ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This report contains “forward-looking statements” within the meaning of the securities laws, for which we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by terminology such as “expect,” “anticipate,” “intend,” “may,” “plan,” “will,” “should,” “could,” “would,” “assume,” “believe,” “estimate,” “predict,” “potential,” “project,” “continue,” “seek,” and similar expressions, as well as statements in the future tense. We have based these forward-looking statements on our current expectations and projections about future events, based on information currently available to us. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at which, or means by which, such performance or results will be achieved.
Forward-looking statements are subject to risks, uncertainties, and assumptions, including those described in the section entitled “Risk Factors” and elsewhere in this Annual Report on Form 10-K. Unforeseen developments could cause actual performance or results to differ substantially from those expressed in or suggested by the forward-looking statements. Management does not assume responsibility for the accuracy or completeness of these forward-looking statements. There is no regulation requiring an update of any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations.
Our business activities are affected by many factors, including, without limitation, redemptions by mutual fund shareholders, taxes, general economic and business conditions, including those related to the COVID-19 pandemic, movement of interest rates, competitive conditions, industry regulation, and fluctuations in the stock market, many of which are beyond the control of our management. Further, the business and regulatory environments in which we operate remain complex, uncertain, and subject to change. We expect that regulatory requirements and developments will cause us to incur additional administrative and compliance costs. Notwithstanding the variability in our economic and regulatory environments, we remain focused on the investment performance of the Hennessy Funds and on providing high-quality customer service to investors.
Our business strategy centers on (i) the identification, completion, and integration of future acquisitions and (ii) organic growth, through both the retention of the mutual fund assets we currently manage and the generation of inflows into the mutual funds we manage. The success of our business strategy may be influenced by the factors discussed in Item 1A, “Risk Factors.” All statements regarding our business strategy, as well as statements regarding market trends and risks and assumptions about changes in the marketplace, are forward-looking by their nature.
OUR CONTINUING RESPONSE TO THE COVID-19 PANDEMIC
In mid-March 2020, in response to the COVID-19 pandemic, we invoked our business continuity plan to ensure a smooth transition to remote work for our employees. We have continued to effectively operate the Company and remain committed to providing the same high level of services to the 16 Hennessy Funds and their shareholders. Further, we have undertaken various initiatives to ensure our continuing success in the work-from-home environment and to look forward to our employees’ returning to the office, including the following:
•
Regularly engaging with key partners and service providers to garner assurance regarding their ability to continue to provide high-quality services to us and to the Hennessy Funds;
•
Strengthening our digital marketing and public relations, including by ex

Explanation: Management Discussion and Analysis section with financial performance data. Source: 1145255_2020.htm (CIK: 1145255, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


Item 6.
Selected Financial Data
(Dollars in Thousands, Except Per Share Data)
Interest Income
$
106,197
$
112,836
$
99,395
$
86,930
$
81,154
Net Interest Income
101,326
103,343
92,504
82,982
77,965
Provision for Credit Losses
9,645
2,027
2,921
2,215
Noninterest Income
(1)
111,165
53,053
51,565
51,746
53,681
Noninterest Expense
149,962
113,609
111,503
109,447
113,213
Income Attributable to Noncontrolling Interests
(2)
(11,078)
-
-
-
-
Net Income Attributable to CCBG
(3)
31,576
30,807
26,224
10,863
11,746
Per Common Share:
Basic Net Income
$
1.88
$
1.84
$
1.54
$
0.64
$
0.69
Diluted Net Income
1.88
1.83
1.54
0.64
0.69
Cash Dividends Declared
0.57
0.48
0.32
0.24
0.17
Diluted Book Value
19.05
19.40
18.00
16.65
16.23
Diluted Tangible Book Value
(4)
13.76
14.37
12.96
11.68
11.23
Performance Ratios:
Return on Average Assets
0.93
%
1.03
%
0.92
%
0.39
%
0.43
%
Return on Average Equity
9.36
9.72
8.89
3.83
4.22
Net Interest Margin (FTE)
3.30
3.85
3.64
3.37
3.25
Noninterest Income as % of Operating Revenues
52.32
33.92
35.79
38.41
40.78
Efficiency Ratio
70.43
72.40
77.05
80.50
85.34
Asset Quality:
Allowance for Credit Losses ("ACL")
$
23,816
$
13,905
$
14,210
$
13,307
$
13,431
ACL to Loans Held for Investment ("HFI")
1.19
%
0.75
%
0.80
%
0.80
%
0.86
%
Nonperforming Assets ("NPAs")
6,679
5,425
9,101
11,100
19,171
NPAs to Total
Assets
0.18
0.18
0.31
0.38
0.67
NPAs to Loans HFI plus OREO
0.33
0.29
0.51
0.67
1.21
ACL to Non-Performing Loans
405.66
310.99
206.79
185.87
157.40
Net Charge-Offs to Average
Loans HFI
0.12
0.13
0.12
0.14
0.09
Capital Ratios:
Tier 1 Capital
16.19
%
17.16
%
16.36
%
16.33
%
15.51
%
Total Capital
17.30
17.90
17.13
17.10
16.28
Common Equity Tier 1 Capital
13.71
14.47
13.58
13.42
12.61
Tangible Common Equity
(4)
6.25
8.06
7.58
7.09
6.90
Leverage
9.33
11.25
10.89
10.47
10.23
Equity to Assets
8.45
10.59
10.23
9.80
9.67
Dividend Pay-Out
30.32
26.23
20.78
37.50
24.64
Averages for the Year:
Loans Held for Investment
$
1,957,576
$
1,811,738
$
1,711,635
$
1,610,127
$
1,530,260
Earning Assets
3,083,675
2,697,098
2,561,884
2,502,231
2,432,392
Total Assets
3,391,071
2,987,056
2,857,148
2,816,096
2,752,309
Deposits
2,844,347
2,537,489
2,422,973
2,371,871
2,282,785
Shareowners’ Equity
337,313
317,072
294,864
283,404
278,335
Year-End
Balances:
Loans Held for Investment
$
2,006,427
$
1,835,929
$
1,774,225
$
1,653,492
$
1,561,289
Earning Assets
3,475,904
2,806,913
2,658,539
2,582,922
2,520,053
Total Assets
3,798,071
3,088,953
2,959,183
2,898,794
2,845,197
Deposits
3,217,560
2,645,454
2,531,856
2,469,877
2,412,286
Shareowners’ Equity
320,837
327,016
302,587
284,210
275,168
Other Data:
Basic Average Shares Outstanding
16,784,711
16,769,507
17,029,420
16,951,663
16,988,747
Diluted Average Shares Outstanding
16,821,950
16,827,413
17,072,329
17,012,637
17,061,186
Shareowners of Record
(5)
1,201
1,243
1,312
1,389
1,489
Banking Locations
(5)
Full-Time Equivalent Associates
(5)(6)
(1)
Includes $2.5 million gain from sale of trust preferred securities in 2016.
(2)
Acquired 51% membership interest in Brand Mortgage Group, LLC , re-named as Capital City Home Loans, on March 1, 2020 - fully consolidated
(3)
For 2017, includes $4.1 million, or $0.24 per diluted share, income tax expense
adjustment related to the Tax
Cuts and Jobs Act of 2017.
For 2018, includes $3.3 million, or $0.19 per diluted share, income tax benefit for
2017 plan year pension contributions made in 2018.
(4)
Diluted tangible book value and tangible common equity ratio are non-GAAP financial measures. For additional
information, including a reconciliation
to GAAP, refer
to page 32
(5)
As of February 25th of the following year.
(6)
Reflects 756 full-time equivalent associates at Core CCBG and 198 full-time
equivalent associates at CCHL.
NON-GAAP FINANCIAL MEASURES
We present a
tangible common equity ratio and a tangible book value per
diluted share that, in each case, removes the effect of
goodwill that resulted from merger and acquisition
activity. We
believe these measures
are us

Explanation: SEC 10-K filing section containing tax-related disclosures. Tax references found: income tax, tax expense, tax benefit. Contains regulated financial information subject to SEC disclosure requirements.


Item 1A. Risk Factors.
Our business, financial condition, results of operations, cash flows and prospects and the prevailing market price and performance of our Class A Common Stock may be adversely affected by a number of factors, including the material risks noted below. Our stockholders and prospective investors should consider these risks, uncertainties and other factors prior to making an investment decision.
Risks Related to Our Growth Strategy
Our investment in new business strategies, services and technologies is inherently risky, and could disrupt our ongoing business or have a material adverse effect on our overall business and results of operations.
We have invested and expect to continue to invest in new business strategies, services and technologies, including our EchoPark business. Such endeavors may involve significant risks and uncertainties, including allocating management resources away from current operations, insufficient revenues to offset expenses associated with these new investments, inadequate return of capital on our investments and unidentified issues not discovered in our due diligence of such strategies and offerings. Because these ventures are inherently risky, no assurance can be given that such strategies and offerings will be successful and will not have a material adverse effect on our reputation, financial condition and operating results.
Our ability to make acquisitions, execute our growth strategy for our EchoPark business and grow organically may be restricted by our ability to obtain capital, the terms of the instruments governing our long-term debt and the need obtain consent from manufacturers.
We intend to finance future real estate and dealership acquisitions with cash generated from operations, through issuances of our stock or debt securities and through borrowings under credit arrangements. We may not be able to obtain additional financing by issuing stock or debt securities due to the market price of our Class A Common Stock, overall market conditions or certain covenants under the instruments that govern our long-term debt that restrict our ability to issue additional indebtedness, or the need for manufacturer consent to the issuance of equity securities. Using cash to complete acquisitions could substantially limit our operating and financial flexibility.
The amount of capital presently available to us is limited to the liquidity available under our existing debt agreements and cash flows generated through operating activities. Pursuant to the 2016 Credit Facilities (as defined below), we are restricted from making dealership acquisitions in any fiscal year if the aggregate cost of all such acquisitions is in excess of certain amounts, without the written consent of the Required Lenders (as that term is defined in the 2016 Credit Facilities). Our ability to obtain additional sources of financing may be limited by the fact that substantially all of the assets of our dealerships are pledged to secure the indebtedness under the 2016 Credit Facilities and the Silo Floor Plan Facilities (as defined below). These pledges may impede our ability to borrow from other sources. Our pace and scale of growing our EchoPark business may be limited in the event other sources of capital are unavailable.
In addition, we are dependent to a significant extent on our ability to finance our new and certain of our used vehicle inventory under the 2016 Floor Plan Facilities or the Silo Floor Plan Facilities (each, as defined below) (collectively, “Floor Plan Financing”). Floor Plan Financing arrangements allow us to borrow money to buy a particular new vehicle from the manufacturer or a used vehicle on trade-in or at auction and pay off the loan when we sell that particular vehicle. We must obtain Floor Plan Financing or obtain consents to assume existing floor plan notes payable in connection with our acquisition of dealerships. In the event that we are unable to obtain such financing, our ability to

Explanation: SEC filing risk factors section containing investment-relevant disclosures. Source: 1043509_2020.htm (CIK: 1043509, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


Item 8.Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of ManTech International Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of ManTech International Corporation and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, changes in stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 19, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue from Contracts with Customers - Refer to Notes 2 and 3 to the financial statements
Critical Audit Matter Description
The Company recognizes revenue on contracts over time when there is a continuous transfer of control to the customer over the duration of the contract as the services are rendered. The accounting conclusions for contracts involves judgment, particularly as it relates to

Explanation: Audited financial statements and supplementary data. Source: 892537_2020.htm (CIK: 892537, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial information is qualified by reference to, and should be read in conjunction with, the Company’s consolidated financial statements and the notes thereto, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere herein. The selected consolidated income statement data for the fiscal years ended August 29, 2020, August 31, 2019, and September 1, 2018 and the selected consolidated balance sheet data as of August 29, 2020 and August 31, 2019 are derived from MSC’s audited consolidated financial statements which are included elsewhere herein. The selected consolidated income statement data for the fiscal years ended September 2, 2017, and September 3, 2016, and the selected consolidated balance sheet data as of September 1, 2018, September 2, 2017, and September 3, 2016 are derived from MSC’s audited consolidated financial statements not included herein.
__________________________
(1)In the second quarter of fiscal year 2020, the Company paid a special cash dividend of $5.00 per share.
(2)In fiscal year 2018, the Company recorded a net tax benefit of $40,464 due to the revaluation of its net deferred tax liabilities primarily related to the lower federal corporate tax rate, partially offset by the lower federal benefit for state taxes and the change from a worldwide tax system to a territorial tax system.
(3)In fiscal year 2019, the Company incurred $6,725 of severance and separation benefits charges and other related costs associated with workforce reduction and increased performance management.
(4)In fiscal year 2020, the Company incurred $6,583 of consulting-related costs to review the optimization of the Company’s operations, and $10,446 of severance and separation benefits charges and other related costs.
(5)Total assets and working capital were impacted in fiscal year 2020 by the adoption of ASU 2016-02, “Leases,” as described further in Notes 1 and 10 to the Consolidated Financial Statements included in Item 8. Prior period amounts were not adjusted and continue to be reported in accordance with our historic accounting policies.

ITEM 7.

Explanation: SEC 10-K filing section containing tax-related disclosures. Tax references found: deferred tax, tax rate, tax benefit. Contains regulated financial information subject to SEC disclosure requirements.


Item 8. Financial Statements and Supplementary Data
Advanced Emissions Solutions, Inc.
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of
Advanced Emissions Solutions, Inc. and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Advanced Emissions Solutions, Inc. and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2020 and 2019, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.
Income Taxes - Realizability of Deferred Tax Assets
As described in Notes 1 and 18 to the consolidated financial statements, the Company recognizes deferred income taxes for the effects of temporary differences between the tax basis of an asset or liability and their reported amounts in the accompanying consolidated balance sheet. These temporary diff

Explanation: SEC 10-K filing section containing tax-related disclosures. Tax references found: income tax, deferred tax. Contains regulated financial information subject to SEC disclosure requirements.


Item 6. SELECTED FINANCIAL DATA
The selected consolidated financial data presented below as of the end of each of the fiscal years in the five-year period ended December 25, 2020 have been derived from our audited consolidated financial statements. The data set forth below is qualified by reference to, and should be read in conjunction with our consolidated financial statements and their notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K. Our consolidated statement of operations for the fiscal year ended December 30, 2016 contained a 53rd week while all other years presented contained 52 weeks.
Consolidated Statement of Operations Data:
(Amounts presented in thousands, except for per share amounts)
(1)Fiscal year 2020 results of operations were materially impacted by the Pandemic.
(2)Includes the impact of the reclassification of food processing costs from selling, general, and administrative expenses, to cost of sales and other reclassifications. Refer to the “Reclassifications” section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K.
(3)Fiscal year 2020 includes a $24,200 write-down related to Del Monte and Bassian trademarks and income of $11,479 related to the revaluation of several earn-out liabilities. Fiscal year 2016 includes income of $8,347 related to the revaluation of the Del Monte earn-out liabilities.
(4)Fiscal year 2016 includes the impact of our debt restructuring resulting in a loss on extinguishment of debt of $22,310.
(5)Fiscal year 2017 includes a tax benefit of $3,573 related to the enactment of H.R. 1, originally known as the Tax Cuts and Jobs Act (the “Tax Act”). Among other changes to the U.S. Internal Revenue Code, the Tax Act reduced the U.S. federal corporate top tax rate from 35.0% to 21.0%.
(6)Fiscal year 2019 and beyond includes the impact of recognizing operating lease right-of-use assets and liabilities as a result of our adoption of Accounting Standards Codification Topic 842, “Leases,” as of December 29, 2018.
(7)We define working capital as current assets less current liabilities.
Acquisitions Affecting Comparability of Operating Results
The Company has made several acquisitions throughout the five-year period ended December 25, 2020. For acquisitions affecting the comparability of the most recent three fiscal years, refer to the “Recent Significant Acquisitions” section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K. Acquisitions affecting comparability of the previous periods as described below:
On August 25, 2017, we entered into an asset purchase agreement to acquire substantially all of the assets of Fells Point, a specialty center-of-the-plate manufacturer and distributor based in the metro Baltimore and Washington DC area. The final purchase price for the transaction was approximately $34.1 million, including $29.7 million paid in cash at closing, $3.3 million consisting of 185,442 shares of our common stock and $1.1 million paid upon settlement of a net working capital true-up. We are also required to pay additional contingent consideration, if earned, in the form of an earn-out amount which could total approximately $12.0 million. The payment of the earn-out liability is subject to the successful achievement of annual Adjusted EBITDA targets for the Fells Point business over a period of four years following closing. We paid $3.0 million during both fiscal 2018 and fiscal 2019 to the former owners of Fells Point related to the successful attainment of the targeted EBITDA in the first two years of their earn-out agreement.
On June 27, 2016, we acquired substantially all of the assets of MT Food, based in Chicago, Illinois. Founded in the mid-1990’s, MT Food was a wholesale distributor of dairy,

Explanation: SEC 10-K filing section containing tax-related disclosures. Tax references found: tax rate, tax benefit, irs, internal revenue. Contains regulated financial information subject to SEC disclosure requirements.


Item 6. Selected Consolidated Financial and Other Data
The following tables present selected consolidated financial and other data as of and for the periods indicated below. This selected data has been derived from our audited consolidated financial statements.
Our historical results are not necessarily indicative of the results that should be expected in any future period. You should read this data together with our audited consolidated financial statements and related notes which are included elsewhere in this Annual Report on Form 10-K, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” also included elsewhere this Annual Report on Form 10-K.
(1)Indicates non-GAAP financial measure; see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Reconciliation of Non-GAAP Financial Measures” for a reconciliation of the non-GAAP financial measures to their most directly comparable financial measures prepared in accordance with GAAP.
Item 7.

Explanation: Selected financial data and key metrics. Source: 1761312_2020.htm (CIK: 1761312, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


Item 8. Financial Statements and Supplementary Data
This item is included in a separate section at the end of this report beginning on page.
Item 9.

Explanation: Audited financial statements and supplementary data. Source: 860546_2020.htm (CIK: 860546, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


ITEM 1A. RISK FACTORS
The risks and uncertainties described below could materially and adversely affect our business, financial condition and results of operations and could cause actual results to differ materially from our expectations and projections. You should read these Risk Factors in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 and our Consolidated Financial Statements and related notes in Item 8. There also may be other factors that we cannot anticipate or that are not described in this report generally because we do not currently perceive them to be material. Those factors could cause results to differ materially from our expectations.
The COVID-19 pandemic and the efforts to mitigate its impact may have an adverse effect on our business, liquidity, results of operations, financial condition and price of our securities.
The pandemic involving the novel strain of coronavirus, or COVID-19, and the measures taken to combat it, may have adverse effect on our business. Public health authorities and governments at local, national and international levels have announced various measures to respond to this pandemic. Some measures that directly or indirectly impact our business include:
● voluntary or mandatory quarantines;
● restrictions on travel;
●limiting gatherings of people in public places: and
Congestion at all ports, product delays from overseas.
Although we have been deemed an “essential” business by state and local authorities in the areas in which we operate, we have undertaken the following measures in an effort to mitigate the spread of COVID-19 including limiting store business hours and encouraging employees to work remotely if possible. We also have enacted our business continuity plans, including implementing procedures requiring employees working remotely where possible which may make maintaining our normal level of corporate operations, quality controls and internal controls difficult. Moreover, the COVID-19 pandemic has caused temporary or long-term disruptions in our supply chains and/or delays in the delivery of our inventory. Further, the COVID-19 pandemic and mitigation efforts have also adversely affected our customers’ financial condition, resulting in reduced spending for the products we sell.
As events are rapidly changing, we do not know how long the COVID-19 pandemic and the measures that have been introduced to respond to it will disrupt our operations or the full extent of that disruption. Further, once we are able to restart normal business hours and operations doing so may take time and will involve costs and uncertainty. We also cannot predict how long the effects of COVID-19 and the efforts to contain it will continue to impact our business after the pandemic is under control. Governments could take additional restrictive measures to combat the pandemic that could further impact our business or the economy in the geographies in which we operate. It is also possible that the impact of the pandemic and response on our suppliers, customers and markets will persist for some time after governments ease their restrictions. These measures have negatively impacted, and may continue to impact, our business and financial condition as the responses to control COVID-19 continue.
Economic conditions could adversely affect our business.
Uncertain global economic conditions, in particular in light of the COVID-19 pandemic, could adversely affect our business. Negative global economic trends, such as decreased consumer and business spending, high unemployment levels and declining consumer and business confidence, pose challenges to our business and could result in declining revenues, profitability and cash flow. Although we continue to devote significant resources to support our brands, unfavorable economic conditions may negatively affect demand for our products.
We face competition that could prohibit us from developing or increasing

Explanation: SEC filing risk factors section containing investment-relevant disclosures. Source: 1604868_2020.htm (CIK: 1604868, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


ITEM 11. EXECUTIVE COMPENSATION
2020 Summary Compensation Table
The following table sets forth information regarding compensation earned in or with respect to our fiscal years 2020, and 2019:
(i) our principal executive officer or other individual serving in a similar capacity during the fiscal year 2020, and 2019
(ii) our two most highly compensated executive officers other than our principal executive officers who were serving as executive officers at December 31, 2020, and 2019 whose compensation exceed $100,000; and
(iii) up to two additional individuals for whom disclosure would have been required but for the fact that the individual was not serving as an executive officer at December 31, 2020. Compensation information is shown for the fiscal years ended December 31, 2020, and 2019:
(1) Ms. Toneguzzo served as the Chief Executive Officer of the Company from June 3, 2019, until her resignation in August 2020.
(2) In August 2020, Mr. Pier assumed the role of Interim Chief Executive Officer of the Company. Mr. Pier receives $7,500 per month in his role of Executive Chairman of the Board of Directors of the Company, and did not receive any additional compensation for his role as Interim CEO.
(3) Mr. McCormack served as the Chief Executive Officer of the Company from June 1, 2016 until the closing date of the Investment and Restructuring Agreement on May 21, 2019.
(4) This amount was not paid by the Company and was transferred to Athens Encapsulation, Inc. (“AEI”) in connection with the IAR Agreement. As such, it is no longer an outstanding obligation of the Company.
(5) Mr. Farrahar served as the Chief Financial Officer of the Company from January 21, 2015 to February 4, 2020.
(6) For 2019, $43,750 was not paid and that amount was transferred to AEI in connection with the IAR Agreement.
Narrative Disclosure to Summary Compensation Table
Except as otherwise described below, there are no compensatory plans or arrangements, including payments to be received from the Company with respect to any named executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with the Company, or our subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of the Company.
Outstanding Equity Awards at 2020 Fiscal Year-End
2020 Option Grants
The following table summarizes activities related to stock options of the Company for the years ended December 31, 2020, and 2019:
Pursuant to IAR Agreement disclosed in Note 3 to the audited consolidated financial statements included herein, all vested stock options to employees on the Effective Date were cancelled and one former director’s vested options were reduced from 1,440,000 to 600,000 shares.
Pursuant to the 2019 stock option grant agreements, 600,000 options vested immediately on the date of grant. The remaining options vest ratably over three years. The Company recorded stock compensation expense of $14,781 and $118,649 during the years ended December 31, 2020, and 2019, respectively, on the vested options. As of December 31, 2020, $6,490 of stock compensation expense remains unrecognized and will be expensed over a weighted average period of 1.50 years on the date of the grant, the Company determined the fair value of the options using a closed-form Black-Scholes pricing model and the following assumptions:
2020 Warrant Issuances
The following table summarizes activities related to warrants of the Company for the years ended December 31, 2020, and 2019:
During the period ended December 31, 2019, the Company issued 4,060,000 warrants to purchase shares of common stock in conjunction with a private placement. Of these warrants, 3,980,000 were issued to purchasers of common stock in the private placement as disclosed above. The remaining 80,000 of warrants were issued as consideration for stock issuance costs incurring related to the private placement disclosed ab

Explanation: Executive compensation disclosures with financial details. Source: 1468639_2020.htm (CIK: 1468639, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


Item 1A. RISK FACTORS.
Our future results may be affected by a number of factors over which we have little or no control. The following issues, uncertainties, and risks, among others, should be considered in evaluating our business and outlook. Also, note that additional risks not currently identified or known to us could also negatively impact our business or financial results.
Risks Relating to the COVID-19 Pandemic
Our business will continue to be adversely affected by the ongoing coronavirus pandemic.
The outbreak of the novel coronavirus (“SARS-CoV-2” or “COVID-19”) has evolved into a global pandemic. The coronavirus has spread to many regions of the world, including the areas of the United States where we operate. The extent to which the coronavirus impacts our business and operating results will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning actions or mandates to contain the coronavirus or treat its impact, among others.
Our business relies heavily on the demand for petroleum products. The spread of the coronavirus has had and will continue to have a material economic effect on our business due to government-imposed restrictions on travel and shelter-in-place orders, increased teleworking and a reduction in business travel and tourism. We expect a continued reduction in demand for petroleum products at some level throughout the course of the pandemic.
Should the coronavirus continue to spread, our business operations could be delayed or interrupted. For instance, our operations would be adversely impacted if a number of our administrative personnel, drivers or field personnel are infected and become ill or are quarantined. In response to the pandemic, we have arranged for certain administrative employees to work remotely outside of our offices or to work in shifts. At this time, we believe that our business would generally be exempted from shelter-in-place orders or other mandated local travel restrictions as an essential service but there can be no assurance as to the scope of quarantine orders imposed by local or state governments.
While the potential economic impact brought by and the duration of the pandemic may be difficult to assess or predict, it has already caused, and is likely to result in further, significant disruption of global financial markets, which may reduce our ability to access capital either at all or on favorable terms. In addition, a recession, depression or other sustained adverse market event resulting from the spread of the coronavirus could materially and adversely affect our business and the value of our common stock.
The ultimate impact of the current pandemic, or any other health epidemic, is highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on our business, or the economy, as a whole. However, these effects could have a material impact on our operations, and we will continue to monitor the situation closely.
Risks Relating to Our Business
Our business is subject to general economic and other factors that are largely out of our control and could affect our operations, profitability and cash flow.
Our business is dependent on various economic factors over which we have little control, that include:
•
the availability of qualified drivers;
•
access to the credit and capital markets;
•
rising healthcare costs;
•
increases in fuel prices, taxes and tolls;
•
increases in costs of equipment;
•
interest rate fluctuations;
•
excess capacity in the trucking industry;
•
changes in laws or regulations or changes in license and regulatory fees;
•
potential disruptions at U.S. ports of entry and in pipeline operations;
•
downturns in customers’ business cycles; and
•
insurance prices and insurance coverage availability.
As a result, we may experience periods of overcapacity, declining prices, lower profit margins and less availability of cash in the f

Explanation: SEC filing risk factors section containing investment-relevant disclosures. Source: 1616741_2020.htm (CIK: 1616741, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


Item 11 Executive Compensation
The board of directors administers our option compensation plan. Our Principal Executive Officer and other members of management regularly discuss our compensation issues with the Board of Directors. Subject to Board review, modification and approval, Danny Schoening typically makes recommendations respecting bonuses and equity incentive awards for the other members of the executive management team. The Board establishes all bonus and equity incentive awards for officers and directors in consultation with other members of the management team.
Summary Compensation Table
The following table sets forth, for the years indicated, all compensation paid, distributed or accrued for services, including salary and bonus amounts, rendered in all capacities by our principal executive officer, principal financial officer and all other executive officers who received or are entitled to receive remuneration in excess of $100,000 during the stated periods. These officers are referred to herein as the “named executive officers.” Except as provided below, none of our executive officers received annual compensation in excess of $100,000 during the last two fiscal years.
(1) The amounts in the “Option awards” column reflect the dollar amounts recognized as the executive portion of compensation expense for financial statement reporting purposes for each named executive officer during fiscal 2014 through fiscal 2016, as required by FASB ASC 718, disregarding any estimates for forfeitures relating to service-based vesting conditions. For the assumptions relating to these valuations, see note 10 to our fiscal 2014 audited financial statements.
(2) On June 15, 2016, the Company issued 150,000 RSUs to its Chief Executive Officer, Danny Schoening, and 50,000 RSUs to its Chief Financial Officer, Karen Hawkins. The RSUs issued to Mr. Schoening and Ms. Hawkins vest as follows: 34% on January 1, 2017, 33% on January 1, 2018 and 33% on January 1, 2019. The total market value of the restricted stock units based on the shares price of $1.85 as of June 15, 2016 is $372 thousand. The restricted stock units were fully vested on January 1, 2019. On June 15, 2017, the Company issued 50,000 RSUs to its General Manager (Applied Optical Products). The RSUs issued to Mr. Bates vest as follows: 34% on January 1, 2018, 33% on January 1, 2019 and 33% on January 1, 2020. The total market value of the restricted stock units granted to Mr. Bates based on the shares price of $0.95 as of June 15, 2017 is $47.5 thousand. On January 2, 2019, the Company issued 150,000 RSUs to its Chief Executive Officer, Danny Schoening, and 50,000 RSUs to its Chief Financial Officer, Karen Hawkins. The RSUs issued to Mr. Schoening and Ms. Hawkins vest as follows: 34% on January 1, 2020, 33% on January 1, 2021 and 33% on January 1, 2022. The total market value of the restricted stock units based on the shares price of $1.32 as of January 2, 2019 is $264 thousand. The cost of the shares is amortized on a straight line basis across the vesting periods. The amounts in the “Stock awards” column reflect the dollar amounts recognized as the executive portion of compensation expense for financial statement reporting purposes for each named executive officer during the fiscal years, as required by FASB ASC 718 (prior authoritative literature SFAS 123(R), disregarding any estimates for forfeitures relating to service-based vesting conditions.
(3) Stanley Hirschman retired as our President as of July 20, 2017 and resigned as a director effective on November 4, 2015.
Option Grants in Last Fiscal Year
There were no Option Grants during the twelve months ended September 27, 2020 or September 29, 2019.
Employment Agreements - Danny Schoening
We entered into an employment agreement with Danny Schoening dated December 1, 2008. The term of the agreement commenced as of December 1, 2008 and the current term has automatically renewed through December 1, 2020. The term of the agreemen

Explanation: Executive compensation disclosures with financial details. Source: 1397016_2020.htm (CIK: 1397016, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


ITEM 6. Selected Financial Data
In the fourth quarter of 2017, the Company recorded a one-time additional income tax expense of $658 million, or $1.90 per diluted share, related to the enactment of the United States "Tax Cuts and Jobs Act" (the "Act") on December 22, 2017. The provisions of the Act significantly revised the U.S. corporate income tax rules. The additional tax expense recorded in the fourth quarter of 2017 primarily related to a one-time repatriation tax of $676 million on the deemed repatriation of post-1986 undistributed earnings of foreign subsidiaries and $53 million of additional foreign withholding taxes related to the expected repatriation of foreign held cash and equivalents. These additional tax charges were partially offset by an $82 million one-time income tax benefit related to the remeasurement of deferred tax assets and liabilities in the fourth quarter of 2017 due to the reduction of the U.S. corporate federal tax rate from a maximum of 35% to a flat rate of 21% beginning in 2018 under the Act.
Certain reclassifications of prior year data have been made to conform to current year reporting, including the adoption of new accounting guidance as discussed below.
In March 2016, the Financial Accounting Standards Board (the "FASB") issued authoritative guidance that included several changes to simplify the accounting for stock-based compensation, including the accounting for income taxes, forfeitures, statutory tax withholding requirements and classification of tax benefits in the statement of cash flows. Among the more significant changes, the new guidance requires that the income tax effects associated with the settlement of stock-based awards after adoption of the guidance be recognized through income tax expense rather than directly in equity. Excess tax benefits recognized in equity under the prior guidance were $29 million for the year ended December 31, 2016. The Company adopted the new guidance effective January 1, 2017 and applied the new guidance prospectively. Excess tax benefits of $27 million, $28 million, $10 million and $50 million were included in Income taxes in the statement of income for the years ended December 31, 2020, 2019, 2018 and 2017, respectively. The expected effect on income tax expense or net cash provided from operating activities related to future stock-based award settlements will vary each period and will depend on inputs such as the stock price at the time of settlement and the number of awards settled in the period presented.
Additional information on the comparability of results is included in Item 7.

Explanation: SEC 10-K filing section containing tax-related disclosures. Tax references found: income tax, tax expense, deferred tax, tax rate. Contains regulated financial information subject to SEC disclosure requirements.


Item 6. Selected Financial Data
The following financial data should be read in conjunction with our consolidated financial statements and the accompanying notes and the MD&A included elsewhere herein.
(1)Our fiscal years as reported are the 52- or 53-weeks periods ending on the Friday nearest September 30. Fiscal year 2020 was a 53- week period. Fiscal years 2019, 2018, 2017 and 2016 were 52-week periods.
(2)In fiscal year 2020, earnings from continuing operations before taxes includes a $40.5 million impairment of loans receivable from the California Proton Treatment Center, $18.7 million in restructuring charges, $17.8 million in impairments to our Maryland Proton Treatment Center and Alabama Proton Treatment Center securities, and $41.9 million in net gains on our equity investments. In fiscal year 2019, earnings from continuing operations before taxes includes a $22.0 million gain on the sale of an equity investment, a $50.5 million goodwill impairment charge related to our Proton Solutions business, a $20.8 million charge associated with the write-off of in-process research and development expenses related to an acquisition, and an $18.6 million charge to acquisition-related expenses due to an increase to the fair value of contingent consideration related to an acquisition. In fiscal year 2018, earnings from continuing operations before taxes includes a $29.7 million hedging loss related to the Australian dollar
purchase price for Sirtex Medical Limited ("Sirtex"), $22.4 million in impairment charges mostly related to our Maryland Proton Therapy Center subordinated loan and $15.7 million of acquisition-related expenses, partially offset by $9.0 million for the Sirtex breakup fee. In fiscal year 2017, earnings from continuing operations before taxes includes $51.4 million in impairment charges related to our loans to the Scripps Proton Therapy Center and a $37.8 million allowance for doubtful accounts from the California Proton Therapy Center and another proton center.
(3)In fiscal year 2018, taxes on earnings includes a $207.8 million tax expense related to the Tax Cuts and Jobs Act, partially offset by an $8.0 million benefit to income tax expense due to the partial release of a valuation allowance as a result of an acquisition.
(4)For fiscal years 2016 through 2018, the financial position at year end includes Varex, which is presented as discontinued operations for all periods presented.
(5)See Note 2, "Business Combinations," for impact from our acquisitions to total assets in fiscal year 2019.
Item 7.

Explanation: SEC 10-K filing section containing tax-related disclosures. Tax references found: income tax, tax expense. Contains regulated financial information subject to SEC disclosure requirements.


Item 7A.Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Sensitivity
Fluctuations in interest rates may result in changes in the fair value of the Company’s financial instruments, cash flows and net interest income. This risk is managed using simulation modeling to calculate the most likely interest rate risk utilizing estimated loan and deposit growth. The objective is to optimize the Company’s financial position, liquidity, and net interest income while limiting volatility.
Senior management regularly reviews the overall interest rate risk position and evaluates strategies to manage the risk. The Company's Asset and Liability Management Committee (“ALCO”) uses simulation analysis to monitor changes in net interest income due to changes in market interest rates. The simulation of rising, declining and flat interest rate scenarios allows management to monitor and adjust interest rate sensitivity to minimize the impact of market interest rate swings. The analysis of the impact on net interest income over a twelve month period is subjected to instantaneous changes in market rates of 100 basis point and 200 basis point increases and a 100 basis point decrease on net interest income and is monitored on a quarterly basis.
The following table presents the ALCO simulation model's projected impact of a change in interest rates on the projected baseline net interest income for the 12 and 24 month periods beginning on January 1, 2021, holding all other changes in the balance sheet static. This change in interest rates assumes parallel shifts in the yield curve and does not take into account changes in the slope of the yield curve.
The Company had a positive gap position based on contractual and prepayment assumptions for the next 12 months, with a positive cumulative interest rate sensitivity gap as a percentage of total earning assets of 26.3% as of December 31, 2020. This result includes assumptions for core deposit re-pricing validated for the Company by an independent third party consulting group.
The computations of interest rate risk do not necessarily include certain actions management may undertake to manage this risk in response to changes in interest rates. Derivative financial instruments, such as interest rate swaps, options, caps, floors, futures and forward contracts may be utilized as components of the Company’s risk management profile.
Market Risk
Market risk refers to potential losses arising from changes in interest rates, and other relevant market rates or prices.
Interest rate risk, defined as the exposure of net interest income and Economic Value of Equity (“EVE”) to adverse movements in interest rates, is the Company’s primary market risk, and mainly arises from the structure of the balance sheet (non-trading activities). The Company is also exposed to market risk in its investing activities. The ALCO meets regularly and is responsible for reviewing the interest rate sensitivity position of the Company and establishing policies to monitor and limit exposure to interest rate risk. The policies established by the ALCO are reviewed and approved by the Company’s board of directors. The primary goal of interest rate risk management is to control exposure to interest rate risk, within policy limits approved by the board of directors. These limits reflect the Company’s tolerance for interest rate risk over short-term and long-term horizons.
The Company also performs valuation analyses, which are used for evaluating levels of risk present in the balance sheet that might not be taken into account in the net interest income simulation analyses. Whereas net interest income simulation highlights exposures over a relatively short time horizon, valuation analysis incorporates all cash flows over the estimated remaining life of all balance sheet positions. The valuation of the balance sheet, at a point in time, is defined as the discounted present value of asset cash flows minus the discounted value of lia

Explanation: Quantitative and qualitative market risk disclosures. Source: 730708_2020.htm (CIK: 730708, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and related financial information required to be filed hereunder are indexed under Item 15 of this report and are incorporated herein by reference.
ITEM 9.

Explanation: Audited financial statements and supplementary data. Source: 934549_2020.htm (CIK: 934549, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


ITEM 6. SELECTED FINANCIAL DATA
SELECTED CONSOLIDATED FINANCIAL DATA
You should read the following selected consolidated financial data along with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the accompanying notes, which are included in this Form 10-K. We derived the selected consolidated financial data from our audited consolidated financial statements. As discussed further in Note 3 to our consolidated financial statements, certain businesses were classified as discontinued operations in fiscal year 2020. The discontinued operations classification has been retrospectively applied to fiscal years 2019 and 2018, but not fiscal years 2017 and 2016, which may affect comparability.
(1)
Includes amortization of deferred debt issuance costs.
(2)
Included in depreciation and amortization above.
(3)
Includes discontinued operations.
ITEM 7.

Explanation: Selected financial data and key metrics. Source: 868857_2020.htm (CIK: 868857, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


ITEM 1A. Risk Factors.
You should carefully consider the following factors and other information in this Annual Report on Form 10-K. Additional risks which we do not presently consider material, or of which we are not currently aware, may also have an adverse impact on us. Please also see “Important Factors Regarding Forward-Looking Statements” on page (ii).
Our financial condition and results of operations could be adversely affected by outbreaks of contagious disease such as the recent COVID-19 pandemic.
Our business could be adversely affected by a widespread outbreak of contagious disease, including the recent COVID-19 pandemic, resulting in business closures and a limit on consumer and employee travel across the globe. Any outbreak of contagious diseases, and other adverse public health developments, could have a material and adverse effect on our business operations. These could include disruptions or restrictions on our ability to travel, temporary closures of our stores and/or office buildings or the facilities of our wholesale customers or suppliers. We may also see disruptions or delays in shipments and negative impacts to pricing of certain components of our products. Further, any disruption of our customers or suppliers would likely impact our sales and operating results. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our end customers’ products and likely impact our operating results. The resulting economic downturn can also negatively impact our stock price.
As of the time of this filing, the impacts of the COVID-19 pandemic have been broad reaching, including impacts to our retail, wholesale and licensing businesses. The pandemic has had an impact on our business globally, with significant temporary store closures and materially lower store traffic at stores that remain open. The COVID-19 pandemic is also impacting the Asia region where we source most of our inventory. Temporary factory closures and the pace of workers returning to work could further impact our suppliers’ ability to source certain raw materials and to produce and fulfill finished goods orders in a timely manner. As of the date of this filing, we have also experienced modest impacts on deliveries, driven primarily by factory labor shortages and port congestion. However, the ability of our distribution and logistics providers to operate may be further impacted depending on the continued severity and duration of the pandemic and may have a significant impact on the cost and timing of receipts for future seasons. The occurrence of any of these events could further negatively impact our future consolidated financial position, results of operations and cash flows. There could be a prolonged impact on our business due to slow economic recovery or changes in consumer behavior. We currently anticipate that we will be able to satisfy our ongoing cash requirements during the next twelve months primarily with cash flow from operations and existing cash balances as supplemented by borrowings under our existing Credit Facility in the U.S. and Canada as well as bank facilities in Europe and China as needed. However, if we have sustained decrease in consumer demand related to the COVID-19 pandemic, we may require access to additional credit. There is no guarantee that we will be able to obtain additional credit or to extend or refinance our existing borrowing agreements, if needed. The results for the first quarter of fiscal 2021 as well as full fiscal 2021 could also be impacted in ways we are not able to predict today, including, but not limited to, non-cash write-downs and asset impairment charges (including impairments on property and equipment, operating lease right-of use assets and goodwill); unrealized gains or losses related to inv

Explanation: SEC filing risk factors section containing investment-relevant disclosures. Source: 912463_2020.htm (CIK: 912463, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


ITEM 6. SELECTED FINANCIAL DATA
(1)2017 includes Valspar financial results since June 1, 2017.
(2)2020 includes acquisition-related amortization expense of $304.5 million. 2019 includes acquisition-related costs of $389.3 million, non-cash trademark impairment charges of $122.1 million, domestic pension plan settlement expense of $32.4 million, as well as a Brazil indirect tax credit of $50.8 million and a benefit from the resolution of the California litigation of $34.7 million. 2018 includes acquisition-related costs of $484.4 million, environmental expense provisions of $167.6 million, California litigation expense of $136.3 million and domestic pension plan settlement expense of $37.6 million. 2017 includes acquisition-related costs of $488.6 million.
(3)2020 includes after-tax acquisition-related amortization expense of $230.0 million. 2019 includes after-tax acquisition-related costs of $299.6 million, after-tax trademark impairment charges of $93.1 million, tax credit investment loss of $74.3 million and after-tax domestic pension plan settlement expense of $25.0 million, partially offset by an after-tax Brazil indirect tax credit of $33.3 million and after-tax benefit from the resolution of the California litigation of $26.1 million. 2018 includes after-tax acquisition-related costs of $394.4 million, after-tax environmental expense provisions of $126.1 million, after-tax California litigation expense of $103.4 million and after-tax domestic pension plan settlement expense of $28.3 million. 2017 includes a one-time income tax benefit of $668.8 million from deferred income tax reductions resulting from the Tax Act (see Note 19 of Item 8) and includes after-tax acquisition-related costs of $329.4 million.
(4)Effective January 1, 2019, the Company adopted ASU 2016-02, “Leases” (ASC 842) using the modified retrospective transition method. As a result, total assets in 2020 and 2019 include operating lease right-of-use assets. See the Consolidated Balance Sheets and Note 8 in Item 8 for additional information.
(5)2020 includes a charge of $2.50 per share for acquisition-related amortization expense. 2019 includes charges of $3.21 per share for acquisition-related costs, $1.00 per share for non-cash trademark impairment charges, a tax credit investment loss of $0.79 per share and domestic pension plan settlement expense of $0.27 per share, partially offset by a Brazil indirect tax credit of $0.36 per share and a benefit from the resolution of the California litigation of $0.28 per share. 2018 includes charges of $4.15 per share for acquisition-related costs, $1.32 per share for environmental expense provisions, $1.09 per share for California litigation expense and $0.30 per share for domestic pension plan settlement expense. 2017 includes a one-time benefit of $7.04 per share from deferred income tax reductions resulting from the Tax Act (see Note 19 of Item 8) and a charge of $3.47 per share for acquisition-related costs.
(6)Based on net income and shareholders’ equity at beginning of year.
(7)Based on cash dividends per common share and prior year’s diluted net income per common share.
(8)Ratio of income before income taxes and interest expense to interest expense.
(9)Based on income before income taxes. 2017 excludes impact of one-time income tax benefit primarily related to the Tax Act (see Note 19 of Item 8).
(10)EBITDA is a non-GAAP measure which management believes enhances the understanding of the Company’s operating performance. See the Non-GAAP Financial Measures section within this Item 6 for additional information.
(11)See Note 1 to the Consolidated Financial Statements in Item 8 for additional information.
Non-GAAP Financial Measures
Management utilizes certain financial measures that are not in accordance with U.S. generally accepted accounting principles (US GAAP) to analyze and manage the performance of the business. The required disclosures for these non-GAAP measures are shown below. The Company provides suc

Explanation: SEC 10-K filing section containing tax-related disclosures. Tax references found: income tax, tax benefit, tax credit. Contains regulated financial information subject to SEC disclosure requirements.


ITEM 1A. RISK FACTORS
Investing in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information contained in this report, and in our other public filings in evaluating our business. Our business, financial condition, operating results, cash flow, and prospects could be materially and adversely affected by any of these risks or uncertainties. In that event, the market price of our common stock could decline and you could lose part or all of your investment.
Risks Related to our Business and Industry
The ongoing COVID-19 pandemic could materially and adversely affect our business, results of operations and financial condition.
In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, which continues to spread throughout the United States and the world and has resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns. While we are unable to accurately predict the full impact that COVID-19 will have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic and containment measures, our compliance with these measures has impacted our day-to-day operations and could disrupt our business and operations, as well as that of our marketers, FI partners, suppliers and others with whom we work, for an indefinite period of time. To support the health and well-being of our employees, marketers, FI partners and communities, our employees began working remotely in March 2020 and are still working from home. In addition, many of our marketers and prospective marketers, as well as our FI partners, are working remotely. The disruptions to our operations caused by COVID-19 may result in inefficiencies, delays and additional costs that we cannot fully mitigate through remote or other alternative work arrangements. In addition, given the economic uncertainty created by COVID-19, we have and may continue to see delays in our sales cycle, failures of marketers to renew at all or to renew at a reduced scope their agreements with us, requests from marketers for payment term deferrals as well as pricing concessions, which, if significant, could materially and adversely affect our business, results of operations and financial condition. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, its impact on industry events, and its effect on consumer spending, our marketers, FI partners, suppliers and vendors and other parties with whom we do business, all of which are uncertain and cannot be predicted at this time. To the extent possible, we are conducting business as usual, with necessary or advisable modifications to employee travel, employee work locations, and cancellation of marketing events. We will continue to actively monitor the rapidly evolving situation related to COVID-19 and may take actions that alter our business operations, including those that may be required by federal, foreign, state or local authorities, or that we determine are in the best interests of our employees, marketers, FI partners, suppliers, vendors and stockholders. At this point, the extent to which the COVID-19 pandemic may impact our business, results of operations and financial condition is uncertain.
More generally, the pandemic raises the possibility of an extended global economic downturn and has caused volatility in financial markets, which could materially and adversely affect demand for our solution and materially and adversely impact our results and financial condition even after the pandemic is contained and the shelter-in-place orders are lifted. For example, we may be unable to

Explanation: SEC filing risk factors section containing investment-relevant disclosures. Source: 1666071_2020.htm (CIK: 1666071, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


ITEM 6. SELECTED FINANCIAL DATA
(1)Includes non-cash impairment charges totaling $10,057 associated with our towable segment.
(2)Includes six months of the operations of the Erwin Hymer Group from the date of acquisition during the fiscal year.
(3)Includes a non-cash goodwill impairment charge of $9,113 associated with a subsidiary in our towable segment.
(4)Includes one month of the operations of Jayco from the date of its acquisition during the fiscal year.
ITEM 7.

Explanation: Selected financial data and key metrics. Source: 730263_2020.htm (CIK: 730263, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


ITEM 11. EXECUTIVE COMPENSATION
Information required by this item can be found in the sections entitled “Director Compensation,” “Compensation Committee Interlocks and Insider Participation in Compensation Decisions,” “Executive Compensation” and "Compensation Tables and Explanatory Information" of the Proxy Statement for the Company's 2021 Annual Meeting of Stockholders and is incorporated herein by reference.
ITEM 12.

Explanation: Executive compensation disclosures with financial details. Source: 1433660_2020.htm (CIK: 1433660, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


ITEM 11. EXECUTIVE COMPENSATION
Information required by Items 402 and 407(e)(4) and (e)(5) of Regulation S-K will be contained in and is hereby incorporated by reference to our definitive Proxy Statement for our 2021 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A promulgated by the SEC under the Exchange Act.
ITEM 12.

Explanation: Executive compensation disclosures with financial details. Source: 101984_2020.htm (CIK: 101984, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


Item 11. Executive Compensation
Compensation Discussion and Analysis
Other than the monthly payment of $10,000 to our sponsor for office space, administrative and support services, none of our executive officers or directors has received any cash (or non-cash) compensation for services rendered to us. Our sponsor, executive officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our independent directors, review on a quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates.
After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting, management or other fees from the combined company. All of these fees will be fully disclosed to shareholders, to the extent then known, in the tender offer materials or proxy solicitation materials furnished to our shareholders in connection with a proposed business combination. It is unlikely the amount of such compensation will be known at the time, because the directors of the post-combination business will be responsible for determining executive and director compensation. Any compensation to be paid to our officers will be determined by our compensation committee.
We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial business combination, although it is possible that some or all of our executive officers and directors may negotiate employment or consulting arrangements to remain with us after the initial business combination. For example, it is anticipated that Ms. Murphy and one other member of our board, will be elected as directors of the combined company in connection with the consummation of the Merger. The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the consummation of our initial business combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to any agreements with our executive officers and directors that provide for benefits upon termination of employment.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based upon its review and discussions, the Compensation Committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K for the year ended December 31, 2020.
Item 12.

Explanation: Executive compensation disclosures with financial details. Source: 1817944_2020.htm (CIK: 1817944, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk related to changes in interest rates. As of December 31, 2020, we had cash and cash equivalents of $47.6 million, consisting primarily of demand deposits with U.S. banking institutions. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our investments are in cash and cash equivalents. Due to the nature of our deposits and the low risk profile of our investments, an immediate 10% change in interest rates would not have a material effect on the fair market value of our deposits.
Item 8.

Explanation: Quantitative and qualitative market risk disclosures. Source: 1600132_2020.htm (CIK: 1600132, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion contains forward-looking statements, including, without limitation, our expectations and statements regarding our outlook and future revenues, expenses, results of operations, liquidity, plans, strategies and management objectives and any assumptions underlying any of the foregoing. Our actual results may differ significantly from those projected in the forward-looking statements. Our forward-looking statements and factors that might cause future actual results to differ materially from our recent results or those projected in the forward-looking statements include, but are not limited to, those discussed in the section titled “Forward-Looking Information” and “Risk Factors” of this Annual Report on Form 10-K. Except as required by law, we assume no obligation to update the forward-looking statements or our risk factors for any reason.
The following section generally discusses Fiscal Year 2020 and 2019 items and year-to-year comparisons between Fiscal Year 2020 and 2019, as well as certain Fiscal Year 2018 items. Discussions of Fiscal Year 2018 items and year-to-year comparisons between fiscal year 2019 and 2018 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2019.
Overview
We are a global leader in customer relationship management (“CRM”) technology that brings companies and customers together. We introduced our first CRM solution in 2000, and we have since expanded our service offerings with new editions, features and platform capabilities. Our core mission is to enable our customers of every size and industry to connect with their customers in new ways through existing and emerging technologies, including cloud, mobile, social, blockchain, voice and artificial intelligence (“AI”), to transform their businesses. Our Customer 360 platform unites sales, service, marketing, commerce, analytics and more to give our customers a single source of information about their customers.
Website references throughout this document are provided for convenience only, and the content on the referenced websites is not incorporated by reference into this report.
Highlights from the Fiscal Year 2020.
•Acquisitions: During fiscal 2020 we completed the acquisition of Tableau Software, Inc. ("Tableau") for $14.8 billion in common stock issued, cash and fair value of equity assumed, ClickSoftware Technologies Ltd. ("ClickSoftware") for $1.4 billion in cash, common stock issued and fair value of equity assumed, and Salesforce.org for $300 million in cash.
•Revenue: Total fiscal 2020 revenue was $17.1 billion, an increase of 29 percent year-over-year. Total fiscal 2020 revenues included approximately $228 million and $689 million of revenues from Salesforce.org and Tableau, respectively.
•Earnings per Share: Fiscal 2020 diluted earnings per share was $0.15, as compared to diluted earnings per share of $1.43 from a year ago.
•Cash: Total cash, cash equivalents and marketable securities ended the fiscal year at $7.9 billion. Cash provided by operations for fiscal 2020 was $4.3 billion, an increase of 27 percent year-over-year.
•Remaining Performance Obligation: Remaining performance obligation ended the fiscal year at approximately $30.8 billion, an increase of 20 percent year-over-year. Our remaining performance obligation includes approximately $450 million and $650 million related to the Salesforce.org business combination in June 2019 and the Tableau acquisition in August 2019, respectively. Current remaining performance obligation ended the fiscal year at approximately $15.0 billion, an increase of 26 percent year-over-year.
We continue to invest for future growth through focusing on multi-cloud adoption by our existing customers, growing our rela

Explanation: Management Discussion and Analysis section with financial performance data. Source: 1108524_2020.htm (CIK: 1108524, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References
in this Annual Report on Form 10-K to “we,” “us,” “our” or the “Company” refer
to Empower Ltd. References to our “management” or our “management team” refer to our officers and directors,
and references to the “sponsor” refer to Empower Sponsor Holdings LLC. The following discussion and analysis of the
Company’s financial condition and results of operations should be read in conjunction with our audited financial statements
and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this
Annual Report on Form 10-K. Certain information contained in the discussion and analysis set forth below includes forward-looking
statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of
many factors, including those set forth under “Special Note Regarding Forward-Looking Statements,” “Item 1A.
Risk Factors” and elsewhere in this Annual Report on Form 10-K.
Overview
We
are a blank check company incorporated in the Cayman Islands on August 19, 2020 formed for the purpose of effecting our initial
business combination We intend to effectuate our initial business combination using cash derived from the proceeds of the Initial
Public Offering and the sale of the private placement warrants, our shares, debt or a combination of cash, shares and debt.
We
expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to
complete our initial business combination will be successful.
Results
of Operations
We
have neither engaged in any operations nor generated any operating revenues to date. Our only activities from inception through
December 31, 2020 were organizational activities and those necessary to prepare for the Initial Public Offering, described below
and looking for a business combination. We do not expect to generate any operating revenues until after the completion of our
initial business combination. We expect to generate non-operating income in the form of interest income on marketable securities
held after the Initial Public Offering. We expect that we will incur increased expenses as a result of being a public company
(for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with
searching for, and completing, our initial business combination.
For
the period from August 19, 2020 (inception) through December 31, 2020, we had a net loss of $221,009, which consisted of formation
and operating costs of $273,915, offset by interest earned on marketable securities held in the trust account of $49,118 and an
unrealized gain on marketable securities held in the trust account of $3,788.
Liquidity
and Capital Resources
On October 9, 2020, we consummated the Initial Public Offering of 25,000,000 units, at a price of $10.00 per unit, generating gross proceeds of $250,000,000. After deducting underwriting fees of $5,000,000, we received net proceeds of $245,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 4,666,667 private placement warrants to the sponsor at a price of $1.50 per private placement warrant generating gross proceeds of $7,000,000. We incurred $465,163 of other offering costs, resulting in net cash provided by financing activities of $251,554,837 for the period from August 19, 2020 (inception) through December 31, 2020. Deferred underwriting costs of $8,750,000 were also incurred in connection with the Initial Public Offering, but are not payable until consummation of our initial business combination.
For the period from August 19, 2020 (inception) through December 31, 2020, cash used in investing activities was $250,000,000. Following the Initial Public Offering, and the sale of the private placement warrants, we invested $250,000,000 in the tru

Explanation: Management Discussion and Analysis section with financial performance data. Source: 1822928_2020.htm (CIK: 1822928, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


Item 6. SELECTED FINANCIAL DATA (1)
In millions, except per share amounts:
(a)Net earnings for the year ended December 31, 2020, includes goodwill and intangible asset impairment charges of $99.0 million (net of tax), predominantly related to the economic challenges stemming from the ongoing COVID-19 pandemic and the expected impacts on the future cash flows in our EMEA and Asia Pacific segments, as well as a $37.9 million loss on assets held for sale at December 31, 2020 related to our Qatar Metal Industries ("QMI") business.
(b)Net earnings for the year ended December 31, 2019, includes a $31.4 million (net of tax) loss related to the divestitures of our business operations in Colombia and Turkey.
(c)Net earnings for the year ended December 31, 2018, includes a $21.9 million tax benefit related to an adjustment to the provisional amounts previously recognized related to the enactment of the 2017 U.S. Tax Cuts and Jobs Act (the "Tax Reform Act").
(d)Net earnings for the year ended December 31, 2017, includes $44.7 million of costs related to the refinancing of our credit facilities and senior notes and a net tax charge of $53.5 million related to the Tax Reform Act.
(e)Net earnings for the year ended December 31, 2016, includes $84.4 million of losses related to our previously divested Systems Integration business.
(1) The Company has not restated 2016 - 2017 for the impact of the adoption of ASC Topic 606, "Revenue from Contracts with Customers" ("ASC 606") as of January 1, 2018, nor has the Company restated the Total assets for 2016 - 2018 for the impact of the adoption of ASC Topic 842, "Leases" as of January 1, 2019. The impact of excluding these standards in prior period presentation is not material.
Item 7.

Explanation: SEC 10-K filing section containing tax-related disclosures. Tax references found: tax benefit, tax reform. Contains regulated financial information subject to SEC disclosure requirements.


ITEM 8. Financial Statements and Supplementary Data
Crowe LLP
Independent Member Crowe Global
Report of Independent Registered Public Accounting Firm
Shareholders and the Board of Directors of
Esquire Financial Holdings, Inc.
Jericho, New York
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial condition of Esquire Financial Holdings, Inc. (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Crowe LLP
We have served as the Company’s auditor since 2006.
New York, New York
March 19, 2021
ESQUIRE FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
See accompanying notes to consolidated financial statements.
ESQUIRE FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
See accompanying notes to consolidated financial statements.
ESQUIRE FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
See accompanying notes to consolidated financial statements.
ESQUIRE FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Dollars in thousands)
See accompanying notes to consolidated financial statements.
ESQUIRE FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
See accompanying notes to consolidated financial statements.
ESQUIRE FINANCIAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2020 and 2019
(Dollars in thousands, except per share data)
NOTE 1

Explanation: Audited financial statements and supplementary data. Source: 1531031_2020.htm (CIK: 1531031, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.


ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Discussion of financial condition and liquidity for NSP-Minnesota is omitted per conditions set forth in general instructions I(1)(a) and (b) of Form 10-K for wholly owned subsidiaries. It is replaced with management’s narrative analysis and the results of operations for the current year as set forth in general instructions I(2)(a) of Form 10-K for wholly owned subsidiaries (reduced disclosure format).
Non-GAAP Financial Measures
The following discussion includes financial information prepared in accordance with GAAP, as well as certain non-GAAP financial measures such as, electric margin, natural gas margin, and ongoing earnings. Generally, a non-GAAP financial measure is a measure of a company’s financial performance, financial position or cash flows that excludes (or includes) amounts that are adjusted from measures calculated and presented in accordance with GAAP. NSP-Minnesota’s management uses non-GAAP measures for financial planning and analysis, for reporting of results to the Board of Directors, in determining performance-based compensation and communicating its earnings outlook to analysts and investors. Non-GAAP financial measures are intended to supplement investors’ understanding of our performance and should not be considered alternatives for financial measures presented in accordance with GAAP. These measures are discussed in more detail below and may not be comparable to other companies’ similarly titled non-GAAP financial measures.
Electric and Natural Gas Margins
Electric margin is presented as electric revenues less electric fuel and purchased power expenses. Natural gas margin is presented as natural gas revenues less the cost of natural gas sold and transported. Expenses incurred for electric fuel and purchased power and the cost of natural gas are generally recovered through various regulatory recovery mechanisms. As a result, changes in these expenses are generally offset in operating revenues.
Management believes electric and natural gas margins provide the most meaningful basis for evaluating our operations because they exclude the revenue impact of fluctuations in these expenses. These margins can be reconciled to operating income, a GAAP measure, by including other operating revenues, cost of sales-other, O&M expenses, conservation and DSM expenses, depreciation and amortization and taxes (other than income taxes).
Earnings Adjusted for Certain Items (Ongoing Earnings)
Ongoing earnings reflect adjustments to GAAP earnings (net income) for certain items.
We use these non-GAAP financial measures to evaluate and provide details of NSP-Minnesota’s core earnings and underlying performance. We believe these measurements are useful to investors to evaluate the actual and projected financial performance and contribution of NSP-Minnesota. For the years ended Dec. 31, 2020 and 2019, there were no adjustments to GAAP earnings and therefore GAAP earnings equal ongoing earnings.
Results of Operations
2020 Comparison with 2019
NSP-Minnesota’s net income was approximately $591 million for 2020, compared with approximately $543 million for 2019. The increase in earnings was driven by higher electric margin (riders, wholesale transmission revenue and a sales true-up mechanism, which reflects lower sales due to COVID-19) and lower O&M expenses, partially offset by increased depreciation and lower natural gas margin.
Electric Margin
Electric revenues and fuel and purchased power expenses are impacted by fluctuations in the price of natural gas, coal and uranium. However, these fluctuations have minimal impact on margin due to fuel recovery mechanisms. In addition, electric customers receive a credit for PTCs generated, which reduce electric revenue and margin (offset by lower tax expense).
Electric Revenues and Margin:
Changes in Electric Margin:
Natural Gas Margin
Natural gas expense varies with changing sales and cost of na


ITEM 11. EXECUTIVE COMPENSATION
Prosper Marketplace, Inc. - Compensation Discussion and Analysis
Overview
This section describes PMI's executive compensation objectives, compensation-setting process, executive compensation components and significant 2020 compensation decisions for PMI's named executive officers (“NEOs”). The compensation provided to PMI's NEOs for 2020 is set forth in detail in the Summary Compensation Table and other tables and the accompanying footnotes and narrative that follow this section.
PMI's named executive officers for 2020 are as follows:
•David Kimball, our Chief Executive Officer;
•Usama Ashraf, our Chief Financial Officer, and our President as of March 1, 2021;
•Nasos Topakas, our Chief Technology Officer;
•Julie Hwang, our General Counsel and Secretary; and
•Ashish Gupta, our Chief Credit Officer.
Executive Compensation Objectives
The objectives of PMI's executive compensation are to:
•attract, retain and motivate senior leaders who are capable of advancing PMI's mission and strategy and ultimately, creating and maintaining its long-term equity value;
•align the interests of PMI's executive officers with its stockholders’ long-term interests; and
•reward executive officers for their contributions to PMI's overall performance as well as for their individual performance.
Compensation-Setting Process
Role of Our Compensation Committee. The Compensation Committee has primary responsibility for overseeing all aspects of our executive compensation program, including evaluating and approving executive salaries, annual bonus awards and the size and structure of equity awards for PMI's executive officers, including the NEOs.
Role of Management. In setting 2020 compensation, PMI's Chief Executive Officer worked closely with the Compensation Committee in making recommendations and attending Committee meetings. Because of his daily involvement with PMI's executive team, the Chief Executive Officer was involved in the determination of compensation for all of PMI's executive officers other than himself. The Compensation Committee also delegated to the Chief Executive Officer the authority to make compensation decisions for senior management and executive officers (other than the Chief Executive Officer, Chief Financial Officer, President and Chief Operating Officer), subject to certain compensation limits set by the Compensation Committee.
Executive Compensation Components
PMI's executive compensation package includes: (1) base salary; (2) cash bonuses; and (3) long term incentives, generally in the form of cash and equity-based compensation, such as stock options and restricted stock units. PMI believes that this compensation mix supports its objective of attracting, motivating and retaining a talented and entrepreneurial executive team who will provide leadership for Prosper’s success in dynamic and competitive markets. PMI's compensation program is balanced among all three components in order to attract top talent and maximize retention, while ensuring that an appropriate portion of the executives’ compensation is tied to the Company's and its stockholders’ long-term interests.
Base Salary
Base salary is a fixed amount, and is not tied to any metric relating to the performance of PMI's business as a whole. The base salary of each executive officer is initially established in the executive officer's offer letter, and reviewed annually by the Compensation Committee. In determining base salaries for 2020, PMI's Compensation Committee together with the Chief Executive Officer considered the individual executive officer's scope of responsibilities, contributions, prior salary level and position (in case of a promotion), and financial and market conditions.
In light of the uncertainties related to the COVID-19 pandemic and its potential impact on the Company’s operations and financial results, in May 2020, PMI implemented temporary salary reductions for all employees with annualized base salaries greater than $1

Explanation: Executive compensation disclosures with financial details. Source: 1542574_2020.htm (CIK: 1542574, Year: 2020). Contains regulated financial information subject to SEC disclosure requirements.