , 2011 totaled $ 16,000 , which is a $ 342,000 or 95 % decrease as compared to the 2010 period . as a percentage of sales , 2011 gross profit was 93 % as compared to 3 % in 2010. the improvement in the gross profit percentage resulted from $ 153,000 in inventory write downs recorded in 2010 compared to $ 1,000 in write downs in 2011 , combined with no fixed production cost incurred in the 2011 period . year 2010 compared to year 2009 sales of the company 's antigen products for the year ended december 31 , 2010 totaled $ 370,000 , which is a $ 79,000 or 27 % increase from the 2009 period . four customers accounted for $ 215,000 of the total 2010 sales and individually represented 10 % , 11 % , 18 % and 19 % of such sales . this increase in sales is primarily attributable to the timing of customer orders as they purchased on-hand stock of inventory . in late 2009 , the company made a strategic decision to suspend antigen production and focus available scientific resources on the acute appendicitis project and single-chain animal product development . in april 2008 , the company entered into a long term exclusive license and commercialization agreement with novartis to develop and launch the company 's novel recombinant single-chain products for bovine species . the total payments received under this agreement were recorded as deferred revenue and was being recognized over future periods through 2020 , with $ 68,000 and $ 64,000 of such license fee recognized in each of years ended december 31 , 2010 and 2009 , respectively . in december 2009 , the company entered into a termination agreement for a prior distribution agreement covering a bovine diagnostic blood test . upon execution of the original agreement , the company received $ 200,000 , which had been recorded as deferred revenue . under the termination agreement a refund of 25 % ( $ 50,000 ) of the development payment previously received was paid and the remaining $ 150,000 , which was no longer subject to any conditions was recorded as license fee income in 2009. cost of sales for the year ended december 31 , 2010 totaled $ 358,000 , which is a $ 352,000 or 50 % decrease as compared to the 2009 period . story_separator_special_tag cash was used for additions to intangibles of $ 310,000 for costs incurred from patent filings and equipment additions totaling $ 192,000. net cash inflows from investing activities generated $ 4,533,000 during the year ended december 31 , 2009. marketable securities investments acquired totaled approximately $ 2.3 million and sales of marketable securities totaled approximately $ 7.4 million . cash totaling $ 596,000 was used in additions to intangibles of $ 352,000 for costs incurred from patent filings and equipment additions totaling $ 244,000 for additions and expansion of lab equipment and facilities . financing activities net cash inflows from financing activities generated $ 782,000 during the year ended december 31 , 2011. the company received net proceeds of $ 1,456,000 from the sale of common stock in a december 2011 registered direct offering and repaid $ 674,000 , in scheduled payments under its debt agreements . net cash inflows from financing activities generated $ 9,171,000 during the year ended december 31 , 2010. the company received net proceeds of $ 9,117,000 from the sale of common stock and $ 291,000 in proceeds from the exercise of stock options . the company repaid $ 236,000 , in scheduled payments under its debt agreements . net cash inflows from financing activities generated $ 8,378,000 during the year ended december 31 , 2009. the company received net proceeds of $ 8,260,000 from an offering of common stock and $ 469,000 in proceeds from the exercise of stock warrants and options . the company repaid $ 351,000 in scheduled payments under its debt agreements . critical accounting policies the preparation of financial statements in conformity with accounting principles generally accepted in the united states of america ( gaap ) requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes . future events and their effects can not be determined with absolute certainty . therefore , the determination of estimates requires the exercise of judgment . actual results inevitably will differ from those estimates , and such differences may be material to the financial statements . the most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with revenue recognition , impairment analysis of intangibles and stock-based compensation . the company 's financial position , results of operations and cash flows are impacted by the accounting policies the company has adopted . in order to get a full understanding of the company 's financial statements , one must have a clear understanding of the accounting policies employed . a summary of the company 's critical accounting policies follows : investments : the company invests excess cash from time to time in highly liquid debt and equity securities of highly rated entities which are classified as trading securities . such amounts are recorded at market and are classified as current , as the company does not intend to hold the investments beyond twelve months . such excess funds are invested under the company 's investment policy but an unexpected decline or loss could have an adverse and material effect on the carrying value , recoverability or investment returns of such investments . our board has approved an investment policy covering the investment parameters to be followed with the primary goals being the safety of principal amounts and maintaining liquidity of the fund . the policy provides for minimum investment rating requirements as well as limitations on investment duration and concentrations . 32 intangible assets : intangible assets primarily represent legal costs and filings associated with obtaining patents on the company 's new discoveries . the company amortizes these costs over the shorter of the legal life of the patent or its estimated economic life using the straight-line method . the company tests intangible assets with finite lives upon significant changes in the company 's business environment . the testing resulted in approximately $ 275,000 , $ 107,000 and $ 565,000 of impairment charges during the years ended december 31 , 2011 , 2010 and 2009 , respectively . long-lived assets : the company records property and equipment at cost . depreciation of the assets is recorded on the straight-line basis over the estimated useful lives of the assets . dispositions of property and equipment are recorded in the period of disposition and any resulting gains or losses are charged to income or expense when the disposal occurs . the company reviews for impairment whenever there is an indication of impairment . the required annual testing resulted in no impairment charges being recorded to date . revenue recognition : the company 's revenues are recognized when products are shipped or delivered to unaffiliated customers . the securities and exchange commission 's staff accounting bulletin ( sab ) no . 104 , provides guidance on the application of generally accepted accounting principles to select revenue recognition issues . the company has concluded that its revenue recognition policy is appropriate and in accordance with sab no . 104. revenue is recognized under development and distribution agreements only after the following criteria are met : ( i ) there exists adequate evidence of the transactions ; ( ii ) delivery of goods has occurred or services have been rendered ; and ( iii ) the price is not contingent on future activity and ( iv ) collectability is reasonably assured . stock-based compensation : asc 718 ( formerly - sfas no . 123 ( r ) ) , share-based payment , defines the fair-value-based method of accounting for stock-based employee compensation plans and transactions used by the company to account for its issuances of equity instruments to record compensation cost for stock-based employee compensation plans at fair value as well as to acquire goods or services from non-employees . transactions in which the company issues stock-based compensation to employees , directors and consultants and for goods or services received from non-employees are accounted for based on the fair value of the equity Narrative : liquidity and capital resources at december 31 , 2011 , we had working capital of $ 2,249,000 , which included cash , cash equivalents and short term investments of $ 3,971,000. we reported a net loss of $ 10,214,000 during the year ended december 31 , 2011 , which included $ 1,093,000 in net non-cash expenses including , stock-based compensation totaling $ 1,336,000 , depreciation and amortization totaling $ 491,000 , impairment and related charges totaling $ 275,000 , and a $ 939,000 non-cash gain related to the novartis termination agreement . currently , our primary focus is to continue the development activities on our acute appendicitis diagnostic test , including advancement of such test with the fda , and to advance the strategic process to monetize our animal health business and related intellectual property . we expect to continue to incur losses from operations for the near-term and these losses could be significant as we incur product development , contract consulting and other product development related expenses . we believe that our current working capital position will not be sufficient to meet our estimated cash needs for the remainder of 2012. these factors raise substantial doubt about the company 's ability to continue as a going concern . if the company does not obtain additional capital , then the company would potentially be required to reduce the scope of its research and development and general and administrative expenses and may not be able to continue in business . the company is actively looking to obtain additional financing ; however , there can be no assurance that the company will be able to obtain sufficient additional financing . we are closely monitoring our cash balances , cash needs and expense levels . the accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result in the possible inability of the company to continue as a going concern .

our goal is to maintain our focus on disciplined underwriting and to continue to pursue profitable growth opportunities across market cycles ; however , we continue to be affected by the impacts of the most recent economic recession . the pace of recovery remains persistently slow and , although it appears to us that total employment and payroll have begun to improve , we do not believe the situation will significantly improve in the near-term . 29 the comparative components of net income are set forth in the following table . replace_table_token_18_th ( 1 ) we define net income before impact of the deferred gain as net income less : ( a ) amortization of deferred gain and ( b ) adjustments to lpt agreement ceded reserves . deferred gain reflects the unamortized gain from our lpt agreement . under gaap , this gain is deferred and is being amortized using the recovery method , whereby the amortization is determined by the proportion of actual reinsurance recoveries to total estimated recoveries , and the amortization is reflected in losses and lae . we periodically reevaluate the remaining direct reserves subject to the lpt agreement . our reevaluation results in corresponding adjustments , if needed , to reserves , ceded reserves , reinsurance recoverables and the deferred gain , with the net effect being an increase or decrease , as the case may be , to net income . net income before impact of the deferred gain is not a measurement of financial performance under gaap , but rather reflects the difference in accounting treatment between statutory and gaap , and should not be considered in isolation or as an alternative to net income before income taxes or net income or any other measure of performance derived in accordance with gaap . we present net income before impact of the deferred gain because we believe that it is an important supplemental measure of operating performance to be used by analysts , investors and other interested parties in evaluating us . the lpt agreement was a non-recurring transaction , under which the deferred gain does not result in ongoing cash benefits , and , consequently , we believe this presentation is useful in providing a meaningful understanding of our operating performance . in addition , we believe this non-gaap measure , as we have defined it , is helpful to our management in identifying trends in our performance because the excluded item has limited significance in our current and ongoing operations . in october 2010 , the financial accounting standards board ( fasb ) issued guidance that changes the definition of acquisition costs which may be capitalized beginning in 2012. we currently estimate that our underwriting and other operating expenses will be increased by approximately $ 7 million in 2012 as a result of the adoption of this new accounting guidance . additional information regarding this change is set forth under “ –new accounting standards . ” net premiums earned net premiums earned increased $ 41.6 million for the year ended december 31 , 2011 , compared to the prior year . this increase is primarily due to increasing policy count as we continue to execute our growth strategy . the change in the accrual for final audit premiums increased our net premiums earned by $ 14.9 million in 2011 , compared to 2010. changes in the accrual for final audit premium are driven by various factors , including general economic conditions such as unemployment and payroll trends . the decrease in net premiums earned for the year ended december 31 , 2010 , compared to the same period of 2009 , was due to the impacts of the recession , including high unemployment and fewer hours worked , declines in our policyholders ' payroll , lower net rates , and our application of disciplined pricing objectives and underwriting guidelines in a highly competitive market . 30 the following table shows the percentage change in our in-force premium , policy count , average policy size , and payroll exposure , upon which our premiums are based , and net rate . replace_table_token_19_th ( 1 ) net rate , defined as total premium in-force divided by total insured payroll exposure , is a function of a variety of factors , including rate changes , underwriting risk profiles and pricing , and changes in business mix related to economic and competitive pressures . over one-half of our business is generated in california , where our policy count increased 26.1 % during the year ended december 31 , 2011 . we set our own premium rates in california based upon actuarial analyses of current and anticipated loss trends with a goal of maintaining underwriting profitability . due to increasing loss costs , primarily medical cost inflation , we have increased our filed premium rates by a cumulative 33.3 % since february 1 , 2009. we expect that premiums in 2012 will continue to reflect : overall rate increases ; increasing policy count as we continue to execute our growth strategy ; increasing average policy size ; and lessened competitive pressures . as we have executed our growth strategy , we have increased our network of independent insurance agencies by approximately 43 % in 2011 and continued to deploy technology to make it easier for agents to do business with us . net investment income and realized gains ( losses ) on investments we invest our holding company assets , statutory surplus , and the funds supporting our insurance liabilities , including unearned premiums and unpaid losses and lae . we invest in fixed maturity securities , equity securities , short-term investments , and cash equivalents . net investment income includes interest and dividends earned on our invested assets and amortization of premiums and discounts on our fixed maturity securities , less bank service charges and custodial and portfolio management fees . we have established a high quality/short duration bias in our investment portfolio . story_separator_special_tag policyholder dividends fluctuate from time to time due to changes in premium levels on dividend policies and the eligibility of policyholders to receive dividend payments . interest expense we incur interest expenses on notes payable . we also had an interest rate swap agreement on our credit facility with wells fargo bank , national association ( wells fargo ) , which expired on september 30 , 2010. interest expense was $ 3.6 million , $ 5.7 million , and $ 7.4 million for the years ended december 31 , 2011 , 2010 , and 2009 , respectively . the decrease in interest expense from 2010 to 2011 was primarily due to the expiration of the interest rate swap that was in place in 2010. the decrease in interest expense from 2009 to 2010 was primarily due to a $ 50.0 million reduction in the principal balance on our credit facility with wells fargo in the fourth quarter of 2009 and the expiration of the interest rate swap in the third quarter of 2010. income tax expense income tax expense ( benefit ) was $ ( 2.1 ) million , $ 3.5 million , and $ 9.3 million for the years ended december 31 , 2011 , 2010 , and 2009 , respectively . the effective tax rates for the years ended december 31 , 2011 , 2010 , and 2009 were ( 4.6 ) % , 5.3 % , and 10.1 % , respectively . the decreased tax expense from 2009 through 2011 is primarily due to increases in tax exempt income as a percentage of pre-tax net income , which was 68.2 % , 50.6 % , and 36.8 % for the years ended december 31 , 2011 , 2010 , and 2009 , respectively . the increases in tax exempt income as a percentage of pre-tax net income for the year ended december 31 , 2011 , compared to the same period of 2010 , and for the year ended december 31 , 2010 , compared to the same period of 2009 , were primarily due to decreases in pre-tax income of $ 21.0 million and $ 26.0 million , respectively . 34 story_separator_special_tag including the deferred gain , as of december 31 , 2011 . operating subsidiaries operating cash and cash equivalents and short–term investments . the primary sources of cash for our insurance operating subsidiaries are funds generated from underwriting operations , investment income , and maturities and sales of investments . the primary uses of cash are payments of claims and operating expenses , purchases of investments , and payments of dividends to the parent holding company , which are subject to state insurance laws and regulations . our insurance subsidiaries had total cash and cash equivalents and fixed maturity securities of $ 305.1 million maturing within the next 24 months at december 31 , 2011 . we believe that our subsidiaries ' liquidity needs over the next 24 months will be met with cash from operations , investment income , and maturing investments . we purchase reinsurance to protect us against the costs of severe claims and catastrophic events . on july 1 , 2011 , we entered into a new reinsurance program that is effective through june 30 , 2012. the reinsurance program consists of one treaty covering excess of loss and catastrophic loss events in five layers of coverage . our reinsurance coverage is $ 195.0 million in excess of our $ 5.0 million retention on a per occurrence basis , subject to a $ 2.0 million annual aggregate deductible and certain exclusions . we believe 35 that our reinsurance program meets our needs and that we are sufficiently capitalized . our insurance subsidiaries are required by law to maintain a certain minimum level of surplus on a statutory basis . surplus is calculated by subtracting total liabilities from total admitted assets . the amount of capital in our insurance subsidiaries is maintained relative to standardized capital adequacy measures such as risk-based capital ( rbc ) , as established by the national association of insurance commissioners . the rbc standard was designed to provide a measure by which regulators can assess the adequacy of an insurance company 's capital and surplus relative to its operations . an insurance company must maintain capital and surplus of at least 200 % of rbc . each of our insurance subsidiaries had total adjusted capital in excess of the minimum rbc requirements that correspond to any level of regulatory action at december 31 , 2011 . various state regulations require us to keep securities or letters of credit on deposit with the states in which we do business . securities having a fair market value of $ 522.6 million and $ 558.6 million were on deposit at december 31 , 2011 and 2010 , respectively . these laws and regulations govern both the amount and type of fixed maturity security that is eligible for deposit . additionally , certain reinsurance contracts require us to hold funds in trust for the benefit of the ceding reinsurer to secure the outstanding liabilities we assumed . the fair value of securities held in trust for reinsurance was $ 40.3 million and $ 52.9 million at december 31 , 2011 and 2010 , respectively . cash flows we monitor cash flows at both the consolidated and subsidiary levels . we use trend and variance analyses to project future cash needs , making adjustments to our forecasts as appropriate . the table below shows our net cash flows . replace_table_token_22_th operating activities . major components of net cash provided by operating activities in 2011 included : net premiums received of $ 358.4 million ; investment income received of $ 90.8 million ; and amounts recovered from reinsurers of $ 46.1 million . these were partially offset by : claims payments of $ 316.4 million ; underwriting and other operating expenses paid of $ 86.1 million ; commissions paid of $ 36.3

liquidity and capital resources parent company operating cash and cash equivalents and short-term investments . we are a holding company and our ability to fund our operations is contingent upon our insurance subsidiaries and their ability to pay dividends up to the holding company . payment of dividends by our insurance subsidiaries is restricted by state insurance laws , including laws establishing minimum solvency and liquidity thresholds . we require cash to pay stockholder dividends , repurchase common stock , make interest and principal payments on our outstanding debt obligations , fund our operating expenses , and support our growth strategy . during 2011 , eicn and epic paid dividends of $ 51.9 million and $ 15.5 million , respectively , to employers group , inc. ( egi ) , their immediate holding company , which were subsequently paid from egi to ehi . based on reported capital , surplus , and dividends paid within the last 12 months , the maximum dividends that may be paid by eicn and epic in 2012 without prior approval by the respective state insurance regulator are $ 26.3 million and $ 13.6 million , respectively . as of december 31 , 2011 , the holding company had $ 188.4 million of cash and cash equivalents and fixed maturity securities maturing within the next 24 months . ten million dollars of our line of credit is payable on each of december 31 , 2012 and december 31 , 2013. we believe that the liquidity needs of the holding company over the next 24 months will be met with cash , maturing investments , and dividends from our insurance subsidiaries . share repurchases .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. our goal is to maintain our focus on disciplined underwriting and to continue to pursue profitable growth opportunities across market cycles ; however , we continue to be affected by the impacts of the most recent economic recession . the pace of recovery remains persistently slow and , although it appears to us that total employment and payroll have begun to improve , we do not believe the situation will significantly improve in the near-term . 29 the comparative components of net income are set forth in the following table . replace_table_token_18_th ( 1 ) we define net income before impact of the deferred gain as net income less : ( a ) amortization of deferred gain and ( b ) adjustments to lpt agreement ceded reserves . deferred gain reflects the unamortized gain from our lpt agreement . under gaap , this gain is deferred and is being amortized using the recovery method , whereby the amortization is determined by the proportion of actual reinsurance recoveries to total estimated recoveries , and the amortization is reflected in losses and lae . we periodically reevaluate the remaining direct reserves subject to the lpt agreement . our reevaluation results in corresponding adjustments , if needed , to reserves , ceded reserves , reinsurance recoverables and the deferred gain , with the net effect being an increase or decrease , as the case may be , to net income . net income before impact of the deferred gain is not a measurement of financial performance under gaap , but rather reflects the difference in accounting treatment between statutory and gaap , and should not be considered in isolation or as an alternative to net income before income taxes or net income or any other measure of performance derived in accordance with gaap . we present net income before impact of the deferred gain because we believe that it is an important supplemental measure of operating performance to be used by analysts , investors and other interested parties in evaluating us . the lpt agreement was a non-recurring transaction , under which the deferred gain does not result in ongoing cash benefits , and , consequently , we believe this presentation is useful in providing a meaningful understanding of our operating performance . in addition , we believe this non-gaap measure , as we have defined it , is helpful to our management in identifying trends in our performance because the excluded item has limited significance in our current and ongoing operations . in october 2010 , the financial accounting standards board ( fasb ) issued guidance that changes the definition of acquisition costs which may be capitalized beginning in 2012. we currently estimate that our underwriting and other operating expenses will be increased by approximately $ 7 million in 2012 as a result of the adoption of this new accounting guidance . additional information regarding this change is set forth under “ –new accounting standards . ” net premiums earned net premiums earned increased $ 41.6 million for the year ended december 31 , 2011 , compared to the prior year . this increase is primarily due to increasing policy count as we continue to execute our growth strategy . the change in the accrual for final audit premiums increased our net premiums earned by $ 14.9 million in 2011 , compared to 2010. changes in the accrual for final audit premium are driven by various factors , including general economic conditions such as unemployment and payroll trends . the decrease in net premiums earned for the year ended december 31 , 2010 , compared to the same period of 2009 , was due to the impacts of the recession , including high unemployment and fewer hours worked , declines in our policyholders ' payroll , lower net rates , and our application of disciplined pricing objectives and underwriting guidelines in a highly competitive market . 30 the following table shows the percentage change in our in-force premium , policy count , average policy size , and payroll exposure , upon which our premiums are based , and net rate . replace_table_token_19_th ( 1 ) net rate , defined as total premium in-force divided by total insured payroll exposure , is a function of a variety of factors , including rate changes , underwriting risk profiles and pricing , and changes in business mix related to economic and competitive pressures . over one-half of our business is generated in california , where our policy count increased 26.1 % during the year ended december 31 , 2011 . we set our own premium rates in california based upon actuarial analyses of current and anticipated loss trends with a goal of maintaining underwriting profitability . due to increasing loss costs , primarily medical cost inflation , we have increased our filed premium rates by a cumulative 33.3 % since february 1 , 2009. we expect that premiums in 2012 will continue to reflect : overall rate increases ; increasing policy count as we continue to execute our growth strategy ; increasing average policy size ; and lessened competitive pressures . as we have executed our growth strategy , we have increased our network of independent insurance agencies by approximately 43 % in 2011 and continued to deploy technology to make it easier for agents to do business with us . net investment income and realized gains ( losses ) on investments we invest our holding company assets , statutory surplus , and the funds supporting our insurance liabilities , including unearned premiums and unpaid losses and lae . we invest in fixed maturity securities , equity securities , short-term investments , and cash equivalents . net investment income includes interest and dividends earned on our invested assets and amortization of premiums and discounts on our fixed maturity securities , less bank service charges and custodial and portfolio management fees . we have established a high quality/short duration bias in our investment portfolio . story_separator_special_tag policyholder dividends fluctuate from time to time due to changes in premium levels on dividend policies and the eligibility of policyholders to receive dividend payments . interest expense we incur interest expenses on notes payable . we also had an interest rate swap agreement on our credit facility with wells fargo bank , national association ( wells fargo ) , which expired on september 30 , 2010. interest expense was $ 3.6 million , $ 5.7 million , and $ 7.4 million for the years ended december 31 , 2011 , 2010 , and 2009 , respectively . the decrease in interest expense from 2010 to 2011 was primarily due to the expiration of the interest rate swap that was in place in 2010. the decrease in interest expense from 2009 to 2010 was primarily due to a $ 50.0 million reduction in the principal balance on our credit facility with wells fargo in the fourth quarter of 2009 and the expiration of the interest rate swap in the third quarter of 2010. income tax expense income tax expense ( benefit ) was $ ( 2.1 ) million , $ 3.5 million , and $ 9.3 million for the years ended december 31 , 2011 , 2010 , and 2009 , respectively . the effective tax rates for the years ended december 31 , 2011 , 2010 , and 2009 were ( 4.6 ) % , 5.3 % , and 10.1 % , respectively . the decreased tax expense from 2009 through 2011 is primarily due to increases in tax exempt income as a percentage of pre-tax net income , which was 68.2 % , 50.6 % , and 36.8 % for the years ended december 31 , 2011 , 2010 , and 2009 , respectively . the increases in tax exempt income as a percentage of pre-tax net income for the year ended december 31 , 2011 , compared to the same period of 2010 , and for the year ended december 31 , 2010 , compared to the same period of 2009 , were primarily due to decreases in pre-tax income of $ 21.0 million and $ 26.0 million , respectively . 34 story_separator_special_tag including the deferred gain , as of december 31 , 2011 . operating subsidiaries operating cash and cash equivalents and short–term investments . the primary sources of cash for our insurance operating subsidiaries are funds generated from underwriting operations , investment income , and maturities and sales of investments . the primary uses of cash are payments of claims and operating expenses , purchases of investments , and payments of dividends to the parent holding company , which are subject to state insurance laws and regulations . our insurance subsidiaries had total cash and cash equivalents and fixed maturity securities of $ 305.1 million maturing within the next 24 months at december 31 , 2011 . we believe that our subsidiaries ' liquidity needs over the next 24 months will be met with cash from operations , investment income , and maturing investments . we purchase reinsurance to protect us against the costs of severe claims and catastrophic events . on july 1 , 2011 , we entered into a new reinsurance program that is effective through june 30 , 2012. the reinsurance program consists of one treaty covering excess of loss and catastrophic loss events in five layers of coverage . our reinsurance coverage is $ 195.0 million in excess of our $ 5.0 million retention on a per occurrence basis , subject to a $ 2.0 million annual aggregate deductible and certain exclusions . we believe 35 that our reinsurance program meets our needs and that we are sufficiently capitalized . our insurance subsidiaries are required by law to maintain a certain minimum level of surplus on a statutory basis . surplus is calculated by subtracting total liabilities from total admitted assets . the amount of capital in our insurance subsidiaries is maintained relative to standardized capital adequacy measures such as risk-based capital ( rbc ) , as established by the national association of insurance commissioners . the rbc standard was designed to provide a measure by which regulators can assess the adequacy of an insurance company 's capital and surplus relative to its operations . an insurance company must maintain capital and surplus of at least 200 % of rbc . each of our insurance subsidiaries had total adjusted capital in excess of the minimum rbc requirements that correspond to any level of regulatory action at december 31 , 2011 . various state regulations require us to keep securities or letters of credit on deposit with the states in which we do business . securities having a fair market value of $ 522.6 million and $ 558.6 million were on deposit at december 31 , 2011 and 2010 , respectively . these laws and regulations govern both the amount and type of fixed maturity security that is eligible for deposit . additionally , certain reinsurance contracts require us to hold funds in trust for the benefit of the ceding reinsurer to secure the outstanding liabilities we assumed . the fair value of securities held in trust for reinsurance was $ 40.3 million and $ 52.9 million at december 31 , 2011 and 2010 , respectively . cash flows we monitor cash flows at both the consolidated and subsidiary levels . we use trend and variance analyses to project future cash needs , making adjustments to our forecasts as appropriate . the table below shows our net cash flows . replace_table_token_22_th operating activities . major components of net cash provided by operating activities in 2011 included : net premiums received of $ 358.4 million ; investment income received of $ 90.8 million ; and amounts recovered from reinsurers of $ 46.1 million . these were partially offset by : claims payments of $ 316.4 million ; underwriting and other operating expenses paid of $ 86.1 million ; commissions paid of $ 36.3 Narrative : liquidity and capital resources parent company operating cash and cash equivalents and short-term investments . we are a holding company and our ability to fund our operations is contingent upon our insurance subsidiaries and their ability to pay dividends up to the holding company . payment of dividends by our insurance subsidiaries is restricted by state insurance laws , including laws establishing minimum solvency and liquidity thresholds . we require cash to pay stockholder dividends , repurchase common stock , make interest and principal payments on our outstanding debt obligations , fund our operating expenses , and support our growth strategy . during 2011 , eicn and epic paid dividends of $ 51.9 million and $ 15.5 million , respectively , to employers group , inc. ( egi ) , their immediate holding company , which were subsequently paid from egi to ehi . based on reported capital , surplus , and dividends paid within the last 12 months , the maximum dividends that may be paid by eicn and epic in 2012 without prior approval by the respective state insurance regulator are $ 26.3 million and $ 13.6 million , respectively . as of december 31 , 2011 , the holding company had $ 188.4 million of cash and cash equivalents and fixed maturity securities maturing within the next 24 months . ten million dollars of our line of credit is payable on each of december 31 , 2012 and december 31 , 2013. we believe that the liquidity needs of the holding company over the next 24 months will be met with cash , maturing investments , and dividends from our insurance subsidiaries . share repurchases .

we currently offer the same solutions internationally as we do in the united states , and we intend to continue expanding our international operations . we do not take title to any of the merchandise processed through our platform and we generally do not collect payments on behalf of our customers . we do not hold any inventory of merchandise and we are not involved in the physical logistics of shipping merchandise to buyers , which is handled by our customers . we plan to grow our revenue by adding new customers , helping our existing customers increase their gmv processed through our platform by taking full advantage of its functionality and selling additional module subscriptions to existing customers to allow them to sell merchandise through new channels . we face a variety of challenges and risks , which we will need to address and manage as we pursue our growth strategy . in particular , we will need to continue to innovate in the face of a rapidly changing e-commerce landscape if we are to remain competitive , and we will need to effectively manage our growth , especially related to our international expansion . in addition , as consumer preferences potentially shift from smaller retailers , we need to continue to add large retailers and branded manufacturers as profitable customers . these customers generally pay a lower percentage of gmv as fees based on the high 33 volume of their gmv processed through the platform . we continue to focus our efforts on increasing value for our customers to support higher rates . although e-commerce continues to expand as retailers and manufacturers continue to increase their online sales , it is also becoming more complex and fragmented due to the hundreds of channels available to retailers and manufacturers and the rapid pace of change and innovation across those channels . in order to gain consumers ' attention in a more crowded and competitive online marketplace , many retailers and an increasing number of manufacturers sell their merchandise through multiple online channels , each with its own rules , requirements and specifications . in particular , third-party marketplaces are an increasingly important driver of growth for a number of large online retailers , and as a result we need to continue to support multiple channels in a variety of geographies in order to support our targeted revenue growth . as of december 31 , 2014 , we supported 41 marketplaces , up from 35 at december 31 , 2013 . we believe the growth in e-commerce globally presents an opportunity for retailers and manufacturers to engage in international sales . however , country-specific marketplaces are often the market share leaders in their regions , as is the case for alibaba in asia and mercadolibre in much of latin america . in order to help our customers capitalize on this potential market opportunity , and to address our customers ' needs with respect to cross-border trade , during 2013 and 2014 , we have expanded our presence in the asia-pacific and latin america regions through the opening of two offices in china , an office in brazil and an additional office in australia . doing business overseas involves substantial challenges , including management attention and resources needed to adapt to multiple languages , cultures , laws and commercial infrastructure , as further described in this report under the caption “ risks related to our international operations . ” our senior management continuously focuses on these and other trends and challenges , and we believe that our culture of innovation and our history of growth and expansion will contribute to the success of our business . we can not , however , assure you that we will be successful in addressing and managing the many challenges and risks that we face . key financial and operating performance metrics we regularly monitor a number of financial and operating metrics in order to measure our performance and project our future performance . these metrics aid us in developing and refining our growth strategies and making strategic decisions . we discuss revenue , gross margin and the components of net loss in the section below entitled “ — components of operating results . ” in addition , we utilize other key metrics as described below . core revenue our reported operating results include revenue attributable to the products from two small legacy acquisitions , both of which occurred prior to 2008 and focused on solutions for lower-volume ebay sellers . we do not consider these products to be a core part of our strategic focus going forward . each of these acquisitions contributed a relatively large number of customers with revenue per customer substantially lower than is characteristic of the rest of our business . we exclude the revenue attributable to these non-core , legacy products in calculating a measure we refer to as core revenue . we anticipate that the revenue associated with these non-core , legacy products will continue to decline over time both in absolute terms and as a percentage of our total revenue . number of core customers the number of customers subscribing to our solutions is a primary determinant of our core revenue . we refer to the customers who subscribe to any of our solutions , other than the non-core , legacy products described above , as our core customers . the number of core customers was 2,841 , 2,429 and 1,928 as of december 31 , 2014 , 2013 and 2012 , respectively . average revenue per core customer the average revenue generated by our core customers is the other primary determinant of our core revenue . story_separator_special_tag our revenue from international operations of $ 14.2 million , or 20.8 % of total revenue , for the year ended december 31 , 2013 increased from $ 11.4 million , or 21.4 % of total revenue , for the year ended december 31 , 2012. the increase in revenue from our international operations was primarily attributable to an increase in the number of international customers . during 2013 , we expanded our presence in the asia-pacific and latin america regions . core revenue replace_table_token_13_th 41 the growth in core revenue was primarily attributable to a 26.0 % increase in the number of core customers using our platform at december 31 , 2013 as compared to december 31 , 2012. the increase in core customers accounted for 62.3 % of the increase in core revenue during the year ended december 31 , 2013. in addition , we experienced a 9.3 % increase in the average revenue per core customer during the year ended december 31 , 2013 as compared to the year ended december 31 , 2012 , which accounted for 37.7 % of the increase in core revenue during the period . the increase in the average revenue per core customer was primarily attributable to an overall increase in transaction volume and , to a lesser extent , to modest overall increases in the percentage fees assessed on the fixed and variable portions of gmv under our contractual arrangements with some of our customers during the year . because we generally enter into annual contracts with our customers , we may renegotiate either or both of the fixed and variable components of the pricing structure of a customer 's contract each year . in addition , the increase in average revenue per core customer was due in part to a general shift in our customer base toward a greater proportion of larger enterprise customers , all of which are core customers . our enterprise customers generally commit to a higher specified minimum amount of gmv per month , which results in a higher proportion of fixed subscription fees . cost of revenue replace_table_token_14_th the increase in cost of revenue was primarily attributable to a $ 2.2 million increase in salaries and personnel-related costs , as we increased the number of employees providing services to our expanding customer base and supporting our platform infrastructure from 110 at december 31 , 2012 to 144 at december 31 , 2013. in addition , we experienced a $ 0.7 million increase in depreciation expense associated with equipment for our data centers and a $ 0.3 million increase in credit card vendor transaction fees . as a percentage of revenue , cost of revenue declined from 27.5 % for the year ended december 31 , 2012 to 26.6 % for the year ended december 31 , 2013. operating expenses sales and marketing replace_table_token_15_th the increase in sales and marketing expense was primarily attributable to a $ 9.6 million increase in salaries and personnel-related costs , as we increased the number of sales and marketing and customer support personnel to continue driving revenue growth . the number of full-time sales and marketing employees increased from 189 at december 31 , 2012 to 301 at december 31 , 2013. in addition , we experienced a $ 3.1 million increase in our marketing and advertising expenses , promotional event programs and travel costs . the increase in sales and marketing expense as a percentage of revenue for the year ended december 31 , 2013 reflects the implementation of our strategy of hiring new sales and marketing professionals and expanding our marketing activities in order to continue to grow our business . research and development replace_table_token_16_th the increase in research and development expense was primarily attributable to a $ 2.1 million increase in salaries and personnel-related costs associated with an increase in research and development personnel . the number of full-time research 42 and development employees increased from 70 at december 31 , 2012 to 93 at december 31 , 2013. in addition , we experienced a $ 0.2 million increase in contractor and consulting expenses primarily related to translation services for our products as we expanded our international operations . general and administrative replace_table_token_17_th the increase in general and administrative expense was primarily attributable to a $ 2.9 million increase in salaries and personnel-related costs associated with an increase in general and administrative personnel to support our growing business and fulfill our obligations as a newly public company . the number of full-time general and administrative employees increased from 36 at december 31 , 2012 to 56 at december 31 , 2013. we also experienced a $ 1.5 million increase in professional fees related to legal , consulting and audit and tax services and a $ 0.8 million increase in insurance and tax costs . in addition , we incurred a $ 0.6 million increase in other general corporate costs necessary to support the overall growth in our business . loss on extinguishment of debt during the year ended december 31 , 2013 , we recognized a loss on extinguishment of debt of $ 3.1 million as a result of the prepayment of our subordinated loan , representing the difference between the par value and payoff amount of the subordinated loan , increased by the write-off of unamortized debt issuance costs and accelerated amortization of the remaining debt discount . seasonality our revenue fluctuates as a result of seasonal variations in our business , principally due to the peak consumer demand and related increased volume of our customers ' gmv during the year-end holiday season . as a result , we have historically had higher revenue in our fourth quarter than other quarters in a given year due to increased gmv processed through our platform , resulting in higher variable subscription fees . liquidity and capital resources sources of liquidity prior to our ipo in may 2013 , we funded our operations primarily through cash from operating

cash flows operating activities our cash flows from operating activities are largely driven by the amount of cash we invest in personnel and infrastructure to support the anticipated growth of our business , the increase in the amount of customers using our platform and the amount and timing of customer payments . our cash flows from operations are affected by the seasonality of our business as noted above . as a result , we experience variations in the timing of invoicing and the receipt of payments from our customers . for the year ended december 31 , 2014 , our cash used in operating activities of $ 21.5 million consisted of a net loss of $ 34.5 million and $ 2.7 million of cash used in changes in working capital , partially offset by $ 15.7 million in adjustments for non-cash items . adjustments for non-cash items primarily consisted of non-cash stock compensation expense of $ 8.0 million , depreciation and amortization expense of $ 6.3 million and bad debt expense of $ 1.3 million . the decrease in cash resulting from changes in working capital primarily consisted of a decrease in accounts payable and accrued expenses of $ 2.7 million , primarily driven by timing of payments to our vendors . further , we experienced an increase in accounts receivable of $ 1.4 million as a result of increased revenue and customer growth and an increase in prepaid expenses and other assets of $ 1.1 million due to prepayments of general corporate expenses that we did not incur in 2013. these decreases in cash were partially 44 offset by an increase in operating cash flow due to an increase in deferred revenue of $ 2.4 million as a result of an increased number of customers prepaying for subscription services .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we currently offer the same solutions internationally as we do in the united states , and we intend to continue expanding our international operations . we do not take title to any of the merchandise processed through our platform and we generally do not collect payments on behalf of our customers . we do not hold any inventory of merchandise and we are not involved in the physical logistics of shipping merchandise to buyers , which is handled by our customers . we plan to grow our revenue by adding new customers , helping our existing customers increase their gmv processed through our platform by taking full advantage of its functionality and selling additional module subscriptions to existing customers to allow them to sell merchandise through new channels . we face a variety of challenges and risks , which we will need to address and manage as we pursue our growth strategy . in particular , we will need to continue to innovate in the face of a rapidly changing e-commerce landscape if we are to remain competitive , and we will need to effectively manage our growth , especially related to our international expansion . in addition , as consumer preferences potentially shift from smaller retailers , we need to continue to add large retailers and branded manufacturers as profitable customers . these customers generally pay a lower percentage of gmv as fees based on the high 33 volume of their gmv processed through the platform . we continue to focus our efforts on increasing value for our customers to support higher rates . although e-commerce continues to expand as retailers and manufacturers continue to increase their online sales , it is also becoming more complex and fragmented due to the hundreds of channels available to retailers and manufacturers and the rapid pace of change and innovation across those channels . in order to gain consumers ' attention in a more crowded and competitive online marketplace , many retailers and an increasing number of manufacturers sell their merchandise through multiple online channels , each with its own rules , requirements and specifications . in particular , third-party marketplaces are an increasingly important driver of growth for a number of large online retailers , and as a result we need to continue to support multiple channels in a variety of geographies in order to support our targeted revenue growth . as of december 31 , 2014 , we supported 41 marketplaces , up from 35 at december 31 , 2013 . we believe the growth in e-commerce globally presents an opportunity for retailers and manufacturers to engage in international sales . however , country-specific marketplaces are often the market share leaders in their regions , as is the case for alibaba in asia and mercadolibre in much of latin america . in order to help our customers capitalize on this potential market opportunity , and to address our customers ' needs with respect to cross-border trade , during 2013 and 2014 , we have expanded our presence in the asia-pacific and latin america regions through the opening of two offices in china , an office in brazil and an additional office in australia . doing business overseas involves substantial challenges , including management attention and resources needed to adapt to multiple languages , cultures , laws and commercial infrastructure , as further described in this report under the caption “ risks related to our international operations . ” our senior management continuously focuses on these and other trends and challenges , and we believe that our culture of innovation and our history of growth and expansion will contribute to the success of our business . we can not , however , assure you that we will be successful in addressing and managing the many challenges and risks that we face . key financial and operating performance metrics we regularly monitor a number of financial and operating metrics in order to measure our performance and project our future performance . these metrics aid us in developing and refining our growth strategies and making strategic decisions . we discuss revenue , gross margin and the components of net loss in the section below entitled “ — components of operating results . ” in addition , we utilize other key metrics as described below . core revenue our reported operating results include revenue attributable to the products from two small legacy acquisitions , both of which occurred prior to 2008 and focused on solutions for lower-volume ebay sellers . we do not consider these products to be a core part of our strategic focus going forward . each of these acquisitions contributed a relatively large number of customers with revenue per customer substantially lower than is characteristic of the rest of our business . we exclude the revenue attributable to these non-core , legacy products in calculating a measure we refer to as core revenue . we anticipate that the revenue associated with these non-core , legacy products will continue to decline over time both in absolute terms and as a percentage of our total revenue . number of core customers the number of customers subscribing to our solutions is a primary determinant of our core revenue . we refer to the customers who subscribe to any of our solutions , other than the non-core , legacy products described above , as our core customers . the number of core customers was 2,841 , 2,429 and 1,928 as of december 31 , 2014 , 2013 and 2012 , respectively . average revenue per core customer the average revenue generated by our core customers is the other primary determinant of our core revenue . story_separator_special_tag our revenue from international operations of $ 14.2 million , or 20.8 % of total revenue , for the year ended december 31 , 2013 increased from $ 11.4 million , or 21.4 % of total revenue , for the year ended december 31 , 2012. the increase in revenue from our international operations was primarily attributable to an increase in the number of international customers . during 2013 , we expanded our presence in the asia-pacific and latin america regions . core revenue replace_table_token_13_th 41 the growth in core revenue was primarily attributable to a 26.0 % increase in the number of core customers using our platform at december 31 , 2013 as compared to december 31 , 2012. the increase in core customers accounted for 62.3 % of the increase in core revenue during the year ended december 31 , 2013. in addition , we experienced a 9.3 % increase in the average revenue per core customer during the year ended december 31 , 2013 as compared to the year ended december 31 , 2012 , which accounted for 37.7 % of the increase in core revenue during the period . the increase in the average revenue per core customer was primarily attributable to an overall increase in transaction volume and , to a lesser extent , to modest overall increases in the percentage fees assessed on the fixed and variable portions of gmv under our contractual arrangements with some of our customers during the year . because we generally enter into annual contracts with our customers , we may renegotiate either or both of the fixed and variable components of the pricing structure of a customer 's contract each year . in addition , the increase in average revenue per core customer was due in part to a general shift in our customer base toward a greater proportion of larger enterprise customers , all of which are core customers . our enterprise customers generally commit to a higher specified minimum amount of gmv per month , which results in a higher proportion of fixed subscription fees . cost of revenue replace_table_token_14_th the increase in cost of revenue was primarily attributable to a $ 2.2 million increase in salaries and personnel-related costs , as we increased the number of employees providing services to our expanding customer base and supporting our platform infrastructure from 110 at december 31 , 2012 to 144 at december 31 , 2013. in addition , we experienced a $ 0.7 million increase in depreciation expense associated with equipment for our data centers and a $ 0.3 million increase in credit card vendor transaction fees . as a percentage of revenue , cost of revenue declined from 27.5 % for the year ended december 31 , 2012 to 26.6 % for the year ended december 31 , 2013. operating expenses sales and marketing replace_table_token_15_th the increase in sales and marketing expense was primarily attributable to a $ 9.6 million increase in salaries and personnel-related costs , as we increased the number of sales and marketing and customer support personnel to continue driving revenue growth . the number of full-time sales and marketing employees increased from 189 at december 31 , 2012 to 301 at december 31 , 2013. in addition , we experienced a $ 3.1 million increase in our marketing and advertising expenses , promotional event programs and travel costs . the increase in sales and marketing expense as a percentage of revenue for the year ended december 31 , 2013 reflects the implementation of our strategy of hiring new sales and marketing professionals and expanding our marketing activities in order to continue to grow our business . research and development replace_table_token_16_th the increase in research and development expense was primarily attributable to a $ 2.1 million increase in salaries and personnel-related costs associated with an increase in research and development personnel . the number of full-time research 42 and development employees increased from 70 at december 31 , 2012 to 93 at december 31 , 2013. in addition , we experienced a $ 0.2 million increase in contractor and consulting expenses primarily related to translation services for our products as we expanded our international operations . general and administrative replace_table_token_17_th the increase in general and administrative expense was primarily attributable to a $ 2.9 million increase in salaries and personnel-related costs associated with an increase in general and administrative personnel to support our growing business and fulfill our obligations as a newly public company . the number of full-time general and administrative employees increased from 36 at december 31 , 2012 to 56 at december 31 , 2013. we also experienced a $ 1.5 million increase in professional fees related to legal , consulting and audit and tax services and a $ 0.8 million increase in insurance and tax costs . in addition , we incurred a $ 0.6 million increase in other general corporate costs necessary to support the overall growth in our business . loss on extinguishment of debt during the year ended december 31 , 2013 , we recognized a loss on extinguishment of debt of $ 3.1 million as a result of the prepayment of our subordinated loan , representing the difference between the par value and payoff amount of the subordinated loan , increased by the write-off of unamortized debt issuance costs and accelerated amortization of the remaining debt discount . seasonality our revenue fluctuates as a result of seasonal variations in our business , principally due to the peak consumer demand and related increased volume of our customers ' gmv during the year-end holiday season . as a result , we have historically had higher revenue in our fourth quarter than other quarters in a given year due to increased gmv processed through our platform , resulting in higher variable subscription fees . liquidity and capital resources sources of liquidity prior to our ipo in may 2013 , we funded our operations primarily through cash from operating Narrative : cash flows operating activities our cash flows from operating activities are largely driven by the amount of cash we invest in personnel and infrastructure to support the anticipated growth of our business , the increase in the amount of customers using our platform and the amount and timing of customer payments . our cash flows from operations are affected by the seasonality of our business as noted above . as a result , we experience variations in the timing of invoicing and the receipt of payments from our customers . for the year ended december 31 , 2014 , our cash used in operating activities of $ 21.5 million consisted of a net loss of $ 34.5 million and $ 2.7 million of cash used in changes in working capital , partially offset by $ 15.7 million in adjustments for non-cash items . adjustments for non-cash items primarily consisted of non-cash stock compensation expense of $ 8.0 million , depreciation and amortization expense of $ 6.3 million and bad debt expense of $ 1.3 million . the decrease in cash resulting from changes in working capital primarily consisted of a decrease in accounts payable and accrued expenses of $ 2.7 million , primarily driven by timing of payments to our vendors . further , we experienced an increase in accounts receivable of $ 1.4 million as a result of increased revenue and customer growth and an increase in prepaid expenses and other assets of $ 1.1 million due to prepayments of general corporate expenses that we did not incur in 2013. these decreases in cash were partially 44 offset by an increase in operating cash flow due to an increase in deferred revenue of $ 2.4 million as a result of an increased number of customers prepaying for subscription services .

such fluctuations are due to a variety of factors , including , among others : ( i ) the level of staff utilization created by our ability to effectively manage our workforce , ( ii ) adjustments to the timing of work on specific customer contracts , ( iii ) the experience mix of personnel assigned to projects , and ( iv ) the service mix and pricing of our contracts . in addition , as global projects wind down or as delays and cancellations occur , staffing levels in certain countries or functional areas can become misaligned with the current business volume . new business awards and backlog we add new business awards to backlog when we enter into a contract or when we receive a written commitment from the customer selecting us as its service provider , provided that ( i ) the customer has received appropriate internal funding approval , ( ii ) the project or projects are not contingent upon completion of another trial or event , ( iii ) the project or projects are expected to commence within the next 12 months and ( iv ) the customer has entered or intends to enter into a comprehensive contract as soon as practicable . contracts generally have terms ranging from several months to several years . we recognize revenue on these awards as services are performed , provided we have entered into a contractual commitment with the customer . our new business awards , net of cancellations of prior awards , for the years ended december 31 , 2016 , 2015 and 2014 were $ 1.22 billion , $ 1.18 billion and $ 0.95 billion , respectively , representing a 4.0 % increase from 2015 to 2016 and a 23.9 % increase from 2014 to 2015. net new business awards were higher for the year ended december 31 , 2016 , due to a lower cancellation rate across our therapeutic service offerings . the growth in net awards was principally in our cns therapeutic area . new business awards have varied and will continue to vary significantly from quarter to quarter . the dollar amount of our backlog consists of anticipated future net service revenue from business awards that either ( 1 ) have not started but are anticipated to begin in the future , or ( 2 ) are in process and have not been completed . our backlog also reflects any cancellation or adjustment activity related to these contracts . the average duration of our contracts will fluctuate from period to period in the future based on the contracts comprising our backlog at any given time . the majority of our contracts can be terminated by our customers with 30 days ' notice . the dollar amount of our backlog is adjusted each quarter for foreign currency fluctuations . during the year ended december 31 , 2016 , fluctuations in foreign currency exchange rates resulted in an unfavorable impact on our december 31 , 2016 backlog in the amount of approximately $ 19.2 million , primarily due to the weakening of the euro and british pound against the u.s. dollar . our backlog as of december 31 , 2016 , 2015 and 2014 was $ 1.99 billion , $ 1.81 billion and $ 1.59 billion , respectively , representing a 9.6 % increase from 2015 to 2016 and a 14.1 % increase from 2014 to 2015 . included within backlog at december 31 , 2016 is approximately $ 0.87 billion that we expect to translate into revenue in 2017 , with the remainder expected to generate revenue beyond 2017 . we believe that backlog and net new business awards might not be consistent indicators of future revenue because they have been , and likely will be , affected by a number of factors , including the variable size and duration of projects , many of which are performed over several years , and cancellations and changes to the scope of work during the course of projects . additionally , projects may be canceled or delayed by the customer or delayed by regulatory authorities . projects that have been delayed for less than 12 months remain in backlog , but the anticipated timing of the recognition of revenue is uncertain . we generally do not have a contractual right to the full amount of the revenue reflected in our backlog . if a customer cancels an award , we might be reimbursed for the costs we have incurred . fluctuations in our reported backlog and net new business award levels also result from the fact that we may receive a small number of relatively large orders in any given reporting period . because of these large orders , our backlog and net new business awards in that reporting period might reach levels that are not sustained in subsequent reporting periods . as we increasingly compete for and enter into large contracts that are more global in nature , we expect the rate at which our backlog and net new business awards convert into revenue to decrease , or lengthen . see part i , item 1a `` risk factors—risks related to our business—our backlog 51 might not be indicative of our future revenues , and we might not realize all of the anticipated future revenue reflected in our backlog `` for more information . results of operations year ended december 31 , 2016 compared to the years ended december 31 , 2015 and 2014 the following table sets forth amounts from our consolidated financial statements along with the percentage change for years ended december 31 , 2016 , 2015 and 2014 ( dollars in thousands ) : replace_table_token_6_th 52 net service revenue and reimbursable out-of-pocket expenses for the years ended december 31 , 2016 , 2015 and 2014 , total revenue was comprised of the following ( dollars in thousands ) : replace_table_token_7_th net service revenue increased $ 115.6 million , or 12.6 % , story_separator_special_tag during the year ended december 31 , 2015 , we incurred transaction expenses of $ 1.6 million , primarily consisting of third-party fees associated with our stock repurchases in may and december of 2015 and our secondary common stock offerings in may , august and december of 2015. transaction expenses were $ 7.9 million for the year ended december 31 , 2014 and primarily consisted of ( i ) $ 4.2 million of debt issuance costs and third-party fees associated with the debt refinancing transactions in february and november 2014 , ( ii ) a $ 3.4 million payment to avista to terminate our consulting services agreement , and ( iii ) $ 0.3 million of legal fees associated with our march 2014 acquisition of mek consulting , a full service cro with operations in the middle east . goodwill and intangible asset impairment charges we evaluate goodwill for impairment annually , or more frequently if events or changes in circumstances indicate that goodwill might be impaired . we perform our annual impairment test by estimating the fair value of each reporting unit using a combination of the income and market approaches for purposes of estimating our total fair value of the reporting unit . during the second quarter of 2014 , we determined that the global consulting ( a component of the clinical development segment ) and phase i services reporting units were not performing according to management 's expectations , requiring an evaluation to determine if the associated goodwill and intangible assets were 57 impaired . as a result of this evaluation , we recorded a $ 9.2 million impairment of goodwill and an $ 8.0 million impairment of intangible assets for the year ended december 31 , 2014. during the first quarter of 2015 , we continued to observe deteriorating performance within our phase i services reporting unit due to reduced revenue resulting from cancellations and lower than expected new business awards . this resulted in a triggering event , requiring an evaluation of both long-lived assets and goodwill for potential impairment . as a result of this evaluation , we recorded a total asset impairment charge of $ 3.9 million , comprised of a long-lived assets impairment charge of $ 1.0 million and a goodwill impairment charge of $ 2.9 million , which was the total remaining goodwill balance of our phase i services reporting unit as of the evaluation date . there were no asset impairment charges during 2016. depreciation and amortization expense total depreciation and amortization expense increased to $ 59.2 million for the year ended december 31 , 2016 from $ 56.0 million for the year ended december 31 , 2015 . this increase was a result of an increase in depreciation expense of $ 3.2 million for the year ended december 31 , 2016 as compared to the year ended december 31 , 2015 , principally due to higher capital expenditures in 2016. total depreciation and amortization expense increased to $ 56.0 million for the year ended december 31 , 2015 from $ 54.5 million for the year ended december 31 , 2014. amortization expense increased by $ 5.0 million for the year ended december 31 , 2015 as compared to the year ended december 31 , 2014 , primarily due to the reduction in estimated useful lives of certain intangible assets during the second quarter of 2014. these increases were partially offset by a $ 3.5 million decrease in depreciation expense for the year ended december 31 , 2015 as compared to the year ended december 31 , 2014 , principally due to ( i ) lower capital expenditures in 2015 and ( ii ) the write-off of long-lived assets in the phase i services reporting unit during the first quarter of 2015. other ( expense ) income , net for the years ended december 31 , 2016 , 2015 and 2014 , the components of total other ( expenses ) income , net were as follows ( dollars in thousands ) : replace_table_token_12_th interest expense decreased by $ 3.6 million for the year ended december 31 , 2016 compared to the year ended december 31 , 2015 and by $ 37.4 million for the year ended december 31 , 2015 compared to the year ended december 31 , 2014 . the decreases in interest expense during the last two years are primarily due to the decreased interest rates as a result of our debt repayment and refinancing activities during the fourth quarter of 2014 , second quarter of 2015 and third quarter of 2016. the loss on extinguishment of debt was $ 0.4 million , $ 9.8 million and $ 46.8 million for the years ended december 31 , 2016 , 2015 and 2014 , respectively , as a result of the august 2016 , may 2015 and november 2014 debt refinancing transactions . other ( expense ) income , net , decreased by $ 12.9 million for the year ended december 31 , 2016 compared to the year ended december 31 , 2015 and by $ 3.8 million for the year ended december 31 , 2015 compared to the year ended december 31 , 2014 . other ( expense ) income , net is primarily comprised of foreign currency gains and losses and the changes are principally driven by fluctuations in foreign exchange rates . in particular , the june 2016 referendum by british voters to exit the european union impacted global markets , including currencies , and resulted in a sharp decline in the value of the british pound as compared to the u.s. 58 dollar and other currencies . in addition , the u.s. presidential election results and resulting foreign policy activities have caused foreign currency exchange rate fluctuations . volatility in exchange rates is expected to continue in the short term as a result of the uncertainties surrounding these activities , which could continue to drive significant fluctuations in foreign currency gains or losses in future

liquidity and capital resources key measures of our liquidity are as follows ( in thousands ) : december 31 , 2016 december 31 , 2015 balance sheet statistics : cash and cash equivalents ( 1 ) $ 102,471 $ 85,011 working capital ( excluding restricted cash ) 55,295 ( 52,998 ) ( 1 ) as of december 31 , 2016 , the amount of cash and cash equivalents held outside the united states by our foreign subsidiaries was $ 86.4 million . cash and cash equivalent balances outside the united states may be subject to foreign withholding and united states taxation , if repatriated . we intend to reinvest cash outside the u.s. except in instances where repatriating such earnings would result in no additional income tax . we fund our operations and growth , including acquisitions , primarily with our working capital , cash flow from operations as well as funds available for borrowing under our $ 200.0 million revolving credit facility . our principal liquidity requirements are to fund our debt service obligations , capital expenditures , expansion of services , possible acquisitions , integration and restructuring costs , geographic expansion , working capital and other general corporate purposes . based on past performance and current expectations , we believe our cash and cash equivalents , cash generated from operations and funds available under our revolving credit facility will be sufficient to meet our working capital needs , capital expenditures , scheduled debt and interest payments , income tax obligations and other currently anticipated liquidity requirements for at least the next 12 months . in august 2016 , we entered into the first amendment to credit agreement and increase revolving joinder ( the “ first amendment ” ) , which amended the credit agreement dated as of may 14 , 2015 ( as amended , the `` credit agreement '' ) .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. such fluctuations are due to a variety of factors , including , among others : ( i ) the level of staff utilization created by our ability to effectively manage our workforce , ( ii ) adjustments to the timing of work on specific customer contracts , ( iii ) the experience mix of personnel assigned to projects , and ( iv ) the service mix and pricing of our contracts . in addition , as global projects wind down or as delays and cancellations occur , staffing levels in certain countries or functional areas can become misaligned with the current business volume . new business awards and backlog we add new business awards to backlog when we enter into a contract or when we receive a written commitment from the customer selecting us as its service provider , provided that ( i ) the customer has received appropriate internal funding approval , ( ii ) the project or projects are not contingent upon completion of another trial or event , ( iii ) the project or projects are expected to commence within the next 12 months and ( iv ) the customer has entered or intends to enter into a comprehensive contract as soon as practicable . contracts generally have terms ranging from several months to several years . we recognize revenue on these awards as services are performed , provided we have entered into a contractual commitment with the customer . our new business awards , net of cancellations of prior awards , for the years ended december 31 , 2016 , 2015 and 2014 were $ 1.22 billion , $ 1.18 billion and $ 0.95 billion , respectively , representing a 4.0 % increase from 2015 to 2016 and a 23.9 % increase from 2014 to 2015. net new business awards were higher for the year ended december 31 , 2016 , due to a lower cancellation rate across our therapeutic service offerings . the growth in net awards was principally in our cns therapeutic area . new business awards have varied and will continue to vary significantly from quarter to quarter . the dollar amount of our backlog consists of anticipated future net service revenue from business awards that either ( 1 ) have not started but are anticipated to begin in the future , or ( 2 ) are in process and have not been completed . our backlog also reflects any cancellation or adjustment activity related to these contracts . the average duration of our contracts will fluctuate from period to period in the future based on the contracts comprising our backlog at any given time . the majority of our contracts can be terminated by our customers with 30 days ' notice . the dollar amount of our backlog is adjusted each quarter for foreign currency fluctuations . during the year ended december 31 , 2016 , fluctuations in foreign currency exchange rates resulted in an unfavorable impact on our december 31 , 2016 backlog in the amount of approximately $ 19.2 million , primarily due to the weakening of the euro and british pound against the u.s. dollar . our backlog as of december 31 , 2016 , 2015 and 2014 was $ 1.99 billion , $ 1.81 billion and $ 1.59 billion , respectively , representing a 9.6 % increase from 2015 to 2016 and a 14.1 % increase from 2014 to 2015 . included within backlog at december 31 , 2016 is approximately $ 0.87 billion that we expect to translate into revenue in 2017 , with the remainder expected to generate revenue beyond 2017 . we believe that backlog and net new business awards might not be consistent indicators of future revenue because they have been , and likely will be , affected by a number of factors , including the variable size and duration of projects , many of which are performed over several years , and cancellations and changes to the scope of work during the course of projects . additionally , projects may be canceled or delayed by the customer or delayed by regulatory authorities . projects that have been delayed for less than 12 months remain in backlog , but the anticipated timing of the recognition of revenue is uncertain . we generally do not have a contractual right to the full amount of the revenue reflected in our backlog . if a customer cancels an award , we might be reimbursed for the costs we have incurred . fluctuations in our reported backlog and net new business award levels also result from the fact that we may receive a small number of relatively large orders in any given reporting period . because of these large orders , our backlog and net new business awards in that reporting period might reach levels that are not sustained in subsequent reporting periods . as we increasingly compete for and enter into large contracts that are more global in nature , we expect the rate at which our backlog and net new business awards convert into revenue to decrease , or lengthen . see part i , item 1a `` risk factors—risks related to our business—our backlog 51 might not be indicative of our future revenues , and we might not realize all of the anticipated future revenue reflected in our backlog `` for more information . results of operations year ended december 31 , 2016 compared to the years ended december 31 , 2015 and 2014 the following table sets forth amounts from our consolidated financial statements along with the percentage change for years ended december 31 , 2016 , 2015 and 2014 ( dollars in thousands ) : replace_table_token_6_th 52 net service revenue and reimbursable out-of-pocket expenses for the years ended december 31 , 2016 , 2015 and 2014 , total revenue was comprised of the following ( dollars in thousands ) : replace_table_token_7_th net service revenue increased $ 115.6 million , or 12.6 % , story_separator_special_tag during the year ended december 31 , 2015 , we incurred transaction expenses of $ 1.6 million , primarily consisting of third-party fees associated with our stock repurchases in may and december of 2015 and our secondary common stock offerings in may , august and december of 2015. transaction expenses were $ 7.9 million for the year ended december 31 , 2014 and primarily consisted of ( i ) $ 4.2 million of debt issuance costs and third-party fees associated with the debt refinancing transactions in february and november 2014 , ( ii ) a $ 3.4 million payment to avista to terminate our consulting services agreement , and ( iii ) $ 0.3 million of legal fees associated with our march 2014 acquisition of mek consulting , a full service cro with operations in the middle east . goodwill and intangible asset impairment charges we evaluate goodwill for impairment annually , or more frequently if events or changes in circumstances indicate that goodwill might be impaired . we perform our annual impairment test by estimating the fair value of each reporting unit using a combination of the income and market approaches for purposes of estimating our total fair value of the reporting unit . during the second quarter of 2014 , we determined that the global consulting ( a component of the clinical development segment ) and phase i services reporting units were not performing according to management 's expectations , requiring an evaluation to determine if the associated goodwill and intangible assets were 57 impaired . as a result of this evaluation , we recorded a $ 9.2 million impairment of goodwill and an $ 8.0 million impairment of intangible assets for the year ended december 31 , 2014. during the first quarter of 2015 , we continued to observe deteriorating performance within our phase i services reporting unit due to reduced revenue resulting from cancellations and lower than expected new business awards . this resulted in a triggering event , requiring an evaluation of both long-lived assets and goodwill for potential impairment . as a result of this evaluation , we recorded a total asset impairment charge of $ 3.9 million , comprised of a long-lived assets impairment charge of $ 1.0 million and a goodwill impairment charge of $ 2.9 million , which was the total remaining goodwill balance of our phase i services reporting unit as of the evaluation date . there were no asset impairment charges during 2016. depreciation and amortization expense total depreciation and amortization expense increased to $ 59.2 million for the year ended december 31 , 2016 from $ 56.0 million for the year ended december 31 , 2015 . this increase was a result of an increase in depreciation expense of $ 3.2 million for the year ended december 31 , 2016 as compared to the year ended december 31 , 2015 , principally due to higher capital expenditures in 2016. total depreciation and amortization expense increased to $ 56.0 million for the year ended december 31 , 2015 from $ 54.5 million for the year ended december 31 , 2014. amortization expense increased by $ 5.0 million for the year ended december 31 , 2015 as compared to the year ended december 31 , 2014 , primarily due to the reduction in estimated useful lives of certain intangible assets during the second quarter of 2014. these increases were partially offset by a $ 3.5 million decrease in depreciation expense for the year ended december 31 , 2015 as compared to the year ended december 31 , 2014 , principally due to ( i ) lower capital expenditures in 2015 and ( ii ) the write-off of long-lived assets in the phase i services reporting unit during the first quarter of 2015. other ( expense ) income , net for the years ended december 31 , 2016 , 2015 and 2014 , the components of total other ( expenses ) income , net were as follows ( dollars in thousands ) : replace_table_token_12_th interest expense decreased by $ 3.6 million for the year ended december 31 , 2016 compared to the year ended december 31 , 2015 and by $ 37.4 million for the year ended december 31 , 2015 compared to the year ended december 31 , 2014 . the decreases in interest expense during the last two years are primarily due to the decreased interest rates as a result of our debt repayment and refinancing activities during the fourth quarter of 2014 , second quarter of 2015 and third quarter of 2016. the loss on extinguishment of debt was $ 0.4 million , $ 9.8 million and $ 46.8 million for the years ended december 31 , 2016 , 2015 and 2014 , respectively , as a result of the august 2016 , may 2015 and november 2014 debt refinancing transactions . other ( expense ) income , net , decreased by $ 12.9 million for the year ended december 31 , 2016 compared to the year ended december 31 , 2015 and by $ 3.8 million for the year ended december 31 , 2015 compared to the year ended december 31 , 2014 . other ( expense ) income , net is primarily comprised of foreign currency gains and losses and the changes are principally driven by fluctuations in foreign exchange rates . in particular , the june 2016 referendum by british voters to exit the european union impacted global markets , including currencies , and resulted in a sharp decline in the value of the british pound as compared to the u.s. 58 dollar and other currencies . in addition , the u.s. presidential election results and resulting foreign policy activities have caused foreign currency exchange rate fluctuations . volatility in exchange rates is expected to continue in the short term as a result of the uncertainties surrounding these activities , which could continue to drive significant fluctuations in foreign currency gains or losses in future Narrative : liquidity and capital resources key measures of our liquidity are as follows ( in thousands ) : december 31 , 2016 december 31 , 2015 balance sheet statistics : cash and cash equivalents ( 1 ) $ 102,471 $ 85,011 working capital ( excluding restricted cash ) 55,295 ( 52,998 ) ( 1 ) as of december 31 , 2016 , the amount of cash and cash equivalents held outside the united states by our foreign subsidiaries was $ 86.4 million . cash and cash equivalent balances outside the united states may be subject to foreign withholding and united states taxation , if repatriated . we intend to reinvest cash outside the u.s. except in instances where repatriating such earnings would result in no additional income tax . we fund our operations and growth , including acquisitions , primarily with our working capital , cash flow from operations as well as funds available for borrowing under our $ 200.0 million revolving credit facility . our principal liquidity requirements are to fund our debt service obligations , capital expenditures , expansion of services , possible acquisitions , integration and restructuring costs , geographic expansion , working capital and other general corporate purposes . based on past performance and current expectations , we believe our cash and cash equivalents , cash generated from operations and funds available under our revolving credit facility will be sufficient to meet our working capital needs , capital expenditures , scheduled debt and interest payments , income tax obligations and other currently anticipated liquidity requirements for at least the next 12 months . in august 2016 , we entered into the first amendment to credit agreement and increase revolving joinder ( the “ first amendment ” ) , which amended the credit agreement dated as of may 14 , 2015 ( as amended , the `` credit agreement '' ) .

in certain instances , our clients request enhancements to the underlying features and functionality of our enterprise and mid-market solution , and in these instances , revenue from subscriptions is recognized over the remaining term of the agreement once the additional features are delivered to the client . we generally invoice our clients a portion of the annual subscription fees upfront for multi-year subscriptions and upfront for consulting services . for amounts not invoiced in advance for multi-year subscriptions or consulting services , we invoice under various terms over the subscription and service periods . we record amounts invoiced for annual subscription periods that have not occurred or services that have not been performed as deferred revenue on our balance sheet . with the growth in the number of clients , our revenue has grown to $ 339.7 million for the year ended december 31 , 2015 from $ 263.6 million for the same period in 2014 . we have historically experienced seasonality in terms of when we enter into client agreements . we usually sign a significantly higher percentage of agreements with new clients , as well as renewal agreements with existing clients , in the fourth quarter of each year . in addition , within a given quarter , we typically sign a large portion of these agreements during the last month , and often the last two weeks , of that quarter . we believe this seasonality is driven by several factors , most notably the tendency of procurement departments at our enterprise clients to purchase technology at the end of a quarter or calendar year , possibly in order to use up their available quarterly or annual funding allocations , or to be able to deploy new talent management capabilities prior to the beginning of a new financial or performance period . as the terms of most of our client agreements are measured in full year increments , agreements initially entered into the fourth quarter or last month of any quarter will generally come up for renewal at that same time in subsequent years . this seasonality is reflected to a much lesser extent , and sometimes is not immediately apparent , in our revenue , due to the fact that we recognize subscription revenue over the term of the client agreement , which is generally three years . in addition , this seasonality is reflected in changes in our deferred revenue balance , which generally is impacted by the timing of when we enter into agreements with new clients , the timing of when we invoice new clients , the timing of when we invoice existing clients for annual subscription periods , and the timing of when we recognize revenue . we expect this seasonality to continue in the future , which may cause fluctuations in certain of our operating results and financial metrics , and thus limit our ability to predict future results . we believe the market for talent management remains large and underpenetrated , providing us with significant growth opportunities . we expect businesses and other organizations to continue to increase their spending on talent management solutions in order to maximize the productivity of their employees , manage changing workforce demographics and ensure compliance with global regulatory requirements . historically , many of these software solutions have been human resource applications running on hardware located on organizations ' premises . we have seen many of these organizations increasingly choose saas for their talent management solutions and we anticipate that trend will continue . we have focused on growing our business to pursue what we believe is a significant market opportunity , and we plan to continue to invest in building for growth . as a result , we expect our cost of revenue and operating expenses to increase in future periods . sales and marketing expenses are expected to increase , as we continue to expand our direct sales teams , increase our marketing activities , and grow our international operations . research and development expenses are expected to increase as we continue to improve the existing functionality for our solutions . we also believe that we must invest in maintaining a high degree of client service and support that is critical for our continued success . we plan to continue our policy of implementing best practices across our organization , expanding our technical operations and investing in our network infrastructure and services capabilities in order to support continued future growth . we also expect to incur additional general and administrative expenses as a result of our growth . 42 our operating results have fluctuated in the past and may continue to fluctuate in the future based on a number of factors , many of which are beyond our control . in addition to those described in the “ risk factors ” section of this annual report on form 10-k , such factors include : our ability to attract new clients ; the timing and rate at which we enter into agreements for our solutions with new clients ; the timing and duration of our client implementations , which is often outside of our direct control , and our ability to provide resources for client implementations and consulting projects ; the extent to which our existing clients renew their subscriptions for our solutions and the timing of those renewals ; the extent to which our existing clients purchase additional products or add incremental users ; the extent to which our clients request enhancements to underlying features and functionality of our solutions and the timing for us to deliver the enhancements to our clients ; changes in the mix of our sales between new and existing clients ; changes to the proportion of our client base that is comprised of enterprise or mid-sized organizations ; seasonal factors affecting the demand for our solutions ; our ability to manage growth , including in terms of new clients , additional users , additional headcount and story_separator_special_tag for consulting services , we analyze both bundled arrangements that include subscriptions to our solutions and consulting services , as well as standalone purchases 46 of different types of consulting services made subsequent to the original subscription . for these consulting services arrangements , we then examine the actual rate per hour we charge or , for fixed fee arrangements , the implied average rate per hour based on the fixed fee divided by the estimated hours to complete the service . the besp is then the product of this average rate per hour and our estimate of the hours needed to complete the services . for e-learning content , we estimate besp by reviewing fees for content in order to establish an average annual fee per user that reflects the cost we incur to acquire the related content from third-party providers . additionally , we estimate besp by reviewing fees for content-hosting by reviewing the selling price of gigabytes sold in order to establish a fee on a per user or bandwidth basis . the determination of besp for our deliverables as described above requires us to make significant estimates and judgments , including the comparability of different subscription arrangements and consulting services and estimates of the hours required to complete various types of services . in addition , we consider other factors including : nature of the deliverables . for example , in categorizing our subscriptions into meaningful groupings for determining besp , we consider the number and type of products the client purchased . for consulting services , we consider the type of consulting service and the estimated hours required to complete the service or average selling price for fixed fee services based on our historical experience . location of our clients . our pricing is different for domestic and international clients , and therefore in determining besp of subscriptions to our solutions , we evaluate domestic arrangements separately from international arrangements . market conditions and competitive landscape for the sale . our pricing and discounting varies based on the economic environment and competition . we consider these factors in determining the grouping of comparable services and the periods over which we compare arrangements to compute the besp . internal costs . our pricing for consulting services and e-learning content considers our internal costs to provide the consulting services and the third-party purchase costs of e-learning content . size of the arrangement . discounting generally increases as the relative size of an arrangement increases , and we take this into consideration in the grouping of our clients to determine besp . our discounting for multiple-deliverable arrangements varies based on the extent and type of the consulting services and content included with the subscriptions in the arrangement . the determination of besp is made through consultation with our senior management . we update our estimates of besp on an ongoing basis as events and circumstances require , and we update our determination to use besp on a periodic basis , including assessing whether we can determine vsoe or tpe . after we determine the fair value of revenue allocable to each deliverable based on the relative selling price method , we recognize the revenue for each based on the type of deliverable . for subscriptions to our solutions , we recognize the revenue on a straight-line basis over the term of the client agreement , which is typically three years . for consulting services , we generally recognize revenue using the proportional performance method over the period the services are performed . in a limited number of cases , the client 's intended use of a solution requires enhancements to its underlying features and functionality . in some of these cases , revenue is recognized as one unit of accounting on a straight-line basis from the point at which the enhancements have been made to the solution through the remaining term of the agreement . in other cases where the enhancement is not required for the client 's intended use , revenue is recognized separately for the enhancement and the solution . the enhancement revenue is recognized based on the allocated value on a straight-line basis once the enhancement has been made to the solution . for arrangements in which we resell third-party e-learning content to our clients or host client or third-party e-learning content provided by the client , we recognize revenue in accordance with accounting guidance as to when to report gross revenue as a principal and when to report net revenue as an agent . we recognize e-learning content revenue in the gross amount that we invoice our client when : ( i ) we are the primary obligor , ( ii ) we have latitude to establish the price charged and ( iii ) we bear the credit risk in the transaction . for arrangements involving our sale of e-learning content , we charge our clients for the content based on pay-per-use or a fixed rate for a specified number of users and recognize the gross amount invoiced as revenue as the content is delivered . for arrangements where clients purchase e-learning content directly from a third-party , or provide it themselves , and we integrate the content into our solutions , we charge a hosting fee . in such cases , we recognize the amount invoiced for hosting as the content is delivered , excluding any portion we invoice that is attributable to fees the third-party charges for the content . 47 commission expense we defer commissions paid to our sales force because these amounts are recoverable from future revenue from the non-cancelable client agreements that give rise to the commissions . we defer expense recognition upon payment and amortize expense to sales and marketing expenses over the term of the client agreement in proportion to the revenue that is recognized . commissions are direct and incremental costs of our client agreements and we generally commence payment of commissions within 45 to 75

cash provided by operating activities during 2014 of $ 33.0 million was a result of the continued growth of our business and our continued investments for further growth . in the year ended december 31 , 2014 , $ 59.5 million , or 92 % , of our net loss of $ 64.9 million consisted of non-cash items , including $ 33.7 million of stock-based compensation , $ 15.1 million of depreciation and amortization , $ 8.3 million of accretion of debt discount and amortization of debt issuance costs , $ 1.7 million of unrealized foreign exchange losses , and amortization of a purchased premium of $ 0.8 million related to investment securities . cash provided by operating activities includes a $ 55.2 million increase in deferred revenue due to increased billings during the year ended december 31 , 2014 , a $ 6.4 million increase in accrued liabilities primarily due to the timing of payments , an increase in accounts payable of $ 4.6 million attributable to increased expenses associated with our growth , and $ 1.2 million decrease in prepaid and other assets primarily due to the timing of payments to vendors . cash provided by operating activities is partially offset by a $ 18.7 million increase in accounts receivable attributable to higher billings in the fiscal year 2014 due to an increased number of clients , a $ 10.1 million increase in deferred commissions due to increased sales , and decrease in other liabilities of $ 0.3 million . cash provided by operating activities during 2013 of $ 17.4 million was a result of the continued growth of our business and our continued investments for further growth . in the year ended december 31 , 2013 , $ 32.2 million , or 80 % , of our net loss of $ 40.4 million consisted of non-cash items , including $ 20.8 million of stock-based compensation , $ 9.7 million of depreciation and amortization , and $ 4.3 million of accretion of debt discount and amortization of debt issuance costs .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. in certain instances , our clients request enhancements to the underlying features and functionality of our enterprise and mid-market solution , and in these instances , revenue from subscriptions is recognized over the remaining term of the agreement once the additional features are delivered to the client . we generally invoice our clients a portion of the annual subscription fees upfront for multi-year subscriptions and upfront for consulting services . for amounts not invoiced in advance for multi-year subscriptions or consulting services , we invoice under various terms over the subscription and service periods . we record amounts invoiced for annual subscription periods that have not occurred or services that have not been performed as deferred revenue on our balance sheet . with the growth in the number of clients , our revenue has grown to $ 339.7 million for the year ended december 31 , 2015 from $ 263.6 million for the same period in 2014 . we have historically experienced seasonality in terms of when we enter into client agreements . we usually sign a significantly higher percentage of agreements with new clients , as well as renewal agreements with existing clients , in the fourth quarter of each year . in addition , within a given quarter , we typically sign a large portion of these agreements during the last month , and often the last two weeks , of that quarter . we believe this seasonality is driven by several factors , most notably the tendency of procurement departments at our enterprise clients to purchase technology at the end of a quarter or calendar year , possibly in order to use up their available quarterly or annual funding allocations , or to be able to deploy new talent management capabilities prior to the beginning of a new financial or performance period . as the terms of most of our client agreements are measured in full year increments , agreements initially entered into the fourth quarter or last month of any quarter will generally come up for renewal at that same time in subsequent years . this seasonality is reflected to a much lesser extent , and sometimes is not immediately apparent , in our revenue , due to the fact that we recognize subscription revenue over the term of the client agreement , which is generally three years . in addition , this seasonality is reflected in changes in our deferred revenue balance , which generally is impacted by the timing of when we enter into agreements with new clients , the timing of when we invoice new clients , the timing of when we invoice existing clients for annual subscription periods , and the timing of when we recognize revenue . we expect this seasonality to continue in the future , which may cause fluctuations in certain of our operating results and financial metrics , and thus limit our ability to predict future results . we believe the market for talent management remains large and underpenetrated , providing us with significant growth opportunities . we expect businesses and other organizations to continue to increase their spending on talent management solutions in order to maximize the productivity of their employees , manage changing workforce demographics and ensure compliance with global regulatory requirements . historically , many of these software solutions have been human resource applications running on hardware located on organizations ' premises . we have seen many of these organizations increasingly choose saas for their talent management solutions and we anticipate that trend will continue . we have focused on growing our business to pursue what we believe is a significant market opportunity , and we plan to continue to invest in building for growth . as a result , we expect our cost of revenue and operating expenses to increase in future periods . sales and marketing expenses are expected to increase , as we continue to expand our direct sales teams , increase our marketing activities , and grow our international operations . research and development expenses are expected to increase as we continue to improve the existing functionality for our solutions . we also believe that we must invest in maintaining a high degree of client service and support that is critical for our continued success . we plan to continue our policy of implementing best practices across our organization , expanding our technical operations and investing in our network infrastructure and services capabilities in order to support continued future growth . we also expect to incur additional general and administrative expenses as a result of our growth . 42 our operating results have fluctuated in the past and may continue to fluctuate in the future based on a number of factors , many of which are beyond our control . in addition to those described in the “ risk factors ” section of this annual report on form 10-k , such factors include : our ability to attract new clients ; the timing and rate at which we enter into agreements for our solutions with new clients ; the timing and duration of our client implementations , which is often outside of our direct control , and our ability to provide resources for client implementations and consulting projects ; the extent to which our existing clients renew their subscriptions for our solutions and the timing of those renewals ; the extent to which our existing clients purchase additional products or add incremental users ; the extent to which our clients request enhancements to underlying features and functionality of our solutions and the timing for us to deliver the enhancements to our clients ; changes in the mix of our sales between new and existing clients ; changes to the proportion of our client base that is comprised of enterprise or mid-sized organizations ; seasonal factors affecting the demand for our solutions ; our ability to manage growth , including in terms of new clients , additional users , additional headcount and story_separator_special_tag for consulting services , we analyze both bundled arrangements that include subscriptions to our solutions and consulting services , as well as standalone purchases 46 of different types of consulting services made subsequent to the original subscription . for these consulting services arrangements , we then examine the actual rate per hour we charge or , for fixed fee arrangements , the implied average rate per hour based on the fixed fee divided by the estimated hours to complete the service . the besp is then the product of this average rate per hour and our estimate of the hours needed to complete the services . for e-learning content , we estimate besp by reviewing fees for content in order to establish an average annual fee per user that reflects the cost we incur to acquire the related content from third-party providers . additionally , we estimate besp by reviewing fees for content-hosting by reviewing the selling price of gigabytes sold in order to establish a fee on a per user or bandwidth basis . the determination of besp for our deliverables as described above requires us to make significant estimates and judgments , including the comparability of different subscription arrangements and consulting services and estimates of the hours required to complete various types of services . in addition , we consider other factors including : nature of the deliverables . for example , in categorizing our subscriptions into meaningful groupings for determining besp , we consider the number and type of products the client purchased . for consulting services , we consider the type of consulting service and the estimated hours required to complete the service or average selling price for fixed fee services based on our historical experience . location of our clients . our pricing is different for domestic and international clients , and therefore in determining besp of subscriptions to our solutions , we evaluate domestic arrangements separately from international arrangements . market conditions and competitive landscape for the sale . our pricing and discounting varies based on the economic environment and competition . we consider these factors in determining the grouping of comparable services and the periods over which we compare arrangements to compute the besp . internal costs . our pricing for consulting services and e-learning content considers our internal costs to provide the consulting services and the third-party purchase costs of e-learning content . size of the arrangement . discounting generally increases as the relative size of an arrangement increases , and we take this into consideration in the grouping of our clients to determine besp . our discounting for multiple-deliverable arrangements varies based on the extent and type of the consulting services and content included with the subscriptions in the arrangement . the determination of besp is made through consultation with our senior management . we update our estimates of besp on an ongoing basis as events and circumstances require , and we update our determination to use besp on a periodic basis , including assessing whether we can determine vsoe or tpe . after we determine the fair value of revenue allocable to each deliverable based on the relative selling price method , we recognize the revenue for each based on the type of deliverable . for subscriptions to our solutions , we recognize the revenue on a straight-line basis over the term of the client agreement , which is typically three years . for consulting services , we generally recognize revenue using the proportional performance method over the period the services are performed . in a limited number of cases , the client 's intended use of a solution requires enhancements to its underlying features and functionality . in some of these cases , revenue is recognized as one unit of accounting on a straight-line basis from the point at which the enhancements have been made to the solution through the remaining term of the agreement . in other cases where the enhancement is not required for the client 's intended use , revenue is recognized separately for the enhancement and the solution . the enhancement revenue is recognized based on the allocated value on a straight-line basis once the enhancement has been made to the solution . for arrangements in which we resell third-party e-learning content to our clients or host client or third-party e-learning content provided by the client , we recognize revenue in accordance with accounting guidance as to when to report gross revenue as a principal and when to report net revenue as an agent . we recognize e-learning content revenue in the gross amount that we invoice our client when : ( i ) we are the primary obligor , ( ii ) we have latitude to establish the price charged and ( iii ) we bear the credit risk in the transaction . for arrangements involving our sale of e-learning content , we charge our clients for the content based on pay-per-use or a fixed rate for a specified number of users and recognize the gross amount invoiced as revenue as the content is delivered . for arrangements where clients purchase e-learning content directly from a third-party , or provide it themselves , and we integrate the content into our solutions , we charge a hosting fee . in such cases , we recognize the amount invoiced for hosting as the content is delivered , excluding any portion we invoice that is attributable to fees the third-party charges for the content . 47 commission expense we defer commissions paid to our sales force because these amounts are recoverable from future revenue from the non-cancelable client agreements that give rise to the commissions . we defer expense recognition upon payment and amortize expense to sales and marketing expenses over the term of the client agreement in proportion to the revenue that is recognized . commissions are direct and incremental costs of our client agreements and we generally commence payment of commissions within 45 to 75 Narrative : cash provided by operating activities during 2014 of $ 33.0 million was a result of the continued growth of our business and our continued investments for further growth . in the year ended december 31 , 2014 , $ 59.5 million , or 92 % , of our net loss of $ 64.9 million consisted of non-cash items , including $ 33.7 million of stock-based compensation , $ 15.1 million of depreciation and amortization , $ 8.3 million of accretion of debt discount and amortization of debt issuance costs , $ 1.7 million of unrealized foreign exchange losses , and amortization of a purchased premium of $ 0.8 million related to investment securities . cash provided by operating activities includes a $ 55.2 million increase in deferred revenue due to increased billings during the year ended december 31 , 2014 , a $ 6.4 million increase in accrued liabilities primarily due to the timing of payments , an increase in accounts payable of $ 4.6 million attributable to increased expenses associated with our growth , and $ 1.2 million decrease in prepaid and other assets primarily due to the timing of payments to vendors . cash provided by operating activities is partially offset by a $ 18.7 million increase in accounts receivable attributable to higher billings in the fiscal year 2014 due to an increased number of clients , a $ 10.1 million increase in deferred commissions due to increased sales , and decrease in other liabilities of $ 0.3 million . cash provided by operating activities during 2013 of $ 17.4 million was a result of the continued growth of our business and our continued investments for further growth . in the year ended december 31 , 2013 , $ 32.2 million , or 80 % , of our net loss of $ 40.4 million consisted of non-cash items , including $ 20.8 million of stock-based compensation , $ 9.7 million of depreciation and amortization , and $ 4.3 million of accretion of debt discount and amortization of debt issuance costs .

77 tyme technologies , inc. and subsidiaries consolidated statements of stockholders ' equity for the years ended march 31 , 2019 and 2018 replace_table_token_3_th the notes to the consolidated financial statements are an integral part of these statements 78 tyme technologies , inc. and subsidiaries consolidated statement of cash flows replace_table_token_4_th the notes to the consolidated financial statements are an integral part of these statements . 79 tyme technologies , inc. and subsidiaries notes to consolidated financial statements note 1. nature of business tyme technologies , inc. ( “ tyme tech ” ) is a delaware corporation headquartered in new york , ny , with wholly owned subsidiaries , tyme inc. and luminant biosciences , llc ( “ luminant ” ) ( collectively , “ tyme ” or the “ company ” ) . prior to 2014 , luminant conducted the initial research and development of the company 's therapeutic platform . since january 1 , 2014 , the majority of the company 's research , development and other business activities have been conducted by tyme inc. , which was incorporated in delaware in 2013. tyme is an emerging biotechnology company developing cancer metabolism-based therapies ( cmbts tm ) that are intended to be effective across a broad range of solid tumors and hematologic cancers , while maintaining patient 's quality of life with relatively low toxicity profiles . unlike targeted therapies that attempt to regulate specific pathways within cancer , tyme 's therapeutic approach is designed to take advantage of a cancer cell 's innate metabolic requirements to cause cancer cell death . the company 's lead clinical cmbt program , sm-88 ( racemetyrosine ) , is a novel , oral , monotherapy investigational agent that has been studied in clinical trials for over five years within more than 150 cancer patients . tyme recently completed enrollment for two phase ii clinical trials in prostate and pancreatic cancer , and the company is preparing for pivotal studies for sm-88 in pancreatic cancer during the second half of calendar year 2019. one of these pivotal trials is focused on patients with third-line pancreatic cancer and would be an amendment to the ongoing tyme-88-panc trial ( part 2 ) . the company has also partnered with the pancreatic cancer action network ( “ pancan ” ) to study sm-88 in an adaptive pivotal trial known as precision promise sm starting as second-line monotherapy and could expand to first-line combination therapy with standard of care . a phase ii investigator-initiated trial evaluating sm-88 monotherapy in late-stage sarcomas was launched in may 2019 , under the direction of principal investigator dr. sant chawla and in collaboration with the joseph ahmed foundation ( “ jaf ” ) . all of sm-88 's current clinical programs study sm-88 in use with three low-dose conditioning agents : methoxsalen , phenytoin , and sirolimus ( hereafter , referred to as “ mps ” ) . the company is actively evaluating the expansion of our clinical program to other cancers as sm-88 has demonstrated complete or partial responses in 15 different forms of cancer with a well-tolerated safety profile . the accompanying consolidated financial statements include the results of operations of tyme tech and its wholly owned subsidiaries . liquidity the consolidated financial statements have been prepared on a going-concern basis , which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business . the company has historically funded its operations primarily through equity offerings . during fiscal year 2019 , the company raised gross proceeds of approximately $ 5.8 million through the issuance of its common stock . most recently in april 2019 , the company raised net proceeds of $ 11.3 million after underwriting discounts and before expenses through an underwritten registered offering . previously on november 2 , 2017 , the company entered into an equity distribution agreement ( “ equity distribution agreement ” ) with canaccord genuity inc. ( “ canaccord ” ) , to commence an at-the-market offering ( the “ atm financing facility ” ) pursuant to which the company may , from time to time , subject to certain rules and regulations , sell shares of the company 's common stock , par value $ 0.0001 per share , having an aggregate offering price up to $ 30.0 million , through canaccord , as the company 's sales agent . in the year ended march 31 , 2019 , the company raised approximately $ 5.8 million in aggregate gross proceeds before commissions and expenses through the atm financing facility and paid canaccord aggregate commissions of $ 0.2 million . at march 31 , 2019 , there remained approximately $ 17.9 million of availability to sell shares through the facility . the proceeds of those offerings are being used by the company for continued clinical studies , drug commercialization and development activities and other general corporate and operating expenses . for the year ended march 31 , 2019 , the company had negative cash flow from operations of $ 20.1 million and net loss of $ 33.0 million , which included $ 10.2 million of non-cash expenses , primarily non-cash equity compensation and warrant modification expense . as of march 31 , 2019 , the company had working capital of approximately $ 9.8 million . management has concluded that substantial doubt does not exist regarding the company 's ability to satisfy its obligations as they come due during the twelve-month period following the issuance of these financial 80 statemen ts . this conclusion is based on the company 's assessment of qualitative and quantitative conditions and events , considered in aggregate as of the date of issuance of these financial statements that are known and reasonably knowable . among other relevant co nditions and events , the company has considered its operational plans , liquidity sources , obligations due or expected , funds necessary to maintain the company 's operations , and potential adverse conditions or story_separator_special_tag 77 tyme technologies , inc. and subsidiaries consolidated statements of stockholders ' equity for the years ended march 31 , 2019 and 2018 replace_table_token_3_th the notes to the consolidated financial statements are an integral part of these statements 78 tyme technologies , inc. and subsidiaries consolidated statement of cash flows replace_table_token_4_th the notes to the consolidated financial statements are an integral part of these statements . 79 tyme technologies , inc. and subsidiaries notes to consolidated financial statements note 1. nature of business tyme technologies , inc. ( “ tyme tech ” ) is a delaware corporation headquartered in new york , ny , with wholly owned subsidiaries , tyme inc. and luminant biosciences , llc ( “ luminant ” ) ( collectively , “ tyme ” or the “ company ” ) . prior to 2014 , luminant conducted the initial research and development of the company 's therapeutic platform . since january 1 , 2014 , the majority of the company 's research , development and other business activities have been conducted by tyme inc. , which was incorporated in delaware in 2013. tyme is an emerging biotechnology company developing cancer metabolism-based therapies ( cmbts tm ) that are intended to be effective across a broad range of solid tumors and hematologic cancers , while maintaining patient 's quality of life with relatively low toxicity profiles . unlike targeted therapies that attempt to regulate specific pathways within cancer , tyme 's therapeutic approach is designed to take advantage of a cancer cell 's innate metabolic requirements to cause cancer cell death . the company 's lead clinical cmbt program , sm-88 ( racemetyrosine ) , is a novel , oral , monotherapy investigational agent that has been studied in clinical trials for over five years within more than 150 cancer patients . tyme recently completed enrollment for two phase ii clinical trials in prostate and pancreatic cancer , and the company is preparing for pivotal studies for sm-88 in pancreatic cancer during the second half of calendar year 2019. one of these pivotal trials is focused on patients with third-line pancreatic cancer and would be an amendment to the ongoing tyme-88-panc trial ( part 2 ) . the company has also partnered with the pancreatic cancer action network ( “ pancan ” ) to study sm-88 in an adaptive pivotal trial known as precision promise sm starting as second-line monotherapy and could expand to first-line combination therapy with standard of care . a phase ii investigator-initiated trial evaluating sm-88 monotherapy in late-stage sarcomas was launched in may 2019 , under the direction of principal investigator dr. sant chawla and in collaboration with the joseph ahmed foundation ( “ jaf ” ) . all of sm-88 's current clinical programs study sm-88 in use with three low-dose conditioning agents : methoxsalen , phenytoin , and sirolimus ( hereafter , referred to as “ mps ” ) . the company is actively evaluating the expansion of our clinical program to other cancers as sm-88 has demonstrated complete or partial responses in 15 different forms of cancer with a well-tolerated safety profile . the accompanying consolidated financial statements include the results of operations of tyme tech and its wholly owned subsidiaries . liquidity the consolidated financial statements have been prepared on a going-concern basis , which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business . the company has historically funded its operations primarily through equity offerings . during fiscal year 2019 , the company raised gross proceeds of approximately $ 5.8 million through the issuance of its common stock . most recently in april 2019 , the company raised net proceeds of $ 11.3 million after underwriting discounts and before expenses through an underwritten registered offering . previously on november 2 , 2017 , the company entered into an equity distribution agreement ( “ equity distribution agreement ” ) with canaccord genuity inc. ( “ canaccord ” ) , to commence an at-the-market offering ( the “ atm financing facility ” ) pursuant to which the company may , from time to time , subject to certain rules and regulations , sell shares of the company 's common stock , par value $ 0.0001 per share , having an aggregate offering price up to $ 30.0 million , through canaccord , as the company 's sales agent . in the year ended march 31 , 2019 , the company raised approximately $ 5.8 million in aggregate gross proceeds before commissions and expenses through the atm financing facility and paid canaccord aggregate commissions of $ 0.2 million . at march 31 , 2019 , there remained approximately $ 17.9 million of availability to sell shares through the facility . the proceeds of those offerings are being used by the company for continued clinical studies , drug commercialization and development activities and other general corporate and operating expenses . for the year ended march 31 , 2019 , the company had negative cash flow from operations of $ 20.1 million and net loss of $ 33.0 million , which included $ 10.2 million of non-cash expenses , primarily non-cash equity compensation and warrant modification expense . as of march 31 , 2019 , the company had working capital of approximately $ 9.8 million . management has concluded that substantial doubt does not exist regarding the company 's ability to satisfy its obligations as they come due during the twelve-month period following the issuance of these financial 80 statemen ts . this conclusion is based on the company 's assessment of qualitative and quantitative conditions and events , considered in aggregate as of the date of issuance of these financial statements that are known and reasonably knowable . among other relevant co nditions and events , the company has considered its operational plans , liquidity sources , obligations due or expected , funds necessary to maintain the company 's operations , and potential adverse conditions or

net cash used in operating activities $ ( 20,116,000 ) $ ( 11,879,000 ) net cash used in investing activities $ ( 16,000 ) $ — net cash provided by financing activities $ 5,458,000 $ 30,372,000 operating activities our cash used in operating activities in the year ended march 31 , 2019 totaled $ 20.1 million which is the sum of ( i ) our net loss of $ 33.0 million , adjusted for non-cash expenses totaling $ 10.3 million ( which includes equity-based compensation , warrant modification expense , severance stock option modification , and depreciation and amortization ) , and ( ii ) changes in operating assets and liabilities of $ 2.6 million . our cash used in operating activities in the year ended march 31 , 2018 totaled $ 11.9 million which is the sum of ( i ) our net loss of $ 19.0 million , adjusted for non-cash expenses totaling $ 7.3 million ( which includes equity-based compensation , depreciation and amortization and the issuance of common stock for services ) , and ( ii ) changes in operating assets and liabilities of $ .2 million . investing activities during the year ended march 31 , 2019 investing activities included $ 16 thousand for the purchase of property and equipment . financing activities during the year ended march 31 , 2019 , our finance activities mainly consisted of the following : in the year ended march 31 , 2019 , the company raised approximately $ 5.7 million in net proceeds after sales commissions and expenses of the offering through the atm financing facility via the sale of 2,383,884 shares of our common stock . during the year ended march 31 , 2018 , our financing activities consisted of the following : in the year ended march 31 , 2018 , the company raised approximately $ 5.8 million in net proceeds after sales commissions and expenses of the offering through the atm financing facility via sale of 1,543,364 shares of our common stock . in march 2018 , we raised approximately $ 21.7 million in net proceeds after underwriting commissions and discounts and expenses of the offering through a public offering of 10,350,000 shares of our common stock .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. 77 tyme technologies , inc. and subsidiaries consolidated statements of stockholders ' equity for the years ended march 31 , 2019 and 2018 replace_table_token_3_th the notes to the consolidated financial statements are an integral part of these statements 78 tyme technologies , inc. and subsidiaries consolidated statement of cash flows replace_table_token_4_th the notes to the consolidated financial statements are an integral part of these statements . 79 tyme technologies , inc. and subsidiaries notes to consolidated financial statements note 1. nature of business tyme technologies , inc. ( “ tyme tech ” ) is a delaware corporation headquartered in new york , ny , with wholly owned subsidiaries , tyme inc. and luminant biosciences , llc ( “ luminant ” ) ( collectively , “ tyme ” or the “ company ” ) . prior to 2014 , luminant conducted the initial research and development of the company 's therapeutic platform . since january 1 , 2014 , the majority of the company 's research , development and other business activities have been conducted by tyme inc. , which was incorporated in delaware in 2013. tyme is an emerging biotechnology company developing cancer metabolism-based therapies ( cmbts tm ) that are intended to be effective across a broad range of solid tumors and hematologic cancers , while maintaining patient 's quality of life with relatively low toxicity profiles . unlike targeted therapies that attempt to regulate specific pathways within cancer , tyme 's therapeutic approach is designed to take advantage of a cancer cell 's innate metabolic requirements to cause cancer cell death . the company 's lead clinical cmbt program , sm-88 ( racemetyrosine ) , is a novel , oral , monotherapy investigational agent that has been studied in clinical trials for over five years within more than 150 cancer patients . tyme recently completed enrollment for two phase ii clinical trials in prostate and pancreatic cancer , and the company is preparing for pivotal studies for sm-88 in pancreatic cancer during the second half of calendar year 2019. one of these pivotal trials is focused on patients with third-line pancreatic cancer and would be an amendment to the ongoing tyme-88-panc trial ( part 2 ) . the company has also partnered with the pancreatic cancer action network ( “ pancan ” ) to study sm-88 in an adaptive pivotal trial known as precision promise sm starting as second-line monotherapy and could expand to first-line combination therapy with standard of care . a phase ii investigator-initiated trial evaluating sm-88 monotherapy in late-stage sarcomas was launched in may 2019 , under the direction of principal investigator dr. sant chawla and in collaboration with the joseph ahmed foundation ( “ jaf ” ) . all of sm-88 's current clinical programs study sm-88 in use with three low-dose conditioning agents : methoxsalen , phenytoin , and sirolimus ( hereafter , referred to as “ mps ” ) . the company is actively evaluating the expansion of our clinical program to other cancers as sm-88 has demonstrated complete or partial responses in 15 different forms of cancer with a well-tolerated safety profile . the accompanying consolidated financial statements include the results of operations of tyme tech and its wholly owned subsidiaries . liquidity the consolidated financial statements have been prepared on a going-concern basis , which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business . the company has historically funded its operations primarily through equity offerings . during fiscal year 2019 , the company raised gross proceeds of approximately $ 5.8 million through the issuance of its common stock . most recently in april 2019 , the company raised net proceeds of $ 11.3 million after underwriting discounts and before expenses through an underwritten registered offering . previously on november 2 , 2017 , the company entered into an equity distribution agreement ( “ equity distribution agreement ” ) with canaccord genuity inc. ( “ canaccord ” ) , to commence an at-the-market offering ( the “ atm financing facility ” ) pursuant to which the company may , from time to time , subject to certain rules and regulations , sell shares of the company 's common stock , par value $ 0.0001 per share , having an aggregate offering price up to $ 30.0 million , through canaccord , as the company 's sales agent . in the year ended march 31 , 2019 , the company raised approximately $ 5.8 million in aggregate gross proceeds before commissions and expenses through the atm financing facility and paid canaccord aggregate commissions of $ 0.2 million . at march 31 , 2019 , there remained approximately $ 17.9 million of availability to sell shares through the facility . the proceeds of those offerings are being used by the company for continued clinical studies , drug commercialization and development activities and other general corporate and operating expenses . for the year ended march 31 , 2019 , the company had negative cash flow from operations of $ 20.1 million and net loss of $ 33.0 million , which included $ 10.2 million of non-cash expenses , primarily non-cash equity compensation and warrant modification expense . as of march 31 , 2019 , the company had working capital of approximately $ 9.8 million . management has concluded that substantial doubt does not exist regarding the company 's ability to satisfy its obligations as they come due during the twelve-month period following the issuance of these financial 80 statemen ts . this conclusion is based on the company 's assessment of qualitative and quantitative conditions and events , considered in aggregate as of the date of issuance of these financial statements that are known and reasonably knowable . among other relevant co nditions and events , the company has considered its operational plans , liquidity sources , obligations due or expected , funds necessary to maintain the company 's operations , and potential adverse conditions or story_separator_special_tag 77 tyme technologies , inc. and subsidiaries consolidated statements of stockholders ' equity for the years ended march 31 , 2019 and 2018 replace_table_token_3_th the notes to the consolidated financial statements are an integral part of these statements 78 tyme technologies , inc. and subsidiaries consolidated statement of cash flows replace_table_token_4_th the notes to the consolidated financial statements are an integral part of these statements . 79 tyme technologies , inc. and subsidiaries notes to consolidated financial statements note 1. nature of business tyme technologies , inc. ( “ tyme tech ” ) is a delaware corporation headquartered in new york , ny , with wholly owned subsidiaries , tyme inc. and luminant biosciences , llc ( “ luminant ” ) ( collectively , “ tyme ” or the “ company ” ) . prior to 2014 , luminant conducted the initial research and development of the company 's therapeutic platform . since january 1 , 2014 , the majority of the company 's research , development and other business activities have been conducted by tyme inc. , which was incorporated in delaware in 2013. tyme is an emerging biotechnology company developing cancer metabolism-based therapies ( cmbts tm ) that are intended to be effective across a broad range of solid tumors and hematologic cancers , while maintaining patient 's quality of life with relatively low toxicity profiles . unlike targeted therapies that attempt to regulate specific pathways within cancer , tyme 's therapeutic approach is designed to take advantage of a cancer cell 's innate metabolic requirements to cause cancer cell death . the company 's lead clinical cmbt program , sm-88 ( racemetyrosine ) , is a novel , oral , monotherapy investigational agent that has been studied in clinical trials for over five years within more than 150 cancer patients . tyme recently completed enrollment for two phase ii clinical trials in prostate and pancreatic cancer , and the company is preparing for pivotal studies for sm-88 in pancreatic cancer during the second half of calendar year 2019. one of these pivotal trials is focused on patients with third-line pancreatic cancer and would be an amendment to the ongoing tyme-88-panc trial ( part 2 ) . the company has also partnered with the pancreatic cancer action network ( “ pancan ” ) to study sm-88 in an adaptive pivotal trial known as precision promise sm starting as second-line monotherapy and could expand to first-line combination therapy with standard of care . a phase ii investigator-initiated trial evaluating sm-88 monotherapy in late-stage sarcomas was launched in may 2019 , under the direction of principal investigator dr. sant chawla and in collaboration with the joseph ahmed foundation ( “ jaf ” ) . all of sm-88 's current clinical programs study sm-88 in use with three low-dose conditioning agents : methoxsalen , phenytoin , and sirolimus ( hereafter , referred to as “ mps ” ) . the company is actively evaluating the expansion of our clinical program to other cancers as sm-88 has demonstrated complete or partial responses in 15 different forms of cancer with a well-tolerated safety profile . the accompanying consolidated financial statements include the results of operations of tyme tech and its wholly owned subsidiaries . liquidity the consolidated financial statements have been prepared on a going-concern basis , which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business . the company has historically funded its operations primarily through equity offerings . during fiscal year 2019 , the company raised gross proceeds of approximately $ 5.8 million through the issuance of its common stock . most recently in april 2019 , the company raised net proceeds of $ 11.3 million after underwriting discounts and before expenses through an underwritten registered offering . previously on november 2 , 2017 , the company entered into an equity distribution agreement ( “ equity distribution agreement ” ) with canaccord genuity inc. ( “ canaccord ” ) , to commence an at-the-market offering ( the “ atm financing facility ” ) pursuant to which the company may , from time to time , subject to certain rules and regulations , sell shares of the company 's common stock , par value $ 0.0001 per share , having an aggregate offering price up to $ 30.0 million , through canaccord , as the company 's sales agent . in the year ended march 31 , 2019 , the company raised approximately $ 5.8 million in aggregate gross proceeds before commissions and expenses through the atm financing facility and paid canaccord aggregate commissions of $ 0.2 million . at march 31 , 2019 , there remained approximately $ 17.9 million of availability to sell shares through the facility . the proceeds of those offerings are being used by the company for continued clinical studies , drug commercialization and development activities and other general corporate and operating expenses . for the year ended march 31 , 2019 , the company had negative cash flow from operations of $ 20.1 million and net loss of $ 33.0 million , which included $ 10.2 million of non-cash expenses , primarily non-cash equity compensation and warrant modification expense . as of march 31 , 2019 , the company had working capital of approximately $ 9.8 million . management has concluded that substantial doubt does not exist regarding the company 's ability to satisfy its obligations as they come due during the twelve-month period following the issuance of these financial 80 statemen ts . this conclusion is based on the company 's assessment of qualitative and quantitative conditions and events , considered in aggregate as of the date of issuance of these financial statements that are known and reasonably knowable . among other relevant co nditions and events , the company has considered its operational plans , liquidity sources , obligations due or expected , funds necessary to maintain the company 's operations , and potential adverse conditions or Narrative : net cash used in operating activities $ ( 20,116,000 ) $ ( 11,879,000 ) net cash used in investing activities $ ( 16,000 ) $ — net cash provided by financing activities $ 5,458,000 $ 30,372,000 operating activities our cash used in operating activities in the year ended march 31 , 2019 totaled $ 20.1 million which is the sum of ( i ) our net loss of $ 33.0 million , adjusted for non-cash expenses totaling $ 10.3 million ( which includes equity-based compensation , warrant modification expense , severance stock option modification , and depreciation and amortization ) , and ( ii ) changes in operating assets and liabilities of $ 2.6 million . our cash used in operating activities in the year ended march 31 , 2018 totaled $ 11.9 million which is the sum of ( i ) our net loss of $ 19.0 million , adjusted for non-cash expenses totaling $ 7.3 million ( which includes equity-based compensation , depreciation and amortization and the issuance of common stock for services ) , and ( ii ) changes in operating assets and liabilities of $ .2 million . investing activities during the year ended march 31 , 2019 investing activities included $ 16 thousand for the purchase of property and equipment . financing activities during the year ended march 31 , 2019 , our finance activities mainly consisted of the following : in the year ended march 31 , 2019 , the company raised approximately $ 5.7 million in net proceeds after sales commissions and expenses of the offering through the atm financing facility via the sale of 2,383,884 shares of our common stock . during the year ended march 31 , 2018 , our financing activities consisted of the following : in the year ended march 31 , 2018 , the company raised approximately $ 5.8 million in net proceeds after sales commissions and expenses of the offering through the atm financing facility via sale of 1,543,364 shares of our common stock . in march 2018 , we raised approximately $ 21.7 million in net proceeds after underwriting commissions and discounts and expenses of the offering through a public offering of 10,350,000 shares of our common stock .

” prc regulations prohibit direct foreign ownership of business entities providing internet content , or icp services in the prc , and restrict foreign ownership of business entities engaging in the advertising business . in october 2008 , a series of contractual arrangements ( the “ contractual agreements ” or the “ vie agreements ) were 42 entered between rise king wfoe and business opportunity online ( beijing ) network technology co. , ltd. ( “ business opportunity online ” ) , beijing cnet online advertising co. , ltd. ( “ beijing cnet online ” ) ( collectively the “ prc operating entities ” ) and its common individual owners ( the “ prc shareholders ” or the “ control group ” ) . the contractual agreements allowed china net bvi through rise king wfoe to , among other things , secure significant rights to influence the prc operating entities ' business operations , policies and management , approve all matters requiring shareholder approval , and receive 100 % of the income earned by the prc operating entities . in return , rise king wfoe provides consulting services to the prc operating entities . in addition , to ensure that the prc operating entities and the prc shareholders perform their obligations under the contractual arrangements , the prc shareholders have pledged all of their equity interests in the prc operating entities to rise king wfoe . they have also entered into an option agreement with rise king wfoe which provides that at such time as when the current restrictions under prc law on foreign ownership of chinese companies engaging in the internet content , information services or advertising business in china are lifted , rise king wfoe may exercise its option to purchase the equity interests in the prc operating entities directly . at the time the above contractual agreements were entered into , the sole registered shareholder of rise king bvi was mr. yang li , who owned 10,000 common stock of rise king bvi , which constituted all of the issued and outstanding shares of rise king bvi . mr. yang li entered into slow-walk agreements with each of the control group individuals . pursuant to the slow-walk agreements , upon the satisfaction of certain conditions , the control group individuals had the option to purchase the 10,000 shares of rise king bvi ( 4,600 by mr. handong cheng , 3,600 by mr. xuanfu liu and 1,800 by ms. li sun , acting as a nominee for mr. zhige zhang ) held by mr. yang li , at a purchase price of us $ 1 per share ( the par value of rise king bvi 's common stock ) . under the terms of the slow-walk agreement , the control group will had the right to purchase the shares as follows : ( 1 ) one-third of the shares when china net bvi and its prc subsidiaries and affiliates ( “ the group ” ) will generate at least rmb 100,000,000 of the gross revenue for twelve months commencing on january 1 , 2009 and ending on december 31 , 2009 ( the “ performance period i ” ) ; ( 2 ) one-third of the shares when the group will generate at least rmb 60,000,000 of the gross revenue for six months commencing on january 1 , 2010 and ending on june 30 , 2010 ( the “ performance period ii ) ; ( 3 ) one-third of the shares when the group generates at least rmb 60,000,000 of the gross revenue for six months commencing on july 1 , 2010 and ending on december 31 , 2010 ( the “ performance period iii ” ) . each control group individual had the right to purchase one-third of the total number of shares that he or she was eligible to purchase under the slow-walk agreement upon the satisfaction of each condition described above . the control group individuals also entered an entrustment agreement with rise king bvi , pursuant to which , based on the 55 % equity interest held in the group , rise king bvi entrusted the control group to manage the group companies by irrevocably authorizing the control group to act on behalf of rise king bvi , as the exclusive agents and attorneys with respect to all matters concerning rise king bvi 's shareholding , during the term of this agreement . the control group also agreed and confirmed that he or she would act in concert with one another when exercising the rights authorized to them in this agreement . the entrustment period commenced on the execution date of the agreement and was effective for a period of ten years , until its termination , as discussed below . as described above , each of mssrs . handong cheng , and xuanfu liu and ms. li sun entered into share transfer agreements ( slow-walk agreement ) with mr. yang li , the sole shareholder of rise king bvi , which beneficially owns an aggregate of 7,434,940 shares of the company 's common stock , ( the “ subject shares ” ) . on march 30 , 2011 , pursuant to the terms of the share transfer agreement , ms. li sun transferred her right to acquire 18 % of the shares of rise king bvi under the share transfer agreement to mr. zhige zhang , the chief financial officer of the company . on march 30 , 2011 , each of mssrs . handong cheng , xuanfu liu and zhige zhang ( the “ prc persons ” ) exercised their right to purchase the outstanding stock of rise king bvi . on the same date , the entrustment agreement originally entered into among rise king bvi and the control group was terminated . as a result of these transactions , the ownership of rise king bvi was transferred from mr. yang li to the prc persons . story_separator_special_tag under the equity method of accounting , an investee company 's accounts are not reflected within our consolidated balance sheets and statements of income and comprehensive income ; however , our share of the earnings or losses of the investee company is reflected in the caption “ share of earnings ( losses ) in equity investment affiliates ” in the consolidated statements of income and comprehensive income . our carrying value ( including advance to the investees ) in equity method investee companies is reflected in the caption “ investment in and advance to equity investment affiliates ” in our consolidated balance sheets . when our carrying value in an equity method investee company is reduced to zero , no further losses are recorded in our consolidated financial statements unless we guaranteed obligations of the investee company or have committed additional funding . when the investee company subsequently reports income , we will not record its share of such income until it equals the amount of its share of losses not previously recognized . goodwill goodwill represents the excess of the purchase price over the fair value of the identifiable assets and liabilities acquired as a result of acquisitions of interests in our subsidiaries . goodwill is not depreciated or amortized but is tested for impairment at the reporting unit level at least on an annual basis , and between annual tests when an event occurs or circumstances change that could indicate that the asset might be impaired . the test consists of two steps . first , identify potential impairment by comparing the fair value of the reporting unit to its carrying amount , including goodwill . if the fair value of the reporting unit is greater than its carrying amount , goodwill is not considered impaired . second , if there is impairment identified in the first step , an impairment loss is recognized for any excess of the carrying amount of the reporting unit 's goodwill over the implied fair value of goodwill . the implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation , in accordance with topic 805 , “ business combinations . ” application of a goodwill impairment test requires significant management judgment , including the identification of reporting units , assigning assets and liabilities to reporting units , assigning goodwill to reporting units , and determining the fair value of each reporting unit . the judgment in estimating the fair value of reporting units 47 includes estimating future cash flows , determining appropriate discount rates and making other assumptions . changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit . deconsolidation we accounted for deconsolidation of subsidiaries in accordance with asc topic 810 “ consolidation ” . in accordance with asc topic 810-10-40-5 , the parent shall account for the deconsolidation of a subsidiary by recognizing a gain or loss in net income attributable to the parent , measured as the difference between : a. the aggregate of all of the following : 1. the fair value of any consideration received ; 2. the fair value of any retained noncontrolling investment in the former subsidiary at the date the subsidiary is deconsolidated ; 3. the carrying amount of any noncontrolling interest in the former subsidiary ( including any accumulated other comprehensive income attributable to the noncontrolling interest ) at the date the subsidiary is deconsolidated . b. the carrying amount of the former subsidiary 's assets and liabilities . changes in a parent 's ownership interest while the parent retains its controlling financial interest in its subsidiary we accounted for changes in a parent 's ownership interest while the parent retains its controlling financial interest in its subsidiary in accordance with asc topic 810 “ consolidation ” , subtopic 10 , which requires the transaction be accounted for as equity transactions ( investments by owners and distributions to owners acting in their capacity as owners ) . therefore , no gain or loss shall be recognized in consolidated net income or comprehensive income . the carrying amount of the noncontrolling interest shall be adjusted to reflect the change in its ownership interest in the subsidiary . any difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interest is adjusted shall be recognized in equity attributable to the parent and reallocated the subsidiary 's accumulated comprehensive income , if any , among the parent and the noncontrolling interest through an adjustment to the parent 's equity . revenue recognition our revenue recognition policies are in compliance with asc topic 605. in accordance with asc topic 605 , revenues are recognized when all four of the following criteria are met : ( i ) persuasive evidence of an arrangement exists , ( ii ) the service has been rendered , ( iii ) the fees are fixed or determinable , and ( iv ) collectability is reasonably assured . sales include revenues from reselling of advertising time purchased from tv stations , internet advertising and providing related value added technical services , reselling of internet advertising spaces and other advertisement related resources . no revenue from advertising-for-advertising barter transactions was recognized because the transactions did not meet the criteria for recognition in asc topic 605 , subtopic 20. advertising contracts establish the fixed price and advertising services to be provided . pursuant to advertising contracts , we provide advertisement placements in different formats , including but not limited to banners , links , logos , buttons , rich media and content integration . revenue is recognized ratably over the period the advertising is provided and , as such , we consider the services to have been delivered . we treat all elements of advertising contracts as a single unit of accounting for revenue recognition purposes . value added technical services are

net cash used in investing activities : for the year ended december 31 , 2011 , our net cash used in investing activities included the following transactions : ( 1 ) we paid approximately us $ 9.7 million in connection with the acquisitions incurred during the year , including the acquisitions of a 100 % equity interest of quanzhou zhi yuan and a 51 % equity interest of quanzhou tian xi shun he in january 2011 , the acquisition of the remaining 49 % equity interest in quanzhou tian xi shun he in june 2011 and the acquisition of a 51 % equity interest in sou yi lian mei in december 2011 ; ( 2 ) total cash acquired from the above acquisitions recorded as cash inflow from investing activities during the year was approximately us $ 0.3 million , ( 3 ) we paid approximately us $ 1.7 million to our equity investment affiliates during the year , including an additional us $ 1.5 million working capital loan to beijing yang guang in the first quarter of 2011 and an approximately us $ 0.2 million additional cash investment to shenzhen mingshan in the third quarter of 2011 ; ( 4 ) from august to december 2011 , after we disposed our investment in beijing yang guang , we collected approximately us $ 8.9 million in the aggregate for ( i ) the cash consideration of the disposal of the 49 % equity interest in beijing yang guang ; ( ii ) our pro-rata share of earnings generated from beijing yang guang during the period when we held the 49 % equity interest in it ; and ( iii ) all of the outstanding working capital loans lent to beijing yang guang in 2010 and 2011 ; ( 5 ) cash effect of deconsolidation of shenzhen mingshan and zhao shang ke hubei recorded as cash outflow from investing activities during the year was approximately us $ 1.7 million , which represented the cash balance of the deconsolidated subsidiaries as of their respective deconsolidation dates ; ( 6 ) we also invested approximately us $ 0.7 million in fixed assets and approximately us $ 1.4 million in intangible assets , which investments were primarily related to the cloud-computing based software technologies purchased during

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. ” prc regulations prohibit direct foreign ownership of business entities providing internet content , or icp services in the prc , and restrict foreign ownership of business entities engaging in the advertising business . in october 2008 , a series of contractual arrangements ( the “ contractual agreements ” or the “ vie agreements ) were 42 entered between rise king wfoe and business opportunity online ( beijing ) network technology co. , ltd. ( “ business opportunity online ” ) , beijing cnet online advertising co. , ltd. ( “ beijing cnet online ” ) ( collectively the “ prc operating entities ” ) and its common individual owners ( the “ prc shareholders ” or the “ control group ” ) . the contractual agreements allowed china net bvi through rise king wfoe to , among other things , secure significant rights to influence the prc operating entities ' business operations , policies and management , approve all matters requiring shareholder approval , and receive 100 % of the income earned by the prc operating entities . in return , rise king wfoe provides consulting services to the prc operating entities . in addition , to ensure that the prc operating entities and the prc shareholders perform their obligations under the contractual arrangements , the prc shareholders have pledged all of their equity interests in the prc operating entities to rise king wfoe . they have also entered into an option agreement with rise king wfoe which provides that at such time as when the current restrictions under prc law on foreign ownership of chinese companies engaging in the internet content , information services or advertising business in china are lifted , rise king wfoe may exercise its option to purchase the equity interests in the prc operating entities directly . at the time the above contractual agreements were entered into , the sole registered shareholder of rise king bvi was mr. yang li , who owned 10,000 common stock of rise king bvi , which constituted all of the issued and outstanding shares of rise king bvi . mr. yang li entered into slow-walk agreements with each of the control group individuals . pursuant to the slow-walk agreements , upon the satisfaction of certain conditions , the control group individuals had the option to purchase the 10,000 shares of rise king bvi ( 4,600 by mr. handong cheng , 3,600 by mr. xuanfu liu and 1,800 by ms. li sun , acting as a nominee for mr. zhige zhang ) held by mr. yang li , at a purchase price of us $ 1 per share ( the par value of rise king bvi 's common stock ) . under the terms of the slow-walk agreement , the control group will had the right to purchase the shares as follows : ( 1 ) one-third of the shares when china net bvi and its prc subsidiaries and affiliates ( “ the group ” ) will generate at least rmb 100,000,000 of the gross revenue for twelve months commencing on january 1 , 2009 and ending on december 31 , 2009 ( the “ performance period i ” ) ; ( 2 ) one-third of the shares when the group will generate at least rmb 60,000,000 of the gross revenue for six months commencing on january 1 , 2010 and ending on june 30 , 2010 ( the “ performance period ii ) ; ( 3 ) one-third of the shares when the group generates at least rmb 60,000,000 of the gross revenue for six months commencing on july 1 , 2010 and ending on december 31 , 2010 ( the “ performance period iii ” ) . each control group individual had the right to purchase one-third of the total number of shares that he or she was eligible to purchase under the slow-walk agreement upon the satisfaction of each condition described above . the control group individuals also entered an entrustment agreement with rise king bvi , pursuant to which , based on the 55 % equity interest held in the group , rise king bvi entrusted the control group to manage the group companies by irrevocably authorizing the control group to act on behalf of rise king bvi , as the exclusive agents and attorneys with respect to all matters concerning rise king bvi 's shareholding , during the term of this agreement . the control group also agreed and confirmed that he or she would act in concert with one another when exercising the rights authorized to them in this agreement . the entrustment period commenced on the execution date of the agreement and was effective for a period of ten years , until its termination , as discussed below . as described above , each of mssrs . handong cheng , and xuanfu liu and ms. li sun entered into share transfer agreements ( slow-walk agreement ) with mr. yang li , the sole shareholder of rise king bvi , which beneficially owns an aggregate of 7,434,940 shares of the company 's common stock , ( the “ subject shares ” ) . on march 30 , 2011 , pursuant to the terms of the share transfer agreement , ms. li sun transferred her right to acquire 18 % of the shares of rise king bvi under the share transfer agreement to mr. zhige zhang , the chief financial officer of the company . on march 30 , 2011 , each of mssrs . handong cheng , xuanfu liu and zhige zhang ( the “ prc persons ” ) exercised their right to purchase the outstanding stock of rise king bvi . on the same date , the entrustment agreement originally entered into among rise king bvi and the control group was terminated . as a result of these transactions , the ownership of rise king bvi was transferred from mr. yang li to the prc persons . story_separator_special_tag under the equity method of accounting , an investee company 's accounts are not reflected within our consolidated balance sheets and statements of income and comprehensive income ; however , our share of the earnings or losses of the investee company is reflected in the caption “ share of earnings ( losses ) in equity investment affiliates ” in the consolidated statements of income and comprehensive income . our carrying value ( including advance to the investees ) in equity method investee companies is reflected in the caption “ investment in and advance to equity investment affiliates ” in our consolidated balance sheets . when our carrying value in an equity method investee company is reduced to zero , no further losses are recorded in our consolidated financial statements unless we guaranteed obligations of the investee company or have committed additional funding . when the investee company subsequently reports income , we will not record its share of such income until it equals the amount of its share of losses not previously recognized . goodwill goodwill represents the excess of the purchase price over the fair value of the identifiable assets and liabilities acquired as a result of acquisitions of interests in our subsidiaries . goodwill is not depreciated or amortized but is tested for impairment at the reporting unit level at least on an annual basis , and between annual tests when an event occurs or circumstances change that could indicate that the asset might be impaired . the test consists of two steps . first , identify potential impairment by comparing the fair value of the reporting unit to its carrying amount , including goodwill . if the fair value of the reporting unit is greater than its carrying amount , goodwill is not considered impaired . second , if there is impairment identified in the first step , an impairment loss is recognized for any excess of the carrying amount of the reporting unit 's goodwill over the implied fair value of goodwill . the implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation , in accordance with topic 805 , “ business combinations . ” application of a goodwill impairment test requires significant management judgment , including the identification of reporting units , assigning assets and liabilities to reporting units , assigning goodwill to reporting units , and determining the fair value of each reporting unit . the judgment in estimating the fair value of reporting units 47 includes estimating future cash flows , determining appropriate discount rates and making other assumptions . changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit . deconsolidation we accounted for deconsolidation of subsidiaries in accordance with asc topic 810 “ consolidation ” . in accordance with asc topic 810-10-40-5 , the parent shall account for the deconsolidation of a subsidiary by recognizing a gain or loss in net income attributable to the parent , measured as the difference between : a. the aggregate of all of the following : 1. the fair value of any consideration received ; 2. the fair value of any retained noncontrolling investment in the former subsidiary at the date the subsidiary is deconsolidated ; 3. the carrying amount of any noncontrolling interest in the former subsidiary ( including any accumulated other comprehensive income attributable to the noncontrolling interest ) at the date the subsidiary is deconsolidated . b. the carrying amount of the former subsidiary 's assets and liabilities . changes in a parent 's ownership interest while the parent retains its controlling financial interest in its subsidiary we accounted for changes in a parent 's ownership interest while the parent retains its controlling financial interest in its subsidiary in accordance with asc topic 810 “ consolidation ” , subtopic 10 , which requires the transaction be accounted for as equity transactions ( investments by owners and distributions to owners acting in their capacity as owners ) . therefore , no gain or loss shall be recognized in consolidated net income or comprehensive income . the carrying amount of the noncontrolling interest shall be adjusted to reflect the change in its ownership interest in the subsidiary . any difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interest is adjusted shall be recognized in equity attributable to the parent and reallocated the subsidiary 's accumulated comprehensive income , if any , among the parent and the noncontrolling interest through an adjustment to the parent 's equity . revenue recognition our revenue recognition policies are in compliance with asc topic 605. in accordance with asc topic 605 , revenues are recognized when all four of the following criteria are met : ( i ) persuasive evidence of an arrangement exists , ( ii ) the service has been rendered , ( iii ) the fees are fixed or determinable , and ( iv ) collectability is reasonably assured . sales include revenues from reselling of advertising time purchased from tv stations , internet advertising and providing related value added technical services , reselling of internet advertising spaces and other advertisement related resources . no revenue from advertising-for-advertising barter transactions was recognized because the transactions did not meet the criteria for recognition in asc topic 605 , subtopic 20. advertising contracts establish the fixed price and advertising services to be provided . pursuant to advertising contracts , we provide advertisement placements in different formats , including but not limited to banners , links , logos , buttons , rich media and content integration . revenue is recognized ratably over the period the advertising is provided and , as such , we consider the services to have been delivered . we treat all elements of advertising contracts as a single unit of accounting for revenue recognition purposes . value added technical services are Narrative : net cash used in investing activities : for the year ended december 31 , 2011 , our net cash used in investing activities included the following transactions : ( 1 ) we paid approximately us $ 9.7 million in connection with the acquisitions incurred during the year , including the acquisitions of a 100 % equity interest of quanzhou zhi yuan and a 51 % equity interest of quanzhou tian xi shun he in january 2011 , the acquisition of the remaining 49 % equity interest in quanzhou tian xi shun he in june 2011 and the acquisition of a 51 % equity interest in sou yi lian mei in december 2011 ; ( 2 ) total cash acquired from the above acquisitions recorded as cash inflow from investing activities during the year was approximately us $ 0.3 million , ( 3 ) we paid approximately us $ 1.7 million to our equity investment affiliates during the year , including an additional us $ 1.5 million working capital loan to beijing yang guang in the first quarter of 2011 and an approximately us $ 0.2 million additional cash investment to shenzhen mingshan in the third quarter of 2011 ; ( 4 ) from august to december 2011 , after we disposed our investment in beijing yang guang , we collected approximately us $ 8.9 million in the aggregate for ( i ) the cash consideration of the disposal of the 49 % equity interest in beijing yang guang ; ( ii ) our pro-rata share of earnings generated from beijing yang guang during the period when we held the 49 % equity interest in it ; and ( iii ) all of the outstanding working capital loans lent to beijing yang guang in 2010 and 2011 ; ( 5 ) cash effect of deconsolidation of shenzhen mingshan and zhao shang ke hubei recorded as cash outflow from investing activities during the year was approximately us $ 1.7 million , which represented the cash balance of the deconsolidated subsidiaries as of their respective deconsolidation dates ; ( 6 ) we also invested approximately us $ 0.7 million in fixed assets and approximately us $ 1.4 million in intangible assets , which investments were primarily related to the cloud-computing based software technologies purchased during

since then we have refined our business model , developed and expanded our service sales teams , our suite of cloud based applications and our service revenue intelligence platform , and opened additional sales centers in the united states , europe and asia and a global sales operations center in kuala lumpur , malaysia . we broadened our customer focus from technology companies to also include technology-enabled healthcare and life sciences and industrial systems companies . we have experienced rapid growth in our operations in recent periods , as indicated by the following : our revenue has increased from $ 152.9 million in 2010 to $ 205.5 million in 2011 , representing an increase of 34 % . 34 our engagements have grown from approximately 100 as of december 31 , 2010 to over 120 as of december 31 , 2011. we are currently in the midst of a significant investment cycle in which we have taken steps designed to drive our future growth and profitability . we plan to offer additional cloud based applications , hire additional sales , service sales and other personnel and further build out our infrastructure to develop our technology . these steps impacted our expenses in recent periods and are expected to continue to impact our profitability in future periods . on march 24 , 2011 , our registration statement on form s-1 relating to our initial public offering ( “ipo” ) was declared effective by the securities and exchange commission ( “sec” ) . the ipo closed on march 30 , 2011 , at which time we sold 9,791,020 shares of our common stock ( inclusive of 1791,020 shares of common stock from the full exercise of the over-allotment option granted to the underwriters ) and the selling stockholders sold 3,940,133 of our common stock . the price of the shares sold in the offering was $ 10.00 per share . after deducting underwriting discounts , commissions and estimated offering expenses payable by us , the aggregate net proceeds received by us totaled approximately $ 87.7 million . we did not receive any proceeds from the sales of shares by the selling stockholders . on march 24 , 2011 , prior to the effective time of the ipo , we converted from a limited liability company into a delaware corporation and changed our name from servicesource international , llc to servicesource international , inc. in conjunction with the conversion , all of our outstanding common shares automatically converted into shares of our common stock . on august 3 , 2011 , we closed a secondary public offering of 10,350,000 shares of our common stock , which included 1,372,061 shares of common stock sold by us ( inclusive of 1,350,000 shares of common stock from the full exercise of the over-allotment option granted to the underwriters ) and 8,977,939 shares of common stock sold by the selling stockholders . the price of the shares sold in the offering was $ 17.50 per share . the total gross proceeds from the follow-on offering to us were $ 24.0 million . after deducting underwriting discounts , commissions and estimated offering expenses payable by us , the aggregate net proceeds received by us totaled approximately $ 23.0 million . we did not receive any proceeds from the sales of shares by the selling stockholders ( other than approximately $ 2.9 million in additional cash received from the exercise of stock options by certain of the selling stockholders ) . key business metrics in assessing the performance of our business , we consider a variety of business metrics in addition to the financial metrics discussed below under “—basis of presentation.” these key metrics include service revenue opportunity under management and number of engagements . service revenue opportunity under management . at december 31 , 2011 , we estimated our opportunity under management to be over $ 7 billion . service revenue opportunity under management ( “opportunity under management” ) is a forward-looking metric and is our estimate , as of a given date , of the value of all end customer service contracts that we will have the opportunity to sell on behalf of our customers over the subsequent twelve-month period . opportunity under management is not a measure of our expected revenue . in addition , opportunity under management reflects our estimate for a forward twelve-month period and should not be used to estimate our opportunity for any particular quarter within that period . the value of end customer contracts actually delivered during a twelve-month period should not be expected to occur in even quarterly increments due to seasonality and other factors impacting our customers and their end customers . we estimate the value of such end customer contracts based on a combination of factors , including the value of end customer contracts made available to us by customers in past periods , the minimum value of end customer contracts that our customers are required to give us the opportunity to sell pursuant to the terms of their contracts with us , periodic internal business reviews of our expectations as to the value of end customer contracts that will be made available to us by customers , the value of end customer contracts included in the spa and collaborative discussions with our customers assessing their expectations as to the value of service contracts that they will make available to us for sale . while the minimum value of end customer contracts that our customers are 35 required to give us represents a portion of our estimated opportunity under management , a significant portion of the opportunity under management is estimated based on the other factors described above . as our experience with our business , our customers and their contracts has grown , we have continually refined the process , improved the assumptions and expanded the data related to our calculation of opportunity under management . story_separator_special_tag predominantly all of the service contracts sold and managed by our sales centers relate to end customers located in the same geography . cost of revenue and gross profit our cost of revenue expenses include compensation , technology costs , including those related to the delivery of our cloud-based solutions , and allocated overhead costs . compensation includes salary , bonus , benefits and stock-based compensation for our dedicated service sales teams . our allocated overhead includes costs for facilities , information technology and depreciation , including amortization of internal-use software associated with our service revenue technology platform and cloud applications . allocated costs for facilities consist of rent , maintenance and compensation of personnel in our facilities departments . our allocated costs for information technology include costs associated with a third-party data center where we maintain our data servers , compensation of our information technology personnel and the cost of support and maintenance contracts associated with computer hardware and software . our overhead costs are allocated to all departments based on headcount . to the extent our customer base or opportunity under management expands , we may need to hire additional service sales personnel and invest in infrastructure to support such growth . we currently expect that our cost of revenue will fluctuate significantly and may increase on an absolute basis and as a percentage of revenue in the near term , including for the reasons discussed above under “—factors affecting our performance—implementation cycle.” operating expenses sales and marketing . sales and marketing expenses are the largest component of our operating expenses and consist primarily of compensation and sales commissions for our sales and marketing staff , allocated expenses and marketing programs and events . we sell our solutions through our global sales organization , which is organized across three geographic regions : nala , emea and apj . our commission plans provide that payment of commissions to our sales representatives is contingent on their continued employment , and we recognize expense over a period that is generally between twelve and fourteen months following the execution of the applicable contract . we currently expect sales and marketing expense to increase on an absolute basis and as a percentage of revenue in the near term based on commissions earned on customer contracts entered into in prior periods , as well as continued investments in sales and marketing personnel and programs as we expand our business domestically and internationally . research and development . research and development expenses consist primarily of compensation , allocated costs and the cost of third-party service providers . we focus our research and development efforts on developing new products and adding new features to our existing technology platform . in addition , we capitalize certain expenditures related to the development and enhancement of internal-use software related to our technology platform . we expect research and development spending , and the related expenses and capitalized costs , to increase on an absolute basis as a percentage of revenue in the near term as we continue to invest in our next-generation technology platform and cloud applications . general and administrative . general and administrative expenses consist primarily of compensation for our executive , human resources , finance and legal functions , and related expenses for professional fees for accounting , tax and legal services , as well as allocated expenses . we expect that our general and administrative expenses will increase on an absolute basis and as a percentage of revenue in the near term as our operations continue to expand and as a result of incremental personnel , informational technology and other costs associated with being a publicly-traded company . amortization of intangible assets . our intangible assets consist of goodwill , customer contracts and related relationships , trademarks and trade names and a non-competition agreement . except for goodwill , which is not amortized , all of our intangible assets were fully amortized as of march 31 , 2009 . 40 other income ( expense ) other income ( expense ) consists primarily of interest expense associated with borrowings under our credit facility and foreign exchange transaction gains and losses , partially offset by interest income . income tax ( benefit ) provision prior to march 1 , 2011 , we conducted our u.s. operations through servicesource international , llc ( the “llc” ) , a pass-through entity for tax purposes that filed its income tax return as a partnership for federal and state income tax purposes , and through llc 's wholly-owned u.s. taxable subsidiary . effective march 1 , 2011 , the llc elected to be taxable as a corporation for u.s. federal and state tax purposes . accordingly , servicesource international , inc. , formerly the llc , is subject to normal u.s. corporation income taxes beginning march 1 , 2011. we also have several subsidiaries formed in foreign jurisdictions which are subject to local income taxes . for a description of our accounting practices relating to income taxes , see “—critical accounting policies and estimates—income taxes” below . results of operations the table below sets forth our consolidated results of operations for the periods presented . the period-to-period comparison of financial results presented below is not necessarily indicative of financial results to be achieved in future periods . replace_table_token_6_th 41 the following table sets forth our operating results as a percentage of net revenue : replace_table_token_7_th years ended—december 31 , 2011 and 2010 net revenue replace_table_token_8_th the 34 % increase in net revenue in 2011 reflects an increase in the number of engagements and the value of service contracts sold on behalf of our customers . the number of customer engagements increased from approximately 100 as of december 31 , 2010 to over 120 as of december 31 , 2011. international revenue increased 55 % during 2011 as compared to 2010 with this growth supported by strong performance in our foreign service sales centers around the world in closing service revenue renewals

liquidity and capital resources at december 31 , 2011 , we had cash , cash equivalents and short-term investments of $ 108.9 million , which primarily consisted of money market mutual funds , municipal securities , commercial paper , and corporate bonds held by financial institutions . in addition we had a $ 20.0 million revolving credit facility . our primary source of cash is receipts from revenue . the primary uses of cash are payroll-related expenses and general operating expenses including facilities , information technology , travel and marketing . other sources of cash are proceeds from exercises of employee stock options and proceeds from our employee stock purchase plan ( “espp” ) . historically , we have financed our operations principally from cash provided by our operating activities and to a lesser extent from borrowings under various credit facilities . we believe our existing cash , cash equivalents and short-term investments and our currently available credit facility will be sufficient to meet our working capital and capital expenditure needs for at least the next twelve months . credit facility at december 31 , 2011 , we had a revolving credit facility which expires in february 2013 and provides borrowings of up to $ 20 million including amounts under letters of credit . amounts outstanding on the facility at december 31 , 2011 consisted of a letter of credit of $ 1.1 million as required under an operating lease agreement for office space . in february 2011 we entered into a new facility which has a non-use fee of 0.50 % per annum based on the average monthly available borrowing base . borrowings on the facility , including amounts outstanding under letter of credit , bear interest at either : ( i ) the libor rate plus an additional margin ; or ( ii ) the base rate ( i.e. , prime rate ) plus an additional margin . at december 31 , 2011 the interest rate for borrowings under the facility was 5.0 % .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. since then we have refined our business model , developed and expanded our service sales teams , our suite of cloud based applications and our service revenue intelligence platform , and opened additional sales centers in the united states , europe and asia and a global sales operations center in kuala lumpur , malaysia . we broadened our customer focus from technology companies to also include technology-enabled healthcare and life sciences and industrial systems companies . we have experienced rapid growth in our operations in recent periods , as indicated by the following : our revenue has increased from $ 152.9 million in 2010 to $ 205.5 million in 2011 , representing an increase of 34 % . 34 our engagements have grown from approximately 100 as of december 31 , 2010 to over 120 as of december 31 , 2011. we are currently in the midst of a significant investment cycle in which we have taken steps designed to drive our future growth and profitability . we plan to offer additional cloud based applications , hire additional sales , service sales and other personnel and further build out our infrastructure to develop our technology . these steps impacted our expenses in recent periods and are expected to continue to impact our profitability in future periods . on march 24 , 2011 , our registration statement on form s-1 relating to our initial public offering ( “ipo” ) was declared effective by the securities and exchange commission ( “sec” ) . the ipo closed on march 30 , 2011 , at which time we sold 9,791,020 shares of our common stock ( inclusive of 1791,020 shares of common stock from the full exercise of the over-allotment option granted to the underwriters ) and the selling stockholders sold 3,940,133 of our common stock . the price of the shares sold in the offering was $ 10.00 per share . after deducting underwriting discounts , commissions and estimated offering expenses payable by us , the aggregate net proceeds received by us totaled approximately $ 87.7 million . we did not receive any proceeds from the sales of shares by the selling stockholders . on march 24 , 2011 , prior to the effective time of the ipo , we converted from a limited liability company into a delaware corporation and changed our name from servicesource international , llc to servicesource international , inc. in conjunction with the conversion , all of our outstanding common shares automatically converted into shares of our common stock . on august 3 , 2011 , we closed a secondary public offering of 10,350,000 shares of our common stock , which included 1,372,061 shares of common stock sold by us ( inclusive of 1,350,000 shares of common stock from the full exercise of the over-allotment option granted to the underwriters ) and 8,977,939 shares of common stock sold by the selling stockholders . the price of the shares sold in the offering was $ 17.50 per share . the total gross proceeds from the follow-on offering to us were $ 24.0 million . after deducting underwriting discounts , commissions and estimated offering expenses payable by us , the aggregate net proceeds received by us totaled approximately $ 23.0 million . we did not receive any proceeds from the sales of shares by the selling stockholders ( other than approximately $ 2.9 million in additional cash received from the exercise of stock options by certain of the selling stockholders ) . key business metrics in assessing the performance of our business , we consider a variety of business metrics in addition to the financial metrics discussed below under “—basis of presentation.” these key metrics include service revenue opportunity under management and number of engagements . service revenue opportunity under management . at december 31 , 2011 , we estimated our opportunity under management to be over $ 7 billion . service revenue opportunity under management ( “opportunity under management” ) is a forward-looking metric and is our estimate , as of a given date , of the value of all end customer service contracts that we will have the opportunity to sell on behalf of our customers over the subsequent twelve-month period . opportunity under management is not a measure of our expected revenue . in addition , opportunity under management reflects our estimate for a forward twelve-month period and should not be used to estimate our opportunity for any particular quarter within that period . the value of end customer contracts actually delivered during a twelve-month period should not be expected to occur in even quarterly increments due to seasonality and other factors impacting our customers and their end customers . we estimate the value of such end customer contracts based on a combination of factors , including the value of end customer contracts made available to us by customers in past periods , the minimum value of end customer contracts that our customers are required to give us the opportunity to sell pursuant to the terms of their contracts with us , periodic internal business reviews of our expectations as to the value of end customer contracts that will be made available to us by customers , the value of end customer contracts included in the spa and collaborative discussions with our customers assessing their expectations as to the value of service contracts that they will make available to us for sale . while the minimum value of end customer contracts that our customers are 35 required to give us represents a portion of our estimated opportunity under management , a significant portion of the opportunity under management is estimated based on the other factors described above . as our experience with our business , our customers and their contracts has grown , we have continually refined the process , improved the assumptions and expanded the data related to our calculation of opportunity under management . story_separator_special_tag predominantly all of the service contracts sold and managed by our sales centers relate to end customers located in the same geography . cost of revenue and gross profit our cost of revenue expenses include compensation , technology costs , including those related to the delivery of our cloud-based solutions , and allocated overhead costs . compensation includes salary , bonus , benefits and stock-based compensation for our dedicated service sales teams . our allocated overhead includes costs for facilities , information technology and depreciation , including amortization of internal-use software associated with our service revenue technology platform and cloud applications . allocated costs for facilities consist of rent , maintenance and compensation of personnel in our facilities departments . our allocated costs for information technology include costs associated with a third-party data center where we maintain our data servers , compensation of our information technology personnel and the cost of support and maintenance contracts associated with computer hardware and software . our overhead costs are allocated to all departments based on headcount . to the extent our customer base or opportunity under management expands , we may need to hire additional service sales personnel and invest in infrastructure to support such growth . we currently expect that our cost of revenue will fluctuate significantly and may increase on an absolute basis and as a percentage of revenue in the near term , including for the reasons discussed above under “—factors affecting our performance—implementation cycle.” operating expenses sales and marketing . sales and marketing expenses are the largest component of our operating expenses and consist primarily of compensation and sales commissions for our sales and marketing staff , allocated expenses and marketing programs and events . we sell our solutions through our global sales organization , which is organized across three geographic regions : nala , emea and apj . our commission plans provide that payment of commissions to our sales representatives is contingent on their continued employment , and we recognize expense over a period that is generally between twelve and fourteen months following the execution of the applicable contract . we currently expect sales and marketing expense to increase on an absolute basis and as a percentage of revenue in the near term based on commissions earned on customer contracts entered into in prior periods , as well as continued investments in sales and marketing personnel and programs as we expand our business domestically and internationally . research and development . research and development expenses consist primarily of compensation , allocated costs and the cost of third-party service providers . we focus our research and development efforts on developing new products and adding new features to our existing technology platform . in addition , we capitalize certain expenditures related to the development and enhancement of internal-use software related to our technology platform . we expect research and development spending , and the related expenses and capitalized costs , to increase on an absolute basis as a percentage of revenue in the near term as we continue to invest in our next-generation technology platform and cloud applications . general and administrative . general and administrative expenses consist primarily of compensation for our executive , human resources , finance and legal functions , and related expenses for professional fees for accounting , tax and legal services , as well as allocated expenses . we expect that our general and administrative expenses will increase on an absolute basis and as a percentage of revenue in the near term as our operations continue to expand and as a result of incremental personnel , informational technology and other costs associated with being a publicly-traded company . amortization of intangible assets . our intangible assets consist of goodwill , customer contracts and related relationships , trademarks and trade names and a non-competition agreement . except for goodwill , which is not amortized , all of our intangible assets were fully amortized as of march 31 , 2009 . 40 other income ( expense ) other income ( expense ) consists primarily of interest expense associated with borrowings under our credit facility and foreign exchange transaction gains and losses , partially offset by interest income . income tax ( benefit ) provision prior to march 1 , 2011 , we conducted our u.s. operations through servicesource international , llc ( the “llc” ) , a pass-through entity for tax purposes that filed its income tax return as a partnership for federal and state income tax purposes , and through llc 's wholly-owned u.s. taxable subsidiary . effective march 1 , 2011 , the llc elected to be taxable as a corporation for u.s. federal and state tax purposes . accordingly , servicesource international , inc. , formerly the llc , is subject to normal u.s. corporation income taxes beginning march 1 , 2011. we also have several subsidiaries formed in foreign jurisdictions which are subject to local income taxes . for a description of our accounting practices relating to income taxes , see “—critical accounting policies and estimates—income taxes” below . results of operations the table below sets forth our consolidated results of operations for the periods presented . the period-to-period comparison of financial results presented below is not necessarily indicative of financial results to be achieved in future periods . replace_table_token_6_th 41 the following table sets forth our operating results as a percentage of net revenue : replace_table_token_7_th years ended—december 31 , 2011 and 2010 net revenue replace_table_token_8_th the 34 % increase in net revenue in 2011 reflects an increase in the number of engagements and the value of service contracts sold on behalf of our customers . the number of customer engagements increased from approximately 100 as of december 31 , 2010 to over 120 as of december 31 , 2011. international revenue increased 55 % during 2011 as compared to 2010 with this growth supported by strong performance in our foreign service sales centers around the world in closing service revenue renewals Narrative : liquidity and capital resources at december 31 , 2011 , we had cash , cash equivalents and short-term investments of $ 108.9 million , which primarily consisted of money market mutual funds , municipal securities , commercial paper , and corporate bonds held by financial institutions . in addition we had a $ 20.0 million revolving credit facility . our primary source of cash is receipts from revenue . the primary uses of cash are payroll-related expenses and general operating expenses including facilities , information technology , travel and marketing . other sources of cash are proceeds from exercises of employee stock options and proceeds from our employee stock purchase plan ( “espp” ) . historically , we have financed our operations principally from cash provided by our operating activities and to a lesser extent from borrowings under various credit facilities . we believe our existing cash , cash equivalents and short-term investments and our currently available credit facility will be sufficient to meet our working capital and capital expenditure needs for at least the next twelve months . credit facility at december 31 , 2011 , we had a revolving credit facility which expires in february 2013 and provides borrowings of up to $ 20 million including amounts under letters of credit . amounts outstanding on the facility at december 31 , 2011 consisted of a letter of credit of $ 1.1 million as required under an operating lease agreement for office space . in february 2011 we entered into a new facility which has a non-use fee of 0.50 % per annum based on the average monthly available borrowing base . borrowings on the facility , including amounts outstanding under letter of credit , bear interest at either : ( i ) the libor rate plus an additional margin ; or ( ii ) the base rate ( i.e. , prime rate ) plus an additional margin . at december 31 , 2011 the interest rate for borrowings under the facility was 5.0 % .

on august 8 , 2015 , we entered into the service provider agreement with the advisor and the service provider , pursuant to which the service provider agreed to provide , subject to the advisor 's oversight , certain real estate-related services , as well as sourcing and structuring of investment opportunities , performance of due diligence , and arranging debt financing and equity investment syndicates , solely with respect to investments in europe . on january 16 , 2018 , we notified the service provider that it was being terminated effective as of march 17 , 2018. additionally , as a result of our termination of the service provider , the property management and leasing agreement among an affiliate of the advisor and the service provider will terminate by its own terms . as required under the advisory agreement , the advisor and its affiliates will continue to manage our affairs on a day to day basis ( including management and leasing of our properties ) and will remain responsible for managing and providing other services with respect to our european investments . the advisor may engage one or more third parties to assist with these responsibilities , all subject to the terms of the advisory agreement . see item 3 . legal proceedings . during the year ended december 31 , 2017 , we sold 1 property and acquired 12 properties ( see note 4 — real estate investments , net to our audited consolidated financial statements in this annual report on form 10-k for further discussion ) . significant accounting estimates and accounting policies set forth below is a summary of the significant accounting estimates and accounting policies that management believes are important to the preparation of our financial statements . certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations , and require the application of significant judgment by our management . as a result , these estimates are subject to a degree of uncertainty . these significant accounting estimates and accounting policies include : revenue recognition our revenues , which are derived primarily from rental income , include rents that each tenant pays in accordance with the terms of each lease agreement and are reported on a straight-line basis over the initial term of the lease . since many of our leases provide for rental increases at specified intervals , straight-line basis accounting requires us to record a receivable and include in revenues unbilled rent receivables that we will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease . for each new lease after acquisition , the commencement date is the date the tenant takes possession of the space . for a lease modification , the commencement date is the date the lease modification is executed . we defer the revenue related to lease payments received from tenants in advance of their due dates . when we acquire a property , the acquisition date for purposes of this calculation is the commencement date . 47 as of december 31 , 2017 and 2016 , cumulative straight-line rents receivable in our audited consolidated balance sheets were $ 42.7 million and $ 30.5 million , respectively . for the years ended december 31 , 2017 and 2016 , our rental revenue included impacts of unbilled rental revenue of $ 10.5 million and $ 10.6 million , respectively , to adjust contractual rent to straight-line rent . we regularly review receivables related to rent and unbilled rent receivables and determine collectability by taking into consideration the tenant 's payment history , the financial condition of the tenant , business conditions in the industry in which the tenant operates and economic conditions in the geographic area in which the property is located . in the event that the collectability of a receivable is in doubt , we record an increase in our allowance for uncollectible accounts or record a direct write-off of the receivable in our audited consolidated statements of operations . cost recoveries from tenants are included in operating expense reimbursement in the period that the related costs are incurred , as applicable . investments in real estate investments in real estate are recorded at cost . improvements and replacements are capitalized when they extend the useful life of the asset . costs of repairs and maintenance are expensed as incurred . we evaluate the inputs , processes and outputs of each asset acquired to determine if the transaction is a business combination or asset acquisition . if an acquisition qualifies as a business combination , the related transaction costs are recorded as an expense in the audited consolidated statements of operations . if an acquisition qualifies as an asset acquisition , the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets . in business combinations , we allocate the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities and non-controlling interests based on their respective fair values . tangible assets may include land , land improvements , buildings , fixtures and tenant improvements . intangible assets or liabilities may include the value of in-place leases , above- and below- market leases and other identifiable assets or liabilities based on lease or property specific characteristics . in addition , any assumed mortgages receivable or payable and any assumed or issued non-controlling interests are recorded at their estimated fair values . in allocating the fair value to assumed mortgages , amounts are recorded to debt premiums or discounts based on the present value of the estimated cash flows , which is calculated to account for either above- or below-market interest rates . story_separator_special_tag operating fees to related parties represent compensation to the advisor for asset management services as well as property management fees paid to the advisor , property manager and service provider for our european investments . our advisory agreement requires us to pay a base management fee of $ 18.0 million per annum ( $ 4.5 million per quarter ) and a variable base management fee , both payable in cash , and incentive compensation , payable in cash and shares , if the applicable hurdles are met ( see note 11 - related party transactions to our audited consolidated financial statements in this annual report on form 10-k for details ) . the increase to operating fees in 2017 is driven in part by the payment of the variable base management fee equal to $ 3.4 million resulting from the issuance of $ 370.4 million of equity in connection with the merger , issuances of shares of common stock pursuant to the atm program and issuances of series a preferred stock . in addition , our operating fees paid to related parties increased due to an increase in the property management fees incurred on the acquisition of 12 properties during 2017 , and was partially offset by our disposition of one property during the first quarter of 2017 , and the disposition of 34 properties during the last two quarters of 2016. no incentive compensation was earned for the two years ended december 31 , 2017 and 2016 , respectively . our service provider and property manager are entitled to fees for the management of our properties . property management fees that we pay our service provider and property manager are calculated as a percentage of our gross revenues . during the years ended december 31 , 2017 and 2016 , property management fees we paid were $ 4.3 million and $ 3.8 million , respectively . the property manager elected to waive $ 1.2 million and $ 2.3 million of the property management fees for the years ended december 31 , 2017 and 2016 , respectively . acquisition and transaction related expenses we recorded $ 2.0 million of acquisition and transaction expenses during the year ended december 31 , 2017 , which consisted of third-party professional fees relating to the merger , fees related to the novation of our derivative contracts in connection with the refinancing in july 2017 of our prior credit facility pursuant to a credit agreement dated as july 25 , 2013 ( as amended from time to time thereafter , the `` prior credit facility `` ) with the credit facility , bridge facility commitment letter fees and legal fees . our 2017 acquisitions and dispositions are considered as asset acquisitions and disposal , therefore any applicable transaction costs were capitalized . acquisition and transaction related expenses during the year ended december 31 , 2016 of $ 9.8 million were primarily related to the merger . 51 general and administrative expense general and administrative expense was $ 8.6 million and $ 7.1 million for the years ended december 31 , 2017 and 2016 , respectively , primarily consisting of professional fees including audit and taxation related services , board member compensation , and directors ' and officers ' liability insurance . the increase for the twelve months ended december 31 , 2017 compared to the twelve months ended december 31 , 2016 is primarily due to the increase in directors and officer 's liability insurance premiums and professional fees . equity based compensation during the years ended december 31 , 2017 and 2016 , we recognized income of $ ( 4.4 ) million and expense of $ 3.4 million , respectively , with respect to equity-based compensation primarily related to changes in the fair value of the opp offset by the amortization of restricted shares and rsus granted to our independent directors . the decrease in equity based compensation in 2017 is primarily due to a decrease in the opp valuation , which resulted from the second year of the performance period under the opp having ended without any ltip units having been earned , due to a decrease in our stock price , and our peer groups having generally outperformed us . see note 13 - share-based compensation to our audited consolidated financial statements in this annual report on form 10-k for details regarding the opp . depreciation and amortization expense depreciation and amortization expense was $ 113.0 million and $ 94.5 million for the years ended december 31 , 2017 and 2016 , respectively . the increase in 2017 is due to a full year of depreciation and amortization expense for the 15 properties acquired through the merger during 2016 , coupled with our short-period depreciation and amortization for the 12 properties acquired in 2017 , and aided by a rise in the value of the gbp and euro throughout 2017 compared to the usd . this expense is offset slightly by the absence of depreciation and amortization for the one property disposition in the first quarter of 2017 and for the 34 properties sold during the last two quarters of 2016. additionally , in connection with the financial difficulties of a tenant , we wrote off the tenant related lease intangibles with a carrying amount of $ 1.8 million , net of accumulated amortization , during the third quarter of 2017. interest expense interest expense was $ 48.5 million and $ 39.1 million for the years ended december 31 , 2017 and 2016 , respectively . the increase was primarily related to $ 386.1 million of debt assumed in the merger and borrowings of $ 720.9 million based on usd equivalent incurred on july 24 , 2017 under the credit facility . these new borrowings were offset by the full repayment of $ 56.5 million outstanding under the mezzanine facility assumed in connection with the merger ( the `` mezzanine facility `` ) on march 30 , 2017 , the full repayment

cash flows from investing activities net cash used in investing activities during the year ended december 31 , 2017 of $ 79.0 million primarily related to cash paid for investments in real estate of $ 98.8 million and capital expenditures of $ 3.1 million , partially offset by net proceeds from the sale of real estate investments of $ 12.3 million from the disposition of kulicke & soffa and net proceeds from settlement of derivatives of $ 10.6 million . 55 net cash provided by investing activities during the year ended december 31 , 2016 of $ 134.1 million primarily related to proceeds from sale of real estate investments of $ 107.8 million on dispositions of 34 properties , cash acquired in merger transaction of $ 19.0 million and restricted cash acquired in merger transaction of $ 7.6 million . net cash used in investing activities during the year ended december 31 , 2015 of $ 222.3 million primarily related to our acquisition of 22 properties with an aggregate base purchase price of $ 255.0 million , which were partially funded with borrowings under our credit facility and by mortgage notes payable . cash flows from financing activities net cash used in financing activities of $ 30.7 million during the year ended december 31 , 2017 related to repayments on the prior credit facility and the credit facility of $ 1.0 billion , dividends to common stockholders of $ 142.7 million , repayment of the mezzanine facility of $ 56.5 million and repayments of mortgage notes payable of $ 21.9 million .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. on august 8 , 2015 , we entered into the service provider agreement with the advisor and the service provider , pursuant to which the service provider agreed to provide , subject to the advisor 's oversight , certain real estate-related services , as well as sourcing and structuring of investment opportunities , performance of due diligence , and arranging debt financing and equity investment syndicates , solely with respect to investments in europe . on january 16 , 2018 , we notified the service provider that it was being terminated effective as of march 17 , 2018. additionally , as a result of our termination of the service provider , the property management and leasing agreement among an affiliate of the advisor and the service provider will terminate by its own terms . as required under the advisory agreement , the advisor and its affiliates will continue to manage our affairs on a day to day basis ( including management and leasing of our properties ) and will remain responsible for managing and providing other services with respect to our european investments . the advisor may engage one or more third parties to assist with these responsibilities , all subject to the terms of the advisory agreement . see item 3 . legal proceedings . during the year ended december 31 , 2017 , we sold 1 property and acquired 12 properties ( see note 4 — real estate investments , net to our audited consolidated financial statements in this annual report on form 10-k for further discussion ) . significant accounting estimates and accounting policies set forth below is a summary of the significant accounting estimates and accounting policies that management believes are important to the preparation of our financial statements . certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations , and require the application of significant judgment by our management . as a result , these estimates are subject to a degree of uncertainty . these significant accounting estimates and accounting policies include : revenue recognition our revenues , which are derived primarily from rental income , include rents that each tenant pays in accordance with the terms of each lease agreement and are reported on a straight-line basis over the initial term of the lease . since many of our leases provide for rental increases at specified intervals , straight-line basis accounting requires us to record a receivable and include in revenues unbilled rent receivables that we will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease . for each new lease after acquisition , the commencement date is the date the tenant takes possession of the space . for a lease modification , the commencement date is the date the lease modification is executed . we defer the revenue related to lease payments received from tenants in advance of their due dates . when we acquire a property , the acquisition date for purposes of this calculation is the commencement date . 47 as of december 31 , 2017 and 2016 , cumulative straight-line rents receivable in our audited consolidated balance sheets were $ 42.7 million and $ 30.5 million , respectively . for the years ended december 31 , 2017 and 2016 , our rental revenue included impacts of unbilled rental revenue of $ 10.5 million and $ 10.6 million , respectively , to adjust contractual rent to straight-line rent . we regularly review receivables related to rent and unbilled rent receivables and determine collectability by taking into consideration the tenant 's payment history , the financial condition of the tenant , business conditions in the industry in which the tenant operates and economic conditions in the geographic area in which the property is located . in the event that the collectability of a receivable is in doubt , we record an increase in our allowance for uncollectible accounts or record a direct write-off of the receivable in our audited consolidated statements of operations . cost recoveries from tenants are included in operating expense reimbursement in the period that the related costs are incurred , as applicable . investments in real estate investments in real estate are recorded at cost . improvements and replacements are capitalized when they extend the useful life of the asset . costs of repairs and maintenance are expensed as incurred . we evaluate the inputs , processes and outputs of each asset acquired to determine if the transaction is a business combination or asset acquisition . if an acquisition qualifies as a business combination , the related transaction costs are recorded as an expense in the audited consolidated statements of operations . if an acquisition qualifies as an asset acquisition , the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets . in business combinations , we allocate the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities and non-controlling interests based on their respective fair values . tangible assets may include land , land improvements , buildings , fixtures and tenant improvements . intangible assets or liabilities may include the value of in-place leases , above- and below- market leases and other identifiable assets or liabilities based on lease or property specific characteristics . in addition , any assumed mortgages receivable or payable and any assumed or issued non-controlling interests are recorded at their estimated fair values . in allocating the fair value to assumed mortgages , amounts are recorded to debt premiums or discounts based on the present value of the estimated cash flows , which is calculated to account for either above- or below-market interest rates . story_separator_special_tag operating fees to related parties represent compensation to the advisor for asset management services as well as property management fees paid to the advisor , property manager and service provider for our european investments . our advisory agreement requires us to pay a base management fee of $ 18.0 million per annum ( $ 4.5 million per quarter ) and a variable base management fee , both payable in cash , and incentive compensation , payable in cash and shares , if the applicable hurdles are met ( see note 11 - related party transactions to our audited consolidated financial statements in this annual report on form 10-k for details ) . the increase to operating fees in 2017 is driven in part by the payment of the variable base management fee equal to $ 3.4 million resulting from the issuance of $ 370.4 million of equity in connection with the merger , issuances of shares of common stock pursuant to the atm program and issuances of series a preferred stock . in addition , our operating fees paid to related parties increased due to an increase in the property management fees incurred on the acquisition of 12 properties during 2017 , and was partially offset by our disposition of one property during the first quarter of 2017 , and the disposition of 34 properties during the last two quarters of 2016. no incentive compensation was earned for the two years ended december 31 , 2017 and 2016 , respectively . our service provider and property manager are entitled to fees for the management of our properties . property management fees that we pay our service provider and property manager are calculated as a percentage of our gross revenues . during the years ended december 31 , 2017 and 2016 , property management fees we paid were $ 4.3 million and $ 3.8 million , respectively . the property manager elected to waive $ 1.2 million and $ 2.3 million of the property management fees for the years ended december 31 , 2017 and 2016 , respectively . acquisition and transaction related expenses we recorded $ 2.0 million of acquisition and transaction expenses during the year ended december 31 , 2017 , which consisted of third-party professional fees relating to the merger , fees related to the novation of our derivative contracts in connection with the refinancing in july 2017 of our prior credit facility pursuant to a credit agreement dated as july 25 , 2013 ( as amended from time to time thereafter , the `` prior credit facility `` ) with the credit facility , bridge facility commitment letter fees and legal fees . our 2017 acquisitions and dispositions are considered as asset acquisitions and disposal , therefore any applicable transaction costs were capitalized . acquisition and transaction related expenses during the year ended december 31 , 2016 of $ 9.8 million were primarily related to the merger . 51 general and administrative expense general and administrative expense was $ 8.6 million and $ 7.1 million for the years ended december 31 , 2017 and 2016 , respectively , primarily consisting of professional fees including audit and taxation related services , board member compensation , and directors ' and officers ' liability insurance . the increase for the twelve months ended december 31 , 2017 compared to the twelve months ended december 31 , 2016 is primarily due to the increase in directors and officer 's liability insurance premiums and professional fees . equity based compensation during the years ended december 31 , 2017 and 2016 , we recognized income of $ ( 4.4 ) million and expense of $ 3.4 million , respectively , with respect to equity-based compensation primarily related to changes in the fair value of the opp offset by the amortization of restricted shares and rsus granted to our independent directors . the decrease in equity based compensation in 2017 is primarily due to a decrease in the opp valuation , which resulted from the second year of the performance period under the opp having ended without any ltip units having been earned , due to a decrease in our stock price , and our peer groups having generally outperformed us . see note 13 - share-based compensation to our audited consolidated financial statements in this annual report on form 10-k for details regarding the opp . depreciation and amortization expense depreciation and amortization expense was $ 113.0 million and $ 94.5 million for the years ended december 31 , 2017 and 2016 , respectively . the increase in 2017 is due to a full year of depreciation and amortization expense for the 15 properties acquired through the merger during 2016 , coupled with our short-period depreciation and amortization for the 12 properties acquired in 2017 , and aided by a rise in the value of the gbp and euro throughout 2017 compared to the usd . this expense is offset slightly by the absence of depreciation and amortization for the one property disposition in the first quarter of 2017 and for the 34 properties sold during the last two quarters of 2016. additionally , in connection with the financial difficulties of a tenant , we wrote off the tenant related lease intangibles with a carrying amount of $ 1.8 million , net of accumulated amortization , during the third quarter of 2017. interest expense interest expense was $ 48.5 million and $ 39.1 million for the years ended december 31 , 2017 and 2016 , respectively . the increase was primarily related to $ 386.1 million of debt assumed in the merger and borrowings of $ 720.9 million based on usd equivalent incurred on july 24 , 2017 under the credit facility . these new borrowings were offset by the full repayment of $ 56.5 million outstanding under the mezzanine facility assumed in connection with the merger ( the `` mezzanine facility `` ) on march 30 , 2017 , the full repayment Narrative : cash flows from investing activities net cash used in investing activities during the year ended december 31 , 2017 of $ 79.0 million primarily related to cash paid for investments in real estate of $ 98.8 million and capital expenditures of $ 3.1 million , partially offset by net proceeds from the sale of real estate investments of $ 12.3 million from the disposition of kulicke & soffa and net proceeds from settlement of derivatives of $ 10.6 million . 55 net cash provided by investing activities during the year ended december 31 , 2016 of $ 134.1 million primarily related to proceeds from sale of real estate investments of $ 107.8 million on dispositions of 34 properties , cash acquired in merger transaction of $ 19.0 million and restricted cash acquired in merger transaction of $ 7.6 million . net cash used in investing activities during the year ended december 31 , 2015 of $ 222.3 million primarily related to our acquisition of 22 properties with an aggregate base purchase price of $ 255.0 million , which were partially funded with borrowings under our credit facility and by mortgage notes payable . cash flows from financing activities net cash used in financing activities of $ 30.7 million during the year ended december 31 , 2017 related to repayments on the prior credit facility and the credit facility of $ 1.0 billion , dividends to common stockholders of $ 142.7 million , repayment of the mezzanine facility of $ 56.5 million and repayments of mortgage notes payable of $ 21.9 million .

our gaap-based net income will be affected by non-cash charges relating to the amortization of customer related intangible assets and other intangible assets attributable to completed acquisitions . under applicable accounting standards , purchasers are required to allocate the total consideration in a business combination to the identified assets acquired and liabilities assumed based on their fair values at the time of acquisition . the excess of the consideration paid over the fair value of the identifiable net assets acquired is to be allocated to goodwill , which is tested at least annually for impairment . applicable accounting standards require that we separately account for and value certain identifiable intangible assets based on the unique facts and circumstances of each acquisition . as a result of our acquisition strategy , our net income will include material non-cash charges relating to the amortization of customer related intangible assets and other intangible assets acquired in our acquisitions . although these charges may increase as we complete more acquisitions , we believe we will be growing the value of our intangible assets ( e.g . , customer relationships ) . thus , we believe that earnings before interest , taxes , depreciation and amortization , or ebitda , is a useful financial measure for investors because it eliminates the effect of these non-cash costs and provides an important metric for our business . ebitda is a non-gaap measure of income and does not include the effects of preferred stock dividends , interest and taxes , and excludes the “ non-cash ” effects of depreciation and amortization on long-term assets . companies have some discretion as to which elements of depreciation and amortization are excluded in the ebitda calculation . we exclude all depreciation charges related to technology and equipment , all amortization charges ( including amortization of leasehold improvements ) , and other intangible assets . we then further adjust ebitda to exclude changes in contingent consideration , expenses specifically attributable to acquisitions , severance and lease termination costs , foreign exchange gains and losses , extraordinary items , share-based compensation expense , non-recurring litigation expenses , and other non-cash charges . adjusted ebitda is then normalized by excluding non-recurring transition costs . while management considers ebitda , adjusted ebitda , and normalized adjusted ebitda useful in analyzing our results , it is not intended to replace any presentation included in our consolidated financial statements . our operating results are also subject to seasonal trends when measured on a quarterly basis . the impact of seasonality on our business will depend on numerous factors , including the markets in which we operate , holiday seasons , consumer demand and economic conditions . since our revenue is largely derived from customers whose shipments are dependent upon consumer demand and just-in-time production schedules , the timing of our revenue is often beyond our control . factors such as shifting demand for retail goods and or manufacturing production delays could unexpectedly affect the timing of our revenue . as we increase the scale of our operations , seasonal trends in one area of our business may be offset to an extent by opposite trends in another area . we can not accurately predict the timing of these factors , nor can we accurately estimate the impact of any particular factor , and thus we can give no assurance any historical seasonal patterns will continue in future periods . 29 critical accounting policies accounting policies , methods and estimates are an integral part of the consolidated financial statements prepared by management and are based upon management 's current judgments . these judgments are normally based on knowledge and experience regarding to past and current events and assumptions about future events . certain accounting policies , methods and estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ from management 's current judgments . while there are a number of accounting policies , methods and estimates that affect our financial statements , the areas that are particularly significant include revenue recognition , accruals for the cost of purchased transportation , the fair value of acquired assets and liabilities , changes in contingent consideration , accounting for the issuance of shares and share-based compensation , the assessment of the recoverability of long-lived assets , acquired intangible assets , goodwill , and the establishment of an allowance for doubtful accounts . we perform an annual impairment test for goodwill as of april 1 of each year , unless events or circumstances indicate impairment may have occurred before that time . we assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount . after assessing qualitative factors , if further testing is necessary we would determine the fair value of each reporting unit , and compare the fair value to the reporting unit 's carrying amount . acquired intangibles consist of customer related intangibles , trade names and trademarks , and non-compete agreements arising from our acquisitions . customer related intangibles are amortized using the straight-line method over a period of up to 10 years , trademarks and trade names are amortized using the straight line method over 15 years , and non-compete agreements are amortized using the straight line method over the term of the underlying agreements . we review long-lived assets to be held-and-used for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable . if the sum of the undiscounted expected future cash flows over the remaining useful life of a long-lived asset is less than its carrying amount , the asset is considered to be impaired . impairment losses are measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset . story_separator_special_tag the conditions imposed by the senior credit facility include the following : ( i ) the absence of an event of default under the senior credit facility , ( ii ) the acquisition must be consensual ; ( iii ) the company to be acquired must be in the transportation and logistics industry , located in the united states or certain other approved jurisdictions , and have a positive ebitda for the 12 month period most recently ended prior to such acquisition , ( iv ) no debt or liens may be incurred , assumed or result from the acquisition , subject to limited exceptions , ( v ) after giving effect for the funding of the acquisition , we must have availability under the senior credit facility of at least the greater of 15 % of the u.s.-based borrowing base and canadian-based borrowing base or $ 15.0 million , and u.s. availability of at least $ 10.0 million , and ( vi ) the pro forma fixed charge coverage ratio is at least 1.1 to 1.0. in the event that we are not able to satisfy the conditions of the senior credit facility in connection with a proposed acquisition , we must either forego the acquisition , obtain the consent of the senior lenders , or retire the senior credit facility . this may limit or slow our ability to achieve the critical mass we may need to achieve our strategic objectives . 38 as of june 30 , 2017 , we have gross availability of $ 65.9 million , net of $ 13.8 million in advances and letter of cred it reserves of approximately $ 0.3 million with approximately $ 51.8 million in availability under the senior credit facility to support future acquisitions and our ongoing working capital requirements . we expect to structure acquisitions with certain amount s paid at closing , and the balance paid over a number of years in the form of earn-out installments which are payable based upon the future earnings of the acquired businesses payable in cash , stock or some combination thereof . as we continue to execute ou r acquisition strategy , we will be required to make significant payments in the future if the earn-out installments under our various acquisitions become due . while we believe that a portion of any required cash payments will be generated by the acquired b usinesses , we may have to secure additional sources of capital to fund the remainder of any cash-based earn-out payments as they become due . this presents us with certain business risks relative to the availability of capacity under our senior credit facil ity , the availability and pricing of future fund raising , as well as the potential dilution to our stockholders to the extent the earn-outs are satisfied directly , or indirectly , from the sale of equity . senior secured integrated private debt fund iv lp term loan and fund v term loan on april 2 , 2015 , wheels obtained a cad $ 29.0 million senior secured canadian term loan from ipd iv pursuant to the ipd iv loan agreement . the company and its u.s. and canadian subsidiaries are guarantors of the wheels obligations thereunder . the loan matures on april 1 , 2024 and accrues interest at a rate of 6.65 % per annum . we made interest-only payments for the first 12 months and will make blended principal and interest through maturity . in connection with the loan , we paid an amount equal to five months of interest payments into a debt service reserve account controlled by ipd . in connection with our acquisition of lomas , wheels obtained a cad $ 10.0 million senior secured canadian term loan from ipd v pursuant to the ipd v loan agreement . the company and its u.s. and canadian subsidiaries are guarantors of the wheels obligations thereunder . the loan matures on june 1 , 2024 and accrues interest at a rate of 6.65 % per annum . the loan repayment consists of monthly blended principal and interest payments . the loans may be prepaid in whole at any time upon providing at least 30 days prior written notice and paying the difference between ( i ) the present value of the loan interest and the principal payments foregone discounted at the government of canada bond yield for the term from the date of prepayment to the maturity date , and ( ii ) the face value of the principal amount being prepaid . the loans are collateralized by a ( i ) first-priority security interest in all of the assets of wheels except the canadian a/r assets , ( ii ) a second-priority security interest in the canadian a/r assets , and ( iii ) a second-priority security interest on all of our assets . the terms of the loan are subject to certain financial covenants , which require us to maintain ( i ) a fixed charge coverage ratio of 1.1 to 1.0 during any trigger period , ( ii ) a debt service coverage ratio of at least 1.2 to 1.0 and ( iii ) a senior debt to ebitda ratio of at least 3.0 to 1.0. under the terms of the ipd loan agreements , we are permitted to make additional acquisitions without ipd 's consent only if certain conditions are satisfied , including , among others : ( i ) the equity interests or property acquired in such acquisition constitute a business reasonably related to our business or the business of wheels ; ( ii ) no default or event of default shall exist prior to or will be caused as a result of such acquisition ; ( iii ) we or wheels shall have provided ipd with at least 10 business days prior written notice of such acquisition that must include certain descriptive information and pro forma information regarding the acquisition ; ( iv ) such

liquidity and capital resources fiscal year ended june 30 , 2017 compared to fiscal year ended june 30 , 2016 net cash provided by operating activities was $ 14.9 million and $ 21.4 million for the years ended june 30 , 2017 and 2016 , respectively . the cash provided primarily consisted of net income or loss adjusted for depreciation and amortization and changes in accounts payable and accounts receivable . net cash used for investing activities was $ 16.3 million and $ 4.4 million for the years ended june 30 , 2017 and 2016 , respectively . the primary uses of cash were for acquisitions and purchases of technology and equipment . cash paid for acquisitions was $ 11.5 million and $ 0.8 million for the years ended june 30 , 2017 and 2016 , respectively . cash paid for purchases of technology and equipment was $ 4.9 million and $ 3.7 million for the years ended june 30 , 2017 and 2016 , respectively . net cash provided by financing activities was $ 2.5 million for the year ended june 30 , 2017 and net cash used for financing activities was $ 19.6 million for the year ended june 30 , 2016. the cash provided or used by financing activities primarily consisted of proceeds from or repayments to the credit facility , borrowings and repayment of notes payable , common stock offering , payments of contingent consideration and payments of preferred stock dividends .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. our gaap-based net income will be affected by non-cash charges relating to the amortization of customer related intangible assets and other intangible assets attributable to completed acquisitions . under applicable accounting standards , purchasers are required to allocate the total consideration in a business combination to the identified assets acquired and liabilities assumed based on their fair values at the time of acquisition . the excess of the consideration paid over the fair value of the identifiable net assets acquired is to be allocated to goodwill , which is tested at least annually for impairment . applicable accounting standards require that we separately account for and value certain identifiable intangible assets based on the unique facts and circumstances of each acquisition . as a result of our acquisition strategy , our net income will include material non-cash charges relating to the amortization of customer related intangible assets and other intangible assets acquired in our acquisitions . although these charges may increase as we complete more acquisitions , we believe we will be growing the value of our intangible assets ( e.g . , customer relationships ) . thus , we believe that earnings before interest , taxes , depreciation and amortization , or ebitda , is a useful financial measure for investors because it eliminates the effect of these non-cash costs and provides an important metric for our business . ebitda is a non-gaap measure of income and does not include the effects of preferred stock dividends , interest and taxes , and excludes the “ non-cash ” effects of depreciation and amortization on long-term assets . companies have some discretion as to which elements of depreciation and amortization are excluded in the ebitda calculation . we exclude all depreciation charges related to technology and equipment , all amortization charges ( including amortization of leasehold improvements ) , and other intangible assets . we then further adjust ebitda to exclude changes in contingent consideration , expenses specifically attributable to acquisitions , severance and lease termination costs , foreign exchange gains and losses , extraordinary items , share-based compensation expense , non-recurring litigation expenses , and other non-cash charges . adjusted ebitda is then normalized by excluding non-recurring transition costs . while management considers ebitda , adjusted ebitda , and normalized adjusted ebitda useful in analyzing our results , it is not intended to replace any presentation included in our consolidated financial statements . our operating results are also subject to seasonal trends when measured on a quarterly basis . the impact of seasonality on our business will depend on numerous factors , including the markets in which we operate , holiday seasons , consumer demand and economic conditions . since our revenue is largely derived from customers whose shipments are dependent upon consumer demand and just-in-time production schedules , the timing of our revenue is often beyond our control . factors such as shifting demand for retail goods and or manufacturing production delays could unexpectedly affect the timing of our revenue . as we increase the scale of our operations , seasonal trends in one area of our business may be offset to an extent by opposite trends in another area . we can not accurately predict the timing of these factors , nor can we accurately estimate the impact of any particular factor , and thus we can give no assurance any historical seasonal patterns will continue in future periods . 29 critical accounting policies accounting policies , methods and estimates are an integral part of the consolidated financial statements prepared by management and are based upon management 's current judgments . these judgments are normally based on knowledge and experience regarding to past and current events and assumptions about future events . certain accounting policies , methods and estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ from management 's current judgments . while there are a number of accounting policies , methods and estimates that affect our financial statements , the areas that are particularly significant include revenue recognition , accruals for the cost of purchased transportation , the fair value of acquired assets and liabilities , changes in contingent consideration , accounting for the issuance of shares and share-based compensation , the assessment of the recoverability of long-lived assets , acquired intangible assets , goodwill , and the establishment of an allowance for doubtful accounts . we perform an annual impairment test for goodwill as of april 1 of each year , unless events or circumstances indicate impairment may have occurred before that time . we assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount . after assessing qualitative factors , if further testing is necessary we would determine the fair value of each reporting unit , and compare the fair value to the reporting unit 's carrying amount . acquired intangibles consist of customer related intangibles , trade names and trademarks , and non-compete agreements arising from our acquisitions . customer related intangibles are amortized using the straight-line method over a period of up to 10 years , trademarks and trade names are amortized using the straight line method over 15 years , and non-compete agreements are amortized using the straight line method over the term of the underlying agreements . we review long-lived assets to be held-and-used for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable . if the sum of the undiscounted expected future cash flows over the remaining useful life of a long-lived asset is less than its carrying amount , the asset is considered to be impaired . impairment losses are measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset . story_separator_special_tag the conditions imposed by the senior credit facility include the following : ( i ) the absence of an event of default under the senior credit facility , ( ii ) the acquisition must be consensual ; ( iii ) the company to be acquired must be in the transportation and logistics industry , located in the united states or certain other approved jurisdictions , and have a positive ebitda for the 12 month period most recently ended prior to such acquisition , ( iv ) no debt or liens may be incurred , assumed or result from the acquisition , subject to limited exceptions , ( v ) after giving effect for the funding of the acquisition , we must have availability under the senior credit facility of at least the greater of 15 % of the u.s.-based borrowing base and canadian-based borrowing base or $ 15.0 million , and u.s. availability of at least $ 10.0 million , and ( vi ) the pro forma fixed charge coverage ratio is at least 1.1 to 1.0. in the event that we are not able to satisfy the conditions of the senior credit facility in connection with a proposed acquisition , we must either forego the acquisition , obtain the consent of the senior lenders , or retire the senior credit facility . this may limit or slow our ability to achieve the critical mass we may need to achieve our strategic objectives . 38 as of june 30 , 2017 , we have gross availability of $ 65.9 million , net of $ 13.8 million in advances and letter of cred it reserves of approximately $ 0.3 million with approximately $ 51.8 million in availability under the senior credit facility to support future acquisitions and our ongoing working capital requirements . we expect to structure acquisitions with certain amount s paid at closing , and the balance paid over a number of years in the form of earn-out installments which are payable based upon the future earnings of the acquired businesses payable in cash , stock or some combination thereof . as we continue to execute ou r acquisition strategy , we will be required to make significant payments in the future if the earn-out installments under our various acquisitions become due . while we believe that a portion of any required cash payments will be generated by the acquired b usinesses , we may have to secure additional sources of capital to fund the remainder of any cash-based earn-out payments as they become due . this presents us with certain business risks relative to the availability of capacity under our senior credit facil ity , the availability and pricing of future fund raising , as well as the potential dilution to our stockholders to the extent the earn-outs are satisfied directly , or indirectly , from the sale of equity . senior secured integrated private debt fund iv lp term loan and fund v term loan on april 2 , 2015 , wheels obtained a cad $ 29.0 million senior secured canadian term loan from ipd iv pursuant to the ipd iv loan agreement . the company and its u.s. and canadian subsidiaries are guarantors of the wheels obligations thereunder . the loan matures on april 1 , 2024 and accrues interest at a rate of 6.65 % per annum . we made interest-only payments for the first 12 months and will make blended principal and interest through maturity . in connection with the loan , we paid an amount equal to five months of interest payments into a debt service reserve account controlled by ipd . in connection with our acquisition of lomas , wheels obtained a cad $ 10.0 million senior secured canadian term loan from ipd v pursuant to the ipd v loan agreement . the company and its u.s. and canadian subsidiaries are guarantors of the wheels obligations thereunder . the loan matures on june 1 , 2024 and accrues interest at a rate of 6.65 % per annum . the loan repayment consists of monthly blended principal and interest payments . the loans may be prepaid in whole at any time upon providing at least 30 days prior written notice and paying the difference between ( i ) the present value of the loan interest and the principal payments foregone discounted at the government of canada bond yield for the term from the date of prepayment to the maturity date , and ( ii ) the face value of the principal amount being prepaid . the loans are collateralized by a ( i ) first-priority security interest in all of the assets of wheels except the canadian a/r assets , ( ii ) a second-priority security interest in the canadian a/r assets , and ( iii ) a second-priority security interest on all of our assets . the terms of the loan are subject to certain financial covenants , which require us to maintain ( i ) a fixed charge coverage ratio of 1.1 to 1.0 during any trigger period , ( ii ) a debt service coverage ratio of at least 1.2 to 1.0 and ( iii ) a senior debt to ebitda ratio of at least 3.0 to 1.0. under the terms of the ipd loan agreements , we are permitted to make additional acquisitions without ipd 's consent only if certain conditions are satisfied , including , among others : ( i ) the equity interests or property acquired in such acquisition constitute a business reasonably related to our business or the business of wheels ; ( ii ) no default or event of default shall exist prior to or will be caused as a result of such acquisition ; ( iii ) we or wheels shall have provided ipd with at least 10 business days prior written notice of such acquisition that must include certain descriptive information and pro forma information regarding the acquisition ; ( iv ) such Narrative : liquidity and capital resources fiscal year ended june 30 , 2017 compared to fiscal year ended june 30 , 2016 net cash provided by operating activities was $ 14.9 million and $ 21.4 million for the years ended june 30 , 2017 and 2016 , respectively . the cash provided primarily consisted of net income or loss adjusted for depreciation and amortization and changes in accounts payable and accounts receivable . net cash used for investing activities was $ 16.3 million and $ 4.4 million for the years ended june 30 , 2017 and 2016 , respectively . the primary uses of cash were for acquisitions and purchases of technology and equipment . cash paid for acquisitions was $ 11.5 million and $ 0.8 million for the years ended june 30 , 2017 and 2016 , respectively . cash paid for purchases of technology and equipment was $ 4.9 million and $ 3.7 million for the years ended june 30 , 2017 and 2016 , respectively . net cash provided by financing activities was $ 2.5 million for the year ended june 30 , 2017 and net cash used for financing activities was $ 19.6 million for the year ended june 30 , 2016. the cash provided or used by financing activities primarily consisted of proceeds from or repayments to the credit facility , borrowings and repayment of notes payable , common stock offering , payments of contingent consideration and payments of preferred stock dividends .

these statements represent projections , beliefs and expectations based on current circumstances and conditions and in light of recent events and trends , and you should not construe these statements either as assurances of performances or as promises of a given course of action . instead , various known and unknown factors are likely to cause our actual performance and management 's actions to vary , and the results of these variances may be both material and adverse . a list of the known material factors that may cause our results to vary , or may cause management to deviate from its current plans and expectations , is included in item 1a “ risk factors . ” the following discussion should also be read in conjunction with the consolidated financial statements and notes included herein . 37 going concern our independent registered public accounting firm has included an explanatory paragraph in their report on our financial statements included in this form 10-k which expressed doubt as to our ability to continue as a going concern . the accompanying financial statements have been prepared assuming that we will continue as a going concern , however , there can be no assurance that we will be able to do so . our recurring losses and difficulty in generating sufficient cash flow to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern , and our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty . business overview we are a medical device company developing and marketing filtration products for therapeutic applications , infection control , and water purification . our hemodiafiltration , or hdf , system is designed to improve the quality of life for the end-stage renal disease , or esrd , patient while addressing the critical financial and clinical needs of the care provider . esrd is a disease state characterized by the irreversible loss of kidney function . the nephros hdf system removes a range of harmful substances more effectively , and with greater capacity , than existing esrd treatment methods , particularly with respect to substances known collectively as “ middle molecules . ” these molecules have been found to contribute to such conditions as dialysis-related amyloidosis , carpal tunnel syndrome , degenerative bone disease and , ultimately , mortality in the esrd patient . nephros esrd products are sold and distributed throughout europe . we currently have three products in various stages of development in the hdf modality to deliver improved therapy to esrd patients : olpur mdhdf filter series ( which we sell in various countries in europe and currently consists of our md190 and md220 diafilters ) ; to our knowledge , it is the only filter designed expressly for hdf therapy and employs our proprietary mid-dilution diafiltration technology ; olpur h 2 h , our add-on module designed to allow the most common types of hemodialysis machines to be used for hdf therapy ; and olpur ns2000 system , our stand-alone hdf machine and associated filter technology . we have also developed our olpur hd 190 high-flux dialyzer cartridge , which incorporates the same materials as our olpur md series but does not employ our proprietary mid-dilution diafiltration technology . our olpur hd190 was designed for use with either hemodialysis or hemodiafiltration machines , and received its approval from the u.s. food and drug administration , or fda , under section 510 ( k ) of the food , drug and cosmetic act , or the fdc act , in june 2005. in january 2006 , we introduced our new dual stage ultrafilter , or dsu , water filtration system . our dsu represents a new and complementary product line to our existing esrd therapy business . the dsu incorporates our unique and proprietary dual stage filter architecture and is , to our knowledge , the only water filter that allows the user to sight-verify that the filter is properly performing its cleansing function . our research and development work on the olpur h 2 h and md mid-dilution filter technologies for esrd therapy provided the foundations for a proprietary multi-stage water filter that we believe is cost effective , extremely reliable , and long-lasting . the dsu is designed to remove a broad range of bacteria , viral agents and toxic substances , including salmonella , hepatitis , cholera , hiv , ebola virus , ricin toxin , legionella , fungi and e-coli . with over 5,800 registered hospitals in the united states alone ( as reported by the american hospital association in fast facts of january 3 , 2012 ) , we believe the hospital shower and faucet market can offer us a valuable opportunity as a first step in water filtration . the following trends , events and uncertainties may have a material impact on our potential sales , revenue and income from operations : 1 ) receiving regulatory approval for each of our esrd therapy products and our dsu product in our target territories ; 2 ) the completion and success of additional clinical trials ; 3 ) the market acceptance of hdf therapy in the united states and of our technologies and products in each of our target markets ; 4 ) our ability to effectively and efficiently manufacture , market and distribute our products ; 5 ) our ability to sell our products at competitive prices which exceed our per unit costs ; 6 ) the consolidation of dialysis clinics into larger clinical groups ; and 38 7 ) the current u.s. healthcare plan is to bundle reimbursement for dialysis treatmentwhich may force dialysis clinics to change therapies due to financial reasons . story_separator_special_tag the repayment of the $ 500,000 note , plus all accrued interest thereon , issued to lambda investors , llc , the payment of an 8 % sourcing/transaction fee ( $ 40,000 ) in respect of the note and an aggregate of $ 100,000 for reimbursement of lambda investors ' legal fees incurred in connection with the loan and the rights offering . on march 11 , 2011 , we effected a reverse stock split , in which every 20 shares of our common stock issued and outstanding immediately prior to the effective time , which was 5:00 p.m. on march 11 , 2011 , were converted into one share of common stock . fractional shares were not issued and stockholders who otherwise would have been entitled to receive a fractional share as a result of the reverse stock split received an amount in cash equal to $ 0.04 per pre-split share for such fractional interests . the number of shares of common stock issued and outstanding was reduced from approximately 201,300,000 pre-split to approximately 10,100,000 post-split . the reverse stock split was effected in connection with the rights offering and private placement . at december 31 , 2011 , we had an accumulated deficit of $ 94,268,000 , and we expect to incur additional losses in the foreseeable future at least until such time , if ever , that we are able to increase product sales or licensing revenue . we have financed our operations since inception primarily through the private placements of equity and debt securities and our initial public offering in september 2004 , from licensing revenue received from asahi kasei medical co. , ltd. ( “ asahi ” ) in march 2005 , a private placement of convertible debenture in june 2006 , a private investment in public equity in september 2007 , a private placement in july 2009 , and the october 2010 issuance of a senior secured note . in march 2011 , the rights offering and concurrent private placement to lambda investors provided additional capital . on june 27 , 2011 , the company entered into a license agreement , effective july 1 , 2011 , with bellco , as licensee . this agreement provides the company with payments of 500,000 , 750,000 , and 600,000 on july 1 , 2011 , january 15 , 2012 and january 15 , 2013 , respectively . the first two fixed payments have been received . the remaining fixed payment of 600,000 or approximately $ 778,000 , will take place in january 2013. beginning on january 1 , 2015 through and including december 31 , 2016 , bellco will pay to nephros a royalty based on the number of units of products sold per year in the territory as follows : for the first 103,000 units sold , 4.50 per unit ; thereafter , 4.00 per unit . anticipated payments from this license agreement will be a positive source of cash flow to the company . as of the date of this report , we estimate that these cash flows would allow us to keep operating only into the second quarter of 2013. our cash flow currently is not , and historically has not been , sufficient to meet our obligations and commitments . we must seek and obtain additional financing to fund our operations . if we can not raise sufficient capital , we will be forced to curtail our planned activities and operations or cease operations entirely and you will lose all of your investment in our company . there can be no assurance that we could raise sufficient capital on a timely basis or on satisfactory terms or at all . net cash used in operating activities was approximately $ 1,296,000 for the year ended december 31 , 2011 compared to approximately $ 1,292,000 for the year ended december 31 , 2010. the most significant items contributing to this net increase of approximately $ 4,000 in cash used in operating activities during the year ended december 31 , 2011 compared to the year ended december 31 , 2010 are highlighted below : · during 2011 , our net loss increased by approximately $ 427,000 , compared to 2010 ; · during 2011 , depreciation expense decreased by approximately $ 38,000 , compared to 2010 ; · our accounts receivable increased by approximately $ 832,000 during 2011 compared to 2010 ; 44 · our long-term assets increased by approximately $ 778,000 during 2011 compared to 2010 ; · our accounts payable and accrued expenses decreased by approximately $ 357,000 in the aggregate during 2011 compared to 2010 ; · during 2011 , we recorded amortization of debt issuance costs of $ 40,000 , whereas amortization of debt issuance costs in 2010 were $ 50,000 ; · during 2011 , we recorded non-cash interest of $ 12,000 , whereas non-cash interest was $ 15,000 in 2010 ; and · our inventory decreased by approximately $ 295,000 during 2011 compared to an increase of approximately $ 98,000 during 2010. offsetting the above changes are the following items : · during 2011 , our stock-based compensation expense , a non-cash expense , increased by approximately $ 164,000 compared to 2010 ; · during 2011 , our deferred revenue increased by approximately $ 2,061,000 compared to 2010 ; · our prepaid expenses and other assets decreased by approximately $ 76,000 during 2011 compared to 2010 ; and · during 2011 , we recorded an inventory reserve of $ 200,000 , whereas there was no inventory reserve in 2010. there was no cash used or provided by investing activities during the year ended december 31 , 2011. net cash used by investing activities was $ 30,000 for the year ended december 31 , 2010 , which was for the purchase of equipment . net cash provided by financing activities was approximately $ 2,723,000 for the year ended december 31 , 2011 , resulting from the issuance of stock and

liquidity and capital resources our future liquidity sources and requirements will depend on many factors , including : · the cost , timing and results of our efforts to obtain regulatory approval of our products , including specifically our 510 ( k ) application for our hdf system ; · the availability of additional financing , through the sale of equity securities or otherwise , on commercially reasonable terms or at all ; · the market acceptance of our products , and our ability to effectively and efficiently produce and market our products ; · the timing and costs associated with obtaining united states regulatory approval or the conformité européene , or ce , mark , which demonstrates compliance with the relevant european union requirements and is a regulatory prerequisite for selling our esrd therapy products in the european union and certain other countries that recognize ce marking ( for products other than our olpur mdhdf filter series , for which the ce mark was obtained in july 2003 ) ; · the continued progress in and the costs of clinical studies and other research and development programs ; · the costs involved in filing and enforcing patent claims and the status of competitive products ; and · the cost of litigation , including potential patent litigation and any other actual or threatened litigation . we expect to put our current capital resources to the following uses : · for the marketing and sales of our products ; · to obtain appropriate regulatory approvals and expand our research and development with respect to our esrd therapy products ; · to continue our esrd therapy product engineering ; · to pursue business opportunities with respect to our dsu water-filtration product ; and · for working capital purposes . 42 in response to liquidity issues experienced with our auction rate securities , and in order to facilitate greater liquidity in our short-term investments , on march 27 , 2008 , our board of directors adopted an investment , risk management and accounting policy . such policy limits the types of instruments or securities in which we may invest our excess funds in the future to : u.s. treasury securities ; certificates of deposit issued by money center banks ; money funds by money center banks ; repurchase agreements ; and eurodollar certificates of deposit issued by money center banks .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. these statements represent projections , beliefs and expectations based on current circumstances and conditions and in light of recent events and trends , and you should not construe these statements either as assurances of performances or as promises of a given course of action . instead , various known and unknown factors are likely to cause our actual performance and management 's actions to vary , and the results of these variances may be both material and adverse . a list of the known material factors that may cause our results to vary , or may cause management to deviate from its current plans and expectations , is included in item 1a “ risk factors . ” the following discussion should also be read in conjunction with the consolidated financial statements and notes included herein . 37 going concern our independent registered public accounting firm has included an explanatory paragraph in their report on our financial statements included in this form 10-k which expressed doubt as to our ability to continue as a going concern . the accompanying financial statements have been prepared assuming that we will continue as a going concern , however , there can be no assurance that we will be able to do so . our recurring losses and difficulty in generating sufficient cash flow to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern , and our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty . business overview we are a medical device company developing and marketing filtration products for therapeutic applications , infection control , and water purification . our hemodiafiltration , or hdf , system is designed to improve the quality of life for the end-stage renal disease , or esrd , patient while addressing the critical financial and clinical needs of the care provider . esrd is a disease state characterized by the irreversible loss of kidney function . the nephros hdf system removes a range of harmful substances more effectively , and with greater capacity , than existing esrd treatment methods , particularly with respect to substances known collectively as “ middle molecules . ” these molecules have been found to contribute to such conditions as dialysis-related amyloidosis , carpal tunnel syndrome , degenerative bone disease and , ultimately , mortality in the esrd patient . nephros esrd products are sold and distributed throughout europe . we currently have three products in various stages of development in the hdf modality to deliver improved therapy to esrd patients : olpur mdhdf filter series ( which we sell in various countries in europe and currently consists of our md190 and md220 diafilters ) ; to our knowledge , it is the only filter designed expressly for hdf therapy and employs our proprietary mid-dilution diafiltration technology ; olpur h 2 h , our add-on module designed to allow the most common types of hemodialysis machines to be used for hdf therapy ; and olpur ns2000 system , our stand-alone hdf machine and associated filter technology . we have also developed our olpur hd 190 high-flux dialyzer cartridge , which incorporates the same materials as our olpur md series but does not employ our proprietary mid-dilution diafiltration technology . our olpur hd190 was designed for use with either hemodialysis or hemodiafiltration machines , and received its approval from the u.s. food and drug administration , or fda , under section 510 ( k ) of the food , drug and cosmetic act , or the fdc act , in june 2005. in january 2006 , we introduced our new dual stage ultrafilter , or dsu , water filtration system . our dsu represents a new and complementary product line to our existing esrd therapy business . the dsu incorporates our unique and proprietary dual stage filter architecture and is , to our knowledge , the only water filter that allows the user to sight-verify that the filter is properly performing its cleansing function . our research and development work on the olpur h 2 h and md mid-dilution filter technologies for esrd therapy provided the foundations for a proprietary multi-stage water filter that we believe is cost effective , extremely reliable , and long-lasting . the dsu is designed to remove a broad range of bacteria , viral agents and toxic substances , including salmonella , hepatitis , cholera , hiv , ebola virus , ricin toxin , legionella , fungi and e-coli . with over 5,800 registered hospitals in the united states alone ( as reported by the american hospital association in fast facts of january 3 , 2012 ) , we believe the hospital shower and faucet market can offer us a valuable opportunity as a first step in water filtration . the following trends , events and uncertainties may have a material impact on our potential sales , revenue and income from operations : 1 ) receiving regulatory approval for each of our esrd therapy products and our dsu product in our target territories ; 2 ) the completion and success of additional clinical trials ; 3 ) the market acceptance of hdf therapy in the united states and of our technologies and products in each of our target markets ; 4 ) our ability to effectively and efficiently manufacture , market and distribute our products ; 5 ) our ability to sell our products at competitive prices which exceed our per unit costs ; 6 ) the consolidation of dialysis clinics into larger clinical groups ; and 38 7 ) the current u.s. healthcare plan is to bundle reimbursement for dialysis treatmentwhich may force dialysis clinics to change therapies due to financial reasons . story_separator_special_tag the repayment of the $ 500,000 note , plus all accrued interest thereon , issued to lambda investors , llc , the payment of an 8 % sourcing/transaction fee ( $ 40,000 ) in respect of the note and an aggregate of $ 100,000 for reimbursement of lambda investors ' legal fees incurred in connection with the loan and the rights offering . on march 11 , 2011 , we effected a reverse stock split , in which every 20 shares of our common stock issued and outstanding immediately prior to the effective time , which was 5:00 p.m. on march 11 , 2011 , were converted into one share of common stock . fractional shares were not issued and stockholders who otherwise would have been entitled to receive a fractional share as a result of the reverse stock split received an amount in cash equal to $ 0.04 per pre-split share for such fractional interests . the number of shares of common stock issued and outstanding was reduced from approximately 201,300,000 pre-split to approximately 10,100,000 post-split . the reverse stock split was effected in connection with the rights offering and private placement . at december 31 , 2011 , we had an accumulated deficit of $ 94,268,000 , and we expect to incur additional losses in the foreseeable future at least until such time , if ever , that we are able to increase product sales or licensing revenue . we have financed our operations since inception primarily through the private placements of equity and debt securities and our initial public offering in september 2004 , from licensing revenue received from asahi kasei medical co. , ltd. ( “ asahi ” ) in march 2005 , a private placement of convertible debenture in june 2006 , a private investment in public equity in september 2007 , a private placement in july 2009 , and the october 2010 issuance of a senior secured note . in march 2011 , the rights offering and concurrent private placement to lambda investors provided additional capital . on june 27 , 2011 , the company entered into a license agreement , effective july 1 , 2011 , with bellco , as licensee . this agreement provides the company with payments of 500,000 , 750,000 , and 600,000 on july 1 , 2011 , january 15 , 2012 and january 15 , 2013 , respectively . the first two fixed payments have been received . the remaining fixed payment of 600,000 or approximately $ 778,000 , will take place in january 2013. beginning on january 1 , 2015 through and including december 31 , 2016 , bellco will pay to nephros a royalty based on the number of units of products sold per year in the territory as follows : for the first 103,000 units sold , 4.50 per unit ; thereafter , 4.00 per unit . anticipated payments from this license agreement will be a positive source of cash flow to the company . as of the date of this report , we estimate that these cash flows would allow us to keep operating only into the second quarter of 2013. our cash flow currently is not , and historically has not been , sufficient to meet our obligations and commitments . we must seek and obtain additional financing to fund our operations . if we can not raise sufficient capital , we will be forced to curtail our planned activities and operations or cease operations entirely and you will lose all of your investment in our company . there can be no assurance that we could raise sufficient capital on a timely basis or on satisfactory terms or at all . net cash used in operating activities was approximately $ 1,296,000 for the year ended december 31 , 2011 compared to approximately $ 1,292,000 for the year ended december 31 , 2010. the most significant items contributing to this net increase of approximately $ 4,000 in cash used in operating activities during the year ended december 31 , 2011 compared to the year ended december 31 , 2010 are highlighted below : · during 2011 , our net loss increased by approximately $ 427,000 , compared to 2010 ; · during 2011 , depreciation expense decreased by approximately $ 38,000 , compared to 2010 ; · our accounts receivable increased by approximately $ 832,000 during 2011 compared to 2010 ; 44 · our long-term assets increased by approximately $ 778,000 during 2011 compared to 2010 ; · our accounts payable and accrued expenses decreased by approximately $ 357,000 in the aggregate during 2011 compared to 2010 ; · during 2011 , we recorded amortization of debt issuance costs of $ 40,000 , whereas amortization of debt issuance costs in 2010 were $ 50,000 ; · during 2011 , we recorded non-cash interest of $ 12,000 , whereas non-cash interest was $ 15,000 in 2010 ; and · our inventory decreased by approximately $ 295,000 during 2011 compared to an increase of approximately $ 98,000 during 2010. offsetting the above changes are the following items : · during 2011 , our stock-based compensation expense , a non-cash expense , increased by approximately $ 164,000 compared to 2010 ; · during 2011 , our deferred revenue increased by approximately $ 2,061,000 compared to 2010 ; · our prepaid expenses and other assets decreased by approximately $ 76,000 during 2011 compared to 2010 ; and · during 2011 , we recorded an inventory reserve of $ 200,000 , whereas there was no inventory reserve in 2010. there was no cash used or provided by investing activities during the year ended december 31 , 2011. net cash used by investing activities was $ 30,000 for the year ended december 31 , 2010 , which was for the purchase of equipment . net cash provided by financing activities was approximately $ 2,723,000 for the year ended december 31 , 2011 , resulting from the issuance of stock and Narrative : liquidity and capital resources our future liquidity sources and requirements will depend on many factors , including : · the cost , timing and results of our efforts to obtain regulatory approval of our products , including specifically our 510 ( k ) application for our hdf system ; · the availability of additional financing , through the sale of equity securities or otherwise , on commercially reasonable terms or at all ; · the market acceptance of our products , and our ability to effectively and efficiently produce and market our products ; · the timing and costs associated with obtaining united states regulatory approval or the conformité européene , or ce , mark , which demonstrates compliance with the relevant european union requirements and is a regulatory prerequisite for selling our esrd therapy products in the european union and certain other countries that recognize ce marking ( for products other than our olpur mdhdf filter series , for which the ce mark was obtained in july 2003 ) ; · the continued progress in and the costs of clinical studies and other research and development programs ; · the costs involved in filing and enforcing patent claims and the status of competitive products ; and · the cost of litigation , including potential patent litigation and any other actual or threatened litigation . we expect to put our current capital resources to the following uses : · for the marketing and sales of our products ; · to obtain appropriate regulatory approvals and expand our research and development with respect to our esrd therapy products ; · to continue our esrd therapy product engineering ; · to pursue business opportunities with respect to our dsu water-filtration product ; and · for working capital purposes . 42 in response to liquidity issues experienced with our auction rate securities , and in order to facilitate greater liquidity in our short-term investments , on march 27 , 2008 , our board of directors adopted an investment , risk management and accounting policy . such policy limits the types of instruments or securities in which we may invest our excess funds in the future to : u.s. treasury securities ; certificates of deposit issued by money center banks ; money funds by money center banks ; repurchase agreements ; and eurodollar certificates of deposit issued by money center banks .

we classify revenue in three categories : service revenue , revenue from reimbursable expenses and non-controlling interests . service revenue consists of amounts attributable to our fee-based services and sales of short-term investments in real estate . reimbursable expenses consist of amounts we incur on behalf of our customers in performing our fee-based services that we pass directly on to our customers without a markup . non-controlling interests represent the earnings of lenders one , a consolidated entity that is a mortgage cooperative managed , but not owned , by altisource . lenders one is included in revenue and reduced from net income to arrive at net income attributable to altisource . strategy and growth businesses we are focused on becoming one of the premier providers of mortgage and real estate marketplaces and related services to a broad and diversified customer base . within the mortgage and real estate market segments , we facilitate transactions and provide products , 33 solutions and services related to home sales , home purchases , home rentals , home maintenance , mortgage originations and mortgage servicing . each of our strategic businesses provides altisource the potential to grow and diversify our customer and revenue base . we believe these businesses operate in very large markets and directly leverage our core competencies and distinct competitive advantages . a further description of our four strategic businesses follows . servicer solutions : through this business , we provide a suite of services and technologies to meet the evolving and growing needs of loan servicers . we are focused on growing referrals from our existing customer base , expanding the service and proprietary technology offerings to our customer base , and attracting new customers to our offerings . we have a customer base that includes ocwen , a gse , nrz , several large bank and non-bank servicers and asset managers . we believe we are one of only a few providers with a broad suite of servicer solutions , nationwide coverage and demonstrated scalability . further , we believe we are well positioned to gain market share as delinquency rates rise and as existing customers and prospects consolidate to larger , full-service providers and outsource services that have historically been performed in-house . origination solutions : through this business , we provide a suite of services and technologies to meet the evolving and growing needs of lenders , mortgage purchasers and securitizers . we are focused on growing referrals from our existing customer base , expanding the service and proprietary technology offerings to our customer base and attracting new customers to our offerings . we have a customer base that includes the lenders one cooperative mortgage bankers , the mortgage builder ® loan origination system customers and mid-size and larger bank and non-bank loan originators . we believe our suite of services and technologies positions us to grow our relationships with our existing customer base by providing additional products , services and solutions to these customers . further , we believe we are well positioned to attract new customers as prospects consolidate to larger , full-service providers and outsource services that have historically been performed in-house . consumer real estate solutions : through this business , we provide real estate buyers and sellers with a technology enabled real estate brokerage and the integrated services to support them in buying and selling a home . our offerings include local real estate agent services , loan brokerage , and closing and title services . we are focused on continuing to develop this business by capitalizing on altisource 's experience in online real estate marketing and loan origination services , as well as on more recently developed agile execution competencies . real estate investor solutions : through this business , we have historically provided a suite of services and technologies to support buyers and sellers of single-family investment homes , including our purchase , renovation , leasing and sale of short-term investments in real estate through our brs business unit . we have a customer base that includes resi and other institutional and smaller single-family rental investors . in august 2018 , altisource entered into an amendment to its agreements with resi to sell altisource 's rental property management business to resi and permit resi to internalize certain services that had been provided by altisource . these services were historically provided under an agreement between resi and altisource , in which altisource was the sole provider of rental property management services to resi through december 2027 , subject to certain exceptions . in november 2018 , we announced plans to sell our short-term investments in real estate and discontinue the brs business . except for these changes , we continue focus on supporting and growing referrals from existing and new customers . share repurchase program on may 15 , 2018 , our shareholders approved the renewal and replacement of the share repurchase program previously approved by the shareholders on may 17 , 2017. under the program , we are authorized to purchase up to 4.3 million shares of our common stock , based on a limit of 25 % of the outstanding shares of common stock on the date of approval , at a minimum price of $ 1.00 per share and a maximum price of $ 500.00 per share , for a period of five years from the date of approval . as of december 31 , 2018 , approximately 3.4 million shares of common stock remain available for repurchase under the program . we purchased 1.6 million shares of common stock at an average price of $ 25.53 per share during the year ended december 31 , 2018 , 1.6 million shares at an average price of $ 23.84 per share during the year ended december 31 , 2017 and 1.4 million shares at an average price of $ 26.81 per share during the year ended december 31 , 2016 . story_separator_special_tag the following table sets forth information on our results of operations for the years ended december 31 : replace_table_token_12_th _ n/m — not meaningful . 38 replace_table_token_13_th _ ( 1 ) these are non-gaap measures that are defined and reconciled to the corresponding gaap measures on pages 28 to 32 . revenue we recognized service revenue of $ 805.5 million for the year ended december 31 , 2018 , a 10 % decrease compared to the year ended december 31 , 2017 . the decrease was driven by the reduction in the size of ocwen 's portfolio and number of delinquent loans in its portfolio resulting from loan repayments , loan modifications , short sales , reo sales and other forms of resolution in the mortgage market segment . service revenue in the real estate market segment increased for the year ended december 31 , 2018 as a result of higher transaction volumes and commission rates per transaction in the consumer real estate solutions business and growth in home sale revenue in the brs and renovation management businesses in real estate investor solutions , largely offset by a decline in revenues in the real estate investor solutions business from resi 's smaller portfolio of non-performing loans and reo , as resi continues to sell off this portfolio and focus on directly acquiring , renovating and managing rental homes . we recognized service revenue of $ 899.6 million for the year ended december 31 , 2017 , a 5 % decrease compared to the year ended december 31 , 2016 . the decrease was primarily due to lower service revenue in our it infrastructure services and customer relationship management businesses in the other businesses , corporate and eliminations segment and , in the mortgage market segment , a reduction in the size of ocwen 's portfolio and number of delinquent loans in its portfolio resulting from loan repayments , loan modifications , short sales , reo sales and other forms of resolution . it infrastructure services revenue declined from the transition of resources supporting ocwen 's technology infrastructure to ocwen . beginning in the fourth quarter of 2015 and continuing through 2017 , we transitioned resources supporting ocwen 's technology infrastructure from altisource to ocwen . the decrease in the customer relationship management service revenue was primarily due to severed client relationships with certain non-profitable clients and a reduction in volume from the transition of services from one customer to another . the declines in the mortgage market segment were partially offset by growth in property preservation and inspection business from ocwen as well as non-ocwen customers and the impact of the 2015 change in the billing model for preservation services on new ocwen reo referrals that resulted in certain services that were historically reimbursable expenses revenue becoming service revenue . furthermore , mortgage market service revenue from loan disbursement processing services increased from the full year impact of the granite acquisition in july 2016. service revenue in the real estate market was lower as a result of resi 's smaller portfolio of non-performing loans and reo , which was largely offset by increased service revenue from home sales in the brs business , which began operations in the second half of 2016 , and an increase in the renovation management business . we recognized reimbursable expense revenue of $ 30.0 million for the year ended december 31 , 2018 , a 25 % decrease compared to the year ended december 31 , 2017 . we recognized reimbursable expense revenue of $ 39.9 million for the year ended december 31 , 2017 , a 23 % decrease compared to the year ended december 31 , 2016 . the decreases in reimbursable expense revenue were primarily a result of , in the mortgage market segment , a reduction in the size of ocwen 's portfolio and number of delinquent loans in its portfolio resulting from loan repayments , loan modifications , short sales , reo sales and other forms of resolution , as discussed in service revenue above . in addition , the decrease for the year ended december 31 , 2017 was driven by the change in 2015 in the billing model for preservation services on new ocwen reo referrals described above , which impacted reimbursable expense revenue in the mortgage market . certain of our revenues are impacted by seasonality . more specifically , revenues from property sales , loan originations and certain property preservation services typically tend to be at their lowest level during the fall and winter months and at their highest level during the spring and summer months . in addition , revenue in the asset recovery management business typically tends to be higher in the first quarter , as borrowers may utilize tax refunds and bonuses to pay debts , and generally declines throughout the rest of the year . cost of revenue and gross profit cost of revenue principally includes payroll and employee benefits associated with personnel employed in customer service and operations roles , fees paid to external providers related to the provision of services , cost of real estate sold , reimbursable expenses , technology and telecommunications costs and depreciation and amortization of operating assets . 39 cost of revenue consists of the following for the years ended december 31 : replace_table_token_14_th n/m — not meaningful . we recognized cost of revenue of $ 622.2 million for the year ended december 31 , 2018 , an 11 % decrease compared to the year ended december 31 , 2017 . the decrease was primarily driven by lower service revenue from ocwen 's portfolio in the mortgage market segment , and related cost reduction initiatives and early benefits of project catalyst , partially offset by an increase in cost of real estate sold in the real estate investor solutions business . the decrease in outside fees and services in the servicer solutions business in the mortgage market segment was driven by lower property preservation and

cash flows the following table presents our cash flows for the years ended december 31 : replace_table_token_29_th _ ( 1 ) these are non-gaap measures that are defined and reconciled to the corresponding gaap measures on pages 28 to 32 . cash flows from operating activities cash flows from operating activities generally consist of the cash effects of transactions and events that enter into the determination of net income . for the year ended december 31 , 2018 , cash flows provided by operating activities were $ 68.4 million , or approximately $ 0.08 for every dollar of service revenue , compared to cash flows from operating activities of $ 66.1 million , or approximately $ 0.07 for every dollar of service revenue , for the year ended december 31 , 2017 and $ 126.8 million of cash flows from operating activities , or approximately $ 0.13 for every dollar of service revenue , for the year ended december 31 , 2016 . cash flows from operating activities during 2018 were impacted by a $ 10.5 million increase in short-term investments in real estate in connection with our brs business . cash flows from operating activities during 2017 were impacted by the $ 28.0 million net payment for the previously accrued litigation settlement and a $ 16.4 million increase in short-term investments in real estate in connection with our brs business . cash flows from operating activities during 2016 were impacted by a $ 13.0 million increase in short-term investments in real estate in connection with our brs business .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we classify revenue in three categories : service revenue , revenue from reimbursable expenses and non-controlling interests . service revenue consists of amounts attributable to our fee-based services and sales of short-term investments in real estate . reimbursable expenses consist of amounts we incur on behalf of our customers in performing our fee-based services that we pass directly on to our customers without a markup . non-controlling interests represent the earnings of lenders one , a consolidated entity that is a mortgage cooperative managed , but not owned , by altisource . lenders one is included in revenue and reduced from net income to arrive at net income attributable to altisource . strategy and growth businesses we are focused on becoming one of the premier providers of mortgage and real estate marketplaces and related services to a broad and diversified customer base . within the mortgage and real estate market segments , we facilitate transactions and provide products , 33 solutions and services related to home sales , home purchases , home rentals , home maintenance , mortgage originations and mortgage servicing . each of our strategic businesses provides altisource the potential to grow and diversify our customer and revenue base . we believe these businesses operate in very large markets and directly leverage our core competencies and distinct competitive advantages . a further description of our four strategic businesses follows . servicer solutions : through this business , we provide a suite of services and technologies to meet the evolving and growing needs of loan servicers . we are focused on growing referrals from our existing customer base , expanding the service and proprietary technology offerings to our customer base , and attracting new customers to our offerings . we have a customer base that includes ocwen , a gse , nrz , several large bank and non-bank servicers and asset managers . we believe we are one of only a few providers with a broad suite of servicer solutions , nationwide coverage and demonstrated scalability . further , we believe we are well positioned to gain market share as delinquency rates rise and as existing customers and prospects consolidate to larger , full-service providers and outsource services that have historically been performed in-house . origination solutions : through this business , we provide a suite of services and technologies to meet the evolving and growing needs of lenders , mortgage purchasers and securitizers . we are focused on growing referrals from our existing customer base , expanding the service and proprietary technology offerings to our customer base and attracting new customers to our offerings . we have a customer base that includes the lenders one cooperative mortgage bankers , the mortgage builder ® loan origination system customers and mid-size and larger bank and non-bank loan originators . we believe our suite of services and technologies positions us to grow our relationships with our existing customer base by providing additional products , services and solutions to these customers . further , we believe we are well positioned to attract new customers as prospects consolidate to larger , full-service providers and outsource services that have historically been performed in-house . consumer real estate solutions : through this business , we provide real estate buyers and sellers with a technology enabled real estate brokerage and the integrated services to support them in buying and selling a home . our offerings include local real estate agent services , loan brokerage , and closing and title services . we are focused on continuing to develop this business by capitalizing on altisource 's experience in online real estate marketing and loan origination services , as well as on more recently developed agile execution competencies . real estate investor solutions : through this business , we have historically provided a suite of services and technologies to support buyers and sellers of single-family investment homes , including our purchase , renovation , leasing and sale of short-term investments in real estate through our brs business unit . we have a customer base that includes resi and other institutional and smaller single-family rental investors . in august 2018 , altisource entered into an amendment to its agreements with resi to sell altisource 's rental property management business to resi and permit resi to internalize certain services that had been provided by altisource . these services were historically provided under an agreement between resi and altisource , in which altisource was the sole provider of rental property management services to resi through december 2027 , subject to certain exceptions . in november 2018 , we announced plans to sell our short-term investments in real estate and discontinue the brs business . except for these changes , we continue focus on supporting and growing referrals from existing and new customers . share repurchase program on may 15 , 2018 , our shareholders approved the renewal and replacement of the share repurchase program previously approved by the shareholders on may 17 , 2017. under the program , we are authorized to purchase up to 4.3 million shares of our common stock , based on a limit of 25 % of the outstanding shares of common stock on the date of approval , at a minimum price of $ 1.00 per share and a maximum price of $ 500.00 per share , for a period of five years from the date of approval . as of december 31 , 2018 , approximately 3.4 million shares of common stock remain available for repurchase under the program . we purchased 1.6 million shares of common stock at an average price of $ 25.53 per share during the year ended december 31 , 2018 , 1.6 million shares at an average price of $ 23.84 per share during the year ended december 31 , 2017 and 1.4 million shares at an average price of $ 26.81 per share during the year ended december 31 , 2016 . story_separator_special_tag the following table sets forth information on our results of operations for the years ended december 31 : replace_table_token_12_th _ n/m — not meaningful . 38 replace_table_token_13_th _ ( 1 ) these are non-gaap measures that are defined and reconciled to the corresponding gaap measures on pages 28 to 32 . revenue we recognized service revenue of $ 805.5 million for the year ended december 31 , 2018 , a 10 % decrease compared to the year ended december 31 , 2017 . the decrease was driven by the reduction in the size of ocwen 's portfolio and number of delinquent loans in its portfolio resulting from loan repayments , loan modifications , short sales , reo sales and other forms of resolution in the mortgage market segment . service revenue in the real estate market segment increased for the year ended december 31 , 2018 as a result of higher transaction volumes and commission rates per transaction in the consumer real estate solutions business and growth in home sale revenue in the brs and renovation management businesses in real estate investor solutions , largely offset by a decline in revenues in the real estate investor solutions business from resi 's smaller portfolio of non-performing loans and reo , as resi continues to sell off this portfolio and focus on directly acquiring , renovating and managing rental homes . we recognized service revenue of $ 899.6 million for the year ended december 31 , 2017 , a 5 % decrease compared to the year ended december 31 , 2016 . the decrease was primarily due to lower service revenue in our it infrastructure services and customer relationship management businesses in the other businesses , corporate and eliminations segment and , in the mortgage market segment , a reduction in the size of ocwen 's portfolio and number of delinquent loans in its portfolio resulting from loan repayments , loan modifications , short sales , reo sales and other forms of resolution . it infrastructure services revenue declined from the transition of resources supporting ocwen 's technology infrastructure to ocwen . beginning in the fourth quarter of 2015 and continuing through 2017 , we transitioned resources supporting ocwen 's technology infrastructure from altisource to ocwen . the decrease in the customer relationship management service revenue was primarily due to severed client relationships with certain non-profitable clients and a reduction in volume from the transition of services from one customer to another . the declines in the mortgage market segment were partially offset by growth in property preservation and inspection business from ocwen as well as non-ocwen customers and the impact of the 2015 change in the billing model for preservation services on new ocwen reo referrals that resulted in certain services that were historically reimbursable expenses revenue becoming service revenue . furthermore , mortgage market service revenue from loan disbursement processing services increased from the full year impact of the granite acquisition in july 2016. service revenue in the real estate market was lower as a result of resi 's smaller portfolio of non-performing loans and reo , which was largely offset by increased service revenue from home sales in the brs business , which began operations in the second half of 2016 , and an increase in the renovation management business . we recognized reimbursable expense revenue of $ 30.0 million for the year ended december 31 , 2018 , a 25 % decrease compared to the year ended december 31 , 2017 . we recognized reimbursable expense revenue of $ 39.9 million for the year ended december 31 , 2017 , a 23 % decrease compared to the year ended december 31 , 2016 . the decreases in reimbursable expense revenue were primarily a result of , in the mortgage market segment , a reduction in the size of ocwen 's portfolio and number of delinquent loans in its portfolio resulting from loan repayments , loan modifications , short sales , reo sales and other forms of resolution , as discussed in service revenue above . in addition , the decrease for the year ended december 31 , 2017 was driven by the change in 2015 in the billing model for preservation services on new ocwen reo referrals described above , which impacted reimbursable expense revenue in the mortgage market . certain of our revenues are impacted by seasonality . more specifically , revenues from property sales , loan originations and certain property preservation services typically tend to be at their lowest level during the fall and winter months and at their highest level during the spring and summer months . in addition , revenue in the asset recovery management business typically tends to be higher in the first quarter , as borrowers may utilize tax refunds and bonuses to pay debts , and generally declines throughout the rest of the year . cost of revenue and gross profit cost of revenue principally includes payroll and employee benefits associated with personnel employed in customer service and operations roles , fees paid to external providers related to the provision of services , cost of real estate sold , reimbursable expenses , technology and telecommunications costs and depreciation and amortization of operating assets . 39 cost of revenue consists of the following for the years ended december 31 : replace_table_token_14_th n/m — not meaningful . we recognized cost of revenue of $ 622.2 million for the year ended december 31 , 2018 , an 11 % decrease compared to the year ended december 31 , 2017 . the decrease was primarily driven by lower service revenue from ocwen 's portfolio in the mortgage market segment , and related cost reduction initiatives and early benefits of project catalyst , partially offset by an increase in cost of real estate sold in the real estate investor solutions business . the decrease in outside fees and services in the servicer solutions business in the mortgage market segment was driven by lower property preservation and Narrative : cash flows the following table presents our cash flows for the years ended december 31 : replace_table_token_29_th _ ( 1 ) these are non-gaap measures that are defined and reconciled to the corresponding gaap measures on pages 28 to 32 . cash flows from operating activities cash flows from operating activities generally consist of the cash effects of transactions and events that enter into the determination of net income . for the year ended december 31 , 2018 , cash flows provided by operating activities were $ 68.4 million , or approximately $ 0.08 for every dollar of service revenue , compared to cash flows from operating activities of $ 66.1 million , or approximately $ 0.07 for every dollar of service revenue , for the year ended december 31 , 2017 and $ 126.8 million of cash flows from operating activities , or approximately $ 0.13 for every dollar of service revenue , for the year ended december 31 , 2016 . cash flows from operating activities during 2018 were impacted by a $ 10.5 million increase in short-term investments in real estate in connection with our brs business . cash flows from operating activities during 2017 were impacted by the $ 28.0 million net payment for the previously accrued litigation settlement and a $ 16.4 million increase in short-term investments in real estate in connection with our brs business . cash flows from operating activities during 2016 were impacted by a $ 13.0 million increase in short-term investments in real estate in connection with our brs business .

35 2012 financial and business performance 2012 was an important year for infinera . we commenced shipment of our next-generation dtn-x platform in the second quarter with first revenues recognized from the platform in the third quarter . the dtn-x platform has been well received by customers across many markets with purchase commitments received from 22 customers by the end of the year . while new deployments of high-capacity networks are now mostly occurring on the dtn-x platform , we continued to sell the dtn platform where appropriate , with nine new dtn platform customers added in 2012. dtn-x market traction and the resulting growth in revenue contributed to an improvement in our overall financial performance in the second half of 2012. we had incurred significant dtn-x related manufacturing and research and development expenditures in 2011 and early 2012 , in advance of generating revenues from the platform . this resulted in significant losses and cash consumption in those periods . in the second half of 2012 , we experienced improved financial metrics with strong sequential quarterly revenue growth , reduced spending levels and improved income statement performance . our overall gross margin for 2012 was 36 % , decreased from 41 % in 2011. this decrease in gross margins in 2012 primarily reflects the impact of early product cycle production costs for the dtn-x platform , increased levels of lower margin network footprint sales and competitive pricing pressure . the industry typically experiences downward pressure on gross margins during network footprint deployments , with higher gross margins achieved as capacity is added to deployed networks . in 2013 , we intend to focus our efforts on leveraging the dtn-x platform to win new network footprint and gain market share . these efforts will be balanced with a focus on product cost improvements and overall prudent financial management . we believe that with sustained revenue growth , we can leverage our vertically-integrated manufacturing model , which combined with selling bandwidth capacity into deployed networks , can result in improved future profitability and cash flow . future business and industry trends our goal is to be the leading provider of optical networking systems to communications service providers , internet content providers , cable operators , subsea network operators , and others . our revenue growth will depend on the continued acceptance of our products , growth of communications traffic and the proliferation of next-generation bandwidth-intensive services , which are expected to drive the need for increased levels of bandwidth . our ability to increase our revenue and achieve profitability will be directly affected by the level of acceptance of our products in the long-haul and metro wdm markets and by our ability to cost-effectively develop and sell innovative products that leverage our technology advantages on a time-to-market basis . as of december 29 , 2012 , we have sold our products for deployment in the optical networks of 111 customers worldwide , including colt , cox communications , deutsche telekom , equinix , interoute , kvh , teliasonera , level 3 , ntt , ote , pacnet and xo communications . we do not have long-term sales commitments from our customers . to date , a few of our customers have accounted for a significant portion of our revenue . no customers accounted for over 10 % of our revenue in 2012 or 2011. one customer accounted for over 10 % of our revenue in 2010. our business will be harmed if any of our key customers do not generate as much revenue as we forecast , stop purchasing from us , or substantially reduce their orders for our products . we are headquartered in sunnyvale , california , with employees located throughout the americas , europe , and the asia pacific region . we expect to continue to add some personnel in the united states and internationally to develop our products and provide additional geographic sales and technical support coverage . we primarily sell our products through our direct sales force , with a small portion sold indirectly through resellers . we derived 98 % , 97 % and 98 % of our revenue from direct sales to customers for 2012 , 2011 and 2010 , respectively . we expect to continue generating a substantial majority of our revenue from direct sales in the future . our near-term year-over-year and quarter-over-quarter revenue will likely be volatile and may be impacted by several factors including general economic and market conditions , time-to-market development of new products , acquisitions of new customers and the timing of large product deployments . 36 we will continue to make significant investments in the business , and management currently believes that operating expenses for 2013 will range from $ 235 million to $ 245 million , including stock-based compensation expense of approximately $ 30 million to $ 35 million . results of operations revenue the following table sets forth , for periods presented , certain consolidated statements of operations information ( in thousands , except % ) : replace_table_token_3_th the following table summarizes our revenue by geography and sales channel for the periods presented ( in thousands , except % ) : replace_table_token_4_th 37 2012 compared to 2011. total revenue increased to $ 438.4 million in 2012 from $ 404.9 million in 2011. revenues were positively impacted by the recognition of revenues from sales of our new dtn-x platform during the second half of 2012. these revenues included sales to existing customers transitioning their higher-capacity network deployments to the dtn-x and new customers purchasing our digital optical network solutions for the first time . story_separator_special_tag as of december 29 , 2012 , we had determined that ownership changes have occurred that would result in limitations on the current and future utilization of its net operating loss carryforwards . however , based on the work performed , the limitations are not significant enough to impact the future utilization of the tax attributes . in determining future taxable income , we make assumptions to forecast federal , state and international operating income , the reversal of temporary differences , and the implementation of any feasible and prudent tax planning strategies . the assumptions require significant judgment regarding the forecasts of future taxable income , and are consistent with our income forecasts used to manage our business . we intend to maintain the remaining valuation allowance until sufficient further positive evidence exists to support a reversal of , or decrease , in the existing valuation allowance . story_separator_special_tag anticipate that any potential lack of liquidity in our ars , even for an extended period of time , will affect our ability to finance our operations , including our continued investments in research and development and planned capital expenditures . we continue to monitor efforts by the financial markets to find alternative means for restoring the liquidity of this investment . our ars investment is classified as a non-current asset until we have better visibility as to when its liquidity will be restored . for 2013 , capital expenditures are expected to be in the range of approximately $ 20 million to $ 25 million , primarily for product development . we believe that our current cash and cash equivalents and investments will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least 12 months . if these sources of cash are insufficient to satisfy our liquidity requirements beyond 12 months , we may require additional capital from equity or debt financings to fund our operations , to respond to competitive pressures or strategic opportunities , or otherwise . we may not be able to secure timely additional financing on favorable terms , or at all . the terms of any additional financing may place limits on our financial and operating flexibility . if we raise additional funds through further issuances of equity , convertible debt securities or other securities convertible into equity , our existing stockholders could suffer dilution in their percentage ownership of us , and any new securities we issue could have rights , preferences and privileges senior to those of holders of our common stock . contractual obligations the following is a summary of our contractual obligations as of december 29 , 2012 : replace_table_token_10_th 44 ( 1 ) we have service agreements with our major production suppliers under which we are committed to purchase certain parts . ( 2 ) we lease facilities under non-cancelable operating lease agreements . these leases have varying terms , predominantly no longer than ten years each and contain leasehold improvement incentives , rent holidays and escalation clauses that range from one to ten years . in addition , some of these leases have renewal options for up to five years . we also have contractual commitments to remove leasehold improvements and return certain properties to a specified condition when the leases terminate . at the inception of a lease with such conditions , we record an asset retirement obligation liability and a corresponding capital asset in an amount equal to the estimated fair value of the obligation . leasehold improvements are amortized using the straight-line method over the shorter of the lease term or estimated useful life of the asset . an assumption of lease renewal where a renewal option exists is used only when the renewal has been determined to be reasonably assured . the estimated useful life of leasehold improvements is one to ten years . ( 3 ) other contracts are related to contractual obligations for non-recurring engineering costs . ( 4 ) tax liabilities of $ 1.8 million related to uncertain tax positions are not included in the table because we are unable to determine the timing of settlement if any , of these future payments with a reasonably reliable estimate . we had $ 3.6 million of standby letters of credit outstanding as of december 29 , 2012. these consisted of $ 1.5 million related to a value added tax license , $ 1.4 million related to a customer proposal guarantee , $ 0.7 million related to property leases and $ 0.3 million related to foreign payroll . we had $ 2.7 million of standby letters of credit outstanding as of december 29 , 2011. these consisted of $ 1.4 million related to a customer proposal guarantee , $ 0.8 million related to a value added tax license and $ 0.5 million related to property leases . off-balance sheet arrangements as of december 29 , 2012 , we did not have any relationships with unconsolidated entities or financial partnerships , such as entities often referred to as structured finance or special purpose entities , which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes . critical accounting policies and estimates our consolidated financial statements are prepared in accordance with united states generally accepted accounting principles ( “u.s . gaap” ) . these accounting principles require us to make certain estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements , as well as the reported amounts of revenue and expenses during the periods presented . significant estimates and assumptions made by management include revenue recognition , stock-based compensation , inventory valuation , allowances for sales reserves , allowances for doubtful accounts , accrued warranty , cash equivalents , fair value measurement of investments , other-than-temporary impairments , derivative instruments and accounting for income taxes . by their nature , these estimates and judgments are

liquidity and capital resources replace_table_token_8_th replace_table_token_9_th cash , cash equivalents , short-term and long-term investments and short-term and long-term restricted cash consist of highly-liquid investments in certificates of deposits , money market funds , commercial paper , corporate bonds , u.s. agency notes and u.s. treasuries . as of december 29 , 2012 , long-term investments included 42 $ 3.1 million ( par value ) of available-for-sale auction rate securities ( “ars” ) . the restricted cash balance amounts are pledged as collateral for certain stand-by and commercial letters of credit . operating activities net cash used in operating activities for 2012 was $ 49.5 million as compared to net cash used in operating activities of $ 2.0 million in 2011 and $ 30.5 million net cash provided by operating activities in 2010. cash flow from operating activities consists of net income ( loss ) , adjusted for non-cash charges , plus or minus working capital changes . our working capital requirements can fluctuate significantly depending on the timing of deployments and the acceptance , billing and payment terms on those deployments . additionally , our ability to manage inventory turns and our ability to negotiate favorable payment terms with our vendors may also impact our working capital requirements . net loss for 2012 was $ 85.3 million , which included non-cash charges of $ 67.2 million , compared to a net loss of $ 81.7 million in the corresponding period in 2011 , including non-cash charges of $ 72.2 million . net loss for 2010 was $ 27.9 million , which included non-cash charges of $ 69.2 million . net cash used to fund working capital was $ 31.3 million for 2012. this increase in working capital requirements was primarily related to the introduction of our dtn-x platform . inventory levels increased by $ 40.6 million as we added inventory for the dtn-x platform while maintaining dtn levels .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. 35 2012 financial and business performance 2012 was an important year for infinera . we commenced shipment of our next-generation dtn-x platform in the second quarter with first revenues recognized from the platform in the third quarter . the dtn-x platform has been well received by customers across many markets with purchase commitments received from 22 customers by the end of the year . while new deployments of high-capacity networks are now mostly occurring on the dtn-x platform , we continued to sell the dtn platform where appropriate , with nine new dtn platform customers added in 2012. dtn-x market traction and the resulting growth in revenue contributed to an improvement in our overall financial performance in the second half of 2012. we had incurred significant dtn-x related manufacturing and research and development expenditures in 2011 and early 2012 , in advance of generating revenues from the platform . this resulted in significant losses and cash consumption in those periods . in the second half of 2012 , we experienced improved financial metrics with strong sequential quarterly revenue growth , reduced spending levels and improved income statement performance . our overall gross margin for 2012 was 36 % , decreased from 41 % in 2011. this decrease in gross margins in 2012 primarily reflects the impact of early product cycle production costs for the dtn-x platform , increased levels of lower margin network footprint sales and competitive pricing pressure . the industry typically experiences downward pressure on gross margins during network footprint deployments , with higher gross margins achieved as capacity is added to deployed networks . in 2013 , we intend to focus our efforts on leveraging the dtn-x platform to win new network footprint and gain market share . these efforts will be balanced with a focus on product cost improvements and overall prudent financial management . we believe that with sustained revenue growth , we can leverage our vertically-integrated manufacturing model , which combined with selling bandwidth capacity into deployed networks , can result in improved future profitability and cash flow . future business and industry trends our goal is to be the leading provider of optical networking systems to communications service providers , internet content providers , cable operators , subsea network operators , and others . our revenue growth will depend on the continued acceptance of our products , growth of communications traffic and the proliferation of next-generation bandwidth-intensive services , which are expected to drive the need for increased levels of bandwidth . our ability to increase our revenue and achieve profitability will be directly affected by the level of acceptance of our products in the long-haul and metro wdm markets and by our ability to cost-effectively develop and sell innovative products that leverage our technology advantages on a time-to-market basis . as of december 29 , 2012 , we have sold our products for deployment in the optical networks of 111 customers worldwide , including colt , cox communications , deutsche telekom , equinix , interoute , kvh , teliasonera , level 3 , ntt , ote , pacnet and xo communications . we do not have long-term sales commitments from our customers . to date , a few of our customers have accounted for a significant portion of our revenue . no customers accounted for over 10 % of our revenue in 2012 or 2011. one customer accounted for over 10 % of our revenue in 2010. our business will be harmed if any of our key customers do not generate as much revenue as we forecast , stop purchasing from us , or substantially reduce their orders for our products . we are headquartered in sunnyvale , california , with employees located throughout the americas , europe , and the asia pacific region . we expect to continue to add some personnel in the united states and internationally to develop our products and provide additional geographic sales and technical support coverage . we primarily sell our products through our direct sales force , with a small portion sold indirectly through resellers . we derived 98 % , 97 % and 98 % of our revenue from direct sales to customers for 2012 , 2011 and 2010 , respectively . we expect to continue generating a substantial majority of our revenue from direct sales in the future . our near-term year-over-year and quarter-over-quarter revenue will likely be volatile and may be impacted by several factors including general economic and market conditions , time-to-market development of new products , acquisitions of new customers and the timing of large product deployments . 36 we will continue to make significant investments in the business , and management currently believes that operating expenses for 2013 will range from $ 235 million to $ 245 million , including stock-based compensation expense of approximately $ 30 million to $ 35 million . results of operations revenue the following table sets forth , for periods presented , certain consolidated statements of operations information ( in thousands , except % ) : replace_table_token_3_th the following table summarizes our revenue by geography and sales channel for the periods presented ( in thousands , except % ) : replace_table_token_4_th 37 2012 compared to 2011. total revenue increased to $ 438.4 million in 2012 from $ 404.9 million in 2011. revenues were positively impacted by the recognition of revenues from sales of our new dtn-x platform during the second half of 2012. these revenues included sales to existing customers transitioning their higher-capacity network deployments to the dtn-x and new customers purchasing our digital optical network solutions for the first time . story_separator_special_tag as of december 29 , 2012 , we had determined that ownership changes have occurred that would result in limitations on the current and future utilization of its net operating loss carryforwards . however , based on the work performed , the limitations are not significant enough to impact the future utilization of the tax attributes . in determining future taxable income , we make assumptions to forecast federal , state and international operating income , the reversal of temporary differences , and the implementation of any feasible and prudent tax planning strategies . the assumptions require significant judgment regarding the forecasts of future taxable income , and are consistent with our income forecasts used to manage our business . we intend to maintain the remaining valuation allowance until sufficient further positive evidence exists to support a reversal of , or decrease , in the existing valuation allowance . story_separator_special_tag anticipate that any potential lack of liquidity in our ars , even for an extended period of time , will affect our ability to finance our operations , including our continued investments in research and development and planned capital expenditures . we continue to monitor efforts by the financial markets to find alternative means for restoring the liquidity of this investment . our ars investment is classified as a non-current asset until we have better visibility as to when its liquidity will be restored . for 2013 , capital expenditures are expected to be in the range of approximately $ 20 million to $ 25 million , primarily for product development . we believe that our current cash and cash equivalents and investments will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least 12 months . if these sources of cash are insufficient to satisfy our liquidity requirements beyond 12 months , we may require additional capital from equity or debt financings to fund our operations , to respond to competitive pressures or strategic opportunities , or otherwise . we may not be able to secure timely additional financing on favorable terms , or at all . the terms of any additional financing may place limits on our financial and operating flexibility . if we raise additional funds through further issuances of equity , convertible debt securities or other securities convertible into equity , our existing stockholders could suffer dilution in their percentage ownership of us , and any new securities we issue could have rights , preferences and privileges senior to those of holders of our common stock . contractual obligations the following is a summary of our contractual obligations as of december 29 , 2012 : replace_table_token_10_th 44 ( 1 ) we have service agreements with our major production suppliers under which we are committed to purchase certain parts . ( 2 ) we lease facilities under non-cancelable operating lease agreements . these leases have varying terms , predominantly no longer than ten years each and contain leasehold improvement incentives , rent holidays and escalation clauses that range from one to ten years . in addition , some of these leases have renewal options for up to five years . we also have contractual commitments to remove leasehold improvements and return certain properties to a specified condition when the leases terminate . at the inception of a lease with such conditions , we record an asset retirement obligation liability and a corresponding capital asset in an amount equal to the estimated fair value of the obligation . leasehold improvements are amortized using the straight-line method over the shorter of the lease term or estimated useful life of the asset . an assumption of lease renewal where a renewal option exists is used only when the renewal has been determined to be reasonably assured . the estimated useful life of leasehold improvements is one to ten years . ( 3 ) other contracts are related to contractual obligations for non-recurring engineering costs . ( 4 ) tax liabilities of $ 1.8 million related to uncertain tax positions are not included in the table because we are unable to determine the timing of settlement if any , of these future payments with a reasonably reliable estimate . we had $ 3.6 million of standby letters of credit outstanding as of december 29 , 2012. these consisted of $ 1.5 million related to a value added tax license , $ 1.4 million related to a customer proposal guarantee , $ 0.7 million related to property leases and $ 0.3 million related to foreign payroll . we had $ 2.7 million of standby letters of credit outstanding as of december 29 , 2011. these consisted of $ 1.4 million related to a customer proposal guarantee , $ 0.8 million related to a value added tax license and $ 0.5 million related to property leases . off-balance sheet arrangements as of december 29 , 2012 , we did not have any relationships with unconsolidated entities or financial partnerships , such as entities often referred to as structured finance or special purpose entities , which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes . critical accounting policies and estimates our consolidated financial statements are prepared in accordance with united states generally accepted accounting principles ( “u.s . gaap” ) . these accounting principles require us to make certain estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements , as well as the reported amounts of revenue and expenses during the periods presented . significant estimates and assumptions made by management include revenue recognition , stock-based compensation , inventory valuation , allowances for sales reserves , allowances for doubtful accounts , accrued warranty , cash equivalents , fair value measurement of investments , other-than-temporary impairments , derivative instruments and accounting for income taxes . by their nature , these estimates and judgments are Narrative : liquidity and capital resources replace_table_token_8_th replace_table_token_9_th cash , cash equivalents , short-term and long-term investments and short-term and long-term restricted cash consist of highly-liquid investments in certificates of deposits , money market funds , commercial paper , corporate bonds , u.s. agency notes and u.s. treasuries . as of december 29 , 2012 , long-term investments included 42 $ 3.1 million ( par value ) of available-for-sale auction rate securities ( “ars” ) . the restricted cash balance amounts are pledged as collateral for certain stand-by and commercial letters of credit . operating activities net cash used in operating activities for 2012 was $ 49.5 million as compared to net cash used in operating activities of $ 2.0 million in 2011 and $ 30.5 million net cash provided by operating activities in 2010. cash flow from operating activities consists of net income ( loss ) , adjusted for non-cash charges , plus or minus working capital changes . our working capital requirements can fluctuate significantly depending on the timing of deployments and the acceptance , billing and payment terms on those deployments . additionally , our ability to manage inventory turns and our ability to negotiate favorable payment terms with our vendors may also impact our working capital requirements . net loss for 2012 was $ 85.3 million , which included non-cash charges of $ 67.2 million , compared to a net loss of $ 81.7 million in the corresponding period in 2011 , including non-cash charges of $ 72.2 million . net loss for 2010 was $ 27.9 million , which included non-cash charges of $ 69.2 million . net cash used to fund working capital was $ 31.3 million for 2012. this increase in working capital requirements was primarily related to the introduction of our dtn-x platform . inventory levels increased by $ 40.6 million as we added inventory for the dtn-x platform while maintaining dtn levels .

we sold the 13 stations previously owned or operated by tribune for $ 1.008 billion in cash , including working capital adjustments . we sold the eight stations that we previously owned for $ 358.6 million in cash , including working capital adjustments . these divestitures resulted in a net gain on disposal of $ 96.1 million . the cash consideration , the repayment of tribune debt , including premium and accrued interest , and the related fees and expenses were funded through a combination of cash on hand of nexstar and tribune , proceeds from the station divestitures , new term loan borrowings and the issuance of new notes ( see “ debt transactions ” below ) . see also note 3—acquisitions and dispositions and note 9—debt to our consolidated financial statements in part iv , item 15 ( a ) of this annual report on form 10-k for additional information about the merger and recently issued debt . 46 future acquisitions and dispositions on november 5 , 2019 , we entered into purchase and sale agreements with fox whereby we will purchase the fox affiliate wjzy and the mynetworktv affiliate wmyt in the charlotte , nc market from fox for approximately $ 45 million in cash , and will sell to fox the fox affiliate kcpq and the mynetworktv affiliate kzjo in the seattle , wa market , as well as the fox affiliate witi in the milwaukee , wi market , for approximately $ 350 million in cash , subject to customary adjustments . the transaction , which has received fcc approval , closed on march 2 , 2020. on january 14 , 2020 , we sold our sports betting information website business to star enterprises ltd. , a subsidiary of alto holdings , ltd. , for total cash consideration of $ 14.4 million . on january 27 , 2020 , we and sinclair agreed to settle the outstanding lawsuit between tribune and sinclair in connection with their terminated merger agreement . tribune is an entity acquired by nexstar in september 2019. as part of the resolution , sinclair has agreed to sell to us television station wdky-tv in the lexington , ky dma , subject to fcc approval and other customary conditions . sinclair has also sold to us certain non-license assets associated with television station kgbt-tv in the harlingen-weslaco-brownsville-mcallen , texas dma . we and sinclair have also modified an existing agreement regarding carriage of certain of sinclair 's digital networks by stations we acquired in connection with the tribune acquisition . finally , on january 28 , 2020 , sinclair made a cash payment to nexstar in an amount that represents the amount of $ 60.0 million plus the payments made or to be made by nexstar with respect to wdky and the kgbt non-license assets purchases . 2019 debt transactions on july 3 , 2019 , we completed the sale and issuance of our $ 1.120 billion 5.625 % notes due 2027. on september 19 , 2019 , we borrowed $ 3.065 billion in new term loan b , issued at 99.21 % , and $ 675.0 million in new term loan a , issued at 99.31 % . the proceeds from these transactions , plus proceeds from the sale of certain television station assets and cash on hand , were used to finance the purchase price of our merger with tribune and to pay the related fees and expenses . on november 22 , 2019 , we issued an additional $ 665.0 million aggregate principal amount of 5.625 % notes due 2027 at an offering price of 104.875 % , which resulted in a debt premium of $ 27.4 million after giving effect to certain fees relating thereto . the proceeds from the notes were used to redeem our $ 400.0 million aggregate principal amount of 5.875 % senior unsecured notes due 2022 ( the “ 5.875 % notes ” ) and our $ 275.0 million aggregate principal amount of 6.125 % senior unsecured notes due 2022 ( the “ 6.125 % notes ” ) . on november 29 , 2019 , mission paid the outstanding principal balances of marshall 's loans to third party bank lenders totaling $ 48.9 million , plus accrued and unpaid interest . after making the payment , mission became marshall 's new lender under the same marshall credit agreement . in 2019 , we prepaid a total of $ 180.0 million in principal balance under our term loan b , funded by cash on hand . through december 2019 , the company repaid scheduled maturities of $ 47.3 million under its term loan a and term loan b . 47 overview of operations as of december 31 , 2019 , we owned , operated , programmed or provided sales and other services to 197 full power television stations , including those owned by vies , in 115 markets in the states of alabama , arkansas , california , colorado , connecticut , district of columbia , florida , georgia , hawaii , illinois , indiana , iowa , kansas , louisiana , maryland , massachusetts , michigan , mississippi , missouri , montana , nevada , new mexico , new york , north carolina , north dakota , ohio , oklahoma , oregon , pennsylvania , rhode island , south carolina , south dakota , tennessee , texas , utah , vermont , virginia , washington , west virginia , and wisconsin . the stations are affiliates of abc , nbc , fox , cbs , the cw , mntv and other broadcast television networks . through various local service agreements , we provided sales , programming and other services to 36 full power television stations owned by independent third parties , of which 32 full power television stations are vies that are consolidated into our financial statements . story_separator_special_tag station direct operating expenses , consisting primarily of news , engineering , programming and selling , general and administrative expenses ( net of trade expense ) were $ 1.872 billion for the year ended december 31 , 2019 , compared to $ 1.570 billion for the same period in 2018 , an increase of $ 302.0 million , or 19.2 % . the increase was primarily due to expenses of our newly acquired stations and entities , mainly tribune , of $ 247.3 million ( including network and programming costs of $ 157.0 million ) , partially offset by a decrease of $ 18.0 million related to our station divestitures . additionally , our legacy stations ' programming costs increased by $ 96.6 million primarily due to network affiliation renewals and annual increases in our network affiliation costs . these increases were partially offset by an $ 18.6 million decrease in the operating expenses of our digital products due primarily to marketplace changes and challenges that led to lower revenue . depreciation of property and equipment was $ 123.4 million for the year ended december 31 , 2019 , compared to $ 109.8 million for the same period in 2018 , an increase of $ 13.6 million , or 12.4 % . this was primarily due to incremental depreciation related to assets acquired in the merger of $ 9.0 million and increased depreciation from related station repacking activities . amortization of intangible assets was $ 200.3 million for the year ended december 31 , 2019 , compared to $ 149.4 million for the same period in 2018 , an increase of $ 50.9 million , or 34.1 % . this was primarily due to increased amortization related to intangible assets acquired in the merger of $ 59.9 million , partially offset by decreases in amortization from certain fully amortized assets . 51 amortization of broadcast rights , excluding barter w as $ 85.0 million for the year ended december 31 , 2019 , compared to $ 61.3 million for the same period in 2018 , an increase of $ 23.7 million , or 38.6 % . this was primarily attributable to incremental amortization resulting from new broadcast rights acquired through the merger of $ 30 . 5 million . th is i ncrease w as partially offset by a reduction in amortization costs on our legacy stations due to renegotiation of certain film contracts which resulted in reduced distribution rates . certain of the company 's stations were assigned to new channels ( “ repack ” ) in connection with the fcc 's process of repurposing a portion of the broadcast television spectrum for wireless broadband use . the company 's stations are currently spending costs , mainly capital expenditures , to construct and license the necessary technical modifications to operate on their newly assigned channels and to vacate their former channels no later than july 13 , 2020. subject to fund limitations , the fcc reimburses television broadcasters , mvpds and other parties for costs reasonably incurred due to the repack . in 2019 and 2018 , we received a total of $ 70.4 million and $ 29.4 million , respectively , in reimbursements from the fcc which we recognized as operating income . in the third quarter of 2019 , we recorded a $ 63.3 million goodwill and intangible assets impairment on our digital reporting unit due to deterioration in customer relationships , mainly driven by marketplace changes on select demand-side platform customers , that led to a long-term projected decrease in operating results . in connection with the merger , we sold the assets of 21 full power television stations in 16 markets , eight of which were previously owned by us and 13 of which were previously owned and operated by tribune . we sold the tribune stations for $ 1.008 billion in cash , including working capital adjustments , and we sold our stations for $ 358.6 million in cash , including working capital adjustments . these divestitures resulted in a net gain on disposal of $ 96.1 million . income on equity investments , net in connection with our merger with tribune completed on september 19 , 2019 , we acquired a 31.3 % ownership stake in tv food network . from the date of acquisition to december 31 , 2019 , nexstar recognized equity in income from this investment of $ 20.5 million , along with loss from other equity method investments of $ 2.6 million . interest expense , net interest expense , net was $ 304.3 million for the year ended december 31 , 2019 , compared to $ 221.0 million for the same period in 2018 , an increase of $ 83.4 million , or 37.7 % , primarily due to interest on new borrowings of $ 87.0 million and one time fees associated with the financing of our merger with tribune of $ 26.6 million . these increases were partially offset by decreases in debt related interest expense of $ 23.7 million , primarily due to prepayments and scheduled repayments of term loans and redemption of bonds , and interest income we earned from an escrow deposit during the third quarter of 2019 of $ 4.9 million and a reduction in interest from our existing term loans due to principal prepayments and scheduled repayments . story_separator_special_tag style= `` background-color : # ffffff ; margin-top:10pt ; margin-bottom:0pt ; text-indent:5.15 % ; color : # 212529 ; font-family : times new roman ; font-size:10pt ; font-weight : normal ; font-style : normal ; text-transform : none ; font-variant : normal ; `` > corporate expenses , related to costs associated with the centralized management of our stations , were $ 110.9 million for the year ended december 31 , 2018 , compared to $ 138.4 million for the same period in 2017 , a decrease of $ 27.5 million , or 19.9 % . this was primarily attributable to a decrease

loss on extinguishment of debt loss on extinguishment of debt was $ 10.3 million for the year ended december 31 , 2019 , compared to $ 12.1 million for the same period in 2018 , a decrease of $ 1.8 million , or 15.0 % . in november 2019 , we redeemed our $ 400.0 million 5.875 % notes and our $ 275.0 million 6.125 % notes . we also made prepayments of our outstanding term loans during 2019. these transactions resulted in total loss on extinguishment of debt of $ 10.3 million . in october 2018 , the company refinanced its then existing term loans and revolving loans . we also made various prepayments of outstanding term loans during 2018. these transactions resulted in total loss on extinguishment of debt of $ 12.1 million . income taxes income tax expense was $ 137.0 million for the year ended december 31 , 2019 , compared to an income tax expense of $ 144.7 million for the same period in 2018 , a decrease in income tax expense of $ 7.7 million . the effective tax rates during the years ended december 31 , 2019 and 2018 were 36.8 % and 27.1 % , respectively . in 2019 , we recognized the tax impact of the divested stations previously owned by us including an income tax expense of $ 10.3 million , or an increase to the effective tax rate of 2.8 % , attributable to nondeductible goodwill written off as a result of the sale . we also recognized an impairment loss on our reporting unit 's goodwill and intangible assets ( see note 4 ) . the impairment loss related to goodwill is not deductible for purposes of calculating the tax provision resulting in an income tax expense of $ 8.9 million , or an increase to the effective tax rate of 2.4 % . valuation allowance increased by $ 19.9 million , or an increase to the effective tax rate of 5.3 % , primarily due to the company 's belief , based upon consideration of positive and negative evidence , that certain deferred tax assets related to one of the vies were not likely to be realized .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we sold the 13 stations previously owned or operated by tribune for $ 1.008 billion in cash , including working capital adjustments . we sold the eight stations that we previously owned for $ 358.6 million in cash , including working capital adjustments . these divestitures resulted in a net gain on disposal of $ 96.1 million . the cash consideration , the repayment of tribune debt , including premium and accrued interest , and the related fees and expenses were funded through a combination of cash on hand of nexstar and tribune , proceeds from the station divestitures , new term loan borrowings and the issuance of new notes ( see “ debt transactions ” below ) . see also note 3—acquisitions and dispositions and note 9—debt to our consolidated financial statements in part iv , item 15 ( a ) of this annual report on form 10-k for additional information about the merger and recently issued debt . 46 future acquisitions and dispositions on november 5 , 2019 , we entered into purchase and sale agreements with fox whereby we will purchase the fox affiliate wjzy and the mynetworktv affiliate wmyt in the charlotte , nc market from fox for approximately $ 45 million in cash , and will sell to fox the fox affiliate kcpq and the mynetworktv affiliate kzjo in the seattle , wa market , as well as the fox affiliate witi in the milwaukee , wi market , for approximately $ 350 million in cash , subject to customary adjustments . the transaction , which has received fcc approval , closed on march 2 , 2020. on january 14 , 2020 , we sold our sports betting information website business to star enterprises ltd. , a subsidiary of alto holdings , ltd. , for total cash consideration of $ 14.4 million . on january 27 , 2020 , we and sinclair agreed to settle the outstanding lawsuit between tribune and sinclair in connection with their terminated merger agreement . tribune is an entity acquired by nexstar in september 2019. as part of the resolution , sinclair has agreed to sell to us television station wdky-tv in the lexington , ky dma , subject to fcc approval and other customary conditions . sinclair has also sold to us certain non-license assets associated with television station kgbt-tv in the harlingen-weslaco-brownsville-mcallen , texas dma . we and sinclair have also modified an existing agreement regarding carriage of certain of sinclair 's digital networks by stations we acquired in connection with the tribune acquisition . finally , on january 28 , 2020 , sinclair made a cash payment to nexstar in an amount that represents the amount of $ 60.0 million plus the payments made or to be made by nexstar with respect to wdky and the kgbt non-license assets purchases . 2019 debt transactions on july 3 , 2019 , we completed the sale and issuance of our $ 1.120 billion 5.625 % notes due 2027. on september 19 , 2019 , we borrowed $ 3.065 billion in new term loan b , issued at 99.21 % , and $ 675.0 million in new term loan a , issued at 99.31 % . the proceeds from these transactions , plus proceeds from the sale of certain television station assets and cash on hand , were used to finance the purchase price of our merger with tribune and to pay the related fees and expenses . on november 22 , 2019 , we issued an additional $ 665.0 million aggregate principal amount of 5.625 % notes due 2027 at an offering price of 104.875 % , which resulted in a debt premium of $ 27.4 million after giving effect to certain fees relating thereto . the proceeds from the notes were used to redeem our $ 400.0 million aggregate principal amount of 5.875 % senior unsecured notes due 2022 ( the “ 5.875 % notes ” ) and our $ 275.0 million aggregate principal amount of 6.125 % senior unsecured notes due 2022 ( the “ 6.125 % notes ” ) . on november 29 , 2019 , mission paid the outstanding principal balances of marshall 's loans to third party bank lenders totaling $ 48.9 million , plus accrued and unpaid interest . after making the payment , mission became marshall 's new lender under the same marshall credit agreement . in 2019 , we prepaid a total of $ 180.0 million in principal balance under our term loan b , funded by cash on hand . through december 2019 , the company repaid scheduled maturities of $ 47.3 million under its term loan a and term loan b . 47 overview of operations as of december 31 , 2019 , we owned , operated , programmed or provided sales and other services to 197 full power television stations , including those owned by vies , in 115 markets in the states of alabama , arkansas , california , colorado , connecticut , district of columbia , florida , georgia , hawaii , illinois , indiana , iowa , kansas , louisiana , maryland , massachusetts , michigan , mississippi , missouri , montana , nevada , new mexico , new york , north carolina , north dakota , ohio , oklahoma , oregon , pennsylvania , rhode island , south carolina , south dakota , tennessee , texas , utah , vermont , virginia , washington , west virginia , and wisconsin . the stations are affiliates of abc , nbc , fox , cbs , the cw , mntv and other broadcast television networks . through various local service agreements , we provided sales , programming and other services to 36 full power television stations owned by independent third parties , of which 32 full power television stations are vies that are consolidated into our financial statements . story_separator_special_tag station direct operating expenses , consisting primarily of news , engineering , programming and selling , general and administrative expenses ( net of trade expense ) were $ 1.872 billion for the year ended december 31 , 2019 , compared to $ 1.570 billion for the same period in 2018 , an increase of $ 302.0 million , or 19.2 % . the increase was primarily due to expenses of our newly acquired stations and entities , mainly tribune , of $ 247.3 million ( including network and programming costs of $ 157.0 million ) , partially offset by a decrease of $ 18.0 million related to our station divestitures . additionally , our legacy stations ' programming costs increased by $ 96.6 million primarily due to network affiliation renewals and annual increases in our network affiliation costs . these increases were partially offset by an $ 18.6 million decrease in the operating expenses of our digital products due primarily to marketplace changes and challenges that led to lower revenue . depreciation of property and equipment was $ 123.4 million for the year ended december 31 , 2019 , compared to $ 109.8 million for the same period in 2018 , an increase of $ 13.6 million , or 12.4 % . this was primarily due to incremental depreciation related to assets acquired in the merger of $ 9.0 million and increased depreciation from related station repacking activities . amortization of intangible assets was $ 200.3 million for the year ended december 31 , 2019 , compared to $ 149.4 million for the same period in 2018 , an increase of $ 50.9 million , or 34.1 % . this was primarily due to increased amortization related to intangible assets acquired in the merger of $ 59.9 million , partially offset by decreases in amortization from certain fully amortized assets . 51 amortization of broadcast rights , excluding barter w as $ 85.0 million for the year ended december 31 , 2019 , compared to $ 61.3 million for the same period in 2018 , an increase of $ 23.7 million , or 38.6 % . this was primarily attributable to incremental amortization resulting from new broadcast rights acquired through the merger of $ 30 . 5 million . th is i ncrease w as partially offset by a reduction in amortization costs on our legacy stations due to renegotiation of certain film contracts which resulted in reduced distribution rates . certain of the company 's stations were assigned to new channels ( “ repack ” ) in connection with the fcc 's process of repurposing a portion of the broadcast television spectrum for wireless broadband use . the company 's stations are currently spending costs , mainly capital expenditures , to construct and license the necessary technical modifications to operate on their newly assigned channels and to vacate their former channels no later than july 13 , 2020. subject to fund limitations , the fcc reimburses television broadcasters , mvpds and other parties for costs reasonably incurred due to the repack . in 2019 and 2018 , we received a total of $ 70.4 million and $ 29.4 million , respectively , in reimbursements from the fcc which we recognized as operating income . in the third quarter of 2019 , we recorded a $ 63.3 million goodwill and intangible assets impairment on our digital reporting unit due to deterioration in customer relationships , mainly driven by marketplace changes on select demand-side platform customers , that led to a long-term projected decrease in operating results . in connection with the merger , we sold the assets of 21 full power television stations in 16 markets , eight of which were previously owned by us and 13 of which were previously owned and operated by tribune . we sold the tribune stations for $ 1.008 billion in cash , including working capital adjustments , and we sold our stations for $ 358.6 million in cash , including working capital adjustments . these divestitures resulted in a net gain on disposal of $ 96.1 million . income on equity investments , net in connection with our merger with tribune completed on september 19 , 2019 , we acquired a 31.3 % ownership stake in tv food network . from the date of acquisition to december 31 , 2019 , nexstar recognized equity in income from this investment of $ 20.5 million , along with loss from other equity method investments of $ 2.6 million . interest expense , net interest expense , net was $ 304.3 million for the year ended december 31 , 2019 , compared to $ 221.0 million for the same period in 2018 , an increase of $ 83.4 million , or 37.7 % , primarily due to interest on new borrowings of $ 87.0 million and one time fees associated with the financing of our merger with tribune of $ 26.6 million . these increases were partially offset by decreases in debt related interest expense of $ 23.7 million , primarily due to prepayments and scheduled repayments of term loans and redemption of bonds , and interest income we earned from an escrow deposit during the third quarter of 2019 of $ 4.9 million and a reduction in interest from our existing term loans due to principal prepayments and scheduled repayments . story_separator_special_tag style= `` background-color : # ffffff ; margin-top:10pt ; margin-bottom:0pt ; text-indent:5.15 % ; color : # 212529 ; font-family : times new roman ; font-size:10pt ; font-weight : normal ; font-style : normal ; text-transform : none ; font-variant : normal ; `` > corporate expenses , related to costs associated with the centralized management of our stations , were $ 110.9 million for the year ended december 31 , 2018 , compared to $ 138.4 million for the same period in 2017 , a decrease of $ 27.5 million , or 19.9 % . this was primarily attributable to a decrease Narrative : loss on extinguishment of debt loss on extinguishment of debt was $ 10.3 million for the year ended december 31 , 2019 , compared to $ 12.1 million for the same period in 2018 , a decrease of $ 1.8 million , or 15.0 % . in november 2019 , we redeemed our $ 400.0 million 5.875 % notes and our $ 275.0 million 6.125 % notes . we also made prepayments of our outstanding term loans during 2019. these transactions resulted in total loss on extinguishment of debt of $ 10.3 million . in october 2018 , the company refinanced its then existing term loans and revolving loans . we also made various prepayments of outstanding term loans during 2018. these transactions resulted in total loss on extinguishment of debt of $ 12.1 million . income taxes income tax expense was $ 137.0 million for the year ended december 31 , 2019 , compared to an income tax expense of $ 144.7 million for the same period in 2018 , a decrease in income tax expense of $ 7.7 million . the effective tax rates during the years ended december 31 , 2019 and 2018 were 36.8 % and 27.1 % , respectively . in 2019 , we recognized the tax impact of the divested stations previously owned by us including an income tax expense of $ 10.3 million , or an increase to the effective tax rate of 2.8 % , attributable to nondeductible goodwill written off as a result of the sale . we also recognized an impairment loss on our reporting unit 's goodwill and intangible assets ( see note 4 ) . the impairment loss related to goodwill is not deductible for purposes of calculating the tax provision resulting in an income tax expense of $ 8.9 million , or an increase to the effective tax rate of 2.4 % . valuation allowance increased by $ 19.9 million , or an increase to the effective tax rate of 5.3 % , primarily due to the company 's belief , based upon consideration of positive and negative evidence , that certain deferred tax assets related to one of the vies were not likely to be realized .

cost of products and services cost of products and services includes primarily labor and related costs , drugs and supplies used primarily in the embryo transfer and in vitro fertilization processes , livestock and feed used in production , and facility charges , including rent and depreciation . fluctuations in the price of livestock and feed have not had a significant impact on our operating margins and no derivative financial instruments are used to mitigate the price risk . research and development expenses we recognize research and development expenses as they are incurred . our research and development expenses consist primarily of : salaries and benefits , including stock-based compensation expense , for personnel in research and development functions ; fees paid to consultants and contract research organizations who perform research on our behalf and under our direction ; costs related to laboratory supplies used in our research and development efforts ; costs related to certain in-licensed technology rights ; depreciation of leasehold improvements and laboratory equipment ; amortization of patents and related technologies acquired in mergers and acquisitions ; and rent and utility costs for our research and development facilities . we have no individually significant research and development projects and our research and development expenses primarily relate to either the costs incurred to expand or otherwise improve our multiple platform technologies , the costs incurred to develop a specific application of our technologies in support of current or prospective collaborators , or costs incurred to expand or otherwise improve our products and services . research and development expenses , including costs for preclinical and clinical development , incurred for programs we support pursuant to an ecc agreement are typically reimbursed by the collaborator at cost and all other research and development programs may be terminated or otherwise deferred at our discretion . the amount of our research and development expenses may be impacted by , among other things , the number of eccs and the number and size of programs we may support on behalf of an ecc . the table below summarizes our research and development expenses incurred to expand or otherwise improve our multiple platform technologies , the costs incurred to develop a specific application of our technologies in support of current or prospective collaborators and licensees , or costs incurred to expand or otherwise improve our products and services for the years ended december 31 , 2016 , 2015 , and 2014 . other research and development expenses for these periods include indirect salaries and overhead expenses that are not allocated to either expanding or improving our multiple platform technologies , specific applications of our technologies in support of current or prospective collaborators and licensees , or expanding or improving our product and services offerings . research and development expenses for the year ended december 31 , 2015 include a $ 59.6 million payment in our common stock for an exclusive license to certain technologies owned by md anderson to be used in the expansion and improvement of our platform technologies . 48 replace_table_token_7_th we expect that our research and development expenses will increase as we continue to enter into collaborations and as we expand our offerings across additional market sectors . we believe these increases will likely include increased costs related to the hiring of additional personnel in research and development functions , increased costs paid to consultants and contract research organizations and increased costs related to laboratory supplies . research and development expenses may also increase as a result of ongoing research and development operations which we might assume through mergers and acquisitions . selling , general and administrative expenses selling , general and administrative , or sg & a , expenses consist primarily of salaries and related costs , including stock-based compensation expense , for employees in executive , operational , finance , sales and marketing , information technology , legal and corporate communications functions . other significant sg & a expenses include rent and utilities , insurance , accounting and legal services and expenses associated with obtaining and maintaining our intellectual property . we expect that our sg & a expenses will increase as we continue to operate as a public company and expand our operations . we believe that these increases will likely include costs related to the hiring of additional personnel and increased fees for business development functions , costs associated with defending the company in litigation matters , the costs of outside consultants and other professional services , including costs to comply with corporate governance , internal controls and similar requirements applicable to public companies . sg & a expenses may also increase as a result of ongoing operations which we might assume through mergers and acquisitions . other income ( expense ) , net we hold equity securities and preferred stock received and or purchased from certain collaborators . other than investments accounted for using the equity method discussed below , we elected the fair value option to account for our equity securities and preferred stock held in these collaborators . these equity securities and preferred stock are recorded at fair value at each reporting date . unrealized appreciation ( depreciation ) resulting from fair value adjustments are reported as other income ( expense ) in the consolidated statement of operations . as such , we bear the risk that fluctuations in the securities ' share prices may significantly impact our results of operations . in june 2015 , we recorded a realized gain related to the distribution of all our shares of ziopharm to our shareholders as a special stock dividend . interest income consists of interest earned on our cash and cash equivalents and short-term and long-term investments . dividend income consists of the monthly preferred stock dividend received from ziopharm . interest expense pertains to deferred consideration payable to the former members of trans ova and long term debt . story_separator_special_tag in conjunction with a prior transaction associated with trans ova 's subsidiary , viagen , in september 2012 , we may be obligated to make certain future contingent payments to the former equity holders of viagen , up to a total of $ 3.0 million if certain revenue targets , as defined in the share purchase agreement , are met . this amount is not included in the table above due to the uncertainty of when we will make any of these future payments , if ever . in january 2009 , aquabounty was awarded a grant to provide funding of a research and development project from the atlantic canada opportunities agency , a canadian government agency . amounts claimed by aquabounty must be repaid in the form of a 10 percent royalty on any products commercialized out of this research and development project until fully paid . because the timing of commercialization is subject to additional regulatory considerations , the timing of repayment is uncertain . aquabounty has claimed all amounts available under the grant , resulting in total long-term debt of $ 1.9 million on our consolidated financial statements as of december 31 , 2016 . this amount is not included in the table above due to the uncertainty of the timing of repayment . net operating losses as of december 31 , 2016 , we had net operating loss carryforwards of approximately $ 253.0 million for u.s. federal income tax purposes available to offset future taxable income and u.s. federal and state research and development tax credits of $ 7.5 million , prior to consideration of annual limitations that may be imposed under section 382. these carryforwards begin to expire in 2022 . our direct foreign subsidiaries have foreign loss carryforwards of approximately $ 119.2 million , most of which do not expire . our past issuances of stock and mergers and acquisitions have resulted in ownership changes within the meaning of section 382. as a result , the utilization of portions of our net operating losses may be subject to annual limitations . as of december 31 , 2016 , approximately $ 15.1 million of our domestic net operating losses generated prior to 2008 are limited by section 382 to annual usage limits of approximately $ 1.5 million . as of december 31 , 2016 , approximately $ 18.6 million of domestic net operating losses were inherited via acquisition and are limited based on the value of the target at the time of the transaction . future changes in stock ownership may also trigger an ownership change and , consequently , a section 382 limitation . we do not file a consolidated income tax return with aquabounty and biopop . as of december 31 , 2016 , aquabounty had loss carryforwards for federal and foreign income tax purposes of approximately $ 22.2 million and $ 12.9 million , respectively , and foreign research tax credits of $ 2.4 million available to offset future taxable income , prior to consideration of annual limitations that may be imposed under section 382 or analogous foreign provisions . these carryforwards will begin to expire in 2018 . as a result of our ownership in aquabounty passing 50 percent in 2013 , an annual section 382 limitation of approximately $ 0.9 million per year will apply to losses and credits carried forward by aquabounty from prior years , which are also subject to prior section 382 limitations . as of december 31 , 2016 , biopop had loss carryforwards of approximately $ 1.4 million for federal income tax purposes available to offset future taxable income . off-balance sheet arrangements we did not have during the periods presented , and we do not currently have , any off-balance sheet arrangements , other than operating leases as mentioned above , as defined under sec rules . 58 critical accounting policies and estimates our management 's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements , which we have prepared in accordance with u.s. gaap . the preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements , as well as the reported revenues and expenses during the reporting periods . we evaluate these estimates and judgments on an ongoing basis . we base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances , the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources . our actual results may differ from these estimates under different assumptions or conditions . while our significant accounting policies are more fully described in note 2 to our consolidated financial statements appearing elsewhere in this annual report on form 10-k , we believe that the following accounting policies are the most critical for fully understanding and evaluating our financial condition and results of operations . revenue recognition we generate revenue through contractual agreements with collaborators and licensing agreements whereby the collaborators or the licensees obtain exclusive access to our proprietary technologies for use in the research , development and commercialization of products and or treatments in a contractually specified field of use . generally , the terms of these agreements provide that we receive some or all of the following : ( i ) upfront payments upon consummation of the agreement ; ( ii ) reimbursements for costs incurred by us for research and development and or manufacturing efforts related to specific applications provided for in the agreement ; ( iii ) milestone payments upon the achievement of specified development , regulatory and commercial activities ; and ( iv ) royalties on sales of products arising from the collaboration or licensing agreement . our collaborations and licensing agreements

liquidity and capital resources sources of liquidity we have incurred losses from operations since our inception and as of december 31 , 2016 , we had an accumulated deficit of $ 729.3 million . from our inception through december 31 , 2016 , we have funded our operations principally with proceeds received from private and public offerings , cash received from our collaborators and through product and service sales made directly to customers . as of december 31 , 2016 , we had cash and cash equivalents of $ 62.6 million and short-term and long-term investments of $ 180.6 million . cash in excess of immediate requirements is invested primarily in money market funds , certificates of deposits and u.s. government debt securities in order to maintain liquidity and preserve capital . we currently generate cash receipts primarily from technology access fees , reimbursement of research and development services performed by us and sales of products and services . cash flows the following table sets forth the significant sources and uses of cash for the periods set forth below : replace_table_token_12_th 55 cash flows from operating activities : in 2016 , our net loss of $ 190.3 million , after consideration of significant noncash items of ( i ) $ 58.9 million of unrealized and realized losses on our equity securities and preferred stock , ( ii ) $ 42.2 million of stock-based compensation expense , ( iii ) $ 24.6 million of depreciation and amortization expense , ( iv ) $ 21.1 million of equity in net loss of affiliates , ( v ) $ 10.8 million of shares issued as payment for services , and ( vi ) $ 7.4 million of noncash dividend income was $ 40.1 million . additionally , we had a $ 17.7 million net increase in our operating assets and liabilities primarily as a result of the recognition of previously deferred revenue , partially offset by a $ 10.0 million technology access fee received in cash pursuant to a new collaboration .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. cost of products and services cost of products and services includes primarily labor and related costs , drugs and supplies used primarily in the embryo transfer and in vitro fertilization processes , livestock and feed used in production , and facility charges , including rent and depreciation . fluctuations in the price of livestock and feed have not had a significant impact on our operating margins and no derivative financial instruments are used to mitigate the price risk . research and development expenses we recognize research and development expenses as they are incurred . our research and development expenses consist primarily of : salaries and benefits , including stock-based compensation expense , for personnel in research and development functions ; fees paid to consultants and contract research organizations who perform research on our behalf and under our direction ; costs related to laboratory supplies used in our research and development efforts ; costs related to certain in-licensed technology rights ; depreciation of leasehold improvements and laboratory equipment ; amortization of patents and related technologies acquired in mergers and acquisitions ; and rent and utility costs for our research and development facilities . we have no individually significant research and development projects and our research and development expenses primarily relate to either the costs incurred to expand or otherwise improve our multiple platform technologies , the costs incurred to develop a specific application of our technologies in support of current or prospective collaborators , or costs incurred to expand or otherwise improve our products and services . research and development expenses , including costs for preclinical and clinical development , incurred for programs we support pursuant to an ecc agreement are typically reimbursed by the collaborator at cost and all other research and development programs may be terminated or otherwise deferred at our discretion . the amount of our research and development expenses may be impacted by , among other things , the number of eccs and the number and size of programs we may support on behalf of an ecc . the table below summarizes our research and development expenses incurred to expand or otherwise improve our multiple platform technologies , the costs incurred to develop a specific application of our technologies in support of current or prospective collaborators and licensees , or costs incurred to expand or otherwise improve our products and services for the years ended december 31 , 2016 , 2015 , and 2014 . other research and development expenses for these periods include indirect salaries and overhead expenses that are not allocated to either expanding or improving our multiple platform technologies , specific applications of our technologies in support of current or prospective collaborators and licensees , or expanding or improving our product and services offerings . research and development expenses for the year ended december 31 , 2015 include a $ 59.6 million payment in our common stock for an exclusive license to certain technologies owned by md anderson to be used in the expansion and improvement of our platform technologies . 48 replace_table_token_7_th we expect that our research and development expenses will increase as we continue to enter into collaborations and as we expand our offerings across additional market sectors . we believe these increases will likely include increased costs related to the hiring of additional personnel in research and development functions , increased costs paid to consultants and contract research organizations and increased costs related to laboratory supplies . research and development expenses may also increase as a result of ongoing research and development operations which we might assume through mergers and acquisitions . selling , general and administrative expenses selling , general and administrative , or sg & a , expenses consist primarily of salaries and related costs , including stock-based compensation expense , for employees in executive , operational , finance , sales and marketing , information technology , legal and corporate communications functions . other significant sg & a expenses include rent and utilities , insurance , accounting and legal services and expenses associated with obtaining and maintaining our intellectual property . we expect that our sg & a expenses will increase as we continue to operate as a public company and expand our operations . we believe that these increases will likely include costs related to the hiring of additional personnel and increased fees for business development functions , costs associated with defending the company in litigation matters , the costs of outside consultants and other professional services , including costs to comply with corporate governance , internal controls and similar requirements applicable to public companies . sg & a expenses may also increase as a result of ongoing operations which we might assume through mergers and acquisitions . other income ( expense ) , net we hold equity securities and preferred stock received and or purchased from certain collaborators . other than investments accounted for using the equity method discussed below , we elected the fair value option to account for our equity securities and preferred stock held in these collaborators . these equity securities and preferred stock are recorded at fair value at each reporting date . unrealized appreciation ( depreciation ) resulting from fair value adjustments are reported as other income ( expense ) in the consolidated statement of operations . as such , we bear the risk that fluctuations in the securities ' share prices may significantly impact our results of operations . in june 2015 , we recorded a realized gain related to the distribution of all our shares of ziopharm to our shareholders as a special stock dividend . interest income consists of interest earned on our cash and cash equivalents and short-term and long-term investments . dividend income consists of the monthly preferred stock dividend received from ziopharm . interest expense pertains to deferred consideration payable to the former members of trans ova and long term debt . story_separator_special_tag in conjunction with a prior transaction associated with trans ova 's subsidiary , viagen , in september 2012 , we may be obligated to make certain future contingent payments to the former equity holders of viagen , up to a total of $ 3.0 million if certain revenue targets , as defined in the share purchase agreement , are met . this amount is not included in the table above due to the uncertainty of when we will make any of these future payments , if ever . in january 2009 , aquabounty was awarded a grant to provide funding of a research and development project from the atlantic canada opportunities agency , a canadian government agency . amounts claimed by aquabounty must be repaid in the form of a 10 percent royalty on any products commercialized out of this research and development project until fully paid . because the timing of commercialization is subject to additional regulatory considerations , the timing of repayment is uncertain . aquabounty has claimed all amounts available under the grant , resulting in total long-term debt of $ 1.9 million on our consolidated financial statements as of december 31 , 2016 . this amount is not included in the table above due to the uncertainty of the timing of repayment . net operating losses as of december 31 , 2016 , we had net operating loss carryforwards of approximately $ 253.0 million for u.s. federal income tax purposes available to offset future taxable income and u.s. federal and state research and development tax credits of $ 7.5 million , prior to consideration of annual limitations that may be imposed under section 382. these carryforwards begin to expire in 2022 . our direct foreign subsidiaries have foreign loss carryforwards of approximately $ 119.2 million , most of which do not expire . our past issuances of stock and mergers and acquisitions have resulted in ownership changes within the meaning of section 382. as a result , the utilization of portions of our net operating losses may be subject to annual limitations . as of december 31 , 2016 , approximately $ 15.1 million of our domestic net operating losses generated prior to 2008 are limited by section 382 to annual usage limits of approximately $ 1.5 million . as of december 31 , 2016 , approximately $ 18.6 million of domestic net operating losses were inherited via acquisition and are limited based on the value of the target at the time of the transaction . future changes in stock ownership may also trigger an ownership change and , consequently , a section 382 limitation . we do not file a consolidated income tax return with aquabounty and biopop . as of december 31 , 2016 , aquabounty had loss carryforwards for federal and foreign income tax purposes of approximately $ 22.2 million and $ 12.9 million , respectively , and foreign research tax credits of $ 2.4 million available to offset future taxable income , prior to consideration of annual limitations that may be imposed under section 382 or analogous foreign provisions . these carryforwards will begin to expire in 2018 . as a result of our ownership in aquabounty passing 50 percent in 2013 , an annual section 382 limitation of approximately $ 0.9 million per year will apply to losses and credits carried forward by aquabounty from prior years , which are also subject to prior section 382 limitations . as of december 31 , 2016 , biopop had loss carryforwards of approximately $ 1.4 million for federal income tax purposes available to offset future taxable income . off-balance sheet arrangements we did not have during the periods presented , and we do not currently have , any off-balance sheet arrangements , other than operating leases as mentioned above , as defined under sec rules . 58 critical accounting policies and estimates our management 's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements , which we have prepared in accordance with u.s. gaap . the preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements , as well as the reported revenues and expenses during the reporting periods . we evaluate these estimates and judgments on an ongoing basis . we base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances , the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources . our actual results may differ from these estimates under different assumptions or conditions . while our significant accounting policies are more fully described in note 2 to our consolidated financial statements appearing elsewhere in this annual report on form 10-k , we believe that the following accounting policies are the most critical for fully understanding and evaluating our financial condition and results of operations . revenue recognition we generate revenue through contractual agreements with collaborators and licensing agreements whereby the collaborators or the licensees obtain exclusive access to our proprietary technologies for use in the research , development and commercialization of products and or treatments in a contractually specified field of use . generally , the terms of these agreements provide that we receive some or all of the following : ( i ) upfront payments upon consummation of the agreement ; ( ii ) reimbursements for costs incurred by us for research and development and or manufacturing efforts related to specific applications provided for in the agreement ; ( iii ) milestone payments upon the achievement of specified development , regulatory and commercial activities ; and ( iv ) royalties on sales of products arising from the collaboration or licensing agreement . our collaborations and licensing agreements Narrative : liquidity and capital resources sources of liquidity we have incurred losses from operations since our inception and as of december 31 , 2016 , we had an accumulated deficit of $ 729.3 million . from our inception through december 31 , 2016 , we have funded our operations principally with proceeds received from private and public offerings , cash received from our collaborators and through product and service sales made directly to customers . as of december 31 , 2016 , we had cash and cash equivalents of $ 62.6 million and short-term and long-term investments of $ 180.6 million . cash in excess of immediate requirements is invested primarily in money market funds , certificates of deposits and u.s. government debt securities in order to maintain liquidity and preserve capital . we currently generate cash receipts primarily from technology access fees , reimbursement of research and development services performed by us and sales of products and services . cash flows the following table sets forth the significant sources and uses of cash for the periods set forth below : replace_table_token_12_th 55 cash flows from operating activities : in 2016 , our net loss of $ 190.3 million , after consideration of significant noncash items of ( i ) $ 58.9 million of unrealized and realized losses on our equity securities and preferred stock , ( ii ) $ 42.2 million of stock-based compensation expense , ( iii ) $ 24.6 million of depreciation and amortization expense , ( iv ) $ 21.1 million of equity in net loss of affiliates , ( v ) $ 10.8 million of shares issued as payment for services , and ( vi ) $ 7.4 million of noncash dividend income was $ 40.1 million . additionally , we had a $ 17.7 million net increase in our operating assets and liabilities primarily as a result of the recognition of previously deferred revenue , partially offset by a $ 10.0 million technology access fee received in cash pursuant to a new collaboration .

59 trokendi xr 2019 compared to 2018. trokendi xr net product sales decreased by 6 % in 2019 as compared to 2018. compared to 2018 , favorable unit prescription volume growth of 5 % coupled with the impact of an 8 % price increase were offset by higher levels of net sales deductions . increased sales deductions were driven primarily by increased per patient costs for our co-pay programs , higher per patient rebate payments to managed care providers , and higher medicaid reimbursement payments . in addition , the majority of the impact of the $ 10 million channel inventory reduction , as described above , was reflected in lower net product sales for trokendi xr in 2019. oxtellar xr 2019 compared to 2018. oxtellar xr net product sales grew 4 % in 2019 as compared to 2018 . compared to 2018 , favorable unit prescription volume growth of 11 % and the impact of an 8 % price increase were offset by higher levels of sales deductions . increased sales deductions were due primarily by higher per patient payments under both medicaid and managed care programs , as well as higher co-pay program expenditures . sales deductions and related accruals the company records accrued product rebates and accrued product returns as current liabilities on our consolidated balance sheets under accrued product returns and rebates . we record sales discounts as a valuation allowance against accounts receivable on the consolidated balance sheets . the outstanding amounts are affected by changes in level of gross sales , the provision for net product sales deductions and the timing of payments/credits . the following table provides a summary of activities with respect to accrued product returns and rebates for the years ended december 31 , 2019 , 2018 and 2017 ( dollars in thousands ) : replace_table_token_6_th 2019 compared to 2018. the total provision for sales deductions on gross product sales increased by $ 69.8 million , from $ 308.6 million in 2018 to $ 378.4 million in 2019 . virtually all of this increase was attributable to the year over year increase in the provision for product rebates , from $ 238.6 million in 2018 to $ 306.5 million in 2019 , or $ 67.9 million . the year over year increase in the provision for product rebates of $ 67.9 million was primarily attributable to greater utilization of our patient co-pay programs . in addition , patient reimbursement challenges and increased contracting pressure from managed care providers resulted in both increased per patient costs for our co-pay programs , higher per patient rebate payments to managed care providers , and higher medicaid reimbursement payments . growth in prescriptions and the impact of the 8 % price increase taken in january contributed , to a lesser extent , to the increase in product rebates . the provision for product returns of $ 10.7 million in 2019 , remained essentially the same year over year due primarily to favorable returns experience , which offset the impact of the 8 % price increase taken in january . 60 the provision for sales discounts increased by $ 1.9 million , from $ 59.2 million to $ 61.1 million in 2018 and 2019 , respectively , because of the prescription volume growth . adjustments related to prior year sales due to changes in our estimates was relatively minor in both years ; i.e . , $ 0.4 million as compared to $ 383.4 million of net product sales in 2019 , and $ 1.8 million as compared to $ 399.9 million of net product sales in 2018. royalty revenue royalty revenue includes royalties from the following products ( dollars in thousands ) : replace_table_token_7_th ( 1 ) royalty from net product sales of mydayis , a product of shire plc ( a subsidiary of takeda pharmaceuticals company ltd ) . ( 2 ) noncash royalty revenue pursuant to our agreement with healthcare royalty partners iii , l.p. ( hc royalty ) . hc royalty receives royalty payments from united therapeutics corporation ( united therapeutics ) based on net product sales of united therapeutics ' product orenitram . supernus records noncash royalty based on such product sales . 2019 compared to 2018 . royalty revenue increased by approximately $ 1.1 million , or 13 % , in 2019 as compared to 2018 , due to increased product sales of mydayis and orenitram . cost of goods sold the following table provides information regarding our cost of goods sold for the years indicated ( dollars in thousands ) : replace_table_token_8_th 2019 compared to 2018 . the year over year increase in cost of goods sold was attributable primarily to higher volume of products sold to our customers . research and development expenses the following table provides information regarding our research and development ( r & d ) expenses for the years indicated ( dollars in thousands ) : replace_table_token_9_th 2019 compared to 2018 . r & d expenses decreased by $ 20.1 million in 2019 as compared to 2018 , primarily driven by the completion of the four phase iii clinical trials for spn-812 in late 2018/early 2019 , and the one-time $ 14 million expense incurred in 2018 due to the acquisition of biscayne neurotherapeutics inc. these reductions were partially offset by the cost to manufacture registration/validation materials for spn-812 to support the nda filing for spn-812 and commercial sales if the nda is approved . 61 selling , general and administrative expense the table below provides information regarding our selling , general and administrative ( sg & a ) expenses for the years indicated ( dollars in thousands ) : replace_table_token_10_th selling and marketing expense 2019 compared to 2018 . story_separator_special_tag selling and marketing expenses decreased by $ 8.0 million in 2019 as compared to 2018 , primarily as a result of decreased professional and consulting expenses of $ 4.3 million and decreased sample expense of $ 3.1 million to support our existing commercial products . general and administrative expense 2019 compared to 2018 . general and administrative ( g & a ) expenses increased by $ 6.6 million in 2019 as compared to 2018 , primarily due to higher employee-related expenses of $ 3.6 million , including $ 2.3 million in share-based compensation , and an increase of $ 1.6 million in professional and consulting fees . other ( expense ) income the following table provides the components of other ( expense ) income during the years indicated ( dollars in thousands ) : replace_table_token_11_th interest income 2019 compared to 2018 . the year over year increase in interest income , $ 7.8 million , was primarily due to an increase in cash , cash equivalents and marketable securities holdings . the increase in securities holdings primarily resulted from the net proceeds of the march 2018 0.625 % 2023 convertible senior note issuance ( 2023 notes ) , with a principal amount of $ 402.5 million . interest expense 2019 compared to 2018 . interest expense in 2019 increased by $ 4.4 million , as compared to 2018 , because of full year interest expense recognized in 2019 on the 2023 notes issued in march 2018. interest expense on non-recourse liability related to sale of future royalties 2019 compared to 2018 . noncash interest expense related to our nonrecourse royalty liability remained generally unchanged , from 2018 to 2019 . 62 income tax expense the following table provides information regarding our income tax expense during the periods indicated ( dollar in thousands ) : replace_table_token_12_th 2019 compared to 2018 . the increase in income tax expense was primarily due to a low effective tax rate in 2018 as the effective tax rate was favorably impacted by employee stock option exercises . the 2019 effective tax rate is favorably impacted by a decrease in our uncertain tax position reserve due to expiring statute of limitations and partially offset by an increase in our state effective tax rates due to an increase in the number of states in which we owe taxes . net earnings the following table provides information regarding our income tax expense during the periods indicated ( dollar in thousands ) : replace_table_token_13_th 2019 compared to 2018 . the increase in net earnings was primarily due to revenue generated from the sale of our two commercial products . trokendi xr and oxtellar xr , partially offset by decreased r & d and sg & a spending and increased income tax expense . story_separator_special_tag thousands ) : replace_table_token_15_th operating activities net cash provided by operating activities is comprised of two components : cash provided by operating earnings ; and cash provided by ( used in ) changes in working capital . the net cash provided by operating activities , $ 143.1 million , was primarily driven by increased operating earnings , reduced by incremental cash absorbed by increased working capital . cash utilized in working capital reflects the timing impacts of cash collections on receivables and settlement of payables , as described below . the changes in certain operating assets and liabilities are as follows ( dollars in thousands ) : replace_table_token_16_th 65 investing activities 2019 compared to 2018. net cash used in investing activities decreased by $ 255.6 million , from $ 413.5 million in 2018 to $ 157.9 million in 2019 , for the year ended december 31 , 2019 . this year over year change was driven by changes in the net purchase of marketable securities . in 2018 , proceeds from the issuance of the 2023 notes in march 2018 were used to purchase marketable securities and long term marketable securities . financing activities 2019 compared to 2018. net cash provided by financing activities decreased to $ 3.9 million for the year ended december 31 , 2019 versus $ 376.4 million provided in the same period in 2018 . this year over year decrease is primarily attributable to the issuance of the 2023 notes in march 2018 , coupled with the related convertible note hedges and warrants . contractual obligations and commitments the following table summarizes our contractual obligations and commitments as of december 31 , 2019 , except as noted below ( dollars in thousands ) : replace_table_token_17_th ( 1 ) relates to the 2023 notes ( see note 9 in the notes to consolidated financial statements in part ii , item 8 of this report . ) ( 2 ) our commitments for operating leases relate to our leases of office equipment , fleet vehicles and the lease of the current headquarters office and laboratory space , as of december 31 , 2019 . ( 3 ) relates primarily to agreements and purchase orders with contractors and vendors . ( 4 ) this table does not include ( i ) any milestone payments which may become payable to third parties under license agreements or contractual agreements regarding our clinical trials or those which may become payable upon achieving sales and developmental milestones per contractual agreements , as the timing and likelihood of such payments are not known , ( ii ) any royalty payments to third parties as the amounts , timing and likelihood of such payments are not known , and ( iii ) contracts that are entered into in the ordinary course of business which are not material in the aggregate in any period presented above . ( 5 ) as of december 31 , 2019 , we had liabilities related to uncertain tax positions . due to uncertainties in the timing of potential tax audits , the timing and the amounts associated with the resolution of these positions is uncertain . as such , we are unable to make a reasonably

liquidity and capital resources we have financed our operations primarily with cash generated from product sales , supplemented by revenues from royalty and licensing arrangements as well as proceeds from the sale of equity and debt securities . continued cash generation is highly dependent on the commercial success of our two commercial products , trokendi xr and oxtellar xr . we were cash flow positive and profitable from operations in 2019 . while we expect continued profitability for future years , we anticipate there may be significant variability from year to year in our profitability , and particularly as we move forward with the anticipated commercial launch of spn-812 in 2020 , assuming fda approval . we believe our existing cash and cash equivalents , marketable securities and cash received from product sales will be sufficient to finance ongoing operations , development of our new products , and label expansions for existing products . to continue to grow our business over the long-term , we plan to commit substantial resources to : product development and clinical trials of product candidates ; product acquisition ; product in-licensing ; and supportive functions such as compliance , finance , management of our intellectual property portfolio , information technology systems and personnel .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. 59 trokendi xr 2019 compared to 2018. trokendi xr net product sales decreased by 6 % in 2019 as compared to 2018. compared to 2018 , favorable unit prescription volume growth of 5 % coupled with the impact of an 8 % price increase were offset by higher levels of net sales deductions . increased sales deductions were driven primarily by increased per patient costs for our co-pay programs , higher per patient rebate payments to managed care providers , and higher medicaid reimbursement payments . in addition , the majority of the impact of the $ 10 million channel inventory reduction , as described above , was reflected in lower net product sales for trokendi xr in 2019. oxtellar xr 2019 compared to 2018. oxtellar xr net product sales grew 4 % in 2019 as compared to 2018 . compared to 2018 , favorable unit prescription volume growth of 11 % and the impact of an 8 % price increase were offset by higher levels of sales deductions . increased sales deductions were due primarily by higher per patient payments under both medicaid and managed care programs , as well as higher co-pay program expenditures . sales deductions and related accruals the company records accrued product rebates and accrued product returns as current liabilities on our consolidated balance sheets under accrued product returns and rebates . we record sales discounts as a valuation allowance against accounts receivable on the consolidated balance sheets . the outstanding amounts are affected by changes in level of gross sales , the provision for net product sales deductions and the timing of payments/credits . the following table provides a summary of activities with respect to accrued product returns and rebates for the years ended december 31 , 2019 , 2018 and 2017 ( dollars in thousands ) : replace_table_token_6_th 2019 compared to 2018. the total provision for sales deductions on gross product sales increased by $ 69.8 million , from $ 308.6 million in 2018 to $ 378.4 million in 2019 . virtually all of this increase was attributable to the year over year increase in the provision for product rebates , from $ 238.6 million in 2018 to $ 306.5 million in 2019 , or $ 67.9 million . the year over year increase in the provision for product rebates of $ 67.9 million was primarily attributable to greater utilization of our patient co-pay programs . in addition , patient reimbursement challenges and increased contracting pressure from managed care providers resulted in both increased per patient costs for our co-pay programs , higher per patient rebate payments to managed care providers , and higher medicaid reimbursement payments . growth in prescriptions and the impact of the 8 % price increase taken in january contributed , to a lesser extent , to the increase in product rebates . the provision for product returns of $ 10.7 million in 2019 , remained essentially the same year over year due primarily to favorable returns experience , which offset the impact of the 8 % price increase taken in january . 60 the provision for sales discounts increased by $ 1.9 million , from $ 59.2 million to $ 61.1 million in 2018 and 2019 , respectively , because of the prescription volume growth . adjustments related to prior year sales due to changes in our estimates was relatively minor in both years ; i.e . , $ 0.4 million as compared to $ 383.4 million of net product sales in 2019 , and $ 1.8 million as compared to $ 399.9 million of net product sales in 2018. royalty revenue royalty revenue includes royalties from the following products ( dollars in thousands ) : replace_table_token_7_th ( 1 ) royalty from net product sales of mydayis , a product of shire plc ( a subsidiary of takeda pharmaceuticals company ltd ) . ( 2 ) noncash royalty revenue pursuant to our agreement with healthcare royalty partners iii , l.p. ( hc royalty ) . hc royalty receives royalty payments from united therapeutics corporation ( united therapeutics ) based on net product sales of united therapeutics ' product orenitram . supernus records noncash royalty based on such product sales . 2019 compared to 2018 . royalty revenue increased by approximately $ 1.1 million , or 13 % , in 2019 as compared to 2018 , due to increased product sales of mydayis and orenitram . cost of goods sold the following table provides information regarding our cost of goods sold for the years indicated ( dollars in thousands ) : replace_table_token_8_th 2019 compared to 2018 . the year over year increase in cost of goods sold was attributable primarily to higher volume of products sold to our customers . research and development expenses the following table provides information regarding our research and development ( r & d ) expenses for the years indicated ( dollars in thousands ) : replace_table_token_9_th 2019 compared to 2018 . r & d expenses decreased by $ 20.1 million in 2019 as compared to 2018 , primarily driven by the completion of the four phase iii clinical trials for spn-812 in late 2018/early 2019 , and the one-time $ 14 million expense incurred in 2018 due to the acquisition of biscayne neurotherapeutics inc. these reductions were partially offset by the cost to manufacture registration/validation materials for spn-812 to support the nda filing for spn-812 and commercial sales if the nda is approved . 61 selling , general and administrative expense the table below provides information regarding our selling , general and administrative ( sg & a ) expenses for the years indicated ( dollars in thousands ) : replace_table_token_10_th selling and marketing expense 2019 compared to 2018 . story_separator_special_tag selling and marketing expenses decreased by $ 8.0 million in 2019 as compared to 2018 , primarily as a result of decreased professional and consulting expenses of $ 4.3 million and decreased sample expense of $ 3.1 million to support our existing commercial products . general and administrative expense 2019 compared to 2018 . general and administrative ( g & a ) expenses increased by $ 6.6 million in 2019 as compared to 2018 , primarily due to higher employee-related expenses of $ 3.6 million , including $ 2.3 million in share-based compensation , and an increase of $ 1.6 million in professional and consulting fees . other ( expense ) income the following table provides the components of other ( expense ) income during the years indicated ( dollars in thousands ) : replace_table_token_11_th interest income 2019 compared to 2018 . the year over year increase in interest income , $ 7.8 million , was primarily due to an increase in cash , cash equivalents and marketable securities holdings . the increase in securities holdings primarily resulted from the net proceeds of the march 2018 0.625 % 2023 convertible senior note issuance ( 2023 notes ) , with a principal amount of $ 402.5 million . interest expense 2019 compared to 2018 . interest expense in 2019 increased by $ 4.4 million , as compared to 2018 , because of full year interest expense recognized in 2019 on the 2023 notes issued in march 2018. interest expense on non-recourse liability related to sale of future royalties 2019 compared to 2018 . noncash interest expense related to our nonrecourse royalty liability remained generally unchanged , from 2018 to 2019 . 62 income tax expense the following table provides information regarding our income tax expense during the periods indicated ( dollar in thousands ) : replace_table_token_12_th 2019 compared to 2018 . the increase in income tax expense was primarily due to a low effective tax rate in 2018 as the effective tax rate was favorably impacted by employee stock option exercises . the 2019 effective tax rate is favorably impacted by a decrease in our uncertain tax position reserve due to expiring statute of limitations and partially offset by an increase in our state effective tax rates due to an increase in the number of states in which we owe taxes . net earnings the following table provides information regarding our income tax expense during the periods indicated ( dollar in thousands ) : replace_table_token_13_th 2019 compared to 2018 . the increase in net earnings was primarily due to revenue generated from the sale of our two commercial products . trokendi xr and oxtellar xr , partially offset by decreased r & d and sg & a spending and increased income tax expense . story_separator_special_tag thousands ) : replace_table_token_15_th operating activities net cash provided by operating activities is comprised of two components : cash provided by operating earnings ; and cash provided by ( used in ) changes in working capital . the net cash provided by operating activities , $ 143.1 million , was primarily driven by increased operating earnings , reduced by incremental cash absorbed by increased working capital . cash utilized in working capital reflects the timing impacts of cash collections on receivables and settlement of payables , as described below . the changes in certain operating assets and liabilities are as follows ( dollars in thousands ) : replace_table_token_16_th 65 investing activities 2019 compared to 2018. net cash used in investing activities decreased by $ 255.6 million , from $ 413.5 million in 2018 to $ 157.9 million in 2019 , for the year ended december 31 , 2019 . this year over year change was driven by changes in the net purchase of marketable securities . in 2018 , proceeds from the issuance of the 2023 notes in march 2018 were used to purchase marketable securities and long term marketable securities . financing activities 2019 compared to 2018. net cash provided by financing activities decreased to $ 3.9 million for the year ended december 31 , 2019 versus $ 376.4 million provided in the same period in 2018 . this year over year decrease is primarily attributable to the issuance of the 2023 notes in march 2018 , coupled with the related convertible note hedges and warrants . contractual obligations and commitments the following table summarizes our contractual obligations and commitments as of december 31 , 2019 , except as noted below ( dollars in thousands ) : replace_table_token_17_th ( 1 ) relates to the 2023 notes ( see note 9 in the notes to consolidated financial statements in part ii , item 8 of this report . ) ( 2 ) our commitments for operating leases relate to our leases of office equipment , fleet vehicles and the lease of the current headquarters office and laboratory space , as of december 31 , 2019 . ( 3 ) relates primarily to agreements and purchase orders with contractors and vendors . ( 4 ) this table does not include ( i ) any milestone payments which may become payable to third parties under license agreements or contractual agreements regarding our clinical trials or those which may become payable upon achieving sales and developmental milestones per contractual agreements , as the timing and likelihood of such payments are not known , ( ii ) any royalty payments to third parties as the amounts , timing and likelihood of such payments are not known , and ( iii ) contracts that are entered into in the ordinary course of business which are not material in the aggregate in any period presented above . ( 5 ) as of december 31 , 2019 , we had liabilities related to uncertain tax positions . due to uncertainties in the timing of potential tax audits , the timing and the amounts associated with the resolution of these positions is uncertain . as such , we are unable to make a reasonably Narrative : liquidity and capital resources we have financed our operations primarily with cash generated from product sales , supplemented by revenues from royalty and licensing arrangements as well as proceeds from the sale of equity and debt securities . continued cash generation is highly dependent on the commercial success of our two commercial products , trokendi xr and oxtellar xr . we were cash flow positive and profitable from operations in 2019 . while we expect continued profitability for future years , we anticipate there may be significant variability from year to year in our profitability , and particularly as we move forward with the anticipated commercial launch of spn-812 in 2020 , assuming fda approval . we believe our existing cash and cash equivalents , marketable securities and cash received from product sales will be sufficient to finance ongoing operations , development of our new products , and label expansions for existing products . to continue to grow our business over the long-term , we plan to commit substantial resources to : product development and clinical trials of product candidates ; product acquisition ; product in-licensing ; and supportive functions such as compliance , finance , management of our intellectual property portfolio , information technology systems and personnel .

we have one reportable segment with businesses that include our core news product and other interest-specific products , and related content and services . we generate revenues principally from subscriptions and advertising . other revenues primarily consist of revenues from licensing , wirecutter affiliate referrals , the leasing of floors in the company headquarters , commercial printing , television and film , retail commerce and our live events business . our main operating costs are employee-related costs . in the accompanying analysis of financial information , we present certain information derived from consolidated financial information but not presented in our financial statements prepared in accordance with generally accepted accounting principles in the united states of america ( “ gaap ” ) . we are presenting in this report supplemental non-gaap financial performance measures that exclude depreciation , amortization , severance , non-operating retirement costs and certain identified special items , as applicable . these non-gaap financial measures should not be considered in isolation from or as a substitute for the related gaap measures and should be read in conjunction with financial information presented on a gaap basis . for further information and reconciliations of these non-gaap measures to the most directly comparable gaap measures , see “ — results of operations — non-gaap financial measures . ” the new york times company – p. 29 the company changed the expense captions on its consolidated statement of operations effective for the quarter ended march 29 , 2020. these changes were made in order to reflect how the company manages its business and to communicate where the company is investing resources and how this aligns with the company 's strategy . the company reclassified expenses for the prior periods in order to present comparable financial results . there was no change to consolidated operating income , total operating costs , net income or cash flows as a result of this change in classification . see note 19 of the notes to the consolidated financial statements for more detail . we believe that a number of factors and industry trends have , and will continue to , present risks and challenges to our business . for a detailed discussion of certain factors that could affect our business , results of operations and financial condition , see “ item 1a — risk factors . ” 2020 financial highlights in 2020 , diluted earnings per share from continuing operations were $ 0.60 , compared with $ 0.83 for 2019. diluted earnings per share from continuing operations excluding severance , non-operating retirement costs and special items discussed below ( or “ adjusted diluted earnings per share , ” a non-gaap measure ) were $ 0.97 for 2020 , compared with $ 0.92 for 2019. operating profit in 2020 was $ 176.3 million , compared with $ 175.6 million for 2019 , as the decrease in operating costs was largely offset by lower revenues . operating profit before depreciation , amortization , severance , multiemployer pension plan withdrawal costs and special items discussed below ( or “ adjusted operating profit , ” a non-gaap measure ) was $ 250.6 million and $ 248.4 million for 2020 and 2019 , respectively . total revenues decreased 1.6 % to $ 1.78 billion in 2020 from $ 1.81 billion in 2019 , primarily driven by a decrease in advertising revenue and other revenue , partially offset by an increase in digital-only subscription revenues . subscription revenues increased 10.3 % to $ 1.20 billion in 2020. advertising revenues decreased 26.1 % to $ 392.4 million in 2020 largely due to lower print advertising revenue , driven by reduced spending by advertisers in connection with the effects of the covid-19 pandemic , which further accelerated secular trends . other revenues decreased 0.9 % to $ 195.9 million in 2020. operating costs decreased in 2020 to $ 1.61 billion from $ 1.63 billion in 2019 , due to a decrease in sales and marketing costs and cost of revenue costs , partially offset by an increase in product development costs and general and administrative costs . operating costs before depreciation , amortization , severance and multiemployer pension plan withdrawal costs ( or “ adjusted operating costs , ” a non-gaap measure ) decreased in 2020 to $ 1.53 billion from $ 1.56 billion in 2019. impact of covid-19 pandemic the global covid-19 pandemic , and efforts to contain it , have continued to cause significant economic disruption , market volatility and uncertainty . these conditions have affected our business and could continue to do so for the foreseeable future . unlike many media companies , which are primarily dependent on advertising , we derive substantial revenue from subscriptions ( approximately 67 % of total revenues in 2020 ) . we experienced significant growth in the number of subscriptions to our digital news and other products in 2020 , which we believe was attributable in part to an increase in traffic given the news environment , and we do not expect the 2020 growth rate to be sustainable or indicative of results for future periods . while subscriptions grew , revenues from the single-copy and bulk sales of our print newspaper ( which collectively represented approximately 6 % of our total subscription revenues in 2020 ) were , and we expect will continue to be , adversely affected as a result of widespread business closures , continued increased levels of remote working and reductions in travel . the worldwide economic conditions caused by the pandemic also led to a significant decline in our advertising revenues in 2020 , and we expect that our advertising revenues will likely continue to be adversely affected if and while these conditions persist . however , our strong balance sheet has enabled us to continue to operate without the liquidity issues experienced by many other companies . as of december 27 , 2020 , we had cash , cash equivalents and short- and long-term marketable securities of $ 882.0 story_separator_special_tag paid digital-only subscriptions totaled approximately 4,395,000 at the end of 2019 , a net increase of 1,035,000 subscriptions compared with the end of 2018. the growth in our digital subscriptions is attributable in part to an increase in traffic given the news environment , as well as a change made to the digital access model during 2019 , which requires users to register and log in to access most of our content . digital-only news product subscriptions totaled approximately 3,429,000 at the end of 2019 , a net increase of 716,000 subscriptions compared with the end of 2018. other product subscriptions ( which , in 2019 , included our games and cooking products ) totaled approximately 966,000 at the end of 2019 , a net increase of 319,000 subscriptions compared with the end of 2018. print domestic home delivery subscriptions totaled approximately 856,000 at the end of 2019 , a net decrease of 68,000 subscriptions compared with the end of 2018. the year-over-year decrease is a result of secular declines . advertising revenues advertising revenue is principally from advertisers ( such as technology , financial and luxury goods companies ) promoting products , services or brands on digital platforms in the form of display ads , audio and video , and in print , in the form of column-inch ads . advertising revenue is primarily derived from offerings sold directly to marketers by our advertising sales teams . a smaller proportion of our total advertising revenues is generated through programmatic auctions run by third-party ad exchanges . advertising revenues are primarily determined by the volume ( e.g . , impressions ) , rate and mix of advertisements . digital advertising includes our core digital advertising business and other digital advertising . our core digital advertising business includes direct-sold website , mobile application , podcast , email and video advertisements . direct-sold display advertising , a component of core digital advertising , includes offerings on websites and mobile applications sold directly to marketers by our advertising sales teams . other digital advertising includes open-market programmatic advertising and creative services fees . print advertising includes revenue from p. 38 – the new york times company column-inch ads and classified advertising , including line-ads as well as preprinted advertising , also known as freestanding inserts . the following table summarizes digital and print advertising revenues for the years ended december 27 , 2020 , december 29 , 2019 , and december 30 , 2018 : replace_table_token_9_th 2020 compared with 2019 digital advertising revenues , which represented 58.3 % of total advertising revenues in 2020 , declined $ 31.9 million or 12.2 % to $ 228.6 million , compared with $ 260.5 million in 2019 , primarily driven by a decrease in creative service fees and direct-sold display advertising revenue . core digital advertising revenue decreased $ 5.8 million , primarily due to a 12 % decline in direct-sold display advertising revenue partially offset by a 26 % increase in podcast advertising revenues . direct-sold display impressions declined 15 % , while the average rate grew 3 % . other digital advertising declined $ 26.1 million as a result of lower creative services revenue resulting from the closure of our hellosociety and fake love digital marketing agencies and reduced spending by advertisers in connection with the effects of the covid-19 pandemic . this decline was partially offset by 7.8 % growth in open-market programmatic advertising revenue , as impressions increased by 40 % , while the average rate decreased 23 % . overall display advertising impressions sold increased 21 % as a result of an increase in traffic to our products , which were primarily filled by programmatic impressions . print advertising revenues , which represented 41.7 % of total advertising revenues in 2020 , declined $ 106.4 million or 39.4 % to $ 163.8 million in 2020 compared with $ 270.2 million in 2019. the decline was primarily in the entertainment , luxury and media categories , and was driven by reduced spending by advertisers in connection with the effects of the covid-19 pandemic , which further accelerated secular trends . the new york times company – p. 39 2019 compared with 2018 digital advertising revenues , which represented 49.1 % of total advertising revenues in 2019 , increased 0.6 % to $ 260.5 million in 2019 compared with $ 258.9 million in 2018. the increase primarily reflected increases in podcast revenue , partially offset by a decrease in direct-sold display advertising revenue . core digital advertising revenue increased $ 5.9 million primarily due to a 149 % increase in podcast revenues , partially offset by 9 % decline in direct-sold display advertising revenue . direct-sold display impressions increased by 1 % , while the average rate declined 4 % . other digital advertising revenue decreased $ 4.4 million primarily as a result of the closure of our hellosociety digital marketing agency . open-market programmatic advertising revenue decreased slightly , as impressions grew by 1 % , while the average rate decreased 8 % . overall display advertising impressions sold increased 1 % . print advertising revenues , which represented 51 % of total advertising revenues in 2019 , declined 9.7 % to $ 270.2 million in 2019 compared with $ 299.4 million in 2018. the decline was primarily in the financial services and luxury categories . other revenues other revenues primarily consist of revenues from licensing , wirecutter affiliate referrals , the leasing of floors in the company headquarters , commercial printing , television and film , retail commerce and our live events business . building rental revenue consists of revenue from the leasing of floors in our company headquarters , which totaled $ 28.5 million , $ 30.6 million and $ 23.3 million in 2020 , 2019 and 2018 , respectively . 2020 compared with 2019 other revenues decreased 0.9 % in 2020 compared with 2019 , primarily as a result of fewer episodes in our television series ( “ the

restricted cash we were required to maintain $ 15.9 million of restricted cash as of december 27 , 2020 , and $ 17.1 million as of december 29 , 2019 , substantially all of which is set aside to collateralize workers ' compensation obligations . capital expenditures capital expenditures totaled approximately $ 30 million and $ 49 million in 2020 and 2019 , respectively . the decrease in capital expenditures was primarily driven by lower expenditures related to the build-out of additional office space in long island city , n.y. , and lower expenditures related to improvements at our college point , n.y. , printing and distribution facility . the cash payments related to the capital expenditures totaled approximately $ 34 million and $ 45 million in 2020 and 2019 , respectively . third-party financing as of december 27 , 2020 , there were no outstanding borrowings under the credit facility and the company p. 48 – the new york times company was in compliance with the financial covenants contained in the credit facility . see note 7 for information regarding the credit facility . contractual obligations the information provided is based on management 's best estimate and assumptions of our contractual obligations as of december 27 , 2020. actual payments in future periods may vary from those reflected in the table . replace_table_token_18_th ( 1 ) see note 17 of the notes to the consolidated financial statements for additional information related to our operating leases . ( 2 ) the company 's general funding policy with respect to qualified pension plans is to contribute amounts at least sufficient to satisfy the minimum amount required by applicable law and regulations .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we have one reportable segment with businesses that include our core news product and other interest-specific products , and related content and services . we generate revenues principally from subscriptions and advertising . other revenues primarily consist of revenues from licensing , wirecutter affiliate referrals , the leasing of floors in the company headquarters , commercial printing , television and film , retail commerce and our live events business . our main operating costs are employee-related costs . in the accompanying analysis of financial information , we present certain information derived from consolidated financial information but not presented in our financial statements prepared in accordance with generally accepted accounting principles in the united states of america ( “ gaap ” ) . we are presenting in this report supplemental non-gaap financial performance measures that exclude depreciation , amortization , severance , non-operating retirement costs and certain identified special items , as applicable . these non-gaap financial measures should not be considered in isolation from or as a substitute for the related gaap measures and should be read in conjunction with financial information presented on a gaap basis . for further information and reconciliations of these non-gaap measures to the most directly comparable gaap measures , see “ — results of operations — non-gaap financial measures . ” the new york times company – p. 29 the company changed the expense captions on its consolidated statement of operations effective for the quarter ended march 29 , 2020. these changes were made in order to reflect how the company manages its business and to communicate where the company is investing resources and how this aligns with the company 's strategy . the company reclassified expenses for the prior periods in order to present comparable financial results . there was no change to consolidated operating income , total operating costs , net income or cash flows as a result of this change in classification . see note 19 of the notes to the consolidated financial statements for more detail . we believe that a number of factors and industry trends have , and will continue to , present risks and challenges to our business . for a detailed discussion of certain factors that could affect our business , results of operations and financial condition , see “ item 1a — risk factors . ” 2020 financial highlights in 2020 , diluted earnings per share from continuing operations were $ 0.60 , compared with $ 0.83 for 2019. diluted earnings per share from continuing operations excluding severance , non-operating retirement costs and special items discussed below ( or “ adjusted diluted earnings per share , ” a non-gaap measure ) were $ 0.97 for 2020 , compared with $ 0.92 for 2019. operating profit in 2020 was $ 176.3 million , compared with $ 175.6 million for 2019 , as the decrease in operating costs was largely offset by lower revenues . operating profit before depreciation , amortization , severance , multiemployer pension plan withdrawal costs and special items discussed below ( or “ adjusted operating profit , ” a non-gaap measure ) was $ 250.6 million and $ 248.4 million for 2020 and 2019 , respectively . total revenues decreased 1.6 % to $ 1.78 billion in 2020 from $ 1.81 billion in 2019 , primarily driven by a decrease in advertising revenue and other revenue , partially offset by an increase in digital-only subscription revenues . subscription revenues increased 10.3 % to $ 1.20 billion in 2020. advertising revenues decreased 26.1 % to $ 392.4 million in 2020 largely due to lower print advertising revenue , driven by reduced spending by advertisers in connection with the effects of the covid-19 pandemic , which further accelerated secular trends . other revenues decreased 0.9 % to $ 195.9 million in 2020. operating costs decreased in 2020 to $ 1.61 billion from $ 1.63 billion in 2019 , due to a decrease in sales and marketing costs and cost of revenue costs , partially offset by an increase in product development costs and general and administrative costs . operating costs before depreciation , amortization , severance and multiemployer pension plan withdrawal costs ( or “ adjusted operating costs , ” a non-gaap measure ) decreased in 2020 to $ 1.53 billion from $ 1.56 billion in 2019. impact of covid-19 pandemic the global covid-19 pandemic , and efforts to contain it , have continued to cause significant economic disruption , market volatility and uncertainty . these conditions have affected our business and could continue to do so for the foreseeable future . unlike many media companies , which are primarily dependent on advertising , we derive substantial revenue from subscriptions ( approximately 67 % of total revenues in 2020 ) . we experienced significant growth in the number of subscriptions to our digital news and other products in 2020 , which we believe was attributable in part to an increase in traffic given the news environment , and we do not expect the 2020 growth rate to be sustainable or indicative of results for future periods . while subscriptions grew , revenues from the single-copy and bulk sales of our print newspaper ( which collectively represented approximately 6 % of our total subscription revenues in 2020 ) were , and we expect will continue to be , adversely affected as a result of widespread business closures , continued increased levels of remote working and reductions in travel . the worldwide economic conditions caused by the pandemic also led to a significant decline in our advertising revenues in 2020 , and we expect that our advertising revenues will likely continue to be adversely affected if and while these conditions persist . however , our strong balance sheet has enabled us to continue to operate without the liquidity issues experienced by many other companies . as of december 27 , 2020 , we had cash , cash equivalents and short- and long-term marketable securities of $ 882.0 story_separator_special_tag paid digital-only subscriptions totaled approximately 4,395,000 at the end of 2019 , a net increase of 1,035,000 subscriptions compared with the end of 2018. the growth in our digital subscriptions is attributable in part to an increase in traffic given the news environment , as well as a change made to the digital access model during 2019 , which requires users to register and log in to access most of our content . digital-only news product subscriptions totaled approximately 3,429,000 at the end of 2019 , a net increase of 716,000 subscriptions compared with the end of 2018. other product subscriptions ( which , in 2019 , included our games and cooking products ) totaled approximately 966,000 at the end of 2019 , a net increase of 319,000 subscriptions compared with the end of 2018. print domestic home delivery subscriptions totaled approximately 856,000 at the end of 2019 , a net decrease of 68,000 subscriptions compared with the end of 2018. the year-over-year decrease is a result of secular declines . advertising revenues advertising revenue is principally from advertisers ( such as technology , financial and luxury goods companies ) promoting products , services or brands on digital platforms in the form of display ads , audio and video , and in print , in the form of column-inch ads . advertising revenue is primarily derived from offerings sold directly to marketers by our advertising sales teams . a smaller proportion of our total advertising revenues is generated through programmatic auctions run by third-party ad exchanges . advertising revenues are primarily determined by the volume ( e.g . , impressions ) , rate and mix of advertisements . digital advertising includes our core digital advertising business and other digital advertising . our core digital advertising business includes direct-sold website , mobile application , podcast , email and video advertisements . direct-sold display advertising , a component of core digital advertising , includes offerings on websites and mobile applications sold directly to marketers by our advertising sales teams . other digital advertising includes open-market programmatic advertising and creative services fees . print advertising includes revenue from p. 38 – the new york times company column-inch ads and classified advertising , including line-ads as well as preprinted advertising , also known as freestanding inserts . the following table summarizes digital and print advertising revenues for the years ended december 27 , 2020 , december 29 , 2019 , and december 30 , 2018 : replace_table_token_9_th 2020 compared with 2019 digital advertising revenues , which represented 58.3 % of total advertising revenues in 2020 , declined $ 31.9 million or 12.2 % to $ 228.6 million , compared with $ 260.5 million in 2019 , primarily driven by a decrease in creative service fees and direct-sold display advertising revenue . core digital advertising revenue decreased $ 5.8 million , primarily due to a 12 % decline in direct-sold display advertising revenue partially offset by a 26 % increase in podcast advertising revenues . direct-sold display impressions declined 15 % , while the average rate grew 3 % . other digital advertising declined $ 26.1 million as a result of lower creative services revenue resulting from the closure of our hellosociety and fake love digital marketing agencies and reduced spending by advertisers in connection with the effects of the covid-19 pandemic . this decline was partially offset by 7.8 % growth in open-market programmatic advertising revenue , as impressions increased by 40 % , while the average rate decreased 23 % . overall display advertising impressions sold increased 21 % as a result of an increase in traffic to our products , which were primarily filled by programmatic impressions . print advertising revenues , which represented 41.7 % of total advertising revenues in 2020 , declined $ 106.4 million or 39.4 % to $ 163.8 million in 2020 compared with $ 270.2 million in 2019. the decline was primarily in the entertainment , luxury and media categories , and was driven by reduced spending by advertisers in connection with the effects of the covid-19 pandemic , which further accelerated secular trends . the new york times company – p. 39 2019 compared with 2018 digital advertising revenues , which represented 49.1 % of total advertising revenues in 2019 , increased 0.6 % to $ 260.5 million in 2019 compared with $ 258.9 million in 2018. the increase primarily reflected increases in podcast revenue , partially offset by a decrease in direct-sold display advertising revenue . core digital advertising revenue increased $ 5.9 million primarily due to a 149 % increase in podcast revenues , partially offset by 9 % decline in direct-sold display advertising revenue . direct-sold display impressions increased by 1 % , while the average rate declined 4 % . other digital advertising revenue decreased $ 4.4 million primarily as a result of the closure of our hellosociety digital marketing agency . open-market programmatic advertising revenue decreased slightly , as impressions grew by 1 % , while the average rate decreased 8 % . overall display advertising impressions sold increased 1 % . print advertising revenues , which represented 51 % of total advertising revenues in 2019 , declined 9.7 % to $ 270.2 million in 2019 compared with $ 299.4 million in 2018. the decline was primarily in the financial services and luxury categories . other revenues other revenues primarily consist of revenues from licensing , wirecutter affiliate referrals , the leasing of floors in the company headquarters , commercial printing , television and film , retail commerce and our live events business . building rental revenue consists of revenue from the leasing of floors in our company headquarters , which totaled $ 28.5 million , $ 30.6 million and $ 23.3 million in 2020 , 2019 and 2018 , respectively . 2020 compared with 2019 other revenues decreased 0.9 % in 2020 compared with 2019 , primarily as a result of fewer episodes in our television series ( “ the Narrative : restricted cash we were required to maintain $ 15.9 million of restricted cash as of december 27 , 2020 , and $ 17.1 million as of december 29 , 2019 , substantially all of which is set aside to collateralize workers ' compensation obligations . capital expenditures capital expenditures totaled approximately $ 30 million and $ 49 million in 2020 and 2019 , respectively . the decrease in capital expenditures was primarily driven by lower expenditures related to the build-out of additional office space in long island city , n.y. , and lower expenditures related to improvements at our college point , n.y. , printing and distribution facility . the cash payments related to the capital expenditures totaled approximately $ 34 million and $ 45 million in 2020 and 2019 , respectively . third-party financing as of december 27 , 2020 , there were no outstanding borrowings under the credit facility and the company p. 48 – the new york times company was in compliance with the financial covenants contained in the credit facility . see note 7 for information regarding the credit facility . contractual obligations the information provided is based on management 's best estimate and assumptions of our contractual obligations as of december 27 , 2020. actual payments in future periods may vary from those reflected in the table . replace_table_token_18_th ( 1 ) see note 17 of the notes to the consolidated financial statements for additional information related to our operating leases . ( 2 ) the company 's general funding policy with respect to qualified pension plans is to contribute amounts at least sufficient to satisfy the minimum amount required by applicable law and regulations .

products incorporating our patented inventions in video include cellular phones , tablets , notebook computers , computers , televisions , gaming consoles , set-top boxes , streaming devices and other consumer electronics . interdigital derives revenues primarily from patent licensing , with smaller contributions from patent sales , product sales , technology solutions licensing and sales and engineering services . on january 1 , 2018 , we adopted the requirements of asu no . 2014-09 , `` revenue from contracts with customers ( topic 606 ) `` ( `` asc 606 `` ) using the modified retrospective method . refer to the `` revenue `` section below as well as note 3 , `` revenue recognition , `` within the consolidated financial statements for further information regarding our adoption of asc 606. acquisition of technicolor 's patent licensing business on july 30 , 2018 , we completed the technicolor acquisition . the final transaction includes the acquisition by interdigital of approximately 18,000 patents and applications , across a broad range of technologies , including approximately 3,000 worldwide video coding patents and applications . refer to note 5 , “ business combinations , ” within the consolidated financial statements for more information on this transaction . acquisition of technicolor 's research & innovation unit on february 11 , 2019 , we announced that we had made a binding offer to acquire the research & innovation ( `` r & i `` ) unit of technicolor sa . r & i is a premier research lab that conducts fundamental research into video coding , iot and smart home , imaging sciences , ar and vr and artificial intelligence and machine learning technologies . after completing the required prior consultation with technicolor 's works council , the companies expect to execute a definitive acquisition agreement , the terms of which have been negotiated . the transaction is expected to close in mid-2019 , subject to customary closing conditions . as consideration for the acquisition , the parties have agreed to terminate the jointly-funded r & d collaboration that was entered into as part of the technicolor acquisition . in addition , technicolor has agreed to reduce its rights to a revenue-sharing arrangement announced as part of the technicolor acquisition . there is no cash consideration . 39 revenue as discussed above , we adopted new revenue guidance , asc 606 , effective january 1 , 2018 using the modified retrospective method . this resulted in a cumulative adjustment of $ 161.3 million to retained earnings . consistent with the modified retrospective adoption method , our results of operations for periods prior to our adoption of asc 606 remain unchanged . as such , revenue is presented in accordance with asc 606 for the year ended december 31 , 2018 and in accordance with asc 605 for all prior periods presented . refer to note 3 , “ revenue recognition , ” within the consolidated financial statements for further information regarding our adoption of asc 606. the adoption of the new guidance affected our recognition of revenue from both our fixed-fee and per-unit license agreements . for accounting purposes under this new guidance , we separate our fixed-fee license agreements into two categories : ( i ) those agreements that provide rights , over the term of the license , to future technologies that are highly interdependent or highly interrelated to the technologies provided at the inception of the agreement ( “ dynamic fixed-fee agreements ” ) and ( ii ) those agreements that do not provide for rights to such future technologies ( “ static fixed-fee agreements ” ) . as a result of our adoption of the new guidance , we will continue to recognize revenue from dynamic fixed-fee agreements on a straight-line basis over the term of the related license agreement , while we expect to recognize most or all of the revenue from static fixed-fee agreements in the quarter the license agreement is signed . we will not recognize any ongoing revenue from static fixed-fee agreements already in existence at the time the guidance was adopted . additionally , in the event a significant financing component is determined to exist in any of our agreements , we will recognize more or less revenue and corresponding interest expense or income , as appropriate . in addition , under our previous accounting practices , we recognized revenue from our per-unit license agreements in the period in which we received the related royalty report , generally one quarter in arrears from the period in which the underlying sales occurred ( i.e . on a `` quarter-lag `` ) . we are now required to record per-unit royalty revenue in the same period in which the licensee 's underlying sales occur . because we generally do not receive the per-unit licensee royalty reports for sales during a given quarter within the time frame necessary to adequately review the reports and include the actual amounts in our quarterly results for such quarter , we accrue the related revenue based on estimates of our licensees ' underlying sales , subject to certain constraints on our ability to estimate such amounts . as a result of accruing revenue for the quarter based on such estimates , adjustments will be required in the following quarter to true-up revenue to the actual amounts reported by our licensees . in addition , to the extent we receive non-refundable prepayments related to per-unit license agreements that do not provide rights over the term of the license to future technologies that are highly interdependent or highly interrelated to the technologies provided at the inception of the agreement , we will recognize such prepayments as revenue in the period in which all remaining revenue recognition criteria have been met . in 2018 , 2017 , and 2016 , our total revenues were $ 307.4 million , $ 532.9 million and $ 665.9 million , respectively . story_separator_special_tag we use a time-based input method of progress to determine the timing of revenue recognition , and as such we recognize the future deliverables on a straight-line basis over the term of the agreement . we utilize the straight-line method as we believe that it best depicts efforts expended to develop and transfer updates to the customer evenly throughout the term of the agreement . static fixed-fee license agreements are fixed-price contracts that generally do not include updates to technology we create after the inception of the license agreement or in which the customer does not stand to substantively benefit from those updates during the term . generally , our performance obligations are satisfied at contract signing , and as such revenue is recognized at that time . variable agreements upon entering a new variable patent license agreement , the licensee typically agrees to pay royalties or license fees on licensed products sold during the term of the agreement . we utilize the sales- or usage- based royalty exception for these agreements and recognize revenues during the contract term when the underlying sale or usage occurs . our licensees under variable agreements provide us with quarterly royalty reports that summarize their sales of covered products and their related royalty obligations to us . we typically receive these royalty reports subsequent to the period in which our licensees ' underlying sales occurred . as a result , we are required to estimate revenues , subject to the constraint on our ability to estimate such amounts . technology solutions technology solutions revenue consists primarily of revenue from royalty payments . we recognize revenue from royalty payments using the same methods described above under our policy for recognizing revenue from patent license agreements . technology solutions revenues also consist of revenues from software licenses , engineering services and product sales . the nature of these contracts and timing of payments vary . patent sales our business strategy of monetizing our intellectual property includes the sale of select patent assets . as patent sales executed under this strategy represent a component of our ongoing major or central operations and activities , we will record the related proceeds as revenue . we will recognize the revenue in accordance with the five-step model , generally upon closing of the patent sale transaction . agreements with multiple performance obligations during 2018 , we signed four new agreements that had multiple performance obligations . consistent with the revenue recognition policies disclosed above under asc 606 , we ( 1 ) identified the contract with the customer , ( 2 ) identified the performance obligations , ( 3 ) determined the transaction price , ( 4 ) allocated the transaction price to the performance obligations , and ( 5 ) recognized revenue as we satisfy the performance obligations . we allocated the transaction price to each performance obligation for accounting purposes using our best estimate of the term and value . the development of a number of these inputs and assumptions in the models requires a significant amount of management judgment and is based upon a number of factors , including the assumed royalty rates , projected sales volumes , discount rate , comparable market transactions which are not directly observable and other relevant factors . changes in any of a number of these assumptions could have had a substantial impact on the relative fair value assigned to each performance obligation for accounting purposes . these inputs and assumptions represent management 's best estimates at the time of the transaction . the impact that a five percent change in the aggregate amount allocated to past patent royalties under these agreements would have had on 2018 revenue is summarized in the following table ( in thousands ) : change in amount allocated allocation to past patent royalties +5 % - % 5 change in revenue $ 2,324 $ ( 2,324 ) revenue from non-financial sources during 2018 , 2017 and 2016 , our patent licensing royalties were derived from patent license agreements ( `` plas `` ) with 66 , 27 and 26 independent licensees , respectively . the number of independent licensees largely increased from 2017 to 2018 due to the technicolor acquisition . we recognized revenue from three , five and four plas in 2018 , 2017 and 2016 , 44 respectively , for which patents generally comprised less than one-third of the total consideration paid or due to us under those agreements . in addition , during 2018 , 2017 and 2016 , we recognized revenue from one pla that was executed in 2014 in connection with a patent purchase agreement ( `` ppa `` ) with the licensee . total cash paid to our licensee under this ppa is approximately 56 % of the total cash due to us under this licensee 's pla . during 2018 , 2017 and 2016 , approximately 3 % , 4 % and 3 % , respectively , of our total revenue was based on the estimated fair value of the patents in the above transactions . we estimated the fair value of the patents in the above transactions primarily by a combination of a discounted cash flow analysis ( the income approach ) , an analysis of comparable market transactions ( the market approach ) , and or by quantifying the amount of money required to replace the future service capability of the assets ( the cost approach ) . for the income approach , the inputs and assumptions used to develop these estimates were based on a market participant perspective and included estimates of projected royalties , discount rates , economic lives and income tax rates , among others . for the market approach , judgment was applied as to which market transactions were most comparable to this transaction . for the cost approach , we utilized the historical cost of assets of similar technologies to determine the estimated replacement cost , including research , development , testing

cash flows provided by operating activities $ 146,792 $ 315,800 $ ( 169,008 ) our cash flows provided by operating activities are principally derived from cash receipts from patent license and technology solutions agreements offset by cash operating expenses and income tax payments . the decrease in cash flows provided by operating activities of $ 169.0 million was primarily attributable to a decrease in cash receipts of $ 183.7 million . this decrease in cash receipts was primarily attributable to the fixed-fee payment structures for existing licensees , as well as the final cash receipts in 2017 for certain fixed-fee agreements that expired in 2018. the table below provides the significant items comprising our cash flows provided by operating activities during the years ended december 31 , 2018 and 2017 ( in thousands ) . replace_table_token_9_th ( a ) cash operating expenses include operating expenses less depreciation of fixed assets , amortization of patents , non-cash compensation and non-cash changes in fair value . 48 ( b ) income taxes paid include foreign withholding taxes . for the year ended december 31 , 2018 , this amount includes a net cash benefit of $ 17.5 million related to the competent authority proceeding discussed further above and within note 14 , `` income taxes , '' in the consolidated financial statements . working capital we believe that working capital , adjusted to exclude cash , cash equivalents , restricted cash and short-term investments and to include current deferred revenue provides additional information about non-cash assets and liabilities that might affect our near-term liquidity . while we believe cash and short-term investments are important measures of our liquidity , the remaining components of our current assets and current liabilities , with the exception of deferred revenue , could affect our near-term liquidity and or cash flow . we have no material obligations associated with our deferred revenue , and the amortization of deferred revenue has no impact on our future liquidity and or cash flow .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. products incorporating our patented inventions in video include cellular phones , tablets , notebook computers , computers , televisions , gaming consoles , set-top boxes , streaming devices and other consumer electronics . interdigital derives revenues primarily from patent licensing , with smaller contributions from patent sales , product sales , technology solutions licensing and sales and engineering services . on january 1 , 2018 , we adopted the requirements of asu no . 2014-09 , `` revenue from contracts with customers ( topic 606 ) `` ( `` asc 606 `` ) using the modified retrospective method . refer to the `` revenue `` section below as well as note 3 , `` revenue recognition , `` within the consolidated financial statements for further information regarding our adoption of asc 606. acquisition of technicolor 's patent licensing business on july 30 , 2018 , we completed the technicolor acquisition . the final transaction includes the acquisition by interdigital of approximately 18,000 patents and applications , across a broad range of technologies , including approximately 3,000 worldwide video coding patents and applications . refer to note 5 , “ business combinations , ” within the consolidated financial statements for more information on this transaction . acquisition of technicolor 's research & innovation unit on february 11 , 2019 , we announced that we had made a binding offer to acquire the research & innovation ( `` r & i `` ) unit of technicolor sa . r & i is a premier research lab that conducts fundamental research into video coding , iot and smart home , imaging sciences , ar and vr and artificial intelligence and machine learning technologies . after completing the required prior consultation with technicolor 's works council , the companies expect to execute a definitive acquisition agreement , the terms of which have been negotiated . the transaction is expected to close in mid-2019 , subject to customary closing conditions . as consideration for the acquisition , the parties have agreed to terminate the jointly-funded r & d collaboration that was entered into as part of the technicolor acquisition . in addition , technicolor has agreed to reduce its rights to a revenue-sharing arrangement announced as part of the technicolor acquisition . there is no cash consideration . 39 revenue as discussed above , we adopted new revenue guidance , asc 606 , effective january 1 , 2018 using the modified retrospective method . this resulted in a cumulative adjustment of $ 161.3 million to retained earnings . consistent with the modified retrospective adoption method , our results of operations for periods prior to our adoption of asc 606 remain unchanged . as such , revenue is presented in accordance with asc 606 for the year ended december 31 , 2018 and in accordance with asc 605 for all prior periods presented . refer to note 3 , “ revenue recognition , ” within the consolidated financial statements for further information regarding our adoption of asc 606. the adoption of the new guidance affected our recognition of revenue from both our fixed-fee and per-unit license agreements . for accounting purposes under this new guidance , we separate our fixed-fee license agreements into two categories : ( i ) those agreements that provide rights , over the term of the license , to future technologies that are highly interdependent or highly interrelated to the technologies provided at the inception of the agreement ( “ dynamic fixed-fee agreements ” ) and ( ii ) those agreements that do not provide for rights to such future technologies ( “ static fixed-fee agreements ” ) . as a result of our adoption of the new guidance , we will continue to recognize revenue from dynamic fixed-fee agreements on a straight-line basis over the term of the related license agreement , while we expect to recognize most or all of the revenue from static fixed-fee agreements in the quarter the license agreement is signed . we will not recognize any ongoing revenue from static fixed-fee agreements already in existence at the time the guidance was adopted . additionally , in the event a significant financing component is determined to exist in any of our agreements , we will recognize more or less revenue and corresponding interest expense or income , as appropriate . in addition , under our previous accounting practices , we recognized revenue from our per-unit license agreements in the period in which we received the related royalty report , generally one quarter in arrears from the period in which the underlying sales occurred ( i.e . on a `` quarter-lag `` ) . we are now required to record per-unit royalty revenue in the same period in which the licensee 's underlying sales occur . because we generally do not receive the per-unit licensee royalty reports for sales during a given quarter within the time frame necessary to adequately review the reports and include the actual amounts in our quarterly results for such quarter , we accrue the related revenue based on estimates of our licensees ' underlying sales , subject to certain constraints on our ability to estimate such amounts . as a result of accruing revenue for the quarter based on such estimates , adjustments will be required in the following quarter to true-up revenue to the actual amounts reported by our licensees . in addition , to the extent we receive non-refundable prepayments related to per-unit license agreements that do not provide rights over the term of the license to future technologies that are highly interdependent or highly interrelated to the technologies provided at the inception of the agreement , we will recognize such prepayments as revenue in the period in which all remaining revenue recognition criteria have been met . in 2018 , 2017 , and 2016 , our total revenues were $ 307.4 million , $ 532.9 million and $ 665.9 million , respectively . story_separator_special_tag we use a time-based input method of progress to determine the timing of revenue recognition , and as such we recognize the future deliverables on a straight-line basis over the term of the agreement . we utilize the straight-line method as we believe that it best depicts efforts expended to develop and transfer updates to the customer evenly throughout the term of the agreement . static fixed-fee license agreements are fixed-price contracts that generally do not include updates to technology we create after the inception of the license agreement or in which the customer does not stand to substantively benefit from those updates during the term . generally , our performance obligations are satisfied at contract signing , and as such revenue is recognized at that time . variable agreements upon entering a new variable patent license agreement , the licensee typically agrees to pay royalties or license fees on licensed products sold during the term of the agreement . we utilize the sales- or usage- based royalty exception for these agreements and recognize revenues during the contract term when the underlying sale or usage occurs . our licensees under variable agreements provide us with quarterly royalty reports that summarize their sales of covered products and their related royalty obligations to us . we typically receive these royalty reports subsequent to the period in which our licensees ' underlying sales occurred . as a result , we are required to estimate revenues , subject to the constraint on our ability to estimate such amounts . technology solutions technology solutions revenue consists primarily of revenue from royalty payments . we recognize revenue from royalty payments using the same methods described above under our policy for recognizing revenue from patent license agreements . technology solutions revenues also consist of revenues from software licenses , engineering services and product sales . the nature of these contracts and timing of payments vary . patent sales our business strategy of monetizing our intellectual property includes the sale of select patent assets . as patent sales executed under this strategy represent a component of our ongoing major or central operations and activities , we will record the related proceeds as revenue . we will recognize the revenue in accordance with the five-step model , generally upon closing of the patent sale transaction . agreements with multiple performance obligations during 2018 , we signed four new agreements that had multiple performance obligations . consistent with the revenue recognition policies disclosed above under asc 606 , we ( 1 ) identified the contract with the customer , ( 2 ) identified the performance obligations , ( 3 ) determined the transaction price , ( 4 ) allocated the transaction price to the performance obligations , and ( 5 ) recognized revenue as we satisfy the performance obligations . we allocated the transaction price to each performance obligation for accounting purposes using our best estimate of the term and value . the development of a number of these inputs and assumptions in the models requires a significant amount of management judgment and is based upon a number of factors , including the assumed royalty rates , projected sales volumes , discount rate , comparable market transactions which are not directly observable and other relevant factors . changes in any of a number of these assumptions could have had a substantial impact on the relative fair value assigned to each performance obligation for accounting purposes . these inputs and assumptions represent management 's best estimates at the time of the transaction . the impact that a five percent change in the aggregate amount allocated to past patent royalties under these agreements would have had on 2018 revenue is summarized in the following table ( in thousands ) : change in amount allocated allocation to past patent royalties +5 % - % 5 change in revenue $ 2,324 $ ( 2,324 ) revenue from non-financial sources during 2018 , 2017 and 2016 , our patent licensing royalties were derived from patent license agreements ( `` plas `` ) with 66 , 27 and 26 independent licensees , respectively . the number of independent licensees largely increased from 2017 to 2018 due to the technicolor acquisition . we recognized revenue from three , five and four plas in 2018 , 2017 and 2016 , 44 respectively , for which patents generally comprised less than one-third of the total consideration paid or due to us under those agreements . in addition , during 2018 , 2017 and 2016 , we recognized revenue from one pla that was executed in 2014 in connection with a patent purchase agreement ( `` ppa `` ) with the licensee . total cash paid to our licensee under this ppa is approximately 56 % of the total cash due to us under this licensee 's pla . during 2018 , 2017 and 2016 , approximately 3 % , 4 % and 3 % , respectively , of our total revenue was based on the estimated fair value of the patents in the above transactions . we estimated the fair value of the patents in the above transactions primarily by a combination of a discounted cash flow analysis ( the income approach ) , an analysis of comparable market transactions ( the market approach ) , and or by quantifying the amount of money required to replace the future service capability of the assets ( the cost approach ) . for the income approach , the inputs and assumptions used to develop these estimates were based on a market participant perspective and included estimates of projected royalties , discount rates , economic lives and income tax rates , among others . for the market approach , judgment was applied as to which market transactions were most comparable to this transaction . for the cost approach , we utilized the historical cost of assets of similar technologies to determine the estimated replacement cost , including research , development , testing Narrative : cash flows provided by operating activities $ 146,792 $ 315,800 $ ( 169,008 ) our cash flows provided by operating activities are principally derived from cash receipts from patent license and technology solutions agreements offset by cash operating expenses and income tax payments . the decrease in cash flows provided by operating activities of $ 169.0 million was primarily attributable to a decrease in cash receipts of $ 183.7 million . this decrease in cash receipts was primarily attributable to the fixed-fee payment structures for existing licensees , as well as the final cash receipts in 2017 for certain fixed-fee agreements that expired in 2018. the table below provides the significant items comprising our cash flows provided by operating activities during the years ended december 31 , 2018 and 2017 ( in thousands ) . replace_table_token_9_th ( a ) cash operating expenses include operating expenses less depreciation of fixed assets , amortization of patents , non-cash compensation and non-cash changes in fair value . 48 ( b ) income taxes paid include foreign withholding taxes . for the year ended december 31 , 2018 , this amount includes a net cash benefit of $ 17.5 million related to the competent authority proceeding discussed further above and within note 14 , `` income taxes , '' in the consolidated financial statements . working capital we believe that working capital , adjusted to exclude cash , cash equivalents , restricted cash and short-term investments and to include current deferred revenue provides additional information about non-cash assets and liabilities that might affect our near-term liquidity . while we believe cash and short-term investments are important measures of our liquidity , the remaining components of our current assets and current liabilities , with the exception of deferred revenue , could affect our near-term liquidity and or cash flow . we have no material obligations associated with our deferred revenue , and the amortization of deferred revenue has no impact on our future liquidity and or cash flow .

we began selling product during the third quarter of 2014 and recognized royalty revenue of $ 36,000 on those sales beginning in the fourth quarter of 2014. product sales our product sales revenue is the result of shipping vitaros ® product to our commercialization partners , which commenced in the third quarter of 2014. the $ 0.2 million decrease in product sales revenue during the year ended december 31 , 2015 as compared to the prior year was due to our commercialization partners shifting gears and contracting directly with our vitaros ® manufacturer . we expect this declining trend to continue as our remaining commercialization partners enter into contracts directly with third-party manufacturers . contract service revenue contract service revenue was generated by our former french subsidiaries which were deconsolidated in april 2013. we expect our cash inflows from operations during 2016 will result from licensing and milestone revenue received from commercial partners as well as royalty payments from vitaros ® product sales . the timing of this revenue is uncertain and as such our revenue may vary significantly between periods . cost of product sales our cost of product sales includes direct material costs associated with the production of inventories . cost of product sales also includes the cost of manufactured samples provided to our commercialization partners free of charge , which , if applicable , contributes to our negative margin . the cost of product sales for the year ended december 31 , 2015 was comparable to the prior year . with our support , many of our commercialization partners are working directly with our third-party manufacturers . we anticipate that our cost of product sales will decrease in future periods as all of our commercialization partners begin to contract directly with the manufacturer to produce vitaros ® . the change in cost of product sales for the year ended december 31 , 2014 as compared to the prior year is due to commencement of shipping vitaros ® product to our commercialization partners in the third quarter of 2014. cost of service revenue our cost of service revenue was related to our former french subsidiaries and included compensation , related personnel expenses and contract services to support our contract service revenue . our former french subsidiaries were deconsolidated in april 2013. operating expense ( income ) operating expense ( income ) was as follows ( in thousands , except percentages ) : replace_table_token_5_th 37 research and development expenses research and development ( “ r & d ” ) costs are expensed as they are incurred and include the cost of compensation and related expenses , as well as expenses for third parties who conduct r & d on our behalf . the $ 6.6 million decrease in r & d expense during the year ended december 31 , 2015 as compared to the prior year , resulted primarily from decreased consulting costs of approximately $ 7.5 million for fispemifene due to the one-time charge of $ 13.6 million in 2014 as a result of the fispemifene in-license agreement with forendo . this was offset by an increase in payroll costs in 2015 related to personnel added in order to manage our clinical and non-clinical trials . we expect to continue to incur additional expenses in 2016 related to the further development of fispemifene , resubmission of a new drug application ( “ nda ” ) for vitaros ® in the united states and the further development of room temperature vitaros ® . the $ 16.2 million increase in our r & d expenses during the year ended december 31 , 2014 , as compared to the prior year , resulted primarily from a charge of $ 13.6 million as a result of the fispemifene in-license agreement with forendo in october 2014 as well as other consulting and outside services for the development of room temperature vitaros ® and rayva . general and administrative expenses general and administrative expenses include expenses for personnel , finance , legal , business development and investor relations . general and administrative expenses decreased slightly during the year ended december 31 , 2015 as compared to the prior year . this decrease was due to a slight reduction in finance and legal expenses in 2015. the $ 2.1 million decrease in general and administrative expenses during 2014 , as compared to the prior year , is primarily due to a decrease in salary-related expenses as a result of the deconsolidation of our former french subsidiaries in april 2013. in addition , we incurred higher legal expenses in 2013 related to the disposition of certain assets and businesses and certain litigation expenses . consulting and professional fees also decreased in 2014 as compared to 2013. gain on contract settlement during the first quarter of 2014 , we recorded a gain on contract settlement of $ 0.9 million , which represented the fair value of 388,888 escrowed common shares that were returned to us in connection with the settlement with former employees of the french subsidiaries . these shares were restored as authorized , unissued common stock in march 2014. the $ 0.5 million gain on contract settlement recorded during 2013 represents the difference between the $ 1.2 million in common shares issued to topotarget in exchange for the extinguishment of $ 1.7 million of contingent consideration . recovery on sale of subsidiary in june 2014 , we amended our stock purchase agreement with biotox and received a one-time cash payment of approximately $ 0.6 million in exchange for relinquishing our rights to future minimum payments . story_separator_special_tag we consider a variety of factors in determining the appropriate method of accounting under our license agreements , including whether the various elements can be separated and accounted for individually as separate units of accounting . deliverables under the arrangement will be separate units of accounting , provided ( i ) a delivered item has value to the customer on a standalone basis ; and ( ii ) if the arrangement includes a general right of return relative to the delivered item and delivery or performance of the undelivered item is considered probable and substantially in our control . we account for revenue arrangements with multiple elements by separating and allocating consideration in a multiple-element arrangement according to the relative selling price of each deliverable . if an element can be separated , an amount is allocated based upon the relative selling price of each element . we determine the relative selling price of a separate deliverable using the price we charge other customers when we sell that product or service separately ; however , if the product or service is not sold separately and third party pricing evidence is not available , we will use our best estimate of selling price . we defer recognition of non-refundable upfront fees if we have continuing performance obligations without which the technology , right , product or service conveyed in conjunction with the non-refundable fee has no utility to the licensee that is separate and independent of our performance under the other elements of the arrangement . non-refundable , up-front fees that are not contingent on any future performance by us and require no consequential continuing involvement on our part are recognized as revenue when the license term commences and the licensed data , technology and or compound is delivered . the specific methodology for the recognition of the revenue is determined on a case-by-case basis according to the facts and circumstances of the applicable agreement . we evaluate milestone payments on an individual basis and revenues are recognized upon achievement of the associated milestone , provided that ( i ) the milestone event is substantive and its achievability was not reasonably assured at the inception of the agreement and ( ii ) the amount of the milestone payment is reasonable in relation to the effort expended or the risk associated with the milestone event . 43 long-lived assets we review our long-lived assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable . an impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset and its eventual disposition are less than its carrying amount . if such asset is considered impaired , the amount of the impairment loss recognized is measured as the amount by which the carrying value of the asset exceeds the fair value of the asset , the fair value of which is determined based upon discounted cash flows or appraised values , depending on the nature of the asset . there were no impairment charges recorded in 2015 related to our long-lived assets . stock based compensation in preparation of our consolidated financial statements , we calculate the value of stock options issued to employees , non-employee contractors and the board of directors and warrants issued to investors and debtholders . the fair value of each option and warrant is estimated on the date of grant using the black-scholes option pricing model . the black-scholes option pricing model is a generally accepted method of estimating the fair value of stock options and warrants . the black-scholes option pricing model requires us to estimate our dividend yield rate , expected volatility and risk free interest rate over the life of the option . the use of estimates on these factors may cause the fair value of the option to be under or overestimated ( see note 9 to our consolidated financial statements for the current estimates used in the black-scholes option pricing model ) . valuation of warrant liability our outstanding common stock warrants issued in connection with the february 2015 financing are classified as liabilities in the accompanying consolidated balance sheets as they contain provisions that require us to maintain active registration of the shares underlying such warrants , which is considered outside of our control . the warrants were recorded at fair value using the black-scholes option pricing model . the fair value of these warrants is re-measured at each financial reporting period with any changes in fair value being recognized as change in fair value of warrant liability in the accompanying consolidated statements of operations . of the inputs used to value the outstanding common stock warrant liabilities as of december 31 , 2015 , the most subjective input is the company 's estimate of expected volatility . if volatility increased to 150 % , the weighted average fair market value of the common stock warrants outstanding would increase by approximately $ 0.9 million , or 49.3 % . clinical trial accruals in preparation of our consolidated financial statements , we are required to estimate our expenses resulting from our obligations under contracts with vendors and consultants and clinical site agreements in connection with conducting clinical trials . the financial terms of these contracts are subject to negotiations which vary from contract to contract , and may result in payment flows that do not match the periods over which materials or services are provided to us under such contracts . our objective is to reflect the appropriate clinical trial expenses in our financial statements by matching those expenses with the period in which the services and efforts are expended . we account for these expenses according to the progress of the clinical trial as measured by patient progression and the timing of various aspects of the trial . we determine accrual estimates through financial models , taking into account discussion with applicable personnel and outside service

cash flow summary the following table summarizes selected items in our consolidated statements of cash flows ( in thousands ) : replace_table_token_7_th operating activities from continuing operations cash used in operating activities from continuing operations of $ 22.6 million in 2015 was primarily due to a net loss of $ 19.0 million net of adjustments to net loss for non-cash items such as the warrant liability revaluation of $ 3.2 million , stock based compensation expense of $ 1.2 million , and a $ 1.0 million decrease in deferred revenue primarily due to the recognition of license fee revenue related to sandoz of $ 1.0 million that had been previously deferred awaiting the satisfaction of a contractual condition in the sandoz license agreement that was met in the third quarter of 2015. changes in operating assets and liabilities also contributed to the cash used in operating activities , such as a decrease to accrued expenses primarily due to the decrease in accrued outside r & d services . cash used in operating activities from continuing operations of $ 18.0 million in 2014 was primarily due to net loss from continuing operations of $ 22.5 million , adjusted for non-cash items including $ 5.9 million of r & d expense paid to forendo in shares of common stock , stock based compensation expense of $ 1.7 million , a gain of $ 0.8 million related to the deconsolidation of our former french subsidiaries , and a $ 0.9 million gain on contract settlement .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we began selling product during the third quarter of 2014 and recognized royalty revenue of $ 36,000 on those sales beginning in the fourth quarter of 2014. product sales our product sales revenue is the result of shipping vitaros ® product to our commercialization partners , which commenced in the third quarter of 2014. the $ 0.2 million decrease in product sales revenue during the year ended december 31 , 2015 as compared to the prior year was due to our commercialization partners shifting gears and contracting directly with our vitaros ® manufacturer . we expect this declining trend to continue as our remaining commercialization partners enter into contracts directly with third-party manufacturers . contract service revenue contract service revenue was generated by our former french subsidiaries which were deconsolidated in april 2013. we expect our cash inflows from operations during 2016 will result from licensing and milestone revenue received from commercial partners as well as royalty payments from vitaros ® product sales . the timing of this revenue is uncertain and as such our revenue may vary significantly between periods . cost of product sales our cost of product sales includes direct material costs associated with the production of inventories . cost of product sales also includes the cost of manufactured samples provided to our commercialization partners free of charge , which , if applicable , contributes to our negative margin . the cost of product sales for the year ended december 31 , 2015 was comparable to the prior year . with our support , many of our commercialization partners are working directly with our third-party manufacturers . we anticipate that our cost of product sales will decrease in future periods as all of our commercialization partners begin to contract directly with the manufacturer to produce vitaros ® . the change in cost of product sales for the year ended december 31 , 2014 as compared to the prior year is due to commencement of shipping vitaros ® product to our commercialization partners in the third quarter of 2014. cost of service revenue our cost of service revenue was related to our former french subsidiaries and included compensation , related personnel expenses and contract services to support our contract service revenue . our former french subsidiaries were deconsolidated in april 2013. operating expense ( income ) operating expense ( income ) was as follows ( in thousands , except percentages ) : replace_table_token_5_th 37 research and development expenses research and development ( “ r & d ” ) costs are expensed as they are incurred and include the cost of compensation and related expenses , as well as expenses for third parties who conduct r & d on our behalf . the $ 6.6 million decrease in r & d expense during the year ended december 31 , 2015 as compared to the prior year , resulted primarily from decreased consulting costs of approximately $ 7.5 million for fispemifene due to the one-time charge of $ 13.6 million in 2014 as a result of the fispemifene in-license agreement with forendo . this was offset by an increase in payroll costs in 2015 related to personnel added in order to manage our clinical and non-clinical trials . we expect to continue to incur additional expenses in 2016 related to the further development of fispemifene , resubmission of a new drug application ( “ nda ” ) for vitaros ® in the united states and the further development of room temperature vitaros ® . the $ 16.2 million increase in our r & d expenses during the year ended december 31 , 2014 , as compared to the prior year , resulted primarily from a charge of $ 13.6 million as a result of the fispemifene in-license agreement with forendo in october 2014 as well as other consulting and outside services for the development of room temperature vitaros ® and rayva . general and administrative expenses general and administrative expenses include expenses for personnel , finance , legal , business development and investor relations . general and administrative expenses decreased slightly during the year ended december 31 , 2015 as compared to the prior year . this decrease was due to a slight reduction in finance and legal expenses in 2015. the $ 2.1 million decrease in general and administrative expenses during 2014 , as compared to the prior year , is primarily due to a decrease in salary-related expenses as a result of the deconsolidation of our former french subsidiaries in april 2013. in addition , we incurred higher legal expenses in 2013 related to the disposition of certain assets and businesses and certain litigation expenses . consulting and professional fees also decreased in 2014 as compared to 2013. gain on contract settlement during the first quarter of 2014 , we recorded a gain on contract settlement of $ 0.9 million , which represented the fair value of 388,888 escrowed common shares that were returned to us in connection with the settlement with former employees of the french subsidiaries . these shares were restored as authorized , unissued common stock in march 2014. the $ 0.5 million gain on contract settlement recorded during 2013 represents the difference between the $ 1.2 million in common shares issued to topotarget in exchange for the extinguishment of $ 1.7 million of contingent consideration . recovery on sale of subsidiary in june 2014 , we amended our stock purchase agreement with biotox and received a one-time cash payment of approximately $ 0.6 million in exchange for relinquishing our rights to future minimum payments . story_separator_special_tag we consider a variety of factors in determining the appropriate method of accounting under our license agreements , including whether the various elements can be separated and accounted for individually as separate units of accounting . deliverables under the arrangement will be separate units of accounting , provided ( i ) a delivered item has value to the customer on a standalone basis ; and ( ii ) if the arrangement includes a general right of return relative to the delivered item and delivery or performance of the undelivered item is considered probable and substantially in our control . we account for revenue arrangements with multiple elements by separating and allocating consideration in a multiple-element arrangement according to the relative selling price of each deliverable . if an element can be separated , an amount is allocated based upon the relative selling price of each element . we determine the relative selling price of a separate deliverable using the price we charge other customers when we sell that product or service separately ; however , if the product or service is not sold separately and third party pricing evidence is not available , we will use our best estimate of selling price . we defer recognition of non-refundable upfront fees if we have continuing performance obligations without which the technology , right , product or service conveyed in conjunction with the non-refundable fee has no utility to the licensee that is separate and independent of our performance under the other elements of the arrangement . non-refundable , up-front fees that are not contingent on any future performance by us and require no consequential continuing involvement on our part are recognized as revenue when the license term commences and the licensed data , technology and or compound is delivered . the specific methodology for the recognition of the revenue is determined on a case-by-case basis according to the facts and circumstances of the applicable agreement . we evaluate milestone payments on an individual basis and revenues are recognized upon achievement of the associated milestone , provided that ( i ) the milestone event is substantive and its achievability was not reasonably assured at the inception of the agreement and ( ii ) the amount of the milestone payment is reasonable in relation to the effort expended or the risk associated with the milestone event . 43 long-lived assets we review our long-lived assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable . an impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset and its eventual disposition are less than its carrying amount . if such asset is considered impaired , the amount of the impairment loss recognized is measured as the amount by which the carrying value of the asset exceeds the fair value of the asset , the fair value of which is determined based upon discounted cash flows or appraised values , depending on the nature of the asset . there were no impairment charges recorded in 2015 related to our long-lived assets . stock based compensation in preparation of our consolidated financial statements , we calculate the value of stock options issued to employees , non-employee contractors and the board of directors and warrants issued to investors and debtholders . the fair value of each option and warrant is estimated on the date of grant using the black-scholes option pricing model . the black-scholes option pricing model is a generally accepted method of estimating the fair value of stock options and warrants . the black-scholes option pricing model requires us to estimate our dividend yield rate , expected volatility and risk free interest rate over the life of the option . the use of estimates on these factors may cause the fair value of the option to be under or overestimated ( see note 9 to our consolidated financial statements for the current estimates used in the black-scholes option pricing model ) . valuation of warrant liability our outstanding common stock warrants issued in connection with the february 2015 financing are classified as liabilities in the accompanying consolidated balance sheets as they contain provisions that require us to maintain active registration of the shares underlying such warrants , which is considered outside of our control . the warrants were recorded at fair value using the black-scholes option pricing model . the fair value of these warrants is re-measured at each financial reporting period with any changes in fair value being recognized as change in fair value of warrant liability in the accompanying consolidated statements of operations . of the inputs used to value the outstanding common stock warrant liabilities as of december 31 , 2015 , the most subjective input is the company 's estimate of expected volatility . if volatility increased to 150 % , the weighted average fair market value of the common stock warrants outstanding would increase by approximately $ 0.9 million , or 49.3 % . clinical trial accruals in preparation of our consolidated financial statements , we are required to estimate our expenses resulting from our obligations under contracts with vendors and consultants and clinical site agreements in connection with conducting clinical trials . the financial terms of these contracts are subject to negotiations which vary from contract to contract , and may result in payment flows that do not match the periods over which materials or services are provided to us under such contracts . our objective is to reflect the appropriate clinical trial expenses in our financial statements by matching those expenses with the period in which the services and efforts are expended . we account for these expenses according to the progress of the clinical trial as measured by patient progression and the timing of various aspects of the trial . we determine accrual estimates through financial models , taking into account discussion with applicable personnel and outside service Narrative : cash flow summary the following table summarizes selected items in our consolidated statements of cash flows ( in thousands ) : replace_table_token_7_th operating activities from continuing operations cash used in operating activities from continuing operations of $ 22.6 million in 2015 was primarily due to a net loss of $ 19.0 million net of adjustments to net loss for non-cash items such as the warrant liability revaluation of $ 3.2 million , stock based compensation expense of $ 1.2 million , and a $ 1.0 million decrease in deferred revenue primarily due to the recognition of license fee revenue related to sandoz of $ 1.0 million that had been previously deferred awaiting the satisfaction of a contractual condition in the sandoz license agreement that was met in the third quarter of 2015. changes in operating assets and liabilities also contributed to the cash used in operating activities , such as a decrease to accrued expenses primarily due to the decrease in accrued outside r & d services . cash used in operating activities from continuing operations of $ 18.0 million in 2014 was primarily due to net loss from continuing operations of $ 22.5 million , adjusted for non-cash items including $ 5.9 million of r & d expense paid to forendo in shares of common stock , stock based compensation expense of $ 1.7 million , a gain of $ 0.8 million related to the deconsolidation of our former french subsidiaries , and a $ 0.9 million gain on contract settlement .

” unless otherwise indicated , the terms “ nustar gp holdings , ” “ we , ” “ our ” and “ us ” are used in this report to refer to nustar gp holdings , llc , to one or more of our consolidated subsidiaries or to all of them taken as a whole . our only cash generating assets are our ownership interests in nustar energy l.p. ( nustar energy ) , a publicly traded delaware limited partnership ( nyse : ns ) . as of december 31 , 2012 , our aggregate ownership interests in nustar energy consisted of the following : the 2 % general partner interest ; 100 % of the incentive distribution rights ( idr ) issued by nustar energy , which entitle us to receive increasing percentages of the cash distributed by nustar energy , currently at the maximum percentage of 23 % ; and 10,351,461 common units of nustar energy representing a 13.0 % limited partner interest . we account for our ownership interest in nustar energy using the equity method . therefore , our financial results reflect a portion of nustar energy 's net income based on our ownership interest . we have no separate operating activities apart from those conducted by nustar energy and therefore generate no revenues from operations . nustar energy is required by its partnership agreement to distribute all of its available cash at the end of each quarter , less reserves established by its general partner , in its sole discretion , to provide for the proper conduct of nustar energy 's business . similarly , we are required by our limited liability company agreement to distribute all of our available cash at the end of each quarter , less reserves established by our board of directors . nustar energy is engaged in the terminalling and storage of petroleum products , the transportation of petroleum products and anhydrous ammonia , and petroleum refining and marketing . nustar energy has terminal and storage facilities in the united states , canada , mexico , the netherlands , including st. eustatius in the caribbean , the united kingdom and turkey . on january 1 , 2013 , nustar energy sold the san antonio refinery and related assets , which included inventory , a terminal in elmendorf , texas and a pipeline connecting the terminal and refinery for approximately $ 115.0 million . nustar energy presented the results of operations for the san antonio refinery and related assets as discontinued operations for the years ended december 31 , 2012 and 2011. on december 13 , 2012 , nustar energy completed its acquisition of the texstar crude oil assets ( as defined below ) , including 100 % of the partnership interest in texstar crude oil pipeline , lp , from texstar midstream services , lp and certain of its affiliates ( collectively , texstar ) for $ 325.4 million ( the texstar asset acquisition ) . the texstar crude oil assets consist of 27 approximately 140 miles of crude oil pipelines and gathering lines , as well as five terminals and storage facilities providing 0.6 million barrels of storage capacity . on september 28 , 2012 , nustar energy sold a 50 % ownership interest ( the asphalt sale ) in nustar asphalt llc ( asphalt jv ) , previously a wholly-owned subsidiary of nustar energy , to an affiliate of lindsay goldberg llc ( lindsay goldberg ) , a private investment firm . asphalt jv owns and operates the asphalt refining assets that were previously wholly owned by nustar energy , including the asphalt refineries located in paulsboro , new jersey and savannah , georgia ( collectively , the asphalt operations ) . lindsay goldberg paid $ 175.0 million for the class a equity interests of asphalt jv , while nustar energy retained the class b equity interests with a fair value of $ 52.0 million . at closing , nustar energy received $ 263.8 million from asphalt jv for inventory related to the asphalt operations . upon closing , nustar energy deconsolidated asphalt jv and started reporting its remaining investment in asphalt jv using the equity method of accounting . in anticipation of the asphalt sale , nustar energy evaluated the goodwill and other long-lived assets associated with the asphalt operations for potential impairment . nustar energy determined the fair value of the asphalt operations reporting unit was less than its carrying value , which resulted in the recognition of a goodwill impairment loss of $ 22.1 million in the second quarter of 2012. in addition , nustar energy recorded an impairment loss of $ 244.3 million in the second quarter of 2012 to write-down the carrying value of long-lived assets related to the asphalt operations , including fixed assets , intangible assets and other long-term assets to their estimated fair value . 28 results of operations as discussed above , we account for our investment in nustar energy using the equity method . as a result , our equity in earnings of nustar energy , our only source of income , directly fluctuates with the amount of nustar energy 's distributions and results of operations . nustar energy 's distributions determine the amount of our incentive distribution earnings , while nustar energy 's results of operations determine the amounts of earnings attributable to our general partner and limited partner interests . story_separator_special_tag please refer to notes 14 and 15 of the notes to consolidated financial statements in item 8 . “ financial statements and supplementary data ” for a more detailed discussion of employee benefit plans and unit-based compensation . nustar energy reimburses us for expenses incurred related to employee benefit plans at cost , and for long-term incentive plan compensation expenses resulting from ns and nsh awards to employees and directors of nustar gp , llc . expenses resulting from nustar gp holdings awards to our non-employee directors are included in “ general and administrative expenses ” on our consolidated statements of comprehensive income ( loss ) . our current liabilities related to the long-term incentive plans and employee benefits are included in “ accrued compensation expense ” and our noncurrent liabilities for employee benefits are included in “ long-term liabilities ” on our consolidated balance sheets . asphalt jv services agreement in conjunction with nustar energy 's asphalt sale , we entered into a services agreement with asphalt jv , effective september 28 , 2012 ( the asphalt jv services agreement ) . the asphalt jv services agreement provides that we will furnish certain administrative and other operating services necessary to conduct the business of asphalt jv . asphalt jv will compensate us for these services through an annual fee totaling $ 10.0 million , subject to adjustment based on the annual merit increase percentage applicable to our employees for the most recently completed contract year . the asphalt jv services agreement will terminate on december 31 , 2017 and will automatically renew for successive two-year terms . asphalt jv may terminate the asphalt jv services agreement at any time , with 180 days prior written notice or reduce the level of service with 45 days prior written notice . asphalt jv employee services agreement in conjunction with nustar energy 's asphalt sale , we entered into an employee services agreement with asphalt jv , effective september 28 , 2012 ( the asphalt jv employee services agreement ) . the asphalt jv employee services agreement provided that certain of our employees would provide employee-services to asphalt jv . in exchange , asphalt jv would reimburse us for the compensation expense of those employees at the same rates that were in effect at the effective date of the asphalt jv 36 employee services agreement , including an annual bonus amount that does not exceed our target bonus plan . the employees covered under the asphalt jv employee services agreement were not entitled to any new unit-based compensation grants from us , and asphalt jv was not responsible for unit-based compensation costs prior to the effective date . the asphalt jv employee services agreement terminated on december 31 , 2012 and effective january 1 , 2013 , those employees became employees of nustar asphalt refining , llc . the following table summarizes information pertaining to related party transactions : replace_table_token_13_th long-term contractual obligations as of december 31 , 2012 , we had no future minimum payments applicable to non-cancellable operating leases and purchase obligations . contingencies as previously discussed , our only cash-generating assets are our indirect ownership interests in nustar energy . nustar energy is subject to certain loss contingencies , the outcome of which could have a material effect on nustar energy 's results of operations and cash flows . please refer to note 11 of the notes to consolidated financial statements in item 8 . “ financial statements and supplementary data ” for a more detailed discussion of contingencies . critical accounting policies the preparation of financial statements in accordance with u.s. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes . actual results could differ from those estimates . the following summary provides further information about our critical accounting policies that involve critical accounting estimates , and should be read in conjunction with note 2 of the notes to consolidated financial statements in item 8 . “ financial statements and supplementary data ” which summarizes our significant accounting policies . the following accounting policies involve estimates that are considered critical due to the level of sensitivity and judgment involved , as well as the impact on our consolidated financial position and results of operations . we believe that all of our estimates are reasonable . investment in nustar energy we evaluate our investment in nustar energy for impairment if and when there is evidence that we may not be able to recover the carrying amount of our investment or that nustar energy is unable to sustain an earnings capacity that justifies the carrying amount . a loss in the value of our investment that is other than a temporary decline is recognized currently in earnings based on the difference between the estimated current fair value of the investment and our carrying amount . in order to determine fair value , our management must make certain estimates and assumptions regarding nustar energy 's operations , including , among other things , an assessment of market conditions , projected cash flows , interest rates and growth rates that could significantly impact the fair value of our investment . due to the significant subjectivity of the assumptions used to determine fair value , changes in market conditions and or changes in assumptions could result in significant impairment charges in the future , thus affecting our earnings . we believe that the carrying amount of our investment in nustar energy , as of december 31 , 2012 , is recoverable . unit-based compensation we account for awards of ns unit options , performance awards and restricted units to employees and directors of nustar gp , llc at fair value , whereby a liability for the award is initially recorded and subsequent changes in the fair value are included in the determination of net income . the fair value of ns unit options is determined using the black-scholes

cash distributions from nustar energy nustar energy pays quarterly distributions within 45 days following the end of each quarter based on the partnership interests outstanding as of a record date that is set after the end of each quarter . the table set forth below shows the cash distributions earned for the periods shown with respect to our ownership interests in nustar energy and idr : replace_table_token_11_th cash flows for the years ended december 31 , 2012 , 2011 and 2010 cash distributions received from nustar energy were $ 92.6 million for the year ended december 31 , 2012 , which we used primarily to fund distributions to our unitholders totaling $ 88.3 million . we borrowed $ 21.0 million from our revolving credit facility for the year ended december 31 , 2012 , mainly to fund our $ 7.1 million in contributions to nustar energy in order to maintain our 2 % general partner interest following its issuance of common units in september 2012. additionally , we repaid $ 17.5 million under the revolving credit facility . cash distributions received from nustar energy were $ 86.1 million for the year ended december 31 , 2011 , which we used primarily to fund distributions to our unitholders totaling $ 83.0 million .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. ” unless otherwise indicated , the terms “ nustar gp holdings , ” “ we , ” “ our ” and “ us ” are used in this report to refer to nustar gp holdings , llc , to one or more of our consolidated subsidiaries or to all of them taken as a whole . our only cash generating assets are our ownership interests in nustar energy l.p. ( nustar energy ) , a publicly traded delaware limited partnership ( nyse : ns ) . as of december 31 , 2012 , our aggregate ownership interests in nustar energy consisted of the following : the 2 % general partner interest ; 100 % of the incentive distribution rights ( idr ) issued by nustar energy , which entitle us to receive increasing percentages of the cash distributed by nustar energy , currently at the maximum percentage of 23 % ; and 10,351,461 common units of nustar energy representing a 13.0 % limited partner interest . we account for our ownership interest in nustar energy using the equity method . therefore , our financial results reflect a portion of nustar energy 's net income based on our ownership interest . we have no separate operating activities apart from those conducted by nustar energy and therefore generate no revenues from operations . nustar energy is required by its partnership agreement to distribute all of its available cash at the end of each quarter , less reserves established by its general partner , in its sole discretion , to provide for the proper conduct of nustar energy 's business . similarly , we are required by our limited liability company agreement to distribute all of our available cash at the end of each quarter , less reserves established by our board of directors . nustar energy is engaged in the terminalling and storage of petroleum products , the transportation of petroleum products and anhydrous ammonia , and petroleum refining and marketing . nustar energy has terminal and storage facilities in the united states , canada , mexico , the netherlands , including st. eustatius in the caribbean , the united kingdom and turkey . on january 1 , 2013 , nustar energy sold the san antonio refinery and related assets , which included inventory , a terminal in elmendorf , texas and a pipeline connecting the terminal and refinery for approximately $ 115.0 million . nustar energy presented the results of operations for the san antonio refinery and related assets as discontinued operations for the years ended december 31 , 2012 and 2011. on december 13 , 2012 , nustar energy completed its acquisition of the texstar crude oil assets ( as defined below ) , including 100 % of the partnership interest in texstar crude oil pipeline , lp , from texstar midstream services , lp and certain of its affiliates ( collectively , texstar ) for $ 325.4 million ( the texstar asset acquisition ) . the texstar crude oil assets consist of 27 approximately 140 miles of crude oil pipelines and gathering lines , as well as five terminals and storage facilities providing 0.6 million barrels of storage capacity . on september 28 , 2012 , nustar energy sold a 50 % ownership interest ( the asphalt sale ) in nustar asphalt llc ( asphalt jv ) , previously a wholly-owned subsidiary of nustar energy , to an affiliate of lindsay goldberg llc ( lindsay goldberg ) , a private investment firm . asphalt jv owns and operates the asphalt refining assets that were previously wholly owned by nustar energy , including the asphalt refineries located in paulsboro , new jersey and savannah , georgia ( collectively , the asphalt operations ) . lindsay goldberg paid $ 175.0 million for the class a equity interests of asphalt jv , while nustar energy retained the class b equity interests with a fair value of $ 52.0 million . at closing , nustar energy received $ 263.8 million from asphalt jv for inventory related to the asphalt operations . upon closing , nustar energy deconsolidated asphalt jv and started reporting its remaining investment in asphalt jv using the equity method of accounting . in anticipation of the asphalt sale , nustar energy evaluated the goodwill and other long-lived assets associated with the asphalt operations for potential impairment . nustar energy determined the fair value of the asphalt operations reporting unit was less than its carrying value , which resulted in the recognition of a goodwill impairment loss of $ 22.1 million in the second quarter of 2012. in addition , nustar energy recorded an impairment loss of $ 244.3 million in the second quarter of 2012 to write-down the carrying value of long-lived assets related to the asphalt operations , including fixed assets , intangible assets and other long-term assets to their estimated fair value . 28 results of operations as discussed above , we account for our investment in nustar energy using the equity method . as a result , our equity in earnings of nustar energy , our only source of income , directly fluctuates with the amount of nustar energy 's distributions and results of operations . nustar energy 's distributions determine the amount of our incentive distribution earnings , while nustar energy 's results of operations determine the amounts of earnings attributable to our general partner and limited partner interests . story_separator_special_tag please refer to notes 14 and 15 of the notes to consolidated financial statements in item 8 . “ financial statements and supplementary data ” for a more detailed discussion of employee benefit plans and unit-based compensation . nustar energy reimburses us for expenses incurred related to employee benefit plans at cost , and for long-term incentive plan compensation expenses resulting from ns and nsh awards to employees and directors of nustar gp , llc . expenses resulting from nustar gp holdings awards to our non-employee directors are included in “ general and administrative expenses ” on our consolidated statements of comprehensive income ( loss ) . our current liabilities related to the long-term incentive plans and employee benefits are included in “ accrued compensation expense ” and our noncurrent liabilities for employee benefits are included in “ long-term liabilities ” on our consolidated balance sheets . asphalt jv services agreement in conjunction with nustar energy 's asphalt sale , we entered into a services agreement with asphalt jv , effective september 28 , 2012 ( the asphalt jv services agreement ) . the asphalt jv services agreement provides that we will furnish certain administrative and other operating services necessary to conduct the business of asphalt jv . asphalt jv will compensate us for these services through an annual fee totaling $ 10.0 million , subject to adjustment based on the annual merit increase percentage applicable to our employees for the most recently completed contract year . the asphalt jv services agreement will terminate on december 31 , 2017 and will automatically renew for successive two-year terms . asphalt jv may terminate the asphalt jv services agreement at any time , with 180 days prior written notice or reduce the level of service with 45 days prior written notice . asphalt jv employee services agreement in conjunction with nustar energy 's asphalt sale , we entered into an employee services agreement with asphalt jv , effective september 28 , 2012 ( the asphalt jv employee services agreement ) . the asphalt jv employee services agreement provided that certain of our employees would provide employee-services to asphalt jv . in exchange , asphalt jv would reimburse us for the compensation expense of those employees at the same rates that were in effect at the effective date of the asphalt jv 36 employee services agreement , including an annual bonus amount that does not exceed our target bonus plan . the employees covered under the asphalt jv employee services agreement were not entitled to any new unit-based compensation grants from us , and asphalt jv was not responsible for unit-based compensation costs prior to the effective date . the asphalt jv employee services agreement terminated on december 31 , 2012 and effective january 1 , 2013 , those employees became employees of nustar asphalt refining , llc . the following table summarizes information pertaining to related party transactions : replace_table_token_13_th long-term contractual obligations as of december 31 , 2012 , we had no future minimum payments applicable to non-cancellable operating leases and purchase obligations . contingencies as previously discussed , our only cash-generating assets are our indirect ownership interests in nustar energy . nustar energy is subject to certain loss contingencies , the outcome of which could have a material effect on nustar energy 's results of operations and cash flows . please refer to note 11 of the notes to consolidated financial statements in item 8 . “ financial statements and supplementary data ” for a more detailed discussion of contingencies . critical accounting policies the preparation of financial statements in accordance with u.s. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes . actual results could differ from those estimates . the following summary provides further information about our critical accounting policies that involve critical accounting estimates , and should be read in conjunction with note 2 of the notes to consolidated financial statements in item 8 . “ financial statements and supplementary data ” which summarizes our significant accounting policies . the following accounting policies involve estimates that are considered critical due to the level of sensitivity and judgment involved , as well as the impact on our consolidated financial position and results of operations . we believe that all of our estimates are reasonable . investment in nustar energy we evaluate our investment in nustar energy for impairment if and when there is evidence that we may not be able to recover the carrying amount of our investment or that nustar energy is unable to sustain an earnings capacity that justifies the carrying amount . a loss in the value of our investment that is other than a temporary decline is recognized currently in earnings based on the difference between the estimated current fair value of the investment and our carrying amount . in order to determine fair value , our management must make certain estimates and assumptions regarding nustar energy 's operations , including , among other things , an assessment of market conditions , projected cash flows , interest rates and growth rates that could significantly impact the fair value of our investment . due to the significant subjectivity of the assumptions used to determine fair value , changes in market conditions and or changes in assumptions could result in significant impairment charges in the future , thus affecting our earnings . we believe that the carrying amount of our investment in nustar energy , as of december 31 , 2012 , is recoverable . unit-based compensation we account for awards of ns unit options , performance awards and restricted units to employees and directors of nustar gp , llc at fair value , whereby a liability for the award is initially recorded and subsequent changes in the fair value are included in the determination of net income . the fair value of ns unit options is determined using the black-scholes Narrative : cash distributions from nustar energy nustar energy pays quarterly distributions within 45 days following the end of each quarter based on the partnership interests outstanding as of a record date that is set after the end of each quarter . the table set forth below shows the cash distributions earned for the periods shown with respect to our ownership interests in nustar energy and idr : replace_table_token_11_th cash flows for the years ended december 31 , 2012 , 2011 and 2010 cash distributions received from nustar energy were $ 92.6 million for the year ended december 31 , 2012 , which we used primarily to fund distributions to our unitholders totaling $ 88.3 million . we borrowed $ 21.0 million from our revolving credit facility for the year ended december 31 , 2012 , mainly to fund our $ 7.1 million in contributions to nustar energy in order to maintain our 2 % general partner interest following its issuance of common units in september 2012. additionally , we repaid $ 17.5 million under the revolving credit facility . cash distributions received from nustar energy were $ 86.1 million for the year ended december 31 , 2011 , which we used primarily to fund distributions to our unitholders totaling $ 83.0 million .

in conjunction with the redemption , the partnership incurred a debt prepayment premium of $ 7.8 million and a non-cash charge of $ 3.9 million for the write-off of unamortized debt issuance costs and unamortized debt discount related to the redemption of the senior unsecured notes . for a more detailed discussion regarding our financing activities , see “ item 7. management 's discussion and analysis of financial condition and results of operations — liquidity and capital resources . ” subsequent events disposition of floating storage assets . on february 12 , 2015 , we sold six liquefied petroleum gas pressure barges , collectively referred to as the ( `` floating storage assets `` ) for $ 41.3 million . these assets were primarily operated under the floating storage component of our ngl distribution business . the proceeds from the disposition were used to reduce outstanding indebtedness under our revolving credit facility . quarterly distribution . on january 22 , 2015 , we declared a quarterly cash distribution of $ 0.8125 per common unit for the fourth quarter of 2014 , or $ 3.25 per common unit on an annualized basis , which was paid on february 13 , 2015 to unitholders of record as of february 6 , 2015. additionally , we paid a distribution to our general partner in the amount of $ 4.4 million . of this amount , $ 0.7 million is related to the base general partner distribution and $ 3.7 million represents incentive distribution rights paid to our general partner . common unit grants . on january 5 , 2015 , we issued 84,750 restricted common units under our long-term incentive plan to the executive officers of our general partner and certain martin resource management employees who provide services to us . these restricted units vest 100 % on january 5 , 2018. critical accounting policies and estimates our discussion and analysis of our financial condition and results of operations are based on the historical consolidated financial statements included elsewhere herein . we prepared these financial statements in conformity with united states generally accepted accounting principles ( “ u.s . gaap ” or “ gaap ” ) . the preparation of these financial statements required us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods . we based our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances . we routinely evaluate these estimates , utilizing historical experience , consultation with experts and other methods we consider reasonable in the particular circumstances . our results may differ from these estimates , and any effects on our business , financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known . changes in these estimates could materially affect our financial position , results of operations or cash flows . you should also read note 2 , “ significant accounting policies ” in notes to consolidated financial statements . the following table evaluates the potential impact of estimates utilized during the periods ended december 31 , 2014 and 2013 : description judgments and uncertainties effect if actual results differ from estimates and assumptions allowance for doubtful accounts we evaluate our allowance for doubtful accounts on an ongoing basis and record adjustments when , in management 's judgment , circumstances warrant it . reserves are recorded to reduce receivables to the amount ultimately expected to be collected . we evaluate the collectability of our accounts receivable based on factors such as the customer 's ability to pay , the age of the receivable and our historical collection experience . a deterioration in any of these factors could result in an increase in the allowance for doubtful accounts balance . if actual collection results are not consistent with our judgments , we may experience an increase in uncollectible receivables . a 10 % increase in our allowance for doubtful accounts would result in a decrease in net income of approximately $ 0.2 million . depreciation 44 depreciation expense is computed using the straight-line method over the useful life of the assets . determination of depreciation expense requires judgment regarding estimated useful lives and salvage values of property , plant and equipment . as circumstances warrant , estimates are reviewed to determine if any changes in the underlying assumptions are needed . the lives of our fixed assets range from 3 - 50 years . if the depreciable lives of our assets were decreased by 10 % , we estimate that annual depreciation expense would increase approximately $ 7.2 million , resulting in a corresponding reduction in net income . impairment of long-lived assets we periodically evaluate whether the carrying value of long-lived assets has been impaired when circumstances indicate the carrying value of the assets may not be recoverable . these evaluations are based on undiscounted cash flow projections over the remaining useful life of the asset . the carrying value is not recoverable if it exceeds the sum of the undiscounted cash flows . any impairment loss is measured as the excess of the asset 's carrying value over its fair value . our impairment analyses require management to use judgment in estimating future cash flows and useful lives , as well as assessing the probability of different outcomes . story_separator_special_tag a 23 % decrease in sales volumes at our blending and packaging facilities resulted in a $ 33.2 million decrease in cost of products sold . product sales volumes from our shore-based terminals decreased 3 % , resulting in a $ 2.0 million decrease in cost of products sold . increased average cost at our blending and packaging facilities of 10 % resulted in an increase of $ 13.6 million in cost of products sold . decreased average cost at our shore-based terminals of 2 % resulted in a decrease of $ 1.1 million in cost of products sold . operating expenses . increased expenses at our specialty terminals accounted for $ 6.2 million of the total increase , primarily attributable to the corpus christi crude terminal . our shore-based terminal expenses increased $ 0.4 million primarily due to repair and maintenance cost at the terminals . in addition , $ 2.5 million of the increase is attributable to the smackover refining assets , primarily as a result of increased compensation expense . selling , general and administrative expenses . the increase in selling , general and administrative expenses is primarily attributable to increased compensation expense . depreciation and amortization . the increase in depreciation and amortization is due to the impact of recent capital expenditures . 49 other operating income . other operating income consists primarily of business interruption recoveries in 2014 and a gain on an involuntary conversion of property , plant and equipment in 2013. comparative results of operations for the twelve months ended december 31 , 2013 and 2012 replace_table_token_11_th services revenues . services revenue increased primarily due to $ 17.7 million attributable to our new crude terminal in corpus christi , texas , which was placed into service in may 2012. in addition , $ 5.2 million of the increase is due to revenues generated by our talen 's acquisition on december 31 , 2012. the remaining increase is primarily due to increased throughput at the smackover refinery . products revenues . an 8 % increase in sales volumes at our blending and packaging facilities resulted in a $ 10.7 million positive impact on product revenues . product sales volumes from our shore-based terminals decreased 7 % , resulting in a $ 5.6 million reduction in product revenues . the average sales price at our blending and packaging facilities decreased 5 % , resulting in a $ 7.8 million decrease in product revenues . the average sales price at our shore-based terminals decreased 4 % , resulting in a $ 3.3 million decrease in product revenues . cost of products sold . an 8 % increase in sales volumes at our blending and packaging facilities resulted in a $ 9.4 million increase in cost of products sold , which was partially offset by a 7 % decrease in sales volumes at our shore-based terminals , resulting in a $ 5.2 million decrease in cost of products sold . decreased average cost at our blending and packaging facilities of 8 % resulted in a decrease of $ 10.0 million in cost of products sold . decreased average cost at our shore-based terminals of 5 % resulted in a decrease of $ 3.9 million in cost of products sold . operating expenses . increased expenses at our specialty terminals accounted for $ 6.9 million of the total increase , primarily attributable to the corpus christi crude terminal . our shore-based terminal expenses increased $ 1.7 million primarily due to the acquisition of the talen 's terminals . in addition , $ 7.1 million of the increase is attributable to the smackover refining assets , primarily as a result of increased utilities and repair and maintenance expense . selling , general and administrative expenses . the decrease in selling , general and administrative expenses is primarily related to decreased advertising expense in our blending and packaging operations . depreciation and amortization . the increase in depreciation and amortization is due to the impact of recent capital expenditures . 50 other operating income ( loss ) . other operating income in 2013 is primarily attributable to a gain on an involuntary conversion of property , plant and equipment . natural gas services segment comparative results of operations for the twelve months ended december 31 , 2014 and 2013 replace_table_token_12_th revenues . services revenue for 2014 are attributable to the acquisition of cardinal on august 29 , 2014. ngl sales volumes increased 33 % , positively impacting product revenues by $ 246.2 million . our ngl average sales price per barrel decreased $ 14.95 , or 23 % , resulting in an offsetting decrease to product revenues of $ 222.3 million . cost of products sold . our average cost per barrel decreased $ 14.51 , or 23 % . our margins decreased by $ 0.43 , or 17.0 % , per barrel during the period . the impact of lower prices reduced cost of products sold by $ 287.2 million while the growth in volumes increased our costs $ 307.7 million . operating expenses . operating expenses increased $ 5.3 million due to the acquisition of cardinal . in addition , compensation costs and repair and maintenance expenses increased $ 0.7 million and $ 0.6 million , respectively , as a result of the acquisition of ngl storage assets from martin resource management . selling , general and administrative expenses . selling , general and administrative expenses increased $ 2.7 million due to the acquisition of cardinal . also contributing to the increase was compensation expense of $ 1.0 million and property taxes of $ 0.5 million . depreciation and amortization . depreciation and amortization increased due to the acquisition of cardinal . 51 comparative results of operations for the twelve months ended december 31 , 2013 and 2012 replace_table_token_13_th revenues . natural gas services sales volumes increased 23 % , positively impacting revenues by $ 181.6 million , primarily as a result of us entering the louisiana butane

cash flows - twelve months ended december 31 , 2014 compared to twelve months ended december 31 , 2013 the following table details the cash flow changes between the twelve months ended december 31 , 2014 and 2013 : replace_table_token_24_th the change in net cash provided by operating activities includes an increase in operating results from continuing operations plus other non cash items of $ 7.5 million , distributions from wtlpg of $ 2.6 million , and a $ 10.1 million 59 unfavorable variance in working capital . changes in working capital are primarily affected by the timing of payments of trade and other accounts payable as well as the collections of trade and other accounts receivable . in addition , cash used in discontinued operations decreased $ 2.0 million in 2014. net cash used in investing activities in 2014 includes the $ 133.9 million net investment in wtlpg . acquisition expenditures increased $ 71.4 million , including the cardinal acquisition of $ 100.2 million , net of cash acquired . contributions to unconsolidated entities and capital expenditures decreased $ 27.5 million and $ 7.9 million in 2014 , respectively . net cash used in discontinued investing activities of $ 42.6 million in 2013 is attributable to the purchase of the six pressure barges which were sold in february 2015. there was no cash provided by or used in discontinued investing activities in 2014. net cash provided by financing activities increased for the year ended december 31 , 2014 as a result of : ( i ) $ 338.7 million in equity offering proceeds , including $ 7.0 million from the general partner ; ( ii ) a $ 228.8 decrease in net proceeds from long-term debt ( borrowings less repayments ) ; ( iii ) a $ 12.8 million increase in cash distributions ; and ( iv ) a $ 5.4 million reduction in the payment of debt issuance costs .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. in conjunction with the redemption , the partnership incurred a debt prepayment premium of $ 7.8 million and a non-cash charge of $ 3.9 million for the write-off of unamortized debt issuance costs and unamortized debt discount related to the redemption of the senior unsecured notes . for a more detailed discussion regarding our financing activities , see “ item 7. management 's discussion and analysis of financial condition and results of operations — liquidity and capital resources . ” subsequent events disposition of floating storage assets . on february 12 , 2015 , we sold six liquefied petroleum gas pressure barges , collectively referred to as the ( `` floating storage assets `` ) for $ 41.3 million . these assets were primarily operated under the floating storage component of our ngl distribution business . the proceeds from the disposition were used to reduce outstanding indebtedness under our revolving credit facility . quarterly distribution . on january 22 , 2015 , we declared a quarterly cash distribution of $ 0.8125 per common unit for the fourth quarter of 2014 , or $ 3.25 per common unit on an annualized basis , which was paid on february 13 , 2015 to unitholders of record as of february 6 , 2015. additionally , we paid a distribution to our general partner in the amount of $ 4.4 million . of this amount , $ 0.7 million is related to the base general partner distribution and $ 3.7 million represents incentive distribution rights paid to our general partner . common unit grants . on january 5 , 2015 , we issued 84,750 restricted common units under our long-term incentive plan to the executive officers of our general partner and certain martin resource management employees who provide services to us . these restricted units vest 100 % on january 5 , 2018. critical accounting policies and estimates our discussion and analysis of our financial condition and results of operations are based on the historical consolidated financial statements included elsewhere herein . we prepared these financial statements in conformity with united states generally accepted accounting principles ( “ u.s . gaap ” or “ gaap ” ) . the preparation of these financial statements required us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods . we based our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances . we routinely evaluate these estimates , utilizing historical experience , consultation with experts and other methods we consider reasonable in the particular circumstances . our results may differ from these estimates , and any effects on our business , financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known . changes in these estimates could materially affect our financial position , results of operations or cash flows . you should also read note 2 , “ significant accounting policies ” in notes to consolidated financial statements . the following table evaluates the potential impact of estimates utilized during the periods ended december 31 , 2014 and 2013 : description judgments and uncertainties effect if actual results differ from estimates and assumptions allowance for doubtful accounts we evaluate our allowance for doubtful accounts on an ongoing basis and record adjustments when , in management 's judgment , circumstances warrant it . reserves are recorded to reduce receivables to the amount ultimately expected to be collected . we evaluate the collectability of our accounts receivable based on factors such as the customer 's ability to pay , the age of the receivable and our historical collection experience . a deterioration in any of these factors could result in an increase in the allowance for doubtful accounts balance . if actual collection results are not consistent with our judgments , we may experience an increase in uncollectible receivables . a 10 % increase in our allowance for doubtful accounts would result in a decrease in net income of approximately $ 0.2 million . depreciation 44 depreciation expense is computed using the straight-line method over the useful life of the assets . determination of depreciation expense requires judgment regarding estimated useful lives and salvage values of property , plant and equipment . as circumstances warrant , estimates are reviewed to determine if any changes in the underlying assumptions are needed . the lives of our fixed assets range from 3 - 50 years . if the depreciable lives of our assets were decreased by 10 % , we estimate that annual depreciation expense would increase approximately $ 7.2 million , resulting in a corresponding reduction in net income . impairment of long-lived assets we periodically evaluate whether the carrying value of long-lived assets has been impaired when circumstances indicate the carrying value of the assets may not be recoverable . these evaluations are based on undiscounted cash flow projections over the remaining useful life of the asset . the carrying value is not recoverable if it exceeds the sum of the undiscounted cash flows . any impairment loss is measured as the excess of the asset 's carrying value over its fair value . our impairment analyses require management to use judgment in estimating future cash flows and useful lives , as well as assessing the probability of different outcomes . story_separator_special_tag a 23 % decrease in sales volumes at our blending and packaging facilities resulted in a $ 33.2 million decrease in cost of products sold . product sales volumes from our shore-based terminals decreased 3 % , resulting in a $ 2.0 million decrease in cost of products sold . increased average cost at our blending and packaging facilities of 10 % resulted in an increase of $ 13.6 million in cost of products sold . decreased average cost at our shore-based terminals of 2 % resulted in a decrease of $ 1.1 million in cost of products sold . operating expenses . increased expenses at our specialty terminals accounted for $ 6.2 million of the total increase , primarily attributable to the corpus christi crude terminal . our shore-based terminal expenses increased $ 0.4 million primarily due to repair and maintenance cost at the terminals . in addition , $ 2.5 million of the increase is attributable to the smackover refining assets , primarily as a result of increased compensation expense . selling , general and administrative expenses . the increase in selling , general and administrative expenses is primarily attributable to increased compensation expense . depreciation and amortization . the increase in depreciation and amortization is due to the impact of recent capital expenditures . 49 other operating income . other operating income consists primarily of business interruption recoveries in 2014 and a gain on an involuntary conversion of property , plant and equipment in 2013. comparative results of operations for the twelve months ended december 31 , 2013 and 2012 replace_table_token_11_th services revenues . services revenue increased primarily due to $ 17.7 million attributable to our new crude terminal in corpus christi , texas , which was placed into service in may 2012. in addition , $ 5.2 million of the increase is due to revenues generated by our talen 's acquisition on december 31 , 2012. the remaining increase is primarily due to increased throughput at the smackover refinery . products revenues . an 8 % increase in sales volumes at our blending and packaging facilities resulted in a $ 10.7 million positive impact on product revenues . product sales volumes from our shore-based terminals decreased 7 % , resulting in a $ 5.6 million reduction in product revenues . the average sales price at our blending and packaging facilities decreased 5 % , resulting in a $ 7.8 million decrease in product revenues . the average sales price at our shore-based terminals decreased 4 % , resulting in a $ 3.3 million decrease in product revenues . cost of products sold . an 8 % increase in sales volumes at our blending and packaging facilities resulted in a $ 9.4 million increase in cost of products sold , which was partially offset by a 7 % decrease in sales volumes at our shore-based terminals , resulting in a $ 5.2 million decrease in cost of products sold . decreased average cost at our blending and packaging facilities of 8 % resulted in a decrease of $ 10.0 million in cost of products sold . decreased average cost at our shore-based terminals of 5 % resulted in a decrease of $ 3.9 million in cost of products sold . operating expenses . increased expenses at our specialty terminals accounted for $ 6.9 million of the total increase , primarily attributable to the corpus christi crude terminal . our shore-based terminal expenses increased $ 1.7 million primarily due to the acquisition of the talen 's terminals . in addition , $ 7.1 million of the increase is attributable to the smackover refining assets , primarily as a result of increased utilities and repair and maintenance expense . selling , general and administrative expenses . the decrease in selling , general and administrative expenses is primarily related to decreased advertising expense in our blending and packaging operations . depreciation and amortization . the increase in depreciation and amortization is due to the impact of recent capital expenditures . 50 other operating income ( loss ) . other operating income in 2013 is primarily attributable to a gain on an involuntary conversion of property , plant and equipment . natural gas services segment comparative results of operations for the twelve months ended december 31 , 2014 and 2013 replace_table_token_12_th revenues . services revenue for 2014 are attributable to the acquisition of cardinal on august 29 , 2014. ngl sales volumes increased 33 % , positively impacting product revenues by $ 246.2 million . our ngl average sales price per barrel decreased $ 14.95 , or 23 % , resulting in an offsetting decrease to product revenues of $ 222.3 million . cost of products sold . our average cost per barrel decreased $ 14.51 , or 23 % . our margins decreased by $ 0.43 , or 17.0 % , per barrel during the period . the impact of lower prices reduced cost of products sold by $ 287.2 million while the growth in volumes increased our costs $ 307.7 million . operating expenses . operating expenses increased $ 5.3 million due to the acquisition of cardinal . in addition , compensation costs and repair and maintenance expenses increased $ 0.7 million and $ 0.6 million , respectively , as a result of the acquisition of ngl storage assets from martin resource management . selling , general and administrative expenses . selling , general and administrative expenses increased $ 2.7 million due to the acquisition of cardinal . also contributing to the increase was compensation expense of $ 1.0 million and property taxes of $ 0.5 million . depreciation and amortization . depreciation and amortization increased due to the acquisition of cardinal . 51 comparative results of operations for the twelve months ended december 31 , 2013 and 2012 replace_table_token_13_th revenues . natural gas services sales volumes increased 23 % , positively impacting revenues by $ 181.6 million , primarily as a result of us entering the louisiana butane Narrative : cash flows - twelve months ended december 31 , 2014 compared to twelve months ended december 31 , 2013 the following table details the cash flow changes between the twelve months ended december 31 , 2014 and 2013 : replace_table_token_24_th the change in net cash provided by operating activities includes an increase in operating results from continuing operations plus other non cash items of $ 7.5 million , distributions from wtlpg of $ 2.6 million , and a $ 10.1 million 59 unfavorable variance in working capital . changes in working capital are primarily affected by the timing of payments of trade and other accounts payable as well as the collections of trade and other accounts receivable . in addition , cash used in discontinued operations decreased $ 2.0 million in 2014. net cash used in investing activities in 2014 includes the $ 133.9 million net investment in wtlpg . acquisition expenditures increased $ 71.4 million , including the cardinal acquisition of $ 100.2 million , net of cash acquired . contributions to unconsolidated entities and capital expenditures decreased $ 27.5 million and $ 7.9 million in 2014 , respectively . net cash used in discontinued investing activities of $ 42.6 million in 2013 is attributable to the purchase of the six pressure barges which were sold in february 2015. there was no cash provided by or used in discontinued investing activities in 2014. net cash provided by financing activities increased for the year ended december 31 , 2014 as a result of : ( i ) $ 338.7 million in equity offering proceeds , including $ 7.0 million from the general partner ; ( ii ) a $ 228.8 decrease in net proceeds from long-term debt ( borrowings less repayments ) ; ( iii ) a $ 12.8 million increase in cash distributions ; and ( iv ) a $ 5.4 million reduction in the payment of debt issuance costs .

the company continues to focus on gross margin improvements through the brady business performance system , lean , and strategic sourcing efforts . research and development expenses increased to $ 43.0 million in fiscal 2011 from $ 42.6 million in fiscal 2010 , and declined as a percentage of sales in fiscal 2011 to 3.2 % compared to 3.4 % in fiscal 2010. the increase in r & d spending was due to the company 's continued commitment to innovation and new product development . this investment declined as percentage of sales slightly in fiscal 2011 as a result of the elimination of the r & d expenses incurred by the company 's previously owned teklynx business . 19 selling , general , and administrative ( “sg & a” ) expenses increased to $ 441.8 million in fiscal 2011 as compared to $ 435.9 million in fiscal 2010. sg & a expenses increased during the fiscal year mainly due to the fluctuations in exchange rates . the company divested of its teklynx business resulting in a pre-tax gain of $ 4.4 million , which is included in sg & a . this pre-tax gain was offset by the associated transaction-related costs and income tax expense , resulting in a net income impact of $ 0.8 million during fiscal 2011. sg & a also increased in fiscal 2011 as a result of the annual merit increases , and increased advertising campaign expenses . as a percentage of sales , sg & a declined to 33.0 % in fiscal 2011 from 34.6 % in fiscal 2010 as the company continues to reduce administrative costs through its cost reduction activities including simplifying , standardizing , and automating processes . restructuring charges were $ 9.2 million and $ 15.3 million during fiscal 2011 and 2010 , respectively . during fiscal 2010 and 2011 , the company incurred restructuring related costs as a result of facility consolidations and continued workforce reduction activities . the costs associated with the workforce reduction primarily include employee separation costs , consisting of severance pay , outplacement services , medical , and other related benefits for the company 's work force . interest expense increased to $ 22.1 million from $ 21.2 million for fiscal 2011 compared to fiscal 2010. in fiscal 2011 , the company repaid approximately $ 61.3 million of debt . interest expense increased due to a full year of interest being recognized on the may 2010 private placement , compared to a partial year of interest in 2010. the increase was partially offset by the lower principal balance under the previously outstanding debt agreements . other income and expense increased $ 2.8 million in fiscal 2011 to $ 4.0 million from $ 1.2 million in the prior year . the increase was primarily due to the interest income earned on the company 's money market and depository accounts , in addition to the gains on securities held in executive deferred compensation plans . the company 's effective tax rate was 24.6 % in fiscal 2011 , which was relatively consistent with the effective tax rate of 25.1 % in fiscal 2010. the company anticipates that its fiscal 2012 effective tax rate will be consistent with prior periods . net income for the fiscal year ended july 31 , 2011 , increased 32.6 % to $ 108.7 million , compared to $ 82.0 million for the fiscal year ended july 31 , 2010 , as a result of the factors noted above . net income as a percentage of sales increased to 8.1 % from 6.5 % for the fiscal year ended july 31 , 2011 compared to the prior year . diluted net income per share increased 31.6 % to $ 2.04 per share for fiscal 2011 compared to $ 1.55 per share for the fiscal year ended july 31 , 2010. fiscal 2011 and 2010 net income before restructuring related expenses was $ 115.2 million , or $ 2.16 per diluted share of class a common stock , and $ 93.4 million , or $ 1.76 per diluted share of class a common stock , respectively . year ended july 31 , 2010 , compared to year ended july 31 , 2009 the comparability of the operating results for the fiscal years ended july 31 , 2010 to july 31 , 2009 , has been impacted by the following acquisitions completed in fiscal 2010. acquisitions : segment date completed welconstruct group limited ( “welco” ) europe october 2009 stickolor industria e comerciao de auto adesivos ltd ( “stickolor” ) americas december 2009 securimed sas ( “securimed” ) europe march 2010 fiscal 2010 sales increased $ 50.4 million , or 4.2 % from fiscal 2009. the 4.2 % increase consisted of 0.2 % growth in organic sales , 1.3 % growth due to acquisitions , and 2.7 % growth resulting from the effects of foreign currency translation . organic sales , defined as sales in the company 's existing core businesses and regions ( exclusive of acquisitions owned less than one year and foreign currency translation effects ) , were up 0.2 % compared to fiscal 2009. the annual organic sales growth of 0.2 % varied significantly by quarter . in the first quarter of the year the company experienced a 15.9 % decline in organic sales as the prior year quarter had not yet been impacted by the economic recession . subsequent to the first quarter the company experienced sequential growth over the prior period each quarter . the acquisitions listed above increased sales by $ 16.2 million or 1.3 % in fiscal 2010. the currency growth reflects fluctuations in the exchange rates used to translate financial results into the united states dollar which increased sales by $ 32.3 million or 2.7 % for the year . story_separator_special_tag a quarterly dividend of $ 0.185 will be paid on october 31 , 2011 , to shareholders of record at the close of business on october 10 , 2011. this dividend represents an increase of 2.8 % and is the 26th consecutive annual increase in dividends . on september 9 , 2011 , the company 's board of directors authorized a share buyback program for up to an additional 2 million shares of the company 's class a common stock . the share repurchase plan may be implemented from time to time on the open market or in privately negotiated transactions , with repurchased shares available for use in connection with the company 's stock-based compensation plans and for other corporate purposes . 26 off-balance sheet arrangements the company does not have material off-balance sheet arrangements or related party transactions . the company is not aware of factors that are reasonably likely to adversely affect liquidity trends , other than the risks discussed in this filing and presented in other company filings . however , the following additional information is provided to assist financial statement users . operating leases — these leases generally are entered into for investments in facilities such as manufacturing facilities , warehouses and office space , computer equipment and company vehicles . purchase commitments — the company has purchase commitments for materials , supplies , services , and property , plant and equipment as part of the ordinary conduct of its business . in the aggregate , such commitments are not in excess of current market prices and are not material to the financial position of the company . due to the proprietary nature of many of the company 's materials and processes , certain supply contracts contain penalty provisions for early termination . the company does not believe a material amount of penalties will be incurred under these contracts based upon historical experience and current expectations . other contractual obligations — the company does not have material financial guarantees or other contractual commitments that are reasonably likely to adversely affect liquidity other than those discussed below under “payments due under contractual obligations.” related party transactions — the company evaluated its affiliated party transactions for the period ended july 31 , 2011. based on the evaluation the company does not have material related party transactions that affect the results of operations , cash flow or financial condition . payments due under contractual obligations the company 's future commitments at july 31 , 2011 , for long-term debt , operating lease obligations , purchase obligations , interest obligations and other obligations are as follows ( dollars in thousands ) : replace_table_token_6_th replace_table_token_7_th inflation and changing prices essentially all of the company 's revenue is derived from the sale of its products in competitive markets . because prices are influenced by market conditions , it is not always possible to fully recover cost increases through pricing . changes in product mix from year to year , timing differences in instituting price changes , and the large amount of part numbers make it impracticable to accurately define the impact of inflation on profit margins . 27 critical accounting estimates management 's discussion and analysis of the company 's financial condition and results of operations are based upon the company 's consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states . the preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses , and related disclosure of contingent assets and liabilities . the company bases these estimates and judgments on historical experience and on various other assumptions that are believed to be reasonable under the circumstances . actual results may differ from these estimates and judgments . the company believes the following accounting estimates are most critical to an understanding of its financial statements . estimates are considered to be critical if they meet both of the following criteria : ( 1 ) the estimate requires assumptions about material matters that are uncertain at the time the accounting estimates are made , and ( 2 ) material changes in the estimates are reasonably likely from period to period . for a detailed discussion on the application of these and other accounting estimates , refer to note 1 to the company 's consolidated financial statements . income taxes the company 's effective tax rate is based on pre-tax income and the tax rates applicable to that income in the various jurisdictions in which the company operates . significant judgment is required in determining the company 's effective income tax rate and in evaluating its tax positions . the company establishes liabilities when it is more likely than not that the company will not realize the full tax benefit of the position . the company adjusts these liabilities in light of changing facts and circumstances . tax regulations may require items of income and expense to be included in a tax return in different periods than the items are reflected in the consolidated financial statements . as a result , the effective income tax rate reflected in the consolidated financial statements may be different than the tax rate reported in the income tax return . some of these differences are permanent , such as expenses that are not deductible on the income tax return , and some are temporary differences , such as depreciation expense . temporary differences create deferred tax assets and liabilities . deferred tax assets generally represent items that can be used as tax deductions or credits in the tax return in future years for which the company has already recorded the tax benefit in the consolidated financial statements . the company establishes valuation allowances against its deferred tax assets when it is more likely than not that the amount of expected future taxable income will not support the use of the deduction or

liquidity and capital resources cash and cash equivalents were $ 390.0 million at july 31 , 2011 , compared to $ 314.8 million at july 31 , 2010. the increase in cash and cash equivalents of $ 75.2 million was the result of cash provided by operations of $ 167.4 million , and the $ 22.0 million positive effects of foreign currency translation , offset by cash used for acquisitions , capital expenditures , dividends and debt repayments during fiscal 2011. the company 's working capital excluding cash as a percentage of sales remained flat at 5 % in fiscal 2011 and 2010. accounts receivable balances increased $ 6.9 million from july 31 , 2010 to july 31 , 2011. the increase in accounts receivable was due primarily to the impact of foreign currency translation as well as the increase in sales volumes . inventories increased $ 9.5 million from july 31 , 2010 to july 31 , 2011 due to increased business activity and the impact of foreign currency translation , partially offset by focused inventory reduction initiatives . current liabilities increased $ 8.1 million over the same period mainly due to the company 's forward foreign exchange currency contracts designated as net investment hedges . cash flow from operating activities totaled $ 167.4 million and $ 165.2 million in fiscal 2011 and 2010 , respectively . the increase was primarily due to the $ 26.7 million increase in net income partially offset by the change in working capital components outlined above . the increase was also due to the payment of the company 's fiscal 2010 annual incentive compensation during fiscal 2011 , whereas no incentive compensation was paid in fiscal 2010 due to the elimination of the annual incentive compensation in fiscal 2009. cash used for investing activities totaled $ 22.6 million and $ 48.7 million in fiscal 2011 and 2010 , respectively . cash used for acquisitions totaled $ 8.0 million during fiscal 2011 for the acquisition of id warehouse .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. the company continues to focus on gross margin improvements through the brady business performance system , lean , and strategic sourcing efforts . research and development expenses increased to $ 43.0 million in fiscal 2011 from $ 42.6 million in fiscal 2010 , and declined as a percentage of sales in fiscal 2011 to 3.2 % compared to 3.4 % in fiscal 2010. the increase in r & d spending was due to the company 's continued commitment to innovation and new product development . this investment declined as percentage of sales slightly in fiscal 2011 as a result of the elimination of the r & d expenses incurred by the company 's previously owned teklynx business . 19 selling , general , and administrative ( “sg & a” ) expenses increased to $ 441.8 million in fiscal 2011 as compared to $ 435.9 million in fiscal 2010. sg & a expenses increased during the fiscal year mainly due to the fluctuations in exchange rates . the company divested of its teklynx business resulting in a pre-tax gain of $ 4.4 million , which is included in sg & a . this pre-tax gain was offset by the associated transaction-related costs and income tax expense , resulting in a net income impact of $ 0.8 million during fiscal 2011. sg & a also increased in fiscal 2011 as a result of the annual merit increases , and increased advertising campaign expenses . as a percentage of sales , sg & a declined to 33.0 % in fiscal 2011 from 34.6 % in fiscal 2010 as the company continues to reduce administrative costs through its cost reduction activities including simplifying , standardizing , and automating processes . restructuring charges were $ 9.2 million and $ 15.3 million during fiscal 2011 and 2010 , respectively . during fiscal 2010 and 2011 , the company incurred restructuring related costs as a result of facility consolidations and continued workforce reduction activities . the costs associated with the workforce reduction primarily include employee separation costs , consisting of severance pay , outplacement services , medical , and other related benefits for the company 's work force . interest expense increased to $ 22.1 million from $ 21.2 million for fiscal 2011 compared to fiscal 2010. in fiscal 2011 , the company repaid approximately $ 61.3 million of debt . interest expense increased due to a full year of interest being recognized on the may 2010 private placement , compared to a partial year of interest in 2010. the increase was partially offset by the lower principal balance under the previously outstanding debt agreements . other income and expense increased $ 2.8 million in fiscal 2011 to $ 4.0 million from $ 1.2 million in the prior year . the increase was primarily due to the interest income earned on the company 's money market and depository accounts , in addition to the gains on securities held in executive deferred compensation plans . the company 's effective tax rate was 24.6 % in fiscal 2011 , which was relatively consistent with the effective tax rate of 25.1 % in fiscal 2010. the company anticipates that its fiscal 2012 effective tax rate will be consistent with prior periods . net income for the fiscal year ended july 31 , 2011 , increased 32.6 % to $ 108.7 million , compared to $ 82.0 million for the fiscal year ended july 31 , 2010 , as a result of the factors noted above . net income as a percentage of sales increased to 8.1 % from 6.5 % for the fiscal year ended july 31 , 2011 compared to the prior year . diluted net income per share increased 31.6 % to $ 2.04 per share for fiscal 2011 compared to $ 1.55 per share for the fiscal year ended july 31 , 2010. fiscal 2011 and 2010 net income before restructuring related expenses was $ 115.2 million , or $ 2.16 per diluted share of class a common stock , and $ 93.4 million , or $ 1.76 per diluted share of class a common stock , respectively . year ended july 31 , 2010 , compared to year ended july 31 , 2009 the comparability of the operating results for the fiscal years ended july 31 , 2010 to july 31 , 2009 , has been impacted by the following acquisitions completed in fiscal 2010. acquisitions : segment date completed welconstruct group limited ( “welco” ) europe october 2009 stickolor industria e comerciao de auto adesivos ltd ( “stickolor” ) americas december 2009 securimed sas ( “securimed” ) europe march 2010 fiscal 2010 sales increased $ 50.4 million , or 4.2 % from fiscal 2009. the 4.2 % increase consisted of 0.2 % growth in organic sales , 1.3 % growth due to acquisitions , and 2.7 % growth resulting from the effects of foreign currency translation . organic sales , defined as sales in the company 's existing core businesses and regions ( exclusive of acquisitions owned less than one year and foreign currency translation effects ) , were up 0.2 % compared to fiscal 2009. the annual organic sales growth of 0.2 % varied significantly by quarter . in the first quarter of the year the company experienced a 15.9 % decline in organic sales as the prior year quarter had not yet been impacted by the economic recession . subsequent to the first quarter the company experienced sequential growth over the prior period each quarter . the acquisitions listed above increased sales by $ 16.2 million or 1.3 % in fiscal 2010. the currency growth reflects fluctuations in the exchange rates used to translate financial results into the united states dollar which increased sales by $ 32.3 million or 2.7 % for the year . story_separator_special_tag a quarterly dividend of $ 0.185 will be paid on october 31 , 2011 , to shareholders of record at the close of business on october 10 , 2011. this dividend represents an increase of 2.8 % and is the 26th consecutive annual increase in dividends . on september 9 , 2011 , the company 's board of directors authorized a share buyback program for up to an additional 2 million shares of the company 's class a common stock . the share repurchase plan may be implemented from time to time on the open market or in privately negotiated transactions , with repurchased shares available for use in connection with the company 's stock-based compensation plans and for other corporate purposes . 26 off-balance sheet arrangements the company does not have material off-balance sheet arrangements or related party transactions . the company is not aware of factors that are reasonably likely to adversely affect liquidity trends , other than the risks discussed in this filing and presented in other company filings . however , the following additional information is provided to assist financial statement users . operating leases — these leases generally are entered into for investments in facilities such as manufacturing facilities , warehouses and office space , computer equipment and company vehicles . purchase commitments — the company has purchase commitments for materials , supplies , services , and property , plant and equipment as part of the ordinary conduct of its business . in the aggregate , such commitments are not in excess of current market prices and are not material to the financial position of the company . due to the proprietary nature of many of the company 's materials and processes , certain supply contracts contain penalty provisions for early termination . the company does not believe a material amount of penalties will be incurred under these contracts based upon historical experience and current expectations . other contractual obligations — the company does not have material financial guarantees or other contractual commitments that are reasonably likely to adversely affect liquidity other than those discussed below under “payments due under contractual obligations.” related party transactions — the company evaluated its affiliated party transactions for the period ended july 31 , 2011. based on the evaluation the company does not have material related party transactions that affect the results of operations , cash flow or financial condition . payments due under contractual obligations the company 's future commitments at july 31 , 2011 , for long-term debt , operating lease obligations , purchase obligations , interest obligations and other obligations are as follows ( dollars in thousands ) : replace_table_token_6_th replace_table_token_7_th inflation and changing prices essentially all of the company 's revenue is derived from the sale of its products in competitive markets . because prices are influenced by market conditions , it is not always possible to fully recover cost increases through pricing . changes in product mix from year to year , timing differences in instituting price changes , and the large amount of part numbers make it impracticable to accurately define the impact of inflation on profit margins . 27 critical accounting estimates management 's discussion and analysis of the company 's financial condition and results of operations are based upon the company 's consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states . the preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses , and related disclosure of contingent assets and liabilities . the company bases these estimates and judgments on historical experience and on various other assumptions that are believed to be reasonable under the circumstances . actual results may differ from these estimates and judgments . the company believes the following accounting estimates are most critical to an understanding of its financial statements . estimates are considered to be critical if they meet both of the following criteria : ( 1 ) the estimate requires assumptions about material matters that are uncertain at the time the accounting estimates are made , and ( 2 ) material changes in the estimates are reasonably likely from period to period . for a detailed discussion on the application of these and other accounting estimates , refer to note 1 to the company 's consolidated financial statements . income taxes the company 's effective tax rate is based on pre-tax income and the tax rates applicable to that income in the various jurisdictions in which the company operates . significant judgment is required in determining the company 's effective income tax rate and in evaluating its tax positions . the company establishes liabilities when it is more likely than not that the company will not realize the full tax benefit of the position . the company adjusts these liabilities in light of changing facts and circumstances . tax regulations may require items of income and expense to be included in a tax return in different periods than the items are reflected in the consolidated financial statements . as a result , the effective income tax rate reflected in the consolidated financial statements may be different than the tax rate reported in the income tax return . some of these differences are permanent , such as expenses that are not deductible on the income tax return , and some are temporary differences , such as depreciation expense . temporary differences create deferred tax assets and liabilities . deferred tax assets generally represent items that can be used as tax deductions or credits in the tax return in future years for which the company has already recorded the tax benefit in the consolidated financial statements . the company establishes valuation allowances against its deferred tax assets when it is more likely than not that the amount of expected future taxable income will not support the use of the deduction or Narrative : liquidity and capital resources cash and cash equivalents were $ 390.0 million at july 31 , 2011 , compared to $ 314.8 million at july 31 , 2010. the increase in cash and cash equivalents of $ 75.2 million was the result of cash provided by operations of $ 167.4 million , and the $ 22.0 million positive effects of foreign currency translation , offset by cash used for acquisitions , capital expenditures , dividends and debt repayments during fiscal 2011. the company 's working capital excluding cash as a percentage of sales remained flat at 5 % in fiscal 2011 and 2010. accounts receivable balances increased $ 6.9 million from july 31 , 2010 to july 31 , 2011. the increase in accounts receivable was due primarily to the impact of foreign currency translation as well as the increase in sales volumes . inventories increased $ 9.5 million from july 31 , 2010 to july 31 , 2011 due to increased business activity and the impact of foreign currency translation , partially offset by focused inventory reduction initiatives . current liabilities increased $ 8.1 million over the same period mainly due to the company 's forward foreign exchange currency contracts designated as net investment hedges . cash flow from operating activities totaled $ 167.4 million and $ 165.2 million in fiscal 2011 and 2010 , respectively . the increase was primarily due to the $ 26.7 million increase in net income partially offset by the change in working capital components outlined above . the increase was also due to the payment of the company 's fiscal 2010 annual incentive compensation during fiscal 2011 , whereas no incentive compensation was paid in fiscal 2010 due to the elimination of the annual incentive compensation in fiscal 2009. cash used for investing activities totaled $ 22.6 million and $ 48.7 million in fiscal 2011 and 2010 , respectively . cash used for acquisitions totaled $ 8.0 million during fiscal 2011 for the acquisition of id warehouse .

accordingly , our segment revenues primarily consist of fund management and related advisory fees , performance fees ( consisting of incentive fees and carried interest allocations ) , investment income , including realized and unrealized gains on our investments in our funds and other trading securities , as well as interest and other income . our segment expenses primarily consist of compensation and benefits expenses , including salaries , bonuses , performance payment arrangements , and equity-based compensation excluding awards granted in our initial public offering or in connection with 94 acquisitions and strategic investments , and general and administrative expenses . while our segment expenses include depreciation and interest expense , our segment expenses exclude acquisition-related charges and amortization of intangibles and impairment . refer to note 16 to the consolidated financial statements included in this annual report on form 10-k for more information on the differences between our financial results reported pursuant to u.s. gaap and our financial results for segment reporting purposes . trends affecting our business expectations for global economic growth remained strong through the fourth quarter of 2017 and into early 2018 , with particular optimism surrounding the outlook for growth in the eurozone . our proprietary portfolio of industrial and manufacturing related indicators remained steady at or near six-year highs during the fourth quarter and into early 2018. as 2017 drew to a close , inflation continued to fall short of central bank targets . in the u.s. , the core pce price index ( the federal reserve 's preferred measure of core inflation ) rose by 1.5 % in the twelve months ended december 2017 , unchanged from november and still well below the federal reserve 's 2 % target . our proprietary portfolio data similarly lacked signs of inflationary pressure , a phenomenon we believe is almost entirely driven by weakness in construction activity . during the fourth quarter of 2017 , eurozone core inflation rose more sluggishly than in the third quarter of 2017 , with year-on-year rates of 0.9 % observed in each month of the fourth quarter . on the other hand , u.s. bond market inflation expectations continue to rise , as the 10-year breakeven rate recently reached 2.1 % . the u.s. dollar declined nearly 10 % against global currencies in 2017 , the largest annual decline in more than 10-years . during 2017 , the euro appreciated 12 % against the u.s. dollar . stronger real global growth , relatively low longer-term interest rates , and the passage of tax reform pushed global equity markets to record highs in 2017. the msci world index advanced 20 % in 2017 and 5 % in the fourth quarter alone , while the s & p 500 rose 19 % over the calendar year and 6 % in the fourth quarter of 2017. underlying earnings growth at the companies comprising the s & p 500 has supported the upward movement of the markets . estimated total 2017 earnings growth for the s & p 500 is 13.4 % , the highest annual rate since 2011. as has been the case throughout the year , companies with greater global exposure have been driving this trend . as of mid-december 2017 , s & p 500 companies with a concentration of at least 50 % of sales outside the u.s. experienced earnings growth of approximately 15 % , compared to approximately 7 % for companies with a greater domestic focus . after strong recent performance pushing global market multiples to multi-year highs , during early february 2018 , the markets experienced a heightened level of volatility in connection with a sell-off . the u.s. 10-year treasury yield ended 2017 at around 2.4 % and has risen to more than 2.8 % in the first two weeks of february 2018. while the yield curve continued to flatten through most of january , it has recently shown signs of steepening , with the credit spread between the 10-year and two-year treasury yields rising to nearly 0.7 % as of february 7 , 2018. credit spreads on b-rated corporate credit ticked up slightly to 370 basis points in the fourth quarter - well below long-run averages - while the trailing high-yield default rate continued to hover around 2.3 % ( measured globally ) . sustained low interest rates and the availability of financing has continued to support valuation multiples near all-time highs , though rising inflation expectations and the repricing of risk may slow the pace of gains . our overall carry fund portfolio appreciated by 5 % during the fourth quarter and was up 20 % for 2017. in the fourth quarter , our corporate private equity funds appreciated by 8 % ( 32 % for the full year ) , our real asset funds appreciated by 4 % ( 19 % for the full year ) and our global credit carry funds appreciated by 1 % for the quarter ( 11 % for the full year ) . appreciation in investment solutions was 3 % in the fourth quarter and 10 % for the full-year , negatively impacted by the strength of the euro relative to the u.s. dollar as alpinvest funds are primarily denominated in euros , with significant underlying usd-denominated investments . our private carry fund portfolio appreciated by 6 % and our public carry fund portfolio appreciated by 9 % during the fourth quarter , each excluding investment solutions . the continued appreciation across our portfolio was aided by market tailwinds in 2017 as described above . however , with market valuation levels at all-time highs , increasing volatility and the potential for upward movement in interest rates , it will be difficult for the public markets to generate the same level of appreciation in 2018 as observed in 2017 and , accordingly , it will be difficult for our portfolio to do the same as well . story_separator_special_tag we use the term “ realized net performance fees ” to refer to realized performance fees from our funds , net of the portion allocated to our investment professionals , if any , and certain tax expenses associated with carried interest attributable to certain partners and employees , which are reflected as realized performance fee related compensation expense . see “ — non-gaap financial measures ” for the amount of realized and unrealized performance fees recognized each period . see “ — segment analysis ” for the realized and unrealized performance fees by segment and related discussion for each period . fair value measurement . u.s. gaap establishes a hierarchal disclosure framework which ranks the observability of market price inputs used in measuring financial instruments at fair value . the observability of inputs is impacted by a number of factors , including the type of financial instrument , the characteristics specific to the financial instrument and the state of the marketplace , including the existence and transparency of transactions between market participants . financial instruments with readily available quoted prices , or for which fair value can be measured from quoted prices in active markets , will generally have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value . the table below summarizes the valuation of investments and other financial instruments included within our aum , by segment and fair value hierarchy levels , as of december 31 , 2017 ( amounts in millions ) : replace_table_token_8_th investment income , interest , and other income . investment income , interest , and other income represent the unrealized and realized gains and losses on our principal investments , including our investments in carlyle funds that are not consolidated , our equity method investments and other principal investments , as well as any interest and other income . investment income ( loss ) also includes the related amortization of the basis difference between the carrying value of our investment and our share of the underlying net assets of the investee , as well as the compensation expense associated with compensatory arrangements provided by us to employees of our equity method investee , as it relates to our investments in ngp . realized investment income ( loss ) is recorded when we redeem all or a portion of our investment or when we receive or are due cash income , such as dividends or distributions . a realized investment loss is also recorded when an investment is deemed to be worthless . unrealized investment income ( loss ) results from changes in the fair value of the underlying investment , as well as the reversal of previously recognized unrealized gains ( losses ) at the time an investment is realized . interest and other income of consolidated funds . interest and other income of consolidated funds primarily represents the interest earned on clo assets . the consolidated funds are not the same entities in all periods presented . the consolidated funds in future periods may change due to changes in fund terms , formation of new funds , and terminations of funds . 99 revenue of a real estate vie . revenue of a real estate vie consists of revenue generated by urbplan , which primarily is revenue earned for land development services using the completed contract method and investment income earned on urbplan 's investments . under the completed contract method of revenue recognition , revenue is not recognized until the period in which the land development services contract is completed , which can cause volatility from period to period based on which contracts are completed . urbplan was deconsolidated from the partnership 's financial results during 2017 as a result of the partnership disposing of its interests in urbplan in a transaction in which a third party acquired operational control and all of the economic interests in urbplan ( see note 15 to the consolidated financial statements ) . net investment gains of consolidated funds . net investment gains of consolidated funds measures the change in the difference in fair value between the assets and the liabilities of the consolidated funds . a gain ( loss ) indicates that the fair value of the assets of the consolidated funds appreciated more ( less ) , or depreciated less ( more ) , than the fair value of the liabilities of the consolidated funds . a gain or loss is not necessarily indicative of the investment performance of the consolidated funds and does not impact the management or incentive fees received by carlyle for its management of the consolidated funds . the portion of the net investment gains ( losses ) of consolidated funds attributable to the limited partner investors is allocated to non-controlling interests . therefore a gain or loss is not expected to have a material impact on the revenues or profitability of the partnership . moreover , although the assets of the consolidated funds are consolidated onto our balance sheet pursuant to u.s. gaap , ultimately we do not have recourse to such assets and such liabilities are generally non-recourse to us . therefore , a gain or loss from the consolidated funds generally does not impact the assets available to our equity holders . expenses compensation and benefits . compensation includes salaries , bonuses , equity-based compensation , and performance payment arrangements . bonuses are accrued over the service period to which they relate . we recognize as compensation expense the portion of performance fees that are due to our employees , senior carlyle professionals , and operating executives in a manner consistent with how we recognize the performance fee revenue . these amounts are accounted for as compensation expense in conjunction with the related performance fee revenue and , until paid , are recognized as a component of the accrued compensation and benefits liability . compensation in respect of performance fees is paid when the related performance fees

net cash used in investing activities . our investing activities generally reflect cash used for acquisitions , fixed assets and software for internal use , and changes in restricted cash . during the year ended december 31 , 2017 , cash used in investing activities principally reflects purchases of fixed assets . purchases of fixed assets were $ 34.0 million , $ 25.4 million and $ 62.3 million for the years ended december 31 , 2017 , 2016 and 2015 , respectively . net cash used in financing activities . financing activities are a net source of cash in 2017 and 2016 and a net use of cash in 2015. in 2017 , we received net proceeds of $ 387.5 million from the issuance of preferred units . in 2016 , we paid $ 58.9 million to repurchase 3.7 million units under our unit repurchase program . in june 2015 , the partnership received net proceeds from the issuance of 7,000,000 common units of $ 209.9 million . the partnership used these net proceeds to acquire 7,000,000 carlyle holdings partnership units from the other limited partners of the carlyle holdings partnerships . distributions to our common unitholders were $ 118.1 million , $ 140.9 million , and $ 251.0 million for the years ended december 31 , 2017 , 2016 and 2015 , respectively . distributions to the non-controlling interest holders in carlyle holdings were $ 295.6 million , $ 422.6 million , and $ 848.5 million for the years ended december 31 , 2017 , 2016 and 2015 , respectively .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. accordingly , our segment revenues primarily consist of fund management and related advisory fees , performance fees ( consisting of incentive fees and carried interest allocations ) , investment income , including realized and unrealized gains on our investments in our funds and other trading securities , as well as interest and other income . our segment expenses primarily consist of compensation and benefits expenses , including salaries , bonuses , performance payment arrangements , and equity-based compensation excluding awards granted in our initial public offering or in connection with 94 acquisitions and strategic investments , and general and administrative expenses . while our segment expenses include depreciation and interest expense , our segment expenses exclude acquisition-related charges and amortization of intangibles and impairment . refer to note 16 to the consolidated financial statements included in this annual report on form 10-k for more information on the differences between our financial results reported pursuant to u.s. gaap and our financial results for segment reporting purposes . trends affecting our business expectations for global economic growth remained strong through the fourth quarter of 2017 and into early 2018 , with particular optimism surrounding the outlook for growth in the eurozone . our proprietary portfolio of industrial and manufacturing related indicators remained steady at or near six-year highs during the fourth quarter and into early 2018. as 2017 drew to a close , inflation continued to fall short of central bank targets . in the u.s. , the core pce price index ( the federal reserve 's preferred measure of core inflation ) rose by 1.5 % in the twelve months ended december 2017 , unchanged from november and still well below the federal reserve 's 2 % target . our proprietary portfolio data similarly lacked signs of inflationary pressure , a phenomenon we believe is almost entirely driven by weakness in construction activity . during the fourth quarter of 2017 , eurozone core inflation rose more sluggishly than in the third quarter of 2017 , with year-on-year rates of 0.9 % observed in each month of the fourth quarter . on the other hand , u.s. bond market inflation expectations continue to rise , as the 10-year breakeven rate recently reached 2.1 % . the u.s. dollar declined nearly 10 % against global currencies in 2017 , the largest annual decline in more than 10-years . during 2017 , the euro appreciated 12 % against the u.s. dollar . stronger real global growth , relatively low longer-term interest rates , and the passage of tax reform pushed global equity markets to record highs in 2017. the msci world index advanced 20 % in 2017 and 5 % in the fourth quarter alone , while the s & p 500 rose 19 % over the calendar year and 6 % in the fourth quarter of 2017. underlying earnings growth at the companies comprising the s & p 500 has supported the upward movement of the markets . estimated total 2017 earnings growth for the s & p 500 is 13.4 % , the highest annual rate since 2011. as has been the case throughout the year , companies with greater global exposure have been driving this trend . as of mid-december 2017 , s & p 500 companies with a concentration of at least 50 % of sales outside the u.s. experienced earnings growth of approximately 15 % , compared to approximately 7 % for companies with a greater domestic focus . after strong recent performance pushing global market multiples to multi-year highs , during early february 2018 , the markets experienced a heightened level of volatility in connection with a sell-off . the u.s. 10-year treasury yield ended 2017 at around 2.4 % and has risen to more than 2.8 % in the first two weeks of february 2018. while the yield curve continued to flatten through most of january , it has recently shown signs of steepening , with the credit spread between the 10-year and two-year treasury yields rising to nearly 0.7 % as of february 7 , 2018. credit spreads on b-rated corporate credit ticked up slightly to 370 basis points in the fourth quarter - well below long-run averages - while the trailing high-yield default rate continued to hover around 2.3 % ( measured globally ) . sustained low interest rates and the availability of financing has continued to support valuation multiples near all-time highs , though rising inflation expectations and the repricing of risk may slow the pace of gains . our overall carry fund portfolio appreciated by 5 % during the fourth quarter and was up 20 % for 2017. in the fourth quarter , our corporate private equity funds appreciated by 8 % ( 32 % for the full year ) , our real asset funds appreciated by 4 % ( 19 % for the full year ) and our global credit carry funds appreciated by 1 % for the quarter ( 11 % for the full year ) . appreciation in investment solutions was 3 % in the fourth quarter and 10 % for the full-year , negatively impacted by the strength of the euro relative to the u.s. dollar as alpinvest funds are primarily denominated in euros , with significant underlying usd-denominated investments . our private carry fund portfolio appreciated by 6 % and our public carry fund portfolio appreciated by 9 % during the fourth quarter , each excluding investment solutions . the continued appreciation across our portfolio was aided by market tailwinds in 2017 as described above . however , with market valuation levels at all-time highs , increasing volatility and the potential for upward movement in interest rates , it will be difficult for the public markets to generate the same level of appreciation in 2018 as observed in 2017 and , accordingly , it will be difficult for our portfolio to do the same as well . story_separator_special_tag we use the term “ realized net performance fees ” to refer to realized performance fees from our funds , net of the portion allocated to our investment professionals , if any , and certain tax expenses associated with carried interest attributable to certain partners and employees , which are reflected as realized performance fee related compensation expense . see “ — non-gaap financial measures ” for the amount of realized and unrealized performance fees recognized each period . see “ — segment analysis ” for the realized and unrealized performance fees by segment and related discussion for each period . fair value measurement . u.s. gaap establishes a hierarchal disclosure framework which ranks the observability of market price inputs used in measuring financial instruments at fair value . the observability of inputs is impacted by a number of factors , including the type of financial instrument , the characteristics specific to the financial instrument and the state of the marketplace , including the existence and transparency of transactions between market participants . financial instruments with readily available quoted prices , or for which fair value can be measured from quoted prices in active markets , will generally have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value . the table below summarizes the valuation of investments and other financial instruments included within our aum , by segment and fair value hierarchy levels , as of december 31 , 2017 ( amounts in millions ) : replace_table_token_8_th investment income , interest , and other income . investment income , interest , and other income represent the unrealized and realized gains and losses on our principal investments , including our investments in carlyle funds that are not consolidated , our equity method investments and other principal investments , as well as any interest and other income . investment income ( loss ) also includes the related amortization of the basis difference between the carrying value of our investment and our share of the underlying net assets of the investee , as well as the compensation expense associated with compensatory arrangements provided by us to employees of our equity method investee , as it relates to our investments in ngp . realized investment income ( loss ) is recorded when we redeem all or a portion of our investment or when we receive or are due cash income , such as dividends or distributions . a realized investment loss is also recorded when an investment is deemed to be worthless . unrealized investment income ( loss ) results from changes in the fair value of the underlying investment , as well as the reversal of previously recognized unrealized gains ( losses ) at the time an investment is realized . interest and other income of consolidated funds . interest and other income of consolidated funds primarily represents the interest earned on clo assets . the consolidated funds are not the same entities in all periods presented . the consolidated funds in future periods may change due to changes in fund terms , formation of new funds , and terminations of funds . 99 revenue of a real estate vie . revenue of a real estate vie consists of revenue generated by urbplan , which primarily is revenue earned for land development services using the completed contract method and investment income earned on urbplan 's investments . under the completed contract method of revenue recognition , revenue is not recognized until the period in which the land development services contract is completed , which can cause volatility from period to period based on which contracts are completed . urbplan was deconsolidated from the partnership 's financial results during 2017 as a result of the partnership disposing of its interests in urbplan in a transaction in which a third party acquired operational control and all of the economic interests in urbplan ( see note 15 to the consolidated financial statements ) . net investment gains of consolidated funds . net investment gains of consolidated funds measures the change in the difference in fair value between the assets and the liabilities of the consolidated funds . a gain ( loss ) indicates that the fair value of the assets of the consolidated funds appreciated more ( less ) , or depreciated less ( more ) , than the fair value of the liabilities of the consolidated funds . a gain or loss is not necessarily indicative of the investment performance of the consolidated funds and does not impact the management or incentive fees received by carlyle for its management of the consolidated funds . the portion of the net investment gains ( losses ) of consolidated funds attributable to the limited partner investors is allocated to non-controlling interests . therefore a gain or loss is not expected to have a material impact on the revenues or profitability of the partnership . moreover , although the assets of the consolidated funds are consolidated onto our balance sheet pursuant to u.s. gaap , ultimately we do not have recourse to such assets and such liabilities are generally non-recourse to us . therefore , a gain or loss from the consolidated funds generally does not impact the assets available to our equity holders . expenses compensation and benefits . compensation includes salaries , bonuses , equity-based compensation , and performance payment arrangements . bonuses are accrued over the service period to which they relate . we recognize as compensation expense the portion of performance fees that are due to our employees , senior carlyle professionals , and operating executives in a manner consistent with how we recognize the performance fee revenue . these amounts are accounted for as compensation expense in conjunction with the related performance fee revenue and , until paid , are recognized as a component of the accrued compensation and benefits liability . compensation in respect of performance fees is paid when the related performance fees Narrative : net cash used in investing activities . our investing activities generally reflect cash used for acquisitions , fixed assets and software for internal use , and changes in restricted cash . during the year ended december 31 , 2017 , cash used in investing activities principally reflects purchases of fixed assets . purchases of fixed assets were $ 34.0 million , $ 25.4 million and $ 62.3 million for the years ended december 31 , 2017 , 2016 and 2015 , respectively . net cash used in financing activities . financing activities are a net source of cash in 2017 and 2016 and a net use of cash in 2015. in 2017 , we received net proceeds of $ 387.5 million from the issuance of preferred units . in 2016 , we paid $ 58.9 million to repurchase 3.7 million units under our unit repurchase program . in june 2015 , the partnership received net proceeds from the issuance of 7,000,000 common units of $ 209.9 million . the partnership used these net proceeds to acquire 7,000,000 carlyle holdings partnership units from the other limited partners of the carlyle holdings partnerships . distributions to our common unitholders were $ 118.1 million , $ 140.9 million , and $ 251.0 million for the years ended december 31 , 2017 , 2016 and 2015 , respectively . distributions to the non-controlling interest holders in carlyle holdings were $ 295.6 million , $ 422.6 million , and $ 848.5 million for the years ended december 31 , 2017 , 2016 and 2015 , respectively .

additionally , intense competition at the system level can result in an environment in which pricing falls rapidly , thereby further increasing demand for solar energy solutions but constraining the ability for project developers , epc companies , and vertically-integrated solar companies such as first solar to sustain meaningful and consistent profitability . in light of such market realities , we are executing our long term strategic plan , vision 2020 described below , under which we are focusing on our competitive strengths . such strengths include our advanced module and system technologies as well as our differentiated , vertically-integrated business model that enables us to provide utility-scale pv solar energy solutions to key geographic markets with immediate electricity needs . worldwide solar markets continue to develop , in part aided by demand elasticity resulting from declining industry average selling prices , both at the module and system level , which make solar power more affordable to new markets , and we have continued to develop our localized presence and expertise in such markets . we are developing , constructing , or operating multiple solar projects around the world , many of which are the largest or among the largest in their regions . in north america , we continue to execute on our advanced-stage utility-scale project pipeline , which includes the construction of some of the world 's largest pv solar power systems . we expect a substantial portion of our consolidated net sales , operating income , and cash flows through the end of 2016 to be derived from these projects . we continue to advance the development and selling efforts for the other projects included in our advanced-stage utility-scale project pipeline and also continue to develop our early-to-mid stage project pipeline and evaluate acquisitions of projects to continue to add to our advanced-stage utility-scale project pipeline . lower industry module and system pricing , while currently challenging for certain solar manufacturers ( particularly manufacturers with high cost structures ) , is expected to continue to contribute to global market diversification and volume elasticity . over time , declining average selling prices are consistent with the erosion of one of the primary historical constraints to widespread solar market penetration , its affordability . in the near term , however , declining average selling prices could adversely affect our results of operations . if competitors reduce pricing to levels below their costs , bid aggressively low prices for ppas and epc agreements , or are able to operate at negative or minimal operating margins for sustained periods of time , our results of operations could be further adversely affected . we continue to mitigate this uncertainty in part by executing on and building our advanced-stage utility-scale systems pipeline , executing on our module efficiency improvement and bos cost reduction roadmaps , and continuing the development of key geographic markets . we continue to face intense competition from manufacturers of crystalline silicon solar modules and other types of solar modules and pv solar power systems . solar module manufacturers compete with one another in several product performance attributes , including conversion efficiency , energy density , reliability , and selling price per watt , and , with respect to pv solar power systems , net present value , return on equity , and lcoe , meaning the net present value of total life cycle costs of the pv solar power system divided by the quantity of energy which is expected to be produced over the system 's life . we believe we are among the lowest cost pv module manufacturers in the solar industry on a module cost per watt basis , based on publicly available information . this cost competitiveness is reflected in the price at which we sell our modules and fully integrated pv solar power systems and enables our systems to compete favorably . our cost competitiveness is based in large part on our module conversion efficiency , proprietary manufacturing technology ( which enables us to produce a cdte module in less than 2.5 hours using a continuous and highly automated industrial manufacturing process , as opposed to a batch process ) , our scale , and our operational excellence . in addition , our cdte modules use approximately 1-2 % of the amount of the semiconductor material that is used to manufacture traditional crystalline silicon solar modules . the cost of polysilicon is a significant driver of the manufacturing cost of crystalline silicon solar modules , and the timing and rate of change in the cost of silicon feedstock and polysilicon could lead to changes in solar module pricing levels . polysilicon costs have had periods of decline over the past several years , contributing to a decline in our relative manufacturing cost competitiveness over traditional crystalline silicon module manufacturers . given the smaller size ( sometimes referred to as form factor ) of our cdte modules compared to certain types of crystalline silicon modules , we may incur higher labor and bos costs associated with systems using our modules . thus , to compete effectively on an lcoe basis , our modules may need to maintain a certain cost advantage per watt compared to crystalline silicon-based modules with larger form factors . bos costs represent a significant portion of the costs associated with the construction of a typical utility-scale pv solar power system . 47 in terms of energy density , in many climates , our cdte modules provide a significant energy yield advantage over conventional crystalline silicon solar modules of equivalent efficiency rating . for example , in humid climates , our cdte modules provide a superior spectral response , and in hot climates , our cdte modules provide a superior temperature coefficient . as a result , at temperatures above 25°c ( standard test conditions ) , our cdte modules produce more energy than competing conventional crystalline silicon solar modules with an equivalent efficiency rating . story_separator_special_tag replace_table_token_4_th 51 projects with executed ppa not sold/not contracted replace_table_token_5_th ( 1 ) the volume of modules installed in mw dc will be higher than the mw ac size pursuant to a dc-ac ratio typically ranging from 1.2 to 1.3 ; such ratio varies across different projects due to various system design factors ( 2 ) controlling interest in the project sold to southern company in august 2015 ( 3 ) contracted but not specified ( 4 ) ppa contracted partners include cobb electric membership corporation , flint electric membership corporation , and sawnee electric membership corporation ( 5 ) nepco is defined as national electric power company , the country of jordan 's regulatory authority for power generation and distribution and a consortium of investors ( 6 ) uog is defined as utility owned generation ( 7 ) project sold under a development agreement in february 2016 ( 8 ) pg & e 150 mw ac and apple inc. 130 mw ac ( 9 ) tsspdcl is defined as southern power distribution company of telangana state ltd and consists of 110 mw ac of projects ; and apspdcl is defined as andhra pradesh southern power distribution company ltd and consists of 80 mw ac of projects ( 10 ) no ppa – electricity to be sold on an open contract basis ( 11 ) scppa is defined as southern california public power authority ; scppa 20 mw ac and city of pasadena 20 mw ac ( 12 ) electricity expected to be sold under feed-in-tariff structure for ten years , pending acquisition of certain licenses ( 13 ) pg & e 11 mw ac and sce 20 mw ac 52 results of operations during 2015 , we revised our previously issued financial statements from 2011 to 2014 to properly record a liability associated with an uncertain tax position related to income of a foreign subsidiary . additional revisions were made for previously identified errors that were corrected in a period subsequent to the period in which the error originated . all financial information presented herein was revised to reflect the correction of these errors . see note 1 “ first solar and its business – revision of previously issued financial statements ” to our consolidated financial statements for the year ended december 31 , 2015 included in this annual report on form 10-k for additional information . the following table sets forth our consolidated statements of operations as a percentage of net sales for the years ended december 31 , 2015 , 2014 , and 2013 : replace_table_token_6_th segment overview we operate our business in two segments . our components segment involves the design , manufacture , and sale of solar modules which convert sunlight into electricity , and our systems segment includes the development , construction , operation , and maintenance of pv solar power systems , which primarily use our solar modules . see note 23 “ segment and geographical information ” to our consolidated financial statements for the year ended december 31 , 2015 included in this annual report on form 10-k. see also item 7 : “ management 's discussion and analysis of financial condition and results of operations – systems project pipeline ” for a description of the system projects in our advanced-stage project pipeline . product revenue the following table sets forth the total amounts of solar module and solar power system net sales for the years ended december 31 , 2015 , 2014 , and 2013 . for the purpose of the following table , ( i ) solar module revenue is composed of total net sales from the sale of solar modules to third parties , and ( ii ) solar power system revenue is composed of total net sales from the sale of pv solar power systems and related services and solutions including the solar modules installed in the systems we develop and construct along with revenue generated from such systems ( in thousands ) : replace_table_token_7_th 53 solar module revenue to third parties decreased by $ 0.9 million during 2015 compared to 2014 primarily due to a 10 % decrease in the average selling price per watt , partially offset by an 11 % increase in the volume of watts sold . solar power system revenue increased by $ 188.7 million during 2015 compared to 2014 primarily due to higher revenue from module plus transactions . our net sales for 2015 also included the sale of majority interests in the partially constructed desert stateline project and north star project and higher revenue from our silver state south , mccoy , and imperial energy center west projects , which commenced construction in late 2014. these 2015 net sales were offset by lower revenue from the completion , or substantial completion , of our desert sunlight , solar gen 2 , topaz , and campo verde projects in 2014. solar module revenue to third parties decreased by $ 152.6 million during 2014 compared to 2013 primarily as a result of a 26 % decrease in the volume of watts sold and a 19 % decrease in the average selling price per watt . solar power system revenue increased by $ 234.1 million during 2014 compared to 2013 primarily as a result of the number and size of projects under construction between these periods as well as the timing of when all the revenue recognition criteria was met . specifically , the increase was attributable to higher revenue from the partial sale of our solar gen 2 project , the sale of our campo verde and macho springs projects , and the commencement of construction and related revenue recognition on multiple projects in california and our agl nyngan project in australia . these increases were partially offset by decreases in systems business project revenue from our desert sunlight project as it neared substantial completion , our completed first phase of the imperial solar energy center south project and our completed amherstburg ,

cash flows the following table summarizes our cash flow activity for the years ended december 31 , 2015 , 2014 , and 2013 ( in thousands ) : replace_table_token_22_th operating activities the decrease in cash provided by operating activities during 2015 was primarily driven by the increase in project assets and deferred project costs resulting from our financing the construction of certain projects with our working capital and increases in our trade accounts receivable . the decrease in cash provided by operating activities during 2014 was primarily attributable to the timing of cash received from customers for the sale of certain systems projects . investing activities the decrease in cash used in investing activities during 2015 was driven by the receipt of $ 239.0 million from the initial public offering of 8point3 energy partners lp , changes in our restricted cash balance , and lower purchases of property , plant and equipment . the effects of these items were partially offset by net purchases of marketable securities of $ 203.1 million during 2015 compared to $ 77.5 million during 2014. the decrease in cash used in investing activities during 2014 was primarily due to changes in our restricted cash balance , lower proceeds from sales of property , plant and equipment , and certain investments in affiliate notes receivable . the effects of these items were partially offset by net purchases of marketable securities of $ 77.5 million during 2014 compared to $ 341.0 million during 2013 . 63 financing activities cash provided by financing activities during 2015 resulted primarily from $ 146.0 million of proceeds from borrowings under our project construction credit facilities in chile , japan , and india and $ 44.7 million of proceeds from the leaseback financing associated with the maryland solar project , partially offset by $ 47.1 million of payments on long-term debt . cash provided by financing activities during 2014 resulted primarily from $ 65.6 million of proceeds from borrowings under our project construction credit facilities in chile , partially offset by $ 60.1 million of payments on long-term debt .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. additionally , intense competition at the system level can result in an environment in which pricing falls rapidly , thereby further increasing demand for solar energy solutions but constraining the ability for project developers , epc companies , and vertically-integrated solar companies such as first solar to sustain meaningful and consistent profitability . in light of such market realities , we are executing our long term strategic plan , vision 2020 described below , under which we are focusing on our competitive strengths . such strengths include our advanced module and system technologies as well as our differentiated , vertically-integrated business model that enables us to provide utility-scale pv solar energy solutions to key geographic markets with immediate electricity needs . worldwide solar markets continue to develop , in part aided by demand elasticity resulting from declining industry average selling prices , both at the module and system level , which make solar power more affordable to new markets , and we have continued to develop our localized presence and expertise in such markets . we are developing , constructing , or operating multiple solar projects around the world , many of which are the largest or among the largest in their regions . in north america , we continue to execute on our advanced-stage utility-scale project pipeline , which includes the construction of some of the world 's largest pv solar power systems . we expect a substantial portion of our consolidated net sales , operating income , and cash flows through the end of 2016 to be derived from these projects . we continue to advance the development and selling efforts for the other projects included in our advanced-stage utility-scale project pipeline and also continue to develop our early-to-mid stage project pipeline and evaluate acquisitions of projects to continue to add to our advanced-stage utility-scale project pipeline . lower industry module and system pricing , while currently challenging for certain solar manufacturers ( particularly manufacturers with high cost structures ) , is expected to continue to contribute to global market diversification and volume elasticity . over time , declining average selling prices are consistent with the erosion of one of the primary historical constraints to widespread solar market penetration , its affordability . in the near term , however , declining average selling prices could adversely affect our results of operations . if competitors reduce pricing to levels below their costs , bid aggressively low prices for ppas and epc agreements , or are able to operate at negative or minimal operating margins for sustained periods of time , our results of operations could be further adversely affected . we continue to mitigate this uncertainty in part by executing on and building our advanced-stage utility-scale systems pipeline , executing on our module efficiency improvement and bos cost reduction roadmaps , and continuing the development of key geographic markets . we continue to face intense competition from manufacturers of crystalline silicon solar modules and other types of solar modules and pv solar power systems . solar module manufacturers compete with one another in several product performance attributes , including conversion efficiency , energy density , reliability , and selling price per watt , and , with respect to pv solar power systems , net present value , return on equity , and lcoe , meaning the net present value of total life cycle costs of the pv solar power system divided by the quantity of energy which is expected to be produced over the system 's life . we believe we are among the lowest cost pv module manufacturers in the solar industry on a module cost per watt basis , based on publicly available information . this cost competitiveness is reflected in the price at which we sell our modules and fully integrated pv solar power systems and enables our systems to compete favorably . our cost competitiveness is based in large part on our module conversion efficiency , proprietary manufacturing technology ( which enables us to produce a cdte module in less than 2.5 hours using a continuous and highly automated industrial manufacturing process , as opposed to a batch process ) , our scale , and our operational excellence . in addition , our cdte modules use approximately 1-2 % of the amount of the semiconductor material that is used to manufacture traditional crystalline silicon solar modules . the cost of polysilicon is a significant driver of the manufacturing cost of crystalline silicon solar modules , and the timing and rate of change in the cost of silicon feedstock and polysilicon could lead to changes in solar module pricing levels . polysilicon costs have had periods of decline over the past several years , contributing to a decline in our relative manufacturing cost competitiveness over traditional crystalline silicon module manufacturers . given the smaller size ( sometimes referred to as form factor ) of our cdte modules compared to certain types of crystalline silicon modules , we may incur higher labor and bos costs associated with systems using our modules . thus , to compete effectively on an lcoe basis , our modules may need to maintain a certain cost advantage per watt compared to crystalline silicon-based modules with larger form factors . bos costs represent a significant portion of the costs associated with the construction of a typical utility-scale pv solar power system . 47 in terms of energy density , in many climates , our cdte modules provide a significant energy yield advantage over conventional crystalline silicon solar modules of equivalent efficiency rating . for example , in humid climates , our cdte modules provide a superior spectral response , and in hot climates , our cdte modules provide a superior temperature coefficient . as a result , at temperatures above 25°c ( standard test conditions ) , our cdte modules produce more energy than competing conventional crystalline silicon solar modules with an equivalent efficiency rating . story_separator_special_tag replace_table_token_4_th 51 projects with executed ppa not sold/not contracted replace_table_token_5_th ( 1 ) the volume of modules installed in mw dc will be higher than the mw ac size pursuant to a dc-ac ratio typically ranging from 1.2 to 1.3 ; such ratio varies across different projects due to various system design factors ( 2 ) controlling interest in the project sold to southern company in august 2015 ( 3 ) contracted but not specified ( 4 ) ppa contracted partners include cobb electric membership corporation , flint electric membership corporation , and sawnee electric membership corporation ( 5 ) nepco is defined as national electric power company , the country of jordan 's regulatory authority for power generation and distribution and a consortium of investors ( 6 ) uog is defined as utility owned generation ( 7 ) project sold under a development agreement in february 2016 ( 8 ) pg & e 150 mw ac and apple inc. 130 mw ac ( 9 ) tsspdcl is defined as southern power distribution company of telangana state ltd and consists of 110 mw ac of projects ; and apspdcl is defined as andhra pradesh southern power distribution company ltd and consists of 80 mw ac of projects ( 10 ) no ppa – electricity to be sold on an open contract basis ( 11 ) scppa is defined as southern california public power authority ; scppa 20 mw ac and city of pasadena 20 mw ac ( 12 ) electricity expected to be sold under feed-in-tariff structure for ten years , pending acquisition of certain licenses ( 13 ) pg & e 11 mw ac and sce 20 mw ac 52 results of operations during 2015 , we revised our previously issued financial statements from 2011 to 2014 to properly record a liability associated with an uncertain tax position related to income of a foreign subsidiary . additional revisions were made for previously identified errors that were corrected in a period subsequent to the period in which the error originated . all financial information presented herein was revised to reflect the correction of these errors . see note 1 “ first solar and its business – revision of previously issued financial statements ” to our consolidated financial statements for the year ended december 31 , 2015 included in this annual report on form 10-k for additional information . the following table sets forth our consolidated statements of operations as a percentage of net sales for the years ended december 31 , 2015 , 2014 , and 2013 : replace_table_token_6_th segment overview we operate our business in two segments . our components segment involves the design , manufacture , and sale of solar modules which convert sunlight into electricity , and our systems segment includes the development , construction , operation , and maintenance of pv solar power systems , which primarily use our solar modules . see note 23 “ segment and geographical information ” to our consolidated financial statements for the year ended december 31 , 2015 included in this annual report on form 10-k. see also item 7 : “ management 's discussion and analysis of financial condition and results of operations – systems project pipeline ” for a description of the system projects in our advanced-stage project pipeline . product revenue the following table sets forth the total amounts of solar module and solar power system net sales for the years ended december 31 , 2015 , 2014 , and 2013 . for the purpose of the following table , ( i ) solar module revenue is composed of total net sales from the sale of solar modules to third parties , and ( ii ) solar power system revenue is composed of total net sales from the sale of pv solar power systems and related services and solutions including the solar modules installed in the systems we develop and construct along with revenue generated from such systems ( in thousands ) : replace_table_token_7_th 53 solar module revenue to third parties decreased by $ 0.9 million during 2015 compared to 2014 primarily due to a 10 % decrease in the average selling price per watt , partially offset by an 11 % increase in the volume of watts sold . solar power system revenue increased by $ 188.7 million during 2015 compared to 2014 primarily due to higher revenue from module plus transactions . our net sales for 2015 also included the sale of majority interests in the partially constructed desert stateline project and north star project and higher revenue from our silver state south , mccoy , and imperial energy center west projects , which commenced construction in late 2014. these 2015 net sales were offset by lower revenue from the completion , or substantial completion , of our desert sunlight , solar gen 2 , topaz , and campo verde projects in 2014. solar module revenue to third parties decreased by $ 152.6 million during 2014 compared to 2013 primarily as a result of a 26 % decrease in the volume of watts sold and a 19 % decrease in the average selling price per watt . solar power system revenue increased by $ 234.1 million during 2014 compared to 2013 primarily as a result of the number and size of projects under construction between these periods as well as the timing of when all the revenue recognition criteria was met . specifically , the increase was attributable to higher revenue from the partial sale of our solar gen 2 project , the sale of our campo verde and macho springs projects , and the commencement of construction and related revenue recognition on multiple projects in california and our agl nyngan project in australia . these increases were partially offset by decreases in systems business project revenue from our desert sunlight project as it neared substantial completion , our completed first phase of the imperial solar energy center south project and our completed amherstburg , Narrative : cash flows the following table summarizes our cash flow activity for the years ended december 31 , 2015 , 2014 , and 2013 ( in thousands ) : replace_table_token_22_th operating activities the decrease in cash provided by operating activities during 2015 was primarily driven by the increase in project assets and deferred project costs resulting from our financing the construction of certain projects with our working capital and increases in our trade accounts receivable . the decrease in cash provided by operating activities during 2014 was primarily attributable to the timing of cash received from customers for the sale of certain systems projects . investing activities the decrease in cash used in investing activities during 2015 was driven by the receipt of $ 239.0 million from the initial public offering of 8point3 energy partners lp , changes in our restricted cash balance , and lower purchases of property , plant and equipment . the effects of these items were partially offset by net purchases of marketable securities of $ 203.1 million during 2015 compared to $ 77.5 million during 2014. the decrease in cash used in investing activities during 2014 was primarily due to changes in our restricted cash balance , lower proceeds from sales of property , plant and equipment , and certain investments in affiliate notes receivable . the effects of these items were partially offset by net purchases of marketable securities of $ 77.5 million during 2014 compared to $ 341.0 million during 2013 . 63 financing activities cash provided by financing activities during 2015 resulted primarily from $ 146.0 million of proceeds from borrowings under our project construction credit facilities in chile , japan , and india and $ 44.7 million of proceeds from the leaseback financing associated with the maryland solar project , partially offset by $ 47.1 million of payments on long-term debt . cash provided by financing activities during 2014 resulted primarily from $ 65.6 million of proceeds from borrowings under our project construction credit facilities in chile , partially offset by $ 60.1 million of payments on long-term debt .

to that end , during fiscal year 2017 , we implemented restructuring efforts including the consolidation of facilities , implementation of a simplified organizational structure and a reduction of marketing and other external expenses . in addition , we reduced headcount by over 400 employees , totaling over 20 % of our workforce . we reduced our full year expenses by over $ 30 million by the end of fiscal year 2017. on march 1 , 2017 , we acquired datarpm for an aggregate sum of $ 30.0 million . datarpm is a leader in cognitive predictive maintenance for the industrial iot ( iiot ) market . this acquisition is a key part of the company 's strategy to provide the best platform to build and deliver cognitive-first applications . on june 1 , 2017 , we acquired kinvey for an aggregate sum of $ 49.2 million . kinvey is the leading backend-as-a-service ( baas ) provider and allows developers to set up , use , and operate a cloud backend for any native , hybrid , web , or iot app built using any development tools . this acquisition , in combination with our existing technologies , enables us to offer the premier platform for building and delivering cognitive business applications . we derive a significant portion of our revenue from international operations , which are primarily conducted in foreign currencies . as a result , changes in the value of these foreign currencies relative to the u.s. dollar have significantly impacted our results of operations and may impact our future results of operations . for example , in fiscal years 2015 and 2016 , the value of the u.s. dollar strengthened in comparison to certain foreign currencies , including in europe , brazil and australia . since approximately one-third of our revenue is denominated in foreign currency , our revenue results during those periods were negatively impacted . the impact of foreign exchange did not result in a material impact on revenue during fiscal year 2017. we expect that future fluctuations in foreign currency exchange rates will impact our results . 20 in september 2017 , we announced a new capital allocation strategy pursuant to which we are targeting to return approximately 50 % of our annual cash flows from operations to stockholders in the form of share repurchases and 25-30 % through dividends . to that end , our board of directors increased our total share repurchase authorization to $ 250.0 million . in fiscal year 2017 , we repurchased and retired 2.2 million shares of our common stock for $ 73.9 million . as of november 30 , 2017 , there is $ 220.0 million remaining under this current authorization . we expect to repurchase $ 120.0 million of shares of our common stock in fiscal year 2018. however , the timing and amount of any shares repurchased will be determined by management based on its evaluation of market conditions and other factors , and we may choose to suspend , expand or discontinue the repurchase program at any time . on september 6 , 2017 , our board of directors approved a 12 % increase in our quarterly cash dividend to $ 0.14 per share of common stock . we began paying quarterly cash dividends of $ 0.125 per share of common stock to progress shareholders in december 2016. we expect to continue paying quarterly cash dividends in subsequent quarters consistent with our capital allocation strategy . however , we may terminate or modify this program at any time without notice . on january 5 , 2018 , our board of directors declared a quarterly dividend of $ 0.14 per share of common stock that will be paid on march 15 , 2018 to shareholders of record as of the close of business on march 1 , 2018. we expect to continue to evaluate possible acquisitions and other strategic transactions designed to expand our business and or add complementary products and technologies to our existing product sets . as a result , our expected uses of cash could change , our cash position could be reduced and we may incur additional debt obligations to the extent we complete additional acquisitions . however , we believe that existing cash balances , together with funds generated from operations and amounts available under our credit facility , will be sufficient to finance our operations and meet our foreseeable cash requirements , including quarterly cash dividends and stock repurchases to progress shareholders , through at least the next twelve months . on december 22 , 2017 , the tax cuts and jobs act ( the `` new tax legislation `` ) was signed into law . the new tax legislation had no impact on the company 's operating results , cash flows and financial condition in the fiscal year ended november 30 , 2017. the new tax legislation will impact the company 's operating results , cash flows , and financial condition beginning in the fiscal year ended november 30 , 2018 and the company is currently evaluating the extent of the impact . the new tax legislation includes a number of provisions , including the reduction of the u.s. corporate tax rate from 35 % to 21 % , effective january 1 , 2018. the new tax legislation also includes provisions that may partially offset the benefit of such rate reduction , including the repeal of the deduction for domestic production activities . as a result of the new tax legislation , we expect to realize a one-time tax benefit or expense for the remeasurement of deferred tax assets and liabilities . the effect of the international provisions of the new tax legislation , which generally establish a territorial-style system for taxing foreign-source income of domestic multinational corporations , are still being analyzed . story_separator_special_tag during the preparation of our condensed consolidated financial statements for the three months ended may 31 , 2016 , we identified an error in our prior year income tax provision whereby income tax expense was overstated for the year ended november 30 , 2015 by $ 2.7 million related to our tax treatment of an intercompany gain . we determined that the error is not material to the prior year financial statements . we also concluded that recording an out-of-period correction would not be material and corrected this error by recording an out-of-period $ 2.7 million tax benefit in our interim financial statements for the period ended may 31 , 2016. net income ( loss ) fiscal year ended ( in thousands ) november 30 , 2017 november 30 , 2016 percentage change net income ( loss ) $ 37,417 $ ( 55,726 ) 167 % as a percentage of total revenue 9 % ( 14 ) % 28 fiscal 2016 compared to fiscal 2015 revenue fiscal year ended percentage change ( in thousands ) november 30 , 2016 november 30 , 2015 as reported constant currency revenue $ 405,341 $ 377,554 7 % 9 % total revenue increased $ 27.8 million , or 7 % , in fiscal year 2016 as compared to fiscal year 2015. revenue would have increased by 9 % if exchange rates had been constant in fiscal year 2016 as compared to exchange rates in fiscal year 2015. the increase in revenue is primarily due to the impact of the telerik acquisition during the first quarter of fiscal year 2015. as a result of acquisition accounting , the acquired deferred revenue balance was significantly reduced to reflect its fair value as of the acquisition date . therefore , the reduction of the acquisition date deferred revenue had a negative impact on revenue in fiscal year 2015. however , in fiscal year 2016 we recognized revenue related to the full value of telerik deferred revenue that was generated during fiscal years 2015 and 2016. the increase in revenue in fiscal year 2016 was also the result of an increase in license and maintenance and services revenue as further described below . changes in prices from fiscal year 2015 to 2016 did not have a significant impact on our revenue . license revenue replace_table_token_12_th software license revenue increased $ 4.6 million , or 4 % , in fiscal year 2016 as compared to fiscal year 2015. software license revenue would have increased by 5 % if exchange rates had been constant in fiscal year 2016 as compared to exchange rates in effect in fiscal year 2015. the increase in license revenue is primarily due to the impact of the telerik acquisition during the first quarter of fiscal year 2015 as described above . the increase in license revenue was also due to an increase in data connectivity and integration license sales , partially offset by decreases in sales to openedge customers and in corticon license sales . maintenance and services revenue replace_table_token_13_th maintenance and services revenue increased $ 23.2 million in fiscal year 2016 as compared to fiscal year 2015. both maintenance revenue and professional services revenue increased 9 % compared to the prior year . the increase in maintenance revenue is primarily due to the impact of the telerik acquisition during the first quarter of fiscal year 2015 as described above . the increase in services revenue in fiscal year 2016 was also due to higher software-as-a-service ( saas ) revenue generated by our application development and deployment segment compared to the prior year . 29 revenue by region replace_table_token_14_th total revenue generated in north america increased $ 21.6 million , and total revenue generated outside north america increased $ 6.2 million , in fiscal year 2016 as compared to fiscal year 2015. the increases in north america and emea were primarily due to the impact of the telerik acquisition during the first quarter of fiscal year 2015 as described above . the increase in latin america is primarily due to a multi-million dollar openedge direct license transaction that was completed in the fourth quarter of fiscal 2016. the decrease in asia pacific is due to several large openedge license transactions that occurred in the third fiscal quarter of 2015. total revenue generated in markets outside north america represented 43 % of total revenue in fiscal year 2016 compared to 45 % of total revenue in fiscal year 2015. total revenue generated in markets outside north america would have represented 44 % of total revenue if exchange rates had been constant in fiscal year 2016 as compared to the exchange rates in effect in fiscal year 2015. revenue by segment replace_table_token_15_th revenue in the openedge segment decreased $ 19.7 million , or 7 % , in fiscal year 2016 as compared to fiscal year 2015 , primarily due to lower license sales to both our isv partners and direct enterprise users and a large multi-year distribution agreement in 2015. revenue in the openedge segment would have decreased by 5 % if exchange rates had been constant in fiscal year 2016 as compared to exchange rates in fiscal year 2015. data connectivity and integration revenue increased $ 10.1 million , or 27 % , in fiscal year 2016 as compared to fiscal year 2015 , primarily in north america , due to higher license revenue resulting from renewals and expansions of distribution agreements with large oem customers . application development and deployment revenue increased $ 37.4 million , or 86 % , year over year as a result of the impact of the telerik acquisition during the first quarter of fiscal year 2015 as described above . 30 cost of software licenses replace_table_token_16_th cost of software licenses consists primarily of costs of royalties , electronic software distribution costs , duplication and packaging . cost of software licenses decreased $ 0.5 million , or 9 % , in fiscal year 2016 as compared to fiscal year 2015 ,

liquidity and capital resources cash , cash equivalents and short-term investments replace_table_token_21_th the decrease in cash , cash equivalents and short-term investments of $ 66.1 million from the end of fiscal year 2016 was due to payments for acquisitions of $ 77.2 million , repurchases of common stock of $ 73.9 million , dividend payments of $ 24.1 million , payments of debt obligations in the amount of $ 11.3 million , equity grant withholding payments of $ 3.8 million , and payments of capital expenditures of $ 3.4 million . these cash outflows were partially offset by cash inflows from operations of $ 105.7 million , the effect of exchange rates on cash of $ 11.8 million , and $ 10.0 million in cash received from the issuance of common stock . except as described below , there are no limitations on our ability to access our cash , cash equivalents and short-term investments . cash , cash equivalents and short-term investments held by our foreign subsidiaries was $ 36.5 million and $ 26.8 million at november 30 , 2017 and 2016 , respectively . foreign cash includes unremitted foreign earnings , which are invested indefinitely outside of the u.s. as such , it is not available to fund our domestic operations . if we were to repatriate these earnings , they would be subject to taxation in the u.s. , but would be offset by foreign tax credits . we do not believe this has a material adverse impact on our liquidity . share repurchases in fiscal year 2015 , we repurchased and retired 1.3 million shares of our common stock for $ 32.9

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. to that end , during fiscal year 2017 , we implemented restructuring efforts including the consolidation of facilities , implementation of a simplified organizational structure and a reduction of marketing and other external expenses . in addition , we reduced headcount by over 400 employees , totaling over 20 % of our workforce . we reduced our full year expenses by over $ 30 million by the end of fiscal year 2017. on march 1 , 2017 , we acquired datarpm for an aggregate sum of $ 30.0 million . datarpm is a leader in cognitive predictive maintenance for the industrial iot ( iiot ) market . this acquisition is a key part of the company 's strategy to provide the best platform to build and deliver cognitive-first applications . on june 1 , 2017 , we acquired kinvey for an aggregate sum of $ 49.2 million . kinvey is the leading backend-as-a-service ( baas ) provider and allows developers to set up , use , and operate a cloud backend for any native , hybrid , web , or iot app built using any development tools . this acquisition , in combination with our existing technologies , enables us to offer the premier platform for building and delivering cognitive business applications . we derive a significant portion of our revenue from international operations , which are primarily conducted in foreign currencies . as a result , changes in the value of these foreign currencies relative to the u.s. dollar have significantly impacted our results of operations and may impact our future results of operations . for example , in fiscal years 2015 and 2016 , the value of the u.s. dollar strengthened in comparison to certain foreign currencies , including in europe , brazil and australia . since approximately one-third of our revenue is denominated in foreign currency , our revenue results during those periods were negatively impacted . the impact of foreign exchange did not result in a material impact on revenue during fiscal year 2017. we expect that future fluctuations in foreign currency exchange rates will impact our results . 20 in september 2017 , we announced a new capital allocation strategy pursuant to which we are targeting to return approximately 50 % of our annual cash flows from operations to stockholders in the form of share repurchases and 25-30 % through dividends . to that end , our board of directors increased our total share repurchase authorization to $ 250.0 million . in fiscal year 2017 , we repurchased and retired 2.2 million shares of our common stock for $ 73.9 million . as of november 30 , 2017 , there is $ 220.0 million remaining under this current authorization . we expect to repurchase $ 120.0 million of shares of our common stock in fiscal year 2018. however , the timing and amount of any shares repurchased will be determined by management based on its evaluation of market conditions and other factors , and we may choose to suspend , expand or discontinue the repurchase program at any time . on september 6 , 2017 , our board of directors approved a 12 % increase in our quarterly cash dividend to $ 0.14 per share of common stock . we began paying quarterly cash dividends of $ 0.125 per share of common stock to progress shareholders in december 2016. we expect to continue paying quarterly cash dividends in subsequent quarters consistent with our capital allocation strategy . however , we may terminate or modify this program at any time without notice . on january 5 , 2018 , our board of directors declared a quarterly dividend of $ 0.14 per share of common stock that will be paid on march 15 , 2018 to shareholders of record as of the close of business on march 1 , 2018. we expect to continue to evaluate possible acquisitions and other strategic transactions designed to expand our business and or add complementary products and technologies to our existing product sets . as a result , our expected uses of cash could change , our cash position could be reduced and we may incur additional debt obligations to the extent we complete additional acquisitions . however , we believe that existing cash balances , together with funds generated from operations and amounts available under our credit facility , will be sufficient to finance our operations and meet our foreseeable cash requirements , including quarterly cash dividends and stock repurchases to progress shareholders , through at least the next twelve months . on december 22 , 2017 , the tax cuts and jobs act ( the `` new tax legislation `` ) was signed into law . the new tax legislation had no impact on the company 's operating results , cash flows and financial condition in the fiscal year ended november 30 , 2017. the new tax legislation will impact the company 's operating results , cash flows , and financial condition beginning in the fiscal year ended november 30 , 2018 and the company is currently evaluating the extent of the impact . the new tax legislation includes a number of provisions , including the reduction of the u.s. corporate tax rate from 35 % to 21 % , effective january 1 , 2018. the new tax legislation also includes provisions that may partially offset the benefit of such rate reduction , including the repeal of the deduction for domestic production activities . as a result of the new tax legislation , we expect to realize a one-time tax benefit or expense for the remeasurement of deferred tax assets and liabilities . the effect of the international provisions of the new tax legislation , which generally establish a territorial-style system for taxing foreign-source income of domestic multinational corporations , are still being analyzed . story_separator_special_tag during the preparation of our condensed consolidated financial statements for the three months ended may 31 , 2016 , we identified an error in our prior year income tax provision whereby income tax expense was overstated for the year ended november 30 , 2015 by $ 2.7 million related to our tax treatment of an intercompany gain . we determined that the error is not material to the prior year financial statements . we also concluded that recording an out-of-period correction would not be material and corrected this error by recording an out-of-period $ 2.7 million tax benefit in our interim financial statements for the period ended may 31 , 2016. net income ( loss ) fiscal year ended ( in thousands ) november 30 , 2017 november 30 , 2016 percentage change net income ( loss ) $ 37,417 $ ( 55,726 ) 167 % as a percentage of total revenue 9 % ( 14 ) % 28 fiscal 2016 compared to fiscal 2015 revenue fiscal year ended percentage change ( in thousands ) november 30 , 2016 november 30 , 2015 as reported constant currency revenue $ 405,341 $ 377,554 7 % 9 % total revenue increased $ 27.8 million , or 7 % , in fiscal year 2016 as compared to fiscal year 2015. revenue would have increased by 9 % if exchange rates had been constant in fiscal year 2016 as compared to exchange rates in fiscal year 2015. the increase in revenue is primarily due to the impact of the telerik acquisition during the first quarter of fiscal year 2015. as a result of acquisition accounting , the acquired deferred revenue balance was significantly reduced to reflect its fair value as of the acquisition date . therefore , the reduction of the acquisition date deferred revenue had a negative impact on revenue in fiscal year 2015. however , in fiscal year 2016 we recognized revenue related to the full value of telerik deferred revenue that was generated during fiscal years 2015 and 2016. the increase in revenue in fiscal year 2016 was also the result of an increase in license and maintenance and services revenue as further described below . changes in prices from fiscal year 2015 to 2016 did not have a significant impact on our revenue . license revenue replace_table_token_12_th software license revenue increased $ 4.6 million , or 4 % , in fiscal year 2016 as compared to fiscal year 2015. software license revenue would have increased by 5 % if exchange rates had been constant in fiscal year 2016 as compared to exchange rates in effect in fiscal year 2015. the increase in license revenue is primarily due to the impact of the telerik acquisition during the first quarter of fiscal year 2015 as described above . the increase in license revenue was also due to an increase in data connectivity and integration license sales , partially offset by decreases in sales to openedge customers and in corticon license sales . maintenance and services revenue replace_table_token_13_th maintenance and services revenue increased $ 23.2 million in fiscal year 2016 as compared to fiscal year 2015. both maintenance revenue and professional services revenue increased 9 % compared to the prior year . the increase in maintenance revenue is primarily due to the impact of the telerik acquisition during the first quarter of fiscal year 2015 as described above . the increase in services revenue in fiscal year 2016 was also due to higher software-as-a-service ( saas ) revenue generated by our application development and deployment segment compared to the prior year . 29 revenue by region replace_table_token_14_th total revenue generated in north america increased $ 21.6 million , and total revenue generated outside north america increased $ 6.2 million , in fiscal year 2016 as compared to fiscal year 2015. the increases in north america and emea were primarily due to the impact of the telerik acquisition during the first quarter of fiscal year 2015 as described above . the increase in latin america is primarily due to a multi-million dollar openedge direct license transaction that was completed in the fourth quarter of fiscal 2016. the decrease in asia pacific is due to several large openedge license transactions that occurred in the third fiscal quarter of 2015. total revenue generated in markets outside north america represented 43 % of total revenue in fiscal year 2016 compared to 45 % of total revenue in fiscal year 2015. total revenue generated in markets outside north america would have represented 44 % of total revenue if exchange rates had been constant in fiscal year 2016 as compared to the exchange rates in effect in fiscal year 2015. revenue by segment replace_table_token_15_th revenue in the openedge segment decreased $ 19.7 million , or 7 % , in fiscal year 2016 as compared to fiscal year 2015 , primarily due to lower license sales to both our isv partners and direct enterprise users and a large multi-year distribution agreement in 2015. revenue in the openedge segment would have decreased by 5 % if exchange rates had been constant in fiscal year 2016 as compared to exchange rates in fiscal year 2015. data connectivity and integration revenue increased $ 10.1 million , or 27 % , in fiscal year 2016 as compared to fiscal year 2015 , primarily in north america , due to higher license revenue resulting from renewals and expansions of distribution agreements with large oem customers . application development and deployment revenue increased $ 37.4 million , or 86 % , year over year as a result of the impact of the telerik acquisition during the first quarter of fiscal year 2015 as described above . 30 cost of software licenses replace_table_token_16_th cost of software licenses consists primarily of costs of royalties , electronic software distribution costs , duplication and packaging . cost of software licenses decreased $ 0.5 million , or 9 % , in fiscal year 2016 as compared to fiscal year 2015 , Narrative : liquidity and capital resources cash , cash equivalents and short-term investments replace_table_token_21_th the decrease in cash , cash equivalents and short-term investments of $ 66.1 million from the end of fiscal year 2016 was due to payments for acquisitions of $ 77.2 million , repurchases of common stock of $ 73.9 million , dividend payments of $ 24.1 million , payments of debt obligations in the amount of $ 11.3 million , equity grant withholding payments of $ 3.8 million , and payments of capital expenditures of $ 3.4 million . these cash outflows were partially offset by cash inflows from operations of $ 105.7 million , the effect of exchange rates on cash of $ 11.8 million , and $ 10.0 million in cash received from the issuance of common stock . except as described below , there are no limitations on our ability to access our cash , cash equivalents and short-term investments . cash , cash equivalents and short-term investments held by our foreign subsidiaries was $ 36.5 million and $ 26.8 million at november 30 , 2017 and 2016 , respectively . foreign cash includes unremitted foreign earnings , which are invested indefinitely outside of the u.s. as such , it is not available to fund our domestic operations . if we were to repatriate these earnings , they would be subject to taxation in the u.s. , but would be offset by foreign tax credits . we do not believe this has a material adverse impact on our liquidity . share repurchases in fiscal year 2015 , we repurchased and retired 1.3 million shares of our common stock for $ 32.9

through tot group , the company generates revenues from transaction fees , service fees , percentage of the dollar amount of each transaction and other fees associated with processing of cashless transactions at the points of sale . the company serves merchants primarily in the retail , restaurant , supermarket , petroleum and hospitality sectors . in addition , tot group ( through its subsidiary ooo tot money ( “ tot money ” ) ) operates the company 's provider of carrier-integrated mobile payments solutions . tot money 's relationships with mobile operators give the company substantial geographic coverage , a strong capacity for innovation in mobile payments and messaging , and the ability to offer customers in-app , p-sms and online and carrier billing solutions in over 49 countries . during the third quarter of 2012 , our subsidiary , tot money , launched operations as a provider of carrier-integrated mobile payments solutions in russia . since then , tot money has continued seeking to expand its carrier-integrated mobile payments business primarily in the commonwealth of independent states ( cis ) countries ( comprised of participating states of the former soviet union ) and other emerging markets . during the second half of 2012 , tot money entered into contracts with the three largest mobile phone operators in russia , mobile telesystems ojsc , megafon ojsc and ojsc vimpelcom , to facilitate payments using sms and mms for their mobile phone subscribers in russia . on april 16 , 2013 , certain subsidiaries of tot group acquired substantially all of the business assets of unified payments , llc , a delaware limited liability company . unified payments provides comprehensive turnkey , payment-processing solutions to small and medium size business owners ( merchants ) and independent sales organizations across the united states . for additional information , see note 4 to the accompanying notes to consolidated financial statements . on june 24 , 2013 , tot group , through its newly formed subsidiary aptito , llc ( “ aptito ” ) acquired substantially all of the business assets of aptito.com , inc. , a new york corporation , a new generation of smart , customer engaged , patent-pending payments platform , mobile point of sale ( “ mpos ” ) , mobile commerce application and self-ordering apple® ipad®-based kiosk . see note 4 for additional information regarding this acquisition . 32 discontinuance of entertainment business on september 25 , 2013 , we entered into a contribution agreement ( the divestiture contribution agreement ) with t1t lab , llc , a florida limited liability company ( t1t lab ) , and t1t group , llc , a delaware limited liability company ( t1t group ) , pursuant to which , on september 25 , 2013 , we contributed to t1t lab all of our membership and participation interests in our subsidiaries openfilm , llc , motorsport , llc , splinex , llc , legalguru , llc and music 1 llc ( a/k/a ooo music1 ) ( collectively , the disposed subsidiaries ) . the disposed subsidiaries constitute all of the company 's interests in online media businesses and operations ( referred to herein collectively as the company 's `` entertainment assets `` ) . immediately following the transactions effectuated pursuant to the divestiture contribution agreement , the company indirectly owned a minority interest in the disposed subsidiaries through its 10 % membership interest in t1t lab and the other 90 % membership interest in t1t lab is owned by t1t group ( which is indirectly wholly-owned by mike zoi , a director and majority stockholder of the company ) . the company disposed its entertainment assets in order to focus its business operations on mobile payments , transactional services and related technologies and to reduce the significant expenses associated with developing and maintaining the entertainment assets . during the first quarter of 2014 , company further reduced its liabilities by divesting its remaining 10 % ownership interest in t1t lab , llc in exchange for termination of its obligation to commit funding of t1t lab , llc associated with its equity ownership . for additional information regarding the divestiture of the company 's entertainment assets , see note 5 of the accompanying notes to consolidated financial statements . since our inception , we have incurred significant operating losses ( for additional information , see “ liquidity and capital resources ” below ) . if we fail to maintain our relationships with merchants , mobile phone providers , content providers , lenders and other business partners , it could harm our revenues and materially adversely affect our financial condition and results of operations . we face all of the risks inherent in a new business , including the need for significant additional capital , management 's potential underestimation of initial and ongoing costs , and potential delays and other problems in connection with developing our technologies and operations . critical accounting policies and estimates our significant accounting policies are described more fully in note 1 to the accompanying consolidated financial statements . the preparation of financial statements in conformity with accounting principles generally accepted in the united states requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements , as well as the reported amounts of revenues and expenses during the reporting period . actual results could differ materially from those estimates . in applying estimates , management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates . those estimates are based on our historical experience , terms of existing contracts , the observance of trends in our industries , information provided by outside sources , trade journals and other sources , as appropriate . revenue . story_separator_special_tag alfa-bank 's compensation pursuant to the agreement for providing financing to tot money is calculated as a financing rate that ranges from 9.70 % to 11.95 % of the amounts borrowed , depending upon the amount borrowed and the number of days in the period from the date financing is provided until the date the applicable account receivable is paid ; however , alfa-bank has the unilateral right to change such financing rates in the event of changes in certain market rates or in alfa-bank 's reasonable discretion . tot money 's obligations under the agreement also are secured by a guarantee given by ao sat & company . ao sat & company is an affiliate of kenges rakishev . the balance of the factoring agreement was 276,789,747 rubles ( approximately $ 8.46 million u.s. dollars ) at december 31 , 2013 and 232,723,216 rubles ( approximately $ 7.11 million in u.s. dollars ) at december 31 , 2012. on february 2 , 2012 , net element entered into a subscription agreement with one of the company 's directors , felix vulis , pursuant to which mr. vulis purchased from net element for $ 100,000 : ( i ) 16,667 shares of net element common stock ; ( ii ) a three-year warrant to purchase up to an additional 16,667 shares of net element common stock with an exercise price of $ 10.00 per share ; ( iii ) a three-year warrant to purchase up to an additional 16,677 shares of net element common stock with an exercise price of $ 20.00 per share ; and ( iv ) a three-year warrant to purchase up to an additional 16,667 shares of net element common stock with an exercise price of $ 40.00 per share . these warrants were cancelled on october 2 , 2012 pursuant to our merger agreement with net element . on february 23 , 2012 , net element entered into a subscription agreement pursuant to which it sold 333,333 newly issued shares of net element common stock to kenges rakishev for an aggregate purchase price of $ 2,000,000 , or $ 6.00 per share . on may 14 , 2012 , net element entered into a $ 500,000 principal amount promissory note and loan agreement with enerfund , llc maturing november 1 , 2012. the interest rate was 5 % per annum . the company repaid this note with accrued interest of around $ 10 thousand on october 3 , 2012 . 39 on june 26 , 2012 , net element 's subsidiary , net element russia , entered into a loan agreement with green venture group , llc , pursuant to which net element russia was loaned 150 million russian rubles ( approximately $ 4.9 million in u.s. dollars ) . the loan was intended to be used by net element russia for working capital and the development of the business of tot money . the interest rate under the loan agreement was 8.15 % per annum and outstanding principal and interest was due on or before november 1 , 2012. green venture group , llc is owned and controlled by mike zoi . the funding under this loan agreement was received july 20 , 2012. on october 2 , 2012 , the loan with green venture group , llc was assigned to the company and simultaneously repaid in full with the exception of $ 301,966 balance at december 31 , 2013 reflected in due to related parties in the accompanying balance sheet . on july 4 , 2012 , net element russia entered into a loan agreement with ooo sat-moscow , pursuant to which net element russia was loaned 150 million russian rubles ( approximately $ 4.9 million in u.s. dollars ) . the loan was intended to be used by net element russia for working capital and the development of the business of tot money . the interest rate under the loan agreement was 8.15 % per annum and outstanding principal and interest was due on or before november 1 , 2012. sat-moscow is indirectly controlled by kenges rakishev , chairman of the board of directors of the company . on october 2 , 2012 , the loan with sat-moscow was assigned to the company and simultaneously repaid in full . in connection with its acquisition of the business assets of unified payments on april 16 , 2013 , the company assumed several long-term debt obligations with an aggregate outstanding amount of $ 20.6 million . such long-term debt includes notes that currently bear interest at rates ranging from 9.75 % to 15.635 % and has maturity dates ranging from october 2014 until january 2016. in addition , pursuant to the contribution agreement entered into by the company on april 16 , 2013 with unified payments , tot group , oleg firer and georgia notes 18 llc , on january 1 , 2014 , the preferred membership interest in unified payments plus payable in kind interest accrued thereon will be converted into a 8 % interest only loan ( interest compounding annually with a balloon payment due on january 1 , 2017 ) and , upon such conversion , such loan will be assumed by a subsidiary of tot group . this convertible preferred membership interest is classified as long term debt with a balance of $ 11,098,066 in the accompanying consolidated balance sheets . for additional information , see notes 4 and 12 of the accompanying notes to unaudited condensed consolidated financial statements . on april 7 , 2014 the company paid off and satisfied its debts with rbl capital corp. , which consisted of two notes : one note with a remaining principal balance of $ 1,416,926 as march 31 , 2014 and one note with a principal balance of $ 934,030 as of march 31 , 2014. the note with the principal balance of $ 1,416,926 provided for the payoff of restructuring interest accrued in the amount of $ 92,239. the

liquidity and capital resources the company 's total assets at december 31 , 2013 were $ 22,508,725 compared to $ 28,378,634 at december 31 , 2012. the year over year change in total assets is primarily attributable to the significant decreases in the company 's cash used to support operations and reductions in notes receivable and advances to aggregators as of december 31 , 2013 compared to december 31 , 2012. at december 31 , 2013 , we had total current assets of $ 12,689,171 including $ 126,319 of cash , $ 10,619,289 of accounts receivable , $ 1,109,538 of advances to aggregators and $ 834,025 of prepaid expenses and other assets . at december 31 , 2012 , we had total current assets of $ 28,005,205 including $ 3,546,787 of cash , $ 2,056,821 of restricted cash ( consisting of approximately $ 1.8 million deposited in a segregated bank account pursuant to our credit facility with alfa-bank , and $ 250,000 in a certificate of deposit that was liquidated in february 2013 ) , $ 6,088,934 in net notes receivable , $ 10,855,175 of accounts receivable , $ 4,777,033 in advances to aggregators and $ 487,995 of prepaid expenses and other assets . the company is currently negotiating an $ 11.2 million convertible note with cayman invest , sa . the draft terms of the agreement call for a zero interest rate and in the event of default an interest rate of 12 % , maturity date of march 31 , 2015 and certain conversion features . the automatic conversion feature provides for 15 % of fully diluted shares to be issued upon the company raising $ 10 million in qualified financing from a third party . cayman invest , sa can also convert , at their sole discretion , under the same terms at any time . although the terms and agreement have not been fully agreed to , cayman invest , sa has advanced $ 6,180,000 between january 1 and april 15 , 2014 in anticipation of the signing of the convertible loan agreement .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. through tot group , the company generates revenues from transaction fees , service fees , percentage of the dollar amount of each transaction and other fees associated with processing of cashless transactions at the points of sale . the company serves merchants primarily in the retail , restaurant , supermarket , petroleum and hospitality sectors . in addition , tot group ( through its subsidiary ooo tot money ( “ tot money ” ) ) operates the company 's provider of carrier-integrated mobile payments solutions . tot money 's relationships with mobile operators give the company substantial geographic coverage , a strong capacity for innovation in mobile payments and messaging , and the ability to offer customers in-app , p-sms and online and carrier billing solutions in over 49 countries . during the third quarter of 2012 , our subsidiary , tot money , launched operations as a provider of carrier-integrated mobile payments solutions in russia . since then , tot money has continued seeking to expand its carrier-integrated mobile payments business primarily in the commonwealth of independent states ( cis ) countries ( comprised of participating states of the former soviet union ) and other emerging markets . during the second half of 2012 , tot money entered into contracts with the three largest mobile phone operators in russia , mobile telesystems ojsc , megafon ojsc and ojsc vimpelcom , to facilitate payments using sms and mms for their mobile phone subscribers in russia . on april 16 , 2013 , certain subsidiaries of tot group acquired substantially all of the business assets of unified payments , llc , a delaware limited liability company . unified payments provides comprehensive turnkey , payment-processing solutions to small and medium size business owners ( merchants ) and independent sales organizations across the united states . for additional information , see note 4 to the accompanying notes to consolidated financial statements . on june 24 , 2013 , tot group , through its newly formed subsidiary aptito , llc ( “ aptito ” ) acquired substantially all of the business assets of aptito.com , inc. , a new york corporation , a new generation of smart , customer engaged , patent-pending payments platform , mobile point of sale ( “ mpos ” ) , mobile commerce application and self-ordering apple® ipad®-based kiosk . see note 4 for additional information regarding this acquisition . 32 discontinuance of entertainment business on september 25 , 2013 , we entered into a contribution agreement ( the divestiture contribution agreement ) with t1t lab , llc , a florida limited liability company ( t1t lab ) , and t1t group , llc , a delaware limited liability company ( t1t group ) , pursuant to which , on september 25 , 2013 , we contributed to t1t lab all of our membership and participation interests in our subsidiaries openfilm , llc , motorsport , llc , splinex , llc , legalguru , llc and music 1 llc ( a/k/a ooo music1 ) ( collectively , the disposed subsidiaries ) . the disposed subsidiaries constitute all of the company 's interests in online media businesses and operations ( referred to herein collectively as the company 's `` entertainment assets `` ) . immediately following the transactions effectuated pursuant to the divestiture contribution agreement , the company indirectly owned a minority interest in the disposed subsidiaries through its 10 % membership interest in t1t lab and the other 90 % membership interest in t1t lab is owned by t1t group ( which is indirectly wholly-owned by mike zoi , a director and majority stockholder of the company ) . the company disposed its entertainment assets in order to focus its business operations on mobile payments , transactional services and related technologies and to reduce the significant expenses associated with developing and maintaining the entertainment assets . during the first quarter of 2014 , company further reduced its liabilities by divesting its remaining 10 % ownership interest in t1t lab , llc in exchange for termination of its obligation to commit funding of t1t lab , llc associated with its equity ownership . for additional information regarding the divestiture of the company 's entertainment assets , see note 5 of the accompanying notes to consolidated financial statements . since our inception , we have incurred significant operating losses ( for additional information , see “ liquidity and capital resources ” below ) . if we fail to maintain our relationships with merchants , mobile phone providers , content providers , lenders and other business partners , it could harm our revenues and materially adversely affect our financial condition and results of operations . we face all of the risks inherent in a new business , including the need for significant additional capital , management 's potential underestimation of initial and ongoing costs , and potential delays and other problems in connection with developing our technologies and operations . critical accounting policies and estimates our significant accounting policies are described more fully in note 1 to the accompanying consolidated financial statements . the preparation of financial statements in conformity with accounting principles generally accepted in the united states requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements , as well as the reported amounts of revenues and expenses during the reporting period . actual results could differ materially from those estimates . in applying estimates , management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates . those estimates are based on our historical experience , terms of existing contracts , the observance of trends in our industries , information provided by outside sources , trade journals and other sources , as appropriate . revenue . story_separator_special_tag alfa-bank 's compensation pursuant to the agreement for providing financing to tot money is calculated as a financing rate that ranges from 9.70 % to 11.95 % of the amounts borrowed , depending upon the amount borrowed and the number of days in the period from the date financing is provided until the date the applicable account receivable is paid ; however , alfa-bank has the unilateral right to change such financing rates in the event of changes in certain market rates or in alfa-bank 's reasonable discretion . tot money 's obligations under the agreement also are secured by a guarantee given by ao sat & company . ao sat & company is an affiliate of kenges rakishev . the balance of the factoring agreement was 276,789,747 rubles ( approximately $ 8.46 million u.s. dollars ) at december 31 , 2013 and 232,723,216 rubles ( approximately $ 7.11 million in u.s. dollars ) at december 31 , 2012. on february 2 , 2012 , net element entered into a subscription agreement with one of the company 's directors , felix vulis , pursuant to which mr. vulis purchased from net element for $ 100,000 : ( i ) 16,667 shares of net element common stock ; ( ii ) a three-year warrant to purchase up to an additional 16,667 shares of net element common stock with an exercise price of $ 10.00 per share ; ( iii ) a three-year warrant to purchase up to an additional 16,677 shares of net element common stock with an exercise price of $ 20.00 per share ; and ( iv ) a three-year warrant to purchase up to an additional 16,667 shares of net element common stock with an exercise price of $ 40.00 per share . these warrants were cancelled on october 2 , 2012 pursuant to our merger agreement with net element . on february 23 , 2012 , net element entered into a subscription agreement pursuant to which it sold 333,333 newly issued shares of net element common stock to kenges rakishev for an aggregate purchase price of $ 2,000,000 , or $ 6.00 per share . on may 14 , 2012 , net element entered into a $ 500,000 principal amount promissory note and loan agreement with enerfund , llc maturing november 1 , 2012. the interest rate was 5 % per annum . the company repaid this note with accrued interest of around $ 10 thousand on october 3 , 2012 . 39 on june 26 , 2012 , net element 's subsidiary , net element russia , entered into a loan agreement with green venture group , llc , pursuant to which net element russia was loaned 150 million russian rubles ( approximately $ 4.9 million in u.s. dollars ) . the loan was intended to be used by net element russia for working capital and the development of the business of tot money . the interest rate under the loan agreement was 8.15 % per annum and outstanding principal and interest was due on or before november 1 , 2012. green venture group , llc is owned and controlled by mike zoi . the funding under this loan agreement was received july 20 , 2012. on october 2 , 2012 , the loan with green venture group , llc was assigned to the company and simultaneously repaid in full with the exception of $ 301,966 balance at december 31 , 2013 reflected in due to related parties in the accompanying balance sheet . on july 4 , 2012 , net element russia entered into a loan agreement with ooo sat-moscow , pursuant to which net element russia was loaned 150 million russian rubles ( approximately $ 4.9 million in u.s. dollars ) . the loan was intended to be used by net element russia for working capital and the development of the business of tot money . the interest rate under the loan agreement was 8.15 % per annum and outstanding principal and interest was due on or before november 1 , 2012. sat-moscow is indirectly controlled by kenges rakishev , chairman of the board of directors of the company . on october 2 , 2012 , the loan with sat-moscow was assigned to the company and simultaneously repaid in full . in connection with its acquisition of the business assets of unified payments on april 16 , 2013 , the company assumed several long-term debt obligations with an aggregate outstanding amount of $ 20.6 million . such long-term debt includes notes that currently bear interest at rates ranging from 9.75 % to 15.635 % and has maturity dates ranging from october 2014 until january 2016. in addition , pursuant to the contribution agreement entered into by the company on april 16 , 2013 with unified payments , tot group , oleg firer and georgia notes 18 llc , on january 1 , 2014 , the preferred membership interest in unified payments plus payable in kind interest accrued thereon will be converted into a 8 % interest only loan ( interest compounding annually with a balloon payment due on january 1 , 2017 ) and , upon such conversion , such loan will be assumed by a subsidiary of tot group . this convertible preferred membership interest is classified as long term debt with a balance of $ 11,098,066 in the accompanying consolidated balance sheets . for additional information , see notes 4 and 12 of the accompanying notes to unaudited condensed consolidated financial statements . on april 7 , 2014 the company paid off and satisfied its debts with rbl capital corp. , which consisted of two notes : one note with a remaining principal balance of $ 1,416,926 as march 31 , 2014 and one note with a principal balance of $ 934,030 as of march 31 , 2014. the note with the principal balance of $ 1,416,926 provided for the payoff of restructuring interest accrued in the amount of $ 92,239. the Narrative : liquidity and capital resources the company 's total assets at december 31 , 2013 were $ 22,508,725 compared to $ 28,378,634 at december 31 , 2012. the year over year change in total assets is primarily attributable to the significant decreases in the company 's cash used to support operations and reductions in notes receivable and advances to aggregators as of december 31 , 2013 compared to december 31 , 2012. at december 31 , 2013 , we had total current assets of $ 12,689,171 including $ 126,319 of cash , $ 10,619,289 of accounts receivable , $ 1,109,538 of advances to aggregators and $ 834,025 of prepaid expenses and other assets . at december 31 , 2012 , we had total current assets of $ 28,005,205 including $ 3,546,787 of cash , $ 2,056,821 of restricted cash ( consisting of approximately $ 1.8 million deposited in a segregated bank account pursuant to our credit facility with alfa-bank , and $ 250,000 in a certificate of deposit that was liquidated in february 2013 ) , $ 6,088,934 in net notes receivable , $ 10,855,175 of accounts receivable , $ 4,777,033 in advances to aggregators and $ 487,995 of prepaid expenses and other assets . the company is currently negotiating an $ 11.2 million convertible note with cayman invest , sa . the draft terms of the agreement call for a zero interest rate and in the event of default an interest rate of 12 % , maturity date of march 31 , 2015 and certain conversion features . the automatic conversion feature provides for 15 % of fully diluted shares to be issued upon the company raising $ 10 million in qualified financing from a third party . cayman invest , sa can also convert , at their sole discretion , under the same terms at any time . although the terms and agreement have not been fully agreed to , cayman invest , sa has advanced $ 6,180,000 between january 1 and april 15 , 2014 in anticipation of the signing of the convertible loan agreement .

commissions and transaction fee revenues primarily consist of trading commissions , revenue-sharing arrangements with market destinations ( also referred to as “payment for order flow” ) and markups on riskless principal transactions in fixed-income securities . basis point — when referring to interest rates , one basis point represents one one-hundredth of one percent . beneficiary accounts — brokerage accounts managed by a custodian , guardian , conservator or trustee on behalf of one or more beneficiaries . examples include accounts maintained under the uniform gift to minors act ( ugma ) or uniform transfer to minors act ( utma ) , guardianship , conservatorship and trust arrangements and pension or profit plan for small business accounts . 24 brokerage accounts — accounts maintained by the company on behalf of clients for securities brokerage activities . the primary types of brokerage accounts are cash accounts , margin accounts , ira accounts and beneficiary accounts . cash accounts — brokerage accounts that do not have margin account approval . client assets — the total value of cash and securities in brokerage accounts . client cash and money market assets — the sum of all client cash balances , including client credit balances and client cash balances swept into insured deposit accounts or money market mutual funds . client credit balances — client cash held in brokerage accounts , excluding balances generated by client short sales on which no interest is paid . interest paid on client credit balances is a reduction of net interest revenue . client credit balances are included in “payable to clients” on our consolidated balance sheets . client margin balances — the total amount of cash loaned to clients in margin accounts . such loans are secured by client assets . interest earned on client margin balances is a component of net interest revenue . client margin balances are included in “receivable from clients” on our consolidated balance sheets . conduit-based assets — deposits paid on securities borrowing associated with our conduit-based securities borrowing/lending business . in our conduit business , we act as an intermediary by borrowing securities from one counterparty and lending the same securities to another counterparty . we generally earn a net interest spread equal to the excess of interest earned on securities borrowing deposits over the interest paid on securities lending deposits . daily average revenue trades ( “darts” ) — total trades divided by the number of trading days in the period . this metric is also known as average client trades per day . ebitda and ebitda excluding investment gains/losses — ebitda ( earnings before interest , taxes , depreciation and amortization ) and ebitda excluding investment gains/losses are non-gaap financial measures . we consider ebitda and ebitda excluding investment gains/losses to be important measures of our financial performance and of our ability to generate cash flows to service debt , fund capital expenditures and fund other corporate investing and financing activities . ebitda is used as the denominator in the consolidated leverage ratio calculation for covenant purposes under our holding company 's senior revolving credit facility . ebitda eliminates the non-cash effect of tangible asset depreciation and amortization and intangible asset amortization . ebitda excluding investment gains/losses also eliminates the effect of non-brokerage investment-related gains and losses that are not likely to be indicative of the ongoing operations of our business . ebitda and ebitda excluding investment gains/losses should be considered in addition to , rather than as a substitute for , pre-tax income , net income and cash flows from operating activities . eps excluding investment gains/losses — earnings per share ( “eps” ) excluding investment gains/losses is a non-gaap financial measure . we define eps excluding investment gains/losses as earnings ( loss ) per share , adjusted to remove the after-tax effect of non-brokerage investment-related gains and losses . we consider eps excluding investment gains/losses an important measure of our financial performance . gains/losses on non-brokerage investments and investment-related derivatives are excluded because we believe they are not likely to be indicative of the ongoing operations of our business . eps excluding investment gains/losses should be considered in addition to , rather than as a substitute for , gaap earnings per share . eps from ongoing operations — eps from ongoing operations is a non-gaap financial measure . we define eps from ongoing operations as earnings ( loss ) per share , adjusted to remove any significant unusual gains or charges . we consider eps from ongoing operations an important measure of the financial performance of our ongoing business . unusual gains and charges are excluded because we believe they are not likely to be indicative of the ongoing operations of our business . eps from ongoing operations should be considered in addition to , rather than as a substitute for , gaap earnings per share . fee-based investment balances — client assets invested in money market mutual funds , other mutual funds and company programs such as advisordirect ® and amerivest , tm on which we earn fee revenues . fee revenues earned on these balances are included in investment product fees on our consolidated statements of income . funded accounts — all open client accounts with a total liquidation value greater than zero . 25 insured deposit account — the company is party to an insured deposit account ( “ida” ) agreement with td bank usa , n.a . ( “td bank usa” ) , td bank , n.a . and the toronto-dominion bank ( “td” ) . under the ida agreement , td bank usa and td bank , n.a . ( together , the “depository institutions” ) make available to clients of the company fdic-insured money market deposit accounts as either designated sweep vehicles or as non-sweep deposit accounts . the company provides marketing , recordkeeping and support services for the depository institutions with respect to the money market deposit accounts . story_separator_special_tag in many matters , such as those in which substantial or indeterminate damages or fines are sought , or where cases or proceedings are in the early stages , it is not possible to determine whether a loss will be incurred , or to estimate the range of that loss , until the matter is close to resolution , in which case no accrual is made until that time . because matters may be resolved over long periods of time , accruals are adjusted as more information becomes available or when an event occurs requiring a change . significant judgment is required in making these estimates , and the actual cost of resolving a matter may ultimately differ materially from the amount accrued . valuation of guarantees we enter into guarantees in the ordinary course of business , primarily to meet the needs of our clients and to manage our asset-based revenues . we record a liability for the estimated fair value of the guarantee at its inception . if actual results differ significantly from these estimates , our results of operations could be materially affected . for further details regarding our guarantees , see the following sections under item 8 , financial statements and supplementary data — notes to consolidated financial statements : “guarantees” under note 14 — commitments and contingencies and “insured deposit account agreement” under note 18 — related party transactions . results of operations conditions in the u.s. equity markets significantly impact the volume of our clients ' trading activity . there is a direct correlation between the volume of our clients ' trading activity and our results of operations . we can not predict future trading volumes in the u.s. equity markets . if client trading activity increases , we expect that it would have a positive impact on our results of operations . if client trading activity declines , we expect that it would have a negative impact on our results of operations . changes in average balances , especially client margin , credit , insured deposit account and mutual fund balances , may significantly impact our results of operations . changes in interest rates also significantly impact our results of operations . we seek to mitigate interest rate risk by aligning the average duration of our interest-earning assets with that of our interest-bearing liabilities . we can not predict the direction of interest rates or the levels of client balances . if interest rates rise , we generally expect to earn a larger net interest spread . conversely , a falling interest rate environment generally would result in our earning a smaller net interest spread . financial performance metrics pre-tax income , net income , earnings per share and ebitda are key metrics we use in evaluating our financial performance . ebitda is a non-gaap financial measure . we consider ebitda to be an important measure of our financial performance and of our ability to generate cash flows to service debt , fund capital expenditures and fund other corporate investing and financing activities . ebitda is used as the denominator in the consolidated leverage ratio calculation for covenant purposes under our holding company 's senior revolving credit facility . ebitda eliminates the non-cash effect of tangible asset depreciation and amortization and intangible asset amortization . ebitda should be considered in addition to , rather than as a substitute for , pre-tax income , net income and cash flows from operating activities . 30 the following table sets forth ebitda in dollars and as a percentage of net revenues for the periods indicated , and provides reconciliations to net income , which is the most directly comparable gaap measure ( dollars in thousands ) : replace_table_token_5_th our ebitda increased for fiscal 2011 compared to fiscal 2010 , primarily due to an 8 % increase in net revenues , partially offset by a 7 % increase in total operating expenses . the increase in net revenues was due primarily to growth in average spread-based and other fee-based investment balances and an 8 % increase in total client trades , partially offset by lower net interest margin earned on the spread-based balances and lower average commissions and transaction fees per trade . the increase in total operating expenses was due primarily to increases in employee compensation and benefits and professional services expenses during fiscal 2011 and the effect of a $ 12.7 million gain on money market funds and client guarantees during fiscal 2010. detailed analysis of net revenues and operating expenses is presented later in this discussion . operating metrics our largest sources of revenues are asset-based revenues and transaction-based revenues . for fiscal 2011 , asset-based revenues and transaction-based revenues accounted for 51 % and 44 % of our net revenues , respectively . asset-based revenues consist of ( 1 ) net interest revenue , ( 2 ) insured deposit account fees and ( 3 ) investment product fees . the primary factors driving our asset-based revenues are average balances and average rates . average balances consist primarily of average client margin balances , average segregated cash balances , average client credit balances , average client insured deposit account balances , average fee-based investment balances and average securities borrowing and lending balances . average rates consist of the average interest rates and fees earned and paid on such balances . the primary factors driving our transaction-based revenues are total client trades and average commissions and transaction fees per trade . we also consider client account and client asset metrics , although we believe they are generally of less significance to our results of operations for any particular period than our metrics for asset-based and transaction-based revenues . asset-based revenue metrics we calculate the return on our interest-earning assets ( excluding conduit-based assets ) and our insured deposit account balances using a measure we refer to as net interest margin . net interest margin is calculated for a given period by dividing the annualized sum

cash dividends our board of directors declared a $ 0.05 per share quarterly cash dividend on our common stock during each quarter of fiscal 2011. we paid a total of $ 114.2 million to fund the dividends for fiscal 2011. on october 20 , 2011 , our board of directors declared a $ 0.06 per share quarterly cash dividend on our common stock for the first quarter of fiscal 2012. we expect to pay approximately $ 33 million on november 15 , 2011 to fund this dividend . off-balance sheet arrangements we enter into guarantees and other off-balance sheet arrangements in the ordinary course of business , primarily to meet the needs of our clients and to manage our asset-based revenues . for information on these arrangements , see the following sections under item 8 , financial statements and supplementary data — notes to consolidated financial statements : “guarantees” under note 14 — commitments and contingencies and “insured deposit account agreement” under note 18 — related party transactions . the ida agreement accounts for a significant percentage of our net revenues ( 28 % of our net revenues for the fiscal year ended september 30 , 2011 ) and enables our clients to invest in an fdic-insured deposit product without the need for the company to maintain a bank charter . 43 contractual obligations the following table summarizes our contractual obligations as of september 30 , 2011 ( dollars in thousands ) : replace_table_token_18_th ( 1 ) represents scheduled principal payments , estimated interest payments and commitment fees pursuant to the senior notes , the interest rate swaps and the revolving credit facilities .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. commissions and transaction fee revenues primarily consist of trading commissions , revenue-sharing arrangements with market destinations ( also referred to as “payment for order flow” ) and markups on riskless principal transactions in fixed-income securities . basis point — when referring to interest rates , one basis point represents one one-hundredth of one percent . beneficiary accounts — brokerage accounts managed by a custodian , guardian , conservator or trustee on behalf of one or more beneficiaries . examples include accounts maintained under the uniform gift to minors act ( ugma ) or uniform transfer to minors act ( utma ) , guardianship , conservatorship and trust arrangements and pension or profit plan for small business accounts . 24 brokerage accounts — accounts maintained by the company on behalf of clients for securities brokerage activities . the primary types of brokerage accounts are cash accounts , margin accounts , ira accounts and beneficiary accounts . cash accounts — brokerage accounts that do not have margin account approval . client assets — the total value of cash and securities in brokerage accounts . client cash and money market assets — the sum of all client cash balances , including client credit balances and client cash balances swept into insured deposit accounts or money market mutual funds . client credit balances — client cash held in brokerage accounts , excluding balances generated by client short sales on which no interest is paid . interest paid on client credit balances is a reduction of net interest revenue . client credit balances are included in “payable to clients” on our consolidated balance sheets . client margin balances — the total amount of cash loaned to clients in margin accounts . such loans are secured by client assets . interest earned on client margin balances is a component of net interest revenue . client margin balances are included in “receivable from clients” on our consolidated balance sheets . conduit-based assets — deposits paid on securities borrowing associated with our conduit-based securities borrowing/lending business . in our conduit business , we act as an intermediary by borrowing securities from one counterparty and lending the same securities to another counterparty . we generally earn a net interest spread equal to the excess of interest earned on securities borrowing deposits over the interest paid on securities lending deposits . daily average revenue trades ( “darts” ) — total trades divided by the number of trading days in the period . this metric is also known as average client trades per day . ebitda and ebitda excluding investment gains/losses — ebitda ( earnings before interest , taxes , depreciation and amortization ) and ebitda excluding investment gains/losses are non-gaap financial measures . we consider ebitda and ebitda excluding investment gains/losses to be important measures of our financial performance and of our ability to generate cash flows to service debt , fund capital expenditures and fund other corporate investing and financing activities . ebitda is used as the denominator in the consolidated leverage ratio calculation for covenant purposes under our holding company 's senior revolving credit facility . ebitda eliminates the non-cash effect of tangible asset depreciation and amortization and intangible asset amortization . ebitda excluding investment gains/losses also eliminates the effect of non-brokerage investment-related gains and losses that are not likely to be indicative of the ongoing operations of our business . ebitda and ebitda excluding investment gains/losses should be considered in addition to , rather than as a substitute for , pre-tax income , net income and cash flows from operating activities . eps excluding investment gains/losses — earnings per share ( “eps” ) excluding investment gains/losses is a non-gaap financial measure . we define eps excluding investment gains/losses as earnings ( loss ) per share , adjusted to remove the after-tax effect of non-brokerage investment-related gains and losses . we consider eps excluding investment gains/losses an important measure of our financial performance . gains/losses on non-brokerage investments and investment-related derivatives are excluded because we believe they are not likely to be indicative of the ongoing operations of our business . eps excluding investment gains/losses should be considered in addition to , rather than as a substitute for , gaap earnings per share . eps from ongoing operations — eps from ongoing operations is a non-gaap financial measure . we define eps from ongoing operations as earnings ( loss ) per share , adjusted to remove any significant unusual gains or charges . we consider eps from ongoing operations an important measure of the financial performance of our ongoing business . unusual gains and charges are excluded because we believe they are not likely to be indicative of the ongoing operations of our business . eps from ongoing operations should be considered in addition to , rather than as a substitute for , gaap earnings per share . fee-based investment balances — client assets invested in money market mutual funds , other mutual funds and company programs such as advisordirect ® and amerivest , tm on which we earn fee revenues . fee revenues earned on these balances are included in investment product fees on our consolidated statements of income . funded accounts — all open client accounts with a total liquidation value greater than zero . 25 insured deposit account — the company is party to an insured deposit account ( “ida” ) agreement with td bank usa , n.a . ( “td bank usa” ) , td bank , n.a . and the toronto-dominion bank ( “td” ) . under the ida agreement , td bank usa and td bank , n.a . ( together , the “depository institutions” ) make available to clients of the company fdic-insured money market deposit accounts as either designated sweep vehicles or as non-sweep deposit accounts . the company provides marketing , recordkeeping and support services for the depository institutions with respect to the money market deposit accounts . story_separator_special_tag in many matters , such as those in which substantial or indeterminate damages or fines are sought , or where cases or proceedings are in the early stages , it is not possible to determine whether a loss will be incurred , or to estimate the range of that loss , until the matter is close to resolution , in which case no accrual is made until that time . because matters may be resolved over long periods of time , accruals are adjusted as more information becomes available or when an event occurs requiring a change . significant judgment is required in making these estimates , and the actual cost of resolving a matter may ultimately differ materially from the amount accrued . valuation of guarantees we enter into guarantees in the ordinary course of business , primarily to meet the needs of our clients and to manage our asset-based revenues . we record a liability for the estimated fair value of the guarantee at its inception . if actual results differ significantly from these estimates , our results of operations could be materially affected . for further details regarding our guarantees , see the following sections under item 8 , financial statements and supplementary data — notes to consolidated financial statements : “guarantees” under note 14 — commitments and contingencies and “insured deposit account agreement” under note 18 — related party transactions . results of operations conditions in the u.s. equity markets significantly impact the volume of our clients ' trading activity . there is a direct correlation between the volume of our clients ' trading activity and our results of operations . we can not predict future trading volumes in the u.s. equity markets . if client trading activity increases , we expect that it would have a positive impact on our results of operations . if client trading activity declines , we expect that it would have a negative impact on our results of operations . changes in average balances , especially client margin , credit , insured deposit account and mutual fund balances , may significantly impact our results of operations . changes in interest rates also significantly impact our results of operations . we seek to mitigate interest rate risk by aligning the average duration of our interest-earning assets with that of our interest-bearing liabilities . we can not predict the direction of interest rates or the levels of client balances . if interest rates rise , we generally expect to earn a larger net interest spread . conversely , a falling interest rate environment generally would result in our earning a smaller net interest spread . financial performance metrics pre-tax income , net income , earnings per share and ebitda are key metrics we use in evaluating our financial performance . ebitda is a non-gaap financial measure . we consider ebitda to be an important measure of our financial performance and of our ability to generate cash flows to service debt , fund capital expenditures and fund other corporate investing and financing activities . ebitda is used as the denominator in the consolidated leverage ratio calculation for covenant purposes under our holding company 's senior revolving credit facility . ebitda eliminates the non-cash effect of tangible asset depreciation and amortization and intangible asset amortization . ebitda should be considered in addition to , rather than as a substitute for , pre-tax income , net income and cash flows from operating activities . 30 the following table sets forth ebitda in dollars and as a percentage of net revenues for the periods indicated , and provides reconciliations to net income , which is the most directly comparable gaap measure ( dollars in thousands ) : replace_table_token_5_th our ebitda increased for fiscal 2011 compared to fiscal 2010 , primarily due to an 8 % increase in net revenues , partially offset by a 7 % increase in total operating expenses . the increase in net revenues was due primarily to growth in average spread-based and other fee-based investment balances and an 8 % increase in total client trades , partially offset by lower net interest margin earned on the spread-based balances and lower average commissions and transaction fees per trade . the increase in total operating expenses was due primarily to increases in employee compensation and benefits and professional services expenses during fiscal 2011 and the effect of a $ 12.7 million gain on money market funds and client guarantees during fiscal 2010. detailed analysis of net revenues and operating expenses is presented later in this discussion . operating metrics our largest sources of revenues are asset-based revenues and transaction-based revenues . for fiscal 2011 , asset-based revenues and transaction-based revenues accounted for 51 % and 44 % of our net revenues , respectively . asset-based revenues consist of ( 1 ) net interest revenue , ( 2 ) insured deposit account fees and ( 3 ) investment product fees . the primary factors driving our asset-based revenues are average balances and average rates . average balances consist primarily of average client margin balances , average segregated cash balances , average client credit balances , average client insured deposit account balances , average fee-based investment balances and average securities borrowing and lending balances . average rates consist of the average interest rates and fees earned and paid on such balances . the primary factors driving our transaction-based revenues are total client trades and average commissions and transaction fees per trade . we also consider client account and client asset metrics , although we believe they are generally of less significance to our results of operations for any particular period than our metrics for asset-based and transaction-based revenues . asset-based revenue metrics we calculate the return on our interest-earning assets ( excluding conduit-based assets ) and our insured deposit account balances using a measure we refer to as net interest margin . net interest margin is calculated for a given period by dividing the annualized sum Narrative : cash dividends our board of directors declared a $ 0.05 per share quarterly cash dividend on our common stock during each quarter of fiscal 2011. we paid a total of $ 114.2 million to fund the dividends for fiscal 2011. on october 20 , 2011 , our board of directors declared a $ 0.06 per share quarterly cash dividend on our common stock for the first quarter of fiscal 2012. we expect to pay approximately $ 33 million on november 15 , 2011 to fund this dividend . off-balance sheet arrangements we enter into guarantees and other off-balance sheet arrangements in the ordinary course of business , primarily to meet the needs of our clients and to manage our asset-based revenues . for information on these arrangements , see the following sections under item 8 , financial statements and supplementary data — notes to consolidated financial statements : “guarantees” under note 14 — commitments and contingencies and “insured deposit account agreement” under note 18 — related party transactions . the ida agreement accounts for a significant percentage of our net revenues ( 28 % of our net revenues for the fiscal year ended september 30 , 2011 ) and enables our clients to invest in an fdic-insured deposit product without the need for the company to maintain a bank charter . 43 contractual obligations the following table summarizes our contractual obligations as of september 30 , 2011 ( dollars in thousands ) : replace_table_token_18_th ( 1 ) represents scheduled principal payments , estimated interest payments and commitment fees pursuant to the senior notes , the interest rate swaps and the revolving credit facilities .

new factors emerge from time to time , and it is not possible for us to predict which factors will arise . in addition , we can not assess the impact of each factor on our business or the extent to which any factor , or combination of factors , may cause actual results to differ materially from those contained in any forward-looking statements . recent events in february 2016 , novavax completed the issuance of $ 325 million of 3.75 % convertible senior notes due in 2023 , resulting in net proceeds of approximately $ 315 million , after deducting initial purchasers ' discounts and commissions , and approximately $ 314 million after deducting offering expenses . we used approximately $ 38 million of the net proceeds to pay the costs of a capped call transaction , which will function to reduce dilution from issuance of additional shares upon conversion of the notes between the note conversion price of $ 6.81 and the cap price of $ 9.73 per share . the resulting final net proceeds to the company were approximately $ 276 million . our cash , cash equivalents and marketable securities on december 31 , 2015 of approximately $ 231 million , as adjusted to give effect to the final net proceeds of the convertible senior note offering of approximately $ 276 million , before giving effect to the anticipated use of the final net proceeds , would result in an as adjusted cash , cash equivalents and marketable securities balance of approximately $ 507 million . 40 overview we are a clinical-stage vaccine company focused on the discovery , development and commercialization of recombinant nanoparticle vaccines and adjuvants . using innovative proprietary recombinant nanoparticle vaccine platform technology , we produce vaccine candidates to efficiently and effectively respond to both known and emerging disease threats . our vaccine candidates are genetically engineered three-dimensional nanostructures that incorporate recombinant proteins critical to disease pathogenesis . our product pipeline targets a variety of infectious diseases with vaccine candidates currently in clinical development for respiratory syncytial virus ( “ rsv ” ) , seasonal influenza , pandemic influenza and ebola virus ( “ ebov ” ) . we have additional preclinical stage programs for a variety of infectious diseases . we are also developing proprietary technology for the production of immune stimulating saponin-based adjuvants through our wholly owned swedish subsidiary , novavax ab . our lead adjuvant , matrix-m , has been successfully tested in a phase 1/2 clinical trial for our pandemic h7n9 influenza virus-like particle vaccine candidate , and in a phase 1 clinical trial for our ebov vaccine candidate . genocea biosciences , inc. ( “ genocea ” ) has licensed rights to our matrix technology and is now conducting phase 2 clinical trials with its herpes simplex 2 vaccine candidate using matrix-m. clinical product pipeline our clinical product pipeline includes vaccine candidates engineered to elicit differentiated immune responses with potential to provide increased protection . our nanoparticle technology platform targets antigens with conserved epitopes essential for viral function . unlike traditional vaccines that ‘ mimic ' viruses and elicit naturally occurring immune responses to them , our nanoparticles are engineered to elicit differentiated immune responses , which may be more efficacious than naturally-occurring immunity . our vaccine technology has the potential to be applied broadly to a wide variety of human infectious diseases . a current summary of our significant research and development programs , along with the programs of our joint venture , cplb , and status of the related products in development follows : program development stage funding collaborator respiratory syncytial virus ( rsv ) · older adults phase 3 · infants via maternal immunization phase 3 bmgf * · pediatrics phase 1 influenza · seasonal quadrivalent phase 2 hhs barda · pandemic h7n9 phase 2 hhs barda combination ( influenza/rsv ) preclinical ebola virus ( ebov ) phase 1 * as detailed herein , our funding and development arrangement with path expired in april 2015 ; we entered into a grant agreement with bmgf in september 2015. respiratory syncytial virus ( rsv ) we are developing our respiratory syncytial virus fusion ( f ) protein nanoparticle vaccine candidate ( “ rsv f vaccine ” ) for three susceptible target populations : older adults ( 60 years of age and older ) , infants via maternal immunization and children six months to five years of age ( “ pediatrics ” ) . we estimate rsv f vaccine peak revenue potential of six to eight billion dollars worldwide . currently there is no approved rsv vaccine available . 41 repeat infection and lifelong susceptibility to rsv are common and we currently estimate the global cost burden of rsv in excess of $ 88 billion . despite decades of effort to develop an rsv vaccine , there are currently no licensed vaccines . although the monoclonal antibody palivizumab ( synagis® ) is effective in pre-term infants , it is not indicated for use in other populations . novavax made a breakthrough in developing a vaccine that targets the fusion protein , or f-protein , of the virus . the f-protein has a highly conserved amino acid sequence called antigenic site ii , which we believe is an ideal vaccine target . palivizumab , which also targets antigenic site ii , has demonstrated protection in five randomized clinical trials . we genetically engineered a novel f-protein antigen and enhanced its immunogenicity by exposing antigenic site ii . novavax ' rsv f vaccine assembles into a recombinant protein nanoparticle optimized for f-protein antigen presentation . the rsv f vaccine elicits palivizumab-competing antibodies at levels that we expect to confer protection . the novavax rsv f vaccine is the first rsv vaccine to demonstrate efficacy in a clinical trial and novavax is positioned to bring the first rsv vaccine to market to combat the 64 million rsv infections that occur globally each year . story_separator_special_tag we expect to initiate a phase 1 clinical trial of a combination respiratory vaccine in the first half of 2017 . 45 ebola virus ( ebov ) ebov , formerly known as ebola hemorrhagic fever , is a severe , often fatal illness in humans . multiple strains of ebov have been identified , the most recent of which , the makona ebov strain , is associated with a case fatality rate of 50 % to 90 % . 38 there are currently no licensed treatments proven to neutralize the virus , but a range of blood , immunological and drug therapies are under development . despite the development of such therapies , current vaccine approaches target either a previous strain of the virus or were initially developed to be delivered by genetic vectors . in contrast , our ebov glycoprotein vaccine candidate ( “ ebola gp vaccine ” ) was developed using the makona ebov strain . in july 2015 , we announced data from our phase 1 clinical trial of our ebola gp vaccine in ascending doses , with and without our matrix-m adjuvant , in 230 healthy adults . participants received either one or two intramuscular injections ranging from 6.5µg to 50µg of antigen , with or without adjuvant , or placebo . immunogenicity was assessed at multiple time points , including days 28 and 35. these phase 1 data demonstrated that our ebola gp vaccine is highly immunogenic , well-tolerated and , in conjunction with our proprietary matrix-m adjuvant , resulted in significant antigen dose-sparing . although the adjuvanted ebola gp vaccine was highly immunogenic at all dose levels , the adjuvanted two-dose regimens induced ebola anti-gp antibody geometric mean responses between 45,000 and 70,000 elisa units , representing a 500 to 750-fold rise over baseline at day 35. in 2015 , we also announced successful data from two separate non-human primate challenge studies of our ebola gp vaccine in which , in both cases , the challenge was lethal for the control animal , whereas 100 % of the immunized animals were protected . cplb programs ( india ) cpl biologicals private limited ( “ cplb ” ) , our joint venture company with cadila pharmaceuticals limited ( “ cadila ” ) in india , is actively developing a number of vaccine candidates that were genetically engineered by us . cplb is owned 20 % by us and 80 % by cadila . cplb operates a manufacturing facility in india for the production of vaccines . seasonal influenza cplb received marketing authorization , the indian equivalent of approval of a biologics license application ( “ bla ” ) , for its recombinant trivalent seasonal vlp influenza vaccine in 2015. because the market for seasonal influenza in india is limited and highly competitive , cplb is currently evaluating its marketing strategy for this vaccine . rabies cplb successfully completed stage ii of its 2-stage phase 1/2 clinical trial in india of a rabies g protein vaccine candidate that we genetically engineered . the objective was to select a dose and regimen for a recombinant vaccine that can be administered both as a pre-exposure prophylaxis for residents of certain higher-risk geographies and travelers to such locations , and as a post-exposure prophylaxis using fewer doses than the current standard of care . in october 2014 , cplb presented clinical results from stage i of the phase 1/2 clinical trial , demonstrating that vaccine recipients , at various doses levels and schedules , showed seroprotective antibody levels at day 14 that were sustained through day 180. the vaccine candidate , which was found to be well-tolerated , also induced seroprotective levels with two-dose and three-dose regimens . cplb has received permission to conduct a phase 3 clinical trial and is considering the optimal schedule for its conduct . 38 who . http : //www.who.int/mediacentre/factsheets/fs103/en/ 46 discovery programs our vaccine platform technology provides an efficient system that has the potential to rapidly develop antigens to selected targets , refine manufacturing processes and optimize development across multiple vaccine candidates . in conjunction with government and or global health authorities , we believe we can address emerging disease threats with pandemic potential . in addition to our response to the h7n9 influenza strain , we have developed a vaccine candidate to middle east respiratory syndrome ( “ mers ” ) , caused by a novel coronavirus first identified in 2012. mers emerged as a disease threat in 2013 , and is currently being monitored by global health agencies , with the who reporting significant confirmed cases of infection and deaths . the mers virus is a part of the coronavirus family that includes the severe acute respiratory syndrome coronavirus ( “ sars ” ) . within weeks of obtaining the sequence of the circulating mers strain , we successfully produced a vaccine candidate designed to provide protection . this vaccine candidate is based on the major surface spike protein , which we had previously identified as the antigen of choice in our work with a sars vaccine candidate . in 2014 , in collaboration with the university of maryland , school of medicine , we published results that showed our investigational vaccine candidates against both mers and sars blocked infection in laboratory studies . although the development of a mers vaccine candidate currently remains a preclinical program , we believe that our mers vaccine candidate offers a viable option to interested global public health authorities . sales of common stock in march 2015 , we completed a public offering of 27,758,620 shares of our common stock , including 3,620,689 shares of common stock that were issued upon the exercise in full of the option to purchase additional shares granted to the underwriters , at a price of $ 7.25 per share resulting in net proceeds of approximately $ 190 million . in 2012 , we entered into an at market issuance sales agreement ( “ sales agreement ” ) , under

liquidity matters and capital resources our future capital requirements depend on numerous factors including , but not limited to , the commitments and progress of our research and development programs , the progress of preclinical and clinical testing , the time and costs involved in obtaining regulatory approvals , the costs of filing , prosecuting , defending and enforcing patent claims and other intellectual property rights and manufacturing costs . we plan to continue to have multiple vaccines and products in various stages of development , and we believe our operating expenses and capital requirements will fluctuate depending upon the timing of certain events , such as the scope , initiation , rate and progress of our preclinical studies and clinical trials and other research and development activities . as of december 31 , 2015 , we had $ 230.7 million in cash and cash equivalents and marketable securities as compared to $ 168.1 million as of december 31 , 2014. these amounts consisted of $ 93.1 million in cash and cash equivalents and $ 137.5 million in marketable securities as of december 31 , 2015 as compared to $ 32.3 million in cash and cash equivalents and $ 135.7 million in marketable securities as of december 31 , 2014. the following table summarizes cash flows for 2015 and 2014 ( in thousands ) : replace_table_token_10_th net cash used in operating activities increased to $ 126.1 million for 2015 , as compared to $ 67.0 million for 2014. the increase in cash usage was primarily due to increased research and development expenses relating to our rsv f vaccine , higher employee-related costs and timing of customer and vendor payments . 54 during 2015 and 2014 , our investing activities consisted primarily of purchases and maturities of marketable securities and capital expenditures . capital expenditures for 2015 and 2014 were $ 18.3 million and $ 7.3 million , respectively . the increase in capital expenditures was primarily due to the purchase of laboratory equipment for process development , analytical development and manufacturing scale-up required to support our maturing product portfolio .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. new factors emerge from time to time , and it is not possible for us to predict which factors will arise . in addition , we can not assess the impact of each factor on our business or the extent to which any factor , or combination of factors , may cause actual results to differ materially from those contained in any forward-looking statements . recent events in february 2016 , novavax completed the issuance of $ 325 million of 3.75 % convertible senior notes due in 2023 , resulting in net proceeds of approximately $ 315 million , after deducting initial purchasers ' discounts and commissions , and approximately $ 314 million after deducting offering expenses . we used approximately $ 38 million of the net proceeds to pay the costs of a capped call transaction , which will function to reduce dilution from issuance of additional shares upon conversion of the notes between the note conversion price of $ 6.81 and the cap price of $ 9.73 per share . the resulting final net proceeds to the company were approximately $ 276 million . our cash , cash equivalents and marketable securities on december 31 , 2015 of approximately $ 231 million , as adjusted to give effect to the final net proceeds of the convertible senior note offering of approximately $ 276 million , before giving effect to the anticipated use of the final net proceeds , would result in an as adjusted cash , cash equivalents and marketable securities balance of approximately $ 507 million . 40 overview we are a clinical-stage vaccine company focused on the discovery , development and commercialization of recombinant nanoparticle vaccines and adjuvants . using innovative proprietary recombinant nanoparticle vaccine platform technology , we produce vaccine candidates to efficiently and effectively respond to both known and emerging disease threats . our vaccine candidates are genetically engineered three-dimensional nanostructures that incorporate recombinant proteins critical to disease pathogenesis . our product pipeline targets a variety of infectious diseases with vaccine candidates currently in clinical development for respiratory syncytial virus ( “ rsv ” ) , seasonal influenza , pandemic influenza and ebola virus ( “ ebov ” ) . we have additional preclinical stage programs for a variety of infectious diseases . we are also developing proprietary technology for the production of immune stimulating saponin-based adjuvants through our wholly owned swedish subsidiary , novavax ab . our lead adjuvant , matrix-m , has been successfully tested in a phase 1/2 clinical trial for our pandemic h7n9 influenza virus-like particle vaccine candidate , and in a phase 1 clinical trial for our ebov vaccine candidate . genocea biosciences , inc. ( “ genocea ” ) has licensed rights to our matrix technology and is now conducting phase 2 clinical trials with its herpes simplex 2 vaccine candidate using matrix-m. clinical product pipeline our clinical product pipeline includes vaccine candidates engineered to elicit differentiated immune responses with potential to provide increased protection . our nanoparticle technology platform targets antigens with conserved epitopes essential for viral function . unlike traditional vaccines that ‘ mimic ' viruses and elicit naturally occurring immune responses to them , our nanoparticles are engineered to elicit differentiated immune responses , which may be more efficacious than naturally-occurring immunity . our vaccine technology has the potential to be applied broadly to a wide variety of human infectious diseases . a current summary of our significant research and development programs , along with the programs of our joint venture , cplb , and status of the related products in development follows : program development stage funding collaborator respiratory syncytial virus ( rsv ) · older adults phase 3 · infants via maternal immunization phase 3 bmgf * · pediatrics phase 1 influenza · seasonal quadrivalent phase 2 hhs barda · pandemic h7n9 phase 2 hhs barda combination ( influenza/rsv ) preclinical ebola virus ( ebov ) phase 1 * as detailed herein , our funding and development arrangement with path expired in april 2015 ; we entered into a grant agreement with bmgf in september 2015. respiratory syncytial virus ( rsv ) we are developing our respiratory syncytial virus fusion ( f ) protein nanoparticle vaccine candidate ( “ rsv f vaccine ” ) for three susceptible target populations : older adults ( 60 years of age and older ) , infants via maternal immunization and children six months to five years of age ( “ pediatrics ” ) . we estimate rsv f vaccine peak revenue potential of six to eight billion dollars worldwide . currently there is no approved rsv vaccine available . 41 repeat infection and lifelong susceptibility to rsv are common and we currently estimate the global cost burden of rsv in excess of $ 88 billion . despite decades of effort to develop an rsv vaccine , there are currently no licensed vaccines . although the monoclonal antibody palivizumab ( synagis® ) is effective in pre-term infants , it is not indicated for use in other populations . novavax made a breakthrough in developing a vaccine that targets the fusion protein , or f-protein , of the virus . the f-protein has a highly conserved amino acid sequence called antigenic site ii , which we believe is an ideal vaccine target . palivizumab , which also targets antigenic site ii , has demonstrated protection in five randomized clinical trials . we genetically engineered a novel f-protein antigen and enhanced its immunogenicity by exposing antigenic site ii . novavax ' rsv f vaccine assembles into a recombinant protein nanoparticle optimized for f-protein antigen presentation . the rsv f vaccine elicits palivizumab-competing antibodies at levels that we expect to confer protection . the novavax rsv f vaccine is the first rsv vaccine to demonstrate efficacy in a clinical trial and novavax is positioned to bring the first rsv vaccine to market to combat the 64 million rsv infections that occur globally each year . story_separator_special_tag we expect to initiate a phase 1 clinical trial of a combination respiratory vaccine in the first half of 2017 . 45 ebola virus ( ebov ) ebov , formerly known as ebola hemorrhagic fever , is a severe , often fatal illness in humans . multiple strains of ebov have been identified , the most recent of which , the makona ebov strain , is associated with a case fatality rate of 50 % to 90 % . 38 there are currently no licensed treatments proven to neutralize the virus , but a range of blood , immunological and drug therapies are under development . despite the development of such therapies , current vaccine approaches target either a previous strain of the virus or were initially developed to be delivered by genetic vectors . in contrast , our ebov glycoprotein vaccine candidate ( “ ebola gp vaccine ” ) was developed using the makona ebov strain . in july 2015 , we announced data from our phase 1 clinical trial of our ebola gp vaccine in ascending doses , with and without our matrix-m adjuvant , in 230 healthy adults . participants received either one or two intramuscular injections ranging from 6.5µg to 50µg of antigen , with or without adjuvant , or placebo . immunogenicity was assessed at multiple time points , including days 28 and 35. these phase 1 data demonstrated that our ebola gp vaccine is highly immunogenic , well-tolerated and , in conjunction with our proprietary matrix-m adjuvant , resulted in significant antigen dose-sparing . although the adjuvanted ebola gp vaccine was highly immunogenic at all dose levels , the adjuvanted two-dose regimens induced ebola anti-gp antibody geometric mean responses between 45,000 and 70,000 elisa units , representing a 500 to 750-fold rise over baseline at day 35. in 2015 , we also announced successful data from two separate non-human primate challenge studies of our ebola gp vaccine in which , in both cases , the challenge was lethal for the control animal , whereas 100 % of the immunized animals were protected . cplb programs ( india ) cpl biologicals private limited ( “ cplb ” ) , our joint venture company with cadila pharmaceuticals limited ( “ cadila ” ) in india , is actively developing a number of vaccine candidates that were genetically engineered by us . cplb is owned 20 % by us and 80 % by cadila . cplb operates a manufacturing facility in india for the production of vaccines . seasonal influenza cplb received marketing authorization , the indian equivalent of approval of a biologics license application ( “ bla ” ) , for its recombinant trivalent seasonal vlp influenza vaccine in 2015. because the market for seasonal influenza in india is limited and highly competitive , cplb is currently evaluating its marketing strategy for this vaccine . rabies cplb successfully completed stage ii of its 2-stage phase 1/2 clinical trial in india of a rabies g protein vaccine candidate that we genetically engineered . the objective was to select a dose and regimen for a recombinant vaccine that can be administered both as a pre-exposure prophylaxis for residents of certain higher-risk geographies and travelers to such locations , and as a post-exposure prophylaxis using fewer doses than the current standard of care . in october 2014 , cplb presented clinical results from stage i of the phase 1/2 clinical trial , demonstrating that vaccine recipients , at various doses levels and schedules , showed seroprotective antibody levels at day 14 that were sustained through day 180. the vaccine candidate , which was found to be well-tolerated , also induced seroprotective levels with two-dose and three-dose regimens . cplb has received permission to conduct a phase 3 clinical trial and is considering the optimal schedule for its conduct . 38 who . http : //www.who.int/mediacentre/factsheets/fs103/en/ 46 discovery programs our vaccine platform technology provides an efficient system that has the potential to rapidly develop antigens to selected targets , refine manufacturing processes and optimize development across multiple vaccine candidates . in conjunction with government and or global health authorities , we believe we can address emerging disease threats with pandemic potential . in addition to our response to the h7n9 influenza strain , we have developed a vaccine candidate to middle east respiratory syndrome ( “ mers ” ) , caused by a novel coronavirus first identified in 2012. mers emerged as a disease threat in 2013 , and is currently being monitored by global health agencies , with the who reporting significant confirmed cases of infection and deaths . the mers virus is a part of the coronavirus family that includes the severe acute respiratory syndrome coronavirus ( “ sars ” ) . within weeks of obtaining the sequence of the circulating mers strain , we successfully produced a vaccine candidate designed to provide protection . this vaccine candidate is based on the major surface spike protein , which we had previously identified as the antigen of choice in our work with a sars vaccine candidate . in 2014 , in collaboration with the university of maryland , school of medicine , we published results that showed our investigational vaccine candidates against both mers and sars blocked infection in laboratory studies . although the development of a mers vaccine candidate currently remains a preclinical program , we believe that our mers vaccine candidate offers a viable option to interested global public health authorities . sales of common stock in march 2015 , we completed a public offering of 27,758,620 shares of our common stock , including 3,620,689 shares of common stock that were issued upon the exercise in full of the option to purchase additional shares granted to the underwriters , at a price of $ 7.25 per share resulting in net proceeds of approximately $ 190 million . in 2012 , we entered into an at market issuance sales agreement ( “ sales agreement ” ) , under Narrative : liquidity matters and capital resources our future capital requirements depend on numerous factors including , but not limited to , the commitments and progress of our research and development programs , the progress of preclinical and clinical testing , the time and costs involved in obtaining regulatory approvals , the costs of filing , prosecuting , defending and enforcing patent claims and other intellectual property rights and manufacturing costs . we plan to continue to have multiple vaccines and products in various stages of development , and we believe our operating expenses and capital requirements will fluctuate depending upon the timing of certain events , such as the scope , initiation , rate and progress of our preclinical studies and clinical trials and other research and development activities . as of december 31 , 2015 , we had $ 230.7 million in cash and cash equivalents and marketable securities as compared to $ 168.1 million as of december 31 , 2014. these amounts consisted of $ 93.1 million in cash and cash equivalents and $ 137.5 million in marketable securities as of december 31 , 2015 as compared to $ 32.3 million in cash and cash equivalents and $ 135.7 million in marketable securities as of december 31 , 2014. the following table summarizes cash flows for 2015 and 2014 ( in thousands ) : replace_table_token_10_th net cash used in operating activities increased to $ 126.1 million for 2015 , as compared to $ 67.0 million for 2014. the increase in cash usage was primarily due to increased research and development expenses relating to our rsv f vaccine , higher employee-related costs and timing of customer and vendor payments . 54 during 2015 and 2014 , our investing activities consisted primarily of purchases and maturities of marketable securities and capital expenditures . capital expenditures for 2015 and 2014 were $ 18.3 million and $ 7.3 million , respectively . the increase in capital expenditures was primarily due to the purchase of laboratory equipment for process development , analytical development and manufacturing scale-up required to support our maturing product portfolio .

replace_table_token_8_th ( 1 ) gross margin as a percentage of revenues from home sales excluding valuation adjustments and operating margin as a percentage of revenues from home sales excluding valuation adjustments are non-gaap financial measures disclosed by certain of our competitors and have been presented because we find it useful in evaluating our performance and believe that it helps readers of our financial statements compare our operations with those of our competitors . see the non-gaap financial measures section . 2011 versus 2010 for both the years ended november 30 , 2011 and 2010 , revenues from home sales were $ 2.6 billion . there was a 1 % increase in the average sales price of homes delivered , offset by a 1 % decrease in the number of home deliveries , excluding unconsolidated entities . new home deliveries , excluding unconsolidated entities , decreased to 10,746 homes in the year ended november 30 , 2011 from 10,859 homes last year . the decrease in home deliveries was primarily in our homebuilding houston and homebuilding west segments and homebuilding other as a result of the absence of the federal homebuyer tax credit , partially offset by an increase in home deliveries in our homebuilding southeast florida segment . the increase in deliveries in our 23 homebuilding southeast florida segment was the result of an increase in home deliveries from communities acquired in the prior year that had sales but only a small amount of deliveries during the year ended november 30 , 2010. the average sales price of homes delivered increased to $ 244,000 in the year ended november 30 , 2011 from $ 243,000 in the same period last year , driven primarily by an increase in the average sales price of home deliveries in all of our homebuilding segments and homebuilding other , except for our homebuilding west segment , primarily due to a higher percentage of home deliveries in higher priced communities . this increase was partially offset by a reduction in average sales price in our homebuilding west segment due to a shift to smaller square footage homes generating a lower average sales price . sales incentives offered to homebuyers were $ 33,700 per home delivered in the year ended november 30 , 2011 , or 12.1 % as a percentage of home sales revenue , compared to $ 32,800 per home delivered in the same period last year , or 11.9 % as a percentage of home sales revenue . currently , our biggest competition is from the sales of existing and foreclosed homes . we differentiate our new homes from those homes by issuing new home warranty , and in certain markets emphasizing energy efficiency and new technology such as keyless door locks and lighting and thermostats controlled remotely from outside the home . gross margins on home sales were $ 523.4 million , or 19.9 % , in the year ended november 30 , 2011 , which included $ 35.7 million of valuation adjustments , compared to gross margins on home sales of $ 517.9 million , or 19.7 % , in the year ended november 30 , 2010 , which included $ 44.7 million of valuation adjustments . gross margins on home sales , excluding valuation adjustments , were $ 559.1 million , or 21.3 % , in the year ended november 30 , 2011 , compared to $ 562.6 million , or 21.4 % , in the year ended november 30 , 2010. gross margins on home sales excluding valuation adjustments is a non-gaap financial measure , which is discussed in the non-gaap financial measures section . gross profits on land sales totaled $ 7.7 million in the year ended november 30 , 2011 , net of $ 0.5 million of valuation adjustments and $ 1.8 million in write-offs of deposits and pre-acquisition costs , compared to gross profits on land sales of $ 21.4 million in the year ended november 30 , 2010 , primarily due to a $ 14.1 million reduction of an obligation related to a profit participation agreement . gross profits on land sales for the year ended november 30 , 2010 were net of $ 3.4 million of valuation adjustments and $ 3.1 million in write-offs of deposits and pre-acquisition costs . selling , general and administrative expenses were $ 384.8 million in the year ended november 30 , 2011 , which included $ 8.4 million related to additional expenses associated with remedying pre-existing liabilities of a previously acquired company , offset by $ 8.0 million related to the receipt of a settlement discussed below . selling , general and administrative expenses were $ 377.0 million in the year ended november 30 , 2010. selling , general and administrative expenses as a percentage of revenues from home sales increased to 14.7 % in the year ended november 30 , 2011 , from 14.3 % in 2010. lennar homebuilding equity in loss from unconsolidated entities was $ 62.7 million in the year ended november 30 , 2011 , which primarily included our share of valuation adjustments of $ 57.6 million related to an asset distribution from a lennar homebuilding unconsolidated entity as the result of a linked transaction . this was offset by a pre-tax gain of $ 62.3 million included in lennar homebuilding other income ( expense ) , net , related to that unconsolidated entity 's net asset distribution . the transaction resulted in a net pre-tax gain of $ 4.7 million . in addition , lennar homebuilding equity in loss from unconsolidated entities included $ 8.9 million of valuation adjustments related to assets of lennar homebuilding 's unconsolidated entities , offset by our share of a gain on debt extinguishment at one of lennar homebuilding 's unconsolidated entities totaling $ 15.4 million . story_separator_special_tag management finds these to be important and useful measures in evaluating our performance because it discloses the profit we generate on homes we actually delivered during the period , as our valuation adjustments generally relate to inventory that we did not deliver during the period . gross margins as a percentage of revenue on home sales excluding valuation adjustments and operating margins as a percentage of revenues from home sales excluding valuation adjustments also are important to our management because they assist our management in making strategic decisions regarding our construction pace , product mix and product pricing based upon the profitability we generated on homes we actually delivered during previous periods . we believe investors also find gross margins and operating margins on home sales excluding valuation adjustments , and gross margins and operating margins on home sales as a percentage of revenues from home sales excluding valuation adjustments to be important and useful because each of them discloses a profitability measure on homes we actually delivered in a period that can be compared to the profitability on homes we delivered in a prior period without regard to the variability of valuation adjustments recorded from period to period . in addition , to the extent that our competitors provide similar information , disclosure of our gross margins and operating margins on home sales excluding valuation adjustments and gross margins and operating margins on home sales as a percentage of revenues from home sales excluding valuation adjustments helps readers of our financial statements compare our ability to generate profits with regard to the homes we deliver in a period to our competitors ' ability to generate profits with regard to the homes they deliver in the same period . although management finds gross margins and operating margins on home sales excluding valuation adjustments and gross margins and operating margins on home sales as a percentage of revenues from home sales excluding valuation adjustments to be important measures in conducting and evaluating our operations , each of these measures has limitations as an analytical tool as it is not reflective of the actual profitability generated by our company during the period . this is because they exclude charges we recorded relating to inventory that was impaired during the period . in addition , because gross margins and operating margins on home sales excluding valuation adjustments and gross margins and operating margins as a percentage of revenues from home sales excluding valuation adjustments are financial measures that are not calculated in accordance with generally accepted accounting principles ( “gaap” ) , they may not be completely comparable to similarly titled measures of our competitors due to differences in methods of calculation and charges being excluded . our management compensates for the limitations of using gross margins and operating margins on home sales excluding valuation adjustments and gross and operating margins as a percentage of revenues from home sales excluding valuation adjustments by using these non-gaap measures only to supplement our gaap results in order to provide a more complete understanding of the factors and trends affecting our operations . in order to analyze our overall performance and actual profitability relative to our homebuilding operations , we also compare our gross margins and operating margins on home sales during the period and gross margins and operating margins as a percentage of revenues from home sales , inclusive of valuation adjustments , with the same measures during prior comparable periods . due to the limitations discussed above , gross margins and operating margins on home sales excluding valuation adjustments and gross margins and operating margins as a percentage of revenues from home sales excluding valuation adjustments should not be viewed in isolation as they are not substitutes for gaap measures of gross margins and operating margins . 27 the table set forth below reconciles our gross margins on home sales excluding valuation adjustments and our operating margins as a percentage of revenues from home sales excluding valuation adjustments for the years ended november 30 , 2011 , 2010 and 2009 to our gross margins and operating margins on home sales for the years ended november 30 , 2011 , 2010 and 2009 : replace_table_token_9_th homebuilding segments our homebuilding operations construct and sell homes primarily for first-time , move-up and active adult homebuyers primarily under the lennar brand name . in addition , our homebuilding operations also purchase , develop and sell land to third parties . in certain circumstances , we diversify our operations through strategic alliances and attempt to minimize our risks by investing with third parties in joint ventures . we have disaggregated our homebuilding southeast florida division from our homebuilding east reportable segment and have presented homebuilding southeast florida as a separate reportable segment due to the division currently achieving one of the quantitative thresholds set forth in accounting standards codification topic 280 , segment reporting , ( “asc 280” ) . in addition , we reclassified the homebuilding activities in the states of georgia , north carolina and south carolina from homebuilding other to our homebuilding east reportable segment because these states currently meet the reportable segment aggregation criteria in asc 280. all prior year segment information has been restated to conform with the 2011 presentation . the change in reportable segments and homebuilding other had no effect on our consolidated financial position , results of operations or cash flows for the periods presented . as of and for the year ended november 30 , 2011 , we have grouped our homebuilding activities into five reportable segments , which we refer to as homebuilding east , homebuilding central , homebuilding west , homebuilding southeast florida and homebuilding houston . information about homebuilding activities in which our homebuilding activities are not economically similar to other states in the same geographic area is grouped under “homebuilding other , ” which is not considered a reportable segment . reference in this management 's discussion and analysis of financial condition and results of operations

debt , require the issuer of certain convertible debt instruments that may be settled in cash on conversion to separately account for the liability and equity components of the instrument in a manner that reflects the issuer 's non-convertible debt borrowing rate . we have applied these provisions to our 2.75 % convertible senior notes . we estimated the fair value of the 2.75 % convertible senior notes using similar debt instruments at issuance that did not have a conversion feature and allocated the residual value to an equity component that represents the estimated fair value of the conversion feature at issuance . the debt discount of the 2.75 % convertible senior notes is being amortized over five years and the annual effective interest rate is 7.1 % after giving effect to the amortization of the discount and deferred financing costs . at both november 30 , 2011 and 2010 , the principal amount of the 2.75 % convertible senior notes was $ 446.0 million . at november 30 , 2011 and 2010 , the carrying amount of the equity component included in stockholders ' equity was $ 57.6 million and $ 70.1 million , respectively , and the net carrying amount of the 2.75 % convertible senior notes included in lennar homebuilding senior notes and other notes payable was $ 388.4 million and $ 375.9 million , respectively . during the years ended november 30 , 2011 and 2010 , the amount of interest recognized relating to both the contractual interest and amortization of the discount was $ 24.8 million and $ 1.7 million , respectively . in may 2010 , we issued $ 250 million of 6.95 % senior notes due 2018 ( the “6.95 % senior notes” ) at a price of 98.929 % in a private placement . proceeds from the offering , after payment of initial purchaser 's discount and expenses , were $ 243.9 million .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. replace_table_token_8_th ( 1 ) gross margin as a percentage of revenues from home sales excluding valuation adjustments and operating margin as a percentage of revenues from home sales excluding valuation adjustments are non-gaap financial measures disclosed by certain of our competitors and have been presented because we find it useful in evaluating our performance and believe that it helps readers of our financial statements compare our operations with those of our competitors . see the non-gaap financial measures section . 2011 versus 2010 for both the years ended november 30 , 2011 and 2010 , revenues from home sales were $ 2.6 billion . there was a 1 % increase in the average sales price of homes delivered , offset by a 1 % decrease in the number of home deliveries , excluding unconsolidated entities . new home deliveries , excluding unconsolidated entities , decreased to 10,746 homes in the year ended november 30 , 2011 from 10,859 homes last year . the decrease in home deliveries was primarily in our homebuilding houston and homebuilding west segments and homebuilding other as a result of the absence of the federal homebuyer tax credit , partially offset by an increase in home deliveries in our homebuilding southeast florida segment . the increase in deliveries in our 23 homebuilding southeast florida segment was the result of an increase in home deliveries from communities acquired in the prior year that had sales but only a small amount of deliveries during the year ended november 30 , 2010. the average sales price of homes delivered increased to $ 244,000 in the year ended november 30 , 2011 from $ 243,000 in the same period last year , driven primarily by an increase in the average sales price of home deliveries in all of our homebuilding segments and homebuilding other , except for our homebuilding west segment , primarily due to a higher percentage of home deliveries in higher priced communities . this increase was partially offset by a reduction in average sales price in our homebuilding west segment due to a shift to smaller square footage homes generating a lower average sales price . sales incentives offered to homebuyers were $ 33,700 per home delivered in the year ended november 30 , 2011 , or 12.1 % as a percentage of home sales revenue , compared to $ 32,800 per home delivered in the same period last year , or 11.9 % as a percentage of home sales revenue . currently , our biggest competition is from the sales of existing and foreclosed homes . we differentiate our new homes from those homes by issuing new home warranty , and in certain markets emphasizing energy efficiency and new technology such as keyless door locks and lighting and thermostats controlled remotely from outside the home . gross margins on home sales were $ 523.4 million , or 19.9 % , in the year ended november 30 , 2011 , which included $ 35.7 million of valuation adjustments , compared to gross margins on home sales of $ 517.9 million , or 19.7 % , in the year ended november 30 , 2010 , which included $ 44.7 million of valuation adjustments . gross margins on home sales , excluding valuation adjustments , were $ 559.1 million , or 21.3 % , in the year ended november 30 , 2011 , compared to $ 562.6 million , or 21.4 % , in the year ended november 30 , 2010. gross margins on home sales excluding valuation adjustments is a non-gaap financial measure , which is discussed in the non-gaap financial measures section . gross profits on land sales totaled $ 7.7 million in the year ended november 30 , 2011 , net of $ 0.5 million of valuation adjustments and $ 1.8 million in write-offs of deposits and pre-acquisition costs , compared to gross profits on land sales of $ 21.4 million in the year ended november 30 , 2010 , primarily due to a $ 14.1 million reduction of an obligation related to a profit participation agreement . gross profits on land sales for the year ended november 30 , 2010 were net of $ 3.4 million of valuation adjustments and $ 3.1 million in write-offs of deposits and pre-acquisition costs . selling , general and administrative expenses were $ 384.8 million in the year ended november 30 , 2011 , which included $ 8.4 million related to additional expenses associated with remedying pre-existing liabilities of a previously acquired company , offset by $ 8.0 million related to the receipt of a settlement discussed below . selling , general and administrative expenses were $ 377.0 million in the year ended november 30 , 2010. selling , general and administrative expenses as a percentage of revenues from home sales increased to 14.7 % in the year ended november 30 , 2011 , from 14.3 % in 2010. lennar homebuilding equity in loss from unconsolidated entities was $ 62.7 million in the year ended november 30 , 2011 , which primarily included our share of valuation adjustments of $ 57.6 million related to an asset distribution from a lennar homebuilding unconsolidated entity as the result of a linked transaction . this was offset by a pre-tax gain of $ 62.3 million included in lennar homebuilding other income ( expense ) , net , related to that unconsolidated entity 's net asset distribution . the transaction resulted in a net pre-tax gain of $ 4.7 million . in addition , lennar homebuilding equity in loss from unconsolidated entities included $ 8.9 million of valuation adjustments related to assets of lennar homebuilding 's unconsolidated entities , offset by our share of a gain on debt extinguishment at one of lennar homebuilding 's unconsolidated entities totaling $ 15.4 million . story_separator_special_tag management finds these to be important and useful measures in evaluating our performance because it discloses the profit we generate on homes we actually delivered during the period , as our valuation adjustments generally relate to inventory that we did not deliver during the period . gross margins as a percentage of revenue on home sales excluding valuation adjustments and operating margins as a percentage of revenues from home sales excluding valuation adjustments also are important to our management because they assist our management in making strategic decisions regarding our construction pace , product mix and product pricing based upon the profitability we generated on homes we actually delivered during previous periods . we believe investors also find gross margins and operating margins on home sales excluding valuation adjustments , and gross margins and operating margins on home sales as a percentage of revenues from home sales excluding valuation adjustments to be important and useful because each of them discloses a profitability measure on homes we actually delivered in a period that can be compared to the profitability on homes we delivered in a prior period without regard to the variability of valuation adjustments recorded from period to period . in addition , to the extent that our competitors provide similar information , disclosure of our gross margins and operating margins on home sales excluding valuation adjustments and gross margins and operating margins on home sales as a percentage of revenues from home sales excluding valuation adjustments helps readers of our financial statements compare our ability to generate profits with regard to the homes we deliver in a period to our competitors ' ability to generate profits with regard to the homes they deliver in the same period . although management finds gross margins and operating margins on home sales excluding valuation adjustments and gross margins and operating margins on home sales as a percentage of revenues from home sales excluding valuation adjustments to be important measures in conducting and evaluating our operations , each of these measures has limitations as an analytical tool as it is not reflective of the actual profitability generated by our company during the period . this is because they exclude charges we recorded relating to inventory that was impaired during the period . in addition , because gross margins and operating margins on home sales excluding valuation adjustments and gross margins and operating margins as a percentage of revenues from home sales excluding valuation adjustments are financial measures that are not calculated in accordance with generally accepted accounting principles ( “gaap” ) , they may not be completely comparable to similarly titled measures of our competitors due to differences in methods of calculation and charges being excluded . our management compensates for the limitations of using gross margins and operating margins on home sales excluding valuation adjustments and gross and operating margins as a percentage of revenues from home sales excluding valuation adjustments by using these non-gaap measures only to supplement our gaap results in order to provide a more complete understanding of the factors and trends affecting our operations . in order to analyze our overall performance and actual profitability relative to our homebuilding operations , we also compare our gross margins and operating margins on home sales during the period and gross margins and operating margins as a percentage of revenues from home sales , inclusive of valuation adjustments , with the same measures during prior comparable periods . due to the limitations discussed above , gross margins and operating margins on home sales excluding valuation adjustments and gross margins and operating margins as a percentage of revenues from home sales excluding valuation adjustments should not be viewed in isolation as they are not substitutes for gaap measures of gross margins and operating margins . 27 the table set forth below reconciles our gross margins on home sales excluding valuation adjustments and our operating margins as a percentage of revenues from home sales excluding valuation adjustments for the years ended november 30 , 2011 , 2010 and 2009 to our gross margins and operating margins on home sales for the years ended november 30 , 2011 , 2010 and 2009 : replace_table_token_9_th homebuilding segments our homebuilding operations construct and sell homes primarily for first-time , move-up and active adult homebuyers primarily under the lennar brand name . in addition , our homebuilding operations also purchase , develop and sell land to third parties . in certain circumstances , we diversify our operations through strategic alliances and attempt to minimize our risks by investing with third parties in joint ventures . we have disaggregated our homebuilding southeast florida division from our homebuilding east reportable segment and have presented homebuilding southeast florida as a separate reportable segment due to the division currently achieving one of the quantitative thresholds set forth in accounting standards codification topic 280 , segment reporting , ( “asc 280” ) . in addition , we reclassified the homebuilding activities in the states of georgia , north carolina and south carolina from homebuilding other to our homebuilding east reportable segment because these states currently meet the reportable segment aggregation criteria in asc 280. all prior year segment information has been restated to conform with the 2011 presentation . the change in reportable segments and homebuilding other had no effect on our consolidated financial position , results of operations or cash flows for the periods presented . as of and for the year ended november 30 , 2011 , we have grouped our homebuilding activities into five reportable segments , which we refer to as homebuilding east , homebuilding central , homebuilding west , homebuilding southeast florida and homebuilding houston . information about homebuilding activities in which our homebuilding activities are not economically similar to other states in the same geographic area is grouped under “homebuilding other , ” which is not considered a reportable segment . reference in this management 's discussion and analysis of financial condition and results of operations Narrative : debt , require the issuer of certain convertible debt instruments that may be settled in cash on conversion to separately account for the liability and equity components of the instrument in a manner that reflects the issuer 's non-convertible debt borrowing rate . we have applied these provisions to our 2.75 % convertible senior notes . we estimated the fair value of the 2.75 % convertible senior notes using similar debt instruments at issuance that did not have a conversion feature and allocated the residual value to an equity component that represents the estimated fair value of the conversion feature at issuance . the debt discount of the 2.75 % convertible senior notes is being amortized over five years and the annual effective interest rate is 7.1 % after giving effect to the amortization of the discount and deferred financing costs . at both november 30 , 2011 and 2010 , the principal amount of the 2.75 % convertible senior notes was $ 446.0 million . at november 30 , 2011 and 2010 , the carrying amount of the equity component included in stockholders ' equity was $ 57.6 million and $ 70.1 million , respectively , and the net carrying amount of the 2.75 % convertible senior notes included in lennar homebuilding senior notes and other notes payable was $ 388.4 million and $ 375.9 million , respectively . during the years ended november 30 , 2011 and 2010 , the amount of interest recognized relating to both the contractual interest and amortization of the discount was $ 24.8 million and $ 1.7 million , respectively . in may 2010 , we issued $ 250 million of 6.95 % senior notes due 2018 ( the “6.95 % senior notes” ) at a price of 98.929 % in a private placement . proceeds from the offering , after payment of initial purchaser 's discount and expenses , were $ 243.9 million .

financial guaranty insurance may be issued at the inception of an insured obligation or may be issued for the benefit of a holder of an obligation in the secondary market . we have provided financial guaranty credit protection through the issuance of a financial guaranty insurance policy , by insuring the obligations under a cds or through the reinsurance of such obligations . both a financial guaranty insurance policy and a cds provide the purchaser of such credit protection with a guaranty of the timely payment of interest and scheduled principal when due on a covered financial obligation , and in the case of most of our financial guaranty cdss , credit protection for amounts in excess of specified levels of losses . these forms of credit enhancement each require similar underwriting and surveillance . 91 in 2008 , in light of difficult market conditions and the downgrade of the financial strength ratings of our financial guaranty insurance subsidiaries , we discontinued writing any new financial guaranty business , other than as necessary to commute , restructure , hedge or otherwise mitigate losses or reduce exposure in our existing portfolio . since 2008 , we have significantly reduced our financial guaranty operations and have reduced our financial guaranty exposures through commutations in order to mitigate uncertainty , maximize the ultimate capital available for our mortgage insurance business and accelerate our access to that capital . in january 2012 , radian asset assurance entered into a three-part transaction ( the `` assured transaction `` ) with subsidiaries of assured guaranty ltd. ( collectively `` assured `` ) that included the following : the commutation of $ 13.8 billion of financial guaranty net par outstanding that was reinsured by radian asset assurance ( the `` assured commutation `` ) ; the ceding of $ 1.8 billion of direct public finance business to assured ( the `` assured cession `` ) ; and an agreement to sell to assured municipal and infrastructure assurance corporation ( the `` fg insurance shell `` ) , a new york domiciled financial guaranty insurance company with licenses to conduct business in 37 states and the district of columbia . radian asset assurance acquired the fg insurance shell in june 2011 in order to pursue potential strategic alternatives in the public finance market . we expect to complete the sale of the fg insurance shell in the first quarter of 2012 , subject to regulatory approval . this three-part transaction with assured reduced our financial guaranty net par outstanding by approximately 22.5 % and is expected to provide a statutory capital benefit to radian asset assurance of approximately $ 100 million in the first quarter of 2012. because radian asset assurance is a wholly-owned subsidiary of radian guaranty , this transaction will also provide a statutory capital benefit of $ 100 million to radian guaranty . this transaction is consistent with our strategic objectives of accelerating the reduction of our financial guaranty net par outstanding and strengthening the statutory capital positions of radian asset assurance and radian guaranty . following the assured transaction , on february 22 , 2012 , radian asset assurance agreed to terminate its arrangement with the national league of cities ( `` nlc `` ) to explore the formation of a new public finance mutual bond insurance company . the following table provides the expected impact on our consolidated financial statements in the first quarter of 2012 for the assured transaction . while we expect a statutory capital benefit as a result of this transaction as discussed above , under gaap this transaction will result in a reduction in net income , and therefore , a reduction in retained earnings . statement of operations ( in millions ) decrease in premiums written $ ( 119.8 ) decrease in net premiums earned $ ( 22.2 ) increase in change in fair value of derivative instruments—gain 0.1 increase in policy acquisition costs ( 15.7 ) gain on sale of affiliate 9.0 decrease in pre-tax income $ ( 28.8 ) balance sheet ( in millions ) decrease in : story_separator_special_tag number of claims that we are denying and the number of insurance certificates that we are rescinding due to fraud , underwriter negligence or other factors , including the impact of our recent experience regarding reinstatements of previously rescinded policies and denied claims . our current level of rescissions and denials remains elevated compared to historical levels , which we believe reflects the larger concentration of poorly underwritten loans ( primarily originated during 2005 through 2008 ) that are in our default inventory , as well as our extensive efforts to examine all claims for potential rescissions or denials . we expect the level of rescissions and denials to continue to remain elevated compared to historical levels as long as our 2005 through 2008 insurance policies comprise the majority of our default inventory . claims paid . total mortgage insurance claims paid in 2011 were $ 1.5 billion and include $ 90.5 million related to the termination of certain structured mortgage insurance transactions . as discussed above , foreclosure backlogs , servicer delays and loan modification programs have reduced the number of defaults going to claim . claims paid in 2011 were also affected by our internal claims payment process . beginning in 2011 , we increased the number of claims that were subject to review for potential violations of our insurance policies . we currently expect total claims paid for 2012 to be approximately $ 1.3 billion . 94 new insurance written . we wrote $ 15.5 billion of new mortgage insurance in 2011 , compared to $ 11.6 billion of insurance written in 2010 . the increase in 2011 compared to 2010 is mainly attributable to an increase in the penetration rate of private mortgage insurance in the overall insured mortgage market , as well as an increase in our share of the private mortgage market . story_separator_special_tag we established a valuation allowance against our deferred tax assets ( `` dta `` ) in the fourth quarter of 2010 , and as a result , our income tax expense was much less in 2011 compared to 2010. net premiums written and earned . net premiums written in 2011 increased slightly from 2010 , due to an increase in premiums written in the mortgage insurance segment . for 2011 , net premiums earned decreased in both our mortgage insurance and financial guaranty segments compared to 2010 . see “ results of operations—mortgage insurance—year ended december 31 , 2011 compared to year ended december 31 , 2010 —net premiums written and earned ” and “ results of operations—financial guaranty—year ended december 31 , 2011 compared to year ended december 31 , 2010 —net premiums earned ” below for further information . net investment income . the decrease in net investment income during 2011 , compared to 2010 , was primarily due to a decline in our total investment balance due to negative cash flows , as well as a shift from higher yielding securities in our investment portfolio to lower yielding investments . our allocation to short-term and short duration investments remains high in anticipation of near-term claim payments in our mortgage insurance segment , and this allocation , combined with certain sales and subsequent reinvestment of longer duration securities in a low interest rate environment , resulted in a lower yield profile for the portfolio . net gains on investments . the components of the net gains on investments for the periods indicated are as follows : replace_table_token_41_th during the second quarter of 2011 , we sold all of our interests in certain bonds held in our available for sale portfolio that were issued as part of securitizations collateralized by the master settlement agreement ( `` msa `` ) among certain domestic tobacco manufacturers and 46 states and certain territories ( the `` tobacco bonds `` ) , realizing a loss on the sale of $ 53.7 million . these losses were more than offset by gains on sales of other securities in our trading portfolio for 2011 , as we took advantage of favorable market conditions allowing us to monetize the gains embedded in the investment portfolio through open market sales of securities . the proceeds from the asset sales were used for liquidity planning purposes or re-invested in similar assets . realized gains from these sales were also additive to the respective statutory capital positions of our subsidiaries that held the investments . in 2010 , a majority of our realized gains on investments occurred as a result of sales from our trading portfolio , in connection with the strategic repositioning of our investment portfolio from tax-advantaged securities to securities that provide taxable investment income . change in fair value of derivative instruments . the components of the gains ( losses ) included in change in fair value of derivative instruments for the years ended december 31 , 2011 , 2010 and 2009 are as follows : replace_table_token_42_th 99 see “ results of operations—financial guaranty—year ended december 31 , 2011 compared to year ended december 31 , 2010 —change in fair value of derivative instruments ” below for further information . as a result of the consolidation in 2010 of certain vies in which we are the primary beneficiary , amounts that had previously been reported in change in fair value of derivative instruments are currently reported as change in fair value of vie debt , which is included in net gains ( losses ) on other financial instruments . the unrealized gains experienced during 2011 are primarily due to the significant widening of our cds spread , which widened by 2,267 basis points during the year , compared to spread tightening of 1,065 basis points in 2010. the unrealized losses experienced during 2010 were primarily due to the significant tightening of our cds spread . the five-year cds spread is presented below as an illustration of the market 's view of our non-performance risk ; the cds spread used in the valuation of specific fair value liabilities is typically based on the remaining term of the instrument . replace_table_token_43_th the following tables quantify the impact of our non-performance risk on our derivative assets , derivative liabilities , as well as net vie liabilities ( in aggregate by type , excluding assumed financial guaranty derivatives ) presented in our consolidated balance sheets . replace_table_token_44_th replace_table_token_45_th net gains ( losses ) on other financial instruments . the components of the net gains ( losses ) on other financial instruments for the periods indicated are as follows : replace_table_token_46_th 100 the results for 2011 and 2010 were mainly impacted by gains and losses on financial guaranty vie debt . the widening of radian group 's five-year cds spread was the dominant driver of the gains in 2011 , as discussed above . radian 's spread tightened during 2010 , resulting in losses reported during that time period . also impacting the results for 2011 were foreign currency translation gains resulting from the liquidation of a foreign subsidiary , which occurred during the second quarter of 2011. see “ results of operations—mortgage insurance—year ended december 31 , 2011 compared to year ended december 31 , 2010 —net gains ( losses ) on other financial instruments ” and “ results of operations—financial guaranty—year ended december 31 , 2011 compared to year ended december 31 , 2010 —net gains ( losses ) on other financial instruments ” below for further information . gain on sale of affiliate . the gain on sale of affiliate for 2010 resulted from the sale of our remaining equity interest in sherman on may 3 , 2010. provision for losses . the provision for losses decreased during 2011 compared to 2010 , primarily due to decreases in both our mortgage insurance and financial guaranty provision for losses . see “ results of operations—mortgage insurance—year ended december 31

cash $ 92.3 deferred policy acquisition costs 26.2 accounts and notes receivable 1.1 derivative assets 0.6 unearned premiums 71.6 derivative liabilities 0.9 increase in other assets 19.0 92 financial guaranty exposure subject to recapture or termination . approximately $ 52.9 billion of our total net par outstanding as of december 31 , 2011 , ( representing 76.4 % of our financial guaranty segment 's total net par outstanding ) was subject to recapture or termination at the option of our primary reinsurance customers and financial guaranty credit derivative counterparties . in february 2012 , three of our cds counterparties exercised their termination rights with respect to 14 corporate collateralized debt obligations ( `` cdos '' ) that we insured ( the “ february 2012 cdo terminations ” ) . the february 2012 cdo terminations reduced our net par outstanding by $ 5.8 billion . after giving effect to the assured transaction and the february 2012 cdo terminations , approximately $ 33.3 billion of our total net par outstanding remains subject to recapture or termination at the option of our primary reinsurance customers and financial guaranty credit derivative counterparties . financial services prior to january 1 , 2011 , we also had a third segment—financial services . our financial services segment consisted mainly of our ownership interest in credit-based asset servicing and securitization llc ( `` c-bass '' ) , which was a credit-based consumer asset business . we wrote off our entire investment in c-bass in 2007. c-bass filed for chapter 11 bankruptcy protection on november 12 , 2010 , and was subsequently liquidated .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. financial guaranty insurance may be issued at the inception of an insured obligation or may be issued for the benefit of a holder of an obligation in the secondary market . we have provided financial guaranty credit protection through the issuance of a financial guaranty insurance policy , by insuring the obligations under a cds or through the reinsurance of such obligations . both a financial guaranty insurance policy and a cds provide the purchaser of such credit protection with a guaranty of the timely payment of interest and scheduled principal when due on a covered financial obligation , and in the case of most of our financial guaranty cdss , credit protection for amounts in excess of specified levels of losses . these forms of credit enhancement each require similar underwriting and surveillance . 91 in 2008 , in light of difficult market conditions and the downgrade of the financial strength ratings of our financial guaranty insurance subsidiaries , we discontinued writing any new financial guaranty business , other than as necessary to commute , restructure , hedge or otherwise mitigate losses or reduce exposure in our existing portfolio . since 2008 , we have significantly reduced our financial guaranty operations and have reduced our financial guaranty exposures through commutations in order to mitigate uncertainty , maximize the ultimate capital available for our mortgage insurance business and accelerate our access to that capital . in january 2012 , radian asset assurance entered into a three-part transaction ( the `` assured transaction `` ) with subsidiaries of assured guaranty ltd. ( collectively `` assured `` ) that included the following : the commutation of $ 13.8 billion of financial guaranty net par outstanding that was reinsured by radian asset assurance ( the `` assured commutation `` ) ; the ceding of $ 1.8 billion of direct public finance business to assured ( the `` assured cession `` ) ; and an agreement to sell to assured municipal and infrastructure assurance corporation ( the `` fg insurance shell `` ) , a new york domiciled financial guaranty insurance company with licenses to conduct business in 37 states and the district of columbia . radian asset assurance acquired the fg insurance shell in june 2011 in order to pursue potential strategic alternatives in the public finance market . we expect to complete the sale of the fg insurance shell in the first quarter of 2012 , subject to regulatory approval . this three-part transaction with assured reduced our financial guaranty net par outstanding by approximately 22.5 % and is expected to provide a statutory capital benefit to radian asset assurance of approximately $ 100 million in the first quarter of 2012. because radian asset assurance is a wholly-owned subsidiary of radian guaranty , this transaction will also provide a statutory capital benefit of $ 100 million to radian guaranty . this transaction is consistent with our strategic objectives of accelerating the reduction of our financial guaranty net par outstanding and strengthening the statutory capital positions of radian asset assurance and radian guaranty . following the assured transaction , on february 22 , 2012 , radian asset assurance agreed to terminate its arrangement with the national league of cities ( `` nlc `` ) to explore the formation of a new public finance mutual bond insurance company . the following table provides the expected impact on our consolidated financial statements in the first quarter of 2012 for the assured transaction . while we expect a statutory capital benefit as a result of this transaction as discussed above , under gaap this transaction will result in a reduction in net income , and therefore , a reduction in retained earnings . statement of operations ( in millions ) decrease in premiums written $ ( 119.8 ) decrease in net premiums earned $ ( 22.2 ) increase in change in fair value of derivative instruments—gain 0.1 increase in policy acquisition costs ( 15.7 ) gain on sale of affiliate 9.0 decrease in pre-tax income $ ( 28.8 ) balance sheet ( in millions ) decrease in : story_separator_special_tag number of claims that we are denying and the number of insurance certificates that we are rescinding due to fraud , underwriter negligence or other factors , including the impact of our recent experience regarding reinstatements of previously rescinded policies and denied claims . our current level of rescissions and denials remains elevated compared to historical levels , which we believe reflects the larger concentration of poorly underwritten loans ( primarily originated during 2005 through 2008 ) that are in our default inventory , as well as our extensive efforts to examine all claims for potential rescissions or denials . we expect the level of rescissions and denials to continue to remain elevated compared to historical levels as long as our 2005 through 2008 insurance policies comprise the majority of our default inventory . claims paid . total mortgage insurance claims paid in 2011 were $ 1.5 billion and include $ 90.5 million related to the termination of certain structured mortgage insurance transactions . as discussed above , foreclosure backlogs , servicer delays and loan modification programs have reduced the number of defaults going to claim . claims paid in 2011 were also affected by our internal claims payment process . beginning in 2011 , we increased the number of claims that were subject to review for potential violations of our insurance policies . we currently expect total claims paid for 2012 to be approximately $ 1.3 billion . 94 new insurance written . we wrote $ 15.5 billion of new mortgage insurance in 2011 , compared to $ 11.6 billion of insurance written in 2010 . the increase in 2011 compared to 2010 is mainly attributable to an increase in the penetration rate of private mortgage insurance in the overall insured mortgage market , as well as an increase in our share of the private mortgage market . story_separator_special_tag we established a valuation allowance against our deferred tax assets ( `` dta `` ) in the fourth quarter of 2010 , and as a result , our income tax expense was much less in 2011 compared to 2010. net premiums written and earned . net premiums written in 2011 increased slightly from 2010 , due to an increase in premiums written in the mortgage insurance segment . for 2011 , net premiums earned decreased in both our mortgage insurance and financial guaranty segments compared to 2010 . see “ results of operations—mortgage insurance—year ended december 31 , 2011 compared to year ended december 31 , 2010 —net premiums written and earned ” and “ results of operations—financial guaranty—year ended december 31 , 2011 compared to year ended december 31 , 2010 —net premiums earned ” below for further information . net investment income . the decrease in net investment income during 2011 , compared to 2010 , was primarily due to a decline in our total investment balance due to negative cash flows , as well as a shift from higher yielding securities in our investment portfolio to lower yielding investments . our allocation to short-term and short duration investments remains high in anticipation of near-term claim payments in our mortgage insurance segment , and this allocation , combined with certain sales and subsequent reinvestment of longer duration securities in a low interest rate environment , resulted in a lower yield profile for the portfolio . net gains on investments . the components of the net gains on investments for the periods indicated are as follows : replace_table_token_41_th during the second quarter of 2011 , we sold all of our interests in certain bonds held in our available for sale portfolio that were issued as part of securitizations collateralized by the master settlement agreement ( `` msa `` ) among certain domestic tobacco manufacturers and 46 states and certain territories ( the `` tobacco bonds `` ) , realizing a loss on the sale of $ 53.7 million . these losses were more than offset by gains on sales of other securities in our trading portfolio for 2011 , as we took advantage of favorable market conditions allowing us to monetize the gains embedded in the investment portfolio through open market sales of securities . the proceeds from the asset sales were used for liquidity planning purposes or re-invested in similar assets . realized gains from these sales were also additive to the respective statutory capital positions of our subsidiaries that held the investments . in 2010 , a majority of our realized gains on investments occurred as a result of sales from our trading portfolio , in connection with the strategic repositioning of our investment portfolio from tax-advantaged securities to securities that provide taxable investment income . change in fair value of derivative instruments . the components of the gains ( losses ) included in change in fair value of derivative instruments for the years ended december 31 , 2011 , 2010 and 2009 are as follows : replace_table_token_42_th 99 see “ results of operations—financial guaranty—year ended december 31 , 2011 compared to year ended december 31 , 2010 —change in fair value of derivative instruments ” below for further information . as a result of the consolidation in 2010 of certain vies in which we are the primary beneficiary , amounts that had previously been reported in change in fair value of derivative instruments are currently reported as change in fair value of vie debt , which is included in net gains ( losses ) on other financial instruments . the unrealized gains experienced during 2011 are primarily due to the significant widening of our cds spread , which widened by 2,267 basis points during the year , compared to spread tightening of 1,065 basis points in 2010. the unrealized losses experienced during 2010 were primarily due to the significant tightening of our cds spread . the five-year cds spread is presented below as an illustration of the market 's view of our non-performance risk ; the cds spread used in the valuation of specific fair value liabilities is typically based on the remaining term of the instrument . replace_table_token_43_th the following tables quantify the impact of our non-performance risk on our derivative assets , derivative liabilities , as well as net vie liabilities ( in aggregate by type , excluding assumed financial guaranty derivatives ) presented in our consolidated balance sheets . replace_table_token_44_th replace_table_token_45_th net gains ( losses ) on other financial instruments . the components of the net gains ( losses ) on other financial instruments for the periods indicated are as follows : replace_table_token_46_th 100 the results for 2011 and 2010 were mainly impacted by gains and losses on financial guaranty vie debt . the widening of radian group 's five-year cds spread was the dominant driver of the gains in 2011 , as discussed above . radian 's spread tightened during 2010 , resulting in losses reported during that time period . also impacting the results for 2011 were foreign currency translation gains resulting from the liquidation of a foreign subsidiary , which occurred during the second quarter of 2011. see “ results of operations—mortgage insurance—year ended december 31 , 2011 compared to year ended december 31 , 2010 —net gains ( losses ) on other financial instruments ” and “ results of operations—financial guaranty—year ended december 31 , 2011 compared to year ended december 31 , 2010 —net gains ( losses ) on other financial instruments ” below for further information . gain on sale of affiliate . the gain on sale of affiliate for 2010 resulted from the sale of our remaining equity interest in sherman on may 3 , 2010. provision for losses . the provision for losses decreased during 2011 compared to 2010 , primarily due to decreases in both our mortgage insurance and financial guaranty provision for losses . see “ results of operations—mortgage insurance—year ended december 31 Narrative : cash $ 92.3 deferred policy acquisition costs 26.2 accounts and notes receivable 1.1 derivative assets 0.6 unearned premiums 71.6 derivative liabilities 0.9 increase in other assets 19.0 92 financial guaranty exposure subject to recapture or termination . approximately $ 52.9 billion of our total net par outstanding as of december 31 , 2011 , ( representing 76.4 % of our financial guaranty segment 's total net par outstanding ) was subject to recapture or termination at the option of our primary reinsurance customers and financial guaranty credit derivative counterparties . in february 2012 , three of our cds counterparties exercised their termination rights with respect to 14 corporate collateralized debt obligations ( `` cdos '' ) that we insured ( the “ february 2012 cdo terminations ” ) . the february 2012 cdo terminations reduced our net par outstanding by $ 5.8 billion . after giving effect to the assured transaction and the february 2012 cdo terminations , approximately $ 33.3 billion of our total net par outstanding remains subject to recapture or termination at the option of our primary reinsurance customers and financial guaranty credit derivative counterparties . financial services prior to january 1 , 2011 , we also had a third segment—financial services . our financial services segment consisted mainly of our ownership interest in credit-based asset servicing and securitization llc ( `` c-bass '' ) , which was a credit-based consumer asset business . we wrote off our entire investment in c-bass in 2007. c-bass filed for chapter 11 bankruptcy protection on november 12 , 2010 , and was subsequently liquidated .

although we may not deploy capital exclusively in qualified communities , it is expected that most of our assets will be identified through this systematic process . cim group seeks to maximize the value of its holdings through active onsite property management and leasing . cim group has extensive in-house research , acquisition , credit analysis , development , finance , leasing and onsite property management capabilities , which leverage its deep understanding of metropolitan communities to position properties for multiple uses and to maximize operating income . as a vertically-integrated owner and operator , cim group has in-house onsite property management and leasing capabilities . property managers prepare annual capital and operating budgets and monthly operating reports , monitor results , and oversee vendor services , maintenance and capital improvement schedules . in addition , they ensure that revenue objectives are met , lease terms are followed , receivables are collected , preventative maintenance programs are implemented , vendors are evaluated and expenses are controlled . in addition , cim group 's real assets management committee reviews and approves strategic plans for each asset , including financial , leasing , marketing , property positioning and disposition plans . the real assets management committee reviews and approves the annual business plan for each property , including its capital and operating budget . cim group 's organizational structure provides for continuity through multi-disciplinary teams responsible for an asset from the time of the original investment recommendation , through the implementation of the asset 's business plan , and any disposition activities . cim group 's investments and development teams are separate groups that work very closely together on transactions requiring development expertise . while the investments team is responsible for acquisition analysis , both the investments and development teams perform due diligence , evaluate and determine underwriting assumptions and participate in the development management and ongoing asset management of cim group 's opportunistic assets . the development team is also responsible for the oversight and or execution of securing entitlements and the development/repositioning process . in instances where cim group is not the lead developer , cim group 's in-house development team continues to provide development and construction oversight to co-sponsors through a shadow team that oversees the progress of the development from beginning to end to ensure adherence to the budgets , schedules , quality and scope of the project in order to maintain cim group 's vision for the final product . the investments and development teams interact as a cohesive team when sourcing , underwriting , acquiring , executing and managing the business plan of an opportunistic acquisition . we seek to utilize the cim group platform to acquire , improve and or develop real estate assets within cim group 's qualified communities . we believe that these assets will provide greater returns than similar assets in other markets , as a result of the population growth , public commitment , and significant private investment that characterize these areas . over time , we seek to expand our real estate assets in communities targeted by cim group , supported by cim group 's broad real estate capabilities , as part of our plan to prudently grow nav and cash flow per share of common stock . as a matter of prudent management , we also regularly evaluate each asset within our portfolio as well as our strategies . such review may result in dispositions when an asset no longer fits our overall objectives or strategies , or when our view of the market value of such asset is equal to or exceeds its intrinsic value . while we are principally focused on class a and creative office assets in vibrant and improving metropolitan communities throughout the united states ( including improving and developing such assets ) , we may also participate more 71 actively in other cim group real estate strategies and product types in order to broaden our participation in cim group 's platform and capabilities for the benefit of all classes of stockholders . this may include , without limitation , engaging in real estate development activities as well as investing in other product types directly , side-by-side with one or more funds of cim group , through direct deployment of capital in a cim group real estate or debt fund , or deploying capital in or originating loans that are secured directly or indirectly by properties primarily located in qualified communities that meet our strategy . such loans may include limited and or non-recourse junior ( mezzanine , b-note or 2nd lien ) and senior acquisition , bridge or repositioning loans . completion of the program to unlock embedded value in our portfolio and improve trading liquidity of our common stock the company completed the previously announced program to unlock embedded value in our portfolio and improve trading liquidity of our common stock : sale of assets . during 2019 , the company sold eight properties in accordance with the approval of its then‑principal stockholder , and an additional two properties ( one office property and one development site in washington , d.c. ) after evaluating each asset within its portfolio and the intrinsic value of each property . the asset sale generated an aggregate gross sales price to the company of $ 990,996,000 . repayment of certain indebtedness . we used a portion of the net proceeds from the asset sale to repay balances on certain of the company 's indebtedness . return of capital to holders of common stock . on august 30 , 2019 , we paid a special dividend of $ 42.00 per share of common stock ( $ 14.00 per share of common stock prior to the reverse stock split ) , or $ 613,294,000 in the aggregate , to stockholders of record of our common stock at the close of business on august 19 , 2019 . cim reit liquidation . story_separator_special_tag asset management and other fees to related parties : asset management fees and other fees to related parties , which have not been allocated to our operating segments , were $ 15,921,000 for the year ended december 31 , 2019 , a decrease of $ 6,085,000 , compared to $ 22,006,000 for the year ended december 31 , 2018 . asset management fees totaled $ 12,019,000 for the year ended december 31 , 2019 compared to $ 17,880,000 for the year ended december 31 , 2018 . asset management fees are calculated based on a percentage of the daily average adjusted fair value of cim urban 's assets , which are appraised in the fourth quarter of each year . the lower fees reflect a decrease in the adjusted fair value of cim urban 's assets due to assets sold in the asset sale , including the sale of three office properties and a parking garage in oakland , california , the sale of an office property in washington , d.c. , and the sale of an office property in san francisco , california , all of which were consummated in march 2019 , the sale of an office property in oakland , california , which was consummated in may 2019 , and the sale of two office properties and one development site in washington , d.c. , which was consummated in july 2019 , partially offset by net increases in the fair value of cim urban 's real estate assets based on the december 31 , 2018 appraised values as well as incremental capital expenditures during 2019. cim commercial also pays a base service fee to the administrator , a related party , which totaled $ 1,102,000 for the year ended december 31 , 2019 compared to $ 1,079,000 for the year ended december 31 , 2018 . in addition , the administrator received compensation and or reimbursement for performing certain services for cim commercial and its subsidiaries that are not covered by the base service fee . for the years ended december 31 , 2019 and 2018 , we expensed $ 2,577,000 and $ 2,783,000 for such services , respectively . for the years ended december 31 , 2019 and 2018 , we also expensed $ 223,000 and $ 264,000 , respectively , related to corporate services subject to reimbursement by us under the cim sba staffing and reimbursement agreement . the properties sold as part of the asset sale will cause asset management fees to decline materially during the year ending december 31 , 2020 as compared to the year ended december 31 , 2019 , and , as discussed in `` item 1––business `` of this annual report on form 10-k , for the first and second quarters of 2020 , we will , subject to applicable laws and regulations under nasdaq and the tase and the agreement of the operator and or the administrator , as applicable , seek to pay some or all of the asset management fees , the base service fee and or reimbursements under the master services agreement in respect of such quarter in shares of common stock . the company may seek to do so for the third and fourth quarters of 2020 as well ( subject to the agreement of the operator and or the administrator , as the case may be , and the approval of a special committee consisting of the independent members of the board of directors ) . interest expense : interest expense , which has not been allocated to our operating segments , was $ 10,361,000 for the year ended december 31 , 2019 , a decrease of $ 15,121,000 , compared to $ 25,482,000 for the year ended december 31 , 2018 . the decrease is primarily due to the legal defeasance of mortgage loans with an aggregate outstanding principal balance of 77 $ 205,500,000 in connection with the sale of three office properties and a parking garage in oakland , california , the prepayment of a $ 46,000,000 mortgage loan in connection with the sale of an office property in washington , d.c. , and the assumption of a $ 28,200,000 mortgage loan by the buyer of an office property in san francisco , california , all of which were consummated in march 2019 , the legal defeasance of a mortgage loan with an outstanding principal balance of $ 39,500,000 in connection with the sale of an office property in oakland , california , which was consummated in may 2019 , a decrease in interest expense , including the impact of interest rate swaps , as a result of the lower average outstanding principal balance on our revolving credit facility during 2019 compared to the average outstanding principal balance on our unsecured credit and term loan facilities during 2018 , and due to higher income during 2019 received in connection with the termination of interest rate swaps as compared to 2018. the aforementioned reductions in our debt are expected to cause interest expense to decline materially during the year ending december 31 , 2020 as compared to the year ended december 31 , 2019. however , the magnitude of any such decrease can not be predicted as it will depend on a number of factors such as the amount and timing of future borrowings on our revolving credit facility , and the terms and amount of any new borrowings we may enter into . general and administrative expenses : general and administrative expenses , which have not been allocated to our operating segments , were $ 4,069,000 for the year ended december 31 , 2019 , a decrease of $ 859,000 , compared to $ 4,928,000 for the year ended december 31 , 2018 . the decrease is primarily due to certain expenses related to our multifamily properties sold during the year ended december 31 , 2017 , which were expensed in 2018. transaction costs : transaction costs were $ 574,000 for

cash flow analysis comparison of the year ended december 31 , 2019 to the year ended december 31 , 2018 our cash and cash equivalents and restricted cash , inclusive of cash and restricted cash included in assets held for sale , net , totaled $ 35,947,000 and $ 77,926,000 at december 31 , 2019 and 2018 , respectively . our cash flows from operating activities are primarily dependent upon the real estate assets owned , occupancy level of our real estate assets , the rental rates achieved through our leases , the adr of our hotel , the collectability of rent and recoveries from our tenants , and loan related activity . our cash flows from operating activities are also impacted by fluctuations in operating expenses and other general and administrative costs . net cash provided by operating activities totaled $ 40,985,000 for the year ended december 31 , 2019 compared to $ 61,456,000 for the year ended december 31 , 2018 . the decrease was primarily due to a $ 16,405,000 decrease in net income adjusted for the gain on sale of real estate , depreciation and amortization expense , impairment of real estate , and loss on early extinguishment of debt , a decrease of $ 14,109,000 in proceeds from the sale of guaranteed loans , a decrease of $ 13,842,000 resulting from a higher level of working capital used compared to the prior period , and a decrease of $ 2,085,000 in principal collected on loans subject to secured borrowings , partially offset by a decrease of $ 25,961,000 in loans funded . 86 our cash flows from investing activities are primarily related to property acquisitions and sales , expenditures for development or repositioning of properties , capital expenditures and cash flows associated with loans originated at our lending segment . net cash provided by investing activities for the year ended december 31 , 2019 was $ 917,193,000 compared to net cash used in investing activities of $ 131,734,000 in the corresponding period in 2018 .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. although we may not deploy capital exclusively in qualified communities , it is expected that most of our assets will be identified through this systematic process . cim group seeks to maximize the value of its holdings through active onsite property management and leasing . cim group has extensive in-house research , acquisition , credit analysis , development , finance , leasing and onsite property management capabilities , which leverage its deep understanding of metropolitan communities to position properties for multiple uses and to maximize operating income . as a vertically-integrated owner and operator , cim group has in-house onsite property management and leasing capabilities . property managers prepare annual capital and operating budgets and monthly operating reports , monitor results , and oversee vendor services , maintenance and capital improvement schedules . in addition , they ensure that revenue objectives are met , lease terms are followed , receivables are collected , preventative maintenance programs are implemented , vendors are evaluated and expenses are controlled . in addition , cim group 's real assets management committee reviews and approves strategic plans for each asset , including financial , leasing , marketing , property positioning and disposition plans . the real assets management committee reviews and approves the annual business plan for each property , including its capital and operating budget . cim group 's organizational structure provides for continuity through multi-disciplinary teams responsible for an asset from the time of the original investment recommendation , through the implementation of the asset 's business plan , and any disposition activities . cim group 's investments and development teams are separate groups that work very closely together on transactions requiring development expertise . while the investments team is responsible for acquisition analysis , both the investments and development teams perform due diligence , evaluate and determine underwriting assumptions and participate in the development management and ongoing asset management of cim group 's opportunistic assets . the development team is also responsible for the oversight and or execution of securing entitlements and the development/repositioning process . in instances where cim group is not the lead developer , cim group 's in-house development team continues to provide development and construction oversight to co-sponsors through a shadow team that oversees the progress of the development from beginning to end to ensure adherence to the budgets , schedules , quality and scope of the project in order to maintain cim group 's vision for the final product . the investments and development teams interact as a cohesive team when sourcing , underwriting , acquiring , executing and managing the business plan of an opportunistic acquisition . we seek to utilize the cim group platform to acquire , improve and or develop real estate assets within cim group 's qualified communities . we believe that these assets will provide greater returns than similar assets in other markets , as a result of the population growth , public commitment , and significant private investment that characterize these areas . over time , we seek to expand our real estate assets in communities targeted by cim group , supported by cim group 's broad real estate capabilities , as part of our plan to prudently grow nav and cash flow per share of common stock . as a matter of prudent management , we also regularly evaluate each asset within our portfolio as well as our strategies . such review may result in dispositions when an asset no longer fits our overall objectives or strategies , or when our view of the market value of such asset is equal to or exceeds its intrinsic value . while we are principally focused on class a and creative office assets in vibrant and improving metropolitan communities throughout the united states ( including improving and developing such assets ) , we may also participate more 71 actively in other cim group real estate strategies and product types in order to broaden our participation in cim group 's platform and capabilities for the benefit of all classes of stockholders . this may include , without limitation , engaging in real estate development activities as well as investing in other product types directly , side-by-side with one or more funds of cim group , through direct deployment of capital in a cim group real estate or debt fund , or deploying capital in or originating loans that are secured directly or indirectly by properties primarily located in qualified communities that meet our strategy . such loans may include limited and or non-recourse junior ( mezzanine , b-note or 2nd lien ) and senior acquisition , bridge or repositioning loans . completion of the program to unlock embedded value in our portfolio and improve trading liquidity of our common stock the company completed the previously announced program to unlock embedded value in our portfolio and improve trading liquidity of our common stock : sale of assets . during 2019 , the company sold eight properties in accordance with the approval of its then‑principal stockholder , and an additional two properties ( one office property and one development site in washington , d.c. ) after evaluating each asset within its portfolio and the intrinsic value of each property . the asset sale generated an aggregate gross sales price to the company of $ 990,996,000 . repayment of certain indebtedness . we used a portion of the net proceeds from the asset sale to repay balances on certain of the company 's indebtedness . return of capital to holders of common stock . on august 30 , 2019 , we paid a special dividend of $ 42.00 per share of common stock ( $ 14.00 per share of common stock prior to the reverse stock split ) , or $ 613,294,000 in the aggregate , to stockholders of record of our common stock at the close of business on august 19 , 2019 . cim reit liquidation . story_separator_special_tag asset management and other fees to related parties : asset management fees and other fees to related parties , which have not been allocated to our operating segments , were $ 15,921,000 for the year ended december 31 , 2019 , a decrease of $ 6,085,000 , compared to $ 22,006,000 for the year ended december 31 , 2018 . asset management fees totaled $ 12,019,000 for the year ended december 31 , 2019 compared to $ 17,880,000 for the year ended december 31 , 2018 . asset management fees are calculated based on a percentage of the daily average adjusted fair value of cim urban 's assets , which are appraised in the fourth quarter of each year . the lower fees reflect a decrease in the adjusted fair value of cim urban 's assets due to assets sold in the asset sale , including the sale of three office properties and a parking garage in oakland , california , the sale of an office property in washington , d.c. , and the sale of an office property in san francisco , california , all of which were consummated in march 2019 , the sale of an office property in oakland , california , which was consummated in may 2019 , and the sale of two office properties and one development site in washington , d.c. , which was consummated in july 2019 , partially offset by net increases in the fair value of cim urban 's real estate assets based on the december 31 , 2018 appraised values as well as incremental capital expenditures during 2019. cim commercial also pays a base service fee to the administrator , a related party , which totaled $ 1,102,000 for the year ended december 31 , 2019 compared to $ 1,079,000 for the year ended december 31 , 2018 . in addition , the administrator received compensation and or reimbursement for performing certain services for cim commercial and its subsidiaries that are not covered by the base service fee . for the years ended december 31 , 2019 and 2018 , we expensed $ 2,577,000 and $ 2,783,000 for such services , respectively . for the years ended december 31 , 2019 and 2018 , we also expensed $ 223,000 and $ 264,000 , respectively , related to corporate services subject to reimbursement by us under the cim sba staffing and reimbursement agreement . the properties sold as part of the asset sale will cause asset management fees to decline materially during the year ending december 31 , 2020 as compared to the year ended december 31 , 2019 , and , as discussed in `` item 1––business `` of this annual report on form 10-k , for the first and second quarters of 2020 , we will , subject to applicable laws and regulations under nasdaq and the tase and the agreement of the operator and or the administrator , as applicable , seek to pay some or all of the asset management fees , the base service fee and or reimbursements under the master services agreement in respect of such quarter in shares of common stock . the company may seek to do so for the third and fourth quarters of 2020 as well ( subject to the agreement of the operator and or the administrator , as the case may be , and the approval of a special committee consisting of the independent members of the board of directors ) . interest expense : interest expense , which has not been allocated to our operating segments , was $ 10,361,000 for the year ended december 31 , 2019 , a decrease of $ 15,121,000 , compared to $ 25,482,000 for the year ended december 31 , 2018 . the decrease is primarily due to the legal defeasance of mortgage loans with an aggregate outstanding principal balance of 77 $ 205,500,000 in connection with the sale of three office properties and a parking garage in oakland , california , the prepayment of a $ 46,000,000 mortgage loan in connection with the sale of an office property in washington , d.c. , and the assumption of a $ 28,200,000 mortgage loan by the buyer of an office property in san francisco , california , all of which were consummated in march 2019 , the legal defeasance of a mortgage loan with an outstanding principal balance of $ 39,500,000 in connection with the sale of an office property in oakland , california , which was consummated in may 2019 , a decrease in interest expense , including the impact of interest rate swaps , as a result of the lower average outstanding principal balance on our revolving credit facility during 2019 compared to the average outstanding principal balance on our unsecured credit and term loan facilities during 2018 , and due to higher income during 2019 received in connection with the termination of interest rate swaps as compared to 2018. the aforementioned reductions in our debt are expected to cause interest expense to decline materially during the year ending december 31 , 2020 as compared to the year ended december 31 , 2019. however , the magnitude of any such decrease can not be predicted as it will depend on a number of factors such as the amount and timing of future borrowings on our revolving credit facility , and the terms and amount of any new borrowings we may enter into . general and administrative expenses : general and administrative expenses , which have not been allocated to our operating segments , were $ 4,069,000 for the year ended december 31 , 2019 , a decrease of $ 859,000 , compared to $ 4,928,000 for the year ended december 31 , 2018 . the decrease is primarily due to certain expenses related to our multifamily properties sold during the year ended december 31 , 2017 , which were expensed in 2018. transaction costs : transaction costs were $ 574,000 for Narrative : cash flow analysis comparison of the year ended december 31 , 2019 to the year ended december 31 , 2018 our cash and cash equivalents and restricted cash , inclusive of cash and restricted cash included in assets held for sale , net , totaled $ 35,947,000 and $ 77,926,000 at december 31 , 2019 and 2018 , respectively . our cash flows from operating activities are primarily dependent upon the real estate assets owned , occupancy level of our real estate assets , the rental rates achieved through our leases , the adr of our hotel , the collectability of rent and recoveries from our tenants , and loan related activity . our cash flows from operating activities are also impacted by fluctuations in operating expenses and other general and administrative costs . net cash provided by operating activities totaled $ 40,985,000 for the year ended december 31 , 2019 compared to $ 61,456,000 for the year ended december 31 , 2018 . the decrease was primarily due to a $ 16,405,000 decrease in net income adjusted for the gain on sale of real estate , depreciation and amortization expense , impairment of real estate , and loss on early extinguishment of debt , a decrease of $ 14,109,000 in proceeds from the sale of guaranteed loans , a decrease of $ 13,842,000 resulting from a higher level of working capital used compared to the prior period , and a decrease of $ 2,085,000 in principal collected on loans subject to secured borrowings , partially offset by a decrease of $ 25,961,000 in loans funded . 86 our cash flows from investing activities are primarily related to property acquisitions and sales , expenditures for development or repositioning of properties , capital expenditures and cash flows associated with loans originated at our lending segment . net cash provided by investing activities for the year ended december 31 , 2019 was $ 917,193,000 compared to net cash used in investing activities of $ 131,734,000 in the corresponding period in 2018 .

we began a new limited time offering ( `` lto `` ) program where we plan to feature a new premium burger every six months . the shackmeister burger launched in january 2015 , the first major burger to debut at shake shack since the smokeshack in april 2012 , and was a huge success , driving positive shifts in mix at a premium price point . we retired the shackmeister burger in july 2015 and introduced the roadside shack , which was 49 | shake shack inc. form 10-k met with similar success . in january 2015 , we also launched the shake of the week , an extension of our custard calendar where guests can enjoy seasonally changing flavors in creamy and deliciously dense shakes . we also made great strides this past year in our mission to stand for something good . in march 2015 , we announced that all burger and hot dog buns served at shacks around the world will be non-gmo and , in december 2015 , we announced our commitment to transition to the use of cage-free eggs in our entire menu by the end of 2016. our fiscal 2015 results demonstrate the success of our various growth strategies . our brand power and thoughtful approach to growth have resulted in strong shack performance across a variety of geographic areas and formats . some financial highlights for fiscal 2015 include : ▪ total revenue increased 60.8 % to $ 190.6 million . ▪ shack sales increased 63.5 % to $ 183.2 million . ▪ same-shack sales increased 13.3 % . ▪ shack-level operating profit margin * , a non-gaap measure , increased 96.8 % to $ 52.9 million , or 28.9 % of shack sales , a 490 basis point increase over prior year . ▪ adjusted ebitda * , a non-gaap measure , increased 117.7 % to $ 41.1 million . ▪ net loss was $ ( 8.8 ) million , or $ ( 0.65 ) per diluted share . ▪ adjusted pro forma net income * , a non-gaap measure , increase d 154.9 % to $ 12.0 million , or $ 0.32 per fully exchanged and diluted share . ▪ 21 system-wide shack openings , comprised of 13 domestic company-operated shacks and eight international licensed shacks , representing a 33.3 % increase in system-wide shack count . * shack-level operating profit and adjusted ebitda are non-gaap measures . reconciliations of shack-level operating profit to operating income and adjusted ebitda to net income , the most directly comparable financial measures presented in accordance with gaap , are set forth on pages 41 and 42. trends in our business we hit the ground running in fiscal 2016 with a strategic focus on driving long-term value creation—continuing to build the community gathering places our guests love , while innovating around our core menu , and further investing in the unique culture that differentiates and drives our company forward . we plan to continue to expand our business , drive shack sales and enhance our competitive positioning by executing on the following strategies : ( i ) opening new domestic company-operated shacks ; ( ii ) capitalizing on our outsized brand awareness ; ( iii ) growing same-shack sales ; and ( iv ) opportunistically increasing our licensed shacks domestically and abroad . our primary means of growth will be opening new domestic company-operated shacks and we believe we have a strong pipeline of shacks for fiscal 2016. this year we will launch in four new major markets—los angeles , phoenix/scottsdale , dallas and minneapolis . we will also be growing our presence in existing markets with new shacks planned in our home market , in herald square and the fulton transit center in manhattan , as well as in queens , long island and other east coast markets from boston to washington d.c. internationally , we opened our first shack in oman in february 2016 and have great locations planned in the middle east , london , japan and now south korea . we also plan to open one domestic licensed shack in 2016 in las vegas ' t-mobile arena . while we believe that there is still ample room to grow our shack-base in new york city , the majority of our domestic company-operated shack growth is expected to occur outside of new york city . because our historical average unit volumes ( `` auvs `` ) have been higher , due in large part to our concentration in urban markets , historical domestic company-operated auvs are not a good measure of expected sales at new shacks . as we continue to expand outside of our established markets , we expect average annual shack sales to be between $ 2.8 million and $ 3.2 million per shack with shack-level operating profit margins in the 18 % to 22 % range ( `` target-volume shacks `` ) , which will reduce overall company-operated shack auvs and shack-l evel operating profit margins . however , given the visibility we currently have into our pipeline for fiscal 2016 , we expect the new shacks to be opened in fiscal 2016 to average at least $ 3.3 million in annual shack sales and achieve at least 22 % shack-level operating profit margins . shake shack inc. form 10-k | 50 we will continue to embrace our fine-dining heritage and , although our core menu remains focused , we plan to continue supplementing it with targeted innovation . in january 2016 , we launched the chick ' n shack at all domestic company-operated shacks . since july 2015 , this item was only offered in our three brooklyn , ny shacks . the guest feedback was extremely positive and it became a top five selling menu item , which gave us the confidence to plan a wider rollout . story_separator_special_tag pre-opening costs were $ 5.4 million in fiscal 2015 , including $ 1.3 million of deferred rent expense , compared to $ 6.1 million in fiscal 2014 , a decrease of $ 0.7 million or 11.1 % , primarily due to a decrease in deferred rent expense and the timing of new domestic company-operated shacks expected to open . pre-opening costs were $ 6.1 million in fiscal 2014 , including $ 2.1 million of deferred rent expense , compared to $ 2.3 million in fiscal 2013 , an increase of $ 3.8 million or 161.6 % , primarily the result of an increase in the number of new domestic company-operated shacks opened in fiscal 2014 as well as an increase in the number of new domestic company-operated shacks opened in new geographic markets during fiscal 2014 and planned openings in the first quarter of fiscal 2015 . 55 | shake shack inc. form 10-k loss on disposal of property and equipment loss on disposal of property and equipment represents the net book value of assets that have been retired and consists primarily of furniture and fixtures that were replaced in the normal course of business . for all periods presented , the loss on disposal of property and equipment was not material . interest expense interest expense primarily consists of interest on the revolving credit facility as well as the amortization of deferred financing costs incurred in connection with the revolving credit facility . interest expense was $ 0.3 million in fiscal 2015 compared to $ 0.4 million in fiscal 2014 , a decrease of $ 0.1 million or 10.5 % . interest expense was $ 0.4 million in fiscal 2014 compared to $ 0.1 million in fiscal 2013 , an increase of $ 0.3 million or 598.1 % . this increase was the result of additional borrowings under our revolving credit facility . income tax expense as a result of the ipo and organizational transactions , we became the sole managing member of sse holdings , which is treated as a partnership for u.s. federal and most applicable state and local income tax purposes . as a partnership , sse holdings is not subject to u.s. federal and certain state and local income taxes . any taxable income or loss generated by sse holdings is passed through to and included in the taxable income or loss of its members , including us , on a pro rata basis . we are subject to u.s. federal income taxes , in addition to state and local income taxes with respect to our allocable share of any taxable income or loss of sse holdings , as well as any stand-alone income or loss generated by shake shack inc. we are also subject to withholding taxes in foreign jurisdictions . for fiscal 2014 and 2013 , the reported income tax expense reflects that of sse holdings , our predecessor for financial reporting purposes , and relates solely to foreign withholding taxes and certain llc entity-level taxes . income tax expense was $ 3.3 million in fiscal 2015 compared to $ 0.7 million in fiscal 2014 . our effective income tax rate increased to 51.4 % in fiscal 2015 from 23.8 % in fiscal 2014 . the increase in both the amount of income tax expense and our effective income tax rate is primarily due to the ipo and organizational transactions . in fiscal 2014 , we were only subject to certain llc entity-level taxes and foreign withholding taxes , whereas in fiscal 2015 we were also subject to u.s. federal , state and local income taxes on our allocable share of any taxable income or loss generated by sse holdings subsequent to the ipo and organizational transactions . as the non-recurring compensation expenses and other ipo-related expenses were incurred in the period prior to the organizational transactions , we are not entitled to any tax benefits related to those expenses . this resulted in a high effective tax rate when compared to our consolidated pre-tax income for fiscal 2015 . income tax expense was $ 0.7 million in fiscal 2014 compared to $ 0.5 million in fiscal 2013 . our effective income tax rate increased to 23.8 % in fiscal 2014 from 7.8 % in fiscal 2013 , primarily due to increased foreign withholding taxes resulting from increased licensing revenue . net income attributable to non-controlling interests although we had a minority economic interest in sse holdings as a result of the ipo and organizational transactions , we became the sole managing member of sse holdings and have the sole voting power in , and control the management of , sse holdings . accordingly , we began consolidating the financial results of sse holdings and reporting a non-controlling interest on our consolidated statement of income , representing the portion of net income attributable to the continuing sse equity owners . in connection with the ipo and organizational transactions , the sse holdings llc agreement was amended to , among other things , ( i ) provide for a new single class of common membership interests in sse holdings , the llc interests , and ( ii ) exchange all of the then-existing membership interests of the original sse equity owners for llc interests . the llc agreement also provides that holders of llc interests may , from time to time , require sse holdings to redeem all or a portion of their llc interests for newly-issued shares of class a common stock on a one-for-one basis . in connection with any redemption or exchange , we will receive a corresponding number of llc interests , increasing our total ownership interest in sse holdings . following the completion of the organizational transactions , we owned 33.3 % of sse holdings . the continuing sse equity owners subsequent to the merger shake shack inc. form 10-k | 56 owned the remaining 66.7 % of sse holdings . as of december 30 , 2015 , we

sources and uses of cash our primary sources of liquidity are cash from operations , cash on hand , and availability under our revolving credit facility . as of december 30 , 2015 , we maintained a cash balance of $ 70.8 million and had $ 19.9 million of availability under our revolving credit facility . our primary requirements for liquidity are to fund our working capital needs , operating lease obligations , capital expenditures and general corporate needs . our requirements for working capital are not significant because our guests pay for their food and beverage purchases in cash or on debit or credit cards at the time of the sale and we are able to sell many of our inventory items before payment is due to the supplier of such items . our ongoing capital expenditures are principally related to opening new shacks , existing shack capital investments ( both for remodels and maintenance ) , as well as investments in our corporate infrastructure . in addition , we are obligated to make payments to the continuing sse equity owners under the tax receivable agreement . as of december 30 , 2015 , such obligations totaled $ 173.1 million . although the amount of any payments that must be made under the tax receivable agreement may be significant , the timing of these payments will vary and will generally be limited to one payment per member per year . the amount of such payments are also limited to the extent we utilize the related deferred tax assets . the payments that we are required to make will generally reduce the amount of overall cash that might have otherwise been available to us or to sse holdings , but we expect the cash tax savings we will realize from the utilization of the related deferred tax assets to fund the required payments .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we began a new limited time offering ( `` lto `` ) program where we plan to feature a new premium burger every six months . the shackmeister burger launched in january 2015 , the first major burger to debut at shake shack since the smokeshack in april 2012 , and was a huge success , driving positive shifts in mix at a premium price point . we retired the shackmeister burger in july 2015 and introduced the roadside shack , which was 49 | shake shack inc. form 10-k met with similar success . in january 2015 , we also launched the shake of the week , an extension of our custard calendar where guests can enjoy seasonally changing flavors in creamy and deliciously dense shakes . we also made great strides this past year in our mission to stand for something good . in march 2015 , we announced that all burger and hot dog buns served at shacks around the world will be non-gmo and , in december 2015 , we announced our commitment to transition to the use of cage-free eggs in our entire menu by the end of 2016. our fiscal 2015 results demonstrate the success of our various growth strategies . our brand power and thoughtful approach to growth have resulted in strong shack performance across a variety of geographic areas and formats . some financial highlights for fiscal 2015 include : ▪ total revenue increased 60.8 % to $ 190.6 million . ▪ shack sales increased 63.5 % to $ 183.2 million . ▪ same-shack sales increased 13.3 % . ▪ shack-level operating profit margin * , a non-gaap measure , increased 96.8 % to $ 52.9 million , or 28.9 % of shack sales , a 490 basis point increase over prior year . ▪ adjusted ebitda * , a non-gaap measure , increased 117.7 % to $ 41.1 million . ▪ net loss was $ ( 8.8 ) million , or $ ( 0.65 ) per diluted share . ▪ adjusted pro forma net income * , a non-gaap measure , increase d 154.9 % to $ 12.0 million , or $ 0.32 per fully exchanged and diluted share . ▪ 21 system-wide shack openings , comprised of 13 domestic company-operated shacks and eight international licensed shacks , representing a 33.3 % increase in system-wide shack count . * shack-level operating profit and adjusted ebitda are non-gaap measures . reconciliations of shack-level operating profit to operating income and adjusted ebitda to net income , the most directly comparable financial measures presented in accordance with gaap , are set forth on pages 41 and 42. trends in our business we hit the ground running in fiscal 2016 with a strategic focus on driving long-term value creation—continuing to build the community gathering places our guests love , while innovating around our core menu , and further investing in the unique culture that differentiates and drives our company forward . we plan to continue to expand our business , drive shack sales and enhance our competitive positioning by executing on the following strategies : ( i ) opening new domestic company-operated shacks ; ( ii ) capitalizing on our outsized brand awareness ; ( iii ) growing same-shack sales ; and ( iv ) opportunistically increasing our licensed shacks domestically and abroad . our primary means of growth will be opening new domestic company-operated shacks and we believe we have a strong pipeline of shacks for fiscal 2016. this year we will launch in four new major markets—los angeles , phoenix/scottsdale , dallas and minneapolis . we will also be growing our presence in existing markets with new shacks planned in our home market , in herald square and the fulton transit center in manhattan , as well as in queens , long island and other east coast markets from boston to washington d.c. internationally , we opened our first shack in oman in february 2016 and have great locations planned in the middle east , london , japan and now south korea . we also plan to open one domestic licensed shack in 2016 in las vegas ' t-mobile arena . while we believe that there is still ample room to grow our shack-base in new york city , the majority of our domestic company-operated shack growth is expected to occur outside of new york city . because our historical average unit volumes ( `` auvs `` ) have been higher , due in large part to our concentration in urban markets , historical domestic company-operated auvs are not a good measure of expected sales at new shacks . as we continue to expand outside of our established markets , we expect average annual shack sales to be between $ 2.8 million and $ 3.2 million per shack with shack-level operating profit margins in the 18 % to 22 % range ( `` target-volume shacks `` ) , which will reduce overall company-operated shack auvs and shack-l evel operating profit margins . however , given the visibility we currently have into our pipeline for fiscal 2016 , we expect the new shacks to be opened in fiscal 2016 to average at least $ 3.3 million in annual shack sales and achieve at least 22 % shack-level operating profit margins . shake shack inc. form 10-k | 50 we will continue to embrace our fine-dining heritage and , although our core menu remains focused , we plan to continue supplementing it with targeted innovation . in january 2016 , we launched the chick ' n shack at all domestic company-operated shacks . since july 2015 , this item was only offered in our three brooklyn , ny shacks . the guest feedback was extremely positive and it became a top five selling menu item , which gave us the confidence to plan a wider rollout . story_separator_special_tag pre-opening costs were $ 5.4 million in fiscal 2015 , including $ 1.3 million of deferred rent expense , compared to $ 6.1 million in fiscal 2014 , a decrease of $ 0.7 million or 11.1 % , primarily due to a decrease in deferred rent expense and the timing of new domestic company-operated shacks expected to open . pre-opening costs were $ 6.1 million in fiscal 2014 , including $ 2.1 million of deferred rent expense , compared to $ 2.3 million in fiscal 2013 , an increase of $ 3.8 million or 161.6 % , primarily the result of an increase in the number of new domestic company-operated shacks opened in fiscal 2014 as well as an increase in the number of new domestic company-operated shacks opened in new geographic markets during fiscal 2014 and planned openings in the first quarter of fiscal 2015 . 55 | shake shack inc. form 10-k loss on disposal of property and equipment loss on disposal of property and equipment represents the net book value of assets that have been retired and consists primarily of furniture and fixtures that were replaced in the normal course of business . for all periods presented , the loss on disposal of property and equipment was not material . interest expense interest expense primarily consists of interest on the revolving credit facility as well as the amortization of deferred financing costs incurred in connection with the revolving credit facility . interest expense was $ 0.3 million in fiscal 2015 compared to $ 0.4 million in fiscal 2014 , a decrease of $ 0.1 million or 10.5 % . interest expense was $ 0.4 million in fiscal 2014 compared to $ 0.1 million in fiscal 2013 , an increase of $ 0.3 million or 598.1 % . this increase was the result of additional borrowings under our revolving credit facility . income tax expense as a result of the ipo and organizational transactions , we became the sole managing member of sse holdings , which is treated as a partnership for u.s. federal and most applicable state and local income tax purposes . as a partnership , sse holdings is not subject to u.s. federal and certain state and local income taxes . any taxable income or loss generated by sse holdings is passed through to and included in the taxable income or loss of its members , including us , on a pro rata basis . we are subject to u.s. federal income taxes , in addition to state and local income taxes with respect to our allocable share of any taxable income or loss of sse holdings , as well as any stand-alone income or loss generated by shake shack inc. we are also subject to withholding taxes in foreign jurisdictions . for fiscal 2014 and 2013 , the reported income tax expense reflects that of sse holdings , our predecessor for financial reporting purposes , and relates solely to foreign withholding taxes and certain llc entity-level taxes . income tax expense was $ 3.3 million in fiscal 2015 compared to $ 0.7 million in fiscal 2014 . our effective income tax rate increased to 51.4 % in fiscal 2015 from 23.8 % in fiscal 2014 . the increase in both the amount of income tax expense and our effective income tax rate is primarily due to the ipo and organizational transactions . in fiscal 2014 , we were only subject to certain llc entity-level taxes and foreign withholding taxes , whereas in fiscal 2015 we were also subject to u.s. federal , state and local income taxes on our allocable share of any taxable income or loss generated by sse holdings subsequent to the ipo and organizational transactions . as the non-recurring compensation expenses and other ipo-related expenses were incurred in the period prior to the organizational transactions , we are not entitled to any tax benefits related to those expenses . this resulted in a high effective tax rate when compared to our consolidated pre-tax income for fiscal 2015 . income tax expense was $ 0.7 million in fiscal 2014 compared to $ 0.5 million in fiscal 2013 . our effective income tax rate increased to 23.8 % in fiscal 2014 from 7.8 % in fiscal 2013 , primarily due to increased foreign withholding taxes resulting from increased licensing revenue . net income attributable to non-controlling interests although we had a minority economic interest in sse holdings as a result of the ipo and organizational transactions , we became the sole managing member of sse holdings and have the sole voting power in , and control the management of , sse holdings . accordingly , we began consolidating the financial results of sse holdings and reporting a non-controlling interest on our consolidated statement of income , representing the portion of net income attributable to the continuing sse equity owners . in connection with the ipo and organizational transactions , the sse holdings llc agreement was amended to , among other things , ( i ) provide for a new single class of common membership interests in sse holdings , the llc interests , and ( ii ) exchange all of the then-existing membership interests of the original sse equity owners for llc interests . the llc agreement also provides that holders of llc interests may , from time to time , require sse holdings to redeem all or a portion of their llc interests for newly-issued shares of class a common stock on a one-for-one basis . in connection with any redemption or exchange , we will receive a corresponding number of llc interests , increasing our total ownership interest in sse holdings . following the completion of the organizational transactions , we owned 33.3 % of sse holdings . the continuing sse equity owners subsequent to the merger shake shack inc. form 10-k | 56 owned the remaining 66.7 % of sse holdings . as of december 30 , 2015 , we Narrative : sources and uses of cash our primary sources of liquidity are cash from operations , cash on hand , and availability under our revolving credit facility . as of december 30 , 2015 , we maintained a cash balance of $ 70.8 million and had $ 19.9 million of availability under our revolving credit facility . our primary requirements for liquidity are to fund our working capital needs , operating lease obligations , capital expenditures and general corporate needs . our requirements for working capital are not significant because our guests pay for their food and beverage purchases in cash or on debit or credit cards at the time of the sale and we are able to sell many of our inventory items before payment is due to the supplier of such items . our ongoing capital expenditures are principally related to opening new shacks , existing shack capital investments ( both for remodels and maintenance ) , as well as investments in our corporate infrastructure . in addition , we are obligated to make payments to the continuing sse equity owners under the tax receivable agreement . as of december 30 , 2015 , such obligations totaled $ 173.1 million . although the amount of any payments that must be made under the tax receivable agreement may be significant , the timing of these payments will vary and will generally be limited to one payment per member per year . the amount of such payments are also limited to the extent we utilize the related deferred tax assets . the payments that we are required to make will generally reduce the amount of overall cash that might have otherwise been available to us or to sse holdings , but we expect the cash tax savings we will realize from the utilization of the related deferred tax assets to fund the required payments .

the quarterly review and adjustment of the qualitative factors employed in the allowance methodology and the updating of historic loss experience allow for timely reaction to emerging conditions and trends . in this context , a series of qualitative factors are used in a methodology as a measurement of how current circumstances are affecting the loan portfolio . included in these qualitative factors are : levels of past due , classified , criticized and non-accrual loans , tdrs and loan modifications ; nature and volume of loans ; changes in lending policies and procedures , underwriting standards , collections , charge-offs and recoveries and for commercial loans , the level of loans being approved with exceptions to lending policy ; experience , ability and depth of management and staff ; national and local economic and business conditions , including various market segments ; quality of the company 's loan review system and degree of board oversight ; concentrations of credit and changes in levels of such concentrations ; and effect of external factors on the level of estimated credit losses in the current portfolio . in determining the allowance for loan losses , management has established both specific and general pooled allowances . values assigned to the qualitative factors and those developed from historic loss experience provide a dynamic basis for the calculation of reserve factors for both pass-rated loans ( general pooled allowance ) and for criticized and classified loans . the amount of the specific allowance is determined through a loan-by-loan analysis of certain large dollar commercial real estate loans . loans not individually reviewed are evaluated as a group using reserve factor percentages based on historical loss experience and the qualitative factors described above . in determining the appropriate level of the general pooled allowance , management makes estimates based on internal risk ratings , which take into account such factors as debt service coverage , loan-to-value ratios and external factors . estimates are periodically measured against actual loss experience . this evaluation is inherently subjective as it requires material estimates including , among others , exposure at default , the amount and timing of expected future cash flows on impaired loans , value of collateral , estimated losses on our commercial , construction and residential loan portfolios and historical loss experience . all of these estimates may be susceptible to significant change . while management uses the best information available to make loan loss allowance evaluations , adjustments to the allowance may be necessary based on changes in economic and other conditions or changes in accounting guidance . in addition , the department and the fdic , as an integral part of their examination processes , periodically review our allowance for loan losses . the department and the fdic may require the recognition of adjustments to the allowance for loan losses based on their judgment of information available to them at the time of their examinations . to the extent that actual outcomes differ from management 's estimates , additional provisions to the allowance for loan losses may be required that would adversely affect earnings in future periods . investment and mortgage-backed securities available for sale . where quoted prices are available in an active market , securities are classified within level 1 of the valuation hierarchy . if quoted market prices are not available , then fair values are estimated using quoted prices of securities with similar characteristics or discounted cash flows and are classified within level 2 of the fair value hierarchy . in certain cases where there is limited activity or less transparency around inputs to the valuation , securities are classified within level 3 of the valuation hierarchy , although there were no securities with that classification as of september 30 , 2019 or 2018 . 61 management evaluates securities for other-than-temporary impairment at least on a quarterly basis , and more frequently when economic or market concerns warrant such evaluation . the company determines whether the unrealized losses are temporary in accordance with u.s. gaap . the evaluation is based upon factors such as the creditworthiness of the issuers/guarantors , the underlying collateral , if applicable , and the continuing performance of the securities . in addition , the company also considers the likelihood that the security will be required to be sold by a regulatory agency , our internal intent not to dispose of the security prior to maturity and whether the entire cost basis of the security is expected to be recovered . in determining whether the cost basis will be recovered , management evaluates other facts and circumstances that may be indicative of an other-than-temporary impairment condition . this includes , but is not limited to , an evaluation of the type of security , length of time and extent to which the fair value has been less than cost , and near-term prospects of the issuer . in addition , certain assets are measured at fair value on a non-recurring basis ; that is , the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances ( for example , when there is evidence of impairment ) . the company measures impaired loans and loans transferred into real estate owned at fair value on a non-recurring basis . valuation techniques and models utilized for measuring financial assets and liabilities are reviewed and validated by the company at least quarterly . derivatives . the company uses interest rate swaps and caps as part of its interest rate risk management strategy . interest rate swaps designated as cash flow hedges involve the payment of either fixed or variable-rate amounts in exchange for the receipt of variable or fixed-rate amounts from a counterparty , respectively . the company uses interest rate swaps to manage its exposure to changes in fair value . story_separator_special_tag the proceeds from the sales were used to invest in higher yielding loan and investment products . non-interest expense . 2019 vs. 2018. for the fiscal year ended september 30 , 2019 , non-interest expense increased $ 631,000 , to $ 16.3 million compared to $ 15.6 million for fiscal year 2018. the primary reason for the higher level of non-interest expense experienced during the year ended september 30 , 2019 , as compared to fiscal year 2018 , was the hiring of additional personnel for our lending operations and an increase in fdic deposit insurance expense . in connection with the bank 's increased emphasis on the origination of commercial real estate and construction and land development loans and the attendant increase in such portfolios , the bank has expanded its lending department operations . partially offsetting these increases were decreases in professional fees and occupancy expense as the company maintained its focus on the continued implementation of operating efficiencies . 2018 vs. 2017. for the year ended september 30 , 2018 , non-interest expense decreased $ 927,000 , to $ 15.6 million compared to $ 16.6 million for fiscal year 2017. the primary reason for the higher level of non-interest expense experienced during the year ended september 30 , 2017 , as compared to fiscal year 2018 , was the one-time merger-related charge in the 2017 period of approximately $ 2.5 million , pre-tax , incurred in connection with the completion of the polonia bancorp acquisition in january 2017 , the decline in fiscal 2018 being partially offset primarily by increases in employee expense and professional services . income tax expense . 2019 vs. 2018 . for the year ended september 30 , 2019 , the company recorded income tax expense of $ 1.9 million , compared to $ 3.7 million for fiscal 2018. the reduction in income tax expense in fiscal 2019 primarily reflected the benefit throughout fiscal 2019 associated with the fully implemented decrease in the federal statutory income tax rate , effective january 1 , 2018 , reducing the company 's statutory tax rate to 21 % . the $ 3.7 million tax expense for the fiscal year ended september 30 , 2018 included a one-time charge of $ 1.8 million related to a revaluation of the company 's deferred tax assets due to the tax legislation enacted in december 2017 that reduced the statutory federal income tax rate from 35 % to 21 % . however , since the company has a september 30 fiscal year , the decrease in the income tax rate was not fully phased in until october 1 , 2018 . 69 2018 vs. 2017 . for the year ended september 30 , 2018 , the company recorded income tax expense of $ 3.7 million , compared to $ 941,000 for fiscal 2017. the $ 3.7 million tax expense for the year ended september 30 , 2018 included a one-time non-cash charge of $ 1.8 million related to a revaluation of the company 's deferred tax assets due to the tax cuts and jobs act legislation enacted in december 2017 that reduced the statutory corporate income tax rate from 35 % to 21 % . during fiscal 2018 , commencing with the quarter ended december 31 , 2017 , the company 's statutory corporate income tax rate was reduced to 24.25 % as compared to companies which are calendar year tax reporting companies whose statutory rate decreased to 21 % starting january 1 , 2018. effective october 1 , 2018 , the company 's statutory tax rate was reduced to 21 % . the company 's tax obligation for the year ended september 30 , 2017 was reduced significantly due to the one-time merger-related charge related to the polonia bancorp acquisition and a one-time loan write-down described previously , both of which were recorded during the three months ended march 31 , 2017. story_separator_special_tag assumed to have annual rates of withdrawal , or “ decay rates , ” based on information from an internal analysis of our accounts up to a maximum of ten years . 72 replace_table_token_31_th ( 1 ) interest-earning assets are included in the period in which the balances are expected to be redeployed and or repriced as a result of anticipated prepayments , scheduled rate adjustments and contractual maturities . ( 2 ) for purposes of the gap analysis , loans receivable includes non-performing loans , gross of the allowance for loan losses and unamortized discounts and deferred loan fees . ( 3 ) includes restricted stock in the fhlb of pittsburgh and acbb . ( 4 ) interest-rate sensitivity gap represents the difference between total interest-earning assets and total interest-bearing liabilities . certain shortcomings are inherent in the method of analysis presented in the foregoing table . for example , although certain assets and liabilities may have similar maturities or periods to repricing , they may react in different degrees to changes in market interest rates . also , the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates , while interest rates on other types may lag behind changes in market rates . additionally , certain assets , such as adjustable-rate loans , have features which restrict changes in interest rates both on a short-term basis and over the life of the asset . further , in the event of a change in interest rates , prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the table . finally , the ability of many borrowers to service their adjustable-rate loans may decrease in the event of an interest rate increase . 73 net portfolio value analysis . our interest rate sensitivity also is monitored by management through the use of a model which generates estimates of the changes in our net portfolio value ( “ npv ” ) over a range of interest rate scenarios . npv is the

liquidity and capital resources liquidity is the ability to maintain cash flows that are adequate to fund operations and meet other obligations on a timely and cost-effective basis in various market conditions . the ability of the company to meet its current financial obligations is a function of balance sheet structure , the ability to liquidate assets and the availability of alternative sources of funds . to meet the needs of the clients and manage the risk of the company , the company engages in liquidity planning and management . our primary sources of funds are from deposits , scheduled principal and interest payments on loans , loan prepayments and the maturity of loans , mortgage-backed securities and other investments , and other funds provided from operations . while scheduled payments from the amortization of loans and mortgage-backed securities and maturing investment securities are relatively predictable sources of funds , deposit flows and loan prepayments can be greatly influenced by general interest rates , economic conditions and competition . we also maintain excess funds in short-term , interest-bearing assets that provide additional liquidity . at september 30 , 2019 , our cash and cash equivalents amounted to $ 48.0 million . in addition , our available-for-sale investment and mortgage-backed securities amounted to an aggregate of $ 512.8 million at september 30 , 2019. we use our liquidity to fund existing and future loan commitments , to fund maturing certificates of deposit and demand deposit withdrawals , to invest in other interest-earning assets , and to meet operating expenses . at september 30 , 2019 , we had certificates of deposit maturing within the next 12 months amounting to $ 405.7 million . we anticipate that a significant portion of the maturing certificates of deposit will be redeposited with us unless we determine to lower rates to below those of our competition in order to facilitate the reduction of higher cost deposits during periods when there is excess cash on hand or in order to satisfy our asset/liability goals . there were no deposits as of september 30 , 2019 requiring the pledging of collateral .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. the quarterly review and adjustment of the qualitative factors employed in the allowance methodology and the updating of historic loss experience allow for timely reaction to emerging conditions and trends . in this context , a series of qualitative factors are used in a methodology as a measurement of how current circumstances are affecting the loan portfolio . included in these qualitative factors are : levels of past due , classified , criticized and non-accrual loans , tdrs and loan modifications ; nature and volume of loans ; changes in lending policies and procedures , underwriting standards , collections , charge-offs and recoveries and for commercial loans , the level of loans being approved with exceptions to lending policy ; experience , ability and depth of management and staff ; national and local economic and business conditions , including various market segments ; quality of the company 's loan review system and degree of board oversight ; concentrations of credit and changes in levels of such concentrations ; and effect of external factors on the level of estimated credit losses in the current portfolio . in determining the allowance for loan losses , management has established both specific and general pooled allowances . values assigned to the qualitative factors and those developed from historic loss experience provide a dynamic basis for the calculation of reserve factors for both pass-rated loans ( general pooled allowance ) and for criticized and classified loans . the amount of the specific allowance is determined through a loan-by-loan analysis of certain large dollar commercial real estate loans . loans not individually reviewed are evaluated as a group using reserve factor percentages based on historical loss experience and the qualitative factors described above . in determining the appropriate level of the general pooled allowance , management makes estimates based on internal risk ratings , which take into account such factors as debt service coverage , loan-to-value ratios and external factors . estimates are periodically measured against actual loss experience . this evaluation is inherently subjective as it requires material estimates including , among others , exposure at default , the amount and timing of expected future cash flows on impaired loans , value of collateral , estimated losses on our commercial , construction and residential loan portfolios and historical loss experience . all of these estimates may be susceptible to significant change . while management uses the best information available to make loan loss allowance evaluations , adjustments to the allowance may be necessary based on changes in economic and other conditions or changes in accounting guidance . in addition , the department and the fdic , as an integral part of their examination processes , periodically review our allowance for loan losses . the department and the fdic may require the recognition of adjustments to the allowance for loan losses based on their judgment of information available to them at the time of their examinations . to the extent that actual outcomes differ from management 's estimates , additional provisions to the allowance for loan losses may be required that would adversely affect earnings in future periods . investment and mortgage-backed securities available for sale . where quoted prices are available in an active market , securities are classified within level 1 of the valuation hierarchy . if quoted market prices are not available , then fair values are estimated using quoted prices of securities with similar characteristics or discounted cash flows and are classified within level 2 of the fair value hierarchy . in certain cases where there is limited activity or less transparency around inputs to the valuation , securities are classified within level 3 of the valuation hierarchy , although there were no securities with that classification as of september 30 , 2019 or 2018 . 61 management evaluates securities for other-than-temporary impairment at least on a quarterly basis , and more frequently when economic or market concerns warrant such evaluation . the company determines whether the unrealized losses are temporary in accordance with u.s. gaap . the evaluation is based upon factors such as the creditworthiness of the issuers/guarantors , the underlying collateral , if applicable , and the continuing performance of the securities . in addition , the company also considers the likelihood that the security will be required to be sold by a regulatory agency , our internal intent not to dispose of the security prior to maturity and whether the entire cost basis of the security is expected to be recovered . in determining whether the cost basis will be recovered , management evaluates other facts and circumstances that may be indicative of an other-than-temporary impairment condition . this includes , but is not limited to , an evaluation of the type of security , length of time and extent to which the fair value has been less than cost , and near-term prospects of the issuer . in addition , certain assets are measured at fair value on a non-recurring basis ; that is , the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances ( for example , when there is evidence of impairment ) . the company measures impaired loans and loans transferred into real estate owned at fair value on a non-recurring basis . valuation techniques and models utilized for measuring financial assets and liabilities are reviewed and validated by the company at least quarterly . derivatives . the company uses interest rate swaps and caps as part of its interest rate risk management strategy . interest rate swaps designated as cash flow hedges involve the payment of either fixed or variable-rate amounts in exchange for the receipt of variable or fixed-rate amounts from a counterparty , respectively . the company uses interest rate swaps to manage its exposure to changes in fair value . story_separator_special_tag the proceeds from the sales were used to invest in higher yielding loan and investment products . non-interest expense . 2019 vs. 2018. for the fiscal year ended september 30 , 2019 , non-interest expense increased $ 631,000 , to $ 16.3 million compared to $ 15.6 million for fiscal year 2018. the primary reason for the higher level of non-interest expense experienced during the year ended september 30 , 2019 , as compared to fiscal year 2018 , was the hiring of additional personnel for our lending operations and an increase in fdic deposit insurance expense . in connection with the bank 's increased emphasis on the origination of commercial real estate and construction and land development loans and the attendant increase in such portfolios , the bank has expanded its lending department operations . partially offsetting these increases were decreases in professional fees and occupancy expense as the company maintained its focus on the continued implementation of operating efficiencies . 2018 vs. 2017. for the year ended september 30 , 2018 , non-interest expense decreased $ 927,000 , to $ 15.6 million compared to $ 16.6 million for fiscal year 2017. the primary reason for the higher level of non-interest expense experienced during the year ended september 30 , 2017 , as compared to fiscal year 2018 , was the one-time merger-related charge in the 2017 period of approximately $ 2.5 million , pre-tax , incurred in connection with the completion of the polonia bancorp acquisition in january 2017 , the decline in fiscal 2018 being partially offset primarily by increases in employee expense and professional services . income tax expense . 2019 vs. 2018 . for the year ended september 30 , 2019 , the company recorded income tax expense of $ 1.9 million , compared to $ 3.7 million for fiscal 2018. the reduction in income tax expense in fiscal 2019 primarily reflected the benefit throughout fiscal 2019 associated with the fully implemented decrease in the federal statutory income tax rate , effective january 1 , 2018 , reducing the company 's statutory tax rate to 21 % . the $ 3.7 million tax expense for the fiscal year ended september 30 , 2018 included a one-time charge of $ 1.8 million related to a revaluation of the company 's deferred tax assets due to the tax legislation enacted in december 2017 that reduced the statutory federal income tax rate from 35 % to 21 % . however , since the company has a september 30 fiscal year , the decrease in the income tax rate was not fully phased in until october 1 , 2018 . 69 2018 vs. 2017 . for the year ended september 30 , 2018 , the company recorded income tax expense of $ 3.7 million , compared to $ 941,000 for fiscal 2017. the $ 3.7 million tax expense for the year ended september 30 , 2018 included a one-time non-cash charge of $ 1.8 million related to a revaluation of the company 's deferred tax assets due to the tax cuts and jobs act legislation enacted in december 2017 that reduced the statutory corporate income tax rate from 35 % to 21 % . during fiscal 2018 , commencing with the quarter ended december 31 , 2017 , the company 's statutory corporate income tax rate was reduced to 24.25 % as compared to companies which are calendar year tax reporting companies whose statutory rate decreased to 21 % starting january 1 , 2018. effective october 1 , 2018 , the company 's statutory tax rate was reduced to 21 % . the company 's tax obligation for the year ended september 30 , 2017 was reduced significantly due to the one-time merger-related charge related to the polonia bancorp acquisition and a one-time loan write-down described previously , both of which were recorded during the three months ended march 31 , 2017. story_separator_special_tag assumed to have annual rates of withdrawal , or “ decay rates , ” based on information from an internal analysis of our accounts up to a maximum of ten years . 72 replace_table_token_31_th ( 1 ) interest-earning assets are included in the period in which the balances are expected to be redeployed and or repriced as a result of anticipated prepayments , scheduled rate adjustments and contractual maturities . ( 2 ) for purposes of the gap analysis , loans receivable includes non-performing loans , gross of the allowance for loan losses and unamortized discounts and deferred loan fees . ( 3 ) includes restricted stock in the fhlb of pittsburgh and acbb . ( 4 ) interest-rate sensitivity gap represents the difference between total interest-earning assets and total interest-bearing liabilities . certain shortcomings are inherent in the method of analysis presented in the foregoing table . for example , although certain assets and liabilities may have similar maturities or periods to repricing , they may react in different degrees to changes in market interest rates . also , the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates , while interest rates on other types may lag behind changes in market rates . additionally , certain assets , such as adjustable-rate loans , have features which restrict changes in interest rates both on a short-term basis and over the life of the asset . further , in the event of a change in interest rates , prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the table . finally , the ability of many borrowers to service their adjustable-rate loans may decrease in the event of an interest rate increase . 73 net portfolio value analysis . our interest rate sensitivity also is monitored by management through the use of a model which generates estimates of the changes in our net portfolio value ( “ npv ” ) over a range of interest rate scenarios . npv is the Narrative : liquidity and capital resources liquidity is the ability to maintain cash flows that are adequate to fund operations and meet other obligations on a timely and cost-effective basis in various market conditions . the ability of the company to meet its current financial obligations is a function of balance sheet structure , the ability to liquidate assets and the availability of alternative sources of funds . to meet the needs of the clients and manage the risk of the company , the company engages in liquidity planning and management . our primary sources of funds are from deposits , scheduled principal and interest payments on loans , loan prepayments and the maturity of loans , mortgage-backed securities and other investments , and other funds provided from operations . while scheduled payments from the amortization of loans and mortgage-backed securities and maturing investment securities are relatively predictable sources of funds , deposit flows and loan prepayments can be greatly influenced by general interest rates , economic conditions and competition . we also maintain excess funds in short-term , interest-bearing assets that provide additional liquidity . at september 30 , 2019 , our cash and cash equivalents amounted to $ 48.0 million . in addition , our available-for-sale investment and mortgage-backed securities amounted to an aggregate of $ 512.8 million at september 30 , 2019. we use our liquidity to fund existing and future loan commitments , to fund maturing certificates of deposit and demand deposit withdrawals , to invest in other interest-earning assets , and to meet operating expenses . at september 30 , 2019 , we had certificates of deposit maturing within the next 12 months amounting to $ 405.7 million . we anticipate that a significant portion of the maturing certificates of deposit will be redeposited with us unless we determine to lower rates to below those of our competition in order to facilitate the reduction of higher cost deposits during periods when there is excess cash on hand or in order to satisfy our asset/liability goals . there were no deposits as of september 30 , 2019 requiring the pledging of collateral .

37 outlook from a financial perspective , we expect operating cash flows and our ratio of debt to total capitalization to improve for fiscal 2020 compared with fiscal 2019. we expect these improvements to be weighted toward the second half of the year , as year-over-year comparisons in consolidated average freight revenue per total mile and margin performance in certain operations are expected to be negative for at least two quarters . from a balance sheet perspective , we expect to reduce total indebtedness , including operating lease right to use liabilities , net of cash , through a combination of net capital expenditures scheduled below normal replacement cycle , and improving operating cash flows . our expectations for improving performance throughout 2020 are based on assumptions of ( i ) declining truckload industry capacity ( due to , among other factors , a continuation of falling new truck production , competitors exiting the industry , and tighter federal drug testing regulations ) , ( ii ) continued u.s. economic expansion , ( iii ) the successful disposal of excess real estate and revenue equipment , and ( iv ) the reallocation of assets to more profitable operations . the timing and magnitude of these factors will impact our results . results of consolidated operations our management 's discussion and analysis of financial condition and results of operations included in this document generally discusses 2019 and 2018 items and year-to-year comparisons between 2019 and 2018. discussions of 2017 items and year-to-year comparisons between 2018 and 2017 that are not included in this document can be found in “ management 's discussion and analysis of financial condition and results of operations ” in part ii , item 7 of our annual report on form 10-k for the fiscal year ended december 31 , 2018. the following table sets forth total revenue and freight revenue ( total revenue less fuel surcharge revenue ) for the periods indicated : revenue replace_table_token_7_th for 2019 , total revenue increased $ 9.1 million , or 1.0 % , to $ 894.5 million from $ 885.5 million in 2018. freight revenue increased $ 20.7 million or 2.7 % , to $ 800.4 million for 2019 , from $ 779.7 million in 2018 , while fuel surcharge revenue decreased $ 11.6 million year-over-year . the increase in freight revenue resulted from a $ 77.5 million , $ 32.5 , and $ 4.1 million increase in freight revenues from our dedicated , managed freight , and factoring segments , respectively , partially offset by a $ 93.4 million decrease in freight revenues from our highway services segment . the increase in 2019 dedicated revenue relates to a 511 ( or 40.9 % ) average tractor increase partially offset by a decrease in average freight revenue per tractor per week of 3.3 % compared to 2018. landair contributed $ 68.2 million of freight revenue to dedicated operations for the full year in 2019 , compared to $ 28.9 million in approximately six months of post-acquisition operations in 2018. the increase in average tractors was attributable to the full year of landair 's operations plus a re-allocation of tractors from highway services to dedicated . the decrease in average freight revenue per tractor per week is the result of fewer miles per tractor partially offset by a 1.3 % , or 2.4 cents per mile , increase in average rate per total mile , both primarily attributable to a full year of landair operations . the decrease in 2019 highway services revenue relates to a 281 ( or 17.6 % ) average tractor decrease as well as a decrease in average freight revenue per tractor per week of 6.4 % compared to 2018. the decrease in average freight revenue per tractor per week is the result of a 5.0 % decrease , or 10.1 cents per mile , in average rate per total mile , and an approximately 1.5 % decrease in average miles per unit when compared to 2018. team driven units decreased approximately 4.4 % to an average of 825 teams in 2019 from 863 teams in 2018. the increase in managed freight revenue is primarily the result of landair 's contribution of $ 83.3 million and $ 38.5 million of revenue in 2019 and 2018 , respectively , to combined managed freight operations . 38 the increase in factoring revenue is primarily the result of new customers as well as growth with existing customers . for comparison purposes in the discussion below , we use total revenue and freight revenue ( total revenue less fuel surcharge revenue ) when discussing changes as a percentage of revenue . as it relates to the comparison of expenses to freight revenue , we believe removing fuel surcharge revenue , which is sometimes a volatile source of revenue , affords a more consistent basis for comparing the results of operations from period-to-period . nonetheless , freight revenue is a non-gaap financial measure and is not a substitute for revenue measured in accordance with gaap . there are limitations to using non-gaap financial measures . our board and management focus on our freight revenue as an indicator of our performance from period to period . we believe our presentation of freight revenue is useful because it provides investors and securities analysts the same information that we use internally to assess our core operating performance . although we believe that freight revenue improves comparability in analyzing our period-to-period performance , it could limit comparability to other companies in our industry , if those companies define freight revenue differently . because of these limitations , freight revenue should not be considered a measure of total revenue generated by or available to our business . management compensates for these limitations by primarily relying on gaap results and using non-gaap financial measures on a supplemental basis . story_separator_special_tag income from equity method investment year ended december 31 , ( in thousands ) 2019 2018 income from equity method investment $ 7,017 $ 7,732 we have accounted for our investment in tel using the equity method of accounting and thus our financial results include our proportionate share of tel 's net income . for the year ended december 31 , 2019 , our earnings resulting from our investment in tel decreased to $ 7.0 million . the decrease in 2019 as compared to 2018 is the result of tel 's write-off of receivables and the revenue impact associated with customer bankruptcy during the fourth quarter of 2019. we expect the impact on our earnings resulting from our investment in tel to be down year-over-year for the first half of 2020 as a result of the discontinued business , but to return to prior levels during the latter half of 2020. income tax expense ( benefit ) replace_table_token_19_th income tax expense decreased approximately $ 12.0 million , or 77.7 % , for the year ended december 31 , 2019 , compared to 2018. as a percentage of total revenue , income tax expense decreased to 0.4 % of total revenue for 2019 from 1.8 % in 2018. as a percentage of freight revenue , income tax expense decreased to 0.4 % of freight revenue for 2019 compared to 2.0 % in 2018. these decreases were primarily related to the decrease in operating income of $ 43.0 million for 2019 , compared to 2018 as described above as well as a decrease in our effective tax rate . the effective tax rate is different from the expected combined tax rate due primarily to permanent differences related to our per diem pay structure for drivers . due to the partial nondeductible effect of the per diem payments , our tax rate will fluctuate in future periods as income fluctuates . we are currently estimating our 2020 effective income tax rate to be approximately 25.5 % . results of segment operations we have four reportable segments , highway services , dedicated , managed freight , and factoring . highway services represents non-dedicated , irregular route truckload services without fixed volume commitments in the expedited and over-the-road solo markets . dedicated represents truckload services under long-term contracts that generally include minimum prices and volumes . our managed freight segment has service offerings ancillary to our highway services and dedicated segments , including : freight brokerage service provided both directly and through freight brokerage agents , who are paid a commission for the freight they provide , tms , and warehousing services . in addition , our factoring segment offers accounts receivable factoring services for external carriers . our highway services and managed freight operations each consist of multiple operating segments , which are aggregated into our reportable segments due to having similar economic characteristics and meeting the aggregation criteria . 43 the operation of each of these businesses is described in our notes to item 1 of part 1 of this annual report on form 10-k. the following table summarizes revenue and operating income data by reportable segment and service offering : replace_table_token_20_th comparison of year ended december 31 , 2019 to year ended december 31 , 2018 for 2019 , total revenue increased $ 9.1 million , or 1.0 % , to $ 894.5 million from $ 885.5 million in 2018. our highway services total revenue decreased $ 112.8 million , as freight revenue decreased $ 93.4 million and fuel surcharge revenue decreased $ 19.4 million . the decrease in 2019 highway services revenue relates to a 281 ( or 17.6 % ) average tractor decrease as well as a decrease in average freight revenue per tractor per week of 6.4 % compared to 2018. the decrease in average freight revenue per tractor per week is the result of a 5.0 % decrease , or 10.1 cents per mile , in average rate per total mile , and an approximately 1.5 % decrease in average miles per unit when compared to 2018. team driven units decreased approximately 4.4 % to an average of 825 teams in 2019 from 863 teams in 2018 . 44 our dedicated total revenue increased $ 84.7 million , as freight revenue increased $ 77.5 million and fuel surcharge revenue increased $ 7.2 million . the increase in 2019 dedicated freight revenue relates to a 511 ( or 40.9 % ) average tractor increase partially offset by a decrease in average freight revenue per tractor per week of 3.3 % compared to 2018. landair contributed $ 83.8 million of freight revenue to dedicated operations in 2019 , compared to $ 37.6 million for approximately six months in 2018. the increase in average tractors was attributable to the full year of landair 's operations plus a re-allocation of tractors from highway services to dedicated . the decrease in average freight revenue per tractor per week is the result of fewer miles per tractor partially offset by a 1.3 % , or 2.4 cents per mile , increase in average rate per total mile primarily attributable to a full year of landair operations , which generate higher revenue per mile and lower miles per tractor . our highway services and dedicated operating income were $ 33.8 million and $ 11.7 million lower in 2019 than 2018. highway services operating income , which generally fluctuates with market cycles to a greater extent than dedicated , declined primarily due to a difficult operating environment that imposed negative pressure on rates and volumes . in particular , the operating results of our temperature-controlled business were significantly unprofitable . dedicated operating income declined due to accepting contract pricing in non-landair operations that was better than highway services but below our targeted profitability , offset by improved results at landair . additionally , higher insurance and claims expense and lower fuel surcharge recovery negatively impacted both of these reportable segments . managed freight total revenue increased

cash flows net cash flows provided by operating activities were $ 64.0 million in 2019 compared with $ 124.8 million in 2018 , primarily due to $ 34.0 million decrease in net income and a $ 22.8 million negative net swing in accounts receivable and accounts payable/accrued expenses due to growth in our factoring segment and timing of expense payment . net cash flows used by investing activities were $ 93.0 million in 2019 compared with $ 120.9 million in 2018. the net investment in the landair acquisition in 2018 was $ 105.9 million . excluding the landair acquisition , net investment in our fleet was $ 91.7 million in 2019 compared with $ 13.5 million in 2018. the increase in 2019 relates primarily to a change in financing method , where more equipment was purchased in 2019 versus acquired under operating or finance leases in 2018. the softer market for used equipment in 2019 also produced lower proceeds per unit , and we had a significant number of tractors held for sale at december 31 , which are expected to generate proceeds in 2020. we took delivery of approximately 775 tractors new company tractors and disposed of approximately 831 used tractors in 2019 , compared to delivery and disposal of 635 tractors and 615 tractors , respectively , in 2018. we expect net capital expenditures to decrease in 2020 compared to 2019 , primarily due to expected purchases of approximately 550 tractors and disposals of approximately 750 used tractors ( including 625 held for sale at december 31 , 2019 ) in 2020 .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. 37 outlook from a financial perspective , we expect operating cash flows and our ratio of debt to total capitalization to improve for fiscal 2020 compared with fiscal 2019. we expect these improvements to be weighted toward the second half of the year , as year-over-year comparisons in consolidated average freight revenue per total mile and margin performance in certain operations are expected to be negative for at least two quarters . from a balance sheet perspective , we expect to reduce total indebtedness , including operating lease right to use liabilities , net of cash , through a combination of net capital expenditures scheduled below normal replacement cycle , and improving operating cash flows . our expectations for improving performance throughout 2020 are based on assumptions of ( i ) declining truckload industry capacity ( due to , among other factors , a continuation of falling new truck production , competitors exiting the industry , and tighter federal drug testing regulations ) , ( ii ) continued u.s. economic expansion , ( iii ) the successful disposal of excess real estate and revenue equipment , and ( iv ) the reallocation of assets to more profitable operations . the timing and magnitude of these factors will impact our results . results of consolidated operations our management 's discussion and analysis of financial condition and results of operations included in this document generally discusses 2019 and 2018 items and year-to-year comparisons between 2019 and 2018. discussions of 2017 items and year-to-year comparisons between 2018 and 2017 that are not included in this document can be found in “ management 's discussion and analysis of financial condition and results of operations ” in part ii , item 7 of our annual report on form 10-k for the fiscal year ended december 31 , 2018. the following table sets forth total revenue and freight revenue ( total revenue less fuel surcharge revenue ) for the periods indicated : revenue replace_table_token_7_th for 2019 , total revenue increased $ 9.1 million , or 1.0 % , to $ 894.5 million from $ 885.5 million in 2018. freight revenue increased $ 20.7 million or 2.7 % , to $ 800.4 million for 2019 , from $ 779.7 million in 2018 , while fuel surcharge revenue decreased $ 11.6 million year-over-year . the increase in freight revenue resulted from a $ 77.5 million , $ 32.5 , and $ 4.1 million increase in freight revenues from our dedicated , managed freight , and factoring segments , respectively , partially offset by a $ 93.4 million decrease in freight revenues from our highway services segment . the increase in 2019 dedicated revenue relates to a 511 ( or 40.9 % ) average tractor increase partially offset by a decrease in average freight revenue per tractor per week of 3.3 % compared to 2018. landair contributed $ 68.2 million of freight revenue to dedicated operations for the full year in 2019 , compared to $ 28.9 million in approximately six months of post-acquisition operations in 2018. the increase in average tractors was attributable to the full year of landair 's operations plus a re-allocation of tractors from highway services to dedicated . the decrease in average freight revenue per tractor per week is the result of fewer miles per tractor partially offset by a 1.3 % , or 2.4 cents per mile , increase in average rate per total mile , both primarily attributable to a full year of landair operations . the decrease in 2019 highway services revenue relates to a 281 ( or 17.6 % ) average tractor decrease as well as a decrease in average freight revenue per tractor per week of 6.4 % compared to 2018. the decrease in average freight revenue per tractor per week is the result of a 5.0 % decrease , or 10.1 cents per mile , in average rate per total mile , and an approximately 1.5 % decrease in average miles per unit when compared to 2018. team driven units decreased approximately 4.4 % to an average of 825 teams in 2019 from 863 teams in 2018. the increase in managed freight revenue is primarily the result of landair 's contribution of $ 83.3 million and $ 38.5 million of revenue in 2019 and 2018 , respectively , to combined managed freight operations . 38 the increase in factoring revenue is primarily the result of new customers as well as growth with existing customers . for comparison purposes in the discussion below , we use total revenue and freight revenue ( total revenue less fuel surcharge revenue ) when discussing changes as a percentage of revenue . as it relates to the comparison of expenses to freight revenue , we believe removing fuel surcharge revenue , which is sometimes a volatile source of revenue , affords a more consistent basis for comparing the results of operations from period-to-period . nonetheless , freight revenue is a non-gaap financial measure and is not a substitute for revenue measured in accordance with gaap . there are limitations to using non-gaap financial measures . our board and management focus on our freight revenue as an indicator of our performance from period to period . we believe our presentation of freight revenue is useful because it provides investors and securities analysts the same information that we use internally to assess our core operating performance . although we believe that freight revenue improves comparability in analyzing our period-to-period performance , it could limit comparability to other companies in our industry , if those companies define freight revenue differently . because of these limitations , freight revenue should not be considered a measure of total revenue generated by or available to our business . management compensates for these limitations by primarily relying on gaap results and using non-gaap financial measures on a supplemental basis . story_separator_special_tag income from equity method investment year ended december 31 , ( in thousands ) 2019 2018 income from equity method investment $ 7,017 $ 7,732 we have accounted for our investment in tel using the equity method of accounting and thus our financial results include our proportionate share of tel 's net income . for the year ended december 31 , 2019 , our earnings resulting from our investment in tel decreased to $ 7.0 million . the decrease in 2019 as compared to 2018 is the result of tel 's write-off of receivables and the revenue impact associated with customer bankruptcy during the fourth quarter of 2019. we expect the impact on our earnings resulting from our investment in tel to be down year-over-year for the first half of 2020 as a result of the discontinued business , but to return to prior levels during the latter half of 2020. income tax expense ( benefit ) replace_table_token_19_th income tax expense decreased approximately $ 12.0 million , or 77.7 % , for the year ended december 31 , 2019 , compared to 2018. as a percentage of total revenue , income tax expense decreased to 0.4 % of total revenue for 2019 from 1.8 % in 2018. as a percentage of freight revenue , income tax expense decreased to 0.4 % of freight revenue for 2019 compared to 2.0 % in 2018. these decreases were primarily related to the decrease in operating income of $ 43.0 million for 2019 , compared to 2018 as described above as well as a decrease in our effective tax rate . the effective tax rate is different from the expected combined tax rate due primarily to permanent differences related to our per diem pay structure for drivers . due to the partial nondeductible effect of the per diem payments , our tax rate will fluctuate in future periods as income fluctuates . we are currently estimating our 2020 effective income tax rate to be approximately 25.5 % . results of segment operations we have four reportable segments , highway services , dedicated , managed freight , and factoring . highway services represents non-dedicated , irregular route truckload services without fixed volume commitments in the expedited and over-the-road solo markets . dedicated represents truckload services under long-term contracts that generally include minimum prices and volumes . our managed freight segment has service offerings ancillary to our highway services and dedicated segments , including : freight brokerage service provided both directly and through freight brokerage agents , who are paid a commission for the freight they provide , tms , and warehousing services . in addition , our factoring segment offers accounts receivable factoring services for external carriers . our highway services and managed freight operations each consist of multiple operating segments , which are aggregated into our reportable segments due to having similar economic characteristics and meeting the aggregation criteria . 43 the operation of each of these businesses is described in our notes to item 1 of part 1 of this annual report on form 10-k. the following table summarizes revenue and operating income data by reportable segment and service offering : replace_table_token_20_th comparison of year ended december 31 , 2019 to year ended december 31 , 2018 for 2019 , total revenue increased $ 9.1 million , or 1.0 % , to $ 894.5 million from $ 885.5 million in 2018. our highway services total revenue decreased $ 112.8 million , as freight revenue decreased $ 93.4 million and fuel surcharge revenue decreased $ 19.4 million . the decrease in 2019 highway services revenue relates to a 281 ( or 17.6 % ) average tractor decrease as well as a decrease in average freight revenue per tractor per week of 6.4 % compared to 2018. the decrease in average freight revenue per tractor per week is the result of a 5.0 % decrease , or 10.1 cents per mile , in average rate per total mile , and an approximately 1.5 % decrease in average miles per unit when compared to 2018. team driven units decreased approximately 4.4 % to an average of 825 teams in 2019 from 863 teams in 2018 . 44 our dedicated total revenue increased $ 84.7 million , as freight revenue increased $ 77.5 million and fuel surcharge revenue increased $ 7.2 million . the increase in 2019 dedicated freight revenue relates to a 511 ( or 40.9 % ) average tractor increase partially offset by a decrease in average freight revenue per tractor per week of 3.3 % compared to 2018. landair contributed $ 83.8 million of freight revenue to dedicated operations in 2019 , compared to $ 37.6 million for approximately six months in 2018. the increase in average tractors was attributable to the full year of landair 's operations plus a re-allocation of tractors from highway services to dedicated . the decrease in average freight revenue per tractor per week is the result of fewer miles per tractor partially offset by a 1.3 % , or 2.4 cents per mile , increase in average rate per total mile primarily attributable to a full year of landair operations , which generate higher revenue per mile and lower miles per tractor . our highway services and dedicated operating income were $ 33.8 million and $ 11.7 million lower in 2019 than 2018. highway services operating income , which generally fluctuates with market cycles to a greater extent than dedicated , declined primarily due to a difficult operating environment that imposed negative pressure on rates and volumes . in particular , the operating results of our temperature-controlled business were significantly unprofitable . dedicated operating income declined due to accepting contract pricing in non-landair operations that was better than highway services but below our targeted profitability , offset by improved results at landair . additionally , higher insurance and claims expense and lower fuel surcharge recovery negatively impacted both of these reportable segments . managed freight total revenue increased Narrative : cash flows net cash flows provided by operating activities were $ 64.0 million in 2019 compared with $ 124.8 million in 2018 , primarily due to $ 34.0 million decrease in net income and a $ 22.8 million negative net swing in accounts receivable and accounts payable/accrued expenses due to growth in our factoring segment and timing of expense payment . net cash flows used by investing activities were $ 93.0 million in 2019 compared with $ 120.9 million in 2018. the net investment in the landair acquisition in 2018 was $ 105.9 million . excluding the landair acquisition , net investment in our fleet was $ 91.7 million in 2019 compared with $ 13.5 million in 2018. the increase in 2019 relates primarily to a change in financing method , where more equipment was purchased in 2019 versus acquired under operating or finance leases in 2018. the softer market for used equipment in 2019 also produced lower proceeds per unit , and we had a significant number of tractors held for sale at december 31 , which are expected to generate proceeds in 2020. we took delivery of approximately 775 tractors new company tractors and disposed of approximately 831 used tractors in 2019 , compared to delivery and disposal of 635 tractors and 615 tractors , respectively , in 2018. we expect net capital expenditures to decrease in 2020 compared to 2019 , primarily due to expected purchases of approximately 550 tractors and disposals of approximately 750 used tractors ( including 625 held for sale at december 31 , 2019 ) in 2020 .

the combination of these factors caused a global supply and demand imbalance for oil and natural gas which , along with concerns regarding the growth outlook in china and the anticipation of potential supply increases related to the lifting of sanctions against iran , resulted in materially lower crude oil prices in 2015 and to date in 2016. the average price of west texas intermediate ( wti ) crude oil decreased from an average price of $ 73 per barrel in the fourth quarter of 2014 to an average of $ 49 per barrel in 2015. these data points compare to an average price of $ 93 per barrel in 2014. the average price of intercontinental exchange brent ( brent ) crude decreased from an average price of $ 76 per barrel in the fourth quarter of 2014 to an average of $ 52 per barrel in 2015. these data points compare to an average price of $ 99 per barrel in 2014. as of february 18 , 2016 , wti crude traded at approximately $ 31 per barrel while brent crude traded at approximately $ 34 per barrel . the magnitude of the supply/demand imbalance has created a market concern that crude oil prices could decline further or remain at their currently low level for the foreseeable future , with the current twelve-month forward strip price for wti and brent crude each averaging $ 37 per barrel . the current and expected price for wti crude will continue to influence our customers ' spending in u.s. shale play developments , such as the permian , bakken , niobrara , and eagle ford basins . spending in these regions will influence the overall drilling and completion activity in the area and , therefore , the activity of our well site services segment . the price for brent crude will influence our customers ' spending related to global offshore drilling and development and , thus , the activity of our offshore products segment . -40- given the historical volatility of crude prices , there remains a high degree of risk that prices could deteriorate further due to high levels of domestic and opec crude oil production , slowing growth rates in various global regions and or the potential for ongoing supply/demand imbalances . conversely , if the global supply of oil were to decrease due to reduced capital investment by our customers or government instability in a major oil-producing nation and energy demand were to continue to increase in the u.s. and countries such as china and india , a recovery in wti and brent crude prices could occur . in any event , crude oil price improvements will depend upon a rebalancing of global supply and demand , the timing of which is difficult to predict . if commodity prices do not improve or decline further , demand for our products and services could further decline . prices for natural gas in the u.s. averaged $ 2.62 per mmbtu in 2015 compared to $ 4.37 per mmbtu in 2014. natural gas prices declined during 2015 largely due to increased natural gas inventories . natural gas prices traded at approximately $ 1.85 per mmbtu as of february 18 , 2016. strong production and a milder winter this year compared to last year resulted in significant increases in natural gas inventories in the u.s. during 2015 , from 2 % below the 5-year average as of the end of 2014 to 14 % above the 5-year average as of the end of 2015. customer spending in the natural gas shale plays has been limited due to associated gas being produced from unconventional oil wells in north america , specifically onshore shale production resulting from the broad application of horizontal drilling and hydraulic fracturing techniques which continued during 2015 , albeit at a much slower pace , and the commissioning of a number of new , large , lng export facilities around the world . as a result of natural gas production growth outpacing demand growth in the u.s. , natural gas prices continue to be weak and are expected to remain below levels considered economical for new investments in numerous natural gas fields , with the current twelve-month forward strip price for natural gas averaging $ 2.30 per mmbtu . if natural gas production growth continues to surpass demand growth in the u.s. and or the supply of natural gas were to increase , whether the supply comes from conventional or unconventional production or associated natural gas production from oil wells , prices for natural gas could remain depressed for an extended period and result in fewer rigs drilling for natural gas . recent wti crude , brent crude and natural gas pricing trends are as follows : replace_table_token_8_th ( 1 ) source : u.s. energy information administration ( eia ) . as of february 18 , 2016 , wti crude , brent crude and natural gas traded at approximately $ 31 per barrel , $ 34 per barrel and $ 1.85 per mmbtu , respectively . ( 2 ) as of december 31 , 2014 , the price of wti and brent crude oil had fallen to $ 53.45 per barrel and $ 55.27 per barrel , respectively . -41- overview demand for the products and services of our offshore products segment is tied primarily to the long-term outlook for commodity prices . demand for our well site services segment responds to shorter-term movements in oil and natural gas prices and , specifically , changes in north american drilling and completion activity given the spot contract nature of our operations coupled with shorter cycles between drilling a well and bringing it on production . other factors that can affect our business and financial results include the general global economic environment and regulatory changes in the u.s. and international markets . story_separator_special_tag ( sg & a ) expense increased $ 18.5 million , or 12 % , in 2014 compared to 2013. the increase was largely due to increased employee-related costs primarily associated with a 5 % increase in total headcount , a portion of which was added in offshore products in connection with the qcs acquisition in december 2013 , coupled with increased bad debt expense . depreciation and amortization . depreciation and amortization expense increased $ 15.5 million , or 14 % , in 2014 compared to 2013 primarily due to capital expenditures made during the previous twelve months across all segments of our company along with increased depreciation and amortization expense related to the qcs acquisition . other operating ( income ) expense . other operating ( income ) expense increased $ 0.8 million , or 9.1 % , in 2014 compared to 2013 primarily due to increased transaction costs incurred in 2014 in connection with the spin-off . operating income . consolidated operating income increased $ 63.0 million , or 25 % , in 2014 compared to 2013 primarily as a result of increases in operating income from our offshore products segment and completion services business of $ 43.2 million , or 28 % , and $ 21.5 million , or 17 % , respectively . these increases in operating income were partially offset by an increase of $ 5.5 million in transaction costs primarily related to the spin-off . interest expense and interest income . net interest expense decreased $ 21.6 million , or 57 % , in 2014 compared to 2013 primarily due to the company 's repurchase of $ 34.0 million aggregate principal amount of our 5 1/8 % notes in the fourth quarter of 2013 , the repurchase of the remaining $ 966.0 million aggregate principal amount of our 6 1/2 % and 5 1/8 % notes in the second quarter of 2014 and the full repayment of our u.s. term loan in the third quarter of 2013 , partially offset by amounts outstanding under our current revolving credit facility coupled with unused commitment fees paid to our lenders . the weighted average interest rate on the company 's total outstanding debt was 6.0 % in 2014 compared to 6.4 % in 2013. loss on extinguishment of debt . during 2014 , we recognized losses on the extinguishment of debt totaling $ 100.4 million primarily due to the repurchase of our remaining 6 1/2 % notes and 5 1/8 % notes , resulting in a loss of $ 96.7 million consisting of the premium paid over book value for the notes and the write-off of unamortized deferred financing costs associated with such notes . in addition , as a result of the refinancing of our bank credit facility in the second quarter of 2014 , we recognized a loss of $ 3.7 million ( net of $ 1.8 million allocated to discontinued operations for the canadian portion of the revolving credit facility ) from the write-off of unamortized deferred financing costs on our revolving credit facility . during 2013 , we recognized a loss on the extinguishment of debt totaling $ 6.2 million from the repurchase of a portion of our 5 1/8 % notes in the fourth quarter of 2013 , resulting in a loss of $ 4.1 million , including the write-off of $ 0.4 million of unamortized deferred financing costs . additionally , during 2013 we wrote off $ 2.1 million of unamortized deferred financing costs associated with the full repayment of our u.s. term loan . -47- income tax expense . the company 's income tax provision for 2014 totaled $ 69.1 million , or 35.2 % of pretax income , compared to income tax expense of $ 75.1 million , or 36.8 % of pretax income , for 2013. the decrease in the effective tax rate from the prior year was largely the result of the mix and levels of pre-tax earnings between the company 's domestic and foreign operations and the loss incurred on extinguishment of debt associated with the debt refinancings completed in connection with the spin-off . discontinued operations . net income from discontinued operations for 2014 was $ 51.8 million compared to $ 208.2 million for 2013 ( exclusive of a $ 128.6 million pre-tax gain , $ 84.0 million after-tax , recorded on the disposal of our tubular services business in 2013 . ) revenues reported within discontinued operations were $ 404.2 million for 2014 compared to $ 2.1 billion for 2013. operating income included within discontinued operations was $ 81.1 million and $ 305.1 million for 2014 and 2013 , respectively . the decreases in revenue and operating income year-over-year primarily relate to the absence of tubular services operations in 2014 compared to 2013 due to this segment 's disposal on september 6 , 2013 , and the absence of accommodations operations for the months of june through december 2014 compared to a full twelve months in 2013 due to the spin-off on may 30 , 2014. other comprehensive income ( loss ) . other comprehensive income ( loss ) increased from a loss of $ 192.8 million in 2013 to income of less than $ 1.0 million in 2014 primarily as a result of foreign currency translation adjustments attributable to the accommodations discontinued operations which were spun-off . liquidity , capital resources and other matters our primary liquidity needs are to fund operating and capital expenditures , which in the past have included expanding and upgrading our offshore products manufacturing facilities and equipment , replacing and increasing completion services assets , funding new product development and general working capital needs . in addition , capital has been used to repay debt , fund our stock repurchase program and fund strategic business acquisitions . our primary sources of funds have been cash flow from operations , proceeds from borrowings under our credit facilities and capital market transactions . in 2014 , we also

loss on extinguishment of debt . during 2014 , we recognized losses on the extinguishment of debt totaling $ 100.4 million primarily due to the repurchase of our remaining 6 1/2 % notes and 5 1/8 % notes , resulting in a loss of $ 96.7 million consisting of the premium paid over book value for the notes and the write-off of unamortized deferred financing costs associated with the notes . in addition , as a result of the refinancing of our bank credit facility in the second quarter of 2014 , we recognized a loss of $ 3.7 million ( net of $ 1.8 million allocated to discontinued operations for the canadian portion of the facility ) from the write-off of unamortized deferred financing costs on our existing credit facility . income tax expense . the company 's income tax provision for 2015 totaled $ 22.2 million , or 43.9 % of pretax income , compared to income tax expense of $ 69.1 million , or 35.2 % of pretax income , for 2014. the increase in the effective tax rate from the prior year was largely the result of a $ 4.1 million valuation allowance recorded against the company 's tax loss carryforwards in various foreign jurisdictions , and $ 3.6 million in tax adjustments primarily related to non-deductible items , partially offset by the loss incurred in 2014 from the extinguishment of debt associated with the debt refinancings completed in conjunction with the spin-off . discontinued operations . net income from discontinued operations for 2015 was $ 0.2 million compared to $ 51.8 million for 2014. there were no revenues reported within discontinued operations during 2015 compared to $ 404.2 million for 2014 due to the spin-off on may 30 , 2014. operating income included within discontinued operations was $ 0.4 million and $ 81.1 million for 2015 and 2014 , respectively . the decreases in revenue and operating income year-over-year primarily relate to the absence of accommodations operations in 2015 compared to five months of operations in 2014. other comprehensive income ( loss ) .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. the combination of these factors caused a global supply and demand imbalance for oil and natural gas which , along with concerns regarding the growth outlook in china and the anticipation of potential supply increases related to the lifting of sanctions against iran , resulted in materially lower crude oil prices in 2015 and to date in 2016. the average price of west texas intermediate ( wti ) crude oil decreased from an average price of $ 73 per barrel in the fourth quarter of 2014 to an average of $ 49 per barrel in 2015. these data points compare to an average price of $ 93 per barrel in 2014. the average price of intercontinental exchange brent ( brent ) crude decreased from an average price of $ 76 per barrel in the fourth quarter of 2014 to an average of $ 52 per barrel in 2015. these data points compare to an average price of $ 99 per barrel in 2014. as of february 18 , 2016 , wti crude traded at approximately $ 31 per barrel while brent crude traded at approximately $ 34 per barrel . the magnitude of the supply/demand imbalance has created a market concern that crude oil prices could decline further or remain at their currently low level for the foreseeable future , with the current twelve-month forward strip price for wti and brent crude each averaging $ 37 per barrel . the current and expected price for wti crude will continue to influence our customers ' spending in u.s. shale play developments , such as the permian , bakken , niobrara , and eagle ford basins . spending in these regions will influence the overall drilling and completion activity in the area and , therefore , the activity of our well site services segment . the price for brent crude will influence our customers ' spending related to global offshore drilling and development and , thus , the activity of our offshore products segment . -40- given the historical volatility of crude prices , there remains a high degree of risk that prices could deteriorate further due to high levels of domestic and opec crude oil production , slowing growth rates in various global regions and or the potential for ongoing supply/demand imbalances . conversely , if the global supply of oil were to decrease due to reduced capital investment by our customers or government instability in a major oil-producing nation and energy demand were to continue to increase in the u.s. and countries such as china and india , a recovery in wti and brent crude prices could occur . in any event , crude oil price improvements will depend upon a rebalancing of global supply and demand , the timing of which is difficult to predict . if commodity prices do not improve or decline further , demand for our products and services could further decline . prices for natural gas in the u.s. averaged $ 2.62 per mmbtu in 2015 compared to $ 4.37 per mmbtu in 2014. natural gas prices declined during 2015 largely due to increased natural gas inventories . natural gas prices traded at approximately $ 1.85 per mmbtu as of february 18 , 2016. strong production and a milder winter this year compared to last year resulted in significant increases in natural gas inventories in the u.s. during 2015 , from 2 % below the 5-year average as of the end of 2014 to 14 % above the 5-year average as of the end of 2015. customer spending in the natural gas shale plays has been limited due to associated gas being produced from unconventional oil wells in north america , specifically onshore shale production resulting from the broad application of horizontal drilling and hydraulic fracturing techniques which continued during 2015 , albeit at a much slower pace , and the commissioning of a number of new , large , lng export facilities around the world . as a result of natural gas production growth outpacing demand growth in the u.s. , natural gas prices continue to be weak and are expected to remain below levels considered economical for new investments in numerous natural gas fields , with the current twelve-month forward strip price for natural gas averaging $ 2.30 per mmbtu . if natural gas production growth continues to surpass demand growth in the u.s. and or the supply of natural gas were to increase , whether the supply comes from conventional or unconventional production or associated natural gas production from oil wells , prices for natural gas could remain depressed for an extended period and result in fewer rigs drilling for natural gas . recent wti crude , brent crude and natural gas pricing trends are as follows : replace_table_token_8_th ( 1 ) source : u.s. energy information administration ( eia ) . as of february 18 , 2016 , wti crude , brent crude and natural gas traded at approximately $ 31 per barrel , $ 34 per barrel and $ 1.85 per mmbtu , respectively . ( 2 ) as of december 31 , 2014 , the price of wti and brent crude oil had fallen to $ 53.45 per barrel and $ 55.27 per barrel , respectively . -41- overview demand for the products and services of our offshore products segment is tied primarily to the long-term outlook for commodity prices . demand for our well site services segment responds to shorter-term movements in oil and natural gas prices and , specifically , changes in north american drilling and completion activity given the spot contract nature of our operations coupled with shorter cycles between drilling a well and bringing it on production . other factors that can affect our business and financial results include the general global economic environment and regulatory changes in the u.s. and international markets . story_separator_special_tag ( sg & a ) expense increased $ 18.5 million , or 12 % , in 2014 compared to 2013. the increase was largely due to increased employee-related costs primarily associated with a 5 % increase in total headcount , a portion of which was added in offshore products in connection with the qcs acquisition in december 2013 , coupled with increased bad debt expense . depreciation and amortization . depreciation and amortization expense increased $ 15.5 million , or 14 % , in 2014 compared to 2013 primarily due to capital expenditures made during the previous twelve months across all segments of our company along with increased depreciation and amortization expense related to the qcs acquisition . other operating ( income ) expense . other operating ( income ) expense increased $ 0.8 million , or 9.1 % , in 2014 compared to 2013 primarily due to increased transaction costs incurred in 2014 in connection with the spin-off . operating income . consolidated operating income increased $ 63.0 million , or 25 % , in 2014 compared to 2013 primarily as a result of increases in operating income from our offshore products segment and completion services business of $ 43.2 million , or 28 % , and $ 21.5 million , or 17 % , respectively . these increases in operating income were partially offset by an increase of $ 5.5 million in transaction costs primarily related to the spin-off . interest expense and interest income . net interest expense decreased $ 21.6 million , or 57 % , in 2014 compared to 2013 primarily due to the company 's repurchase of $ 34.0 million aggregate principal amount of our 5 1/8 % notes in the fourth quarter of 2013 , the repurchase of the remaining $ 966.0 million aggregate principal amount of our 6 1/2 % and 5 1/8 % notes in the second quarter of 2014 and the full repayment of our u.s. term loan in the third quarter of 2013 , partially offset by amounts outstanding under our current revolving credit facility coupled with unused commitment fees paid to our lenders . the weighted average interest rate on the company 's total outstanding debt was 6.0 % in 2014 compared to 6.4 % in 2013. loss on extinguishment of debt . during 2014 , we recognized losses on the extinguishment of debt totaling $ 100.4 million primarily due to the repurchase of our remaining 6 1/2 % notes and 5 1/8 % notes , resulting in a loss of $ 96.7 million consisting of the premium paid over book value for the notes and the write-off of unamortized deferred financing costs associated with such notes . in addition , as a result of the refinancing of our bank credit facility in the second quarter of 2014 , we recognized a loss of $ 3.7 million ( net of $ 1.8 million allocated to discontinued operations for the canadian portion of the revolving credit facility ) from the write-off of unamortized deferred financing costs on our revolving credit facility . during 2013 , we recognized a loss on the extinguishment of debt totaling $ 6.2 million from the repurchase of a portion of our 5 1/8 % notes in the fourth quarter of 2013 , resulting in a loss of $ 4.1 million , including the write-off of $ 0.4 million of unamortized deferred financing costs . additionally , during 2013 we wrote off $ 2.1 million of unamortized deferred financing costs associated with the full repayment of our u.s. term loan . -47- income tax expense . the company 's income tax provision for 2014 totaled $ 69.1 million , or 35.2 % of pretax income , compared to income tax expense of $ 75.1 million , or 36.8 % of pretax income , for 2013. the decrease in the effective tax rate from the prior year was largely the result of the mix and levels of pre-tax earnings between the company 's domestic and foreign operations and the loss incurred on extinguishment of debt associated with the debt refinancings completed in connection with the spin-off . discontinued operations . net income from discontinued operations for 2014 was $ 51.8 million compared to $ 208.2 million for 2013 ( exclusive of a $ 128.6 million pre-tax gain , $ 84.0 million after-tax , recorded on the disposal of our tubular services business in 2013 . ) revenues reported within discontinued operations were $ 404.2 million for 2014 compared to $ 2.1 billion for 2013. operating income included within discontinued operations was $ 81.1 million and $ 305.1 million for 2014 and 2013 , respectively . the decreases in revenue and operating income year-over-year primarily relate to the absence of tubular services operations in 2014 compared to 2013 due to this segment 's disposal on september 6 , 2013 , and the absence of accommodations operations for the months of june through december 2014 compared to a full twelve months in 2013 due to the spin-off on may 30 , 2014. other comprehensive income ( loss ) . other comprehensive income ( loss ) increased from a loss of $ 192.8 million in 2013 to income of less than $ 1.0 million in 2014 primarily as a result of foreign currency translation adjustments attributable to the accommodations discontinued operations which were spun-off . liquidity , capital resources and other matters our primary liquidity needs are to fund operating and capital expenditures , which in the past have included expanding and upgrading our offshore products manufacturing facilities and equipment , replacing and increasing completion services assets , funding new product development and general working capital needs . in addition , capital has been used to repay debt , fund our stock repurchase program and fund strategic business acquisitions . our primary sources of funds have been cash flow from operations , proceeds from borrowings under our credit facilities and capital market transactions . in 2014 , we also Narrative : loss on extinguishment of debt . during 2014 , we recognized losses on the extinguishment of debt totaling $ 100.4 million primarily due to the repurchase of our remaining 6 1/2 % notes and 5 1/8 % notes , resulting in a loss of $ 96.7 million consisting of the premium paid over book value for the notes and the write-off of unamortized deferred financing costs associated with the notes . in addition , as a result of the refinancing of our bank credit facility in the second quarter of 2014 , we recognized a loss of $ 3.7 million ( net of $ 1.8 million allocated to discontinued operations for the canadian portion of the facility ) from the write-off of unamortized deferred financing costs on our existing credit facility . income tax expense . the company 's income tax provision for 2015 totaled $ 22.2 million , or 43.9 % of pretax income , compared to income tax expense of $ 69.1 million , or 35.2 % of pretax income , for 2014. the increase in the effective tax rate from the prior year was largely the result of a $ 4.1 million valuation allowance recorded against the company 's tax loss carryforwards in various foreign jurisdictions , and $ 3.6 million in tax adjustments primarily related to non-deductible items , partially offset by the loss incurred in 2014 from the extinguishment of debt associated with the debt refinancings completed in conjunction with the spin-off . discontinued operations . net income from discontinued operations for 2015 was $ 0.2 million compared to $ 51.8 million for 2014. there were no revenues reported within discontinued operations during 2015 compared to $ 404.2 million for 2014 due to the spin-off on may 30 , 2014. operating income included within discontinued operations was $ 0.4 million and $ 81.1 million for 2015 and 2014 , respectively . the decreases in revenue and operating income year-over-year primarily relate to the absence of accommodations operations in 2015 compared to five months of operations in 2014. other comprehensive income ( loss ) .

this solution is designed to provide it teams with 49 comprehensive operational awareness by pairing endpoint visibility and log analytics . with insightops , we believe that it professionals will have the ability to easily search and ask questions of their data to gain insights regarding core issues related to their it environments faster , which , we believe , will ultimately improve uptime and business productivity . insightops is currently being tested in a beta program , and we anticipate it will be ready for sale during the first half of 2017. in november 2016 , we announced the appointment of jeff kalowski as our new chief financial officer , effective january 9 , 2017. he replaced steven gatoff , who joined us at the beginning of 2013 , announced his planned departure in august 2016 and formally transitioned from our company in january 2017. in october 2016 , we announced that andrew burton , who was formerly our senior vice president of logentries , was promoted to the position of chief operating officer . our business model we have three offerings : ( 1 ) threat exposure management , which includes our nexpose , metasploit and appspider products , ( 2 ) incident detection and response , which includes our insightidr , managed detection and response ( formerly known as “analytic response” ) and logentries products as well as our incident response services and ( 3 ) security advisory services . we offer our products through a variety of delivery models to meet the needs of our diverse customer base , including : licensed software , including both term and perpetual licenses , and the simultaneous sale of maintenance and support . our nexpose , metasploit and appspider products are offered through perpetual or term software licenses , with a substantial majority of our customers selecting a perpetual license . substantially all of our customers who purchase software licenses also purchase ( 1 ) an agreement for maintenance and support , which provides our customers with telephone and web-based support and ongoing bug fixes and repairs during the term of the maintenance and support agreement and ( 2 ) purchasers of nexpose and metasploit also purchase content subscriptions , which provide our customers with real-time access to the latest vulnerabilities and exploits . our maintenance and support and content subscription agreements are typically for one to three-year terms . cloud-based subscriptions , where our software capabilities are provided to our customers through cloud access and on a software as a service , or saas , basis . our insightidr , appspider and logentries products are offered on a cloud-based subscription basis , generally with one to three-year terms . managed services , where we operate our software and provide our capabilities on behalf of our customers . our managed vulnerability management ( nexpose ) , managed application security ( appspider ) and managed detection and response ( insightidr ) products are offered on a managed service basis , generally pursuant to one to three-year agreements . we also offer various professional services across all of our offerings , including deployment and training services related to our nexpose , metasploit , appspider and insightidr software products , incident response services and security advisory services . customers can purchase our professional services together with our product offerings or on a stand-alone basis pursuant to fixed fee or time-and-materials agreements . an important component of our revenue growth strategy is to have our existing customers renew their agreements with us and purchase additional products from us . to assess our performance against this objective , we monitor the renewal rates of our existing customers . we calculate our renewal rate by dividing the dollar value of renewed customer agreements , including upsells and cross-sells of additional products , but excluding professional services , on a monthly basis in a trailing 12-month period by the dollar value of the corresponding 50 expiring customer agreements . we also calculate an expiring renewal rate that does not take into account any upsells or cross-sells . as a result of this methodology , we would not expect our expiring renewal rate to exceed 100 % . our renewal rate was 120 % , 126 % and 111 % in 2016 , 2015 and 2014 , respectively , and our expiring revenue renewal rate was 89 % , 88 % and 85 % in 2016 , 2015 and 2014 , respectively . our goal is to maintain what we believe are strong renewal rates , and work to increase them over time . however , our renewal rates may decline or fluctuate as a result of a number of factors , including customers ' satisfaction or dissatisfaction with our products and professional services , pricing , economic conditions or overall reductions in our customers ' spending levels . we generate revenue from selling products , maintenance and support , and professional services . in 2016 , 2015 and 2014 , 81 % , 82 % and 86 % of our revenue , respectively , was derived from sales of products and associated maintenance and support , while the remaining 19 % , 18 % and 14 % , respectively , was derived from the sale of professional services . in 2016 , 2015 and 2014 , recurring revenue , defined as sales of content subscriptions , managed services , cloud-based subscriptions and maintenance and support , made up 62 % of total revenue . we generally bill customers and collect payment for both our products and services up front . in 2016 , 2015 and 2014 , 55 % , 53 % and 53 % , respectively , of our total revenue came from deferred revenue on the balance sheet at the beginning of the respective periods . key metrics we monitor the following key metrics to help us measure and evaluate the effectiveness of our operations : replace_table_token_7_th total revenue and growth . story_separator_special_tag the increase in professional services gross margin was driven by higher utilization as well as a higher percentage of our services bookings coming from services that are sold on a standalone basis , which are recognized as delivered . the increase in maintenance and support gross margin was driven by our ability to scale as our revenue continues to grow . the decrease in products gross margin was due to an increase in revenue from cloud-based subscriptions and managed services which have lower gross margins than our software license product sales . operating expenses research and development expense replace_table_token_19_th research and development expense increased by $ 9.2 million in 2016 compared to 2015 primarily due to a $ 6.1 million increase in personnel costs as a result of our increase in headcount of our research and development teams from 205 as of december 31 , 2015 to 251 as of december 31 , 2016 as well as the timing effect of when our headcount additions were hired in 2016 and 2015 , to support our product innovation . included in the increase in personnel cost was a $ 1.0 million increase in stock-based compensation expense and $ 3.1 million of additional cost attributable to the nt objectives , inc. ( nto ) and logentries acquisitions due to 2016 including a full year of expense , partially offset by $ 0.6 million in proceeds received from a northern ireland grant . our increase in research and development expense also included a $ 3.7 million increase in allocated overhead driven largely by an increase in it and facilities costs . these cost increases were offset by a $ 0.5 million reduction related to a charge taken in 2015 for the write off of capitalized product development costs , and a $ 0.1 million decrease in other expenses . sales and marketing expense replace_table_token_20_th sales and marketing expense increased by $ 23.2 million in 2016 compared to 2015 primarily due to a $ 13.2 million increase in personnel costs , resulting from an increase in headcount from 314 as of december 31 , 2015 to 346 as of december 31 , 2016 as well as the timing effect of when our headcount additions were hired in 60 2016 and 2015 , to actively market and develop additional sales of our products and services . included in the increase in personnel cost was a $ 3.5 million increase in stock-based compensation expense and $ 2.6 million of additional costs attributable to the logentries acquisition due to 2016 including a full year of expense . our increase in sales and marketing expense also included a $ 3.3 million increase in allocated overhead driven largely by an increase in it and facilities costs , a $ 2.2 million increase in marketing expense driven largely by continued investments in attracting new customers , a $ 2.1 million increase in partner referral fees , a $ 1.2 million increase in travel and entertainment expense , a $ 0.7 million increase in recruiting and training costs , a $ 0.3 million increase in professional fees and $ 0.2 million of other expenses . general and administrative expense replace_table_token_21_th general and administrative expense increased by $ 6.6 million in 2016 compared to 2015 primarily due to a $ 3.7 million increase in personnel costs as a result of an increase in headcount from 97 as of december 31 , 2015 to 126 as of december 31 , 2016 as well as the timing effect of when our headcount additions were hired in 2016 and 2015 , to support our overall company growth as well as operations as a public company . included in the increase in personnel costs was a $ 2.0 million increase in stock-based compensation expense . our increase in general and administrative expense also included a $ 0.9 million increase in professional fees related to global structuring of our intellectual property and international business operations , a $ 0.6 million increase in allocated overhead , driven by higher it and facilities costs , a $ 0.4 million increase in recruiting and relocation costs related to certain key employees , a $ 0.5 million increase in amortization expense largely due to the logentries acquisition , a $ 0.4 million increase in insurance costs , and $ 0.4 million related to a settlement and licensing agreement with a third party , partially offset by a $ 0.3 million decrease in other expenses . interest income ( expense ) , net replace_table_token_22_th interest income ( expense ) , net increased by $ 2.7 million in 2016 compared to 2015 primarily due to the repayment in full and termination of our term loan in july 2015. other income ( expense ) , net replace_table_token_23_th other income ( expense ) , net reflected a $ 0.2 million decrease in expense in 2016 compared to 2015 primarily due to realized and unrealized foreign currency gains and losses . 61 income tax ( benefit ) provision replace_table_token_24_th income tax ( benefit ) expense decreased by $ 0.5 million in 2016 compared to 2015 primarily due to recognition of research and development tax credits in canada , ireland and the uk , as well as the impact related to the restructuring of our international business operations . year ended december 31 , 2015 compared to the year ended december 31 , 2014 revenue replace_table_token_25_th total revenue increased by $ 33.6 million in 2015 compared to 2014 primarily due to an increase of $ 17.8 million in revenue recognized from our deferred revenue balance . the remaining increase was the result of increased purchases of additional products and services of $ 8.9 million by our existing customers and $ 6.9 million from increased sales to new customers . the increase in total revenue in 2015 was comprised of $ 29.0 million from north america and $ 4.6 million from the rest of the world . we added 1,399 net new customers in 2015 , bringing our

liquidity and capital resources our principal sources of liquidity are cash and cash equivalents , investments and our accounts receivable . in connection with our initial public offering , or ipo , and concurrent private placement in july 2015 , we received aggregate net proceeds to us of $ 112.3 million , after deducting underwriting discounts and commissions related to our ipo of $ 8.3 million and offering expenses of $ 3.1 million . prior to our ipo , we funded our operations primarily through issuances of common and redeemable convertible preferred stock and debt , including net proceeds of $ 93.4 million from the sale of shares of common and preferred stock . as of december 31 , 2016 , we had $ 53.1 million in cash and cash equivalents and an accumulated deficit of $ 389.3 million . since our inception , we have generated significant losses and expect to continue to generate losses for the foreseeable future . we believe that our existing cash and cash equivalents together with cash generated from our operations will be sufficient to meet our working capital expenditure requirements for at least the next 12 months . our future capital requirements will depend on many factors , including our growth rate , the timing and extent of spending to support research and development efforts , the expansion of sales and marketing activities , particularly internationally , the introduction of new and enhanced products and professional service offerings and the cost of any future acquisitions of technology or businesses . in the event that additional financing is required from outside sources , we may be unable to raise the funds on acceptable terms , if at all . if we are unable to raise additional capital on terms satisfactory to us when we require it , our business , operating results and financial condition could be adversely affected .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. this solution is designed to provide it teams with 49 comprehensive operational awareness by pairing endpoint visibility and log analytics . with insightops , we believe that it professionals will have the ability to easily search and ask questions of their data to gain insights regarding core issues related to their it environments faster , which , we believe , will ultimately improve uptime and business productivity . insightops is currently being tested in a beta program , and we anticipate it will be ready for sale during the first half of 2017. in november 2016 , we announced the appointment of jeff kalowski as our new chief financial officer , effective january 9 , 2017. he replaced steven gatoff , who joined us at the beginning of 2013 , announced his planned departure in august 2016 and formally transitioned from our company in january 2017. in october 2016 , we announced that andrew burton , who was formerly our senior vice president of logentries , was promoted to the position of chief operating officer . our business model we have three offerings : ( 1 ) threat exposure management , which includes our nexpose , metasploit and appspider products , ( 2 ) incident detection and response , which includes our insightidr , managed detection and response ( formerly known as “analytic response” ) and logentries products as well as our incident response services and ( 3 ) security advisory services . we offer our products through a variety of delivery models to meet the needs of our diverse customer base , including : licensed software , including both term and perpetual licenses , and the simultaneous sale of maintenance and support . our nexpose , metasploit and appspider products are offered through perpetual or term software licenses , with a substantial majority of our customers selecting a perpetual license . substantially all of our customers who purchase software licenses also purchase ( 1 ) an agreement for maintenance and support , which provides our customers with telephone and web-based support and ongoing bug fixes and repairs during the term of the maintenance and support agreement and ( 2 ) purchasers of nexpose and metasploit also purchase content subscriptions , which provide our customers with real-time access to the latest vulnerabilities and exploits . our maintenance and support and content subscription agreements are typically for one to three-year terms . cloud-based subscriptions , where our software capabilities are provided to our customers through cloud access and on a software as a service , or saas , basis . our insightidr , appspider and logentries products are offered on a cloud-based subscription basis , generally with one to three-year terms . managed services , where we operate our software and provide our capabilities on behalf of our customers . our managed vulnerability management ( nexpose ) , managed application security ( appspider ) and managed detection and response ( insightidr ) products are offered on a managed service basis , generally pursuant to one to three-year agreements . we also offer various professional services across all of our offerings , including deployment and training services related to our nexpose , metasploit , appspider and insightidr software products , incident response services and security advisory services . customers can purchase our professional services together with our product offerings or on a stand-alone basis pursuant to fixed fee or time-and-materials agreements . an important component of our revenue growth strategy is to have our existing customers renew their agreements with us and purchase additional products from us . to assess our performance against this objective , we monitor the renewal rates of our existing customers . we calculate our renewal rate by dividing the dollar value of renewed customer agreements , including upsells and cross-sells of additional products , but excluding professional services , on a monthly basis in a trailing 12-month period by the dollar value of the corresponding 50 expiring customer agreements . we also calculate an expiring renewal rate that does not take into account any upsells or cross-sells . as a result of this methodology , we would not expect our expiring renewal rate to exceed 100 % . our renewal rate was 120 % , 126 % and 111 % in 2016 , 2015 and 2014 , respectively , and our expiring revenue renewal rate was 89 % , 88 % and 85 % in 2016 , 2015 and 2014 , respectively . our goal is to maintain what we believe are strong renewal rates , and work to increase them over time . however , our renewal rates may decline or fluctuate as a result of a number of factors , including customers ' satisfaction or dissatisfaction with our products and professional services , pricing , economic conditions or overall reductions in our customers ' spending levels . we generate revenue from selling products , maintenance and support , and professional services . in 2016 , 2015 and 2014 , 81 % , 82 % and 86 % of our revenue , respectively , was derived from sales of products and associated maintenance and support , while the remaining 19 % , 18 % and 14 % , respectively , was derived from the sale of professional services . in 2016 , 2015 and 2014 , recurring revenue , defined as sales of content subscriptions , managed services , cloud-based subscriptions and maintenance and support , made up 62 % of total revenue . we generally bill customers and collect payment for both our products and services up front . in 2016 , 2015 and 2014 , 55 % , 53 % and 53 % , respectively , of our total revenue came from deferred revenue on the balance sheet at the beginning of the respective periods . key metrics we monitor the following key metrics to help us measure and evaluate the effectiveness of our operations : replace_table_token_7_th total revenue and growth . story_separator_special_tag the increase in professional services gross margin was driven by higher utilization as well as a higher percentage of our services bookings coming from services that are sold on a standalone basis , which are recognized as delivered . the increase in maintenance and support gross margin was driven by our ability to scale as our revenue continues to grow . the decrease in products gross margin was due to an increase in revenue from cloud-based subscriptions and managed services which have lower gross margins than our software license product sales . operating expenses research and development expense replace_table_token_19_th research and development expense increased by $ 9.2 million in 2016 compared to 2015 primarily due to a $ 6.1 million increase in personnel costs as a result of our increase in headcount of our research and development teams from 205 as of december 31 , 2015 to 251 as of december 31 , 2016 as well as the timing effect of when our headcount additions were hired in 2016 and 2015 , to support our product innovation . included in the increase in personnel cost was a $ 1.0 million increase in stock-based compensation expense and $ 3.1 million of additional cost attributable to the nt objectives , inc. ( nto ) and logentries acquisitions due to 2016 including a full year of expense , partially offset by $ 0.6 million in proceeds received from a northern ireland grant . our increase in research and development expense also included a $ 3.7 million increase in allocated overhead driven largely by an increase in it and facilities costs . these cost increases were offset by a $ 0.5 million reduction related to a charge taken in 2015 for the write off of capitalized product development costs , and a $ 0.1 million decrease in other expenses . sales and marketing expense replace_table_token_20_th sales and marketing expense increased by $ 23.2 million in 2016 compared to 2015 primarily due to a $ 13.2 million increase in personnel costs , resulting from an increase in headcount from 314 as of december 31 , 2015 to 346 as of december 31 , 2016 as well as the timing effect of when our headcount additions were hired in 60 2016 and 2015 , to actively market and develop additional sales of our products and services . included in the increase in personnel cost was a $ 3.5 million increase in stock-based compensation expense and $ 2.6 million of additional costs attributable to the logentries acquisition due to 2016 including a full year of expense . our increase in sales and marketing expense also included a $ 3.3 million increase in allocated overhead driven largely by an increase in it and facilities costs , a $ 2.2 million increase in marketing expense driven largely by continued investments in attracting new customers , a $ 2.1 million increase in partner referral fees , a $ 1.2 million increase in travel and entertainment expense , a $ 0.7 million increase in recruiting and training costs , a $ 0.3 million increase in professional fees and $ 0.2 million of other expenses . general and administrative expense replace_table_token_21_th general and administrative expense increased by $ 6.6 million in 2016 compared to 2015 primarily due to a $ 3.7 million increase in personnel costs as a result of an increase in headcount from 97 as of december 31 , 2015 to 126 as of december 31 , 2016 as well as the timing effect of when our headcount additions were hired in 2016 and 2015 , to support our overall company growth as well as operations as a public company . included in the increase in personnel costs was a $ 2.0 million increase in stock-based compensation expense . our increase in general and administrative expense also included a $ 0.9 million increase in professional fees related to global structuring of our intellectual property and international business operations , a $ 0.6 million increase in allocated overhead , driven by higher it and facilities costs , a $ 0.4 million increase in recruiting and relocation costs related to certain key employees , a $ 0.5 million increase in amortization expense largely due to the logentries acquisition , a $ 0.4 million increase in insurance costs , and $ 0.4 million related to a settlement and licensing agreement with a third party , partially offset by a $ 0.3 million decrease in other expenses . interest income ( expense ) , net replace_table_token_22_th interest income ( expense ) , net increased by $ 2.7 million in 2016 compared to 2015 primarily due to the repayment in full and termination of our term loan in july 2015. other income ( expense ) , net replace_table_token_23_th other income ( expense ) , net reflected a $ 0.2 million decrease in expense in 2016 compared to 2015 primarily due to realized and unrealized foreign currency gains and losses . 61 income tax ( benefit ) provision replace_table_token_24_th income tax ( benefit ) expense decreased by $ 0.5 million in 2016 compared to 2015 primarily due to recognition of research and development tax credits in canada , ireland and the uk , as well as the impact related to the restructuring of our international business operations . year ended december 31 , 2015 compared to the year ended december 31 , 2014 revenue replace_table_token_25_th total revenue increased by $ 33.6 million in 2015 compared to 2014 primarily due to an increase of $ 17.8 million in revenue recognized from our deferred revenue balance . the remaining increase was the result of increased purchases of additional products and services of $ 8.9 million by our existing customers and $ 6.9 million from increased sales to new customers . the increase in total revenue in 2015 was comprised of $ 29.0 million from north america and $ 4.6 million from the rest of the world . we added 1,399 net new customers in 2015 , bringing our Narrative : liquidity and capital resources our principal sources of liquidity are cash and cash equivalents , investments and our accounts receivable . in connection with our initial public offering , or ipo , and concurrent private placement in july 2015 , we received aggregate net proceeds to us of $ 112.3 million , after deducting underwriting discounts and commissions related to our ipo of $ 8.3 million and offering expenses of $ 3.1 million . prior to our ipo , we funded our operations primarily through issuances of common and redeemable convertible preferred stock and debt , including net proceeds of $ 93.4 million from the sale of shares of common and preferred stock . as of december 31 , 2016 , we had $ 53.1 million in cash and cash equivalents and an accumulated deficit of $ 389.3 million . since our inception , we have generated significant losses and expect to continue to generate losses for the foreseeable future . we believe that our existing cash and cash equivalents together with cash generated from our operations will be sufficient to meet our working capital expenditure requirements for at least the next 12 months . our future capital requirements will depend on many factors , including our growth rate , the timing and extent of spending to support research and development efforts , the expansion of sales and marketing activities , particularly internationally , the introduction of new and enhanced products and professional service offerings and the cost of any future acquisitions of technology or businesses . in the event that additional financing is required from outside sources , we may be unable to raise the funds on acceptable terms , if at all . if we are unable to raise additional capital on terms satisfactory to us when we require it , our business , operating results and financial condition could be adversely affected .

our management believes that given current facts and circumstances , it is unlikely that applying any other reasonable judgments or estimate methodologies would have caused a material change in our results of operations , financial position or liquidity for the periods presented in this report . asset impairment the company reviews its long-lived assets including finite-lived intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable . in performing the review for recoverability , the company estimates the future cash flows expected to result from the use of the asset and its eventual disposition . if the sum of the expected future cash flows ( undiscounted and without interest charges ) is less than the carrying amount of the asset , an impairment loss is recognized as the excess of the carrying amount over the fair value . otherwise , an impairment loss is not recognized . management estimates the fair value and the estimated future cash flows expected . any changes in these estimates could impact whether there was impairment and the amount of the impairment . there were no impairments during the year ended december 31 , 2016. during the year ended december 31 , 2015 , management recorded a $ 2 thousand impairment for a patent within the power and electromechanical segment as the company chose not to continue pursuit of the related patent grants and a $ 2 thousand impairment of its capitalized website costs for its japan site after choosing to translate its u.s.-based website into japanese . during the year ended december 31 , 2014 , management identified an indefinite-lived intangible technology rights asset for which its expected life was reduced and an impairment of $ 32 thousand was recorded . indefinite-lived intangibles and goodwill assets the company accounts for business combinations under the acquisition method of accounting in accordance with asc 805 , `` business combinations , `` where the total purchase price is allocated to the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values . the purchase price is allocated using the information currently available , and may be adjusted , up to one year from acquisition date , after obtaining more information regarding , among other things , asset valuations , liabilities assumed and revisions to preliminary estimates . the purchase price in excess of the fair value of the tangible and identified intangible assets acquired less liabilities assumed is recognized as goodwill . the company tests for indefinite-lived intangibles and goodwill impairment in the second quarter of each year and whenever events or circumstances indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable . the company 's qualitative assessment of impairment for indefinite-lived assets at may 31 , 2016 , followed the guidance in asc 350-30-35-18a and 18b . the company performed a qualitative and quantitative analysis of goodwill and a qualitative analysis of its indefinite-lived intangibles at may 31 , 2016 , and determined there was no impairment of indefinite-lived intangibles and goodwill . 30 cui global has adopted asu 2011-08 , which simplifies how an entity is required to test goodwill for impairment . the asu allows an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test . under this asu , cui global is not required to calculate the fair value of a reporting unit unless the entity determines , based on a qualitative assessment , that it is more likely than not that its fair value is less than its carrying amount . the asu includes a number of factors to consider in conducting the qualitative assessment . we adopted asu 2011-08 during the year ended december 31 , 2013. the adoption of asu 2011-08 did not have an impact on our consolidated financial statements . the company tests for goodwill impairment in the second quarter of each year and whenever events or changes in circumstances indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable . as detailed in asc 350-20-35-3a , in performing its testing for goodwill , management completes a qualitative analysis to determine whether it was more likely than not that the fair value of a reporting unit is less than its carrying amount , including goodwill . to complete this review , management follows the steps in asc 350-20-35-3c to evaluate the fair values of the intangibles and goodwill and considers all known events and circumstances that might trigger an impairment of goodwill . in 2016 , 2015 and 2014 , the analysis , determined that there was no impairment necessary to goodwill . through these reviews , management concluded that there were no events or circumstances that triggered an impairment ( and there was no expectation that a reporting unit or a significant portion of a reporting unit would be sold or otherwise disposed of in the following year ) , therefore , no further analysis was necessary to prepare for goodwill impairment beyond the steps in 350-20-35-3c in accordance with asu 2011-08. on a periodic basis , we will also perform a quantitative analysis of goodwill impairment and in 2016 , in addition to the qualitative analysis , we performed a quantitative analysis of goodwill impairment . no impairment of goodwill was required . stock-based compensation the company accounts for stock-based compensation using fasb accounting standards codification no . 718 ( ‘ ‘ fasb asc 718 `` ) , ‘ ‘ compensation – stock compensation . `` fasb codification no . 718 requires the fair value of all stock-based employee compensation awarded to employees to be recorded as an expense over the related vesting period . story_separator_special_tag in addition , the agreement calls for an earn-out/royalty payment of two percent of the gross sales ( for specific , identified customers ) over a period of three years from the closing date , up to a maximum of $ 0.3 million that may or may not be paid to the seller within 90 days of each calendar year-end , depending on performance by the identified customer ( s ) . the final adjusted purchase price for the acquisition of tectrol was $ 4.5 million , which included the present value of $ 0.3 million of royalties to be paid on future sales , which was recorded as $ 0.2 million of contingent consideration and had a balance of $ 0.1 million at december 31 , 2016 . 34 financing activities see , above , the section entitled recent sales of unregistered securities for a complete listing of all securities transactions . during the year ended december 31 , 2016 , the company issued payments of $ 41 thousand against capital leases of motor vehicles and equipment and $ 85 thousand against the mortgage note payable . also in 2016 , the company issued payment of $ 59 thousand toward the contingent liability associated with the tectrol acquisition . during the year ended december 31 , 2015 , the company issued payments of $ 32 thousand against capital leases of motor vehicles and equipment and $ 81 thousand against the mortgage note payable . during the year ended december 31 , 2014 , the company issued payments of $ 0.1 million against capital leases of motor vehicles and equipment and $ 77 thousand against the mortgage note payable . cui global may raise additional capital needed to fund the further development and marketing of its products as well as payment of its debt obligations . financing activities – related party activity during 2016 , 2015 and 2014 , $ 0.3 million , $ 0.3 million , and $ 0.3 million , respectively in interest payments were made in relation to the promissory notes issued to related party , ied , inc. the promissory note terms include a due date of may 15 , 2020 and an interest rate of 5 % per annum , with interest payable monthly and the principal due as a balloon payment at maturity . please see note 9. notes payable and note 13. related party transactions for further discussion of these transactions . recap of liquidity and capital resources during the year ended december 31 , 2016 , the company continued to invest in orbital gas systems north america in houston while the cui-canada operation was more fully integrated into the company 's power and electromechanical segment . as expected in the year following two major additions , cash usage was still more than what it will be when the businesses are fully mature , but improved over the year ended december 31 , 2015 , when the company invested for future growth with the acquisition of its canada operations in the power and electromechanical segment , the startup of its orbital gas systems north america operations in the energy segment along with the investment in the new orbital u.k. facility . the net cash used in operating activities decreased to $ 0.8 million from $ 6.4 million in 2015 with much of that due to decreases in working capital requirements since integrating in and starting the two new operations during the prior year . the wells fargo mortgage promissory note has a balance at december 31 , 2016 of $ 3.4 million due , of which $ 89 thousand is the current portion . the wells fargo promissory note has an interest rate of 2 % above libor , payable over ten years , secured by a deed of trust on the purchased property executed by cui properties , llc and guaranteed by cui global , inc. in conjunction with the purchase and promissory note , wells fargo and the company entered into a swap transaction confirmation agreement effective october 1 , 2013 that effectively maximizes the annual interest rate at 6.27 % . 35 the company 's wholly owned subsidiary , cui , inc. renewed its two-year revolving line of credit ( loc ) with wells fargo bank in the principal amount of $ 4.0 million line of credit , on october 1 , 2016 for an additional two years . the interest rate on any outstanding balance is 1.75 % above either the daily one month libor or the libor in effect on the first day of the applicable fixed rate term . the loc is secured through a security agreement on accounts receivable and equipment , as well as other miscellaneous personal property assets . the loc contains certain financial covenants , one of which the company was not in compliance with at december 31 , 2016. the company has obtained a waiver from wells fargo bank for the instance of non-compliance through march 31 , 2017 , the next measuring date . cui global , inc. , the parent company , is a payment guarantor of the loc . at december 31 , 2016 , there was no balance outstanding on the line of credit . wells fargo bank has waived the cross-default provision on the promissory note payable owed by cui properties for a period beyond one year from the date of this report as it relates to the loc covenant violation , therefore the note is not considered to be in default and continues to include a portion classified as long term . on october 5 , 2016 , orbital gas systems ltd. signed a five-year agreement with the london branch of wells fargo bank n.a . for a multi-currency variable rate overdraft facility with a facility limit of 1.5 million pounds sterling ( $ 1.9 million at december 31 , 2016 ) that expires on october 5 , 2021. the interest rate on the facility is

bad debt replace_table_token_14_th bad debt expenses in 2016 , 2015 and 2014 represents less than ½ % of total revenues and relates to miscellaneous receivables , which the company has either recorded an allowance for doubtful collections of the receivable or for which the company has determined the balance to be uncollectible . 41 other income ( expense ) replace_table_token_15_th investment income the company recognized investment income on equity investment in an affiliate of $ 0 in 2016 , $ 53 thousand in the first 9 months of 2015 and , $ 49 thousand for the year ended december 31 , 2014. the company discontinued the equity method of accounting for its investment as of october 1 , 2015. during the three months ended march 31 , 2016 , the investment in tpi was exchanged for a note receivable from tpi of $ 0.4 million , which was the carrying value of the investment , earning interest at 5 % per annum , due june 30 , 2019. the company recorded $ 19 thousand of interest income from the note in the year ended december 31 , 2016. the interest receivable is settled on a quarterly basis via a non-cash offset against the finders-fee royalties earned by tpi on gaspt sales . any remaining finders-fee royalties balance is offset against the note receivable quarterly . cui global reviewed the note receivable for non-collectability as of december 31 , 2016 and concluded that no allowance was necessary . for more information on this investment , see note 2 , summary of significant accounting policies - investment and note receivable , to the consolidated financial statements under part ii , item 8 , ‘ ‘ financial statements and supplementary data . '' interest expense the company incurred $ 0.5 million , $ 0.4 million , and $ 0.5 million of interest expense during 2016 , 2015 and 2014 , respectively . interest expense is for interest on the secured note , secured promissory note , and bank working capital loans .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. our management believes that given current facts and circumstances , it is unlikely that applying any other reasonable judgments or estimate methodologies would have caused a material change in our results of operations , financial position or liquidity for the periods presented in this report . asset impairment the company reviews its long-lived assets including finite-lived intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable . in performing the review for recoverability , the company estimates the future cash flows expected to result from the use of the asset and its eventual disposition . if the sum of the expected future cash flows ( undiscounted and without interest charges ) is less than the carrying amount of the asset , an impairment loss is recognized as the excess of the carrying amount over the fair value . otherwise , an impairment loss is not recognized . management estimates the fair value and the estimated future cash flows expected . any changes in these estimates could impact whether there was impairment and the amount of the impairment . there were no impairments during the year ended december 31 , 2016. during the year ended december 31 , 2015 , management recorded a $ 2 thousand impairment for a patent within the power and electromechanical segment as the company chose not to continue pursuit of the related patent grants and a $ 2 thousand impairment of its capitalized website costs for its japan site after choosing to translate its u.s.-based website into japanese . during the year ended december 31 , 2014 , management identified an indefinite-lived intangible technology rights asset for which its expected life was reduced and an impairment of $ 32 thousand was recorded . indefinite-lived intangibles and goodwill assets the company accounts for business combinations under the acquisition method of accounting in accordance with asc 805 , `` business combinations , `` where the total purchase price is allocated to the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values . the purchase price is allocated using the information currently available , and may be adjusted , up to one year from acquisition date , after obtaining more information regarding , among other things , asset valuations , liabilities assumed and revisions to preliminary estimates . the purchase price in excess of the fair value of the tangible and identified intangible assets acquired less liabilities assumed is recognized as goodwill . the company tests for indefinite-lived intangibles and goodwill impairment in the second quarter of each year and whenever events or circumstances indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable . the company 's qualitative assessment of impairment for indefinite-lived assets at may 31 , 2016 , followed the guidance in asc 350-30-35-18a and 18b . the company performed a qualitative and quantitative analysis of goodwill and a qualitative analysis of its indefinite-lived intangibles at may 31 , 2016 , and determined there was no impairment of indefinite-lived intangibles and goodwill . 30 cui global has adopted asu 2011-08 , which simplifies how an entity is required to test goodwill for impairment . the asu allows an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test . under this asu , cui global is not required to calculate the fair value of a reporting unit unless the entity determines , based on a qualitative assessment , that it is more likely than not that its fair value is less than its carrying amount . the asu includes a number of factors to consider in conducting the qualitative assessment . we adopted asu 2011-08 during the year ended december 31 , 2013. the adoption of asu 2011-08 did not have an impact on our consolidated financial statements . the company tests for goodwill impairment in the second quarter of each year and whenever events or changes in circumstances indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable . as detailed in asc 350-20-35-3a , in performing its testing for goodwill , management completes a qualitative analysis to determine whether it was more likely than not that the fair value of a reporting unit is less than its carrying amount , including goodwill . to complete this review , management follows the steps in asc 350-20-35-3c to evaluate the fair values of the intangibles and goodwill and considers all known events and circumstances that might trigger an impairment of goodwill . in 2016 , 2015 and 2014 , the analysis , determined that there was no impairment necessary to goodwill . through these reviews , management concluded that there were no events or circumstances that triggered an impairment ( and there was no expectation that a reporting unit or a significant portion of a reporting unit would be sold or otherwise disposed of in the following year ) , therefore , no further analysis was necessary to prepare for goodwill impairment beyond the steps in 350-20-35-3c in accordance with asu 2011-08. on a periodic basis , we will also perform a quantitative analysis of goodwill impairment and in 2016 , in addition to the qualitative analysis , we performed a quantitative analysis of goodwill impairment . no impairment of goodwill was required . stock-based compensation the company accounts for stock-based compensation using fasb accounting standards codification no . 718 ( ‘ ‘ fasb asc 718 `` ) , ‘ ‘ compensation – stock compensation . `` fasb codification no . 718 requires the fair value of all stock-based employee compensation awarded to employees to be recorded as an expense over the related vesting period . story_separator_special_tag in addition , the agreement calls for an earn-out/royalty payment of two percent of the gross sales ( for specific , identified customers ) over a period of three years from the closing date , up to a maximum of $ 0.3 million that may or may not be paid to the seller within 90 days of each calendar year-end , depending on performance by the identified customer ( s ) . the final adjusted purchase price for the acquisition of tectrol was $ 4.5 million , which included the present value of $ 0.3 million of royalties to be paid on future sales , which was recorded as $ 0.2 million of contingent consideration and had a balance of $ 0.1 million at december 31 , 2016 . 34 financing activities see , above , the section entitled recent sales of unregistered securities for a complete listing of all securities transactions . during the year ended december 31 , 2016 , the company issued payments of $ 41 thousand against capital leases of motor vehicles and equipment and $ 85 thousand against the mortgage note payable . also in 2016 , the company issued payment of $ 59 thousand toward the contingent liability associated with the tectrol acquisition . during the year ended december 31 , 2015 , the company issued payments of $ 32 thousand against capital leases of motor vehicles and equipment and $ 81 thousand against the mortgage note payable . during the year ended december 31 , 2014 , the company issued payments of $ 0.1 million against capital leases of motor vehicles and equipment and $ 77 thousand against the mortgage note payable . cui global may raise additional capital needed to fund the further development and marketing of its products as well as payment of its debt obligations . financing activities – related party activity during 2016 , 2015 and 2014 , $ 0.3 million , $ 0.3 million , and $ 0.3 million , respectively in interest payments were made in relation to the promissory notes issued to related party , ied , inc. the promissory note terms include a due date of may 15 , 2020 and an interest rate of 5 % per annum , with interest payable monthly and the principal due as a balloon payment at maturity . please see note 9. notes payable and note 13. related party transactions for further discussion of these transactions . recap of liquidity and capital resources during the year ended december 31 , 2016 , the company continued to invest in orbital gas systems north america in houston while the cui-canada operation was more fully integrated into the company 's power and electromechanical segment . as expected in the year following two major additions , cash usage was still more than what it will be when the businesses are fully mature , but improved over the year ended december 31 , 2015 , when the company invested for future growth with the acquisition of its canada operations in the power and electromechanical segment , the startup of its orbital gas systems north america operations in the energy segment along with the investment in the new orbital u.k. facility . the net cash used in operating activities decreased to $ 0.8 million from $ 6.4 million in 2015 with much of that due to decreases in working capital requirements since integrating in and starting the two new operations during the prior year . the wells fargo mortgage promissory note has a balance at december 31 , 2016 of $ 3.4 million due , of which $ 89 thousand is the current portion . the wells fargo promissory note has an interest rate of 2 % above libor , payable over ten years , secured by a deed of trust on the purchased property executed by cui properties , llc and guaranteed by cui global , inc. in conjunction with the purchase and promissory note , wells fargo and the company entered into a swap transaction confirmation agreement effective october 1 , 2013 that effectively maximizes the annual interest rate at 6.27 % . 35 the company 's wholly owned subsidiary , cui , inc. renewed its two-year revolving line of credit ( loc ) with wells fargo bank in the principal amount of $ 4.0 million line of credit , on october 1 , 2016 for an additional two years . the interest rate on any outstanding balance is 1.75 % above either the daily one month libor or the libor in effect on the first day of the applicable fixed rate term . the loc is secured through a security agreement on accounts receivable and equipment , as well as other miscellaneous personal property assets . the loc contains certain financial covenants , one of which the company was not in compliance with at december 31 , 2016. the company has obtained a waiver from wells fargo bank for the instance of non-compliance through march 31 , 2017 , the next measuring date . cui global , inc. , the parent company , is a payment guarantor of the loc . at december 31 , 2016 , there was no balance outstanding on the line of credit . wells fargo bank has waived the cross-default provision on the promissory note payable owed by cui properties for a period beyond one year from the date of this report as it relates to the loc covenant violation , therefore the note is not considered to be in default and continues to include a portion classified as long term . on october 5 , 2016 , orbital gas systems ltd. signed a five-year agreement with the london branch of wells fargo bank n.a . for a multi-currency variable rate overdraft facility with a facility limit of 1.5 million pounds sterling ( $ 1.9 million at december 31 , 2016 ) that expires on october 5 , 2021. the interest rate on the facility is Narrative : bad debt replace_table_token_14_th bad debt expenses in 2016 , 2015 and 2014 represents less than ½ % of total revenues and relates to miscellaneous receivables , which the company has either recorded an allowance for doubtful collections of the receivable or for which the company has determined the balance to be uncollectible . 41 other income ( expense ) replace_table_token_15_th investment income the company recognized investment income on equity investment in an affiliate of $ 0 in 2016 , $ 53 thousand in the first 9 months of 2015 and , $ 49 thousand for the year ended december 31 , 2014. the company discontinued the equity method of accounting for its investment as of october 1 , 2015. during the three months ended march 31 , 2016 , the investment in tpi was exchanged for a note receivable from tpi of $ 0.4 million , which was the carrying value of the investment , earning interest at 5 % per annum , due june 30 , 2019. the company recorded $ 19 thousand of interest income from the note in the year ended december 31 , 2016. the interest receivable is settled on a quarterly basis via a non-cash offset against the finders-fee royalties earned by tpi on gaspt sales . any remaining finders-fee royalties balance is offset against the note receivable quarterly . cui global reviewed the note receivable for non-collectability as of december 31 , 2016 and concluded that no allowance was necessary . for more information on this investment , see note 2 , summary of significant accounting policies - investment and note receivable , to the consolidated financial statements under part ii , item 8 , ‘ ‘ financial statements and supplementary data . '' interest expense the company incurred $ 0.5 million , $ 0.4 million , and $ 0.5 million of interest expense during 2016 , 2015 and 2014 , respectively . interest expense is for interest on the secured note , secured promissory note , and bank working capital loans .

we also have a loan review department that reviews every market within ctb annually and performs extensive testing of the loan portfolio to assure the accuracy of loan grades and classifications for delinquency , troubled debt restructuring , impaired status , impairment , nonaccrual status , and adequate loan loss reserves . the loan review department has annually reviewed on average 95 % of the outstanding commercial loan portfolio for the past three years . the average annual review percentage of the consumer and residential loan portfolio for the past three years was 85 % based on the loan production during the number of months included in the review scope . the review scope is generally four to six months of production . impaired loans , loans not expected to meet contractual principal and interest payments , at december 31 , 2018 totaled $ 46.4 million compared to $ 47.4 million at december 31 , 2017. included in certain loan categories of impaired loans are troubled debt restructurings that were classified as impaired . at december 31 , 2018 , ctbi had $ 31.5 million in commercial loans secured by real estate , $ 4.2 million in commercial real estate construction loans , $ 8.8 million in commercial other loans , and $ 1.9 million in real estate mortgage loans that were modified in troubled debt restructurings and or impaired . management evaluates all impaired loans for impairment and records a direct charge-off or provides specific reserves when necessary . for further information regarding nonperforming and impaired loans , see note 4 to the consolidated financial statements . ctbi generally does not offer high risk loans such as option arm products , high loan to value ratio mortgages , interest-only loans , loans with initial teaser rates , or loans with negative amortizations , and therefore , ctbi would have no significant exposure to these products . our level of foreclosed properties at $ 27.3 million at december 31 , 2018 was a decrease of $ 4.7 million from the $ 32.0 million at december 31 , 2017. sales of foreclosed properties for the year ended december 31 , 2018 totaled $ 7.7 million while new foreclosed properties totaled $ 5.5 million . at december 31 , 2018 , the book value of properties under contracts to sell was $ 3.3 million ; however , the closings had not occurred at year-end . when foreclosed properties are acquired , appraisals are obtained and the properties are booked at the current market value less expected sales costs . additionally , periodic updated appraisals are obtained on unsold foreclosed properties . when an updated appraisal reflects a market value below the current book value , a charge is booked to current earnings to reduce the property to its new market value less expected sales costs . charges to earnings in 2018 to reflect the decrease in current market values of foreclosed properties totaled $ 2.5 million . there were 63 properties reappraised during 2018. of these , 40 were written down by a total of $ 0.9 million . charges during the year ended december 31 , 2017 were $ 3.0 million . our policy for determining the frequency of periodic reviews is based upon consideration of the specific properties and the known or perceived market fluctuations in a particular market and is typically between 12 and 18 months but generally not more than 24 months . approximately ninety-three percent of our oreo properties have appraisals dated within the past 18 months . management anticipates that our foreclosed properties will remain elevated as we work through current market conditions . the appraisal aging analysis of foreclosed properties , as well as the holding period , at december 31 , 2018 is shown below : replace_table_token_21_th * regulatory approval is required and has been obtained to hold these properties beyond the initial period of 5 years . additional approval may be required to continue to hold these properties should they not be liquidated during the extension period , which is typically one year . to the extent we are not able to sell a foreclosed property in 10 years , we will be required to relinquish ownership of that property . as of december 31 , 2018 , foreclosed property with a total book value of $ 2.4 million , representing 8.6 % of our foreclosed properties ( based on book value ) , had been held by us for at least nine years . the book value at december 31 , 2018 represents management 's best estimate of realizable value of the properties . net loan charge-offs for the year were $ 6.4 million , or 0.20 % of average loans annualized , a decrease from prior year 's $ 7.3 million , or 0.24 % of average loans annualized . of the total net charge-offs , $ 1.6 million were in commercial loans , $ 3.3 million were in indirect auto loans , $ 1.0 million were in residential real estate mortgage loans , and $ 0.5 million were in direct consumer loans . our loan loss reserve as a percentage of total loans outstanding at december 31 , 2018 decreased to 1.12 % from the 1.16 % at december 31 , 2017. our reserve coverage ( allowance for loan and lease loss reserve to nonperforming loans ) was 162.7 % at december 31 , 2018 compared to 127.8 % at december 31 , 2017. contractual obligations and commitments as disclosed in the notes to the consolidated financial statements , we have certain obligations and commitments to make future payments under contracts . at december 31 , 2018 , the aggregate contractual obligations and commitments are : replace_table_token_22_th * the amounts provided as interest on advances from federal home loan bank and interest on long-term debt assume the liabilities will not be prepaid and interest is calculated to their individual maturities . story_separator_special_tag critical accounting policies and estimates the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the united states of america requires the appropriate application of certain accounting policies , many of which require us to make estimates and assumptions about future events and their impact on amounts reported in our consolidated financial statements and related notes . since future events and their impact can not be determined with certainty , the actual results will inevitably differ from our estimates . such differences could be material to the consolidated financial statements . we believe the application of accounting policies and the estimates required therein are reasonable . these accounting policies and estimates are constantly reevaluated , and adjustments are made when facts and circumstances dictate a change . historically , we have found our application of accounting policies to be appropriate , and actual results have not differed materially from those determined using necessary estimates . our accounting policies are described in note 1 to the consolidated financial statements . we have identified the following critical accounting policies : investments – management determines the classification of securities at purchase . we classify debt securities into held-to-maturity , trading , or available-for-sale categories . held-to-maturity securities are those which we have the positive intent and ability to hold to maturity and are reported at amortized cost . in accordance with financial accounting standards board accounting standards codification ( “ asc ” ) 320 , investments – debt securities , investments in debt securities that are not classified as held-to-maturity shall be classified in one of the following categories and measured at fair value in the statement of financial position : a. trading securities . securities that are bought and held principally for the purpose of selling them in the near term ( thus held for only a short period of time ) shall be classified as trading securities . trading generally reflects active and frequent buying and selling , and trading securities are generally used with the objective of generating profits on short-term differences in price . b. available-for-sale securities . investments not classified as trading securities ( nor as held-to-maturity securities ) shall be classified as available-for-sale securities . we do not have any securities that are classified as trading securities . available-for-sale securities are reported at fair value , with unrealized gains and losses included as a separate component of shareholders ' equity , net of tax . if declines in fair value are other than temporary , the carrying value of the securities is written down to fair value as a realized loss with a charge to income for the portion attributable to credit losses and a charge to other comprehensive income for the portion that is not credit related . gains or losses on disposition of debt securities are computed by specific identification for those securities . interest and dividend income , adjusted by amortization of purchase premium or discount , is included in earnings . when the fair value of a security is below its amortized cost , and depending on the length of time the condition exists and the extent the fair market value is below amortized cost , additional analysis is performed to determine whether an other than temporary impairment condition exists . available-for-sale and held-to-maturity securities are analyzed quarterly for possible other than temporary impairment . the analysis considers ( i ) whether we have the intent to sell our securities prior to recovery and or maturity and ( ii ) whether it is more likely than not that we will not have to sell our securities prior to recovery and or maturity . often , the information available to conduct these assessments is limited and rapidly changing , making estimates of fair value subject to judgment . if actual information or conditions are different than estimated , the extent of the impairment of the security may be different than previously estimated , which could have a material effect on ctbi 's results of operations and financial condition . subsequent to the effective date of asu 2016-01 , asc 320 applies only to debt securities and asc 321 , investments – equity securities , applies to equity securities . asc 321 requires equity investments ( except those accounted for under the equity method and those that result in the consolidation of the investee ) to be measured at fair value , with changes in fair values recognized in net income . equity securities with a readily determinable fair value are required to be measured at fair value , with changes in fair value recognized through net income . equity securities without a readily determinable fair value are carried at cost , less any impairment , if any , plus or minus changes resulting from observable price changes for identical or similar investments . an election can be made , as permitted by asc 321-10-35-2 , to subsequently measure an equity security without a readily determinable fair value , at fair value . equity securities held by ctbi include securities without readily determinable fair values . ctbi has elected to account for these securities at fair value . the fair value of these securities was determined by a third party service provider using level 3 inputs as defined in asc 820 , fair value measurement , and changes in fair value are recognized in income . loans – loans with the ability and the intent to be held until maturity and or payoff are reported at the carrying value of unpaid principal reduced by unearned interest , an allowance for loan and lease losses , and unamortized deferred fees or costs . income is recorded on the level yield basis . interest accrual is discontinued when management believes , after considering economic and business conditions , collateral value , and collection efforts , that the borrower 's financial condition is such that collection of interest is doubtful . any loan greater

capital resources ● impact of inflation , changing prices , and economic conditions ● stock repurchase program ● critical accounting policies and estimates our business community trust bancorp , inc. ( “ ctbi ” ) is a bank holding company headquartered in pikeville , kentucky . currently , we own one commercial bank , community trust bank , inc. ( “ ctb ” ) and one trust company , community trust and investment company . through our subsidiaries , we have seventy-nine banking locations in eastern , northeastern , central , and south central kentucky , southern west virginia , and northeastern tennessee , four trust offices across kentucky , and one trust office in northeastern tennessee . at december 31 , 2018 , we had total consolidated assets of $ 4.2 billion and total consolidated deposits , including repurchase agreements , of $ 3.5 billion . total shareholders ' equity at december 31 , 2018 was $ 564.2 million . trust assets under management , which are excluded from ctbi 's total consolidated assets , at december 31 , 2018 , were $ 2.0 billion . trust assets under management include ctb 's investment portfolio totaling $ 0.6 billion . through its subsidiaries , ctbi engages in a wide range of commercial and personal banking and trust and wealth management activities , which include accepting time and demand deposits ; making secured and unsecured loans to corporations , individuals and others ; providing cash management services to corporate and individual customers ; issuing letters of credit ; renting safe deposit boxes ; and providing funds transfer services . the lending activities of ctb include making commercial , construction , mortgage , and personal loans . lease-financing , lines of credit , revolving lines of credit , term loans , and other specialized loans , including asset-based financing , are also available . our corporate subsidiaries act as trustees of personal trusts , as executors of estates , as trustees for employee benefit trusts , as paying agents for bond and stock issues , as investment agent , as depositories for securities , and as providers of full service brokerage and insurance services . for further information , see item 1 of this annual report .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we also have a loan review department that reviews every market within ctb annually and performs extensive testing of the loan portfolio to assure the accuracy of loan grades and classifications for delinquency , troubled debt restructuring , impaired status , impairment , nonaccrual status , and adequate loan loss reserves . the loan review department has annually reviewed on average 95 % of the outstanding commercial loan portfolio for the past three years . the average annual review percentage of the consumer and residential loan portfolio for the past three years was 85 % based on the loan production during the number of months included in the review scope . the review scope is generally four to six months of production . impaired loans , loans not expected to meet contractual principal and interest payments , at december 31 , 2018 totaled $ 46.4 million compared to $ 47.4 million at december 31 , 2017. included in certain loan categories of impaired loans are troubled debt restructurings that were classified as impaired . at december 31 , 2018 , ctbi had $ 31.5 million in commercial loans secured by real estate , $ 4.2 million in commercial real estate construction loans , $ 8.8 million in commercial other loans , and $ 1.9 million in real estate mortgage loans that were modified in troubled debt restructurings and or impaired . management evaluates all impaired loans for impairment and records a direct charge-off or provides specific reserves when necessary . for further information regarding nonperforming and impaired loans , see note 4 to the consolidated financial statements . ctbi generally does not offer high risk loans such as option arm products , high loan to value ratio mortgages , interest-only loans , loans with initial teaser rates , or loans with negative amortizations , and therefore , ctbi would have no significant exposure to these products . our level of foreclosed properties at $ 27.3 million at december 31 , 2018 was a decrease of $ 4.7 million from the $ 32.0 million at december 31 , 2017. sales of foreclosed properties for the year ended december 31 , 2018 totaled $ 7.7 million while new foreclosed properties totaled $ 5.5 million . at december 31 , 2018 , the book value of properties under contracts to sell was $ 3.3 million ; however , the closings had not occurred at year-end . when foreclosed properties are acquired , appraisals are obtained and the properties are booked at the current market value less expected sales costs . additionally , periodic updated appraisals are obtained on unsold foreclosed properties . when an updated appraisal reflects a market value below the current book value , a charge is booked to current earnings to reduce the property to its new market value less expected sales costs . charges to earnings in 2018 to reflect the decrease in current market values of foreclosed properties totaled $ 2.5 million . there were 63 properties reappraised during 2018. of these , 40 were written down by a total of $ 0.9 million . charges during the year ended december 31 , 2017 were $ 3.0 million . our policy for determining the frequency of periodic reviews is based upon consideration of the specific properties and the known or perceived market fluctuations in a particular market and is typically between 12 and 18 months but generally not more than 24 months . approximately ninety-three percent of our oreo properties have appraisals dated within the past 18 months . management anticipates that our foreclosed properties will remain elevated as we work through current market conditions . the appraisal aging analysis of foreclosed properties , as well as the holding period , at december 31 , 2018 is shown below : replace_table_token_21_th * regulatory approval is required and has been obtained to hold these properties beyond the initial period of 5 years . additional approval may be required to continue to hold these properties should they not be liquidated during the extension period , which is typically one year . to the extent we are not able to sell a foreclosed property in 10 years , we will be required to relinquish ownership of that property . as of december 31 , 2018 , foreclosed property with a total book value of $ 2.4 million , representing 8.6 % of our foreclosed properties ( based on book value ) , had been held by us for at least nine years . the book value at december 31 , 2018 represents management 's best estimate of realizable value of the properties . net loan charge-offs for the year were $ 6.4 million , or 0.20 % of average loans annualized , a decrease from prior year 's $ 7.3 million , or 0.24 % of average loans annualized . of the total net charge-offs , $ 1.6 million were in commercial loans , $ 3.3 million were in indirect auto loans , $ 1.0 million were in residential real estate mortgage loans , and $ 0.5 million were in direct consumer loans . our loan loss reserve as a percentage of total loans outstanding at december 31 , 2018 decreased to 1.12 % from the 1.16 % at december 31 , 2017. our reserve coverage ( allowance for loan and lease loss reserve to nonperforming loans ) was 162.7 % at december 31 , 2018 compared to 127.8 % at december 31 , 2017. contractual obligations and commitments as disclosed in the notes to the consolidated financial statements , we have certain obligations and commitments to make future payments under contracts . at december 31 , 2018 , the aggregate contractual obligations and commitments are : replace_table_token_22_th * the amounts provided as interest on advances from federal home loan bank and interest on long-term debt assume the liabilities will not be prepaid and interest is calculated to their individual maturities . story_separator_special_tag critical accounting policies and estimates the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the united states of america requires the appropriate application of certain accounting policies , many of which require us to make estimates and assumptions about future events and their impact on amounts reported in our consolidated financial statements and related notes . since future events and their impact can not be determined with certainty , the actual results will inevitably differ from our estimates . such differences could be material to the consolidated financial statements . we believe the application of accounting policies and the estimates required therein are reasonable . these accounting policies and estimates are constantly reevaluated , and adjustments are made when facts and circumstances dictate a change . historically , we have found our application of accounting policies to be appropriate , and actual results have not differed materially from those determined using necessary estimates . our accounting policies are described in note 1 to the consolidated financial statements . we have identified the following critical accounting policies : investments – management determines the classification of securities at purchase . we classify debt securities into held-to-maturity , trading , or available-for-sale categories . held-to-maturity securities are those which we have the positive intent and ability to hold to maturity and are reported at amortized cost . in accordance with financial accounting standards board accounting standards codification ( “ asc ” ) 320 , investments – debt securities , investments in debt securities that are not classified as held-to-maturity shall be classified in one of the following categories and measured at fair value in the statement of financial position : a. trading securities . securities that are bought and held principally for the purpose of selling them in the near term ( thus held for only a short period of time ) shall be classified as trading securities . trading generally reflects active and frequent buying and selling , and trading securities are generally used with the objective of generating profits on short-term differences in price . b. available-for-sale securities . investments not classified as trading securities ( nor as held-to-maturity securities ) shall be classified as available-for-sale securities . we do not have any securities that are classified as trading securities . available-for-sale securities are reported at fair value , with unrealized gains and losses included as a separate component of shareholders ' equity , net of tax . if declines in fair value are other than temporary , the carrying value of the securities is written down to fair value as a realized loss with a charge to income for the portion attributable to credit losses and a charge to other comprehensive income for the portion that is not credit related . gains or losses on disposition of debt securities are computed by specific identification for those securities . interest and dividend income , adjusted by amortization of purchase premium or discount , is included in earnings . when the fair value of a security is below its amortized cost , and depending on the length of time the condition exists and the extent the fair market value is below amortized cost , additional analysis is performed to determine whether an other than temporary impairment condition exists . available-for-sale and held-to-maturity securities are analyzed quarterly for possible other than temporary impairment . the analysis considers ( i ) whether we have the intent to sell our securities prior to recovery and or maturity and ( ii ) whether it is more likely than not that we will not have to sell our securities prior to recovery and or maturity . often , the information available to conduct these assessments is limited and rapidly changing , making estimates of fair value subject to judgment . if actual information or conditions are different than estimated , the extent of the impairment of the security may be different than previously estimated , which could have a material effect on ctbi 's results of operations and financial condition . subsequent to the effective date of asu 2016-01 , asc 320 applies only to debt securities and asc 321 , investments – equity securities , applies to equity securities . asc 321 requires equity investments ( except those accounted for under the equity method and those that result in the consolidation of the investee ) to be measured at fair value , with changes in fair values recognized in net income . equity securities with a readily determinable fair value are required to be measured at fair value , with changes in fair value recognized through net income . equity securities without a readily determinable fair value are carried at cost , less any impairment , if any , plus or minus changes resulting from observable price changes for identical or similar investments . an election can be made , as permitted by asc 321-10-35-2 , to subsequently measure an equity security without a readily determinable fair value , at fair value . equity securities held by ctbi include securities without readily determinable fair values . ctbi has elected to account for these securities at fair value . the fair value of these securities was determined by a third party service provider using level 3 inputs as defined in asc 820 , fair value measurement , and changes in fair value are recognized in income . loans – loans with the ability and the intent to be held until maturity and or payoff are reported at the carrying value of unpaid principal reduced by unearned interest , an allowance for loan and lease losses , and unamortized deferred fees or costs . income is recorded on the level yield basis . interest accrual is discontinued when management believes , after considering economic and business conditions , collateral value , and collection efforts , that the borrower 's financial condition is such that collection of interest is doubtful . any loan greater Narrative : capital resources ● impact of inflation , changing prices , and economic conditions ● stock repurchase program ● critical accounting policies and estimates our business community trust bancorp , inc. ( “ ctbi ” ) is a bank holding company headquartered in pikeville , kentucky . currently , we own one commercial bank , community trust bank , inc. ( “ ctb ” ) and one trust company , community trust and investment company . through our subsidiaries , we have seventy-nine banking locations in eastern , northeastern , central , and south central kentucky , southern west virginia , and northeastern tennessee , four trust offices across kentucky , and one trust office in northeastern tennessee . at december 31 , 2018 , we had total consolidated assets of $ 4.2 billion and total consolidated deposits , including repurchase agreements , of $ 3.5 billion . total shareholders ' equity at december 31 , 2018 was $ 564.2 million . trust assets under management , which are excluded from ctbi 's total consolidated assets , at december 31 , 2018 , were $ 2.0 billion . trust assets under management include ctb 's investment portfolio totaling $ 0.6 billion . through its subsidiaries , ctbi engages in a wide range of commercial and personal banking and trust and wealth management activities , which include accepting time and demand deposits ; making secured and unsecured loans to corporations , individuals and others ; providing cash management services to corporate and individual customers ; issuing letters of credit ; renting safe deposit boxes ; and providing funds transfer services . the lending activities of ctb include making commercial , construction , mortgage , and personal loans . lease-financing , lines of credit , revolving lines of credit , term loans , and other specialized loans , including asset-based financing , are also available . our corporate subsidiaries act as trustees of personal trusts , as executors of estates , as trustees for employee benefit trusts , as paying agents for bond and stock issues , as investment agent , as depositories for securities , and as providers of full service brokerage and insurance services . for further information , see item 1 of this annual report .

we further believe that authentication will occur on the device itself for potentially low-value , and therefore low-risk , use-transactions and that user authentication for high-value transactions will migrate to the application provider 's authentication server , typically located within their supporting technology infrastructure , or cloud . we have developed our technology to enable , on-device authentication as well as network or cloud-based authentication and believe we may be the only technology vendor capable of providing this flexibility and capability . our core technology works on over 40 commercially available fingerprint readers , across both windows and linux platforms , and apple ios and android mobile operating systems . this interoperability , coupled with the ability to authentic users via the device or cloud , is unique in the industry , provides a key differentiator for us , and in our opinion , makes our technology more viable than competing technologies and expands the size of the overall market for our products . we believe there is potential for significant market growth in five key areas : ● corporate network access control , including corporate campuses , computer networks and applications ; ● consumer mobile credentialing , including mobile payments , credit and payment card programs , data and application access , and commercial loyalty programs ; ● government services and highly regulated industries including , medicare , medicaid , social security , drivers licenses , campus and school id , passports/visas ; ● direct sales of fingerprint readers to consumers and commercial customers ; and ● growth in the asia pacific region . in the near-term , we expect to grow our business within government services and highly-regulated industries in which we have historically had a strong presence , such as the healthcare industry . we believe that continued heightened security and privacy requirements in these industries will generate increased demand for security solutions , including biometrics . in addition , we expect that the integration of our technology into windows 10 , will accelerate the demand for our computer network log-on solutions and fingerprint readers . finally , our entry into the asian market and licensing arrangement with cgg is expected to further expand our business by opening new markets . over the longer term , we intend to expand our business into the cloud and mobile computing industries . the emergence of cloud computing and mobile computing are primary drivers of commercial and consumer adoption of advanced authentication applications , including biometric and bio-key authentication capabilities . as the value of assets , services and transactions increases on such networks , we expect that security and user authentication demand should rise proportionately . our integration partners include major web and network technology providers , who we believe will deliver our cloud-applicable solutions to interested service-providers . these service-providers could include , but are not limited to , financial institutions , web-service providers , consumer payment service providers , credit reporting services , consumer data service providers , healthcare providers and others . additionally , our integration partners include major technology component providers and oem manufacturers , who we believe will deliver our device-applicable solutions to interested hardware manufacturers . such manufacturers could include cellular handset and smartphone manufacturers , tablet manufacturers , laptop and pc manufacturers , among other hardware manufacturers . 17 results of operations consolidated results of operations two year % trend replace_table_token_3_th revenues and costs of goods sold replace_table_token_4_th revenues revenue increased $ 1,255,369 or 31 % to $ 5,261,225 in 2015 as compared to $ 4,005,856 in 2014. as described more fully below , the increase was primarily due to material growth in our core business of licensing our software and new revenue stream from sales of our fingerprint readers . for the years ended december 31 , 2015 and 2014 , service revenues included approximately $ 679,000 and $ 627,000 , respectively , of recurring maintenance and support revenue , and approximately $ 252,000 and $ 863,000 , respectively , of non-recurring custom services revenue . recurring service revenue increased 8 % from 2014 to 2015 , due to the increase in bundled maintenance agreements to our expanding customer license base . non-recurring custom services decreased 71 % due to a completion of a customer project at the end of 2014 . 18 for the years ended december 31 , 2015 and 2014 , license and other revenue ( comprised of third party and bio-key hardware , and royalty ) increased approximately 72 % as a result of several contributing factors . software license revenue increased by approximately $ 957,000 or 49 % during the year ended december 31 , 2015 compared to the year ended december 31 , 2014. we continued to expand our relationship with ncr , developed new partnerships , continued to ship orders to aesynt for their continued deployment of our identification technology in their accudose® product line , and for ongoing expansion of biometric id deployments with commercial partners lexisnexis , educational biometric technology , identimetrics , and a large supplemental order from single international customer . hardware sales increased by approximately $ 841,000 ( 181 % ) , as a result of the introduction of our new low cost fingerprint readers , the establishment of our hong kong subsidiary , and expanding healthcare industry deployments . royalty income , from an oem agreement for the year ended december 31 , 2015 increased 18 % to approximately $ 103,000 from $ 87,000 during 2014 , due to adding a new oem partner . costs of goods sold for the year ended december 31 , 2015 , cost of service decreased approximately $ 185,000 primarily as a result of costs associated with non-recurring custom services revenue . license and other costs for the year ended december 31 , 2015 increased approximately $ 716,000 due primarily to the increase in hardware revenue , and third party software revenue . story_separator_special_tag also , projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions , or that the degree of compliance with the policies or procedures may deteriorate . under the supervision and with the participation of our management , including our ceo and cfo , we have conducted an evaluation of the effectiveness of our internal control over financial reporting as of december 31 , 2015 , based upon the framework in internal control-integrated framework issued by the committee of sponsoring organizations of the treadway commission . based on this evaluation , management has concluded that our internal control over financial reporting was effective as of december 31 , 2015. as the company is a smaller reporting company , this annual report does not include an attestation report of the company 's registered public accounting firm regarding internal control over financial reporting . management 's report was not subject to attestation by the company 's registered public accounting firm pursuant to rules of the securities and exchange commission that permit the company to provide only management 's report in this annual report . changes in internal control over financial reporting no change in our internal control over financial reporting occurred during the fiscal quarter ended december 31 , 2015 that has materially affected , or is reasonably likely to materially affect , our internal control over financial reporting . item 9b . other information none . 25 part iii item 10. directors , executive officers and corporate governance the following sets forth certain information about each director , executive officer , and key employee of the company . replace_table_token_8_th ( a ) compensation committee member ( b ) audit committee member ( c ) nominating committee member directors we believe that our board of directors should be composed of individuals with sophistication and experience in many substantive areas that impact our business . we believe that experience , qualifications , or skills in the following areas are most important : legal/regulatory and government affairs ; accounting and finance ; design , innovation and engineering ; strategic planning ; and human resources and development practices ; and board practices of other corporations . these areas are in addition to the personal qualifications described in this section . we believe that our current board members possess the professional and personal qualifications necessary for board service , and have highlighted particularly noteworthy attributes for each board member below . the principal occupation and business experience , for at least the past five years , of each current director is as follows : michael w. depasquale has served as our chief executive officer and a director since january 3 , 2003 , and chairman of the board since january 29 , 2014. he served as co-chief executive officer of the company from july 2005 to august 2006. mr. depasquale brings more than 27 years of executive management , sales and marketing experience to the company . prior to joining us , mr. depasquale served as the president and chief executive officer of prism esolutions , inc. , a pennsylvania-based provider of professional consulting services and online solutions for iso-9001/14000 certification for customers in manufacturing , healthcare and government markets , since february 2001. from december 1999 through december 2000 , mr. depasquale served as group vice president for wrc media , a new york-based distributor of supplemental education products and software . from january 1996 until december 1999 , mr. depasquale served as senior vice president of jostens learning corp. , a california-based provider of multimedia curriculum . prior to jostens , mr. depasquale held sales and marketing management positions with mcgraw-hill and digital equipment corporation . mr. depasquale earned a bachelor of science degree from the new jersey institute of technology . he serves on the board of directors and as treasurer of the international biometrics and identification industry association . mr. depasquale has extensive general management experience in the technology sector and has served as a director for number of non-profit organizations and private companies . charles p. romeo has served as a director since february 28 , 2005 and from january 29 , 2003 to april 19 , 2004. from april 2004 until february 2005 , he served as our vice president of sales , public safety division . from november 2005 to november 2007 , mr. romeo served as the vice president of sales and marketing for unicom , a rhode island systems integrator . from september 2002 until april 2004 , mr. romeo was the president and chief executive officer of freedombridge technologies , inc. , a rhode island-based consulting firm to technology companies in the homeland security industry specializing in implementing direct and channel selling programs , strategic alliances and partnerships in the law enforcement market . prior to founding freedombridge , mr. romeo had a 33 year sales and marketing management career with digital equipment corporation , compaq computer corporation and hewlett packard . during his career , mr. romeo served as vice president of service sales for a $ 500 million business unit , and director of public sector sales for a $ 275 million division of hewlett packard . mr. romeo authored the sales manager 's troubleshooter , prentice hall 1998 , which was named as one of the “ top 10 must reads ” by sales and marketing magazine . mr. romeo earned a bachelor of science degree in mathematics and economics from the university of massachusetts and an executive mba from babson college . mr. romeo has significant sales and marketing management experience in the infrastructure and computer hardware and software industries . 26 john schoenherr has served as a director since december 30 , 2004. mr. schoenherr served as vice president of corporate performance management for oracle corporation from 1995 through 2006. prior to oracle he served as senior vice president of business intelligence and analytics at information resources

liquidity and capital resources operating activities overview net cash used for operations during the year ended december 31 , 2015 was approximately $ 15,560,000. items of note were as follows : ● negative cash flows from the purchase of software licenses of $ 12,000,000 and other inventory of approximately $ 337,000 ● negative cash flows related to an increase in accounts receivable , less movements in prepayments , accounts payable , and accrued expenses of approximately $ 1,804,000 , due to working capital management , and ● net positive cash flows related to the adjustments for depreciation , amortization , share-based compensation , debt discount , and fair value adjustments of approximately $ 442,000 investing activities overview net cash used for investing activities during the year ended december 31 , 2015 was approximately $ 3,000 and was due to the purchase of capital expenditures . financing activities overview net cash provided by financing activities during the year ended december 31 , 2015 was approximately $ 19,041,000 and attributable primarily to the following : ● positive cash flows from the issuance of shares of preferred stock and warrants of approximately $ 19,500,000 , net of dividends and financing costs of approximately $ 459,000 . 20 capital resources since our inception , our capital needs have been principally met through proceeds from the sale of equity and debt securities . we expect capital expenditures to be less than $ 100,000 during the next twelve months . we do not currently maintain a line of credit or term loan with any commercial bank or other financial institution . the following sets forth our primary sources of capital during the previous two years : as of december 2011 , we entered into a 24-month accounts receivable factoring arrangement with a financial institution ( the “ factor ” ) . pursuant to the terms of this arrangement , from time to time , we sell to the factor certain of our accounts receivable balances on a non-recourse basis for credit approved accounts .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we further believe that authentication will occur on the device itself for potentially low-value , and therefore low-risk , use-transactions and that user authentication for high-value transactions will migrate to the application provider 's authentication server , typically located within their supporting technology infrastructure , or cloud . we have developed our technology to enable , on-device authentication as well as network or cloud-based authentication and believe we may be the only technology vendor capable of providing this flexibility and capability . our core technology works on over 40 commercially available fingerprint readers , across both windows and linux platforms , and apple ios and android mobile operating systems . this interoperability , coupled with the ability to authentic users via the device or cloud , is unique in the industry , provides a key differentiator for us , and in our opinion , makes our technology more viable than competing technologies and expands the size of the overall market for our products . we believe there is potential for significant market growth in five key areas : ● corporate network access control , including corporate campuses , computer networks and applications ; ● consumer mobile credentialing , including mobile payments , credit and payment card programs , data and application access , and commercial loyalty programs ; ● government services and highly regulated industries including , medicare , medicaid , social security , drivers licenses , campus and school id , passports/visas ; ● direct sales of fingerprint readers to consumers and commercial customers ; and ● growth in the asia pacific region . in the near-term , we expect to grow our business within government services and highly-regulated industries in which we have historically had a strong presence , such as the healthcare industry . we believe that continued heightened security and privacy requirements in these industries will generate increased demand for security solutions , including biometrics . in addition , we expect that the integration of our technology into windows 10 , will accelerate the demand for our computer network log-on solutions and fingerprint readers . finally , our entry into the asian market and licensing arrangement with cgg is expected to further expand our business by opening new markets . over the longer term , we intend to expand our business into the cloud and mobile computing industries . the emergence of cloud computing and mobile computing are primary drivers of commercial and consumer adoption of advanced authentication applications , including biometric and bio-key authentication capabilities . as the value of assets , services and transactions increases on such networks , we expect that security and user authentication demand should rise proportionately . our integration partners include major web and network technology providers , who we believe will deliver our cloud-applicable solutions to interested service-providers . these service-providers could include , but are not limited to , financial institutions , web-service providers , consumer payment service providers , credit reporting services , consumer data service providers , healthcare providers and others . additionally , our integration partners include major technology component providers and oem manufacturers , who we believe will deliver our device-applicable solutions to interested hardware manufacturers . such manufacturers could include cellular handset and smartphone manufacturers , tablet manufacturers , laptop and pc manufacturers , among other hardware manufacturers . 17 results of operations consolidated results of operations two year % trend replace_table_token_3_th revenues and costs of goods sold replace_table_token_4_th revenues revenue increased $ 1,255,369 or 31 % to $ 5,261,225 in 2015 as compared to $ 4,005,856 in 2014. as described more fully below , the increase was primarily due to material growth in our core business of licensing our software and new revenue stream from sales of our fingerprint readers . for the years ended december 31 , 2015 and 2014 , service revenues included approximately $ 679,000 and $ 627,000 , respectively , of recurring maintenance and support revenue , and approximately $ 252,000 and $ 863,000 , respectively , of non-recurring custom services revenue . recurring service revenue increased 8 % from 2014 to 2015 , due to the increase in bundled maintenance agreements to our expanding customer license base . non-recurring custom services decreased 71 % due to a completion of a customer project at the end of 2014 . 18 for the years ended december 31 , 2015 and 2014 , license and other revenue ( comprised of third party and bio-key hardware , and royalty ) increased approximately 72 % as a result of several contributing factors . software license revenue increased by approximately $ 957,000 or 49 % during the year ended december 31 , 2015 compared to the year ended december 31 , 2014. we continued to expand our relationship with ncr , developed new partnerships , continued to ship orders to aesynt for their continued deployment of our identification technology in their accudose® product line , and for ongoing expansion of biometric id deployments with commercial partners lexisnexis , educational biometric technology , identimetrics , and a large supplemental order from single international customer . hardware sales increased by approximately $ 841,000 ( 181 % ) , as a result of the introduction of our new low cost fingerprint readers , the establishment of our hong kong subsidiary , and expanding healthcare industry deployments . royalty income , from an oem agreement for the year ended december 31 , 2015 increased 18 % to approximately $ 103,000 from $ 87,000 during 2014 , due to adding a new oem partner . costs of goods sold for the year ended december 31 , 2015 , cost of service decreased approximately $ 185,000 primarily as a result of costs associated with non-recurring custom services revenue . license and other costs for the year ended december 31 , 2015 increased approximately $ 716,000 due primarily to the increase in hardware revenue , and third party software revenue . story_separator_special_tag also , projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions , or that the degree of compliance with the policies or procedures may deteriorate . under the supervision and with the participation of our management , including our ceo and cfo , we have conducted an evaluation of the effectiveness of our internal control over financial reporting as of december 31 , 2015 , based upon the framework in internal control-integrated framework issued by the committee of sponsoring organizations of the treadway commission . based on this evaluation , management has concluded that our internal control over financial reporting was effective as of december 31 , 2015. as the company is a smaller reporting company , this annual report does not include an attestation report of the company 's registered public accounting firm regarding internal control over financial reporting . management 's report was not subject to attestation by the company 's registered public accounting firm pursuant to rules of the securities and exchange commission that permit the company to provide only management 's report in this annual report . changes in internal control over financial reporting no change in our internal control over financial reporting occurred during the fiscal quarter ended december 31 , 2015 that has materially affected , or is reasonably likely to materially affect , our internal control over financial reporting . item 9b . other information none . 25 part iii item 10. directors , executive officers and corporate governance the following sets forth certain information about each director , executive officer , and key employee of the company . replace_table_token_8_th ( a ) compensation committee member ( b ) audit committee member ( c ) nominating committee member directors we believe that our board of directors should be composed of individuals with sophistication and experience in many substantive areas that impact our business . we believe that experience , qualifications , or skills in the following areas are most important : legal/regulatory and government affairs ; accounting and finance ; design , innovation and engineering ; strategic planning ; and human resources and development practices ; and board practices of other corporations . these areas are in addition to the personal qualifications described in this section . we believe that our current board members possess the professional and personal qualifications necessary for board service , and have highlighted particularly noteworthy attributes for each board member below . the principal occupation and business experience , for at least the past five years , of each current director is as follows : michael w. depasquale has served as our chief executive officer and a director since january 3 , 2003 , and chairman of the board since january 29 , 2014. he served as co-chief executive officer of the company from july 2005 to august 2006. mr. depasquale brings more than 27 years of executive management , sales and marketing experience to the company . prior to joining us , mr. depasquale served as the president and chief executive officer of prism esolutions , inc. , a pennsylvania-based provider of professional consulting services and online solutions for iso-9001/14000 certification for customers in manufacturing , healthcare and government markets , since february 2001. from december 1999 through december 2000 , mr. depasquale served as group vice president for wrc media , a new york-based distributor of supplemental education products and software . from january 1996 until december 1999 , mr. depasquale served as senior vice president of jostens learning corp. , a california-based provider of multimedia curriculum . prior to jostens , mr. depasquale held sales and marketing management positions with mcgraw-hill and digital equipment corporation . mr. depasquale earned a bachelor of science degree from the new jersey institute of technology . he serves on the board of directors and as treasurer of the international biometrics and identification industry association . mr. depasquale has extensive general management experience in the technology sector and has served as a director for number of non-profit organizations and private companies . charles p. romeo has served as a director since february 28 , 2005 and from january 29 , 2003 to april 19 , 2004. from april 2004 until february 2005 , he served as our vice president of sales , public safety division . from november 2005 to november 2007 , mr. romeo served as the vice president of sales and marketing for unicom , a rhode island systems integrator . from september 2002 until april 2004 , mr. romeo was the president and chief executive officer of freedombridge technologies , inc. , a rhode island-based consulting firm to technology companies in the homeland security industry specializing in implementing direct and channel selling programs , strategic alliances and partnerships in the law enforcement market . prior to founding freedombridge , mr. romeo had a 33 year sales and marketing management career with digital equipment corporation , compaq computer corporation and hewlett packard . during his career , mr. romeo served as vice president of service sales for a $ 500 million business unit , and director of public sector sales for a $ 275 million division of hewlett packard . mr. romeo authored the sales manager 's troubleshooter , prentice hall 1998 , which was named as one of the “ top 10 must reads ” by sales and marketing magazine . mr. romeo earned a bachelor of science degree in mathematics and economics from the university of massachusetts and an executive mba from babson college . mr. romeo has significant sales and marketing management experience in the infrastructure and computer hardware and software industries . 26 john schoenherr has served as a director since december 30 , 2004. mr. schoenherr served as vice president of corporate performance management for oracle corporation from 1995 through 2006. prior to oracle he served as senior vice president of business intelligence and analytics at information resources Narrative : liquidity and capital resources operating activities overview net cash used for operations during the year ended december 31 , 2015 was approximately $ 15,560,000. items of note were as follows : ● negative cash flows from the purchase of software licenses of $ 12,000,000 and other inventory of approximately $ 337,000 ● negative cash flows related to an increase in accounts receivable , less movements in prepayments , accounts payable , and accrued expenses of approximately $ 1,804,000 , due to working capital management , and ● net positive cash flows related to the adjustments for depreciation , amortization , share-based compensation , debt discount , and fair value adjustments of approximately $ 442,000 investing activities overview net cash used for investing activities during the year ended december 31 , 2015 was approximately $ 3,000 and was due to the purchase of capital expenditures . financing activities overview net cash provided by financing activities during the year ended december 31 , 2015 was approximately $ 19,041,000 and attributable primarily to the following : ● positive cash flows from the issuance of shares of preferred stock and warrants of approximately $ 19,500,000 , net of dividends and financing costs of approximately $ 459,000 . 20 capital resources since our inception , our capital needs have been principally met through proceeds from the sale of equity and debt securities . we expect capital expenditures to be less than $ 100,000 during the next twelve months . we do not currently maintain a line of credit or term loan with any commercial bank or other financial institution . the following sets forth our primary sources of capital during the previous two years : as of december 2011 , we entered into a 24-month accounts receivable factoring arrangement with a financial institution ( the “ factor ” ) . pursuant to the terms of this arrangement , from time to time , we sell to the factor certain of our accounts receivable balances on a non-recourse basis for credit approved accounts .

- 32 - attracting and penetrating network partners we created our business model to take advantage of the changing dynamics of the u.s. private health insurance market . our model is based on a b2b2c distribution strategy , meaning that we rely on our employer partners and health plan partners to reach potential members to increase the number of our hsa members . our success depends in large part on our ability to further penetrate our existing network partners by adding new hsa members from these partners and adding new network partners . our innovative technology platform we believe that innovations incorporated in our technology that enable consumers to make healthcare saving and spending decisions differentiate us from our competitors and drive our growth in revenue , hsa members , network partners and aum . similarly , these innovations underpin our ability to provide a differentiated consumer experience in a cost-effective manner . for example , we are currently undertaking a significant update of our proprietary platform 's architecture , which will allow us to improve our transaction processing capabilities and related platform infrastructure to support continued account and transaction growth . we intend to continue to invest in our technology development to enhance our platform 's capabilities and infrastructure . our “ purple ” culture the new healthcare consumer needs education and advice delivered by people as well as technology . we believe that our team-oriented , customer-focused culture , which we call “ purple , ” is a significant factor in our ability to attract and retain customers and to nimbly address opportunities in the rapidly changing healthcare sector . we make significant efforts to promote and foster purple within our workforce . we invest in and intend to continue to invest in human capital through technology-enabled training , career development and advancement opportunities . we regularly measure the success of these efforts , particularly in the context of rapid growth . interest rates as a non-bank custodian , we contract with fdic-insured custodial depository bank partners and an insurance company partner to hold cash aum , and we generate a significant portion of our total revenue from interest we charge based on interest rates offered to us by these partners . these contracts are generally long-term , substantially reducing our exposure to short-term fluctuations in interest rates . a sustained decline in prevailing interest rates may negatively affect our business by reducing the size of the interest rate margins available to us and thus the size of the custodial revenue we can realize . conversely , a sustained increase in prevailing interest rates would present us with an opportunity to increase our interest rate margins . changes in prevailing interest rates are driven by macroeconomic trends and government policies over which we have no control . our competition and industry our direct competitors are hsa custodians . these are primarily state or federally chartered banks and other financial institutions for which we believe technology-based healthcare services are not a core business . certain of our direct competitors have chosen to exit the market despite increased demand for these services . this has created , and we believe will continue to create , opportunities for us to leverage our technology platform and capabilities to increase our market share . however , some of our direct competitors are in a position , should they choose , to devote more resources to the development , sale and support of their products and services than we have at our disposal . in addition , numerous indirect competitors , including benefits administration technology and service providers , partner with banks and other hsa custodians to compete with us . our health plan partners may also choose to offer technology-based healthcare services directly , as some health plans have done . our success depends on our ability to predict and react quickly to these and other industry and competitive dynamics . regulatory change federal law and regulations , including the affordable care act , irs regulations , labor law and public health regulations that govern the provision of health insurance and are the foundation for tax-advantaged healthcare saving and spending through hsas and ras , play a pivotal role in determining our market opportunity . privacy and data security-related laws such as hipaa and the gramm-leach-bliley act , laws governing the provision of investment advice to consumers , such as the advisers act and the federal deposit insurance act , all play a similar role in determining our competitive landscape . in addition , state-level regulations also have significant implications for our business in some cases . our ability to predict and react quickly to relevant legal and regulatory trends and to correctly interpret their market and competitive implications is important to our success . - 33 - key financial and operating metrics our management regularly reviews a number of key operating and financial metrics to evaluate our business , determine the allocation of our resources , make decisions regarding corporate strategies and evaluate forward-looking projections and trends affecting our business . we discuss certain of these key financial metrics , including revenue , below in the section entitled “ key components of our results of operations . ” in addition , we utilize other key metrics as described below . hsa members the following table sets forth our hsa members for the periods indicated : replace_table_token_4_th the number of our hsa members is critical because our service revenue is driven by the amount we charge per hsa . story_separator_special_tag add hsa members by charging a lower rate as additional hsa members are added . accordingly , as network partners add more hsa members , the service revenue per hsa member will continue to decrease . additionally , as ras grow less rapidly than hsas , service revenue per hsa member will decrease . the decrease in service revenue per hsa member was partially offset by an increase in custodial revenue per hsa member . - 39 - custodial revenue the $ 13.4 million increase in custodial revenue from the year ended january 31 , 2015 to the year ended january 31 , 2016 was primarily due to an increase in average daily cash aum of $ 772.7 million , or 50 % , and an increase in the yield on average cash aum from 1.52 % in the year ended january 31 , 2015 to 1.57 % in the year ended january 31 , 2016. custodial revenue increased in the year ended january 31 , 2016 as a percentage of our total revenue compared to the year ended january 31 , 2015 , primarily due to our aum growing faster than our hsa members and higher yield on average cash aum . the $ 5.4 million increase in custodial revenue from the year ended january 31 , 2014 to the year ended january 31 , 2015 was primarily due to an increase in average daily cash aum of $ 416.0 million , or 37 % , partially offset by a decrease in the yield on average cash aum from 1.64 % in the year ended january 31 , 2014 to 1.52 % in the year ended january 31 , 2015. custodial revenue decreased in the year ended january 31 , 2015 as a percentage of our total revenue compared to the year ended january 31 , 2014 , primarily due to lower-rate custodial depository agreements added in the year ended january 31 , 2015 to accommodate our growth in cash aum . this had an adverse impact on our interest yield during the year ended january 31 , 2015 compared to the year ended january 31 , 2014. cash aum per hsa member of $ 1,532 as of january 31 , 2016 increased compared to the cash aum per hsa member of $ 1,455 as of january 31 , 2015. this was primarily due to the bancorp hsa portfolio acquired during the year having higher average cash aum balances . custodial revenue per hsa member increased by approximately 5 % from the year ended january 31 , 2015 to the year ended january 31 , 2016 , primarily due to the higher yield and higher average cash aum balances . interchange revenue the $ 9.7 million increase in interchange revenue from the year ended january 31 , 2015 to the year ended january 31 , 2016 was due to an overall increase in the number of our hsa members and payment activity . in addition , we continued to see a trend toward more hsa spending through payment card transaction swipes and less by checks and ach or electronic reimbursements , which increased our interchange revenue . the $ 5.8 million increase in interchange revenue from the year ended january 31 , 2014 to the year ended january 31 , 2015 was due to an overall increase in the number of our hsa members and payment activity . our efforts to increase card spend on our platform has resulted in an increase in interchange revenue per hsa member for the year ended january 31 , 2016 by approximately 5 % . cost of revenue the following table sets forth our cost of revenue for the periods indicated : replace_table_token_11_th service costs the $ 9.6 million increase in service costs from the year ended january 31 , 2015 to the year ended january 31 , 2016 was due to the higher volume of total accounts being serviced . the $ 9.6 million increase includes $ 5.5 million related to the hiring of additional personnel to implement and support our new network partners and hsa members , increased activation and processing costs of $ 2.1 million related to account and card activation as well as monthly processing of statements and other communications , stock compensation of $ 686,000 , depreciation and amortization of $ 465,000 , information technology expenses of $ 339,000 and $ 560,000 in other expenses . the $ 8.3 million increase in account costs from the year ended january 31 , 2014 to the year ended january 31 , 2015 was due to the higher volume of total accounts being serviced . the $ 8.3 million increase includes $ 4.6 million related to the hiring of additional personnel to implement and support our new network partners and hsa members , activation and processing costs of $ 2.0 million related to account and card activation as well as monthly processing of statements and other communications , information technology expenses of $ 315,000 , depreciation and amortization of $ 320,000 , stock compensation of $ 393,000 and $ 614,000 in other expenses . - 40 - custodial costs the $ 2.4 million increase in custodial costs from the year ended january 31 , 2015 to the year ended january 31 , 2016 was due to an increase in custodial costs on average cash aum from 0.27 % for the year ended january 31 , 2015 to 0.28 % for the year ended january 31 , 2016 , and an increase in average daily cash aum from $ 1.55 billion for the year ended january 31 , 2015 to $ 2.33 billion during the year ended january 31 , 2016. the $ 654,000 increase in custodial costs from the year ended january 31 , 2014 to the year ended january 31 , 2015 was due to an increase in average daily cash aum from $ 1.14 billion for the year ended january 31 , 2014 to $ 1.55 billion for the

cash flows provided by operating activities . net cash provided by operating activities during the year ended january 31 , 2016 resulted primarily from our net income of $ 16.6 million being adjusted for the following non-cash items : depreciation and amortization of $ 8.6 million and stock-based compensation of $ 5.9 million , changes in accrued compensation of $ 2.5 million , and accounts payable of $ 1.0 million . these were offset by changes in accounts receivable of $ 5.2 million , deferred income taxes of $ 2.2 million , and accrued liabilities , deferred rent and other assets of $ 742,000. net cash provided by operating activities during the year ended january 31 , 2015 resulted primarily from our net income of $ 10.2 million being adjusted for the following non-cash items : depreciation and amortization of $ 5.9 million and stock-based compensation of $ 2.5 million , deferred income taxes of $ 1.6 million , changes in accrued compensation of $ 1.2 million and a revaluation of our derivative liability associated with our series d-3 redeemable convertible preferred stock of $ 735,000 and changes in deferred rent of $ 95,000. these items were offset by changes in accounts receivable of $ 3.4 million , other assets of $ 1.6 million , accounts payable of $ 1.2 million , accrued liabilities and inventories of $ 1.0 million .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. - 32 - attracting and penetrating network partners we created our business model to take advantage of the changing dynamics of the u.s. private health insurance market . our model is based on a b2b2c distribution strategy , meaning that we rely on our employer partners and health plan partners to reach potential members to increase the number of our hsa members . our success depends in large part on our ability to further penetrate our existing network partners by adding new hsa members from these partners and adding new network partners . our innovative technology platform we believe that innovations incorporated in our technology that enable consumers to make healthcare saving and spending decisions differentiate us from our competitors and drive our growth in revenue , hsa members , network partners and aum . similarly , these innovations underpin our ability to provide a differentiated consumer experience in a cost-effective manner . for example , we are currently undertaking a significant update of our proprietary platform 's architecture , which will allow us to improve our transaction processing capabilities and related platform infrastructure to support continued account and transaction growth . we intend to continue to invest in our technology development to enhance our platform 's capabilities and infrastructure . our “ purple ” culture the new healthcare consumer needs education and advice delivered by people as well as technology . we believe that our team-oriented , customer-focused culture , which we call “ purple , ” is a significant factor in our ability to attract and retain customers and to nimbly address opportunities in the rapidly changing healthcare sector . we make significant efforts to promote and foster purple within our workforce . we invest in and intend to continue to invest in human capital through technology-enabled training , career development and advancement opportunities . we regularly measure the success of these efforts , particularly in the context of rapid growth . interest rates as a non-bank custodian , we contract with fdic-insured custodial depository bank partners and an insurance company partner to hold cash aum , and we generate a significant portion of our total revenue from interest we charge based on interest rates offered to us by these partners . these contracts are generally long-term , substantially reducing our exposure to short-term fluctuations in interest rates . a sustained decline in prevailing interest rates may negatively affect our business by reducing the size of the interest rate margins available to us and thus the size of the custodial revenue we can realize . conversely , a sustained increase in prevailing interest rates would present us with an opportunity to increase our interest rate margins . changes in prevailing interest rates are driven by macroeconomic trends and government policies over which we have no control . our competition and industry our direct competitors are hsa custodians . these are primarily state or federally chartered banks and other financial institutions for which we believe technology-based healthcare services are not a core business . certain of our direct competitors have chosen to exit the market despite increased demand for these services . this has created , and we believe will continue to create , opportunities for us to leverage our technology platform and capabilities to increase our market share . however , some of our direct competitors are in a position , should they choose , to devote more resources to the development , sale and support of their products and services than we have at our disposal . in addition , numerous indirect competitors , including benefits administration technology and service providers , partner with banks and other hsa custodians to compete with us . our health plan partners may also choose to offer technology-based healthcare services directly , as some health plans have done . our success depends on our ability to predict and react quickly to these and other industry and competitive dynamics . regulatory change federal law and regulations , including the affordable care act , irs regulations , labor law and public health regulations that govern the provision of health insurance and are the foundation for tax-advantaged healthcare saving and spending through hsas and ras , play a pivotal role in determining our market opportunity . privacy and data security-related laws such as hipaa and the gramm-leach-bliley act , laws governing the provision of investment advice to consumers , such as the advisers act and the federal deposit insurance act , all play a similar role in determining our competitive landscape . in addition , state-level regulations also have significant implications for our business in some cases . our ability to predict and react quickly to relevant legal and regulatory trends and to correctly interpret their market and competitive implications is important to our success . - 33 - key financial and operating metrics our management regularly reviews a number of key operating and financial metrics to evaluate our business , determine the allocation of our resources , make decisions regarding corporate strategies and evaluate forward-looking projections and trends affecting our business . we discuss certain of these key financial metrics , including revenue , below in the section entitled “ key components of our results of operations . ” in addition , we utilize other key metrics as described below . hsa members the following table sets forth our hsa members for the periods indicated : replace_table_token_4_th the number of our hsa members is critical because our service revenue is driven by the amount we charge per hsa . story_separator_special_tag add hsa members by charging a lower rate as additional hsa members are added . accordingly , as network partners add more hsa members , the service revenue per hsa member will continue to decrease . additionally , as ras grow less rapidly than hsas , service revenue per hsa member will decrease . the decrease in service revenue per hsa member was partially offset by an increase in custodial revenue per hsa member . - 39 - custodial revenue the $ 13.4 million increase in custodial revenue from the year ended january 31 , 2015 to the year ended january 31 , 2016 was primarily due to an increase in average daily cash aum of $ 772.7 million , or 50 % , and an increase in the yield on average cash aum from 1.52 % in the year ended january 31 , 2015 to 1.57 % in the year ended january 31 , 2016. custodial revenue increased in the year ended january 31 , 2016 as a percentage of our total revenue compared to the year ended january 31 , 2015 , primarily due to our aum growing faster than our hsa members and higher yield on average cash aum . the $ 5.4 million increase in custodial revenue from the year ended january 31 , 2014 to the year ended january 31 , 2015 was primarily due to an increase in average daily cash aum of $ 416.0 million , or 37 % , partially offset by a decrease in the yield on average cash aum from 1.64 % in the year ended january 31 , 2014 to 1.52 % in the year ended january 31 , 2015. custodial revenue decreased in the year ended january 31 , 2015 as a percentage of our total revenue compared to the year ended january 31 , 2014 , primarily due to lower-rate custodial depository agreements added in the year ended january 31 , 2015 to accommodate our growth in cash aum . this had an adverse impact on our interest yield during the year ended january 31 , 2015 compared to the year ended january 31 , 2014. cash aum per hsa member of $ 1,532 as of january 31 , 2016 increased compared to the cash aum per hsa member of $ 1,455 as of january 31 , 2015. this was primarily due to the bancorp hsa portfolio acquired during the year having higher average cash aum balances . custodial revenue per hsa member increased by approximately 5 % from the year ended january 31 , 2015 to the year ended january 31 , 2016 , primarily due to the higher yield and higher average cash aum balances . interchange revenue the $ 9.7 million increase in interchange revenue from the year ended january 31 , 2015 to the year ended january 31 , 2016 was due to an overall increase in the number of our hsa members and payment activity . in addition , we continued to see a trend toward more hsa spending through payment card transaction swipes and less by checks and ach or electronic reimbursements , which increased our interchange revenue . the $ 5.8 million increase in interchange revenue from the year ended january 31 , 2014 to the year ended january 31 , 2015 was due to an overall increase in the number of our hsa members and payment activity . our efforts to increase card spend on our platform has resulted in an increase in interchange revenue per hsa member for the year ended january 31 , 2016 by approximately 5 % . cost of revenue the following table sets forth our cost of revenue for the periods indicated : replace_table_token_11_th service costs the $ 9.6 million increase in service costs from the year ended january 31 , 2015 to the year ended january 31 , 2016 was due to the higher volume of total accounts being serviced . the $ 9.6 million increase includes $ 5.5 million related to the hiring of additional personnel to implement and support our new network partners and hsa members , increased activation and processing costs of $ 2.1 million related to account and card activation as well as monthly processing of statements and other communications , stock compensation of $ 686,000 , depreciation and amortization of $ 465,000 , information technology expenses of $ 339,000 and $ 560,000 in other expenses . the $ 8.3 million increase in account costs from the year ended january 31 , 2014 to the year ended january 31 , 2015 was due to the higher volume of total accounts being serviced . the $ 8.3 million increase includes $ 4.6 million related to the hiring of additional personnel to implement and support our new network partners and hsa members , activation and processing costs of $ 2.0 million related to account and card activation as well as monthly processing of statements and other communications , information technology expenses of $ 315,000 , depreciation and amortization of $ 320,000 , stock compensation of $ 393,000 and $ 614,000 in other expenses . - 40 - custodial costs the $ 2.4 million increase in custodial costs from the year ended january 31 , 2015 to the year ended january 31 , 2016 was due to an increase in custodial costs on average cash aum from 0.27 % for the year ended january 31 , 2015 to 0.28 % for the year ended january 31 , 2016 , and an increase in average daily cash aum from $ 1.55 billion for the year ended january 31 , 2015 to $ 2.33 billion during the year ended january 31 , 2016. the $ 654,000 increase in custodial costs from the year ended january 31 , 2014 to the year ended january 31 , 2015 was due to an increase in average daily cash aum from $ 1.14 billion for the year ended january 31 , 2014 to $ 1.55 billion for the Narrative : cash flows provided by operating activities . net cash provided by operating activities during the year ended january 31 , 2016 resulted primarily from our net income of $ 16.6 million being adjusted for the following non-cash items : depreciation and amortization of $ 8.6 million and stock-based compensation of $ 5.9 million , changes in accrued compensation of $ 2.5 million , and accounts payable of $ 1.0 million . these were offset by changes in accounts receivable of $ 5.2 million , deferred income taxes of $ 2.2 million , and accrued liabilities , deferred rent and other assets of $ 742,000. net cash provided by operating activities during the year ended january 31 , 2015 resulted primarily from our net income of $ 10.2 million being adjusted for the following non-cash items : depreciation and amortization of $ 5.9 million and stock-based compensation of $ 2.5 million , deferred income taxes of $ 1.6 million , changes in accrued compensation of $ 1.2 million and a revaluation of our derivative liability associated with our series d-3 redeemable convertible preferred stock of $ 735,000 and changes in deferred rent of $ 95,000. these items were offset by changes in accounts receivable of $ 3.4 million , other assets of $ 1.6 million , accounts payable of $ 1.2 million , accrued liabilities and inventories of $ 1.0 million .

we remain uncertain as to how long current macroeconomic and industry conditions will persist , the pace of any recovery , and the magnitude of the effect of these conditions on the growth of our markets and business , as well as our results of operations . we continue to encounter a highly competitive marketplace for sales of our networking solutions offering , particularly within our packet-optical transport segment . competition has intensified as we and our competitors have introduced new , high-capacity , high-speed network solutions and more aggressively sought to capture market share and displace incumbent vendors at large carrier customers . we have also encountered increased competition as we have expanded our business in emerging geographies and new markets or applications for our communications networking products . for example , we have made early progress in the sale of our products for application in submarine networks and with sales to customers in the middle east . in this competitive environment , securing new opportunities , particularly in international markets , often requires that we agree to less favorable commercial terms or pricing , financial commitments requiring collateralized performance bonds or similar instruments that place cash resources at risk , and other contractual commitments that place a disproportionate allocation of risk upon the vendor . these terms can adversely affect our result of operations . we expect the level of competition , particularly in north america , to continue and potentially increase , as chinese equipment vendors seek to gain entry into the u.s. market , and other multinational competitors seek to retain incumbent positions with large customers in the region . potential supply chain disruption in recent months , several regions of thailand have experienced severe flooding , causing significant damage to infrastructure and factories . flooding has affected the operations of certain component providers in our supply chain , or , in turn , their suppliers of components based in thailand . we are actively monitoring and evaluating stabilization efforts of these suppliers following the flooding and are currently working with existing suppliers and qualifying new sources of supply in order to minimize the effect on our customers and our business . given the severity of the situation and our dependency upon the recovery efforts of these suppliers , however , there can be no assurance that we will not encounter shortages , extended lead 33 times , additional costs or other disruptions in the availability or allocation of components that could affect our business over the next several fiscal quarters . market opportunity and strategy despite recent macroeconomic and competitive dynamics , we believe that a number of important underlying drivers represent significant long-term opportunities and growing demand for converged optical ethernet networking solutions in our target markets . we believe that market trends , including the proliferation of smartphones , tablets and similar devices running mobile web applications , the prevalence of video applications , and the shift of enterprise and consumer applications to cloud-based or virtualized network environments are emblematic of increased use and dependence by consumers and enterprises upon a growing variety of broadband applications and services . we expect that these services will continue to add significant multiservice network traffic , requiring our customers to invest in next-generation , high-capacity network infrastructures that are more efficient , robust and dynamic . to capitalize on the market dynamics above , we invested heavily in our business during fiscal 2011 and are in the process of introducing , or transitioning to new solutions offerings in each of our product segments . simultaneously , we have been investing in market entry into multiple new geographies and customer segments , as well as the expansion of footprint and market share within our traditional customer base across our segments . we have also been making investments in an effort to optimize and gain leverage from our business processes , systems , infrastructure and resources in order to achieve our desired operating model and profitability goals . these investments are a critical element of our effort to address customer business challenges and evolving network requirements and position us to seize market opportunities . we believe these investments , together with the successful completion of significant integration activities relating to the men business during fiscal 2011 , lay a strong foundation for long-term growth of our business . additional components of our overall corporate strategy can be found in item 1 , “ business ” above . acquisition of nortel metro ethernet networks business and effect on results of operations and financial condition on march 19 , 2010 , we completed our acquisition ( the `` men acquisition `` ) of substantially all of the optical networking and carrier ethernet assets of nortel 's metro ethernet networks business ( the “ men business ” ) for a purchase price of $ 676.8 million . see note 2 to the consolidated financial statements in item 8 of part ii of this annual report for more information . the men acquisition represented a transformative opportunity for ciena , strengthening our position as a leader in next-generation , converged optical ethernet networking and accelerating the execution of our corporate and research and development strategies . due to the relative scale of its operations , however , the men acquisition materially affected our operations , financial results and liquidity during the periods covered in this report and may make period to period comparisons difficult . story_separator_special_tag gross margin can vary significantly depending upon the mix and concentration of revenue by segment or product line , the concentration of lower margin common equipment sales within a segment or product line , geographic mix and the mix of customers and services in a given fiscal quarter . gross margin can also be affected by our introduction of new products , charges for excess and obsolete inventory , changes in warranty costs and sales volume . we expect that gross margins will be subject to fluctuation based on our level of success in driving cost reductions , rationalizing our supply chain and consolidating third party contract manufacturers and distribution sites as part of our effort to optimize our operations . gross margin can also be adversely affected by the competitive environment and level of pricing pressure we encounter . the combination of the recent period of uncertain market conditions , constraints on customer capital expenditures and increased competition has resulted in a heightened customer focus on pricing and return on network investment , as customers address network traffic growth and strive to increase revenue and profit . while competition is intense across our segments , our exposure to pricing pressure has been most severe in metro and core applications for our packet-optical transport platforms , particularly in international markets . as a result , in an effort to retain or secure customers , enter new markets or capture market share , in the past we have and in the future we may agree to pricing or other unfavorable commercial terms that result in lower or negative gross margins on a particular order or group of orders . because packet-optical transport and international revenue 38 comprise a greater percentage of our overall revenue than in prior periods , these market dynamics may adversely affect our gross margins and results of operations in certain periods . service gross margin can be affected by the mix of customers and services , particularly the mix between deployment and maintenance services , geographic mix and the timing and extent of any investments in internal resources to support this business . the tables below ( in thousands , except percentage data ) set forth the changes in revenue , cost of goods sold and gross profit for the periods indicated : replace_table_token_5_th _ * denotes % of total revenue * * denotes % change from 2010 to 2011 replace_table_token_6_th _ * denotes % of product revenue * * denotes % change from 2010 to 2011 replace_table_token_7_th _ * denotes % of service revenue * * denotes % change from 2010 to 2011 gross profit as a percentage of revenue increased as a result of the factors described below . gross profit on products as a percentage of product revenue increased , despite less favorable product mix in fiscal 2011 , largely as a result of the adverse effect , in fiscal 2010 , of a number of items relating to the men acquisition that increased costs of goods sold in that period . these items included $ 48.0 million related to the revaluation of inventory and $ 6.6 million in excess purchase commitment losses on ciena 's pre-acquisition inventory relating to product rationalization decisions . fiscal 2011 cost of goods sold included $ 14.3 million related to the revaluation of inventory and an $ 8.8 million increase in amortization of intangible assets . gross profit on services as a percentage of services revenue increased due to higher concentration of professional services as a percentage of revenue , and improved operational efficiencies . 39 operating expense research and development expense primarily consists of salaries and related employee expense ( including share-based compensation expense ) , prototype costs relating to design , development , and testing of our products , depreciation expense and third-party consulting costs . sales and marketing expense primarily consists of salaries , commissions and related employee expense ( including share-based compensation expense ) , and sales and marketing support expense , including travel , demonstration units , trade show expense and third-party consulting costs . general and administrative expense primarily consists of salaries and related employee expense ( including share-based compensation expense ) , and costs for third-party consulting and other services . amortization of intangible assets primarily reflects purchased technology and customer relationships from our acquisitions . the table below ( in thousands , except percentage data ) sets forth the changes in operating expense for the periods indicated : replace_table_token_8_th _ * denotes % of total revenue * * denotes % change from 2010 to 2011 research and development expense was adversely affected by $ 12.2 million as a result of foreign exchange rates , primarily due to the weakening of the u.s. dollar in relation to the canadian dollar . the $ 52.2 million increase primarily reflects increases of $ 47.4 million in employee compensation and related costs , $ 13.6 million in facilities and information systems , $ 4.8 million in depreciation expense and $ 2.5 million in professional services and fees . these increases were partially offset by decreases of $ 9.6 million in prototype expense and a $ 5.5 million benefit related to a conditional grant from the province of ontario . under this strategic jobs investment fund grant , we can receive up to an aggregate of $ 25.0 million canadian dollars in funding for eligible costs relating to certain next-generation , coherent optical transport development initiatives over the period from fiscal 2011 to fiscal 2015. we anticipate receiving future disbursements , approximating cad $ 5.0 million per fiscal year over the period above . amounts received under the grant are subject to recoupment in the event that we fail to achieve certain minimum investment , employment and project milestones . selling and marketing expense was adversely affected by $ 2.5 million due to foreign exchange rates , primarily due to the weakening of the u.s. dollar in relation to the euro and the canadian dollar

cash used by accounts receivable during fiscal 2011 , net of $ 1.7 million in provision for doubtful accounts , was $ 75.6 million primarily due to increased sales volume . our days sales outstanding ( dsos ) decreased from 100 days for fiscal 2010 to 86 days for fiscal 2011 . our dsos level for fiscal 2010 largely reflects the timing of the men acquisition and the effect on this calculation of having only a partial year of revenue from the men business . utilizing annualized fourth quarter revenue for purposes of this calculation would have resulted in dsos of 74 days for fiscal 2010 and 83 days for fiscal 2011. our dsos increased due to growth in international sales , which generally involve longer payment cycles . the following table sets forth ( in thousands ) changes to our accounts receivable , net of allowance for doubtful accounts , from the end of fiscal 2010 through the end of fiscal 2011 : october 31 , increase 2010 2011 ( decrease ) accounts receivable , net $ 343,582 $ 417,509 $ 73,927 inventory cash generated by inventory during fiscal 2011 was $ 14.2 million . our inventory turns increased from 2.3 turns during fiscal 2010 to 3.6 turns during fiscal 2011 . during fiscal 2011 , changes in inventory reflect a $ 17.3 million reduction related to a non-cash provision for excess and obsolescence . the following table sets forth ( in thousands ) changes to the components of our inventory from the end of fiscal 2010 through the end fiscal 2011 : 48 replace_table_token_20_th prepaid expense and other cash used by prepaid expense and other during fiscal 2011 was $ 18.3 million . this usage was primarily related to increases in product demonstration units and deferred deployment expense , partially offset by the receipt of the contingent refund receivable related to the carling lease termination . accounts payable , accruals and other obligations cash used by accounts payable , accruals and other obligations during fiscal 2011 was $ 59.3 million . between the end of fiscal 2010 and fiscal 2011 , the change in unpaid equipment purchases was $ 1.2

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we remain uncertain as to how long current macroeconomic and industry conditions will persist , the pace of any recovery , and the magnitude of the effect of these conditions on the growth of our markets and business , as well as our results of operations . we continue to encounter a highly competitive marketplace for sales of our networking solutions offering , particularly within our packet-optical transport segment . competition has intensified as we and our competitors have introduced new , high-capacity , high-speed network solutions and more aggressively sought to capture market share and displace incumbent vendors at large carrier customers . we have also encountered increased competition as we have expanded our business in emerging geographies and new markets or applications for our communications networking products . for example , we have made early progress in the sale of our products for application in submarine networks and with sales to customers in the middle east . in this competitive environment , securing new opportunities , particularly in international markets , often requires that we agree to less favorable commercial terms or pricing , financial commitments requiring collateralized performance bonds or similar instruments that place cash resources at risk , and other contractual commitments that place a disproportionate allocation of risk upon the vendor . these terms can adversely affect our result of operations . we expect the level of competition , particularly in north america , to continue and potentially increase , as chinese equipment vendors seek to gain entry into the u.s. market , and other multinational competitors seek to retain incumbent positions with large customers in the region . potential supply chain disruption in recent months , several regions of thailand have experienced severe flooding , causing significant damage to infrastructure and factories . flooding has affected the operations of certain component providers in our supply chain , or , in turn , their suppliers of components based in thailand . we are actively monitoring and evaluating stabilization efforts of these suppliers following the flooding and are currently working with existing suppliers and qualifying new sources of supply in order to minimize the effect on our customers and our business . given the severity of the situation and our dependency upon the recovery efforts of these suppliers , however , there can be no assurance that we will not encounter shortages , extended lead 33 times , additional costs or other disruptions in the availability or allocation of components that could affect our business over the next several fiscal quarters . market opportunity and strategy despite recent macroeconomic and competitive dynamics , we believe that a number of important underlying drivers represent significant long-term opportunities and growing demand for converged optical ethernet networking solutions in our target markets . we believe that market trends , including the proliferation of smartphones , tablets and similar devices running mobile web applications , the prevalence of video applications , and the shift of enterprise and consumer applications to cloud-based or virtualized network environments are emblematic of increased use and dependence by consumers and enterprises upon a growing variety of broadband applications and services . we expect that these services will continue to add significant multiservice network traffic , requiring our customers to invest in next-generation , high-capacity network infrastructures that are more efficient , robust and dynamic . to capitalize on the market dynamics above , we invested heavily in our business during fiscal 2011 and are in the process of introducing , or transitioning to new solutions offerings in each of our product segments . simultaneously , we have been investing in market entry into multiple new geographies and customer segments , as well as the expansion of footprint and market share within our traditional customer base across our segments . we have also been making investments in an effort to optimize and gain leverage from our business processes , systems , infrastructure and resources in order to achieve our desired operating model and profitability goals . these investments are a critical element of our effort to address customer business challenges and evolving network requirements and position us to seize market opportunities . we believe these investments , together with the successful completion of significant integration activities relating to the men business during fiscal 2011 , lay a strong foundation for long-term growth of our business . additional components of our overall corporate strategy can be found in item 1 , “ business ” above . acquisition of nortel metro ethernet networks business and effect on results of operations and financial condition on march 19 , 2010 , we completed our acquisition ( the `` men acquisition `` ) of substantially all of the optical networking and carrier ethernet assets of nortel 's metro ethernet networks business ( the “ men business ” ) for a purchase price of $ 676.8 million . see note 2 to the consolidated financial statements in item 8 of part ii of this annual report for more information . the men acquisition represented a transformative opportunity for ciena , strengthening our position as a leader in next-generation , converged optical ethernet networking and accelerating the execution of our corporate and research and development strategies . due to the relative scale of its operations , however , the men acquisition materially affected our operations , financial results and liquidity during the periods covered in this report and may make period to period comparisons difficult . story_separator_special_tag gross margin can vary significantly depending upon the mix and concentration of revenue by segment or product line , the concentration of lower margin common equipment sales within a segment or product line , geographic mix and the mix of customers and services in a given fiscal quarter . gross margin can also be affected by our introduction of new products , charges for excess and obsolete inventory , changes in warranty costs and sales volume . we expect that gross margins will be subject to fluctuation based on our level of success in driving cost reductions , rationalizing our supply chain and consolidating third party contract manufacturers and distribution sites as part of our effort to optimize our operations . gross margin can also be adversely affected by the competitive environment and level of pricing pressure we encounter . the combination of the recent period of uncertain market conditions , constraints on customer capital expenditures and increased competition has resulted in a heightened customer focus on pricing and return on network investment , as customers address network traffic growth and strive to increase revenue and profit . while competition is intense across our segments , our exposure to pricing pressure has been most severe in metro and core applications for our packet-optical transport platforms , particularly in international markets . as a result , in an effort to retain or secure customers , enter new markets or capture market share , in the past we have and in the future we may agree to pricing or other unfavorable commercial terms that result in lower or negative gross margins on a particular order or group of orders . because packet-optical transport and international revenue 38 comprise a greater percentage of our overall revenue than in prior periods , these market dynamics may adversely affect our gross margins and results of operations in certain periods . service gross margin can be affected by the mix of customers and services , particularly the mix between deployment and maintenance services , geographic mix and the timing and extent of any investments in internal resources to support this business . the tables below ( in thousands , except percentage data ) set forth the changes in revenue , cost of goods sold and gross profit for the periods indicated : replace_table_token_5_th _ * denotes % of total revenue * * denotes % change from 2010 to 2011 replace_table_token_6_th _ * denotes % of product revenue * * denotes % change from 2010 to 2011 replace_table_token_7_th _ * denotes % of service revenue * * denotes % change from 2010 to 2011 gross profit as a percentage of revenue increased as a result of the factors described below . gross profit on products as a percentage of product revenue increased , despite less favorable product mix in fiscal 2011 , largely as a result of the adverse effect , in fiscal 2010 , of a number of items relating to the men acquisition that increased costs of goods sold in that period . these items included $ 48.0 million related to the revaluation of inventory and $ 6.6 million in excess purchase commitment losses on ciena 's pre-acquisition inventory relating to product rationalization decisions . fiscal 2011 cost of goods sold included $ 14.3 million related to the revaluation of inventory and an $ 8.8 million increase in amortization of intangible assets . gross profit on services as a percentage of services revenue increased due to higher concentration of professional services as a percentage of revenue , and improved operational efficiencies . 39 operating expense research and development expense primarily consists of salaries and related employee expense ( including share-based compensation expense ) , prototype costs relating to design , development , and testing of our products , depreciation expense and third-party consulting costs . sales and marketing expense primarily consists of salaries , commissions and related employee expense ( including share-based compensation expense ) , and sales and marketing support expense , including travel , demonstration units , trade show expense and third-party consulting costs . general and administrative expense primarily consists of salaries and related employee expense ( including share-based compensation expense ) , and costs for third-party consulting and other services . amortization of intangible assets primarily reflects purchased technology and customer relationships from our acquisitions . the table below ( in thousands , except percentage data ) sets forth the changes in operating expense for the periods indicated : replace_table_token_8_th _ * denotes % of total revenue * * denotes % change from 2010 to 2011 research and development expense was adversely affected by $ 12.2 million as a result of foreign exchange rates , primarily due to the weakening of the u.s. dollar in relation to the canadian dollar . the $ 52.2 million increase primarily reflects increases of $ 47.4 million in employee compensation and related costs , $ 13.6 million in facilities and information systems , $ 4.8 million in depreciation expense and $ 2.5 million in professional services and fees . these increases were partially offset by decreases of $ 9.6 million in prototype expense and a $ 5.5 million benefit related to a conditional grant from the province of ontario . under this strategic jobs investment fund grant , we can receive up to an aggregate of $ 25.0 million canadian dollars in funding for eligible costs relating to certain next-generation , coherent optical transport development initiatives over the period from fiscal 2011 to fiscal 2015. we anticipate receiving future disbursements , approximating cad $ 5.0 million per fiscal year over the period above . amounts received under the grant are subject to recoupment in the event that we fail to achieve certain minimum investment , employment and project milestones . selling and marketing expense was adversely affected by $ 2.5 million due to foreign exchange rates , primarily due to the weakening of the u.s. dollar in relation to the euro and the canadian dollar Narrative : cash used by accounts receivable during fiscal 2011 , net of $ 1.7 million in provision for doubtful accounts , was $ 75.6 million primarily due to increased sales volume . our days sales outstanding ( dsos ) decreased from 100 days for fiscal 2010 to 86 days for fiscal 2011 . our dsos level for fiscal 2010 largely reflects the timing of the men acquisition and the effect on this calculation of having only a partial year of revenue from the men business . utilizing annualized fourth quarter revenue for purposes of this calculation would have resulted in dsos of 74 days for fiscal 2010 and 83 days for fiscal 2011. our dsos increased due to growth in international sales , which generally involve longer payment cycles . the following table sets forth ( in thousands ) changes to our accounts receivable , net of allowance for doubtful accounts , from the end of fiscal 2010 through the end of fiscal 2011 : october 31 , increase 2010 2011 ( decrease ) accounts receivable , net $ 343,582 $ 417,509 $ 73,927 inventory cash generated by inventory during fiscal 2011 was $ 14.2 million . our inventory turns increased from 2.3 turns during fiscal 2010 to 3.6 turns during fiscal 2011 . during fiscal 2011 , changes in inventory reflect a $ 17.3 million reduction related to a non-cash provision for excess and obsolescence . the following table sets forth ( in thousands ) changes to the components of our inventory from the end of fiscal 2010 through the end fiscal 2011 : 48 replace_table_token_20_th prepaid expense and other cash used by prepaid expense and other during fiscal 2011 was $ 18.3 million . this usage was primarily related to increases in product demonstration units and deferred deployment expense , partially offset by the receipt of the contingent refund receivable related to the carling lease termination . accounts payable , accruals and other obligations cash used by accounts payable , accruals and other obligations during fiscal 2011 was $ 59.3 million . between the end of fiscal 2010 and fiscal 2011 , the change in unpaid equipment purchases was $ 1.2

we believe the following accounting policies applied by ameris represent critical accounting policies . allowance for loan losses we believe the allowance for loan losses is a critical accounting policy that requires the most significant judgments and estimates used in the preparation of our consolidated financial statements . the allowance for loan losses represents management 's estimate of probable incurred losses in the company 's loan portfolio . calculation of the allowance for loan losses represents a critical accounting estimate due to the significant judgment , assumptions and estimates related to the amount and timing of estimated losses , consideration of subjective environmental factors and the amount and timing of cash flows related to impaired loans . management believes that the allowance for loan losses is adequate . while management uses available information to recognize losses on loans , future additions to the allowance for loan losses may be necessary based on changes in economic conditions . in addition , various regulatory agencies , as an integral part of their examination processes , periodically review the company 's allowance for loan losses . such agencies may require the company to recognize additions to the allowance for loan losses based on their judgments about information available to them at the time of their examination . considering current information and events regarding a borrower 's ability to repay its obligations , management considers a loan to be impaired when the ultimate collectability of all amounts due , according to the contractual terms of the loan agreement , is in doubt . when a loan is considered to be impaired , the amount of impairment is measured based on the present value of expected future cash flows discounted at the loan 's effective interest rate or if the loan is collateral-dependent , the fair value of the collateral is used to determine the amount of impairment . impairment losses are included in the allowance for loan losses through a charge to the provision for loan losses . subsequent recoveries are credited to the allowance for loan losses . cash receipts for accruing loans are applied to principal and interest under the contractual terms of the loan agreement . cash receipts on impaired loans for which the accrual of interest has been discontinued are applied first to principal and then to interest income . certain economic and interest rate factors could have a material impact on the determination of the allowance for loan losses . an improving economy could result in the expansion of businesses and creation of jobs which would positively affect our loan growth and improve our gross revenue stream . conversely , certain factors could result from an expanding economy which could increase our credit costs and adversely impact our net earnings . a significant rapid rise in interest rates could create higher borrowing costs and shrinking corporate profits which could have a material impact on a borrower 's ability to pay . we will continue to concentrate on maintaining a high quality loan portfolio through strict administration of our loan policy . another factor that we have considered in the determination of the allowance for loan losses is loan concentrations to individual borrowers or industries . based on total committed exposure at december 31 , 2017 , we had six individual loans/lines of credit that exceeded our normal in-house credit limit of $ 30.0 million . total exposure from these six individual loans/lines of credit amounted to $ 258.5 million as of december 31 , 2017. the largest total committed exposure for a single loan/line of credit at december 31 , 2017 was $ 50.0 million , and we had three lines of credit at this level . all three of these $ 50.0 million lines of credit are extended to clients of our warehouse lending division . as of december 31 , 2017 , we had 11 relationships consisting of 32 loans/lines of credit that exceeded $ 30.0 million . total exposure from these 11 relationships amounted to $ 440.0 million as of december 31 , 2017. the largest total committed exposure for a single relationship at december 31 , 2017 was also $ 50.0 million , and we had three relationships at this level . all three of these $ 50.0 million relationships are clients of our warehouse lending division as well . additional disclosure concerning the company 's largest loan relationships is provided in the “ balance sheet comparison ” section below . a substantial portion of our loan portfolio is in the commercial real estate and residential real estate sectors . the majority of these loans are secured by real estate in our primary market areas . a substantial portion of oreo is located in those same 37 markets . therefore , the ultimate collectability of a substantial portion of our loan portfolio and the recoverability of a substantial portion of the carrying amount of oreo are susceptible to changes to market conditions in our primary market area . fair value accounting estimates gaap requires the use of fair values in determining the carrying values of certain assets and liabilities , as well as for specific disclosures . the most significant fair values used in determining carrying value include investment securities available for sale , loans held for sale , derivative financial instruments , impaired loans , oreo , and the net assets acquired in business combinations . certain of these assets do not have a readily available market to determine fair value and require an estimate based on specific parameters . when market prices are unavailable , we determine fair values utilizing estimates , which are constantly changing , including interest rates , duration , prepayment speeds and other specific conditions . in most cases , these specific parameters require a significant amount of judgment by management . at december 31 , 2017 , the percentage of the company 's assets measured at fair value was 13 % . story_separator_special_tag finance division . excluding these amounts , expenses in 2017 increased by $ 7.5 million , or 3.7 % , compared with 2016 levels . salaries and benefits increased $ 13.2 million , or 12.3 % , during 2017. the majority of this increase is attributable to $ 4.5 million in salary and benefit expense in the new premium finance division , $ 3.3 million in salary and benefit expense related to the strengthening of the company 's bsa department , and $ 2.3 million in additional salary and benefits in the retail mortgage division . exclusive of these three areas , salary and benefits increased $ 3.0 million , or 4.0 % . occupancy costs decreased $ 328,000 , or 1.3 % , during 2017 , principally as a result of management 's cost saving efforts during the year . data processing and it-related costs increased $ 3.3 million , or 13.3 % , in 2017 due to an increased number of accounts and products , as well as customer 's increased reliance on mobile and internet oriented products and services . other professional fees increased $ 5.6 million , or 66.1 % , in 2017 , primarily due to fees incurred in the premium finance division pursuant to the uspf management and license agreement . advertising and public relations and other noninterest expense increased during 2017 to support the larger operations of the company . merger and conversion charges of $ 915,000 in 2017 reflect a decrease of $ 5.5 million compared with $ 6.4 million recorded in 2016. merger and conversion charges were elevated in 2016 due to the acquisition of jaxb and conversion to our core system . credit resolution-related expenses decreased $ 2.7 million , or 43.4 % , in 2017 as credit quality continues to improve . 2016 compared with 2015 . operating expenses increased from $ 199.1 million in 2015 to $ 215.8 million in 2016. total expenses in 2016 include approximately $ 6.4 million in merger-related charges and $ 5.8 million in compliance-related charges , while total expenses in 2015 include approximately $ 8.0 million in merger-related charges . excluding these amounts , expenses in 2016 increased by only $ 12.6 million , or 6.6 % , compared with 2015 levels . salaries and benefits increased $ 12.8 million during 2016 , driven by $ 2.5 million associated with the company 's acquisition of jaxb in march 2016 and $ 8.2 million relating to higher compensation levels in the company 's mortgage and sba divisions . 44 occupancy costs increased $ 3.2 million , or 15.1 % , during 2016 , principally as a result of the increased number of retail branches operated during the year , as well as additional expenses for administrative offices . data processing and it-related costs increased $ 4.7 million , or 23.9 % , in 2016. growth in accounts associated with the acquisition of the jacksonville bank accounted for a portion of this increase , while the majority of the increase related to much higher online and mobile banking adoption . other professional fees increased $ 6.0 million in 2016 , mostly due to the compliance-related charges recorded in the fourth quarter of 2016. postage and delivery , legal fees and other noninterest expense all increased during 2016 to support the larger operations of the company . merger and conversion charges of $ 6.4 million in 2016 relate to the jaxb acquisition , compared with $ 8.0 million recorded in 2015 related to the merchants and branch acquisitions . credit resolution-related expenses decreased $ 11.5 million in 2016. during the second quarter of 2015 , the company recorded $ 11.2 million of pre-tax oreo write-downs and other credit resolution-related expenses related to an aggressive write-down on remaining non-performing assets in order to expedite their liquidation . income taxes income tax expense is influenced by the amount of taxable income , the amount of tax-exempt income and the amount of non-deductible expenses . for the year ended december 31 , 2017 , the company recorded income tax expense of approximately $ 50.7 million , compared with $ 33.1 million recorded in 2016 and $ 15.9 million recorded in 2015. the company 's effective tax rate was 40.8 % , 31.5 % and 28.0 % for the years ended december 31 , 2017 , 2016 and 2015 , respectively . income tax expense for the year ended includes a charge of approximately $ 13.6 million to income tax expense attributable to the remeasurement of the company 's deferred tax assets and deferred tax liabilities due to the recently enacted federal tax legislation that reduces the company 's future federal corporate tax rate . excluding this remeasurement charge , income tax expense for the year ended december 31 , 2017 would have been $ 37.1 million and the company 's effective tax rate would have been approximately 29.9 % . balance sheet comparison loans management believes that our loan portfolio is adequately diversified . the loan portfolio contains no foreign loans or significant concentrations in any one industry . as of december 31 , 2017 , approximately 65.2 % of our legacy loan portfolio was secured by real estate , reflecting a continuing reduction from 70.3 % at december 31 , 2016 and 79.8 % at december 31 , 2015 as the company continues to diversify its legacy loan portfolio . the amount of loans outstanding , excluding purchased loans , at the indicated dates is shown in the following table according to type of loans . replace_table_token_10_th the following table summarizes the various loan types comprising the `` commercial , financial and agricultural `` loan category displayed in the preceding table . replace_table_token_11_th 45 the following table provides additional disclosure on the various loan types comprising the subgroup “ real estate – commercial & farmland ” at december 31 , 2017 . replace_table_token_12_th the company seeks to diversify its loan portfolio across its geographic footprint and in various

liquidity and interest rate sensitivity liquidity management involves the matching of the cash flow requirements of customers , who may be either depositors desiring to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs , and the ability of our company to meet those needs . we seek to meet liquidity requirements primarily through management of short-term investments ( principally interest-bearing deposits in banks ) and monthly amortizing loans . another source of liquidity is the repayment of maturing single payment loans . in addition , our company maintains relationships with correspondent banks , including the fhlb and the federal reserve bank of atlanta , which could provide funds on short notice , if needed . a principal objective of our asset/liability management strategy is to minimize our exposure to changes in interest rates by matching the maturity and repricing horizons of interest-earning assets and interest-bearing liabilities . this strategy is overseen in part through the direction of our asset and liability committee ( the “ alco committee ” ) which establishes policies and monitors results to control interest rate sensitivity . as part of our interest rate risk management policy , the alco committee examines the extent to which its assets and liabilities are “ interest rate sensitive ” and monitors its interest rate-sensitivity “ gap. ” an asset or liability is considered to be interest rate sensitive if it will reprice or mature within the time period analyzed , usually one year or less . the interest rate-sensitivity gap is the difference between the interest-earning assets and interest-bearing liabilities scheduled to mature or reprice within such time period . a gap is considered positive when the amount of interest rate-sensitive assets exceeds the amount of interest rate-sensitive liabilities . a gap is considered negative when the amount of interest rate-sensitive liabilities exceeds the interest rate-sensitive assets .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we believe the following accounting policies applied by ameris represent critical accounting policies . allowance for loan losses we believe the allowance for loan losses is a critical accounting policy that requires the most significant judgments and estimates used in the preparation of our consolidated financial statements . the allowance for loan losses represents management 's estimate of probable incurred losses in the company 's loan portfolio . calculation of the allowance for loan losses represents a critical accounting estimate due to the significant judgment , assumptions and estimates related to the amount and timing of estimated losses , consideration of subjective environmental factors and the amount and timing of cash flows related to impaired loans . management believes that the allowance for loan losses is adequate . while management uses available information to recognize losses on loans , future additions to the allowance for loan losses may be necessary based on changes in economic conditions . in addition , various regulatory agencies , as an integral part of their examination processes , periodically review the company 's allowance for loan losses . such agencies may require the company to recognize additions to the allowance for loan losses based on their judgments about information available to them at the time of their examination . considering current information and events regarding a borrower 's ability to repay its obligations , management considers a loan to be impaired when the ultimate collectability of all amounts due , according to the contractual terms of the loan agreement , is in doubt . when a loan is considered to be impaired , the amount of impairment is measured based on the present value of expected future cash flows discounted at the loan 's effective interest rate or if the loan is collateral-dependent , the fair value of the collateral is used to determine the amount of impairment . impairment losses are included in the allowance for loan losses through a charge to the provision for loan losses . subsequent recoveries are credited to the allowance for loan losses . cash receipts for accruing loans are applied to principal and interest under the contractual terms of the loan agreement . cash receipts on impaired loans for which the accrual of interest has been discontinued are applied first to principal and then to interest income . certain economic and interest rate factors could have a material impact on the determination of the allowance for loan losses . an improving economy could result in the expansion of businesses and creation of jobs which would positively affect our loan growth and improve our gross revenue stream . conversely , certain factors could result from an expanding economy which could increase our credit costs and adversely impact our net earnings . a significant rapid rise in interest rates could create higher borrowing costs and shrinking corporate profits which could have a material impact on a borrower 's ability to pay . we will continue to concentrate on maintaining a high quality loan portfolio through strict administration of our loan policy . another factor that we have considered in the determination of the allowance for loan losses is loan concentrations to individual borrowers or industries . based on total committed exposure at december 31 , 2017 , we had six individual loans/lines of credit that exceeded our normal in-house credit limit of $ 30.0 million . total exposure from these six individual loans/lines of credit amounted to $ 258.5 million as of december 31 , 2017. the largest total committed exposure for a single loan/line of credit at december 31 , 2017 was $ 50.0 million , and we had three lines of credit at this level . all three of these $ 50.0 million lines of credit are extended to clients of our warehouse lending division . as of december 31 , 2017 , we had 11 relationships consisting of 32 loans/lines of credit that exceeded $ 30.0 million . total exposure from these 11 relationships amounted to $ 440.0 million as of december 31 , 2017. the largest total committed exposure for a single relationship at december 31 , 2017 was also $ 50.0 million , and we had three relationships at this level . all three of these $ 50.0 million relationships are clients of our warehouse lending division as well . additional disclosure concerning the company 's largest loan relationships is provided in the “ balance sheet comparison ” section below . a substantial portion of our loan portfolio is in the commercial real estate and residential real estate sectors . the majority of these loans are secured by real estate in our primary market areas . a substantial portion of oreo is located in those same 37 markets . therefore , the ultimate collectability of a substantial portion of our loan portfolio and the recoverability of a substantial portion of the carrying amount of oreo are susceptible to changes to market conditions in our primary market area . fair value accounting estimates gaap requires the use of fair values in determining the carrying values of certain assets and liabilities , as well as for specific disclosures . the most significant fair values used in determining carrying value include investment securities available for sale , loans held for sale , derivative financial instruments , impaired loans , oreo , and the net assets acquired in business combinations . certain of these assets do not have a readily available market to determine fair value and require an estimate based on specific parameters . when market prices are unavailable , we determine fair values utilizing estimates , which are constantly changing , including interest rates , duration , prepayment speeds and other specific conditions . in most cases , these specific parameters require a significant amount of judgment by management . at december 31 , 2017 , the percentage of the company 's assets measured at fair value was 13 % . story_separator_special_tag finance division . excluding these amounts , expenses in 2017 increased by $ 7.5 million , or 3.7 % , compared with 2016 levels . salaries and benefits increased $ 13.2 million , or 12.3 % , during 2017. the majority of this increase is attributable to $ 4.5 million in salary and benefit expense in the new premium finance division , $ 3.3 million in salary and benefit expense related to the strengthening of the company 's bsa department , and $ 2.3 million in additional salary and benefits in the retail mortgage division . exclusive of these three areas , salary and benefits increased $ 3.0 million , or 4.0 % . occupancy costs decreased $ 328,000 , or 1.3 % , during 2017 , principally as a result of management 's cost saving efforts during the year . data processing and it-related costs increased $ 3.3 million , or 13.3 % , in 2017 due to an increased number of accounts and products , as well as customer 's increased reliance on mobile and internet oriented products and services . other professional fees increased $ 5.6 million , or 66.1 % , in 2017 , primarily due to fees incurred in the premium finance division pursuant to the uspf management and license agreement . advertising and public relations and other noninterest expense increased during 2017 to support the larger operations of the company . merger and conversion charges of $ 915,000 in 2017 reflect a decrease of $ 5.5 million compared with $ 6.4 million recorded in 2016. merger and conversion charges were elevated in 2016 due to the acquisition of jaxb and conversion to our core system . credit resolution-related expenses decreased $ 2.7 million , or 43.4 % , in 2017 as credit quality continues to improve . 2016 compared with 2015 . operating expenses increased from $ 199.1 million in 2015 to $ 215.8 million in 2016. total expenses in 2016 include approximately $ 6.4 million in merger-related charges and $ 5.8 million in compliance-related charges , while total expenses in 2015 include approximately $ 8.0 million in merger-related charges . excluding these amounts , expenses in 2016 increased by only $ 12.6 million , or 6.6 % , compared with 2015 levels . salaries and benefits increased $ 12.8 million during 2016 , driven by $ 2.5 million associated with the company 's acquisition of jaxb in march 2016 and $ 8.2 million relating to higher compensation levels in the company 's mortgage and sba divisions . 44 occupancy costs increased $ 3.2 million , or 15.1 % , during 2016 , principally as a result of the increased number of retail branches operated during the year , as well as additional expenses for administrative offices . data processing and it-related costs increased $ 4.7 million , or 23.9 % , in 2016. growth in accounts associated with the acquisition of the jacksonville bank accounted for a portion of this increase , while the majority of the increase related to much higher online and mobile banking adoption . other professional fees increased $ 6.0 million in 2016 , mostly due to the compliance-related charges recorded in the fourth quarter of 2016. postage and delivery , legal fees and other noninterest expense all increased during 2016 to support the larger operations of the company . merger and conversion charges of $ 6.4 million in 2016 relate to the jaxb acquisition , compared with $ 8.0 million recorded in 2015 related to the merchants and branch acquisitions . credit resolution-related expenses decreased $ 11.5 million in 2016. during the second quarter of 2015 , the company recorded $ 11.2 million of pre-tax oreo write-downs and other credit resolution-related expenses related to an aggressive write-down on remaining non-performing assets in order to expedite their liquidation . income taxes income tax expense is influenced by the amount of taxable income , the amount of tax-exempt income and the amount of non-deductible expenses . for the year ended december 31 , 2017 , the company recorded income tax expense of approximately $ 50.7 million , compared with $ 33.1 million recorded in 2016 and $ 15.9 million recorded in 2015. the company 's effective tax rate was 40.8 % , 31.5 % and 28.0 % for the years ended december 31 , 2017 , 2016 and 2015 , respectively . income tax expense for the year ended includes a charge of approximately $ 13.6 million to income tax expense attributable to the remeasurement of the company 's deferred tax assets and deferred tax liabilities due to the recently enacted federal tax legislation that reduces the company 's future federal corporate tax rate . excluding this remeasurement charge , income tax expense for the year ended december 31 , 2017 would have been $ 37.1 million and the company 's effective tax rate would have been approximately 29.9 % . balance sheet comparison loans management believes that our loan portfolio is adequately diversified . the loan portfolio contains no foreign loans or significant concentrations in any one industry . as of december 31 , 2017 , approximately 65.2 % of our legacy loan portfolio was secured by real estate , reflecting a continuing reduction from 70.3 % at december 31 , 2016 and 79.8 % at december 31 , 2015 as the company continues to diversify its legacy loan portfolio . the amount of loans outstanding , excluding purchased loans , at the indicated dates is shown in the following table according to type of loans . replace_table_token_10_th the following table summarizes the various loan types comprising the `` commercial , financial and agricultural `` loan category displayed in the preceding table . replace_table_token_11_th 45 the following table provides additional disclosure on the various loan types comprising the subgroup “ real estate – commercial & farmland ” at december 31 , 2017 . replace_table_token_12_th the company seeks to diversify its loan portfolio across its geographic footprint and in various Narrative : liquidity and interest rate sensitivity liquidity management involves the matching of the cash flow requirements of customers , who may be either depositors desiring to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs , and the ability of our company to meet those needs . we seek to meet liquidity requirements primarily through management of short-term investments ( principally interest-bearing deposits in banks ) and monthly amortizing loans . another source of liquidity is the repayment of maturing single payment loans . in addition , our company maintains relationships with correspondent banks , including the fhlb and the federal reserve bank of atlanta , which could provide funds on short notice , if needed . a principal objective of our asset/liability management strategy is to minimize our exposure to changes in interest rates by matching the maturity and repricing horizons of interest-earning assets and interest-bearing liabilities . this strategy is overseen in part through the direction of our asset and liability committee ( the “ alco committee ” ) which establishes policies and monitors results to control interest rate sensitivity . as part of our interest rate risk management policy , the alco committee examines the extent to which its assets and liabilities are “ interest rate sensitive ” and monitors its interest rate-sensitivity “ gap. ” an asset or liability is considered to be interest rate sensitive if it will reprice or mature within the time period analyzed , usually one year or less . the interest rate-sensitivity gap is the difference between the interest-earning assets and interest-bearing liabilities scheduled to mature or reprice within such time period . a gap is considered positive when the amount of interest rate-sensitive assets exceeds the amount of interest rate-sensitive liabilities . a gap is considered negative when the amount of interest rate-sensitive liabilities exceeds the interest rate-sensitive assets .

with an ongoing commitment to corporate citizenship , the company has been named to the dow jones sustainability north america index for six consecutive years . fiscal 2017 performance reflected a higher gross profit in the grocery & snacks segment , offset by lower gross profits in the refrigerated & frozen , foodservice , and international segments . fiscal 2017 results were also impacted by lower sales volumes and the reduction of profits due to the divestitures of spicetec and jm swank in the first quarter of fiscal 2017. the improved operating performance reflected significantly lower selling , general and administrative ( `` sg & a `` ) expenses and lower interest expense , in each case compared to fiscal 2016. diluted earnings per share in fiscal 2017 was $ 1.46 , including earnings of $ 1.25 per diluted share from continuing operations and $ 0.21 per diluted share from discontinued operations . diluted loss per share in fiscal 2016 was $ 1.56 , including earnings of $ 0.29 per diluted share from continuing operations and a loss of $ 1.85 per diluted share from discontinued 18 operations . several significant items affect the comparability of year-over-year results of continuing operations ( see `` items impacting comparability `` below ) . in fiscal 2017 , we completed the spinoff of lamb weston holdings , inc. ( `` lamb weston `` ) through a distribution of 100 % of our interest in lamb weston to holders of outstanding shares of our common stock ( the `` spinoff `` ) . the transaction effecting this change was structured as a tax-free spinoff . we also completed several other acquisitions and divestitures during the year . see `` acquisitions `` below and `` divestitures and formation of ardent mills joint venture `` below . finally , we completed the relocation of our corporate headquarters to chicago , illinois in the first quarter of fiscal 2017. in the first quarter of fiscal 2017 , in anticipation of the spinoff , we reorganized our reporting segments . we now reflect our results of operations in five reporting segments : grocery & snacks , refrigerated & frozen , international , foodservice , and commercial . the results of operations for the lamb weston business have been reclassified to results of discontinued operations for all periods presented , and the assets and liabilities of the lamb weston business have been reclassified to assets and liabilities of discontinued operations for all periods prior to the spinoff . items impacting comparability items of note impacting comparability of results from continuing operations for fiscal 2017 included the following : charges totaling $ 304.2 million ( $ 257.7 million after-tax ) related to the impairment of goodwill and other intangible assets , gains totaling $ 197.4 million ( $ 68.4 million after-tax ) from the sales of the spicetec and jm swank businesses , charges totaling $ 93.3 million ( $ 60.2 million after-tax ) related to the early retirement of debt , charges totaling $ 63.6 million ( $ 41.4 million after-tax ) in connection with the `` scae plan `` ( as defined below ) , charges totaling $ 31.4 million ( $ 19.6 million after-tax ) , including an impairment charge of $ 27.6 million related to the production assets of the business , for the planned divestiture of the wesson ® oil business , charges totaling $ 13.8 million ( $ 8.5 million after-tax ) related to a pension lump sum settlement , a gain of $ 5.7 million ( $ 3.7 million after-tax ) in connection with a legacy legal matter , an income tax benefit of $ 91.3 million related to a tax adjustment of valuation allowance associated with the planned divestiture of the wesson ® oil business , and an income tax benefit of $ 14.6 million associated with a tax planning strategy that allowed us to utilize certain state tax attributes and certain foreign incentives . items of note impacting comparability of results from continuing operations for fiscal 2016 included the following : a charge of $ 348.5 million ( $ 215.1 million after-tax ) reflecting the year-end write-off of actuarial losses in excess of 10 % of our pension liability , charges totaling $ 281.8 million ( $ 178.2 million after-tax ) in connection with the `` scae plan `` , a charge of $ 50.1 million ( $ 31.6 million after-tax ) related to the impairment of the chef boyardee ® brand , charges of $ 23.9 million ( $ 15.4 million after-tax ) related to the repurchase of certain senior notes , a charge of $ 5.0 million ( $ 3.1 million after-tax ) in connection with a legacy legal matter , and income tax expense of $ 8.3 million related to legal entity changes for a business retained from private brands and a $ 2.7 million charge for the prior year implementation of a new tax position offset by the benefit of normal , recurring , income tax credits and deductions combined with a lower pre-tax level of earnings ( due in large part to the impact of the write-off of $ 348.5 million of actuarial losses under our method of accounting for pension benefits ) . 19 segment presentation of gains and losses from derivatives used for economic hedging of anticipated commodity input costs and economic hedging of foreign currency exchange rate risks of anticipated transactions is discussed in the segment review below . acquisitions in april 2017 , we acquired protein-based snacking businesses thanasi foods llc , maker of duke 's ® meat snacks , and bigs llc , maker of bigs ® seeds , for $ 217.6 million in cash , net of cash acquired , subject to a working capital adjustment ( the `` thanasi acquisition `` ) . story_separator_special_tag international incurred an operating loss for fiscal 2017 of $ 168.9 million and earned an operating profit of $ 66.7 million in fiscal 2016 . the operating loss in fiscal 2017 includes charges totaling $ 235.9 million for the impairment of goodwill and an intangible brand asset in our canadian and mexican operations . gross profits were $ 8.5 million lower in fiscal 2017 than in fiscal 2016 , driven by the impact of foreign exchange rates . operating profits were negatively impacted by $ 9.9 million from the impact of foreign exchange rates in fiscal 2017 relative to fiscal 2016 . 24 foodservice operating profit for fiscal 2017 was $ 105.1 million , an increase of $ 7.4 million , or 8 % , compared to fiscal 2016 . gross profits were $ 5.6 million lower in fiscal 2017 than in fiscal 2016 , driven by volume declines and product supply shortfalls . this was offset by an inventory write-down in fiscal 2016 at a foreign non-core popcorn business that we have since exited . operating profit of the foodservice segment was impacted by charges of $ 1.8 million in fiscal 2017 in connection with our restructuring plans . commercial operating profit was $ 202.6 million in fiscal 2017 and $ 45.4 million in fiscal 2016 . the company sold the spicetec and jm swank businesses in the first quarter of fiscal 2017 , recognizing pre-tax gains totaling $ 197.4 million . the spicetec and jm swank businesses comprise the entire commercial segment following the presentation of lamb weston as discontinued operations . there are no further operations in the commercial segment . interest expense , net in fiscal 2017 , net interest expense was $ 195.5 million , a decrease of $ 100.3 million , or 34 % , from fiscal 2016 . the decrease reflects the repayment of $ 2.2 billion , $ 550 million , and $ 473 million of debt in the third quarter of fiscal 2016 , the first quarter of fiscal 2017 , and the third quarter of fiscal 2017 , respectively , as well as the exchange of $ 1.4 billion of debt in connection with the spinoff of lamb weston during the second quarter of 2017. for more information about the debt exchange , please see note 6 `` discontinued operations and other divestitures `` to the consolidated financial statements contained in this report . income taxes our income tax expense was $ 254.7 million and $ 46.4 million in fiscal 2017 and 2016 , respectively . the effective tax rate ( calculated as the ratio of income tax expense to pre-tax income from continuing operations , inclusive of equity method investment earnings ) was approximately 32 % and 27 % for fiscal 2017 and 2016 , respectively . the effective tax rate in fiscal 2017 reflects the following : additional tax expense associated with non-deductible goodwill sold in connection with the divestitures of the spicetec and jm swank businesses , additional tax expense associated with non-deductible goodwill in our mexican and canadian businesses , for which an impairment charge was recognized , an income tax benefit for the adjustment of a valuation allowance associated with the planned divestiture of the wesson ® oil business , an income tax benefit for excess tax benefits allowed upon the vesting/exercise of employee stock compensation awards by our employees , beyond that which is attributable to the original fair value of the awards upon the date of grant , and an income tax benefit associated with a tax planning strategy that allowed us to utilize certain state tax attributes and certain foreign incentives . the effective tax rate in fiscal 2016 reflects the following : additional tax expense related to legal entity changes for a business retained from the private brands business , a charge for the prior year implementation of a new tax position , and an income tax benefit of normal , recurring , income tax credits and deductions combined with a lower pre-tax level of earnings ( due in large part to the impact of the write-off of $ 348.5 million of actuarial losses under our method of accounting for pension benefits ) . we expect our effective tax rate in fiscal 2018 , exclusive of any unusual transactions or tax events , to be approximately 32.5 % -33.5 % . 25 equity method investment earnings we include our share of the earnings of certain affiliates based on our economic ownership interest in the affiliates . our most significant affiliate is the ardent mills joint venture . our share of earnings from our equity method investment earnings were $ 71.2 million and $ 66.1 million for fiscal 2017 and 2016 , respectively . the increases are reflective of higher profits from the ardent mills joint venture due to more favorable wheat market conditions as well as improved operational effectiveness . results of discontinued operations our discontinued operations generated after-tax income of $ 102.0 million in fiscal 2017 and an after-tax loss of $ 794.4 million in fiscal 2016. results reflected the operations of lamb weston through the date of its spinoff in november 2016 , as well as the results of the private brands business prior to its divestiture in the second half of fiscal 2016. we incurred significant costs associated with effecting the spinoff . these costs are included in results of discontinued operations . we recognized a pre-tax charge of $ 1.92 billion ( $ 1.44 billion after-tax ) in fiscal 2016 , to write-down the goodwill and long-lived assets of the private brands business to the final sales price , less costs to sell , and to recognize the final loss . earnings ( loss ) per share diluted earnings per share in fiscal 2017 was $ 1.46 , including earnings of $ 1.25 per diluted share from continuing operations and $ 0.21 per diluted share from discontinued operations . diluted loss per share in fiscal 2016 was

liquidity and capital resources sources of liquidity and capital the primary objective of our financing strategy is to maintain a prudent capital structure that provides us flexibility to pursue our growth objectives . if necessary , we use short-term debt principally to finance ongoing operations , including our seasonal requirements for working capital and a combination of equity and long-term debt to finance both our base working capital needs and our non-current assets . we are committed to maintaining an investment grade credit rating . during fiscal 2017 , we entered into a revolving credit agreement ( the `` credit agreement '' ) with a syndicate of financial institutions that provides for an unsecured revolving credit facility in a maximum aggregate principal amount outstanding at any one time of $ 1.25 billion ( subject to increase to a maximum aggregate principal amount of $ 1.75 billion with the consent of the lenders ) . this revolving credit facility replaced our existing revolving credit facility . we have historically used a credit facility principally as a back-up for our commercial paper program . as of may 28 , 2017 , there were no outstanding borrowings under the facility . the credit agreement contains customary affirmative and negative covenants for unsecured investment grade credit facilities of this type . it generally requires our ratio of ebitda ( earnings before interest , taxes , depreciation and amortization ) to interest expense to be not less than 3.0 to 1.0 and our ratio of funded debt to ebitda to be not greater than 3.75 to 1.0 ( provided that such ratio may be increased at the option of the company in connection with a material transaction ) , with each ratio to be calculated on a rolling four-quarter basis . as of may 28 , 2017 , we were in compliance with all financial covenants under the credit agreement . 29 as of may 28 , 2017 , we had $ 26.2 million outstanding under our commercial paper program . the highest level of borrowings during fiscal 2017 was $ 65.0 million .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. with an ongoing commitment to corporate citizenship , the company has been named to the dow jones sustainability north america index for six consecutive years . fiscal 2017 performance reflected a higher gross profit in the grocery & snacks segment , offset by lower gross profits in the refrigerated & frozen , foodservice , and international segments . fiscal 2017 results were also impacted by lower sales volumes and the reduction of profits due to the divestitures of spicetec and jm swank in the first quarter of fiscal 2017. the improved operating performance reflected significantly lower selling , general and administrative ( `` sg & a `` ) expenses and lower interest expense , in each case compared to fiscal 2016. diluted earnings per share in fiscal 2017 was $ 1.46 , including earnings of $ 1.25 per diluted share from continuing operations and $ 0.21 per diluted share from discontinued operations . diluted loss per share in fiscal 2016 was $ 1.56 , including earnings of $ 0.29 per diluted share from continuing operations and a loss of $ 1.85 per diluted share from discontinued 18 operations . several significant items affect the comparability of year-over-year results of continuing operations ( see `` items impacting comparability `` below ) . in fiscal 2017 , we completed the spinoff of lamb weston holdings , inc. ( `` lamb weston `` ) through a distribution of 100 % of our interest in lamb weston to holders of outstanding shares of our common stock ( the `` spinoff `` ) . the transaction effecting this change was structured as a tax-free spinoff . we also completed several other acquisitions and divestitures during the year . see `` acquisitions `` below and `` divestitures and formation of ardent mills joint venture `` below . finally , we completed the relocation of our corporate headquarters to chicago , illinois in the first quarter of fiscal 2017. in the first quarter of fiscal 2017 , in anticipation of the spinoff , we reorganized our reporting segments . we now reflect our results of operations in five reporting segments : grocery & snacks , refrigerated & frozen , international , foodservice , and commercial . the results of operations for the lamb weston business have been reclassified to results of discontinued operations for all periods presented , and the assets and liabilities of the lamb weston business have been reclassified to assets and liabilities of discontinued operations for all periods prior to the spinoff . items impacting comparability items of note impacting comparability of results from continuing operations for fiscal 2017 included the following : charges totaling $ 304.2 million ( $ 257.7 million after-tax ) related to the impairment of goodwill and other intangible assets , gains totaling $ 197.4 million ( $ 68.4 million after-tax ) from the sales of the spicetec and jm swank businesses , charges totaling $ 93.3 million ( $ 60.2 million after-tax ) related to the early retirement of debt , charges totaling $ 63.6 million ( $ 41.4 million after-tax ) in connection with the `` scae plan `` ( as defined below ) , charges totaling $ 31.4 million ( $ 19.6 million after-tax ) , including an impairment charge of $ 27.6 million related to the production assets of the business , for the planned divestiture of the wesson ® oil business , charges totaling $ 13.8 million ( $ 8.5 million after-tax ) related to a pension lump sum settlement , a gain of $ 5.7 million ( $ 3.7 million after-tax ) in connection with a legacy legal matter , an income tax benefit of $ 91.3 million related to a tax adjustment of valuation allowance associated with the planned divestiture of the wesson ® oil business , and an income tax benefit of $ 14.6 million associated with a tax planning strategy that allowed us to utilize certain state tax attributes and certain foreign incentives . items of note impacting comparability of results from continuing operations for fiscal 2016 included the following : a charge of $ 348.5 million ( $ 215.1 million after-tax ) reflecting the year-end write-off of actuarial losses in excess of 10 % of our pension liability , charges totaling $ 281.8 million ( $ 178.2 million after-tax ) in connection with the `` scae plan `` , a charge of $ 50.1 million ( $ 31.6 million after-tax ) related to the impairment of the chef boyardee ® brand , charges of $ 23.9 million ( $ 15.4 million after-tax ) related to the repurchase of certain senior notes , a charge of $ 5.0 million ( $ 3.1 million after-tax ) in connection with a legacy legal matter , and income tax expense of $ 8.3 million related to legal entity changes for a business retained from private brands and a $ 2.7 million charge for the prior year implementation of a new tax position offset by the benefit of normal , recurring , income tax credits and deductions combined with a lower pre-tax level of earnings ( due in large part to the impact of the write-off of $ 348.5 million of actuarial losses under our method of accounting for pension benefits ) . 19 segment presentation of gains and losses from derivatives used for economic hedging of anticipated commodity input costs and economic hedging of foreign currency exchange rate risks of anticipated transactions is discussed in the segment review below . acquisitions in april 2017 , we acquired protein-based snacking businesses thanasi foods llc , maker of duke 's ® meat snacks , and bigs llc , maker of bigs ® seeds , for $ 217.6 million in cash , net of cash acquired , subject to a working capital adjustment ( the `` thanasi acquisition `` ) . story_separator_special_tag international incurred an operating loss for fiscal 2017 of $ 168.9 million and earned an operating profit of $ 66.7 million in fiscal 2016 . the operating loss in fiscal 2017 includes charges totaling $ 235.9 million for the impairment of goodwill and an intangible brand asset in our canadian and mexican operations . gross profits were $ 8.5 million lower in fiscal 2017 than in fiscal 2016 , driven by the impact of foreign exchange rates . operating profits were negatively impacted by $ 9.9 million from the impact of foreign exchange rates in fiscal 2017 relative to fiscal 2016 . 24 foodservice operating profit for fiscal 2017 was $ 105.1 million , an increase of $ 7.4 million , or 8 % , compared to fiscal 2016 . gross profits were $ 5.6 million lower in fiscal 2017 than in fiscal 2016 , driven by volume declines and product supply shortfalls . this was offset by an inventory write-down in fiscal 2016 at a foreign non-core popcorn business that we have since exited . operating profit of the foodservice segment was impacted by charges of $ 1.8 million in fiscal 2017 in connection with our restructuring plans . commercial operating profit was $ 202.6 million in fiscal 2017 and $ 45.4 million in fiscal 2016 . the company sold the spicetec and jm swank businesses in the first quarter of fiscal 2017 , recognizing pre-tax gains totaling $ 197.4 million . the spicetec and jm swank businesses comprise the entire commercial segment following the presentation of lamb weston as discontinued operations . there are no further operations in the commercial segment . interest expense , net in fiscal 2017 , net interest expense was $ 195.5 million , a decrease of $ 100.3 million , or 34 % , from fiscal 2016 . the decrease reflects the repayment of $ 2.2 billion , $ 550 million , and $ 473 million of debt in the third quarter of fiscal 2016 , the first quarter of fiscal 2017 , and the third quarter of fiscal 2017 , respectively , as well as the exchange of $ 1.4 billion of debt in connection with the spinoff of lamb weston during the second quarter of 2017. for more information about the debt exchange , please see note 6 `` discontinued operations and other divestitures `` to the consolidated financial statements contained in this report . income taxes our income tax expense was $ 254.7 million and $ 46.4 million in fiscal 2017 and 2016 , respectively . the effective tax rate ( calculated as the ratio of income tax expense to pre-tax income from continuing operations , inclusive of equity method investment earnings ) was approximately 32 % and 27 % for fiscal 2017 and 2016 , respectively . the effective tax rate in fiscal 2017 reflects the following : additional tax expense associated with non-deductible goodwill sold in connection with the divestitures of the spicetec and jm swank businesses , additional tax expense associated with non-deductible goodwill in our mexican and canadian businesses , for which an impairment charge was recognized , an income tax benefit for the adjustment of a valuation allowance associated with the planned divestiture of the wesson ® oil business , an income tax benefit for excess tax benefits allowed upon the vesting/exercise of employee stock compensation awards by our employees , beyond that which is attributable to the original fair value of the awards upon the date of grant , and an income tax benefit associated with a tax planning strategy that allowed us to utilize certain state tax attributes and certain foreign incentives . the effective tax rate in fiscal 2016 reflects the following : additional tax expense related to legal entity changes for a business retained from the private brands business , a charge for the prior year implementation of a new tax position , and an income tax benefit of normal , recurring , income tax credits and deductions combined with a lower pre-tax level of earnings ( due in large part to the impact of the write-off of $ 348.5 million of actuarial losses under our method of accounting for pension benefits ) . we expect our effective tax rate in fiscal 2018 , exclusive of any unusual transactions or tax events , to be approximately 32.5 % -33.5 % . 25 equity method investment earnings we include our share of the earnings of certain affiliates based on our economic ownership interest in the affiliates . our most significant affiliate is the ardent mills joint venture . our share of earnings from our equity method investment earnings were $ 71.2 million and $ 66.1 million for fiscal 2017 and 2016 , respectively . the increases are reflective of higher profits from the ardent mills joint venture due to more favorable wheat market conditions as well as improved operational effectiveness . results of discontinued operations our discontinued operations generated after-tax income of $ 102.0 million in fiscal 2017 and an after-tax loss of $ 794.4 million in fiscal 2016. results reflected the operations of lamb weston through the date of its spinoff in november 2016 , as well as the results of the private brands business prior to its divestiture in the second half of fiscal 2016. we incurred significant costs associated with effecting the spinoff . these costs are included in results of discontinued operations . we recognized a pre-tax charge of $ 1.92 billion ( $ 1.44 billion after-tax ) in fiscal 2016 , to write-down the goodwill and long-lived assets of the private brands business to the final sales price , less costs to sell , and to recognize the final loss . earnings ( loss ) per share diluted earnings per share in fiscal 2017 was $ 1.46 , including earnings of $ 1.25 per diluted share from continuing operations and $ 0.21 per diluted share from discontinued operations . diluted loss per share in fiscal 2016 was Narrative : liquidity and capital resources sources of liquidity and capital the primary objective of our financing strategy is to maintain a prudent capital structure that provides us flexibility to pursue our growth objectives . if necessary , we use short-term debt principally to finance ongoing operations , including our seasonal requirements for working capital and a combination of equity and long-term debt to finance both our base working capital needs and our non-current assets . we are committed to maintaining an investment grade credit rating . during fiscal 2017 , we entered into a revolving credit agreement ( the `` credit agreement '' ) with a syndicate of financial institutions that provides for an unsecured revolving credit facility in a maximum aggregate principal amount outstanding at any one time of $ 1.25 billion ( subject to increase to a maximum aggregate principal amount of $ 1.75 billion with the consent of the lenders ) . this revolving credit facility replaced our existing revolving credit facility . we have historically used a credit facility principally as a back-up for our commercial paper program . as of may 28 , 2017 , there were no outstanding borrowings under the facility . the credit agreement contains customary affirmative and negative covenants for unsecured investment grade credit facilities of this type . it generally requires our ratio of ebitda ( earnings before interest , taxes , depreciation and amortization ) to interest expense to be not less than 3.0 to 1.0 and our ratio of funded debt to ebitda to be not greater than 3.75 to 1.0 ( provided that such ratio may be increased at the option of the company in connection with a material transaction ) , with each ratio to be calculated on a rolling four-quarter basis . as of may 28 , 2017 , we were in compliance with all financial covenants under the credit agreement . 29 as of may 28 , 2017 , we had $ 26.2 million outstanding under our commercial paper program . the highest level of borrowings during fiscal 2017 was $ 65.0 million .

if one or more of the factors affecting our forward looking information and statements proves incorrect , then our actual results , performance or achievements could differ materially from those expressed in , or implied by , forward looking information and statements contained in this report . you should not place undue reliance on our forward looking information and statements . we will not update the forward looking statements to reflect actual results or changes in the factors affecting the forward looking statements . general the company is a growth oriented , one-bank holding company headquartered in bethesda , maryland . the company provides general commercial and consumer banking services through the bank , its wholly owned banking subsidiary , a maryland chartered bank , which is a member of the federal reserve system . the company was organized in october 1997 , to be the holding company for the bank . the bank was organized as an independent , community oriented , full service banking alternative to the super regional financial institutions , which dominate the primary market area . the company 's philosophy is to provide superior , personalized service to its customers . the company focuses on relationship banking , providing each customer with a number of services , becoming familiar with and addressing customer needs in a proactive , personalized fashion . the bank currently has a total of seventeen branch offices , including seven offices serving montgomery county , maryland , five offices in the district of columbia and five offices in arlington and fairfax counties in virginia . the company has announced plans to open an additional office in alexandria , virginia , which is expected to open in march 2013. the company offers a broad range of commercial banking services to its business and professional clients as well as full service consumer banking services to individuals living and or working primarily in the bank 's market area . the company emphasizes providing commercial banking services to sole proprietors , small and medium-sized businesses , partnerships , corporations , non-profit organizations and associations , and investors living and working in and near the primary service area . these services include the usual deposit functions of commercial banks , including business and personal checking accounts , `` now `` accounts and money market and savings accounts , business , construction , and commercial loans , residential mortgages and consumer loans , and cash management services . the bank is also active in the origination and sale of residential mortgage loans and the origination of small business loans . the residential mortgage loans are originated for sale to third-party investors , generally large mortgage and banking companies , under firm commitments by the investors to purchase the loans subject to compliance with pre-established investor criteria . additionally , the company is active in the origination of small business administration ( `` sba `` ) loans . the company generally sells the insured portion of the sba loan generating noninterest income from the gains on sale , as well as servicing income on the portion participated . bethesda leasing , llc , a subsidiary of the bank , holds title to and manages other real estate owned ( `` oreo `` ) assets . eagle insurance services , llc , a subsidiary of the bank , offers access to insurance products and services through a referral program with a third party insurance broker . additionally , the bank offers investment advisory services through a referral program with a third party . ecv , a subsidiary of the company , provides subordinated financing for the acquisition , development and construction of real estate projects . this lending involves higher levels of risk , together with commensurate expected returns . throughout 2012 , generally weak economic conditions persisted in the u.s. economy and worldwide , with u.s. unemployment levels remaining high , although some improvement occurred ; real estate values remaining a concern , persistent higher than normal levels of home foreclosures , and personal income levels rising only modestly . additionally , significant continued gridlock in washington d.c. politics over concerns of public debt and deficits , tax policy and spending levels added a heighted level of business 38 uncertainty to everyday economic activity . average interest rates declined for a second straight year in 2012 , in part due to the federal reserve 's continued quantitative easing programs involving large purchases of u.s. treasury and mortgaged backed securities . these purchases served to keep residential mortgage interest rates at all-time lows , in the hope that more homeowners might benefit from refinancing existing home mortgages . generally speaking , the company 's primary market , the washington , d.c. metropolitan area , has been relatively less impacted by recessionary type forces than other parts of the country , due in part to the significant economic impact of the federal government , a highly educated work force and a diverse economy . during 2012 , the company 's enhanced its marketplace positioning by remaining proactive in growing client relationships , expanding its branch presence in the northern virginia area , and by the continued addition of experienced lending and sales personnel . the company has had the financial resources and has remained committed to meeting the credit needs of its community , resulting in continued growth in its loan portfolio during 2012. furthermore , the company 's capital position was enhanced in 2012 by successful completion of common stock offerings providing net proceeds of approximately $ 43 million . the company believes its strategies of remaining growth oriented and seeking quality lending and deposit relationships during the difficult economic times of the past few years have proven successful and is evidenced in its financial and performance ratios . additionally , the company believes such focus and strategy of relationship building has fostered future growth opportunities . story_separator_special_tag 42 earning assets is due primarily to a large increase in average loans held for sale . for the year ended december 31 , 2012 , as compared to the same period in 2011 , average loans held for sale , increased $ 77 million , a 122 % increase . the increase in average loans for the year ended december 31 , 2012 as compared to the same period in 2011 is primarily attributable to growth in loans for both investor commercial real estate and construction . increases in average deposits for the year ended december 31 , 2012 , as compared to the same period in 2011 , is attributable to growth in noninterest bearing demand deposits , and money market accounts . average investment securities for the year ended december 31 , 2012 and 2011 amounted to 11 % of average earning assets . the combination of federal funds sold , interest bearing deposits with other banks and loans held for sale , averaged 12 % of average earning assets for the year ended december 31 , 2012 as compared to 13 % for the same period in 2011. for the three months ended december 31 , 2012 , average loans were 76 % of average earning assets as compared to 66 % ( 76 % excluding the effect of the settlement deposit ) for the same period in 2011. average loans increased $ 411 million ( 20 % ) and average deposits increased $ 96 million ( 4 % ) ( $ 493 million and 22 % excluding the effect of the settlement deposit ) , during the three months ended december 31 , 2012 as compared to the same quarter of 2011. the increase in average loans in the fourth quarter of 2012 as compared to the fourth quarter of 2011 is primarily attributable to growth in construction loans . increases in average deposits in the fourth quarter of 2012 , as compared to the fourth quarter of 2011 , is attributable to growth in money market accounts . average investment securities for the three months ended december 31 , 2012 and 2011 amounted to 10 % of average earning assets . the combination of federal funds sold , interest bearing deposits with other banks and loans held for sale , averaged 14 % of average earning assets for the three months ended december 31 , 2012 as compared to 24 % for the same period in 2011 ( 13 % excluding the effect of the settlement deposit ) . the provision for credit losses was $ 16.2 million for the year of 2012 as compared to $ 11.0 million in 2011. at december 31 , 2012 the allowance for credit losses represented 1.50 % of loans outstanding , as compared to 1.44 % at december 31 , 2011. the allowance for credit losses represented 122 % of nonperforming loans at december 31 , 2012 , as compared to 90 % at december 31 , 2011. the higher provisioning in 2012 as compared to 2011 is attributable to the change in loan mix , higher reserves for classified loans , loan growth , and higher net charge-offs in the twelve months of 2012 compared to 2011. for the twelve months ended december 31 , 2012 , net charge-offs totaled $ 8.4 million ( 0.37 % of average loans ) compared to $ 6.1 million ( 0.32 % of average loans ) for the twelve months ended december 31 , 2011. net charge-offs in the twelve months ended december 31 , 2012 were primarily attributable to commercial and industrial loans ( $ 3.1 million ) , construction loans ( $ 2.5 million ) , commercial real estate loans ( $ 1.2 million ) , home equity and consumer loans ( $ 970 thousand ) , owner occupied real estate ( $ 350 thousand ) and the unguaranteed portion of sba loans ( $ 248 thousand ) . for the three months ended december 31 , 2012 , the provision for credit losses was $ 4.1 million as compared to $ 2.8 million for the three months ended december 31 , 2011. the higher provisioning in the fourth quarter of 2012 , as compared to the fourth quarter of 2011 , is due to change in loan mix , loan growth and higher net charge-offs . net charge-offs of $ 2.2 million in the fourth quarter of 2012 represented 0.37 % of average loans as compared to $ 1.7 million or 0.34 % of average loans in the fourth quarter of 2011. net charge-offs in the fourth quarter of 2012 were primarily attributable to commercial and industrial loans ( $ 1.4 million ) , construction loans ( $ 459 thousand ) , home equity and consumer loans ( $ 195 thousand ) , and the unguaranteed portion of sba loans ( $ 111 thousand ) . total noninterest income for the twelve months of 2012 was $ 21.4 million compared to $ 13.5 million in 2011 , an increase of 58 % . this increase was due primarily to an $ 8.0 million increase in gains realized on the sale of residential mortgage loans . service charges on deposit accounts increased $ 619 thousand in 2012 as compared to 2011 , a 19 % increase . other noninterest income increased by $ 652 thousand primarily due to other loan income and atm fees . investment securities gains were $ 690 thousand for the twelve months in 2012 as compared to $ 1.4 million for the same period in 2011. a $ 529 thousand loss on the early extinguishment of debt was realized in 2012 due to restructuring of fhlb advances . excluding 43 investment securities gains and the loss on the early extinguishment of debt , total noninterest income was $ 21.2 million for the twelve months of 2012 as compared to $ 12.1 million for 2011 , a 76 % increase . total noninterest income for

capital resources and adequacy the assessment of capital adequacy depends on a number of factors such as asset quality and mix , liquidity , earnings performance , changing competitive conditions and economic forces , regulatory measures and policy , as well as the overall level of growth and complexity of the balance sheet . the adequacy of the company 's current and future capital needs is monitored by management and discussed with alco on an ongoing basis . management seeks to maintain a capital structure that will assure an adequate level of capital to support anticipated asset growth and to absorb potential losses . the federal banking regulators have issued guidance for those institutions which are deemed to have concentrations in commercial real estate lending . pursuant to the supervisory criteria contained in the guidance for identifying institutions with a potential commercial real estate concentration risk , institutions which have ( 1 ) total reported loans for construction , land development , and other land acquisitions which represent in total 100 % or more of an institution 's total risk-based capital ; or ( 2 ) total commercial real estate loans representing 300 % or more of the institution 's total risk-based capital and the institution 's commercial real estate loan portfolio has increased 50 % or more during the prior 36 months are identified as having potential commercial real estate concentration risk . institutions which are deemed to have concentrations in commercial real estate lending are expected to employ heightened levels of risk management with respect to their commercial real estate portfolios , and may be required to hold higher 72 levels of capital . the company , like many community banks , has a concentration in commercial real estate loans , and the company has experienced significant growth in its commercial real estate portfolio in recent years . at december 31 , 2012 , non-owner-occupied commercial real estate loans ( including construction , land and land development loans ) represent 407 % of total risk based capital . construction , land and land development loans represent 153 % of total risk based capital .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. if one or more of the factors affecting our forward looking information and statements proves incorrect , then our actual results , performance or achievements could differ materially from those expressed in , or implied by , forward looking information and statements contained in this report . you should not place undue reliance on our forward looking information and statements . we will not update the forward looking statements to reflect actual results or changes in the factors affecting the forward looking statements . general the company is a growth oriented , one-bank holding company headquartered in bethesda , maryland . the company provides general commercial and consumer banking services through the bank , its wholly owned banking subsidiary , a maryland chartered bank , which is a member of the federal reserve system . the company was organized in october 1997 , to be the holding company for the bank . the bank was organized as an independent , community oriented , full service banking alternative to the super regional financial institutions , which dominate the primary market area . the company 's philosophy is to provide superior , personalized service to its customers . the company focuses on relationship banking , providing each customer with a number of services , becoming familiar with and addressing customer needs in a proactive , personalized fashion . the bank currently has a total of seventeen branch offices , including seven offices serving montgomery county , maryland , five offices in the district of columbia and five offices in arlington and fairfax counties in virginia . the company has announced plans to open an additional office in alexandria , virginia , which is expected to open in march 2013. the company offers a broad range of commercial banking services to its business and professional clients as well as full service consumer banking services to individuals living and or working primarily in the bank 's market area . the company emphasizes providing commercial banking services to sole proprietors , small and medium-sized businesses , partnerships , corporations , non-profit organizations and associations , and investors living and working in and near the primary service area . these services include the usual deposit functions of commercial banks , including business and personal checking accounts , `` now `` accounts and money market and savings accounts , business , construction , and commercial loans , residential mortgages and consumer loans , and cash management services . the bank is also active in the origination and sale of residential mortgage loans and the origination of small business loans . the residential mortgage loans are originated for sale to third-party investors , generally large mortgage and banking companies , under firm commitments by the investors to purchase the loans subject to compliance with pre-established investor criteria . additionally , the company is active in the origination of small business administration ( `` sba `` ) loans . the company generally sells the insured portion of the sba loan generating noninterest income from the gains on sale , as well as servicing income on the portion participated . bethesda leasing , llc , a subsidiary of the bank , holds title to and manages other real estate owned ( `` oreo `` ) assets . eagle insurance services , llc , a subsidiary of the bank , offers access to insurance products and services through a referral program with a third party insurance broker . additionally , the bank offers investment advisory services through a referral program with a third party . ecv , a subsidiary of the company , provides subordinated financing for the acquisition , development and construction of real estate projects . this lending involves higher levels of risk , together with commensurate expected returns . throughout 2012 , generally weak economic conditions persisted in the u.s. economy and worldwide , with u.s. unemployment levels remaining high , although some improvement occurred ; real estate values remaining a concern , persistent higher than normal levels of home foreclosures , and personal income levels rising only modestly . additionally , significant continued gridlock in washington d.c. politics over concerns of public debt and deficits , tax policy and spending levels added a heighted level of business 38 uncertainty to everyday economic activity . average interest rates declined for a second straight year in 2012 , in part due to the federal reserve 's continued quantitative easing programs involving large purchases of u.s. treasury and mortgaged backed securities . these purchases served to keep residential mortgage interest rates at all-time lows , in the hope that more homeowners might benefit from refinancing existing home mortgages . generally speaking , the company 's primary market , the washington , d.c. metropolitan area , has been relatively less impacted by recessionary type forces than other parts of the country , due in part to the significant economic impact of the federal government , a highly educated work force and a diverse economy . during 2012 , the company 's enhanced its marketplace positioning by remaining proactive in growing client relationships , expanding its branch presence in the northern virginia area , and by the continued addition of experienced lending and sales personnel . the company has had the financial resources and has remained committed to meeting the credit needs of its community , resulting in continued growth in its loan portfolio during 2012. furthermore , the company 's capital position was enhanced in 2012 by successful completion of common stock offerings providing net proceeds of approximately $ 43 million . the company believes its strategies of remaining growth oriented and seeking quality lending and deposit relationships during the difficult economic times of the past few years have proven successful and is evidenced in its financial and performance ratios . additionally , the company believes such focus and strategy of relationship building has fostered future growth opportunities . story_separator_special_tag 42 earning assets is due primarily to a large increase in average loans held for sale . for the year ended december 31 , 2012 , as compared to the same period in 2011 , average loans held for sale , increased $ 77 million , a 122 % increase . the increase in average loans for the year ended december 31 , 2012 as compared to the same period in 2011 is primarily attributable to growth in loans for both investor commercial real estate and construction . increases in average deposits for the year ended december 31 , 2012 , as compared to the same period in 2011 , is attributable to growth in noninterest bearing demand deposits , and money market accounts . average investment securities for the year ended december 31 , 2012 and 2011 amounted to 11 % of average earning assets . the combination of federal funds sold , interest bearing deposits with other banks and loans held for sale , averaged 12 % of average earning assets for the year ended december 31 , 2012 as compared to 13 % for the same period in 2011. for the three months ended december 31 , 2012 , average loans were 76 % of average earning assets as compared to 66 % ( 76 % excluding the effect of the settlement deposit ) for the same period in 2011. average loans increased $ 411 million ( 20 % ) and average deposits increased $ 96 million ( 4 % ) ( $ 493 million and 22 % excluding the effect of the settlement deposit ) , during the three months ended december 31 , 2012 as compared to the same quarter of 2011. the increase in average loans in the fourth quarter of 2012 as compared to the fourth quarter of 2011 is primarily attributable to growth in construction loans . increases in average deposits in the fourth quarter of 2012 , as compared to the fourth quarter of 2011 , is attributable to growth in money market accounts . average investment securities for the three months ended december 31 , 2012 and 2011 amounted to 10 % of average earning assets . the combination of federal funds sold , interest bearing deposits with other banks and loans held for sale , averaged 14 % of average earning assets for the three months ended december 31 , 2012 as compared to 24 % for the same period in 2011 ( 13 % excluding the effect of the settlement deposit ) . the provision for credit losses was $ 16.2 million for the year of 2012 as compared to $ 11.0 million in 2011. at december 31 , 2012 the allowance for credit losses represented 1.50 % of loans outstanding , as compared to 1.44 % at december 31 , 2011. the allowance for credit losses represented 122 % of nonperforming loans at december 31 , 2012 , as compared to 90 % at december 31 , 2011. the higher provisioning in 2012 as compared to 2011 is attributable to the change in loan mix , higher reserves for classified loans , loan growth , and higher net charge-offs in the twelve months of 2012 compared to 2011. for the twelve months ended december 31 , 2012 , net charge-offs totaled $ 8.4 million ( 0.37 % of average loans ) compared to $ 6.1 million ( 0.32 % of average loans ) for the twelve months ended december 31 , 2011. net charge-offs in the twelve months ended december 31 , 2012 were primarily attributable to commercial and industrial loans ( $ 3.1 million ) , construction loans ( $ 2.5 million ) , commercial real estate loans ( $ 1.2 million ) , home equity and consumer loans ( $ 970 thousand ) , owner occupied real estate ( $ 350 thousand ) and the unguaranteed portion of sba loans ( $ 248 thousand ) . for the three months ended december 31 , 2012 , the provision for credit losses was $ 4.1 million as compared to $ 2.8 million for the three months ended december 31 , 2011. the higher provisioning in the fourth quarter of 2012 , as compared to the fourth quarter of 2011 , is due to change in loan mix , loan growth and higher net charge-offs . net charge-offs of $ 2.2 million in the fourth quarter of 2012 represented 0.37 % of average loans as compared to $ 1.7 million or 0.34 % of average loans in the fourth quarter of 2011. net charge-offs in the fourth quarter of 2012 were primarily attributable to commercial and industrial loans ( $ 1.4 million ) , construction loans ( $ 459 thousand ) , home equity and consumer loans ( $ 195 thousand ) , and the unguaranteed portion of sba loans ( $ 111 thousand ) . total noninterest income for the twelve months of 2012 was $ 21.4 million compared to $ 13.5 million in 2011 , an increase of 58 % . this increase was due primarily to an $ 8.0 million increase in gains realized on the sale of residential mortgage loans . service charges on deposit accounts increased $ 619 thousand in 2012 as compared to 2011 , a 19 % increase . other noninterest income increased by $ 652 thousand primarily due to other loan income and atm fees . investment securities gains were $ 690 thousand for the twelve months in 2012 as compared to $ 1.4 million for the same period in 2011. a $ 529 thousand loss on the early extinguishment of debt was realized in 2012 due to restructuring of fhlb advances . excluding 43 investment securities gains and the loss on the early extinguishment of debt , total noninterest income was $ 21.2 million for the twelve months of 2012 as compared to $ 12.1 million for 2011 , a 76 % increase . total noninterest income for Narrative : capital resources and adequacy the assessment of capital adequacy depends on a number of factors such as asset quality and mix , liquidity , earnings performance , changing competitive conditions and economic forces , regulatory measures and policy , as well as the overall level of growth and complexity of the balance sheet . the adequacy of the company 's current and future capital needs is monitored by management and discussed with alco on an ongoing basis . management seeks to maintain a capital structure that will assure an adequate level of capital to support anticipated asset growth and to absorb potential losses . the federal banking regulators have issued guidance for those institutions which are deemed to have concentrations in commercial real estate lending . pursuant to the supervisory criteria contained in the guidance for identifying institutions with a potential commercial real estate concentration risk , institutions which have ( 1 ) total reported loans for construction , land development , and other land acquisitions which represent in total 100 % or more of an institution 's total risk-based capital ; or ( 2 ) total commercial real estate loans representing 300 % or more of the institution 's total risk-based capital and the institution 's commercial real estate loan portfolio has increased 50 % or more during the prior 36 months are identified as having potential commercial real estate concentration risk . institutions which are deemed to have concentrations in commercial real estate lending are expected to employ heightened levels of risk management with respect to their commercial real estate portfolios , and may be required to hold higher 72 levels of capital . the company , like many community banks , has a concentration in commercial real estate loans , and the company has experienced significant growth in its commercial real estate portfolio in recent years . at december 31 , 2012 , non-owner-occupied commercial real estate loans ( including construction , land and land development loans ) represent 407 % of total risk based capital . construction , land and land development loans represent 153 % of total risk based capital .

trading partner analytics . our trading partner analytics solution consists of data analytics applications which allow our customers to improve their visibility across , and analysis of , their supply chains . through interactive data analysis , our retailer customers improve their visibility into supplier performance and their understanding of product sell-through . our revenues for this solution primarily consist of a monthly subscription fee . other trading partner solutions . the remainder of our revenues are derived from solutions that allow our customers to perform tasks such as barcode labeling or picking-and-packaging information tracking as well as purchases of miscellaneous supplies . these revenues are primarily transaction-based . 32 cost of revenues and operating expenses overhead allocation . we allocate overhead expenses such as rent , certain employee benefit costs , office supplies and depreciation of general office assets to cost of revenues and operating expenses categories based on headcount . cost of revenues . cost of revenues consist primarily of personnel costs for our implementation teams , customer support personnel and application support personnel . cost of revenues also includes our cost of network services , which is primarily data center costs for the locations where we keep the equipment that serves our customers , and connectivity costs that facilitate electronic data transmission between our customers and their trading partners . sales and marketing expenses . sales and marketing expenses consist primarily of personnel costs for our sales , marketing and product management teams , commissions earned by our sales personnel and marketing costs . in order to expand our business , we will continue to add resources to our sales and marketing efforts over time . research and development expenses . research and development expenses consist primarily of personnel costs for development and maintenance of existing solutions . our research and development group is also responsible for enhancing existing solutions and applications as well as internal tools and developing new information maps that integrate our customers to their trading partners in compliance with those trading partners ' requirements . general and administrative expenses . general and administrative expenses consist primarily of personnel costs for finance , human resources and internal information technology support , as well as legal , accounting and other fees , such as credit card processing fees . other metrics recurring revenue customers . as of december 31 , 2014 , we had approximately 22,000 customers with contracts to pay us monthly fees , which we refer to as recurring revenue customers . we report recurring revenue customers at the end of a period . a small portion of our recurring revenue customers consist of separate units within a larger organization . we treat each of these units , which may include divisions , departments , affiliates and franchises , as distinct customers . average recurring revenues per recurring revenue customer . we calculate average recurring revenues per recurring revenue customer , which we also refer to as wallet share , by dividing the recurring revenues from recurring revenue customers for the period by the average of the beginning and ending number of recurring revenue customers for the period . for interim periods , we annualize this number by multiplying the quotient calculated above by the quotient of 12 divided by the number of months in the period . we anticipate that average recurring revenues per recurring revenue customer will continue to increase as we increase the number of solutions we offer and increase the penetration of those solutions across our customer base . non-gaap financial measures . to supplement our financial statements , we also provide investors with adjusted ebitda and non-gaap income per share , both of which are non-gaap financial measures . we believe that these non-gaap measures provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations . our management uses these non-gaap measures to compare the company 's performance to that of prior periods for trend analyses and planning purposes . adjusted ebitda is also used for purposes of determining executive and senior management incentive compensation . these measures are also presented to our board of directors . these non-gaap measures should not be considered a substitute for , or superior to , financial measures calculated in accordance with generally accepted accounting principles in the united states of america . these 33 non-gaap financial measures exclude significant expenses and income that are required by gaap to be recorded in the company 's financial statements and are subject to inherent limitations . investors should review the reconciliations of non-gaap financial measures to the comparable gaap financial measures that are included in this “management 's discussion and analysis of financial condition and results of operations.” critical accounting policies and estimates the discussion of our financial condition and results of operations is based upon our financial statements , which are prepared in accordance with accounting principles generally accepted in the united states of america , or gaap . the preparation of these financial statements requires us to make estimates , judgments and assumptions that affect the reported amounts of assets , liabilities , revenues , costs and expenses and related disclosures . on an ongoing basis , we evaluate our estimates and assumptions . we base our estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that we believe to be reasonable . our actual results may differ from these estimates under different assumptions or conditions . we believe that of our significant accounting policies , which are described in the notes to our financial statements , the following accounting policies involve a greater degree of judgment , complexity and effect on materiality . story_separator_special_tag also contributing to the increase were higher expenses for depreciation , software subscriptions , stock-based compensation and occupancy in 2013 as compared to 2012. as a percentage of revenues , research and development expenses were 10 % for 2013 and 11 % for 2012. general and administrative expenses . general and administrative expenses for 2013 increased $ 3.7 million , or 27 % , to $ 17.2 million from $ 13.5 million for 2012. this increase was due to increased headcount in 2013 , which resulted in higher personnel costs , as well as increased stock-based compensation , depreciation and software maintenance and subscription expenses compared to 2012. in addition , legal expenses in 2013 decreased slightly as compared to 2012. as a percentage of revenues , general and administrative expenses were 17 % for 2013 , compared to 18 % for 2012. amortization of intangible assets . amortization expense for the year ended december 31 , 2013 included $ 290,000 for the impairment of a certain non-competition agreement . income tax expense . our 2013 provision for income taxes was $ 686,000 and included current state and foreign income taxes as well as deferred federal and state income taxes . it also included a one-time tax benefit for the retroactive benefit of the 2012 federal r & d credit . the american taxpayer relief act of 2012 was enacted on january 2 , 2013 and extended the federal r & d credit from january 1 , 2012 through december 31 , 2013. if this one-time tax benefit were excluded , our 2013 provision for income taxes would have been $ 803,000. our 2012 provision for income taxes was $ 121,000 and included current state and foreign income taxes as well as deferred federal and state income taxes . it also included one-time tax benefits related to true-up adjustments for prior years and increased state effective tax rates . if these one-time benefits were excluded , our 2012 provision for income taxes would have been $ 418,000. see note k to our consolidated financial statements , included in this annual report on form 10-k , for additional information regarding our income taxes . adjusted ebitda . adjusted ebitda , which is a non-gaap measure of financial performance , consists of net income plus depreciation and amortization , interest expense , interest income , income tax expense , stock-based compensation expense and other adjustments as necessary for a fair presentation . in 2013 , other adjustments included the impact of a use tax refund related to items previously expensed . the following table provides a reconciliation of net income to adjusted ebitda ( in thousands ) : replace_table_token_13_th 40 non-gaap income per share . non-gaap income per share , which is also a non-gaap measure of financial performance , consists of net income plus stock-based compensation expense and amortization expense related to intangible assets divided by the weighted average number of shares of common stock outstanding during each period . the following table provides a reconciliation of net income to non-gaap income per share ( in thousands , except per share amounts ) : replace_table_token_14_th story_separator_special_tag stock purchase plan . net cash provided by financing activities was $ 52.7 million for 2013 , and primarily represented $ 47.6 million of net proceeds from our common stock offering in november 2013 and $ 5.1 million related to the exercise of stock options and proceeds from our employee stock purchase plan . net cash provided by financing activities was $ 59.5 million for 2012 , and primarily represented $ 57.8 million of net proceeds from our common stock offering in september 2012 and $ 2.0 million of cash received from the exercise of employee stock options and net proceeds from our employee stock purchase plan . credit facility we have a revolving credit agreement with jpmorgan chase bank , n.a . which provides for a $ 20 million revolving credit facility that we may draw upon from time to time , subject to certain terms and conditions , and will mature on september 30 , 2016. proceeds from the credit facility are anticipated to be used for acquisitions and our capital needs . interest on amounts borrowed under the credit facility is based on ( i ) an adjusted libo rate ( as defined in the revolving credit agreement ) plus an applicable margin of 175 to 225 basis points based on our net working capital , or ( ii ) jpmorgan 's prime rate ( provided it is not less than the adjusted one month libo rate ( as defined in the revolving credit agreement ) ) plus an applicable margin of -25 to 25 basis points based on our net working capital . interest is payable monthly in arrears . availability under the credit facility is subject to a borrowing base equal to the sum of 250 % of our eligible monthly recurring revenue ( as defined in the revolving credit agreement ) and all borrowings are due in full no later than the maturity date of the agreement . the revolving credit agreement contains customary representations , warranties , covenants and events of default , including , but not limited to financial covenants requiring us to maintain a fixed charge coverage ratio of 42 not less than 1.20 to 1.00 , cash and cash equivalents of not less than $ 10 million and a minimum number of recurring revenue customers . if an event of default occurs , among other things , the applicable interest rate is subject to an increase of 200 basis points and all outstanding obligations may become immediately due and payable . there were no borrowings under the revolving credit agreement in 2014 or 2013. in connection with the acquisition of edifice in 2012 , we borrowed $ 11.0 million under our line of credit to fund a portion of the cash paid for the acquisition . on september 11 , 2012 , this debt was

liquidity and capital resources at december 31 , 2014 , our principal sources of liquidity were cash and cash equivalents totaling $ 130.8 million and accounts receivable , net of allowance for doubtful accounts of $ 15.4 million compared to cash and cash equivalents of $ 131.3 million and accounts receivable , net of allowance for doubtful accounts of $ 11.6 million at december 31 , 2013. our working capital at december 31 , 2014 was $ 137.6 million compared to working capital of $ 137.2 million at december 31 , 2013. the slight increase in working capital from december 31 , 2013 to december 31 , 2014 resulted primarily from the following : $ 499,000 decrease in cash and cash equivalents , due primarily to the $ 16.8 million of cash provided by operations and $ 3.5 million of cash received from the exercise of stock options and net proceeds from our employee stock purchase plan , all reduced by the $ 12.6 million of cash used for the leadtec acquisition , the $ 7.6 million of cash used for capital expenditures and the impact of changes in foreign currency exchange rates ; $ 3.8 million increase in net accounts receivable , as new accounts exceeded collections of outstanding balances in 2014 due

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. trading partner analytics . our trading partner analytics solution consists of data analytics applications which allow our customers to improve their visibility across , and analysis of , their supply chains . through interactive data analysis , our retailer customers improve their visibility into supplier performance and their understanding of product sell-through . our revenues for this solution primarily consist of a monthly subscription fee . other trading partner solutions . the remainder of our revenues are derived from solutions that allow our customers to perform tasks such as barcode labeling or picking-and-packaging information tracking as well as purchases of miscellaneous supplies . these revenues are primarily transaction-based . 32 cost of revenues and operating expenses overhead allocation . we allocate overhead expenses such as rent , certain employee benefit costs , office supplies and depreciation of general office assets to cost of revenues and operating expenses categories based on headcount . cost of revenues . cost of revenues consist primarily of personnel costs for our implementation teams , customer support personnel and application support personnel . cost of revenues also includes our cost of network services , which is primarily data center costs for the locations where we keep the equipment that serves our customers , and connectivity costs that facilitate electronic data transmission between our customers and their trading partners . sales and marketing expenses . sales and marketing expenses consist primarily of personnel costs for our sales , marketing and product management teams , commissions earned by our sales personnel and marketing costs . in order to expand our business , we will continue to add resources to our sales and marketing efforts over time . research and development expenses . research and development expenses consist primarily of personnel costs for development and maintenance of existing solutions . our research and development group is also responsible for enhancing existing solutions and applications as well as internal tools and developing new information maps that integrate our customers to their trading partners in compliance with those trading partners ' requirements . general and administrative expenses . general and administrative expenses consist primarily of personnel costs for finance , human resources and internal information technology support , as well as legal , accounting and other fees , such as credit card processing fees . other metrics recurring revenue customers . as of december 31 , 2014 , we had approximately 22,000 customers with contracts to pay us monthly fees , which we refer to as recurring revenue customers . we report recurring revenue customers at the end of a period . a small portion of our recurring revenue customers consist of separate units within a larger organization . we treat each of these units , which may include divisions , departments , affiliates and franchises , as distinct customers . average recurring revenues per recurring revenue customer . we calculate average recurring revenues per recurring revenue customer , which we also refer to as wallet share , by dividing the recurring revenues from recurring revenue customers for the period by the average of the beginning and ending number of recurring revenue customers for the period . for interim periods , we annualize this number by multiplying the quotient calculated above by the quotient of 12 divided by the number of months in the period . we anticipate that average recurring revenues per recurring revenue customer will continue to increase as we increase the number of solutions we offer and increase the penetration of those solutions across our customer base . non-gaap financial measures . to supplement our financial statements , we also provide investors with adjusted ebitda and non-gaap income per share , both of which are non-gaap financial measures . we believe that these non-gaap measures provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations . our management uses these non-gaap measures to compare the company 's performance to that of prior periods for trend analyses and planning purposes . adjusted ebitda is also used for purposes of determining executive and senior management incentive compensation . these measures are also presented to our board of directors . these non-gaap measures should not be considered a substitute for , or superior to , financial measures calculated in accordance with generally accepted accounting principles in the united states of america . these 33 non-gaap financial measures exclude significant expenses and income that are required by gaap to be recorded in the company 's financial statements and are subject to inherent limitations . investors should review the reconciliations of non-gaap financial measures to the comparable gaap financial measures that are included in this “management 's discussion and analysis of financial condition and results of operations.” critical accounting policies and estimates the discussion of our financial condition and results of operations is based upon our financial statements , which are prepared in accordance with accounting principles generally accepted in the united states of america , or gaap . the preparation of these financial statements requires us to make estimates , judgments and assumptions that affect the reported amounts of assets , liabilities , revenues , costs and expenses and related disclosures . on an ongoing basis , we evaluate our estimates and assumptions . we base our estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that we believe to be reasonable . our actual results may differ from these estimates under different assumptions or conditions . we believe that of our significant accounting policies , which are described in the notes to our financial statements , the following accounting policies involve a greater degree of judgment , complexity and effect on materiality . story_separator_special_tag also contributing to the increase were higher expenses for depreciation , software subscriptions , stock-based compensation and occupancy in 2013 as compared to 2012. as a percentage of revenues , research and development expenses were 10 % for 2013 and 11 % for 2012. general and administrative expenses . general and administrative expenses for 2013 increased $ 3.7 million , or 27 % , to $ 17.2 million from $ 13.5 million for 2012. this increase was due to increased headcount in 2013 , which resulted in higher personnel costs , as well as increased stock-based compensation , depreciation and software maintenance and subscription expenses compared to 2012. in addition , legal expenses in 2013 decreased slightly as compared to 2012. as a percentage of revenues , general and administrative expenses were 17 % for 2013 , compared to 18 % for 2012. amortization of intangible assets . amortization expense for the year ended december 31 , 2013 included $ 290,000 for the impairment of a certain non-competition agreement . income tax expense . our 2013 provision for income taxes was $ 686,000 and included current state and foreign income taxes as well as deferred federal and state income taxes . it also included a one-time tax benefit for the retroactive benefit of the 2012 federal r & d credit . the american taxpayer relief act of 2012 was enacted on january 2 , 2013 and extended the federal r & d credit from january 1 , 2012 through december 31 , 2013. if this one-time tax benefit were excluded , our 2013 provision for income taxes would have been $ 803,000. our 2012 provision for income taxes was $ 121,000 and included current state and foreign income taxes as well as deferred federal and state income taxes . it also included one-time tax benefits related to true-up adjustments for prior years and increased state effective tax rates . if these one-time benefits were excluded , our 2012 provision for income taxes would have been $ 418,000. see note k to our consolidated financial statements , included in this annual report on form 10-k , for additional information regarding our income taxes . adjusted ebitda . adjusted ebitda , which is a non-gaap measure of financial performance , consists of net income plus depreciation and amortization , interest expense , interest income , income tax expense , stock-based compensation expense and other adjustments as necessary for a fair presentation . in 2013 , other adjustments included the impact of a use tax refund related to items previously expensed . the following table provides a reconciliation of net income to adjusted ebitda ( in thousands ) : replace_table_token_13_th 40 non-gaap income per share . non-gaap income per share , which is also a non-gaap measure of financial performance , consists of net income plus stock-based compensation expense and amortization expense related to intangible assets divided by the weighted average number of shares of common stock outstanding during each period . the following table provides a reconciliation of net income to non-gaap income per share ( in thousands , except per share amounts ) : replace_table_token_14_th story_separator_special_tag stock purchase plan . net cash provided by financing activities was $ 52.7 million for 2013 , and primarily represented $ 47.6 million of net proceeds from our common stock offering in november 2013 and $ 5.1 million related to the exercise of stock options and proceeds from our employee stock purchase plan . net cash provided by financing activities was $ 59.5 million for 2012 , and primarily represented $ 57.8 million of net proceeds from our common stock offering in september 2012 and $ 2.0 million of cash received from the exercise of employee stock options and net proceeds from our employee stock purchase plan . credit facility we have a revolving credit agreement with jpmorgan chase bank , n.a . which provides for a $ 20 million revolving credit facility that we may draw upon from time to time , subject to certain terms and conditions , and will mature on september 30 , 2016. proceeds from the credit facility are anticipated to be used for acquisitions and our capital needs . interest on amounts borrowed under the credit facility is based on ( i ) an adjusted libo rate ( as defined in the revolving credit agreement ) plus an applicable margin of 175 to 225 basis points based on our net working capital , or ( ii ) jpmorgan 's prime rate ( provided it is not less than the adjusted one month libo rate ( as defined in the revolving credit agreement ) ) plus an applicable margin of -25 to 25 basis points based on our net working capital . interest is payable monthly in arrears . availability under the credit facility is subject to a borrowing base equal to the sum of 250 % of our eligible monthly recurring revenue ( as defined in the revolving credit agreement ) and all borrowings are due in full no later than the maturity date of the agreement . the revolving credit agreement contains customary representations , warranties , covenants and events of default , including , but not limited to financial covenants requiring us to maintain a fixed charge coverage ratio of 42 not less than 1.20 to 1.00 , cash and cash equivalents of not less than $ 10 million and a minimum number of recurring revenue customers . if an event of default occurs , among other things , the applicable interest rate is subject to an increase of 200 basis points and all outstanding obligations may become immediately due and payable . there were no borrowings under the revolving credit agreement in 2014 or 2013. in connection with the acquisition of edifice in 2012 , we borrowed $ 11.0 million under our line of credit to fund a portion of the cash paid for the acquisition . on september 11 , 2012 , this debt was Narrative : liquidity and capital resources at december 31 , 2014 , our principal sources of liquidity were cash and cash equivalents totaling $ 130.8 million and accounts receivable , net of allowance for doubtful accounts of $ 15.4 million compared to cash and cash equivalents of $ 131.3 million and accounts receivable , net of allowance for doubtful accounts of $ 11.6 million at december 31 , 2013. our working capital at december 31 , 2014 was $ 137.6 million compared to working capital of $ 137.2 million at december 31 , 2013. the slight increase in working capital from december 31 , 2013 to december 31 , 2014 resulted primarily from the following : $ 499,000 decrease in cash and cash equivalents , due primarily to the $ 16.8 million of cash provided by operations and $ 3.5 million of cash received from the exercise of stock options and net proceeds from our employee stock purchase plan , all reduced by the $ 12.6 million of cash used for the leadtec acquisition , the $ 7.6 million of cash used for capital expenditures and the impact of changes in foreign currency exchange rates ; $ 3.8 million increase in net accounts receivable , as new accounts exceeded collections of outstanding balances in 2014 due

we believe that these adjustments , and the non-gaap measures derived from them , provide information to better analyze our operations between periods , and over time . investors should consider these non-gaap measures in addition to , and not as a substitute for , financial measures prepared in accordance with gaap . 23 a reconciliation of the non-gaap measures to the most comparable gaap measures is included below : replace_table_token_6_th revenue we generate revenue primarily from management fees and performance fees , which we collectively refer to as our advisory fees , by managing assets on behalf of institutional accounts and for retail clients , which are generally open-end mutual funds catering primarily to retail investors . our advisory fee income is recognized over the period in which investment management services are provided . following the preferred method identified in the revenue recognition topic of the financial accounting standards board accounting standards codification ( “ fasb asc ” ) , income from performance fees is recorded at the conclusion of the contractual performance period , when all contingencies are resolved . our advisory fees are primarily driven by the level of our aum . our aum increases or decreases with the net inflows or outflows of funds into our various investment strategies and with the investment performance thereof . in order to increase our aum and expand our business , we must develop and market investment strategies that suit the investment needs of our target clients , and provide attractive returns over the long-term . the value and composition of our aum , and our ability to continue to attract clients , will depend on a variety of factors including , among other things : our ability to educate our target clients about our classic value investment strategies and provide them with exceptional client service ; the relative investment performance of our investment strategies , as compared to competing products and market indices ; competitive conditions in the investment management and broader financial services sectors ; general economic conditions ; investor sentiment and confidence ; and our decision to close strategies when we deem it to be in the best interests of our clients . for our institutional accounts , we are paid fees according to a schedule , which varies by investment strategy . the substantial majority of these accounts pay us management fees pursuant to a schedule in which the rate we earn on the aum declines as the amount of aum increases . pursuant to our sub-investment advisory agreements with our retail clients and advisory agreements with pzena-branded funds , we are generally paid a management fee according to a schedule in which the rate we earn on the aum declines as the 24 amount of aum increases . certain of these funds pay us fixed-rate management fees . due to the substantially larger account size of certain of these accounts , the average advisory fees we earn on them , as a percentage of aum , are lower than the advisory fees we earn on our institutional accounts . certain of our clients pay us fees according to the performance of their accounts relative to certain agreed-upon benchmarks , which results in a lower base fee , but allows us to earn higher fees if the relevant investment strategy outperforms the agreed-upon benchmark . the majority of advisory fees we earn on institutional accounts is based on the value of our aum at a specific date on a quarterly basis , either in arrears or advance . advisory fees on certain of our institutional accounts , and with respect to all of our retail accounts , are calculated based on the average of the monthly or daily market value . advisory fees are also generally adjusted for any cash flows into or out of a portfolio , where the cash flow represents greater than 10 % of the value of the portfolio . while a specific group of accounts may use the same fee rate , the method used to calculate the fee according to the fee rate schedule may differ as described above . our advisory fees may fluctuate based on a number of factors , including the following : changes in aum due to appreciation or depreciation of our investment portfolios , and the levels of the contribution and withdrawal of assets by new and existing clients ; distribution of aum among our investment strategies , which have differing fee schedules ; distribution of aum between institutional accounts and retail accounts , for which we generally earn lower overall advisory fees ; and the level of our performance with respect to accounts on which we are paid performance fees . expenses our expenses consist primarily of compensation and benefits expense , as well as general and administrative expense . our largest expense is compensation and benefits , which includes the salaries , bonuses , equity-based compensation , and related benefits and payroll costs attributable to our employee members and employees . compensation and benefits packages are benchmarked against relevant industry and geographic peer groups in order to attract and retain qualified personnel . general and administrative expense includes lease expenses , professional and outside services fees , depreciation , costs associated with operating and maintaining our research , trading and portfolio accounting systems , and other expenses . our occupancy-related costs and professional services expenses , in particular , generally increase or decrease in relative proportion to the overall size and scale of our business operations . we incur additional expenses associated with being a public company for , among other things , director and officer insurance , director fees , sec reporting and compliance ( including sarbanes-oxley and dodd-frank compliance ) , professional fees , transfer agent fees , and other similar expenses . story_separator_special_tag in addition , an increase in average aum and in revenues typically results in higher operating income and net income , while a decrease in average aum and in revenues typically results in lower operating income , net income , and operating margins . we would expect pressure on our operating income , net income and operating margins in the future if average aum and revenues were to decline . revenues our revenue from advisory fees earned on our institutional accounts and our retail accounts for the three years ended december 31 , 2014 is described below : replace_table_token_11_th year ended december 31 , 2014 versus december 31 , 2013 our total revenue increased $ 16.7 million , or 17.5 % , to $ 112.5 million for the year ended december 31 , 2014 from $ 95.8 million for the year ended december 31 , 2013 . this change was driven primarily by an increase in average assets . for the years ended december 31 , 2014 and 2013 , average assets were $ 26.2 billion and $ 21.0 billion , respectively . this increase in average assets was driven by net inflows and market appreciation during 2014. our weighted average fee rates were 0.430 % and 0.456 % for the years ended december 31 , 2014 and 2013 , respectively . this decrease was primarily due to a shift in mix towards our expanded products and larger relationships as well as a shift in mix between our institutional and retail strategies , which generally carry lower fees . for the year ended december 31 , 2014 , average assets in our institutional and retail strategies were 56.9 % and 43.1 % , respectively , of total average aum . for the year 30 ended december 31 , 2013 , average assets in our institutional and retail strategies were 62.4 % and 37.6 % . average assets in institutional accounts increased $ 1.8 billion , or 13.7 % , to $ 14.9 billion for the year ended december 31 , 2014 , from $ 13.1 billion for the year ended december 31 , 2013 , and had weighted average fees of 0.555 % and 0.580 % for the years ended december 31 , 2014 and 2013 , respectively . weighted-average fee rates decreased primarily due to a a higher mix of assets in our expanded products and larger relationships , which generally carry lower fee rates , as well as a decrease in institutional performance fees recognized during 2014 . average assets in retail accounts increased $ 3.4 billion , or 43.0 % , to $ 11.3 billion for the year ended december 31 , 2014 , from $ 7.9 billion for the year ended december 31 , 2013 , and had weighted average fees of 0.264 % and 0.252 % for the years ended december 31 , 2014 and 2013 , respectively . the increase in weighted average fees in retail accounts was due primarily to an increase in retail performance fees recognized during 2014 as well as the addition of assets in strategies which generally carry higher fee rates . year ended december 31 , 2013 versus december 31 , 2012 our total revenue increased $ 19.5 million , or 25.5 % , to $ 95.8 million for the year ended december 31 , 2013 , from $ 76.3 million for the year ended december 31 , 2012 . this change was driven primarily by a $ 3.6 million increase in performance fees recognized , as well as an increase in average assets . for the years ended december 31 , 2013 and 2012 , average assets were $ 21.0 billion and $ 14.9 billion , respectively . the increase in average assets was driven by market appreciation and net inflows during 2013. our weighted average fee rates were 0.456 % and 0.512 % for the years ended december 31 , 2013 and 2012 , respectively . this decrease was primarily due to a shift in mix towards our expanded products and larger relationships as well as a shift in mix between our institutional and retail strategies , which generally carry lower fees , partially offset by the increase in performance fees recognized in 2013 as noted above . this shift in mix reflects the full year impact of retail inflows associated with our assignment to manage 28 % of the vanguard windsor fund as of the beginning of august 2012 as well as net inflows in our retail accounts during 2013. for the year ended december 31 , 2013 , average assets in our institutional and retail strategies were 62.4 % and 37.6 % , respectively , of total average aum . for the year ended december 31 , 2012 , average assets in our institutional and retail strategies were 75.8 % and 24.2 % . average assets in institutional accounts increased $ 1.8 billion , or 15.9 % , to $ 13.1 billion for the year ended december 31 , 2013 , from $ 11.3 billion for the year ended december 31 , 2012 , and had weighted average fees of 0.580 % and 0.574 % for the years ended december 31 , 2013 and 2012 , respectively . weighted-average fee rates increased primarily due to the increase in performance fees recognized during 2013 , partially offset by a higher mix of assets in our expanded products and larger relationships , which generally carry lower fee rates . average assets in retail accounts increased $ 4.3 billion , or 119 % , to $ 7.9 billion for the year ended december 31 , 2013 , from $ 3.6 billion for the year ended december 31 , 2012 , and had weighted average fees of 0.252 % and 0.316 % for the years ended december 31 , 2013 and 2012 , respectively . the decrease in weighted average fees in retail accounts was due primarily to the full year impact of the vanguard assignment . expenses our

cash flows year ended december 31 , 2014 versus december 31 , 2013 cash and cash equivalents increased $ 5.2 million to $ 39.1 million in 2014 compared to $ 33.9 million in 2013 . net cash provided by operating activities increased $ 10.9 million in 2014 to $ 55.4 million from $ 44.5 million in 2013 . the increase was primarily due to an increase in net income partially offset by changes in operating assets and liabilities and working capital . net cash used in investing activities was $ 2.6 million in 2014 compared to $ 1.8 million used in 2013 . the $ 0.8 million increase was primarily attributable to a $ 1.9 million increase in purchases of property and equipment related to our new corporate headquarters and a $ 1.0 million net increase in purchases in investments associated primarily with the incubation of new products during 2014 . net cash used in financing activities increased $ 6.2 million in 2014 to $ 47.8 million from $ 41.5 million in 2013 . this increase is primarily due to an $ 11.6 million increase in distributions to non-controlling interests . the increase in these distributions primarily reflects increased tax allocations associated with increased taxable income in 2014 and dividend distributions to members of our operating company . net cash used in financing activities in 2014 also reflects a $ 1.5 million increase in cash dividends paid during 2014. these increases were partially offset by a $ 4.8 million increase in contributions from non-controlling interests primarily reflecting contributions into our consolidated subsidiaries and a $ 1.8 million decrease in the repurchase and retirement of class a common stock , class b units , and class b unit options during 2014 . year ended december 31 , 2013 versus december 31 , 2012 cash and cash equivalents increased $ 1.3 million to $ 33.9 million in 2013 compared to $ 32.6 million in 2012 . net cash provided by operating activities increased $ 12.5 million in 2013 to $ 44.5 million from $ 32.0 million in 2012 .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we believe that these adjustments , and the non-gaap measures derived from them , provide information to better analyze our operations between periods , and over time . investors should consider these non-gaap measures in addition to , and not as a substitute for , financial measures prepared in accordance with gaap . 23 a reconciliation of the non-gaap measures to the most comparable gaap measures is included below : replace_table_token_6_th revenue we generate revenue primarily from management fees and performance fees , which we collectively refer to as our advisory fees , by managing assets on behalf of institutional accounts and for retail clients , which are generally open-end mutual funds catering primarily to retail investors . our advisory fee income is recognized over the period in which investment management services are provided . following the preferred method identified in the revenue recognition topic of the financial accounting standards board accounting standards codification ( “ fasb asc ” ) , income from performance fees is recorded at the conclusion of the contractual performance period , when all contingencies are resolved . our advisory fees are primarily driven by the level of our aum . our aum increases or decreases with the net inflows or outflows of funds into our various investment strategies and with the investment performance thereof . in order to increase our aum and expand our business , we must develop and market investment strategies that suit the investment needs of our target clients , and provide attractive returns over the long-term . the value and composition of our aum , and our ability to continue to attract clients , will depend on a variety of factors including , among other things : our ability to educate our target clients about our classic value investment strategies and provide them with exceptional client service ; the relative investment performance of our investment strategies , as compared to competing products and market indices ; competitive conditions in the investment management and broader financial services sectors ; general economic conditions ; investor sentiment and confidence ; and our decision to close strategies when we deem it to be in the best interests of our clients . for our institutional accounts , we are paid fees according to a schedule , which varies by investment strategy . the substantial majority of these accounts pay us management fees pursuant to a schedule in which the rate we earn on the aum declines as the amount of aum increases . pursuant to our sub-investment advisory agreements with our retail clients and advisory agreements with pzena-branded funds , we are generally paid a management fee according to a schedule in which the rate we earn on the aum declines as the 24 amount of aum increases . certain of these funds pay us fixed-rate management fees . due to the substantially larger account size of certain of these accounts , the average advisory fees we earn on them , as a percentage of aum , are lower than the advisory fees we earn on our institutional accounts . certain of our clients pay us fees according to the performance of their accounts relative to certain agreed-upon benchmarks , which results in a lower base fee , but allows us to earn higher fees if the relevant investment strategy outperforms the agreed-upon benchmark . the majority of advisory fees we earn on institutional accounts is based on the value of our aum at a specific date on a quarterly basis , either in arrears or advance . advisory fees on certain of our institutional accounts , and with respect to all of our retail accounts , are calculated based on the average of the monthly or daily market value . advisory fees are also generally adjusted for any cash flows into or out of a portfolio , where the cash flow represents greater than 10 % of the value of the portfolio . while a specific group of accounts may use the same fee rate , the method used to calculate the fee according to the fee rate schedule may differ as described above . our advisory fees may fluctuate based on a number of factors , including the following : changes in aum due to appreciation or depreciation of our investment portfolios , and the levels of the contribution and withdrawal of assets by new and existing clients ; distribution of aum among our investment strategies , which have differing fee schedules ; distribution of aum between institutional accounts and retail accounts , for which we generally earn lower overall advisory fees ; and the level of our performance with respect to accounts on which we are paid performance fees . expenses our expenses consist primarily of compensation and benefits expense , as well as general and administrative expense . our largest expense is compensation and benefits , which includes the salaries , bonuses , equity-based compensation , and related benefits and payroll costs attributable to our employee members and employees . compensation and benefits packages are benchmarked against relevant industry and geographic peer groups in order to attract and retain qualified personnel . general and administrative expense includes lease expenses , professional and outside services fees , depreciation , costs associated with operating and maintaining our research , trading and portfolio accounting systems , and other expenses . our occupancy-related costs and professional services expenses , in particular , generally increase or decrease in relative proportion to the overall size and scale of our business operations . we incur additional expenses associated with being a public company for , among other things , director and officer insurance , director fees , sec reporting and compliance ( including sarbanes-oxley and dodd-frank compliance ) , professional fees , transfer agent fees , and other similar expenses . story_separator_special_tag in addition , an increase in average aum and in revenues typically results in higher operating income and net income , while a decrease in average aum and in revenues typically results in lower operating income , net income , and operating margins . we would expect pressure on our operating income , net income and operating margins in the future if average aum and revenues were to decline . revenues our revenue from advisory fees earned on our institutional accounts and our retail accounts for the three years ended december 31 , 2014 is described below : replace_table_token_11_th year ended december 31 , 2014 versus december 31 , 2013 our total revenue increased $ 16.7 million , or 17.5 % , to $ 112.5 million for the year ended december 31 , 2014 from $ 95.8 million for the year ended december 31 , 2013 . this change was driven primarily by an increase in average assets . for the years ended december 31 , 2014 and 2013 , average assets were $ 26.2 billion and $ 21.0 billion , respectively . this increase in average assets was driven by net inflows and market appreciation during 2014. our weighted average fee rates were 0.430 % and 0.456 % for the years ended december 31 , 2014 and 2013 , respectively . this decrease was primarily due to a shift in mix towards our expanded products and larger relationships as well as a shift in mix between our institutional and retail strategies , which generally carry lower fees . for the year ended december 31 , 2014 , average assets in our institutional and retail strategies were 56.9 % and 43.1 % , respectively , of total average aum . for the year 30 ended december 31 , 2013 , average assets in our institutional and retail strategies were 62.4 % and 37.6 % . average assets in institutional accounts increased $ 1.8 billion , or 13.7 % , to $ 14.9 billion for the year ended december 31 , 2014 , from $ 13.1 billion for the year ended december 31 , 2013 , and had weighted average fees of 0.555 % and 0.580 % for the years ended december 31 , 2014 and 2013 , respectively . weighted-average fee rates decreased primarily due to a a higher mix of assets in our expanded products and larger relationships , which generally carry lower fee rates , as well as a decrease in institutional performance fees recognized during 2014 . average assets in retail accounts increased $ 3.4 billion , or 43.0 % , to $ 11.3 billion for the year ended december 31 , 2014 , from $ 7.9 billion for the year ended december 31 , 2013 , and had weighted average fees of 0.264 % and 0.252 % for the years ended december 31 , 2014 and 2013 , respectively . the increase in weighted average fees in retail accounts was due primarily to an increase in retail performance fees recognized during 2014 as well as the addition of assets in strategies which generally carry higher fee rates . year ended december 31 , 2013 versus december 31 , 2012 our total revenue increased $ 19.5 million , or 25.5 % , to $ 95.8 million for the year ended december 31 , 2013 , from $ 76.3 million for the year ended december 31 , 2012 . this change was driven primarily by a $ 3.6 million increase in performance fees recognized , as well as an increase in average assets . for the years ended december 31 , 2013 and 2012 , average assets were $ 21.0 billion and $ 14.9 billion , respectively . the increase in average assets was driven by market appreciation and net inflows during 2013. our weighted average fee rates were 0.456 % and 0.512 % for the years ended december 31 , 2013 and 2012 , respectively . this decrease was primarily due to a shift in mix towards our expanded products and larger relationships as well as a shift in mix between our institutional and retail strategies , which generally carry lower fees , partially offset by the increase in performance fees recognized in 2013 as noted above . this shift in mix reflects the full year impact of retail inflows associated with our assignment to manage 28 % of the vanguard windsor fund as of the beginning of august 2012 as well as net inflows in our retail accounts during 2013. for the year ended december 31 , 2013 , average assets in our institutional and retail strategies were 62.4 % and 37.6 % , respectively , of total average aum . for the year ended december 31 , 2012 , average assets in our institutional and retail strategies were 75.8 % and 24.2 % . average assets in institutional accounts increased $ 1.8 billion , or 15.9 % , to $ 13.1 billion for the year ended december 31 , 2013 , from $ 11.3 billion for the year ended december 31 , 2012 , and had weighted average fees of 0.580 % and 0.574 % for the years ended december 31 , 2013 and 2012 , respectively . weighted-average fee rates increased primarily due to the increase in performance fees recognized during 2013 , partially offset by a higher mix of assets in our expanded products and larger relationships , which generally carry lower fee rates . average assets in retail accounts increased $ 4.3 billion , or 119 % , to $ 7.9 billion for the year ended december 31 , 2013 , from $ 3.6 billion for the year ended december 31 , 2012 , and had weighted average fees of 0.252 % and 0.316 % for the years ended december 31 , 2013 and 2012 , respectively . the decrease in weighted average fees in retail accounts was due primarily to the full year impact of the vanguard assignment . expenses our Narrative : cash flows year ended december 31 , 2014 versus december 31 , 2013 cash and cash equivalents increased $ 5.2 million to $ 39.1 million in 2014 compared to $ 33.9 million in 2013 . net cash provided by operating activities increased $ 10.9 million in 2014 to $ 55.4 million from $ 44.5 million in 2013 . the increase was primarily due to an increase in net income partially offset by changes in operating assets and liabilities and working capital . net cash used in investing activities was $ 2.6 million in 2014 compared to $ 1.8 million used in 2013 . the $ 0.8 million increase was primarily attributable to a $ 1.9 million increase in purchases of property and equipment related to our new corporate headquarters and a $ 1.0 million net increase in purchases in investments associated primarily with the incubation of new products during 2014 . net cash used in financing activities increased $ 6.2 million in 2014 to $ 47.8 million from $ 41.5 million in 2013 . this increase is primarily due to an $ 11.6 million increase in distributions to non-controlling interests . the increase in these distributions primarily reflects increased tax allocations associated with increased taxable income in 2014 and dividend distributions to members of our operating company . net cash used in financing activities in 2014 also reflects a $ 1.5 million increase in cash dividends paid during 2014. these increases were partially offset by a $ 4.8 million increase in contributions from non-controlling interests primarily reflecting contributions into our consolidated subsidiaries and a $ 1.8 million decrease in the repurchase and retirement of class a common stock , class b units , and class b unit options during 2014 . year ended december 31 , 2013 versus december 31 , 2012 cash and cash equivalents increased $ 1.3 million to $ 33.9 million in 2013 compared to $ 32.6 million in 2012 . net cash provided by operating activities increased $ 12.5 million in 2013 to $ 44.5 million from $ 32.0 million in 2012 .

in our u.s. drilling operating segment , our rig years ( a measure of activity and utilization ) have decreased from 212.5 years during fiscal year 2014 to 120.0 years during fiscal year 2015. in our canada drilling operating segment , our rig years have declined by roughly 51 % from 2014. our international operating segment has not been immune from the impact of lower oil prices . although international drilling markets tend to react slower than the north american markets , we began to experience downward pressure on dayrates in the international segment beginning in the second quarter of 2015. our international rig years declined in the latter half of 2015 , primarily due to the conclusion of several drilling projects as well as reduced activity resulting from lower commodity prices . given the commodity price environment entering 2016 , we expect continued erosion at least through the first half of the year in industry rig counts , both domestic and international , as well as continued downward pressure on the utilization and pricing of 23 our rig fleets . at december 31 , 2015 , we had $ 2.24 billion availability remaining under our $ 2.25 billion revolving credit facility and commercial paper program , which expires july 2020. availability under the revolving credit facility is subject to a covenant not to exceed a net debt to capital ratio of 0.60:1. as of december 31 , 2015 , our net debt to capital ratio was 0.44:1. see item 6 . “selected financial data” . financial results during 2015 , our income ( loss ) from continuing operations was adversely affected by approximately $ 369.0 million in impairments and other charges . net loss from continuing operations totaled $ 329.5 million for 2015 ( $ 1.14 per diluted share ) compared to a net loss from continuing operations of $ 669.3 million ( $ 2.28 per diluted share ) in 2014. the impairment charges stemmed from the impact of the industry downturn on our business activity and future outlook as the continuation of depressed oil prices led to considerable reductions in capital spending by some of our customers and diminished demand for our drilling services . the impairments and retirement provisions were primarily comprised of $ 140.1 million related to tangible assets and equipment and $ 180.6 million related to an other-than-temporary impairment on our equity method investment in cjes . operating revenues in 2015 totaled $ 3.9 billion , representing a decrease of $ 2.9 billion , or 43 % , over 2014. the decrease in revenues was due in part to ceasing to consolidate the revenues associated with our completion & production services business . further exacerbating the decline in revenues was the decrease in activity and reduced dayrates within our u.s. and canada drilling operating segments resulting from the overall decline in oil prices throughout 2015 as mentioned above . these decreases were partially offset by an increase in revenue in our international drilling operating segment . during 2014 , our income ( loss ) from continuing operations was adversely affected by approximately $ 1.03 billion in impairments and other charges . net loss from continuing operations totaled $ 669.3 million for 2014 ( $ 2.28 per diluted share ) compared to net income from continuing operations of $ 158.3 million ( $ 0.51 per diluted share ) in 2013. the impairments and retirement provisions stemmed from the sharp decline in crude oil prices during the fourth quarter of 2014 and the resulting impact on our customers ' spending programs and demand for our services . the impairments and retirement provisions were comprised of approximately $ 611.6 million in charges related to drilling rigs and rig equipment and $ 386.5 million in impairments to our goodwill and intangible assets . the goodwill and intangible assets were primarily attributable to our completion services operating segment from the acquisition of superior well services , inc. ( “superior” ) in 2010. of the $ 611.6 million in charges related to our drilling rigs and rig equipment , the majority is attributable to retirements and impairments to our lower 48 legacy rig fleet ( non ac rigs ) , including the functional retirement of 25 mechanical rigs , an impairment to the scr fleet and the resultant reduction in yard assets and spare rig components due to reduced operating fleet size . the balance is attributable to charges for the impairment or retirement of our jackup rig fleet in the gulf of mexico , our coil tubing drilling rigs in canada and various other under-utilized rigs and related equipment in canada and our international markets . excluding these items , our operating results increased in 2014 over 2013. operating revenues in 2014 totaled $ 6.8 billion , representing an increase of $ 652.2 million , or 11 % , over 2013. the increase in revenues was driven by increases from virtually all of our operating segments with the exception of canada drilling . adjusted operating income for 2014 totaled $ 604.3 million , representing an increase of $ 46.1 million , or 8 % , over 2013. this increase was driven primarily by our u.s. and international drilling and rig services operating segments , which more than offset declines in our completion and production services and canada drilling operating segments . 24 the following tables set forth certain information with respect to our reportable segments and rig activity : replace_table_token_8_th 25 replace_table_token_9_th replace_table_token_10_th ( 1 ) all periods present the operating activities of most of our wholly owned oil and gas businesses , aircraft logistics operations and construction services as discontinued operations . ( 2 ) includes our other services comprised of our drilling technology and top drive manufacturing , directional drilling , rig instrumentation and software services . ( 3 ) represents the elimination of inter-segment transactions . story_separator_special_tag should it remain at these levels for an extended period of time , it could result in a future other-than-temporary impairment . provision for international operations during 2015 , we recognized $ 25.4 million related to assets and receivables impacted by the degradation of the overall country economy and financial situation in venezuela , which has been adversely affected by the downturn in oil prices , primarily comprised of a loss of $ 10.0 million related to the remeasurement of our net monetary assets denominated in local currency from the official exchange rate of 6.3 bolivares per us dollar to the simadi exchange rate which was 199 bolivares per us dollar as of september 30 , 2015 and $ 15.4 million related to the write-off of a receivable balance . the balance of this provision represents an obligation associated with the decision to exit a non-core business line in another country within the region of $ 22.9 million . for the year ended december 31 , 2014 tangible assets and equipment the following table summarizes the 2014 retirement and impairment charges for tangible assets and equipment by operating segment : 32 replace_table_token_15_th approximately two-thirds of the 2014 charges from drilling rigs and rig equipment is related to the u.s. lower 48 legacy rig fleet . given the sharp decline in crude oil prices and the resulting impact on our customers ' spending programs that we experienced in 2014 , and the disproportionate impact of the reduced activity that we believe our legacy rig fleet will absorb , we have retired 25 mechanical rigs and impaired our fleet of scr rigs , including the resultant retirement of and reduction in yard assets and spare rig components associated with a reduced overall size of our working rig fleet . also included in the 2014 charges for our u.s. drilling rigs and rig equipment is a retirement provision of approximately $ 54.4 million for our gulf of mexico jackup fleet . this market has been challenged for the past several years and we believe the drop in oil prices will exacerbate the lack of demand for these rigs . the majority of these rigs would require substantial amounts of capital in order for them to be operable again . the balance of the drilling rigs and rig equipment charges relate to our coil tubing drilling rig fleet in canada and various under-utilized or under-performing rigs or asset classes throughout our international and canada drilling fleets . we also recognized an impairment charge related to obsolete inventory within our rig services operating segment . goodwill and intangible assets during 2014 , we recognized an impairment of goodwill totaling $ 356.6 million , the majority of which was for the remaining goodwill balance of $ 335.0 million in our completion services operating segment related to the acquisition of superior in 2010. the value attributable to the merger with cjes declined sharply beginning in the fourth quarter of 2014 , with a drop in the market price of cjes 's stock and the agreed upon reduction to the amount of cash we expect to receive from this transaction . the combination of these events and a sharp decline in the market price of our stock , led us to believe that a triggering event had occurred in the fourth quarter of 2014 , and we performed an impairment test on our remaining goodwill balances . we determined that our completion services goodwill balances should be fully impaired . the balance of the impairment relates to $ 21.6 million in goodwill related to ryan directional services , inc. our directional drilling operations included in our rig services operating segment . the decline in oil prices and the impact it had on our businesses , along with the lack of certainty surrounding an eventual recovery , led us to impair these goodwill balances . additionally , during 2014 , we recognized an impairment of $ 29.9 million primarily related to various intangible assets , such as customer relationships within our completion & production services and rig services operating segments related to previous acquisitions . transaction costs during 2014 , we incurred $ 22.3 million in transaction costs related to the merger with cjes , including professional fees and other costs incurred to reorganize the business in contemplation of the merger . other-than-temporary impairment during 2014 , we recorded an other-than-temporary impairment of $ 7.0 million related to an equity security . because the trading price of this security remained below our cost basis for an extended period , we determined the investment was other than temporarily impaired and it was appropriate to write down the investment 's carrying value to its current estimated fair value . 33 for the year ended december 31 , 2013 provision for retirement of long-lived assets during 2013 , we recorded a provision for retirement of long-lived assets in multiple operating segments totaling $ 14.0 million , which reduced the carrying value of some assets to their salvage value . the retirements related to assets in saudi arabia and included obsolete top-drives , nonworking trucks , generators , engines and other miscellaneous equipment . the retirements in our canada operations included functionally inoperable rigs and other drilling equipment . in our completion & production services operations , the retirements related to rigs and vehicles that would require significant repair to return to work and other non-core assets . impairments of long-lived assets during 2013 , we recognized an impairment of $ 20.0 million to our fleet of coil-tubing units in our completion & production services business . intense competition and oversupply of equipment has led to lower utilization and margins for this product line . when these factors were considered as part of our annual impairment tests on long-lived assets , the sum of the estimated future cash flows , on an undiscounted basis , was less than the carrying amount of these assets . the estimated fair values of these assets were

financial condition and sources of liquidity our primary sources of liquidity are cash and investments , availability under our revolving credit facility , our commercial paper program and cash generated from operations . as of december 31 , 2015 , we had cash and short-term investments of $ 274.6 million and working capital of $ 0.5 billion . as of december 31 , 2014 , we had cash and short-term investments of $ 536.2 million and working capital of $ 1.2 billion . at december 31 , 2015 , we had $ 2.24 billion availability remaining under our $ 2.25 billion revolving credit facility and commercial paper program . during 2015 , we entered into an amendment to our existing committed , unsecured revolving credit facility to increase the borrowing capacity to $ 2.2 billion , extend the maturity date to july 2020 and increase the size of the accordion option to 38 $ 500.0 million . we subsequently exercised $ 50.0 million of the accordion option to bring the total availability to $ 2.25 billion . we expect to use this capacity to provide financial flexibility for strategic investment opportunities , debt refinancing and other corporate uses . a dditionally , nabors industries , inc. , our wholly owned subsidiary , entered into a new five-year unsecured term loan facility for $ 325.0 million . the term loan facility contains a mandatory prepayment of $ 162.5 million due in 2018. we used this facility to pay down our commercial paper borrowings during 2015. we had 11 letter-of-credit facilities with various banks as of december 31 , 2015. availability under these facilities as of december 31 , 2015 was as follows : ( in thousands ) credit available $ 657,239 letters of credit outstanding , inclusive of financial and performance guarantees 211,685 remaining availability $ 445,554 our ability to access capital markets or to otherwise obtain sufficient financing is enhanced by our senior unsecured debt ratings as provided by the major credit rating agencies in the united states and our historical ability to access these markets as needed .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. in our u.s. drilling operating segment , our rig years ( a measure of activity and utilization ) have decreased from 212.5 years during fiscal year 2014 to 120.0 years during fiscal year 2015. in our canada drilling operating segment , our rig years have declined by roughly 51 % from 2014. our international operating segment has not been immune from the impact of lower oil prices . although international drilling markets tend to react slower than the north american markets , we began to experience downward pressure on dayrates in the international segment beginning in the second quarter of 2015. our international rig years declined in the latter half of 2015 , primarily due to the conclusion of several drilling projects as well as reduced activity resulting from lower commodity prices . given the commodity price environment entering 2016 , we expect continued erosion at least through the first half of the year in industry rig counts , both domestic and international , as well as continued downward pressure on the utilization and pricing of 23 our rig fleets . at december 31 , 2015 , we had $ 2.24 billion availability remaining under our $ 2.25 billion revolving credit facility and commercial paper program , which expires july 2020. availability under the revolving credit facility is subject to a covenant not to exceed a net debt to capital ratio of 0.60:1. as of december 31 , 2015 , our net debt to capital ratio was 0.44:1. see item 6 . “selected financial data” . financial results during 2015 , our income ( loss ) from continuing operations was adversely affected by approximately $ 369.0 million in impairments and other charges . net loss from continuing operations totaled $ 329.5 million for 2015 ( $ 1.14 per diluted share ) compared to a net loss from continuing operations of $ 669.3 million ( $ 2.28 per diluted share ) in 2014. the impairment charges stemmed from the impact of the industry downturn on our business activity and future outlook as the continuation of depressed oil prices led to considerable reductions in capital spending by some of our customers and diminished demand for our drilling services . the impairments and retirement provisions were primarily comprised of $ 140.1 million related to tangible assets and equipment and $ 180.6 million related to an other-than-temporary impairment on our equity method investment in cjes . operating revenues in 2015 totaled $ 3.9 billion , representing a decrease of $ 2.9 billion , or 43 % , over 2014. the decrease in revenues was due in part to ceasing to consolidate the revenues associated with our completion & production services business . further exacerbating the decline in revenues was the decrease in activity and reduced dayrates within our u.s. and canada drilling operating segments resulting from the overall decline in oil prices throughout 2015 as mentioned above . these decreases were partially offset by an increase in revenue in our international drilling operating segment . during 2014 , our income ( loss ) from continuing operations was adversely affected by approximately $ 1.03 billion in impairments and other charges . net loss from continuing operations totaled $ 669.3 million for 2014 ( $ 2.28 per diluted share ) compared to net income from continuing operations of $ 158.3 million ( $ 0.51 per diluted share ) in 2013. the impairments and retirement provisions stemmed from the sharp decline in crude oil prices during the fourth quarter of 2014 and the resulting impact on our customers ' spending programs and demand for our services . the impairments and retirement provisions were comprised of approximately $ 611.6 million in charges related to drilling rigs and rig equipment and $ 386.5 million in impairments to our goodwill and intangible assets . the goodwill and intangible assets were primarily attributable to our completion services operating segment from the acquisition of superior well services , inc. ( “superior” ) in 2010. of the $ 611.6 million in charges related to our drilling rigs and rig equipment , the majority is attributable to retirements and impairments to our lower 48 legacy rig fleet ( non ac rigs ) , including the functional retirement of 25 mechanical rigs , an impairment to the scr fleet and the resultant reduction in yard assets and spare rig components due to reduced operating fleet size . the balance is attributable to charges for the impairment or retirement of our jackup rig fleet in the gulf of mexico , our coil tubing drilling rigs in canada and various other under-utilized rigs and related equipment in canada and our international markets . excluding these items , our operating results increased in 2014 over 2013. operating revenues in 2014 totaled $ 6.8 billion , representing an increase of $ 652.2 million , or 11 % , over 2013. the increase in revenues was driven by increases from virtually all of our operating segments with the exception of canada drilling . adjusted operating income for 2014 totaled $ 604.3 million , representing an increase of $ 46.1 million , or 8 % , over 2013. this increase was driven primarily by our u.s. and international drilling and rig services operating segments , which more than offset declines in our completion and production services and canada drilling operating segments . 24 the following tables set forth certain information with respect to our reportable segments and rig activity : replace_table_token_8_th 25 replace_table_token_9_th replace_table_token_10_th ( 1 ) all periods present the operating activities of most of our wholly owned oil and gas businesses , aircraft logistics operations and construction services as discontinued operations . ( 2 ) includes our other services comprised of our drilling technology and top drive manufacturing , directional drilling , rig instrumentation and software services . ( 3 ) represents the elimination of inter-segment transactions . story_separator_special_tag should it remain at these levels for an extended period of time , it could result in a future other-than-temporary impairment . provision for international operations during 2015 , we recognized $ 25.4 million related to assets and receivables impacted by the degradation of the overall country economy and financial situation in venezuela , which has been adversely affected by the downturn in oil prices , primarily comprised of a loss of $ 10.0 million related to the remeasurement of our net monetary assets denominated in local currency from the official exchange rate of 6.3 bolivares per us dollar to the simadi exchange rate which was 199 bolivares per us dollar as of september 30 , 2015 and $ 15.4 million related to the write-off of a receivable balance . the balance of this provision represents an obligation associated with the decision to exit a non-core business line in another country within the region of $ 22.9 million . for the year ended december 31 , 2014 tangible assets and equipment the following table summarizes the 2014 retirement and impairment charges for tangible assets and equipment by operating segment : 32 replace_table_token_15_th approximately two-thirds of the 2014 charges from drilling rigs and rig equipment is related to the u.s. lower 48 legacy rig fleet . given the sharp decline in crude oil prices and the resulting impact on our customers ' spending programs that we experienced in 2014 , and the disproportionate impact of the reduced activity that we believe our legacy rig fleet will absorb , we have retired 25 mechanical rigs and impaired our fleet of scr rigs , including the resultant retirement of and reduction in yard assets and spare rig components associated with a reduced overall size of our working rig fleet . also included in the 2014 charges for our u.s. drilling rigs and rig equipment is a retirement provision of approximately $ 54.4 million for our gulf of mexico jackup fleet . this market has been challenged for the past several years and we believe the drop in oil prices will exacerbate the lack of demand for these rigs . the majority of these rigs would require substantial amounts of capital in order for them to be operable again . the balance of the drilling rigs and rig equipment charges relate to our coil tubing drilling rig fleet in canada and various under-utilized or under-performing rigs or asset classes throughout our international and canada drilling fleets . we also recognized an impairment charge related to obsolete inventory within our rig services operating segment . goodwill and intangible assets during 2014 , we recognized an impairment of goodwill totaling $ 356.6 million , the majority of which was for the remaining goodwill balance of $ 335.0 million in our completion services operating segment related to the acquisition of superior in 2010. the value attributable to the merger with cjes declined sharply beginning in the fourth quarter of 2014 , with a drop in the market price of cjes 's stock and the agreed upon reduction to the amount of cash we expect to receive from this transaction . the combination of these events and a sharp decline in the market price of our stock , led us to believe that a triggering event had occurred in the fourth quarter of 2014 , and we performed an impairment test on our remaining goodwill balances . we determined that our completion services goodwill balances should be fully impaired . the balance of the impairment relates to $ 21.6 million in goodwill related to ryan directional services , inc. our directional drilling operations included in our rig services operating segment . the decline in oil prices and the impact it had on our businesses , along with the lack of certainty surrounding an eventual recovery , led us to impair these goodwill balances . additionally , during 2014 , we recognized an impairment of $ 29.9 million primarily related to various intangible assets , such as customer relationships within our completion & production services and rig services operating segments related to previous acquisitions . transaction costs during 2014 , we incurred $ 22.3 million in transaction costs related to the merger with cjes , including professional fees and other costs incurred to reorganize the business in contemplation of the merger . other-than-temporary impairment during 2014 , we recorded an other-than-temporary impairment of $ 7.0 million related to an equity security . because the trading price of this security remained below our cost basis for an extended period , we determined the investment was other than temporarily impaired and it was appropriate to write down the investment 's carrying value to its current estimated fair value . 33 for the year ended december 31 , 2013 provision for retirement of long-lived assets during 2013 , we recorded a provision for retirement of long-lived assets in multiple operating segments totaling $ 14.0 million , which reduced the carrying value of some assets to their salvage value . the retirements related to assets in saudi arabia and included obsolete top-drives , nonworking trucks , generators , engines and other miscellaneous equipment . the retirements in our canada operations included functionally inoperable rigs and other drilling equipment . in our completion & production services operations , the retirements related to rigs and vehicles that would require significant repair to return to work and other non-core assets . impairments of long-lived assets during 2013 , we recognized an impairment of $ 20.0 million to our fleet of coil-tubing units in our completion & production services business . intense competition and oversupply of equipment has led to lower utilization and margins for this product line . when these factors were considered as part of our annual impairment tests on long-lived assets , the sum of the estimated future cash flows , on an undiscounted basis , was less than the carrying amount of these assets . the estimated fair values of these assets were Narrative : financial condition and sources of liquidity our primary sources of liquidity are cash and investments , availability under our revolving credit facility , our commercial paper program and cash generated from operations . as of december 31 , 2015 , we had cash and short-term investments of $ 274.6 million and working capital of $ 0.5 billion . as of december 31 , 2014 , we had cash and short-term investments of $ 536.2 million and working capital of $ 1.2 billion . at december 31 , 2015 , we had $ 2.24 billion availability remaining under our $ 2.25 billion revolving credit facility and commercial paper program . during 2015 , we entered into an amendment to our existing committed , unsecured revolving credit facility to increase the borrowing capacity to $ 2.2 billion , extend the maturity date to july 2020 and increase the size of the accordion option to 38 $ 500.0 million . we subsequently exercised $ 50.0 million of the accordion option to bring the total availability to $ 2.25 billion . we expect to use this capacity to provide financial flexibility for strategic investment opportunities , debt refinancing and other corporate uses . a dditionally , nabors industries , inc. , our wholly owned subsidiary , entered into a new five-year unsecured term loan facility for $ 325.0 million . the term loan facility contains a mandatory prepayment of $ 162.5 million due in 2018. we used this facility to pay down our commercial paper borrowings during 2015. we had 11 letter-of-credit facilities with various banks as of december 31 , 2015. availability under these facilities as of december 31 , 2015 was as follows : ( in thousands ) credit available $ 657,239 letters of credit outstanding , inclusive of financial and performance guarantees 211,685 remaining availability $ 445,554 our ability to access capital markets or to otherwise obtain sufficient financing is enhanced by our senior unsecured debt ratings as provided by the major credit rating agencies in the united states and our historical ability to access these markets as needed .

these effects have had a significant impact on our business , including reduced demand for our workforce solutions , early terminations or reductions in projects , and hiring freezes , and a shift of a majority of our workforce to remote operations , all of which have contributed to a decline in revenues and other significant adverse impacts on our financial results . other potential impacts of covid-19 may include continued or expanded closures or reductions of operations with respect to our client partners ' operations or facilities , the possibility our client partners will not be able to pay for our workforce solutions , or that they will attempt to defer payments owed to us , either of which could materially impact our liquidity , the possibility that the uncertain nature of the pandemic may not yield the increase in certain of our workforce solutions that we have historically observed during periods of economic downturn , and the possibility that various government-sponsored programs to provide economic relief may be inadequate . further , we may continue to experience adverse financial impacts , some of which may be material , if we can not offset revenue declines with cost savings through expense-related initiatives , human capital management initiatives , or otherwise . as a result of these observed and potential developments , we expect our business , results of operations , and financial condition to continue to be negatively affected . real estate was strongly affected by covid-19 when client partners immediately stopped non-emergency maintenance , which is our largest revenue source . additional , during our high volume season , many client partners were forced into a virtual leasing model verses using onsite touring options . with many government actions requiring eviction moratoriums , our client partners ' response was to tighten all expenses . we will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal , state , local authorities , or that we determine are in the best interests of our team members , field talent , client partners , and stockholders . the potential effects are not clear for any such alterations or modifications on our business , our client partners , candidates , vendors , or on our financial results . results of operations the following tables summarize key components of our results of operations for the periods indicated , both in dollars and as a percentage of revenues , and have been derived from our consolidated financial statements . replace_table_token_7_th 30 replace_table_token_8_th fifty-two week fiscal year ended december 27 , 2020 ( fiscal 2020 ) compared with fifty-two week fiscal year ended december 29 , 2019 ( fiscal 2019 ) revenues : replace_table_token_9_th real estate revenues : real estate revenues decreased approximately $ 27.7 million ( 28.7 % ) due to the effects of the covid-19 pandemic discussed above . the decrease was due to a 31.7 % decrease in billed hours partially offset by a 4.1 % increase in average bill rate . revenue from new offices was $ 0.8 million . professional revenues : professional revenues increased approximately $ 15.1 million ( 12.2 % ) , primarily from ljk and edgerock acquisitions , which contributed $ 36.1 million of new revenues . the remaining professional group decreased $ 21.1 million . even with the overall increase , billed hours decreased 5.0 % offsets by an increase of 17.7 % in average bill rate and an increase in permanent placements of $ 1.2 million . light industrial revenues : light industrial revenues decreased approximately $ 3.8 million ( 5.1 % ) due to the effects of the covid-19 pandemic . the decrease was due to a 11.8 % decrease in billed hours partially offset by a 7.6 % increase in average bill rate . 31 gross profit : gross profit represents revenues from workforce solutions less cost of services expenses , which consist of payroll , payroll taxes , payroll-related insurance , field talent costs , and reimbursable costs . replace_table_token_10_th replace_table_token_11_th overall , our gross profit decreased approximately $ 4.5 million ( 5.5 % ) . as a percentage of revenue , gross profit has remained consistent at 27.4 % , primarily due to higher gross profits across our professional segment . we determine spread as the difference between bill rate and pay rate . real estate gross profit : real estate gross profit decreased approximately $ 11.1 million ( 30.1 % ) consistent with the decrease in revenue , which was partially offset by a 2.2 % increase in average spread . professional gross profit : professional gross profit increased approximately $ 7.3 million ( 22.3 % ) consistent with the increase in revenue , primarily from ljk and edgerock acquisitions , which contributed $ 12.2 million of gross profit and an overall increase of 19.5 % in average spread . light industrial gross profit : light industrial gross profit decreased approximately $ 0.7 million ( 6.2 % ) in line with the decreased revenue , which was partially offset by an increase of 6.0 % in the average spread . selling , general and administrative expenses : selling , general and administrative expenses increased approximately $ 4.4 million ( 7.8 % ) , primarily related from ljk and edgerock acquisitions , which contributed $ 9.5 million of new expense that was partially offset by reduced compensation costs from the decline in gross profit and by many of our actions taken starting in march related to the covid-19 pandemic to reduce actual and planned operating costs as detailed in the following table . 32 replace_table_token_12_th depreciation and amortization : depreciation and amortization charges increased approximately $ 0.1 million ( 2.9 % ) . story_separator_special_tag as a result of the certain business developments and changes in our long-term projections , we concluded a triggering event had occurred that required an interim impairment assessment to be performed . the qualitative assessment thresholds were met on all reporting units except the finance and accounting group , within the professional segment . we calculated the quantitative impairment test of the finance and accounting group using the relief from royalty method for the indefinite-lived intangible assets and residual method for the definite-lived intangible assets by asset group ( see note 6 in the notes to consolidated financial statements ) . we determined that there were no impairment indicators for these assets in fiscal 2019 and 2018. goodwill goodwill represents the difference between the enterprise value/cash paid less the fair value of all recognized net asset fair values including identifiable intangible asset values in a business combination . we review goodwill for impairment annually during the fourth quarter or whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable . we considered the current and expected future economic and market conditions surrounding covid-19 and its impact on each of the reporting units . as a result of the certain business developments and changes in our long-term 39 projections , during second quarter 2020 , we concluded a triggering event had occurred that required an interim impairment assessment to be performed . the qualitative assessment thresholds were met on all reporting units except the finance and accounting group . we calculated the quantitative impairment test of the finance and accounting group using the discounted cash flow method and concluded there was no goodwill impairment loss . based on annual testing , the company has determined that there was no goodwill impairment in fiscal 2020 , 2019 or 2018. we first evaluate qualitative factors to determine whether it is more likely than not ( that is , a likelihood of more than 50 percent ) that the fair value of the reporting unit is less than its carrying amount , including goodwill . if after qualitatively assessing the totality of events or circumstances , we determine that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount , then further testing is unnecessary . if after assessing the totality of events or circumstances , we determine that it is more likely than not that the fair value of the reporting unit is less than its carrying amount , we then estimate the fair value of the reporting unit and compare the fair value of the reporting unit with its carrying amount , including goodwill , as discussed below . in assessing whether it is more likely than not that an indefinite-lived intangible asset is impaired , we assess relevant events and circumstances that could affect the significant inputs used to determine the fair value . the quantitative impairment test for an indefinite-lived intangible asset consists of a comparison of the fair value of the asset with its carrying amount . if the carrying amount of an intangible asset exceeds its fair value , a reporting unit shall recognize an impairment loss in an amount equal to that excess . the quantitative goodwill impairment test involves a two-step process . in the first step , we compare the fair value of each reporting unit to its carrying value . if the fair value of the reporting unit exceeds its carrying value , goodwill is not impaired and no further testing is required . if the fair value of the reporting unit is less than the carrying value , we must perform the second step of the impairment test to measure the amount of impairment loss . in the second step , the reporting unit 's fair value is allocated to all of the assets and liabilities of the reporting unit , including any unrecognized intangible assets , in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination . if the implied fair value of the reporting unit 's goodwill is less than the carrying value , the difference is recorded as an impairment loss . contingent consideration we have obligations , to be paid in cash , related to our acquisitions if certain future operating and financial goals are met . the fair value of this contingent consideration is determined using expected cash flows and present value technique . the fair value calculation of the expected future payments uses a discount rate commensurate with the risks of the expected cash flow . the resulting discount is amortized as interest expense over the outstanding period using the effective interest method . leases we lease all their office space through operating leases , which expire at various dates through 2025. many of the lease agreements obligate us to pay real estate taxes , insurance and certain maintenance costs , which are accounted for separately . certain of our lease arrangements contain renewal provisions from 3 to 10 years , exercisable at our option . our lease agreements do not contain any material residual value guarantees or material restrictive covenants . we determine if an arrangement is an operating lease at inception . leases with an initial term of 12 months or less are not recorded on the balance sheet . all other leases are recorded on the balance sheet as right-of-use assets and lease liabilities for the lease term . right of use lease assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised . the present value of lease payments is determined primarily using the incremental borrowing rate based on the information available at lease commencement date . our operating lease

liquidity and capital resources our working capital requirements are primarily driven by field talent payments , tax payments and client partner accounts receivable receipts . since receipts from client partners lag payments to field talent , working capital requirements increase substantially in periods of growth . our primary sources of liquidity are cash generated from operations and borrowings under our credit agreement with bmo harris bank , n.a . ( “ bmo ” ) , that provides for a revolving credit facility maturing july 16 , 2024 ( the “ revolving facility ” ) . our primary uses of cash are payments to field talent , team members , related payroll liabilities , operating expenses , capital expenditures , cash interest , cash taxes , dividends and contingent consideration and debt payments . we believe that the cash generated from operations , together with the borrowing availability under our revolving facility , will be sufficient to meet our normal working capital needs for at least the next twelve months , including investments made , and expenses incurred , in connection with opening new markets throughout the next year . our ability to continue to fund these items may be affected by general economic , competitive and other factors , many of which are outside of our control . if our future cash flow from operations and other capital resources are insufficient to fund our liquidity needs , we may be forced to obtain additional debt or equity capital or refinance all or a portion of our debt .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. these effects have had a significant impact on our business , including reduced demand for our workforce solutions , early terminations or reductions in projects , and hiring freezes , and a shift of a majority of our workforce to remote operations , all of which have contributed to a decline in revenues and other significant adverse impacts on our financial results . other potential impacts of covid-19 may include continued or expanded closures or reductions of operations with respect to our client partners ' operations or facilities , the possibility our client partners will not be able to pay for our workforce solutions , or that they will attempt to defer payments owed to us , either of which could materially impact our liquidity , the possibility that the uncertain nature of the pandemic may not yield the increase in certain of our workforce solutions that we have historically observed during periods of economic downturn , and the possibility that various government-sponsored programs to provide economic relief may be inadequate . further , we may continue to experience adverse financial impacts , some of which may be material , if we can not offset revenue declines with cost savings through expense-related initiatives , human capital management initiatives , or otherwise . as a result of these observed and potential developments , we expect our business , results of operations , and financial condition to continue to be negatively affected . real estate was strongly affected by covid-19 when client partners immediately stopped non-emergency maintenance , which is our largest revenue source . additional , during our high volume season , many client partners were forced into a virtual leasing model verses using onsite touring options . with many government actions requiring eviction moratoriums , our client partners ' response was to tighten all expenses . we will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal , state , local authorities , or that we determine are in the best interests of our team members , field talent , client partners , and stockholders . the potential effects are not clear for any such alterations or modifications on our business , our client partners , candidates , vendors , or on our financial results . results of operations the following tables summarize key components of our results of operations for the periods indicated , both in dollars and as a percentage of revenues , and have been derived from our consolidated financial statements . replace_table_token_7_th 30 replace_table_token_8_th fifty-two week fiscal year ended december 27 , 2020 ( fiscal 2020 ) compared with fifty-two week fiscal year ended december 29 , 2019 ( fiscal 2019 ) revenues : replace_table_token_9_th real estate revenues : real estate revenues decreased approximately $ 27.7 million ( 28.7 % ) due to the effects of the covid-19 pandemic discussed above . the decrease was due to a 31.7 % decrease in billed hours partially offset by a 4.1 % increase in average bill rate . revenue from new offices was $ 0.8 million . professional revenues : professional revenues increased approximately $ 15.1 million ( 12.2 % ) , primarily from ljk and edgerock acquisitions , which contributed $ 36.1 million of new revenues . the remaining professional group decreased $ 21.1 million . even with the overall increase , billed hours decreased 5.0 % offsets by an increase of 17.7 % in average bill rate and an increase in permanent placements of $ 1.2 million . light industrial revenues : light industrial revenues decreased approximately $ 3.8 million ( 5.1 % ) due to the effects of the covid-19 pandemic . the decrease was due to a 11.8 % decrease in billed hours partially offset by a 7.6 % increase in average bill rate . 31 gross profit : gross profit represents revenues from workforce solutions less cost of services expenses , which consist of payroll , payroll taxes , payroll-related insurance , field talent costs , and reimbursable costs . replace_table_token_10_th replace_table_token_11_th overall , our gross profit decreased approximately $ 4.5 million ( 5.5 % ) . as a percentage of revenue , gross profit has remained consistent at 27.4 % , primarily due to higher gross profits across our professional segment . we determine spread as the difference between bill rate and pay rate . real estate gross profit : real estate gross profit decreased approximately $ 11.1 million ( 30.1 % ) consistent with the decrease in revenue , which was partially offset by a 2.2 % increase in average spread . professional gross profit : professional gross profit increased approximately $ 7.3 million ( 22.3 % ) consistent with the increase in revenue , primarily from ljk and edgerock acquisitions , which contributed $ 12.2 million of gross profit and an overall increase of 19.5 % in average spread . light industrial gross profit : light industrial gross profit decreased approximately $ 0.7 million ( 6.2 % ) in line with the decreased revenue , which was partially offset by an increase of 6.0 % in the average spread . selling , general and administrative expenses : selling , general and administrative expenses increased approximately $ 4.4 million ( 7.8 % ) , primarily related from ljk and edgerock acquisitions , which contributed $ 9.5 million of new expense that was partially offset by reduced compensation costs from the decline in gross profit and by many of our actions taken starting in march related to the covid-19 pandemic to reduce actual and planned operating costs as detailed in the following table . 32 replace_table_token_12_th depreciation and amortization : depreciation and amortization charges increased approximately $ 0.1 million ( 2.9 % ) . story_separator_special_tag as a result of the certain business developments and changes in our long-term projections , we concluded a triggering event had occurred that required an interim impairment assessment to be performed . the qualitative assessment thresholds were met on all reporting units except the finance and accounting group , within the professional segment . we calculated the quantitative impairment test of the finance and accounting group using the relief from royalty method for the indefinite-lived intangible assets and residual method for the definite-lived intangible assets by asset group ( see note 6 in the notes to consolidated financial statements ) . we determined that there were no impairment indicators for these assets in fiscal 2019 and 2018. goodwill goodwill represents the difference between the enterprise value/cash paid less the fair value of all recognized net asset fair values including identifiable intangible asset values in a business combination . we review goodwill for impairment annually during the fourth quarter or whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable . we considered the current and expected future economic and market conditions surrounding covid-19 and its impact on each of the reporting units . as a result of the certain business developments and changes in our long-term 39 projections , during second quarter 2020 , we concluded a triggering event had occurred that required an interim impairment assessment to be performed . the qualitative assessment thresholds were met on all reporting units except the finance and accounting group . we calculated the quantitative impairment test of the finance and accounting group using the discounted cash flow method and concluded there was no goodwill impairment loss . based on annual testing , the company has determined that there was no goodwill impairment in fiscal 2020 , 2019 or 2018. we first evaluate qualitative factors to determine whether it is more likely than not ( that is , a likelihood of more than 50 percent ) that the fair value of the reporting unit is less than its carrying amount , including goodwill . if after qualitatively assessing the totality of events or circumstances , we determine that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount , then further testing is unnecessary . if after assessing the totality of events or circumstances , we determine that it is more likely than not that the fair value of the reporting unit is less than its carrying amount , we then estimate the fair value of the reporting unit and compare the fair value of the reporting unit with its carrying amount , including goodwill , as discussed below . in assessing whether it is more likely than not that an indefinite-lived intangible asset is impaired , we assess relevant events and circumstances that could affect the significant inputs used to determine the fair value . the quantitative impairment test for an indefinite-lived intangible asset consists of a comparison of the fair value of the asset with its carrying amount . if the carrying amount of an intangible asset exceeds its fair value , a reporting unit shall recognize an impairment loss in an amount equal to that excess . the quantitative goodwill impairment test involves a two-step process . in the first step , we compare the fair value of each reporting unit to its carrying value . if the fair value of the reporting unit exceeds its carrying value , goodwill is not impaired and no further testing is required . if the fair value of the reporting unit is less than the carrying value , we must perform the second step of the impairment test to measure the amount of impairment loss . in the second step , the reporting unit 's fair value is allocated to all of the assets and liabilities of the reporting unit , including any unrecognized intangible assets , in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination . if the implied fair value of the reporting unit 's goodwill is less than the carrying value , the difference is recorded as an impairment loss . contingent consideration we have obligations , to be paid in cash , related to our acquisitions if certain future operating and financial goals are met . the fair value of this contingent consideration is determined using expected cash flows and present value technique . the fair value calculation of the expected future payments uses a discount rate commensurate with the risks of the expected cash flow . the resulting discount is amortized as interest expense over the outstanding period using the effective interest method . leases we lease all their office space through operating leases , which expire at various dates through 2025. many of the lease agreements obligate us to pay real estate taxes , insurance and certain maintenance costs , which are accounted for separately . certain of our lease arrangements contain renewal provisions from 3 to 10 years , exercisable at our option . our lease agreements do not contain any material residual value guarantees or material restrictive covenants . we determine if an arrangement is an operating lease at inception . leases with an initial term of 12 months or less are not recorded on the balance sheet . all other leases are recorded on the balance sheet as right-of-use assets and lease liabilities for the lease term . right of use lease assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised . the present value of lease payments is determined primarily using the incremental borrowing rate based on the information available at lease commencement date . our operating lease Narrative : liquidity and capital resources our working capital requirements are primarily driven by field talent payments , tax payments and client partner accounts receivable receipts . since receipts from client partners lag payments to field talent , working capital requirements increase substantially in periods of growth . our primary sources of liquidity are cash generated from operations and borrowings under our credit agreement with bmo harris bank , n.a . ( “ bmo ” ) , that provides for a revolving credit facility maturing july 16 , 2024 ( the “ revolving facility ” ) . our primary uses of cash are payments to field talent , team members , related payroll liabilities , operating expenses , capital expenditures , cash interest , cash taxes , dividends and contingent consideration and debt payments . we believe that the cash generated from operations , together with the borrowing availability under our revolving facility , will be sufficient to meet our normal working capital needs for at least the next twelve months , including investments made , and expenses incurred , in connection with opening new markets throughout the next year . our ability to continue to fund these items may be affected by general economic , competitive and other factors , many of which are outside of our control . if our future cash flow from operations and other capital resources are insufficient to fund our liquidity needs , we may be forced to obtain additional debt or equity capital or refinance all or a portion of our debt .

60 cost of product sales cost of product sales of continuing operations was $ ( 0.6 ) million for the year ended december 31 , 2019 , compared to $ 3.3 million for the year ended december 31 , 2018. the $ ( 0.6 ) million of cost of product sales of continuing operations recognized in the current year is driven by the settlement agreement the company entered into related to the ulesfia product during the second quarter of 2019. the settlement agreement fully released the company of all current and future liabilities related to the lachlan agreement , which contained minimum purchase obligations and minimum royalty provisions that the company had accrued for in the amount of $ 2.4 million in the year ended december 31 , 2018. pursuant to the settlement agreement , during the second quarter of 2019 , the company made a $ 2.3 million cash payment for a full release of all current and future liabilities related to the lachlan agreement as of june 30 , 2019. as a result , the company reversed the $ 8.7 million liability for the minimum obligations and $ 0.4 million royalty payable in accrued liabilities during the second quarter of 2019. the settlement agreement also released the former trx owners of their requirement to indemnify the company for the losses discussed above . as a result , the company reversed the $ 5.2 million indemnity receivable in other receivables during the second quarter of 2019. the settlement agreement resulted in a net reversal of $ 1.6 million in previously recognized expense to cost of product sales for the year ended december 31 , 2019. this reversal is partially offset by cost of product sales of approximately $ 1.0 million , which is primarily composed of royalties , cost of inventory sold and licenses . the $ 3.3 million of cost of product sales for the year ended december 31 , 2018 primarily consists of the ulesfia minimum royalty obligations described above . research and development expenses the following table summarizes our research and development expenses for the years ended december 31 , 2019 and 2018 : replace_table_token_1_th research and development expenses increased $ 6.0 million for the year ended december 31 , 2019 compared to the prior year . the overall increase was driven by an increase in research and development activities during the current year as the company continues to develop its pipeline assets . clinical expenses increased $ 2.4 million primarily due to increased development costs related to cerc-801 , cerc-802 , and cerc-803 , which were acquired as part of the ichorion acquisition in september 2018 , and increased activities related to the cerc-301 clinical study in noh during the first half of 2019. chemistry , manufacturing , and controls ( `` cmc `` ) expenses increased $ 3.3 million for the year ended december 31 , 2019 compared to the same period in 2018 due to additional spending on manufacturing to support clinical development . salaries , benefits and related costs increased by $ 0.7 million compared to the same period in 2018 due to an increase in headcount and salary-related costs needed to maintain and grow our research and development activities as we continue to invest in our pipeline assets . additionally , stock-based compensation increased by $ 0.4 million due to an increase in the amount of stock option grants in 2019 driven by an increased headcount , as well as the additional expense related to the annual stock option award that was granted on april 1 , 2019. these increases were partially offset by a $ 1.3 million reversal of research and development expense related to the company 's assignment of its license agreement with respect to cerc-611 to es therapeutics in the third quarter of 2019. pursuant to the assignment agreement , the company assigned and transferred its rights , interest and obligations related to the compound , thus releasing the company 's contingent payment of $ 1.3 million to lilly upon the first subject dosage of cerc-611 in a multiple ascending dose study , which was previously recorded as a license obligation on the balance sheet . the elimination of the license obligation resulted in an offset of research and development expense for the year ended december 31 , 2019 . 61 the company expects research and development expenses to increase in 2020 as the company advances its newly acquired pipeline assets and also continues to advance the cerc-800 assets . acquired in-process research and development expenses as part of the ichorion acquisition in september 2018 , the company acquired $ 18.7 million of in-process research and development ( `` ipr & d `` ) for three preclinical therapies ( cerc-801 , cerc-802 and cerc-803 ) for cdgs . the fair value of the ipr & d was immediately recognized as acquired ipr & d expense as the ipr & d asset has no other alternate use due to the stage of development . there was no acquired ipr & d expense for the year ended december 31 , 2019. general and administrative expenses the following table summarizes our general and administrative expenses of continuing operations for the years ended december 31 , 2019 and 2018 : replace_table_token_2_th general and administrative expenses decreased $ 0.4 million for the year ended december 31 , 2019 compared to 2018. the overall decrease was driven by a $ 0.5 million decrease in legal , consulting and other professional fees and a $ 0.6 million decrease in stock-based compensation , largely offset by a $ 0.6 million increase in salaries , benefits and related costs . legal , consulting and other professional expenses decreased $ 0.5 million , which was driven by a substantial decrease in consulting fees in the current year . story_separator_special_tag estimated fair value and change in fair value of contingent consideration the company 's business acquisitions of avadel 's pediatric products and trx involved the potential for future payment of consideration that is contingent upon the achievement of operation and commercial milestones and royalty payments on future product sales . the fair value of contingent consideration was determined at the acquisition date utilizing unobservable inputs such as the estimated amount and timing of projected cash flows , the probability of success ( achievement of the contingent event ) and the risk-adjusted discount rate used to present value the probability-weighted cash flows . subsequent to the acquisition date , at each reporting period , the contingent consideration liability was remeasured at the current fair value with changes recorded in the consolidated statements of operations . as part of the aytu divestiture , aytu assumed the company 's contingent consideration liability related to future royalties on avadel 's pediatric products . additionally , as part of a settlement the company entered into in the second quarter of 2019 , the company was released from its contingent consideration liability related to trx . therefore , the company 's contingent consideration liability was $ 0 as of december 31 , 2019. there is no change in fair value of contingent consideration included in cost of product sales or research and development costs . for the year ended december 31 , 2019 and 2018 , the change in fair value of contingent consideration related to royalties on avadel 's pediatric products was included within net income ( loss ) from discontinued operations , net of tax ( inclusive of gain on sale ) . the change in fair value of contingent consideration related to trx was included within its own standalone line in operating expenses from continuing operations in the company 's consolidated statements of operations because the contingent consideration was related to a product that was not sold as part of the aytu divestiture . estimated fair value of investment in aytu and change in fair value of investment in aytu as consideration for the aytu divestiture , the company received approximately 9.8 million shares of aytu series g convertible preferred stock . pursuant to asc 323 , the company accounts for this investment as a financial instrument because cerecor 's investment does not result in a controlling financial interest as the preferred stock received is in-substance common stock and cerecor does not have the ability to exercise significant influence or joint control of aytu . therefore , the fair value of the investment in aytu was determined at the divestiture date utilizing quoted prices for aytu 's common stock price with a discount for lack of marketability due to our shares being restricted as of december 31 , 2019 and subject to a lockup period ending on july 1 , 2020. subsequent to the divestiture date , at each reporting period , the investment in aytu will be remeasured at its current fair value with the change in fair value recorded to other income , net in the accompanying statements of operations . the investment in aytu is recorded in the consolidated balance sheet as a current asset because it is available for sale within one year of december 31 , 2019. estimated fair value of guarantee and change in fair value of guarantee as of the closing date of the aytu divestiture on november 1 , 2019 , aytu assumed the company 's debt obligation to deerfield csf and the contingent consideration liability related to future royalties on avadel 's pediatric products . in conjunction with the closing of the aytu divestiture in the fourth quarter of 2019 , the company entered into a guarantee , which guarantees the payment of the assumed debt obligation and contingent consideration . the fair value of the guarantees were determined at the time of the divestiture as the difference between ( i ) the estimated fair value of the debt and contingent payments , respectively , using cerecor 's estimated cost of debt and ( ii ) the estimated fair value of the debt and contingent payments , respectively , using aytu 's estimated cost of debt . subsequent to the close of the aytu divestiture , at each reporting period , the guarantee will be remeasured at its current fair value with changes recorded in income ( loss ) from discontinued operations , net of tax within the consolidated statements of operations . income taxes the company accounts for income taxes under the asset and liability method in accordance with asc 740 , income taxes ( “ asc 740 ” ) . deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to affect taxable income . deferred tax assets primarily include net operating loss ( `` nol `` ) and tax credit carryforwards , accrued expenses not currently deductible and the cumulative temporary differences related to certain research and patent costs . certain tax attributes , including nols and research and development credit carryforwards , may be subject to an annual limitation under sections 382 and 383 of the internal revenue code ( the `` irc `` ) . see note 15 for further information within the company 's consolidated financial statements . the portion of any deferred tax asset for which it is more likely than not that a tax benefit will not be 68 realized must then be offset by recording a valuation allowance . the company recognizes the tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position . the amount for which an exposure exists is measured as the largest amount of benefit determined on

cash flows the following table summarizes our cash flows for the years ended december 31 , 2019 and 2018 : replace_table_token_5_th net cash used in operating activities total net cash used in operating activities was $ 19.1 million for the year ended december 31 , 2019 , consisting primarily of a net loss of $ 16.1 million , which was driven by increased research and development activities as the company continued to fund its pipeline of development assets . adjustments to reconcile net loss to net cash used in net operating activities included $ 8.0 million gain recognized on the aytu divestiture and a $ 1.0 million non-cash gain on the change of fair value of contingent consideration liability , partially offset by $ 3.9 million of non-cash depreciation and amortization and non-cash stock-based compensation of $ 2.5 million . additionally , changes in assets and liabilities , net of aytu divestiture decreased by a net $ 2.0 million , mainly driven by decreases in accrued expenses and other liabilities of $ 6.8 million , license obligations of $ 1.3 million and income taxes payable of $ 1.5 million , partially offset increases in accounts receivable of $ 1.7 million , net , and other receivables , excluding the aevi loan , of $ 5.1 million . the company expects a significant and likely increase in net cash used in operating activities in 2020 due to our continued investment in the cerc-800 compounds and our increased investment in the pipeline assets recently acquired as part of the aevi merger .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. 60 cost of product sales cost of product sales of continuing operations was $ ( 0.6 ) million for the year ended december 31 , 2019 , compared to $ 3.3 million for the year ended december 31 , 2018. the $ ( 0.6 ) million of cost of product sales of continuing operations recognized in the current year is driven by the settlement agreement the company entered into related to the ulesfia product during the second quarter of 2019. the settlement agreement fully released the company of all current and future liabilities related to the lachlan agreement , which contained minimum purchase obligations and minimum royalty provisions that the company had accrued for in the amount of $ 2.4 million in the year ended december 31 , 2018. pursuant to the settlement agreement , during the second quarter of 2019 , the company made a $ 2.3 million cash payment for a full release of all current and future liabilities related to the lachlan agreement as of june 30 , 2019. as a result , the company reversed the $ 8.7 million liability for the minimum obligations and $ 0.4 million royalty payable in accrued liabilities during the second quarter of 2019. the settlement agreement also released the former trx owners of their requirement to indemnify the company for the losses discussed above . as a result , the company reversed the $ 5.2 million indemnity receivable in other receivables during the second quarter of 2019. the settlement agreement resulted in a net reversal of $ 1.6 million in previously recognized expense to cost of product sales for the year ended december 31 , 2019. this reversal is partially offset by cost of product sales of approximately $ 1.0 million , which is primarily composed of royalties , cost of inventory sold and licenses . the $ 3.3 million of cost of product sales for the year ended december 31 , 2018 primarily consists of the ulesfia minimum royalty obligations described above . research and development expenses the following table summarizes our research and development expenses for the years ended december 31 , 2019 and 2018 : replace_table_token_1_th research and development expenses increased $ 6.0 million for the year ended december 31 , 2019 compared to the prior year . the overall increase was driven by an increase in research and development activities during the current year as the company continues to develop its pipeline assets . clinical expenses increased $ 2.4 million primarily due to increased development costs related to cerc-801 , cerc-802 , and cerc-803 , which were acquired as part of the ichorion acquisition in september 2018 , and increased activities related to the cerc-301 clinical study in noh during the first half of 2019. chemistry , manufacturing , and controls ( `` cmc `` ) expenses increased $ 3.3 million for the year ended december 31 , 2019 compared to the same period in 2018 due to additional spending on manufacturing to support clinical development . salaries , benefits and related costs increased by $ 0.7 million compared to the same period in 2018 due to an increase in headcount and salary-related costs needed to maintain and grow our research and development activities as we continue to invest in our pipeline assets . additionally , stock-based compensation increased by $ 0.4 million due to an increase in the amount of stock option grants in 2019 driven by an increased headcount , as well as the additional expense related to the annual stock option award that was granted on april 1 , 2019. these increases were partially offset by a $ 1.3 million reversal of research and development expense related to the company 's assignment of its license agreement with respect to cerc-611 to es therapeutics in the third quarter of 2019. pursuant to the assignment agreement , the company assigned and transferred its rights , interest and obligations related to the compound , thus releasing the company 's contingent payment of $ 1.3 million to lilly upon the first subject dosage of cerc-611 in a multiple ascending dose study , which was previously recorded as a license obligation on the balance sheet . the elimination of the license obligation resulted in an offset of research and development expense for the year ended december 31 , 2019 . 61 the company expects research and development expenses to increase in 2020 as the company advances its newly acquired pipeline assets and also continues to advance the cerc-800 assets . acquired in-process research and development expenses as part of the ichorion acquisition in september 2018 , the company acquired $ 18.7 million of in-process research and development ( `` ipr & d `` ) for three preclinical therapies ( cerc-801 , cerc-802 and cerc-803 ) for cdgs . the fair value of the ipr & d was immediately recognized as acquired ipr & d expense as the ipr & d asset has no other alternate use due to the stage of development . there was no acquired ipr & d expense for the year ended december 31 , 2019. general and administrative expenses the following table summarizes our general and administrative expenses of continuing operations for the years ended december 31 , 2019 and 2018 : replace_table_token_2_th general and administrative expenses decreased $ 0.4 million for the year ended december 31 , 2019 compared to 2018. the overall decrease was driven by a $ 0.5 million decrease in legal , consulting and other professional fees and a $ 0.6 million decrease in stock-based compensation , largely offset by a $ 0.6 million increase in salaries , benefits and related costs . legal , consulting and other professional expenses decreased $ 0.5 million , which was driven by a substantial decrease in consulting fees in the current year . story_separator_special_tag estimated fair value and change in fair value of contingent consideration the company 's business acquisitions of avadel 's pediatric products and trx involved the potential for future payment of consideration that is contingent upon the achievement of operation and commercial milestones and royalty payments on future product sales . the fair value of contingent consideration was determined at the acquisition date utilizing unobservable inputs such as the estimated amount and timing of projected cash flows , the probability of success ( achievement of the contingent event ) and the risk-adjusted discount rate used to present value the probability-weighted cash flows . subsequent to the acquisition date , at each reporting period , the contingent consideration liability was remeasured at the current fair value with changes recorded in the consolidated statements of operations . as part of the aytu divestiture , aytu assumed the company 's contingent consideration liability related to future royalties on avadel 's pediatric products . additionally , as part of a settlement the company entered into in the second quarter of 2019 , the company was released from its contingent consideration liability related to trx . therefore , the company 's contingent consideration liability was $ 0 as of december 31 , 2019. there is no change in fair value of contingent consideration included in cost of product sales or research and development costs . for the year ended december 31 , 2019 and 2018 , the change in fair value of contingent consideration related to royalties on avadel 's pediatric products was included within net income ( loss ) from discontinued operations , net of tax ( inclusive of gain on sale ) . the change in fair value of contingent consideration related to trx was included within its own standalone line in operating expenses from continuing operations in the company 's consolidated statements of operations because the contingent consideration was related to a product that was not sold as part of the aytu divestiture . estimated fair value of investment in aytu and change in fair value of investment in aytu as consideration for the aytu divestiture , the company received approximately 9.8 million shares of aytu series g convertible preferred stock . pursuant to asc 323 , the company accounts for this investment as a financial instrument because cerecor 's investment does not result in a controlling financial interest as the preferred stock received is in-substance common stock and cerecor does not have the ability to exercise significant influence or joint control of aytu . therefore , the fair value of the investment in aytu was determined at the divestiture date utilizing quoted prices for aytu 's common stock price with a discount for lack of marketability due to our shares being restricted as of december 31 , 2019 and subject to a lockup period ending on july 1 , 2020. subsequent to the divestiture date , at each reporting period , the investment in aytu will be remeasured at its current fair value with the change in fair value recorded to other income , net in the accompanying statements of operations . the investment in aytu is recorded in the consolidated balance sheet as a current asset because it is available for sale within one year of december 31 , 2019. estimated fair value of guarantee and change in fair value of guarantee as of the closing date of the aytu divestiture on november 1 , 2019 , aytu assumed the company 's debt obligation to deerfield csf and the contingent consideration liability related to future royalties on avadel 's pediatric products . in conjunction with the closing of the aytu divestiture in the fourth quarter of 2019 , the company entered into a guarantee , which guarantees the payment of the assumed debt obligation and contingent consideration . the fair value of the guarantees were determined at the time of the divestiture as the difference between ( i ) the estimated fair value of the debt and contingent payments , respectively , using cerecor 's estimated cost of debt and ( ii ) the estimated fair value of the debt and contingent payments , respectively , using aytu 's estimated cost of debt . subsequent to the close of the aytu divestiture , at each reporting period , the guarantee will be remeasured at its current fair value with changes recorded in income ( loss ) from discontinued operations , net of tax within the consolidated statements of operations . income taxes the company accounts for income taxes under the asset and liability method in accordance with asc 740 , income taxes ( “ asc 740 ” ) . deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to affect taxable income . deferred tax assets primarily include net operating loss ( `` nol `` ) and tax credit carryforwards , accrued expenses not currently deductible and the cumulative temporary differences related to certain research and patent costs . certain tax attributes , including nols and research and development credit carryforwards , may be subject to an annual limitation under sections 382 and 383 of the internal revenue code ( the `` irc `` ) . see note 15 for further information within the company 's consolidated financial statements . the portion of any deferred tax asset for which it is more likely than not that a tax benefit will not be 68 realized must then be offset by recording a valuation allowance . the company recognizes the tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position . the amount for which an exposure exists is measured as the largest amount of benefit determined on Narrative : cash flows the following table summarizes our cash flows for the years ended december 31 , 2019 and 2018 : replace_table_token_5_th net cash used in operating activities total net cash used in operating activities was $ 19.1 million for the year ended december 31 , 2019 , consisting primarily of a net loss of $ 16.1 million , which was driven by increased research and development activities as the company continued to fund its pipeline of development assets . adjustments to reconcile net loss to net cash used in net operating activities included $ 8.0 million gain recognized on the aytu divestiture and a $ 1.0 million non-cash gain on the change of fair value of contingent consideration liability , partially offset by $ 3.9 million of non-cash depreciation and amortization and non-cash stock-based compensation of $ 2.5 million . additionally , changes in assets and liabilities , net of aytu divestiture decreased by a net $ 2.0 million , mainly driven by decreases in accrued expenses and other liabilities of $ 6.8 million , license obligations of $ 1.3 million and income taxes payable of $ 1.5 million , partially offset increases in accounts receivable of $ 1.7 million , net , and other receivables , excluding the aevi loan , of $ 5.1 million . the company expects a significant and likely increase in net cash used in operating activities in 2020 due to our continued investment in the cerc-800 compounds and our increased investment in the pipeline assets recently acquired as part of the aevi merger .

during 2018 , average nymex oil and gas prices were $ 64.77 per barrel and $ 3.09 per mcf , respectively , representing an increase of 27 % and a decrease of 1 % , respectively , from the average nymex oil and gas prices for 2017 . local market prices for oil and gas can be impacted by pipeline capacity constraints limiting takeaway and increasing basis differentials . gas production growth and pipeline constraints in the permian basin and mid-continent region and oil production growth and pipeline constraints in the permian basin have resulted in higher basis differentials and , therefore , lower realized prices . the average prices per barrel of oil and mcf of gas that we realized were less than the wti cushing and henry hub indices by the amounts shown in the table below for the periods indicated . replace_table_token_16_th pipeline expansion projects in the permian basin are expected to ease capacity constraints as they come online over the next few years , which is reflected in the current futures markets that show narrowing differentials . however , if pipeline constraints remain , higher differentials will persist or potentially worsen . our revenue , profitability , and future growth are highly dependent on the prices we receive for our oil and gas production . see results of operations revenues below for further information regarding our realized commodity prices . 38 2018 summary of operating and financial results total daily production volumes increased 17 % to 221.9 mboe per day . oil volumes increased 18 % to 67.7 mbbls per day . gas volumes increased 10 % to 563.9 mmcf per day . ngl volumes increased 27 % to 60.3 mbbls per day . total production revenue increased 23 % to $ 2.30 billion . year-end proved reserves increased 6 % to 591.2 mmboe , as compared to 559.0 mmboe at year-end 2017 . exploration and development capital investments were $ 1.57 billion , as compared to $ 1.28 billion in 2017 . cash flow provided by operating activities increased 41 % to $ 1.55 billion . cash on hand at december 31 , 2018 was $ 800.7 million . for the year ended december 31 , 2018 , we had net income of $ 791.9 million ( $ 8.32 per diluted share ) as compared to net income of $ 494.3 million ( $ 5.19 per diluted share ) in 2017 . production revenue in 2018 was positively impacted by increased production volumes across all products as well as increased realized oil and ngl commodity prices . lower realized gas prices negatively impacted 2018. year-over-year changes are discussed further in the results of operations section that follows . proved reserves our proved reserves by region at december 31 , 2018 and 2017 were as follows : replace_table_token_17_th replace_table_token_18_th year-end 2018 proved reserves increased approximately 6 % to 591.2 mmboe , compared to 559.0 mmboe at year-end 2017 . proved gas reserves were 1.59 tcf , proved oil reserves were 146.5 mmbbls , and proved ngl reserves were 179.4 mmbbls . reserves in the permian basin accounted for 57 % of our total proved reserves with nearly all of the remainder in our mid-continent region . see supplemental information on oil and gas producing activities ( unaudited ) in item 8 for a more detailed discussion regarding year-over-year changes in our proved reserves . 39 the process of estimating quantities of oil , gas , and ngl reserves is complex . significant decisions are required in the evaluation of all available geological , geophysical , engineering , and economic data . although every reasonable effort is made to ensure that our reserve estimates represent the most accurate assessments possible , subjective decisions and available data for our various fields make these estimates generally less precise than other estimates included in financial statement disclosures . see proved reserves estimation procedures in items 1 and 2 for a discussion of our reserve estimation process and item 1a risk factors , which includes a discussion of factors that affect our proved reserves estimates . results of operations effective january 1 , 2018 , we adopted the provisions of accounting standards codification 606 , revenue from contracts with customers ( “ asc 606 ” ) , utilizing the modified retrospective approach , which we applied to contracts that were not completed as of that date . because we utilized the modified retrospective approach , there was no impact to prior periods ' reported amounts . application of asc 606 has no impact on our net income or cash flows from operations ; however , certain costs classified as transportation , processing , and other operating in the statement of operations under prior accounting standards are now reflected as deductions from revenue under asc 606. the following table presents the impact on our oil sales , gas sales , and ngl sales and on our transportation , processing , and other operating costs from the application of asc 606 in the current reporting period : replace_table_token_19_th almost all our revenues are derived from sales of our oil , natural gas , and ngl production . increases or decreases in our revenues , profitability , and future production growth are highly dependent on the commodity prices we receive . prices are market driven and we expect that future prices will continue to fluctuate due to supply and demand factors , availability of transportation , seasonality , geopolitical , and economic factors . see item 7a quantitative and qualitative disclosures about market risk for more information regarding the sensitivity of our revenues to price fluctuations . story_separator_special_tag we remeasured the deferred tax assets and liabilities as of december 31 , 2017 to reflect the reduction in the u.s. income tax rate from 35 % to 21 % for years after 2017 and , as a result of this remeasurement , we recorded an income tax benefit of $ 61.1 million and a corresponding $ 61.1 million decrease in the net deferred tax liabilities as of december 31 , 2017. we believe the accounting for the effects of h.r.1 recognized in the december 31 , 2017 financial statements is materially complete . during 2018 , no other adjustments were made . as a result of h.r.1 , we expect our effective 46 tax rate in future periods will be lower than in periods prior to enactment . in addition , the limitations on utilization of net operating losses and deductibility of interest and executive compensation may result in the payment of cash taxes earlier than expected . our combined federal and state effective tax rates , as shown above , differ from the statutory rate primarily due to state income taxes , non-deductible expenses , revisions , and the impact of changes in tax law . see note 9 to the consolidated financial statements for further information regarding our income taxes . results of operations 2017 compared to 2016 summary for the year ended december 31 , 2017 , we had net income of $ 494.3 million ( $ 5.19 per diluted share ) , up from a net loss of $ 408.8 million ( $ 4.38 per diluted share ) in 2016 . production revenue in 2017 was positively impacted by increased realized commodity prices and production volumes . lower commodity prices negatively impacted 2016 , including resulting in $ 757.7 million of impairments of our oil and gas properties in that year . year-over-year changes are discussed further as follows . also refer to the “ 2018 compared to 2017 ” section above for general information regarding various statement of operations line items . revenues realized prices and production volumes were higher in 2017 as compared to 2016 , which caused our revenues to increase by $ 652.8 million , or 53 % , from the prior year . the following table shows our production revenue for the years indicated as well as the change in revenue due to changes in prices and volumes . replace_table_token_31_th the table below presents our production volumes by commodity , our average realized commodity prices , and certain major u.s. index prices . the sale of our permian basin oil production is typically tied to the wti midland benchmark price and the sale of our mid-continent oil production is typically tied to the wti cushing benchmark price . during 2017 and 2016 , 78 % and 80 % , respectively , of our oil production was in the permian basin with the majority of the remainder in the mid-continent region . our realized prices do not include settlements of commodity derivative contracts . 47 replace_table_token_32_th other revenues we transport , process , and market some third-party gas that is associated with our equity gas . we market and sell gas for other working interest owners under short term agreements and may earn a fee for such services . the table below reflects income from third-party gas gathering and processing and our net marketing margin for marketing third-party gas . replace_table_token_33_th fluctuations in revenues from gas gathering and gas marketing activities are a function of increases and decreases in volumes , commodity prices , and gathering rate charges . the increases from 2016 are primarily due to an increase in prices . 48 operating costs and expenses total operating costs and expenses of $ 1.17 billion in 2017 were 36 % lower than the $ 1.83 billion incurred in 2016 . most of the decrease resulted from ceiling test impairments of our oil and gas properties of $ 757.7 million recorded in 2016 ; we recorded no ceiling test impairments in 2017. also contributing to the decrease was the net gain on derivative instruments in 2017 compared to a net loss in 2016. otherwise , all other categories of operating costs and expenses increased in 2017. the following table shows our operating costs and expenses for the years indicated and a discussion of year-over-year differences follows . replace_table_token_34_th ceiling test impairment we use the full cost method of accounting for our oil and gas operations . accounting rules require us to perform a quarterly ceiling test calculation to test our capitalized oil and gas property costs for possible impairment . if the net capitalized cost of our oil and gas properties , as adjusted for income taxes , exceeds the ceiling limitation , the excess is charged to expense . the ceiling limitation is equal to the sum of : ( i ) the present value discounted at 10 % of estimated future net revenues from proved reserves , ( ii ) the cost of properties not being amortized , and ( iii ) the lower of cost or estimated fair value of unproven properties included in the costs being amortized , as adjusted for income taxes . estimated future net revenues are determined based on trailing twelve-month average commodity prices and estimated proved reserve quantities , operating costs , and capital expenditures . at each quarter-end date during the year ended december 31 , 2017 , the net capitalized cost of our oil and gas properties , as adjusted for income taxes , did not exceed the ceiling limitation , and , therefore , we did not recognize a ceiling test impairment during the year . the commodity prices used in the december 31 , 2017 ceiling calculation , based on the required trailing twelve-month average prices , were $ 2.98 per mcf of gas and $ 51.34 per barrel of oil . a decline of approximately 19 % or more in the value of the ceiling limitation would have

net cash provided by operating activities in 2018 was $ 1.55 billion , up $ 454.4 million , or 41 % , from $ 1.10 billion in 2017 . the increase was primarily a result of higher revenues due to higher production volumes and realized oil and ngl prices in 2018 . also contributing to the increase was a decreased investment in working capital , primarily caused by the timing of cash receipts of accounts receivable . these increases were partially offset by increased net operating expenses , primarily production expense and taxes other than income , and increased cash outflows for settlements of derivative instruments . net cash provided by operating activities in 2017 was $ 1.10 billion , up $ 470.7 million , or 75 % , from $ 625.8 million in 2016. the increase was primarily a result of higher revenue due to higher realized prices and production volumes in 2017. this increase was partially offset by increased operating expenses and an increased investment in working capital . see results of operations above for more information regarding year-over-year changes in revenue and operating expenses . in 2018 , net cash used by investing activities was $ 1.09 billion , compared to $ 1.27 billion and $ 692.4 million in 2017 and 2016 , respectively . the majority of our cash flows used by investing activities are for e & d capital expenditures , which , as reflected in the statements of cash flows , were $ 1.57 billion , $ 1.23 billion , and $ 699.6 million in 2018 , 2017 , and 2016 , respectively . our other capital expenditures , which are primarily for our midstream assets , were $ 103.5 million , $ 45.4 million , and $ 22.2 million in 2018 , 2017 , and 2016 , respectively .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. during 2018 , average nymex oil and gas prices were $ 64.77 per barrel and $ 3.09 per mcf , respectively , representing an increase of 27 % and a decrease of 1 % , respectively , from the average nymex oil and gas prices for 2017 . local market prices for oil and gas can be impacted by pipeline capacity constraints limiting takeaway and increasing basis differentials . gas production growth and pipeline constraints in the permian basin and mid-continent region and oil production growth and pipeline constraints in the permian basin have resulted in higher basis differentials and , therefore , lower realized prices . the average prices per barrel of oil and mcf of gas that we realized were less than the wti cushing and henry hub indices by the amounts shown in the table below for the periods indicated . replace_table_token_16_th pipeline expansion projects in the permian basin are expected to ease capacity constraints as they come online over the next few years , which is reflected in the current futures markets that show narrowing differentials . however , if pipeline constraints remain , higher differentials will persist or potentially worsen . our revenue , profitability , and future growth are highly dependent on the prices we receive for our oil and gas production . see results of operations revenues below for further information regarding our realized commodity prices . 38 2018 summary of operating and financial results total daily production volumes increased 17 % to 221.9 mboe per day . oil volumes increased 18 % to 67.7 mbbls per day . gas volumes increased 10 % to 563.9 mmcf per day . ngl volumes increased 27 % to 60.3 mbbls per day . total production revenue increased 23 % to $ 2.30 billion . year-end proved reserves increased 6 % to 591.2 mmboe , as compared to 559.0 mmboe at year-end 2017 . exploration and development capital investments were $ 1.57 billion , as compared to $ 1.28 billion in 2017 . cash flow provided by operating activities increased 41 % to $ 1.55 billion . cash on hand at december 31 , 2018 was $ 800.7 million . for the year ended december 31 , 2018 , we had net income of $ 791.9 million ( $ 8.32 per diluted share ) as compared to net income of $ 494.3 million ( $ 5.19 per diluted share ) in 2017 . production revenue in 2018 was positively impacted by increased production volumes across all products as well as increased realized oil and ngl commodity prices . lower realized gas prices negatively impacted 2018. year-over-year changes are discussed further in the results of operations section that follows . proved reserves our proved reserves by region at december 31 , 2018 and 2017 were as follows : replace_table_token_17_th replace_table_token_18_th year-end 2018 proved reserves increased approximately 6 % to 591.2 mmboe , compared to 559.0 mmboe at year-end 2017 . proved gas reserves were 1.59 tcf , proved oil reserves were 146.5 mmbbls , and proved ngl reserves were 179.4 mmbbls . reserves in the permian basin accounted for 57 % of our total proved reserves with nearly all of the remainder in our mid-continent region . see supplemental information on oil and gas producing activities ( unaudited ) in item 8 for a more detailed discussion regarding year-over-year changes in our proved reserves . 39 the process of estimating quantities of oil , gas , and ngl reserves is complex . significant decisions are required in the evaluation of all available geological , geophysical , engineering , and economic data . although every reasonable effort is made to ensure that our reserve estimates represent the most accurate assessments possible , subjective decisions and available data for our various fields make these estimates generally less precise than other estimates included in financial statement disclosures . see proved reserves estimation procedures in items 1 and 2 for a discussion of our reserve estimation process and item 1a risk factors , which includes a discussion of factors that affect our proved reserves estimates . results of operations effective january 1 , 2018 , we adopted the provisions of accounting standards codification 606 , revenue from contracts with customers ( “ asc 606 ” ) , utilizing the modified retrospective approach , which we applied to contracts that were not completed as of that date . because we utilized the modified retrospective approach , there was no impact to prior periods ' reported amounts . application of asc 606 has no impact on our net income or cash flows from operations ; however , certain costs classified as transportation , processing , and other operating in the statement of operations under prior accounting standards are now reflected as deductions from revenue under asc 606. the following table presents the impact on our oil sales , gas sales , and ngl sales and on our transportation , processing , and other operating costs from the application of asc 606 in the current reporting period : replace_table_token_19_th almost all our revenues are derived from sales of our oil , natural gas , and ngl production . increases or decreases in our revenues , profitability , and future production growth are highly dependent on the commodity prices we receive . prices are market driven and we expect that future prices will continue to fluctuate due to supply and demand factors , availability of transportation , seasonality , geopolitical , and economic factors . see item 7a quantitative and qualitative disclosures about market risk for more information regarding the sensitivity of our revenues to price fluctuations . story_separator_special_tag we remeasured the deferred tax assets and liabilities as of december 31 , 2017 to reflect the reduction in the u.s. income tax rate from 35 % to 21 % for years after 2017 and , as a result of this remeasurement , we recorded an income tax benefit of $ 61.1 million and a corresponding $ 61.1 million decrease in the net deferred tax liabilities as of december 31 , 2017. we believe the accounting for the effects of h.r.1 recognized in the december 31 , 2017 financial statements is materially complete . during 2018 , no other adjustments were made . as a result of h.r.1 , we expect our effective 46 tax rate in future periods will be lower than in periods prior to enactment . in addition , the limitations on utilization of net operating losses and deductibility of interest and executive compensation may result in the payment of cash taxes earlier than expected . our combined federal and state effective tax rates , as shown above , differ from the statutory rate primarily due to state income taxes , non-deductible expenses , revisions , and the impact of changes in tax law . see note 9 to the consolidated financial statements for further information regarding our income taxes . results of operations 2017 compared to 2016 summary for the year ended december 31 , 2017 , we had net income of $ 494.3 million ( $ 5.19 per diluted share ) , up from a net loss of $ 408.8 million ( $ 4.38 per diluted share ) in 2016 . production revenue in 2017 was positively impacted by increased realized commodity prices and production volumes . lower commodity prices negatively impacted 2016 , including resulting in $ 757.7 million of impairments of our oil and gas properties in that year . year-over-year changes are discussed further as follows . also refer to the “ 2018 compared to 2017 ” section above for general information regarding various statement of operations line items . revenues realized prices and production volumes were higher in 2017 as compared to 2016 , which caused our revenues to increase by $ 652.8 million , or 53 % , from the prior year . the following table shows our production revenue for the years indicated as well as the change in revenue due to changes in prices and volumes . replace_table_token_31_th the table below presents our production volumes by commodity , our average realized commodity prices , and certain major u.s. index prices . the sale of our permian basin oil production is typically tied to the wti midland benchmark price and the sale of our mid-continent oil production is typically tied to the wti cushing benchmark price . during 2017 and 2016 , 78 % and 80 % , respectively , of our oil production was in the permian basin with the majority of the remainder in the mid-continent region . our realized prices do not include settlements of commodity derivative contracts . 47 replace_table_token_32_th other revenues we transport , process , and market some third-party gas that is associated with our equity gas . we market and sell gas for other working interest owners under short term agreements and may earn a fee for such services . the table below reflects income from third-party gas gathering and processing and our net marketing margin for marketing third-party gas . replace_table_token_33_th fluctuations in revenues from gas gathering and gas marketing activities are a function of increases and decreases in volumes , commodity prices , and gathering rate charges . the increases from 2016 are primarily due to an increase in prices . 48 operating costs and expenses total operating costs and expenses of $ 1.17 billion in 2017 were 36 % lower than the $ 1.83 billion incurred in 2016 . most of the decrease resulted from ceiling test impairments of our oil and gas properties of $ 757.7 million recorded in 2016 ; we recorded no ceiling test impairments in 2017. also contributing to the decrease was the net gain on derivative instruments in 2017 compared to a net loss in 2016. otherwise , all other categories of operating costs and expenses increased in 2017. the following table shows our operating costs and expenses for the years indicated and a discussion of year-over-year differences follows . replace_table_token_34_th ceiling test impairment we use the full cost method of accounting for our oil and gas operations . accounting rules require us to perform a quarterly ceiling test calculation to test our capitalized oil and gas property costs for possible impairment . if the net capitalized cost of our oil and gas properties , as adjusted for income taxes , exceeds the ceiling limitation , the excess is charged to expense . the ceiling limitation is equal to the sum of : ( i ) the present value discounted at 10 % of estimated future net revenues from proved reserves , ( ii ) the cost of properties not being amortized , and ( iii ) the lower of cost or estimated fair value of unproven properties included in the costs being amortized , as adjusted for income taxes . estimated future net revenues are determined based on trailing twelve-month average commodity prices and estimated proved reserve quantities , operating costs , and capital expenditures . at each quarter-end date during the year ended december 31 , 2017 , the net capitalized cost of our oil and gas properties , as adjusted for income taxes , did not exceed the ceiling limitation , and , therefore , we did not recognize a ceiling test impairment during the year . the commodity prices used in the december 31 , 2017 ceiling calculation , based on the required trailing twelve-month average prices , were $ 2.98 per mcf of gas and $ 51.34 per barrel of oil . a decline of approximately 19 % or more in the value of the ceiling limitation would have Narrative : net cash provided by operating activities in 2018 was $ 1.55 billion , up $ 454.4 million , or 41 % , from $ 1.10 billion in 2017 . the increase was primarily a result of higher revenues due to higher production volumes and realized oil and ngl prices in 2018 . also contributing to the increase was a decreased investment in working capital , primarily caused by the timing of cash receipts of accounts receivable . these increases were partially offset by increased net operating expenses , primarily production expense and taxes other than income , and increased cash outflows for settlements of derivative instruments . net cash provided by operating activities in 2017 was $ 1.10 billion , up $ 470.7 million , or 75 % , from $ 625.8 million in 2016. the increase was primarily a result of higher revenue due to higher realized prices and production volumes in 2017. this increase was partially offset by increased operating expenses and an increased investment in working capital . see results of operations above for more information regarding year-over-year changes in revenue and operating expenses . in 2018 , net cash used by investing activities was $ 1.09 billion , compared to $ 1.27 billion and $ 692.4 million in 2017 and 2016 , respectively . the majority of our cash flows used by investing activities are for e & d capital expenditures , which , as reflected in the statements of cash flows , were $ 1.57 billion , $ 1.23 billion , and $ 699.6 million in 2018 , 2017 , and 2016 , respectively . our other capital expenditures , which are primarily for our midstream assets , were $ 103.5 million , $ 45.4 million , and $ 22.2 million in 2018 , 2017 , and 2016 , respectively .

any forward-looking statements involve known and unknown risks , uncertainties , and other factors that may cause our actual results , performance , or achievements to be materially different from any future results , performance , or achievements expressed or implied by such forward-looking statements . such factors include , among others , potential tariffs , our ability to maintain liquidity , our maintenance of patent protection , the impact of current and future court decisions regarding current litigation , our ability to maintain favorable third party manufacturing and supplier arrangements and relationships , foreign trade risk , our ability to quickly increase capacity in response to an increase in demand , our ability to access the market , our ability to maintain or decrease production costs , our ability to continue to finance research and development as well as operations and expansion of production , the impact of larger market players , specifically bd , in providing devices to the safety market , and other factors referenced in item 1a . risk factors . given these uncertainties , undue reliance should not be placed on forward-looking statements . 10 overview we have been manufacturing and marketing our products since 1997. vanishpoint ® syringes comprised 84.9 % of our sales in 2018. we also manufacture and market the easypoint ® needle , blood collection tube holder , iv safety catheter , and vanishpoint ® blood collection set . we currently provide other safety medical products in addition to safety products utilizing retractable technology . one such product is the patient safe ® syringe , which is uniquely designed to reduce the risk of bloodstream infections associated with catheter hub contamination . in the second quarter of 2016 , we began selling the easypoint ® needle . easypoint ® needles made up 10.3 % of revenues in 2018. the easypoint ® is a retractable needle that can be used with luer lock syringes , luer slip syringes , and prefilled syringes to give injections . the easypoint ® needle can also be used to aspirate fluids and collect blood . based on industry-wide trends , we anticipate that demand may increase for the easypoint ® needle . historically , unit sales have increased in the latter part of the year due , in part , to the demand for syringes during the flu season . our products have been and continue to be distributed nationally and internationally through numerous distributors . although we have made limited progress in some areas , such as the alternate care market , our volumes are not as high as they should be given the nature and quality of our products and the federal and state legislation requiring the use of safe needle devices . the alternate care market is composed of facilities that provide long-term nursing and out-patient surgery , emergency care , physician services , health clinics , and retail pharmacies . we continue to pursue various strategies to have better access to the hospital market , as well as other markets , including attempting to gain access to the market through our sales efforts , our innovative technology , introduction of new products , and , when necessary , litigation . we have reported in the past that our progress is limited principally due to the practices engaged in by bd , the dominant maker and seller of disposable syringes . we initiated an antitrust and false advertising lawsuit in 2007 against bd . although a district court judgment in 2015 awarded us approximately $ 340 million in antitrust damages from bd and the fifth circuit affirmed a finding of false advertising liability against bd , we were ultimately awarded a take nothing judgment in august 2017 and the case was dismissed . we appealed that ruling and oral arguments occurred october 3 , 2018. on march 26 , 2019 , the u.s. court of appeals for the fifth circuit issued an opinion affirming the take nothing judgment . we are evaluating this ruling and conferring with legal counsel regarding possible future action . our litigation expenses were significantly less in 2017 and 2018 than previous years . 2017 costs related to additional compensation , bonuses to ms. larios and mr. cowan , and stock option expense related to options granted in 2016 affect comparability of 2018 results to 2017 results . in november 2018 , we terminated 19 employees earning total annual compensation of approximately $ 1.12 million . some of these positions may be filled in the future . severance costs associated with the 2018 terminations were $ 244 thousand . in january 2018 , congress imposed another two-year moratorium on the 2.3 % medical device excise tax imposed by internal revenue code section 4191. thus , the medical device excise tax is not expected to go into effect until january 1 , 2020. in 2016 , we granted a right to three of our executive officers to purchase shares directly from the company . thomas j. shaw was the only officer to exercise such right prior to expiration , buying a total of three million shares in two transactions in 2017 for an aggregate purchase price of $ 2.35 million . we received approximately $ 1 million from our insurance carrier in the second quarter of 2017 and used these funds to repair our buildings from earlier storm damage . the remaining proceeds of $ 261 thousand were recognized as insurance proceeds in the fourth quarter of 2018. product purchases from our chinese manufacturers have enabled us to increase manufacturing capacity with little capital outlay and have provided a competitive manufacturing cost . story_separator_special_tag in 2018 , our chinese manufacturers 11 produced approximately 85.3 % of our products . in the event that we become unable to purchase products from our chinese manufacturers , we would need to find an alternate manufacturer for the blood collection set , iv catheter , patient safe ® syringe , 0.5ml insulin syringe , 0.5ml autodisable syringe , and 2ml , 5ml , and 10ml syringes and we would increase domestic production for the 1ml and 3ml syringes . in 1995 , we entered into a license agreement with thomas j. shaw for the exclusive right to manufacture , market , and distribute products utilizing his patented automated retraction technology and other patented technology . this technology is the subject of various patents and patent applications owned by mr. shaw . the license agreement generally provides for quarterly payments of a 5 % royalty fee on gross sales . with increased volumes , our manufacturing unit costs have generally tended to decline . factors that could affect our unit costs include increases in costs by third party manufacturers , changing production volumes , costs of petroleum products , and transportation costs . increases in such costs may not be recoverable through price increases of our products . results of operations the following discussion contains trend information and other forward-looking statements that involve a number of risks and uncertainties . our actual future results could differ materially from our historical results of operations and those discussed in the forward-looking statements . all period references are to our fiscal years ended december 2018 , 2017 , or 2016. dollar amounts have been rounded for ease of reading . comparison of year ended december 31 , 2018 and year ended december 31 , 2017 domestic sales accounted for 86.1 % and 78.3 % of the revenues in 2018 and 2017 , respectively . domestic revenues increased 6.0 % principally due to increased volume mitigated by lower average price . domestic unit sales increased 12.0 % . domestic unit sales were 81.0 % of total unit sales for 2018. international revenues decreased from $ 7.5 million in 2017 to $ 4.6 million in 2018 , primarily due to lower volumes . overall unit sales decreased 3.8 % . our international orders may be subject to significant fluctuation over time . such orders may fluctuate due to health initiatives at various times as well as economic conditions . cost of manufactured product decreased $ 1.5 million principally due to lower volumes and lower unit cost of manufacture . royalty expense increased $ 80 thousand due to increased gross sales . gross profit margins increased from 28.9 % in 2017 to 30.7 % in 2018 principally due to lower cost of manufacturing . operating expenses decreased 14.2 % from the prior year due to lower legal expense , no bonuses paid in 2018 , lower travel and entertainment cost , decreased costs of engineering samples , and no stock option expense in 2018. these decreases were mitigated by severance costs . recognition of insurance proceeds of $ 261 thousand is due to actual building repairs being less than the insurance payment . the loss from operations was $ 1.3 million in 2018 compared to a loss from operations of $ 3.8 million in 2017. we recorded $ 188 thousand in tax benefits in connection with the enactment of the tax cut and jobs act ( the “act” ) on december 22 , 2017. the act established new tax provisions that affect us including the elimination of the corporate alternative minimum tax and changing rules related to uses and limitations of net operating loss carry forwards created after december 31 , 2017. carry forward credits from alternative minimum taxes paid in prior years became refundable in tax years beginning january 1 , 2018. such credits were , however , subject to sequestration . however , in january 2019 , the irs had a ruling that provided that alternative minimum tax payments are not subject to sequestration , bringing the total benefit to $ 202 thousand , an increase of $ 13 thousand from last year . 12 cash flow from operations was negative $ 1.2 million in 2018 due to our net loss , increased inventory , and use of insurance proceeds for repairs . the decrease in cash was mitigated by a decrease in accounts receivable and an increase in liabilities . in 2018 , we transferred $ 3 million from our cash accounts into securities with maturities of one to three years . this transfer significantly affects our net decrease in cash in 2018. however , the securities may increase investment income in the future . comparison of year ended december 31 , 2017 and year ended december 31 , 2016 domestic sales accounted for 78.3 % and 88.2 % of the revenues in 2017 and 2016 , respectively . domestic revenues increased 2.7 % principally due to increased sales of easypoint ® and the blood collection set . domestic unit sales increased 7.1 % . domestic unit sales were 69.5 % of total unit sales for 2017. international revenues increased from $ 3.5 million in 2016 to $ 7.5 million in 2017 , primarily due to increased volumes mitigated by lower average prices . overall unit sales increased 28.3 % . our international orders may be subject to significant fluctuation over time . such orders may fluctuate due to health initiatives at various times as well as economic conditions . cost of manufactured product increased $ 4.7 million principally due to higher volumes . royalty expense increased $ 337 thousand due to increased gross sales . gross profit margins decreased from 34.7 % in 2016 to 28.9 % in 2017 principally due to a larger portion of international sales which bear a lower average sales price . operating expenses decreased 0.7 % from the prior year due to decreased legal expenses and no impairment costs incurred in 2017 , offset by increased

liquidity and capital resources at the present time , management does not intend to publicly raise equity capital . due to the funds received from prior litigation and direct purchase of stock , we have sufficient cash reserves and intend to rely on operations , cash reserves , and debt financing , when available , as the primary ongoing sources of cash . our ability to obtain additional funds through loans is uncertain . in 2018 , we transferred $ 3 million from our cash accounts into securities with maturities of one to three years . this transfer significantly affects our net decrease in cash in 2018. however , the securities may increase investment income in the future . historical sources of liquidity we have historically funded operations primarily from the proceeds from revenues , private placements , litigation settlements , and loans . 13 internal sources of liquidity margins and market access to routinely achieve positive or break even quarters , we need increased access to hospital markets which has been difficult to obtain . we will continue to attempt to gain access to the market through our sales efforts , innovative technology , the introduction of new products , and , when necessary , litigation . we continue to focus on methods of upgrading our manufacturing capability and efficiency in order to reduce costs .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. any forward-looking statements involve known and unknown risks , uncertainties , and other factors that may cause our actual results , performance , or achievements to be materially different from any future results , performance , or achievements expressed or implied by such forward-looking statements . such factors include , among others , potential tariffs , our ability to maintain liquidity , our maintenance of patent protection , the impact of current and future court decisions regarding current litigation , our ability to maintain favorable third party manufacturing and supplier arrangements and relationships , foreign trade risk , our ability to quickly increase capacity in response to an increase in demand , our ability to access the market , our ability to maintain or decrease production costs , our ability to continue to finance research and development as well as operations and expansion of production , the impact of larger market players , specifically bd , in providing devices to the safety market , and other factors referenced in item 1a . risk factors . given these uncertainties , undue reliance should not be placed on forward-looking statements . 10 overview we have been manufacturing and marketing our products since 1997. vanishpoint ® syringes comprised 84.9 % of our sales in 2018. we also manufacture and market the easypoint ® needle , blood collection tube holder , iv safety catheter , and vanishpoint ® blood collection set . we currently provide other safety medical products in addition to safety products utilizing retractable technology . one such product is the patient safe ® syringe , which is uniquely designed to reduce the risk of bloodstream infections associated with catheter hub contamination . in the second quarter of 2016 , we began selling the easypoint ® needle . easypoint ® needles made up 10.3 % of revenues in 2018. the easypoint ® is a retractable needle that can be used with luer lock syringes , luer slip syringes , and prefilled syringes to give injections . the easypoint ® needle can also be used to aspirate fluids and collect blood . based on industry-wide trends , we anticipate that demand may increase for the easypoint ® needle . historically , unit sales have increased in the latter part of the year due , in part , to the demand for syringes during the flu season . our products have been and continue to be distributed nationally and internationally through numerous distributors . although we have made limited progress in some areas , such as the alternate care market , our volumes are not as high as they should be given the nature and quality of our products and the federal and state legislation requiring the use of safe needle devices . the alternate care market is composed of facilities that provide long-term nursing and out-patient surgery , emergency care , physician services , health clinics , and retail pharmacies . we continue to pursue various strategies to have better access to the hospital market , as well as other markets , including attempting to gain access to the market through our sales efforts , our innovative technology , introduction of new products , and , when necessary , litigation . we have reported in the past that our progress is limited principally due to the practices engaged in by bd , the dominant maker and seller of disposable syringes . we initiated an antitrust and false advertising lawsuit in 2007 against bd . although a district court judgment in 2015 awarded us approximately $ 340 million in antitrust damages from bd and the fifth circuit affirmed a finding of false advertising liability against bd , we were ultimately awarded a take nothing judgment in august 2017 and the case was dismissed . we appealed that ruling and oral arguments occurred october 3 , 2018. on march 26 , 2019 , the u.s. court of appeals for the fifth circuit issued an opinion affirming the take nothing judgment . we are evaluating this ruling and conferring with legal counsel regarding possible future action . our litigation expenses were significantly less in 2017 and 2018 than previous years . 2017 costs related to additional compensation , bonuses to ms. larios and mr. cowan , and stock option expense related to options granted in 2016 affect comparability of 2018 results to 2017 results . in november 2018 , we terminated 19 employees earning total annual compensation of approximately $ 1.12 million . some of these positions may be filled in the future . severance costs associated with the 2018 terminations were $ 244 thousand . in january 2018 , congress imposed another two-year moratorium on the 2.3 % medical device excise tax imposed by internal revenue code section 4191. thus , the medical device excise tax is not expected to go into effect until january 1 , 2020. in 2016 , we granted a right to three of our executive officers to purchase shares directly from the company . thomas j. shaw was the only officer to exercise such right prior to expiration , buying a total of three million shares in two transactions in 2017 for an aggregate purchase price of $ 2.35 million . we received approximately $ 1 million from our insurance carrier in the second quarter of 2017 and used these funds to repair our buildings from earlier storm damage . the remaining proceeds of $ 261 thousand were recognized as insurance proceeds in the fourth quarter of 2018. product purchases from our chinese manufacturers have enabled us to increase manufacturing capacity with little capital outlay and have provided a competitive manufacturing cost . story_separator_special_tag in 2018 , our chinese manufacturers 11 produced approximately 85.3 % of our products . in the event that we become unable to purchase products from our chinese manufacturers , we would need to find an alternate manufacturer for the blood collection set , iv catheter , patient safe ® syringe , 0.5ml insulin syringe , 0.5ml autodisable syringe , and 2ml , 5ml , and 10ml syringes and we would increase domestic production for the 1ml and 3ml syringes . in 1995 , we entered into a license agreement with thomas j. shaw for the exclusive right to manufacture , market , and distribute products utilizing his patented automated retraction technology and other patented technology . this technology is the subject of various patents and patent applications owned by mr. shaw . the license agreement generally provides for quarterly payments of a 5 % royalty fee on gross sales . with increased volumes , our manufacturing unit costs have generally tended to decline . factors that could affect our unit costs include increases in costs by third party manufacturers , changing production volumes , costs of petroleum products , and transportation costs . increases in such costs may not be recoverable through price increases of our products . results of operations the following discussion contains trend information and other forward-looking statements that involve a number of risks and uncertainties . our actual future results could differ materially from our historical results of operations and those discussed in the forward-looking statements . all period references are to our fiscal years ended december 2018 , 2017 , or 2016. dollar amounts have been rounded for ease of reading . comparison of year ended december 31 , 2018 and year ended december 31 , 2017 domestic sales accounted for 86.1 % and 78.3 % of the revenues in 2018 and 2017 , respectively . domestic revenues increased 6.0 % principally due to increased volume mitigated by lower average price . domestic unit sales increased 12.0 % . domestic unit sales were 81.0 % of total unit sales for 2018. international revenues decreased from $ 7.5 million in 2017 to $ 4.6 million in 2018 , primarily due to lower volumes . overall unit sales decreased 3.8 % . our international orders may be subject to significant fluctuation over time . such orders may fluctuate due to health initiatives at various times as well as economic conditions . cost of manufactured product decreased $ 1.5 million principally due to lower volumes and lower unit cost of manufacture . royalty expense increased $ 80 thousand due to increased gross sales . gross profit margins increased from 28.9 % in 2017 to 30.7 % in 2018 principally due to lower cost of manufacturing . operating expenses decreased 14.2 % from the prior year due to lower legal expense , no bonuses paid in 2018 , lower travel and entertainment cost , decreased costs of engineering samples , and no stock option expense in 2018. these decreases were mitigated by severance costs . recognition of insurance proceeds of $ 261 thousand is due to actual building repairs being less than the insurance payment . the loss from operations was $ 1.3 million in 2018 compared to a loss from operations of $ 3.8 million in 2017. we recorded $ 188 thousand in tax benefits in connection with the enactment of the tax cut and jobs act ( the “act” ) on december 22 , 2017. the act established new tax provisions that affect us including the elimination of the corporate alternative minimum tax and changing rules related to uses and limitations of net operating loss carry forwards created after december 31 , 2017. carry forward credits from alternative minimum taxes paid in prior years became refundable in tax years beginning january 1 , 2018. such credits were , however , subject to sequestration . however , in january 2019 , the irs had a ruling that provided that alternative minimum tax payments are not subject to sequestration , bringing the total benefit to $ 202 thousand , an increase of $ 13 thousand from last year . 12 cash flow from operations was negative $ 1.2 million in 2018 due to our net loss , increased inventory , and use of insurance proceeds for repairs . the decrease in cash was mitigated by a decrease in accounts receivable and an increase in liabilities . in 2018 , we transferred $ 3 million from our cash accounts into securities with maturities of one to three years . this transfer significantly affects our net decrease in cash in 2018. however , the securities may increase investment income in the future . comparison of year ended december 31 , 2017 and year ended december 31 , 2016 domestic sales accounted for 78.3 % and 88.2 % of the revenues in 2017 and 2016 , respectively . domestic revenues increased 2.7 % principally due to increased sales of easypoint ® and the blood collection set . domestic unit sales increased 7.1 % . domestic unit sales were 69.5 % of total unit sales for 2017. international revenues increased from $ 3.5 million in 2016 to $ 7.5 million in 2017 , primarily due to increased volumes mitigated by lower average prices . overall unit sales increased 28.3 % . our international orders may be subject to significant fluctuation over time . such orders may fluctuate due to health initiatives at various times as well as economic conditions . cost of manufactured product increased $ 4.7 million principally due to higher volumes . royalty expense increased $ 337 thousand due to increased gross sales . gross profit margins decreased from 34.7 % in 2016 to 28.9 % in 2017 principally due to a larger portion of international sales which bear a lower average sales price . operating expenses decreased 0.7 % from the prior year due to decreased legal expenses and no impairment costs incurred in 2017 , offset by increased Narrative : liquidity and capital resources at the present time , management does not intend to publicly raise equity capital . due to the funds received from prior litigation and direct purchase of stock , we have sufficient cash reserves and intend to rely on operations , cash reserves , and debt financing , when available , as the primary ongoing sources of cash . our ability to obtain additional funds through loans is uncertain . in 2018 , we transferred $ 3 million from our cash accounts into securities with maturities of one to three years . this transfer significantly affects our net decrease in cash in 2018. however , the securities may increase investment income in the future . historical sources of liquidity we have historically funded operations primarily from the proceeds from revenues , private placements , litigation settlements , and loans . 13 internal sources of liquidity margins and market access to routinely achieve positive or break even quarters , we need increased access to hospital markets which has been difficult to obtain . we will continue to attempt to gain access to the market through our sales efforts , innovative technology , the introduction of new products , and , when necessary , litigation . we continue to focus on methods of upgrading our manufacturing capability and efficiency in order to reduce costs .

factors that might cause such a difference include those discussed under the caption “special note regarding forward looking statements” and in “risk factors” and elsewhere in this annual report on form 10-k. these and many other factors could affect our future financial and operating results . we undertake no obligation to update any forward-looking statement to reflect events after the date of this annual report . overview cymabay therapeutics , inc. is focused on developing therapies to treat metabolic diseases with high unmet medical need , including serious rare and orphan disorders . our two key clinical development candidates are mbx-8025 and arhalofenate . we are currently developing mbx-8025 for the treatment of various orphan lipid and liver diseases . in an earlier phase 2 clinical study conducted in patients with mixed dyslipidemia , mbx-8025 demonstrated favorable effects on cholesterol , triglycerides and markers of liver health . in march 2016 , we announced data from a second phase 2 clinical study evaluating mbx-8025 in 13 patients with homozygous familial hypercholesterolemia ( hofh ) . five patients in this study experienced what we believe was a clinically meaningful maximal decrease in low density lipoprotein ( ldl-c ) of greater than 20 % with three of them having decreases greater than 30 % . however , given the variability in responses observed in this study , including a number of patients that did not experience a decrease in ldl-c , we believe additional proof-of-concept data would be warranted before determining whether or not to advance to a registration study of mbx-8025 in patients with hofh . in november 2015 , we initiated a double-blind , placebo-controlled phase 2 study of mbx-8025 in patients with primary biliary cholangitis ( pbc ) , formerly referred to as primary biliary cirrhosis . in this study , approximately 75 patients with pbc who have had an inadequate response to ursodiol are to be enrolled and randomized to receive either placebo or mbx-8025 ( either 50 mg or 200 mg ) for 12 weeks . the primary endpoint will be the change in alkaline phosphatase , and the study is expected to include patients from the u.s. , as well as canada , germany , poland and u.k. we expect this study to be completed by the end of 2016. we also believe that mbx-8025 could have utility in the treatment of severe hypertriglyceridemia ( shtg ) and the more prevalent , but high unmet need , indication of nonalcoholic steatohepatitis ( nash ) . we have obtained orphan-drug designations for mbx-8025 in both hofh and shtg ( frederickson type i or v hyperlipoproteinemia ) . arhalofenate , is being developed for the treatment of gout . arhalofenate has been studied in five phase 2 clinical trials in patients with gout and consistently demonstrated the ability to reduce gout flares and reduce serum uric acid ( sua ) . gout flares are recurring and painful episodes of joint inflammation that are triggered by the presence of monosodium urate crystals that form as a result of elevated sua levels . we believe the potential for arhalofenate to prevent or reduce flares while also lowering sua could differentiate it from currently available treatments for gout and classify it as the first potential drug in what we believe could be a new class of gout therapy referred to as urate lowering anti-flare therapy ( ulaft ) . arhalofenate has established a favorable safety profile in clinical trials involving over 1,100 patients exposed to date . we have completed end of phase 2 discussions with the fda and intend to partner arhalofenate prior to advancing into phase 3 development . we are an emerging growth company . under the jobs act emerging growth companies can delay adopting new or revised accounting standards until such time of those standards apply to private companies . we have adopted this exemption from new or revised accounting standards , and therefore , we may not be subject to the same new or revised accounting standards as other public companies that are not “emerging growth companies.” 60 index to financial statements equity financings on july 25 , 2014 , we completed a public offering of 4.6 million shares of our common stock at $ 5.50 per share which we refer to as our 2014 public offering . net proceeds to us in connection with the 2014 public offering were approximately $ 23.0 million after deducting underwriting discounts , commissions and offering expenses . on november 7 , 2014 , we filed a $ 100 million registration statement on form s-3 with the sec , which registration statement includes an at-the-market facility ( atm ) to sell up to $ 25 million of common stock under the registration statement . as of december 31 , 2015 , we have sold shares of common stock under the atm with aggregate net proceeds to us of $ 4.3 million . on july 27 , 2015 , pursuant to our shelf registration statement on form s-3 , we completed the issuance of 8.2 million shares of our common stock at $ 2.81 per share which we refer to as our 2015 public offering . net proceeds to us in connection with the 2015 public offering were approximately $ 21.1 million after deducting underwriting discounts , commissions and other offering expenses . critical accounting policies and use of estimates our management 's discussion and analysis of our financial condition and results of operations is based on our financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states ( gaap ) . story_separator_special_tag specifically , the $ 11.1 million warrant revaluation gain recognized during the year ended december 31 , 2015 , was due primarily to a decrease in the value of our common stock from $ 9.83 at december 31 , 2014 , to $ 1.69 at december 31 , 2015. the warrant valuation in 2014 also changed primarily due to an increase in the price of our common stock . specifically , the $ 7.2 million warrant revaluation loss recognized during the year ended december 31 , 2014 , was due primarily to an increase in the value of our common stock from $ 5.00 at december 31 , 2013 , to $ 9.83 at december 31 , 2014. income taxes as of december 31 , 2015 , we had federal net operating loss carryforwards of $ 205.7 million and state net operating loss carryforwards of $ 172.0 million to offset future taxable income , if any . in addition , we had federal research and development tax credit carry forwards of $ 7.2 million and state research and development tax credit carryforwards of $ 3.5 million . if not utilized , the federal net operating loss and tax credit carryforwards will expire beginning in 2024 through 2035 and the state net operating loss carryforwards will expire beginning in 2016 through 2035. the state tax credit will carry forward indefinitely . current federal and state tax laws include substantial restrictions on the utilization of net operating losses and tax credits in the event of an ownership change . even if the carryforwards are available , they may be subject to annual limitations , lack of future taxable income , or future ownership changes that could result in the expiration of the carryforwards before they are 64 index to financial statements utilized . at december 31 , 2015 , we recorded a 100 % valuation allowance against our deferred assets of approximately $ 111.8 million as our management believes it is more likely than not that they will not be fully realized . if we determine in the future that we will be able to realize all or a portion of our net operating loss carryforwards , an adjustment to our net operating loss carryforwards would increase net income in the period in which we make such a determination . story_separator_special_tag we also agreed to pay a facility fee of 1.00 % of the 2015 term loan facility commitment . in addition , we issued warrants exercisable for a total of 114,436 shares of our common stock to the lenders at an exercise price of $ 2.84 per share , and with a term of ten years . 66 index to financial statements cash flows the following table sets forth a summary of the net cash flow activity for each of the periods indicated below : replace_table_token_5_th operating activities : cash used in operating activities for the years ended december 31 , 2015 , and december 31 , 2014 , was $ 23.3 million and $ 21.1 million , respectively . the increase of $ 2.2 million in cash used in operating activities is due primarily to our incurrence of research and development expenses as a result of our expanded clinical trial and drug development activities , and increased general and administrative expenses . investing activities : net cash used in investing activities was $ 11.1 million for the year ended december 31 , 2015 and $ 16.9 million for the year ended december 31 , 2014 , and was primarily due to the net purchase of marketable securities as we sought to invest funds raised in our equity and debt financings . financing activities : net cash provided by financing activities was $ 30.5 million for the year ended december 31 , 2015 , primarily as a result of $ 4.3 million in net proceeds received from sales of our common stock in january and february 2015 pursuant to a $ 25 million at-the-market facility , $ 21.1 million in net proceeds received from our 2015 public offering , and $ 9.5 million in net proceeds from our 2015 term loan facility negotiated in august 2015 , offset in part primarily by $ 4.8 million in principal repayments on our 2013 term loan facility . net cash provided by financing activities was $ 25.2 million in the year ended december 31 , 2014 , primarily due to $ 25.4 million of proceeds received from our 2014 public offering , offset by $ 0.2 million in principal repayments on our venture debt facility . capital requirements we have incurred operating losses since inception and had an accumulated deficit of $ 396.3 million at december 31 , 2015. management expects operating losses and negative cash flows to continue for the foreseeable future . as of december 31 , 2015 , we had $ 41.5 million in cash and cash equivalents and marketable securities , which is available to fund future operations and service our existing debt obligations through at least the next twelve months , after which we will be required to seek additional equity or debt financing and or non-dilutive funding from potential licensing , partnering or other strategic collaborative arrangements to fund future operations . it is unclear if or when any such transactions will occur , on satisfactory terms or at all . off balance sheet arrangements as of december 31 , 2015 , we had no off-balance sheet arrangements ( as defined in item 303 ( a ) ( 4 ) ( ii ) of regulation s-k under the exchange act ) that create potential material risks for us and that are not recognized on our balance sheets . 67 index to financial statements contractual obligations the following table summarizes our long-term contractual obligations as of december 31 , 2015 : replace_table_token_6_th in addition , we rely on contract research organizations and other research support providers to perform clinical and preclinical studies for us and we contract with firms

liquidity and capital resources we have financed our operations primarily through the sale of equity securities , licensing fees , issuance of debt and collaborations with third parties . at december 31 , 2015 , we had cash , cash equivalents and marketable securities of $ 41.5 million , primarily as a result of the aggregate proceeds received in our series of financings described in the next paragraph , which we refer to collectively as the “2013 financing , ” and our 2014 public offering and 2015 public offering . specifically , on september 30 , 2013 , we issued common stock and warrants to purchase our common stock and we secured a term loan facility which together enabled us to raise aggregate net proceeds of $ 28.8 million . on september 30 , 2013 , all of the shares of our outstanding redeemable convertible preferred stock converted to common stock , and we sold shares of our common stock and warrants to purchase shares of our common stock in a private placement for aggregate gross proceeds of $ 26.8 million , and raised an additional $ 5.0 million in venture debt financing pursuant to a $ 10.0 million loan agreement which we entered into simultaneously with the private placement , resulting in aggregate net proceeds to us of $ 28.8 million after deducting placement agent fees and offering expenses . at the same time we issued shares of our common stock in cancellation of approximately $ 16.9 million of debt owed to the holder of that debt and on october 31 , 2013 , we issued common stock and warrants to purchase our common stock to raise additional net proceeds of $ 2.2 million .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. factors that might cause such a difference include those discussed under the caption “special note regarding forward looking statements” and in “risk factors” and elsewhere in this annual report on form 10-k. these and many other factors could affect our future financial and operating results . we undertake no obligation to update any forward-looking statement to reflect events after the date of this annual report . overview cymabay therapeutics , inc. is focused on developing therapies to treat metabolic diseases with high unmet medical need , including serious rare and orphan disorders . our two key clinical development candidates are mbx-8025 and arhalofenate . we are currently developing mbx-8025 for the treatment of various orphan lipid and liver diseases . in an earlier phase 2 clinical study conducted in patients with mixed dyslipidemia , mbx-8025 demonstrated favorable effects on cholesterol , triglycerides and markers of liver health . in march 2016 , we announced data from a second phase 2 clinical study evaluating mbx-8025 in 13 patients with homozygous familial hypercholesterolemia ( hofh ) . five patients in this study experienced what we believe was a clinically meaningful maximal decrease in low density lipoprotein ( ldl-c ) of greater than 20 % with three of them having decreases greater than 30 % . however , given the variability in responses observed in this study , including a number of patients that did not experience a decrease in ldl-c , we believe additional proof-of-concept data would be warranted before determining whether or not to advance to a registration study of mbx-8025 in patients with hofh . in november 2015 , we initiated a double-blind , placebo-controlled phase 2 study of mbx-8025 in patients with primary biliary cholangitis ( pbc ) , formerly referred to as primary biliary cirrhosis . in this study , approximately 75 patients with pbc who have had an inadequate response to ursodiol are to be enrolled and randomized to receive either placebo or mbx-8025 ( either 50 mg or 200 mg ) for 12 weeks . the primary endpoint will be the change in alkaline phosphatase , and the study is expected to include patients from the u.s. , as well as canada , germany , poland and u.k. we expect this study to be completed by the end of 2016. we also believe that mbx-8025 could have utility in the treatment of severe hypertriglyceridemia ( shtg ) and the more prevalent , but high unmet need , indication of nonalcoholic steatohepatitis ( nash ) . we have obtained orphan-drug designations for mbx-8025 in both hofh and shtg ( frederickson type i or v hyperlipoproteinemia ) . arhalofenate , is being developed for the treatment of gout . arhalofenate has been studied in five phase 2 clinical trials in patients with gout and consistently demonstrated the ability to reduce gout flares and reduce serum uric acid ( sua ) . gout flares are recurring and painful episodes of joint inflammation that are triggered by the presence of monosodium urate crystals that form as a result of elevated sua levels . we believe the potential for arhalofenate to prevent or reduce flares while also lowering sua could differentiate it from currently available treatments for gout and classify it as the first potential drug in what we believe could be a new class of gout therapy referred to as urate lowering anti-flare therapy ( ulaft ) . arhalofenate has established a favorable safety profile in clinical trials involving over 1,100 patients exposed to date . we have completed end of phase 2 discussions with the fda and intend to partner arhalofenate prior to advancing into phase 3 development . we are an emerging growth company . under the jobs act emerging growth companies can delay adopting new or revised accounting standards until such time of those standards apply to private companies . we have adopted this exemption from new or revised accounting standards , and therefore , we may not be subject to the same new or revised accounting standards as other public companies that are not “emerging growth companies.” 60 index to financial statements equity financings on july 25 , 2014 , we completed a public offering of 4.6 million shares of our common stock at $ 5.50 per share which we refer to as our 2014 public offering . net proceeds to us in connection with the 2014 public offering were approximately $ 23.0 million after deducting underwriting discounts , commissions and offering expenses . on november 7 , 2014 , we filed a $ 100 million registration statement on form s-3 with the sec , which registration statement includes an at-the-market facility ( atm ) to sell up to $ 25 million of common stock under the registration statement . as of december 31 , 2015 , we have sold shares of common stock under the atm with aggregate net proceeds to us of $ 4.3 million . on july 27 , 2015 , pursuant to our shelf registration statement on form s-3 , we completed the issuance of 8.2 million shares of our common stock at $ 2.81 per share which we refer to as our 2015 public offering . net proceeds to us in connection with the 2015 public offering were approximately $ 21.1 million after deducting underwriting discounts , commissions and other offering expenses . critical accounting policies and use of estimates our management 's discussion and analysis of our financial condition and results of operations is based on our financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states ( gaap ) . story_separator_special_tag specifically , the $ 11.1 million warrant revaluation gain recognized during the year ended december 31 , 2015 , was due primarily to a decrease in the value of our common stock from $ 9.83 at december 31 , 2014 , to $ 1.69 at december 31 , 2015. the warrant valuation in 2014 also changed primarily due to an increase in the price of our common stock . specifically , the $ 7.2 million warrant revaluation loss recognized during the year ended december 31 , 2014 , was due primarily to an increase in the value of our common stock from $ 5.00 at december 31 , 2013 , to $ 9.83 at december 31 , 2014. income taxes as of december 31 , 2015 , we had federal net operating loss carryforwards of $ 205.7 million and state net operating loss carryforwards of $ 172.0 million to offset future taxable income , if any . in addition , we had federal research and development tax credit carry forwards of $ 7.2 million and state research and development tax credit carryforwards of $ 3.5 million . if not utilized , the federal net operating loss and tax credit carryforwards will expire beginning in 2024 through 2035 and the state net operating loss carryforwards will expire beginning in 2016 through 2035. the state tax credit will carry forward indefinitely . current federal and state tax laws include substantial restrictions on the utilization of net operating losses and tax credits in the event of an ownership change . even if the carryforwards are available , they may be subject to annual limitations , lack of future taxable income , or future ownership changes that could result in the expiration of the carryforwards before they are 64 index to financial statements utilized . at december 31 , 2015 , we recorded a 100 % valuation allowance against our deferred assets of approximately $ 111.8 million as our management believes it is more likely than not that they will not be fully realized . if we determine in the future that we will be able to realize all or a portion of our net operating loss carryforwards , an adjustment to our net operating loss carryforwards would increase net income in the period in which we make such a determination . story_separator_special_tag we also agreed to pay a facility fee of 1.00 % of the 2015 term loan facility commitment . in addition , we issued warrants exercisable for a total of 114,436 shares of our common stock to the lenders at an exercise price of $ 2.84 per share , and with a term of ten years . 66 index to financial statements cash flows the following table sets forth a summary of the net cash flow activity for each of the periods indicated below : replace_table_token_5_th operating activities : cash used in operating activities for the years ended december 31 , 2015 , and december 31 , 2014 , was $ 23.3 million and $ 21.1 million , respectively . the increase of $ 2.2 million in cash used in operating activities is due primarily to our incurrence of research and development expenses as a result of our expanded clinical trial and drug development activities , and increased general and administrative expenses . investing activities : net cash used in investing activities was $ 11.1 million for the year ended december 31 , 2015 and $ 16.9 million for the year ended december 31 , 2014 , and was primarily due to the net purchase of marketable securities as we sought to invest funds raised in our equity and debt financings . financing activities : net cash provided by financing activities was $ 30.5 million for the year ended december 31 , 2015 , primarily as a result of $ 4.3 million in net proceeds received from sales of our common stock in january and february 2015 pursuant to a $ 25 million at-the-market facility , $ 21.1 million in net proceeds received from our 2015 public offering , and $ 9.5 million in net proceeds from our 2015 term loan facility negotiated in august 2015 , offset in part primarily by $ 4.8 million in principal repayments on our 2013 term loan facility . net cash provided by financing activities was $ 25.2 million in the year ended december 31 , 2014 , primarily due to $ 25.4 million of proceeds received from our 2014 public offering , offset by $ 0.2 million in principal repayments on our venture debt facility . capital requirements we have incurred operating losses since inception and had an accumulated deficit of $ 396.3 million at december 31 , 2015. management expects operating losses and negative cash flows to continue for the foreseeable future . as of december 31 , 2015 , we had $ 41.5 million in cash and cash equivalents and marketable securities , which is available to fund future operations and service our existing debt obligations through at least the next twelve months , after which we will be required to seek additional equity or debt financing and or non-dilutive funding from potential licensing , partnering or other strategic collaborative arrangements to fund future operations . it is unclear if or when any such transactions will occur , on satisfactory terms or at all . off balance sheet arrangements as of december 31 , 2015 , we had no off-balance sheet arrangements ( as defined in item 303 ( a ) ( 4 ) ( ii ) of regulation s-k under the exchange act ) that create potential material risks for us and that are not recognized on our balance sheets . 67 index to financial statements contractual obligations the following table summarizes our long-term contractual obligations as of december 31 , 2015 : replace_table_token_6_th in addition , we rely on contract research organizations and other research support providers to perform clinical and preclinical studies for us and we contract with firms Narrative : liquidity and capital resources we have financed our operations primarily through the sale of equity securities , licensing fees , issuance of debt and collaborations with third parties . at december 31 , 2015 , we had cash , cash equivalents and marketable securities of $ 41.5 million , primarily as a result of the aggregate proceeds received in our series of financings described in the next paragraph , which we refer to collectively as the “2013 financing , ” and our 2014 public offering and 2015 public offering . specifically , on september 30 , 2013 , we issued common stock and warrants to purchase our common stock and we secured a term loan facility which together enabled us to raise aggregate net proceeds of $ 28.8 million . on september 30 , 2013 , all of the shares of our outstanding redeemable convertible preferred stock converted to common stock , and we sold shares of our common stock and warrants to purchase shares of our common stock in a private placement for aggregate gross proceeds of $ 26.8 million , and raised an additional $ 5.0 million in venture debt financing pursuant to a $ 10.0 million loan agreement which we entered into simultaneously with the private placement , resulting in aggregate net proceeds to us of $ 28.8 million after deducting placement agent fees and offering expenses . at the same time we issued shares of our common stock in cancellation of approximately $ 16.9 million of debt owed to the holder of that debt and on october 31 , 2013 , we issued common stock and warrants to purchase our common stock to raise additional net proceeds of $ 2.2 million .

on july 1 , 2011 , our common stock began trading “ regular-way ” on the nyse under the ticker symbol “ mpc . ” prior to the spinoff on june 30 , 2011 , our results of operations and cash flows consisted of the rm & t business , which represented a combined reporting entity . subsequent to the spinoff , our results of operations and cash flows consist of consolidated mpc activities . all significant intercompany transactions and accounts have been eliminated . the consolidated statements of income for periods prior to the spinoff include expense allocations for certain corporate functions historically performed by the marathon oil companies , including allocations of general corporate expenses related to executive oversight , accounting , treasury , tax , legal , procurement and information technology . those allocations were based primarily on specific identification , headcount or computer utilization . our management believes the assumptions underlying the consolidated financial statements , including the assumptions regarding allocating general corporate expenses from the marathon oil companies , are reasonable . however , the consolidated financial statements do not include all of the actual expenses that would have been incurred had we been a stand-alone company during those periods presented prior to the spinoff and may not reflect our consolidated results of operations and cash flows had we been a stand-alone company during the periods presented . actual 36 costs that would have been incurred if we had been a stand-alone company would depend on multiple factors , including organizational structure and strategic decisions made in various areas , including information technology and infrastructure . subsequent to the spinoff , we are performing these functions using internal resources or services provided by third parties , certain of which were provided by the marathon oil companies during a transition period pursuant to a transition services agreement , which terminated june 30 , 2012. see item 8. financial statements and supplementary data – note 7 . executive summary net income attributable to mpc was $ 2.11 billion , or $ 6.64 per diluted share , in 2013 compared to $ 3.39 billion , or $ 9.89 per diluted share , in 2012 . the decrease was primarily due to our refining & marketing segment , which generated income from operations of $ 3.21 billion in 2013 compared to $ 5.10 billion in 2012 . the decrease in refining & marketing segment income from operations was primarily due to narrower crude oil differentials and lower net product price realizations , partially offset by higher refinery throughput and sales volumes . our speedway segment generated income from operations of $ 375 million for 2013 compared to $ 310 million for 2012 . the increase was primarily due to higher gasoline and distillate gross margins and a higher merchandise gross margin , partially offset by higher operating expenses related to an increase in the number of convenience stores . during 2013 , speedway acquired nine convenience stores located in tennessee , western indiana and western pennsylvania , which expanded speedway 's marketing area by two additional states . in 2012 , speedway acquired 97 convenience stores located in indiana , ohio and northern kentucky . these acquisitions support our strategic initiative to increase speedway segment sales and complement our existing network of assets . our pipeline transportation segment generated income from operations of $ 210 million for 2013 compared to $ 216 million for 2012 . the decrease primarily reflects higher operating expenses and depreciation and lower pipeline affiliate income , partially offset by higher transportation revenue . the higher expenses and revenues were primarily attributable to the formation of mplx . on february 1 , 2013 , we acquired from bp the 451,000 barrel per calendar day refinery in texas city , texas , three intrastate natural gas liquid pipelines originating at the refinery , four light product terminals , branded-jobber marketing contract assignments for the supply of approximately 1,200 branded sites , a 1,040 megawatt electric cogeneration facility and a 50 mbpd allocation of space on the colonial pipeline . we refer to these assets as the “ galveston bay refinery and related assets . ” we paid $ 1.49 billion for these assets , which included $ 935 million for inventory . pursuant to the purchase and sale agreement , we may also be required to pay bp a contingent earnout of up to an additional $ 700 million over six years , subject to certain conditions . these assets are part of our refining & marketing and pipeline transportation segments . our financial results and operating statistics for all periods prior to the acquisition do not include amounts for the galveston bay refinery and related assets . see item 8. financial statements and supplementary data – note 5 for additional information on the acquisition of these assets . in 2012 , we completed a $ 2.2 billion ( excluding capitalized interest ) heavy oil upgrading and expansion project at our detroit refinery . this project increased the refinery 's heavy crude oil refining capacity from 20 mbpcd to 100 mbpcd , allowing it to process more heavy , sour crude oils , including canadian bitumen blends , which have historically traded at a significant discount to light sweet crude oil . we also continued to optimize our refineries in 2013 , increasing their combined crude oil refining capacity by 15 mbpcd . on august 1 , 2013 , we acquired from mitsui & co. ( u.s.a. ) , inc. its interests in three ethanol companies for $ 75 million . story_separator_special_tag consumer excise taxes increased $ 554 million in 2013 compared to 2012 , primarily due to an increase in refined product sales volumes related to the galveston bay refinery acquired in february 2013. depreciation and amortization increased $ 225 million in 2013 compared to 2012 , primarily due to the completion of the heavy oil upgrading and expansion project at our detroit , michigan refinery in late 2012 and our acquisition of the galveston bay refinery and related assets in february 2013. other taxes increased $ 70 million in 2013 compared to 2012 , primarily due to increases in personal property taxes of $ 41 million , payroll taxes of $ 21 million and sales and use tax expense of $ 13 million . these increases were attributable to a number of factors including the completion of the heavy oil upgrading and expansion project at our detroit refinery , the acquisition of the galveston bay refinery and related assets and speedway 's acquisition of 97 convenience stores in 2012. net interest and other financial costs increased $ 69 million in 2013 compared to 2012 , primarily reflecting a decrease in capitalized interest in 2013 due to the completion of the detroit refinery heavy oil upgrading and expansion project in late 2012. we capitalized interest of $ 28 million in 2013 compared to $ 101 million in 2012 . provision for income taxes decreased $ 732 million in 2013 compared to 2012 , primarily due to the $ 1.99 billion decrease in income before income taxes in 2013 . the effective tax rate of 34 percent in 2013 is less than the u.s. statutory rate of 35 percent primarily due to certain permanent benefit differences , including the domestic manufacturing deduction , partially offset by state and local tax expense . see item 8. financial statements and supplementary data – note 12 for further details . segment results revenues are summarized by segment in the following table . replace_table_token_24_th 42 refining & marketing segment revenues increased $ 18.20 billion in 2013 from 2012 , primarily due to an increase in refined product sales volumes related to the galveston bay refinery acquired in february 2013 , partially offset by lower refined product selling prices . the table below shows our refining & marketing segment refined product sales volumes and prices . replace_table_token_25_th ( a ) includes intersegment sales . the table below shows the average refined product benchmark prices for our marketing areas . replace_table_token_26_th refining & marketing intersegment sales to our speedway segment were $ 9.29 billion in 2013 compared to $ 8.78 billion in 2012 , with the increase primarily due to higher sales volume , partially offset by lower selling prices . intersegment refined product sales volumes were 2.98 billion gallons in 2013 compared to 2.73 billion gallons in 2012 , with the increased volumes primarily due to an increase in speedway 's gasoline and distillate sales volume . speedway segment revenues increased $ 232 million in 2013 compared to 2012 , primarily due to higher gasoline and distillate sales volumes , partially offset by lower gasoline and distillate selling prices , which averaged $ 3.45 per gallon in 2013 compared to $ 3.54 per gallon in 2012 . the speedway segment also had higher merchandise sales . the increases in gasoline and distillate sales volumes and merchandise sales primarily resulted from the acquisitions of convenience stores in 2013 and 2012 . pipeline transportation segment revenue increased $ 78 million in 2013 compared to 2012 , primarily due to higher average tariffs received on the volumes of crude oil and products shipped , higher crude oil throughput volumes and an increase in storage fees and other revenue . income before income taxes and income from operations by segment are summarized in the following table . replace_table_token_27_th ( a ) included in the pipeline transportation segment for 2013 and 2012 are $ 20 million and $ 4 million of corporate overhead costs attributable to mplx , which were included in items not allocated to segments prior to mplx 's october 31 , 2012 initial public offering . these expenses are not currently allocated to other segments . ( b ) see item 8. financial statements and supplementary data - note 6 . ( c ) see item 8. financial statements and supplementary data - note 22 . ( d ) includes related party net interest and other financial income . 43 the following table presents certain market indicators that we believe are helpful in understanding the results of our refining & marketing segment 's business . replace_table_token_28_th ( a ) all spreads and differentials are measured against prompt lls . ( b ) calculation utilizes usgc 3 % residual fuel oil price as a proxy for chicago 3 % residual fuel oil price . ( c ) blended chicago/usgc crack spread is 38 % / 62 % in 2013 and 52 % / 48 % in 2012 based on mpc 's refining capacity by region in each period . ( d ) lls ( prompt ) - [ delivered cost of sour crude oil : arab light , kuwait , maya , western canadian select and mars ] . refining & marketing segment income from operations decreased $ 1.89 billion in 2013 from 2012 , primarily due to narrower crude oil differentials and lower net product price realizations , partially offset by higher refinery throughput and sales volumes . the sweet/sour crude oil differential narrowed by $ 3.94 per barrel and the lls-wti crude oil differential narrowed by $ 8.19 per barrel in 2013 compared to 2012 , which we estimate had negative impacts on segment income of $ 1.21 billion and $ 998 million , respectively . we estimate the lower net product price realizations had a negative impact on segment income of $ 593 million . total refinery throughputs increased 439 mbpd in 2013 compared to 2012 , primarily due to the galveston bay refinery , which we

net cash provided by operating activities decreased $ 1.09 billion in 2013 compared to 2012 , primarily due to decrease s in net income of $ 1.26 billion and non-cash income adjustments of $ 453 million , partially offset by favorable changes in working capital of $ 626 million compared to 2012. net cash provided from operating activities increased $ 1.18 billion in 2012 compared to 2011 , primarily due to increases in net income of $ 1.00 billion and non-cash income adjustments of $ 620 million , partially offset by unfavorable changes in working capital of $ 441 million . for 2013 , changes in working capital were a net $ 198 million source of cash , primarily due to an increase in accounts payable and accrued liabilities , partially offset by increases in current receivables and inventory volumes . accounts payable increased $ 1.45 billion from year-end 2012 , primarily due to higher crude oil payable volumes , and current receivables increased $ 949 million from year-end 2012 , primarily due to higher refined product receivable volumes attributable to an increase in refined product sales volumes . both of these increases are associated with the galveston bay refinery acquired in february 2013. changes in inventories were a $ 305 million use of cash in 2013 , primarily due to higher refined product and crude oil inventory volumes . changes in working capital were a net $ 428 million use of cash in 2012 , primarily due to a decrease in accounts payable and accrued liabilities resulting primarily from reductions in crude oil prices and payable volumes , partially offset by a decrease in current receivables resulting primarily from reductions in crude oil prices and receivable volumes . changes in working capital were a net $ 13 million source of cash in 2011 , primarily due to an increase in accounts payable and accrued liabilities resulting primarily from increases in crude oil prices and payable volumes , partially offset by an increase in current receivables resulting from increases in crude oil prices and receivable volumes and refined product prices .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. on july 1 , 2011 , our common stock began trading “ regular-way ” on the nyse under the ticker symbol “ mpc . ” prior to the spinoff on june 30 , 2011 , our results of operations and cash flows consisted of the rm & t business , which represented a combined reporting entity . subsequent to the spinoff , our results of operations and cash flows consist of consolidated mpc activities . all significant intercompany transactions and accounts have been eliminated . the consolidated statements of income for periods prior to the spinoff include expense allocations for certain corporate functions historically performed by the marathon oil companies , including allocations of general corporate expenses related to executive oversight , accounting , treasury , tax , legal , procurement and information technology . those allocations were based primarily on specific identification , headcount or computer utilization . our management believes the assumptions underlying the consolidated financial statements , including the assumptions regarding allocating general corporate expenses from the marathon oil companies , are reasonable . however , the consolidated financial statements do not include all of the actual expenses that would have been incurred had we been a stand-alone company during those periods presented prior to the spinoff and may not reflect our consolidated results of operations and cash flows had we been a stand-alone company during the periods presented . actual 36 costs that would have been incurred if we had been a stand-alone company would depend on multiple factors , including organizational structure and strategic decisions made in various areas , including information technology and infrastructure . subsequent to the spinoff , we are performing these functions using internal resources or services provided by third parties , certain of which were provided by the marathon oil companies during a transition period pursuant to a transition services agreement , which terminated june 30 , 2012. see item 8. financial statements and supplementary data – note 7 . executive summary net income attributable to mpc was $ 2.11 billion , or $ 6.64 per diluted share , in 2013 compared to $ 3.39 billion , or $ 9.89 per diluted share , in 2012 . the decrease was primarily due to our refining & marketing segment , which generated income from operations of $ 3.21 billion in 2013 compared to $ 5.10 billion in 2012 . the decrease in refining & marketing segment income from operations was primarily due to narrower crude oil differentials and lower net product price realizations , partially offset by higher refinery throughput and sales volumes . our speedway segment generated income from operations of $ 375 million for 2013 compared to $ 310 million for 2012 . the increase was primarily due to higher gasoline and distillate gross margins and a higher merchandise gross margin , partially offset by higher operating expenses related to an increase in the number of convenience stores . during 2013 , speedway acquired nine convenience stores located in tennessee , western indiana and western pennsylvania , which expanded speedway 's marketing area by two additional states . in 2012 , speedway acquired 97 convenience stores located in indiana , ohio and northern kentucky . these acquisitions support our strategic initiative to increase speedway segment sales and complement our existing network of assets . our pipeline transportation segment generated income from operations of $ 210 million for 2013 compared to $ 216 million for 2012 . the decrease primarily reflects higher operating expenses and depreciation and lower pipeline affiliate income , partially offset by higher transportation revenue . the higher expenses and revenues were primarily attributable to the formation of mplx . on february 1 , 2013 , we acquired from bp the 451,000 barrel per calendar day refinery in texas city , texas , three intrastate natural gas liquid pipelines originating at the refinery , four light product terminals , branded-jobber marketing contract assignments for the supply of approximately 1,200 branded sites , a 1,040 megawatt electric cogeneration facility and a 50 mbpd allocation of space on the colonial pipeline . we refer to these assets as the “ galveston bay refinery and related assets . ” we paid $ 1.49 billion for these assets , which included $ 935 million for inventory . pursuant to the purchase and sale agreement , we may also be required to pay bp a contingent earnout of up to an additional $ 700 million over six years , subject to certain conditions . these assets are part of our refining & marketing and pipeline transportation segments . our financial results and operating statistics for all periods prior to the acquisition do not include amounts for the galveston bay refinery and related assets . see item 8. financial statements and supplementary data – note 5 for additional information on the acquisition of these assets . in 2012 , we completed a $ 2.2 billion ( excluding capitalized interest ) heavy oil upgrading and expansion project at our detroit refinery . this project increased the refinery 's heavy crude oil refining capacity from 20 mbpcd to 100 mbpcd , allowing it to process more heavy , sour crude oils , including canadian bitumen blends , which have historically traded at a significant discount to light sweet crude oil . we also continued to optimize our refineries in 2013 , increasing their combined crude oil refining capacity by 15 mbpcd . on august 1 , 2013 , we acquired from mitsui & co. ( u.s.a. ) , inc. its interests in three ethanol companies for $ 75 million . story_separator_special_tag consumer excise taxes increased $ 554 million in 2013 compared to 2012 , primarily due to an increase in refined product sales volumes related to the galveston bay refinery acquired in february 2013. depreciation and amortization increased $ 225 million in 2013 compared to 2012 , primarily due to the completion of the heavy oil upgrading and expansion project at our detroit , michigan refinery in late 2012 and our acquisition of the galveston bay refinery and related assets in february 2013. other taxes increased $ 70 million in 2013 compared to 2012 , primarily due to increases in personal property taxes of $ 41 million , payroll taxes of $ 21 million and sales and use tax expense of $ 13 million . these increases were attributable to a number of factors including the completion of the heavy oil upgrading and expansion project at our detroit refinery , the acquisition of the galveston bay refinery and related assets and speedway 's acquisition of 97 convenience stores in 2012. net interest and other financial costs increased $ 69 million in 2013 compared to 2012 , primarily reflecting a decrease in capitalized interest in 2013 due to the completion of the detroit refinery heavy oil upgrading and expansion project in late 2012. we capitalized interest of $ 28 million in 2013 compared to $ 101 million in 2012 . provision for income taxes decreased $ 732 million in 2013 compared to 2012 , primarily due to the $ 1.99 billion decrease in income before income taxes in 2013 . the effective tax rate of 34 percent in 2013 is less than the u.s. statutory rate of 35 percent primarily due to certain permanent benefit differences , including the domestic manufacturing deduction , partially offset by state and local tax expense . see item 8. financial statements and supplementary data – note 12 for further details . segment results revenues are summarized by segment in the following table . replace_table_token_24_th 42 refining & marketing segment revenues increased $ 18.20 billion in 2013 from 2012 , primarily due to an increase in refined product sales volumes related to the galveston bay refinery acquired in february 2013 , partially offset by lower refined product selling prices . the table below shows our refining & marketing segment refined product sales volumes and prices . replace_table_token_25_th ( a ) includes intersegment sales . the table below shows the average refined product benchmark prices for our marketing areas . replace_table_token_26_th refining & marketing intersegment sales to our speedway segment were $ 9.29 billion in 2013 compared to $ 8.78 billion in 2012 , with the increase primarily due to higher sales volume , partially offset by lower selling prices . intersegment refined product sales volumes were 2.98 billion gallons in 2013 compared to 2.73 billion gallons in 2012 , with the increased volumes primarily due to an increase in speedway 's gasoline and distillate sales volume . speedway segment revenues increased $ 232 million in 2013 compared to 2012 , primarily due to higher gasoline and distillate sales volumes , partially offset by lower gasoline and distillate selling prices , which averaged $ 3.45 per gallon in 2013 compared to $ 3.54 per gallon in 2012 . the speedway segment also had higher merchandise sales . the increases in gasoline and distillate sales volumes and merchandise sales primarily resulted from the acquisitions of convenience stores in 2013 and 2012 . pipeline transportation segment revenue increased $ 78 million in 2013 compared to 2012 , primarily due to higher average tariffs received on the volumes of crude oil and products shipped , higher crude oil throughput volumes and an increase in storage fees and other revenue . income before income taxes and income from operations by segment are summarized in the following table . replace_table_token_27_th ( a ) included in the pipeline transportation segment for 2013 and 2012 are $ 20 million and $ 4 million of corporate overhead costs attributable to mplx , which were included in items not allocated to segments prior to mplx 's october 31 , 2012 initial public offering . these expenses are not currently allocated to other segments . ( b ) see item 8. financial statements and supplementary data - note 6 . ( c ) see item 8. financial statements and supplementary data - note 22 . ( d ) includes related party net interest and other financial income . 43 the following table presents certain market indicators that we believe are helpful in understanding the results of our refining & marketing segment 's business . replace_table_token_28_th ( a ) all spreads and differentials are measured against prompt lls . ( b ) calculation utilizes usgc 3 % residual fuel oil price as a proxy for chicago 3 % residual fuel oil price . ( c ) blended chicago/usgc crack spread is 38 % / 62 % in 2013 and 52 % / 48 % in 2012 based on mpc 's refining capacity by region in each period . ( d ) lls ( prompt ) - [ delivered cost of sour crude oil : arab light , kuwait , maya , western canadian select and mars ] . refining & marketing segment income from operations decreased $ 1.89 billion in 2013 from 2012 , primarily due to narrower crude oil differentials and lower net product price realizations , partially offset by higher refinery throughput and sales volumes . the sweet/sour crude oil differential narrowed by $ 3.94 per barrel and the lls-wti crude oil differential narrowed by $ 8.19 per barrel in 2013 compared to 2012 , which we estimate had negative impacts on segment income of $ 1.21 billion and $ 998 million , respectively . we estimate the lower net product price realizations had a negative impact on segment income of $ 593 million . total refinery throughputs increased 439 mbpd in 2013 compared to 2012 , primarily due to the galveston bay refinery , which we Narrative : net cash provided by operating activities decreased $ 1.09 billion in 2013 compared to 2012 , primarily due to decrease s in net income of $ 1.26 billion and non-cash income adjustments of $ 453 million , partially offset by favorable changes in working capital of $ 626 million compared to 2012. net cash provided from operating activities increased $ 1.18 billion in 2012 compared to 2011 , primarily due to increases in net income of $ 1.00 billion and non-cash income adjustments of $ 620 million , partially offset by unfavorable changes in working capital of $ 441 million . for 2013 , changes in working capital were a net $ 198 million source of cash , primarily due to an increase in accounts payable and accrued liabilities , partially offset by increases in current receivables and inventory volumes . accounts payable increased $ 1.45 billion from year-end 2012 , primarily due to higher crude oil payable volumes , and current receivables increased $ 949 million from year-end 2012 , primarily due to higher refined product receivable volumes attributable to an increase in refined product sales volumes . both of these increases are associated with the galveston bay refinery acquired in february 2013. changes in inventories were a $ 305 million use of cash in 2013 , primarily due to higher refined product and crude oil inventory volumes . changes in working capital were a net $ 428 million use of cash in 2012 , primarily due to a decrease in accounts payable and accrued liabilities resulting primarily from reductions in crude oil prices and payable volumes , partially offset by a decrease in current receivables resulting primarily from reductions in crude oil prices and receivable volumes . changes in working capital were a net $ 13 million source of cash in 2011 , primarily due to an increase in accounts payable and accrued liabilities resulting primarily from increases in crude oil prices and payable volumes , partially offset by an increase in current receivables resulting from increases in crude oil prices and receivable volumes and refined product prices .

our bottling partners either combine the concentrates with sweeteners ( depending on the product ) , still water and or sparkling water , or combine the syrups with sparkling water to produce finished beverages . the finished beverages are packaged in authorized containers — such as cans and refillable and nonrefillable glass and plastic bottles — bearing our trademarks or trademarks licensed to us and are then sold to retailers directly or , in some cases , through wholesalers or other bottlers . outside the united states , we also sell concentrates for fountain beverages to our bottling partners who are typically authorized to manufacture fountain syrups , which they sell to fountain retailers such as restaurants and convenience stores which use the fountain syrups to produce beverages for immediate consumption , or to authorized fountain wholesalers who in turn sell and distribute the fountain syrups to fountain retailers . our finished product operations consist primarily of company-owned or -controlled bottling , sales and distribution operations , including ccr . our company-owned or -controlled bottling , sales and distribution operations , other than ccr , are included in our bottling investments operating segment . ccr is included in our north america operating segment . our finished product operations generate net operating revenues by selling sparkling beverages and a variety of still beverages , such as juices and juice drinks , energy and sports drinks , ready-to-drink teas and coffees , and certain water products , to retailers or to distributors , wholesalers and bottling partners who distribute them to retailers . in addition , in the united states , we manufacture fountain syrups and sell them to fountain retailers such as restaurants and convenience stores who use the fountain syrups to produce beverages for immediate consumption or to authorized fountain wholesalers or bottling partners who resell the fountain syrups to fountain retailers . in the united states , we authorize wholesalers to resell our fountain syrups through nonexclusive appointments that neither restrict us in setting the prices at which we sell fountain syrups to the wholesalers nor restrict the territories in which the wholesalers may resell in the united states . 30 the following table sets forth the percentage of total net operating revenues related to concentrate operations and finished product operations : replace_table_token_5_th 1 includes concentrates sold by the company to authorized bottling partners for the manufacture of fountain syrups . the bottlers then typically sell the fountain syrups to wholesalers or directly to fountain retailers . 2 includes fountain syrups manufactured by the company , including consolidated bottling operations , and sold to fountain retailers or to authorized fountain wholesalers or bottling partners who resell the fountain syrups to fountain retailers . the following table sets forth the percentage of total worldwide unit case volume related to concentrate operations and finished product operations : replace_table_token_6_th 1 includes unit case volume related to concentrates sold by the company to authorized bottling partners for the manufacture of fountain syrups . the bottlers then typically sell the fountain syrups to wholesalers or directly to fountain retailers . 2 includes unit case volume related to fountain syrups manufactured by the company , including consolidated bottling operations , and sold to fountain retailers or to authorized fountain wholesalers or bottling partners who resell the fountain syrups to fountain retailers . the nonalcoholic beverage segment of the commercial beverage industry we operate in the highly competitive nonalcoholic beverage segment of the commercial beverage industry . we face strong competition from numerous other general and specialty beverage companies . we , along with other beverage companies , are affected by a number of factors , including , but not limited to , cost to manufacture and distribute products , consumer spending , economic conditions , availability and quality of water , consumer preferences , inflation , political climate , local and national laws and regulations , foreign currency exchange fluctuations , fuel prices and weather patterns . our objective our objective is to use our formidable assets — our brands , financial strength , unrivaled distribution system , global reach , and the talent and strong commitment of our management and associates — to achieve long-term sustainable growth . our vision for sustainable growth includes the following : people : being a great place to work where people are inspired to be the best they can be . portfolio : bringing to the world a portfolio of beverage brands that anticipates and satisfies people 's desires and needs . partners : nurturing a winning network of partners and building mutual loyalty . planet : being a responsible global citizen that makes a difference . profit : maximizing return to shareowners while being mindful of our overall responsibilities . productivity : managing our people , time and money for greatest effectiveness . 31 strategic priorities we have the following five strategic priorities designed to create long-term sustainable growth for our company and the coca-cola system and value for our shareowners : accelerate sparkling growth , led by brand coca-cola strategically expand our profitable still portfolio increase media investments by maximizing productivity win at the point of sale by unlocking the power of the coca-cola system invest in our next generation of leaders to enable the entire coca-cola system so that we can deliver on these strategic priorities , we must further enhance our core capabilities of consumer marketing ; commercial leadership ; franchise leadership ; and bottling and distribution operations . core capabilities consumer marketing marketing investments are designed to enhance consumer awareness of , and increase consumer preference for , our brands . successful marketing investments produce long-term growth in unit case volume , per capita consumption and our share of worldwide nonalcoholic beverage sales . story_separator_special_tag if an impairment charge is recorded by one of our equity method investees , the company records its proportionate share of such charge as a reduction of equity income ( loss ) — net in our consolidated statements of income . however , the actual amount we record with respect to our proportionate share of such charges may be impacted by items such as basis differences , deferred taxes and deferred gains . management 's assessments of the recoverability and impairment tests of noncurrent assets involve critical accounting estimates . these estimates require significant management judgment , include inherent uncertainties and are often interdependent ; therefore , they do not change in isolation . factors that management must estimate include , among others , the economic life of the asset , sales volume , pricing , cost of raw materials , delivery costs , inflation , cost of capital , marketing spending , foreign currency exchange rates , tax rates , capital spending and proceeds from the sale of assets . these factors are even more difficult to predict when global financial markets are highly volatile . the estimates we use when assessing the recoverability of noncurrent assets are consistent with those we use in our internal planning . when performing impairment tests , we estimate the fair values of the assets using management 's best assumptions , which we believe would be consistent with what a hypothetical marketplace participant would use . estimates and assumptions used in these tests are evaluated and updated as appropriate . the variability of these factors depends on a number of conditions , including uncertainty about future events , and thus our accounting estimates may change from period to period . if other assumptions and estimates had been used when these tests were performed , impairment charges could have resulted . as mentioned above , these factors do not change in isolation and , therefore , we do not believe it is practicable or meaningful to present the impact of changing a single factor . furthermore , if management uses different assumptions or if different conditions occur in future periods , future impairment charges could result . refer to the heading `` operations review `` below for additional information related to our present business environment . certain factors discussed above are impacted by our current business environment and are discussed throughout this report , as appropriate . our company faces many uncertainties and risks related to various economic , political and regulatory environments in the countries in which we operate , particularly in developing or emerging markets . refer to the heading `` our business — challenges and risks `` above and `` item 1a . risk factors `` in part i of this report . as a result , management must make numerous assumptions which involve a significant amount of judgment when completing recoverability and impairment tests of noncurrent assets in various regions around the world . investments in equity and debt securities the carrying values of our investments in equity securities are determined using the equity method , the cost method or the fair value method . we account for investments in companies that we do not control or account for under the equity method either at fair value or under the cost method , as applicable . investments in equity securities , other than investments accounted for under the equity method , are carried at fair value if the fair value of the security is readily determinable . equity investments carried at fair value are classified as either trading or available-for-sale securities . realized and unrealized gains and losses on trading securities and realized gains and losses on available-for-sale securities are included in net income . unrealized gains and losses , net of deferred taxes , on available-for-sale securities are included in our consolidated balance sheets as a component of accumulated other comprehensive income ( loss ) ( `` aoci `` ) . trading securities are reported as either marketable securities or other assets in our consolidated balance sheets . securities classified as available-for-sale are reported as either marketable securities or other investments in our consolidated balance sheets , depending on the length of time we intend to hold the investment . investments in equity securities that do not qualify for fair value accounting or equity method accounting are accounted for under the cost method . in accordance with the cost method , our initial investment is recorded at cost and we record dividend income when applicable dividends are declared . cost method investments are reported as other investments in our consolidated balance sheets . our investments in debt securities are carried at either amortized cost or fair value . investments in debt securities that the company has the positive intent and ability to hold to maturity are carried at amortized cost and classified as held-to-maturity . investments in debt securities that are not classified as held-to-maturity are carried at fair value and classified as either trading or available-for-sale . 36 the following table presents the carrying values of our investments in equity and debt securities ( in millions ) : replace_table_token_7_th * accounts for less than 1 percent of the company 's total assets . 1 the total percentage does not add due to rounding . investments classified as trading securities are not assessed for impairment , since they are carried at fair value with the change in fair value included in net income . we review our investments in equity and debt securities that are accounted for using the equity method or cost method or that are classified as available-for-sale or held-to-maturity each reporting period to determine whether a significant event or change in circumstances has occurred that may have an adverse effect on the fair value of each investment . when such events or changes occur , we evaluate the fair value compared to our cost basis in the investment . we also perform this evaluation every reporting

cash flows from financing activities our cash flows provided by ( used in ) financing activities were as follows ( in millions ) : replace_table_token_23_th debt financing our company maintains debt levels we consider prudent based on our cash flows , interest coverage ratio and percentage of debt to capital . we use debt financing to lower our overall cost of capital , which increases our return on shareowners ' equity . this exposes us to adverse changes in interest rates . our interest expense may also be affected by our credit ratings . as of december 31 , 2013 , our long-term debt was rated `` aa- '' by standard & poor 's , `` aa3 '' by moody 's and `` a+ '' by fitch . our commercial paper program was rated `` a-1+ '' by standard & poor 's , `` p-1 '' by moody 's and `` f-1 '' by fitch . in assessing our credit strength , all three agencies consider our capital structure ( including the amount and maturity dates of our debt ) and financial policies as well as the aggregated balance sheet and other financial information of the company . in addition , some rating agencies also consider the financial information of certain bottlers , including new cce , coca-cola amatil limited , coca-cola bottling co. consolidated , coca-cola femsa and coca-cola hellenic . while the company has no legal obligation for the debt of these bottlers , the rating agencies believe the strategic importance of the bottlers to the company 's business model provides the company with an incentive to keep these bottlers viable . it is our expectation that the credit rating agencies will continue using this methodology . if our credit ratings were to be downgraded as a result of changes in our capital structure , our major bottlers ' financial performance , changes in the credit rating agencies ' methodology in assessing our credit strength , or for any other reason , our cost of borrowing could increase .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. our bottling partners either combine the concentrates with sweeteners ( depending on the product ) , still water and or sparkling water , or combine the syrups with sparkling water to produce finished beverages . the finished beverages are packaged in authorized containers — such as cans and refillable and nonrefillable glass and plastic bottles — bearing our trademarks or trademarks licensed to us and are then sold to retailers directly or , in some cases , through wholesalers or other bottlers . outside the united states , we also sell concentrates for fountain beverages to our bottling partners who are typically authorized to manufacture fountain syrups , which they sell to fountain retailers such as restaurants and convenience stores which use the fountain syrups to produce beverages for immediate consumption , or to authorized fountain wholesalers who in turn sell and distribute the fountain syrups to fountain retailers . our finished product operations consist primarily of company-owned or -controlled bottling , sales and distribution operations , including ccr . our company-owned or -controlled bottling , sales and distribution operations , other than ccr , are included in our bottling investments operating segment . ccr is included in our north america operating segment . our finished product operations generate net operating revenues by selling sparkling beverages and a variety of still beverages , such as juices and juice drinks , energy and sports drinks , ready-to-drink teas and coffees , and certain water products , to retailers or to distributors , wholesalers and bottling partners who distribute them to retailers . in addition , in the united states , we manufacture fountain syrups and sell them to fountain retailers such as restaurants and convenience stores who use the fountain syrups to produce beverages for immediate consumption or to authorized fountain wholesalers or bottling partners who resell the fountain syrups to fountain retailers . in the united states , we authorize wholesalers to resell our fountain syrups through nonexclusive appointments that neither restrict us in setting the prices at which we sell fountain syrups to the wholesalers nor restrict the territories in which the wholesalers may resell in the united states . 30 the following table sets forth the percentage of total net operating revenues related to concentrate operations and finished product operations : replace_table_token_5_th 1 includes concentrates sold by the company to authorized bottling partners for the manufacture of fountain syrups . the bottlers then typically sell the fountain syrups to wholesalers or directly to fountain retailers . 2 includes fountain syrups manufactured by the company , including consolidated bottling operations , and sold to fountain retailers or to authorized fountain wholesalers or bottling partners who resell the fountain syrups to fountain retailers . the following table sets forth the percentage of total worldwide unit case volume related to concentrate operations and finished product operations : replace_table_token_6_th 1 includes unit case volume related to concentrates sold by the company to authorized bottling partners for the manufacture of fountain syrups . the bottlers then typically sell the fountain syrups to wholesalers or directly to fountain retailers . 2 includes unit case volume related to fountain syrups manufactured by the company , including consolidated bottling operations , and sold to fountain retailers or to authorized fountain wholesalers or bottling partners who resell the fountain syrups to fountain retailers . the nonalcoholic beverage segment of the commercial beverage industry we operate in the highly competitive nonalcoholic beverage segment of the commercial beverage industry . we face strong competition from numerous other general and specialty beverage companies . we , along with other beverage companies , are affected by a number of factors , including , but not limited to , cost to manufacture and distribute products , consumer spending , economic conditions , availability and quality of water , consumer preferences , inflation , political climate , local and national laws and regulations , foreign currency exchange fluctuations , fuel prices and weather patterns . our objective our objective is to use our formidable assets — our brands , financial strength , unrivaled distribution system , global reach , and the talent and strong commitment of our management and associates — to achieve long-term sustainable growth . our vision for sustainable growth includes the following : people : being a great place to work where people are inspired to be the best they can be . portfolio : bringing to the world a portfolio of beverage brands that anticipates and satisfies people 's desires and needs . partners : nurturing a winning network of partners and building mutual loyalty . planet : being a responsible global citizen that makes a difference . profit : maximizing return to shareowners while being mindful of our overall responsibilities . productivity : managing our people , time and money for greatest effectiveness . 31 strategic priorities we have the following five strategic priorities designed to create long-term sustainable growth for our company and the coca-cola system and value for our shareowners : accelerate sparkling growth , led by brand coca-cola strategically expand our profitable still portfolio increase media investments by maximizing productivity win at the point of sale by unlocking the power of the coca-cola system invest in our next generation of leaders to enable the entire coca-cola system so that we can deliver on these strategic priorities , we must further enhance our core capabilities of consumer marketing ; commercial leadership ; franchise leadership ; and bottling and distribution operations . core capabilities consumer marketing marketing investments are designed to enhance consumer awareness of , and increase consumer preference for , our brands . successful marketing investments produce long-term growth in unit case volume , per capita consumption and our share of worldwide nonalcoholic beverage sales . story_separator_special_tag if an impairment charge is recorded by one of our equity method investees , the company records its proportionate share of such charge as a reduction of equity income ( loss ) — net in our consolidated statements of income . however , the actual amount we record with respect to our proportionate share of such charges may be impacted by items such as basis differences , deferred taxes and deferred gains . management 's assessments of the recoverability and impairment tests of noncurrent assets involve critical accounting estimates . these estimates require significant management judgment , include inherent uncertainties and are often interdependent ; therefore , they do not change in isolation . factors that management must estimate include , among others , the economic life of the asset , sales volume , pricing , cost of raw materials , delivery costs , inflation , cost of capital , marketing spending , foreign currency exchange rates , tax rates , capital spending and proceeds from the sale of assets . these factors are even more difficult to predict when global financial markets are highly volatile . the estimates we use when assessing the recoverability of noncurrent assets are consistent with those we use in our internal planning . when performing impairment tests , we estimate the fair values of the assets using management 's best assumptions , which we believe would be consistent with what a hypothetical marketplace participant would use . estimates and assumptions used in these tests are evaluated and updated as appropriate . the variability of these factors depends on a number of conditions , including uncertainty about future events , and thus our accounting estimates may change from period to period . if other assumptions and estimates had been used when these tests were performed , impairment charges could have resulted . as mentioned above , these factors do not change in isolation and , therefore , we do not believe it is practicable or meaningful to present the impact of changing a single factor . furthermore , if management uses different assumptions or if different conditions occur in future periods , future impairment charges could result . refer to the heading `` operations review `` below for additional information related to our present business environment . certain factors discussed above are impacted by our current business environment and are discussed throughout this report , as appropriate . our company faces many uncertainties and risks related to various economic , political and regulatory environments in the countries in which we operate , particularly in developing or emerging markets . refer to the heading `` our business — challenges and risks `` above and `` item 1a . risk factors `` in part i of this report . as a result , management must make numerous assumptions which involve a significant amount of judgment when completing recoverability and impairment tests of noncurrent assets in various regions around the world . investments in equity and debt securities the carrying values of our investments in equity securities are determined using the equity method , the cost method or the fair value method . we account for investments in companies that we do not control or account for under the equity method either at fair value or under the cost method , as applicable . investments in equity securities , other than investments accounted for under the equity method , are carried at fair value if the fair value of the security is readily determinable . equity investments carried at fair value are classified as either trading or available-for-sale securities . realized and unrealized gains and losses on trading securities and realized gains and losses on available-for-sale securities are included in net income . unrealized gains and losses , net of deferred taxes , on available-for-sale securities are included in our consolidated balance sheets as a component of accumulated other comprehensive income ( loss ) ( `` aoci `` ) . trading securities are reported as either marketable securities or other assets in our consolidated balance sheets . securities classified as available-for-sale are reported as either marketable securities or other investments in our consolidated balance sheets , depending on the length of time we intend to hold the investment . investments in equity securities that do not qualify for fair value accounting or equity method accounting are accounted for under the cost method . in accordance with the cost method , our initial investment is recorded at cost and we record dividend income when applicable dividends are declared . cost method investments are reported as other investments in our consolidated balance sheets . our investments in debt securities are carried at either amortized cost or fair value . investments in debt securities that the company has the positive intent and ability to hold to maturity are carried at amortized cost and classified as held-to-maturity . investments in debt securities that are not classified as held-to-maturity are carried at fair value and classified as either trading or available-for-sale . 36 the following table presents the carrying values of our investments in equity and debt securities ( in millions ) : replace_table_token_7_th * accounts for less than 1 percent of the company 's total assets . 1 the total percentage does not add due to rounding . investments classified as trading securities are not assessed for impairment , since they are carried at fair value with the change in fair value included in net income . we review our investments in equity and debt securities that are accounted for using the equity method or cost method or that are classified as available-for-sale or held-to-maturity each reporting period to determine whether a significant event or change in circumstances has occurred that may have an adverse effect on the fair value of each investment . when such events or changes occur , we evaluate the fair value compared to our cost basis in the investment . we also perform this evaluation every reporting Narrative : cash flows from financing activities our cash flows provided by ( used in ) financing activities were as follows ( in millions ) : replace_table_token_23_th debt financing our company maintains debt levels we consider prudent based on our cash flows , interest coverage ratio and percentage of debt to capital . we use debt financing to lower our overall cost of capital , which increases our return on shareowners ' equity . this exposes us to adverse changes in interest rates . our interest expense may also be affected by our credit ratings . as of december 31 , 2013 , our long-term debt was rated `` aa- '' by standard & poor 's , `` aa3 '' by moody 's and `` a+ '' by fitch . our commercial paper program was rated `` a-1+ '' by standard & poor 's , `` p-1 '' by moody 's and `` f-1 '' by fitch . in assessing our credit strength , all three agencies consider our capital structure ( including the amount and maturity dates of our debt ) and financial policies as well as the aggregated balance sheet and other financial information of the company . in addition , some rating agencies also consider the financial information of certain bottlers , including new cce , coca-cola amatil limited , coca-cola bottling co. consolidated , coca-cola femsa and coca-cola hellenic . while the company has no legal obligation for the debt of these bottlers , the rating agencies believe the strategic importance of the bottlers to the company 's business model provides the company with an incentive to keep these bottlers viable . it is our expectation that the credit rating agencies will continue using this methodology . if our credit ratings were to be downgraded as a result of changes in our capital structure , our major bottlers ' financial performance , changes in the credit rating agencies ' methodology in assessing our credit strength , or for any other reason , our cost of borrowing could increase .

in december 2010 , the company 's shareholders approved the unification of our prior nonvoting common stock and voting class a common stock into a single class . effective december 10 , 2010 , the two classes were combined into a single voting class now known simply as our common stock . same store revenues . we believe the changes in same store revenues are a key performance indicator . the change in same store revenues is calculated by comparing revenues for the year to revenues for the prior year for all stores open for the entire 24-month period , excluding stores that received lease agreements from other acquired , closed or merged stores . 24 key components of net income in this management 's discussion and analysis section , we review the company 's consolidated results , including the five components of our revenues , costs of sales and expenses , of which depreciation of lease merchandise is a significant part . revenues . we separate our total revenues into five components : lease revenues and fees , retail sales , non-retail sales , franchise royalties and fees , and other . lease revenues and fees include all revenues derived from lease agreements at company-operated stores , including agreements that result in our customers acquiring ownership at the end of the term . retail sales represent sales of both new and returned lease merchandise from our stores . non-retail sales mainly represent new merchandise sales to our aaron 's sales & lease ownership division franchisees . franchise royalties and fees represent fees from the sale of franchise rights and royalty payments from franchisees , as well as other related income from our franchised stores . other revenues include , at times , income from gains on asset dispositions and other miscellaneous revenues . retail cost of sales . retail cost of sales represents the original or depreciated cost of merchandise sold through our company-operated stores . non-retail cost of sales . non-retail cost of sales primarily represents the cost of merchandise sold to our franchisees . operating expenses . operating expenses include personnel costs , selling costs , occupancy costs , and delivery , among other expenses . lawsuit ( income ) expense . lawsuit expense consists of the net cost of paying legal judgments and settlement amounts ; defense costs are included in operating expenses . lawsuit income results from reductions in previously accrued reserves . retirement/separation charges . retirement/separation charges represent costs associated with the retirement of the company 's founder and former chairman of the board in 2012 and the departure of the company 's former chief executive officer in 2011. depreciation of lease merchandise . depreciation of lease merchandise reflects the expense associated with depreciating merchandise held for lease and leased to customers by our company-operated stores . critical accounting policies revenue recognition . lease revenues are recognized in the month they are due on the accrual basis of accounting . for internal management reporting purposes , lease revenues from sales and lease ownership agreements are recognized by the reportable segments as revenue in the month the cash is collected . on a monthly basis , we record an accrual for lease revenues due but not yet received , net of allowances , and a deferral of revenue for lease payments received prior to the month due . our revenue recognition accounting policy matches the lease revenue with the corresponding costs , mainly depreciation , associated with the lease merchandise . at december 31 , 2012 and 2011 , we had a revenue deferral representing cash collected in advance of being due or otherwise earned totaling $ 45.3 million and $ 43.9 million , respectively , and an accrued revenue receivable , net of allowance for doubtful accounts , based on historical collection rates of $ 7.4 million and $ 5.2 million , respectively . revenues from the sale of merchandise to franchisees are recognized at the time of receipt of the merchandise by the franchisee and revenues from such sales to other customers are recognized at the time of shipment . lease merchandise . our aaron 's sales & lease ownership and homesmart divisions depreciate merchandise over the applicable agreement period , generally 12 to 24 months ( monthly agreements ) or 60 to 120 weeks ( weekly agreements ) when leased , and 36 months when not leased , to 0 % salvage value . our policies require weekly lease merchandise counts at the store and write-offs for unsalable , damaged , or missing merchandise inventories . full physical inventories are generally taken at our fulfillment and manufacturing facilities two to four times a year with appropriate provisions made for missing , damaged and unsalable merchandise . in addition , we monitor lease merchandise levels and mix by division , store and fulfillment center , as well as the average age of merchandise on hand . if unsalable lease merchandise can not be returned to vendors , its carrying value is adjusted to net realizable value or written off . all lease merchandise is available for lease and sale , excluding merchandise determined to be missing , damaged or unsalable . 25 we record lease merchandise carrying value adjustments on the allowance method , which estimates the merchandise losses incurred but not yet identified by management as of the end of the accounting period . lease merchandise adjustments totaled $ 54.9 million , $ 46.2 million , and $ 46.5 million for the years ended december 31 , 2012 , 2011 , and 2010 , respectively . the fiscal year ended december 31 , 2010 includes a write-down of $ 4.7 million related to the closure of the aaron 's office furniture stores . leases and closed store reserves . the majority of our company-operated stores are operated from leased facilities under operating lease agreements . story_separator_special_tag 30 income tax expense income tax expense increased $ 34.2 million to $ 103.8 million in 2012 , compared with $ 69.6 million in 2011 , representing a 49.1 % increase due to a 51 % increase in earnings in 2012 , offset by a slightly lower tax rate in 2012. our effective tax rate was 37.5 % in 2012 and 38.0 % in 2011. income tax expense decreased $ 2.8 million to $ 69.6 million in 2011 , compared with $ 72.4 million in 2010 , representing a 3.9 % decrease . our effective tax rate was 38.0 % in both 2011 and 2010. net earnings from continuing operations information about our earnings before income taxes by reportable segment is as follows : replace_table_token_7_th nmf—calculation is not meaningful year ended december 31 , 2012 versus year ended december 31 , 2011 earnings before income taxes increased $ 93.5 million , or 51 % , primarily due to a $ 99.8 million , or 69.5 % , increase in the sales and lease ownership segment , a $ 3.1 million , or 6.2 % , increase in the franchise segment , and a $ 321,000 increase in the homesmart segment , partially offset by a decrease of $ 2.6 million in the manufacturing segment , and $ 12.7 million in the “other” segment , primarily due to the closure of the aaron 's office furniture division store and retirement charges of $ 10.4 million associated with the retirement of the company 's founder and former chairman of the board . net earnings increased $ 59.3 million to $ 173.0 million in 2012 compared with $ 113.8 million in 2011 , representing a 52.1 % increase . as a percentage of total revenues , net earnings from continuing operations were 7.8 % and 5.6 % in 2012 and 2011 , respectively . additionally , net earnings for 2012 included the recognition of income of $ 35.5 million related to the alford vs. aaron rents , inc. et al case previously discussed . the company 's increased profitability of new company-operated sales and lease ownership stores added over the past several years , contributing to a 5.1 % increase in same store revenues and a 5.4 % increase in franchise royalties and fees . year ended december 31 , 2011 versus year ended december 31 , 2010 earnings before income taxes decreased $ 7.4 million , or 3.9 % , primarily due to a $ 15.7 million , or 9.9 % , decrease in the sales and lease ownership segment and a $ 7.0 million decrease in the homesmart segment , partially offset by a $ 3.6 million , or 7.9 % , increase in the franchise segment and a $ 13.3 million increase in the “other” segment , primarily due to the closure of 14 aaron 's office furniture division stores during 2010. net earnings decreased $ 4.6 million to $ 113.8 million in 2011 compared with $ 118.4 million in 2010 , representing a 3.9 % decrease . as a percentage of total revenues , net earnings from continuing operations were 5.6 % and 6.3 % in 2011 and 2010 , respectively . additionally , the decrease in net earnings for 2011 was impacted by litigation expense of $ 36.5 million related to the alford vs. aaron rents , inc. et al case previously discussed partially offset by an increase in profitability of new company-operated sales and lease ownership stores added over the past several years , contributing to a 4.4 % increase in same store revenues , and a 7.0 % increase in franchise royalties and fees . 31 balance sheet story_separator_special_tag style= `` font-size:6px ; margin-top:0px ; margin-bottom:0px `` > trade credit with vendors ; proceeds from the sale of lease return merchandise ; private debt offerings ; and stock offerings . at december 31 , 2012 , there was no outstanding balance under our revolving credit agreement . the credit facilities balance decreased by $ 12.0 million in 2012 , reflecting the repayment at maturity of the remaining $ 12.0 million 5.03 % senior unsecured notes due july 2012. our revolving credit facility was amended on december 13 , 2012 and extends the maturity date until december 13 , 2017. the amendment to the company 's revolving credit agreement is discussed in further detail in note 6 to our consolidated financial statements . the total available credit under the facility as of december 31 , 2012 is $ 140.0 million . on december 19 , 2012 , the company entered into amendment no . 1 to a note purchase agreement with several insurance companies . the amendment amends the note purchase agreement dated as of july 5 , 2011 , pursuant to which the company and its subsidiaries , aaron investment company , aaron 's production company and 99lto , llc , as co-obligors , issued $ 125 million in senior unsecured notes to the purchasers in a private placement . the notes bear interest at the rate of 3.75 % per year and mature on april 27 , 2018. payments of interest are due quarterly , commencing july 27 , 2011 , with principal payments of $ 25.0 million each due annually commencing april 27 , 2014 . 33 our revolving credit agreement and senior unsecured notes , and our franchise loan program discussed below , contain certain financial covenants . these covenants include requirements that we maintain ratios of : ( 1 ) ebitda plus lease expense to fixed charges of no less than 2:1 ; and ( 2 ) total debt to ebitda of no greater than 3:1 ; “ebitda” in each case means consolidated net income before interest and tax expense , depreciation ( other than lease merchandise depreciation ) and amortization expense , and other non-cash charges . the company is also required to maintain a minimum amount of shareholders ' equity . see the full text of the covenants in our

cash and cash equivalents . the company 's cash balance decreased to $ 129.5 million at december 31 , 2012 from $ 176.3 million at december 31 , 2011. the $ 46.7 million decrease in our cash balance is due to cash flow generated from operations , less cash used by investing and financing activities . for additional information , refer to the “liquidity and capital resources” section below . investment securities . our investment securities balance was $ 85.9 million at december 31 , 2012 primarily as a result of purchases of corporate bonds in 2011 and an investment in bonds issued by a privately-held rent-to-own company based in the united kingdom . the securities are recorded at amortized cost in the consolidated balance sheets and mature at various dates through 2014. lease merchandise , net . the increase of $ 101.8 million in lease merchandise , net of accumulated depreciation , to $ 964.1 million at december 31 , 2012 from $ 862.3 million at december 31 , 2011 , is primarily the result of a net increase in lease merchandise of $ 92.7 million in the sales and lease ownership segment and $ 6.4 million in the homesmart segment . goodwill . the $ 14.9 million increase in goodwill , to $ 234.2 million on december 31 , 2012 from $ 219.3 million on december 31 , 2011 , is the result of a series of acquisitions of sales and lease ownership businesses . during 2012 , the company acquired 44 sales and lease ownership stores with an aggregate purchase price of $ 29.7 million . the company acquired four stores that were converted to homesmart with an aggregate purchase price of $ 1.3 million . the principal tangible assets acquired consisted of lease merchandise , vehicles and fixtures and equipment . prepaid expenses and other assets .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. in december 2010 , the company 's shareholders approved the unification of our prior nonvoting common stock and voting class a common stock into a single class . effective december 10 , 2010 , the two classes were combined into a single voting class now known simply as our common stock . same store revenues . we believe the changes in same store revenues are a key performance indicator . the change in same store revenues is calculated by comparing revenues for the year to revenues for the prior year for all stores open for the entire 24-month period , excluding stores that received lease agreements from other acquired , closed or merged stores . 24 key components of net income in this management 's discussion and analysis section , we review the company 's consolidated results , including the five components of our revenues , costs of sales and expenses , of which depreciation of lease merchandise is a significant part . revenues . we separate our total revenues into five components : lease revenues and fees , retail sales , non-retail sales , franchise royalties and fees , and other . lease revenues and fees include all revenues derived from lease agreements at company-operated stores , including agreements that result in our customers acquiring ownership at the end of the term . retail sales represent sales of both new and returned lease merchandise from our stores . non-retail sales mainly represent new merchandise sales to our aaron 's sales & lease ownership division franchisees . franchise royalties and fees represent fees from the sale of franchise rights and royalty payments from franchisees , as well as other related income from our franchised stores . other revenues include , at times , income from gains on asset dispositions and other miscellaneous revenues . retail cost of sales . retail cost of sales represents the original or depreciated cost of merchandise sold through our company-operated stores . non-retail cost of sales . non-retail cost of sales primarily represents the cost of merchandise sold to our franchisees . operating expenses . operating expenses include personnel costs , selling costs , occupancy costs , and delivery , among other expenses . lawsuit ( income ) expense . lawsuit expense consists of the net cost of paying legal judgments and settlement amounts ; defense costs are included in operating expenses . lawsuit income results from reductions in previously accrued reserves . retirement/separation charges . retirement/separation charges represent costs associated with the retirement of the company 's founder and former chairman of the board in 2012 and the departure of the company 's former chief executive officer in 2011. depreciation of lease merchandise . depreciation of lease merchandise reflects the expense associated with depreciating merchandise held for lease and leased to customers by our company-operated stores . critical accounting policies revenue recognition . lease revenues are recognized in the month they are due on the accrual basis of accounting . for internal management reporting purposes , lease revenues from sales and lease ownership agreements are recognized by the reportable segments as revenue in the month the cash is collected . on a monthly basis , we record an accrual for lease revenues due but not yet received , net of allowances , and a deferral of revenue for lease payments received prior to the month due . our revenue recognition accounting policy matches the lease revenue with the corresponding costs , mainly depreciation , associated with the lease merchandise . at december 31 , 2012 and 2011 , we had a revenue deferral representing cash collected in advance of being due or otherwise earned totaling $ 45.3 million and $ 43.9 million , respectively , and an accrued revenue receivable , net of allowance for doubtful accounts , based on historical collection rates of $ 7.4 million and $ 5.2 million , respectively . revenues from the sale of merchandise to franchisees are recognized at the time of receipt of the merchandise by the franchisee and revenues from such sales to other customers are recognized at the time of shipment . lease merchandise . our aaron 's sales & lease ownership and homesmart divisions depreciate merchandise over the applicable agreement period , generally 12 to 24 months ( monthly agreements ) or 60 to 120 weeks ( weekly agreements ) when leased , and 36 months when not leased , to 0 % salvage value . our policies require weekly lease merchandise counts at the store and write-offs for unsalable , damaged , or missing merchandise inventories . full physical inventories are generally taken at our fulfillment and manufacturing facilities two to four times a year with appropriate provisions made for missing , damaged and unsalable merchandise . in addition , we monitor lease merchandise levels and mix by division , store and fulfillment center , as well as the average age of merchandise on hand . if unsalable lease merchandise can not be returned to vendors , its carrying value is adjusted to net realizable value or written off . all lease merchandise is available for lease and sale , excluding merchandise determined to be missing , damaged or unsalable . 25 we record lease merchandise carrying value adjustments on the allowance method , which estimates the merchandise losses incurred but not yet identified by management as of the end of the accounting period . lease merchandise adjustments totaled $ 54.9 million , $ 46.2 million , and $ 46.5 million for the years ended december 31 , 2012 , 2011 , and 2010 , respectively . the fiscal year ended december 31 , 2010 includes a write-down of $ 4.7 million related to the closure of the aaron 's office furniture stores . leases and closed store reserves . the majority of our company-operated stores are operated from leased facilities under operating lease agreements . story_separator_special_tag 30 income tax expense income tax expense increased $ 34.2 million to $ 103.8 million in 2012 , compared with $ 69.6 million in 2011 , representing a 49.1 % increase due to a 51 % increase in earnings in 2012 , offset by a slightly lower tax rate in 2012. our effective tax rate was 37.5 % in 2012 and 38.0 % in 2011. income tax expense decreased $ 2.8 million to $ 69.6 million in 2011 , compared with $ 72.4 million in 2010 , representing a 3.9 % decrease . our effective tax rate was 38.0 % in both 2011 and 2010. net earnings from continuing operations information about our earnings before income taxes by reportable segment is as follows : replace_table_token_7_th nmf—calculation is not meaningful year ended december 31 , 2012 versus year ended december 31 , 2011 earnings before income taxes increased $ 93.5 million , or 51 % , primarily due to a $ 99.8 million , or 69.5 % , increase in the sales and lease ownership segment , a $ 3.1 million , or 6.2 % , increase in the franchise segment , and a $ 321,000 increase in the homesmart segment , partially offset by a decrease of $ 2.6 million in the manufacturing segment , and $ 12.7 million in the “other” segment , primarily due to the closure of the aaron 's office furniture division store and retirement charges of $ 10.4 million associated with the retirement of the company 's founder and former chairman of the board . net earnings increased $ 59.3 million to $ 173.0 million in 2012 compared with $ 113.8 million in 2011 , representing a 52.1 % increase . as a percentage of total revenues , net earnings from continuing operations were 7.8 % and 5.6 % in 2012 and 2011 , respectively . additionally , net earnings for 2012 included the recognition of income of $ 35.5 million related to the alford vs. aaron rents , inc. et al case previously discussed . the company 's increased profitability of new company-operated sales and lease ownership stores added over the past several years , contributing to a 5.1 % increase in same store revenues and a 5.4 % increase in franchise royalties and fees . year ended december 31 , 2011 versus year ended december 31 , 2010 earnings before income taxes decreased $ 7.4 million , or 3.9 % , primarily due to a $ 15.7 million , or 9.9 % , decrease in the sales and lease ownership segment and a $ 7.0 million decrease in the homesmart segment , partially offset by a $ 3.6 million , or 7.9 % , increase in the franchise segment and a $ 13.3 million increase in the “other” segment , primarily due to the closure of 14 aaron 's office furniture division stores during 2010. net earnings decreased $ 4.6 million to $ 113.8 million in 2011 compared with $ 118.4 million in 2010 , representing a 3.9 % decrease . as a percentage of total revenues , net earnings from continuing operations were 5.6 % and 6.3 % in 2011 and 2010 , respectively . additionally , the decrease in net earnings for 2011 was impacted by litigation expense of $ 36.5 million related to the alford vs. aaron rents , inc. et al case previously discussed partially offset by an increase in profitability of new company-operated sales and lease ownership stores added over the past several years , contributing to a 4.4 % increase in same store revenues , and a 7.0 % increase in franchise royalties and fees . 31 balance sheet story_separator_special_tag style= `` font-size:6px ; margin-top:0px ; margin-bottom:0px `` > trade credit with vendors ; proceeds from the sale of lease return merchandise ; private debt offerings ; and stock offerings . at december 31 , 2012 , there was no outstanding balance under our revolving credit agreement . the credit facilities balance decreased by $ 12.0 million in 2012 , reflecting the repayment at maturity of the remaining $ 12.0 million 5.03 % senior unsecured notes due july 2012. our revolving credit facility was amended on december 13 , 2012 and extends the maturity date until december 13 , 2017. the amendment to the company 's revolving credit agreement is discussed in further detail in note 6 to our consolidated financial statements . the total available credit under the facility as of december 31 , 2012 is $ 140.0 million . on december 19 , 2012 , the company entered into amendment no . 1 to a note purchase agreement with several insurance companies . the amendment amends the note purchase agreement dated as of july 5 , 2011 , pursuant to which the company and its subsidiaries , aaron investment company , aaron 's production company and 99lto , llc , as co-obligors , issued $ 125 million in senior unsecured notes to the purchasers in a private placement . the notes bear interest at the rate of 3.75 % per year and mature on april 27 , 2018. payments of interest are due quarterly , commencing july 27 , 2011 , with principal payments of $ 25.0 million each due annually commencing april 27 , 2014 . 33 our revolving credit agreement and senior unsecured notes , and our franchise loan program discussed below , contain certain financial covenants . these covenants include requirements that we maintain ratios of : ( 1 ) ebitda plus lease expense to fixed charges of no less than 2:1 ; and ( 2 ) total debt to ebitda of no greater than 3:1 ; “ebitda” in each case means consolidated net income before interest and tax expense , depreciation ( other than lease merchandise depreciation ) and amortization expense , and other non-cash charges . the company is also required to maintain a minimum amount of shareholders ' equity . see the full text of the covenants in our Narrative : cash and cash equivalents . the company 's cash balance decreased to $ 129.5 million at december 31 , 2012 from $ 176.3 million at december 31 , 2011. the $ 46.7 million decrease in our cash balance is due to cash flow generated from operations , less cash used by investing and financing activities . for additional information , refer to the “liquidity and capital resources” section below . investment securities . our investment securities balance was $ 85.9 million at december 31 , 2012 primarily as a result of purchases of corporate bonds in 2011 and an investment in bonds issued by a privately-held rent-to-own company based in the united kingdom . the securities are recorded at amortized cost in the consolidated balance sheets and mature at various dates through 2014. lease merchandise , net . the increase of $ 101.8 million in lease merchandise , net of accumulated depreciation , to $ 964.1 million at december 31 , 2012 from $ 862.3 million at december 31 , 2011 , is primarily the result of a net increase in lease merchandise of $ 92.7 million in the sales and lease ownership segment and $ 6.4 million in the homesmart segment . goodwill . the $ 14.9 million increase in goodwill , to $ 234.2 million on december 31 , 2012 from $ 219.3 million on december 31 , 2011 , is the result of a series of acquisitions of sales and lease ownership businesses . during 2012 , the company acquired 44 sales and lease ownership stores with an aggregate purchase price of $ 29.7 million . the company acquired four stores that were converted to homesmart with an aggregate purchase price of $ 1.3 million . the principal tangible assets acquired consisted of lease merchandise , vehicles and fixtures and equipment . prepaid expenses and other assets .

the acquisition has benefited our omnichannel platform through added scale , has strengthened the company 's presence in certain geographic markets , and has enhanced the company 's ability to drive inventory supply-chain synergies between the aaron 's business and progressive leasing in markets that sei served . 30 we also took steps to further address the expense structure of our aaron 's business by completing a thorough review of our remaining store base in order to identify opportunities for rationalization . as a result of this evaluation and other cost-reduction initiatives , the company closed 56 underperforming company-operated stores during 2016 , closed 82 stores during 2017 and anticipates closing an additional eight stores in the first six months of 2018. the company also optimized its home office and field support staff in 2016 and 2017 , which resulted in a reduction in employee headcount in those areas , to more closely align with current business conditions . highlights the following summarizes significant highlights from our 2017 fiscal year : the company reported record revenues of $ 3.4 billion , and its net earnings before income tax ( benefit ) expense increased to a record $ 239.6 million compared to $ 218.4 million in 2016 . the tax cuts and jobs act ( the `` tax act `` ) enacted in december 2017 , among other things , lowered the u.s. corporate income tax rate from 35 % to 21 % effective january 1 , 2018. the estimated net impact of the tax act to our income tax ( benefit ) expense for the year ended december 31 , 2017 is a non-cash provisional income tax benefit of $ 137 million , which primarily relates to the remeasurement of net deferred tax liabilities at the lower tax rate . progressive leasing achieved record revenues of $ 1.6 billion , an increase of 26.6 % over 2016 . progressive leasing 's revenue growth is due to a 23.0 % increase in active doors , which contributed to a 31.2 % increase in total invoice volume . progressive leasing increased its earnings before income taxes to $ 140.2 million compared to $ 104.7 million in 2016 , due mainly to its revenue growth . aaron 's business revenues decreased to $ 1.8 billion , an 8.4 % decrease compared to 2016 . the decline is due primarily to a 7.0 % decrease in same store sales , the net reduction of 130 company-operated stores during the 24-month period ended december 31 , 2017 , and declines in non-retail sales to our franchisees . earnings before income taxes decreased to $ 110.6 million in 2017 compared to $ 123.0 million in the prior year due primarily to the decline in same store sales and the reduction in non-retail sales to franchisees . the company acquired substantially all of the assets of the store operations of sei , its largest franchisee , for approximately $ 140 million in cash . the company generated cash from operating activities of $ 159.1 million compared to $ 467.2 million in 2016 and ended 2017 with $ 51.0 million in cash and $ 393.9 million available on our revolving credit facility . the company returned $ 70.5 million to our shareholders through the repurchase of 2.0 million shares and the payment of our quarterly dividends , which we have paid for 30 consecutive years . key metrics active doors . we believe that active doors are a key performance indicator of our progressive leasing segment . active doors represent retail store locations at which at least one virtual lease-to-own transaction has been completed during the trailing twelve month period . the following table presents active doors for the progressive leasing segment : replace_table_token_8_th invoice volume . we also believe that invoice volume is a key performance indicator of our progressive leasing segment . invoice volume is defined as the retail price of lease merchandise acquired and leased by progressive leasing during the period , net of returns . the following table presents total invoice volume for the progressive leasing segment : replace_table_token_9_th 31 the company 's franchised and company-operated store activity ( unaudited ) is summarized as follows : replace_table_token_10_th 1 in may 2016 , we sold our 82 company-operated homesmart stores . same store revenues . we believe that changes in same store revenues are a key performance indicator of the aaron 's business . for the year ended december 31 , 2017 , we calculated this amount by comparing revenues for the year ended december 31 , 2017 to revenues for the year ended december 31 , 2016 for all stores open for the entire 24-month period ended december 31 , 2017 , excluding stores that received lease agreements from other acquired , closed or merged stores . same store revenues declined by 7.0 % during the 24 month period ended december 31 , 2017 . key components of earnings before income taxes in this management 's discussion and analysis section , we review our consolidated results . for the years ended december 31 , 2017 and the comparable prior year periods , some of the key revenue , cost and expense items that affected earnings before income tax ( benefit ) expense were as follows : revenues . we separate our total revenues into six components : ( i ) lease revenues and fees ; ( ii ) retail sales ; ( iii ) non-retail sales ; ( iv ) franchise royalties and fees ; ( v ) interest and fees on loans receivable ; and ( vi ) other . lease revenues and fees include all revenues derived from lease agreements at company-operated stores and retail locations serviced by progressive leasing . retail sales represent sales of both new and returned lease merchandise from our company-operated stores . non-retail sales primarily represent new merchandise sales to our franchisees . story_separator_special_tag other operating ( income ) expense , net information about the components of other operating ( income ) expense , net is as follows : replace_table_token_12_th in 2016 , other operating income , net of $ 6.4 million included a gain of $ 11.1 million related to the sale of the company 's former corporate headquarters building in january 2016 , partially offset by a loss and other charges related to the sale of homesmart of $ 5.4 million . in 2015 , other operating expense , net of $ 1.3 million included a $ 3.5 million loss related to a lease termination on a company aircraft , impairment charges of $ 0.8 million on leasehold improvements related to company-operated stores that were closed during the period and impairment charges of $ 0.5 million on assets held for sale . in addition , the company recognized gains of $ 2.1 million from the sale of 25 company-operated stores during 2015 . operating profit interest income . interest income decreased to $ 1.8 million in 2017 from $ 2.7 million in 2016 due to the discontinuation of accruing interest income related to the perfect home notes effective april 1 , 2017 , partially offset by an increase in interest income from higher cash and cash equivalent balances throughout 2017 . interest income increased to $ 2.7 million in 2016 from $ 2.2 million in 2015 primarily due to an increase in the interest rate of the perfect home notes during 2016 . interest expense . interest expense decreased to $ 20.5 million in 2017 from $ 23.4 million in 2016 and $ 23.3 million in 2015 due primarily to a lower outstanding debt balance throughout 2017 . other non-operating income ( expense ) , net . other non-operating income ( expense ) , net includes the impact of foreign currency remeasurement , as well as gains resulting from changes in the cash surrender value of company-owned life insurance related to the company 's deferred compensation plan . included in other non-operating income ( expense ) , net were foreign currency remeasurement gains of $ 2.1 million during 2017 and losses of $ 3.7 million and $ 2.5 million during 2016 and 2015 , respectively . these gains and losses result from changes in the value of the u.s. dollar against the british pound and canadian dollar . gains related to the changes in the cash surrender value of company-owned life insurance were $ 1.5 million , $ 0.2 million and $ 0.8 million during 2017 , 2016 and 2015 , respectively . 38 earnings ( loss ) before income taxes information about our earnings ( loss ) before income tax ( benefit ) expense by reportable segment is as follows : replace_table_token_13_th the factors impacting the change in earnings ( loss ) before income tax ( benefit ) expense are discussed above . income tax ( benefit ) expense the company recorded a net income tax benefit of $ 53.0 million for the year ended december 31 , 2017 as compared to income tax expense of $ 79.1 million in 2016 . the net income tax benefit recognized in 2017 was the result of the tax act which was signed into law on december 22 , 2017. the tax act , among other things , ( i ) lowered the u.s. corporate income tax rate from 35 % to 21 % effective january 1 , 2018 ; ( ii ) provided for 100 % expense deduction of certain qualified depreciable assets , including lease merchandise inventory , purchased after september 27 , 2017 ( but would be phased down starting in 2023 ) ; and ( iii ) failed to extend the manufacturing deduction that expired in 2017 under the terms of previous tax law . during the three months ended december 31 , 2017 , the company recorded a net non-cash provisional income tax benefit of $ 137.0 million related to the tax act , which is comprised of an estimated $ 140.0 million remeasurement of deferred tax liabilities at the lower tax rates , partially offset by an estimated $ 3.0 million from the loss of the manufacturing deduction and other impacts . income tax expense increased in 2016 compared to 2015 due primarily to higher pretax income . the effective tax rate remained relatively unchanged at 36.2 % in 2016 compared to 36.3 % in 2015 . overview of financial position the major changes in the consolidated balance sheet from december 31 , 2016 to december 31 , 2017 , include : cash and cash equivalents decreased $ 257.5 million to $ 51.0 million at december 31 , 2017 primarily due to the acquisition of our largest franchisee , scheduled repayments of the company 's unsecured notes and credit facilities , repayment of the dami credit facility , and the return of $ 70.5 million to shareholders in the form of share repurchases and dividends . for additional information , refer to the `` liquidity and capital resources `` section below . lease merchandise increased $ 152.8 million due primarily to increases in lease merchandise purchases at progressive leasing to support higher invoice volume and growth in active doors and the acquisition of our largest franchisee , partially offset by stores closed as part of the company 's restructuring initiatives . goodwill increased $ 96.2 million due primarily to the addition of estimated sei-related goodwill of $ 91.8 million . refer to note 2 to these consolidated financial statements for further details regarding the acquisition accounting for sei . income tax receivable increased $ 88.1 million to $ 100.0 million primarily due to the enactment of the tax act in december 2017. the company made periodic tax payments throughout 2017 based on the previous tax laws . the tax act changed those laws by providing for 100 % expense deduction of the company 's lease merchandise inventory purchased by the company after september 27 , 2017 , which

cash outflows of $ 50.7 million to acquire a 100 % ownership interest in dami . 40 cash used in financing activities cash used in financing activities was $ 211.4 million , $ 153.7 million and $ 47.3 million during the years ended december 31 , 2017 , 2016 and 2015 , respectively . the $ 57.7 million increase in financing cash outflows in 2017 as compared to 2016 is primarily due to ( i ) a $ 28.0 million increase in company repurchases of outstanding common stock in 2017 compared to 2016 and ( ii ) a $ 25.4 million increase in the net repayments of outstanding debt in 2017 compared to 2016. during 2017 , the company made scheduled repayments of $ 85.0 million on unsecured notes , $ 15.0 million on the term loan facility , and paid $ 53.0 million to pay off the dami credit facility , partially offset by $ 15.6 million in borrowings from the refinanced term loan in september 2017. the $ 106.4 million increase in financing cash outflows in 2016 as compared to 2015 is primarily due to the net repayments of outstanding debt in each period . in 2016 , the following net repayments were made : $ 75.0 million on our revolving facility , $ 25.0 million on our 3.95 % senior unsecured notes , and $ 12.5 million on our term loan . in 2015 , total net repayments of outstanding debt were $ 40.7 million . separately , the company repurchased $ 34.5 million of its common stock in 2016 . share repurchases we purchase our stock in the market from time to time as authorized by our board of directors . during the year ended december 31 , 2017 , the company purchased 1,961,442 shares for $ 62.6 million . during the year ended december 31 , 2016 , the company purchased 1,372,700 shares for $ 34.5 million . as of december 31 , 2017 , we have the authority to purchase 7,162,279 additional shares . dividends we have a consistent history of paying dividends , having paid dividends for 30 consecutive years . our annual common stock dividend was $ 0.1125

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. the acquisition has benefited our omnichannel platform through added scale , has strengthened the company 's presence in certain geographic markets , and has enhanced the company 's ability to drive inventory supply-chain synergies between the aaron 's business and progressive leasing in markets that sei served . 30 we also took steps to further address the expense structure of our aaron 's business by completing a thorough review of our remaining store base in order to identify opportunities for rationalization . as a result of this evaluation and other cost-reduction initiatives , the company closed 56 underperforming company-operated stores during 2016 , closed 82 stores during 2017 and anticipates closing an additional eight stores in the first six months of 2018. the company also optimized its home office and field support staff in 2016 and 2017 , which resulted in a reduction in employee headcount in those areas , to more closely align with current business conditions . highlights the following summarizes significant highlights from our 2017 fiscal year : the company reported record revenues of $ 3.4 billion , and its net earnings before income tax ( benefit ) expense increased to a record $ 239.6 million compared to $ 218.4 million in 2016 . the tax cuts and jobs act ( the `` tax act `` ) enacted in december 2017 , among other things , lowered the u.s. corporate income tax rate from 35 % to 21 % effective january 1 , 2018. the estimated net impact of the tax act to our income tax ( benefit ) expense for the year ended december 31 , 2017 is a non-cash provisional income tax benefit of $ 137 million , which primarily relates to the remeasurement of net deferred tax liabilities at the lower tax rate . progressive leasing achieved record revenues of $ 1.6 billion , an increase of 26.6 % over 2016 . progressive leasing 's revenue growth is due to a 23.0 % increase in active doors , which contributed to a 31.2 % increase in total invoice volume . progressive leasing increased its earnings before income taxes to $ 140.2 million compared to $ 104.7 million in 2016 , due mainly to its revenue growth . aaron 's business revenues decreased to $ 1.8 billion , an 8.4 % decrease compared to 2016 . the decline is due primarily to a 7.0 % decrease in same store sales , the net reduction of 130 company-operated stores during the 24-month period ended december 31 , 2017 , and declines in non-retail sales to our franchisees . earnings before income taxes decreased to $ 110.6 million in 2017 compared to $ 123.0 million in the prior year due primarily to the decline in same store sales and the reduction in non-retail sales to franchisees . the company acquired substantially all of the assets of the store operations of sei , its largest franchisee , for approximately $ 140 million in cash . the company generated cash from operating activities of $ 159.1 million compared to $ 467.2 million in 2016 and ended 2017 with $ 51.0 million in cash and $ 393.9 million available on our revolving credit facility . the company returned $ 70.5 million to our shareholders through the repurchase of 2.0 million shares and the payment of our quarterly dividends , which we have paid for 30 consecutive years . key metrics active doors . we believe that active doors are a key performance indicator of our progressive leasing segment . active doors represent retail store locations at which at least one virtual lease-to-own transaction has been completed during the trailing twelve month period . the following table presents active doors for the progressive leasing segment : replace_table_token_8_th invoice volume . we also believe that invoice volume is a key performance indicator of our progressive leasing segment . invoice volume is defined as the retail price of lease merchandise acquired and leased by progressive leasing during the period , net of returns . the following table presents total invoice volume for the progressive leasing segment : replace_table_token_9_th 31 the company 's franchised and company-operated store activity ( unaudited ) is summarized as follows : replace_table_token_10_th 1 in may 2016 , we sold our 82 company-operated homesmart stores . same store revenues . we believe that changes in same store revenues are a key performance indicator of the aaron 's business . for the year ended december 31 , 2017 , we calculated this amount by comparing revenues for the year ended december 31 , 2017 to revenues for the year ended december 31 , 2016 for all stores open for the entire 24-month period ended december 31 , 2017 , excluding stores that received lease agreements from other acquired , closed or merged stores . same store revenues declined by 7.0 % during the 24 month period ended december 31 , 2017 . key components of earnings before income taxes in this management 's discussion and analysis section , we review our consolidated results . for the years ended december 31 , 2017 and the comparable prior year periods , some of the key revenue , cost and expense items that affected earnings before income tax ( benefit ) expense were as follows : revenues . we separate our total revenues into six components : ( i ) lease revenues and fees ; ( ii ) retail sales ; ( iii ) non-retail sales ; ( iv ) franchise royalties and fees ; ( v ) interest and fees on loans receivable ; and ( vi ) other . lease revenues and fees include all revenues derived from lease agreements at company-operated stores and retail locations serviced by progressive leasing . retail sales represent sales of both new and returned lease merchandise from our company-operated stores . non-retail sales primarily represent new merchandise sales to our franchisees . story_separator_special_tag other operating ( income ) expense , net information about the components of other operating ( income ) expense , net is as follows : replace_table_token_12_th in 2016 , other operating income , net of $ 6.4 million included a gain of $ 11.1 million related to the sale of the company 's former corporate headquarters building in january 2016 , partially offset by a loss and other charges related to the sale of homesmart of $ 5.4 million . in 2015 , other operating expense , net of $ 1.3 million included a $ 3.5 million loss related to a lease termination on a company aircraft , impairment charges of $ 0.8 million on leasehold improvements related to company-operated stores that were closed during the period and impairment charges of $ 0.5 million on assets held for sale . in addition , the company recognized gains of $ 2.1 million from the sale of 25 company-operated stores during 2015 . operating profit interest income . interest income decreased to $ 1.8 million in 2017 from $ 2.7 million in 2016 due to the discontinuation of accruing interest income related to the perfect home notes effective april 1 , 2017 , partially offset by an increase in interest income from higher cash and cash equivalent balances throughout 2017 . interest income increased to $ 2.7 million in 2016 from $ 2.2 million in 2015 primarily due to an increase in the interest rate of the perfect home notes during 2016 . interest expense . interest expense decreased to $ 20.5 million in 2017 from $ 23.4 million in 2016 and $ 23.3 million in 2015 due primarily to a lower outstanding debt balance throughout 2017 . other non-operating income ( expense ) , net . other non-operating income ( expense ) , net includes the impact of foreign currency remeasurement , as well as gains resulting from changes in the cash surrender value of company-owned life insurance related to the company 's deferred compensation plan . included in other non-operating income ( expense ) , net were foreign currency remeasurement gains of $ 2.1 million during 2017 and losses of $ 3.7 million and $ 2.5 million during 2016 and 2015 , respectively . these gains and losses result from changes in the value of the u.s. dollar against the british pound and canadian dollar . gains related to the changes in the cash surrender value of company-owned life insurance were $ 1.5 million , $ 0.2 million and $ 0.8 million during 2017 , 2016 and 2015 , respectively . 38 earnings ( loss ) before income taxes information about our earnings ( loss ) before income tax ( benefit ) expense by reportable segment is as follows : replace_table_token_13_th the factors impacting the change in earnings ( loss ) before income tax ( benefit ) expense are discussed above . income tax ( benefit ) expense the company recorded a net income tax benefit of $ 53.0 million for the year ended december 31 , 2017 as compared to income tax expense of $ 79.1 million in 2016 . the net income tax benefit recognized in 2017 was the result of the tax act which was signed into law on december 22 , 2017. the tax act , among other things , ( i ) lowered the u.s. corporate income tax rate from 35 % to 21 % effective january 1 , 2018 ; ( ii ) provided for 100 % expense deduction of certain qualified depreciable assets , including lease merchandise inventory , purchased after september 27 , 2017 ( but would be phased down starting in 2023 ) ; and ( iii ) failed to extend the manufacturing deduction that expired in 2017 under the terms of previous tax law . during the three months ended december 31 , 2017 , the company recorded a net non-cash provisional income tax benefit of $ 137.0 million related to the tax act , which is comprised of an estimated $ 140.0 million remeasurement of deferred tax liabilities at the lower tax rates , partially offset by an estimated $ 3.0 million from the loss of the manufacturing deduction and other impacts . income tax expense increased in 2016 compared to 2015 due primarily to higher pretax income . the effective tax rate remained relatively unchanged at 36.2 % in 2016 compared to 36.3 % in 2015 . overview of financial position the major changes in the consolidated balance sheet from december 31 , 2016 to december 31 , 2017 , include : cash and cash equivalents decreased $ 257.5 million to $ 51.0 million at december 31 , 2017 primarily due to the acquisition of our largest franchisee , scheduled repayments of the company 's unsecured notes and credit facilities , repayment of the dami credit facility , and the return of $ 70.5 million to shareholders in the form of share repurchases and dividends . for additional information , refer to the `` liquidity and capital resources `` section below . lease merchandise increased $ 152.8 million due primarily to increases in lease merchandise purchases at progressive leasing to support higher invoice volume and growth in active doors and the acquisition of our largest franchisee , partially offset by stores closed as part of the company 's restructuring initiatives . goodwill increased $ 96.2 million due primarily to the addition of estimated sei-related goodwill of $ 91.8 million . refer to note 2 to these consolidated financial statements for further details regarding the acquisition accounting for sei . income tax receivable increased $ 88.1 million to $ 100.0 million primarily due to the enactment of the tax act in december 2017. the company made periodic tax payments throughout 2017 based on the previous tax laws . the tax act changed those laws by providing for 100 % expense deduction of the company 's lease merchandise inventory purchased by the company after september 27 , 2017 , which Narrative : cash outflows of $ 50.7 million to acquire a 100 % ownership interest in dami . 40 cash used in financing activities cash used in financing activities was $ 211.4 million , $ 153.7 million and $ 47.3 million during the years ended december 31 , 2017 , 2016 and 2015 , respectively . the $ 57.7 million increase in financing cash outflows in 2017 as compared to 2016 is primarily due to ( i ) a $ 28.0 million increase in company repurchases of outstanding common stock in 2017 compared to 2016 and ( ii ) a $ 25.4 million increase in the net repayments of outstanding debt in 2017 compared to 2016. during 2017 , the company made scheduled repayments of $ 85.0 million on unsecured notes , $ 15.0 million on the term loan facility , and paid $ 53.0 million to pay off the dami credit facility , partially offset by $ 15.6 million in borrowings from the refinanced term loan in september 2017. the $ 106.4 million increase in financing cash outflows in 2016 as compared to 2015 is primarily due to the net repayments of outstanding debt in each period . in 2016 , the following net repayments were made : $ 75.0 million on our revolving facility , $ 25.0 million on our 3.95 % senior unsecured notes , and $ 12.5 million on our term loan . in 2015 , total net repayments of outstanding debt were $ 40.7 million . separately , the company repurchased $ 34.5 million of its common stock in 2016 . share repurchases we purchase our stock in the market from time to time as authorized by our board of directors . during the year ended december 31 , 2017 , the company purchased 1,961,442 shares for $ 62.6 million . during the year ended december 31 , 2016 , the company purchased 1,372,700 shares for $ 34.5 million . as of december 31 , 2017 , we have the authority to purchase 7,162,279 additional shares . dividends we have a consistent history of paying dividends , having paid dividends for 30 consecutive years . our annual common stock dividend was $ 0.1125

additionally , we experienced higher legal costs and increased expenses under our hcv co-promotion agreement with abbvie in 2015 than in the prior year . 59 cash provided by operating activities for the year ended december 31 , 2015 was $ 15.8 million , compared to $ 7.5 million for the year ended december 31 , 2014. as of december 31 , 2015 , we had $ 101.3 million in cash and short term investments , compared to $ 97.9 million at december 31 , 2014 . 2015 developments rapid ebola test early in 2015 , we completed the design of a rapid ebola antigen test using our oraquick ® platform . in june 2015 , we entered into a contract for up to $ 10.4 million in total funding from barda related to our oraquick ® ebola test . the three-year , multi-phased contract included an initial commitment of $ 1.8 million and options for up to an additional $ 8.6 million to fund certain clinical and regulatory activities . in september 2015 , barda exercised an option under the contract to provide $ 7.2 million in additional funding for our oraquick ® ebola test . this funding will be used primarily for clinical and regulatory activities required to request fda 510 ( k ) clearance for this product . funding received under this contract is recorded as other revenue in our consolidated statement of operations as the activities are being performed . in july 2015 , we received a u.s. food and drug administration ( “fda” ) emergency use authorization ( “eua” ) for the oraquick ® ebola test . this authorization allows the use of the test for the duration of the u.s. secretary of the department of health and human services ' ( “hhs” ) august 5 , 2014 declaration regarding the emergency use of in vitro diagnostic tests for the detection of the ebola virus . in march 2016 , we received an eua for use of the ebola test on oral fluid samples collected from cadavers . we have also submitted for pre-qualification of this product with the world health organization . during 2015 , we recognized $ 2.3 million in revenue from sales of this product to the centers for disease control and prevention ( “cdc” ) for investigational use and field testing in africa . data generated in these clinical and non-clinical studies was used in the application to obtain the eua from the fda . we are also continuing to focus our efforts on securing sustainable product purchase commitments from both government and non-government sources for the oraquick ® ebola rapid antigen test . microbiome product offering during 2015 , an area of focus for our molecular collection business has been the microbiome market , through the offering of our omnigene ® gut product for which we received ce mark approval and completed design validation on a high-throughput automated processing system . several technical manuscripts with academic and biotech groups are in process that will report on the ability of this product to “snapshot” microbiome communities at the point of collection . we sold our collection kit to over 100 customers and generated approximately $ 539,000 of revenue in 2015. business segments we operate our business within two reportable segments : our “osur” business , which consists of the development , manufacture and sale of diagnostic products , specimen collection devices , and medical devices , and our “dnag” or molecular collection systems business , which consists primarily of the development , manufacture and sale of oral fluid collection devices that are used to collect , stabilize , transport , and store samples of genetic material for molecular testing . osur revenues are derived primarily from products sold into the united states and internationally to various clinical laboratories , hospitals , clinics , community-based organizations , public health organizations , distributors , government agencies , physicians ' offices , commercial and industrial entities , retail pharmacies , mass merchandisers and consumers over the internet . dnag revenues result primarily from products sold into the commercial market , which consists of customers engaged in consumer genetics , clinical genetic testing , pharmacogenomics , personalized medicine , microbiome and animal genetic testing , as well as products sold into the academic research market which consists of research laboratories , universities and hospitals . 60 results of operations year ended december 31 , 2015 compared to december 31 , 2014 consolidated net revenues the table below shows a breakdown of total net revenues ( dollars in thousands ) generated by each of our business segments . replace_table_token_5_th consolidated net product revenues increased 6 % to $ 104.5 million in 2015 from $ 98.9 million in 2014 , primarily as a result of higher sales of our molecular collection systems , oraquick ® hcv and intercept ® products . these increases were partially offset by lower sales of our oraquick ® professional hiv and cryosurgical systems products . other revenues were $ 15.3 million in 2015 , of which $ 13.5 million represents exclusivity payments received under our hcv co-promotion agreement with abbvie and $ 1.8 million represents ebola-related funding from barda . other revenues were $ 7.6 million in 2014 , all which represent exclusivity payments from abbvie . consolidated net revenues derived from products sold to customers outside the u.s. were $ 23.2 million and $ 24.2 million , or 19 % and 23 % of consolidated net revenues during the years ended december 31 , 2015 and 2014 , respectively . because the majority of our international sales are denominated in u.s. dollars , the impact of fluctuating foreign currency exchange rates was not material to our total net revenues . net revenues by segment osur segment the table below shows the amount of total net revenues ( dollars in thousands ) generated by our osur segment . story_separator_special_tag the table below shows a breakdown of our total net intercept ® revenues ( dollars in thousands ) generated in each market during 2014 and 2013. replace_table_token_12_th domestic intercept ® sales in 2014 increased to $ 6.1 million compared to $ 5.7 million in 2013 , primarily due to market growth resulting from increased interest in oral fluid testing by customers who previously used alternative specimen types for drug testing and improved domestic employment conditions . international intercept ® sales decreased 70 % to $ 149,000 in 2014 from $ 500,000 in 2013 largely due to the absence of purchases by a uk distributor who began selling its own competing oral specimen collection device in 2012. sales to this distributor were $ 316,000 in 2013. cryosurgical systems market sales of our cryosurgical systems products ( which includes both the physicians ' office and otc markets ) increased 7 % to $ 15.5 million in 2014 from $ 14.5 million in 2013 . 67 the table below shows a breakdown of our total net cryosurgical systems revenues ( dollars in thousands ) generated in each market during 2014 and 2013. replace_table_token_13_th sales of our histofreezer ® product in the domestic professional market increased 12 % to $ 6.8 million in 2014 , compared to $ 6.0 million in 2013. this increase is largely due to higher sales by one of our distributors to teaching hospitals , physician offices , and the military . this increase also reflects below normal sales in early 2013 , resulting from higher distributor purchases in the fourth quarter of 2012 in advance of a price increase implemented in january 2013. the current year increase in net revenues was negatively impacted by the merger of our two largest distributors , who began selling a private label cryosurgical product in direct competition with our histofreezer ® product in 2014. during 2014 , international sales of histofreezer ® decreased to $ 693,000 , compared to $ 1.4 million in the same period of the prior year . our long-term supply agreement for the histofreezer ® product with a contract manufacturer terminated in late 2013 , and that former supplier has since begun promoting a competing product similar to histofreezer ® . in order to remain competitive with this new product , we have decreased the per unit sales price of our histofreezer ® product in certain international markets . in addition , we experienced delivery problems and inventory shortages as we transitioned to a new manufacturer of our international histofreezer ® product line . in the fourth quarter of 2014 , we launched our wart removal product in the u.s. retail market through private labeling with a large pharmacy chain . sales related to this product were $ 108,000. sales of our international otc cryosurgical products during 2014 increased 14 % to $ 8.0 million compared to $ 7.0 million in 2013 , largely due to higher sales to our european distributor , partially offset by lower sales to our latin american distributor . sales to our european distributor increased to $ 4.8 million , compared to $ 3.6 million during 2013 , primarily due to the launch of our product into new geographic territories and new market segments in europe . sales to our latin american distributor decreased to $ 3.0 million , compared to $ 3.3 million in 2013 , reflecting lower sales into brazil , partially offset by an increase in sales into mexico . insurance risk assessment market sales to the insurance risk assessment market decreased 7 % to $ 3.7 million in 2014 from $ 3.9 million in 2013 , as a result of reduced demand in the domestic life insurance market , resulting from the adoption by some underwriters of a “simplified issue” policy , pursuant to which testing for risk factors is replaced by having applicants respond to a questionnaire about their behaviors . other revenues other revenues were $ 7.6 million in 2014 and represent the recognition of exclusivity revenues under our hcv co-promotion agreement with abbvie . other revenues in 2013 were $ 623,000 and represent royalties paid on domestic outsales of merck 's otc cryosurgical wart removal product , pursuant to a license and settlement agreement which expired in august 2013 . 68 dnag segment molecular collection systems net molecular collection systems revenues , which primarily represent sales of our oragene ® product line , increased 17 % to $ 23.8 million in 2014 from $ 20.4 million in 2013. sales of oragene ® in the commercial market increased approximately 9 % in 2014 , primarily as a result of overall market growth and increased use of our oragene ® product in pharmacogenomics testing . sales of oragene ® in the academic market increased 35 % largely due to orders placed by two new international customers as well as higher sales to one of the company 's larger existing academic customers . sales to dnag 's largest commercial customer decreased approximately $ 3.4 million in 2014. sales to dnag 's other customers grew 48 % in the current year and substantially offset the lower sales to this large customer . consolidated operating results consolidated gross margin was 63 % in 2014 compared to 59 % in 2013. this increase was largely due to the $ 7.6 million of other revenues associated with our abbvie agreement , as well as a more favorable product mix driven largely by increased dnag sales to higher margin customers . consolidated operating loss decreased by $ 7.4 million to $ 4.8 million in 2014 , compared $ 12.2 million in 2013. the lower operating loss was primarily due to the higher licensing and product development revenues and lower hiv otc sales and marketing expenses in 2014 , partially offset by a $ 2.8 million reduction in contract termination payments received from roche during 2014. operating income ( loss ) by segment osur segment osur 's gross margin was 60 % in 2014 compared to

liquidity and capital resources replace_table_token_14_th our cash and short-term investment balances increased to $ 101.3 million at december 31 , 2015 from $ 97.9 million at december 31 , 2014. our working capital increased to $ 111.5 million at december 31 , 2015 from $ 104.8 million at december 31 , 2014. during 2015 , we generated $ 15.8 million in cash from our operating activities . our net income of $ 8.2 million was increased by non-cash stock-based compensation expense of $ 6.0 million , depreciation and amortization expense of $ 5.7 million , and other non-cash charges of $ 605,000. a $ 2.3 million decrease in inventory balances largely associated with our oraquick ® hcv product also contributed to cash generated in 2015. also contributing to cash provided by operations in 2015 was a net increase in deferred revenue of $ 1.7 million , which represents the receipt of cash payments from abbvie reduced by the amounts ratably recognized in revenue during the period . uses of cash in operating activities during 2015 included a $ 3.7 million increase in accounts receivable resulting from a higher level of product orders placed near the end of the year ; a $ 2.6 million decrease in accounts payable largely associated with a decrease in expenses related to the abbvie agreement ; a $ 1.4 million increase in prepaid expenses and other assets largely associated with the new canadian office lease and the buy-out of our royalty obligation under one of our license agreements ; and a $ 992,000 decrease in accrued expenses and other liabilities largely associated with a decrease in our royalty obligations . we used a net amount of $ 6.7 million in investing activities during 2015 to purchase $ 26.9 million in short-term investments and $ 3.7 million to acquire property and equipment . these payments were offset by proceeds received from the maturities of short-term investments of $ 23.9 million .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. additionally , we experienced higher legal costs and increased expenses under our hcv co-promotion agreement with abbvie in 2015 than in the prior year . 59 cash provided by operating activities for the year ended december 31 , 2015 was $ 15.8 million , compared to $ 7.5 million for the year ended december 31 , 2014. as of december 31 , 2015 , we had $ 101.3 million in cash and short term investments , compared to $ 97.9 million at december 31 , 2014 . 2015 developments rapid ebola test early in 2015 , we completed the design of a rapid ebola antigen test using our oraquick ® platform . in june 2015 , we entered into a contract for up to $ 10.4 million in total funding from barda related to our oraquick ® ebola test . the three-year , multi-phased contract included an initial commitment of $ 1.8 million and options for up to an additional $ 8.6 million to fund certain clinical and regulatory activities . in september 2015 , barda exercised an option under the contract to provide $ 7.2 million in additional funding for our oraquick ® ebola test . this funding will be used primarily for clinical and regulatory activities required to request fda 510 ( k ) clearance for this product . funding received under this contract is recorded as other revenue in our consolidated statement of operations as the activities are being performed . in july 2015 , we received a u.s. food and drug administration ( “fda” ) emergency use authorization ( “eua” ) for the oraquick ® ebola test . this authorization allows the use of the test for the duration of the u.s. secretary of the department of health and human services ' ( “hhs” ) august 5 , 2014 declaration regarding the emergency use of in vitro diagnostic tests for the detection of the ebola virus . in march 2016 , we received an eua for use of the ebola test on oral fluid samples collected from cadavers . we have also submitted for pre-qualification of this product with the world health organization . during 2015 , we recognized $ 2.3 million in revenue from sales of this product to the centers for disease control and prevention ( “cdc” ) for investigational use and field testing in africa . data generated in these clinical and non-clinical studies was used in the application to obtain the eua from the fda . we are also continuing to focus our efforts on securing sustainable product purchase commitments from both government and non-government sources for the oraquick ® ebola rapid antigen test . microbiome product offering during 2015 , an area of focus for our molecular collection business has been the microbiome market , through the offering of our omnigene ® gut product for which we received ce mark approval and completed design validation on a high-throughput automated processing system . several technical manuscripts with academic and biotech groups are in process that will report on the ability of this product to “snapshot” microbiome communities at the point of collection . we sold our collection kit to over 100 customers and generated approximately $ 539,000 of revenue in 2015. business segments we operate our business within two reportable segments : our “osur” business , which consists of the development , manufacture and sale of diagnostic products , specimen collection devices , and medical devices , and our “dnag” or molecular collection systems business , which consists primarily of the development , manufacture and sale of oral fluid collection devices that are used to collect , stabilize , transport , and store samples of genetic material for molecular testing . osur revenues are derived primarily from products sold into the united states and internationally to various clinical laboratories , hospitals , clinics , community-based organizations , public health organizations , distributors , government agencies , physicians ' offices , commercial and industrial entities , retail pharmacies , mass merchandisers and consumers over the internet . dnag revenues result primarily from products sold into the commercial market , which consists of customers engaged in consumer genetics , clinical genetic testing , pharmacogenomics , personalized medicine , microbiome and animal genetic testing , as well as products sold into the academic research market which consists of research laboratories , universities and hospitals . 60 results of operations year ended december 31 , 2015 compared to december 31 , 2014 consolidated net revenues the table below shows a breakdown of total net revenues ( dollars in thousands ) generated by each of our business segments . replace_table_token_5_th consolidated net product revenues increased 6 % to $ 104.5 million in 2015 from $ 98.9 million in 2014 , primarily as a result of higher sales of our molecular collection systems , oraquick ® hcv and intercept ® products . these increases were partially offset by lower sales of our oraquick ® professional hiv and cryosurgical systems products . other revenues were $ 15.3 million in 2015 , of which $ 13.5 million represents exclusivity payments received under our hcv co-promotion agreement with abbvie and $ 1.8 million represents ebola-related funding from barda . other revenues were $ 7.6 million in 2014 , all which represent exclusivity payments from abbvie . consolidated net revenues derived from products sold to customers outside the u.s. were $ 23.2 million and $ 24.2 million , or 19 % and 23 % of consolidated net revenues during the years ended december 31 , 2015 and 2014 , respectively . because the majority of our international sales are denominated in u.s. dollars , the impact of fluctuating foreign currency exchange rates was not material to our total net revenues . net revenues by segment osur segment the table below shows the amount of total net revenues ( dollars in thousands ) generated by our osur segment . story_separator_special_tag the table below shows a breakdown of our total net intercept ® revenues ( dollars in thousands ) generated in each market during 2014 and 2013. replace_table_token_12_th domestic intercept ® sales in 2014 increased to $ 6.1 million compared to $ 5.7 million in 2013 , primarily due to market growth resulting from increased interest in oral fluid testing by customers who previously used alternative specimen types for drug testing and improved domestic employment conditions . international intercept ® sales decreased 70 % to $ 149,000 in 2014 from $ 500,000 in 2013 largely due to the absence of purchases by a uk distributor who began selling its own competing oral specimen collection device in 2012. sales to this distributor were $ 316,000 in 2013. cryosurgical systems market sales of our cryosurgical systems products ( which includes both the physicians ' office and otc markets ) increased 7 % to $ 15.5 million in 2014 from $ 14.5 million in 2013 . 67 the table below shows a breakdown of our total net cryosurgical systems revenues ( dollars in thousands ) generated in each market during 2014 and 2013. replace_table_token_13_th sales of our histofreezer ® product in the domestic professional market increased 12 % to $ 6.8 million in 2014 , compared to $ 6.0 million in 2013. this increase is largely due to higher sales by one of our distributors to teaching hospitals , physician offices , and the military . this increase also reflects below normal sales in early 2013 , resulting from higher distributor purchases in the fourth quarter of 2012 in advance of a price increase implemented in january 2013. the current year increase in net revenues was negatively impacted by the merger of our two largest distributors , who began selling a private label cryosurgical product in direct competition with our histofreezer ® product in 2014. during 2014 , international sales of histofreezer ® decreased to $ 693,000 , compared to $ 1.4 million in the same period of the prior year . our long-term supply agreement for the histofreezer ® product with a contract manufacturer terminated in late 2013 , and that former supplier has since begun promoting a competing product similar to histofreezer ® . in order to remain competitive with this new product , we have decreased the per unit sales price of our histofreezer ® product in certain international markets . in addition , we experienced delivery problems and inventory shortages as we transitioned to a new manufacturer of our international histofreezer ® product line . in the fourth quarter of 2014 , we launched our wart removal product in the u.s. retail market through private labeling with a large pharmacy chain . sales related to this product were $ 108,000. sales of our international otc cryosurgical products during 2014 increased 14 % to $ 8.0 million compared to $ 7.0 million in 2013 , largely due to higher sales to our european distributor , partially offset by lower sales to our latin american distributor . sales to our european distributor increased to $ 4.8 million , compared to $ 3.6 million during 2013 , primarily due to the launch of our product into new geographic territories and new market segments in europe . sales to our latin american distributor decreased to $ 3.0 million , compared to $ 3.3 million in 2013 , reflecting lower sales into brazil , partially offset by an increase in sales into mexico . insurance risk assessment market sales to the insurance risk assessment market decreased 7 % to $ 3.7 million in 2014 from $ 3.9 million in 2013 , as a result of reduced demand in the domestic life insurance market , resulting from the adoption by some underwriters of a “simplified issue” policy , pursuant to which testing for risk factors is replaced by having applicants respond to a questionnaire about their behaviors . other revenues other revenues were $ 7.6 million in 2014 and represent the recognition of exclusivity revenues under our hcv co-promotion agreement with abbvie . other revenues in 2013 were $ 623,000 and represent royalties paid on domestic outsales of merck 's otc cryosurgical wart removal product , pursuant to a license and settlement agreement which expired in august 2013 . 68 dnag segment molecular collection systems net molecular collection systems revenues , which primarily represent sales of our oragene ® product line , increased 17 % to $ 23.8 million in 2014 from $ 20.4 million in 2013. sales of oragene ® in the commercial market increased approximately 9 % in 2014 , primarily as a result of overall market growth and increased use of our oragene ® product in pharmacogenomics testing . sales of oragene ® in the academic market increased 35 % largely due to orders placed by two new international customers as well as higher sales to one of the company 's larger existing academic customers . sales to dnag 's largest commercial customer decreased approximately $ 3.4 million in 2014. sales to dnag 's other customers grew 48 % in the current year and substantially offset the lower sales to this large customer . consolidated operating results consolidated gross margin was 63 % in 2014 compared to 59 % in 2013. this increase was largely due to the $ 7.6 million of other revenues associated with our abbvie agreement , as well as a more favorable product mix driven largely by increased dnag sales to higher margin customers . consolidated operating loss decreased by $ 7.4 million to $ 4.8 million in 2014 , compared $ 12.2 million in 2013. the lower operating loss was primarily due to the higher licensing and product development revenues and lower hiv otc sales and marketing expenses in 2014 , partially offset by a $ 2.8 million reduction in contract termination payments received from roche during 2014. operating income ( loss ) by segment osur segment osur 's gross margin was 60 % in 2014 compared to Narrative : liquidity and capital resources replace_table_token_14_th our cash and short-term investment balances increased to $ 101.3 million at december 31 , 2015 from $ 97.9 million at december 31 , 2014. our working capital increased to $ 111.5 million at december 31 , 2015 from $ 104.8 million at december 31 , 2014. during 2015 , we generated $ 15.8 million in cash from our operating activities . our net income of $ 8.2 million was increased by non-cash stock-based compensation expense of $ 6.0 million , depreciation and amortization expense of $ 5.7 million , and other non-cash charges of $ 605,000. a $ 2.3 million decrease in inventory balances largely associated with our oraquick ® hcv product also contributed to cash generated in 2015. also contributing to cash provided by operations in 2015 was a net increase in deferred revenue of $ 1.7 million , which represents the receipt of cash payments from abbvie reduced by the amounts ratably recognized in revenue during the period . uses of cash in operating activities during 2015 included a $ 3.7 million increase in accounts receivable resulting from a higher level of product orders placed near the end of the year ; a $ 2.6 million decrease in accounts payable largely associated with a decrease in expenses related to the abbvie agreement ; a $ 1.4 million increase in prepaid expenses and other assets largely associated with the new canadian office lease and the buy-out of our royalty obligation under one of our license agreements ; and a $ 992,000 decrease in accrued expenses and other liabilities largely associated with a decrease in our royalty obligations . we used a net amount of $ 6.7 million in investing activities during 2015 to purchase $ 26.9 million in short-term investments and $ 3.7 million to acquire property and equipment . these payments were offset by proceeds received from the maturities of short-term investments of $ 23.9 million .

due to federal acquisition regulation ( far ) rules that govern our u.s. government business and related cost accounting standards ( cas ) , most types of costs are allocable to u.s. government contracts . as such , we do not focus on individual cost groupings ( such as manufacturing , engineering and design labor costs , subcontractor costs , material costs , overhead costs and general and administrative ( g & a ) costs ) , as much as we do on total contract cost , which is the key driver of our sales and operating income . in evaluating our operating performance , we look primarily at changes in sales and operating income . where applicable , significant fluctuations in operating performance attributable to individual contracts or programs , or changes in a specific cost element across multiple contracts , are described in our analysis . based on this approach - 23 - northrop grumman corporation and the nature of our operations , the discussion of results of operations below first focuses on our three segments before distinguishing between products and services . changes in sales are generally described in terms of volume , deliveries or other indicators of sales activity . changes in margins are generally described in terms of performance and contract mix . for purposes of this discussion , volume generally refers to increases or decreases in sales or cost from production/service activity levels or delivery rates . performance generally refers to non-volume related changes in profitability . contract mix refers to changes in the ratio of contract type , lifecycle , customer or other non-performance impacts on contract profitability . consolidated operating results selected financial highlights are presented in the table below : replace_table_token_8_th sales 2016 – sales increased $ 982 million , or 4 percent , as compared with 2015 , primarily due to higher sales at aerospace systems and mission systems . 2015 – sales decreased $ 453 million , or 2 percent , as compared with 2014 , primarily due to lower sales on u.s. government contracts across the company , partially offset by an increase in international sales at aerospace systems . see “ revenue recognition ” in note 1 to the consolidated financial statements for further information on sales by customer category . see “ segment operating results ” for further information by segment and “ product and service analysis ” for product and service detail . operating costs and expenses and operating margin rate operating costs and expenses primarily include labor , material , subcontractor and overhead costs , and are generally allocated to contracts as incurred . operating margin rate is defined as operating income as a percentage of sales . in accordance with industry practice and the regulations that govern cost accounting requirements for government contracts , most general management and corporate expenses incurred at the segment and corporate locations are considered allowable and allocable costs . allowable and allocable g & a costs , including independent research and development ( ir & d ) and bid and proposal costs , are allocated on a systematic basis to contracts in progress . operating costs and expenses comprise the following : replace_table_token_9_th 2016 – operating costs and expenses as a percentage of sales increased slightly in 2016 as compared with 2015 , which reduced our operating margin rate to 13.0 percent from 13.1 percent in the prior year period . the decrease in - 24 - northrop grumman corporation operating margin rate was driven by lower segment margin rates , as described in “ segment operating results , ” and a $ 32 million decrease in our net fas/cas pension adjustment , partially offset by a $ 137 million reduction in unallocated corporate expenses , as described in note 3 to the consolidated financial statements . 2015 – operating costs and expenses as a percentage of sales increased in 2015 as compared with 2014 , which reduced our operating margin rate to 13.1 percent from 13.3 percent in the prior year period . the decrease in operating margin rate was driven by $ 179 million of lower segment operating income , as described in “ segment operating results , ” and $ 21 million in higher unallocated corporate expenses , partially offset by a $ 79 million increase in our net fas/cas pension adjustment , as described in note 3 to the consolidated financial statements . 2016 – g & a as a percentage of sales decreased to 10.5 percent in 2016 from 10.9 percent in 2015 , principally due to higher sales volume . 2015 – g & a as a percentage of sales increased to 10.9 percent in 2015 from 10.0 percent in 2014 , principally due to an increase in ir & d as we continue to invest in future business opportunities . for further information regarding product and service sales and costs , see the “ product and service analysis ” section that follows “ segment operating results . ” operating income we define operating income as sales less operating costs and expenses , which includes g & a . 2016 – operating income increased $ 117 million , or 4 percent , as compared with 2015 , primarily due to a $ 137 million reduction in unallocated corporate expenses and higher sales volume , partially offset by a $ 32 million decrease in our net fas/cas pension adjustment and lower segment margin rates . 2015 – operating income decreased $ 120 million , or 4 percent , as compared with 2014 , primarily due to the lower sales volume described above and the absence in 2015 of a $ 75 million benefit realized in 2014 in connection with agreements reached with the u.s. government to settle certain claims relating to use of the company 's intellectual property and a terminated program . story_separator_special_tag backlog consisted of the following at december 31 , 2016 and 2015 : replace_table_token_18_th approximately $ 18.2 billion of the $ 45.3 billion total backlog at december 31 , 2016 is expected to be converted into sales in 2017. story_separator_special_tag follows : replace_table_token_21_th ( 1 ) a “ purchase obligation ” is defined as an agreement to purchase goods or services that is enforceable and legally binding on us and that specifies all significant terms , including : fixed or minimum quantities to be purchased ; fixed , minimum , or variable price provisions ; and the approximate timing of the transaction . these amounts are primarily comprised of open purchase order commitments to suppliers and subcontractors pertaining to funded contracts . ( 2 ) other long-term liabilities , including their current portions , primarily consist of total accrued environmental reserves , deferred compensation and other miscellaneous liabilities , of which $ 119 million is related to environmental reserves recorded in other current liabilities . it excludes obligations for uncertain tax positions of $ 142 million , as the timing of such payments , if any , can not be reasonably estimated . - 32 - northrop grumman corporation the table above excludes estimated minimum funding requirements for retirement and other post-retirement benefit plans , as set forth by the employee retirement income security act , as amended ( erisa ) . for further information about future minimum contributions for these plans , see note 12 to the consolidated financial statements . further details regarding long-term debt and operating leases can be found in notes 9 and 11 , respectively , to the consolidated financial statements . critical accounting policies , estimates , and judgments our consolidated financial statements are based on u.s. gaap , which require us to make estimates and assumptions about future events that affect the amounts reported in our consolidated financial statements . we employ judgment in making our estimates in consideration of historical experience , currently available information and various other assumptions that we believe to be reasonable under the circumstances . actual results could differ from our estimates and assumptions , and any such differences could be material to our consolidated financial statements . we believe the following accounting policies are critical to the understanding of our consolidated financial statements and require the use of significant management judgment in their application . for a summary of our significant accounting policies , see note 1 to the consolidated financial statements . revenue recognition due to the long-term nature of our contracts , we generally recognize revenue using the percentage-of-completion method of accounting as work on our contracts progresses , which requires us to make reasonably dependable estimates regarding the design , manufacture and delivery of our products and services . in accounting for these contracts , we utilize either the cost-to-cost or the units-of-delivery method of percentage-of-completion accounting , with cost-to-cost being the predominant method . contract sales may include estimated amounts not contractually agreed to or yet funded by the customer , including cost or performance incentives ( such as award and incentive fees ) , un-priced change orders , contract claims and requests for equitable adjustment ( reas ) . further , as contracts are performed , change orders can be a regular occurrence and may be un-priced until negotiated with the customer . un-priced change orders , contract claims ( including change orders unapproved as to both scope and price ) and reas are included in estimated contract sales when management believes it is probable the un-priced change order , claim and or rea will result in additional contract revenue and the amount can be reliably estimated based on the facts and circumstances known to us at the time . our cost estimation process is based on the professional knowledge of our engineering , program management and financial professionals , and draws on their significant experience and judgment . we prepare eacs for our contracts and calculate an estimated contract operating margin based on estimated contract sales and cost . since contract costs are typically incurred over a period of several years , estimation of these costs requires the use of judgment . factors considered in estimating the cost of the work to be completed include our historical performance , the availability , productivity and cost of labor , the nature and complexity of work to be performed , the effect of change orders , availability and cost of materials , components and subcontracts , the effect of any delays in performance and the level of indirect cost allocations . we generally review and reassess our sales , cost and profit estimates for each significant contract at least annually or more frequently as determined by the occurrence of events , changes in circumstances and evaluations of contract performance to reflect the latest reliable information available . changes in estimates of contract sales and cost are frequent . the company performs on a broad portfolio of long-term contracts , including the development of complex and customized military platforms and systems , as well as advanced electronic equipment and software , that often include technology at the forefront of science . changes in estimates occur for a variety of reasons , including changes in contract scope , the resolution of risk at lower or higher cost than anticipated , unanticipated risks affecting contract costs , performance issues with our subcontractors or suppliers , changes in indirect cost allocations , such as overhead and g & a costs , and changes in estimated award and incentive fees . identified risks typically include technical , schedule and or performance risk based on our evaluation of the contract effort . similarly , the changes in estimates may include identified opportunities for operating margin improvement . for the impacts of changes in estimates on our consolidated statement of earnings and comprehensive income ( loss ) , see “ consolidated operating results ” and note 1 to the consolidated

liquidity and capital resources we endeavor to ensure the most efficient conversion of operating income into cash for deployment in our business and to maximize shareholder value through cash deployment activities . in addition to our cash position , we use various financial measures to assist in capital deployment decision-making , including cash provided by operating activities and free cash flow , a non-gaap measure described in more detail below . - 30 - northrop grumman corporation as of december 31 , 2016 , we had cash and cash equivalents of $ 2.5 billion , of which $ 182 million was held outside of the u.s. by foreign subsidiaries . cash and cash equivalents and cash generated from operating activities , supplemented by borrowings under credit facilities and or in the capital markets , if needed , are expected to be sufficient to fund our operations for at least the next 12 months . capital expenditure commitments were $ 657 million at december 31 , 2016 , and are expected to be paid with cash on hand . operating cash flow the table below summarizes the key components of cash flow provided by operating activities : replace_table_token_19_th ( 1 ) includes depreciation and amortization , stock based compensation expense ( including related excess tax benefits in 2015 and 2014 ) and deferred income taxes . 2016 – net cash provided by operating activities for 2016 increased by $ 651 million , or 30 percent , as compared with 2015 , principally due to a $ 500 million voluntary pre-tax pension contribution ( $ 325 million after-tax ) made in the first quarter of 2015 , changes in trade working capital and an increase in net earnings during 2016 , partially offset by an increase in net income tax payments .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. due to federal acquisition regulation ( far ) rules that govern our u.s. government business and related cost accounting standards ( cas ) , most types of costs are allocable to u.s. government contracts . as such , we do not focus on individual cost groupings ( such as manufacturing , engineering and design labor costs , subcontractor costs , material costs , overhead costs and general and administrative ( g & a ) costs ) , as much as we do on total contract cost , which is the key driver of our sales and operating income . in evaluating our operating performance , we look primarily at changes in sales and operating income . where applicable , significant fluctuations in operating performance attributable to individual contracts or programs , or changes in a specific cost element across multiple contracts , are described in our analysis . based on this approach - 23 - northrop grumman corporation and the nature of our operations , the discussion of results of operations below first focuses on our three segments before distinguishing between products and services . changes in sales are generally described in terms of volume , deliveries or other indicators of sales activity . changes in margins are generally described in terms of performance and contract mix . for purposes of this discussion , volume generally refers to increases or decreases in sales or cost from production/service activity levels or delivery rates . performance generally refers to non-volume related changes in profitability . contract mix refers to changes in the ratio of contract type , lifecycle , customer or other non-performance impacts on contract profitability . consolidated operating results selected financial highlights are presented in the table below : replace_table_token_8_th sales 2016 – sales increased $ 982 million , or 4 percent , as compared with 2015 , primarily due to higher sales at aerospace systems and mission systems . 2015 – sales decreased $ 453 million , or 2 percent , as compared with 2014 , primarily due to lower sales on u.s. government contracts across the company , partially offset by an increase in international sales at aerospace systems . see “ revenue recognition ” in note 1 to the consolidated financial statements for further information on sales by customer category . see “ segment operating results ” for further information by segment and “ product and service analysis ” for product and service detail . operating costs and expenses and operating margin rate operating costs and expenses primarily include labor , material , subcontractor and overhead costs , and are generally allocated to contracts as incurred . operating margin rate is defined as operating income as a percentage of sales . in accordance with industry practice and the regulations that govern cost accounting requirements for government contracts , most general management and corporate expenses incurred at the segment and corporate locations are considered allowable and allocable costs . allowable and allocable g & a costs , including independent research and development ( ir & d ) and bid and proposal costs , are allocated on a systematic basis to contracts in progress . operating costs and expenses comprise the following : replace_table_token_9_th 2016 – operating costs and expenses as a percentage of sales increased slightly in 2016 as compared with 2015 , which reduced our operating margin rate to 13.0 percent from 13.1 percent in the prior year period . the decrease in - 24 - northrop grumman corporation operating margin rate was driven by lower segment margin rates , as described in “ segment operating results , ” and a $ 32 million decrease in our net fas/cas pension adjustment , partially offset by a $ 137 million reduction in unallocated corporate expenses , as described in note 3 to the consolidated financial statements . 2015 – operating costs and expenses as a percentage of sales increased in 2015 as compared with 2014 , which reduced our operating margin rate to 13.1 percent from 13.3 percent in the prior year period . the decrease in operating margin rate was driven by $ 179 million of lower segment operating income , as described in “ segment operating results , ” and $ 21 million in higher unallocated corporate expenses , partially offset by a $ 79 million increase in our net fas/cas pension adjustment , as described in note 3 to the consolidated financial statements . 2016 – g & a as a percentage of sales decreased to 10.5 percent in 2016 from 10.9 percent in 2015 , principally due to higher sales volume . 2015 – g & a as a percentage of sales increased to 10.9 percent in 2015 from 10.0 percent in 2014 , principally due to an increase in ir & d as we continue to invest in future business opportunities . for further information regarding product and service sales and costs , see the “ product and service analysis ” section that follows “ segment operating results . ” operating income we define operating income as sales less operating costs and expenses , which includes g & a . 2016 – operating income increased $ 117 million , or 4 percent , as compared with 2015 , primarily due to a $ 137 million reduction in unallocated corporate expenses and higher sales volume , partially offset by a $ 32 million decrease in our net fas/cas pension adjustment and lower segment margin rates . 2015 – operating income decreased $ 120 million , or 4 percent , as compared with 2014 , primarily due to the lower sales volume described above and the absence in 2015 of a $ 75 million benefit realized in 2014 in connection with agreements reached with the u.s. government to settle certain claims relating to use of the company 's intellectual property and a terminated program . story_separator_special_tag backlog consisted of the following at december 31 , 2016 and 2015 : replace_table_token_18_th approximately $ 18.2 billion of the $ 45.3 billion total backlog at december 31 , 2016 is expected to be converted into sales in 2017. story_separator_special_tag follows : replace_table_token_21_th ( 1 ) a “ purchase obligation ” is defined as an agreement to purchase goods or services that is enforceable and legally binding on us and that specifies all significant terms , including : fixed or minimum quantities to be purchased ; fixed , minimum , or variable price provisions ; and the approximate timing of the transaction . these amounts are primarily comprised of open purchase order commitments to suppliers and subcontractors pertaining to funded contracts . ( 2 ) other long-term liabilities , including their current portions , primarily consist of total accrued environmental reserves , deferred compensation and other miscellaneous liabilities , of which $ 119 million is related to environmental reserves recorded in other current liabilities . it excludes obligations for uncertain tax positions of $ 142 million , as the timing of such payments , if any , can not be reasonably estimated . - 32 - northrop grumman corporation the table above excludes estimated minimum funding requirements for retirement and other post-retirement benefit plans , as set forth by the employee retirement income security act , as amended ( erisa ) . for further information about future minimum contributions for these plans , see note 12 to the consolidated financial statements . further details regarding long-term debt and operating leases can be found in notes 9 and 11 , respectively , to the consolidated financial statements . critical accounting policies , estimates , and judgments our consolidated financial statements are based on u.s. gaap , which require us to make estimates and assumptions about future events that affect the amounts reported in our consolidated financial statements . we employ judgment in making our estimates in consideration of historical experience , currently available information and various other assumptions that we believe to be reasonable under the circumstances . actual results could differ from our estimates and assumptions , and any such differences could be material to our consolidated financial statements . we believe the following accounting policies are critical to the understanding of our consolidated financial statements and require the use of significant management judgment in their application . for a summary of our significant accounting policies , see note 1 to the consolidated financial statements . revenue recognition due to the long-term nature of our contracts , we generally recognize revenue using the percentage-of-completion method of accounting as work on our contracts progresses , which requires us to make reasonably dependable estimates regarding the design , manufacture and delivery of our products and services . in accounting for these contracts , we utilize either the cost-to-cost or the units-of-delivery method of percentage-of-completion accounting , with cost-to-cost being the predominant method . contract sales may include estimated amounts not contractually agreed to or yet funded by the customer , including cost or performance incentives ( such as award and incentive fees ) , un-priced change orders , contract claims and requests for equitable adjustment ( reas ) . further , as contracts are performed , change orders can be a regular occurrence and may be un-priced until negotiated with the customer . un-priced change orders , contract claims ( including change orders unapproved as to both scope and price ) and reas are included in estimated contract sales when management believes it is probable the un-priced change order , claim and or rea will result in additional contract revenue and the amount can be reliably estimated based on the facts and circumstances known to us at the time . our cost estimation process is based on the professional knowledge of our engineering , program management and financial professionals , and draws on their significant experience and judgment . we prepare eacs for our contracts and calculate an estimated contract operating margin based on estimated contract sales and cost . since contract costs are typically incurred over a period of several years , estimation of these costs requires the use of judgment . factors considered in estimating the cost of the work to be completed include our historical performance , the availability , productivity and cost of labor , the nature and complexity of work to be performed , the effect of change orders , availability and cost of materials , components and subcontracts , the effect of any delays in performance and the level of indirect cost allocations . we generally review and reassess our sales , cost and profit estimates for each significant contract at least annually or more frequently as determined by the occurrence of events , changes in circumstances and evaluations of contract performance to reflect the latest reliable information available . changes in estimates of contract sales and cost are frequent . the company performs on a broad portfolio of long-term contracts , including the development of complex and customized military platforms and systems , as well as advanced electronic equipment and software , that often include technology at the forefront of science . changes in estimates occur for a variety of reasons , including changes in contract scope , the resolution of risk at lower or higher cost than anticipated , unanticipated risks affecting contract costs , performance issues with our subcontractors or suppliers , changes in indirect cost allocations , such as overhead and g & a costs , and changes in estimated award and incentive fees . identified risks typically include technical , schedule and or performance risk based on our evaluation of the contract effort . similarly , the changes in estimates may include identified opportunities for operating margin improvement . for the impacts of changes in estimates on our consolidated statement of earnings and comprehensive income ( loss ) , see “ consolidated operating results ” and note 1 to the consolidated Narrative : liquidity and capital resources we endeavor to ensure the most efficient conversion of operating income into cash for deployment in our business and to maximize shareholder value through cash deployment activities . in addition to our cash position , we use various financial measures to assist in capital deployment decision-making , including cash provided by operating activities and free cash flow , a non-gaap measure described in more detail below . - 30 - northrop grumman corporation as of december 31 , 2016 , we had cash and cash equivalents of $ 2.5 billion , of which $ 182 million was held outside of the u.s. by foreign subsidiaries . cash and cash equivalents and cash generated from operating activities , supplemented by borrowings under credit facilities and or in the capital markets , if needed , are expected to be sufficient to fund our operations for at least the next 12 months . capital expenditure commitments were $ 657 million at december 31 , 2016 , and are expected to be paid with cash on hand . operating cash flow the table below summarizes the key components of cash flow provided by operating activities : replace_table_token_19_th ( 1 ) includes depreciation and amortization , stock based compensation expense ( including related excess tax benefits in 2015 and 2014 ) and deferred income taxes . 2016 – net cash provided by operating activities for 2016 increased by $ 651 million , or 30 percent , as compared with 2015 , principally due to a $ 500 million voluntary pre-tax pension contribution ( $ 325 million after-tax ) made in the first quarter of 2015 , changes in trade working capital and an increase in net earnings during 2016 , partially offset by an increase in net income tax payments .

although the company believes that its plans , intentions , expectations and estimates reflected or implied in such forward-looking statements are reasonable , the company can not assure you that such plans , intentions , expectations or estimates will be achieved in whole or in part , that the company has identified all potential risks , or that the company can successfully avoid or mitigate such risks in whole or in part . you should carefully review the risk factors described above ( see item 1a – risk factors , above ) and any other cautionary statements contained or incorporated by reference in this annual report . all forward-looking and other statements attributable to the company or persons acting on its behalf are expressly subject to and qualified by all such risk factors and other cautionary statements . you should not place undue reliance on the company 's forward-looking statements because the matters they describe are subject to known and unknown risks , uncertainties and other unpredictable factors , many of which are beyond its control . the company 's forward-looking statements , risk factors and other cautionary statements ( whether contained in this annual report , the 2013 proxy statement or any other applicable sec report ) are based on the information currently available to the company and speak only as of the date specifically referenced , or if no date is referenced , then as of december 31 , 2012 , in the case of this annual report or the 2013 proxy statement or the last day of the period covered by any other applicable sec report . new risks and uncertainties arise from time to time , and it is impossible for the company to predict these matters or how they may arise or affect the company . over time , the company 's actual assets , business , capital , cash flow , credit , expenses , financial condition , income , liabilities , liquidity , locations , marketing , operations , prospects , sales , strategies , taxation or other achievements , results , risks or condition will likely differ from those expressed or implied by the company 's forward-looking statements , and such difference could be significant and materially adverse to the company and the value of your investment in the company 's common stock . the company does not intend or promise , and the company expressly disclaims any obligation , to publicly update or revise any forward-looking statements , risk factors or other cautionary statements ( in whole or in part ) , whether as a result of new information , future events or recognition or otherwise , except as and to the extent required by applicable law . overview spar group , inc. ( `` sgrp `` ) , and its subsidiaries ( together with sgrp , the `` spar group `` or the `` company `` ) , is a diversified international merchandising and marketing services company and provides a broad array of services worldwide to help companies improve their sales , operating efficiency and profits at retail locations . the company provides merchandising and other marketing services to manufacturers , distributors and retailers worldwide , primarily in mass merchandisers , office supply , grocery , drug store , independent , convenience and electronics stores , as well as providing furniture and other product assembly services in stores , homes and offices . the company has supplied these project and product services in the united states since certain of its predecessors were formed in 1979 and internationally since the company acquired its first international subsidiary in japan in may of 2001. today the company operates in 10 countries that encompass approximately 50 % of the total world population through operations in the united states , canada , japan , south africa , india , romania , china , australia , mexico and turkey . -25- critical accounting policies & estimates the company 's critical accounting policies , including the assumptions and judgments underlying them , are disclosed in the note 2 to the consolidated financial statements . these policies have been consistently applied in all material respects and address such matters as revenue recognition , depreciation methods , asset impairment recognition , consolidation of subsidiaries and other companies . while the estimates and judgments associated with the application of these policies may be affected by different assumptions or conditions , the company believes the estimates and judgments associated with the reported amounts are appropriate in the circumstances . four critical accounting policies are consolidation of subsidiaries , revenue recognition , allowance for doubtful accounts , and internal use software development costs . consolidation of subsidiaries the company consolidates its 100 % owned subsidiaries . the company also consolidates all of its 51 % owned subsidiaries as the company believes it is the primary beneficiary and controls the economic activities in accordance with accounting standards codification ( asc ) 810-10 , consolidation of variable interest entity . revenue recognition the company 's services are provided to its clients under contracts or agreements . the company bills its clients based upon service fee and per unit fee billing arrangements . revenues under service fee billing arrangements are recognized when the service is performed . the company 's per unit fee arrangements provide for fees to be earned based on the retail sales of a client 's products to consumers . the company recognizes per unit fees in the period such amounts become determinable and are reported to the company . allowance for doubtful accounts the company continually monitors the validity of its accounts receivable based upon current client credit information and financial condition . story_separator_special_tag selling , general and administrative expenses were approximately $ 22.1 million and $ 18.5 million for the years ended december 31 , 2012 and 2011 , respectively . replace_table_token_5_th domestic selling , general and administrative expenses totaled $ 9.8 million for the year ended december 31 , 2012 , compared to $ 8.9 million for the same period in 2011 . the increase of approximately $ 900,000 was due primarily to payroll related expenses , legal and accounting services , as well as expenses from the newly acquired merchandising company . international selling , general and administrative expenses totaled $ 12.3 million for the year ended december 31 , 2012 , compared to $ 9.6 million for the same period in 2011. the increase of approximately $ 2.7 million was primarily attributable to the new subsidiaries in romania and south africa , and a full year impact from fourth quarter 2011 acquisitions in mexico and turkey , partially offset by lower expenses in australia and india . depreciation and amortization depreciation and amortization expenses totaled $ 1.2 million for the year ended december 31 , 2012 , compared to $ 1.1 million for the same period in 2011. the increase was primarily due to higher capital expenditures related to software development compared to prior year . interest expense , net the company 's net interest expense was $ 129,000 and $ 197,000 for the years ended december 31 , 2012 and 2011 , respectively . the decrease in interest expense was directly attributable to reduced borrowings and lower interest rates . income taxes the income tax provision for the years ended december 31 , 2012 and 2011 was $ 550,000 and $ 362,000 , respectively . the tax provision resulted primarily from domestic state taxes and for tax provisions related to certain international profits . the company recognizes minimum federal tax provisions as the company anticipates utilizing operating loss carry forwards in 2012. the company has established over time and currently has a valuation allowance reserve of approximately $ 4.2 million against its deferred tax asset balance at december 31 , 2012. the reduction of that reserve and the corresponding realization of these deferred tax assets is contingent upon the realization of future taxable profits over several years . the company does not believe such future profits are certain , and thus the requirements of asc 740-10 for reducing that reserve are not currently met , due to the subjective nature of forecasting profits and the risks the company faces on a daily basis as noted in item 1a of this report , including ( without limitation ) the risks related to dependence on the trend of both clients and retailers towards outsourcing merchandising and marketing services , the competitive nature of the this industry , economic and retail uncertainty , reliance on the internet and dependence upon cost of services provided by affiliates . non-controlling interest net operating profits from the non-controlling interests , respecting the company 's 51 % owned subsidiaries , resulted in a reduction of the company 's net income of $ 521,000 and $ 123,000 for the years ended december 31 , 2012 and 2011 , respectively . net income the company reported a net income of $ 2.9 million for the year ended december 31 , 2012 , or $ 0.14 per diluted share , compared to a net income of $ 2.2 million , or $ 0.10 per diluted share , for the corresponding period last year , based on diluted shares outstanding of 21.6 million and 21.3 million at december 31 , 2012 , and 2011 , respectively . off balance sheet arrangements none . -28- story_separator_special_tag domestic subsidiaries , and their respective equity and assets ) . as of the effective date of the second sterling amendment , the basic interest rate under the sterling credit facility was reduced by three quarters of one percent ( 3/4 % ) per annum to the sum of the fluctuating prime rate of interest published in the wall street journal from time to time plus three quarters of one percent ( 3/4 % ) percent per annum , which automatically changes with each change in such rate . -29- effective january 1 , 2013 the sterling credit facility was amended ( the `` third sterling amendment `` ) to reduce the interest rate to the prime rate ( as that term is defined in the loan agreement ) plus one quarter of one percent ( 1/4 % ) per annum . due to the requirement to maintain a lock box arrangement with the agent and the lenders ' ability to invoke a subjective acceleration clause at its discretion , borrowings under the sterling credit facility will be classified as current . the sterling credit facility contains certain financial and other restrictive covenants and also limits certain expenditures by the borrowers , including , but not limited to , capital expenditures and other investments . at december 31 , 2012 , the company was in compliance with such covenants . international credit facilities : in october 2011 , sparfacts australia pty . ltd. , replaced the commonwealth bank line of credit with a new receivables based secured line of credit facility with oxford funding pty ltd. for $ 1.2 million ( australian ) or approximately $ 1.2 million ( based upon the exchange rate at december 31 , 2012 ) . the facility provides for borrowing based upon a formula as defined in the agreement ( principally 80 % of eligible accounts receivable less certain deductions ) . the agreement expired on october 31 , 2012. sparfacts is in the process of renegotiating a new agreement . spar canada company , a wholly owned subsidiary , has a secured credit agreement with royal bank of canada providing for a demand operating loan for a maximum borrowing of $ 750,000 ( canadian ) or approximately $ 753,000 ( based upon the exchange rate at december 31

liquidity and capital resources the company had net income before non-controlling interest of $ 3.5 million and $ 2.3 million for the years ended december 31 , 2012 , and december 31 , 2011 , respectively . the company 's cash provided by operating activities for the year ended december 31 , 2012 , was $ 3.4 million , compared to net cash provided by operating activities of $ 3.5 million in 2011. the net cash provided by operating activities was primarily due to a reported net income , depreciation and an increase in accounts payable , accrued expenses and other liabilities , partially offset by an increase in accounts receivable . net cash used by the company in investing activities was $ 1.8 million for the year ended december 31 , 2012 , and $ 1.3 million for the year ended december 31 , 2011 , respectively . the net cash used in investing activities was a result of capitalization of software development costs , the purchase of computer equipment , the purchase of non-controlling interest in new subsidiaries and the final payment for the purchase of the mexican subsidiary . net cash used by the company in financing activities for the year ended december 31 , 2012 , was $ 1.4 million compared with net cash used in financing activities of $ 1.5 million for the year ended december 31 , 2011. the cash used in financing activities was primarily a result of the company 's net payments on its lines of credit .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. although the company believes that its plans , intentions , expectations and estimates reflected or implied in such forward-looking statements are reasonable , the company can not assure you that such plans , intentions , expectations or estimates will be achieved in whole or in part , that the company has identified all potential risks , or that the company can successfully avoid or mitigate such risks in whole or in part . you should carefully review the risk factors described above ( see item 1a – risk factors , above ) and any other cautionary statements contained or incorporated by reference in this annual report . all forward-looking and other statements attributable to the company or persons acting on its behalf are expressly subject to and qualified by all such risk factors and other cautionary statements . you should not place undue reliance on the company 's forward-looking statements because the matters they describe are subject to known and unknown risks , uncertainties and other unpredictable factors , many of which are beyond its control . the company 's forward-looking statements , risk factors and other cautionary statements ( whether contained in this annual report , the 2013 proxy statement or any other applicable sec report ) are based on the information currently available to the company and speak only as of the date specifically referenced , or if no date is referenced , then as of december 31 , 2012 , in the case of this annual report or the 2013 proxy statement or the last day of the period covered by any other applicable sec report . new risks and uncertainties arise from time to time , and it is impossible for the company to predict these matters or how they may arise or affect the company . over time , the company 's actual assets , business , capital , cash flow , credit , expenses , financial condition , income , liabilities , liquidity , locations , marketing , operations , prospects , sales , strategies , taxation or other achievements , results , risks or condition will likely differ from those expressed or implied by the company 's forward-looking statements , and such difference could be significant and materially adverse to the company and the value of your investment in the company 's common stock . the company does not intend or promise , and the company expressly disclaims any obligation , to publicly update or revise any forward-looking statements , risk factors or other cautionary statements ( in whole or in part ) , whether as a result of new information , future events or recognition or otherwise , except as and to the extent required by applicable law . overview spar group , inc. ( `` sgrp `` ) , and its subsidiaries ( together with sgrp , the `` spar group `` or the `` company `` ) , is a diversified international merchandising and marketing services company and provides a broad array of services worldwide to help companies improve their sales , operating efficiency and profits at retail locations . the company provides merchandising and other marketing services to manufacturers , distributors and retailers worldwide , primarily in mass merchandisers , office supply , grocery , drug store , independent , convenience and electronics stores , as well as providing furniture and other product assembly services in stores , homes and offices . the company has supplied these project and product services in the united states since certain of its predecessors were formed in 1979 and internationally since the company acquired its first international subsidiary in japan in may of 2001. today the company operates in 10 countries that encompass approximately 50 % of the total world population through operations in the united states , canada , japan , south africa , india , romania , china , australia , mexico and turkey . -25- critical accounting policies & estimates the company 's critical accounting policies , including the assumptions and judgments underlying them , are disclosed in the note 2 to the consolidated financial statements . these policies have been consistently applied in all material respects and address such matters as revenue recognition , depreciation methods , asset impairment recognition , consolidation of subsidiaries and other companies . while the estimates and judgments associated with the application of these policies may be affected by different assumptions or conditions , the company believes the estimates and judgments associated with the reported amounts are appropriate in the circumstances . four critical accounting policies are consolidation of subsidiaries , revenue recognition , allowance for doubtful accounts , and internal use software development costs . consolidation of subsidiaries the company consolidates its 100 % owned subsidiaries . the company also consolidates all of its 51 % owned subsidiaries as the company believes it is the primary beneficiary and controls the economic activities in accordance with accounting standards codification ( asc ) 810-10 , consolidation of variable interest entity . revenue recognition the company 's services are provided to its clients under contracts or agreements . the company bills its clients based upon service fee and per unit fee billing arrangements . revenues under service fee billing arrangements are recognized when the service is performed . the company 's per unit fee arrangements provide for fees to be earned based on the retail sales of a client 's products to consumers . the company recognizes per unit fees in the period such amounts become determinable and are reported to the company . allowance for doubtful accounts the company continually monitors the validity of its accounts receivable based upon current client credit information and financial condition . story_separator_special_tag selling , general and administrative expenses were approximately $ 22.1 million and $ 18.5 million for the years ended december 31 , 2012 and 2011 , respectively . replace_table_token_5_th domestic selling , general and administrative expenses totaled $ 9.8 million for the year ended december 31 , 2012 , compared to $ 8.9 million for the same period in 2011 . the increase of approximately $ 900,000 was due primarily to payroll related expenses , legal and accounting services , as well as expenses from the newly acquired merchandising company . international selling , general and administrative expenses totaled $ 12.3 million for the year ended december 31 , 2012 , compared to $ 9.6 million for the same period in 2011. the increase of approximately $ 2.7 million was primarily attributable to the new subsidiaries in romania and south africa , and a full year impact from fourth quarter 2011 acquisitions in mexico and turkey , partially offset by lower expenses in australia and india . depreciation and amortization depreciation and amortization expenses totaled $ 1.2 million for the year ended december 31 , 2012 , compared to $ 1.1 million for the same period in 2011. the increase was primarily due to higher capital expenditures related to software development compared to prior year . interest expense , net the company 's net interest expense was $ 129,000 and $ 197,000 for the years ended december 31 , 2012 and 2011 , respectively . the decrease in interest expense was directly attributable to reduced borrowings and lower interest rates . income taxes the income tax provision for the years ended december 31 , 2012 and 2011 was $ 550,000 and $ 362,000 , respectively . the tax provision resulted primarily from domestic state taxes and for tax provisions related to certain international profits . the company recognizes minimum federal tax provisions as the company anticipates utilizing operating loss carry forwards in 2012. the company has established over time and currently has a valuation allowance reserve of approximately $ 4.2 million against its deferred tax asset balance at december 31 , 2012. the reduction of that reserve and the corresponding realization of these deferred tax assets is contingent upon the realization of future taxable profits over several years . the company does not believe such future profits are certain , and thus the requirements of asc 740-10 for reducing that reserve are not currently met , due to the subjective nature of forecasting profits and the risks the company faces on a daily basis as noted in item 1a of this report , including ( without limitation ) the risks related to dependence on the trend of both clients and retailers towards outsourcing merchandising and marketing services , the competitive nature of the this industry , economic and retail uncertainty , reliance on the internet and dependence upon cost of services provided by affiliates . non-controlling interest net operating profits from the non-controlling interests , respecting the company 's 51 % owned subsidiaries , resulted in a reduction of the company 's net income of $ 521,000 and $ 123,000 for the years ended december 31 , 2012 and 2011 , respectively . net income the company reported a net income of $ 2.9 million for the year ended december 31 , 2012 , or $ 0.14 per diluted share , compared to a net income of $ 2.2 million , or $ 0.10 per diluted share , for the corresponding period last year , based on diluted shares outstanding of 21.6 million and 21.3 million at december 31 , 2012 , and 2011 , respectively . off balance sheet arrangements none . -28- story_separator_special_tag domestic subsidiaries , and their respective equity and assets ) . as of the effective date of the second sterling amendment , the basic interest rate under the sterling credit facility was reduced by three quarters of one percent ( 3/4 % ) per annum to the sum of the fluctuating prime rate of interest published in the wall street journal from time to time plus three quarters of one percent ( 3/4 % ) percent per annum , which automatically changes with each change in such rate . -29- effective january 1 , 2013 the sterling credit facility was amended ( the `` third sterling amendment `` ) to reduce the interest rate to the prime rate ( as that term is defined in the loan agreement ) plus one quarter of one percent ( 1/4 % ) per annum . due to the requirement to maintain a lock box arrangement with the agent and the lenders ' ability to invoke a subjective acceleration clause at its discretion , borrowings under the sterling credit facility will be classified as current . the sterling credit facility contains certain financial and other restrictive covenants and also limits certain expenditures by the borrowers , including , but not limited to , capital expenditures and other investments . at december 31 , 2012 , the company was in compliance with such covenants . international credit facilities : in october 2011 , sparfacts australia pty . ltd. , replaced the commonwealth bank line of credit with a new receivables based secured line of credit facility with oxford funding pty ltd. for $ 1.2 million ( australian ) or approximately $ 1.2 million ( based upon the exchange rate at december 31 , 2012 ) . the facility provides for borrowing based upon a formula as defined in the agreement ( principally 80 % of eligible accounts receivable less certain deductions ) . the agreement expired on october 31 , 2012. sparfacts is in the process of renegotiating a new agreement . spar canada company , a wholly owned subsidiary , has a secured credit agreement with royal bank of canada providing for a demand operating loan for a maximum borrowing of $ 750,000 ( canadian ) or approximately $ 753,000 ( based upon the exchange rate at december 31 Narrative : liquidity and capital resources the company had net income before non-controlling interest of $ 3.5 million and $ 2.3 million for the years ended december 31 , 2012 , and december 31 , 2011 , respectively . the company 's cash provided by operating activities for the year ended december 31 , 2012 , was $ 3.4 million , compared to net cash provided by operating activities of $ 3.5 million in 2011. the net cash provided by operating activities was primarily due to a reported net income , depreciation and an increase in accounts payable , accrued expenses and other liabilities , partially offset by an increase in accounts receivable . net cash used by the company in investing activities was $ 1.8 million for the year ended december 31 , 2012 , and $ 1.3 million for the year ended december 31 , 2011 , respectively . the net cash used in investing activities was a result of capitalization of software development costs , the purchase of computer equipment , the purchase of non-controlling interest in new subsidiaries and the final payment for the purchase of the mexican subsidiary . net cash used by the company in financing activities for the year ended december 31 , 2012 , was $ 1.4 million compared with net cash used in financing activities of $ 1.5 million for the year ended december 31 , 2011. the cash used in financing activities was primarily a result of the company 's net payments on its lines of credit .

in particular , our presence in the lte smartphone markets continue to grow as our customers targeting those markets are gaining market share at the expense of the incumbents . during 2017 , we reported 311 million lte chipsets shipped , up from 226 million in 2016. the royalty we derive from smartphones is higher on average than that of feature phones , so we may benefit if and when lte handset markets around the world transition and shift away from feature phones to smartphones , particularly in emerging economies . furthermore , we believe that we may benefit from the base station chip ramp up in coming years , as a large customer of ours is forecasted to start ramping up production in the second half of 2018. our specialization and competitive edge in signal processing platforms for next generation long and short range wireless such as 5g , nb-iot , 802.11ac and 802.11ax wi-fi technologies , and the inherent low cost , power and performance balance of our designs , put us in a strong position to simultaneously capitalize on mass market adoption of such technologies and address multiple markets and product sectors , including handsets , fixed wireless access , macro base stations , remote radio heads , cellular backhaul , small cells , wi-fi routers and a variety of machine type communications such as connected cars , smart cities and industrial markets . together with our presence in the handset baseband market , our bluetooth and wi-fi ips allow us to expand further into iot applications and substantially increase our overall addressable market . our addressable market size is expected to be 35 billion devices by 2020 , per data from abi research . already , shipments of products incorporating our bluetooth ip are sizeable , with more than 200 million ceva-powered bluetooth chips shipped in 2017 , up 45 % from 138 million units in 2016. the growing market potential for voice assisted devices , as voice is becoming the primary user interface for iot applications , including mobile , automotive and consumer devices , offers an additional growth segment for the company in voice enabled devices such as smartphones , headsets , earbuds , smart speakers , smart home and automotive . to better address this market , we recently introduced clearvox , a new voice input software and algorithm , that is offered in conjunction with our audio/voice dsps . clearvox , plus our proven track record in audio/voice processing , with more than 6 billion audio chips shipped to date , puts us in a strong position to power audio and voice roadmaps across this new range of addressable end markets . our ceva-xm4 and ceva-xm6 imaging and vision platforms for deep learning provide highly compelling offerings for any camera-enabled device such as smartphones , tablets , automotive safety ( adas ) , autonomous driving ( ad ) , drones , robotics , security and surveillance , augmented reality ( ar ) and virtual reality ( vr ) , drones , and signage . per abi research , camera shipments are expected to exceed 2.7 billion units by 2018. we have already signed more than 50 licensing agreements for our imaging and vision dsps across those markets , where our customers can add camera-related enhancements such as smarter autofocus , better picture using super resolution algorithms , and better image capture in low-light environments . other customers can add video analytics support to enable new services like augmented reality , gesture recognition and advanced safety capabilities in cars . this transformation in vision processing and neural net software and hardware needs is an opportunity for us to expand our footprint and content in smartphones , tablets , drones , surveillance , automotive adas and industrial iot applications . beyond vision , neural networks are increasingly being deployed for a wide range of markets in order to make devices ‘smarter ' . these markets include iot , smartphones , surveillance , automotive , robotics , medical and industrial . to address this significant and lucrative opportunity , we recently announced neupro™ - a family of ai processors for deep learning at the edge . these self-contained ai processors are the first non-dsp processors ever developed by ceva and bring the power of deep learning to the device , without relying on connectivity to the cloud . we believe this market opportunity for ai at the edge is on top of our existing product lines and represents a new licensing and royalty driver for the company in the coming years . 33 as a result of our diversification strategy beyond baseband for handsets and our progress in addressing those new markets under the iot umbrella , we expect significant growth in royalty revenues derived from non-handset baseband applications over the next few years , due to a combination of higher unit shipments of bluetooth products that bear lower asps , along with higher asps driven by base station and vision products . notwithstanding the various growth opportunities we have outlined above , our business operates in a highly competitive and cyclical environment . the maintenance of our competitive position and our future growth are dependent on our ability to adapt to ever-changing technologies , short product life cycles , evolving industry standards , changing customer needs and the trend towards internet-of-things , handset baseband , connectivity , and voice , audio and video convergence in the markets that we operate . also , our business relies significantly on revenues derived from a limited number of customers . the discontinuation of product lines or market sectors that incorporate our technology by our significant customers or a change in direction of their business and our inability to adapt our technology to their new business needs could have material negative implications for our future royalty revenues . moreover , competition has historically increased pricing pressures for our products and decreased our average selling prices . story_separator_special_tag in addition , historically , excess tax benefits or deficiencies from our equity awards were recorded as additional paid-in capital in our consolidated balance sheets and were classified as a financing activity in our consolidated statements of cash flows . as a result of adoption , we prospectively record any excess tax benefits or deficiencies from our equity awards as part of our provision for income taxes in our consolidated statements of operations during the reporting periods during which equity vesting occurs . excess tax benefits for share-based payments are presented as an operating activity in the statements of cash flows rather than financing activity . we elected to apply the cash flow classification requirements related to excess tax benefits prospectively in accordance with asu 2016-09 and prior periods have not been adjusted . we estimate the fair value of options and stock appreciation right ( “sar” ) awards on the date of grant using an option-pricing model . the value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service period in our consolidated statement of income . we recognize compensation expenses for the value of our options and sars , which have graded vesting based on the accelerated attribution method over the requisite service period of each of the awards . prior to january 1 , 2017 , we recognized compensation expenses for the value of our options and sars , net of estimated forfeitures . estimated forfeitures were based on actual historical pre-vesting forfeitures and the rate was adjusted to reflect changes in facts and circumstances , if any . we recognize compensation expenses for the value of our restricted stock unit ( “rsu” ) awards , based on the straight-line method over the requisite service period of each of the awards . the fair value of each rsu is the market value as determined by the closing price of the common stock on the day of grant . we use the monte-carlo simulation model for options and sars granted . expected volatility was calculated based upon actual historical stock price movements over the most recent periods ending on the grant date , equal to the expected option and sar term . we have historically not paid dividends and have no foreseeable plans to pay dividends . the risk-free interest rate is based on the yield from u.s. treasury zero-coupon bonds with an equivalent term . the monte-carlo model also considers the suboptimal exercise multiple which is based on the average exercise behavior of our employees over the past years , the contractual term of the options and sars , and the probability of termination or retirement of the holder of the options and sars in computing the value of the options and sars . although our management believes that their estimates and judgments about equity-based compensation expense are reasonable , actual results and future changes in estimates may differ substantially from our current estimates . impairment of marketable securities marketable securities consist mainly of corporate bonds . we determine the appropriate classification of marketable securities at the time of purchase and re-evaluate such designation at each balance sheet date . in accordance with fasb asc no . 320 , “investment debt and equity securities , ” we classify marketable securities as available-for-sale . available-for-sale securities are stated at fair value , with unrealized gains and losses 38 reported in accumulated other comprehensive income ( loss ) , a separate component of stockholders ' equity , net of taxes . realized gains and losses on sales of marketable securities , as determined on a specific identification basis , are included in financial income , net . the amortized cost of marketable securities is adjusted for amortization of premium and accretion of discount to maturity , both of which , together with interest , are included in financial income , net . we have classified all marketable securities as short-term , even though the stated maturity date may be one year or more beyond the current balance sheet date , because it is probable that we will sell these securities prior to maturity to meet liquidity needs or as part of risk versus reward objectives . we recognize an impairment charge when a decline in the fair value of our investments in debt securities below the cost basis of such securities is judged to be other-than-temporary . the determination of credit losses requires significant judgment and actual results may be materially different from our estimates . factors considered in making such a determination include the duration and severity of the impairment , the reason for the decline in value , the ability of the issuer to meet payment obligations and the potential recovery period . for securities that are deemed other-than-temporarily impaired , the amount of impairment is recognized in the statement of income and is limited to the amount related to credit losses , while impairment related to other factors is recognized in other comprehensive income ( loss ) . during the years ended december 31 , 2015 , 2016 and 2017 , no other-than temporary impairment were recorded related to our marketable securities . recently issued accounting pronouncement ( a ) revenue recognition in may 2014 , the fasb issued new guidance related to revenue recognition , which outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance . the new guidance requires a company to recognize revenue as control of goods or services transfers to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services . it defines a five-step approach for recognizing revenue , which may require a company to use more judgment and make more estimates than under the current guidance . we adopted the new guidance during the first quarter of 2018 and apply the standard using modified retrospective approach , with the cumulative effect of applying the

liquidity and capital resources as of december 31 , 2017 , we had approximately $ 21.7 million in cash and cash equivalents , $ 34.4 million in short term bank deposits , $ 82.7 million in marketable securities , and $ 44.5 million in long term bank deposits , totaling $ 183.3 million , as compared to $ 156.5 million at december 31 , 2016. the increase in 2017 as compared to 2016 principally reflected cash provided by operating activities and cash proceeds from exercise of stock-based awards , offset by the purchase of computers and platform tools , mainly for our research and development activities . out of total cash , cash equivalents , bank deposits and marketable securities of $ 183.3 million at year end 2017 , $ 138.7 million was held by our foreign subsidiaries . our intent is to permanently reinvest earnings of our foreign subsidiaries and our current operating plans do not demonstrate a need to repatriate foreign earnings to fund our u.s. operations . however , if these funds were needed for our operations in the united states , we would be required to accrue and pay taxes to repatriate these funds . the determination of the amount of additional taxes related to the repatriation of these earnings is not practicable , as it may vary based on various factors such as the location of the cash and the effect of regulation in the various jurisdictions from which the cash would be repatriated . during 2017 , we invested $ 101.9 million of cash in bank deposits and marketable securities with maturities up to 57 months from the balance sheet date . in addition , during the same period , bank deposits and marketable securities were sold or redeemed for cash amounting to $ 77.3 million . during 2016 , we invested $ 85.0 million of cash in bank deposits and marketable securities with maturities up to 59 months from the balance sheet date . in addition , during the same period , bank deposits and marketable securities were sold or redeemed for cash amounting to $ 66.4 million .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. in particular , our presence in the lte smartphone markets continue to grow as our customers targeting those markets are gaining market share at the expense of the incumbents . during 2017 , we reported 311 million lte chipsets shipped , up from 226 million in 2016. the royalty we derive from smartphones is higher on average than that of feature phones , so we may benefit if and when lte handset markets around the world transition and shift away from feature phones to smartphones , particularly in emerging economies . furthermore , we believe that we may benefit from the base station chip ramp up in coming years , as a large customer of ours is forecasted to start ramping up production in the second half of 2018. our specialization and competitive edge in signal processing platforms for next generation long and short range wireless such as 5g , nb-iot , 802.11ac and 802.11ax wi-fi technologies , and the inherent low cost , power and performance balance of our designs , put us in a strong position to simultaneously capitalize on mass market adoption of such technologies and address multiple markets and product sectors , including handsets , fixed wireless access , macro base stations , remote radio heads , cellular backhaul , small cells , wi-fi routers and a variety of machine type communications such as connected cars , smart cities and industrial markets . together with our presence in the handset baseband market , our bluetooth and wi-fi ips allow us to expand further into iot applications and substantially increase our overall addressable market . our addressable market size is expected to be 35 billion devices by 2020 , per data from abi research . already , shipments of products incorporating our bluetooth ip are sizeable , with more than 200 million ceva-powered bluetooth chips shipped in 2017 , up 45 % from 138 million units in 2016. the growing market potential for voice assisted devices , as voice is becoming the primary user interface for iot applications , including mobile , automotive and consumer devices , offers an additional growth segment for the company in voice enabled devices such as smartphones , headsets , earbuds , smart speakers , smart home and automotive . to better address this market , we recently introduced clearvox , a new voice input software and algorithm , that is offered in conjunction with our audio/voice dsps . clearvox , plus our proven track record in audio/voice processing , with more than 6 billion audio chips shipped to date , puts us in a strong position to power audio and voice roadmaps across this new range of addressable end markets . our ceva-xm4 and ceva-xm6 imaging and vision platforms for deep learning provide highly compelling offerings for any camera-enabled device such as smartphones , tablets , automotive safety ( adas ) , autonomous driving ( ad ) , drones , robotics , security and surveillance , augmented reality ( ar ) and virtual reality ( vr ) , drones , and signage . per abi research , camera shipments are expected to exceed 2.7 billion units by 2018. we have already signed more than 50 licensing agreements for our imaging and vision dsps across those markets , where our customers can add camera-related enhancements such as smarter autofocus , better picture using super resolution algorithms , and better image capture in low-light environments . other customers can add video analytics support to enable new services like augmented reality , gesture recognition and advanced safety capabilities in cars . this transformation in vision processing and neural net software and hardware needs is an opportunity for us to expand our footprint and content in smartphones , tablets , drones , surveillance , automotive adas and industrial iot applications . beyond vision , neural networks are increasingly being deployed for a wide range of markets in order to make devices ‘smarter ' . these markets include iot , smartphones , surveillance , automotive , robotics , medical and industrial . to address this significant and lucrative opportunity , we recently announced neupro™ - a family of ai processors for deep learning at the edge . these self-contained ai processors are the first non-dsp processors ever developed by ceva and bring the power of deep learning to the device , without relying on connectivity to the cloud . we believe this market opportunity for ai at the edge is on top of our existing product lines and represents a new licensing and royalty driver for the company in the coming years . 33 as a result of our diversification strategy beyond baseband for handsets and our progress in addressing those new markets under the iot umbrella , we expect significant growth in royalty revenues derived from non-handset baseband applications over the next few years , due to a combination of higher unit shipments of bluetooth products that bear lower asps , along with higher asps driven by base station and vision products . notwithstanding the various growth opportunities we have outlined above , our business operates in a highly competitive and cyclical environment . the maintenance of our competitive position and our future growth are dependent on our ability to adapt to ever-changing technologies , short product life cycles , evolving industry standards , changing customer needs and the trend towards internet-of-things , handset baseband , connectivity , and voice , audio and video convergence in the markets that we operate . also , our business relies significantly on revenues derived from a limited number of customers . the discontinuation of product lines or market sectors that incorporate our technology by our significant customers or a change in direction of their business and our inability to adapt our technology to their new business needs could have material negative implications for our future royalty revenues . moreover , competition has historically increased pricing pressures for our products and decreased our average selling prices . story_separator_special_tag in addition , historically , excess tax benefits or deficiencies from our equity awards were recorded as additional paid-in capital in our consolidated balance sheets and were classified as a financing activity in our consolidated statements of cash flows . as a result of adoption , we prospectively record any excess tax benefits or deficiencies from our equity awards as part of our provision for income taxes in our consolidated statements of operations during the reporting periods during which equity vesting occurs . excess tax benefits for share-based payments are presented as an operating activity in the statements of cash flows rather than financing activity . we elected to apply the cash flow classification requirements related to excess tax benefits prospectively in accordance with asu 2016-09 and prior periods have not been adjusted . we estimate the fair value of options and stock appreciation right ( “sar” ) awards on the date of grant using an option-pricing model . the value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service period in our consolidated statement of income . we recognize compensation expenses for the value of our options and sars , which have graded vesting based on the accelerated attribution method over the requisite service period of each of the awards . prior to january 1 , 2017 , we recognized compensation expenses for the value of our options and sars , net of estimated forfeitures . estimated forfeitures were based on actual historical pre-vesting forfeitures and the rate was adjusted to reflect changes in facts and circumstances , if any . we recognize compensation expenses for the value of our restricted stock unit ( “rsu” ) awards , based on the straight-line method over the requisite service period of each of the awards . the fair value of each rsu is the market value as determined by the closing price of the common stock on the day of grant . we use the monte-carlo simulation model for options and sars granted . expected volatility was calculated based upon actual historical stock price movements over the most recent periods ending on the grant date , equal to the expected option and sar term . we have historically not paid dividends and have no foreseeable plans to pay dividends . the risk-free interest rate is based on the yield from u.s. treasury zero-coupon bonds with an equivalent term . the monte-carlo model also considers the suboptimal exercise multiple which is based on the average exercise behavior of our employees over the past years , the contractual term of the options and sars , and the probability of termination or retirement of the holder of the options and sars in computing the value of the options and sars . although our management believes that their estimates and judgments about equity-based compensation expense are reasonable , actual results and future changes in estimates may differ substantially from our current estimates . impairment of marketable securities marketable securities consist mainly of corporate bonds . we determine the appropriate classification of marketable securities at the time of purchase and re-evaluate such designation at each balance sheet date . in accordance with fasb asc no . 320 , “investment debt and equity securities , ” we classify marketable securities as available-for-sale . available-for-sale securities are stated at fair value , with unrealized gains and losses 38 reported in accumulated other comprehensive income ( loss ) , a separate component of stockholders ' equity , net of taxes . realized gains and losses on sales of marketable securities , as determined on a specific identification basis , are included in financial income , net . the amortized cost of marketable securities is adjusted for amortization of premium and accretion of discount to maturity , both of which , together with interest , are included in financial income , net . we have classified all marketable securities as short-term , even though the stated maturity date may be one year or more beyond the current balance sheet date , because it is probable that we will sell these securities prior to maturity to meet liquidity needs or as part of risk versus reward objectives . we recognize an impairment charge when a decline in the fair value of our investments in debt securities below the cost basis of such securities is judged to be other-than-temporary . the determination of credit losses requires significant judgment and actual results may be materially different from our estimates . factors considered in making such a determination include the duration and severity of the impairment , the reason for the decline in value , the ability of the issuer to meet payment obligations and the potential recovery period . for securities that are deemed other-than-temporarily impaired , the amount of impairment is recognized in the statement of income and is limited to the amount related to credit losses , while impairment related to other factors is recognized in other comprehensive income ( loss ) . during the years ended december 31 , 2015 , 2016 and 2017 , no other-than temporary impairment were recorded related to our marketable securities . recently issued accounting pronouncement ( a ) revenue recognition in may 2014 , the fasb issued new guidance related to revenue recognition , which outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance . the new guidance requires a company to recognize revenue as control of goods or services transfers to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services . it defines a five-step approach for recognizing revenue , which may require a company to use more judgment and make more estimates than under the current guidance . we adopted the new guidance during the first quarter of 2018 and apply the standard using modified retrospective approach , with the cumulative effect of applying the Narrative : liquidity and capital resources as of december 31 , 2017 , we had approximately $ 21.7 million in cash and cash equivalents , $ 34.4 million in short term bank deposits , $ 82.7 million in marketable securities , and $ 44.5 million in long term bank deposits , totaling $ 183.3 million , as compared to $ 156.5 million at december 31 , 2016. the increase in 2017 as compared to 2016 principally reflected cash provided by operating activities and cash proceeds from exercise of stock-based awards , offset by the purchase of computers and platform tools , mainly for our research and development activities . out of total cash , cash equivalents , bank deposits and marketable securities of $ 183.3 million at year end 2017 , $ 138.7 million was held by our foreign subsidiaries . our intent is to permanently reinvest earnings of our foreign subsidiaries and our current operating plans do not demonstrate a need to repatriate foreign earnings to fund our u.s. operations . however , if these funds were needed for our operations in the united states , we would be required to accrue and pay taxes to repatriate these funds . the determination of the amount of additional taxes related to the repatriation of these earnings is not practicable , as it may vary based on various factors such as the location of the cash and the effect of regulation in the various jurisdictions from which the cash would be repatriated . during 2017 , we invested $ 101.9 million of cash in bank deposits and marketable securities with maturities up to 57 months from the balance sheet date . in addition , during the same period , bank deposits and marketable securities were sold or redeemed for cash amounting to $ 77.3 million . during 2016 , we invested $ 85.0 million of cash in bank deposits and marketable securities with maturities up to 59 months from the balance sheet date . in addition , during the same period , bank deposits and marketable securities were sold or redeemed for cash amounting to $ 66.4 million .

at december 31 , 2016 and february 22 , 2017 we continued to operate four drilling rigs in the delaware basin , including two rigs in our rustler breaks asset area , one rig in our wolf asset area and one rig in our ranger and arrowhead asset areas in lea and eddy counties , new mexico . the vast majority of our 2016 capital expenditures of $ 454.4 million were directed to the delineation and development of our leasehold position in the delaware basin , to the development of certain midstream assets to support our operations there and to the acquisition of additional leasehold interests prospective for the wolfcamp , bone spring and other liquids-rich plays in the delaware basin . our remaining capital expenditures were directed to the installation of pumping units and other facilities on certain of our eagle ford shale wells in south texas and to our participation in several non-operated wells drilled and completed in the eagle ford and haynesville shales throughout 2016 , as noted above . we increased our leasehold position significantly in the delaware basin during 2016. at december 31 , 2016 , we held approximately 163,700 gross ( 94,300 net ) acres in the permian basin in southeast new mexico and west texas , primarily in the delaware basin in lea and eddy counties , new mexico and loving county , texas . between january 1 , 2017 and february 22 , 2017 , we acquired approximately 13,900 gross ( 8,200 net ) leasehold and mineral acres and approximately 1,000 boe per day of related production from various lessors and other operators , mostly in and around our existing acreage in the delaware basin . this brought our total permian basin acreage position at february 22 , 2017 to 177,600 gross ( 101,400 net ) acres , almost all of which was located in the delaware basin . our oil production , natural gas production and average daily oil equivalent production during 2016 were the best in the company 's history . our average daily oil equivalent production for the year ended december 31 , 2016 was 27,813 boe per day , including 13,924 bbl of oil per day and 83.3 mmcf of natural gas per day , an increase of 12 % as compared to 24,955 boe per day , including 12,306 bbl of oil per day and 75.9 mmcf of natural gas per day , for the year ended december 31 , 2015 . our average daily oil production in 2016 of 13,924 bbl of oil per day increased 13 % , as compared to an average daily oil production of 12,306 bbl of oil per day in 2015 . this increase in oil production was primarily a result of our ongoing delineation and development drilling in the delaware basin , which offset declining oil production in the eagle ford shale where we have not drilled any new operated wells since the second quarter of 2015. our average daily natural gas production of 83.3 mmcf per day for the year ended december 31 , 2016 increased 10 % from 75.9 mmcf per day for the year ended december 31 , 2015 . this increase in natural gas production was primarily attributable to increased natural gas production associated with our operations in the delaware basin and new , non-operated haynesville shale wells completed and placed on production on our elm grove properties in northwest louisiana in the latter half of 2015 and into 2016. oil production comprised 50 % of our total production ( using a conversion ratio of one bbl of oil per six mcf of natural gas ) for the year ended december 31 , 2016 , as compared to 49 % for the year ended december 31 , 2015 . for the year ended december 31 , 2016 , our oil and natural gas revenues were $ 291.2 million , an increase of 5 % from oil and natural gas revenues of $ 278.3 million for the year ended december 31 , 2015 . our oil revenues and natural gas revenues increased 3 % and 8 % to approximately $ 209.9 million and $ 81.2 million , respectively , as a result of the increases in oil and natural gas production for the year ended december 31 , 2016 as noted above , as compared to $ 203.4 million and $ 75.0 million , respectively , for the year ended december 31 , 2015 . the increase in both oil and natural gas production in 2016 helped to mitigate the impacts of somewhat lower realized weighted average oil and natural gas prices of $ 41.19 per bbl and $ 2.66 per mcf in 2016 , respectively , as compared to $ 45.27 per bbl and $ 2.71 per mcf in 2015 , respectively . we reported a net loss of approximately $ 97.4 million , or $ 1.07 per diluted common share on a gaap basis for the year ended december 31 , 2016 , as compared to a net loss of $ 679.8 million , or $ 8.34 per diluted common share , for the year ended december 31 , 2015 . our net loss and net loss per diluted common share on a gaap basis were significantly impacted by full-cost ceiling impairments of $ 158.6 million and $ 801.2 million for the years ended december 31 , 2016 and 2015 , respectively , as a result of substantial declines in oil and natural gas prices throughout 2015 and 2016. adjusted ebitda for the year ended december 31 , 2016 was $ 157.9 million , as compared to adjusted ebitda of $ 223.2 million reported for the year ended december 31 , 2015 . story_separator_special_tag from a lower weighted average natural gas price realized for the year ended december 31 , 2015 of $ 2.71 per mcf , as compared to $ 5.08 per mcf realized for the year ended december 31 , 2014. the lower weighted average natural gas price was partially mitigated by the 81 % increase in our natural gas production to 27.7 bcf for the year ended december 31 , 2015 , as compared to 15.3 bcf for the year ended december 31 , 2014. the increased natural gas production was primarily attributable to new , non-operated haynesville shale wells completed and placed on production on our elm grove properties in northwest louisiana during the latter half of 2014 and into 2015 , but also included increased natural gas production associated with our operations in the delaware basin and the eagle ford shale . third-party midstream services revenues . our third-party midstream services revenues increased to $ 1.9 million , or an increase of 54 % , for the year ended december 31 , 2015 , as compared to $ 1.2 million for the december 31 , 2014 . the increase was primarily attributable to third-party oil , natural gas and salt water gathering and salt water disposal fees in our wolf asset area . 61 realized gain ( loss ) on derivatives . our realized net gain on derivatives was $ 77.1 million for the year ended december 31 , 2015 , as compared to a realized net gain of $ 5.0 million for the year ended december 31 , 2014. we realized net gains of $ 62.3 million , $ 12.7 million and $ 2.2 million from our oil , natural gas and ngl derivative contracts , respectively , for the year ended december 31 , 2015 resulting from oil and natural gas prices being below the floor prices of most of our costless collar contracts and ngl prices being below the fixed prices of all of our swap contracts . our realized net gain on derivatives was $ 5.0 million for the year ended december 31 , 2014. we realized a net gain from our oil derivative contracts of approximately $ 5.2 million and a net gain of $ 0.5 million from our ngl derivative contracts for the year ended december 31 , 2014 due to oil prices being below the floor prices of some of our oil costless collar contracts and ngl prices being below the fixed prices of some of our swap contracts , respectively , especially during the latter part of 2014. these gains were partially offset by a net loss of $ 0.7 million on our natural gas derivative contracts , due to natural gas prices being in excess of the ceiling prices of our natural gas costless collar contracts , especially in the early months of 2014. we realized an average gain of approximately $ 22.89 per bbl hedged on all of our open oil costless collar contracts during the year ended december 31 , 2015 , as compared to an average gain of $ 2.00 per bbl hedged for the year ended december 31 , 2014. our oil volumes hedged for the year ended december 31 , 2015 were also 5 % higher as compared to the year ended december 31 , 2014. we realized an average gain of approximately $ 0.73 per mmbtu hedged on all of our open natural gas costless collar contracts during the year ended december 31 , 2015 , as compared to an average loss of approximately $ 0.06 per mmbtu hedged on all of our open natural gas costless collar contracts during the year ended december 31 , 2014. our total natural gas volumes hedged for the year ended december 31 , 2015 were also 38 % higher than the total natural gas volumes hedged for the year ended december 31 , 2014. unrealized gain ( loss ) on derivatives . our unrealized net loss on derivatives was approximately $ 39.3 million for the year ended december 31 , 2015 , as compared to an unrealized net gain of approximately $ 58.3 million for the year ended december 31 , 2014. during the year ended december 31 , 2015 , the net fair value of our open oil , natural gas and ngl derivatives contracts decreased to approximately $ 16.3 million from $ 55.5 million for the year ended december 31 , 2014 , resulting in an unrealized net loss on derivatives of approximately $ 39.3 million for the year ended december 31 , 2015. during the year ended december 31 , 2015 , the net fair value of our open oil , natural gas and ngl derivative contracts decreased by $ 31.9 million , $ 5.4 million and $ 1.9 million , respectively , due primarily to the realized gains from oil , natural gas and ngl derivative contracts settled during the year ended december 31 , 2015 . 62 expenses the following table summarizes our operating expenses and other income ( expense ) for the periods indicated . replace_table_token_22_th ( 1 ) $ 0.1 million , or $ 0.01 per boe , was reclassified to third-party midstream revenues for the year ended december 31 , 2015 , due to our midstream business becoming a reportable segment in the third quarter of 2016. there was no such reclassification made in 2014 . ( 2 ) $ 3.5 million , or $ 0.38 per boe , and $ 1.4 million , or $ 0.24 per boe , were reclassified to plant and other midstream services operating expenses for the years ended december 31 , 2015 and 2014 , respectively , due to our midstream business becoming a reportable segment in the third quarter of 2016 . ( 3 ) $ 1.7 million and $ 1.2 million were reclassified to midstream services revenues for the years ended december 31 , 2015 and 2014 , respectively , due to our midstream business becoming a reportable segment in the

net cash provided by financing activities was $ 321.2 million for the year ended december 31 , 2014 . the net cash provided by financing activities for the year ended december 31 , 2014 was primarily attributable to the total proceeds from our may 2014 public equity offering of $ 181.9 million and total borrowings of $ 320.0 million under our credit agreement during the period , offset by the costs of the offering of $ 0.6 million incurred during the period and by the repayment of $ 180.0 million in borrowings under our credit agreement during the period . see note 6 to the consolidated financial statements in this annual report for a summary of our debt , including our credit agreement and the senior notes . 70 off-balance sheet arrangements from time-to-time , we enter into off-balance sheet arrangements and transactions that can give rise to material off-balance sheet obligations of the company . as of december 31 , 2016 , the material off-balance sheet arrangements and transactions that we had entered into include ( i ) operating lease agreements , ( ii ) non-operated drilling commitments , ( iii ) termination obligations under drilling rig contracts , ( iv ) firm transportation , gathering , processing , disposal and fractionation commitments and ( v ) contractual obligations for which the ultimate settlement amounts are not fixed and determinable , such as derivative contracts that are sensitive to future changes in commodity prices or interest rates , gathering , treating , fractionation and transportation commitments on uncertain volumes of future throughput , open delivery commitments and indemnification obligations following certain divestitures . other than the off-balance sheet arrangements described above , the company has no transactions , arrangements or other relationships with unconsolidated entities or other persons that are reasonably likely to materially affect the company 's liquidity or availability of or requirements for capital resources . see “ —obligations and commitments ” below and note 13 to the consolidated financial statements in this annual report for more information regarding the company 's off-balance sheet arrangements . such information is incorporated herein by reference .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. at december 31 , 2016 and february 22 , 2017 we continued to operate four drilling rigs in the delaware basin , including two rigs in our rustler breaks asset area , one rig in our wolf asset area and one rig in our ranger and arrowhead asset areas in lea and eddy counties , new mexico . the vast majority of our 2016 capital expenditures of $ 454.4 million were directed to the delineation and development of our leasehold position in the delaware basin , to the development of certain midstream assets to support our operations there and to the acquisition of additional leasehold interests prospective for the wolfcamp , bone spring and other liquids-rich plays in the delaware basin . our remaining capital expenditures were directed to the installation of pumping units and other facilities on certain of our eagle ford shale wells in south texas and to our participation in several non-operated wells drilled and completed in the eagle ford and haynesville shales throughout 2016 , as noted above . we increased our leasehold position significantly in the delaware basin during 2016. at december 31 , 2016 , we held approximately 163,700 gross ( 94,300 net ) acres in the permian basin in southeast new mexico and west texas , primarily in the delaware basin in lea and eddy counties , new mexico and loving county , texas . between january 1 , 2017 and february 22 , 2017 , we acquired approximately 13,900 gross ( 8,200 net ) leasehold and mineral acres and approximately 1,000 boe per day of related production from various lessors and other operators , mostly in and around our existing acreage in the delaware basin . this brought our total permian basin acreage position at february 22 , 2017 to 177,600 gross ( 101,400 net ) acres , almost all of which was located in the delaware basin . our oil production , natural gas production and average daily oil equivalent production during 2016 were the best in the company 's history . our average daily oil equivalent production for the year ended december 31 , 2016 was 27,813 boe per day , including 13,924 bbl of oil per day and 83.3 mmcf of natural gas per day , an increase of 12 % as compared to 24,955 boe per day , including 12,306 bbl of oil per day and 75.9 mmcf of natural gas per day , for the year ended december 31 , 2015 . our average daily oil production in 2016 of 13,924 bbl of oil per day increased 13 % , as compared to an average daily oil production of 12,306 bbl of oil per day in 2015 . this increase in oil production was primarily a result of our ongoing delineation and development drilling in the delaware basin , which offset declining oil production in the eagle ford shale where we have not drilled any new operated wells since the second quarter of 2015. our average daily natural gas production of 83.3 mmcf per day for the year ended december 31 , 2016 increased 10 % from 75.9 mmcf per day for the year ended december 31 , 2015 . this increase in natural gas production was primarily attributable to increased natural gas production associated with our operations in the delaware basin and new , non-operated haynesville shale wells completed and placed on production on our elm grove properties in northwest louisiana in the latter half of 2015 and into 2016. oil production comprised 50 % of our total production ( using a conversion ratio of one bbl of oil per six mcf of natural gas ) for the year ended december 31 , 2016 , as compared to 49 % for the year ended december 31 , 2015 . for the year ended december 31 , 2016 , our oil and natural gas revenues were $ 291.2 million , an increase of 5 % from oil and natural gas revenues of $ 278.3 million for the year ended december 31 , 2015 . our oil revenues and natural gas revenues increased 3 % and 8 % to approximately $ 209.9 million and $ 81.2 million , respectively , as a result of the increases in oil and natural gas production for the year ended december 31 , 2016 as noted above , as compared to $ 203.4 million and $ 75.0 million , respectively , for the year ended december 31 , 2015 . the increase in both oil and natural gas production in 2016 helped to mitigate the impacts of somewhat lower realized weighted average oil and natural gas prices of $ 41.19 per bbl and $ 2.66 per mcf in 2016 , respectively , as compared to $ 45.27 per bbl and $ 2.71 per mcf in 2015 , respectively . we reported a net loss of approximately $ 97.4 million , or $ 1.07 per diluted common share on a gaap basis for the year ended december 31 , 2016 , as compared to a net loss of $ 679.8 million , or $ 8.34 per diluted common share , for the year ended december 31 , 2015 . our net loss and net loss per diluted common share on a gaap basis were significantly impacted by full-cost ceiling impairments of $ 158.6 million and $ 801.2 million for the years ended december 31 , 2016 and 2015 , respectively , as a result of substantial declines in oil and natural gas prices throughout 2015 and 2016. adjusted ebitda for the year ended december 31 , 2016 was $ 157.9 million , as compared to adjusted ebitda of $ 223.2 million reported for the year ended december 31 , 2015 . story_separator_special_tag from a lower weighted average natural gas price realized for the year ended december 31 , 2015 of $ 2.71 per mcf , as compared to $ 5.08 per mcf realized for the year ended december 31 , 2014. the lower weighted average natural gas price was partially mitigated by the 81 % increase in our natural gas production to 27.7 bcf for the year ended december 31 , 2015 , as compared to 15.3 bcf for the year ended december 31 , 2014. the increased natural gas production was primarily attributable to new , non-operated haynesville shale wells completed and placed on production on our elm grove properties in northwest louisiana during the latter half of 2014 and into 2015 , but also included increased natural gas production associated with our operations in the delaware basin and the eagle ford shale . third-party midstream services revenues . our third-party midstream services revenues increased to $ 1.9 million , or an increase of 54 % , for the year ended december 31 , 2015 , as compared to $ 1.2 million for the december 31 , 2014 . the increase was primarily attributable to third-party oil , natural gas and salt water gathering and salt water disposal fees in our wolf asset area . 61 realized gain ( loss ) on derivatives . our realized net gain on derivatives was $ 77.1 million for the year ended december 31 , 2015 , as compared to a realized net gain of $ 5.0 million for the year ended december 31 , 2014. we realized net gains of $ 62.3 million , $ 12.7 million and $ 2.2 million from our oil , natural gas and ngl derivative contracts , respectively , for the year ended december 31 , 2015 resulting from oil and natural gas prices being below the floor prices of most of our costless collar contracts and ngl prices being below the fixed prices of all of our swap contracts . our realized net gain on derivatives was $ 5.0 million for the year ended december 31 , 2014. we realized a net gain from our oil derivative contracts of approximately $ 5.2 million and a net gain of $ 0.5 million from our ngl derivative contracts for the year ended december 31 , 2014 due to oil prices being below the floor prices of some of our oil costless collar contracts and ngl prices being below the fixed prices of some of our swap contracts , respectively , especially during the latter part of 2014. these gains were partially offset by a net loss of $ 0.7 million on our natural gas derivative contracts , due to natural gas prices being in excess of the ceiling prices of our natural gas costless collar contracts , especially in the early months of 2014. we realized an average gain of approximately $ 22.89 per bbl hedged on all of our open oil costless collar contracts during the year ended december 31 , 2015 , as compared to an average gain of $ 2.00 per bbl hedged for the year ended december 31 , 2014. our oil volumes hedged for the year ended december 31 , 2015 were also 5 % higher as compared to the year ended december 31 , 2014. we realized an average gain of approximately $ 0.73 per mmbtu hedged on all of our open natural gas costless collar contracts during the year ended december 31 , 2015 , as compared to an average loss of approximately $ 0.06 per mmbtu hedged on all of our open natural gas costless collar contracts during the year ended december 31 , 2014. our total natural gas volumes hedged for the year ended december 31 , 2015 were also 38 % higher than the total natural gas volumes hedged for the year ended december 31 , 2014. unrealized gain ( loss ) on derivatives . our unrealized net loss on derivatives was approximately $ 39.3 million for the year ended december 31 , 2015 , as compared to an unrealized net gain of approximately $ 58.3 million for the year ended december 31 , 2014. during the year ended december 31 , 2015 , the net fair value of our open oil , natural gas and ngl derivatives contracts decreased to approximately $ 16.3 million from $ 55.5 million for the year ended december 31 , 2014 , resulting in an unrealized net loss on derivatives of approximately $ 39.3 million for the year ended december 31 , 2015. during the year ended december 31 , 2015 , the net fair value of our open oil , natural gas and ngl derivative contracts decreased by $ 31.9 million , $ 5.4 million and $ 1.9 million , respectively , due primarily to the realized gains from oil , natural gas and ngl derivative contracts settled during the year ended december 31 , 2015 . 62 expenses the following table summarizes our operating expenses and other income ( expense ) for the periods indicated . replace_table_token_22_th ( 1 ) $ 0.1 million , or $ 0.01 per boe , was reclassified to third-party midstream revenues for the year ended december 31 , 2015 , due to our midstream business becoming a reportable segment in the third quarter of 2016. there was no such reclassification made in 2014 . ( 2 ) $ 3.5 million , or $ 0.38 per boe , and $ 1.4 million , or $ 0.24 per boe , were reclassified to plant and other midstream services operating expenses for the years ended december 31 , 2015 and 2014 , respectively , due to our midstream business becoming a reportable segment in the third quarter of 2016 . ( 3 ) $ 1.7 million and $ 1.2 million were reclassified to midstream services revenues for the years ended december 31 , 2015 and 2014 , respectively , due to our midstream business becoming a reportable segment in the Narrative : net cash provided by financing activities was $ 321.2 million for the year ended december 31 , 2014 . the net cash provided by financing activities for the year ended december 31 , 2014 was primarily attributable to the total proceeds from our may 2014 public equity offering of $ 181.9 million and total borrowings of $ 320.0 million under our credit agreement during the period , offset by the costs of the offering of $ 0.6 million incurred during the period and by the repayment of $ 180.0 million in borrowings under our credit agreement during the period . see note 6 to the consolidated financial statements in this annual report for a summary of our debt , including our credit agreement and the senior notes . 70 off-balance sheet arrangements from time-to-time , we enter into off-balance sheet arrangements and transactions that can give rise to material off-balance sheet obligations of the company . as of december 31 , 2016 , the material off-balance sheet arrangements and transactions that we had entered into include ( i ) operating lease agreements , ( ii ) non-operated drilling commitments , ( iii ) termination obligations under drilling rig contracts , ( iv ) firm transportation , gathering , processing , disposal and fractionation commitments and ( v ) contractual obligations for which the ultimate settlement amounts are not fixed and determinable , such as derivative contracts that are sensitive to future changes in commodity prices or interest rates , gathering , treating , fractionation and transportation commitments on uncertain volumes of future throughput , open delivery commitments and indemnification obligations following certain divestitures . other than the off-balance sheet arrangements described above , the company has no transactions , arrangements or other relationships with unconsolidated entities or other persons that are reasonably likely to materially affect the company 's liquidity or availability of or requirements for capital resources . see “ —obligations and commitments ” below and note 13 to the consolidated financial statements in this annual report for more information regarding the company 's off-balance sheet arrangements . such information is incorporated herein by reference .

as a result , our net income has not been subject to , and we have not paid , u.s. federal or state income taxes , and we have not been required to make any provision or recognize any liability for u.s. federal income tax in our financial statements . the consummation of our initial public offering resulted in the termination of our status as an s corporation and in our taxation as a c corporation for u.s. federal and state income tax purposes . upon the termination of our status as an s corporation , we commenced paying u.s. federal income tax on our pre-tax net income for each year ( including the short year beginning on the date our status as an s corporation terminated ) , and our financial statements reflect a provision for u.s. federal income tax . as a result of this change , the net income and earnings per share data presented prior to our conversion to a c corporation in 2018 , which do not include any provision for u.s. federal income tax , will not be comparable with our current net income and earnings per share , which is calculated by including a provision for u.s. federal and state income tax . furthermore , we have recognized deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of our existing assets and liabilities and their respective tax bases . deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled . the effect on deferred tax assets and liabilities of the change in tax rates resulting from becoming a c corporation were recognized in income in the quarter the change took place . this difference between the financial statement carrying amounts of assets and liabilities and their respective tax bases was recorded as a net deferred tax asset of $ 2 million ( net of $ 13,000 uncertain tax liability ) on our consolidated balance sheet as of december 31 , 2020 . 31 pro forma income tax expense and net income as a result of our status as an s corporation , we had no u.s. federal income tax expense for the full year ended december 31 , 2018 , but rather only for the short year after conversion to c corporation status ( as discussed earlier ) . the pro forma impact of being taxed as a c corporation is illustrated in the following table : replace_table_token_7_th ( 1 ) a portion of our net income in each of these periods was derived from nontaxable investment income and other nondeductible expenses . ( 2 ) based on a statutory federal income tax rate of 21 % , 21 % and 21 % , for the years ended december 31 , 2020 , 2019 and 2018 , respectively , plus the applicable statutory state income tax rate for each of the respective periods . state income tax was $ 1.6 million and $ 1.2 million , with an effective state tax rate of 4.9 % and 4.4 % for the years ended december 31 , 2020 and 2019 , respectively . state income tax expense would have been approximately $ 1.3 million for the year ended december 31 , 2018 with an effective state tax rate of 4.9 % 2020 highlights for the year ended december 31 , 2020 , we reported pre-tax net income of $ 25.9 million compared to pre-tax net income of $ 15.0 million for the year ended december 31 , 2019. the increase was primarily related to compensation expense from the one-time , non-cash executive stock transaction in 2019. for the year ended december 31 , 2020 , average loans totaled $ 823.2 million , an increase of $ 187.0 million or 29.4 % , from december 31 , 2019. for the year ended december 31 , 2020 , loan yields , excluding loan fee income , were 5.76 % , a decrease of 112 basis points from the same period in 2019 due to decreasing interest rates . loan yield excluding loan fee income is a non-gaap measure . see “ gaap reconciliation and management explanation of non-gaap financial measures ” elsewhere in this report . pre-tax return on average assets and return on average equity was 2.73 % and 25.29 % , respectively for the year ended december 31 , 2020 , as compared to 1.88 % and 15.44 % , respectively , for the same period in 2019. our efficiency ratio for the year ended december 31 , 2020 was 36.03 % as compared to 65.39 % for the year ended december 31 , 2019. the decrease was due to compensation expense from the the one-time , non-cash executive stock transaction in 2019. as of december 31 , 2020 , total loans were $ 836.6 million , an increase of $ 129.3 million , or 18.3 % , from december 31 , 2019. total deposits were $ 905.5 million as of december 31 , 2020 , an increase of $ 148.0 million , or 19.5 % , from december 31 , 2019. tangible book value per share was $ 11.69 as of december 31 , 2020 , an increase of $ 1.91 , or 19.6 % , from december 31 , 2019. tangible book value per share is a non-gaap financial measure . see “ gaap reconciliation and management explanation of non-gaap financial measures ” elsewhere in this report . story_separator_special_tag in cases where a borrower experiences financial difficulties and we make certain concessionary modifications to contractual terms , the loan is classified as a tdr . included in certain loan categories of impaired loans are tdrs on which we have granted certain material concessions to the borrower as a result of the borrower experiencing financial difficulties . the concessions granted by us may include , but are not limited to : ( 1 ) a modification in which the maturity date , timing of payments or frequency of payments is modified , ( 2 ) an interest rate lower than the current market rate for new loans with similar risk , or ( 3 ) a combination of the first two concessions . if a borrower on a restructured accruing loan has demonstrated performance under the previous terms , is not experiencing financial difficulty and shows the capacity to continue to perform under the restructured terms , the loan will remain on accrual status . otherwise , the loan will be placed on nonaccrual status until the borrower demonstrates a sustained period of performance , which generally requires six consecutive months of payments . loans identified as tdrs are evaluated for impairment using the present value of the expected cash flows or the estimated fair value of the collateral , if the loan is collateral dependent . the fair value is determined , when possible , by an appraisal of the property less estimated costs related to liquidation of the collateral . the appraisal amount may also be adjusted for current market conditions . adjustments to reflect the present value of the expected cash flows or the estimated fair value of collateral dependent loans are a component in determining an appropriate allowance , and as such , may result in increases or decreases to the provision for loan losses in current and future earnings . real estate we acquire as a result of foreclosure or by deed-in-lieu of foreclosure is classified as other real estate owned , or oreo , until sold , and is initially recorded at fair value less costs to sell when acquired , establishing a new cost basis . nonperforming loans include nonaccrual loans , loans past due 90 days or more and still accruing interest and loans modified under tdrs that are not performing in accordance with their modified terms . nonperforming assets consist of nonperforming loans plus oreo . loans accounted for on a nonaccrual basis were $ 14.6 million as of december 31 , 2020 , $ 1.8 million as of december 31 , 2019 and $ 2.6 million as of december 31 , 2018. oreo was $ 0 as of december 31 , 2020 , $ 0 as of december 31 , 2019 and $ 110,000 as of december 31 , 2018 . 41 the following table presents information regarding nonperforming assets as of the dates indicated . replace_table_token_18_th the following tables present an aging analysis of loans as of the dates indicated . replace_table_token_19_th replace_table_token_20_th 42 replace_table_token_21_th in addition to the past due and nonaccrual criteria , the company also evaluates loans according to its internal risk grading system . loans are segregated between pass , watch , special mention , and substandard categories . the definitions of those categories are as follows : in addition to the past due and nonaccrual criteria , the company also evaluates loans according to its internal risk grading system . loans are segregated between pass , watch , special mention , and substandard categories . the definitions of those categories are as follows : pass : these loans generally conform to bank policies , are characterized by policy-conforming advance rates on collateral , and have well-defined repayment sources . in addition , these credits are extended to borrowers and guarantors with a strong balance sheet and either substantial liquidity or a reliable income history . watch : these loans are still considered “ pass ” credits ; however , various factors such as industry stress , material changes in cash flow or financial conditions , or deficiencies in loan documentation , or other risk issues determined by the lending officer , commercial loan committee or cqc warrant a heightened sense and frequency of monitoring . special mention : these loans have observable weaknesses or evidence imprudent handling or structural issues . the weaknesses require close attention , and the remediation of those weaknesses is necessary . no risk of probable loss exists . credits in this category are expected to quickly migrate to “ watch ” or “ substandard ” as this is viewed as a transitory loan grade . substandard : these loans are not adequately protected by the sound worth and debt service capacity of the borrower , but may be well-secured . the loans have defined weaknesses relative to cash flow , collateral , financial condition or other factors that might jeopardize repayment of all of the principal and interest on a timely basis . there is the possibility that a future loss will occur if weaknesses are not remediated . substandard loans totaled $ 23.1 million as of december 31 , 2020 , an increase of $ 12.0 million compared to december 31 , 2019. the increase primarily related to two commercial and industrial relationships comprised of one note each totaling $ 14.4 million with no specific reserves and two commercial real estate relationships comprised of one note each totaling $ 5.0 million with no specific reserves . substandard loans totaled $ 11.1 million as of december 31 , 2019 , an increase of $ 2.0 million compared to december 31 , 2018. the increase primarily related to one agricultural relationship comprised of four notes totaling $ 1.8 million with no specific reserve , one agricultural relationship comprised of three notes totaling $ 555,000 with no specific reserve , one mixed relationship comprised of eight notes totaling $ 4.2 million with no specific reserve , and one mixed relationship comprised

liquidity liquidity refers to the measure of our ability to meet the cash flow requirements of depositors and borrowers , while at the same time meeting our operating , capital and strategic cash flow needs , all at a reasonable cost . we continuously monitor our liquidity position to ensure that assets and liabilities are managed in a manner that will meet all short-term and long-term cash requirements . we manage our liquidity position to meet the daily cash flow needs of customers , while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of our shareholders . 47 our liquidity position is supported by management of liquid assets and access to alternative sources of funds . our liquid assets include cash , interest-bearing deposits in correspondent banks and fed funds sold . other available sources of liquidity include wholesale deposits and borrowings from correspondent banks and fhlb advances . our short-term and long-term liquidity requirements are primarily met through cash flow from operations , redeployment of prepaying and maturing balances in our loan portfolios , and increases in customer deposits . other alternative sources of funds will supplement these primary sources to the extent necessary to meet additional liquidity requirements on either a short-term or long-term basis . as of december 31 , 2020 , we had no unsecured fed funds lines with correspondent depository institutions with no amounts advanced . in addition , based on the values of loans pledged as collateral , we had borrowing availability with the fhlb of $ 64.8 million as of december 31 , 2020 and $ 71.7 million as of december 31 , 2019. capital requirements the bank is subject to various regulatory capital requirements administered by the federal and state banking regulators . failure to meet regulatory capital requirements may result in certain mandatory and possible additional discretionary actions by regulators that , if undertaken , could have a direct material effect on our financial statements .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. as a result , our net income has not been subject to , and we have not paid , u.s. federal or state income taxes , and we have not been required to make any provision or recognize any liability for u.s. federal income tax in our financial statements . the consummation of our initial public offering resulted in the termination of our status as an s corporation and in our taxation as a c corporation for u.s. federal and state income tax purposes . upon the termination of our status as an s corporation , we commenced paying u.s. federal income tax on our pre-tax net income for each year ( including the short year beginning on the date our status as an s corporation terminated ) , and our financial statements reflect a provision for u.s. federal income tax . as a result of this change , the net income and earnings per share data presented prior to our conversion to a c corporation in 2018 , which do not include any provision for u.s. federal income tax , will not be comparable with our current net income and earnings per share , which is calculated by including a provision for u.s. federal and state income tax . furthermore , we have recognized deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of our existing assets and liabilities and their respective tax bases . deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled . the effect on deferred tax assets and liabilities of the change in tax rates resulting from becoming a c corporation were recognized in income in the quarter the change took place . this difference between the financial statement carrying amounts of assets and liabilities and their respective tax bases was recorded as a net deferred tax asset of $ 2 million ( net of $ 13,000 uncertain tax liability ) on our consolidated balance sheet as of december 31 , 2020 . 31 pro forma income tax expense and net income as a result of our status as an s corporation , we had no u.s. federal income tax expense for the full year ended december 31 , 2018 , but rather only for the short year after conversion to c corporation status ( as discussed earlier ) . the pro forma impact of being taxed as a c corporation is illustrated in the following table : replace_table_token_7_th ( 1 ) a portion of our net income in each of these periods was derived from nontaxable investment income and other nondeductible expenses . ( 2 ) based on a statutory federal income tax rate of 21 % , 21 % and 21 % , for the years ended december 31 , 2020 , 2019 and 2018 , respectively , plus the applicable statutory state income tax rate for each of the respective periods . state income tax was $ 1.6 million and $ 1.2 million , with an effective state tax rate of 4.9 % and 4.4 % for the years ended december 31 , 2020 and 2019 , respectively . state income tax expense would have been approximately $ 1.3 million for the year ended december 31 , 2018 with an effective state tax rate of 4.9 % 2020 highlights for the year ended december 31 , 2020 , we reported pre-tax net income of $ 25.9 million compared to pre-tax net income of $ 15.0 million for the year ended december 31 , 2019. the increase was primarily related to compensation expense from the one-time , non-cash executive stock transaction in 2019. for the year ended december 31 , 2020 , average loans totaled $ 823.2 million , an increase of $ 187.0 million or 29.4 % , from december 31 , 2019. for the year ended december 31 , 2020 , loan yields , excluding loan fee income , were 5.76 % , a decrease of 112 basis points from the same period in 2019 due to decreasing interest rates . loan yield excluding loan fee income is a non-gaap measure . see “ gaap reconciliation and management explanation of non-gaap financial measures ” elsewhere in this report . pre-tax return on average assets and return on average equity was 2.73 % and 25.29 % , respectively for the year ended december 31 , 2020 , as compared to 1.88 % and 15.44 % , respectively , for the same period in 2019. our efficiency ratio for the year ended december 31 , 2020 was 36.03 % as compared to 65.39 % for the year ended december 31 , 2019. the decrease was due to compensation expense from the the one-time , non-cash executive stock transaction in 2019. as of december 31 , 2020 , total loans were $ 836.6 million , an increase of $ 129.3 million , or 18.3 % , from december 31 , 2019. total deposits were $ 905.5 million as of december 31 , 2020 , an increase of $ 148.0 million , or 19.5 % , from december 31 , 2019. tangible book value per share was $ 11.69 as of december 31 , 2020 , an increase of $ 1.91 , or 19.6 % , from december 31 , 2019. tangible book value per share is a non-gaap financial measure . see “ gaap reconciliation and management explanation of non-gaap financial measures ” elsewhere in this report . story_separator_special_tag in cases where a borrower experiences financial difficulties and we make certain concessionary modifications to contractual terms , the loan is classified as a tdr . included in certain loan categories of impaired loans are tdrs on which we have granted certain material concessions to the borrower as a result of the borrower experiencing financial difficulties . the concessions granted by us may include , but are not limited to : ( 1 ) a modification in which the maturity date , timing of payments or frequency of payments is modified , ( 2 ) an interest rate lower than the current market rate for new loans with similar risk , or ( 3 ) a combination of the first two concessions . if a borrower on a restructured accruing loan has demonstrated performance under the previous terms , is not experiencing financial difficulty and shows the capacity to continue to perform under the restructured terms , the loan will remain on accrual status . otherwise , the loan will be placed on nonaccrual status until the borrower demonstrates a sustained period of performance , which generally requires six consecutive months of payments . loans identified as tdrs are evaluated for impairment using the present value of the expected cash flows or the estimated fair value of the collateral , if the loan is collateral dependent . the fair value is determined , when possible , by an appraisal of the property less estimated costs related to liquidation of the collateral . the appraisal amount may also be adjusted for current market conditions . adjustments to reflect the present value of the expected cash flows or the estimated fair value of collateral dependent loans are a component in determining an appropriate allowance , and as such , may result in increases or decreases to the provision for loan losses in current and future earnings . real estate we acquire as a result of foreclosure or by deed-in-lieu of foreclosure is classified as other real estate owned , or oreo , until sold , and is initially recorded at fair value less costs to sell when acquired , establishing a new cost basis . nonperforming loans include nonaccrual loans , loans past due 90 days or more and still accruing interest and loans modified under tdrs that are not performing in accordance with their modified terms . nonperforming assets consist of nonperforming loans plus oreo . loans accounted for on a nonaccrual basis were $ 14.6 million as of december 31 , 2020 , $ 1.8 million as of december 31 , 2019 and $ 2.6 million as of december 31 , 2018. oreo was $ 0 as of december 31 , 2020 , $ 0 as of december 31 , 2019 and $ 110,000 as of december 31 , 2018 . 41 the following table presents information regarding nonperforming assets as of the dates indicated . replace_table_token_18_th the following tables present an aging analysis of loans as of the dates indicated . replace_table_token_19_th replace_table_token_20_th 42 replace_table_token_21_th in addition to the past due and nonaccrual criteria , the company also evaluates loans according to its internal risk grading system . loans are segregated between pass , watch , special mention , and substandard categories . the definitions of those categories are as follows : in addition to the past due and nonaccrual criteria , the company also evaluates loans according to its internal risk grading system . loans are segregated between pass , watch , special mention , and substandard categories . the definitions of those categories are as follows : pass : these loans generally conform to bank policies , are characterized by policy-conforming advance rates on collateral , and have well-defined repayment sources . in addition , these credits are extended to borrowers and guarantors with a strong balance sheet and either substantial liquidity or a reliable income history . watch : these loans are still considered “ pass ” credits ; however , various factors such as industry stress , material changes in cash flow or financial conditions , or deficiencies in loan documentation , or other risk issues determined by the lending officer , commercial loan committee or cqc warrant a heightened sense and frequency of monitoring . special mention : these loans have observable weaknesses or evidence imprudent handling or structural issues . the weaknesses require close attention , and the remediation of those weaknesses is necessary . no risk of probable loss exists . credits in this category are expected to quickly migrate to “ watch ” or “ substandard ” as this is viewed as a transitory loan grade . substandard : these loans are not adequately protected by the sound worth and debt service capacity of the borrower , but may be well-secured . the loans have defined weaknesses relative to cash flow , collateral , financial condition or other factors that might jeopardize repayment of all of the principal and interest on a timely basis . there is the possibility that a future loss will occur if weaknesses are not remediated . substandard loans totaled $ 23.1 million as of december 31 , 2020 , an increase of $ 12.0 million compared to december 31 , 2019. the increase primarily related to two commercial and industrial relationships comprised of one note each totaling $ 14.4 million with no specific reserves and two commercial real estate relationships comprised of one note each totaling $ 5.0 million with no specific reserves . substandard loans totaled $ 11.1 million as of december 31 , 2019 , an increase of $ 2.0 million compared to december 31 , 2018. the increase primarily related to one agricultural relationship comprised of four notes totaling $ 1.8 million with no specific reserve , one agricultural relationship comprised of three notes totaling $ 555,000 with no specific reserve , one mixed relationship comprised of eight notes totaling $ 4.2 million with no specific reserve , and one mixed relationship comprised Narrative : liquidity liquidity refers to the measure of our ability to meet the cash flow requirements of depositors and borrowers , while at the same time meeting our operating , capital and strategic cash flow needs , all at a reasonable cost . we continuously monitor our liquidity position to ensure that assets and liabilities are managed in a manner that will meet all short-term and long-term cash requirements . we manage our liquidity position to meet the daily cash flow needs of customers , while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of our shareholders . 47 our liquidity position is supported by management of liquid assets and access to alternative sources of funds . our liquid assets include cash , interest-bearing deposits in correspondent banks and fed funds sold . other available sources of liquidity include wholesale deposits and borrowings from correspondent banks and fhlb advances . our short-term and long-term liquidity requirements are primarily met through cash flow from operations , redeployment of prepaying and maturing balances in our loan portfolios , and increases in customer deposits . other alternative sources of funds will supplement these primary sources to the extent necessary to meet additional liquidity requirements on either a short-term or long-term basis . as of december 31 , 2020 , we had no unsecured fed funds lines with correspondent depository institutions with no amounts advanced . in addition , based on the values of loans pledged as collateral , we had borrowing availability with the fhlb of $ 64.8 million as of december 31 , 2020 and $ 71.7 million as of december 31 , 2019. capital requirements the bank is subject to various regulatory capital requirements administered by the federal and state banking regulators . failure to meet regulatory capital requirements may result in certain mandatory and possible additional discretionary actions by regulators that , if undertaken , could have a direct material effect on our financial statements .

over the last three years , abbott 's operating margin was impacted by several factors . in 2017 , abbott 's operating margin decreased by approximately 900 basis points primarily due to costs associated with the acquisitions , including higher intangible amortization expense , inventory step-up amortization and integration costs , partially offset by operating margin improvement across various businesses . in 2016 and 2015 , abbott expanded its operating margin by approximately 120 basis points per year primarily due to margin improvement in the nutritional and diagnostics businesses . in abbott 's worldwide nutritional products business , sales over the last three years were positively impacted by demographics such as an aging population and an increasing rate of chronic disease in developed markets and the rise of a middle class in many emerging markets , as well as by numerous new product introductions that leveraged abbott 's strong brands . these positive factors were offset by challenging conditions in various markets over the last three years . in 2017 , the nutritionals business experienced growth in the u.s. due to above-market performance in abbott 's infant and toddler brands , including pediasure® , pedialyte® and similac® . increased 2017 sales in china and india were partially offset by challenging market conditions in the infant formula market in various emerging markets . with respect to the profitability of the nutritional products business , manufacturing and distribution process changes , as well as other cost reductions drove margin improvements across the business over the last three years although such improvements were offset by increased commodity costs in 2017. the decrease in operating margins for this business from 25.0 percent of sales in 2015 to 22.9 percent in 2017 was almost entirely due to the negative impact of foreign exchange . in abbott 's worldwide diagnostics business , sales growth over the last three years reflected the acquisition of alere in october of 2017 , as well as continued market penetration by the core laboratory business in the u.s. and china , and growth in other emerging markets . in addition , the point of care diagnostics business experienced sales growth led by the continued adoption of abbott 's i-stat® handheld system . worldwide diagnostic sales increased 16.7 percent in 2017 and 5.5 percent in 2016 , excluding the impact of foreign exchange . excluding the impact of the alere acquisition , as well as the impact of foreign exchange , sales in the diagnostics products segment increased 5.5 percent in 2017. in 2017 , abbott continued the international roll-out of its recently launched alinity systems for the core laboratory , including `` alinity c `` for clinical chemistry , `` alinity i `` for immunoassay diagnostics and `` alinity s `` for blood and plasma screening . in the fourth quarter of 2017 , abbott received fda approval in the u.s. for the `` alinity c `` and `` alinity i `` instruments for clinical chemistry and immunoassay diagnostics . alinity is an integrated family of next-generation diagnostic systems and solutions which are designed to increase efficiency by running more tests in less space , generating test results faster and minimizing human errors while continuing to provide quality results . margin improvement continued to be a key focus for the diagnostics business in 2017 although such improvements were partially offset by the negative impact of foreign exchange . operating margins increased from 25.2 percent of sales in 2015 to 26.1 percent in 2017 as the business continued to execute on efficiency initiatives in the manufacturing and supply chain functions . the established pharmaceutical products segment focuses on the sale of its products in emerging markets after the sale of its developed markets business to mylan on february 27 , 2015. excluding the impact of foreign exchange , established pharmaceutical sales from continuing operations increased 9.5 percent in 2017 and 10.5 percent in 2016. the sales increase in 2017 was driven by double-digit growth in china and various countries in latin america . operating margins increased from 17.7 percent of sales in 2015 to 19.8 percent in 2017. since the beginning of the first quarter of 2017 , the results of abbott 's cardiovascular and neuromodulation products segment includes abbott 's historical vascular products segment and 23 st. jude medical from the date of acquisition . excluding the impact of foreign exchange , sales in the cardiovascular and neuromodulation products segment increased 207.4 percent in 2017 and 4.5 percent in 2016. the sales increase in 2017 was driven by the acquisition of st. jude medical . excluding the impact of the acquisition , as well as the impact of foreign exchange , sales in the cardiovascular and neuromodulation products segment were essentially unchanged in 2017 versus the prior year . in 2017 , higher structural heart and endovascular sales were offset by lower coronary stent sales and the comparison impact from the favorable 2016 resolution of a third-party royalty agreement . in 2016 , sales growth was driven by double-digit growth in abbott 's sales of its mitraclip structural heart device for the treatment of mitral regurgitation , as well as endovascular franchise sales growth . these increases were partially offset by pricing pressures primarily related to drug-eluting stents ( des ) and lower market share for abbott 's xience des franchise in certain geographies . in 2017 , operating earnings for this segment increased over 160 percent ; the operating margin profile declined from 38.0 percent of sales in 2015 to 30.5 percent in 2017 primarily due to the mix of business resulting from the acquisition of st. jude medical and ongoing pricing pressures in the coronary business . in 2017 , abbott obtained regulatory approval for various products in addition to the approvals described above in the diagnostics business . story_separator_special_tag accordingly , abbott is often initially unable to develop a best estimate of loss , and therefore the minimum amount , which could be zero , is recorded . as information becomes known , either the minimum loss amount is increased , resulting in additional loss provisions , or a best estimate can be made , also resulting in additional loss provisions . occasionally , a best estimate amount is changed to a lower amount when events result in an expectation of a more favorable outcome than previously expected . abbott estimates the range of possible loss to be from approximately $ 115 million to $ 160 million for its legal proceedings and environmental exposures . accruals of approximately $ 135 million have been recorded at december 31 , 2017 for these proceedings and exposures . these accruals represent management 's best estimate of probable loss , as defined by fasb asc no . 450 , `` contingencies . `` 27 results of operations sales the following table details the components of sales growth by reportable segment for the last two years : replace_table_token_3_th the increase in total net sales in 2017 reflects the acquisitions of st. jude medical and alere , as well as organic growth in the established pharmaceuticals and diagnostics businesses . the increase in 2016 reflects unit growth , partially offset by the impact of unfavorable foreign exchange . the price declines related to the cardiovascular and neuromodulation products segment in 2017 and 2016 primarily reflect pricing pressure on drug eluting stents ( des ) as a result of market competition in the u.s. and other major markets . 28 a comparison of significant product and product group sales is as follows . percent changes are versus the prior year and are based on unrounded numbers . replace_table_token_4_th n/m = percent change is not meaningful . replace_table_token_5_th note : in order to compute results excluding the impact of exchange rates , current year u.s. dollar sales are multiplied or divided , as appropriate , by the current year average foreign exchange rates and then those amounts are multiplied or divided , as appropriate , by the prior year average foreign exchange rates . 29 total established pharmaceutical products sales increased 9.5 percent in 2017 and 10.5 percent in 2016 , excluding the impact of foreign exchange . the established pharmaceutical products segment is focused on several key emerging markets including india , russia , china and brazil . excluding the impact of foreign exchange , total sales in these key emerging markets increased 11.9 percent in 2017 and 13.3 percent in 2016. excluding the impact of foreign exchange , 2017 sales in several geographies including china and various countries in latin america experienced double-digit growth . excluding the impact of foreign exchange , sales in established pharmaceuticals ' other emerging markets increased 2.2 percent in 2017 and increased 2.0 percent in 2016. the 2017 sales growth for established pharmaceuticals ' other emerging markets includes the unfavorable impact of venezuelan operations . excluding venezuela and the effect of foreign exchange , sales in other emerging markets increased 7.5 percent . total nutritional products sales increased 0.6 percent in 2017 and 1.2 percent in 2016 , excluding the unfavorable impact of foreign exchange . in abbott 's international pediatric nutritional business , the 2017 decrease in sales was driven by challenging market conditions in the infant formula market in various emerging markets , partially offset by growth in china and india . the 2017 growth in china reflects a partial recovery from the 2016 sales decline in china . the 2016 decrease in sales was driven by challenging market conditions in china , including the impact of new food safety regulations , which contributed to an oversupply of product in the market . the 2016 sales decrease in china was partially offset by strong performance in several markets across latin america and southeast asia . the increases in u.s. pediatric nutritional 2017 and 2016 sales primarily reflect continued above-market performance in abbott 's infant and toddler brands , including pediasure® , pedialyte® and similac® . excluding the unfavorable impact of foreign exchange , the 2017 and 2016 increases in international adult nutritional sales are due primarily to growth in ensure® , abbott 's market-leading complete and balanced nutrition brand , as well as volume growth in emerging markets and continued expansion of the adult nutrition category internationally . u.s. adult nutritional revenues decreased in 2017 due to competitive and market dynamics , while sales increased in 2016 driven by the growth of ensure® sales . total diagnostic products sales increased 16.7 percent in 2017 and 5.5 percent in 2016 , excluding the impact of foreign exchange . the sales increase in 2017 included the acquisition of alere , which was completed on october 3 , 2017. excluding the impact of the acquisition , as well as the impact of foreign exchange , sales in the diagnostics products segment increased 5.5 percent primarily driven by share gains in the core laboratory markets globally , as well as strong performance in point of care led by the continued adoption of abbott 's i-stat® handheld system . the 2016 sales increase was primarily driven by share gains in the core laboratory and point of care markets in the u.s. and internationally . excluding the effect of foreign exchange , total cardiovascular and neuromodulation products sales grew 207.4 percent in 2017 and 4.5 percent in 2016. the sales increase in 2017 was primarily driven by the acquisition of st. jude medical which was completed on january 4 , 2017. excluding the impact of the acquisition , as well as the impact of foreign exchange , sales in the vascular business were essentially flat in 2017 versus the prior year as lower coronary stent sales and the comparison impact from the favorable 2016 resolution of a third-party royalty agreement were offset by higher structural heart and endovascular sales . in 2016 , double-digit

debt and capital at december 31 , 2017 , abbott 's long-term debt rating was bbb by standard & poor 's corporation and baa3 by moody 's investors service ( moody 's ) . in february 2018 , moody 's raised abbott 's rating to baa2 with a positive outlook . abbott expects to maintain an investment grade rating . abbott is committed to reducing its debt levels following the recent acquisitions of st. jude medical and alere . on february 16 , 2018 , the board of directors authorized the redemption of up to $ 5 billion of currently outstanding long-term notes in addition to the $ 3.95 billion repaid in january 2018 discussed below . abbott has readily available financial resources , including lines of credit of $ 5.0 billion which expire in 2019. these lines of credit are part of a 2014 revolving credit agreement that provides abbott with the ability to borrow up to $ 5 billion on an unsecured basis . prior to october 3 , 2017 , no amounts were previously drawn under the revolving credit agreement . on october 3 , 2017 , in connection with the alere acquisition , abbott borrowed $ 1.7 billion under these lines of credit . these borrowings were due to be repaid in july 2019 and bore interest based on a eurodollar rate , plus an applicable margin based on abbott 's credit ratings . in the fourth quarter of 2017 , abbott paid off $ 550 million of these borrowings . on january 5 , 2018 , abbott paid off the remaining balance under these lines of credit ahead of the 2019 due date . on july 31 , 2017 , abbott entered into a 5-year term loan agreement that allowed abbott to borrow up to $ 2.8 billion on an unsecured basis for the acquisition of alere . on october 3 , 2017 , abbott borrowed $ 2.8 billion under this term loan agreement to finance the acquisition of alere , to repay certain indebtedness of abbott and alere , and to pay fees and expenses in connection with the acquisition .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. over the last three years , abbott 's operating margin was impacted by several factors . in 2017 , abbott 's operating margin decreased by approximately 900 basis points primarily due to costs associated with the acquisitions , including higher intangible amortization expense , inventory step-up amortization and integration costs , partially offset by operating margin improvement across various businesses . in 2016 and 2015 , abbott expanded its operating margin by approximately 120 basis points per year primarily due to margin improvement in the nutritional and diagnostics businesses . in abbott 's worldwide nutritional products business , sales over the last three years were positively impacted by demographics such as an aging population and an increasing rate of chronic disease in developed markets and the rise of a middle class in many emerging markets , as well as by numerous new product introductions that leveraged abbott 's strong brands . these positive factors were offset by challenging conditions in various markets over the last three years . in 2017 , the nutritionals business experienced growth in the u.s. due to above-market performance in abbott 's infant and toddler brands , including pediasure® , pedialyte® and similac® . increased 2017 sales in china and india were partially offset by challenging market conditions in the infant formula market in various emerging markets . with respect to the profitability of the nutritional products business , manufacturing and distribution process changes , as well as other cost reductions drove margin improvements across the business over the last three years although such improvements were offset by increased commodity costs in 2017. the decrease in operating margins for this business from 25.0 percent of sales in 2015 to 22.9 percent in 2017 was almost entirely due to the negative impact of foreign exchange . in abbott 's worldwide diagnostics business , sales growth over the last three years reflected the acquisition of alere in october of 2017 , as well as continued market penetration by the core laboratory business in the u.s. and china , and growth in other emerging markets . in addition , the point of care diagnostics business experienced sales growth led by the continued adoption of abbott 's i-stat® handheld system . worldwide diagnostic sales increased 16.7 percent in 2017 and 5.5 percent in 2016 , excluding the impact of foreign exchange . excluding the impact of the alere acquisition , as well as the impact of foreign exchange , sales in the diagnostics products segment increased 5.5 percent in 2017. in 2017 , abbott continued the international roll-out of its recently launched alinity systems for the core laboratory , including `` alinity c `` for clinical chemistry , `` alinity i `` for immunoassay diagnostics and `` alinity s `` for blood and plasma screening . in the fourth quarter of 2017 , abbott received fda approval in the u.s. for the `` alinity c `` and `` alinity i `` instruments for clinical chemistry and immunoassay diagnostics . alinity is an integrated family of next-generation diagnostic systems and solutions which are designed to increase efficiency by running more tests in less space , generating test results faster and minimizing human errors while continuing to provide quality results . margin improvement continued to be a key focus for the diagnostics business in 2017 although such improvements were partially offset by the negative impact of foreign exchange . operating margins increased from 25.2 percent of sales in 2015 to 26.1 percent in 2017 as the business continued to execute on efficiency initiatives in the manufacturing and supply chain functions . the established pharmaceutical products segment focuses on the sale of its products in emerging markets after the sale of its developed markets business to mylan on february 27 , 2015. excluding the impact of foreign exchange , established pharmaceutical sales from continuing operations increased 9.5 percent in 2017 and 10.5 percent in 2016. the sales increase in 2017 was driven by double-digit growth in china and various countries in latin america . operating margins increased from 17.7 percent of sales in 2015 to 19.8 percent in 2017. since the beginning of the first quarter of 2017 , the results of abbott 's cardiovascular and neuromodulation products segment includes abbott 's historical vascular products segment and 23 st. jude medical from the date of acquisition . excluding the impact of foreign exchange , sales in the cardiovascular and neuromodulation products segment increased 207.4 percent in 2017 and 4.5 percent in 2016. the sales increase in 2017 was driven by the acquisition of st. jude medical . excluding the impact of the acquisition , as well as the impact of foreign exchange , sales in the cardiovascular and neuromodulation products segment were essentially unchanged in 2017 versus the prior year . in 2017 , higher structural heart and endovascular sales were offset by lower coronary stent sales and the comparison impact from the favorable 2016 resolution of a third-party royalty agreement . in 2016 , sales growth was driven by double-digit growth in abbott 's sales of its mitraclip structural heart device for the treatment of mitral regurgitation , as well as endovascular franchise sales growth . these increases were partially offset by pricing pressures primarily related to drug-eluting stents ( des ) and lower market share for abbott 's xience des franchise in certain geographies . in 2017 , operating earnings for this segment increased over 160 percent ; the operating margin profile declined from 38.0 percent of sales in 2015 to 30.5 percent in 2017 primarily due to the mix of business resulting from the acquisition of st. jude medical and ongoing pricing pressures in the coronary business . in 2017 , abbott obtained regulatory approval for various products in addition to the approvals described above in the diagnostics business . story_separator_special_tag accordingly , abbott is often initially unable to develop a best estimate of loss , and therefore the minimum amount , which could be zero , is recorded . as information becomes known , either the minimum loss amount is increased , resulting in additional loss provisions , or a best estimate can be made , also resulting in additional loss provisions . occasionally , a best estimate amount is changed to a lower amount when events result in an expectation of a more favorable outcome than previously expected . abbott estimates the range of possible loss to be from approximately $ 115 million to $ 160 million for its legal proceedings and environmental exposures . accruals of approximately $ 135 million have been recorded at december 31 , 2017 for these proceedings and exposures . these accruals represent management 's best estimate of probable loss , as defined by fasb asc no . 450 , `` contingencies . `` 27 results of operations sales the following table details the components of sales growth by reportable segment for the last two years : replace_table_token_3_th the increase in total net sales in 2017 reflects the acquisitions of st. jude medical and alere , as well as organic growth in the established pharmaceuticals and diagnostics businesses . the increase in 2016 reflects unit growth , partially offset by the impact of unfavorable foreign exchange . the price declines related to the cardiovascular and neuromodulation products segment in 2017 and 2016 primarily reflect pricing pressure on drug eluting stents ( des ) as a result of market competition in the u.s. and other major markets . 28 a comparison of significant product and product group sales is as follows . percent changes are versus the prior year and are based on unrounded numbers . replace_table_token_4_th n/m = percent change is not meaningful . replace_table_token_5_th note : in order to compute results excluding the impact of exchange rates , current year u.s. dollar sales are multiplied or divided , as appropriate , by the current year average foreign exchange rates and then those amounts are multiplied or divided , as appropriate , by the prior year average foreign exchange rates . 29 total established pharmaceutical products sales increased 9.5 percent in 2017 and 10.5 percent in 2016 , excluding the impact of foreign exchange . the established pharmaceutical products segment is focused on several key emerging markets including india , russia , china and brazil . excluding the impact of foreign exchange , total sales in these key emerging markets increased 11.9 percent in 2017 and 13.3 percent in 2016. excluding the impact of foreign exchange , 2017 sales in several geographies including china and various countries in latin america experienced double-digit growth . excluding the impact of foreign exchange , sales in established pharmaceuticals ' other emerging markets increased 2.2 percent in 2017 and increased 2.0 percent in 2016. the 2017 sales growth for established pharmaceuticals ' other emerging markets includes the unfavorable impact of venezuelan operations . excluding venezuela and the effect of foreign exchange , sales in other emerging markets increased 7.5 percent . total nutritional products sales increased 0.6 percent in 2017 and 1.2 percent in 2016 , excluding the unfavorable impact of foreign exchange . in abbott 's international pediatric nutritional business , the 2017 decrease in sales was driven by challenging market conditions in the infant formula market in various emerging markets , partially offset by growth in china and india . the 2017 growth in china reflects a partial recovery from the 2016 sales decline in china . the 2016 decrease in sales was driven by challenging market conditions in china , including the impact of new food safety regulations , which contributed to an oversupply of product in the market . the 2016 sales decrease in china was partially offset by strong performance in several markets across latin america and southeast asia . the increases in u.s. pediatric nutritional 2017 and 2016 sales primarily reflect continued above-market performance in abbott 's infant and toddler brands , including pediasure® , pedialyte® and similac® . excluding the unfavorable impact of foreign exchange , the 2017 and 2016 increases in international adult nutritional sales are due primarily to growth in ensure® , abbott 's market-leading complete and balanced nutrition brand , as well as volume growth in emerging markets and continued expansion of the adult nutrition category internationally . u.s. adult nutritional revenues decreased in 2017 due to competitive and market dynamics , while sales increased in 2016 driven by the growth of ensure® sales . total diagnostic products sales increased 16.7 percent in 2017 and 5.5 percent in 2016 , excluding the impact of foreign exchange . the sales increase in 2017 included the acquisition of alere , which was completed on october 3 , 2017. excluding the impact of the acquisition , as well as the impact of foreign exchange , sales in the diagnostics products segment increased 5.5 percent primarily driven by share gains in the core laboratory markets globally , as well as strong performance in point of care led by the continued adoption of abbott 's i-stat® handheld system . the 2016 sales increase was primarily driven by share gains in the core laboratory and point of care markets in the u.s. and internationally . excluding the effect of foreign exchange , total cardiovascular and neuromodulation products sales grew 207.4 percent in 2017 and 4.5 percent in 2016. the sales increase in 2017 was primarily driven by the acquisition of st. jude medical which was completed on january 4 , 2017. excluding the impact of the acquisition , as well as the impact of foreign exchange , sales in the vascular business were essentially flat in 2017 versus the prior year as lower coronary stent sales and the comparison impact from the favorable 2016 resolution of a third-party royalty agreement were offset by higher structural heart and endovascular sales . in 2016 , double-digit Narrative : debt and capital at december 31 , 2017 , abbott 's long-term debt rating was bbb by standard & poor 's corporation and baa3 by moody 's investors service ( moody 's ) . in february 2018 , moody 's raised abbott 's rating to baa2 with a positive outlook . abbott expects to maintain an investment grade rating . abbott is committed to reducing its debt levels following the recent acquisitions of st. jude medical and alere . on february 16 , 2018 , the board of directors authorized the redemption of up to $ 5 billion of currently outstanding long-term notes in addition to the $ 3.95 billion repaid in january 2018 discussed below . abbott has readily available financial resources , including lines of credit of $ 5.0 billion which expire in 2019. these lines of credit are part of a 2014 revolving credit agreement that provides abbott with the ability to borrow up to $ 5 billion on an unsecured basis . prior to october 3 , 2017 , no amounts were previously drawn under the revolving credit agreement . on october 3 , 2017 , in connection with the alere acquisition , abbott borrowed $ 1.7 billion under these lines of credit . these borrowings were due to be repaid in july 2019 and bore interest based on a eurodollar rate , plus an applicable margin based on abbott 's credit ratings . in the fourth quarter of 2017 , abbott paid off $ 550 million of these borrowings . on january 5 , 2018 , abbott paid off the remaining balance under these lines of credit ahead of the 2019 due date . on july 31 , 2017 , abbott entered into a 5-year term loan agreement that allowed abbott to borrow up to $ 2.8 billion on an unsecured basis for the acquisition of alere . on october 3 , 2017 , abbott borrowed $ 2.8 billion under this term loan agreement to finance the acquisition of alere , to repay certain indebtedness of abbott and alere , and to pay fees and expenses in connection with the acquisition .

we approved more than 4,700 lots in the fourth quarter alone , up over 200 % from the same quarter in the prior year . as a result of this robust lot approval activity , our year-end supply of lots controlled exceeded 27,000 , which was our highest level in more than a decade . at the end of 2019 , our financial position remained strong , as evidenced by total liquidity of $ 1.51 billion and a year-over-year decrease in our debt-to-capital ratio . already in 2020 , we have focused on further improvement to our balance sheet through the issuance of $ 300 million of 10-year senior notes at a rate of 3.850 % , which is the lowest rate for any senior note issuance in our company 's history . with strong capital resources available , we remain focused on taking steps to drive the continued growth of our business , with a goal of driving our active community count higher for a third consecutive year in 2020 . * see “ forward-looking statements ” above . 17 homebuilding pretax income ( loss ) replace_table_token_5_th n/m – not meaningful homebuilding pretax income for 2019 was $ 244.8 million , an increase of $ 27.3 million from $ 217.5 million for the year ended december 31 , 2018. the increase was primarily attributable to a 7 % increase in home sale revenues as well as a 50 basis point improvement in gross margin from home sales . our west segment experienced a $ 34.2 million year-over-year improvement in pretax income , primarily due to a 13 % increase in home sale revenues and an improved gross margin . our mountain segment experienced a $ 1.6 million increase in pretax income from the prior year , primarily due to a 5 % increase in home sale revenues , which was partially offset by increased marketing expenses driven by a higher average active community count . our east segment experienced a $ 2.8 million decrease in pretax income from the prior year , mainly due to a 9 % decrease in home sale revenues . our corporate segment experienced a $ 5.8 million increase in pretax loss , due mostly to a year-over-year increase in stock-based compensation expense associated with performance-based equity awards that were granted in 2017 and 2018. assets replace_table_token_6_th total homebuilding assets increased 10 % from december 31 , 2018 to december 31 , 2019. increases in each of our homebuilding segments were the result of increases in our inventory balances . these increases were driven by a greater number of lots acquired during 2019 than those delivered to homebuyers during the year as well as an increase in homes completed or under construction as of year-end . the increase in our corporate segment was the result of the adoption of accounting standards update ( “ asu ” ) 2016-02 , leases on january 1 , 2019 , which requires a lessee to recognize a right-of-use asset and a corresponding lease liability , primarily related to our corporate office . 18 new home deliveries & home sale revenues : changes in home sale revenues are impacted by changes in the number of new homes delivered and the average selling price of those delivered homes . commentary for each of our segments on significant changes in these two metrics is provided below . replace_table_token_7_th replace_table_token_8_th west segment commentary for the year ended december 31 , 2019 , the increase in new home deliveries was the result of a 5 % increase in the number of homes in backlog to begin the year along with a year-over-year increase in net new orders in all of our western markets resulting in increased deliveries in the second half of 2019. the average selling price of homes delivered decreased as a result of a decline in the percentage of deliveries coming from our higher priced communities in southern california . in addition , a greater percentage of closings within all of our western markets during the current year were from our more affordable product offerings . mountain segment commentary for the year ended december 31 , 2019 , new home deliveries increased 6 % driven by improved backlog conversion rates in our colorado markets and an increase in net new orders in each of our mountain markets resulting in increased deliveries in the second half of 2019. backlog conversion rates in colorado benefited from cycle time improvements as a result of ( 1 ) an increase in the percentage of seasons tm deliveries , which have some of the shortest cycle times of all of our product offerings and ( 2 ) improved cycle times across all of our product offerings in these markets . these improvements in net new orders and backlog conversion were partially offset by a 17 % decrease in homes in backlog to begin the year . east segment commentary for the year ended december 31 , 2019 , the decrease in the average selling price of homes delivered in our east segment was due to a change in mix resulting from ( 1 ) a higher percentage of our deliveries coming from our florida markets , which have a lower average selling price than our mid-atlantic market and ( 2 ) a higher percentage of deliveries in this segment coming from communities that offer more affordable home plans . the increase in new home deliveries was driven by a year-over-year increase in net new orders in all of our east markets resulting in increased deliveries in the second half of 2019 as well as shorter cycle times as a higher percentage of our deliveries were from our more affordable product offerings . these improvements in backlog conversion and net new orders were partially offset by a 19 % decrease in homes in backlog to begin the year . story_separator_special_tag we expect that the obligations secured by these performance bonds and letters of credit generally will be performed in the ordinary course of business and in accordance with the applicable contractual terms . to the extent that the obligations are performed , the related performance bonds and letters of credit should be released and we should not have any continuing obligations . however , in the event any such performance bonds or letters of credit are called , our indemnity obligations could require us to reimburse the issuer of the performance bond or letter of credit . we have made no material guarantees with respect to third-party obligations . contractual obligations the table below summarizes our known contractual obligations at december 31 , 2019. replace_table_token_22_th ( 1 ) the table above excludes $ 149.6 million of mortgage loans that we are obligated to repurchase under our mortgage repurchase facility since it is not long-term indebtedness . additionally , there were outstanding performance bonds and letters of credit totaling approximately $ 264.0 million and $ 98.7 million , respectively , at december 31 , 2019 , which have been excluded from the table above due to the uncertainty as to whether any payments may be made . 31 critical accounting estimates and policies the preparation of financial statements in conformity with accounting policies generally accepted in the united states of america requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period . management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances , the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources . management evaluates such estimates and judgments on an on-going basis and makes adjustments as deemed necessary . actual results could differ from these estimates if conditions are significantly different in the future . see “ forward-looking statements ” above . listed below are those estimates and policies that we believe are critical and require the use of complex judgment in their application . our critical accounting estimates and policies are as follows and should be read in conjunction with the notes to our consolidated financial statements . homebuilding inventory valuation . refer to note 1 , summary of significant accounting policies , in the notes to the financial statements for information on the composition of the inventory balances . in accordance with accounting standards codification ( “ asc ” ) topic 360 , property , plant , and equipment ( “ asc 360 ” ) , homebuilding inventories , excluding those classified as held for sale , are carried at cost unless events and circumstances indicate that the carrying value of the underlying subdivision may not be recoverable . we evaluate inventories for impairment at each quarter end on a subdivision level basis as each such subdivision represents the lowest level of identifiable cash flows . in making this determination , we review , among other things , the following for each subdivision : actual and trending “ operating margin ” ( which is defined as home sale revenues less home cost of sales and all incremental costs associated directly with the subdivision , including sales commissions and marketing costs ) ; estimated future undiscounted cash flows and operating margin ; forecasted operating margin for homes in backlog ; actual and trending net home orders ; homes available for sale ; market information for each sub-market , including competition levels , home foreclosure levels , the size and style of homes currently being offered for sale and lot size ; and known or probable events indicating that the carrying value may not be recoverable . if events or circumstances indicate that the carrying value of our inventory may not be recoverable , assets are reviewed for impairment by comparing the undiscounted estimated future cash flows from an individual subdivision ( including capitalized interest ) to its carrying value . we generally determine the estimated fair value of each subdivision by determining the present value of the estimated future cash flows at discount rates , which are level 3 inputs ( see note 7 , fair value measurements , in the notes to the financial statements for definitions of fair value inputs ) , that are commensurate with the risk of the subdivision under evaluation . the evaluation for the recoverability of the carrying value of the assets for each individual subdivision can be impacted significantly by our estimates of future home sale revenues , home construction costs , and development costs per home , all of which are level 3 inputs . these estimates of undiscounted future cash flows are dependent on specific market or sub-market conditions for each subdivision . while we consider available information to determine what we believe to be our best estimates as of the end of a reporting period , these estimates are subject to change in future reporting periods as facts and circumstances change . local market-specific conditions that may impact these estimates for a subdivision include : historical subdivision results , and actual and trending operating margin , base selling prices and home sales incentives ; forecasted operating margin for homes in backlog ; the intensity of competition within a market or sub-market , including publicly available home sales prices and home sales incentives offered by our competitors ; increased levels of home foreclosures ; the current sales pace for active subdivisions ; subdivision specific attributes , such as location , availability and size of lots in the sub-market , desirability and uniqueness of subdivision location and the size and style of homes currently being offered ; potential for alternative home styles to respond to local market conditions ; changes by management in the sales

capital resources our capital structure is primarily a combination of ( 1 ) permanent financing , represented by stockholders ' equity ; ( 2 ) long-term financing , represented by our 5.625 % senior notes due 2020 , 5.500 % senior notes due 2024 and our 6.000 % senior notes due 2043 ; ( 3 ) our revolving credit facility and ( 4 ) our mortgage repurchase facility . on january 9 , 2020 , we completed an offering of $ 300 million of 3.850 % senior notes due january 2030 ( see note 24 , subsequent events , in the notes to the financial statements for further discussion ) . because of our current balance of cash , cash equivalents , marketable securities , ability to access the capital markets , and available capacity under both our revolving credit facility and mortgage repurchase facility , we believe that our capital resources are adequate to satisfy our short and long-term capital requirements , including meeting future payments on our senior notes as they become due . see “ forward-looking statements ” above . we may from time to time seek to retire or purchase our outstanding senior notes through cash purchases , whether through open market purchases , privately negotiated transactions or otherwise . such repurchases , if any , will depend on prevailing market conditions , our liquidity requirements , contractual restrictions and other factors . the amounts involved may be material . senior notes , revolving credit facility and mortgage repurchase facility senior notes . our senior notes are not secured and , while the senior note indentures contain some restrictions on secured debt and other transactions , they do not contain financial covenants . our senior notes are fully and unconditionally guaranteed on an unsecured basis , jointly and severally , by most of our homebuilding segment subsidiaries . we believe that we are in compliance with the representations , warranties and covenants in the senior note indentures . revolving credit facility . we have an unsecured revolving credit agreement ( “ revolving credit facility ” ) with a group of lenders , which may be used for general corporate purposes .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we approved more than 4,700 lots in the fourth quarter alone , up over 200 % from the same quarter in the prior year . as a result of this robust lot approval activity , our year-end supply of lots controlled exceeded 27,000 , which was our highest level in more than a decade . at the end of 2019 , our financial position remained strong , as evidenced by total liquidity of $ 1.51 billion and a year-over-year decrease in our debt-to-capital ratio . already in 2020 , we have focused on further improvement to our balance sheet through the issuance of $ 300 million of 10-year senior notes at a rate of 3.850 % , which is the lowest rate for any senior note issuance in our company 's history . with strong capital resources available , we remain focused on taking steps to drive the continued growth of our business , with a goal of driving our active community count higher for a third consecutive year in 2020 . * see “ forward-looking statements ” above . 17 homebuilding pretax income ( loss ) replace_table_token_5_th n/m – not meaningful homebuilding pretax income for 2019 was $ 244.8 million , an increase of $ 27.3 million from $ 217.5 million for the year ended december 31 , 2018. the increase was primarily attributable to a 7 % increase in home sale revenues as well as a 50 basis point improvement in gross margin from home sales . our west segment experienced a $ 34.2 million year-over-year improvement in pretax income , primarily due to a 13 % increase in home sale revenues and an improved gross margin . our mountain segment experienced a $ 1.6 million increase in pretax income from the prior year , primarily due to a 5 % increase in home sale revenues , which was partially offset by increased marketing expenses driven by a higher average active community count . our east segment experienced a $ 2.8 million decrease in pretax income from the prior year , mainly due to a 9 % decrease in home sale revenues . our corporate segment experienced a $ 5.8 million increase in pretax loss , due mostly to a year-over-year increase in stock-based compensation expense associated with performance-based equity awards that were granted in 2017 and 2018. assets replace_table_token_6_th total homebuilding assets increased 10 % from december 31 , 2018 to december 31 , 2019. increases in each of our homebuilding segments were the result of increases in our inventory balances . these increases were driven by a greater number of lots acquired during 2019 than those delivered to homebuyers during the year as well as an increase in homes completed or under construction as of year-end . the increase in our corporate segment was the result of the adoption of accounting standards update ( “ asu ” ) 2016-02 , leases on january 1 , 2019 , which requires a lessee to recognize a right-of-use asset and a corresponding lease liability , primarily related to our corporate office . 18 new home deliveries & home sale revenues : changes in home sale revenues are impacted by changes in the number of new homes delivered and the average selling price of those delivered homes . commentary for each of our segments on significant changes in these two metrics is provided below . replace_table_token_7_th replace_table_token_8_th west segment commentary for the year ended december 31 , 2019 , the increase in new home deliveries was the result of a 5 % increase in the number of homes in backlog to begin the year along with a year-over-year increase in net new orders in all of our western markets resulting in increased deliveries in the second half of 2019. the average selling price of homes delivered decreased as a result of a decline in the percentage of deliveries coming from our higher priced communities in southern california . in addition , a greater percentage of closings within all of our western markets during the current year were from our more affordable product offerings . mountain segment commentary for the year ended december 31 , 2019 , new home deliveries increased 6 % driven by improved backlog conversion rates in our colorado markets and an increase in net new orders in each of our mountain markets resulting in increased deliveries in the second half of 2019. backlog conversion rates in colorado benefited from cycle time improvements as a result of ( 1 ) an increase in the percentage of seasons tm deliveries , which have some of the shortest cycle times of all of our product offerings and ( 2 ) improved cycle times across all of our product offerings in these markets . these improvements in net new orders and backlog conversion were partially offset by a 17 % decrease in homes in backlog to begin the year . east segment commentary for the year ended december 31 , 2019 , the decrease in the average selling price of homes delivered in our east segment was due to a change in mix resulting from ( 1 ) a higher percentage of our deliveries coming from our florida markets , which have a lower average selling price than our mid-atlantic market and ( 2 ) a higher percentage of deliveries in this segment coming from communities that offer more affordable home plans . the increase in new home deliveries was driven by a year-over-year increase in net new orders in all of our east markets resulting in increased deliveries in the second half of 2019 as well as shorter cycle times as a higher percentage of our deliveries were from our more affordable product offerings . these improvements in backlog conversion and net new orders were partially offset by a 19 % decrease in homes in backlog to begin the year . story_separator_special_tag we expect that the obligations secured by these performance bonds and letters of credit generally will be performed in the ordinary course of business and in accordance with the applicable contractual terms . to the extent that the obligations are performed , the related performance bonds and letters of credit should be released and we should not have any continuing obligations . however , in the event any such performance bonds or letters of credit are called , our indemnity obligations could require us to reimburse the issuer of the performance bond or letter of credit . we have made no material guarantees with respect to third-party obligations . contractual obligations the table below summarizes our known contractual obligations at december 31 , 2019. replace_table_token_22_th ( 1 ) the table above excludes $ 149.6 million of mortgage loans that we are obligated to repurchase under our mortgage repurchase facility since it is not long-term indebtedness . additionally , there were outstanding performance bonds and letters of credit totaling approximately $ 264.0 million and $ 98.7 million , respectively , at december 31 , 2019 , which have been excluded from the table above due to the uncertainty as to whether any payments may be made . 31 critical accounting estimates and policies the preparation of financial statements in conformity with accounting policies generally accepted in the united states of america requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period . management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances , the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources . management evaluates such estimates and judgments on an on-going basis and makes adjustments as deemed necessary . actual results could differ from these estimates if conditions are significantly different in the future . see “ forward-looking statements ” above . listed below are those estimates and policies that we believe are critical and require the use of complex judgment in their application . our critical accounting estimates and policies are as follows and should be read in conjunction with the notes to our consolidated financial statements . homebuilding inventory valuation . refer to note 1 , summary of significant accounting policies , in the notes to the financial statements for information on the composition of the inventory balances . in accordance with accounting standards codification ( “ asc ” ) topic 360 , property , plant , and equipment ( “ asc 360 ” ) , homebuilding inventories , excluding those classified as held for sale , are carried at cost unless events and circumstances indicate that the carrying value of the underlying subdivision may not be recoverable . we evaluate inventories for impairment at each quarter end on a subdivision level basis as each such subdivision represents the lowest level of identifiable cash flows . in making this determination , we review , among other things , the following for each subdivision : actual and trending “ operating margin ” ( which is defined as home sale revenues less home cost of sales and all incremental costs associated directly with the subdivision , including sales commissions and marketing costs ) ; estimated future undiscounted cash flows and operating margin ; forecasted operating margin for homes in backlog ; actual and trending net home orders ; homes available for sale ; market information for each sub-market , including competition levels , home foreclosure levels , the size and style of homes currently being offered for sale and lot size ; and known or probable events indicating that the carrying value may not be recoverable . if events or circumstances indicate that the carrying value of our inventory may not be recoverable , assets are reviewed for impairment by comparing the undiscounted estimated future cash flows from an individual subdivision ( including capitalized interest ) to its carrying value . we generally determine the estimated fair value of each subdivision by determining the present value of the estimated future cash flows at discount rates , which are level 3 inputs ( see note 7 , fair value measurements , in the notes to the financial statements for definitions of fair value inputs ) , that are commensurate with the risk of the subdivision under evaluation . the evaluation for the recoverability of the carrying value of the assets for each individual subdivision can be impacted significantly by our estimates of future home sale revenues , home construction costs , and development costs per home , all of which are level 3 inputs . these estimates of undiscounted future cash flows are dependent on specific market or sub-market conditions for each subdivision . while we consider available information to determine what we believe to be our best estimates as of the end of a reporting period , these estimates are subject to change in future reporting periods as facts and circumstances change . local market-specific conditions that may impact these estimates for a subdivision include : historical subdivision results , and actual and trending operating margin , base selling prices and home sales incentives ; forecasted operating margin for homes in backlog ; the intensity of competition within a market or sub-market , including publicly available home sales prices and home sales incentives offered by our competitors ; increased levels of home foreclosures ; the current sales pace for active subdivisions ; subdivision specific attributes , such as location , availability and size of lots in the sub-market , desirability and uniqueness of subdivision location and the size and style of homes currently being offered ; potential for alternative home styles to respond to local market conditions ; changes by management in the sales Narrative : capital resources our capital structure is primarily a combination of ( 1 ) permanent financing , represented by stockholders ' equity ; ( 2 ) long-term financing , represented by our 5.625 % senior notes due 2020 , 5.500 % senior notes due 2024 and our 6.000 % senior notes due 2043 ; ( 3 ) our revolving credit facility and ( 4 ) our mortgage repurchase facility . on january 9 , 2020 , we completed an offering of $ 300 million of 3.850 % senior notes due january 2030 ( see note 24 , subsequent events , in the notes to the financial statements for further discussion ) . because of our current balance of cash , cash equivalents , marketable securities , ability to access the capital markets , and available capacity under both our revolving credit facility and mortgage repurchase facility , we believe that our capital resources are adequate to satisfy our short and long-term capital requirements , including meeting future payments on our senior notes as they become due . see “ forward-looking statements ” above . we may from time to time seek to retire or purchase our outstanding senior notes through cash purchases , whether through open market purchases , privately negotiated transactions or otherwise . such repurchases , if any , will depend on prevailing market conditions , our liquidity requirements , contractual restrictions and other factors . the amounts involved may be material . senior notes , revolving credit facility and mortgage repurchase facility senior notes . our senior notes are not secured and , while the senior note indentures contain some restrictions on secured debt and other transactions , they do not contain financial covenants . our senior notes are fully and unconditionally guaranteed on an unsecured basis , jointly and severally , by most of our homebuilding segment subsidiaries . we believe that we are in compliance with the representations , warranties and covenants in the senior note indentures . revolving credit facility . we have an unsecured revolving credit agreement ( “ revolving credit facility ” ) with a group of lenders , which may be used for general corporate purposes .

guidewire implementation teams assist customers in building implementation plans , integrating our software with their existing systems , and defining business rules and specific requirements unique to each customer and installation . to extend our technology leadership position in the global market , we continue to focus on product innovation through our investment in research and development . we continue to invest in guidewire insurancesuite - policycenter , claimcenter and billingcenter . further , we are also investing in new technologies and offerings , such as data management , mobile and portals and hosted analytic applications . these investments complement guidewire insurancesuite and enable our customers to accelerate the pace and impact of their transformation initiatives . new technology and product development is central to our core strategy and our commitment to our customers . our product innovation strategy is critical to our growth and global expansion or otherwise responding to competitive pressures which could limit our ability to capture the global p & c market share . our success depends on our continued ability to develop new or enhanced versions of our existing products to meet evolving customer requirements and enabling successful transformations . we also partner with leading si consulting firms to achieve scalable , cost-effective implementations for our customers . our extensive relationships with sis and industry partners have strengthened and expanded in line with the interest in and adoption of our products . we encourage our partners to co-market , pursue joint sales initiatives and drive broader adoption of our technology , helping us grow our business more efficiently and enabling us to focus our engineering resources on continued innovation and further enhancement of our solutions . our track record of success with customers and their implementations is central to our strategy . we continue to focus and invest time and resources recruiting si partners in new markets and ensuring that all partners are ready to assist with implementing our new products . 29 we face a number of risks in the execution of our strategy including expanding to new markets , lengthy sales cycles , intense competition in the global market , reliance on sales to a relatively small number of large customers , product development , customer buying patterns , and the overall adoption of our products . in response to these risks and factors as well as others we might face , we continue to invest in many areas of our business . our investments in sales and marketing align with our goal of winning new customers in both existing markets and new markets . further , our sales investments also enable us to maintain a persistent , consultative relationship with our existing customers in order to sell new products and solutions . our investments in technology and product development allow us to sell in more markets and address a broader spectrum of customer needs as they embark on transformation initiatives . we will also continue to invest in our consulting services and our si partner ecosystem with a goal of ensuring that all customers are successful in their transformation journey . key business metrics we use certain key metrics to evaluate and manage our business , including rolling four-quarter recurring revenues from term licenses and total maintenance . in addition , we present select gaap and non-gaap financial metrics that we use internally to manage the business and that we believe are useful for investors . these metrics include adjusted ebitda and operating cash flow . four-quarter recurring revenues we measure four-quarter recurring revenues by adding the total term license revenues and total maintenance revenues recognized in the preceding four quarters ended in the stated period and excluding perpetual license revenues , revenues from perpetual buyout rights and services revenues . this metric allows us to better understand the trends in our recurring revenues because it typically reduces the variations in any particular quarter caused by seasonality , the effects of the annual invoicing of our term licenses and certain effects of contractual provisions that may accelerate or delay revenue recognition in some cases . our four-quarter recurring revenues for each of the nine periods presented were : replace_table_token_6_th adjusted ebitda we believe adjusted ebitda , a non-gaap measure , is useful , in addition to other financial measures presented in accordance with gaap , in evaluating our operating performance compared to that of other companies in our industry , as this metric generally eliminates the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance . please refer to item 6 , selected financial data , for further details on why we use this metric and why we believe this metric is useful to our stockholders . the following table provides a reconciliation of net income to adjusted ebitda : replace_table_token_7_th ( 1 ) see note 2 “ change in accounting policy - stock-based compensation ” of notes to consolidated financial statements . 30 operating cash flows we monitor our cash flows from operating activities , or operating cash flows , as a key measure of our overall business performance , which enables us to analyze our financial performance without the effects of certain non-cash items such as depreciation and amortization and stock-based compensation expenses . additionally , operating cash flows takes into account the impact of changes in deferred revenues , which reflects the receipt of cash payment for products before they are recognized as revenues . our operating cash flows are significantly impacted by timing of invoicing and collections of accounts receivable , annual bonus payment , as well as payments of payroll and other taxes . they were also impacted by the payment of a litigation settlement during the three months ended october 31 , 2011. as a result , our operating cash flows fluctuate significantly on a quarterly basis . story_separator_special_tag operating expenses replace_table_token_14_th ( 1 ) see note 2 “ change in accounting policy - stock-based compensation ” of notes to consolidated financial statements . the $ 37.6 million increase in operating expenses was primarily driven by increased personnel-related and operational expenses , including higher stock-based compensation , travel-related costs , marketing programs , professional services costs including consulting , as a result of hiring 46 additional employees during the fiscal year 2014 in these functional areas . we expect all of our operating expense line items to increase in absolute dollars in future periods to support our future growth strategy . research and development the $ 13.2 million increase in research and development expenses was primarily due to an increase of $ 7.1 million in personnel-related expenses as a result of an average of 32 additional employees during the fiscal year 2014 , a $ 3.2 million increase in stock-based compensation and a $ 2.9 million increase in other professional services expenses and operational costs . sales and marketing 37 the $ 20.3 million increase in sales and marketing expenses was primarily due to a $ 9.6 million increase in personnel-related expenses primarily as a result of an average of 52 additional employees during the fiscal year 2014 , a $ 7.1 million increase in stock-based compensation , a $ 1.8 million increase in travel-related costs and marketing programs , and a $ 1.8 million increase in operational costs . general and administrative the $ 4.1 million increase in general and administrative expenses was primarily due to a $ 4.8 million increase in personnel-related expenses primarily as a result of an average of 19 additional employees during the fiscal year 2014 , and a $ 1.6 million increase in stock-based compensation . these increases were offset by a $ 2.3 million decrease in operational costs . other income ( expense ) replace_table_token_15_th * not meaningful interest income , net interest income increased by $ 0.9 million primarily due to higher interest income from the yield earned on the proceeds of our follow-on public offering and the investment of excess cash in the fiscal year 2014. other expense , net other expense increased by $ 0.3 million primarily due to higher currency exchange losses resulting from the u.s. dollar strengthening against the australian dollar , canadian dollar , euro , and british pound during the fiscal year 2014 compared to the fiscal year 2013. provision for income taxes we recognized an income tax provision of $ 5.2 million for the fiscal year 2014 compared to $ 5.5 million for the fiscal year 2013 . our effective income tax rate increased to 26.2 % for the fiscal year 2014 compared to 18.1 % for the fiscal year 2013 , which was primarily due to a decrease in tax credits . comparison of the fiscal years ended july 31 , 2013 and 2012 revenues please refer to note 1 of notes to consolidated financial statements for a description of our accounting policy related to revenue recognition . replace_table_token_16_th license revenues 38 the $ 26.4 million increase in license revenues during the fiscal year 2013 was primarily driven by continued adoption of our policycenter software , increased adoption of our billingcenter and insurancesuite software , and increased sales and marketing efforts in north america and europe . replace_table_token_17_th the $ 38.0 million increase in term license revenues during the fiscal year 2013 was driven by $ 32.0 million of additional revenues recognized during the fiscal year 2013 from new orders , $ 5.8 million of additional revenues recognized upon attainment of the required revenue recognition criteria related to prior year orders during the fiscal year 2013 , and $ 2.7 million of revenues recognized due to timing of invoicing and corresponding due dates . in addition , there was $ 0.9 million of additional revenues recognized when vsoe of fair value of maintenance was established for one customer during the fiscal year 2013. these increases were partially offset by a decrease of $ 2.5 million of revenues recognized due to completion of project implementations in prior periods , and a decrease of $ 1.1 million of revenues recognized for one customer that exercised a perpetual buyout option in the prior period . the $ 11.6 million decrease in perpetual license revenues during the fiscal year 2013 was primarily driven by new customers increasingly signing term license agreements in the current period . this decrease was net of a $ 3.0 million increase in revenues related to new orders , and $ 2.5 million of revenues recognized for one customer from milestone billing upon completion of a project . maintenance revenues the $ 8.0 million increase in maintenance revenues was primarily driven by $ 6.8 million of additional revenues recognized from new and existing orders , and $ 1.1 million of revenues recognized upon attainment of the required revenue recognition criteria related to prior year orders during the period . services revenues the $ 34.1 million increase in services revenues was primarily driven by an additional $ 29.4 million of revenues related to implementation of our software . included in this increase is $ 1.7 million of revenues recognized when reliable estimates were obtained from one customer during the prior period , $ 4.0 million of revenues recognized upon completion of implementation projects continued from prior fiscal years , and $ 0.7 million of revenues recognized when vsoe of fair value of maintenance was established for one customer during the fiscal year 2013. in addition , an increase of $ 2.5 million was recognized related to training and an increase of $ 2.2 million in revenues were recognized related to reimbursable travel expenses . deferred revenues replace_table_token_18_th the $ 11.3 million decrease in deferred license revenues was primarily driven by $ 5.8 million of revenues recognized from existing orders entered into in prior fiscal years where we attained the required revenue recognition criteria during the fiscal year 2013 , of which $ 3.2 million

cash flows the following summary of cash flows for the periods indicated has been derived from our consolidated financial statements included elsewhere in this annual report on form 10-k : replace_table_token_28_th cash flows from operating activities net cash provided by operating activities increased in fiscal year 2014 from fiscal year 2013 primarily due to larger adjustments for non-cash items consisting of $ 17.0 million from stock-based compensation expenses , other non-cash items of $ 3.0 million , and $ 1.9 million from depreciation and amortization . these increases were partially offset by a decrease in net income of $ 9.9 million and adjustments for non-cash items of $ 4.5 million from excess tax benefits related to the exercise of stock options and $ 2.4 million from deferred taxes . changes in assets and liabilities provided additional cash of $ 37.8 million due to increases in deferred revenues of $ 28.2 million , accounts payable , accruals and other liabilities of $ 9.1 million , and an increase in assets of $ 0.5 million in the fiscal year 2014 compared to fiscal year 2013 . 47 net cash provided by operating activities increased in fiscal year 2013 from fiscal year 2012 primarily due to a $ 6.0 million increase in net income , a $ 12.6 million increase in stock-based compensation expenses , $ 1.9 million from depreciation and amortization , and other non-cash items of $ 0.5 million .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. guidewire implementation teams assist customers in building implementation plans , integrating our software with their existing systems , and defining business rules and specific requirements unique to each customer and installation . to extend our technology leadership position in the global market , we continue to focus on product innovation through our investment in research and development . we continue to invest in guidewire insurancesuite - policycenter , claimcenter and billingcenter . further , we are also investing in new technologies and offerings , such as data management , mobile and portals and hosted analytic applications . these investments complement guidewire insurancesuite and enable our customers to accelerate the pace and impact of their transformation initiatives . new technology and product development is central to our core strategy and our commitment to our customers . our product innovation strategy is critical to our growth and global expansion or otherwise responding to competitive pressures which could limit our ability to capture the global p & c market share . our success depends on our continued ability to develop new or enhanced versions of our existing products to meet evolving customer requirements and enabling successful transformations . we also partner with leading si consulting firms to achieve scalable , cost-effective implementations for our customers . our extensive relationships with sis and industry partners have strengthened and expanded in line with the interest in and adoption of our products . we encourage our partners to co-market , pursue joint sales initiatives and drive broader adoption of our technology , helping us grow our business more efficiently and enabling us to focus our engineering resources on continued innovation and further enhancement of our solutions . our track record of success with customers and their implementations is central to our strategy . we continue to focus and invest time and resources recruiting si partners in new markets and ensuring that all partners are ready to assist with implementing our new products . 29 we face a number of risks in the execution of our strategy including expanding to new markets , lengthy sales cycles , intense competition in the global market , reliance on sales to a relatively small number of large customers , product development , customer buying patterns , and the overall adoption of our products . in response to these risks and factors as well as others we might face , we continue to invest in many areas of our business . our investments in sales and marketing align with our goal of winning new customers in both existing markets and new markets . further , our sales investments also enable us to maintain a persistent , consultative relationship with our existing customers in order to sell new products and solutions . our investments in technology and product development allow us to sell in more markets and address a broader spectrum of customer needs as they embark on transformation initiatives . we will also continue to invest in our consulting services and our si partner ecosystem with a goal of ensuring that all customers are successful in their transformation journey . key business metrics we use certain key metrics to evaluate and manage our business , including rolling four-quarter recurring revenues from term licenses and total maintenance . in addition , we present select gaap and non-gaap financial metrics that we use internally to manage the business and that we believe are useful for investors . these metrics include adjusted ebitda and operating cash flow . four-quarter recurring revenues we measure four-quarter recurring revenues by adding the total term license revenues and total maintenance revenues recognized in the preceding four quarters ended in the stated period and excluding perpetual license revenues , revenues from perpetual buyout rights and services revenues . this metric allows us to better understand the trends in our recurring revenues because it typically reduces the variations in any particular quarter caused by seasonality , the effects of the annual invoicing of our term licenses and certain effects of contractual provisions that may accelerate or delay revenue recognition in some cases . our four-quarter recurring revenues for each of the nine periods presented were : replace_table_token_6_th adjusted ebitda we believe adjusted ebitda , a non-gaap measure , is useful , in addition to other financial measures presented in accordance with gaap , in evaluating our operating performance compared to that of other companies in our industry , as this metric generally eliminates the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance . please refer to item 6 , selected financial data , for further details on why we use this metric and why we believe this metric is useful to our stockholders . the following table provides a reconciliation of net income to adjusted ebitda : replace_table_token_7_th ( 1 ) see note 2 “ change in accounting policy - stock-based compensation ” of notes to consolidated financial statements . 30 operating cash flows we monitor our cash flows from operating activities , or operating cash flows , as a key measure of our overall business performance , which enables us to analyze our financial performance without the effects of certain non-cash items such as depreciation and amortization and stock-based compensation expenses . additionally , operating cash flows takes into account the impact of changes in deferred revenues , which reflects the receipt of cash payment for products before they are recognized as revenues . our operating cash flows are significantly impacted by timing of invoicing and collections of accounts receivable , annual bonus payment , as well as payments of payroll and other taxes . they were also impacted by the payment of a litigation settlement during the three months ended october 31 , 2011. as a result , our operating cash flows fluctuate significantly on a quarterly basis . story_separator_special_tag operating expenses replace_table_token_14_th ( 1 ) see note 2 “ change in accounting policy - stock-based compensation ” of notes to consolidated financial statements . the $ 37.6 million increase in operating expenses was primarily driven by increased personnel-related and operational expenses , including higher stock-based compensation , travel-related costs , marketing programs , professional services costs including consulting , as a result of hiring 46 additional employees during the fiscal year 2014 in these functional areas . we expect all of our operating expense line items to increase in absolute dollars in future periods to support our future growth strategy . research and development the $ 13.2 million increase in research and development expenses was primarily due to an increase of $ 7.1 million in personnel-related expenses as a result of an average of 32 additional employees during the fiscal year 2014 , a $ 3.2 million increase in stock-based compensation and a $ 2.9 million increase in other professional services expenses and operational costs . sales and marketing 37 the $ 20.3 million increase in sales and marketing expenses was primarily due to a $ 9.6 million increase in personnel-related expenses primarily as a result of an average of 52 additional employees during the fiscal year 2014 , a $ 7.1 million increase in stock-based compensation , a $ 1.8 million increase in travel-related costs and marketing programs , and a $ 1.8 million increase in operational costs . general and administrative the $ 4.1 million increase in general and administrative expenses was primarily due to a $ 4.8 million increase in personnel-related expenses primarily as a result of an average of 19 additional employees during the fiscal year 2014 , and a $ 1.6 million increase in stock-based compensation . these increases were offset by a $ 2.3 million decrease in operational costs . other income ( expense ) replace_table_token_15_th * not meaningful interest income , net interest income increased by $ 0.9 million primarily due to higher interest income from the yield earned on the proceeds of our follow-on public offering and the investment of excess cash in the fiscal year 2014. other expense , net other expense increased by $ 0.3 million primarily due to higher currency exchange losses resulting from the u.s. dollar strengthening against the australian dollar , canadian dollar , euro , and british pound during the fiscal year 2014 compared to the fiscal year 2013. provision for income taxes we recognized an income tax provision of $ 5.2 million for the fiscal year 2014 compared to $ 5.5 million for the fiscal year 2013 . our effective income tax rate increased to 26.2 % for the fiscal year 2014 compared to 18.1 % for the fiscal year 2013 , which was primarily due to a decrease in tax credits . comparison of the fiscal years ended july 31 , 2013 and 2012 revenues please refer to note 1 of notes to consolidated financial statements for a description of our accounting policy related to revenue recognition . replace_table_token_16_th license revenues 38 the $ 26.4 million increase in license revenues during the fiscal year 2013 was primarily driven by continued adoption of our policycenter software , increased adoption of our billingcenter and insurancesuite software , and increased sales and marketing efforts in north america and europe . replace_table_token_17_th the $ 38.0 million increase in term license revenues during the fiscal year 2013 was driven by $ 32.0 million of additional revenues recognized during the fiscal year 2013 from new orders , $ 5.8 million of additional revenues recognized upon attainment of the required revenue recognition criteria related to prior year orders during the fiscal year 2013 , and $ 2.7 million of revenues recognized due to timing of invoicing and corresponding due dates . in addition , there was $ 0.9 million of additional revenues recognized when vsoe of fair value of maintenance was established for one customer during the fiscal year 2013. these increases were partially offset by a decrease of $ 2.5 million of revenues recognized due to completion of project implementations in prior periods , and a decrease of $ 1.1 million of revenues recognized for one customer that exercised a perpetual buyout option in the prior period . the $ 11.6 million decrease in perpetual license revenues during the fiscal year 2013 was primarily driven by new customers increasingly signing term license agreements in the current period . this decrease was net of a $ 3.0 million increase in revenues related to new orders , and $ 2.5 million of revenues recognized for one customer from milestone billing upon completion of a project . maintenance revenues the $ 8.0 million increase in maintenance revenues was primarily driven by $ 6.8 million of additional revenues recognized from new and existing orders , and $ 1.1 million of revenues recognized upon attainment of the required revenue recognition criteria related to prior year orders during the period . services revenues the $ 34.1 million increase in services revenues was primarily driven by an additional $ 29.4 million of revenues related to implementation of our software . included in this increase is $ 1.7 million of revenues recognized when reliable estimates were obtained from one customer during the prior period , $ 4.0 million of revenues recognized upon completion of implementation projects continued from prior fiscal years , and $ 0.7 million of revenues recognized when vsoe of fair value of maintenance was established for one customer during the fiscal year 2013. in addition , an increase of $ 2.5 million was recognized related to training and an increase of $ 2.2 million in revenues were recognized related to reimbursable travel expenses . deferred revenues replace_table_token_18_th the $ 11.3 million decrease in deferred license revenues was primarily driven by $ 5.8 million of revenues recognized from existing orders entered into in prior fiscal years where we attained the required revenue recognition criteria during the fiscal year 2013 , of which $ 3.2 million Narrative : cash flows the following summary of cash flows for the periods indicated has been derived from our consolidated financial statements included elsewhere in this annual report on form 10-k : replace_table_token_28_th cash flows from operating activities net cash provided by operating activities increased in fiscal year 2014 from fiscal year 2013 primarily due to larger adjustments for non-cash items consisting of $ 17.0 million from stock-based compensation expenses , other non-cash items of $ 3.0 million , and $ 1.9 million from depreciation and amortization . these increases were partially offset by a decrease in net income of $ 9.9 million and adjustments for non-cash items of $ 4.5 million from excess tax benefits related to the exercise of stock options and $ 2.4 million from deferred taxes . changes in assets and liabilities provided additional cash of $ 37.8 million due to increases in deferred revenues of $ 28.2 million , accounts payable , accruals and other liabilities of $ 9.1 million , and an increase in assets of $ 0.5 million in the fiscal year 2014 compared to fiscal year 2013 . 47 net cash provided by operating activities increased in fiscal year 2013 from fiscal year 2012 primarily due to a $ 6.0 million increase in net income , a $ 12.6 million increase in stock-based compensation expenses , $ 1.9 million from depreciation and amortization , and other non-cash items of $ 0.5 million .

we are making progress resolving many of these issues as we begin to take advantage of the system 's capabilities . the new erp system is designed to provide us with the ability to access reliable , transparent , real-time data , allowing us to meet the technology requirements of state-of-the-art distribution and packaging centers . in november 2011 , we entered into a lease for a new , state-of-the art packaging and distribution center in mccook , illinois . this new facility will consolidate operations currently performed in our illinois locations . the new facility is designed to specifically meet our distribution needs and will incorporate upgraded technology and increased space . we anticipate the combined operations will streamline our distribution logistics and reduce our cost structure . the facility 's close proximity to a major freight hub will provide us more time to process orders and expand our next-day delivery capabilities . in conjunction with closing the des plaines facility , we plan to relocate our corporate headquarters to a location approximately three miles from our current location . we anticipate these moves will be completed in the second half of 2012. our new erp system is also allowing us to make progress on our sales channel transformation initiatives . we have been investing in the design and development of a new ecommerce website , which we expect to introduce to our customers in the first half of 2012. with the launch of our new website , our customers will have access to an integrated sales channel , allowing them to research products and prices and to place orders on a 24/7 basis . this improvement should help us capture a portion of our customers ' “unplanned” purchases . also , during 2011 , we amended our existing $ 55.0 million dollar credit facility , extending the term until october , 2016 and improving pricing . we also amended financial covenants , giving us the flexibility to better implement our strategic initiatives and further invest in our business . during 2011 , we continued to distribute a quarterly cash dividend of $ 0.12 per share , representing a dividend yield of 3.1 % based on our december 31 , 2011 stock price . we ended the year with $ 2.1 million of cash and no outstanding borrowings . we believe our existing cash-on-hand and our untapped credit facility provide us with the capital resources to make the necessary investments to continue the transformation of our business and allow us to pursue future growth opportunities . 18 summary of financial performance replace_table_token_7_th 19 results of operations for 2011 as compared to 2010 net sales and gross profit sales and gross profit results for the years ended december 31 , 2011 and 2010 were as follows : replace_table_token_8_th net sales for 2011 decreased 0.6 % to $ 315.0 million from $ 316.8 million in 2010 on one less selling day . excluding the canadian exchange rate impact , net sales decreased 1.0 % for the year . mro net sales decreased $ 2.7 million or 0.9 % in 2011 to $ 300.4 million from $ 303.1 million in 2010. the decrease was largely due to certain challenges we encountered following the launch of our erp system which caused delays in our supply chain and fulfillment processes leading to a build-up of backorders and lost sales in the second half of the year . for the year , average mro daily sales were $ 1.197 million in 2011 compared to $ 1.203 million in 2010. in the first half of 2011 , prior to the erp launch our average mro daily sales were $ 1.259 million , up 7.5 % over 2010 levels . immediately after the launch in august , we saw average mro daily sales drop as we encountered the issues described above . as we have worked to resolve these challenges , average daily sales have begun to recover as shown in the table below . ( all amounts for 2011 ) : replace_table_token_9_th oem net sales increased $ 0.9 million or 6.7 % in 2011 to $ 14.6 million from $ 13.6 million in 2010. overall gross profit decreased 7.7 % in 2011 to $ 179.8 million from $ 194.8 million in 2010. as a percent of sales , gross profit margin decreased to 57.1 % in 2011 compared to 61.5 % in 2010. mro gross profit decreased 8.1 % in 2011 to $ 176.9 million from $ 192.5 million in 2010. as a percent of net sales , mro gross profit margin decreased to 58.9 % in 2011 from 63.5 % in 2010. this decline was driven by four main factors : ( 1 ) increased vendor costs were not passed along to our customers as we held pricing constant to facilitate our erp implementation ; ( 2 ) outbound freight 20 costs increased as we shipped more single line orders to support our customers following the erp conversion ; ( 3 ) increased labor costs associated with the packaging of inventory ; and ( 4 ) a strategic decision to pursue larger customers with lower margins , which is expected to increase retention and allow for dollar margin expansion over time . we also encountered a deterioration of mro gross margins subsequent to our erp conversion . mro gross margins for the first , second , third and fourth quarters of 2011 were 62.2 % , 59.1 % , 58.4 % and 55.3 % , respectively . story_separator_special_tag such amounts are adjusted , as appropriate , to reflect changes in enacted tax rates expected to be in effect when the temporary differences reverse . a valuation allowance is established to offset any deferred tax assets if , based upon the available evidence , it is more likely than not that some or all of the deferred tax assets will not be realized . the determination of the amount of a valuation allowance to be provided on recorded deferred tax assets involves estimates regarding ( 1 ) the timing and amount of the reversal of taxable temporary differences , ( 2 ) expected future taxable income , ( 3 ) the impact of tax planning strategies and ( 4 ) the ability to carry back deferred tax assets to offset prior taxable income . in assessing the need for a valuation allowance , we consider all available positive and negative evidence , including past operating results , projections of future taxable income and the feasibility of ongoing tax planning strategies . the projections of future taxable income include a number of estimates and assumptions regarding our volume , pricing and costs . additionally , valuation allowances related to deferred tax assets can be impacted by changes to tax laws . significant judgment is required in determining income tax provisions as well as deferred tax asset and liability balances , including the estimation of valuation allowances and the evaluation of tax positions . we recognize the benefit of tax positions when a benefit is more likely than not ( i.e . , greater than 50 % likely ) to be sustained on its technical merits . recognized tax benefits are measured at the largest amount that is more likely than not to be sustained , based on cumulative probability , in final settlement of the position . we recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense . goodwill impairment – goodwill , all of which is included in our mro segment , is tested annually during the fourth quarter , or when events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value . impairment of goodwill is evaluated using a two-step process . first the fair value of the reporting unit is compared with its carrying amount , including goodwill . if the fair value of the reporting unit exceeds its carrying amount , goodwill of the reporting unit is not considered impaired , and thus , the second step of the impairment test is unnecessary . if the carrying amount of the reporting unit exceeds its fair value , the second step of the goodwill impairment test is performed to measure the amount of impairment loss , if any . we estimate the fair value of the mro segment using a market approach , which relies on the market value of companies that are engaged in the same line of business . we also prepare a discounted cash flow ( “dcf” ) analysis based on our operating plan to determine a range of fair values . the dcf model relies on a number of assumptions that have a significant effect on the resulting fair value calculation and may change in future periods . estimated future cash flows are affected both by future economic conditions outside the control of management and operating results directly related to management 's execution of our business strategy . our dcf model is also affected by our estimate of a discount rate that is consistent with the weighted average cost of capital that we anticipate a potential market participant would use . 27 we then assess the reasonableness of our estimate of the fair value of the mro segment . this is done by applying the same valuation methodology and estimates described above to the entire company and reconciling the resulting estimated fair value of the consolidated company to its market capitalization based on the trading range of the company 's stock near the measurement date . currently , the calculated fair value of the mro segment exceeds its carrying value by $ 38 million and , therefore , is not considered impaired . changes in the assumptions used in our dcf calculation could have a material effect on the fair value estimate and could change our assessment of impairment . a hypothetical 10 % decrease in the estimated future annual cash flows generated by the mro segment would decrease its estimated fair value by approximately $ 9 million . a hypothetical 100 basis point increase in the discount rate would decrease its estimated fair value by approximately $ 15 million . item 7a . q uantitative and qualitative disclosures about market risk . one of our subsidiaries is located and operates in canada using the canadian dollar as its functional currency . operating results are translated into u.s. dollars when consolidated into our financial statements . therefore , we are exposed to market risk relating to the change in the value of the canadian dollar relative to the u.s. dollar . a hypothetical 10 % change in the canadian foreign currency exchange rate would have affected our 2011 net sales by $ 3.0 million and net assets by $ 1.7 million . certain compensation awards have been granted to our directors , officers and key employees that are payable in cash , based upon the market price of our common stock . these awards are re-measured each reporting period and the effect of the change in the share price is reflected in our operating results . a hypothetical 10 % change in the price of our common stock on december 31 , 2011 would have affected our 2011 operating income by $ 0.2 million . a number of our current and past employees have opted to defer a portion of their earned compensation to be paid at a future date . these individuals

liquidity and capital resources cash used in operating activities was $ 22.9 million in 2011 compared to cash provided by operations of $ 11.3 million and $ 10.6 million in 2010 and 2009 , respectively . in 2011 , cash was primarily used to support increased levels of accounts receivable and inventory . the increase in inventory was attributable to erp issues which negatively affected our procurement process and service level to customers . these issues also led to delays in the collection of our receivables . we are making progress resolving these issues and anticipate a return to more normalized receivable and inventory levels during 2012. in 2010 , cash was primarily generated from operating income and proceeds received from the sale of acs and rutland . in 2009 , cash was primarily generated through the streamlining of working capital by reducing excess inventories and increased collection of accounts receivable . cash from operations was net of $ 10.0 million in settlement payments in 2010 and 2009 , respectively . cash used to purchase property , plant and equipment was $ 11.1 million , $ 10.0 million and $ 2.7 million in 2011 , 2010 and 2009 , respectively . purchases included $ 5.9 million and $ 6.5 million for the new erp system in 2011 and 2010 , respectively . our 2011 capital outlays also included $ 1.6 million towards the construction of our new mccook packaging and distribution center and $ 0.8 million related to the redevelopment of our web-site .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we are making progress resolving many of these issues as we begin to take advantage of the system 's capabilities . the new erp system is designed to provide us with the ability to access reliable , transparent , real-time data , allowing us to meet the technology requirements of state-of-the-art distribution and packaging centers . in november 2011 , we entered into a lease for a new , state-of-the art packaging and distribution center in mccook , illinois . this new facility will consolidate operations currently performed in our illinois locations . the new facility is designed to specifically meet our distribution needs and will incorporate upgraded technology and increased space . we anticipate the combined operations will streamline our distribution logistics and reduce our cost structure . the facility 's close proximity to a major freight hub will provide us more time to process orders and expand our next-day delivery capabilities . in conjunction with closing the des plaines facility , we plan to relocate our corporate headquarters to a location approximately three miles from our current location . we anticipate these moves will be completed in the second half of 2012. our new erp system is also allowing us to make progress on our sales channel transformation initiatives . we have been investing in the design and development of a new ecommerce website , which we expect to introduce to our customers in the first half of 2012. with the launch of our new website , our customers will have access to an integrated sales channel , allowing them to research products and prices and to place orders on a 24/7 basis . this improvement should help us capture a portion of our customers ' “unplanned” purchases . also , during 2011 , we amended our existing $ 55.0 million dollar credit facility , extending the term until october , 2016 and improving pricing . we also amended financial covenants , giving us the flexibility to better implement our strategic initiatives and further invest in our business . during 2011 , we continued to distribute a quarterly cash dividend of $ 0.12 per share , representing a dividend yield of 3.1 % based on our december 31 , 2011 stock price . we ended the year with $ 2.1 million of cash and no outstanding borrowings . we believe our existing cash-on-hand and our untapped credit facility provide us with the capital resources to make the necessary investments to continue the transformation of our business and allow us to pursue future growth opportunities . 18 summary of financial performance replace_table_token_7_th 19 results of operations for 2011 as compared to 2010 net sales and gross profit sales and gross profit results for the years ended december 31 , 2011 and 2010 were as follows : replace_table_token_8_th net sales for 2011 decreased 0.6 % to $ 315.0 million from $ 316.8 million in 2010 on one less selling day . excluding the canadian exchange rate impact , net sales decreased 1.0 % for the year . mro net sales decreased $ 2.7 million or 0.9 % in 2011 to $ 300.4 million from $ 303.1 million in 2010. the decrease was largely due to certain challenges we encountered following the launch of our erp system which caused delays in our supply chain and fulfillment processes leading to a build-up of backorders and lost sales in the second half of the year . for the year , average mro daily sales were $ 1.197 million in 2011 compared to $ 1.203 million in 2010. in the first half of 2011 , prior to the erp launch our average mro daily sales were $ 1.259 million , up 7.5 % over 2010 levels . immediately after the launch in august , we saw average mro daily sales drop as we encountered the issues described above . as we have worked to resolve these challenges , average daily sales have begun to recover as shown in the table below . ( all amounts for 2011 ) : replace_table_token_9_th oem net sales increased $ 0.9 million or 6.7 % in 2011 to $ 14.6 million from $ 13.6 million in 2010. overall gross profit decreased 7.7 % in 2011 to $ 179.8 million from $ 194.8 million in 2010. as a percent of sales , gross profit margin decreased to 57.1 % in 2011 compared to 61.5 % in 2010. mro gross profit decreased 8.1 % in 2011 to $ 176.9 million from $ 192.5 million in 2010. as a percent of net sales , mro gross profit margin decreased to 58.9 % in 2011 from 63.5 % in 2010. this decline was driven by four main factors : ( 1 ) increased vendor costs were not passed along to our customers as we held pricing constant to facilitate our erp implementation ; ( 2 ) outbound freight 20 costs increased as we shipped more single line orders to support our customers following the erp conversion ; ( 3 ) increased labor costs associated with the packaging of inventory ; and ( 4 ) a strategic decision to pursue larger customers with lower margins , which is expected to increase retention and allow for dollar margin expansion over time . we also encountered a deterioration of mro gross margins subsequent to our erp conversion . mro gross margins for the first , second , third and fourth quarters of 2011 were 62.2 % , 59.1 % , 58.4 % and 55.3 % , respectively . story_separator_special_tag such amounts are adjusted , as appropriate , to reflect changes in enacted tax rates expected to be in effect when the temporary differences reverse . a valuation allowance is established to offset any deferred tax assets if , based upon the available evidence , it is more likely than not that some or all of the deferred tax assets will not be realized . the determination of the amount of a valuation allowance to be provided on recorded deferred tax assets involves estimates regarding ( 1 ) the timing and amount of the reversal of taxable temporary differences , ( 2 ) expected future taxable income , ( 3 ) the impact of tax planning strategies and ( 4 ) the ability to carry back deferred tax assets to offset prior taxable income . in assessing the need for a valuation allowance , we consider all available positive and negative evidence , including past operating results , projections of future taxable income and the feasibility of ongoing tax planning strategies . the projections of future taxable income include a number of estimates and assumptions regarding our volume , pricing and costs . additionally , valuation allowances related to deferred tax assets can be impacted by changes to tax laws . significant judgment is required in determining income tax provisions as well as deferred tax asset and liability balances , including the estimation of valuation allowances and the evaluation of tax positions . we recognize the benefit of tax positions when a benefit is more likely than not ( i.e . , greater than 50 % likely ) to be sustained on its technical merits . recognized tax benefits are measured at the largest amount that is more likely than not to be sustained , based on cumulative probability , in final settlement of the position . we recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense . goodwill impairment – goodwill , all of which is included in our mro segment , is tested annually during the fourth quarter , or when events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value . impairment of goodwill is evaluated using a two-step process . first the fair value of the reporting unit is compared with its carrying amount , including goodwill . if the fair value of the reporting unit exceeds its carrying amount , goodwill of the reporting unit is not considered impaired , and thus , the second step of the impairment test is unnecessary . if the carrying amount of the reporting unit exceeds its fair value , the second step of the goodwill impairment test is performed to measure the amount of impairment loss , if any . we estimate the fair value of the mro segment using a market approach , which relies on the market value of companies that are engaged in the same line of business . we also prepare a discounted cash flow ( “dcf” ) analysis based on our operating plan to determine a range of fair values . the dcf model relies on a number of assumptions that have a significant effect on the resulting fair value calculation and may change in future periods . estimated future cash flows are affected both by future economic conditions outside the control of management and operating results directly related to management 's execution of our business strategy . our dcf model is also affected by our estimate of a discount rate that is consistent with the weighted average cost of capital that we anticipate a potential market participant would use . 27 we then assess the reasonableness of our estimate of the fair value of the mro segment . this is done by applying the same valuation methodology and estimates described above to the entire company and reconciling the resulting estimated fair value of the consolidated company to its market capitalization based on the trading range of the company 's stock near the measurement date . currently , the calculated fair value of the mro segment exceeds its carrying value by $ 38 million and , therefore , is not considered impaired . changes in the assumptions used in our dcf calculation could have a material effect on the fair value estimate and could change our assessment of impairment . a hypothetical 10 % decrease in the estimated future annual cash flows generated by the mro segment would decrease its estimated fair value by approximately $ 9 million . a hypothetical 100 basis point increase in the discount rate would decrease its estimated fair value by approximately $ 15 million . item 7a . q uantitative and qualitative disclosures about market risk . one of our subsidiaries is located and operates in canada using the canadian dollar as its functional currency . operating results are translated into u.s. dollars when consolidated into our financial statements . therefore , we are exposed to market risk relating to the change in the value of the canadian dollar relative to the u.s. dollar . a hypothetical 10 % change in the canadian foreign currency exchange rate would have affected our 2011 net sales by $ 3.0 million and net assets by $ 1.7 million . certain compensation awards have been granted to our directors , officers and key employees that are payable in cash , based upon the market price of our common stock . these awards are re-measured each reporting period and the effect of the change in the share price is reflected in our operating results . a hypothetical 10 % change in the price of our common stock on december 31 , 2011 would have affected our 2011 operating income by $ 0.2 million . a number of our current and past employees have opted to defer a portion of their earned compensation to be paid at a future date . these individuals Narrative : liquidity and capital resources cash used in operating activities was $ 22.9 million in 2011 compared to cash provided by operations of $ 11.3 million and $ 10.6 million in 2010 and 2009 , respectively . in 2011 , cash was primarily used to support increased levels of accounts receivable and inventory . the increase in inventory was attributable to erp issues which negatively affected our procurement process and service level to customers . these issues also led to delays in the collection of our receivables . we are making progress resolving these issues and anticipate a return to more normalized receivable and inventory levels during 2012. in 2010 , cash was primarily generated from operating income and proceeds received from the sale of acs and rutland . in 2009 , cash was primarily generated through the streamlining of working capital by reducing excess inventories and increased collection of accounts receivable . cash from operations was net of $ 10.0 million in settlement payments in 2010 and 2009 , respectively . cash used to purchase property , plant and equipment was $ 11.1 million , $ 10.0 million and $ 2.7 million in 2011 , 2010 and 2009 , respectively . purchases included $ 5.9 million and $ 6.5 million for the new erp system in 2011 and 2010 , respectively . our 2011 capital outlays also included $ 1.6 million towards the construction of our new mccook packaging and distribution center and $ 0.8 million related to the redevelopment of our web-site .

the duration and extent of restrictions imposed on our customers by federal , state and local governments is dependent on future developments regarding the pandemic , including new information about the severity of the disease , trends in infection rates , and development of effective medical treatments for the disease , among others . the adverse impact of the pandemic on our customers during the fifty-two weeks ended december 25 , 2020 resulted in a $ 616.7 million decline in our organic sales compared to the prior year . due to the pandemic , we incurred estimated non-cash charges of $ 15.8 million related to incremental bad debt expense and approximately $ 14.6 million related to estimated inventory obsolescence during the fifty-two weeks ended december 25 , 2020. our management team is responding rapidly to the changing landscape and pursuing alternate sources of revenue to mitigate the extent of sales declines in our core customer base . our sales force is working closely with our core customers and developing solutions to help them fulfill the demand in their communities while complying with health and safety restrictions . we are actively entering into new business relationships which include retail food outlets as they have experienced increases in consumer demand and shortages in their traditional supply chains due to the pandemic . as we develop these new sales channels , we are negotiating favorable credit terms given the nature of the underlying customer base and the current market 34 environment . in addition , our purchasing teams have worked diligently to shift our product purchases to skus that are in high demand . thus far , we have not experienced difficulties in procuring products from our suppliers . in response to the pandemic , we expanded our direct-to-consumer product offerings by launching our “ shop like a chef ” online home delivery platform in several of the markets we serve . we now offer products directly to consumers through both our allen brothers and “ shop like a chef ” online platforms . we have implemented cost control measures during this time of demand volatility . our variable cost structure naturally decreases as our sales decrease , however , we are also reducing our fixed cost structure . among other actions , we have postponed planned capital expenditures , returned certain equipment on short-term rental agreements , and reduced compensation expense through salary reductions , furloughs and lay-offs as we right-size our organization to current levels of demand . management determined the pandemic 's adverse impact on our operations and our market capitalization were triggering events that required us to test goodwill and long-lived assets for impairment as of march 27 , 2020. no impairments were identified as a result of these tests . although there were no additional triggering events during the remainder of fiscal 2020 , the impacts of the pandemic on our business are uncertain and will depend on future developments , and as such , it is possible that another triggering event could occur that under certain circumstances could cause us to recognize an impairment charge in the future . we closed the fiscal year with total cash and cash equivalents of $ 193.3 million , and approximately $ 50.3 million of remaining availability under our asset-based loan facility as of december 25 , 2020. the future impact of the pandemic on our business , operations and liquidity is difficult to predict at this time and is highly dependent on future developments including new information that may emerge on the severity of the disease , the extent of the outbreak , federal , state and local government responses , trends in infection rates , development of effective medical treatments for the disease , and future consumer spending behavior , among others . recent significant acquisitions on february 3 , 2020 , we entered into an asset purchase agreement to acquire substantially all of the assets of cambridge packing co , inc. ( “ cambridge ” ) , a specialty center-of-the-plate producer and distributor in new england . the cash purchase price was approximately $ 16.4 million , inclusive of a $ 0.6 million working capital true-up . we are required to pay additional contingent consideration , if earned , of up to $ 3.0 million over a two-year period upon successful attainment of certain gross profit targets . on january 27 , 2020 , we entered into an asset purchase agreement to acquire substantially all of the assets , including certain real-estate assets , of sid wainer & son ( “ sid wainer ” ) , a specialty food and produce distributor in new england . the cash purchase price was approximately $ 44.1 million , inclusive of a $ 2.4 million working capital true-up . we are required to pay additional contingent consideration , if earned , of up to $ 4.0 million over a two-year period upon successful attainment of certain gross profit targets . on february 25 , 2019 , pursuant to an asset purchase agreement , we acquired substantially all of the assets of bassian farms , inc. and related entities ( “ bassian ” ) , a specialty center-of-the-plate distributor based in northern california . the aggregate purchase price for the transaction was approximately $ 31.8 million , consisting of $ 28.0 million in cash paid at closing and the issuance of a $ 4.0 million unsecured convertible note , partially offset by the settlement of a net working capital true-up . we are also required to pay additional contingent consideration , if earned , which could total $ 9.0 million over a four-year period . the payment of the earn-out liability is subject to the successful achievement of certain gross profit targets . story_separator_special_tag inflation our profitability is dependent on , among other things , our ability to anticipate and react to changes in the costs of key operating resources , including food and other raw materials , labor , energy and other supplies and services . substantial increases in costs and expenses could impact our operating results to the extent that such increases can not be passed along to our customers . the impact of inflation on food , labor , energy and occupancy costs can significantly affect the profitability of our operations . commitments and significant contractual obligations the following table summarizes our contractual obligations and commercial commitments at december 25 , 2020 : replace_table_token_16_th 42 ( 1 ) interest on our various outstanding debt instruments is included in the above table , except for our term loans and abl , which have floating interest rates . at december 25 , 2020 , we had borrowings of $ 201.6 million under our term loans and $ 40.0 million under our abl . during the fiscal year ended december 25 , 2020 , the weighted average interest rate on our term loan and abl borrowings were approximately 4.4 % and 1.7 % , respectively . see note 10 “ debt obligations ” to our consolidated financial statements for further information on our debt instruments . ( 2 ) the table above excludes $ 2.8 million of total contingent earn-out liabilities related to certain acquisitions as of december 25 , 2020 and approximately $ 30.2 million of lease payments related to a distribution facility that does not commence until fiscal 2021 . ( 3 ) the table above excludes our supplier purchase obligations as we do not have any material unconditional contractual obligations to purchase fixed or minimum quantities of goods or services from our suppliers . we had outstanding letters of credit of approximately $ 20.1 million and $ 16.6 million at december 25 , 2020 and december 27 , 2019 , respectively . substantially all of our assets are pledged as collateral to secure our borrowings under our credit facilities . off-balance sheet arrangements as of december 25 , 2020 , we did not have any off-balance sheet arrangements , as defined in item 303 ( a ) ( 4 ) ( ii ) of regulation s-k. critical accounting policies the preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses , and related disclosure of contingent assets and liabilities . the sec has defined critical accounting policies as those that are both most important to the portrayal of our financial condition and results and require our most difficult , complex or subjective judgments or estimates . based on this definition , we believe our critical accounting policies include the following : ( i ) determining our allowance for doubtful accounts , ( ii ) inventory valuation , with regard to determining inventory balance adjustments for excess and obsolete inventory , ( iii ) business combinations , ( iv ) valuing goodwill and intangible assets , ( v ) self-insurance reserves , ( vi ) accounting for income taxes and ( vii ) contingent earn-out liabilities . for all financial statement periods presented , there have been no material modifications to the application of these critical accounting policies . allowance for doubtful accounts we analyze customer creditworthiness , accounts receivable balances , payment history , payment terms and historical bad debt levels when evaluating the adequacy of our allowance for doubtful accounts . in instances where a reserve has been recorded for a particular customer , future sales to the customer are either conducted using cash-on-delivery terms or the account is closely monitored so that agreed-upon payments are received prior to orders being released . a failure to pay results in held or cancelled orders . we also estimate receivables that will ultimately be uncollectible based upon historical write-off experience . management incorporates current macro-economic factors in existence as of the balance sheet date that may impact the food-away-from-home industry and or its customers , and specifically , beginning in the first quarter of fiscal 2020 , the impact of the pandemic . we may be required to increase or decrease our allowance for doubtful accounts due to various factors , including the overall economic environment and particular circumstances of individual customers . our accounts receivable balance was $ 96.4 million and $ 175.0 million , net of the allowance for doubtful accounts of $ 24.0 million and $ 8.8 million , as of december 25 , 2020 and december 27 , 2019 , respectively . inventory valuation we adjust our inventory balances for excess and obsolete inventories . these adjustments are primarily based upon customer demand , inventory age , specifically identified inventory items and overall economic conditions . a sudden and unexpected change in consumer preferences or change in overall economic conditions could result in a significant change to these adjustments that could require a corresponding charge to earnings . we actively manage our inventory levels as we seek to minimize the risk of loss and have consistently achieved a relatively high level of inventory turnover . as a result of the impacts of the pandemic on our customer demand we incurred additional inventory valuation charges of $ 14.6 million in fiscal 2020. business combinations we account for acquisitions in accordance with accounting standards codification topic 805 “ business combinations . ” assets acquired and liabilities assumed are recorded at their estimated fair values , as of the acquisition date . the judgments made in determining the estimated fair value of assets acquired and liabilities assumed , including estimated useful life , may 43 have a material impact on our consolidated balance sheet and may materially impact the amount of depreciation and amortization expense recognized in periods subsequent to the acquisition . we determine the fair value of intangible assets using an income approach

liquidity and capital resources we finance our day-to-day operations and growth primarily with cash flows from operations , borrowings under our senior secured credit facilities and other indebtedness , operating leases , trade payables and equity financing . indebtedness the following table presents selected financial information on our indebtedness ( in thousands ) : replace_table_token_13_th as of december 25 , 2020 , we have various floating- and fixed-rate debt instruments with varying maturities for an aggregate principal amount of $ 395.6 million . see note 10 “ debt obligations ” to our consolidated financial statements for a full description of our debt instruments . on june 8 , 2020 , we amended our senior secured credit agreement which converted $ 238.1 million of the term loans then outstanding into a new tranche of term loans ( the “ 2025 tranche ” ) , which , among other things , extended the maturity date by three years and increased the fixed-rate portion of interest charged by 200 basis points . the company made a prepayment of $ 35.7 million on the 2025 tranche immediately after it was established . see note 10 “ debt obligations ” to our consolidated financial statements for a full description . on march 18 , 2020 , we drew $ 100.0 million on our asset-based loan facility to increase our cash on hand during the early stages of the pandemic 's impact to our business and have subsequently repaid $ 60.0 million of the draw . 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 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 .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. the duration and extent of restrictions imposed on our customers by federal , state and local governments is dependent on future developments regarding the pandemic , including new information about the severity of the disease , trends in infection rates , and development of effective medical treatments for the disease , among others . the adverse impact of the pandemic on our customers during the fifty-two weeks ended december 25 , 2020 resulted in a $ 616.7 million decline in our organic sales compared to the prior year . due to the pandemic , we incurred estimated non-cash charges of $ 15.8 million related to incremental bad debt expense and approximately $ 14.6 million related to estimated inventory obsolescence during the fifty-two weeks ended december 25 , 2020. our management team is responding rapidly to the changing landscape and pursuing alternate sources of revenue to mitigate the extent of sales declines in our core customer base . our sales force is working closely with our core customers and developing solutions to help them fulfill the demand in their communities while complying with health and safety restrictions . we are actively entering into new business relationships which include retail food outlets as they have experienced increases in consumer demand and shortages in their traditional supply chains due to the pandemic . as we develop these new sales channels , we are negotiating favorable credit terms given the nature of the underlying customer base and the current market 34 environment . in addition , our purchasing teams have worked diligently to shift our product purchases to skus that are in high demand . thus far , we have not experienced difficulties in procuring products from our suppliers . in response to the pandemic , we expanded our direct-to-consumer product offerings by launching our “ shop like a chef ” online home delivery platform in several of the markets we serve . we now offer products directly to consumers through both our allen brothers and “ shop like a chef ” online platforms . we have implemented cost control measures during this time of demand volatility . our variable cost structure naturally decreases as our sales decrease , however , we are also reducing our fixed cost structure . among other actions , we have postponed planned capital expenditures , returned certain equipment on short-term rental agreements , and reduced compensation expense through salary reductions , furloughs and lay-offs as we right-size our organization to current levels of demand . management determined the pandemic 's adverse impact on our operations and our market capitalization were triggering events that required us to test goodwill and long-lived assets for impairment as of march 27 , 2020. no impairments were identified as a result of these tests . although there were no additional triggering events during the remainder of fiscal 2020 , the impacts of the pandemic on our business are uncertain and will depend on future developments , and as such , it is possible that another triggering event could occur that under certain circumstances could cause us to recognize an impairment charge in the future . we closed the fiscal year with total cash and cash equivalents of $ 193.3 million , and approximately $ 50.3 million of remaining availability under our asset-based loan facility as of december 25 , 2020. the future impact of the pandemic on our business , operations and liquidity is difficult to predict at this time and is highly dependent on future developments including new information that may emerge on the severity of the disease , the extent of the outbreak , federal , state and local government responses , trends in infection rates , development of effective medical treatments for the disease , and future consumer spending behavior , among others . recent significant acquisitions on february 3 , 2020 , we entered into an asset purchase agreement to acquire substantially all of the assets of cambridge packing co , inc. ( “ cambridge ” ) , a specialty center-of-the-plate producer and distributor in new england . the cash purchase price was approximately $ 16.4 million , inclusive of a $ 0.6 million working capital true-up . we are required to pay additional contingent consideration , if earned , of up to $ 3.0 million over a two-year period upon successful attainment of certain gross profit targets . on january 27 , 2020 , we entered into an asset purchase agreement to acquire substantially all of the assets , including certain real-estate assets , of sid wainer & son ( “ sid wainer ” ) , a specialty food and produce distributor in new england . the cash purchase price was approximately $ 44.1 million , inclusive of a $ 2.4 million working capital true-up . we are required to pay additional contingent consideration , if earned , of up to $ 4.0 million over a two-year period upon successful attainment of certain gross profit targets . on february 25 , 2019 , pursuant to an asset purchase agreement , we acquired substantially all of the assets of bassian farms , inc. and related entities ( “ bassian ” ) , a specialty center-of-the-plate distributor based in northern california . the aggregate purchase price for the transaction was approximately $ 31.8 million , consisting of $ 28.0 million in cash paid at closing and the issuance of a $ 4.0 million unsecured convertible note , partially offset by the settlement of a net working capital true-up . we are also required to pay additional contingent consideration , if earned , which could total $ 9.0 million over a four-year period . the payment of the earn-out liability is subject to the successful achievement of certain gross profit targets . story_separator_special_tag inflation our profitability is dependent on , among other things , our ability to anticipate and react to changes in the costs of key operating resources , including food and other raw materials , labor , energy and other supplies and services . substantial increases in costs and expenses could impact our operating results to the extent that such increases can not be passed along to our customers . the impact of inflation on food , labor , energy and occupancy costs can significantly affect the profitability of our operations . commitments and significant contractual obligations the following table summarizes our contractual obligations and commercial commitments at december 25 , 2020 : replace_table_token_16_th 42 ( 1 ) interest on our various outstanding debt instruments is included in the above table , except for our term loans and abl , which have floating interest rates . at december 25 , 2020 , we had borrowings of $ 201.6 million under our term loans and $ 40.0 million under our abl . during the fiscal year ended december 25 , 2020 , the weighted average interest rate on our term loan and abl borrowings were approximately 4.4 % and 1.7 % , respectively . see note 10 “ debt obligations ” to our consolidated financial statements for further information on our debt instruments . ( 2 ) the table above excludes $ 2.8 million of total contingent earn-out liabilities related to certain acquisitions as of december 25 , 2020 and approximately $ 30.2 million of lease payments related to a distribution facility that does not commence until fiscal 2021 . ( 3 ) the table above excludes our supplier purchase obligations as we do not have any material unconditional contractual obligations to purchase fixed or minimum quantities of goods or services from our suppliers . we had outstanding letters of credit of approximately $ 20.1 million and $ 16.6 million at december 25 , 2020 and december 27 , 2019 , respectively . substantially all of our assets are pledged as collateral to secure our borrowings under our credit facilities . off-balance sheet arrangements as of december 25 , 2020 , we did not have any off-balance sheet arrangements , as defined in item 303 ( a ) ( 4 ) ( ii ) of regulation s-k. critical accounting policies the preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses , and related disclosure of contingent assets and liabilities . the sec has defined critical accounting policies as those that are both most important to the portrayal of our financial condition and results and require our most difficult , complex or subjective judgments or estimates . based on this definition , we believe our critical accounting policies include the following : ( i ) determining our allowance for doubtful accounts , ( ii ) inventory valuation , with regard to determining inventory balance adjustments for excess and obsolete inventory , ( iii ) business combinations , ( iv ) valuing goodwill and intangible assets , ( v ) self-insurance reserves , ( vi ) accounting for income taxes and ( vii ) contingent earn-out liabilities . for all financial statement periods presented , there have been no material modifications to the application of these critical accounting policies . allowance for doubtful accounts we analyze customer creditworthiness , accounts receivable balances , payment history , payment terms and historical bad debt levels when evaluating the adequacy of our allowance for doubtful accounts . in instances where a reserve has been recorded for a particular customer , future sales to the customer are either conducted using cash-on-delivery terms or the account is closely monitored so that agreed-upon payments are received prior to orders being released . a failure to pay results in held or cancelled orders . we also estimate receivables that will ultimately be uncollectible based upon historical write-off experience . management incorporates current macro-economic factors in existence as of the balance sheet date that may impact the food-away-from-home industry and or its customers , and specifically , beginning in the first quarter of fiscal 2020 , the impact of the pandemic . we may be required to increase or decrease our allowance for doubtful accounts due to various factors , including the overall economic environment and particular circumstances of individual customers . our accounts receivable balance was $ 96.4 million and $ 175.0 million , net of the allowance for doubtful accounts of $ 24.0 million and $ 8.8 million , as of december 25 , 2020 and december 27 , 2019 , respectively . inventory valuation we adjust our inventory balances for excess and obsolete inventories . these adjustments are primarily based upon customer demand , inventory age , specifically identified inventory items and overall economic conditions . a sudden and unexpected change in consumer preferences or change in overall economic conditions could result in a significant change to these adjustments that could require a corresponding charge to earnings . we actively manage our inventory levels as we seek to minimize the risk of loss and have consistently achieved a relatively high level of inventory turnover . as a result of the impacts of the pandemic on our customer demand we incurred additional inventory valuation charges of $ 14.6 million in fiscal 2020. business combinations we account for acquisitions in accordance with accounting standards codification topic 805 “ business combinations . ” assets acquired and liabilities assumed are recorded at their estimated fair values , as of the acquisition date . the judgments made in determining the estimated fair value of assets acquired and liabilities assumed , including estimated useful life , may 43 have a material impact on our consolidated balance sheet and may materially impact the amount of depreciation and amortization expense recognized in periods subsequent to the acquisition . we determine the fair value of intangible assets using an income approach Narrative : liquidity and capital resources we finance our day-to-day operations and growth primarily with cash flows from operations , borrowings under our senior secured credit facilities and other indebtedness , operating leases , trade payables and equity financing . indebtedness the following table presents selected financial information on our indebtedness ( in thousands ) : replace_table_token_13_th as of december 25 , 2020 , we have various floating- and fixed-rate debt instruments with varying maturities for an aggregate principal amount of $ 395.6 million . see note 10 “ debt obligations ” to our consolidated financial statements for a full description of our debt instruments . on june 8 , 2020 , we amended our senior secured credit agreement which converted $ 238.1 million of the term loans then outstanding into a new tranche of term loans ( the “ 2025 tranche ” ) , which , among other things , extended the maturity date by three years and increased the fixed-rate portion of interest charged by 200 basis points . the company made a prepayment of $ 35.7 million on the 2025 tranche immediately after it was established . see note 10 “ debt obligations ” to our consolidated financial statements for a full description . on march 18 , 2020 , we drew $ 100.0 million on our asset-based loan facility to increase our cash on hand during the early stages of the pandemic 's impact to our business and have subsequently repaid $ 60.0 million of the draw . 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 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 .

▪ revenues decreased $ 65.1 million , or 2.1 % , compared to the prior year . revenues were impacted by changes in our pricing structure whereby we offered lower prices for millions of our u.s. assisted tax preparation clients , which was partially offset by a 5.9 % increase in paid u.s. diy returns . ▪ operating expenses increased $ 71.2 million , or 3.0 % , due to a combination of higher compensation , marketing , and information technology expenses , partially offset by reductions in depreciation and amortization . ▪ pretax earnings decreased $ 123.6 million , or 18.5 % , due to the revenue and expense changes mentioned above . 22 2019 form 10-k | h & r block , inc. ▪ income tax expense increased $ 58.1 million , or 138.9 % , due to tax legislation enacted in the prior fiscal year . see item 8 , note 10 to the consolidated financial statements for further discussion . ▪ net income from continuing operations decreased $ 181.7 million , or 29.0 % , compared with the prior year , due to lower pretax earnings and higher income taxes . ▪ diluted earnings per share from continuing operations decreased 27.9 % from the prior year to $ 2.15 due to lower net income offset by share repurchases . ▪ earnings from continuing operations before interest , taxes , depreciation and amortization ( ebitda ) decreased $ 142.5 million , or 15.1 % , to $ 798.9 million . see `` non-gaap financial information `` at the end of this item for a reconciliation of non-gaap measures . results of operations our subsidiaries provide assisted , diy , and virtual tax preparation solutions through multiple channels ( including in-person , online and mobile applications , virtual , and desktop software ) and distribute h & r block-branded products and services , including those of our financial partners , to the general public primarily in the u.s. , canada , australia , and their respective territories . tax returns are either prepared by h & r block tax professionals ( in company-owned or franchise offices , virtually or via an internet review ) or prepared and filed by our clients through our diy tax solutions . we operate as a single segment that includes all of our continuing operations , which are designed to enable clients to obtain tax preparation services seamlessly . h & r block , inc. | 2019 form 10-k 23 replace_table_token_4_th ( 1 ) an assisted tax return is defined as a current or prior year individual tax return that has been accepted and paid for by the client . also included are tax pro go sm , tax pro review sm , and business returns . a diy return is defined as a return that has been electronically filed and accepted by the irs . also included are online returns paid and printed . ( 2 ) net average charge is calculated as tax preparation fees divided by tax returns prepared . for diy , net average charge excludes irs free file . ( 3 ) net average charge related to h & r block franchise operations represents tax preparation fees collected by h & r block franchisees divided by returns prepared in franchise offices . h & r block will recognize a portion of franchise revenues as franchise royalties based on the terms of franchise agreements . we provide net average charge as a key operating metric because we consider it an important supplemental measure useful to analysts , investors , and other interested parties as it provides insights into pricing and tax return mix relative to our customer base , which are significant drivers of revenue . our definition of net average charge may not be comparable to similarly titled measures of other companies . 24 2019 form 10-k | h & r block , inc. replace_table_token_5_th ( 1 ) we reclassified $ 31.0 million of supplies expense from its own financial statement line to other expenses for fiscal year 2018 to conform to the current year presentation . ( 2 ) see `` non-gaap financial information `` at the end of this item for a reconciliation of non-gaap measures . fiscal 2019 compared to fiscal 2018 revenues decreased $ 65.1 million , or 2.1 % , compared to the prior year . u.s. assisted tax preparation fees decreased $ 88.2 million , or 4.5 % , primarily due to a decrease in net average charge of 4.0 % due to lower prices . u.s. diy tax preparation fees increased $ 16.9 million , or 7.0 % , primarily due to higher online volumes . h & r block , inc. | 2019 form 10-k 25 total operating expenses increased $ 71.2 million or 3.0 % from the prior year . field wages increased $ 10.7 million , or 1.4 % , due to higher office labor cost , including short-term incentives . other wages increased $ 25.1 million , or 13.1 % , primarily due to higher information technology wages and short-term incentive increases . occupancy expenses were consistent with the prior year , largely due to prior year write-offs of leasehold improvements for approximately 400 offices that we decided to permanently close , offset by lease buyout payments related to those offices in the current year . marketing expenses increased $ 20.7 million , or 8.3 % , primarily due to higher online advertising . depreciation and amortization decreased $ 16.6 million , or 9.1 % , primarily due to lower depreciation on equipment and amortization of internally developed software . story_separator_special_tag the income tax laws of jurisdictions in which we operate are complex and subject to different interpretations by the taxpayer and applicable government taxing authorities . income tax returns filed by us are based on our interpretation of these rules . the amount of income taxes we pay is subject to ongoing audits by federal , state and foreign tax authorities , which may result in proposed assessments , including interest or penalties . we accrue a liability for unrecognized tax benefits arising from uncertain tax positions reflecting our judgment as to the ultimate resolution of the applicable issues . assumptions and approach used . differences between a tax position taken or expected to be taken in our tax returns and the amount of benefit recorded in our financial statements result in unrecognized tax benefits . unrecognized tax benefits are recorded in the balance sheet as either a liability or reductions to recorded tax assets , as applicable . our uncertain tax positions arise from items such as apportionment of income for state purposes , transfer pricing , and the deductibility of related party transactions . we evaluate each uncertain tax position based on its technical merits . for each position , we consider all applicable information including relevant tax laws , the taxing authorities potential position , our tax return position , and the possible settlement outcomes to determine the amount of liability to record . in making this determination , we assume the tax authority has all relevant information at its disposal . sensitivity of estimate to change . our assessment of the technical merits and measurement of tax benefits associated with uncertain tax positions is subject to a high degree of judgment and estimation . actual results may differ from our current judgments due to a variety of factors , including changes in law , interpretations of law by taxing authorities that differ from our assessments , changes in the jurisdictions in which we operate and results of routine tax examinations . we believe we have adequately provided for any reasonably foreseeable outcome related to these matters . however , our future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved , or when statutes of limitation on potential assessments expire . as a result , our effective tax rate may fluctuate on a quarterly basis . h & r block , inc. | 2019 form 10-k 27 see the additional discussion in item 8 , note 10 to the consolidated financial statements . new accounting pronouncements see item 8 , note 1 to the consolidated financial statements for a discussion of recently issued accounting pronouncements . financial condition these comments should be read in conjunction with the consolidated balance sheets and consolidated statements of cash flows included in item 8 . capital resources and liquidity – overview – our primary sources of capital and liquidity include cash from operations ( including changes in working capital ) , draws on our 2018 cloc , and issuances of debt . we use our sources of liquidity primarily to fund working capital , service and repay debt , pay dividends , repurchase shares of our common stock , and acquire businesses . our operations are highly seasonal and substantially all of our revenues and cash flow are generated during the period from february through april . therefore , we require the use of cash to fund losses and working capital needs from may through january , and typically rely on available cash balances from the prior tax season and borrowings to meet our off-season liquidity needs . given the likely availability of a number of liquidity options discussed herein , we believe that , in the absence of any unexpected developments , our existing sources of capital as of april 30 , 2019 are sufficient to meet our future operating and financing needs . discussion of consolidated statements of cash flows – the following table summarizes our statements of cash flows for fiscal years 2019 and 2018 . see item 8 for the complete consolidated statements of cash flows for these periods . replace_table_token_7_th operating activities . cash provided by operating activities decreased $ 243.5 million from fiscal year 2018 . the decrease from the prior year was primarily due to lower net income and higher taxes paid compared to the prior year . investing activities . story_separator_special_tag a material adverse impact on the emerald advance tm product , our business , and our consolidated financial position , results of operations , and cash flows . we will continue to analyze the potential impact on the company as the court case and the cfpb 's pending rulemaking process progress . from time to time , we receive inquiries from governmental authorities regarding the applicability of laws to our services and products and other matters relating to our business . we can not predict what effect future laws , changes in interpretations of existing laws or the results of future governmental inquiries with respect to services and products or other matters relating to our business may have on our consolidated financial position , results of operations and cash flows . we have received certain governmental inquiries relating to our irs free file program . we may also be subject to future inquiries or other proceedings regarding this program or other aspects of our business . regulatory inquiries may result in the incurrence of additional expense , diversion of management 's attention , adverse judgments , 30 2019 form 10-k | h & r block , inc. settlements , fines , penalties , injunctions or other relief . see additional discussion of legal matters in item 8 , note 13 to the consolidated financial statements . non-gaap financial information non-gaap financial measures should not be considered as a substitute for , or superior to , measures of financial performance prepared in accordance with gaap . because these measures are

cash used in investing activities totaled $ 155.1 million compared to $ 112.1 million in the prior year . this change is principally due to a $ 40.0 million investment in an available-for-sale debt security in the current fiscal year . financing activities . cash used in financing activities increased $ 213.0 million . this increase resulted primarily from higher share repurchase activity in the current year and lower stock option exercises compared to the prior year . cash requirements – dividends and share repurchase . returning capital to shareholders in the form of dividends and the repurchase of outstanding shares has historically been a significant component of our capital allocation plan . we have consistently paid quarterly dividends . dividends paid totaled $ 205.5 million and $ 200.5 million in fiscal years 2019 and 2018 , respectively . although we have historically paid dividends and plan to continue to do so , there can be no assurances that circumstances will not change in the future that could affect our ability or decisions to pay dividends . 28 2019 form 10-k | h & r block , inc. in september 2015 , our board of directors approved a $ 3.5 billion share repurchase program , effective through june 2019. as a part of the repurchase program , in the current year , we purchased $ 184.8 million of our common stock at an average price of $ 23.51 per share . see item 8 , note 8 to the consolidated financial statements for additional information . in june 2019 , our board of directors extended its previous share repurchase authorization for three years . approximately $ 1.0 billion remains under this authorization , which now expires in june 2022. these repurchases may be effectuated through open market transactions , some of which may be effectuated under sec rule 10b5-1 . the company may cancel , suspend , or extend the time period for the purchase of shares at any time . any repurchases will be funded primarily through available cash and cash from operations . although we may continue to repurchase shares , there is no assurance that we will purchase up to the full board authorization .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. ▪ revenues decreased $ 65.1 million , or 2.1 % , compared to the prior year . revenues were impacted by changes in our pricing structure whereby we offered lower prices for millions of our u.s. assisted tax preparation clients , which was partially offset by a 5.9 % increase in paid u.s. diy returns . ▪ operating expenses increased $ 71.2 million , or 3.0 % , due to a combination of higher compensation , marketing , and information technology expenses , partially offset by reductions in depreciation and amortization . ▪ pretax earnings decreased $ 123.6 million , or 18.5 % , due to the revenue and expense changes mentioned above . 22 2019 form 10-k | h & r block , inc. ▪ income tax expense increased $ 58.1 million , or 138.9 % , due to tax legislation enacted in the prior fiscal year . see item 8 , note 10 to the consolidated financial statements for further discussion . ▪ net income from continuing operations decreased $ 181.7 million , or 29.0 % , compared with the prior year , due to lower pretax earnings and higher income taxes . ▪ diluted earnings per share from continuing operations decreased 27.9 % from the prior year to $ 2.15 due to lower net income offset by share repurchases . ▪ earnings from continuing operations before interest , taxes , depreciation and amortization ( ebitda ) decreased $ 142.5 million , or 15.1 % , to $ 798.9 million . see `` non-gaap financial information `` at the end of this item for a reconciliation of non-gaap measures . results of operations our subsidiaries provide assisted , diy , and virtual tax preparation solutions through multiple channels ( including in-person , online and mobile applications , virtual , and desktop software ) and distribute h & r block-branded products and services , including those of our financial partners , to the general public primarily in the u.s. , canada , australia , and their respective territories . tax returns are either prepared by h & r block tax professionals ( in company-owned or franchise offices , virtually or via an internet review ) or prepared and filed by our clients through our diy tax solutions . we operate as a single segment that includes all of our continuing operations , which are designed to enable clients to obtain tax preparation services seamlessly . h & r block , inc. | 2019 form 10-k 23 replace_table_token_4_th ( 1 ) an assisted tax return is defined as a current or prior year individual tax return that has been accepted and paid for by the client . also included are tax pro go sm , tax pro review sm , and business returns . a diy return is defined as a return that has been electronically filed and accepted by the irs . also included are online returns paid and printed . ( 2 ) net average charge is calculated as tax preparation fees divided by tax returns prepared . for diy , net average charge excludes irs free file . ( 3 ) net average charge related to h & r block franchise operations represents tax preparation fees collected by h & r block franchisees divided by returns prepared in franchise offices . h & r block will recognize a portion of franchise revenues as franchise royalties based on the terms of franchise agreements . we provide net average charge as a key operating metric because we consider it an important supplemental measure useful to analysts , investors , and other interested parties as it provides insights into pricing and tax return mix relative to our customer base , which are significant drivers of revenue . our definition of net average charge may not be comparable to similarly titled measures of other companies . 24 2019 form 10-k | h & r block , inc. replace_table_token_5_th ( 1 ) we reclassified $ 31.0 million of supplies expense from its own financial statement line to other expenses for fiscal year 2018 to conform to the current year presentation . ( 2 ) see `` non-gaap financial information `` at the end of this item for a reconciliation of non-gaap measures . fiscal 2019 compared to fiscal 2018 revenues decreased $ 65.1 million , or 2.1 % , compared to the prior year . u.s. assisted tax preparation fees decreased $ 88.2 million , or 4.5 % , primarily due to a decrease in net average charge of 4.0 % due to lower prices . u.s. diy tax preparation fees increased $ 16.9 million , or 7.0 % , primarily due to higher online volumes . h & r block , inc. | 2019 form 10-k 25 total operating expenses increased $ 71.2 million or 3.0 % from the prior year . field wages increased $ 10.7 million , or 1.4 % , due to higher office labor cost , including short-term incentives . other wages increased $ 25.1 million , or 13.1 % , primarily due to higher information technology wages and short-term incentive increases . occupancy expenses were consistent with the prior year , largely due to prior year write-offs of leasehold improvements for approximately 400 offices that we decided to permanently close , offset by lease buyout payments related to those offices in the current year . marketing expenses increased $ 20.7 million , or 8.3 % , primarily due to higher online advertising . depreciation and amortization decreased $ 16.6 million , or 9.1 % , primarily due to lower depreciation on equipment and amortization of internally developed software . story_separator_special_tag the income tax laws of jurisdictions in which we operate are complex and subject to different interpretations by the taxpayer and applicable government taxing authorities . income tax returns filed by us are based on our interpretation of these rules . the amount of income taxes we pay is subject to ongoing audits by federal , state and foreign tax authorities , which may result in proposed assessments , including interest or penalties . we accrue a liability for unrecognized tax benefits arising from uncertain tax positions reflecting our judgment as to the ultimate resolution of the applicable issues . assumptions and approach used . differences between a tax position taken or expected to be taken in our tax returns and the amount of benefit recorded in our financial statements result in unrecognized tax benefits . unrecognized tax benefits are recorded in the balance sheet as either a liability or reductions to recorded tax assets , as applicable . our uncertain tax positions arise from items such as apportionment of income for state purposes , transfer pricing , and the deductibility of related party transactions . we evaluate each uncertain tax position based on its technical merits . for each position , we consider all applicable information including relevant tax laws , the taxing authorities potential position , our tax return position , and the possible settlement outcomes to determine the amount of liability to record . in making this determination , we assume the tax authority has all relevant information at its disposal . sensitivity of estimate to change . our assessment of the technical merits and measurement of tax benefits associated with uncertain tax positions is subject to a high degree of judgment and estimation . actual results may differ from our current judgments due to a variety of factors , including changes in law , interpretations of law by taxing authorities that differ from our assessments , changes in the jurisdictions in which we operate and results of routine tax examinations . we believe we have adequately provided for any reasonably foreseeable outcome related to these matters . however , our future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved , or when statutes of limitation on potential assessments expire . as a result , our effective tax rate may fluctuate on a quarterly basis . h & r block , inc. | 2019 form 10-k 27 see the additional discussion in item 8 , note 10 to the consolidated financial statements . new accounting pronouncements see item 8 , note 1 to the consolidated financial statements for a discussion of recently issued accounting pronouncements . financial condition these comments should be read in conjunction with the consolidated balance sheets and consolidated statements of cash flows included in item 8 . capital resources and liquidity – overview – our primary sources of capital and liquidity include cash from operations ( including changes in working capital ) , draws on our 2018 cloc , and issuances of debt . we use our sources of liquidity primarily to fund working capital , service and repay debt , pay dividends , repurchase shares of our common stock , and acquire businesses . our operations are highly seasonal and substantially all of our revenues and cash flow are generated during the period from february through april . therefore , we require the use of cash to fund losses and working capital needs from may through january , and typically rely on available cash balances from the prior tax season and borrowings to meet our off-season liquidity needs . given the likely availability of a number of liquidity options discussed herein , we believe that , in the absence of any unexpected developments , our existing sources of capital as of april 30 , 2019 are sufficient to meet our future operating and financing needs . discussion of consolidated statements of cash flows – the following table summarizes our statements of cash flows for fiscal years 2019 and 2018 . see item 8 for the complete consolidated statements of cash flows for these periods . replace_table_token_7_th operating activities . cash provided by operating activities decreased $ 243.5 million from fiscal year 2018 . the decrease from the prior year was primarily due to lower net income and higher taxes paid compared to the prior year . investing activities . story_separator_special_tag a material adverse impact on the emerald advance tm product , our business , and our consolidated financial position , results of operations , and cash flows . we will continue to analyze the potential impact on the company as the court case and the cfpb 's pending rulemaking process progress . from time to time , we receive inquiries from governmental authorities regarding the applicability of laws to our services and products and other matters relating to our business . we can not predict what effect future laws , changes in interpretations of existing laws or the results of future governmental inquiries with respect to services and products or other matters relating to our business may have on our consolidated financial position , results of operations and cash flows . we have received certain governmental inquiries relating to our irs free file program . we may also be subject to future inquiries or other proceedings regarding this program or other aspects of our business . regulatory inquiries may result in the incurrence of additional expense , diversion of management 's attention , adverse judgments , 30 2019 form 10-k | h & r block , inc. settlements , fines , penalties , injunctions or other relief . see additional discussion of legal matters in item 8 , note 13 to the consolidated financial statements . non-gaap financial information non-gaap financial measures should not be considered as a substitute for , or superior to , measures of financial performance prepared in accordance with gaap . because these measures are Narrative : cash used in investing activities totaled $ 155.1 million compared to $ 112.1 million in the prior year . this change is principally due to a $ 40.0 million investment in an available-for-sale debt security in the current fiscal year . financing activities . cash used in financing activities increased $ 213.0 million . this increase resulted primarily from higher share repurchase activity in the current year and lower stock option exercises compared to the prior year . cash requirements – dividends and share repurchase . returning capital to shareholders in the form of dividends and the repurchase of outstanding shares has historically been a significant component of our capital allocation plan . we have consistently paid quarterly dividends . dividends paid totaled $ 205.5 million and $ 200.5 million in fiscal years 2019 and 2018 , respectively . although we have historically paid dividends and plan to continue to do so , there can be no assurances that circumstances will not change in the future that could affect our ability or decisions to pay dividends . 28 2019 form 10-k | h & r block , inc. in september 2015 , our board of directors approved a $ 3.5 billion share repurchase program , effective through june 2019. as a part of the repurchase program , in the current year , we purchased $ 184.8 million of our common stock at an average price of $ 23.51 per share . see item 8 , note 8 to the consolidated financial statements for additional information . in june 2019 , our board of directors extended its previous share repurchase authorization for three years . approximately $ 1.0 billion remains under this authorization , which now expires in june 2022. these repurchases may be effectuated through open market transactions , some of which may be effectuated under sec rule 10b5-1 . the company may cancel , suspend , or extend the time period for the purchase of shares at any time . any repurchases will be funded primarily through available cash and cash from operations . although we may continue to repurchase shares , there is no assurance that we will purchase up to the full board authorization .

we believe the ability to leverage one team to serve both markets will result in significant productivity and cost optimization as we continue to scale our business . we are executing a well-defined , three-pronged strategy designed to expand gross margins . first , we have insourced our console manufacturing to help lower console cost . second , we are adding a second-source contract manufacturer for our cartridges to gain higher efficiency and lower material cost . third , we will continue to utilize our cloud-based data system , as well as enhanced product performance , to help drive down the cost of service . we generate revenue primarily from the initial sale of tablo consoles , and recurring sales of per-treatment consumables , including the tablo cartridge , which generates significant total revenue over the life of the console . we generate additional revenue via annual service contracts and shipping and handling charged to customer . our total revenue was $ 49.9 million , $ 15.1 million and $ 2.0 million for the years ended december 31 , 2020 , 2019 and 2018 , respectively . for the years ended december 31 , 2020 , 2019 and 2018 , we incurred net losses of $ 121.5 million , $ 68.3 million and $ 49.8 million , respectively . as of december 31 , 2020 , we had an accumulated deficit of $ 494.1 million . 85 initial public offering on september 17 , 2020 , we completed our ipo , in which we sold 10,293,777 shares of common stock ( which included 1,342,666 shares that were offered and sold pursuant to the full exercise of the ipo underwriters ' option to purchase additional shares in connection with the ipo ) at a price to the public of $ 27.00 per share . including the full exercise of the underwriters ' option to purchase additional shares , we received aggregate net proceeds of approximately $ 254.8 million after deducting offering costs , underwriting discounts and commissions of approximately $ 23.1 million . upon the closing of the ipo , all of our outstanding redeemable convertible preferred stock automatically converted into shares of common stock . factors affecting our business market acceptance of tablo in acute setting . we plan to broaden our installed base by continuing to target idns and health systems , the va and sub-acute ltach and snf providers . in addition , we plan to focus on driving utilization and fleet expansion with existing customers by providing an exceptional user experience delivered through our commercial team and a steady release of software enhancements that amplify tablo 's operational reliability . our ability to successfully execute on this strategy , and thereby increase our revenue , will in part drive our results of operations and impact on our business . expansion of tablo within the home setting . we believe a significant growth opportunity exists within the home hemodialysis market . we are partnering with health systems and innovative dialysis clinic providers who are motivated to grow their home hemodialysis population , and who share our vision of creating a seamless and supported transition to the home . we will also invest in market development over the longer term to expand the home hemodialysis market itself . the expansion of the home hemodialysis market and our ability to penetrate this market will be an important factor in driving the future growth of our business . cost of revenue . the results of our business will depend in part on our ability to increase our gross margins by more effectively managing our costs to produce tablo consoles and consumables , as well as subsequently servicing tablo for our customers . the tablo cartridge is currently produced by our contract manufacturer based in thailand , and , until recently , we exclusively relied on our contract manufacturer based in morgan hill , california for production of the tablo console . utilizing these contract manufacturers has resulted in higher direct console and cartridge costs . as a result , cost of product revenue was $ 57.0 million , $ 27.2 million and $ 7.8 million for the years ended december 31 , 2020 , 2019 and 2018 , respectively . we are currently undertaking a number of initiatives in order to help reduce these costs . we recently established a new manufacturing facility for the production of tablo consoles in tijuana , mexico which we operate in collaboration with our outsourced business administration service provider , tacna , and have begun manufacturing in the first quarter of 2021. in addition , we are moving production of a majority of tablo cartridges from our existing contract manufacturing partner to a new contract manufacturer , also located in tijuana , mexico . our ability to grow our business will depend in part on these and other measures to control the costs of producing tablo being successful . likewise , it will be important that we effectively manage the costs of generating our service revenue . our cost of service and other revenue was $ 5.9 million , $ 5.7 million and $ 0.3 million for the years ended december 31 , 2020 , 2019 and 2018. impacts of the covid-19 pandemic . in march 2020 , the world health organization declared the global outbreak of covid-19 to be a pandemic . since then , covid-19 has continued to spread throughout much of the united states and the world causing uncertainty and disruption to business activities . we continue to closely monitor the recent developments surrounding the continued spread and potential resurgence of covid-19 . the results of our business may be impacted by developments related to the covid-19 pandemic . story_separator_special_tag this was offset by $ 15.9 million in increased costs as a result of selling more product and a $ 5.5 million increase in in higher manufacturing overhead , which was , in turn , driven by a $ 2.2 million investment in our new manufacturing facility in tijuana , mexico , a $ 1.0 million increase in allocated costs and a $ 0.8 million increase in compensation and personnel costs . research and development research and development expenses increased by $ 5.5 million , or 24 % , for the year ended december 31 , 2020 as compared to the year ended december 31 , 2019. the increase was primarily due to a $ 6.1 million increase in compensation and personnel costs , which includes a $ 4.3 million increase in stock-based compensation expense , and a $ 0.3 million increase in materials and supplies . these increases were partially offset by a $ 0.9 million decrease in professional service and consultant service expenses . sales and marketing sales and marketing expenses increased by $ 24.8 million , or 122 % for the year ended december 31 , 2020 as compared to the year ended december 31 , 2019. the increase was primarily due to a $ 22.4 million increase in compensation and personnel costs as a result of increased headcount , which includes a $ 4.3 million increase in stock-based compensation expense , and a $ 10.1 million increase in commission expense as a result of higher orders , a $ 0.9 million increase in supplies , materials and freight expenses related to increased activities in support of driving penetration of tablo , a $ 0.9 million increase in facilities and other allocated costs and a $ 0.6 million increase in professional service and consultant service expenses . general and administrative general and administrative expenses increased by $ 21.6 million , or 242 % , for the year ended december 31 , 2020 as compared to the year ended december 31 , 2019. the increase was primarily due to a $ 17.2 million increase in compensation and personnel costs , which includes a $ 11.8 million increase in stock-based compensation expense , a $ 4.5 million increase in professional and consultant services associated with being a public company including legal , accounting , and secondary offering costs , and a $ 0.3 million increase in depreciation expense . the increases were partially offset by a $ 0.4 million decrease in facilities and other allocated costs . interest income and other income , net interest income and other income , net decreased by $ 2.0 million , or 79 % , for the year ended december 31 , 2020 as compared to the year ended december 31 , 2019. this decrease was driven by lower interest rates and a lower average balance in money market funds and short-term investment securities during 2020 . 91 interest expense interest expense decreased by $ 1.4 million , or 32 % , for the year ended december 31 , 2020 as compared to the year ended december 31 , 2019. this decrease was primarily due to a lower debt discount amortization expense in the year ended december 31 , 2020 , the repayment of our perceptive term loan in july 2020 and a lower interest rate under the svb term loan . change in fair value of redeemable convertible preferred stock warrant liability the change in the fair value of redeemable convertible preferred stock warrant liability was driven by the changes in assumptions used to value the warrant liability . upon the closing of our ipo in september 2020 , all shares of our outstanding redeemable convertible preferred stock warrants were either exercised into common stock or automatically converted into warrants to purchase common stock . accordingly , we have ceased to incur the change in fair value of redeemable convertible preferred stock warrant liability as the entire redeemable convertible preferred stock warrant liability was reclassified to additional paid-in capital . loss on extinguishment of term loan the loss on extinguishment of term loan of $ 1.6 million was recognized for the repayment of the perceptive term loan in july 2020 , which included early prepayment and exit fees . comparison of years ended december 31 , 2019 and 2018 the following table summarizes our results of operations for the years ended december 31 , 2019 and 2018 ( in thousands , except percentages ) : replace_table_token_7_th * not meaningful 92 revenue product revenue product revenue increased by $ 12.0 million , or 686 % , for the year ended december 31 , 2019 , compared to the year ended december 31 , 2018. the increase was primarily due to $ 10.0 million in higher tablo console revenue , which was driven by new customer adoption and fleet expansion with existing customers , as well as $ 0.5 million in increased console leasing revenue and $ 1.0 million in increased sales of tablo consumables , including cartridges , given our higher tablo installed base . service and other revenue service and other revenue increased by $ 1.1 million , or 415 % , for the year ended december 31 , 2019 , compared to the year ended december 31 , 2018. the increase was primarily due to growth in service contracts as a result of a higher tablo installed base , as well as services associated with leased consoles . cost of revenue cost of product revenue cost of product revenue increased by $ 19.4 million , or 248 % , for the year ended december 31 , 2019 , compared to the year ended december 31 , 2018. this increase was primarily due to higher console and consumable volume of $ 30.1 million , which was offset by a $ 10.6 million reduction in product costs and expense associated with upgrading certain prior generation consoles . cost of service and other revenue cost of service and other revenue increased by $ 5.4

net cash flows from operating activities net cash used in operating activities of $ 99.0 million for the year ended december 30 , 2020 was due to a net loss of $ 121.5 million and a net cash outflow from the change in our operating assets and liabilities of $ 5.8 million , partially offset by non-cash adjustments for stock-based compensation expense of $ 21.4 million , depreciation and amortization of $ 3.2 million , loss on extinguishment of term loan of $ 1.6 million , non-cash interest expense of $ 0.6 million , non-cash lease expense of $ 0.6 million , provision for inventories of $ 0.5 million , loss on disposal of property and equipment of $ 0.2 million , and change in fair value of redeemable convertible preferred stock warrant liability of $ 0.1 million . the net cash outflow from operating assets and liabilities was primarily due to an increase in inventories of $ 16.3 million due to the timing of inventory purchases including advance purchases of inventory due to anticipated demand , an increase in prepaid expenses and other assets of $ 6.2 million , an increase in accounts receivable of $ 2.6 million due to timing of collections , and an increase in accrued interest of $ 0.2 million for the svb term loan . the net cash outflow from operating assets and liabilities was partially offset by an increase in accrued payroll and related benefits of $ 9.9 million due to an increase in headcount , an increase in accrued expenses and other current liabilities of $ 4.8 million consistent with the growth of our business , an increase in deferred revenue of $ 2.8 million , an increase in accrued warranty liability of $ 1.2 million , an increase in accounts payable of $ 0.7 million due to timing of vendor payments , and an increase in operating lease liability of $ 0.1 million .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we believe the ability to leverage one team to serve both markets will result in significant productivity and cost optimization as we continue to scale our business . we are executing a well-defined , three-pronged strategy designed to expand gross margins . first , we have insourced our console manufacturing to help lower console cost . second , we are adding a second-source contract manufacturer for our cartridges to gain higher efficiency and lower material cost . third , we will continue to utilize our cloud-based data system , as well as enhanced product performance , to help drive down the cost of service . we generate revenue primarily from the initial sale of tablo consoles , and recurring sales of per-treatment consumables , including the tablo cartridge , which generates significant total revenue over the life of the console . we generate additional revenue via annual service contracts and shipping and handling charged to customer . our total revenue was $ 49.9 million , $ 15.1 million and $ 2.0 million for the years ended december 31 , 2020 , 2019 and 2018 , respectively . for the years ended december 31 , 2020 , 2019 and 2018 , we incurred net losses of $ 121.5 million , $ 68.3 million and $ 49.8 million , respectively . as of december 31 , 2020 , we had an accumulated deficit of $ 494.1 million . 85 initial public offering on september 17 , 2020 , we completed our ipo , in which we sold 10,293,777 shares of common stock ( which included 1,342,666 shares that were offered and sold pursuant to the full exercise of the ipo underwriters ' option to purchase additional shares in connection with the ipo ) at a price to the public of $ 27.00 per share . including the full exercise of the underwriters ' option to purchase additional shares , we received aggregate net proceeds of approximately $ 254.8 million after deducting offering costs , underwriting discounts and commissions of approximately $ 23.1 million . upon the closing of the ipo , all of our outstanding redeemable convertible preferred stock automatically converted into shares of common stock . factors affecting our business market acceptance of tablo in acute setting . we plan to broaden our installed base by continuing to target idns and health systems , the va and sub-acute ltach and snf providers . in addition , we plan to focus on driving utilization and fleet expansion with existing customers by providing an exceptional user experience delivered through our commercial team and a steady release of software enhancements that amplify tablo 's operational reliability . our ability to successfully execute on this strategy , and thereby increase our revenue , will in part drive our results of operations and impact on our business . expansion of tablo within the home setting . we believe a significant growth opportunity exists within the home hemodialysis market . we are partnering with health systems and innovative dialysis clinic providers who are motivated to grow their home hemodialysis population , and who share our vision of creating a seamless and supported transition to the home . we will also invest in market development over the longer term to expand the home hemodialysis market itself . the expansion of the home hemodialysis market and our ability to penetrate this market will be an important factor in driving the future growth of our business . cost of revenue . the results of our business will depend in part on our ability to increase our gross margins by more effectively managing our costs to produce tablo consoles and consumables , as well as subsequently servicing tablo for our customers . the tablo cartridge is currently produced by our contract manufacturer based in thailand , and , until recently , we exclusively relied on our contract manufacturer based in morgan hill , california for production of the tablo console . utilizing these contract manufacturers has resulted in higher direct console and cartridge costs . as a result , cost of product revenue was $ 57.0 million , $ 27.2 million and $ 7.8 million for the years ended december 31 , 2020 , 2019 and 2018 , respectively . we are currently undertaking a number of initiatives in order to help reduce these costs . we recently established a new manufacturing facility for the production of tablo consoles in tijuana , mexico which we operate in collaboration with our outsourced business administration service provider , tacna , and have begun manufacturing in the first quarter of 2021. in addition , we are moving production of a majority of tablo cartridges from our existing contract manufacturing partner to a new contract manufacturer , also located in tijuana , mexico . our ability to grow our business will depend in part on these and other measures to control the costs of producing tablo being successful . likewise , it will be important that we effectively manage the costs of generating our service revenue . our cost of service and other revenue was $ 5.9 million , $ 5.7 million and $ 0.3 million for the years ended december 31 , 2020 , 2019 and 2018. impacts of the covid-19 pandemic . in march 2020 , the world health organization declared the global outbreak of covid-19 to be a pandemic . since then , covid-19 has continued to spread throughout much of the united states and the world causing uncertainty and disruption to business activities . we continue to closely monitor the recent developments surrounding the continued spread and potential resurgence of covid-19 . the results of our business may be impacted by developments related to the covid-19 pandemic . story_separator_special_tag this was offset by $ 15.9 million in increased costs as a result of selling more product and a $ 5.5 million increase in in higher manufacturing overhead , which was , in turn , driven by a $ 2.2 million investment in our new manufacturing facility in tijuana , mexico , a $ 1.0 million increase in allocated costs and a $ 0.8 million increase in compensation and personnel costs . research and development research and development expenses increased by $ 5.5 million , or 24 % , for the year ended december 31 , 2020 as compared to the year ended december 31 , 2019. the increase was primarily due to a $ 6.1 million increase in compensation and personnel costs , which includes a $ 4.3 million increase in stock-based compensation expense , and a $ 0.3 million increase in materials and supplies . these increases were partially offset by a $ 0.9 million decrease in professional service and consultant service expenses . sales and marketing sales and marketing expenses increased by $ 24.8 million , or 122 % for the year ended december 31 , 2020 as compared to the year ended december 31 , 2019. the increase was primarily due to a $ 22.4 million increase in compensation and personnel costs as a result of increased headcount , which includes a $ 4.3 million increase in stock-based compensation expense , and a $ 10.1 million increase in commission expense as a result of higher orders , a $ 0.9 million increase in supplies , materials and freight expenses related to increased activities in support of driving penetration of tablo , a $ 0.9 million increase in facilities and other allocated costs and a $ 0.6 million increase in professional service and consultant service expenses . general and administrative general and administrative expenses increased by $ 21.6 million , or 242 % , for the year ended december 31 , 2020 as compared to the year ended december 31 , 2019. the increase was primarily due to a $ 17.2 million increase in compensation and personnel costs , which includes a $ 11.8 million increase in stock-based compensation expense , a $ 4.5 million increase in professional and consultant services associated with being a public company including legal , accounting , and secondary offering costs , and a $ 0.3 million increase in depreciation expense . the increases were partially offset by a $ 0.4 million decrease in facilities and other allocated costs . interest income and other income , net interest income and other income , net decreased by $ 2.0 million , or 79 % , for the year ended december 31 , 2020 as compared to the year ended december 31 , 2019. this decrease was driven by lower interest rates and a lower average balance in money market funds and short-term investment securities during 2020 . 91 interest expense interest expense decreased by $ 1.4 million , or 32 % , for the year ended december 31 , 2020 as compared to the year ended december 31 , 2019. this decrease was primarily due to a lower debt discount amortization expense in the year ended december 31 , 2020 , the repayment of our perceptive term loan in july 2020 and a lower interest rate under the svb term loan . change in fair value of redeemable convertible preferred stock warrant liability the change in the fair value of redeemable convertible preferred stock warrant liability was driven by the changes in assumptions used to value the warrant liability . upon the closing of our ipo in september 2020 , all shares of our outstanding redeemable convertible preferred stock warrants were either exercised into common stock or automatically converted into warrants to purchase common stock . accordingly , we have ceased to incur the change in fair value of redeemable convertible preferred stock warrant liability as the entire redeemable convertible preferred stock warrant liability was reclassified to additional paid-in capital . loss on extinguishment of term loan the loss on extinguishment of term loan of $ 1.6 million was recognized for the repayment of the perceptive term loan in july 2020 , which included early prepayment and exit fees . comparison of years ended december 31 , 2019 and 2018 the following table summarizes our results of operations for the years ended december 31 , 2019 and 2018 ( in thousands , except percentages ) : replace_table_token_7_th * not meaningful 92 revenue product revenue product revenue increased by $ 12.0 million , or 686 % , for the year ended december 31 , 2019 , compared to the year ended december 31 , 2018. the increase was primarily due to $ 10.0 million in higher tablo console revenue , which was driven by new customer adoption and fleet expansion with existing customers , as well as $ 0.5 million in increased console leasing revenue and $ 1.0 million in increased sales of tablo consumables , including cartridges , given our higher tablo installed base . service and other revenue service and other revenue increased by $ 1.1 million , or 415 % , for the year ended december 31 , 2019 , compared to the year ended december 31 , 2018. the increase was primarily due to growth in service contracts as a result of a higher tablo installed base , as well as services associated with leased consoles . cost of revenue cost of product revenue cost of product revenue increased by $ 19.4 million , or 248 % , for the year ended december 31 , 2019 , compared to the year ended december 31 , 2018. this increase was primarily due to higher console and consumable volume of $ 30.1 million , which was offset by a $ 10.6 million reduction in product costs and expense associated with upgrading certain prior generation consoles . cost of service and other revenue cost of service and other revenue increased by $ 5.4 Narrative : net cash flows from operating activities net cash used in operating activities of $ 99.0 million for the year ended december 30 , 2020 was due to a net loss of $ 121.5 million and a net cash outflow from the change in our operating assets and liabilities of $ 5.8 million , partially offset by non-cash adjustments for stock-based compensation expense of $ 21.4 million , depreciation and amortization of $ 3.2 million , loss on extinguishment of term loan of $ 1.6 million , non-cash interest expense of $ 0.6 million , non-cash lease expense of $ 0.6 million , provision for inventories of $ 0.5 million , loss on disposal of property and equipment of $ 0.2 million , and change in fair value of redeemable convertible preferred stock warrant liability of $ 0.1 million . the net cash outflow from operating assets and liabilities was primarily due to an increase in inventories of $ 16.3 million due to the timing of inventory purchases including advance purchases of inventory due to anticipated demand , an increase in prepaid expenses and other assets of $ 6.2 million , an increase in accounts receivable of $ 2.6 million due to timing of collections , and an increase in accrued interest of $ 0.2 million for the svb term loan . the net cash outflow from operating assets and liabilities was partially offset by an increase in accrued payroll and related benefits of $ 9.9 million due to an increase in headcount , an increase in accrued expenses and other current liabilities of $ 4.8 million consistent with the growth of our business , an increase in deferred revenue of $ 2.8 million , an increase in accrued warranty liability of $ 1.2 million , an increase in accounts payable of $ 0.7 million due to timing of vendor payments , and an increase in operating lease liability of $ 0.1 million .

the enterprise software ( “ es ” ) segment provides municipal and county governments and schools with software systems and services to meet their information technology and automation needs for mission-critical “ back-office ” functions such as : financial management ; courts and justice processes ; public safety ; planning , regulatory and maintenance ; land and vital records management ; and data analytics . the appraisal and tax ( “ a & t ” ) segment provides systems and software that automate the appraisal and assessment of real and personal property as well as property appraisal outsourcing services for local governments and taxing authorities . property appraisal outsourcing services include : the physical inspection of commercial and residential properties ; data collection and processing ; computer analysis for property valuation ; preparation of tax rolls ; community education ; and arbitration between taxpayers and the assessing jurisdiction . 21 our total employee count increased to 4,525 at december 31 , 2018 , from 4,069 at december 31 , 2017 . for the twelve months ended december 31 , 2018 , total revenues increased 11 % compared to the prior year . organic revenue growth was 9 % for the twelve months ended december 31 , 2018 , compared to the prior year period and revenues from acquisitions contributed 2 % of growth for the twelve months ended december 31 , 2018 . subscriptions revenue grew 28 % for the twelve months ended december 31 , 2018 , due to a gradual shift toward cloud-based , software as a service business , as well as continued strong growth in our e-filing revenues from courts and the addition of new subscription revenues from the acquisition of socrata . organic subscriptions revenue increased 21 % for the twelve months ended december 31 , 2018 . our backlog at december 31 , 2018 was $ 1.25 billion , a 2 % increase from last year . recent acquisitions on december 7 , 2018 , we acquired certain assets and intellectual property of scenedoc , inc. ( `` scenedoc `` ) , a company that provides mobile-first , software-as-a-service ( saas ) field reporting for law enforcement agencies . the total purchase price was approximately $ 6.2 million , of which $ 5.4 million was paid in cash and approximately $ 759,000 accrued for a working capital holdback . as of december 31 , 2018 , the purchase price allocation for scenedoc is not yet complete . the preliminary estimates of fair value assumed at the acquisition date for intangible assets , receivables and deferred revenue and related deferred taxes are subject to change as valuations are finalized . on october 1 , 2018 , we acquired all of the equity interests of trademaster , inc. dba mobileeyes ( `` mobileeyes `` ) , a company that develops software to improve public safety by supporting fire prevention and suppression , emergency response , and structural safety . the total purchase price was approximately $ 5.3 million in cash . on august 31 , 2018 , we acquired all of the assets of caseloadpro , l. p. ( `` caseloadpro `` ) , a company that provides a fully featured probation case management system . the purchase price of $ 9.3 million was paid in cash . on april 30 , 2018 , we acquired all of the capital stock of socrata , inc. ( `` socrata `` ) , a company that provides open data and data-as-a-service solutions including cloud-based data integration , visualization , analysis , and reporting solutions for federal , state and local government agencies . the purchase price , net of cash acquired of $ 1.7 million , was $ 147.6 million in cash . on april 30 , 2018 , we acquired all of the equity interests of sage data security , llc ( `` sage `` ) , a cybersecurity company offering a suite of services that supports an entire cybersecurity lifecycle , including program development , education and training , technical testing , advisory services , and digital forensics . the total purchase price was $ 11.6 million paid in cash . as of december 31 , 2018 , the purchase price allocations for sage , socrata , caseloadpro , and mobileeyes are complete . the operating results of all 2018 acquisitions are included with the operating results of the enterprise software segment since their date of acquisition . revenues from socrata included in tyler 's results of operations totaled approximately $ 13.9 million and the net loss was $ 11.5 million for the twelve months ended december 31 , 2018 . the impact of the sage , caseloadpro , mobileeyes and scenedoc acquisitions , individually and in the aggregate , on our operating results , assets and liabilities is not material . our balance sheet as of december 31 , 2018 , reflects the allocation of the purchase price to the assets acquired based on their fair value at the date of each acquisition . the fair value of the assets and liabilities acquired are based on valuations using level iii , unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities . we monitor and analyze several key performance indicators in order to manage our business and evaluate our financial and operating performance . these indicators include the following : revenues – we derive our revenues from five primary sources : sale of software licenses and royalties ; subscription-based arrangements ; software services ; maintenance ; and appraisal services . subscriptions and maintenance are considered recurring revenue sources and comprised approximately 65 % of our revenue in 2018 . the number of new saas clients and the number of existing clients who convert from our traditional software arrangements to our saas model are a significant driver to our business , together with new software license sales and maintenance rate increases . story_separator_special_tag the assessment of recoverability or of the estimated useful life for amortization purposes will be affected if the timing or the amount of estimated future operating cash flows is not achieved . such indicators may include , among others : a significant decline in expected future cash flows ; a sustained , significant decline in stock price and market capitalization ; a significant adverse change in legal factors or in the business climate ; unanticipated competition ; and reductions in growth rates . in addition , products , capabilities , or technologies developed by others may render our software products obsolete or non-competitive . any adverse change in these factors could have a significant impact on the recoverability of goodwill or other intangible assets . share-based compensation . we have a stock incentive plan that provides for the grant of stock options , restricted stock units and performance stock units to key employees , directors and non-employee consultants . we estimate the fair value of share-based awards on the date of grant . share-based compensation expense includes the estimated effects of forfeitures , which will be adjusted over the requisite service period to the extent actual forfeitures differ or are expected to differ from such estimates . changes in estimated forfeitures are recognized in the period of change and will also impact the amount of expense to be recognized in future periods . forfeiture rate assumptions are derived from historical data . we estimate stock price volatility at the date of grant based on the historical volatility of our common stock . estimated option life is determined using the weighted-average period the stock options are expected to be outstanding based primarily on the options ' vesting terms , remaining contractual life and the employees ' expected exercise based on historical patterns . determining the appropriate fair-value model and calculating the fair value of share-based awards at the grant date requires considerable judgment , including estimating stock price volatility , expected option life and forfeiture rates . 26 analysis of results of operations and other the following discussion compares the historical results of operations on a basis consistent with gaap for the years ended december 31 , 2018 , 2017 and 2016 . replace_table_token_2_th 27 2018 compared to 2017 revenues on april 30 , 2018 , we acquired socrata , a company that provides open data and data-as-a-service solutions for federal , state and local government agencies including cloud-based data integration , visualization , analysis , and reporting solutions . the following table details revenue for socrata for the periods presented as of december 31 , 2018 , which is included in our consolidated statements of income : 2018 revenues : software licenses and royalties $ — subscriptions 12,106 software services 1,751 maintenance — appraisal services — hardware and other 20 total revenues $ 13,877 on december 7 , 2018 , we acquired scenedoc , inc. , a company that provides mobile-first , software-as-a-service ( saas ) field reporting for law enforcement agencies . on october 1 , 2018 , we acquired mobileeyes , a company that develops software to improve public safety by supporting fire prevention and suppression , emergency response , and structural safety . on august 31 , 2018 , we acquired caseloadpro , a company that provides a fully featured probation case management system . on april 30 , 2018 , we also acquired sage , a cybersecurity company offering a suite of services that supports an entire cybersecurity lifecycle . the impact of these acquisitions on our operating results is not considered material , individually and in the aggregate , and is not included in the table above . the results of these acquisitions are included with the operating results of the es segment from their dates of acquisition . for comparative purposes , we have provided explanations for changes in operations to exclude results of operations for these acquisitions noting the exclusion . software licenses and royalties . the following table sets forth a comparison of our software licenses and royalties revenue for the years ended december 31 : replace_table_token_3_th software license and royalties revenue grew 8 % compared to the prior year . the majority of this growth was due to an active marketplace as the result of generally positive local government economic conditions , as well as our increasingly strong competitive position , which we attribute in part to our investment in product development in recent years . an increase in the number of larger contracts related to our planning , regulatory and maintenance solutions and public safety solutions also contributed to the growth in license revenue . although the mix of new contracts between subscription-based and perpetual license arrangements may vary from quarter to quarter and year to year , we expect our longer-term software license growth rate to be negatively impacted by a growing number of customers choosing our subscription-based options , rather than purchasing the software under a traditional perpetual software license arrangement . subscription-based arrangements result in lower software license revenue in the initial year as compared to perpetual software license arrangements but generate higher overall revenue over the term of the contract . our new client mix in 2018 was approximately 47 % selecting perpetual software license arrangements and approximately 53 % selecting subscription-based arrangements compared to a client mix in 2017 of approximately 53 % selecting perpetual software license arrangements and approximately 47 % selecting subscription-based arrangements . 28 subscriptions . the following table sets forth a comparison of our subscriptions revenue for the years ended december 31 : replace_table_token_4_th subscription-based revenue primarily consists of revenue derived from our saas arrangements , which generally utilize the tyler private cloud . as part of our subscription-based services , we also provide electronic document filing solutions ( “ e-filing ” ) that simplify the filing and management of court related documents for courts and law offices . e-filing revenue is derived from transaction fees and fixed fee arrangements .

financial condition and liquidity as of december 31 , 2018 , we had cash and cash equivalents of $ 134.3 million compared to $ 185.9 million at december 31 , 2017 . we also had $ 97.7 million invested in investment grade corporate bonds , municipal bonds and asset-backed securities as of december 31 , 2018 compared to $ 63.8 million at december 31 , 2017 . these investments mature between 2018 through 2022 and we intend to hold these investments until maturity . cash and cash equivalents consist of cash on deposit with several domestic banks and money market funds . as of december 31 , 2018 , we had no outstanding borrowings and no outstanding letters of credit . we believe our revolving line of credit , cash from operating activities , cash on hand and access to the credit markets provide us with sufficient flexibility to meet our long-term financial needs . the following table sets forth a summary of cash flows for the years ended december 31 : replace_table_token_20_th net cash provided by operating activities continues to be our primary source of funds to finance operating needs and capital expenditures . other potential capital resources include cash on hand , public and private issuances of debt or equity securities , and bank borrowings . it is possible that our ability to access the capital and credit markets in the future may be limited by economic conditions or other factors .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. the enterprise software ( “ es ” ) segment provides municipal and county governments and schools with software systems and services to meet their information technology and automation needs for mission-critical “ back-office ” functions such as : financial management ; courts and justice processes ; public safety ; planning , regulatory and maintenance ; land and vital records management ; and data analytics . the appraisal and tax ( “ a & t ” ) segment provides systems and software that automate the appraisal and assessment of real and personal property as well as property appraisal outsourcing services for local governments and taxing authorities . property appraisal outsourcing services include : the physical inspection of commercial and residential properties ; data collection and processing ; computer analysis for property valuation ; preparation of tax rolls ; community education ; and arbitration between taxpayers and the assessing jurisdiction . 21 our total employee count increased to 4,525 at december 31 , 2018 , from 4,069 at december 31 , 2017 . for the twelve months ended december 31 , 2018 , total revenues increased 11 % compared to the prior year . organic revenue growth was 9 % for the twelve months ended december 31 , 2018 , compared to the prior year period and revenues from acquisitions contributed 2 % of growth for the twelve months ended december 31 , 2018 . subscriptions revenue grew 28 % for the twelve months ended december 31 , 2018 , due to a gradual shift toward cloud-based , software as a service business , as well as continued strong growth in our e-filing revenues from courts and the addition of new subscription revenues from the acquisition of socrata . organic subscriptions revenue increased 21 % for the twelve months ended december 31 , 2018 . our backlog at december 31 , 2018 was $ 1.25 billion , a 2 % increase from last year . recent acquisitions on december 7 , 2018 , we acquired certain assets and intellectual property of scenedoc , inc. ( `` scenedoc `` ) , a company that provides mobile-first , software-as-a-service ( saas ) field reporting for law enforcement agencies . the total purchase price was approximately $ 6.2 million , of which $ 5.4 million was paid in cash and approximately $ 759,000 accrued for a working capital holdback . as of december 31 , 2018 , the purchase price allocation for scenedoc is not yet complete . the preliminary estimates of fair value assumed at the acquisition date for intangible assets , receivables and deferred revenue and related deferred taxes are subject to change as valuations are finalized . on october 1 , 2018 , we acquired all of the equity interests of trademaster , inc. dba mobileeyes ( `` mobileeyes `` ) , a company that develops software to improve public safety by supporting fire prevention and suppression , emergency response , and structural safety . the total purchase price was approximately $ 5.3 million in cash . on august 31 , 2018 , we acquired all of the assets of caseloadpro , l. p. ( `` caseloadpro `` ) , a company that provides a fully featured probation case management system . the purchase price of $ 9.3 million was paid in cash . on april 30 , 2018 , we acquired all of the capital stock of socrata , inc. ( `` socrata `` ) , a company that provides open data and data-as-a-service solutions including cloud-based data integration , visualization , analysis , and reporting solutions for federal , state and local government agencies . the purchase price , net of cash acquired of $ 1.7 million , was $ 147.6 million in cash . on april 30 , 2018 , we acquired all of the equity interests of sage data security , llc ( `` sage `` ) , a cybersecurity company offering a suite of services that supports an entire cybersecurity lifecycle , including program development , education and training , technical testing , advisory services , and digital forensics . the total purchase price was $ 11.6 million paid in cash . as of december 31 , 2018 , the purchase price allocations for sage , socrata , caseloadpro , and mobileeyes are complete . the operating results of all 2018 acquisitions are included with the operating results of the enterprise software segment since their date of acquisition . revenues from socrata included in tyler 's results of operations totaled approximately $ 13.9 million and the net loss was $ 11.5 million for the twelve months ended december 31 , 2018 . the impact of the sage , caseloadpro , mobileeyes and scenedoc acquisitions , individually and in the aggregate , on our operating results , assets and liabilities is not material . our balance sheet as of december 31 , 2018 , reflects the allocation of the purchase price to the assets acquired based on their fair value at the date of each acquisition . the fair value of the assets and liabilities acquired are based on valuations using level iii , unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities . we monitor and analyze several key performance indicators in order to manage our business and evaluate our financial and operating performance . these indicators include the following : revenues – we derive our revenues from five primary sources : sale of software licenses and royalties ; subscription-based arrangements ; software services ; maintenance ; and appraisal services . subscriptions and maintenance are considered recurring revenue sources and comprised approximately 65 % of our revenue in 2018 . the number of new saas clients and the number of existing clients who convert from our traditional software arrangements to our saas model are a significant driver to our business , together with new software license sales and maintenance rate increases . story_separator_special_tag the assessment of recoverability or of the estimated useful life for amortization purposes will be affected if the timing or the amount of estimated future operating cash flows is not achieved . such indicators may include , among others : a significant decline in expected future cash flows ; a sustained , significant decline in stock price and market capitalization ; a significant adverse change in legal factors or in the business climate ; unanticipated competition ; and reductions in growth rates . in addition , products , capabilities , or technologies developed by others may render our software products obsolete or non-competitive . any adverse change in these factors could have a significant impact on the recoverability of goodwill or other intangible assets . share-based compensation . we have a stock incentive plan that provides for the grant of stock options , restricted stock units and performance stock units to key employees , directors and non-employee consultants . we estimate the fair value of share-based awards on the date of grant . share-based compensation expense includes the estimated effects of forfeitures , which will be adjusted over the requisite service period to the extent actual forfeitures differ or are expected to differ from such estimates . changes in estimated forfeitures are recognized in the period of change and will also impact the amount of expense to be recognized in future periods . forfeiture rate assumptions are derived from historical data . we estimate stock price volatility at the date of grant based on the historical volatility of our common stock . estimated option life is determined using the weighted-average period the stock options are expected to be outstanding based primarily on the options ' vesting terms , remaining contractual life and the employees ' expected exercise based on historical patterns . determining the appropriate fair-value model and calculating the fair value of share-based awards at the grant date requires considerable judgment , including estimating stock price volatility , expected option life and forfeiture rates . 26 analysis of results of operations and other the following discussion compares the historical results of operations on a basis consistent with gaap for the years ended december 31 , 2018 , 2017 and 2016 . replace_table_token_2_th 27 2018 compared to 2017 revenues on april 30 , 2018 , we acquired socrata , a company that provides open data and data-as-a-service solutions for federal , state and local government agencies including cloud-based data integration , visualization , analysis , and reporting solutions . the following table details revenue for socrata for the periods presented as of december 31 , 2018 , which is included in our consolidated statements of income : 2018 revenues : software licenses and royalties $ — subscriptions 12,106 software services 1,751 maintenance — appraisal services — hardware and other 20 total revenues $ 13,877 on december 7 , 2018 , we acquired scenedoc , inc. , a company that provides mobile-first , software-as-a-service ( saas ) field reporting for law enforcement agencies . on october 1 , 2018 , we acquired mobileeyes , a company that develops software to improve public safety by supporting fire prevention and suppression , emergency response , and structural safety . on august 31 , 2018 , we acquired caseloadpro , a company that provides a fully featured probation case management system . on april 30 , 2018 , we also acquired sage , a cybersecurity company offering a suite of services that supports an entire cybersecurity lifecycle . the impact of these acquisitions on our operating results is not considered material , individually and in the aggregate , and is not included in the table above . the results of these acquisitions are included with the operating results of the es segment from their dates of acquisition . for comparative purposes , we have provided explanations for changes in operations to exclude results of operations for these acquisitions noting the exclusion . software licenses and royalties . the following table sets forth a comparison of our software licenses and royalties revenue for the years ended december 31 : replace_table_token_3_th software license and royalties revenue grew 8 % compared to the prior year . the majority of this growth was due to an active marketplace as the result of generally positive local government economic conditions , as well as our increasingly strong competitive position , which we attribute in part to our investment in product development in recent years . an increase in the number of larger contracts related to our planning , regulatory and maintenance solutions and public safety solutions also contributed to the growth in license revenue . although the mix of new contracts between subscription-based and perpetual license arrangements may vary from quarter to quarter and year to year , we expect our longer-term software license growth rate to be negatively impacted by a growing number of customers choosing our subscription-based options , rather than purchasing the software under a traditional perpetual software license arrangement . subscription-based arrangements result in lower software license revenue in the initial year as compared to perpetual software license arrangements but generate higher overall revenue over the term of the contract . our new client mix in 2018 was approximately 47 % selecting perpetual software license arrangements and approximately 53 % selecting subscription-based arrangements compared to a client mix in 2017 of approximately 53 % selecting perpetual software license arrangements and approximately 47 % selecting subscription-based arrangements . 28 subscriptions . the following table sets forth a comparison of our subscriptions revenue for the years ended december 31 : replace_table_token_4_th subscription-based revenue primarily consists of revenue derived from our saas arrangements , which generally utilize the tyler private cloud . as part of our subscription-based services , we also provide electronic document filing solutions ( “ e-filing ” ) that simplify the filing and management of court related documents for courts and law offices . e-filing revenue is derived from transaction fees and fixed fee arrangements . Narrative : financial condition and liquidity as of december 31 , 2018 , we had cash and cash equivalents of $ 134.3 million compared to $ 185.9 million at december 31 , 2017 . we also had $ 97.7 million invested in investment grade corporate bonds , municipal bonds and asset-backed securities as of december 31 , 2018 compared to $ 63.8 million at december 31 , 2017 . these investments mature between 2018 through 2022 and we intend to hold these investments until maturity . cash and cash equivalents consist of cash on deposit with several domestic banks and money market funds . as of december 31 , 2018 , we had no outstanding borrowings and no outstanding letters of credit . we believe our revolving line of credit , cash from operating activities , cash on hand and access to the credit markets provide us with sufficient flexibility to meet our long-term financial needs . the following table sets forth a summary of cash flows for the years ended december 31 : replace_table_token_20_th net cash provided by operating activities continues to be our primary source of funds to finance operating needs and capital expenditures . other potential capital resources include cash on hand , public and private issuances of debt or equity securities , and bank borrowings . it is possible that our ability to access the capital and credit markets in the future may be limited by economic conditions or other factors .

we have an intellectual property portfolio of 125 patents related to the visual display of digital image data . we focus our research and development efforts on developing video enhancement solutions for our target markets that increase performance , video quality and device functionality while reducing power consumed . we seek to expand our technology portfolio through internal development and co-development with business partners , and we continually evaluate acquisition opportunities and other ways to leverage our technology into other high-value markets . pixelworks was founded in 1997 and is incorporated under the laws of the state of oregon . historically , significant portions of our revenue have been generated by sales to a relatively small number of end customers and distributors . we sell our products worldwide through a direct sales force , distributors and manufacturers ' representatives . we sell to distributors in china , europe , japan , korea , southeast asia , taiwan and the u.s , and our manufacturers ' representatives support some of our korean and european sales . our distributors typically provide engineering support to our end customers and often have valuable and established relationships with our end customers . in certain countries in which we operate , it is customary to sell to distributors . while distributor payment to us is not dependent upon the distributor 's ability to resell the product or to collect from the end customer , the distributors may provide longer payment terms to end customers than those we would offer . significant portions of our products are sold overseas . sales outside the u.s. accounted for approximately 83 % of revenue in 2013 , 90 % of revenue in 2012 and 96 % of revenue in 2011 . our integrators , branded manufacturers and branded suppliers incorporate our products into systems that are sold worldwide . all of our revenue to date has been denominated in u.s. dollars . 35 results of operations year ended december 31 , 2013 compared with year ended december 31 , 2012 , and year ended december 31 , 2012 compared with year ended december 31 , 2011. revenue , net net revenue was as follows ( in thousands ) : replace_table_token_4_th 2013 v. 2012 net revenue decreased $ 11.6 million , or 19 % , from 2012 to 2013. revenue related to ic product sales was $ 40.0 million and $ 54.7 million for 2013 and 2012 , respectively . revenue related to license of intellectual property ( `` ip `` ) was $ 8.1 million and $ 5.0 million for 2013 and 2012 , respectively . the decrease related to ic product sales was primarily attributable to a 32 % decrease in units sold partially offset by a 7 % increase in average selling price ( `` asp `` ) . the decrease in units sold was primarily due to decreased sales into both the digital projector and advanced television markets , primarily due the continued impact of the macro-economic environment on end market demand . the increase in asp was primarily due to increased sales of our ultra high definition advanced television product , as a percentage of our overall units sold , which has a higher asp than our other advanced television products . during the third quarter of 2013 , we entered into an agreement with a third-party to provide a non-exclusive license for a package of our technologies and to provide certain services , under which we expect to receive a total of approximately $ 10.3 million . the license revenue recorded during 2013 was primarily due to achieving milestones under this agreement . we expect to record an additional $ 2.2 million in licensing revenue related to this agreement upon the achievement of additional milestones , most of which are expected to be achieved in the first half of 2014. licensing revenue recorded in 2012 related to licensing agreements that were entered into during 2011 and 2012 . 2012 v. 2011 net revenue decreased $ 4.9 million , or 8 % , from 2011 to 2012. revenue related to ic product sales was $ 54.7 million and $ 63.6 million for 2012 and 2011 , respectively . revenue related to the license of ip was $ 5.0 million and $ 1.0 million for 2012 and 2011 , respectively . the decrease in revenue related to ic product sales was primarily attributable to a 9 % decrease in asp and a 6 % decrease in units sold . the decrease in asp was primarily due to a greater proportion of unit sales of our latest generation motionengine® co-processor ics , which have lower price points than our other product lines . the decrease in asp was also attributable to reduced pricing on our earlier generation digital projector products . the decrease in units sold was primarily due to a decrease in sales of our earlier generation digital projector products due to competitive factors affecting customer transition to next generation digital projector solutions . 36 cost of revenue and gross profit cost of revenue and gross profit were as follows ( in thousands ) : replace_table_token_5_th 1 includes purchased materials , assembly , test , labor , employee benefits and royalties , all of which are related to sales of ic products . 2 includes direct labor costs and allocated overhead associated with licensing agreements . 3 includes charges to reduce inventory to lower of cost or market and a benefit for sales of previously written down inventory . 4 includes stock-based compensation and additional amortization of a non-cancelable prepaid royalty . story_separator_special_tag as a result , we provide for these returns in our reserve for sales returns and allowances . at the end of each reporting period , we estimate the reserve for returns based on historical experience and knowledge of any applicable events or transactions . certain of our distributors have stock rotation provisions in their distributor agreements , which allow them to return a limited amount of their in-stock inventory in exchange for products of equal value . at the end of each reporting period , we estimate the reserve for stock rotations based on historical experience and knowledge of any applicable events or transactions . certain distributors also have price protection provisions in their distributor agreements with us . under the price protection provisions , we grant distributors credit if they purchased product for a specific end customer and we subsequently lower the price to the end customer such that the distributor can no longer earn its negotiated margin on in-stock inventory . at the end of each reporting period , we estimate a reserve for price protection credits based on historical experience and knowledge of any applicable events or transactions . product warranties . we warrant that our products will be free from defects in materials and workmanship for a period of twelve months from delivery . warranty repairs are guaranteed for the remainder of the original warranty period . our warranty is limited to repairing or replacing products , or refunding the purchase price . at the end of each reporting period , we estimate a reserve for warranty returns based on historical experience and knowledge of any applicable events or transactions . while we engage in extensive product quality programs and processes , which include actively monitoring and evaluating the quality of our suppliers , should actual product failure rates or product replacement costs differ from our estimates , revisions to the estimated warranty liability may be required . allowance for doubtful accounts . we offer credit to customers after careful examination of their creditworthiness . we maintain an allowance for doubtful accounts for estimated losses that may result from the inability of our customers to make required payments . at the end of each reporting period , we estimate the allowance for doubtful accounts based on our account-by-account risk analysis of outstanding receivable balances . the determination to write-off specific accounts receivable balances is made based on the likelihood of collection and past due status . past due status is based on invoice date and terms specific to each customer . if the financial condition of our customers were to deteriorate , resulting in an impairment of their ability to make payments , additional allowances may be required . inventory valuation . we value inventory at the lower of cost or market . in addition , we write down any obsolete , unmarketable or otherwise impaired inventory to net realizable value . the determination of obsolete or excess inventory requires us to estimate the future demand for our products . the estimate of future demand is compared to inventory levels to determine the amount , if any , of obsolete or excess inventory . if actual market conditions are less favorable than those we projected at the time the inventory was written down , additional inventory write-downs may be required . inventory valuation is re-evaluated on a quarterly basis . amortization of non-cancelable prepaid royalty . as of december 31 , 2013 , we had a prepaid non-cancelable royalty of $ 0.3 million for the license of ip from a third party . we amortize the prepaid based on our estimated average unit cost , which is dependent upon forecasted shipments of our products that contain the licensed ip . if our actual shipments are less than forecasted , the estimated amortization rate will increase in the future . 42 useful lives and recoverability of equipment and other long-lived assets . we evaluate the remaining useful life and recoverability of equipment and other assets , including identifiable intangible assets with definite lives , whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable . if there is an indicator of impairment , we prepare an estimate of future , undiscounted cash flows expected to result from the use of each asset and its eventual disposition . if these cash flows are less than the carrying value of the asset , we adjust the carrying amount of the asset to its estimated fair value . while we have concluded that the carrying value of our long-lived assets is recoverable as of december 31 , 2013 , our analysis is dependent upon our estimates of future cash flows and our actual results may vary . stock-based compensation . we estimate the fair value of stock options using the black-scholes option pricing model , which requires certain estimates , including an expected forfeiture rate and expected term of options granted . we also make decisions regarding the method of calculating expected volatilities and the risk-free interest rate used in the option-pricing model . the resulting calculated fair value of stock options is recognized as compensation expense over the requisite service period , which is generally the vesting period . when there are changes to the assumptions used in the option-pricing model , including fluctuations in the market price of our common stock , there will be variations in the calculated fair value of our future stock option awards , which results in variation in the compensation cost recognized . additionally , any modification of an award that increases its fair value will require us to recognize additional expense . income taxes . we record deferred income taxes for temporary differences between the amount of assets and liabilities for financial and tax reporting purposes and we record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized . we also

cash and cash equivalents total cash and cash equivalents increased $ 7.4 million from $ 13.4 million at december 31 , 2012 to $ 20.8 million at december 31 , 2013 . the increase resulted primarily from approximately $ 9.6 million in net proceeds from our underwritten registered public offering of our common stock ( see `` equity offering '' ) , a $ 3.0 million non-formula advance on our short-term line of credit and $ 0.5 million in proceeds from the issuance of common stock under our employee equity incentive plans . these increases were partially offset by $ 1.2 million used in operating activities due primarily to the net loss we recorded for the year ended december 31 , 2013 and $ 4.5 million used for purchases of property and equipment and licensed technology and payments on other asset financing . total cash and marketable securities decreased $ 1.7 million from $ 15.1 million at december 31 , 2011 to $ 13.4 million at december 31 , 2012 . the decrease resulted primarily from $ 3.9 million used for purchases of property and equipment and payments on other asset financing , partially offset by $ 1.8 million provided by operating activities due primarily to changes in working capital . as of december 31 , 2013 , our cash and cash equivalents balance of $ 20.8 million consisted of $ 0.4 million in cash and $ 20.4 million in u.s. denominated money market funds .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. we have an intellectual property portfolio of 125 patents related to the visual display of digital image data . we focus our research and development efforts on developing video enhancement solutions for our target markets that increase performance , video quality and device functionality while reducing power consumed . we seek to expand our technology portfolio through internal development and co-development with business partners , and we continually evaluate acquisition opportunities and other ways to leverage our technology into other high-value markets . pixelworks was founded in 1997 and is incorporated under the laws of the state of oregon . historically , significant portions of our revenue have been generated by sales to a relatively small number of end customers and distributors . we sell our products worldwide through a direct sales force , distributors and manufacturers ' representatives . we sell to distributors in china , europe , japan , korea , southeast asia , taiwan and the u.s , and our manufacturers ' representatives support some of our korean and european sales . our distributors typically provide engineering support to our end customers and often have valuable and established relationships with our end customers . in certain countries in which we operate , it is customary to sell to distributors . while distributor payment to us is not dependent upon the distributor 's ability to resell the product or to collect from the end customer , the distributors may provide longer payment terms to end customers than those we would offer . significant portions of our products are sold overseas . sales outside the u.s. accounted for approximately 83 % of revenue in 2013 , 90 % of revenue in 2012 and 96 % of revenue in 2011 . our integrators , branded manufacturers and branded suppliers incorporate our products into systems that are sold worldwide . all of our revenue to date has been denominated in u.s. dollars . 35 results of operations year ended december 31 , 2013 compared with year ended december 31 , 2012 , and year ended december 31 , 2012 compared with year ended december 31 , 2011. revenue , net net revenue was as follows ( in thousands ) : replace_table_token_4_th 2013 v. 2012 net revenue decreased $ 11.6 million , or 19 % , from 2012 to 2013. revenue related to ic product sales was $ 40.0 million and $ 54.7 million for 2013 and 2012 , respectively . revenue related to license of intellectual property ( `` ip `` ) was $ 8.1 million and $ 5.0 million for 2013 and 2012 , respectively . the decrease related to ic product sales was primarily attributable to a 32 % decrease in units sold partially offset by a 7 % increase in average selling price ( `` asp `` ) . the decrease in units sold was primarily due to decreased sales into both the digital projector and advanced television markets , primarily due the continued impact of the macro-economic environment on end market demand . the increase in asp was primarily due to increased sales of our ultra high definition advanced television product , as a percentage of our overall units sold , which has a higher asp than our other advanced television products . during the third quarter of 2013 , we entered into an agreement with a third-party to provide a non-exclusive license for a package of our technologies and to provide certain services , under which we expect to receive a total of approximately $ 10.3 million . the license revenue recorded during 2013 was primarily due to achieving milestones under this agreement . we expect to record an additional $ 2.2 million in licensing revenue related to this agreement upon the achievement of additional milestones , most of which are expected to be achieved in the first half of 2014. licensing revenue recorded in 2012 related to licensing agreements that were entered into during 2011 and 2012 . 2012 v. 2011 net revenue decreased $ 4.9 million , or 8 % , from 2011 to 2012. revenue related to ic product sales was $ 54.7 million and $ 63.6 million for 2012 and 2011 , respectively . revenue related to the license of ip was $ 5.0 million and $ 1.0 million for 2012 and 2011 , respectively . the decrease in revenue related to ic product sales was primarily attributable to a 9 % decrease in asp and a 6 % decrease in units sold . the decrease in asp was primarily due to a greater proportion of unit sales of our latest generation motionengine® co-processor ics , which have lower price points than our other product lines . the decrease in asp was also attributable to reduced pricing on our earlier generation digital projector products . the decrease in units sold was primarily due to a decrease in sales of our earlier generation digital projector products due to competitive factors affecting customer transition to next generation digital projector solutions . 36 cost of revenue and gross profit cost of revenue and gross profit were as follows ( in thousands ) : replace_table_token_5_th 1 includes purchased materials , assembly , test , labor , employee benefits and royalties , all of which are related to sales of ic products . 2 includes direct labor costs and allocated overhead associated with licensing agreements . 3 includes charges to reduce inventory to lower of cost or market and a benefit for sales of previously written down inventory . 4 includes stock-based compensation and additional amortization of a non-cancelable prepaid royalty . story_separator_special_tag as a result , we provide for these returns in our reserve for sales returns and allowances . at the end of each reporting period , we estimate the reserve for returns based on historical experience and knowledge of any applicable events or transactions . certain of our distributors have stock rotation provisions in their distributor agreements , which allow them to return a limited amount of their in-stock inventory in exchange for products of equal value . at the end of each reporting period , we estimate the reserve for stock rotations based on historical experience and knowledge of any applicable events or transactions . certain distributors also have price protection provisions in their distributor agreements with us . under the price protection provisions , we grant distributors credit if they purchased product for a specific end customer and we subsequently lower the price to the end customer such that the distributor can no longer earn its negotiated margin on in-stock inventory . at the end of each reporting period , we estimate a reserve for price protection credits based on historical experience and knowledge of any applicable events or transactions . product warranties . we warrant that our products will be free from defects in materials and workmanship for a period of twelve months from delivery . warranty repairs are guaranteed for the remainder of the original warranty period . our warranty is limited to repairing or replacing products , or refunding the purchase price . at the end of each reporting period , we estimate a reserve for warranty returns based on historical experience and knowledge of any applicable events or transactions . while we engage in extensive product quality programs and processes , which include actively monitoring and evaluating the quality of our suppliers , should actual product failure rates or product replacement costs differ from our estimates , revisions to the estimated warranty liability may be required . allowance for doubtful accounts . we offer credit to customers after careful examination of their creditworthiness . we maintain an allowance for doubtful accounts for estimated losses that may result from the inability of our customers to make required payments . at the end of each reporting period , we estimate the allowance for doubtful accounts based on our account-by-account risk analysis of outstanding receivable balances . the determination to write-off specific accounts receivable balances is made based on the likelihood of collection and past due status . past due status is based on invoice date and terms specific to each customer . if the financial condition of our customers were to deteriorate , resulting in an impairment of their ability to make payments , additional allowances may be required . inventory valuation . we value inventory at the lower of cost or market . in addition , we write down any obsolete , unmarketable or otherwise impaired inventory to net realizable value . the determination of obsolete or excess inventory requires us to estimate the future demand for our products . the estimate of future demand is compared to inventory levels to determine the amount , if any , of obsolete or excess inventory . if actual market conditions are less favorable than those we projected at the time the inventory was written down , additional inventory write-downs may be required . inventory valuation is re-evaluated on a quarterly basis . amortization of non-cancelable prepaid royalty . as of december 31 , 2013 , we had a prepaid non-cancelable royalty of $ 0.3 million for the license of ip from a third party . we amortize the prepaid based on our estimated average unit cost , which is dependent upon forecasted shipments of our products that contain the licensed ip . if our actual shipments are less than forecasted , the estimated amortization rate will increase in the future . 42 useful lives and recoverability of equipment and other long-lived assets . we evaluate the remaining useful life and recoverability of equipment and other assets , including identifiable intangible assets with definite lives , whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable . if there is an indicator of impairment , we prepare an estimate of future , undiscounted cash flows expected to result from the use of each asset and its eventual disposition . if these cash flows are less than the carrying value of the asset , we adjust the carrying amount of the asset to its estimated fair value . while we have concluded that the carrying value of our long-lived assets is recoverable as of december 31 , 2013 , our analysis is dependent upon our estimates of future cash flows and our actual results may vary . stock-based compensation . we estimate the fair value of stock options using the black-scholes option pricing model , which requires certain estimates , including an expected forfeiture rate and expected term of options granted . we also make decisions regarding the method of calculating expected volatilities and the risk-free interest rate used in the option-pricing model . the resulting calculated fair value of stock options is recognized as compensation expense over the requisite service period , which is generally the vesting period . when there are changes to the assumptions used in the option-pricing model , including fluctuations in the market price of our common stock , there will be variations in the calculated fair value of our future stock option awards , which results in variation in the compensation cost recognized . additionally , any modification of an award that increases its fair value will require us to recognize additional expense . income taxes . we record deferred income taxes for temporary differences between the amount of assets and liabilities for financial and tax reporting purposes and we record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized . we also Narrative : cash and cash equivalents total cash and cash equivalents increased $ 7.4 million from $ 13.4 million at december 31 , 2012 to $ 20.8 million at december 31 , 2013 . the increase resulted primarily from approximately $ 9.6 million in net proceeds from our underwritten registered public offering of our common stock ( see `` equity offering '' ) , a $ 3.0 million non-formula advance on our short-term line of credit and $ 0.5 million in proceeds from the issuance of common stock under our employee equity incentive plans . these increases were partially offset by $ 1.2 million used in operating activities due primarily to the net loss we recorded for the year ended december 31 , 2013 and $ 4.5 million used for purchases of property and equipment and licensed technology and payments on other asset financing . total cash and marketable securities decreased $ 1.7 million from $ 15.1 million at december 31 , 2011 to $ 13.4 million at december 31 , 2012 . the decrease resulted primarily from $ 3.9 million used for purchases of property and equipment and payments on other asset financing , partially offset by $ 1.8 million provided by operating activities due primarily to changes in working capital . as of december 31 , 2013 , our cash and cash equivalents balance of $ 20.8 million consisted of $ 0.4 million in cash and $ 20.4 million in u.s. denominated money market funds .

the spin-off and merger on july 1 , 2014 ( the `` distribution date `` ) , international paper completed the previously announced spin-off of xpedx to the international paper shareholders ( the `` spin-off `` ) , forming a new public company called veritiv . immediately following the spin-off , uwwh merged with and into veritiv ( the `` merger `` ) . prior to the distribution date , veritiv 's financial position , results of operations and cash flows consisted of only the xpedx business of international paper and were derived from international paper 's historical accounting records . the financial results of xpedx have been presented on a carve-out basis through the distribution date , while the financial results for veritiv , post spin-off , are prepared on a stand-alone basis . as such , the audited consolidated and combined financial statements as of and for the year ended december 31 , 2014 consist of the consolidated results of veritiv on a stand-alone basis for the six months ended december 31 , 2014 and the combined results of operations of xpedx for the six months ended june 30 , 2014 on a carve-out basis . the combined financial statements as of and for the year ended december 31 , 2013 consist entirely of the combined results of xpedx on a carve-out basis . for periods prior to the spin-off , the combined financial statements include expense allocations for certain functions previously provided by international paper . see note 1 of the notes to the consolidated and combined financial statements for further information . key performance measure adjusted ebitda is the primary financial performance measure veritiv uses to manage its businesses , to monitor its results of operations , to measure its performance against the abl facility and to incentivize its management . this common metric is intended to align shareholders , debt holders and management . adjusted ebitda is a non-gaap financial measure and is not an alternative to net income , operating income or any other measure prescribed by u.s. generally accepted accounting principles ( `` gaap `` ) . veritiv uses adjusted ebitda ( earnings before interest , income taxes , depreciation and amortization , restructuring charges , non-restructuring stock-based compensation expense , lifo expense ( income ) , non-restructuring asset impairment charges , non-restructuring severance charges , gain on sale of joint venture , merger and integration expenses , loss from discontinued operations , net of income taxes , fair value adjustments on the contingent liability associated with the tax receivable agreement ( `` tra `` ) and certain other adjustments ) because veritiv believes investors commonly use adjusted ebitda as a key financial metric for valuing companies such as veritiv . in addition , the credit agreement governing the abl facility ( as defined in the notes to the consolidated and combined financial statements ) permits the company to exclude these and other charges in calculating consolidated ebitda , as defined in the abl facility . the table below provides a reconciliation of veritiv 's net income ( loss ) determined in accordance with gaap to adjusted ebitda for the year ended december 31 , 2015 and on a pro forma basis for the year ended december 31 , 2014. the pro forma adjustments assume that the merger occurred on january 1 , 2014 and include unisource 's operating results from january 1 , 2014 to june 30 , 2014 as well as purchase accounting adjustments for incremental depreciation and amortization expense related to the fair value adjustments to property and equipment and identifiable intangible assets . the pro forma results do not reflect events that have occurred or may occur after the transactions , including the impact of any synergies expected to result from the merger . accordingly , the unaudited pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed date , nor is it necessarily an indication of future operating results . 27 replace_table_token_4_th the table below provides a reconciliation of veritiv 's net income ( loss ) determined in accordance with gaap to adjusted ebitda as reported for the years ended december 31 , 2015 , 2014 and 2013 . replace_table_token_5_th 28 adjusted ebitda has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of veritiv 's results as reported under gaap . for example , adjusted ebitda : does not reflect the company 's income tax expenses or the cash requirements to pay its taxes ; and although depreciation and amortization charges are non-cash charges , it does not reflect that the assets being depreciated and amortized will often have to be replaced in the future , and the foregoing metrics do not reflect any cash requirements for such replacements . other companies in the industry may calculate adjusted ebitda differently than veritiv does , limiting its usefulness as a comparative measure . because of these limitations , adjusted ebitda should not be considered as a measure of discretionary cash available to veritiv to invest in the growth of its business . veritiv compensates for these limitations by relying both on the company 's gaap results and by using adjusted ebitda for supplemental purposes . additionally , adjusted ebitda is not an alternative measure of financial performance under gaap and therefore should be considered in conjunction with net income and other performance measures such as operating income or net cash provided by operating activities and not as an alternative to such gaap measures . results of operations , including business segments the following discussion compares the consolidated and combined operating results of veritiv for the years ended december 31 , 2015 , 2014 and 2013 . story_separator_special_tag these improvements were partially offset by ( i ) a $ 4.2 million reduction from the decline in sales volume and ( ii ) a $ 0.1 million increase in various other expenses . comparison of the years ended december 31 , 2014 and december 31 , 2013 net sales increased due primarily to the net sales contribution of $ 325.9 million from the merger . this increase was partially offset by a 7.2 % decrease in the net sales of legacy xpedx operations , due primarily to a 6.3 % decline in volume driven by ( i ) the loss of three large customers which comprised 2.8 % of the decline in sales and ( ii ) a continued decrease in volume at existing customers due to both structural demand decline and market price decreases for the products sold by the company . adjusted ebitda increased by $ 10.8 million as a result of the merger . the change in legacy xpedx adjusted ebitda during this period was minimal . 34 packaging the table below presents selected data with respect to the packaging segment : replace_table_token_12_th the table below presents the components of the net sales change compared to the prior year : replace_table_token_13_th comparison of the years ended december 31 , 2015 and december 31 , 2014 the net sales increase is due primarily to the net sales contribution of $ 570.7 million from the merger . excluding the impact of changes in foreign currency exchange rates and the merger , net sales increased 1.5 % due to increases in corrugated and cushioning product sales . the change in shipping terms discussed previously resulted in a $ 4.9 million reduction in 2015 revenue . adjusted ebitda increased by $ 43.1 million as a result of the merger . excluding the merger , adjusted ebitda increased by $ 12.5 million due to ( i ) a $ 24.5 million improvement in product mix that was partially driven by procurement synergies , ( ii ) a $ 2.1 million decrease in distribution expenses primarily attributable to decreases in third-party freight and fuel expenses and ( iii ) a $ 2.9 million increase from the improvement in sales volume . these improvements were partially offset by ( i ) a $ 11.2 million increase in selling and administrative personnel costs which was partially attributable to a $ 3.6 million increase in commissions expense due to the change in the sales commission allocations to the segments , ( ii ) a $ 3.0 million decline due to the strengthening of the u.s. dollar and ( iii ) a $ 2.8 million increase in various other expenses . comparison of the years ended december 31 , 2014 and december 31 , 2013 net sales increased due primarily to the net sales contribution of $ 613.1 million from the merger , along with a 2.9 % increase in net sales of the legacy xpedx operations . this increase was due primarily to a 4.2 % increase in sales volume driven by higher sales at existing customers . this was partially offset by a 1.3 % unfavorable price mix variance driven primarily by growth in new business at lower margins . adjusted ebitda increased by $ 50.2 million as a result of the merger . the legacy xpedx adjusted ebitda declined by $ 11.1 million as a result of ( i ) a $ 17.3 million decline in product mix , ( ii ) an $ 8.7 million increase in distribution expenses driven by an increase in sales volume , and ( iii ) a $ 4.6 million increase in personnel expenses . these cost increases were offset by ( i ) a $ 15.1 million increase from the improvement in sales volume and ( ii ) a $ 4.4 million decline in various other expenses . 35 facility solutions the table below presents selected data with respect to the facility solutions segment . replace_table_token_14_th the table below presents the components of the net sales change compared to the prior year : replace_table_token_15_th comparison of the years ended december 31 , 2015 and december 31 , 2014 the net sales increase is due primarily to the net sales contribution of $ 288.0 million from the merger . excluding the impact of changes in foreign currency exchange rates and the merger , net sales decreased 4.2 % , primarily due to the loss of four large customers . the change in shipping terms discussed previously resulted in a $ 1.3 million reduction in 2015 revenue . adjusted ebitda increased by $ 12.3 million as a result of the merger . excluding the merger , adjusted ebitda decreased by $ 4.2 million due to ( i ) a $ 11.3 million decrease due to the reduction in sales volume , ( ii ) a $ 4.7 million increase in personnel expenses , which was partially attributable to a $ 2.9 million increase in commissions expense due to the change in the sales commission allocations to the segments and ( iii ) a $ 1.7 million increase in various other expenses . these drivers were partially offset by ( i ) an $ 8.7 million decrease in distribution expenses due to lower sales volumes and ( ii ) a $ 4.8 million increase from the improvement in product mix . comparison of the years ended december 31 , 2014 and december 31 , 2013 net sales increased due primarily to the net sales contribution of $ 322.8 million from the merger . this increase was offset by an 11.5 % decline in legacy xpedx net sales . the decline in legacy xpedx sales is primarily driven by attrition with five customers comprising 8.4 % of the decline . adjusted ebitda increased by $ 16.1 million as a result of the merger . the legacy xpedx adjusted ebitda increased by $ 3.1 million driven primarily by ( i ) a $ 10.8 million reduction in distribution expenses due to

net cash provided by operating activities decreased by $ 47.2 million compared to 2013. cash provided by operating activities in 2014 was negatively impacted by approximately $ 58.4 million of cash outflows for merger and integration expenses . investing activities 2015 compared to 2014 : for 2015 , net cash used for investing activities primarily relates to $ 29.4 million of integration-related capital expenditures and $ 15.0 million of ordinary capital expenditures . for 2014 , net cash provided by investing activities primarily relates to $ 31.8 million of net cash acquired from the merger and $ 4.8 million of proceeds from asset sales , partially offset by $ 17.2 million of capital expenditures . ordinary capital expenditures for 2016 are expected to be in the range of $ 20.0 million to $ 30.0 million , with another $ 10.0 million to $ 20.0 million of integration-related capital expenditures during 2016 . 2014 compared to 2013 : net cash provided by investing activities increased by $ 6.7 million due primarily to the net cash acquired from the merger . this increase was partially offset by higher capital expenditures and lower proceeds from sales of assets as compared to 2013. financing activities 2015 compared to 2014 : in 2015 , net repayments on the abl facility were $ 47.0 million compared to net proceeds of $ 847.8 million in 2014. borrowings on the abl facility were higher in 2014 due to funding activities associated with the spin-off and merger , including a $ 432.8 million payment to former parent and a $ 303.9 million payment to extinguish unisource 's senior credit facility . payments under capital leases and financing obligations to related party were higher in 2015 due to a full year of activity compared to six months in 2014. the net repayments on the abl facility in 2015 were funded by cash flows from operations . 37 2014 compared to 2013 : net cash provided by financing activities was $ 23.0 million compared to net cash used for financing activities of $ 76.6 million for the prior year period .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. the spin-off and merger on july 1 , 2014 ( the `` distribution date `` ) , international paper completed the previously announced spin-off of xpedx to the international paper shareholders ( the `` spin-off `` ) , forming a new public company called veritiv . immediately following the spin-off , uwwh merged with and into veritiv ( the `` merger `` ) . prior to the distribution date , veritiv 's financial position , results of operations and cash flows consisted of only the xpedx business of international paper and were derived from international paper 's historical accounting records . the financial results of xpedx have been presented on a carve-out basis through the distribution date , while the financial results for veritiv , post spin-off , are prepared on a stand-alone basis . as such , the audited consolidated and combined financial statements as of and for the year ended december 31 , 2014 consist of the consolidated results of veritiv on a stand-alone basis for the six months ended december 31 , 2014 and the combined results of operations of xpedx for the six months ended june 30 , 2014 on a carve-out basis . the combined financial statements as of and for the year ended december 31 , 2013 consist entirely of the combined results of xpedx on a carve-out basis . for periods prior to the spin-off , the combined financial statements include expense allocations for certain functions previously provided by international paper . see note 1 of the notes to the consolidated and combined financial statements for further information . key performance measure adjusted ebitda is the primary financial performance measure veritiv uses to manage its businesses , to monitor its results of operations , to measure its performance against the abl facility and to incentivize its management . this common metric is intended to align shareholders , debt holders and management . adjusted ebitda is a non-gaap financial measure and is not an alternative to net income , operating income or any other measure prescribed by u.s. generally accepted accounting principles ( `` gaap `` ) . veritiv uses adjusted ebitda ( earnings before interest , income taxes , depreciation and amortization , restructuring charges , non-restructuring stock-based compensation expense , lifo expense ( income ) , non-restructuring asset impairment charges , non-restructuring severance charges , gain on sale of joint venture , merger and integration expenses , loss from discontinued operations , net of income taxes , fair value adjustments on the contingent liability associated with the tax receivable agreement ( `` tra `` ) and certain other adjustments ) because veritiv believes investors commonly use adjusted ebitda as a key financial metric for valuing companies such as veritiv . in addition , the credit agreement governing the abl facility ( as defined in the notes to the consolidated and combined financial statements ) permits the company to exclude these and other charges in calculating consolidated ebitda , as defined in the abl facility . the table below provides a reconciliation of veritiv 's net income ( loss ) determined in accordance with gaap to adjusted ebitda for the year ended december 31 , 2015 and on a pro forma basis for the year ended december 31 , 2014. the pro forma adjustments assume that the merger occurred on january 1 , 2014 and include unisource 's operating results from january 1 , 2014 to june 30 , 2014 as well as purchase accounting adjustments for incremental depreciation and amortization expense related to the fair value adjustments to property and equipment and identifiable intangible assets . the pro forma results do not reflect events that have occurred or may occur after the transactions , including the impact of any synergies expected to result from the merger . accordingly , the unaudited pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed date , nor is it necessarily an indication of future operating results . 27 replace_table_token_4_th the table below provides a reconciliation of veritiv 's net income ( loss ) determined in accordance with gaap to adjusted ebitda as reported for the years ended december 31 , 2015 , 2014 and 2013 . replace_table_token_5_th 28 adjusted ebitda has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of veritiv 's results as reported under gaap . for example , adjusted ebitda : does not reflect the company 's income tax expenses or the cash requirements to pay its taxes ; and although depreciation and amortization charges are non-cash charges , it does not reflect that the assets being depreciated and amortized will often have to be replaced in the future , and the foregoing metrics do not reflect any cash requirements for such replacements . other companies in the industry may calculate adjusted ebitda differently than veritiv does , limiting its usefulness as a comparative measure . because of these limitations , adjusted ebitda should not be considered as a measure of discretionary cash available to veritiv to invest in the growth of its business . veritiv compensates for these limitations by relying both on the company 's gaap results and by using adjusted ebitda for supplemental purposes . additionally , adjusted ebitda is not an alternative measure of financial performance under gaap and therefore should be considered in conjunction with net income and other performance measures such as operating income or net cash provided by operating activities and not as an alternative to such gaap measures . results of operations , including business segments the following discussion compares the consolidated and combined operating results of veritiv for the years ended december 31 , 2015 , 2014 and 2013 . story_separator_special_tag these improvements were partially offset by ( i ) a $ 4.2 million reduction from the decline in sales volume and ( ii ) a $ 0.1 million increase in various other expenses . comparison of the years ended december 31 , 2014 and december 31 , 2013 net sales increased due primarily to the net sales contribution of $ 325.9 million from the merger . this increase was partially offset by a 7.2 % decrease in the net sales of legacy xpedx operations , due primarily to a 6.3 % decline in volume driven by ( i ) the loss of three large customers which comprised 2.8 % of the decline in sales and ( ii ) a continued decrease in volume at existing customers due to both structural demand decline and market price decreases for the products sold by the company . adjusted ebitda increased by $ 10.8 million as a result of the merger . the change in legacy xpedx adjusted ebitda during this period was minimal . 34 packaging the table below presents selected data with respect to the packaging segment : replace_table_token_12_th the table below presents the components of the net sales change compared to the prior year : replace_table_token_13_th comparison of the years ended december 31 , 2015 and december 31 , 2014 the net sales increase is due primarily to the net sales contribution of $ 570.7 million from the merger . excluding the impact of changes in foreign currency exchange rates and the merger , net sales increased 1.5 % due to increases in corrugated and cushioning product sales . the change in shipping terms discussed previously resulted in a $ 4.9 million reduction in 2015 revenue . adjusted ebitda increased by $ 43.1 million as a result of the merger . excluding the merger , adjusted ebitda increased by $ 12.5 million due to ( i ) a $ 24.5 million improvement in product mix that was partially driven by procurement synergies , ( ii ) a $ 2.1 million decrease in distribution expenses primarily attributable to decreases in third-party freight and fuel expenses and ( iii ) a $ 2.9 million increase from the improvement in sales volume . these improvements were partially offset by ( i ) a $ 11.2 million increase in selling and administrative personnel costs which was partially attributable to a $ 3.6 million increase in commissions expense due to the change in the sales commission allocations to the segments , ( ii ) a $ 3.0 million decline due to the strengthening of the u.s. dollar and ( iii ) a $ 2.8 million increase in various other expenses . comparison of the years ended december 31 , 2014 and december 31 , 2013 net sales increased due primarily to the net sales contribution of $ 613.1 million from the merger , along with a 2.9 % increase in net sales of the legacy xpedx operations . this increase was due primarily to a 4.2 % increase in sales volume driven by higher sales at existing customers . this was partially offset by a 1.3 % unfavorable price mix variance driven primarily by growth in new business at lower margins . adjusted ebitda increased by $ 50.2 million as a result of the merger . the legacy xpedx adjusted ebitda declined by $ 11.1 million as a result of ( i ) a $ 17.3 million decline in product mix , ( ii ) an $ 8.7 million increase in distribution expenses driven by an increase in sales volume , and ( iii ) a $ 4.6 million increase in personnel expenses . these cost increases were offset by ( i ) a $ 15.1 million increase from the improvement in sales volume and ( ii ) a $ 4.4 million decline in various other expenses . 35 facility solutions the table below presents selected data with respect to the facility solutions segment . replace_table_token_14_th the table below presents the components of the net sales change compared to the prior year : replace_table_token_15_th comparison of the years ended december 31 , 2015 and december 31 , 2014 the net sales increase is due primarily to the net sales contribution of $ 288.0 million from the merger . excluding the impact of changes in foreign currency exchange rates and the merger , net sales decreased 4.2 % , primarily due to the loss of four large customers . the change in shipping terms discussed previously resulted in a $ 1.3 million reduction in 2015 revenue . adjusted ebitda increased by $ 12.3 million as a result of the merger . excluding the merger , adjusted ebitda decreased by $ 4.2 million due to ( i ) a $ 11.3 million decrease due to the reduction in sales volume , ( ii ) a $ 4.7 million increase in personnel expenses , which was partially attributable to a $ 2.9 million increase in commissions expense due to the change in the sales commission allocations to the segments and ( iii ) a $ 1.7 million increase in various other expenses . these drivers were partially offset by ( i ) an $ 8.7 million decrease in distribution expenses due to lower sales volumes and ( ii ) a $ 4.8 million increase from the improvement in product mix . comparison of the years ended december 31 , 2014 and december 31 , 2013 net sales increased due primarily to the net sales contribution of $ 322.8 million from the merger . this increase was offset by an 11.5 % decline in legacy xpedx net sales . the decline in legacy xpedx sales is primarily driven by attrition with five customers comprising 8.4 % of the decline . adjusted ebitda increased by $ 16.1 million as a result of the merger . the legacy xpedx adjusted ebitda increased by $ 3.1 million driven primarily by ( i ) a $ 10.8 million reduction in distribution expenses due to Narrative : net cash provided by operating activities decreased by $ 47.2 million compared to 2013. cash provided by operating activities in 2014 was negatively impacted by approximately $ 58.4 million of cash outflows for merger and integration expenses . investing activities 2015 compared to 2014 : for 2015 , net cash used for investing activities primarily relates to $ 29.4 million of integration-related capital expenditures and $ 15.0 million of ordinary capital expenditures . for 2014 , net cash provided by investing activities primarily relates to $ 31.8 million of net cash acquired from the merger and $ 4.8 million of proceeds from asset sales , partially offset by $ 17.2 million of capital expenditures . ordinary capital expenditures for 2016 are expected to be in the range of $ 20.0 million to $ 30.0 million , with another $ 10.0 million to $ 20.0 million of integration-related capital expenditures during 2016 . 2014 compared to 2013 : net cash provided by investing activities increased by $ 6.7 million due primarily to the net cash acquired from the merger . this increase was partially offset by higher capital expenditures and lower proceeds from sales of assets as compared to 2013. financing activities 2015 compared to 2014 : in 2015 , net repayments on the abl facility were $ 47.0 million compared to net proceeds of $ 847.8 million in 2014. borrowings on the abl facility were higher in 2014 due to funding activities associated with the spin-off and merger , including a $ 432.8 million payment to former parent and a $ 303.9 million payment to extinguish unisource 's senior credit facility . payments under capital leases and financing obligations to related party were higher in 2015 due to a full year of activity compared to six months in 2014. the net repayments on the abl facility in 2015 were funded by cash flows from operations . 37 2014 compared to 2013 : net cash provided by financing activities was $ 23.0 million compared to net cash used for financing activities of $ 76.6 million for the prior year period .

in june 2013 , following the clinical hold , we extended the development period for which we received funds from united from 6.5 years to 11.5 years . the license fee will be recognized on a straight line basis as revenue over the estimated development period . cost of revenues cost of revenues decreased by 45 % from $ 20,000 for the year ended june 30 , 2013 to $ 11,000 for the year ended june 30 , 2014. cost of revenues decreased by 5 % from $ 21,000 for the year ended june 30 , 2012 to $ 20,000 for the year ended june 30 , 2013. all such cost of revenues is derived from the united agreement and reflects the royalties we are obligated to pay the ocs . the reductions in the years ended june 30 , 2013 and 2014 are a result of the re-evaluation we did for the development period under the united agreement . as described above , following the clinical hold we extended the development period for which we received funds from united from 6.5 years to 11.5 years . research and development net research and development net costs ( costs less participation and grants by the ocs and other parties ) , for the year ended june 30 , 2014 increased by 13 % to $ 19,542,000 from $ 17,233,000 for the year ended june 30 , 2013. this increase is attributed to the material increase in our in-house research and development activity , increase in our salaries due to , among other things , an increase of 45 employees as compared to the average number of employees in the year ended june 2013 , an increase in our depreciation expenses and an increase in our rent and maintenance expenses , offset by an increase in ocs participation . this increase in ocs participation is attributable to the fact that due to a delay in the approval of the ocs grant for 2013 , we recognized $ 5,396,000 in fiscal year 2014 compared to $ 2,673,000 in fiscal year 2013. research and development net costs ( costs less participation and grants by the ocs and other parties ) , for the year ended june 30 , 2013 increased by 88 % to $ 17,233,000 from $ 9,158,000 for the year ended june 30 , 2012. this increase is mainly due to the increase in our research and development activities during the fiscal year 2013 , and more specifically is attributed to the increase in our clinical trials expenses , salaries , lab materials expenses and consultants and subcontractor expenses , including hiring 46 new employees since june 30 , 2012 . 27 general and administrative general and administrative expenses increased by 54 % from $ 5,649,000 for the year ended june 30 , 2013 to $ 8,676,000 for the year ended june 30 , 2014. this is primarily driven by an increase in stock-based compensation expenses related to our employees and directors , due to timing of grants made to directors , and an increase in our salaries due to , among other things , an increase of 6 employees as compared to the average number of employees in the year ended june 2013. general and administrative expenses decreased by 14 % from $ 6,568,000 for the year ended june 30 , 2012 to $ 5,649,000 for the year ended june 30 , 2013. this decrease is mainly due to a decrease in stock-based compensation expenses related to our employees and consultants . financial income , net financial income decreased from $ 1,068,000 for the year ended june 30 , 2013 to $ 918,000 for the year ended june 30 , 2014. the decrease is mainly due to a decrease in gains from hedging instruments and interest income on deposits over the past fiscal year , offset by an increase in our gain from marketable securities . financial income increased from $ 237,000 for the year ended june 30 , 2012 to $ 1,068,000 for the year ended june 30 , 2013. the increase is mainly due to an increase in gains from hedging instruments and changes in exchange rates over the past fiscal year . net loss net loss for the year ended june 30 , 2014 was $ 26,932,000 as compared to a net loss of $ 21,155,000 for the year ended june 30 , 2013. net loss per share for the year ended june 30 , 2014 was $ 0.42 , as compared to $ 0.38 for the year ended june 30 , 2013. the net loss per share increased as a result of the increase in our net loss , offset by the increase in our weighted average number of shares due to the issuance of additional shares , mainly the shares issued to cha in december 2013 and the shares issued under an at market issuance sales agreement ( atm agreement ) . net loss for the year ended june 30 , 2013 was $ 21,155,000 as compared to net loss of $ 14,794,000 for the year ended june 30 , 2012. net loss per share for the year ended june 30 , 2013 was $ 0.38 , as compared to $ 0.34 for the year ended june 30 , 2012. the net loss per share increased as a result of the increase in our net loss , offset by the increase in our weighted average number of shares due to the issuance of additional shares , mainly as part of a public offering we consummated in september 2012. story_separator_special_tag 0pt ; margin-right : 0pt `` > during the years that ended june 30 , 2014 , 2013 and 2012 we received approximately $ 3,243,000 , $ 1,452,000 and $ 3,156,000 , respectively , from the ocs towards our research and development expenses . story_separator_special_tag the grant will be used to cover research and development expenses for the period january 1 , 2014 to december 31 , 2014. in addition , the european authorities approved a research grant under the fp7 in the amount of approximately 92,955 for a period of 5 years which began on january 1 , 2011. we believe that we have sufficient cash to fund our operations for at least the next 12 months . application of critical accounting policies our significant accounting policies are more fully described in note 2 to our consolidated financial statements appearing in this annual report . we believe that the accounting policies below are critical for one to fully understand and evaluate our financial condition and results of operations . the discussion and analysis of our financial condition and results of operations is based on our financial statements , which we prepared in accordance with u.s. generally accepted accounting principles . the preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities , as well as the reported revenues and expenses during the reporting periods . on an ongoing basis , we evaluate such estimates and judgments , including those described in greater detail below . we base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances . actual results may differ from these estimates under different assumptions or conditions . revenue recognition from the united agreement we recognize revenue pursuant to the license agreement with united in accordance with asc 605-25 , `` revenue recognition , multiple-element arrangements `` . pursuant to asc 605-25 , each deliverable is evaluated to determine whether it qualifies as a separate unit of accounting based on whether the deliverable has “ stand-alone value ” to the customer . the arrangement 's consideration that is fixed or determinable is then allocated to each separate unit of accounting based on the relative selling price of each deliverable . in general , the consideration allocated to each unit of accounting is recognized as the related goods or services are delivered , limited to the consideration that is not contingent upon future deliverables . we received an up-front , non-refundable license payment of $ 5,000,000. additional payments totaling $ 37,500,000 are subject to the achievement of certain regulatory milestones by united . since the deliverables in the united agreement do not have stand-alone value , none of them qualifies as a separate unit of accounting . accordingly , the non-refundable upfront license fee of $ 5,000,000 is deferred and recognized on a straight line basis over the related performance period which is the development period in accordance with staff accounting bulletin ( “ sab ” ) no . 104 , `` revenue recognition `` . we assessed the remaining performance period under the united agreement at 8.5 years as of june 30 , 2014. the additional regulatory milestones payments will be recognized upon the achievement of futures events by united , in accordance with asc 450-30-25 , “ gain contingencies `` . as of june 30 , 2014 , no regulatory milestones were achieved . we also received an advance payment for the development of $ 2,000,000 that will be deductible against development expenses as it accrued . the upfront payment which was received and has not yet fully recognized in the statement of operations , is included in the balance sheet as advance payment . part of the expenses related to the development , on a cost basis , shall be repaid to the company by united according to the applicable license agreement . we are deducting the payments from research and development expenses in accordance with asc 730-20 , `` research and development agreements `` . as of june 30 , 2014 , we deducted an amount of approximately $ 1,753,000 . 31 stock-based compensation stock-based compensation is considered critical accounting policy due to the significant expenses of restricted stock units which were granted to our employees , directors and consultants . in fiscal year 2014 , we recorded stock-based compensation expenses related to restricted stock units in the amount of $ 5,840,000. in accordance with asc 718 , `` compensation-stock compensation `` ( asc 718 ) , restricted shares units to employees and directors are measured at their fair value on the grant date . all restricted shares units granted in 2014 and 2013 were granted for no consideration ; therefore their fair value was equal to the share price at the date of grant , based on the close trading price of our shares known at the grant date . the restricted shares units to non-employees consultants are remeasured in any future vesting period for the unvested portion of the grants . the value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in our consolidated statements of operations . we have graded vesting based on the accelerated method over the requisite service period of each of the awards . the expected pre-vesting forfeiture rate affects the number of the shares . based on our historical experience , the pre-vesting forfeiture rate per grant is 7 % for the shares granted to employees and 0 % for the shares granted to our directors , officers and non-employees consultants . marketable securities marketable securities consist of corporate bonds , government bonds and stocks . we determine the appropriate classification of marketable securities at the time of purchase and re-evaluate such designation at each balance sheet date . in accordance with asc no . 320 , `` investment debt and equity securities , `` we classify marketable securities as available-for-sale . available-for-sale securities are stated at fair value , with unrealized gains and losses reported in accumulated other comprehensive income ( loss ) , a separate component of stockholders ' equity . realized gains and losses on

liquidity and capital resources as of june 30 , 2014 , our total current assets were $ 61,987,000 and our total current liabilities were $ 7,397,000. on june 30 , 2014 , we had a working capital surplus of $ 54,590,000 and an accumulated deficit of $ 113,834,000. as of june 30 , 2013 , our total current assets were $ 55,085,000 and our total current liabilities were $ 5,921,000. on june 30 , 2013 , we had a working capital surplus of $ 49,164,000 and an accumulated deficit of $ 86,902,000. our cash and cash equivalents as of june 30 , 2014 amounted to $ 4,493,000. this is a decrease of $ 4,514,000 from the $ 9,007,000 reported as of june 30 , 2013. cash balances decreased in the year ended june 30 , 2014 for the reasons presented below : operating activities used cash of $ 19,121,000 in the year ended june 30 , 2014. cash used by operating activities in the year ended june 30 , 2014 primarily consisted of payments of salaries to our employees , and payments of fees to our consultants , suppliers , subcontractors , and professional services providers including the costs of clinical studies , offset by an ocs grant . 28 investing activities provided cash of $ 1,983,000 in the year ended june 30 , 2014. the investing activities consisted primarily of withdrawal of $ 7,421,000 of short-term deposits and proceeds of $ 6,867,000 from the sale and redemption of marketable securities , offset by investing $ 10,851,000 in marketable securities and the purchase of property and equipment for $ 1,573,000. financing activities generated cash in the amount of $ 12,624,000 during the year ended june 30 , 2014. the financing activities are primarily attributable to net proceeds of $ 10,644,000 from issuing shares of our common stock under the atm agreement as described below , and from exercises of warrants by shareholders .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. in june 2013 , following the clinical hold , we extended the development period for which we received funds from united from 6.5 years to 11.5 years . the license fee will be recognized on a straight line basis as revenue over the estimated development period . cost of revenues cost of revenues decreased by 45 % from $ 20,000 for the year ended june 30 , 2013 to $ 11,000 for the year ended june 30 , 2014. cost of revenues decreased by 5 % from $ 21,000 for the year ended june 30 , 2012 to $ 20,000 for the year ended june 30 , 2013. all such cost of revenues is derived from the united agreement and reflects the royalties we are obligated to pay the ocs . the reductions in the years ended june 30 , 2013 and 2014 are a result of the re-evaluation we did for the development period under the united agreement . as described above , following the clinical hold we extended the development period for which we received funds from united from 6.5 years to 11.5 years . research and development net research and development net costs ( costs less participation and grants by the ocs and other parties ) , for the year ended june 30 , 2014 increased by 13 % to $ 19,542,000 from $ 17,233,000 for the year ended june 30 , 2013. this increase is attributed to the material increase in our in-house research and development activity , increase in our salaries due to , among other things , an increase of 45 employees as compared to the average number of employees in the year ended june 2013 , an increase in our depreciation expenses and an increase in our rent and maintenance expenses , offset by an increase in ocs participation . this increase in ocs participation is attributable to the fact that due to a delay in the approval of the ocs grant for 2013 , we recognized $ 5,396,000 in fiscal year 2014 compared to $ 2,673,000 in fiscal year 2013. research and development net costs ( costs less participation and grants by the ocs and other parties ) , for the year ended june 30 , 2013 increased by 88 % to $ 17,233,000 from $ 9,158,000 for the year ended june 30 , 2012. this increase is mainly due to the increase in our research and development activities during the fiscal year 2013 , and more specifically is attributed to the increase in our clinical trials expenses , salaries , lab materials expenses and consultants and subcontractor expenses , including hiring 46 new employees since june 30 , 2012 . 27 general and administrative general and administrative expenses increased by 54 % from $ 5,649,000 for the year ended june 30 , 2013 to $ 8,676,000 for the year ended june 30 , 2014. this is primarily driven by an increase in stock-based compensation expenses related to our employees and directors , due to timing of grants made to directors , and an increase in our salaries due to , among other things , an increase of 6 employees as compared to the average number of employees in the year ended june 2013. general and administrative expenses decreased by 14 % from $ 6,568,000 for the year ended june 30 , 2012 to $ 5,649,000 for the year ended june 30 , 2013. this decrease is mainly due to a decrease in stock-based compensation expenses related to our employees and consultants . financial income , net financial income decreased from $ 1,068,000 for the year ended june 30 , 2013 to $ 918,000 for the year ended june 30 , 2014. the decrease is mainly due to a decrease in gains from hedging instruments and interest income on deposits over the past fiscal year , offset by an increase in our gain from marketable securities . financial income increased from $ 237,000 for the year ended june 30 , 2012 to $ 1,068,000 for the year ended june 30 , 2013. the increase is mainly due to an increase in gains from hedging instruments and changes in exchange rates over the past fiscal year . net loss net loss for the year ended june 30 , 2014 was $ 26,932,000 as compared to a net loss of $ 21,155,000 for the year ended june 30 , 2013. net loss per share for the year ended june 30 , 2014 was $ 0.42 , as compared to $ 0.38 for the year ended june 30 , 2013. the net loss per share increased as a result of the increase in our net loss , offset by the increase in our weighted average number of shares due to the issuance of additional shares , mainly the shares issued to cha in december 2013 and the shares issued under an at market issuance sales agreement ( atm agreement ) . net loss for the year ended june 30 , 2013 was $ 21,155,000 as compared to net loss of $ 14,794,000 for the year ended june 30 , 2012. net loss per share for the year ended june 30 , 2013 was $ 0.38 , as compared to $ 0.34 for the year ended june 30 , 2012. the net loss per share increased as a result of the increase in our net loss , offset by the increase in our weighted average number of shares due to the issuance of additional shares , mainly as part of a public offering we consummated in september 2012. story_separator_special_tag 0pt ; margin-right : 0pt `` > during the years that ended june 30 , 2014 , 2013 and 2012 we received approximately $ 3,243,000 , $ 1,452,000 and $ 3,156,000 , respectively , from the ocs towards our research and development expenses . story_separator_special_tag the grant will be used to cover research and development expenses for the period january 1 , 2014 to december 31 , 2014. in addition , the european authorities approved a research grant under the fp7 in the amount of approximately 92,955 for a period of 5 years which began on january 1 , 2011. we believe that we have sufficient cash to fund our operations for at least the next 12 months . application of critical accounting policies our significant accounting policies are more fully described in note 2 to our consolidated financial statements appearing in this annual report . we believe that the accounting policies below are critical for one to fully understand and evaluate our financial condition and results of operations . the discussion and analysis of our financial condition and results of operations is based on our financial statements , which we prepared in accordance with u.s. generally accepted accounting principles . the preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities , as well as the reported revenues and expenses during the reporting periods . on an ongoing basis , we evaluate such estimates and judgments , including those described in greater detail below . we base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances . actual results may differ from these estimates under different assumptions or conditions . revenue recognition from the united agreement we recognize revenue pursuant to the license agreement with united in accordance with asc 605-25 , `` revenue recognition , multiple-element arrangements `` . pursuant to asc 605-25 , each deliverable is evaluated to determine whether it qualifies as a separate unit of accounting based on whether the deliverable has “ stand-alone value ” to the customer . the arrangement 's consideration that is fixed or determinable is then allocated to each separate unit of accounting based on the relative selling price of each deliverable . in general , the consideration allocated to each unit of accounting is recognized as the related goods or services are delivered , limited to the consideration that is not contingent upon future deliverables . we received an up-front , non-refundable license payment of $ 5,000,000. additional payments totaling $ 37,500,000 are subject to the achievement of certain regulatory milestones by united . since the deliverables in the united agreement do not have stand-alone value , none of them qualifies as a separate unit of accounting . accordingly , the non-refundable upfront license fee of $ 5,000,000 is deferred and recognized on a straight line basis over the related performance period which is the development period in accordance with staff accounting bulletin ( “ sab ” ) no . 104 , `` revenue recognition `` . we assessed the remaining performance period under the united agreement at 8.5 years as of june 30 , 2014. the additional regulatory milestones payments will be recognized upon the achievement of futures events by united , in accordance with asc 450-30-25 , “ gain contingencies `` . as of june 30 , 2014 , no regulatory milestones were achieved . we also received an advance payment for the development of $ 2,000,000 that will be deductible against development expenses as it accrued . the upfront payment which was received and has not yet fully recognized in the statement of operations , is included in the balance sheet as advance payment . part of the expenses related to the development , on a cost basis , shall be repaid to the company by united according to the applicable license agreement . we are deducting the payments from research and development expenses in accordance with asc 730-20 , `` research and development agreements `` . as of june 30 , 2014 , we deducted an amount of approximately $ 1,753,000 . 31 stock-based compensation stock-based compensation is considered critical accounting policy due to the significant expenses of restricted stock units which were granted to our employees , directors and consultants . in fiscal year 2014 , we recorded stock-based compensation expenses related to restricted stock units in the amount of $ 5,840,000. in accordance with asc 718 , `` compensation-stock compensation `` ( asc 718 ) , restricted shares units to employees and directors are measured at their fair value on the grant date . all restricted shares units granted in 2014 and 2013 were granted for no consideration ; therefore their fair value was equal to the share price at the date of grant , based on the close trading price of our shares known at the grant date . the restricted shares units to non-employees consultants are remeasured in any future vesting period for the unvested portion of the grants . the value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in our consolidated statements of operations . we have graded vesting based on the accelerated method over the requisite service period of each of the awards . the expected pre-vesting forfeiture rate affects the number of the shares . based on our historical experience , the pre-vesting forfeiture rate per grant is 7 % for the shares granted to employees and 0 % for the shares granted to our directors , officers and non-employees consultants . marketable securities marketable securities consist of corporate bonds , government bonds and stocks . we determine the appropriate classification of marketable securities at the time of purchase and re-evaluate such designation at each balance sheet date . in accordance with asc no . 320 , `` investment debt and equity securities , `` we classify marketable securities as available-for-sale . available-for-sale securities are stated at fair value , with unrealized gains and losses reported in accumulated other comprehensive income ( loss ) , a separate component of stockholders ' equity . realized gains and losses on Narrative : liquidity and capital resources as of june 30 , 2014 , our total current assets were $ 61,987,000 and our total current liabilities were $ 7,397,000. on june 30 , 2014 , we had a working capital surplus of $ 54,590,000 and an accumulated deficit of $ 113,834,000. as of june 30 , 2013 , our total current assets were $ 55,085,000 and our total current liabilities were $ 5,921,000. on june 30 , 2013 , we had a working capital surplus of $ 49,164,000 and an accumulated deficit of $ 86,902,000. our cash and cash equivalents as of june 30 , 2014 amounted to $ 4,493,000. this is a decrease of $ 4,514,000 from the $ 9,007,000 reported as of june 30 , 2013. cash balances decreased in the year ended june 30 , 2014 for the reasons presented below : operating activities used cash of $ 19,121,000 in the year ended june 30 , 2014. cash used by operating activities in the year ended june 30 , 2014 primarily consisted of payments of salaries to our employees , and payments of fees to our consultants , suppliers , subcontractors , and professional services providers including the costs of clinical studies , offset by an ocs grant . 28 investing activities provided cash of $ 1,983,000 in the year ended june 30 , 2014. the investing activities consisted primarily of withdrawal of $ 7,421,000 of short-term deposits and proceeds of $ 6,867,000 from the sale and redemption of marketable securities , offset by investing $ 10,851,000 in marketable securities and the purchase of property and equipment for $ 1,573,000. financing activities generated cash in the amount of $ 12,624,000 during the year ended june 30 , 2014. the financing activities are primarily attributable to net proceeds of $ 10,644,000 from issuing shares of our common stock under the atm agreement as described below , and from exercises of warrants by shareholders .

critical accounting policies and estimates we have identified the policies discussed below as critical to understanding our business and our results of operations and financial condition . the impact and any associated risks related to these policies on our business operations is discussed throughout management 's discussion and analysis of financial condition and results of operations where such policies affect our reported and expected financial results . 20 revenue recognition we recognize revenues when there is persuasive evidence of an arrangement , title and risk of loss have passed , delivery has occurred or the services have been rendered , the sales price is fixed or determinable and collection of the related receivable is reasonably assured . title and risk of loss generally pass to our customers upon shipment or at delivery destination point . in circumstances where either title or risk of loss pass upon destination , acceptance or cash payment , we defer revenue recognition until such events occur . our equipment has non-software and embedded software components that function together to deliver the equipment 's essential functionality . revenue is recognized upon shipment or at delivery destination point , provided that customer acceptance criteria can be demonstrated prior to shipment . certain contracts require us to perform tests of the product to ensure that performance meets the published product specifications or customer requested specifications , which are generally conducted prior to shipment . where the criteria can not be demonstrated prior to shipment , revenue is deferred until customer acceptance has been received . we also defer the portion of the sales price that is not due until acceptance , which represents deferred profit . for multiple element arrangements , we allocate revenue to all deliverables based on their relative selling prices . in such circumstances , a hierarchy is used to determine the selling price for allocating revenue to deliverables as follows : ( i ) vendor-specific objective evidence of selling price ( “vsoe” ) , ( ii ) third-party evidence of selling price ( “tpe” ) , and ( iii ) best estimate of the selling price ( “besp” ) . for a delivered item to be considered a separate unit , the delivered item must have value to the customer on a standalone basis and the delivery or performance of the undelivered item must be considered probable and substantially in our control . our post-shipment obligations include installation , training services , one-year standard warranties , and extended warranties . installation does not alter the product capabilities , does not require specialized skills or tools and can be performed by the customers or other vendors . installation is typically provided within five days of product shipment and is completed within one to two days thereafter . training services are optional and do not affect the customers ' ability to use the product . we defer revenue for the selling price of installation and training . extended warranties constitute warranty obligations beyond one year and we defer revenue in accordance with financial accounting standards board ( “fasb” ) accounting standards codification ( “asc” ) 605-20 , “separately priced extended warranty and product maintenance contracts” and asc 605-25 , “revenue recognition multiple-element arrangements.” service revenue is recognized over the contractual period or as services are performed . our products are generally subject to warranty and the related costs of the warranty are provided for in cost of revenues when product revenue is recognized . we classify shipping and handling costs in cost of revenues . we do not provide our customers with contractual rights of return for any of our products . retirement and postretirement plans effective january 1 , 2012 , we changed the method of recognizing actuarial gains and losses for our defined benefit pension plans and postretirement benefit plan and calculating the expected return on plan assets for our defined benefit pension plans . historically , we recognized net actuarial gains and losses in accumulated other comprehensive income within shareholders ' equity on our consolidated balance sheet on an annual basis and amortized them into operating results over the average remaining years of service of the plan participants , to the extent such gains and losses were outside of a range ( “corridor” ) . in 2012 , we elected to immediately recognize net actuarial gains and losses and the change in the fair value of the plan assets in our operating results in the year in which they occur or upon any interim remeasurement of the plans . in addition , we used to calculate the expected return on plan assets using a calculated market-related value of plan assets . effective january 1 , 2012 , we elected to calculate the expected return on plan assets using the fair value of the plan assets . we believe that this new method is preferable as it eliminates the delay in recognizing gains and losses in our operating results and it will improve the transparency by faster recognition of the effects of economic and 21 interest rate trends on plan obligations and investments . these actuarial gains and losses are generally measured annually as of december 31 and , accordingly , will be recorded during the fourth quarter of each year or upon any interim remeasurement of the plans . in accordance with financial accounting standards board accounting standards codification topic 250 , “accounting changes and error corrections” , all prior periods presented in this annual report on form 10-k have been adjusted to apply the new accounting method retrospectively . inventories inventories are stated at the lower of cost ( first-in , first-out basis ) or net realizable value . on a quarterly basis , we use consistent methodologies to evaluate all inventories for net realizable value . we record a provision for both excess and obsolete inventory when such write-downs or write-offs are identified through the quarterly review process . story_separator_special_tag 29 interest and other replace_table_token_18_th interest income increased by $ 2.2 million , from $ 4.1 million in 2013 to $ 6.3 million in 2014 , due primarily to higher cash and marketable securities balances in 2014. interest expense decreased by $ 19.2 million , from $ 26.1 million in 2013 to $ 6.9 million in 2014 , due primarily to a repayment of our convertible debt in the first quarter of 2014. in 2013 and 2012 , interest expense included convertible debt discount amortization . in 2013 , other ( income ) expense , net included a $ 34.2 million gain from the sale of an equity investment . income ( loss ) before income taxes replace_table_token_19_th ( 1 ) included in corporate are pension and postretirement plans actuarial gains and losses , interest income and interest expense . the decrease in income before income taxes from 2013 to 2014 was primarily due to a $ 98.9 million goodwill impairment charge related to wireless test and $ 46.6 million pension expense related to actuarial losses in 2014 , partially offset by higher income due to higher revenues in semiconductor test in 2014. the decrease in income before income taxes from 2012 to 2013 was primarily due to lower revenues in 2013 compared to 2012 , a $ 9.8 million increase in restructuring and other costs , partially offset by a $ 34.2 million gain from the sale of an equity investment in 2013. income taxes income tax expense for 2014 , 2013 and 2012 totaled $ 14.1 million , $ 37.0 million and $ 48.9 million , respectively . the effective tax rate for 2014 , 2013 and 2012 was 14.8 % , 18.3 % and 18.4 % , respectively . the decrease in income tax expense from 2013 to 2014 was primarily attributable to a shift in the geographic distribution of income which decreased income subject to taxation in the united states relative to lower tax rate jurisdictions , partially offset by an increase in income tax expense associated with uncertain tax positions and a reduction in the benefit from u.s. research and development tax credits . the decrease in income tax expense from 2012 to 2013 was due to the reinstatement of the u.s. research and development tax credit in 2013 for fiscal years 2013 and 2012 and lower pre-tax income , partially offset by higher tax expense for uncertain tax positions and state taxes . 30 u.s. research and development tax credits provided a 7.9 % and 7.2 % reduction to the 2014 and 2013 u.s. statutory federal tax rate of 35.0 % , respectively . the research and development tax credit expired at the end of 2014 ; therefore if the credit is not re-enacted there could be an unfavorable impact on our 2015 effective income tax rate . we operate under a tax holiday in singapore , which is effective through december 31 , 2015. the tax savings attributable to the singapore tax holiday for the years ended december 31 , 2014 , 2013 and 2012 were $ 13.2 million or $ 0.06 per diluted share , $ 4.7 million or $ 0.02 per diluted share and $ 10.9 million or $ 0.05 per diluted share , respectively . we are in discussions with the singapore economic development board with respect to extension of the tax holiday for periods after december 31 , 2015. contractual obligations the following table reflects our contractual obligations as of december 31 , 2014 : replace_table_token_20_th ( 1 ) included in other long-term liabilities are liabilities for customer advances , extended warranty , uncertain tax positions , deferred tax liabilities and other obligations . for certain long-term obligations , we are unable to provide a reasonably reliable estimate of the timing of future payments relating to these obligations and therefore we included these amounts in the column marked “other.” story_separator_special_tag in january 2015 , our board of directors authorized the repurchase of up to $ 500 million of common stock , $ 300 million of which we intend to repurchase in 2015. we believe our cash , cash equivalents and marketable securities balance will be sufficient to pay our quarterly dividend , execute our authorized share repurchase program and meet our working capital and expenditure needs for at least the next twelve months . the amount of cash , cash equivalents and marketable securities in the u.s. and our operations in the u.s. provide sufficient liquidity to fund our business activities in the u.s. we have approximately $ 616 million of cash outside the u.s. that if repatriated would incur additional taxes . determination of the additional taxes that would be incurred is not practicable due to uncertainty regarding the remittance structure , the mix of earnings and earnings and profit pools in the year of remittance , and overall complexity of the calculation . inflation has not had a significant long-term impact on earnings . retirement plans asc 715-20 , “compensation – retirement benefits – defined benefit plans” requires an employer with defined benefit plans or other postretirement benefit plans to recognize an asset or a liability on its balance sheet for the overfunded or underfunded status of the plans as defined by asc 715-20. the pension asset or liability represents the difference between the fair value of the pension plan 's assets and the projected benefit obligation as of december 31. for other postretirement benefit plans , the liability is the difference between the fair value of the plan 's assets and the accumulated postretirement benefit obligation as of december 31 . 33 our pension expense , which includes the u.s. qualified pension plan ( “u.s . plan” ) , certain qualified plans for non-u.s. subsidiaries , and a u.s. supplemental executive defined benefit plan , was approximately $ 52.4 million for the year ended december 31 , 2014. the largest portion of our 2014 pension expense was $ 31.2 million for our u.s. plan . pension

liquidity and capital resources our cash , cash equivalents and marketable securities balance increased $ 99.2 million to $ 1.3 billion from 2013 to 2014. cash activity for 2014 , 2013 and 2012 was as follows : replace_table_token_21_th in 2014 , changes in operating assets and liabilities , net of businesses acquired , provided cash of $ 52.4 million . this was due to a $ 100.8 million decrease in operating assets and a $ 48.4 million decrease in operating liabilities . 31 the decrease in operating assets was due to a $ 41.5 million decrease in prepayments and other assets primarily related to a reduction in prepayments to our contract manufacturers , a $ 51.2 million decrease in inventories due to higher sales , and an $ 8.1 million decrease in accounts receivable . the decrease in operating liabilities was due to $ 33.9 million of retirement plan contributions , a $ 17.0 million decrease in other accrued liabilities , a $ 16.9 million decrease in accounts payable , a $ 7.3 million decrease in accrued employee compensation due primarily to employee stock awards payroll taxes and variable compensation payments , a $ 4.3 million convertible note interest payment , partially offset by a $ 22.0 million increase in customer advance payments and deferred revenue , and an $ 8.9 million increase in accrued income taxes . investing activities during 2014 used cash of $ 332.9 million due to $ 1,578.7 million used for purchases of marketable securities and $ 169.0 million used for purchases of property , plant and equipment , and $ 19.4 million used for the acquisition of ait , completed in october 2014 , partially offset by proceeds from sales and maturities of marketable securities that provided cash of $ 859.7 million and $ 570.4 million , respectively , and net proceeds from life insurance of $ 4.2 million primarily related to the cash surrender value from the cancellation of teradyne owned life insurance policies on its retired chief executive officer .

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.

Write a concise summary of the following text delimited by triple backquotes. Return your response as a narrative which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text. critical accounting policies and estimates we have identified the policies discussed below as critical to understanding our business and our results of operations and financial condition . the impact and any associated risks related to these policies on our business operations is discussed throughout management 's discussion and analysis of financial condition and results of operations where such policies affect our reported and expected financial results . 20 revenue recognition we recognize revenues when there is persuasive evidence of an arrangement , title and risk of loss have passed , delivery has occurred or the services have been rendered , the sales price is fixed or determinable and collection of the related receivable is reasonably assured . title and risk of loss generally pass to our customers upon shipment or at delivery destination point . in circumstances where either title or risk of loss pass upon destination , acceptance or cash payment , we defer revenue recognition until such events occur . our equipment has non-software and embedded software components that function together to deliver the equipment 's essential functionality . revenue is recognized upon shipment or at delivery destination point , provided that customer acceptance criteria can be demonstrated prior to shipment . certain contracts require us to perform tests of the product to ensure that performance meets the published product specifications or customer requested specifications , which are generally conducted prior to shipment . where the criteria can not be demonstrated prior to shipment , revenue is deferred until customer acceptance has been received . we also defer the portion of the sales price that is not due until acceptance , which represents deferred profit . for multiple element arrangements , we allocate revenue to all deliverables based on their relative selling prices . in such circumstances , a hierarchy is used to determine the selling price for allocating revenue to deliverables as follows : ( i ) vendor-specific objective evidence of selling price ( “vsoe” ) , ( ii ) third-party evidence of selling price ( “tpe” ) , and ( iii ) best estimate of the selling price ( “besp” ) . for a delivered item to be considered a separate unit , the delivered item must have value to the customer on a standalone basis and the delivery or performance of the undelivered item must be considered probable and substantially in our control . our post-shipment obligations include installation , training services , one-year standard warranties , and extended warranties . installation does not alter the product capabilities , does not require specialized skills or tools and can be performed by the customers or other vendors . installation is typically provided within five days of product shipment and is completed within one to two days thereafter . training services are optional and do not affect the customers ' ability to use the product . we defer revenue for the selling price of installation and training . extended warranties constitute warranty obligations beyond one year and we defer revenue in accordance with financial accounting standards board ( “fasb” ) accounting standards codification ( “asc” ) 605-20 , “separately priced extended warranty and product maintenance contracts” and asc 605-25 , “revenue recognition multiple-element arrangements.” service revenue is recognized over the contractual period or as services are performed . our products are generally subject to warranty and the related costs of the warranty are provided for in cost of revenues when product revenue is recognized . we classify shipping and handling costs in cost of revenues . we do not provide our customers with contractual rights of return for any of our products . retirement and postretirement plans effective january 1 , 2012 , we changed the method of recognizing actuarial gains and losses for our defined benefit pension plans and postretirement benefit plan and calculating the expected return on plan assets for our defined benefit pension plans . historically , we recognized net actuarial gains and losses in accumulated other comprehensive income within shareholders ' equity on our consolidated balance sheet on an annual basis and amortized them into operating results over the average remaining years of service of the plan participants , to the extent such gains and losses were outside of a range ( “corridor” ) . in 2012 , we elected to immediately recognize net actuarial gains and losses and the change in the fair value of the plan assets in our operating results in the year in which they occur or upon any interim remeasurement of the plans . in addition , we used to calculate the expected return on plan assets using a calculated market-related value of plan assets . effective january 1 , 2012 , we elected to calculate the expected return on plan assets using the fair value of the plan assets . we believe that this new method is preferable as it eliminates the delay in recognizing gains and losses in our operating results and it will improve the transparency by faster recognition of the effects of economic and 21 interest rate trends on plan obligations and investments . these actuarial gains and losses are generally measured annually as of december 31 and , accordingly , will be recorded during the fourth quarter of each year or upon any interim remeasurement of the plans . in accordance with financial accounting standards board accounting standards codification topic 250 , “accounting changes and error corrections” , all prior periods presented in this annual report on form 10-k have been adjusted to apply the new accounting method retrospectively . inventories inventories are stated at the lower of cost ( first-in , first-out basis ) or net realizable value . on a quarterly basis , we use consistent methodologies to evaluate all inventories for net realizable value . we record a provision for both excess and obsolete inventory when such write-downs or write-offs are identified through the quarterly review process . story_separator_special_tag 29 interest and other replace_table_token_18_th interest income increased by $ 2.2 million , from $ 4.1 million in 2013 to $ 6.3 million in 2014 , due primarily to higher cash and marketable securities balances in 2014. interest expense decreased by $ 19.2 million , from $ 26.1 million in 2013 to $ 6.9 million in 2014 , due primarily to a repayment of our convertible debt in the first quarter of 2014. in 2013 and 2012 , interest expense included convertible debt discount amortization . in 2013 , other ( income ) expense , net included a $ 34.2 million gain from the sale of an equity investment . income ( loss ) before income taxes replace_table_token_19_th ( 1 ) included in corporate are pension and postretirement plans actuarial gains and losses , interest income and interest expense . the decrease in income before income taxes from 2013 to 2014 was primarily due to a $ 98.9 million goodwill impairment charge related to wireless test and $ 46.6 million pension expense related to actuarial losses in 2014 , partially offset by higher income due to higher revenues in semiconductor test in 2014. the decrease in income before income taxes from 2012 to 2013 was primarily due to lower revenues in 2013 compared to 2012 , a $ 9.8 million increase in restructuring and other costs , partially offset by a $ 34.2 million gain from the sale of an equity investment in 2013. income taxes income tax expense for 2014 , 2013 and 2012 totaled $ 14.1 million , $ 37.0 million and $ 48.9 million , respectively . the effective tax rate for 2014 , 2013 and 2012 was 14.8 % , 18.3 % and 18.4 % , respectively . the decrease in income tax expense from 2013 to 2014 was primarily attributable to a shift in the geographic distribution of income which decreased income subject to taxation in the united states relative to lower tax rate jurisdictions , partially offset by an increase in income tax expense associated with uncertain tax positions and a reduction in the benefit from u.s. research and development tax credits . the decrease in income tax expense from 2012 to 2013 was due to the reinstatement of the u.s. research and development tax credit in 2013 for fiscal years 2013 and 2012 and lower pre-tax income , partially offset by higher tax expense for uncertain tax positions and state taxes . 30 u.s. research and development tax credits provided a 7.9 % and 7.2 % reduction to the 2014 and 2013 u.s. statutory federal tax rate of 35.0 % , respectively . the research and development tax credit expired at the end of 2014 ; therefore if the credit is not re-enacted there could be an unfavorable impact on our 2015 effective income tax rate . we operate under a tax holiday in singapore , which is effective through december 31 , 2015. the tax savings attributable to the singapore tax holiday for the years ended december 31 , 2014 , 2013 and 2012 were $ 13.2 million or $ 0.06 per diluted share , $ 4.7 million or $ 0.02 per diluted share and $ 10.9 million or $ 0.05 per diluted share , respectively . we are in discussions with the singapore economic development board with respect to extension of the tax holiday for periods after december 31 , 2015. contractual obligations the following table reflects our contractual obligations as of december 31 , 2014 : replace_table_token_20_th ( 1 ) included in other long-term liabilities are liabilities for customer advances , extended warranty , uncertain tax positions , deferred tax liabilities and other obligations . for certain long-term obligations , we are unable to provide a reasonably reliable estimate of the timing of future payments relating to these obligations and therefore we included these amounts in the column marked “other.” story_separator_special_tag in january 2015 , our board of directors authorized the repurchase of up to $ 500 million of common stock , $ 300 million of which we intend to repurchase in 2015. we believe our cash , cash equivalents and marketable securities balance will be sufficient to pay our quarterly dividend , execute our authorized share repurchase program and meet our working capital and expenditure needs for at least the next twelve months . the amount of cash , cash equivalents and marketable securities in the u.s. and our operations in the u.s. provide sufficient liquidity to fund our business activities in the u.s. we have approximately $ 616 million of cash outside the u.s. that if repatriated would incur additional taxes . determination of the additional taxes that would be incurred is not practicable due to uncertainty regarding the remittance structure , the mix of earnings and earnings and profit pools in the year of remittance , and overall complexity of the calculation . inflation has not had a significant long-term impact on earnings . retirement plans asc 715-20 , “compensation – retirement benefits – defined benefit plans” requires an employer with defined benefit plans or other postretirement benefit plans to recognize an asset or a liability on its balance sheet for the overfunded or underfunded status of the plans as defined by asc 715-20. the pension asset or liability represents the difference between the fair value of the pension plan 's assets and the projected benefit obligation as of december 31. for other postretirement benefit plans , the liability is the difference between the fair value of the plan 's assets and the accumulated postretirement benefit obligation as of december 31 . 33 our pension expense , which includes the u.s. qualified pension plan ( “u.s . plan” ) , certain qualified plans for non-u.s. subsidiaries , and a u.s. supplemental executive defined benefit plan , was approximately $ 52.4 million for the year ended december 31 , 2014. the largest portion of our 2014 pension expense was $ 31.2 million for our u.s. plan . pension Narrative : liquidity and capital resources our cash , cash equivalents and marketable securities balance increased $ 99.2 million to $ 1.3 billion from 2013 to 2014. cash activity for 2014 , 2013 and 2012 was as follows : replace_table_token_21_th in 2014 , changes in operating assets and liabilities , net of businesses acquired , provided cash of $ 52.4 million . this was due to a $ 100.8 million decrease in operating assets and a $ 48.4 million decrease in operating liabilities . 31 the decrease in operating assets was due to a $ 41.5 million decrease in prepayments and other assets primarily related to a reduction in prepayments to our contract manufacturers , a $ 51.2 million decrease in inventories due to higher sales , and an $ 8.1 million decrease in accounts receivable . the decrease in operating liabilities was due to $ 33.9 million of retirement plan contributions , a $ 17.0 million decrease in other accrued liabilities , a $ 16.9 million decrease in accounts payable , a $ 7.3 million decrease in accrued employee compensation due primarily to employee stock awards payroll taxes and variable compensation payments , a $ 4.3 million convertible note interest payment , partially offset by a $ 22.0 million increase in customer advance payments and deferred revenue , and an $ 8.9 million increase in accrued income taxes . investing activities during 2014 used cash of $ 332.9 million due to $ 1,578.7 million used for purchases of marketable securities and $ 169.0 million used for purchases of property , plant and equipment , and $ 19.4 million used for the acquisition of ait , completed in october 2014 , partially offset by proceeds from sales and maturities of marketable securities that provided cash of $ 859.7 million and $ 570.4 million , respectively , and net proceeds from life insurance of $ 4.2 million primarily related to the cash surrender value from the cancellation of teradyne owned life insurance policies on its retired chief executive officer .