RUWKHILVFDO\ HDUHQGHG ’ HFHP EHU
7DEOHRI &RQWHQWV
0 DUN 2 QH
8 1 , 7 ( ’ 67 $ 7 ( 6
6( &8 5 , 7 , ( 6 $ 1 ’ ( ; &+ $ 1 * ( &2 0 0 , 66, 2 1
: DVKLQJ WRQ ’ &
) 2 5 0 .
Œ $ QQXDO5 HSRUWSXUVXDQWWR 6HFWLRQ RU G RI WKH6HFXULWLHV( [ FKDQJ H$ FWRI
) RUWKHILVFDO\ HDUHQGHG ’ HFHP EHU
RU
Ł 7 UDQVLWLRQ UHSRUWSXUVXDQWWR 6HFWLRQ RU G RI WKH6HFXULWLHV( [ FKDQJ H$ FWRI
) RUWKHWUDQVLWLRQ SHULRG IURP WR
&RP P LVVLRQ ) LOH1 XP EHU
3$ 3$ - 2 + 1 ¶6 , 1 7 ( 5 1 $ 7 , 2 1 $ / , 1 &
( [ D F W Q D P H R I U H J L V W U D Q W D V V S H F
’ H OH D Z D U
6 W D W H R U R W K H U M X U L V G L F W L R Q, 5R I
6 ( P S O R \ H U
L Q F R U J SD R Q U L D] WD
LW RL QR Q
R U R U
, G H Q W L I L F D W L R Q 1 R
V 3 %D RS XD O H- YR DK UQ G¶
/ R X
.L HV QY WL XO
FO NH \
$ G G U H V V I L RF I H V S U L Q F L S D O H [ H F X W L Y H= L SR I & R G H
5 H VJ L VW WH UO DH QS LWK QR¶ F Q O H X G QL XQ PJ E HD UU H D F R G H
6 H F X U L W L H V U H$ ▇ ▇ LWV W H U H G S X U V X D Q W W R 6 H F W L R Q E
L 7 W O H R I ( ▇ ▇ ▇ & O D V V 7 U D G L Q J 6 \ P E R O V 1 D P H R I HH JDHL F GVK W HH U[ F K D Q J H
& R P P R Q 6 W R F N 3 = = $ S D U Y D O X H7 K H 1 $ 6 ’ $ 4 6 W R F N 0
6 H F X U L W L H V U H$ J F1LWRV QW HH U H G S X U V X D Q W W R 6 H F W L R Q J R
, QGLFDWHE\ FKHFNP DUNLI WKHUHJ LVWUDQWLVDZ HOONQRZ QVHDVRQHGLVVXHU DVGHILQHGLQ5 XOH RI WKH6HFXULWLHV$ FW<HVŒ 1 ▇▇
, QGLFDWHE\ FKHFNP DUNLI WKHUHJ LVWUDQWLVQRWUHTXLUHGWR ILOHUHSRUWVSXUVXDQWWR 6HFWLRQ RU6HFWLRQ G RI WKH$ FW<HVŁ 1 ▇▇
, QGLFDWHE\ FKHFNP ▇▇▇▇ KHWKHUWKHUHJ LVWUDQW KDVILOHGDOOUHSRUWVUHTXLUHGWR EHILOHGE\ 6HFWLRQ RU G RI WKH6HFXULWLHV( [ FKDQJ H$ FWRI GXULQJ WKHSUHFHGLQJ P RQWKV RUIRUVXFKVKRUWHUSHULRGWKDWWKH UHJ LVWUDQWZ DVUHTXLUHGWR ILOHVXFKUHSRUWV DQG KDVEHHQVXEMHFWWR VXFKILOLQJ UHTXLUHP HQWVIRUWKHSDVW GD\ V <HVŒ 1 ▇▇
, QGLFDWHE\ FKHFN P DUN Z KHWKHUWKHUHJ LVWUDQWKDVVXEP LWWHG HOHFWURQLFDOO\ HYHU\ , QWHUDFWLYH’ DWD) LOHUHTXLUHG WR EHVXEP LWWHG SXUVXDQWWR 5 XOH RI 5 HJ XODWLRQ 6 7 RI WKLVFKDSWHU GXULQJ WKHSUHFHGLQJ P RQWKV RUIRUVXFKVKRUWHUSHULRGWKDWWKHUHJ LVWUDQWZ DVUHTXLUHGWR VXEP LWVXFKILOHV <HVŒ 1 ▇▇
, QGLFDWHE\ FKHFNP ▇▇▇▇ KHWKHUWKHUHJ LVWUDQWLVDODUJ HDFFHOHUDWHGILOHU DQDFFHOHUDWHGILOHU DQRQ DFFHOHUDWHGILOHU DVP DOOHUUHSRUWLQJ FRP SDQ\ RUDQHP HUJ LQJ J URZ WKFRP SDQ\ 6HHWKHGHILQLWLRQVRI ‡ODUJ HDFFHOHUDWHG ILOHU· ‡DFFHOHUDWHGILOHU· ‡VP DOOHUUHSRUWLQJ FRP SDQ\ · DQG‡HP HUJ LQJ J URZ WKFRP SDQ\ · LQ5 XOH E RI WKH( [ FKDQJ H$ FW
/ DUJ HDFFHOHUDWHGILOHUŒ $ FFHOHUDWHGILOHUŁ
1 RQ DFFHOHUDWHGILOHU Ł 6P DOOHUUHSRUWLQJ FRP SDQ\ Ł
( P HUJ LQJ J URZ WKFRP SDQ\ Ł
, I DQ HP HUJ LQJ J URZ WK FRP SDQ\ LQGLFDWHE\ FKHFN P DUN LI WKH5 HJ LVWUDQWKDVHOHFWHG QRWWR XVHWKHH[ WHQGHG WUDQVLWLRQ SHULRG IRUFRP SO\ LQJ Z LWK DQ\ QHZ RUUHYLVHG ILQDQFLDODFFRXQWLQJ VWDQGDUGVSURYLGHG SXUVXDQWWR 6HFWLRQ D RI WKH( [ FKDQJ H$ FW Ł
, QGLFDWHE\ FKHFN P DUN Z KHWKHUWKHUHJ LVWUDQWKDVILOHG DUHSRUWRQ DQG DWWHVWDWLRQ WR LWVP DQDJ HP HQW¶VDVVHVVP HQWRI WKHHIIHFWLYHQHVVRI LWVLQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ XQGHU6HFWLRQ E RI WKH6DUEDQHV 2 [ OH\ $ FW 8 6 & E E\ WKHUHJ LVWHUHGSXEOLF DFFRXQWLQJ ILUP WKDWSUHSDUHGRULVVXHGLWVDXGLWUHSRUW Œ
, QGLFDWHE\ FKHFNP ▇▇▇▇ KHWKHUWKHUHJ LVWUDQWLVDVKHOOFRP SDQ\ DVGHILQHGLQ5 XOH E RI WKH$ FW <HVŁ 1 ▇▇
7 KHDJ J UHJ DWHP DUNHWYDOXHRI WKHFRP P RQVWRFNKHOGE\ QRQ DIILOLDWHVRI WKH5 HJ LVWUDQWFRP SXWHGE\ UHIHUHQFHWR WKHFORVLQJ VDOHSULFHRQ7 KH1 $ 6’ $ 4 6WRFN0 DUNHWDVRI WKHODVWEXVLQHVVGD\ RI WKH5 HJ LVWUDQW¶VP RVW UHFHQWO\ FRP SOHWHGVHFRQGILVFDOTXDUWHU -XQH Z DV
$ VRI ) HEUXDU\ WKHUHZ HUH VKDUHVRI WKH5 HJ LVWUDQW¶VFRP P RQVWRFNRXWVWDQGLQJ
’ 2 & 8 0 ( 1 7 6 7 ( ,’ 1 &5% 2( <)5 (3 52 ( 5 1 $ & (
3 R U W L R QV V
3 RU IR [ \W$ QK 6QH WX DD5 WOH HJ LP0 HVH QWH WUW$ DSL QUIQ RWLJ
UO¶
R IW K 6H W R F N K R O G DH UU HV
LW QR F R EU HS R KU HD OW
7$ %/ ( 2 ) &2 1 7 ( 1 7 6
3 ▇▇ ▇
3$ 5 7 ,
, WHP %XVLQHVV
, WHP $ 5 LVN) DFWRUV
, WHP % 8 QUHVROYHG6WDII &RP P HQWV
, WHP 3URSHUWLHV
, WHP / HJ DO3URFHHGLQJ V
, WHP 0 LQH6DIHW\ ’ LVFORVXUHV
3$ 5 7 , ,
, WHP 0 DUNHWIRU5 HJ LVWUDQW¶V&RP P RQ( TXLW\ 5 HODWHG6WRFNKROGHU0 DWWHUVDQG, VVXHU3XUFKDVHVRI
( TXLW\ 6HFXULWLHV
, WHP 6HOHFWHG) LQDQFLDO’ DWD
, WHP 0 DQDJ HP HQW¶V’ LVFXVVLRQDQG$ QDO\ VLVRI ) LQDQFLDO&RQGLWLRQDQG5 HVXOWVRI 2 SHUDWLRQV
, WHP $ 4 XDQWLWDWLYHDQG4 XDOLWDWLYH’ LVFORVXUHV$ ERXW0 DUNHW5 LVN
, WHP ) LQDQFLDO6WDWHP HQWVDQG6XSSOHP HQWDU\ ’ DWD
, WHP &KDQJ HVLQDQG’ LVDJ UHHP HQWVZ LWK$ FFRXQWDQWVRQ$ FFRXQWLQJ DQG) LQDQFLDO’ LVFORVXUH
, WHP $ &RQWUROVDQG3URFHGXUHV
, WHP % 2 WKHU, QIRUP DWLRQ
3$ 5 7 , , ,
, WHP ’ LUHFWRUV ( [ HFXWLYH2 IILFHUVDQG&RUSRUDWH* RYHUQDQFH
, WHP ( [ HFXWLYH&RP SHQVDWLRQ
, WHP 6HFXULW\ 2 Z QHUVKLS RI &HUWDLQ%HQHILFLDO2 Z QHUVDQG0 DQDJ HP HQWDQG5 HODWHG6WRFNKROGHU0 DWWHUV
, WHP &HUWDLQ5 HODWLRQVKLSVDQG5 HODWHG7 UDQVDFWLRQV DQG’ LUHFWRU, QGHSHQGHQFH
, WHP 3ULQFLSDO$ FFRXQWLQJ ) HHVDQG6HUYLFHV
3$ 5 7 , 9
, WHP ( [ KLELWV ) LQDQFLDO6WDWHP HQW6FKHGXOHV
3$ 5 7 ,
, WHP %XVLQHVV
* HQHUDO
3DSD -RKQ¶V, QWHUQDWLRQDO , QF ▇’ ▇▇▇▇ DUH FRUSRUDWLRQ UHIHUUHG WR DVWKH ‡&RP SDQ\ · ‡3DSD -RKQ¶V· RULQ WKH ILUVWSHUVRQ QRWDWLRQVRI
‡Z H· ‡XV· DQG ‡RXU· RSHUDWHVDQG IUDQFKLVHVSL] ] D GHOLYHU\ DQG FDUU\ RXWUHVWDXUDQWVDQG LQ FHUWDLQ LQWHUQDWLRQDOP DUNHWV GLQHLQ DQG GHOLYHU\ UHVWDXUDQWVXQGHUWKHWUDGHP DUN ‡3DSD-RKQ¶V· 3DSD-RKQ¶VEHJ DQ RSHUDWLRQVLQ $ W’ HFHP EHU WKHUHZ HUH
3DSD -RKQ¶VUHVWDXUDQWVLQ RSHUDWLRQ FRQVLVWLQJ RI &RP SDQ\ RZ QHG DQG IUDQFKLVHG UHVWDXUDQWVRSHUDWLQJ LQ FRXQWULHVDQG WHUULWRULHV 2 XU&RP SDQ\ RZ QHG UHVWDXUDQWVLQFOXGH UHVWDXUDQWVRSHUDWHG XQGHUIRXUMRLQWYHQWXUH DUUDQJ HP HQWV $ OORI WKH LQWHUQDWLRQDOUHVWDXUDQWVDUHIUDQFKLVHG
6WUDWHJ \
: HDUHFRP P LWWHGWR GHOLYHULQJ RQRXUEUDQGSURP LVH‡%( 7 7 ( 5 , 1 * 5 ( ’ , ( 1 7 6 %( 7 7 ( 5 3, ==$ · DQGDEXVLQHVVVWUDWHJ \ GHVLJ QHGWR GULYHVXVWDLQDEOHORQJ WHUP SURILWDEOHJ URZ WK
RQV
HV
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‡3DSDGLDV· IODWEUHDG VW\ OH VDQGZ LFK DQG -DODSHQR 3RSSHU5 ROOV IROORZ HG E\ ( SLF 6WXIIHG &UXVW3L] ] D LQ WKH ILUVWTXDUWHURI 1 HZ SURGXFWLQQRYDWLRQVDUH GHVLJ QHGWR LQFUHDVHVDOHVZ LWKRXWDGGLQJ FRVWVRUVLJ QLILFDQWRSHUDWLRQDOFRP SOH[ LW\ WR RXUUHVWDXUDQWV
: H XWLOL] H WHFKQRORJ \ WR GHOLYHUD EHWWHUFXVWRP HUH[ SHULHQFH LP SURYH RSHUDWLRQDOHIILFLHQFLHV DQG LQIRUP RXUGHFLVLRQ P DNLQJ 2 XU OR\ DOW\ DQGRQHWR RQHP DUNHWLQJ SODWIRUP VKHOS XVUHWDLQOR\ DOFXVWRP HUVDQGDWWUDFWQHZ RQHV : HDOVR SDUWQHUZ LWKWKUHHRI WKHIRXUWRS GRP HVWLF GHOLYHU\ DJ J UHJ DWRUVWR P HHWFXVWRP HUGHP DQGIRURXUSURGXFWV 7 KHQRYHOFRURQDYLUXV ‡&2 9 , ’ · SDQGHP LF KDVDFFHOHUDWHG FXVWRP HUGHP DQGIRURXUSURGXFWVWKURXJ KDOWHUQDWHGHOLYHU\ FKDQQHOV DQGWKHVHFKDQJ HVKDYHHQDEOHGXVWR P HHWFXVWRP HUGHP DQGGXULQJ WKHSDQGHP LF HVSHFLDOO\ GXULQJ SHDNWLP HVZ KHQRXUGHOLYHU\ WHDP VDUHZ RUNLQJ DWIXOOFDSDFLW\
: H FDUH DERXWWKH KHDOWK DQG VDIHW\ RI RXUWHDP P HP EHUVDQG FXVWRP HUV 7 KH &RP SDQ\ KDVWDNHQ VWHSVWR P LWLJ DWH WKH LP SDFWRI WKH &2 9 , ’ SDQGHP LF E\ LP SOHP HQWLQJ H[ WUDKHDOWKDQGVDIHW\ P HDVXUHVDFURVVRXUEXVLQHVV LQFOXGLQJ 1 R &RQWDFW’ HOLYHU\ DQGHQKDQFHG FOHDQLQJ DQGVDQLWL] DWLRQP HDVXUHV : HRIIHUHGYLUWXDOGRFWRU¶VYLVLWVIRUWHDP P HP EHUVDQGSDLGVSHFLDOERQXVHVWR P DQ\ RI RXUIURQWOLQH HP SOR\ HHVLQDGGLWLRQWR H[ LVWLQJ EHQHILWVVXFKDVQR FRVWP HQWDOKHDOWKVXSSRUWDQGDIIRUGDEOHKHDOWKSODQRSWLRQV
: HFRQWLQXH WR H[ SDQG RXUIRRWSULQWERWK GRP HVWLFDOO\ DQG LQWHUQDWLRQDOO\ 2 XUJ URZ WK LVGHSHQGHQWRQ P DLQWDLQLQJ D VWURQJ IUDQFKLVH V\ VWHP DQG LP SURYLQJ XQLWHFRQRP LFV : HVHHN WR DWWUDFWDQG UHWDLQ IUDQFKLVHHVZ LWK H[ SHULHQFHLQ UHVWDXUDQWRUUHWDLORSHUDWLRQVDQG Z LWK WKHILQDQFLDOUHVRXUFHVDQG P DQDJ HP HQWFDSDELOLW\ WR RSHQ VLQJ OHRUP XOWLSOHORFDWLRQV : KLOHHDFK 3DSD-RKQ¶VIUDQFKLVHHP DQDJ HVDQG RSHUDWHVLWVRZ QUHVWDXUDQWVDQGEXVLQHVV Z HGHYRWHVLJ QLILFDQWUHVRXUFHVWR SURYLGLQJ IUDQFKLVHHVZ LWKDVVLVWDQFHLQUHVWDXUDQWRSHUDWLRQV TXDOLW\ DVVXUDQFH WHFKQRORJ \ WUDLQLQJ P DUNHWLQJ VLWHVHOHFWLRQ DQG UHVWDXUDQWGHVLJ Q 7 KH&2 9 , ’ SDQGHP LF KDVQHJ DWLYHO\ LP SDFWHG RXUDELOLW\ WR RSHQ VWRUHV ERWK GRP HVWLFDOO\ DQG LQWHUQDWLRQDOO\ EXWZ H KDYH H[ SHQGHG DGGLWLRQDOUHVRXUFHVWR GULYH RXUGHYHORSP HQW HIIRUWVZ KHQWKHSDQGHP LF VXEVLGHV : HH[ SHFWRYHUDOOXQLWJ URZ WKWR FRP HLQFUHDVLQJ O\ IURP LQWHUQDWLRQDOP DUNHWV
2 XUVXFFHVVGHSHQGVRQRXUDELOLW\ WR UHFUXLWP RWLYDWHDQGUHWDLQDKLJ KO\ TXDOLILHGZ RUNIRUFHLQDQLQWHQVHO\ FRP SHWLWLYHHQYLURQP HQW: H EHOLHYHWKDWLQFUHDVLQJ GLYHUVLW\ LQRXUZ RUNIRUFHZ LOODOVR KHOS XVGULYHLQQRYDWLRQWKDWUHIOHFWVDQGUHVRQDWHVZ LWKWKHLQFUHDVLQJ GLYHUVLW\ RI RXUFXVWRP HUVGRP HVWLFDOO\ DQGJ OREDOO\
6HJ P HQW2 YHUYLHZ
3DSD-RKQ¶VKDVGHILQHG IRXUUHSRUWDEOHVHJ P HQWV ’ RP HVWLF &RP SDQ\ RZ QHG UHVWDXUDQWV 1 RUWK$ P HULFDFRP P LVVDULHV 4 XDOLW\ &RQWURO &HQWHUV 1 RUWK$ P HULFDIUDQFKLVLQJ DQG, QWHUQDWLRQDORSHUDWLRQV
’ RP HVWLF &RP SDQ\ RZQHG5 HVWDXUDQWV
7 KH’ RP HVWLF &RP SDQ\ RZ QHG UHVWDXUDQWVHJ P HQWFRQVLVWVRI WKHRSHUDWLRQVRI DOOGRP HVWLF &RP SDQ\ RZ QHG UHVWDXUDQWV ‡GRP HVWLF· LV GHILQHG DVWKH FRQWLJ XRXV8 QLWHG 6WDWHV DQG GHULYHVLWVUHYHQXHVSULQFLSDOO\ IURP UHWDLOVDOHVRI SL] ] D ‡3DSDGLDV· Z KLFK DUH IODWEUHDG VW\ OH VDQGZ LFKHV DQG VLGH LWHP V LQFOXGLQJ EUHDGVWLFNV FKHHVHVWLFNV FKLFNHQ SRSSHUV DQG Z LQJ V GHVVHUWLWHP V DQG FDQQHG RUERWWOHG EHYHUDJ HV
2 I WKHWRWDO 1 RUWK$ P HULFDQUHVWDXUDQWVRSHQDVRI ’ HFHP EHU XQLWV RUDSSUR[ LP DWHO\ Z HUH&RP SDQ\ RZ QHG , Q WKH GRP HVWLF &RP SDQ\ RZ QHG UHVWDXUDQWVLQFOXGHG LQ WKHIXOO\ HDU¶VFRP SDUDEOHUHVWDXUDQWEDVHJ HQHUDWHG DYHUDJ HDQQXDOXQLW
VDOHVRI P LOOLRQ : HDUHFRP P LWWHGWR P DLQWDLQLQJ VRXQGUHVWDXUDQWXQLWHFRQRP LFV
2 SHUDWLQJ &RP SDQ\ RZ QHG UHVWDXUDQWVDOORZ VXVWR LP SURYH RSHUDWLRQV WUDLQLQJ P DUNHWLQJ DQG TXDOLW\ VWDQGDUGVIRUWKH EHQHILWRI WKH HQWLUHV\ VWHP
1 RUWK$ P HULFDFRP P LVVDU\
7 KH 1 RUWK $ P HULFD FRP P LVVDU\ VHJ P HQWFRP SULVHV IXOOVHUYLFH UHJ LRQDOGRXJ K SURGXFWLRQ DQG GLVWULEXWLRQ 4 XDOLW\ &RQWURO&HQWHUV
‡4 & &HQWHUV· LQ WKH8 QLWHG 6WDWHV ‡8 6 · Z KLFK VXSSO\ SL] ] DVDXFH GRXJ K IRRG SURGXFWV SDSHUSURGXFWV VP DOOZ DUHVDQG FOHDQLQJ VXSSOLHVWZ LFHZ HHNO\ WR HDFK WUDGLWLRQDOUHVWDXUDQWVHUYHG 7 KLVV\ VWHP HQDEOHVXVWR P RQLWRUDQG FRQWUROSURGXFWTXDOLW\ DQG FRQVLVWHQF\ Z KLOHORZ HULQJ IRRGDQGRWKHUFRVWV : HDOVR KDYHRQH4 & &HQWHULQ&DQDGD Z KLFKSURGXFHVDQGGLVWULEXWHVIUHVKGRXJ K : HHYDOXDWHWKH 4 & &HQWHUV\ VWHP FDSDFLW\ LQ UHODWLRQ WR H[ LVWLQJ UHVWDXUDQWV¶ YROXP HV DQG SODQQHG UHVWDXUDQWJ URZ WK DQG IDFLOLWLHV DUH GHYHORSHG RU XSJ UDGHG DV RSHUDWLRQDORU HFRQRP LF FRQGLWLRQV Z DUUDQW7R HQVXUH FRQVLVWHQWIRRG TXDOLW\ HDFK GRP HVWLF IUDQFKLVHH LV UHTXLUHG WR SXUFKDVHGRXJ KDQGSL] ] DVDXFHIURP RXU4 & &HQWHUVDQGWR SXUFKDVHDOORWKHUVXSSOLHVIURP RXU4 & &HQWHUVRURWKHUDSSURYHGVXSSOLHUV
1 RUWK$ P HULFDIUDQFKLVLQJ
7 KH 1 RUWK $ P HULFD IUDQFKLVLQJ VHJ P HQWFRQVLVWVRI RXUIUDQFKLVH VDOHVDQG VXSSRUWDFWLYLWLHVDQG GHULYHVLWVUHYHQXHVIURP WKH VDOH RI IUDQFKLVHDQG GHYHORSP HQWULJ KWVDQG WKHFROOHFWLRQ RI UR\ DOWLHVIURP RXUIUDQFKLVHHVORFDWHG LQ WKH8 QLWHG 6WDWHVDQG &DQDGD 2 XU1 RUWK
$ P HULFDQ IUDQFKLVHG UHVWDXUDQWV Z KLFK LQFOXGHG UHVWDXUDQWVLQ WKHIXOO\ HDU¶VFRP SDUDEOHEDVHIRU J HQHUDWHG DYHUDJ HDQQXDO XQLWVDOHVRI P LOOLRQ 7 KHVH VDOHV Z KLOH QRWLQFOXGHG LQ WKH &RP SDQ\ ¶VUHYHQXHV FRQWULEXWH WR RXUUR\ DOW\ UHYHQXHV IUDQFKLVHH P DUNHWLQJ IXQGFRQWULEXWLRQV DQGFRP P LVVDU\ UHYHQXH
, QWHUQDWLRQDO
7 KH , QWHUQDWLRQDOVHJ P HQWSULQFLSDOO\ FRQVLVWVRI GLVWULEXWLRQ VDOHVWR IUDQFKLVHG 3DSD -RKQ¶VUHVWDXUDQWVORFDWHG LQ WKH 8 QLWHG . LQJ GRP
‡8 . · DQG RXUIUDQFKLVH VDOHV DQG VXSSRUWDFWLYLWLHV Z KLFK GHULYH UHYHQXHV IURP VDOHV RI IUDQFKLVH DQG GHYHORSP HQWULJ KWV DQG WKH FROOHFWLRQ RI UR\ DOWLHVIURP RXULQWHUQDWLRQDOIUDQFKLVHHV , QWHUQDWLRQDOIUDQFKLVHHVDUH GHILQHG DVDOOIUDQFKLVH RSHUDWLRQVRXWVLGH RI WKH 8 QLWHG6WDWHVDQG&DQDGD $ VRI ’ HFHP EHU WKHUHZ HUH LQWHUQDWLRQDOUHVWDXUDQWV DOORI Z KLFKDUHIUDQFKLVHG 7 KH&RP SDQ\ FXUUHQWO\ RSHUDWHVRQHLQWHUQDWLRQDO4 & &HQWHU Z KLFKLVLQWKH8 . 2 WKHU4 & &HQWHUVRXWVLGHWKH8 6 DUHRSHUDWHGE\ IUDQFKLVHHVSXUVXDQW WR OLFHQVHDJ UHHP HQWVRUE\ RWKHUWKLUGSDUWLHV
$ OORWKHUV
$ OORWKHUEXVLQHVVXQLWVWKDWGR QRWP HHWWKHTXDQWLWDWLYHWKUHVKROGVIRUGHWHUP LQLQJ UHSRUWDEOHVHJ P HQWV Z KLFKDUHQRWRSHUDWLQJ VHJ P HQWV Z HUHIHUWR DV‡DOORWKHUV· Z KLFKFRQVLVWVRI RSHUDWLRQVWKDWGHULYHUHYHQXHVIURP WKHVDOH SULQFLSDOO\
WR &RP SDQ\ RZ QHG DQG IUDQFKLVHG UHVWDXUDQWV RI SULQWLQJ DQG SURP RWLRQDO LWHP V IUDQFKLVH FRQWULEXWLRQV WR P DUNHWLQJ IXQGV DQG LQIRUP DWLRQ V\ VWHP VDQG UHODWHG VHUYLFHVXVHG LQ UHVWDXUDQWRSHUDWLRQV LQFOXGLQJ RXUSRLQWRI VDOH V\ VWHP RQOLQH DQG RWKHUWHFKQRORJ \ EDVHGRUGHULQJ SODWIRUP V
6HH‡0 DQDJ HP HQW¶V’ LVFXVVLRQ DQG$ QDO\ VLVRI ) LQDQFLDO&RQGLWLRQ DQG 5 HVXOWVRI 2 SHUDWLRQV· DQG ‡1 RWH · RI ‡1 RWHVWR &RQVROLGDWHG
) LQDQFLDO6WDWHP HQWV· IRUILQDQFLDOLQIRUP DWLRQDERXWRXUVHJ P HQWV ’ HYHORSP HQW
ULHV
$ W’ HFHP EHU WKHUHZ HUH 3DSD-RKQ¶VUHVWDXUDQWVRSHUDWLQJ LQ FRXQWULHVDQGWHUULWR DVIROORZ V
’ RP HVWLF &RP SDQ\ RZ QHG
) UDQFKLVHG 1 RUWK
$ P HULFD
7 RWDO1 RUWK
$ P HULFD , QWHUQDWLRQDO 6\ VWHP Z LGH
%HJ LQQLQJ ’ HFHP EHU 2 SHQHG
&ORVHG ( QGLQJ ’ HFHP EHU
1 HWXQLWJ URZ WK GHFOLQH
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
$ V RI ’ HFHP EHU Z H KDYH GHYHORSP HQWDJ UHHP HQWV Z LWK RXU IUDQFKLVHHV IRU DSSUR[ LP DWHO\ DGGLWLRQDO1 RUWK $ P HULFD UHVWDXUDQWV WKHP DMRULW\ RI Z KLFKDUHFRP P LWWHGWR RSHQRYHUWKHQH[ WWZ R \ HDUV DQG DGGLWLRQDOLQWHUQDWLRQDOIUDQFKLVHGUHVWDXUDQWV WKHP DMRULW\ RI Z KLFKDUHVFKHGXOHGWR RSHQRYHUWKHQH[ WVL[ \ HDUV
) UDQFKLVH3 URJ UDP
: HFRQWLQXHWR DWWUDFWTXDOLILHG DQG H[ SHULHQFHG IUDQFKLVHHV Z KRP Z HFRQVLGHUWR EHDYLWDOSDUWRI RXUV\ VWHP ¶VFRQWLQXHG J URZ WK : H EHOLHYH RXUUHODWLRQVKLS Z LWK RXUIUDQFKLVHHVLVIXQGDP HQWDOWR WKH SHUIRUP DQFH RI RXUEUDQG DQG Z H VWULYH WR P DLQWDLQ D FROODERUDWLYH UHODWLRQVKLS Z LWK RXUIUDQFKLVHHV ) UDQFKLVHHV DUH DSSURYHG RQ WKH EDVLV RI WKH DSSOLFDQW¶V EXVLQHVV EDFNJ URXQG UHVWDXUDQWRSHUDWLQJ H[ SHULHQFHDQGILQDQFLDOUHVRXUFHV
1 RUWK$ P HULFD’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¶V0 DUNHWLQJ ) XQG ‡3-0 ) ·
2 YHUWKHSDVWVHYHUDO\ HDUV Z HKDYHRIIHUHGYDULRXVGHYHORSP HQWLQFHQWLYHSURJ UDP VIRUGRP HVWLF IUDQFKLVHHVWR DFFHOHUDWHXQLWRSHQLQJ V
6XFK LQFHQWLYHVLQFOXGHG WKH IROORZ LQJ IRU WUDGLWLRQDORSHQLQJ V Z DLYHURI DOORUSDUWRI WKH VWDQGDUG RQHWLP H IUDQFKLVH IHH Z DLYHURI DOORUSDUWRI WKH UR\ DOW\ IHHIRUDSHULRGRI WLP H FUHGLWIRUQHZ VWRUHHTXLSP HQWDQG FUHGLWWR EHDSSOLHGWRZ DUGD IXWXUH IRRG SXUFKDVH XQGHUFHUWDLQ FLUFXP VWDQFHV : HEHOLHYH GHYHORSP HQWLQFHQWLYH SURJ UDP VKDYH DFFHOHUDWHG XQLWRSHQLQJ V DQG Z H
H[ SHFWWR FRQWLQXHWR XWLOL] HVXFKGHYHORSP HQWLQFHQWLYHV
6XEVWDQWLDOO\ DOOH[ LVWLQJ IUDQFKLVHDJ UHHP HQWVKDYHDQLQLWLDO \ HDUWHUP Z LWKD \ HDUUHQHZ DORSWLRQ : HKDYHWKHULJ KWWR WHUP LQDWHD IUDQFKLVH DJ UHHP HQWIRUD YDULHW\ RI UHDVRQV LQFOXGLQJ D IUDQFKLVHH¶V IDLOXUH WR P DNH SD\ P HQWV Z KHQ GXH RUIDLOXUH WR DGKHUH WR RXU RSHUDWLRQDOSROLFLHVDQGVWDQGDUGV 0 DQ\ VWDWHIUDQFKLVHODZ VOLP LWRXUDELOLW\ DVDIUDQFKLVRUWR WHUP LQDWHRUUHIXVHWR UHQHZ DIUDQFKLVH
, QWHUQDWLRQDO’ HYHORSP HQWDQG ) UDQFKLVH $ J UHHP HQWV , Q LQWHUQDWLRQDOP DUNHWV Z H KDYH HLWKHUD GHYHORSP HQWDJ UHHP HQWRUD P DVWHU IUDQFKLVHDJ UHHP HQWZ LWK DIUDQFKLVHHIRUWKHRSHQLQJ RI DVSHFLILHG QXP EHURI UHVWDXUDQWVZ LWKLQ DGHILQHG SHULRG RI WLP HDQG VSHFLILHG J HRJ UDSKLF DUHD 8 QGHUDP DVWHUIUDQFKLVHDJ UHHP HQWWKHIUDQFKLVHHKDVWKHULJ KWWR VXE IUDQFKLVHDSRUWLRQ RI WKHGHYHORSP HQWWR RQHRU P RUHVXE IUDQFKLVHHVDSSURYHGE\ XV
2 XUFXUUHQWVWDQGDUGLQWHUQDWLRQDOP DVWHUIUDQFKLVHDQGGHYHORSP HQWDJ UHHP HQWVSURYLGHIRUSD\ P HQWWR XVRI DUR\ DOW\ IHHRI RI VDOHV
) RULQWHUQDWLRQDOP DUNHWVZ LWK VXE IUDQFKLVHDJ UHHP HQWV WKHHIIHFWLYHVXE IUDQFKLVHUR\ DOW\ UHFHLYHG E\ WKH&RP SDQ\ LVJ HQHUDOO\ RI VDOHVDQG WKHP DVWHUIUDQFKLVHHJ HQHUDOO\ UHFHLYHVDUR\ DOW\ RI RI VDOHV 7 KHUHP DLQLQJ WHUP VDSSOLFDEOHWR WKHRSHUDWLRQ RI LQGLYLGXDO UHVWDXUDQWVDUHVXEVWDQWLDOO\ HTXLYDOHQWWR WKHWHUP VRI RXUGRP HVWLF IUDQFKLVHDJ UHHP HQW’ HYHORSP HQWDJ UHHP HQWVZ LOOEHQHJ RWLDWHG DW RWKHUWKDQ VWDQGDUGWHUP VIRUIHHVDQGUR\ DOWLHV DQGZ HP D\ RIIHUYDULRXVGHYHORSP HQWDQGUR\ DOW\ LQFHQWLYHVWR KHOS GULYHQHWXQLWJ URZ WK DQGUHVXOWV
) UDQFKLVH2 SHUDWLRQV $ OOIUDQFKLVHHVDUHUHTXLUHG WR RSHUDWHWKHLU3DSD-RKQ¶VUHVWDXUDQWVLQ FRP SOLDQFHZ LWK RXUSROLFLHV VWDQGDUGVDQG VSHFLILFDWLRQV LQFOXGLQJ P DWWHUVVXFKDVP HQXLWHP V LQJ UHGLHQWV DQGUHVWDXUDQWGHVLJ Q ) UDQFKLVHHVKDYHIXOOGLVFUHWLRQLQKXP DQUHVRXUFH SUDFWLFHV DQG J HQHUDOO\ KDYHIXOOGLVFUHWLRQ WR GHWHUP LQHWKHSULFHVWR EHFKDUJ HG WR FXVWRP HUV EXWZ HJ HQHUDOO\ KDYHWKHDXWKRULW\ WR VHW P D[ LP XP SULFHSRLQWVIRUQDWLRQDOO\ DGYHUWLVHGSURP RWLRQV
) UDQFKLVHH/ RDQV 6HOHFWHGGRP HVWLF DQGLQWHUQDWLRQDOIUDQFKLVHHVKDYHERUURZ HGIXQGVIURP XV SULQFLSDOO\ IRUWKHSXUFKDVHRI UHVWDXUDQWV IURP XVRURWKHUIUDQFKLVHHVRU LQ FHUWDLQ LQWHUQDWLRQDOP DUNHWV IRUFRQVWUXFWLRQ DQG GHYHORSP HQWRI QHZ UHVWDXUDQWV / RDQVP DGH WR IUDQFKLVHHVFDQEHDULQWHUHVWDWIL[ HGRUIORDWLQJ UDWHVDQGLQP RVWFDVHVDUHVHFXUHGE\ WKHIL[ WXUHV HTXLSP HQWDQGVLJ QDJ HRI WKHUHVWDXUDQW DQGRUDUHJ XDUDQWHHGE\ WKHIUDQFKLVHRZ QHUV $ W’ HFHP EHU QHWORDQVRXWVWDQGLQJ WRWDOHG P LOOLRQ 6HH‡1 RWH · RI ‡1 RWHV WR &RQVROLGDWHG) LQDQFLDO6WDWHP HQWV· IRUDGGLWLRQDOLQIRUP DWLRQ
0 DUNHWLQJ 3 URJ UDP V
2 XUGRP HVWLF P DUNHWLQJ VWUDWHJ \ FRQVLVWVRI ERWK QDWLRQDODQG ORFDOFRP SRQHQWV 2 XUQDWLRQDOVWUDWHJ \ LQFOXGHVQDWLRQDODGYHUWLVLQJ YLD WHOHYLVLRQ SULQW GLUHFWP DLO GLJ LWDO P RELOH P DUNHWLQJ DQG VRFLDO P HGLD FKDQQHOV 2 XU GLJ LWDO P DUNHWLQJ DFWLYLWLHV KDYH LQFUHDVHG VLJ QLILFDQWO\ RYHU WKH SDVWVHYHUDO\ HDUV LQ UHVSRQVH WR LQFUHDVLQJ FXVWRP HU XVH RI RQOLQH DQG P RELOH WHFKQRORJ \ / RFDODGYHUWLVLQJ SURJ UDP VLQFOXGHWHOHYLVLRQ UDGLR SULQWGLUHFWP DLOVWRUHWR GRRUIO\ HUV GLJ LWDOP RELOHP DUNHWLQJ DQGORFDOVRFLDOP HGLDFKDQQHOV
’ RP HVWLF &RP SDQ\ RZ QHG DQG IUDQFKLVHG 3DSD -RKQ¶VUHVWDXUDQWVZ LWKLQ D GHILQHG P DUNHWP D\ EH UHTXLUHG WR MRLQ DQ DUHD DGYHUWLVLQJ FRRSHUDWLYH ‡&R RS· ( DFK P HP EHU UHVWDXUDQWFRQWULEXWHV D SHUFHQWDJ H RI VDOHV WR WKH &R RS IRU P DUNHWZ LGH SURJ UDP V VXFK DV WHOHYLVLRQ UDGLR GLJ LWDODQG SULQWDGYHUWLVLQJ DQG VSRUWV VSRQVRUVKLSV 7 KH UDWH RI FRQWULEXWLRQ DQG XVHV RI WKH P RQLHV FROOHFWHG DUH GHWHUP LQHGE\ DP DMRULW\ YRWHRI WKH&R RS¶VP HP EHUV
7 KH UHVWDXUDQWOHYHODQG &R RS P DUNHWLQJ HIIRUWV DUH VXSSRUWHG E\ P HGLD SULQWGLJ LWDODQG HOHFWURQLF DGYHUWLVLQJ P DWHULDOV WKDWDUH SURGXFHG E\ 3-0 ) RXUQDWLRQDOP DUNHWLQJ IXQG 3-0 ) LVDFRQVROLGDWHG QRQVWRFN FRUSRUDWLRQ GHVLJ QHG WR RSHUDWHDWEUHDN HYHQ IRUWKH SXUSRVH RI GHVLJ QLQJ DQG DGP LQLVWHULQJ DGYHUWLVLQJ DQG SURP RWLRQDOSURJ UDP VIRUDOOSDUWLFLSDWLQJ GRP HVWLF UHVWDXUDQWV 3-0 ) SURGXFHV DQG EX\ VDLUWLP HIRU3DSD-RKQ¶VQDWLRQDOWHOHYLVLRQ FRP P HUFLDOVDQG DGYHUWLVHVWKH&RP SDQ\ ¶VSURGXFWVWKURXJ K GLJ LWDOP HGLDLQFOXGLQJ EDQQHUDGYHUWLVLQJ SDLG VHDUFK HQJ LQHDGYHUWLVLQJ P RELOHP DUNHWLQJ VRFLDOP HGLDDGYHUWLVLQJ DQG P DUNHWLQJ WH[ WP HVVDJ LQJ DQG HP DLO 3-0 ) DOVR HQJ DJ HVLQRWKHUEUDQG EXLOGLQJ DFWLYLWLHV VXFKDVFRQVXP HUUHVHDUFKDQGSXEOLF UHODWLRQVDFWLYLWLHV ’ RP HVWLF &RP SDQ\ RZ QHG DQGIUDQFKLVHG3DSD-RKQ¶VUHVWDXUDQWVDUHUHTXLUHGWR FRQWULEXWHDFHUWDLQP LQLP XP SHUFHQWDJ HRI VDOHVWR 3-0 )
, Q LQWHUQDWLRQDOP DUNHWV RXUP DUNHWLQJ IRFXVHVRQ UHDFKLQJ FXVWRP HUVZ KR OLYHRUZ RUN Z LWKLQ DVP DOOUDGLXVRI D3DSD-RKQ¶VUHVWDXUDQW 2 XULQWHUQDWLRQDOP DUNHWVXVHDFRP ELQDWLRQRI DGYHUWLVLQJ VWUDWHJ LHV LQFOXGLQJ WHOHYLVLRQ UDGLR SULQWGLJ LWDO P RELOHP DUNHWLQJ DQGORFDO VRFLDOP HGLDGHSHQGLQJ RQWKHVL] HRI WKHORFDOP DUNHW
+ XP DQ &DSLWDO
2 XU WHDP P HP EHUV DUH FULWLFDOWR RXU VXFFHVV $ V RI ’ HFHP EHU Z H HP SOR\ HG DSSUR[ LP DWHO\ SHUVRQV RI Z KRP DSSUR[ LP DWHO\ Z HUHWHDP P HP EHUVDW&RP SDQ\ RZ QHG UHVWDXUDQWV DSSUR[ LP DWHO\ Z HUHP DQDJ HP HQWSHUVRQQHODW&RP SDQ\ RZ QHG UHVWDXUDQWV DSSUR[ LP DWHO\ Z HUHFRUSRUDWHSHUVRQQHODQG DSSUR[ LP DWHO\ Z HUH4 & &HQWHUDQG RXUSULQWDQG SURP RWLRQV VXEVLGLDU\ SHUVRQQHO0 RVWUHVWDXUDQWWHDP P HP EHUVZ RUNSDUWWLP HDQGDUHSDLGRQDQKRXUO\ EDVLV
W
2 XUIUDQFKLVHHVDUHLQGHSHQGHQWEXVLQHVVRZ QHUV VR WKHLUHP SOR\ HHVDUHQRWRXUHP SOR\ HHVDQGWKHUHIRUHDUHQRWLQFOXGHGLQRXUHP SOR\ HH FRXQ : HHVWLP DWHWKHWRWDOQXP EHURI SHUVRQVLQ3DSD-RKQ¶VV\ VWHP LQFOXGLQJ RXUWHDP P HP EHUV IUDQFKLVHHVDQGWKHWHDP P HP EHUVRI IUDQFKLVHHV Z DVDSSUR[ LP DWHO\ DVRI ’ HFHP EHU
’ LYHUVLW\ ( TXLW\ DQG, QFOXVLRQ
2 XUFRP P LWP HQWWR GLYHUVLW\ HTXLW\ DQGLQFOXVLRQLVURRWHGLQRXUEHOLHI WKDWKDYLQJ D3DSD-RKQVIDP LO\ WKDWIXOO\ UHIOHFWVDQGFHOHEUDWHV WKHJ OREDOQDWXUHRI RXUEUDQGLVWKHULJ KWZ D\ WR GR EXVLQHVV
: H DUH EXLOGLQJ D FXOWXUH RI OHDGHUVZ KR EHOLHYH LQ LQFOXVLYLW\ GLYHUVLW\ DQG Z LQQLQJ : H¶UH LP SOHP HQWLQJ LQLWLDWLYHVWR GLYHUVLI\ RXU Z RUNIRUFH DQG OHDGHUVKLS SLSHOLQH HP EHG SROLFLHV DQG SUDFWLFHV WKDWHQVXUH IDLUQHVV DQG LQVWLOO DQG UHZ DUG EHKDYLRUV DFURVV WKH RUJ DQL] DWLRQWKDWIRVWHUEHORQJ LQJ DQGLQFUHDVHHP SOR\ HHHQJ DJ HP HQW2 XWRI WKH P HP EHUVRI RXU( [ HFXWLYH/ HDGHUVKLS 7HDP IRXUDUH IHP DOH RQHLV/ HVELDQ * D\ %LVH[ XDO7 UDQVJ HQGHU4 XHHURU4 XHVWLRQLQJ ‡/ * %7 4 · DQG WZ R DUH%ODFN : HKDYHDOVR LQLWLDWHG P XOWLSOH FRUSRUDWH LQLWLDWLYHV RYHUWKH SDVWVHYHUDO\ HDUV 6RP H H[ DP SOHV DUH RXUDIIRUGDEOH KHDOWKFDUH SODQV DQG IUHH YLUWXDOKHDOWKFDUH YLVLWV DYDLODEOHWR DOOSDUWWLP HDQG IXOOWLP HWHDP P HP EHUV WKHODXQFK RI 7 KH3DSD-RKQ¶V) RXQGDWLRQ IRU%XLOGLQJ &RP P XQLW\ RXULQDXJ XUDO ’ D\ RI 6HUYLFHZ LWK%R\ VDQG* LUOV&OXEVRI $ P HULFD DQGWKHFUHDWLRQRI HLJ KWHP SOR\ HHUHVRXUFHDIILQLW\ J URXSV
7DOHQW$ WWUDFWLRQ 5 HWHQWLRQDQG’ HYHORSP HQW
7R KHOS RXUWHDP P HP EHUVVXFFHHG LQ WKHLUUROHVDQG WR HQVXUH FRQVLVWHQWRSHUDWLRQDOH[ HFXWLRQ Z H HP SKDVL] HFRQWLQXRXVWUDLQLQJ DQG GHYHORSP HQWRSSRUWXQLWLHV LQFOXGLQJ SURYLGLQJ LQQRYDWLYH WRROV DQG P DWHULDOV IRU WKH RSHUDWLRQDOWUDLQLQJ DQG GHYHORSP HQWRI WHDP
P HP EHUV 2 SHUDWLRQVSHUVRQQHOFRP SOHWH RXUP DQDJ HP HQWWUDLQLQJ SURJ UDP DQG RQJ RLQJ GHYHORSP HQWSURJ UDP V LQFOXGLQJ P XOWLXQLW WUDLQLQJ LQ Z KLFK LQVWUXFWLRQ LVJ LYHQ RQ DOODVSHFWVRI RXUV\ VWHP VDQG RSHUDWLRQV , Q DGGLWLRQ WR IXUWKHUVXSSRUWRXUWHDP P HP EHUV¶ GHYHORSP HQWZ HKDYHHVWDEOLVKHGRXU’ RXJ K ’ HJ UHHVSURJ UDP Z KLFKDOORZ VRXUWHDP P HP EHUVWR HDUQDFROOHJ HGHJ UHHIRUIUHHRUDWD UHGXFHG WXLWLRQ LQ SDUWQHUVKLS Z LWK 3XUGXH 8 QLYHUVLW\ * OREDODQG WKH 8 QLYHUVLW\ RI 0 DU\ ODQG * OREDO&DP SXV : H DOVR RIIHUD WXLWLRQ UHLP EXUVHP HQWSURJ UDP WKDWSURYLGHVDQRWKHURSSRUWXQLW\ IRURXUWHDP P HP EHUVWR DGYDQFHWKHLUFDUHHUV : HDOVR SUHYLRXVO\ DQQRXQFHG WKHSODQQHG RSHQLQJ RI DQRIILFHLQ$ WODQWD * HRUJ LDWR WDS LQWR WKHGLYHUVH GHHS WDOHQWSRROLQWKHUHJ LRQ
: RUNSODFH+ HDOWK DQG 6DIHW\
$ VSDUWRI WKH &RP SDQ\ ¶VHQWHUSULVHZ LGH VDIHW\ P DQDJ HP HQWV\ VWHP Z H LQYHVWLQ WUDLQLQJ WHFKQRORJ \ DQG SHRSOH WR SURWHFWERWK RXU FXVWRP HUVDQG WHDP P HP EHUV $ OO3DSD -RKQ¶VWHDP P HP EHUV IURP WKRVH DWRXUFRUSRUDWH RIILFH WR WKRVH Z RUNLQJ LQ RXUZ DUHKRXVHV DQGUHVWDXUDQWV UHFHLYHDQQXDOVDIHW\ WUDLQLQJ EDVHGRQWKHUHTXLUHP HQWVRI WKHLUUROHV %RWK4 & &HQWHUVDQGUHVWDXUDQWRSHUDWLRQVXQGHUJ R DQQXDOVDIHW\ DXGLWV DVZ HOODVUDQGRP VDIHW\ FKHFNVE\ UHJ LRQDOVDIHW\ P DQDJ HUVDQGILHOGVDIHW\ FRRUGLQDWRUV
: H KDYH DOVR WDNHQ VWHSVWR P LWLJ DWH WKH LP SDFWRI WKH &2 9 , ’ SDQGHP LF RQ RXUWHDP P HP EHUVDQG RXUFXVWRP HUVE\ LP SOHP HQWLQJ H[ WUDKHDOWKDQGVDIHW\ P HDVXUHVDFURVVRXUEXVLQHVV LQFOXGLQJ 1 R&RQWDFW’ HOLYHU\ DQGHQKDQFHGFOHDQLQJ DQGVDQLWL] DWLRQP HDVXUHV
, QGXVWU\ DQG &RP SHWLWLRQ
7 KH8 QLWHG 6WDWHV4 XLFN 6HUYLFH5 HVWDXUDQWSL] ] D ‡4 65 3L] ] D· LQGXVWU\ LVP DWXUHDQG KLJ KO\ FRP SHWLWLYHZ LWK UHVSHFWWR SULFH VHUYLFH ORFDWLRQ IRRG TXDOLW\ FXVWRP HUOR\ DOW\ SURJ UDP VDQG SURGXFWLQQRYDWLRQ 7 KH4 65 3L] ] DFDWHJ RU\ LVODUJ HO\ IUDJ P HQWHG DQG FRP SHWLWRUV LQFOXGHLQWHUQDWLRQDO QDWLRQDODQGUHJ LRQDOFKDLQV DVZ HOODVDODUJ HQXP EHURI ORFDOLQGHSHQGHQWSL] ] DRSHUDWRUV DQ\ RI Z KLFKFDQXWLOL] H DJ URZ LQJ QXP EHURI IRRG GHOLYHU\ VHUYLFHV 6RP HRI RXUFRP SHWLWRUVKDYHEHHQ LQ H[ LVWHQFHIRUVXEVWDQWLDOO\ ORQJ HUSHULRGVWKDQ 3DSD
-RKQ¶V KDYH VXEVWDQWLDOO\ J UHDWHUUHVRXUFHV WKDQ 3DSD -RKQ¶V DQG FDQ KDYH KLJ KHUOHYHOV RI UHVWDXUDQWSHQHWUDWLRQ DQG VWURQJ ▇▇ ▇ ▇▇▇ GHYHORSHG EUDQG DZ DUHQHVV LQ P DUNHWV Z KHUH Z H FRP SHWH &RP SHWLWLRQ IURP GHOLYHU\ DJ J UHJ DWRUV DQG RWKHU IRRG GHOLYHU\ FRQFHSWV FRQWLQXHVWR LQFUHDVHERWKGRP HVWLFDOO\ DQGLQWHUQDWLRQDOO\
: LWK UHVSHFWWR WKHVDOHRI IUDQFKLVHV Z HFRP SHWHZ LWK P DQ\ IUDQFKLVRUVRI UHVWDXUDQWVDQG RWKHUEXVLQHVVFRQFHSWV 7 KHUHLVDOVR DFWLYH FRP SHWLWLRQ IRUP DQDJ HP HQWSHUVRQQHO GULYHUVDQG KRXUO\ WHDP P HP EHUV DQG DWWUDFWLYH FRP P HUFLDOUHDOHVWDWH VLWHVVXLWDEOH IRU3DSD
-RKQ¶VUHVWDXUDQWV
* RYHUQP HQW5 HJ XODWLRQ
: H DORQJ Z LWK RXUIUDQFKLVHHV DUHVXEMHFWWR YDULRXVIHGHUDO VWDWH ORFDODQG LQWHUQDWLRQDOODZ VDIIHFWLQJ WKHRSHUDWLRQ RI RXUUHVSHFWLYH EXVLQHVVHV LQFOXGLQJ ODZ VDQGUHJ XODWLRQVUHODWHGWR RXUP DUNHWLQJ DQGDGYHUWLVLQJ DVZ HOODVWKHSUHSDUDWLRQDQGVDOHRI IRRG IRRGVDIHW\ DQG P HQX ODEHOLQJ ( DFK 3DSD -RKQ¶VUHVWDXUDQWLVVXEMHFWWR OLFHQVLQJ DQG UHJ XODWLRQ E\ D QXP EHURI J RYHUQP HQWDODXWKRULWLHV Z KLFK LQFOXGH ] RQLQJ KHDOWK VDIHW\ VDQLWDWLRQ EXLOGLQJ DQG ILUH DJ HQFLHV LQ WKH VWDWH RU P XQLFLSDOLW\ LQ Z KLFK WKH UHVWDXUDQWLV ORFDWHG ’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▇▇ ▇ UHTXLUHP HQWV EHQHILWV WD[ DWLRQ Z RUNLQJ FRQGLWLRQV FLWL] HQVKLS UHTXLUHP HQWV DQGRYHUWLP H
: HDUHVXEMHFWWR ) HGHUDO7 UDGH&RP P LVVLRQ ‡) 7 &·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‡OLYLQJ Z ▇▇ ▇· RU RWKHUFXUUHQWRUSURSRVHG UHJ XODWLRQV DQG LQFUHDVHVLQ P LQLP XP Z ▇▇ ▇ UDWHVDIIHFW3DSD -RKQ¶VDVZ HOODVRWKHUVZ LWKLQ WKH UHVWDXUDQW LQGXVWU\ : HDUHDOVR VXEMHFWWR DSSOLFDEOHODZ VLQHDFKQRQ 8 6 MXULVGLFWLRQLQZ KLFKZ HRSHUDWH
3 ULYDF\ DQG ’ DWD3 URWHFWLRQ
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
7 UDGHP DUNV &RS\ ULJ KWVDQG ’ RP DLQ 1 DP HV
: H SURWHFWRXU LQWHOOHFWXDOSURSHUW\ WKURXJ K D FRP ELQDWLRQ RI SDWHQWV FRS\ ULJ KWV WUDGHP DUNV DQG WUDGH VHFUHWV IRUHLJ Q LQWHOOHFWXDO SURSHUW\ ODZ V FRQILGHQWLDOLW\ DJ UHHP HQWVDQGRWKHUFRQWUDFWXDOSURYLVLRQV : HKDYHDOVR UHJ LVWHUHG DQGDSSOLHGIRUWKHUHJ LVWUDWLRQRI 8 6 DQG LQWHUQDWLRQDOWUDGHP DUNV VHUYLFH P DUNV GRP DLQ QDP HVDQG FRS\ ULJ KWV ) URP WLP H WR WLP H Z H DUH P DGH DZ DUH RI WKH XVH E\ RWKHU SHUVRQVLQ FHUWDLQ J HRJ UDSKLFDODUHDVRI QDP HVDQG P DUNVWKDWDUH WKH VDP H DVRUVXEVWDQWLDOO\ VLP LODUWR RXUP DUNV , WLVRXUSROLF\ WR SXUVXHUHJ LVWUDWLRQRI RXUP DUNVZ KHQHYHUSRVVLEOHDQGWR YLJ RURXVO\ RSSRVHDQ\ LQIULQJ HP HQWRI RXUP DUNV
: H ▇▇▇▇ FRS\ ULJ KWV LQ DXWKRUHG Z RUNV XVHG LQ RXUEXVLQHVV LQFOXGLQJ DGYHUWLVHP HQWV SDFNDJ LQJ WUDLQLQJ Z HEVLWH DQG SURP RWLRQDO P DWHULDOV , Q DGGLWLRQ Z H KDYH UHJ LVWHUHG DQG P DLQWDLQ , QWHUQHWGRP DLQ QDP HV LQFOXGLQJ ‡SDSDMRKQVFRP · DQG FRXQWU\ FRGH GRP DLQV SDWWHUQHGDVSDSDMRKQVFF RUDFORVHYDULDWLRQWKHUHRI Z LWK‡ FF· UHSUHVHQWLQJ DVSHFLILF FRXQWU\ FRGH
, P SDFWRI &2 9 , ’
3OHDVHUHIHUWR ‡5 HFHQW%XVLQHVV0 DWWHUV· Z LWKLQ ‡, WHP 0 DQDJ HP HQW¶V’ LVFXVVLRQ DQG$ QDO\ VLVRI ) LQDQFLDO&RQGLWLRQ DQG 5 HVXOWVRI
2 SHUDWLRQV· IRUDGLVFXVVLRQRI UHFHQWEXVLQHVVGHYHORSP HQWV LQFOXGLQJ WKHLP SDFWWKH&2 9 , ’ SDQGHP LF LVKDYLQJ RQRXUEXVLQHVVDQG UHVXOWVRI RSHUDWLRQVDQGILQDQFLDOFRQGLWLRQ
$ GGLWLRQDO, QIRUP DWLRQ
$ OORI RXUSHULRGLF DQG FXUUHQWUHSRUWV ILOHG Z LWK WKH 6HFXULWLHV DQG ( [ FKDQJ H &RP P LVVLRQ WKH ‡6( &· SXUVXDQWWR 6HFWLRQ D RU G RI WKH 6HFXULWLHVDQG ( [ FKDQJ H$ FWRI DVDP HQGHG WKH ‡( [ FKDQJ H$ FW· DUH DYDLODEOH IUHH RI FKDUJ H WKURXJ K RXUZ HEVLWH ORFDWHG DWZ Z Z SDSDMRKQVFRP 7 KHVHUHSRUWVLQFOXGHRXUDQQXDOUHSRUWVRQ ) RUP . TXDUWHUO\ UHSRUWVRQ ) RUP 4 FXUUHQWUHSRUWV RQ) RUP . DQGDQ\ DP HQGP HQWVWR WKRVHUHSRUWV 7 KHVHUHSRUWVDUHDYDLODEOHWKURXJ KRXUZ HEVLWHDVVRRQDVUHDVRQDEO\ SUDFWLFDEOHDIWHU
Z H HOHFWURQLFDOO\ ILOH WKHP Z LWK WKH 6( & : H DOVR P DNH DYDLODEOH IUHH RI FKDUJ H RQ RXUZ HEVLWH RXU&RUSRUDWH * RYHUQDQFH * XLGHOLQHV
%RDUG&RP P LWWHH&KDUWHUV DQGRXU&RGHRI ( WKLFV Z KLFKDSSOLHVWR 3DSD-RKQ¶VGLUHFWRUV RIILFHUVDQGHP SOR\ HHV 3ULQWHGFRSLHVRI VXFK GRFXP HQWVDUH DOVR DYDLODEOH IUHH RI FKDUJ H XSRQ Z ULWWHQ UHTXHVWWR , QYHVWRU5 HODWLRQV 3DSD -RKQ¶V, QWHUQDWLRQDO , QF 3 2 %R[
/ RXLVYLOOH . < 7 KH 6( & P DLQWDLQV DQ LQWHUQHWVLWH WKDWFRQWDLQV UHSRUWV SUR[ \ DQG LQIRUP DWLRQ VWDWHP HQWV DQG RWKHU LQIRUP DWLRQUHJ DUGLQJ LVVXHUVWKDWILOHHOHFWURQLFDOO\ Z LWKWKH6( & LQFOXGLQJ XV DWZ Z Z VHF J RY 7 KHUHIHUHQFHVWR WKHVHZ HEVLWHDGGUHVVHV GR QRWFRQVWLWXWH LQFRUSRUDWLRQ E\ UHIHUHQFH RI WKH LQIRUP DWLRQ FRQWDLQHG RQ WKH Z HEVLWHV Z KLFK VKRXOG QRWEH FRQVLGHUHG SDUWRI WKLV GRFXP HQW
, WHP $ 5 LVN ) DFWRUV
: HDUHVXEMHFWWR ULVNVWKDWFRXOG KDYHDQHJ DWLYHHIIHFWRQ RXUEXVLQHVV ILQDQFLDOFRQGLWLRQ DQG UHVXOWVRI RSHUDWLRQV 7 KHVHULVNVFRXOG FDXVHDFWXDORSHUDWLQJ UHVXOWVWR GLIIHUIURP WKRVHH[ SUHVVHGLQFHUWDLQ‡IRUZ DUG ORRNLQJ VWDWHP HQWV· FRQWDLQHGLQWKLV) RUP . DVZ HOODV LQRWKHU&RP SDQ\ FRP P XQLFDWLRQV <RXVKRXOGFDUHIXOO\ FRQVLGHUWKHIROORZ LQJ ULVNIDFWRUVWRJ HWKHUZ LWKDOORWKHULQIRUP DWLRQLQFOXGHGLQ WKLV) RUP . DQGRXURWKHUSXEOLFO\ ILOHGGRFXP HQWV
, QGXVWU\ 5 LVNV
: HDUHVXEMHFWWR ULVNVUHODWHG WR SDQGHP LF RXWEUHDNV LQFOXGLQJ &2 9 , ’ ZKLFK P D\ KDYHD P DWHULDODGYHUVHHIIHFWRQ RXUEXVLQHVV ILQDQFLDOFRQGLWLRQDQGUHVXOWVRI RSHUDWLRQV
RU
: HDUHVXEMHFWWR ULVNVUHODWHG WR WKHJ OREDO&2 9 , ’ SDQGHP LF Z KLFK KDVKDG DQG LVH[ SHFWHG WR FRQWLQXHWR KDYH VLJ QLILFDQWDGYHUVH LP SDFWV RQ HFRQRP LF DQG P DUNHWFRQGLWLRQV , Q UHVSRQVH WR WKH SDQGHP LF J RYHUQP HQWV DQG RWKHUDXWKRULWLHV DURXQG WKH Z RUOG KDYH LP SRVHG P HDVXUHVWR DWWHP SWWR FRQWUROWKHVSUHDG RI &2 9 , ’ LQFOXGLQJ UHVWULFWLRQVRQ IUHHGRP RI P RYHP HQWDQG EXVLQHVVRSHUDWLRQV VXFK DV WUDYHOEDQV VRFLDOGLVWDQFLQJ UHTXLUHP HQWV LQFOXGLQJ OLP LWDWLRQV RQ J DWKHULQJ V VKHOWHULQ SODFH RUGHUV DQG TXDUDQWLQHV DQG P DQGDWHG EXVLQHVVFORVXUHV Z KLFK KDYHUHVXOWHG LQ VLJ QLILFDQWFKDQJ HVLQ FRP P HUFLDODFWLYLW\ DQG FRQVXP HUEHKDYL : HFDQQRWSUHGLFW Z KHQWKHHIIHFWVRI WKHSDQGHP LF Z LOOVXEVLGH KRZ ORQJ WKHUHZ LOOEHFRQWLQXLQJ UHVXUJ HQFHVRUP XWDWLRQVRI WKHYLUXVRUWKHHIIHFWLYHQHVV RI YDFFLQHVDQGWUHDWP HQW
WKHUDSLHVRUWKHVSHHG RI YDFFLQHGLVWULEXWLRQ 7R WKHH[ WHQWWKDWWKH&2 9 , ’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¶ HFRQRP LF FRQGLWLRQVDUH VLP LODUO\ DIIHFWHG WKH\ P LJ KWGHOD\ RUUHGXFH SXUFKDVHVIURP XV Z KLFK FRXOGDGYHUVHO\ DIIHFWRXUEXVLQHVV ILQDQFLDOFRQGLWLRQRUUHVXOWVRI RSHUDWLRQV
7 KHSRWHQWLDODGYHUVHHIIHFWVRI &2 9 , ’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’ FRXOGKDYHRQWKHVHULVNVUHP DLQVXQFHUWDLQ
0 RUHRYHU GXULQJ WKHGXUDWLRQ RI WKH&2 9 , ’ SDQGHP LF Z HKDYHH[ SHULHQFHG DVLJ QLILFDQWLQFUHDVHLQ FRP SDUDEOHVDOHVDQG UHYHQXHV
7 KH FLUFXP VWDQFHVWKDWKDYH FRQWULEXWHG WR WKH DFFHOHUDWLRQ RI WKH J URZ WK RI RXUEXVLQHVVVWHP P LQJ IURP WKH HIIHFWVRI WKH &2 9 , ’ SDQGHP LF P D\ QRWFRQWLQXH LQ WKH IXWXUH RQFH WKH LP SDFWRI WKH &2 9 , ’ SDQGHP LF WDSHUV SDUWLFXODUO\ DVD YDFFLQH EHFRP HVZ LGHO\ DYDLODEOH DQGFXVWRP HUVDUHQR ORQJ HUVXEMHFWWR VKHOWHULQ SODFHRUVRFLDOGLVWDQFLQJ P DQGDWHV : HH[ SHFWWKHJ URZ WKUDWHVLQFRP SDUDEOH VDOHVDQGUHYHQXHVWR VORZ RUGHFOLQH
2 XUSURILWDELOLW\ P D\ VXIIHUDVDUHVXOWRI LQWHQVHFRP SHWLWLRQLQRXULQGXVWU\
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
: LWKWKHVLJ QLILFDQWOHYHORI FRP SHWLWLRQDQGWKHSDFHRI LQQRYDWLRQ Z HP D\ EHUHTXLUHGWR LQFUHDVHLQYHVWP HQWVSHQGLQJ LQVHYHUDODUHDV SDUWLFXODUO\ P DUNHWLQJ DQGWHFKQRORJ \ Z KLFKFDQGHFUHDVHSURILWDELOLW\
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
P D\ P DNHLWGLIILFXOWIRUXVWR P DLQWDLQRULQFUHDVHRXUP DUNHWVKDUHDQGFRXOGQHJ DWLYHO\ LP SDFWRXUVDOHVDQGRXUV\ VWHP Z LGHUHVWDXUDQW RSHUDWLRQV : HDOVR IDFHLQFUHDVLQJ FRP SHWLWLRQ IURP RWKHUKRP HGHOLYHU\ VHUYLFHVDQG J URFHU\ VWRUHVWKDWRIIHUDQ LQFUHDVLQJ YDULHW\ RI SUHSSHGRUSUHSDUHGP HDOVLQUHVSRQVHWR FRQVXP HUGHP DQG $ VDUHVXOWRXUVDOHVFDQEHGLUHFWO\ DQGQHJ DWLYHO\ LP SDFWHGE\ DFWLRQVRI RXU FRP SHWLWRUV WKHHP HUJ HQFHRUJ URZ WKRI QHZ FRP SHWLWRUV FRQVXP HUVHQWLP HQWRURWKHUIDFWRUVRXWVLGHRXUFRQWURO
2 QH RI RXU FRP SHWLWLYH VWUHQJ WKV LV RXU ‡%( 7 7 ( 5 , 1 * 5 ( ’ , ( 1 7 6 %( 7 7 ( 5 3, ==$ · EUDQG SURP LVH 7 KLV P HDQV Z H P D\ XVH LQJ UHGLHQWVWKDWFRVWP RUHWKDQ WKHLQJ UHGLHQWVVRP HRI RXUFRP SHWLWRUVP D\ XVH %HFDXVHRI RXULQYHVWP HQWLQ KLJ KHUTXDOLW\ LQJ UHGLHQWV Z HFRXOGKDYHORZ HUSURILWP DUJ LQVWKDQVRP HRI RXUFRP SHWLWRUVLI Z HDUHQRWDEOHWR HVWDEOLVKDTXDOLW\ GLIIHUHQWLDWRUWKDWUHVRQDWHVZ LWK FRQVXP HUV 2 XUVDOHVP D\ EHSDUWLFXODUO\ LP SDFWHGDVFRP SHWLWRUVLQFUHDVLQJ O\ HP SKDVL] HORZ HUFRVWP HQXRSWLRQV
&KDQJ HVLQFRQVXP HUSUHIHUHQFHVRUGLVFUHWLRQDU\ FRQVXP HUVSHQGLQJ FRXOGDGYHUVHO\ LP SDFWRXUUHVXOWV
&KDQJ HV LQ FRQVXP HU SUHIHUHQFHV DQG WUHQGV FRXOG QHJ DWLYHO\ DIIHFWXV IRU H[ ▇▇ ▇▇▇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
) RRGVDIHW\ DQGTXDOLW\ FRQFHUQVP D\ QHJ DWLYHO\ LP SDFWRXUEXVLQHVVDQGSURILWDELOLW\
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
: HUHO\ RQ RXUGRP HVWLF DQG LQWHUQDWLRQDOVXSSOLHUV DVGR RXUIUDQFKLVHHV WR SURYLGHTXDOLW\ LQJ UHGLHQWVDQG WR FRP SO\ Z LWK DSSOLFDEOH ODZ VDQG LQGXVWU\ VWDQGDUGV $ IDLOXUHRI RQHRI RXUGRP HVWLF RULQWHUQDWLRQDOVXSSOLHUVWR P HHWRXUTXDOLW\ VWDQGDUGV RUP HHWGRP HVWLF RU LQWHUQDWLRQDOIRRGLQGXVWU\ VWDQGDUGV FRXOGUHVXOWLQDGLVUXSWLRQLQRXUVXSSO\ FKDLQDQGQHJ DWLYHO\ LP SDFWRXUEUDQGDQGRXUUHVXOWV
) DLOXUHWR SUHVHUYHWKHYDOXHDQGUHOHYDQFHRI RXUEUDQGFRXOGKDYHDQHJ DWLYHLP SDFWRQRXUILQDQFLDOUHVXOWV
2 XUUHVXOWVGHSHQG XSRQ RXUDELOLW\ WR GLIIHUHQWLDWH RXUEUDQG DQG RXUUHSXWDWLRQ IRUTXDOLW\ ’ DP ▇▇ ▇ WR RXUEUDQG RUUHSXWDWLRQ FRXOG QHJ DWLYHO\ LP SDFWRXUEXVLQHVVDQG ILQDQFLDOUHVXOWV 2 XUEUDQG KDVEHHQ KLJ KO\ UDWHG LQ FHUWDLQ 8 6 VXUYH\ V DQG Z HVWULYHWR EXLOG WKH YDOXHRI RXUEUDQGDVZ HGHYHORS LQWHUQDWLRQDOP DUNHWV
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▇▇ ▇ RXU UHSXWDWLRQ , I Z H DUH XQVXFFHVVIXOLQP DQDJ LQJ LQFLGHQWVWKDWHURGHFRQVXP HUWUXVWRUFRQILGHQFH SDUWLFXODUO\ LI VXFKLQFLGHQWVUHFHLYHFRQVLGHUDEOHSXEOLFLW\ RU UHVXOWLQOLWLJ DWLRQ RXUEUDQGYDOXHDQGILQDQFLDOUHVXOWVFRXOGEHQHJ DWLYHO\ LP SDFWHG
2 XULQDELOLW\ RUIDLOXUHWR UHFRJ QL]H UHVSRQGWR DQGHIIHFWLYHO\ P DQDJ HWKHDFFHOHUDWHGLP SDFWRI VRFLDOP HGLDFRXOGDGYHUVHO\ LP SDFWRXU EXVLQHVV
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¶VDFFXUDF\
, Q DGGLWLRQ Z H IUHTXHQWO\ XVH VRFLDOP HGLD WR FRP P XQLFDWH Z LWK FRQVXP HUV DQG WKH SXEOLF LQ J HQHUDO ) DLOXUH WR XVH VRFLDOP HGLD HIIHFWLYHO\ FRXOG OHDG WR D GHFOLQH LQ EUDQG YDOXH DQG UHYHQXH 2 WKHUULVNV DVVRFLDWHG Z LWK WKH XVH RI VRFLDOP HGLD LQFOXGH LP SURSHU GLVFORVXUHRI SURSULHWDU\ LQIRUP DWLRQ QHJ DWLYHFRP P HQWVDERXWRXUEUDQG H[ SRVXUHRI SHUVRQDOO\ LGHQWLILDEOHLQIRUP DWLRQ IUDXG KRD[ HVRU P DOLFLRXVGLVVHP LQDWLRQRI IDOVHLQIRUP DWLRQ
2 XUIUDQFKLVHEXVLQHVVP RGHOSUHVHQWVDQXP EHURI ULVNV
2 XUVXFFHVV LQFUHDVLQJ O\ UHOLHV RQ WKH ILQDQFLDOVXFFHVV DQG FRRSHUDWLRQ RI RXUIUDQFKLVHHV \ HWZ H KDYH OLP LWHG LQIOXHQFH RYHUWKHLU RSHUDWLRQV 2 XUIUDQFKLVHHV P DQDJ H WKHLUEXVLQHVVHV LQGHSHQGHQWO\ DQG WKHUHIRUH DUH UHVSRQVLEOH IRUWKH GD\ WR GD\ RSHUDWLRQ RI WKHLU UHVWDXUDQWV 7 KHUHYHQXHVZ HUHDOL] HIURP IUDQFKLVHGUHVWDXUDQWVDUHODUJ HO\ GHSHQGHQWRQWKHDELOLW\ RI RXUIUDQFKLVHHVWR J URZ WKHLUVDOHV
, I RXUIUDQFKLVHHVGR QRWH[ SHULHQFHVDOHVJ URZ WK RXUUHYHQXHVDQG P DUJ LQVFRXOG EHQHJ DWLYHO\ DIIHFWHG $ OVR LI VDOHVWUHQGVZ RUVHQ IRU IUDQFKLVHHV HVSHFLDOO\ LQ HP HUJ LQJ P DUNHWVDQGRUKLJ KFRVWP DUNHWV WKHLUILQDQFLDOUHVXOWVP D\ GHWHULRUDWH Z KLFK FRXOG UHVXOWLQ DP RQJ RWKHUWKLQJ V KLJ KHUOHYHOVRI UHTXLUHG ILQDQFLDOVXSSRUWIURP XV KLJ KHUQXP EHUVRI UHVWDXUDQWFORVXUHV UHGXFHG QXP EHUVRI UHVWDXUDQW RSHQLQJ V GHOD\ HGRUUHGXFHGSD\ P HQWVWR XV RULQFUHDVHGIUDQFKLVHHDVVLVWDQFH Z KLFKUHGXFHVRXUUHYHQXHV
2 XUVXFFHVVDOVR LQFUHDVLQJ O\ GHSHQGVRQWKHZ LOOLQJ QHVVDQGDELOLW\ RI RXUIUDQFKLVHHVWR UHP DLQDOLJ QHGZ LWKXVRQRSHUDWLQJ SURP RWLRQDO DQG P DUNHWLQJ SODQV ) UDQFKLVHHV¶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¶VLP DJ HDQGUHSXWDWLRQFRXOGEHKDUP HG Z KLFKLQWXUQFRXOGKXUWRXUEXVLQHVVDQGRSHUDWLQJ UHVXOWV
: HP D\ EHDGYHUVHO\ LP SDFWHGE\ LQFUHDVHVLQWKHFRVWRI IRRGLQJ UHGLHQWVDQGRWKHUFRVWV
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
&KDQJ HVLQSULYDF\ RUGDWDSURWHFWLRQODZVFRXOGDGYHUVHO\ DIIHFWRXUDELOLW\ WR P DUNHWRXUSURGXFWVHIIHFWLYHO\
: HUHO\ RQ DYDULHW\ RI GLUHFWP DUNHWLQJ WHFKQLTXHV LQFOXGLQJ HP DLO WH[ WP HVVDJ HVDQG SRVWDOP DLOLQJ V $ Q\ IXWXUHUHVWULFWLRQVLQ IHGHUDO VWDWHRUIRUHLJ QODZ VUHJ DUGLQJ P DUNHWLQJ DQGVROLFLWDWLRQRUGRP HVWLF RULQWHUQDWLRQDOGDWDSURWHFWLRQODZ VWKDWJ RYHUQWKHVHDFWLYLWLHVFRXOG DGYHUVHO\ DIIHFWWKH FRQWLQXLQJ HIIHFWLYHQHVV RI HP DLO WH[ WP HVVDJ HV DQG SRVWDOP DLOLQJ WHFKQLTXHV DQG FRXOG IRUFH FKDQJ HV LQ RXU P DUNHWLQJ VWUDWHJ LHV , I WKLVRFFXUV Z H P D\ QHHG WR GHYHORS DOWHUQDWLYH P DUNHWLQJ VWUDWHJ LHV Z KLFK P D\ QRWEH DVHIIHFWLYH DQG FRXOG LP SDFWWKHDP RXQWDQGWLP LQJ RI RXUUHYHQXHV
2 XU LQWHUQDWLRQDORSHUDWLRQV DUH VXEMHFWWR LQFUHDVHG ULVNV DQG RWKHU IDFWRUV WKDWP D\ P DNH LWP RUH GLIILFXOWWR DFKLHYH RU P DLQWDLQ SURILWDELOLW\ RUP HHWSODQQHGJ URZWKUDWHV
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
2 XU LQWHUQDWLRQDORSHUDWLRQV DUH DOVR VXEMHFWWR DGGLWLRQDOULVN IDFWRUV LQFOXGLQJ LP SRUWDQG H[ SRUWFRQWUROV FRP SOLDQFH Z LWK DQWL FRUUXSWLRQDQGRWKHUIRUHLJ QODZ V GLIILFXOWLHVHQIRUFLQJ LQWHOOHFWXDOSURSHUW\ DQGFRQWUDFWULJ KWVLQIRUHLJ QMXULVGLFWLRQV DQGWKHLP SRVLWLRQ RI LQFUHDVHG RUQHZ WDULIIVRUWUDGH EDUULHUV : H LQWHQG WR FRQWLQXH WR H[ SDQG LQWHUQDWLRQDOO\ Z KLFK Z RXOG P DNH WKH ULVNVUHODWHG WR RXU LQWHUQDWLRQDORSHUDWLRQVP RUHVLJ QLILFDQWRYHUWLP H
2 XULQWHUQDWLRQDOUHVWDXUDQWV¶ UHVXOWV Z KLFK DUHFRP SOHWHO\ IUDQFKLVHG GHSHQG KHDYLO\ RQ WKHRSHUDWLQJ FDSDELOLWLHVDQG ILQDQFLDOVWUHQJ WK RI RXUIUDQFKLVHHV $ Q\ FKDQJ HVLQWKHDELOLW\ RI RXUIUDQFKLVHHVWR UXQWKHLUVWRUHVSURILWDEO\ LQDFFRUGDQFHZ LWKRXURSHUDWLQJ VWDQGDUGV RU WR HIIHFWLYHO\ VXE IUDQFKLVHUHVWDXUDQWV FRXOGUHVXOWLQEUDQGGDP ▇▇ ▇ DKLJ KHUQXP EHURI UHVWDXUDQWFORVXUHVDQGDUHGXFWLRQLQWKHQXP EHU RI QHZ UHVWDXUDQWRSHQLQJ V
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¶FDVKIORZ V
: H DUH VXEMHFWWR ULVNV DQG XQFHUWDLQWLHV DVVRFLDWHG Z LWK WKH 8 QLWHG . LQJ GRP ¶V Z LWKGUDZ DOIURP WKH ( XURSHDQ 8 QLRQ UHIHUUHG WR DV
‡%UH[ LW· LQFOXGLQJ LP SOLFDWLRQVIRUWKHIUHHIORZ RI ODERUDQGJ RRGVLQWKH8 QLWHG. LQJ GRP DQGWKH( XURSHDQ8 QLRQDQGRWKHUILQDQFLDO OHJ ▇▇▇▇[ DQGWUDGHLP SOLFDWLRQV
$ GYHUVHJ OREDOHFRQRP LF FRQGLWLRQVVXEMHFWXVWR DGGLWLRQDOULVN
2 XUILQDQFLDOFRQGLWLRQ DQG UHVXOWVRI RSHUDWLRQVDUHLP SDFWHG E\ J OREDOP DUNHWVDQG HFRQRP LF FRQGLWLRQVRYHUZ KLFK QHLWKHUZ HQRURXU IUDQFKLVHHVKDYHFRQWURO $ Q HFRQRP LF GRZ QWXUQ LQFOXGLQJ GHWHULRUDWLRQ LQ WKHHFRQRP LF FRQGLWLRQVLQ WKH8 6 RULQWHUQDWLRQDOP DUNHWV Z KHUHZ HFRP SHWH P D\ UHVXOWLQDUHGXFWLRQLQWKHGHP DQGIRURXUSURGXFWV ORQJ HUSD\ P HQWF\ FOHV VORZ HUDGRSWLRQRI QHZ WHFKQRORJ LHV DQGLQFUHDVHGSULFHFRP SHWLWLRQ
3RRUHFRQRP LF FRQGLWLRQVP D\ DGYHUVHO\ DIIHFWWKHDELOLW\ RI RXUIUDQFKLVHHVWR SD\ UR\ DOWLHVRUDP RXQWVRZ HG DQG FRXOG DOVR GLVUXSWRXU EXVLQHVVDQGDGYHUVHO\ DIIHFWRXUUHVXOWV
+ ▇▇ ▇▇▇ ODERU FRVWV DQG LQFUHDVHG FRP SHWLWLRQ IRU TXDOLILHG WHDP P HP EHUV LQFUHDVH WKH FRVWRI GRLQJ EXVLQHVV DQG HQVXULQJ DGHTXDWH VWDIILQJ LQ RXUUHVWDXUDQWVDQG 4 & &HQWHUV $ GGLWLRQDOO\ FKDQJ HVLQ HP SOR\ P HQWDQG ODERUODZV LQFOXGLQJ KHDOWK FDUH OHJ LVODWLRQ DQG P LQLP XP ZDJ HLQFUHDVHV FRXOGLQFUHDVHFRVWVIRURXUV\ VWHP ZLGHRSHUDWLRQV
2 XUVXFFHVVGHSHQGVLQ SDUWRQ RXUDQG RXUIUDQFKLVHHV¶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
: H DUH DOVR VXEMHFWWR IHGHUDO VWDWH DQG IRUHLJ Q ODZ VJ RYHUQLQJ VXFK P DWWHUVDVP LQLP XP Z ▇▇ ▇ UHTXLUHP HQWV RYHUWLP H FRP SHQVDWLRQ EHQHILWV Z RUNLQJ FRQGLWLRQV FLWL] HQVKLS UHTXLUHP HQWVDQG GLVFULP LQDWLRQ DQG IDP LO\ DQG P HGLFDOOHDYH DQG HP SOR\ HH UHODWHG OLWLJ DWLRQ
/ DERUFRVWVDQGODERUUHODWHGEHQHILWVDUHSULP DU\ FRP SRQHQWVLQWKHFRVWRI RSHUDWLRQRI RXUUHVWDXUDQWVDQG4 & &HQWHUV / DERUVKRUWDJ HV LQFUHDVHGHP SOR\ HHWXUQRYHUDQGKHDOWKFDUHP DQGDWHVFRXOGLQFUHDVHRXUV\ VWHP Z LGHODERUFRVWV
$ VLJ QLILFDQWQXP EHURI KRXUO\ SHUVRQQHODUH SDLG DWUDWHVFORVH WR WKH IHGHUDODQG VWDWH P LQLP XP Z ▇▇ ▇ UHTXLUHP HQWV $ FFRUGLQJ O\ WKH HQDFWP HQWRI DGGLWLRQDOVWDWHRUORFDOP LQLP XP Z DJ HLQFUHDVHVDERYHIHGHUDOZ DJ HUDWHVRUUHJ XODWLRQVUHODWHG WR H[ HP SWHP SOR\ HHVKDV LQFUHDVHG DQG FRXOG FRQWLQXH WR LQFUHDVH ODERU FRVWV IRU RXU GRP HVWLF V\ VWHP Z LGH RSHUDWLRQV $ VLJ QLILFDQWLQFUHDVH LQ WKH IHGHUDO P LQLP XP Z DJ HUHTXLUHP HQWFRXOGDGYHUVHO\ LP SDFWRXUILQDQFLDOFRQGLWLRQDQGUHVXOWVRI RSHUDWLRQV
: H UHO\ RQ LQIRUP DWLRQ WHFKQRORJ \ WR RSHUDWH RXUEXVLQHVVHVDQG P DLQWDLQ RXUFRP SHWLWLYHQHVV DQG DQ\ IDLOXUH WR LQYHVWLQ RUDGDSWWR WHFKQRORJ LFDOGHYHORSP HQWVRULQGXVWU\ WUHQGVFRXOGKDUP RXUEXVLQHVV
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
: HUHO\ RQ RXULQWHUQDWLRQDOIUDQFKLVHHVWR P DLQWDLQ WKHLURZ QSRLQWRI VDOHDQG RQOLQHRUGHULQJ V\ VWHP V Z KLFK DUHRIWHQ SXUFKDVHG IURP WKLUG SDUW\ YHQGRUV SRWHQWLDOO\ H[ SRVLQJ LQWHUQDWLRQDOIUDQFKLVHHVWR P RUH RSHUDWLRQDOULVN LQFOXGLQJ F\ EHUDQG GDWD SULYDF\ ULVNVDQG J RYHUQP HQWDOUHJ XODWLRQFRP SOLDQFHULVNV
&RP SDQ\ 5 LVNV
2 XUUHRUJ DQL]DWLRQDFWLYLWLHVZLOOLQFUHDVHRXUH[ SHQVHV P D\ QRWEHVXFFHVVIXODQGP D\ DGYHUVHO\ LP SDFWHP SOR\ HHKLULQJ DQGUHWHQWLRQ
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
, Q DGGLWLRQ WXUQRYHULQ RXUFRUSRUDWHRIILFHVXSSRUWWHDP VGXHWR FHUWDLQ IXQFWLRQVUHORFDWLQJ WR RXURIILFHLQ * HRUJ LDFRXOG GLVWUDFWRXU HP SOR\ HHV GHFUHDVHHP SOR\ HHP RUDOH KDUP RXUUHSXWDWLRQ DQGQHJ DWLYHO\ LP SDFWWKHRYHUDOOSHUIRUP DQFHRI RXUFRUSRUDWHVXSSRUWWHDP V
$ VDUHVXOWRI WKHVHRURWKHUVLP LODUULVNV RXUEXVLQHVV UHVXOWVRI RSHUDWLRQVDQGILQDQFLDOFRQGLWLRQP D\ EHDGYHUVHO\ DIIHFWHG
: HP D\ QRWEHDEOHWR HIIHFWLYHO\ P DUNHWRXUSURGXFWVRUP DLQWDLQNH\ P DUNHWLQJ SDUWQHUVKLSV
7 KH VXFFHVVRI RXUEXVLQHVVGHSHQGVRQ WKH HIIHFWLYHQHVVRI RXUP DUNHWLQJ DQG SURP RWLRQDOSODQV : H P D\ QRWEH DEOH WR HIIHFWLYHO\ H[ HFXWHRXUQDWLRQDORUORFDOP DUNHWLQJ SODQV SDUWLFXODUO\ LI Z HH[ SHULHQFHG ORZ HUVDOHVWKDWZ RXOG UHVXOWLQ UHGXFHG OHYHOVRI P DUNHWLQJ IXQGV : HP D\ EHUHTXLUHGWR H[ SHQGDGGLWLRQDOIXQGVWR HIIHFWLYHO\ LP SURYHFRQVXP HUVHQWLP HQWDQGVDOHV DQGZ HP D\ DOVR EHUHTXLUHG WR HQJ DJ HLQDGGLWLRQDODFWLYLWLHVWR UHWDLQFXVWRP HUVRUDWWUDFWQHZ
FXVWRP HUV WR WKH EUDQG 6XFK P DUNHWLQJ H[ SHQVHV DQG SURP RWLRQDODFWLYLWLHV Z KLFK FRXOG LQFOXGH GLVFRXQWLQJ RXU SURGXFWV FRXOG DGYHUVHO\ LP SDFWRXUUHVXOWV
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
: HP D\ QRWEHDEOHWR H[ HFXWHRXUVWUDWHJ \ RUDFKLHYHRXUSODQQHG J URZWK WDUJ HWV ZKLFK FRXOG QHJ DWLYHO\ LP SDFWRXUEXVLQHVVDQG RXU ILQDQFLDOUHVXOWV
2 XUJ URZ WK VWUDWHJ \ GHSHQGVRQ RXUDQG RXUIUDQFKLVHHV¶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’ HFOLQHVLQ FRP SDUDEOH VDOHV QHWVWRUH RSHQLQJ VDQG UHODWHG RSHUDWLQJ SURILWVFDQ LP SDFWRXUVWRFN SULFH , I Z HGR QRWFRQWLQXHWR LP SURYHIXWXUHVDOHVDQG RSHUDWLQJ UHVXOWVDQG P HHWRXUUHODWHGJ URZ WKWDUJ HWVRUH[ WHUQDOH[ SHFWDWLRQVIRUQHWUHVWDXUDQWRSHQLQJ VRURXURWKHUVWUDWHJ LF REMHFWLYHVLQWKHIXWXUH RXUVWRFN SULFHFRXOGGHFOLQH
2 XUIUDQFKLVHHVUHP DLQ GHSHQGHQWRQ WKHDYDLODELOLW\ RI ILQDQFLQJ WR UHP RGHORUUHQRYDWHH[ LVWLQJ ORFDWLRQV XSJ UDGHV\ VWHP VDQG HQKDQFH WHFKQRORJ \ RUFRQVWUXFWDQG RSHQ QHZ UHVWDXUDQWV ) URP WLP H WR WLP H WKH &RP SDQ\ P D\ SURYLGH ILQDQFLQJ WR FHUWDLQ IUDQFKLVHHVDQG SURVSHFWLYH IUDQFKLVHHVLQ RUGHUWR P LWLJ DWH VWRUH FORVLQJ V DOORZ QHZ XQLWVWR RSHQ RUFRP SOHWH UHTXLUHG XSJ UDGHV , I Z H DUH XQDEOH RU XQZ LOOLQJ WR SURYLGH VXFK ILQDQFLQJ Z KLFK LV D IXQFWLRQ RI DP RQJ RWKHUWKLQJ V D IUDQFKLVHH¶V FUHGLWZ RUWKLQHVV WKH QXP EHURI QHZ UHVWDXUDQWRSHQLQJ VP D\ EH VORZ HURUWKH UDWH RI FORVXUHVP D\ EH KLJ KHUWKDQ H[ SHFWHG DQG RXUUHVXOWVRI RSHUDWLRQVP D\ EH DGYHUVHO\ LP SDFWHG 7R WKH H[ WHQWZ HSURYLGH ILQDQFLQJ WR IUDQFKLVHHV RXUUHVXOWVFRXOG EH QHJ DWLYHO\ LP SDFWHG E\ QHJ DWLYH SHUIRUP DQFH RI WKHVH IUDQFKLVHHORDQV
2 XUGHSHQGHQFHRQDVROHVXSSOLHURUDOLP LWHGQXP EHURI VXSSOLHUVIRUVRP HLQJ UHGLHQWVFRXOGUHVXOWLQGLVUXSWLRQVWR RXUEXVLQHVV
’ RP HVWLF UHVWDXUDQWVSXUFKDVHVXEVWDQWLDOO\ DOOIRRGDQGUHODWHGSURGXFWVIURP RXU4 & &HQWHUV : HDUHGHSHQGHQWRQ/ HSULQR ) RRGV’ DLU\ 3URGXFWV&RP SDQ\ ‡/ HSULQR· DVRXUVROH VXSSOLHUIRUP R] ] DUHOOD FKHHVH RQH RI RXUNH\ LQJ UHGLHQWV / HSULQR RQH RI WKH P DMRUSL] ] D FDWHJ RU\ VXSSOLHUVRI FKHHVHLQ WKH8 QLWHG 6WDWHV FXUUHQWO\ VXSSOLHVDOORI RXUP R] ] DUHOODFKHHVHGRP HVWLFDOO\ DQG VXEVWDQWLDOO\ DOORI RXU P R] ] DUHOODFKHHVHLQWHUQDWLRQDOO\ : HDOVR GHSHQGRQDVROHVRXUFHIRURXUVXSSO\ RI FHUWDLQGHVVHUWVDQGJ DUOLF VDXFH Z KLFKFRQVWLWXWHOHVV WKDQ RI RXUGRP HVWLF &RP SDQ\ RZ QHG UHVWDXUDQWVDOHV : KLOHZ HKDYHQR RWKHUVROHVRXUFHVRI VXSSO\ IRUNH\ LQJ UHGLHQWVRUP HQX LWHP V Z HGR VRXUFHRWKHUNH\ LQJ UHGLHQWVIURP DOLP LWHGQXP EHURI VXSSOLHUV $ OWHUQDWLYHVRXUFHVRI P R] ] DUHOODFKHHVH GHVVHUWV RWKHUNH\ LQJ UHGLHQWVRUP HQX LWHP VP D\ QRWEHDYDLODEOHRQ DWLP HO\ EDVLVRUP D\ QRWEHDYDLODEOHRQ WHUP VDVIDYRUDEOHWR XVDVXQGHURXUFXUUHQW DUUDQJ HP HQWV
2 XU&RP SDQ\ RZ QHG DQG IUDQFKLVHG UHVWDXUDQWVFRXOG DOVR EH KDUP HG E\ VXSSO\ FKDLQ LQWHUUXSWLRQVLQFOXGLQJ WKRVH FDXVHG E\ IDFWRUV EH\ RQG RXUFRQWURORUWKH FRQWURORI RXUVXSSOLHUV 3URORQJ HG GLVUXSWLRQ LQ WKH VXSSO\ RI SURGXFWVIURP RUWR RXU4 & &HQWHUVGXH WR Z HDWKHU FOLP DWH FKDQJ H QDWXUDOGLVDVWHUV &2 9 , ’ FURS GLVHDVH IRRG VDIHW\ LQFLGHQWV UHJ XODWRU\ FRP SOLDQFH ODERU GLVSXWH RU LQWHUUXSWLRQ RI VHUYLFHE\ FDUULHUVFRXOG LQFUHDVHFRVWV OLP LWWKHDYDLODELOLW\ RI LQJ UHGLHQWVFULWLFDOWR RXUUHVWDXUDQWRSHUDWLRQVDQG KDYHD VLJ QLILFDQWLP SDFWRQUHVXOWV , QSDUWLFXODU DGYHUVHZ HDWKHURU
FURS GLVHDVHDIIHFWLQJ WKH&DOLIRUQLDWRP DWR FURS FRXOGGLVUXSWWKHVXSSO\ RI SL] ] DVDXFHWR RXUDQGRXUIUDQFKLVHHV¶ UHVWDXUDQWV , QVROYHQF\ RI NH\ VXSSOLHUVFRXOGDOVR FDXVHVLP LODUEXVLQHVVLQWHUUXSWLRQVDQGQHJ DWLYHO\ LP SDFWRXUEXVLQHVV
: HUHO\ RQWKLUGSDUWLHVIRUFHUWDLQEXVLQHVVSURFHVVHVDQGVHUYLFHV DQGIDLOXUHRULQDELOLW\ RI VXFKWKLUG SDUW\ YHQGRUVWR SHUIRUP VXEMHFWV XVWR ULVNV LQFOXGLQJ EXVLQHVVGLVUXSWLRQDQGLQFUHDVHGFRVWV
: H GHSHQG RQ WKH SHUIRUP DQFH RI VXSSOLHUVDQG RWKHUWKLUG SDUWLHVLQ RXUEXVLQHVVRSHUDWLRQV 7 ▇▇▇▇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
&KDQJ HVLQSXUFKDVLQJ SUDFWLFHVE\ RXUGRP HVWLF IUDQFKLVHHVFRXOGKDUP RXUFRP P LVVDU\ EXVLQHVV
$ OWKRXJ K RXUGRP HVWLF IUDQFKLVHHVFXUUHQWO\ SXUFKDVHVXEVWDQWLDOO\ DOOIRRG SURGXFWVIURP RXU4 & &HQWHUV WKHRQO\ UHTXLUHG 4 & &HQWHU SXUFKDVHVE\ IUDQFKLVHHVDUHSL] ] DVDXFH GRXJ KDQGRWKHULWHP VZ HP D\ GHVLJ QDWHDVSURSULHWDU\ RULQWHJ UDOWR RXUV\ VWHP $ Q\ FKDQJ HVLQ SXUFKDVLQJ SUDFWLFHVE\ GRP HVWLF IUDQFKLVHHV VXFK DVVHHNLQJ DOWHUQDWLYHDSSURYHG VXSSOLHUVRI LQJ UHGLHQWVRURWKHUIRRG SURGXFWV FRXOG DGYHUVHO\ DIIHFWWKHILQDQFLDOUHVXOWVRI RXU4 & &HQWHUVDQGWKH&RP SDQ\
2 XUFXUUHQWLQVXUDQFHP D\ QRWEHDGHTXDWHDQGZHP D\ H[ SHULHQFHFODLP VLQH[ FHVVRI RXUUHVHUYHV
2 XULQVXUDQFHSURJ UDP VIRUZ RUNHUV¶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
: HDUHVXEMHFWWR GHEWFRYHQDQWUHVWULFWLRQV
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
: LWK RXULQGHEWHGQHVV ZHP D\ KDYHUHGXFHG DYDLODELOLW\ RI FDVK IORZ IRURWKHUSXUSRVHV , QFUHDVHVLQ LQWHUHVWUDWHVZRXOG DOVR LQFUHDVH RXUGHEWVHUYLFHFRVWVDQGFRXOGP DWHULDOO\ LP SDFWRXUSURILWDELOLW\ DVZHOODVWKHSURILWDELOLW\ RI RXUIUDQFKLVHHV
&XUUHQWGHEWOHYHOVXQGHURXUH[ LVWLQJ FUHGLWIDFLOLW\ P D\ UHGXFHDYDLODEOHFDVKIORZ WR SODQIRURUUHDFWWR EXVLQHVVFKDQJ HV FKDQJ HVLQWKH LQGXVWU\ RUDQ\ J HQHUDODGYHUVHHFRQRP LF FRQGLWLRQV 8 QGHURXUFUHGLWIDFLOLW\ Z HDUHH[ SRVHGWR YDULDEOHLQWHUHVWUDWHV : HKDYHHQWHUHG LQWR LQWHUHVWUDWHVZ DSVWKDWIL[ DVLJ QLILFDQWSRUWLRQ RI RXUYDULDEOHLQWHUHVWUDWHULVN + RZ HYHU E\ XVLQJ DGHULYDWLYHLQVWUXP HQWWR KHGJ H H[ SRVXUHVWR FKDQJ HVLQLQWHUHVWUDWHV Z HDOVR H[ SRVHRXUVHOYHVWR FUHGLWULVN &UHGLWULVNLVGXHWR WKHSRVVLEOHIDLOXUHRI WKHFRXQWHUSDUW\ WR SHUIRUP XQGHUWKHWHUP VRI WKHGHULYDWLYHFRQWUDFW
+ LJ KHULQIODWLRQ DQG DUHODWHG LQFUHDVHLQ FRVWV LQFOXGLQJ ULVLQJ LQWHUHVWUDWHV FRXOG DOVR LP SDFWRXUIUDQFKLVHHVDQG WKHLUDELOLW\ WR RSHQ QHZ UHVWDXUDQWVRURSHUDWHH[ LVWLQJ UHVWDXUDQWVSURILWDEO\
, QDGGLWLRQ WKHORDQVXQGHURXUFUHGLWIDFLOLW\ DFFUXHLQWHUHVWDWDSHUDQQXP UDWHWKDWP D\ LQFOXGH DWWKH&RP SDQ\ ¶VHOHFWLRQ DVSUHDGRYHU WKH/ RQGRQ , QWHUEDQN 2 IIHUHG 5 DWH ‡/ , %2 5 · , Q-XO\ WKHKHDG RI WKH8 QLWHG . LQJ GRP ) LQDQFLDO&RQGXFW$ XWKRULW\ WKHDXWKRULW\ WKDWUHJ XODWHV/ , %2 5 DQQRXQFHGLWVLQWHQWLRQWR SKDVHRXWWKHXVHRI / , %2 5 E\ WKHHQGRI + RZ HYHU WKH, QWHUFRQWLQHQWDO( [ FKDQJ H
%HQFKP DUN$ GP LQLVWUDWLRQ LQ LWVFDSDFLW\ DVDGP LQLVWUDWRURI 8 6’ / , %2 5 KDVDQQRXQFHG WKDWLWLQWHQGVWR H[ WHQG SXEOLFDWLRQ RI 8 6’
/ , %2 5 RWKHU WKDQ RQHZ HHN DQG WZ R P RQWK WHQRUV E\ P RQWKV WR -XQH 1 RWZ LWKVWDQGLQJ WKLV SRVVLEOH H[ WHQVLRQ D MRLQW VWDWHP HQWE\ NH\ UHJ XODWRU\ DXWKRULWLHVFDOOVRQ EDQNVWR FHDVHHQWHULQJ LQWR QHZ FRQWUDFWVWKDWXVH8 6’ / , %2 5 DVDUHIHUHQFHUDWHE\ QR ODWHUWKDQ ’ HFHP EHU 7 KH 8 6 ) HGHUDO5 HVHUYH LQ FRQMXQFWLRQ Z LWK WKH$ OWHUQDWLYH 5 HIHUHQFH 5 DWHV&RP P LWWHH D VWHHULQJ FRP P LWWHHFRP SULVHGRI ODUJ H8 6 ILQDQFLDOLQVWLWXWLRQV LVFRQVLGHULQJ UHSODFLQJ 8 6 GROODU/ , %2 5 Z LWKWKH6HFXUHG2 YHUQLJ KW) LQDQFLQJ
5 DWH 62 ) 5 DQHZ LQGH[ FDOFXODWHGE\ VKRUWWHUP UHSXUFKDVHDJ UHHP HQWV EDFNHGE\ 7 UHDVXU\ VHFXULWLHV $ OWKRXJ K62 ) 5 DSSHDUVWR EH WKH SUHIHUUHG UHSODFHP HQWUDWH IRU8 6 GROODU/ , %2 5 DWWKLVWLP H LWLVQRWSRVVLEOH WR GHILQLWLYHO\ SUHGLFWWKH HIIHFWRI DQ\ FKDQJ HVWR
/ , %2 5 DQ\ SKDVH RXWRI / , %2 5 RUDQ\ HVWDEOLVKP HQWRI DOWHUQDWLYH EHQFKP DUN UDWHV LQFOXGLQJ 62 ) 5 7 KH FHVVDWLRQ RI / , %2 5 Z LOO UHTXLUHXVWR DP HQG WKHWHUP VRI RXUFUHGLWIDFLOLW\ RUDQ\ IXWXUHFUHGLWDJ UHHP HQWVH[ WHQGLQJ EH\ RQG -XQH DQG LQGH[ HG WR / , %2 5 WR UHSODFH/ , %2 5 Z LWK 62 ) 5 RUVXFK RWKHUVWDQGDUG WKDWLVHVWDEOLVKHG Z KLFK FRXOG KDYHDP DWHULDODGYHUVHHIIHFWRQ XV LQFOXGLQJ RQ RXU FRVWRI IXQGV DFFHVVWR FDSLWDOP DUNHWVDQGILQDQFLDOUHVXOWV
, QYHVWP HQW5 LVNV
2 XU%RDUG RI ’ LUHFWRUVKDVDGRSWHG D OLP LWHG GXUDWLRQ VWRFNKROGHUULJ KWVDJ UHHP HQWZKLFK FRXOG GHOD\ RUGLVFRXUDJ HD P HUJ HU WHQGHU RIIHURUDVVXP SWLRQRI FRQWURORI WKH&RP SDQ\ QRWDSSURYHGE\ RXU%RDUGRI ’ LUHFWRUV
QW·
2 Q$ SULO WKH&RP SDQ\ ¶VVWRFNKROGHUVUDWLILHG WKHDGRSWLRQ E\ WKH%RDUG RI ’ LUHFWRUVRI WKH5 LJ KWV$ J UHHP HQWGDWHG DVRI -XO\ DVDP HQGHG RQ ) HEUXDU\ 0 DUFK DQG 2 FWREHU DVDP HQGHG WKH ‡5 LJ KWV$ J UHHP H 7 KH RULJ LQDO
5 LJ KWV$ J UHHP HQWDGRSWHG E\ WKH%RDUG RI ’ LUHFWRUVRQ -XO\ KDG DQ H[ SLUDWLRQ GDWHRI -XO\ DQG DEHQHILFLDORZ QHUVKLS WULJ J HUWKUHVKROG RI 2 Q) HEUXDU\ LQ FRQQHFWLRQ Z LWK WKHVDOHDQG LVVXDQFHRI VKDUHVRI WKH&RP SDQ\ ¶V6HULHV% &RQYHUWLEOH 3UHIHUUHG6WRFN ‡6HULHV% 3UHIHUUHG6WRFN· WR FHUWDLQIXQGVDIILOLDWHGZ LWK RUP DQDJ HGE\ 6WDUERDUG9 DOXH/ 3 FROOHFWLYHO\ ‡6WDUERDUG· WKH RULJ LQDO5 LJ KWV $ J UHHP HQWZ DV DP HQGHG WR H[ HP SW6WDUERDUG IURP EHLQJ FRQVLGHUHG DQ ‡$ FTXLULQJ 3HUVRQ· XQGHU WKH 5 LJ KWV
WR
$ J UHHP HQWVROHO\ DVDUHVXOWRI LWVEHQHILFLDORZ QHUVKLS RI L VKDUHVRI FRP P RQVWRFNEHQHILFLDOO\ RZ QHGE\ 6WDUERDUGSULRUWR WKHVDOHDQG LVVXDQFH RI WKH 6HULHV% 3UHIHUUHG 6WRFN LL VKDUHVRI 6HULHV% 3UHIHUUHG 6WRFN LVVXHG RULVVXDEOH WR 6WDUERDUG XQGHUWKH WHUP VRI WKH 6HFXULWLHV 3XUFKDVH $ J UHHP HQWGDWHG ) HEUXDU\ Z LWK 6WDUERDUG WKH ‡6HFXULWLHV 3XUFKDVH $ J UHHP HQW· DQG LLL VKDUHV RI WKH FRP P RQ VWRFN RULQ FHUWDLQ FLUFXP VWDQFHVFHUWDLQ VHULHVRI SUHIHUUHG VWRFN LVVXDEOHXSRQ FRQYHUVLRQ RI WKH6HULHV% 3UHIHUUHG 6WRFN RU FHUWDLQVHULHVRI SUHIHUUHGVWRFNLVVXDEOHRQFRQYHUVLRQWKHUHRI SXUVXDQWWR WKHWHUP VRI WKH&HUWLILFDWHRI ’ HVLJ QDWLRQRI 6HULHV% 3UHIHUUHG 6WRFN 2 Q 0 DUFK WKH 5 LJ KWV$ J UHHP HQWZ DVIXUWKHUDP HQGHG H[ WHQG WKH WHUP RI WKH 5 LJ KWV$ J UHHP HQWWR 0 DUFK
LQFUHDVH WKH EHQHILFLDORZ QHUVKLS WULJ J HUWKUHVKROG DWZ KLFK D SHUVRQ EHFRP HV DQ DFTXLULQJ SHUVRQ IURP WR H[ FHSWIRUD
‡J UDQGIDWKHUHG SHUVRQ· SURYLVLRQ DQG P DNHFHUWDLQ RWKHUFKDQJ HV 7 KH5 LJ KWV$ J UHHP HQWZ DVIXUWKHUDP HQGHG RQ 2 FWREHU ▇▇ ▇▇▇▇ LQDWHWKH‡J UDQGIDWKHUHGSHUVRQ· SURYLVLRQDVWKHUHDUHQR VWRFNKROGHUVWKDWFXUUHQWO\ EHQHILFLDOO\ RZ Q RUP RUHRI WKH&RP SDQ\ ¶V FRP P RQVWRFN
KWV
KWV
KWV
7 KH5 LJ KWV$ J UHHP HQWLVLQWHQGHG WR HQDEOHDOORI RXUVWRFNKROGHUVWR UHDOL] HWKHIXOOSRWHQWLDOYDOXHRI WKHLULQYHVWP HQWLQ WKH&RP SDQ\ DQG WR SURWHFWWKHLQWHUHVWVRI WKH&RP SDQ\ DQG LWVVWRFNKROGHUVE\ UHGXFLQJ WKHOLNHOLKRRG WKDWDQ\ SHUVRQ RUJ URXS J DLQVFRQWURORI WKH &RP SDQ\ WKURXJ KRSHQP DUNHWDFFXP XODWLRQRURWKHUWDFWLFVZ LWKRXWSD\ LQJ DQDSSURSULDWHFRQWUROSUHP LXP 7 KH5 LJ $ J UHHP HQWFRXOG UHQGHUP RUHGLIILFXOWRUGLVFRXUDJ H DP HUJ HU WHQGHURIIHU RUDVVXP SWLRQRI FRQWURORI WKH&RP SDQ\ WKDWLVQRWDSSURYHGE\ RXU%RDUGRI ’ LUHFWRUV 7 KH5 LJ $ J UHHP HQWKRZ HYHU VKRXOG QRWLQWHUIHUHZ LWK DQ\ P HUJ HU WHQGHURUH[ FKDQJ HRIIHURURWKHUEXVLQHVVFRP ELQDWLRQ DSSURYHGE\ RXU%RDUGRI ’ LUHFWRUV , QDGGLWLRQ WKH5 LJ $ J UHHP HQWGRHVQRWSUHYHQWRXU%RDUGRI ’ LUHFWRUVIURP FRQVLGHULQJ DQ\ RIIHU WKDWLWFRQVLGHUVWR EHLQWKHEHVWLQWHUHVWRI WKH&RP SDQ\ ¶VVWRFNKROGHUV
7KHLVVXDQFHRI VKDUHVRI RXU6HULHV%3 UHIHUUHG6WRFNWR 6WDUERDUGDQGLWVSHUP LWWHGWUDQVIHUHHVGLOXWHVWKHRZQHUVKLS DQGUHODWLYHYRWLQJ SRZHURI KROGHUVRI RXUFRP P RQVWRFNDQGP D\ DGYHUVHO\ DIIHFWWKHP DUNHWSULFHRI RXUFRP P RQVWRFN
3XUVXDQWWR WKH 6HFXULWLHV3XUFKDVH$ J UHHP HQWWKH &RP SDQ\ VROG VKDUHVRI RXUQHZ O\ GHVLJ QDWHG 6HULHV% 3UHIHUUHG 6WRFN WR
6WDUERDUGLQ
$ VRI ’ HFHP EHU WKHVKDUHVKHOG E\ 6WDUERDUG UHSUHVHQW RI RXURXWVWDQGLQJ FRP P RQ VWRFN RQ DQ DVFRQYHUWHG EDVLV 7 KH 6HULHV% 3UHIHUUHG 6WRFN LVFRQYHUWLEOHDWWKHRSWLRQ RI WKHKROGHUVDWDQ\ WLP HLQWR VKDUHVRI FRP P RQ VWRFN EDVHG RQ WKHFRQYHUVLRQ UDWH GHWHUP LQHGE\ GLYLGLQJ WKHVWDWHGYDOXHRI WKH6HULHV% 3UHIHUUHG6WRFN E\
%HFDXVHKROGHUVRI RXU6HULHV% 3UHIHUUHG 6WRFN DUHHQWLWOHG WR YRWH RQ DQ DVFRQYHUWHG EDVLV WRJ HWKHUZ LWK KROGHUVRI RXUFRP P RQ VWRFN RQDOOP DWWHUVVXEP LWWHGWR DYRWHRI WKHKROGHUVRI RXUFRP P RQVWRFN WKHLVVXDQFHRI WKH6HULHV% 3UHIHUUHG6WRFNWR 6WDUERDUGHIIHFWLYHO\ UHGXFHVWKHUHODWLYHYRWLQJ SRZ HURI WKHKROGHUVRI RXUFRP P RQVWRFN
, Q DGGLWLRQ WKHFRQYHUVLRQ RI WKH6HULHV% 3UHIHUUHG 6WRFN LQWR FRP P RQ VWRFN Z RXOG GLOXWHWKHRZ QHUVKLS LQWHUHVWRI H[ LVWLQJ KROGHUVRI RXUFRP P RQ VWRFN ) XUWKHUP RUH DQ\ VDOHVLQ WKHSXEOLF P DUNHWRI WKHFRP P RQ VWRFN LVVXDEOHXSRQ FRQYHUVLRQ RI WKH6HULHV% 3UHIHUUHG 6WRFN FRXOG DGYHUVHO\ DIIHFWSUHYDLOLQJ P DUNHWSULFHVRI RXUFRP P RQ VWRFN 3XUVXDQWWR DFXVWRP DU\ UHJ LVWUDWLRQ ULJ KWVDJ UHHP HQWZ LWK
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
2 XU6HULHV%3 UHIHUUHG6WRFNKDVULJ KWV SUHIHUHQFHVDQGSULYLOHJ HVWKDWDUHQRWKHOGE\ DQGDUHSUHIHUHQWLDOWR WKHULJ KWVRI RXUFRP P RQ VWRFNKROGHUV ZKLFK FRXOG DGYHUVHO\ DIIHFWRXUOLTXLGLW\ DQG ILQDQFLDOFRQGLWLRQ UHVXOWLQ WKHLQWHUHVWVRI KROGHUVRI RXU6HULHV% 3 UHIHUUHG 6WRFNGLIIHULQJ IURP WKRVHRI RXUFRP P RQVWRFNKROGHUVDQGGHOD\ RUSUHYHQWDQDWWHP SWWR WDNHRYHUWKH&RP SDQ\
6WDUERDUGDQGWKHRWKHUKROGHUVRI RXU6HULHV% 3UHIHUUHG6WRFNKDYHDOLTXLGDWLRQSUHIHUHQFHHQWLWOLQJ WKHP WR EHSDLG EHIRUHDQ\ SD\ P HQW P D\ EHP DGHWR KROGHUVRI RXUFRP P RQVWRFNLQFRQQHFWLRQZ LWKDOLTXLGDWLRQHYHQWDQDP RXQWSHUVKDUHRI 6HULHV% 3UHIHUUHG6WRFNHTXDO WR WKHJ UHDWHURI L WKHVWDWHGYDOXHWKHUHRI SOXVDFFUXHGDQGXQSDLGGLYLGHQGVDQG LL WKHDP RXQWWKDWZ RXOGKDYHEHHQUHFHLYHGKDGVXFK VKDUHRI 6HULHV% 3UHIHUUHG6WRFNEHHQFRQYHUWHGLQWR FRP P RQVWRFNLP P HGLDWHO\ SULRUWR VXFKOLTXLGDWLRQHYHQW
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¶VULJ KWWR UHGHHP VRP HRUDOORI VXFKVKDUHVRI 6HULHV% 3UHIHUUHG6WRFNIRUFDVK
7 KH KROGHUVRI RXU6HULHV% 3UHIHUUHG 6WRFN DOVR KDYH FHUWDLQ UHGHP SWLRQ ULJ KWVRUSXWULJ KWV LQFOXGLQJ WKH ULJ KWRQ DQ\ GDWH IROORZ LQJ
1 RYHP EHU WR UHTXLUHXVWR UHSXUFKDVHDOORUDQ\ SRUWLRQ RI WKH6HULHV% 3UHIHUUHG 6WRFN + ROGHUVRI WKH6HULHV% 3UHIHUUHG 6WRFN DOVR KDYHWKHULJ KWVXEMHFWWR FHUWDLQH[ FHSWLRQV WR UHTXLUHXVWR UHSXUFKDVHDOORUDQ\ SRUWLRQRI WKH6HULHV% 3UHIHUUHG6WRFNXSRQFHUWDLQ FKDQJ HRI FRQWUROHYHQWV
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
HIIHFWRI P DNLQJ DQ DFTXLVLWLRQ RI WKH &RP SDQ\ P RUH H[ SHQVLYH DQG SRWHQWLDOO\ GHWHUULQJ SURSRVHG WUDQVDFWLRQVWKDWP D\ RWKHUZ LVH EH EHQHILFLDOWR RXUVWRFNKROGHUV
6WDUERDUGP D\ H[ HUFLVHLQIOXHQFHRYHUXV LQFOXGLQJ WKURXJ KLWVDELOLW\ WR GHVLJ QDWHXS WR WZR P HP EHUVRI RXU%RDUGRI ’ LUHFWRUV
7 KHWUDQVDFWLRQGRFXP HQWVHQWHUHGLQWR LQFRQQHFWLRQZ LWKWKHVDOHRI WKH6HULHV% 3UHIHUUHG6WRFNWR 6WDUERDUGJ UDQWWR 6WDUERDUGFRQVHQW ULJ KWVZ LWKUHVSHFWWR FHUWDLQDFWLRQVE\ XV LQFOXGLQJ
DP HQGLQJ RXURUJ DQL] DWLRQDOGRFXP HQWVLQDP DQQHUWKDWZ RXOGKDYHDQDGYHUVHHIIHFWRQWKH6HULHV% 3UHIHUUHG6WRFN LVVXLQJ VHFXULWLHVWKDWDUHVHQLRUWR RUHTXDOLQSULRULW\ Z LWK WKH6HULHV% 3UHIHUUHG6WRFN DQG
LQFUHDVLQJ WKHP D[ LP XP QXP EHURI GLUHFWRUVRQRXU%RDUGWR P RUHWKDQHOHYHQSHUVRQVRUWZ HOYHSHUVRQV VXEMHFWWR WKHWHUP VRI WKH* RYHUQDQFH$ J UHHP HQWWKH‡* RYHUQDQFH$ J UHHP HQW· HQWHUHGLQWR LQFRQQHFWLRQZ LWKWKH6HFXULWLHV3XUFKDVH$ J UHHP HQW
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
, Q DGGLWLRQ WKHWHUP VRI WKH* RYHUQDQFH$ J UHHP HQWJ UDQW6WDUERDUG FHUWDLQ ULJ KWVWR GHVLJ QDWHGLUHFWRUVWR EHQRP LQDWHG IRUHOHFWLRQ E\ KROGHUVRI RXUFRP P RQ VWRFN ) RUVR ORQJ DVFHUWDLQ FULWHULDVHWIRUWK LQ WKH* RYHUQDQFH$ J UHHP HQWDUHVDWLVILHG LQFOXGLQJ WKDW6WDUERDUG EHQHILFLDOO\ RZ Q LQ WKHDJ J UHJ DWH DWOHDVWL VKDUHVRI 6HULHV% 3UHIHUUHG 6WRFN RU LL WKHOHVVHURI RI WKH&RP SDQ\ ¶VWKHQ RXWVWDQGLQJ FRP P RQVWRFN RQDQDVFRQYHUWHGEDVLV LI DSSOLFDEOH DQG VKDUHVRI LVVXHGDQGRXWVWDQGLQJ FRP P RQVWRFN VXEMHFW WR DGMXVWP HQWIRUVWRFN VSOLWV UHFODVVLILFDWLRQV FRP ELQDWLRQVDQG VLP LODUDGMXVWP HQWV 6WDUERDUG KDVWKHULJ KWWR GHVLJ QDWHWZ R GLUHFWRUV IRUHOHFWLRQWR RXU%RDUG FRQVLVWLQJ RI RQHQRP LQHHZ KR LVDIILOLDWHGZ LWK6WDUERDUGDQGRQHLQGHSHQGHQWQRP LQHH
7 KHGLUHFWRUVGHVLJ QDWHG E\ 6WDUERDUG DOVR DUHHQWLWOHG WR VHUYHRQ FRP P LWWHHVRI RXU%RDUG VXEMHFWWR DSSOLFDEOHODZ DQG VWRFN H[ FKDQJ H UXOHV 1 RWZ LWKVWDQGLQJ WKHIDFWWKDWDOOGLUHFWRUVZ LOOEHVXEMHFWWR ILGXFLDU\ GXWLHVWR XVDQGWR DSSOLFDEOHODZ WKHLQWHUHVWVRI WKHGLUHFWRUV GHVLJ QDWHGE\ 6WDUERDUGP D\ GLIIHUIURP WKHLQWHUHVWVRI RXUVHFXULW\ KROGHUVDVDZ KROHRURI RXURWKHUGLUHFWRUV
: HP D\ QRWEHDEOHWR UDLVHWKHIXQGVQHFHVVDU\ WR ILQDQFHDUHTXLUHGUHSXUFKDVHRI RXU6HULHV%3 UHIHUUHG6WRFN
$ IWHU1 RYHP EHU HDFK KROGHURI 6HULHV% 3UHIHUUHG 6WRFN Z LOOKDYH WKH ULJ KWXSRQ GD\ V¶ QRWLFH WR UHTXLUH WKH &RP SDQ\ WR UHSXUFKDVHDOORUDQ\ SRUWLRQ RI WKH6HULHV% 3UHIHUUHG 6WRFN IRUFDVK DWDSULFHHTXDOWR SHUVKDUHRI 6HULHV% 3UHIHUUHG 6WRFN SOXV DOODFFUXHG EXWXQSDLG GLYLGHQGV , Q DGGLWLRQ XSRQ FHUWDLQ FKDQJ HRI FRQWUROHYHQWV KROGHUVRI 6HULHV% 3UHIHUUHG 6WRFN FDQ UHTXLUHXV VXEMHFWWR FHUWDLQH[ FHSWLRQV WR UHSXUFKDVHDQ\ RUDOORI WKHLU6HULHV% 3UHIHUUHG6WRFN
, WLVSRVVLEOHWKDWZ HZ RXOGQRWKDYHVXIILFLHQWIXQGVWR P DNHDQ\ UHTXLUHGUHSXUFKDVHRI 6HULHV% 3UHIHUUHG6WRFN 0 RUHRYHU Z HP D\ QRW EHDEOHWR DUUDQJ HILQDQFLQJ WR SD\ WKHUHSXUFKDVHSULFH
* HQHUDO5 LVNV
1 DWXUDOGLVDVWHUV KRVWLOLWLHV VRFLDOXQUHVWVHYHUHZHDWKHUDQGRWKHUFDWDVWURSKLF HYHQWVP D\ GLVUXSWRXURSHUDWLRQVRUVXSSO\ FKDLQ
7 KHRFFXUUHQFHRI DQDWXUDOGLVDVWHU KRVWLOLWLHV F\ EHUDWWDFN VRFLDOXQUHVWWHUURULVWDFWLYLW\ RXWEUHDNRI HSLGHP LF SDQGHP LF RUFRQWDJ LRXV GLVHDVH SRZ HURXWDJ HV VHYHUHZ HDWKHU VXFK DVWRUQDGRV KXUULFDQHV EOL] ] DUGV LFHVWRUP V IORRGV KHDWZ DYHV HWF RURWKHUFDWDVWURSKLF HYHQWV P D\ GLVUXSWRXURSHUDWLRQV RUVXSSO\ FKDLQ DQG UHVXOWLQ WKH FORVXUH RI RXUUHVWDXUDQWV &RP SDQ\ RZ QHG RUIUDQFKLVHG RXU FRUSRUDWH RIILFHV DQ\ RI RXU 4 & &HQWHUV RU WKH IDFLOLWLHV RI RXU VXSSOLHUV DQG FDQ DGYHUVHO\ DIIHFWFRQVXP HU VSHQGLQJ FRQVXP HU FRQILGHQFHOHYHOVDQGVXSSO\ DYDLODELOLW\ DQGFRVWV DQ\ RI Z KLFKFRXOGP DWHULDOO\ DGYHUVHO\ DIIHFWRXUUHVXOWVRI RSHUDWLRQV
, QFUHDVLQJ O\ FRP SOH[ ODZVDQGUHJ XODWLRQVFRXOGDGYHUVHO\ DIIHFWRXUEXVLQHVV
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▇▇ ▇▇▇ VRP H ORFDOJ RYHUQP HQWDJ HQFLHV KDYH LP SOHP HQWHG RUGLQDQFHV WKDWUHVWULFWWKH VDOH RI FHUWDLQ IRRG RU GULQN SURGXFWV
&RP SOLDQFHZ LWKQHZ RUDGGLWLRQDOGRP HVWLF DQGLQWHUQDWLRQDOJ RYHUQP HQWODZ VRUUHJ XODWLRQV LQFOXGLQJ WKH( XURSHDQ8 QLRQ* HQHUDO’ DWD 3URWHFWLRQ 5 HJ XODWLRQ ‡* ’ 35 · DQG WKH&DOLIRUQLD&RQVXP HU3ULYDF\ $ FW‡&&3$ · Z KLFK FRXOG LQFUHDVHFRVWVIRUFRP SOLDQFH 7 KHVH ODZ VDQG UHJ XODWLRQVDUHLQFUHDVLQJ LQ FRP SOH[ LW\ DQG QXP EHU FKDQJ HIUHTXHQWO\ DQG LQFUHDVLQJ O\ FRQIOLFWDP RQJ WKHYDULRXVFRXQWULHVLQ Z KLFKZ HRSHUDWH Z KLFKKDVUHVXOWHGLQJ UHDWHUFRP SOLDQFHULVNDQGFRVWV , I Z HIDLOWR FRP SO\ Z LWKWKHVHODZ VRUUHJ XODWLRQV Z HFRXOGEH VXEMHFWWR UHSXWDWLRQDO GDP ▇▇ ▇ DQG VLJ QLILFDQWOLWLJ DWLRQ P RQHWDU\ GDP DJ HV UHJ XODWRU\ HQIRUFHP HQWDFWLRQV RU ILQHV LQ YDULRXV MXULVGLFWLRQV ) RUH[ ▇▇ ▇▇▇ DIDLOXUHWR FRP SO\ Z LWKWKH* ’ 35 FRXOGUHVXOWLQILQHVXS WR WKHJ UHDWHURI … P LOOLRQRU RI DQQXDOJ OREDO UHYHQXHV
’ LVUXSWLRQVRI RXUFULWLFDOEXVLQHVVRULQIRUP DWLRQWHFKQRORJ \ V\ VWHP VFRXOGKDUP RXUDELOLW\ WR FRP SHWHDQGFRQGXFWRXUEXVLQHVV
2 XUFULWLFDOEXVLQHVVDQGLQIRUP DWLRQWHFKQRORJ \ V\ VWHP VKDYHLQWKHSDVWDQGFRXOGLQWKHIXWXUHEHGDP DJ HGRULQWHUUXSWHGE\ SRZ HUORVV YDULRXVWHFKQRORJ LFDOIDLOXUHV XVHUHUURUV F\ EHUDWWDFNV VDERWDJ H RUDFWVRI * RG , Q SDUWLFXODU WKH &RP SDQ\ DQG RXUIUDQFKLVHHVKDYH H[ SHULHQFHG RFFDVLRQDOLQWHUUXSWLRQV RI RXU GLJ LWDORUGHULQJ VROXWLRQV Z KLFK P DNH RQOLQH RUGHULQJ XQDYDLODEOH RU VORZ WR UHVSRQG QHJ DWLYHO\ LP SDFWLQJ VDOHVDQG WKHH[ SHULHQFHRI RXUFXVWRP HUV , I RXUGLJ LWDORUGHULQJ VROXWLRQVGR QRWSHUIRUP Z LWK DGHTXDWHVSHHG DQG VHFXULW\ RXUFXVWRP HUVP D\ EHOHVVLQFOLQHGWR UHWXUQWR RXUGLJ LWDORUGHULQJ VROXWLRQV
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
WR P LWLJ DWHWKHULVNVRI WKHVHHYHQWVRUFRP SHQVDWHIRUORVVHVUHODWHG WR WKHVHHYHQWV Z KLFK FRXOG GDP DJ HRXUEXVLQHVVDQG UHSXWDWLRQ DQG EHH[ SHQVLYHDQGGLIILFXOWWR UHP HG\ RUUHSDLU
) DLOXUHWR P DLQWDLQ WKHLQWHJ ULW\ RI LQWHUQDORUFXVWRP HUGDWD FRXOG UHVXOWLQ GDP DJ HWR RXUUHSXWDWLRQ ORVVRI VDOHV DQGRUVXEMHFWXVWR OLWLJ DWLRQ SHQDOWLHVRUVLJ QLILFDQWFRVWV
: H DUH VXEMHFWWR D QXP EHURI SULYDF\ DQG GDWD SURWHFWLRQ ODZ V DQG UHJ XODWLRQV : H FROOHFWDQG UHWDLQ ODUJ H YROXP HV RI LQWHUQDODQG FXVWRP HUGDWD LQFOXGLQJ FUHGLWFDUG GDWD DQG RWKHUSHUVRQDOO\ LGHQWLILDEOH LQIRUP DWLRQ RI RXUHP SOR\ HHV DQG FXVWRP HUV KRXVHG LQ WKH YDULRXVLQIRUP DWLRQ V\ VWHP VZ HXVH &RQVWDQWO\ FKDQJ LQJ LQIRUP DWLRQ VHFXULW\ WKUHDWV SDUWLFXODUO\ SHUVLVWHQWF\ EHUVHFXULW\ WKUHDWV SRVH ULVNVWR WKH VHFXULW\ RI RXUV\ VWHP VDQG QHWZ RUNV DQG WKH FRQILGHQWLDOLW\ DYDLODELOLW\ DQG LQWHJ ULW\ RI RXUGDWD DQG WKH DYDLODELOLW\ DQG LQWHJ ULW\ RI RXUFULWLFDOEXVLQHVVIXQFWLRQV $ VWHFKQLTXHVXVHG LQ F\ EHUDWWDFNVHYROYH Z HP D\ QRWEH DEOH WR WLP HO\ GHWHFWWKUHDWVRU DQWLFLSDWH DQG LP SOHP HQWDGHTXDWH VHFXULW\ P HDVXUHV 7 KH LQWHJ ULW\ DQG SURWHFWLRQ RI WKH FXVWRP HU HP SOR\ HH IUDQFKLVHH DQG &RP SDQ\ GDWD DUH FULWLFDOWR XV 2 XULQIRUP DWLRQ WHFKQRORJ \ V\ VWHP V DQG GDWDEDVHV DQG WKRVH SURYLGHG E\ RXUWKLUG SDUW\ YHQGRUV LQFOXGLQJ LQWHUQDWLRQDOYHQGRUV KDYHEHHQDQGZ LOOFRQWLQXHWR EHVXEMHFWWR FRP SXWHUYLUXVHV P DOZ DUHDWWDFNV XQDXWKRUL] HGXVHUDWWHP SWV SKLVKLQJ DQG GHQLDORI VHUYLFHDQG RWKHUP DOLFLRXVF\ EHUDWWDFNV 7 KHIDLOXUHWR SUHYHQWIUDXG RUVHFXULW\ EUHDFKHVRUWR DGHTXDWHO\ LQYHVWLQ GDWD VHFXULW\ FRXOG KDUP RXUEXVLQHVVDQG UHYHQXHVGXHWR WKHUHSXWDWLRQDOGDP DJ HWR RXUEUDQG 6XFK DEUHDFK FRXOG DOVR UHVXOWLQ OLWLJ DWLRQ UHJ XODWRU\ DFWLRQV SHQDOWLHV DQGRWKHUVLJ QLILFDQWFRVWVWR XVDQGKDYHDP DWHULDODGYHUVHHIIHFWRQRXUILQDQFLDOUHVXOWV 7 KHVHFRVWVFRXOG EHVLJ QLILFDQWDQGZ HOOLQH[ FHVVRI RUQRWFRYHUHGE\ RXUF\ EHULQVXUDQFHFRYHUDJ H
: H KDYH EHHQ DQG ZLOOFRQWLQXH WR EH VXEMHFWWR YDULRXV W\ SHV RI LQYHVWLJ DWLRQV DQG OLWLJ DWLRQ LQFOXGLQJ FROOHFWLYH DQG FODVV DFWLRQ OLWLJ DWLRQ ZKLFKFRXOGVXEMHFWXVWR VLJ QLILFDQWGDP DJ HVRURWKHUUHP HGLHV
: HDUHVXEMHFWWR WKHULVN RI LQYHVWLJ DWLRQVDQG OLWLJ DWLRQ IURP YDULRXVSDUWLHV LQFOXGLQJ YHQGRUV FXVWRP HUV IUDQFKLVHHV VWDWHDQG IHGHUDO DJ HQFLHV VWRFNKROGHUVDQGHP SOR\ HHV ) URP WLP HWR WLP H Z HDUHLQYROYHGLQDQXP EHURI ODZ VXLWV FODLP V LQYHVWLJ DWLRQV DQGSURFHHGLQJ V FRQVLVWLQJ RI VHFXULWLHV DQWLWUXVWLQWHOOHFWXDOSURSHUW\ HP SOR\ P HQWFRQVXP HU SHUVRQDOLQMXU\ FRUSRUDWH J RYHUQDQFH FRP P HUFLDODQG RWKHUP DWWHUVDULVLQJ LQWKHRUGLQDU\ FRXUVHRI EXVLQHVV
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
QHJ DWLYHLP SDFWRQFRQVXP HUSHUFHSWLRQVRI XVDQGRXUEXVLQHVVDQGFUHDWHUHSXWDWLRQDORURWKHUKDUP WR WKH&RP SDQ\
: HP D\ QRWEHDEOHWR DGHTXDWHO\ SURWHFWRXULQWHOOHFWXDOSURSHUW\ ULJ KWV ZKLFKFRXOGQHJ DWLYHO\ DIIHFWRXUUHVXOWVRI RSHUDWLRQV
: H GHSHQG RQ WKH 3DSD -RKQ¶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¶VKLJ K TXDOLW\ UHSXWDWLRQ / LWLJ DWLRQ FRXOG UHVXOWLQ KLJ K FRVWVDQG GLYHUVLRQ RI UHVRXUFHV Z KLFK FRXOG QHJ DWLYHO\ DIIHFWRXU UHVXOWVRI RSHUDWLRQV UHJ DUGOHVVRI WKHRXWFRP H
: HP D\ EHVXEMHFWWR LP SDLUP HQWFKDUJ HV
, P SDLUP HQWFKDUJ HV DUH SRVVLEOH GXH WR WKH QDWXUH DQG WLP LQJ RI GHFLVLRQV Z H P DNH DERXWXQGHUSHUIRUP LQJ DVVHWV RUP DUNHWV RULI SUHYLRXVO\ RSHQHG RUDFTXLUHG UHVWDXUDQWVSHUIRUP EHORZ RXUH[ SHFWDWLRQV 7 KLVFRXOG UHVXOWLQ DGHFUHDVHLQ RXUUHSRUWHG DVVHWYDOXHDQG UHGXFWLRQLQRXUQHWLQFRP H
: HRSHUDWHJ OREDOO\ DQGFKDQJ HVLQWD[ ODZVFRXOGDGYHUVHO\ DIIHFWRXUUHVXOWV
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
, WHP % 8 QUHVROYHG 6WDII &RP P HQWV 1 RQH
, WHP 3 URSHUWLHV
$ V RI ’ HFHP EHU WKHUH Z HUH 3DSD -RKQ¶V UHVWDXUDQWV Z RUOGZ LGH 7 KH IROORZ LQJ WDEOHV SURYLGH WKH ORFDWLRQV RI RXU UHVWDXUDQWV : HGHILQH‡1 RUWK$ P HULFD· DVWKH8 QLWHG6WDWHVDQG&DQDGDDQG‡GRP HVWLF· DVWKHFRQWLJ XRXV8 QLWHG6WDWHV
1 RUWK$ P HULFD5 HVWDXUDQWV
&RP SDQ\ ) UDQFKLVHG 7 RWDO
$ ODEDP D
$ ODVND †
$ UL] RQD †
$ UNDQVDV †
&DOLIRUQLD †
&RORUDGR †
&RQQHFWLFXW †
’ HODZ DUH †
’ LVWULFWRI &ROXP ELD †
) ORULGD
* HRUJ LD
+ DZ DLL †
, GDKR †
, OOLQRLV
, QGLDQD
, RZ D †
. DQVDV
. HQWXFN\
/ RXLVLDQD †
0 DLQH †
0 DU\ ODQG
0 DVVDFKXVHWWV †
0 LFKLJ DQ †
0 LQQHVRWD †
0 LVVLVVLSSL †
0 LVVRXUL
0 RQWDQD †
1 HEUDVND †
1 HYDGD †
1 HZ + DP SVKLUH †
1 HZ -HUVH\ †
1 HZ 0 H[ LFR †
1 HZ <RUN †
1 RUWK&DUROLQD
1 RUWK’ DNRWD †
2 KLR †
2 NODKRP D †
2 UHJ RQ †
3HQQV\ OYDQLD †
5 KRGH, VODQG †
6RXWK&DUROLQD
6RXWK’ DNRWD †
7HQQHVVHH
7H[ DV
8 WDK †
9 LUJ LQLD
: DVKLQJ WRQ †
: HVW9 LUJ LQLD †
: LVFRQVLQ †
: \ RP LQJ †
7RWDO8 6 3DSD-RKQ¶V5 HVWDXUDQWV
&DQDGD †
7RWDO1 RUWK$ P HULFD3DSD-RKQ¶V5 HVWDXUDQWV
&RP SDQ\ RZ QHG 3DSD-RKQ¶VUHVWDXUDQWVLQFOXGHUHVWDXUDQWVRZ QHG E\ P DMRULW\ RZ QHG VXEVLGLDULHV 7 KHUHZ HUH VXFK UHVWDXUDQWV DW’ HFHP EHU LQ0 DU\ ODQG LQ7H[ DV LQ9 LUJ LQLD DQG LQ* HRUJ LD
, QWHUQDWLRQDO5 HVWDXUDQWV
) UDQFKLVHG
$ ] HUEDLMDQ
%DKUDLQ
%HODUXV
%ROLYLD
&D\ P DQ, VODQGV
&KLOH
&KLQD
&RORP ELD
&RVWD5 LFD
&\ SUXV
’ RP LQLFDQ5 HSXEOLF
( FXDGRU
( J \ SW
( O6DOYDGRU
) UDQFH
* XDP
* XDWHP DOD
, UDT
, UHODQG
, VUDHO
. D] DNKVWDQ
. RUHD
. XZ DLW
. \ UJ \ ] VWDQ
0 H[ LFR
0 RURFFR
1 HWKHUODQGV
1 LFDUDJ XD
2 P DQ
3DNLVWDQ
3DQDP D
3HUX
3KLOLSSLQHV
3RODQG
3RUWXJ DO
3XHUWR 5 LFR
4 DWDU
5 XVVLD
6DXGL$ UDELD
6SDLQ
7 ULQLGDG
7 XQLVLD
7 XUNH\
8 QLWHG$ UDE ( P LUDWHV
8 QLWHG. LQJ GRP
9 HQH] XHOD
7RWDO, QWHUQDWLRQDO3DSD-RKQ¶V5 HVWDXUDQWV
2 I WKH &RP SDQ\ ¶V LQWHUQDWLRQDOIUDQFKLVHG UHVWDXUDQWV DSSUR[ LP DWHO\ VWRUHVZ HUH WHP SRUDULO\ FORVHG DVRI ’ HFHP EHU SULQFLSDOO\ LQ/ DWLQ$ P HULFDDQG( XURSH LQDFFRUGDQFHZ LWKJ RYHUQP HQWSROLFLHVDVDUHVXOWRI WKH&2 9 , ’ RXWEUHDN
0 RVW3DSD-RKQ¶V&RP SDQ\ RZ QHGUHVWDXUDQWVDUHORFDWHGLQOHDVHGVSDFH 7 KHLQLWLDOWHUP RI P RVWGRP HVWLF UHVWDXUDQWOHDVHVLVILYH\ HDUV Z LWK P RVWOHDVHVSURYLGLQJ IRURQH ▇▇▇ ▇▇▇ RSWLRQVWR UHQHZ IRUDWOHDVWRQH DGGLWLRQDOWHUP * HQHUDOO\ WKH OHDVHVDUH WULSOH QHWOHDVHV Z KLFKUHTXLUHXVWR SD\ DOORUDSRUWLRQRI WKHFRVWRI LQVXUDQFH WD[ HVDQGXWLOLWLHV $ VDUHVXOWRI DVVLJ QLQJ RXULQWHUHVWLQREOLJ DWLRQVXQGHU SURSHUW\ OHDVHVDVDFRQGLWLRQ RI WKHUHIUDQFKLVLQJ RI FHUWDLQ UHVWDXUDQWV Z HDUHDOVR FRQWLQJ HQWO\ OLDEOHIRUSD\ P HQWRI DSSUR[ LP DWHO\
GRP HVWLF OHDVHV
1 LQH RI RXU 1 RUWK $ P HULFD 4 & &HQWHUV DUH ORFDWHG LQ OHDVHG VSDFH 2 XU UHP DLQLQJ WKUHH ORFDWLRQV DUH LQ EXLOGLQJ V Z H RZ Q
$ GGLWLRQDOO\ RXUFRUSRUDWHRIILFHDQGRXUSULQWLQJ RSHUDWLRQVORFDWHGLQ/ RXLVYLOOH . < DUHLQEXLOGLQJ VRZ QHGE\ XV
2 Q 6HSWHP EHU Z H DQQRXQFHG SODQVWR RSHQ DQ RIILFH LQ $ WODQWD * HRUJ LD Z KLFK Z LOOEH LQ D OHDVHG VSDFH &HUWDLQ FRUSRUDWH IXQFWLRQV LQFOXGLQJ P HQX LQQRYDWLRQ P DUNHWLQJ GLJ LWDO FXVWRP HU H[ SHULHQFH KXP DQ UHVRXUFHV GLYHUVLW\ HTXLW\ DQG LQFOXVLRQ FRP P XQLFDWLRQV RSHUDWLRQV GHYHORSP HQWILQDQFLDOSODQQLQJ DQGDQDO\ VLVDQGLQYHVWRUUHODWLRQVZ LOOEHUHORFDWHGWR WKH$ WODQWDRIILFH 2 XU LQIRUP DWLRQ WHFKQRORJ \ ILQDQFH VXSSO\ FKDLQ DQG OHJ DOWHDP VZ LOOFRQWLQXHWR RSHUDWHLQ RXU/ RXLVYLOOH . HQWXFN\ RIILFH Z KLFK UHP DLQV FULWLFDOWR RXUVXFFHVV : HDOVR P DLQWDLQ D&RP SDQ\ RZ QHG RIILFHRXWVLGHRI / RQGRQ 8 QLWHG . LQJ GRP ‡8 . · Z KHUHRXULQWHUQDWLRQDO RSHUDWLRQVDUHP DQDJ HG ) RUDGGLWLRQDOLQIRUP DWLRQ VHH‡1 RWH · RI ‡1 RWHVWR &RQVROLGDWHG) LQDQFLDO6WDWHP HQWV·
$ W’ HFHP EHU Z HOHDVHGDQGVXEOHDVHGDSSUR[ LP DWHO\ 3DSD-RKQ¶VUHVWDXUDQWVLWHVWR IUDQFKLVHHVLQWKH8 . 7 KHLQLWLDOOHDVH WHUP VRQWKHIUDQFKLVHGVLWHVLQWKH8 QLWHG. LQJ GRP DUHJ HQHUDOO\ \ HDUV 7 KHLQLWLDOOHDVHWHUP VRI WKHIUDQFKLVHHVXEOHDVHVDUHJ HQHUDOO\ ILYHWR WHQ\ HDUV : HRZ QDIXOOVHUYLFH4 & &HQWHULQWKH8 . 6HH‡1 RWH · RI ‡1 RWHVWR &RQVROLGDWHG) LQDQFLDO6WDWHP HQWV· IRUDGGLWLRQDO LQIRUP DWLRQ
, WHP / HJ DO3 URFHHGLQJ V
7 KHLQIRUP DWLRQ FRQWDLQHG LQ ‡1 RWH / LWLJ DWLRQ &RP P LWP HQWVDQG &RQWLQJ HQFLHV· RI ‡1 RWHVWR &RQVROLGDWHG ) LQDQFLDO6WDWHP HQWV· LV LQFRUSRUDWHGE\ UHIHUHQFHKHUHLQ
, WHP 0 LQH6DIHW\ ’ LVFORVXUHV 1 RQH
, QIRUP DWLRQ DERXWRXU( [ HFXWLYH2 IILFHUV
6HWIRUWKEHORZ DUHWKHFXUUHQWH[ HFXWLYHRIILFHUVRI 3DSD-RKQ¶V
1 DP H | $ J H D | 3 RVLWLRQ | ) LUVW( OHFWHG ( [ HFXWLYH2 IILFHU | |||
5 REHUW0 / \ QFK | 3UHVLGHQWDQG&KLHI ( [ HFXWLYH2 IILFHU | |||||
$ QQ% * XJ LQR | &KLHI ) LQDQFLDO2 IILFHU | |||||
0 DUYLQ%RDN\ H | &KLHI 3HRSOHDQG’ LYHUVLW\ 2 IILFHU | |||||
$ P DQGD&ODUN | &KLHI ’ HYHORSP HQW2 IILFHU | |||||
-DP HV$ 1 ▇▇▇▇▇▇ | &KLHI 2 SHUDWLQJ 2 IILFHU 1 RUWK$ P HULFD | |||||
&DUROLQH0 2 \ OHU | &KLHI / HJ DODQG5 LVN2 IILFHU | |||||
-DFN+ 6Z D\ VODQG | &KLHI 2 SHUDWLQJ 2 IILFHU , QWHUQDWLRQDO | |||||
& 0 D[ : HW] ▇▇ | &KLHI &RP P HUFLDODQG0 DUNHWLQJ 2 IILFHU | |||||
D $ J HVDUHDVRI -DQXDU\ |
5 REHUW0 / \ QFK Z DVDSSRLQWHG DV3UHVLGHQWDQG &KLHI ( [ HFXWLYH2 IILFHULQ$ XJ XVW 0 U / \ QFK MRLQHG 3DSD-RKQ¶VDIWHUVHUYLQJ DV
3UHVLGHQWRI $ UE\ ¶V5 HVWDXUDQW* URXS VLQFH$ XJ XVW DQGVHUYHGDV%UDQG3UHVLGHQWDQG&KLHI 0 DUNHWLQJ 2 IILFHUIURP $ XJ XVW WR
$ XJ XVW 3ULRUWR $ UE\ ¶V KH VHUYHG DV9 LFH 3UHVLGHQWRI 0 DUNHWLQJ DW7DFR %HOO 0 U / \ QFK KDV P RUH WKDQ \ HDUV FRP ELQHG H[ SHULHQFHLQWKH4 65 DQGFRQVXP HUSDFNDJ HGJ RRGVLQGXVWULHV DQGDOVR KHOGVHQLRUUROHVDW+ - + HLQ] &RP SDQ\ DQG3URFWHU * DP EOH
$ QQ % * XJ LQR Z DVDSSRLQWHG WR &KLHI ) LQDQFLDO2 IILFHULQ 2 FWREHU 0 V * XJ LQR MRLQV3DSD-RKQ¶VIURP 7DUJ HW&RUSRUDWLRQ Z KHUH VKHVHUYHGDV6HQLRU9 LFH3UHVLGHQW) LQDQFLQJ 3ODQQLQJ DQG$ QDO\ VLVVLQFH SURYLGLQJ RYHUDOOVWUDWHJ \ J XLGDQFH DQGGLUHFWLRQLQWKH GHYHORSP HQWDQG H[ HFXWLRQ RI 7DUJ HW¶VSODQQLQJ DQDO\ VLVDQG FDSLWDOLQYHVWP HQWSRUWIROLRV 3ULRUWR 7DUJ HW0 V * XJ LQR VSHQW \ HDUVDW 3DWWHUVRQ&RP SDQLHV, QF LQFOXGLQJ IRXU\ HDUVDV( [ HFXWLYH9 LFH3UHVLGHQWDQG&KLHI ) LQDQFLDO2 IILFHU
0 DUYLQ %RDN\ HZ DVDSSRLQWHG &KLHI 3HRSOHDQG ’ LYHUVLW\ 2 IILFHULQ 1 RYHP EHU DIWHUSUHYLRXVO\ VHUYLQJ DV3DSD-RKQ¶VILUVW&KLHI
3HRSOH 2 IILFHUVLQFH -DQXDU\ 0 U %RDN\ H MRLQHG 3DSD -RKQ¶V DIWHUVHUYLQJ DV9 LFH 3UHVLGHQWRI + XP DQ 5 HVRXUFHV DWSHWUROHXP FRP SDQ\ $ QGHDYRU LQ7H[ DVZ KHUHKHDOVR OHG GLYHUVLW\ HTXLW\ DQG LQFOXVLRQ 3ULRUWR $ QGHDYRU KHZ DV&KLHI + XP DQ 5 HVRXUFHV2 IILFHU IRU0 7 6 $ OOVWUHDP DWHOHFRP P XQLFDWLRQVFRP SDQ\ QRZ SDUWRI %HOO&DQDGDIURP -XQH WR 0 DUFK 3ULRUWR WKDW0 U%RDN\ HKHOG VHQLRUKXP DQ UHVRXUFHVSRVLWLRQVIRURUJ DQL] DWLRQVDFURVVWKH8 QLWHG 6WDWHV &DQDGDDQG / DWLQ$ P HULFD LQFOXGLQJ DW* RRG\ HDU WKH3XOWH
* URXS DQG7 KH+ RP H’ HSRW
$ P DQGD&ODUN Z DVDSSRLQWHGDV&KLHI ’ HYHORSP HQW2 IILFHULQ) HEUXDU\ 0 V &ODUNMRLQV3DSD-RKQ¶VIURP 7DFR %HOOZ KHUHVKHZ DV UHVSRQVLEOHIRUGHVLJ Q FRQVXP HUIDFLQJ WHFKQRORJ \ P HUFKDQGLVLQJ FXVWRP HUP DUNHWLQJ QHZ FRQFHSWVDQGFRP SDQ\ GHYHORSP HQWVHUYLQJ DV ( [ HFXWLYH 9 LFH 3UHVLGHQW5 HVWDXUDQW( [ SHULHQFH IURP ) HEUXDU\ WR ) HEUXDU\ 6HQLRU 9 LFH 3UHVLGHQW1 RUWK $ P HULFD ’ HYHORSP HQWIURP 0 D\ WR ) HEUXDU\ DQG WKH * HQHUDO0 DQDJ HUIRU7DFR %HOO&DQDGD IURP 1 RYHP EHU WR $ XJ XVW 3UHYLRXVO\ 0 V &ODUN VHUYHG LQ UROHVRI LQFUHDVLQJ UHVSRQVLELOLW\ LQ %UDQG 0 DUNHWLQJ DW7DFR %HOOVLQFH 3ULRUWR MRLQLQJ 7DFR %HOO
0 V &ODUNZ RUNHGDW3URFWHUDQG* DP EOHLQYDULRXVP DUNHWLQJ UROHVIRUQHDUO\ \ HDUVRQ3 * EUDQGVLQFOXGLQJ 2 OD\ 3DP SHUVDQG2 UDO
%
-DP HV$ 1 RUEHUJ Z DVQDP HG &KLHI 2 SHUDWLQJ 2 IILFHU 1 RUWK $ P HULFD LQ 1 RYHP EHU DIWHUVHUYLQJ DV&KLHI 5 HVWDXUDQW2 SHUDWLRQV 2 IILFHUVLQFH-XO\ 0 U 1 RUEHUJ D4 65 LQGXVWU\ YHWHUDQ VSHQWP RUHWKDQ \ HDUVRI KLVFDUHHUDW0 F’ RQDOG¶V + LVP RVWUHFHQWUROH WKHUHZ DV( [ HFXWLYH9 LFH3UHVLGHQWDQG&KLHI 2 SHUDWLRQV2 IILFHUIURP WR
Z KHUHKHP DQDJ HGRSHUDWLRQVIRU 8 6 UHVWDXUDQWV $ IWHUKLVORQJ WHQXUHDW0 F’ RQDOG¶V 1 RUEHUJ VHUYHGDVDQLQGHSHQGHQWVWUDWHJ LF DGYLVRUIURP WR WR RUJ DQL] DWLRQVLQ WKH UHVWDXUDQWKRVSLWDOLW\ HQWHUWDLQP HQWDQG FRQVXP HUJ RRGVFDWHJ RULHV + H VHUYHVDVD P HP EHURI WKHERDUGRI GLUHFWRUVIRU2 XW ( TXDO: RUNSODFH$ GYRFDWHV WKHZ RUOG¶VSUHP LHUQRQSURILWRUJ DQL] DWLRQGHGLFDWHGWR DFKLHYLQJ OHVELDQ ▇ ▇\ ELVH[ XDOWUDQVJ HQGHU DQGTXHHUZ RUNSODFHHTXDOLW\
&DUROLQH0 2 \ OHUZ DVDSSRLQWHG &KLHI / HJ DODQG 5 LVN 2 IILFHULQ 2 FWREHU 0 V 2 \ OHUSUHYLRXVO\ VHUYHG DV6HQLRU9 LFH3UHVLGHQW &KLHI / HJ DO2 IILFHU IURP 0 D\ WR 2 FWREHU DQG 6HQLRU 9 LFH 3UHVLGHQW * HQHUDO&RXQVHOIURP 0 D\ WR 0 D\
$ GGLWLRQDOO\ 0 V 2 \ OHUVHUYHGDV6HQLRU9 LFH3UHVLGHQW/ HJ DO$ IIDLUVIURP 1 RYHP EHU WR 0 D\ 6KHMRLQHGWKH&RP SDQ\ ¶VOHJ DO GHSDUWP HQWLQ 6KHDOVR VHUYHG DVLQWHULP KHDG RI + XP DQ 5 HVRXUFHVIURP ’ HFHP EHU WR 6HSWHP EHU 3ULRUWR MRLQLQJ 3DSD
-RKQ¶V 0 V 2 \ OHUSUDFWLFHGODZ Z LWKWKHILUP : \ DWW7DUUDQWDQG&RP EV/ / 3
-DFN + 6Z D\ VODQG Z DV DSSRLQWHG WR &KLHI 2 SHUDWLQJ 2 IILFHU , QWHUQDWLRQDO LQ 0 D\ DIWHU VHUYLQJ DV 6HQLRU 9 LFH 3UHVLGHQW
, QWHUQDWLRQDOVLQFH$ SULO 0 U 6Z D\ VODQG SUHYLRXVO\ VHUYHG DV9 LFH3UHVLGHQW, QWHUQDWLRQDOIURP $ ▇▇▇▇ ▇▇ $ ▇▇▇▇ 5 HJ LRQDO 9 LFH3UHVLGHQW, QWHUQDWLRQDOIURP 0 D\ WR$ SULO DQG9 LFH3UHVLGHQW, QWHUQDWLRQDO2 SHUDWLRQVIURP $ ▇▇▇▇ ▇▇ 0 D\ 0 U
6Z D\ VODQGKDVVHUYHGLQYDULRXVFDSDFLWLHVRI LQFUHDVLQJ UHVSRQVLELOLW\ LQ, QWHUQDWLRQDO2 SHUDWLRQVVLQFHMRLQLQJ WKH&RP SDQ\ \ HDUVDJ R
& 0 D[ : HW] HOZ DVDSSRLQWHG&KLHI &RP P HUFLDODQG0 DUNHWLQJ 2 IILFHULQ1 RYHP EHU 0 U: HW] HOMRLQHG3DSD-RKQ¶VDIWHUVHUYLQJ DV 9 LFH3UHVLGHQW&RQVXP HU%UDQGVDQG %XVLQHVV7 UDQVIRUP DWLRQ – 8 6 DQG &DQDGDVLQFH-XO\ DW33* $ UFKLWHFWXUDO&RDWLQJ V $ OVR DW
33* 0 U: HW] HOVHUYHGDV9 LFH3UHVLGHQW+ RP H&HQWHUVDQG* OREDO6WUDWHJ LF 0 DUNHWLQJ IURP -XQH WKURXJ K-XO\ DQGDV* HQHUDO
0 DQDJ HU+ RP H&HQWHUVDQG &KLHI 0 DUNHWLQJ 2 IILFHU8 6 &DQDGDVWDUWLQJ LQ 1 RYHP EHU 3ULRUWR 33* 0 U: HW] HOZ RUNHG DW+ -
+ HLQ] &RP SDQ\ IRUWHQ \ HDUVLQ DYDULHW\ RI GRP HVWLF DQG J OREDOUROHV OHDGLQJ FRQVXP HUGULYHQ EXVLQHVVHV GHYHORSLQJ EUDQG P DUNHWLQJ VWUDWHJ LHVDQGGHOLYHULQJ SURILWDEOHJ URZ WK
7 KHUHDUHQR IDP LO\ UHODWLRQVKLSVEHWZ HHQDQ\ RI WKHGLUHFWRUVRUH[ HFXWLYHRIILFHUVRI WKH&RP SDQ\
3$ 5 7 , ,
, WHP 0 DUNHWIRU5 HJ LVWUDQW¶V&RP P RQ ( TXLW\ 5 HODWHG 6WRFNKROGHU0 DWWHUVDQG , VVXHU3 XUFKDVHVRI ( TXLW\ 6HFXULWLHV
2 XUFRP P RQ VWRFN WUDGHVRQ 7 KH1 $ 6’ $ 4 * OREDO6HOHFW0 DUNHWWLHURI 7 KH1 $ 6’ $ 4 6WRFN 0 DUNHWXQGHUWKHV\ P ERO3==$ $ VRI
) HEUXDU\ WKHUH Z HUH UHFRUG KROGHUVRI FRP P RQ VWRFN + RZ HYHU WKHUH DUH VLJ QLILFDQWO\ P RUH EHQHILFLDORZ QHUVRI RXU FRP P RQVWRFNWKDQWKHUHDUHUHFRUGKROGHUV
2 Q -DQXDU\ RXU%RDUG RI ’ LUHFWRUVGHFODUHG DILUVWTXDUWHUGLYLGHQG RI SHUVKDUHRI FRP P RQ VWRFN DSSUR[ LP DWHO\
P LOOLRQZ DVSDLGWR FRP P RQVWRFNKROGHUVDQG P LOOLRQZ DVSDLGDV‡SDVVWKURXJ K· GLYLGHQGVWR KROGHUVRI 6HULHV% 3UHIHUUHG6WRFNRQ DQ ‡DVFRQYHUWHG EDVLV· 7 KHILUVWTXDUWHUGLYLGHQG RQ RXWVWDQGLQJ VKDUHVRI 6HULHV% 3UHIHUUHG 6WRFN Z DVDOVR GHFODUHG RQ -DQXDU\
7 KHFRP P RQ VWRFN GLYLGHQG Z DVSDLG RQ ) HEUXDU\ WR VWRFNKROGHUVRI UHFRUG DVRI WKHFORVHRI EXVLQHVVRQ ) HEUXDU\
7 KHILUVWTXDUWHUSUHIHUUHGGLYLGHQGRI P LOOLRQZ LOOEHSDLGWR KROGHUVRI 6HULHV% 3UHIHUUHG6WRFNRQ$ SULO
: H DQWLFLSDWH FRQWLQXLQJ WKH SD\ P HQWRI TXDUWHUO\ FDVK GLYLGHQGV 7 KH DFWXDODP RXQWRI VXFK GLYLGHQGVLVVXEMHFWWR GHFODUDWLRQ E\ RXU
%RDUG RI ’ LUHFWRUVDQG Z LOOGHSHQG XSRQ IXWXUH HDUQLQJ V UHVXOWVRI RSHUDWLRQV FDSLWDOUHTXLUHP HQWV RXUILQDQFLDOFRQGLWLRQ DQG RWKHU UHOHYDQWIDFWRUV 7 KHUHFDQEHQR DVVXUDQFHWKDWWKH&RP SDQ\ Z LOOFRQWLQXHWR SD\ TXDUWHUO\ FDVKGLYLGHQGVDWWKHFXUUHQWUDWHRUDWDOO
2 XU%RDUGRI ’ LUHFWRUVKDVDXWKRUL] HGWKHUHSXUFKDVHRI XS WR P LOOLRQRI FRP P RQVWRFNXQGHUDVKDUHUHSXUFKDVHSURJ UDP WKDWEHJ DQ RQ 1 RYHP EHU DQG LVHIIHFWLYHWKURXJ K’ HFHP EHU , QILVFDO DWRWDORI VKDUHVZ LWK DQ DJ J UHJ DWHFRVWRI
P LOOLRQDQGDQDYHUDJ HSULFHRI SHUVKDUHZ HUHUHSXUFKDVHGXQGHUWKLVSURJ UDP ) XQGLQJ IRUWKHVKDUHUHSXUFKDVHSURJ UDP KDVEHHQ SURYLGHGWKURXJ KRXURSHUDWLQJ FDVKIORZ V
7 KHIROORZ LQJ WDEOHVXP P DUL] HVRXUUHSXUFKDVHDFWLYLW\ E\ ILVFDOSHULRGGXULQJ WKHIRXUWKTXDUWHUHQGHG’ HFHP EHU LQWKRXVDQGV H[ FHSWSHUVKDUHDP RXQWV
7 RWDO1 XP EHU 0 D[ LP XP ’ ROODU
7 RWDO $ YHUDJ H RI 6KDUHV3 XUFKDVHG 9 DOXHRI 6KDUHV
1 XP EHU 3 ULFH DV3 DUWRI 3 XEOLFO\ WKDW0 D\ <HW%H RI 6KDUHV 3 DLG SHU $ QQRXQFHG 3 ODQV 3 XUFKDVHG 8 QGHUWKH
) LVFDO3 HULRG 3 XUFKDVHG 6KDUH RU3 URJ UDP V 3 ODQVRU3 URJ UDP V
6XEVHTXHQWWR \ HDUHQG Z H DFTXLUHG DQ DGGLWLRQDO VKDUHV DWDQ DJ J UHJ DWH FRVWRI P LOOLRQ $ SSUR[ LP DWHO\ P LOOLRQ UHP DLQHGDYDLODEOHXQGHUWKH&RP SDQ\ ¶VVKDUHUHSXUFKDVHSURJ UDP DVRI ) HEUXDU\
7 KH&RP SDQ\ XWLOL] HVDZ ULWWHQWUDGLQJ SODQXQGHU5 XOH E XQGHUWKH6HFXULWLHV( [ FKDQJ H$ FWRI DVDP HQGHG IURP WLP HWR WLP H WR IDFLOLWDWHWKHUHSXUFKDVHRI VKDUHVRI RXUFRP P RQ VWRFN XQGHUWKLVVKDUHUHSXUFKDVHSURJ UDP 7 KHUHFDQ EHQR DVVXUDQFHWKDWZ HZ LOO UHSXUFKDVHVKDUHVRI RXUFRP P RQVWRFNHLWKHUWKURXJ KD5 XOH E WUDGLQJ SODQRURWKHUZ LVH
7 KH LQIRUP DWLRQ UHTXLUHG E\ , WHP Z LWK UHVSHFWWR VHFXULWLHVDXWKRUL] HG IRULVVXDQFH XQGHUHTXLW\ FRP SHQVDWLRQ SODQVLVLQFRUSRUDWHG KHUHLQE\ UHIHUHQFHWR 3DUW, , , , WHP RI WKLV) RUP .
6WRFN 3 HUIRUP DQFH* UDSK
7 KH IROORZ LQJ SHUIRUP DQFH J UDSK FRP SDUHVWKH FXP XODWLYH VKDUHKROGHUUHWXUQ RI WKH &RP SDQ\ ¶VFRP P RQ VWRFN IRUWKH ILYH\ HDUSHULRG EHWZ HHQ ’ HFHP EHU DQG ’ HFHP EHU WR L WKH1 $ 6’ $ 4 6WRFN 0 DUNHW8 6 , QGH[ DQG LL DJ URXS RI WKH&RP SDQ\ ¶V SHHUVFRQVLVWLQJ RI 8 6 FRP SDQLHVOLVWHG RQ 1 $ 6’ $ 4 Z LWK VWDQGDUG LQGXVWU\ FODVVLILFDWLRQ 6,& FRGHV HDWLQJ DQG GULQNLQJ SODFHV 0 DQDJ HP HQWEHOLHYHVWKHFRP SDQLHVLQFOXGHG LQ WKLVSHHUJ URXS DSSURSULDWHO\ UHIOHFWWKHVFRSHRI WKH&RP SDQ\ ¶VRSHUDWLRQVDQG P DWFKWKHFRP SHWLWLYHP DUNHWLQZ KLFKWKH&RP SDQ\ RSHUDWHV 7 KHJ UDSKDVVXP HVWKHYDOXHRI WKHLQYHVWP HQWVLQWKH&RP SDQ\ ¶VFRP P RQ VWRFNDQGLQHDFKLQGH[ Z DV RQ’ HFHP EHU DQGWKDWDOOGLYLGHQGVZ HUHUHLQYHVWHG
, WHP 6HOHFWHG ) LQDQFLDO’ DWD
7 KH VHOHFWHG ILQDQFLDOGDWD SUHVHQWHG IRU HDFK RI WKH SDVWILYH ILVFDO\ HDUV Z HUH GHULYHG IURP RXU DXGLWHG &RQVROLGDWHG ) LQDQFLDO
6WDWHP HQWV 7 KH VHOHFWHG ILQDQFLDOGDWD EHORZ VKRXOG EH UHDG LQ FRQMXQFWLRQ Z LWK ‡0 DQDJ HP HQW¶V’ LVFXVVLRQ DQG $ QDO\ VLVRI ) LQDQFLDO &RQGLWLRQ DQG 5 HVXOWV RI 2 SHUDWLRQV· DQG WKH ‡&RQVROLGDWHG ) LQDQFLDO6WDWHP HQWV· DQG 1 RWHV WKHUHWR LQFOXGHG LQ , WHP DQG , WHP UHVSHFWLYHO\ RI WKLV) RUP .
, Q WKRXVDQGV H[ FHSWSHUVKDUHGDWD
<HDU( QGHG
’ HF ’ HF ’ HF ’ HF ’ HF
Z HHNV Z HHNV Z HHNV Z HHNV Z HHNV
, QFRP H6WDWHP HQW’ DWD
5 HYHQXHV
’ RP HVWLF &RP SDQ\ RZ QHGUHVWDXUDQWVDOHV
1 RUWK$ P HULFDIUDQFKLVHUR\ DOWLHVDQGIHHV
1 RUWK$ P HULFDFRP P LVVDU\ UHYHQXHV
, QWHUQDWLRQDOUHYHQXHV
2 WKHUUHYHQXHV
7RWDOUHYHQXHV
5 HIUDQFKLVLQJ DQGLP SDLUP HQWJ DLQV ORVVHV QHW †
2 SHUDWLQJ LQFRP H
/ HJ DOVHWWOHP HQW † † † †
, QYHVWP HQWLQFRP H
, QWHUHVWH[ SHQVH
, QFRP HEHIRUHLQFRP HWD[ HV
, QFRP HWD[ H[ SHQVH EHQHILW
1 HWLQFRP HEHIRUHDWWULEXWLRQWR QRQFRQWUROOLQJ
LQWHUHVWV
1 HWLQFRP HDWWULEXWDEOHWR QRQFRQWUROOLQJ LQWHUHVWV
1 HWLQFRP HDWWULEXWDEOHWR WKH&RP SDQ\
1 HWLQFRP H ORVV DWWULEXWDEOHWR FRP P RQ VKDUHKROGHUV
%DVLF HDUQLQJ V ORVV SHUFRP P RQVKDUH
’ LOXWHGHDUQLQJ V ORVV SHUFRP P RQVKDUH
%DVLF Z HLJ KWHGDYHUDJ HFRP P RQVKDUHV
RXWVWDQGLQJ
’ LOXWHGZ HLJ KWHGDYHUDJ HFRP P RQVKDUHV
RXWVWDQGLQJ
’ LYLGHQGVGHFODUHGSHUFRP P RQVKDUH
%DODQFH6KHHW’ DWD
7RWDODVVHWV
7RWDOGHEW
6HULHV% &RQYHUWLEOH3UHIHUUHG6WRFN † † †
5 HGHHP DEOHQRQFRQWUROOLQJ LQWHUHVWV
7RWDOVWRFNKROGHUV¶ GHILFLWHTXLW\
: HRSHUDWHRQD Z HHNILVFDO\ HDUHQGLQJ RQWKHODVW6XQGD\ RI ’ HFHP EHURI HDFK\ HDU$ OOILVFDO\ HDUVFRQVLVWHGRI
Z HHNVZ LWK WKHH[ FHSWLRQ RI WKH ILVFDO\ HDUZ KLFK FRQVLVWHG RI Z HHNV 7 KHDGGLWLRQDOZ HHN UHVXOWHG LQ DGGLWLRQDO UHYHQXHV RI DSSUR[ LP DWHO\ P LOOLRQ DQG DGGLWLRQDORSHUDWLQJ LQFRP H RI DSSUR[ LP DWHO\ P LOOLRQ RU SHU GLOXWHGVKDUHIRU
1 RUWK $ P HULFD IUDQFKLVH UR\ DOWLHVZ HUH GHULYHG IURP IUDQFKLVHG UHVWDXUDQWVDOHVRI ELOOLRQ LQ ELOOLRQ LQ ELOOLRQLQ ELOOLRQLQ ELOOLRQRQD Z HHNEDVLV DQG ELOOLRQLQ
, QFOXGHV LQWHUQDWLRQDOUR\ DOWLHV DQG IHHV UHVWDXUDQWVDOHV IRULQWHUQDWLRQDO&RP SDQ\ RZ QHG UHVWDXUDQWV DQG LQWHUQDWLRQDO FRP P LVVDU\ UHYHQXHV , QWHUQDWLRQDOUR\ DOWLHV Z HUH GHULYHG IURP IUDQFKLVHG UHVWDXUDQWVDOHV RI P LOOLRQ LQ
P LOOLRQ LQ P LOOLRQ LQ P LOOLRQ LQ P LOOLRQ RQ D Z HHN EDVLV DQG
P LOOLRQ LQ 5 HVWDXUDQWVDOHVIRULQWHUQDWLRQDO&RP SDQ\ RZ QHG UHVWDXUDQWVZ HUH P LOOLRQ LQ P LOOLRQ LQ P LOOLRQRQD Z HHNEDVLV DQG P LOOLRQLQ QRQHLQ DQG
7 KH &RP SDQ\ LQFXUUHG P LOOLRQ DQG P LOOLRQ RI 6SHFLDO FKDUJ HV LQ DQG UHVSHFWLYHO\ 6HH
‡0 DQDJ HP HQW¶V’ LVFXVVLRQDQG$ QDO\ VLVRI ) LQDQFLDO&RQGLWLRQDQG5 HVXOWVRI 2 SHUDWLRQV· IRUDGGLWLRQDOLQIRUP DWLRQ 5 HSUHVHQWVWKHQRQFRQWUROOLQJ LQWHUHVWV¶DOORFDWLRQRI LQFRP HIRURXUMRLQWYHQWXUHDUUDQJ HP HQWV
, WHP 0 DQDJ HP HQW¶V’ LVFXVVLRQ DQG$ QDO\ VLVRI ) LQDQFLDO&RQGLWLRQ DQG 5 HVXOWVRI 2 SHUDWLRQV
, QWURGXFWLRQ
3DSD-RKQ¶V, QWHUQDWLRQDO , QF UHIHUUHGWR DVWKH‡&RP SDQ\ · ‡3DSD-RKQ¶V· RULQWKHILUVWSHUVRQQRWDWLRQVRI ‡Z H· ‡XV· DQG‡RXU· EHJ DQ RSHUDWLRQVLQ $ W’ HFHP EHU WKHUHZ HUH 3DSD-RKQ¶VUHVWDXUDQWVLQ RSHUDWLRQ FRQVLVWLQJ RI &RP SDQ\ RZ QHG DQG IUDQFKLVHGUHVWDXUDQWV 2 XUUHYHQXHVDUHGHULYHGIURP UHWDLOVDOHVRI SL] ] DDQGRWKHUIRRGDQGEHYHUDJ HSURGXFWVWR WKHJ HQHUDOSXEOLF
E\ &RP SDQ\ RZ QHG UHVWDXUDQWV IUDQFKLVH UR\ DOWLHV DQG VDOHVRI IUDQFKLVH DQG GHYHORSP HQWULJ KWV $ GGLWLRQDOO\ DSSUR[ LP DWHO\ WR RI RXU1 RUWK$ P HULFDUHYHQXHVLQ HDFK RI WKHODVWWZ R ILVFDO\ HDUVZ HUHGHULYHG IURP VDOHVWR IUDQFKLVHHVRI YDULRXVLWHP VLQFOXGLQJ
IRRG DQG SDSHUSURGXFWV IURP RXUGRP HVWLF 4 XDOLW\ &RQWURO&HQWHUV ‡4 & &HQWHUV· SULQWLQJ DQG SURP RWLRQDOLWHP V DQG LQIRUP DWLRQ V\ VWHP VHTXLSP HQWDQG VRIWZ DUHDQG UHODWHG VHUYLFHV : HDOVR GHULYHUHYHQXHVIURP WKHRSHUDWLRQ RI RXULQWHUQDWLRQDO4 & FHQWHULQ WKH 8 QLWHG. LQJ GRP DQGIURP FRQWULEXWLRQVUHFHLYHGE\ 3DSD-RKQ¶V0 DUNHWLQJ ) XQG ‡3-0 ) · RXUQDWLRQDOP DUNHWLQJ IXQG : HEHOLHYHWKDW LQ DGGLWLRQ WR VXSSRUWLQJ ERWK &RP SDQ\ DQG IUDQFKLVHG SURILWDELOLW\ DQG J URZ WK WKHVH DFWLYLWLHV FRQWULEXWH WR SURGXFWTXDOLW\ DQG FRQVLVWHQF\ WKURXJ KRXWWKH3DSD-RKQ¶VV\ VWHP
: H VWULYH WR REWDLQ KLJ K TXDOLW\ UHVWDXUDQWVLWHV Z LWK J RRG DFFHVV DQG YLVLELOLW\ DQG WR HQKDQFH WKH DSSHDUDQFH DQG TXDOLW\ RI RXU UHVWDXUDQWV : H EHOLHYH WKHVH IDFWRUV LP SURYH RXULP ▇▇ ▇ DQG EUDQG DZ DUHQHVV ’ HWDLOHG EHORZ DUH SURJ UHVVLRQV RI RXU’ RP HVWLF DQG
, QWHUQDWLRQDOUHVWDXUDQWVRYHUWKHODVWWZ RILVFDO\ HDUV
’ RP HVWLF &RP SDQ\ RZ QHG
) UDQFKLVHG 1 RUWK
$ P HULFD
7 RWDO1 RUWK
$ P HULFD , QWHUQDWLRQDO 6\ VWHP Z LGH
%HJ LQQLQJ ’ HFHP EHU
2 SHQHG
&ORVHG
$ FTXLUHG
6ROG
( QGLQJ ’ HFHP EHU
2 SHQHG
&ORVHG
( QGLQJ ’ HFHP EHU
5 HFHQW%XVLQHVV0 DWWHUV
, Q WKH&RP SDQ\ IRFXVHG RQ H[ HFXWLQJ WKHVWUDWHJ LF SULRULWLHVDQG EXLOGLQJ DIRXQGDWLRQ IRUORQJ WHUP VXFFHVV LQFOXGLQJ WKHVSHFLILF LWHP VGHVFULEHGEHORZ
HG
HV
HV
, QQRYDWLRQ %HJ LQQLQJ LQ WKH IRXUWK TXDUWHURI WKH &RP SDQ\ KDVHP EUDFHG D QHZ FXOWXUH RI LQQRYDWLRQ GHOLYHULQJ P XOWLSOH QHZ SURGXFWLQQRYDWLRQVDQG P DUNHWLQJ VXFFHVVHV , Q Z HODXQFK * DUOLF 3DUP HVDQ &UXVW3L] ] D WRDVWHG KDQGKHOG ‡3DSDGLDV· IODWEUHDG VW\ OHVDQGZ LFK -DODSHQR 3RSSHU5 ROOV DQG WKH6KDT D5 RQLSL] ] D 2 I SDUWLFXODUKLJ KOLJ KWWKH6KDT D5 RQLSL] ] DZ DVODXQFKHG DVSDUW RI DIXQG UDLVHUIRU7 KH 3DSD -RKQ¶V) RXQGDWLRQ LQ FROODERUDWLRQ Z LWK 6KDTXLOOH 2 ¶1 HDO RXUERDUG P HP EHUDQG UHVWDXUDQWRZ QHU 7 KH 6KDT D5 RQLSL] ] DZ DVDGLIIHUHQWLDWHG KLJ K YDOXHSURGXFWZ LWKDFKDULWDEOHFRP SRQHQWWKDWVXSSRUWHGP HDQLQJ IXOFDXVHVDOLJ QHGZ LWKRXU EUDQG¶VYDOX , QWKHIRXUWKTXDUWHURI Z HDOVR WHVWHG( SLF 6WXIIHG&UXVWZ KLFKZ DVRIILFLDOO\ ODXQFKHGLQ ( SLF 6WXIIHG&UXVW Z DVWKH &RP SDQ\ ¶VELJ J HVWQHZ SURGXFWODXQFK WR GDWH DQG EXLOGVXSRQ RXURULJ LQDOIUHVK QHYHUIUR] HQ VL[ LQJ UHGLHQWGRXJ K 3URGXFW LQQRYDWLRQLVQRWRQO\ DQLP SRUWDQWSDUWRI RXUSODQIRU WR FRQWLQXHEXLOGLQJ VDOHVEXWDOVR UHSUHVHQWVDQRWKHUSODWIRUP IRURXUORQJ HU WHUP VWUDWHJ \ DQGRSSRUWXQLW\
1 RYHO&RURQDYLUXV ‡&2 9 , ’ · 7 KH&2 9 , ’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
2 XUSULP DU\ IRFXVFRQWLQXHVWR EHWKHVDIHW\ RI RXUWHDP P HP EHUV IUDQFKLVHHV DQG FXVWRP HUV 7 KH&RP SDQ\ KDVWDNHQ VWHSVWR P LWLJ DWH WKH LP SDFWRI WKH &2 9 , ’ SDQGHP LF E\ LP SOHP HQWLQJ H[ WUD KHDOWK DQG VDIHW\ P HDVXUHV DFURVV RXUEXVLQHVV LQFOXGLQJ 1 R &RQWDFW ’ HOLYHU\ DQGHQKDQFHGFOHDQLQJ DQGVDQLWL] DWLRQP HDVXUHV IRUWKHSURWHFWLRQRI ERWKRXUFXVWRP HUVDQGWHDP P HP EHUV : HKDYHH[ SDQGHG RXUHP SOR\ HH EHQHILWVWR LQFOXGH IUHH YLUWXDOGRFWRUYLVLWVDQG SDLG VSHFLDOERQXVHVWR P DQ\ RI RXUIURQWOLQH WHDP P HP EHUV 7 KLVLVLQ DGGLWLRQWR H[ LVWLQJ HP SOR\ HHEHQHILWVRI QR FRVWP HQWDOKHDOWKVXSSRUWDIIRUGDEOHKHDOWKSODQRSWLRQVDQGDFFHVVWR WKH3DSD-RKQ¶V7HDP
0 HP EHU( P HUJ HQF\ 5 HOLHI ) XQG LI DQGZ KHQQHHGHG , QDGGLWLRQ WKH&RP SDQ\ KLUHGWKRXVDQGVRI QHZ UHVWDXUDQWWHDP P HP EHUVLQ WR KHOS P HHWGHP DQGDQGVHUYHRXUFXVWRP HUV
2 I WKH &RP SDQ\ ¶V LQWHUQDWLRQDOIUDQFKLVHG VWRUHV DSSUR[ LP DWHO\ VWRUHV Z HUH WHP SRUDULO\ FORVHG DV RI ’ HFHP EHU SULQFLSDOO\ LQ / DWLQ $ P HULFD DQG ( XURSH LQ DFFRUGDQFH Z LWK J RYHUQP HQWSROLFLHV , Q 1 RUWK $ P HULFD DOP RVWDOOWUDGLWLRQDOUHVWDXUDQWV UHP DLQ RSHQ DQG IXOO\ RSHUDWLRQDO $ QXP EHURI QRQ WUDGLWLRQDOUHVWDXUDQWVORFDWHG LQ XQLYHUVLWLHVDQG VWDGLXP VDUH WHP SRUDULO\ FORVHG WKHVHQRQ WUDGLWLRQDOORFDWLRQVDUHQRWVLJ QLILFDQWWR RXUUHYHQXHVDQGRSHUDWLQJ UHVXOWV
: HEHOLHYHWKHSDQGHP LF KDVDFFHOHUDWHG RXUSUHYLRXVO\ DQQRXQFHG HIIRUWVWR LQQRYDWHDQG EULQJ QHZ DQG IRUP HUFXVWRP HUVWR WKH3DSD
H
-RKQ¶VV\ VWHP : HEHOLHYH WKDWHYHQ DIWHUWKH SDQGHP LF UHODWHG UHVWULFWLRQVDUH OLIWHG Z HZ LOOEHQHILWIURP WKH LQFUHDVH LQ FXVWRP HUVZ H KDYHH[ SHULHQFHG GXHWR RXUP HQX LQQRYDWLRQ FXVWRP HUOR\ DOW\ SURJ UDP VDQG RXURIIHULQJ VRI KLJ K TXDOLW\ SL] ] DDQG RWKHUP HQX LWHP V ’ XHWR WKHVXEVWDQWLDOXQFHUWDLQW\ UHODWHG WR WKHHIIHFWVRI WKHSDQGHP LF DQG LWVGXUDWLRQ Z HDUHXQDEOHWR SUHGLFWWKHVSHFLILF LP SDFWWKH SDQGHP LF DQGUHODWHGUHVWULFWLRQVZ LOOKDYHRQRXUUHVXOWVRI RSHUDWLRQV OLTXLGLW\ RUORQJ WHUP ILQDQFLDOFRQGLWLRQ LQFOXGLQJ Z KHWKHUDQGWR Z KDWH[ WHQWWKHLQFUHDVHGGHP DQGIRURXUSURGXFWVZ LOOFRQWLQX ) RUDGLVFXVVLRQRI WKHULVNVWR RXUEXVLQHVVSUHVHQWHGE\ WKH&2 9 , ’ SDQGHP LF VHH, WHP $ 5 LVN) DFWRUVRI WKLV) RUP .
6WUDWHJ LF &RUSRUDWH5 HRUJ DQL]DWLRQ IRU/ RQJ WHUP * URZWK , Q WKHWKLUG TXDUWHURI Z HDQQRXQFHG SODQVWR RSHQ DQ RIILFHLQ$ WODQWD
* HRUJ LDORFDWHG LQ 7 KUHH%DOOSDUN &HQWHUDW7 KH%DWWHU\ $ WODQWDLQ WKHVXP P HURI 7 KH$ WODQWDRIILFHLVSDUWRI DEURDGHUVWUDWHJ LF UHRUJ DQL] DWLRQ RI FRUSRUDWH IXQFWLRQVUHIOHFWLQJ WKH &RP SDQ\ ¶VRQJ RLQJ WUDQVIRUP DWLRQ LQWR DEUDQG DQG FXOWXUH WKDWFDQ HIIHFWLYHO\ DQG HIILFLHQWO\ GHOLYHURQ WKH&RP SDQ\ ¶VSXUSRVH YDOXHVDQG VWUDWHJ LF EXVLQHVVSULRULWLHV $ IIHFWHG HP SOR\ HHVZ KR GR QRWUHORFDWHWR $ WODQWD KDYHEHHQ RIIHUHG DVHSDUDWLRQ SDFNDJ H $ VDUHVXOWZ HH[ SHFWWR LQFXUFHUWDLQ RQHWLP HFRUSRUDWHUHRUJ DQL] DWLRQ FRVWVRI DSSUR[ LP DWHO\
WR P LOOLRQUHODWHGWR HP SOR\ HHVHYHUDQFHDQGWUDQVLWLRQ UHFUXLWP HQWDQGUHORFDWLRQDQGRWKHUWKLUG SDUW\ FRVWVWKURXJ K 2 I WKDWDP RXQWZ HLQFXUUHGFRVWVRI DSSUR[ LP DWHO\ P LOOLRQLQ
3 UHVHQWDWLRQ RI ) LQDQFLDO5 HVXOWV &ULWLFDO$ FFRXQWLQJ 3 ROLFLHVDQG ( VWLP DWHV
7 KH UHVXOWV RI RSHUDWLRQV DUH EDVHG RQ RXU &RQVROLGDWHG ) LQDQFLDO6WDWHP HQWV Z KLFK Z HUH SUHSDUHG LQ FRQIRUP LW\ Z LWK DFFRXQWLQJ SULQFLSOHVJ HQHUDOO\ DFFHSWHG LQ WKH8 QLWHG 6WDWHV ‡* $ $ 3· 7 KHSUHSDUDWLRQ RI &RQVROLGDWHG ) LQDQFLDO6WDWHP HQWVUHTXLUHVP DQDJ HP HQW WR VHOHFWDFFRXQWLQJ SROLFLHVIRUFULWLFDODFFRXQWLQJ DUHDVDVZ HOODVHVWLP DWHVDQG DVVXP SWLRQVWKDWDIIHFWWKH DP RXQWVUHSRUWHG LQ WKH &RQVROLGDWHG ) LQDQFLDO6WDWHP HQWV 7 KH&RP SDQ\ ¶VVLJ QLILFDQWDFFRXQWLQJ SROLFLHV LQFOXGLQJ UHFHQWO\ LVVXHG DFFRXQWLQJ SURQRXQFHP HQWV DUH P RUH IXOO\ GHVFULEHG LQ ‡1 RWH · RI ‡1 RWHV WR &RQVROLGDWHG ) LQDQFLDO6WDWHP HQWV· 6LJ QLILFDQWFKDQJ HV LQ DVVXP SWLRQV DQGRU FRQGLWLRQVLQ RXUFULWLFDODFFRXQWLQJ SROLFLHVFRXOG P DWHULDOO\ LP SDFWWKH RSHUDWLQJ UHVXOWV : H KDYH LGHQWLILHG WKH IROORZ LQJ DFFRXQWLQJ SROLFLHVDQGUHODWHGMXGJ P HQWVDVFULWLFDOWR XQGHUVWDQGLQJ WKHUHVXOWVRI RXURSHUDWLRQV
$ OORZDQFHIRU&UHGLW/ RVVHVRQ$ FFRXQWVDQG) UDQFKLVHH1 RWHV5 HFHLYDEOH
$ VRI ’ HFHP EHU DFFRXQWVUHFHLYDEOHZ DV P LOOLRQ Z LWK DQ DOORZ DQFHIRUFUHGLWORVVHVRI P LOOLRQ DQG IUDQFKLVHHQRWHV UHFHLYDEOHZ DV P LOOLRQZ LWKDQDOORZ DQFHIRUFUHGLWORVVHVRI P LOOLRQ $ VRI ’ HFHP EHU DFFRXQWVUHFHLYDEOHZ DV
P LOOLRQ Z LWK DQ DOORZ DQFHIRUFUHGLWORVVHVRI P LOOLRQ DQG IUDQFKLVHHQRWHVUHFHLYDEOHZ DV P LOOLRQ Z LWK DQ DOORZ DQFHIRUFUHGLW ORVVHVRI P LOOLRQ ( VWLP DWHVRI H[ SHFWHG FUHGLWORVVHV HYHQ LI UHP RWH DUHEDVHG XSRQ KLVWRULFDODFFRXQWZ ULWHRII WUHQGV IDFWVDERXW WKHFXUUHQWILQDQFLDOFRQGLWLRQRI WKHGHEWRU IRUHFDVWVRI IXWXUHRSHUDWLQJ UHVXOWVEDVHGXSRQFXUUHQWWUHQGVRI VHOHFWRSHUDWLQJ P HWULFV DQG P DFURHFRQRP LF IDFWRUV 7 KHDOORZ DQFHIRUFUHGLWORVVHVRQ IUDQFKLVHHQRWHUHFHLYDEOHVLVEDVHG RQ UHYLHZ RI HDFK IUDQFKLVHH¶VHFRQRP LF SHUIRUP DQFH DQG P DUNHWFRQGLWLRQVDIWHUFRQVLGHUDWLRQ RI WKH IDLUYDOXH RI RXUXQGHUO\ LQJ FROODWHUDOULJ KWV HJ XQGHUO\ LQJ IUDQFKLVHH EXVLQHVV SURSHUW\ DQG HTXLSP HQW DQG DQ\ J XDUDQWHHV &UHGLWTXDOLW\ LV P RQLWRUHG WKURXJ K WKH WLP LQJ RI SD\ P HQWV FRP SDUHG WR WKH SUHVFULEHG SD\ P HQWWHUP VDQG NQRZ Q IDFWVUHJ DUGLQJ WKHILQDQFLDOFRQGLWLRQ RI WKHIUDQFKLVHHRUFXVWRP HU $ FFRXQWDQG QRWHUHFHLYDEOH EDODQFHVDUHFKDUJ HGRII DJ DLQVWWKHDOORZ DQFHDIWHUUHFRYHU\ HIIRUWVKDYHFHDVHG
, QVXUDQFH5 HVHUYHV
2 XULQVXUDQFHSURJ UDP VIRUZ RUNHUV¶ FRP SHQVDWLRQ RZ QHG DQG QRQ RZ QHG DXWRP RELOHV J HQHUDOOLDELOLW\ SURSHUW\ DQG KHDOWK LQVXUDQFH FRYHUDJ HSURYLGHG WR RXUHP SOR\ HHVDUH IXQGHG E\ WKH &RP SDQ\ XS WR FHUWDLQ UHWHQWLRQ OHYHOVXQGHURXUUHWHQWLRQ SURJ UDP V 5 HWHQWLRQ OLP LWVJ HQHUDOO\ UDQJ HIURP WR P LOOLRQ
$ VRI ’ HFHP EHU DQG ’ HFHP EHU RXULQVXUDQFHUHVHUYHVZ HUH P LOOLRQ DQG P LOOLRQ UHVSHFWLYHO\ / RVVHVDUH DFFUXHGEDVHGXSRQXQGLVFRXQWHGHVWLP DWHVRI WKHOLDELOLW\ IRUFODLP VLQFXUUHGDQGIRUHYHQWVWKDWKDYHRFFXUUHGEXWKDYHQRWEHHQUHSRUWHG XVLQJ FHUWDLQ WKLUG SDUW\ DFWXDULDOSURMHFWLRQV DQG RXUFODLP V ORVV H[ SHULHQFH 7 KH GHWHUP LQDWLRQ RI WKH UHFRUGHG LQVXUDQFH UHVHUYHV LV KLJ KO\ MXGJ P HQWDODQG FRP SOH[ GXHWR WKHVLJ QLILFDQWXQFHUWDLQW\ LQ WKHSRWHQWLDOYDOXHRI UHSRUWHG FODLP VDQG WKHQXP EHUDQG SRWHQWLDO YDOXHRI LQFXUUHGEXWQRWUHSRUWHGFODLP V WKHDSSOLFDWLRQRI VLJ QLILFDQWMXGJ P HQWLQP DNLQJ WKRVHHVWLP DWHVDQGWKHXVHRI YDULRXVDFWXDULDO YDOXDWLRQ P HWKRGV 7 KHHVWLP DWHG LQVXUDQFHFODLP VORVVHVFRXOG EHVLJ QLILFDQWO\ DIIHFWHG VKRXOG WKHIUHTXHQF\ RUXOWLP DWHFRVWRI FODLP V GLIIHU VLJ QLILFDQWO\ IURP KLVWRULFDOWUHQGV XVHG WR HVWLP DWH WKH LQVXUDQFH UHVHUYHV UHFRUGHG E\ WKH &RP SDQ\ 7 KH &RP SDQ\ UHFRUGV HVWLP DWHGORVVHVDERYHUHWHQWLRQZ LWKLQLWVUHVHUYHZ LWKDFRUUHVSRQGLQJ UHFHLYDEOHIRUH[ SHFWHGDP RXQWVGXHIURP LQVXUDQFHFDUULHUV
, QWDQJ LEOH$ VVHWV† * RRGZLOO
: HHYDOXDWHJ RRGZ LOODQQXDOO\ LQ WKHIRXUWK TXDUWHURUZ KHQHYHUZ HLGHQWLI\ FHUWDLQ WULJ J HULQJ HYHQWVRUFLUFXP VWDQFHVWKDWZ RXOG P RUH OLNHO\ WKDQ QRWUHGXFHWKHIDLUYDOXHRI DUHSRUWLQJ XQLWEHORZ LWVFDUU\ LQJ DP RXQW6XFK WHVWVDUHFRP SOHWHG VHSDUDWHO\ Z LWK UHVSHFWWR WKH J RRGZ LOORI HDFK RI RXUUHSRUWLQJ XQLWV : HP D\ SHUIRUP DTXDOLWDWLYHDVVHVVP HQWRUP RYHGLUHFWO\ WR WKHTXDQWLWDWLYHDVVHVVP HQWIRUDQ\ UHSRUWLQJ XQLWLQDQ\ SHULRGLI Z HEHOLHYHWKDWLWLVP RUHHIILFLHQWRULI LP SDLUP HQWLQGLFDWRUVH[ LVW
: HHOHFWHGWR SHUIRUP DTXDOLWDWLYHDVVHVVP HQWIRURXURSHUDWLRQVLQWKHIRXUWKTXDUWHURI $ VDUHVXOWRI RXUTXDOLWDWLYHDQDO\ VHV Z H GHWHUP LQHGWKDWLWZ DVP RUHOLNHO\ WKDQ QRWWKDWWKHIDLUYDOXHVRI RXUUHSRUWLQJ XQLWVZ HUHJ UHDWHUWKDQWKHLUFDUU\ LQJ DP RXQWV 6XEVHTXHQW WR FRP SOHWLQJ RXUJ RRGZ LOOLP SDLUP HQWWHVWV QR LQGLFDWRUV RI LP SDLUP HQWZ HUH LGHQWLILHG 6HH ‡1 RWH · RI ‡1 RWHV WR &RQVROLGDWHG
) LQDQFLDO6WDWHP HQWV· IRUDGGLWLRQDOLQIRUP DWLRQ
, QFRP H7D[ $ FFRXQWVDQG7D[ 5 HVHUYHV
3DSD -RKQ¶V LV VXEMHFWWR LQFRP H WD[ HV LQ WKH 8 QLWHG 6WDWHV DQG VHYHUDOIRUHLJ Q MXULVGLFWLRQV 6LJ QLILFDQWMXGJ P HQWLV UHTXLUHG LQ GHWHUP LQLQJ 3DSD-RKQ¶VSURYLVLRQ IRULQFRP HWD[ HVDQG WKHUHODWHG DVVHWVDQG OLDELOLWLHV 7 KHSURYLVLRQ IRULQFRP HWD[ HVLQFOXGHVLQFRP H WD[ HVSDLG FXUUHQWO\ SD\ DEOHRUUHFHLYDEOHDQGWKRVHGHIHUUHG
’ HIHUUHGWD[ DVVHWVDQGOLDELOLWLHVDUHGHWHUP LQHGEDVHGRQGLIIHUHQFHVEHWZ HHQILQDQFLDOUHSRUWLQJ DQGWD[ EDVLVRI DVVHWVDQGOLDELOLWLHVDQG DUHP HDVXUHG XVLQJ HQDFWHG WD[ UDWHVDQG ODZ VWKDWDUHH[ SHFWHG WR EHLQ HIIHFWZ KHQ WKHGLIIHUHQFHVUHYHUVH ’ HIHUUHG WD[ DVVHWVDUHDOVR UHFRJ QL] HG IRUWKHHVWLP DWHG IXWXUHHIIHFWVRI WD[ DWWULEXWHFDUU\ IRUZ DUGV HJ QHWRSHUDWLQJ ORVVHV FDSLWDOORVVHV DQG IRUHLJ Q WD[ FUHGLWV 7 KHHIIHFWRQ GHIHUUHG WD[ HVRI FKDQJ HVLQ WD[ UDWHVLVUHFRJ QL] HG LQ WKHSHULRG LQ Z KLFK WKHQHZ WD[ UDWHLVHQDFWHG 9 DOXDWLRQ DOORZ DQFHV DUHHVWDEOLVKHGZ KHQQHFHVVDU\ RQDMXULVGLFWLRQDOEDVLVWR UHGXFHGHIHUUHGWD[ DVVHWVWR WKHDP RXQWVZ HH[ SHFWWR UHDOL] H
7D[ DXWKRULWLHVSHULRGLFDOO\ DXGLWWKH&RP SDQ\ : HUHFRUGUHVHUYHVDQGUHODWHGLQWHUHVWDQGSHQDOWLHVIRULGHQWLILHGH[ SRVXUHVDVLQFRP HWD[ H[ SHQVH : HHYDOXDWHWKHVHLVVXHVDQGDGMXVWIRUHYHQWV VXFKDVVWDWXWHRI OLP LWDWLRQVH[ SLUDWLRQV FRXUWUXOLQJ VRUDXGLWVHWWOHP HQWV Z KLFK P D\ LP SDFWRXUXOWLP DWHSD\ P HQWIRUVXFKH[ SRVXUHV : HUHFRJ QL] HGDGHFUHDVHLQLQFRP HWD[ H[ SHQVHRI DQG LQ
DQG UHVSHFWLYHO\ DVVRFLDWHG Z LWK WKHILQDOL] DWLRQ RI FHUWDLQ LQFRP HWD[ P DWWHUV 6HH‡1 RWH · RI ‡1 RWHVWR &RQVROLGDWHG ) LQDQFLDO 6WDWHP HQWV· IRUDGGLWLRQDOLQIRUP DWLRQ
) LVFDO<HDU
2 XUILVFDO\ HDUHQGVRQ WKHODVW6XQGD\ LQ ’ HFHP EHURI HDFK \ HDU$ OOILVFDO\ HDUVSUHVHQWHG LQ WKHDFFRP SDQ\ LQJ &RQVROLGDWHG ) LQDQFLDO
6WDWHP HQWVFRQVLVWRI Z HHNV
5 HVXOWVRI 2 SHUDWLRQV
&RP SDUHGWR
7 KLVVHFWLRQRI WKLV) RUP . J HQHUDOO\ GLVFXVVHVILVFDO DQG LWHP VDQG\ HDUWR \ HDUFRP SDULVRQVEHWZ HHQILVFDO DQG
’ LVFXVVLRQVRI LWHP VDQG \ HDUWR \ HDUFRP SDULVRQVEHWZ HHQ ILVFDO DQG WKDWDUH QRWLQFOXGHG LQ WKLV) RUP . FDQ EH IRXQG LQ ‡0 DQDJ HP HQW¶V’ LVFXVVLRQ DQG$ QDO\ VLVRI ) LQDQFLDO&RQGLWLRQ DQG 5 HVXOWVRI 2 SHUDWLRQV· LQ 3DUW, , , WHP RI WKH&RP SDQ\ ¶V
$ QQXDO5 HSRUWRQ) RUP . IRUWKHILVFDO\ HDUHQGHG’ HFHP EHU
’ LVFXVVLRQRI 5 HYHQXHV &RQVROLGDWHGUHYHQXHVLQFUHDVHG P LOOLRQ RU WR ELOOLRQLQ FRP SDUHGWR ELOOLRQLQ 5 HYHQXHVDUHVXP P DUL] HGLQWKHIROORZ LQJ WDEOH GROODUVLQWKRXVDQGV
<HDU( QGHG
’ HF ’ HF 3 HUFHQW
, QFUHDVH &KDQJ H
’ RP HVWLF &RP SDQ\ RZ QHGUHVWDXUDQWVDOHV
1 RUWK$ P HULFDIUDQFKLVHUR\ DOWLHVDQGIHHV
1 RUWK$ P HULFDFRP P LVVDU\ UHYHQXHV
, QWHUQDWLRQDOUHYHQXHV
2 WKHUUHYHQXHV 7 RWDOUHYHQXHV
’ RP HVWLF &RP SDQ\ RZ QHGUHVWDXUDQWVDOHVLQFUHDVHG P LOOLRQ RU LQ ( [ FOXGLQJ WKHLP SDFWRI UHIUDQFKLVLQJ UHVWDXUDQWV LQ SULP DULO\ ORFDWHG LQ 6RXWK ) ORULGD DQG * HRUJ LD ’ RP HVWLF &RP SDQ\ RZ QHG UHVWDXUDQWVDOHVLQFUHDVHG P LOOLRQ RU
7 KHLQFUHDVHZ DVSULP DULO\ GXHWR SRVLWLYHFRP SDUDEOHVDOHVRI SDUWLDOO\ RIIVHWE\ WKH IDYRUDEOHLP SDFWIURP WKHH[ SLUDWLRQRI FXVWRP HUUHZ DUGVDVVRFLDWHG Z LWK RXU3DSD5 HZ DUGVOR\ DOW\ SURJ UDP RI P LOOLRQ ‡&RP SDUDEOHVDOHV· UHSUHVHQWVWKHFKDQJ HLQ \ HDU RYHU\ HDUVDOHVIRUWKHVDP HEDVHRI UHVWDXUDQWVIRUWKHVDP HILVFDOSHULRGV
1 RUWK $ P HULFD IUDQFKLVH UR\ DOWLHV DQG IHHV LQFUHDVHG P LOOLRQ RU LQ ( [ FOXGLQJ WKH LP SDFWRI UHIUDQFKLVLQJ 1 RUWK
$ P HULFDIUDQFKLVHUR\ DOWLHVDQG IHHVLQFUHDVHG P LOOLRQ RU 7 KHLQFUHDVHZ DVSULP DULO\ GXHWR SRVLWLYHFRP SDUDEOHVDOHVRI
) UDQFKLVHUR\ DOWLHVDQGIHHVLQ DOVR UHIOHFWDKLJ KHUHIIHFWLYHUR\ DOW\ UDWHGXHWR ORZ HUWHP SRUDU\ UR\ DOW\ UHOLHI Z KLFKZ DVSDUW RI RXUIUDQFKLVHDVVLVWDQFHSURJ UDP VHH‡7HP SRUDU\ ) UDQFKLVH6XSSRUW·
1 RUWK $ P HULFD IUDQFKLVH UHVWDXUDQWVDOHVLQFUHDVHG WR ELOOLRQ IRU FRP SDUHG WR SULRU\ HDU 1 RUWK $ P HULFD IUDQFKLVH UHVWDXUDQWVDOHVDUHQRWLQFOXGHGLQ&RP SDQ\ UHYHQXHV KRZ HYHU RXU1 RUWK$ P HULFDIUDQFKLVHUR\ DOWLHVDUHGHULYHGIURP WKHVHVDOHV
1 RUWK $ P HULFD FRP P LVVDU\ UHYHQXHV LQFUHDVHG P LOOLRQ RU SULP DULO\ GXH WR KLJ KHUYROXP HV DQG SULFLQJ DVVRFLDWHG Z LWK KLJ KHUFRP P RGLWLHVFRVWV SULP DULO\ FKHHVH
, QWHUQDWLRQDOUHYHQXHVLQFUHDVHG P LOOLRQ RU LQ SULP DULO\ GXHWR KLJ KHU3-8 . FRP P LVVDU\ UHYHQXHVDQGKLJ KHUUR\ DOWLHV IURP KLJ KHUFRP SDUDEOHVDOHVRI
, QWHUQDWLRQDOIUDQFKLVHUHVWDXUDQWVDOHVLQFUHDVHG WR ELOOLRQ LQ H[ FOXGLQJ WKHLP SDFWRI IRUHLJ QFXUUHQF\ SULP DULO\ GXHWR LQFUHDVHVLQ FRP SDUDEOH VDOHV , QWHUQDWLRQDOIUDQFKLVH UHVWDXUDQWVDOHVDUH QRWLQFOXGHG LQ &RP SDQ\ UHYHQXHV KRZ HYHU RXULQWHUQDWLRQDO UR\ DOW\ UHYHQXHLVGHULYHGIURP WKHVHVDOHV
2 WKHUUHYHQXHV Z KLFKSULP DULO\ LQFOXGHVRXU1 RUWK$ P HULFDP DUNHWLQJ IXQGV RQOLQHDQGP RELOHRUGHULQJ EXVLQHVVDQGRXUZ KROO\ RZ QHG SULQWDQG SURP RWLRQV VXEVLGLDU\ LQFUHDVHG P LOOLRQ RU LQ SULP DULO\ GXH WR KLJ KHUP DUNHWLQJ IXQG UHYHQXHV IURP DQ LQFUHDVH LQ IUDQFKLVH VDOHV DQG DQ LQFUHDVH LQ WKH QDWLRQDOP DUNHWLQJ IXQG FRQWULEXWLRQ UDWH LQ DQG KLJ KHURQOLQH UHYHQXHV IURP LQFUHDVHGUHVWDXUDQWVDOHV
’ LVFXVVLRQRI 2 SHUDWLQJ 5 HVXOWV
2 SHUDWLQJ LQFRP H LVVXP P DUL] HG LQ WKH IROORZ LQJ WDEOH RQ D UHSRUWLQJ VHJ P HQWEDVLV 2 SHUDWLQJ LQFRP H LQFUHDVHG DSSUR[ LP DWHO\
P LOOLRQIRUWKH\ HDUHQGHG’ HFHP EHU DVFRP SDUHGWR WKHSULRU\ HDU$ ORQJ VLGHWKH* $ $ 3 RSHUDWLQJ LQFRP HGDWD Z HKDYHLQFOXGHG
‡DGMXVWHG· RSHUDWLQJ LQFRP H WR H[ FOXGH 6SHFLDOLWHP V 6SHFLDOLWHP VIRU LQFOXGH VWUDWHJ LF FRUSRUDWH UHRUJ DQL] DWLRQ FRVWVDVVRFLDWHG Z LWK RXUQHZ RIILFH LQ $ WODQWD * HRUJ LD SURMHFWHG WR RSHQ LQ WKH VXP P HURI 7 KH UHFRQFLOLDWLRQ RI * $ $ 3 WR QRQ * $ $ 3 ILQDQFLDO UHVXOWV DVZ HOODVWKH6SHFLDOLWHP V DUHLQFOXGHGLQ‡, WHP V, P SDFWLQJ &RP SDUDELOLW\ 1 RQ * $ $ 3 0 HDVXUHV· : HEHOLHYHWKHVHQRQ * $ $ 3 P HDVXUHVDUHLP SRUWDQWIRUFRP SDUDELOLW\ SXUSRVHV
<HDU( QGHG
5 HSRUWHG 6SHFLDO $ GMXVWHG 5 HSRUWHG 6SHFLDO $ GMXVWHG $ GMXVWHG ’ HF LWHP V ’ HF ’ HF LWHP V ’ HF , QFUHDVH
, QWKRXVDQGV LQ LQ ’ HFUHDVH
’ RP HVWLF &RP SDQ\ RZ QHG UHVWDXUDQWV | † | |
1 RUWK$ P HULFDIUDQFKLVLQJ | † | † |
1 RUWK$ P HULFDFRP P LVVDULHV | † | † |
, QWHUQDWLRQDO | † | † |
$ OORWKHUV | † | † |
8 QDOORFDWHGFRUSRUDWHH[ SHQVHV | ||
( OLP LQDWLRQRI LQWHUVHJ P HQWSURILWV | † | † |
$ GMXVWHG RSHUDWLQJ LQFRP H |
|
7 KHLQFUHDVHLQ RSHUDWLQJ LQFRP HRI P LOOLRQ DQG LQFUHDVHLQ DGMXVWHG RSHUDWLQJ LQFRP HRI P LOOLRQ LQ H[ FOXGLQJ 6SHFLDO LWHP V Z DVSULP DULO\ GXHWR WKHIROORZ LQJ
’ RP HVWLF &RP SDQ\ RZ QHG 5 HVWDXUDQWV 6HJ P HQW ’ RP HVWLF &RP SDQ\ RZ QHG UHVWDXUDQWV RSHUDWLQJ LQFRP H LQFUHDVHG
P LOOLRQIRU DVFRP SDUHGWR WKHSULRU\ HDUFRP SDUDEOHSHULRG 7 KHLQFUHDVHZ DVSULP DULO\ GXHWR KLJ KHUSURILWVIURP SRVLWLYH FRP SDUDEOH VDOHVRI SDUWLDOO\ RIIVHWE\ ODERULQLWLDWLYHVDQG ERQXVH[ SHQVHV LQFOXGLQJ D VSHFLDOHQG RI \ HDUERQXVIRU IURQWOLQHWHDP P HP EHUV DQG KLJ KHUFRP P RGLWLHVFRVWV $ GGLWLRQDOO\ EHQHILWHG IURP WKHH[ SLUDWLRQ RI FXVWRP HUUHZ DUGV DVVRFLDWHGZ LWKRXU3DSD5 HZ DUGVOR\ DOW\ SURJ UDP RI P LOOLRQ
1 RUWK$ P HULFD) UDQFKLVLQJ 6HJ P HQW 1 RUWK$ P HULFDIUDQFKLVLQJ RSHUDWLQJ LQFRP HLQFUHDVHG P LOOLRQIRU SULP DULO\ GXHWR KLJ KHUFRP SDUDEOHVDOHVRI 7 KHILVFDO\ HDU DOVR EHQHILWHG IURP DKLJ KHUHIIHFWLYHUR\ DOW\ UDWHFRP SDUHG ▇▇
▇▇▇▇ DULO\ GXHWR ORZ HUUR\ DOW\ UHOLHI LQ DVGLVFXVVHGLQ‡7HP SRUDU\ ) UDQFKLVH6XSSRUW·
1 RUWK $ P HULFD &RP P LVVDULHV 6HJ P HQW 1 RUWK $ P HULFD FRP P LVVDULHV RSHUDWLQJ LQFRP H LQFUHDVHG P LOOLRQ LQ SULP DULO\ GXHWR KLJ KHUSURILWVIURP KLJ KHUYROXP HV SDUWLDOO\ RIIVHWE\ WKHERQXVIRUIURQWOLQHWHDP P HP EHUV
, QWHUQDWLRQDO6HJ P HQW , QWHUQDWLRQDORSHUDWLQJ LQFRP HLQFUHDVHG P LOOLRQIRU FRP SDUHGWR WKHSULRU\ HDUSULP DULO\ GXH WR KLJ KHUUR\ DOW\ UHYHQXH 3-8 . FRP P LVVDU\ LQFRP HDWWULEXWDEOHWR LQFUHDVHGXQLWVDQGKLJ KHUFRP SDUDEOHVDOHVDQGORZ HUWUDYHO FRVWVGXHWR &2 9 , ’ 7 KHVHLQFUHDVHVZ HUHSDUWLDOO\ RIIVHWE\ ORZ HUUHYHQXHVUHFHLYHG IURP FHUWDLQ IUDQFKLVHHVDVDUHVXOWRI UR\ DOW\ VXSSRUWKLJ KHUERQXVHVDQGWKHXQIDYRUDEOHLP SDFWRI IRUHLJ QH[ FKDQJ HUDWHV
$ OO2 WKHUV $ OO2 WKHUV RSHUDWLQJ LQFRP H LQFUHDVHG P LOOLRQ SULP DULO\ GXH WR KLJ KHURQOLQH UHYHQXHV SDUWLDOO\ RIIVHWE\ WLP LQJ RI P DUNHWLQJ VSHQGLQWKHSULRU\ HDU
8 QDOORFDWHG &RUSRUDWH( [ SHQVHV 8 QDOORFDWHGFRUSRUDWHH[ SHQVHVGHFUHDVHGDSSUR[ LP DWHO\ P LOOLRQLQ FRP SDUHGWR SULP DULO\ GXHWR ORZ HUP DUNHWLQJ IXQGLQYHVWP HQWVRI P LOOLRQDVGLVFXVVHGLQ‡7HP SRUDU\ ) UDQFKLVH6XSSRUW·
5 HYLHZ RI &RQVROLGDWHG5 HVXOWV
<H D (U Q G H G | |||||
’ H | F H P E H | U ’ H F H P E H U | |||
R | I 5 H O D W H GR I 5 , HQH OF | ||||
L Q | W K | R | X V D Q G V | 5 H Y | H Q X H V 5 H Y H Q X H’H HV |
5 H Y H Q X | H V | ||||
’ R P H V W L F & R P S D Q \ R Z Q H G U H V W D X U D Q W V | |||||
5 HYHQXHV ) RUWKHUHDVRQVGLVFXVVHGDERYH FRQVROLGDWHGUHYHQXHVLQFUHDVHG P LOOLRQ RU WR ELOOLRQLQ FRP SDUHG WR ELOOLRQLQ
D DUV WH H G D F VU H
1 R $ U P ▇▇ ▇▇ L F D I U D Q F K L V H U R \ D O W L H V D Q G I H
1 R $ U P ▇▇ ▇▇ L F D F R P P L V V D U \ U H Y H Q X H V
, | Q W H | U Q | D W | L | R Q D | O | U H | Y H | Q | X | H V | ||
2 | W K H | U | U H | Y | H Q X | H | V | ||||||
7 R | ▇▇ ▇▇ OH | Q UX | H V |
2 S H U D W L Q J
V K R Z Q V H S
F R V W V
D U D W H O \
H [ F O X G L Q J E H O R Z
G H S U H F L D W
& R V W V D Q G H [ S H Q V H V
D O H V H V
L R Q D
’ R P H V W L F & R P S D Q \ R Z Q H G U H V W D X U D Q W H [ S H Q V
1 R $ U P ▇▇ ▇▇ L F D F R P P L V V D U \ H [ S H Q V H V
, Q W H U Q D W L R Q D O H [ S H Q V H V
2 W K H U H [ S H Q V H V
* H Q H U D O D Q G D G P L Q L V W U D W L Y H H [ S H Q V H V
’ H S U H F L D W L R Q D Q G D P R U W L ] D W L R Q
7R W D O F R V W V D Q G H [ S H Q V H V
5 H I U D Q F K L V L Q J J D L Q V
2 S H U D W L Q J L Q F R P H
, Q Y H V W P H Q W L Q F R P H
, Q W H U H V W H [ S H Q V H
, Q F R P H E H I R U H L Q F R P H W D [ H V
&RVWVDQGH[ SHQVHV 7RWDOFRVWVDQGH[ SHQVHVZ HUHDSSUR[ LP DWHO\ ELOOLRQ RU RI WRWDOUHYHQXHVLQ FRP SDUHGWR ELOOLRQ RU LQ 7 KHGHFUHDVHLQWRWDOFRVWVDQGH[ SHQVHV DVDSHUFHQWDJ HRI UHYHQXHV Z DVSULP DULO\ GXHWR WKHIROORZ LQJ
’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
1 RUWK$ P HULFDFRP P LVVDU\ H[ SHQVHVZ HUH P LOOLRQ LQ RU RI UHODWHG UHYHQXHVFRP SDUHG WR P LOOLRQ LQ RU RI UHODWHG UHYHQXHV LQ 7 KH GHFUHDVH LQ H[ SHQVHV DV D SHUFHQWDJ H RI UHODWHG UHYHQXHV Z DV SULP DULO\ GXH WR ORZ HU
RSHUDWLQJ FRVWVRQKLJ KHUYROXP HVDQGORZ HUGHOLYHU\ FRVWV
, QWHUQDWLRQDOH[ SHQVHVZ HUH P LOOLRQ LQ RU RI UHODWHG UHYHQXHV FRP SDUHG WR SULRU\ HDUH[ SHQVHVRI P LOOLRQ RU RI UHODWHGUHYHQXHVLQ 7 KHLQFUHDVHRI LQH[ SHQVHV DVDSHUFHQWDJ HRI UHODWHGUHYHQXHV Z DVSULP DULO\ GXHWR WKHKLJ KHU
P L[ RI 8 QLWHG . LQJ GRP FRP P LVVDU\ UHYHQXHVZ KLFK KDYH D ORZ HURYHUDOOP DUJ LQ DQG ORZ HUUHYHQXHVUHVXOWLQJ IURP LQFUHDVHG UR\ DOW\ VXSSRUWSURYLGHGWR FHUWDLQIUDQFKLVHHV
2 WKHUH[ SHQVHVZ HUH P LOOLRQLQ RU RI UHODWHGUHYHQXHV FRP SDUHGWR SULRU\ HDUH[ SHQVHVRI P LOOLRQ RU RI UHODWHG UHYHQXHVLQ 7 KH GHFUHDVHLQ H[ SHQVHV DVDSHUFHQWDJ HRI UHODWHG UHYHQXHV Z DVSULP DULO\ GXHWR KLJ KHUP DUJ LQVIURP RXURQOLQHDQGP RELOHRUGHULQJ EXVLQHVV SDUWLDOO\ RIIVHWE\ ORZ HUUHYHQXHVDWRXUSULQWLQJ VXEVLGLDU\
* HQHUDODQGDGP LQLVWUDWLYH ‡* $ · H[ SHQVHVZ HUH P LOOLRQ RU RI UHYHQXHVIRU FRP SDUHGWR P LOOLRQ RU RI UHYHQXHVIRU * $ H[ SHQVHVFRQVLVWHGRI WKHIROORZ LQJ GROODUVLQWKRXVDQGV
<HDU( QGHG
’ HFHP EHU ’ HFHP EHU
$ GP LQLVWUDWLYHH[ SHQVHV D 6SHFLDOLWHP V E F
2 WKHUJ HQHUDOH[ SHQVHV G
* HQHUDODQGDGP LQLVWUDWLYHH[ SHQVHV
D 7 KHLQFUHDVHLQ DGP LQLVWUDWLYHH[ SHQVHVRI P LOOLRQ IRUWKH\ HDUHQGHG ’ HFHP EHU FRP SDUHG WR SULRU\ HDUZ DVSULP DULO\ GXHWR KLJ KHUP DQDJ HP HQWLQFHQWLYHFRVWV SDUWLDOO\ RIIVHWE\ UHGXFHGWUDYHOFRVWVGXHWR &2 9 , ’ UHVWULFWLRQVDQGORZ HUSURIHVVLRQDO DQGFRQVXOWLQJ IHHV
E 5 HSUHVHQWV P LOOLRQ LQ VWUDWHJ LF UHRUJ DQL] DWLRQ FRVWVIRUWKH \ HDUHQGHG ’ HFHP EHU DVVRFLDWHG Z LWK RXUQHZ RIILFH LQ
$ WODQWD * HRUJ LD SURMHFWHG WR RSHQ LQ WKH VXP P HURI 6HH ‡1 RWH · RI ‡1 RWHV WR &RQVROLGDWHG ) LQDQFLDO6WDWHP HQWV· IRU DGGLWLRQDOLQIRUP DWLRQ
F 7 KH6SHFLDOLWHP VIRUWKH\ HDUHQGHG’ HFHP EHU LQFOXGHWKHIROORZ LQJ
P LOOLRQ RI OHJ DODQG DGYLVRU\ IHHV SULP DULO\ DVVRFLDWHG Z LWK WKH UHYLHZ RI D Z LGH UDQJ H RI VWUDWHJ LF RSSRUWXQLWLHV WKDW FXOP LQDWHGLQDVWUDWHJ LF LQYHVWP HQWLQWKH&RP SDQ\ E\ IXQGVDIILOLDWHGZ LWK RUP DQDJ HGE\ 6WDUERDUG9 DOXH/ 3 ‡6WDUERDUG·
P LOOLRQ UHODWHG WR D RQHWLP H P DUN WR P DUNHWDGMXVWP HQWIURP WKH LQFUHDVH LQ YDOXH RI WKH 6WDUERDUG RSWLRQ WR SXUFKDVH VKDUHVRI WKH &RP SDQ\ ¶V6HULHV% &RQYHUWLEOH 3UHIHUUHG 6WRFN ‡6HULHV% 3UHIHUUHG 6WRFN· WKDWFXOP LQDWHG LQ WKH SXUFKDVH RI P LOOLRQ RI 6HULHV% 3UHIHUUHG 6WRFN LQ ODWH 0 DUFK 6HH ‡1 RWH · RI ‡1 RWHVWR &RQVROLGDWHG ) LQDQFLDO6WDWHP HQWV· IRU
DGGLWLRQDOLQIRUP DWLRQ DQG
P LOOLRQ WKDWLQFOXGHVVHYHUDQFHFRVWVIRUWKH&RP SDQ\ ¶VIRUP HU&( 2 DVZ HOODVFRVWVUHODWHG WR WKHWHUP LQDWLRQ RI DOLFHQVH DJ UHHP HQWIRULQWHOOHFWXDOSURSHUW\ QR ORQJ HUEHLQJ XWLOL] HG
G 7 KH GHFUHDVH LQ RWKHUJ HQHUDOH[ SHQVHVRI P LOOLRQ Z DVSULP DULO\ GXH WR ORZ HUGLVFUHWLRQDU\ P DUNHWLQJ IXQG LQYHVWP HQWVDQG ORZ HUSURYLVLRQVIRUXQFROOHFWLEOHDFFRXQWVDQGQRWHVUHFHLYDEOH
6HH‡, WHP V, P SDFWLQJ &RP SDUDELOLW\ 1 RQ * $ $ 3 0 HDVXUHV· IRUDGGLWLRQDOLQIRUP DWLRQUHJ DUGLQJ WKH6SHFLDOLWHP V
’ HSUHFLDWLRQ DQG DP RUWL]DWLRQ ’ HSUHFLDWLRQ DQG DP RUWL] DWLRQ H[ SHQVHZ DV P LOOLRQ RU RI UHYHQXHVLQ DVFRP SDUHG WR P LOOLRQ RU RI UHYHQXHVIRU
5 HIUDQFKLVLQJ J DLQV 5 HIUDQFKLVLQJ J DLQVRI P LOOLRQ LQ Z HUHSULP DULO\ DVVRFLDWHG Z LWK WKHUHIUDQFKLVLQJ RI &RP SDQ\ RZ QHG UHVWDXUDQWV LQ * HRUJ LD DQG &RP SDQ\ RZ QHG UHVWDXUDQWV LQ 6RXWK ) ORULGD 6HH ‡1 RWH · RI ‡1 RWHV WR WKH &RQVROLGDWHG ) LQDQFLDO 6WDWHP HQWV· IRUDGGLWLRQDOLQIRUP DWLRQ
, QWHUHVWH[ SHQVH , QWHUHVWH[ SHQVHGHFUHDVHGDSSUR[ LP DWHO\ P LOOLRQIRUWKH\ HDUHQGHG’ HFHP EHU SULP DULO\ GXHWR DGHFUHDVH LQ WKH DYHUDJ H RXWVWDQGLQJ GHEWEDODQFH DQG ORZ HULQWHUHVWUDWHV 7RWDOGHEWRXWVWDQGLQJ Z DV P LOOLRQ DVRI ’ HFHP EHU
2 XWVWDQGLQJ GHEWDW’ HFHP EHU GHFUHDVHG P LOOLRQ IURP ’ HFHP EHU SULP DULO\ GXH WR UHSD\ P HQWVRQ RXUVHFXUHG WHUP ORDQIDFLOLW\
, QFRP HEHIRUHLQFRP HWD[ HV , QFRP HEHIRUHLQFRP HWD[ HVZ DV P LOOLRQ LQ FRP SDUHG WR P LOOLRQ LQ RUDQ LQFUHDVHRI P LOOLRQGXHWR WKHUHDVRQVGLVFXVVHGDERYH
, QFRP HWD[ H[ SHQVH EHQHILW 7 KHHIIHFWLYHLQFRP HWD[ UDWHZ DV IRU FRP SDUHG WR IRU 7 KHHIIHFWLYHUDWHZ DV KLJ KHULQ GXHWR WKHLP SDFWRI VLP LODUWD[ FUHGLWDP RXQWVRQKLJ KHULQFRP HEHIRUHLQFRP HWD[ HV 7 KH LQFRP HWD[ UDWHLQFOXGHGD QRQ GHGXFWLEOH P LOOLRQ H[ SHQVH DVVRFLDWHG Z LWK WKH RQHWLP H P DUN WR P DUNHWLQFUHDVH LQ WKH IDLUYDOXH RI WKH 6WDUERDUG RSWLRQ WR SXUFKDVH6HULHV% 3UHIHUUHG6WRFN DVSUHYLRXVO\ P HQWLRQHG 7 KHIROORZ LQJ FRP SDUHVLQFRP HWD[ H[ SHQVH EHQHILWIRU DQG
<HDU( QGHG
’ HFHP EHU ’ HFHP EHU
, QFRP HEHIRUHLQFRP HWD[ HV
, QFRP HWD[ H[ SHQVH EHQHILW
( IIHFWLYHWD[ UDWH
6HH ‡, WHP V , P SDFWLQJ &RP SDUDELOLW\ 1 RQ * $ $ 3 0 HDVXUHV· DQG ‡1 RWH · DQG ‡1 RWH · RI ‡1 RWHV WR &RQVROLGDWHG ) LQDQFLDO
6WDWHP HQWV· IRUDGGLWLRQDOLQIRUP DWLRQ
’ LOXWHG HDUQLQJ V ORVV SHUVKDUH ’ LOXWHG HDUQLQJ VSHUFRP P RQ VKDUHZ DV IRU FRP SDUHG WR GLOXWHG ORVVSHUFRP P RQ VKDUHRI LQ UHSUHVHQWLQJ DQ LQFUHDVH RI ( [ FOXGLQJ 6SHFLDOLWHP V DGMXVWHG GLOXWHG HDUQLQJ V SHUFRP P RQ VKDUH Z DV
FRP SDUHGWR LQ UHSUHVHQWLQJ DQLQFUHDVHRI ’ LOXWHGHDUQLQJ VSHUFRP P RQVKDUHZ DVUHGXFHGE\ DSSUR[ LP DWHO\ SHU VKDUH LQ LP SDFWZ KHQ H[ FOXGLQJ 6SHFLDOLWHP V GXH WR LQFRP H DWWULEXWDEOH WR SDUWLFLSDWLQJ VHFXULWLHV LQFOXGLQJ 6HULHV % 3UHIHUUHG 6WRFNKROGHUV EDVHG RQ XQGLVWULEXWHG HDUQLQJ V IRU 6HH ‡1 RWH · RI ‡1 RWHV WR &RQVROLGDWHG ) LQDQFLDO6WDWHP HQWV· IRU DGGLWLRQDOLQIRUP DWLRQ
, WHP V, P SDFWLQJ &RP SDUDELOLW\ 1 RQ * $ $ 3 0 HDVXUHV
7 KH WDEOH EHORZ UHFRQFLOHV RXU* $ $ 3 ILQDQFLDOUHVXOWV WR RXUDGMXVWHG ILQDQFLDOUHVXOWV Z KLFK DUH QRQ * $ $ 3 P HDVXUHV FROOHFWLYHO\ GHILQHG DV‡6SHFLDOLWHP V· 7 KHQRQ * $ $ 3 DGMXVWHG UHVXOWVVKRZ Q EHORZ DQG Z LWKLQ WKLV) RUP . Z KLFK H[ FOXGHWKH6SHFLDOLWHP V VKRXOG QRWEH FRQVWUXHG DV D VXEVWLWXWH IRURUD EHWWHULQGLFDWRURI WKH &RP SDQ\ ¶V SHUIRUP DQFH WKDQ WKH &RP SDQ\ ¶V * $ $ 3 UHVXOWV 0 DQDJ HP HQWEHOLHYHVSUHVHQWLQJ FHUWDLQILQDQFLDOLQIRUP DWLRQH[ FOXGLQJ WKH6SHFLDOLWHP VLVLP SRUWDQWIRUSXUSRVHVRI FRP SDULVRQWR SULRU
\ HDUUHVXOWV , Q DGGLWLRQ P DQDJ HP HQWXVHVWKHVH P HWULFVWR HYDOXDWH WKH &RP SDQ\ ¶VXQGHUO\ LQJ RSHUDWLQJ SHUIRUP DQFH DQG WR DQDO\ ] H WUHQGV 6HH‡5 HVXOWVRI 2 SHUDWLRQV· IRUIXUWKHUDQDO\ VLVUHJ DUGLQJ WKHLP SDFWRI WKH6SHFLDOLWHP V DQG‡1 RWH · ‡1 RWH · DQG‡1 RWH · RI ‡1 RWHVWR &RQVROLGDWHG) LQDQFLDO6WDWHP HQWV· UHVSHFWLYHO\ IRUDGGLWLRQDOLQIRUP DWLRQDERXWWKH6SHFLDOLWHP V
1 RWH ( IIHFWLYHDVRI WKHILUVWTXDUWHURI WKH&RP SDQ\ P RGLILHGLWVSUHVHQWDWLRQRI DGMXVWHG QRQ * $ $ 3 ILQDQFLDOUHVXOWVWR QR ORQJ HU SUHVHQWFHUWDLQ ILQDQFLDODVVLVWDQFH SURYLGHG WR WKH 1 RUWK $ P HULFD V\ VWHP LQ WKH IRUP RI UR\ DOW\ UHOLHI DQG GLVFUHWLRQDU\ P DUNHWLQJ IXQG LQYHVWP HQWVDV6SHFLDOFKDUJ HV 7 KLVILQDQFLDODVVLVWDQFH Z KLFK EHJ DQ LQ WKHWKLUG TXDUWHURI LQ UHVSRQVHWR GHFOLQLQJ VDOHVLQ 1 RUWK
$ P HULFD FRQFOXGHG LQ WKH WKLUG TXDUWHURI DV DQQRXQFHG LQ D IRUP DOSODQ LQ -XO\ 7 KH DGMXVWHG ILQDQFLDOUHVXOWV IRUWKH &RP SDQ\ ¶VILVFDO\ HDUHQGHG ’ HFHP EHU KDYHEHHQ UHYLVHG WR UHP RYHWKHVHLWHP V 6HH‡7HP SRUDU\ ) UDQFKLVH6XSSRUW· EHORZ IRU DGGLWLRQDOLQIRUP DWLRQUHJ DUGLQJ WKLVFKDQJ HLQSUHVHQWDWLRQ
<HDU( QGHG ’ HF ’ HF
, QWKRXVDQGV H[ FHSWSHUVKDUHDP RXQWV
1 RWH
* $ $ 3 RSHUDWLQJ LQFRP H
6WUDWHJ LF FRUSRUDWHUHRUJ DQL] DWLRQFRVWV †
6SHFLDOFKDUJ HV
/ HJ DODQGDGYLVRU\ IHHV †
0 DUN WR P DUNHWDGMXVWP HQWRQRSWLRQYDOXDWLRQ †
2 WKHUFRVWV †
5 HIUDQFKLVLQJ J DLQV †
$ GMXVWHGRSHUDWLQJ LQFRP H
* $ $ 3 QHWLQFRP H ORVV DWWULEXWDEOHWR FRP P RQVKDUHKROGHUV
6WUDWHJ LF FRUSRUDWHUHRUJ DQL] DWLRQFRVWV †
6SHFLDOFKDUJ HV
/ HJ DODQGDGYLVRU\ IHHV †
0 DUN WR P DUNHWDGMXVWP HQWRQRSWLRQYDOXDWLRQ †
2 WKHUFRVWV †
5 HIUDQFKLVLQJ J DLQV †
7D[ HIIHFWRI 1 RQ * $ $ 3 LWHP V
7Z R FODVVLP SDFWIRU1 RQ * $ $ 3 DGMXVWP HQWWR QHWLQFRP H †
$ GMXVWHGQHWLQFRP HDWWULEXWDEOHWR FRP P RQVKDUHKROGHUV
* $ $ 3 GLOXWHGHDUQLQJ V ORVV SHUVKDUH
6WUDWHJ LF FRUSRUDWHUHRUJ DQL] DWLRQFRVWV †
6SHFLDOFKDUJ HV
/ HJ DODQGDGYLVRU\ IHHV †
0 DUN WR P DUNHWDGMXVWP HQWRQRSWLRQYDOXDWLRQ †
2 WKHUFRVWV †
5 HIUDQFKLVLQJ J DLQV †
7D[ HIIHFWRI 1 RQ * $ $ 3 LWHP V
7Z R FODVVLP SDFWIRU1 RQ * $ $ 3 DGMXVWP HQWWR HDUQLQJ VSHUVKDUH †
$ GMXVWHGGLOXWHGHDUQLQJ VSHUVKDUH
5 HSUHVHQWVVWUDWHJ LF FRUSRUDWH UHRUJ DQL] DWLRQ FRVWVDVVRFLDWHG Z LWK RXUQHZ RIILFH LQ $ WODQWD * HRUJ LD SURMHFWHG WR RSHQ LQ WKH VXP P HURI
5 HSUHVHQWV DGYLVRU\ DQG OHJ DO FRVWV LQFXUUHG LQ SULP DULO\ DVVRFLDWHG Z LWK WKH UHYLHZ RI D Z LGH UDQJ H RI VWUDWHJ LF RSSRUWXQLWLHVWKDWFXOP LQDWHGLQWKHVWUDWHJ LF LQYHVWP HQWLQWKH&RP SDQ\ E\ DIILOLDWHVRI 6WDUERDUG9 DOXH/ 3 ‡6WDUERDUG· DVZ HOO DVFHUWDLQOLWLJ DWLRQFRVWVDVVRFLDWHGZ LWKOHJ DOSURFHHGLQJ VLQLWLDWHGE\ RXUIRXQGHU
5 HSUHVHQWV D RQHWLP H P DUN WR P DUNHWDGMXVWP HQWRI P LOOLRQ SULP DULO\ UHODWHG WR WKH LQFUHDVH LQ WKH IDLU YDOXH RI WKH
6WDUERDUGRSWLRQWR SXUFKDVH6HULHV% 3UHIHUUHG6WRFNWKDWFXOP LQDWHGLQWKHSXUFKDVHRI DGGLWLRQDOSUHIHUUHGVWRFNLQODWH0 DUFK
, QFOXGHVVHYHUDQFHFRVWVIRURXUIRUP HU&( 2 DQG FRVWVUHODWHG WR WKHWHUP LQDWLRQ RI DOLFHQVHDJ UHHP HQWIRULQWHOOHFWXDOSURSHUW\ QR ORQJ HUEHLQJ XWLOL] HG
7 KH WD[ HIIHFWIRUVWUDWHJ LF FRUSRUDWH UHRUJ DQL] DWLRQ FRVWVZ DVFDOFXODWHG E\ DSSO\ LQJ WKH IXOO\ HDUP DUJ LQDOWD[ UDWH RI
7 KHWD[ HIIHFWIRU/ HJ DODQG DGYLVRU\ IHHV 2 WKHUFRVWV DQG 5 HIUDQFKLVLQJ J DLQVZ DVFDOFXODWHG E\ DSSO\ LQJ WKH IXOO\ HDU P DUJ LQDOUDWHRI 7 KHP DUN WR P DUNHWDGMXVWP HQWRQRSWLRQYDOXDWLRQZ DVQRQ GHGXFWLEOHIRUWD[ SXUSRVHV
5 HSUHVHQWV DQ DGMXVWP HQWWR WKH DOORFDWLRQ RI XQGLVWULEXWHG HDUQLQJ V WR SDUWLFLSDWLQJ VHFXULWLHV IRU WKH VWUDWHJ LF FRUSRUDWH UHRUJ DQL] DWLRQFRVWV
7 KH QRQ * $ $ 3 DGMXVWHG UHVXOWVVKRZ Q DERYH DQG Z LWKLQ WKLVGRFXP HQWZ KLFK H[ FOXGH WKH 6SHFLDOLWHP V VKRXOG QRWEH FRQVWUXHG DVD VXEVWLWXWH IRURUD EHWWHULQGLFDWRURI WKH &RP SDQ\ ¶VSHUIRUP DQFH WKDQ WKH &RP SDQ\ ¶V* $ $ 3 UHVXOWV 0 DQDJ HP HQWEHOLHYHVSUHVHQWLQJ FHUWDLQ ILQDQFLDOLQIRUP DWLRQ H[ FOXGLQJ WKH6SHFLDOLWHP VLVLP SRUWDQWIRUSXUSRVHVRI FRP SDUDELOLW\ , Q DGGLWLRQ P DQDJ HP HQWXVHVWKHVH P HWULFV WR HYDOXDWH WKH &RP SDQ\ ¶V XQGHUO\ LQJ RSHUDWLQJ SHUIRUP DQFH DQG WR DQDO\ ] H WUHQGV 6HH ‡5 HVXOWV RI 2 SHUDWLRQV· IRUIXUWKHU DQDO\ VLVUHJ DUGLQJ WKHLP SDFWRI WKH6SHFLDOLWHP V
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‡7HP SRUDU\ ) UDQFKLVH 6XSSRUW· RI P LOOLRQ RUDSSUR[ LP DWHO\ SHUGLOXWHG VKDUH IRU FRP SDUHGWR P LOOLRQ RUDSSUR[ LP DWHO\ SHUGLOXWHGVKDUH IRU DVIROORZ V LQWKRXVDQGV
<HDU( QGHG
’ HFHP EHU ’ HFHP EHU
5 R\ DOW\ UHOLHI D 0 DUNHWLQJ IXQGLQYHVWP HQWV E
7RWDO7HP SRUDU\ ) UDQFKLVH6XSSRUW
D 5 HSUHVHQWVILQDQFLDODVVLVWDQFHSURYLGHG WR WKH1 RUWK$ P HULFDV\ VWHP LQ WKHIRUP RI WHP SRUDU\ UR\ DOW\ UHGXFWLRQVWKDWDUHDERYH DQG EH\ RQG WKH OHYHORI IUDQFKLVH DVVLVWDQFH WKH &RP SDQ\ Z RXOG LQFXULQ WKH RUGLQDU\ FRXUVH RI LWV EXVLQHVV 7 KHVH UR\ DOW\ UHGXFWLRQVDUHQRWDQH[ SHQVH EXWUDWKHUFRQVLVWRI WKHDP RXQWRI Z DLYHGUR\ DOWLHVWKDWWKH&RP SDQ\ Z RXOGRWKHUZ LVHKDYHEHHQ HQWLWOHGWR DEVHQWWKHZ DLYHU 7 KHZ DLYHGUR\ DOWLHVDUHQRWLQFOXGHGLQ1 RUWK$ P HULFDIUDQFKLVHUR\ DOWLHVDQGIHHVUHYHQXHV
E 5 HSUHVHQWV LQFUHP HQWDOGLVFUHWLRQDU\ P DUNHWLQJ IXQG LQYHVWP HQWV LQ H[ FHVV RI FRQWUDFWXDO&RP SDQ\ RZ QHG UHVWDXUDQWOHYHO FRQWULEXWLRQV Z KLFK Z HUH P DGH DV SDUWRI WKH WHP SRUDU\ ILQDQFLDOVXSSRUWSDFNDJ H WR RXUIUDQFKLVHHV 7 KH P DUNHWLQJ IXQG LQYHVWP HQWVDUHLQFOXGHGLQ8 QDOORFDWHGFRUSRUDWHH[ SHQVHV
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¶V* $ $ 3 P HDVXUHV 6HH‡/ LTXLGLW\ DQG &DSLWDO5 HVRXUFHV· IRUD UHFRQFLOLDWLRQRI IUHHFDVKIORZ WR WKHP RVWGLUHFWO\ FRP SDUDEOH* $ $ 3 P HDVXUH
7 KHSUHVHQWDWLRQRI WKHQRQ * $ $ 3 P HDVXUHVLQWKLVUHSRUWLVP DGHDORQJ VLGHWKHP RVWGLUHFWO\ FRP SDUDEOH* $ $ 3 P HDVXUHV
/ LTXLGLW\ DQG &DSLWDO5 HVRXUFHV ’ HEW
7 KH &RP SDQ\ KDVD VHFXUHG UHYROYLQJ FUHGLWIDFLOLW\ Z LWK DYDLODEOH ERUURZ LQJ VRI P LOOLRQ WKH ‡5 HYROYLQJ ) DFLOLW\ · RI Z KLFK P LOOLRQZ DVRXWVWDQGLQJ DVRI ’ HFHP EHU DQGDVHFXUHGWHUP ORDQIDFLOLW\ Z LWKDQRXWVWDQGLQJ EDODQFHRI P LOOLRQ WKH
‡7HUP / RDQ) DFLOLW\ · DQGWRJ HWKHUZ LWKWKH5 HYROYLQJ ) DFLOLW\ WKH‡3-, ) DFLOLWLHV· , QFOXGLQJ RXWVWDQGLQJ OHWWHUVRI FUHGLWWKH&RP SDQ\ ¶V UHP DLQLQJ DYDLODELOLW\ XQGHUWKH3-, ) DFLOLWLHVDW’ HFHP EHU Z DVDSSUR[ LP DWHO\ P LOOLRQ
: HXVHLQWHUHVWUDWHVZ DSVWR KHGJ HDJ DLQVWWKHHIIHFWVRI SRWHQWLDOLQWHUHVWUDWHLQFUHDVHVRQ ERUURZ LQJ VXQGHURXU3-, ) DFLOLWLHV $ VRI ’ HFHP EHU Z HKDYHWKHIROORZ LQJ LQWHUHVWUDWHVZ DS DJ UHHP HQWVZ LWKDWRWDOQRWLRQDOYDOXHRI P LOOLRQ
( IIHFWLYH’ DWHV | ) ORDWLQJ 5 DWH’ HEW ) L[ HG 5 DWHV | |
$ SULO | WKURXJ K$ SULO | P LOOLRQ |
$ SULO | WKURXJ K$ SULO | P LOOLRQ |
$ SULO | WKURXJ K$ SULO | P LOOLRQ |
-DQXDU\ | WKURXJ K$ XJ XVW | P LOOLRQ |
-DQXDU\ | WKURXJ K$ XJ XVW | P LOOLRQ |
-DQXDU\ | WKURXJ K$ XJ XVW | P LOOLRQ |
7 KHZ HLJ KWHGDYHUDJ HLQWHUHVWUDWHVRQRXU3-, ) DFLOLWLHV LQFOXGLQJ WKHLP SDFWRI WKHLQWHUHVWUDWHVZ DS DJ UHHP HQWV Z HUH DQG LQ ILVFDO DQG UHVSHFWLYHO\
2 XU3-, &UHGLW$ J UHHP HQWFRQWDLQVDIILUP DWLYHDQG QHJ DWLYHFRYHQDQWV LQFOXGLQJ WKHIROORZ LQJ ILQDQFLDOFRYHQDQWV DVGHILQHG E\ WKH3-, &UHGLW$ J UHHP HQW
$ FWXDO5 DWLR IRUWKH
<HDU( QGHG
3 HUP LWWHG 5 DWLR | ’ HFHP EHU | ||
/ HYHUDJ HUDWLR | 1 RWWR H[ FHHG | WR | WR |
, QWHUHVWFRYHUDJ HUDWLR | 1 RWOHVVWKDQ | WR | WR |
2 XUOHYHUDJ H UDWLR LVGHILQHG DVRXWVWDQGLQJ GHEWGLYLGHG E\ FRQVROLGDWHG HDUQLQJ VEHIRUH LQWHUHVWWD[ HV GHSUHFLDWLRQ DQG DP RUWL] DWLRQ
‡( %, 7 ’ $ · IRUWKH P RVWUHFHQWIRXUILVFDOTXDUWHUV 2 XULQWHUHVWFRYHUDJ H UDWLR LV GHILQHG DV WKH VXP RI FRQVROLGDWHG ( %, 7 ’ $ DQG FRQVROLGDWHG UHQWDOH[ SHQVHIRUWKHP RVWUHFHQWIRXUILVFDOTXDUWHUVGLYLGHG E\ WKHVXP RI FRQVROLGDWHG LQWHUHVWH[ SHQVHDQG FRQVROLGDWHG UHQWDOH[ SHQVHIRUWKHP RVWUHFHQWIRXUILVFDOTXDUWHUV : HZ HUHLQFRP SOLDQFHZ LWKDOOILQDQFLDOFRYHQDQWVDVRI ’ HFHP EHU
3DSD -RKQ¶V 0 DUNHWLQJ ) XQG , QF ‡3-0 ) · RXU QDWLRQDOP DUNHWLQJ IXQG KDV D P LOOLRQ UHYROYLQJ OLQH RI FUHGLW WKH ‡3-0 )
5 HYROYLQJ ) DFLOLW\ · SXUVXDQWWR D5 HYROYLQJ / RDQ$ J UHHP HQWGDWHG6HSWHP EHU DVDP HQGHG WKH‡3-0 ) / RDQ$ J UHHP HQW· Z LWK
8 6 %DQN1 DWLRQDO$ VVRFLDWLRQ DVOHQGHU 7 KHUHZ DVQR EDODQFHRXWVWDQGLQJ XQGHUWKH3-0 ) 5 HYROYLQJ ) DFLOLW\ DVRI ’ HFHP EHU
DQG’ HFHP EHU 7 KH3-0 ) RSHUDWLQJ UHVXOWVDQGWKHUHODWHGGHEWRXWVWDQGLQJ GR QRWLP SDFWWKHILQDQFLDOFRYHQDQWVXQGHUWKH3-, &UHGLW$ J UHHP HQW
6HH‡1 RWH · RI ‡1 RWHVWR &RQVROLGDWHG) LQDQFLDO6WDWHP HQWV· IRUDGGLWLRQDOLQIRUP DWLRQ &DVK) ORZV
&DVK IORZ SURYLGHG E\ RSHUDWLQJ DFWLYLWLHV Z DV P LOOLRQ IRU DV FRP SDUHG WR P LOOLRQ LQ 7 KH LQFUHDVH RI DSSUR[ LP DWHO\ P LOOLRQZ DVSULP DULO\ GXHWR KLJ KHUQHWLQFRP HDQGIDYRUDEOHZ RUNLQJ FDSLWDOFKDQJ HVLQFOXGLQJ WLP LQJ RI SD\ P HQWV
&DVKIORZ XVHGLQLQYHVWLQJ DFWLYLWLHVZ DV P LOOLRQLQ DVFRP SDUHGWR P LOOLRQIRUWKHVDP HSHULRGLQ 7 KHLQFUHDVHLQ FDVK IORZ XVHG LQ LQYHVWLQJ DFWLYLWLHVZ DVSULP DULO\ GXH WR SURFHHGVIURP WKH UHIUDQFKLVLQJ RI UHVWDXUDQWVLQ 7 KLVZ DVVRP HZ KDW RIIVHWE\ KLJ KHUQRWHUHSD\ P HQWVIURP IUDQFKLVHHVLQ
&DVKIORZ XVHGLQILQDQFLQJ DFWLYLWLHVZ DV P LOOLRQLQ DVFRP SDUHGWR P LOOLRQIRUWKHVDP HSHULRGLQ 7 KHLQFUHDVHLQ FDVK IORZ XVHG LQ ILQDQFLQJ DFWLYLWLHVZ DVSULP DULO\ GXHWR WKHWLP LQJ RI UHSD\ P HQWVRQ RXU7HUP / RDQ ) DFLOLW\ UHSXUFKDVHVRI FRP P RQ VWRFN DQG KLJ KHUGLYLGHQGVSDLG WR SUHIHUUHG VWRFNKROGHUV RIIVHWE\ KLJ KHUFDVK SURFHHGVUHFHLYHG IURP WKHH[ HUFLVHRI VWRFN RSWLRQV , Q
Z H DOVR UHFHLYHG P LOOLRQ LQ SURFHHGV IURP WKH LVVXDQFH RI 6HULHV % 3UHIHUUHG 6WRFN Z KLFK Z DV SULP DULO\ XVHG IRUQHW UHSD\ P HQWVRQRXU5 HYROYLQJ ) DFLOLW\ RI P LOOLRQ
7 KH&RP SDQ\ UHFRUGHGGLYLGHQGVRI DSSUR[ LP DWHO\ P LOOLRQIRUWKH\ HDUHQGHG’ HFHP EHU FRQVLVWLQJ RI WKHIROORZ LQJ P LOOLRQSDLGWR FRP P RQVWRFNKROGHUV SHUVKDUH
P LOOLRQ LQ FRP P RQ VWRFN ‡SDVVWKURXJ K· GLYLGHQGVSDLG WR 6HULHV% 3UHIHUUHG 6WRFNKROGHUVRQ DQ DVFRQYHUWHG EDVLV
SHUVKDUH DQG
P LOOLRQLQSUHIHUUHGGLYLGHQGVRQWKH6HULHV% 3UHIHUUHG6WRFN RI WKHLQYHVWP HQWSHUDQQXP
7 KH&RP SDQ\ SDLGFRP P RQVWRFNGLYLGHQGVRI P LOOLRQ FRP P RQVWRFN‡SDVVWKURXJ K· GLYLGHQGVWR 6HULHV% 3UHIHUUHG6WRFNKROGHUV RI P LOOLRQ DQG P LOOLRQLQSUHIHUUHGGLYLGHQGVRQWKH6HULHV% 3UHIHUUHG6WRFNLQ
2 Q -DQXDU\ RXU%RDUG RI ’ LUHFWRUVGHFODUHG DILUVWTXDUWHUGLYLGHQG RI SHUVKDUHRI FRP P RQ VWRFN DSSUR[ LP DWHO\
P LOOLRQZ DVSDLGWR FRP P RQVWRFNKROGHUVDQG P LOOLRQZ DVSDLGDV‡SDVVWKURXJ K· GLYLGHQGVWR KROGHUVRI 6HULHV% 3UHIHUUHG6WRFNRQ DQDVFRQYHUWHGEDVLV 7 KHILUVWTXDUWHUGLYLGHQGRQRXWVWDQGLQJ VKDUHVRI 6HULHV% 3UHIHUUHG6WRFNZ DVDOVR GHFODUHGRQ-DQXDU\
7 KHFRP P RQVWRFNGLYLGHQGZ DVSDLGRQ) HEUXDU\ WR VWRFNKROGHUVRI UHFRUGDVRI WKHFORVHRI EXVLQHVVRQ) HEUXDU\ 7 KH ILUVWTXDUWHUSUHIHUUHGGLYLGHQGRI P LOOLRQZ LOOEHSDLGWR KROGHUVRI 6HULHV% 3UHIHUUHG6WRFNRQ$ SULO
: HDOVR XVHIUHHFDVK IORZ DQRQ * $ $ 3 P HDVXUH GHILQHG DVQHWFDVK SURYLGHG E\ RSHUDWLQJ DFWLYLWLHV IURP WKH&RQVROLGDWHG 6WDWHP HQWV RI &DVK ) ORZ V OHVVWKHSXUFKDVHVRI SURSHUW\ DQG HTXLSP HQWDQG GLYLGHQGVSDLG WR SUHIHUUHG VWRFNKROGHUV : HYLHZ IUHHFDVK IORZ DVDQ LP SRUWDQWP HDVXUHEHFDXVHLWLVRQHIDFWRUWKDWP DQDJ HP HQWXVHVLQGHWHUP LQLQJ WKHDP RXQWRI FDVKDYDLODEOHIRUGLVFUHWLRQDU\ LQYHVWP HQW
) UHHFDVK IORZ LVQRWDWHUP GHILQHG E\ * $ $ 3 DQG DVDUHVXOWRXUP HDVXUHRI IUHHFDVK IORZ P LJ KWQRWEHFRP SDUDEOHWR VLP LODUO\ WLWOHG P HDVXUHVXVHG E\ RWKHUFRP SDQLHV ) UHH FDVK IORZ VKRXOG QRWEH FRQVWUXHG DVD VXEVWLWXWH IRURUD EHWWHULQGLFDWRURI WKH &RP SDQ\ ¶V SHUIRUP DQFHWKDQ WKH&RP SDQ\ ¶V* $ $ 3 P HDVXUHV 6HH‡, WHP V, P SDFWLQJ &RP SDUDELOLW\ 1 RQ * $ $ 3 0 HDVXUHV· IRUDGLVFXVVLRQ RI IUHH FDVKIORZ 7 KH&RP SDQ\ ¶VIUHHFDVKIORZ IRUWKHODVWWZ R\ HDUVZ DVDVIROORZ V LQWKRXVDQGV
<HDU( QGHG ’ HF ’ HF
1 HWFDVKSURYLGHGE\ RSHUDWLQJ DFWLYLWLHV
3XUFKDVHVRI SURSHUW\ DQGHTXLSP HQW
’ LYLGHQGVSDLGWR SUHIHUUHGVWRFNKROGHUV
) UHHFDVKIORZ
&RQWUDFWXDO2 EOLJ DWLRQV
&RQWUDFWXDOREOLJ DWLRQVDQGSD\ P HQWVDVRI ’ HFHP EHU GXHE\ \ HDUDUHDVIROORZ V LQWKRXVDQGV
3 D\ P HQWV’ XHE\ 3 HULRG
/ HVVWKDQ <HDU | <HDUV | <HDUV | $ IWHU <HDUV | 7 RWDO | |
&RQWUDFWXDO2 EOLJ DWLRQV | |||||
7HUP / RDQ) DFLOLW\ | † | † | |||
5 HYROYLQJ ) DFLOLW\ | † | † | † | ||
, QWHUHVWSD\ P HQWV | † |
| |||
7RWDOGHEW | † | ||||
2 SHUDWLQJ OHDVHV | |||||
) LQDQFHOHDVHV | |||||
7RWDOFRQWUDFWXDOREOLJ DWLRQV |
: HXWLOL] HLQWHUHVWUDWHVZ DSVWR KHGJ HRXUYDULDEOHUDWHGHEW$ W’ HFHP EHU Z HKDG DQ LQWHUHVWUDWHVZ DS OLDELOLW\ RI
P LOOLRQUHFRUGHGLQ$ FFUXHGH[ SHQVHVDQGRWKHUFXUUHQWOLDELOLWLHVDQG2 WKHUORQJ WHUP OLDELOLWLHVLQWKH&RQVROLGDWHG%DODQFH6KHHW
, QWHUHVWSD\ P HQWVDVVXP HDQ RXWVWDQGLQJ GHEWEDODQFHRI P LOOLRQ , QWHUHVWSD\ P HQWVDUHFDOFXODWHG EDVHG RQ / , %2 5 SOXVWKH DSSOLFDEOH P DUJ LQ LQ HIIHFWDW’ HFHP EHU DQG LQFOXGHV WKH LP SDFWRI LQWHUHVWUDWH VZ DS DJ UHHP HQWV LQ HIIHFW7 KH DFWXDO LQWHUHVWUDWHVRQ RXUYDULDEOHUDWHGHEWDQG WKHDP RXQWRI RXULQGHEWHGQHVVFRXOG YDU\ IURP WKRVHXVHG WR FRP SXWHWKHDERYHLQWHUHVW SD\ P HQWV 6HH‡1 RWH · RI ‡1 RWHVWR &RQVROLGDWHG ) LQDQFLDO6WDWHP HQWV· IRUDGGLWLRQDOLQIRUP DWLRQ FRQFHUQLQJ RXUGHEWDQG FUHGLW DUUDQJ HP HQWV
6HH‡1 RWH · RI ‡1 RWHVWR &RQVROLGDWHG) LQDQFLDO6WDWHP HQWV· IRUDGGLWLRQDOLQIRUP DWLRQ 7 KHDERYHDP RXQWVH[ FOXGHIXWXUHH[ SHFWHG VXE OHDVHLQFRP HLQWKH8 QLWHG. LQJ GRP
7 KHDERYHWDEOHGRHVQRWLQFOXGHWKHIROORZ LQJ
8 QUHFRJ QL] HGWD[ EHQHILWVRI P LOOLRQVLQFHZ HDUHQRWDEOHWR P DNHUHDVRQDEOHHVWLP DWHVRI WKHSHULRGRI FDVKVHWWOHP HQWZ LWK UHVSHFWWR WKHWD[ LQJ DXWKRULW\
5 HGHHP DEOHQRQFRQWUROOLQJ LQWHUHVWVRI P LOOLRQDVZ HDUHQRWDEOHWR SUHGLFWWKHWLP LQJ RI WKHUHGHP SWLRQV
( [ SHFWHG P LQLP XP OHDVHSD\ P HQWVRI DSSUR[ LP DWHO\ P LOOLRQ DVVRFLDWHG Z LWK RXUQHZ RIILFHLQ$ WODQWD * HRUJ LDZ KLFK LV H[ SHFWHGWR FRP P HQFHLQILVFDO
2 II %DODQFH6KHHW$ UUDQJ HP HQWV
: HJ XDUDQWHHOHDVHVIRUFHUWDLQ 3DSD-RKQ¶V1 RUWK$ P HULFDQ IUDQFKLVHHVZ KR KDYHSXUFKDVHG UHVWDXUDQWVWKDWZ HUHSUHYLRXVO\ &RP SDQ\ RZ QHG : HDUHFRQWLQJ HQWO\ OLDEOHRQ WKHVHOHDVHV 7 KHVHOHDVHVKDYHYDU\ LQJ WHUP V WKHODWHVWRI Z KLFK H[ SLUHVLQ $ VRI ’ HFHP EHU
WKHHVWLP DWHG P D[ LP XP DP RXQWRI XQGLVFRXQWHG SD\ P HQWVWKH&RP SDQ\ FRXOG EHUHTXLUHG WR P DNHLQ WKHHYHQWRI QRQSD\ P HQW E\ WKHSULP DU\ OHVVHHVZ DVDSSUR[ LP DWHO\ P LOOLRQ
: HKDYHFHUWDLQ RWKHUFRP P HUFLDOFRP P LWP HQWVZ KHUHSD\ P HQWLVFRQWLQJ HQWXSRQ WKHRFFXUUHQFHRI FHUWDLQ HYHQWV : LWK RXULQVXUDQFH SURJ UDP V Z HDUHSDUW\ WR VWDQGE\ OHWWHUVRI FUHGLWZ LWKRII EDODQFHVKHHWULVNDVIROORZ VE\ \ HDU LQWKRXVDQGV
$ P RXQWRI &RP P LWP HQW( [ SLUDWLRQ 3 HU3 HULRG
/ HVVWKDQ $ IWHU
<HDU <HDUV <HDUV <HDUV 7 RWDO
6WDQGE\ OHWWHUVRI FUHGLW † † †
6HH‡1 RWH · DQG ‡1 RWH · RI ‡1 RWHVWR &RQVROLGDWHG ) LQDQFLDO6WDWHP HQWV· IRUDGGLWLRQDOLQIRUP DWLRQ UHODWHG WR FRQWUDFWXDODQG RWKHU FRP P LWP HQWV
) RUZ DUG / RRNLQJ 6WDWHP HQWV
&HUWDLQ P DWWHUVGLVFXVVHG LQ WKLV$ QQXDO5 HSRUWRQ ) RUP . DQG RWKHU&RP SDQ\ FRP P XQLFDWLRQVWKDWDUHQRWVWDWHP HQWVRI KLVWRULFDO IDFWFRQVWLWXWHIRUZ DUG ORRNLQJ VWDWHP HQWVZ LWKLQ WKHP HDQLQJ RI WKHIHGHUDOVHFXULWLHVODZ V * HQHUDOO\ WKHXVHRI Z RUGVVXFK DV‡H[ SHFW·
‡LQWHQG· ‡HVWLP DWH· ‡EHOLHYH· ‡DQWLFLSDWH· ‡Z LOO· ‡IRUHFDVW· ‡SODQ· ‡SURMHFW· RUVLP LODUZ RUGVLGHQWLI\ IRUZ DUG ORRNLQJ VWDWHP HQWVWKDW Z H LQWHQG WR EH LQFOXGHG Z LWKLQ WKH VDIH KDUERUSURWHFWLRQV SURYLGHG E\ WKH IHGHUDOVHFXULWLHV ODZ V 6XFK IRUZ DUG ORRNLQJ VWDWHP HQWV LQFOXGHRUP D\ UHODWHWR SURMHFWLRQVRUJ XLGDQFHFRQFHUQLQJ EXVLQHVVSHUIRUP DQFH UHYHQXH HDUQLQJ V FDVK IORZ HDUQLQJ VSHUVKDUH VKDUH UHSXUFKDVHV WKH ILQDQFLDO LP SDFWRI WKH WHP SRUDU\ EXVLQHVV RSSRUWXQLWLHV GLVUXSWLRQV DQG WHP SRUDU\ FKDQJ HV LQ GHP DQG Z H DUH H[ SHULHQFLQJ UHODWHG WR WKHFXUUHQWRXWEUHDN RI WKHQRYHOFRURQDYLUXVGLVHDVH &2 9 , ’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
WKH DELOLW\ RI WKH &RP SDQ\ WR P DQDJ H GLIILFXOWLHV DQG RSSRUWXQLWLHV DVVRFLDWHG Z LWK RUUHODWHG WR WKH &2 9 , ’ SDQGHP LF LQFOXGLQJ ULVNVUHODWHG WR WKH LP SDFWRI J RYHUQP HQWDOUHVWULFWLRQVRQ IUHHGRP RI P RYHP HQWDQG EXVLQHVVRSHUDWLRQVLQFOXGLQJ TXDUDQWLQHV VRFLDOGLVWDQFLQJ UHTXLUHP HQWV DQG P DQGDWRU\ EXVLQHVV FORVXUHV WKH YLUXV¶V LP SDFWRQ WKH DYDLODELOLW\ RI RXU Z RUNIRUFH WKHSRWHQWLDOGLVUXSWLRQ RI RXUVXSSO\ FKDLQ FKDQJ HVLQ FRQVXP HUGHP DQG RUEHKDYLRU LP SDFWRI GHOD\ HG QHZ VWRUH RSHQLQJ V ERWK GRP HVWLFDOO\ DQG LQWHUQDWLRQDOO\ WKH RYHUDOO FRQWUDFWLRQ LQ J OREDO HFRQRP LF DFWLYLW\ LQFOXGLQJ LQFUHDVHG XQHP SOR\ P HQWRXUOLTXLGLW\ SRVLWLRQ RXUDELOLW\ WR QDYLJ DWH FKDQJ LQJ J RYHUQP HQWDOSURJ UDP VDQG UHJ XODWLRQVUHODWLQJ WR WKH SDQGHP LF DQGWKHLQFUHDVHGULVNRI SKLVKLQJ DQGRWKHUF\ EHUDWWDFNV
WKHDVVXP SWLRQ WKDWWKHVWRUHFORVXUHVLQ LQWHUQDWLRQDOP DUNHWVDQG QRQ WUDGLWLRQDOUHVWDXUDQWVLQ 1 RUWK$ P HULFDDUHQRWH[ SHFWHG WR EHSHUP DQHQWWKHDVVXP SWLRQ WKDWRXUGHOLYHU\ UHVWDXUDQWVZ LOOFRQWLQXHWR VWD\ RSHQ DQG EHGHHP HG HVVHQWLDOEXVLQHVVHVE\ QDWLRQDOVWDWHDQGORFDODXWKRULWLHVLQP RVWRI WKHMXULVGLFWLRQVLQZ KLFKZ HRSHUDWH
WKHXQFHUWDLQW\ RI Z KHWKHUDQG WR Z KDWH[ WHQWWKHLQFUHDVHLQ GHP DQG IRURXUSURGXFWVWKDWZ HDUHFXUUHQWO\ H[ SHULHQFLQJ GXULQJ WKH&2 9 , ’ SDQGHP LF Z LOOFRQWLQXHIROORZ LQJ DFHVVDWLRQRI WKHHIIHFWVRI WKHYLUXVLQWKHIXWXUH
RXUDELOLW\ WR VXFFHVVIXOO\ LP SOHP HQWRUIXOO\ UHDOL] H WKH DQWLFLSDWHG EHQHILWVRI RXUFRUSRUDWH UHRUJ DQL] DWLRQ DQG QHZ RIILFH LQ
$ WODQWD * HRUJ LDDQG FRUSRUDWHUHRUJ DQL] DWLRQ LQ WKHWLP HIUDP HVZ HGHVLUHRUZ LWKLQ WKHH[ SHFWHG UDQJ HRI H[ SHQVHV RUDWDOO , Q DGGLWLRQ WXUQRYHULQRXUVXSSRUWWHDP VGXHWR RXUUHORFDWLRQWR * HRUJ LDFRXOGGLVWUDFWRXUHP SOR\ HHV GHFUHDVHHP SOR\ HHP RUDOH KDUP RXUUHSXWDWLRQ DQGQHJ DWLYHO\ LP SDFWWKHRYHUDOOSHUIRUP DQFHRI RXUFRUSRUDWHVXSSRUWWHDP V
LQFUHDVHG FRVWV IRUEUDQGLQJ LQLWLDWLYHV DQG ODXQFKLQJ QHZ DGYHUWLVLQJ DQG P DUNHWLQJ FDP SDLJ QV DQG SURP RWLRQV WR LP SURYH FRQVXP HUVHQWLP HQWDQGVDOHVWUHQGV DQGWKHULVNWKDWVXFKLQLWLDWLYHVZ LOOQRWEHHIIHFWLYH
ULVNVUHODWHGWR VRFLDOP HGLD LQFOXGLQJ SXEOLFLW\ DGYHUVHO\ DQGUDSLGO\ LP SDFWLQJ RXUEUDQGDQGUHSXWDWLRQ
DJ J UHVVLYHFKDQJ HVLQ SULFLQJ RURWKHUP DUNHWLQJ RUSURP RWLRQDOVWUDWHJ LHVE\ FRP SHWLWRUV Z KLFK P D\ DGYHUVHO\ DIIHFWVDOHVDQG SURILWDELOLW\ DQGQHZ SURGXFWDQGFRQFHSWGHYHORSP HQWVE\ IRRGLQGXVWU\ FRP SHWLWRUV
FKDQJ HVLQFRQVXP HUSUHIHUHQFHVRUFRQVXP HUEX\ LQJ KDELWV LQFOXGLQJ WKHJ URZ LQJ SRSXODULW\ RI GHOLYHU\ DJ J UHJ DWRUV DVZ HOODV FKDQJ HV LQ J HQHUDOHFRQRP LF FRQGLWLRQV RU RWKHU IDFWRUV WKDWP D\ DIIHFWFRQVXP HU FRQILGHQFH DQG GLVFUHWLRQDU\ VSHQGLQJ LQFOXGLQJ KLJ KHUXQHP SOR\ P HQW
WKHDGYHUVHLP SDFWRQWKH&RP SDQ\ RURXUUHVXOWVFDXVHGE\ J OREDOKHDOWKFRQFHUQV SURGXFWUHFDOOV IRRGTXDOLW\ RUVDIHW\ LVVXHV LQFLGHQFHV RI IRRGERUQH LOOQHVV IRRG FRQWDP LQDWLRQ DQG RWKHUJ HQHUDOSXEOLF KHDOWK FRQFHUQV DERXWRXU&RP SDQ\ RZ QHG RU IUDQFKLVHGUHVWDXUDQWVRURWKHUVLQWKHUHVWDXUDQWLQGXVWU\
WKHHIIHFWLYHQHVVRI RXUWHFKQRORJ \ LQYHVWP HQWVDQGFKDQJ HVLQXQLWOHYHORSHUDWLRQV
WKHDELOLW\ RI WKH&RP SDQ\ DQGLWVIUDQFKLVHHVWR P HHWSODQQHGJ URZ WKWDUJ HWVDQGRSHUDWHQHZ DQGH[ LVWLQJ UHVWDXUDQWVSURILWDEO\ LQFOXGLQJ GLIILFXOWLHVILQGLQJ TXDOLILHGIUDQFKLVHHV VWRUHOHYHOHP SOR\ HHVRUVXLWDEOHVLWHV
LQFUHDVHV LQ ODERU FRVWV IRRG FRVWV RU VXVWDLQHG KLJ KHU RWKHU RSHUDWLQJ FRVWV 7 KLV FRXOG LQFOXGH LQFUHDVHG HP SOR\ HH FRP SHQVDWLRQ LQFOXGLQJ DVDUHVXOWRI FKDQJ HVLQ P LQLP XP Z ▇▇ ▇ EHQHILWV LQVXUDQFH WD[ UDWHV QHZ UHJ XODWRU\ UHTXLUHP HQWVRU LQFUHDVLQJ FRP SOLDQFHFRVWV
LQFUHDVHVLQ LQVXUDQFH FODLP VDQG UHODWHG FRVWVIRUSURJ UDP VIXQGHG E\ WKH &RP SDQ\ XS WR FHUWDLQ UHWHQWLRQ OLP LWV LQFOXGLQJ P HGLFDORZ QHGDQGQRQ RZ QHGYHKLFOHV Z RUNHUV¶FRP SHQVDWLRQ J HQHUDOOLDELOLW\ DQGSURSHUW\
GLVUXSWLRQ RI RXUVXSSO\ FKDLQ RUFRP P LVVDU\ RSHUDWLRQV Z KLFK FRXOG EH FDXVHG E\ RXUVROH VRXUFH RI VXSSO\ RI P R] ] DUHOOD FKHHVH GHVVHUWV J DUOLF FXSVRUOLP LWHG VRXUFH RI VXSSOLHUVIRURWKHUNH\ LQJ UHGLHQWVRUP RUH J HQHUDOO\ GXH WR Z HDWKHU QDWXUDO GLVDVWHUVLQFOXGLQJ GURXJ KWGLVHDVH RUJ HRSROLWLFDORURWKHUGLVUXSWLRQVEH\ RQGRXUFRQWUROLQFOXGLQJ &2 9 , ’ LQFUHDVHGULVNVDVVRFLDWHGZ LWKRXULQWHUQDWLRQDORSHUDWLRQV LQFOXGLQJ HFRQRP LF DQGSROLWLFDOFRQGLWLRQVDQGULVNVDVVRFLDWHGZ LWK WKHZ LWKGUDZ ▇▇▇▇ WKH8 QLWHG. LQJ GRP IURP WKH( XURSHDQ8 QLRQ LQVWDELOLW\ RUXQFHUWDLQW\ LQRXULQWHUQDWLRQDOP DUNHWV HVSHFLDOO\ HP HUJ LQJ P DUNHWV IOXFWXDWLRQVLQFXUUHQF\ H[ FKDQJ HUDWHV GLIILFXOW\ LQP HHWLQJ SODQQHGVDOHVWDUJ HWVDQGQHZ VWRUHJ URZ WK
WKH LP SDFWRI FXUUHQWRUIXWXUH FODLP VDQG OLWLJ DWLRQ DQG RXUDELOLW\ WR FRP SO\ Z LWK FXUUHQWSURSRVHG RUIXWXUH OHJ LVODWLRQ WKDW FRXOGLP SDFWRXUEXVLQHVVLQFOXGLQJ FRP SOLDQFHZ LWKWKH( XURSHDQ8 QLRQ* HQHUDO’ DWD3URWHFWLRQ5 HJ XODWLRQ
WKH&RP SDQ\ VDELOLW\ WR FRQWLQXHWR SD\ GLYLGHQGVWR VWRFNKROGHUVEDVHG XSRQ SURILWDELOLW\ FDVK IORZ VDQG FDSLWDODGHTXDF\ LI UHVWDXUDQWVDOHVDQGRSHUDWLQJ UHVXOWVGHFOLQH
GLVUXSWLRQ RI FULWLFDOEXVLQHVVRULQIRUP DWLRQ WHFKQRORJ \ V\ VWHP V RUWKRVH RI RXUVXSSOLHUV DQG ULVNVDVVRFLDWHG Z LWK V\ VWHP V IDLOXUHVDQG GDWD SULYDF\ DQG VHFXULW\ EUHDFKHV LQFOXGLQJ WKHIWRI FRQILGHQWLDO&RP SDQ\ HP SOR\ HH DQG FXVWRP HULQIRUP DWLRQ LQFOXGLQJ SD\ P HQWFDUGV DQG
FKDQJ HVLQ) HGHUDORUVWDWHLQFRP H J HQHUDODQGRWKHUWD[ ODZ V UXOHVDQGUHJ XODWLRQVDQGFKDQJ HVLQJ HQHUDOO\ DFFHSWHGDFFRXQWLQJ SULQFLSOHV
7 KHVHDQGRWKHUULVNIDFWRUVDUHGLVFXVVHGLQGHWDLOLQ‡3DUW, , WHP $ † 5 LVN) DFWRUV· RI WKLV$ QQXDO5 HSRUWRQ) RUP . : HXQGHUWDNH QR REOLJ DWLRQWR XSGDWHSXEOLFO\ DQ\ IRUZ DUG ORRNLQJ VWDWHP HQWV Z KHWKHUDVDUHVXOWRI IXWXUHHYHQWV QHZ LQIRUP DWLRQRURWKHUZ LVH H[ FHSW DVUHTXLUHGE\ ODZ
, WHP $ 4 XDQWLWDWLYHDQG 4 XDOLWDWLYH’ LVFORVXUHV$ ERXW0 DUNHW5 LVN
, QWHUHVW5 DWH5 LVN
: H DUH H[ SRVHG WR WKH LP SDFWRI LQWHUHVWUDWH FKDQJ HVRQ RXU5 HYROYLQJ ) DFLOLW\ DQG RXU7HUP / RDQ ) DFLOLW\ Z KLFK FRP SULVH WKH 3-,
) DFLOLWLHV : HDWWHP SWWR P LQLP L] HLQWHUHVWUDWHULVNH[ SRVXUHE\ IL[ LQJ RXULQWHUHVWUDWHWKURXJ KWKHXWLOL] DWLRQRI LQWHUHVWUDWHVZ DSV Z KLFK DUHGHULYDWLYHILQDQFLDOLQVWUXP HQWV 2 XUVZ DSVDUHHQWHUHG LQWR Z LWK ILQDQFLDOLQVWLWXWLRQVWKDWSDUWLFLSDWHLQ WKH3-, ) DFLOLWLHV %\ XVLQJ D GHULYDWLYHLQVWUXP HQWWR KHGJ HH[ SRVXUHVWR FKDQJ HVLQ LQWHUHVWUDWHV Z HH[ SRVHRXUVHOYHVWR FUHGLWULVN GXHWR WKHSRVVLEOHIDLOXUHRI WKH FRXQWHUSDUW\ WR SHUIRUP XQGHUWKH WHUP VRI WKH GHULYDWLYH FRQWUDFW : H GR QRWHQWHULQWR FRQWUDFWVIRUWUDGLQJ SXUSRVHVDQG GR QRWXVH OHYHUDJ HG LQVWUXP HQWV 6HH‡1 RWH · RI ‡1 RWHVWR &RQVROLGDWHG ) LQDQFLDO6WDWHP HQWV· IRUDGGLWLRQDOLQIRUP DWLRQ RQ RXUGHEWREOLJ DWLRQV DQGGHULYDWLYHLQVWUXP HQWV
) RUHLJ Q&XUUHQF\ ( [ FKDQJ H5 DWH5 LVN
: H DUH H[ SRVHG WR IRUHLJ Q FXUUHQF\ H[ FKDQJ H UDWH IOXFWXDWLRQV IURP RXURSHUDWLRQV RXWVLGH RI WKH 8 QLWHG 6WDWHV Z KLFK FDQ DGYHUVHO\ LP SDFWRXUUHYHQXHV QHWLQFRP HDQG FDVK IORZ V 2 XULQWHUQDWLRQDORSHUDWLRQVSULQFLSDOO\ FRQVLVWRI GLVWULEXWLRQ VDOHVWR IUDQFKLVHG 3DSD
-RKQ¶V UHVWDXUDQWV ORFDWHG LQ WKH 8 QLWHG . LQJ GRP DQG RXUIUDQFKLVH VDOHV DQG VXSSRUWDFWLYLWLHV Z KLFK GHULYH UHYHQXHV IURP VDOHV RI IUDQFKLVH DQG GHYHORSP HQWULJ KWV DQG WKH FROOHFWLRQ RI UR\ DOWLHV IURP RXULQWHUQDWLRQDOIUDQFKLVHHV $ SSUR[ LP DWHO\ RI RXU UHYHQXHV RI RXU UHYHQXHVDQG RI RXUUHYHQXHVIRU Z HUHGHULYHGIURP WKHVHLQWHUQDWLRQDORSHUDWLRQV
: H KDYH QRWKLVWRULFDOO\ KHGJ HG RXU H[ SRVXUH WR IRUHLJ Q FXUUHQF\ IOXFWXDWLRQV ) RUHLJ Q FXUUHQF\ H[ FKDQJ H UDWH IOXFWXDWLRQV KDG DQ XQIDYRUDEOHLP SDFWRI DSSUR[ LP DWHO\ RQRXUFRQVROLGDWHGUHYHQXHVLQ FRP SDUHGWR DQXQIDYRUDEOHLP SDFWRI P LOOLRQLQ
) RUHLJ Q FXUUHQF\ H[ FKDQJ H UDWHV KDG DQ XQIDYRUDEOH LP SDFWRI P LOOLRQ RQ RXURSHUDWLQJ LQFRP H LQ FRP SDUHG WR DQ XQIDYRUDEOHLP SDFWRI P LOOLRQ LQ $ Q DGGLWLRQDO DGYHUVHFKDQJ HLQ WKHIRUHLJ QFXUUHQF\ UDWHVIRURXULQWHUQDWLRQDOP DUNHWV Z RXOG UHVXOWLQ DQ DGGLWLRQDOQHJ DWLYHLP SDFWRQ DQQXDOUHYHQXHDQG RSHUDWLQJ LQFRP HRI DSSUR[ LP DWHO\ P LOOLRQ DQG P LOOLRQ UHVSHFWLYHO\
&RP P RGLW\ 3 ULFH5 LVN
, Q WKHRUGLQDU\ FRXUVHRI EXVLQHVV WKHIRRG DQG SDSHUSURGXFWVZ HSXUFKDVH LQFOXGLQJ FKHHVH RXUODUJ HVWLQJ UHGLHQWFRVW DUHVXEMHFWWR VHDVRQDOIOXFWXDWLRQV Z HDWKHU DYDLODELOLW\ GHP DQGDQGRWKHUIDFWRUVWKDWDUHEH\ RQGRXUFRQWURO: HKDYHSULFLQJ DJ UHHP HQWVZ LWKVRP HRI RXUYHQGRUV LQFOXGLQJ IRUZ DUG SULFLQJ DJ UHHP HQWVIRUD SRUWLRQ RI RXUFKHHVH SXUFKDVHVIRURXUGRP HVWLF &RP SDQ\ RZ QHG UHVWDXUDQWV Z KLFKDUHDFFRXQWHGIRUDVQRUP DOSXUFKDVHV KRZ HYHU Z HVWLOOUHP DLQH[ SRVHGWR RQ J RLQJ FRP P RGLW\ YRODWLOLW\
7 KHIROORZ LQJ WDEOHSUHVHQWVWKHDFWXDODYHUDJ HEORFN SULFHIRUFKHHVHE\ TXDUWHULQ DQG $ OVR SUHVHQWHG LVWKHSURMHFWHG DYHUDJ HEORFNSULFHE\ TXDUWHU EDVHGRQWKH) HEUXDU\ &KLFDJ R 0 HUFDQWLOH( [ FKDQJ HFKHHVHIXWXUHVSULFHVIRU
3 URMHFWHG %ORFN %ORFN %ORFN
0 DUNHW 3 ULFH 3 ULFH 3 ULFH
4 XDUWHU
4 XDUWHU
4 XDUWHU
4 XDUWHU
) XOO<HDU
, WHP ) LQDQFLDO6WDWHP HQWVDQG 6XSSOHP HQWDU\ ’ DWD
5 HSRUWRI , QGHSHQGHQW5 HJ LVWHUHG 3 XEOLF $ FFRXQWLQJ ) LUP
7R WKH6WRFNKROGHUVDQGWKH%RDUGRI ’ LUHFWRUVRI 3DSD-RKQ¶V, QWHUQDWLRQDO, QF DQG6XEVLGLDULHV
2 SLQLRQ RQ WKH) LQDQFLDO6WDWHP HQWV
: H KDYH DXGLWHG WKH DFFRP SDQ\ LQJ FRQVROLGDWHG EDODQFH VKHHWVRI 3DSD -RKQ¶V, QWHUQDWLRQDO , QF DQG 6XEVLGLDULHV WKH &RP SDQ\ DVRI ’ HFHP EHU DQG’ HFHP EHU WKHUHODWHGFRQVROLGDWHGVWDWHP HQWVRI RSHUDWLRQV FRP SUHKHQVLYHLQFRP H ORVV VWRFNKROGHUV
GHILFLWDQG FDVK IORZ VIRUHDFK RI WKH WZ R \ HDUVLQ WKH SHULRG HQGHG ’ HFHP EHU DQG WKH UHODWHG QRWHVDQG ILQDQFLDOVWDWHP HQW VFKHGXOH OLVWHG LQ WKH , QGH[ DW, WHP D FROOHFWLYHO\ UHIHUUHG WR DV WKH ‡FRQVROLGDWHG ILQDQFLDOVWDWHP HQWV· , Q RXU RSLQLRQ WKH FRQVROLGDWHG ILQDQFLDOVWDWHP HQWVSUHVHQWIDLUO\ LQ DOOP DWHULDOUHVSHFWV WKHILQDQFLDOSRVLWLRQ RI WKH&RP SDQ\ DW’ HFHP EHU DQG ’ HFHP EHU DQGWKHUHVXOWVRI LWVRSHUDWLRQVDQGLWVFDVKIORZ VIRUHDFKRI WKHWZ R \ HDUVLQWKHSHULRGHQGHG’ HFHP EHU LQ FRQIRUP LW\ Z LWK8 6 J HQHUDOO\ DFFHSWHGDFFRXQWLQJ SULQFLSOHV
: HDOVR KDYHDXGLWHG LQDFFRUGDQFHZ LWKWKHVWDQGDUGVRI WKH3XEOLF &RP SDQ\ $ FFRXQWLQJ 2 YHUVLJ KW%RDUG 8 QLWHG6WDWHV 3&$ 2 % WKH &RP SDQ\ VLQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ DVRI ’ HFHP EHU EDVHG RQ FULWHULDHVWDEOLVKHG LQ , QWHUQDO&RQWURO, QWHJ UDWHG
) UDP HZ RUN LVVXHG E\ WKH&RP P LWWHHRI 6SRQVRULQJ 2 UJ DQL] DWLRQVRI WKH7 UHDGZ D\ &RP P LVVLRQ ) UDP HZ RUN DQG RXUUHSRUWGDWHG
) HEUXDU\ H[ SUHVVHGDQXQTXDOLILHGRSLQLRQWKHUHRQ
$ GRSWLRQ RI $ 68 1 R
$ VGLVFXVVHG LQ 1 RWH WR WKHFRQVROLGDWHG ILQDQFLDOVWDWHP HQWV WKH&RP SDQ\ FKDQJ HG LWVP HWKRG RI DFFRXQWLQJ IRUOHDVHVLQ GXHWR WKHDGRSWLRQRI $ 68 1 R / HDVHV DVDP HQGHG
%DVLVIRU2 SLQLRQ
7 KHVH ILQDQFLDOVWDWHP HQWV DUH WKH UHVSRQVLELOLW\ RI WKH &RP SDQ\ V P DQDJ HP HQW2 XU UHVSRQVLELOLW\ LV WR H[ SUHVV DQ RSLQLRQ RQ WKH &RP SDQ\ ¶VILQDQFLDOVWDWHP HQWVEDVHG RQ RXUDXGLWV : HDUHDSXEOLF DFFRXQWLQJ ILUP UHJ LVWHUHG Z LWK WKH3&$ 2 % DQG DUHUHTXLUHG WR EH LQGHSHQGHQWZ LWKUHVSHFWWR WKH&RP SDQ\ LQDFFRUGDQFHZ LWKWKH8 6 IHGHUDOVHFXULWLHVODZ VDQGWKHDSSOLFDEOHUXOHVDQGUHJ XODWLRQVRI WKH 6HFXULWLHVDQG( [ FKDQJ H&RP P LVVLRQDQGWKH3&$ 2 %
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
&ULWLFDO$ XGLW0 DWWHUV
7 KH FULWLFDODXGLWP DWWHUVFRP P XQLFDWHG EHORZ DUH P DWWHUVDULVLQJ IURP WKH FXUUHQWSHULRG RI WKH FRQVROLGDWHG ILQDQFLDOVWDWHP HQWVWKDW Z HUHFRP P XQLFDWHGRUUHTXLUHGWR EHFRP P XQLFDWHGWR WKHDXGLWFRP P LWWHHDQGWKDW UHODWHWR DFFRXQWVRUGLVFORVXUHVWKDWDUHP DWHULDO WR WKHFRQVROLGDWHGILQDQFLDOVWDWHP HQWVDQG LQYROYHGRXUHVSHFLDOO\ FKDOOHQJ LQJ VXEMHFWLYHRUFRP SOH[ MXGJ P HQWV 7 KHFRP P XQLFDWLRQ RI FULWLFDODXGLWP DWWHUVGRHVQRWDOWHULQDQ\ Z D\ RXURSLQLRQRQWKHFRQVROLGDWHGILQDQFLDOVWDWHP HQWV WDNHQDVDZ ▇▇▇▇ DQGZ HDUHQRWE\ FRP P XQLFDWLQJ WKHFULWLFDODXGLWP DWWHUVEHORZ SURYLGLQJ VHSDUDWHRSLQLRQVRQWKHFULWLFDODXGLWP DWWHUVRURQWKHDFFRXQWVRUGLVFORVXUHVWR Z KLFKWKH\ UHODWH
0 HDVXUHP HQWDQGYDOXDWLRQ RI UHVHUYHIRUIUDQFKLVHHQRWHVUHFHLYDEOH
’ HVFULSWLRQRI WKH0 DWWHU $ V GHVFULEHG LQ 1 RWH WR WKH FRQVROLGDWHG ILQDQFLDOVWDWHP HQWV WKH &RP SDQ\ KDV D UHVHUYH IRUIUDQFKLVHH QRWHVUHFHLYDEOH RI P LOOLRQ ‡5 HVHUYH IRU) UDQFKLVHH 1 RWHV 5 HFHLYDEOHV· DJ DLQVWDJ URVVEDODQFHRI IUDQFKLVHHQRWHVUHFHLYDEOHVRI P LOOLRQ DW ’ HFHP EHU 7 KH 5 HVHUYH IRU ) UDQFKLVHH 1 RWHV 5 HFHLYDEOHV LV HVWLP DWHG WR UHGXFHWKHRXWVWDQGLQJ QRWHVUHFHLYDEOHIRUH[ SHFWHG FUHGLWORVVHVDIWHUFRQVLGHUDWLRQ RI WKH IDLUYDOXH RI WKH &RP SDQ\ ¶VFROODWHUDOULJ KWV HJ XQGHUO\ LQJ IUDQFKLVHH EXVLQHVV SURSHUW\ DQG HTXLSP HQW DQG DQ\ J XDUDQWHHV DV Z HOODV D UHYLHZ RI HDFK IUDQFKLVHH¶V HFRQRP LF SHUIRUP DQFH KLVWRULFDOORVVLQIRUP DWLRQ FXUUHQWP DUNHWFRQGLWLRQV DQGIXWXUH HFRQRP LF FRQGLWLRQV
$ XGLWLQJ WKH YDOXDWLRQ RI WKH 5 HVHUYH IRU) UDQFKLVHH 1 RWHV5 HFHLYDEOHVLVFKDOOHQJ LQJ GXH WR WKH MXGJ P HQWLQKHUHQWLQ HVWLP DWLQJ WKH IDLUYDOXH RI WKH &RP SDQ\ ¶V FROODWHUDO ULJ KWV Z KLFK KDVDVLJ QLILFDQWHIIHFWRQ WKHP HDVXUHP HQWRI WKH5 HVHUYHIRU) UDQFKLVHH 1 RWHV5 HFHLYDEOHV
+ RZ : H$ GGUHVVHGWKH0 DWWHULQ 2 XU$ XGLW
: H WHVWHG P DQDJ HP HQW¶V FRQWUROV UHODWHG WR WKH P HDVXUHP HQWDQG YDOXDWLRQ RI WKH 5 HVHUYH IRU ) UDQFKLVHH 1 RWHV 5 HFHLYDEOHV ) RU H[ ▇▇ ▇▇▇ Z H WHVWHG FRQWUROV RYHU P DQDJ HP HQW¶VUHYLHZ RI WKHSURJ UHVVLRQRI RXWVWDQGLQJ QRWHVUHFHLYDEOHDQGWKH5 HVHUYH IRU) UDQFKLVHH1 RWHV5 HFHLYDEOHDQG WKHRYHUDOOUHYLHZ RI WKHDGHTXDF\ RI WKH5 HVHUYH IRU) UDQFKLVHH 1 RWHV5 HFHLYDEOH : KHUH MXGJ P HQWZ DVH[ HUFLVHG E\ P DQDJ HP HQWRXU DXGLWSURFHGXUHV LQFOXGHG WHVWLQJ FRQWUROV RYHU P DQDJ HP HQW¶V HYDOXDWLRQ RI WKH DVVXP SWLRQV LQFOXGLQJ WKH IDLU YDOXH RI WKH FROODWHUDO ULJ KWV DQG J XDUDQWHHV Z KHUH FROODWHUDOZ DV WDNHQ RU SHUVRQDOJ XDUDQWHH J LYHQ LQ FRQQHFWLRQ Z LWK LVVXDQFH RI WKH DSSOLFDEOH QRWH 2 XU FRQWUROWHVWLQJ DOVR FRQVLGHUHG P DQDJ HP HQW¶V UHYLHZ RYHU WKH FRP SOHWHQHVVDQG DFFXUDF\ RI WKH XQGHUO\ LQJ GDWD XVHG LQ HYDOXDWLQJ WKH P HDVXUHP HQW DQGYDOXDWLRQRI WKH5 HVHUYHIRU) UDQFKLVHH1 RWHV5 HFHLYDEOHV
7R WHVWWKHP HDVXUHP HQWDQGYDOXDWLRQRI WKH5 HVHUYHIRU) UDQFKLVHH1 RWHV5 HFHLYDEOHV RXU DXGLWSURFHGXUHV LQFOXGHG DP RQJ RWKHUV HYDOXDWLQJ WKH VWDWXV RI FROOHFWLRQ RI VFKHGXOHG SD\ P HQWV IRU RXWVWDQGLQJ QRWHV UHFHLYDEOHV DQDO\ ] LQJ XQLWHFRQRP LFV IRU IUDQFKLVHHV WR LGHQWLI\ LQGLFDWRUV RI WKHLUILQDQFLDOKHDOWK HYDOXDWLQJ WKH HVWLP DWHV RI FROODWHUDOYDOXH DQGWKHXQGHUO\ LQJ GDWDXVHGE\ P DQDJ HP HQW ) RUH[ DP ▇▇▇ ▇▇ HYDOXDWH WKH HVWLP DWHV RI FROODWHUDOYDOXH Z H FRP SDUHG P DQDJ HP HQW¶V HVWLP DWHV WR WKRVH RI UHFHQWO\ H[ HFXWHG P DUNHWWUDQVDFWLRQVWR XQGHUVWDQG SRWHQWLDOP DUNHWDGMXVWP HQWVZ LWKLQ WKHHVWLP DWLRQSURFHVV
0 HDVXUHP HQWDQGYDOXDWLRQ RI LQVXUDQFHUHVHUYHV
’ HVFULSWLRQRI WKH0 DWWHU $ V GHVFULEHG LQ 1 RWH WR WKH FRQVROLGDWHG ILQDQFLDOVWDWHP HQWV DV RI ’ HFHP EHU
WKH &RP SDQ\ KDV P LOOLRQ DFFUXHG IRUVHOI LQVXUDQFH UHVHUYHV ‡, QVXUDQFH 5 HVHUYHV· 7 KH &RP SDQ\ LVVHOI LQVXUHG IRUFHUWDLQ REOLJ DWLRQVXS WR VWDWHG UHWHQWLRQ OHYHOV XQGHU LWV UHWHQWLRQ SURJ UDP V UHODWHG WR Z RUNHUV¶ FRP SHQVDWLRQ DXWRP RELOH SURSHUW\ DQG J HQHUDOOLDELOLW\ SURJ UDP V DQG MXGJ P HQWV DQG HVWLP DWHV DUH XVHG E\ WKH &RP SDQ\ LQ GHWHUP LQLQJ WKH SRWHQWLDOYDOXH DVVRFLDWHG Z LWK UHSRUWHG FODLP V DQG IRU HYHQWVWKDWKDYHRFFXUUHGEXWKDYHQRWEHHQUHSRUWHG
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
+ RZ : H$ GGUHVVHGWKH0 DWWHULQ 2 XU$ XGLW
: HWHVWHG FRQWUROVUHODWHG WR WKHP HDVXUHP HQWDQG YDOXDWLRQ RI WKH, QVXUDQFH5 HVHUYHV
) RU H[ ▇▇ ▇▇▇ Z H WHVWHG FRQWUROV RYHU P DQDJ HP HQW¶V UHYLHZ RI WKH DVVXP SWLRQV DQG P HWKRGV XVHG WR HVWDEOLVK WKH HVWLP DWH WKH XQGHUO\ LQJ GDWD VLJ QLILFDQWDFWXDULDO DVVXP SWLRQVDQGWKHUHODWHGUHFRQFLOLDWLRQV
7R WHVWWKHP HDVXUHP HQWDQG YDOXDWLRQ RI WKH, QVXUDQFH5 HVHUYHV RXUDXGLWSURFHGXUHV LQFOXGHG DP RQJ RWKHUV SHUIRUP LQJ WUDQVDFWLRQDOWHVWLQJ RYHU WKH FRP SOHWHQHVV DQG DFFXUDF\ RI FODLP VGDWDDQG YRXFKLQJ SD\ P HQWVP DGHWR WKLUG SDUWLHV ) XUWKHUP RUH Z H LQYROYHG RXUDFWXDULDOVSHFLDOLVWVWR DVVLVWLQ WKHHYDOXDWLRQ RI WKHNH\ DVVXP SWLRQVDQG P HWKRGRORJ LHVXVHGE\ P DQDJ HP HQWWR GHWHUP LQHWKH, QVXUDQFH5 HVHUYHV
V ( UQVW <RXQJ / / 3
: HKDYHVHUYHGDVWKH&RP SDQ\ ¶VDXGLWRUFRQVHFXWLYHO\ VLQFH
/ RXLVYLOOH . HQWXFN\
) HEUXDU\
5 HSRUWRI , QGHSHQGHQW5 HJ LVWHUHG 3 XEOLF $ FFRXQWLQJ ) LUP
7R WKH6WRFNKROGHUVDQG%RDUGRI ’ LUHFWRUV
3DSD-RKQ¶V, QWHUQDWLRQDO, QF
2 SLQLRQRQWKH&RQVROLGDWHG) LQDQFLDO6WDWHP HQWV
: HKDYHDXGLWHGWKHDFFRP SDQ\ LQJ FRQVROLGDWHGVWDWHP HQWVRI RSHUDWLRQV FRP SUHKHQVLYHLQFRP H VWRFNKROGHUV¶GHILFLWDQGFDVKIORZ VRI 3DSD-RKQ¶V, QWHUQDWLRQDO, QF DQGVXEVLGLDULHV WKH&RP SDQ\ IRUWKH\ HDUHQGHG’ HFHP EHU DQGWKHUHODWHGQRWHVDQGILQDQFLDO VWDWHP HQWVFKHGXOH, , FROOHFWLYHO\ WKHFRQVROLGDWHGILQDQFLDOVWDWHP HQWV , QRXURSLQLRQ WKHFRQVROLGDWHGILQDQFLDOVWDWHP HQWVSUHVHQW IDLUO\ LQDOOP DWHULDOUHVSHFWV WKHUHVXOWVRI RSHUDWLRQVRI WKH&RP SDQ\ DQGLWVFDVKIORZ VIRUWKH\ HDUHQGHG’ HFHP EHU LQ FRQIRUP LW\ Z LWK8 6 J HQHUDOO\ DFFHSWHGDFFRXQWLQJ SULQFLSOHV
%DVLVIRU2 SLQLRQ
7 KHVHFRQVROLGDWHGILQDQFLDOVWDWHP HQWVDUHWKHUHVSRQVLELOLW\ RI WKH&RP SDQ\ ¶VP DQDJ HP HQW2 XUUHVSRQVLELOLW\ LVWR H[ SUHVVDQRSLQLRQRQ WKHVHFRQVROLGDWHGILQDQFLDOVWDWHP HQWVEDVHGRQRXUDXGLW: HDUHDSXEOLF DFFRXQWLQJ ILUP UHJ LVWHUHGZ LWKWKH3XEOLF &RP SDQ\
$ FFRXQWLQJ 2 YHUVLJ KW%RDUG 8 QLWHG6WDWHV 3&$ 2 % DQGDUHUHTXLUHGWR EHLQGHSHQGHQWZ LWKUHVSHFWWR WKH&RP SDQ\ LQDFFRUGDQFHZ LWK WKH8 6 IHGHUDOVHFXULWLHVODZ VDQGWKHDSSOLFDEOHUXOHVDQGUHJ XODWLRQVRI WKH6HFXULWLHVDQG( [ FKDQJ H&RP P LVVLRQDQGWKH3&$ 2 %
: HFRQGXFWHGRXUDXGLWLQDFFRUGDQFHZ LWKWKHVWDQGDUGVRI WKH3&$ 2 % 7 KRVHVWDQGDUGVUHTXLUHWKDWZ HSODQDQGSHUIRUP WKHDXGLWWR REWDLQUHDVRQDEOHDVVXUDQFHDERXWZ KHWKHUWKHFRQVROLGDWHGILQDQFLDOVWDWHP HQWVDUHIUHHRI P DWHULDOP LVVWDWHP HQWZ KHWKHUGXHWR HUURURU IUDXG 2 XUDXGLWLQFOXGHGSHUIRUP LQJ SURFHGXUHVWR DVVHVVWKHULVNVRI P DWHULDOP LVVWDWHP HQWRI WKHFRQVROLGDWHGILQDQFLDOVWDWHP HQWV
Z KHWKHUGXHWR HUURURUIUDXG DQGSHUIRUP LQJ SURFHGXUHVWKDWUHVSRQGWR WKRVHULVNV 6XFKSURFHGXUHVLQFOXGHGH[ DP LQLQJ RQDWHVWEDVLV HYLGHQFHUHJ DUGLQJ WKHDP RXQWVDQGGLVFORVXUHVLQWKHFRQVROLGDWHGILQDQFLDOVWDWHP HQWV 2 XUDXGLWDOVR LQFOXGHGHYDOXDWLQJ WKHDFFRXQWLQJ SULQFLSOHVXVHGDQGVLJ QLILFDQWHVWLP DWHVP DGHE\ P DQDJ HP HQWDVZ HOODVHYDOXDWLQJ WKHRYHUDOOSUHVHQWDWLRQRI WKHFRQVROLGDWHGILQDQFLDO VWDWHP HQWV : HEHOLHYHWKDWRXUDXGLWSURYLGHVDUHDVRQDEOHEDVLVIRURXURSLQLRQ
V . 30 * / / 3
: HVHUYHGDVWKH&RP SDQ\ ¶VDXGLWRUIURP WR
/ RXLVYLOOH . HQWXFN\ 0 DUFK
3 DSD- RKQ¶V, QWHUQDWLRQDO, QF DQG 6XEVLGLDULHV &RQVROLGDWHG 6WDWHP HQWVRI 2 SHUDWLRQV
<HDUHQGHG ’ HFHP EHU ’ HFHP EHU ’ HFHP EHU
, QWKRXVDQGV H[ FHSWSHUVKDUHDP RXQWV
5 H Y H Q X H V
’ R P H V W L F & R P S D Q \ R Z Q H G U H V W D X U D Q W V D O H V
1 R $ U P ▇▇ ▇▇ L F D I U D Q F K L V H U R \ D O W L H V D Q G I H
H V
1 R $ U P ▇▇ ▇▇ L F D F R P P L V V D U \ U H Y H Q X H V
, Q W H U Q D W L R Q D O U H Y H Q X H V
2 W K H U U H Y H Q X H V
7 R ▇▇ ▇▇ OH Q UX H V
& R V W V D Q G H [ S H Q V H V
2 S H U D W L Q J | F R V W V | H [ F | O X | G | L Q J G H S U H F L D W |
’ R P H V W L F | & R P S D Q \ | R Z Q | H G | U H V W D X U D Q W H | |
1 R $ U P ▇▇ ▇▇ L F D | F R P P L V V | D U \ | H [ | S | H Q V H V |
, Q W H U Q D W L R Q D O H [ S H Q V H V
L R Q D [ S H Q V
2 W K H U H [ S H Q V H V
* H Q H U D O D Q G D G P L Q L V W U D W L Y H H [ S H Q V H V
’ H S U H F L D W L R Q D Q G D P R U W L ] D W L R Q
7 R W D O F R V W V D Q G H [ S H Q V H V
5 H I U D Q F K L V L Q J J D L Q V O R V V H †V
2 S H U D W L Q J L Q F R P H
, Q Y H V W P H Q W L Q F R P H
, Q W H U H V W H [ S H Q V H
, Q F R HP H L QE FH RI PR ▇▇ ▇ ▇ [ H V
, Q F R P H W D [ H [ S H Q V H E H Q H I L W
1 | H | W | LH | Q | FD RWP WH U RLEOEHOXIHLWRVQLUWJ R VQ L | Q WW R H | U Q R | Q F R Q W U | ||||||||||||
1 | H | W | L | Q | F | R | P | H | D W W U L E X | W | D E | O H | W | R | Q R Q F R | Q W U | R O | O L Q | ||
1 | H | W | L | Q | F | R | P | H | D W W U L E X | W | D E | O H | W | R | W K H | & | R P S | D Q | \ | |
& D | O | F X | O | D | W | L | R | HQ D UR QI L VHQQ KJ H ▇▇ ▇▇ | L OQ RF VR VP | ▇ | ▇ | ▇▇ UR V V | I R | U |
1 | H | W | L Q | F | R | P | H | D W W | U L E | X W D E O H W R W K H & R P S D Q \ | ||||
’ L Y L G H Q G V S D L G W R S D U W L F L S D W L Q J V H F X †U L W L H
1 | H | W | L | Q | F | R | P | H | D | W W | U | L | E | X W D E O H W R S D U †W L F L S D† |
1 | H | W | L | Q | F | R | P | H | O R | V | V | D W W U L E X W D E O H W R F |
W L Q J R P P R Q
% D V L F H D U Q L Q J V O R V V S H U F R P P R Q V K D U H
’ L O X W H G H D U Q L Q J V O R V V S H U F R P P R Q V K D U H
’ L O X W H G Z H L J K W H G D Y H U D J H F R P P R Q V K D U
% D V L F Z H L J K W H G D Y H U D J H F R P P R Q V K D U H V R X W V
H V R X
’ L Y L G H Q G V G H F O D U H G S H U F R P P R Q V K D U H
6HHDFFRP SDQ\ LQJ QRWHV
3 DSD- RKQ¶V, QWHUQDWLRQDO, QF DQG 6XEVLGLDULHV &RQVROLGDWHG 6WDWHP HQWVRI &RP SUHKHQVLYH, QFRP H / RVV
<HDU( QGHG ’ HFHP EHU ’ HFHP EHU ’ HFHP EHU
, QWKRXVDQGV
1 HWLQFRP HEHIRUHDWWULEXWLRQWR QRQFRQWUROOLQJ LQWHUHVWV
2 WKHUFRP SUHKHQVLYHORVV EHIRUHWD[
) RUHLJ QFXUUHQF\ WUDQVODWLRQDGMXVWP HQWV
, QWHUHVWUDWHVZ DSV
2 WKHUFRP SUHKHQVLYHORVV EHIRUHWD[
, QFRP HWD[ HIIHFW
) RUHLJ QFXUUHQF\ WUDQVODWLRQDGMXVWP HQWV
, QWHUHVWUDWHVZ DSV
, QFRP HWD[ HIIHFW
2 WKHUFRP SUHKHQVLYHORVV QHWRI WD[
&RP SUHKHQVLYHLQFRP H ORVV EHIRUHDWWULEXWLRQWR QRQFRQWUROOLQJ LQWHUHVWV
/ HVV FRP SUHKHQVLYH LQFRP H ORVV UHGHHP DEOHQRQFRQWUROOLQJ LQWHUHVWV
/ HVV FRP SUHKHQVLYH LQFRP H QRQUHGHHP DEOHQRQFRQWUROOLQJ LQWHUHVWV
&RP SUHKHQVLYHLQFRP H ORVV DWWULEXWDEOHWR WKH&RP SDQ\
2 Q -XQH WKH &RP SDQ\ UHIUDQFKLVHG &RP SDQ\ RZ QHG UHVWDXUDQWV DQG D TXDOLW\ FRQWUROFHQWHUORFDWHG LQ &KLQD , Q FRQMXQFWLRQZ LWKWKHWUDQVDFWLRQ DSSUR[ LP DWHO\ RI DFFXP XODWHGRWKHUFRP SUHKHQVLYHLQFRP HDQG DVVRFLDWHGGHIHUUHGWD[ UHODWHG WR IRUHLJ Q FXUUHQF\ WUDQVODWLRQ Z HUHUHYHUVHG 6HH‡1 RWH · RI ‡1 RWHVWR &RQVROLGDWHG ) LQDQFLDO6WDWHP HQWV· IRUDGGLWLRQDO LQIRUP DWLRQ
$ P RXQWVUHFODVVLILHG RXWRI DFFXP XODWHG RWKHUFRP SUHKHQVLYH ORVVLQWR LQWHUHVWH[ SHQVH LQFOXGHG DQG IRUWKH
\ HDUVHQGHG’ HFHP EHU ’ HFHP EHU DQG’ HFHP EHU UHVSHFWLYHO\
7 KHLQFRP HWD[ HIIHFWVRI DP RXQWVUHFODVVLILHGRXWRI DFFXP XODWHGRWKHUFRP SUHKHQVLYHORVVZ HUH DQG IRUWKH\ HDUV HQGHG’ HFHP EHU ’ HFHP EHU DQG’ HFHP EHU UHVSHFWLYHO\
$ VRI -DQXDU\ Z H DGRSWHG $ FFRXQWLQJ 6WDQGDUGV8 SGDWH ‡$ 68 · ‡5 HFODVVLILFDWLRQ RI &HUWDLQ 7D[ ( IIHFWVIURP
$ FFXP XODWHG 2 WKHU&RP SUHKHQVLYH, QFRP H· DQG UHFODVVLILHG VWUDQGHG WD[ HIIHFWVRI DSSUR[ LP DWHO\ WR UHWDLQHG HDUQLQJ VLQ WKH ILUVWTXDUWHURI
6HHDFFRP SDQ\ LQJ QRWHV
3 DSD- RKQ¶V, QWHUQDWLRQDO, QF DQG 6XEVLGLDULHV &RQVROLGDWHG %DODQFH6KHHWV
’ HFHP EHU ’ HFHP EHU
, QWKRXVDQGV H[ FHSWSHUVKDUHDP RXQWV
$ VVHWV
&XUUHQWDVVHWV
&DVKDQGFDVKHTXLYDOHQWV | ||
$ FFRXQWVUHFHLYDEOH OHVVDOORZ DQFHIRUFUHGLWORVVHVRI LQ DQG | LQ | |
1 RWHVUHFHLYDEOH FXUUHQWSRUWLRQ | ||
, QFRP HWD[ UHFHLYDEOH | ||
, QYHQWRULHV | ||
3UHSDLGH[ SHQVHVDQGRWKHUFXUUHQWDVVHWV | ||
7 RWDOFXUUHQWDVVHWV | ||
3URSHUW\ DQGHTXLSP HQWQHW | ||
) LQDQFHOHDVHULJ KWRI XVHDVVHWV QHW | ||
2 SHUDWLQJ OHDVHULJ KWRI XVHDVVHWV | ||
1 RWHVUHFHLYDEOH OHVVFXUUHQWSRUWLRQ OHVVDOORZ DQFHIRUFUHGLWORVVHVRI | LQ | DQG LQ |
* RRGZ LOO | ||
’ HIHUUHGLQFRP HWD[ HV | ||
2 WKHUDVVHWV | ||
7 RWDODVVHWV | ||
/ LDELOLWLHV 6HULHV% &RQYHUWLEOH3 UHIHUUHG 6WRFN 5 HGHHP DEOHQRQFRQWUROOLQJ LQWHUHVWVDQG 6WRFNKROGHUV¶GHILFLW
$ FFRXQWVSD\ DEOH
&XUUHQWOLDELOLWLHV
&XUUHQWSRUWLRQRI ORQJ WHUP GHEW
&XUUHQWILQDQFHOHDVHOLDELOLWLHV
$ FFUXHGH[ SHQVHVDQGRWKHUFXUUHQWOLDELOLWLHV
, QFRP HDQGRWKHUWD[ HVSD\ DEOH &XUUHQWGHIHUUHGUHYHQXH &XUUHQWRSHUDWLQJ OHDVHOLDELOLWLHV
7 RWDOFXUUHQWOLDELOLWLHV
’ HIHUUHGUHYHQXH
/ RQJ WHUP RSHUDWLQJ OHDVHOLDELOLWLHV
/ RQJ WHUP ILQDQFHOHDVHOLDELOLWLHV
7 RWDOOLDELOLWLHV
’ HIHUUHGLQFRP HWD[ HV
/ RQJ WHUP GHEWOHVVFXUUHQWSRUWLRQ QHW 2 WKHUORQJ WHUP OLDELOLWLHV
6HULHV% &RQYHUWLEOH3 UHIHUUHG 6WRFN ’ HFHP EHU DQG’ HFHP EHU
SDUYDOXH
VKDUHVDXWKRUL] HG
VKDUHVLVVXHGDQGRXWVWDQGLQJ DW
5 HGHHP DEOHQRQFRQWUROOLQJ LQWHUHVWV
&RP P RQVWRFN SDUYDOXHSHUVKDUH LVVXHG DW’ HFHP EHU DQG DW’ HFHP EHU
6WRFNKROGHUV¶GHILFLW
7 UHDVXU\ VWRFN VKDUHVDW’ HFHP EHU DQG VKDUHVDW’ HFHP EHU DWFRVW
$ FFXP XODWHGRWKHUFRP SUHKHQVLYHORVV
$ GGLWLRQDOSDLG LQFDSLWDO 5 HWDLQHGHDUQLQJ V
7RWDOVWRFNKROGHUV¶GHILFLW
1 RQFRQWUROOLQJ LQWHUHVWVLQVXEVLGLDULHV
7 RWDO6WRFNKROGHUV¶GHILFLW
7 RWDOOLDELOLWLHV 6HULHV% &RQYHUWLEOH3 UHIHUUHG 6WRFN 5 HGHHP DEOHQRQFRQWUROOLQJ LQWHUHVWVDQG
6WRFNKROGHUV¶GHILFLW
6HHDFFRP SDQ\ LQJ QRWHV
3 DSD- RKQ¶V, QWHUQDWLRQDO, QF DQG 6XEVLGLDULHV &RQVROLGDWHG 6WDWHP HQWVRI 6WRFNKROGHUV¶’ HILFLW
3 DSD- RKQ¶V, QWHUQDWLRQDO, QF
&RP P RQ $ FFXP XODWHG
6WRFN $ GGLWLRQDO 2 WKHU 1 RQFRQWUROOLQJ 7 RWDO
6KDUHV &RP P RQ 3 DLG , Q &RP SUHKHQVLYH 5 HWDLQHG 7 UHDVXU\ , QWHUHVWVLQ 6WRFNKROGHUV¶
, QWKRXVDQGV 2 XWVWDQGLQJ 6WRFN &DSLWDO / RVV ( DUQLQJ V 6WRFN 6XEVLGLDULHV ’ HILFLW
%DODQFHDW’ HFHP EHU | ||||||||
&XP XODWLYHHIIHFWRI DGRSWLRQRI $ 68 | † | † | † | † |
| † | † |
|
$ GMXVWHG EDODQFHDW- DQXDU\ | ||||||||
1 HWLQFRP H | † | † | † | † | † | |||
2 WKHUFRP SUHKHQVLYHORVV QHWRI WD[ | † | † | † | † | † | † | ||
$ GRSWLRQRI $ 68 | † | † | † | † | † | † | ||
&DVKGLYLGHQGVRQFRP P RQVWRFN | † | † | † | † | † | |||
( [ HUFLVHRI VWRFNRSWLRQV | † | † | † | † | ||||
$ FTXLVLWLRQRI &RP SDQ\ FRP P RQVWRFN | † | † | † | † | † | |||
6WRFN EDVHGFRP SHQVDWLRQH[ SHQVH | † | † | † | † | † | † | ||
, VVXDQFHRI UHVWULFWHGVWRFN | † | † | † | † | † | |||
7D[ HIIHFWRI UHVWULFWHGVWRFNDZ ▇▇▇▇ | † | † | † | † | † | † | ||
’ LVWULEXWLRQVWR QRQFRQWUROOLQJ LQWHUHVWV | † | † | † | † | † | † | ||
2 WKHU |
| † |
| † |
|
| † |
|
%DODQFHDW’ HFHP EHU | ||||||||
1 HWLQFRP H | † | † | † | † | † | |||
2 WKHUFRP SUHKHQVLYHORVV QHWRI WD[ | † | † | † | † | † | † | ||
&DVKGLYLGHQGVRQFRP P RQVWRFN | † | † | † | † | † | |||
&DVKGLYLGHQGVRQSUHIHUUHGVWRFN | † | † | † | † | † | † | ||
’ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ | † | † | † | † | † | † | ||
( [ HUFLVHRI VWRFNRSWLRQV | † | † | † | † | ||||
6WRFN EDVHGFRP SHQVDWLRQH[ SHQVH | † | † | † | † | † | † | ||
, VVXDQFHRI UHVWULFWHGVWRFN | † | † | † | † | † | |||
7D[ HIIHFWRI UHVWULFWHGVWRFNDZ ▇▇▇▇ | † | † | † | † | † | † | ||
’ LVWULEXWLRQVWR QRQFRQWUROOLQJ LQWHUHVWV | † | † | † | † | † | † | ||
2 WKHU |
| † |
| † |
|
| † |
|
%DODQFHDW’ HFHP EHU |
|
|
|
|
|
|
|
|
3 DSD- RKQ¶V, QWHUQDWLRQDO, QF DQG 6XEVLGLDULHV &RQVROLGDWHG 6WDWHP HQWVRI 6WRFNKROGHUV¶’ HILFLWFRQWLQXHG
3 DSD- RKQ¶V, QWHUQDWLRQDO, QF
&RP P RQ $ FFXP XODWHG
6WRFN $ GGLWLRQDO 2 WKHU 1 RQFRQWUROOLQJ 7 RWDO
6KDUHV &RP P RQ 3 DLG , Q &RP SUHKHQVLYH 5 HWDLQHG 7 UHDVXU\ , QWHUHVWVLQ 6WRFNKROGHUV¶
%DODQFHDW’ HFHP EHU
, QWKRXVDQGV 2 XWVWDQGLQJ 6WRFN &DSLWDO / RVV ( DUQLQJ V 6WRFN 6XEVLGLDULHV ’ HILFLW
& X P XI OH DF W
L$ Y6R 8HI
HD IG R S W L R Q
$ GMXVWHG EDODQFHDW’ HFHP EHU
† † † † † †
&DVKGLYLGHQGVRQSUHIHUUHGVWRFN † † † † † †
2 WKHUFRP SUHKHQVLYHORVV QHWRI WD[ † † † † † †
1 HWLQFRP H † † † † † &DVKGLYLGHQGVRQFRP P RQVWRFN † † † † †
( [ HUFLVHRI VWRFNRSWLRQV † † † †
$ FTXLVLWLRQRI &RP SDQ\ FRP P RQVWRFN † † † † †
6WRFN EDVHGFRP SHQVDWLRQH[ SHQVH † † † † † †
, VVXDQFHRI UHVWULFWHGVWRFN † † † † †
7D[ HIIHFWRI UHVWULFWHGVWRFNDZ ▇▇▇▇ † † † † † †
’ LVWULEXWLRQVWR QRQFRQWUROOLQJ LQWHUHVWV † † † † † †
%DODQFHDW’ HFHP EHU
2 WKHU † † †
$ V R I - D Q X D
$U 6\ 8
W ‡ K 5 HH Y &H RQ PX SH D Q I \ U R DP G R &S RW
1 HL RWQ PWF WHR&K RH P D S’ WHD
FQ H\
P E’ HH
FU H P E DH ’QUHG F H P EH H[
UF O X G DH QV G U H WV LSD YHO HFOWO RR\ F D E
W K H U H G H H P D E O H Q R Q F R Q W U R O O L Q J L Q W H U H V W V
$ RV - I D Q X DW U&K \ RH P DS GD $RQ 6S \ 8W H ‡ G 5 H F O R D&I VH V7UD L(W[ I I DHLI LFFU $QWDRF VWPF LX 2RP WQX& KOR HDP UWS U,H QHG FKDRHQP QGH ▇ ▇
U H F O D V VI
LH IF LW HV G
R VI WW URD DS
QSU GUH HRW [GDL LP WQD DHW [GH O HH\ I D U Q L Q J V L Q W K
$ VR ’ I H F H P E WH &KU RH P DS GD R$Q 6S\ 8W H ‡G ) L Q, QD VQ WF– &LU UDX/ HOPRHGHVVRLQV7WSW L V0F H D V R X&I UU /HHRPGVRHLVQQWHW V
) L Q D Q F L D O , Q V W U X P H Q W V · 6 H H ‡ 1 R W H · R I
$ ’WH F H P E WH DKU FH F XR PWFX KROHHP DKUS WHUO HQR GVVI
LV ZYVDFHPR S UR QLI XHV
QWH
UGI HR DUF OHX LLUW] JUHUQHGD OQQ RF V V\I OV D QDWQ GLH RW Q
X Q U H D O L ] H G J D L Q R Q W K H L Q W H U H V W U D W H V Z D S
$ ’WH F H P E WH DKU FH F XR PWFX KROHHP DKUS WHOU HQR GVVI
LV ZY VDHF PR S UR QLI XHV QWH UGI HR DUF OXH LULW] JUHUQHGD OQQ RF VV\I OV D
DQWQ GLH RW Q
X Q U H D O L ] H G O R V V R Q W K H L Q W H U H V W U D W H V Z D S
$ ’WH F H P E WH DKU FH F XR PWFX KROHHP DKUS WHOU HQR GVVI
LV ZY VDHF PR S UR QLI XHV QWH UGI HR DUF OXH LULW] JUHUQHGD OQQ RF VV\I OV D
DQWQ GLH RW Q
X Q U H D O L ] H G O R V V R Q W K H L Q W H U H V W U D W H V Z D S
6HHDFFRP SDQ\ LQJ QRWHV
3 DSD- RKQ¶V, QWHUQDWLRQDO, QF DQG 6XEVLGLDULHV &RQVROLGDWHG 6WDWHP HQWVRI &DVK ) ORZ V
<H D HU Q G H G
, Q W K R X V D Q G V
’ H F H P E’ HH UF H P E’ H FU
H P E H U
2 S H U D W L Q J D F W L Y L W L H V
1 H W L Q F R P H E H I R U H D W W U L E X W L R Q W R Q R Q F R Q W
’ H S U H F L D W L R Q D Q G D P R U W L ] D W L R Q
$ G M X V W P H Q W V W R U H F R Q F L O H Q H W L Q F R P H
▇ ▇ ▇ & U H G L W S U R Y L V L R Q I R U D O O R Z D Q F H I R U F U H
’ H I H U U H G L Q F R P H W D [ H V
3 U H I H U U H G V W R F N R S W L R Q P D U†
N W R P D U N†
H W D G
6 W R F N E D V H G F R P S H Q V D W L R Q H [ S H Q V H
* D L Q O R V V R Q U H I U D Q F K L V †L Q J
& K D Q J H V L Q R S H U D W L Q J D V V H W V D Q G O L D
2 W K H U
$ F F R X Q W V U H F H L Y D E O H
E L O L W
, Q F R P H W D [ U H F H L Y D E O H
3 U H S D L G H [ S H Q V H V D Q G R W K H U F X U U H Q W
, Q Y H Q W R U L H V
2 W K H U D V V H W V D Q G O L D E L O L W L H V
D V V H
$ F F R X Q W V S D \ D E O H
1 H W F D V K S U R Y L G H G E \ R S H U D W L Q J D F W L Y
$ F F U X H G H [ S H Q V H V D Q G R W K H U F X U U H Q W
, Q F R P H D Q G R W K H U W D [ H V S D \ D E O H ’ H I H U U H G U H Y H Q X H
, Q Y H V W L Q J D F W L Y L W L H V
O L D E L L W L H V
3 X U F K D V H V R I S U R S H U W \ D Q G H T X L S P H Q W
1 R W H V L V V X H G
5 H S D \ P H Q W V R I Q R W H V L V V X H G
3 U R F H H G V I U R P G L Y H V W L W X U H V † R I U H V W D X U D Q W V
2 W K H U
1 H W F D V K X V H G L Q L Q Y H V W L Q J D F W L Y L W L H V
) L Q D Q F L Q J D F W L Y L W L H V
1 H W U H S D \ P H Q W V S U R F H H G V † R I U H Y R O Y L
5 H S D \ P H Q W V R I W H U P O R D Q
3 U R F H H G V I U R P H [ H U F L V H R I V W R F N R S W L
’ H E W L V V X D Q F H F R V W V † †
Q J F U R Q V
’ L Y L G H Q G V S D L G W R F R P P R Q V W R F N K R O G H U V
’ L Y L G H Q G V S D L G W R S U H I H U U H G V W R F N K R O† G H U V 7D [ S D \ P H Q W V I R U H T X L W \ D Z D U G L V V X D Q F H V
$ F T X L V L W L R Q R I & R P S D Q \ F R P P R Q V W† R F N
3 U R F H H G V I U R P L V V X D Q F H R I S† U H I H U U H G †V W R F N
, V V X D Q F H F R V W V D V V R F L D W H G
’ L V W U L E X W L R Q V W R Q R Q F R Q W U R O O L Q J L Q W H
& R Q W U L E X W L R Q V I U R P Q R Q F R Q W
2 W K H U
†Z L W K S U H I H† U U H G
†U R O O L Q J L Q † W H U H V
U H V W V
1 H W F D V K X V H G L Q I L Q D Q F L Q J D F W L Y L W L H
V
( II H F W R I H [ F K D Q J H U D W H F K D Q J H V R Q F D V K D Q
& K D Q J H L Q F D V K D Q G F D V K H T X L Y D O H Q W V
& D V K D Q G F D V K H T X L Y D O H Q W V D W H Q G R I
& D V K D Q G F D V K H T X L Y D O H Q W V D W E H J L Q Q L Q J R I
S H U L
6HHDFFRP SDQ\ LQJ QRWHV
3 DSD- RKQ¶V, QWHUQDWLRQDO, QF DQG 6XEVLGLDULHV
1 RWHVWR &RQVROLGDWHG ) LQDQFLDO6WDWHP HQWV ’ HVFULSWLRQ RI %XVLQHVV
3DSD -RKQ¶V, QWHUQDWLRQDO , QF UHIHUUHG WR DVWKH ‡&RP SDQ\ · ‡3DSD -RKQ¶V· RULQ WKH ILUVWSHUVRQ QRWDWLRQVRI ‡Z H· ‡XV· DQG ‡RXU· RSHUDWHVDQG IUDQFKLVHVSL] ] D GHOLYHU\ DQG FDUU\ RXWUHVWDXUDQWVXQGHUWKH WUDGHP DUN ‡3DSD -RKQ¶V· LQ FRXQWULHVDQG WHUULWRULHVDVRI ’ HFHP EHU 2 XUUHYHQXHVDUH GHULYHG IURP UHWDLOVDOHVRI SL] ] D DQG RWKHUIRRG DQG EHYHUDJ HSURGXFWVWR WKH J HQHUDOSXEOLF E\ &RP SDQ\ RZ QHG UHVWDXUDQWV IUDQFKLVH UR\ DOWLHV DQG VDOHV RI IUDQFKLVH DQG GHYHORSP HQWULJ KWV SULQWLQJ DQG SURP RWLRQDOLWHP V DQG LQIRUP DWLRQ V\ VWHP V HTXLSP HQWDQG VRIWZ DUH DQG UHODWHG VHUYLFHV : H J HQHUDWHG UHYHQXHV IURP WKH RSHUDWLRQ RI RXU4 XDOLW\ &RQWURO &HQWHUV ‡4 & &HQWHUV· Z KLFK VXSSO\ SL] ] DVDXFH GRXJ K IRRG SURGXFWV SDSHUSURGXFWV VP DOOZ DUHVDQG FOHDQLQJ VXSSOLHVWR UHVWDXUDQWV
: HDOVR GHULYHGUHYHQXHIURP FRQWULEXWLRQVUHFHLYHGE\ RXU1 RUWK$ P HULFD0 DUNHWLQJ IXQGV
6LJ QLILFDQW$ FFRXQWLQJ 3 ROLFLHV
3 ULQFLSOHVRI &RQVROLGDWLRQ
7 KH DFFRP SDQ\ LQJ &RQVROLGDWHG ) LQDQFLDO6WDWHP HQWVLQFOXGH WKH DFFRXQWVRI 3DSD -RKQ¶V, QWHUQDWLRQDO , QF DQG LWVVXEVLGLDULHV $ OO LQWHUFRP SDQ\ EDODQFHVDQGWUDQVDFWLRQVKDYHEHHQHOLP LQDWHG
) LVFDO<HDU
2 XUILVFDO\ HDUHQGVRQWKHODVW6XQGD\ LQ’ HFHP EHURI HDFK\ HDU$ OOILVFDO\ HDUVSUHVHQWHGFRQVLVWRI Z HHNV
8 VHRI ( VWLP DWHV
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
5 HYHQXH5 HFRJ QLWLRQ
5 HYHQXH LV P HDVXUHG EDVHG RQ FRQVLGHUDWLRQ VSHFLILHG LQ FRQWUDFWV Z LWK FXVWRP HUV DQG H[ FOXGHV Z DLYHUV RULQFHQWLYHV DQG DP RXQWV FROOHFWHG RQ EHKDOI RI WKLUG SDUWLHV SULP DULO\ VDOHVWD[ 7 KH&RP SDQ\ UHFRJ QL] HVUHYHQXHZ KHQ LWVDWLVILHVDSHUIRUP DQFHREOLJ DWLRQ E\ WUDQVIHUULQJ FRQWURORYHUD SURGXFWRUVHUYLFH WR DFXVWRP HU 7D[ HVDVVHVVHG E\ DJ RYHUQP HQWDODXWKRULW\ WKDWDUH ERWK LP SRVHG RQ DQG FRQFXUUHQWZ LWK DVSHFLILF UHYHQXHSURGXFLQJ WUDQVDFWLRQ WKDWDUHFROOHFWHG E\ WKH&RP SDQ\ IURP DFXVWRP HU DUHH[ FOXGHG IURP UHYHQXH ’ HOLYHU\ FRVWV LQFOXGLQJ IUHLJ KWDVVRFLDWHG Z LWK RXUGRP HVWLF FRP P LVVDU\ DQG RWKHUVDOHV DUHDFFRXQWHG IRUDVIXOILOOP HQWFRVWVDQG DUH LQFOXGHGLQRSHUDWLQJ FRVWV
7 KHIROORZ LQJ GHVFULEHVSULQFLSDODFWLYLWLHV VHSDUDWHGE\ P DMRUSURGXFWRUVHUYLFH IURP Z KLFKWKH&RP SDQ\ J HQHUDWHVLWVUHYHQXHV ’ RP HVWLF &RP SDQ\ RZQHG5 HVWDXUDQW6DOHV
7 KH GRP HVWLF &RP SDQ\ RZ QHG UHVWDXUDQWV SULQFLSDOO\ J HQHUDWH UHYHQXH IURP UHWDLOVDOHV RI KLJ K TXDOLW\ SL] ] D 3DSDGLDV Z KLFK DUH IODWEUHDG VW\ OH VDQGZ LFKHV DQG VLGH LWHP VLQFOXGLQJ EUHDGVWLFNV FKHHVHVWLFNV FKLFNHQ SRSSHUVDQG Z LQJ V GHVVHUWLWHP VDQG FDQQHG RU ERWWOHG EHYHUDJ HV 5 HYHQXHV IURP &RP SDQ\ RZ QHG UHVWDXUDQWV DUH UHFRJ QL] HG Z KHQ WKH SURGXFWV DUH GHOLYHUHG WR RU FDUULHG RXWE\ FXVWRP HUV
2 XU1 RUWK $ P HULFDQ FXVWRP HUOR\ DOW\ SURJ UDP 3DSD 5 HZ DUGV LVD VSHQG EDVHG SURJ UDP WKDWUHZ DUGVFXVWRP HUVZ LWK SRLQWVIRUHDFK SXUFKDVH 3DSD 5 HZ DUGVSRLQWVDUH DFFXP XODWHG DQG UHGHHP HG IRUGROODURII GLVFRXQWV ‡3DSD ’ RXJ K·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’ RXJ KUHZ DUGDQGZ KHQWKHSRLQWVRU3DSD’ RXJ KUHZ DUGH[ SLUHV
) UDQFKLVH5 R\ DOWLHVDQG) HHV
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
7 KHP DMRULW\ RI LQLWLDOIUDQFKLVHOLFHQVHIHHVDQGDUHDGHYHORSP HQWH[ FOXVLYLW\ IHHVDUHIURP LQWHUQDWLRQDOORFDWLRQV , QLWLDOIUDQFKLVHOLFHQVH IHHVDUH ELOOHG DWWKH VWRUH RSHQLQJ GDWH $ UHD GHYHORSP HQWH[ FOXVLYLW\ IHHVDUH ELOOHG XSRQ H[ HFXWLRQ RI WKH GHYHORSP HQWDJ UHHP HQWV Z KLFK J UDQWWKHULJ KWWR GHYHORS IUDQFKLVHG UHVWDXUDQWVLQ IXWXUHSHULRGVLQ VSHFLILF J HRJ UDSKLF DUHDV $ UHDGHYHORSP HQWH[ FOXVLYLW\ IHHV DUH LQFOXGHG LQ ’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
7 KH &RP SDQ\ RIIHUV YDULRXV LQFHQWLYH SURJ UDP V IRUIUDQFKLVHHV LQFOXGLQJ UR\ DOW\ LQFHQWLYHV QHZ UHVWDXUDQWRSHQLQJ LQFHQWLYHV LH GHYHORSP HQWLQFHQWLYHV DQGRWKHUVXSSRUWLQLWLDWLYHV 5 R\ DOWLHVDQGIUDQFKLVHIHHVVDOHVDUHUHGXFHGWR UHIOHFWDQ\ UR\ DOW\ LQFHQWLYHVHDUQHG RUJ UDQWHGXQGHUWKHVHSURJ UDP VWKDWDUHLQWKHIRUP RI GLVFRXQWV
&RP P LVVDU\ 5 HYHQXHV
&RP P LVVDU\ UHYHQXHVDUHFRP SULVHG RI IRRG DQG VXSSOLHVVROG WR IUDQFKLVHG UHVWDXUDQWVDQG DUHUHFRJ QL] HG DVUHYHQXHXSRQ VKLSP HQWRI WKHUHODWHGSURGXFWVWR WKHIUDQFKLVHHV 3D\ P HQWVDUHJ HQHUDOO\ GXHZ LWKLQ GD\ V
$ VQRWHG DERYH WKHUH DUH YDULRXVLQFHQWLYH SURJ UDP VDYDLODEOH WR IUDQFKLVHHVUHODWHG WR QHZ UHVWDXUDQWRSHQLQJ VLQFOXGLQJ GLVFRXQWVRQ LQLWLDOFRP P LVVDU\ RUGHUVDQGQHZ VWRUHHTXLSP HQWLQFHQWLYHV DWVXEVWDQWLDOO\ QR FRVWWR IUDQFKLVHHV &RP P LVVDU\ UHYHQXHVDUHUHGXFHGWR UHIOHFWLQFHQWLYHVLQ WKH IRUP RI GLUHFWGLVFRXQWVRQ LQLWLDOFRP P LVVDU\ RUGHUV 7 KH QHZ VWRUH HTXLSP HQWLQFHQWLYH LVDOVR UHFRUGHG DVD UHGXFWLRQRI FRP P LVVDU\ VDOHVRYHUWKHWHUP RI WKHLQFHQWLYHDJ UHHP HQWZ KLFKLVJ HQHUDOO\ WKUHHWR ILYH\ HDUV
2 WKHU5 HYHQXHV
) UDQFKLVH 0 DUNHWLQJ ) XQG UHYHQXHV UHSUHVHQWD UHTXLUHG HVWDEOLVKHG SHUFHQWDJ H RI P RQWKO\ UHVWDXUDQWVDOHV FROOHFWHG E\ 3DSD -RKQ¶V 0 DUNHWLQJ ) XQG , QF ‡3-0 ) · Z KLFKLVRXUQDWLRQDOP DUNHWLQJ IXQG DQGYDULRXVRWKHULQWHUQDWLRQDODQGGRP HVWLF P DUNHWLQJ IXQGV ‡&R RS· RU‡&R RSHUDWLYH· ) XQGV Z KHUHZ HKDYHGHWHUP LQHG IRUSXUSRVHVRI DFFRXQWLQJ WKDWZ HKDYHFRQWURORYHUWKHVLJ QLILFDQWDFWLYLWLHVRI WKHIXQGV 3-0 ) IXQGVLWVRSHUDWLRQVZ LWK RQJ RLQJ ILQDQFLDOVXSSRUWDQG FRQWULEXWLRQVIURP GRP HVWLF 3DSD-RKQ¶VUHVWDXUDQWV RI Z KLFK DSSUR[ LP DWHO\ DUHIUDQFKLVHGUHVWDXUDQWP HP EHUV &RQWULEXWLRQVDUHEDVHGRQDSHUFHQWDJ HRI P RQWKO\ UHVWDXUDQWVDOHVDQGDUHELOOHG P RQWKO\ : KHQ Z HDUHGHWHUP LQHG WR EHWKHSULQFLSDOLQ WKHVHDUUDQJ HP HQWV DGYHUWLVLQJ IXQG FRQWULEXWLRQVDQG H[ SHQGLWXUHVDUHUHSRUWHG RQDJ URVVEDVLVLQWKH
&RQVROLGDWHG 6WDWHP HQWVRI 2 SHUDWLRQV 2 XUREOLJ DWLRQ UHODWHG WR WKHVHIXQGVLVWR GHYHORS DQG FRQGXFWDGYHUWLVLQJ DFWLYLWLHVLQ DVSHFLILF FRXQWU\ UHJ LRQ RUP DUNHWLQFOXGLQJ WKHSODFHP HQWRI HOHFWURQLF DQGSULQWP DWHULDOV
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’ HIHUUHG UHYHQXHDQG DUHGXFWLRQ WR 2 WKHUUHYHQXHVEDVHG XSRQHVWLP DWHGUHGHP SWLRQSDWWHUQV
) HHVIRULQIRUP DWLRQVHUYLFHV LQFOXGLQJ VRIWZ DUHP DLQWHQDQFHIHHV KHOS GHVNIHHV FHQWUDOL] HGFDOOFHQWHUIHHV DQGRQOLQHRUGHULQJ IHHVDUH UHFRJ QL] HGDVUHYHQXHDVVXFKVHUYLFHVDUHSURYLGHGDQGDUHLQFOXGHGLQ2 WKHUUHYHQXHV
5 HYHQXHVIRUSULQWLQJ SURP RWLRQDOLWHP V DQG GLUHFWP DLOP DUNHWLQJ VHUYLFHVDUH UHFRJ QL] HG XSRQ VKLSP HQWRI WKH UHODWHG SURGXFWVWR IUDQFKLVHHV DQG RWKHUFXVWRP HUV ’ LUHFWP DLODGYHUWLVLQJ GLVFRXQWV DUH DOVR SHULRGLFDOO\ RIIHUHG E\ RXU3UHIHUUHG 0 DUNHWLQJ 6ROXWLRQV VXEVLGLDU\ 2 WKHUUHYHQXHVDUHUHGXFHGWR UHIOHFWWKHVHDGYHUWLVLQJ GLVFRXQWV
5 HQWDOLQFRP H SULP DULO\ GHULYHG IURP SURSHUWLHV OHDVHG E\ WKH &RP SDQ\ DQG VXEOHDVHG WR IUDQFKLVHHV LQ WKH 8 QLWHG . LQJ GRP LV UHFRJ QL] HGRQDVWUDLJ KWOLQHEDVLVRYHUWKHUHVSHFWLYHRSHUDWLQJ OHDVHWHUP V
$ GYHUWLVLQJ DQG5 HODWHG&RVWV
’ RP HVWLF &RP SDQ\ RZ QHG DGYHUWLVLQJ DQG UHODWHG FRVWV RI P LOOLRQ P LOOLRQ DQG P LOOLRQ LQ DQG UHVSHFWLYHO\ LQFOXGHWKHFRVWVRI GRP HVWLF &RP SDQ\ RZ QHGORFDOUHVWDXUDQWDFWLYLWLHVVXFKDVP DLOFRXSRQV GRRUKDQJ HUVDQGSURP RWLRQDO LWHP VDQG DGYHUWLVLQJ DFWLYLWLHVDGP LQLVWHUHG WKURXJ K 3-0 ) DQG YDULRXVORFDOP DUNHWFRRSHUDWLYHDGYHUWLVLQJ IXQGV 3-0 ) LVUHVSRQVLEOH IRUGHYHORSLQJ DQG FRQGXFWLQJ P DUNHWLQJ DQG DGYHUWLVLQJ IRUWKH GRP HVWLF 3DSD -RKQ¶V V\ VWHP 7 KH &R RS ) XQGV DUH UHVSRQVLEOH IRU GHYHORSLQJ DQG FRQGXFWLQJ DGYHUWLVLQJ DFWLYLWLHVLQ DVSHFLILF P DUNHWLQFOXGLQJ WKHSODFHP HQWRI HOHFWURQLF DQG SULQWP DWHULDOVGHYHORSHG E\ 3-0 ) ’ XULQJ DQG WKH&RP SDQ\ FRQWULEXWHGDGGLWLRQDODP RXQWVRI P LOOLRQDQG P LOOLRQ UHVSHFWLYHO\ WR 3-0 ) UHSUHVHQWLQJ LQFUHP HQWDOGLVFUHWLRQDU\ P DUNHWLQJ IXQGLQYHVWP HQWVLQH[ FHVVRI FRQWUDFWXDO&RP SDQ\ RZ QHGUHVWDXUDQWOHYHOFRQWULEXWLRQV DV SDUWRI RXUWHP SRUDU\ ILQDQFLDOVXSSRUWSDFNDJ H WR RXUIUDQFKLVHHV 7 KH P DUNHWLQJ IXQG LQYHVWP HQWV DUH LQFOXGHG LQ * HQHUDODQG DGP LQLVWUDWLYHH[ SHQVHVZ LWKLQWKHDFFRP SDQ\ LQJ &RQVROLGDWHG6WDWHP HQWVRI 2 SHUDWLRQV
/ HDVHV
/ HDVH H[ SHQVH LVUHFRJ QL] HG RQ D VWUDLJ KWOLQH EDVLVRYHUWKH H[ SHFWHG OLIH RI WKH OHDVH WHUP IRURSHUDWLQJ OHDVHV Z KHUHDVOHDVH H[ SHQVH IROORZ VDQ DFFHOHUDWHG H[ SHQVHUHFRJ QLWLRQ IRUILQDQFHOHDVHV $ OHDVHWHUP RIWHQ LQFOXGHVRSWLRQ SHULRGV DYDLODEOHDWWKHLQFHSWLRQ RI WKH OHDVH / HDVHH[ SHQVHLVFRP SULVHG RI RSHUDWLQJ DQG ILQDQFHOHDVHFRVWV VKRUWWHUP OHDVHFRVWV DQG YDULDEOHOHDVHFRVWV Z KLFK SULP DULO\ LQFOXGHFRP P RQDUHDP DLQWHQDQFH UHDOHVWDWHWD[ HV DQGLQVXUDQFHIRUWKH&RP SDQ\ ¶VUHDOHVWDWHOHDVHV / HDVHFRVWVDOVR LQFOXGHYDULDEOH UHQWZ KLFKLVSULP DULO\ UHODWHGWR WKH&RP SDQ\ ¶VVXSSO\ FKDLQWUDFWRUDQGWUDLOHUOHDVHVWKDWDUHEDVHGRQDUDWHSHUP LOH
7 KH &RP SDQ\ DGRSWHG $ 68 ‡/ HDVHV 7RSLF · LQ WKH ILUVWTXDUWHURI DQG SULRUSHULRGV KDYH QRWEHHQ UHVWDWHG DQG FRQWLQXHWR EHUHSRUWHGXQGHUWKHDFFRXQWLQJ VWDQGDUGVLQHIIHFWIRUWKRVHSHULRGV
6WRFN%DVHG&RP SHQVDWLRQ
&RP SHQVDWLRQ H[ SHQVH IRUHTXLW\ J UDQWVLVHVWLP DWHG RQ WKH J UDQWGDWH QHWRI SURMHFWHG IRUIHLWXUHV DQG LVUHFRJ QL] HG RYHUWKH YHVWLQJ SHULRG J UDGHGYHVWLQJ RYHUWKUHH\ HDUV 5 HVWULFWHGVWRFNLVYDOXHGEDVHGRQWKHP DUNHWSULFHRI WKH&RP SDQ\ ¶VVKDUHVRQWKHGDWHRI J UDQW 6WRFNRSWLRQVDUHYDOXHGXVLQJ D%ODFN 6FKROHVRSWLRQSULFLQJ P RGHO 2 XUVSHFLILF DVVXP SWLRQVIRUHVWLP DWLQJ WKHIDLUYDOXHRI RSWLRQVDUH LQFOXGHGLQ1 RWH
&DVK( TXLYDOHQWV
&DVK HTXLYDOHQWVFRQVLVWRI KLJ KO\ OLTXLG LQYHVWP HQWVZ LWK P DWXULW\ RI WKUHH P RQWKVRUOHVVDWGDWH RI SXUFKDVH 7 KHVH LQYHVWP HQWVDUH FDUULHGDWFRVWZ KLFKDSSUR[ LP DWHVIDLUYDOXH
$ FFRXQWV5 HFHLYDEOH
6XEVWDQWLDOO\ DOODFFRXQWVUHFHLYDEOHLVGXHIURP IUDQFKLVHHVIRUSXUFKDVHVRI IRRG SDSHUSURGXFWV SRLQWRI VDOHHTXLSP HQWSULQWLQJ DQG SURP RWLRQDOLWHP V LQIRUP DWLRQ V\ VWHP VDQG UHODWHG VHUYLFHV P DUNHWLQJ DQG UR\ DOWLHV &UHGLWLVH[ WHQGHG EDVHG RQ DQ HYDOXDWLRQ RI WKH IUDQFKLVHH¶VILQDQFLDOFRQGLWLRQDQGFROODWHUDOLVJ HQHUDOO\ QRWUHTXLUHG $ QDOORZ DQFHIRUFUHGLWORVVHVLVDQHVWLP DWH HYHQLI UHP RWH EDVHG XSRQKLVWRULFDODFFRXQWZ ULWHRII WUHQGV IDFWVDERXWWKHFXUUHQWILQDQFLDOFRQGLWLRQRI WKHGHEWRU IRUHFDVWVRI IXWXUHRSHUDWLQJ UHVXOWVEDVHG XSRQ FXUUHQWWUHQGVRI VHOHFWRSHUDWLQJ P HWULFVDQG P DFURHFRQRP LF IDFWRUV $ FFRXQWEDODQFHVDUHFKDUJ HG RII DJ DLQVWWKHDOORZ DQFHDIWHU UHFRYHU\ HIIRUWVKDYHFHDVHG
6HH 5 HFHQW$ FFRXQWLQJ 3 URQRXQFHP HQWVIRULQIRUP DWLRQ UHJ DUGLQJ WKH DGRSWLRQ DQG UHODWHG DFFRXQWLQJ LP SDFWRI $ 68 ‡&UHGLW
/ RVVHV· Z KLFKZ DVHIIHFWLYH’ HFHP EHU 1 RWHV5 HFHLYDEOH
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¶VHFRQRP LF SHUIRUP DQFH DQG P DUNHWFRQGLWLRQVDIWHUFRQVLGHUDWLRQ RI WKH IDLUYDOXH RI RXUXQGHUO\ LQJ FROODWHUDOULJ KWV HJ XQGHUO\ LQJ IUDQFKLVHH EXVLQHVV SURSHUW\ DQG HTXLSP HQWDQG DQ\ J XDUDQWHHV 1 RWH EDODQFHVDUH FKDUJ HG RII DJ DLQVWWKH DOORZ DQFH DIWHU UHFRYHU\ HIIRUWVKDYHFHDVHG
, QWHUHVWLQFRP H UHFRUGHG RQ IUDQFKLVHH ORDQVZ DVDSSUR[ LP DWHO\ P LOOLRQ LQ LQ DQG LQ DQG LV UHSRUWHGLQ, QYHVWP HQWLQFRP HLQWKHDFFRP SDQ\ LQJ &RQVROLGDWHG6WDWHP HQWVRI 2 SHUDWLRQV
6HH 5 HFHQW$ FFRXQWLQJ 3 URQRXQFHP HQWVIRULQIRUP DWLRQ UHJ DUGLQJ WKH DGRSWLRQ DQG UHODWHG DFFRXQWLQJ LP SDFWRI $ 68 ‡&UHGLW
/ RVVHV· Z KLFKZ DVHIIHFWLYH’ HFHP EHU
, QYHQWRULHV
, QYHQWRULHV Z KLFK FRQVLVWRI IRRG SURGXFWV SDSHUJ RRGVDQG VXSSOLHV VP DOOZ DUHV DQG SULQWLQJ DQG SURP RWLRQDOLWHP V DUHVWDWHG DWWKH ORZ HURI FRVWGHWHUP LQHGXQGHUWKHILUVWLQ ILUVWRXW) , ) 2 P HWKRG RUQHWUHDOL] DEOHYDOXH
3 URSHUW\ DQG( TXLSP HQW
3URSHUW\ DQG HTXLSP HQWDUH VWDWHG DWFRVW’ HSUHFLDWLRQ LVUHFRUGHG XVLQJ WKH VWUDLJ KWOLQH P HWKRG RYHUWKH HVWLP DWHG XVHIXOOLYHVRI WKH DVVHWV J HQHUDOO\ ILYHWR WHQ \ HDUVIRUUHVWDXUDQWFRP P LVVDU\ DQG RWKHUHTXLSP HQWWZ HQW\ WR IRUW\ \ HDUVIRUEXLOGLQJ VDQG LP SURYHP HQWV DQGILYH\ HDUVIRUWHFKQRORJ \ DQGFRP P XQLFDWLRQDVVHWV / HDVHKROGLP SURYHP HQWVDUHDP RUWL] HGRYHUWKHVKRUWHURI WKHLUHVWLP DWHGXVHIXO OLYHVRUWKHWHUP VRI WKHUHVSHFWLYHOHDVHV LQFOXGLQJ WKHILUVWUHQHZ DOSHULRG J HQHUDOO\ ILYHWR WHQ\ HDUV
’ HSUHFLDWLRQH[ SHQVHZ DV P LOOLRQLQ P LOOLRQLQ DQG P LOOLRQLQ ’ HIHUUHG&RVWV
: H FDSLWDOL] H FHUWDLQ LQIRUP DWLRQ V\ VWHP VGHYHORSP HQWDQG UHODWHG FRVWVWKDWP HHWHVWDEOLVKHG FULWHULD $ P RXQWVFDSLWDOL] HG Z KLFK DUH LQFOXGHGLQSURSHUW\ DQGHTXLSP HQWDUHDP RUWL] HGSULQFLSDOO\ RYHUSHULRGVQRWH[ FHHGLQJ ILYH\ HDUV
XSRQ FRP SOHWLRQ RI WKHUHODWHG LQIRUP DWLRQ V\ VWHP VSURMHFW7RWDOFRVWVFDSLWDOL] HG Z HUHDSSUR[ LP DWHO\ P LOOLRQ LQ P LOOLRQ LQ DQG P LOOLRQ LQ 7 KHXQDP RUWL] HG LQIRUP DWLRQ V\ VWHP VGHYHORSP HQWFRVWVDSSUR[ LP DWHG P LOOLRQ DQG P LOOLRQ DVRI ’ HFHP EHU DQG’ HFHP EHU UHVSHFWLYHO\
, QWDQJ LEOH$ VVHWV† * RRGZLOO
: HHYDOXDWHJ RRGZ LOODQQXDOO\ LQ WKHIRXUWK TXDUWHURUZ KHQHYHUZ HLGHQWLI\ FHUWDLQ WULJ J HULQJ HYHQWVRUFLUFXP VWDQFHVWKDWZ RXOG P RUH OLNHO\ WKDQ QRWUHGXFHWKHIDLUYDOXHRI DUHSRUWLQJ XQLWEHORZ LWVFDUU\ LQJ DP RXQW6XFK WHVWVDUHFRP SOHWHG VHSDUDWHO\ Z LWK UHVSHFWWR WKH J RRGZ LOORI HDFKRI RXUUHSRUWLQJ XQLWV Z KLFKLQFOXGHVRXUGRP HVWLF &RP SDQ\ RZ QHGUHVWDXUDQWV 8 QLWHG. LQJ GRP ‡3-8 . · &KLQD DQG 3UHIHUUHG 0 DUNHWLQJ 6ROXWLRQVRSHUDWLRQV : HP D\ SHUIRUP DTXDOLWDWLYHDVVHVVP HQWRUP RYHGLUHFWO\ WR WKHTXDQWLWDWLYHDVVHVVP HQWIRU DQ\ UHSRUWLQJ XQLWLQDQ\ SHULRGLI Z HEHOLHYHWKDWLWLVP RUHHIILFLHQWRULI LP SDLUP HQWLQGLFDWRUVH[ LVW
: H HOHFWHG WR SHUIRUP D TXDOLWDWLYH DVVHVVP HQWIRURXUGRP HVWLF &RP SDQ\ RZ QHG UHVWDXUDQWV 3-8 . &KLQD DQG 3UHIHUUHG 0 DUNHWLQJ 6ROXWLRQVRSHUDWLRQVLQ WKHIRXUWK TXDUWHURI $ VDUHVXOWRI RXUTXDOLWDWLYHDQDO\ VHV Z HGHWHUP LQHG WKDWLWZ DVP RUHOLNHO\ WKDQ QRW WKDWWKH IDLUYDOXHVRI RXUUHSRUWLQJ XQLWVZ HUH J UHDWHUWKDQ WKHLUFDUU\ LQJ DP RXQWV 6XEVHTXHQWWR FRP SOHWLQJ RXUJ RRGZ LOOLP SDLUP HQW WHVWV QR LQGLFDWRUVRI LP SDLUP HQWZ HUHLGHQWLILHG 6HH1 RWH IRUDGGLWLRQDOLQIRUP DWLRQ
’ HIHUUHG, QFRP H7D[ $ FFRXQWVDQG7D[ 5 HVHUYHV
: HDUHVXEMHFWWR LQFRP HWD[ HVLQ WKH8 QLWHG 6WDWHVDQG VHYHUDOIRUHLJ Q MXULVGLFWLRQV 6LJ QLILFDQWMXGJ P HQWLVUHTXLUHG LQ GHWHUP LQLQJ WKH SURYLVLRQ IRULQFRP H WD[ HVDQG WKH UHODWHG DVVHWVDQG OLDELOLWLHV 7 KH SURYLVLRQ IRULQFRP H WD[ HVLQFOXGHVLQFRP H WD[ HVSDLG FXUUHQWO\ SD\ DEOHRUUHFHLYDEOHDQGWKRVHGHIHUUHG
’ HIHUUHGWD[ DVVHWVDQGOLDELOLWLHVDUHGHWHUP LQHGEDVHGRQGLIIHUHQFHVEHWZ HHQILQDQFLDOUHSRUWLQJ DQGWD[ EDVLVRI DVVHWVDQGOLDELOLWLHVDQG DUHP HDVXUHG XVLQJ HQDFWHG WD[ UDWHVDQG ODZ VWKDWDUHH[ SHFWHG WR EHLQ HIIHFWZ KHQ WKHGLIIHUHQFHVUHYHUVH ’ HIHUUHG WD[ DVVHWVDUHDOVR UHFRJ QL] HG IRUWKHHVWLP DWHG IXWXUHHIIHFWVRI WD[ DWWULEXWHFDUU\ IRUZ DUGV HJ QHWRSHUDWLQJ ORVVHV FDSLWDOORVVHV DQG IRUHLJ Q WD[ FUHGLWV 7 KHHIIHFWRQ GHIHUUHG WD[ HVRI FKDQJ HVLQ WD[ UDWHVLVUHFRJ QL] HG LQ WKHSHULRG LQ Z KLFK WKHQHZ WD[ UDWHLVHQDFWHG 9 DOXDWLRQ DOORZ DQFHV DUHHVWDEOLVKHGZ KHQQHFHVVDU\ RQDMXULVGLFWLRQDOEDVLVWR UHGXFHGHIHUUHGWD[ DVVHWVWR WKHDP RXQWVZ HH[ SHFWWR UHDOL] H
7D[ DXWKRULWLHVSHULRGLFDOO\ DXGLWWKH&RP SDQ\ : HUHFRUGUHVHUYHVDQGUHODWHGLQWHUHVWDQGSHQDOWLHVIRULGHQWLILHGH[ SRVXUHVDVLQFRP HWD[ H[ SHQVH : HHYDOXDWHWKHVHLVVXHVDQGDGMXVWIRUHYHQWV VXFKDVVWDWXWHRI OLP LWDWLRQVH[ SLUDWLRQV FRXUWUXOLQJ VRUDXGLWVHWWOHP HQWV Z KLFK P D\ LP SDFWRXUXOWLP DWHSD\ P HQWIRUVXFKH[ SRVXUHV 6HH1 RWH IRUDGGLWLRQDOLQIRUP DWLRQ
, QVXUDQFH5 HVHUYHV
2 XULQVXUDQFHSURJ UDP VIRUZ RUNHUV¶ FRP SHQVDWLRQ RZ QHG DQG QRQ RZ QHG DXWRP RELOHV J HQHUDOOLDELOLW\ SURSHUW\ DQG KHDOWK LQVXUDQFH FRYHUDJ HSURYLGHG WR RXUHP SOR\ HHVDUH IXQGHG E\ WKH &RP SDQ\ XS WR FHUWDLQ UHWHQWLRQ OHYHOVXQGHURXUUHWHQWLRQ SURJ UDP V 5 HWHQWLRQ OLP LWVJ HQHUDOO\ UDQJ HIURP WR P LOOLRQ
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
’ HULYDWLYH) LQDQFLDO, QVWUXP HQWV
: HUHFRJ QL] HDOOGHULYDWLYHVRQWKHEDODQFHVKHHWDWIDLUYDOXH $ WLQFHSWLRQDQGRQDQRQJ RLQJ EDVLV Z HDVVHVVZ KHWKHUHDFKGHULYDWLYHWKDW TXDOLILHVIRUKHGJ HDFFRXQWLQJ FRQWLQXHVWR EHKLJ KO\ HIIHFWLYHLQRIIVHWWLQJ FKDQJ HVLQWKHFDVKIORZ VRI WKHKHGJ HGLWHP , I WKHGHULYDWLYH P HHWVWKHKHGJ HFULWHULDDVGHILQHG E\ FHUWDLQ DFFRXQWLQJ VWDQGDUGV GHSHQGLQJ RQ WKHQDWXUHRI WKHKHGJ H FKDQJ HVLQ WKHIDLUYDOXHRI WKH GHULYDWLYH DUH HLWKHURIIVHWDJ DLQVWWKH FKDQJ H LQ IDLUYDOXH RI DVVHWV OLDELOLWLHVRUILUP FRP P LWP HQWVWKURXJ K HDUQLQJ VRUUHFRJ QL] HG LQ DFFXP XODWHGRWKHUFRP SUHKHQVLYHLQFRP H ORVV XQWLOWKHKHGJ HGLWHP LVUHFRJ QL] HGLQHDUQLQJ V
, Q Z HUHGXFHG WKHQRWLRQDOYDOXHRI RXUVZ DSVE\ P LOOLRQ DVDUHVXOWRI SD\ LQJ GRZ Q DVXEVWDQWLDOSRUWLRQ RI GHEWXQGHURXU 5 HYROYLQJ ) DFLOLW\ XVLQJ WKHSURFHHGVUHFHLYHGIURP WKHVDOHRI RXU6HULHV% &RQYHUWLEOH3UHIHUUHG6WRFN WKH‡6HULHV% 3UHIHUUHG6WRFN·
7 KHWHUP LQDWLRQRI P LOOLRQRI QRWLRQDOVZ DS YDOXHZ DVQRWVLJ QLILFDQWWR RXUUHVXOWVRI RSHUDWLRQV
: HUHFRJ QL] HG ORVV LQFRP HRI P LOOLRQ P LOOLRQDIWHUWD[ LQ P LOOLRQ P LOOLRQDIWHUWD[ LQ DQG
P LOOLRQ P LOOLRQDIWHUWD[ LQ LQRWKHUFRP SUHKHQVLYHORVVIRUWKHQHWFKDQJ HLQWKHIDLUYDOXHRI RXULQWHUHVWUDWHVZ DSV 6HH1 RWH IRUDGGLWLRQDOLQIRUP DWLRQRQRXUGHEWDQGFUHGLWDUUDQJ HP HQWV
1 RQFRQWUROOLQJ , QWHUHVWV
$ W’ HFHP EHU WKH &RP SDQ\ KDG IRXU MRLQWYHQWXUHV FRQVLVWLQJ RI UHVWDXUDQWV Z KLFK KDYH QRQFRQWUROOLQJ LQWHUHVWV &RQVROLGDWHGQHWLQFRP HLVUHTXLUHGWR EHUHSRUWHGVHSDUDWHO\ DWDP RXQWVDWWULEXWDEOHWR ERWKWKH&RP SDQ\ DQGWKHQRQFRQWUROOLQJ LQWHUHVWV
$ GGLWLRQDOO\ GLVFORVXUHVDUH UHTXLUHG WR FOHDUO\ LGHQWLI\ DQG GLVWLQJ XLVK EHWZ HHQ WKH LQWHUHVWVRI WKH &RP SDQ\ DQG WKH LQWHUHVWVRI WKH QRQFRQWUROOLQJ RZ QHUV LQFOXGLQJ D GLVFORVXUH RQ WKH IDFH RI WKH &RQVROLGDWHG 6WDWHP HQWV RI 2 SHUDWLRQV RI LQFRP H DWWULEXWDEOH WR WKH QRQFRQWUROOLQJ LQWHUHVWKROGHU
7 KHIROORZ LQJ VXP P DUL] HVWKHUHGHP SWLRQIHDWXUH ORFDWLRQDQGUHODWHGDFFRXQWLQJ Z LWKLQWKH&RQVROLGDWHG%DODQFH6KHHWVIRUWKHVHIRXU MRLQWYHQWXUHDUUDQJ HP HQWV
7 \ SHRI - RLQW9 HQWXUH$ UUDQJ HP HQW
/ RFDWLRQ Z LWKLQ WKH &RQVROLGDWHG %DODQFH
6KHHWV 5 HFRUGHG9 DOXH
-RLQWYHQWXUHVZ LWKQR UHGHP SWLRQIHDWXUH 3HUP DQHQWHTXLW\ &DUU\ LQJ YDOXH
-RLQWYHQWXUHVZ LWKRSWLRQWR UHTXLUHWKH&RP SDQ\ WR SXUFKDVHWKHQRQFRQWUROOLQJ LQWHUHVW QRW
FXUUHQWO\ UHGHHP DEOHRUUHGHP SWLRQQRWSUREDEOH 7HP SRUDU\ HTXLW\ &DUU\ LQJ YDOXH 6HH1 RWHV DQG IRUDGGLWLRQDOLQIRUP DWLRQUHJ DUGLQJ QRQFRQWUROOLQJ LQWHUHVWVDQGGLYHVWLWXUHV
) RUHLJ Q&XUUHQF\ 7UDQVODWLRQ
7 KHORFDOFXUUHQF\ LVWKHIXQFWLRQDOFXUUHQF\ IRUHDFK RI RXUIRUHLJ Q VXEVLGLDULHV 5 HYHQXHVDQG H[ SHQVHVDUHWUDQVODWHG LQWR 8 6 GROODUV XVLQJ P RQWKO\ DYHUDJ H H[ FKDQJ H UDWHV Z KLOH DVVHWVDQG OLDELOLWLHVDUH WUDQVODWHG XVLQJ \ HDUHQG H[ FKDQJ H UDWHVDQG KLVWRULFDOUDWHV 7 KH UHVXOWLQJ WUDQVODWLRQDGMXVWP HQWVDUHLQFOXGHGDVDFRP SRQHQWRI DFFXP XODWHGRWKHUFRP SUHKHQVLYHORVV QHWRI LQFRP HWD[ HV
5 HFHQW$ FFRXQWLQJ 3 URQRXQFHP HQWV
) LQDQFLDO, QVWUXP HQWV– &UHGLW/ RVVHV
7 KH &RP SDQ\ DGRSWHG $ 68 ‡) LQDQFLDO, QVWUXP HQWV– &UHGLW/ RVVHV 7RSLF 0 HDVXUHP HQWRI &UHGLW/ RVVHVRQ ) LQDQFLDO
, QVWUXP HQWV· ‡$ 68 · DVRI ’ HFHP EHU WKHILUVWGD\ RI ILVFDO XQGHUWKHP RGLILHGUHWURVSHFWLYHWUDQVLWLRQP HWKRG 7RSLF UHTXLUHVP HDVXUHP HQWDQGUHFRJ QLWLRQRI H[ SHFWHGYHUVXVLQFXUUHGORVVHVIRUILQDQFLDODVVHWVKHOG ) LQDQFLDOLQVWUXP HQWVVXEMHFW WR$ 68 LQFOXGHWUDGHDFFRXQWVUHFHLYDEOH QRWHVUHFHLYDEOH
DQGLQWHUHVWUHFHLYDEOH FODVVLILHGDV2 WKHUDVVHWVLQWKH&RQVROLGDWHG%DODQFH6KHHWV IURP IUDQFKLVHHV 7 KHLP SDFWRI WKHDGRSWLRQZ DVQRW P DWHULDOWR RXUFRQVROLGDWHGILQDQFLDOVWDWHP HQWV
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
7 KH IROORZ LQJ WDEOH VXP P DUL] HV FKDQJ HV LQ RXU DOORZ DQFHV IRU FUHGLWORVVHV IRU DFFRXQWV UHFHLYDEOH QRWHV UHFHLYDEOH DQG LQWHUHVW UHFHLYDEOH
L Q W K R X V D Q G V $ F F R X Q W V1 R
5W HH FV H L 5Y, HQDHFWEVHHOWL UH Y D5
EH OF H L
% | D | O | D | Q | F | H | D W | ’ | H | F | H | P | E | H | U | ||
& | X | P | XI | OH | DF | ▇ | ▇ $YR6 HI8 | HD | IG | R | S | W | L | R | Q | R I | † |
% | D | O | D | Q | F | H | D W | ’ | H | F | H | P | E | H | U | ||
& X U U H Q W S H U L R G F U H G L W S U R Y L V L R Q I R U H [ S
: U L I WV JH H F GRK ID DU J D | L Q V W | W | K | H | D O O R Z D Q F H | † | |
5 H F R Y H U L H V | F R O O | H F | W | H | G | † | † |
7 U D Q V I H U V | † |
% D O D Q F H D W ’ H F H P E H U †
5 HIHUHQFH5 DWH5 HIRUP – + HGJ LQJ
, Q 0 DUFK WKH) $ 6% LVVXHG$ 68 ‡) DFLOLWDWLRQ RI WKH( IIHFWVRI 5 HIHUHQFH5 DWH5 HIRUP RQ ) LQDQFLDO5 HSRUWLQJ · 7 KH$ 68 SURYLGHVRSWLRQDOH[ SHGLHQWVDQGH[ FHSWLRQVIRUDSSO\ LQJ J XLGDQFHRQFRQWUDFWP RGLILFDWLRQVDQGKHGJ HDFFRXQWLQJ UHODWHGWR WKHH[ SHFWHG P DUNHWWUDQVLWLRQ IURP / , %2 5 DQG RWKHULQWHUEDQN RIIHUHG UDWHVWR DOWHUQDWLYHUHIHUHQFHUDWHVLI FHUWDLQ FULWHULDDUHP HW7 KLVJ XLGDQFHZ DV HIIHFWLYHEHJ LQQLQJ RQ 0 DUFK DQG WKH&RP SDQ\ P D\ HOHFWWR DSSO\ WKHDP HQGP HQWVSURVSHFWLYHO\ WKURXJ K’ HFHP EHU
7 KHKHGJ HDFFRXQWLQJ H[ SHGLHQWVP D\ EHDSSOLHG RQ DQ LQGLYLGXDOKHGJ LQJ UHODWLRQVKLS EDVLV WR HOLJ LEOHKHGJ HDFFRXQWLQJ UHODWLRQVKLSV WKDWH[ LVWHG DVRI WKH EHJ LQQLQJ RI WKH HIIHFWLYH GDWH RI WKLVJ XLGDQFH DQG WR QHZ HOLJ LEOH KHGJ LQJ UHODWLRQVKLSVHQWHUHG LQWR DIWHUWKH HIIHFWLYHGDWHRI WKLVJ XLGDQFH KRZ HYHU WKRVHH[ SHGLHQWVJ HQHUDOO\ FDQQRWEHDSSOLHG WR KHGJ LQJ UHODWLRQVKLSVIRUSHULRGVDIWHU’ HFHP EHU 7 KH &RP SDQ\ DGRSWHG FHUWDLQ RSWLRQDOKHGJ H DFFRXQWLQJ H[ SHGLHQWV SURYLGHG E\ $ 68 GXULQJ ILVFDO 7 KH
DGRSWLRQ RI WKLVJ XLGDQFHGLG QRWKDYHDP DWHULDOLP SDFWRQ WKH&RP SDQ\ ¶VFRQVROLGDWHG ILQDQFLDOSRVLWLRQ UHVXOWVRI RSHUDWLRQV RUFDVK IORZ V
$ FFRXQWLQJ 6WDQGDUGVWR EH$ GRSWHGLQ) XWXUH3 HULRGV &RQYHUWLEOH, QVWUXP HQWV
, Q$ XJ XVW WKH) $ 6% LVVXHG$ 68 ‡’ HEW– ’ HEWZLWK&RQYHUVLRQDQG2 WKHU2 SWLRQV 6XEWRSLF DQG’ HULYDWLYHVDQG
+ HGJ LQJ &RQWUDFWVLQ ( QWLW\ ¶V2 ZQ ( TXLW\ 6XEWRSLF $ FFRXQWLQJ IRU&RQYHUWLEOH, QVWUXP HQWVDQG &RQWUDFWVLQ DQ ( QWLW\ ¶V2 ZQ ( TXLW\ · 7 KLV$ 68 DP HQGV) $ 6%¶VJ XLGDQFHRQ FRQYHUWLEOHLQVWUXP HQWVDQG WKHGHULYDWLYHVVFRSHH[ FHSWLRQ IRUFRQWUDFWVLQ DQ HQWLW\ ¶V RZ Q HTXLW\ DQG LP SURYHVDQG DP HQGVWKHUHODWHG HDUQLQJ VSHUVKDUH ‡( 36· J XLGDQFHIRUERWK 6XEWRSLFV 7 KH$ 68 Z LOOEHHIIHFWLYHIRU DQQXDOUHSRUWLQJ SHULRGVDIWHU’ HFHP EHU DQG LQWHULP SHULRGVWKHUHLQ Z LWK HDUO\ DGRSWLRQ SHUP LWWHG 7 KH&RP SDQ\ LVFXUUHQWO\ HYDOXDWLQJ WKHLP SDFWWKLVJ XLGDQFHP D\ KDYHRQLWVFRQVROLGDWHGILQDQFLDOVWDWHP HQWVDQGUHODWHGGLVFORVXUHV
5 HFODVVLILFDWLRQV
&HUWDLQSULRU\ HDUDP RXQWVLQWKH&RQVROLGDWHG%DODQFH6KHHWDQG&RQVROLGDWHG6WDWHP HQWRI &DVK) ORZ VKDYHEHHQUHFODVVLILHGWR FRQIRUP WR WKHFXUUHQW\ HDUSUHVHQWDWLRQ
/ HDVHV
7 KH &RP SDQ\ KDVVLJ QLILFDQWOHDVHVWKDWLQFOXGH P RVWGRP HVWLF &RP SDQ\ RZ QHG UHVWDXUDQWDQG FRP P LVVDU\ ORFDWLRQV 2 WKHUGRP HVWLF OHDVHVLQFOXGHWUDFWRUDQG WUDLOHUOHDVHVXVHG E\ RXUGLVWULEXWLRQ VXEVLGLDU\ DVZ HOODVFRP P LVVDU\ HTXLSP HQW $ GGLWLRQDOO\ WKH&RP SDQ\ OHDVHV D VLJ QLILFDQWQXP EHURI UHVWDXUDQWV Z LWKLQ WKH 8 QLWHG . LQJ GRP WKHVH UHVWDXUDQWV DUH WKHQ VXEOHDVHG WR WKH IUDQFKLVHHV 7 KH &RP SDQ\ ¶VOHDVHVKDYHWHUP VDVIROORZ V
$ Y H U D J H O H D V H W H U P
’ R P H V W L F & R P S D Q \ R Z Q H G) L ▇▇ ▇▇ V SW\ RHOD QDXX HUVU HVD QDQ HWW Z VD OO H
D V W
8 Q L W H G . L Q J G R P I U D Q F K L V H \R HZ DQ UH VG U H V W D X U D Q W
’ R P H V W L F F R P P L V V D U \ O R F D W
\L HSR RODQ QXUV HUV
H QD HW Z D OO H D V W
’ R P H V W L F D Q G L Q W H U Q D W ) LL RYVWQ H DR Y OH Q W U\ DH
▇▇ ▇▇
RV U V D Q G
’ R P H V W L F D Q GI L F L HQ W HH TU XQ L D S WP7 LHK RQUIQWLHDRYHO H F \ RH PD P UL VV V D U
\ D Q G
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¶VOHDVHVLQFOXGHWKHFRQWUDFWXDOO\ REOLJ DWHGSHULRGRI WKHOHDVHV SOXVDQ\ DGGLWLRQDOSHULRGVFRYHUHGE\ &RP SDQ\ RSWLRQVWR H[ WHQGWKHOHDVHVWKDWWKH&RP SDQ\ LVUHDVRQDEO\ FHUWDLQWR H[ HUFLVH
&HUWDLQ OHDVHVSURYLGH WKDWWKH OHDVH SD\ P HQWVP D\ EH LQFUHDVHG DQQXDOO\ EDVHG RQ WKH IL[ HG UDWH WHUP VRUDGMXVWDEOH WHUP VVXFK DVWKH &RQVXP HU3ULFH , QGH[ ) XWXUH EDVH UHQWHVFDODWLRQVWKDWDUH QRWFRQWUDFWXDOO\ TXDQWLILDEOH DVRI WKH OHDVH FRP P HQFHP HQWGDWH DUH QRW LQFOXGHGLQRXUOHDVHOLDELOLW\
7 KH IROORZ LQJ VFKHGXOH GHWDLOVWKH WRWDOULJ KWRI XVH DVVHWVDQG OHDVH OLDELOLWLHVRQ WKH &RQVROLGDWHG %DODQFH 6KHHWVDVRI ’ HFHP EHU DQG’ HFHP EHU LQWKRXVDQGV
/ H D V H V & O D V V L I L F D W L R Q
’ H F H P E H’
UH F H P E H U
$ V V H W V
) L Q D Q F H O H D V
)H L Q D D V Q V F ▇▇ ▇ ▇▇ H D
QV HH W
U L J K W R I X V H D V
2 S H U D W L Q J O H
2D SV ▇▇ ▇ ▇ ▇ WV LV QH ▇ ▇ ▇▇ H D
QV HH W
U L J K W R I X V H
7R W D O O H D V H D V V H W V
/ L D E L O L W L H V
& X U U H Q W I L Q D &Q XF UH U HO QH WD V
IH L Q O D L QD F E H L O OL HW DL VH HV
O L D E L O L
& X U U H Q W R S H U &D XWU L U Q H J Q WO H RD SV HH ▇ ▇ ▇ ▇▇ LD QE J L O OL HW DL VH HV
O L D E L
1 R Q F X U U H Q W I
/L RQ QD J Q F WH
H UO PH D IV L H Q D OQ LF DH E L OO HL DW ▇ ▇ HH V O L D E L O
1 R Q F X U U H Q W R / S R H Q U J D WW L HQ UJ P O RH S D H V U H D W O L L Q D J E L OO HL DW ▇ ▇ ▇▇ ▇ ▇ ▇ ▇
7R W D O O H D V H O L D E L O L W L H V
/ HDVHH[ SHQVHIRUOHDVHSD\ P HQWVLVUHFRJ QL] HG RQ DVWUDLJ KWOLQHEDVLVRYHUWKHOHDVHWHUP / HDVHH[ SHQVHLVFRP SULVHG RI RSHUDWLQJ DQG ILQDQFHOHDVHFRVWV VKRUWWHUP OHDVHFRVWV DQG YDULDEOHOHDVHFRVWV Z KLFK SULP DULO\ LQFOXGHFRP P RQ DUHDP DLQWHQDQFH UHDOHVWDWHWD[ HV DQG LQVXUDQFH IRUWKH &RP SDQ\ ¶VUHDOHVWDWH OHDVHV / HDVH FRVWVDOVR LQFOXGH YDULDEOH UHQWZ KLFK LVSULP DULO\ UHODWHG WR WKH &RP SDQ\ ¶V VXSSO\ FKDLQ WUDFWRUDQG WUDLOHUOHDVHV WKDWDUH EDVHG RQ D UDWH SHUP LOH / HDVH H[ SHQVH IRUWKH \ HDUV HQGHG ’ HFHP EHU DQG ’ HFHP EHU DUHDVIROORZ V
<H D
(U Q G H G <H D
(U Q G H G
L Q W K R X V D Q G V ’ H F H P E H U ’ H F H P E H U
) L Q D Q F H O H D V H
$ P R U W L ] D W L R Q R I U L J K W R I X V H D V V H W V
, Q W H U H V W R Q O H D V H O L D E L O L W L H V
2 S H U D W L Q J O H D V H
2 S H U D W L Q J O H D V H F R V W
6 K R U W W H U P O H D V H F R V W
9 D U L D | E O H | O H | D V H | F R V W | ||||
7R W D O | O H D | V H | F | R | V | W V | ||
6 X E O H | D V H | L Q | F R | P | H | |||
7R W D O | O H D | V H | F | R | V | W V Q H W R I | V X E O H D V H L Q F R P H | |
) XWXUH P LQLP XP OHDVH SD\ P HQWVXQGHUFRQWUDFWXDOO\ REOLJ DWHG OHDVHVDQG DVVRFLDWHG VXEOHDVH LQFRP H DVRI ’ HFHP EHU DUH DV IROORZ V LQWKRXVDQGV
) L Q D Q F H2 S H U D W L Q( J[ S H F W H G
) L <VH FD DU O
/ H D V H & R V W V
/ H D V H & R V W V
6 X E O H D V H
, Q F R P H
7 K H U H D I W H U
7R W D O I X W X U H P L Q L P X P O H D V H S D \ P H Q W V
7R W D O S U H V H Q W Y D O X H R I O H D V H O L D E L O L
/ H V V L P S X W H G L Q W H U H V W †
W L H V
D ( [ FOXGHVH[ SHFWHGP LQLP XP OHDVHSD\ P HQWVRI DSSUR[ LP DWHO\ P LOOLRQDVVRFLDWHGZ LWKRXUQHZ RIILFHLQ$ WODQWD * HRUJ LDZ KLFK LVH[ SHFWHGWR FRP P HQFHLQILVFDO
/ HVVRU2 SHUDWLQJ / HDVHV
: HVXEOHDVHFHUWDLQUHWDLOVSDFHWR RXUIUDQFKLVHHVLQWKH8 QLWHG. LQJ GRP Z KLFKDUHSULP DULO\ RSHUDWLQJ OHDVHV $ W’ HFHP EHU Z H OHDVHG DQG VXEOHDVHG 3DSD-RKQ¶VUHVWDXUDQWVWR IUDQFKLVHHVLQ WKH8 QLWHG . LQJ GRP 7 KHLQLWLDOOHDVHWHUP VRQ WKHIUDQFKLVHG VLWHVLQ WKH8 QLWHG. LQJ GRP DUHJ HQHUDOO\ \ HDUV 7 KH&RP SDQ\ KDVWKHRSWLRQWR QHJ RWLDWHDQH[ WHQVLRQWRZ DUGWKHHQGRI WKHOHDVHWHUP DWWKH ODQGORUG¶VGLVFUHWLRQ 5 HQWDOLQFRP H SULP DULO\ GHULYHG IURP SURSHUWLHVOHDVHG DQG VXEOHDVHG WR IUDQFKLVHHVLQ WKH 8 QLWHG . LQJ GRP LV UHFRJ QL] HGRQDVWUDLJ KWOLQHEDVLVRYHUWKHUHVSHFWLYHRSHUDWLQJ OHDVHWHUP V LQDFFRUGDQFHZ LWK7RSLF VLP LODUWR SUHYLRXVJ XLGDQFH
/ HDVH* XDUDQWHHV
$ VDUHVXOWRI DVVLJ QLQJ RXULQWHUHVWLQ REOLJ DWLRQVXQGHUSURSHUW\ OHDVHVDVDFRQGLWLRQ RI WKHUHIUDQFKLVLQJ RI FHUWDLQ UHVWDXUDQWV Z HDUH FRQWLQJ HQWO\ OLDEOHIRUSD\ P HQWRI DSSUR[ LP DWHO\ GRP HVWLF OHDVHV 7 KHVHOHDVHVKDYHYDU\ LQJ WHUP V WKHODWHVWRI Z KLFKH[ SLUHVLQ
$ VRI ’ HFHP EHU WKHHVWLP DWHGP D[ LP XP DP RXQWRI XQGLVFRXQWHGSD\ P HQWVWKH&RP SDQ\ FRXOGEHUHTXLUHGWR P DNHLQWKHHYHQW RI QRQSD\ P HQWE\ WKHSULP DU\ OHVVHHVZ DV P LOOLRQ 7 KLVFRQWLQJ HQWOLDELOLW\ LVQRWLQFOXGHG LQ WKH&RQVROLGDWHG %DODQFH6KHHWRU IXWXUHP LQLP XP OHDVHREOLJ DWLRQ 7 KHIDLUYDOXHRI WKHJ XDUDQWHHLVQRWP DWHULDO
7 KHUHZ HUHQR OHDVHVUHFRUGHGEHWZ HHQUHODWHGSDUWLHV
6XSSOHP HQWDO&DVK ) ORZ 2 WKHU, QIRUP DWLRQ
6XSSOHP HQWDOFDVKIORZ LQIRUP DWLRQUHODWHGWR OHDVHVIRUWKH\ HDUVHQGHG’ HFHP EHU DQG’ HFHP EHU DUHDVIROORZ V
<H D (U Q G H G
L Q W K R X V D Q G V ’ H F H P E H U ’ H F H P E H U
& D V K S D L G | I R U | D | P R X Q W V | L | Q F O X G H G L Q W |
2 S H U D W L Q J | F D V | K | I O R Z V | I U R P I L Q D Q F H O H | |
) L Q D Q F L Q J | F D V | K | I O R Z V | I U R P I L Q D Q F H O H | |
K H P H D V H V
D V H V
2 S H U D W L Q J F D V K I O R Z V I U R P R S H U D W L Q J O H D V H
5 L J K W R I X V H D V V H W V R E W D L Q H G L Q H [ F K
D Q J H
5 L J K W R I X V H D V V H W V R E W D L Q H G L Q H [ F K D Q J H
& D V K U H F H L Y H G I U R P V X E O H D V H L Q F R P H
: H L J K W H G D Y H U D J H U H P D L Q L Q J O H D V H W H U
P L Q
) L Q D Q F H O H D V H V
2 S H U D W L Q J O H D V H V
: H L J K W H G D Y H U D J H G L V F R X Q W U D W H
) L Q D Q F H O H D V H V
2 S H U D W L Q J O H D V H V
D , Q F O X G H G Z L W K L Q W K H F
IK VD HQ WJ H
E \L Q
Q R2 QW K
FH DU
R I X V H D V V H W D P R U W L ] D W L R Q D Q G O H D V H O L D E
3 DSD- RKQ¶V0 DUNHWLQJ ) XQG , QF
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¶VJ LIWFDUGSURJ UDP V
$ VVHWV DQG OLDELOLWLHV RI 3-0 ) Z KLFK DUH UHVWULFWHG LQ WKHLU XVH LQFOXGHG LQ WKH &RQVROLGDWHG %DODQFH 6KHHWV Z HUH DV IROORZ V LQ WKRXVDQGV
’ H F H P E H U ’ H F H P E H U
$ V V H W V
& XH UQ UW D V V H W V
& D V K D Q G F D V K H T X L Y D O H Q W V
$ F F R X Q W V U H F H L Y D E O H Q H W
, Q F R P H W D [ U H F H L Y D E O H
3 U H S D L G H [ S H Q V H V D Q G R W K H U F X U U H Q W D V V H W
7 R W DH OQ W F XD UV UV | H | W | V | ||||||
’ H I H U U H G L | Q | F | R | P | H | W | D | [ H V | Q H W |
7 R W D O D V V H W V | |||||||||
/ L D E L O L W L H V
& XH UQ UW O L D E L O L W L H V
$ F F R X Q W V S D \ D E O H
, Q F R P H D Q G R W K H U W D [ H V S D \ D E O H
$ F F U X H G H [ S H Q V H V D Q G R W K H U F X U U H Q W O L D E L
& X U U H Q W G H I H U U H G U H Y H Q X H
7 R W DH
OQ W
F XO UL UD E L O L W L H V
’ H I H U U H G U H Y H Q X H
7 R W D O O L D E L O L W L H V
5 HYHQXH5 HFRJ QLWLRQ &RQWUDFW%DODQFHV
2 XUFRQWUDFWOLDELOLWLHV SULP DULO\ UHODWH WR IUDQFKLVH IHHV XQUHGHHP HG J LIWFDUG OLDELOLWLHV DQG OR\ DOW\ SURJ UDP REOLJ DWLRQV Z KLFK Z H FODVVLI\ DV’ HIHUUHGUHYHQXHRQWKH&RQVROLGDWHG%DODQFH6KHHWV ’ XULQJ WKH\ HDUVHQGHG’ HFHP EHU DQG’ HFHP EHU WKH &RP SDQ\ UHFRJ QL] HG P LOOLRQDQG P LOOLRQLQUHYHQXH UHVSHFWLYHO\ UHODWHGWR GHIHUUHGUHYHQXH
7 KHFRQWUDFWOLDELOLW\ EDODQFHVDUHLQFOXGHGLQWKHIROORZ LQJ LQWKRXVDQGV
) U D Q F K L V H I H H V D Q G X Q U H G H H P H G J L I W F
& R Q W U D F W / L D E L O L W L ’ H F H P E H U ’ H F H P E H U & K D Q J H
7R W D O F R Q W U D F W O L D E L O L W L H V
D U G V & X V W R P H U O R \ D O W \ S U R J U D P
2 XUFRQWUDFWDVVHWVFRQVLVWSULP DULO\ RI HTXLSP HQWLQFHQWLYHVSURYLGHGWR IUDQFKLVHHV ( TXLSP HQWLQFHQWLYHVDUHUHODWHGWR WKHIXWXUHYDOXH RI FRP P LVVDU\ UHYHQXHWKH&RP SDQ\ Z LOOUHFHLYHRYHUWKHWHUP RI WKHLQFHQWLYHDJ UHHP HQW $ VRI ’ HFHP EHU DQG ’ HFHP EHU
WKH FRQWUDFWDVVHWVZ HUH DSSUR[ LP DWHO\ P LOOLRQ DQG P LOOLRQ UHVSHFWLYHO\ ) RUWKH \ HDUVHQGHG ’ HFHP EHU DQG ’ HFHP EHU UHVSHFWLYHO\ UHYHQXHZ DVUHGXFHGDSSUR[ LP DWHO\ P LOOLRQDQG P LOOLRQIRUWKHDP RUWL] DWLRQRI FRQWUDFWDVVHWV RYHUWKH DSSOLFDEOH FRQWUDFWWHUP V &RQWUDFWDVVHWV DUH LQFOXGHG LQ 3UHSDLG H[ SHQVHV DQG RWKHUFXUUHQWDVVHWV DQG 2 WKHUDVVHWV RQ WKH &RQVROLGDWHG%DODQFH6KHHWV
7 UDQVDFWLRQ 3 ULFH$ OORFDWHGWR WKH5 HP DLQLQJ 3 HUIRUP DQFH2 EOLJ DWLRQV
7 KHIROORZ LQJ WDEOH LQ WKRXVDQGV LQFOXGHVHVWLP DWHG UHYHQXHH[ SHFWHG WR EHUHFRJ QL] HG LQ WKHIXWXUHUHODWHG WR SHUIRUP DQFHREOLJ DWLRQV WKDWDUHXQVDWLVILHGDWWKHHQGRI WKHUHSRUWLQJ SHULRG
3 H U I R U P D Q F H 2 E O L J D W L R Q V E
/ H V V W K D Q
<H D U <H D U V <H D U V <H D U V <H D U V7 KH HD UI W H7 R UW D O
) U D Q F K L V H I H H V
$ SSUR[ LP DWHO\ P LOOLRQ RI DUHD GHYHORSP HQWIHHV UHODWHG WR XQRSHQHG VWRUHV DQG LQWHUQDWLRQDOXQHDUQHG UR\ DOWLHV DUH LQFOXGHG LQ ’ HIHUUHG UHYHQXH 7 LP LQJ RI UHYHQXH UHFRJ QLWLRQ LV GHSHQGHQWXSRQ WKH WLP LQJ RI VWRUH RSHQLQJ V DQG IUDQFKLVHHV¶ UHYHQXHV * LIWFDUG OLDELOLWLHVRI DSSUR[ LP DWHO\ P LOOLRQ LQFOXGHG LQ ’ HIHUUHG UHYHQXH Z LOOEHUHFRJ QL] HG LQ &RP SDQ\ RZ QHG UHVWDXUDQWUHYHQXHVZ KHQ J LIWFDUGVDUHUHGHHP HG 7 KH&RP SDQ\ Z LOOUHFRJ QL] HUHGHP SWLRQ IHHUHYHQXHLQ 2 WKHUUHYHQXHVZ KHQ FDUGVDUHUHGHHP HG DWIUDQFKLVHG UHVWDXUDQWORFDWLRQV
7 KH &RP SDQ\ DSSOLHV WKH SUDFWLFDOH[ SHGLHQWLQ $ 6& DQG GRHV QRWGLVFORVH LQIRUP DWLRQ DERXWUHP DLQLQJ SHUIRUP DQFH REOLJ DWLRQVWKDWKDYHRULJ LQDOH[ SHFWHGGXUDWLRQVRI RQH\ HDURUOHVV
6WRFNKROGHUV¶’ HILFLW
6KDUHV$ XWKRUL]HGDQG2 XWVWDQGLQJ
7 KH&RP SDQ\ KDVDXWKRUL] HG P LOOLRQVKDUHVRI SUHIHUUHGVWRFN P LOOLRQVKDUHVRI FRP P RQVWRFN DQG VKDUHVRI 6HULHV%
3UHIHUUHG 6WRFN 7 KH &RP SDQ\ ¶V RXWVWDQGLQJ VKDUHV RI FRP P RQ VWRFN QHWRI UHSXUFKDVHG FRP P RQ VWRFN Z HUH P LOOLRQ VKDUHV DW ’ HFHP EHU DQG P LOOLRQ VKDUHVDW’ HFHP EHU 7 KHUHZ HUH VKDUHVRI 6HULHV% 3UHIHUUHG 6WRFN RXWVWDQGLQJ DW ’ HFHP EHU DQG’ HFHP EHU
6KDUH5 HSXUFKDVH3 URJ UDP
2 XU%RDUGRI ’ LUHFWRUVKDVDXWKRUL] HGWKHUHSXUFKDVHRI XS WR P LOOLRQRI FRP P RQVWRFNXQGHUDVKDUHUHSXUFKDVHSURJ UDP WKDWEHJ DQ RQ 1 RYHP EHU DQG LVHIIHFWLYHWKURXJ K’ HFHP EHU , QILVFDO DWRWDORI VKDUHVZ LWK DQ DJ J UHJ DWHFRVWRI
P LOOLRQDQGDQDYHUDJ HSULFHRI SHUVKDUHZ HUHUHSXUFKDVHGXQGHUWKLVSURJ UDP ) XQGLQJ IRUWKHVKDUHUHSXUFKDVHSURJ UDP KDVEHHQ SURYLGHGWKURXJ KRXURSHUDWLQJ FDVKIORZ V
7 KH&RP SDQ\ UHSXUFKDVHG P LOOLRQVKDUHVIRU P LOOLRQLQ Z KLFKZ HUHIXQGHGWKURXJ KDFUHGLWIDFLOLW\ RSHUDWLQJ FDVKIORZ VWRFNRSWLRQH[ HUFLVHV DQGFDVKDQGFDVKHTXLYDOHQWV 7 KHUHZ HUHQR VKDUHUHSXUFKDVHVGXULQJ ILVFDO
6XEVHTXHQWWR \ HDUHQG Z H DFTXLUHG DQ DGGLWLRQDO VKDUHV DWDQ DJ J UHJ DWH FRVWRI P LOOLRQ $ SSUR[ LP DWHO\ P LOOLRQ UHP DLQHGDYDLODEOHXQGHUWKH&RP SDQ\ ¶VVKDUHUHSXUFKDVHSURJ UDP DVRI ) HEUXDU\
7 KHWLP LQJ DQGYROXP HRI VKDUHUHSXUFKDVHVP D\ EHH[ HFXWHGDWWKHGLVFUHWLRQRI P DQDJ HP HQWRQDQRSSRUWXQLVWLF EDVLV VXEMHFWWR P DUNHW DQG EXVLQHVVFRQGLWLRQV UHJ XODWRU\ UHTXLUHP HQWVDQG RWKHUIDFWRUV RUSXUVXDQWWR WUDGLQJ SODQVRURWKHUDUUDQJ HP HQWV 5 HSXUFKDVHVXQGHU WKHQHZ SURJ UDP P D\ EHP DGHWKURXJ K RSHQ P DUNHWEORFN DQG SULYDWHO\ QHJ RWLDWHG WUDQVDFWLRQV LQFOXGLQJ 5 XOH E SODQV DWWLP HV DQGLQVXFKDP RXQWVDVP DQDJ HP HQWGHHP VDSSURSULDWH 5 HSXUFKDVHV
XQGHUWKH&RP SDQ\ ¶VVKDUHUHSXUFKDVHSURJ UDP P D\ EHFRP P HQFHG RUVXVSHQGHG IURP WLP HWR WLP HDWWKH&RP SDQ\ ¶VGLVFUHWLRQ Z LWKRXW SULRUQRWLFH ) XQGLQJ IRUWKH VKDUH UHSXUFKDVH SURJ UDP Z LOOEH SURYLGHG WKURXJ K RXUFUHGLWIDFLOLW\ RSHUDWLQJ FDVK IORZ VWRFN RSWLRQ H[ HUFLVHVDQGFDVKDQGFDVKHTXLYDOHQWV
’ LYLGHQGV
7 KH&RP SDQ\ UHFRUGHGGLYLGHQGVRI DSSUR[ LP DWHO\ P LOOLRQIRUWKH\ HDUHQGHG’ HFHP EHU FRQVLVWLQJ RI WKHIROORZ LQJ P LOOLRQSDLGWR FRP P RQVWRFNKROGHUV SHUVKDUH
P LOOLRQ LQ FRP P RQ VWRFN ‡SDVVWKURXJ K· GLYLGHQGVSDLG WR 6HULHV% 3UHIHUUHG 6WRFNKROGHUVRQ DQ DVFRQYHUWHG EDVLV SHUVKDUH DQG
P LOOLRQLQSUHIHUUHGGLYLGHQGVRQWKH6HULHV% 3UHIHUUHG6WRFN RI WKHLQYHVWP HQWSHUDQQXP
7 KH &RP SDQ\ SDLG FRP P RQ VWRFN GLYLGHQGV RI P LOOLRQ DQG P LOOLRQ LQ DQG UHVSHFWLYHO\ $ GGLWLRQDOO\ WKH &RP SDQ\ SDLG FRP P RQ VWRFN ‡SDVVWKURXJ K· GLYLGHQGVWR 6HULHV% 3UHIHUUHG 6WRFNKROGHUVRI P LOOLRQ DQG P LOOLRQ LQ SUHIHUUHG GLYLGHQGVRQWKH6HULHV% 3UHIHUUHG6WRFNLQ 7 KHUHZ HUHQR GLYLGHQGVWR KROGHUVRI 6HULHV% 3UHIHUUHGVWRFNLQ
2 Q -DQXDU\ RXU%RDUG RI ’ LUHFWRUVGHFODUHG DILUVWTXDUWHUGLYLGHQG RI SHUVKDUHRI FRP P RQ VWRFN DSSUR[ LP DWHO\
P LOOLRQZ DVSDLGWR FRP P RQVWRFNKROGHUVDQG P LOOLRQZ DVSDLGDV‡SDVVWKURXJ K· GLYLGHQGVWR KROGHUVRI 6HULHV% 3UHIHUUHG6WRFNRQ DQDVFRQYHUWHGEDVLV 7 KHILUVWTXDUWHUGLYLGHQGRQRXWVWDQGLQJ VKDUHVRI 6HULHV% 3UHIHUUHG6WRFNZ DVDOVR GHFODUHGRQ-DQXDU\
7 KHFRP P RQVWRFNGLYLGHQGZ DVSDLGRQ) HEUXDU\ WR VWRFNKROGHUVRI UHFRUGDVRI WKHFORVHRI EXVLQHVVRQ) HEUXDU\ 7 KH ILUVWTXDUWHUSUHIHUUHGGLYLGHQGRI P LOOLRQZ LOOEHSDLGWR KROGHUVRI 6HULHV% 3UHIHUUHG6WRFNRQ$ SULO
6HULHV% &RQYHUWLEOH3 UHIHUUHG 6WRFN
2 Q) HEUXDU\ WKH&RP SDQ\ HQWHUHGLQWR D6HFXULWLHV3XUFKDVH$ J UHHP HQWWKH‡6HFXULWLHV3XUFKDVH$ J UHHP HQW· Z LWKFHUWDLQIXQGV DIILOLDWHG Z LWK RUP DQDJ HG E\ 6WDUERDUG 9 DOXH/ 3 WRJ HWKHUZ LWK LWVDIILOLDWHV ‡6WDUERDUG· SXUVXDQWWR Z KLFK 6WDUERDUG P DGHD
P LOOLRQ VWUDWHJ LF LQYHVWP HQWLQ WKH &RP SDQ\ ¶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‡DFFUHGLWHGLQYHVWRU· DVGHILQHGLQ5 XOH RI 5 HJ XODWLRQ’ SURP XOJ DWHGXQGHUWKH6HFXULWLHV$ FW
7 KHLQLWLDOGLYLGHQG UDWHRQ WKH6HULHV% 3UHIHUUHG 6WRFN LV SHUDQQXP RI WKHVWDWHG YDOXHRI SHUVKDUH WKH‡6WDWHG 9 DOXH· SD\ DEOHTXDUWHUO\ LQDUUHDUV 2 QWKHWKLUGDQQLYHUVDU\ RI WKHGDWHRI LVVXDQFH HDFKKROGHURI 6HULHV% 3UHIHUUHG6WRFNZ LOOKDYHWKHULJ KWWR LQFUHDVHWKHGLYLGHQG RQ WKHVKDUHVRI 6HULHV% 3UHIHUUHG 6WRFN WR DQG RQ WKHILIWK DQQLYHUVDU\ RI WKHGDWHRI LVVXDQFH HDFK KROGHU Z LOOKDYHWKHULJ KWWR LQFUHDVHWKHGLYLGHQGRQWKHVKDUHVRI 6HULHV% 3UHIHUUHG6WRFNWR VXEMHFWLQHDFKFDVHWR WKH&RP SDQ\ ¶VULJ KWWR UHGHHP VRP HRUDOORI VXFKVKDUHVRI 6HULHV% 3UHIHUUHG6WRFNIRUFDVK 7 KH6HULHV% 3UHIHUUHG6WRFNDOVR SDUWLFLSDWHVRQDQDVFRQYHUWHG EDVLVLQ DQ\ UHJ XODURUVSHFLDOGLYLGHQGVSDLG WR FRP P RQ VWRFNKROGHUV , I DWDQ\ WLP H WKH&RP SDQ\ UHGXFHVWKHUHJ XODUGLYLGHQG SDLG WR FRP P RQVWRFNKROGHUV WKH6HULHV% 3UHIHUUHG6WRFNGLYLGHQGZ LOOUHP DLQWKHVDP HDVLI WKHFRP P RQVWRFNGLYLGHQGKDGQRWEHHQUHGXFHG
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
+ ROGHUVRI WKH6HULHV% 3UHIHUUHG 6WRFN KDYHWKHULJ KWWR YRWHZ LWK FRP P RQ VWRFNKROGHUVRQ DQ DVFRQYHUWHG EDVLVRQ DOOP DWWHUV Z LWKRXW UHJ DUG ▇▇ ▇▇▇ LWDWLRQVRQ FRQYHUVLRQ RWKHUWKDQ WKH( [ FKDQJ H&DS Z KLFK LVHTXDOWR WKHLVVXDQFHRI J UHDWHUWKDQ RI WKHQXP EHURI VKDUHVRI FRP P RQVWRFNRXWVWDQGLQJ DQGVXEMHFWWR FHUWDLQOLP LWDWLRQVLQWKH&HUWLILFDWHRI ’ HVLJ QDWLRQIRUWKH6HULHV% 3UHIHUUHG6WRFN
8 SRQFRQVXP P DWLRQRI DFKDQJ HRI FRQWURORI WKH&RP SDQ\ WKHKROGHUVRI 6HULHV% 3UHIHUUHG6WRFNKDYHWKHULJ KWWR UHTXLUHWKH&RP SDQ\ WR UHSXUFKDVHWKH6HULHV% 3UHIHUUHG6WRFNDWDQDP RXQWHTXDOWR WKHVXP RI L WKHJ UHDWHURI $ WKH6WDWHG9 DOXHRI WKH6HULHV% 3UHIHUUHG 6WRFN EHLQJ UHGHHP HG SOXVDFFUXHG DQG XQSDLG GLYLGHQGVDQG LQWHUHVWDQG % WKH&KDQJ HRI &RQWURO$ V&RQYHUWHG9 DOXHZ LWK UHVSHFWWR WKH 6HULHV% 3UHIHUUHG 6KDUHVEHLQJ UHGHHP HG DQG LL WKH 0 DNH: ▇▇▇▇$ P RXQWDVHDFK RI WKHVH WHUP VLVGHILQHG LQ WKH &HUWLILFDWH RI ’ HVLJ QDWLRQ
6LQFHWKHKROGHUVKDYHWKHRSWLRQWR UHGHHP WKHLUVKDUHVRI 6HULHV% 3UHIHUUHG6WRFNIURP DQGDIWHUWKHHLJ KW\ HDUDQQLYHUVDU\ RI LVVXDQFH Z KLFKP D\ RUP D\ QRWEHH[ HUFLVHG WKHVWRFNLVFRQVLGHUHGFRQWLQJ HQWO\ UHGHHP DEOHDQG DFFRUGLQJ O\ LVFODVVLILHGDVWHP SRUDU\ HTXLW\ RI P LOOLRQRQWKH&RQVROLGDWHG%DODQFH6KHHWDVRI ’ HFHP EHU 7 KLVDP RXQWLVUHSRUWHGQHWRI P LOOLRQRI UHODWHGLVVXDQFH
FRVWV , Q DFFRUGDQFH Z LWK DSSOLFDEOH DFFRXQWLQJ J XLGDQFH WKH &RP SDQ\ DOVR UHFRUGHG D RQHWLP H P DUN WR P DUNHWWHP SRUDU\ HTXLW\ DGMXVWP HQWRI P LOOLRQ LQ IRUWKHLQFUHDVHLQ IDLUYDOXHIRUERWK WKH P LOOLRQ RSWLRQ H[ HUFLVHG E\ 6WDUERDUG DQG WKHVKDUHV SXUFKDVHGE\ IUDQFKLVHHVIRUWKHSHULRGRI WLP HWKHRSWLRQZ DVRXWVWDQGLQJ 7 KHP DUN WR P DUNHWWHP SRUDU\ HTXLW\ DGMXVWP HQWZ DVUHFRUGHG LQ * HQHUDODQG DGP LQLVWUDWLYH H[ SHQVHVIRU P LOOLRQ 6WDUERDUG DQG DVD UHGXFWLRQ WR 1 RUWK $ P HULFD IUDQFKLVH UR\ DOWLHVDQG IHHVRI
P LOOLRQ ) UDQFKLVHHV Z LWKLQ WKH&RQVROLGDWHG 6WDWHP HQWRI 2 SHUDWLRQVLQ Z LWK QR DVVRFLDWHG WD[ EHQHILW 2 YHUWKHLQLWLDOHLJ KW
\ HDUWHUP WKH P LOOLRQLQYHVWP HQWZ LOOEHDFFUHWHGWR WKHUHODWHGUHGHP SWLRQYDOXHRI DSSUR[ LP DWHO\ P LOOLRQDVDQDGMXVWP HQW WR 5 HWDLQHG( DUQLQJ V
7 KHIROORZ LQJ VXP P DUL] HVFKDQJ HVWR RXU6HULHV% 3UHIHUUHG6WRFN LQWKRXVDQGV
%DODQFHDW’ HFHP EHU †
, VVXDQFHRI SUHIHUUHGVWRFN
2 QHWLP HP DUN WR P DUNHWDGMXVWP HQW
, VVXDQFHFRVWV
$ FFUHWLRQ
%DODQFHDW’ HFHP EHU
7D[ GHGXFWLRQRQLVVXDQFHFRVWV
$ FFUHWLRQ
%DODQFHDW’ HFHP EHU
( DUQLQJ V / RVV SHU6KDUH
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
%DVLF HDUQLQJ V ORVV SHUFRP P RQVKDUHDUHFRP SXWHGE\ GLYLGLQJ QHWLQFRP H ORVV DWWULEXWDEOHWR FRP P RQVKDUHKROGHUVE\ WKHZ HLJ KWHG DYHUDJ HFRP P RQVKDUHVRXWVWDQGLQJ ’ LOXWHGHDUQLQJ V ORVV SHUFRP P RQVKDUHDUHFRP SXWHGE\ GLYLGLQJ WKHQHWLQFRP H ORVV DWWULEXWDEOH WR FRP P RQ VKDUHKROGHUV E\ WKH GLOXWHG Z HLJ KWHG DYHUDJ H FRP P RQ VKDUHV RXWVWDQGLQJ ’ LOXWHG Z HLJ KWHG DYHUDJ H FRP P RQ VKDUHV RXWVWDQGLQJ FRQVLVWRI EDVLF Z HLJ KWHG DYHUDJ H FRP P RQ VKDUHVRXWVWDQGLQJ SOXVZ HLJ KWHG DYHUDJ H DZ DUGVRXWVWDQGLQJ XQGHURXUHTXLW\ FRP SHQVDWLRQSODQV Z KLFKDUHGLOXWLYHVHFXULWLHV
7 KHFDOFXODWLRQVRI EDVLF HDUQLQJ V ORVV SHUFRP P RQVKDUHDQGGLOXWHGHDUQLQJ V ORVV SHUFRP P RQVKDUHIRUWKH\ HDUVHQGHG’ HFHP EHU ’ HFHP EHU DQG’ HFHP EHU DUHDVIROORZ V LQWKRXVDQGV H[ FHSWSHUVKDUHGDWD
%DVLF HDUQLQJ V ORVV SHUFRP P RQ VKDUH | |||||
1 HWLQFRP HDWWULEXWDEOHWR WKH&RP SDQ\ | |||||
’ LYLGHQGVSDLGWR SDUWLFLSDWLQJ VHFXULWLHVDQGDFFUHWLRQ | † | ||||
1 HWLQFRP HDWWULEXWDEOHWR SDUWLFLSDWLQJ VHFXULWLHV | † † | ||||
1 HWLQFRP H ORVV DWWULEXWDEOHWR FRP P RQVKDUHKROGHUV | |||||
%DVLF Z HLJ KWHGDYHUDJ HFRP P RQVKDUHVRXWVWDQGLQJ | |||||
%DVLF HDUQLQJ V ORVV SHUFRP P RQVKDUH | |||||
’ LOXWHG HDUQLQJ V ORVV SHUFRP P RQ VKDUH | |||||
1 HWLQFRP H ORVV DWWULEXWDEOHWR FRP P RQVKDUHKROGHUV | |||||
: HLJ KWHGDYHUDJ HFRP P RQVKDUHVRXWVWDQGLQJ | |||||
’ LOXWLYHHIIHFWRI RXWVWDQGLQJ HTXLW\ DZ DUGV D | † | ||||
’ LOXWHGZ HLJ KWHGDYHUDJ HFRP P RQVKDUHVRXWVWDQGLQJ E | |||||
’ LOXWHGHDUQLQJ V ORVV SHUFRP P RQVKDUH | |||||
D 6KDUHVVXEMHFWWR RSWLRQVWR SXUFKDVHFRP P RQVWRFNZ LWKDQH[ HUFLVHSULFHJ UHDWHUWKDQWKHDYHUDJ HP DUNHWSULFHIRUWKH\ HDUZ HUHQRW LQFOXGHG LQ WKH FRP SXWDWLRQ RI GLOXWHG HDUQLQJ VSHUFRP P RQ VKDUH EHFDXVH WKH HIIHFWZ RXOG KDYH EHHQ DQWLGLOXWLYH 7 KH Z HLJ KWHG DYHUDJ HQXP EHURI VKDUHVVXEMHFWWR DQWLGLOXWLYHRSWLRQVZ DV LQ DQG LQ UHVSHFWLYHO\ QRQHLQ
E 7 KH &RP SDQ\ KDG VKDUHV RI 6HULHV % 3UHIHUUHG 6WRFN RXWVWDQGLQJ DV RI ’ HFHP EHU DQG ’ HFHP EHU UHVSHFWLYHO\ ) RUWKHIXOO\ GLOXWHGFDOFXODWLRQ WKH6HULHV% 3UHIHUUHGVWRFNGLYLGHQGVZ HUHDGGHGEDFNWR QHWLQFRP H ORVV DWWULEXWDEOH WR FRP P RQ VKDUHKROGHUV 7 KH&RP SDQ\ WKHQ DSSOLHG WKHLI FRQYHUWHG P HWKRG WR FDOFXODWHGLOXWLRQ RQ WKH6HULHV% 3UHIHUUHG 6WRFN Z KLFKUHVXOWHGLQ P LOOLRQDGGLWLRQDOFRP P RQVKDUHV 7 KLVFDOFXODWLRQZ DVDQWLGLOXWLYHIRUERWKSHULRGVSUHVHQWHGDQGDVVXFKZ DV H[ FOXGHG
6HH1 RWH IRUDGGLWLRQDOLQIRUP DWLRQUHJ DUGLQJ RXUHTXLW\ DZ DUGV LQFOXGLQJ UHVWULFWHGVWRFN
) DLU9 DOXH0 HDVXUHP HQWVDQG ’ LVFORVXUHV
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
&HUWDLQ DVVHWVDQG OLDELOLWLHVDUHP HDVXUHG DWIDLUYDOXHRQ DUHFXUULQJ EDVLVDQG DUHUHTXLUHG WR EHFODVVLILHG DQG GLVFORVHG LQ RQHRI WKH IROORZ LQJ FDWHJ RULHV
/ HYHO 4 XRWHGP DUNHWSULFHVLQDFWLYHP DUNHWVIRULGHQWLFDODVVHWVRUOLDELOLWLHV
/ HYHO 2 EVHUYDEOHP DUNHWEDVHGLQSXWVRUXQREVHUYDEOHLQSXWVWKDWDUHFRUURERUDWHGE\ P DUNHWGDWD
/ HYHO 8 QREVHUYDEOHLQSXWVWKDWDUHQRWFRUURERUDWHGE\ P DUNHWGDWD
2 XUILQDQFLDODVVHWVDQG OLDELOLWLHVWKDWZ HUHP HDVXUHG DWIDLUYDOXHRQ DUHFXUULQJ EDVLVDVRI ’ HFHP EHU DQG ’ HFHP EHU DUHDVIROORZ V LQWKRXVDQGV
&DUU\ LQJ ) DLU9 DOXH0 HDVXUHP HQWV
’ HFHP EHU
9 DOXH / HYHO / HYHO / HYHO
) LQDQFLDODVVHWV
&DVKVXUUHQGHUYDOXHRI OLIHLQVXUDQFHSROLFLHV D † †
) LQDQFLDOOLDELOLWLHV
, QWHUHVWUDWHVZ DSV E † †
’ HFHP EHU
) LQDQFLDODVVHWV
&DVKVXUUHQGHUYDOXHRI OLIHLQVXUDQFHSROLFLHV D † †
) LQDQFLDOOLDELOLWLHV
, QWHUHVWUDWHVZ DSV E † †
D 5 HSUHVHQWVOLIHLQVXUDQFHSROLFLHVKHOGLQRXUQRQ TXDOLILHGGHIHUUHGFRP SHQVDWLRQSODQ
E 7 KH IDLUYDOXH RI RXULQWHUHVWUDWH VZ DSVLVEDVHG RQ WKH VXP RI DOOIXWXUH QHWSUHVHQWYDOXH FDVK IORZ V 7 KH IXWXUH FDVK IORZ VDUH GHULYHG EDVHG RQ WKH WHUP V RI RXULQWHUHVWUDWH VZ DSV DV Z HOODV FRQVLGHULQJ SXEOLVKHG GLVFRXQWIDFWRUV DQG SURMHFWHG / RQGRQ
, QWHUEDQN2 IIHUHG5 DWHV ‡/ , %2 5 ·
7 KHUHZ HUHQR WUDQVIHUVDP RQJ OHYHOVZ LWKLQWKHIDLUYDOXHKLHUDUFK\ GXULQJ ILVFDO RU
1 RQFRQWUROOLQJ , QWHUHVWV
3DSD -RKQ¶VKDVIRXUMRLQWYHQWXUH DUUDQJ HP HQWVLQ Z KLFK WKHUH DUH QRQFRQWUROOLQJ LQWHUHVWVKHOG E\ WKLUG SDUWLHV 7 KHVH MRLQWYHQWXUH DUUDQJ HP HQWV LQFOXGH UHVWDXUDQWV DQG UHVWDXUDQWV DW’ HFHP EHU DQG ’ HFHP EHU UHVSHFWLYHO\ 1 HWLQFRP H DWWULEXWDEOHWR WKHVHMRLQWYHQWXUHVIRUWKH\ HDUVHQGHG’ HFHP EHU ’ HFHP EHU DQG’ HFHP EHU Z HUHDVIROORZ V LQ WKRXVDQGV
3DSD-RKQ¶V, QWHUQDWLRQDO, QF 1 RQFRQWUROOLQJ LQWHUHVWV
7RWDOQHWLQFRP H
$ VRI ’ HFHP EHU WKHQRQFRQWUROOLQJ LQWHUHVWKROGHURI WZ R MRLQWYHQWXUHVKDYHWKHRSWLRQWR UHTXLUHWKH&RP SDQ\ WR SXUFKDVHWKHLU LQWHUHVWWKRXJ K QRWFXUUHQWO\ UHGHHP DEOH 6LQFH UHGHP SWLRQ RI WKH QRQFRQWUROOLQJ LQWHUHVWV LV RXWVLGH RI WKH &RP SDQ\ ¶V FRQWURO WKH QRQFRQWUROOLQJ LQWHUHVWVDUHSUHVHQWHGLQWKHFDSWLRQ‡5 HGHHP DEOHQRQFRQWUROOLQJ LQWHUHVWV· LQWKH&RQVROLGDWHG%DODQFH6KHHWV
7 KHIROORZ LQJ VXP P DUL] HVFKDQJ HVLQRXUUHGHHP DEOHQRQFRQWUROOLQJ LQWHUHVWVLQ DQG LQWKRXVDQGV
%DODQFHDW’ HFHP EHU 1 HWORVV
&RQWULEXWLRQV
%DODQFHDW’ HFHP EHU
1 HWLQFRP H ’ LVWULEXWLRQV
%DODQFHDW’ HFHP EHU
’ LYHVWLWXUHV
, Q WKH IRXUWK TXDUWHURI WKH &RP SDQ\ FRP SOHWHG WKH UHIUDQFKLVLQJ RI &RP SDQ\ RZ QHG UHVWDXUDQWV LQ 6RXWK ) ORULGD IRU
P LOOLRQLQFDVKSURFHHGV 7 KHVDOHUHVXOWHGLQDSUHWD[ J DLQRI P LOOLRQVKRZ QLQ5 HIUDQFKLVLQJ J DLQV ORVVHV QHWRQWKH&RQVROLGDWHG 6WDWHP HQWRI 2 SHUDWLRQV , QFRQQHFWLRQZ LWKWKHGLYHVWLWXUH Z HZ URWHRII DQDOORFDWLRQRI WKHJ RRGZ LOOUHODWHGWR WKHGRP HVWLF &RP SDQ\ RZ QHG UHVWDXUDQWVUHSRUWLQJ XQLWRI P LOOLRQ Z KLFK UHSUHVHQWVWKHSUR UDWDIDLUYDOXHRI WKHUHIUDQFKLVHG UHVWDXUDQWVLQ FRP SDULVRQ WR WKHWRWDOIDLUYDOXHRI WKH&RP SDQ\ RZ QHGUHVWDXUDQWVUHSRUWLQJ XQLW
, Q WKH WKLUG TXDUWHURI WKH &RP SDQ\ UHIUDQFKLVHG &RP SDQ\ RZ QHG UHVWDXUDQWV LQ 0 DFRQ * HRUJ LD IRU P LOOLRQ LQ FDVK SURFHHGV 7 KHVDOHUHVXOWHG LQ DSUHWD[ J DLQ RI P LOOLRQ VKRZ Q LQ 5 HIUDQFKLVLQJ J DLQV ORVVHV QHWRQ WKH&RQVROLGDWHG 6WDWHP HQWRI 2 SHUDWLRQV , Q FRQQHFWLRQ Z LWK WKH GLYHVWLWXUH Z H Z URWH RII DQ DOORFDWLRQ RI WKH J RRGZ LOOUHODWHG WR WKH GRP HVWLF &RP SDQ\ RZ QHG UHVWDXUDQWVUHSRUWLQJ XQLWRI P LOOLRQ Z KLFKUHSUHVHQWVWKHSUR UDWDIDLUYDOXHRI WKHUHIUDQFKLVHGUHVWDXUDQWVLQFRP SDULVRQWR WKHWRWDO IDLUYDOXHRI WKH&RP SDQ\ RZ QHGUHVWDXUDQWVUHSRUWLQJ XQLW
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¶ UHSRUWLQJ XQLW : HUHFRUGHG DSUHWD[ UHIUDQFKLVLQJ J DLQRI DSSUR[ LP DWHO\ DVVRFLDWHGZ LWKWKHVDOHRI WKHUHVWDXUDQWV
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
, Q WKHILUVWTXDUWHURI WKH&RP SDQ\ UHIUDQFKLVHG UHVWDXUDQWVRZ QHG WKURXJ KDMRLQWYHQWXUHLQ WKH’ HQYHU &RORUDGR P DUNHW 7 KH &RP SDQ\ KHOG D RZ QHUVKLS VKDUH LQ WKH UHVWDXUDQWV EHLQJ UHIUDQFKLVHG 7 KH QRQFRQWUROOLQJ LQWHUHVWSRUWLRQ RI WKH MRLQWYHQWXUH DUUDQJ HP HQWZ DVSUHYLRXVO\ UHFRUGHGDWUHGHP SWLRQYDOXHZ LWKLQWKH&RQVROLGDWHG%DODQFH6KHHW 7RWDOFRQVLGHUDWLRQIRUWKHDVVHWVDOHRI WKHUHVWDXUDQWVZ DV P LOOLRQ FRQVLVWLQJ RI FDVK SURFHHGVRI P LOOLRQ LQFOXGLQJ FDVK SDLG IRUYDULRXVZ RUNLQJ FDSLWDOLWHP V DQG QRWHVILQDQFHGE\ 3DSD-RKQ¶VIRU P LOOLRQ
, QFRQQHFWLRQZ LWKWKHGLYHVWLWXUH Z HZ URWHRII DQDOORFDWLRQRI WKHJ RRGZ LOOUHODWHGWR WKHGRP HVWLF &RP SDQ\ RZ QHGUHVWDXUDQWVUHSRUWLQJ XQLWRI Z KLFK UHSUHVHQWV WKH SUR UDWD IDLUYDOXH RI WKH UHIUDQFKLVHG UHVWDXUDQWV LQ FRP SDULVRQ WR WKH WRWDOIDLUYDOXH RI WKH &RP SDQ\ RZ QHGUHVWDXUDQWV¶UHSRUWLQJ XQLW: HUHFRUGHGDSUHWD[ UHIUDQFKLVLQJ J DLQRI DSSUR[ LP DWHO\
* RRGZ LOO
7 KHIROORZ LQJ VXP P DUL] HVFKDQJ HVLQWKH&RP SDQ\ ¶VJ RRGZ LOOE\ UHSRUWDEOHVHJ P HQWLQWKRXVDQGV
’ RP HVWLF &RP SDQ\
RZ QHG
5 HVWDXUDQWV , QWHUQDWLRQDO D $ OO2 WKHUV 7 RWDO
%DODQFHDVRI ’ HFHP EHU
’ LYHVWLWXUHV E | † | † | |
) RUHLJ QFXUUHQF\ DGMXVWP HQWV | † | † | |
%DODQFHDVRI ’ HFHP EHU | |||
) RUHLJ QFXUUHQF\ DGMXVWP HQWV | † | † | |
%DODQFHDVRI ’ HFHP EHU |
D 7 KH LQWHUQDWLRQDOJ RRGZ LOOEDODQFHVIRUDOO\ HDUVSUHVHQWHG DUH QHWRI DFFXP XODWHG LP SDLUP HQWRI P LOOLRQ DVVRFLDWHG Z LWK RXU 3-8 . UHSRUWLQJ XQLW
E , QFOXGHV UHVWDXUDQWVORFDWHGSULP DULO\ LQWZ R GRP HVWLF P DUNHWV
’ HEW
/ RQJ WHUP GHEWQHWFRQVLVWVRI WKHIROORZ LQJ LQWKRXVDQGV
’ HFHP EHU ’ HFHP EHU
2 XWVWDQGLQJ GHEW
8 QDP RUWL] HGGHEWLVVXDQFHFRVWV
&XUUHQWSRUWLRQRI ORQJ WHUP GHEW 7RWDOORQJ WHUP GHEWQHW
7 KH &RP SDQ\ KDVD VHFXUHG UHYROYLQJ FUHGLWIDFLOLW\ Z LWK DYDLODEOH ERUURZ LQJ VRI P LOOLRQ WKH ‡5 HYROYLQJ ) DFLOLW\ · RI Z KLFK P LOOLRQZ DVRXWVWDQGLQJ DVRI ’ HFHP EHU DQGDVHFXUHGWHUP ORDQIDFLOLW\ Z LWKDQRXWVWDQGLQJ EDODQFHRI P LOOLRQ WKH
‡7HUP / RDQ ) DFLOLW\ · DQG WRJ HWKHUZ LWK WKH5 HYROYLQJ ) DFLOLW\ WKH‡3-, ) DFLOLWLHV· 7 KH3-, ) DFLOLWLHVP DWXUHRQ$ XJ XVW 7 KH ORDQVXQGHUWKH3-, ) DFLOLWLHVDFFUXHLQWHUHVWDWDSHUDQQXP UDWHHTXDOWR DWWKH&RP SDQ\ ¶VHOHFWLRQ HLWKHU/ , %2 5 SOXVDP DUJ LQ UDQJ LQJ IURP WR EDVLVSRLQWVRUDEDVHUDWH J HQHUDOO\ GHWHUP LQHG E\ DSULP HUDWH IHGHUDOIXQGVUDWHRU/ , %2 5 SOXV SOXVDP DUJ LQ UDQJ LQJ IURP WR EDVLVSRLQWV , QHDFKFDVH WKHDFWXDOP DUJ LQLVGHWHUP LQHGDFFRUGLQJ WR DUDWLR RI WKH&RP SDQ\ ¶VWRWDOLQGHEWHGQHVV WR HDUQLQJ VEHIRUH LQWHUHVWWD[ HV GHSUHFLDWLRQ DQG DP RUWL] DWLRQ ‡( %, 7 ’ $ · IRUWKH WKHQ P RVWUHFHQWO\ HQGHG IRXUTXDUWHUSHULRG WKH
‡/ HYHUDJ H5 DWLR· 7 KH&UHGLW$ J UHHP HQWJ RYHUQLQJ WKH3-, ) DFLOLWLHV WKH‡3-, &UHGLW$ J UHHP HQW· SODFHVFHUWDLQ FXVWRP DU\ UHVWULFWLRQV XSRQ WKH&RP SDQ\ EDVHG RQ LWVILQDQFLDOFRYHQDQWV 7 KHVHLQFOXGHOLP LWLQJ WKHUHSXUFKDVHRI FRP P RQ VWRFN DQG QRWLQFUHDVLQJ WKHFDVK GLYLGHQG DERYHWKHOHVVHURI SHUVKDUHSHUTXDUWHURU P LOOLRQ SHUILVFDO\ HDULI WKH&RP SDQ\ ¶VOHYHUDJ HUDWLR LVDERYH WR
4 XDUWHUO\ DP RUWL] DWLRQSD\ P HQWVDUHUHTXLUHGWR EHP DGHRQWKH7HUP / RDQ) DFLOLW\ LQWKHDP RXQWRI P LOOLRQ / RDQVRXWVWDQGLQJ XQGHUWKH 3-, ) DFLOLWLHV P D\ EH SUHSDLG DWDQ\ WLP H Z LWKRXWSUHP LXP RUSHQDOW\ VXEMHFWWR FXVWRP DU\ EUHDNDJ H FRVWV LQ WKH FDVH RI ERUURZ LQJ VIRUZ KLFKD/ , %2 5 UDWHHOHFWLRQLVLQHIIHFW 8 S WR P LOOLRQRI WKH5 HYROYLQJ ) DFLOLW\ P D\ EHDGYDQFHGLQFHUWDLQDJ UHHG IRUHLJ QFXUUHQFLHV LQFOXGLQJ ( XURV 3RXQGV6WHUOLQJ &DQDGLDQ’ ROODUV -DSDQHVH<HQ DQG0 H[ LFDQ3HVRV
7 KH3-, &UHGLW$ J UHHP HQWFRQWDLQVFXVWRP DU\ DIILUP DWLYHDQGQHJ DWLYHFRYHQDQWV LQFOXGLQJ ILQDQFLDOFRYHQDQWVUHTXLULQJ WKHP DLQWHQDQFH RI WKH/ HYHUDJ H5 DWLR DQGDVSHFLILHGIL[ HGFKDUJ HFRYHUDJ HUDWLR 7 KH3-, &UHGLW$ J UHHP HQWDOORZ VIRUDSHUP LWWHG/ HYHUDJ H5 DWLR RI
WR GHFUHDVLQJ RYHUWLP HWR WR E\ DQGDIL[ HGFKDUJ HFRYHUDJ HUDWLR RI WR Z KLFKLQFUHDVHVWR WR LQ DQGWKHUHDIWHU: HZ HUHLQFRP SOLDQFHZ LWKWKHVHILQDQFLDOFRYHQDQWVDW’ HFHP EHU
8 QGHUWKH3-, &UHGLW$ J UHHP HQWZ HKDYHWKHRSWLRQWR LQFUHDVHWKH5 HYROYLQJ ) DFLOLW\ RUWKH7HUP / RDQ) DFLOLW\ LQDQDJ J UHJ DWHDP RXQWRI XS WR P LOOLRQ VXEMHFWWR WKH / HYHUDJ H 5 DWLR RI WKH &RP SDQ\ QRWH[ FHHGLQJ WR 7 KH &RP SDQ\ DQG FHUWDLQ GLUHFWDQG LQGLUHFWGRP HVWLF VXEVLGLDULHVDUHUHTXLUHG WR J UDQWDVHFXULW\ LQWHUHVWLQ VXEVWDQWLDOO\ DOORI WKHFDSLWDOVWRFN DQG HTXLW\ LQWHUHVWVRI WKHLU UHVSHFWLYHGRP HVWLF DQGILUVWWLHUP DWHULDOIRUHLJ QVXEVLGLDULHVWR VHFXUHWKHREOLJ DWLRQVRZ HGXQGHUWKH3-, ) DFLOLWLHV
2 XURXWVWDQGLQJ GHEWRI P LOOLRQ DW’ HFHP EHU XQGHUWKH3-, ) DFLOLWLHVZ DVFRP SRVHG RI P LOOLRQ RXWVWDQGLQJ XQGHU WKH7HUP / RDQ ) DFLOLW\ DQG P LOOLRQ RXWVWDQGLQJ XQGHUWKH5 HYROYLQJ ) DFLOLW\ , QFOXGLQJ RXWVWDQGLQJ OHWWHUVRI FUHGLWWKH&RP SDQ\ ¶V UHP DLQLQJ DYDLODELOLW\ XQGHUWKH3-, ) DFLOLWLHVDW’ HFHP EHU Z DVDSSUR[ LP DWHO\ P LOOLRQ
$ VRI ’ HFHP EHU WKH&RP SDQ\ KDG DSSUR[ LP DWHO\ P LOOLRQ LQ XQDP RUWL] HG GHEWLVVXDQFHFRVWV Z KLFK DUHEHLQJ DP RUWL] HG LQWR LQWHUHVWH[ SHQVHRYHUWKHWHUP RI WKH3-, ) DFLOLWLHV
: H DWWHP SWWR P LQLP L] H LQWHUHVWUDWH ULVN H[ SRVXUH E\ IL[ LQJ RXUUDWH WKURXJ K WKH XWLOL] DWLRQ RI LQWHUHVWUDWH VZ DSV Z KLFK DUH GHULYDWLYH ILQDQFLDOLQVWUXP HQWV 2 XUVZ DSV DUH HQWHUHG LQWR Z LWK ILQDQFLDOLQVWLWXWLRQV WKDWSDUWLFLSDWH LQ WKH 3-, &UHGLW$ J UHHP HQW%\ XVLQJ D GHULYDWLYHLQVWUXP HQWWR KHGJ HH[ SRVXUHVWR FKDQJ HVLQ LQWHUHVWUDWHV Z HH[ SRVHRXUVHOYHVWR FUHGLWULVN GXHWR WKHSRVVLEOHIDLOXUHRI WKH FRXQWHUSDUW\ WR SHUIRUP XQGHUWKHWHUP VRI WKHGHULYDWLYHFRQWUDFW
: HXVHLQWHUHVWUDWHVZ DSVWR KHGJ HDJ DLQVWWKHHIIHFWVRI SRWHQWLDOLQWHUHVWUDWHLQFUHDVHVRQERUURZ LQJ VXQGHURXU3-, ) DFLOLWLHV
$ VRI ’ HFHP EHU Z HKDYHWKHIROORZ LQJ LQWHUHVWUDWHVZ DS DJ UHHP HQWVZ LWKDWRWDOQRWLRQDOYDOXHRI P LOOLRQ
( IIHFWLYH’ DWHV ) ORDWLQJ 5 DWH’ HEW ) L[ HG 5 DWHV
$ SULO WKURXJ K$ SULO P LOOLRQ
$ SULO WKURXJ K$ SULO P LOOLRQ
$ SULO WKURXJ K$ SULO P LOOLRQ
-DQXDU\ WKURXJ K$ XJ XVW P LOOLRQ
-DQXDU\ WKURXJ K$ XJ XVW P LOOLRQ
-DQXDU\ WKURXJ K$ XJ XVW P LOOLRQ
7 KH J DLQ RUORVVRQ WKH VZ DSVLVUHFRJ QL] HG LQ $ FFXP XODWHG RWKHUFRP SUHKHQVLYH ORVVDQG UHFODVVLILHG LQWR HDUQLQJ VDVDGMXVWP HQWVWR LQWHUHVWH[ SHQVH LQ WKH VDP HSHULRG RUSHULRGVGXULQJ Z KLFK WKH VZ DSVDIIHFWHDUQLQJ V * DLQVRUORVVHVRQ WKH VZ DSVUHSUHVHQWLQJ KHGJ H FRP SRQHQWVH[ FOXGHGIURP WKHDVVHVVP HQWRI HIIHFWLYHQHVVDUHUHFRJ QL] HGLQFXUUHQWHDUQLQJ V
7 KH IROORZ LQJ WDEOH SURYLGHV LQIRUP DWLRQ RQ WKH ORFDWLRQ DQG DP RXQWV RI RXU VZ DSV LQ WKH DFFRP SDQ\ LQJ &RQVROLGDWHG ) LQDQFLDO
6WDWHP HQWV LQWKRXVDQGV
%DODQFH6KHHW/ RFDWLRQ
, QWHUHVW5 DWH6Z DS ’ HULYDWLYHV
) DLU9 DOXH ) DLU9 DOXH
’ HFHP EHU ’ HFHP EHU
2 WKHUFXUUHQWDQGORQJ WHUP OLDELOLWLHV
7 KHHIIHFWRI GHULYDWLYHLQVWUXP HQWVRQWKHDFFRP SDQ\ LQJ &RQVROLGDWHG) LQDQFLDO6WDWHP HQWVLVDVIROORZ V LQWKRXVDQGV
/ RFDWLRQ RI * DLQ | $ P RXQWRI * DLQ | |||
’ HULYDWLYHV | $ P RXQWRI * DLQ RU | RU / RVV | RU / RVV | 7 RWDO, QWHUHVW( [ SHQVH |
&DVK ) ORZ | / RVV 5 HFRJ QL] HG | 5 HFODVVLILHG IURP | 5 HFODVVLILHG IURP | RQ &RQVROLGDWHG |
+ HGJ LQJ | LQ$ 2 &/ | $ 2 &/ LQWR | $ 2 &/ LQWR | 6WDWHP HQWVRI |
5 HODWLRQVKLSV RQ’ HULYDWLYH , QFRP H , QFRP H 2 SHUDWLRQV
, QWHUHVWUDWHVZ DSV
, QWHUHVWH[ SHQVH
, QWHUHVWH[ SHQVH
, QWHUHVWH[ SHQVH
7 KHZ HLJ KWHG DYHUDJ HLQWHUHVWUDWHVRQ RXU3-, ) DFLOLWLHV LQFOXGLQJ WKHLP SDFWRI WKHLQWHUHVWUDWHVZ DS DJ UHHP HQWV Z HUH DQG LQILVFDO DQG UHVSHFWLYHO\ , QWHUHVWSDLG LQFOXGLQJ SD\ P HQWVP DGHRUUHFHLYHGXQGHUWKHVZ DSV Z DV P LOOLRQ
LQ P LOOLRQ LQ DQG P LOOLRQ LQ $ VRI ’ HFHP EHU WKHSRUWLRQ RI WKHDJ J UHJ DWH P LOOLRQ LQWHUHVW UDWHVZ DS OLDELOLW\ WKDWZ RXOGEHUHFODVVLILHGLQWR LQWHUHVWH[ SHQVHGXULQJ WKHQH[ WWZ HOYHP RQWKVDSSUR[ LP DWHV P LOOLRQ
3-0 ) KDV D P LOOLRQ UHYROYLQJ OLQH RI FUHGLW WKH ‡3-0 ) 5 HYROYLQJ ) DFLOLW\ · SXUVXDQWWR D 5 HYROYLQJ / RDQ $ J UHHP HQWGDWHG
6HSWHP EHU DVDP HQGHG WKH‡3-0 ) / RDQ$ J UHHP HQW· Z LWK 8 6 %DQN 1 DWLRQDO$ VVRFLDWLRQ DVOHQGHU 7 KH3-0 ) 5 HYROYLQJ
) DFLOLW\ LVVHFXUHG E\ VXEVWDQWLDOO\ DOODVVHWVRI 3-0 ) 7 KH3-0 ) 5 HYROYLQJ ) DFLOLW\ P DWXUHVRQ 6HSWHP EHU 7 KHERUURZ LQJ V XQGHUWKH3-0 ) 5 HYROYLQJ ) DFLOLW\ DFFUXHLQWHUHVWDWDYDULDEOHUDWHRI WKHRQHP RQWK/ , %2 5 SOXV 7 KHDSSOLFDEOHLQWHUHVWUDWHVRQ WKH3-0 ) 5 HYROYLQJ ) DFLOLW\ Z HUH DQG LQ ILVFDO DQG UHVSHFWLYHO\ 7 KHUHZ DVQR EDODQFHRXWVWDQGLQJ XQGHUWKH3-0 ) 5 HYROYLQJ ) DFLOLW\ DVRI ’ HFHP EHU DQG ’ HFHP EHU 7 KH3-0 ) RSHUDWLQJ UHVXOWVDQG WKHUHODWHG GHEW RXWVWDQGLQJ GR QRWLP SDFWWKHILQDQFLDOFRYHQDQWVXQGHUWKH3-, &UHGLW$ J UHHP HQW
3 URSHUW\ DQG ( TXLSP HQW1 HW
3URSHUW\ DQGHTXLSP HQWQHWFRQVLVWVRI WKHIROORZ LQJ LQWKRXVDQGV
’ HFHP EHU ’ HFHP EHU
/ DQG
%XLOGLQJ VDQGLP SURYHP HQWV
/ HDVHKROGLP SURYHP HQWV ( TXLSP HQWDQGRWKHU
&RQVWUXFWLRQLQSURJ UHVV 7RWDOSURSHUW\ DQGHTXLSP HQW
$ FFXP XODWHGGHSUHFLDWLRQDQGDP RUWL] DWLRQ
3URSHUW\ DQGHTXLSP HQWQHW
$ FFUXHG ( [ SHQVHVDQG 2 WKHU&XUUHQW/ LDELOLWLHV
$ FFUXHGH[ SHQVHVDQGRWKHUFXUUHQWOLDELOLWLHVFRQVLVWRI WKHIROORZ LQJ LQWKRXVDQGV
’ HFHP EHU ’ HFHP EHU
0 DUNHWLQJ 6DODULHV EHQHILWVDQGERQXVHV
, QVXUDQFHUHVHUYHV FXUUHQW 3XUFKDVHV
, QWHUHVWUDWHVZ DSV FXUUHQWSRUWLRQ 6WUDWHJ LF FRUSRUDWHUHRUJ DQL] DWLRQFRVWV †
’ HSRVLWV &RQVXOWLQJ DQGSURIHVVLRQDOIHHV
5 HQW 2 WKHU
7RWDO 2 WKHU/ RQJ WHUP / LDELOLWLHV
2 WKHUORQJ WHUP OLDELOLWLHVFRQVLVWRI WKHIROORZ LQJ LQWKRXVDQGV
’ HFHP EHU ’ HFHP EHU
, QVXUDQFHUHVHUYHV ’ HIHUUHGFRP SHQVDWLRQSODQ
( P SOR\ HUSD\ UROOWD[ HV †
2 WKHU
7RWDO
5 HSUHVHQWVGHIHUUHG HP SOR\ HUSD\ UROOWD[ HVXQGHUWKH&RURQDYLUXV$ LG 5 HOLHI DQG ( FRQRP LF 6HFXULW\ $ FWRI Z KLFK DSSUR[ LP DWHO\ KDOI RI WKHGHIHUUDOLVGXHRQ’ HFHP EHU DQG’ HFHP EHU
6WUDWHJ LF &RUSRUDWH5 HRUJ DQL] DWLRQ IRU/ RQJ WHUP * URZ WK
2 Q6HSWHP EHU Z HDQQRXQFHGSODQVWR RSHQDQRIILFHLQ$ WODQWD * HRUJ LDORFDWHGLQ7 KUHH%DOOSDUN&HQWHUDW7 KH%DWWHU\ $ WODQWD
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
7 KHRSHQLQJ RI WKHRIILFHLQ$ WODQWDDQGUHODWHGRUJ DQL] DWLRQDOFKDQJ HVDUHSURMHFWHGWR EHFRP SOHWHGE\ WKHVXP P HURI $ OODIIHFWHG HP SOR\ HHVZ HUHHLWKHURIIHUHGDQRSSRUWXQLW\ WR FRQWLQXHZ LWKWKHRUJ DQL] DWLRQRUZ HUHRIIHUHGDVHYHUDQFHSDFNDJ H $ VDUHVXOWZ HH[ SHFW WR LQFXU FHUWDLQ RQHWLP H FRUSRUDWH UHRUJ DQL] DWLRQ FRVWV RI DSSUR[ LP DWHO\ WR P LOOLRQ UHODWHG WR HP SOR\ HH VHYHUDQFH DQG WUDQVLWLRQ UHFUXLWP HQWDQGUHORFDWLRQ DQGWKLUGSDUW\ DQGRWKHUFRVWVWKURXJ K
: H UHFRUG VHYHUDQFH DV D RQHWLP H WHUP LQDWLRQ EHQHILWDQG UHFRJ QL] H WKH H[ SHQVH UDWDEO\ RYHUWKH HP SOR\ HHV¶ UHTXLUHG IXWXUH VHUYLFH SHULRG $ OORWKHUFRVWV LQFOXGLQJ HP SOR\ HHWUDQVLWLRQ FRVWV UHFUXLWP HQWDQG UHORFDWLRQ FRVWV DQG WKLUG SDUW\ FRVWV DUHUHFRJ QL] HG LQ WKH SHULRG LQFXUUHG $ OO VWUDWHJ LF FRUSRUDWH UHRUJ DQL] DWLRQ FRVWV KDYH EHHQ UHFRUGHG LQ * HQHUDO DQG DGP LQLVWUDWLYH H[ SHQVHV RQ WKH &RQVROLGDWHG6WDWHP HQWRI 2 SHUDWLRQV
6WUDWHJ LF FRUSRUDWHUHRUJ DQL] DWLRQFRVWVUHFRUGHGIRUWKH\ HDUHQGHG’ HFHP EHU FRQVLVWRI WKHIROORZ LQJ
<HDU( QGHG ’ HF
( P SOR\ HHVHYHUDQFHDQGRWKHUHP SOR\ HHWUDQVLWLRQFRVWV 5 HFUXLWLQJ DQGSURIHVVLRQDOIHHV
2 WKHUFRVWV 7RWDOVWUDWHJ LF FRUSRUDWHUHRUJ DQL] DWLRQFRVWV
6WRFN EDVHGFRP SHQVDWLRQIRUIHLWXUHVRQXQYHVWHGDZ DUGV
7RWDOVWUDWHJ LF FRUSRUDWHUHRUJ DQL] DWLRQFRVWV QHWRI VWRFNIRUIHLWXUHV
$ VRI ’ HFHP EHU WKH HVWLP DWH RI XQSDLG VWUDWHJ LF FRUSRUDWH UHRUJ DQL] DWLRQ FRVWVDUH LQFOXGHG LQ $ FFUXHG H[ SHQVHVDQG RWKHU FXUUHQWOLDELOLWLHVRQWKH&RQVROLGDWHG%DODQFH6KHHW7 KHIROORZ LQJ WDEOHVXP P DUL] HVWKHDFWLYLW\ IRUWKH\ HDUHQGHG’ HFHP EHU
%DODQFHDW %DODQFHDW
’ HF ’ HF
&KDUJ HV 3 D\ P HQWV
( P SOR\ HHVHYHUDQFHDQGRWKHUHP SOR\ HHWUDQVLWLRQFRVWV † 5 HFUXLWLQJ DQGSURIHVVLRQDOIHHV †
2 WKHUFRVWV †
7RWDOVWUDWHJ LF FRUSRUDWHUHRUJ DQL] DWLRQOLDELOLW\ †
: H H[ SHFWWR UHFRJ QL] H DGGLWLRQDOFRVWV DVVRFLDWHG Z LWK WKH FRUSRUDWH UHRUJ DQL] DWLRQ LQ RI DSSUR[ LP DWHO\ WR P LOOLRQ LQFOXGLQJ H[ SHQGLWXUHVUHODWHGWR L HP SOR\ HHVHYHUDQFHDQGRWKHUHP SOR\ HHWUDQVLWLRQFRVWVRI DSSUR[ LP DWHO\ P LOOLRQWR P LOOLRQ LL UHORFDWLRQDQGUHFUXLWLQJ FRVWVRI P LOOLRQWR P LOOLRQ DQG LLL WKLUG SDUW\ DQGRWKHUFRVWVRI P LOOLRQWR P LOOLRQ
, QFRP H7 D[ HV
7 KH IROORZ LQJ WDEOH SUHVHQWVWKH GRP HVWLF DQG IRUHLJ Q FRP SRQHQWVRI LQFRP H ORVV EHIRUH LQFRP H WD[ HVIRU DQG LQ WKRXVDQGV
’ RP HVWLF LQFRP H ORVV
) RUHLJ QLQFRP H
7RWDOLQFRP H
, QFOXGHGZ LWKLQWKHIRUHLJ QLQFRP HEHIRUHLQFRP HWD[ HVDERYHLV P LOOLRQ P LOOLRQ DQG P LOOLRQRI IRUHLJ QVRXUFHGLQFRP H VXEMHFWWR IRUHLJ QZ LWKKROGLQJ WD[ HVLQ DQG UHVSHFWLYHO\
$ VXP P DU\ RI WKHH[ SHQVH EHQHILWIRULQFRP HWD[ IROORZ V LQWKRXVDQGV
&XUUHQW
) HGHUDO
) RUHLJ Q
6WDWHDQGORFDO
’ HIHUUHG
) HGHUDO
) RUHLJ Q
6WDWHDQGORFDO
7RWDOLQFRP HWD[ H[ SHQVH EHQHILW
6LJ QLILFDQWGHIHUUHGWD[ DVVHWV OLDELOLWLHV IROORZ LQWKRXVDQGV
’ HFHP EHU ’ HFHP EHU
$ FFUXHGOLDELOLWLHV
$ FFUXHGERQXVHV
2 WKHUOLDELOLWLHVDQGDVVHWUHVHUYHV
( TXLW\ DZ DUGV
/ HDVHOLDELOLWLHV
2 WKHU
1 HWRSHUDWLQJ ORVVHV
) RUHLJ QWD[ FUHGLWFDUU\ IRUZ DUGV
7RWDOGHIHUUHGWD[ DVVHWV
9 DOXDWLRQDOORZ DQFHV
7RWDOGHIHUUHGWD[ DVVHWV QHWRI YDOXDWLRQDOORZ DQFHV
’ HIHUUHGH[ SHQVHV
$ FFHOHUDWHGGHSUHFLDWLRQ
* RRGZ LOO
5 LJ KWRI XVHDVVHWV
2 WKHU
7RWDOGHIHUUHGWD[ OLDELOLWLHV
1 HWGHIHUUHGWD[ DVVHWV OLDELOLWLHV
7 KH &RP SDQ\ KDG DSSUR[ LP DWHO\ P LOOLRQ DQG P LOOLRQ RI VWDWH GHIHUUHG WD[ DVVHWVSULP DULO\ UHODWHG WR VWDWH QHWRSHUDWLQJ ORVV FDUU\ IRUZ DUGV DV RI ’ HFHP EHU DQG ’ HFHP EHU UHVSHFWLYHO\ 2 XUDELOLW\ WR XWLOL] H WKHVH VWDWH GHIHUUHG WD[ DVVHWV LV GHSHQGHQWRQ RXUDELOLW\ WR J HQHUDWHHDUQLQJ VLQ IXWXUH\ HDUVLQ WKHUHVSHFWLYHVWDWHMXULVGLFWLRQV 7 KH&RP SDQ\ SURYLGHG DIXOOYDOXDWLRQ DOORZ DQFHRI P LOOLRQ DQG P LOOLRQ IRUWKHVHVWDWHGHIHUUHG WD[ DVVHWVDVZ HEHOLHYHUHDOL] DWLRQ EDVHG RQ WKHP RUHOLNHO\ WKDQ QRW FULWHULDKDVQRWEHHQP HWDVRI ’ HFHP EHU DQG’ HFHP EHU UHVSHFWLYHO\
7 KH&RP SDQ\ KDGDSSUR[ LP DWHO\ P LOOLRQDQG P LOOLRQRI IRUHLJ QQHWRSHUDWLQJ ORVVDQGFDSLWDOORVVFDUU\ RYHUVDVRI ’ HFHP EHU DQG ’ HFHP EHU UHVSHFWLYHO\ 7 KH &RP SDQ\ KDG DSSUR[ LP DWHO\ P LOOLRQ DQG P LOOLRQ RI YDOXDWLRQ DOORZ DQFHV
SULP DULO\ UHODWHGWR WKHIRUHLJ QFDSLWDOORVVHVDVRI ’ HFHP EHU DQG’ HFHP EHU UHVSHFWLYHO\ $ VXEVWDQWLDOP DMRULW\ RI RXU IRUHLJ QQHWRSHUDWLQJ ORVVHVGR QRWKDYHDQH[ SLUDWLRQGDWH
, QDGGLWLRQ WKH&RP SDQ\ KDGDSSUR[ LP DWHO\ P LOOLRQDQG P LOOLRQLQIRUHLJ QWD[ FUHGLWFDUU\ IRUZ DUGVDVRI ’ HFHP EHU
DQG’ HFHP EHU UHVSHFWLYHO\ WKDWH[ SLUHWHQ\ HDUVIURP LQFHSWLRQLQ\ HDUV WKURXJ K 2 XUDELOLW\ WR XWLOL] HWKHVHIRUHLJ Q WD[ FUHGLWFDUU\ IRUZ DUGVLVGHSHQGHQWRQ RXUDELOLW\ WR J HQHUDWHIRUHLJ Q HDUQLQJ VLQ IXWXUH\ HDUVVXIILFLHQWWR FODLP IRUHLJ Q WD[ FUHGLWVLQ H[ FHVVRI IRUHLJ QWD[ HVSDLGLQWKRVH\ HDUV 7 KH&RP SDQ\ SURYLGHGDIXOOYDOXDWLRQDOORZ DQFHRI P LOOLRQDQG P LOOLRQIRUWKHVH IRUHLJ Q WD[ FUHGLWFDUU\ IRUZ DUGVDVZ HEHOLHYHUHDOL] DWLRQ EDVHG RQ WKHP RUHOLNHO\ WKDQ QRWFULWHULDKDVQRWEHHQ P HWDVRI ’ HFHP EHU
DQG’ HFHP EHU UHVSHFWLYHO\
7 KHUHFRQFLOLDWLRQRI LQFRP HWD[ FRP SXWHGDWWKH8 6 IHGHUDOVWDWXWRU\ UDWHWR LQFRP HWD[ H[ SHQVH EHQHILWIRUWKH\ HDUVHQGHG’ HFHP EHU ’ HFHP EHU DQG’ HFHP EHU LVDVIROORZ VLQERWKGROODUVDQGDVDSHUFHQWDJ HRI LQFRP HEHIRUHLQFRP HWD[ HV LQ
, QFRP H7 D[ ( [ SHQVH | , QFRP H 7 D[ 5 DWH | , QFRP H7 D[ %HQHILW | , QFRP H 7 D[ 5 DWH | , QFRP H7 D[ ( [ SHQVH | , QFRP H 7 D[ 5 DWH | ||||
7D[ DW8 6 IHGHUDOVWDWXWRU\ UDWH | |||||||||
6WDWHDQGORFDOLQFRP HWD[ HV | |||||||||
) RUHLJ QLQFRP HWD[ HV | |||||||||
, QFRP HRI FRQVROLGDWHGSDUWQHUVKLSV | |||||||||
DWWULEXWDEOHWR QRQFRQWUROOLQJ LQWHUHVWV | |||||||||
1 RQ TXDOLILHGGHIHUUHGFRP SHQVDWLRQSODQ | |||||||||
LQFRP H ORVV | |||||||||
( [ FHVVWD[ EHQHILWV H[ SHQVHRQHTXLW\ DZ DUGV | |||||||||
3UHIHUUHGVWRFNRSWLRQP DUN WR P DUNHWDGMXVWP | HQW | † | † † | ||||||
7D[ FUHGLWV | |||||||||
’ LVSRVLWLRQRI &KLQD | † | † | |||||||
2 WKHU | |||||||||
7RWDO | |||||||||
&DVKIRULQFRP HWD[ HVSDLG UHFHLYHG Z HUH | P LOOLRQLQ | P LOOLRQLQ | DQG | P LOOLRQLQ | |||||
WKRXVDQGV
†
† †
7 KH&RP SDQ\ ILOHVLQFRP HWD[ UHWXUQVLQ WKH8 6 IHGHUDOMXULVGLFWLRQ DQG YDULRXVVWDWHDQG IRUHLJ Q MXULVGLFWLRQV 7 KH&RP SDQ\ Z LWK IHZ H[ FHSWLRQV LVQR ORQJ HUVXEMHFWWR 8 6 IHGHUDO VWDWHDQG ORFDO RUQRQ 8 6 LQFRP HWD[ H[ DP LQDWLRQVE\ WD[ DXWKRULWLHVIRU\ HDUVEHIRUH
7 KH&RP SDQ\ LVFXUUHQWO\ XQGHUJ RLQJ H[ DP LQDWLRQVE\ YDULRXVWD[ DXWKRULWLHV 7 KH&RP SDQ\ DQWLFLSDWHVWKDWWKHILQDOL] DWLRQRI WKHVH FXUUHQWH[ DP LQDWLRQVDQGRWKHULVVXHVFRXOGUHVXOWLQDGHFUHDVHLQWKHOLDELOLW\ IRUXQUHFRJ QL] HGWD[ EHQHILWV DQGDGHFUHDVHRI LQFRP HWD[ H[ SHQVH RI DSSUR[ LP DWHO\ GXULQJ WKHQH[ W P RQWKV
7 KH&RP SDQ\ KDG P LOOLRQRI XQUHFRJ QL] HGWD[ EHQHILWVDW’ HFHP EHU Z KLFK LI UHFRJ QL] HG Z RXOGDIIHFWWKHHIIHFWLYHWD[ UDWH
$ UHFRQFLOLDWLRQ RI WKHEHJ LQQLQJ DQG HQGLQJ OLDELOLW\ IRUXQUHFRJ QL] HG WD[ EHQHILWVH[ FOXGLQJ LQWHUHVWDQG SHQDOWLHVLVDVIROORZ V Z KLFK LV UHFRUGHGDVDQRWKHUORQJ WHUP OLDELOLW\ LQWKRXVDQGV
%DODQFHDW’ HFHP EHU
$ GGLWLRQVIRUWD[ SRVLWLRQVRI SULRU\ HDUV
5 HGXFWLRQVIRUWD[ SRVLWLRQVRI SULRU\ HDUV
5 HGXFWLRQVIRUODSVHRI VWDWXWHRI OLP LWDWLRQV †
%DODQFHDW’ HFHP EHU
$ GGLWLRQVIRUWD[ SRVLWLRQVRI SULRU\ HDUV
5 HGXFWLRQVIRUWD[ SRVLWLRQVRI SULRU\ HDUV
5 HGXFWLRQVIRUODSVHRI VWDWXWHRI OLP LWDWLRQV
%DODQFHDW’ HFHP EHU
7 KH&RP SDQ\ UHFRJ QL] HVDFFUXHGLQWHUHVWDQGSHQDOWLHVUHODWHGWR XQUHFRJ QL] HGWD[ EHQHILWVDVSDUWRI LQFRP HWD[ H[ SHQVH 7 KH&RP SDQ\ ¶V DQG LQFRP HWD[ H[ SHQVH EHQHILWLQFOXGHVLQWHUHVWEHQHILWRI DQG UHVSHFWLYHO\ 7 KH&RP SDQ\ KDVDFFUXHG
DSSUR[ LP DWHO\ DQG IRUWKH SD\ P HQWRI LQWHUHVWDQG SHQDOWLHV DV RI ’ HFHP EHU DQG ’ HFHP EHU UHVSHFWLYHO\
5 HODWHG 3 DUW\ 7 UDQVDFWLRQV
2 Q 0 DUFK 0 U 6KDTXLOOH 2 ¶1 HDOZ DVDSSRLQWHG WR RXU%RDUG RI ’ LUHFWRUV 2 Q -XQH WKH &RP SDQ\ HQWHUHG LQWR DQ ( QGRUVHP HQW$ J UHHP HQW WKH ‡( QGRUVHP HQW$ J UHHP HQW· HIIHFWLYH 0 DUFK Z LWK $ %* 6KDT / / & ‡$ %* 6KDT· DQ HQWLW\ DIILOLDWHG Z LWK 0 U 2 ¶1 HDO IRUWKHSHUVRQDOVHUYLFHVRI 0 U 2 ¶1 HDO 3XUVXDQWWR WKH( QGRUVHP HQW$ J UHHP HQWWKH&RP SDQ\ UHFHLYHG WKH ULJ KWDQGOLFHQVHWR XVH0 U 2 ¶1 HDO¶VQDP H QLFNQDP H LQLWLDOV DXWRJ UDSK YRLFH YLGHR RUILOP SRUWUD\ DOV SKRWRJ UDSK OLNHQHVVDQGFHUWDLQ RWKHULQWHOOHFWXDOSURSHUW\ ULJ KWV LQGLYLGXDOO\ DQGFROOHFWLYHO\ WKH‡3HUVRQDOLW\ 5 LJ KWV· LQHDFKFDVH VROHO\ DVDSSURYHGE\ $ %* 6KDT LQ FRQQHFWLRQZ LWKWKHDGYHUWLVLQJ SURP RWLRQDQGVDOHRI 3DSD-RKQ¶VEUDQGHGSURGXFWV 0 U2 ¶1 HDODOVR DJ UHHGWR SURYLGHEUDQGDP EDVVDGRU VHUYLFHVUHODWHG WR DSSHDUDQFHV VRFLDOP HGLDDQG SXEOLF UHODWLRQVP DWWHUV DQG WR FROODERUDWHZ LWK XVWR GHYHORS RQHRUP RUHFR EUDQGHG SURGXFWVXVLQJ WKH3HUVRQDOLW\ 5 LJ KWV
$ V FRQVLGHUDWLRQ IRU WKH ULJ KWV DQG VHUYLFHV J UDQWHG XQGHU WKH ( QGRUVHP HQW$ J UHHP HQWWKH &RP SDQ\ DJ UHHG WR SD\ WR $ %* 6KDT DJ J UHJ DWH FDVK SD\ P HQWVRI P LOOLRQ RYHUWKH WKUHH \ HDUVRI WKH ( QGRUVHP HQW$ J UHHP HQW7 KH &RP SDQ\ Z LOODOVR SD\ H[ SHQVHV UHODWHG WR WKHP DUNHWLQJ DQG SHUVRQDOVHUYLFHVSURYLGHG E\ 0 U 2 ¶1 HDO , Q DGGLWLRQ WKH&RP SDQ\ DJ UHHG WR J UDQW UHVWULFWHG VWRFN XQLWVWR 0 U 2 ¶1 HDO DVDJ HQWRI $ %* XQGHURXU 2 P QLEXV, QFHQWLYH3ODQ 7 KHLQLWLDOWHUP RI WKH( QGRUVHP HQW$ J UHHP HQWHQGVRQ 0 DUFK Z LWK DQ RSWLRQ IRUDRQH\ HDUH[ WHQVLRQ XSRQ WKHSDUWLHV¶ P XWXDODJ UHHP HQW7 KH( QGRUVHP HQW$ J UHHP HQWDOVR LQFOXGHV FXVWRP DU\ H[ FOXVLYLW\ WHUP LQDWLRQDQGLQGHP QLILFDWLRQFODXVHV
2 Q0 D\ 0 U 2 ¶1 HDODQGWKH&RP SDQ\ HQWHUHGLQWR DMRLQWYHQWXUHIRUWKHRSHUDWLRQRI QLQH$ WODQWDDUHD3DSD-RKQ¶VUHVWDXUDQWV WKDWZ HUH SUHYLRXVO\ &RP SDQ\ RZ QHG UHVWDXUDQWV 7 KH &RP SDQ\ RZ QV DSSUR[ LP DWHO\ RI WKH MRLQWYHQWXUH DQG 0 U 2 ¶1 HDORZ QV DSSUR[ LP DWHO\ RI WKH MRLQWYHQWXUH Z KLFK LV FRQVROLGDWHG LQWR WKH &RP SDQ\ ¶V ILQDQFLDO VWDWHP HQWV 0 U 2 ¶1 HDO FRQWULEXWHG DSSUR[ LP DWHO\ UHSUHVHQWLQJ KLVSUR UDWDFDSLWDOFRQWULEXWLRQ
2 Q-XO\ WKH&RP SDQ\ DQG3-0 ) HQWHUHGLQWR$ P HQGP HQW1 R WKH‡$ P HQGP HQW· WR WKH( QGRUVHP HQW$ J UHHP HQWZ LWK$ %*
6KDT 3XUVXDQWWR WKH$ P HQGP HQWWKH&RP SDQ\ DQG3-0 ) GHYHORSHGDFR EUDQGHGH[ WUDODUJ HSL] ] DSURGXFWXVLQJ WKH3HUVRQDOLW\ 5 LJ KWV
$ %* 6KDT GLG QRWUHFHLYH DQ\ DGGLWLRQDOUR\ DOW\ IHHV IURP WKH &RP SDQ\ EH\ RQG WKH FDVK SD\ P HQWDOUHDG\ FRQWHP SODWHG XQGHUKLV ( QGRUVHP HQW$ J UHHP HQWXQGHUWKH$ P HQGP HQW , Q DGGLWLRQ WKH&RP SDQ\ GRQDWHG RQH8 6 GROODUIRUHDFK XQLWRI WKHSL] ] DVROG LQ WKH 8 QLWHG6WDWHVDQGRQH&DQDGLDQGROODUIRUHDFKXQLWVROGLQ&DQDGDWR7 KH3DSD-RKQ¶V) RXQGDWLRQIRU%XLOGLQJ &RP P XQLW\
/ LWLJ DWLRQ &RP P LWP HQWVDQG &RQWLQJ HQFLHV
/ LWLJ DWLRQ
7 KH&RP SDQ\ LVLQYROYHG LQ DQXP EHURI ODZ VXLWV FODLP V LQYHVWLJ DWLRQVDQG SURFHHGLQJ V LQFOXGLQJ WKRVHVSHFLILFDOO\ LGHQWLILHG EHORZ FRQVLVWLQJ RI LQWHOOHFWXDOSURSHUW\ HP SOR\ P HQWFRQVXP HU FRP P HUFLDODQG RWKHUP DWWHUVDULVLQJ LQ WKH RUGLQDU\ FRXUVH RI EXVLQHVV , Q DFFRUGDQFH Z LWK $ 6& ‡&RQWLQJ HQFLHV· WKH &RP SDQ\ KDVP DGH DFFUXDOVZ LWK UHVSHFWWR WKHVH P DWWHUVZ KHUH DSSURSULDWH Z KLFK DUH UHIOHFWHG LQ WKH&RP SDQ\ ¶VFRQVROLGDWHG ILQDQFLDOVWDWHP HQWV : HUHYLHZ WKHVHSURYLVLRQVDWOHDVWTXDUWHUO\ DQG DGMXVWWKHP WR UHIOHFWWKH LP SDFWRI QHJ RWLDWLRQV VHWWOHP HQWV UXOLQJ V DGYLFHRI OHJ DOFRXQVHODQGRWKHULQIRUP DWLRQDQGHYHQWVSHUWDLQLQJ WR DSDUWLFXODUFDVH
’ XUOLQJ HWDOY 3 DSD- RKQ¶V, QWHUQDWLRQDO, QF LVDFRQGLWLRQDOO\ FHUWLILHGFROOHFWLYHDFWLRQILOHGLQ0 D\ LQWKH8 QLWHG6WDWHV’ LVWULFW &RXUWIRUWKH6RXWKHUQ ’ LVWULFWRI 1 HZ <RUN DOOHJ LQJ WKDWFRUSRUDWHUHVWDXUDQWGHOLYHU\ GULYHUVZ HUHQRWSURSHUO\ UHLP EXUVHG IRUYHKLFOH P LOHDJ H DQG H[ SHQVHVLQ DFFRUGDQFH Z LWK WKH ) DLU/ DERU6WDQGDUGV$ FW, Q -XO\ WKH ’ LVWULFW&RXUWJ UDQWHG D P RWLRQ WR FHUWLI\ D FRQGLWLRQDOFRUSRUDWHFROOHFWLYHFODVVDQGWKHRSWLQQRWLFHSURFHVVKDVEHHQFRP SOHWHG $ VRI WKHFORVHRI WKHRSWLQSHULRGRQ2 FWREHU
GULYHUVRSWHG LQWR WKH FROOHFWLYH FODVV 7 KH &RP SDQ\ FRQWLQXHVWR GHQ\ DQ\ OLDELOLW\ RUZ URQJ GRLQJ LQ WKLVP DWWHUDQG LV YLJ RURXVO\ GHIHQGLQJ WKLVDFWLRQ 7 KH&RP SDQ\ KDVQRWUHFRUGHGDQ\ OLDELOLW\ UHODWHGWR WKLVODZ VXLWDVRI ’ HFHP EHU DVLWGRHVQRW EHOLHYHDORVVLVSUREDEOHRUUHDVRQDEO\ HVWLP DEOH
’ DQNHUY 3 DSD - RKQ¶V, QWHUQDWLRQDO , QF HWDO 2 Q$ XJ XVW DFODVVDFWLRQ ODZ VXLWZ DVILOHG LQ WKH8 QLWHG 6WDWHV’ LVWULFW&RXUW 6RXWKHUQ’ LVWULFWRI 1 HZ <RUNRQEHKDOI RI DFODVVRI LQYHVWRUVZ KR SXUFKDVHGRUDFTXLUHGVWRFNLQ3DSD-RKQVWKURXJ KDSHULRGXS WR DQG LQFOXGLQJ -XO\ 7 KHFRP SODLQWDOOHJ HGYLRODWLRQVRI 6HFWLRQV E DQG D RI WKH6HFXULWLHV( [ FKDQJ H$ FWRI DVDP HQGHG 7 KH’ LVWULFW&RXUWDSSRLQWHG WKH2 NODKRP D/ DZ ( QIRUFHP HQW5 HWLUHP HQW6\ VWHP WR OHDG WKHFDVH $ Q DP HQGHG FRP SODLQWZ DVILOHG RQ
) HEUXDU\ Z KLFKWKH&RP SDQ\ P RYHGWR GLVP LVV 2 Q0 DUFK WKH&RXUWJ UDQWHGWKH&RP SDQ\ ¶VP RWLRQWR GLVP LVV RQWKH J URXQGWKDWWKHFRP SODLQWIDLOHGWR VWDWHDQ\ YLDEOHFDXVHRI DFWLRQ 7 KH3ODLQWLIIVVXEVHTXHQWO\ ILOHGDVHFRQGDP HQGHGFRP SODLQWRQ$ SULO Z KLFKWKH&RP SDQ\ P RYHGWR GLVP LVV 7 KH&RP SDQ\ EHOLHYHVWKDWLWKDVYDOLGDQGP HULWRULRXVGHIHQVHVWR WKHVHFRQGDP HQGHG
FRP SODLQWDQG LQWHQGVWR YLJ RURXVO\ GHIHQG DJ DLQVWWKH FDVH 7 KH &RP SDQ\ KDVQRWUHFRUGHG DQ\ OLDELOLW\ UHODWHG WR WKLVODZ VXLWDVRI ’ HFHP EHU DVLWGRHVQRWEHOLHYHDORVVLVSUREDEOHRUUHDVRQDEO\ HVWLP DEOH 6XEVHTXHQWWR ’ HFHP EHU RQ ) HEUXDU\
WKH&RP SDQ\ ¶VP RWLRQWR GLVP LVVWKHFDVHZ DVJ UDQWHGZ LWKSUHMXGLFH ( TXLW\ &RP SHQVDWLRQ
: HDZ DUG VWRFN RSWLRQV WLP HEDVHG UHVWULFWHG VWRFN DQG SHUIRUP DQFHEDVHG UHVWULFWHG VWRFN XQLWVIURP WLP HWR WLP HXQGHUWKH3DSD-RKQ¶V
, QWHUQDWLRQDO , QF 2 P QLEXV, QFHQWLYH3ODQ 7 KHUHDUHDSSUR[ LP DWHO\ P LOOLRQVKDUHVRI FRP P RQVWRFNDXWKRUL] HGIRULVVXDQFHDQG UHP DLQLQJ DYDLODEOHXQGHUWKH 2 P QLEXV, QFHQWLYH3ODQ DVRI ’ HFHP EHU Z KLFK LQFOXGHV P LOOLRQ VKDUHVWUDQVIHUUHG IURP WKH3DSD-RKQ¶V, QWHUQDWLRQDO 2 P QLEXV, QFHQWLYH3ODQ 2 SWLRQDZ DUGVDUHJ UDQWHGZ LWKDQH[ HUFLVHSULFHHTXDOWR WKHP DUNHWSULFHRI WKH&RP SDQ\ ¶VVWRFN DWWKHGDWHRI J UDQW2 SWLRQVRXWVWDQGLQJ DVRI ’ HFHP EHU J HQHUDOO\ H[ SLUHWHQ \ HDUVIURP WKHGDWHRI J UDQW DQGJ HQHUDOO\ YHVWRYHUDWKUHH\ HDUSHULRG
: HUHFRUGHG VWRFN EDVHG HP SOR\ HHFRP SHQVDWLRQ H[ SHQVHRI P LOOLRQ LQ P LOOLRQ LQ DQG P LOOLRQ LQ $ W ’ HFHP EHU WKHUH Z DV P LOOLRQ RI XQUHFRJ QL] HG FRP SHQVDWLRQ FRVWUHODWHG WR QRQYHVWHG DZ DUGV RI Z KLFK WKH &RP SDQ\ H[ SHFWVWR UHFRJ QL] H P LOOLRQLQ P LOOLRQLQ DQG P LOOLRQLQ
6WRFN2 SWLRQV
2 SWLRQVH[ HUFLVHG Z KLFK Z HUHLVVXHG IURP DXWKRUL] HG VKDUHV LQFOXGHG VKDUHVLQ VKDUHVLQ DQG VKDUHV LQ 7 KHWRWDOLQWULQVLF YDOXHRI WKHRSWLRQVH[ HUFLVHG GXULQJ DQG Z DV P LOOLRQ P LOOLRQ DQG P LOOLRQ UHVSHFWLYHO\
, QIRUP DWLRQSHUWDLQLQJ WR RSWLRQDFWLYLW\ GXULQJ LVDVIROORZ V QXP EHURI RSWLRQVDQGDJ J UHJ DWHLQWULQVLF YDOXHLQWKRXVDQGV
: HLJ KWHG
$ YHUDJ H
: HLJ KWHG 5 HP DLQLQJ
1 XP EHU $ YHUDJ H &RQWUDFWXDO $ J J UHJ DWH RI ( [ HUFLVH 7 HUP , QWULQVLF
2 XWVWDQGLQJ DW’ HFHP EHU
2 SWLRQV 3 ULFH , Q<HDUV 9 DOXH
( [ HUFLVHG
&DQFHOOHG
2 XWVWDQGLQJ DW’ HFHP EHU
( [ HUFLVDEOHDW’ HFHP EHU
7 KHIROORZ LQJ LVDVXP P DU\ RI WKHVLJ QLILFDQWDVVXP SWLRQVXVHG LQ HVWLP DWLQJ WKHIDLUYDOXHRI RSWLRQVJ UDQWHG LQ DQG QRQHLQ
$ VVXP SWLRQV Z HLJ KWHGDYHUDJ H
5 LVN IUHHLQWHUHVWUDWH
( [ SHFWHGGLYLGHQG\ LHOG
( [ SHFWHGYRODWLOLW\
( [ SHFWHGWHUP LQ\ HDUV
7 KHULVN IUHHLQWHUHVWUDWHIRUWKHSHULRGVZ LWKLQ WKHFRQWUDFWXDOOLIHRI DQ RSWLRQ LVEDVHG RQ WKH8 6 7 UHDVXU\ \ LHOG FXUYHLQ HIIHFWDWWKH WLP HRI J UDQW7 KHH[ SHFWHG GLYLGHQG \ LHOG Z DVHVWLP DWHG DVWKHDQQXDOGLYLGHQG GLYLGHG E\ WKHP DUNHWSULFHRI WKH&RP SDQ\ ¶VVKDUHVRQ WKHGDWHRI J UDQW( [ SHFWHGYRODWLOLW\ Z DVHVWLP DWHGXVLQJ WKH&RP SDQ\ ¶VKLVWRULFDOVKDUHSULFHYRODWLOLW\ IRUDSHULRGVLP LODUWR WKHH[ SHFWHG OLIHRI WKHRSWLRQ
2 SWLRQVJ UDQWHG J HQHUDOO\ YHVWLQ HTXDOLQVWDOOP HQWVRYHUWKUHH\ HDUVDQG H[ SLUHWHQ \ HDUVDIWHUJ UDQW7 KHH[ SHFWHG WHUP IRUWKHVHRSWLRQV UHSUHVHQWVWKHSHULRGRI WLP HWKDWRSWLRQVJ UDQWHGDUHH[ SHFWHGWR EHRXWVWDQGLQJ DQGZ DVFDOFXODWHGXVLQJ KLVWRULFDOH[ SHULHQFH
7 KHZ HLJ KWHG DYHUDJ HJ UDQWGDWHIDLUYDOXHVRI RSWLRQVJ UDQWHG GXULQJ DQG Z DV DQG UHVSHFWLYHO\ 7 KH&RP SDQ\ J UDQWHGRSWLRQVWR SXUFKDVH DQG VKDUHVLQ DQG UHVSHFWLYHO\ 7 KHUHZ HUHQR RSWLRQVJ UDQWHGLQ
5 HVWULFWHG6WRFN
: H J UDQWHG VKDUHV RI UHVWULFWHG VWRFN WKDWDUH WLP HEDVHG DQG J HQHUDOO\ YHVWLQ HTXDOLQVWDOOP HQWV RYHUWKUHH \ HDUV LQ
LQ DQG LQ 8 SRQ YHVWLQJ WKH VKDUHVDUH LVVXHG IURP WUHDVXU\ VWRFN 7 KHVH UHVWULFWHG VKDUHVDUH LQWHQGHG WR IRFXVSDUWLFLSDQWVRQRXUORQJ UDQJ HREMHFWLYHV Z KLOHDWWKHVDP HWLP HVHUYLQJ DVDUHWHQWLRQP HFKDQLVP : HFRQVLGHUWLP HEDVHGUHVWULFWHG VWRFN DZ DUGVWR EH SDUWLFLSDWLQJ VHFXULWLHVEHFDXVH KROGHUVRI VXFK VKDUHVKDYH QRQ IRUIHLWDEOH GLYLGHQG ULJ KWV : H GHFODUHG GLYLGHQGV WRWDOLQJ SHUVKDUH LQ SHUVKDUH LQ DQG SHUVKDUH LQ WR KROGHUVRI WLP H EDVHGUHVWULFWHGVWRFN
: HJ UDQWHG DQG UHVWULFWHG VWRFN XQLWVWKDWDUHWLP HEDVHG DQG YHVWRYHUDSHULRG RI RQHWR WKUHH\ HDUVLQ DQG UHVSHFWLYHO\ 8 SRQ YHVWLQJ WKHXQLWVDUHLVVXHG IURP WUHDVXU\ VWRFN 7RWDOGLYLGHQGVGHFODUHG IRUWKHVHDZ DUGVZ HUHLQVLJ QLILFDQWWR WKH UHVXOWVRI RXURSHUDWLRQV
$ GGLWLRQDOO\ Z HJ UDQWHG VWRFN VHWWOHG SHUIRUP DQFHEDVHG UHVWULFWHG VWRFN XQLWVWR H[ HFXWLYH P DQDJ HP HQW XQLWVLQ XQLWVLQ DQG XQLWVLQ
7 KH DQG SHUIRUP DQFHEDVHG UHVWULFWHG VWRFN XQLWVUHTXLUH WKH DFKLHYHP HQWRI FHUWDLQ SHUIRUP DQFH DQG P DUNHWIDFWRUV Z KLFK FRQVLVWRI WKH &RP SDQ\ ¶V7RWDO6KDUHKROGHU5 HWXUQ ‡7 65 · UHODWLYH WR D SUHGHWHUP LQHG SHHUJ URXS 7 KH J UDQWGDWH IDLUYDOXH RI WKH SHUIRUP DQFHEDVHGUHVWULFWHGVWRFNXQLWVZ DVGHWHUP LQHGWKURXJ KWKHXVHRI D0 RQWH&DUOR VLP XODWLRQP RGHO
7 KHIROORZ LQJ LVDVXP P DU\ RI WKHVLJ QLILFDQWDVVXP SWLRQVXVHGLQHVWLP DWLQJ WKHIDLUYDOXHRI WKHSHUIRUP DQFHEDVHGUHVWULFWHGVWRFNXQLWV J UDQWHGLQ DQG
$ VVXP SWLRQV 5 LVN IUHHLQWHUHVWUDWH
( [ SHFWHGYRODWLOLW\
7 KH ULVN IUHH LQWHUHVWUDWH IRUWKH SHULRGVZ LWKLQ WKH FRQWUDFWXDOOLIH RI WKH SHUIRUP DQFHEDVHG UHVWULFWHG VWRFN XQLWLVEDVHG RQ WKH 8 6
7 UHDVXU\ \ LHOG FXUYHLQ HIIHFWDWWKHWLP HRI J UDQW ( [ SHFWHG YRODWLOLW\ Z DVHVWLP DWHG XVLQJ WKH&RP SDQ\ ¶VKLVWRULFDOVKDUHSULFHYRODWLOLW\ IRUDSHULRGVLP LODUWR WKHH[ SHFWHGOLIHRI WKHSHUIRUP DQFHEDVHGUHVWULFWHGVWRFNXQLW
7 KH SHUIRUP DQFHEDVHG UHVWULFWHG VWRFN XQLWV J UDQWHG LQ YHVWRYHUWKUHH \ HDUV FOLII YHVW H[ SLUH WHQ \ HDUV DIWHUJ UDQWDQG DUH H[ SHQVHG RYHUWKH SHUIRUP DQFH SHULRG 7 KH Z HLJ KWHG DYHUDJ HJ UDQWGDWH IDLUYDOXH RI SHUIRUP DQFHEDVHG UHVWULFWHG VWRFN XQLWVJ UDQWHG GXULQJ DQG Z DV DQG UHVSHFWLYHO\
, Q WKH &RP SDQ\ J UDQWHG SHUIRUP DQFHEDVHG UHVWULFWHG VWRFN DZ DUGVXQGHUD WKUHH\ HDUFOLII YHVWDQG WKH YHVWLQJ RI WKH DZ DUGVLV GHSHQGHQWXSRQ WKH &RP SDQ\ ¶VDFKLHYHP HQWRI DFRP SRXQGHG DQQXDOJ URZ WK UDWH RI HDUQLQJ VSHUVKDUH DQG WKH DFKLHYHP HQWRI FHUWDLQ VDOHVDQGXQLWJ URZ WKP HWULFV 8 SRQYHVWLQJ WKHVKDUHVDUHLVVXHGIURP DXWKRUL] HGVKDUHV
7 KHIDLUYDOXHRI WLP HEDVHG UHVWULFWHG VWRFN DQG SHUIRUP DQFHEDVHG UHVWULFWHG VWRFN XQLWVLVEDVHG RQ WKHP DUNHWSULFHRI WKH&RP SDQ\ ¶V VKDUHVRQWKHJ UDQWGDWH , QIRUP DWLRQSHUWDLQLQJ WR WKHVHDZ DUGVGXULQJ LVDVIROORZ V VKDUHVLQWKRXVDQGV
: HLJ KWHG
$ YHUDJ H
* UDQW’ DWH
6KDUHV ) DLU9 DOXH
7RWDODVRI ’ HFHP EHU
* UDQWHG
) RUIHLWHG 9 HVWHG
7RWDODVRI ’ HFHP EHU ( P SOR\ HH%HQHILW3 ODQV
: H KDYH HVWDEOLVKHG WKH 3DSD -RKQ¶V , QWHUQDWLRQDO , QF N 3ODQ WKH ‡ N 3ODQ· DV D GHILQHG FRQWULEXWLRQ EHQHILWSODQ LQ
DFFRUGDQFH Z LWK 6HFWLRQ N RI WKH , QWHUQDO5 HYHQXH &RGH 7 KH N 3ODQ LV RSHQ WR HP SOR\ HHV Z KR P HHWFHUWDLQ HOLJ LELOLW\ UHTXLUHP HQWVDQG DOORZ VSDUWLFLSDWLQJ HP SOR\ HHVWR GHIHUUHFHLSWRI DSRUWLRQ RI WKHLUFRP SHQVDWLRQ DQG FRQWULEXWHVXFK DP RXQWWR RQHRU P RUH LQYHVWP HQWIXQGV $ WRXUGLVFUHWLRQ Z H P D\ P DNH P DWFKLQJ FRQWULEXWLRQ SD\ P HQWV Z KLFK DUH VXEMHFWWR YHVWLQJ EDVHG RQ DQ HP SOR\ HH¶VOHQJ WKRI VHUYLFHZ LWKXV
, Q DGGLWLRQ Z H P DLQWDLQ D QRQ TXDOLILHG GHIHUUHG FRP SHQVDWLRQ SODQ DYDLODEOH WR FHUWDLQ HP SOR\ HHVDQG GLUHFWRUV 8 QGHUWKLVSODQ WKH SDUWLFLSDQWVP D\ GHIHUD FHUWDLQ DP RXQWRI WKHLUFRP SHQVDWLRQ Z KLFK LVFUHGLWHG WR WKH SDUWLFLSDQWV¶ DFFRXQWV 7 KH SDUWLFLSDQWGLUHFWHG LQYHVWP HQWVDVVRFLDWHG Z LWK WKLVSODQ DUHLQFOXGHG LQ 2 WKHUDVVHWV P LOOLRQ DQG P LOOLRQ DW’ HFHP EHU DQG ’ HFHP EHU UHVSHFWLYHO\ DQG WKH DVVRFLDWHG OLDELOLWLHV P LOOLRQ DQG P LOOLRQ DW’ HFHP EHU DQG ’ HFHP EHU
UHVSHFWLYHO\ DUHLQFOXGHGLQ2 WKHUORQJ WHUP OLDELOLWLHVLQWKHDFFRP SDQ\ LQJ &RQVROLGDWHG%DODQFH6KHHWV
$ WRXUGLVFUHWLRQ Z HFRQWULEXWHG DP DWFKLQJ SD\ P HQWRI LQ LQ DQG LQ XS WR DP D[ LP XP RI RI D SDUWLFLSDWLQJ HP SOR\ HH¶VHDUQLQJ VGHIHUUHG LQWR ERWK WKH N 3ODQ DQG WKHQRQ TXDOLILHG GHIHUUHG FRP SHQVDWLRQ SODQ 6XFK FRVWVZ HUH
P LOOLRQLQ P LOOLRQLQ DQG P LOOLRQLQ 6HJ P HQW, QIRUP DWLRQ
: H KDYH IRXUUHSRUWDEOH VHJ P HQWV GRP HVWLF &RP SDQ\ RZ QHG UHVWDXUDQWV 1 RUWK $ P HULFD FRP P LVVDULHV 1 RUWK $ P HULFD IUDQFKLVLQJ DQG LQWHUQDWLRQDORSHUDWLRQV 7 KH GRP HVWLF &RP SDQ\ RZ QHG UHVWDXUDQWVHJ P HQWFRQVLVWV RI WKH RSHUDWLRQV RI DOOGRP HVWLF ‡GRP HVWLF·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¶VUHVWDXUDQWVORFDWHG LQ WKH 8 QLWHG . LQJ GRP DQG RXUIUDQFKLVH VDOHVDQG VXSSRUWDFWLYLWLHV Z KLFK GHULYH UHYHQXHV IURP VDOHVRI IUDQFKLVHDQG GHYHORSP HQWULJ KWVDQG WKHFROOHFWLRQ RI UR\ DOWLHVIURP RXULQWHUQDWLRQDOIUDQFKLVHHV , QWHUQDWLRQDOIUDQFKLVHHV DUHGHILQHG DVDOOIUDQFKLVHRSHUDWLRQVRXWVLGHRI WKH8 QLWHG 6WDWHVDQG &DQDGD $ OORWKHUEXVLQHVVXQLWVWKDWGR QRWP HHWWKHTXDQWLWDWLYH WKUHVKROGVIRUGHWHUP LQLQJ UHSRUWDEOHVHJ P HQWV Z KLFKDUHQRWRSHUDWLQJ VHJ P HQWV Z HUHIHUWR DV‡DOORWKHUV· Z KLFKFRQVLVWVRI RSHUDWLRQV WKDWGHULYHUHYHQXHVIURP WKHVDOH SULQFLSDOO\ WR &RP SDQ\ RZ QHGDQGIUDQFKLVHGUHVWDXUDQWV RI SULQWLQJ DQGSURP RWLRQDOLWHP V IUDQFKLVH FRQWULEXWLRQVWR P DUNHWLQJ IXQGVDQG LQIRUP DWLRQ V\ VWHP VDQG UHODWHG VHUYLFHVXVHG LQ UHVWDXUDQWRSHUDWLRQV LQFOXGLQJ RXUSRLQWRI VDOH V\ VWHP RQOLQHDQGRWKHUWHFKQRORJ \ EDVHGRUGHULQJ SODWIRUP V
&HUWDLQ DGP LQLVWUDWLYHDQG FDSLWDOFRVWVDUHDOORFDWHG WR VHJ P HQWVEDVHG XSRQ SUHGHWHUP LQHG UDWHVRUDFWXDOHVWLP DWHG UHVRXUFHXVDJ H : H DFFRXQWIRULQWHUFRP SDQ\ VDOHVDQGWUDQVIHUVDVLI WKHVDOHVRUWUDQVIHUVZ HUHWR WKLUGSDUWLHVDQGHOLP LQDWHWKHDFWLYLW\ LQFRQVROLGDWLRQ
2 XUUHSRUWDEOHVHJ P HQWVDUHEXVLQHVVXQLWVWKDWSURYLGHGLIIHUHQWSURGXFWVRUVHUYLFHV 6HSDUDWHP DQDJ HP HQWRI HDFK VHJ P HQWLVUHTXLUHG EHFDXVHHDFKEXVLQHVVXQLWLVVXEMHFWWR GLIIHUHQWRSHUDWLRQDOLVVXHVDQGVWUDWHJ LHV 1 R VLQJ OHH[ WHUQDOFXVWRP HUDFFRXQWHGIRU ▇▇▇ ▇▇▇ RI RXUFRQVROLGDWHGUHYHQXHV
’ XULQJ WKHIRXUWK TXDUWHURI Z HXSGDWHG RXUVHJ P HQWSURILWP HDVXUHWR RSHUDWLQJ LQFRP HIURP LQFRP HEHIRUHLQFRP HWD[ HV 7 KLV FKDQJ HLQ WKHVHJ P HQWSURILWP HDVXUHHOLP LQDWHG LQWHUHVWH[ SHQVH WKHP DMRULW\ RI Z KLFK LP SDFWHG XQDOORFDWHG FRUSRUDWHH[ SHQVHV 3ULRU SHULRGDP RXQWVKDYHEHHQUHFDVWWR UHIOHFWWKLVFKDQJ H
2 XUVHJ P HQWLQIRUP DWLRQLVDVIROORZ V
, QWKRXVDQGV
5 HYHQXHV 1 RWH 1 RWH
’ RP HVWLF &RP SDQ\ RZ QHGUHVWDXUDQWV
1 RUWK$ P HULFDIUDQFKLVLQJ
1 RUWK$ P HULFDFRP P LVVDULHV
, QWHUQDWLRQDO
$ OORWKHUV
7 RWDOUHYHQXHV
, QWHUVHJ P HQWUHYHQXHV
1 RUWK$ P HULFDIUDQFKLVLQJ
1 RUWK$ P HULFDFRP P LVVDULHV
, QWHUQDWLRQDO
$ OORWKHUV
7 RWDOLQWHUVHJ P HQWUHYHQXHV
’ HSUHFLDWLRQ DQG DP RUWL] DWLRQ
’ RP HVWLF &RP SDQ\ RZ QHGUHVWDXUDQWV
1 RUWK$ P HULFDFRP P LVVDULHV
, QWHUQDWLRQDO
$ OORWKHUV
8 QDOORFDWHGFRUSRUDWHH[ SHQVHV
7 RWDOGHSUHFLDWLRQ DQG DP RUWL] DWLRQ
2 SHUDWLQJ LQFRP H
’ RP HVWLF &RP SDQ\ RZ QHGUHVWDXUDQWV
1 RUWK$ P HULFDIUDQFKLVLQJ
1 RUWK$ P HULFDFRP P LVVDULHV
, QWHUQDWLRQDO
$ OORWKHUV
8 QDOORFDWHGFRUSRUDWHH[ SHQVHV
( OLP LQDWLRQRI LQWHUVHJ P HQWSURILWV
7 RWDORSHUDWLQJ LQFRP H
1 RWH ’ XULQJ WKHIRXUWK TXDUWHURI Z HXSGDWHG RXUVHJ P HQWSURILWP HDVXUHWR RSHUDWLQJ LQFRP H $ P RXQWVLQ DQG KDYH EHHQUHFDVWWR UHIOHFWWKLVFKDQJ H
, QFOXGHV P LOOLRQ DQG P LOOLRQ RI UHIUDQFKLVLQJ J DLQV ORVVHV LQ DQG UHVSHFWLYHO\ 6HH 1 RWH IRUDGGLWLRQDO LQIRUP DWLRQ
, QFOXGHVD P LOOLRQQHWORVVDVVRFLDWHGZ LWKUHIUDQFKLVLQJ LQ 6HH1 RWH IRUDGGLWLRQDOLQIRUP DWLRQ
, QFOXGHV 6SHFLDOFKDUJ HV RI P LOOLRQ DQG P LOOLRQ IRU WKH \ HDUV HQGHG ’ HFHP EHU DQG ’ HFHP EHU UHVSHFWLYHO\
, QWKRXVDQGV
3 URSHUW\ DQG HTXLSP HQWQHW ’ RP HVWLF &RP SDQ\ RZ QHGUHVWDXUDQWV
1 RUWK$ P HULFDFRP P LVVDULHV
, QWHUQDWLRQDO
$ OORWKHUV 8 QDOORFDWHGFRUSRUDWHDVVHWV
$ FFXP XODWHGGHSUHFLDWLRQDQGDP RUWL] DWLRQ 3 URSHUW\ DQG HTXLSP HQWQHW
( [ SHQGLWXUHVIRUSURSHUW\ DQG HTXLSP HQW
’ RP HVWLF &RP SDQ\ RZ QHGUHVWDXUDQWV 1 RUWK$ P HULFDFRP P LVVDULHV
, QWHUQDWLRQDO
$ OORWKHUV
8 QDOORFDWHGFRUSRUDWH 7 RWDOH[ SHQGLWXUHVIRUSURSHUW\ DQG HTXLSP HQW
’ LVDJ J UHJ DWLRQ RI 5 HYHQXH
, QWKHIROORZ LQJ WDEOHV UHYHQXHVDUHGLVDJ J UHJ DWHGE\ P DMRUSURGXFWOLQH 7 KHWDEOHVDOVR LQFOXGHDUHFRQFLOLDWLRQRI WKHGLVDJ J UHJ DWHG UHYHQXHVE\ WKHUHSRUWDEOHVHJ P HQWLQWKRXVDQGV
5 H S R U W D E O H 6 H J P H Q W V
’ R P H V W L F
<H D
(U Q G H G ’ H F H P E H U
& R P S D Q1 \R U W K
R Z Q H G$ P H U L1 RF $DU PWH KU L F D
0 D MR3RGUUX F W V 6 UH UV
YW LD FXI ▇▇▇ VDD
QQ /FWFLKVRQL PHV PVLL QV,
JQV ▇▇
▇▇ UL
QH$ ODV
OW L
R QW7 R DKWOHD UO V
& R P S D Q \ R Z Q H G U H V W D X U D Q W V D O H V
) U D Q F K L V H U R \ D O W L H V D Q G I H H V
& R P P L V V D U \ V D O H V
2 W K H U U H Y H Q X H V
( O L P L Q D W L R Q V 7R W D O V H J P H Q W U H Y H Q X H V
, Q W H U Q D W L R Q D O R W K H U U H Y H Q X H V 7R W D O U H Y H Q X H V
5 H S R U W D E O H 6 H J P H Q W V
’ R P H V W L F
<H D
(U Q G H G ’ H F H P E H U
& R P S D Q1 \R U W K
R Z Q H G$ P H U L1 RF $DU PWH KU L F D
0 D MR3RGUUX F W V 6 UH UV
YW LD FXI ▇▇▇ VDD
QQ /FWFLKVRQL PHV PVLL QV,
JQV ▇▇
▇▇ UL
QH$ ODV
OW L
R QW7 R DKWOHD UO V
& R P S D Q \ R Z Q H G U H V W D X U D Q W V D O H V
) U D Q F K L V H U R \ D O W L H V D Q G I H H V
& R P P L V V D U \ V D O H V
2 W K H U U H Y H Q X H V
( O L P L Q D W L R Q V 7R W D O V H J P H Q W U H Y H Q X H V
, Q W H U Q D W L R Q D O R W K H U U H Y H Q X H V
, Q W H U Q D W L R Q D O H O L P L Q D W L R Q V
7R W D O U H Y H Q X H V
5 H S R U W D E O H 6 H J P H Q W V
’ R P H V W L F
<H D
(U Q G H G ’ H F H P E H U
& R P S D Q1 \R U W K
R Z Q H G$ P H U L1 RF $DU PWH KU L F D
0 D MR3RGUUX F W V 6 UH UV
YW LD FXI ▇▇▇ VDD
QQ /FWFLKVRQL PHV PVLL QV,
JQV ▇▇
▇▇ UL
QH$ ODV
OW L
R QW7 R DKWOHD UO V
& R P S D Q \ R Z Q H G U H V W D X U D Q W V D O H V
) U D Q F K L V H U R \ D O W L H V D Q G I H H V
& R P P L V V D U \ V D O H V
2 W K H U U H Y H Q X H V
( O L P L Q D W L R Q V
7R W D O V H J P H Q W U H Y H Q X H V
, Q W H U Q D W L R Q D O R W K H U U H Y H Q X H V
, Q W H U Q D W L R Q D O H O L P L Q D W L R Q V
7R W D O U H Y H Q X H V
2 WKHUUHYHQXHVDVUHSRUWHG LQ WKH &RQVROLGDWHG 6WDWHP HQWVRI 2 SHUDWLRQVLQFOXGH P LOOLRQ P LOOLRQ DQG P LOOLRQ RI UHYHQXH IRUWKH \ HDUV HQGHG ’ HFHP EHU ’ HFHP EHU DQG ’ HFHP EHU UHVSHFWLYHO\ WKDWDUH SDUWRI WKH LQWHUQDWLRQDOUHSRUWLQJ VHJ P HQW7 KHVH DP RXQWVLQFOXGH P DUNHWLQJ IXQG FRQWULEXWLRQVDQG VXEOHDVH UHQWDOLQFRP HIURP LQWHUQDWLRQDO IUDQFKLVHHVLQ WKH8 QLWHG . LQJ GRP WKDWSURYLGHQR VLJ QLILFDQWFRQWULEXWLRQ WR LQFRP HEHIRUHLQFRP HWD[ HVEXWP XVWEHUHSRUWHG RQ D J URVV EDVLV XQGHUDFFRXQWLQJ UHTXLUHP HQWV 7 KH UHODWHG H[ SHQVHV IRUWKHVH 2 WKHUUHYHQXHV DUH UHSRUWHG LQ 2 WKHUH[ SHQVHV LQ WKH &RQVROLGDWHG6WDWHP HQWVRI 2 SHUDWLRQV
4 XDUWHUO\ ’ DWD 8 QDXGLWHG LQ7 KRXVDQGV H[ FHSW3 HU6KDUH’ DWD
2 XUTXDUWHUO\ VHOHFWILQDQFLDOGDWDLVDVIROORZ V
4 XDUWHU
VW QG UG WK
7RWDOUHYHQXHV
2 SHUDWLQJ LQFRP H D
1 HWLQFRP HDWWULEXWDEOHWR WKH&RP SDQ\ D
%DVLF HDUQLQJ VSHUFRP P RQVKDUH D
’ LOXWHGHDUQLQJ VSHUFRP P RQVKDUH D
’ LYLGHQGVGHFODUHGSHUFRP P RQVKDUH
4 XDUWHU
VW QG UG WK
7RWDOUHYHQXHV
2 SHUDWLQJ LQFRP H ORVV E
1 HWORVV LQFRP HDWWULEXWDEOHWR WKH&RP SDQ\ E
%DVLF ORVV HDUQLQJ VSHUFRP P RQVKDUH E
’ LOXWHG ORVV HDUQLQJ VSHUFRP P RQVKDUH E
’ LYLGHQGVGHFODUHGSHUFRP P RQVKDUH
D 7 KH\ HDUHQGHG’ HFHP EHU Z DVLP SDFWHGE\ WKHIROORZ LQJ
L 7 KHIRXUWKTXDUWHURI LQFOXGHVFRVWVRI P LOOLRQ DIWHUWD[ ORVVRI P LOOLRQDQGEDVLF DQGGLOXWHGORVVSHUFRP P RQ VKDUHRI IURP VWUDWHJ LF FRUSRUDWHUHRUJ DQL] DWLRQFRVWV
E 7 KH\ HDUHQGHG’ HFHP EHU Z DVLP SDFWHGE\ WKHIROORZ LQJ
L 7 KHILUVWVHFRQG DQGWKLUGTXDUWHUVRI LQFOXGHFRVWVRI P LOOLRQ DQG P LOOLRQ UHVSHFWLYHO\ DIWHUWD[ ORVVHVRI P LOOLRQ P LOOLRQ DQG P LOOLRQ UHVSHFWLYHO\ DQG EDVLF DQG GLOXWHG ORVVSHUFRP P RQ VKDUH RI
DQG UHVSHFWLYHO\ IURP 6SHFLDOFKDUJ HV
LL 7 KH WKLUG DQG IRXUWK TXDUWHUVRI LQFOXGH J DLQVRI P LOOLRQ DQG P LOOLRQ UHVSHFWLYHO\ DIWHUWD[ J DLQVRI
P LOOLRQ DQG P LOOLRQ UHVSHFWLYHO\ DQG EDVLF DQG GLOXWHG HDUQLQJ VSHUFRP P RQ VKDUH RI DQG UHVSHFWLYHO\ UHODWHGWR WKH&RP SDQ\ ¶VUHIUDQFKLVLQJ RI &RP SDQ\ RZ QHGUHVWDXUDQWV
4 XDUWHUO\ HDUQLQJ VSHUVKDUHRQDIXOO\ HDUEDVLVP D\ QRWDJ UHHWR WKH&RQVROLGDWHG6WDWHP HQWVRI 2 SHUDWLRQVGXHWR URXQGLQJ
, WHP &KDQJ HVLQ DQG ’ LVDJ UHHP HQWVZ LWK$ FFRXQWDQWVRQ$ FFRXQWLQJ DQG ) LQDQFLDO’ LVFORVXUH 1 RQH
, WHP $ &RQWUROVDQG 3 URFHGXUHV
D ( YDOXDWLRQRI ’ LVFORVXUH&RQWUROVDQG3 URFHGXUHV
$ VRI WKHHQG RI WKHSHULRG FRYHUHG E\ WKLVUHSRUWZ HFDUULHG RXWDQ HYDOXDWLRQ XQGHUWKHVXSHUYLVLRQ DQG Z LWK WKHSDUWLFLSDWLRQ RI RXU P DQDJ HP HQWLQFOXGLQJ RXU&KLHI ( [ HFXWLYH2 IILFHU ‡&( 2 · DQG &KLHI ) LQDQFLDO2 IILFHU ‡&) 2 · RI WKHHIIHFWLYHQHVVRI RXUGLVFORVXUH FRQWUROVDQGSURFHGXUHV DVGHILQHGLQ5 XOHV D H DQG G H RI WKH( [ FKDQJ H$ FW %DVHGXSRQWKLVHYDOXDWLRQ WKH&( 2 DQG&) 2 FRQFOXGHGWKDWWKH&RP SDQ\ ¶VGLVFORVXUHFRQWUROVDQGSURFHGXUHVDUHHIIHFWLYH
E 0 DQDJ HP HQW¶V5 HSRUWRQRXU, QWHUQDO&RQWURORYHU) LQDQFLDO5 HSRUWLQJ
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
8 QGHUWKH VXSHUYLVLRQ DQG Z LWK WKH SDUWLFLSDWLRQ RI RXUP DQDJ HP HQWLQFOXGLQJ RXU&( 2 DQG &) 2 Z H FRQGXFWHG DQ HYDOXDWLRQ RI WKH HIIHFWLYHQHVVRI RXULQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ EDVHG RQ WKHFULWHULDHVWDEOLVKHG LQ , QWHUQDO&RQWURO† , QWHJ UDWHG ) UDP HZRUN LVVXHG E\ WKH &RP P LWWHH RI 6SRQVRULQJ 2 UJ DQL] DWLRQV ‡&2 62 · RI WKH 7 UHDGZ D\ &RP P LVVLRQ ‡ ) UDP HZ RUN· %DVHG RQ RXU HYDOXDWLRQXQGHUWKH&2 62 ) UDP HZ RUN RXUP DQDJ HP HQWFRQFOXGHGWKDWRXULQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ Z DVHIIHFWLYHDV RI ’ HFHP EHU
( UQVW <RXQJ / / 3 DQLQGHSHQGHQWUHJ LVWHUHGSXEOLF DFFRXQWLQJ ILUP KDVDXGLWHGWKH &RQVROLGDWHG) LQDQFLDO6WDWHP HQWVLQFOXGHGLQ WKLV$ QQXDO5 HSRUWRQ ) RUP . DQG DVSDUWRI LWVDXGLWKDVLVVXHG DQ DWWHVWDWLRQ UHSRUWLQFOXGHG KHUHLQ RQ WKH HIIHFWLYHQHVVRI RXU LQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ
F &KDQJ HVLQ, QWHUQDO&RQWURORYHU) LQDQFLDO5 HSRUWLQJ
7 KHUHZ HUHQR FKDQJ HVLQ RXULQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ GXULQJ WKHTXDUWHUHQGHG ’ HFHP EHU WKDWKDYHP DWHULDOO\ DIIHFWHG RUDUHOLNHO\ WR P DWHULDOO\ DIIHFWWKH&RP SDQ\ ¶VLQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ
5 HSRUWRI , QGHSHQGHQW5 HJ LVWHUHG 3 XEOLF $ FFRXQWLQJ ) LUP
7R WKH6WRFNKROGHUVDQGWKH%RDUGRI ’ LUHFWRUVRI 3DSD-RKQ¶V, QWHUQDWLRQDO, QF DQG6XEVLGLDULHV
2 SLQLRQ RQ , QWHUQDO&RQWURORYHU) LQDQFLDO5 HSRUWLQJ
: HKDYHDXGLWHG 3DSD-RKQ¶V, QWHUQDWLRQDO , QF DQG 6XEVLGLDULHV¶ LQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ DVRI ’ HFHP EHU EDVHG RQ FULWHULDHVWDEOLVKHG LQ , QWHUQDO&RQWURO† , QWHJ UDWHG ) UDP HZ RUN LVVXHG E\ WKH&RP P LWWHHRI 6SRQVRULQJ 2 UJ DQL] DWLRQVRI WKH7 UHDGZ D\ &RP P LVVLRQ ) UDP HZ RUN WKH &2 62 FULWHULD , Q RXURSLQLRQ 3DSD -RKQ¶V , QWHUQDWLRQDO , QF DQG 6XEVLGLDULHV WKH &RP SDQ\ P DLQWDLQHG LQ DOOP DWHULDOUHVSHFWV HIIHFWLYH LQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ DV RI ’ HFHP EHU EDVHG RQ WKH &2 62 FULWHULD
: HDOVR KDYHDXGLWHG LQDFFRUGDQFHZ LWKWKHVWDQGDUGVRI WKH3XEOLF &RP SDQ\ $ FFRXQWLQJ 2 YHUVLJ KW%RDUG 8 QLWHG6WDWHV 3&$ 2 % WKH FRQVROLGDWHGILQDQFLDOVWDWHP HQWVRI WKH&RP SDQ\ DQGRXUUHSRUWGDWHG) HEUXDU\ H[ SUHVVHGDQXQTXDOLILHGRSLQLRQWKHUHRQ
%DVLVIRU2 SLQLRQ
7 KH&RP SDQ\ ¶VP DQDJ HP HQWLVUHVSRQVLEOHIRUP DLQWDLQLQJ HIIHFWLYHLQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ DQG IRULWVDVVHVVP HQWRI WKH HIIHFWLYHQHVVRI LQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ LQFOXGHGLQWKHDFFRP SDQ\ LQJ ‡0 DQDJ HP HQW¶V5 HSRUWRQRXU, QWHUQDO&RQWURO2 YHU
) LQDQFLDO5 HSRUWLQJ · 2 XUUHVSRQVLELOLW\ LVWR H[ SUHVVDQ RSLQLRQ RQ WKH&RP SDQ\ ¶VLQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ EDVHG RQ RXU DXGLW: H DUH DSXEOLF DFFRXQWLQJ ILUP UHJ LVWHUHG Z LWK WKH 3&$ 2 % DQG DUH UHTXLUHG WR EH LQGHSHQGHQWZ LWK UHVSHFWWR WKH &RP SDQ\ LQ DFFRUGDQFHZ LWK WKH8 6 IHGHUDOVHFXULWLHVODZ VDQG WKHDSSOLFDEOHUXOHVDQG UHJ XODWLRQVRI WKH6HFXULWLHVDQG ( [ FKDQJ H&RP P LVVLRQ DQG WKH3&$ 2 %
: HFRQGXFWHG RXUDXGLWLQ DFFRUGDQFHZ LWK WKHVWDQGDUGVRI WKH3&$ 2 % 7 KRVHVWDQGDUGVUHTXLUHWKDWZ HSODQ DQG SHUIRUP WKHDXGLWWR REWDLQUHDVRQDEOHDVVXUDQFHDERXWZ KHWKHUHIIHFWLYHLQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ Z DVP DLQWDLQHGLQDOOP DWHULDOUHVSHFWV
2 XUDXGLWLQFOXGHG REWDLQLQJ DQ XQGHUVWDQGLQJ RI LQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ DVVHVVLQJ WKH ULVN WKDWD P DWHULDOZ HDNQHVV H[ LVWV WHVWLQJ DQG HYDOXDWLQJ WKH GHVLJ Q DQG RSHUDWLQJ HIIHFWLYHQHVVRI LQWHUQDOFRQWUROEDVHG RQ WKH DVVHVVHG ULVN DQG SHUIRUP LQJ VXFK RWKHUSURFHGXUHVDVZ HFRQVLGHUHGQHFHVVDU\ LQWKHFLUFXP VWDQFHV : HEHOLHYHWKDWRXUDXGLWSURYLGHVDUHDVRQDEOHEDVLVIRURXURSLQLRQ
’ HILQLWLRQ DQG / LP LWDWLRQVRI , QWHUQDO&RQWURO2 YHU) LQDQFLDO5 HSRUWLQJ
$ FRP SDQ\ ¶VLQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ LVD SURFHVVGHVLJ QHG WR SURYLGH UHDVRQDEOH DVVXUDQFH UHJ DUGLQJ WKH UHOLDELOLW\ RI ILQDQFLDOUHSRUWLQJ DQG WKH SUHSDUDWLRQ RI ILQDQFLDOVWDWHP HQWV IRUH[ WHUQDOSXUSRVHV LQ DFFRUGDQFH Z LWK J HQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV $ FRP SDQ\ ¶VLQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ LQFOXGHVWKRVHSROLFLHVDQGSURFHGXUHVWKDW SHUWDLQWR WKHP DLQWHQDQFH RI UHFRUGVWKDWLQUHDVRQDEOHGHWDLO DFFXUDWHO\ DQGIDLUO\ UHIOHFWWKHWUDQVDFWLRQVDQGGLVSRVLWLRQVRI WKHDVVHWVRI WKHFRP SDQ\ SURYLGH UHDVRQDEOHDVVXUDQFHWKDWWUDQVDFWLRQVDUHUHFRUGHGDVQHFHVVDU\ ▇▇ ▇▇▇▇ LWSUHSDUDWLRQRI ILQDQFLDOVWDWHP HQWVLQDFFRUGDQFHZ LWKJ HQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV DQG WKDWUHFHLSWVDQG H[ SHQGLWXUHVRI WKHFRP SDQ\ DUHEHLQJ P DGHRQO\ LQ DFFRUGDQFHZ LWK DXWKRUL] DWLRQV RI P DQDJ HP HQWDQG GLUHFWRUV RI WKH FRP SDQ\ DQG SURYLGH UHDVRQDEOH DVVXUDQFH UHJ DUGLQJ SUHYHQWLRQ RU WLP HO\ GHWHFWLRQ RI XQDXWKRUL] HGDFTXLVLWLRQ XVH RUGLVSRVLWLRQRI WKHFRP SDQ\ ¶VDVVHWVWKDWFRXOGKDYHDP DWHULDOHIIHFWRQWKHILQDQFLDOVWDWHP HQWV
%HFDXVHRI LWVLQKHUHQWOLP LWDWLRQV LQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ P D\ QRWSUHYHQWRUGHWHFWP LVVWDWHP HQWV $ OVR SURMHFWLRQVRI DQ\ HYDOXDWLRQ RI HIIHFWLYHQHVV WR IXWXUH SHULRGV DUH VXEMHFWWR WKH ULVN WKDWFRQWUROV P D\ EHFRP H LQDGHTXDWH EHFDXVH RI FKDQJ HV LQ FRQGLWLRQV RUWKDWWKHGHJ UHHRI FRP SOLDQFHZ LWKWKHSROLFLHVRUSURFHGXUHVP D\ GHWHULRUDWH
V ( UQVW <RXQJ / / 3
/ RXLVYLOOH . HQWXFN\
) HEUXDU\
, WHP % 2 WKHU, QIRUP DWLRQ 1 RQH
3$ 5 7 , , ,
, WHP ’ LUHFWRUV ( [ HFXWLYH2 IILFHUVDQG &RUSRUDWH* RYHUQDQFH
, QIRUP DWLRQ UHJ DUGLQJ H[ HFXWLYH RIILFHUVLVLQFOXGHG DERYH XQGHUWKH FDSWLRQ ‡, QIRUP DWLRQ DERXWRXU( [ HFXWLYH 2 IILFHUV· DWWKH HQG RI 3DUW, RI WKLV5 HSRUW2 WKHULQIRUP DWLRQ UHJ DUGLQJ GLUHFWRUV H[ HFXWLYH RIILFHUVDQG FRUSRUDWH J RYHUQDQFH DSSHDULQJ XQGHUWKH FDSWLRQV
‡&RUSRUDWH * RYHUQDQFH· ‡, WHP ( OHFWLRQ RI ’ LUHFWRUV· ‡’ HOLQTXHQW6HFWLRQ D 5 HSRUWV· DQG ‡( [ HFXWLYH &RP SHQVDWLRQ &RP SHQVDWLRQ ’ LVFXVVLRQ DQG$ QDO\ VLV· LVLQFRUSRUDWHG E\ UHIHUHQFHIURP WKH&RP SDQ\ ¶VGHILQLWLYHSUR[ \ VWDWHP HQWZ KLFK Z LOOEHILOHG Z LWKWKH6HFXULWLHVDQG( [ FKDQJ H&RP P LVVLRQQR ODWHUWKDQ GD\ VDIWHUWKHHQGRI WKHILVFDO\ HDUFRYHUHGE\ WKLV5 HSRUW
: HKDYHDGRSWHG DZ ULWWHQ FRGHRI HWKLFVWKDWDSSOLHVWR RXUGLUHFWRUV RIILFHUVDQG HP SOR\ HHV : HLQWHQG WR SRVWDOOUHTXLUHG GLVFORVXUHV FRQFHUQLQJ DQ\ DP HQGP HQWVWR RUZ DLYHUVIURP RXUFRGHRI HWKLFVRQRXUZ HEVLWHWR WKHH[ WHQWSHUP LWWHGE\ 1 $ 6’ $ 4 2 XUFRGHRI HWKLFV FDQEHIRXQGRQRXUZ HEVLWH Z KLFKLVORFDWHGDWZ Z Z SDSDMRKQVFRP
, WHP ( [ HFXWLYH&RP SHQVDWLRQ
, QIRUP DWLRQ UHJ DUGLQJ H[ HFXWLYH FRP SHQVDWLRQ DSSHDULQJ XQGHUWKH FDSWLRQV‡( [ HFXWLYH &RP SHQVDWLRQ &RP SHQVDWLRQ ’ LVFXVVLRQ DQG
$ QDO\ VLV· ‡&RP SHQVDWLRQ &RP P LWWHH 5 HSRUW· DQG ‡&HUWDLQ 5 HODWLRQVKLSV DQG 5 HODWHG 7 UDQVDFWLRQV † &RP SHQVDWLRQ &RP P LWWHH
, QWHUORFNVDQG , QVLGHU3DUWLFLSDWLRQ· LVLQFRUSRUDWHG E\ UHIHUHQFHIURP WKH&RP SDQ\ ¶VGHILQLWLYHSUR[ \ VWDWHP HQWZ KLFK Z LOOEHILOHG Z LWK WKH6HFXULWLHVDQG( [ FKDQJ H&RP P LVVLRQQR ODWHUWKDQ GD\ VDIWHUWKHHQGRI WKHILVFDO\ HDUFRYHUHGE\ WKLV5 HSRUW
, WHP 6HFXULW\ 2 Z QHUVKLS RI &HUWDLQ %HQHILFLDO2 Z QHUVDQG 0 DQDJ HP HQWDQG 5 HODWHG 6WRFNKROGHU0 DWWHUV
7 KHIROORZ LQJ WDEOHSURYLGHVLQIRUP DWLRQ DVRI ’ HFHP EHU UHJ DUGLQJ WKHQXP EHURI VKDUHVRI WKH&RP SDQ\ ¶VFRP P RQ VWRFN WKDW P D\ EHLVVXHGXQGHUWKH&RP SDQ\ ¶VHTXLW\ FRP SHQVDWLRQSODQV
F | ||
D | E | 1 XP EHURI VHFXULWLHV |
1 XP EHURI | : HLJ KWHG | UHP DLQLQJ DYDLODEOH |
VHFXULWLHVWR EH | DYHUDJ H | IRUIXWXUHLVVXDQFH |
LVVXHG XSRQ H[ HUFLVH | H[ HUFLVHSULFH | XQGHUHTXLW\ |
RI RXWVWDQGLQJ | RI RXWVWDQGLQJ | FRP SHQVDWLRQ SODQV |
RSWLRQV Z DUUDQWV | RSWLRQV Z DUUDQWV | H[ FOXGLQJ VHFXULWLHV |
3 ODQ&DWHJ RU\ DQG ULJ KWV DQG ULJ KWV UHIOHFWHG LQFROXP Q D
( TXLW\ FRP SHQVDWLRQSODQVDSSURYHGE\ VHFXULW\ KROGHUV ( TXLW\ FRP SHQVDWLRQSODQVQRWDSSURYHGE\ VHFXULW\ KROGHUV
7RWDO
5 HSUHVHQWVVKDUHVRI FRP P RQ VWRFN LVVXDEOHSXUVXDQWWR WKHQRQ TXDOLILHG GHIHUUHG FRP SHQVDWLRQ SODQ 7 KHZ HLJ KWHG DYHUDJ HH[ HUFLVH SULFH FROXP QE GRHVQRWLQFOXGHDQ\ DVVXP HGSULFHIRULVVXDQFHRI VKDUHVSXUVXDQWWR WKHQRQ TXDOLILHGGHIHUUHGFRP SHQVDWLRQSODQ
, QIRUP DWLRQ UHJ DUGLQJ VHFXULW\ RZ QHUVKLS RI FHUWDLQ EHQHILFLDORZ QHUVDQG P DQDJ HP HQWDQG UHODWHG VWRFNKROGHUP DWWHUVDSSHDULQJ XQGHU WKH FDSWLRQ ‡6HFXULW\ 2 Z QHUVKLS RI &HUWDLQ %HQHILFLDO2 Z QHUV DQG 0 DQDJ HP HQW· LV LQFRUSRUDWHG E\ UHIHUHQFH IURP WKH &RP SDQ\ ¶V GHILQLWLYHSUR[ \ VWDWHP HQWZ KLFK Z LOOEHILOHG Z LWK WKH6HFXULWLHVDQG ( [ FKDQJ H&RP P LVVLRQ QR ODWHUWKDQ GD\ VDIWHUWKHHQG RI WKH ILVFDO\ HDUFRYHUHGE\ WKLV5 HSRUW
, WHP &HUWDLQ 5 HODWLRQVKLSVDQG 5 HODWHG7 UDQVDFWLRQV DQG ’ LUHFWRU, QGHSHQGHQFH
, QIRUP DWLRQ UHJ DUGLQJ FHUWDLQ UHODWLRQVKLSVDQG UHODWHG WUDQVDFWLRQV DQG GLUHFWRULQGHSHQGHQFH DSSHDULQJ XQGHUWKH FDSWLRQV‡&RUSRUDWH
* RYHUQDQFH· DQG ‡&HUWDLQ 5 HODWLRQVKLSV DQG 5 HODWHG 7 UDQVDFWLRQV· LV LQFRUSRUDWHG E\ UHIHUHQFH IURP WKH &RP SDQ\ ¶V GHILQLWLYH SUR[ \ VWDWHP HQWZ KLFKZ LOOEHILOHGZ LWKWKH6HFXULWLHVDQG( [ FKDQJ H&RP P LVVLRQQR ODWHUWKDQ GD\ VDIWHUWKHHQGRI WKHILVFDO\ HDUFRYHUHG E\ WKLV5 HSRUW
, WHP 3 ULQFLSDO$ FFRXQWLQJ ) HHVDQG 6HUYLFHV
, QIRUP DWLRQ UHJ DUGLQJ SULQFLSDODFFRXQWLQJ IHHVDQG VHUYLFHVDSSHDULQJ XQGHUWKH FDSWLRQ ‡5 DWLILFDWLRQ RI WKH 6HOHFWLRQ RI , QGHSHQGHQW
$ XGLWRUV· LV LQFRUSRUDWHG E\ UHIHUHQFH IURP WKH &RP SDQ\ ¶V GHILQLWLYH SUR[ \ VWDWHP HQWZ KLFK Z LOOEH ILOHG Z LWK WKH 6HFXULWLHV DQG ( [ FKDQJ H&RP P LVVLRQQR ODWHUWKDQ GD\ VDIWHUWKHHQGRI WKHILVFDO\ HDUFRYHUHGE\ WKLV5 HSRUW
3$ 5 7 , 9
, WHP ( [ KLELWV ) LQDQFLDO6WDWHP HQW6FKHGXOHV D ) LQDQFLDO6WDWHP HQWV
7 KHIROORZ LQJ &RQVROLGDWHG ) LQDQFLDO6WDWHP HQWV QRWHVUHODWHG WKHUHWR DQG UHSRUWVRI LQGHSHQGHQWDXGLWRUVDUHLQFOXGHG LQ , WHP RI WKLV
5 HSRUW
5 HSRUWVRI , QGHSHQGHQW5 HJ LVWHUHG3XEOLF $ FFRXQWLQJ ) LUP V
&RQVROLGDWHG6WDWHP HQWVRI 2 SHUDWLRQVIRUWKH\ HDUVHQGHG’ HFHP EHU ’ HFHP EHU DQG’ HFHP EHU
&RQVROLGDWHG 6WDWHP HQWV RI &RP SUHKHQVLYH , QFRP H / RVV IRUWKH \ HDUV HQGHG ’ HFHP EHU ’ HFHP EHU DQG ’ HFHP EHU
&RQVROLGDWHG%DODQFH6KHHWVDVRI ’ HFHP EHU DQG’ HFHP EHU
&RQVROLGDWHG6WDWHP HQWVRI 6WRFNKROGHUV¶ ’ HILFLWIRUWKH\ HDUVHQGHG’ HFHP EHU ’ HFHP EHU DQG’ HFHP EHU
&RQVROLGDWHG6WDWHP HQWVRI &DVK) ORZ VIRUWKH\ HDUVHQGHG’ HFHP EHU ’ HFHP EHU DQG’ HFHP EHU 1 RWHVWR &RQVROLGDWHG) LQDQFLDO6WDWHP HQWV
D ) LQDQFLDO6WDWHP HQW6FKHGXOHV
6FKHGXOH, , 9 DOXDWLRQDQG4 XDOLI\ LQJ $ FFRXQWV | ||||
%DODQFHDW | &KDUJ HG WR UHFRYHUHG IURP | %DODQFHDW | ||
&ODVVLILFDWLRQ | %HJ LQQLQJ RI <HDU | &RVWVDQG ( [ SHQVHV | $ GGLWLRQV ’ HGXFWLRQV | ( QG RI <HDU |
LQWKRXVDQGV
) LVFDO\ HDUHQGHG ’ HFHP EHU
’ HGXFWHGIURP DVVHWDFFRXQWV
9 DOXDWLRQDOORZ DQFHRQGHIHUUHGWD[ DVVHWV
) LVFDO\ HDUHQGHG ’ HFHP EHU
’ HGXFWHGIURP DVVHWDFFRXQWV
5 HVHUYHIRUXQFROOHFWLEOHDFFRXQWVUHFHLYDEOH
5 HVHUYHIRUIUDQFKLVHHQRWHVUHFHLYDEOH
9 DOXDWLRQDOORZ DQFHRQGHIHUUHGWD[ DVVHWV
) LVFDO\ HDUHQGHG ’ HFHP EHU
’ HGXFWHGIURP DVVHWDFFRXQWV
5 HVHUYHIRUXQFROOHFWLEOHDFFRXQWVUHFHLYDEOH
5 HVHUYHIRUIUDQFKLVHHQRWHVUHFHLYDEOH
9 DOXDWLRQDOORZ DQFHRQGHIHUUHGWD[ DVVHWV
8 QFROOHFWLEOHDFFRXQWVZ ULWWHQRII DQGUHFODVVLILFDWLRQVEHWZ HHQDFFRXQWVDQGQRWHVUHFHLYDEOHUHVHUYHV
$ OORWKHUVFKHGXOHVIRUZ KLFKSURYLVLRQLVP DGHLQWKHDSSOLFDEOHDFFRXQWLQJ UHJ XODWLRQRI WKH6HFXULWLHVDQG( [ FKDQJ H&RP P LVVLRQDUHQRW UHTXLUHGXQGHUWKHUHODWHGLQVWUXFWLRQVRUDUHLQDSSOLFDEOHDQG WKHUHIRUH KDYHEHHQRP LWWHG
D ( [ KLELWV
7 KHH[ KLELWVOLVWHGLQWKHDFFRP SDQ\ LQJ LQGH[ WR ( [ KLELWVDUHILOHGDVSDUWRI WKLV) RUP .
, WHP 6XP P DU\ 1 RQH
( [ KLELW
( ; + , %, 7 , 1 ’ ( ;
1 XP EHU ’ HVFULSWLRQ RI ( [ KLELW
2 XU$ P HQGHGDQG5 HVWDWHG&HUWLILFDWHRI , QFRUSRUDWLRQ ( [ KLELW WR RXU4 XDUWHUO\ 5 HSRUWRQ) RUP 4 IRUWKHTXDUWHUO\
SHULRGHQGHG-XQH LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
2 XU$ P HQGHG DQG 5 HVWDWHG %\ / DZ V ( [ KLELW WR RXU4 XDUWHUO\ 5 HSRUWRQ ) RUP 4 IRUWKH TXDUWHUO\ SHULRG HQGHG
6HSWHP EHU LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
&HUWLILFDWHRI ’ HVLJ QDWLRQRI 6HULHV% &RQYHUWLEOH3UHIHUUHG6WRFNRI 3DSD-RKQ¶V, QWHUQDWLRQDO, QF ( [ KLELW WR RXUUHSRUW
RQ) RUP . DVILOHGRQ) HEUXDU\ LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
&HUWLILFDWHRI ’ HVLJ QDWLRQ RI 6HULHV$ -XQLRU3DUWLFLSDWLQJ 3UHIHUUHG 6WRFN RI 3DSD-RKQ¶V, QWHUQDWLRQDO , QF ( [ KLELW WR
RXUUHSRUWRQ) RUP . DVILOHGRQ-XO\ LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
5 LJ KWV$ J UHHP HQWGDWHG DV RI -XO\ E\ DQG EHWZ HHQ 3DSD -RKQ¶V , QWHUQDWLRQDO , QF DQG &RP SXWHUVKDUH 7 UXVW &RP SDQ\ 1 $ DVULJ KWVDJ HQW ( [ KLELW WR RXUUHSRUWRQ ) RUP . DVILOHG RQ -XO\ LVLQFRUSRUDWHG KHUHLQ E\
UHIHUHQFH
$ P HQGP HQW1 R WR 5 LJ KWV$ J UHHP HQWGDWHG DVRI ) HEUXDU\ E\ DQG EHWZ HHQ 3DSD-RKQ¶V, QWHUQDWLRQDO , QF DQG &RP SXWHUVKDUH7 UXVW&RP SDQ\ 1 $ DVULJ KWVDJ HQW ( [ KLELW WR RXUUHSRUWRQ) RUP . DVILOHGRQ) HEUXDU\ LV
LQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
$ P HQGP HQW1 R WR 5 LJ KWV$ J UHHP HQWGDWHG DV RI 0 DUFK E\ DQG EHWZ HHQ 3DSD -RKQ¶V, QWHUQDWLRQDO , QF DQG
&RP SXWHUVKDUH7 UXVW&RP SDQ\ 1 $ DVULJ KWVDJ HQW ( [ KLELW WR RXUUHSRUWRQ ) RUP . DVILOHG RQ 0 DUFK LV
LQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
$ P HQGP HQW1 R WR 5 LJ KWV$ J UHHP HQWGDWHG DVRI 2 FWREHU E\ DQG EHWZ HHQ 3DSD-RKQ¶V, QWHUQDWLRQDO , QF DQG
&RP SXWHUVKDUH7 UXVW&RP SDQ\ 1 $ DVULJ KWVDJ HQW ( [ KLELW WR RXUUHSRUWRQ) RUP . DVILOHG RQ2 FWREHU LV
LQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
) RUP RI 5 ▇▇ ▇▇▇ &HUWLILFDWH ( [ KLELW WR RXUUHSRUWRQ ) RUP . DV ILOHG RQ -XO\ LV LQFRUSRUDWHG KHUHLQ E\
UHIHUHQFH
6SHFLP HQ&RP P RQ6WRFN&HUWLILFDWH ( [ KLELW WR RXU$ QQXDO5 HSRUWRQ) RUP . IRUWKHILVFDO\ HDUHQGHG’ HFHP EHU
LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
’ HVFULSWLRQ RI 5 HJ LVWUDQW¶VVHFXULWLHVUHJ LVWHUHGSXUVXDQWWR 6HFWLRQ RI WKH6HFXULWLHV( [ FKDQJ H$ FWRI ( [ KLELW WR RXU$ QQXDO5 HSRUWRQ) RUP . IRUWKHILVFDO\ HDUHQGHG’ HFHP EHU LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
) RUP RI 3DSD-RKQ¶V, QWHUQDWLRQDO, QF ’ LUHFWRU, QGHP QLILFDWLRQ$ J UHHP HQW( [ KLELW WR RXUUHSRUWRQ) RUP . IRUWKH
ILVFDO\ HDUHQGHG’ HFHP EHU LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
) RUP RI 3DSD-RKQ¶V, QWHUQDWLRQDO , QF 2 IILFHU, QGHP QLILFDWLRQ$ J UHHP HQW( [ KLELW WR RXUUHSRUWRQ) RUP . IRUWKH
ILVFDO\ HDUHQGHG’ HFHP EHU LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
( [ KLELW
1 XP EHU ’ HVFULSWLRQ RI ( [ KLELW
6HFXULWLHV3XUFKDVH$ J UHHP HQWEHWZ HHQ 3DSD -RKQ¶V, QWHUQDWLRQDO , QF DQG 6WDUERDUG 9 DOXH DQG 2 SSRUWXQLW\ 0 DVWHU) XQG
/ WG 6WDUERDUG 9 DOXH DQG 2 SSRUWXQLW\ 0 DVWHU) XQG / / 3 6WDUERDUG 9 DOXH DQG 2 SSRUWXQLW\ & / 3 6WDUERDUG 9 DOXH DQG
2 SSRUWXQLW\ 6 / / & DQG 6WDUERDUG9 DOXH/ 3 HIIHFWLYH) HEUXDU\ ( [ KLELW WR RXUUHSRUWRQ) RUP . DVILOHG RQ
) HEUXDU\ LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
5 HJ LVWUDWLRQ 5 LJ KWV$ J UHHP HQWEHWZ HHQ 3DSD-RKQ¶V, QWHUQDWLRQDO , QF DQG 6WDUERDUG 9 DOXH DQG 2 SSRUWXQLW\ 0 DVWHU) XQG
/ WG 6WDUERDUG 9 DOXH DQG 2 SSRUWXQLW\ 0 DVWHU) XQG / / 3 6WDUERDUG 9 DOXH DQG 2 SSRUWXQLW\ & / 3 6WDUERDUG 9 DOXH DQG 2 SSRUWXQLW\ 6 / / & DQG 6WDUERDUG9 DOXH/ 3 HIIHFWLYH) HEUXDU\ ( [ KLELW WR RXUUHSRUWRQ ) RUP . DVILOHG RQ
) HEUXDU\ LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
* RYHUQDQFH$ J UHHP HQWEHWZ HHQ 3DSD -RKQ¶V, QWHUQDWLRQDO , QF DQG 6WDUERDUG 9 DOXH / 3 6WDUERDUG 9 DOXH DQG 2 SSRUWXQLW\
0 DVWHU) XQG / WG 6WDUERDUG 9 DOXH DQG 2 SSRUWXQLW\ 0 DVWHU) XQG / / 3 6WDUERDUG 9 DOXH DQG 2 SSRUWXQLW\ & / 3 6WDUERDUG
9 DOXH DQG 2 SSRUWXQLW\ 6 / / & 6WDUERDUG 9 DOXH 5 / 3 6WDUERDUG 9 DOXH * 3 / / & 6WDUERDUG 3ULQFLSDO&R / 3 6WDUERDUG
3ULQFLSDO&R * 3 / / & 6WDUERDUG 9 DOXH / / 3 6WDUERDUG 9 DOXH 5 * 3 / / & -HIIUH\ & 6P LWK DQG 3HWHU$ ) HOG HIIHFWLYH
) HEUXDU\ ( [ KLELW WR RXUUHSRUWRQ) RUP . DVILOHGRQ) HEUXDU\ LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
$ P HQGP HQW1 R WR * RYHUQDQFH$ J UHHP HQWE\ DQG DP RQJ 3DSD-RKQ¶V, QWHUQDWLRQDODQG WKHHQWLWLHVDQG QDWXUDOSHUVRQV
OLVWHG RQ WKHVLJ QDWXUHSDJ HVDWWDFKHG WKHUHWR HIIHFWLYH0 DUFK ( [ KLELW WR RXUUHSRUWRQ ) RUP . DVILOHG RQ
0 DUFK LVLQFRUSRUDWHGKHUHLQ E\ UHIHUHQFH
( P SOR\ P HQW$ J UHHP HQWEHWZ HHQ 3DSD-RKQ¶V, QWHUQDWLRQDO , QF DQG 5 REHUW/ \ QFK HIIHFWLYH$ XJ XVW ( [ KLELW
WR RXUUHSRUWRQ) RUP . DVILOHGRQ$ XJ XVW LVLQFRUSRUDWHKHUHLQE\ UHIHUHQFH
( QGRUVHP HQW$ J UHHP HQWH[ HFXWHG -XQH DQG HIIHFWLYH 0 DUFK E\ DP RQJ RQ WKH RQH KDQG $ %* 6KDT
/ / & IRUWKHSHUVRQDOVHUYLFHVRI 6KDTXLOOH2 ¶1 HDODQG RQWKHRWKHUKDQG 3DSD-RKQ¶V0 DUNHWLQJ ) XQG , QF DQG3DSD-RKQ¶V
, QWHUQDWLRQDO, QF ( [ KLELW WR RXUUHSRUWRQ) RUP . DVILOHGRQ-XQH LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
$ P HQGP HQW1 R WR WKH0 DUFK ( QGRUVHP HQW$ J UHHP HQWIRUSHUVRQDOVHUYLFHVRI 6KDTXLOOH2 ¶1 HDOE\ DQG DP RQJ
$ %* 6KDT / / & 3DSD-RKQ¶V0 DUNHWLQJ ) XQG , QF DQG3DSD-RKQ¶V, QWHUQDWLRQDO, QF HIIHFWLYH-XO\ ( [ KLELW WR RXUUHSRUWRQ) RUP 4 IRUWKHTXDUWHUO\ SHULRGHQGHG6HSWHP EHU LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
&UHGLW$ J UHHP HQWGDWHG$ XJ XVW E\ DQG DP RQJ 3DSD-RKQ¶V, QWHUQDWLRQDO, QF DVERUURZ HU WKH* XDUDQWRUVSDUW\
WKHUHWR -30 RUJ DQ &KDVH%DQN 1 $ DV$ GP LQLVWUDWLYH$ J HQWDQG WKHRWKHUOHQGLQJ LQVWLWXWLRQVWKDWDUHSDUWLHVWKHUHWR DV
/ HQGHUV &RQIRUP HG FRS\ WKURXJ K DP HQGP HQWQR ( [ KLELW WR RXUUHSRUWRQ ) RUP . IRUWKHILVFDO\ HDUHQGHG
’ HFHP EHU LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
$ P HQGP HQW1 R WR &UHGLW$ J UHHP HQWGDWHG 2 FWREHU E\ DQG DP RQJ 3DSD-RKQ¶V, QWHUQDWLRQDO , QF DVERUURZ HU
WKH* XDUDQWRUVSDUW\ WKHUHWR -30 RUJ DQ &KDVH%DQN 1 $ DV$ GP LQLVWUDWLYH$ J HQWDQG WKHRWKHUOHQGLQJ LQVWLWXWLRQVWKDW
DUHSDUWLHVWKHUHWR DV/ HQGHUV ( [ KLELW WR RXU4 XDUWHUO\ 5 HSRUWRQ) RUP 4 IRUWKHTXDUWHUO\ SHULRGHQGHG6HSWHP EHU
LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
( [ KLELW
1 XP EHU ’ HVFULSWLRQ RI ( [ KLELW
$ P HQGP HQW1 R WR &UHGLW$ J UHHP HQWGDWHG ) HEUXDU\ E\ DQG DP RQJ 3DSD-RKQ¶V, QWHUQDWLRQDO , QF DVERUURZ HU
WKH* XDUDQWRUVSDUW\ WKHUHWR -30 RUJ DQ &KDVH%DQN 1 $ DV$ GP LQLVWUDWLYH$ J HQWDQG WKHRWKHUOHQGLQJ LQVWLWXWLRQVWKDW
DUHSDUWLHVWKHUHWR DV/ HQGHUV ( [ KLELW WR RXUUHSRUWRQ ) RUP . IRUWKHILVFDO\ HDUHQGHG ’ HFHP EHU LV
LQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
-RLQGHU$ J UHHP HQWGDWHG ’ HFHP EHU EHWZ HHQ 3DSD-RKQ¶V8 6$ * HRUJ LD , QF 3DSD-RKQ¶V) UDQFKLVLQJ / / & DQG
-30 RUJ DQ &KDVH %DQN 1 $ DV$ GP LQLVWUDWLYH$ J HQWXQGHUWKDWFHUWDLQ &UHGLW$ J UHHP HQWGDWHG DVRI $ XJ XVW
DP RQJ 3DSD-RKQ¶V, QWHUQDWLRQDO , QF WKHRWKHU/ RDQ 3DUWLHVSDUW\ WKHUHWR WKHOHQGHUVSDUW\ WKHUHWR DQG WKH$ GP LQLVWUDWLYH
$ J HQW
3DSD -RKQ¶V, QWHUQDWLRQDO , QF ’ HIHUUHG &RP SHQVDWLRQ 3ODQ DVDP HQGHG WKURXJ K ’ HFHP EHU ( [ KLELW WR RXU UHSRUWRQ) RUP . IRUWKHILVFDO\ HDUHQGHG’ HFHP EHU LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
3DSD-RKQ¶V, QWHUQDWLRQDO , QF 2 P QLEXV, QFHQWLYH3ODQ ( [ KLELW WR RXUUHSRUWRQ) RUP . DVILOHGRQ0 D\
LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
3DSD-RKQ¶V, QWHUQDWLRQDO , QF 2 P QLEXV, QFHQWLYH3ODQ ( [ KLELW WR RXUUHSRUWRQ) RUP . DVILOHGRQ0 D\
LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
3DSD-RKQ¶V, QWHUQDWLRQDO, QF $ P HQGHGDQG5 HVWDWHG&KDQJ HRI &RQWURO6HYHUDQFH3ODQ ( [ KLELW WR RXUUHSRUWRQ) RUP
. ILOHGRQ1 RYHP EHU LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
3DSD-RKQ¶V, QWHUQDWLRQDO , QF 6HYHUDQFH3D\ 3ODQ ( [ KLELW WR RXUUHSRUWRQ) RUP 4 IRUWKHTXDUWHUO\ SHULRG HQGHG
0 DUFK LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
$ P HQGP HQWWR 3DSD -RKQ¶V, QWHUQDWLRQDO , QF 6HYHUDQFH 3D\ 3ODQ ( [ KLELW WR RXUUHSRUWRQ ) RUP . DVILOHG RQ
1 RYHP EHU LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
$ P HQGP HQW1 R WR 3DSD-RKQ¶V, QWHUQDWLRQDO, QF 6HYHUDQFH3D\ 3ODQ ( [ KLELW WR RXUUHSRUWRQ) RUP . DVILOHGRQ
’ HFHP EHU LVLQFRUSRUDWHGKHUHLQE\ UHIHUHQFH
6XEVLGLDULHVRI WKH&RP SDQ\
&RQVHQWRI ( UQVW <RXQJ / / 3
&RQVHQWRI . 30 * / / 3
6HFWLRQ &HUWLILFDWLRQRI &KLHI ( [ HFXWLYH2 IILFHU3XUVXDQWWR( [ FKDQJ H$ FW5 XOH D H
6HFWLRQ &HUWLILFDWLRQRI &KLHI ) LQDQFLDO2 IILFHU3XUVXDQWWR( [ FKDQJ H$ FW5 XOH D H
6HFWLRQ &HUWLILFDWLRQ RI &KLHI ( [ HFXWLYH 2 IILFHU 3XUVXDQWWR 8 6 & 6HFWLRQ $ V $ GRSWHG 3XUVXDQWWR
6HFWLRQ RI WKH6DUEDQHV2 [ OH\ $ FWRI
