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accounts receivable from direct customers and distributors ( excluding those distributors discussed in the immediately preceding paragraph ) are recognized and inventory is relieved upon shipment as title to inventories generally transfers upon shipment at which point we have a legally enforceable right to collection under normal terms . accounts receivable related to consigned inventory is recognized when the customer takes title to such inventory from its consigned location at which point inventory is relieved , title transfers , and we have a legally enforceable right to collection under the terms of our agreement with the related customers . we estimate potential future returns and sales allowances related to current period product revenue . management analyzes historical returns , changes in customer demand and acceptance of products when evaluating the adequacy of returns and sales allowances . estimates made by us may differ from actual returns and sales allowances . these differences may materially impact reported revenue and amounts ultimately collected on accounts receivable . historically , such differences have not been material . 23 at june 27 , 2015 and june 28 , 2014 , we had $ 17.4 million and $ 16.2 million accrued for returns and allowances against accounts receivable , respectively . during fiscal years 2015 and 2014 , we recorded $ 81.5 million and $ 75.3 million for estimated returns and allowances against revenues , respectively . these amounts were offset by $ 80.2 million and $ 71.6 million for actual returns and allowances given during fiscal years 2015 and 2014 , respectively . inventories inventories are stated at the lower of ( i ) standard cost , which approximates actual cost on a first-in-first-out basis , or ( ii ) market value . our standard cost revision policy is to continuously monitor manufacturing variances and revise standard costs on a quarterly basis . because of the cyclical nature of the market , inventory levels , obsolescence of technology , and product life cycles , we generally write-down inventories to net realizable value based on forecasted product demand . actual demand and market conditions may be lower than those projected by us . this difference could have a material adverse effect on our gross margin should inventory write-downs beyond those initially recorded become necessary . alternatively , should actual demand and market conditions be more favorable than those estimated by us , gross margin could be favorably impacted as we release these reserves upon the ultimate product shipment . during fiscal years 2015 , 2014 and 2013 , we had net inventory write-downs of $ 28.6 million , $ 35.1 million and $ 19.2 million , respectively . long-lived assets we evaluate the recoverability of property , plant and equipment in accordance with accounting standards codification ( “ asc ” ) no . 360 , property , plant , and equipment ( “ asc 360 ” ) . we perform periodic reviews to determine whether facts and circumstances exist that would indicate that the carrying amounts of property , plant and equipment might not be fully recoverable . if facts and circumstances indicate that the carrying amount of property , plant and equipment might not be fully recoverable , we compare projected undiscounted net cash flows associated with the related asset or group of assets over their estimated remaining useful lives against their respective carrying amounts . in the event that the projected undiscounted cash flows are not sufficient to recover the carrying value of the assets , the assets are written down to their estimated fair values based on the expected discounted future cash flows attributable to the assets . evaluation of impairment of property , plant and equipment requires estimates in the forecast of future operating results that are used in the preparation of the expected future undiscounted cash flows . actual future operating results and the remaining economic lives of our property , plant and equipment could differ from our estimates used in assessing the recoverability of these assets . these differences could result in impairment charges , which could have a material adverse impact on our results of operations . we recorded impairment charges of $ 67.0 million , $ 11.6 million , and $ 24.9 million during fiscal years 2015 , 2014 and 2013 , respectively . intangible assets and goodwill we account for intangible assets in accordance with asc no . 350 , intangibles-goodwill and other ( “ asc 350 ” ) , we review goodwill and purchased intangible assets with indefinite lives for impairment annually and whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable , such as when reductions in demand or significant economic slowdowns in the semiconductor industry are present . intangible asset reviews are performed when indicators exist that could indicate the carrying value may not be recoverable based on comparisons to undiscounted expected future cash flows . if this comparison indicates that there is impairment , the impaired asset is written down to fair value , which is typically calculated using : ( i ) quoted market prices or ( ii ) discounted expected future cash flows utilizing a discount rate consistent with the guidance provided in fasb concepts statement no . 7 , using cash flow information and present value in accounting measurements . impairment is based on the excess of the carrying amount over the fair value of those assets . during fiscal years 2015 , 2014 and 2013 , we recorded impairment of intangible assets of $ 8.9 million , $ 2.6 million and $ 2.8 million , respectively , related to write-offs of acquired in-process research and development . goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired . story_separator_special_tag million decrease was primarily due to lower levels of certain assets classified as excess property , plant and equipment and certain assets classified as held for sale written down to fair value less cost to sell , including used fabrication tools and test equipment . impairment of goodwill and intangible assets impairment of goodwill and intangible assets was $ 93.0 million in fiscal year 2015 and $ 2.6 million in fiscal year 2014 . the $ 90.4 million increase was primarily driven by impairments to goodwill and in-process research and development for the sensing solutions reporting unit . the sensing solutions reporting unit develops integrated circuits that are primarily sold in the consumer and automotive end customer markets . the impairment was the result of our decision within the quarter ended december 27 , 2014 to exit certain market offerings that have competitive dynamics which are no longer consistent with our business objectives . for details , please refer to note 8 : “ goodwill and intangible assets ” in our consolidated financial statements included in part iv , item 15 ( a ) to this annual report . impairment of goodwill and intangible assets was $ 2.6 million in fiscal year 2014 and $ 2.8 million in fiscal year 2013. there were no significant fluctuations in any specific items making up the impairment of goodwill and intangible assets expenses . severance and restructuring expenses severance and restructuring expenses were $ 30.6 million in fiscal year 2015 and $ 24.9 million in fiscal year 2014 , which represented 1.3 % and 1.0 % of net revenues , respectively . the $ 5.7 million increase was primarily due to restructuring activities which took place during fiscal 2015 , primarily $ 23.9 million associated with the major reorganization of the company 's business units as well as $ 6.7 million associated with the decision to shut down our san jose wafer fabrication facility . for details , please refer to note 18 : “ restructuring activities ” in our consolidated financial statements included in part iv , item 15 ( a ) to this annual report . during the fiscal year 2015 , we commenced activities to close down the operations in our san jose wafer fabrication facility , our hillsboro , oregon testing site , and our batangas , the philippines manufacturing site . additionally , we announced the planned transfer of our wafer manufacturing facility in san antonio , texas to a foundry partner and to close our wafer level packaging manufacturing facility in dallas , texas during our fourth fiscal quarter of 2015 earnings call . as a result of these actions , we expect to incur additional severance and restructuring expenses throughout our fiscal year 2016. severance and restructuring expenses were $ 24.9 million in fiscal year 2014 and $ 2.8 million in fiscal year 2013 , which represented 1.0 % and 0.1 % of net revenues , respectively . the $ 22.1 million increase was primarily due to a $ 10.8 million increase in severance and restructuring expenses associated with the reorganization of certain business units and an $ 11.0 million increase in severance costs associated with restructuring plans arising from the volterra acquisition . the reorganizations were driven by the desire to focus on specific investment areas , simplify business processes and eliminate redundant positions . acquisition-related costs acquisition-related costs were $ 7.0 million in fiscal year 2014 , and included banker , legal , and other volterra acquisition-related costs . other operating expenses ( income ) , net other operating expenses ( income ) , net were $ ( 2.0 ) million and $ 15.8 million in fiscal year 2015 and 2014 , respectively , which represented ( 0.1 ) % and 0.6 % of net revenues , respectively . the net decrease in other operating expenses of $ 17.8 million was primarily driven by a change in estimate to an expected loss on rent expense for vacated office space of $ 3.4 million as well as the absence of one-time expenses incurred in fiscal year 2014 such as the $ 6.0 million intellectual property infringement legal settlement and the impairment of notes receivable of $ 4.1 million related to a divestiture . other operating expenses ( income ) , net were $ 15.8 million and $ 3.1 million in fiscal years 2014 and 2013 , respectively , which represented 0.6 % and 0.1 % of net revenues , respectively . the net increase in other operating expenses ( income ) of $ 12.7 million was primarily attributable to a $ 6.0 million intellectual property infringement legal settlement and an impairment of notes receivable of $ 4.1 million related to a divestiture . 29 interest and other income ( expense ) , net interest and other income ( expense ) , net were $ 8.9 million in fiscal year 2015 and $ ( 13.1 ) million in fiscal year 2014 , which represented 0.4 % and ( 0.5 ) % of net revenues , respectively . the net decrease in expenses of $ 22.0 million to an income position was primarily attributable to the gain of $ 35.8 million on the sale of our captive touch business , which occurred in june 2015. this gain was partially offset by a $ 14.0 million decrease in income from licensing intellectual property and $ 5.5 million in additional interest expense resulting from the issuance of long-term notes . interest and other income ( expense ) , net were $ ( 13.1 ) million in fiscal year 2014 and $ ( 18.0 ) million in fiscal year 2013 , which represented ( 0.5 ) % and ( 0.7 ) % of net revenues , respectively . the net decrease in expenses of $ 5.0 million was primarily driven by income from licensing intellectual property of $ 17.1 million offset by $ 10.6 million in additional interest expense resulting from the issuance of long-term notes . provision for income
| cash flows were as follows : 31 replace_table_token_8_th operating activities cash provided by operating activities is net income adjusted for certain non-cash items and changes in certain assets and liabilities . cash provided by operating activities was $ 693.7 million in fiscal year 2015 , a decrease of $ 82.4 million compared with fiscal year 2014 . this decrease was primarily a result of $ 206.0 million of net income , a $ 148.8 million decrease from fiscal year 2014 and a net change in assets and liabilities of $ 61.0 million , a $ 50.0 million decrease in cash provided by operating activities from fiscal year 2014 . these decreases were partially offset by non-cash adjustments to net income of $ 426.7 million , which increased cash provided by operating activities by $ 116.4 million compared with fiscal year 2014. the movement in non-cash adjustments primarily resulted from impairment of the sensing solutions reporting unit goodwill of $ 84.1 million and increased depreciation of $ 54.8 million , primarily associated with accelerated depreciation for the san jose wafer fabrication facility shut down . cash from operations for fiscal year 2014 decreased by approximately $ 41.8 million compared with fiscal year 2013 . this decrease was due to lower net income of $ 100.1 million and lower deferred taxes of $ 57.5 million , which was partially offset by lower cash use of $ 66.8 million and $ 55.9 million relating to other current assets and inventory , respectively . investing activities investing cash flows consist primarily of capital expenditures , net investment purchases and maturities and acquisitions . cash used in investing activities decreased by $ 573.4 million for fiscal year 2015 compared with fiscal year 2014 . the decrease was due primarily to relative decrease in cash used for acquisitions of $ 451.5 million relating to the volterra acquisition in fiscal year 2014 , $ 56.7 million of reduction in capital expenditures relating to property , plant and equipment due to spending control efforts and $ 35.6 million in cash proceeds from the sale of our captive touch business .
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provided that no significant deterioration in general economic conditions occurs , the company expects total revenues from existing businesses to increase on a year-over-year basis during fiscal 2016 due to an increase in overall demand for the services we provide . despite this expectation of growth within certain segments , we remain focused on controlled growth within certain markets which continue to experience highly competitive margins and increasing costs . to continue to grow our business , including through acquisitions , and to fund working capital , we may require a significant amount of cash . our ability to generate cash depends on many factors that are beyond our control , including demand for our services , the availability of projects at margins acceptable to us , the ultimate collectability of our receivables , our ability to borrow on our 2012 credit facility , and our ability to raise funds in the capital markets , among many other factors . we anticipate that the combination of cash on hand , cash flows from operations and available capacity under our 2012 credit facility will provide sufficient cash to enable us to meet our working capital needs , debt service requirements and capital expenditures for property and equipment through the next twelve months . we expect that our fixed asset requirements will range from $ 2.0 to $ 3.0 million for the fiscal year ending on september 30 , 2016 , and we may acquire these assets either through capital expenditures or through lease agreements . results of operations we report our operating results across our four operating segments : communications , residential , commercial & industrial and infrastructure solutions . expenses associated with our corporate office are classified as a fifth segment . the following table presents selected historical results of operations of ies . the infrastructure solutions segment was added in connection with the acquisition of miscor group , ltd. in september 2013. replace_table_token_8_th consolidated revenues for the year ended september 30 , 2015 were $ 61.5 million greater than for the year ended september 30 , 2014 , an increase of 12.0 % . revenues increased as both the communications and residential segments recognized double digit revenue growth driven by an increase in demand for their service offerings 29 combined with continued improvement of conditions in the markets in which they operate . the commercial and industrial segment also contributed to the overall year over year growth while the infrastructure solutions segment reported a minor decline in revenue , primarily due to a decrease in demand for power assemblies by certain of our large rail customers . our overall gross profit percentage increased to 17.4 % during the year ended september 30 , 2015 as compared to 16.2 % during the year ended september 30 , 2014. gross profit as a percentage of revenue increased at all of our operating segments . this was primarily accomplished through improved project execution combined with a favorable mix of projects in progress and other services in demand . selling , general and administrative expenses include costs not directly associated with performing work for our customers . these costs consist primarily of compensation and benefits related to corporate , segment and branch management ( including incentive-based compensation ) , occupancy and utilities , training , professional services , information technology costs , consulting fees , travel and certain types of depreciation and amortization . we allocate certain corporate selling , general and administrative costs across our segments as we believe this more accurately reflects the costs associated with operating each segment . during the year ended september 30 , 2015 , our selling , general and administrative expenses were $ 81.4 million , an increase of $ 5.8 million , or 7.7 % , as compared to the year ended september 30 , 2014. the increase is primarily attributable to higher personnel costs in connection with the growth and increased profitability in our communication and residential segments . these increases were partially offset by a $ 1.0 million reduction in acquisition related costs and professional fees for the year ended september 30 , 2015 compared to the year ended september 30 , 2014. communications 2015 compared to 2014 replace_table_token_9_th revenue . revenues increased by $ 25.8 million during the year ended september 30 , 2015 , a 22.2 % increase compared to the year ended september 30 , 2014 . the increase is the result of both the expansion of our customer base and additional work with existing customers . the expansion of our service offerings within areas such as voice over internet protocol ( voip ) resulted in $ 10.8 million of incremental revenue for the year ended september 30 , 2015. the majority of the other service offerings such as audio-visual and security , cabling , and data center work increased due to the overall volume of projects completed or in progress during the current year . increases in these areas more than offset a decrease in high-tech manufacturing revenue , which fell by $ 6.0 million for the year ended september 30 , 2015 compared to the year ended september 30 , 2014. gross profit . gross profit during the year ended september 30 , 2015 increased $ 4.7 million , or 22.1 % , as compared to the year ended september 30 , 2014. this increase was primarily driven by the overall increase in revenues noted above . story_separator_special_tag this gross profit included an impact of $ 0.5 million of additional costs associated with the sale of inventory that was written up to fair value in purchase accounting upon the acquisition of the business in 2013. the business climate for engine components services has been more challenging during the second half of the year ended september 30 , 2014 , as we have experienced a decrease in demand for our engine repair services from certain large customers . however , demand has begun to increase subsequent to september 30 , 2014. the engine components service line reported gross profit of $ 2.8 million at a margin of 21.3 % for the year ended september 30 , 2014. the infrastructure solutions segment reported $ 9.3 million of general and administrative expense for the year ended september 30 , 2014. interest and other expense , net replace_table_token_17_th interest expense during the year ended september 30 , 2015 , we incurred interest expense of $ 1.1 million primarily comprised of interest expense from our term loan facility with wells fargo , an average letter of credit balance of $ 6.9 million under the 2012 credit facility and an average unused line of credit balance of $ 45.5 million . this compares to interest expense of $ 1.6 million for the year ended september 30 , 2014 , on a debt balance primarily comprised of our term loan facility with wells fargo , an average letter of credit balance of $ 6.8 million under the 2012 credit facility and an average unused line of credit balance of $ 23.8 million . 35 for the year ended september 30 , 2013 , we incurred interest expense of $ 1.8 million on a debt balance primarily comprised of the tontine term loan ( as defined herein ) , financing agreements related to our commercial insurance policy premiums , an average letter of credit balance of $ 7.4 million under our 2006 revolving credit facility with bank of america , n.a . , and an average unused line of credit balance of $ 22.6 million . provision for income taxes our provision for income taxes was $ 0.7 million for the years ended september 30 , 2015 and 2014. tax expense increased by $ 0.1 million related to the federal income tax provision , $ 0.5 million related to the state income tax provision , and $ 0.1 million related to uncertain tax benefits . however , these increases were offset by a $ 0.7 million benefit from a reduction in our valuation allowance as a result of deferred tax liabilities added in connection with the acquisition of southern rewinding . our provision for income taxes increased from $ 0.3 million for the year ended september 30 , 2013 to $ 0.7 million for the year ended september 30 , 2014. the increase includes a $ 0.3 million increase related to the federal income tax provision and a $ 0.1 million increase related to the state income tax provision . we provided a valuation allowance for the federal income tax benefit resulting from the loss from operations for the year ended september 30 , 2013. as a result , we did not recognize any net benefit for federal income taxes for the year ended september 30 , 2013. working capital during the year ended september 30 , 2015 , working capital increased by $ 8.9 million from september 30 , 2014 , reflecting a $ 21.1 million increase in current assets and an $ 12.2 million increase in current liabilities during the period . during the year ended september 30 , 2015 , our current assets increased by $ 21.1 million , or 12.6 % , to $ 189.0 million , as compared to $ 168.0 million as of september 30 , 2014. the increase in current assets is driven by current trade accounts receivables , net , which increased by $ 15.5 million at september 30 , 2015 , as compared to september 30 , 2014. the increase in receivables was most notable in our communications segment , which reported significantly higher revenues year over year . days sales outstanding ( dsos ) increased to 56 as of september 30 , 2015 from 54 as of september 30 , 2014. while the rate of collections may vary , our secured position , resulting from our ability to secure liens against our customers ' overdue receivables , reasonably assures that collection will occur eventually to the extent that our security retains value . costs and estimated earnings in excess of billings on uncompleted contracts increased by $ 3.5 million at september 30 , 2015 as compared to september 30 , 2014 , primarily as a result of increased activity at our communications segment . during the year ended september 30 , 2015 , our total current liabilities increased by $ 12.2 million to $ 108.1 million , compared to $ 95.9 million as of september 30 , 2014. the increase was driven primarily by an increase in accounts payable and accrued expenses , which increased by $ 8.9 million at september 30 , 2015 as compared with september 30 , 2014. the increase is driven by increased activity at our communications segment . surety many customers , particularly in connection with new construction , require us to post performance and payment bonds issued by a surety . these bonds provide a guarantee to the customer that we will perform under the terms of our contract and that we will pay our subcontractors and vendors . if we fail to perform under the terms of our contract or to pay subcontractors and vendors , the customer may demand that the surety make payments or provide services under the bond . we must reimburse the sureties for any expenses or outlays they incur on our behalf . to date , we have not been required to make any reimbursements to our sureties for bond-related costs . as is
| cash flows were as follows : 31 replace_table_token_8_th operating activities cash provided by operating activities is net income adjusted for certain non-cash items and changes in certain assets and liabilities . cash provided by operating activities was $ 693.7 million in fiscal year 2015 , a decrease of $ 82.4 million compared with fiscal year 2014 . this decrease was primarily a result of $ 206.0 million of net income , a $ 148.8 million decrease from fiscal year 2014 and a net change in assets and liabilities of $ 61.0 million , a $ 50.0 million decrease in cash provided by operating activities from fiscal year 2014 . these decreases were partially offset by non-cash adjustments to net income of $ 426.7 million , which increased cash provided by operating activities by $ 116.4 million compared with fiscal year 2014. the movement in non-cash adjustments primarily resulted from impairment of the sensing solutions reporting unit goodwill of $ 84.1 million and increased depreciation of $ 54.8 million , primarily associated with accelerated depreciation for the san jose wafer fabrication facility shut down . cash from operations for fiscal year 2014 decreased by approximately $ 41.8 million compared with fiscal year 2013 . this decrease was due to lower net income of $ 100.1 million and lower deferred taxes of $ 57.5 million , which was partially offset by lower cash use of $ 66.8 million and $ 55.9 million relating to other current assets and inventory , respectively . investing activities investing cash flows consist primarily of capital expenditures , net investment purchases and maturities and acquisitions . cash used in investing activities decreased by $ 573.4 million for fiscal year 2015 compared with fiscal year 2014 . the decrease was due primarily to relative decrease in cash used for acquisitions of $ 451.5 million relating to the volterra acquisition in fiscal year 2014 , $ 56.7 million of reduction in capital expenditures relating to property , plant and equipment due to spending control efforts and $ 35.6 million in cash proceeds from the sale of our captive touch business .
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provided that no significant deterioration in general economic conditions occurs , the company expects total revenues from existing businesses to increase on a year-over-year basis during fiscal 2016 due to an increase in overall demand for the services we provide . despite this expectation of growth within certain segments , we remain focused on controlled growth within certain markets which continue to experience highly competitive margins and increasing costs . to continue to grow our business , including through acquisitions , and to fund working capital , we may require a significant amount of cash . our ability to generate cash depends on many factors that are beyond our control , including demand for our services , the availability of projects at margins acceptable to us , the ultimate collectability of our receivables , our ability to borrow on our 2012 credit facility , and our ability to raise funds in the capital markets , among many other factors . we anticipate that the combination of cash on hand , cash flows from operations and available capacity under our 2012 credit facility will provide sufficient cash to enable us to meet our working capital needs , debt service requirements and capital expenditures for property and equipment through the next twelve months . we expect that our fixed asset requirements will range from $ 2.0 to $ 3.0 million for the fiscal year ending on september 30 , 2016 , and we may acquire these assets either through capital expenditures or through lease agreements . results of operations we report our operating results across our four operating segments : communications , residential , commercial & industrial and infrastructure solutions . expenses associated with our corporate office are classified as a fifth segment . the following table presents selected historical results of operations of ies . the infrastructure solutions segment was added in connection with the acquisition of miscor group , ltd. in september 2013. replace_table_token_8_th consolidated revenues for the year ended september 30 , 2015 were $ 61.5 million greater than for the year ended september 30 , 2014 , an increase of 12.0 % . revenues increased as both the communications and residential segments recognized double digit revenue growth driven by an increase in demand for their service offerings 29 combined with continued improvement of conditions in the markets in which they operate . the commercial and industrial segment also contributed to the overall year over year growth while the infrastructure solutions segment reported a minor decline in revenue , primarily due to a decrease in demand for power assemblies by certain of our large rail customers . our overall gross profit percentage increased to 17.4 % during the year ended september 30 , 2015 as compared to 16.2 % during the year ended september 30 , 2014. gross profit as a percentage of revenue increased at all of our operating segments . this was primarily accomplished through improved project execution combined with a favorable mix of projects in progress and other services in demand . selling , general and administrative expenses include costs not directly associated with performing work for our customers . these costs consist primarily of compensation and benefits related to corporate , segment and branch management ( including incentive-based compensation ) , occupancy and utilities , training , professional services , information technology costs , consulting fees , travel and certain types of depreciation and amortization . we allocate certain corporate selling , general and administrative costs across our segments as we believe this more accurately reflects the costs associated with operating each segment . during the year ended september 30 , 2015 , our selling , general and administrative expenses were $ 81.4 million , an increase of $ 5.8 million , or 7.7 % , as compared to the year ended september 30 , 2014. the increase is primarily attributable to higher personnel costs in connection with the growth and increased profitability in our communication and residential segments . these increases were partially offset by a $ 1.0 million reduction in acquisition related costs and professional fees for the year ended september 30 , 2015 compared to the year ended september 30 , 2014. communications 2015 compared to 2014 replace_table_token_9_th revenue . revenues increased by $ 25.8 million during the year ended september 30 , 2015 , a 22.2 % increase compared to the year ended september 30 , 2014 . the increase is the result of both the expansion of our customer base and additional work with existing customers . the expansion of our service offerings within areas such as voice over internet protocol ( voip ) resulted in $ 10.8 million of incremental revenue for the year ended september 30 , 2015. the majority of the other service offerings such as audio-visual and security , cabling , and data center work increased due to the overall volume of projects completed or in progress during the current year . increases in these areas more than offset a decrease in high-tech manufacturing revenue , which fell by $ 6.0 million for the year ended september 30 , 2015 compared to the year ended september 30 , 2014. gross profit . gross profit during the year ended september 30 , 2015 increased $ 4.7 million , or 22.1 % , as compared to the year ended september 30 , 2014. this increase was primarily driven by the overall increase in revenues noted above . story_separator_special_tag this gross profit included an impact of $ 0.5 million of additional costs associated with the sale of inventory that was written up to fair value in purchase accounting upon the acquisition of the business in 2013. the business climate for engine components services has been more challenging during the second half of the year ended september 30 , 2014 , as we have experienced a decrease in demand for our engine repair services from certain large customers . however , demand has begun to increase subsequent to september 30 , 2014. the engine components service line reported gross profit of $ 2.8 million at a margin of 21.3 % for the year ended september 30 , 2014. the infrastructure solutions segment reported $ 9.3 million of general and administrative expense for the year ended september 30 , 2014. interest and other expense , net replace_table_token_17_th interest expense during the year ended september 30 , 2015 , we incurred interest expense of $ 1.1 million primarily comprised of interest expense from our term loan facility with wells fargo , an average letter of credit balance of $ 6.9 million under the 2012 credit facility and an average unused line of credit balance of $ 45.5 million . this compares to interest expense of $ 1.6 million for the year ended september 30 , 2014 , on a debt balance primarily comprised of our term loan facility with wells fargo , an average letter of credit balance of $ 6.8 million under the 2012 credit facility and an average unused line of credit balance of $ 23.8 million . 35 for the year ended september 30 , 2013 , we incurred interest expense of $ 1.8 million on a debt balance primarily comprised of the tontine term loan ( as defined herein ) , financing agreements related to our commercial insurance policy premiums , an average letter of credit balance of $ 7.4 million under our 2006 revolving credit facility with bank of america , n.a . , and an average unused line of credit balance of $ 22.6 million . provision for income taxes our provision for income taxes was $ 0.7 million for the years ended september 30 , 2015 and 2014. tax expense increased by $ 0.1 million related to the federal income tax provision , $ 0.5 million related to the state income tax provision , and $ 0.1 million related to uncertain tax benefits . however , these increases were offset by a $ 0.7 million benefit from a reduction in our valuation allowance as a result of deferred tax liabilities added in connection with the acquisition of southern rewinding . our provision for income taxes increased from $ 0.3 million for the year ended september 30 , 2013 to $ 0.7 million for the year ended september 30 , 2014. the increase includes a $ 0.3 million increase related to the federal income tax provision and a $ 0.1 million increase related to the state income tax provision . we provided a valuation allowance for the federal income tax benefit resulting from the loss from operations for the year ended september 30 , 2013. as a result , we did not recognize any net benefit for federal income taxes for the year ended september 30 , 2013. working capital during the year ended september 30 , 2015 , working capital increased by $ 8.9 million from september 30 , 2014 , reflecting a $ 21.1 million increase in current assets and an $ 12.2 million increase in current liabilities during the period . during the year ended september 30 , 2015 , our current assets increased by $ 21.1 million , or 12.6 % , to $ 189.0 million , as compared to $ 168.0 million as of september 30 , 2014. the increase in current assets is driven by current trade accounts receivables , net , which increased by $ 15.5 million at september 30 , 2015 , as compared to september 30 , 2014. the increase in receivables was most notable in our communications segment , which reported significantly higher revenues year over year . days sales outstanding ( dsos ) increased to 56 as of september 30 , 2015 from 54 as of september 30 , 2014. while the rate of collections may vary , our secured position , resulting from our ability to secure liens against our customers ' overdue receivables , reasonably assures that collection will occur eventually to the extent that our security retains value . costs and estimated earnings in excess of billings on uncompleted contracts increased by $ 3.5 million at september 30 , 2015 as compared to september 30 , 2014 , primarily as a result of increased activity at our communications segment . during the year ended september 30 , 2015 , our total current liabilities increased by $ 12.2 million to $ 108.1 million , compared to $ 95.9 million as of september 30 , 2014. the increase was driven primarily by an increase in accounts payable and accrued expenses , which increased by $ 8.9 million at september 30 , 2015 as compared with september 30 , 2014. the increase is driven by increased activity at our communications segment . surety many customers , particularly in connection with new construction , require us to post performance and payment bonds issued by a surety . these bonds provide a guarantee to the customer that we will perform under the terms of our contract and that we will pay our subcontractors and vendors . if we fail to perform under the terms of our contract or to pay subcontractors and vendors , the customer may demand that the surety make payments or provide services under the bond . we must reimburse the sureties for any expenses or outlays they incur on our behalf . to date , we have not been required to make any reimbursements to our sureties for bond-related costs . as is
| liquidity £ $ 30,000 at any time during the period ; and excess availability $ 7,500 ; and fixed charge coverage ratio ³ 1.0:1.0 2.50 percentage points iii liquidity > $ 30,000 at all times during the period ; and excess availability > $ 7,500 ; and fixed charge coverage ratio ³ 1.0:1.0 2.00 percentage points in addition , we are charged monthly in arrears for ( 1 ) an unused commitment fee of 0.50 % per annum , ( 2 ) a collateral monitoring fee ranging from $ 1 thousand to $ 2 thousand , based on the then-applicable interest rate margin , ( 3 ) a letter of credit fee based on the then-applicable interest rate margin and ( 4 ) certain other fees and charges as specified in the amended credit agreement . at september 30 , 2015 , we had $ 22.8 million under the 2012 credit facility that was available to us without triggering or violating our financial covenant , $ 6.9 million in outstanding letters of credit with wells fargo and outstanding borrowings of $ 10.2 million the tontine term loan on december 12 , 2007 , we entered into the tontine term loan , a $ 25 million senior subordinated loan agreement , with tontine , which the company terminated and prepaid in full through a final payment of $ 10 million in february , 2013 . 38 rights offering on august 7 , 2014 , we completed a $ 20 million rights offering ( the rights offering ) . in the rights offering , we distributed , at no charge , to the holders of shares of our common stock one non-transferable subscription right for each share of common stock owned as of the record date . each right entitled the holder thereof to purchase from the company 0.214578135 shares of common stock at a subscription price of $ 5.20 per share ( the basic subscription rights ) , which represented a discount to the market price of our common stock at the closing of the offering .
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( the `` administrator `` ) , a wholly-owned subsidiary of new mountain capital , provides the administrative services necessary to conduct our day-to-day operations . the administrator has hired a third-party sub-administrator to assist with the provision of administrative services . we conducted a private offering ( the `` private offering `` ) of our common stock to investors in reliance on exemptions from the registration requirements of the securities act of 1933 , as amended . at the closing of any private offering , each investor in the private offering will make a capital commitment ( a `` capital commitment `` ) to purchase common stock pursuant 56 to a subscription agreement entered into with us ( a `` subscription agreement `` ) . we commenced our loan origination and investment activities on the date we issued shares to persons not affiliated with the investment adviser ( the `` initial closing date `` ) , which occurred on february 18 , 2020. we may conduct subsequent closing at times during our investment period ( the `` investment period `` ) , which will commence on the initial closing date and shall initially continue until the 48-month anniversary of the initial closing date , subject to automatic extensions thereafter , each for an additional one year period , unless the holders of a majority of our outstanding common stock elect to forego any such extension upon not less than ninety days prior written notice . holders of a majority of our outstanding common stock may also terminate the investment period as of any earlier anniversary of the initial closing date upon not less than ninety days written notice . each investor will be required to make capital contributions to purchase our common stock each time a drawdown notice is issued based on such investor 's capital commitment . pursuant to the subscription agreement entered into with each investor , we shall commence the wind up of operations two years following the expiration of the investment period , subject to additional extensions , each for an additional one year period , upon approval of the holders of a majority of our then outstanding common stock . on december 9 , 2020 , we established nmf slf i spv , l.l.c . ( `` slf i spv `` ) as a wholly-owned direct subsidiary , whose assets are used to secure slf i spv 's credit facility . prior to and through this date , financial information presented represents nmf slf i , inc. only . our investment objective is to generate current income and capital appreciation primarily by investing in or originating debt investments in first lien and unitranche leveraged loans of companies that the investment adviser believes are `` defensive growth `` companies in non-cyclical industry niches where the investment adviser has developed strong proprietary research and operational advantages . we make investments through both primary originations and open-market secondary purchases . we predominantly target loans to , and invest in u.s. middle market businesses , a market segment we believe continues to be underserved by other lenders . we define middle market businesses as those businesses with annual earnings before interest , taxes , depreciation , and amortization ( `` ebitda `` ) between $ 10.0 million and $ 200.0 million . the primary focus is in the debt of defensive growth companies , which are defined as generally exhibiting the following characteristics : ( i ) sustainable secular growth drivers , ( ii ) high barriers to competitive entry , ( iii ) high free cash flow after capital expenditure and working capital needs , ( iv ) high returns on assets and ( v ) niche market dominance . as of december 31 , 2020 , our top five industry concentrations were software , healthcare services , business services , financial services and distribution & logistics . as of december 31 , 2020 , our net assets were approximately $ 386.7 million and our portfolio had a fair value of approximately $ 468.0 million in 51 portfolio companies . covid-19 developments on march 11 , 2020 , the world health organization declared covid-19 a global pandemic and recommended containment and mitigation measures worldwide . the covid-19 pandemic has had , and continues to have , a significant impact on the u.s. economy and on us . the extent of the continued impact of the covid-19 pandemic on the financial performance of our current and future investments will depend on future developments , including the duration and spread of the virus , related advisories and restrictions , and the health of the financial markets and economy as a result of the covid-19 pandemic , all of which are highly uncertain and can not be predicted . to the extent our portfolio companies continue to be adversely impacted by the effects of the covid-19 pandemic , such impact may have a material adverse impact on our future net investment income , the fair value of our portfolio investments , our financial condition and results of operations and the financial condition of our portfolio companies . we will continue to monitor the rapidly evolving situation surrounding the covid-19 pandemic and guidance from u.s. and international authorities , including federal , state and local public health authorities , and we may take additional actions based on their recommendations . in these circumstances , there may be developments outside our control requiring us to adjust our plan of operation . for example , recurring covid-19 outbreaks have led to the re-introduction or continuation of certain public health restrictions ( such as instituting quarantines , prohibitions on travel and the closure of offices , businesses , schools , retail stores and other public venues ) in certain states in the united states and globally and could continue to lead to the reintroduction of such restrictions elsewhere . story_separator_special_tag non-accrual income : investments are placed on non-accrual status when principal or interest payments are past due for 30 days or more and when there is reasonable doubt that principal or interest will be collected . accrued cash and un-capitalized pik interest or dividends are reversed when an investment is placed on non-accrual status . previously capitalized pik interest or dividends are not reversed when an investment is placed on non-accrual status . interest or dividend payments received on non-accrual investments may be recognized as income or applied to principal depending upon management 's judgment of the ultimate collectibility . non-accrual investments are restored to accrual status when past due principal and interest is paid and , in management 's judgment , are likely to remain current . as of december 31 , 2020 , no investments were on non-accrual status . fee income : fee income represents delayed compensation , consent or amendment fees , revolver fees , structuring fees , upfront fees and other miscellaneous fees received and are typically non-recurring in nature . delayed compensation is income earned from counterparties on trades that do not settle within a set number of business days after trade date . fee income may also include fees from bridge loans . we may from time to time enter into bridge financing commitments , an obligation to provide interim financing to a counterparty until permanent credit can be obtained . these commitments are short-term in nature and may expire unfunded . a fee is received by us for providing such commitments . structuring fees and upfront fees are recognized as income when earned , usually when paid at the closing of the investment , and are non-refundable . monitoring of portfolio investments we monitor the performance and financial trends of our portfolio companies on at least a quarterly basis . we attempt to identify any developments within the portfolio company , the industry or the macroeconomic environment that may alter any material element of our original investment strategy . we use an investment rating system to characterize and monitor the credit profile and expected level of returns on each investment in the portfolio . we use a four-level numeric rating scale as follows : investment rating 1—investment is performing materially above expectations ; 61 investment rating 2—investment is performing materially in-line with expectations . all new loans are rated 2 at initial purchase ; investment rating 3—investment is performing materially below expectations , where the risk of loss has materially increased since the original investment ; and investment rating 4—investment is performing substantially below expectations and risks have increased substantially since the original investment . payments may be delinquent . there is meaningful possibility that we will not recoup our original cost basis in the investment and may realize a substantial loss upon exit . the following table shows the distribution of our investments on the 1 to 4 investment rating scale at fair value as of december 31 , 2020 : replace_table_token_10_th as of december 31 , 2020 , all investments in our portfolio had an investment rating of 1 or 2. in response to the continuing impact of the covid-19 pandemic and its impact on the overall market environment and the health of our portfolio companies , we performed a company-by-company evaluation of the anticipated impact of the covid-19 pandemic . the evaluation process consisted of dialogue with sponsors and portfolio companies to understand the impact of the covid-19 pandemic on each portfolio company , the portfolio company 's response to any disruption , the level of sponsor support , and the current and projected financial and liquidity position of the portfolio company . based on this evaluation , we assigned each portfolio company a `` risk rating `` of red , orange , yellow and green , with red reflecting a portfolio company with the potential for the most severe impact due to the covid-19 pandemic and green reflecting the least . we will continue to monitor our portfolio companies and provide support to their management teams where possible . the following table shows the risk ratings of our portfolio companies as of december 31 , 2020 : replace_table_token_11_th portfolio and investment activity the fair value of our investments was approximately $ 468.0 million in 51 portfolio companies at december 31 , 2020. the following table shows our portfolio and investment activity for the year ended december 31 , 2020 : replace_table_token_12_th 62 recent accounting standards updates see part ii—financial statements and supplementary data—note 14. recent accounting standards in this annual report on form 10-k for details on recent accounting standards updates . results of operations for the year ended december 31 , 2020 and for the period from january 23 , 2019 ( inception ) to december 31 , 2019 revenue year ended ( in thousands ) december 31 , 2020 december 31 , 2019 ( 1 ) interest income $ 16,235 $ — fee income 2,817 — total investment income $ 19,052 $ — ( 1 ) for the year ended december 31 , 2019 , amounts represent the period from january 23 , 2019 ( inception ) to december 31 , 2019. for the year ended december 31 , 2020 , total investment income of approximately $ 19.1 million consisted of approximately $ 13.0 million in cash interest from investments , approximately $ 0.2 million in pik and non-cash interest from investments , net amortization of purchase premiums and discounts of approximately $ 3.1 million , and approximately $ 2.8 million in fee income . investment income for the year ended december 31 , 2020 is driven by our deployment of capital and increasing invested balance . we had not commenced investment operations for the year ended december 31 , 2019 and therefore had no investment income . operating expenses replace_table_token_13_th ( 1 ) for the year ended december 31 , 2019 , amounts represent the period from january 23 , 2019 ( inception ) to
| liquidity £ $ 30,000 at any time during the period ; and excess availability $ 7,500 ; and fixed charge coverage ratio ³ 1.0:1.0 2.50 percentage points iii liquidity > $ 30,000 at all times during the period ; and excess availability > $ 7,500 ; and fixed charge coverage ratio ³ 1.0:1.0 2.00 percentage points in addition , we are charged monthly in arrears for ( 1 ) an unused commitment fee of 0.50 % per annum , ( 2 ) a collateral monitoring fee ranging from $ 1 thousand to $ 2 thousand , based on the then-applicable interest rate margin , ( 3 ) a letter of credit fee based on the then-applicable interest rate margin and ( 4 ) certain other fees and charges as specified in the amended credit agreement . at september 30 , 2015 , we had $ 22.8 million under the 2012 credit facility that was available to us without triggering or violating our financial covenant , $ 6.9 million in outstanding letters of credit with wells fargo and outstanding borrowings of $ 10.2 million the tontine term loan on december 12 , 2007 , we entered into the tontine term loan , a $ 25 million senior subordinated loan agreement , with tontine , which the company terminated and prepaid in full through a final payment of $ 10 million in february , 2013 . 38 rights offering on august 7 , 2014 , we completed a $ 20 million rights offering ( the rights offering ) . in the rights offering , we distributed , at no charge , to the holders of shares of our common stock one non-transferable subscription right for each share of common stock owned as of the record date . each right entitled the holder thereof to purchase from the company 0.214578135 shares of common stock at a subscription price of $ 5.20 per share ( the basic subscription rights ) , which represented a discount to the market price of our common stock at the closing of the offering .
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( the `` administrator `` ) , a wholly-owned subsidiary of new mountain capital , provides the administrative services necessary to conduct our day-to-day operations . the administrator has hired a third-party sub-administrator to assist with the provision of administrative services . we conducted a private offering ( the `` private offering `` ) of our common stock to investors in reliance on exemptions from the registration requirements of the securities act of 1933 , as amended . at the closing of any private offering , each investor in the private offering will make a capital commitment ( a `` capital commitment `` ) to purchase common stock pursuant 56 to a subscription agreement entered into with us ( a `` subscription agreement `` ) . we commenced our loan origination and investment activities on the date we issued shares to persons not affiliated with the investment adviser ( the `` initial closing date `` ) , which occurred on february 18 , 2020. we may conduct subsequent closing at times during our investment period ( the `` investment period `` ) , which will commence on the initial closing date and shall initially continue until the 48-month anniversary of the initial closing date , subject to automatic extensions thereafter , each for an additional one year period , unless the holders of a majority of our outstanding common stock elect to forego any such extension upon not less than ninety days prior written notice . holders of a majority of our outstanding common stock may also terminate the investment period as of any earlier anniversary of the initial closing date upon not less than ninety days written notice . each investor will be required to make capital contributions to purchase our common stock each time a drawdown notice is issued based on such investor 's capital commitment . pursuant to the subscription agreement entered into with each investor , we shall commence the wind up of operations two years following the expiration of the investment period , subject to additional extensions , each for an additional one year period , upon approval of the holders of a majority of our then outstanding common stock . on december 9 , 2020 , we established nmf slf i spv , l.l.c . ( `` slf i spv `` ) as a wholly-owned direct subsidiary , whose assets are used to secure slf i spv 's credit facility . prior to and through this date , financial information presented represents nmf slf i , inc. only . our investment objective is to generate current income and capital appreciation primarily by investing in or originating debt investments in first lien and unitranche leveraged loans of companies that the investment adviser believes are `` defensive growth `` companies in non-cyclical industry niches where the investment adviser has developed strong proprietary research and operational advantages . we make investments through both primary originations and open-market secondary purchases . we predominantly target loans to , and invest in u.s. middle market businesses , a market segment we believe continues to be underserved by other lenders . we define middle market businesses as those businesses with annual earnings before interest , taxes , depreciation , and amortization ( `` ebitda `` ) between $ 10.0 million and $ 200.0 million . the primary focus is in the debt of defensive growth companies , which are defined as generally exhibiting the following characteristics : ( i ) sustainable secular growth drivers , ( ii ) high barriers to competitive entry , ( iii ) high free cash flow after capital expenditure and working capital needs , ( iv ) high returns on assets and ( v ) niche market dominance . as of december 31 , 2020 , our top five industry concentrations were software , healthcare services , business services , financial services and distribution & logistics . as of december 31 , 2020 , our net assets were approximately $ 386.7 million and our portfolio had a fair value of approximately $ 468.0 million in 51 portfolio companies . covid-19 developments on march 11 , 2020 , the world health organization declared covid-19 a global pandemic and recommended containment and mitigation measures worldwide . the covid-19 pandemic has had , and continues to have , a significant impact on the u.s. economy and on us . the extent of the continued impact of the covid-19 pandemic on the financial performance of our current and future investments will depend on future developments , including the duration and spread of the virus , related advisories and restrictions , and the health of the financial markets and economy as a result of the covid-19 pandemic , all of which are highly uncertain and can not be predicted . to the extent our portfolio companies continue to be adversely impacted by the effects of the covid-19 pandemic , such impact may have a material adverse impact on our future net investment income , the fair value of our portfolio investments , our financial condition and results of operations and the financial condition of our portfolio companies . we will continue to monitor the rapidly evolving situation surrounding the covid-19 pandemic and guidance from u.s. and international authorities , including federal , state and local public health authorities , and we may take additional actions based on their recommendations . in these circumstances , there may be developments outside our control requiring us to adjust our plan of operation . for example , recurring covid-19 outbreaks have led to the re-introduction or continuation of certain public health restrictions ( such as instituting quarantines , prohibitions on travel and the closure of offices , businesses , schools , retail stores and other public venues ) in certain states in the united states and globally and could continue to lead to the reintroduction of such restrictions elsewhere . story_separator_special_tag non-accrual income : investments are placed on non-accrual status when principal or interest payments are past due for 30 days or more and when there is reasonable doubt that principal or interest will be collected . accrued cash and un-capitalized pik interest or dividends are reversed when an investment is placed on non-accrual status . previously capitalized pik interest or dividends are not reversed when an investment is placed on non-accrual status . interest or dividend payments received on non-accrual investments may be recognized as income or applied to principal depending upon management 's judgment of the ultimate collectibility . non-accrual investments are restored to accrual status when past due principal and interest is paid and , in management 's judgment , are likely to remain current . as of december 31 , 2020 , no investments were on non-accrual status . fee income : fee income represents delayed compensation , consent or amendment fees , revolver fees , structuring fees , upfront fees and other miscellaneous fees received and are typically non-recurring in nature . delayed compensation is income earned from counterparties on trades that do not settle within a set number of business days after trade date . fee income may also include fees from bridge loans . we may from time to time enter into bridge financing commitments , an obligation to provide interim financing to a counterparty until permanent credit can be obtained . these commitments are short-term in nature and may expire unfunded . a fee is received by us for providing such commitments . structuring fees and upfront fees are recognized as income when earned , usually when paid at the closing of the investment , and are non-refundable . monitoring of portfolio investments we monitor the performance and financial trends of our portfolio companies on at least a quarterly basis . we attempt to identify any developments within the portfolio company , the industry or the macroeconomic environment that may alter any material element of our original investment strategy . we use an investment rating system to characterize and monitor the credit profile and expected level of returns on each investment in the portfolio . we use a four-level numeric rating scale as follows : investment rating 1—investment is performing materially above expectations ; 61 investment rating 2—investment is performing materially in-line with expectations . all new loans are rated 2 at initial purchase ; investment rating 3—investment is performing materially below expectations , where the risk of loss has materially increased since the original investment ; and investment rating 4—investment is performing substantially below expectations and risks have increased substantially since the original investment . payments may be delinquent . there is meaningful possibility that we will not recoup our original cost basis in the investment and may realize a substantial loss upon exit . the following table shows the distribution of our investments on the 1 to 4 investment rating scale at fair value as of december 31 , 2020 : replace_table_token_10_th as of december 31 , 2020 , all investments in our portfolio had an investment rating of 1 or 2. in response to the continuing impact of the covid-19 pandemic and its impact on the overall market environment and the health of our portfolio companies , we performed a company-by-company evaluation of the anticipated impact of the covid-19 pandemic . the evaluation process consisted of dialogue with sponsors and portfolio companies to understand the impact of the covid-19 pandemic on each portfolio company , the portfolio company 's response to any disruption , the level of sponsor support , and the current and projected financial and liquidity position of the portfolio company . based on this evaluation , we assigned each portfolio company a `` risk rating `` of red , orange , yellow and green , with red reflecting a portfolio company with the potential for the most severe impact due to the covid-19 pandemic and green reflecting the least . we will continue to monitor our portfolio companies and provide support to their management teams where possible . the following table shows the risk ratings of our portfolio companies as of december 31 , 2020 : replace_table_token_11_th portfolio and investment activity the fair value of our investments was approximately $ 468.0 million in 51 portfolio companies at december 31 , 2020. the following table shows our portfolio and investment activity for the year ended december 31 , 2020 : replace_table_token_12_th 62 recent accounting standards updates see part ii—financial statements and supplementary data—note 14. recent accounting standards in this annual report on form 10-k for details on recent accounting standards updates . results of operations for the year ended december 31 , 2020 and for the period from january 23 , 2019 ( inception ) to december 31 , 2019 revenue year ended ( in thousands ) december 31 , 2020 december 31 , 2019 ( 1 ) interest income $ 16,235 $ — fee income 2,817 — total investment income $ 19,052 $ — ( 1 ) for the year ended december 31 , 2019 , amounts represent the period from january 23 , 2019 ( inception ) to december 31 , 2019. for the year ended december 31 , 2020 , total investment income of approximately $ 19.1 million consisted of approximately $ 13.0 million in cash interest from investments , approximately $ 0.2 million in pik and non-cash interest from investments , net amortization of purchase premiums and discounts of approximately $ 3.1 million , and approximately $ 2.8 million in fee income . investment income for the year ended december 31 , 2020 is driven by our deployment of capital and increasing invested balance . we had not commenced investment operations for the year ended december 31 , 2019 and therefore had no investment income . operating expenses replace_table_token_13_th ( 1 ) for the year ended december 31 , 2019 , amounts represent the period from january 23 , 2019 ( inception ) to
| liquidity and capital resources the primary use of existing funds and any funds raised in the future is expected to be for repayment of indebtedness , investments in portfolio companies , cash distributions to our stockholders or for other general corporate purposes . we expect to generate cash from ( 1 ) drawing down capital in respect of common stock , ( 2 ) cash flows from investments and operations and ( 3 ) borrowings from banks or other lenders . we will seek to enter into any bank debt , credit facility or other financing arrangements on at least customary market terms ; however , we can not assure you we will be able to do so . any such incurrence or issuance would be subject to prevailing market conditions , our liquidity requirements , contractual and regulatory restrictions and other factors . as permitted by the small business credit availability act ( the `` sbca '' ) upon organization , the investment adviser , as the initial stockholder , authorized us to adopt the application of the modified asset coverage requirements set forth in section 61 ( a ) ( 2 ) of the 1940 act , as amended by the sbca , which resulted in the reduction from 200.0 % to 150.0 % of the minimum asset coverage ratio applicable to us . in connection with their subscriptions of the shares , our stockholders were required to acknowledge our ability to operate with an asset coverage ratio that may be as low as 150.0 % . in accordance with the 1940 act , with certain limited exceptions , we are only allowed to borrow amounts such that our asset coverage , calculated pursuant to the 1940 act , is at least 150.0 % after such borrowing ( which means we can borrow $ 2 for every $ 1 of our equity ) . as of december 31 , 2020 , our asset coverage ratio was 539.44 % . on january 27 , 2020 , we entered into subscription agreements with several investors providing for the private placement of shares of common stock .
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in developing these fair values , the valuation services and brokers use estimates of cash flows based on historical performance of similar instruments in similar rate environments . debt securities available for sale consist primarily of mortgage-backed securities issued by u.s. government-sponsored agencies . the company uses various indicators in determining whether a security is other-than-temporarily impaired including , for debt securities , when it is probable that the contractual interest and principal will not be collected , or for equity securities , whether the market value is below its cost for an extended period of time with low expectation of recovery . the debt securities are monitored for changes in credit ratings because adverse changes in credit ratings could indicate a change in the estimated cash flows of the underlying collateral or issuer . for marketable equity securities , the company considers the issuer ' s financial condition , capital strength and near term prospects to determine whether an impairment is temporary or other-than-temporary . the company also considers the volatility of a security ' s price in comparison to the market as a whole and any recoveries or declines in fair value subsequent to the balance sheet date . if management determines that the impairment is other-than-temporary , the entire amount of the impairment as of the balance sheet date is recognized in earnings even if the decision to sell the security has not been made . the fair value of the security becomes the new amortized cost basis of the investment and is not adjusted for subsequent recoveries in fair value.the unrealized losses associated with available-for-sale debt securities were not considered to be other-than-temporarily impaired as of december 31 , 2015 and 2014 because the unrealized losses were related to changes in interest rates and did not affect the expected cash flows of the underlying collateral or issuer . the unrealized losses associated with the equity investments were also not considered other-than-temporarily impaired as of december 31 , 2015 and 2014. management concluded that the decline in fair value was temporary and would recover by way of increases in market price or positive changes in foreign currency exchange rates . 19 deferred income taxes . the company provides for deferred income taxes on the liability method whereby tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences . temporary differences are the differences between the reported amounts of assets and liabilities in the financial statements and their tax basis . deferred tax assets are reduced by a valuation allowance when , in the opinion of management , it is more likely than not that some portion or all of the deferred tax assets will not be realized . deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment . summary during 2015 , the company achieved net income , second consecutive year since 2007 , primarily as a result of balance sheet and operational restructuring initiatives implemented during 2013 , 2014 and 2015 by new executive management . the following were among the company 's notable achievements in 2015 : ● net interest margin ( nim ) of 3.60 % ● the amount of classified assets outstanding continues to decline and the overall risk rating for the portfolio has improved ● average non-interest bearing deposits increased $ 13.0 million . ● as compared to december 31 , 2014 o total cash and cash equivalents growth of $ 12.1 million or 16.6 % o improved tier 1 to average assets capital ratios o increase in total interest and dividend income of $ 3.4 million or 16.6 % o increase in income before taxes of $ 2.5 million or 265.0 % financial condition assets the company 's total assets increased $ 20.9 million , or 3.3 % , from $ 632.6 million at december 31 , 2014 to $ 653.5 million at december 31 , 2015 as generation of income and increased in the bank 's borrowings . ● cash and cash equivalents increased $ 12.1 million primarily due to the bank 's efforts to increase liquidity . ● net loans increased $ 7.1 million as originations exceeded payments of loan principal . ● premises and equipment net increased by $ 7.1 million . the increase was primarily due to the purchase of $ 6.0 million in owned premises , including the purchase of a branch property previously leased and the construction of a new branch in a town where the company has leased space historically . equipment increased by $ 1.0 million , net of depreciation and dispositions , as the company invested in its network infrastructure , its website and communications-related technology . ● deferred tax assets of $ 13.8 million were reported at december 31 , 2015. investments the following table is a summary of the company 's investment portfolio at fair value at december 31 for the years shown . replace_table_token_3_th total investments decreased $ 4.3 million , or 9.3 % , primarily due to principal payments of $ 3.8 million on the government agency mortgage-backed securities and proceeds of $ 2.5 million from maturities of government sponsor agency bonds , partially offset by purchases of subordinated notes of $ 2.0 million . in addition , the bank 's unrealized loss on available for sale securities decreased $ 205,000 from $ 453,000 at december 31 , 2014 to $ 248,000 for year ending december 31 , 2015 . 20 the following table presents the maturity distribution of available-for-sale investment securities at december 31 , 2015 and the weighted average yield of the amortized cost of such securities . the weighted average yields were calculated on the amortized cost and effective yields to maturity of each security . actual maturities of mortgage-backed securities may differ from contractual maturities because the mortgages underlying the securities may be repaid without any penalties . story_separator_special_tag provision for loan losses during 2015 , the company recorded a $ 250,000 provision for loan losses in the first quarter due to the growth of the loan portfolio . as the year progressed , loan originations were partial offset by loan payoffs . overall , the credit quality of the loan portfolio continues to improve as the amount of classified assets outstanding has declined and the overall risk rating for the portfolio has improved which has enabled the company to maintain its loan loss reserve level with no additional provision requirements for the remainder of 2015. during 2014 , the company did not make any additional provisions for loan losses due to continued improvement in asset quality . during the fourth quarter of 2014 management implemented changes to the methodology for calculating the allowance for the loan losses by updating our study of the loss emergence period ( “ lep ” ) . a more detailed description of the change is presented under the discussion entitled “ allowance for loan losses ” ( “ all ” ) within the significant accounting policies section of note 1 to the consolidated financial statements . 33 non-interest income non-interest income decreased by $ 281,000 , or 15.3 % , from $ 1.8 million in 2014 to $ 1.6 million in 2015. non-interest income for 2014 included a $ 455,000 loss on disposition of the bank 's boli policy , off set by $ 439,000 earnings on cash surrender value of the bank 's policy . lower deposit fees and service charges of $ 284,000 in 2015 is primarily due to lower overdraft fees as a result of closing frequently overdrawn accounts due to credit risk reasons . partially offsetting the noted changes was incremental rental income of approximately $ 47,000. non-interest expense non-interest expense increased $ 580,000 , or 3.2 % , from $ 18.3 million for the year ended december 31 , 2014 to $ 18.9 million for the year ended december 31 , 2015. non-interest expense in 2014 included expense of $ 437,000 related to tax penalty for disposition of the boli policy . non- interest expense in 2015 included the following differences : ● salaries and benefits were increased by $ 1.2 million , primarily due to personnel increases to support the company 's growth . ● professional and other outside services decreased $ 656,000 primarily due to lower legal fees resulting from improved asset quality , renegotiation of several vendor contracts and reduced consultant usage . ● regulatory assessments reduction of $ 276,000 primarily due to improved ratings . ● advertising and promotional expense increased $ 339,000 primarily due to the company changing its overall business strategy and focus as the bank changed its name and redefined its approach to the way it provides value to its customers , community and the market place . ● year ended 2015 , also includes a $ 133,000 non-cash charge , primarily associated with the abandonment of leasehold improvements in conjuction with the purchase of the company 's fairfield branch building . 34 comparison of results of operations for the years 201 4 and 201 3 for the year ended december 31 , 2014 , the company recorded net income of $ 15.7 million ( $ 4.08 per share ) compared to a net loss of $ 7.3 million ( $ 1.90 per share ) for the year ended december 31 , 2013. income before income tax expense was $ 1.0 million , an increase of $ 8.6 million compared to a loss before income tax expense of $ 7.6 million in 2013 . ● net interest income increased $ 0.6 million ● provision for loan losses decreased $ 1.0 million ● non-interest income decreased $ 0.6 million ● non-interest expense decreased $ 7.6 million the positive results for 2014 created the company 's first year of net profitability since 2007 and was primarily due to balance sheet and operational restructuring initiatives implemented during 2013 and 2014 by new executive management . these initiatives included : ● prepayment of high cost borrowings and replacement with borrowings at significantly lower rates . ● strategic repricing of deposits ● streamlining of branch and back office operations and exiting the residential mortage business , resulting in non-interest expense reductions . ● negotiating vendor price concessions ● purchasing three branch buildings where the cost of the leases exceeded the cost to own the properties . the company 's improved earnings and balance sheet resulted from the initiatives noted along with continued efficiencies during 2014 enabled the company to recognize a $ 16.8 million income tax benefit in the third quarter of 2014. net interest income net interest income is the difference between interest income on interest earning assets and interest expense on interest-bearing liabilities . net interest income depends on the relative amounts of interest earning assets and interest bearing liabilities and the interest rates earned or paid on them , respectively . net interest income increased $ 0.6 million from $ 16.8 million for the year ended december 31 , 2013 to $ 17.4 million for the year ended december 31 , 2014 . ● total interest and dividend income decreased $ 1.3 million , or 6.0 % , primarily as a result of lower average loan balances . increased yields on loans were offset by lower yields on investments . o average loan balances were $ 27.8 million lower in 2014 than in 2013 , including a decrease in the average residential real estate loan balance of $ 27.7 million . the decrease in average loan balances resulted in lower interest income of $ 1.3 million . o average yields on loans increased to 4.59 % from 4.55 % in 2013. this benefitted interest income by $ 151,000 and was largely derived from loan mix as lower yielding residential loans constituted a smaller portion of the average loan portfolio in 2014. o average yields on investments decreased to 1.50 % from 1.81 %
| liquidity and capital resources the primary use of existing funds and any funds raised in the future is expected to be for repayment of indebtedness , investments in portfolio companies , cash distributions to our stockholders or for other general corporate purposes . we expect to generate cash from ( 1 ) drawing down capital in respect of common stock , ( 2 ) cash flows from investments and operations and ( 3 ) borrowings from banks or other lenders . we will seek to enter into any bank debt , credit facility or other financing arrangements on at least customary market terms ; however , we can not assure you we will be able to do so . any such incurrence or issuance would be subject to prevailing market conditions , our liquidity requirements , contractual and regulatory restrictions and other factors . as permitted by the small business credit availability act ( the `` sbca '' ) upon organization , the investment adviser , as the initial stockholder , authorized us to adopt the application of the modified asset coverage requirements set forth in section 61 ( a ) ( 2 ) of the 1940 act , as amended by the sbca , which resulted in the reduction from 200.0 % to 150.0 % of the minimum asset coverage ratio applicable to us . in connection with their subscriptions of the shares , our stockholders were required to acknowledge our ability to operate with an asset coverage ratio that may be as low as 150.0 % . in accordance with the 1940 act , with certain limited exceptions , we are only allowed to borrow amounts such that our asset coverage , calculated pursuant to the 1940 act , is at least 150.0 % after such borrowing ( which means we can borrow $ 2 for every $ 1 of our equity ) . as of december 31 , 2020 , our asset coverage ratio was 539.44 % . on january 27 , 2020 , we entered into subscription agreements with several investors providing for the private placement of shares of common stock .
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in developing these fair values , the valuation services and brokers use estimates of cash flows based on historical performance of similar instruments in similar rate environments . debt securities available for sale consist primarily of mortgage-backed securities issued by u.s. government-sponsored agencies . the company uses various indicators in determining whether a security is other-than-temporarily impaired including , for debt securities , when it is probable that the contractual interest and principal will not be collected , or for equity securities , whether the market value is below its cost for an extended period of time with low expectation of recovery . the debt securities are monitored for changes in credit ratings because adverse changes in credit ratings could indicate a change in the estimated cash flows of the underlying collateral or issuer . for marketable equity securities , the company considers the issuer ' s financial condition , capital strength and near term prospects to determine whether an impairment is temporary or other-than-temporary . the company also considers the volatility of a security ' s price in comparison to the market as a whole and any recoveries or declines in fair value subsequent to the balance sheet date . if management determines that the impairment is other-than-temporary , the entire amount of the impairment as of the balance sheet date is recognized in earnings even if the decision to sell the security has not been made . the fair value of the security becomes the new amortized cost basis of the investment and is not adjusted for subsequent recoveries in fair value.the unrealized losses associated with available-for-sale debt securities were not considered to be other-than-temporarily impaired as of december 31 , 2015 and 2014 because the unrealized losses were related to changes in interest rates and did not affect the expected cash flows of the underlying collateral or issuer . the unrealized losses associated with the equity investments were also not considered other-than-temporarily impaired as of december 31 , 2015 and 2014. management concluded that the decline in fair value was temporary and would recover by way of increases in market price or positive changes in foreign currency exchange rates . 19 deferred income taxes . the company provides for deferred income taxes on the liability method whereby tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences . temporary differences are the differences between the reported amounts of assets and liabilities in the financial statements and their tax basis . deferred tax assets are reduced by a valuation allowance when , in the opinion of management , it is more likely than not that some portion or all of the deferred tax assets will not be realized . deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment . summary during 2015 , the company achieved net income , second consecutive year since 2007 , primarily as a result of balance sheet and operational restructuring initiatives implemented during 2013 , 2014 and 2015 by new executive management . the following were among the company 's notable achievements in 2015 : ● net interest margin ( nim ) of 3.60 % ● the amount of classified assets outstanding continues to decline and the overall risk rating for the portfolio has improved ● average non-interest bearing deposits increased $ 13.0 million . ● as compared to december 31 , 2014 o total cash and cash equivalents growth of $ 12.1 million or 16.6 % o improved tier 1 to average assets capital ratios o increase in total interest and dividend income of $ 3.4 million or 16.6 % o increase in income before taxes of $ 2.5 million or 265.0 % financial condition assets the company 's total assets increased $ 20.9 million , or 3.3 % , from $ 632.6 million at december 31 , 2014 to $ 653.5 million at december 31 , 2015 as generation of income and increased in the bank 's borrowings . ● cash and cash equivalents increased $ 12.1 million primarily due to the bank 's efforts to increase liquidity . ● net loans increased $ 7.1 million as originations exceeded payments of loan principal . ● premises and equipment net increased by $ 7.1 million . the increase was primarily due to the purchase of $ 6.0 million in owned premises , including the purchase of a branch property previously leased and the construction of a new branch in a town where the company has leased space historically . equipment increased by $ 1.0 million , net of depreciation and dispositions , as the company invested in its network infrastructure , its website and communications-related technology . ● deferred tax assets of $ 13.8 million were reported at december 31 , 2015. investments the following table is a summary of the company 's investment portfolio at fair value at december 31 for the years shown . replace_table_token_3_th total investments decreased $ 4.3 million , or 9.3 % , primarily due to principal payments of $ 3.8 million on the government agency mortgage-backed securities and proceeds of $ 2.5 million from maturities of government sponsor agency bonds , partially offset by purchases of subordinated notes of $ 2.0 million . in addition , the bank 's unrealized loss on available for sale securities decreased $ 205,000 from $ 453,000 at december 31 , 2014 to $ 248,000 for year ending december 31 , 2015 . 20 the following table presents the maturity distribution of available-for-sale investment securities at december 31 , 2015 and the weighted average yield of the amortized cost of such securities . the weighted average yields were calculated on the amortized cost and effective yields to maturity of each security . actual maturities of mortgage-backed securities may differ from contractual maturities because the mortgages underlying the securities may be repaid without any penalties . story_separator_special_tag provision for loan losses during 2015 , the company recorded a $ 250,000 provision for loan losses in the first quarter due to the growth of the loan portfolio . as the year progressed , loan originations were partial offset by loan payoffs . overall , the credit quality of the loan portfolio continues to improve as the amount of classified assets outstanding has declined and the overall risk rating for the portfolio has improved which has enabled the company to maintain its loan loss reserve level with no additional provision requirements for the remainder of 2015. during 2014 , the company did not make any additional provisions for loan losses due to continued improvement in asset quality . during the fourth quarter of 2014 management implemented changes to the methodology for calculating the allowance for the loan losses by updating our study of the loss emergence period ( “ lep ” ) . a more detailed description of the change is presented under the discussion entitled “ allowance for loan losses ” ( “ all ” ) within the significant accounting policies section of note 1 to the consolidated financial statements . 33 non-interest income non-interest income decreased by $ 281,000 , or 15.3 % , from $ 1.8 million in 2014 to $ 1.6 million in 2015. non-interest income for 2014 included a $ 455,000 loss on disposition of the bank 's boli policy , off set by $ 439,000 earnings on cash surrender value of the bank 's policy . lower deposit fees and service charges of $ 284,000 in 2015 is primarily due to lower overdraft fees as a result of closing frequently overdrawn accounts due to credit risk reasons . partially offsetting the noted changes was incremental rental income of approximately $ 47,000. non-interest expense non-interest expense increased $ 580,000 , or 3.2 % , from $ 18.3 million for the year ended december 31 , 2014 to $ 18.9 million for the year ended december 31 , 2015. non-interest expense in 2014 included expense of $ 437,000 related to tax penalty for disposition of the boli policy . non- interest expense in 2015 included the following differences : ● salaries and benefits were increased by $ 1.2 million , primarily due to personnel increases to support the company 's growth . ● professional and other outside services decreased $ 656,000 primarily due to lower legal fees resulting from improved asset quality , renegotiation of several vendor contracts and reduced consultant usage . ● regulatory assessments reduction of $ 276,000 primarily due to improved ratings . ● advertising and promotional expense increased $ 339,000 primarily due to the company changing its overall business strategy and focus as the bank changed its name and redefined its approach to the way it provides value to its customers , community and the market place . ● year ended 2015 , also includes a $ 133,000 non-cash charge , primarily associated with the abandonment of leasehold improvements in conjuction with the purchase of the company 's fairfield branch building . 34 comparison of results of operations for the years 201 4 and 201 3 for the year ended december 31 , 2014 , the company recorded net income of $ 15.7 million ( $ 4.08 per share ) compared to a net loss of $ 7.3 million ( $ 1.90 per share ) for the year ended december 31 , 2013. income before income tax expense was $ 1.0 million , an increase of $ 8.6 million compared to a loss before income tax expense of $ 7.6 million in 2013 . ● net interest income increased $ 0.6 million ● provision for loan losses decreased $ 1.0 million ● non-interest income decreased $ 0.6 million ● non-interest expense decreased $ 7.6 million the positive results for 2014 created the company 's first year of net profitability since 2007 and was primarily due to balance sheet and operational restructuring initiatives implemented during 2013 and 2014 by new executive management . these initiatives included : ● prepayment of high cost borrowings and replacement with borrowings at significantly lower rates . ● strategic repricing of deposits ● streamlining of branch and back office operations and exiting the residential mortage business , resulting in non-interest expense reductions . ● negotiating vendor price concessions ● purchasing three branch buildings where the cost of the leases exceeded the cost to own the properties . the company 's improved earnings and balance sheet resulted from the initiatives noted along with continued efficiencies during 2014 enabled the company to recognize a $ 16.8 million income tax benefit in the third quarter of 2014. net interest income net interest income is the difference between interest income on interest earning assets and interest expense on interest-bearing liabilities . net interest income depends on the relative amounts of interest earning assets and interest bearing liabilities and the interest rates earned or paid on them , respectively . net interest income increased $ 0.6 million from $ 16.8 million for the year ended december 31 , 2013 to $ 17.4 million for the year ended december 31 , 2014 . ● total interest and dividend income decreased $ 1.3 million , or 6.0 % , primarily as a result of lower average loan balances . increased yields on loans were offset by lower yields on investments . o average loan balances were $ 27.8 million lower in 2014 than in 2013 , including a decrease in the average residential real estate loan balance of $ 27.7 million . the decrease in average loan balances resulted in lower interest income of $ 1.3 million . o average yields on loans increased to 4.59 % from 4.55 % in 2013. this benefitted interest income by $ 151,000 and was largely derived from loan mix as lower yielding residential loans constituted a smaller portion of the average loan portfolio in 2014. o average yields on investments decreased to 1.50 % from 1.81 %
| liquidity the company 's liquidity position was 16.4 % and 15.7 % at december 31 , 2015 and 2014 , respectively . the liquidity ratio is defined as the percentage of liquid assets to total assets . the following categories of assets as described in the accompanying consolidated balance sheets are considered liquid assets : cash and due from banks , federal funds sold , short-term investments and available-for-sale securities which have not been pledged . liquidity is a measure of the company 's ability to generate adequate cash to meet financial obligations . the principal cash requirements of a financial institution are to cover increases in its loan portfolio and downward fluctuations in deposit accounts . management believes the company 's short-term assets provide sufficient liquidity to satisfy loan demand , cover potential fluctuations in deposit accounts and to meet other anticipated cash requirements . at december 31 , 2015 , cash and cash equivalents and unpledged available-for-sale securities were $ 85.4 million and $ 21.9 million , respectively . in addition to federal home loan bank advances outstanding at december 31 , 2015 , the bank had the ability to borrow an additional $ 13.9 million from the federalhome loan bank of boston , which included a $ 2.0 million overnight line of credit .
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progress on our strategic initiatives established in 2015 has created a sustainable platform positioning us for the continued execution of transformational changes that will provide greater long-term value for our shareholders . summarized results of operations replace_table_token_10_th on december 22 , 2017 , the tax cuts and jobs act ( “ tax reform ” ) was signed into law . as a result of the enactment of this law , in 2017 , “ purchased services and rents ” included a $ 151 million benefit and “ income taxes ” included a $ 3,331 million benefit , which added $ 3,482 million to “ net income ” and $ 12.00 to “ diluted earnings per share . ” the 2017 operating ratio was favorably impacted by 1.5 percentage points . for more information on the impact of tax reform , see note 4. the following table adjusts our 2017 gaap financial results to exclude the effects of tax reform , specifically , the effects of remeasurement of net deferred tax liabilities related to the reduction of the federal tax rate from 35 % to 21 % ( the “ 2017 tax adjustments ” ) . we use these non-gaap financial measures internally and believe this information provides useful supplemental information to investors to facilitate making period-to-period comparisons by excluding the 2017 tax adjustments . while we believe that these non-gaap financial measures are useful in evaluating our business , this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with gaap . in addition , these non-gaap financial measures may not be the same as similar measures presented by other companies . k 18 reconciliation of non-gaap financial measures replace_table_token_11_th in the table below and the paragraph following , references to 2017 results and related comparisons use the adjusted , non-gaap results from the reconciliation in the table above . replace_table_token_12_th income from railway operations rose in both comparisons resulting from higher railway operating revenues that more than offset higher expenses . revenue growth of 9 % and 7 % in 2018 and 2017 , respectively , was tempered by increased adjusted operating expenses of 4 % in both periods . in addition to higher income from railway operations , net income and diluted earnings per share growth in 2018 also benefited from a lower effective tax rate , primarily due to the enactment of tax reform . finally , our share repurchase programs in both years resulted in diluted earnings per share growth that exceeded that of net income . k 19 detailed results of operations railway operating revenues the following tables present a three-year comparison of revenues , volumes ( units ) , and average revenue per unit by commodity group . replace_table_token_13_th replace_table_token_14_th replace_table_token_15_th k 20 revenues increased $ 907 million and $ 663 million in 2018 and 2017 , respectively , compared to the prior years . as reflected in the table below , higher 2018 revenues were the result of higher average revenue per unit , driven by pricing gains and higher fuel surcharge revenue , partially offset by the mix-related impacts of increased intermodal volume and decreased coal volume . in addition , overall volume also increased . the rise in 2017 was largely the result of increased volume , particularly in our coal and intermodal markets , coupled with pricing gains . the table below reflects the components of the revenue change by major commodity group . replace_table_token_16_th most of our contracts include negotiated fuel surcharges , typically tied to either on-highway diesel ( ohd ) or west texas intermediate crude oil . approximately 90 % of our revenue base is covered by these negotiated fuel surcharges , with almost 75 % tied to ohd . for both 2018 and 2017 , contracts tied to ohd accounted for about 90 % of our fuel surcharge revenue . revenues associated with fuel surcharges totaled $ 657 million , $ 359 million , and $ 236 million in 2018 , 2017 , and 2016 , respectively . merchandise revenues increased in both 2018 and 2017 compared with the prior years . in 2018 , revenues grew due to higher average revenue per unit , driven by pricing gains and higher fuel surcharge revenue , as well as higher volumes . volume gains in chemicals , agriculture , and paper , clay , and forest products were partially offset by declines in automotive and metals and construction traffic . revenue growth in 2017 was a result of higher average revenue per unit , the result of price improvements . volume was relatively flat compared to the prior year , as gains in the metals and construction group were offset by declines in automotive , agriculture , and chemicals traffic . for 2019 , merchandise revenues are expected to increase , primarily the result of pricing gains . chemicals revenues rose in 2018 compared to a modest increase in 2017. in 2018 the rise was the result of higher volume and higher average revenue per unit , due to pricing gains and higher fuel surcharge revenue . volumes grew due to increased shipments of crude oil , liquefied petroleum gas , and plastics , partially offset by a decrease in coal ash shipments . the increase in 2017 was due to higher average revenue per unit , a result of favorable mix and price improvements , which outweighed declines in volume . volume declines were the result of fewer shipments of crude oil from the bakken oil fields , lower shipments of coal ash , partially offset by an increase in shipments of plastics . story_separator_special_tag we review assumptions related to our defined benefit plans annually , and while changes are likely to occur in assumptions concerning retirement age , projected earnings , and mortality , they are not expected to have a material effect on our net pension expense or net pension liability in the future . the net pension liability is recorded at net present value using discount rates that are based on the current interest rate environment in light of the timing of expected benefit payments . we utilize analyses in which the projected annual cash flows from the pension and postretirement benefit plans are matched with yield curves based on an appropriate universe of high-quality corporate bonds . we use the results of the yield curve analyses to select the discount rates that match the payment streams of the benefits in these plans . properties and depreciation most of our assets are long-lived railway properties ( note 7 ) . as disclosed in note 1 , the primary depreciation method for our asset base is group life . see note 1 for a more detailed discussion of the assumptions and estimates in this area . depreciation expense for 2018 totaled $ 1.1 billion . our composite depreciation rates for 2018 are disclosed in note 7 ; a one year increase ( or decrease ) in the estimated average useful lives of depreciable assets would have resulted in an approximate $ 40 million decrease ( or increase ) to depreciation expense . k 28 personal injury casualties and other claims expense , included in “ materials and other ” in the consolidated statements of income , includes our accrual for personal injury liabilities . to aid in valuing our personal injury liability and determining the amount to accrue with respect to such claims during the year , we utilize studies prepared by an independent consulting actuarial firm . the actuarial firm studies our historical patterns of reserving for claims and subsequent settlements , taking into account relevant outside influences . we adjust the liability quarterly based upon our assessment and the results of the study . our estimate is subject to inherent limitation given the difficulty of predicting future events and as such the ultimate loss sustained may vary from the estimated liability recorded . for a more detailed discussion of the assumptions and estimates in accounting for personal injury see note 17. income taxes our net deferred tax liability totaled $ 6.5 billion at december 31 , 2018 ( note 4 ) . this liability is estimated based on the expected future tax consequences of items recognized in the financial statements . after application of the federal statutory tax rate to book income , judgment is required with respect to the timing and deductibility of expenses in our income tax returns . for state income and other taxes , judgment is also required with respect to the apportionment among the various jurisdictions . a valuation allowance is recorded if we expect that it is more likely than not that deferred tax assets will not be realized . we have a $ 50 million valuation allowance on $ 425 million of deferred tax assets as of december 31 , 2018 , reflecting the expectation that almost all of these assets will be realized . other matters labor agreements approximately 80 % of our railroad employees are covered by collective bargaining agreements with various labor unions . pursuant to the railway labor act , these agreements remain in effect until new agreements are reached , or until the bargaining procedures mandated by the railway labor act are completed . we largely bargain nationally in concert with other major railroads , represented by the national carriers conference committee . moratorium provisions in the labor agreements govern when the railroads and unions may propose changes to the agreements . the 2015 bargaining round is now complete with finalized agreements in place with all employees . all of the newly negotiated agreements have moratorium provisions that will reopen the agreements for negotiation beginning january 1 , 2020. market risks at december 31 , 2018 , we had no outstanding debt subject to interest rate fluctuations . market risk for fixed-rate debt is estimated as the potential increase in fair value resulting from a one percentage point decrease in interest rates as of december 31 , 2018 , and amounts to an increase of approximately $ 1.4 billion to the fair value of our debt at december 31 , 2018. we consider it unlikely that interest rate fluctuations applicable to these instruments will result in a material adverse effect on our financial position , results of operations , or liquidity . new accounting pronouncements for a detailed discussion of new accounting pronouncements , see note 1. k 29 inflation in preparing financial statements , gaap requires the use of historical cost that disregards the effects of inflation on the replacement cost of property . as a capital-intensive company , we have most of our capital invested in long-lived assets . the replacement cost of these assets , as well as the related depreciation expense , would be substantially greater than the amounts reported on the basis of historical cost . forward-looking statements certain statements in management 's discussion and analysis of financial condition and results of operations are “ forward-looking statements ” within the meaning of the “ safe harbor ” provisions of the private securities litigation reform act of 1995 , as amended . these statements relate to future events or our future financial performance and involve known and unknown risks , uncertainties , and other factors that may cause our actual results , levels of activity , performance , or our achievements or those of our industry to be materially different from those expressed or implied by any forward-looking statements . in some cases , forward-looking statements can be identified by terminology such as “ may , ” “ will , ” “ could , ”
| liquidity the company 's liquidity position was 16.4 % and 15.7 % at december 31 , 2015 and 2014 , respectively . the liquidity ratio is defined as the percentage of liquid assets to total assets . the following categories of assets as described in the accompanying consolidated balance sheets are considered liquid assets : cash and due from banks , federal funds sold , short-term investments and available-for-sale securities which have not been pledged . liquidity is a measure of the company 's ability to generate adequate cash to meet financial obligations . the principal cash requirements of a financial institution are to cover increases in its loan portfolio and downward fluctuations in deposit accounts . management believes the company 's short-term assets provide sufficient liquidity to satisfy loan demand , cover potential fluctuations in deposit accounts and to meet other anticipated cash requirements . at december 31 , 2015 , cash and cash equivalents and unpledged available-for-sale securities were $ 85.4 million and $ 21.9 million , respectively . in addition to federal home loan bank advances outstanding at december 31 , 2015 , the bank had the ability to borrow an additional $ 13.9 million from the federalhome loan bank of boston , which included a $ 2.0 million overnight line of credit .
| 0 |
progress on our strategic initiatives established in 2015 has created a sustainable platform positioning us for the continued execution of transformational changes that will provide greater long-term value for our shareholders . summarized results of operations replace_table_token_10_th on december 22 , 2017 , the tax cuts and jobs act ( “ tax reform ” ) was signed into law . as a result of the enactment of this law , in 2017 , “ purchased services and rents ” included a $ 151 million benefit and “ income taxes ” included a $ 3,331 million benefit , which added $ 3,482 million to “ net income ” and $ 12.00 to “ diluted earnings per share . ” the 2017 operating ratio was favorably impacted by 1.5 percentage points . for more information on the impact of tax reform , see note 4. the following table adjusts our 2017 gaap financial results to exclude the effects of tax reform , specifically , the effects of remeasurement of net deferred tax liabilities related to the reduction of the federal tax rate from 35 % to 21 % ( the “ 2017 tax adjustments ” ) . we use these non-gaap financial measures internally and believe this information provides useful supplemental information to investors to facilitate making period-to-period comparisons by excluding the 2017 tax adjustments . while we believe that these non-gaap financial measures are useful in evaluating our business , this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with gaap . in addition , these non-gaap financial measures may not be the same as similar measures presented by other companies . k 18 reconciliation of non-gaap financial measures replace_table_token_11_th in the table below and the paragraph following , references to 2017 results and related comparisons use the adjusted , non-gaap results from the reconciliation in the table above . replace_table_token_12_th income from railway operations rose in both comparisons resulting from higher railway operating revenues that more than offset higher expenses . revenue growth of 9 % and 7 % in 2018 and 2017 , respectively , was tempered by increased adjusted operating expenses of 4 % in both periods . in addition to higher income from railway operations , net income and diluted earnings per share growth in 2018 also benefited from a lower effective tax rate , primarily due to the enactment of tax reform . finally , our share repurchase programs in both years resulted in diluted earnings per share growth that exceeded that of net income . k 19 detailed results of operations railway operating revenues the following tables present a three-year comparison of revenues , volumes ( units ) , and average revenue per unit by commodity group . replace_table_token_13_th replace_table_token_14_th replace_table_token_15_th k 20 revenues increased $ 907 million and $ 663 million in 2018 and 2017 , respectively , compared to the prior years . as reflected in the table below , higher 2018 revenues were the result of higher average revenue per unit , driven by pricing gains and higher fuel surcharge revenue , partially offset by the mix-related impacts of increased intermodal volume and decreased coal volume . in addition , overall volume also increased . the rise in 2017 was largely the result of increased volume , particularly in our coal and intermodal markets , coupled with pricing gains . the table below reflects the components of the revenue change by major commodity group . replace_table_token_16_th most of our contracts include negotiated fuel surcharges , typically tied to either on-highway diesel ( ohd ) or west texas intermediate crude oil . approximately 90 % of our revenue base is covered by these negotiated fuel surcharges , with almost 75 % tied to ohd . for both 2018 and 2017 , contracts tied to ohd accounted for about 90 % of our fuel surcharge revenue . revenues associated with fuel surcharges totaled $ 657 million , $ 359 million , and $ 236 million in 2018 , 2017 , and 2016 , respectively . merchandise revenues increased in both 2018 and 2017 compared with the prior years . in 2018 , revenues grew due to higher average revenue per unit , driven by pricing gains and higher fuel surcharge revenue , as well as higher volumes . volume gains in chemicals , agriculture , and paper , clay , and forest products were partially offset by declines in automotive and metals and construction traffic . revenue growth in 2017 was a result of higher average revenue per unit , the result of price improvements . volume was relatively flat compared to the prior year , as gains in the metals and construction group were offset by declines in automotive , agriculture , and chemicals traffic . for 2019 , merchandise revenues are expected to increase , primarily the result of pricing gains . chemicals revenues rose in 2018 compared to a modest increase in 2017. in 2018 the rise was the result of higher volume and higher average revenue per unit , due to pricing gains and higher fuel surcharge revenue . volumes grew due to increased shipments of crude oil , liquefied petroleum gas , and plastics , partially offset by a decrease in coal ash shipments . the increase in 2017 was due to higher average revenue per unit , a result of favorable mix and price improvements , which outweighed declines in volume . volume declines were the result of fewer shipments of crude oil from the bakken oil fields , lower shipments of coal ash , partially offset by an increase in shipments of plastics . story_separator_special_tag we review assumptions related to our defined benefit plans annually , and while changes are likely to occur in assumptions concerning retirement age , projected earnings , and mortality , they are not expected to have a material effect on our net pension expense or net pension liability in the future . the net pension liability is recorded at net present value using discount rates that are based on the current interest rate environment in light of the timing of expected benefit payments . we utilize analyses in which the projected annual cash flows from the pension and postretirement benefit plans are matched with yield curves based on an appropriate universe of high-quality corporate bonds . we use the results of the yield curve analyses to select the discount rates that match the payment streams of the benefits in these plans . properties and depreciation most of our assets are long-lived railway properties ( note 7 ) . as disclosed in note 1 , the primary depreciation method for our asset base is group life . see note 1 for a more detailed discussion of the assumptions and estimates in this area . depreciation expense for 2018 totaled $ 1.1 billion . our composite depreciation rates for 2018 are disclosed in note 7 ; a one year increase ( or decrease ) in the estimated average useful lives of depreciable assets would have resulted in an approximate $ 40 million decrease ( or increase ) to depreciation expense . k 28 personal injury casualties and other claims expense , included in “ materials and other ” in the consolidated statements of income , includes our accrual for personal injury liabilities . to aid in valuing our personal injury liability and determining the amount to accrue with respect to such claims during the year , we utilize studies prepared by an independent consulting actuarial firm . the actuarial firm studies our historical patterns of reserving for claims and subsequent settlements , taking into account relevant outside influences . we adjust the liability quarterly based upon our assessment and the results of the study . our estimate is subject to inherent limitation given the difficulty of predicting future events and as such the ultimate loss sustained may vary from the estimated liability recorded . for a more detailed discussion of the assumptions and estimates in accounting for personal injury see note 17. income taxes our net deferred tax liability totaled $ 6.5 billion at december 31 , 2018 ( note 4 ) . this liability is estimated based on the expected future tax consequences of items recognized in the financial statements . after application of the federal statutory tax rate to book income , judgment is required with respect to the timing and deductibility of expenses in our income tax returns . for state income and other taxes , judgment is also required with respect to the apportionment among the various jurisdictions . a valuation allowance is recorded if we expect that it is more likely than not that deferred tax assets will not be realized . we have a $ 50 million valuation allowance on $ 425 million of deferred tax assets as of december 31 , 2018 , reflecting the expectation that almost all of these assets will be realized . other matters labor agreements approximately 80 % of our railroad employees are covered by collective bargaining agreements with various labor unions . pursuant to the railway labor act , these agreements remain in effect until new agreements are reached , or until the bargaining procedures mandated by the railway labor act are completed . we largely bargain nationally in concert with other major railroads , represented by the national carriers conference committee . moratorium provisions in the labor agreements govern when the railroads and unions may propose changes to the agreements . the 2015 bargaining round is now complete with finalized agreements in place with all employees . all of the newly negotiated agreements have moratorium provisions that will reopen the agreements for negotiation beginning january 1 , 2020. market risks at december 31 , 2018 , we had no outstanding debt subject to interest rate fluctuations . market risk for fixed-rate debt is estimated as the potential increase in fair value resulting from a one percentage point decrease in interest rates as of december 31 , 2018 , and amounts to an increase of approximately $ 1.4 billion to the fair value of our debt at december 31 , 2018. we consider it unlikely that interest rate fluctuations applicable to these instruments will result in a material adverse effect on our financial position , results of operations , or liquidity . new accounting pronouncements for a detailed discussion of new accounting pronouncements , see note 1. k 29 inflation in preparing financial statements , gaap requires the use of historical cost that disregards the effects of inflation on the replacement cost of property . as a capital-intensive company , we have most of our capital invested in long-lived assets . the replacement cost of these assets , as well as the related depreciation expense , would be substantially greater than the amounts reported on the basis of historical cost . forward-looking statements certain statements in management 's discussion and analysis of financial condition and results of operations are “ forward-looking statements ” within the meaning of the “ safe harbor ” provisions of the private securities litigation reform act of 1995 , as amended . these statements relate to future events or our future financial performance and involve known and unknown risks , uncertainties , and other factors that may cause our actual results , levels of activity , performance , or our achievements or those of our industry to be materially different from those expressed or implied by any forward-looking statements . in some cases , forward-looking statements can be identified by terminology such as “ may , ” “ will , ” “ could , ”
| cash used in investing activities was $ 1.7 billion in 2018 , compared with $ 1.5 billion in 2017 , and $ 1.8 billion in 2016 . in 2018 , higher property additions drove the increase . the decline in 2017 was a reflection of lower cash outflows for property additions and a drop in corporate-owned life insurance investments . capital spending and track and equipment statistics can be found within the “ railway property ” section of part i of this report on form 10-k. for 2019 , we expect capital spending to approximate 16 % to 18 % of revenues . cash used in financing activities was $ 2.3 billion in 2018 , compared with $ 2.0 billion in 2017 , and $ 1.3 billion in 2016 . both year-over-year comparisons reflect increased repurchases of common stock and higher debt repayments . in 2018 , the increase was also impacted by higher dividend payments , but tempered by increased proceeds from borrowings . in 2017 , lower proceeds from borrowings also contributed to the rise . share repurchases totaled $ 2.8 billion in 2018 , $ 1.0 billion in 2017 , and $ 803 million in 2016 for the purchase and retirement of 17.1 million ( including 7.0 million shares repurchased for $ 1.2 billion under the asr program , see note 15 ) , 8.2 million , and 9.2 million shares , respectively . as of december 31 , 2018 , 39.4 million shares remain authorized by our board of directors for repurchase .
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to accelerate patient enrollment , we have expanded this trial from a single-site , single-country study to a multi-site , multi-country program . this trial is being conducted in switzerland , canada , and the united states . data from the first three patients demonstrated a 43 favorable safety profile and multi-segment gains in sensory function in two of the three patients 12 months after transplantation of hucns-sc cells compared to pre-transplant baselines ; the third patient remained stable . as of february 2014 , a total of eleven patients have been dosed with our hucns-sc cells in this trial and we expect to complete enrollment of the final patient in the first quarter of 2014. we plan to initiate by the middle of 2014 , a controlled phase ii efficacy study to further investigate our hucns-sc cells as a treatment for spinal cord injury . we are also conducting a phase i/ii clinical trial in dry amd at three trial sites in the united states , and as of february 2014 , have completed enrollment of the first of two planned patient cohorts with our hucns-sc cells . this cohort consisted of eight subjects . we expect to complete enrollment of the second cohort consisting of eight patients by the end of the second quarter of 2014. we previously completed a phase i clinical trial in infantile and late infantile neuronal ceroid lipofuscinosis ( ncl ) , which showed that our hucns-sc cells were well tolerated and non-tumorigenic , and that there was evidence of engraftment and long-term survival of the transplanted hucns-sc cells . in october 2013 , the results of a four-year , long-term follow up study of the patients from the initial phase i study showed there were no long-term safety or tolerability issues associated with the cells up to five years post-transplantation . for a brief description of our significant therapeutic research and development programs see overview therapeutic product development programs in the business section of part i , item 1 of this form 10-k. in april 2013 , we entered into an agreement with the california institute for regenerative medicine ( cirm ) under which cirm will provide up to approximately $ 19.3 million as a forgivable loan , in accordance with mutually agreed upon terms and conditions and cirm regulations . the cirm loan will help fund preclinical development of our hucns-sc cells for alzheimer 's disease . we received an initial disbursement of $ 3.8 million under the cirm loan agreement in july 2013 , and a subsequent disbursement of $ 3.8 million in january 2014. for a brief description of our significant therapeutic research and development programs see overview research and development programs in the business section of part i , item 1 of this form 10-k. we are also engaged in developing and commercializing applications of our technologies to enable research , which we believe represent current and nearer-term commercial opportunities . our portfolio of technologies includes cell technologies relating to embryonic stem cells , induced pluripotent stem ( ips ) cells , and tissue-derived ( adult ) stem cells ; expertise and infrastructure for providing cell-based assays for drug discovery ; a cell culture products and antibody reagents business ; and an intellectual property portfolio with claims relevant to cell processing , reprogramming and manipulation , as well as to gene targeting and insertion . many of these enabling technologies were acquired in april 2009 as part of our acquisition of the operations of stem cell sciences plc ( scs ) . we have not derived any revenue or cash flows from the sale or commercialization of any products except for license revenue for certain of our patented technologies and sales of products for use in stem cell research . as a result , we have incurred annual operating losses since inception and expect to incur substantial operating losses in the future . therefore , we are dependent upon external financing , such as from equity and debt offerings , to finance our operations . before we can derive revenue or cash inflows from the commercialization of any of our therapeutic product candidates , we will need to : ( i ) conduct substantial in vitro testing and characterization of our proprietary cell types , ( ii ) undertake preclinical and clinical testing for specific disease indications ; ( iii ) develop , validate and scale-up manufacturing processes to produce these cell-based therapeutics , and ( iv ) obtain required regulatory approvals . these steps are risky , expensive and time consuming . overall , we expect our r & d expenses to be substantial and to increase for the foreseeable future as we continue the development and clinical investigation of our current and future product candidates . however , expenditures on r & d programs are subject to many uncertainties , including whether we develop our product candidates with a partner or independently . we can not forecast with any degree of certainty which of our current product candidates will be subject to future collaboration , when such collaboration agreements will be secured , if at all , and to what degree such arrangements would affect our development plans and capital requirements . in addition , there are numerous factors associated with the successful commercialization of any of our cell-based 44 therapeutics , including future trial design and regulatory requirements , many of which can not be determined with accuracy at this time given the stage of our development and the novel nature of stem cell technologies . the regulatory pathways , both in the united states and internationally , are complex and fluid given the novel and , in general , clinically unproven nature of stem cell technologies . story_separator_special_tag wind-down expenses in connection with exiting our research and manufacturing operations in lincoln , rhode island , and the relocation of our corporate headquarters and remaining research laboratories to california in october 1999 , we provided a reserve for our estimate of the exit cost obligation . the reserve was for the estimated costs of our former research and administrative facility in lincoln , which we held on a lease that terminated on june 30 , 2013. we periodically re-evaluated and adjusted the reserve after considering various factors such as our lease payments through to the end of the lease , operating expenses , the real estate market in rhode island , and 48 estimated subtenant income based on actual and projected occupancy . we have closed this reserve as our lease and related obligations terminated on june 30 , 2013. see note 11 wind-down and exit costs in the notes to the consolidated financial statements of part ii , item 8 of this form 10-k for further information . goodwill and other intangible assets ( patent and license costs ) goodwill of approximately $ 2,139,000 at december 31 , 2013 , relates to the acquisition of scs operations . goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests . if the assumptions and estimates used to allocate the purchase price are not correct , or if business conditions change , purchase price adjustments or future asset impairment charges could be required . we test goodwill for impairment on an annual basis or more frequently if we believe indicators of impairment exist . impairment evaluations involve management estimates of asset useful lives and future cash flows . significant management judgment is required in the forecasts of future operating results that are used in the evaluations , and it is possible , even likely , that the plans and estimates used may be incorrect . if our actual results , or the plans and estimates used in future impairment analysis are lower than the original estimates used to assess the recoverability of these assets , we could incur additional impairment charges in a future period . we completed our annual impairment testing during the fourth quarter of 2013 , and determined that there was no impairment of goodwill . other intangible assets , net were approximately $ 1,836,000 at december 31 , 2013. intangible assets with finite useful lives are amortized generally on a straight-line basis over the periods benefited . intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable . prior to fiscal year 2001 , we capitalized certain patent costs , which are being amortized over the estimated life of the patent and would be expensed at the time such patents are deemed to have no continuing value . since 2001 , all patent costs are expensed as incurred . license costs are capitalized and amortized over the estimated life of the license agreement . in december 2011 , in part because of management 's decision to focus on our therapeutic product development programs and not to allocate time and resources to the assays technology , we determined that we could not predict the future cash flows from the intangible ipr & d asset related to the assays technology . therefore , we determined that the intangible asset was impaired and wrote off the approximately $ 655,000 carrying value of the asset . impairment of long-lived tangible assets long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable . if property , plant , and equipment are considered to be impaired , the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its estimated fair market value . no such impairment was recognized during the year 2013. loan payable in april 2013 , we entered into a loan agreement with silicon valley bank ( svb ) and received loan proceeds of $ 9,900,000 , net of a $ 100,000 cash discount . the loan has a three-year term and bears interest at an annual rate of 6 % . the loan obligations are secured by a first priority security interest on substantially all of our assets excluding intellectual property . there is also a final $ 1,000,000 fee payable at the end of the term which is being expensed over the term of the loan using the effective interest method . in conjunction with the loan agreement , we issued to svb a ten year warrant to acquire 293,531 shares of common stock at an exercise price of $ 1.7034 per share . the warrant is immediately exercisable and expires in april 2023. we estimated the fair value of the warrant to be approximately $ 388,000 using the black-scholes option pricing model . we applied the relative fair value method to allocate the $ 9,900,000 net proceeds between the loan and warrant . the approximately $ 388,000 fair value allocated to the warrant was recorded as an increase to additional paid-in capital and as a discount to loan payable . approximately $ 9,512,000 was assigned to the loan and was recorded as the initial carrying amount of the loan payable , net of discount . the approximately $ 388,000 fair value of the 49 warrant and the $ 100,000 cash discount are both being amortized as additional interest expense over the term of the loan using the effective interest rate method . we also incurred loan issuance costs of approximately $ 117,000 , which are recorded as deferred financing costs on the accompanying consolidated balance sheet and are being amortized to interest expense over the term of the loan agreement using the effective interest rate method . the effective interest rate used to amortize the deferred financing costs and the discount ( including the fair
| cash used in investing activities was $ 1.7 billion in 2018 , compared with $ 1.5 billion in 2017 , and $ 1.8 billion in 2016 . in 2018 , higher property additions drove the increase . the decline in 2017 was a reflection of lower cash outflows for property additions and a drop in corporate-owned life insurance investments . capital spending and track and equipment statistics can be found within the “ railway property ” section of part i of this report on form 10-k. for 2019 , we expect capital spending to approximate 16 % to 18 % of revenues . cash used in financing activities was $ 2.3 billion in 2018 , compared with $ 2.0 billion in 2017 , and $ 1.3 billion in 2016 . both year-over-year comparisons reflect increased repurchases of common stock and higher debt repayments . in 2018 , the increase was also impacted by higher dividend payments , but tempered by increased proceeds from borrowings . in 2017 , lower proceeds from borrowings also contributed to the rise . share repurchases totaled $ 2.8 billion in 2018 , $ 1.0 billion in 2017 , and $ 803 million in 2016 for the purchase and retirement of 17.1 million ( including 7.0 million shares repurchased for $ 1.2 billion under the asr program , see note 15 ) , 8.2 million , and 9.2 million shares , respectively . as of december 31 , 2018 , 39.4 million shares remain authorized by our board of directors for repurchase .
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to accelerate patient enrollment , we have expanded this trial from a single-site , single-country study to a multi-site , multi-country program . this trial is being conducted in switzerland , canada , and the united states . data from the first three patients demonstrated a 43 favorable safety profile and multi-segment gains in sensory function in two of the three patients 12 months after transplantation of hucns-sc cells compared to pre-transplant baselines ; the third patient remained stable . as of february 2014 , a total of eleven patients have been dosed with our hucns-sc cells in this trial and we expect to complete enrollment of the final patient in the first quarter of 2014. we plan to initiate by the middle of 2014 , a controlled phase ii efficacy study to further investigate our hucns-sc cells as a treatment for spinal cord injury . we are also conducting a phase i/ii clinical trial in dry amd at three trial sites in the united states , and as of february 2014 , have completed enrollment of the first of two planned patient cohorts with our hucns-sc cells . this cohort consisted of eight subjects . we expect to complete enrollment of the second cohort consisting of eight patients by the end of the second quarter of 2014. we previously completed a phase i clinical trial in infantile and late infantile neuronal ceroid lipofuscinosis ( ncl ) , which showed that our hucns-sc cells were well tolerated and non-tumorigenic , and that there was evidence of engraftment and long-term survival of the transplanted hucns-sc cells . in october 2013 , the results of a four-year , long-term follow up study of the patients from the initial phase i study showed there were no long-term safety or tolerability issues associated with the cells up to five years post-transplantation . for a brief description of our significant therapeutic research and development programs see overview therapeutic product development programs in the business section of part i , item 1 of this form 10-k. in april 2013 , we entered into an agreement with the california institute for regenerative medicine ( cirm ) under which cirm will provide up to approximately $ 19.3 million as a forgivable loan , in accordance with mutually agreed upon terms and conditions and cirm regulations . the cirm loan will help fund preclinical development of our hucns-sc cells for alzheimer 's disease . we received an initial disbursement of $ 3.8 million under the cirm loan agreement in july 2013 , and a subsequent disbursement of $ 3.8 million in january 2014. for a brief description of our significant therapeutic research and development programs see overview research and development programs in the business section of part i , item 1 of this form 10-k. we are also engaged in developing and commercializing applications of our technologies to enable research , which we believe represent current and nearer-term commercial opportunities . our portfolio of technologies includes cell technologies relating to embryonic stem cells , induced pluripotent stem ( ips ) cells , and tissue-derived ( adult ) stem cells ; expertise and infrastructure for providing cell-based assays for drug discovery ; a cell culture products and antibody reagents business ; and an intellectual property portfolio with claims relevant to cell processing , reprogramming and manipulation , as well as to gene targeting and insertion . many of these enabling technologies were acquired in april 2009 as part of our acquisition of the operations of stem cell sciences plc ( scs ) . we have not derived any revenue or cash flows from the sale or commercialization of any products except for license revenue for certain of our patented technologies and sales of products for use in stem cell research . as a result , we have incurred annual operating losses since inception and expect to incur substantial operating losses in the future . therefore , we are dependent upon external financing , such as from equity and debt offerings , to finance our operations . before we can derive revenue or cash inflows from the commercialization of any of our therapeutic product candidates , we will need to : ( i ) conduct substantial in vitro testing and characterization of our proprietary cell types , ( ii ) undertake preclinical and clinical testing for specific disease indications ; ( iii ) develop , validate and scale-up manufacturing processes to produce these cell-based therapeutics , and ( iv ) obtain required regulatory approvals . these steps are risky , expensive and time consuming . overall , we expect our r & d expenses to be substantial and to increase for the foreseeable future as we continue the development and clinical investigation of our current and future product candidates . however , expenditures on r & d programs are subject to many uncertainties , including whether we develop our product candidates with a partner or independently . we can not forecast with any degree of certainty which of our current product candidates will be subject to future collaboration , when such collaboration agreements will be secured , if at all , and to what degree such arrangements would affect our development plans and capital requirements . in addition , there are numerous factors associated with the successful commercialization of any of our cell-based 44 therapeutics , including future trial design and regulatory requirements , many of which can not be determined with accuracy at this time given the stage of our development and the novel nature of stem cell technologies . the regulatory pathways , both in the united states and internationally , are complex and fluid given the novel and , in general , clinically unproven nature of stem cell technologies . story_separator_special_tag wind-down expenses in connection with exiting our research and manufacturing operations in lincoln , rhode island , and the relocation of our corporate headquarters and remaining research laboratories to california in october 1999 , we provided a reserve for our estimate of the exit cost obligation . the reserve was for the estimated costs of our former research and administrative facility in lincoln , which we held on a lease that terminated on june 30 , 2013. we periodically re-evaluated and adjusted the reserve after considering various factors such as our lease payments through to the end of the lease , operating expenses , the real estate market in rhode island , and 48 estimated subtenant income based on actual and projected occupancy . we have closed this reserve as our lease and related obligations terminated on june 30 , 2013. see note 11 wind-down and exit costs in the notes to the consolidated financial statements of part ii , item 8 of this form 10-k for further information . goodwill and other intangible assets ( patent and license costs ) goodwill of approximately $ 2,139,000 at december 31 , 2013 , relates to the acquisition of scs operations . goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests . if the assumptions and estimates used to allocate the purchase price are not correct , or if business conditions change , purchase price adjustments or future asset impairment charges could be required . we test goodwill for impairment on an annual basis or more frequently if we believe indicators of impairment exist . impairment evaluations involve management estimates of asset useful lives and future cash flows . significant management judgment is required in the forecasts of future operating results that are used in the evaluations , and it is possible , even likely , that the plans and estimates used may be incorrect . if our actual results , or the plans and estimates used in future impairment analysis are lower than the original estimates used to assess the recoverability of these assets , we could incur additional impairment charges in a future period . we completed our annual impairment testing during the fourth quarter of 2013 , and determined that there was no impairment of goodwill . other intangible assets , net were approximately $ 1,836,000 at december 31 , 2013. intangible assets with finite useful lives are amortized generally on a straight-line basis over the periods benefited . intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable . prior to fiscal year 2001 , we capitalized certain patent costs , which are being amortized over the estimated life of the patent and would be expensed at the time such patents are deemed to have no continuing value . since 2001 , all patent costs are expensed as incurred . license costs are capitalized and amortized over the estimated life of the license agreement . in december 2011 , in part because of management 's decision to focus on our therapeutic product development programs and not to allocate time and resources to the assays technology , we determined that we could not predict the future cash flows from the intangible ipr & d asset related to the assays technology . therefore , we determined that the intangible asset was impaired and wrote off the approximately $ 655,000 carrying value of the asset . impairment of long-lived tangible assets long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable . if property , plant , and equipment are considered to be impaired , the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its estimated fair market value . no such impairment was recognized during the year 2013. loan payable in april 2013 , we entered into a loan agreement with silicon valley bank ( svb ) and received loan proceeds of $ 9,900,000 , net of a $ 100,000 cash discount . the loan has a three-year term and bears interest at an annual rate of 6 % . the loan obligations are secured by a first priority security interest on substantially all of our assets excluding intellectual property . there is also a final $ 1,000,000 fee payable at the end of the term which is being expensed over the term of the loan using the effective interest method . in conjunction with the loan agreement , we issued to svb a ten year warrant to acquire 293,531 shares of common stock at an exercise price of $ 1.7034 per share . the warrant is immediately exercisable and expires in april 2023. we estimated the fair value of the warrant to be approximately $ 388,000 using the black-scholes option pricing model . we applied the relative fair value method to allocate the $ 9,900,000 net proceeds between the loan and warrant . the approximately $ 388,000 fair value allocated to the warrant was recorded as an increase to additional paid-in capital and as a discount to loan payable . approximately $ 9,512,000 was assigned to the loan and was recorded as the initial carrying amount of the loan payable , net of discount . the approximately $ 388,000 fair value of the 49 warrant and the $ 100,000 cash discount are both being amortized as additional interest expense over the term of the loan using the effective interest rate method . we also incurred loan issuance costs of approximately $ 117,000 , which are recorded as deferred financing costs on the accompanying consolidated balance sheet and are being amortized to interest expense over the term of the loan agreement using the effective interest rate method . the effective interest rate used to amortize the deferred financing costs and the discount ( including the fair
| net cash used in operating activities cash used in operating activities was approximately $ 23,286,000 in 2013 , $ 19,869,000 in 2012 , and $ 22,058,000 in 2011. cash used in operating activities is primarily driven by our net loss as adjusted for non-cash charges and differences in the timing of operating cash flows . 55 net cash used in investing activities net cash from investing activities increased by approximately $ 19,692,000 in 2013 compared to 2012. the increase was primarily attributable to maturities of marketable debt securities in 2013. in 2013 we had net maturities of marketable debt securities of approximately $ 13,742,000 compared to net purchases of marketable securities of approximately $ 10,619,000 in 2012. this cash-inflow in 2013 was partially offset by an increase in net investment in leasehold improvements , equipment and other assets of approximately $ 4,669,000 in 2013 as compared to 2012. net cash used in investing activities increased by approximately $ 7,270,000 , or 212 % , in 2012 compared to 2011. the increase was primarily attributable to an increase in net purchases of marketable debt securities in 2012 as compared to 2011. our investment portfolio is comprised primarily of u.s. treasury debt securities , which are classified as cash equivalents . net cash provided by financing activities the increases in cash provided by financing activities from 2011 to 2013 were primarily attributable to higher net proceeds from sales of our common stock . listed below are key financing transactions entered into by us in 2013 , 2012 and 2011 : in april 2013 , we entered into a loan agreement with svb and received loan proceeds of $ 9,900,000 , net of a $ 100,000 cash discount .
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allowance for credit losses we account for the credit risk associated with our lending activities through the allowance and provision for credit losses . the allowance represents management 's best estimate of probable losses that have been incurred in our existing loan portfolio as of the balance sheet date . the provision is a periodic charge to earnings in an amount necessary to maintain the allowance at a level that is appropriate based on management 's assessment of probable estimated losses . management determines and reviews with the board of directors the adequacy of the allowance on a quarterly basis in accordance with the methodology described below . 25 individual loans are selected for review in accordance with financial accounting standards board ( “ fasb ” ) accounting standards codification ( “ asc ” ) topic 310 , “ receivables . ” these are generally large balance commercial loans and commercial mortgages that are rated less than “ satisfactory ” based on our internal credit-rating process . we assess whether the loans identified for review in step one are “ impaired , ” which means that it is probable that all amounts will not be collected according to the contractual terms of the loan agreement , which generally represents loans that management has placed on nonaccrual status . for impaired loans we calculate the estimated fair value of the loans that are selected for review based on observable market prices , discounted cash flows or the value of the underlying collateral and record an allowance if needed . we then select pools of homogeneous smaller balance loans , having similar risk characteristics , as well as unimpaired larger commercial loans , that have similar risk characteristics , for evaluation collectively under the provisions of fasb asc topic 450 , “ contingencies . ” these smaller balance loans generally include residential mortgages , consumer loans , installment loans and some commercial loans . fasb asc topic 450 loans are segmented into groups with similar characteristics and an allowance for credit losses is allocated to each segment based on recent loss history and other relevant information . we then review the results to determine the appropriate balance of the allowance for credit losses . this review includes consideration of additional factors , such as the mix of loans in the portfolio , the balance of the allowance relative to total loans and nonperforming assets , trends in the overall risk profile in the portfolio , trends in delinquencies and nonaccrual loans , and local and national economic information and industry data , including trends in the industries we believe are higher risk . there are many factors affecting the allowance for credit losses ; some are quantitative , while others require qualitative judgment . these factors require the use of estimates related to the amount and timing of expected future cash flows , appraised values on impaired loans , estimated losses for each loan category based on historical loss experience by category , loss emergence periods for each loan category and consideration of current economic trends and conditions , all of which may be susceptible to significant judgment and change . to the extent that actual outcomes differ from estimates , additional provisions for credit losses could be required that could adversely affect our earnings or financial position in future periods . the loan portfolio represents the largest asset category on our consolidated statements of financial condition . fair values of financial instruments fasb asc topic 820 , “ fair value measurements and disclosures , ” establishes a framework for measuring fair value . in accordance with fasb asc topic 820 , first commonwealth groups financial assets and financial liabilities measured at fair value into three levels based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value . level 1 valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities . level 2 valuations are for instruments that trade in less active dealer or broker markets and incorporate values obtained for identical or comparable instruments . level 3 valuations are derived from other valuation methodologies , including option pricing models , discounted cash flow models and similar techniques , and not based on market exchange , dealer or broker traded transactions . level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to each instrument . level 2 investment securities are valued by a recognized third party pricing service using observable inputs . management validates the market values provided by the third party service by having another recognized pricing service price 100 % of securities on an annual basis and a random sample of securities each quarter , monthly monitoring of variances from prior period pricing and on a monthly basis evaluating pricing changes compared to expectations based on changes in the financial markets . level 3 investments include pooled trust preferred collateralized debt obligations . the fair values of these investments are determined by a specialized third party valuation service . management validates the fair value of the pooled trust preferred collateralized debt obligations by monitoring the performance of the underlying collateral , discussing the discount rate , cash flow assumptions and general market trends with the specialized third party and by confirming changes in the underlying collateral to the trustee and underwriter reports . management 's monitoring of the underlying collateral includes deferrals of interest payments , payment defaults , cures of previously deferred interest payments , any regulatory filings or actions and general news related to the underlying collateral . management also evaluates fair value changes compared to expectations based on changes in the interest rates used in determining the discount rate and general financial markets . story_separator_special_tag the most notable change is a $ 4.4 million increase in net securities gains ( losses ) due to the early redemption of two of our pooled trust preferred securities . the majority of this increase is the result of a successful auction call completed on pretsl xiii , a pooled trust preferred security on which other-than-temporary impairment charges were recognized in 2009 and 2010. as a result , the security was called at par resulting in a gain of $ 4.3 million . additionally , the liquidation of pretsl vii provided for a gain of $ 0.7 million . the gain on sale of mortgage loans increased $ 1.3 million due to continued growth in mortgage loan originations since the company reentered the secondary mortgage market . the derivatives mark to market decreased $ 0.7 million . this reflects a change in fair value due to movements in corporate bond spreads and not a realized loss on the swaps . if the company 's total assets would equal or exceed $ 10 billion we would no longer qualify for exemption from the interchange fee cap included in the dodd-frank act . the estimated impact of this change would decrease interchange income by $ 7.6 million . 32 noninterest expense the components of noninterest expense for each year in the three-year period ended december 31 are as follows : replace_table_token_11_th noninterest expense , excluding the loss on sale or write-down of assets , litigation and operational losses , and merger and acquisition related expense , increased $ 32.0 million , or 21 % , for the year ended 2017 compared to 2016 . contributing to the 2017 increase is a $ 16.6 million increase in salaries and employee benefits primarily due to an increase of 98 full-time equivalent employees at december 31 , 2017 compared to december 31 , 2016 . the higher number of employees is a result of the acquisition of 13 branches from firstmerit in december 2016 , the acquisition of dcb financial in april 2017 and the continued expansion of our mortgage and commercial banking businesses in ohio . also contributing to the increase in salaries and employee benefits was $ 2.5 million of expense for a one-time bonus of $ 1,500 paid to all full and part-time employees ( other than the top five named executive officers ) following the passage of the tax cuts and jobs act . the two noted acquisitions also accounted for all of the $ 2.5 million increase in net occupancy expense , $ 1.0 million of the increase in furniture and equipment expense and all of the $ 2.5 million increase in intangible amortization . other operating expense increased $ 5.5 million for the year 2017 compared to 2016 , primarily due to a $ 1.4 million increase in expense related to the reserve for unfunded loan commitments , a $ 1.7 million increase in data processing expense primarily relates to additional volume associated with increased debit cards and card usage as well as an increase in usage of digital channels . merger related expenses totaled $ 10.2 million and $ 3.2 million for the years 2017 and 2016 , respectively . expenses in 2017 reflect one-time expenses related to the acquisition of dcb financial while expenses in 2016 reflect those expenses related to the acquisition of 13 firstmerit branches . merger expense in 2015 relates to the acquisition of first community bank . income tax the provision for income taxes of $ 48.6 million in 2017 reflects an increase of $ 22.9 million compared to the provision for income taxes in 2016 . the majority of this change , $ 16.7 million , relates to a non-cash charge recorded for the revaluation of deferred tax assets in connection with the passage of the tax cuts and jobs act . the remaining increase in the provision for income taxes relates to the increase in the level of pretax income of $ 103.7 million and $ 85.2 million for 2017 and 2016 , respectively . the effective tax rate was 47 % and 30 % for tax expense in 2017 and 2016 , respectively . excluding the $ 16.7 million charge related to the revaluation of deferred tax assets , the effective tax rate for 2017 would have been 31 % . we ordinarily generate an annual effective tax rate that is less than the statutory rate of 35 % due to benefits resulting from tax-exempt interest , income from bank owned life insurance and tax benefits associated with low income housing tax credits , which are relatively consistent regardless of the level of pretax income . 33 financial condition first commonwealth 's total assets increased $ 624.5 million in 2017 . loans , including loans held for sale , increased $ 535.8 million , or 11 % , while investments increased $ 2.3 million , or less than 1 % . loan growth in 2017 was impacted by $ 383.1 million of loans acquired as part of the dcb financial acquisition , including $ 44.8 million in commercial , financial , agricultural and other , $ 25.2 million in real estate construction , $ 197.5 million in residential real estate , $ 109.8 million in commercial real estate and $ 5.8 million in loans to individuals . during 2017 , approximately $ 343.5 million in investment securities were sold , called or matured . some of these securities were lower yielding securities and as such , their replacement contributed to the increase in yield earned on the portfolio . in total , $ 241.1 million in mortgage-backed securities , $ 10.0 million in corporate securities and $ 2.0 million in municipal securities were purchased in 2017 to help increase earnings from the portfolio while maintaining a reduced risk profile . first commonwealth 's total liabilities increased $ 486.3 million , or 8 % , in 2017 . deposits increased $ 633.3 million , or 13 % , largely due
| net cash used in operating activities cash used in operating activities was approximately $ 23,286,000 in 2013 , $ 19,869,000 in 2012 , and $ 22,058,000 in 2011. cash used in operating activities is primarily driven by our net loss as adjusted for non-cash charges and differences in the timing of operating cash flows . 55 net cash used in investing activities net cash from investing activities increased by approximately $ 19,692,000 in 2013 compared to 2012. the increase was primarily attributable to maturities of marketable debt securities in 2013. in 2013 we had net maturities of marketable debt securities of approximately $ 13,742,000 compared to net purchases of marketable securities of approximately $ 10,619,000 in 2012. this cash-inflow in 2013 was partially offset by an increase in net investment in leasehold improvements , equipment and other assets of approximately $ 4,669,000 in 2013 as compared to 2012. net cash used in investing activities increased by approximately $ 7,270,000 , or 212 % , in 2012 compared to 2011. the increase was primarily attributable to an increase in net purchases of marketable debt securities in 2012 as compared to 2011. our investment portfolio is comprised primarily of u.s. treasury debt securities , which are classified as cash equivalents . net cash provided by financing activities the increases in cash provided by financing activities from 2011 to 2013 were primarily attributable to higher net proceeds from sales of our common stock . listed below are key financing transactions entered into by us in 2013 , 2012 and 2011 : in april 2013 , we entered into a loan agreement with svb and received loan proceeds of $ 9,900,000 , net of a $ 100,000 cash discount .
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allowance for credit losses we account for the credit risk associated with our lending activities through the allowance and provision for credit losses . the allowance represents management 's best estimate of probable losses that have been incurred in our existing loan portfolio as of the balance sheet date . the provision is a periodic charge to earnings in an amount necessary to maintain the allowance at a level that is appropriate based on management 's assessment of probable estimated losses . management determines and reviews with the board of directors the adequacy of the allowance on a quarterly basis in accordance with the methodology described below . 25 individual loans are selected for review in accordance with financial accounting standards board ( “ fasb ” ) accounting standards codification ( “ asc ” ) topic 310 , “ receivables . ” these are generally large balance commercial loans and commercial mortgages that are rated less than “ satisfactory ” based on our internal credit-rating process . we assess whether the loans identified for review in step one are “ impaired , ” which means that it is probable that all amounts will not be collected according to the contractual terms of the loan agreement , which generally represents loans that management has placed on nonaccrual status . for impaired loans we calculate the estimated fair value of the loans that are selected for review based on observable market prices , discounted cash flows or the value of the underlying collateral and record an allowance if needed . we then select pools of homogeneous smaller balance loans , having similar risk characteristics , as well as unimpaired larger commercial loans , that have similar risk characteristics , for evaluation collectively under the provisions of fasb asc topic 450 , “ contingencies . ” these smaller balance loans generally include residential mortgages , consumer loans , installment loans and some commercial loans . fasb asc topic 450 loans are segmented into groups with similar characteristics and an allowance for credit losses is allocated to each segment based on recent loss history and other relevant information . we then review the results to determine the appropriate balance of the allowance for credit losses . this review includes consideration of additional factors , such as the mix of loans in the portfolio , the balance of the allowance relative to total loans and nonperforming assets , trends in the overall risk profile in the portfolio , trends in delinquencies and nonaccrual loans , and local and national economic information and industry data , including trends in the industries we believe are higher risk . there are many factors affecting the allowance for credit losses ; some are quantitative , while others require qualitative judgment . these factors require the use of estimates related to the amount and timing of expected future cash flows , appraised values on impaired loans , estimated losses for each loan category based on historical loss experience by category , loss emergence periods for each loan category and consideration of current economic trends and conditions , all of which may be susceptible to significant judgment and change . to the extent that actual outcomes differ from estimates , additional provisions for credit losses could be required that could adversely affect our earnings or financial position in future periods . the loan portfolio represents the largest asset category on our consolidated statements of financial condition . fair values of financial instruments fasb asc topic 820 , “ fair value measurements and disclosures , ” establishes a framework for measuring fair value . in accordance with fasb asc topic 820 , first commonwealth groups financial assets and financial liabilities measured at fair value into three levels based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value . level 1 valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities . level 2 valuations are for instruments that trade in less active dealer or broker markets and incorporate values obtained for identical or comparable instruments . level 3 valuations are derived from other valuation methodologies , including option pricing models , discounted cash flow models and similar techniques , and not based on market exchange , dealer or broker traded transactions . level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to each instrument . level 2 investment securities are valued by a recognized third party pricing service using observable inputs . management validates the market values provided by the third party service by having another recognized pricing service price 100 % of securities on an annual basis and a random sample of securities each quarter , monthly monitoring of variances from prior period pricing and on a monthly basis evaluating pricing changes compared to expectations based on changes in the financial markets . level 3 investments include pooled trust preferred collateralized debt obligations . the fair values of these investments are determined by a specialized third party valuation service . management validates the fair value of the pooled trust preferred collateralized debt obligations by monitoring the performance of the underlying collateral , discussing the discount rate , cash flow assumptions and general market trends with the specialized third party and by confirming changes in the underlying collateral to the trustee and underwriter reports . management 's monitoring of the underlying collateral includes deferrals of interest payments , payment defaults , cures of previously deferred interest payments , any regulatory filings or actions and general news related to the underlying collateral . management also evaluates fair value changes compared to expectations based on changes in the interest rates used in determining the discount rate and general financial markets . story_separator_special_tag the most notable change is a $ 4.4 million increase in net securities gains ( losses ) due to the early redemption of two of our pooled trust preferred securities . the majority of this increase is the result of a successful auction call completed on pretsl xiii , a pooled trust preferred security on which other-than-temporary impairment charges were recognized in 2009 and 2010. as a result , the security was called at par resulting in a gain of $ 4.3 million . additionally , the liquidation of pretsl vii provided for a gain of $ 0.7 million . the gain on sale of mortgage loans increased $ 1.3 million due to continued growth in mortgage loan originations since the company reentered the secondary mortgage market . the derivatives mark to market decreased $ 0.7 million . this reflects a change in fair value due to movements in corporate bond spreads and not a realized loss on the swaps . if the company 's total assets would equal or exceed $ 10 billion we would no longer qualify for exemption from the interchange fee cap included in the dodd-frank act . the estimated impact of this change would decrease interchange income by $ 7.6 million . 32 noninterest expense the components of noninterest expense for each year in the three-year period ended december 31 are as follows : replace_table_token_11_th noninterest expense , excluding the loss on sale or write-down of assets , litigation and operational losses , and merger and acquisition related expense , increased $ 32.0 million , or 21 % , for the year ended 2017 compared to 2016 . contributing to the 2017 increase is a $ 16.6 million increase in salaries and employee benefits primarily due to an increase of 98 full-time equivalent employees at december 31 , 2017 compared to december 31 , 2016 . the higher number of employees is a result of the acquisition of 13 branches from firstmerit in december 2016 , the acquisition of dcb financial in april 2017 and the continued expansion of our mortgage and commercial banking businesses in ohio . also contributing to the increase in salaries and employee benefits was $ 2.5 million of expense for a one-time bonus of $ 1,500 paid to all full and part-time employees ( other than the top five named executive officers ) following the passage of the tax cuts and jobs act . the two noted acquisitions also accounted for all of the $ 2.5 million increase in net occupancy expense , $ 1.0 million of the increase in furniture and equipment expense and all of the $ 2.5 million increase in intangible amortization . other operating expense increased $ 5.5 million for the year 2017 compared to 2016 , primarily due to a $ 1.4 million increase in expense related to the reserve for unfunded loan commitments , a $ 1.7 million increase in data processing expense primarily relates to additional volume associated with increased debit cards and card usage as well as an increase in usage of digital channels . merger related expenses totaled $ 10.2 million and $ 3.2 million for the years 2017 and 2016 , respectively . expenses in 2017 reflect one-time expenses related to the acquisition of dcb financial while expenses in 2016 reflect those expenses related to the acquisition of 13 firstmerit branches . merger expense in 2015 relates to the acquisition of first community bank . income tax the provision for income taxes of $ 48.6 million in 2017 reflects an increase of $ 22.9 million compared to the provision for income taxes in 2016 . the majority of this change , $ 16.7 million , relates to a non-cash charge recorded for the revaluation of deferred tax assets in connection with the passage of the tax cuts and jobs act . the remaining increase in the provision for income taxes relates to the increase in the level of pretax income of $ 103.7 million and $ 85.2 million for 2017 and 2016 , respectively . the effective tax rate was 47 % and 30 % for tax expense in 2017 and 2016 , respectively . excluding the $ 16.7 million charge related to the revaluation of deferred tax assets , the effective tax rate for 2017 would have been 31 % . we ordinarily generate an annual effective tax rate that is less than the statutory rate of 35 % due to benefits resulting from tax-exempt interest , income from bank owned life insurance and tax benefits associated with low income housing tax credits , which are relatively consistent regardless of the level of pretax income . 33 financial condition first commonwealth 's total assets increased $ 624.5 million in 2017 . loans , including loans held for sale , increased $ 535.8 million , or 11 % , while investments increased $ 2.3 million , or less than 1 % . loan growth in 2017 was impacted by $ 383.1 million of loans acquired as part of the dcb financial acquisition , including $ 44.8 million in commercial , financial , agricultural and other , $ 25.2 million in real estate construction , $ 197.5 million in residential real estate , $ 109.8 million in commercial real estate and $ 5.8 million in loans to individuals . during 2017 , approximately $ 343.5 million in investment securities were sold , called or matured . some of these securities were lower yielding securities and as such , their replacement contributed to the increase in yield earned on the portfolio . in total , $ 241.1 million in mortgage-backed securities , $ 10.0 million in corporate securities and $ 2.0 million in municipal securities were purchased in 2017 to help increase earnings from the portfolio while maintaining a reduced risk profile . first commonwealth 's total liabilities increased $ 486.3 million , or 8 % , in 2017 . deposits increased $ 633.3 million , or 13 % , largely due
| liquidity liquidity refers to our ability to meet the cash flow requirements of depositors and borrowers as well as our operating cash needs with cost-effective funding . liquidity risk arises from the possibility that we may not be able to meet our financial obligations and operating cash needs or may become overly reliant upon external funding sources . in order to manage this risk , our board of directors has established a liquidity policy that identifies primary sources of liquidity , establishes procedures for monitoring and measuring liquidity and quantifies minimum liquidity requirements based on limits approved by our board of directors . this policy designates our asset/liability committee ( “ alco ” ) as the body responsible for meeting these objectives . the alco , which includes members of executive management , reviews liquidity on a periodic basis and approves significant changes in strategies that affect balance sheet or cash flow positions . liquidity is centrally managed on a daily basis by our treasury department , which monitors it by using such measures as a 30 day liquidity stress analysis , liquidity gap ratios and noncore funding ratios . we generate funds to meet our cash flow needs primarily through the core deposit base of fcb and the maturity or repayment of loans and other interest-earning assets , including investments . core deposits are the most stable source of liquidity a bank can have due to the long-term relationship with a deposit customer . the level of deposits during any period is sometimes influenced by factors outside of management 's control , such as the level of short-term and long-term market interest rates and yields offered on competing investments , such as money market mutual funds .
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in april 2017 , we drew $ 150.0 million under the unsecured revolving credit facility to fund the acquisition . ( 3 ) on july 1 , 2016 , we purchased a partial interest in land held as a tenancy in common in conjunction with our acquisition of the 11601 wilshire property . the land interest held as a tenancy in common was accounted for as an equity method investment . on june 15 , 2017 , we purchased the remaining interest , which was fair valued and allocated to land and building . ( 4 ) this parcel is adjacent to the sunset las palmas studios property . dispositions we disposed of four office properties during 2017 that were non-strategic assets in our portfolio . these dispositions resulted in $ 45.6 million of gains . the following table summarizes the properties sold in 2017 : replace_table_token_17_th _ ( 1 ) represents gross sales price before certain credits , prorations and closing costs . ( 2 ) the consolidated joint venture that owned pinnacle i and pinnacle ii sold the properties to affiliates of blackstone . in conjunction with the sale , the $ 216.0 million debt secured by these properties was assumed by the purchasers . held for sale as of december 31 , 2017 , we had four properties that met the criteria to be classified as held for sale . the following table summarizes properties classified as held for sale as of december 31 , 2017 : replace_table_token_18_th ( 1 ) represents gross sales price before certain credits , prorations and closing costs . redevelopment/development properties are selected for redevelopment when we believe the result of doing so will render a higher economic return . we may engage in the development or redevelopment of office properties when market conditions support a favorable risk-adjusted return . a redevelopment can consist of a range of improvements to a property , and may constitute a complete structural renovation of a building or remodeling select areas to make the property more attractive to tenants . redevelopment and development properties are excluded from our in-service portfolio to maintain consistency in evaluating our performance from period to period . the redevelopment and development process is generally capital-intensive and occurs over the course of several months or years . commonly associated with newly-acquired properties , redevelopment efforts may also occur at properties we currently own . at december 31 , 2017 , there were a total of four properties included in property under development in our consolidated balance sheets : 95 jackson ( formerly merrill place theater building ) , maxwell , cue and epic . financings in january 2017 , we completed an underwritten public offering of 8,881,575 shares of common stock for total proceeds , net of transaction costs , of approximately $ 310.9 million . proceeds were used to repurchase 8,881,575 common units in the operating partnership from blackstone and farallon capital management , llc ( “ the farallon funds ” ) . 46 in march 2017 , we completed an underwritten public offering of 9,775,000 shares of common stock for total proceeds , net of transaction costs , of approximately $ 337.5 million . proceeds from the offering were used to fully repay a $ 255.0 million balance outstanding under our unsecured revolving credit facility and for our acquisition of sunset las palmas . in october 2017 , we completed our inaugural public offering of $ 400.0 million registered senior notes due november 1 , 2027. the net proceeds from the offering , after deducting the underwriting discounts and offering expenses , were approximately $ 396.7 million and were used to repay $ 150.0 million of our 5-year term loan due april 2020 with the remainder of the net proceeds , together with cash on hand , used to repay $ 250.0 million outstanding under our unsecured revolving credit facility . in november 2017 , the consolidated joint venture that owned pinnacle i and pinnacle ii sold the properties to affiliates of blackstone for $ 350.0 million . in conjunction with the sale , the $ 216.0 million debt secured by these properties was assumed by the purchasers . additionally , we used proceeds from the sale and cash on hand to repay $ 100.0 million of our 5-year term loan due november 2020. factors that may influence our operating results business and strategy we invest in class-a office and media and entertainment properties located in high barrier-to-entry , innovation-centric submarkets with significant growth potential . our positioning within these submarkets allows us to attract and retain quality growth companies as tenants , many of which are in the technology and media and entertainment sectors . the purchase of properties with a value-add component , typically through off-market transactions , also facilitates our growth . these types of assets afford us the opportunity to capture embedded rent growth and occupancy upside , and to strategically invest capital to reposition and redevelop assets to generate additional cash flow . we take a more measured approach to ground-up development , with most under-construction , planned or potential projects located on ancillary sites part of existing operating assets . management expertise across disciplines supports execution at all levels of our operations . in particular , aggressive leasing and proactive asset management , combined with a focus on conservatively managing our balance sheet , are central to our strategy . rental revenue the amount of net rental revenue generated by the properties in our portfolio depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space and space that becomes available from lease terminations . as of december 31 , 2017 , the percent leased for our in-service office properties was approximately 92.1 % ( or 90.3 % , excluding leases signed but not commenced as of that date ) . story_separator_special_tag the stock-based compensation is amortized through the final vesting period on a straight-line basis and graded vesting basis for time-based awards and performance-based awards , respectively . pursuant to the adoption of asu 2016-09 , we account for forfeitures of awards as they occur . our compensation committee will regularly consider the accounting implications of significant compensation decisions , especially in connection with decisions that relate to our equity incentive award plans and programs . income taxes our property-owning subsidiaries are limited liability companies and are treated as pass-through entities or disregarded entities ( or , in the case of the entities that own the 1455 market and hill7 properties , reits ) for federal income tax purposes . accordingly , no provision has been made for federal income taxes in the accompanying consolidated financial statements for the activities of these entities . we have elected to be taxed as a reit under the code commencing with our taxable year ended december 31 , 2010. we believe that we have operated in a manner that has allowed us to qualify as a reit for federal income tax purposes commencing with such taxable year , and we intend to continue operating in such manner . to qualify as a reit , we are required to distribute at least 90 % of our net taxable income , excluding net capital gains , to our stockholders and meet the various other requirements imposed by the code relating to such matters as operating results , asset holdings , distribution levels and diversity of stock ownership . provided that we continue to qualify for taxation as a reit , we are generally not subject to corporate level income tax on the earnings distributed currently to our stockholders . if we fail to qualify as a reit in any taxable year , and are unable to avail ourselves of certain savings provisions set forth in the code , all of our taxable income would be subject to federal corporate income tax , including any applicable alternative minimum tax for taxable years prior to 2018. unless entitled to relief under specific statutory provisions , we would be ineligible to elect to be treated as a reit for the four taxable years following the year for which we lose our qualification . it is not possible to state whether in all circumstances we would be entitled to this statutory relief . we own and may acquire direct or indirect interests in one or more subsidiary reits . a subsidiary reit is subject to the various reit qualification requirements and other limitations described herein that are applicable to us . if a subsidiary reit were to fail to qualify as a reit , then ( i ) that subsidiary reit would become subject to federal income tax , ( ii ) shares in such reit would cease to be qualifying assets for purposes of the asset tests applicable to reits and ( iii ) it is possible that we would fail certain of the asset tests applicable to reits , in which event we would fail to qualify as a reit unless we could avail ourselves of certain relief provisions . we believe that our operating partnership is properly treated as a partnership for federal income tax purposes . as a partnership , our operating partnership is not subject to federal income tax on its income . instead , each of its partners , including us , is allocated , and may be required to pay tax with respect to , its share of our operating partnership 's income . as such , no provision for federal income taxes has been included for the operating partnership . we have elected , together with one of our subsidiaries , to treat such subsidiary as a taxable reit subsidiary ( “ trs ” ) for federal income tax purposes . certain activities that we may undertake , such as non-customary services for our tenants and 51 holding assets that we can not hold directly , will be conducted by a trs . a trs is subject to federal and , where applicable , state and local income taxes on its net income . we are subject to the statutory requirements of the states in which we conduct business . we periodically evaluate our tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years , as defined by the statute of limitations , based on their technical merits . as of december 31 , 2017 , we have not established a liability for uncertain tax positions . we and our trs file income tax returns with the u.s. federal government and various state and local jurisdictions . we and our trs are no longer subject to tax examinations by tax authorities for years prior to 2012. generally , we have assessed our tax positions for all open years , which include 2012 to 2016 , and concluded that there are no material uncertainties to be recognized . 52 results of operations the following table identifies the properties in our portfolio as of december 31 , 2017 : replace_table_token_19_th _ ( 1 ) we acquired this property in august 2007 and completed its development in june 2008 . ( 2 ) this property was classified as held for sale as of december 31 , 2017 and the sale is expected to close during the first quarter of 2018 . ( 3 ) we have a 55 % ownership interest in the consolidated joint venture that owns the 1455 market property . ( 4 ) this development was completed in the second quarter of 2017 . ( 5 ) we estimate this development will be completed in the fourth quarter of 2018 and stabilized in the second quarter of 2019. as a result of this development , the estimated rentable square footage increased to 99,090 .
| liquidity liquidity refers to our ability to meet the cash flow requirements of depositors and borrowers as well as our operating cash needs with cost-effective funding . liquidity risk arises from the possibility that we may not be able to meet our financial obligations and operating cash needs or may become overly reliant upon external funding sources . in order to manage this risk , our board of directors has established a liquidity policy that identifies primary sources of liquidity , establishes procedures for monitoring and measuring liquidity and quantifies minimum liquidity requirements based on limits approved by our board of directors . this policy designates our asset/liability committee ( “ alco ” ) as the body responsible for meeting these objectives . the alco , which includes members of executive management , reviews liquidity on a periodic basis and approves significant changes in strategies that affect balance sheet or cash flow positions . liquidity is centrally managed on a daily basis by our treasury department , which monitors it by using such measures as a 30 day liquidity stress analysis , liquidity gap ratios and noncore funding ratios . we generate funds to meet our cash flow needs primarily through the core deposit base of fcb and the maturity or repayment of loans and other interest-earning assets , including investments . core deposits are the most stable source of liquidity a bank can have due to the long-term relationship with a deposit customer . the level of deposits during any period is sometimes influenced by factors outside of management 's control , such as the level of short-term and long-term market interest rates and yields offered on competing investments , such as money market mutual funds .
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in april 2017 , we drew $ 150.0 million under the unsecured revolving credit facility to fund the acquisition . ( 3 ) on july 1 , 2016 , we purchased a partial interest in land held as a tenancy in common in conjunction with our acquisition of the 11601 wilshire property . the land interest held as a tenancy in common was accounted for as an equity method investment . on june 15 , 2017 , we purchased the remaining interest , which was fair valued and allocated to land and building . ( 4 ) this parcel is adjacent to the sunset las palmas studios property . dispositions we disposed of four office properties during 2017 that were non-strategic assets in our portfolio . these dispositions resulted in $ 45.6 million of gains . the following table summarizes the properties sold in 2017 : replace_table_token_17_th _ ( 1 ) represents gross sales price before certain credits , prorations and closing costs . ( 2 ) the consolidated joint venture that owned pinnacle i and pinnacle ii sold the properties to affiliates of blackstone . in conjunction with the sale , the $ 216.0 million debt secured by these properties was assumed by the purchasers . held for sale as of december 31 , 2017 , we had four properties that met the criteria to be classified as held for sale . the following table summarizes properties classified as held for sale as of december 31 , 2017 : replace_table_token_18_th ( 1 ) represents gross sales price before certain credits , prorations and closing costs . redevelopment/development properties are selected for redevelopment when we believe the result of doing so will render a higher economic return . we may engage in the development or redevelopment of office properties when market conditions support a favorable risk-adjusted return . a redevelopment can consist of a range of improvements to a property , and may constitute a complete structural renovation of a building or remodeling select areas to make the property more attractive to tenants . redevelopment and development properties are excluded from our in-service portfolio to maintain consistency in evaluating our performance from period to period . the redevelopment and development process is generally capital-intensive and occurs over the course of several months or years . commonly associated with newly-acquired properties , redevelopment efforts may also occur at properties we currently own . at december 31 , 2017 , there were a total of four properties included in property under development in our consolidated balance sheets : 95 jackson ( formerly merrill place theater building ) , maxwell , cue and epic . financings in january 2017 , we completed an underwritten public offering of 8,881,575 shares of common stock for total proceeds , net of transaction costs , of approximately $ 310.9 million . proceeds were used to repurchase 8,881,575 common units in the operating partnership from blackstone and farallon capital management , llc ( “ the farallon funds ” ) . 46 in march 2017 , we completed an underwritten public offering of 9,775,000 shares of common stock for total proceeds , net of transaction costs , of approximately $ 337.5 million . proceeds from the offering were used to fully repay a $ 255.0 million balance outstanding under our unsecured revolving credit facility and for our acquisition of sunset las palmas . in october 2017 , we completed our inaugural public offering of $ 400.0 million registered senior notes due november 1 , 2027. the net proceeds from the offering , after deducting the underwriting discounts and offering expenses , were approximately $ 396.7 million and were used to repay $ 150.0 million of our 5-year term loan due april 2020 with the remainder of the net proceeds , together with cash on hand , used to repay $ 250.0 million outstanding under our unsecured revolving credit facility . in november 2017 , the consolidated joint venture that owned pinnacle i and pinnacle ii sold the properties to affiliates of blackstone for $ 350.0 million . in conjunction with the sale , the $ 216.0 million debt secured by these properties was assumed by the purchasers . additionally , we used proceeds from the sale and cash on hand to repay $ 100.0 million of our 5-year term loan due november 2020. factors that may influence our operating results business and strategy we invest in class-a office and media and entertainment properties located in high barrier-to-entry , innovation-centric submarkets with significant growth potential . our positioning within these submarkets allows us to attract and retain quality growth companies as tenants , many of which are in the technology and media and entertainment sectors . the purchase of properties with a value-add component , typically through off-market transactions , also facilitates our growth . these types of assets afford us the opportunity to capture embedded rent growth and occupancy upside , and to strategically invest capital to reposition and redevelop assets to generate additional cash flow . we take a more measured approach to ground-up development , with most under-construction , planned or potential projects located on ancillary sites part of existing operating assets . management expertise across disciplines supports execution at all levels of our operations . in particular , aggressive leasing and proactive asset management , combined with a focus on conservatively managing our balance sheet , are central to our strategy . rental revenue the amount of net rental revenue generated by the properties in our portfolio depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space and space that becomes available from lease terminations . as of december 31 , 2017 , the percent leased for our in-service office properties was approximately 92.1 % ( or 90.3 % , excluding leases signed but not commenced as of that date ) . story_separator_special_tag the stock-based compensation is amortized through the final vesting period on a straight-line basis and graded vesting basis for time-based awards and performance-based awards , respectively . pursuant to the adoption of asu 2016-09 , we account for forfeitures of awards as they occur . our compensation committee will regularly consider the accounting implications of significant compensation decisions , especially in connection with decisions that relate to our equity incentive award plans and programs . income taxes our property-owning subsidiaries are limited liability companies and are treated as pass-through entities or disregarded entities ( or , in the case of the entities that own the 1455 market and hill7 properties , reits ) for federal income tax purposes . accordingly , no provision has been made for federal income taxes in the accompanying consolidated financial statements for the activities of these entities . we have elected to be taxed as a reit under the code commencing with our taxable year ended december 31 , 2010. we believe that we have operated in a manner that has allowed us to qualify as a reit for federal income tax purposes commencing with such taxable year , and we intend to continue operating in such manner . to qualify as a reit , we are required to distribute at least 90 % of our net taxable income , excluding net capital gains , to our stockholders and meet the various other requirements imposed by the code relating to such matters as operating results , asset holdings , distribution levels and diversity of stock ownership . provided that we continue to qualify for taxation as a reit , we are generally not subject to corporate level income tax on the earnings distributed currently to our stockholders . if we fail to qualify as a reit in any taxable year , and are unable to avail ourselves of certain savings provisions set forth in the code , all of our taxable income would be subject to federal corporate income tax , including any applicable alternative minimum tax for taxable years prior to 2018. unless entitled to relief under specific statutory provisions , we would be ineligible to elect to be treated as a reit for the four taxable years following the year for which we lose our qualification . it is not possible to state whether in all circumstances we would be entitled to this statutory relief . we own and may acquire direct or indirect interests in one or more subsidiary reits . a subsidiary reit is subject to the various reit qualification requirements and other limitations described herein that are applicable to us . if a subsidiary reit were to fail to qualify as a reit , then ( i ) that subsidiary reit would become subject to federal income tax , ( ii ) shares in such reit would cease to be qualifying assets for purposes of the asset tests applicable to reits and ( iii ) it is possible that we would fail certain of the asset tests applicable to reits , in which event we would fail to qualify as a reit unless we could avail ourselves of certain relief provisions . we believe that our operating partnership is properly treated as a partnership for federal income tax purposes . as a partnership , our operating partnership is not subject to federal income tax on its income . instead , each of its partners , including us , is allocated , and may be required to pay tax with respect to , its share of our operating partnership 's income . as such , no provision for federal income taxes has been included for the operating partnership . we have elected , together with one of our subsidiaries , to treat such subsidiary as a taxable reit subsidiary ( “ trs ” ) for federal income tax purposes . certain activities that we may undertake , such as non-customary services for our tenants and 51 holding assets that we can not hold directly , will be conducted by a trs . a trs is subject to federal and , where applicable , state and local income taxes on its net income . we are subject to the statutory requirements of the states in which we conduct business . we periodically evaluate our tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years , as defined by the statute of limitations , based on their technical merits . as of december 31 , 2017 , we have not established a liability for uncertain tax positions . we and our trs file income tax returns with the u.s. federal government and various state and local jurisdictions . we and our trs are no longer subject to tax examinations by tax authorities for years prior to 2012. generally , we have assessed our tax positions for all open years , which include 2012 to 2016 , and concluded that there are no material uncertainties to be recognized . 52 results of operations the following table identifies the properties in our portfolio as of december 31 , 2017 : replace_table_token_19_th _ ( 1 ) we acquired this property in august 2007 and completed its development in june 2008 . ( 2 ) this property was classified as held for sale as of december 31 , 2017 and the sale is expected to close during the first quarter of 2018 . ( 3 ) we have a 55 % ownership interest in the consolidated joint venture that owns the 1455 market property . ( 4 ) this development was completed in the second quarter of 2017 . ( 5 ) we estimate this development will be completed in the fourth quarter of 2018 and stabilized in the second quarter of 2019. as a result of this development , the estimated rentable square footage increased to 99,090 .
| liquidity sources we had approximately $ 78.9 million of cash and cash equivalents at december 31 , 2017 . our principal source of operating cash flow is related to leasing and operating the properties in our portfolio . our properties provide a relatively consistent stream of cash flow that provides us with resources to pay operating expenses , debt service and fund quarterly dividend and distribution requirements . our ability to access the equity capital markets will be dependent on a number of factors as well , including general market conditions for reits and market perceptions about us . we have an atm program that allows us to sell up to $ 125.0 million of common stock , $ 20.1 million of which has been sold through december 31 , 2017 . any future sales will depend on several factors , including , but not limited to , market conditions , the trading price of our common stock and our capital needs . we have no obligation to sell the remaining shares available for sale under this program . as of december 31 , 2017 , we had total borrowing capacity of $ 400.0 million under our unsecured revolving credit facility , $ 100.0 million of which had been drawn . our ability to incur additional debt will be dependent on a number of factors , including our degree of leverage , the value of our unencumbered assets and borrowing restrictions that may be imposed by lenders . if we incur additional debt , the risks associated with our leverage , including our ability to service our debt , would increase . based on the closing price of our common stock of $ 34.25 as of december 31 , 2017 , our ratio of debt to total market capitalization was approximately 31.2 % ( counting series a preferred units as debt ) as of december 31 , 2017 .
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these decreases were partially offset by an increase in nonfuel gross margin in excess of site level operating expenses generated by our locations . as described under the heading `` other disputes `` in note 13 to the notes to consolidated financial statements included in item 15 of this annual report , comdata has purported to terminate its merchant agreement with us and , beginning february 1 , 2017 , unilaterally increased the fees it withholds from the transaction settlement payments due to us . we believe that comdata has wrongfully terminated our agreement and raised the fees we pay comdata , and we are pursuing litigation against comdata . however , if we do not prevail in our pending litigation against comdata , we may not be able to recover the increased fees comdata charges us through higher prices to customers , and our operating expenses may increase . 38 factors affecting comparability transaction agreement with hpt on june 1 , 2015 , we entered a transaction agreement with hpt , which we and hpt amended on june 22 , 2016. we refer to this amended transaction agreement as the transaction agreement . under the transaction agreement , among other things , we agreed to sell to hpt 16 existing travel centers we owned and certain assets at 11 properties currently leased from hpt , plus four additional travel centers upon our completion of their development , and hpt agreed to lease back these properties and assets to us under the hpt leases . we also agreed to purchase from hpt five travel centers we previously leased from hpt . during the year ended december 31 , 2015 , we sold 14 travel centers and certain assets at 11 properties currently leased from hpt for an aggregate of $ 279,383 and purchased five travel centers from hpt for $ 45,042 . the resulting net increase of our minimum annual rent under our ta leases was $ 20,153. on march 31 , 2016 , we sold one of the development properties to hpt for $ 19,683 , and our minimum annual rent due to hpt increased by $ 1,673 . on june 22 , 2016 , we sold two existing travel centers for an aggregate of $ 23,876 , and our minimum annual rent due to hpt increased by $ 2,029 . on june 30 , 2016 , we sold one of the development properties to hpt for $ 22,297 , and our minimum annual rent due to hpt increased by $ 1,895 . on september 30 , 2016 , we sold one of the development properties to hpt for $ 16,557 , and our minimum annual rent due to hpt increased by $ 1,407 . see notes 7 and 12 to the notes to consolidated financial statements included in item 15 of this annual report for more information about our transaction agreement with hpt . acquired and developed sites since the beginning of 2011 , when we began our acquisition program , to december 31 , 2016 , we have invested $ 855,003 to develop , purchase and improve 318 travel centers , convenience stores and standalone restaurants . for the year ended december 31 , 2016 , these investments produced site level gross margin in excess of site level operating expenses of $ 99,957 , or , on a sequential basis , $ 8,253 , or 9.0 % , greater than site level gross margin in excess of site level operating expenses for the twelve months ended september 30 , 2016. we believe that our investments require a period after they are developed or acquired and upgrades are completed to reach their expected stabilized financial results , generally three years for travel centers and one year for convenience stores . we acquired or developed 39 travel centers during the 2011 to 2016 period . of those , 36 are included in the `` travel centers segment same site operating data `` for the years ended december 31 , 2016 and 2015. as of december 31 , 2016 , we have invested $ 312,139 ( including improvements ) in these 36 locations , and they generated $ 54,271 of gross margin in excess of site level operating expenses during the year ended december 31 , 2016 . the remaining three locations were developed by us for a total investment of $ 64,862 ; and they generated $ 3,526 of gross margin in excess of site level operating expenses during the year ended december 31 , 2016 ; however , we have operated these locations for less than the full year 2016 ( one opened in each of january , march and may ) . we acquired 228 convenience stores during the 2013 to 2016 period . of these , 31 are included in the `` convenience store segment same site operating data `` for the years ended december 31 , 2016 and 2015. as of december 31 , 2016 , we have invested $ 66,491 ( including improvements ) in these 31 locations , and they generated $ 11,608 of gross margin in excess of site level operating expenses during the year ended december 31 , 2016 . the remaining 197 locations were acquired by us in 2015 or 2016 for a total investment of $ 376,854 ( including improvements ) , and these convenience stores generated $ 23,237 of gross margin in excess of site level operating expenses during the year ended december 31 , 2016 . the 29 convenience stores we acquired during 2016 were operated by us for an average of nine months during 2016 and some of these were fully or partially out of service while being renovated . story_separator_special_tag replace_table_token_14_th 46 the following table presents our same site operating results for our convenience store segment for the year ended december 31 , 2016 , as compared to the year ended december 31 , 2015 , and for the year ended december 31 , 2015 , as compared to the year ended december 31 , 2014 . replace_table_token_15_th year ended december 31 , 2016 , as compared to december 31 , 2015 revenues . fuel revenues for 2016 increase d by $ 195,853 , or 87.1 % , as compared to 2015 . the table below shows the changes in total fuel revenues for our convenience store segment based on price and volume changes between periods . replace_table_token_16_th the increase in fuel revenues in our convenience store segment was due to sales volume at acquired locations , partially offset by decreases in market prices for fuel and a decrease in fuel sales volume on a same site basis . on a same site basis , fuel sales volume for 2016 decrease d by 632 gallons , or 1.5 % , as compared to 2015 . the decrease in same site fuel sales volume was primarily due to our adjusting fuel sales pricing to manage fuel sales volume and profitability and the effects of competition . nonfuel revenues for 2016 increase d by $ 139,655 , or 90.0 % , as compared to 2015 . the increase in nonfuel revenues was primarily due to acquired locations . on a same site basis , nonfuel revenues increase d modestly as operations at acquired sites continue to stabilize . site level gross margin in excess of site level operating expenses . site level gross margin in excess of site level operating expenses for 2016 increase d by $ 19,401 , or 112.4 % , as compared to 2015 , primarily due to acquired locations . 47 on a same site basis , site level gross margin in excess of site level operating expenses for 2016 increase d as compared to 2015 due to an increase in nonfuel gross margin due to a favorable change in the mix of products and services sold and an increase in fuel gross margin primarily resulting from our continued focus on adjusting our fuel sales pricing to manage profitability . year ended december 31 , 2015 , as compared to december 31 , 2014 revenues . fuel revenues for 2015 increase d by $ 111,673 , or 98.6 % as compared to 2014 . the table below shows the changes in total fuel revenues for our convenience store segment based on price and volume changes between periods . replace_table_token_17_th the increase in fuel revenues at our convenience store segment reflected increases in sales volume from both sites we acquired during 2015 and same sites , partially offset by decreases in market prices for fuel . on a same site basis , fuel sales volume for 2015 increase d by 1,642 gallons , or 4.1 % , from 2014 . nonfuel revenues for 2015 increase d by $ 78,563 , or 102.5 % , from 2014 . the increase in nonfuel revenues was primarily due to the sites we acquired during 2015 . on a same site basis , nonfuel revenues increase d by $ 3,023 , or 3.9 % , for 2015 , as compared to 2014 , primarily due to the favorable effects of certain of our marketing initiatives . site level gross margin in excess of site level operating expenses . site level gross margin in excess of site level operating expenses for 2015 increase d by $ 8,425 , or 95.4 % , from 2014 , due to locations acquired in 2015 and a $ 3,550 , or 40.2 % , increase on a same site basis . on a same site basis , site level gross margin in excess of site level operating expenses increase d for 2015 as compared to 2014 , due to an increase in nonfuel gross margin due to a favorable change in the mix or products and services sold , an increase in fuel gross margin primarily resulting from our continued focus on adjusting our fuel sales pricing to manage fuel sales volume and profitability , partially offset by an increase in site level operating expenses . 48 liquidity and capital resources our principal liquidity requirements are to meet our operating and financing costs and to fund our capital expenditures , acquisitions and working capital requirements . our principal sources of liquidity to meet these requirements are our : cash balance ; operating cash flow ; our credit facility , with a current maximum availability of $ 200,000 , or our credit facility , subject to limits based on our qualified collateral ; sales to hpt of improvements we make to the sites we lease from hpt and the development site to be sold to hpt under the transaction agreement ; potential issuances of new debt and equity securities ; and potential financing or selling of unencumbered real estate that we own . we believe that the primary risks we currently face with respect to our operating cash flow are : continuing decreased demand for our fuel products resulting from regulatory and market efforts for improved engine fuel efficiency and fuel conservation generally ; decreased demand for our products and services that we may experience as a result of competition ; a significant portion of our expenses are fixed in nature , which may restrict our ability to realize a sufficient reduction in our expenses to offset a reduction in our revenues ; the possible inability of recently acquired or developed properties to generate the stabilized financial results we expect ; the risk of an economic slowdown or recession ; and the negative impacts on our gross margins and working capital requirements if there were a return to the higher level of prices for petroleum products we experienced during the first half of 2014 and in prior years ,
| liquidity sources we had approximately $ 78.9 million of cash and cash equivalents at december 31 , 2017 . our principal source of operating cash flow is related to leasing and operating the properties in our portfolio . our properties provide a relatively consistent stream of cash flow that provides us with resources to pay operating expenses , debt service and fund quarterly dividend and distribution requirements . our ability to access the equity capital markets will be dependent on a number of factors as well , including general market conditions for reits and market perceptions about us . we have an atm program that allows us to sell up to $ 125.0 million of common stock , $ 20.1 million of which has been sold through december 31 , 2017 . any future sales will depend on several factors , including , but not limited to , market conditions , the trading price of our common stock and our capital needs . we have no obligation to sell the remaining shares available for sale under this program . as of december 31 , 2017 , we had total borrowing capacity of $ 400.0 million under our unsecured revolving credit facility , $ 100.0 million of which had been drawn . our ability to incur additional debt will be dependent on a number of factors , including our degree of leverage , the value of our unencumbered assets and borrowing restrictions that may be imposed by lenders . if we incur additional debt , the risks associated with our leverage , including our ability to service our debt , would increase . based on the closing price of our common stock of $ 34.25 as of december 31 , 2017 , our ratio of debt to total market capitalization was approximately 31.2 % ( counting series a preferred units as debt ) as of december 31 , 2017 .
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these decreases were partially offset by an increase in nonfuel gross margin in excess of site level operating expenses generated by our locations . as described under the heading `` other disputes `` in note 13 to the notes to consolidated financial statements included in item 15 of this annual report , comdata has purported to terminate its merchant agreement with us and , beginning february 1 , 2017 , unilaterally increased the fees it withholds from the transaction settlement payments due to us . we believe that comdata has wrongfully terminated our agreement and raised the fees we pay comdata , and we are pursuing litigation against comdata . however , if we do not prevail in our pending litigation against comdata , we may not be able to recover the increased fees comdata charges us through higher prices to customers , and our operating expenses may increase . 38 factors affecting comparability transaction agreement with hpt on june 1 , 2015 , we entered a transaction agreement with hpt , which we and hpt amended on june 22 , 2016. we refer to this amended transaction agreement as the transaction agreement . under the transaction agreement , among other things , we agreed to sell to hpt 16 existing travel centers we owned and certain assets at 11 properties currently leased from hpt , plus four additional travel centers upon our completion of their development , and hpt agreed to lease back these properties and assets to us under the hpt leases . we also agreed to purchase from hpt five travel centers we previously leased from hpt . during the year ended december 31 , 2015 , we sold 14 travel centers and certain assets at 11 properties currently leased from hpt for an aggregate of $ 279,383 and purchased five travel centers from hpt for $ 45,042 . the resulting net increase of our minimum annual rent under our ta leases was $ 20,153. on march 31 , 2016 , we sold one of the development properties to hpt for $ 19,683 , and our minimum annual rent due to hpt increased by $ 1,673 . on june 22 , 2016 , we sold two existing travel centers for an aggregate of $ 23,876 , and our minimum annual rent due to hpt increased by $ 2,029 . on june 30 , 2016 , we sold one of the development properties to hpt for $ 22,297 , and our minimum annual rent due to hpt increased by $ 1,895 . on september 30 , 2016 , we sold one of the development properties to hpt for $ 16,557 , and our minimum annual rent due to hpt increased by $ 1,407 . see notes 7 and 12 to the notes to consolidated financial statements included in item 15 of this annual report for more information about our transaction agreement with hpt . acquired and developed sites since the beginning of 2011 , when we began our acquisition program , to december 31 , 2016 , we have invested $ 855,003 to develop , purchase and improve 318 travel centers , convenience stores and standalone restaurants . for the year ended december 31 , 2016 , these investments produced site level gross margin in excess of site level operating expenses of $ 99,957 , or , on a sequential basis , $ 8,253 , or 9.0 % , greater than site level gross margin in excess of site level operating expenses for the twelve months ended september 30 , 2016. we believe that our investments require a period after they are developed or acquired and upgrades are completed to reach their expected stabilized financial results , generally three years for travel centers and one year for convenience stores . we acquired or developed 39 travel centers during the 2011 to 2016 period . of those , 36 are included in the `` travel centers segment same site operating data `` for the years ended december 31 , 2016 and 2015. as of december 31 , 2016 , we have invested $ 312,139 ( including improvements ) in these 36 locations , and they generated $ 54,271 of gross margin in excess of site level operating expenses during the year ended december 31 , 2016 . the remaining three locations were developed by us for a total investment of $ 64,862 ; and they generated $ 3,526 of gross margin in excess of site level operating expenses during the year ended december 31 , 2016 ; however , we have operated these locations for less than the full year 2016 ( one opened in each of january , march and may ) . we acquired 228 convenience stores during the 2013 to 2016 period . of these , 31 are included in the `` convenience store segment same site operating data `` for the years ended december 31 , 2016 and 2015. as of december 31 , 2016 , we have invested $ 66,491 ( including improvements ) in these 31 locations , and they generated $ 11,608 of gross margin in excess of site level operating expenses during the year ended december 31 , 2016 . the remaining 197 locations were acquired by us in 2015 or 2016 for a total investment of $ 376,854 ( including improvements ) , and these convenience stores generated $ 23,237 of gross margin in excess of site level operating expenses during the year ended december 31 , 2016 . the 29 convenience stores we acquired during 2016 were operated by us for an average of nine months during 2016 and some of these were fully or partially out of service while being renovated . story_separator_special_tag replace_table_token_14_th 46 the following table presents our same site operating results for our convenience store segment for the year ended december 31 , 2016 , as compared to the year ended december 31 , 2015 , and for the year ended december 31 , 2015 , as compared to the year ended december 31 , 2014 . replace_table_token_15_th year ended december 31 , 2016 , as compared to december 31 , 2015 revenues . fuel revenues for 2016 increase d by $ 195,853 , or 87.1 % , as compared to 2015 . the table below shows the changes in total fuel revenues for our convenience store segment based on price and volume changes between periods . replace_table_token_16_th the increase in fuel revenues in our convenience store segment was due to sales volume at acquired locations , partially offset by decreases in market prices for fuel and a decrease in fuel sales volume on a same site basis . on a same site basis , fuel sales volume for 2016 decrease d by 632 gallons , or 1.5 % , as compared to 2015 . the decrease in same site fuel sales volume was primarily due to our adjusting fuel sales pricing to manage fuel sales volume and profitability and the effects of competition . nonfuel revenues for 2016 increase d by $ 139,655 , or 90.0 % , as compared to 2015 . the increase in nonfuel revenues was primarily due to acquired locations . on a same site basis , nonfuel revenues increase d modestly as operations at acquired sites continue to stabilize . site level gross margin in excess of site level operating expenses . site level gross margin in excess of site level operating expenses for 2016 increase d by $ 19,401 , or 112.4 % , as compared to 2015 , primarily due to acquired locations . 47 on a same site basis , site level gross margin in excess of site level operating expenses for 2016 increase d as compared to 2015 due to an increase in nonfuel gross margin due to a favorable change in the mix of products and services sold and an increase in fuel gross margin primarily resulting from our continued focus on adjusting our fuel sales pricing to manage profitability . year ended december 31 , 2015 , as compared to december 31 , 2014 revenues . fuel revenues for 2015 increase d by $ 111,673 , or 98.6 % as compared to 2014 . the table below shows the changes in total fuel revenues for our convenience store segment based on price and volume changes between periods . replace_table_token_17_th the increase in fuel revenues at our convenience store segment reflected increases in sales volume from both sites we acquired during 2015 and same sites , partially offset by decreases in market prices for fuel . on a same site basis , fuel sales volume for 2015 increase d by 1,642 gallons , or 4.1 % , from 2014 . nonfuel revenues for 2015 increase d by $ 78,563 , or 102.5 % , from 2014 . the increase in nonfuel revenues was primarily due to the sites we acquired during 2015 . on a same site basis , nonfuel revenues increase d by $ 3,023 , or 3.9 % , for 2015 , as compared to 2014 , primarily due to the favorable effects of certain of our marketing initiatives . site level gross margin in excess of site level operating expenses . site level gross margin in excess of site level operating expenses for 2015 increase d by $ 8,425 , or 95.4 % , from 2014 , due to locations acquired in 2015 and a $ 3,550 , or 40.2 % , increase on a same site basis . on a same site basis , site level gross margin in excess of site level operating expenses increase d for 2015 as compared to 2014 , due to an increase in nonfuel gross margin due to a favorable change in the mix or products and services sold , an increase in fuel gross margin primarily resulting from our continued focus on adjusting our fuel sales pricing to manage fuel sales volume and profitability , partially offset by an increase in site level operating expenses . 48 liquidity and capital resources our principal liquidity requirements are to meet our operating and financing costs and to fund our capital expenditures , acquisitions and working capital requirements . our principal sources of liquidity to meet these requirements are our : cash balance ; operating cash flow ; our credit facility , with a current maximum availability of $ 200,000 , or our credit facility , subject to limits based on our qualified collateral ; sales to hpt of improvements we make to the sites we lease from hpt and the development site to be sold to hpt under the transaction agreement ; potential issuances of new debt and equity securities ; and potential financing or selling of unencumbered real estate that we own . we believe that the primary risks we currently face with respect to our operating cash flow are : continuing decreased demand for our fuel products resulting from regulatory and market efforts for improved engine fuel efficiency and fuel conservation generally ; decreased demand for our products and services that we may experience as a result of competition ; a significant portion of our expenses are fixed in nature , which may restrict our ability to realize a sufficient reduction in our expenses to offset a reduction in our revenues ; the possible inability of recently acquired or developed properties to generate the stabilized financial results we expect ; the risk of an economic slowdown or recession ; and the negative impacts on our gross margins and working capital requirements if there were a return to the higher level of prices for petroleum products we experienced during the first half of 2014 and in prior years ,
| cash flow from operating activities in 2016 , we had net cash inflows from operating activities of $ 110,777 , a decrease of $ 26,111 compared to $ 136,888 in 2015 . the decrease was primarily due a decrease in cash from the net income attributable to common shareholders in 2015 to net loss attributable to common shareholders in 2016 , partially offset by lower working capital in 2016 as compared to 2015 . in 2015 , we had net cash inflows from operating activities of $ 136,888 , a decrease of $ 24,237 compared to $ 161,125 in 2014 . the decrease was primarily due to lower net income partially offset by lower net working capital in 2015 as compared to 2014 . 50 cash flow from investing activities in 2016 , we had cash outflows from investing activities of $ 220,038 , a decrease of $ 17,439 compared to $ 237,477 in 2015 . the decrease was primarily due to a reduction in our acquisition activities , partially offset by lower proceeds from asset sales to hpt and higher capital expenditures in 2016 than in 2015. in 2016 , we invested $ 71,935 for the acquisition of 29 convenience stores , 11 standalone restaurants and franchise agreements for an additional 39 standalone restaurants and invested $ 329,997 for other capital improvements to our properties . in 2016 , we received $ 193,082 of proceeds from the sales of five properties and assets to hpt , including improvements to properties we lease from hpt . in 2015 , we had cash outflows from investing activities of $ 237,477 , an increase of $ 103,059 compared to $ 134,418 in 2014 . the increase was primarily due to capital expenditures and cash invested for acquisitions , partially offset by proceeds from the sale of assets to hpt . in 2015 , we invested $ 320,290 for the acquisition of three travel centers and 169 convenience stores , and we made investments of $ 295,437 for other capital improvements to our properties .
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our tommy bahama and lilly pulitzer e-commerce flash clearance sales on our websites , as well as our 41 tommy bahama outlet stores , play an important role in overall brand and inventory management by allowing us to sell discontinued and out-of-season products in brand appropriate settings and at better prices than are typically available from third parties . the wholesale operations of our lifestyle brands complement our direct to consumer operations and provide access to a larger group of consumers . as we seek to maintain the integrity of our lifestyle brands by limiting promotional activity in our full-price retail stores and e-commerce websites , we generally target select wholesale customers that follow this same approach in their stores . our wholesale customers for our tommy bahama and lilly pulitzer brands include better department stores and specialty stores . within our lanier apparel operating group , we sell tailored clothing and sportswear products under licensed brands , private label products and owned brands to department stores , national chains , warehouse clubs , discount retailers , specialty retailers and others throughout the united states . all of our operating groups operate in highly competitive apparel markets in which numerous u.s.-based and foreign apparel firms compete . no single apparel firm or small group of apparel firms dominates the apparel industry and our direct competitors vary by operating group and distribution channel . we believe that the principal competitive factors in the apparel industry are the reputation , value and image of brand names ; design ; consumer preference ; price ; quality ; marketing ; and customer service . the apparel industry is cyclical and very dependent upon the overall level of discretionary consumer spending , which changes as regional , domestic and international economic conditions change . often , negative economic conditions have a longer and more severe impact on the apparel industry than these conditions may have on other industries . we believe the global economic conditions and resulting economic uncertainty that have prevailed in recent years continue to impact our 36 business , and the apparel industry as a whole . although some signs of economic improvements exist , the apparel retail environment remains increasingly more promotional . additionally , the apparel retail market is evolving as a result of shifting shopping patterns and technological advances , with e-commerce playing an increasingly important role and bricks and mortar retail stores playing a different role in consumers ' journey to their ultimate purchase . the industry is also being impacted by the coming of age of the millenial generation whose values and approach to the marketplace are so different from past generations . we believe that our lifestyle brands are ideally suited to succeed and thrive in the long-term while managing the various challenges facing our industry . we believe that our tommy bahama and lilly pulitzer lifestyle brands have significant opportunities for long-term growth in their direct to consumer businesses through expansion of bricks and mortar retail store operations , as we add additional retail store locations and attempt to increase comparable retail store sales , and higher sales in our e-commerce operations , which are likely to grow at a faster rate than comparable bricks and mortar retail store sales . we also believe that these lifestyle brands provide an opportunity for moderate sales increases in their wholesale businesses in the long-term primarily from current customers adding to their existing door count and the selective addition of new wholesale customers who generally follow a full-price retail model . we also believe that there are opportunities for modest sales growth for lanier apparel in the future through new product programs for existing and new customers . we believe that we must continue to invest in our tommy bahama and lilly pulitzer lifestyle brands in order to take advantage of their long-term growth opportunities . investments include capital expenditures primarily related to the direct to consumer operations such as retail store and restaurant build-out and remodels , e-commerce initiatives , technology enhancements and distribution center and administrative office expansion initiatives . additionally , we anticipate increased employment , advertising and other costs in key functions to support the ongoing business operations and fuel future sales growth . we continue to believe that it is important to maintain a strong balance sheet and liquidity . we believe that positive cash flow from operations in the future coupled with the strength of our balance sheet and liquidity will provide us with sufficient resources to fund future investments in our owned lifestyle brands . while we believe that we have significant opportunities to appropriately deploy our capital and resources in our existing lifestyle brands , in the future , we may also add additional lifestyle brands to our portfolio if we identify appropriate targets which meet our investment criteria . the following table sets forth our consolidated operating results from continuing operations ( in thousands , except per share amounts ) for fiscal 2015 compared to fiscal 2014 : replace_table_token_14_th the higher net earnings from continuing operations in fiscal 2015 primarily resulted from ( 1 ) higher operating income in lilly pulitzer reflecting higher net sales and gross margins partially offset by higher sg & a associated with expanding operations , ( 2 ) a lower operating loss in corporate and other reflecting a lower lifo accounting charge , ( 3 ) lower interest expense and ( 4 ) lower effective tax rate . these favorable items were partially offset by ( 1 ) lower operating income in tommy bahama reflecting higher sg & a associated with the expanding operations and lower gross margin , partially offset by the impact of higher net sales and ( 2 ) lower operating income in lanier apparel reflecting the impact of lower sales partially offset by a higher gross margin . discontinued operations discontinued operations include the assets and operations of our former ben sherman operating group which we sold in july 2015. story_separator_special_tag 42 tommy bahama : replace_table_token_24_th the lower operating income for tommy bahama was primarily due to the higher sg & a and lower gross margin partially offset by higher sales . the higher sg & a reflects ( 1 ) $ 15.1 million of incremental sg & a associated with the cost of operating additional retail stores and restaurants , including pre-opening rent and set-up costs associated with new stores and restaurants , ( 2 ) $ 2.7 million of increased occupancy costs associated with duplicate rent expense , moving costs and higher rent structure related to the relocation of tommy bahama 's office in seattle , washington during the third quarter of fiscal 2015 and ( 3 ) higher costs to support the growing tommy bahama business . these higher sg & a amounts were partially offset by reductions in other sg & a accounts , including incentive compensation . the operating loss for the tommy bahama waikiki retail-restaurant location prior to opening in late october 2015 was $ 2.1 million , with the substantial majority of this loss consisting of pre-opening rent and set-up costs , which are included in the incremental sg & a amount associated with new locations above . fiscal 2015 included an operating loss of $ 8.3 million related to our tommy bahama asia-pacific expansion compared to an operating loss of $ 10.3 million in fiscal 2014. lilly pulitzer : replace_table_token_25_th the increase in operating income in lilly pulitzer was primarily due to the higher net sales and gross margin . these items were partially offset by increased sg & a . the increased sg & a was primarily associated with ( 1 ) higher costs to support the growing business , reflecting increased infrastructure costs and advertising expense , ( 2 ) $ 4.8 million of incremental sg & a associated with the cost of operating additional retail stores and ( 3 ) $ 1.0 million of higher incentive compensation . lanier apparel : replace_table_token_26_th the lower operating income for lanier apparel was primarily due to the reduction in net sales partially offset by higher gross margin and lower sg & a . the lower sg & a primarily reflects decreases in certain variable and other expenses including royalty , advertising and distribution expenses . corporate and other : 43 replace_table_token_27_th the improved operating results in corporate and other were primarily due to the lower lifo accounting charge in fiscal 2015 and a $ 0.9 million gain on sale of real estate , which were partially offset by higher incentive compensation amounts . interest expense , net fiscal 2015 fiscal 2014 $ change % change interest expense , net $ 2,458 $ 3,236 $ ( 778 ) ( 24.0 ) % interest expense for fiscal 2015 decreased from the prior year primarily due to lower average debt outstanding , particularly in second half of fiscal 2015 , and lower borrowing rates during fiscal 2015 . the lower average debt outstanding in the second half of fiscal 2015 was primarily a result of the use of proceeds from the july 2015 sale of ben sherman for debt repayment . income taxes replace_table_token_28_th income tax expense for fiscal 2015 increased , reflecting higher earnings partially offset by a lower effective tax rate . the lower effective tax rate in fiscal 2015 compared to fiscal 2014 primarily resulted from improved operating results in our hong-kong based sourcing and tommy bahama asia-pacific retail operations . our effective tax rate for fiscal 2016 is estimated to be approximately 37.5 % reflecting our expectation that our operating results in our sourcing operations and tommy bahama asia-pacific retail operations will continue to improve . net earnings from continuing operations replace_table_token_29_th the higher net earnings in fiscal 2015 primarily resulted from ( 1 ) higher operating income in lilly pulitzer , ( 2 ) a lower operating loss in corporate and other , ( 3 ) lower interest expense and ( 4 ) lower effective tax rate . these favorable items were partially offset by ( 1 ) lower operating income in tommy bahama and ( 2 ) lower operating income in lanier apparel . discontinued operations net loss from discontinued operations , net of taxes was $ 28.0 million in fiscal 2015 compared to a net loss from discontinued operations , net of taxes of $ 8.0 million in fiscal 2014 with the larger net loss primarily due to the $ 20.5 million loss on sale of the ben sherman operations , which was completed in the second quarter of fiscal 2015. we do not anticipate significant operations or earnings related to the discontinued operations in future periods , with cash flow attributable to discontinued operations in future periods primarily limited to the post-closing purchase price adjustments paid in the first quarter of fiscal 2016 and amounts associated with certain lease obligations related to the ben sherman business which we retained in connection with the transaction . fiscal 2014 compared to fiscal 2013 the discussion and tables below compare certain line items included in our consolidated statements of operations for fiscal 2014 to fiscal 2013. each dollar and percentage change provided reflects the change between these periods unless 44 indicated otherwise . each dollar and share amount included in the tables is in thousands except for per share amounts . individual line items of our consolidated statements of operations may not be directly comparable to those of our competitors , as classification of certain expenses may vary by company . net sales replace_table_token_30_th consolidated net sales increased 8.3 % reflecting the net sales increases in tommy bahama and lilly pulitzer , as discussed below . further , as direct to consumer sales grew at a faster rate than wholesale sales , net sales in the direct to consumer channel of distribution represented a greater percentage of consolidated net sales during fiscal 2014 as presented below : replace_table_token_31_th tommy bahama : the tommy bahama net sales increase of 7.3 % was
| cash flow from operating activities in 2016 , we had net cash inflows from operating activities of $ 110,777 , a decrease of $ 26,111 compared to $ 136,888 in 2015 . the decrease was primarily due a decrease in cash from the net income attributable to common shareholders in 2015 to net loss attributable to common shareholders in 2016 , partially offset by lower working capital in 2016 as compared to 2015 . in 2015 , we had net cash inflows from operating activities of $ 136,888 , a decrease of $ 24,237 compared to $ 161,125 in 2014 . the decrease was primarily due to lower net income partially offset by lower net working capital in 2015 as compared to 2014 . 50 cash flow from investing activities in 2016 , we had cash outflows from investing activities of $ 220,038 , a decrease of $ 17,439 compared to $ 237,477 in 2015 . the decrease was primarily due to a reduction in our acquisition activities , partially offset by lower proceeds from asset sales to hpt and higher capital expenditures in 2016 than in 2015. in 2016 , we invested $ 71,935 for the acquisition of 29 convenience stores , 11 standalone restaurants and franchise agreements for an additional 39 standalone restaurants and invested $ 329,997 for other capital improvements to our properties . in 2016 , we received $ 193,082 of proceeds from the sales of five properties and assets to hpt , including improvements to properties we lease from hpt . in 2015 , we had cash outflows from investing activities of $ 237,477 , an increase of $ 103,059 compared to $ 134,418 in 2014 . the increase was primarily due to capital expenditures and cash invested for acquisitions , partially offset by proceeds from the sale of assets to hpt . in 2015 , we invested $ 320,290 for the acquisition of three travel centers and 169 convenience stores , and we made investments of $ 295,437 for other capital improvements to our properties .
| 0 |
our tommy bahama and lilly pulitzer e-commerce flash clearance sales on our websites , as well as our 41 tommy bahama outlet stores , play an important role in overall brand and inventory management by allowing us to sell discontinued and out-of-season products in brand appropriate settings and at better prices than are typically available from third parties . the wholesale operations of our lifestyle brands complement our direct to consumer operations and provide access to a larger group of consumers . as we seek to maintain the integrity of our lifestyle brands by limiting promotional activity in our full-price retail stores and e-commerce websites , we generally target select wholesale customers that follow this same approach in their stores . our wholesale customers for our tommy bahama and lilly pulitzer brands include better department stores and specialty stores . within our lanier apparel operating group , we sell tailored clothing and sportswear products under licensed brands , private label products and owned brands to department stores , national chains , warehouse clubs , discount retailers , specialty retailers and others throughout the united states . all of our operating groups operate in highly competitive apparel markets in which numerous u.s.-based and foreign apparel firms compete . no single apparel firm or small group of apparel firms dominates the apparel industry and our direct competitors vary by operating group and distribution channel . we believe that the principal competitive factors in the apparel industry are the reputation , value and image of brand names ; design ; consumer preference ; price ; quality ; marketing ; and customer service . the apparel industry is cyclical and very dependent upon the overall level of discretionary consumer spending , which changes as regional , domestic and international economic conditions change . often , negative economic conditions have a longer and more severe impact on the apparel industry than these conditions may have on other industries . we believe the global economic conditions and resulting economic uncertainty that have prevailed in recent years continue to impact our 36 business , and the apparel industry as a whole . although some signs of economic improvements exist , the apparel retail environment remains increasingly more promotional . additionally , the apparel retail market is evolving as a result of shifting shopping patterns and technological advances , with e-commerce playing an increasingly important role and bricks and mortar retail stores playing a different role in consumers ' journey to their ultimate purchase . the industry is also being impacted by the coming of age of the millenial generation whose values and approach to the marketplace are so different from past generations . we believe that our lifestyle brands are ideally suited to succeed and thrive in the long-term while managing the various challenges facing our industry . we believe that our tommy bahama and lilly pulitzer lifestyle brands have significant opportunities for long-term growth in their direct to consumer businesses through expansion of bricks and mortar retail store operations , as we add additional retail store locations and attempt to increase comparable retail store sales , and higher sales in our e-commerce operations , which are likely to grow at a faster rate than comparable bricks and mortar retail store sales . we also believe that these lifestyle brands provide an opportunity for moderate sales increases in their wholesale businesses in the long-term primarily from current customers adding to their existing door count and the selective addition of new wholesale customers who generally follow a full-price retail model . we also believe that there are opportunities for modest sales growth for lanier apparel in the future through new product programs for existing and new customers . we believe that we must continue to invest in our tommy bahama and lilly pulitzer lifestyle brands in order to take advantage of their long-term growth opportunities . investments include capital expenditures primarily related to the direct to consumer operations such as retail store and restaurant build-out and remodels , e-commerce initiatives , technology enhancements and distribution center and administrative office expansion initiatives . additionally , we anticipate increased employment , advertising and other costs in key functions to support the ongoing business operations and fuel future sales growth . we continue to believe that it is important to maintain a strong balance sheet and liquidity . we believe that positive cash flow from operations in the future coupled with the strength of our balance sheet and liquidity will provide us with sufficient resources to fund future investments in our owned lifestyle brands . while we believe that we have significant opportunities to appropriately deploy our capital and resources in our existing lifestyle brands , in the future , we may also add additional lifestyle brands to our portfolio if we identify appropriate targets which meet our investment criteria . the following table sets forth our consolidated operating results from continuing operations ( in thousands , except per share amounts ) for fiscal 2015 compared to fiscal 2014 : replace_table_token_14_th the higher net earnings from continuing operations in fiscal 2015 primarily resulted from ( 1 ) higher operating income in lilly pulitzer reflecting higher net sales and gross margins partially offset by higher sg & a associated with expanding operations , ( 2 ) a lower operating loss in corporate and other reflecting a lower lifo accounting charge , ( 3 ) lower interest expense and ( 4 ) lower effective tax rate . these favorable items were partially offset by ( 1 ) lower operating income in tommy bahama reflecting higher sg & a associated with the expanding operations and lower gross margin , partially offset by the impact of higher net sales and ( 2 ) lower operating income in lanier apparel reflecting the impact of lower sales partially offset by a higher gross margin . discontinued operations discontinued operations include the assets and operations of our former ben sherman operating group which we sold in july 2015. story_separator_special_tag 42 tommy bahama : replace_table_token_24_th the lower operating income for tommy bahama was primarily due to the higher sg & a and lower gross margin partially offset by higher sales . the higher sg & a reflects ( 1 ) $ 15.1 million of incremental sg & a associated with the cost of operating additional retail stores and restaurants , including pre-opening rent and set-up costs associated with new stores and restaurants , ( 2 ) $ 2.7 million of increased occupancy costs associated with duplicate rent expense , moving costs and higher rent structure related to the relocation of tommy bahama 's office in seattle , washington during the third quarter of fiscal 2015 and ( 3 ) higher costs to support the growing tommy bahama business . these higher sg & a amounts were partially offset by reductions in other sg & a accounts , including incentive compensation . the operating loss for the tommy bahama waikiki retail-restaurant location prior to opening in late october 2015 was $ 2.1 million , with the substantial majority of this loss consisting of pre-opening rent and set-up costs , which are included in the incremental sg & a amount associated with new locations above . fiscal 2015 included an operating loss of $ 8.3 million related to our tommy bahama asia-pacific expansion compared to an operating loss of $ 10.3 million in fiscal 2014. lilly pulitzer : replace_table_token_25_th the increase in operating income in lilly pulitzer was primarily due to the higher net sales and gross margin . these items were partially offset by increased sg & a . the increased sg & a was primarily associated with ( 1 ) higher costs to support the growing business , reflecting increased infrastructure costs and advertising expense , ( 2 ) $ 4.8 million of incremental sg & a associated with the cost of operating additional retail stores and ( 3 ) $ 1.0 million of higher incentive compensation . lanier apparel : replace_table_token_26_th the lower operating income for lanier apparel was primarily due to the reduction in net sales partially offset by higher gross margin and lower sg & a . the lower sg & a primarily reflects decreases in certain variable and other expenses including royalty , advertising and distribution expenses . corporate and other : 43 replace_table_token_27_th the improved operating results in corporate and other were primarily due to the lower lifo accounting charge in fiscal 2015 and a $ 0.9 million gain on sale of real estate , which were partially offset by higher incentive compensation amounts . interest expense , net fiscal 2015 fiscal 2014 $ change % change interest expense , net $ 2,458 $ 3,236 $ ( 778 ) ( 24.0 ) % interest expense for fiscal 2015 decreased from the prior year primarily due to lower average debt outstanding , particularly in second half of fiscal 2015 , and lower borrowing rates during fiscal 2015 . the lower average debt outstanding in the second half of fiscal 2015 was primarily a result of the use of proceeds from the july 2015 sale of ben sherman for debt repayment . income taxes replace_table_token_28_th income tax expense for fiscal 2015 increased , reflecting higher earnings partially offset by a lower effective tax rate . the lower effective tax rate in fiscal 2015 compared to fiscal 2014 primarily resulted from improved operating results in our hong-kong based sourcing and tommy bahama asia-pacific retail operations . our effective tax rate for fiscal 2016 is estimated to be approximately 37.5 % reflecting our expectation that our operating results in our sourcing operations and tommy bahama asia-pacific retail operations will continue to improve . net earnings from continuing operations replace_table_token_29_th the higher net earnings in fiscal 2015 primarily resulted from ( 1 ) higher operating income in lilly pulitzer , ( 2 ) a lower operating loss in corporate and other , ( 3 ) lower interest expense and ( 4 ) lower effective tax rate . these favorable items were partially offset by ( 1 ) lower operating income in tommy bahama and ( 2 ) lower operating income in lanier apparel . discontinued operations net loss from discontinued operations , net of taxes was $ 28.0 million in fiscal 2015 compared to a net loss from discontinued operations , net of taxes of $ 8.0 million in fiscal 2014 with the larger net loss primarily due to the $ 20.5 million loss on sale of the ben sherman operations , which was completed in the second quarter of fiscal 2015. we do not anticipate significant operations or earnings related to the discontinued operations in future periods , with cash flow attributable to discontinued operations in future periods primarily limited to the post-closing purchase price adjustments paid in the first quarter of fiscal 2016 and amounts associated with certain lease obligations related to the ben sherman business which we retained in connection with the transaction . fiscal 2014 compared to fiscal 2013 the discussion and tables below compare certain line items included in our consolidated statements of operations for fiscal 2014 to fiscal 2013. each dollar and percentage change provided reflects the change between these periods unless 44 indicated otherwise . each dollar and share amount included in the tables is in thousands except for per share amounts . individual line items of our consolidated statements of operations may not be directly comparable to those of our competitors , as classification of certain expenses may vary by company . net sales replace_table_token_30_th consolidated net sales increased 8.3 % reflecting the net sales increases in tommy bahama and lilly pulitzer , as discussed below . further , as direct to consumer sales grew at a faster rate than wholesale sales , net sales in the direct to consumer channel of distribution represented a greater percentage of consolidated net sales during fiscal 2014 as presented below : replace_table_token_31_th tommy bahama : the tommy bahama net sales increase of 7.3 % was
| cash and cash equivalents as of january 30 , 2016 and january 31 , 2015 include typical cash amounts maintained on an ongoing basis in our operations , which generally ranges from $ 5 million to $ 10 million at any given time . any excess cash generally is used to repay amounts outstanding under our revolving credit agreement . the decrease in receivables , net as of january 30 , 2016 was primarily a result of lower wholesale sales in the last two months of fiscal 2015 as compared to the last two months of fiscal 2014 . inventories , net as of january 30 , 2016 increased from january 31 , 2015 primarily as a result of an increase in tommy bahama and lilly pulitzer inventories partially offset by lower inventories in lanier apparel . we believe that inventory levels in each operating group are appropriate to support anticipated sales levels for the first quarter of fiscal 2016. prepaid expenses increased at january 30 , 2016 primarily as a result of the growth in our business and the timing of payment and recognition of the related expenses for certain prepaid items including maintenance and other service contracts , rent , and advertising as well as an increase in prepaid taxes . the decrease in assets related to discontinued operations , net reflects our disposition of the ben sherman operations in the second quarter of fiscal 2015 .
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only 56 % of total revenue ( excluding reimbursed management type contract revenue ) for the year ended december 31 , 2019 , however , was from management type contracts because , under those contracts , the revenue collected from customers belongs to our clients . therefore , gross profit and total general and administrative expense , rather than revenue , are management 's primary focus . we believe that sophisticated clients ( which also include property owners ) recognize the potential for parking services , parking management , ground transportation services , baggage handling services and other ancillary services to be a profit generator and or a service differentiator to their customers . by outsourcing these services , they are able to capture additional profit and customer experience by leveraging the unique operational skills and controls that an experienced services company can offer . our ability to consistently deliver a uniformly high level of services to our clients , including the use of various technological enhancements , allows us to maximize the profit and or customer experience to our clients and improves our ability to win contracts and retain existing clients . our focus on customer service and satisfaction is a key driver of our high retention rate , which was approximately 93 % and 88 % for the years ended december 31 , 2019 and 2018 , respectively . this retention rate captures facilities for the commercial segment . commercial segment facilities the following table reflects our commercial facilities ( by contractual type ) operated at the end of the years indicated : replace_table_token_3_th ( 1 ) includes partial ownership in one leased facility for 2019 , 2018 and 2017 . 21 revenue we recognize services revenue from lease and management type contracts as the related services are provided . substantially all of our revenue comes from the following two sources : lease type contracts . consists of all revenue received at lease type locations , including gross receipts ( net of local taxes ) , consulting and real estate development fees , gains on sales of contracts and payments for exercising termination rights . revenue from lease type contracts includes a reduction of services revenue - lease type contracts due to the adoption of topic 853 , which requires rental expense for the periods after january 1 , 2018 be presented as a reduction of services revenue - lease type contracts for that business ( and corresponding contracts ) that meet the criteria and definition of a service concession arrangement . management type contracts . consists of management fees , including fixed , variable and or performance-based fees , and amounts attributable to ancillary services such as accounting , equipment leasing , baggage services , payments received for exercising termination rights , consulting , developmental fees , gains on sales of contracts , insurance and other value-added services with respect to managed type contracts . we believe we generally purchase required insurance at lower rates than our clients can obtain on their own because we effectively self-insure for all liability and worker 's compensation and health care claims by maintaining a large per-claim deductible . as a result , we have generated operating income on the insurance provided under our management type contracts by focusing on our risk management efforts and controlling losses . management type contract revenues do not include gross customer collections at managed type contracts as these revenues belong to the client rather than to us . management type contracts generally provide us with a management fee regardless of the operating performance of the underlying management type contract . reimbursed management type contract revenue . c onsists of the direct reimbursement from the client for operating expenses incurred under a management type contract , which are reflected in our revenue . cost of services our cost of services consists of the following : lease type contracts . consists of contractual rents or fees paid to the client and all operating expenses incurred in connection with operating the leased facility . contractual rents or fees paid to the client are generally based on either a fixed contractual amount or a percentage of gross revenue or a combination thereof . generally , under a lease type arrangement we are not responsible for major capital expenditures or real estate taxes . cost of services from lease type contracts includes a reduction of cost of services revenue - lease type contracts due to the adoption of topic 853 , which requires rental expense for the periods after january 1 , 2018 be presented as a reduction of services revenue - lease type contracts ( and corresponding contracts ) that meet the criteria and definition of a service concession arrangement . management type contracts . the cost of services under a management type contract is generally the responsibility of the client . as a result , these costs are not included in our results of operations . however , our reverse management type contracts , which typically provide for larger management fees , do require us to pay for certain costs and those costs are included in our results of operations . reimbursed management type contract expense . c onsists of direct reimbursed costs incurred on behalf of a client under a management type contract , which are reflected in our cost of services . gross profit gross profit equals our revenue less the cost of generating such revenue . this is the key metric we use to examine our performance because it captures the underlying economic benefit to us of both lease and management type contracts . general and administrative expenses general and administrative expenses include salaries , wages , payroll taxes , insurance , travel and office related expenses for our headquarters , field offices , supervisory employees , and board of directors . story_separator_special_tag 2017-10 , service concession arrangements ( topic 853 ) , which requires rental expense to be presented as a reduction of services revenue - lease type contracts versus the comparative period presentation of recording rent expense as an increase to cost of services - lease type contracts for that business ( and corresponding contracts ) meeting the criteria and definition of a service concession arrangement , as discussed in note 5. revenue to the consolidated financial statements included in item 15 . `` exhibits and financial statement schedules `` , partially offset by net increases in short-term parking revenue , monthly parking revenue and transient parking revenue . from a reporting segment perspective , lease type contract revenue decreased primarily due to expired business in commercial , existing business in commercial and aviation , conversions in commercial , and new/acquired business in aviation , partially offset by increases from new/acquired business in commercial and existing business in other . 27 management type contracts management type contract revenue increased $ 13.3 million , or 3.8 % , to $ 361.5 million for the year ended december 31 , 2018 , compared to $ 348.2 million for the prior year . the increase in management type contract revenue resulted primarily from increases of $ 32.1 million from new/acquired business , and $ 4.0 million from existing business , partially offset by a decrease of $ 22.5 million from expired business and $ 0.3 million from business that converted from lease type contracts during the periods presented . existing business revenue increased $ 4.0 million , or 1.5 % , primarily due to change in contract terms for certain management type contracts , whereby the contract terms converted from a management type contract to a `` reverse `` management type contract , which typically has higher management fees from the client but require us to pay certain operating costs associated with the operation , and increased management fees . from a reporting segment perspective , management type contract revenue increased primarily due to increases in new/acquired business for commercial and aviation , existing business for commercial and other , and conversions in aviation , partially offset by decreases in expired business in commercial and aviation , existing business for aviation , and conversions in commercial . reimbursed management type contract revenue reimbursed management type contract revenue increased $ 13.8 million , or 2.0 % , to $ 693.0 million for the year ended december 31 , 2018 , compared to $ 679.2 million in the prior year . the slight increase resulted primarily from an increase in reimbursements for costs incurred on behalf of a client . segment cost of services information is summarized as follows : replace_table_token_8_th ( a ) the year ended december 31 , 2018 new/acquired business in commercial includes a $ 8.9 million reduction of cost of services - lease type contracts due to the adoption of topic 853 , which requires rent expense for the current period be presented as a reduction of services revenue - lease type contracts for that business ( and corresponding contracts ) that meet the criteria and definition of a service concession arrangement . ( b ) the year ended december 31 , 2018 new/acquired business in aviation includes a $ 2.3 million reduction of cost of services - lease type contracts due to the adoption of topic 853 , which requires rent expense for the current period be presented as a reduction of services revenue - lease type contracts for that business ( and corresponding contracts ) that meet the criteria and definition of a service concession arrangement . ( c ) the year ended december 31 , 2018 expired business in commercial includes a $ 0.3 million reduction of cost of services - lease type contracts due to the adoption of topic 853 , which requires rental expense for the current period be presented as a reduction of services revenue - lease type contracts for that business ( and corresponding contracts ) that meet the criteria and definition of a service concession arrangement . ( d ) the year ended december 31 , 2018 existing business in commercial includes a $ 14.9 million reduction of cost of services - lease type contracts due to the adoption of topic 853 , which requires rent expense for the current period be presented as a reduction of services revenue - lease type contracts for that business ( and corresponding contracts ) that meet the criteria and definition of a service concession arrangement . ( e ) the year ended december 31 , 2018 existing business in aviation includes a $ 107.1 million reduction of cost of services - lease type contracts due to the adoption of topic 853 , which requires rent expense for the current period be presented as a reduction of services revenue - lease type contracts for that business ( and corresponding contracts ) that meet the criteria and definition of a service concession arrangement . ( f ) on november 30 , 2018 , we completed the acquisition . the year ended december 31 , 2018 new/acquired business in aviation includes bags cost of services - management type contracts , for the period of november 30 , 2018 through december 31 , 2018. see note 3. acquisition , which is included in part iv , item 15 . `` exhibits and financial statement schedules `` for further discussion of the acquisition . lease type contracts cost of services for lease type contracts decreased $ 140.8 million , or 27.2 % , to $ 377.6 million for the year ended december 31 , 2018 , compared to $ 518.4 million for the prior year . the decrease in cost of services for lease type contracts resulted primarily from decreases of $ 110.1 million from existing business , $ 30.6 million from expired business and $ 5.1 million from business that converted from management type contracts during the periods presented , partially
| cash and cash equivalents as of january 30 , 2016 and january 31 , 2015 include typical cash amounts maintained on an ongoing basis in our operations , which generally ranges from $ 5 million to $ 10 million at any given time . any excess cash generally is used to repay amounts outstanding under our revolving credit agreement . the decrease in receivables , net as of january 30 , 2016 was primarily a result of lower wholesale sales in the last two months of fiscal 2015 as compared to the last two months of fiscal 2014 . inventories , net as of january 30 , 2016 increased from january 31 , 2015 primarily as a result of an increase in tommy bahama and lilly pulitzer inventories partially offset by lower inventories in lanier apparel . we believe that inventory levels in each operating group are appropriate to support anticipated sales levels for the first quarter of fiscal 2016. prepaid expenses increased at january 30 , 2016 primarily as a result of the growth in our business and the timing of payment and recognition of the related expenses for certain prepaid items including maintenance and other service contracts , rent , and advertising as well as an increase in prepaid taxes . the decrease in assets related to discontinued operations , net reflects our disposition of the ben sherman operations in the second quarter of fiscal 2015 .
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only 56 % of total revenue ( excluding reimbursed management type contract revenue ) for the year ended december 31 , 2019 , however , was from management type contracts because , under those contracts , the revenue collected from customers belongs to our clients . therefore , gross profit and total general and administrative expense , rather than revenue , are management 's primary focus . we believe that sophisticated clients ( which also include property owners ) recognize the potential for parking services , parking management , ground transportation services , baggage handling services and other ancillary services to be a profit generator and or a service differentiator to their customers . by outsourcing these services , they are able to capture additional profit and customer experience by leveraging the unique operational skills and controls that an experienced services company can offer . our ability to consistently deliver a uniformly high level of services to our clients , including the use of various technological enhancements , allows us to maximize the profit and or customer experience to our clients and improves our ability to win contracts and retain existing clients . our focus on customer service and satisfaction is a key driver of our high retention rate , which was approximately 93 % and 88 % for the years ended december 31 , 2019 and 2018 , respectively . this retention rate captures facilities for the commercial segment . commercial segment facilities the following table reflects our commercial facilities ( by contractual type ) operated at the end of the years indicated : replace_table_token_3_th ( 1 ) includes partial ownership in one leased facility for 2019 , 2018 and 2017 . 21 revenue we recognize services revenue from lease and management type contracts as the related services are provided . substantially all of our revenue comes from the following two sources : lease type contracts . consists of all revenue received at lease type locations , including gross receipts ( net of local taxes ) , consulting and real estate development fees , gains on sales of contracts and payments for exercising termination rights . revenue from lease type contracts includes a reduction of services revenue - lease type contracts due to the adoption of topic 853 , which requires rental expense for the periods after january 1 , 2018 be presented as a reduction of services revenue - lease type contracts for that business ( and corresponding contracts ) that meet the criteria and definition of a service concession arrangement . management type contracts . consists of management fees , including fixed , variable and or performance-based fees , and amounts attributable to ancillary services such as accounting , equipment leasing , baggage services , payments received for exercising termination rights , consulting , developmental fees , gains on sales of contracts , insurance and other value-added services with respect to managed type contracts . we believe we generally purchase required insurance at lower rates than our clients can obtain on their own because we effectively self-insure for all liability and worker 's compensation and health care claims by maintaining a large per-claim deductible . as a result , we have generated operating income on the insurance provided under our management type contracts by focusing on our risk management efforts and controlling losses . management type contract revenues do not include gross customer collections at managed type contracts as these revenues belong to the client rather than to us . management type contracts generally provide us with a management fee regardless of the operating performance of the underlying management type contract . reimbursed management type contract revenue . c onsists of the direct reimbursement from the client for operating expenses incurred under a management type contract , which are reflected in our revenue . cost of services our cost of services consists of the following : lease type contracts . consists of contractual rents or fees paid to the client and all operating expenses incurred in connection with operating the leased facility . contractual rents or fees paid to the client are generally based on either a fixed contractual amount or a percentage of gross revenue or a combination thereof . generally , under a lease type arrangement we are not responsible for major capital expenditures or real estate taxes . cost of services from lease type contracts includes a reduction of cost of services revenue - lease type contracts due to the adoption of topic 853 , which requires rental expense for the periods after january 1 , 2018 be presented as a reduction of services revenue - lease type contracts ( and corresponding contracts ) that meet the criteria and definition of a service concession arrangement . management type contracts . the cost of services under a management type contract is generally the responsibility of the client . as a result , these costs are not included in our results of operations . however , our reverse management type contracts , which typically provide for larger management fees , do require us to pay for certain costs and those costs are included in our results of operations . reimbursed management type contract expense . c onsists of direct reimbursed costs incurred on behalf of a client under a management type contract , which are reflected in our cost of services . gross profit gross profit equals our revenue less the cost of generating such revenue . this is the key metric we use to examine our performance because it captures the underlying economic benefit to us of both lease and management type contracts . general and administrative expenses general and administrative expenses include salaries , wages , payroll taxes , insurance , travel and office related expenses for our headquarters , field offices , supervisory employees , and board of directors . story_separator_special_tag 2017-10 , service concession arrangements ( topic 853 ) , which requires rental expense to be presented as a reduction of services revenue - lease type contracts versus the comparative period presentation of recording rent expense as an increase to cost of services - lease type contracts for that business ( and corresponding contracts ) meeting the criteria and definition of a service concession arrangement , as discussed in note 5. revenue to the consolidated financial statements included in item 15 . `` exhibits and financial statement schedules `` , partially offset by net increases in short-term parking revenue , monthly parking revenue and transient parking revenue . from a reporting segment perspective , lease type contract revenue decreased primarily due to expired business in commercial , existing business in commercial and aviation , conversions in commercial , and new/acquired business in aviation , partially offset by increases from new/acquired business in commercial and existing business in other . 27 management type contracts management type contract revenue increased $ 13.3 million , or 3.8 % , to $ 361.5 million for the year ended december 31 , 2018 , compared to $ 348.2 million for the prior year . the increase in management type contract revenue resulted primarily from increases of $ 32.1 million from new/acquired business , and $ 4.0 million from existing business , partially offset by a decrease of $ 22.5 million from expired business and $ 0.3 million from business that converted from lease type contracts during the periods presented . existing business revenue increased $ 4.0 million , or 1.5 % , primarily due to change in contract terms for certain management type contracts , whereby the contract terms converted from a management type contract to a `` reverse `` management type contract , which typically has higher management fees from the client but require us to pay certain operating costs associated with the operation , and increased management fees . from a reporting segment perspective , management type contract revenue increased primarily due to increases in new/acquired business for commercial and aviation , existing business for commercial and other , and conversions in aviation , partially offset by decreases in expired business in commercial and aviation , existing business for aviation , and conversions in commercial . reimbursed management type contract revenue reimbursed management type contract revenue increased $ 13.8 million , or 2.0 % , to $ 693.0 million for the year ended december 31 , 2018 , compared to $ 679.2 million in the prior year . the slight increase resulted primarily from an increase in reimbursements for costs incurred on behalf of a client . segment cost of services information is summarized as follows : replace_table_token_8_th ( a ) the year ended december 31 , 2018 new/acquired business in commercial includes a $ 8.9 million reduction of cost of services - lease type contracts due to the adoption of topic 853 , which requires rent expense for the current period be presented as a reduction of services revenue - lease type contracts for that business ( and corresponding contracts ) that meet the criteria and definition of a service concession arrangement . ( b ) the year ended december 31 , 2018 new/acquired business in aviation includes a $ 2.3 million reduction of cost of services - lease type contracts due to the adoption of topic 853 , which requires rent expense for the current period be presented as a reduction of services revenue - lease type contracts for that business ( and corresponding contracts ) that meet the criteria and definition of a service concession arrangement . ( c ) the year ended december 31 , 2018 expired business in commercial includes a $ 0.3 million reduction of cost of services - lease type contracts due to the adoption of topic 853 , which requires rental expense for the current period be presented as a reduction of services revenue - lease type contracts for that business ( and corresponding contracts ) that meet the criteria and definition of a service concession arrangement . ( d ) the year ended december 31 , 2018 existing business in commercial includes a $ 14.9 million reduction of cost of services - lease type contracts due to the adoption of topic 853 , which requires rent expense for the current period be presented as a reduction of services revenue - lease type contracts for that business ( and corresponding contracts ) that meet the criteria and definition of a service concession arrangement . ( e ) the year ended december 31 , 2018 existing business in aviation includes a $ 107.1 million reduction of cost of services - lease type contracts due to the adoption of topic 853 , which requires rent expense for the current period be presented as a reduction of services revenue - lease type contracts for that business ( and corresponding contracts ) that meet the criteria and definition of a service concession arrangement . ( f ) on november 30 , 2018 , we completed the acquisition . the year ended december 31 , 2018 new/acquired business in aviation includes bags cost of services - management type contracts , for the period of november 30 , 2018 through december 31 , 2018. see note 3. acquisition , which is included in part iv , item 15 . `` exhibits and financial statement schedules `` for further discussion of the acquisition . lease type contracts cost of services for lease type contracts decreased $ 140.8 million , or 27.2 % , to $ 377.6 million for the year ended december 31 , 2018 , compared to $ 518.4 million for the prior year . the decrease in cost of services for lease type contracts resulted primarily from decreases of $ 110.1 million from existing business , $ 30.6 million from expired business and $ 5.1 million from business that converted from management type contracts during the periods presented , partially
| cash and cash equivalents we had cash and cash equivalents of $ 24.1 million at december 31 , 2019 , compared to $ 39.9 million at december 31 , 2018 . the cash balances reflect our ability to utilize funds deposited into our local bank accounts . cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements were $ 0.5 million and $ 1.7 million as of december 31 , 2019 and 2018 , respectively , and are included within cash and cash equivalents within the consolidated balance sheets . availability , timing of deposits and the subsequent movement of cash into our corporate bank accounts may result in significant changes to our cash balances . summary of cash flows replace_table_token_11_th operating activities our primary sources of funds are cash flows from operating activities and changes in operating assets and liabilities . net cash provided by operating activities totaled $ 76.0 million for 2019 , compared to $ 70.9 million for 2018 . cash provided during 2019 included $ 91.7 million from operations , partially offset by changes in operating assets and liabilities that resulted in a use of $ 15.7 million .
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ecu netbacks in the first quarter of 2014 are forecast to be lower than the fourth quarter of 2013 as a result of lower caustic soda prices partially offset by higher chlorine prices . chemical distribution segment income was $ 9.7 million in 2013 compared to $ 4.5 million in 2012. chemical distribution segment income was higher than the prior year as a result of the additional period of our ownership . depreciation and amortization expense included in segment income for the years ended december 31 , 2013 and 2012 of $ 15.4 million and $ 5.5 million , respectively , were primarily associated with the acquisition fair valuing of ka steel . as a result of acquiring ka steel in august of 2012 , we anticipate realizing approximately $ 35 million of annual synergies at the end of three years . these synergies include opportunities to sell additional volumes of products we produce such as caustic soda , bleach , hydrochloric acid and potassium hydroxide through ka steel and to optimize freight cost and logistics assets between our chlor alkali products segment and ka steel . winchester segment income was $ 143.2 million in 2013 , which represented the highest level of segment income in at least the last two decades , improved 159 % compared to 2012 segment income of $ 55.2 million . the increase in segment income compared to last year reflects the impact of increased volumes due to the continuation of the stronger than historical demand that began in the fourth quarter of 2012 , improved selling prices and decreased costs , including the impact of decreased costs associated with our new centerfire operation in oxford , ms. 21 other ( expense ) income in 2013 included a gain of $ 6.5 million on the sale of our equity interest in a limited liability company that owns a bleach related chemical manufacturing facility ( bleach joint venture ) . income tax expense for 2013 included $ 11.4 million of favorable adjustments associated with the expiration of the statutes of limitations in federal and state jurisdictions , $ 8.3 million of benefit associated with reductions in valuation allowances on our capital loss carryforwards and $ 1.9 million of benefit associated with the research credit under section 41 of the u.s. internal revenue code ( research credit ) , which were partially offset by $ 1.8 million of expense associated with changes in tax contingencies and $ 1.3 million of expense associated with increases in valuation allowances on certain state tax credits carryforwards . during 2013 , we entered into sale/leaseback agreements for chlorine , caustic soda and bleach railcars and bleach trailers . we received proceeds from the sales of $ 35.8 million . in december 2013 , we repaid $ 12.2 million due under the annual requirements of the sunbelt notes . in january 2013 , we also repaid the $ 11.4 million 6.5 % senior notes ( 2013 notes ) , which became due . these were redeemed using cash . during 2013 , we purchased and retired 1.5 million shares with a total value of $ 36.2 million under the share repurchase plan approved by our board of directors on july 21 , 2011. restructurings on december 9 , 2010 , our board of directors approved a plan to eliminate our use of mercury in the manufacture of chlor alkali products . under the plan , the 260,000 tons of mercury cell capacity at our charleston , tn facility was converted to 200,000 tons of membrane capacity capable of producing both potassium hydroxide and caustic soda . the board of directors also approved plans to reconfigure our augusta , ga facility to manufacture bleach and distribute caustic soda , while discontinuing chlor alkali manufacturing at this site . we based our decision to convert and reconfigure on several factors . first , during 2009 and 2010 we had experienced a steady increase in the number of customers unwilling to accept our products manufactured using mercury cell technology . second , there was federal legislation passed in 2008 governing the treatment of mercury that significantly limited our recycling options after december 31 , 2012. we concluded that exiting mercury cell technology production after 2012 represented an unacceptable future cost risk . further , the conversion of the charleston , tn plant to membrane technology reduced the electricity usage per ecu produced by approximately 25 % . the decision to reconfigure the augusta , ga facility to manufacture bleach and distribute caustic soda removed the highest cost production capacity from our system . mercury cell chlor alkali production at the augusta , ga facility was discontinued at the end of september 2012 and the conversion at charleston , tn was completed in the second half of 2012 with the successful start-up of two new membrane cell lines . these actions reduced chlor alkali capacity by 160,000 tons . the completion of these projects eliminated our chlor alkali production using mercury cell technology . on november 3 , 2010 , we announced that we had made the decision to relocate the winchester centerfire pistol and rifle ammunition manufacturing operations from east alton , il to oxford , ms. this relocation , when completed , is forecast to reduce winchester 's annual operating costs by approximately $ 35 million to $ 40 million . we expect the centerfire relocation project to generate winchester operating cost savings of $ 24 million to $ 26 million in 2014. consistent with this relocation decision in 2010 , we initiated an estimated $ 110 million five-year project , which includes approximately $ 80 million of capital spending . the capital spending was partially financed by $ 31 million of grants provided by the state of mississippi and local governments . story_separator_special_tag while the success of the first quarter 2014 chlorine price increase and the fourth quarter 2013 caustic soda price increase is not yet known , the majority of the benefit , if realized , would impact second quarter 2014 results . ecu netbacks in the first quarter of 2014 are forecast to be lower than the fourth quarter of 2013 as a result of lower caustic soda prices partially offset by higher chlorine prices . pension and postretirement benefits under asc 715 , we recorded an after-tax charge of $ 7.7 million ( $ 12.5 million pretax ) to shareholders ' equity as of december 31 , 2013 for our pension and other postretirement plans . this charge reflected unfavorable performance on plan assets during 2013 , partially offset by a 60 -basis point increase in the plans ' discount rate . in 2012 , we recorded an after-tax charge of $ 101.9 million ( $ 166.8 million pretax ) to shareholders ' equity as of december 31 , 2012 for our pension and other postretirement plans . this charge reflected a 100-basis point decrease in the plans ' discount rate , partially offset by the favorable performance on plan assets during 2012. in 2011 , we recorded an after-tax charge of $ 29.0 million ( $ 46.8 million pretax ) to shareholders ' equity as of december 31 , 2011 for our pension and other postretirement plans . this charge reflected a 40-basis point decrease in the plans ' discount rate and an unfavorable actuarial change related to mortality tables , partially offset by the favorable performance on plan assets during 2011. the non-cash charges to shareholders ' equity do not affect our ability to borrow under our senior revolving credit facility . during the third quarter of 2012 , the “ moving ahead for progress in the 21st century act ” became law . the new law changes the mechanism for determining interest rates to be used for calculating minimum defined benefit pension plan funding requirements . interest rates are determined using an average of rates for a 25-year period , which can have the effect of increasing the annual discount rate , reducing the defined benefit pension plan obligation , and potentially reducing or eliminating the minimum annual funding requirement . the new law also increased premiums paid to the pbgc . based on our plan assumptions and estimates , we will not be required to make any cash contributions to the domestic qualified defined benefit pension plan at least through 2014 and under the new law may not be required to make any additional contributions for at least the next five years . we do have a small canadian qualified defined benefit pension plan to which we made cash contributions of $ 1.0 million in 2013 and $ 0.9 million in both 2012 and 2011 , and we anticipate approximately $ 1 million of cash contributions in 2014. at december 31 , 2013 , the projected benefit obligation of $ 1,916.6 million exceeded the market value of assets in our qualified defined benefit pension plans by $ 55.9 million , as calculated under asc 715. as part of the acquisition of ka steel , as of december 31 , 2013 , we have recorded a contingent liability of $ 10.0 million for the withdrawal from a multi-employer defined benefit pension plan . as of december 31 , 2013 , we have a $ 0.9 million liability associated with an agreement to withdraw our henderson , nv chlor alkali hourly workforce from a multi-employer defined benefit pension plan . components of net periodic benefit ( income ) costs were : replace_table_token_6_th in june 2011 , we recorded a curtailment charge of $ 1.1 million related to the ratification of a new five and one half year winchester , east alton , il union labor agreement . this curtailment charge was included in restructuring charges . 26 the service cost and the amortization of prior service cost components of pension expense related to employees of the operating segments are allocated to the operating segments based on their respective estimated census data . consolidated results of operations replace_table_token_7_th 2013 compared 2012 sales for 2013 were $ 2,515.0 million compared to $ 2,184.7 million last year , an increase of $ 330.3 million , or 15 % . chemical distribution segment sales increased by $ 250.1 million due to the additional period of our ownership . winchester sales increased by $ 160.0 million , or 26 % , from 2012 primarily due to increased shipments to domestic commercial and law enforcement customers and higher selling prices , partially offset by lower shipments to military and international customers . these increases were partially offset by an increase in the elimination of intersegment sales between the chlor alkali products segment and the chemical distribution segment ( $ 63.2 million ) and a decrease in chlor alkali products ' sales of $ 16.6 million , or 1 % , primarily due to lower product prices , primarily hydrochloric acid and chlorine . our 2013 ecu netbacks decreased 3 % compared to 2012. gross margin increased $ 44.6 million , or 10 % , from 2012 , primarily as a result of increased winchester gross margin ( $ 91.6 million ) , primarily due to increased shipments to domestic commercial customers and improved selling prices , and additional gross margin contributed by the chemical distribution segment ( $ 12.2 million ) due to the additional period of our ownership . these increases were partially offset by lower chlor alkali gross margin ( $ 61.3 million ) , primarily due to lower product prices , primarily hydrochloric acid and chlorine , and higher operating costs associated with planned maintenance outages , higher electricity costs primarily due to increased natural gas prices and higher depreciation expense . these decreases were partially offset by a favorable contract settlement . gross margin as a percentage of sales was
| cash and cash equivalents we had cash and cash equivalents of $ 24.1 million at december 31 , 2019 , compared to $ 39.9 million at december 31 , 2018 . the cash balances reflect our ability to utilize funds deposited into our local bank accounts . cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements were $ 0.5 million and $ 1.7 million as of december 31 , 2019 and 2018 , respectively , and are included within cash and cash equivalents within the consolidated balance sheets . availability , timing of deposits and the subsequent movement of cash into our corporate bank accounts may result in significant changes to our cash balances . summary of cash flows replace_table_token_11_th operating activities our primary sources of funds are cash flows from operating activities and changes in operating assets and liabilities . net cash provided by operating activities totaled $ 76.0 million for 2019 , compared to $ 70.9 million for 2018 . cash provided during 2019 included $ 91.7 million from operations , partially offset by changes in operating assets and liabilities that resulted in a use of $ 15.7 million .
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ecu netbacks in the first quarter of 2014 are forecast to be lower than the fourth quarter of 2013 as a result of lower caustic soda prices partially offset by higher chlorine prices . chemical distribution segment income was $ 9.7 million in 2013 compared to $ 4.5 million in 2012. chemical distribution segment income was higher than the prior year as a result of the additional period of our ownership . depreciation and amortization expense included in segment income for the years ended december 31 , 2013 and 2012 of $ 15.4 million and $ 5.5 million , respectively , were primarily associated with the acquisition fair valuing of ka steel . as a result of acquiring ka steel in august of 2012 , we anticipate realizing approximately $ 35 million of annual synergies at the end of three years . these synergies include opportunities to sell additional volumes of products we produce such as caustic soda , bleach , hydrochloric acid and potassium hydroxide through ka steel and to optimize freight cost and logistics assets between our chlor alkali products segment and ka steel . winchester segment income was $ 143.2 million in 2013 , which represented the highest level of segment income in at least the last two decades , improved 159 % compared to 2012 segment income of $ 55.2 million . the increase in segment income compared to last year reflects the impact of increased volumes due to the continuation of the stronger than historical demand that began in the fourth quarter of 2012 , improved selling prices and decreased costs , including the impact of decreased costs associated with our new centerfire operation in oxford , ms. 21 other ( expense ) income in 2013 included a gain of $ 6.5 million on the sale of our equity interest in a limited liability company that owns a bleach related chemical manufacturing facility ( bleach joint venture ) . income tax expense for 2013 included $ 11.4 million of favorable adjustments associated with the expiration of the statutes of limitations in federal and state jurisdictions , $ 8.3 million of benefit associated with reductions in valuation allowances on our capital loss carryforwards and $ 1.9 million of benefit associated with the research credit under section 41 of the u.s. internal revenue code ( research credit ) , which were partially offset by $ 1.8 million of expense associated with changes in tax contingencies and $ 1.3 million of expense associated with increases in valuation allowances on certain state tax credits carryforwards . during 2013 , we entered into sale/leaseback agreements for chlorine , caustic soda and bleach railcars and bleach trailers . we received proceeds from the sales of $ 35.8 million . in december 2013 , we repaid $ 12.2 million due under the annual requirements of the sunbelt notes . in january 2013 , we also repaid the $ 11.4 million 6.5 % senior notes ( 2013 notes ) , which became due . these were redeemed using cash . during 2013 , we purchased and retired 1.5 million shares with a total value of $ 36.2 million under the share repurchase plan approved by our board of directors on july 21 , 2011. restructurings on december 9 , 2010 , our board of directors approved a plan to eliminate our use of mercury in the manufacture of chlor alkali products . under the plan , the 260,000 tons of mercury cell capacity at our charleston , tn facility was converted to 200,000 tons of membrane capacity capable of producing both potassium hydroxide and caustic soda . the board of directors also approved plans to reconfigure our augusta , ga facility to manufacture bleach and distribute caustic soda , while discontinuing chlor alkali manufacturing at this site . we based our decision to convert and reconfigure on several factors . first , during 2009 and 2010 we had experienced a steady increase in the number of customers unwilling to accept our products manufactured using mercury cell technology . second , there was federal legislation passed in 2008 governing the treatment of mercury that significantly limited our recycling options after december 31 , 2012. we concluded that exiting mercury cell technology production after 2012 represented an unacceptable future cost risk . further , the conversion of the charleston , tn plant to membrane technology reduced the electricity usage per ecu produced by approximately 25 % . the decision to reconfigure the augusta , ga facility to manufacture bleach and distribute caustic soda removed the highest cost production capacity from our system . mercury cell chlor alkali production at the augusta , ga facility was discontinued at the end of september 2012 and the conversion at charleston , tn was completed in the second half of 2012 with the successful start-up of two new membrane cell lines . these actions reduced chlor alkali capacity by 160,000 tons . the completion of these projects eliminated our chlor alkali production using mercury cell technology . on november 3 , 2010 , we announced that we had made the decision to relocate the winchester centerfire pistol and rifle ammunition manufacturing operations from east alton , il to oxford , ms. this relocation , when completed , is forecast to reduce winchester 's annual operating costs by approximately $ 35 million to $ 40 million . we expect the centerfire relocation project to generate winchester operating cost savings of $ 24 million to $ 26 million in 2014. consistent with this relocation decision in 2010 , we initiated an estimated $ 110 million five-year project , which includes approximately $ 80 million of capital spending . the capital spending was partially financed by $ 31 million of grants provided by the state of mississippi and local governments . story_separator_special_tag while the success of the first quarter 2014 chlorine price increase and the fourth quarter 2013 caustic soda price increase is not yet known , the majority of the benefit , if realized , would impact second quarter 2014 results . ecu netbacks in the first quarter of 2014 are forecast to be lower than the fourth quarter of 2013 as a result of lower caustic soda prices partially offset by higher chlorine prices . pension and postretirement benefits under asc 715 , we recorded an after-tax charge of $ 7.7 million ( $ 12.5 million pretax ) to shareholders ' equity as of december 31 , 2013 for our pension and other postretirement plans . this charge reflected unfavorable performance on plan assets during 2013 , partially offset by a 60 -basis point increase in the plans ' discount rate . in 2012 , we recorded an after-tax charge of $ 101.9 million ( $ 166.8 million pretax ) to shareholders ' equity as of december 31 , 2012 for our pension and other postretirement plans . this charge reflected a 100-basis point decrease in the plans ' discount rate , partially offset by the favorable performance on plan assets during 2012. in 2011 , we recorded an after-tax charge of $ 29.0 million ( $ 46.8 million pretax ) to shareholders ' equity as of december 31 , 2011 for our pension and other postretirement plans . this charge reflected a 40-basis point decrease in the plans ' discount rate and an unfavorable actuarial change related to mortality tables , partially offset by the favorable performance on plan assets during 2011. the non-cash charges to shareholders ' equity do not affect our ability to borrow under our senior revolving credit facility . during the third quarter of 2012 , the “ moving ahead for progress in the 21st century act ” became law . the new law changes the mechanism for determining interest rates to be used for calculating minimum defined benefit pension plan funding requirements . interest rates are determined using an average of rates for a 25-year period , which can have the effect of increasing the annual discount rate , reducing the defined benefit pension plan obligation , and potentially reducing or eliminating the minimum annual funding requirement . the new law also increased premiums paid to the pbgc . based on our plan assumptions and estimates , we will not be required to make any cash contributions to the domestic qualified defined benefit pension plan at least through 2014 and under the new law may not be required to make any additional contributions for at least the next five years . we do have a small canadian qualified defined benefit pension plan to which we made cash contributions of $ 1.0 million in 2013 and $ 0.9 million in both 2012 and 2011 , and we anticipate approximately $ 1 million of cash contributions in 2014. at december 31 , 2013 , the projected benefit obligation of $ 1,916.6 million exceeded the market value of assets in our qualified defined benefit pension plans by $ 55.9 million , as calculated under asc 715. as part of the acquisition of ka steel , as of december 31 , 2013 , we have recorded a contingent liability of $ 10.0 million for the withdrawal from a multi-employer defined benefit pension plan . as of december 31 , 2013 , we have a $ 0.9 million liability associated with an agreement to withdraw our henderson , nv chlor alkali hourly workforce from a multi-employer defined benefit pension plan . components of net periodic benefit ( income ) costs were : replace_table_token_6_th in june 2011 , we recorded a curtailment charge of $ 1.1 million related to the ratification of a new five and one half year winchester , east alton , il union labor agreement . this curtailment charge was included in restructuring charges . 26 the service cost and the amortization of prior service cost components of pension expense related to employees of the operating segments are allocated to the operating segments based on their respective estimated census data . consolidated results of operations replace_table_token_7_th 2013 compared 2012 sales for 2013 were $ 2,515.0 million compared to $ 2,184.7 million last year , an increase of $ 330.3 million , or 15 % . chemical distribution segment sales increased by $ 250.1 million due to the additional period of our ownership . winchester sales increased by $ 160.0 million , or 26 % , from 2012 primarily due to increased shipments to domestic commercial and law enforcement customers and higher selling prices , partially offset by lower shipments to military and international customers . these increases were partially offset by an increase in the elimination of intersegment sales between the chlor alkali products segment and the chemical distribution segment ( $ 63.2 million ) and a decrease in chlor alkali products ' sales of $ 16.6 million , or 1 % , primarily due to lower product prices , primarily hydrochloric acid and chlorine . our 2013 ecu netbacks decreased 3 % compared to 2012. gross margin increased $ 44.6 million , or 10 % , from 2012 , primarily as a result of increased winchester gross margin ( $ 91.6 million ) , primarily due to increased shipments to domestic commercial customers and improved selling prices , and additional gross margin contributed by the chemical distribution segment ( $ 12.2 million ) due to the additional period of our ownership . these increases were partially offset by lower chlor alkali gross margin ( $ 61.3 million ) , primarily due to lower product prices , primarily hydrochloric acid and chlorine , and higher operating costs associated with planned maintenance outages , higher electricity costs primarily due to increased natural gas prices and higher depreciation expense . these decreases were partially offset by a favorable contract settlement . gross margin as a percentage of sales was
| liquidity and other financing arrangements our principal sources of liquidity are from cash and cash equivalents , restricted cash , cash flow from operations and short-term borrowings under our senior revolving credit facility . additionally , we believe that we have access to the debt and equity markets . cash flow from operations is variable as a result of both the seasonal and the cyclical nature of our operating results , which have been affected by seasonal and economic cycles in many of the industries we serve , such as the vinyls , urethanes , bleach , ammunition and pulp and paper . the seasonality of the ammunition business , which is typically driven by the fall hunting season , and the seasonality of the vinyls and bleach businesses , which are stronger in periods of warmer weather , typically cause working capital to fluctuate between $ 50 million to $ 100 million over the course of the year . cash flow from operations is affected by changes in ecu selling prices caused by the changes in the supply/demand balance of chlorine and caustic soda , resulting in the chlor alkali business having significant leverage on our earnings and cash flow . for example , assuming all other costs remain constant and internal consumption remains approximately the same , a $ 10 per ecu selling price change equates to an approximate $ 15 million annual change in our revenues and pretax profit when we are operating at full capacity . for 2013 , cash provided by operating activities increased by $ 37.8 million from 2012 , primarily due to higher earnings and a larger decrease in working capital in 2013. for 2013 , working capital decreased $ 29.6 million compared to a decrease of $ 18.4 million in 2012. the decrease in 2013 was primarily due to decreased receivables of $ 18.9 million , primarily at chemical distribution , and decreased inventory of $ 8.6 million , primarily at chemical distribution and winchester .
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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 other financing arrangements our principal sources of liquidity are from cash and cash equivalents , restricted cash , cash flow from operations and short-term borrowings under our senior revolving credit facility . additionally , we believe that we have access to the debt and equity markets . cash flow from operations is variable as a result of both the seasonal and the cyclical nature of our operating results , which have been affected by seasonal and economic cycles in many of the industries we serve , such as the vinyls , urethanes , bleach , ammunition and pulp and paper . the seasonality of the ammunition business , which is typically driven by the fall hunting season , and the seasonality of the vinyls and bleach businesses , which are stronger in periods of warmer weather , typically cause working capital to fluctuate between $ 50 million to $ 100 million over the course of the year . cash flow from operations is affected by changes in ecu selling prices caused by the changes in the supply/demand balance of chlorine and caustic soda , resulting in the chlor alkali business having significant leverage on our earnings and cash flow . for example , assuming all other costs remain constant and internal consumption remains approximately the same , a $ 10 per ecu selling price change equates to an approximate $ 15 million annual change in our revenues and pretax profit when we are operating at full capacity . for 2013 , cash provided by operating activities increased by $ 37.8 million from 2012 , primarily due to higher earnings and a larger decrease in working capital in 2013. for 2013 , working capital decreased $ 29.6 million compared to a decrease of $ 18.4 million in 2012. the decrease in 2013 was primarily due to decreased receivables of $ 18.9 million , primarily at chemical distribution , and decreased inventory of $ 8.6 million , primarily at chemical distribution and winchester .
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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 .
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42 table of contents the growth of our fully diluted book value per share over the last 10 years is shown in the table below . the table below summarizes the calculation of our fully diluted book value per ordinary share as of december 31 , 2020 and 2019 : replace_table_token_3_th ( 1 ) there are warrants outstanding to acquire 175,901 series c non-voting ordinary shares for an exercise price of $ 115.00 per share , subject to certain adjustments ( the `` warrants `` ) . the warrants were issued in april 2011 and expire in april 2021. the warrant holder may , at its election , satisfy the exercise price of the warrants on a cashless basis by surrender of shares otherwise issuable upon exercise of the warrants in accordance with a formula set forth in the warrants . ( 2 ) ordinary shares outstanding includes voting and non-voting shares but excludes ordinary shares held in the enstar group limited employee benefit trust ( the `` eb trust `` ) in respect of awards made under our joint share ownership plan , a sub-plan to our amended and restated 2016 equity incentive plan ( the `` jsop `` ) . ( 3 ) share-based dilutive securities include restricted shares , restricted share units , and performance share units ( `` psus `` ) . the amounts for psus , and for ordinary shares held in the eb trust in respect of the jsop , are adjusted at the end of each period end to reflect the latest estimated performance multipliers for the respective awards . the jsop shares did not have a dilutive effect as of december 31 , 2020 . 43 table of contents non-gaap financial measure in addition to presenting net earnings ( losses ) attributable to enstar ordinary shareholders and diluted earnings ( losses ) per ordinary share determined in accordance with u.s. gaap , we believe that presenting non-gaap operating income ( loss ) attributable to enstar ordinary shareholders and non-gaap diluted operating income ( loss ) per ordinary share provides investors with valuable measures of our performance . non-gaap operating income ( loss ) attributable to enstar ordinary shareholders is calculated by the addition or subtraction of certain items from within our consolidated statements of earnings to or from net earnings ( loss ) attributable to enstar ordinary shareholders , the most directly comparable gaap financial measure , as illustrated in the table below , for the years ending december 31 , 2020 , 2019 and 2018 : replace_table_token_4_th ( 1 ) represents the net realized and unrealized gains and losses related to fixed maturity securities recognized in net earnings ( losses ) . our fixed maturity securities are held directly on our balance sheet and also within the `` funds held - directly managed `` balance . refer to note 6 - `` investments `` in the notes to our consolidated financial statements included within item 8 of this annual report on form 10-k for further details on our net realized and unrealized gains and losses . ( 2 ) represents an aggregation of the tax expense or benefit associated with the specific country to which the pre-tax adjustment relates , calculated at the applicable jurisdictional tax rate . ( 3 ) represents the impact of the adjustments on the net earnings ( loss ) attributable to noncontrolling interest associated with the specific subsidiaries to which the adjustments relate . ( 4 ) non-gaap financial measure . ( 5 ) during a period of loss , the basic weighted average ordinary shares outstanding is used in the denominator of the diluted loss per ordinary share computation as the effect of including potentially dilutive securities would be anti-dilutive . 44 table of contents basis of non-gaap operating income ( loss ) financial measure our non-gaap measure shown above , as defined in item 10 ( e ) of regulation s-k , enables readers of the consolidated financial statements to analyze our results in a way that is more aligned with the manner in which our management measures our underlying performance . we believe that presenting this non-gaap financial measure , which may be defined and calculated differently by other companies , improves the understanding of our consolidated results of operations . this measure should not be viewed as a substitute for those calculated in accordance with u.s. gaap . non-gaap operating income ( loss ) is net earnings attributable to enstar ordinary shareholders excluding : ( i ) net realized and unrealized ( gains ) losses on fixed maturity investments and funds held - directly managed included in net earnings ( loss ) ; ( ii ) change in fair value of insurance contracts for which we have elected the fair value option ; ( iii ) gain ( loss ) on sale of subsidiaries , if any ; ( iv ) net earnings ( loss ) from discontinued operations , if any ; ( v ) tax effect of these adjustments , where applicable ; and ( vi ) attribution of share of adjustments to noncontrolling interest , where applicable . we eliminate the impact of net realized and unrealized ( gains ) losses on fixed maturity investments and funds held - directly managed and change in fair value of insurance contracts for which we have elected the fair value option because these items are subject to significant fluctuations in fair value from period to period , driven primarily by market conditions and general economic conditions , and therefore their impact on our earnings is not reflective of the performance of our core operations . we eliminate the impact of gain ( loss ) on sale of subsidiaries and net earnings ( loss ) on discontinued operations because these are not reflective of the performance of our core operations . story_separator_special_tag to our other investments results in 2019. for a reconciliation of non-gaap operating income attributable to enstar ordinary shareholders to net earnings attributable to enstar ordinary shareholders calculated in accordance with gaap , see `` non-gaap financial measures `` above . results of operations by segment - for the years ended december 31 , 2020 , 2019 and 2018 we have three reportable segments of business that are each managed , operated and reported on separately : ( i ) non-life run-off ; ( ii ) atrium ; and ( iii ) starstone . our other activities , which do not qualify as a reportable segment , include our corporate expenses , debt servicing costs , preferred share dividends , holding company income and expenses , foreign exchange and other miscellaneous items . for a description of our segments , see `` item 1. business - operating segments . `` as discussed in item 1. business - company overview and note 5 - `` divestitures , held-for-sale businesses and discontinued operations `` in the notes to our consolidated financial statements included within item 8 of this annual report on form 10-k , the strategic transactions related to our atrium and starstone segments will enable us to focus on our core non-life run-off business . we will review and assess our segment structure in 2021 to reflect the changes to the starstone and atrium segments in the fourth quarter of 2020 and the first quarter of 2021 , respectively . 49 table of contents the below table provides a split by operating segment of the net earnings attributable to enstar ordinary shareholders for the years ended december 31 , 2020 , 2019 and 2018 : replace_table_token_6_th the following is a discussion of our results of operations by segment . non-life run-off segment for a description of our non-life run-off segment , see `` item 1. business - operating segments - non-life run-off . `` the following is a discussion and analysis of the results of operations for our non-life run-off segment . replace_table_token_7_th ( 1 ) comparability between periods is impacted by the current period net incurred losses and lae as acquired unearned premium is earned , and by changes in fair value due to the election of the fair value option on certain business . refer to net incurred losses and lae table for further details . ( 2 ) this includes amounts relating to both fixed income securities and other investments . we have historically accounted for our fixed income securities as a trading portfolio , whereby unrealized amounts are reflected in earnings . however , from october 1 , 2019 , we have elected to use afs accounting and , as trading fixed income securities mature or are disposed of , to the extent the proceeds are reinvested in fixed income securities , the investments will be classified as afs securities for the non-life run-off segment . 50 table of contents overall results 2020 versus 2019 : net earnings attributable to the non-life run-off segment increased by $ 806.3 million , primarily due to : an increase in net realized and unrealized gains of $ 659.2 million . net realized and unrealized gains in 2020 were driven by an increase in the valuation of our other investments , predominantly in a hedge fund in the current period as discussed below in the `` investment results - consolidated `` section ; an increase in earnings from equity method investments of $ 182.4 million , driven primarily by our investments in enhanzed re and monument re ; and an increase in other income of $ 65.1 million largely driven by changes in actuarial estimates in defendant asbestos and environmental liabilities ; partially offset by , an increase in net underwriting losses of $ 50.9 million . an analysis of the components of the segment 's net earnings is shown below . investment results are separately discussed below in the `` investments results - consolidated `` section . net premiums earned : the following table shows the gross and net premiums written and earned for the non-life run-off segment . replace_table_token_8_th since business in this segment is in run-off , our general expectation is for premiums associated with legacy business to decline in future periods . however , the actual amount in any particular year will be impacted by new transactions during the year and the run-off of unearned premiums from transactions completed in recent years . premiums earned in this segment are generally offset by net incurred losses and lae related to the premiums . premiums earned may be higher than premiums written as we may acquire or assume unearned premium without the writing of gross premiums . 2020 versus 2019 : net premiums earned in 2020 were primarily related to the amtrust ritc transactions assumed in 2019 , whereas premiums written and earned in 2019 were primarily related to the run-off business assumed as a result of the amtrust ritc transactions and the acquisition of maiden reinsurance north america , inc. ( `` maiden re north america `` ) . 51 table of contents net incurred losses and lae : the following table shows the components of net incurred losses and lae for the non-life run-off segment . replace_table_token_9_th ( 1 ) comprises the movement during the year in specific case reserve liabilities as a result of claims settlements or changes advised to us by our policyholders and attorneys , less changes in case reserves recoverable advised by us to our reinsurers as a result of the settlement or movement of assumed claims . ( 2 ) represents the gross change in our actuarial estimates of ibnr , less amounts recoverable . ( 3 ) represents the change in the estimate of the total future costs to administer the claims . ( 4 ) relates to the amortization of deferred charge assets and deferred gain liabilities on retroactive reinsurance contracts . ( 5 ) relates to the amortization of
| 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 .
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42 table of contents the growth of our fully diluted book value per share over the last 10 years is shown in the table below . the table below summarizes the calculation of our fully diluted book value per ordinary share as of december 31 , 2020 and 2019 : replace_table_token_3_th ( 1 ) there are warrants outstanding to acquire 175,901 series c non-voting ordinary shares for an exercise price of $ 115.00 per share , subject to certain adjustments ( the `` warrants `` ) . the warrants were issued in april 2011 and expire in april 2021. the warrant holder may , at its election , satisfy the exercise price of the warrants on a cashless basis by surrender of shares otherwise issuable upon exercise of the warrants in accordance with a formula set forth in the warrants . ( 2 ) ordinary shares outstanding includes voting and non-voting shares but excludes ordinary shares held in the enstar group limited employee benefit trust ( the `` eb trust `` ) in respect of awards made under our joint share ownership plan , a sub-plan to our amended and restated 2016 equity incentive plan ( the `` jsop `` ) . ( 3 ) share-based dilutive securities include restricted shares , restricted share units , and performance share units ( `` psus `` ) . the amounts for psus , and for ordinary shares held in the eb trust in respect of the jsop , are adjusted at the end of each period end to reflect the latest estimated performance multipliers for the respective awards . the jsop shares did not have a dilutive effect as of december 31 , 2020 . 43 table of contents non-gaap financial measure in addition to presenting net earnings ( losses ) attributable to enstar ordinary shareholders and diluted earnings ( losses ) per ordinary share determined in accordance with u.s. gaap , we believe that presenting non-gaap operating income ( loss ) attributable to enstar ordinary shareholders and non-gaap diluted operating income ( loss ) per ordinary share provides investors with valuable measures of our performance . non-gaap operating income ( loss ) attributable to enstar ordinary shareholders is calculated by the addition or subtraction of certain items from within our consolidated statements of earnings to or from net earnings ( loss ) attributable to enstar ordinary shareholders , the most directly comparable gaap financial measure , as illustrated in the table below , for the years ending december 31 , 2020 , 2019 and 2018 : replace_table_token_4_th ( 1 ) represents the net realized and unrealized gains and losses related to fixed maturity securities recognized in net earnings ( losses ) . our fixed maturity securities are held directly on our balance sheet and also within the `` funds held - directly managed `` balance . refer to note 6 - `` investments `` in the notes to our consolidated financial statements included within item 8 of this annual report on form 10-k for further details on our net realized and unrealized gains and losses . ( 2 ) represents an aggregation of the tax expense or benefit associated with the specific country to which the pre-tax adjustment relates , calculated at the applicable jurisdictional tax rate . ( 3 ) represents the impact of the adjustments on the net earnings ( loss ) attributable to noncontrolling interest associated with the specific subsidiaries to which the adjustments relate . ( 4 ) non-gaap financial measure . ( 5 ) during a period of loss , the basic weighted average ordinary shares outstanding is used in the denominator of the diluted loss per ordinary share computation as the effect of including potentially dilutive securities would be anti-dilutive . 44 table of contents basis of non-gaap operating income ( loss ) financial measure our non-gaap measure shown above , as defined in item 10 ( e ) of regulation s-k , enables readers of the consolidated financial statements to analyze our results in a way that is more aligned with the manner in which our management measures our underlying performance . we believe that presenting this non-gaap financial measure , which may be defined and calculated differently by other companies , improves the understanding of our consolidated results of operations . this measure should not be viewed as a substitute for those calculated in accordance with u.s. gaap . non-gaap operating income ( loss ) is net earnings attributable to enstar ordinary shareholders excluding : ( i ) net realized and unrealized ( gains ) losses on fixed maturity investments and funds held - directly managed included in net earnings ( loss ) ; ( ii ) change in fair value of insurance contracts for which we have elected the fair value option ; ( iii ) gain ( loss ) on sale of subsidiaries , if any ; ( iv ) net earnings ( loss ) from discontinued operations , if any ; ( v ) tax effect of these adjustments , where applicable ; and ( vi ) attribution of share of adjustments to noncontrolling interest , where applicable . we eliminate the impact of net realized and unrealized ( gains ) losses on fixed maturity investments and funds held - directly managed and change in fair value of insurance contracts for which we have elected the fair value option because these items are subject to significant fluctuations in fair value from period to period , driven primarily by market conditions and general economic conditions , and therefore their impact on our earnings is not reflective of the performance of our core operations . we eliminate the impact of gain ( loss ) on sale of subsidiaries and net earnings ( loss ) on discontinued operations because these are not reflective of the performance of our core operations . story_separator_special_tag to our other investments results in 2019. for a reconciliation of non-gaap operating income attributable to enstar ordinary shareholders to net earnings attributable to enstar ordinary shareholders calculated in accordance with gaap , see `` non-gaap financial measures `` above . results of operations by segment - for the years ended december 31 , 2020 , 2019 and 2018 we have three reportable segments of business that are each managed , operated and reported on separately : ( i ) non-life run-off ; ( ii ) atrium ; and ( iii ) starstone . our other activities , which do not qualify as a reportable segment , include our corporate expenses , debt servicing costs , preferred share dividends , holding company income and expenses , foreign exchange and other miscellaneous items . for a description of our segments , see `` item 1. business - operating segments . `` as discussed in item 1. business - company overview and note 5 - `` divestitures , held-for-sale businesses and discontinued operations `` in the notes to our consolidated financial statements included within item 8 of this annual report on form 10-k , the strategic transactions related to our atrium and starstone segments will enable us to focus on our core non-life run-off business . we will review and assess our segment structure in 2021 to reflect the changes to the starstone and atrium segments in the fourth quarter of 2020 and the first quarter of 2021 , respectively . 49 table of contents the below table provides a split by operating segment of the net earnings attributable to enstar ordinary shareholders for the years ended december 31 , 2020 , 2019 and 2018 : replace_table_token_6_th the following is a discussion of our results of operations by segment . non-life run-off segment for a description of our non-life run-off segment , see `` item 1. business - operating segments - non-life run-off . `` the following is a discussion and analysis of the results of operations for our non-life run-off segment . replace_table_token_7_th ( 1 ) comparability between periods is impacted by the current period net incurred losses and lae as acquired unearned premium is earned , and by changes in fair value due to the election of the fair value option on certain business . refer to net incurred losses and lae table for further details . ( 2 ) this includes amounts relating to both fixed income securities and other investments . we have historically accounted for our fixed income securities as a trading portfolio , whereby unrealized amounts are reflected in earnings . however , from october 1 , 2019 , we have elected to use afs accounting and , as trading fixed income securities mature or are disposed of , to the extent the proceeds are reinvested in fixed income securities , the investments will be classified as afs securities for the non-life run-off segment . 50 table of contents overall results 2020 versus 2019 : net earnings attributable to the non-life run-off segment increased by $ 806.3 million , primarily due to : an increase in net realized and unrealized gains of $ 659.2 million . net realized and unrealized gains in 2020 were driven by an increase in the valuation of our other investments , predominantly in a hedge fund in the current period as discussed below in the `` investment results - consolidated `` section ; an increase in earnings from equity method investments of $ 182.4 million , driven primarily by our investments in enhanzed re and monument re ; and an increase in other income of $ 65.1 million largely driven by changes in actuarial estimates in defendant asbestos and environmental liabilities ; partially offset by , an increase in net underwriting losses of $ 50.9 million . an analysis of the components of the segment 's net earnings is shown below . investment results are separately discussed below in the `` investments results - consolidated `` section . net premiums earned : the following table shows the gross and net premiums written and earned for the non-life run-off segment . replace_table_token_8_th since business in this segment is in run-off , our general expectation is for premiums associated with legacy business to decline in future periods . however , the actual amount in any particular year will be impacted by new transactions during the year and the run-off of unearned premiums from transactions completed in recent years . premiums earned in this segment are generally offset by net incurred losses and lae related to the premiums . premiums earned may be higher than premiums written as we may acquire or assume unearned premium without the writing of gross premiums . 2020 versus 2019 : net premiums earned in 2020 were primarily related to the amtrust ritc transactions assumed in 2019 , whereas premiums written and earned in 2019 were primarily related to the run-off business assumed as a result of the amtrust ritc transactions and the acquisition of maiden reinsurance north america , inc. ( `` maiden re north america `` ) . 51 table of contents net incurred losses and lae : the following table shows the components of net incurred losses and lae for the non-life run-off segment . replace_table_token_9_th ( 1 ) comprises the movement during the year in specific case reserve liabilities as a result of claims settlements or changes advised to us by our policyholders and attorneys , less changes in case reserves recoverable advised by us to our reinsurers as a result of the settlement or movement of assumed claims . ( 2 ) represents the gross change in our actuarial estimates of ibnr , less amounts recoverable . ( 3 ) represents the change in the estimate of the total future costs to administer the claims . ( 4 ) relates to the amortization of deferred charge assets and deferred gain liabilities on retroactive reinsurance contracts . ( 5 ) relates to the amortization of
| cash flows the following table summarizes our consolidated cash flows provided by ( used in ) operating , investing and financing activities . replace_table_token_35_th details of our consolidated cash flows are included in `` item 8. financial statements and supplementary data - consolidated statements of cash flows for the years ended december 31 , 2020 , 2019 and 2018 '' of this annual report on form 10-k. 2020 versus 2019 : cash and cash equivalents increased by $ 540.5 million in 2020 compared to $ 73.2 million during 2019 . 74 table of contents cash and cash equivalents increased by $ 540.5 million in 2020 , as cash provided by operating and financing activities of $ 2.8 billion and $ 117.4 million , respectively , was partially offset by cash used in investing activities of $ 2.3 billion . cash provided by operations in 2020 was predominantly driven by : ( i ) the proceeds from net sales and maturities of trading securities of $ 1.7 billion ; and ( ii ) cash and restricted cash acquired in non-life run-off reinsurance transactions of $ 1.6 billion ; partially offset by the timing of paid losses . cash provided by financing activities in 2020 was primarily attributable to net inflows of $ 179.5 million from loan obligations , partially offset by share repurchases and preferred share dividends . cash used in investing activities in 2020 primarily related to net purchases of afs securities of $ 1.9 billion and net subscriptions of other investments of $ 380.3 million . change in cash of business held-for-sale is due to the classification of the assets and liabilities of northshore as held-for-sale as of december 31 , 2020 and the disposal of starstone u.s. cash and cash equivalents increased by $ 73.2 million in 2019 , as cash provided by operating and financing activities of $ 1.4 billion and $ 248.5 million , respectively , was partially offset by cash used in investing activities of $ 1.6 billion .
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we serve a broad range of end consumers , including outdoor enthusiasts , hunters and recreational shooters , athletes , as well as law enforcement and military professionals . our products are sold through a wide variety of mass , specialty and independent retailers , such as bass pro shops , cabela 's , dick 's sporting goods , gander mountain , recreational equipment , inc. , sportsman 's warehouse , target and walmart . we also sell certain of our products directly to consumers through the relevant brand 's website . we have a scalable , integrated portfolio of brands that allows us to leverage our deep customer knowledge , product development and innovation , supply chain and distribution , and sales and marketing functions across product categories to better serve our retail partners and end users . as of march 31 , 2016 , we operated in two business segments . these operating segments are defined based on the reporting and review process used by the chief operating decision maker , vista outdoor 's chief executive officer . as of march 31 , 2016 , vista outdoor 's two operating segments were : shooting sports , which generated 62 % of our sales in fiscal year 2016 . shooting sports product lines include centerfire ammunition , rimfire ammunition , shotshell ammunition , reloading components , centerfire rifles , rimfire rifles , shotguns and range systems . outdoor products , which generated 38 % of our sales in fiscal year 2016 . the outdoor products product lines are archery/hunting accessories , global eyewear and sport protection , golf , hydration products , optics , shooting accessories , tactical products and water sports . archery/hunting accessories include high-performance hunting arrows , game calls , hunting blinds , game cameras and waterfowl decoys . global eyewear and sport protection products include safety and protective eyewear , as well as fashion and sports eyewear and helmets . golf products include laser rangefinders . hydration products include hydration packs and water bottles . optics products include binoculars , riflescopes and telescopes . shooting accessories products include reloading equipment , clay targets , and premium gun care products . tactical products include holsters , duty gear , bags and packs . water sports products include stand up paddle boards . financial highlights and notable events certain notable events or activities affecting our fiscal 2016 financial results and subsequent results included the following : financial highlights for fiscal 2016 annual sales of $ 2,270,734 and $ 2,083,414 for the fiscal years ended march 31 , 2016 and 2015 , respectively . the increase was driven by the acquisition of camelbak and jimmy styks and increase in demand within the shooting sports market , partially offset by unfavorable foreign currency impacts . gross profit was $ 619,445 and $ 528,921 for the fiscal years ended march 31 , 2016 and 2015 , respectively . the increase was driven by the sales increase noted above , product mix , and favorable material procurement . the decrease in the current year 's tax rate to 38.3 % from 48.4 % in the year ended march 31 , 2015 was primarily caused by the absence of the nondeductible goodwill impairment recorded in the prior year period and lower nondeductible transaction costs , partially offset by true-up of deferred taxes and income taxes payable . on july 20 , 2015 , we completed the jimmy styks acquisition , using $ 40,000 of cash on hand with additional contingent consideration payable if incremental profitability growth milestones are achieved over the next three years . on august 3 , 2015 , we completed the acquisition of camelbak products , llc ( the `` camelbak acquisition `` ) for total consideration of $ 412,500 , subject to a customary working capital adjustment , utilizing cash on hand and borrowings under our existing credit facilities . on august 11 , 2015 , we issued $ 350,000 aggregate principal amount of 5.875 % senior notes ( the “ notes ” ) that mature on october 1 , 2023 . 32 during fiscal 2016 , we repurchased 3,179,086 shares for $ 142,200. notable events-subsequent to year end on april 1 , 2016 , we completed the acquisition of brg sports inc. 's action sports division , which was operated by bell sports corp. the acquisition includes the market-leading brands bell and giro , as well as blackburn , copilot , krash and raskullz . under the terms of the transaction , we paid $ 400,000 , subject to customary working capital adjustments , and additional contingent consideration payable if incremental profitability growth milestones within the bell powersports product line are achieved . on april 1 , 2016 , in connection with the action sports acquisition , we completed a refinancing of our senior secured credit facilities , under which our term loan balance was $ 332,500 , by entering into new senior secured credit facilities consisting of a $ 400,000 revolving credit facility and a $ 640,000 term loan facility maturing april 1 , 2021. we also drew $ 80,000 on our revolving credit facility to fund the purchase of action sports . outlook shooting sports market - the current year has seen an increase in the number of new long-gun background checks as evidenced by the nics . this increase along with higher sales on a year-over-year basis within shooting sports in the back half of fiscal year 2016 , indicates the market is stabilizing after the declines seen in fiscal years 2014 and 2015. critical accounting policies our discussion and analysis of our financial condition and results of operations are based upon our consolidated and combined financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states . story_separator_special_tag these increases were partially offset by the absence of a $ 52,220 pre-tax non-cash impairment charge ( $ 41,020 impairment to goodwill and $ 11,200 impairment to tradename ) recorded in the fiscal year ended march 31 , 2015. net interest expense years ended march 31 2016 2015 $ change % change interest expense $ 24,351 $ 30,108 $ ( 5,757 ) ( 19.1 ) % the decrease in interest expense was due to our debt balances being lower than those allocated to us by orbital atk in the prior year period , partially offset by a higher average interest rate . 37 income tax provision replace_table_token_8_th the decrease in the current period tax rate is primarily due to the absence of the nondeductible goodwill impairment recorded in the prior year period and lower nondeductible transaction costs , partially offset by true-up of deferred taxes and income taxes payable . our provision for income taxes includes federal , state and foreign income taxes . the effective tax rate for fiscal 2016 of 38.3 % differs from the federal statutory rate of 35.0 % primarily due to state income taxes and true-up of deferred and payable taxes , partially offset by dmd , which decreased the rate . the effective tax rate for fiscal year 2015 of 48.4 % differs from the federal statutory rate of 35.0 % due to the nondeductible goodwill impairment , state income taxes and nondeductible transaction costs , partially offset by dmd and true-up of prior year taxes , which decreased the rate . we entered into a tax matters agreement with orbital atk that governs the respective rights , responsibilities and obligations of vista outdoor and orbital atk after the spin-off with respect to tax liabilities and benefits , tax attributes , tax contests and other tax sharing regarding u.s. federal , state , local and foreign income taxes , other tax matters and related tax returns . we have joint and several liability with orbital atk to the irs for the consolidated u.s. federal income taxes of the orbital atk consolidated group relating to the taxable periods in which we were part of that group . however , the tax matters agreement specifies the portion , if any , of this tax liability for which we bear responsibility , and orbital atk agrees to indemnify us against any amounts for which the we are not responsible . the tax matters agreement also provides special rules for allocating tax liabilities in the event that the spin-off is determined not to be tax-free . the tax matters agreement provides for certain covenants that may restrict the ability to pursue strategic or other transactions that otherwise could maximize the value of the business and may discourage or delay a change of control . for example , unless we ( or orbital atk , as applicable ) were to receive a supplemental private letter ruling from the irs or an unqualified opinion from a nationally recognized tax advisor , or orbital atk were to grant us a waiver , we would be restricted until two years after the spin-off is consummated from entering into transactions which would result in an ownership shift in the company of more than 30 % ( measured by vote or value ) or divestitures of certain businesses or entities which could impact the tax-free nature of the spin-off . though valid as between the parties , the tax matters agreement is not binding on the irs . prior to the spin-off , orbital atk or one of its subsidiaries filed income tax returns in the u.s. federal and various u.s. state jurisdictions that included vista outdoor . in addition , certain of our subsidiaries file income tax returns in foreign jurisdictions . after the spin-off we file income tax returns in the u.s. federal , foreign and various u.s. state jurisdictions . with a few exceptions , orbital atk and its subsidiaries and vista outdoor are no longer subject to u.s. federal , state and local , or foreign income tax examinations by tax authorities prior to 2009. the irs has completed the audits of orbital atk through fiscal year 2012 and is currently auditing orbital atk 's tax returns for fiscal years 2013 and 2014. the irs is also currently auditing the our tax return that begins after the spin-off and ends on march 31 , 2015. we believe appropriate provisions for all outstanding issues relating to our portion of these returns have been made for all remaining open years in all jurisdictions . as of march 31 , 2016 and 2015 , the total amount of unrecognized tax benefits was $ 36,194 and $ 30,768 , respectively , of which $ 29,884 and $ 25,875 , respectively , would affect the effective tax rate , if recognized . the remaining balance is related to deferred tax items which only impact the timing of tax payments . although the timing and outcome of audit settlements are uncertain , it is reasonably possible that a $ 5,388 reduction of the uncertain tax benefits will occur in the next 12 months . the settlement of these unrecognized tax benefits could result in earnings from $ 0 to $ 4,574 . see note 11 to the consolidated and combined financial statements for further details . we believe it is more likely than not that the recorded deferred benefits will be realized through the reduction of future taxable income . our recorded valuation allowance of $ 3,234 at march 31 , 2016 relates to certain tax credits , net operating losses and interest carryforwards that are not expected to be realized before their expiration . the valuation allowance decreased during fiscal year 2016 primarily due to the expiration of certain capital losses and credits and the use of certain credits . 38 fiscal 2015 sales the following is a summary of each operating segment 's sales : replace_table_token_9_th the overall fluctuation in net sales was driven
| cash flows the following table summarizes our consolidated cash flows provided by ( used in ) operating , investing and financing activities . replace_table_token_35_th details of our consolidated cash flows are included in `` item 8. financial statements and supplementary data - consolidated statements of cash flows for the years ended december 31 , 2020 , 2019 and 2018 '' of this annual report on form 10-k. 2020 versus 2019 : cash and cash equivalents increased by $ 540.5 million in 2020 compared to $ 73.2 million during 2019 . 74 table of contents cash and cash equivalents increased by $ 540.5 million in 2020 , as cash provided by operating and financing activities of $ 2.8 billion and $ 117.4 million , respectively , was partially offset by cash used in investing activities of $ 2.3 billion . cash provided by operations in 2020 was predominantly driven by : ( i ) the proceeds from net sales and maturities of trading securities of $ 1.7 billion ; and ( ii ) cash and restricted cash acquired in non-life run-off reinsurance transactions of $ 1.6 billion ; partially offset by the timing of paid losses . cash provided by financing activities in 2020 was primarily attributable to net inflows of $ 179.5 million from loan obligations , partially offset by share repurchases and preferred share dividends . cash used in investing activities in 2020 primarily related to net purchases of afs securities of $ 1.9 billion and net subscriptions of other investments of $ 380.3 million . change in cash of business held-for-sale is due to the classification of the assets and liabilities of northshore as held-for-sale as of december 31 , 2020 and the disposal of starstone u.s. cash and cash equivalents increased by $ 73.2 million in 2019 , as cash provided by operating and financing activities of $ 1.4 billion and $ 248.5 million , respectively , was partially offset by cash used in investing activities of $ 1.6 billion .
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we serve a broad range of end consumers , including outdoor enthusiasts , hunters and recreational shooters , athletes , as well as law enforcement and military professionals . our products are sold through a wide variety of mass , specialty and independent retailers , such as bass pro shops , cabela 's , dick 's sporting goods , gander mountain , recreational equipment , inc. , sportsman 's warehouse , target and walmart . we also sell certain of our products directly to consumers through the relevant brand 's website . we have a scalable , integrated portfolio of brands that allows us to leverage our deep customer knowledge , product development and innovation , supply chain and distribution , and sales and marketing functions across product categories to better serve our retail partners and end users . as of march 31 , 2016 , we operated in two business segments . these operating segments are defined based on the reporting and review process used by the chief operating decision maker , vista outdoor 's chief executive officer . as of march 31 , 2016 , vista outdoor 's two operating segments were : shooting sports , which generated 62 % of our sales in fiscal year 2016 . shooting sports product lines include centerfire ammunition , rimfire ammunition , shotshell ammunition , reloading components , centerfire rifles , rimfire rifles , shotguns and range systems . outdoor products , which generated 38 % of our sales in fiscal year 2016 . the outdoor products product lines are archery/hunting accessories , global eyewear and sport protection , golf , hydration products , optics , shooting accessories , tactical products and water sports . archery/hunting accessories include high-performance hunting arrows , game calls , hunting blinds , game cameras and waterfowl decoys . global eyewear and sport protection products include safety and protective eyewear , as well as fashion and sports eyewear and helmets . golf products include laser rangefinders . hydration products include hydration packs and water bottles . optics products include binoculars , riflescopes and telescopes . shooting accessories products include reloading equipment , clay targets , and premium gun care products . tactical products include holsters , duty gear , bags and packs . water sports products include stand up paddle boards . financial highlights and notable events certain notable events or activities affecting our fiscal 2016 financial results and subsequent results included the following : financial highlights for fiscal 2016 annual sales of $ 2,270,734 and $ 2,083,414 for the fiscal years ended march 31 , 2016 and 2015 , respectively . the increase was driven by the acquisition of camelbak and jimmy styks and increase in demand within the shooting sports market , partially offset by unfavorable foreign currency impacts . gross profit was $ 619,445 and $ 528,921 for the fiscal years ended march 31 , 2016 and 2015 , respectively . the increase was driven by the sales increase noted above , product mix , and favorable material procurement . the decrease in the current year 's tax rate to 38.3 % from 48.4 % in the year ended march 31 , 2015 was primarily caused by the absence of the nondeductible goodwill impairment recorded in the prior year period and lower nondeductible transaction costs , partially offset by true-up of deferred taxes and income taxes payable . on july 20 , 2015 , we completed the jimmy styks acquisition , using $ 40,000 of cash on hand with additional contingent consideration payable if incremental profitability growth milestones are achieved over the next three years . on august 3 , 2015 , we completed the acquisition of camelbak products , llc ( the `` camelbak acquisition `` ) for total consideration of $ 412,500 , subject to a customary working capital adjustment , utilizing cash on hand and borrowings under our existing credit facilities . on august 11 , 2015 , we issued $ 350,000 aggregate principal amount of 5.875 % senior notes ( the “ notes ” ) that mature on october 1 , 2023 . 32 during fiscal 2016 , we repurchased 3,179,086 shares for $ 142,200. notable events-subsequent to year end on april 1 , 2016 , we completed the acquisition of brg sports inc. 's action sports division , which was operated by bell sports corp. the acquisition includes the market-leading brands bell and giro , as well as blackburn , copilot , krash and raskullz . under the terms of the transaction , we paid $ 400,000 , subject to customary working capital adjustments , and additional contingent consideration payable if incremental profitability growth milestones within the bell powersports product line are achieved . on april 1 , 2016 , in connection with the action sports acquisition , we completed a refinancing of our senior secured credit facilities , under which our term loan balance was $ 332,500 , by entering into new senior secured credit facilities consisting of a $ 400,000 revolving credit facility and a $ 640,000 term loan facility maturing april 1 , 2021. we also drew $ 80,000 on our revolving credit facility to fund the purchase of action sports . outlook shooting sports market - the current year has seen an increase in the number of new long-gun background checks as evidenced by the nics . this increase along with higher sales on a year-over-year basis within shooting sports in the back half of fiscal year 2016 , indicates the market is stabilizing after the declines seen in fiscal years 2014 and 2015. critical accounting policies our discussion and analysis of our financial condition and results of operations are based upon our consolidated and combined financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states . story_separator_special_tag these increases were partially offset by the absence of a $ 52,220 pre-tax non-cash impairment charge ( $ 41,020 impairment to goodwill and $ 11,200 impairment to tradename ) recorded in the fiscal year ended march 31 , 2015. net interest expense years ended march 31 2016 2015 $ change % change interest expense $ 24,351 $ 30,108 $ ( 5,757 ) ( 19.1 ) % the decrease in interest expense was due to our debt balances being lower than those allocated to us by orbital atk in the prior year period , partially offset by a higher average interest rate . 37 income tax provision replace_table_token_8_th the decrease in the current period tax rate is primarily due to the absence of the nondeductible goodwill impairment recorded in the prior year period and lower nondeductible transaction costs , partially offset by true-up of deferred taxes and income taxes payable . our provision for income taxes includes federal , state and foreign income taxes . the effective tax rate for fiscal 2016 of 38.3 % differs from the federal statutory rate of 35.0 % primarily due to state income taxes and true-up of deferred and payable taxes , partially offset by dmd , which decreased the rate . the effective tax rate for fiscal year 2015 of 48.4 % differs from the federal statutory rate of 35.0 % due to the nondeductible goodwill impairment , state income taxes and nondeductible transaction costs , partially offset by dmd and true-up of prior year taxes , which decreased the rate . we entered into a tax matters agreement with orbital atk that governs the respective rights , responsibilities and obligations of vista outdoor and orbital atk after the spin-off with respect to tax liabilities and benefits , tax attributes , tax contests and other tax sharing regarding u.s. federal , state , local and foreign income taxes , other tax matters and related tax returns . we have joint and several liability with orbital atk to the irs for the consolidated u.s. federal income taxes of the orbital atk consolidated group relating to the taxable periods in which we were part of that group . however , the tax matters agreement specifies the portion , if any , of this tax liability for which we bear responsibility , and orbital atk agrees to indemnify us against any amounts for which the we are not responsible . the tax matters agreement also provides special rules for allocating tax liabilities in the event that the spin-off is determined not to be tax-free . the tax matters agreement provides for certain covenants that may restrict the ability to pursue strategic or other transactions that otherwise could maximize the value of the business and may discourage or delay a change of control . for example , unless we ( or orbital atk , as applicable ) were to receive a supplemental private letter ruling from the irs or an unqualified opinion from a nationally recognized tax advisor , or orbital atk were to grant us a waiver , we would be restricted until two years after the spin-off is consummated from entering into transactions which would result in an ownership shift in the company of more than 30 % ( measured by vote or value ) or divestitures of certain businesses or entities which could impact the tax-free nature of the spin-off . though valid as between the parties , the tax matters agreement is not binding on the irs . prior to the spin-off , orbital atk or one of its subsidiaries filed income tax returns in the u.s. federal and various u.s. state jurisdictions that included vista outdoor . in addition , certain of our subsidiaries file income tax returns in foreign jurisdictions . after the spin-off we file income tax returns in the u.s. federal , foreign and various u.s. state jurisdictions . with a few exceptions , orbital atk and its subsidiaries and vista outdoor are no longer subject to u.s. federal , state and local , or foreign income tax examinations by tax authorities prior to 2009. the irs has completed the audits of orbital atk through fiscal year 2012 and is currently auditing orbital atk 's tax returns for fiscal years 2013 and 2014. the irs is also currently auditing the our tax return that begins after the spin-off and ends on march 31 , 2015. we believe appropriate provisions for all outstanding issues relating to our portion of these returns have been made for all remaining open years in all jurisdictions . as of march 31 , 2016 and 2015 , the total amount of unrecognized tax benefits was $ 36,194 and $ 30,768 , respectively , of which $ 29,884 and $ 25,875 , respectively , would affect the effective tax rate , if recognized . the remaining balance is related to deferred tax items which only impact the timing of tax payments . although the timing and outcome of audit settlements are uncertain , it is reasonably possible that a $ 5,388 reduction of the uncertain tax benefits will occur in the next 12 months . the settlement of these unrecognized tax benefits could result in earnings from $ 0 to $ 4,574 . see note 11 to the consolidated and combined financial statements for further details . we believe it is more likely than not that the recorded deferred benefits will be realized through the reduction of future taxable income . our recorded valuation allowance of $ 3,234 at march 31 , 2016 relates to certain tax credits , net operating losses and interest carryforwards that are not expected to be realized before their expiration . the valuation allowance decreased during fiscal year 2016 primarily due to the expiration of certain capital losses and credits and the use of certain credits . 38 fiscal 2015 sales the following is a summary of each operating segment 's sales : replace_table_token_9_th the overall fluctuation in net sales was driven
| net cash provided by operating activities was $ 154,338 in fiscal 2015 compared to $ 172,310 in fiscal year 2014. this decrease of $ 17,972 was driven by the timing of the collection of receivables and increases in balances settled with orbital atk . 41 investing activities . net cash used for investing activities was $ 503,204 in fiscal 2016 compared to $ 42,869 in fiscal year 2015. this increase of $ 460,335 was primarily caused by the impact of the acquisitions of camelbak and jimmy styks . net cash used for investing activities was $ 42,869 in fiscal 2015 compared to $ 1,341,747 in fiscal year 2014. the decrease of $ 1,298,878 was primarily caused by the impact of the acquisitions of bushnell and savage arms in the prior year . financing activities . net cash provided by financing activities was $ 192,600 in fiscal year 2016 compared to $ 116,126 in fiscal year 2015. this change of $ 76,474 reflects the absence of the dividend to orbital atk of $ 214,000 , partially offset by an increase in share repurchases in the current year of $ 138,097 . net cash provided by financing activities was $ 116,126 in fiscal year 2015 compared to $ 1,209,316 in fiscal year 2014. this change of $ 1,093,190 reflects the issuance of $ 350,000 in debt and the dividend to orbital atk of $ 214,000 as well as changes in orbital atk 's investment in vista outdoor and the allocation of debt to vista outdoor from orbital atk . subsequent to the spin-off , we no longer participate in cash management and funding arrangements with orbital atk . prior to the spin-off , we utilized those arrangements to fund significant expenditures , such as manufacturing capacity expansion and acquisitions . liquidity in addition to our normal operating cash requirements , our principal future cash requirements will be to fund capital expenditures , debt repayments , employee benefit obligations , share repurchases , and any strategic acquisitions . our short-term cash requirements for operations are expected to consist mainly of capital expenditures to maintain and expand production facilities and working capital requirements .
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recent trends in the electric industry include : leveling of demand due to slower population growth , demand side management of energy and an increase in customer-owned generation ; public policy initiatives to reduce ghg emissions and encourage competition for the sale and delivery of electricity ; increased need for infrastructure replacement and grid development to accommodate new technologies ; and technological and financing innovation that facilitate conservation , distributed energy resources , such as customer-owned generation and energy storage , and changes in electricity generation , transmission and distribution . 4 sce is investing in and strengthening its electric grid and driving operational and service excellence to improve system safety , reliability and service while controlling costs and rates . the electric distribution grid is an important component of california 's public policy goals to support a cleaner environment . these policy goals continue to advance as california moves forward in implementing senate bill 350. sb 350 requires retail sellers of electricity to procure 50 % of their customers ' electricity requirements from renewable resources by 2030. california policy goals also promote an increase in electric vehicle usage and investment in charging infrastructure . these goals may create opportunities for the electric grid to enable ghg emission reductions by providing the supporting infrastructure to increase adoption of customer-owned generation , electric storage , and electric vehicles but they may increase customer rates and add technical complexity and risk to the safe and reliable operation of the electric grid . in 2015 , sce filed a distribution resources plan ( “ drp ” ) with the cpuc as part of the cpuc 's initiative to address , among other issues , the increased penetration of customer-owned generation and other distributed energy resources , such as rooftop solar . for more information , see `` —capital program—distribution grid development—distribution resources plan `` below . edison international is also investing in competitive businesses . these include small , targeted investments in energy service companies that utilize technologies and access markets to capitalize on the changes in the electric industry . current areas of focus are providing energy services to commercial and industrial customers , including distributed resources , engaging in competitive transmission opportunities , and exploring distributed water treatment and recycling . capital program sce forecasts capital expenditures for 2016 – 2017 in the range of $ 8.0 billion to $ 8.3 billion . the forecast includes the level of spending authorized in the 2015 grc decision . the low end of the range reflects a 3 % reduction from forecasted levels for ferc projects using management judgment based on historical experience . total capital expenditures ( including accruals ) , were $ 3.9 billion in 2015 and $ 4.0 billion in 2014. sce 's year-end rate base ( excluding san onofre ) was $ 24.6 billion at december 31 , 2015 compared to $ 23.3 billion at december 31 , 2014. sce 's 2015 actual capital expenditures ( including accruals ) and the 2016 – 2017 forecast for major capital expenditures are set forth in the table below : replace_table_token_4_th capital expenditures for projects under cpuc jurisdiction are recovered through the authorized revenue requirement in sce 's grcs or through other cpuc-authorized mechanisms . recovery for 2016 – 2017 planned expenditures for projects under ferc jurisdiction will be pursued through ferc-authorized mechanisms . sce is scheduled to file its 2018 grc application in september 2016 , which will include a capital expenditures forecast for 2018 – 2020. the completion of projects , the timing of expenditures , and the associated cost recovery may be affected by permitting requirements and delays , construction schedules , availability of labor , equipment and materials , financing , legal and regulatory approvals and developments , community requests or protests , weather and other unforeseen conditions . 5 at december 31 , 2015 , sce 's rate base authorized in the 2015 grc and recorded rate base for ferc jurisdictional assets determined in accordance with sce 's ferc formula rate are summarized as follows : replace_table_token_5_th 1 excludes rate base adjustment of $ 324 million . see `` —regulatory proceedings—2015 general rate case `` for further discussion . 2 includes $ 13 million and $ 6 million reduction from extension of bonus depreciation for pole loading and ferc , respectively . sce 's forecasted rate base for 2016 and 2017 is as follows : replace_table_token_6_th 1 refer to footnote 1 in previous table . the forecasted rate base for 2016 and 2017 includes the net impact of extension of bonus depreciation , which reduces average rate base by $ 298 million and $ 701 million , respectively . distribution grid development distribution resources plan on july 1 , 2015 , sce filed its drp with the cpuc . the filing was made as part of a cpuc proceeding that was initiated to support california 's ghg reduction targets , modernize the electric distribution system to accommodate two-way flows of energy associated with distributed energy resources , such as rooftop solar , and facilitate customer choice of new technologies and services that reduce emissions and improve resilience . sce 's drp included an indicative forecast of capital investment in distribution automation , substation automation , communications systems , technology platforms and applications , and grid reinforcement . subject to future cpuc guidance , sce anticipates integrating authorization for revenue to support drp operation and maintenance and capital spending into future general rate cases , beginning with its 2018 – 2020 grc . story_separator_special_tag utility cost-recovery activities – representing cpuc- and ferc-authorized balancing accounts which allow for recovery of specific project or program costs , subject to reasonableness review or compliance with upfront standards . utility cost-recovery activities include rates which provide recovery , subject to reasonableness review of , among other things , fuel costs , purchased power costs , public purpose related-program costs ( including energy efficiency and demand-side management programs ) and certain operation and maintenance expenses . revenue impact of 2015 grc decision as indicated in the table below , revenue in the 2015 grc decision is lower than the amount authorized in 2014 due to lower operation and maintenance costs and income taxes . accordingly , sce will refund $ 451 million to customers beginning in january 2016. the following table summarizes the 2015 grc decision compared to the amounts of revenue currently authorized : replace_table_token_7_th 1 authorized revenue for operation and maintenance costs decreased due to : $ 72 million reduction in cost-recovery activities , which does not impact earnings , primarily for pension , postretirement benefits other than pensions ( pbop ) , medical and results sharing costs . these cost-recovery activities are recorded through balancing accounts , which allow for recovery of these specific projects or program costs , subject to reasonableness review . $ 93 million reduction for utility earning activities primarily from sce 's initiatives to improve operational efficiency which has resulted in lower forecasted operation and maintenance costs than included in the 2014 authorized amounts . 2 authorized revenue for income taxes decreased due to flow-through items for income tax benefits – primarily repair and cost of removal deductions ( see `` notes to consolidated financial statements—note 7. income taxes `` for a discussion on flow-through regulatory accounting ) . forecasted flow-through items increased in the 2015 grc from the amounts reflected in 2014 authorized revenue which is reflected as lower revenue requirement . 10 the following table is a summary of sce 's results of operations for the periods indicated . replace_table_token_8_th 1 see use of non-gaap financial measures in `` management overview—highlights of operating results . `` utility earning activities 2015 vs 2014 utility earning activities were primarily affected by the following : lower operating revenue of $ 526 million is primarily due to : a decrease in authorized cpuc revenue of $ 379 million ( excludes amounts classified as cost-recovery activities ) . the decrease in revenue is primarily due to lower authorized revenue for operation and maintenance expenses and for flow-through items for income tax benefits related to repair and cost of removal deductions . a decrease in revenue from approximately $ 300 million of tax benefits in excess of amounts authorized in the 2015 grc and recognized through the tama and the pole loading balancing account ( offset in income tax benefits discussed below ) . in addition , sce recorded $ 39 million ( $ 26 million after-tax ) of incremental return on the pole loading rate base recorded through this balancing account . an increase in ferc-related revenue of $ 83 million primarily related to rate base growth and higher operating costs . an increase in san onofre-related revenue of $ 40 million due to the implementation of the san onofre oii settlement agreement . revenue for san onofre for 2015 primarily related to recovery of amortization of the regulatory asset and authorized return as provided by the san onofre settlement agreement compared to revenue in 2014 related to recovery of san onofre 's cost of service . 11 energy efficiency incentive awards were $ 29 million in 2015 compared to $ 22 million in 2014. sce 's portion of neil insurance and legal cost recoveries of approximately $ 20 million in 2015 ( see `` notes to the consolidated financial statements—note 11. commitments and contingencies—san onofre related matters `` for further information on the agreement with neil ) . higher revenue in 2014 from approval by the cpuc of a $ 30 million increase in the 2012-2014 authorized revenue requirement related to deferred income taxes and from $ 15 million of generator settlements . see “ notes to the consolidated financial statements—note 10. regulatory assets and liabilities—regulatory balancing accounts . ” lower operation and maintenance expense of $ 129 million primarily due to : lower san onofre-related expense of $ 93 million . during 2014 , san onofre-related expenses were recorded as operation and maintenance expenses . during 2015 , the cpuc authorized sce reimbursement of 2014 costs from the nuclear decommissioning trusts with such reimbursement subsequently refunded to customers . during 2015 , decommissioning expenses were reimbursed from the nuclear decommissioning trust and , therefore , did not result in operation and maintenance expenses . a decrease of $ 77 million primarily related to transmission and distribution , legal , and customer service costs partially offset by higher outside service costs in 2015. higher severance costs related to workforce reduction efforts ( $ 26 million in 2015 and $ 2 million in 2014 ) . in 2015 , sce incurred a penalty of $ 16.74 million related to ex parte communications ( see `` notes to consolidated financial statements—note 11. commitments and contingencies `` for further information ) . higher depreciation , decommissioning and amortization expense of $ 195 million primarily due to san onofre-related expense of $ 134 million in 2015 related to the amortization of the regulatory asset and a $ 61 million increase in depreciation primarily related to transmission and distribution investments . higher property and other taxes of $ 16 million primarily due to an increase in assessed property values in 2015. impairment and other charges of $ 163 million ( $ 72 million after-tax ) in 2014 related to the san onofre oii settlement agreement , as discussed below . higher other income and expenses of $ 21 million primarily due to higher afudc equity income related to a higher rate and higher construction work in progress balances in
| net cash provided by operating activities was $ 154,338 in fiscal 2015 compared to $ 172,310 in fiscal year 2014. this decrease of $ 17,972 was driven by the timing of the collection of receivables and increases in balances settled with orbital atk . 41 investing activities . net cash used for investing activities was $ 503,204 in fiscal 2016 compared to $ 42,869 in fiscal year 2015. this increase of $ 460,335 was primarily caused by the impact of the acquisitions of camelbak and jimmy styks . net cash used for investing activities was $ 42,869 in fiscal 2015 compared to $ 1,341,747 in fiscal year 2014. the decrease of $ 1,298,878 was primarily caused by the impact of the acquisitions of bushnell and savage arms in the prior year . financing activities . net cash provided by financing activities was $ 192,600 in fiscal year 2016 compared to $ 116,126 in fiscal year 2015. this change of $ 76,474 reflects the absence of the dividend to orbital atk of $ 214,000 , partially offset by an increase in share repurchases in the current year of $ 138,097 . net cash provided by financing activities was $ 116,126 in fiscal year 2015 compared to $ 1,209,316 in fiscal year 2014. this change of $ 1,093,190 reflects the issuance of $ 350,000 in debt and the dividend to orbital atk of $ 214,000 as well as changes in orbital atk 's investment in vista outdoor and the allocation of debt to vista outdoor from orbital atk . subsequent to the spin-off , we no longer participate in cash management and funding arrangements with orbital atk . prior to the spin-off , we utilized those arrangements to fund significant expenditures , such as manufacturing capacity expansion and acquisitions . liquidity in addition to our normal operating cash requirements , our principal future cash requirements will be to fund capital expenditures , debt repayments , employee benefit obligations , share repurchases , and any strategic acquisitions . our short-term cash requirements for operations are expected to consist mainly of capital expenditures to maintain and expand production facilities and working capital requirements .
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recent trends in the electric industry include : leveling of demand due to slower population growth , demand side management of energy and an increase in customer-owned generation ; public policy initiatives to reduce ghg emissions and encourage competition for the sale and delivery of electricity ; increased need for infrastructure replacement and grid development to accommodate new technologies ; and technological and financing innovation that facilitate conservation , distributed energy resources , such as customer-owned generation and energy storage , and changes in electricity generation , transmission and distribution . 4 sce is investing in and strengthening its electric grid and driving operational and service excellence to improve system safety , reliability and service while controlling costs and rates . the electric distribution grid is an important component of california 's public policy goals to support a cleaner environment . these policy goals continue to advance as california moves forward in implementing senate bill 350. sb 350 requires retail sellers of electricity to procure 50 % of their customers ' electricity requirements from renewable resources by 2030. california policy goals also promote an increase in electric vehicle usage and investment in charging infrastructure . these goals may create opportunities for the electric grid to enable ghg emission reductions by providing the supporting infrastructure to increase adoption of customer-owned generation , electric storage , and electric vehicles but they may increase customer rates and add technical complexity and risk to the safe and reliable operation of the electric grid . in 2015 , sce filed a distribution resources plan ( “ drp ” ) with the cpuc as part of the cpuc 's initiative to address , among other issues , the increased penetration of customer-owned generation and other distributed energy resources , such as rooftop solar . for more information , see `` —capital program—distribution grid development—distribution resources plan `` below . edison international is also investing in competitive businesses . these include small , targeted investments in energy service companies that utilize technologies and access markets to capitalize on the changes in the electric industry . current areas of focus are providing energy services to commercial and industrial customers , including distributed resources , engaging in competitive transmission opportunities , and exploring distributed water treatment and recycling . capital program sce forecasts capital expenditures for 2016 – 2017 in the range of $ 8.0 billion to $ 8.3 billion . the forecast includes the level of spending authorized in the 2015 grc decision . the low end of the range reflects a 3 % reduction from forecasted levels for ferc projects using management judgment based on historical experience . total capital expenditures ( including accruals ) , were $ 3.9 billion in 2015 and $ 4.0 billion in 2014. sce 's year-end rate base ( excluding san onofre ) was $ 24.6 billion at december 31 , 2015 compared to $ 23.3 billion at december 31 , 2014. sce 's 2015 actual capital expenditures ( including accruals ) and the 2016 – 2017 forecast for major capital expenditures are set forth in the table below : replace_table_token_4_th capital expenditures for projects under cpuc jurisdiction are recovered through the authorized revenue requirement in sce 's grcs or through other cpuc-authorized mechanisms . recovery for 2016 – 2017 planned expenditures for projects under ferc jurisdiction will be pursued through ferc-authorized mechanisms . sce is scheduled to file its 2018 grc application in september 2016 , which will include a capital expenditures forecast for 2018 – 2020. the completion of projects , the timing of expenditures , and the associated cost recovery may be affected by permitting requirements and delays , construction schedules , availability of labor , equipment and materials , financing , legal and regulatory approvals and developments , community requests or protests , weather and other unforeseen conditions . 5 at december 31 , 2015 , sce 's rate base authorized in the 2015 grc and recorded rate base for ferc jurisdictional assets determined in accordance with sce 's ferc formula rate are summarized as follows : replace_table_token_5_th 1 excludes rate base adjustment of $ 324 million . see `` —regulatory proceedings—2015 general rate case `` for further discussion . 2 includes $ 13 million and $ 6 million reduction from extension of bonus depreciation for pole loading and ferc , respectively . sce 's forecasted rate base for 2016 and 2017 is as follows : replace_table_token_6_th 1 refer to footnote 1 in previous table . the forecasted rate base for 2016 and 2017 includes the net impact of extension of bonus depreciation , which reduces average rate base by $ 298 million and $ 701 million , respectively . distribution grid development distribution resources plan on july 1 , 2015 , sce filed its drp with the cpuc . the filing was made as part of a cpuc proceeding that was initiated to support california 's ghg reduction targets , modernize the electric distribution system to accommodate two-way flows of energy associated with distributed energy resources , such as rooftop solar , and facilitate customer choice of new technologies and services that reduce emissions and improve resilience . sce 's drp included an indicative forecast of capital investment in distribution automation , substation automation , communications systems , technology platforms and applications , and grid reinforcement . subject to future cpuc guidance , sce anticipates integrating authorization for revenue to support drp operation and maintenance and capital spending into future general rate cases , beginning with its 2018 – 2020 grc . story_separator_special_tag utility cost-recovery activities – representing cpuc- and ferc-authorized balancing accounts which allow for recovery of specific project or program costs , subject to reasonableness review or compliance with upfront standards . utility cost-recovery activities include rates which provide recovery , subject to reasonableness review of , among other things , fuel costs , purchased power costs , public purpose related-program costs ( including energy efficiency and demand-side management programs ) and certain operation and maintenance expenses . revenue impact of 2015 grc decision as indicated in the table below , revenue in the 2015 grc decision is lower than the amount authorized in 2014 due to lower operation and maintenance costs and income taxes . accordingly , sce will refund $ 451 million to customers beginning in january 2016. the following table summarizes the 2015 grc decision compared to the amounts of revenue currently authorized : replace_table_token_7_th 1 authorized revenue for operation and maintenance costs decreased due to : $ 72 million reduction in cost-recovery activities , which does not impact earnings , primarily for pension , postretirement benefits other than pensions ( pbop ) , medical and results sharing costs . these cost-recovery activities are recorded through balancing accounts , which allow for recovery of these specific projects or program costs , subject to reasonableness review . $ 93 million reduction for utility earning activities primarily from sce 's initiatives to improve operational efficiency which has resulted in lower forecasted operation and maintenance costs than included in the 2014 authorized amounts . 2 authorized revenue for income taxes decreased due to flow-through items for income tax benefits – primarily repair and cost of removal deductions ( see `` notes to consolidated financial statements—note 7. income taxes `` for a discussion on flow-through regulatory accounting ) . forecasted flow-through items increased in the 2015 grc from the amounts reflected in 2014 authorized revenue which is reflected as lower revenue requirement . 10 the following table is a summary of sce 's results of operations for the periods indicated . replace_table_token_8_th 1 see use of non-gaap financial measures in `` management overview—highlights of operating results . `` utility earning activities 2015 vs 2014 utility earning activities were primarily affected by the following : lower operating revenue of $ 526 million is primarily due to : a decrease in authorized cpuc revenue of $ 379 million ( excludes amounts classified as cost-recovery activities ) . the decrease in revenue is primarily due to lower authorized revenue for operation and maintenance expenses and for flow-through items for income tax benefits related to repair and cost of removal deductions . a decrease in revenue from approximately $ 300 million of tax benefits in excess of amounts authorized in the 2015 grc and recognized through the tama and the pole loading balancing account ( offset in income tax benefits discussed below ) . in addition , sce recorded $ 39 million ( $ 26 million after-tax ) of incremental return on the pole loading rate base recorded through this balancing account . an increase in ferc-related revenue of $ 83 million primarily related to rate base growth and higher operating costs . an increase in san onofre-related revenue of $ 40 million due to the implementation of the san onofre oii settlement agreement . revenue for san onofre for 2015 primarily related to recovery of amortization of the regulatory asset and authorized return as provided by the san onofre settlement agreement compared to revenue in 2014 related to recovery of san onofre 's cost of service . 11 energy efficiency incentive awards were $ 29 million in 2015 compared to $ 22 million in 2014. sce 's portion of neil insurance and legal cost recoveries of approximately $ 20 million in 2015 ( see `` notes to the consolidated financial statements—note 11. commitments and contingencies—san onofre related matters `` for further information on the agreement with neil ) . higher revenue in 2014 from approval by the cpuc of a $ 30 million increase in the 2012-2014 authorized revenue requirement related to deferred income taxes and from $ 15 million of generator settlements . see “ notes to the consolidated financial statements—note 10. regulatory assets and liabilities—regulatory balancing accounts . ” lower operation and maintenance expense of $ 129 million primarily due to : lower san onofre-related expense of $ 93 million . during 2014 , san onofre-related expenses were recorded as operation and maintenance expenses . during 2015 , the cpuc authorized sce reimbursement of 2014 costs from the nuclear decommissioning trusts with such reimbursement subsequently refunded to customers . during 2015 , decommissioning expenses were reimbursed from the nuclear decommissioning trust and , therefore , did not result in operation and maintenance expenses . a decrease of $ 77 million primarily related to transmission and distribution , legal , and customer service costs partially offset by higher outside service costs in 2015. higher severance costs related to workforce reduction efforts ( $ 26 million in 2015 and $ 2 million in 2014 ) . in 2015 , sce incurred a penalty of $ 16.74 million related to ex parte communications ( see `` notes to consolidated financial statements—note 11. commitments and contingencies `` for further information ) . higher depreciation , decommissioning and amortization expense of $ 195 million primarily due to san onofre-related expense of $ 134 million in 2015 related to the amortization of the regulatory asset and a $ 61 million increase in depreciation primarily related to transmission and distribution investments . higher property and other taxes of $ 16 million primarily due to an increase in assessed property values in 2015. impairment and other charges of $ 163 million ( $ 72 million after-tax ) in 2014 related to the san onofre oii settlement agreement , as discussed below . higher other income and expenses of $ 21 million primarily due to higher afudc equity income related to a higher rate and higher construction work in progress balances in
| net cash used by operating activities net cash used by operating activities decreased in 2015 by $ 297 million from 2014 and increased in 2014 by $ 331 million from 2013 due to : $ 204 million and $ 225 million of cash payments made to the reorganization trust in september 2015 and april 2014 related to the eme settlement agreement , respectively , see `` —notes to consolidated financial statements—note 15. discontinued operations—eme chapter 11 bankruptcy '' for further information . $ 143 million receipt of intercompany tax-allocation payments in 2015 and a $ 189 million deposit made with the irs in 2014 related to open tax years 2003 through 2006 . $ 54 million cash outflow from operating activities in 2015 , compared to $ 2 million cash inflow in 2014 and $ 81 million cash outflow in 2013 , due to the timing of payments and receipts relating to interest and operating costs . 23 net cash provided by financing activities net cash provided by financing activities were as follows : replace_table_token_18_th 1 includes $ 20 million debt financing for edison energy group , see `` notes to consolidated financial statements—note 5. debt and credit agreements—project financings . '' net cash used by investing activities net cash used by investing activities during 2015 primarily relates to approximately $ 100 million in acquisitions of three companies that support edison energy group 's commercial and industrial services growth strategy and $ 15 million related to edison energy group 's capital expenditures for commercial solar installations . see `` notes to consolidated financial statements—note 9. investments '' for further information . net cash used by investing activities during 2014 relate to edison energy group 's capital expenditures of $ 49 million for commercial solar installations . contractual obligations and contingencies contractual obligations edison international parent and other and sce 's contractual obligations as of december 31 , 2015 , for the years 2016 through 2020 and thereafter are estimated below . replace_table_token_19_th 1 for additional details , see `` notes to consolidated financial statements—note 5. debt and credit agreements . '' amount includes interest payments totaling $ 8.86 billion and $ 34 million over applicable period of the debt for sce and edison international parent and other , respectively .
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although our jurisdiction of organization is ireland , we manage our affairs so that we are centrally managed and controlled in the united kingdom ( the `` u.k. `` ) and therefore have our tax residency in the u.k. our former parent company , pentair ltd. , took its form on september 28 , 2012 as a result of a reverse acquisition ( the `` merger `` ) involving pentair , inc. and an indirect , wholly-owned subsidiary of flow control ( defined below ) , with pentair , inc. surviving as an indirect , wholly-owned subsidiary of pentair ltd. `` flow control `` refers to pentair ltd. prior the merger . prior to the merger , tyco international ltd. ( `` tyco `` ) engaged in an internal restructuring whereby it transferred to flow control certain assets related to the flow control business of tyco , and flow control assumed from tyco certain liabilities related to the flow control business of tyco . on september 28 , 2012 prior to the merger , tyco effected a spin-off of flow control through the pro-rata distribution of 100 % of the outstanding ordinary shares of flow control to tyco 's shareholders ( the `` distribution `` ) , resulting in the distribution of approximately 110.9 million of our ordinary shares to tyco 's shareholders . the merger was accounted for as a reverse acquisition under the purchase method of accounting with pentair , inc. treated as the acquirer . on january 30 , 2014 , we acquired , as part of water quality systems , the remaining 19.9 percent ownership interest in two entities , a u.s. entity and an international entity ( collectively , pentair residential filtration or `` prf `` ) , from ge water & process technologies ( a unit of general electric company ) ( `` ge `` ) for $ 134.3 million in cash . prior to the acquisition , we held a 80.1 percent ownership equity interest in prf , representing our and ge 's respective global water softener and residential water filtration businesses . 25 on july 28 , 2014 , our board of directors approved a decision to exit our water transport business in australia . the results of the water transport business have been presented as discontinued operations and the assets and liabilities of the water transport business have been reclassified as held for sale for all periods presented . during 2014 , we recognized an impairment charge related to allocated amounts of goodwill , intangible assets , property , plant & equipment and other non-current assets totaling $ 380.1 million , net of tax , representing our estimated loss on disposal of the water transport business . the sale of the water transport business was completed in 2015. on september 18 , 2015 , we acquired , as part of technical solutions , all of the outstanding shares of capital stock of erico global company ( `` erico `` ) for approximately $ 1.8 billion ( the `` erico acquisition `` ) . erico is a leading global manufacturer and marketer of engineered electrical and fastening products for electrical , mechanical and civil applications . erico has employees in 30 countries across the world with recognized brands including caddy fixing , fastening and support products ; erico electrical grounding , bonding and connectivity products and lenton engineered systems . during the latter part of the fourth quarter of 2015 , the oil and gas industry continued to deteriorate , leading management to reconsider its estimates for future profitability of valves & controls . as a result , for the year ended december 31 , 2015 , we recognized a pre-tax , non-cash impairment charge of $ 554.7 million related to goodwill and trade name intangible assets in valves & controls . key trends and uncertainties regarding our existing business the following trends and uncertainties affected our financial performance in 2015 and 2014 , and will likely impact our results in the future : in late 2014 and continuing through 2015 , our results were negatively impacted due to the strengthening of the u.s. dollar against most key global currencies . we expect this trend to continue into 2016. in 2015 , we experienced declines in project orders , particularly within the energy and industrial businesses . we expect headwinds in the energy and industrial business to continue and oil prices to remain depressed throughout 2016. in the last three quarters of 2015 , we initiated further restructuring actions to offset the negative earnings impact of foreign exchange and core revenue decline . we expect to continue these actions into 2016 and these actions will contribute to margin growth in 2016. we have identified specific product and geographic market opportunities that we find attractive and continue to pursue , both within and outside the united states . we are reinforcing our businesses to more effectively address these opportunities through research and development and additional sales and marketing resources . unless we successfully penetrate these markets , our core sales growth will likely be limited or may decline . despite the favorable long-term outlook for our end-markets , we experience differing levels of volatility depending on the end-market and may continue to do so over the medium and longer term . while we believe the general trends are favorable , factors specific to each of our major end-markets may negatively affect the capital spending plans of our customers and lead to lower sales volumes for us . through 2014 and into 2015 , we experienced material and other cost inflation . we strive for productivity improvements , and we implement increases in selling prices to help mitigate this inflation . we expect the current economic environment will result in continuing price volatility for many of our raw materials . commodity prices have declined , but we are uncertain as to the timing and impact of these market changes . story_separator_special_tag these increase s were partially offset by : a strong u.s. dollar causing unfavorable foreign currency effects ; lower core sales volumes in our infrastructure business , primarily due to broad-based slowing of global capital spending ; and a decrease in demand for products in developing regions . the 3.9 percent increase in technical solutions sales in 2014 from 2013 was primarily the result of : higher sales volume in the u.s. , china and canada ; increased sales in our industrial , infrastructure and residential & commercial businesses ; and selective increases in selling prices to mitigate inflationary cost increases . these increase s were partially offset by : unfavorable foreign currency effects ; and loss of revenue related to the divestiture of a business at the end of the first quarter of 2013. segment income the components of the change in technical solutions segment income from the prior period were as follows : replace_table_token_19_th the 0.1 percentage point decrease in segment income for technical solutions as a percentage of net sales in 2015 from 2014 and was primarily the result of : high margin project sales in 2014 that did not recur in 2015 ; lower core sales volumes in our infrastructure business , which resulted in decreased leverage on operating expenses ; and 35 inflationary increases related to labor costs and certain raw materials . these decrease s were partially offset by : higher core sales volumes in our energy and commercial businesses , which resulted in increased leverage on operating expenses ; and selective increases in selling prices to mitigate inflationary cost increases . the 1.3 percentage point increase in segment income for technical solutions as a percentage of sales in 2014 from 2013 was primarily the result of : higher sales volume in our industrial , infrastructure and residential & commercial businesses , which resulted in increased leverage on operating expenses ; and selective increases in selling prices to mitigate inflationary cost increases . these increase s were partially offset by : inflationary increases related to labor costs and certain raw materials . liquidity and capital resources we generally fund cash requirements for working capital , capital expenditures , equity investments , acquisitions , debt repayments , dividend payments and share repurchases from cash generated from operations , availability under existing committed revolving credit facilities and in certain instances , public and private debt and equity offerings . we have grown our businesses in significant part in the past through acquisitions financed by credit provided under our revolving credit facilities and from time to time , by private or public debt issuance . our primary revolving credit facilities have generally been adequate for these purposes , although we have negotiated additional credit facilities as needed to allow us to complete acquisitions . we intend to issue commercial paper to fund our financing needs on a short-term basis and to use our revolving credit facility as back-up liquidity to support commercial paper . we are focusing on increasing our cash flow and repaying existing debt , while continuing to fund our research and development , marketing and capital investment initiatives . our intent is to maintain investment grade ratings and a solid liquidity position . we experience seasonal cash flows primarily due to seasonal demand in a number of markets within flow & filtration solutions and water quality systems . we generally borrow in the first quarter of our fiscal year for operational purposes , which usage reverses in the second quarter as the seasonality of our businesses peaks . end-user demand for pool and certain pumping equipment follows warm weather trends and is at seasonal highs from april to august . the magnitude of the sales spike is partially mitigated by employing some advance sale `` early buy `` programs ( generally including extended payment terms and or additional discounts ) . demand for residential and agricultural water systems is also impacted by weather patterns , particularly by heavy flooding and droughts . additionally , technical solutions generally experiences increased demand for thermal protection products and services during the fall and winter months in the northern hemisphere . operating activities cash provided by operating activities of continuing operations was $ 750.0 million in 2015 , or $ 255.0 million lower than in 2014 . the decrease in cash provided by operating activities from continuing operations was due primarily to a $ 173.2 million decrease in net income ( loss ) from continuing operations before noncontrolling interest , net of the following non-cash items : depreciation and amortization , loss ( gain ) on sale of businesses , goodwill and trade name impairment and pension and other post-retirement expense ( income ) . cash provided by operating activities from continuing operations was $ 1,005.0 million in 2014 , or $ 73.7 million higher than in 2013 . the increase in cash provided by operating activities from continuing operations was due primarily to a $ 184.3 million increase in net income ( loss ) before noncontrolling interest , net of the following non-cash items : depreciation and amortization , loss ( gain ) on sale of businesses , trade name impairment and pension and other post-retirement expense ( income ) . investing activities story_separator_special_tag style= `` font-family : inherit ; font-size:10pt ; `` > december 31 , 2015 , we were in compliance with all financial covenants in our debt agreements . total availability under the amended credit facility was $ 1,139.1 million as of december 31 , 2015 , which was limited to $ 640.6 million by the leverage ratio in the amended credit facility 's credit agreement . in addition to the amended credit facility , we have various other credit facilities with an aggregate availability of $ 50.6 million , of which none was outstanding at december 31 , 2015 . borrowings under these credit facilities bear interest at variable rates . as of december 31 , 2015 , we had $ 64.2 million
| net cash used by operating activities net cash used by operating activities decreased in 2015 by $ 297 million from 2014 and increased in 2014 by $ 331 million from 2013 due to : $ 204 million and $ 225 million of cash payments made to the reorganization trust in september 2015 and april 2014 related to the eme settlement agreement , respectively , see `` —notes to consolidated financial statements—note 15. discontinued operations—eme chapter 11 bankruptcy '' for further information . $ 143 million receipt of intercompany tax-allocation payments in 2015 and a $ 189 million deposit made with the irs in 2014 related to open tax years 2003 through 2006 . $ 54 million cash outflow from operating activities in 2015 , compared to $ 2 million cash inflow in 2014 and $ 81 million cash outflow in 2013 , due to the timing of payments and receipts relating to interest and operating costs . 23 net cash provided by financing activities net cash provided by financing activities were as follows : replace_table_token_18_th 1 includes $ 20 million debt financing for edison energy group , see `` notes to consolidated financial statements—note 5. debt and credit agreements—project financings . '' net cash used by investing activities net cash used by investing activities during 2015 primarily relates to approximately $ 100 million in acquisitions of three companies that support edison energy group 's commercial and industrial services growth strategy and $ 15 million related to edison energy group 's capital expenditures for commercial solar installations . see `` notes to consolidated financial statements—note 9. investments '' for further information . net cash used by investing activities during 2014 relate to edison energy group 's capital expenditures of $ 49 million for commercial solar installations . contractual obligations and contingencies contractual obligations edison international parent and other and sce 's contractual obligations as of december 31 , 2015 , for the years 2016 through 2020 and thereafter are estimated below . replace_table_token_19_th 1 for additional details , see `` notes to consolidated financial statements—note 5. debt and credit agreements . '' amount includes interest payments totaling $ 8.86 billion and $ 34 million over applicable period of the debt for sce and edison international parent and other , respectively .
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although our jurisdiction of organization is ireland , we manage our affairs so that we are centrally managed and controlled in the united kingdom ( the `` u.k. `` ) and therefore have our tax residency in the u.k. our former parent company , pentair ltd. , took its form on september 28 , 2012 as a result of a reverse acquisition ( the `` merger `` ) involving pentair , inc. and an indirect , wholly-owned subsidiary of flow control ( defined below ) , with pentair , inc. surviving as an indirect , wholly-owned subsidiary of pentair ltd. `` flow control `` refers to pentair ltd. prior the merger . prior to the merger , tyco international ltd. ( `` tyco `` ) engaged in an internal restructuring whereby it transferred to flow control certain assets related to the flow control business of tyco , and flow control assumed from tyco certain liabilities related to the flow control business of tyco . on september 28 , 2012 prior to the merger , tyco effected a spin-off of flow control through the pro-rata distribution of 100 % of the outstanding ordinary shares of flow control to tyco 's shareholders ( the `` distribution `` ) , resulting in the distribution of approximately 110.9 million of our ordinary shares to tyco 's shareholders . the merger was accounted for as a reverse acquisition under the purchase method of accounting with pentair , inc. treated as the acquirer . on january 30 , 2014 , we acquired , as part of water quality systems , the remaining 19.9 percent ownership interest in two entities , a u.s. entity and an international entity ( collectively , pentair residential filtration or `` prf `` ) , from ge water & process technologies ( a unit of general electric company ) ( `` ge `` ) for $ 134.3 million in cash . prior to the acquisition , we held a 80.1 percent ownership equity interest in prf , representing our and ge 's respective global water softener and residential water filtration businesses . 25 on july 28 , 2014 , our board of directors approved a decision to exit our water transport business in australia . the results of the water transport business have been presented as discontinued operations and the assets and liabilities of the water transport business have been reclassified as held for sale for all periods presented . during 2014 , we recognized an impairment charge related to allocated amounts of goodwill , intangible assets , property , plant & equipment and other non-current assets totaling $ 380.1 million , net of tax , representing our estimated loss on disposal of the water transport business . the sale of the water transport business was completed in 2015. on september 18 , 2015 , we acquired , as part of technical solutions , all of the outstanding shares of capital stock of erico global company ( `` erico `` ) for approximately $ 1.8 billion ( the `` erico acquisition `` ) . erico is a leading global manufacturer and marketer of engineered electrical and fastening products for electrical , mechanical and civil applications . erico has employees in 30 countries across the world with recognized brands including caddy fixing , fastening and support products ; erico electrical grounding , bonding and connectivity products and lenton engineered systems . during the latter part of the fourth quarter of 2015 , the oil and gas industry continued to deteriorate , leading management to reconsider its estimates for future profitability of valves & controls . as a result , for the year ended december 31 , 2015 , we recognized a pre-tax , non-cash impairment charge of $ 554.7 million related to goodwill and trade name intangible assets in valves & controls . key trends and uncertainties regarding our existing business the following trends and uncertainties affected our financial performance in 2015 and 2014 , and will likely impact our results in the future : in late 2014 and continuing through 2015 , our results were negatively impacted due to the strengthening of the u.s. dollar against most key global currencies . we expect this trend to continue into 2016. in 2015 , we experienced declines in project orders , particularly within the energy and industrial businesses . we expect headwinds in the energy and industrial business to continue and oil prices to remain depressed throughout 2016. in the last three quarters of 2015 , we initiated further restructuring actions to offset the negative earnings impact of foreign exchange and core revenue decline . we expect to continue these actions into 2016 and these actions will contribute to margin growth in 2016. we have identified specific product and geographic market opportunities that we find attractive and continue to pursue , both within and outside the united states . we are reinforcing our businesses to more effectively address these opportunities through research and development and additional sales and marketing resources . unless we successfully penetrate these markets , our core sales growth will likely be limited or may decline . despite the favorable long-term outlook for our end-markets , we experience differing levels of volatility depending on the end-market and may continue to do so over the medium and longer term . while we believe the general trends are favorable , factors specific to each of our major end-markets may negatively affect the capital spending plans of our customers and lead to lower sales volumes for us . through 2014 and into 2015 , we experienced material and other cost inflation . we strive for productivity improvements , and we implement increases in selling prices to help mitigate this inflation . we expect the current economic environment will result in continuing price volatility for many of our raw materials . commodity prices have declined , but we are uncertain as to the timing and impact of these market changes . story_separator_special_tag these increase s were partially offset by : a strong u.s. dollar causing unfavorable foreign currency effects ; lower core sales volumes in our infrastructure business , primarily due to broad-based slowing of global capital spending ; and a decrease in demand for products in developing regions . the 3.9 percent increase in technical solutions sales in 2014 from 2013 was primarily the result of : higher sales volume in the u.s. , china and canada ; increased sales in our industrial , infrastructure and residential & commercial businesses ; and selective increases in selling prices to mitigate inflationary cost increases . these increase s were partially offset by : unfavorable foreign currency effects ; and loss of revenue related to the divestiture of a business at the end of the first quarter of 2013. segment income the components of the change in technical solutions segment income from the prior period were as follows : replace_table_token_19_th the 0.1 percentage point decrease in segment income for technical solutions as a percentage of net sales in 2015 from 2014 and was primarily the result of : high margin project sales in 2014 that did not recur in 2015 ; lower core sales volumes in our infrastructure business , which resulted in decreased leverage on operating expenses ; and 35 inflationary increases related to labor costs and certain raw materials . these decrease s were partially offset by : higher core sales volumes in our energy and commercial businesses , which resulted in increased leverage on operating expenses ; and selective increases in selling prices to mitigate inflationary cost increases . the 1.3 percentage point increase in segment income for technical solutions as a percentage of sales in 2014 from 2013 was primarily the result of : higher sales volume in our industrial , infrastructure and residential & commercial businesses , which resulted in increased leverage on operating expenses ; and selective increases in selling prices to mitigate inflationary cost increases . these increase s were partially offset by : inflationary increases related to labor costs and certain raw materials . liquidity and capital resources we generally fund cash requirements for working capital , capital expenditures , equity investments , acquisitions , debt repayments , dividend payments and share repurchases from cash generated from operations , availability under existing committed revolving credit facilities and in certain instances , public and private debt and equity offerings . we have grown our businesses in significant part in the past through acquisitions financed by credit provided under our revolving credit facilities and from time to time , by private or public debt issuance . our primary revolving credit facilities have generally been adequate for these purposes , although we have negotiated additional credit facilities as needed to allow us to complete acquisitions . we intend to issue commercial paper to fund our financing needs on a short-term basis and to use our revolving credit facility as back-up liquidity to support commercial paper . we are focusing on increasing our cash flow and repaying existing debt , while continuing to fund our research and development , marketing and capital investment initiatives . our intent is to maintain investment grade ratings and a solid liquidity position . we experience seasonal cash flows primarily due to seasonal demand in a number of markets within flow & filtration solutions and water quality systems . we generally borrow in the first quarter of our fiscal year for operational purposes , which usage reverses in the second quarter as the seasonality of our businesses peaks . end-user demand for pool and certain pumping equipment follows warm weather trends and is at seasonal highs from april to august . the magnitude of the sales spike is partially mitigated by employing some advance sale `` early buy `` programs ( generally including extended payment terms and or additional discounts ) . demand for residential and agricultural water systems is also impacted by weather patterns , particularly by heavy flooding and droughts . additionally , technical solutions generally experiences increased demand for thermal protection products and services during the fall and winter months in the northern hemisphere . operating activities cash provided by operating activities of continuing operations was $ 750.0 million in 2015 , or $ 255.0 million lower than in 2014 . the decrease in cash provided by operating activities from continuing operations was due primarily to a $ 173.2 million decrease in net income ( loss ) from continuing operations before noncontrolling interest , net of the following non-cash items : depreciation and amortization , loss ( gain ) on sale of businesses , goodwill and trade name impairment and pension and other post-retirement expense ( income ) . cash provided by operating activities from continuing operations was $ 1,005.0 million in 2014 , or $ 73.7 million higher than in 2013 . the increase in cash provided by operating activities from continuing operations was due primarily to a $ 184.3 million increase in net income ( loss ) before noncontrolling interest , net of the following non-cash items : depreciation and amortization , loss ( gain ) on sale of businesses , trade name impairment and pension and other post-retirement expense ( income ) . investing activities story_separator_special_tag style= `` font-family : inherit ; font-size:10pt ; `` > december 31 , 2015 , we were in compliance with all financial covenants in our debt agreements . total availability under the amended credit facility was $ 1,139.1 million as of december 31 , 2015 , which was limited to $ 640.6 million by the leverage ratio in the amended credit facility 's credit agreement . in addition to the amended credit facility , we have various other credit facilities with an aggregate availability of $ 50.6 million , of which none was outstanding at december 31 , 2015 . borrowings under these credit facilities bear interest at variable rates . as of december 31 , 2015 , we had $ 64.2 million
| net cash used for investing activities of continuing operations was $ 2,024.5 million in 2015 , compared to $ 128.3 million in 2014 and $ 211.2 million in 2013 . the following investing activities impacted our cash flow : 36 acquisitions in 2015 , we paid cash of $ 1,806.3 million , net of cash acquired , to acquire erico global company during the third quarter and cash of $ 96.0 million , net of cash acquired , to acquire nuheat industries limited ( `` nuheat '' ) during the second quarter , both as part of technical solutions . during the fourth quarter , we paid an additional $ 0.9 million related to the nuheat acquisition in settlement of a working capital adjustment . in december 2014 , we paid cash of $ 7.5 million and $ 4.8 million to acquire businesses as part of water quality systems and technical solutions , respectively . in june 2013 , $ 84.4 million of cash was paid to tyco in settlement of a working capital and net indebtedness adjustment related to the merger . in addition , in december 2013 we acquired a business as part of water quality systems for cash consideration of $ 8.0 million , net of cash acquired . divestitures during 2013 , we sold businesses that were part of technical solutions and flow & filtration solutions for a cash purchase price of $ 30.1 million and $ 13.4 million , respectively , net of transaction costs , resulting in a gain of $ 16.8 million and $ 4.0 million , respectively . capital expenditures capital expenditures in 2015 , 2014 and 2013 were $ 134.3 million , $ 129.6 million and $ 170.0 million , respectively . we anticipate capital expenditures for fiscal 2016 to be approximately $ 140 million , primarily for capacity expansions of manufacturing facilities located in our low-cost countries , developing new products and general maintenance . financing activities net cash provided by financing activities was $ 1,286.3 million in 2015 .
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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 nmfcalculation 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
| net cash used for investing activities of continuing operations was $ 2,024.5 million in 2015 , compared to $ 128.3 million in 2014 and $ 211.2 million in 2013 . the following investing activities impacted our cash flow : 36 acquisitions in 2015 , we paid cash of $ 1,806.3 million , net of cash acquired , to acquire erico global company during the third quarter and cash of $ 96.0 million , net of cash acquired , to acquire nuheat industries limited ( `` nuheat '' ) during the second quarter , both as part of technical solutions . during the fourth quarter , we paid an additional $ 0.9 million related to the nuheat acquisition in settlement of a working capital adjustment . in december 2014 , we paid cash of $ 7.5 million and $ 4.8 million to acquire businesses as part of water quality systems and technical solutions , respectively . in june 2013 , $ 84.4 million of cash was paid to tyco in settlement of a working capital and net indebtedness adjustment related to the merger . in addition , in december 2013 we acquired a business as part of water quality systems for cash consideration of $ 8.0 million , net of cash acquired . divestitures during 2013 , we sold businesses that were part of technical solutions and flow & filtration solutions for a cash purchase price of $ 30.1 million and $ 13.4 million , respectively , net of transaction costs , resulting in a gain of $ 16.8 million and $ 4.0 million , respectively . capital expenditures capital expenditures in 2015 , 2014 and 2013 were $ 134.3 million , $ 129.6 million and $ 170.0 million , respectively . we anticipate capital expenditures for fiscal 2016 to be approximately $ 140 million , primarily for capacity expansions of manufacturing facilities located in our low-cost countries , developing new products and general maintenance . financing activities net cash provided by financing activities was $ 1,286.3 million in 2015 .
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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 nmfcalculation 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 .
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we also offer advanced design helmets , body armor , and goggles for skiing , mountain and road cycling , as well as eyewear , skis , ski poles , ski bindings , ski boots , ski skins , and ski safety products , including avalanche transceivers , shovels , and probes . on may 28 , 2010 , we acquired black diamond equipment , ltd. ( which may be referred to as “ black diamond equipment ” or “ bdel ” ) and gregory mountain products , llc ( which may be referred to as “ gregory mountain products ” , “ gregory ” or “ gmp ” ) . on january 20 , 2011 , the company changed its name from clarus corporation to black diamond , inc. , which we believe more accurately reflects our current business . in july 2012 we acquired poc sweden ab and its subsidiaries ( collectively , “ poc ” ) and in october 2012 we acquired pieps holding gmbh and its subsidiaries ( collectively , “ pieps ” ) . on july 23 , 2014 , the company and gregory mountain products , its then wholly-owned subsidiary , completed the sale of certain assets to samsonite llc ( “ samsonite ” ) comprising gregory 's business of designing , manufacturing , marketing , distributing and selling technical , alpine , backpacking , hiking , mountaineering and active trail products and accessories as well as outdoor-inspired lifestyle bags ( the “ business ” ) pursuant to the terms of that certain asset purchase agreement ( the “ gmp purchase agreement ” ) , dated as of june 18 , 2014 , by and among the company , gregory and samsonite . under the terms of the gmp purchase agreement , samsonite paid $ 84,135,000 in cash for gregory 's assets comprising the business and assumed certain specified liabilities ( the “ gmp sale ” ) . the activities of gregory have been segregated and reported as discontinued operations for all periods presented . see note 4. discontinued operations to the notes to consolidated financial statements . 32 critical accounting policies and use of estimates management 's discussion of financial condition and results of operations is based on the consolidated financial statements , which have been prepared in accordance with u.s. generally accepted accounting principles ( “ gaap ” ) . the preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements . estimates also affect the reported amounts of revenues and expenses during the reporting periods . we continually evaluate our estimates and assumptions including those related to derivatives , revenue recognition , income taxes and valuation of long-lived assets , goodwill and other intangible assets . we base our estimates on historical experience and other assumptions that are believed to be reasonable under the circumstances . actual results could differ from these estimates . we believe the following critical accounting policies include the more significant estimates and assumptions used in the preparation of our consolidated financial statements . our accounting policies are more fully described in note 1 of our consolidated financial statements . · we use derivative instruments to hedge currency rate movements on foreign currency denominated sales . we enter into forward contracts , option contracts , and non-deliverable forwards to manage the impact of foreign currency fluctuations on a portion of our forecasted sales denominated in foreign currencies . these derivatives are carried at fair value on our consolidated balance sheets in other assets and accrued liabilities . changes in fair value of the derivatives not designated as hedge instruments are included in the determination of net income . for derivative contracts designated as hedge instruments , the effective portion of gains and losses resulting from changes in fair value of the instruments are included in accumulated other comprehensive income and reclassified to earnings in the period the underlying hedged item is recognized in earnings . we use operating budgets and cash flow forecasts to estimate future sales and to determine the level and timing of derivative transactions intended to mitigate such risks in accordance with our risk management policies . if the forecasted sales levels are not reached , our derivative instruments may be deemed to be not effective which may result in foreign currency gains and losses being recorded in our statement of comprehensive income , which could materially affect our financial position and results of operations . · we sell our products pursuant to customer orders or sales contracts entered into with our customers . revenue is recognized when title and risk of loss pass to the customer and when collectability is reasonably assured . charges for shipping and handling fees are included in net sales and the corresponding shipping and handling expenses are included in cost of sales in the accompanying consolidated statements of operations . at the time of revenue recognition , we also provide for estimated sales returns and miscellaneous claims from customers as reductions to revenues . the estimates are based on historical rates of product returns and claims . however , actual returns and claims in any future period are inherently uncertain and thus may differ from these estimates . if actual or expected returns and claims are significantly greater or lower than the allowances that we have established , we will record a reduction or increase to sales in the period in which we make such a determination . · we account for income taxes using the asset and liability method . the asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities , and for operating loss and tax credit carryforwards . story_separator_special_tag selling , general , and administrative expenses of $ 55,946 during the year ended december 31 , 2012. the increase in selling , general , and administrative expenses was primarily attributable to the inclusion of poc and pieps for the full year ended december 31 , 2013 , the addition of our black diamond japan gk operations , the company 's investments in its strategic initiatives , such as apparel sold by black diamond equipment , and infrastructure to support both current and anticipated future growth , as well as an increase in stock based compensation expense of $ 1,321 as a result of the company issuing fully vested stock option awards . restructuring charges consolidated restructuring expense increased $ 102 , or 139.7 % , to $ 175 during the year ended december 31 , 2013 compared to consolidated restructuring expense of $ 73 during the year ended december 31 , 2012. the restructuring expenses incurred during the year ended december 31 , 2013 relate to the relocation of poc 's portsmouth , nh facility to the company 's u.s. distribution facilities in salt lake city , ut . merger and integration costs consolidated merger and integration expense increased $ 321 , or 131.6 % , to $ 565 during the year ended december 31 , 2013 compared to consolidated merger and integration expense of $ 244 during the year ended december 31 , 2012 , which consisted of expenses related to the integration of poc and pieps . transaction costs consolidated transaction expense decreased $ 1,975 , or 97.3 % , to $ 54 during the year ended december 31 , 2013 compared to consolidated transaction expense of $ 2,029 during the year ended december 31 , 2012 , which consisted of professional fees and expenses in 2013 related to the company 's acquisitions of poc and pieps . interest expense , net consolidated interest expense increased $ 110 , or 4.5 % , to $ 2,577 during the year ended december 31 , 2013 compared to consolidated interest expense of $ 2,467 during the year ended december 31 , 2012. the increase in interest expense was primarily attributable to higher average outstanding debt amounts during the year ended december 31 , 2013 compared to the same period in 2012. other , net consolidated other , net , decreased to income of $ 350 during the year ended december 31 , 2013 compared to a consolidated other , net income of $ 869 during the year ended december 31 , 2012. the decrease in other , net , was primarily attributable to a decrease in remeasurement gains recognized on the company 's foreign denominated accounts receivable and accounts payable , partially offset by an increase in gains on mark-to-market adjustments on non-hedged foreign currency contracts . 39 income taxes consolidated income tax benefit increased $ 1,905 , or 55.0 % , to a benefit of $ 5,369 during the year ended december 31 , 2013 compared to consolidated income tax benefit of $ 3,464 during the same period in 2012. the increase in income tax benefit is due to an increase in loss before income tax recorded during the year ended december 31 , 2013 , compared to the same period in 2012. our effective income tax rate was 32.5 % for the year ended december 31 , 2013 compared to an effective income tax rate of 80.1 % for the same period in 2012. during the year ended december 31 , 2013 , a benefit of $ 230 was recorded as a discrete event for the 2012 federal research credit that was retroactively reinstated in 2013. the decrease in the effective income tax rate is primarily attributable to a release of valuation allowance and changes in foreign statutory tax rates during the year ended december 31 , 2012. discontinued operations discontinued operations increased $ 2,448 , to $ 5,262 during the year ended december 31 , 2013 compared to discontinued operations of $ 2,814 during the year ended december 31 , 2012. the increase was due to an increase in sales and gross margin recorded by gregory during the year ended december 31 , 2013 compared to the same period in 2012. story_separator_special_tag 10pt times new roman , times , serif ; margin : 0pt 0 ; text-align : justify `` > on october 31 , 2014 , the company together with its direct and indirect domestic subsidiaries entered into a second amended and restated loan agreement ( the “ second amended and restated loan agreement ” ) with zions first national bank ( the “ lender ” ) , which matures on april 1 , 2017. under the second amended and restated loan agreement , the company has a $ 30,000 revolving line of credit ( the “ revolving line of credit ” ) pursuant to a second amended and restated promissory note ( revolving loan ) ( the “ revolving line of credit promissory note ” ) which is inclusive of a $ 10,000 accordion option ( the “ accordion ” ) available to the company to increase the revolving line of credit on a seasonal or permanent basis for funding general corporate needs including working capital , capital expenditures , permitted loans or investments in subsidiaries , and the issuance of letters of credit . also pursuant to the second amended and restated loan agreement , the company terminated its outstanding term loan facility which previously allowed the company to borrow up to $ 10,000 and certain additional changes were made to the original amended and restated loan agreement and the covenants contained therein . 41 all debt associated with the second amended and restated loan agreement bears interest at one-month london interbank offered rate ( “ libor ” ) plus an applicable margin as determined by the ratio of total senior debt to trailing twelve month ebitda as follows : ( i ) one month libor plus 4.00 % per annum at all
| 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 .
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we also offer advanced design helmets , body armor , and goggles for skiing , mountain and road cycling , as well as eyewear , skis , ski poles , ski bindings , ski boots , ski skins , and ski safety products , including avalanche transceivers , shovels , and probes . on may 28 , 2010 , we acquired black diamond equipment , ltd. ( which may be referred to as “ black diamond equipment ” or “ bdel ” ) and gregory mountain products , llc ( which may be referred to as “ gregory mountain products ” , “ gregory ” or “ gmp ” ) . on january 20 , 2011 , the company changed its name from clarus corporation to black diamond , inc. , which we believe more accurately reflects our current business . in july 2012 we acquired poc sweden ab and its subsidiaries ( collectively , “ poc ” ) and in october 2012 we acquired pieps holding gmbh and its subsidiaries ( collectively , “ pieps ” ) . on july 23 , 2014 , the company and gregory mountain products , its then wholly-owned subsidiary , completed the sale of certain assets to samsonite llc ( “ samsonite ” ) comprising gregory 's business of designing , manufacturing , marketing , distributing and selling technical , alpine , backpacking , hiking , mountaineering and active trail products and accessories as well as outdoor-inspired lifestyle bags ( the “ business ” ) pursuant to the terms of that certain asset purchase agreement ( the “ gmp purchase agreement ” ) , dated as of june 18 , 2014 , by and among the company , gregory and samsonite . under the terms of the gmp purchase agreement , samsonite paid $ 84,135,000 in cash for gregory 's assets comprising the business and assumed certain specified liabilities ( the “ gmp sale ” ) . the activities of gregory have been segregated and reported as discontinued operations for all periods presented . see note 4. discontinued operations to the notes to consolidated financial statements . 32 critical accounting policies and use of estimates management 's discussion of financial condition and results of operations is based on the consolidated financial statements , which have been prepared in accordance with u.s. generally accepted accounting principles ( “ gaap ” ) . the preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements . estimates also affect the reported amounts of revenues and expenses during the reporting periods . we continually evaluate our estimates and assumptions including those related to derivatives , revenue recognition , income taxes and valuation of long-lived assets , goodwill and other intangible assets . we base our estimates on historical experience and other assumptions that are believed to be reasonable under the circumstances . actual results could differ from these estimates . we believe the following critical accounting policies include the more significant estimates and assumptions used in the preparation of our consolidated financial statements . our accounting policies are more fully described in note 1 of our consolidated financial statements . · we use derivative instruments to hedge currency rate movements on foreign currency denominated sales . we enter into forward contracts , option contracts , and non-deliverable forwards to manage the impact of foreign currency fluctuations on a portion of our forecasted sales denominated in foreign currencies . these derivatives are carried at fair value on our consolidated balance sheets in other assets and accrued liabilities . changes in fair value of the derivatives not designated as hedge instruments are included in the determination of net income . for derivative contracts designated as hedge instruments , the effective portion of gains and losses resulting from changes in fair value of the instruments are included in accumulated other comprehensive income and reclassified to earnings in the period the underlying hedged item is recognized in earnings . we use operating budgets and cash flow forecasts to estimate future sales and to determine the level and timing of derivative transactions intended to mitigate such risks in accordance with our risk management policies . if the forecasted sales levels are not reached , our derivative instruments may be deemed to be not effective which may result in foreign currency gains and losses being recorded in our statement of comprehensive income , which could materially affect our financial position and results of operations . · we sell our products pursuant to customer orders or sales contracts entered into with our customers . revenue is recognized when title and risk of loss pass to the customer and when collectability is reasonably assured . charges for shipping and handling fees are included in net sales and the corresponding shipping and handling expenses are included in cost of sales in the accompanying consolidated statements of operations . at the time of revenue recognition , we also provide for estimated sales returns and miscellaneous claims from customers as reductions to revenues . the estimates are based on historical rates of product returns and claims . however , actual returns and claims in any future period are inherently uncertain and thus may differ from these estimates . if actual or expected returns and claims are significantly greater or lower than the allowances that we have established , we will record a reduction or increase to sales in the period in which we make such a determination . · we account for income taxes using the asset and liability method . the asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities , and for operating loss and tax credit carryforwards . story_separator_special_tag selling , general , and administrative expenses of $ 55,946 during the year ended december 31 , 2012. the increase in selling , general , and administrative expenses was primarily attributable to the inclusion of poc and pieps for the full year ended december 31 , 2013 , the addition of our black diamond japan gk operations , the company 's investments in its strategic initiatives , such as apparel sold by black diamond equipment , and infrastructure to support both current and anticipated future growth , as well as an increase in stock based compensation expense of $ 1,321 as a result of the company issuing fully vested stock option awards . restructuring charges consolidated restructuring expense increased $ 102 , or 139.7 % , to $ 175 during the year ended december 31 , 2013 compared to consolidated restructuring expense of $ 73 during the year ended december 31 , 2012. the restructuring expenses incurred during the year ended december 31 , 2013 relate to the relocation of poc 's portsmouth , nh facility to the company 's u.s. distribution facilities in salt lake city , ut . merger and integration costs consolidated merger and integration expense increased $ 321 , or 131.6 % , to $ 565 during the year ended december 31 , 2013 compared to consolidated merger and integration expense of $ 244 during the year ended december 31 , 2012 , which consisted of expenses related to the integration of poc and pieps . transaction costs consolidated transaction expense decreased $ 1,975 , or 97.3 % , to $ 54 during the year ended december 31 , 2013 compared to consolidated transaction expense of $ 2,029 during the year ended december 31 , 2012 , which consisted of professional fees and expenses in 2013 related to the company 's acquisitions of poc and pieps . interest expense , net consolidated interest expense increased $ 110 , or 4.5 % , to $ 2,577 during the year ended december 31 , 2013 compared to consolidated interest expense of $ 2,467 during the year ended december 31 , 2012. the increase in interest expense was primarily attributable to higher average outstanding debt amounts during the year ended december 31 , 2013 compared to the same period in 2012. other , net consolidated other , net , decreased to income of $ 350 during the year ended december 31 , 2013 compared to a consolidated other , net income of $ 869 during the year ended december 31 , 2012. the decrease in other , net , was primarily attributable to a decrease in remeasurement gains recognized on the company 's foreign denominated accounts receivable and accounts payable , partially offset by an increase in gains on mark-to-market adjustments on non-hedged foreign currency contracts . 39 income taxes consolidated income tax benefit increased $ 1,905 , or 55.0 % , to a benefit of $ 5,369 during the year ended december 31 , 2013 compared to consolidated income tax benefit of $ 3,464 during the same period in 2012. the increase in income tax benefit is due to an increase in loss before income tax recorded during the year ended december 31 , 2013 , compared to the same period in 2012. our effective income tax rate was 32.5 % for the year ended december 31 , 2013 compared to an effective income tax rate of 80.1 % for the same period in 2012. during the year ended december 31 , 2013 , a benefit of $ 230 was recorded as a discrete event for the 2012 federal research credit that was retroactively reinstated in 2013. the decrease in the effective income tax rate is primarily attributable to a release of valuation allowance and changes in foreign statutory tax rates during the year ended december 31 , 2012. discontinued operations discontinued operations increased $ 2,448 , to $ 5,262 during the year ended december 31 , 2013 compared to discontinued operations of $ 2,814 during the year ended december 31 , 2012. the increase was due to an increase in sales and gross margin recorded by gregory during the year ended december 31 , 2013 compared to the same period in 2012. story_separator_special_tag 10pt times new roman , times , serif ; margin : 0pt 0 ; text-align : justify `` > on october 31 , 2014 , the company together with its direct and indirect domestic subsidiaries entered into a second amended and restated loan agreement ( the “ second amended and restated loan agreement ” ) with zions first national bank ( the “ lender ” ) , which matures on april 1 , 2017. under the second amended and restated loan agreement , the company has a $ 30,000 revolving line of credit ( the “ revolving line of credit ” ) pursuant to a second amended and restated promissory note ( revolving loan ) ( the “ revolving line of credit promissory note ” ) which is inclusive of a $ 10,000 accordion option ( the “ accordion ” ) available to the company to increase the revolving line of credit on a seasonal or permanent basis for funding general corporate needs including working capital , capital expenditures , permitted loans or investments in subsidiaries , and the issuance of letters of credit . also pursuant to the second amended and restated loan agreement , the company terminated its outstanding term loan facility which previously allowed the company to borrow up to $ 10,000 and certain additional changes were made to the original amended and restated loan agreement and the covenants contained therein . 41 all debt associated with the second amended and restated loan agreement bears interest at one-month london interbank offered rate ( “ libor ” ) plus an applicable margin as determined by the ratio of total senior debt to trailing twelve month ebitda as follows : ( i ) one month libor plus 4.00 % per annum at all
| liquidity and capital resources consolidated year ended december 31 , 2014 compared to consolidated year ended december 31 , 2013 the following presents a discussion of cash flows for the consolidated year ended december 31 , 2014 compared with the consolidated year ended december 31 , 2013. our primary ongoing funding requirements are for working capital , expansion of our operations , and general corporate needs , as well as investing activities associated with the expansion into new product categories . we plan to fund our future expansion of operations and investing activities through a combination of our future operating cash flows , revolving credit facilities , and the net proceeds from the gmp sale . we believe that our liquidity requirements for at least the next 12 months will be adequately covered by existing cash , marketable securities , cash provided by operations and our existing revolving credit facilities . at december 31 , 2014 , we had total cash of $ 31,034 and marketable securities of $ 9,902 compared to a cash balance of $ 4,478 at december 31 , 2013 , which were substantially controlled by the company 's u.s. entities . the increase in cash and marketable securities as of december 31 , 2014 was mainly due to the sale of gregory . at december 31 , 2014 , the company had $ 1,562 of the $ 31,034 in cash held by foreign entities ; however , this cash is available for repatriation without significant tax consequence .
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we expect our expenses will increase substantially in connection with our ongoing and planned activities as we : conduct our ongoing and planned clinical trials of our product candidates ; conduct gmp production , process and scale-up development and technology transfer activities for the manufacture of our product candidates , including those undergoing clinical investigation and ind-enabling preclinical development ; procure laboratory equipment , materials and supplies for the manufacture of our product candidates and the conduct of our research activities ; conduct preclinical and clinical research to investigate the therapeutic activity of our product candidates ; continue our research , development and manufacturing activities , including under our sponsored research and collaboration agreements with ono , university of minnesota and memorial sloan kettering ; 60 maintain , prosecute , protect , expand and enforce our intellectual property portfolio ; engage with regulatory authorities for the development of , and seek regulatory approvals for , our product candidates ; establish business operations at our new corporate headquarters , including internal gmp production capabilities ; hire additional clinical , manufacturing , regulatory , quality control and technical personnel to advance our product candidates ; hire additional scientific personnel to advance our research and development efforts ; and hire general and administrative personnel to continue operating as a public company and support our operations . we do not expect to generate any revenues from sales of any therapeutic products unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates , which we expect will take a number of years . if we obtain regulatory approval for any of our product candidates , we expect to incur significant commercialization expenses related to product sales , marketing , manufacturing and distribution . accordingly , we will seek to fund our operations through public or private equity or debt financings or other sources . however , we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all . our failure to raise capital or enter into such other arrangements when needed would have a negative effect on our financial condition and ability to develop our product candidates . financial operations overview we conduct substantially all of our activities through fate therapeutics , inc. , a delaware corporation , at our facilities in san diego , california . fate therapeutics , inc. owns 100 % of the voting shares of tfinity therapeutics , inc. ( tfinity ) , 100 % of the voting shares of fate therapeutics ltd. ( fate ltd. ) , incorporated in the united kingdom , and 100 % of the voting shares of fate therapeutics b.v. ( fate b.v. ) , incorporated in the netherlands . the following information is presented on a consolidated basis to include the accounts of fate therapeutics , inc. , tfinity , fate b.v. , and fate ltd. to date , the aggregate operations of our subsidiaries have not been significant and all intercompany transactions and balances have been eliminated in consolidation . collaboration revenue to date , we have not generated any revenues from therapeutic product sales . our revenues have been derived from collaboration agreements and government grants . agreement with ono pharmaceutical co. , ltd. on september 14 , 2018 , we entered into a collaboration and option agreement ( the ono agreement ) with ono for the joint development and commercialization of two off-the-shelf ipsc-derived car t-cell product candidates . pursuant to the terms of the ono agreement , we received an upfront , non-refundable and non-creditable payment of $ 10.0 million . additionally , we are entitled to receive fees for the conduct of research and development under a joint development plan , which fees are estimated to be $ 20.0 million in aggregate , of which $ 6.5 million has been received as of december 31 , 2019. we concluded that ono represented a customer and in accordance with accounting standards codification ( asc ) 606 , revenue from contracts with customers , we determined that the initial transaction price under the ono agreement equals $ 30.0 million , consisting of the upfront , non-refundable and non-creditable payment of $ 10.0 million and the aggregate estimated research and development fees of $ 20.0 million . in addition , we identified our performance obligations under the ono agreement , including our grant to ono of a license to certain of our intellectual property subject to certain conditions , our conduct of research services , and our participation in a joint steering committee . we determined that all performance obligations should be accounted for as one combined performance obligation since no individual performance obligation is distinct , and that the combined performance obligation is transferred over the expected term of the conduct of the research services , which is estimated to be four years . during the years ended december 31 , 2019 and 2018 , we recognized $ 9.3 million and $ 0.6 million , respectively , of collaboration revenue under the ono agreement . as of december 31 , 2019 , aggregate deferred revenue related to the ono agreement was $ 6.6 million . agreement with juno therapeutics , inc. on may 4 , 2015 , we entered into a strategic research collaboration and license agreement ( the juno agreement ) with juno therapeutics , inc. ( juno ) to screen for and identify small molecule modulators that enhance the therapeutic properties of juno 's genetically-engineered t-cell immunotherapies . 61 in connection with the juno agreement , during the years ended december 31 , 2019 and 2018 , we recognized $ 1.4 million and $ 4.1 million , respectively , as collaboration revenue in the consolidated statements of operations and comprehensive loss . on may 4 , 2019 , the four-year initial research term under the juno agreement concluded as scheduled . story_separator_special_tag research and development expenses were $ 87.8 million for the year ended december 31 , 2019 , compared to $ 56.0 million for the year ended december 31 , 2018. the increase in research and development expenses was attributable primarily to the following : $ 14.7 million increase in employee compensation and benefits expense , including employee-stock based compensation expense ; $ 10.3 million increase in expenditures for laboratory materials and supplies relating to the manufacture of our product candidates and the conduct of our research activities , including under our collaboration agreements ; $ 9.3 million increase in third-party professional consultant and service provider expenses relating to the manufacture and clinical development of our product candidates and the conduct of our research activities , including under our collaboration agreements ; $ 2.4 million increase in facility lease expense due to an office and lab expansion in january 2019. these increases were partially offset by an aggregate decrease of $ 6.7 million in licensing expense resulting from the amended and restated exclusive license with msk that occurred in may 2018 and the exclusive license agreement with the j. david gladstone institutes that occurred in september 2018. no such expense was present in fiscal year 2019. see note 2 of the consolidated financial statements for additional detail . general and administrative expenses . general and administrative expenses were $ 23.6 million for the year ended december 31 , 2019 , compared to $ 15.8 million for the year ended december 31 , 2018. the increase in general and administrative expenses was attributable primarily to a $ 6.5 million increase in employee compensation and benefits expense , including employee stock-based compensation expense and an increase of $ 0.5 million in facility lease and related expense . other income , net . other income , net was $ 2.6 million and $ 0.5 million for the years ended december 31 , 2019 and 2018 , respectively . other income , net for each period consisted primarily of interest income earned on cash and cash equivalents , interest income from investments ( including the amortization of discounts and premiums ) and interest expense relating to our term loan with silicon valley bank . 65 story_separator_special_tag payments to msk on net sales of licensed products . we are also obligated to pay msk a percentage of certain sublicense income received by us . furthermore , in the event a licensed product achieves a specified clinical milestone , msk is then eligible to receive additional milestone payments , where the amount of such payments owed to msk are contingent upon certain increases in the price of our common stock following the date of achievement of such clinical milestone . j. david gladstone institutes license agreement on september 11 , 2018 , we entered into an exclusive license agreement with the j. david gladstone institutes ( gladstone ) . pursuant to the license agreement with gladstone , we issued 100,000 shares of our common stock to gladstone , which shares were valued at $ 1.3 million on the date of the agreement . we also paid an upfront cash fee of $ 0.1 million , and we are obligated to pay milestone payments in an aggregate amount of up to approximately $ 1.9 million upon the achievement of specified clinical , regulatory and commercial milestones and as well as royalties to gladstone in the low single digits on net sales of licensed products . we are also obligated to pay gladstone a tiered percentage in the low to mid-single digits of certain sublicense income received by us . investing activities during the years ended december 31 , 2019 and 2018 , investing activities used cash of $ 157.5 million and $ 0.5 million , respectively . during the year ended december 31 , 2019 we purchased $ 248.9 million of investments , which were partially offset by $ 98.8 million in maturities of investments . during the year ended december 31 , 2018 , we purchased $ 55.7 million of investments , offset by $ 57.5 million in maturities of investments . the remaining investing activities for the periods presented were primarily attributable to the purchase of property and equipment . financing activities financing activities provided cash of $ 149.9 million for the year ended december 31 , 2019 , which primarily consisted of $ 162.4 million of net proceeds from our september 2019 public offering of common stock and $ 2.5 million in proceeds from the issuance of common stock from equity incentive plans pursuant to the exercise of employee stock options net of issuance costs . these proceeds were partially offset by $ 15.0 million in repayments on our long-term debt facility . financing activities provided cash of $ 140.8 million for the year ended december 31 , 2018 , which primarily consisted of the $ 134.6 million of net proceeds from our september 2018 public offering of common stock and $ 3.5 million of proceeds from the california institute for regenerative medicine ( cirm ) award . from our inception through december 31 , 2019 we have funded our consolidated operations primarily through the public and private sale of common stock , the private placement of preferred stock and convertible notes , commercial bank debt and revenues from collaboration activities and grants . as of december 31 , 2019 , we had aggregate cash and cash equivalents and investments of $ 260.9 million . public offering of common stock in september 2019 , we completed a public offering of common stock in which investors , certain of which are affiliated with our directors , purchased 9,890,000 shares of our common stock at a price of $ 17.50 per share under our shelf registration statement . gross proceeds from the offering were $ 173.1 million . after giving effect to $ 10.7 million in underwriting discounts , commissions and expenses related to the offering , net proceeds were $ 162.4 million . in september 2018
| liquidity and capital resources consolidated year ended december 31 , 2014 compared to consolidated year ended december 31 , 2013 the following presents a discussion of cash flows for the consolidated year ended december 31 , 2014 compared with the consolidated year ended december 31 , 2013. our primary ongoing funding requirements are for working capital , expansion of our operations , and general corporate needs , as well as investing activities associated with the expansion into new product categories . we plan to fund our future expansion of operations and investing activities through a combination of our future operating cash flows , revolving credit facilities , and the net proceeds from the gmp sale . we believe that our liquidity requirements for at least the next 12 months will be adequately covered by existing cash , marketable securities , cash provided by operations and our existing revolving credit facilities . at december 31 , 2014 , we had total cash of $ 31,034 and marketable securities of $ 9,902 compared to a cash balance of $ 4,478 at december 31 , 2013 , which were substantially controlled by the company 's u.s. entities . the increase in cash and marketable securities as of december 31 , 2014 was mainly due to the sale of gregory . at december 31 , 2014 , the company had $ 1,562 of the $ 31,034 in cash held by foreign entities ; however , this cash is available for repatriation without significant tax consequence .
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we expect our expenses will increase substantially in connection with our ongoing and planned activities as we : conduct our ongoing and planned clinical trials of our product candidates ; conduct gmp production , process and scale-up development and technology transfer activities for the manufacture of our product candidates , including those undergoing clinical investigation and ind-enabling preclinical development ; procure laboratory equipment , materials and supplies for the manufacture of our product candidates and the conduct of our research activities ; conduct preclinical and clinical research to investigate the therapeutic activity of our product candidates ; continue our research , development and manufacturing activities , including under our sponsored research and collaboration agreements with ono , university of minnesota and memorial sloan kettering ; 60 maintain , prosecute , protect , expand and enforce our intellectual property portfolio ; engage with regulatory authorities for the development of , and seek regulatory approvals for , our product candidates ; establish business operations at our new corporate headquarters , including internal gmp production capabilities ; hire additional clinical , manufacturing , regulatory , quality control and technical personnel to advance our product candidates ; hire additional scientific personnel to advance our research and development efforts ; and hire general and administrative personnel to continue operating as a public company and support our operations . we do not expect to generate any revenues from sales of any therapeutic products unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates , which we expect will take a number of years . if we obtain regulatory approval for any of our product candidates , we expect to incur significant commercialization expenses related to product sales , marketing , manufacturing and distribution . accordingly , we will seek to fund our operations through public or private equity or debt financings or other sources . however , we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all . our failure to raise capital or enter into such other arrangements when needed would have a negative effect on our financial condition and ability to develop our product candidates . financial operations overview we conduct substantially all of our activities through fate therapeutics , inc. , a delaware corporation , at our facilities in san diego , california . fate therapeutics , inc. owns 100 % of the voting shares of tfinity therapeutics , inc. ( tfinity ) , 100 % of the voting shares of fate therapeutics ltd. ( fate ltd. ) , incorporated in the united kingdom , and 100 % of the voting shares of fate therapeutics b.v. ( fate b.v. ) , incorporated in the netherlands . the following information is presented on a consolidated basis to include the accounts of fate therapeutics , inc. , tfinity , fate b.v. , and fate ltd. to date , the aggregate operations of our subsidiaries have not been significant and all intercompany transactions and balances have been eliminated in consolidation . collaboration revenue to date , we have not generated any revenues from therapeutic product sales . our revenues have been derived from collaboration agreements and government grants . agreement with ono pharmaceutical co. , ltd. on september 14 , 2018 , we entered into a collaboration and option agreement ( the ono agreement ) with ono for the joint development and commercialization of two off-the-shelf ipsc-derived car t-cell product candidates . pursuant to the terms of the ono agreement , we received an upfront , non-refundable and non-creditable payment of $ 10.0 million . additionally , we are entitled to receive fees for the conduct of research and development under a joint development plan , which fees are estimated to be $ 20.0 million in aggregate , of which $ 6.5 million has been received as of december 31 , 2019. we concluded that ono represented a customer and in accordance with accounting standards codification ( asc ) 606 , revenue from contracts with customers , we determined that the initial transaction price under the ono agreement equals $ 30.0 million , consisting of the upfront , non-refundable and non-creditable payment of $ 10.0 million and the aggregate estimated research and development fees of $ 20.0 million . in addition , we identified our performance obligations under the ono agreement , including our grant to ono of a license to certain of our intellectual property subject to certain conditions , our conduct of research services , and our participation in a joint steering committee . we determined that all performance obligations should be accounted for as one combined performance obligation since no individual performance obligation is distinct , and that the combined performance obligation is transferred over the expected term of the conduct of the research services , which is estimated to be four years . during the years ended december 31 , 2019 and 2018 , we recognized $ 9.3 million and $ 0.6 million , respectively , of collaboration revenue under the ono agreement . as of december 31 , 2019 , aggregate deferred revenue related to the ono agreement was $ 6.6 million . agreement with juno therapeutics , inc. on may 4 , 2015 , we entered into a strategic research collaboration and license agreement ( the juno agreement ) with juno therapeutics , inc. ( juno ) to screen for and identify small molecule modulators that enhance the therapeutic properties of juno 's genetically-engineered t-cell immunotherapies . 61 in connection with the juno agreement , during the years ended december 31 , 2019 and 2018 , we recognized $ 1.4 million and $ 4.1 million , respectively , as collaboration revenue in the consolidated statements of operations and comprehensive loss . on may 4 , 2019 , the four-year initial research term under the juno agreement concluded as scheduled . story_separator_special_tag research and development expenses were $ 87.8 million for the year ended december 31 , 2019 , compared to $ 56.0 million for the year ended december 31 , 2018. the increase in research and development expenses was attributable primarily to the following : $ 14.7 million increase in employee compensation and benefits expense , including employee-stock based compensation expense ; $ 10.3 million increase in expenditures for laboratory materials and supplies relating to the manufacture of our product candidates and the conduct of our research activities , including under our collaboration agreements ; $ 9.3 million increase in third-party professional consultant and service provider expenses relating to the manufacture and clinical development of our product candidates and the conduct of our research activities , including under our collaboration agreements ; $ 2.4 million increase in facility lease expense due to an office and lab expansion in january 2019. these increases were partially offset by an aggregate decrease of $ 6.7 million in licensing expense resulting from the amended and restated exclusive license with msk that occurred in may 2018 and the exclusive license agreement with the j. david gladstone institutes that occurred in september 2018. no such expense was present in fiscal year 2019. see note 2 of the consolidated financial statements for additional detail . general and administrative expenses . general and administrative expenses were $ 23.6 million for the year ended december 31 , 2019 , compared to $ 15.8 million for the year ended december 31 , 2018. the increase in general and administrative expenses was attributable primarily to a $ 6.5 million increase in employee compensation and benefits expense , including employee stock-based compensation expense and an increase of $ 0.5 million in facility lease and related expense . other income , net . other income , net was $ 2.6 million and $ 0.5 million for the years ended december 31 , 2019 and 2018 , respectively . other income , net for each period consisted primarily of interest income earned on cash and cash equivalents , interest income from investments ( including the amortization of discounts and premiums ) and interest expense relating to our term loan with silicon valley bank . 65 story_separator_special_tag payments to msk on net sales of licensed products . we are also obligated to pay msk a percentage of certain sublicense income received by us . furthermore , in the event a licensed product achieves a specified clinical milestone , msk is then eligible to receive additional milestone payments , where the amount of such payments owed to msk are contingent upon certain increases in the price of our common stock following the date of achievement of such clinical milestone . j. david gladstone institutes license agreement on september 11 , 2018 , we entered into an exclusive license agreement with the j. david gladstone institutes ( gladstone ) . pursuant to the license agreement with gladstone , we issued 100,000 shares of our common stock to gladstone , which shares were valued at $ 1.3 million on the date of the agreement . we also paid an upfront cash fee of $ 0.1 million , and we are obligated to pay milestone payments in an aggregate amount of up to approximately $ 1.9 million upon the achievement of specified clinical , regulatory and commercial milestones and as well as royalties to gladstone in the low single digits on net sales of licensed products . we are also obligated to pay gladstone a tiered percentage in the low to mid-single digits of certain sublicense income received by us . investing activities during the years ended december 31 , 2019 and 2018 , investing activities used cash of $ 157.5 million and $ 0.5 million , respectively . during the year ended december 31 , 2019 we purchased $ 248.9 million of investments , which were partially offset by $ 98.8 million in maturities of investments . during the year ended december 31 , 2018 , we purchased $ 55.7 million of investments , offset by $ 57.5 million in maturities of investments . the remaining investing activities for the periods presented were primarily attributable to the purchase of property and equipment . financing activities financing activities provided cash of $ 149.9 million for the year ended december 31 , 2019 , which primarily consisted of $ 162.4 million of net proceeds from our september 2019 public offering of common stock and $ 2.5 million in proceeds from the issuance of common stock from equity incentive plans pursuant to the exercise of employee stock options net of issuance costs . these proceeds were partially offset by $ 15.0 million in repayments on our long-term debt facility . financing activities provided cash of $ 140.8 million for the year ended december 31 , 2018 , which primarily consisted of the $ 134.6 million of net proceeds from our september 2018 public offering of common stock and $ 3.5 million of proceeds from the california institute for regenerative medicine ( cirm ) award . from our inception through december 31 , 2019 we have funded our consolidated operations primarily through the public and private sale of common stock , the private placement of preferred stock and convertible notes , commercial bank debt and revenues from collaboration activities and grants . as of december 31 , 2019 , we had aggregate cash and cash equivalents and investments of $ 260.9 million . public offering of common stock in september 2019 , we completed a public offering of common stock in which investors , certain of which are affiliated with our directors , purchased 9,890,000 shares of our common stock at a price of $ 17.50 per share under our shelf registration statement . gross proceeds from the offering were $ 173.1 million . after giving effect to $ 10.7 million in underwriting discounts , commissions and expenses related to the offering , net proceeds were $ 162.4 million . in september 2018
| liquidity and capital resources we have incurred losses and negative cash flows from operations since inception . as of december 31 , 2019 , we had an accumulated deficit of $ 383.5 million and anticipate that we will continue to incur net losses for the foreseeable future . the following table sets forth a summary of the net cash flow activity for each of the years ended december 31 : replace_table_token_3_th operating activities cash used in operating activities increased from $ 38.7 million for the year ended december 31 , 2018 to $ 83.2 million for the year ended december 31 , 2019. the change in cash used in operating activities was attributable primarily to our increase in net loss and a decrease in the deferred revenue balance from 2018 to 2019 , partially offset by an increase in stock-based compensation expense . agreement with ono pharmaceutical co. , ltd. on september 14 , 2018 , we entered into the ono agreement with ono for the joint development and commercialization of two off-the-shelf , ipsc-derived car t-cell product candidates ( each a candidate and collectively the candidates ) . under the terms of the ono agreement , ono paid to us an upfront , non-refundable and non-creditable payment of $ 10.0 million . additionally , as consideration for our conduct of research and preclinical development under a joint development plan , ono pays us annual research and development fees set forth in the annual budget included in the joint development plan , which fees are estimated to be $ 20.0 million in aggregate over the course of the joint development plan . further , under the terms of the ono agreement , ono has agreed to pay us an additional $ 40.0 million , subject to the achievement of a preclinical milestone and the exercise by ono of its options to obtain exclusive licenses to develop and commercialize the candidates .
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the 2011 results were impacted by a loss on debt extinguishment , including debt refinancing costs and the write-off of previously deferred debt issuance costs , of $ 2.2 million ( $ 1.4 million after-tax ) . the 2010 results were impacted by a loss on debt extinguishment , including debt refinancing costs and the write-off of previously deferred debt issuance costs , of $ 19.6 million ( $ 12.1 million after-tax ) . the 2009 results were impacted by a favorable tax adjustment of approximately $ 12.7 million , a net gain on asset sales and dispositions of $ 16.8 million ( $ 10.4 million after-tax ) , and a gain on senior note repurchases of $ 13.0 million ( $ 8.1 million after-tax ) . see notes 7 and 11 of the notes to consolidated financial statements for additional information . our results of operations for 2009 were also favorably impacted by the consumer assistance to recycle and save act of 2009 , 23 commonly referred to as “ cash for clunkers , ” that officially began in july 2009 and ended in august 2009. cash for clunkers stimulated consumer demand for new vehicles , and we sold approximately 12,500 new vehicles under the program . market conditions full-year u.s. industry new vehicle unit sales were 12.7 million in 2011 , as compared to 11.5 million in 2010 and 10.4 million in 2009 . while unemployment in the united states remained high , housing markets remained depressed , and the saar remained below pre-recession levels , we saw an improving automotive retail market during 2011 as compared to the past few years , and we expect continued improvement over the next several years . we currently anticipate full-year u.s. industry new vehicle unit sales will increase to approximately 14.0 million in 2012 . however , actual sales may materially differ . in 2011 , the earthquake and tsunami that struck japan and the flooding in thailand caused significant production and supply chain disruptions that resulted in significantly reduced new vehicle production and lower new vehicle shipments by japanese manufacturers . these disruptions also impacted non-japanese manufacturers that rely on components produced in japan and or thailand . in 2011 , our unit sales of new vehicles were adversely impacted by these disruptions ; however , gross profit per vehicle retailed benefited significantly from constrained supply . shipments from japanese manufacturers began to improve at the end of the third quarter and continued to improve in the fourth quarter of 2011. we expect that the improving supply environment will result in lower gross profit per vehicle retailed in 2012. while we believe that new vehicle unit sales will improve in 2012 and over the next several years , we also believe that the automotive retail market will remain challenging and that the annual rate of new vehicle unit sales will remain below pre-recession levels in 2012 . the rate of industry new vehicle unit sales over the past few years has led to a decline in the number of recent-model-year vehicles in operation , our primary service base , and it may take several years for this service base to return to pre-recession levels . debt refinancing please refer to “ liquidity and capital resources – debt refinancing transactions ” below for a discussion of certain refinancing transactions that we completed during the second quarter of 2010 , the fourth quarter of 2011 , and the first quarter of 2012. inventory management our new and used vehicle inventories are stated at the lower of cost or market in our consolidated balance sheets . we have generally not experienced losses on the sale of new vehicle inventory , in part due to incentives provided by manufacturers to promote sales of new vehicles and our inventory management practices . we had 43,906 units in new vehicle inventory at december 31 , 2011 , and 48,499 units at december 31 , 2010 . we continue to monitor our new vehicle inventory levels closely based on current economic conditions and will adjust them as appropriate . in general , used vehicles that are not sold on a retail basis are liquidated at wholesale auctions . we record estimated losses on used vehicle inventory expected to be liquidated at wholesale auctions at a loss . our used vehicle inventory balance was net of cumulative write-downs of $ 0.9 million at december 31 , 2011 , and $ 0.4 million at december 31 , 2010 . parts , accessories , and other inventory are carried at the lower of acquisition cost ( first-in , first-out method ) or market . we estimate the amount of potential obsolete inventory based upon past experience and market trends . our parts , accessories , and other inventory balance was net of cumulative write-downs of $ 2.8 million at december 31 , 2011 , and $ 3.4 million at december 31 , 2010 . critical accounting policies and estimates we prepare our consolidated financial statements in conformity with accounting principles generally accepted in the united states , which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities , the disclosure of contingent assets and liabilities at the date of the financial statements , and the reported amounts of revenue and expenses during the reporting period . we evaluate our estimates on an ongoing basis and we base our estimates on historical experience and various other assumptions we believe to be reasonable . actual outcomes could differ materially from those estimates in a manner that could have a material effect on our consolidated financial statements . set 24 forth below are the policies and estimates that we have identified as critical to our business operations and an understanding of our results of operations , based on the high degree of judgment or complexity in their application . story_separator_special_tag for example , the results for a dealership acquired in february 2010 would be included only in our same store comparison of 2011 to 2010 , not in our same store comparison of 2010 to 2009 . results for a dealership that we classified as a discontinued operation in october 2011 would be removed entirely from our same store comparison of 2011 to 2010 . therefore , the amounts presented in the year 2010 column that is being compared to the 2011 column may differ from the amounts presented in the year 2010 column that is being compared to the year 2009 column . replace_table_token_11_th 31 replace_table_token_12_th 32 new vehicle replace_table_token_13_th replace_table_token_14_th 2011 compared to 2010 same store new vehicle revenue increased during 2011 , as compared to 2010 , as a result of an increase in same store unit volume and an increase in same store revenue per new vehicle retailed . the increase in same store unit volume was primarily due to improved market conditions , including improved credit availability offered to consumers and increased consumer demand , as well as reinstatement or expansion of certain manufacturer leasing programs . the increase in same store unit volume for 2011 was partially offset by the japan supply constraints , which adversely impacted unit sales in the second , third , and fourth quarters of 2011 , and by a decrease in manufacturer incentives . same store revenue per new vehicle retailed increased during 2011 , as compared to 2010 , primarily due to a shift in mix away from import vehicles , which have relatively lower average selling prices , toward domestic and premium luxury vehicles . same store revenue per new vehicle retailed also benefited from an increase in the average selling prices for new vehicles in all three segments - domestic , import , and premium luxury . same store gross profit per new vehicle retailed benefited from a shift in mix away from import vehicles , which generate relatively lower gross profit per vehicle retailed , due to the tight supply of vehicles produced by japanese manufacturers , as well as from an increase in new vehicle gross profit in all three segments . the increase in same store gross profit per vehicle retailed was partially offset by a decrease in certain performance-based manufacturer incentives primarily related to premium luxury vehicles previously sold as compared to the prior year . these incentives favorably impacted gross profit by $ 8.0 million in 2011 , compared to $ 13.1 million in 2010. we were able to recognize these incentives due to our achievement of certain manufacturer incentive program goals during 2011 and 2010 . 33 see “ market conditions ” above for a discussion of the automotive retail environment , including our expectations regarding gross profit per vehicle retailed in 2012 . 2010 compared to 2009 same store new vehicle revenue increased during 2010 , as compared to 2009 , primarily as a result of an increase in same store unit volume and an increase in same store revenue per new vehicle retailed . the increase in same store unit volume was primarily due to improved market conditions , including improved credit availability offered to consumers , the reinstatement or expansion of certain manufacturer leasing programs , and an increase in consumer confidence . same store revenue per new vehicle retailed benefited from an increase in the average selling prices for new vehicles in all three segments – domestic , import , and premium luxury – primarily due to improved market conditions . same store revenue per new vehicle retailed also benefited from a shift in mix toward large vehicles , which have relatively higher average selling prices . same store gross profit per new vehicle retailed increased during 2010 , as compared to 2009 , due in part to a recovery in margins for both small and large vehicles in all three segments as a result of improved market conditions . additionally , we achieved certain manufacturer incentive program goals during the fourth quarter of 2010. as a result , we were able to recognize certain performance-based manufacturer incentives , primarily related to premium luxury vehicles previously sold , which favorably impacted gross profit by $ 13.1 million and operating income by $ 11.8 million . new vehicle inventories our new vehicle inventories were $ 1.4 billion or 50 days supply at december 31 , 2011 , as compared to new vehicle inventories of $ 1.5 billion or 63 days supply at december 31 , 2010 . we had 43,906 units in new vehicle inventory at december 31 , 2011 , and 48,499 units at december 31 , 2010 . the following table details net new vehicle inventory carrying benefit , consisting of new vehicle floorplan interest expense net of floorplan assistance earned ( amounts received from manufacturers specifically to support store financing of new vehicle inventory ) . floorplan assistance is accounted for as a component of new vehicle gross profit . replace_table_token_15_th 2011 compared to 2010 the net new vehicle inventory carrying benefit increased in 2011 , as compared to 2010 , due to an increase in floorplan assistance as a result of higher new vehicle sales and an increase in the floorplan assistance rate per unit , partially offset by an increase in floorplan interest expense primarily due to higher average vehicle floorplan payable balances during the year . 2010 compared to 2009 the net new vehicle inventory carrying benefit increased in 2010 , as compared to 2009 , due to an increase in floorplan assistance as a result of higher new vehicle sales and an increase in the floorplan assistance rate per unit , partially offset by an increase in floorplan interest expense primarily due to higher average vehicle floorplan payable balances during the year . 34 used vehicle replace_table_token_16_th ( 1 ) as of december 31 , 2011 , we have revised our method of calculating used vehicle days supply from a
| liquidity and capital resources we have incurred losses and negative cash flows from operations since inception . as of december 31 , 2019 , we had an accumulated deficit of $ 383.5 million and anticipate that we will continue to incur net losses for the foreseeable future . the following table sets forth a summary of the net cash flow activity for each of the years ended december 31 : replace_table_token_3_th operating activities cash used in operating activities increased from $ 38.7 million for the year ended december 31 , 2018 to $ 83.2 million for the year ended december 31 , 2019. the change in cash used in operating activities was attributable primarily to our increase in net loss and a decrease in the deferred revenue balance from 2018 to 2019 , partially offset by an increase in stock-based compensation expense . agreement with ono pharmaceutical co. , ltd. on september 14 , 2018 , we entered into the ono agreement with ono for the joint development and commercialization of two off-the-shelf , ipsc-derived car t-cell product candidates ( each a candidate and collectively the candidates ) . under the terms of the ono agreement , ono paid to us an upfront , non-refundable and non-creditable payment of $ 10.0 million . additionally , as consideration for our conduct of research and preclinical development under a joint development plan , ono pays us annual research and development fees set forth in the annual budget included in the joint development plan , which fees are estimated to be $ 20.0 million in aggregate over the course of the joint development plan . further , under the terms of the ono agreement , ono has agreed to pay us an additional $ 40.0 million , subject to the achievement of a preclinical milestone and the exercise by ono of its options to obtain exclusive licenses to develop and commercialize the candidates .
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the 2011 results were impacted by a loss on debt extinguishment , including debt refinancing costs and the write-off of previously deferred debt issuance costs , of $ 2.2 million ( $ 1.4 million after-tax ) . the 2010 results were impacted by a loss on debt extinguishment , including debt refinancing costs and the write-off of previously deferred debt issuance costs , of $ 19.6 million ( $ 12.1 million after-tax ) . the 2009 results were impacted by a favorable tax adjustment of approximately $ 12.7 million , a net gain on asset sales and dispositions of $ 16.8 million ( $ 10.4 million after-tax ) , and a gain on senior note repurchases of $ 13.0 million ( $ 8.1 million after-tax ) . see notes 7 and 11 of the notes to consolidated financial statements for additional information . our results of operations for 2009 were also favorably impacted by the consumer assistance to recycle and save act of 2009 , 23 commonly referred to as “ cash for clunkers , ” that officially began in july 2009 and ended in august 2009. cash for clunkers stimulated consumer demand for new vehicles , and we sold approximately 12,500 new vehicles under the program . market conditions full-year u.s. industry new vehicle unit sales were 12.7 million in 2011 , as compared to 11.5 million in 2010 and 10.4 million in 2009 . while unemployment in the united states remained high , housing markets remained depressed , and the saar remained below pre-recession levels , we saw an improving automotive retail market during 2011 as compared to the past few years , and we expect continued improvement over the next several years . we currently anticipate full-year u.s. industry new vehicle unit sales will increase to approximately 14.0 million in 2012 . however , actual sales may materially differ . in 2011 , the earthquake and tsunami that struck japan and the flooding in thailand caused significant production and supply chain disruptions that resulted in significantly reduced new vehicle production and lower new vehicle shipments by japanese manufacturers . these disruptions also impacted non-japanese manufacturers that rely on components produced in japan and or thailand . in 2011 , our unit sales of new vehicles were adversely impacted by these disruptions ; however , gross profit per vehicle retailed benefited significantly from constrained supply . shipments from japanese manufacturers began to improve at the end of the third quarter and continued to improve in the fourth quarter of 2011. we expect that the improving supply environment will result in lower gross profit per vehicle retailed in 2012. while we believe that new vehicle unit sales will improve in 2012 and over the next several years , we also believe that the automotive retail market will remain challenging and that the annual rate of new vehicle unit sales will remain below pre-recession levels in 2012 . the rate of industry new vehicle unit sales over the past few years has led to a decline in the number of recent-model-year vehicles in operation , our primary service base , and it may take several years for this service base to return to pre-recession levels . debt refinancing please refer to “ liquidity and capital resources – debt refinancing transactions ” below for a discussion of certain refinancing transactions that we completed during the second quarter of 2010 , the fourth quarter of 2011 , and the first quarter of 2012. inventory management our new and used vehicle inventories are stated at the lower of cost or market in our consolidated balance sheets . we have generally not experienced losses on the sale of new vehicle inventory , in part due to incentives provided by manufacturers to promote sales of new vehicles and our inventory management practices . we had 43,906 units in new vehicle inventory at december 31 , 2011 , and 48,499 units at december 31 , 2010 . we continue to monitor our new vehicle inventory levels closely based on current economic conditions and will adjust them as appropriate . in general , used vehicles that are not sold on a retail basis are liquidated at wholesale auctions . we record estimated losses on used vehicle inventory expected to be liquidated at wholesale auctions at a loss . our used vehicle inventory balance was net of cumulative write-downs of $ 0.9 million at december 31 , 2011 , and $ 0.4 million at december 31 , 2010 . parts , accessories , and other inventory are carried at the lower of acquisition cost ( first-in , first-out method ) or market . we estimate the amount of potential obsolete inventory based upon past experience and market trends . our parts , accessories , and other inventory balance was net of cumulative write-downs of $ 2.8 million at december 31 , 2011 , and $ 3.4 million at december 31 , 2010 . critical accounting policies and estimates we prepare our consolidated financial statements in conformity with accounting principles generally accepted in the united states , which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities , the disclosure of contingent assets and liabilities at the date of the financial statements , and the reported amounts of revenue and expenses during the reporting period . we evaluate our estimates on an ongoing basis and we base our estimates on historical experience and various other assumptions we believe to be reasonable . actual outcomes could differ materially from those estimates in a manner that could have a material effect on our consolidated financial statements . set 24 forth below are the policies and estimates that we have identified as critical to our business operations and an understanding of our results of operations , based on the high degree of judgment or complexity in their application . story_separator_special_tag for example , the results for a dealership acquired in february 2010 would be included only in our same store comparison of 2011 to 2010 , not in our same store comparison of 2010 to 2009 . results for a dealership that we classified as a discontinued operation in october 2011 would be removed entirely from our same store comparison of 2011 to 2010 . therefore , the amounts presented in the year 2010 column that is being compared to the 2011 column may differ from the amounts presented in the year 2010 column that is being compared to the year 2009 column . replace_table_token_11_th 31 replace_table_token_12_th 32 new vehicle replace_table_token_13_th replace_table_token_14_th 2011 compared to 2010 same store new vehicle revenue increased during 2011 , as compared to 2010 , as a result of an increase in same store unit volume and an increase in same store revenue per new vehicle retailed . the increase in same store unit volume was primarily due to improved market conditions , including improved credit availability offered to consumers and increased consumer demand , as well as reinstatement or expansion of certain manufacturer leasing programs . the increase in same store unit volume for 2011 was partially offset by the japan supply constraints , which adversely impacted unit sales in the second , third , and fourth quarters of 2011 , and by a decrease in manufacturer incentives . same store revenue per new vehicle retailed increased during 2011 , as compared to 2010 , primarily due to a shift in mix away from import vehicles , which have relatively lower average selling prices , toward domestic and premium luxury vehicles . same store revenue per new vehicle retailed also benefited from an increase in the average selling prices for new vehicles in all three segments - domestic , import , and premium luxury . same store gross profit per new vehicle retailed benefited from a shift in mix away from import vehicles , which generate relatively lower gross profit per vehicle retailed , due to the tight supply of vehicles produced by japanese manufacturers , as well as from an increase in new vehicle gross profit in all three segments . the increase in same store gross profit per vehicle retailed was partially offset by a decrease in certain performance-based manufacturer incentives primarily related to premium luxury vehicles previously sold as compared to the prior year . these incentives favorably impacted gross profit by $ 8.0 million in 2011 , compared to $ 13.1 million in 2010. we were able to recognize these incentives due to our achievement of certain manufacturer incentive program goals during 2011 and 2010 . 33 see “ market conditions ” above for a discussion of the automotive retail environment , including our expectations regarding gross profit per vehicle retailed in 2012 . 2010 compared to 2009 same store new vehicle revenue increased during 2010 , as compared to 2009 , primarily as a result of an increase in same store unit volume and an increase in same store revenue per new vehicle retailed . the increase in same store unit volume was primarily due to improved market conditions , including improved credit availability offered to consumers , the reinstatement or expansion of certain manufacturer leasing programs , and an increase in consumer confidence . same store revenue per new vehicle retailed benefited from an increase in the average selling prices for new vehicles in all three segments – domestic , import , and premium luxury – primarily due to improved market conditions . same store revenue per new vehicle retailed also benefited from a shift in mix toward large vehicles , which have relatively higher average selling prices . same store gross profit per new vehicle retailed increased during 2010 , as compared to 2009 , due in part to a recovery in margins for both small and large vehicles in all three segments as a result of improved market conditions . additionally , we achieved certain manufacturer incentive program goals during the fourth quarter of 2010. as a result , we were able to recognize certain performance-based manufacturer incentives , primarily related to premium luxury vehicles previously sold , which favorably impacted gross profit by $ 13.1 million and operating income by $ 11.8 million . new vehicle inventories our new vehicle inventories were $ 1.4 billion or 50 days supply at december 31 , 2011 , as compared to new vehicle inventories of $ 1.5 billion or 63 days supply at december 31 , 2010 . we had 43,906 units in new vehicle inventory at december 31 , 2011 , and 48,499 units at december 31 , 2010 . the following table details net new vehicle inventory carrying benefit , consisting of new vehicle floorplan interest expense net of floorplan assistance earned ( amounts received from manufacturers specifically to support store financing of new vehicle inventory ) . floorplan assistance is accounted for as a component of new vehicle gross profit . replace_table_token_15_th 2011 compared to 2010 the net new vehicle inventory carrying benefit increased in 2011 , as compared to 2010 , due to an increase in floorplan assistance as a result of higher new vehicle sales and an increase in the floorplan assistance rate per unit , partially offset by an increase in floorplan interest expense primarily due to higher average vehicle floorplan payable balances during the year . 2010 compared to 2009 the net new vehicle inventory carrying benefit increased in 2010 , as compared to 2009 , due to an increase in floorplan assistance as a result of higher new vehicle sales and an increase in the floorplan assistance rate per unit , partially offset by an increase in floorplan interest expense primarily due to higher average vehicle floorplan payable balances during the year . 34 used vehicle replace_table_token_16_th ( 1 ) as of december 31 , 2011 , we have revised our method of calculating used vehicle days supply from a
| cash flows the following table summarizes the changes in our cash provided by ( used in ) operating , investing , and financing activities : replace_table_token_33_th cash flows from operating activities our primary sources of operating cash flows are collections from contracts-in-transit and customers following the sale of vehicles and proceeds from vehicle floorplan payable-trade . our primary uses of cash from operating activities are repayments of vehicle floorplan payable-trade , personnel-related expenditures , and payments related to taxes and leased properties . 2011 compared to 2010 during 2011 , we paid $ 14.8 million in connection with refinancing our indebtedness . cash flows from operating activities reflect $ 1.8 million of these cash payments that we charged to expense related to this refinancing transaction . in addition , we charged to expense $ 0.4 million of previously deferred debt issuance costs . cash flows from financing activities , discussed below , reflect $ 13.0 million of debt issuance costs that will be amortized to interest expense over the term of the new credit agreement . net cash provided by operating activities increased during 2011 , as compared to 2010 , primarily due to a decrease in working capital requirements and an increase in earnings . 2010 compared to 2009 during 2010 , we paid $ 28.1 million in connection with refinancing our indebtedness , including debt tender premiums . cash flows from operating activities reflect $ 16.1 million of these cash payments that we charged to expense related to these transactions . in addition , we charged to expense $ 3.5 million of previously deferred debt issuance costs . cash flows from financing activities , discussed below , reflect $ 11.9 million of debt issuance costs that are being amortized to interest expense over the term of the related debt arrangements . net cash provided by operating activities decreased during 2010 , as compared to 2009 , primarily due to an increase in working capital requirements and debt refinancing costs noted above .
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business portfolio and investment activity in general , our investments in debt securities have a term of no more than seven years , accrue interest at variable rates ( generally based on the one-month libor ) and , to a lesser extent , at fixed rates . we seek debt instruments that pay interest monthly or , at a minimum , quarterly , have a success fee or deferred interest provision and are primarily interest only with all principal and any accrued but unpaid interest due at maturity . generally , success fees accrue at a set rate and are contractually due upon a change of control of a portfolio company , typically from an exit or sale . some debt securities have deferred interest whereby some portion of the interest payment is added to the principal balance so that the interest is paid , together with the principal , at maturity . this form of deferred interest is often called pik interest . 41 typically , our equity investments consist of common stock , preferred stock , limited liability company interests , or warrants to purchase the foregoing . often , these equity investments occur in connection with our original investment , recapitalizing a business , or refinancing existing debt . during the year ended september 30 , 2017 , we invested $ 99.2 million in eleven new portfolio companies and extended $ 17.6 million of investments to existing portfolio companies . in addition , during the year ended september 30 , 2017 , we exited nine portfolio companies through sales and early payoffs . we received a total of $ 83.4 million in combined net proceeds and principal repayments from the aforementioned portfolio company exits as well as existing portfolio companies during the year ended september 30 , 2017. this activity resulted in a net increase in our overall portfolio by two portfolio companies to 47 and a net increase of 7.8 % in our portfolio at cost since september 30 , 2016. we intend to continue to make new conservative investments in businesses with steady cash flows . we are focused on building our pipeline and making investments that meet our objectives and strategies and that provide appropriate returns , in light of the accompanying risks . from our initial public offering in august 2001 and through september 30 , 2017 , we have made 470 different loans to , or investments in , 217 companies for a total of approximately $ 1.7 billion , before giving effect to principal repayments on investments and divestitures . during the year ended september 30 , 2017 , the following significant transactions occurred : in october 2016 , rp crown parent , llc paid off at par for net proceeds of $ 2.0 million . in october 2016 , our $ 3.9 million secured first lien debt investment in vertellus specialties , inc. was restructured . as a result of the restructure , we received a new $ 1.1 million secured second lien debt investment in vertellus holdings llc and common equity with a cost basis of $ 3.0 million . in november 2016 , we completed the sale of substantially all the assets of rbc acquisition corp. ( rbc ) for net proceeds of $ 36.3 million , which resulted in a realized loss of $ 2.3 million . in connection with the sale , we received success fee income of $ 1.1 million and net receivables of $ 1.5 million , which are recorded within other assets , net . in november 2016 , we invested $ 5.2 million in sea link international irb , inc. through secured second lien debt and equity . in december 2016 , we sold our investment in behrens manufacturing , llc ( behrens ) , which resulted in success fee income of $ 0.4 million and a realized gain of $ 2.5 million . in connection with the sale , we received net cash proceeds of $ 8.2 million , including the repayment of our debt investment of $ 4.3 million at par . in december 2016 , we invested $ 7.0 million in vacation rental pros property management , llc through secured second lien debt . in december 2016 , autoparts holdings limited paid off at par for proceeds of $ 0.7 million . in december 2016 , we invested $ 5.0 million in ldiscovery , llc through secured second lien debt . in february 2017 , we invested $ 10.0 million in belnick , inc. through secured second lien debt . in february 2017 , we invested $ 29.0 million in netfortris corp. through secured first lien debt . in february 2017 , vitera healthcare solutions , llc paid off at par for net proceeds of $ 4.5 million . in march 2017 , lcr contractors , llc paid off at par for net cash proceeds of $ 8.6 million . in connection with the payoff , we received a prepayment fee of $ 0.2 million . in april 2017 , we invested $ 22.0 million in hb capital resources , ltd. through secured second lien debt . in may 2017 , we invested an additional $ 4.1 million in an existing portfolio company , lignetics , inc. , through secured second lien debt and equity , to support an acquisition . 42 in may 2017 , we invested $ 4.0 million in keystone acquisition corp. through secured second lien debt . in june 2017 , we invested $ 3.0 million in medical solutions holdings , inc. through secured second lien debt . in july 2017 , our loan to sourcehov , llc was paid off for net proceeds of $ 4.8 million , resulting in a realized loss of $ 0.2 million . in august 2017 , we invested $ 12.5 million in el academies , inc. through secured first lien debt and equity . story_separator_special_tag during the year ended september 30 , 2016 , we reversed $ 0.1 million of unrealized depreciation related to the expiration of our interest rate cap agreement in january 2016 . 49 comparison of the year ended september 30 , 2016 to the year ended september 30 , 2015 replace_table_token_15_th investment income interest income increased by 0.9 % for the year ended september 30 , 2016 , as compared to the prior year . this increase was due primarily to an increase in the weighted average yield on our interest-bearing portfolio partially offset by a slight decrease in the principal balance of our interest-bearing investment portfolio outstanding during the year . the weighted average yield on our interest-bearing investments is based on the current stated interest rate on interest-bearing investments which increased to 11.1 % for the year ended september 30 , 2016 compared to 10.9 % for the year ended september 30 , 2015 , inclusive of any allowances on interest receivables made during those periods . the weighted average principal balance of our interest-bearing investment portfolio during the year ended september 30 , 2016 , was $ 317.0 million , compared to $ 319.1 million for the prior year , a decrease of $ 2.1 million , or 0.1 % . as of september 30 , 2016 , two portfolio companies , sunshine and vertellus specialties , inc. , were either fully or partially on non-accrual status , with an aggregate debt cost basis of approximately $ 26.5 million , or 7.7 % of the cost basis of all debt investments in our portfolio . as of september 30 , 2015 , two portfolio companies , sunshine and heartland , were either fully or partially on non-accrual status , with an aggregate debt cost basis of approximately $ 26.4 million , or 7.1 % of the cost basis of all debt investments in our portfolio . other income increased by 23.1 % during the year ended september 30 , 2016 , as compared to the prior year . for the year ended september 30 , 2016 , other income consisted primarily of $ 3.4 million in success fees recognized , $ 0.3 million in dividend income received , and $ 0.2 million in prepayment fees received . for the year ended september 30 , 2015 , other income consisted primarily of $ 1.9 million in success fees recognized , $ 0.9 million in dividend income , and $ 0.3 million in settlement fees . 50 the following tables list the investment income for our five largest portfolio company investments at fair value during the respective years : replace_table_token_16_th ( a ) new investment during applicable period . expenses expenses , net of credits from the adviser , decreased for the year ended september 30 , 2016 , by 3.6 % as compared to the prior year . this decrease was primarily due to decreases in our net base management fees to the advisor and interest expense on borrowings , partially offset by an increase in the net incentive fee to the adviser . interest expense decreased by $ 0.9 million , or 24.3 % , during the year ended september 30 , 2016 , as compared to the prior year , primarily due to decreased borrowings outstanding throughout the period on our credit facility . the weighted average balance outstanding on our credit facility during the year ended september 30 , 2016 , was approximately $ 64.0 million , as compared to $ 92.5 million in the prior year period , a decrease of 30.8 % . net base management fee earned by the adviser decreased by $ 0.6 million , or 10.5 % , during the year ended september 30 , 2016 , as compared to the prior year period , resulting from a decrease in the average total assets outstanding and a decrease in the annual base management fee from 2.0 % to 1.75 % , which was effective july 1 , 2015. the base management , loan servicing and incentive fees , and associated non-contractual , unconditional and irrevocable credits , are computed quarterly , as described under transactions with the adviser in note 4 related party transactions of the accompanying notes to consolidated financial statements and are summarized in the following table : 51 replace_table_token_17_th ( a ) average total assets subject to the base management fee is defined as total assets , including investments made with proceeds of borrowings , less any uninvested cash or cash equivalents resulting from borrowings , valued at the end of the four most recently completed quarters within the respective years and adjusted appropriately for any share issuances or repurchases during the applicable year . ( b ) reflected , on a gross basis , as a line item on our accompanying consolidated statement of operations located elsewhere in this annual report on form 10-k. realized loss and unrealized appreciation net realized loss on investments for the year ended september 30 , 2016 , we recorded a net realized gain on investments of $ 7.2 million , which resulted primarily from the sales of funko , spl , westland , and ashland for a combined realized gain of $ 18.7 million and net proceeds of $ 35.4 million . this realized gain was partially offset by a combined realized loss of $ 11.7 million recognized from the sale of heartland and the restructures of targus and precision during the year ended september 30 , 2016. we also recognized a realized loss of $ 0.6 million during the year ended september 30 , 2016 related to a settlement associated with wp evenflo group holdings , inc. , which we had previously exited at a realized gain of $ 1.0 million in september 2014. for the year ended september 30 , 2015 , we recorded a net realized loss on investments of $ 34.2 million , which resulted primarily from the sales of midwest metal distribution , inc. ( midwest
| cash flows the following table summarizes the changes in our cash provided by ( used in ) operating , investing , and financing activities : replace_table_token_33_th cash flows from operating activities our primary sources of operating cash flows are collections from contracts-in-transit and customers following the sale of vehicles and proceeds from vehicle floorplan payable-trade . our primary uses of cash from operating activities are repayments of vehicle floorplan payable-trade , personnel-related expenditures , and payments related to taxes and leased properties . 2011 compared to 2010 during 2011 , we paid $ 14.8 million in connection with refinancing our indebtedness . cash flows from operating activities reflect $ 1.8 million of these cash payments that we charged to expense related to this refinancing transaction . in addition , we charged to expense $ 0.4 million of previously deferred debt issuance costs . cash flows from financing activities , discussed below , reflect $ 13.0 million of debt issuance costs that will be amortized to interest expense over the term of the new credit agreement . net cash provided by operating activities increased during 2011 , as compared to 2010 , primarily due to a decrease in working capital requirements and an increase in earnings . 2010 compared to 2009 during 2010 , we paid $ 28.1 million in connection with refinancing our indebtedness , including debt tender premiums . cash flows from operating activities reflect $ 16.1 million of these cash payments that we charged to expense related to these transactions . in addition , we charged to expense $ 3.5 million of previously deferred debt issuance costs . cash flows from financing activities , discussed below , reflect $ 11.9 million of debt issuance costs that are being amortized to interest expense over the term of the related debt arrangements . net cash provided by operating activities decreased during 2010 , as compared to 2009 , primarily due to an increase in working capital requirements and debt refinancing costs noted above .
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business portfolio and investment activity in general , our investments in debt securities have a term of no more than seven years , accrue interest at variable rates ( generally based on the one-month libor ) and , to a lesser extent , at fixed rates . we seek debt instruments that pay interest monthly or , at a minimum , quarterly , have a success fee or deferred interest provision and are primarily interest only with all principal and any accrued but unpaid interest due at maturity . generally , success fees accrue at a set rate and are contractually due upon a change of control of a portfolio company , typically from an exit or sale . some debt securities have deferred interest whereby some portion of the interest payment is added to the principal balance so that the interest is paid , together with the principal , at maturity . this form of deferred interest is often called pik interest . 41 typically , our equity investments consist of common stock , preferred stock , limited liability company interests , or warrants to purchase the foregoing . often , these equity investments occur in connection with our original investment , recapitalizing a business , or refinancing existing debt . during the year ended september 30 , 2017 , we invested $ 99.2 million in eleven new portfolio companies and extended $ 17.6 million of investments to existing portfolio companies . in addition , during the year ended september 30 , 2017 , we exited nine portfolio companies through sales and early payoffs . we received a total of $ 83.4 million in combined net proceeds and principal repayments from the aforementioned portfolio company exits as well as existing portfolio companies during the year ended september 30 , 2017. this activity resulted in a net increase in our overall portfolio by two portfolio companies to 47 and a net increase of 7.8 % in our portfolio at cost since september 30 , 2016. we intend to continue to make new conservative investments in businesses with steady cash flows . we are focused on building our pipeline and making investments that meet our objectives and strategies and that provide appropriate returns , in light of the accompanying risks . from our initial public offering in august 2001 and through september 30 , 2017 , we have made 470 different loans to , or investments in , 217 companies for a total of approximately $ 1.7 billion , before giving effect to principal repayments on investments and divestitures . during the year ended september 30 , 2017 , the following significant transactions occurred : in october 2016 , rp crown parent , llc paid off at par for net proceeds of $ 2.0 million . in october 2016 , our $ 3.9 million secured first lien debt investment in vertellus specialties , inc. was restructured . as a result of the restructure , we received a new $ 1.1 million secured second lien debt investment in vertellus holdings llc and common equity with a cost basis of $ 3.0 million . in november 2016 , we completed the sale of substantially all the assets of rbc acquisition corp. ( rbc ) for net proceeds of $ 36.3 million , which resulted in a realized loss of $ 2.3 million . in connection with the sale , we received success fee income of $ 1.1 million and net receivables of $ 1.5 million , which are recorded within other assets , net . in november 2016 , we invested $ 5.2 million in sea link international irb , inc. through secured second lien debt and equity . in december 2016 , we sold our investment in behrens manufacturing , llc ( behrens ) , which resulted in success fee income of $ 0.4 million and a realized gain of $ 2.5 million . in connection with the sale , we received net cash proceeds of $ 8.2 million , including the repayment of our debt investment of $ 4.3 million at par . in december 2016 , we invested $ 7.0 million in vacation rental pros property management , llc through secured second lien debt . in december 2016 , autoparts holdings limited paid off at par for proceeds of $ 0.7 million . in december 2016 , we invested $ 5.0 million in ldiscovery , llc through secured second lien debt . in february 2017 , we invested $ 10.0 million in belnick , inc. through secured second lien debt . in february 2017 , we invested $ 29.0 million in netfortris corp. through secured first lien debt . in february 2017 , vitera healthcare solutions , llc paid off at par for net proceeds of $ 4.5 million . in march 2017 , lcr contractors , llc paid off at par for net cash proceeds of $ 8.6 million . in connection with the payoff , we received a prepayment fee of $ 0.2 million . in april 2017 , we invested $ 22.0 million in hb capital resources , ltd. through secured second lien debt . in may 2017 , we invested an additional $ 4.1 million in an existing portfolio company , lignetics , inc. , through secured second lien debt and equity , to support an acquisition . 42 in may 2017 , we invested $ 4.0 million in keystone acquisition corp. through secured second lien debt . in june 2017 , we invested $ 3.0 million in medical solutions holdings , inc. through secured second lien debt . in july 2017 , our loan to sourcehov , llc was paid off for net proceeds of $ 4.8 million , resulting in a realized loss of $ 0.2 million . in august 2017 , we invested $ 12.5 million in el academies , inc. through secured first lien debt and equity . story_separator_special_tag during the year ended september 30 , 2016 , we reversed $ 0.1 million of unrealized depreciation related to the expiration of our interest rate cap agreement in january 2016 . 49 comparison of the year ended september 30 , 2016 to the year ended september 30 , 2015 replace_table_token_15_th investment income interest income increased by 0.9 % for the year ended september 30 , 2016 , as compared to the prior year . this increase was due primarily to an increase in the weighted average yield on our interest-bearing portfolio partially offset by a slight decrease in the principal balance of our interest-bearing investment portfolio outstanding during the year . the weighted average yield on our interest-bearing investments is based on the current stated interest rate on interest-bearing investments which increased to 11.1 % for the year ended september 30 , 2016 compared to 10.9 % for the year ended september 30 , 2015 , inclusive of any allowances on interest receivables made during those periods . the weighted average principal balance of our interest-bearing investment portfolio during the year ended september 30 , 2016 , was $ 317.0 million , compared to $ 319.1 million for the prior year , a decrease of $ 2.1 million , or 0.1 % . as of september 30 , 2016 , two portfolio companies , sunshine and vertellus specialties , inc. , were either fully or partially on non-accrual status , with an aggregate debt cost basis of approximately $ 26.5 million , or 7.7 % of the cost basis of all debt investments in our portfolio . as of september 30 , 2015 , two portfolio companies , sunshine and heartland , were either fully or partially on non-accrual status , with an aggregate debt cost basis of approximately $ 26.4 million , or 7.1 % of the cost basis of all debt investments in our portfolio . other income increased by 23.1 % during the year ended september 30 , 2016 , as compared to the prior year . for the year ended september 30 , 2016 , other income consisted primarily of $ 3.4 million in success fees recognized , $ 0.3 million in dividend income received , and $ 0.2 million in prepayment fees received . for the year ended september 30 , 2015 , other income consisted primarily of $ 1.9 million in success fees recognized , $ 0.9 million in dividend income , and $ 0.3 million in settlement fees . 50 the following tables list the investment income for our five largest portfolio company investments at fair value during the respective years : replace_table_token_16_th ( a ) new investment during applicable period . expenses expenses , net of credits from the adviser , decreased for the year ended september 30 , 2016 , by 3.6 % as compared to the prior year . this decrease was primarily due to decreases in our net base management fees to the advisor and interest expense on borrowings , partially offset by an increase in the net incentive fee to the adviser . interest expense decreased by $ 0.9 million , or 24.3 % , during the year ended september 30 , 2016 , as compared to the prior year , primarily due to decreased borrowings outstanding throughout the period on our credit facility . the weighted average balance outstanding on our credit facility during the year ended september 30 , 2016 , was approximately $ 64.0 million , as compared to $ 92.5 million in the prior year period , a decrease of 30.8 % . net base management fee earned by the adviser decreased by $ 0.6 million , or 10.5 % , during the year ended september 30 , 2016 , as compared to the prior year period , resulting from a decrease in the average total assets outstanding and a decrease in the annual base management fee from 2.0 % to 1.75 % , which was effective july 1 , 2015. the base management , loan servicing and incentive fees , and associated non-contractual , unconditional and irrevocable credits , are computed quarterly , as described under transactions with the adviser in note 4 related party transactions of the accompanying notes to consolidated financial statements and are summarized in the following table : 51 replace_table_token_17_th ( a ) average total assets subject to the base management fee is defined as total assets , including investments made with proceeds of borrowings , less any uninvested cash or cash equivalents resulting from borrowings , valued at the end of the four most recently completed quarters within the respective years and adjusted appropriately for any share issuances or repurchases during the applicable year . ( b ) reflected , on a gross basis , as a line item on our accompanying consolidated statement of operations located elsewhere in this annual report on form 10-k. realized loss and unrealized appreciation net realized loss on investments for the year ended september 30 , 2016 , we recorded a net realized gain on investments of $ 7.2 million , which resulted primarily from the sales of funko , spl , westland , and ashland for a combined realized gain of $ 18.7 million and net proceeds of $ 35.4 million . this realized gain was partially offset by a combined realized loss of $ 11.7 million recognized from the sale of heartland and the restructures of targus and precision during the year ended september 30 , 2016. we also recognized a realized loss of $ 0.6 million during the year ended september 30 , 2016 related to a settlement associated with wp evenflo group holdings , inc. , which we had previously exited at a realized gain of $ 1.0 million in september 2014. for the year ended september 30 , 2015 , we recorded a net realized loss on investments of $ 34.2 million , which resulted primarily from the sales of midwest metal distribution , inc. ( midwest
| liquidity and capital resources operating activities our cash flows from operating activities are primarily generated from the interest payments on debt securities that we receive from our portfolio companies , as well as net proceeds received through repayments or sales of our investments . we utilize this cash primarily to fund new investments , make interest payments on our credit facility , make distributions to our stockholders , pay management and administrative fees to the adviser and administrator , and for other operating expenses . net cash used in operating activities for the year ended september 30 , 2017 was $ 12.9 million as compared to net cash provided by operating activities of $ 60.0 million for the year ended september 30 , 2016. the change was primarily due to an increase in purchases of investments and a decrease in principal repayments on investments and net proceeds from sale of investments period over period . purchases of investments were $ 112.1 million during the year ended september 30 , 2017 compared to $ 80.0 million during the prior year period . repayments and net proceeds from sales were $ 83.4 million during the year ended september 30 , 2017 compared to $ 121.1 million during the prior year period . as of september 30 , 2017 , we had loans to , syndicated participations in or equity investments in 47 private companies , with an aggregate cost basis of approximately $ 411.4 million . as of september 30 , 2016 , we had loans to , syndicated participations in or equity investments in 45 private companies , with an aggregate cost basis of approximately $ 381.8 million . the following table summarizes our total portfolio investment activity during the years ended september 30 , 2017 and 2016 : replace_table_token_20_th ( a ) pik interest is a non-cash source of income and is calculated at the contractual rate stated in a loan agreement and added to the principal balance of a loan .
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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
| liquidity and capital resources operating activities our cash flows from operating activities are primarily generated from the interest payments on debt securities that we receive from our portfolio companies , as well as net proceeds received through repayments or sales of our investments . we utilize this cash primarily to fund new investments , make interest payments on our credit facility , make distributions to our stockholders , pay management and administrative fees to the adviser and administrator , and for other operating expenses . net cash used in operating activities for the year ended september 30 , 2017 was $ 12.9 million as compared to net cash provided by operating activities of $ 60.0 million for the year ended september 30 , 2016. the change was primarily due to an increase in purchases of investments and a decrease in principal repayments on investments and net proceeds from sale of investments period over period . purchases of investments were $ 112.1 million during the year ended september 30 , 2017 compared to $ 80.0 million during the prior year period . repayments and net proceeds from sales were $ 83.4 million during the year ended september 30 , 2017 compared to $ 121.1 million during the prior year period . as of september 30 , 2017 , we had loans to , syndicated participations in or equity investments in 47 private companies , with an aggregate cost basis of approximately $ 411.4 million . as of september 30 , 2016 , we had loans to , syndicated participations in or equity investments in 45 private companies , with an aggregate cost basis of approximately $ 381.8 million . the following table summarizes our total portfolio investment activity during the years ended september 30 , 2017 and 2016 : replace_table_token_20_th ( a ) pik interest is a non-cash source of income and is calculated at the contractual rate stated in a loan agreement and added to the principal balance of a loan .
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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 .
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working at the top of client organizations also allows us to attract and retain high-caliber consultants . in addition to executive search , we provide consulting services including executive leadership assessment , leadership , team and board development , succession planning , talent strategy , people performance , inter-team collaboration , culture shaping and organizational transformation . we provide our services to a broad range of clients through the expertise of over 400 consultants located in major cities around the world . our executive search services are provided on a retained basis . revenue before reimbursements of out-of-pocket expenses ( “ net revenue ” ) consists of retainers and indirect expenses billed to clients . typically , we are paid a retainer for our executive search services equal to approximately one-third of the estimated first-year compensation for the position to be filled . in addition , if the actual compensation of a placed candidate exceeds the estimated compensation , we often are authorized to bill the client for one-third of the excess . indirect expenses are calculated as a percentage of the retainer with certain dollar limits per search . key performance indicators we manage and assess our performance through various means , with primary financial and operational measures including net revenue , operating income , operating margin , adjusted ebitda ( non-gaap ) and adjusted ebitda margin ( non-gaap ) . 17 executive search and heidrick consulting performance is also measured using consultant headcount . specific to executive search , confirmation trends , consultant productivity and average revenue per search are used to measure performance . revenue is driven by market conditions and a combination of the number of executive search engagements and leadership consulting and culture shaping projects and the average revenue per search or project . with the exception of compensation expense , incremental increases in revenue do not necessarily result in proportionate increases in costs , particularly operating and administrative expenses , thus creating the potential to improve operating margins . the number of consultants , confirmation trends , number of searches or projects completed , productivity levels and the average revenue per search or project will vary from quarter to quarter , affecting net revenue and operating margin . our compensation model at the executive search consultant level , there are fixed and variable components of compensation . individuals are rewarded for their performance based on a system that directly ties a portion of their compensation to the amount of net revenue for which they are responsible . a portion of the reward may be based upon individual performance against a series of non-financial measures . credit towards the variable portion of an executive search consultant 's compensation is earned by generating net revenue for winning and executing work . each quarter , we review and update the expected annual performance of all executive search consultants and accrue variable compensation accordingly . the amount of variable compensation that is accrued for each executive search consultant is based on a tiered payout model . overall company performance determines the amount available for total variable compensation . the more net revenue that is generated by the consultant , the higher the percentage credited towards the consultant 's variable compensation and thus accrued by our company as expense . at the heidrick consulting consultant level , there are also fixed and variable components of compensation . overall compensation is determined based on the total economic contribution of the heidrick consulting segment to the business as a whole . individual consultant compensation can vary , and is derived from credits earned for delivering client work plus credits earned for contributions of intellectual and human capital , client relationship development and consulting practice development . each quarter , we review and update the expected annual performance of all heidrick consulting consultants and accrue variable compensation accordingly . the mix of individual consultants who generate revenue in executive search and economic contributions in heidrick consulting can significantly affect the total amount of compensation expense recorded , which directly impacts operating margin . as a result , the variable portion of the compensation expense may fluctuate significantly from quarter to quarter . the total variable compensation is discretionary , and is based on company-wide financial targets approved by the human resources and compensation committee of the board of directors . a portion of our executive search consultants ' and management cash bonuses is deferred and paid over a three-year vesting period . the compensation expense related to the amounts being deferred is recognized on a graded vesting attribution method over the requisite service period . this service period begins on january 1 of the respective fiscal year and continues through the deferral date , which coincides with our bonus payments in the first quarter of the following year , and for an additional three year vesting period . the deferrals are recorded in accrued salaries and employee benefits in the consolidated balance sheets . 2018 overview consolidated net revenue was $ 716.0 million for the year ended december 31 , 2018 , an increase of $ 94.6 million , or 15.2 % , compared to 2017. executive search net revenue was $ 652.9 million in 2018 , an increase of $ 100.8 million compared to 2017. the increase in executive search net revenue was the result of growth in the americas , europe and asia pacific . our acquisition of amrop a/s ( `` amrop `` ) in january 2018 also contributed to the growth in executive search net revenue . the net impact of the new revenue recognition standard increased executive search net revenue by approximately $ 8.0 million . story_separator_special_tag variable compensation increased $ 5.9 million due to higher bonus accruals for consultant performance . the impact of the new revenue recognition standard increased salaries and benefits expense by approximately $ 2.1 million . 24 general and administrative expenses decreased $ 3.3 million , or 13.6 % from 2017 primarily due to decreases in bad debt , internal travel and office occupancy . restructuring charges were $ 2.0 million for the year ended december 31 , 2017. these charges include approximately $ 1.8 million in severance-related charges , $ 0.1 million in office-related charges and $ 0.1 million in professional fees and other expenses . the asia pacific segment reported operating income of $ 16.0 million in 2018 , an increase of $ 15.5 million compared to $ 0.5 million in 2017. excluding the impact of restructuring charges in 2017 , operating income increased $ 13.4 million from $ 2.6 million to $ 16.0 million . heidrick consulting the heidrick consulting segment reported net revenue of $ 63.1 million in 2018 , a decrease of 9.0 % compared to $ 69.4 million in 2017. the decline in revenue was primarily the result of the adoption of the new revenue recognition standard and its $ 3.8 million negative impact on revenue associated with enterprise agreements . enterprise agreements are now recognized over a longer term due to certain renewal options included in the contract . foreign exchange rate fluctuations positively impacted results by $ 0.7 million , or 1.1 % . there were 66 heidrick consulting partner and principal consultants as of december 31 , 2018 , compared to 64 as of december 31 , 2017. salaries and employee benefits expense increased $ 3.9 million , or 8.0 % , from 2017. fixed compensation increased $ 4.6 million primarily due to increases in talent acquisition and retention costs , and base salaries and payroll taxes , partially offset by a decrease in retirement and benefits . variable compensation decreased $ 0.7 million due to lower bonus accruals for consultant performance . the impact of the new revenue recognition standard decreased salaries and benefits expense by approximately $ 2.7 million . general and administrative expenses decreased $ 4.8 million , or 16.7 % , from 2017 primarily as a result of decreases in the use of external third-party consultants and intangible amortization as a result of impairment in the prior year , partially offset by an increase in professional services . impairment charges for the year ended december 31 , 2017 were $ 50.7 million due to the impairment of goodwill and amortizable intangible assets associated with our leadership consulting and culture shaping reporting units . the impairment charge is recorded within impairment charges in the condensed consolidated statement of comprehensive income ( loss ) for the year ended december 31 , 2017. in 2018 , the company completed the integration of its leadership consulting and culture shaping businesses into one combined service offering , heidrick consulting . restructuring charges were $ 3.4 million for the year ended december 31 , 2017. these charges included approximately $ 2.1 million in severance-related charges , $ 1.2 million in professional fees and other expenses and $ 0.1 million in office-related charges . the heidrick consulting segment reported an operating loss of $ 13.6 million in 2018 , an increase of $ 48.7 million , compared to an operating loss of $ 62.4 million in 2017. excluding the impact of impairment and restructuring charges in 2017 , operating loss decreased $ 5.4 million from a loss of $ 8.3 million to a loss of $ 13.6 million . global operations support global operations support expenses decreased $ 3.8 million , or 9.5 % , to $ 36.3 million from $ 40.0 million in 2017. salaries and employee benefits expense increased $ 2.8 million , or 15.4 % , due to increases in management and support bonuses , stock compensation and separation costs , partially offset by a decrease in the deferred compensation plan due to market fluctuations . general and administrative expense decreased $ 1.2 million due to decreases in internal travel , professional fees , hiring fees and communications services , partially offset by an increase in office occupancy . restructuring charges were $ 5.5 million for the year ended december 31 , 2017. these charges included approximately $ 4.5 million of severance-related charges and $ 0.9 million of professional fees and other costs . excluding the impact of restructuring charges in 2017 , expenses increased $ 1.7 million from $ 34.6 million in 2017 to $ 36.3 million in 2018 . 25 year ended december 31 , 2017 compared to year ended december 31 , 2016 total revenue . consolidated total revenue increased $ 39.2 million , or 6.5 % , to $ 640.1 million for the year ended december 31 , 2017 from $ 600.9 million for the year ended december 31 , 2016. the increase in total revenue was primarily due to the increase in revenue before reimbursements ( net revenue ) . revenue before reimbursements ( net revenue ) . consolidated net revenue increased $ 39.0 million or 6.7 % , to $ 621.4 million in 2017 , from $ 582.4 million in 2016. foreign exchange rate fluctuations negatively impacted results by $ 1.4 million , or 0.2 % . executive search net revenue was $ 552.0 million in 2017 , an increase of $ 44.7 million from 2016. the increase in executive search net revenue was the result of growth in the americas , europe and asia pacific . heidrick consulting net revenue decreased $ 5.7 million , or 7.6 % , to $ 69.4 million in 2017 from $ 75.0 million in 2016. the number of executive search and heidrick consulting consultants was 346 and 64 , respectively , as of december 31 , 2017 compared to 335 and 62 , respectively , as of december 31 , 2016. specific to executive search , productivity as measured by
| 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 .
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working at the top of client organizations also allows us to attract and retain high-caliber consultants . in addition to executive search , we provide consulting services including executive leadership assessment , leadership , team and board development , succession planning , talent strategy , people performance , inter-team collaboration , culture shaping and organizational transformation . we provide our services to a broad range of clients through the expertise of over 400 consultants located in major cities around the world . our executive search services are provided on a retained basis . revenue before reimbursements of out-of-pocket expenses ( “ net revenue ” ) consists of retainers and indirect expenses billed to clients . typically , we are paid a retainer for our executive search services equal to approximately one-third of the estimated first-year compensation for the position to be filled . in addition , if the actual compensation of a placed candidate exceeds the estimated compensation , we often are authorized to bill the client for one-third of the excess . indirect expenses are calculated as a percentage of the retainer with certain dollar limits per search . key performance indicators we manage and assess our performance through various means , with primary financial and operational measures including net revenue , operating income , operating margin , adjusted ebitda ( non-gaap ) and adjusted ebitda margin ( non-gaap ) . 17 executive search and heidrick consulting performance is also measured using consultant headcount . specific to executive search , confirmation trends , consultant productivity and average revenue per search are used to measure performance . revenue is driven by market conditions and a combination of the number of executive search engagements and leadership consulting and culture shaping projects and the average revenue per search or project . with the exception of compensation expense , incremental increases in revenue do not necessarily result in proportionate increases in costs , particularly operating and administrative expenses , thus creating the potential to improve operating margins . the number of consultants , confirmation trends , number of searches or projects completed , productivity levels and the average revenue per search or project will vary from quarter to quarter , affecting net revenue and operating margin . our compensation model at the executive search consultant level , there are fixed and variable components of compensation . individuals are rewarded for their performance based on a system that directly ties a portion of their compensation to the amount of net revenue for which they are responsible . a portion of the reward may be based upon individual performance against a series of non-financial measures . credit towards the variable portion of an executive search consultant 's compensation is earned by generating net revenue for winning and executing work . each quarter , we review and update the expected annual performance of all executive search consultants and accrue variable compensation accordingly . the amount of variable compensation that is accrued for each executive search consultant is based on a tiered payout model . overall company performance determines the amount available for total variable compensation . the more net revenue that is generated by the consultant , the higher the percentage credited towards the consultant 's variable compensation and thus accrued by our company as expense . at the heidrick consulting consultant level , there are also fixed and variable components of compensation . overall compensation is determined based on the total economic contribution of the heidrick consulting segment to the business as a whole . individual consultant compensation can vary , and is derived from credits earned for delivering client work plus credits earned for contributions of intellectual and human capital , client relationship development and consulting practice development . each quarter , we review and update the expected annual performance of all heidrick consulting consultants and accrue variable compensation accordingly . the mix of individual consultants who generate revenue in executive search and economic contributions in heidrick consulting can significantly affect the total amount of compensation expense recorded , which directly impacts operating margin . as a result , the variable portion of the compensation expense may fluctuate significantly from quarter to quarter . the total variable compensation is discretionary , and is based on company-wide financial targets approved by the human resources and compensation committee of the board of directors . a portion of our executive search consultants ' and management cash bonuses is deferred and paid over a three-year vesting period . the compensation expense related to the amounts being deferred is recognized on a graded vesting attribution method over the requisite service period . this service period begins on january 1 of the respective fiscal year and continues through the deferral date , which coincides with our bonus payments in the first quarter of the following year , and for an additional three year vesting period . the deferrals are recorded in accrued salaries and employee benefits in the consolidated balance sheets . 2018 overview consolidated net revenue was $ 716.0 million for the year ended december 31 , 2018 , an increase of $ 94.6 million , or 15.2 % , compared to 2017. executive search net revenue was $ 652.9 million in 2018 , an increase of $ 100.8 million compared to 2017. the increase in executive search net revenue was the result of growth in the americas , europe and asia pacific . our acquisition of amrop a/s ( `` amrop `` ) in january 2018 also contributed to the growth in executive search net revenue . the net impact of the new revenue recognition standard increased executive search net revenue by approximately $ 8.0 million . story_separator_special_tag variable compensation increased $ 5.9 million due to higher bonus accruals for consultant performance . the impact of the new revenue recognition standard increased salaries and benefits expense by approximately $ 2.1 million . 24 general and administrative expenses decreased $ 3.3 million , or 13.6 % from 2017 primarily due to decreases in bad debt , internal travel and office occupancy . restructuring charges were $ 2.0 million for the year ended december 31 , 2017. these charges include approximately $ 1.8 million in severance-related charges , $ 0.1 million in office-related charges and $ 0.1 million in professional fees and other expenses . the asia pacific segment reported operating income of $ 16.0 million in 2018 , an increase of $ 15.5 million compared to $ 0.5 million in 2017. excluding the impact of restructuring charges in 2017 , operating income increased $ 13.4 million from $ 2.6 million to $ 16.0 million . heidrick consulting the heidrick consulting segment reported net revenue of $ 63.1 million in 2018 , a decrease of 9.0 % compared to $ 69.4 million in 2017. the decline in revenue was primarily the result of the adoption of the new revenue recognition standard and its $ 3.8 million negative impact on revenue associated with enterprise agreements . enterprise agreements are now recognized over a longer term due to certain renewal options included in the contract . foreign exchange rate fluctuations positively impacted results by $ 0.7 million , or 1.1 % . there were 66 heidrick consulting partner and principal consultants as of december 31 , 2018 , compared to 64 as of december 31 , 2017. salaries and employee benefits expense increased $ 3.9 million , or 8.0 % , from 2017. fixed compensation increased $ 4.6 million primarily due to increases in talent acquisition and retention costs , and base salaries and payroll taxes , partially offset by a decrease in retirement and benefits . variable compensation decreased $ 0.7 million due to lower bonus accruals for consultant performance . the impact of the new revenue recognition standard decreased salaries and benefits expense by approximately $ 2.7 million . general and administrative expenses decreased $ 4.8 million , or 16.7 % , from 2017 primarily as a result of decreases in the use of external third-party consultants and intangible amortization as a result of impairment in the prior year , partially offset by an increase in professional services . impairment charges for the year ended december 31 , 2017 were $ 50.7 million due to the impairment of goodwill and amortizable intangible assets associated with our leadership consulting and culture shaping reporting units . the impairment charge is recorded within impairment charges in the condensed consolidated statement of comprehensive income ( loss ) for the year ended december 31 , 2017. in 2018 , the company completed the integration of its leadership consulting and culture shaping businesses into one combined service offering , heidrick consulting . restructuring charges were $ 3.4 million for the year ended december 31 , 2017. these charges included approximately $ 2.1 million in severance-related charges , $ 1.2 million in professional fees and other expenses and $ 0.1 million in office-related charges . the heidrick consulting segment reported an operating loss of $ 13.6 million in 2018 , an increase of $ 48.7 million , compared to an operating loss of $ 62.4 million in 2017. excluding the impact of impairment and restructuring charges in 2017 , operating loss decreased $ 5.4 million from a loss of $ 8.3 million to a loss of $ 13.6 million . global operations support global operations support expenses decreased $ 3.8 million , or 9.5 % , to $ 36.3 million from $ 40.0 million in 2017. salaries and employee benefits expense increased $ 2.8 million , or 15.4 % , due to increases in management and support bonuses , stock compensation and separation costs , partially offset by a decrease in the deferred compensation plan due to market fluctuations . general and administrative expense decreased $ 1.2 million due to decreases in internal travel , professional fees , hiring fees and communications services , partially offset by an increase in office occupancy . restructuring charges were $ 5.5 million for the year ended december 31 , 2017. these charges included approximately $ 4.5 million of severance-related charges and $ 0.9 million of professional fees and other costs . excluding the impact of restructuring charges in 2017 , expenses increased $ 1.7 million from $ 34.6 million in 2017 to $ 36.3 million in 2018 . 25 year ended december 31 , 2017 compared to year ended december 31 , 2016 total revenue . consolidated total revenue increased $ 39.2 million , or 6.5 % , to $ 640.1 million for the year ended december 31 , 2017 from $ 600.9 million for the year ended december 31 , 2016. the increase in total revenue was primarily due to the increase in revenue before reimbursements ( net revenue ) . revenue before reimbursements ( net revenue ) . consolidated net revenue increased $ 39.0 million or 6.7 % , to $ 621.4 million in 2017 , from $ 582.4 million in 2016. foreign exchange rate fluctuations negatively impacted results by $ 1.4 million , or 0.2 % . executive search net revenue was $ 552.0 million in 2017 , an increase of $ 44.7 million from 2016. the increase in executive search net revenue was the result of growth in the americas , europe and asia pacific . heidrick consulting net revenue decreased $ 5.7 million , or 7.6 % , to $ 69.4 million in 2017 from $ 75.0 million in 2016. the number of executive search and heidrick consulting consultants was 346 and 64 , respectively , as of december 31 , 2017 compared to 335 and 62 , respectively , as of december 31 , 2016. specific to executive search , productivity as measured by
| cash and cash equivalents . cash and cash equivalents at december 31 , 2018 were $ 279.9 million , an increase of $ 72.4 million compared to $ 207.5 million at december 31 , 2017 . the $ 279.9 million of cash and cash equivalents at december 31 , 2018 includes $ 112.1 million held by our foreign subsidiaries . a portion of the $ 112.1 million is considered permanently reinvested in these foreign subsidiaries . if these funds were required to satisfy obligations in the united states , the repatriation of these funds could cause us to incur additional foreign withholding taxes . we expect to pay approximately $ 202.0 million in variable compensation related to 2018 performance in march and april 2019 . in january 2019 , we paid approximately $ 14.0 million in variable compensation that was deferred in prior years . 29 cash flows provided by operating activities . in 2018 , cash provided by operating activities was $ 102.9 million , principally reflecting net income net of non-cash charges of $ 68.6 million , an increase in accrued expenses of $ 71.5 million , partially offset by an increase in accounts receivable of $ 16.8 million and restructuring payments of $ 11.6 million . the increase in accrued expenses primarily reflects approximately $ 202.0 million of current year bonus accruals , partially offset by $ 148.0 million of bonus payments for 2017 made in early 2018. in 2017 , cash provided by operating activities was $ 67.0 million , principally reflecting net income net of non-cash charges of $ 21.1 million , an increase in accrued expenses of $ 18.3 million and a restructuring accrual of $ 13.0 million .
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restructuring costs on march 18 , 2015 , the company committed to move forward with a plan to cease operations at its raritan , new jersey , plant and consolidate operations into its newburyport , massachusetts , facility and other ufp facilities . the company 's decision was in response to a continued decline in business at the raritan facility and the recent purchase of the facility in newburyport . the activities related to this consolidation are complete . 18 the company also relocated all operations in its haverhill , massachusetts , and byfield , massachusetts facilities and is in the process of relocating certain operations in its georgetown , massachusetts facility to newburyport . the haverhill and byfield relocations were complete at december 31 , 2015 and the georgetown relocation is substantially complete . the company has incurred approximately $ 2.1 million in one-time expenses in connection with the massachusetts consolidations . included in this amount are approximately $ 180,000 relating to employee severance payments and relocation costs , approximately $ 1.5 million in moving expenses and expenses associated with vacating the raritan , haverhill and byfield properties , and approximately $ 360,000 in lease termination costs . total cash charges were approximately $ 2.0 million . the company expects annual cost savings of approximately $ 1.0 million as a result of these consolidations . on july 16 , 2014 , the company committed to move forward with a plan to cease operations at its costa mesa , california , plant and consolidate operations into its rancho dominguez , california , facility and other ufp facilities . the company 's decision was in response to the december 31 , 2014 , expiration of the lease on the costa mesa facility as well as the close proximity of the two properties . the california consolidation was complete at december 31 , 2015. the company recorded the following restructuring costs associated with the consolidations discussed above for the fiscal years ended december 31 , 2016 and 2015 ( in thousands ) : replace_table_token_5_th the 2016 costs were reclassified in the consolidated statement of income as “ restructuring costs ” from cost of sales . the 2015 costs were reclassified in the consolidated statement of income as “ restructuring costs ” as follows : $ 1,669,000 from cost of sales , $ 36,000 from selling , general and administrative expenses and $ 51,000 from gain on sales of property , plant and equipment . material overcharge settlement the company was a participant in a class action lawsuit against a number of polyurethane foam suppliers ( “ defendants ” ) that recently reached settlement . the suit was filed to recover damages and obtain injunctive relief for defendants ' alleged violations of the federal antitrust laws with respect to the fixing of prices of polyurethane foam sold from january 1 , 1999 through august 2010. the company recorded a gain of approximately $ 2.1 million during the year ended december 31 , 2016 , which represents the full settlement amount received . the settlement amount is recorded as “ material overcharge settlement ” in the operating income section of the consolidated statements of income . interest income and expense the company had net interest income of approximately $ 80,000 for the year ended december 31 , 2016 , compared to net interest income of approximately $ 27,000 for the year ended december 31 , 2015. the increase in net interest income is due primarily to an increase in interest earned on money market accounts and certificates of deposit and decreasing interest costs on the company 's term loans . 19 income taxes the company recorded income tax expense as a percentage of income before income tax expense , of 35.3 % for each of the years ended december 31 , 2016 and 2015. the company has deferred tax assets on its books associated with net operating losses generated in previous years . the company has considered both positive and negative available evidence in its determination that the deferred tax assets are more likely than not to be realized , and has not recorded a tax valuation allowance at december 31 , 2016. the company will continue to assess whether the deferred tax assets will be realizable and , when appropriate , will record a valuation allowance against these assets . the amount of the net deferred tax asset considered realizable , however , could be reduced in the near term if estimates of future taxable income during the carry-forward period are reduced . 2015 compared to 2014 sales net sales decreased 0.3 % to $ 138.9 million for the year ended december 31 , 2015 , from net sales of $ 139.3 million in 2014 , primarily due to decreases in sales to customers in the electronics , industrial and aerospace and defense markets of approximately 16.5 % , 16.5 % and 13.2 % , respectively , primarily offset by an increase in sales to customers in the medical market of approximately 14.6 % . the decline in sales to customers in the electronics market was largely due to the loss of a packaging contract by one of the company 's distributor customers . the decline in sales to customers in the aerospace and defense market was primarily due to a large , one-time order from a single customer in this market in 2014. the decline in sales to customers in the industrial market is comprised of reductions in sales to many smaller accounts . the increase in sales to customers in the medical market reflects the company 's strategy of focusing resources in the area as well as the overall growth of our customers ' products . story_separator_special_tag the company has deferred tax assets on its books associated with net operating losses generated in previous years . the company has considered both positive and negative available evidence in its determination that the deferred tax assets are more likely than not to be realized , and has not recorded a tax valuation allowance at december 31 , 2016. the company will continue to assess whether the deferred tax assets will be realizable and , when appropriate , will record a valuation allowance against these assets . the amount of the net deferred tax asset considered realizable , however , could be reduced in the near term if estimates of future taxable income during the carry-forward period are reduced . 21 liquidity and capital resources the company generally funds its operating expenses , capital requirements , and growth plan through internally generated cash and bank credit facilities . story_separator_special_tag style= `` border-collapse : collapse ; width : 100 % ; font-size : 10pt `` > 23 off-balance-sheet arrangements in addition to operating leases , the company 's off-balance-sheet arrangements include standby letters of credit which are included in the company 's revolving credit facility . as of december 31 , 2016 , there was approximately $ 0.4 million in standby letters of credit drawable as a financial guarantee on worker 's compensation insurance policies . critical accounting policies the preparation of consolidated financial statements requires the company to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues , and expenses , and related disclosure of contingent assets and liabilities . on an ongoing basis , the company evaluates its estimates , including those related to product returns , bad debts , inventories , intangible assets , income taxes , warranty obligations , restructuring charges , contingencies , and litigation . the company bases its estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances , including current and anticipated worldwide economic conditions , both in general and specifically in relation to the packaging and component product industries , 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 . the company 's significant accounting policies are described in note 1 to the consolidated financial statements included in item 8 of this report . the company believes the following critical accounting policies necessitated that significant judgments and estimates be used in the preparation of its consolidated financial statements . the company has reviewed these policies with its audit committee . revenue recognition the company recognizes revenue at the time of shipment when title and risk of loss have passed to the customer , persuasive evidence of an arrangement exists , performance of its obligation is complete , its price to the buyer is fixed or determinable , and the company is reasonably assured of collection . determination of these criteria , in some cases , requires management 's judgment . should changes in conditions cause management to determine that these criteria are not met for certain future transactions , revenue for any reporting period could be adversely affected . goodwill goodwill is tested for impairment annually , and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate that the carrying amount may be impaired . impairment testing for goodwill is done at a reporting unit level . reporting units are one level below the business segment level , but can be combined when reporting units within the same segment have similar economic characteristics . an impairment loss generally would be recognized when the carrying amount of the reporting unit 's net assets exceeds the estimated fair value of the reporting unit . the company consists of a single reporting unit . we last performed “ step 1 ” of the goodwill impairment test as of september 30 , 2014. we utilized the guideline public company ( “ gpc ” ) method under the market approach and the discounted cash flows method ( “ dcf ” ) under the income approach to determine the fair value of the reporting unit for purposes of testing the reporting unit 's carrying value of goodwill for impairment . the gpc method derives a value by generating a multiple of ebitda through the comparison of the company to similar publicly traded companies . the dcf approach derives a value based on the present value of a series of estimated future cash flows at the valuation date by the application of a discount rate , one that a prudent investor would require before making an investment in our equity securities . the key assumptions used in our approach included : · the reporting unit 's estimated financials and five-year projections of financial results , which were based on our strategic plans and long-range forecasts . sales growth rates represent estimates based on current and forecasted sales mix and market conditions . the profit margins were projected based on historical margins , projected sales mix , current expense structure and anticipated expense modifications . · the projected terminal value which reflects the total present value of projected cash flows beyond the last period in the dcf . this value reflects a growth rate for the reporting unit , which is approximately the same growth rate of expected inflation into perpetuity . 24 · the discount rate determined using a weighted average cost of capital method ( “ wacc ” ) , which considered market and industry data as well as company-specific risk factors . · selection of guideline public companies which are similar to each other and to the company . as of september 30 , 2014 , based on our calculations under the above noted approach , the fair value of the reporting unit exceeded its carrying
| cash and cash equivalents . cash and cash equivalents at december 31 , 2018 were $ 279.9 million , an increase of $ 72.4 million compared to $ 207.5 million at december 31 , 2017 . the $ 279.9 million of cash and cash equivalents at december 31 , 2018 includes $ 112.1 million held by our foreign subsidiaries . a portion of the $ 112.1 million is considered permanently reinvested in these foreign subsidiaries . if these funds were required to satisfy obligations in the united states , the repatriation of these funds could cause us to incur additional foreign withholding taxes . we expect to pay approximately $ 202.0 million in variable compensation related to 2018 performance in march and april 2019 . in january 2019 , we paid approximately $ 14.0 million in variable compensation that was deferred in prior years . 29 cash flows provided by operating activities . in 2018 , cash provided by operating activities was $ 102.9 million , principally reflecting net income net of non-cash charges of $ 68.6 million , an increase in accrued expenses of $ 71.5 million , partially offset by an increase in accounts receivable of $ 16.8 million and restructuring payments of $ 11.6 million . the increase in accrued expenses primarily reflects approximately $ 202.0 million of current year bonus accruals , partially offset by $ 148.0 million of bonus payments for 2017 made in early 2018. in 2017 , cash provided by operating activities was $ 67.0 million , principally reflecting net income net of non-cash charges of $ 21.1 million , an increase in accrued expenses of $ 18.3 million and a restructuring accrual of $ 13.0 million .
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restructuring costs on march 18 , 2015 , the company committed to move forward with a plan to cease operations at its raritan , new jersey , plant and consolidate operations into its newburyport , massachusetts , facility and other ufp facilities . the company 's decision was in response to a continued decline in business at the raritan facility and the recent purchase of the facility in newburyport . the activities related to this consolidation are complete . 18 the company also relocated all operations in its haverhill , massachusetts , and byfield , massachusetts facilities and is in the process of relocating certain operations in its georgetown , massachusetts facility to newburyport . the haverhill and byfield relocations were complete at december 31 , 2015 and the georgetown relocation is substantially complete . the company has incurred approximately $ 2.1 million in one-time expenses in connection with the massachusetts consolidations . included in this amount are approximately $ 180,000 relating to employee severance payments and relocation costs , approximately $ 1.5 million in moving expenses and expenses associated with vacating the raritan , haverhill and byfield properties , and approximately $ 360,000 in lease termination costs . total cash charges were approximately $ 2.0 million . the company expects annual cost savings of approximately $ 1.0 million as a result of these consolidations . on july 16 , 2014 , the company committed to move forward with a plan to cease operations at its costa mesa , california , plant and consolidate operations into its rancho dominguez , california , facility and other ufp facilities . the company 's decision was in response to the december 31 , 2014 , expiration of the lease on the costa mesa facility as well as the close proximity of the two properties . the california consolidation was complete at december 31 , 2015. the company recorded the following restructuring costs associated with the consolidations discussed above for the fiscal years ended december 31 , 2016 and 2015 ( in thousands ) : replace_table_token_5_th the 2016 costs were reclassified in the consolidated statement of income as “ restructuring costs ” from cost of sales . the 2015 costs were reclassified in the consolidated statement of income as “ restructuring costs ” as follows : $ 1,669,000 from cost of sales , $ 36,000 from selling , general and administrative expenses and $ 51,000 from gain on sales of property , plant and equipment . material overcharge settlement the company was a participant in a class action lawsuit against a number of polyurethane foam suppliers ( “ defendants ” ) that recently reached settlement . the suit was filed to recover damages and obtain injunctive relief for defendants ' alleged violations of the federal antitrust laws with respect to the fixing of prices of polyurethane foam sold from january 1 , 1999 through august 2010. the company recorded a gain of approximately $ 2.1 million during the year ended december 31 , 2016 , which represents the full settlement amount received . the settlement amount is recorded as “ material overcharge settlement ” in the operating income section of the consolidated statements of income . interest income and expense the company had net interest income of approximately $ 80,000 for the year ended december 31 , 2016 , compared to net interest income of approximately $ 27,000 for the year ended december 31 , 2015. the increase in net interest income is due primarily to an increase in interest earned on money market accounts and certificates of deposit and decreasing interest costs on the company 's term loans . 19 income taxes the company recorded income tax expense as a percentage of income before income tax expense , of 35.3 % for each of the years ended december 31 , 2016 and 2015. the company has deferred tax assets on its books associated with net operating losses generated in previous years . the company has considered both positive and negative available evidence in its determination that the deferred tax assets are more likely than not to be realized , and has not recorded a tax valuation allowance at december 31 , 2016. the company will continue to assess whether the deferred tax assets will be realizable and , when appropriate , will record a valuation allowance against these assets . the amount of the net deferred tax asset considered realizable , however , could be reduced in the near term if estimates of future taxable income during the carry-forward period are reduced . 2015 compared to 2014 sales net sales decreased 0.3 % to $ 138.9 million for the year ended december 31 , 2015 , from net sales of $ 139.3 million in 2014 , primarily due to decreases in sales to customers in the electronics , industrial and aerospace and defense markets of approximately 16.5 % , 16.5 % and 13.2 % , respectively , primarily offset by an increase in sales to customers in the medical market of approximately 14.6 % . the decline in sales to customers in the electronics market was largely due to the loss of a packaging contract by one of the company 's distributor customers . the decline in sales to customers in the aerospace and defense market was primarily due to a large , one-time order from a single customer in this market in 2014. the decline in sales to customers in the industrial market is comprised of reductions in sales to many smaller accounts . the increase in sales to customers in the medical market reflects the company 's strategy of focusing resources in the area as well as the overall growth of our customers ' products . story_separator_special_tag the company has deferred tax assets on its books associated with net operating losses generated in previous years . the company has considered both positive and negative available evidence in its determination that the deferred tax assets are more likely than not to be realized , and has not recorded a tax valuation allowance at december 31 , 2016. the company will continue to assess whether the deferred tax assets will be realizable and , when appropriate , will record a valuation allowance against these assets . the amount of the net deferred tax asset considered realizable , however , could be reduced in the near term if estimates of future taxable income during the carry-forward period are reduced . 21 liquidity and capital resources the company generally funds its operating expenses , capital requirements , and growth plan through internally generated cash and bank credit facilities . story_separator_special_tag style= `` border-collapse : collapse ; width : 100 % ; font-size : 10pt `` > 23 off-balance-sheet arrangements in addition to operating leases , the company 's off-balance-sheet arrangements include standby letters of credit which are included in the company 's revolving credit facility . as of december 31 , 2016 , there was approximately $ 0.4 million in standby letters of credit drawable as a financial guarantee on worker 's compensation insurance policies . critical accounting policies the preparation of consolidated financial statements requires the company to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues , and expenses , and related disclosure of contingent assets and liabilities . on an ongoing basis , the company evaluates its estimates , including those related to product returns , bad debts , inventories , intangible assets , income taxes , warranty obligations , restructuring charges , contingencies , and litigation . the company bases its estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances , including current and anticipated worldwide economic conditions , both in general and specifically in relation to the packaging and component product industries , 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 . the company 's significant accounting policies are described in note 1 to the consolidated financial statements included in item 8 of this report . the company believes the following critical accounting policies necessitated that significant judgments and estimates be used in the preparation of its consolidated financial statements . the company has reviewed these policies with its audit committee . revenue recognition the company recognizes revenue at the time of shipment when title and risk of loss have passed to the customer , persuasive evidence of an arrangement exists , performance of its obligation is complete , its price to the buyer is fixed or determinable , and the company is reasonably assured of collection . determination of these criteria , in some cases , requires management 's judgment . should changes in conditions cause management to determine that these criteria are not met for certain future transactions , revenue for any reporting period could be adversely affected . goodwill goodwill is tested for impairment annually , and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate that the carrying amount may be impaired . impairment testing for goodwill is done at a reporting unit level . reporting units are one level below the business segment level , but can be combined when reporting units within the same segment have similar economic characteristics . an impairment loss generally would be recognized when the carrying amount of the reporting unit 's net assets exceeds the estimated fair value of the reporting unit . the company consists of a single reporting unit . we last performed “ step 1 ” of the goodwill impairment test as of september 30 , 2014. we utilized the guideline public company ( “ gpc ” ) method under the market approach and the discounted cash flows method ( “ dcf ” ) under the income approach to determine the fair value of the reporting unit for purposes of testing the reporting unit 's carrying value of goodwill for impairment . the gpc method derives a value by generating a multiple of ebitda through the comparison of the company to similar publicly traded companies . the dcf approach derives a value based on the present value of a series of estimated future cash flows at the valuation date by the application of a discount rate , one that a prudent investor would require before making an investment in our equity securities . the key assumptions used in our approach included : · the reporting unit 's estimated financials and five-year projections of financial results , which were based on our strategic plans and long-range forecasts . sales growth rates represent estimates based on current and forecasted sales mix and market conditions . the profit margins were projected based on historical margins , projected sales mix , current expense structure and anticipated expense modifications . · the projected terminal value which reflects the total present value of projected cash flows beyond the last period in the dcf . this value reflects a growth rate for the reporting unit , which is approximately the same growth rate of expected inflation into perpetuity . 24 · the discount rate determined using a weighted average cost of capital method ( “ wacc ” ) , which considered market and industry data as well as company-specific risk factors . · selection of guideline public companies which are similar to each other and to the company . as of september 30 , 2014 , based on our calculations under the above noted approach , the fair value of the reporting unit exceeded its carrying
| cash flows net cash provided by operations for the year ended december 31 , 2016 was approximately $ 9.4 million and was primarily a result of net income generated of approximately $ 8.0 million , depreciation and amortization of approximately $ 5.6 million , share-based compensation of approximately $ 1.0 million , an increase in deferred taxes of approximately $ 0.6 million , an increase in other liabilities of $ 0.2 million and a decrease in refundable income taxes of approximately $ 0.2 million . these cash inflows and adjustments to income were partially offset by an increase in accounts receivable of approximately $ 3.8 million due to an increase in sales during the fourth quarter of 2016 over the same period for 2015 of approximately $ 2.6 million and an increase in payment terms to a large customer , an increase in prepaid expenses of approximately $ 1.4 million due primarily to prepayments on equipment purchases and a decrease in accounts payable and accrued expenses of approximately $ 1.0 million due to the timing of vendor payments in the ordinary course of business . net cash used in investing activities during the year ended december 31 , 2016 was approximately $ 7.3 million of which approximately $ 2.6 million was the result of renovations to our corporate headquarters and manufacturing facility in newburyport , massachusetts , and approximately $ 4.7 million was the result of other additions of technology , manufacturing machinery , and equipment across the company . net cash used in financing activities was approximately $ 0.6 million for the year ended december 31 , 2016 , representing cash used to service term debt of approximately $ 1.0 million and to pay statutory withholding for stock options exercised and restricted stock units vested of approximately $ 0.2 million , partially offset by excess tax benefits on share-based compensation of approximately $ 0.1 million , and net proceeds received upon stock option exercises of approximately $ 0.5 million . outstanding and available debt the company maintains an unsecured $ 40 million revolving credit facility with bank of america , n.a .
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of gas . if commodity prices remain at these levels or continue to decline , our revenue and cash flow from operations will also likely decline . in addition , lower commodity prices could also reduce the amount of oil and gas that we can produce economically . if oil and gas prices remain depressed or continue to decline , our revenues , profitability and cash flow from operations will also likely decrease which could cause us to alter our business plans , including reducing our drilling activities . such declines could also require us to write down the carrying value of our oil and gas assets which would also cause a reduction in net income . finally , low commodity prices will likely cause a reduction of the borrowing base under our credit facility . the borrowing base under our credit facility is next scheduled to be redetermined on april 1 , 2016. the realized prices that we receive for our production differ from nymex futures and spot market prices , principally due to : basis differentials which are dependent on actual delivery location ; adjustments for btu content ; quality of the hydrocarbons ; and gathering , processing and transportation costs . the following table sets forth our average differentials for the years ended december 31 , 2013 , 2014 and 2015 : replace_table_token_14_th ( 1 ) average realized prices are before the impact of hedging activities . - the company 's derivative contracts consist of nymex-based fixed price swaps and three-way collar contracts . under fixed price swaps , we receive a fixed price for our production and pay a variable market price to the contract counter-party . three-way collar contracts combine a long put , a short put and a short call . under a collar , we pay the counterparty if the market price is 43 above the ceiling price ( short call ) and the counterparty pays us if the market price is below the floor price ( long put ) . the use of the long put combined with a short put allows us to sell a call at a higher price , thus establishing a higher ceiling and limits our exposure to future settlement payments while also restricting our downward risk to the difference between the long put and the short put if the price drops below the price of the short put . this allows us to settle our contracts for the market price plus the spread between the short put and the long put in a case where the market price has fallen below the short put fixed price . our hedging arrangements equate to approximately 62 % of the estimated oil production from our net proved developed producing reserves ( as of december 31 , 2015 ) through december 31 , 2016 , and 29 % in 2017. by removing a portion of price volatility on our future oil and gas production , we believe we will mitigate , but not eliminate , the potential effects of changing commodity prices on our cash flow from operations for those periods . however , when prevailing market prices are higher than our contract prices , we will not realize increased cash flow on the portion of the production that has been hedged . we have in the past and will in the future sustain realized and unrealized losses on our derivative contracts if market prices are higher than our contract prices . conversely , when prevailing market prices are lower than our contract prices , we will sustain realized and unrealized gains on our commodity derivative contracts . in 2013 , we incurred a net loss of $ 2.5 million , consisting of a loss of $ 5.0 million related to closed contracts and a gain of $ 2.5 million related to open contracts . in 2014 , we incurred a gain of $ 25.2 million , consisting of a gain of $ 0.3 million on closed contracts and a gain of $ 24.9 million related to open contracts . in 2015 we incurred a gain of $ 19.3 million , consisting of a gain of $ 9.5 million on closed contracts and a gain of $ 9.8 million related to open contracts . we have not designated any of these derivative contracts as a hedge as prescribed by applicable accounting rules . the following table sets forth our derivative contracts at december 31 , 2015 : fixed price swaps : replace_table_token_15_th collar contracts combined with short puts ( three way collars ) : daily volume ( bbl ) floor ( long put ) ceiling ( short call ) short put 2016 1,000 $ 60.00 $ 71.00 $ 45.00 at december 31 , 2015 , the aggregate fair market value of our commodity derivative contracts was an asset of approximately $ 27.4 million . production volumes . our proved reserves will decline as oil and gas is produced , unless we find , acquire or develop additional properties containing proved reserves or conduct successful exploration and development activities . based on the reserve information set forth in our reserve estimates as of december 31 , 2015 , our average annual estimated decline rate for our net proved developed producing reserves is 33 % ; 26 % ; 15 % ; 11 % and 10 % in 2017 , 2018 , 2019 , 2020 and 2021 , respectively , 10 % in the next five years , and approximately 12 % thereafter . these rates of decline are estimates and actual production declines could be materially higher . while we have had some success in finding , acquiring and developing additional reserves , we have not always been able to fully replace the production volumes lost from natural field declines and property sales . story_separator_special_tag as of december 31 , 2014 the net capitalized cost of our oil and gas properties did not exceed the present value of our estimated proved reserves . as of december 31 , 2015 , the net capitalized cost of our oil and gas properties exceeded the present value of our estimated proved reserves , resulting in the recognition of an impairment of $ 128.6 million in 2015. the year-end amount was calculated in accordance with sec rules utilizing the twelve month first-day-of-the-month average oil and gas prices for the year ended 2015 which were $ 50.12 per bbl for oil and $ 2.63 per mcf for gas as adjusted to reflect the expected realized prices for our oil and gas reserves . we expect to record an additional impairment of our oil and gas properties during 2016 as a result of declining oil and gas prices . based on the 12-month unweighted average oil and gas prices through march 1 , 2016 of $ 46.04 per bbl of oil and $ 2.48 per mcf of gas being held constant for the trailing 12-month period we estimate that we will record a ceiling test write down on our existing assets of approximately $ 30.1 million at march 31 , 2016 and if such prices do not change during the remainder of 2016 an additional write down of $ 72.7 million for the remainder of the year ending december 31 , 2016. however , whether the amount of any such impairments will be similar in amount to such estimates , is contingent upon many factors such as the price of oil , gas and ngls for the remainder of 2016 , increases or decreases in our reserve base , changes in estimated costs and expenses , and oil and gas property acquisitions , which could increase , decrease or eliminate the need for such impairments . comparison of year ended december 31 , 2014 to year ended december 31 , 2013 operating revenue . during the year ended december 31 , 2014 , operating revenue increased to $ 133.7 million from $ 92.3 million in 2013. the increase in revenue was primarily due to a 68 % increase in oil sales volumes in 2014 as compared to 2013 , offset by lower realized prices for oil and ngl prices . gas sales volumes were down by approximately 13 % ; however the decrease in gas volumes was offset by higher realized gas prices . we also had a significant increase in ngl sales volumes in 2014 as compared to 2013 , which was partially offset by lower realized ngl prices . increased sales volumes of oil and ngl contributed $ 54.0 million to operating revenue . lower gas sales volumes had a negative impact on operating revenue of $ 1.4 million . higher realized prices for gas contributed $ 2.6 million to operating revenue , while lower oil and ngl prices had a negative impact on revenue of $ 13.9 million in 2014. oil sales volumes increased to 1,394 mbbls for the year ended december 31 , 2014 from 829 mbbls for the same period of 2013. the increase in oil sales volumes was due to new production brought on line in 2014. new wells brought onto production in 2014 contributed 722 mbbls to production for the year ended december 31 , 2014 , offset by natural field declines and property sales . gas sales volumes decreased to 2,918 mmcf for the year ended december 31 , 2014 from 3,343 mmcf for the year ended december 31 , 2013. the decrease in gas production was due to natural field declines ; the timing of new wells being brought on line , property sales , as well as our emphasis on drilling oil wells as opposed to gas wells . new wells brought onto production during 2014 contributed 594 mmcf to production for the year ended december 31 , 2014. due to continued weakness in gas prices , our focus during 2014 was primarily on oil and ngl projects . ngl sales increased to 207 mbbls for the year ended december 31 , 2014 from 147 mbbls for the same period of 2013. the increase in ngl sales was primarily due to increased gas production from fields in west texas , wyoming and north dakota that have a higher ngl content than our historical gas production . lease operating expenses . loe for the year ended december 31 , 2014 increased to $ 25.9 million from $ 23.2 million in 2013. the increase in loe was primarily due to increased cost of services , and significant non-recurring loe . the increase was partially offset by sales of producing properties in 2013 , which had higher operating costs . loe per boe for the year ended december 31 , 2014 was $ 12.39 compared to $ 15.13 for the same period of 2013. the decrease in loe per boe was attributable to higher sales volumes in 2014 , partially offset by higher costs . production and ad valorem taxes . production and ad valorem taxes for the year ended december 31 , 2014 increased to $ 11.5 million from $ 8.4 million in 2013. the increase was primarily due to increased production in 2014 as compared to 2013. production and ad valorem taxes as a percentage of oil and gas revenue remained constant at approximately 9 % for the years ended december 31 , 2014 and 2013 . 48 general and administrative expense . g & a expense , excluding stock-based compensation , increased to $ 10.7 million for the year ended december 31 , 2014 from $ 9.9 million in 2013. g & a expense per boe was $ 5.11 for the year ended december 31 , 2014 compared to $ 6.45 for the same period of 2013. the increase in g & a was primarily due to additional personnel and salary increases . stock-based compensation . options granted to employees and
| cash flows net cash provided by operations for the year ended december 31 , 2016 was approximately $ 9.4 million and was primarily a result of net income generated of approximately $ 8.0 million , depreciation and amortization of approximately $ 5.6 million , share-based compensation of approximately $ 1.0 million , an increase in deferred taxes of approximately $ 0.6 million , an increase in other liabilities of $ 0.2 million and a decrease in refundable income taxes of approximately $ 0.2 million . these cash inflows and adjustments to income were partially offset by an increase in accounts receivable of approximately $ 3.8 million due to an increase in sales during the fourth quarter of 2016 over the same period for 2015 of approximately $ 2.6 million and an increase in payment terms to a large customer , an increase in prepaid expenses of approximately $ 1.4 million due primarily to prepayments on equipment purchases and a decrease in accounts payable and accrued expenses of approximately $ 1.0 million due to the timing of vendor payments in the ordinary course of business . net cash used in investing activities during the year ended december 31 , 2016 was approximately $ 7.3 million of which approximately $ 2.6 million was the result of renovations to our corporate headquarters and manufacturing facility in newburyport , massachusetts , and approximately $ 4.7 million was the result of other additions of technology , manufacturing machinery , and equipment across the company . net cash used in financing activities was approximately $ 0.6 million for the year ended december 31 , 2016 , representing cash used to service term debt of approximately $ 1.0 million and to pay statutory withholding for stock options exercised and restricted stock units vested of approximately $ 0.2 million , partially offset by excess tax benefits on share-based compensation of approximately $ 0.1 million , and net proceeds received upon stock option exercises of approximately $ 0.5 million . outstanding and available debt the company maintains an unsecured $ 40 million revolving credit facility with bank of america , n.a .
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of gas . if commodity prices remain at these levels or continue to decline , our revenue and cash flow from operations will also likely decline . in addition , lower commodity prices could also reduce the amount of oil and gas that we can produce economically . if oil and gas prices remain depressed or continue to decline , our revenues , profitability and cash flow from operations will also likely decrease which could cause us to alter our business plans , including reducing our drilling activities . such declines could also require us to write down the carrying value of our oil and gas assets which would also cause a reduction in net income . finally , low commodity prices will likely cause a reduction of the borrowing base under our credit facility . the borrowing base under our credit facility is next scheduled to be redetermined on april 1 , 2016. the realized prices that we receive for our production differ from nymex futures and spot market prices , principally due to : basis differentials which are dependent on actual delivery location ; adjustments for btu content ; quality of the hydrocarbons ; and gathering , processing and transportation costs . the following table sets forth our average differentials for the years ended december 31 , 2013 , 2014 and 2015 : replace_table_token_14_th ( 1 ) average realized prices are before the impact of hedging activities . - the company 's derivative contracts consist of nymex-based fixed price swaps and three-way collar contracts . under fixed price swaps , we receive a fixed price for our production and pay a variable market price to the contract counter-party . three-way collar contracts combine a long put , a short put and a short call . under a collar , we pay the counterparty if the market price is 43 above the ceiling price ( short call ) and the counterparty pays us if the market price is below the floor price ( long put ) . the use of the long put combined with a short put allows us to sell a call at a higher price , thus establishing a higher ceiling and limits our exposure to future settlement payments while also restricting our downward risk to the difference between the long put and the short put if the price drops below the price of the short put . this allows us to settle our contracts for the market price plus the spread between the short put and the long put in a case where the market price has fallen below the short put fixed price . our hedging arrangements equate to approximately 62 % of the estimated oil production from our net proved developed producing reserves ( as of december 31 , 2015 ) through december 31 , 2016 , and 29 % in 2017. by removing a portion of price volatility on our future oil and gas production , we believe we will mitigate , but not eliminate , the potential effects of changing commodity prices on our cash flow from operations for those periods . however , when prevailing market prices are higher than our contract prices , we will not realize increased cash flow on the portion of the production that has been hedged . we have in the past and will in the future sustain realized and unrealized losses on our derivative contracts if market prices are higher than our contract prices . conversely , when prevailing market prices are lower than our contract prices , we will sustain realized and unrealized gains on our commodity derivative contracts . in 2013 , we incurred a net loss of $ 2.5 million , consisting of a loss of $ 5.0 million related to closed contracts and a gain of $ 2.5 million related to open contracts . in 2014 , we incurred a gain of $ 25.2 million , consisting of a gain of $ 0.3 million on closed contracts and a gain of $ 24.9 million related to open contracts . in 2015 we incurred a gain of $ 19.3 million , consisting of a gain of $ 9.5 million on closed contracts and a gain of $ 9.8 million related to open contracts . we have not designated any of these derivative contracts as a hedge as prescribed by applicable accounting rules . the following table sets forth our derivative contracts at december 31 , 2015 : fixed price swaps : replace_table_token_15_th collar contracts combined with short puts ( three way collars ) : daily volume ( bbl ) floor ( long put ) ceiling ( short call ) short put 2016 1,000 $ 60.00 $ 71.00 $ 45.00 at december 31 , 2015 , the aggregate fair market value of our commodity derivative contracts was an asset of approximately $ 27.4 million . production volumes . our proved reserves will decline as oil and gas is produced , unless we find , acquire or develop additional properties containing proved reserves or conduct successful exploration and development activities . based on the reserve information set forth in our reserve estimates as of december 31 , 2015 , our average annual estimated decline rate for our net proved developed producing reserves is 33 % ; 26 % ; 15 % ; 11 % and 10 % in 2017 , 2018 , 2019 , 2020 and 2021 , respectively , 10 % in the next five years , and approximately 12 % thereafter . these rates of decline are estimates and actual production declines could be materially higher . while we have had some success in finding , acquiring and developing additional reserves , we have not always been able to fully replace the production volumes lost from natural field declines and property sales . story_separator_special_tag as of december 31 , 2014 the net capitalized cost of our oil and gas properties did not exceed the present value of our estimated proved reserves . as of december 31 , 2015 , the net capitalized cost of our oil and gas properties exceeded the present value of our estimated proved reserves , resulting in the recognition of an impairment of $ 128.6 million in 2015. the year-end amount was calculated in accordance with sec rules utilizing the twelve month first-day-of-the-month average oil and gas prices for the year ended 2015 which were $ 50.12 per bbl for oil and $ 2.63 per mcf for gas as adjusted to reflect the expected realized prices for our oil and gas reserves . we expect to record an additional impairment of our oil and gas properties during 2016 as a result of declining oil and gas prices . based on the 12-month unweighted average oil and gas prices through march 1 , 2016 of $ 46.04 per bbl of oil and $ 2.48 per mcf of gas being held constant for the trailing 12-month period we estimate that we will record a ceiling test write down on our existing assets of approximately $ 30.1 million at march 31 , 2016 and if such prices do not change during the remainder of 2016 an additional write down of $ 72.7 million for the remainder of the year ending december 31 , 2016. however , whether the amount of any such impairments will be similar in amount to such estimates , is contingent upon many factors such as the price of oil , gas and ngls for the remainder of 2016 , increases or decreases in our reserve base , changes in estimated costs and expenses , and oil and gas property acquisitions , which could increase , decrease or eliminate the need for such impairments . comparison of year ended december 31 , 2014 to year ended december 31 , 2013 operating revenue . during the year ended december 31 , 2014 , operating revenue increased to $ 133.7 million from $ 92.3 million in 2013. the increase in revenue was primarily due to a 68 % increase in oil sales volumes in 2014 as compared to 2013 , offset by lower realized prices for oil and ngl prices . gas sales volumes were down by approximately 13 % ; however the decrease in gas volumes was offset by higher realized gas prices . we also had a significant increase in ngl sales volumes in 2014 as compared to 2013 , which was partially offset by lower realized ngl prices . increased sales volumes of oil and ngl contributed $ 54.0 million to operating revenue . lower gas sales volumes had a negative impact on operating revenue of $ 1.4 million . higher realized prices for gas contributed $ 2.6 million to operating revenue , while lower oil and ngl prices had a negative impact on revenue of $ 13.9 million in 2014. oil sales volumes increased to 1,394 mbbls for the year ended december 31 , 2014 from 829 mbbls for the same period of 2013. the increase in oil sales volumes was due to new production brought on line in 2014. new wells brought onto production in 2014 contributed 722 mbbls to production for the year ended december 31 , 2014 , offset by natural field declines and property sales . gas sales volumes decreased to 2,918 mmcf for the year ended december 31 , 2014 from 3,343 mmcf for the year ended december 31 , 2013. the decrease in gas production was due to natural field declines ; the timing of new wells being brought on line , property sales , as well as our emphasis on drilling oil wells as opposed to gas wells . new wells brought onto production during 2014 contributed 594 mmcf to production for the year ended december 31 , 2014. due to continued weakness in gas prices , our focus during 2014 was primarily on oil and ngl projects . ngl sales increased to 207 mbbls for the year ended december 31 , 2014 from 147 mbbls for the same period of 2013. the increase in ngl sales was primarily due to increased gas production from fields in west texas , wyoming and north dakota that have a higher ngl content than our historical gas production . lease operating expenses . loe for the year ended december 31 , 2014 increased to $ 25.9 million from $ 23.2 million in 2013. the increase in loe was primarily due to increased cost of services , and significant non-recurring loe . the increase was partially offset by sales of producing properties in 2013 , which had higher operating costs . loe per boe for the year ended december 31 , 2014 was $ 12.39 compared to $ 15.13 for the same period of 2013. the decrease in loe per boe was attributable to higher sales volumes in 2014 , partially offset by higher costs . production and ad valorem taxes . production and ad valorem taxes for the year ended december 31 , 2014 increased to $ 11.5 million from $ 8.4 million in 2013. the increase was primarily due to increased production in 2014 as compared to 2013. production and ad valorem taxes as a percentage of oil and gas revenue remained constant at approximately 9 % for the years ended december 31 , 2014 and 2013 . 48 general and administrative expense . g & a expense , excluding stock-based compensation , increased to $ 10.7 million for the year ended december 31 , 2014 from $ 9.9 million in 2013. g & a expense per boe was $ 5.11 for the year ended december 31 , 2014 compared to $ 6.45 for the same period of 2013. the increase in g & a was primarily due to additional personnel and salary increases . stock-based compensation . options granted to employees and
| liquidity and capital resources general . the oil and gas industry is a highly capital intensive and cyclical business . our capital requirements are driven principally by our obligations to service debt and to fund the following : the development and exploration of existing properties , including drilling and completion costs of wells ; acquisition of interests in additional oil and gas properties ; and 49 production and transportation facilities . the amount of capital expenditures we are able to make has a direct impact on our ability to increase cash flow from operations and , thereby , will directly affect our ability to service our debt obligations and to grow the business through the development of existing properties and the acquisition of new properties . our principal sources of capital are cash flow from operations , borrowings under our credit facility , cash on hand , proceeds from the sale of properties , and if an opportunity presents itself , the sale of debt or equity securities , although we may not be able to complete any financings on terms acceptable to us , if at all . operating cash flow . our operating cash flow is sensitive to many variables , the most volatile of which is the prices of the oil , gas and ngl we produce and sell . our consolidated cash flow from operations decreased in 2015 as a result of the significant decrease in commodity prices . in spite of this decline , we expect cash flow from operations to continue to be a primary source of liquidity as we adjust our capital program in response to lower commodity prices . commodity prices . prices are determined primarily by prevailing market conditions . regional and worldwide economic activity , weather and other substantially variable factors influence market conditions for these products . these factors , which are difficult to predict , create volatility in prices and are beyond our control .
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we also believe there is a continuing shift in consumer demand from traditional non-performance products to performance products , which are intended to provide better performance by wicking perspiration away from the skin , helping to regulate body temperature and 31 enhancing comfort . we plan to continue to grow our business over the long term through increased sales of our apparel , footwear and accessories , expansion of our wholesale distribution , growth in our direct-to-consumer sales channel and expansion in international markets . although we believe these trends will facilitate our growth , we also face potential challenges that could limit our ability to take advantage of these opportunities or negatively impact our financial results , including , among others , the risk of general economic or market conditions that could affect consumer spending and the financial health of our retail customers . for example , recent and ongoing developments regarding covid-19 may negatively impact our results of operations . additionally , we may not be able to successfully execute on our long-term strategies , or successfully manage the increasingly complex operations of our global business effectively . although we have implemented restructuring plans in the past and may implement additional plans in the future , we may not fully realize the expected benefits of these plans or other operating or cost-saving initiatives . in addition , we may not consistently be able to anticipate consumer preferences and develop new and innovative products that meet changing preferences in a timely manner . furthermore , our industry is very competitive , and competition pressures could cause us to reduce the prices of our products or otherwise affect our profitability . we also rely on third-party suppliers and manufacturers outside the u.s. to provide fabrics and to produce our products , and disruptions to our supply chain could harm our business . for a more complete discussion of the risks facing our business , refer to the “ risk factors ” section included in item 1a . covid-19 in march 2020 , a novel strain of coronavirus ( covid-19 ) was declared a global pandemic by the world health organization . this pandemic has negatively affected the u.s. and global economies , disrupted global supply chains and financial markets , and led to significant travel and transportation restrictions , including mandatory closures and orders to “ shelter-in-place ” . during the first quarter of fiscal 2020 , we took action to close substantially all of our brand and factory house stores based on regional conditions , a majority of which remained closed into the second quarter of fiscal 2020. by the end of the third quarter of fiscal 2020 , substantially all of our brand and factory house stores were re-opened . as pandemic conditions worsened globally during the fourth quarter of fiscal 2020 , we again closed certain stores based on regional conditions , particularly in emea and latin america . the following is a summary of our owned and operated store closures and their status throughout fiscal 2020 and as of the end of january 2021 : north america : beginning in mid-march we closed all of our stores in the north america operating segment , which remained closed through the end of april . we began a progressive re-opening of our stores in may and more than 85 % of our stores were open by the end of june . as of the end of september 2020 , all of our stores were open and approximately 95 % of our stores were open as of the end of january 2021. emea : beginning in mid-march we closed all of our stores in the emea operating segment , of which , over 65 % remained closed through the end of april . we continued the re-opening of our stores in may and more than 95 % of the stores were open at the end of june . as of the end of september 2020 , all of our stores were open , however , in the fourth quarter we had to close almost 60 % of our stores based on regional conditions . as of the end of january 2021 , only 25 % of our stores were open . asia-pacific : stores in china were closed from late-january through early-march , when a slowly progressive re-opening process started . stores in the remainder of the asia-pacific operating segment were also closed from time to time based on local conditions . more than 80 % of our stores were open by the end of april , and by the end of june 2020 more than 95 % of the stores were open and continued to be open until the end of september 2020. as of the end of january 2021 , approximately 90 % of our stores were open . latin america : beginning in mid-march , we closed all of our stores in the latin america operating segment , which remained closed in april and through the end of may . we began a progressive re-opening of stores in june , and more than 25 % of our stores were open by the end of june , and by the end of september 2020 approximately 85 % of our stores remained open . however , in the fourth quarter , we had to close certain stores based on regional conditions , and approximately 55 % of our stores were open as of the end of january 2021. the discussion above reflects the status of our owned and operated stores through the end of january 2021 , however , depending on the progression of covid-19 , stores in certain regions may close from time to time . additionally , throughout this time , many of our wholesale customers also closed their stores or operated them at limited capacity . story_separator_special_tag we consolidate our selling , general and administrative expenses into two primary categories : marketing and other . the other category is the sum of our selling , product innovation and supply chain , and corporate services categories . the marketing category consists primarily of sports and brand marketing , media , and retail presentation . sports and brand marketing includes professional , club , collegiate sponsorship , individual athlete and influencer agreements , and products provided directly to team equipment managers and to individual athletes . media includes digital , broadcast and print media outlets , including social and mobile media . retail presentation includes sales displays and concept shops and depreciation expense specific to our in-store fixture programs . our marketing costs are an important driver of our growth . other expense , net consists of unrealized and realized gains and losses on our foreign currency derivative financial instruments and unrealized and realized gains and losses on adjustments that arise from fluctuations in foreign currency exchange rates relating to transactions generated by our international subsidiaries . 36 results of operations the following table sets forth key components of our results of operations for the periods indicated , both in dollars and as a percentage of net revenues : replace_table_token_4_th replace_table_token_5_th 37 consolidated results of operations year ended december 31 , 2020 compared to year ended december 31 , 2019 net revenues decreased $ 792.5 million , or 15 % , to $ 4,474.7 million in fiscal 2020 from $ 5,267.1 million in fiscal 2019. net revenues by product category are summarized below : replace_table_token_6_th ( 1 ) corporate other revenues consist of foreign currency hedge gains and losses related to revenues generated by entities within our geographic operating segments , but managed through our central foreign exchange risk management program . the decrease in net sales was primarily driven by a unit sales decline in apparel , footwear and accessories across all categories due to decreased demand , primarily related to impacts of covid-19 including cancellations of orders by wholesale customers , closures of brand and factory house stores and lower traffic upon store re-openings , and a unit sales decrease of off-price sales within our wholesale channel . the decrease was partially offset by growth in the e-commerce business and sale of specialty products , such as sports masks , within our accessories category . license revenues decreased $ 33 million , or 23.8 % , to $ 105.8 million in fiscal 2020 from $ 138.8 million in fiscal 2019 driven primarily by lower contractual royalty minimums , decreased revenue from our licensing partners in north america due to softer demand as a result of impacts of covid-19 . further , fiscal 2019 included one-time settlements with two of our north american partners . connected fitness revenue decreased $ 0.6 million , or 0.4 % , to $ 135.8 million in fiscal 2020 from $ 136.4 million in fiscal 2019 primarily driven by a decrease in advertising revenue and one-time development fee from a partner in fiscal 2019. additionally , the decrease in revenue is due to the sale of the myfitnesspal platform during the fourth quarter of fiscal 2020. gross profit decreased $ 310.4 million to $ 2,160.1 million in fiscal 2020 from $ 2,470.5 million in fiscal 2019. gross profit as a percentage of net revenues , or gross margin , increased 140 basis points to 48.3 % in fiscal 2020 compared to 46.9 % in fiscal 2019. this increase in gross margin percentage was primarily driven by the following : an approximate 220 basis point increase driven by channel mix , primarily due to a lower percentage of off-price sales within our wholesale channel which carry a lower gross margin , and a higher percentage of direct-to-consumer sales , led by e-commerce ; and an approximate 70 basis point increase driven by supply chain initiatives primarily related to product cost improvements . the increase was partially offset by an approximate 130 basis point decrease driven by covid-19 related pricing and discounting impacts primarily within the direct-to-consumer business , as well as 30 basis points due to restructuring related expenses . selling , general and administrative expenses decreased $ 61.8 million to $ 2,171.9 million in fiscal 2020 from $ 2,233.8 million in fiscal 2019. as a percentage of net revenues , selling , general and administrative expenses increased to 48.5 % in fiscal 2020 from 42.4 % in fiscal 2019. selling , general and administrative expense was impacted by the following : marketing costs decreased $ 28.5 million to $ 550.4 million in fiscal 2020 from $ 578.9 million in fiscal 2019. this decrease was primarily driven by reduced rights fees for sports marketing assets and reductions in marketing within our wholesale channel . these decreases were primarily due to impacts of covid-19 , including event cancellations and store closures . these decreases were partially offset by 38 increased brand marketing and direct-to-consumer marketing investments . as a percentage of net revenues , marketing costs increased to 12.3 % in fiscal 2020 from 11.0 % in fiscal 2019. other costs decreased $ 33.3 million to $ 1,621.6 million in fiscal 2020 from $ 1,654.9 million in fiscal 2019. this decrease was driven primarily by lower incentive compensation , decreased travel and entertainment , and lower depreciation mostly due to reductions in capital expenditures . the decreases in incentive compensation and travel and entertainment were primarily due to impacts of covid-19 . these decreases were partially offset by higher legal expense , increased third party distribution costs to support e-commerce revenues , and an increase in allowance for doubtful account reserves due to negative developments regarding certain customer balances that represent a higher risk of credit default . as a percentage of net revenues , other costs increased to 36.2 % in fiscal 2020 from 31.4 % in fiscal 2019. restructuring and impairment charges w ere $ 602 million co mprised of $ 461 million
| liquidity and capital resources general . the oil and gas industry is a highly capital intensive and cyclical business . our capital requirements are driven principally by our obligations to service debt and to fund the following : the development and exploration of existing properties , including drilling and completion costs of wells ; acquisition of interests in additional oil and gas properties ; and 49 production and transportation facilities . the amount of capital expenditures we are able to make has a direct impact on our ability to increase cash flow from operations and , thereby , will directly affect our ability to service our debt obligations and to grow the business through the development of existing properties and the acquisition of new properties . our principal sources of capital are cash flow from operations , borrowings under our credit facility , cash on hand , proceeds from the sale of properties , and if an opportunity presents itself , the sale of debt or equity securities , although we may not be able to complete any financings on terms acceptable to us , if at all . operating cash flow . our operating cash flow is sensitive to many variables , the most volatile of which is the prices of the oil , gas and ngl we produce and sell . our consolidated cash flow from operations decreased in 2015 as a result of the significant decrease in commodity prices . in spite of this decline , we expect cash flow from operations to continue to be a primary source of liquidity as we adjust our capital program in response to lower commodity prices . commodity prices . prices are determined primarily by prevailing market conditions . regional and worldwide economic activity , weather and other substantially variable factors influence market conditions for these products . these factors , which are difficult to predict , create volatility in prices and are beyond our control .
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we also believe there is a continuing shift in consumer demand from traditional non-performance products to performance products , which are intended to provide better performance by wicking perspiration away from the skin , helping to regulate body temperature and 31 enhancing comfort . we plan to continue to grow our business over the long term through increased sales of our apparel , footwear and accessories , expansion of our wholesale distribution , growth in our direct-to-consumer sales channel and expansion in international markets . although we believe these trends will facilitate our growth , we also face potential challenges that could limit our ability to take advantage of these opportunities or negatively impact our financial results , including , among others , the risk of general economic or market conditions that could affect consumer spending and the financial health of our retail customers . for example , recent and ongoing developments regarding covid-19 may negatively impact our results of operations . additionally , we may not be able to successfully execute on our long-term strategies , or successfully manage the increasingly complex operations of our global business effectively . although we have implemented restructuring plans in the past and may implement additional plans in the future , we may not fully realize the expected benefits of these plans or other operating or cost-saving initiatives . in addition , we may not consistently be able to anticipate consumer preferences and develop new and innovative products that meet changing preferences in a timely manner . furthermore , our industry is very competitive , and competition pressures could cause us to reduce the prices of our products or otherwise affect our profitability . we also rely on third-party suppliers and manufacturers outside the u.s. to provide fabrics and to produce our products , and disruptions to our supply chain could harm our business . for a more complete discussion of the risks facing our business , refer to the “ risk factors ” section included in item 1a . covid-19 in march 2020 , a novel strain of coronavirus ( covid-19 ) was declared a global pandemic by the world health organization . this pandemic has negatively affected the u.s. and global economies , disrupted global supply chains and financial markets , and led to significant travel and transportation restrictions , including mandatory closures and orders to “ shelter-in-place ” . during the first quarter of fiscal 2020 , we took action to close substantially all of our brand and factory house stores based on regional conditions , a majority of which remained closed into the second quarter of fiscal 2020. by the end of the third quarter of fiscal 2020 , substantially all of our brand and factory house stores were re-opened . as pandemic conditions worsened globally during the fourth quarter of fiscal 2020 , we again closed certain stores based on regional conditions , particularly in emea and latin america . the following is a summary of our owned and operated store closures and their status throughout fiscal 2020 and as of the end of january 2021 : north america : beginning in mid-march we closed all of our stores in the north america operating segment , which remained closed through the end of april . we began a progressive re-opening of our stores in may and more than 85 % of our stores were open by the end of june . as of the end of september 2020 , all of our stores were open and approximately 95 % of our stores were open as of the end of january 2021. emea : beginning in mid-march we closed all of our stores in the emea operating segment , of which , over 65 % remained closed through the end of april . we continued the re-opening of our stores in may and more than 95 % of the stores were open at the end of june . as of the end of september 2020 , all of our stores were open , however , in the fourth quarter we had to close almost 60 % of our stores based on regional conditions . as of the end of january 2021 , only 25 % of our stores were open . asia-pacific : stores in china were closed from late-january through early-march , when a slowly progressive re-opening process started . stores in the remainder of the asia-pacific operating segment were also closed from time to time based on local conditions . more than 80 % of our stores were open by the end of april , and by the end of june 2020 more than 95 % of the stores were open and continued to be open until the end of september 2020. as of the end of january 2021 , approximately 90 % of our stores were open . latin america : beginning in mid-march , we closed all of our stores in the latin america operating segment , which remained closed in april and through the end of may . we began a progressive re-opening of stores in june , and more than 25 % of our stores were open by the end of june , and by the end of september 2020 approximately 85 % of our stores remained open . however , in the fourth quarter , we had to close certain stores based on regional conditions , and approximately 55 % of our stores were open as of the end of january 2021. the discussion above reflects the status of our owned and operated stores through the end of january 2021 , however , depending on the progression of covid-19 , stores in certain regions may close from time to time . additionally , throughout this time , many of our wholesale customers also closed their stores or operated them at limited capacity . story_separator_special_tag we consolidate our selling , general and administrative expenses into two primary categories : marketing and other . the other category is the sum of our selling , product innovation and supply chain , and corporate services categories . the marketing category consists primarily of sports and brand marketing , media , and retail presentation . sports and brand marketing includes professional , club , collegiate sponsorship , individual athlete and influencer agreements , and products provided directly to team equipment managers and to individual athletes . media includes digital , broadcast and print media outlets , including social and mobile media . retail presentation includes sales displays and concept shops and depreciation expense specific to our in-store fixture programs . our marketing costs are an important driver of our growth . other expense , net consists of unrealized and realized gains and losses on our foreign currency derivative financial instruments and unrealized and realized gains and losses on adjustments that arise from fluctuations in foreign currency exchange rates relating to transactions generated by our international subsidiaries . 36 results of operations the following table sets forth key components of our results of operations for the periods indicated , both in dollars and as a percentage of net revenues : replace_table_token_4_th replace_table_token_5_th 37 consolidated results of operations year ended december 31 , 2020 compared to year ended december 31 , 2019 net revenues decreased $ 792.5 million , or 15 % , to $ 4,474.7 million in fiscal 2020 from $ 5,267.1 million in fiscal 2019. net revenues by product category are summarized below : replace_table_token_6_th ( 1 ) corporate other revenues consist of foreign currency hedge gains and losses related to revenues generated by entities within our geographic operating segments , but managed through our central foreign exchange risk management program . the decrease in net sales was primarily driven by a unit sales decline in apparel , footwear and accessories across all categories due to decreased demand , primarily related to impacts of covid-19 including cancellations of orders by wholesale customers , closures of brand and factory house stores and lower traffic upon store re-openings , and a unit sales decrease of off-price sales within our wholesale channel . the decrease was partially offset by growth in the e-commerce business and sale of specialty products , such as sports masks , within our accessories category . license revenues decreased $ 33 million , or 23.8 % , to $ 105.8 million in fiscal 2020 from $ 138.8 million in fiscal 2019 driven primarily by lower contractual royalty minimums , decreased revenue from our licensing partners in north america due to softer demand as a result of impacts of covid-19 . further , fiscal 2019 included one-time settlements with two of our north american partners . connected fitness revenue decreased $ 0.6 million , or 0.4 % , to $ 135.8 million in fiscal 2020 from $ 136.4 million in fiscal 2019 primarily driven by a decrease in advertising revenue and one-time development fee from a partner in fiscal 2019. additionally , the decrease in revenue is due to the sale of the myfitnesspal platform during the fourth quarter of fiscal 2020. gross profit decreased $ 310.4 million to $ 2,160.1 million in fiscal 2020 from $ 2,470.5 million in fiscal 2019. gross profit as a percentage of net revenues , or gross margin , increased 140 basis points to 48.3 % in fiscal 2020 compared to 46.9 % in fiscal 2019. this increase in gross margin percentage was primarily driven by the following : an approximate 220 basis point increase driven by channel mix , primarily due to a lower percentage of off-price sales within our wholesale channel which carry a lower gross margin , and a higher percentage of direct-to-consumer sales , led by e-commerce ; and an approximate 70 basis point increase driven by supply chain initiatives primarily related to product cost improvements . the increase was partially offset by an approximate 130 basis point decrease driven by covid-19 related pricing and discounting impacts primarily within the direct-to-consumer business , as well as 30 basis points due to restructuring related expenses . selling , general and administrative expenses decreased $ 61.8 million to $ 2,171.9 million in fiscal 2020 from $ 2,233.8 million in fiscal 2019. as a percentage of net revenues , selling , general and administrative expenses increased to 48.5 % in fiscal 2020 from 42.4 % in fiscal 2019. selling , general and administrative expense was impacted by the following : marketing costs decreased $ 28.5 million to $ 550.4 million in fiscal 2020 from $ 578.9 million in fiscal 2019. this decrease was primarily driven by reduced rights fees for sports marketing assets and reductions in marketing within our wholesale channel . these decreases were primarily due to impacts of covid-19 , including event cancellations and store closures . these decreases were partially offset by 38 increased brand marketing and direct-to-consumer marketing investments . as a percentage of net revenues , marketing costs increased to 12.3 % in fiscal 2020 from 11.0 % in fiscal 2019. other costs decreased $ 33.3 million to $ 1,621.6 million in fiscal 2020 from $ 1,654.9 million in fiscal 2019. this decrease was driven primarily by lower incentive compensation , decreased travel and entertainment , and lower depreciation mostly due to reductions in capital expenditures . the decreases in incentive compensation and travel and entertainment were primarily due to impacts of covid-19 . these decreases were partially offset by higher legal expense , increased third party distribution costs to support e-commerce revenues , and an increase in allowance for doubtful account reserves due to negative developments regarding certain customer balances that represent a higher risk of credit default . as a percentage of net revenues , other costs increased to 36.2 % in fiscal 2020 from 31.4 % in fiscal 2019. restructuring and impairment charges w ere $ 602 million co mprised of $ 461 million
| cash provided by investing activities increas ed $ 213.5 million to $ 66.3 million in fis cal 2020 from cash used in investing activities of $ 147.1 million in fiscal 2019 primarily due to proceeds from the sale of myfitnesspal of $ 198.9 million in the fourth quarter of fiscal 2020 . 43 total capital expenditures in fiscal 2020 decreased by $ 53.5 million to $ 92.3 million compared to $ 145.8 million in fiscal 2019. financing activities cash provided by financing activities increased $ 573.9 million to $ 436.9 million in fiscal 2020 from cash used in financing activities of $ 137.1 million in fiscal 2019. this i ncrease was primarily due to the issuance of $ 500 million of 1.50 % convertible senior notes in fiscal 2020. capital resources credit facility on march 8 , 2019 , we entered into an amended and restated credit agreement by and among the company , as borrower , jpmorgan chase bank , n.a. , as administrative agent , and the other lenders and arrangers party thereto ( the “ credit agreement ” ) . the credit agreement has a term of five years , maturing in march 2024 , with permitted extensions under certain circumstances . in may 2020 , we entered into an amendment to the credit agreement ( the “ amendment ” and , the credit agreement as amended , the “ amended credit agreement ” or the “ revolving credit facility ” ) , pursuant to which the prior revolving credit commitments were reduced from $ 1.25 billion to $ 1.1 billion of borrowings . from time to time throughout fiscal 2020 , we borrowed funds under this facility as a precautionary measure in order to increase our cash position and preserve liquidity given the ongoing uncertainty in global markets resulting from the covid-19 pandemic .
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in the december update of the fed 's summary of economic projections , the median forecast for real gdp growth decreased in 2018 and 2019 and remained the same for 2020 , while the median forecast for the unemployment rate remained the same for 2018 and 2019 and increased in 2020. the projection of the median fed funds rates , based on the individual assessments of the fomc members , was 2.4 % in 2018 , 2.9 % in 2019 and 3.1 % in 2020. the interest rate environment experienced volatility in 2018 , as rates moved higher in concert with expectations for federal funds rate increases and then reversed course during the fourth quarter , falling sharply partially due to uncertainty related to the path of the economy in 2019. agency mortgages underperformed for 2018 , with nearly all the underperformance occurring in the fourth quarter . agency rmbs spreads widened as interest rates declined , which primarily drove the decrease in mitt 's book value for the year . during the fourth quarter , legacy rmbs spreads were wider but exhibited strong technical demand and favorable underlying fundamentals . the crt market widened in sympathy with broader risk markets during the fourth quarter , with the widening most pronounced in the lower part of the capital structure . despite this backdrop , there was little forced selling from crt investors during the quarter . the market conditions and trends outlined above may have a meaningful impact on our operating results and our existing portfolio and may cause us to adjust our investment and financing strategies over time as new opportunities emerge and the risk profile of our business changes . 49 recent government activity the current regulatory environment may be impacted by future legislative developments , such as amendments to key provisions of the dodd-frank act or changes to fannie mae and freddie mac , including with respect to how long they will continue to be in existence , the extent of their roles in the market and what forms they will take . there is a lack of clarity around the impact of such potential reform on our operations . results of operations our operating results can be affected by a number of factors and primarily depend on the size and composition of our investment portfolio , the level of our net interest income , the market value of our assets and the supply of , and demand for , our target assets in the marketplace , which can be impacted by unanticipated credit events , such as defaults , liquidations or delinquencies , experienced by borrowers whose mortgage loans are included in our investment portfolio . our primary source of net income available to common stockholders is our net interest income , less our cost of hedging , which represents the difference between the interest earned on our investment portfolio and the costs of financing and hedging our investment portfolio . our net interest income varies primarily as a result of changes in market interest rates , prepayment speeds , as measured by the constant prepayment rate ( `` cpr `` ) on the agency rmbs in our investment portfolio , and our funding and hedging costs . the table below presents certain information from our consolidated statements of operations for the years ended december 31 , 2018 , december 31 , 2017 and december 31 , 2016 ( in thousands ) : replace_table_token_8_th 50 net income/ ( loss ) available to common stockholders net income/ ( loss ) available to common stockholders decreased $ 117.0 million from $ 105.1 million for the year ended december 31 , 2017 to $ ( 11.9 ) million for the year ended december 31 , 2018 primarily due to lower prices on our securities and derivatives and other investments , which decreased our `` unrealized gain/ ( loss ) on real estate securities and loans , net , `` our `` unrealized gain/ ( loss ) on derivative and other instruments , net `` , and our `` net realized gain/ ( loss ) . `` net income/ ( loss ) available to common stockholders increased $ 54.9 million from $ 50.2 million for the year ended december 31 , 2016 to $ 105.1 million for the year ended december 31 , 2017 primarily due to higher prices on our securities , which increased our `` unrealized gain/ ( loss ) on real estate securities and loans , net , `` coupled with higher derivative prices , which increased our `` unrealized gain/ ( loss ) on derivative and other instruments , net . `` interest income interest income is calculated using the effective interest method for our gaap investment portfolio excluding sfr and calculated based on the actual coupon rate and the outstanding principal balance on our u.s. treasury securities , if any . year ended december 31 , 2018 compared to the year ended december 31 , 2017 interest income increased by $ 27.7 million from $ 128.8 million for the year ended december 31 , 2017 to $ 156.5 million for the year ended december 31 , 2018 primarily due to an increase in the weighted average cost of our gaap investment portfolio ( excluding sfr ) and u.s. treasury securities , if any , period over period by $ 0.4 billion from $ 2.9 billion for the year ended december 31 , 2017 to $ 3.3 billion for the year ended december 31 , 2018 . this was coupled with an increase in the weighted average yield on our gaap investment portfolio ( excluding sfr ) and u.s. treasury securities , if any , during the period of 0.35 % from 4.45 % for the year ended december 31 , 2017 to 4.80 % for the year ended december 31 , 2018 . story_separator_special_tag there was no property management fee for the year ended december 31 , 2017 . years ended december 31 , 2017 compared to the year ended december 31 , 2016 there was no property management fee for the years ended december 31 , 2017 and december 31 , 2016 . equity in earnings/ ( loss ) from affiliates equity in earnings/ ( loss ) from affiliates represents our share of earnings and profits of investments held within affiliated entities . a majority of these investments are comprised of real estate securities , loans and our investment in ag arc . year ended december 31 , 2018 compared to the year ended december 31 , 2017 for the years ended december 31 , 2018 and december 31 , 2017 , we recorded equity in earnings/ ( loss ) from affiliates of $ 15.6 million and $ 12.6 million , respectively . the increase primarily pertains to increased security prices causing an increase in unrealized gains on securities and loans . year ended december 31 , 2017 compared to the year ended december 31 , 2016 for the years ended december 31 , 2017 and december 31 , 2016 , we recorded equity in earnings/ ( loss ) from affiliates of $ 12.6 million and $ 1.5 million , respectively . the increase primarily pertains to an increased allocation of our capital to investments held within affiliated entities , increased security prices , and realized gains recognized on certain investments held by our affiliates . book value per share as of december 31 , 2018 , december 31 , 2017 , and december 31 , 2016 , our book value per common share was $ 17.21 , $ 19.62 , and $ 17.86 respectively . undepreciated book value per share is a non-gaap book value metric which adds accumulated depreciation and amortization back to book value to present an adjusted book value that incorporates the company 's single-family rental property portfolio at its undepreciated basis . this metric allows management to consider the investment portfolio exclusive of non-cash adjustments and facilitates the comparison of our financial performance to peer reits . a reconciliation of book value per share to undepreciated book value per share as of december 31 , 2018 , december 31 , 2017 and december 31 , 2016 is presented below . replace_table_token_11_th per share amounts for book value are calculated using all outstanding common shares in accordance with gaap , including all shares granted to ag reit management , llc , our external manager , and our independent directors under our equity incentive plans as of quarter-end . book value is calculated using stockholders ' equity less net proceeds of the company 's 8.25 % series a and 8.00 % series b cumulative redeemable preferred stock as the numerator . 56 presentation of investment , financing and hedging activities in the `` investment activities , `` `` financing activities , `` `` hedging activities `` and `` liquidity and capital resources `` sections of this part ii , item 7 , where we disclose our investment portfolio and the related financing arrangements , we have presented this information inclusive of ( i ) unconsolidated ownership interests in affiliates that are accounted for under gaap using the equity method and ( ii ) tbas , which are accounted for as derivatives under gaap . our investment portfolio and the related financing arrangements are presented along with a reconciliation to gaap . this presentation of our investment portfolio is consistent with how our management evaluates the business , and we believe this presentation , when considered with the gaap presentation , provides supplemental information useful for investors in evaluating our investment portfolio and financial condition . see note 2 to the notes to consolidated financial statements for a discussion of investments in debt and equity of affiliates and tbas . net interest margin and leverage ratio our gaap net interest margin is calculated by subtracting the weighted average cost of funds on our gaap investment portfolio from the weighted average yield for our gaap investment portfolio , which excludes cash held by us and any net tba position . both elements of cost of funds on our gaap investment portfolio are weighted by the outstanding financing arrangements on our gaap investment portfolio , securitized debt , and loan participation payable at quarter end , exclusive of repurchase agreements associated with u.s. treasury securities , if any . net interest margin , a non-gaap financial measure , is calculated by subtracting the weighted average cost of funds from the weighted average yield for our investment portfolio , which excludes cash held by us and any net tba position . the weighted average yield on our agency rmbs portfolio and our credit portfolio represents an effective interest rate , which utilizes all estimates of future cash flows and adjusts for actual prepayment and cash flow activity as of year-end . the weighted average yield on our sfr portfolio represents annualized fourth quarter net operating income divided by the carrying value of our sfr portfolio gross of accumulated depreciation and amortization . net operating income on our sfr portfolio is comprised of rental income and other sfr related income less property operating and maintenance expenses and property management fees . the calculation of weighted average yield is weighted on net carrying value . the weighted average cost of funds is the sum of the weighted average funding costs on total financing outstanding at year-end and our weighted average hedging cost , which is the weighted average of the net pay rate on our interest rate swaps , the net receive/pay rate on our treasury long and short positions , respectively , and the net receivable rate on our io index derivatives , if any . both elements of cost of funds are weighted by the outstanding financing arrangements on our investment portfolio , securitized debt , and loan participation payable at year-end , exclusive
| cash provided by investing activities increas ed $ 213.5 million to $ 66.3 million in fis cal 2020 from cash used in investing activities of $ 147.1 million in fiscal 2019 primarily due to proceeds from the sale of myfitnesspal of $ 198.9 million in the fourth quarter of fiscal 2020 . 43 total capital expenditures in fiscal 2020 decreased by $ 53.5 million to $ 92.3 million compared to $ 145.8 million in fiscal 2019. financing activities cash provided by financing activities increased $ 573.9 million to $ 436.9 million in fiscal 2020 from cash used in financing activities of $ 137.1 million in fiscal 2019. this i ncrease was primarily due to the issuance of $ 500 million of 1.50 % convertible senior notes in fiscal 2020. capital resources credit facility on march 8 , 2019 , we entered into an amended and restated credit agreement by and among the company , as borrower , jpmorgan chase bank , n.a. , as administrative agent , and the other lenders and arrangers party thereto ( the “ credit agreement ” ) . the credit agreement has a term of five years , maturing in march 2024 , with permitted extensions under certain circumstances . in may 2020 , we entered into an amendment to the credit agreement ( the “ amendment ” and , the credit agreement as amended , the “ amended credit agreement ” or the “ revolving credit facility ” ) , pursuant to which the prior revolving credit commitments were reduced from $ 1.25 billion to $ 1.1 billion of borrowings . from time to time throughout fiscal 2020 , we borrowed funds under this facility as a precautionary measure in order to increase our cash position and preserve liquidity given the ongoing uncertainty in global markets resulting from the covid-19 pandemic .
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in the december update of the fed 's summary of economic projections , the median forecast for real gdp growth decreased in 2018 and 2019 and remained the same for 2020 , while the median forecast for the unemployment rate remained the same for 2018 and 2019 and increased in 2020. the projection of the median fed funds rates , based on the individual assessments of the fomc members , was 2.4 % in 2018 , 2.9 % in 2019 and 3.1 % in 2020. the interest rate environment experienced volatility in 2018 , as rates moved higher in concert with expectations for federal funds rate increases and then reversed course during the fourth quarter , falling sharply partially due to uncertainty related to the path of the economy in 2019. agency mortgages underperformed for 2018 , with nearly all the underperformance occurring in the fourth quarter . agency rmbs spreads widened as interest rates declined , which primarily drove the decrease in mitt 's book value for the year . during the fourth quarter , legacy rmbs spreads were wider but exhibited strong technical demand and favorable underlying fundamentals . the crt market widened in sympathy with broader risk markets during the fourth quarter , with the widening most pronounced in the lower part of the capital structure . despite this backdrop , there was little forced selling from crt investors during the quarter . the market conditions and trends outlined above may have a meaningful impact on our operating results and our existing portfolio and may cause us to adjust our investment and financing strategies over time as new opportunities emerge and the risk profile of our business changes . 49 recent government activity the current regulatory environment may be impacted by future legislative developments , such as amendments to key provisions of the dodd-frank act or changes to fannie mae and freddie mac , including with respect to how long they will continue to be in existence , the extent of their roles in the market and what forms they will take . there is a lack of clarity around the impact of such potential reform on our operations . results of operations our operating results can be affected by a number of factors and primarily depend on the size and composition of our investment portfolio , the level of our net interest income , the market value of our assets and the supply of , and demand for , our target assets in the marketplace , which can be impacted by unanticipated credit events , such as defaults , liquidations or delinquencies , experienced by borrowers whose mortgage loans are included in our investment portfolio . our primary source of net income available to common stockholders is our net interest income , less our cost of hedging , which represents the difference between the interest earned on our investment portfolio and the costs of financing and hedging our investment portfolio . our net interest income varies primarily as a result of changes in market interest rates , prepayment speeds , as measured by the constant prepayment rate ( `` cpr `` ) on the agency rmbs in our investment portfolio , and our funding and hedging costs . the table below presents certain information from our consolidated statements of operations for the years ended december 31 , 2018 , december 31 , 2017 and december 31 , 2016 ( in thousands ) : replace_table_token_8_th 50 net income/ ( loss ) available to common stockholders net income/ ( loss ) available to common stockholders decreased $ 117.0 million from $ 105.1 million for the year ended december 31 , 2017 to $ ( 11.9 ) million for the year ended december 31 , 2018 primarily due to lower prices on our securities and derivatives and other investments , which decreased our `` unrealized gain/ ( loss ) on real estate securities and loans , net , `` our `` unrealized gain/ ( loss ) on derivative and other instruments , net `` , and our `` net realized gain/ ( loss ) . `` net income/ ( loss ) available to common stockholders increased $ 54.9 million from $ 50.2 million for the year ended december 31 , 2016 to $ 105.1 million for the year ended december 31 , 2017 primarily due to higher prices on our securities , which increased our `` unrealized gain/ ( loss ) on real estate securities and loans , net , `` coupled with higher derivative prices , which increased our `` unrealized gain/ ( loss ) on derivative and other instruments , net . `` interest income interest income is calculated using the effective interest method for our gaap investment portfolio excluding sfr and calculated based on the actual coupon rate and the outstanding principal balance on our u.s. treasury securities , if any . year ended december 31 , 2018 compared to the year ended december 31 , 2017 interest income increased by $ 27.7 million from $ 128.8 million for the year ended december 31 , 2017 to $ 156.5 million for the year ended december 31 , 2018 primarily due to an increase in the weighted average cost of our gaap investment portfolio ( excluding sfr ) and u.s. treasury securities , if any , period over period by $ 0.4 billion from $ 2.9 billion for the year ended december 31 , 2017 to $ 3.3 billion for the year ended december 31 , 2018 . this was coupled with an increase in the weighted average yield on our gaap investment portfolio ( excluding sfr ) and u.s. treasury securities , if any , during the period of 0.35 % from 4.45 % for the year ended december 31 , 2017 to 4.80 % for the year ended december 31 , 2018 . story_separator_special_tag there was no property management fee for the year ended december 31 , 2017 . years ended december 31 , 2017 compared to the year ended december 31 , 2016 there was no property management fee for the years ended december 31 , 2017 and december 31 , 2016 . equity in earnings/ ( loss ) from affiliates equity in earnings/ ( loss ) from affiliates represents our share of earnings and profits of investments held within affiliated entities . a majority of these investments are comprised of real estate securities , loans and our investment in ag arc . year ended december 31 , 2018 compared to the year ended december 31 , 2017 for the years ended december 31 , 2018 and december 31 , 2017 , we recorded equity in earnings/ ( loss ) from affiliates of $ 15.6 million and $ 12.6 million , respectively . the increase primarily pertains to increased security prices causing an increase in unrealized gains on securities and loans . year ended december 31 , 2017 compared to the year ended december 31 , 2016 for the years ended december 31 , 2017 and december 31 , 2016 , we recorded equity in earnings/ ( loss ) from affiliates of $ 12.6 million and $ 1.5 million , respectively . the increase primarily pertains to an increased allocation of our capital to investments held within affiliated entities , increased security prices , and realized gains recognized on certain investments held by our affiliates . book value per share as of december 31 , 2018 , december 31 , 2017 , and december 31 , 2016 , our book value per common share was $ 17.21 , $ 19.62 , and $ 17.86 respectively . undepreciated book value per share is a non-gaap book value metric which adds accumulated depreciation and amortization back to book value to present an adjusted book value that incorporates the company 's single-family rental property portfolio at its undepreciated basis . this metric allows management to consider the investment portfolio exclusive of non-cash adjustments and facilitates the comparison of our financial performance to peer reits . a reconciliation of book value per share to undepreciated book value per share as of december 31 , 2018 , december 31 , 2017 and december 31 , 2016 is presented below . replace_table_token_11_th per share amounts for book value are calculated using all outstanding common shares in accordance with gaap , including all shares granted to ag reit management , llc , our external manager , and our independent directors under our equity incentive plans as of quarter-end . book value is calculated using stockholders ' equity less net proceeds of the company 's 8.25 % series a and 8.00 % series b cumulative redeemable preferred stock as the numerator . 56 presentation of investment , financing and hedging activities in the `` investment activities , `` `` financing activities , `` `` hedging activities `` and `` liquidity and capital resources `` sections of this part ii , item 7 , where we disclose our investment portfolio and the related financing arrangements , we have presented this information inclusive of ( i ) unconsolidated ownership interests in affiliates that are accounted for under gaap using the equity method and ( ii ) tbas , which are accounted for as derivatives under gaap . our investment portfolio and the related financing arrangements are presented along with a reconciliation to gaap . this presentation of our investment portfolio is consistent with how our management evaluates the business , and we believe this presentation , when considered with the gaap presentation , provides supplemental information useful for investors in evaluating our investment portfolio and financial condition . see note 2 to the notes to consolidated financial statements for a discussion of investments in debt and equity of affiliates and tbas . net interest margin and leverage ratio our gaap net interest margin is calculated by subtracting the weighted average cost of funds on our gaap investment portfolio from the weighted average yield for our gaap investment portfolio , which excludes cash held by us and any net tba position . both elements of cost of funds on our gaap investment portfolio are weighted by the outstanding financing arrangements on our gaap investment portfolio , securitized debt , and loan participation payable at quarter end , exclusive of repurchase agreements associated with u.s. treasury securities , if any . net interest margin , a non-gaap financial measure , is calculated by subtracting the weighted average cost of funds from the weighted average yield for our investment portfolio , which excludes cash held by us and any net tba position . the weighted average yield on our agency rmbs portfolio and our credit portfolio represents an effective interest rate , which utilizes all estimates of future cash flows and adjusts for actual prepayment and cash flow activity as of year-end . the weighted average yield on our sfr portfolio represents annualized fourth quarter net operating income divided by the carrying value of our sfr portfolio gross of accumulated depreciation and amortization . net operating income on our sfr portfolio is comprised of rental income and other sfr related income less property operating and maintenance expenses and property management fees . the calculation of weighted average yield is weighted on net carrying value . the weighted average cost of funds is the sum of the weighted average funding costs on total financing outstanding at year-end and our weighted average hedging cost , which is the weighted average of the net pay rate on our interest rate swaps , the net receive/pay rate on our treasury long and short positions , respectively , and the net receivable rate on our io index derivatives , if any . both elements of cost of funds are weighted by the outstanding financing arrangements on our investment portfolio , securitized debt , and loan participation payable at year-end , exclusive
| cash flows as of december 31 , 2018 , our cash and cash equivalents totaled $ 31.6 million representing a net increase from $ 15.2 million at december 31 , 2017 . cash provided by operations of $ 78.0 million was attributable to net interest income less operating expenses . cash provided by investing activities of $ 161.0 million was attributable to sales and principal repayments of investments less purchases of investments . cash used in financing activities of $ 207.5 million was primarily attributable to repayments of financing arrangements offset by borrowings under financing arrangements and dividend payments . equity distribution agreement on may 5 , 2017 , we entered into an equity distribution agreement with each of credit suisse securities ( usa ) llc and jmp securities llc ( collectively , the `` sales agents '' ) , which we refer to as the `` equity distribution agreements , '' pursuant to which we may sell up to $ 100.0 million aggregate offering price of shares of our common stock from time to time through the sales agents , as defined in rule 415 under the securities act of 1933. the equity distribution agreements were amended on may 2 , 2018 in conjunction with the filing of our shelf registration statement registering up to $ 750.0 million of its securities , including capital stock ( the `` 2018 registration statement '' ) .
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the negative provision in each period was also impacted by other recoveries from our collection efforts and a continual decline in our historical charge-off levels from prior years . we do not expect a similar level of negative provision for loan losses in 2016 . - 25 - we had our third consecutive full year of net recoveries in 2015. the following table reflects the provision for loan losses for the past five years along with certain metrics that impact the determination of the level of the provision for loan losses . replace_table_token_14_th during the economic downturn in 2008 and 2009 , the state of michigan entered into a recession earlier than the rest of the country and experienced heavy job loss as a result of the concentration the state has related to the automotive industry . our market areas of grand rapids and holland fared better than the state as a whole , but nevertheless the impact of our local economy on our results was profound . the recession and job loss impacted housing values , commercial real estate values and consumer activity . improvement has been evident during the past several years . the state 's unemployment rate at the end of 2015 was 5.1 % , down dramatically from 15.2 % in june 2009. the grand rapids and holland area unemployment rate was 3.0 % at the end of 2015. residential housing values and commercial real estate property values decreased significantly during the recession , but have shown signs of stabilization , with some of our newer appraisals tending to reflect values at or above prior year values . it also appears that the housing market in our primary market area has stabilized and is now improving . in the grand rapids market during 2015 , there were 10 % more living unit starts than in 2014. similarly , in the holland-grand haven/lakeshore region , there were 11 % more living unit starts in 2015 than in 2014. these improvements are on top of improved results in 2014 over 2013. also , these markets are now also seeing significant activity in duplex , condominium and apartment starts after years of virtually no activity . in years immediately following the recession , we diversified our loan portfolio structure by de-emphasizing commercial real estate loans . however , in 2014 , we began cautiously increasing commercial real estate loans along with commercial and industrial loans , residential mortgages and other consumer loans . commercial real estate loans have increased from $ 472.3 million at december 31 , 2013 to $ 490.5 million at december 31 , 2014 and $ 508.7 million at december 31 , 2015. commercial and industrial loans have increased from $ 274.1 million at december 31 , 2013 to $ 327.7 million at december 31 , 2014 and $ 377.3 million at december 31 , 2015. consumer loans have increased from $ 295.9 million at december 31 , 2013 to totaling $ 300.3 million at december 31 , 2014 and $ 312.0 million at december 31 , 2015. with our improved financial condition , successful capital raise in 2011 , and retained earnings growth , our focus has shifted to high quality loan portfolio growth . we experienced strong commercial loan growth in the fourth quarter of 2014 and throughout 2015 and believe we are positioned for continued growth in 2016. results of operations summary : net income was $ 12.8 million ( $ 18.4 million on a pretax basis ) for 2015 , compared to net income of $ 10.5 million ( $ 15.0 million on a pretax basis ) for 2014 and $ 9.5 million ( $ 13.8 million on a pretax basis ) for 2013. earnings ( loss ) per common share on a diluted basis was $ 0.38 for 2015 , $ 0.31 for 2014 and $ ( 0.29 ) for 2013. earnings ( loss ) per share for 2013 was affected by a one-time , non-cash reduction to net income available to common shares of $ 17.6 million representing the impact of the preferred stock exchange completed on december 30 , 2013. earnings in each period were positively impacted by negative provisions for loan losses ( $ 3.5 million in 2015 , $ 3.4 million in 2014 and $ 4.3 million in 2013 ) . these negative provisions resulted from reduced levels of nonperforming loans , improved asset quality and reduced levels of chargeoffs . these items are discussed more fully below . we continued our improvement in nonperforming asset expenses in 2015. costs associated with nonperforming assets were $ 3.0 million in 2015 , compared to $ 3.1 million in 2014 and $ 5.5 million in 2013. lost interest from nonperforming assets decreased to approximately $ 1.4 million for 2015 , compared to $ 1.9 million for 2014 and $ 2.4 million for 2013. each of these items are discussed more fully below . - 26 - net interest income : net interest income totaled $ 44.1 million during 2015 , compared to $ 41.4 million during 2014 and $ 41.3 million in 2013. the increase in net interest income during 2015 compared to 2014 was our second straight year with an increase in core net interest income , following several years of declining net interest income . this increase was due to an increase in average earning assets of $ 129.4 million from $ 1.35 billion in 2014 to $ 1.48 billion in 2015. our net interest income as a percentage of average interest-earning assets ( i.e . `` net interest margin `` or `` margin `` ) decreased by 6 basis points compared to 2014. as is customary in the banking industry , interest income on tax-exempt securities is adjusted in the computation of the yield on tax-exempt securities and net interest margin using a 35 % tax rate to report these items on a fully taxable equivalent basis . story_separator_special_tag at december 31 , 2012 , we concluded that the valuation allowance was no longer required and the $ 18.9 million valuation allowance was reversed . our effective tax rate was 31 % for 2015 30 % for 2014 and 31 % for 2013. financial condition summary : since the economic recession in 2008 and 2009 , we had been focused on improving our loan portfolio , reducing exposure in higher loan concentration types , building our investment portfolio , and improving our financial condition through diversification of credit risk , improved capital ratios , and reduced reliance on non-core funding . we experienced positive results in each of these areas over the past several years . with the success in strengthening our financial condition , we have turned our focus more recently to achieving high quality loan portfolio growth . total assets were $ 1.730 billion at december 31 , 2015 , an increase of $ 145.8 million from $ 1.584 billion at december 31 , 2014. this change reflected increases of $ 52.0 million in cash and cash equivalents , $ 4.9 million in securities available for sale , $ 20.3 million in securities held to maturity and $ 79.4 million in our loan portfolio , partially offset by decreases of $ 10.7 million in other real estate owned and $ 3.4 million in net deferred tax asset . total deposits increased by $ 129.2 million and other borrowed funds were up by $ 8.1 million at december 31 , 2015 compared to december 31 , 2014 . - 32 - total shareholders ' equity increased by $ 9.5 million from december 31 , 2014 to december 31 , 2015. shareholders ' equity was increased by $ 12.8 million of net income in 2015 , partially offset by cash dividends of $ 3.7 million , or $ 0.11 per share . shareholders ' equity was also increased by $ 286,000 in 2015 as a result of a swing in other comprehensive income due to the effect of interest rate movement on the fair value of our available for sale securities portfolio . as of december 31 , 2015 , the bank was categorized as “ well capitalized ” under applicable regulatory guidelines . story_separator_special_tag 0px ; background-color : # 000000 `` / > the following table shows our loan origination activity for portfolio loans during 2015 , broken out by loan type and also shows average originated loan size ( dollars in thousands ) : replace_table_token_22_th our loan portfolio is reviewed regularly by our senior management , our loan officers , and an internal loan review team that is independent of our loan originators and credit administration . an administrative loan committee consisting of senior management and seasoned lending and collections personnel meets monthly to manage our internal watch list and proactively manage high risk loans . when reasonable doubt exists concerning collectability of interest or principal of one of our loans , the loan is placed in nonaccrual status . any interest previously accrued but not collected is reversed and charged against current earnings . nonperforming assets are comprised of nonperforming loans , foreclosed assets and repossessed assets . at december 31 , 2015 , nonperforming assets totaled $ 18.3 million compared to $ 36.7 million at december 31 , 2014. additions to other real estate owned in 2015 were $ 2.5 million , compared to $ 4.9 million in 2014. based on the loans currently in their redemption period , we expect there to be fewer additions to other real estate owned in 2016 than there were in 2015. proceeds from sales of foreclosed properties were $ 11.5 million in 2015 , resulting in a net realized loss on sale of $ 926,000. proceeds from sales of foreclosed properties were $ 12.5 million in 2014 resulting in a net realized gain of $ 624,000. we expect the level of sales of foreclosed properties in 2016 to be lower than the levels experienced in 2015. nonperforming loans include loans on nonaccrual status and loans delinquent more than 90 days but still accruing . as of december 31 , 2015 , nonperforming loans totaled $ 756,000 , or 0.06 % of total portfolio loans , compared to $ 8.4 million , or 0.75 % of total portfolio loans , at december 31 , 2014. loans for development or sale of 1-4 family residential properties comprised approximately $ 195,000 , or 25.8 % of total nonperforming loans , at december 31 , 2015 compared to $ 245,000 , or 2.9 % of total nonperforming loans , at december 31 , 2014. the remaining balance of nonperforming loans at december 31 , 2015 consisted of $ 330,000 of commercial real estate loans secured by various types of non-residential real estate , $ 174,000 of commercial and industrial loans , and $ 57,000 of consumer and residential mortgage loans . foreclosed and repossessed assets include assets acquired in settlement of loans . foreclosed assets totaled $ 17.6 million at december 31 , 2015 and $ 28.2 million at december 31 , 2014. of this balance at december 31 , 2015 , there were 48 commercial real estate properties totaling approximately $ 16.6 million . the remaining balance was comprised of 10 residential properties totaling approximately $ 1.0 million . one commercial real estate property comprised $ 4.0 million , or 23 % , of total other real estate owned at december 31 , 2015. all properties acquired through or in lieu of foreclosure are initially transferred at their fair value less estimated costs to sell and then evaluated monthly for impairment after transfer using a lower of cost or market approach . updated property valuations are obtained at least annually on all foreclosed assets . - 35 - at december 31 , 2015 , our foreclosed asset portfolio had a weighted average age held in portfolio of 3.87 years . below is a breakout of our foreclosed asset portfolio at december
| cash flows as of december 31 , 2018 , our cash and cash equivalents totaled $ 31.6 million representing a net increase from $ 15.2 million at december 31 , 2017 . cash provided by operations of $ 78.0 million was attributable to net interest income less operating expenses . cash provided by investing activities of $ 161.0 million was attributable to sales and principal repayments of investments less purchases of investments . cash used in financing activities of $ 207.5 million was primarily attributable to repayments of financing arrangements offset by borrowings under financing arrangements and dividend payments . equity distribution agreement on may 5 , 2017 , we entered into an equity distribution agreement with each of credit suisse securities ( usa ) llc and jmp securities llc ( collectively , the `` sales agents '' ) , which we refer to as the `` equity distribution agreements , '' pursuant to which we may sell up to $ 100.0 million aggregate offering price of shares of our common stock from time to time through the sales agents , as defined in rule 415 under the securities act of 1933. the equity distribution agreements were amended on may 2 , 2018 in conjunction with the filing of our shelf registration statement registering up to $ 750.0 million of its securities , including capital stock ( the `` 2018 registration statement '' ) .
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the negative provision in each period was also impacted by other recoveries from our collection efforts and a continual decline in our historical charge-off levels from prior years . we do not expect a similar level of negative provision for loan losses in 2016 . - 25 - we had our third consecutive full year of net recoveries in 2015. the following table reflects the provision for loan losses for the past five years along with certain metrics that impact the determination of the level of the provision for loan losses . replace_table_token_14_th during the economic downturn in 2008 and 2009 , the state of michigan entered into a recession earlier than the rest of the country and experienced heavy job loss as a result of the concentration the state has related to the automotive industry . our market areas of grand rapids and holland fared better than the state as a whole , but nevertheless the impact of our local economy on our results was profound . the recession and job loss impacted housing values , commercial real estate values and consumer activity . improvement has been evident during the past several years . the state 's unemployment rate at the end of 2015 was 5.1 % , down dramatically from 15.2 % in june 2009. the grand rapids and holland area unemployment rate was 3.0 % at the end of 2015. residential housing values and commercial real estate property values decreased significantly during the recession , but have shown signs of stabilization , with some of our newer appraisals tending to reflect values at or above prior year values . it also appears that the housing market in our primary market area has stabilized and is now improving . in the grand rapids market during 2015 , there were 10 % more living unit starts than in 2014. similarly , in the holland-grand haven/lakeshore region , there were 11 % more living unit starts in 2015 than in 2014. these improvements are on top of improved results in 2014 over 2013. also , these markets are now also seeing significant activity in duplex , condominium and apartment starts after years of virtually no activity . in years immediately following the recession , we diversified our loan portfolio structure by de-emphasizing commercial real estate loans . however , in 2014 , we began cautiously increasing commercial real estate loans along with commercial and industrial loans , residential mortgages and other consumer loans . commercial real estate loans have increased from $ 472.3 million at december 31 , 2013 to $ 490.5 million at december 31 , 2014 and $ 508.7 million at december 31 , 2015. commercial and industrial loans have increased from $ 274.1 million at december 31 , 2013 to $ 327.7 million at december 31 , 2014 and $ 377.3 million at december 31 , 2015. consumer loans have increased from $ 295.9 million at december 31 , 2013 to totaling $ 300.3 million at december 31 , 2014 and $ 312.0 million at december 31 , 2015. with our improved financial condition , successful capital raise in 2011 , and retained earnings growth , our focus has shifted to high quality loan portfolio growth . we experienced strong commercial loan growth in the fourth quarter of 2014 and throughout 2015 and believe we are positioned for continued growth in 2016. results of operations summary : net income was $ 12.8 million ( $ 18.4 million on a pretax basis ) for 2015 , compared to net income of $ 10.5 million ( $ 15.0 million on a pretax basis ) for 2014 and $ 9.5 million ( $ 13.8 million on a pretax basis ) for 2013. earnings ( loss ) per common share on a diluted basis was $ 0.38 for 2015 , $ 0.31 for 2014 and $ ( 0.29 ) for 2013. earnings ( loss ) per share for 2013 was affected by a one-time , non-cash reduction to net income available to common shares of $ 17.6 million representing the impact of the preferred stock exchange completed on december 30 , 2013. earnings in each period were positively impacted by negative provisions for loan losses ( $ 3.5 million in 2015 , $ 3.4 million in 2014 and $ 4.3 million in 2013 ) . these negative provisions resulted from reduced levels of nonperforming loans , improved asset quality and reduced levels of chargeoffs . these items are discussed more fully below . we continued our improvement in nonperforming asset expenses in 2015. costs associated with nonperforming assets were $ 3.0 million in 2015 , compared to $ 3.1 million in 2014 and $ 5.5 million in 2013. lost interest from nonperforming assets decreased to approximately $ 1.4 million for 2015 , compared to $ 1.9 million for 2014 and $ 2.4 million for 2013. each of these items are discussed more fully below . - 26 - net interest income : net interest income totaled $ 44.1 million during 2015 , compared to $ 41.4 million during 2014 and $ 41.3 million in 2013. the increase in net interest income during 2015 compared to 2014 was our second straight year with an increase in core net interest income , following several years of declining net interest income . this increase was due to an increase in average earning assets of $ 129.4 million from $ 1.35 billion in 2014 to $ 1.48 billion in 2015. our net interest income as a percentage of average interest-earning assets ( i.e . `` net interest margin `` or `` margin `` ) decreased by 6 basis points compared to 2014. as is customary in the banking industry , interest income on tax-exempt securities is adjusted in the computation of the yield on tax-exempt securities and net interest margin using a 35 % tax rate to report these items on a fully taxable equivalent basis . story_separator_special_tag at december 31 , 2012 , we concluded that the valuation allowance was no longer required and the $ 18.9 million valuation allowance was reversed . our effective tax rate was 31 % for 2015 30 % for 2014 and 31 % for 2013. financial condition summary : since the economic recession in 2008 and 2009 , we had been focused on improving our loan portfolio , reducing exposure in higher loan concentration types , building our investment portfolio , and improving our financial condition through diversification of credit risk , improved capital ratios , and reduced reliance on non-core funding . we experienced positive results in each of these areas over the past several years . with the success in strengthening our financial condition , we have turned our focus more recently to achieving high quality loan portfolio growth . total assets were $ 1.730 billion at december 31 , 2015 , an increase of $ 145.8 million from $ 1.584 billion at december 31 , 2014. this change reflected increases of $ 52.0 million in cash and cash equivalents , $ 4.9 million in securities available for sale , $ 20.3 million in securities held to maturity and $ 79.4 million in our loan portfolio , partially offset by decreases of $ 10.7 million in other real estate owned and $ 3.4 million in net deferred tax asset . total deposits increased by $ 129.2 million and other borrowed funds were up by $ 8.1 million at december 31 , 2015 compared to december 31 , 2014 . - 32 - total shareholders ' equity increased by $ 9.5 million from december 31 , 2014 to december 31 , 2015. shareholders ' equity was increased by $ 12.8 million of net income in 2015 , partially offset by cash dividends of $ 3.7 million , or $ 0.11 per share . shareholders ' equity was also increased by $ 286,000 in 2015 as a result of a swing in other comprehensive income due to the effect of interest rate movement on the fair value of our available for sale securities portfolio . as of december 31 , 2015 , the bank was categorized as “ well capitalized ” under applicable regulatory guidelines . story_separator_special_tag 0px ; background-color : # 000000 `` / > the following table shows our loan origination activity for portfolio loans during 2015 , broken out by loan type and also shows average originated loan size ( dollars in thousands ) : replace_table_token_22_th our loan portfolio is reviewed regularly by our senior management , our loan officers , and an internal loan review team that is independent of our loan originators and credit administration . an administrative loan committee consisting of senior management and seasoned lending and collections personnel meets monthly to manage our internal watch list and proactively manage high risk loans . when reasonable doubt exists concerning collectability of interest or principal of one of our loans , the loan is placed in nonaccrual status . any interest previously accrued but not collected is reversed and charged against current earnings . nonperforming assets are comprised of nonperforming loans , foreclosed assets and repossessed assets . at december 31 , 2015 , nonperforming assets totaled $ 18.3 million compared to $ 36.7 million at december 31 , 2014. additions to other real estate owned in 2015 were $ 2.5 million , compared to $ 4.9 million in 2014. based on the loans currently in their redemption period , we expect there to be fewer additions to other real estate owned in 2016 than there were in 2015. proceeds from sales of foreclosed properties were $ 11.5 million in 2015 , resulting in a net realized loss on sale of $ 926,000. proceeds from sales of foreclosed properties were $ 12.5 million in 2014 resulting in a net realized gain of $ 624,000. we expect the level of sales of foreclosed properties in 2016 to be lower than the levels experienced in 2015. nonperforming loans include loans on nonaccrual status and loans delinquent more than 90 days but still accruing . as of december 31 , 2015 , nonperforming loans totaled $ 756,000 , or 0.06 % of total portfolio loans , compared to $ 8.4 million , or 0.75 % of total portfolio loans , at december 31 , 2014. loans for development or sale of 1-4 family residential properties comprised approximately $ 195,000 , or 25.8 % of total nonperforming loans , at december 31 , 2015 compared to $ 245,000 , or 2.9 % of total nonperforming loans , at december 31 , 2014. the remaining balance of nonperforming loans at december 31 , 2015 consisted of $ 330,000 of commercial real estate loans secured by various types of non-residential real estate , $ 174,000 of commercial and industrial loans , and $ 57,000 of consumer and residential mortgage loans . foreclosed and repossessed assets include assets acquired in settlement of loans . foreclosed assets totaled $ 17.6 million at december 31 , 2015 and $ 28.2 million at december 31 , 2014. of this balance at december 31 , 2015 , there were 48 commercial real estate properties totaling approximately $ 16.6 million . the remaining balance was comprised of 10 residential properties totaling approximately $ 1.0 million . one commercial real estate property comprised $ 4.0 million , or 23 % , of total other real estate owned at december 31 , 2015. all properties acquired through or in lieu of foreclosure are initially transferred at their fair value less estimated costs to sell and then evaluated monthly for impairment after transfer using a lower of cost or market approach . updated property valuations are obtained at least annually on all foreclosed assets . - 35 - at december 31 , 2015 , our foreclosed asset portfolio had a weighted average age held in portfolio of 3.87 years . below is a breakout of our foreclosed asset portfolio at december
| cash and cash equivalents : our cash and cash equivalents , which include federal funds sold and short-term investments , were $ 181.5 million at december 31 , 2015 compared to $ 129.5 million at december 31 , 2014. this $ 52.0 million increase was a result of deposit growth exceeding loan growth during 2015 and a seasonal increase in deposits at year end . interest-bearing time deposits with other financial institutions : we opened two time deposit accounts with our primary correspondent bank in the first quarter of 2013 , each in equal amounts totaling $ 25.0 million . one of these deposits matured in march 2014 and the other matured in september 2014. we opened another time deposit of $ 20.0 million in the first quarter of 2014 which matures in february 2016. these time deposits provide a higher interest rate than federal funds sold or other short-term investments . securities : securities available for sale were $ 166.8 million at december 31 , 2015 compared to $ 161.9 million at december 31 , 2014. the balance at december 31 , 2015 primarily consisted of u.s. agency securities , agency mortgage backed securities and various municipal investments . our held to maturity portfolio increased from $ 31.6 million at december 31 , 2014 to $ 51.9 million at december 31 , 2015. our held to maturity portfolio is comprised of state and municipal bonds . portfolio loans and asset quality : total portfolio loans increased by $ 79.4 million to $ 1.20 billion at december 31 , 2015 compared to $ 1.12 billion at december 31 , 2014. during 2015 , our commercial portfolio increased by $ 67.8 million , while our residential portfolio increased by $ 19.7 million and our consumer portfolio decreased by $ 8.1 million . the volume of residential mortgage loans originated for sale in 2015 increased compared to 2014 due to the mortgage rate environment and our increase in the number of residential mortgage lenders .
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deposits grew $ 167.8 million , or 7 % , to $ 2.504 billion at december 31 , 2020 , compared to $ 2.336 billion at december 31 , 2019. non-interest bearing deposits grew by $ 225.8 million in 2020 , or 20 % , and made up 54 % of total deposits at year-end . cost of deposits remained low at 0.11 % in 2020 , compared to 0.20 % in 2019. net interest income totaled $ 96.7 million and $ 95.7 million in 2020 and 2019 , respectively . the $ 1.0 million increase in 2020 was primarily due to sba ppp loans and lower rates on interest-bearing deposits , largely offset by lower yields on earning-assets . the tax-equivalent net interest margin decreased to 3.55 % in 2020 , compared to 3.98 % in 2019. the 43 basis point decrease was primarily due to lower yields across interest-earning asset categories , partially offset by lower rates on interest-bearing deposits . the efficiency ratio was 57.06 % in 2020 , up from 55.33 % in 2019. contributing to this increase was the decrease in net interest margin , higher provision for credit losses on unfunded loan commitments , and lower income from s ervice charges on deposit accounts and atm fees in 2020. for the year ended december 31 , 2020 , return on assets and return on equity were 1.04 % and 8.60 % , respectively , compared to 1.34 % and 10.49 % in the prior year . all capital ratios exceeded regulatory requirements . the total risk-based capital ratio for bancorp was 16.0 % at december 31 , 2020 up from 15.1 % at december 31 , 2019. tangible common equity to tangible assets was 11.3 % at both december 31 , 2020 and december 31 , 2019 ( see footnote 8 , item 6 , selected financial data , for the definition of this non-gaap financial measure ) . the total risk-based capital ratio for the bank was 15.8 % at december 31 , 2020 and 14.6 % at december 31 , 2019. the board of directors declared a cash dividend of $ 0.23 per share on january 22 , 2021. this was the 63 rd consecutive quarterly dividend paid by bank of marin bancorp . the cash dividend was paid on february 12 , 2021 to shareholders of record at the close of business on february 5 , 2021. our strong capital and liquidity position afforded us the opportunity to eliminate a high cost funding source . on march 15 , 2021 we redeemed the $ 2.8 million subordinated debenture , which carried a rate of 5.68 % in 2020. the redemption consisted of $ 4.1 million principal balance , quarterly interest due , and $ 1.3 million in accelerated accretion of purchase discount . the contractual interest rate on the subordinated debenture was 3-month libor plus 1.40 % , or 1.62 % as of december 31 , 2020. covid-19 pandemic-related response update - we have remained open and responded to customer needs throughout 2020. we more than doubled our charitable contributions to non-profit organizations in our community to over $ 1.0 million in 2020. in march 2020 , we began waiving all atm and overdraft fees and cancelling early withdrawal penalties for time certificate of deposits when allowed by law . we accommodated loan payment relief requests for borrowers with financial hardships and lowered interest rate floors on commercial prime rate loans . under the provisions of the coronavirus aid , relief and economic security act ( `` cares act `` ) of 2020 , bank of marin originated over 1,800 ppp loans to small businesses , reaching nearly 28,000 employees in our markets . in 2021 , we are once again diligently working with our customers to accommodate requests for round two of ppp 26 loans under the economic aid to hard-hit small businesses , nonprofits , and venues act ( `` economic aid act `` ) , which became law in december of 2020. paycheck protection program - while the ppp affords us an opportunity to assist our customers and community and requires a large of amount of human resources , the ppp loans do not pose a significant amount of risk of loss to the bank as they are 100 % guaranteed by the sba . as of december 31 , 2020 , there were 1,777 ppp loans outstanding totaling $ 291.6 million , net of $ 5.4 million in unearned fees . during the fourth quarter bank of marin opened a secure ppp loan forgiveness application portal and gave all ppp borrowers access to apply . as of december 31 , 2020 we received sba loan forgiveness payments totaling $ 10.9 million for 35 loans that were forgiven . of the total ppp loans rem aining , 74 % ( 1,309 loans ) totaling $ 58.7 million are less than or equal to $ 150 thousand and have access to streamlined forgiveness processing . on january 19 , 2021 , the bank launched the application process and began accepting loan requests for the second round of ppp , as revised by the economic aid act . as of march 11 , 2021 , we have received 974 loan applications totaling $ 131.6 million . payment relief - during 2020 , in accordance with section 4013 of the cares act , subsequently amended by the economic aid act , we elected to apply the temporary accounting relief provisions for loan modifications that met certain criteria , which would otherwise be designated as tdrs under existing gaap . of the 269 loans totaling $ 402.9 million granted payment relief since the onset of the pandemic , 222 loans or $ 324.2 million have resumed normal payments and 18 loans or $ 7.7 million paid off . as of december 31 , 2020 , 21 borrowing relationships with 29 loans totaling $ 71.0 million had requested additional payment relief . story_separator_special_tag the decrease was primarily due to $ 1.0 million in consulting expenses related to core processing contract negotiations in 2018 , lower data processing expenses in 2019 as a result of the renegotiation of the bank 's core systems contract , and lower federal deposit insurance corporation ( `` fdic `` ) deposit insurance expenses due to the fdic deposit insurance fund reserve exceeding its billing threshold in 2019. the decreases in non-interest expense were partially offset by $ 918 thousand higher salaries and related benefits as a result of annual merit increases , three additional full-time equivalent employees ( on average ) , and personnel severance , as well as higher recruiting fees recorded in other expenses . provision for income taxes income tax provisions reflect accruals for taxes at the applicable rates for federal income tax and california franchise tax based upon reported pre-tax income . provisions also reflect permanent differences between income for tax and financial reporting purposes ( such as earnings on tax exempt loans and municipal securities , boli , low-income housing tax credits , and stock-based compensation from the exercise of stock options , disqualifying dispositions of incentive stock options and vesting of restricted stock awards ) . the provision for income taxes totaled $ 10.3 million at an effective tax rate of 25.5 % in 2020 , compared to $ 11.7 million at an effective tax rate of 25.4 % in 2019 and $ 10.8 million at an effective tax rate of 24.9 % in 2018. the decrease in the provision in 2020 compared to 2019 reflected lower pre-tax income and higher tax-exempt interest income on municipal securities . the slight increase in the effective tax rate in 2020 as compared to 2019 was due to a favorable deferred tax liability true-up recognized in 2019 and a lower tax benefit from boli income in 2020. the increase in the effective tax rate in 2019 compared to 2018 was due to a higher level of tax benefits in 2018 from the exercise of non-qualified stock options and disqualifying dispositions of incentive stock options by former employees of bank of napa post-acquisition . we file a consolidated return in the u.s. federal tax jurisdiction and a combined return in the state of california tax jurisdiction . there were no ongoing federal or state income tax examinations at the issuance of this report . at december 31 , 2020 and 2019 , neither the bank nor bancorp had accruals for interest or penalties related to unrecognized tax benefits . financial condition our assets increased $ 204.6 million from december 31 , 2019 to december 31 , 2020 , mainly due to loan growth of $ 245.3 million , primarily driven by ppp loan originations , which were offset by a $ 68.3 million decrease in investment security balances . investment securities we maintain an investment securities portfolio to provide liquidity and to generate earnings on funds that have not been loaned to customers . management determines the maturities and types of securities to be purchased based on liquidity and interest rate risk position , and the desire to attain a reasonable investment yield balanced with risk exposure . table 5 shows the composition of the debt securities portfolio by expected maturity at december 31 , 2020 and 2019. expected maturities differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties . we estimate and update expected maturity dates regularly based on current and historical prepayment speeds . the weighted average life of the investment portfolio at december 31 , 2020 and 2019 was approximately five and six years , respectively . 32 table 5 investment securities replace_table_token_5_th 1 book value reflects cost , adjusted for accumulated amortization and accretion . 2 weighted average calculation is based on amortized cost of securities . 3 yields on tax-exempt municipal bonds are presented on a taxable equivalent basis , using federal tax rate of 21 % . the amortized cost of our investment securities portfolio decreased $ 79.3 million or 14 % during 2020. we purchased $ 97.5 million in securities in 2020 designated as available-for-sale to provide flexibility for liquidity and interest rate risk management . these purchases were offset by $ 143.1 million of paydowns , calls and maturities , and $ 32.8 million of sales during 2020. during 2020 , we purchased $ 57.6 million in obligations of state and political subdivisions , $ 31.0 million in collateralized mortgage obligations ( `` cmos `` ) and $ 9.0 million in debentures of government sponsored agencies . we consider agency debentures and cmos issued by u.s. government sponsored entities to have low credit risk as they carry the credit support of the u.s. federal government . the debentures , cmos and mbs issued by u.s. government sponsored agencies , state and municipal securities , and sba-backed securities made up 70.1 % , 22.1 % and 7.8 % of the portfolio at december 31 , 2020 , compared to 79.6 % , 12.4 % and 7.8 % , respectively at december 31 , 2019. see the discussion in the section captioned “ securities may lose value due to credit quality of the issuers ” in item 1a risk factors above . 33 at december 31 , 2020 , distribution of our investment in obligations of state and political subdivisions was as follows : replace_table_token_6_th the portion of the portfolio outside the state of california is distributed among 10 states . the largest concentrations outside california are in texas ( 55.3 % ) , washington ( 9.3 % ) , and maryland ( 6.4 % ) . during march 2020 , we strategically increased our credit exposure to obligations issued by high credit quality issuers in texas that are either guaranteed by the aaa-rated texas permanent school fund ( `` psf `` ) or backed by revenue sources from essential services such as
| cash and cash equivalents : our cash and cash equivalents , which include federal funds sold and short-term investments , were $ 181.5 million at december 31 , 2015 compared to $ 129.5 million at december 31 , 2014. this $ 52.0 million increase was a result of deposit growth exceeding loan growth during 2015 and a seasonal increase in deposits at year end . interest-bearing time deposits with other financial institutions : we opened two time deposit accounts with our primary correspondent bank in the first quarter of 2013 , each in equal amounts totaling $ 25.0 million . one of these deposits matured in march 2014 and the other matured in september 2014. we opened another time deposit of $ 20.0 million in the first quarter of 2014 which matures in february 2016. these time deposits provide a higher interest rate than federal funds sold or other short-term investments . securities : securities available for sale were $ 166.8 million at december 31 , 2015 compared to $ 161.9 million at december 31 , 2014. the balance at december 31 , 2015 primarily consisted of u.s. agency securities , agency mortgage backed securities and various municipal investments . our held to maturity portfolio increased from $ 31.6 million at december 31 , 2014 to $ 51.9 million at december 31 , 2015. our held to maturity portfolio is comprised of state and municipal bonds . portfolio loans and asset quality : total portfolio loans increased by $ 79.4 million to $ 1.20 billion at december 31 , 2015 compared to $ 1.12 billion at december 31 , 2014. during 2015 , our commercial portfolio increased by $ 67.8 million , while our residential portfolio increased by $ 19.7 million and our consumer portfolio decreased by $ 8.1 million . the volume of residential mortgage loans originated for sale in 2015 increased compared to 2014 due to the mortgage rate environment and our increase in the number of residential mortgage lenders .
| 0 |
deposits grew $ 167.8 million , or 7 % , to $ 2.504 billion at december 31 , 2020 , compared to $ 2.336 billion at december 31 , 2019. non-interest bearing deposits grew by $ 225.8 million in 2020 , or 20 % , and made up 54 % of total deposits at year-end . cost of deposits remained low at 0.11 % in 2020 , compared to 0.20 % in 2019. net interest income totaled $ 96.7 million and $ 95.7 million in 2020 and 2019 , respectively . the $ 1.0 million increase in 2020 was primarily due to sba ppp loans and lower rates on interest-bearing deposits , largely offset by lower yields on earning-assets . the tax-equivalent net interest margin decreased to 3.55 % in 2020 , compared to 3.98 % in 2019. the 43 basis point decrease was primarily due to lower yields across interest-earning asset categories , partially offset by lower rates on interest-bearing deposits . the efficiency ratio was 57.06 % in 2020 , up from 55.33 % in 2019. contributing to this increase was the decrease in net interest margin , higher provision for credit losses on unfunded loan commitments , and lower income from s ervice charges on deposit accounts and atm fees in 2020. for the year ended december 31 , 2020 , return on assets and return on equity were 1.04 % and 8.60 % , respectively , compared to 1.34 % and 10.49 % in the prior year . all capital ratios exceeded regulatory requirements . the total risk-based capital ratio for bancorp was 16.0 % at december 31 , 2020 up from 15.1 % at december 31 , 2019. tangible common equity to tangible assets was 11.3 % at both december 31 , 2020 and december 31 , 2019 ( see footnote 8 , item 6 , selected financial data , for the definition of this non-gaap financial measure ) . the total risk-based capital ratio for the bank was 15.8 % at december 31 , 2020 and 14.6 % at december 31 , 2019. the board of directors declared a cash dividend of $ 0.23 per share on january 22 , 2021. this was the 63 rd consecutive quarterly dividend paid by bank of marin bancorp . the cash dividend was paid on february 12 , 2021 to shareholders of record at the close of business on february 5 , 2021. our strong capital and liquidity position afforded us the opportunity to eliminate a high cost funding source . on march 15 , 2021 we redeemed the $ 2.8 million subordinated debenture , which carried a rate of 5.68 % in 2020. the redemption consisted of $ 4.1 million principal balance , quarterly interest due , and $ 1.3 million in accelerated accretion of purchase discount . the contractual interest rate on the subordinated debenture was 3-month libor plus 1.40 % , or 1.62 % as of december 31 , 2020. covid-19 pandemic-related response update - we have remained open and responded to customer needs throughout 2020. we more than doubled our charitable contributions to non-profit organizations in our community to over $ 1.0 million in 2020. in march 2020 , we began waiving all atm and overdraft fees and cancelling early withdrawal penalties for time certificate of deposits when allowed by law . we accommodated loan payment relief requests for borrowers with financial hardships and lowered interest rate floors on commercial prime rate loans . under the provisions of the coronavirus aid , relief and economic security act ( `` cares act `` ) of 2020 , bank of marin originated over 1,800 ppp loans to small businesses , reaching nearly 28,000 employees in our markets . in 2021 , we are once again diligently working with our customers to accommodate requests for round two of ppp 26 loans under the economic aid to hard-hit small businesses , nonprofits , and venues act ( `` economic aid act `` ) , which became law in december of 2020. paycheck protection program - while the ppp affords us an opportunity to assist our customers and community and requires a large of amount of human resources , the ppp loans do not pose a significant amount of risk of loss to the bank as they are 100 % guaranteed by the sba . as of december 31 , 2020 , there were 1,777 ppp loans outstanding totaling $ 291.6 million , net of $ 5.4 million in unearned fees . during the fourth quarter bank of marin opened a secure ppp loan forgiveness application portal and gave all ppp borrowers access to apply . as of december 31 , 2020 we received sba loan forgiveness payments totaling $ 10.9 million for 35 loans that were forgiven . of the total ppp loans rem aining , 74 % ( 1,309 loans ) totaling $ 58.7 million are less than or equal to $ 150 thousand and have access to streamlined forgiveness processing . on january 19 , 2021 , the bank launched the application process and began accepting loan requests for the second round of ppp , as revised by the economic aid act . as of march 11 , 2021 , we have received 974 loan applications totaling $ 131.6 million . payment relief - during 2020 , in accordance with section 4013 of the cares act , subsequently amended by the economic aid act , we elected to apply the temporary accounting relief provisions for loan modifications that met certain criteria , which would otherwise be designated as tdrs under existing gaap . of the 269 loans totaling $ 402.9 million granted payment relief since the onset of the pandemic , 222 loans or $ 324.2 million have resumed normal payments and 18 loans or $ 7.7 million paid off . as of december 31 , 2020 , 21 borrowing relationships with 29 loans totaling $ 71.0 million had requested additional payment relief . story_separator_special_tag the decrease was primarily due to $ 1.0 million in consulting expenses related to core processing contract negotiations in 2018 , lower data processing expenses in 2019 as a result of the renegotiation of the bank 's core systems contract , and lower federal deposit insurance corporation ( `` fdic `` ) deposit insurance expenses due to the fdic deposit insurance fund reserve exceeding its billing threshold in 2019. the decreases in non-interest expense were partially offset by $ 918 thousand higher salaries and related benefits as a result of annual merit increases , three additional full-time equivalent employees ( on average ) , and personnel severance , as well as higher recruiting fees recorded in other expenses . provision for income taxes income tax provisions reflect accruals for taxes at the applicable rates for federal income tax and california franchise tax based upon reported pre-tax income . provisions also reflect permanent differences between income for tax and financial reporting purposes ( such as earnings on tax exempt loans and municipal securities , boli , low-income housing tax credits , and stock-based compensation from the exercise of stock options , disqualifying dispositions of incentive stock options and vesting of restricted stock awards ) . the provision for income taxes totaled $ 10.3 million at an effective tax rate of 25.5 % in 2020 , compared to $ 11.7 million at an effective tax rate of 25.4 % in 2019 and $ 10.8 million at an effective tax rate of 24.9 % in 2018. the decrease in the provision in 2020 compared to 2019 reflected lower pre-tax income and higher tax-exempt interest income on municipal securities . the slight increase in the effective tax rate in 2020 as compared to 2019 was due to a favorable deferred tax liability true-up recognized in 2019 and a lower tax benefit from boli income in 2020. the increase in the effective tax rate in 2019 compared to 2018 was due to a higher level of tax benefits in 2018 from the exercise of non-qualified stock options and disqualifying dispositions of incentive stock options by former employees of bank of napa post-acquisition . we file a consolidated return in the u.s. federal tax jurisdiction and a combined return in the state of california tax jurisdiction . there were no ongoing federal or state income tax examinations at the issuance of this report . at december 31 , 2020 and 2019 , neither the bank nor bancorp had accruals for interest or penalties related to unrecognized tax benefits . financial condition our assets increased $ 204.6 million from december 31 , 2019 to december 31 , 2020 , mainly due to loan growth of $ 245.3 million , primarily driven by ppp loan originations , which were offset by a $ 68.3 million decrease in investment security balances . investment securities we maintain an investment securities portfolio to provide liquidity and to generate earnings on funds that have not been loaned to customers . management determines the maturities and types of securities to be purchased based on liquidity and interest rate risk position , and the desire to attain a reasonable investment yield balanced with risk exposure . table 5 shows the composition of the debt securities portfolio by expected maturity at december 31 , 2020 and 2019. expected maturities differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties . we estimate and update expected maturity dates regularly based on current and historical prepayment speeds . the weighted average life of the investment portfolio at december 31 , 2020 and 2019 was approximately five and six years , respectively . 32 table 5 investment securities replace_table_token_5_th 1 book value reflects cost , adjusted for accumulated amortization and accretion . 2 weighted average calculation is based on amortized cost of securities . 3 yields on tax-exempt municipal bonds are presented on a taxable equivalent basis , using federal tax rate of 21 % . the amortized cost of our investment securities portfolio decreased $ 79.3 million or 14 % during 2020. we purchased $ 97.5 million in securities in 2020 designated as available-for-sale to provide flexibility for liquidity and interest rate risk management . these purchases were offset by $ 143.1 million of paydowns , calls and maturities , and $ 32.8 million of sales during 2020. during 2020 , we purchased $ 57.6 million in obligations of state and political subdivisions , $ 31.0 million in collateralized mortgage obligations ( `` cmos `` ) and $ 9.0 million in debentures of government sponsored agencies . we consider agency debentures and cmos issued by u.s. government sponsored entities to have low credit risk as they carry the credit support of the u.s. federal government . the debentures , cmos and mbs issued by u.s. government sponsored agencies , state and municipal securities , and sba-backed securities made up 70.1 % , 22.1 % and 7.8 % of the portfolio at december 31 , 2020 , compared to 79.6 % , 12.4 % and 7.8 % , respectively at december 31 , 2019. see the discussion in the section captioned “ securities may lose value due to credit quality of the issuers ” in item 1a risk factors above . 33 at december 31 , 2020 , distribution of our investment in obligations of state and political subdivisions was as follows : replace_table_token_6_th the portion of the portfolio outside the state of california is distributed among 10 states . the largest concentrations outside california are in texas ( 55.3 % ) , washington ( 9.3 % ) , and maryland ( 6.4 % ) . during march 2020 , we strategically increased our credit exposure to obligations issued by high credit quality issuers in texas that are either guaranteed by the aaa-rated texas permanent school fund ( `` psf `` ) or backed by revenue sources from essential services such as
| liquidity the goal of liquidity management is to provide adequate funds to meet loan demand and to fund operating activities and deposit withdrawals . we accomplish this goal by maintaining an appropriate level of liquid assets and formal lines of credit with the fhlb , frbsf and correspondent banks that enable us to borrow funds as discussed in note 7 to the consolidated financial statement in item 8 of this report . our asset liability management committee ( `` alco '' ) , which is comprised of independent bank directors and the bank 's chief executive officer , is responsible for approving and monitoring our liquidity targets and strategies . alco has adopted a contingency funding plan that provides early detection of potential liquidity issues in the market or the bank and institutes prompt responses that may prevent or alleviate a potential liquidity crisis . management monitors liquidity daily and regularly adjusts our position based on current and future liquidity needs . we also have relationships with third-party deposit networks and can adjust the placement of our deposits via reciprocal or one-way sales as part of our cash management strategy , as discussed in note 6 to the consolidated financial statements in item 8 of this report . we obtain funds from the repayment and maturity of loans , deposit inflows , investment security maturities and paydowns , federal funds purchases , fhlb advances , other borrowings , and cash flow from operations . our primary uses of funds are the origination of loans , the purchase of investment securities , withdrawals of deposits , maturity of certificates of deposit , repayment of borrowings , and dividends to common stockholders .
| 1 |
data is anticipated in the second half of 2014 on the primary outcome measure , which is renal function assessed by iohexol glomerular filtration rate ( gfr ) at 18 months . migalastat hcl combination programs for fabry disease study 013 is an open-label phase 2 drug-drug interaction study that evaluated the effects of a single oral dose of migalastat hcl ( 150 mg or 450 mg ) co-administered prior to the currently marketed erts for fabry disease ( fabrazyme® or replagal® ) in males with fabry disease . results from this study presented in february 2013 demonstrated an increase in a -gal a enzyme levels , the enzyme deficient in fabry patients , in plasma and in tissue following co-administration of migalastat hcl with ert versus ert alone . in addition to investigating migalastat hcl co-administered with ert , we are currently conducting preclinical formulation and ind-enabling studies of intravenous treatment of migalastat hcl co-formulated with jcr 's proprietary investigational recombinant human a -gal a enzyme ( jr-051 ) . we believe this chaperone-ert co-formulated product has the potential to enter the clinic in late 2013 or early 2014. at2220 chart programs for pompe disease we also continue to advance our pharmacological chaperone at2220 ( duvoglustat hcl ) co-administered with the only approved erts ( myozyme®/lumizyme® ) for pompe disease . we recently completed a phase 2 safety and pk study ( study 010 ) that investigated single ascending oral doses of at2220 ( 50 mg , 100 mg , 250 mg , and 600 mg ) co-administered with myozyme® or lumizyme® in patients with pompe disease . each patient received one infusion of ert alone , and then a single dose of at2220 just prior to the next ert infusion . results from this study showed an increase in gaa enzyme activity in plasma and muscle compared to ert alone . based on these results , we expect to initiate a repeat-dose clinical study of a novel intravenous formulation of at2220 ( at2220-iv ) co-administered with myozyme®/lumizyme® in the third quarter of 2013. in addition , working with our contract manufacturer laureate pharmaceuticals , we have initiated development of a co-formulated product which combines at2220 ( duvoglustat hcl ) with our own proprietary recombinant human ( rh ) gaa enzyme as a next-generation ert for pompe disease . we believe this approach has the potential to improve the properties of the rhgaa enzyme itself while incorporating at2220 as a small molecule stabilizer to increase exposure and tissue uptake , and reduce immunogenicity relative to currently marketed erts . chart programs in other lsds we also plan to continue our commitment to the broader application of the chart technology as a potential next-generation treatment approach for other lysosomal storage diseases in 2013. our preclinical studies include the pharmacological chaperones at3375 and afegostat tartrate ( at2101 ) co-administered with ert for gaucher disease , and new undisclosed pharmacological chaperones in combination with other erts . in addition , we continue our preclinical work to investigate at3375 , which targets the glucocerobrosidase ( gcase ) enzyme in the brain , as a potential treatment for parkinson 's disease . we have generated significant losses to date and expect to continue to generate losses as we continue the clinical and preclinical development of our drug candidates . these activities are budgeted to expand over time and will require further resources if we are to be successful . from our inception in -60- february 2002 through december 31 , 2012 , we have accumulated a deficit of $ 318.9 million . as we have not yet generated commercial sales revenue from any of our product candidates , our losses will continue and are likely to be substantial in the near term . collaboration with gsk on july 17 , 2012 , the company entered into the expanded collaboration agreement with an affiliate of glaxosmithkline plc ( gsk ) pursuant to which the company and gsk will continue to develop and commercialize migalastat hcl , currently in phase 3 development for the treatment of fabry disease . the expanded collaboration agreement amends and replaces in its entirety the license and collaboration agreement entered into between the company and gsk on october 28 , 2010 ( the `` original collaboration agreement `` ) for the development and commercialization of migalastat hcl . under the terms of the expanded collaboration agreement , the company and gsk will co-develop all formulations of migalastat hcl for fabry disease , including the development of migalastat hcl co-formulated with an investigational enzyme replacement therapy ( ert ) for fabry disease ( the `` co-formulated product `` ) in collaboration with another gsk collaborator jcr pharmaceutical co. , ltd. the company will commercialize all migalastat hcl products for fabry disease in the united states while gsk will commercialize all such products in the rest of the world . gsk is eligible to receive u.s. regulatory approval milestones totaling $ 20 million for migalastat hcl monotherapy and migalastat hcl for co-administration with ert , and additional regulatory approval and product launch milestone payments totaling up to $ 35 million within seven years following the launch of the co-formulated product . the company will also be responsible for certain pass-through milestone payments and single-digit royalties on the net u.s. sales of the co-formulated product that gsk must pay to a third party . story_separator_special_tag expected volatility was calculated based on a blended weighted average of historical information of our stock and the weighted average of historical information of similar public entities for which historical information was available . we will continue to use a blended weighted average approach using our own historical volatility and other similar public entity volatility information until our historical volatility is relevant to measure expected volatility for future option grants . the average expected life was determined using a `` simplified `` method of estimating the expected exercise term which is the mid-point between the vesting date and the end of the contractual term . as our stock price volatility has been over 75 % and we have experienced significant business transactions ( shire and gsk collaborations ) , we believe that we do not have sufficient reliable exercise data in order to justify a change from the use of the `` simplified `` method of estimating the expected exercise term of employee stock option grants . the risk-free interest rate is based on u.s. treasury , zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant . forfeitures are estimated based on expected turnover as well as a historical analysis of actual option forfeitures . the weighted average assumptions used in the black-scholes option pricing model are as follows : replace_table_token_8_th the weighted-average grant-date fair value per share of options granted during 2010 , 2011 and 2012 were $ 2.09 , $ 4.11 and $ 3.31 , respectively . warrants the warrants issued in connection with our march 2010 registered direct offering are classified as a liability . the fair value of the warrant liability is evaluated at each balance sheet date using the black-scholes valuation model . this model uses inputs such as the underlying price of the shares issued when the warrant is exercised , volatility , risk free interest rate and expected life of the instrument . any changes in the fair value of the warrants liability is recognized in the consolidated statement of -67- operations . the weighted average assumptions used in the black-scholes valuation model for the warrants for december 31 , 2011 and 2012 are as follows : replace_table_token_9_th during 2012 there were approximately 0.5 million warrants exercised and for the year ended december 31 , 2012 , we recorded a gain of $ 0.7 million due to the change in the fair value of the warrant liability . the resulting fair value of the warrant liability at december 31 , 2012 was $ 0.9 million . basic and diluted net loss attributable to common stockholders per common share we calculated net loss per share as a measurement of our performance while giving effect to all dilutive potential common shares that were outstanding during the reporting period . we had a net loss for all periods presented ; accordingly , the inclusion of common stock options and warrants would be anti-dilutive . therefore , the weighted average shares used to calculate both basic and diluted earnings per share are the same . the following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net loss attributable to common stockholders per common share ( in thousands except share amounts ) : years ended december 31 , 2010 2011 2012 historical numerator : net loss attributable to common stockholders $ ( 54,936 ) $ ( 44,412 ) $ ( 48,785 ) denominator : weighted average common shares outstanding basic and diluted 27,734,797 34,569,642 45,565,217 dilutive common stock equivalents would include the dilutive effect of common stock options and warrants for common stock equivalents . potentially dilutive common stock equivalents totaled approximately 7.0 million , 8.5 million and 9.4 million for the years ended december 31 , 2010 , 2011 and 2012 , respectively . potentially dilutive common stock equivalents were excluded from the diluted earnings per share denominator for all periods because of their anti-dilutive effect . results of operations year ended december 31 , 2012 compared to year ended december 31 , 2011 revenue . for the years ended december 31 , 2012 and 2011 , we recognized $ 6.8 million and $ 6.6 million , respectively , as collaboration and milestone revenue which includes a $ 3.5 million payment for a clinical development milestone in 2012. the reimbursements for research and development costs under the original license and collaboration agreement that met the criteria for revenue recognition were recognized as research revenue . for the years ended december 31 , 2012 and 2011 , we recognized $ 11.6 million and $ 14.8 million , respectively , as research revenue . -68- under the original license and collaboration agreement , gsk paid us an initial , non-refundable license fee of $ 30 million and a premium of $ 3.2 million related to gsk 's purchase of an equity investment in amicus which was being recognized as collaboration and milestone revenue on a straight-line basis over the development period until entry into the expanded collaboration agreement . due to a change in the accounting for revenue recognition for the expanded collaboration agreement , all revenue recognition related to the collaboration will be suspended until the total arrangement consideration becomes fixed and determinable . any payments received from gsk will be recorded as deferred reimbursements on the balance sheet . in addition , future milestone payments we may pay gsk will be applied against the balance of this deferred reimbursements account . revenue recognition would resume once the total arrangement consideration becomes fixed and determinable which would occur when the balance of the deferred reimbursements account is sufficient to cover all the remaining contingent milestone payments . as a result , we no longer recognize any revenue related to collaboration and milestone revenue or research revenue as of the date of the expanded collaboration agreement . there is no cash effect of this change in accounting , and there is no scenario
| liquidity the goal of liquidity management is to provide adequate funds to meet loan demand and to fund operating activities and deposit withdrawals . we accomplish this goal by maintaining an appropriate level of liquid assets and formal lines of credit with the fhlb , frbsf and correspondent banks that enable us to borrow funds as discussed in note 7 to the consolidated financial statement in item 8 of this report . our asset liability management committee ( `` alco '' ) , which is comprised of independent bank directors and the bank 's chief executive officer , is responsible for approving and monitoring our liquidity targets and strategies . alco has adopted a contingency funding plan that provides early detection of potential liquidity issues in the market or the bank and institutes prompt responses that may prevent or alleviate a potential liquidity crisis . management monitors liquidity daily and regularly adjusts our position based on current and future liquidity needs . we also have relationships with third-party deposit networks and can adjust the placement of our deposits via reciprocal or one-way sales as part of our cash management strategy , as discussed in note 6 to the consolidated financial statements in item 8 of this report . we obtain funds from the repayment and maturity of loans , deposit inflows , investment security maturities and paydowns , federal funds purchases , fhlb advances , other borrowings , and cash flow from operations . our primary uses of funds are the origination of loans , the purchase of investment securities , withdrawals of deposits , maturity of certificates of deposit , repayment of borrowings , and dividends to common stockholders .
| 0 |
data is anticipated in the second half of 2014 on the primary outcome measure , which is renal function assessed by iohexol glomerular filtration rate ( gfr ) at 18 months . migalastat hcl combination programs for fabry disease study 013 is an open-label phase 2 drug-drug interaction study that evaluated the effects of a single oral dose of migalastat hcl ( 150 mg or 450 mg ) co-administered prior to the currently marketed erts for fabry disease ( fabrazyme® or replagal® ) in males with fabry disease . results from this study presented in february 2013 demonstrated an increase in a -gal a enzyme levels , the enzyme deficient in fabry patients , in plasma and in tissue following co-administration of migalastat hcl with ert versus ert alone . in addition to investigating migalastat hcl co-administered with ert , we are currently conducting preclinical formulation and ind-enabling studies of intravenous treatment of migalastat hcl co-formulated with jcr 's proprietary investigational recombinant human a -gal a enzyme ( jr-051 ) . we believe this chaperone-ert co-formulated product has the potential to enter the clinic in late 2013 or early 2014. at2220 chart programs for pompe disease we also continue to advance our pharmacological chaperone at2220 ( duvoglustat hcl ) co-administered with the only approved erts ( myozyme®/lumizyme® ) for pompe disease . we recently completed a phase 2 safety and pk study ( study 010 ) that investigated single ascending oral doses of at2220 ( 50 mg , 100 mg , 250 mg , and 600 mg ) co-administered with myozyme® or lumizyme® in patients with pompe disease . each patient received one infusion of ert alone , and then a single dose of at2220 just prior to the next ert infusion . results from this study showed an increase in gaa enzyme activity in plasma and muscle compared to ert alone . based on these results , we expect to initiate a repeat-dose clinical study of a novel intravenous formulation of at2220 ( at2220-iv ) co-administered with myozyme®/lumizyme® in the third quarter of 2013. in addition , working with our contract manufacturer laureate pharmaceuticals , we have initiated development of a co-formulated product which combines at2220 ( duvoglustat hcl ) with our own proprietary recombinant human ( rh ) gaa enzyme as a next-generation ert for pompe disease . we believe this approach has the potential to improve the properties of the rhgaa enzyme itself while incorporating at2220 as a small molecule stabilizer to increase exposure and tissue uptake , and reduce immunogenicity relative to currently marketed erts . chart programs in other lsds we also plan to continue our commitment to the broader application of the chart technology as a potential next-generation treatment approach for other lysosomal storage diseases in 2013. our preclinical studies include the pharmacological chaperones at3375 and afegostat tartrate ( at2101 ) co-administered with ert for gaucher disease , and new undisclosed pharmacological chaperones in combination with other erts . in addition , we continue our preclinical work to investigate at3375 , which targets the glucocerobrosidase ( gcase ) enzyme in the brain , as a potential treatment for parkinson 's disease . we have generated significant losses to date and expect to continue to generate losses as we continue the clinical and preclinical development of our drug candidates . these activities are budgeted to expand over time and will require further resources if we are to be successful . from our inception in -60- february 2002 through december 31 , 2012 , we have accumulated a deficit of $ 318.9 million . as we have not yet generated commercial sales revenue from any of our product candidates , our losses will continue and are likely to be substantial in the near term . collaboration with gsk on july 17 , 2012 , the company entered into the expanded collaboration agreement with an affiliate of glaxosmithkline plc ( gsk ) pursuant to which the company and gsk will continue to develop and commercialize migalastat hcl , currently in phase 3 development for the treatment of fabry disease . the expanded collaboration agreement amends and replaces in its entirety the license and collaboration agreement entered into between the company and gsk on october 28 , 2010 ( the `` original collaboration agreement `` ) for the development and commercialization of migalastat hcl . under the terms of the expanded collaboration agreement , the company and gsk will co-develop all formulations of migalastat hcl for fabry disease , including the development of migalastat hcl co-formulated with an investigational enzyme replacement therapy ( ert ) for fabry disease ( the `` co-formulated product `` ) in collaboration with another gsk collaborator jcr pharmaceutical co. , ltd. the company will commercialize all migalastat hcl products for fabry disease in the united states while gsk will commercialize all such products in the rest of the world . gsk is eligible to receive u.s. regulatory approval milestones totaling $ 20 million for migalastat hcl monotherapy and migalastat hcl for co-administration with ert , and additional regulatory approval and product launch milestone payments totaling up to $ 35 million within seven years following the launch of the co-formulated product . the company will also be responsible for certain pass-through milestone payments and single-digit royalties on the net u.s. sales of the co-formulated product that gsk must pay to a third party . story_separator_special_tag expected volatility was calculated based on a blended weighted average of historical information of our stock and the weighted average of historical information of similar public entities for which historical information was available . we will continue to use a blended weighted average approach using our own historical volatility and other similar public entity volatility information until our historical volatility is relevant to measure expected volatility for future option grants . the average expected life was determined using a `` simplified `` method of estimating the expected exercise term which is the mid-point between the vesting date and the end of the contractual term . as our stock price volatility has been over 75 % and we have experienced significant business transactions ( shire and gsk collaborations ) , we believe that we do not have sufficient reliable exercise data in order to justify a change from the use of the `` simplified `` method of estimating the expected exercise term of employee stock option grants . the risk-free interest rate is based on u.s. treasury , zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant . forfeitures are estimated based on expected turnover as well as a historical analysis of actual option forfeitures . the weighted average assumptions used in the black-scholes option pricing model are as follows : replace_table_token_8_th the weighted-average grant-date fair value per share of options granted during 2010 , 2011 and 2012 were $ 2.09 , $ 4.11 and $ 3.31 , respectively . warrants the warrants issued in connection with our march 2010 registered direct offering are classified as a liability . the fair value of the warrant liability is evaluated at each balance sheet date using the black-scholes valuation model . this model uses inputs such as the underlying price of the shares issued when the warrant is exercised , volatility , risk free interest rate and expected life of the instrument . any changes in the fair value of the warrants liability is recognized in the consolidated statement of -67- operations . the weighted average assumptions used in the black-scholes valuation model for the warrants for december 31 , 2011 and 2012 are as follows : replace_table_token_9_th during 2012 there were approximately 0.5 million warrants exercised and for the year ended december 31 , 2012 , we recorded a gain of $ 0.7 million due to the change in the fair value of the warrant liability . the resulting fair value of the warrant liability at december 31 , 2012 was $ 0.9 million . basic and diluted net loss attributable to common stockholders per common share we calculated net loss per share as a measurement of our performance while giving effect to all dilutive potential common shares that were outstanding during the reporting period . we had a net loss for all periods presented ; accordingly , the inclusion of common stock options and warrants would be anti-dilutive . therefore , the weighted average shares used to calculate both basic and diluted earnings per share are the same . the following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net loss attributable to common stockholders per common share ( in thousands except share amounts ) : years ended december 31 , 2010 2011 2012 historical numerator : net loss attributable to common stockholders $ ( 54,936 ) $ ( 44,412 ) $ ( 48,785 ) denominator : weighted average common shares outstanding basic and diluted 27,734,797 34,569,642 45,565,217 dilutive common stock equivalents would include the dilutive effect of common stock options and warrants for common stock equivalents . potentially dilutive common stock equivalents totaled approximately 7.0 million , 8.5 million and 9.4 million for the years ended december 31 , 2010 , 2011 and 2012 , respectively . potentially dilutive common stock equivalents were excluded from the diluted earnings per share denominator for all periods because of their anti-dilutive effect . results of operations year ended december 31 , 2012 compared to year ended december 31 , 2011 revenue . for the years ended december 31 , 2012 and 2011 , we recognized $ 6.8 million and $ 6.6 million , respectively , as collaboration and milestone revenue which includes a $ 3.5 million payment for a clinical development milestone in 2012. the reimbursements for research and development costs under the original license and collaboration agreement that met the criteria for revenue recognition were recognized as research revenue . for the years ended december 31 , 2012 and 2011 , we recognized $ 11.6 million and $ 14.8 million , respectively , as research revenue . -68- under the original license and collaboration agreement , gsk paid us an initial , non-refundable license fee of $ 30 million and a premium of $ 3.2 million related to gsk 's purchase of an equity investment in amicus which was being recognized as collaboration and milestone revenue on a straight-line basis over the development period until entry into the expanded collaboration agreement . due to a change in the accounting for revenue recognition for the expanded collaboration agreement , all revenue recognition related to the collaboration will be suspended until the total arrangement consideration becomes fixed and determinable . any payments received from gsk will be recorded as deferred reimbursements on the balance sheet . in addition , future milestone payments we may pay gsk will be applied against the balance of this deferred reimbursements account . revenue recognition would resume once the total arrangement consideration becomes fixed and determinable which would occur when the balance of the deferred reimbursements account is sufficient to cover all the remaining contingent milestone payments . as a result , we no longer recognize any revenue related to collaboration and milestone revenue or research revenue as of the date of the expanded collaboration agreement . there is no cash effect of this change in accounting , and there is no scenario
| liquidity and capital resources source of liquidity as a result of our significant research and development expenditures and the lack of any approved products to generate product sales revenue , we have not been profitable and have generated operating losses since we were incorporated in 2002. we have funded our operations principally with $ 148.7 million of proceeds from redeemable convertible preferred stock offerings , $ 75.0 million of gross proceeds from our ipo in june 2007 , $ 18.5 million of gross proceeds from our registered direct offering in march 2010 , $ 65.6 million of gross proceeds from our stock offering in march 2012 , $ 49.9 million from gsk 's investments in the company in october 2010 and july 2012 , and $ 80.0 million from non-refundable license fees from collaborations . in the future , we expect to fund our -71- operations , in part , through the receipt of cost-sharing and milestone payments from gsk . the following table summarizes our significant funding sources as of december 31 , 2012 : replace_table_token_10_th ( 1 ) represents gross proceeds ( 2 ) the series a , b , c and d redeemable convertible preferred stock was converted to common stock upon the effectiveness of our ipo in addition , in conjunction with the gsk collaboration agreement , we received reimbursement of research and development expenditures from the date of the agreement ( october 28 , 2010 ) through december 31 , 2012 of $ 23.9 million . we also received $ 31.1 million in reimbursement of research and development expenditures from the shire collaboration from the date of the agreement ( november 7 , 2007 ) through year end 2009. as of december 31 , 2012 , we had cash and cash equivalents and marketable securities of $ 99.1 million . we invest cash in excess of our immediate requirements with regard to liquidity and capital preservation in a variety of interest-bearing instruments , including obligations of u.s. government agencies and money market accounts . wherever possible , we seek to minimize the potential effects of concentration and degrees of risk .
| 1 |
the investment return , or yield , on invested assets is an important element of the company 's earnings since insurance products are priced with the assumption that premiums received can be invested for a period of time before benefits are paid . most of the company 's invested assets have been held in fixed maturity available-for-sale securities , primarily in asset classes of corporate bonds , municipal bonds , and government obligation bonds . the interest rate environment has a significant impact on the determination of insurance contract liabilities , our investment rates and yields , and our asset/liability management . the primary investment objective for the company is to maximize economic value , consistent with acceptable risk parameters , including the management of credit risk and interest rate sensitivity of invested assets , while generating sufficient after-tax income to meet policyholder and corporate obligations . the company maintains a prudent investment strategy that may vary based on a variety of factors including business needs , regulatory requirements and tax considerations . we have previously reported that a portion of the life insurance policies issued by our subsidiary insurance companies failed to qualify for the favorable u.s. federal income tax treatment afforded by sections 7702 and 72 ( s ) of the internal revenue code ( `` irc `` ) of 1986. further , we have determined that the structure of our policies sold to non-u.s. persons , which were novated to cica ltd. effective july 1 , 2018 , may have inadvertently generated u.s. source income over time , which caused tax withholding and information reporting requirements for the company under chapters 3 and 4 of the irc . we have incurred significant costs in the evaluation process of this issue as we have engaged legal , tax and actuarial consultants to assist us in this review and remediation . in december 2019 , the company submitted corrected withholding tax returns to the irs in order to establish the tax liability amount for failing to withhold tax and report the u.s. source income generated by the novated policies . with the continued uncertainty that remains , including the acceptance of the submitted withholding tax returns , irs review of our submission , and future negotiations , our estimated liability as of december 31 , 2019 was approximately $ 10.0 million , after tax , related to projected agreement with the irs . the probability weighted range of financial estimates relative to this issue is $ 7.4 million to $ 52.5 million , net of tax . the amount of our liabilities and expenses depends on a number of uncertainties , including the number of prior tax years for which we may be liable to the irs , the number of domestic life insurance policies we will be required to remediate , the methodology applicable to the calculation of taxable benefits under non-compliant policies and the amount of time and resources we will require from external advisors who are assisting us with resolving these issues . given the range of potential outcomes and the significant variables assumed in establishing our estimates , actual amounts incurred may exceed our reserve and also could exceed the high end of our estimated range of liabilities and expenses . on may 17 , 2017 , we submitted an offer to enter into closing agreements with the irs covering certain cica and cnlic domestic life insurance policies ( the `` closing agreements `` ) , which was accepted by the irs on june 7 , 2019. pursuant to the closing agreements , cica and cnlic agreed to pay the irs $ 123,779 and $ 4,118 , respectively , by august 6 , 2019 , and follow the corrective steps for the policies outlined in the closing agreements by september 5 , 2019. these payments were made to the irs on july 12 , 2019. see note 7. commitments and contingencies in the notes to our consolidated financial statements for more information . current financial highlights our total assets grew 8.0 % , or $ 129 million , from 2018 to 2019 and totaled $ 1.7 billion as of december 31 , 2019 . total stockholders ' equity increased 38.4 % from $ 187.7 million at december 31 , 2018 , to $ 259.8 million at december 31 , 2019 primarily due to a change in net unrealized gains on available-for-sale securities after taxes of $ 71.8 million in 2019 as market interest rates decreased from 2018 levels . insurance premiums declined 1.9 % in 2019 compared to 2018 , totaling $ 184.3 million and $ 187.9 million , respectively . the decline was driven by fewer renewal premiums in our life insurance segment , partially offset by an increase in first year premiums in that segment as we realized growth in 2019 following investment in our sales and marketing activities and increased sales of higher average premium policies . first year premiums in our life insurance segment increased 2.1 % in 2019 compared december 31 , 2019 | 10-k 29 citizens , inc. to 2018 . insurance premiums declined 6.3 % in 2018 compared to 2017 , driven by fewer renewal and first year premiums in our life insurance segment . net investment income increased 9.8 % in 2019 compared to 2018 , totaling $ 59.5 million and $ 54.2 million , respectively . the increase was driven by a growing asset base derived from cash flows from our insurance operations , improvements in cash management , and a strategic focus on achieving greater yields while maintaining a prudent risk profile for our investment portfolio . the average yield on the consolidated investment portfolio was an annualized rate of 4.36 % for 2019 compared to 4.17 % for 2018 . a realized gain of $ 2.0 million was recorded during 2019 related to the redemption of two fixed maturity securities by the issuers at a price above par . story_separator_special_tag million , respectively . the significant change in effective tax rate noted in 2017 is the result of the tax cuts and jobs act of 2017 ( the `` tax act `` ) enacted at the end of 2017 which resulted in $ 35.7 million of income tax due to the remeasurement of deferred tax assets . differences between our effective tax rate and the statutory tax rate result from income and expense items that are treated differently for financial reporting and tax purposes . refer to note 9. income taxes in the notes to our consolidated financial statements for further discussion . december 31 , 2019 | 10-k 36 citizens , inc. segment operations our business is comprised of two operating business segments , as detailed below . life insurance home service insurance our insurance operations are the primary focus of the company , as those operations generate most of our income . the amount of insurance , number of policies issued , and average face amounts of policies issued during the periods indicated are shown below . replace_table_token_10_th the number of policies issued decreased 8.7 % and 8.9 % for the life insurance and home service insurance segments in 2019 and 2018 , respectively . the decline in the number of new business applications in our life insurance segment is driven by ceasing sales in brazil and terminating agreements with several independent consultants in latin america who did not align with our vision , values and culture . excluding these two factors , the number of policies issued by our international business increased during 2018 and 2019 as we invested heavily in our sales and marketing activities and achieved better alignment with our independent consultants on vision , value and strategy . while the number of policies issued has declined in the life insurance and home service insurance segments during 2019 , the average face amount issued has increased , resulting in overall premium income not declining at the same rate as policy issuances . these segments are reported in accordance with u.s. gaap . the company evaluates profit and loss performance based on net income before federal income taxes . replace_table_token_11_th december 31 , 2019 | 10-k 37 citizens , inc. life insurance our life insurance segment primarily issues ordinary whole life insurance and endowment policies in u.s. dollar-denominated amounts to foreign residents in more than 20 countries through approximately 1,000 independent marketing consultants . replace_table_token_12_th premiums . premium revenues decreased by 2.5 % in 2019 compared to 2018 as first year premiums increased 2.1 % , while renewal premiums declined by 2.9 % . we have invested heavily in our sales and marketing activities in 2019 and achieved better alignment with our independent consultants on vision , value , and strategy . the increase in first year premiums is also partly due to the company 's focus on selling higher average premium policies . since the first quarter of 2019 , we have experienced progressive improvement in our new business production for our international business . for 2018 , premiums decreased 6.3 % as we experienced declines in both first year and renewal premiums . life insurance premium breakout is detailed below . replace_table_token_13_th the company has taken actions over the past few years to pursue long-term stability that may have negatively impacted sales levels , including reducing discretionary dividends on existing international policies in response to the sustained low interest environment . in addition , in 2017 , the company introduced a set of repriced products in response to the continued low interest rate environment . these measures resulted in more expensive policies for our customers and december 31 , 2019 | 10-k 38 citizens , inc. likely negatively impacted our new sales . also , in april 2018 , in connection with the review of our international business model , we discontinued accepting new life insurance applications from brazilian citizens or residents . brazil had been one of our top premium-producing countries in our international life insurance business for the past several years . finally , venezuela , which has historically been one of our more critical markets , has experienced prolonged economic and social turmoil , which has negatively impacted our sales in the country , decreasing approximately 10 % in both 2019 and 2018 . endowment sales represent a significant portion of our new business sales internationally and totaled approximately $ 9.3 million , $ 10.4 million and $ 13.3 million , representing approximately 79.5 % , 90.8 % and 76.4 % of total first year premiums in 2019 , 2018 , and 2017 , respectively . most of our life insurance policies contain a policy loan provision , which allows the policyholder to use the accumulated cash value of a policy to pay premiums . these accumulated cash values can also be taken as a cash loan from the policy at the request of the policyholder and are secured by the policy values . the policy loan asset balance increased 1.3 % from 2018 to 2019 and remains at the same approximate ratio to life reserves as noted in prior years . the following table sets forth , by country , our direct premiums from our international life insurance business for the periods indicated . replace_table_token_14_th sales from colombia , venezuela and taiwan represented the majority of the new business premiums in 2019 , 2018 and 2017 . overall , three of our top five countries listed above experienced a decline in premium levels from 2018 to 2019 , with venezuela leading the decline . while overall premiums declined in 2019 compared to 2018 due to a decrease in renewal premiums , first year premiums increased during the period . our international business and premiums could be impacted by our inability to comply with current or future foreign laws or regulations applicable to the company or our independent consultants in the countries where we accept applications . in addition , marketing
| liquidity and capital resources source of liquidity as a result of our significant research and development expenditures and the lack of any approved products to generate product sales revenue , we have not been profitable and have generated operating losses since we were incorporated in 2002. we have funded our operations principally with $ 148.7 million of proceeds from redeemable convertible preferred stock offerings , $ 75.0 million of gross proceeds from our ipo in june 2007 , $ 18.5 million of gross proceeds from our registered direct offering in march 2010 , $ 65.6 million of gross proceeds from our stock offering in march 2012 , $ 49.9 million from gsk 's investments in the company in october 2010 and july 2012 , and $ 80.0 million from non-refundable license fees from collaborations . in the future , we expect to fund our -71- operations , in part , through the receipt of cost-sharing and milestone payments from gsk . the following table summarizes our significant funding sources as of december 31 , 2012 : replace_table_token_10_th ( 1 ) represents gross proceeds ( 2 ) the series a , b , c and d redeemable convertible preferred stock was converted to common stock upon the effectiveness of our ipo in addition , in conjunction with the gsk collaboration agreement , we received reimbursement of research and development expenditures from the date of the agreement ( october 28 , 2010 ) through december 31 , 2012 of $ 23.9 million . we also received $ 31.1 million in reimbursement of research and development expenditures from the shire collaboration from the date of the agreement ( november 7 , 2007 ) through year end 2009. as of december 31 , 2012 , we had cash and cash equivalents and marketable securities of $ 99.1 million . we invest cash in excess of our immediate requirements with regard to liquidity and capital preservation in a variety of interest-bearing instruments , including obligations of u.s. government agencies and money market accounts . wherever possible , we seek to minimize the potential effects of concentration and degrees of risk .
| 0 |
the investment return , or yield , on invested assets is an important element of the company 's earnings since insurance products are priced with the assumption that premiums received can be invested for a period of time before benefits are paid . most of the company 's invested assets have been held in fixed maturity available-for-sale securities , primarily in asset classes of corporate bonds , municipal bonds , and government obligation bonds . the interest rate environment has a significant impact on the determination of insurance contract liabilities , our investment rates and yields , and our asset/liability management . the primary investment objective for the company is to maximize economic value , consistent with acceptable risk parameters , including the management of credit risk and interest rate sensitivity of invested assets , while generating sufficient after-tax income to meet policyholder and corporate obligations . the company maintains a prudent investment strategy that may vary based on a variety of factors including business needs , regulatory requirements and tax considerations . we have previously reported that a portion of the life insurance policies issued by our subsidiary insurance companies failed to qualify for the favorable u.s. federal income tax treatment afforded by sections 7702 and 72 ( s ) of the internal revenue code ( `` irc `` ) of 1986. further , we have determined that the structure of our policies sold to non-u.s. persons , which were novated to cica ltd. effective july 1 , 2018 , may have inadvertently generated u.s. source income over time , which caused tax withholding and information reporting requirements for the company under chapters 3 and 4 of the irc . we have incurred significant costs in the evaluation process of this issue as we have engaged legal , tax and actuarial consultants to assist us in this review and remediation . in december 2019 , the company submitted corrected withholding tax returns to the irs in order to establish the tax liability amount for failing to withhold tax and report the u.s. source income generated by the novated policies . with the continued uncertainty that remains , including the acceptance of the submitted withholding tax returns , irs review of our submission , and future negotiations , our estimated liability as of december 31 , 2019 was approximately $ 10.0 million , after tax , related to projected agreement with the irs . the probability weighted range of financial estimates relative to this issue is $ 7.4 million to $ 52.5 million , net of tax . the amount of our liabilities and expenses depends on a number of uncertainties , including the number of prior tax years for which we may be liable to the irs , the number of domestic life insurance policies we will be required to remediate , the methodology applicable to the calculation of taxable benefits under non-compliant policies and the amount of time and resources we will require from external advisors who are assisting us with resolving these issues . given the range of potential outcomes and the significant variables assumed in establishing our estimates , actual amounts incurred may exceed our reserve and also could exceed the high end of our estimated range of liabilities and expenses . on may 17 , 2017 , we submitted an offer to enter into closing agreements with the irs covering certain cica and cnlic domestic life insurance policies ( the `` closing agreements `` ) , which was accepted by the irs on june 7 , 2019. pursuant to the closing agreements , cica and cnlic agreed to pay the irs $ 123,779 and $ 4,118 , respectively , by august 6 , 2019 , and follow the corrective steps for the policies outlined in the closing agreements by september 5 , 2019. these payments were made to the irs on july 12 , 2019. see note 7. commitments and contingencies in the notes to our consolidated financial statements for more information . current financial highlights our total assets grew 8.0 % , or $ 129 million , from 2018 to 2019 and totaled $ 1.7 billion as of december 31 , 2019 . total stockholders ' equity increased 38.4 % from $ 187.7 million at december 31 , 2018 , to $ 259.8 million at december 31 , 2019 primarily due to a change in net unrealized gains on available-for-sale securities after taxes of $ 71.8 million in 2019 as market interest rates decreased from 2018 levels . insurance premiums declined 1.9 % in 2019 compared to 2018 , totaling $ 184.3 million and $ 187.9 million , respectively . the decline was driven by fewer renewal premiums in our life insurance segment , partially offset by an increase in first year premiums in that segment as we realized growth in 2019 following investment in our sales and marketing activities and increased sales of higher average premium policies . first year premiums in our life insurance segment increased 2.1 % in 2019 compared december 31 , 2019 | 10-k 29 citizens , inc. to 2018 . insurance premiums declined 6.3 % in 2018 compared to 2017 , driven by fewer renewal and first year premiums in our life insurance segment . net investment income increased 9.8 % in 2019 compared to 2018 , totaling $ 59.5 million and $ 54.2 million , respectively . the increase was driven by a growing asset base derived from cash flows from our insurance operations , improvements in cash management , and a strategic focus on achieving greater yields while maintaining a prudent risk profile for our investment portfolio . the average yield on the consolidated investment portfolio was an annualized rate of 4.36 % for 2019 compared to 4.17 % for 2018 . a realized gain of $ 2.0 million was recorded during 2019 related to the redemption of two fixed maturity securities by the issuers at a price above par . story_separator_special_tag million , respectively . the significant change in effective tax rate noted in 2017 is the result of the tax cuts and jobs act of 2017 ( the `` tax act `` ) enacted at the end of 2017 which resulted in $ 35.7 million of income tax due to the remeasurement of deferred tax assets . differences between our effective tax rate and the statutory tax rate result from income and expense items that are treated differently for financial reporting and tax purposes . refer to note 9. income taxes in the notes to our consolidated financial statements for further discussion . december 31 , 2019 | 10-k 36 citizens , inc. segment operations our business is comprised of two operating business segments , as detailed below . life insurance home service insurance our insurance operations are the primary focus of the company , as those operations generate most of our income . the amount of insurance , number of policies issued , and average face amounts of policies issued during the periods indicated are shown below . replace_table_token_10_th the number of policies issued decreased 8.7 % and 8.9 % for the life insurance and home service insurance segments in 2019 and 2018 , respectively . the decline in the number of new business applications in our life insurance segment is driven by ceasing sales in brazil and terminating agreements with several independent consultants in latin america who did not align with our vision , values and culture . excluding these two factors , the number of policies issued by our international business increased during 2018 and 2019 as we invested heavily in our sales and marketing activities and achieved better alignment with our independent consultants on vision , value and strategy . while the number of policies issued has declined in the life insurance and home service insurance segments during 2019 , the average face amount issued has increased , resulting in overall premium income not declining at the same rate as policy issuances . these segments are reported in accordance with u.s. gaap . the company evaluates profit and loss performance based on net income before federal income taxes . replace_table_token_11_th december 31 , 2019 | 10-k 37 citizens , inc. life insurance our life insurance segment primarily issues ordinary whole life insurance and endowment policies in u.s. dollar-denominated amounts to foreign residents in more than 20 countries through approximately 1,000 independent marketing consultants . replace_table_token_12_th premiums . premium revenues decreased by 2.5 % in 2019 compared to 2018 as first year premiums increased 2.1 % , while renewal premiums declined by 2.9 % . we have invested heavily in our sales and marketing activities in 2019 and achieved better alignment with our independent consultants on vision , value , and strategy . the increase in first year premiums is also partly due to the company 's focus on selling higher average premium policies . since the first quarter of 2019 , we have experienced progressive improvement in our new business production for our international business . for 2018 , premiums decreased 6.3 % as we experienced declines in both first year and renewal premiums . life insurance premium breakout is detailed below . replace_table_token_13_th the company has taken actions over the past few years to pursue long-term stability that may have negatively impacted sales levels , including reducing discretionary dividends on existing international policies in response to the sustained low interest environment . in addition , in 2017 , the company introduced a set of repriced products in response to the continued low interest rate environment . these measures resulted in more expensive policies for our customers and december 31 , 2019 | 10-k 38 citizens , inc. likely negatively impacted our new sales . also , in april 2018 , in connection with the review of our international business model , we discontinued accepting new life insurance applications from brazilian citizens or residents . brazil had been one of our top premium-producing countries in our international life insurance business for the past several years . finally , venezuela , which has historically been one of our more critical markets , has experienced prolonged economic and social turmoil , which has negatively impacted our sales in the country , decreasing approximately 10 % in both 2019 and 2018 . endowment sales represent a significant portion of our new business sales internationally and totaled approximately $ 9.3 million , $ 10.4 million and $ 13.3 million , representing approximately 79.5 % , 90.8 % and 76.4 % of total first year premiums in 2019 , 2018 , and 2017 , respectively . most of our life insurance policies contain a policy loan provision , which allows the policyholder to use the accumulated cash value of a policy to pay premiums . these accumulated cash values can also be taken as a cash loan from the policy at the request of the policyholder and are secured by the policy values . the policy loan asset balance increased 1.3 % from 2018 to 2019 and remains at the same approximate ratio to life reserves as noted in prior years . the following table sets forth , by country , our direct premiums from our international life insurance business for the periods indicated . replace_table_token_14_th sales from colombia , venezuela and taiwan represented the majority of the new business premiums in 2019 , 2018 and 2017 . overall , three of our top five countries listed above experienced a decline in premium levels from 2018 to 2019 , with venezuela leading the decline . while overall premiums declined in 2019 compared to 2018 due to a decrease in renewal premiums , first year premiums increased during the period . our international business and premiums could be impacted by our inability to comply with current or future foreign laws or regulations applicable to the company or our independent consultants in the countries where we accept applications . in addition , marketing
| parent company liquidity and capital resources below for a discussion of additional parent company liquidity . december 31 , 2019 | 10-k 50 citizens , inc. we have established a liability of $ 10.0 million , net of tax , for probable liabilities and expenses associated with a tax compliance matter as of december 31 , 2019 as described in note 7. commitments and contingencies in the notes to our consolidated financial statements , which represents management 's best estimate . we have disclosed an estimated range related to probable liabilities and expenses of $ 7.4 million to $ 52.5 million , net of tax . this estimate and range include projected settlement amounts payable to the irs , as well as estimated increased payout obligations to current and former holders of non-compliant domestic life insurance policies expected to result from remediation of those policies . the amount of our liabilities and expenses depends on a number of uncertainties , including the number of prior tax years for which we may be liable to the irs , the number of domestic life insurance policies we will be required to remediate , and the methodology applicable to the calculation of the tax liabilities for policies . given the range of potential outcomes and the significant variables assumed in establishing our estimates , actual amounts incurred may exceed our reserve and exceed the high end of our estimated range of liabilities and expenses . the naic has established minimum capital requirements in the form of risk-based capital ( `` rbc '' ) . rbc considers the type of business written by an insurance company , the quality of its assets , and various other aspects of an insurance company 's business to develop a minimum level of capital called `` authorized control level risk-based capital '' . this level of capital is then compared to an adjusted statutory capital that includes capital and surplus as reported under statutory accounting principles , plus certain investment reserves . should the ratio of adjusted statutory capital to control level risk-based capital fall below 200 % , a series of remedial actions by the affected company would be required . we have a parental guarantee between citizens , inc.
| 1 |
risk factors. operating overview new and used vehicle revenues include sales to retail customers and to leasing companies providing consumer automobile leasing . we generate finance and insurance revenues from sales of third-party extended service contracts , sales of third-party insurance policies , commissions relating to the sale of finance and lease contracts to third parties and the sales of certain other products . service and parts revenues include fees paid for repair , maintenance and collision services , and the sale of replacement parts and other aftermarket accessories . 24 our gross profit tends to vary with the mix of revenues we derive from the sale of new vehicles , used vehicles , finance and insurance products , and service and parts transactions . our gross profit varies across product lines , with vehicle sales usually resulting in lower gross profit margins and our other revenues resulting in higher gross profit margins . factors such as inventory and vehicle availability , customer demand , consumer confidence , unemployment , general economic conditions , seasonality , weather , credit availability , fuel prices and manufacturers ' advertising and incentives also impact the mix of our revenues , and therefore influence our gross profit margin . aggregate gross profit increased $ 251.1 million , or 14.3 % , during 2012 compared to 2011. the increase in gross profit is largely attributable to a 9.9 % increase in same store retail revenue . our retail gross margin percentage declined from 16.8 % during 2011 to 16.3 % during 2012 , due primarily to lower gross margin on new and used vehicle retail sales as well as an increase in the percentage of our revenues generated by vehicle sales , which carry a lower gross margin than other parts of our business . our selling expenses consist of advertising and compensation for sales personnel , including commissions and related bonuses . general and administrative expenses include compensation for administration , finance , legal and general management personnel , rent , insurance , utilities , and other expenses . as the majority of our selling expenses are variable , and we believe a significant portion of our general and administrative expenses are subject to our control , we believe our expenses can be adjusted over time to reflect economic trends . floor plan interest expense relates to financing incurred in connection with the acquisition of new and used vehicle inventories that is secured by those vehicles . other interest expense consists of interest charges on all of our interest-bearing debt , other than interest relating to floor plan financing . the cost of our variable rate indebtedness is based on the prime rate , defined london interbank offered rate ( libor ) , the bank of england base rate , the finance house base rate , or the euro interbank offered rate . our floor plan interest expense has increased during 2012 as a result of higher applicable interest rates due to the impact of interest rate swap transactions that began in 2012 , as well as an increase in the amounts outstanding under floor plan arrangements . our other interest expense has increased during 2012 due to the increase in borrowings under our revolving credit agreements in the u.s. and u.k. due to significant acquisitions in 2012. equity in earnings of affiliates represents our share of the earnings from our investments in joint ventures and other non-consolidated investments , including ptl . because ptl is engaged in different businesses than we are , its operating performance may vary significantly from ours . the future success of our business is dependent upon , among other things , general economic and industry conditions , our ability to consummate and integrate acquisitions , the level of vehicle sales in the markets where we operate , our ability to increase sales of higher margin products , especially service and parts services , our ability to realize returns on our significant capital investment in new and upgraded dealership facilities and the return realized from our investments in various joint ventures and other non-consolidated investments . see item 1a risk factors and forward-looking statements below . critical accounting policies and estimates the preparation of financial statements in accordance with accounting principles generally accepted in the united states of america requires the application of accounting policies that often involve making estimates and employing judgments . such judgments influence the assets , liabilities , revenues and expenses recognized in our financial statements . management , on an ongoing basis , reviews these estimates and assumptions . management may determine that modifications in assumptions and estimates are required , which may result in a material change in our results of operations or financial position . the following are the accounting policies applied in the preparation of our financial statements that management believes are most dependent upon the use of estimates and assumptions . 25 revenue recognition vehicle , parts and service sales we record revenue when vehicles are delivered and title has passed to the customer , when vehicle service or repair work is completed and when parts are delivered to our customers . sales promotions that we offer to customers are accounted for as a reduction of revenues at the time of sale . rebates and other incentives offered directly to us by manufacturers are recognized as a reduction of cost of sales . reimbursements of qualified advertising expenses are treated as a reduction of selling , general and administrative expenses . the amounts received under certain manufacturer rebate and incentive programs are based on the attainment of program objectives , and such earnings are recognized either upon the sale of the vehicle for which the award was received , or upon attainment of the particular program goals if not associated with individual vehicles . story_separator_special_tag revenues new vehicle retail sales revenue increased $ 1.14 billion , or 20.3 % , from 2011 to 2012 and increased $ 532.7 million , or 10.4 % , from 2010 to 2011. the increase from 2011 to 2012 is due to a $ 687.4 million , or 12.6 % , increase in same-store revenues , coupled with a $ 455.6 million increase from net dealership acquisitions during the year . the same store revenue increase is due primarily to the 12.9 % increase in same store unit sales , which increased revenue by $ 699.4 million , somewhat offset by an $ 83 , or 0.2 % , decrease in comparative average selling prices per unit , which decreased revenue by $ 12.0 million . the increase from 2010 to 2011 is due to a $ 299.0 million , or 6.0 % , increase in same store revenues , coupled with a $ 233.7 million increase from net dealership acquisitions during the year . the same store revenue increase is due primarily to a $ 2,012 , or 5.7 % , increase in average selling prices per unit , which increased revenue by $ 283.7 million , coupled with the 0.3 % increase in new retail unit sales , which increased revenue by $ 15.3 million . we believe the changes in comparative average selling price per unit were driven in part by inventory availability in our japanese volume foreign brands as a result of the march 2011 tsunami . gross profit retail gross profit from new vehicle sales increased $ 79.6 million , or 17.0 % , from 2011 to 2012 , and increased $ 49.1 million , or 11.7 % , from 2010 to 2011. the increase from 2011 to 2012 is due to a $ 40.4 million , or 8.9 % , increase in same store gross profit , coupled with a $ 39.2 million increase from net dealership acquisitions during the year . the same store increase is due primarily to the 12.9 % increase in new retail unit sales , which increased gross profit by $ 56.4 million , somewhat offset by a $ 111 , or 3.5 % , decrease in average gross profit per new vehicle retailed , which decreased gross profit by $ 16.0 million . we believe that the changes in gross 29 profit per unit and gross margin in 2012 and 2011 were driven in part by inventory availability of japanese brands as a result of the march 2011 tsunami . inventory levels normalized in 2012. the increase from 2010 to 2011 is due to a $ 30.3 million , or 7.4 % , increase in same store gross profit , coupled with a $ 18.8 million increase from net dealership acquisitions during the year . the same store increase is due primarily to a $ 206 , or 7.1 % , increase in the average gross profit per new vehicle retailed , which increased gross profit by $ 29.0 million , coupled with the 0.3 % increase in retail unit sales , which increased gross profit by $ 1.3 million . used vehicle data replace_table_token_7_th units retail unit sales of used vehicles increased 24,079 units , or 19.8 % , from 2011 to 2012 and increased 18,279 units , or 17.7 % , from 2010 to 2011. the increase from 2011 to 2012 is due to a 13,692 unit , or 11.6 % , increase in same store retail unit sales , coupled with a 10,387 unit increase from net dealership acquisitions . same store units increased 14.2 % in the u.s. and 6.2 % internationally . the same store increases were driven by an 11.0 % increase in our premium brands , a 12.6 % increase in our volume foreign brands , and a 11.3 % increase in our domestic brands . we believe that overall our same store used vehicle sales are being positively impacted by improved market conditions including increased credit availability , pent-up demand , an increase in trade-in units due to an increase in new unit sales , and our focus on retailing trade-ins and minimizing wholesaled vehicles . the increase from 2010 to 2011 is due to a 14,437 or 14.2 % , increase in same store used retail unit sales , coupled with a 3,842 unit increase from net dealership acquisitions . the same store increase was due primarily to unit sales increases in premium and volume foreign brand stores in the u.s. and premium brands in the u.k. revenues used vehicle retail sales revenue increased $ 509.0 million , or 15.7 % , from 2011 to 2012 and increased $ 510.1 million , or 18.7 % , from 2010 to 2011. the increase from 2011 to 2012 is due to a $ 260.1 million , or 8.2 % , increase in same store revenues , coupled with a $ 248.9 million increase from net dealership acquisitions . the same store revenue increase is due to the 11.6 % increase in same store retail unit sales , which increased revenue by $ 354.9 million , somewhat offset by an $ 802 , or 3.0 % , decrease in comparative average selling prices per unit , which decreased revenue by $ 94.8 million . the increase from 2010 to 2011 is due to a $ 407.9 million , or 15.1 % , increase in same store revenues , coupled with a $ 102.2 million increase from net dealership acquisitions during the year . the same store revenue increase is due to the 14.2 % increase in same store retail unit sales , which increased revenue by $ 385.8 million , coupled with a $ 217 , or 0.8 % , increase in comparative average selling price per unit , which increased revenue by $ 22.1 million . 30 gross profit retail gross profit from used vehicle sales increased $ 30.4 million , or 12.0 % , from 2011 to 2012 and increased
| parent company liquidity and capital resources below for a discussion of additional parent company liquidity . december 31 , 2019 | 10-k 50 citizens , inc. we have established a liability of $ 10.0 million , net of tax , for probable liabilities and expenses associated with a tax compliance matter as of december 31 , 2019 as described in note 7. commitments and contingencies in the notes to our consolidated financial statements , which represents management 's best estimate . we have disclosed an estimated range related to probable liabilities and expenses of $ 7.4 million to $ 52.5 million , net of tax . this estimate and range include projected settlement amounts payable to the irs , as well as estimated increased payout obligations to current and former holders of non-compliant domestic life insurance policies expected to result from remediation of those policies . the amount of our liabilities and expenses depends on a number of uncertainties , including the number of prior tax years for which we may be liable to the irs , the number of domestic life insurance policies we will be required to remediate , and the methodology applicable to the calculation of the tax liabilities for policies . given the range of potential outcomes and the significant variables assumed in establishing our estimates , actual amounts incurred may exceed our reserve and exceed the high end of our estimated range of liabilities and expenses . the naic has established minimum capital requirements in the form of risk-based capital ( `` rbc '' ) . rbc considers the type of business written by an insurance company , the quality of its assets , and various other aspects of an insurance company 's business to develop a minimum level of capital called `` authorized control level risk-based capital '' . this level of capital is then compared to an adjusted statutory capital that includes capital and surplus as reported under statutory accounting principles , plus certain investment reserves . should the ratio of adjusted statutory capital to control level risk-based capital fall below 200 % , a series of remedial actions by the affected company would be required . we have a parental guarantee between citizens , inc.
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risk factors. operating overview new and used vehicle revenues include sales to retail customers and to leasing companies providing consumer automobile leasing . we generate finance and insurance revenues from sales of third-party extended service contracts , sales of third-party insurance policies , commissions relating to the sale of finance and lease contracts to third parties and the sales of certain other products . service and parts revenues include fees paid for repair , maintenance and collision services , and the sale of replacement parts and other aftermarket accessories . 24 our gross profit tends to vary with the mix of revenues we derive from the sale of new vehicles , used vehicles , finance and insurance products , and service and parts transactions . our gross profit varies across product lines , with vehicle sales usually resulting in lower gross profit margins and our other revenues resulting in higher gross profit margins . factors such as inventory and vehicle availability , customer demand , consumer confidence , unemployment , general economic conditions , seasonality , weather , credit availability , fuel prices and manufacturers ' advertising and incentives also impact the mix of our revenues , and therefore influence our gross profit margin . aggregate gross profit increased $ 251.1 million , or 14.3 % , during 2012 compared to 2011. the increase in gross profit is largely attributable to a 9.9 % increase in same store retail revenue . our retail gross margin percentage declined from 16.8 % during 2011 to 16.3 % during 2012 , due primarily to lower gross margin on new and used vehicle retail sales as well as an increase in the percentage of our revenues generated by vehicle sales , which carry a lower gross margin than other parts of our business . our selling expenses consist of advertising and compensation for sales personnel , including commissions and related bonuses . general and administrative expenses include compensation for administration , finance , legal and general management personnel , rent , insurance , utilities , and other expenses . as the majority of our selling expenses are variable , and we believe a significant portion of our general and administrative expenses are subject to our control , we believe our expenses can be adjusted over time to reflect economic trends . floor plan interest expense relates to financing incurred in connection with the acquisition of new and used vehicle inventories that is secured by those vehicles . other interest expense consists of interest charges on all of our interest-bearing debt , other than interest relating to floor plan financing . the cost of our variable rate indebtedness is based on the prime rate , defined london interbank offered rate ( libor ) , the bank of england base rate , the finance house base rate , or the euro interbank offered rate . our floor plan interest expense has increased during 2012 as a result of higher applicable interest rates due to the impact of interest rate swap transactions that began in 2012 , as well as an increase in the amounts outstanding under floor plan arrangements . our other interest expense has increased during 2012 due to the increase in borrowings under our revolving credit agreements in the u.s. and u.k. due to significant acquisitions in 2012. equity in earnings of affiliates represents our share of the earnings from our investments in joint ventures and other non-consolidated investments , including ptl . because ptl is engaged in different businesses than we are , its operating performance may vary significantly from ours . the future success of our business is dependent upon , among other things , general economic and industry conditions , our ability to consummate and integrate acquisitions , the level of vehicle sales in the markets where we operate , our ability to increase sales of higher margin products , especially service and parts services , our ability to realize returns on our significant capital investment in new and upgraded dealership facilities and the return realized from our investments in various joint ventures and other non-consolidated investments . see item 1a risk factors and forward-looking statements below . critical accounting policies and estimates the preparation of financial statements in accordance with accounting principles generally accepted in the united states of america requires the application of accounting policies that often involve making estimates and employing judgments . such judgments influence the assets , liabilities , revenues and expenses recognized in our financial statements . management , on an ongoing basis , reviews these estimates and assumptions . management may determine that modifications in assumptions and estimates are required , which may result in a material change in our results of operations or financial position . the following are the accounting policies applied in the preparation of our financial statements that management believes are most dependent upon the use of estimates and assumptions . 25 revenue recognition vehicle , parts and service sales we record revenue when vehicles are delivered and title has passed to the customer , when vehicle service or repair work is completed and when parts are delivered to our customers . sales promotions that we offer to customers are accounted for as a reduction of revenues at the time of sale . rebates and other incentives offered directly to us by manufacturers are recognized as a reduction of cost of sales . reimbursements of qualified advertising expenses are treated as a reduction of selling , general and administrative expenses . the amounts received under certain manufacturer rebate and incentive programs are based on the attainment of program objectives , and such earnings are recognized either upon the sale of the vehicle for which the award was received , or upon attainment of the particular program goals if not associated with individual vehicles . story_separator_special_tag revenues new vehicle retail sales revenue increased $ 1.14 billion , or 20.3 % , from 2011 to 2012 and increased $ 532.7 million , or 10.4 % , from 2010 to 2011. the increase from 2011 to 2012 is due to a $ 687.4 million , or 12.6 % , increase in same-store revenues , coupled with a $ 455.6 million increase from net dealership acquisitions during the year . the same store revenue increase is due primarily to the 12.9 % increase in same store unit sales , which increased revenue by $ 699.4 million , somewhat offset by an $ 83 , or 0.2 % , decrease in comparative average selling prices per unit , which decreased revenue by $ 12.0 million . the increase from 2010 to 2011 is due to a $ 299.0 million , or 6.0 % , increase in same store revenues , coupled with a $ 233.7 million increase from net dealership acquisitions during the year . the same store revenue increase is due primarily to a $ 2,012 , or 5.7 % , increase in average selling prices per unit , which increased revenue by $ 283.7 million , coupled with the 0.3 % increase in new retail unit sales , which increased revenue by $ 15.3 million . we believe the changes in comparative average selling price per unit were driven in part by inventory availability in our japanese volume foreign brands as a result of the march 2011 tsunami . gross profit retail gross profit from new vehicle sales increased $ 79.6 million , or 17.0 % , from 2011 to 2012 , and increased $ 49.1 million , or 11.7 % , from 2010 to 2011. the increase from 2011 to 2012 is due to a $ 40.4 million , or 8.9 % , increase in same store gross profit , coupled with a $ 39.2 million increase from net dealership acquisitions during the year . the same store increase is due primarily to the 12.9 % increase in new retail unit sales , which increased gross profit by $ 56.4 million , somewhat offset by a $ 111 , or 3.5 % , decrease in average gross profit per new vehicle retailed , which decreased gross profit by $ 16.0 million . we believe that the changes in gross 29 profit per unit and gross margin in 2012 and 2011 were driven in part by inventory availability of japanese brands as a result of the march 2011 tsunami . inventory levels normalized in 2012. the increase from 2010 to 2011 is due to a $ 30.3 million , or 7.4 % , increase in same store gross profit , coupled with a $ 18.8 million increase from net dealership acquisitions during the year . the same store increase is due primarily to a $ 206 , or 7.1 % , increase in the average gross profit per new vehicle retailed , which increased gross profit by $ 29.0 million , coupled with the 0.3 % increase in retail unit sales , which increased gross profit by $ 1.3 million . used vehicle data replace_table_token_7_th units retail unit sales of used vehicles increased 24,079 units , or 19.8 % , from 2011 to 2012 and increased 18,279 units , or 17.7 % , from 2010 to 2011. the increase from 2011 to 2012 is due to a 13,692 unit , or 11.6 % , increase in same store retail unit sales , coupled with a 10,387 unit increase from net dealership acquisitions . same store units increased 14.2 % in the u.s. and 6.2 % internationally . the same store increases were driven by an 11.0 % increase in our premium brands , a 12.6 % increase in our volume foreign brands , and a 11.3 % increase in our domestic brands . we believe that overall our same store used vehicle sales are being positively impacted by improved market conditions including increased credit availability , pent-up demand , an increase in trade-in units due to an increase in new unit sales , and our focus on retailing trade-ins and minimizing wholesaled vehicles . the increase from 2010 to 2011 is due to a 14,437 or 14.2 % , increase in same store used retail unit sales , coupled with a 3,842 unit increase from net dealership acquisitions . the same store increase was due primarily to unit sales increases in premium and volume foreign brand stores in the u.s. and premium brands in the u.k. revenues used vehicle retail sales revenue increased $ 509.0 million , or 15.7 % , from 2011 to 2012 and increased $ 510.1 million , or 18.7 % , from 2010 to 2011. the increase from 2011 to 2012 is due to a $ 260.1 million , or 8.2 % , increase in same store revenues , coupled with a $ 248.9 million increase from net dealership acquisitions . the same store revenue increase is due to the 11.6 % increase in same store retail unit sales , which increased revenue by $ 354.9 million , somewhat offset by an $ 802 , or 3.0 % , decrease in comparative average selling prices per unit , which decreased revenue by $ 94.8 million . the increase from 2010 to 2011 is due to a $ 407.9 million , or 15.1 % , increase in same store revenues , coupled with a $ 102.2 million increase from net dealership acquisitions during the year . the same store revenue increase is due to the 14.2 % increase in same store retail unit sales , which increased revenue by $ 385.8 million , coupled with a $ 217 , or 0.8 % , increase in comparative average selling price per unit , which increased revenue by $ 22.1 million . 30 gross profit retail gross profit from used vehicle sales increased $ 30.4 million , or 12.0 % , from 2011 to 2012 and increased
| cash flows cash and cash equivalents increased by $ 16.6 million , $ 9.0 million and $ 4.1 million during 2012 , 2011 and 2010 , respectively . the major components of these changes are discussed below . cash flows from continuing operating activities cash provided by continuing operating activities was $ 327.9 million , $ 133.3 million , and $ 207.4 million during 2012 , 2011 , and 2010 , respectively . cash flows from continuing operating activities includes net income , as adjusted for non-cash items and the effects of changes in working capital . we finance substantially all of our new and a portion of our used vehicle inventories under revolving floor plan notes payable with various lenders . we retain the right to select which , if any , financing source to utilize in connection with the procurement of vehicle inventories . many vehicle manufacturers provide vehicle financing for the dealers representing their brands ; however , it is not a requirement that we utilize this financing . historically , our floor plan finance source has been based on aggregate pricing considerations . 38 in accordance with generally accepted accounting principles relating to the statement of cash flows , we report all cash flows arising in connection with floor plan notes payable with the manufacturer of a particular new vehicle as an operating activity in our statement of cash flows , and all cash flows arising in connection with floor plan notes payable to a party other than the manufacturer of a particular new vehicle and all floor plan notes payable relating to pre-owned vehicles as a financing activity in our statement of cash flows . currently , the majority of our non-trade vehicle financing is with other manufacturer captive lenders . to date , we have not experienced any material limitation with respect to the amount or availability of financing from any institution providing us vehicle financing .
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and administrative expenses 1,945 total restructuring activities $ 11,443 the restructuring costs above may not indicative of expected costs or cost savings in future periods . as of march 31 , 2018 , we have $ 3.4 million and $ 0.5 million of restructuring liabilities related to the restructuring activities recorded in other accrued liabilities and other liabilities , respectively , in the consolidated balance sheet . federal income tax reform the tax cuts and jobs act ( the “ tax act ” ) was enacted on december 22 , 2017. the tax act significantly revises the future ongoing u.s. corporate income tax by , among other things , lowering the u. s. corporate income tax rate from 35 % to 21 % , full expensing on qualified property , eliminates the domestic manufacturing deduction and implements a territorial tax system . the 21 % u.s. corporate income tax rate is effective january 1 , 2018. based on the company 's fiscal year end of march 31 , the u.s. statutory federal rate is 31.5 % for the fiscal year ended march 31 , 2018. we currently estimate the provisional future effective tax rate will be in the range of 30 % to 32 % which is a decrease of 8 % to 10 % from our previous historical expectation . the company has recognized the provisional tax impacts related to revaluation of deferred tax assets and liabilities and deemed repatriated earnings and included these amounts in its financial statements for the year ended march 31 , 2018. the ultimate impact may differ from these provisional amounts , possibly materially , due to , among other things , additional analysis , changes in interpretations and assumptions the company has made , additional regulatory guidance that may be issued , and actions the company may take as a result of the tax act . the accounting is expected to be finalized when the fiscal 2018 u.s. corporate income tax return is filed . the company recognized an initial provisional amount for revaluing its deferred tax attributes resulting in a $ 14.7 million tax benefit for the quarter ended december 31 , 2017. on the basis of revised computations during the fourth quarter , we recognized an additional deferred tax benefit of $ 1.3 million for the quarter ended march 31 , 2018. a total deferred tax benefit of $ 16.0 million was recorded for the fiscal year ended march 31 , 2018. the company had an estimated $ 33.2 million of undistributed earnings on its foreign subsidiaries subject to the deemed mandatory repatriation . the company recognized an initial provisional $ 4.4 million of income tax expense for the quarter ended december 31 , 2017. after the utilization of existing foreign tax credits , the company 40 advanced drainage systems , inc. expected to pay additional u.s. federal taxes of approximately $ 0.9 million on the deemed mandatory repatriation as of the quarter ended december 31 , 2017. on the basis of revised undistributed earnings computations that were calculated during the fourth quarter , we recognized an additional measurement-period adjustment of $ 0.8 million to income tax expense for the quarter ended march 31 , 2018. a total transition tax expense of $ 5.2 million has been recorded for the fiscal year ended march 31 , 2018. after the utilization of existing foreign tax credits , the company expects to pay additional u.s. federal taxes of approximately $ 1.0 million as of the fiscal year ended march 31 , 2018. key factors affecting our results of operations product demand - there are numerous factors that influence demand for our products . our businesses are cyclical in nature and sensitive to general economic conditions , primarily in the united states , canada , mexico and south america . the non-residential , residential , agricultural and infrastructure markets we serve are affected by the availability of credit , lending practices , interest rates and unemployment rates . demand for new homes , farm income , commercial development and highway infrastructure spending have a direct impact on our financial condition and results of operations . accordingly , the following factors may have a direct impact on our business in the markets in which our products are sold : the strength of the economy ; the amount and type of non-residential and residential construction ; funding for infrastructure spending ; farm income and agricultural land values ; inventory of improved housing lots ; changes in raw material prices ; the availability and cost of credit ; non-residential occupancy rates ; commodity prices ; and demographic factors such as population growth and household formation . product pricing - the price of our products is impacted by competitive pricing dynamics in our industry as well as by raw material input costs . our industry is highly competitive and the sales prices for our products may vary based on the sales policies of our competitors . raw material costs represent a significant portion of the cost of goods sold for our pipe products , or pipe . we aim to increase our product selling prices in order to cover raw material price increases , but the inability to do so could impact our profitability . movements in raw material costs and resulting changes in the selling prices may also impact changes in period-to-period comparisons of net sales . material conversion - our hdpe and pp pipe and related water management product lines compete with other manufacturers of corrugated polyethylene pipe as well as manufacturers of alternative products made with traditional materials , such as concrete , steel and pvc . our net sales are driven by market trends , including the continued increase in adoption of thermoplastic corrugated pipe products as a replacement for traditional materials . thermoplastic corrugated pipe is generally lighter , more durable , more cost effective and easier to install than comparable products made from traditional materials . story_separator_special_tag in the fiscal year ended march 31 , 2017 , all stock options were liability-classified resulting in adjustments to fair value each period . loss on disposal of assets and costs from exit and disposal activities – in the fiscal year ended march 31 , 2018 , we recorded $ 11.4 million of expense related to restructuring activities , including closing four underutilized manufacturing facilities . in addition , we recorded a loss on other disposals and partial disposals of property , plant and equipment of approximately $ 3.6 million . see “ note 2. loss on disposal of assets and costs from exit and disposal activities ” for additional discussion . intangible amortization - intangible amortization remained relatively flat as a percentage of revenue in fiscal 2018 compared to fiscal 2017. interest expense - interest expense from our debt and capital lease obligations decreased $ 2.2 million or 12.6 % in fiscal 2018 as compared to fiscal 2017. interest expense decreased primarily due to our average overall outstanding debt decreasing by $ 25.0 million or 7.1 % for fiscal 2018 compared to the average balance outstanding for fiscal 2017. derivative gains and other income , net – derivative gains and other income , net , decreased to gains of $ 4.0 million in fiscal 2018 compared to gains of $ 6.0 million in fiscal 2017. the decrease in gain on derivative contracts is primarily due to a significant amount of the company 's propylene swaps maturing in fiscal 2017. the decrease in gain on derivative contracts was partially offset by changes in foreign currency exchange rates . income tax expense – for the fiscal years ended march 31 , 2018 and 2017 , we had effective tax rates of 14.8 % and 38.0 % , respectively . the decrease in the effective tax rate was primarily due to impact of the tax act and return to provision adjustments . see “ note 17. income taxes ” for additional information . equity in net loss of unconsolidated affiliates - equity in net loss of unconsolidated affiliates decreased $ 3.6 million over fiscal 2018 to a net loss of $ 0.7 million for fiscal 2018 compared to a net loss of $ 4.3 million during fiscal 2017. the net loss decreased primarily as a result of the $ 1.9 million gain recognized as a result of the contribution of outstanding receivables we made to the south american joint venture . see “ note 10. investment in unconsolidated affiliates ” for additional information . the decrease was also due to the $ 1.3 million impairment charge related to our investment in the south american joint venture in fiscal 2017 , which was partially offset by the $ 0.3 million impairment charge related to our investment in the tigre-ads usa in fiscal 2018. net income attributable to noncontrolling interest - income attributable to noncontrolling interest remained relatively flat as a percentage of revenue in fiscal 2018 compared to fiscal 2017 . 47 advanced drainage systems , inc. fiscal year ended march 31 , 2017 compared with fiscal year ended march 31 , 2016 the following table summarizes our operating results as a percentage of net sales that have been derived from our consolidated financial statements for the fiscal years ended march 31 , 2017 and 2016. we believe this presentation is useful to investors in comparing historical results . replace_table_token_12_th net sales - net sales totaled $ 1,257.3 million in fiscal 2017 , decreasing $ 33.4 million or 2.6 % , as compared to $ 1,290.7 million in fiscal 2016. replace_table_token_13_th our domestic sales decreased $ 11.6 million , or 1.0 % , as compared to fiscal 2016. domestic pipe sales decreased $ 25.5 million , or 3.1 % , which was primarily a result of volume decreases of $ 16.6 million and net price decreases of $ 8.8 million . the agriculture market has experienced continued sales decreases . allied product sales increased $ 14.0 million , or 4.6 % , as well as increased sales volume of products sold primarily into the non-residential and infrastructure end markets . 48 advanced drainage systems , inc. international sales decreased $ 21.9 million , or 12.4 % , to $ 155.0 million in fiscal year 2017 , as compared to $ 176.9 million in the prior year . the decrease in pipe sales resulted from a reduction in volumes of $ 15.1 million and net price decreases of $ 2.7 million . there was also a decrease in allied product sales of $ 4.5 million , or 12.1 % . cost of goods sold and gross profit - cost of goods sold decreased $ 43.9 million , or 4.4 % , to $ 961.5 million during year 2017 as compared to $ 1,005.3 million during fiscal 2016. gross profit increased $ 10.5 million , or 3.7 % , to $ 295.8 million from $ 285.4 million during fiscal 2016. gross profit as a percentage of net sales increased to 23.5 % in fiscal 2017 from 22.1 % in fiscal 2016. replace_table_token_14_th domestic gross profit increased $ 18.2 million , or 7.3 % , to $ 268.0 million for fiscal 2017 as compared to $ 249.8 million during fiscal 2016. the increase was primarily the result of lower raw material costs of $ 38.7 million due to decreased raw material prices . the increase was offset by the decrease in net sales discussed above , a $ 5.2 million increase in labor and overhead costs and a $ 3.5 million increase in transportation expenses . international gross profit decreased $ 7.7 million , or 21.7 % , for fiscal 2017 over fiscal 2016 primarily due to the decrease in sales discussed above and a $ 6.6 million increase in labor and overhead cost . the decreases were offset by a $ 17.2 million decrease in raw material due to decreased raw material cost and a $ 1.3 million decrease in transportation expenses . selling expenses
| cash flows cash and cash equivalents increased by $ 16.6 million , $ 9.0 million and $ 4.1 million during 2012 , 2011 and 2010 , respectively . the major components of these changes are discussed below . cash flows from continuing operating activities cash provided by continuing operating activities was $ 327.9 million , $ 133.3 million , and $ 207.4 million during 2012 , 2011 , and 2010 , respectively . cash flows from continuing operating activities includes net income , as adjusted for non-cash items and the effects of changes in working capital . we finance substantially all of our new and a portion of our used vehicle inventories under revolving floor plan notes payable with various lenders . we retain the right to select which , if any , financing source to utilize in connection with the procurement of vehicle inventories . many vehicle manufacturers provide vehicle financing for the dealers representing their brands ; however , it is not a requirement that we utilize this financing . historically , our floor plan finance source has been based on aggregate pricing considerations . 38 in accordance with generally accepted accounting principles relating to the statement of cash flows , we report all cash flows arising in connection with floor plan notes payable with the manufacturer of a particular new vehicle as an operating activity in our statement of cash flows , and all cash flows arising in connection with floor plan notes payable to a party other than the manufacturer of a particular new vehicle and all floor plan notes payable relating to pre-owned vehicles as a financing activity in our statement of cash flows . currently , the majority of our non-trade vehicle financing is with other manufacturer captive lenders . to date , we have not experienced any material limitation with respect to the amount or availability of financing from any institution providing us vehicle financing .
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and administrative expenses 1,945 total restructuring activities $ 11,443 the restructuring costs above may not indicative of expected costs or cost savings in future periods . as of march 31 , 2018 , we have $ 3.4 million and $ 0.5 million of restructuring liabilities related to the restructuring activities recorded in other accrued liabilities and other liabilities , respectively , in the consolidated balance sheet . federal income tax reform the tax cuts and jobs act ( the “ tax act ” ) was enacted on december 22 , 2017. the tax act significantly revises the future ongoing u.s. corporate income tax by , among other things , lowering the u. s. corporate income tax rate from 35 % to 21 % , full expensing on qualified property , eliminates the domestic manufacturing deduction and implements a territorial tax system . the 21 % u.s. corporate income tax rate is effective january 1 , 2018. based on the company 's fiscal year end of march 31 , the u.s. statutory federal rate is 31.5 % for the fiscal year ended march 31 , 2018. we currently estimate the provisional future effective tax rate will be in the range of 30 % to 32 % which is a decrease of 8 % to 10 % from our previous historical expectation . the company has recognized the provisional tax impacts related to revaluation of deferred tax assets and liabilities and deemed repatriated earnings and included these amounts in its financial statements for the year ended march 31 , 2018. the ultimate impact may differ from these provisional amounts , possibly materially , due to , among other things , additional analysis , changes in interpretations and assumptions the company has made , additional regulatory guidance that may be issued , and actions the company may take as a result of the tax act . the accounting is expected to be finalized when the fiscal 2018 u.s. corporate income tax return is filed . the company recognized an initial provisional amount for revaluing its deferred tax attributes resulting in a $ 14.7 million tax benefit for the quarter ended december 31 , 2017. on the basis of revised computations during the fourth quarter , we recognized an additional deferred tax benefit of $ 1.3 million for the quarter ended march 31 , 2018. a total deferred tax benefit of $ 16.0 million was recorded for the fiscal year ended march 31 , 2018. the company had an estimated $ 33.2 million of undistributed earnings on its foreign subsidiaries subject to the deemed mandatory repatriation . the company recognized an initial provisional $ 4.4 million of income tax expense for the quarter ended december 31 , 2017. after the utilization of existing foreign tax credits , the company 40 advanced drainage systems , inc. expected to pay additional u.s. federal taxes of approximately $ 0.9 million on the deemed mandatory repatriation as of the quarter ended december 31 , 2017. on the basis of revised undistributed earnings computations that were calculated during the fourth quarter , we recognized an additional measurement-period adjustment of $ 0.8 million to income tax expense for the quarter ended march 31 , 2018. a total transition tax expense of $ 5.2 million has been recorded for the fiscal year ended march 31 , 2018. after the utilization of existing foreign tax credits , the company expects to pay additional u.s. federal taxes of approximately $ 1.0 million as of the fiscal year ended march 31 , 2018. key factors affecting our results of operations product demand - there are numerous factors that influence demand for our products . our businesses are cyclical in nature and sensitive to general economic conditions , primarily in the united states , canada , mexico and south america . the non-residential , residential , agricultural and infrastructure markets we serve are affected by the availability of credit , lending practices , interest rates and unemployment rates . demand for new homes , farm income , commercial development and highway infrastructure spending have a direct impact on our financial condition and results of operations . accordingly , the following factors may have a direct impact on our business in the markets in which our products are sold : the strength of the economy ; the amount and type of non-residential and residential construction ; funding for infrastructure spending ; farm income and agricultural land values ; inventory of improved housing lots ; changes in raw material prices ; the availability and cost of credit ; non-residential occupancy rates ; commodity prices ; and demographic factors such as population growth and household formation . product pricing - the price of our products is impacted by competitive pricing dynamics in our industry as well as by raw material input costs . our industry is highly competitive and the sales prices for our products may vary based on the sales policies of our competitors . raw material costs represent a significant portion of the cost of goods sold for our pipe products , or pipe . we aim to increase our product selling prices in order to cover raw material price increases , but the inability to do so could impact our profitability . movements in raw material costs and resulting changes in the selling prices may also impact changes in period-to-period comparisons of net sales . material conversion - our hdpe and pp pipe and related water management product lines compete with other manufacturers of corrugated polyethylene pipe as well as manufacturers of alternative products made with traditional materials , such as concrete , steel and pvc . our net sales are driven by market trends , including the continued increase in adoption of thermoplastic corrugated pipe products as a replacement for traditional materials . thermoplastic corrugated pipe is generally lighter , more durable , more cost effective and easier to install than comparable products made from traditional materials . story_separator_special_tag in the fiscal year ended march 31 , 2017 , all stock options were liability-classified resulting in adjustments to fair value each period . loss on disposal of assets and costs from exit and disposal activities – in the fiscal year ended march 31 , 2018 , we recorded $ 11.4 million of expense related to restructuring activities , including closing four underutilized manufacturing facilities . in addition , we recorded a loss on other disposals and partial disposals of property , plant and equipment of approximately $ 3.6 million . see “ note 2. loss on disposal of assets and costs from exit and disposal activities ” for additional discussion . intangible amortization - intangible amortization remained relatively flat as a percentage of revenue in fiscal 2018 compared to fiscal 2017. interest expense - interest expense from our debt and capital lease obligations decreased $ 2.2 million or 12.6 % in fiscal 2018 as compared to fiscal 2017. interest expense decreased primarily due to our average overall outstanding debt decreasing by $ 25.0 million or 7.1 % for fiscal 2018 compared to the average balance outstanding for fiscal 2017. derivative gains and other income , net – derivative gains and other income , net , decreased to gains of $ 4.0 million in fiscal 2018 compared to gains of $ 6.0 million in fiscal 2017. the decrease in gain on derivative contracts is primarily due to a significant amount of the company 's propylene swaps maturing in fiscal 2017. the decrease in gain on derivative contracts was partially offset by changes in foreign currency exchange rates . income tax expense – for the fiscal years ended march 31 , 2018 and 2017 , we had effective tax rates of 14.8 % and 38.0 % , respectively . the decrease in the effective tax rate was primarily due to impact of the tax act and return to provision adjustments . see “ note 17. income taxes ” for additional information . equity in net loss of unconsolidated affiliates - equity in net loss of unconsolidated affiliates decreased $ 3.6 million over fiscal 2018 to a net loss of $ 0.7 million for fiscal 2018 compared to a net loss of $ 4.3 million during fiscal 2017. the net loss decreased primarily as a result of the $ 1.9 million gain recognized as a result of the contribution of outstanding receivables we made to the south american joint venture . see “ note 10. investment in unconsolidated affiliates ” for additional information . the decrease was also due to the $ 1.3 million impairment charge related to our investment in the south american joint venture in fiscal 2017 , which was partially offset by the $ 0.3 million impairment charge related to our investment in the tigre-ads usa in fiscal 2018. net income attributable to noncontrolling interest - income attributable to noncontrolling interest remained relatively flat as a percentage of revenue in fiscal 2018 compared to fiscal 2017 . 47 advanced drainage systems , inc. fiscal year ended march 31 , 2017 compared with fiscal year ended march 31 , 2016 the following table summarizes our operating results as a percentage of net sales that have been derived from our consolidated financial statements for the fiscal years ended march 31 , 2017 and 2016. we believe this presentation is useful to investors in comparing historical results . replace_table_token_12_th net sales - net sales totaled $ 1,257.3 million in fiscal 2017 , decreasing $ 33.4 million or 2.6 % , as compared to $ 1,290.7 million in fiscal 2016. replace_table_token_13_th our domestic sales decreased $ 11.6 million , or 1.0 % , as compared to fiscal 2016. domestic pipe sales decreased $ 25.5 million , or 3.1 % , which was primarily a result of volume decreases of $ 16.6 million and net price decreases of $ 8.8 million . the agriculture market has experienced continued sales decreases . allied product sales increased $ 14.0 million , or 4.6 % , as well as increased sales volume of products sold primarily into the non-residential and infrastructure end markets . 48 advanced drainage systems , inc. international sales decreased $ 21.9 million , or 12.4 % , to $ 155.0 million in fiscal year 2017 , as compared to $ 176.9 million in the prior year . the decrease in pipe sales resulted from a reduction in volumes of $ 15.1 million and net price decreases of $ 2.7 million . there was also a decrease in allied product sales of $ 4.5 million , or 12.1 % . cost of goods sold and gross profit - cost of goods sold decreased $ 43.9 million , or 4.4 % , to $ 961.5 million during year 2017 as compared to $ 1,005.3 million during fiscal 2016. gross profit increased $ 10.5 million , or 3.7 % , to $ 295.8 million from $ 285.4 million during fiscal 2016. gross profit as a percentage of net sales increased to 23.5 % in fiscal 2017 from 22.1 % in fiscal 2016. replace_table_token_14_th domestic gross profit increased $ 18.2 million , or 7.3 % , to $ 268.0 million for fiscal 2017 as compared to $ 249.8 million during fiscal 2016. the increase was primarily the result of lower raw material costs of $ 38.7 million due to decreased raw material prices . the increase was offset by the decrease in net sales discussed above , a $ 5.2 million increase in labor and overhead costs and a $ 3.5 million increase in transportation expenses . international gross profit decreased $ 7.7 million , or 21.7 % , for fiscal 2017 over fiscal 2016 primarily due to the decrease in sales discussed above and a $ 6.6 million increase in labor and overhead cost . the decreases were offset by a $ 17.2 million decrease in raw material due to decreased raw material cost and a $ 1.3 million decrease in transportation expenses . selling expenses
| debt and capitalized lease obligations see “ note 5. leases ” and “ note 12. debt ” to our consolidated financial statements included in “ item 8. financial statements and supplementary data ” for a discussion of the company 's financing transactions , including the secured bank loans , the senior notes and the company 's capital lease obligations . financing transactions secured bank loans - on september 24 , 2010 , we entered into a credit agreement with pnc bank , national association , or pnc , as administrative agent , and lender parties thereto . the credit agreement , as amended and restated on june 12 , 2013 and subsequently further amended , provides for our bank term loans consisting of ( i ) the revolving credit facility providing for revolving loans and letters of credit of up to a maximum aggregate principal amount of $ 325 million , ( ii ) the term loan facility providing for the term loans in an aggregate original principal amount of $ 100 million , and ( iii ) the ads mexicana revolving credit facility , described below , which is more fully described in our fiscal 2017 form 10-k. on june 22 , 2017 , we entered into a second amended and restated credit agreement with pnc , which amends and restates the agreement dated as of june 12 , 2013 , to provide us a $ 550 million revolving credit facility , which is more fully described in “ note 12. debt ” to the consolidated financial statements .
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these revenues are recorded under revenues from assets under management ( `` aum `` ) or administration ( `` aua `` ) or collectively ( `` aum/a `` ) . our asset-based fees vary based on the types of investment solutions and services that financial advisors utilize . asset-based fees accounted for approximately 84 % , 83 % and 81 % of our total revenues for the years ended december 31 , 2014 , 2013 and 2012 , respectively . in future periods , the percentage of our total revenues attributable to asset-based fees is expected to vary based on fluctuations in securities markets , whether we enter into significant license agreements , the mix of aum or aua , and other factors . as of december 31 , 2014 , approximately $ 246 billion of investment assets subject to asset-based fees were managed or administered utilizing our technology platforms by approximately 29,000 financial advisors through approximately 978,000 investor accounts . we also generate revenues from recurring , contractual licensing fees for providing access to our technology platforms . these revenues are recorded under revenues from licensing and professional services . licensing fees are generally fixed in nature for the contract term and are based on the level of investment solutions and services provided , rather than on the amount of client assets on our technology platforms . licensing fees accounted for 14 % , 15 % and 15 % of our total revenues for the years ended december 31 , 2014 , 2013 and 2012 , respectively . fees received in connection with professional services and other revenue accounted for the remainder of our total revenues . as of december 31 , 2014 , approximately $ 467 billion of investment assets for which we receive licensing fees for utilizing our technology platforms were serviced by approximately 12,000 financial advisors through approximately 1,881,000 investor accounts . 39 the following table provides information regarding the amount of assets utilizing our platform technology , investor accounts and financial advisors in the periods indicated . replace_table_token_7_th revenues from assets under management or administration we generally charge our customers fees based on a higher percentage of the market value of aum than the fees we charge on the market value of aua , because we provide fiduciary oversight and or act as the investment advisor in connection with assets we categorize as aum . the level of fees varies based on the nature of the investment solutions and services we provide , as well as the specific investment manager , fund and or custodian chosen by the financial advisor . a portion of our revenues from assets under management or administration include costs paid by us to third parties for sub-advisory , clearing , custody and brokerage services . these expenses are recorded under cost of revenues . we do not have fiduciary responsibility in connection with aua and , therefore , generally charge lower fees on these assets . our fees for aua vary based on the nature of the investment solutions and services we provide . for over 85 % of our revenues from assets under management or administration , we bill customers at the beginning of each quarter based on the market value of customer assets on our platforms as of the end of the prior quarter . for example , revenues from assets under management or administration recognized during the fourth quarter of 2014 were primarily based on the market value of assets as of september 30 , 2014. our revenues from assets under management or administration are generally recognized ratably throughout the quarter based on the number of days in the quarter . our revenues from assets under management or administration are affected by the amount of new assets that are added to existing and new client accounts , which we refer to as gross sales . gross sales , from time to time , also include conversions of client assets to our technology platforms . the amount of assets that are withdrawn from client accounts are referred to as redemptions . we refer to the difference between gross sales and redemptions as net flows . positive net flows indicate that the market value of assets added to client accounts exceeds the market value of assets that have been withdrawn from client accounts . 40 our revenues from assets under management or administration are also affected by changes in the market values of securities held in client accounts due to fluctuations in the securities markets . certain types of securities have historically experienced greater market price fluctuations , such as equity securities , than other securities , such as fixed income securities , though in any given period the type of securities that experience the greatest fluctuations may vary . the following table provides information regarding the degree to which gross sales , redemptions , net flows and changes in the market values of assets contributed to changes in aum or aua in the periods indicated . replace_table_token_8_th the above aum/a gross sales figures include $ 28.2 billion in new client conversions . the company onboarded an additional $ 66.9 billion in licensing conversions during 2014 , bringing total conversions for the year to $ 95.1 billion . replace_table_token_9_th the above aum/a gross sales figures include $ 24.5 billion in new client conversions . the company onboarded an additional $ 33.6 billion in licensing conversions during 2013 , bringing total conversions for the year to $ 58.1 billion . the mix of assets under management and assets under administration was as follows as of the dates indicated : replace_table_token_10_th we expect the percentage of aum and aua will fluctuate in future periods . the nature and type of services requested by our customers are the key drivers in determining whether customer assets are classified as aum or aua . therefore , we do not have direct control over the mix of aum and aua . story_separator_special_tag in certain cases , management is required to determine whether revenues should be recognized in an amount equal to the gross fees we receive or net of payments of expenses to third-parties , such as third party investment managers and 46 custodians , that perform services for us in connection with certain of our financial advisors ' client accounts . generally , when fees are collected for investment management , clearing , custody or brokerage services in circumstances where we do not have a direct contract with the third-party provider , the fees are recorded as revenue on a net basis . fees we received in advance of the performance of services are recorded as deferred revenues on our consolidated balance sheet and are recognized as revenues when earned , generally over three months . the company derives licensing fees from recurring contractual fixed fee contracts with larger financial institutions or enterprise clients . licensing contracts allow the customer to provide a unique configuration of platform features and investment solutions for their advisors . the licensing fees vary based on the type of services provided and our revenues received under license agreements are recognized over the contractual term . the company 's license agreements do not generally provide its customers the ability to take possession of the software or host the software on the customers ' own systems or through a hosting arrangement with an unrelated party . when the company enters into arrangements with multiple deliverables , exclusive of arrangements with software deliverables , it applies the fasb 's guidance for revenue arrangements with multiple deliverables and evaluates each deliverable to determine whether it represents a separate unit of accounting based on the following criteria : ( i ) whether the delivered item has value to the customer on a stand-alone basis , and ( ii ) if the contract includes a general right of return relative to the delivered item , delivery or performance of the undelivered item ( s ) is considered probable and substantially in the control of the company . revenue is allocated to each unit of accounting or element based on relative selling prices . the company determines relative selling prices by using either ( a ) vendor-specific objective evidence ( `` vsoe `` ) if it exists ; or ( b ) third-party evidence ( `` tpe `` ) of selling price . when neither vsoe nor tpe of selling price exists for a deliverable , the company uses its best estimate of the selling price for that deliverable . after determining which deliverables represent a separate unit of accounting , each unit is then accounted for under the applicable revenue recognition guidance . in cases where elements can not be treated as separate units of accounting , the elements are combined into a single unit of accounting for revenue recognition purposes . if one of the elements that are combined into a single unit of accounting is fees from professional services , including implementation related services or customized service platform software development , the professional service fees are recognized over the course of the expected customer relationship . we have estimated the life of the customer relationship by considering both the historical retention rate of our customers while not exceeding the number of years over which we can accurately forecast future revenues . we currently estimate this term to be five years . the company also derives professional service fees from providing contractual customized platform software development and implementation services , which are recognized under a proportional-performance model utilizing an output-based approach . the company 's contracts generally have fixed prices , and generally specify or quantify deliverables . our revenue recognition is also affected by our judgment in determining whether collectability is reasonably assured . with regard to allowances for uncollectible receivables , we consider customer-specific information related to delinquent accounts and past loss experience , as well as current economic conditions in establishing the amount of the allowance . purchase accounting in 2012 , we completed the acquisitions of prima and tamarac for consideration totaling $ 13,925 and $ 48,427 , respectively . in 2013 , the company completed the acquisition of wms for total consideration of $ 24,730. in 2014 , ers , llc completed the acquisition of klein for total consideration of $ 5,588. in the fourth quarter of 2014 , the company completed the acquisition of placemark for total 47 consideration of $ 66,701. for more information on the acquisitions see note 3 to the notes to consolidated financial statements . assigning fair market values to the assets acquired and liabilities assumed at the date of an acquisition requires knowledge of current market values , and the values of assets in use , and often requires the application of judgment regarding estimates and assumptions . while the ultimate responsibility resides with management , for material acquisitions , we retain the services of certified valuation specialists to assist with assigning estimated values to certain acquired assets and assumed liabilities , including intangible assets and contingent consideration . acquired intangible assets , excluding goodwill , are valued using a discounted cash flow methodology based on future cash flows specific to the type of intangible asset purchased . this methodology incorporates various estimates and assumptions , the most significant being projected revenue growth rates , margins , and forecasted cash flows based on the discount rate and terminal growth rate . management projects revenue growth rates , margins and cash flows based on the historical operating results of the acquired entity adjusted for synergies anticipated to be achieved through integration , expected future performance , operational strategies , and the general macroeconomic environment . we review finite-lived intangible assets for triggering events such as significant changes in operations , customers or future revenue that might indicate the need to impair the assets acquired or change the useful lives of the assets acquired . there was no impairment or change in
| debt and capitalized lease obligations see “ note 5. leases ” and “ note 12. debt ” to our consolidated financial statements included in “ item 8. financial statements and supplementary data ” for a discussion of the company 's financing transactions , including the secured bank loans , the senior notes and the company 's capital lease obligations . financing transactions secured bank loans - on september 24 , 2010 , we entered into a credit agreement with pnc bank , national association , or pnc , as administrative agent , and lender parties thereto . the credit agreement , as amended and restated on june 12 , 2013 and subsequently further amended , provides for our bank term loans consisting of ( i ) the revolving credit facility providing for revolving loans and letters of credit of up to a maximum aggregate principal amount of $ 325 million , ( ii ) the term loan facility providing for the term loans in an aggregate original principal amount of $ 100 million , and ( iii ) the ads mexicana revolving credit facility , described below , which is more fully described in our fiscal 2017 form 10-k. on june 22 , 2017 , we entered into a second amended and restated credit agreement with pnc , which amends and restates the agreement dated as of june 12 , 2013 , to provide us a $ 550 million revolving credit facility , which is more fully described in “ note 12. debt ” to the consolidated financial statements .
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these revenues are recorded under revenues from assets under management ( `` aum `` ) or administration ( `` aua `` ) or collectively ( `` aum/a `` ) . our asset-based fees vary based on the types of investment solutions and services that financial advisors utilize . asset-based fees accounted for approximately 84 % , 83 % and 81 % of our total revenues for the years ended december 31 , 2014 , 2013 and 2012 , respectively . in future periods , the percentage of our total revenues attributable to asset-based fees is expected to vary based on fluctuations in securities markets , whether we enter into significant license agreements , the mix of aum or aua , and other factors . as of december 31 , 2014 , approximately $ 246 billion of investment assets subject to asset-based fees were managed or administered utilizing our technology platforms by approximately 29,000 financial advisors through approximately 978,000 investor accounts . we also generate revenues from recurring , contractual licensing fees for providing access to our technology platforms . these revenues are recorded under revenues from licensing and professional services . licensing fees are generally fixed in nature for the contract term and are based on the level of investment solutions and services provided , rather than on the amount of client assets on our technology platforms . licensing fees accounted for 14 % , 15 % and 15 % of our total revenues for the years ended december 31 , 2014 , 2013 and 2012 , respectively . fees received in connection with professional services and other revenue accounted for the remainder of our total revenues . as of december 31 , 2014 , approximately $ 467 billion of investment assets for which we receive licensing fees for utilizing our technology platforms were serviced by approximately 12,000 financial advisors through approximately 1,881,000 investor accounts . 39 the following table provides information regarding the amount of assets utilizing our platform technology , investor accounts and financial advisors in the periods indicated . replace_table_token_7_th revenues from assets under management or administration we generally charge our customers fees based on a higher percentage of the market value of aum than the fees we charge on the market value of aua , because we provide fiduciary oversight and or act as the investment advisor in connection with assets we categorize as aum . the level of fees varies based on the nature of the investment solutions and services we provide , as well as the specific investment manager , fund and or custodian chosen by the financial advisor . a portion of our revenues from assets under management or administration include costs paid by us to third parties for sub-advisory , clearing , custody and brokerage services . these expenses are recorded under cost of revenues . we do not have fiduciary responsibility in connection with aua and , therefore , generally charge lower fees on these assets . our fees for aua vary based on the nature of the investment solutions and services we provide . for over 85 % of our revenues from assets under management or administration , we bill customers at the beginning of each quarter based on the market value of customer assets on our platforms as of the end of the prior quarter . for example , revenues from assets under management or administration recognized during the fourth quarter of 2014 were primarily based on the market value of assets as of september 30 , 2014. our revenues from assets under management or administration are generally recognized ratably throughout the quarter based on the number of days in the quarter . our revenues from assets under management or administration are affected by the amount of new assets that are added to existing and new client accounts , which we refer to as gross sales . gross sales , from time to time , also include conversions of client assets to our technology platforms . the amount of assets that are withdrawn from client accounts are referred to as redemptions . we refer to the difference between gross sales and redemptions as net flows . positive net flows indicate that the market value of assets added to client accounts exceeds the market value of assets that have been withdrawn from client accounts . 40 our revenues from assets under management or administration are also affected by changes in the market values of securities held in client accounts due to fluctuations in the securities markets . certain types of securities have historically experienced greater market price fluctuations , such as equity securities , than other securities , such as fixed income securities , though in any given period the type of securities that experience the greatest fluctuations may vary . the following table provides information regarding the degree to which gross sales , redemptions , net flows and changes in the market values of assets contributed to changes in aum or aua in the periods indicated . replace_table_token_8_th the above aum/a gross sales figures include $ 28.2 billion in new client conversions . the company onboarded an additional $ 66.9 billion in licensing conversions during 2014 , bringing total conversions for the year to $ 95.1 billion . replace_table_token_9_th the above aum/a gross sales figures include $ 24.5 billion in new client conversions . the company onboarded an additional $ 33.6 billion in licensing conversions during 2013 , bringing total conversions for the year to $ 58.1 billion . the mix of assets under management and assets under administration was as follows as of the dates indicated : replace_table_token_10_th we expect the percentage of aum and aua will fluctuate in future periods . the nature and type of services requested by our customers are the key drivers in determining whether customer assets are classified as aum or aua . therefore , we do not have direct control over the mix of aum and aua . story_separator_special_tag in certain cases , management is required to determine whether revenues should be recognized in an amount equal to the gross fees we receive or net of payments of expenses to third-parties , such as third party investment managers and 46 custodians , that perform services for us in connection with certain of our financial advisors ' client accounts . generally , when fees are collected for investment management , clearing , custody or brokerage services in circumstances where we do not have a direct contract with the third-party provider , the fees are recorded as revenue on a net basis . fees we received in advance of the performance of services are recorded as deferred revenues on our consolidated balance sheet and are recognized as revenues when earned , generally over three months . the company derives licensing fees from recurring contractual fixed fee contracts with larger financial institutions or enterprise clients . licensing contracts allow the customer to provide a unique configuration of platform features and investment solutions for their advisors . the licensing fees vary based on the type of services provided and our revenues received under license agreements are recognized over the contractual term . the company 's license agreements do not generally provide its customers the ability to take possession of the software or host the software on the customers ' own systems or through a hosting arrangement with an unrelated party . when the company enters into arrangements with multiple deliverables , exclusive of arrangements with software deliverables , it applies the fasb 's guidance for revenue arrangements with multiple deliverables and evaluates each deliverable to determine whether it represents a separate unit of accounting based on the following criteria : ( i ) whether the delivered item has value to the customer on a stand-alone basis , and ( ii ) if the contract includes a general right of return relative to the delivered item , delivery or performance of the undelivered item ( s ) is considered probable and substantially in the control of the company . revenue is allocated to each unit of accounting or element based on relative selling prices . the company determines relative selling prices by using either ( a ) vendor-specific objective evidence ( `` vsoe `` ) if it exists ; or ( b ) third-party evidence ( `` tpe `` ) of selling price . when neither vsoe nor tpe of selling price exists for a deliverable , the company uses its best estimate of the selling price for that deliverable . after determining which deliverables represent a separate unit of accounting , each unit is then accounted for under the applicable revenue recognition guidance . in cases where elements can not be treated as separate units of accounting , the elements are combined into a single unit of accounting for revenue recognition purposes . if one of the elements that are combined into a single unit of accounting is fees from professional services , including implementation related services or customized service platform software development , the professional service fees are recognized over the course of the expected customer relationship . we have estimated the life of the customer relationship by considering both the historical retention rate of our customers while not exceeding the number of years over which we can accurately forecast future revenues . we currently estimate this term to be five years . the company also derives professional service fees from providing contractual customized platform software development and implementation services , which are recognized under a proportional-performance model utilizing an output-based approach . the company 's contracts generally have fixed prices , and generally specify or quantify deliverables . our revenue recognition is also affected by our judgment in determining whether collectability is reasonably assured . with regard to allowances for uncollectible receivables , we consider customer-specific information related to delinquent accounts and past loss experience , as well as current economic conditions in establishing the amount of the allowance . purchase accounting in 2012 , we completed the acquisitions of prima and tamarac for consideration totaling $ 13,925 and $ 48,427 , respectively . in 2013 , the company completed the acquisition of wms for total consideration of $ 24,730. in 2014 , ers , llc completed the acquisition of klein for total consideration of $ 5,588. in the fourth quarter of 2014 , the company completed the acquisition of placemark for total 47 consideration of $ 66,701. for more information on the acquisitions see note 3 to the notes to consolidated financial statements . assigning fair market values to the assets acquired and liabilities assumed at the date of an acquisition requires knowledge of current market values , and the values of assets in use , and often requires the application of judgment regarding estimates and assumptions . while the ultimate responsibility resides with management , for material acquisitions , we retain the services of certified valuation specialists to assist with assigning estimated values to certain acquired assets and assumed liabilities , including intangible assets and contingent consideration . acquired intangible assets , excluding goodwill , are valued using a discounted cash flow methodology based on future cash flows specific to the type of intangible asset purchased . this methodology incorporates various estimates and assumptions , the most significant being projected revenue growth rates , margins , and forecasted cash flows based on the discount rate and terminal growth rate . management projects revenue growth rates , margins and cash flows based on the historical operating results of the acquired entity adjusted for synergies anticipated to be achieved through integration , expected future performance , operational strategies , and the general macroeconomic environment . we review finite-lived intangible assets for triggering events such as significant changes in operations , customers or future revenue that might indicate the need to impair the assets acquired or change the useful lives of the assets acquired . there was no impairment or change in
| liquidity and capital resources as of december 31 , 2014 , we had total cash and cash equivalents of $ 209,754 , compared to $ 49,942 as of december 31 , 2013. we plan to use existing cash as of december 31 , 2014 and cash generated in the ongoing operations of our business to fund our current operations , capital expenditures and possible acquisitions or other strategic activity . 60 cash flows the following table presents information regarding our cash flows and cash and cash equivalents for the periods indicated : replace_table_token_17_th operating activities net cash provided by operating activities in 2014 increased by $ 27,140 compared to 2013 , primarily due to an increase in net income of $ 10,319 in 2014 compared to the prior year period and an increase in the change in operating assets and liabilities totaling $ 18,559 offset by a decrease in non-cash adjustments totaling $ 2,364. net cash provided by operating activities in 2013 increased by $ 309 compared to 2012 , primarily due to an increase in net income of $ 3,195 in 2013 compared to the prior year period and an increase in non-cash adjustments totaling $ 2,612 , offset by an overall net decrease in the change in operating assets and liabilities of $ 5,498. investing activities net cash used in investing activities in 2014 increased by $ 50,869 compared to 2013 , primarily due to the increase in cash used in acquisitions of $ 50,578. in 2014 , the company acquired placemark and klein for net cash totaling $ 58,282 and $ 1,288 , respectively , and in 2013 , the company acquired wms for net cash totaling $ 8,992 ( see note 3 to the notes to consolidated financial statements ) .
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in simple terms , our protein catalysts can accelerate and or improve yields of chemical reactions . we use our codeevolver ® protein engineering technology platform to develop novel enzymes that enable industrial biocatalytic reactions and fermentations . our technology platform has enabled commercially viable products and processes for the manufacture of pharmaceutical intermediates and active ingredients and fine chemicals . our approach to develop commercially viable biocatalytic manufacturing processes begins by conceptually designing the most cost-effective and practical process for a targeted product . we then develop optimized protein catalysts to enable that process design , using our codeevolver ® protein engineering platform technology . engineered protein catalyst candidates - many thousands for each protein engineering project - are then rapidly screened and validated in high throughput under relevant manufacturing operating conditions . this approach results in an optimized protein catalyst enabling cost-efficient processes that typically are relatively simple to run in conventional manufacturing equipment . this also allows for the efficient technical transfer of our process to our manufacturing partners . the successful embodiment of our codeevolver ® protein engineering technology platform in commercial manufacturing processes requires well-integrated expertise in a number of technical disciplines . in addition to those directly involved in practicing our codeevolver ® protein engineering platform technology , such as molecular biology , enzymology , microbiology , 36 cellular engineering , metabolic engineering , bioinformatics , biochemistry and high throughput analytical chemistry , our process development projects also involve integrated expertise in organic chemistry , chemical process development , chemical engineering , fermentation process development and fermentation engineering . our integrated , multi-disciplinary approach to biocatalyst and process development is a critical success factor for our company . we initially commercialized our codeevolver ® protein engineering technology platform and products in the pharmaceuticals market , which remains our primary business focus . our customers , which include several large global pharmaceutical companies , use our technology , products and services in their manufacturing processes and process development . we have also used the technology to develop protein catalysts for use in the fine chemicals market . the fine chemicals market consists of several large market verticals , including food and food ingredients , animal feed , flavors , fragrances , and agricultural chemicals . more recently , we are also using the codeevolver ® protein engineering technology platform to develop early stage , novel biotherapeutic product candidates , both for our customers and for our own business , most notably our lead program for the potential treatment of pku in humans . pku is an inherited metabolic disorder in which the enzyme that converts the essential amino acid phenylalanine into tyrosine is deficient . we have also used our technology to develop an enzyme for customers using ngs and pcr/qpcr for in vitro molecular diagnostic and genomic research applications . results of operations overview revenues were $ 48.8 million in 2016 , an increase of 17 % from $ 41.8 million in 2015 . product sales , which consist primarily of sales of protein catalysts , pharmaceutical intermediates , and codex ® biocatalyst panels and kits , were $ 15.3 million in 2016 , an increase of 35 % compared with $ 11.4 million in 2015 . the increase was primarily due to higher customer demand in 2016 as compared to 2015. research and development revenues , which include license , technology access and exclusivity fees , research service fees , milestone payments , royalties , and optimization and screening fees , totaled $ 31.3 million in 2016 , an increase of 22 % , compared with $ 25.6 million in 2015 . the increase was primarily due to the completion of the second and final milestone in the transfer of our proprietary codeevolver ® protein engineering platform technology to merck under the merck codeevolver ® agreement , which resulted in recognition of an $ 8.0 million milestone , the achievement of the third and final milestone in the transfer of our proprietary codeevolver ® protein engineering platform technology to gsk under the gsk codeevolver ® agreement which resulted in revenue recognition of a $ 7.5 million milestone payment , and an increase of $ 4.0 million in revenue recognition from the early completion of the technology transfer for both merck and gsk . the revenue increases in 2016 were partially offset by 2015 revenues from a $ 6.5 million milestone under the gsk codeevolver ® agreement , a $ 5.0 million milestone under the merck codeevolver ® agreement and a $ 3.1 million final settlement of a royalty-related arrangement by a customer . revenue sharing arrangement was $ 2.2 million in 2016 , a decrease of 54 % , compared with $ 4.8 million in 2015 . the decline resulted from the expiration of the formulation patent for argatroban in june 2014 , allowing for increased generic competition in the subsequent quarters after the expiration of the patent . research and development expenses were $ 22.2 million in 2016 , an increase of 8 % from $ 20.7 million in 2015 . the increase was primarily due to higher consulting fees related to the evaluation of potential new drug development targets , higher outside services related to intellectual property , and increased costs associated with higher headcount . selling , general and administrative expenses were $ 25.4 million in 2016 , an increase of 14 % compared to $ 22.3 million in 2015 . the increase was primarily due to higher legal expenses relating to intellectual property , higher consulting fees relating to exploration of new business development opportunities and increased costs associated with higher headcount . net loss was $ 8.6 million , or a net loss of $ 0.21 per share , in 2016 compared to a net loss of $ 7.6 million , or a net loss of $ 0.19 per share , in 2015 . story_separator_special_tag following the completion of the technology transfer to merck , we are now eligible to receive payments of up to $ 15.0 million for each commercial api that is manufactured by merck using one or more novel enzymes developed by merck using 42 the codeevolver ® technology . in addition , depending upon gsk 's successful application of the licensed technology , we have the potential to receive additional contingent payments that range from $ 5.75 million to $ 38.5 million per project . we are actively collaborating with new and existing customers in the pharmaceutical and food industries . we believe that we can utilize our current products and services , and develop new products and services , to increase our revenue and gross margins in future periods . we have historically experienced negative cash flows from operations as we continue to invest in key technology development projects and improvements to our protein engineering technology platform , and expand our business development and collaboration with new customers . our cash flows from operations will continue to be affected principally by sales and gross margins from licensing our technology to major pharmaceutical companies , product sales and collaborative research and development services provided to customers , as well as our headcount costs , primarily in research and development . our primary source of cash flows from operating activities is cash receipts from licensing our technology to major pharmaceutical companies , and our customers for purchases of products and or collaborative research and development services . our largest uses of cash from operating activities are for employee-related expenditures , rent payments , inventory purchases to support our product sales and non-payroll research and development costs . we believe that , based on our current level of operations , our existing cash and cash equivalents will provide adequate funds for ongoing operations , planned capital expenditures and working capital requirements for at least the next 12 months . however , we may need additional capital if our current plans and assumptions change . our need for additional capital will depend on many factors , including the financial success of our business , the spending required to develop and commercialize new and existing products , the effect of any acquisitions of other businesses , technologies or facilities that we may make or develop in the future , our spending on new market opportunities , and the potential costs for the filing , prosecution , enforcement and defense of patent claims , if necessary . if our capital resources are insufficient to meet our capital requirements , and we are unable to enter into or maintain collaborations with partners that are able or willing to fund our development efforts or commercialize any products that we develop or enable , we will have to raise additional funds to continue the development of our technology and products and complete the commercialization of products , if any , resulting from our technologies . in addition , we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans . we may seek to obtain such additional funding through equity offerings , debt financings , credit facilities and or strategic collaborations . if future financings involve the issuance of equity securities , our existing stockholders would suffer dilution . if we raise debt financing or enter into credit facilities , we may be subject to restrictive covenants that limit our ability to conduct our business . strategic collaborations may also place restrictions on our business . we may not be able to raise sufficient additional funds on terms that are favorable to us , if at all . if we fail to raise sufficient funds and fail to generate sufficient revenue to achieve planned gross margins and to control operating costs , our ability to fund our operations , take advantage of strategic opportunities , develop products or technologies , or otherwise respond to competitive pressures could be significantly limited . if this happens , we may be forced to delay or terminate research or development programs or the commercialization of products resulting from our technologies , curtail or cease operations or obtain funds through collaborative and licensing arrangements that may require us to relinquish commercial rights , or grant licenses on terms that are not favorable to us . if adequate funds are not available , we will not be able to successfully execute our business plan or continue our business . on december 9 , 2016 , we filed a registration statement on form s-3 with the sec , under which we may sell an aggregate of up to $ 80.0 million of common stock , preferred stock , debt securities , warrants , purchase contract and or units . the sec declared the registration statement effective on january 10 , 2017. story_separator_special_tag customers . 45 we perform collaborative research and development activities as specified in each respective customer agreement . payments for services received are not refundable . certain research agreements are based on a contractual reimbursement rate per fte working on the project . we recognize revenue from research services as those services are performed over the contractual performance periods . when up-front payments are combined with fte services in a single unit of accounting , we recognize the up-front payments using the proportionate performance method of revenue recognition based upon the actual amount of research labor hours incurred relative to the amount of the total expected labor hours to be incurred by us , up to the amount of cash received . in cases where the planned levels of research services fluctuate substantially over the research term , we are required to make estimates of the total hours required to perform our obligations . we recognize research and development revenues from non-refundable , up-front license fees or technology access payments that are not dependent on any
| liquidity and capital resources as of december 31 , 2014 , we had total cash and cash equivalents of $ 209,754 , compared to $ 49,942 as of december 31 , 2013. we plan to use existing cash as of december 31 , 2014 and cash generated in the ongoing operations of our business to fund our current operations , capital expenditures and possible acquisitions or other strategic activity . 60 cash flows the following table presents information regarding our cash flows and cash and cash equivalents for the periods indicated : replace_table_token_17_th operating activities net cash provided by operating activities in 2014 increased by $ 27,140 compared to 2013 , primarily due to an increase in net income of $ 10,319 in 2014 compared to the prior year period and an increase in the change in operating assets and liabilities totaling $ 18,559 offset by a decrease in non-cash adjustments totaling $ 2,364. net cash provided by operating activities in 2013 increased by $ 309 compared to 2012 , primarily due to an increase in net income of $ 3,195 in 2013 compared to the prior year period and an increase in non-cash adjustments totaling $ 2,612 , offset by an overall net decrease in the change in operating assets and liabilities of $ 5,498. investing activities net cash used in investing activities in 2014 increased by $ 50,869 compared to 2013 , primarily due to the increase in cash used in acquisitions of $ 50,578. in 2014 , the company acquired placemark and klein for net cash totaling $ 58,282 and $ 1,288 , respectively , and in 2013 , the company acquired wms for net cash totaling $ 8,992 ( see note 3 to the notes to consolidated financial statements ) .
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in simple terms , our protein catalysts can accelerate and or improve yields of chemical reactions . we use our codeevolver ® protein engineering technology platform to develop novel enzymes that enable industrial biocatalytic reactions and fermentations . our technology platform has enabled commercially viable products and processes for the manufacture of pharmaceutical intermediates and active ingredients and fine chemicals . our approach to develop commercially viable biocatalytic manufacturing processes begins by conceptually designing the most cost-effective and practical process for a targeted product . we then develop optimized protein catalysts to enable that process design , using our codeevolver ® protein engineering platform technology . engineered protein catalyst candidates - many thousands for each protein engineering project - are then rapidly screened and validated in high throughput under relevant manufacturing operating conditions . this approach results in an optimized protein catalyst enabling cost-efficient processes that typically are relatively simple to run in conventional manufacturing equipment . this also allows for the efficient technical transfer of our process to our manufacturing partners . the successful embodiment of our codeevolver ® protein engineering technology platform in commercial manufacturing processes requires well-integrated expertise in a number of technical disciplines . in addition to those directly involved in practicing our codeevolver ® protein engineering platform technology , such as molecular biology , enzymology , microbiology , 36 cellular engineering , metabolic engineering , bioinformatics , biochemistry and high throughput analytical chemistry , our process development projects also involve integrated expertise in organic chemistry , chemical process development , chemical engineering , fermentation process development and fermentation engineering . our integrated , multi-disciplinary approach to biocatalyst and process development is a critical success factor for our company . we initially commercialized our codeevolver ® protein engineering technology platform and products in the pharmaceuticals market , which remains our primary business focus . our customers , which include several large global pharmaceutical companies , use our technology , products and services in their manufacturing processes and process development . we have also used the technology to develop protein catalysts for use in the fine chemicals market . the fine chemicals market consists of several large market verticals , including food and food ingredients , animal feed , flavors , fragrances , and agricultural chemicals . more recently , we are also using the codeevolver ® protein engineering technology platform to develop early stage , novel biotherapeutic product candidates , both for our customers and for our own business , most notably our lead program for the potential treatment of pku in humans . pku is an inherited metabolic disorder in which the enzyme that converts the essential amino acid phenylalanine into tyrosine is deficient . we have also used our technology to develop an enzyme for customers using ngs and pcr/qpcr for in vitro molecular diagnostic and genomic research applications . results of operations overview revenues were $ 48.8 million in 2016 , an increase of 17 % from $ 41.8 million in 2015 . product sales , which consist primarily of sales of protein catalysts , pharmaceutical intermediates , and codex ® biocatalyst panels and kits , were $ 15.3 million in 2016 , an increase of 35 % compared with $ 11.4 million in 2015 . the increase was primarily due to higher customer demand in 2016 as compared to 2015. research and development revenues , which include license , technology access and exclusivity fees , research service fees , milestone payments , royalties , and optimization and screening fees , totaled $ 31.3 million in 2016 , an increase of 22 % , compared with $ 25.6 million in 2015 . the increase was primarily due to the completion of the second and final milestone in the transfer of our proprietary codeevolver ® protein engineering platform technology to merck under the merck codeevolver ® agreement , which resulted in recognition of an $ 8.0 million milestone , the achievement of the third and final milestone in the transfer of our proprietary codeevolver ® protein engineering platform technology to gsk under the gsk codeevolver ® agreement which resulted in revenue recognition of a $ 7.5 million milestone payment , and an increase of $ 4.0 million in revenue recognition from the early completion of the technology transfer for both merck and gsk . the revenue increases in 2016 were partially offset by 2015 revenues from a $ 6.5 million milestone under the gsk codeevolver ® agreement , a $ 5.0 million milestone under the merck codeevolver ® agreement and a $ 3.1 million final settlement of a royalty-related arrangement by a customer . revenue sharing arrangement was $ 2.2 million in 2016 , a decrease of 54 % , compared with $ 4.8 million in 2015 . the decline resulted from the expiration of the formulation patent for argatroban in june 2014 , allowing for increased generic competition in the subsequent quarters after the expiration of the patent . research and development expenses were $ 22.2 million in 2016 , an increase of 8 % from $ 20.7 million in 2015 . the increase was primarily due to higher consulting fees related to the evaluation of potential new drug development targets , higher outside services related to intellectual property , and increased costs associated with higher headcount . selling , general and administrative expenses were $ 25.4 million in 2016 , an increase of 14 % compared to $ 22.3 million in 2015 . the increase was primarily due to higher legal expenses relating to intellectual property , higher consulting fees relating to exploration of new business development opportunities and increased costs associated with higher headcount . net loss was $ 8.6 million , or a net loss of $ 0.21 per share , in 2016 compared to a net loss of $ 7.6 million , or a net loss of $ 0.19 per share , in 2015 . story_separator_special_tag following the completion of the technology transfer to merck , we are now eligible to receive payments of up to $ 15.0 million for each commercial api that is manufactured by merck using one or more novel enzymes developed by merck using 42 the codeevolver ® technology . in addition , depending upon gsk 's successful application of the licensed technology , we have the potential to receive additional contingent payments that range from $ 5.75 million to $ 38.5 million per project . we are actively collaborating with new and existing customers in the pharmaceutical and food industries . we believe that we can utilize our current products and services , and develop new products and services , to increase our revenue and gross margins in future periods . we have historically experienced negative cash flows from operations as we continue to invest in key technology development projects and improvements to our protein engineering technology platform , and expand our business development and collaboration with new customers . our cash flows from operations will continue to be affected principally by sales and gross margins from licensing our technology to major pharmaceutical companies , product sales and collaborative research and development services provided to customers , as well as our headcount costs , primarily in research and development . our primary source of cash flows from operating activities is cash receipts from licensing our technology to major pharmaceutical companies , and our customers for purchases of products and or collaborative research and development services . our largest uses of cash from operating activities are for employee-related expenditures , rent payments , inventory purchases to support our product sales and non-payroll research and development costs . we believe that , based on our current level of operations , our existing cash and cash equivalents will provide adequate funds for ongoing operations , planned capital expenditures and working capital requirements for at least the next 12 months . however , we may need additional capital if our current plans and assumptions change . our need for additional capital will depend on many factors , including the financial success of our business , the spending required to develop and commercialize new and existing products , the effect of any acquisitions of other businesses , technologies or facilities that we may make or develop in the future , our spending on new market opportunities , and the potential costs for the filing , prosecution , enforcement and defense of patent claims , if necessary . if our capital resources are insufficient to meet our capital requirements , and we are unable to enter into or maintain collaborations with partners that are able or willing to fund our development efforts or commercialize any products that we develop or enable , we will have to raise additional funds to continue the development of our technology and products and complete the commercialization of products , if any , resulting from our technologies . in addition , we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans . we may seek to obtain such additional funding through equity offerings , debt financings , credit facilities and or strategic collaborations . if future financings involve the issuance of equity securities , our existing stockholders would suffer dilution . if we raise debt financing or enter into credit facilities , we may be subject to restrictive covenants that limit our ability to conduct our business . strategic collaborations may also place restrictions on our business . we may not be able to raise sufficient additional funds on terms that are favorable to us , if at all . if we fail to raise sufficient funds and fail to generate sufficient revenue to achieve planned gross margins and to control operating costs , our ability to fund our operations , take advantage of strategic opportunities , develop products or technologies , or otherwise respond to competitive pressures could be significantly limited . if this happens , we may be forced to delay or terminate research or development programs or the commercialization of products resulting from our technologies , curtail or cease operations or obtain funds through collaborative and licensing arrangements that may require us to relinquish commercial rights , or grant licenses on terms that are not favorable to us . if adequate funds are not available , we will not be able to successfully execute our business plan or continue our business . on december 9 , 2016 , we filed a registration statement on form s-3 with the sec , under which we may sell an aggregate of up to $ 80.0 million of common stock , preferred stock , debt securities , warrants , purchase contract and or units . the sec declared the registration statement effective on january 10 , 2017. story_separator_special_tag customers . 45 we perform collaborative research and development activities as specified in each respective customer agreement . payments for services received are not refundable . certain research agreements are based on a contractual reimbursement rate per fte working on the project . we recognize revenue from research services as those services are performed over the contractual performance periods . when up-front payments are combined with fte services in a single unit of accounting , we recognize the up-front payments using the proportionate performance method of revenue recognition based upon the actual amount of research labor hours incurred relative to the amount of the total expected labor hours to be incurred by us , up to the amount of cash received . in cases where the planned levels of research services fluctuate substantially over the research term , we are required to make estimates of the total hours required to perform our obligations . we recognize research and development revenues from non-refundable , up-front license fees or technology access payments that are not dependent on any
| cash flows the following is a summary of cash flows for the years ended december 31 , 2016 , 2015 and 2014 : replace_table_token_12_th 43 cash flows from operating activities cash used in operating activities was $ 2.7 million in 2016 , which resulted from a net loss of $ 8.6 million adjusted for non-cash depreciation and amortization of $ 4.5 million and stock-based compensation of $ 5.7 million , as well as changes in operating assets and liabilities . the net change in operating assets and liabilities included decreases in deferred revenue of $ 6.4 million primarily related to revenue recognition on the achievement of milestones from collaborative arrangements with merck and gsk , an increase of $ 0.8 million in restricted cash reflecting the funding of a reserve to satisfy the funding obligations of our india subsidiary , partially offset by a decrease in accounts receivable of $ 1.4 million , and increases in accrued compensation of $ 1.0 million primarily due to higher payroll costs and higher accounts payable of $ 0.9 million due to the timing of payment of invoices . cash used in operating activities was $ 0.4 million in 2015 , which resulted from a net loss of $ 7.6 million adjusted for non-cash depreciation and amortization of $ 5.4 million and stock-based compensation of $ 5.1 million , as well as changes in operating assets and liabilities . the net change in operating assets and liabilities included increases in accounts receivable of $ 3.5 million due primarily to an accrual of a settlement payment from a customer relating to past-due payments and a buy-out of future payments , increases in deferred revenue of $ 1.9 million due mainly to the codeevolver ® technology transfer to merck , and decreases in accounts payable of $ 1.3 million due to the timing of payment of invoices . cash flows from investing activities cash used in investing activities was $ 0.8 million in 2016 primarily due to the purchase of property and equipment . we expect capital spending for 2017 to be approximately $ 1.0 million primarily for replacement and upgrades of lab equipment .
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atlantic american is an insurance holding company whose operations are conducted primarily through its insurance subsidiaries : american southern insurance company and american safety insurance company ( together known as american southern ) in the property and casualty insurance industry , and bankers fidelity life insurance company and bankers fidelity assurance company ( together known as bankers fidelity ) in the life and health insurance industry . each operating company is managed separately , offers different products and is evaluated on its individual performance . critical accounting policies the accounting and reporting policies of the company are in accordance with accounting principles generally accepted in the united states of america ( gaap ) and , in management 's belief , conform to general practices within the insurance industry . the following is an explanation of the company 's accounting policies and the resultant estimates considered most significant by management . these accounting policies inherently require significant judgment and assumptions and actual operating results could differ significantly from management 's estimates determined using these policies . atlantic american does not expect that changes in the estimates determined using these policies will have a material effect on the company 's financial condition or liquidity , although changes could have a material effect on its consolidated results of operations . unpaid loss and loss adjustment expenses comprised 30 % of the company 's total liabilities at december 31 , 2015. this liability includes estimates for : 1 ) unpaid losses on claims reported prior to december 31 , 2015 , 2 ) future development on those reported claims , 3 ) unpaid ultimate losses on claims incurred prior to december 31 , 2015 but not yet reported and 4 ) unpaid loss adjustment expenses for reported and unreported claims incurred prior to december 31 , 2015. quantification of loss estimates for each of these components involves a significant degree of judgment and estimates may vary , materially , from period to period . estimated unpaid losses on reported claims are developed based on historical experience with similar claims by the company . development on reported claims , estimates of unpaid ultimate losses on claims incurred prior to december 31 , 2015 but not yet reported , and estimates of unpaid loss adjustment expenses are developed based on the company 's historical experience , using actuarial methods to assist in the analysis . the company 's actuaries develop ranges of estimated development on reported and unreported claims as well as loss adjustment expenses using various methods , including the paid-loss development method , the reported-loss development method , the paid bornhuetter-ferguson method and the reported bornhuetter-ferguson method . any single method used to estimate ultimate losses has inherent advantages and disadvantages due to the trends and changes affecting the business environment and the company 's administrative policies . further , external factors , such as legislative changes , medical cost inflation , and others may directly or indirectly impact the relative adequacy of liabilities for unpaid losses and loss adjustment expenses . the company 's approach is to select an estimate of ultimate losses based on comparing results of a variety of reserving methods , as opposed to total reliance on any single method . unpaid loss and loss adjustment expenses are reviewed periodically for significant lines of business , and when current results differ from the original assumptions used to develop such estimates , the amount of the company 's recorded liability for unpaid loss and loss adjustment expenses is adjusted . in the event the company 's actual reported losses in any period are materially in excess of the previously estimated amounts , such losses , to the extent reinsurance coverage does not exist , could have a material adverse effect on the company 's results of operations . 16 future policy benefits comprised 34 % of the company 's total liabilities at december 31 , 2015. these liabilities relate primarily to life insurance products and are based upon assumed future investment yields , mortality rates , and withdrawal rates after giving effect to possible risks of adverse deviation . the assumed mortality and withdrawal rates are based upon the company 's experience . if actual results differ from the initial assumptions , the amount of the company 's recorded liability could require adjustment . deferred acquisition costs comprised 9 % of the company 's total assets at december 31 , 2015. deferred acquisition costs are commissions , premium taxes , and other costs that vary with and are primarily related to the acquisition of new and renewal business and are generally deferred and amortized . the deferred amounts are recorded as an asset on the balance sheet and amortized to expense in a systematic manner . traditional life insurance and long-duration health insurance deferred policy acquisition costs are amortized over the estimated premium-paying period of the related policies using assumptions consistent with those used in computing the related liability for policy benefit reserves . deferred acquisition costs for property and casualty insurance and short-duration health insurance are amortized over the effective period of the related insurance policies . deferred policy acquisition costs are expensed when such costs are deemed not to be recoverable from future premiums ( for traditional life and long-duration health insurance ) and from the related unearned premiums and investment income ( for property and casualty and short-duration health insurance ) . assessments of recoverability for property and casualty and short-duration health insurance are extremely sensitive to the estimates of a subsequent year 's projected losses related to the unearned premiums . story_separator_special_tag in both 2015 and 2014 , the company 's five principal states in terms of premium revenue were georgia , indiana , ohio , pennsylvania , and tennessee , which accounted for approximately 43 % and 44 % of total premiums for 2015 and 2014 , respectively . benefits and losses decreased $ 1.7 million , or 2.5 % , during 2015 as compared to 2014. as a percentage of premiums , benefits and losses were 68.8 % in 2015 compared to 67.5 % in 2014. the increase in the loss ratio was primarily attributable to the company 's initiative to moderate price increases in medicare supplement product offerings in certain competitive markets . underwriting expenses decreased $ 1.1 million , or 3.2 % , during 2015 as compared to 2014. as a percentage of earned premiums , these expenses were 34.0 % in 2015 compared to 33.6 % in 2014. the slight increase in the expense ratio was primarily due to earned premiums decreasing at a higher rate than the decrease in underwriting expenses . investment income and realized gains investment income decreased $ 0.3 million , or 2.7 % , in 2015 as compared to 2014. the decrease in investment income was primarily attributable to a decrease in the average yield on the company 's investments in fixed maturities . the company had net realized investment gains of $ 4.9 million in 2015 compared to net realized investment gains of $ 1.6 million in 2014. the net realized investment gains in 2015 were primarily attributable to a $ 3.2 million gain from the sale of property held within two of the company 's real estate partnership investments as well as gains from the sale of a number of the company 's investments in fixed maturities . the net realized investment gains in 2014 resulted from the disposition of several of the company 's investments in 22 fixed maturities . during 2014 , the company recorded investment impairments due to other than temporary declines in values of $ 0.2 million on certain of its investments in non-redeemable preferred stocks . while the impairments did not impact the carrying value of the investments , they resulted in realized losses which reduced reported realized investment gains . there were no impairments recorded in 2015. management continually evaluates the company 's investment portfolio and , as may be determined to be appropriate , makes adjustments for impairments and or will divest investments . see note 2 of notes to consolidated financial statements . interest expense interest expense decreased $ 0.2 million , or 11.1 % , in 2015 as compared to 2014 due to a decrease in the outstanding amount of junior subordinated debentures . on august 4 , 2014 , the company acquired $ 7.5 million of its then outstanding junior subordinated debentures , which decreased the outstanding balance to $ 33.7 million and resulted in lower prospective interest expense . other expenses other expenses ( commissions , underwriting expenses , and other expenses ) increased $ 3.8 million , or 7.1 % , in 2015 as compared to 2014. the increase in other expenses was primarily attributable to an increase of $ 2.7 million in commission accruals at american southern due to more favorable loss experience . the majority of american southern 's business is structured in a way that agents are compensated based upon the loss ratios of the business they place with the company . during periods in which the loss ratio decreases , commissions and underwriting expenses will generally increase , and conversely , during periods in which the loss ratio increases , commissions and underwriting expenses will generally decrease . also contributing to the increase in other expense during 2015 was an increase in legal and consulting fees of $ 1.4 million . further , agent lead expense in the life and health operations increased $ 1.1 million resulting from increased lead investment . partially offsetting the increases in other expenses was a decrease in general advertising and other agency related expenses as well as a decrease in actuarial consulting fees in the life and health operations . as a percentage of earned premiums , other expenses were 38.1 % in 2015 as compared with 34.9 % in 2014. the increase in the expense ratio was primarily due to the increase in commission accruals at american southern as well as the increased legal and consulting fees both discussed previously . income taxes the primary differences between the effective tax rate and the federal statutory income tax rate for 2015 resulted from the dividends-received deduction ( drd ) and the small life insurance company deduction ( sld ) . the current estimated drd is adjusted as underlying factors change and can vary from estimates based on , but not limited to , actual distributions from investments as well as the amount of the company 's taxable income . the sld varies in amount and is determined at a rate of 60 percent of the tentative life insurance company taxable income ( licti ) . the sld for any taxable year is reduced ( but not below zero ) by 15 percent of the tentative licti for such taxable year as it exceeds $ 3.0 million and is ultimately phased out at $ 15.0 million . the primary differences between the effective tax rate and the federal statutory income tax rate for 2014 resulted from the drd , the sld and the change in deferred tax asset valuation allowance . the change in deferred tax asset valuation allowance was due to the utilization of certain capital loss carryforward benefits that had been previously reduced to zero through an existing valuation allowance reserve . all unused capital loss carryforwards expired at the end of 2014. story_separator_special_tag class= `` unknown `` style= `` color : # 000000 ; font-family : times new roman , times , serif ; font-size : 13.33px ; padding-left : 0px ; text-indent : 0px ;
| cash flows the following is a summary of cash flows for the years ended december 31 , 2016 , 2015 and 2014 : replace_table_token_12_th 43 cash flows from operating activities cash used in operating activities was $ 2.7 million in 2016 , which resulted from a net loss of $ 8.6 million adjusted for non-cash depreciation and amortization of $ 4.5 million and stock-based compensation of $ 5.7 million , as well as changes in operating assets and liabilities . the net change in operating assets and liabilities included decreases in deferred revenue of $ 6.4 million primarily related to revenue recognition on the achievement of milestones from collaborative arrangements with merck and gsk , an increase of $ 0.8 million in restricted cash reflecting the funding of a reserve to satisfy the funding obligations of our india subsidiary , partially offset by a decrease in accounts receivable of $ 1.4 million , and increases in accrued compensation of $ 1.0 million primarily due to higher payroll costs and higher accounts payable of $ 0.9 million due to the timing of payment of invoices . cash used in operating activities was $ 0.4 million in 2015 , which resulted from a net loss of $ 7.6 million adjusted for non-cash depreciation and amortization of $ 5.4 million and stock-based compensation of $ 5.1 million , as well as changes in operating assets and liabilities . the net change in operating assets and liabilities included increases in accounts receivable of $ 3.5 million due primarily to an accrual of a settlement payment from a customer relating to past-due payments and a buy-out of future payments , increases in deferred revenue of $ 1.9 million due mainly to the codeevolver ® technology transfer to merck , and decreases in accounts payable of $ 1.3 million due to the timing of payment of invoices . cash flows from investing activities cash used in investing activities was $ 0.8 million in 2016 primarily due to the purchase of property and equipment . we expect capital spending for 2017 to be approximately $ 1.0 million primarily for replacement and upgrades of lab equipment .
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atlantic american is an insurance holding company whose operations are conducted primarily through its insurance subsidiaries : american southern insurance company and american safety insurance company ( together known as american southern ) in the property and casualty insurance industry , and bankers fidelity life insurance company and bankers fidelity assurance company ( together known as bankers fidelity ) in the life and health insurance industry . each operating company is managed separately , offers different products and is evaluated on its individual performance . critical accounting policies the accounting and reporting policies of the company are in accordance with accounting principles generally accepted in the united states of america ( gaap ) and , in management 's belief , conform to general practices within the insurance industry . the following is an explanation of the company 's accounting policies and the resultant estimates considered most significant by management . these accounting policies inherently require significant judgment and assumptions and actual operating results could differ significantly from management 's estimates determined using these policies . atlantic american does not expect that changes in the estimates determined using these policies will have a material effect on the company 's financial condition or liquidity , although changes could have a material effect on its consolidated results of operations . unpaid loss and loss adjustment expenses comprised 30 % of the company 's total liabilities at december 31 , 2015. this liability includes estimates for : 1 ) unpaid losses on claims reported prior to december 31 , 2015 , 2 ) future development on those reported claims , 3 ) unpaid ultimate losses on claims incurred prior to december 31 , 2015 but not yet reported and 4 ) unpaid loss adjustment expenses for reported and unreported claims incurred prior to december 31 , 2015. quantification of loss estimates for each of these components involves a significant degree of judgment and estimates may vary , materially , from period to period . estimated unpaid losses on reported claims are developed based on historical experience with similar claims by the company . development on reported claims , estimates of unpaid ultimate losses on claims incurred prior to december 31 , 2015 but not yet reported , and estimates of unpaid loss adjustment expenses are developed based on the company 's historical experience , using actuarial methods to assist in the analysis . the company 's actuaries develop ranges of estimated development on reported and unreported claims as well as loss adjustment expenses using various methods , including the paid-loss development method , the reported-loss development method , the paid bornhuetter-ferguson method and the reported bornhuetter-ferguson method . any single method used to estimate ultimate losses has inherent advantages and disadvantages due to the trends and changes affecting the business environment and the company 's administrative policies . further , external factors , such as legislative changes , medical cost inflation , and others may directly or indirectly impact the relative adequacy of liabilities for unpaid losses and loss adjustment expenses . the company 's approach is to select an estimate of ultimate losses based on comparing results of a variety of reserving methods , as opposed to total reliance on any single method . unpaid loss and loss adjustment expenses are reviewed periodically for significant lines of business , and when current results differ from the original assumptions used to develop such estimates , the amount of the company 's recorded liability for unpaid loss and loss adjustment expenses is adjusted . in the event the company 's actual reported losses in any period are materially in excess of the previously estimated amounts , such losses , to the extent reinsurance coverage does not exist , could have a material adverse effect on the company 's results of operations . 16 future policy benefits comprised 34 % of the company 's total liabilities at december 31 , 2015. these liabilities relate primarily to life insurance products and are based upon assumed future investment yields , mortality rates , and withdrawal rates after giving effect to possible risks of adverse deviation . the assumed mortality and withdrawal rates are based upon the company 's experience . if actual results differ from the initial assumptions , the amount of the company 's recorded liability could require adjustment . deferred acquisition costs comprised 9 % of the company 's total assets at december 31 , 2015. deferred acquisition costs are commissions , premium taxes , and other costs that vary with and are primarily related to the acquisition of new and renewal business and are generally deferred and amortized . the deferred amounts are recorded as an asset on the balance sheet and amortized to expense in a systematic manner . traditional life insurance and long-duration health insurance deferred policy acquisition costs are amortized over the estimated premium-paying period of the related policies using assumptions consistent with those used in computing the related liability for policy benefit reserves . deferred acquisition costs for property and casualty insurance and short-duration health insurance are amortized over the effective period of the related insurance policies . deferred policy acquisition costs are expensed when such costs are deemed not to be recoverable from future premiums ( for traditional life and long-duration health insurance ) and from the related unearned premiums and investment income ( for property and casualty and short-duration health insurance ) . assessments of recoverability for property and casualty and short-duration health insurance are extremely sensitive to the estimates of a subsequent year 's projected losses related to the unearned premiums . story_separator_special_tag in both 2015 and 2014 , the company 's five principal states in terms of premium revenue were georgia , indiana , ohio , pennsylvania , and tennessee , which accounted for approximately 43 % and 44 % of total premiums for 2015 and 2014 , respectively . benefits and losses decreased $ 1.7 million , or 2.5 % , during 2015 as compared to 2014. as a percentage of premiums , benefits and losses were 68.8 % in 2015 compared to 67.5 % in 2014. the increase in the loss ratio was primarily attributable to the company 's initiative to moderate price increases in medicare supplement product offerings in certain competitive markets . underwriting expenses decreased $ 1.1 million , or 3.2 % , during 2015 as compared to 2014. as a percentage of earned premiums , these expenses were 34.0 % in 2015 compared to 33.6 % in 2014. the slight increase in the expense ratio was primarily due to earned premiums decreasing at a higher rate than the decrease in underwriting expenses . investment income and realized gains investment income decreased $ 0.3 million , or 2.7 % , in 2015 as compared to 2014. the decrease in investment income was primarily attributable to a decrease in the average yield on the company 's investments in fixed maturities . the company had net realized investment gains of $ 4.9 million in 2015 compared to net realized investment gains of $ 1.6 million in 2014. the net realized investment gains in 2015 were primarily attributable to a $ 3.2 million gain from the sale of property held within two of the company 's real estate partnership investments as well as gains from the sale of a number of the company 's investments in fixed maturities . the net realized investment gains in 2014 resulted from the disposition of several of the company 's investments in 22 fixed maturities . during 2014 , the company recorded investment impairments due to other than temporary declines in values of $ 0.2 million on certain of its investments in non-redeemable preferred stocks . while the impairments did not impact the carrying value of the investments , they resulted in realized losses which reduced reported realized investment gains . there were no impairments recorded in 2015. management continually evaluates the company 's investment portfolio and , as may be determined to be appropriate , makes adjustments for impairments and or will divest investments . see note 2 of notes to consolidated financial statements . interest expense interest expense decreased $ 0.2 million , or 11.1 % , in 2015 as compared to 2014 due to a decrease in the outstanding amount of junior subordinated debentures . on august 4 , 2014 , the company acquired $ 7.5 million of its then outstanding junior subordinated debentures , which decreased the outstanding balance to $ 33.7 million and resulted in lower prospective interest expense . other expenses other expenses ( commissions , underwriting expenses , and other expenses ) increased $ 3.8 million , or 7.1 % , in 2015 as compared to 2014. the increase in other expenses was primarily attributable to an increase of $ 2.7 million in commission accruals at american southern due to more favorable loss experience . the majority of american southern 's business is structured in a way that agents are compensated based upon the loss ratios of the business they place with the company . during periods in which the loss ratio decreases , commissions and underwriting expenses will generally increase , and conversely , during periods in which the loss ratio increases , commissions and underwriting expenses will generally decrease . also contributing to the increase in other expense during 2015 was an increase in legal and consulting fees of $ 1.4 million . further , agent lead expense in the life and health operations increased $ 1.1 million resulting from increased lead investment . partially offsetting the increases in other expenses was a decrease in general advertising and other agency related expenses as well as a decrease in actuarial consulting fees in the life and health operations . as a percentage of earned premiums , other expenses were 38.1 % in 2015 as compared with 34.9 % in 2014. the increase in the expense ratio was primarily due to the increase in commission accruals at american southern as well as the increased legal and consulting fees both discussed previously . income taxes the primary differences between the effective tax rate and the federal statutory income tax rate for 2015 resulted from the dividends-received deduction ( drd ) and the small life insurance company deduction ( sld ) . the current estimated drd is adjusted as underlying factors change and can vary from estimates based on , but not limited to , actual distributions from investments as well as the amount of the company 's taxable income . the sld varies in amount and is determined at a rate of 60 percent of the tentative life insurance company taxable income ( licti ) . the sld for any taxable year is reduced ( but not below zero ) by 15 percent of the tentative licti for such taxable year as it exceeds $ 3.0 million and is ultimately phased out at $ 15.0 million . the primary differences between the effective tax rate and the federal statutory income tax rate for 2014 resulted from the drd , the sld and the change in deferred tax asset valuation allowance . the change in deferred tax asset valuation allowance was due to the utilization of certain capital loss carryforward benefits that had been previously reduced to zero through an existing valuation allowance reserve . all unused capital loss carryforwards expired at the end of 2014. story_separator_special_tag class= `` unknown `` style= `` color : # 000000 ; font-family : times new roman , times , serif ; font-size : 13.33px ; padding-left : 0px ; text-indent : 0px ;
| liquidity and capital resources the primary cash needs of the company are for the payment of claims and operating expenses , maintaining adequate statutory capital and surplus levels , and meeting debt service requirements . current and expected patterns of claim frequency and severity may change from period to period but generally are expected to continue within historical ranges . the company 's primary sources of cash are written premiums , investment income and proceeds from the sale and maturity of its invested assets . the company believes that , within each operating company , total invested assets will be sufficient to satisfy all policy liabilities and that cash inflows from investment earnings , future premium receipts and reinsurance collections will be adequate to fund the payment of claims and expenses as needed . 23 cash flows at the parent are derived from dividends , management fees , and tax-sharing payments , as described below , from the subsidiaries . the cash needs of the parent are for the payment of operating expenses , the acquisition of capital assets and debt service requirements , as well as the repurchase of shares and payments of any dividends as may be authorized and approved by the company 's board of directors from time to time . at december 31 , 2015 , the parent had approximately $ 23.5 million of unrestricted cash and investments . dividend payments to a parent corporation by its wholly owned insurance subsidiaries are subject to annual limitations and are restricted to 10 % of statutory surplus or statutory earnings before recognizing realized investment gains of the individual insurance subsidiaries . at december 31 , 2015 , the parent 's insurance subsidiaries had an aggregate statutory surplus of $ 73.6 million . dividends were paid to atlantic american by its subsidiaries totaling $ 6.8 million and $ 6.5 million in 2015 and 2014 , respectively . the parent provides certain administrative , purchasing and other services to each of its subsidiaries . the amounts charged to and paid by the subsidiaries for these services were $ 7.4 million and $ 7.5
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we also generate revenue from fees charged to both clients and freelancers for other services , such as for transacting payments through our work marketplace , premium offerings , purchases of connects , foreign currency exchange , and our upwork payroll offering . in addition , we provide a managed services offering where we engage freelancers to complete projects , directly invoice the client , and assume responsibility for work performed . on december 31 , 2019 , we adopted topic 606 effective as of january 1 , 2019 using the modified retrospective method . as a result , revenue results for the years ended december 31 , 2020 and 2019 are presented in accordance with this new revenue recognition standard while historical revenue results for reporting periods prior to 2019 are presented in conformity with amounts previously disclosed under the prior revenue recognition standard , topic 605. financial highlights for 2020 in march 2020 , the world health organization declared the outbreak of covid-19 to be a pandemic , which continues to spread throughout the united states and the world , and has resulted in governmental authorities implementing numerous measures to contain the virus , including travel bans and restrictions , shelter-in-place orders , and business limitations and shutdowns . the covid-19 pandemic and the resulting restrictions intended to prevent its spread have accelerated the secular shift toward remote and independent work , and , with our unique , remote-based business model , the covid-19 pandemic has not impacted our clients ' access to highly-skilled freelancers to complete short- and long-term projects on our work marketplace . in 2020 , we continued to identify opportunities to prioritize our advertising and marketing efforts in order to reach those new and existing clients seeking to engage with independent talent due to the covid-19 pandemic , as well as companies that have already embraced a remote work model . as a result of these efforts , our 2020 results were fueled by both existing and new clients , who used our work marketplace to address their changing business needs . we began to see the impact of the pandemic on our results at the end of the first quarter , when we experienced a temporary reduction in the growth rates of gsv and revenue . this trend continued into the beginning of the second quarter , driven by spend contraction by many of our clients , as the covid-19 pandemic continued to disrupt their businesses . these trends stabilized in the second half of the second quarter , and improved thereafter , contributing to an overall increase in the growth 55 rates of gsv and revenue in 2020. also , beginning in the second half of the second quarter of 2020 , we began to see an increase in client acquisition driven by the acceleration in the shift toward remote work , due in part to the covid-19 pandemic and the execution of our strategic initiatives . this increase in client acquisition continued to accelerate in the second half of 2020 and drove an increase in freelancer billings , which , in turn , drove an increase in marketplace revenue . as a result , our work marketplace enabled $ 2.5 billion of gsv in 2020 , $ 2.1 billion in 2019 , and $ 1.8 billion in 2018 , representing year-over-year increases of 21 % in 2020 and 19 % in 2019. we generated revenue of $ 373.6 million in 2020 , $ 300.6 million in 2019 , and $ 253.4 million in 2018 , representing year-over-year increases of 24 % in 2020 and 19 % in 2019. while we have not incurred significant disruptions to our business thus far from the covid-19 pandemic , at this time , we are unable to fully assess the aggregate impact it will have on our business due to various uncertainties , which include , but are not limited to , the duration of the pandemic , its effect on the economy , its impact to the businesses of our clients , actions that may be taken by governmental authorities related to the pandemic , and other factors identified in part i , item 1a “ risk factors ” in this annual report , including the risk factor titled “ our business experienced , and may again experience , an adverse impact from the ongoing covid-19 pandemic . in addition , users may reduce their use of our work marketplace following the covid-19 pandemic . ” additionally , while we have made significant investments to grow our business , including investments in sales and marketing to acquire new clients and drive brand awareness , in the fourth quarter of 2020 , we decided that it was no longer cost-effective for our sales team to sell our upwork business offering . we do not expect this decision to have a material impact on our marketplace revenue , as we will service those clients that we had previously targeted with our upwork business offering with our other marketplace offerings , such as upwork basic and plus . in 2020 , we also made significant investments in research and development to build new product features and launch new offerings and in operations and personnel , and we intend to continue to focus on these efforts . as a result , we generated a net loss of $ 22.9 million in 2020 compared to a net loss of $ 16.7 million in 2019. our adjusted ebitda was $ 14.0 million in 2020 , an increase of 89 % from 2019. adjusted ebitda is a financial measure that is not prepared in accordance with , and is not an alternative to , financial measures prepared in accordance with u.s. gaap . see the section titled “ selected consolidated financial data—non-gaap financial measures ” for a definition of adjusted ebitda and information regarding our use of adjusted ebitda and a reconciliation of net loss to adjusted ebitda . story_separator_special_tag marketplace revenue , which represents the majority of our total revenue , is primarily comprised of the service fees paid by freelancers as a percentage of the total amount that freelancers charge clients for services accessed through our work marketplace and , to a lesser extent , payment processing and administration fees paid by clients . in the fourth quarter of 2020 , we decided that it was no longer cost-effective for our sales team to sell our upwork business offering . we do not expect this decision to have a material impact on our marketplace revenue , as we will service those clients that we had previously targeted with our upwork business offering with our other marketplace offerings , such as upwork basic and plus . our upwork basic and plus offerings provide clients with access to freelancers with verified work history and client feedback on our work marketplace , the ability to instantly match with the right freelancers , and built-in collaboration features . for freelancers working with clients that are on our upwork basic and plus offerings , we have a tiered freelancer service fee schedule based on cumulative lifetime billings by the freelancer to each client . freelancers typically pay us 20 % of the first $ 500 , 10 % for the next $ 9,500 , and then 5 % for any amount over $ 10,000 they bill to each client through our work marketplace . we recognize revenue on sunday for the majority of our tiered freelancer service fees each week . to a lesser extent , we also generate revenue from freelancers through membership fees , purchases of connects , and withdrawal and other fees . in addition , we generate marketplace revenue from our upwork basic and plus offerings by charging clients a payment processing and administration fee . clients using our upwork basic offering pay a fee equal to 3 % of their client spend . we recognize revenue on monday for a substantial portion of our client fees each week . clients using our upwork plus offering pay a flat fee of approximately $ 50 per month for additional features and pay a fee equal to 3 % of their client spend unless they pay via ach ( in which case , provided all eligibility criteria are met , the fee is waived ) . to a lesser extent , we also generate revenue from clients through foreign currency exchange fees when clients choose to pay in currencies other than the u.s. dollar . our upwork enterprise and other premium offerings , which are designed for larger clients , include access to additional product features , premium access to top freelancers , professional services , custom reporting , and flexible payment terms . for our upwork enterprise offering , we charge clients a monthly or annual subscription fee and a service fee calculated as a percentage of the client 's spend on freelancer services , in addition to the service fees paid by freelancers . additionally , upwork enterprise clients can also subscribe to a compliance offering that includes worker classification services for an additional fee and may also choose to use our work marketplace to engage freelancers that were not originally sourced through our work marketplace for a lower fee percentage . one of our premium offerings , upwork payroll , is available to clients when freelancers are classified as employees for engagements on our work marketplace . the client enters into an upwork payroll agreement with us , and we separately contract 59 with unrelated third-party staffing providers that provide employment services to such clients . revenue from upwork payroll is currently immaterial . the covid-19 pandemic and the resulting restrictions intended to prevent its spread have accelerated the secular shift toward remote and independent work . in 2020 , we continued to identify opportunities to prioritize our advertising and marketing efforts in order to reach those new and existing clients seeking to engage with independent talent due to the covid-19 pandemic , as well as companies that have already embraced a remote work model . as a result of these efforts , coupled with our execution against strategic initiatives , our 2020 results were fueled by both existing and new clients , who used our work marketplace to address their changing business needs and drove an increase in freelancer billings , which , in turn , drove an increase in marketplace revenue . although the covid-19 pandemic did not have a material adverse impact on our financial results for the year ended december 31 , 2020 , we are continuously evaluating the nature of and extent to which the covid-19 pandemic will impact our business , operating results , and financial condition . managed services revenue . through our managed services offering , we are responsible for providing services and engaging freelancers directly or as employees of third-party staffing providers to perform services for clients on our behalf . the freelancers providing services in connection with our managed services include independent talent and agencies of varying sizes . under u.s. gaap , we are deemed to be the principal in these managed services arrangements and therefore recognize the entire gsv of managed services projects as managed services revenue , as compared to recognizing only the percentage of the client spend that we receive , as we do with our marketplace offerings . managed services revenue grew at a slower rate than our marketplace revenue in 2020 compared to 2019 , and we anticipate this trend to continue , as we primarily focus on increasing client usage of and spend on our marketplace offerings . cost of revenue and gross profit cost of revenue . cost of revenue consists primarily of the cost of payment processing fees , amounts paid to freelancers to deliver services for clients under our managed services offering , personnel-related costs for our services and support personnel , third-party hosting fees for our use
| liquidity and capital resources the primary cash needs of the company are for the payment of claims and operating expenses , maintaining adequate statutory capital and surplus levels , and meeting debt service requirements . current and expected patterns of claim frequency and severity may change from period to period but generally are expected to continue within historical ranges . the company 's primary sources of cash are written premiums , investment income and proceeds from the sale and maturity of its invested assets . the company believes that , within each operating company , total invested assets will be sufficient to satisfy all policy liabilities and that cash inflows from investment earnings , future premium receipts and reinsurance collections will be adequate to fund the payment of claims and expenses as needed . 23 cash flows at the parent are derived from dividends , management fees , and tax-sharing payments , as described below , from the subsidiaries . the cash needs of the parent are for the payment of operating expenses , the acquisition of capital assets and debt service requirements , as well as the repurchase of shares and payments of any dividends as may be authorized and approved by the company 's board of directors from time to time . at december 31 , 2015 , the parent had approximately $ 23.5 million of unrestricted cash and investments . dividend payments to a parent corporation by its wholly owned insurance subsidiaries are subject to annual limitations and are restricted to 10 % of statutory surplus or statutory earnings before recognizing realized investment gains of the individual insurance subsidiaries . at december 31 , 2015 , the parent 's insurance subsidiaries had an aggregate statutory surplus of $ 73.6 million . dividends were paid to atlantic american by its subsidiaries totaling $ 6.8 million and $ 6.5 million in 2015 and 2014 , respectively . the parent provides certain administrative , purchasing and other services to each of its subsidiaries . the amounts charged to and paid by the subsidiaries for these services were $ 7.4 million and $ 7.5
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we also generate revenue from fees charged to both clients and freelancers for other services , such as for transacting payments through our work marketplace , premium offerings , purchases of connects , foreign currency exchange , and our upwork payroll offering . in addition , we provide a managed services offering where we engage freelancers to complete projects , directly invoice the client , and assume responsibility for work performed . on december 31 , 2019 , we adopted topic 606 effective as of january 1 , 2019 using the modified retrospective method . as a result , revenue results for the years ended december 31 , 2020 and 2019 are presented in accordance with this new revenue recognition standard while historical revenue results for reporting periods prior to 2019 are presented in conformity with amounts previously disclosed under the prior revenue recognition standard , topic 605. financial highlights for 2020 in march 2020 , the world health organization declared the outbreak of covid-19 to be a pandemic , which continues to spread throughout the united states and the world , and has resulted in governmental authorities implementing numerous measures to contain the virus , including travel bans and restrictions , shelter-in-place orders , and business limitations and shutdowns . the covid-19 pandemic and the resulting restrictions intended to prevent its spread have accelerated the secular shift toward remote and independent work , and , with our unique , remote-based business model , the covid-19 pandemic has not impacted our clients ' access to highly-skilled freelancers to complete short- and long-term projects on our work marketplace . in 2020 , we continued to identify opportunities to prioritize our advertising and marketing efforts in order to reach those new and existing clients seeking to engage with independent talent due to the covid-19 pandemic , as well as companies that have already embraced a remote work model . as a result of these efforts , our 2020 results were fueled by both existing and new clients , who used our work marketplace to address their changing business needs . we began to see the impact of the pandemic on our results at the end of the first quarter , when we experienced a temporary reduction in the growth rates of gsv and revenue . this trend continued into the beginning of the second quarter , driven by spend contraction by many of our clients , as the covid-19 pandemic continued to disrupt their businesses . these trends stabilized in the second half of the second quarter , and improved thereafter , contributing to an overall increase in the growth 55 rates of gsv and revenue in 2020. also , beginning in the second half of the second quarter of 2020 , we began to see an increase in client acquisition driven by the acceleration in the shift toward remote work , due in part to the covid-19 pandemic and the execution of our strategic initiatives . this increase in client acquisition continued to accelerate in the second half of 2020 and drove an increase in freelancer billings , which , in turn , drove an increase in marketplace revenue . as a result , our work marketplace enabled $ 2.5 billion of gsv in 2020 , $ 2.1 billion in 2019 , and $ 1.8 billion in 2018 , representing year-over-year increases of 21 % in 2020 and 19 % in 2019. we generated revenue of $ 373.6 million in 2020 , $ 300.6 million in 2019 , and $ 253.4 million in 2018 , representing year-over-year increases of 24 % in 2020 and 19 % in 2019. while we have not incurred significant disruptions to our business thus far from the covid-19 pandemic , at this time , we are unable to fully assess the aggregate impact it will have on our business due to various uncertainties , which include , but are not limited to , the duration of the pandemic , its effect on the economy , its impact to the businesses of our clients , actions that may be taken by governmental authorities related to the pandemic , and other factors identified in part i , item 1a “ risk factors ” in this annual report , including the risk factor titled “ our business experienced , and may again experience , an adverse impact from the ongoing covid-19 pandemic . in addition , users may reduce their use of our work marketplace following the covid-19 pandemic . ” additionally , while we have made significant investments to grow our business , including investments in sales and marketing to acquire new clients and drive brand awareness , in the fourth quarter of 2020 , we decided that it was no longer cost-effective for our sales team to sell our upwork business offering . we do not expect this decision to have a material impact on our marketplace revenue , as we will service those clients that we had previously targeted with our upwork business offering with our other marketplace offerings , such as upwork basic and plus . in 2020 , we also made significant investments in research and development to build new product features and launch new offerings and in operations and personnel , and we intend to continue to focus on these efforts . as a result , we generated a net loss of $ 22.9 million in 2020 compared to a net loss of $ 16.7 million in 2019. our adjusted ebitda was $ 14.0 million in 2020 , an increase of 89 % from 2019. adjusted ebitda is a financial measure that is not prepared in accordance with , and is not an alternative to , financial measures prepared in accordance with u.s. gaap . see the section titled “ selected consolidated financial data—non-gaap financial measures ” for a definition of adjusted ebitda and information regarding our use of adjusted ebitda and a reconciliation of net loss to adjusted ebitda . story_separator_special_tag marketplace revenue , which represents the majority of our total revenue , is primarily comprised of the service fees paid by freelancers as a percentage of the total amount that freelancers charge clients for services accessed through our work marketplace and , to a lesser extent , payment processing and administration fees paid by clients . in the fourth quarter of 2020 , we decided that it was no longer cost-effective for our sales team to sell our upwork business offering . we do not expect this decision to have a material impact on our marketplace revenue , as we will service those clients that we had previously targeted with our upwork business offering with our other marketplace offerings , such as upwork basic and plus . our upwork basic and plus offerings provide clients with access to freelancers with verified work history and client feedback on our work marketplace , the ability to instantly match with the right freelancers , and built-in collaboration features . for freelancers working with clients that are on our upwork basic and plus offerings , we have a tiered freelancer service fee schedule based on cumulative lifetime billings by the freelancer to each client . freelancers typically pay us 20 % of the first $ 500 , 10 % for the next $ 9,500 , and then 5 % for any amount over $ 10,000 they bill to each client through our work marketplace . we recognize revenue on sunday for the majority of our tiered freelancer service fees each week . to a lesser extent , we also generate revenue from freelancers through membership fees , purchases of connects , and withdrawal and other fees . in addition , we generate marketplace revenue from our upwork basic and plus offerings by charging clients a payment processing and administration fee . clients using our upwork basic offering pay a fee equal to 3 % of their client spend . we recognize revenue on monday for a substantial portion of our client fees each week . clients using our upwork plus offering pay a flat fee of approximately $ 50 per month for additional features and pay a fee equal to 3 % of their client spend unless they pay via ach ( in which case , provided all eligibility criteria are met , the fee is waived ) . to a lesser extent , we also generate revenue from clients through foreign currency exchange fees when clients choose to pay in currencies other than the u.s. dollar . our upwork enterprise and other premium offerings , which are designed for larger clients , include access to additional product features , premium access to top freelancers , professional services , custom reporting , and flexible payment terms . for our upwork enterprise offering , we charge clients a monthly or annual subscription fee and a service fee calculated as a percentage of the client 's spend on freelancer services , in addition to the service fees paid by freelancers . additionally , upwork enterprise clients can also subscribe to a compliance offering that includes worker classification services for an additional fee and may also choose to use our work marketplace to engage freelancers that were not originally sourced through our work marketplace for a lower fee percentage . one of our premium offerings , upwork payroll , is available to clients when freelancers are classified as employees for engagements on our work marketplace . the client enters into an upwork payroll agreement with us , and we separately contract 59 with unrelated third-party staffing providers that provide employment services to such clients . revenue from upwork payroll is currently immaterial . the covid-19 pandemic and the resulting restrictions intended to prevent its spread have accelerated the secular shift toward remote and independent work . in 2020 , we continued to identify opportunities to prioritize our advertising and marketing efforts in order to reach those new and existing clients seeking to engage with independent talent due to the covid-19 pandemic , as well as companies that have already embraced a remote work model . as a result of these efforts , coupled with our execution against strategic initiatives , our 2020 results were fueled by both existing and new clients , who used our work marketplace to address their changing business needs and drove an increase in freelancer billings , which , in turn , drove an increase in marketplace revenue . although the covid-19 pandemic did not have a material adverse impact on our financial results for the year ended december 31 , 2020 , we are continuously evaluating the nature of and extent to which the covid-19 pandemic will impact our business , operating results , and financial condition . managed services revenue . through our managed services offering , we are responsible for providing services and engaging freelancers directly or as employees of third-party staffing providers to perform services for clients on our behalf . the freelancers providing services in connection with our managed services include independent talent and agencies of varying sizes . under u.s. gaap , we are deemed to be the principal in these managed services arrangements and therefore recognize the entire gsv of managed services projects as managed services revenue , as compared to recognizing only the percentage of the client spend that we receive , as we do with our marketplace offerings . managed services revenue grew at a slower rate than our marketplace revenue in 2020 compared to 2019 , and we anticipate this trend to continue , as we primarily focus on increasing client usage of and spend on our marketplace offerings . cost of revenue and gross profit cost of revenue . cost of revenue consists primarily of the cost of payment processing fees , amounts paid to freelancers to deliver services for clients under our managed services offering , personnel-related costs for our services and support personnel , third-party hosting fees for our use
| cash flows the following table summarizes our cash flows for the years ended december 31 , 2020 , 2019 , and 2018 ( in thousands ) : replace_table_token_22_th operating activities our largest source of cash from operating activities is revenue generated from our work marketplace . our primary uses of cash from operating activities are for personnel-related expenditures , marketing activities , including advertising , payment processing fees , amounts paid to freelancers to deliver services for clients under our managed services offering , and third-party hosting costs . in addition , because we are licensed as an internet escrow agent , our total cash and cash provided by operating activities may be impacted by the timing of the end of our fiscal quarter as discussed in the section titled “ —liquidity and capital resources—escrow funding requirements. ” net cash provided by operating activities during 2020 was $ 22.4 million , which resulted from non-cash charges of $ 43.0 million and net cash inflows of $ 2.2 million from changes in operating assets and liabilities , offset by a net loss of $ 22.9 million . the change in operating assets and liabilities primarily resulted from changes in trade and client receivables , accrued expenses , and other current and long-term liabilities . due to fluctuations in revenue and the number of transactions on our work marketplace , coupled with fluctuations in the timing of cash receipts and payments , our operating assets and liabilities will likely continue to fluctuate in the future . net cash provided by operating activities during 2019 was $ 1.1 million , which resulted from non-cash charges of $ 32.2 million , offset by a net loss of $ 16.7 million and net cash outflows of $ 14.4 million from changes in operating assets and liabilities . the change in operating assets and liabilities primarily resulted from the increase in trade and client receivables of $ 10.9 million .
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the net proceeds of the offering , including the full exercise of the option , were approximately $ 10.6 million , after deducting the underwriting discounts and commissions and the other estimated offering expenses payable by us . in june 2017 , we entered into a controlled equity offering sm sales agreement ( sales agreement ) with cantor fitzgerald & co. ( cantor ) , as sales agent , pursuant to which we may offer and sell , from time to time through cantor , shares of our common stock , par value $ 0.001 per share , providing for aggregate sales proceeds of up to $ 20,000,000. under the sales agreement , cantor may sell such shares of common stock in sales deemed to be an at the market offering ( atm ) as defined in rule 415 ( a ) ( 4 ) promulgated under the securities act of 1933 , as amended , with us setting the parameters for the sale of shares thereunder , including the number of shares to be issued , the time period during which sales are requested to be made , any limits on the number of shares that may be sold in any one trading day , 63 and any minimum price below which sales may not be made . the sales agreement provides that cantor will be entitled to compensation for its services equal to 3.0 % of the gross proceeds from the sale of shares sold pursuant to the sales agreement . we have no obligation to sell any shares under the sales agreement , and may at any time suspend solicitations and offers under the sales agreement . from january 1 , 2018 through march 29 , 2018 , we sold an aggregate of 527,000 shares of our common stock and received $ 4.1 million after deducting commissions related to the sales agreement . in september 2017 , we closed an underwritten public offering in which we sold an aggregate of 3,967,500 shares of common stock , including 517,500 shares sold in connection with the exercise in full by the underwriters of their option to purchase additional shares . the net proceeds of the offering , including the full exercise of the option , were approximately $ 26.9 million , after deducting underwriting discounts , commissions , and other offering expenses payable by us . we will need to raise additional capital in the form of debt or equity or through partnerships to fund additional development of our product candidates , and we may in-license , acquire , or invest in complementary businesses or products . in addition , as capital resources permit , we may augment or otherwise modify the clinical development plans described herein . research and development expenses we expense all of our research and development expenses as they are incurred . research and development costs that are paid in advance of performance are capitalized as a prepaid expense until incurred . research and development expenses primarily include : non-clinical development , preclinical research , and clinical trial and regulatory-related costs ; expenses incurred under agreements with sites and consultants that conduct our clinical trials ; and employee-related expenses , including salaries , benefits , travel , and stock-based compensation expense . substantially all of our research and development expenses to date have been incurred in connection with reproxalap . we expect our research and development expenses to increase for the foreseeable future as we advance reproxalap and other compounds through preclinical and clinical development . the process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming . we are unable to estimate with any certainty the costs we will incur in the continued development of reproxalap and our other product candidates . clinical development timelines , the probability of success , and development costs can differ materially from expectations . we may never succeed in achieving marketing approval for our product candidates . the costs of clinical trials may vary significantly over the life of a project owing to , but not limited to , the following : per patient trial costs ; the number of sites included in the trials ; the countries in which the trials are conducted ; the length of time required to enroll eligible patients ; the design of the trials ; the cost of manufacturing the drug ; the number of patients that participate in the trials ; the number of doses that patients receive ; the cost of vehicle or active comparative agents used in trials ; the drop-out or discontinuation rates of patients ; potential additional safety monitoring or other studies requested by regulatory agencies ; the duration of patient follow-up ; and the efficacy and safety profile of the product candidate . 64 we do not expect reproxalap and our other product candidates to be commercially available , if at all , for the next several years . general and administrative expenses general and administrative expenses consist primarily of salaries and related benefits , including stock-based compensation . our general and administrative expenses consisted primarily of payroll expenses for our full-time employees during the years ended december 31 , 2017 and 2016. other general and administrative expenses include professional fees for auditing , tax , and legal services , including patent related costs . we expect that general and administrative expenses will increase in the future as we expand our operating activities , continue to incur additional costs associated with being a publicly-traded company , and maintain compliance with exchange listing and sec requirements . these increases will likely include higher consulting costs , legal fees , accounting fees , directors ' and officers ' liability insurance premiums , and fees associated with investor relations . story_separator_special_tag losses have resulted principally from costs incurred in our clinical trials and other research and development programs , as well as from our general and administrative expenses . research and development expenses . research and development expenses were $ 16.3 million for the year ended december 31 , 2017 compared to $ 13.2 million for the same period in 2016. the increase of $ 3.1 million is primarily related to the increase in our external research and development expenditures , including clinical and manufacturing costs , and a decrease in personnel and preclinical costs . general and administrative expenses . general and administrative expenses were $ 6.2 million for the year ended december 31 , 2017 , compared to $ 5.5 million for the year ended 2016. the increase of approximately $ 0.7 million is primarily related to an increase in personnel , legal , and professional service costs . other income ( expense ) . total other income ( expense ) was approximately $ 148,000 for the year ended december 31 , 2017 compared to $ ( 3,000 ) for the year ended december 31 , 2015 , and consisted of interest income partially offset by interest expense related to our credit facility . story_separator_special_tag the outcome , costs , and timing of seeking and obtaining regulatory approvals from the fda , and any similar regulatory agencies ; the timing and costs associated with manufacturing reproxalap and our other product candidates for clinical trials and other studies and , if approved , for commercial sale ; our need and ability to hire additional management , development , and scientific personnel ; the cost to maintain , expand and defend the scope of our intellectual property portfolio , including the amount and timing of any payments we may be required to make , or that we may receive , in connection with licensing , filing , prosecuting , defending , and enforcing of any patents or other intellectual property rights ; the timing and costs associated with establishing sales and marketing capabilities ; market acceptance of reproxalap and our other product candidates ; the costs of acquiring , licensing , or investing in additional businesses , products , product candidates , and technologies ; and our need to remediate any material weaknesses and implement additional internal systems and infrastructure , including financial and reporting systems . we may need or desire to obtain additional capital to finance our operations through debt , equity , or alternative financing arrangements . we may also seek capital through collaborations or partnerships with other companies . the issuance of debt could require us to grant additional liens on certain of our assets that may limit our flexibility . if we raise additional capital by issuing equity securities , the terms and prices for these financings may be much more favorable to the new investors than the terms obtained by our existing stockholders . these financings also may significantly dilute the ownership of our existing stockholders . if we are unable to obtain additional financing , we may be required to reduce the scope of our future activities , which could harm our business , financial condition , and operating results . there can be no assurance that any additional financing required in the future will be available on acceptable terms , if at all . 71 we will continue to incur costs as a public company including , but not limited to , costs and expenses for directors fees ; increased directors and officers insurance ; investor relations fees ; expenses for compliance with the sarbanes-oxley act of 2002 and rules implemented by the sec and nasdaq , on which our common stock is listed ; and various other costs . the sarbanes-oxley act of 2002 requires that we maintain effective disclosure controls and procedures and internal controls . the following table summarizes our cash flows for the years ended december 31 , 2017 and 2016 : replace_table_token_3_th operating activities . net cash used in operating activities was $ 19.2 million in 2017 , compared to net cash used in operating activities of $ 15.1 million in 2016. the primary use of cash was to fund our operations . the increase in the amount of cash used in operating activities for 2017 as compared to 2016 was due to an increase in research and development expenses , in addition to general and administrative expenses . investing activities . net cash used in investing activities in 2017 were $ 10.2 million , related primarily to the purchase of marketable securities partially offset by sales and maturities of marketable securities , compared to net cash used in investing activities in 2016 of $ 0.2 million , related primarily to the purchase of marketable securities partially offset by sales and maturities of marketable securities . financing activities . net cash provided by financing activities was $ 37.4 million for the year ended december 31 , 2017 , related to our underwritten public offerings , compared to net cash provided by financing activities of $ 12.7 million for year ended 2016 , related to our underwritten public offerings . off-balance sheet arrangements through december 31 , 2017 , we have not entered into and did not have any relationships with unconsolidated entities or financial collaborations , 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 purpose . contractual obligations and commitments in september 2017 , we executed a lease agreement ( the office lease ) , which was amended in november 2017. the amended lease as of december 31 , 2017 , consisted of approximately 9,351 square feet of office space of office space located in lexington , massachusetts ( the premises ) . we intend to use the premises as our corporate headquarters . the term of the office lease is through december
| cash flows the following table summarizes our cash flows for the years ended december 31 , 2020 , 2019 , and 2018 ( in thousands ) : replace_table_token_22_th operating activities our largest source of cash from operating activities is revenue generated from our work marketplace . our primary uses of cash from operating activities are for personnel-related expenditures , marketing activities , including advertising , payment processing fees , amounts paid to freelancers to deliver services for clients under our managed services offering , and third-party hosting costs . in addition , because we are licensed as an internet escrow agent , our total cash and cash provided by operating activities may be impacted by the timing of the end of our fiscal quarter as discussed in the section titled “ —liquidity and capital resources—escrow funding requirements. ” net cash provided by operating activities during 2020 was $ 22.4 million , which resulted from non-cash charges of $ 43.0 million and net cash inflows of $ 2.2 million from changes in operating assets and liabilities , offset by a net loss of $ 22.9 million . the change in operating assets and liabilities primarily resulted from changes in trade and client receivables , accrued expenses , and other current and long-term liabilities . due to fluctuations in revenue and the number of transactions on our work marketplace , coupled with fluctuations in the timing of cash receipts and payments , our operating assets and liabilities will likely continue to fluctuate in the future . net cash provided by operating activities during 2019 was $ 1.1 million , which resulted from non-cash charges of $ 32.2 million , offset by a net loss of $ 16.7 million and net cash outflows of $ 14.4 million from changes in operating assets and liabilities . the change in operating assets and liabilities primarily resulted from the increase in trade and client receivables of $ 10.9 million .
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the net proceeds of the offering , including the full exercise of the option , were approximately $ 10.6 million , after deducting the underwriting discounts and commissions and the other estimated offering expenses payable by us . in june 2017 , we entered into a controlled equity offering sm sales agreement ( sales agreement ) with cantor fitzgerald & co. ( cantor ) , as sales agent , pursuant to which we may offer and sell , from time to time through cantor , shares of our common stock , par value $ 0.001 per share , providing for aggregate sales proceeds of up to $ 20,000,000. under the sales agreement , cantor may sell such shares of common stock in sales deemed to be an at the market offering ( atm ) as defined in rule 415 ( a ) ( 4 ) promulgated under the securities act of 1933 , as amended , with us setting the parameters for the sale of shares thereunder , including the number of shares to be issued , the time period during which sales are requested to be made , any limits on the number of shares that may be sold in any one trading day , 63 and any minimum price below which sales may not be made . the sales agreement provides that cantor will be entitled to compensation for its services equal to 3.0 % of the gross proceeds from the sale of shares sold pursuant to the sales agreement . we have no obligation to sell any shares under the sales agreement , and may at any time suspend solicitations and offers under the sales agreement . from january 1 , 2018 through march 29 , 2018 , we sold an aggregate of 527,000 shares of our common stock and received $ 4.1 million after deducting commissions related to the sales agreement . in september 2017 , we closed an underwritten public offering in which we sold an aggregate of 3,967,500 shares of common stock , including 517,500 shares sold in connection with the exercise in full by the underwriters of their option to purchase additional shares . the net proceeds of the offering , including the full exercise of the option , were approximately $ 26.9 million , after deducting underwriting discounts , commissions , and other offering expenses payable by us . we will need to raise additional capital in the form of debt or equity or through partnerships to fund additional development of our product candidates , and we may in-license , acquire , or invest in complementary businesses or products . in addition , as capital resources permit , we may augment or otherwise modify the clinical development plans described herein . research and development expenses we expense all of our research and development expenses as they are incurred . research and development costs that are paid in advance of performance are capitalized as a prepaid expense until incurred . research and development expenses primarily include : non-clinical development , preclinical research , and clinical trial and regulatory-related costs ; expenses incurred under agreements with sites and consultants that conduct our clinical trials ; and employee-related expenses , including salaries , benefits , travel , and stock-based compensation expense . substantially all of our research and development expenses to date have been incurred in connection with reproxalap . we expect our research and development expenses to increase for the foreseeable future as we advance reproxalap and other compounds through preclinical and clinical development . the process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming . we are unable to estimate with any certainty the costs we will incur in the continued development of reproxalap and our other product candidates . clinical development timelines , the probability of success , and development costs can differ materially from expectations . we may never succeed in achieving marketing approval for our product candidates . the costs of clinical trials may vary significantly over the life of a project owing to , but not limited to , the following : per patient trial costs ; the number of sites included in the trials ; the countries in which the trials are conducted ; the length of time required to enroll eligible patients ; the design of the trials ; the cost of manufacturing the drug ; the number of patients that participate in the trials ; the number of doses that patients receive ; the cost of vehicle or active comparative agents used in trials ; the drop-out or discontinuation rates of patients ; potential additional safety monitoring or other studies requested by regulatory agencies ; the duration of patient follow-up ; and the efficacy and safety profile of the product candidate . 64 we do not expect reproxalap and our other product candidates to be commercially available , if at all , for the next several years . general and administrative expenses general and administrative expenses consist primarily of salaries and related benefits , including stock-based compensation . our general and administrative expenses consisted primarily of payroll expenses for our full-time employees during the years ended december 31 , 2017 and 2016. other general and administrative expenses include professional fees for auditing , tax , and legal services , including patent related costs . we expect that general and administrative expenses will increase in the future as we expand our operating activities , continue to incur additional costs associated with being a publicly-traded company , and maintain compliance with exchange listing and sec requirements . these increases will likely include higher consulting costs , legal fees , accounting fees , directors ' and officers ' liability insurance premiums , and fees associated with investor relations . story_separator_special_tag losses have resulted principally from costs incurred in our clinical trials and other research and development programs , as well as from our general and administrative expenses . research and development expenses . research and development expenses were $ 16.3 million for the year ended december 31 , 2017 compared to $ 13.2 million for the same period in 2016. the increase of $ 3.1 million is primarily related to the increase in our external research and development expenditures , including clinical and manufacturing costs , and a decrease in personnel and preclinical costs . general and administrative expenses . general and administrative expenses were $ 6.2 million for the year ended december 31 , 2017 , compared to $ 5.5 million for the year ended 2016. the increase of approximately $ 0.7 million is primarily related to an increase in personnel , legal , and professional service costs . other income ( expense ) . total other income ( expense ) was approximately $ 148,000 for the year ended december 31 , 2017 compared to $ ( 3,000 ) for the year ended december 31 , 2015 , and consisted of interest income partially offset by interest expense related to our credit facility . story_separator_special_tag the outcome , costs , and timing of seeking and obtaining regulatory approvals from the fda , and any similar regulatory agencies ; the timing and costs associated with manufacturing reproxalap and our other product candidates for clinical trials and other studies and , if approved , for commercial sale ; our need and ability to hire additional management , development , and scientific personnel ; the cost to maintain , expand and defend the scope of our intellectual property portfolio , including the amount and timing of any payments we may be required to make , or that we may receive , in connection with licensing , filing , prosecuting , defending , and enforcing of any patents or other intellectual property rights ; the timing and costs associated with establishing sales and marketing capabilities ; market acceptance of reproxalap and our other product candidates ; the costs of acquiring , licensing , or investing in additional businesses , products , product candidates , and technologies ; and our need to remediate any material weaknesses and implement additional internal systems and infrastructure , including financial and reporting systems . we may need or desire to obtain additional capital to finance our operations through debt , equity , or alternative financing arrangements . we may also seek capital through collaborations or partnerships with other companies . the issuance of debt could require us to grant additional liens on certain of our assets that may limit our flexibility . if we raise additional capital by issuing equity securities , the terms and prices for these financings may be much more favorable to the new investors than the terms obtained by our existing stockholders . these financings also may significantly dilute the ownership of our existing stockholders . if we are unable to obtain additional financing , we may be required to reduce the scope of our future activities , which could harm our business , financial condition , and operating results . there can be no assurance that any additional financing required in the future will be available on acceptable terms , if at all . 71 we will continue to incur costs as a public company including , but not limited to , costs and expenses for directors fees ; increased directors and officers insurance ; investor relations fees ; expenses for compliance with the sarbanes-oxley act of 2002 and rules implemented by the sec and nasdaq , on which our common stock is listed ; and various other costs . the sarbanes-oxley act of 2002 requires that we maintain effective disclosure controls and procedures and internal controls . the following table summarizes our cash flows for the years ended december 31 , 2017 and 2016 : replace_table_token_3_th operating activities . net cash used in operating activities was $ 19.2 million in 2017 , compared to net cash used in operating activities of $ 15.1 million in 2016. the primary use of cash was to fund our operations . the increase in the amount of cash used in operating activities for 2017 as compared to 2016 was due to an increase in research and development expenses , in addition to general and administrative expenses . investing activities . net cash used in investing activities in 2017 were $ 10.2 million , related primarily to the purchase of marketable securities partially offset by sales and maturities of marketable securities , compared to net cash used in investing activities in 2016 of $ 0.2 million , related primarily to the purchase of marketable securities partially offset by sales and maturities of marketable securities . financing activities . net cash provided by financing activities was $ 37.4 million for the year ended december 31 , 2017 , related to our underwritten public offerings , compared to net cash provided by financing activities of $ 12.7 million for year ended 2016 , related to our underwritten public offerings . off-balance sheet arrangements through december 31 , 2017 , we have not entered into and did not have any relationships with unconsolidated entities or financial collaborations , 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 purpose . contractual obligations and commitments in september 2017 , we executed a lease agreement ( the office lease ) , which was amended in november 2017. the amended lease as of december 31 , 2017 , consisted of approximately 9,351 square feet of office space of office space located in lexington , massachusetts ( the premises ) . we intend to use the premises as our corporate headquarters . the term of the office lease is through december
| liquidity and capital resources we have funded our operations primarily from the sale of equity securities and convertible equity securities and borrowings under our credit facility , discussed below . we have incurred operating losses since inception and negative cash flows from operating activities in devoting substantially all of our efforts towards research and development . at december 31 , 2017 , we had total stockholders ' equity of approximately $ 39.6 million , and cash , cash equivalents , and marketable securities of $ 42.9 million . during the year ended december 31 , 2017 , we had net loss of approximately $ 22.3 million . we expect to generate operating losses for the foreseeable future . we are a party to a loan and security agreement ( the credit facility ) with pacific western bank ( pacific western , formerly square 1 bank ) , which was originally entered into in april 2012 and has been subsequently amended . pursuant to the credit facility , pacific western agreed to make term loans in a principal amount of up to $ 5.0 million available to us to fund expenses related to our clinical trials and general working capital purposes . the term loans were made available to us upon the following terms : ( i ) $ 2.0 million was made available in 69 november 2014 ( which was used in part to refinance then outstanding loans from pacific western ) ; and ( ii ) $ 3.0 million became available to us in may 2016 following the satisfaction of certain conditions , including receipt of positive phase 2 clinical trial results in noninfectious anterior uveitis . in november 2017 , we amended our credit facility such that any term loan we draw is payable as interest only prior to october 2018 and thereafter is payable in monthly installments of principal plus accrued interest over 36 months . each term loan accrues interest from its date of issue at a variable annual interest rate equal to the greater of 2.0 % plus prime or 5.25 % per annum . the annualized interest rate as of december 31 , 2017 was 6.56 % .
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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 have funded our operations primarily from the sale of equity securities and convertible equity securities and borrowings under our credit facility , discussed below . we have incurred operating losses since inception and negative cash flows from operating activities in devoting substantially all of our efforts towards research and development . at december 31 , 2017 , we had total stockholders ' equity of approximately $ 39.6 million , and cash , cash equivalents , and marketable securities of $ 42.9 million . during the year ended december 31 , 2017 , we had net loss of approximately $ 22.3 million . we expect to generate operating losses for the foreseeable future . we are a party to a loan and security agreement ( the credit facility ) with pacific western bank ( pacific western , formerly square 1 bank ) , which was originally entered into in april 2012 and has been subsequently amended . pursuant to the credit facility , pacific western agreed to make term loans in a principal amount of up to $ 5.0 million available to us to fund expenses related to our clinical trials and general working capital purposes . the term loans were made available to us upon the following terms : ( i ) $ 2.0 million was made available in 69 november 2014 ( which was used in part to refinance then outstanding loans from pacific western ) ; and ( ii ) $ 3.0 million became available to us in may 2016 following the satisfaction of certain conditions , including receipt of positive phase 2 clinical trial results in noninfectious anterior uveitis . in november 2017 , we amended our credit facility such that any term loan we draw is payable as interest only prior to october 2018 and thereafter is payable in monthly installments of principal plus accrued interest over 36 months . each term loan accrues interest from its date of issue at a variable annual interest rate equal to the greater of 2.0 % plus prime or 5.25 % per annum . the annualized interest rate as of december 31 , 2017 was 6.56 % .
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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 .
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the sale generated proceeds of $ 355.9 million and resulted in a gain of $ 192.8 million . as of december 31 , 2014 , we effectively own 44 % of cyrusone , which is held in the form of 1.9 million shares of cyrusone common stock and 26.6 million cyrusone lp partnership units . 29 form 10-k part ii cincinnati bell inc. in the second quarter of 2014 , we entered into agreements to sell our wireless spectrum licenses and certain other assets related to our wireless business . this agreement to sell our wireless spectrum license closed on september 30 , 2014 , for cash proceeds of $ 194.4 million . as a result , we derecognized the $ 88.2 million carrying value of the licenses previously reported as `` intangible assets , net `` in the consolidated balance sheets . also on september 30 , 2014 , we entered into a separate agreement to use certain spectrum licenses until we no longer provide wireless service . we recorded the fair value of the lease of the spectrum of $ 6.4 million , in `` prepaid expenses `` in the consolidated balance sheets . this fair value is considered a level 3 measurement based on other comparable transactions . the asset is being amortized over a six month period and had a net carrying value of $ 3.2 million as of december 31 , 2014. in addition , as we continue to use the licenses , we deferred the gain of $ 112.6 million related to the sale of the spectrum , which is presented in the consolidated balance sheets . we plan to operate and generate cash from our wireless operations until no later than april 6 , 2015. at that time , we will transfer certain leases and other assets valued at approximately $ 25 million to the acquiring company . negotiations with the communications workers of america ( “ cwa ” ) have been ongoing since the tentative agreement reached on august 4 , 2014 was not ratified by local members of the union . we reached another tentative agreement on january 23 , 2015 that is pending ratification by the local union 's members . consolidated results of operations 2014 compared to 2013 service revenue was $ 999.6 million in 2014 , a decrease of $ 39.7 million compared to 2013 . of this decrease , $ 15.2 million was due to the deconsolidation of cyrusone 's results of operations from our consolidated financial statements . excluding the impact of cyrusone , service revenue in 2014 decreased by $ 24.5 million year-over-year , primarily driven by lower wireless service revenue of $ 59.4 million as the postpaid and prepaid subscriber base continues to decline as a result of the wind down of the business . this decrease was partially offset by strong demand for strategic products that resulted in an additional $ 12.2 million of wireline service revenue and $ 22.7 million of it services and hardware revenue . product revenue totaled $ 278.6 million in 2014 , up 28 % compared to 2013 due largely to $ 64.8 million higher sales of telecommunications and it hardware . wireline equipment sales were up $ 4.9 million as a result of sales generated through an agreement with verizon wireless to sell their products and services at our retail locations . increased sales were partially offset by lower wireless handset and accessory sales . cost of services was $ 454.2 million in 2014 , up $ 23.8 million compared to 2013 due to the growth in our strategic products . wireline and it services costs were up $ 17.3 million and $ 17.6 million , respectively . these increases were partially offset by wireless cost of services which are down $ 6.5 million as a result of a declining subscriber base . cyrusone cost of services was $ 4.6 million in 2013. cost of products sold was $ 244.9 million in 2014 up from $ 215.9 million in the prior year , due to a $ 52.6 million increase of costs from higher telecommunications and it hardware sales . wireline cost of products increased by $ 3.8 million primarily related to sales generated through an agreement with verizon wireless to sell their products and services at our retail locations . these increases were partially offset by lower wireless cost of products sold equaling $ 27.4 million , due to lower handset and accessory sales as a result of the planned wind down of the wireless segment . selling , general and administrative ( “ sg & a ” ) expenses were $ 223.1 million in 2014 , an increase of $ 2.3 million compared to the same period in 2013 . cyrusone sg & a expenses were $ 2.4 million prior to the ipo . excluding cyrusone , sg & a expenses increased $ 4.7 million compared to the prior year . wireline and it services and hardware costs were up $ 2.1 million and $ 6.9 million , respectively , to support growth in our strategic products . wireline costs were also up due to outsourcing certain it functions . partially offsetting this increase was a $ 14.9 million decrease in wireless sg & a expenses due primarily to cost containment efforts as we begin to wind down operations . corporate costs were up $ 10.6 million from the prior year primarily as a result of an increase in stock compensation expense due to less mark to market benefit on plans indexed to changes in our stock price as well as increases in other employee related costs . 30 form 10-k part ii cincinnati bell inc. depreciation and amortization was $ 231.0 million in 2014 , an increase of $ 61.4 million compared to the prior year . story_separator_special_tag an income tax benefit of $ 2.5 million in 2013 was the result of pre-tax losses . in 2013 , income tax expense includes a valuation allowance provision of $ 10.7 million for texas margin credits which , effective with cyrusone 's ipo , are uncertain of being realized before their expiration date . in periods without tax law changes , the company expects its effective tax rate to exceed statutory rates primarily due to the non-deductible expenses associated with the broadband securities . the company uses federal and state net operating losses to defray payment of federal and state tax liabilities . as a result , the company had cash income tax payments , net of refunds , of $ 2.8 million in 2013 . discussion of operating segment results the company manages its business based upon products and service offerings . at december 31 , 2012 , we operated four business segments : wireline , it services and hardware , wireless and data center colocation . effective january 24 , 2013 , the date of the cyrusone ipo , we no longer include cyrusone , our former data center colocation segment , in our consolidated financial statements and now account for our ownership in cyrusone as an equity method investment . therefore , at december 31 , 2014 and 2013 , we operated three business segments : wireline , it services and hardware and wireless . certain corporate administrative expenses have been allocated to our business segments based upon the nature of the expense and the relative size of the segment . intercompany transactions between segments have been eliminated . 34 form 10-k part ii cincinnati bell inc. wireline the wireline segment provides products and services such as data transport , high-speed internet , entertainment , local voice , long distance , voip , and other services . cincinnati bell telephone company llc ( cbt ) , a subsidiary of the company , is the incumbent local exchange carrier ( ilec ) for a geography that covers a radius of approximately 25 miles around cincinnati , ohio , and includes parts of northern kentucky and southeastern indiana . cbt has operated this territory for over 140 years . voice and data services beyond its ilec territory , particularly in dayton and mason , ohio , are provided through the operations of cincinnati bell extended territories llc ( `` cbet `` ) , a competitive local exchange carrier ( `` clec `` ) and subsidiary of cbt . the company provides long distance and voip services primarily through its cincinnati bell any distance inc. ( `` cbad `` ) and evolve business solutions llc ( `` evolve `` ) subsidiaries . replace_table_token_5_th 35 form 10-k part ii cincinnati bell inc. 2014 compared to 2013 revenues data revenue consists of fioptics high-speed and dsl internet access , data transport , and interconnection services . data revenue was $ 334.9 million in 2014 , an increase of $ 17.1 million compared to 2013 . strategic data revenue was $ 151.1 million in 2014 , up $ 29.0 million compared to the prior year . revenue from fioptics high-speed internet service increased to $ 45.7 million in 2014 , up 64 % compared to the prior year . the increase is primarily due to a growing subscriber base totaling 113,700 accounts at december 31 , 2014 and an increase in monthly arpu of approximately $ 4.00 , up 12 % compared to the prior year . strategic revenue from dsl customers subscribing to at least a10 megabit internet product totaled $ 6.2 million . strategic business revenue totaled $ 102.7 million , including $ 3.5 million from fioptics , up 9 % from the prior year . legacy data revenue was $ 183.8 million , a decrease of $ 11.9 million from the prior year . this decrease is primarily due to our business customers migrating to higher bandwidth data transport products and a 17 % decline in dsl customers as a result of switching to higher speed internet products . voice local service revenue includes local service , digital trunking , switched access , information services , and other value-added services such as caller identification , voicemail , call waiting , and call return . voice local service revenue was $ 203.5 million in 2014 , down $ 25.6 million compared to 2013 . strategic voice service revenue was $ 21.0 million in 2014 , up $ 3.1 million compared to 2013 , primarily due to an increase in fioptics voice lines , which totaled 61,000 at december 31 , 2014. legacy voice service revenue was $ 175.8 million in 2014 , down $ 28.4 million compared to 2013. the segment continues to lose access lines as a result of , among other factors , customers electing to solely use wireless service in lieu of traditional local wireline service , company-initiated disconnections of customers with credit problems , and customers electing to use service from other providers . in 2014 , legacy voice service revenue also experienced increased access line churn as a result of the wind down of the wireless segment due to customers electing to discontinue their local voice service that had been bundled with their wireless subscription . integration voice revenue totaled $ 6.7 million in 2014 , down $ 0.3 million compared to the prior year . long distance and voip revenue was $ 107.3 million in 2014 , consistent with the prior year as the growth in strategic products offset legacy declines . strategic revenue was $ 58.1 million in 2014 , an increase of $ 7.0 million compared to the prior year due largely to the growth in voip and private line services . legacy revenue was $ 47.0 million in 2014 , a decrease of $ 5.1 million compared to 2013 primarily due to an 8 % decrease in long distance lines as both consumers and business customers are migrating to voip or wireless
| 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 .
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the sale generated proceeds of $ 355.9 million and resulted in a gain of $ 192.8 million . as of december 31 , 2014 , we effectively own 44 % of cyrusone , which is held in the form of 1.9 million shares of cyrusone common stock and 26.6 million cyrusone lp partnership units . 29 form 10-k part ii cincinnati bell inc. in the second quarter of 2014 , we entered into agreements to sell our wireless spectrum licenses and certain other assets related to our wireless business . this agreement to sell our wireless spectrum license closed on september 30 , 2014 , for cash proceeds of $ 194.4 million . as a result , we derecognized the $ 88.2 million carrying value of the licenses previously reported as `` intangible assets , net `` in the consolidated balance sheets . also on september 30 , 2014 , we entered into a separate agreement to use certain spectrum licenses until we no longer provide wireless service . we recorded the fair value of the lease of the spectrum of $ 6.4 million , in `` prepaid expenses `` in the consolidated balance sheets . this fair value is considered a level 3 measurement based on other comparable transactions . the asset is being amortized over a six month period and had a net carrying value of $ 3.2 million as of december 31 , 2014. in addition , as we continue to use the licenses , we deferred the gain of $ 112.6 million related to the sale of the spectrum , which is presented in the consolidated balance sheets . we plan to operate and generate cash from our wireless operations until no later than april 6 , 2015. at that time , we will transfer certain leases and other assets valued at approximately $ 25 million to the acquiring company . negotiations with the communications workers of america ( “ cwa ” ) have been ongoing since the tentative agreement reached on august 4 , 2014 was not ratified by local members of the union . we reached another tentative agreement on january 23 , 2015 that is pending ratification by the local union 's members . consolidated results of operations 2014 compared to 2013 service revenue was $ 999.6 million in 2014 , a decrease of $ 39.7 million compared to 2013 . of this decrease , $ 15.2 million was due to the deconsolidation of cyrusone 's results of operations from our consolidated financial statements . excluding the impact of cyrusone , service revenue in 2014 decreased by $ 24.5 million year-over-year , primarily driven by lower wireless service revenue of $ 59.4 million as the postpaid and prepaid subscriber base continues to decline as a result of the wind down of the business . this decrease was partially offset by strong demand for strategic products that resulted in an additional $ 12.2 million of wireline service revenue and $ 22.7 million of it services and hardware revenue . product revenue totaled $ 278.6 million in 2014 , up 28 % compared to 2013 due largely to $ 64.8 million higher sales of telecommunications and it hardware . wireline equipment sales were up $ 4.9 million as a result of sales generated through an agreement with verizon wireless to sell their products and services at our retail locations . increased sales were partially offset by lower wireless handset and accessory sales . cost of services was $ 454.2 million in 2014 , up $ 23.8 million compared to 2013 due to the growth in our strategic products . wireline and it services costs were up $ 17.3 million and $ 17.6 million , respectively . these increases were partially offset by wireless cost of services which are down $ 6.5 million as a result of a declining subscriber base . cyrusone cost of services was $ 4.6 million in 2013. cost of products sold was $ 244.9 million in 2014 up from $ 215.9 million in the prior year , due to a $ 52.6 million increase of costs from higher telecommunications and it hardware sales . wireline cost of products increased by $ 3.8 million primarily related to sales generated through an agreement with verizon wireless to sell their products and services at our retail locations . these increases were partially offset by lower wireless cost of products sold equaling $ 27.4 million , due to lower handset and accessory sales as a result of the planned wind down of the wireless segment . selling , general and administrative ( “ sg & a ” ) expenses were $ 223.1 million in 2014 , an increase of $ 2.3 million compared to the same period in 2013 . cyrusone sg & a expenses were $ 2.4 million prior to the ipo . excluding cyrusone , sg & a expenses increased $ 4.7 million compared to the prior year . wireline and it services and hardware costs were up $ 2.1 million and $ 6.9 million , respectively , to support growth in our strategic products . wireline costs were also up due to outsourcing certain it functions . partially offsetting this increase was a $ 14.9 million decrease in wireless sg & a expenses due primarily to cost containment efforts as we begin to wind down operations . corporate costs were up $ 10.6 million from the prior year primarily as a result of an increase in stock compensation expense due to less mark to market benefit on plans indexed to changes in our stock price as well as increases in other employee related costs . 30 form 10-k part ii cincinnati bell inc. depreciation and amortization was $ 231.0 million in 2014 , an increase of $ 61.4 million compared to the prior year . story_separator_special_tag an income tax benefit of $ 2.5 million in 2013 was the result of pre-tax losses . in 2013 , income tax expense includes a valuation allowance provision of $ 10.7 million for texas margin credits which , effective with cyrusone 's ipo , are uncertain of being realized before their expiration date . in periods without tax law changes , the company expects its effective tax rate to exceed statutory rates primarily due to the non-deductible expenses associated with the broadband securities . the company uses federal and state net operating losses to defray payment of federal and state tax liabilities . as a result , the company had cash income tax payments , net of refunds , of $ 2.8 million in 2013 . discussion of operating segment results the company manages its business based upon products and service offerings . at december 31 , 2012 , we operated four business segments : wireline , it services and hardware , wireless and data center colocation . effective january 24 , 2013 , the date of the cyrusone ipo , we no longer include cyrusone , our former data center colocation segment , in our consolidated financial statements and now account for our ownership in cyrusone as an equity method investment . therefore , at december 31 , 2014 and 2013 , we operated three business segments : wireline , it services and hardware and wireless . certain corporate administrative expenses have been allocated to our business segments based upon the nature of the expense and the relative size of the segment . intercompany transactions between segments have been eliminated . 34 form 10-k part ii cincinnati bell inc. wireline the wireline segment provides products and services such as data transport , high-speed internet , entertainment , local voice , long distance , voip , and other services . cincinnati bell telephone company llc ( cbt ) , a subsidiary of the company , is the incumbent local exchange carrier ( ilec ) for a geography that covers a radius of approximately 25 miles around cincinnati , ohio , and includes parts of northern kentucky and southeastern indiana . cbt has operated this territory for over 140 years . voice and data services beyond its ilec territory , particularly in dayton and mason , ohio , are provided through the operations of cincinnati bell extended territories llc ( `` cbet `` ) , a competitive local exchange carrier ( `` clec `` ) and subsidiary of cbt . the company provides long distance and voip services primarily through its cincinnati bell any distance inc. ( `` cbad `` ) and evolve business solutions llc ( `` evolve `` ) subsidiaries . replace_table_token_5_th 35 form 10-k part ii cincinnati bell inc. 2014 compared to 2013 revenues data revenue consists of fioptics high-speed and dsl internet access , data transport , and interconnection services . data revenue was $ 334.9 million in 2014 , an increase of $ 17.1 million compared to 2013 . strategic data revenue was $ 151.1 million in 2014 , up $ 29.0 million compared to the prior year . revenue from fioptics high-speed internet service increased to $ 45.7 million in 2014 , up 64 % compared to the prior year . the increase is primarily due to a growing subscriber base totaling 113,700 accounts at december 31 , 2014 and an increase in monthly arpu of approximately $ 4.00 , up 12 % compared to the prior year . strategic revenue from dsl customers subscribing to at least a10 megabit internet product totaled $ 6.2 million . strategic business revenue totaled $ 102.7 million , including $ 3.5 million from fioptics , up 9 % from the prior year . legacy data revenue was $ 183.8 million , a decrease of $ 11.9 million from the prior year . this decrease is primarily due to our business customers migrating to higher bandwidth data transport products and a 17 % decline in dsl customers as a result of switching to higher speed internet products . voice local service revenue includes local service , digital trunking , switched access , information services , and other value-added services such as caller identification , voicemail , call waiting , and call return . voice local service revenue was $ 203.5 million in 2014 , down $ 25.6 million compared to 2013 . strategic voice service revenue was $ 21.0 million in 2014 , up $ 3.1 million compared to 2013 , primarily due to an increase in fioptics voice lines , which totaled 61,000 at december 31 , 2014. legacy voice service revenue was $ 175.8 million in 2014 , down $ 28.4 million compared to 2013. the segment continues to lose access lines as a result of , among other factors , customers electing to solely use wireless service in lieu of traditional local wireline service , company-initiated disconnections of customers with credit problems , and customers electing to use service from other providers . in 2014 , legacy voice service revenue also experienced increased access line churn as a result of the wind down of the wireless segment due to customers electing to discontinue their local voice service that had been bundled with their wireless subscription . integration voice revenue totaled $ 6.7 million in 2014 , down $ 0.3 million compared to the prior year . long distance and voip revenue was $ 107.3 million in 2014 , consistent with the prior year as the growth in strategic products offset legacy declines . strategic revenue was $ 58.1 million in 2014 , an increase of $ 7.0 million compared to the prior year due largely to the growth in voip and private line services . legacy revenue was $ 47.0 million in 2014 , a decrease of $ 5.1 million compared to 2013 primarily due to an 8 % decrease in long distance lines as both consumers and business customers are migrating to voip or wireless
| cash provided by operating activities during 2013 was $ 78.8 million , a decrease of $ 133.9 million compared to 2012 . this decrease was largely driven by the deconsolidation of cyrusone in january 2013 , the $ 42.6 million payment of transaction related compensation , $ 16.0 million of higher pension and postretirement payments and increased working capital usage . 48 form 10-k part ii cincinnati bell inc. cash flows from investing activities cash flows provided by investing activities were $ 392.6 million in 2014 , compared to cash used by investing activities of $ 185.4 million in 2013 and $ 371.8 million in 2012 . the increase in 2014 compared to the prior year is primarily due to the $ 355.9 million of proceeds received on the sale of cyrusone partnership units , in addition to cash proceeds totaling $ 194.4 million that were received on september 30 , 2014 as a result of the completed wireless spectrum sale . the deconsolidation of cyrusone in 2013 increased cash used in investing activities by $ 19.5 million for the period january 1 , 2013 through january 23 , 2013. excluding cyrusone , capital expenditures were down $ 6.9 million from the prior year largely due to a decreased investment in the wireless network . dividends received from cyrusone were up $ 7.1 million compared to the prior year . capital expenditures were $ 196.9 million for 2013 , which was $ 170.3 million lower than 2012 due primarily to the deconsolidation of cyrusone , offset by increased investment in our strategic fiber products . as a result of the cyrusone ipo , we received dividends of $ 21.3 million from cyrusone in 2013. in 2012 , we deposited $ 11.1 million of cash into an escrow account and released $ 4.9 million from this account to fund construction of a data center .
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our reputation as an innovator is exemplified by recent new product introductions such as the y-knot® flex system for instability repairs featuring the smallest double-loaded ( 1.8mm ) anchors available and curved , flexible instrumentation to help 21 surgeons achieve ideal anchor placement and the y-knot® rc anchors for rotator cuffs are the world 's only self-punching all-suture anchors which helps simplify techniques while its small size is designed to improve placement options ; the new d4000 resection system featuring an intuitive touchscreen display and direct pump integration for a seamless clinical experience ; the im8000 2dhd camera system can be used in multi-specialty procedures and includes a new autoclavable camera head featuring proprietary cmos technology for clear , crisp imagery and a new ls8000 led light source providing improved light sensitivity for clearer visualization ; the new hall 50 powered instrument system can be used in total joint replacements featuring lighter , ergonomically-designed handpieces to provide a comfortable , high-performance clinical experience while the new hall ul-approved autoclavable lithium batteries deliver dependable , long-lasting power and the unique , multi-tray system also provides hospitals with new levels of sterilization convenience ; the new gs2000 50l insufflator features the market 's fastest flow rate and a dual-tank shuttle valve system to help provide clear and consistent laparoscopic visualization ; the entriport line of trocars help deliver effective sealing and clear visualization in a wide range of sizes optimal for nearly every minimally invasive abdominal surgical application ; our new d-flex probes were designed for use with the da vinci® surgical system and enable non-contact hemostasis with argon gas and our detachatip® iii multi-use endosurgery instruments offer the optimal blend of performance and cost efficiency - combining precise , reliable , and comfortable performance with dramatically reduced procedural costs . business challenges significant volatility in the financial markets and foreign currency exchange rates as well as depressed economic conditions in both domestic and international markets , have presented significant business challenges since the second half of 2008. while we returned to revenue growth in 2010 , 2011 and 2012 , we experienced a sales decline during 2013. we are cautiously optimistic that the domestic economic environment is improving , however conditions in europe and elsewhere may present significant business challenges for the company . while there can be no assurance that improvement in the overall economic environment will be sustained , we will continue to monitor and manage the impact of the overall economic environment on the company . over the past few years we successfully completed certain of our operational restructuring plans whereby we consolidated manufacturing and distribution centers as well as restructured certain of our administrative functions . we continue to restructure both operations and administrative functions as necessary throughout the organization . however , we can not be certain such activities will be completed in the estimated time period or that planned cost savings will be achieved . our facilities are subject to periodic inspection by the united states food and drug administration ( “ fda ” ) and foreign regulatory agencies or notified bodies for , among other things , conformance to quality system regulation and current good manufacturing practice ( “ cgmp ” ) requirements and foreign or international standards . we are committed to the principles and strategies of systems-based quality management for improved cgmp compliance , operational performance and efficiencies through our company-wide quality systems initiatives . however , there can be no assurance that our actions will ensure that we will not receive a warning letter or be the subject of other regulatory action , which may include consent decrees or fines , that we will not conduct product recalls or that we will not experience temporary or extended periods during which we may not be able to sell products in foreign countries . during the third quarter of 2013 , the fda inspected our centennial , co manufacturing facility and issued a form 483 with observations on september 20 , 2013. the company subsequently submitted responses to the observations , and the fda issued a warning letter on january 30 , 2014 relating to the inspection and the responses to the form 483 observations . accordingly , we are undertaking corrective actions that may involve additional costs for the company . these remediation costs are not expected to be material , however there can be no assurance that the actions undertaken by the company will ensure that the company will not undertake recalls , voluntary or otherwise , nor can there be any assurance that a future inspection by the fda will not result in an additional form 483 or warning letter , or other regulatory actions which may include consent decrees or fines . critical accounting policies preparation of our financial statements requires us to make estimates and assumptions which affect the reported amounts of assets , liabilities , revenues and expenses . note 1 to the consolidated financial statements describes the significant accounting policies used in preparation of the consolidated financial statements . the most significant areas involving management judgments and estimates are described below and are considered by management to be critical to understanding the financial condition and results of operations of conmed corporation . revenue recognition revenue is recognized when title has been transferred to the customer which is at the time of shipment . the following policies apply to our major categories of revenue transactions : 22 sales to customers are evidenced by firm purchase orders . title and the risks and rewards of ownership are transferred to the customer when product is shipped under our stated shipping terms . payment by the customer is due under fixed payment terms and collectability is reasonably assured . we place certain of our capital equipment with customers on a loaned basis in return for commitments to purchase related single-use products over time periods generally ranging from one to three years . story_separator_special_tag in accordance with the patient protection and affordable care act and health care and education affordability reconciliation act , the company was required in 2013 to begin paying a 2.3 % excise tax imposed upon sales within the u.s. of certain medical device products . the medical device excise tax expense totaled $ 5.9 million in 2013 . 26 as discussed in note 11 to the consolidated financial statements , other expense in 2013 consisted of an $ 8.8 million charge related to administrative consolidation expenses , $ 3.2 million in legal costs associated with a patent infringement claim and a $ 1.4 million pension settlement expense as further described in note 10. other expense in 2012 consisted of a $ 6.5 million charge related to administrative consolidation expenses , a $ 0.7 million charge related to the purchase of the company 's former distributor for the nordic region of europe , $ 1.6 million in costs associated with a contractual dispute with a former distributor and $ 1.2 million in costs associated with the purchase of viking systems , inc .. as discussed in note 5 to the consolidated financial statements , we entered into an amended and restated senior credit agreement on january 17 , 2013. in connection with the refinancing , we recorded a $ 0.3 million loss on the early extinguishment of debt related to the write-off of unamortized deferred financing costs under the then existing senior credit agreement . interest expense was $ 5.6 million in 2013 compared to $ 5.7 million in 2012 . the decrease in interest expense is due to lower weighted average interest rates on higher weighted average borrowings outstanding in 2013 as compared to the same period a year ago . the weighted average interest rates on our borrowings decreased to 2.39 % in 2013 as compared to 3.03 % in 2012 . a provision for income taxes was recorded at an effective rate of 29.0 % in 2013 and 31.9 % in 2012 as compared to the federal statutory rate of 35.0 % . the effective tax rate is lower than that recorded in the same period a year ago as a result of a greater proportion of earnings in foreign jurisdictions where the corporate tax rate and deduction for notional interest on equity allowed against taxable profits in europe result in effective tax rates lower than the statutory rate , tax benefits recorded in the third quarter of 2013 as a result of taxing authority determinations , and tax benefits related to business tax provisions , including the research and development credit ( $ 0.8 million ) , that were enacted in the first quarter of 2013 , retroactive to january 1 , 2012. a reconciliation of the united states statutory income tax rate to our effective tax rate is included in note 6 to the consolidated financial statements . 2012 compared to 2011 sales for 2012 were $ 767.1 million , an increase of $ 42.0 million ( 5.8 % ) compared to sales of $ 725.1 million in 2011 with the increases in our orthopedic surgery and surgical visualization product lines . the distribution agreement with musculoskeletal transplant foundation ( `` mtf `` ) accounted for a 3.9 % annual sales increase . in local currency , excluding the effects of the hedging program , sales increased 5.7 % . sales of capital equipment decreased $ 6.1 million ( -3.8 % ) to $ 155.9 million in 2012 from $ 162.0 million in 2011 ; sales of single-use products increased $ 48.1 million ( 8.5 % ) to $ 611.2 million in 2012 from $ 563.1 million in 2011 . in local currency , excluding the effects of the hedging program , sales of capital equipment decreased 3.7 % while single-use products increased 8.4 % . we believe the overall decline in capital sales is driven by capital purchasing constraints in hospitals due to depressed economic conditions . orthopedic surgery sales increased $ 42.7 million ( 11.5 % ) in 2012 to $ 413.9 million from $ 371.2 million in 2011 mainly due to the distribution agreement with mtf , increased sales of our procedure specific , large bone burs and blades and small bone handpiece product offerings . in local currency , excluding the effects of the hedging program sales increased 11.4 % . general surgery sales decreased $ 0.8 million ( -0.3 % ) in 2012 to $ 286.6 million from $ 287.4 million in 2011 mainly due to lower sales in our patient monitoring products and advanced energy products offset by increases in our gastrointestinal and pulmonary products . in local currency , excluding the effects of the hedging program , sales decreased -0.4 % . surgical visualization sales remained relatively flat , with a $ 0.1 million ( 0.2 % ) increase in 2012 to $ 66.6 million from $ 66.5 million in 2011 due to higher video systems sales . in local currency , excluding the effects of the hedging program , sales increased 0.7 % . cost of sales increased to $ 361.3 million in 2012 as compared to $ 350.1 million in 2011 . gross profit margins increased 1.2 percentage points to 52.9 % in 2012 as compared to 51.7 % in 2011 . the increase in gross profit margins of 1.2 percentage points is primarily a result of the distribution agreement we entered into during 2012 with mtf as further described in note 4 to the consolidated financial statements ( 1.5 percentage points ) and product mix offset by the impact of unfavorable foreign exchange rates on sales and higher restructuring charges than the same period a year ago . selling and administrative expense increased to $ 302.5 million in 2012 compared to $ 276.6 million in 2011 . selling and administrative expense as a percentage of net sales increased to 39.4 % in 2012 from 38.1 % in 2011 . this increase of 1.3 percentage points is
| cash provided by operating activities during 2013 was $ 78.8 million , a decrease of $ 133.9 million compared to 2012 . this decrease was largely driven by the deconsolidation of cyrusone in january 2013 , the $ 42.6 million payment of transaction related compensation , $ 16.0 million of higher pension and postretirement payments and increased working capital usage . 48 form 10-k part ii cincinnati bell inc. cash flows from investing activities cash flows provided by investing activities were $ 392.6 million in 2014 , compared to cash used by investing activities of $ 185.4 million in 2013 and $ 371.8 million in 2012 . the increase in 2014 compared to the prior year is primarily due to the $ 355.9 million of proceeds received on the sale of cyrusone partnership units , in addition to cash proceeds totaling $ 194.4 million that were received on september 30 , 2014 as a result of the completed wireless spectrum sale . the deconsolidation of cyrusone in 2013 increased cash used in investing activities by $ 19.5 million for the period january 1 , 2013 through january 23 , 2013. excluding cyrusone , capital expenditures were down $ 6.9 million from the prior year largely due to a decreased investment in the wireless network . dividends received from cyrusone were up $ 7.1 million compared to the prior year . capital expenditures were $ 196.9 million for 2013 , which was $ 170.3 million lower than 2012 due primarily to the deconsolidation of cyrusone , offset by increased investment in our strategic fiber products . as a result of the cyrusone ipo , we received dividends of $ 21.3 million from cyrusone in 2013. in 2012 , we deposited $ 11.1 million of cash into an escrow account and released $ 4.9 million from this account to fund construction of a data center .
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our reputation as an innovator is exemplified by recent new product introductions such as the y-knot® flex system for instability repairs featuring the smallest double-loaded ( 1.8mm ) anchors available and curved , flexible instrumentation to help 21 surgeons achieve ideal anchor placement and the y-knot® rc anchors for rotator cuffs are the world 's only self-punching all-suture anchors which helps simplify techniques while its small size is designed to improve placement options ; the new d4000 resection system featuring an intuitive touchscreen display and direct pump integration for a seamless clinical experience ; the im8000 2dhd camera system can be used in multi-specialty procedures and includes a new autoclavable camera head featuring proprietary cmos technology for clear , crisp imagery and a new ls8000 led light source providing improved light sensitivity for clearer visualization ; the new hall 50 powered instrument system can be used in total joint replacements featuring lighter , ergonomically-designed handpieces to provide a comfortable , high-performance clinical experience while the new hall ul-approved autoclavable lithium batteries deliver dependable , long-lasting power and the unique , multi-tray system also provides hospitals with new levels of sterilization convenience ; the new gs2000 50l insufflator features the market 's fastest flow rate and a dual-tank shuttle valve system to help provide clear and consistent laparoscopic visualization ; the entriport line of trocars help deliver effective sealing and clear visualization in a wide range of sizes optimal for nearly every minimally invasive abdominal surgical application ; our new d-flex probes were designed for use with the da vinci® surgical system and enable non-contact hemostasis with argon gas and our detachatip® iii multi-use endosurgery instruments offer the optimal blend of performance and cost efficiency - combining precise , reliable , and comfortable performance with dramatically reduced procedural costs . business challenges significant volatility in the financial markets and foreign currency exchange rates as well as depressed economic conditions in both domestic and international markets , have presented significant business challenges since the second half of 2008. while we returned to revenue growth in 2010 , 2011 and 2012 , we experienced a sales decline during 2013. we are cautiously optimistic that the domestic economic environment is improving , however conditions in europe and elsewhere may present significant business challenges for the company . while there can be no assurance that improvement in the overall economic environment will be sustained , we will continue to monitor and manage the impact of the overall economic environment on the company . over the past few years we successfully completed certain of our operational restructuring plans whereby we consolidated manufacturing and distribution centers as well as restructured certain of our administrative functions . we continue to restructure both operations and administrative functions as necessary throughout the organization . however , we can not be certain such activities will be completed in the estimated time period or that planned cost savings will be achieved . our facilities are subject to periodic inspection by the united states food and drug administration ( “ fda ” ) and foreign regulatory agencies or notified bodies for , among other things , conformance to quality system regulation and current good manufacturing practice ( “ cgmp ” ) requirements and foreign or international standards . we are committed to the principles and strategies of systems-based quality management for improved cgmp compliance , operational performance and efficiencies through our company-wide quality systems initiatives . however , there can be no assurance that our actions will ensure that we will not receive a warning letter or be the subject of other regulatory action , which may include consent decrees or fines , that we will not conduct product recalls or that we will not experience temporary or extended periods during which we may not be able to sell products in foreign countries . during the third quarter of 2013 , the fda inspected our centennial , co manufacturing facility and issued a form 483 with observations on september 20 , 2013. the company subsequently submitted responses to the observations , and the fda issued a warning letter on january 30 , 2014 relating to the inspection and the responses to the form 483 observations . accordingly , we are undertaking corrective actions that may involve additional costs for the company . these remediation costs are not expected to be material , however there can be no assurance that the actions undertaken by the company will ensure that the company will not undertake recalls , voluntary or otherwise , nor can there be any assurance that a future inspection by the fda will not result in an additional form 483 or warning letter , or other regulatory actions which may include consent decrees or fines . critical accounting policies preparation of our financial statements requires us to make estimates and assumptions which affect the reported amounts of assets , liabilities , revenues and expenses . note 1 to the consolidated financial statements describes the significant accounting policies used in preparation of the consolidated financial statements . the most significant areas involving management judgments and estimates are described below and are considered by management to be critical to understanding the financial condition and results of operations of conmed corporation . revenue recognition revenue is recognized when title has been transferred to the customer which is at the time of shipment . the following policies apply to our major categories of revenue transactions : 22 sales to customers are evidenced by firm purchase orders . title and the risks and rewards of ownership are transferred to the customer when product is shipped under our stated shipping terms . payment by the customer is due under fixed payment terms and collectability is reasonably assured . we place certain of our capital equipment with customers on a loaned basis in return for commitments to purchase related single-use products over time periods generally ranging from one to three years . story_separator_special_tag in accordance with the patient protection and affordable care act and health care and education affordability reconciliation act , the company was required in 2013 to begin paying a 2.3 % excise tax imposed upon sales within the u.s. of certain medical device products . the medical device excise tax expense totaled $ 5.9 million in 2013 . 26 as discussed in note 11 to the consolidated financial statements , other expense in 2013 consisted of an $ 8.8 million charge related to administrative consolidation expenses , $ 3.2 million in legal costs associated with a patent infringement claim and a $ 1.4 million pension settlement expense as further described in note 10. other expense in 2012 consisted of a $ 6.5 million charge related to administrative consolidation expenses , a $ 0.7 million charge related to the purchase of the company 's former distributor for the nordic region of europe , $ 1.6 million in costs associated with a contractual dispute with a former distributor and $ 1.2 million in costs associated with the purchase of viking systems , inc .. as discussed in note 5 to the consolidated financial statements , we entered into an amended and restated senior credit agreement on january 17 , 2013. in connection with the refinancing , we recorded a $ 0.3 million loss on the early extinguishment of debt related to the write-off of unamortized deferred financing costs under the then existing senior credit agreement . interest expense was $ 5.6 million in 2013 compared to $ 5.7 million in 2012 . the decrease in interest expense is due to lower weighted average interest rates on higher weighted average borrowings outstanding in 2013 as compared to the same period a year ago . the weighted average interest rates on our borrowings decreased to 2.39 % in 2013 as compared to 3.03 % in 2012 . a provision for income taxes was recorded at an effective rate of 29.0 % in 2013 and 31.9 % in 2012 as compared to the federal statutory rate of 35.0 % . the effective tax rate is lower than that recorded in the same period a year ago as a result of a greater proportion of earnings in foreign jurisdictions where the corporate tax rate and deduction for notional interest on equity allowed against taxable profits in europe result in effective tax rates lower than the statutory rate , tax benefits recorded in the third quarter of 2013 as a result of taxing authority determinations , and tax benefits related to business tax provisions , including the research and development credit ( $ 0.8 million ) , that were enacted in the first quarter of 2013 , retroactive to january 1 , 2012. a reconciliation of the united states statutory income tax rate to our effective tax rate is included in note 6 to the consolidated financial statements . 2012 compared to 2011 sales for 2012 were $ 767.1 million , an increase of $ 42.0 million ( 5.8 % ) compared to sales of $ 725.1 million in 2011 with the increases in our orthopedic surgery and surgical visualization product lines . the distribution agreement with musculoskeletal transplant foundation ( `` mtf `` ) accounted for a 3.9 % annual sales increase . in local currency , excluding the effects of the hedging program , sales increased 5.7 % . sales of capital equipment decreased $ 6.1 million ( -3.8 % ) to $ 155.9 million in 2012 from $ 162.0 million in 2011 ; sales of single-use products increased $ 48.1 million ( 8.5 % ) to $ 611.2 million in 2012 from $ 563.1 million in 2011 . in local currency , excluding the effects of the hedging program , sales of capital equipment decreased 3.7 % while single-use products increased 8.4 % . we believe the overall decline in capital sales is driven by capital purchasing constraints in hospitals due to depressed economic conditions . orthopedic surgery sales increased $ 42.7 million ( 11.5 % ) in 2012 to $ 413.9 million from $ 371.2 million in 2011 mainly due to the distribution agreement with mtf , increased sales of our procedure specific , large bone burs and blades and small bone handpiece product offerings . in local currency , excluding the effects of the hedging program sales increased 11.4 % . general surgery sales decreased $ 0.8 million ( -0.3 % ) in 2012 to $ 286.6 million from $ 287.4 million in 2011 mainly due to lower sales in our patient monitoring products and advanced energy products offset by increases in our gastrointestinal and pulmonary products . in local currency , excluding the effects of the hedging program , sales decreased -0.4 % . surgical visualization sales remained relatively flat , with a $ 0.1 million ( 0.2 % ) increase in 2012 to $ 66.6 million from $ 66.5 million in 2011 due to higher video systems sales . in local currency , excluding the effects of the hedging program , sales increased 0.7 % . cost of sales increased to $ 361.3 million in 2012 as compared to $ 350.1 million in 2011 . gross profit margins increased 1.2 percentage points to 52.9 % in 2012 as compared to 51.7 % in 2011 . the increase in gross profit margins of 1.2 percentage points is primarily a result of the distribution agreement we entered into during 2012 with mtf as further described in note 4 to the consolidated financial statements ( 1.5 percentage points ) and product mix offset by the impact of unfavorable foreign exchange rates on sales and higher restructuring charges than the same period a year ago . selling and administrative expense increased to $ 302.5 million in 2012 compared to $ 276.6 million in 2011 . selling and administrative expense as a percentage of net sales increased to 39.4 % in 2012 from 38.1 % in 2011 . this increase of 1.3 percentage points is
| liquidity and capital resources our liquidity needs arise primarily from capital investments , working capital requirements and payments on indebtedness under the amended and restated senior credit agreement , described below . we have historically met these liquidity requirements with funds generated from operations and borrowings under our revolving credit facility . in addition , we have historically used term borrowings , including borrowings under the amended and restated senior credit agreement and borrowings under separate loan facilities , in the case of real property purchases , to finance our acquisitions . we also have the ability to raise funds through the sale of stock or we may issue debt through a private placement or public offering . we believe that our cash on hand , cash from operating activities and proceeds from our amended and restated senior credit agreement provide us with sufficient financial resources to meet our anticipated capital requirements and obligations as they come due . we had total cash on hand at december 31 , 2013 of $ 54.4 million , of which approximately $ 45.2 million was held by our foreign subsidiaries outside the united states with unremitted earnings . during the fourth quarter of 2011 , we repatriated $ 16.2 million of foreign earnings to the united states . we do not currently intend to repatriate additional funds held outside of the united states in the foreseeable future . if we were to repatriate these funds , we would be required to accrue and pay taxes on such amounts . operating cash flows our net working capital position was $ 260.9 million at december 31 , 2013 . net cash provided by operating activities was $ 103.0 million in 2011 , $ 95.2 million in 2012 and $ 80.9 million in 2013 generated on net income of $ 0.8 million in 2011 , $ 40.5 million in 2012 and $ 35.9 million in 2013 .
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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
| liquidity and capital resources our liquidity needs arise primarily from capital investments , working capital requirements and payments on indebtedness under the amended and restated senior credit agreement , described below . we have historically met these liquidity requirements with funds generated from operations and borrowings under our revolving credit facility . in addition , we have historically used term borrowings , including borrowings under the amended and restated senior credit agreement and borrowings under separate loan facilities , in the case of real property purchases , to finance our acquisitions . we also have the ability to raise funds through the sale of stock or we may issue debt through a private placement or public offering . we believe that our cash on hand , cash from operating activities and proceeds from our amended and restated senior credit agreement provide us with sufficient financial resources to meet our anticipated capital requirements and obligations as they come due . we had total cash on hand at december 31 , 2013 of $ 54.4 million , of which approximately $ 45.2 million was held by our foreign subsidiaries outside the united states with unremitted earnings . during the fourth quarter of 2011 , we repatriated $ 16.2 million of foreign earnings to the united states . we do not currently intend to repatriate additional funds held outside of the united states in the foreseeable future . if we were to repatriate these funds , we would be required to accrue and pay taxes on such amounts . operating cash flows our net working capital position was $ 260.9 million at december 31 , 2013 . net cash provided by operating activities was $ 103.0 million in 2011 , $ 95.2 million in 2012 and $ 80.9 million in 2013 generated on net income of $ 0.8 million in 2011 , $ 40.5 million in 2012 and $ 35.9 million in 2013 .
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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 .
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the purchase of this group annuity contract will reduce the company 's outstanding pension benefit obligation by approximately $ 55 million , representing approximately 37 % of the total obligations of the company 's qualified pension plans , and will be funded with pension plan assets and additional cash on hand . in connection with this transaction , the company will record a one-time non-cash settlement charge in the second half of 2021 currently estimated between $ 18 million and $ 22 million , reflecting the accelerated recognition of a portion of unamortized actuarial losses in the plan . the actual settlement charge could differ from this estimate due to final data and plan wind-up expenses . on january 28 , 2021 , the company acquired hartland controls , a manufacturer and leading supplier of electrical components used primarily in heating , ventilation , air conditioning ( hvac ) and other industrial and control systems applications with annualized sales of approximately $ 70 million . the cash purchase price for hartland controls was approximately $ 113 million and the operations of hartland controls will be included in the industrial segment . impact of covid-19 on business the company continued to manage through the covid-19 impacts throughout the year , with significant improvement to its financial results in the second half of 2020 compared to the first half of 2020. our manufacturing facilities generally operated at normal capacity levels during the second half of the year as production disruptions were minimal . the effects from covid-19 are continuing to drive increased costs , from spending on personal protective equipment ( `` ppe `` ) , additional personnel and employee transportation costs , and manufacturing inefficiencies , as well as an increase in freight costs for our products due to the transportation capacity constraints across the world . this was partially offset during 2020 by the receipt of cash subsidies from international government covid-19 relief programs . the company 's priorities continue to be first , on our associates , their families and the communities in which we operate ; second , our customers ; and third , long-term financial health of the company . in an effort to protect the health and safety of our employees , the company enacted numerous proactive , aggressive actions at its facilities globally in the first quarter of 2020 , and implemented a number of safety procedures including hygiene and disinfection protocols , social distancing and wearing ppe . the company expects these actions will continue for the foreseeable future . during 2020 , governments around the world enacted various measures in an effort to contain covid-19 and slow its spread . these measures included orders to close all businesses not deemed “ essential ” , isolate residents to their homes or places of residence , and practice social distancing when engaging in essential activities , which disrupted certain of our operating locations in around the world in the first half of 2020. during the second half of 2020 , all of our manufacturing facilities were operational and were generally running at normal capacity levels . the company continues to work with customers to meet production requirements for their products , many of which are considered essential , including healthcare and medical devices , transportation , communication and energy infrastructure . the company anticipates that the global health crisis caused by covid-19 may continue to negatively impact its business activity for the foreseeable future . it is currently difficult to estimate the magnitude of the covid-19 disruption , if future disruptions will occur due to a resurgence in covid-19 cases and its impact on our employees , customers , suppliers and 21 vendors . the company will continue to actively monitor the situation and may take further actions altering our business operations that we determine are in the best interests of our employees , customers , partners , suppliers , and other stakeholders , or as required by federal , state , or local authorities . it is not clear what the potential effects any such alterations or modifications may have on our business and operations , including the effects on our customers , employees , and prospects , or on our financial results for the fiscal year 2021. outlook vision and strategy the company closely collaborates with its customers to design and manufacture innovative and reliable solutions for a safer , connected , and more sustainable world in virtually every market that uses electrical energy ; for example , transportation applications like passenger and commercial vehicles , including emobility , industrial applications like renewables and energy storage , hvac and industrial automation and safety , motor drives and power conversion , and electronics applications like data centers and telecommunications , medical devices , home and building automation , appliances , and mobile and consumer electronics . built upon that framework , the secular growth themes of a safer , connected , and more sustainable world , drive increased product content opportunities . the company 's strategic plan is focused on increasing shareholder value by driving profitable sales growth , earnings per share growth , strong cash flow generation , and deploying capital to drive value creation . the company pursues the following major strategic initiatives , which are summarized below , along with more specific areas of focus . strategic objectives priorities double digit sales growth ● grow through increased product content with existing customers and increased market share ● expand portfolio into new and underpenetrated geographies and end markets ● increase innovation capabilities and investments ● expand presence in products and applications that are converging across business segments ● targeted mergers and acquisitions eps growth ● focus on higher profitability growth opportunities ● improve operating margins through operational excellence ● disciplined approach to balancing costs with long-term strategic investments cash flow and liquidity ● disciplined management of working capital ● deployment of capital consistent with capital allocation priorities ● mergers and acquisitions that story_separator_special_tag the estimated discount rate was 10.2 % for the electronics-passive products and sensor and the electronics-semiconductor reporting units , 9.2 % for the passenger car products and commercial vehicle products reporting units , 11.2 % for the automotive sensors reporting unit , 12.2 % for the relays reporting unit and 11.2 % for the power fuse reporting unit . a 1.0 % increase in the estimated discount rates would have resulted in no reporting units failing the annual goodwill impairment test . the company believes that its estimates of future cash flows and discount rates are reasonable , but future changes in the underlying assumptions could differ due to the inherent uncertainty in making such estimates . additionally , price deterioration or lower volume could have a significant impact on the fair values of the reporting units . long-lived assets the company evaluates the recoverability of other long-lived assets , including property , plant and equipment and certain identifiable intangible assets , whenever events or changes in circumstances indicate that the carrying value of an asset or asset 26 group may not be recoverable . factors which could trigger an impairment review include significant underperformance relative to historical or projected operating results , significant changes in the manner of use of the assets or the strategy for the overall business , a significant decrease in the market value of the assets or significant negative industry or economic trends . when the company determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the indicators , the assets are assessed for impairment based on the estimated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition . if the carrying value of an asset exceeds its estimated future undiscounted cash flows , an impairment loss is recorded for the excess of the asset 's carrying value over its fair value . during the first quarter of 2020 , the company recognized a $ 2.2 million impairment charge related to the land and building associated with the company 's announced consolidation of a manufacturing facility within the industrial segment . for the year-ended december 28 , 2019 , the company recognized non-cash impairment charges of $ 0.3 million for certain machinery and equipment related to the closure of a european manufacturing facility in the automotive sensors business within the automotive segment . environmental liabilities environmental liabilities are accrued based on estimates of the probability of potential future environmental exposure . costs related to on-going maintenance of environmental sites are expensed as incurred . if actual or estimated probable future losses exceed the company 's recorded liability for such claims , it would record additional charges as other expense during the period in which the actual loss or change in estimate occurred . the company evaluates its reserve for coal mine remediation annually utilizing a third-party expert . pension and supplemental executive retirement plan the company records annual income and expense amounts relating to its pension and postretirement benefits plans based on calculations which include various actuarial assumptions including discount rates , expected long-term rates of return and compensation increases . the company reviews its actuarial assumptions on an annual basis as of the fiscal year-end balance sheet date ( or more frequently if a significant event requiring remeasurement occurs ) and modifies the assumption based on current rates and trends when it is appropriate to do so . the effects of modifications are recognized immediately on the consolidated balance sheets but are generally amortized into operating earnings over future periods , with the deferred amount recorded in accumulated other comprehensive income ( loss ) . the company believes that the assumptions utilized in recording its obligations under its plans are reasonable based on its experience , market conditions and input from its actuaries and investment advisors . the company maintains several pension plans in international locations . the expected returns on plan assets and discount rates are determined based on each plan 's investment approach , local interest rates and plan participant profiles . the weighted-average discount rates for the company 's defined benefit plans primarily in europe and the asia-pacific regions at december 26 , 2020 and december 28 , 2019 were 1.2 % and 2.3 % , respectively . a 50 basis point change in the discount rates at december 26 , 2020 would have the following effect on the projected benefit obligation : ( in millions ) 0.5 % increase 0.5 % decrease projected benefit obligation $ ( 11.3 ) $ 12.4 on april 7 , 2020 , the company entered into a definitive agreement to purchase a group annuity contract , under which an insurance company will be required to directly pay and administer pension payments to certain of the company 's uk pension plan participants , or their designated beneficiaries . the purchase of this group annuity contract will reduce the company 's outstanding pension benefit obligation by approximately $ 55 million , representing approximately 37 % of the total obligations of the company 's qualified pension plans , and will be funded with pension plan assets and additional cash on hand . in connection with this transaction , the company will record a one-time non-cash settlement charge in the second half of 2021 currently estimated between $ 18 million and $ 22 million , reflecting the accelerated recognition of a portion of unamortized actuarial losses in the plan . the actual settlement charge could differ from this estimate due to final data and plan wind-up expenses . equity-based compensation equity-based compensation expense is recorded for stock-option awards and restricted share units based upon the fair values of the awards . the fair value of stock-option awards is estimated at the grant date using the black-scholes option pricing model , which includes assumptions for volatility , expected term , risk-free interest rate and dividend yield . expected volatility is
| 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 .
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the purchase of this group annuity contract will reduce the company 's outstanding pension benefit obligation by approximately $ 55 million , representing approximately 37 % of the total obligations of the company 's qualified pension plans , and will be funded with pension plan assets and additional cash on hand . in connection with this transaction , the company will record a one-time non-cash settlement charge in the second half of 2021 currently estimated between $ 18 million and $ 22 million , reflecting the accelerated recognition of a portion of unamortized actuarial losses in the plan . the actual settlement charge could differ from this estimate due to final data and plan wind-up expenses . on january 28 , 2021 , the company acquired hartland controls , a manufacturer and leading supplier of electrical components used primarily in heating , ventilation , air conditioning ( hvac ) and other industrial and control systems applications with annualized sales of approximately $ 70 million . the cash purchase price for hartland controls was approximately $ 113 million and the operations of hartland controls will be included in the industrial segment . impact of covid-19 on business the company continued to manage through the covid-19 impacts throughout the year , with significant improvement to its financial results in the second half of 2020 compared to the first half of 2020. our manufacturing facilities generally operated at normal capacity levels during the second half of the year as production disruptions were minimal . the effects from covid-19 are continuing to drive increased costs , from spending on personal protective equipment ( `` ppe `` ) , additional personnel and employee transportation costs , and manufacturing inefficiencies , as well as an increase in freight costs for our products due to the transportation capacity constraints across the world . this was partially offset during 2020 by the receipt of cash subsidies from international government covid-19 relief programs . the company 's priorities continue to be first , on our associates , their families and the communities in which we operate ; second , our customers ; and third , long-term financial health of the company . in an effort to protect the health and safety of our employees , the company enacted numerous proactive , aggressive actions at its facilities globally in the first quarter of 2020 , and implemented a number of safety procedures including hygiene and disinfection protocols , social distancing and wearing ppe . the company expects these actions will continue for the foreseeable future . during 2020 , governments around the world enacted various measures in an effort to contain covid-19 and slow its spread . these measures included orders to close all businesses not deemed “ essential ” , isolate residents to their homes or places of residence , and practice social distancing when engaging in essential activities , which disrupted certain of our operating locations in around the world in the first half of 2020. during the second half of 2020 , all of our manufacturing facilities were operational and were generally running at normal capacity levels . the company continues to work with customers to meet production requirements for their products , many of which are considered essential , including healthcare and medical devices , transportation , communication and energy infrastructure . the company anticipates that the global health crisis caused by covid-19 may continue to negatively impact its business activity for the foreseeable future . it is currently difficult to estimate the magnitude of the covid-19 disruption , if future disruptions will occur due to a resurgence in covid-19 cases and its impact on our employees , customers , suppliers and 21 vendors . the company will continue to actively monitor the situation and may take further actions altering our business operations that we determine are in the best interests of our employees , customers , partners , suppliers , and other stakeholders , or as required by federal , state , or local authorities . it is not clear what the potential effects any such alterations or modifications may have on our business and operations , including the effects on our customers , employees , and prospects , or on our financial results for the fiscal year 2021. outlook vision and strategy the company closely collaborates with its customers to design and manufacture innovative and reliable solutions for a safer , connected , and more sustainable world in virtually every market that uses electrical energy ; for example , transportation applications like passenger and commercial vehicles , including emobility , industrial applications like renewables and energy storage , hvac and industrial automation and safety , motor drives and power conversion , and electronics applications like data centers and telecommunications , medical devices , home and building automation , appliances , and mobile and consumer electronics . built upon that framework , the secular growth themes of a safer , connected , and more sustainable world , drive increased product content opportunities . the company 's strategic plan is focused on increasing shareholder value by driving profitable sales growth , earnings per share growth , strong cash flow generation , and deploying capital to drive value creation . the company pursues the following major strategic initiatives , which are summarized below , along with more specific areas of focus . strategic objectives priorities double digit sales growth ● grow through increased product content with existing customers and increased market share ● expand portfolio into new and underpenetrated geographies and end markets ● increase innovation capabilities and investments ● expand presence in products and applications that are converging across business segments ● targeted mergers and acquisitions eps growth ● focus on higher profitability growth opportunities ● improve operating margins through operational excellence ● disciplined approach to balancing costs with long-term strategic investments cash flow and liquidity ● disciplined management of working capital ● deployment of capital consistent with capital allocation priorities ● mergers and acquisitions that story_separator_special_tag the estimated discount rate was 10.2 % for the electronics-passive products and sensor and the electronics-semiconductor reporting units , 9.2 % for the passenger car products and commercial vehicle products reporting units , 11.2 % for the automotive sensors reporting unit , 12.2 % for the relays reporting unit and 11.2 % for the power fuse reporting unit . a 1.0 % increase in the estimated discount rates would have resulted in no reporting units failing the annual goodwill impairment test . the company believes that its estimates of future cash flows and discount rates are reasonable , but future changes in the underlying assumptions could differ due to the inherent uncertainty in making such estimates . additionally , price deterioration or lower volume could have a significant impact on the fair values of the reporting units . long-lived assets the company evaluates the recoverability of other long-lived assets , including property , plant and equipment and certain identifiable intangible assets , whenever events or changes in circumstances indicate that the carrying value of an asset or asset 26 group may not be recoverable . factors which could trigger an impairment review include significant underperformance relative to historical or projected operating results , significant changes in the manner of use of the assets or the strategy for the overall business , a significant decrease in the market value of the assets or significant negative industry or economic trends . when the company determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the indicators , the assets are assessed for impairment based on the estimated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition . if the carrying value of an asset exceeds its estimated future undiscounted cash flows , an impairment loss is recorded for the excess of the asset 's carrying value over its fair value . during the first quarter of 2020 , the company recognized a $ 2.2 million impairment charge related to the land and building associated with the company 's announced consolidation of a manufacturing facility within the industrial segment . for the year-ended december 28 , 2019 , the company recognized non-cash impairment charges of $ 0.3 million for certain machinery and equipment related to the closure of a european manufacturing facility in the automotive sensors business within the automotive segment . environmental liabilities environmental liabilities are accrued based on estimates of the probability of potential future environmental exposure . costs related to on-going maintenance of environmental sites are expensed as incurred . if actual or estimated probable future losses exceed the company 's recorded liability for such claims , it would record additional charges as other expense during the period in which the actual loss or change in estimate occurred . the company evaluates its reserve for coal mine remediation annually utilizing a third-party expert . pension and supplemental executive retirement plan the company records annual income and expense amounts relating to its pension and postretirement benefits plans based on calculations which include various actuarial assumptions including discount rates , expected long-term rates of return and compensation increases . the company reviews its actuarial assumptions on an annual basis as of the fiscal year-end balance sheet date ( or more frequently if a significant event requiring remeasurement occurs ) and modifies the assumption based on current rates and trends when it is appropriate to do so . the effects of modifications are recognized immediately on the consolidated balance sheets but are generally amortized into operating earnings over future periods , with the deferred amount recorded in accumulated other comprehensive income ( loss ) . the company believes that the assumptions utilized in recording its obligations under its plans are reasonable based on its experience , market conditions and input from its actuaries and investment advisors . the company maintains several pension plans in international locations . the expected returns on plan assets and discount rates are determined based on each plan 's investment approach , local interest rates and plan participant profiles . the weighted-average discount rates for the company 's defined benefit plans primarily in europe and the asia-pacific regions at december 26 , 2020 and december 28 , 2019 were 1.2 % and 2.3 % , respectively . a 50 basis point change in the discount rates at december 26 , 2020 would have the following effect on the projected benefit obligation : ( in millions ) 0.5 % increase 0.5 % decrease projected benefit obligation $ ( 11.3 ) $ 12.4 on april 7 , 2020 , the company entered into a definitive agreement to purchase a group annuity contract , under which an insurance company will be required to directly pay and administer pension payments to certain of the company 's uk pension plan participants , or their designated beneficiaries . the purchase of this group annuity contract will reduce the company 's outstanding pension benefit obligation by approximately $ 55 million , representing approximately 37 % of the total obligations of the company 's qualified pension plans , and will be funded with pension plan assets and additional cash on hand . in connection with this transaction , the company will record a one-time non-cash settlement charge in the second half of 2021 currently estimated between $ 18 million and $ 22 million , reflecting the accelerated recognition of a portion of unamortized actuarial losses in the plan . the actual settlement charge could differ from this estimate due to final data and plan wind-up expenses . equity-based compensation equity-based compensation expense is recorded for stock-option awards and restricted share units based upon the fair values of the awards . the fair value of stock-option awards is estimated at the grant date using the black-scholes option pricing model , which includes assumptions for volatility , expected term , risk-free interest rate and dividend yield . expected volatility is
| cash flow from operating activities 38 net cash provided by operating activities was $ 245.3 million for 2019 , compared to $ 331.8 million during 2018. the decrease in net cash provided by operating activities was primarily driven by lower earnings and higher working capital levels primarily due to the timing of supplier payments , payroll year-end cut off and higher annual incentive compensation payments in 2019. cash flow from investing activities net cash used in investing activities was $ 56.4 million for 2019 , compared to $ 382.3 million during 2019. net cash used for the acquisition of ixys was $ 306.5 million and $ 9.0 million for the acquisition of the remaining 38 % outstanding common stock of monolith in 2018. capital expenditures were $ 61.9 million , representing a decrease of $ 12.9 million compared to 2018. the company also received proceeds of $ 6.2 million in 2019 primarily as a result of the sale of a property within the industrial segment . cash flow from financing activities net cash used in financing activities was $ 146.3 million for 2019 compared to net cash provided by financing activities of $ 121.9 million for 2018. the company repurchased 579,916 shares of its common stock during fiscal 2019 totaling $ 95.0 million , but made payments of $ 99.4 million related to settled share repurchases . the company made payments of $ 10.0 million on the term loan in 2019 as compared to $ 310.0 million of proceeds from the credit facility , term loan and senior notes payable and $ 102.5 million of payments on the credit facility and term loan during 2018. c ontractual obligations and commitments the following table summarizes outstanding contractual obligations and commitments as of december 26 , 2020 : replace_table_token_15_th ( a ) excludes offsetting issuance costs of $ 4.1 million . euro denominated debt amounts are converted based on the euro to u.s. dollar spot rate at year end . for more information see note 9 , debt , of the notes to consolidated financial statements . ( b ) amounts represent estimated contractual interest payments on outstanding debt .
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the key factors that affected our financial performance during the previous two years included : losses and lae decreased 3 % in 2016 and 5 % in 2015 , each compared to the previous year ; underwriting and other operating expenses increased 1 % in 2016 and 5 % in 2015 , each compared to the previous year ; net realized gains ( losses ) on investments of $ 11.2 million , $ ( 10.7 ) million , and $ 16.3 million in 2016 , 2015 , and 2014 , respectively ; and income tax expense was $ 34.0 million , $ 5.0 million , and $ 5.9 million in 2016 , 2015 , and 2014 , respectively . we continue to execute a number of ongoing business initiatives , including : focusing on internal and customer-facing business process excellence ; accelerating the settlement of open claims ; diversifying our risk exposure across geographic markets ; utilizing a multi-company pricing platform ; utilizing territory-specific pricing ; and leveraging data-driven strategies to target , price , and underwrite profitable classes of business across all of our markets . 28 the following noteworthy items were included in our 2016 results of operations : ( 1 ) favorable prior year accident year loss development of $ 18.4 million , including $ 17.0 million of favorable development on our voluntary business and $ 1.4 million of favorable development on our assigned risk business , which decreased our losses and lae by the same amount ; ( 2 ) favorable development in the estimated reserves ceded under the lpt agreement , which resulted in a $ 3.1 million cumulative adjustment to the deferred gain and reduced our losses and lae by the same amount ( lpt reserve adjustment ) ; and ( 3 ) an increase in the contingent commission receivable under the lpt agreement , which resulted in a $ 1.8 million cumulative adjustment to the deferred gain , and reduced our losses and lae by the same amount ( lpt contingent commission adjustment ) . collectively , these items increased our net income before taxes by $ 23.3 million for the year ended december 31 , 2016. the following noteworthy items were included in our 2015 results of operations : ( 1 ) favorable prior year accident year loss development of $ 7.2 million , including $ 9.0 million of favorable development on our voluntary business , partially offset by $ 1.8 million of unfavorable development on our assigned risk business , which decreased our losses and lae by the same amount ; ( 2 ) favorable development in the estimated reserves ceded under the lpt agreement that resulted in a $ 6.4 million lpt reserve adjustment ; ( 3 ) an increase in the contingent commission receivable under the lpt agreement , which resulted in a $ 2.6 million lpt contingent commission adjustment ; and ( 4 ) a reallocation of $ 56.3 million of losses and lae reserves from non-taxable periods prior to january 1 , 2000 , which reduced our effective tax rate by 15.4 percentage points . collectively , these items increased our net income before taxes by $ 16.2 million and decreased our income tax expense by $ 15.3 million for the year ended december 31 , 2015. the following noteworthy items were included in our 2014 results of operations : ( 1 ) favorable development in the estimated reserves ceded under the lpt agreement , which resulted in a $ 31.1 million lpt reserve adjustment ; ( 2 ) an increase in the contingent commission receivable under the lpt agreement , which resulted in a $ 10.8 million lpt contingent commission adjustment ; and ( 3 ) a reallocation of $ 13.1 million of losses and lae reserves from non-taxable periods prior to january 1 , 2000 , which reduced our effective tax rate by 3.4 percentage points . collectively , these items increased our net income before taxes by $ 41.9 million and decreased our income tax expense by $ 3.6 million for the year ended december 31 , 2014. the comparative components of net income are set forth in the following table : replace_table_token_16_th ( 1 ) lpt reserve adjustments result in a cumulative adjustment to the deferred gain , which is recognized in losses and lae incurred on our consolidated statements of comprehensive income , such that the deferred gain reflects the balance that would have existed had the revised reserves been recognized at the inception of the lpt agreement . ( see note 2 in the notes to our consolidated financial statements . ) ( 2 ) lpt contingent commission adjustments result in a cumulative adjustment to the deferred gain , which is recognized in losses and lae incurred on our consolidated statements of comprehensive income , such that the deferred gain reflects the balance that would have 29 existed had the revised contingent profit commission been recognized at the inception of the lpt agreement . ( see note 2 in the notes to our consolidated financial statements . ) ( 3 ) we define net income before impact of the lpt agreement as net income before the impact of : ( a ) amortization of the deferred gain ; ( b ) adjustments to the lpt agreement ceded reserves ; and ( c ) adjustments to the contingent commission receivable –lpt agreement . the deferred gain reflects the unamortized gain from the lpt agreement . under gaap , this gain is deferred and is being amortized using the recovery method in which amortization is determined by the proportion of actual reinsurance recoveries to total estimated recoveries over the life of the lpt agreement , except for the contingent profit commission , which is amortized through june 30 , 2024. the amortization is reflected in losses and lae . story_separator_special_tag prior to the privatization , the fund was part of the state of nevada and therefore was not subject to federal income tax . accordingly , our pre-privatization loss and lae reserve adjustments , lpt reserve adjustments and deferred gain amortization impact our net income but do not change our taxable income . income tax expense was $ 34.0 million , $ 5.0 million , and $ 5.9 million for the years ended december 31 , 2016 , 2015 , and 2014 , respectively , representing effective tax rates of 24.2 % , 5.0 % , and 5.5 % for the years ended december 31 , 2016 , 2015 , and 2014 , respectively . for 2016 , tax-advantaged investment income , lpt reserve adjustments , deferred gain amortization and certain other adjustments reduced our income tax expense computed at a statutory 35 % rate by $ 15.3 million . for 2015 , tax-advantaged investment income , pre-privatization loss and lae reserve adjustments , lpt reserve adjustments , deferred gain amortization and certain other adjustments reduced our income tax expense computed at a statutory 35 % rate by $ 29.8 million . for 2014 , tax-advantaged investment income , pre-privatization loss and lae reserve adjustments , lpt reserve adjustments , deferred gain amortization and certain other adjustments reduced our income tax expense computed at a statutory 35 % rate by $ 31.4 million . for additional information regarding our income tax expense see note 8 in the notes to our consolidated financial statements . liquidity and capital resources holding company liquidity we are a holding company and our ability to fund our operations is contingent upon existing capital and the ability of our insurance subsidiaries ' to pay dividends up to the holding company . payment of dividends by our insurance subsidiaries is restricted by state insurance laws and regulations , including laws establishing minimum solvency and liquidity thresholds . we require cash to pay common stock dividends , repurchase common stock , make interest and principal payments on any outstanding debt obligations , provide additional surplus to our insurance subsidiaries , and fund our operating expenses . our insurance subsidiaries ' ability to pay dividends to their parent is based on reported capital , surplus , and dividends paid within the last 12 months . for 2017 , eicn and epic can not pay any dividends without prior regulatory approval ; ecic can pay $ 4.6 million of dividends through june 21 , 2017 and $ 38.1 million thereafter without prior regulatory approval , provided that no dividends are paid prior to june 21 , 2017 ; and eac can pay $ 18.0 million of dividends beginning july 6 , 2017 without prior regulatory approval . total cash and investments at the holding company were $ 57.3 million at december 31 , 2016 , consisting of $ 41.4 million of cash and cash equivalents and $ 16.0 million of fixed maturity securities . we do not currently have a revolving credit facility because 33 we believe that the holding company 's cash needs for the foreseeable future will be met with its cash and investments on hand , as well as dividends available from its insurance subsidiaries . operating subsidiaries ' liquidity the primary sources of cash for our insurance operating subsidiaries are premium collections , investment income , sales and maturities of investments and reinsurance recoveries . the primary uses of cash for our insurance subsidiaries are payments of losses and lae , commission expenses , underwriting and other operating expenses , ceded reinsurance , investment purchases and dividends paid to their parent . total cash and investments held by our operating subsidiaries was $ 2,560.5 million at december 31 , 2016 , consisting of $ 23.9 million of cash and cash equivalents , $ 16.0 million of short-term investments , $ 2,328.4 million of fixed maturity securities and $ 192.2 million of equity securities . sources of immediate and unencumbered liquidity at our operating subsidiaries as of december 31 , 2016 consisted of $ 20.3 million of cash and cash equivalents , $ 142.0 million of publicly-traded equity securities whose proceeds are available within four business days , and $ 1.3 billion of highly liquid fixed maturity securities whose proceeds are available within four business days . we believe that our subsidiaries ' liquidity needs over the next 24 months will be met with cash from operations , investment income , and maturing investments . each of our insurance subsidiaries became a member of the federal home loan bank ( fhlb ) in january 2016. membership allows our subsidiaries access to collateralized advances , which may be used to support and enhance liquidity management . the amount of advances that may be taken is dependent on statutory admitted assets on a per company basis . currently , none of our subsidiaries has advances outstanding under the fhlb facility . we purchase reinsurance to protect us against the costs of severe claims and catastrophic events . on july 1 , 2016 , we entered into a new reinsurance program that is effective through june 30 , 2017 . the reinsurance program consists of one treaty covering excess of loss and catastrophic loss events in four layers of coverage . our reinsurance coverage is $ 190.0 million in excess of our $ 10.0 million retention on a per occurrence basis , subject to certain exclusions . we believe that our excess of loss reinsurance program currently meets our needs . 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
| cash flow from operating activities 38 net cash provided by operating activities was $ 245.3 million for 2019 , compared to $ 331.8 million during 2018. the decrease in net cash provided by operating activities was primarily driven by lower earnings and higher working capital levels primarily due to the timing of supplier payments , payroll year-end cut off and higher annual incentive compensation payments in 2019. cash flow from investing activities net cash used in investing activities was $ 56.4 million for 2019 , compared to $ 382.3 million during 2019. net cash used for the acquisition of ixys was $ 306.5 million and $ 9.0 million for the acquisition of the remaining 38 % outstanding common stock of monolith in 2018. capital expenditures were $ 61.9 million , representing a decrease of $ 12.9 million compared to 2018. the company also received proceeds of $ 6.2 million in 2019 primarily as a result of the sale of a property within the industrial segment . cash flow from financing activities net cash used in financing activities was $ 146.3 million for 2019 compared to net cash provided by financing activities of $ 121.9 million for 2018. the company repurchased 579,916 shares of its common stock during fiscal 2019 totaling $ 95.0 million , but made payments of $ 99.4 million related to settled share repurchases . the company made payments of $ 10.0 million on the term loan in 2019 as compared to $ 310.0 million of proceeds from the credit facility , term loan and senior notes payable and $ 102.5 million of payments on the credit facility and term loan during 2018. c ontractual obligations and commitments the following table summarizes outstanding contractual obligations and commitments as of december 26 , 2020 : replace_table_token_15_th ( a ) excludes offsetting issuance costs of $ 4.1 million . euro denominated debt amounts are converted based on the euro to u.s. dollar spot rate at year end . for more information see note 9 , debt , of the notes to consolidated financial statements . ( b ) amounts represent estimated contractual interest payments on outstanding debt .
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the key factors that affected our financial performance during the previous two years included : losses and lae decreased 3 % in 2016 and 5 % in 2015 , each compared to the previous year ; underwriting and other operating expenses increased 1 % in 2016 and 5 % in 2015 , each compared to the previous year ; net realized gains ( losses ) on investments of $ 11.2 million , $ ( 10.7 ) million , and $ 16.3 million in 2016 , 2015 , and 2014 , respectively ; and income tax expense was $ 34.0 million , $ 5.0 million , and $ 5.9 million in 2016 , 2015 , and 2014 , respectively . we continue to execute a number of ongoing business initiatives , including : focusing on internal and customer-facing business process excellence ; accelerating the settlement of open claims ; diversifying our risk exposure across geographic markets ; utilizing a multi-company pricing platform ; utilizing territory-specific pricing ; and leveraging data-driven strategies to target , price , and underwrite profitable classes of business across all of our markets . 28 the following noteworthy items were included in our 2016 results of operations : ( 1 ) favorable prior year accident year loss development of $ 18.4 million , including $ 17.0 million of favorable development on our voluntary business and $ 1.4 million of favorable development on our assigned risk business , which decreased our losses and lae by the same amount ; ( 2 ) favorable development in the estimated reserves ceded under the lpt agreement , which resulted in a $ 3.1 million cumulative adjustment to the deferred gain and reduced our losses and lae by the same amount ( lpt reserve adjustment ) ; and ( 3 ) an increase in the contingent commission receivable under the lpt agreement , which resulted in a $ 1.8 million cumulative adjustment to the deferred gain , and reduced our losses and lae by the same amount ( lpt contingent commission adjustment ) . collectively , these items increased our net income before taxes by $ 23.3 million for the year ended december 31 , 2016. the following noteworthy items were included in our 2015 results of operations : ( 1 ) favorable prior year accident year loss development of $ 7.2 million , including $ 9.0 million of favorable development on our voluntary business , partially offset by $ 1.8 million of unfavorable development on our assigned risk business , which decreased our losses and lae by the same amount ; ( 2 ) favorable development in the estimated reserves ceded under the lpt agreement that resulted in a $ 6.4 million lpt reserve adjustment ; ( 3 ) an increase in the contingent commission receivable under the lpt agreement , which resulted in a $ 2.6 million lpt contingent commission adjustment ; and ( 4 ) a reallocation of $ 56.3 million of losses and lae reserves from non-taxable periods prior to january 1 , 2000 , which reduced our effective tax rate by 15.4 percentage points . collectively , these items increased our net income before taxes by $ 16.2 million and decreased our income tax expense by $ 15.3 million for the year ended december 31 , 2015. the following noteworthy items were included in our 2014 results of operations : ( 1 ) favorable development in the estimated reserves ceded under the lpt agreement , which resulted in a $ 31.1 million lpt reserve adjustment ; ( 2 ) an increase in the contingent commission receivable under the lpt agreement , which resulted in a $ 10.8 million lpt contingent commission adjustment ; and ( 3 ) a reallocation of $ 13.1 million of losses and lae reserves from non-taxable periods prior to january 1 , 2000 , which reduced our effective tax rate by 3.4 percentage points . collectively , these items increased our net income before taxes by $ 41.9 million and decreased our income tax expense by $ 3.6 million for the year ended december 31 , 2014. the comparative components of net income are set forth in the following table : replace_table_token_16_th ( 1 ) lpt reserve adjustments result in a cumulative adjustment to the deferred gain , which is recognized in losses and lae incurred on our consolidated statements of comprehensive income , such that the deferred gain reflects the balance that would have existed had the revised reserves been recognized at the inception of the lpt agreement . ( see note 2 in the notes to our consolidated financial statements . ) ( 2 ) lpt contingent commission adjustments result in a cumulative adjustment to the deferred gain , which is recognized in losses and lae incurred on our consolidated statements of comprehensive income , such that the deferred gain reflects the balance that would have 29 existed had the revised contingent profit commission been recognized at the inception of the lpt agreement . ( see note 2 in the notes to our consolidated financial statements . ) ( 3 ) we define net income before impact of the lpt agreement as net income before the impact of : ( a ) amortization of the deferred gain ; ( b ) adjustments to the lpt agreement ceded reserves ; and ( c ) adjustments to the contingent commission receivable –lpt agreement . the deferred gain reflects the unamortized gain from the lpt agreement . under gaap , this gain is deferred and is being amortized using the recovery method in which amortization is determined by the proportion of actual reinsurance recoveries to total estimated recoveries over the life of the lpt agreement , except for the contingent profit commission , which is amortized through june 30 , 2024. the amortization is reflected in losses and lae . story_separator_special_tag prior to the privatization , the fund was part of the state of nevada and therefore was not subject to federal income tax . accordingly , our pre-privatization loss and lae reserve adjustments , lpt reserve adjustments and deferred gain amortization impact our net income but do not change our taxable income . income tax expense was $ 34.0 million , $ 5.0 million , and $ 5.9 million for the years ended december 31 , 2016 , 2015 , and 2014 , respectively , representing effective tax rates of 24.2 % , 5.0 % , and 5.5 % for the years ended december 31 , 2016 , 2015 , and 2014 , respectively . for 2016 , tax-advantaged investment income , lpt reserve adjustments , deferred gain amortization and certain other adjustments reduced our income tax expense computed at a statutory 35 % rate by $ 15.3 million . for 2015 , tax-advantaged investment income , pre-privatization loss and lae reserve adjustments , lpt reserve adjustments , deferred gain amortization and certain other adjustments reduced our income tax expense computed at a statutory 35 % rate by $ 29.8 million . for 2014 , tax-advantaged investment income , pre-privatization loss and lae reserve adjustments , lpt reserve adjustments , deferred gain amortization and certain other adjustments reduced our income tax expense computed at a statutory 35 % rate by $ 31.4 million . for additional information regarding our income tax expense see note 8 in the notes to our consolidated financial statements . liquidity and capital resources holding company liquidity we are a holding company and our ability to fund our operations is contingent upon existing capital and the ability of our insurance subsidiaries ' to pay dividends up to the holding company . payment of dividends by our insurance subsidiaries is restricted by state insurance laws and regulations , including laws establishing minimum solvency and liquidity thresholds . we require cash to pay common stock dividends , repurchase common stock , make interest and principal payments on any outstanding debt obligations , provide additional surplus to our insurance subsidiaries , and fund our operating expenses . our insurance subsidiaries ' ability to pay dividends to their parent is based on reported capital , surplus , and dividends paid within the last 12 months . for 2017 , eicn and epic can not pay any dividends without prior regulatory approval ; ecic can pay $ 4.6 million of dividends through june 21 , 2017 and $ 38.1 million thereafter without prior regulatory approval , provided that no dividends are paid prior to june 21 , 2017 ; and eac can pay $ 18.0 million of dividends beginning july 6 , 2017 without prior regulatory approval . total cash and investments at the holding company were $ 57.3 million at december 31 , 2016 , consisting of $ 41.4 million of cash and cash equivalents and $ 16.0 million of fixed maturity securities . we do not currently have a revolving credit facility because 33 we believe that the holding company 's cash needs for the foreseeable future will be met with its cash and investments on hand , as well as dividends available from its insurance subsidiaries . operating subsidiaries ' liquidity the primary sources of cash for our insurance operating subsidiaries are premium collections , investment income , sales and maturities of investments and reinsurance recoveries . the primary uses of cash for our insurance subsidiaries are payments of losses and lae , commission expenses , underwriting and other operating expenses , ceded reinsurance , investment purchases and dividends paid to their parent . total cash and investments held by our operating subsidiaries was $ 2,560.5 million at december 31 , 2016 , consisting of $ 23.9 million of cash and cash equivalents , $ 16.0 million of short-term investments , $ 2,328.4 million of fixed maturity securities and $ 192.2 million of equity securities . sources of immediate and unencumbered liquidity at our operating subsidiaries as of december 31 , 2016 consisted of $ 20.3 million of cash and cash equivalents , $ 142.0 million of publicly-traded equity securities whose proceeds are available within four business days , and $ 1.3 billion of highly liquid fixed maturity securities whose proceeds are available within four business days . we believe that our subsidiaries ' liquidity needs over the next 24 months will be met with cash from operations , investment income , and maturing investments . each of our insurance subsidiaries became a member of the federal home loan bank ( fhlb ) in january 2016. membership allows our subsidiaries access to collateralized advances , which may be used to support and enhance liquidity management . the amount of advances that may be taken is dependent on statutory admitted assets on a per company basis . currently , none of our subsidiaries has advances outstanding under the fhlb facility . we purchase reinsurance to protect us against the costs of severe claims and catastrophic events . on july 1 , 2016 , we entered into a new reinsurance program that is effective through june 30 , 2017 . the reinsurance program consists of one treaty covering excess of loss and catastrophic loss events in four layers of coverage . our reinsurance coverage is $ 190.0 million in excess of our $ 10.0 million retention on a per occurrence basis , subject to certain exclusions . we believe that our excess of loss reinsurance program currently meets our needs . 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
| capital resources as of december 31 , 2016 , the capital resources available to us consisted of : ( i ) $ 32.0 million of notes payable consisting of surplus notes maturing in 2034 ; ( ii ) $ 840.6 million of stockholders ' equity ; and ( iii ) the $ 174.9 million deferred gain . the following outlines each component of our total capital resources : notes payable . the surplus notes bear interest at a fixed rate of between 405 and 425 basis points in excess of the 90-day libor per annum , payable quarterly . we may redeem the surplus notes at any time at their face value of $ 32.0 million , plus accrued and unpaid interest . the surplus notes mature in 2034. both the payment of interest and repayment of the surplus notes are subject to the prior approval of the florida department of financial services . 35 stockholders ' equity . the following table summarizes our beginning and ending stockholders ' equity balance and the changes thereto for each of the years ended december 31 , 2016 , 2015 , and 2014 : replace_table_token_21_th deferred gain . the deferred gain , which totaled $ 174.9 million and $ 189.5 million as of december 31 , 2016 and 2015 , respectively , reflects the unamortized gain from the lpt agreement . see note 2 in the notes to our consolidated financial statements . contractual obligations and commitments . the following table identifies our long-term debt and contractual obligations as of december 31 , 2016 . replace_table_token_22_th ( 1 ) notes payable includes payments of the principal and estimated interest expense on our surplus notes outstanding based on libor plus a margin . the interest rates used ranged from 4.9 % to 5.1 % . ( 2 ) estimated losses and lae reserve payment patterns have been computed based on historical information .
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24 the following table presents monthly sales results compared to the equivalent fiscal periods in 2019 : domestic system-wide same-store sales ( 1 ) compared to 2019 fiscal periods : replace_table_token_7_th the following table presents domestic capacity restrictions : domestic capacity restrictions as of december 30 , 2020 : % of domestic system 75 % capacity or social distancing 29 % 50 % - 66 % capacity 23 % 25 % - 33 % capacity 5 % off-premise only 39 % no restrictions 1 % temporarily closed 3 % total 100 % franchise and license revenue reductions in addition to the impacts that reduced sales had on franchise and licenses revenues , certain forms of franchise support resulted in reductions to these revenues throughout 2020 including : abatement of $ 6.0 million of royalties including $ 1.9 million in the first quarter , $ 3.1 million in the second quarter and $ 1.0 in the fourth quarter ; abatement of $ 1.3 million of advertising fees in the first quarter . cost savings initiatives in response to the covid-19 pandemic , we also implemented the following cost savings initiatives : suspended travel and canceled in-person field meetings ; placed holds on all open corporate and field positions ; significantly reduced restaurant level staffing across the company restaurant portfolio ; meaningfully reduced compensation for our board of directors and multiple levels of management ; and furloughed over 25 % of the employees at our corporate office , approximately half of which were subsequently separated from the company . we subsequently eased certain of these cost savings measures . for example , we have resumed recruiting for certain corporate and field positions , and the compensation reductions expired on june 25 , 2020. we also secured $ 2.6 million of federal tax credits in connection with wages paid to retained employees during the crisis under the coronavirus aid , relief , and economic security ( cares ) act . liquidity actions taken effective february 27 , 2020 , we suspended share repurchases , and effective march 16 , 2020 terminated our rule 10b5-1 plan in both cases in light of uncertain market conditions arising from the covid-19 pandemic . 25 due to the impact of the covid-19 pandemic , effective may 13 , 2020 and december 15 , 2020 , the company and certain of its subsidiaries entered into a second and third amendment , respectively , to the current credit facility which amended the credit agreement dated as of october 26 , 2017. see liquidity and capital resources - credit facility . as of december 30 , 2020 , the company was in compliance with its financial covenants related to the amended credit facility . on july 6 , 2020 , we closed on the issuance and sale of 8,000,000 shares of common stock . net proceeds of $ 69.6 million were received after deducting the underwriters ' discounts and commissions and offering expenses payable by the company and disbursed to pay down the outstanding balance on the credit facility . growing and revitalizing the brand over the last five years , our growth initiatives have led to 169 new restaurant openings . during 2020 , our franchisees opened 20 restaurants , of which eight are international franchised locations , including four in canada , two in mexico , and one each in indonesia and central america . our goal is to increase net restaurant growth through both domestic and international avenues . domestic growth will continue to focus on markets in which we have modest penetration . development agreements related to the sale of 113 of our company restaurants during 2018 and 2019 and recently enhanced development agreements in canada and the philippines are expected to stimulate both domestic and international growth over the next several years . a total of 22 remodels were completed during 2020 , consisting of 20 at franchised restaurants and two at company restaurants . eleven of these remodels were in our heritage image , which we launched in late 2013. this updated look reflects a more contemporary diner feel to further reinforce our america 's diner positioning . the remaining 11 restaurants updated to our heritage 2.0 image which features more attention-grabbing exterior elements while extending the relaxing interior elements from the original heritage program . as of the end of 2020 , approximately 91 % of the restaurants in the system have been remodeled to one of our two heritage images . balancing the use of cash though certain strategies have been impacted by the covid-19 pandemic , we are still focused in the longer term on balancing the use of cash between reinvesting in our base of company restaurants , growing and strengthening the brand and returning cash to shareholders . during 2020 , cash capital expenditures were $ 7.0 million . our real estate strategy is to redeploy proceeds from the sale of certain pieces of our owned real estate to acquire higher quality real estate underlying company and franchised restaurants . during 2020 , we generated $ 9.4 million of cash proceeds from the sale of real estate . prior to suspending share repurchases , during 2020 , we repurchased a total of 1.7 million shares of our common stock for $ 34.2 million . since initiating our share repurchase program in november 2010 , we have repurchased a total of 54.0 million shares of our common stock for $ 553.9 million . the company is prohibited from paying dividends and making stock repurchases and other general investments until the date of delivery of our financial statements for the fiscal quarter ending september 29 , 2021. see liquidity and capital resources - credit facility . in december 2019 , the board approved a new share repurchase authorization for $ 250 million . as of december 30 , 2020 , there was approximately $ 248.0 million remaining under our current repurchase authorization . story_separator_special_tag the consolidated leverage ratio covenant was waived until the fiscal quarter ending march 31 , 2021 , at which point the covenant level was to increase from 4.00x to 4.50x , stepping down to 4.25x in the second quarter of 2021 and 4.00x in the third fiscal quarter of 2021 and thereafter . in addition , the second amendment added a monthly minimum liquidity covenant , defined as the sum of unrestricted cash and revolver availability , ranging from $ 60 million to $ 70 million , commencing on may 13 , 2020 to may 26 , 2021. on december 15 , 2020 , we executed an additional amendment ( the “ third amendment ” ) to our credit agreement . commencing with the effective date of the third amendment until the date of delivery of the financial statements for the fiscal quarter ending december 29 , 2021 , the interest rate shall remain libor plus 3.00 % . as of the effective date of the third amendment , the accordion feature is removed , and the total credit facility commitment is $ 375 million and will be reduced to $ 350 million on july 1 , 2021. commencing with the effective date of the third amendment until the date of delivery of the financial statements for the fiscal quarter ending september 29 , 2021 , the company will continue to have supplemental monthly reporting obligations to its lenders and will be prohibited from paying dividends and making stock repurchases and other general investments . additionally , existing restrictions on capital expenditures of $ 10 million in the aggregate will remain in effect through march 31 , 2021 , at which point the restrictions will expand to $ 12 million in the aggregate through september 29 , 2021. the third amendment temporarily waives certain financial covenants . the consolidated fixed charge coverage ratio covenant is waived through march 31 , 2021 , at which point the covenant level will be a minimum of 1.00x , adjusting to 1.25x on july 1 , 2021 , and 1.50x on september 30 , 2021 and thereafter . the consolidated leverage ratio covenant is waived through march 31 , 2021 , at which point the covenant level will be a maximum of 5.25x , stepping down to 4.75x on july 1 , 2021 , and 4.00x on september 30 , 2021 and thereafter . in addition , the third amendment maintains a monthly minimum liquidity covenant , defined as the sum of unrestricted cash and revolver availability , of $ 70 million , commencing on the effective date until the date of delivery of the financial statements for the fiscal quarter ending september 29 , 2021. we were in compliance with all financial covenants as of december 30 , 2020. prior to considering the impact of our interest rate swaps , described below , the weighted-average interest rate on outstanding revolver loans was 3.15 % as of december 30 , 2020. taking into consideration our interest rate swaps that are designated as cash flow hedges , the weighted-average interest rate of outstanding revolver loans was 5.01 % as of december 30 , 2020. interest rate hedges we have interest rate swaps to hedge a portion of the forecasted cash flows of our floating rate debt . see part ii item 7a . quantitative and qualitative disclosures about market risk for details on our interest rate swaps . contractual obligations our future contractual obligations and commitments at december 30 , 2020 consisted of the following : replace_table_token_19_th 35 ( a ) interest obligations represent payments related to our long-term debt outstanding at december 30 , 2020. for long-term debt with variable rates , we have used the rate applicable at december 30 , 2020 to project interest over the periods presented in the table above , taking into consideration the impact of the interest rate swaps that are designated as cash flow hedges for the applicable periods . the finance lease obligation amounts above are inclusive of interest . ( b ) purchase obligations include amounts payable for company and franchised restaurants under purchase contracts for food and non-food products . many of these agreements do not obligate us to purchase any specific volumes and include provisions that would allow us to cancel such agreements with appropriate notice . for agreements with cancellation provisions , amounts included in the table above represent our estimate of purchase obligations during the periods presented if we were to cancel these contracts with appropriate notice . ( c ) unrecognized tax benefits are related to uncertain tax positions . as we are not able to reasonably estimate the timing or amount of these payments , the related balances have not been reflected in this table . off-balance sheet arrangements we do not have any off-balance sheet arrangements . critical accounting policies and estimates our reported results are impacted by the application of certain accounting policies that require us to make subjective or complex judgments . these judgments involve estimations of the effect of matters that are inherently uncertain and may significantly impact our quarterly or annual results of operations or financial condition . changes in the estimates and judgments could significantly affect our results of operations and financial condition and cash flows in future years . descriptions of what we consider to be our most significant critical accounting policies are as follows : self-insurance liabilities . we are self-insured for a portion of our losses related to certain medical plans , workers ' compensation , general , product and automobile insurance liability . in estimating these liabilities , we utilize independent actuarial estimates of expected losses , which are based on statistical analysis of historical data . our estimates of expected losses are adjusted over time based on changes to the actual costs of the underlying claims , which could result in additional expense or reversal of expense previously recorded . see note 2 to our consolidated financial statements
| capital resources as of december 31 , 2016 , the capital resources available to us consisted of : ( i ) $ 32.0 million of notes payable consisting of surplus notes maturing in 2034 ; ( ii ) $ 840.6 million of stockholders ' equity ; and ( iii ) the $ 174.9 million deferred gain . the following outlines each component of our total capital resources : notes payable . the surplus notes bear interest at a fixed rate of between 405 and 425 basis points in excess of the 90-day libor per annum , payable quarterly . we may redeem the surplus notes at any time at their face value of $ 32.0 million , plus accrued and unpaid interest . the surplus notes mature in 2034. both the payment of interest and repayment of the surplus notes are subject to the prior approval of the florida department of financial services . 35 stockholders ' equity . the following table summarizes our beginning and ending stockholders ' equity balance and the changes thereto for each of the years ended december 31 , 2016 , 2015 , and 2014 : replace_table_token_21_th deferred gain . the deferred gain , which totaled $ 174.9 million and $ 189.5 million as of december 31 , 2016 and 2015 , respectively , reflects the unamortized gain from the lpt agreement . see note 2 in the notes to our consolidated financial statements . contractual obligations and commitments . the following table identifies our long-term debt and contractual obligations as of december 31 , 2016 . replace_table_token_22_th ( 1 ) notes payable includes payments of the principal and estimated interest expense on our surplus notes outstanding based on libor plus a margin . the interest rates used ranged from 4.9 % to 5.1 % . ( 2 ) estimated losses and lae reserve payment patterns have been computed based on historical information .
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24 the following table presents monthly sales results compared to the equivalent fiscal periods in 2019 : domestic system-wide same-store sales ( 1 ) compared to 2019 fiscal periods : replace_table_token_7_th the following table presents domestic capacity restrictions : domestic capacity restrictions as of december 30 , 2020 : % of domestic system 75 % capacity or social distancing 29 % 50 % - 66 % capacity 23 % 25 % - 33 % capacity 5 % off-premise only 39 % no restrictions 1 % temporarily closed 3 % total 100 % franchise and license revenue reductions in addition to the impacts that reduced sales had on franchise and licenses revenues , certain forms of franchise support resulted in reductions to these revenues throughout 2020 including : abatement of $ 6.0 million of royalties including $ 1.9 million in the first quarter , $ 3.1 million in the second quarter and $ 1.0 in the fourth quarter ; abatement of $ 1.3 million of advertising fees in the first quarter . cost savings initiatives in response to the covid-19 pandemic , we also implemented the following cost savings initiatives : suspended travel and canceled in-person field meetings ; placed holds on all open corporate and field positions ; significantly reduced restaurant level staffing across the company restaurant portfolio ; meaningfully reduced compensation for our board of directors and multiple levels of management ; and furloughed over 25 % of the employees at our corporate office , approximately half of which were subsequently separated from the company . we subsequently eased certain of these cost savings measures . for example , we have resumed recruiting for certain corporate and field positions , and the compensation reductions expired on june 25 , 2020. we also secured $ 2.6 million of federal tax credits in connection with wages paid to retained employees during the crisis under the coronavirus aid , relief , and economic security ( cares ) act . liquidity actions taken effective february 27 , 2020 , we suspended share repurchases , and effective march 16 , 2020 terminated our rule 10b5-1 plan in both cases in light of uncertain market conditions arising from the covid-19 pandemic . 25 due to the impact of the covid-19 pandemic , effective may 13 , 2020 and december 15 , 2020 , the company and certain of its subsidiaries entered into a second and third amendment , respectively , to the current credit facility which amended the credit agreement dated as of october 26 , 2017. see liquidity and capital resources - credit facility . as of december 30 , 2020 , the company was in compliance with its financial covenants related to the amended credit facility . on july 6 , 2020 , we closed on the issuance and sale of 8,000,000 shares of common stock . net proceeds of $ 69.6 million were received after deducting the underwriters ' discounts and commissions and offering expenses payable by the company and disbursed to pay down the outstanding balance on the credit facility . growing and revitalizing the brand over the last five years , our growth initiatives have led to 169 new restaurant openings . during 2020 , our franchisees opened 20 restaurants , of which eight are international franchised locations , including four in canada , two in mexico , and one each in indonesia and central america . our goal is to increase net restaurant growth through both domestic and international avenues . domestic growth will continue to focus on markets in which we have modest penetration . development agreements related to the sale of 113 of our company restaurants during 2018 and 2019 and recently enhanced development agreements in canada and the philippines are expected to stimulate both domestic and international growth over the next several years . a total of 22 remodels were completed during 2020 , consisting of 20 at franchised restaurants and two at company restaurants . eleven of these remodels were in our heritage image , which we launched in late 2013. this updated look reflects a more contemporary diner feel to further reinforce our america 's diner positioning . the remaining 11 restaurants updated to our heritage 2.0 image which features more attention-grabbing exterior elements while extending the relaxing interior elements from the original heritage program . as of the end of 2020 , approximately 91 % of the restaurants in the system have been remodeled to one of our two heritage images . balancing the use of cash though certain strategies have been impacted by the covid-19 pandemic , we are still focused in the longer term on balancing the use of cash between reinvesting in our base of company restaurants , growing and strengthening the brand and returning cash to shareholders . during 2020 , cash capital expenditures were $ 7.0 million . our real estate strategy is to redeploy proceeds from the sale of certain pieces of our owned real estate to acquire higher quality real estate underlying company and franchised restaurants . during 2020 , we generated $ 9.4 million of cash proceeds from the sale of real estate . prior to suspending share repurchases , during 2020 , we repurchased a total of 1.7 million shares of our common stock for $ 34.2 million . since initiating our share repurchase program in november 2010 , we have repurchased a total of 54.0 million shares of our common stock for $ 553.9 million . the company is prohibited from paying dividends and making stock repurchases and other general investments until the date of delivery of our financial statements for the fiscal quarter ending september 29 , 2021. see liquidity and capital resources - credit facility . in december 2019 , the board approved a new share repurchase authorization for $ 250 million . as of december 30 , 2020 , there was approximately $ 248.0 million remaining under our current repurchase authorization . story_separator_special_tag the consolidated leverage ratio covenant was waived until the fiscal quarter ending march 31 , 2021 , at which point the covenant level was to increase from 4.00x to 4.50x , stepping down to 4.25x in the second quarter of 2021 and 4.00x in the third fiscal quarter of 2021 and thereafter . in addition , the second amendment added a monthly minimum liquidity covenant , defined as the sum of unrestricted cash and revolver availability , ranging from $ 60 million to $ 70 million , commencing on may 13 , 2020 to may 26 , 2021. on december 15 , 2020 , we executed an additional amendment ( the “ third amendment ” ) to our credit agreement . commencing with the effective date of the third amendment until the date of delivery of the financial statements for the fiscal quarter ending december 29 , 2021 , the interest rate shall remain libor plus 3.00 % . as of the effective date of the third amendment , the accordion feature is removed , and the total credit facility commitment is $ 375 million and will be reduced to $ 350 million on july 1 , 2021. commencing with the effective date of the third amendment until the date of delivery of the financial statements for the fiscal quarter ending september 29 , 2021 , the company will continue to have supplemental monthly reporting obligations to its lenders and will be prohibited from paying dividends and making stock repurchases and other general investments . additionally , existing restrictions on capital expenditures of $ 10 million in the aggregate will remain in effect through march 31 , 2021 , at which point the restrictions will expand to $ 12 million in the aggregate through september 29 , 2021. the third amendment temporarily waives certain financial covenants . the consolidated fixed charge coverage ratio covenant is waived through march 31 , 2021 , at which point the covenant level will be a minimum of 1.00x , adjusting to 1.25x on july 1 , 2021 , and 1.50x on september 30 , 2021 and thereafter . the consolidated leverage ratio covenant is waived through march 31 , 2021 , at which point the covenant level will be a maximum of 5.25x , stepping down to 4.75x on july 1 , 2021 , and 4.00x on september 30 , 2021 and thereafter . in addition , the third amendment maintains a monthly minimum liquidity covenant , defined as the sum of unrestricted cash and revolver availability , of $ 70 million , commencing on the effective date until the date of delivery of the financial statements for the fiscal quarter ending september 29 , 2021. we were in compliance with all financial covenants as of december 30 , 2020. prior to considering the impact of our interest rate swaps , described below , the weighted-average interest rate on outstanding revolver loans was 3.15 % as of december 30 , 2020. taking into consideration our interest rate swaps that are designated as cash flow hedges , the weighted-average interest rate of outstanding revolver loans was 5.01 % as of december 30 , 2020. interest rate hedges we have interest rate swaps to hedge a portion of the forecasted cash flows of our floating rate debt . see part ii item 7a . quantitative and qualitative disclosures about market risk for details on our interest rate swaps . contractual obligations our future contractual obligations and commitments at december 30 , 2020 consisted of the following : replace_table_token_19_th 35 ( a ) interest obligations represent payments related to our long-term debt outstanding at december 30 , 2020. for long-term debt with variable rates , we have used the rate applicable at december 30 , 2020 to project interest over the periods presented in the table above , taking into consideration the impact of the interest rate swaps that are designated as cash flow hedges for the applicable periods . the finance lease obligation amounts above are inclusive of interest . ( b ) purchase obligations include amounts payable for company and franchised restaurants under purchase contracts for food and non-food products . many of these agreements do not obligate us to purchase any specific volumes and include provisions that would allow us to cancel such agreements with appropriate notice . for agreements with cancellation provisions , amounts included in the table above represent our estimate of purchase obligations during the periods presented if we were to cancel these contracts with appropriate notice . ( c ) unrecognized tax benefits are related to uncertain tax positions . as we are not able to reasonably estimate the timing or amount of these payments , the related balances have not been reflected in this table . off-balance sheet arrangements we do not have any off-balance sheet arrangements . critical accounting policies and estimates our reported results are impacted by the application of certain accounting policies that require us to make subjective or complex judgments . these judgments involve estimations of the effect of matters that are inherently uncertain and may significantly impact our quarterly or annual results of operations or financial condition . changes in the estimates and judgments could significantly affect our results of operations and financial condition and cash flows in future years . descriptions of what we consider to be our most significant critical accounting policies are as follows : self-insurance liabilities . we are self-insured for a portion of our losses related to certain medical plans , workers ' compensation , general , product and automobile insurance liability . in estimating these liabilities , we utilize independent actuarial estimates of expected losses , which are based on statistical analysis of historical data . our estimates of expected losses are adjusted over time based on changes to the actual costs of the underlying claims , which could result in additional expense or reversal of expense previously recorded . see note 2 to our consolidated financial statements
| liquidity and capital resources summary of cash flows our primary sources of liquidity and capital resources are cash generated from operations and borrowings under our credit facility ( as described below ) . principal uses of cash are operating expenses , capital expenditures and , prior to the second quarter of 2020 , the repurchase of shares of our common stock . the following table presents a summary of our sources and uses of cash and cash equivalents for the periods indicated : replace_table_token_17_th net cash flows used in operating activities were $ 3.1 million for the year ended december 30 , 2020 compared to net cash flows provided by operating activities of $ 43.3 million for the year ended december 25 , 2019. the decrease in cash flows provided by ( used in ) operating activities was primarily due to the impacts of the covid-19 pandemic and the timing of prior year accrual payments . net cash flows provided by operating activities were $ 43.3 million for the year ended december 25 , 2019 compared to $ 73.7 million for the year ended december 26 , 2018. the decrease in cash flows provided by operating activities was primarily due to the reduction in equivalent units and the related runoff of liabilities resulting from the sale of company restaurants . we believe that our estimated cash flows from operations for 2021 , combined with our capacity for additional borrowings under our credit facility , will enable us to meet our anticipated cash requirements and fund capital expenditures over the next twelve months . 33 net cash flows provided by investing activities were $ 4.7 million for the year ended december 30 , 2020. these cash flows are primarily proceeds from the sale of real estate of $ 9.4 million and proceeds from the sale of investments of $ 2.9 million , partially offset by capital expenditures of $ 7.0 million and investment purchases of $ 1.4 million .
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we consider our equipment to be eco-friendly as the heatwurx process reuses and rejuvenates distressed asphalt , uses recycled asphalt pavement for filler material , eliminates travel to and from asphalt batch plants , and extends the life of the roadway . we believe our equipment , technology and processes provide savings over other processes that can be more labor and equipment intensive . 17 our hot-in-place recycling process and equipment was selected by the technology implementation group of the american association of state highway transportation officials ( aashto tig ) as an additionally selected technology for the year 2012. we develop , manufacture and intend to sell our unique and innovative and eco-friendly equipment to federal , state and local agencies as well as contractors for the repair and rehabilitation of damaged and deteriorated asphalt surfaces . during 2014 , we acquired dr. pave , llc a service company offering asphalt repair and restoration utilizing the heatwurx asphalt repair technology and established a new entity dr. pave worldwide llc to house our franchise program providing franchisees with the exclusive heatwurx equipment and processing . we launched our franchise sales program throughout the u.s. in the third quarter of 2014 ; however , to date , no franchises have been sold . the company decided not to renew its franchise registrations throughout the u.s. do to the extensive costs . in 2015 , we offered license agreements , which grants a license of all heatwurx equipment and supplies and the use of the heatwurx intellectual property within a specified territory . we have one licensee as of december 31 , 2016. we are no longer receiving financial support and we do not believe we will be able to obtain financing from another source . we do not believe we are able to achieve a level of revenues adequate to support our cost structure . do to the slow growth in the service sector and the high cost of the franchise registrations , we discontinued the operations of dr. pave , llc and dr. pave worldwide llc . in addition , we significantly scaled back operations to maintain only a minimal level of operations necessary to support our licensee and look for potential merger candidates . the company sold the remaining equipment and inventory to the licensee during 2016. based upon the company 's current financial position , the company does not believe it will be able to satisfy the mandatory principal payments . the company will work with the lenders to explore extension or conversion options . there is no guarantee the lenders will accommodate our requests . as of december 31 , 2016 ; principal in the amount of $ 962,361 is outstanding and payable under the secured notes . these notes are secured by all the assets of the company , including intellectual property rights . we are in default on the notes , and as a result the company 's assets may be foreclosed upon . the issues described above raise substantial doubt about the company 's ability to continue as a going concern . it is our intention to move forward as a public entity and to seek potential merger candidates . if the company fails to merge or be acquired by another company , we will be required to terminate all operations . section 107 of the jobs act provides that an emerging growth company can take advantage of the extended transition period provided in section 7 ( a ) ( 2 ) ( b ) of the securities act for complying with new or revised accounting standards . in other words , an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies . however , we are choosing to opt out of such extended transition period , and as a result , we will comply with new or revised standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies . section 107 of the jobs act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable . results of operations for the year ended december 31 , 2016 compared to year ended december 31 , 2015 for the year ended december 31 , 2016 , our net loss was approximately $ 336,000 including income from discontinued operations of approximately $ 1,000 , compared to a net loss of approximately $ 3,354,000 including loss from discontinued operations of approximately $ 371,000 for the year ended december 31 , 2015. further description of these losses is provided below . revenue revenue decreased to $ 5,000 for the year ended december 31 , 2016 from approximately $ 113,000 for the year ended december 31 , 2015 as a result of decreased equipment and consumables sales . the prior year sales of consumables consisted of our proprietary blend of polymer pellets used to strengthen the repair when mixed in to the recycled asphalt product ; and rxehab rejuvenation strips which is an oil-based product which creates the binding agent for the asphalt repair . the sales in 2015 were offset by significant sales discounts . the company does not anticipate any future revenue from equipment sales in 2017 . 18 cost of goods sold there was no cost of goods sold during 2016 compared to approximately $ 126,000 for the year ended december 31 , 2015. in 2015 the company recognized cost of goods sold from consumable sales , and had a negative gross profit as a result of significant discounts . story_separator_special_tag selling , general and administrative selling , general and administrative expenses decreased to approximately $ 70,000 for the year ended december 31 , 2016 from approximately $ 945,000 for the year ended december 31 , 2015. the decrease in selling , general and administrative expenses is principally due to the significant reduction in operating activities which include a decrease in employee expenses of approximately $ 406,000 ; a decrease in travel and office expenses of approximately $ 376,000 which includes commercial insurance , rent and other expenses ; a decrease in legal and investor relations expenses of $ 53,000 ; a decrease in advertising and promotion of approximately $ 35,000 ; and a decrease in bad debt expense of $ 5,000. impairment of assets held for sale as part of the strategy to keep operations running at minimum capacity , in 2015 we chose to sell assets or return collateralized assets to relieve the debt , which were not critical to the continued . we reclassified these non-critical assets for sale from equipment or inventory and recognized an impairment loss when the carrying amount of the assets exceeds its fair value . during the year ended december 31 , 2015 we recognized an impairment on assets held for sale in the amount of $ 186,068. impairment of intangible asset based on our current financial condition and the inability to obtain financing ; we are unable to pursue the necessary commercialization activities to drive us to profitability . we have therefore estimated no future cash flows related to the intangible assets and recognized an impairment of intangible assets in the amount of $ 1,517,859 for the year ended december 31 , 2015. research and development research and development decreased to approximately $ 6,000 for the year ended december 31 , 2016 from approximately $ 29,000 for the year ended december 31 , 2015 , as a result of fewer patent applications being filed thereby reducing the legal fees associated therewith , a decrease in manufacturing research and development costs , and a decrease in consulting fees . we currently have six issued u.s. patents : five utility patents and one design patent . we have two pending u.s. patent applications and three foreign patent applications . three issued utility patents , us patent nos . 8,556,536 ; 8,562,247 and 8,714,871 were issued on oct. 15 , 2013 , oct. 24 , 2013 , and may 6 , 2014 , respectively and cover certain unique device and method of use aspects of our asphalt repair equipment . our design patent , us patent no . d700,633 , was issued on march 4 , 2014 and covers the ornamental design of our asphalt processor . u.s. patent no . 8,801,325 issued august 12 , 2014 and covers aspects of our computer-controlled asphalt heater . u.s. patent no . 9,022,686 was issued may 5 , 2015 and covers complementary features of our computer-controlled asphalt heater . we intend to protect our intellectual property rights in the united states and in a limited number of countries outside of the united states . however , we do not have any assurance that our current pending patent applications will be granted or that we will be able to develop future patentable technologies . we do not believe our ability to operate our business is dependent on the patentability of our technology . income taxes we have incurred tax losses since we began operations . a tax benefit would have been recorded for losses incurred since march 29 , 2011 ; however , due to the uncertainty of realizing these assets , a valuation allowance was recognized which fully offset the deferred tax assets . 19 story_separator_special_tag assumptions believed to be reasonable under the circumstances . actual results may differ materially from these estimates under different assumptions or conditions . we believe the following critical accounting policies involve significant judgments and estimates used in the preparation of our financial statements . see note 2 of the accompanying notes to the financial statements included in item 8 of this form 10-k for additional information on these policies and estimates , as well as a discussion of additional accounting policies and estimates . 21 revenue recognition equipment sales revenue is recognized when equipment is shipped to our customer and collection is reasonably assured . we sell our equipment ( hwx-30 heater and hwx-ap-40 asphalt processor ) , as well as certain consumables , such as rxehab rejuvenation strips and polymer pellets , to third parties . equipment sales revenue is recognized when all of the following criteria are satisfied : ( a ) persuasive evidence of a sales arrangement exists ; ( b ) price is fixed and determinable ; ( c ) collectability is reasonably assured ; and ( d ) delivery has occurred . persuasive evidence of an arrangement and a fixed or determinable price exist once we receive an order or contract from a customer . we assess collectability at the time of the sale and if collectability is not reasonably assured , the sale is deferred and not recognized until collectability is probable or payment is received . typically , title and risk of ownership transfer when the equipment is shipped . research and development expenses research and development costs are expensed as incurred and consist of direct and overhead-related expenses . expenditures to acquire technologies , including licenses , which are utilized in research and development and that have no alternative future use are expensed when incurred . technology we develop for use in our products is expensed as incurred until technological feasibility has been established after which it is capitalized and depreciated . stock-based compensation we record equity instruments at their fair value on the measurement date by utilizing the black-scholes option-pricing model . stock compensation for all share-based payments , is recognized as an expense over the requisite service period . significant assumptions utilized in determining the fair value of our stock options
| liquidity and capital resources summary of cash flows our primary sources of liquidity and capital resources are cash generated from operations and borrowings under our credit facility ( as described below ) . principal uses of cash are operating expenses , capital expenditures and , prior to the second quarter of 2020 , the repurchase of shares of our common stock . the following table presents a summary of our sources and uses of cash and cash equivalents for the periods indicated : replace_table_token_17_th net cash flows used in operating activities were $ 3.1 million for the year ended december 30 , 2020 compared to net cash flows provided by operating activities of $ 43.3 million for the year ended december 25 , 2019. the decrease in cash flows provided by ( used in ) operating activities was primarily due to the impacts of the covid-19 pandemic and the timing of prior year accrual payments . net cash flows provided by operating activities were $ 43.3 million for the year ended december 25 , 2019 compared to $ 73.7 million for the year ended december 26 , 2018. the decrease in cash flows provided by operating activities was primarily due to the reduction in equivalent units and the related runoff of liabilities resulting from the sale of company restaurants . we believe that our estimated cash flows from operations for 2021 , combined with our capacity for additional borrowings under our credit facility , will enable us to meet our anticipated cash requirements and fund capital expenditures over the next twelve months . 33 net cash flows provided by investing activities were $ 4.7 million for the year ended december 30 , 2020. these cash flows are primarily proceeds from the sale of real estate of $ 9.4 million and proceeds from the sale of investments of $ 2.9 million , partially offset by capital expenditures of $ 7.0 million and investment purchases of $ 1.4 million .
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we consider our equipment to be eco-friendly as the heatwurx process reuses and rejuvenates distressed asphalt , uses recycled asphalt pavement for filler material , eliminates travel to and from asphalt batch plants , and extends the life of the roadway . we believe our equipment , technology and processes provide savings over other processes that can be more labor and equipment intensive . 17 our hot-in-place recycling process and equipment was selected by the technology implementation group of the american association of state highway transportation officials ( aashto tig ) as an additionally selected technology for the year 2012. we develop , manufacture and intend to sell our unique and innovative and eco-friendly equipment to federal , state and local agencies as well as contractors for the repair and rehabilitation of damaged and deteriorated asphalt surfaces . during 2014 , we acquired dr. pave , llc a service company offering asphalt repair and restoration utilizing the heatwurx asphalt repair technology and established a new entity dr. pave worldwide llc to house our franchise program providing franchisees with the exclusive heatwurx equipment and processing . we launched our franchise sales program throughout the u.s. in the third quarter of 2014 ; however , to date , no franchises have been sold . the company decided not to renew its franchise registrations throughout the u.s. do to the extensive costs . in 2015 , we offered license agreements , which grants a license of all heatwurx equipment and supplies and the use of the heatwurx intellectual property within a specified territory . we have one licensee as of december 31 , 2016. we are no longer receiving financial support and we do not believe we will be able to obtain financing from another source . we do not believe we are able to achieve a level of revenues adequate to support our cost structure . do to the slow growth in the service sector and the high cost of the franchise registrations , we discontinued the operations of dr. pave , llc and dr. pave worldwide llc . in addition , we significantly scaled back operations to maintain only a minimal level of operations necessary to support our licensee and look for potential merger candidates . the company sold the remaining equipment and inventory to the licensee during 2016. based upon the company 's current financial position , the company does not believe it will be able to satisfy the mandatory principal payments . the company will work with the lenders to explore extension or conversion options . there is no guarantee the lenders will accommodate our requests . as of december 31 , 2016 ; principal in the amount of $ 962,361 is outstanding and payable under the secured notes . these notes are secured by all the assets of the company , including intellectual property rights . we are in default on the notes , and as a result the company 's assets may be foreclosed upon . the issues described above raise substantial doubt about the company 's ability to continue as a going concern . it is our intention to move forward as a public entity and to seek potential merger candidates . if the company fails to merge or be acquired by another company , we will be required to terminate all operations . section 107 of the jobs act provides that an emerging growth company can take advantage of the extended transition period provided in section 7 ( a ) ( 2 ) ( b ) of the securities act for complying with new or revised accounting standards . in other words , an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies . however , we are choosing to opt out of such extended transition period , and as a result , we will comply with new or revised standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies . section 107 of the jobs act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable . results of operations for the year ended december 31 , 2016 compared to year ended december 31 , 2015 for the year ended december 31 , 2016 , our net loss was approximately $ 336,000 including income from discontinued operations of approximately $ 1,000 , compared to a net loss of approximately $ 3,354,000 including loss from discontinued operations of approximately $ 371,000 for the year ended december 31 , 2015. further description of these losses is provided below . revenue revenue decreased to $ 5,000 for the year ended december 31 , 2016 from approximately $ 113,000 for the year ended december 31 , 2015 as a result of decreased equipment and consumables sales . the prior year sales of consumables consisted of our proprietary blend of polymer pellets used to strengthen the repair when mixed in to the recycled asphalt product ; and rxehab rejuvenation strips which is an oil-based product which creates the binding agent for the asphalt repair . the sales in 2015 were offset by significant sales discounts . the company does not anticipate any future revenue from equipment sales in 2017 . 18 cost of goods sold there was no cost of goods sold during 2016 compared to approximately $ 126,000 for the year ended december 31 , 2015. in 2015 the company recognized cost of goods sold from consumable sales , and had a negative gross profit as a result of significant discounts . story_separator_special_tag selling , general and administrative selling , general and administrative expenses decreased to approximately $ 70,000 for the year ended december 31 , 2016 from approximately $ 945,000 for the year ended december 31 , 2015. the decrease in selling , general and administrative expenses is principally due to the significant reduction in operating activities which include a decrease in employee expenses of approximately $ 406,000 ; a decrease in travel and office expenses of approximately $ 376,000 which includes commercial insurance , rent and other expenses ; a decrease in legal and investor relations expenses of $ 53,000 ; a decrease in advertising and promotion of approximately $ 35,000 ; and a decrease in bad debt expense of $ 5,000. impairment of assets held for sale as part of the strategy to keep operations running at minimum capacity , in 2015 we chose to sell assets or return collateralized assets to relieve the debt , which were not critical to the continued . we reclassified these non-critical assets for sale from equipment or inventory and recognized an impairment loss when the carrying amount of the assets exceeds its fair value . during the year ended december 31 , 2015 we recognized an impairment on assets held for sale in the amount of $ 186,068. impairment of intangible asset based on our current financial condition and the inability to obtain financing ; we are unable to pursue the necessary commercialization activities to drive us to profitability . we have therefore estimated no future cash flows related to the intangible assets and recognized an impairment of intangible assets in the amount of $ 1,517,859 for the year ended december 31 , 2015. research and development research and development decreased to approximately $ 6,000 for the year ended december 31 , 2016 from approximately $ 29,000 for the year ended december 31 , 2015 , as a result of fewer patent applications being filed thereby reducing the legal fees associated therewith , a decrease in manufacturing research and development costs , and a decrease in consulting fees . we currently have six issued u.s. patents : five utility patents and one design patent . we have two pending u.s. patent applications and three foreign patent applications . three issued utility patents , us patent nos . 8,556,536 ; 8,562,247 and 8,714,871 were issued on oct. 15 , 2013 , oct. 24 , 2013 , and may 6 , 2014 , respectively and cover certain unique device and method of use aspects of our asphalt repair equipment . our design patent , us patent no . d700,633 , was issued on march 4 , 2014 and covers the ornamental design of our asphalt processor . u.s. patent no . 8,801,325 issued august 12 , 2014 and covers aspects of our computer-controlled asphalt heater . u.s. patent no . 9,022,686 was issued may 5 , 2015 and covers complementary features of our computer-controlled asphalt heater . we intend to protect our intellectual property rights in the united states and in a limited number of countries outside of the united states . however , we do not have any assurance that our current pending patent applications will be granted or that we will be able to develop future patentable technologies . we do not believe our ability to operate our business is dependent on the patentability of our technology . income taxes we have incurred tax losses since we began operations . a tax benefit would have been recorded for losses incurred since march 29 , 2011 ; however , due to the uncertainty of realizing these assets , a valuation allowance was recognized which fully offset the deferred tax assets . 19 story_separator_special_tag assumptions believed to be reasonable under the circumstances . actual results may differ materially from these estimates under different assumptions or conditions . we believe the following critical accounting policies involve significant judgments and estimates used in the preparation of our financial statements . see note 2 of the accompanying notes to the financial statements included in item 8 of this form 10-k for additional information on these policies and estimates , as well as a discussion of additional accounting policies and estimates . 21 revenue recognition equipment sales revenue is recognized when equipment is shipped to our customer and collection is reasonably assured . we sell our equipment ( hwx-30 heater and hwx-ap-40 asphalt processor ) , as well as certain consumables , such as rxehab rejuvenation strips and polymer pellets , to third parties . equipment sales revenue is recognized when all of the following criteria are satisfied : ( a ) persuasive evidence of a sales arrangement exists ; ( b ) price is fixed and determinable ; ( c ) collectability is reasonably assured ; and ( d ) delivery has occurred . persuasive evidence of an arrangement and a fixed or determinable price exist once we receive an order or contract from a customer . we assess collectability at the time of the sale and if collectability is not reasonably assured , the sale is deferred and not recognized until collectability is probable or payment is received . typically , title and risk of ownership transfer when the equipment is shipped . research and development expenses research and development costs are expensed as incurred and consist of direct and overhead-related expenses . expenditures to acquire technologies , including licenses , which are utilized in research and development and that have no alternative future use are expensed when incurred . technology we develop for use in our products is expensed as incurred until technological feasibility has been established after which it is capitalized and depreciated . stock-based compensation we record equity instruments at their fair value on the measurement date by utilizing the black-scholes option-pricing model . stock compensation for all share-based payments , is recognized as an expense over the requisite service period . significant assumptions utilized in determining the fair value of our stock options
| liquidity and capital resources overview we have incurred operating losses , accumulated deficit and negative cash flows from operations since inception . as of december 31 , 2016 , we had an accumulated deficit of approximately $ 15,255,000 from operating activities . the company had total cash on hand of approximately $ 3,000 as of december 31 , 2016. the company is not able to obtain additional financing adequate to fulfill its commercialization activities , nor achieve a level of revenues adequate to support the company 's cost structure . operating activities during 2016 , the company used $ 30,853 in cash for continuing operations and $ 12,350 for discontinued operations compared to cash used of $ 639,550 for continuing operations and $ 232,356 for discontinued operations during 2015. this decrease in cash used for operating activities was due to the significant reduction in employees and overhead expenses . the company has had little revenue since inception . the company does not currently have any revenue under contract nor does it have any immediate sales prospects . the company has significantly scaled back operations to maintain only a minimal level of operations necessary to support our licensee and look for potential merger candidates . for the year ended december 31 , 2016 , the company incurred a net loss from continuing operations of approximately $ 337,000. the operations of dr. pave , llc and dr. pave worldwide , llc have been discontinued . these business components are included in discontinued operations as of december 31 , 2016. it is the company 's intention to move forward as a public entity and to seek potential merger candidates . if the company fails to merge or be acquired by another company , we will be required to terminate all operations . investing activities during 2016 the company received $ 17,000 in cash for continuing operations from the sale of assets held for sale .
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consolidated revenue totaled $ 1,536.7 million for the year ended december 31 , 2019 , an increase of $ 158.5 million compared to the same period in 2018 , primarily due to the acquisition of hawaiian telcom . hawaiian telcom contributed $ 346.7 million and $ 175.0 million of revenue in 2019 and 2018 , respectively . revenue growth from the acquisition was partially offset by the decline in legacy revenue exceeding the growth in revenue from our fiber offerings in cincinnati as well as the decline of higher margin revenue contributed by general electric company ( “ ge ” ) of $ 20.6 million in the cloud practice . fioptics revenue in cincinnati increased $ 12.0 million while legacy revenue in cincinnati decreased $ 25.1 million in 2019 compared to the same period in the prior year . the increases in cost of services and products , selling , general and administrative ( “ sg & a ” ) , and depreciation and amortization expenses are primarily related to the acquisition of hawaiian telcom . 26 form 10-k part ii cincinnati bell inc. operating income in 201 9 was $ 73.1 million , down $ 10.2 million compared to the same period in 2018 . the revenue contribution from hawaiian telcom in addition to the decrease in transaction and integration costs were more than offset by declines in legacy revenue and increases in cost of services and products , depreciation and amortization and sg & a costs . loss before income taxes totaled $ 77.2 million for the year ended december 31 , 2019 , resulting in an increase in the loss of $ 16.8 million as compared to the comparable period in 2018. in addition to the items impacting operating income , the increased loss before income taxes is primarily due to increased interest expense related to additional debt acquired to fund the acquisition of hawaiian telcom . consolidated results of operations revenue replace_table_token_5_th entertainment and communications revenue increased in 2019 and 2018 compared to the same periods in the prior year primarily due to the acquisition of hawaiian telcom , which contributed revenue of $ 306.6 million and $ 155.1 million in 2019 and 2018 , respectively . in cincinnati , the growth in fioptics partially mitigated the decline in legacy revenue . fioptics revenue in cincinnati totaled $ 353.2 million , $ 341.2 million and $ 309.9 million for the years ended december 31 , 2019 , 2018 and 2017 , respectively , up 4 % in 2019 and up 10 % in 2018 from the comparable prior year . it services and hardware revenue increased in 2019 compared to 2018 primarily due to the acquisition of hawaiian telcom which contributed revenue of $ 40.1 million and $ 19.9 million in 2019 and 2018 , respectively . in addition to the impact of the acquisition , increased revenue from the communications and consulting practices was partially offset by lower revenue in the cloud and infrastructure solutions practices . cloud revenue decline is primarily due to lower revenue contributed by ge of $ 20.6 million due to ge insourcing certain cloud services . revenue increased in 2018 compared to 2017 primarily due to the acquisition of onx that closed in the fourth quarter of 2017 , and to a lesser extent , the acquisition of hawaiian telcom . operating costs replace_table_token_6_th entertainment and communications costs increased in 2019 and 2018 compared to the same periods in the prior year primarily due to the acquisition of hawaiian telcom which contributed costs of $ 150.9 million and $ 80.1 million in 2019 and 2018 , respectively . excluding the impact associated with the acquisition , costs of services and products decreased $ 9.9 million and $ 0.6 million for the years ended december 31 , 2019 and 2018 , respectively , as compared to the comparable periods in the prior year . the decrease in 2019 compared to 2018 is due to lower contract services costs and lower payroll related costs due to headcount reductions made during restructuring initiatives that were executed in 2017 and 2018. the decrease in 2018 compared to 2017 is due to lower payroll related costs resulting from restructuring initiatives which were partially offset by increased video content costs due to higher rates charged by our content providers . it services and hardware costs increased in 2019 compared to 2018 due to increased payroll and contractor costs associated with resources utilized to support the revenue growth in the communications and consulting practices for the year ended december 31 , 2019 as compared to the same period in the prior year . in addition , hawaiian telcom contributed $ 21.9 million and $ 9.8 million to cost of services and products in 2019 and 2018 , respectively . costs increased in 2018 compared to the prior year comparable period primarily due to expense associated with headcount in place for twelve months in 2018 versus three months in 2017 as a result of the acquisition of onx . 27 form 10-k part ii cincinnati bell inc. replace_table_token_7_th entertainment and communications sg & a expenses were up in 2019 and 2018 compared to the same periods in the prior year primarily due to the acquisition of hawaiian telcom . hawaiian telcom contributed sg & a expense of $ 64.2 million and $ 32.9 million in 2019 and 2018 , respectively . sg & a costs also increased in 2019 compared to the prior year due to an increase in advertising expense and the bad debt reserve for certain receivables with a wholesale customer that filed for bankruptcy in the first quarter of 2019 whose collectability remains uncertain . these increases were partially offset as the segment continues to focus on cost containment and realizing synergies with hawaiian telcom . story_separator_special_tag depreciation and amortization expenses were up in 2018 compared to 2017 primarily due to the acquisition of hawaiian telcom as well as assets placed in service in connection with the expansion of our fiber network in cincinnati . hawaiian telcom contributed $ 44.7 million of depreciation and amortization expense in 2018. restructuring and severance charges recorded in 2019 are related to a severance program for certain management employees as the company continues its efforts to realize synergies that can be achieved due to the acquisition of hawaiian telcom . restructuring and severance charges were recorded in the fourth quarter of 2018 related to a vsp for certain management employees in cincinnati as the company identified efficiencies that can be achieved due to the acquisition of hawaiian telcom . restructuring and severance charges recorded in 2017 were related to a vsp for certain bargained employees to reduce field and network costs associated with our legacy copper network . 34 form 10-k part ii cincinnati bell inc. entertainment and communications , continued capital expenditures replace_table_token_16_th replace_table_token_17_th * represents fioptics in cincinnati capital expenditures in cincinnati are incurred to expand our fioptics product suite , upgrade and increase capacity for our networks , and to extend the life of our fiber and copper networks . the company is focused on building fttp addresses , and during 2019 , we passed 12,500 fttp addresses in cincinnati . as of december 31 , 2019 , the company is able to deliver its fioptics services with speeds up to 30 megabits or more to 623,400 residential and commercial addresses , or 75 % of our operating territory in cincinnati . cincinnati construction capital expenditures decreased $ 13.8 million in 2019 compared to 2018 due to passing fewer addresses and the timing of capital expenditures , which does not necessarily coincide with the timing of when addresses become available . cincinnati installation capital expenditures are primarily related to the timing of expenditures for customer premise equipment utilized for installations . in 2019 , cincinnati installation capital expenditures decreased $ 2.7 million compared to the prior year . cincinnati construction capital expenditures decreased $ 14.7 million in 2018 compared to 2017 even though we passed 38,800 doors in both 2018 and 2017 due to more efficient capital spending . in addition , construction costs incurred for connect america fund ( `` caf `` ) doors totaled $ 5.5 million in 2017 compared to $ 1.4 million in 2018. cincinnati installation capital expenditures decreased $ 7.3 million for 2018 compared to 2017 due to fewer video and internet activations in 2018. installation capital expenditures were also impacted by the timing of expenditures for customer premise equipment utilized for installations as well as the company 's implementation of self-installations in cincinnati which has led to a decrease in the average cost per install . enterprise fiber capital expenditures in cincinnati are related to success-based fiber builds , including associated equipment , for enterprise and carrier projects to provide ethernet services . other capital expenditures are related to it projects , cable and equipment maintenance and capacity additions , real estate upgrades and maintenance , plus other minor capital purchases . 35 form 10-k part ii cincinnati bell inc. entertainment and communications , continued hawaii construction capital expenditures increased $ 4.3 million in 2019 compared to 2018 due to building out 5,900 new fttp addresses in 2019 , primarily in rural areas and on the neighbor islands . hawaii installation capital expenditures increased $ 1.8 million compared to the same period in the prior year which only includes six months of activity subsequent to the acquisition close date . enterprise fiber capital in hawaii is primarily driven by new ethernet customers . hawaii capital expenditures classified as other include it projects , real estate projects , road jobs or plant damage projects , and network upgrades or optimization projects . 36 form 10-k part ii cincinnati bell inc. it services and hardware the it services and hardware segment provides end-to-end solutions from consulting to implementation to ongoing optimization . these solutions include cloud , communications and consulting services along with the sale and maintenance of major branded telecom and it hardware reported as infrastructure solutions . these services and products are provided through the company 's subsidiaries in various geographic areas throughout the united states , canada and europe . by offering a full range of equipment and strategic services in conjunction with the company 's fiber and copper networks , the it services and hardware segment provides our customers personalized solutions designed to meet their business objectives . cloud services include the design , implementation and on-going management of the customer 's infrastructure . this includes on-premise , public cloud and private cloud solutions . the company assists customers with the risk assessment phase through an in-depth understanding of the customer 's business as well as building and designing a solution , using either the customer 's existing infrastructure or new cloud-based options that transform the way the customer does business . communications solutions help to transform the way our customers do business by connecting employees , customers , and business partners . by upgrading legacy technologies through customized build projects and reducing customer costs , the company helps to transform the customer 's business . these services include unified communications as a service ( `` ucaas `` ) , software-defined wide area network ( `` sd-wan `` ) , network as a service ( `` naas `` ) , contact center and collaboration . using our experience and expertise , infrastructure solutions are tailored to our customers ' organizational goals . we offer a complete portfolio of services that provide customers with efficient and optimized it solutions that are agile and responsive to their business and are integrated , simplified and manageable . through consulting with customers , the company will build a solution using standard manufacturer equipment to meet our customers ' specific requirements . consulting services help
| liquidity and capital resources overview we have incurred operating losses , accumulated deficit and negative cash flows from operations since inception . as of december 31 , 2016 , we had an accumulated deficit of approximately $ 15,255,000 from operating activities . the company had total cash on hand of approximately $ 3,000 as of december 31 , 2016. the company is not able to obtain additional financing adequate to fulfill its commercialization activities , nor achieve a level of revenues adequate to support the company 's cost structure . operating activities during 2016 , the company used $ 30,853 in cash for continuing operations and $ 12,350 for discontinued operations compared to cash used of $ 639,550 for continuing operations and $ 232,356 for discontinued operations during 2015. this decrease in cash used for operating activities was due to the significant reduction in employees and overhead expenses . the company has had little revenue since inception . the company does not currently have any revenue under contract nor does it have any immediate sales prospects . the company has significantly scaled back operations to maintain only a minimal level of operations necessary to support our licensee and look for potential merger candidates . for the year ended december 31 , 2016 , the company incurred a net loss from continuing operations of approximately $ 337,000. the operations of dr. pave , llc and dr. pave worldwide , llc have been discontinued . these business components are included in discontinued operations as of december 31 , 2016. it is the company 's intention to move forward as a public entity and to seek potential merger candidates . if the company fails to merge or be acquired by another company , we will be required to terminate all operations . investing activities during 2016 the company received $ 17,000 in cash for continuing operations from the sale of assets held for sale .
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consolidated revenue totaled $ 1,536.7 million for the year ended december 31 , 2019 , an increase of $ 158.5 million compared to the same period in 2018 , primarily due to the acquisition of hawaiian telcom . hawaiian telcom contributed $ 346.7 million and $ 175.0 million of revenue in 2019 and 2018 , respectively . revenue growth from the acquisition was partially offset by the decline in legacy revenue exceeding the growth in revenue from our fiber offerings in cincinnati as well as the decline of higher margin revenue contributed by general electric company ( “ ge ” ) of $ 20.6 million in the cloud practice . fioptics revenue in cincinnati increased $ 12.0 million while legacy revenue in cincinnati decreased $ 25.1 million in 2019 compared to the same period in the prior year . the increases in cost of services and products , selling , general and administrative ( “ sg & a ” ) , and depreciation and amortization expenses are primarily related to the acquisition of hawaiian telcom . 26 form 10-k part ii cincinnati bell inc. operating income in 201 9 was $ 73.1 million , down $ 10.2 million compared to the same period in 2018 . the revenue contribution from hawaiian telcom in addition to the decrease in transaction and integration costs were more than offset by declines in legacy revenue and increases in cost of services and products , depreciation and amortization and sg & a costs . loss before income taxes totaled $ 77.2 million for the year ended december 31 , 2019 , resulting in an increase in the loss of $ 16.8 million as compared to the comparable period in 2018. in addition to the items impacting operating income , the increased loss before income taxes is primarily due to increased interest expense related to additional debt acquired to fund the acquisition of hawaiian telcom . consolidated results of operations revenue replace_table_token_5_th entertainment and communications revenue increased in 2019 and 2018 compared to the same periods in the prior year primarily due to the acquisition of hawaiian telcom , which contributed revenue of $ 306.6 million and $ 155.1 million in 2019 and 2018 , respectively . in cincinnati , the growth in fioptics partially mitigated the decline in legacy revenue . fioptics revenue in cincinnati totaled $ 353.2 million , $ 341.2 million and $ 309.9 million for the years ended december 31 , 2019 , 2018 and 2017 , respectively , up 4 % in 2019 and up 10 % in 2018 from the comparable prior year . it services and hardware revenue increased in 2019 compared to 2018 primarily due to the acquisition of hawaiian telcom which contributed revenue of $ 40.1 million and $ 19.9 million in 2019 and 2018 , respectively . in addition to the impact of the acquisition , increased revenue from the communications and consulting practices was partially offset by lower revenue in the cloud and infrastructure solutions practices . cloud revenue decline is primarily due to lower revenue contributed by ge of $ 20.6 million due to ge insourcing certain cloud services . revenue increased in 2018 compared to 2017 primarily due to the acquisition of onx that closed in the fourth quarter of 2017 , and to a lesser extent , the acquisition of hawaiian telcom . operating costs replace_table_token_6_th entertainment and communications costs increased in 2019 and 2018 compared to the same periods in the prior year primarily due to the acquisition of hawaiian telcom which contributed costs of $ 150.9 million and $ 80.1 million in 2019 and 2018 , respectively . excluding the impact associated with the acquisition , costs of services and products decreased $ 9.9 million and $ 0.6 million for the years ended december 31 , 2019 and 2018 , respectively , as compared to the comparable periods in the prior year . the decrease in 2019 compared to 2018 is due to lower contract services costs and lower payroll related costs due to headcount reductions made during restructuring initiatives that were executed in 2017 and 2018. the decrease in 2018 compared to 2017 is due to lower payroll related costs resulting from restructuring initiatives which were partially offset by increased video content costs due to higher rates charged by our content providers . it services and hardware costs increased in 2019 compared to 2018 due to increased payroll and contractor costs associated with resources utilized to support the revenue growth in the communications and consulting practices for the year ended december 31 , 2019 as compared to the same period in the prior year . in addition , hawaiian telcom contributed $ 21.9 million and $ 9.8 million to cost of services and products in 2019 and 2018 , respectively . costs increased in 2018 compared to the prior year comparable period primarily due to expense associated with headcount in place for twelve months in 2018 versus three months in 2017 as a result of the acquisition of onx . 27 form 10-k part ii cincinnati bell inc. replace_table_token_7_th entertainment and communications sg & a expenses were up in 2019 and 2018 compared to the same periods in the prior year primarily due to the acquisition of hawaiian telcom . hawaiian telcom contributed sg & a expense of $ 64.2 million and $ 32.9 million in 2019 and 2018 , respectively . sg & a costs also increased in 2019 compared to the prior year due to an increase in advertising expense and the bad debt reserve for certain receivables with a wholesale customer that filed for bankruptcy in the first quarter of 2019 whose collectability remains uncertain . these increases were partially offset as the segment continues to focus on cost containment and realizing synergies with hawaiian telcom . story_separator_special_tag depreciation and amortization expenses were up in 2018 compared to 2017 primarily due to the acquisition of hawaiian telcom as well as assets placed in service in connection with the expansion of our fiber network in cincinnati . hawaiian telcom contributed $ 44.7 million of depreciation and amortization expense in 2018. restructuring and severance charges recorded in 2019 are related to a severance program for certain management employees as the company continues its efforts to realize synergies that can be achieved due to the acquisition of hawaiian telcom . restructuring and severance charges were recorded in the fourth quarter of 2018 related to a vsp for certain management employees in cincinnati as the company identified efficiencies that can be achieved due to the acquisition of hawaiian telcom . restructuring and severance charges recorded in 2017 were related to a vsp for certain bargained employees to reduce field and network costs associated with our legacy copper network . 34 form 10-k part ii cincinnati bell inc. entertainment and communications , continued capital expenditures replace_table_token_16_th replace_table_token_17_th * represents fioptics in cincinnati capital expenditures in cincinnati are incurred to expand our fioptics product suite , upgrade and increase capacity for our networks , and to extend the life of our fiber and copper networks . the company is focused on building fttp addresses , and during 2019 , we passed 12,500 fttp addresses in cincinnati . as of december 31 , 2019 , the company is able to deliver its fioptics services with speeds up to 30 megabits or more to 623,400 residential and commercial addresses , or 75 % of our operating territory in cincinnati . cincinnati construction capital expenditures decreased $ 13.8 million in 2019 compared to 2018 due to passing fewer addresses and the timing of capital expenditures , which does not necessarily coincide with the timing of when addresses become available . cincinnati installation capital expenditures are primarily related to the timing of expenditures for customer premise equipment utilized for installations . in 2019 , cincinnati installation capital expenditures decreased $ 2.7 million compared to the prior year . cincinnati construction capital expenditures decreased $ 14.7 million in 2018 compared to 2017 even though we passed 38,800 doors in both 2018 and 2017 due to more efficient capital spending . in addition , construction costs incurred for connect america fund ( `` caf `` ) doors totaled $ 5.5 million in 2017 compared to $ 1.4 million in 2018. cincinnati installation capital expenditures decreased $ 7.3 million for 2018 compared to 2017 due to fewer video and internet activations in 2018. installation capital expenditures were also impacted by the timing of expenditures for customer premise equipment utilized for installations as well as the company 's implementation of self-installations in cincinnati which has led to a decrease in the average cost per install . enterprise fiber capital expenditures in cincinnati are related to success-based fiber builds , including associated equipment , for enterprise and carrier projects to provide ethernet services . other capital expenditures are related to it projects , cable and equipment maintenance and capacity additions , real estate upgrades and maintenance , plus other minor capital purchases . 35 form 10-k part ii cincinnati bell inc. entertainment and communications , continued hawaii construction capital expenditures increased $ 4.3 million in 2019 compared to 2018 due to building out 5,900 new fttp addresses in 2019 , primarily in rural areas and on the neighbor islands . hawaii installation capital expenditures increased $ 1.8 million compared to the same period in the prior year which only includes six months of activity subsequent to the acquisition close date . enterprise fiber capital in hawaii is primarily driven by new ethernet customers . hawaii capital expenditures classified as other include it projects , real estate projects , road jobs or plant damage projects , and network upgrades or optimization projects . 36 form 10-k part ii cincinnati bell inc. it services and hardware the it services and hardware segment provides end-to-end solutions from consulting to implementation to ongoing optimization . these solutions include cloud , communications and consulting services along with the sale and maintenance of major branded telecom and it hardware reported as infrastructure solutions . these services and products are provided through the company 's subsidiaries in various geographic areas throughout the united states , canada and europe . by offering a full range of equipment and strategic services in conjunction with the company 's fiber and copper networks , the it services and hardware segment provides our customers personalized solutions designed to meet their business objectives . cloud services include the design , implementation and on-going management of the customer 's infrastructure . this includes on-premise , public cloud and private cloud solutions . the company assists customers with the risk assessment phase through an in-depth understanding of the customer 's business as well as building and designing a solution , using either the customer 's existing infrastructure or new cloud-based options that transform the way the customer does business . communications solutions help to transform the way our customers do business by connecting employees , customers , and business partners . by upgrading legacy technologies through customized build projects and reducing customer costs , the company helps to transform the customer 's business . these services include unified communications as a service ( `` ucaas `` ) , software-defined wide area network ( `` sd-wan `` ) , network as a service ( `` naas `` ) , contact center and collaboration . using our experience and expertise , infrastructure solutions are tailored to our customers ' organizational goals . we offer a complete portfolio of services that provide customers with efficient and optimized it solutions that are agile and responsive to their business and are integrated , simplified and manageable . through consulting with customers , the company will build a solution using standard manufacturer equipment to meet our customers ' specific requirements . consulting services help
| cash flows cash flows from operating activities cash provided by operating activities during 2019 was $ 259.1 million , an increase of $ 44.4 million compared to 2018. hawaiian telcom contributed operating cash flow of approximately $ 92.0 million in 2019 compared to approximately $ 18.0 million in 2018. in addition , the increase was due to lower restructuring and transaction and integration payments of $ 2.1 million and $ 33.9 million , respectively , compared to 2018. these increases were partially offset by lower tax refunds of $ 13.2 million for amt refundable tax credits in 2019 compared to 2018 , lower contribution due to loss of ge cloud revenue in 2019 and unfavorable working capital . cash provided by operating activities during 2018 was $ 214.7 million , an increase of $ 11.3 million compared to 2017. the increase was primarily due to contributions from recent acquisitions , lower restructuring payments of $ 13.0 million compared to 2017 , and improved working capital . these increases were partially offset by increased interest payments of $ 66.0 million and increased payments for transaction and integrations costs of $ 24.8 million in 2018 compared to 2017. cash flows from investing activities cash used by investing activities totaled $ 223.3 million 2019 , a decrease of $ 214.1 million compared to the prior year , primarily due to the acquisition of hawaiian telcom in 2018. cash used by investing activities totaled $ 437.4 million in 2018 , an increase of $ 200.6 million compared to 2017 , primarily due to the acquisition of hawaiian telcom . in 2017 , cash used for the acquisition of onx was partially offset by cash provided by the sale of our remaining 2.8 million shares of cyrusone inc. common stock for net proceeds totalling $ 140.7 million . cash flows from financing activities cash used in financing activities was $ 39.6 million in 2019.
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55 to date , the primary market for our products has been the united states , where we sell our products through a combination of direct sales representatives employed by us and distributor sales representatives employed by our exclusive independent distributors , who distribute our products on our behalf for a commission that is generally based on a percentage of sales . we believe there is significant opportunity to strengthen our position in the u.s. market by increasing the size of our u.s. sales force and we intend to add additional direct and distributor sales representatives in the future . during the year ended december 31 , 2017 , our international sales accounted for approximately 17 % of our total sales . the international sales total includes a full year of results following the september 1 , 2016 acquisition of the international operations and distribution channel of alphatec holdings , inc. ( “ alphatec international ” ) . we have sold our products in 54 countries outside the united states through a combination of direct sales representatives employed by us and international distributors . we believe there are significant opportunities for us to increase our presence in both existing and new international markets through the continued expansion of our direct and distributor sales forces and the commercialization of additional products . components of our results of operations we manage our business globally within one operating segment , which is consistent with how our management reviews our business , makes investment and resource allocation decisions and assesses operating performance . sales today , we sell primarily implants and related disposables , primarily to hospitals , for use by spine surgeons to treat spine disorders . we generally consign our surgical sets , which contain our implants , disposables , surgical instruments and cases to our sales representatives , and the sets are maintained with the sales representatives or at our hospital customers that purchase the implants and related disposables used in the surgeries . we recognize revenue when the consigned implants and related disposables have been implanted or used , or for sets that are sold directly and not consigned , when title to the goods and risk of loss are transferred to customers with no remaining performance obligations which affect the customer 's final acceptance of the sale . we completed our first sale of excelsiusgps in the fourth quarter of 2017 . we recognize revenue when the equipment is installed and accepted by the customer , which is consistent with when title to the good and risk of loss is transferred to the customer . we expect to expand our u.s. and international sales forces , which will provide us with significant opportunity to continue to increase our penetration in existing markets and to enter new international markets . we also expect to increase sales by commercializing new products , but expect the increase of sales from new products to be partially offset by decreased sales of earlier-generation products . 56 cost of goods sold while we have increased our in-house spinal implant product manufacturing capacity , we also have products manufactured by third-party suppliers . substantially all of our suppliers manufacture our products in the united states . our c ost of goods sold consists primarily of costs from our in-house manufacturing , costs of products purchased from third-party suppliers , excess and obsolete inventory charges , depreciation of surgical instruments and cases , royalties , shipping , inspection and related costs incurred in making our products available for sale or use . beginning in january 2013 , our cost of goods sold increased as a result of a medical device excise tax ( “ mdet ” ) of up to 2.3 % on the sale of certain medical devices in the united states . on december 18 , 2015 , the mdet was suspended for two years effective january 1 , 2016. in january 2018 , congress further extended the moratorium on the medical device excise tax through january 1 , 2020. research and development expenses our research and development expenses primarily consist of engineering , product development , clinical and regulatory expenses , consulting services , outside prototyping services , internal and external research activities , materials , depreciation , and other costs associated with development of our products . research and development expenses also include related personnel and consultants ' compensation and stock-based compensation expense . we expense research and development costs as they are incurred . we expect to incur additional research and development costs as we continue to develop new products . these costs will increase in absolute terms as we continue to expand our product pipeline and add personnel . selling , general and administrative expenses selling , general and administrative expenses primarily consist of salaries , benefits and other related costs , including stock-based compensation for personnel employed in sales , marketing , finance , legal , compliance , administrative , information technology , medical education and training , quality and human resource departments . our selling , general and administrative expenses also include commissions , generally based on a percentage of sales , to direct sales representatives and distributors . we expect our selling , general and administrative expenses will increase in absolute terms with the continued expansion of our sales force and commercialization of our current and pipeline products . we plan to hire more personnel to support the growth of our business . provision for litigation we record a provision for litigation settlements when a loss is known or considered probable and the amount can be reasonably estimated and in the case of a favorable settlement , income when realized . amortization of intangibles we amortize finite lived intangible assets over the period of estimated benefit using the straight-line method and estimated lives ranging from one to seventeen years . story_separator_special_tag for additional information regarding the alphatec international acquisition , please refer to “ part ii ; item 8. financial statements and supplementary data ; notes to consolidated financial statements ; note 2. acquisitions ” and for additional information regarding constant currency , please refer to “ non-gaap financial measures ” below . 62 cost of goods sold replace_table_token_7_th the increase in cost of goods sold was primarily due to increases from higher volumes , product mix and inventory write offs . partially offsetting these increases was a cost benefit of $ 4.0 million from in-house manufacturing . research and development expenses replace_table_token_8_th the decrease in research and development expenses was due primarily to $ 4.0 million of one-time licensing cost incurred in 2016 , which was partially offset by increased investment into inr technology and orthopedic trauma for additional headcount to further research activities and development of new innovative products . selling , general and administrative expenses replace_table_token_9_th the increase in selling , general and administrative expenses was due primarily to increases of $ 15.8 million of costs to support alphatec international sales , $ 9.5 million of costs to build the inr technology and orthopedic trauma sales forces , and a $ 10.1 million increase in the u.s. sales force expenses . in addition , there were cost increases of $ 6.5 million related to general and administrative compensation costs . provision for litigation replace_table_token_10_th the current year provision for litigation , which is relatively consistent with the prior year provision , includes legal settlement and verdict costs . 63 for additional information regarding litigation , please refer to “ part ii ; item 8. financial statements and supplementary data ; notes to consolidated financial statements ; note 15. commitments and contingencies . ” amortization of intangibles replace_table_token_11_th the increase in the amortization of intangibles is primarily due to intangible assets acquired in connection with the alphatec international acquisition . acquisition related costs replace_table_token_12_th acquisition related costs remained consistent for the year ended december 31 , 2017 as compared to the year ended december 31 , 2016. the current year balance primarily consists of costs associated with the kb medical acquisition . other income , net replace_table_token_13_th the increase in other income , net is due primarily to increases in interest income from increased average investment balances and the note receivable with alphatec spine inc. , coupled with increases in foreign exchange transaction gains . for additional information regarding the note receivable with alphatec spine inc. , please refer to “ part ii ; item 8. financial statements and supplementary data ; notes to consolidated financial statements ; note 3. note receivable . ” 64 income tax provision replace_table_token_14_th our tax provision and effective tax rate for the year ended december 31 , 2017 was higher than the prior year due primarily to the impact of the u.s. tax cuts and jobs act ( “ tax reform act ” ) , as further described in “ part ii ; item 8. financial statements and supplementary data ; notes to consolidated financial statements ; note 13. income taxes . ” year ended december 31 , 2016 compared to the year ended december 31 , 2015 sales the following table sets forth , for the periods indicated , our sales by product category and geography expressed as dollar amounts and the changes in sales between the specified periods expressed in dollar amounts and as percentages : replace_table_token_15_th product launches continue to be a driving force in our sales growth , particularly from products launched during the last three years . the growth in disruptive technology of $ 19.7 million was due primarily to sales of regenerative biologics , expandable interbody and minimally invasive products launched during the past three years , including sales from ttot since the acquisition in late 2014. innovative fusion sales decreased by $ 0.5 million due to sales declines of pedicle screw systems , which were partially offset by increases from alphatec international sales . replace_table_token_16_th in the united states , the increase in sales of $ 2.0 million was due primarily to expansion into new territories and increased penetration in existing territories . the region experienced strong sales in disruptive technology products , led by sales of expandable interbody products and regenerative biologics , which were partially offset by declines in innovative fusion products , primarily pedicle screw systems . 65 internationally , the increase in sales of $ 17.2 million was primarily due to incremental sales from the alphatec international acquisition . on a constant currency basis , our international sales grew $ 18.8 million , or by 40.4 % , due to expansion into new international territories . our worldwide sales increased 3.8 % on a constant currency basis . for additional information regarding the alphatec international acquisition , please refer to “ part ii ; item 8. financial statements and supplementary data ; notes to consolidated financial statements ; note 2. acquisitions ” and for additional information regarding constant currency , please refer to “ non-gaap financial measures ” below . cost of goods sold replace_table_token_17_th the increase in cost of goods sold was primarily due to increases from higher volumes , product mix , inventory write offs and increases in depreciation and other operational costs . included in these increases was a prior period adjustment of $ 1.8 million . partially offsetting these increases was $ 9.0 million in savings related to the two-year moratorium on the medical device excise tax ( “ mdet ” ) , which began january 1 , 2016. savings of $ 5.0 million were realized in 2016 from the impact of lower manufacturing costs from branch medical group ( “ bmg ” ) as well as a $ 3.4 million decrease in freight costs . for additional information regarding the prior period adjustment , please refer to “ part ii ; item 8. financial statements and supplementary data ; notes to consolidated financial statements ; note 1.
| cash flows cash flows from operating activities cash provided by operating activities during 2019 was $ 259.1 million , an increase of $ 44.4 million compared to 2018. hawaiian telcom contributed operating cash flow of approximately $ 92.0 million in 2019 compared to approximately $ 18.0 million in 2018. in addition , the increase was due to lower restructuring and transaction and integration payments of $ 2.1 million and $ 33.9 million , respectively , compared to 2018. these increases were partially offset by lower tax refunds of $ 13.2 million for amt refundable tax credits in 2019 compared to 2018 , lower contribution due to loss of ge cloud revenue in 2019 and unfavorable working capital . cash provided by operating activities during 2018 was $ 214.7 million , an increase of $ 11.3 million compared to 2017. the increase was primarily due to contributions from recent acquisitions , lower restructuring payments of $ 13.0 million compared to 2017 , and improved working capital . these increases were partially offset by increased interest payments of $ 66.0 million and increased payments for transaction and integrations costs of $ 24.8 million in 2018 compared to 2017. cash flows from investing activities cash used by investing activities totaled $ 223.3 million 2019 , a decrease of $ 214.1 million compared to the prior year , primarily due to the acquisition of hawaiian telcom in 2018. cash used by investing activities totaled $ 437.4 million in 2018 , an increase of $ 200.6 million compared to 2017 , primarily due to the acquisition of hawaiian telcom . in 2017 , cash used for the acquisition of onx was partially offset by cash provided by the sale of our remaining 2.8 million shares of cyrusone inc. common stock for net proceeds totalling $ 140.7 million . cash flows from financing activities cash used in financing activities was $ 39.6 million in 2019.
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55 to date , the primary market for our products has been the united states , where we sell our products through a combination of direct sales representatives employed by us and distributor sales representatives employed by our exclusive independent distributors , who distribute our products on our behalf for a commission that is generally based on a percentage of sales . we believe there is significant opportunity to strengthen our position in the u.s. market by increasing the size of our u.s. sales force and we intend to add additional direct and distributor sales representatives in the future . during the year ended december 31 , 2017 , our international sales accounted for approximately 17 % of our total sales . the international sales total includes a full year of results following the september 1 , 2016 acquisition of the international operations and distribution channel of alphatec holdings , inc. ( “ alphatec international ” ) . we have sold our products in 54 countries outside the united states through a combination of direct sales representatives employed by us and international distributors . we believe there are significant opportunities for us to increase our presence in both existing and new international markets through the continued expansion of our direct and distributor sales forces and the commercialization of additional products . components of our results of operations we manage our business globally within one operating segment , which is consistent with how our management reviews our business , makes investment and resource allocation decisions and assesses operating performance . sales today , we sell primarily implants and related disposables , primarily to hospitals , for use by spine surgeons to treat spine disorders . we generally consign our surgical sets , which contain our implants , disposables , surgical instruments and cases to our sales representatives , and the sets are maintained with the sales representatives or at our hospital customers that purchase the implants and related disposables used in the surgeries . we recognize revenue when the consigned implants and related disposables have been implanted or used , or for sets that are sold directly and not consigned , when title to the goods and risk of loss are transferred to customers with no remaining performance obligations which affect the customer 's final acceptance of the sale . we completed our first sale of excelsiusgps in the fourth quarter of 2017 . we recognize revenue when the equipment is installed and accepted by the customer , which is consistent with when title to the good and risk of loss is transferred to the customer . we expect to expand our u.s. and international sales forces , which will provide us with significant opportunity to continue to increase our penetration in existing markets and to enter new international markets . we also expect to increase sales by commercializing new products , but expect the increase of sales from new products to be partially offset by decreased sales of earlier-generation products . 56 cost of goods sold while we have increased our in-house spinal implant product manufacturing capacity , we also have products manufactured by third-party suppliers . substantially all of our suppliers manufacture our products in the united states . our c ost of goods sold consists primarily of costs from our in-house manufacturing , costs of products purchased from third-party suppliers , excess and obsolete inventory charges , depreciation of surgical instruments and cases , royalties , shipping , inspection and related costs incurred in making our products available for sale or use . beginning in january 2013 , our cost of goods sold increased as a result of a medical device excise tax ( “ mdet ” ) of up to 2.3 % on the sale of certain medical devices in the united states . on december 18 , 2015 , the mdet was suspended for two years effective january 1 , 2016. in january 2018 , congress further extended the moratorium on the medical device excise tax through january 1 , 2020. research and development expenses our research and development expenses primarily consist of engineering , product development , clinical and regulatory expenses , consulting services , outside prototyping services , internal and external research activities , materials , depreciation , and other costs associated with development of our products . research and development expenses also include related personnel and consultants ' compensation and stock-based compensation expense . we expense research and development costs as they are incurred . we expect to incur additional research and development costs as we continue to develop new products . these costs will increase in absolute terms as we continue to expand our product pipeline and add personnel . selling , general and administrative expenses selling , general and administrative expenses primarily consist of salaries , benefits and other related costs , including stock-based compensation for personnel employed in sales , marketing , finance , legal , compliance , administrative , information technology , medical education and training , quality and human resource departments . our selling , general and administrative expenses also include commissions , generally based on a percentage of sales , to direct sales representatives and distributors . we expect our selling , general and administrative expenses will increase in absolute terms with the continued expansion of our sales force and commercialization of our current and pipeline products . we plan to hire more personnel to support the growth of our business . provision for litigation we record a provision for litigation settlements when a loss is known or considered probable and the amount can be reasonably estimated and in the case of a favorable settlement , income when realized . amortization of intangibles we amortize finite lived intangible assets over the period of estimated benefit using the straight-line method and estimated lives ranging from one to seventeen years . story_separator_special_tag for additional information regarding the alphatec international acquisition , please refer to “ part ii ; item 8. financial statements and supplementary data ; notes to consolidated financial statements ; note 2. acquisitions ” and for additional information regarding constant currency , please refer to “ non-gaap financial measures ” below . 62 cost of goods sold replace_table_token_7_th the increase in cost of goods sold was primarily due to increases from higher volumes , product mix and inventory write offs . partially offsetting these increases was a cost benefit of $ 4.0 million from in-house manufacturing . research and development expenses replace_table_token_8_th the decrease in research and development expenses was due primarily to $ 4.0 million of one-time licensing cost incurred in 2016 , which was partially offset by increased investment into inr technology and orthopedic trauma for additional headcount to further research activities and development of new innovative products . selling , general and administrative expenses replace_table_token_9_th the increase in selling , general and administrative expenses was due primarily to increases of $ 15.8 million of costs to support alphatec international sales , $ 9.5 million of costs to build the inr technology and orthopedic trauma sales forces , and a $ 10.1 million increase in the u.s. sales force expenses . in addition , there were cost increases of $ 6.5 million related to general and administrative compensation costs . provision for litigation replace_table_token_10_th the current year provision for litigation , which is relatively consistent with the prior year provision , includes legal settlement and verdict costs . 63 for additional information regarding litigation , please refer to “ part ii ; item 8. financial statements and supplementary data ; notes to consolidated financial statements ; note 15. commitments and contingencies . ” amortization of intangibles replace_table_token_11_th the increase in the amortization of intangibles is primarily due to intangible assets acquired in connection with the alphatec international acquisition . acquisition related costs replace_table_token_12_th acquisition related costs remained consistent for the year ended december 31 , 2017 as compared to the year ended december 31 , 2016. the current year balance primarily consists of costs associated with the kb medical acquisition . other income , net replace_table_token_13_th the increase in other income , net is due primarily to increases in interest income from increased average investment balances and the note receivable with alphatec spine inc. , coupled with increases in foreign exchange transaction gains . for additional information regarding the note receivable with alphatec spine inc. , please refer to “ part ii ; item 8. financial statements and supplementary data ; notes to consolidated financial statements ; note 3. note receivable . ” 64 income tax provision replace_table_token_14_th our tax provision and effective tax rate for the year ended december 31 , 2017 was higher than the prior year due primarily to the impact of the u.s. tax cuts and jobs act ( “ tax reform act ” ) , as further described in “ part ii ; item 8. financial statements and supplementary data ; notes to consolidated financial statements ; note 13. income taxes . ” year ended december 31 , 2016 compared to the year ended december 31 , 2015 sales the following table sets forth , for the periods indicated , our sales by product category and geography expressed as dollar amounts and the changes in sales between the specified periods expressed in dollar amounts and as percentages : replace_table_token_15_th product launches continue to be a driving force in our sales growth , particularly from products launched during the last three years . the growth in disruptive technology of $ 19.7 million was due primarily to sales of regenerative biologics , expandable interbody and minimally invasive products launched during the past three years , including sales from ttot since the acquisition in late 2014. innovative fusion sales decreased by $ 0.5 million due to sales declines of pedicle screw systems , which were partially offset by increases from alphatec international sales . replace_table_token_16_th in the united states , the increase in sales of $ 2.0 million was due primarily to expansion into new territories and increased penetration in existing territories . the region experienced strong sales in disruptive technology products , led by sales of expandable interbody products and regenerative biologics , which were partially offset by declines in innovative fusion products , primarily pedicle screw systems . 65 internationally , the increase in sales of $ 17.2 million was primarily due to incremental sales from the alphatec international acquisition . on a constant currency basis , our international sales grew $ 18.8 million , or by 40.4 % , due to expansion into new international territories . our worldwide sales increased 3.8 % on a constant currency basis . for additional information regarding the alphatec international acquisition , please refer to “ part ii ; item 8. financial statements and supplementary data ; notes to consolidated financial statements ; note 2. acquisitions ” and for additional information regarding constant currency , please refer to “ non-gaap financial measures ” below . cost of goods sold replace_table_token_17_th the increase in cost of goods sold was primarily due to increases from higher volumes , product mix , inventory write offs and increases in depreciation and other operational costs . included in these increases was a prior period adjustment of $ 1.8 million . partially offsetting these increases was $ 9.0 million in savings related to the two-year moratorium on the medical device excise tax ( “ mdet ” ) , which began january 1 , 2016. savings of $ 5.0 million were realized in 2016 from the impact of lower manufacturing costs from branch medical group ( “ bmg ” ) as well as a $ 3.4 million decrease in freight costs . for additional information regarding the prior period adjustment , please refer to “ part ii ; item 8. financial statements and supplementary data ; notes to consolidated financial statements ; note 1.
| cash provided by operating activities the decrease in net cash provided by operating activities for the year ended december 31 , 2017 was due primarily to the timing of collection and billing of trade accounts receivable , which was partially offset by an increase in depreciation and amortization expense . the increase in net cash provided by operating activities for the year ended december 31 , 2016 was due primarily to the recovery of the restricted cash related to the depuy synthes settlement , coupled with lower working capital and lower year-over-year income tax payments . 72 cash used in investing activities the increase in net cash used in investing activities for the year ended december 31 , 2017 was due primarily to higher investment in marketable securities and increased purchases of property and equipment , which was partially offset by the decrease in cash used for the acquisition of businesses . the decrease in net cash used in investing activities for the year ended december 31 , 2016 was due primarily to lower investment in marketable securities and decreased purchases of property and equipment , which was partially offset by the issuance of a note receivable , and an increase in cash used for the acquisition of businesses . cash provided by financing activities the increase in cash provided by financing activities for the year ended december 31 , 2017 was due primarily to higher proceeds from exercises of stock options , which was partially offset by payments for business acquisition liabilities . the decrease in cash provided by financing activities for the year ended december 31 , 2016 was due primarily to higher payments of business acquisition liabilities . liquidity and capital resources the following table highlights certain information related to our liquidity and capital resources : replace_table_token_32_th during the year ended december 31 , 2017 , our total cash , cash equivalents and marketable securities increased $ 79.1 million , primarily as a result of our cash provided by operating activities and increased investment in marketable securities .
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to help mitigate the spread of the virus and in response to health advisories and governmental actions and regulations , the company has modified its business practices and has implemented health and safety measures that are designed to protect employees and represented talent . the company 's revenues are heavily dependent on the level of economic activity in the united states and the united kingdom , particularly in the fashion , advertising and publishing industries , all of which have been negatively impacted by the pandemic and may not recover as quickly as other sectors of the economy . there have been mandates from federal , state , and local authorities requiring forced closures of non-essential businesses . as a result , beginning in march 2020 , the company saw a significant reduction in customer bookings , resulting in a negative impact to revenue and earnings . during the second half of 2020 , bookings increased from the preceding months , but remained significantly below pre-pandemic levels . 11 in addition to reduced revenue , business operations have been adversely affected by reductions in productivity , limitations on the ability of customers to make timely payments , disruptions in talents ' ability to travel to needed locations , and supply chain disruptions impeding clothing or footwear wardrobe from reaching destinations for photoshoots and other bookings . many of the company 's customers are large retail and fashion companies , some of which have had to close stores in the united states and internationally due to the spread of covid-19 . some of these customers have filed for bankruptcy in 2020 and others may be unable to pay amounts already owed to the company , resulting in increased current and future bad debt expense . these customers also may not emerge from the pandemic with the financial ability , or need , to purchase wilhelmina 's services to the extent that they did in previous years . some model talent have been quarantined with family far from the major cities where wilhelmina 's offices are located , and also away from where most modeling jobs take place . many u.s. and international airlines have decreased their flight schedules which , as economic activities resumes and clients increase booking requests , may make it difficult for talent to be available when and where they are needed . the b.1.1.7 variant of the covid-19 virus , which is believed to spread easily and quickly , has particularly impacted the united kingdom in recent months , resulting in renewed strict lockdowns that have impacted wilhelmina 's london operations and are continuing into 2021. while these disruptions are currently expected to be temporary , there continues to be uncertainty around the duration . postponed and cancelled bookings related to the pandemic contributed significantly to reduced revenues and increased operating losses during 2020. although some clients increased activity and bookings during the second half of 2020 , rising covid-19 infection rates in cities where wilhelmina operates could lead to a slower economic recovery in those markets , and possible additional business closings or local mandates that could slow the recovery in operations there . since wilhelmina extends customary payment terms to its clients , even as bookings resume , there is likely to be a lag before significant cash collections return . in the meantime , the company continues to have significant employee , office rent , and other expenses . reduced outstanding accounts receivable available as collateral under the company 's credit agreement with amegy bank has limited its access to additional financing . net losses in recent periods have also impacted compliance with the financial covenants under the amegy bank credit agreement , further impeding the company 's ability to obtain additional financing . since the pandemic began , many stock markets , including nasdaq capital market where wilhelmina 's common stock is listed , have been volatile . a further decline in the company 's stock price would reduce its market capitalization and could require additional goodwill or intangible asset impairment writedowns . the company has taken the following actions to address the impact of covid-19 and the current recessionary environment , in order to efficiently manage the business and maintain adequate liquidity and maximum flexibility : - in april 2020 , obtained approximately $ 2.0 million in loans under the paycheck protection program ( the “ ppp ” ) of the coronavirus aid , relief , and economic security act ( the “ cares act ” ) administered by the u.s. small business administration ( “ sba ” ) . - eliminated discretionary travel and entertainment expenses . - suspended share repurchases . the terms of the company 's ppp loans restrict share repurchases until 12 months have passed after full repayment . - did not renew the leases on three new york city model apartments when the terms ended in june and august , 2020 . - did not renew the lease on the company 's new york city office , and required all new york based staff to work remotely . - suspended efforts to fill two highly compensated executive roles following the resignation of the company 's chief executive officer and vice president in early 2020 . - negotiated discounts with various vendors and service providers . - effective july 1 , 2020 , implemented layoffs of approximately 36 % of its staff , including employees at each of the company 's five offices , and effected temporary salary reductions for the remaining staff . if the quarantines and limitations on non-essential work are re-implemented , or persist for an extended period , the company may need to implement additional cost savings measures . story_separator_special_tag in the event all or any portion of the ppp loans is forgiven , the amount forgiven is applied to outstanding principal , and would be recorded as forgiveness of debt income . as of december 31 , 2020 , a total of $ 2.0 million was outstanding on the ppp loans . off-balance sheet arrangements as of december 31 , 2020 , the company had outstanding a $ 0.2 million irrevocable standby letter of credit under the company 's revolving credit facility with amegy bank . the letter of credit served as security under the lease relating to the company 's office space in new york city that expired on february 28 , 2021 . 16 effect of inflation inflation has not been a material factor affecting the company 's business . general operating expenses , such as salaries , employee benefits , insurance and occupancy costs , are subject to normal inflationary pressures . critical accounting policies and estimates the consolidated financial statements of the company are prepared in accordance with generally accepted accounting practices in the united states of america ( “ u.s . gaap ” ) . the preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets , liabilities , revenues , costs , and expenses and related disclosures . we base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances . in many instances , we could have reasonably used different accounting estimates , and in other instances , changes in the accounting estimates are reasonably likely to occur from period to period . accordingly , actual results could differ significantly from the estimates made by our management . to the extent that there are material differences between these estimates and actual results , our future financial statement presentation , financial condition , results of operations and cash flows may be affected . the following items require significant estimation or judgement . for additional information about our accounting policies , refer to “ note 2 , summary of significant accounting policies ” in the audited financial statements included herewith . revenue recognition the company has adopted the requirements of accounting standards update ( “ asu ” ) no . 2014-09 , revenue from contracts with customers ( topic 606 ) ( “ asc 606 ” ) . asc 606 establishes a principle for recognizing revenue upon the transfer of promised goods or services to customers , in an amount that reflects the expected consideration received in exchange for those goods or services . our revenues are derived primarily from fashion model bookings , and representation of social media influencers and actors for commercials , film , and television . our performance obligations are primarily satisfied at a point in time when the talent has completed the contractual requirements . a contract 's transaction price is allocated to each distinct performance obligation and recognized as revenue when , or as , the performance obligation is satisfied . the performance obligations for most of the company 's core modeling bookings are satisfied on the day of the event , and the “ day rate ” total fee is agreed in advance when the customer books the model for a particular date . for contracts with multiple performance obligations , we allocate the contract 's transaction price to each performance obligation based on the estimated relative standalone selling price . model costs model costs include amounts owed to talent , including taxes required to be withheld and remitted directly to taxing authorities , commissions owed to other agencies , and related costs such as those paid for photography . costs are accrued in the period in which the event takes place consistent with when the revenue is recognized . the company typically enters into contractual agreements with models under which the company is obligated to pay talent upon collection of fees from the customer . share based compensation share-based compensation expense is estimated at the grant date based on the award 's fair value as calculated by the black-scholes option pricing model and is recognized on a straight line basis as an expense over the requisite service period , which is generally the vesting period . the determination of the fair value of share-based awards on the date of grant using an option pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables . these variables include the estimated volatility over the expected term of the awards , actual and projected employee stock option exercise behaviors , risk-free interest rates , estimated forfeitures and expected dividends . income taxes we are subject to income taxes in the united states , the united kingdom , and numerous local jurisdictions . deferred tax assets are recognized for unused tax losses , unused tax credits , and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used . unused tax loss carry-forwards are reviewed at each reporting date and a valuation allowance is established if it is doubtful we will generate sufficient future taxable income to utilize the loss carry-forwards . 17 in determining the amount of current and deferred income tax , we take into account whether additional taxes , interest , or penalties may be due . although we believe that we have adequately reserved for our income taxes , we can provide no assurance that the final tax outcome will not be materially different . to the extent that the final tax outcome is different than the amounts recorded , such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and operating results . accounts receivable and allowance for doubtful accounts accounts receivable are accounted for
| cash provided by operating activities the decrease in net cash provided by operating activities for the year ended december 31 , 2017 was due primarily to the timing of collection and billing of trade accounts receivable , which was partially offset by an increase in depreciation and amortization expense . the increase in net cash provided by operating activities for the year ended december 31 , 2016 was due primarily to the recovery of the restricted cash related to the depuy synthes settlement , coupled with lower working capital and lower year-over-year income tax payments . 72 cash used in investing activities the increase in net cash used in investing activities for the year ended december 31 , 2017 was due primarily to higher investment in marketable securities and increased purchases of property and equipment , which was partially offset by the decrease in cash used for the acquisition of businesses . the decrease in net cash used in investing activities for the year ended december 31 , 2016 was due primarily to lower investment in marketable securities and decreased purchases of property and equipment , which was partially offset by the issuance of a note receivable , and an increase in cash used for the acquisition of businesses . cash provided by financing activities the increase in cash provided by financing activities for the year ended december 31 , 2017 was due primarily to higher proceeds from exercises of stock options , which was partially offset by payments for business acquisition liabilities . the decrease in cash provided by financing activities for the year ended december 31 , 2016 was due primarily to higher payments of business acquisition liabilities . liquidity and capital resources the following table highlights certain information related to our liquidity and capital resources : replace_table_token_32_th during the year ended december 31 , 2017 , our total cash , cash equivalents and marketable securities increased $ 79.1 million , primarily as a result of our cash provided by operating activities and increased investment in marketable securities .
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to help mitigate the spread of the virus and in response to health advisories and governmental actions and regulations , the company has modified its business practices and has implemented health and safety measures that are designed to protect employees and represented talent . the company 's revenues are heavily dependent on the level of economic activity in the united states and the united kingdom , particularly in the fashion , advertising and publishing industries , all of which have been negatively impacted by the pandemic and may not recover as quickly as other sectors of the economy . there have been mandates from federal , state , and local authorities requiring forced closures of non-essential businesses . as a result , beginning in march 2020 , the company saw a significant reduction in customer bookings , resulting in a negative impact to revenue and earnings . during the second half of 2020 , bookings increased from the preceding months , but remained significantly below pre-pandemic levels . 11 in addition to reduced revenue , business operations have been adversely affected by reductions in productivity , limitations on the ability of customers to make timely payments , disruptions in talents ' ability to travel to needed locations , and supply chain disruptions impeding clothing or footwear wardrobe from reaching destinations for photoshoots and other bookings . many of the company 's customers are large retail and fashion companies , some of which have had to close stores in the united states and internationally due to the spread of covid-19 . some of these customers have filed for bankruptcy in 2020 and others may be unable to pay amounts already owed to the company , resulting in increased current and future bad debt expense . these customers also may not emerge from the pandemic with the financial ability , or need , to purchase wilhelmina 's services to the extent that they did in previous years . some model talent have been quarantined with family far from the major cities where wilhelmina 's offices are located , and also away from where most modeling jobs take place . many u.s. and international airlines have decreased their flight schedules which , as economic activities resumes and clients increase booking requests , may make it difficult for talent to be available when and where they are needed . the b.1.1.7 variant of the covid-19 virus , which is believed to spread easily and quickly , has particularly impacted the united kingdom in recent months , resulting in renewed strict lockdowns that have impacted wilhelmina 's london operations and are continuing into 2021. while these disruptions are currently expected to be temporary , there continues to be uncertainty around the duration . postponed and cancelled bookings related to the pandemic contributed significantly to reduced revenues and increased operating losses during 2020. although some clients increased activity and bookings during the second half of 2020 , rising covid-19 infection rates in cities where wilhelmina operates could lead to a slower economic recovery in those markets , and possible additional business closings or local mandates that could slow the recovery in operations there . since wilhelmina extends customary payment terms to its clients , even as bookings resume , there is likely to be a lag before significant cash collections return . in the meantime , the company continues to have significant employee , office rent , and other expenses . reduced outstanding accounts receivable available as collateral under the company 's credit agreement with amegy bank has limited its access to additional financing . net losses in recent periods have also impacted compliance with the financial covenants under the amegy bank credit agreement , further impeding the company 's ability to obtain additional financing . since the pandemic began , many stock markets , including nasdaq capital market where wilhelmina 's common stock is listed , have been volatile . a further decline in the company 's stock price would reduce its market capitalization and could require additional goodwill or intangible asset impairment writedowns . the company has taken the following actions to address the impact of covid-19 and the current recessionary environment , in order to efficiently manage the business and maintain adequate liquidity and maximum flexibility : - in april 2020 , obtained approximately $ 2.0 million in loans under the paycheck protection program ( the “ ppp ” ) of the coronavirus aid , relief , and economic security act ( the “ cares act ” ) administered by the u.s. small business administration ( “ sba ” ) . - eliminated discretionary travel and entertainment expenses . - suspended share repurchases . the terms of the company 's ppp loans restrict share repurchases until 12 months have passed after full repayment . - did not renew the leases on three new york city model apartments when the terms ended in june and august , 2020 . - did not renew the lease on the company 's new york city office , and required all new york based staff to work remotely . - suspended efforts to fill two highly compensated executive roles following the resignation of the company 's chief executive officer and vice president in early 2020 . - negotiated discounts with various vendors and service providers . - effective july 1 , 2020 , implemented layoffs of approximately 36 % of its staff , including employees at each of the company 's five offices , and effected temporary salary reductions for the remaining staff . if the quarantines and limitations on non-essential work are re-implemented , or persist for an extended period , the company may need to implement additional cost savings measures . story_separator_special_tag in the event all or any portion of the ppp loans is forgiven , the amount forgiven is applied to outstanding principal , and would be recorded as forgiveness of debt income . as of december 31 , 2020 , a total of $ 2.0 million was outstanding on the ppp loans . off-balance sheet arrangements as of december 31 , 2020 , the company had outstanding a $ 0.2 million irrevocable standby letter of credit under the company 's revolving credit facility with amegy bank . the letter of credit served as security under the lease relating to the company 's office space in new york city that expired on february 28 , 2021 . 16 effect of inflation inflation has not been a material factor affecting the company 's business . general operating expenses , such as salaries , employee benefits , insurance and occupancy costs , are subject to normal inflationary pressures . critical accounting policies and estimates the consolidated financial statements of the company are prepared in accordance with generally accepted accounting practices in the united states of america ( “ u.s . gaap ” ) . the preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets , liabilities , revenues , costs , and expenses and related disclosures . we base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances . in many instances , we could have reasonably used different accounting estimates , and in other instances , changes in the accounting estimates are reasonably likely to occur from period to period . accordingly , actual results could differ significantly from the estimates made by our management . to the extent that there are material differences between these estimates and actual results , our future financial statement presentation , financial condition , results of operations and cash flows may be affected . the following items require significant estimation or judgement . for additional information about our accounting policies , refer to “ note 2 , summary of significant accounting policies ” in the audited financial statements included herewith . revenue recognition the company has adopted the requirements of accounting standards update ( “ asu ” ) no . 2014-09 , revenue from contracts with customers ( topic 606 ) ( “ asc 606 ” ) . asc 606 establishes a principle for recognizing revenue upon the transfer of promised goods or services to customers , in an amount that reflects the expected consideration received in exchange for those goods or services . our revenues are derived primarily from fashion model bookings , and representation of social media influencers and actors for commercials , film , and television . our performance obligations are primarily satisfied at a point in time when the talent has completed the contractual requirements . a contract 's transaction price is allocated to each distinct performance obligation and recognized as revenue when , or as , the performance obligation is satisfied . the performance obligations for most of the company 's core modeling bookings are satisfied on the day of the event , and the “ day rate ” total fee is agreed in advance when the customer books the model for a particular date . for contracts with multiple performance obligations , we allocate the contract 's transaction price to each performance obligation based on the estimated relative standalone selling price . model costs model costs include amounts owed to talent , including taxes required to be withheld and remitted directly to taxing authorities , commissions owed to other agencies , and related costs such as those paid for photography . costs are accrued in the period in which the event takes place consistent with when the revenue is recognized . the company typically enters into contractual agreements with models under which the company is obligated to pay talent upon collection of fees from the customer . share based compensation share-based compensation expense is estimated at the grant date based on the award 's fair value as calculated by the black-scholes option pricing model and is recognized on a straight line basis as an expense over the requisite service period , which is generally the vesting period . the determination of the fair value of share-based awards on the date of grant using an option pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables . these variables include the estimated volatility over the expected term of the awards , actual and projected employee stock option exercise behaviors , risk-free interest rates , estimated forfeitures and expected dividends . income taxes we are subject to income taxes in the united states , the united kingdom , and numerous local jurisdictions . deferred tax assets are recognized for unused tax losses , unused tax credits , and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used . unused tax loss carry-forwards are reviewed at each reporting date and a valuation allowance is established if it is doubtful we will generate sufficient future taxable income to utilize the loss carry-forwards . 17 in determining the amount of current and deferred income tax , we take into account whether additional taxes , interest , or penalties may be due . although we believe that we have adequately reserved for our income taxes , we can provide no assurance that the final tax outcome will not be materially different . to the extent that the final tax outcome is different than the amounts recorded , such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and operating results . accounts receivable and allowance for doubtful accounts accounts receivable are accounted for
| liquidity and capital resources the company 's cash balance decreased to $ 5.6 million at december 31 , 2020 from $ 7.0 million at december 31 , 2019. the cash balance decreased primarily as a result of $ 2.0 million net cash used by operating activities and $ 0.2 million cash used in investing activities , partially offset by $ 0.6 million cash provided by financing activities , as well as $ 0.1 million foreign currency effect on cash flow . net cash used in operating activities of $ 2.0 million was primarily the result of net loss and decreases in amounts due to models , accounts payable and accrued liabilities , and lease liabilities , partially offset by decreases in accounts receivable and right of use assets . the $ 0.2 million cash used in investing activities was attributable to purchases of property and equipment , including software and computer equipment . the $ 0.6 million of cash used in financing activities was primarily attributable to receipt of $ 2.0 million of ppp loans , partially offset by $ 1.3 million principal payments on the company 's amegy bank term loans , and payments on finance leases . the company 's primary liquidity needs are for working capital associated with performing services under its client contracts and servicing its remaining term loan . generally , the company incurs significant operating expenses with payment terms shorter than its average collections on billings . the covid-19 pandemic has had an impact on the company 's cash flows during the year ended december 31 , 2020 , primarily due to reduced bookings and modeling jobs and delayed payments from customers . the company has taken actions to address the impact of covid-19 by reducing expenses and has the ability to implement more significant cost savings measures if the current limitations on non-essential work persist for an extended period . based on 2021 budgeted and year-to-date cash flow information , management believes that the company has sufficient liquidity to meet its projected operational expenses and capital expenditure requirements for the next twelve months .
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professional services revenues are recognized over time as services are rendered . most of our projects are performed on a time and materials basis , while a portion of our revenues is derived from projects performed on a fixed fee or fixed fee percent complete basis . for time and material projects , revenues are recognized and billed by multiplying the number of hours our professionals expend in the performance of the project by the hourly rates . for fixed fee contracts , revenues are recognized and billed by multiplying the established fixed rate per time period by the number of time periods elapsed . for fixed fee percent complete projects , revenues are generally recognized using an input method based on the ratio of hours expended to total estimated hours . fixed fee percent complete engagements represented 8 % of our services revenues for the year ended december 31 , 2020 compared to 7 % and 8 % for the years ended december 31 , 2019 and 2018 , respectively . on most projects , we are reimbursed for out-of-pocket expenses including travel and other project-related expenses . these reimbursements are included as a component of the transaction price of the respective professional services contract . the aggregate amount of reimbursed expenses will fluctuate depending on the location of our clients , the total number of our projects that require travel , the impact of travel restrictions imposed as a result of the covid-19 pandemic , and whether our arrangements with our clients provide for the reimbursement of such expenses . in conjunction with services provided , we occasionally receive referral fees under partner programs . these referral fees are recognized at a point in time when earned and recorded within services revenues . 21 software and hardware revenues software and hardware revenues are derived from sales of third-party software and hardware resales , in which we are considered the agent , and sales of internally developed software , in which we are considered the principal . revenues from sales of third-party software and hardware are recorded on a net basis , while revenues from internally developed software sales are recorded on a gross basis . software and hardware revenues are expected to fluctuate depending on our clients ' demand for these products , which may be impacted by the covid-19 pandemic . there are no significant cancellation or termination-type provisions for our software and hardware sales . contracts for our professional services provide for a general right , to the client or us , to cancel or terminate the contract within a given period of time ( generally 10 to 30 days ' notice is required ) . the client is responsible for any time and expenses incurred up to the date of cancellation or termination of the contract . cost of revenues cost of revenues consists of cost of services , primarily related to cash and non-cash compensation and benefits ( including bonuses and non-cash compensation related to equity awards ) , costs associated with subcontractors , reimbursable expenses and other project-related expenses . cost of revenues does not include depreciation of assets used in the production of revenues which are primarily personal computers , servers , and other information technology related equipment . in accordance with asc topic 606 , sales of third-party software and hardware are presented on a net basis , and as such , third-party software and hardware costs are not presented within cost of revenues . our cost of services as a percentage of services revenues is affected by the utilization rates of our professionals ( defined as the percentage of our professionals ' time billed to clients divided by the total available hours in the respective period ) , the salaries we pay our professionals , and the average billing rate we receive from our clients . if a project ends earlier than scheduled , we retain professionals in advance of receiving project assignments , or demand for our services declines , our utilization rate will decline and adversely affect our cost of services as a percentage of services revenues . selling , general , and administrative expenses selling , general and administrative ( “ sg & a ” ) expenses are primarily composed of sales-related costs , general and administrative salaries , stock compensation expense , office costs , recruiting expense , variable compensation costs , marketing costs and other miscellaneous expenses . we have access to sales leads generated by our software vendors whose products we use to design and implement solutions for our clients . these relationships enable us to optimize our selling costs and sales cycle times and increase win rates through leveraging our partners ' marketing efforts and endorsements . plans for growth and acquisitions our goal is to continue to build one of the leading information technology consulting firms by expanding our relationships with existing and new clients and through the continuation of our disciplined acquisition strategy . our future growth plan includes expanding our business with a primary focus on customers in the united states , both organically and through acquisitions . we also intend to further leverage our existing offshore and nearshore capabilities to support our future growth and provide our clients flexible options for project delivery . our ability to continue to implement our growth plan may be negatively affected by the impact of the covid-19 pandemic on our operations , and our ability to evaluate potential acquisitions . when analyzing revenue growth by base business compared to acquired companies in the results of operations section below , revenue attributable to base business includes revenue from an acquired company that has been owned for a full four quarters after the date of acquisition . acquisition of psl on june 17 , 2020 , a wholly-owned subsidiary of the company acquired psl pursuant to the terms of a stock purchase agreement . story_separator_special_tag the company estimates variable consideration based on historical experience and forecasted sales and includes the variable consideration in the transaction price . other services revenues are comprised of hosting fees , partner referral fees , maintenance agreements , training and internally developed software-as-a-service ( “ saas ” ) sales . revenues from hosting fees , maintenance agreements , training and internally developed saas sales are generally recognized over time using a time-based measure of progress as services are rendered . partner referral fees are recorded at a point in time upon meeting specified requirements to earn the respective fee . on many professional service projects , the company is also reimbursed for out-of-pocket expenses including travel and other project-related expenses . these reimbursements are included as a component of the transaction price of the respective professional services contract and are invoiced as the expenses are incurred . the company structures its professional services arrangements to recover the cost of reimbursable expenses without a markup . software and hardware revenues are comprised of third-party software and hardware resales , in which the company is considered the agent , and sales of internally developed software , in which the company is considered the principal . third-party software and hardware revenues are recognized and invoiced when the company fulfills its obligation to arrange the sale , which occurs when the purchase order with the vendor is executed and the customer has access to the software or the hardware has been shipped to the customer . internally developed software revenues are recognized and invoiced when control is transferred to the customer , which occurs when the software has been made available to the customer and the license term has commenced . revenues from third-party software and hardware sales are recorded on a net basis , while revenues from internally developed 28 software sales are recorded on a gross basis . there are no significant cancellation or termination-type provisions for the company 's software and hardware sales , and the term between invoicing and payment due date is not significant . arrangements with clients may contain multiple promises such as delivery of software , hardware , professional services or post-contract support services . these promises are accounted for as separate performance obligations if they are distinct . for arrangements with clients that contain multiple performance obligations , the transaction price is allocated to the separate performance obligations based on estimated relative standalone selling price , which is estimated by the expected cost plus a margin approach , taking into consideration market conditions and competitive factors . because contracts that contain multiple performance obligations are typically short term due to the contract cancellation provisions , the allocation of the transaction price to the separate performance obligations is not considered a significant estimate . revenues are presented net of taxes assessed by governmental authorities . sales taxes are generally collected and subsequently remitted on all software and hardware sales and certain services transactions as appropriate . purchase accounting and related fair value measurements the company allocates the purchase price , including contingent consideration , of our acquisitions to the assets and liabilities acquired , including identifiable intangible assets , based on their respective fair values at the date of acquisition . such fair market value assessments are primarily based on third-party valuations using assumptions developed by management that require significant judgments and estimates that can change materially as additional information becomes available . the purchase price allocated to intangibles is based on unobservable factors , including but not limited to , projected revenues , expenses , customer attrition rates , royalty rates , a weighted average cost of capital , among others . the weighted average cost of capital uses a market participant 's cost of equity and after-tax cost of debt and reflects the risks inherent in the cash flows . the approach to valuing the initial contingent consideration associated with the purchase price also uses similar unobservable factors such as projected revenues and expenses over the term of the contingent earn-out period , discounted for the period over which the contingent consideration is measured , and volatility rates . based upon these assumptions , the initial contingent consideration is then valued using a monte carlo simulation . the company finalizes the purchase price allocation once certain initial accounting valuation estimates are finalized , and no later than 12 months following the acquisition date . convertible debt in accordance with accounting for debt with conversion and other options , the company bifurcated the principal amount of the notes into liability and equity components . the initial liability component of the notes was valued based on the contractual cash flows discounted at an appropriate comparable market non-convertible debt borrowing rate at the date of issuance . the equity component representing the conversion option and calculated as the residual amount of the proceeds was recorded as an increase in additional paid-in capital within stockholders ' equity , partially offset by the associated deferred tax effect . the amount recorded within additional paid-in capital is not to be remeasured as long as it continues to meet the conditions for equity classification . the resulting debt discount is being amortized to interest expense using the effective interest method over the period from the issuance date through the contractual maturity date . the company utilizes the treasury stock method to calculate the effects of the notes on diluted earnings per share . in connection with the issuance of the notes , the company entered into the notes hedges with the option counterparties . the notes hedges provide the company with the option to acquire , on a net settlement basis , shares of common stock equal to the number of shares of common stock that notionally underlie the notes and corresponds to the conversion price of the notes . if the company elects cash settlement and exercises the notes hedges , the aggregate amount of cash received from the option counterparties
| liquidity and capital resources the company 's cash balance decreased to $ 5.6 million at december 31 , 2020 from $ 7.0 million at december 31 , 2019. the cash balance decreased primarily as a result of $ 2.0 million net cash used by operating activities and $ 0.2 million cash used in investing activities , partially offset by $ 0.6 million cash provided by financing activities , as well as $ 0.1 million foreign currency effect on cash flow . net cash used in operating activities of $ 2.0 million was primarily the result of net loss and decreases in amounts due to models , accounts payable and accrued liabilities , and lease liabilities , partially offset by decreases in accounts receivable and right of use assets . the $ 0.2 million cash used in investing activities was attributable to purchases of property and equipment , including software and computer equipment . the $ 0.6 million of cash used in financing activities was primarily attributable to receipt of $ 2.0 million of ppp loans , partially offset by $ 1.3 million principal payments on the company 's amegy bank term loans , and payments on finance leases . the company 's primary liquidity needs are for working capital associated with performing services under its client contracts and servicing its remaining term loan . generally , the company incurs significant operating expenses with payment terms shorter than its average collections on billings . the covid-19 pandemic has had an impact on the company 's cash flows during the year ended december 31 , 2020 , primarily due to reduced bookings and modeling jobs and delayed payments from customers . the company has taken actions to address the impact of covid-19 by reducing expenses and has the ability to implement more significant cost savings measures if the current limitations on non-essential work persist for an extended period . based on 2021 budgeted and year-to-date cash flow information , management believes that the company has sufficient liquidity to meet its projected operational expenses and capital expenditure requirements for the next twelve months .
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