Arrow Annual Report 2007

Page 1

Delivering today while building for the future

ARROW ELECTRONICS, INC. ANNUAL REPORT 2007


Financial Highlights

Company Highlights

IN THOUSANDS EXCEPT PER SHARE DATA

For the year ended Sales

Number of Employees

12,600

Number of Customers

140,000

$11,164,196

Number of Suppliers

700

Worldwide Locations

300

2007(a)(d)

2006(b)(d)

2005(c)

$15,984,992

$13,577,112

Operating income

686,905

606,225

480,258

Net income

407,792

388,331

253,609 2007 Sales

Net income per share: Basic

3.31

3.19

2.15

Diluted

3.28

3.16

2.09

At year-end Total assets Shareholders’ equity Common shares outstanding

$8,059,860

$6,669,572

$6,044,917

3,551,860

2,996,559

2,372,886

122,827

122,245

119,803

(a) Operating income and net income include restructuring and integration charges of $11.7 .7 million ($7.0 million net of related taxes or $.06 per share on both a basic and diluted ted bas basis) and an income tax benefit of $6.0 million, net ($.05 per share on both a basic and nd diluted dilu ed basis), basis) principally due to a reduction in deferred income taxes as a result of the e stat statutory tory ra rate change hange in Germany in 2007. (b Opera (b) Operating income and net income include restructuring urin ing a and d integ integration chargess of $11.8 million ($9.0 million net of related taxes or $.07 .07 7 per p share on both h a basic and di diluted basis),, a charge arge related to a pre-acquisition warranty arra rrant nty cla claim of $2.8 m million ($1.9 ($ million net of related ted taxes es or $.02 .02 per share on both a basic ba bas and diluted dilut ba basis), and a charge ch related to pre-acquisition environmental vironmental matters erss aris arising i i out of the company’s purchase of Wyle of $1.4 million ($.9 million net of related d ta taxes axes or $.01 per share on both a basic and diluted basis). Net income also includess a loss on pr prepayment of debt of $2.6 million ($1.6 million net of related taxes axes or $ $.01 01 per share are on both a basic and diluted basis) and the reduction of the provision for income taxes o of $46.2 million ($.38 per share on both a basic and diluted basis) and the reduction of interest expense of $6.9 million ($4.2 million net of related taxes or $.03 per share on both a basic and diluted basis) related to the settlement of certain income tax matters. (c) Operating income and net income include restructuring and integration charges of $12.7 million ($7.3 million net of related taxes or $.06 and $.05 per share on a basic and diluted basis, respectively) and an acquisition indemnification credit of $1.7 million ($1.3 million net of related taxes or $.01 per share on a basic basis). Net income also includes a loss on prepayment of debt of $4.3 million ($2.6 million net of related taxes or $.02 and $.01 per share on a basic and diluted basis, respectively) and a loss of $3.0 million ($.03 per share on both a basic and diluted basis) on the write-down of an investment. (d) Operating income and net income include stock option expense of $11.2 million ($7.0 million net of related taxes or $.06 per share on both a basic and diluted basis) and $13.0 million ($8.5 million net of related taxes or $.07 per share on both a basic and diluted basis) for 2007 and 2006, respectively, resulting from the company’s adoption of Financial Accounting Standards Board Statement No. 123 (revised 2004), “Share-Based Payment,” and the Securities and Exchange Commission Staff Accounting Bulletin No. 107.

Global Components

$11.2 billion

Global Enterprise Computing Solutions

$4.8 billion


ARROW ELECTRONICS, INC. ™ ANNUAL REPORT 2007 ™ 1

Arrow Electronics is a global provider of products, services and solutions to industrial and commercial users of electronic components and enterprise computing solutions. Headquartered in Melville, New York, Arrow serves as a supply channel partner for approximately 700 suppliers and 140,000 original equipment manufacturers, contract manufacturers and commercial customers through a global network of more than 300 locations in 50 countries and territories.


ARROW ELECTRONICS, INC. ANNUAL 22 ANNUALREPORT REPORT2007 2007

Delivering today while building for the future.


ARROW ELECTRONICS, INC. ANNUAL REPORT 2007 3

Our performance in 2007 represents another year of accomplishment for Arrow Electronics. We posted our fifth consecutive year of strong revenue performance, with record sales of $16 billion, an increase of almost 18 percent over 2006. In addition, productivity among our employees rose by 11 percent, the fifth consecutive year in which we realized an increase in this measure. Arrow’s success, as always, rests on the work of our 12,600 dedicated employees around the world. I thank each and every one of them for their commitment that has enabled us to make remarkable progress toward our long-term goals. We were cash flow positive for the fifth consecutive year while also growing sales, a record in our history. And for the fourth consecutive year, return on invested capital – a critical measure in increasing shareholder value – was well in excess of our cost of capital. We manage our business by balancing a strong financial discipline that creates shareholder value while investing in growing the company. Our return on invested capital has more than tripled over the past five years. Operating income increased to $699 million compared to $622 million in 2006, and net income per share increased to $3.29 compared to $2.92 in 2006.* Our cash flow performance of $851 million was very strong in 2007.

The more than $4 billion in free cash flow generated over the past seven years gives us the financial capabilities to grow our business and deliver value for shareholders. With a balance sheet that is the strongest in 10 years as a foundation, we continue to grow sales faster than the market, and over the last five years we have grown profits faster than sales – while investing in the long-term growth of Arrow. Our goal is to drive industry-leading performance now, while investing strongly in our future for the growth and success of Arrow. Our vision remains the same: to be the clear number-one worldwide provider of products, services and solutions to connect technology with customers, to power the supply chain, and to deliver premium investment results for our shareholders. The priorities that guided us in 2007 and will guide us in the years to come include targeting profitable growth areas where we see opportunity in our Global Components business and continuing the transformation and expansion of our Enterprise Computing Solutions business, while building shareholder value.


ARROW 44 ARROWELECTRONICS, ELECTRONICS,INC. INC. ANNUAL ANNUALREPORT REPORT2007 2007

Growth in Global Components Our Global Components business achieved record sales of $11.2 billion, more than half from outside the United States. We are the market leader in North America and Europe, as well as a major player in Asia-Pacific, and we increased sales and profitability in 2007 in a market that showed low single-digit growth. In North America, we saw strength in our vertical market initiatives as we grew our business in the lighting, industrial and transportation markets. We are moving ahead with strategic initiatives to expand further into our core area globally, serving small- and medium-sized customer segments. In an increasingly competitive marketplace, we are always identifying ways to operate more efficiently and create even more value for our business partners. In Europe, we are building upon our market-leading position. We are investing in broadening our customer base, and made progress in our initiatives to achieve a seamless Pan-European structure. The ongoing movement of manufacturing to Eastern Europe presents growth opportunities for us, and we have expanded our operations in Russia. The Asia-Pacific market continues to expand and now accounts for approximately half of the worldwide use of electronic components. This region represents 22 percent of our total components revenue, up from 13 percent in 2003. Our focus is to drive profitable growth through our strong local presence while leveraging our global reach. Ongoing efficiency initiatives helped us generate the highest operating income for this

business since 2000 as well as significant improvements in our return on working capital. Our strategic move to launch the Arrow Japan subsidiary and the acquisition of Universe Electron Corporation, a Tokyo-based distributor of semiconductor and multimedia products to the region’s major manufacturers and firms, will allow us to expand our components business in Japan’s $60 billion marketplace. As we look forward, we see significant opportunities to grow across markets, geographies and products, particularly with small- and medium-sized customers that comprise approximately 80 percent of sales in our components business. This customer base represents a growth engine for us and is expected to outpace long-term market growth rates. Other growth areas include high-brightness light-emitting diodes, or LEDs, where we have established an industry-leading position and doubled our customer base and revenues over the past year. LEDs are expected to be an $8 billion global market by 2010, and we are excited about the opportunities in this rapidly developing market where electronic lighting modules are playing an increasing role.

With a balance sheet that is the strongest in 10 years as a foundation, we continue to grow sales faster than the market, and over the last five years we have grown profits faster than sales – while investing in the long-term growth of Arrow.


ARROW ELECTRONICS, INC. ™ ANNUAL REPORT 2007 ™ 5

Passives, electromechanical and connector products are another growth area for our components business as we build upon our number-one position and expand into new customer segments. We are also well positioned in the medical market where we provide the design, compliance and critical time-tomarket services for customers operating under stringent government regulations and certifications. Industrial and transportation represent additional growth opportunities given the trend toward the increasing use of electronic components in those markets. As our world becomes more digitally oriented, the demand for analog products that convert real-world sources into digital signals is increasing at a pace much greater than the overall components market. We have an industry-leading position in analog products, and we fully intend to grow that position.

Transformation of Enterprise Computing Solutions Throughout 2007, we continued on our journey to transform our Enterprise Computing Solutions business, and we began to reap the financial and operational benefits. Sales in Enterprise Computing Solutions increased 132 percent over the last three years, and this business now represents nearly a third of Arrow’s total revenues. This business serves value-added resellers (VARs), companies that provide a wide range of computing solutions to customers, from small businesses to larger organizations requiring more complex solutions. The expansion of our Enterprise Computing Solutions business gives us a more balanced portfolio offering unique software- and solution-selling capabilities with the increased scale necessary to achieve greater levels of operating efficiency.

Enterprise Computing Solutions generated double-digit organic growth in 2007 in a market that grew in the midsingle digits. Driven by acquisitions and strong performance in the fast-growing segments of industry-standard servers, storage, software and services, this business grew revenues to $4.8 billion in 2007, a 91 percent increase from 2006. Operating income rose to $202 million in 2007, representing a 64 percent increase from the prior year. We increased our geographic reach with the acquisitions of DNSint.com AG in 2005, InTechnology plc in 2006 and the Centia Group Limited and AKS Group AB in 2007. We gained significant cross-selling opportunities with the acquisitions of Alternative Technology in 2006 and KeyLink Systems Group (KeyLink) from Agilysys, Inc., in 2007. These acquisitions will accelerate our growth in the enterprise computing solutions market.


ARROW 66 ARROWELECTRONICS, ELECTRONICS,INC. INC. ANNUAL ANNUALREPORT REPORT2007 2007

These strategic moves have significantly expanded our reach to resellers in 22 countries and territories. All of these acquisitions are on track, fully integrated, and are meeting our target financial goals.

Arrow Worldwide Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, Canada, China, Croatia, Czech Republic, Denmark, England, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Malaysia, Mexico, Netherlands, New Zealand, Norway, Philippines, Poland, Portugal, Romania, Scotland, Serbia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Taiwan, Thailand, the Russian Federation, Turkey, Ukraine, United States

Enterprise Computing Solutions unveiled an expanded portfolio of storage, software, security products and services. This focus on selling total solutions better enables our reseller and supplier partners to serve the growing technology needs of medium-sized businesses. This strategy leverages our vertical market expertise in the $87 billion midmarket – the fastest-growing segment in enterprise computing – which also helps to diversify our revenue stream. We continue to make investments in this business, such as in the fast-growing markets of Eastern Europe and high-growth customer segments in North America. We are laying the groundwork to create further long-term opportunities for our vendors, resellers and customers.

Investing in the Long-Term Growth of Arrow Looking ahead, we are confident of our ability to perform in any marketplace given our leading position, our broad base of approximately 140,000 customers and 700 suppliers, and our global network of more than 300 locations in 50 countries and territories. Entering new geographies and markets, expanding our product offerings and operating more efficiently will increase our ability to serve our customers. Our disciplined operations and financial focus coupled with our market-leading position enable us to manage the company for consistent performance as we invest in Arrow for the long term. We are transforming our systems to operate with standardized global processes through our ongoing enterprise resource planning (ERP) platform initiative. By moving to one global system, we will draw on best practices across the entire organization as we drive the


ARROW ELECTRONICS, INC. ANNUAL REPORT 2007 7

We are confident of our ability to perform in any marketplace given our leading position, our broad base of approximately 140,000 customers and 700 suppliers, and our global network of more than 300 locations in 50 countries and territories. company to higher levels of efficiency and productivity, allowing us to enhance business agility and customer service. This program is on track and on schedule, and we believe its benefits, when fully implemented, will in fact be even greater than when the program was first announced over a year ago. In March 2008, Michael J. Long was named president and chief operating officer of Arrow, and elected to the board of directors. Joining Arrow in 1991, Mike held significant leadership positions in Arrow’s businesses, most recently as senior vice president of Arrow and president of Global Components. Prior to that, he was president of Arrow North American Computer Products (now Enterprise

Computing Solutions). Mike has been a powerful contributor to Arrow’s growth agenda, and I am delighted that all of our businesses now will benefit from his leadership. We also announced the appointment of Gail E. Hamilton, former executive vice president of Symantec, to our board of directors. Gail brings over 20 years of experience growing technology and services businesses in the enterprise market. Her proven track record of creating value for customers in this industry will be an asset to Arrow. With 12,600 Arrow employees around the world as our solid foundation, we are committed to developing and cultivating the future leadership at Arrow for the ongoing success of the company.

In 2007, Arrow was once again named to Fortune magazine’s list of America’s Most Admired Companies. In addition, Arrow was selected as one of Forbes magazine’s 400 Best Big Companies in America. These and other awards and acknowledgements from customers, suppliers and the media reflect the importance we place on listening to the distinct needs of our customers. Continuing to create value for our business partners and shareholders while investing in future growth and profitability is our priority. As our 2007 results demonstrate, we are generating solid results while investing in our vision for the future. We have made substantial progress on our journey in the last five years – we remain excited about and committed to what we believe is a strong, vibrant future for Arrow.

William E. Mitchell Chairman & Chief Executive Officer


8 ARROW ELECTRONICS, INC. ANNUAL REPORT 2007

Non-GAAP Financial Information The noted references in the shareholder letter to operating income and net income per diluted share were each adjusted for certain charges, credits and losses that we believe impact the comparability of our results of operations. These charges, credits and losses arise out of the company’s efficiency enhancement initiatives, the company’s acquisitions of other companies, certain income tax related matters, the prepayment of debt and the write-down of investments. This financial information has not been prepared in accordance with generally accepted accounting principles (GAAP). The following table sets forth reconciliations of operating income, net income and net income per diluted share, prepared in accordance with GAAP, to operating income, net income and net income per diluted share, each as adjusted. We believe that such non-GAAP financial information may be useful to investors to assist in assessing and understanding our operating performance and the underlying trends in our business because management considers the charges, credits and losses referred to above to be outside our core operating results. This non-GAAP financial information is among the primary indicators management uses as a basis for evaluating our financial and operating performance. In addition, our board of directors may use this non-GAAP financial information in evaluating management performance and setting management compensation. The presentation of this non-GAAP financial information is not meant to be considered in isolation or as a substitute for, or alternative to, operating income, net income and net income per diluted share determined in accordance with GAAP. Analysis of results and outlook on a non-GAAP basis should be used as a complement to, and in conjunction with, data presented in accordance with GAAP.

IN THOUSANDS EXCEPT PER SHARE DATA

Year ended December 31,

2007

2006

2005

Operating income, as reported Restructuring and integration charges Pre-acquisition warranty claim Pre-acquisition environmental matters Acquisition indemnification credit

$686,905 11,745 -

$606,225 11,829 2,837 1,449 -

$480,258 12,716 (1,672)

Operating income, as adjusted

$698,650

$622,340

$491,302

Net income, as reported Restructuring and integration charges Deferred tax adjustment Pre-acquisition warranty claim Pre-acquisition environmental matters Impact of settlement of tax matters Income taxes: 2005 and prior Interest (net of taxes): 2005 and prior Loss on prepayment of debt Write-down of investment Acquisition indemnification credit

$407,792 7,036 (6,024) -

$388,331 8,977 1,861 867

$253,609 7,310 -

-

(40,426)

-

-

(2,431) 1,558 -

2,596 3,019 (1,267)

Net income, as adjusted

$408,804

$358,737

$265,267

Net income per diluted share, as reported Restructuring charges Deferred tax adjustment Pre-acquisition warranty claim Pre-acquisition environmental matters Impact of settlement of tax matters Income taxes: 2005 and prior Interest (net of taxes): 2005 and prior Loss on prepayment of debt Write-down of investment Acquisition indemnification credit

$3.28 .06 (.05) -

$3.16 .07 .02 .01

$2.09 .05 -

-

(.33)

-

-

(.02) .01 -

.01 .03 -

Net income per diluted share, as adjusted

$3.29

$2.92

$2.18


BOARD OF DIRECTORS

EXECUTIVE OFFICERS

William E. Mitchell Chairman and Chief Executive Officer, Arrow Electronics, Inc.

William E. Mitchell Chairman and Chief Executive Officer

Daniel W. Duval Lead Independent Director, Arrow Electronics, Inc. John C. Waddell Vice Chairman, Arrow Electronics, Inc. Gail E. Hamilton Former Executive Vice President, Symantec John N. Hanson Chairman, Joy Global Inc. Richard S. Hill Chairman and Chief Executive Officer, Novellus Systems Inc. M.F. (Fran) Keeth Retired President and Chief Executive Officer, Shell Chemical LP Roger King Retired President and Chief Executive Officer, Sa Sa International Holdings Ltd. Michael J. Long President and Chief Operating Officer, Arrow Electronics, Inc. Karen Gordon Mills Managing Director, Solera Capital LLC Stephen C. Patrick Chief Financial Officer, Colgate-Palmolive Company

Michael J. Long President and Chief Operating Officer Peter S. Brown Senior Vice President, General Counsel and Secretary John P. McMahon Senior Vice President, Corporate Human Resources Paul J. Reilly Senior Vice President and Chief Financial Officer

CORPORATE OFFICERS Wayne Brody Vice President, Assistant Secretary and Chief Compliance Officer Kurt Colehower Vice President and President, Arrow North American Components (NAC)

Peter T. Kong Vice President and President, Arrow Asia/Pacific Bhawnesh C. Mathur Senior Vice President, Supplier Marketing and Asset Management, Arrow Global Components Brian P. McNally Vice President and President, Global Alliance and Supply Chain, Arrow Global Components Vincent Melvin Vice President and Chief Information Officer M. Catherine Morris Senior Vice President and President, Arrow Enterprise Computing Solutions (ECS) Jan M. Salsgiver Vice President and Executive Vice President, Arrow Europe, Middle East, Africa and South America (EMEASA) Vincent Vellucci Vice President and Senior Vice President, Global Sales Excellence, Arrow Global Components

Philippe Combes Vice President and President, Arrow Europe, Middle East, Africa and South America (EMEASA) Kevin J. Gilroy Senior Vice President and President, Arrow Enterprise Computing Solutions (ECS) Ernest Keith Vice President, Worldwide Operational Excellence, Arrow Global Components

Barry W. Perry Former Chairman and Chief Executive Officer, Engelhard Corporation

Corporate Headquarters 50 Marcus Drive Melville, New York 11747-4210

Independent Registered Public Accounting Firm Ernst & Young LLP 5 Times Square New York, New York 10036-6530

Transfer Agent and Registrar The Bank of New York Mellon Shareowner Services 480 Washington Boulevard Jersey City, New Jersey 07310

Annual Meeting The Annual Meeting of Shareholders will be held at 11 a.m. on May 2, 2008, at the Grand Hyatt, 109 East 42nd Street, New York, New York.

Investor Relations 50 Marcus Drive Melville, New York 11747-4210 Phone: 631-847-2799 E-mail: investor@arrow.com Web: www.arrow.com/investor

All shareholders are invited to attend.

Shareholder Information Exchange: New York Stock Exchange Common Stock Symbol: ARW

Arrow Electronics is an Equal Opportunity Employer. Arrow, , arrow.com and all Arrow domain names and business group names are trademarks and service marks of Arrow Electronics, Inc. Š 2008 Arrow Electronics, Inc.


www.arrow.com

Cover and shareholder letter are printed on paper purchased from mills that practice sustainable forestry. The financial section is printed on 100 percent recycled paper containing 30 percent post-consumer recycled content.


7DEOH RI &RQWHQWV

81,7(' 67$7(6 6(&85,7,(6 $1' (;&+$1*( &200,66,21 :DVKLQJWRQ ' &

)250 . >;@ $118$/ 5(3257 38568$17 72 6(&7,21 25 G 2) 7+( 6(&85,7,(6 (;&+$1*( $&7 2) )RU WKH ILVFDO \HDU HQGHG 'HFHPEHU 25 > @ 75$16,7,21 5(3257 38568$17 72 6(&7,21 25 G 2) 7+( 6(&85,7,(6 (;&+$1*( $&7 2) )RU WKH WUDQVLWLRQ SHULRG IURP WR &RPPLVVLRQ ILOH QXPEHU

$552: (/(&7521,&6 ,1& ([DFW QDPH RI UHJLVWUDQW DV VSHFLILHG LQ LWV FKDUWHU

1HZ <RUN 6WDWH RU RWKHU MXULVGLFWLRQ RI LQFRUSRUDWLRQ RU RUJDQL]DWLRQ

0DUFXV 'ULYH 0HOYLOOH 1HZ <RUN $GGUHVV RI SULQFLSDO H[HFXWLYH RIILFHV

, 5 6 (PSOR\HU ,GHQWLILFDWLRQ 1XPEHU

=LS &RGH

5HJLVWUDQW¶V WHOHSKRQH QXPEHU LQFOXGLQJ DUHD FRGH

6HFXULWLHV UHJLVWHUHG SXUVXDQW WR 6HFWLRQ E RI WKH $FW 7LWOH RI HDFK FODVV &RPPRQ 6WRFN SDU YDOXH 3UHIHUUHG 6KDUH 3XUFKDVH 5LJKWV

1DPH RI HDFK H[FKDQJH RQ ZKLFK UHJLVWHUHG 1HZ <RUN 6WRFN ([FKDQJH 1HZ <RUN 6WRFN ([FKDQJH

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¶V NQRZOHGJH LQ GHILQLWLYH SUR[\ RU LQIRUPDWLRQ VWDWHPHQWV LQFRUSRUDWHG E\ UHIHUHQFH LQ 3DUW ,,, RI WKLV )RUP . RU DQ\ DPHQGPHQW WR WKLV )RUP . > @ ,QGLFDWH E\ FKHFN PDUN ZKHWKHU WKH UHJLVWUDQW LV D ODUJH DFFHOHUDWHG ILOHU DQ DFFHOHUDWHG ILOHU RU D QRQ DFFHOHUDWHG ILOHU 6HH GHILQLWLRQ RI ³DFFHOHUDWHG ILOHU DQG ODUJH DFFHOHUDWHG ILOHU´ LQ 5XOH E RI WKH ([FKDQJH $FW /DUJH DFFHOHUDWHG ILOHU >;@ $FFHOHUDWHG ILOHU > @ 1RQ DFFHOHUDWHG ILOHU > @ ,QGLFDWH E\ FKHFN PDUN ZKHWKHU WKH UHJLVWUDQW LV D VKHOO FRPSDQ\ DV GHILQHG LQ 5XOH E RI WKH $FW <HV > @ 1R >;@ 7KH DJJUHJDWH PDUNHW YDOXH RI YRWLQJ VWRFN KHOG E\ QRQ DIILOLDWHV RI WKH UHJLVWUDQW DV RI WKH ODVW EXVLQHVV GD\ RI WKH UHJLVWUDQW¶V PRVW UHFHQWO\ FRPSOHWHG VHFRQG ILVFDO TXDUWHU ZDV 7KHUH ZHUH VKDUHV RI &RPPRQ 6WRFN RXWVWDQGLQJ DV RI )HEUXDU\ '2&80(176 ,1&25325$7(' %< 5()(5(1&(

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7KH GHILQLWLYH SUR[\ VWDWHPHQW UHODWHG WR WKH UHJLVWUDQW¶V $QQXDO 0HHWLQJ RI 6KDUHKROGHUV WR EH KHOG 0D\ LV LQFRUSRUDWHG E\ UHIHUHQFH LQ 3DUW ,,, WR WKH H[WHQW GHVFULEHG WKHUHLQ

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7$%/( 2) &217(176

3$57 , ,WHP ,WHP $ ,WHP % ,WHP ,WHP ,WHP

%XVLQHVV 5LVN )DFWRUV 8QUHVROYHG 6WDII &RPPHQWV 3URSHUWLHV /HJDO 3URFHHGLQJV 6XEPLVVLRQ RI 0DWWHUV WR D 9RWH RI 6HFXULW\ +ROGHUV 3$57 ,, ,WHP 0DUNHW IRU 5HJLVWUDQW¶V &RPPRQ (TXLW\ DQG 5HODWHG 6WRFNKROGHU 0DWWHUV ,WHP 6HOHFWHG )LQDQFLDO 'DWD ,WHP 0DQDJHPHQW¶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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

3$57 , ,WHP %XVLQHVV $UURZ (OHFWURQLFV ,QF WKH ³FRPSDQ\´ RU ³$UURZ´ LV D JOREDO SURYLGHU RI SURGXFWV VHUYLFHV DQG VROXWLRQV WR LQGXVWULDO DQG FRPPHUFLDO XVHUV RI HOHFWURQLF FRPSRQHQWV DQG HQWHUSULVH FRPSXWLQJ VROXWLRQV 7KH FRPSDQ\ EHOLHYHV LW LV D OHDGHU LQ WKH HOHFWURQLFV GLVWULEXWLRQ LQGXVWU\ LQ RSHUDWLQJ V\VWHPV HPSOR\HH SURGXFWLYLW\ YDOXH DGGHG SURJUDPV DQG WRWDO TXDOLW\ DVVXUDQFH $UURZ ZKLFK ZDV LQFRUSRUDWHG LQ 1HZ <RUN LQ VHUYHV DSSUR[LPDWHO\ VXSSOLHUV DQG DSSUR[LPDWHO\ RULJLQDO HTXLSPHQW PDQXIDFWXUHUV ³2(0V´ FRQWUDFW PDQXIDFWXUHUV ³&0V´ DQG FRPPHUFLDO FXVWRPHUV 6HUYLQJ LWV LQGXVWULDO DQG FRPPHUFLDO FXVWRPHUV DV D VXSSO\ FKDQQHO SDUWQHU WKH FRPSDQ\ RIIHUV ERWK D ZLGH VSHFWUXP RI SURGXFWV DQG D EURDG UDQJH RI VHUYLFHV DQG VROXWLRQV LQFOXGLQJ PDWHULDOV SODQQLQJ GHVLJQ VHUYLFHV SURJUDPPLQJ DQG DVVHPEO\ VHUYLFHV LQYHQWRU\ PDQDJHPHQW DQG D FRPSUHKHQVLYH VXLWH RI RQOLQH VXSSO\ FKDLQ WRROV $UURZ¶V GLYHUVH ZRUOGZLGH FXVWRPHU EDVH FRQVLVWV RI 2(0V &0V DQG FRPPHUFLDO FXVWRPHUV &XVWRPHUV LQFOXGH PDQXIDFWXUHUV RI FRQVXPHU DQG LQGXVWULDO HTXLSPHQW LQFOXGLQJ PDFKLQH WRROV IDFWRU\ DXWRPDWLRQ DQG URERWLF HTXLSPHQW WHOHFRPPXQLFDWLRQV SURGXFWV DXWRPRWLYH DQG WUDQVSRUWDWLRQ DLUFUDIW DQG DHURVSDFH HTXLSPHQW VFLHQWLILF DQG PHGLFDO GHYLFHV DQG FRPSXWHU DQG RIILFH SURGXFWV &XVWRPHUV DOVR LQFOXGH YDOXH DGGHG UHVHOOHUV ³9$5V´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³(&6´ EXVLQHVV VHJPHQW )RU DSSUR[LPDWHO\ RI WKH FRPSDQ\¶V VDOHV FRQVLVWHG RI HOHFWURQLF FRPSRQHQWV DQG DSSUR[LPDWHO\ RI WKH FRPSDQ\¶V VDOHV FRQVLVWHG RI HQWHUSULVH FRPSXWLQJ VROXWLRQV 7KH ILQDQFLDO LQIRUPDWLRQ DERXW WKH FRPSDQ\¶V EXVLQHVV VHJPHQWV DQG JHRJUDSKLF RSHUDWLRQV FDQ EH IRXQG LQ 1RWH RI WKH 1RWHV WR &RQVROLGDWHG )LQDQFLDO 6WDWHPHQWV *OREDO &RPSRQHQWV 7KH FRPSDQ\¶V JOREDO FRPSRQHQWV EXVLQHVV VHJPHQW RQH RI WKH ODUJHVW GLVWULEXWRUV RI HOHFWURQLF FRPSRQHQWV DQG UHODWHG VHUYLFHV LQ WKH ZRUOG VSDQV WKH ZRUOG¶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¶V VDOHV SULPDULO\ FRQVLVW RI VHPLFRQGXFWRU SURGXFWV DQG UHODWHG VHUYLFHV DSSUR[LPDWHO\ DUH RI SDVVLYH HOHFWURPHFKDQLFDO DQG LQWHUFRQQHFW SURGXFWV FRQVLVWLQJ SULPDULO\ RI FDSDFLWRUV UHVLVWRUV SRWHQWLRPHWHUV SRZHU VXSSOLHV UHOD\V VZLWFKHV DQG FRQQHFWRUV DQG DSSUR[LPDWHO\ DUH RI FRPSXWLQJ DQG PHPRU\ SURGXFWV 0RVW RI WKH FRPSDQ\¶V FXVWRPHUV UHTXLUH GHOLYHU\ RI WKH SURGXFWV WKH\ RUGHUHG RQ VFKHGXOHV WKDW DUH JHQHUDOO\ QRW DYDLODEOH RQ GLUHFW SXUFKDVHV IURP PDQXIDFWXUHUV DQG IUHTXHQWO\ WKHLU RUGHUV DUH RI LQVXIILFLHQW VL]H WR EH SODFHG GLUHFWO\ ZLWK PDQXIDFWXUHUV 0RVW PDQXIDFWXUHUV RI HOHFWURQLF FRPSRQHQWV UHO\ RQ DXWKRUL]HG GLVWULEXWRUV VXFK DV WKH FRPSDQ\ WR DXJPHQW WKHLU VDOHV DQG PDUNHWLQJ RSHUDWLRQV $V D PDUNHWLQJ VWRFNLQJ DQG ILQDQFLDO LQWHUPHGLDU\ WKH GLVWULEXWRU

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

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¶V JOREDO (&6 EXVLQHVV VHJPHQW LV D OHDGLQJ GLVWULEXWRU RI HQWHUSULVH DQG PLGUDQJH FRPSXWLQJ SURGXFWV VHUYLFHV DQG VROXWLRQV WR 9$5V LQ 1RUWK $PHULFD DQG (XURSH 2YHU WKH SDVW WZR \HDUV WKH FRPSDQ\ KDV WUDQVIRUPHG LWV HQWHUSULVH FRPSXWLQJ VROXWLRQV EXVLQHVV LQWR D VWURQJHU RUJDQL]DWLRQ ZLWK EURDGHU JHRJUDSKLF UHDFK LQFUHDVHG PDUNHW VKDUH LQ WKH IDVW JURZLQJ SURGXFW VHJPHQWV RI VRIWZDUH DQG VWRUDJH DQG D PRUH UREXVW FXVWRPHU DQG VXSSOLHU EDVH ([HFXWLRQ RQ WKH FRPSDQ\¶V VWUDWHJLF REMHFWLYHV UHVXOWHG LQ WKH JOREDO (&6 EXVLQHVV VHJPHQW EHFRPLQJ D OHDGLQJ YDOXH DGGHG GLVWULEXWRU RI HQWHUSULVH SURGXFWV IRU ,%0 DQG +HZOHWW 3DFNDUG DQG D OHDGLQJ GLVWULEXWRU RI HQWHUSULVH VWRUDJH DQG VHFXULW\ DQG YLUWXDOL]DWLRQ VRIWZDUH 6LQFH 'HFHPEHU JOREDO (&6¶ JHRJUDSKLF IRRWSULQW H[SDQGHG IURP WZR FRXQWULHV WR FRXQWULHV DURXQG WKH ZRUOG LQFOXGLQJ $XVWULD %XOJDULD &DQDGD &URDWLD &]HFK 5HSXEOLF 'HQPDUN (VWRQLD )LQODQG *HUPDQ\ +XQJDU\ /DWYLD /LWKXDQLD 1RUZD\ 3RODQG 5RPDQLD 6HUELD 6ORYDNLD 6ORYHQLD 6ZHGHQ 6ZLW]HUODQG WKH 8QLWHG .LQJGRP DQG WKH 8QLWHG 6WDWHV 7KH FRPSDQ\¶V JOREDO (&6 EXVLQHVV VHJPHQW KDV PDGH VHYHUDO UHFHQW DFTXLVLWLRQV ZLWK WKH VWUDWHJLF JRDO RI EHFRPLQJ WKH SUHPLHU HQWHUSULVH FRPSXWLQJ VROXWLRQV GLVWULEXWRU 7KH EXVLQHVV EHJDQ LWV JOREDO H[SDQVLRQ LQ 'HFHPEHU ZLWK WKH DFTXLVLWLRQ RI '16LQW FRP $* ³'16´ D OHDGLQJ YDOXH DGGHG HQWHUSULVH GLVWULEXWRU EDVHG LQ 0XQLFK *HUPDQ\ '16 UHSUHVHQWHG $UURZ¶V ILUVW IRUD\ LQWR WKH (XURSHDQ HQWHUSULVH FRPSXWLQJ VROXWLRQV PDUNHWSODFH DQG EHFDPH WKH VWUDWHJLF SODWIRUP WR H[SDQG WKH FRPSDQ\¶V (&6 EXVLQHVV WKURXJKRXW WKH (XURSHDQ UHJLRQ ,Q )HEUXDU\ WKH JOREDO (&6 EXVLQHVV VHJPHQW DFTXLUHG 6.<'$7$ &RUSRUDWLRQ D &DQDGLDQ YDOXH DGGHG GLVWULEXWRU RI GDWD VWRUDJH VROXWLRQV ,Q 1RYHPEHU WKH JOREDO (&6 EXVLQHVV VHJPHQW DFTXLUHG $OWHUQDWLYH 7HFKQRORJ\ ,QF ³$OWHUQDWLYH 7HFKQRORJ\´ D OHDGLQJ VSHFLDOW\ VRIWZDUH GLVWULEXWRU RI DFFHVV LQIUDVWUXFWXUH VHFXULW\ DQG YLUWXDOL]DWLRQ VROXWLRQV LQ 1RUWK $PHULFD 7KLV WUDQVDFWLRQ FUHDWHG VLJQLILFDQW RSSRUWXQLWLHV LQ WKH IDVW JURZLQJ YDOXH DGGHG VRIWZDUH PDUNHW 7KH JOREDO (&6 EXVLQHVV VHJPHQW¶V VRIWZDUH DQG VWRUDJH FDSDELOLWLHV ZHUH IXUWKHU VWUHQJWKHQHG WKURXJK LWV DFTXLVLWLRQ RI ,Q7HFKQRORJ\ 'LVWULEXWLRQ SOF¶V VSHFLDOLVW GLVWULEXWLRQ GLYLVLRQ ³,Q7HFKQRORJ\´ LQ 'HFHPEHU %DVHG LQ +DUURJDWH (QJODQG WKH ,Q7HFKQRORJ\ WUDQVDFWLRQ H[WHQGHG WKH EXVLQHVV¶ RSHUDWLRQV LQWR WKH 8QLWHG .LQJGRP WKH VHFRQG ODUJHVW LQIRUPDWLRQ WHFKQRORJ\ PDUNHW LQ (XURSH &RQWLQXLQJ LWV VWUDWHJLF H[SDQVLRQ WKH JOREDO (&6 EXVLQHVV VHJPHQW DFTXLUHG VXEVWDQWLDOO\ DOO RI WKH DVVHWV DQG RSHUDWLRQV RI LWV .H\/LQN 6\VWHPV *URXS EXVLQHVV ³.H\/LQN´ IURP $JLO\V\V ,QF ³$JLO\V\V´ LQ 0DUFK 7KH DFTXLVLWLRQ RI .H\/LQN D OHDGLQJ YDOXH DGGHG GLVWULEXWRU RI HQWHUSULVH VHUYHUV VWRUDJH DQG VRIWZDUH LQ WKH 8QLWHG 6WDWHV DQG &DQDGD EURXJKW FRQVLGHUDEOH VFDOH FURVV VHOOLQJ RSSRUWXQLWLHV DQG PLG PDUNHW UHVHOOHU IRFXV WR WKH FRPSDQ\¶V JOREDO (&6 EXVLQHVV VHJPHQW 7KH FRPSDQ\¶V JOREDO (&6 EXVLQHVV VHJPHQW DOVR HQWHUHG LQWR D ORQJ WHUP SURFXUHPHQW DJUHHPHQW ZLWK $JLO\V\V ,Q 6HSWHPEHU WKH JOREDO (&6 EXVLQHVV VHJPHQW DFTXLUHG &HQWLD *URXS /LPLWHG DQG $.6 *URXS $% ³&HQWLD $.6´ VSHFLDOW\ GLVWULEXWRUV RI DFFHVV LQIUDVWUXFWXUH VHFXULW\ DQG YLUWXDOL]DWLRQ VRIWZDUH VROXWLRQV LQ (XURSH :LWKLQ WKH JOREDO (&6 EXVLQHVV VHJPHQW DSSUR[LPDWHO\ RI WKH FRPSDQ\¶V VDOHV FRQVLVW RI HQWHUSULVH DQG HPEHGGHG FRPSXWLQJ V\VWHPV DQG UHODWHG VHUYLFHV FRQVLVW RI VRIWZDUH DQG FRQVLVW RI VWRUDJH ,QIRUPDWLRQ WHFKQRORJ\ ³,7´ GHPDQGV IRU WRGD\¶V EXVLQHVVHV DUH HYROYLQJ $V ,7 QHHGV EHFRPH PRUH FRPSOH[ FRUSRUDWH LQIRUPDWLRQ RIILFHUV DUH LQFUHDVLQJO\ VHHNLQJ SURGXFWV EXQGOHG LQWR VROXWLRQV WKDW VXSSRUW EXVLQHVV FRPPXQLFDWLRQ RSHUDWLRQV SURFHVVHV DQG WUDQVDFWLRQV 0LG PDUNHW DQG HQWHUSULVH HQG XVHUV UHO\ RQ 9$5V IRU WKHLU ,7 QHHGV DQG JOREDO (&6 ZRUNV ZLWK WKHVH 9$5V WR WDLORU FRPSOH[ KLJKO\ WHFKQLFDO VROXWLRQV IRU WKH HQG XVHU 9$5V UDQJH LQ VL]H IURP VPDOO DQG PHGLXP

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

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¶ YHQGRU SDUWQHUV EHQHILW IURP DIIRUGDEOH PLG PDUNHW DFFHVV GHPDQG FUHDWLRQ VSHHG WR PDUNHW DQG HQKDQFHG VXSSO\ FKDLQ HIILFLHQF\ )RU YHQGRUV JOREDO (&6 LV WKH DJJUHJDWLRQ SRLQW WR RYHU 9$5V ,Q EHWWHU VHUYLQJ WKH QHHGV RI ERWK WKH PDQXIDFWXUHUV DQG 9$5V WKH FRPSDQ\¶V IRFXV LV WR EH DQ H[WHQVLRQ RI WKH PDQXIDFWXUHU¶V VDOHV DQG PDUNHWLQJ RUJDQL]DWLRQ DQG PDQDJH WKH VXSSO\ FKDLQ DV ZHOO DV WR OHYHUDJH WKH FRPSDQ\¶V VWURQJ UHODWLRQVKLSV ZLWK WKH ZRUOG¶V IRUHPRVW KDUGZDUH VRIWZDUH DQG VWRUDJH PDQXIDFWXUHUV WR EHWWHU HQDEOH 9$5V WR GHOLYHU VROXWLRQV WR WKHLU FXVWRPHUV &XVWRPHUV DQG 6XSSOLHUV 7KH FRPSDQ\ DQG LWV DIILOLDWHV VHUYH DSSUR[LPDWHO\ LQGXVWULDO DQG FRPPHUFLDO FXVWRPHUV ,QGXVWULDO FXVWRPHUV UDQJH IURP PDMRU 2(0V DQG &0V WR VPDOO HQJLQHHULQJ ILUPV ZKLOH FRPPHUFLDO FXVWRPHUV SULPDULO\ LQFOXGH 9$5V DQG 2(0V 1R VLQJOH FXVWRPHU DFFRXQWHG IRU PRUH WKDQ RI WKH FRPSDQ\¶V FRQVROLGDWHG VDOHV 7KH SURGXFWV RIIHUHG E\ WKH FRPSDQ\ DUH VROG E\ ERWK ILHOG VDOHV UHSUHVHQWDWLYHV ZKR UHJXODUO\ FDOO RQ FXVWRPHUV LQ DVVLJQHG PDUNHW DUHDV DQG E\ LQVLGH VDOHV SHUVRQQHO ZKR FDOO RQ FXVWRPHUV E\ WHOHSKRQH IURP WKH FRPSDQ\¶V VHOOLQJ ORFDWLRQV 7KH FRPSDQ\ DOVR KDV VDOHV WHDPV WKDW IRFXV RQ VPDOO DQG HPHUJLQJ FXVWRPHUV ZKHUH VDOHV UHSUHVHQWDWLYHV UHJXODUO\ FDOO RQ FXVWRPHUV E\ WHOHSKRQH IURP FHQWUDOL]HG VHOOLQJ ORFDWLRQV DQG LQERXQG VDOHV DJHQWV VHUYH FXVWRPHUV WKDW FDOO LQWR WKH FRPSDQ\ (DFK RI WKH FRPSDQ\¶V 1RUWK $PHULFDQ VHOOLQJ ORFDWLRQV DQG SULPDU\ GLVWULEXWLRQ FHQWHUV LQ WKH JOREDO FRPSRQHQWV EXVLQHVV VHJPHQW DUH HOHFWURQLFDOO\ OLQNHG WR WKH FRPSDQ\¶V FHQWUDO FRPSXWHU V\VWHP ZKLFK SURYLGHV IXOO\ LQWHJUDWHG RQOLQH UHDO WLPH GDWD ZLWK UHVSHFW WR QDWLRQZLGH LQYHQWRU\ OHYHOV DQG IDFLOLWDWHV FRQWURO RI SXUFKDVLQJ VKLSSLQJ DQG ELOOLQJ 7KH FRPSDQ\¶V LQWHUQDWLRQDO RSHUDWLRQV LQ WKH JOREDO FRPSRQHQWV EXVLQHVV VHJPHQW KDYH VLPLODU RQOLQH UHDO WLPH FRPSXWHU V\VWHPV DQG WKH\ FDQ DOVR DFFHVV WKH FRPSDQ\¶V :RUOGZLGH 6WRFN &KHFN 6\VWHP ZKLFK SURYLGHV DFFHVV WR WKH FRPSDQ\¶V RQOLQH UHDO WLPH LQYHQWRU\ V\VWHP 7KH FRPSDQ\ VHOOV WKH SURGXFWV RI DSSUR[LPDWHO\ VXSSOLHUV 6DOHV IURP SURGXFWV DQG VHUYLFHV IURP ,%0 DFFRXQWHG IRU DSSUR[LPDWHO\ RI WKH FRPSDQ\¶V FRQVROLGDWHG VDOHV LQ 1R RWKHU VLQJOH VXSSOLHU DFFRXQWHG IRU PRUH WKDQ RI WKH FRPSDQ\¶V FRQVROLGDWHG VDOHV LQ 7KH FRPSDQ\ EHOLHYHV WKDW PDQ\ RI WKH SURGXFWV LW VHOOV DUH DYDLODEOH IURP RWKHU VRXUFHV DW FRPSHWLWLYH SULFHV +RZHYHU FHUWDLQ SDUWV RI WKH FRPSDQ\¶V EXVLQHVV VXFK DV WKH FRPSDQ\¶V JOREDO (&6 EXVLQHVV VHJPHQW UHO\ RQ D OLPLWHG QXPEHU RI VXSSOLHUV ZLWK WKH VWUDWHJ\ RI SURYLGLQJ IRFXVHG VXSSRUW GHHS SURGXFW NQRZOHGJH DQG FXVWRPL]HG VHUYLFH WR PDQXIDFWXUHUV DQG 9$5V 0RVW RI WKH FRPSDQ\¶V SXUFKDVHV DUH SXUVXDQW WR DXWKRUL]HG GLVWULEXWRU DJUHHPHQWV ZKLFK DUH W\SLFDOO\ FDQFHODEOH E\ HLWKHU SDUW\ DW DQ\ WLPH RU RQ VKRUW QRWLFH 'LVWULEXWLRQ $JUHHPHQWV ,W LV WKH SROLF\ RI PRVW PDQXIDFWXUHUV WR SURWHFW DXWKRUL]HG GLVWULEXWRUV VXFK DV WKH FRPSDQ\ DJDLQVW WKH SRWHQWLDO ZULWH GRZQ RI LQYHQWRULHV GXH WR WHFKQRORJLFDO FKDQJH RU PDQXIDFWXUHUV¶ SULFH UHGXFWLRQV :ULWH GRZQV RI LQYHQWRULHV WR PDUNHW YDOXH DUH EDVHG XSRQ FRQWUDFWXDO SURYLVLRQV ZKLFK W\SLFDOO\ SURYLGH FHUWDLQ SURWHFWLRQV WR WKH FRPSDQ\ IRU SURGXFW REVROHVFHQFH DQG SULFH HURVLRQ LQ WKH IRUP RI UHWXUQ SULYLOHJHV DQG SULFH SURWHFWLRQ 8QGHU WKH WHUPV RI WKH UHODWHG GLVWULEXWRU DJUHHPHQWV DQG DVVXPLQJ WKH GLVWULEXWRU FRPSOLHV ZLWK FHUWDLQ FRQGLWLRQV VXFK VXSSOLHUV DUH UHTXLUHG WR FUHGLW WKH GLVWULEXWRU IRU UHGXFWLRQV LQ PDQXIDFWXUHUV¶ OLVW SULFHV $V RI 'HFHPEHU WKLV W\SH RI DUUDQJHPHQW FRYHUHG DSSUR[LPDWHO\ RI WKH FRPSDQ\¶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¶V FRQVROLGDWHG LQYHQWRULHV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

:KLOH WKHVH LQGXVWU\ SUDFWLFHV GR QRW ZKROO\ SURWHFW WKH FRPSDQ\ IURP LQYHQWRU\ ORVVHV WKH FRPSDQ\ EHOLHYHV WKDW WKH\ FXUUHQWO\ SURYLGH VXEVWDQWLDO SURWHFWLRQ IURP VXFK ORVVHV &RPSHWLWLRQ 7KH FRPSDQ\¶V EXVLQHVV LV H[WUHPHO\ FRPSHWLWLYH SDUWLFXODUO\ ZLWK UHVSHFW WR SULFHV IUDQFKLVHV DQG LQ FHUWDLQ LQVWDQFHV SURGXFW DYDLODELOLW\ 7KH FRPSDQ\ FRPSHWHV ZLWK VHYHUDO RWKHU ODUJH PXOWLQDWLRQDO DQG QDWLRQDO GLVWULEXWRUV DV ZHOO DV QXPHURXV UHJLRQDO DQG ORFDO GLVWULEXWRUV $V RQH RI WKH ZRUOG¶V ODUJHVW HOHFWURQLFV GLVWULEXWRUV WKH FRPSDQ\¶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³6(&´ 7KH LQIRUPDWLRQ SRVWHG RQ WKH FRPSDQ\¶V ZHEVLWH LV QRW LQFRUSRUDWHG LQWR WKLV DQQXDO UHSRUW RQ )RUP . ,Q DGGLWLRQ WKH 6(& PDLQWDLQV D ZHEVLWH KWWS ZZZ VHF JRY WKDW FRQWDLQV UHSRUWV SUR[\ DQG LQIRUPDWLRQ VWDWHPHQWV DQG RWKHU LQIRUPDWLRQ UHJDUGLQJ LVVXHUV WKDW ILOH HOHFWURQLFDOO\ ZLWK WKH 6(& 7KH DQQXDO UHSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU LQFOXGHV WKH FHUWLILFDWLRQV RI WKH FRPSDQ\¶V &KLHI ([HFXWLYH 2IILFHU DQG &KLHI )LQDQFLDO 2IILFHU DV ([KLELWV L DQG LL UHVSHFWLYHO\ ZKLFK ZHUH ILOHG ZLWK WKH 6(& DV UHTXLUHG XQGHU 6HFWLRQ RI WKH 6DUEDQHV 2[OH\ $FW RI DQG FHUWLI\ WKH TXDOLW\ RI WKH FRPSDQ\¶V SXEOLF GLVFORVXUH 7KH FRPSDQ\¶V &KLHI ([HFXWLYH 2IILFHU KDV DOVR VXEPLWWHG D FHUWLILFDWLRQ WR WKH 1HZ <RUN 6WRFN ([FKDQJH WKH ³1<6(´ FHUWLI\LQJ WKDW KH LV QRW DZDUH RI DQ\ YLRODWLRQV E\ WKH FRPSDQ\ RI 1<6( FRUSRUDWH JRYHUQDQFH OLVWLQJ VWDQGDUGV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

9LQFHQW 3 0HOYLQ ZDV DSSRLQWHG 9LFH 3UHVLGHQW DQG &KLHI ,QIRUPDWLRQ 2IILFHU RI WKH FRPSDQ\ LQ 6HSWHPEHU 3ULRU WR MRLQLQJ WKH FRPSDQ\ KH VHUYHG DV 6HQLRU 9LFH 3UHVLGHQW DQG &KLHI ,QIRUPDWLRQ 2IILFHU RI 6DQPLQD 6&, ,QF IURP 'HFHPEHU WR 6HSWHPEHU ,WHP $ 5LVN )DFWRUV 'HVFULEHG EHORZ DQG WKURXJKRXW WKLV UHSRUW DUH FHUWDLQ ULVNV WKDW WKH FRPSDQ\¶V PDQDJHPHQW EHOLHYHV DUH DSSOLFDEOH WR WKH FRPSDQ\¶V EXVLQHVV DQG WKH LQGXVWU\ LQ ZKLFK LW RSHUDWHV 7KHUH PD\ EH DGGLWLRQDO ULVNV WKDW DUH QRW SUHVHQWO\ PDWHULDO RU NQRZQ 7KHUH DUH DOVR ULVNV ZLWKLQ WKH HFRQRP\ WKH LQGXVWU\ DQG WKH FDSLWDO PDUNHWV WKDW DIIHFW EXVLQHVV JHQHUDOO\ DQG WKH FRPSDQ\ DV ZHOO ZKLFK DUH QRW GHVFULEHG ,I DQ\ RI WKH GHVFULEHG HYHQWV RFFXU WKH FRPSDQ\¶V EXVLQHVV UHVXOWV RI RSHUDWLRQV ILQDQFLDO FRQGLWLRQ OLTXLGLW\ RU DFFHVV WR WKH FDSLWDO PDUNHWV FRXOG EH PDWHULDOO\ DGYHUVHO\ DIIHFWHG :KHQ VWDWHG EHORZ WKDW D ULVN PD\ KDYH D PDWHULDO DGYHUVH HIIHFW RQ WKH FRPSDQ\¶V EXVLQHVV LW PHDQV WKDW VXFK ULVN PD\ KDYH RQH RU PRUH RI WKHVH HIIHFWV $ ODUJH SRUWLRQ RI WKH FRPSDQ\¶V UHYHQXHV FRPHV IURP WKH VDOH RI VHPLFRQGXFWRUV ZKLFK KDV KLVWRULFDOO\ EHHQ D F\FOLFDO LQGXVWU\ $OWKRXJK WKH PDUNHW VHHPV WR KDYH VWDELOL]HG LQ UHFHQW \HDUV WKH VHPLFRQGXFWRU LQGXVWU\ KLVWRULFDOO\ KDV H[SHULHQFHG IOXFWXDWLRQV LQ SURGXFW VXSSO\ DQG GHPDQG RIWHQ DVVRFLDWHG ZLWK FKDQJHV LQ WHFKQRORJ\ DQG PDQXIDFWXULQJ FDSDFLW\ 6DOHV RI VHPLFRQGXFWRU SURGXFWV DQG UHODWHG VHUYLFHV UHSUHVHQWHG DSSUR[LPDWHO\ DQG RI WKH FRPSDQ\¶V FRQVROLGDWHG VDOHV LQ DQG UHVSHFWLYHO\ DQG WKH FRPSDQ\¶V UHYHQXHV DQG SURILWDELOLW\ SDUWLFXODUO\ LQ LWV JOREDO FRPSRQHQWV EXVLQHVV VHJPHQW WHQG WR FORVHO\ IROORZ WKH VWUHQJWK RU ZHDNQHVV RI WKH VHPLFRQGXFWRU PDUNHW :KLOH WKH VHPLFRQGXFWRU LQGXVWU\ KDV VWUHQJWKHQHG LQ UHFHQW \HDUV IURP LWV GRZQWXUQ LQ DQG DQ\ SRWHQWLDO IXWXUH F\FOLFDO GRZQWXUQV LQ WKH WHFKQRORJ\ LQGXVWU\ SDUWLFXODUO\ LQ WKH VHPLFRQGXFWRU VHFWRU FRXOG KDYH D PDWHULDO DGYHUVH HIIHFW RQ WKH FRPSDQ\¶V EXVLQHVV DQG QHJDWLYHO\ LPSDFW LWV DELOLW\ WR PDLQWDLQ FXUUHQW SURILWDELOLW\ OHYHOV ,I WKH FRPSDQ\ ZDV XQDEOH WR PDLQWDLQ LWV UHODWLRQVKLSV ZLWK LWV VXSSOLHUV RU LI WKH VXSSOLHUV PDWHULDOO\ FKDQJH WKH WHUPV RI WKHLU H[LVWLQJ DJUHHPHQWV ZLWK WKH FRPSDQ\ WKH FRPSDQ\¶V EXVLQHVV FRXOG EH PDWHULDOO\ DGYHUVHO\ DIIHFWHG $ VXEVWDQWLDO SRUWLRQ RI WKH FRPSDQ\¶V LQYHQWRU\ LV SXUFKDVHG IURP VXSSOLHUV ZLWK ZKLFK WKH FRPSDQ\ KDV HQWHUHG LQWR QRQ H[FOXVLYH GLVWULEXWLRQ DJUHHPHQWV 7KHVH DJUHHPHQWV DUH W\SLFDOO\ FDQFHODEOH RQ VKRUW QRWLFH JHQHUDOO\ WR GD\V &HUWDLQ SDUWV RI WKH FRPSDQ\¶V EXVLQHVV VXFK DV WKH FRPSDQ\¶V JOREDO (&6 EXVLQHVV UHO\ RQ D OLPLWHG QXPEHU RI VXSSOLHUV )RU H[DPSOH VDOHV IURP SURGXFWV DQG VHUYLFHV IURP RQH RI WKH FRPSDQ\¶V VXSSOLHUV ,%0 DFFRXQWHG IRU DSSUR[LPDWHO\ RI LWV FRQVROLGDWHG VDOHV LQ 7R WKH H[WHQW WKDW WKH FRPSDQ\¶V VLJQLILFDQW VXSSOLHUV DUH XQZLOOLQJ WR FRQWLQXH WR GR EXVLQHVV ZLWK WKH FRPSDQ\ WKH FRPSDQ\¶V EXVLQHVV FRXOG EH PDWHULDOO\ DGYHUVHO\ DIIHFWHG ,Q DGGLWLRQ WR WKH H[WHQW WKDW WKH FRPSDQ\¶V VXSSOLHUV PRGLI\ WKH WHUPV RI WKHLU FRQWUDFWV ZLWK WKH FRPSDQ\ LQFOXGLQJ ZLWKRXW OLPLWDWLRQ WKH WHUPV UHJDUGLQJ SULFH SURWHFWLRQ ULJKWV RI UHWXUQ UHEDWHV RU RWKHU WHUPV WKDW DUH IDYRUDEOH WR WKH FRPSDQ\ RU H[WHQG OHDG WLPHV OLPLW VXSSOLHV GXH WR FDSDFLW\ FRQVWUDLQWV RU RWKHU IDFWRUV WKHUH FRXOG EH D PDWHULDO DGYHUVH HIIHFW RQ WKH FRPSDQ\¶V EXVLQHVV 7KH FRPSHWLWLYH SUHVVXUHV WKH FRPSDQ\ IDFHV FRXOG KDYH D PDWHULDO DGYHUVH DIIHFW RQ WKH FRPSDQ\¶V EXVLQHVV 7KH PDUNHW IRU WKH FRPSDQ\¶V SURGXFWV DQG VHUYLFHV LV YHU\ FRPSHWLWLYH DQG VXEMHFW WR UDSLG WHFKQRORJLFDO FKDQJH 1RW RQO\ GRHV WKH FRPSDQ\ FRPSHWH ZLWK RWKHU GLVWULEXWRUV LW DOVR FRPSHWHV IRU FXVWRPHUV ZLWK PDQ\ RI LWV RZQ VXSSOLHUV $GGLWLRQDO FRPSHWLWLRQ KDV HPHUJHG IURP WKLUG SDUW\ ORJLVWLFV SURYLGHUV FDWDORJXH GLVWULEXWRUV DQG EURNHUV 7KH FRPSDQ\¶V IDLOXUH WR PDLQWDLQ DQG HQKDQFH LWV FRPSHWLWLYH SRVLWLRQ FRXOG DGYHUVHO\ DIIHFW LWV EXVLQHVV DQG SURVSHFWV )XUWKHUPRUH WKH FRPSDQ\¶V HIIRUWV WR FRPSHWH LQ WKH PDUNHWSODFH FRXOG FDXVH GHWHULRUDWLRQ RI JURVV SURILW PDUJLQV DQG WKXV RYHUDOO SURILWDELOLW\ 7KH VL]HV RI WKH FRPSDQ\¶V FRPSHWLWRUV YDU\ DFURVV PDUNHW VHFWRUV DV GR WKH UHVRXUFHV WKH FRPSDQ\ KDV DOORFDWHG WR WKH VHFWRUV LQ ZKLFK LW GRHV EXVLQHVV 7KHUHIRUH VRPH RI WKH FRPSHWLWRUV PD\ KDYH PRUH H[WHQVLYH FXVWRPHU EDVH WKDQ WKH FRPSDQ\ KDV LQ DOO RU PRUH RI LWV PDUNHW VHFWRUV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

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¶V DELOLW\ WR DYRLG VXFK OLDELOLWLHV PD\ EH OLPLWHG DV D UHVXOW RI GLIIHULQJ IDFWRUV VXFK DV WKH LQDELOLW\ WR H[FOXGH VXFK GDPDJHV GXH WR WKH ODZV RI VRPH RI WKH FRXQWULHV ZKHUH LW GRHV EXVLQHVV 7KH FRPSDQ\¶V EXVLQHVV FRXOG EH PDWHULDOO\ DGYHUVHO\ DIIHFWHG DV D UHVXOW RI D VLJQLILFDQW TXDOLW\ RU SHUIRUPDQFH LVVXH LQ WKH SURGXFWV VROG E\ WKH FRPSDQ\ LI LW LV UHTXLUHG WR SD\ IRU WKH GDPDJHV WKDW UHVXOW $OWKRXJK WKH FRPSDQ\ FXUUHQWO\ KDV SURGXFW OLDELOLW\ LQVXUDQFH VXFK LQVXUDQFH LV OLPLWHG LQ FRYHUDJH DQG DPRXQW 'HFOLQHV LQ YDOXH DQG RWKHU IDFWRUV SHUWDLQLQJ WR WKH FRPSDQ\¶V LQYHQWRU\ FRXOG PDWHULDOO\ DGYHUVHO\ DIIHFW LWV EXVLQHVV 7KH PDUNHW IRU WKH FRPSDQ\¶V SURGXFWV DQG VHUYLFHV LV VXEMHFW WR UDSLG WHFKQRORJLFDO FKDQJH HYROYLQJ LQGXVWU\ VWDQGDUGV FKDQJHV LQ HQG PDUNHW GHPDQG DQG UHJXODWRU\ UHTXLUHPHQWV ZKLFK FDQ FRQWULEXWH WR WKH GHFOLQH LQ YDOXH RU REVROHVFHQFH RI LQYHQWRU\ 'XULQJ DQ HFRQRPLF GRZQWXUQ SULFHV FRXOG GHFOLQH GXH WR DQ RYHUVXSSO\ RI SURGXFW DQG WKHUHIRUH WKHUH PD\ EH JUHDWHU ULVN RI GHFOLQHV LQ LQYHQWRU\ YDOXH $OWKRXJK PRVW RI WKH FRPSDQ\¶V VXSSOLHUV SURYLGH WKH FRPSDQ\ ZLWK FHUWDLQ SURWHFWLRQV IURP WKH ORVV LQ YDOXH RI LQYHQWRU\ VXFK DV SULFH SURWHFWLRQ DQG FHUWDLQ ULJKWV RI UHWXUQ WKH FRPSDQ\ FDQQRW EH VXUH WKDW VXFK SURWHFWLRQV ZLOO IXOO\ FRPSHQVDWH LW IRU WKH ORVV LQ YDOXH RU WKDW WKH VXSSOLHUV ZLOO FKRRVH WR RU EH DEOH WR KRQRU VXFK DJUHHPHQWV )RU H[DPSOH PDQ\ RI WKH FRPSDQ\¶V VXSSOLHUV ZLOO QRW DOORZ SURGXFWV WR EH UHWXUQHG DIWHU WKH\ KDYH EHHQ KHOG LQ LQYHQWRU\ EH\RQG D FHUWDLQ DPRXQW RI WLPH DQG LQ PRVW LQVWDQFHV WKH UHWXUQ ULJKWV DUH OLPLWHG WR D FHUWDLQ SHUFHQWDJH RI WKH DPRXQW RI SURGXFW WKH FRPSDQ\ SXUFKDVHG LQ D SDUWLFXODU WLPH IUDPH ,Q DGGLWLRQ DV GLVFXVVHG EHORZ WKH FRPSDQ\ KLVWRULFDOO\ KDV VROG DQG FRQWLQXHV WR VHOO SURGXFWV WKDW FRQWDLQ VXEVWDQFHV WKDW DUH UHJXODWHG RU PD\ EH UHJXODWHG E\ YDULRXV HQYLURQPHQWDO ODZV 6RPH RI WKH FRPSDQ\¶V LQYHQWRU\ PD\ EHFRPH REVROHWH DV D UHVXOW RI WKHVH RU RWKHU H[LVWLQJ RU QHZ UHJXODWLRQV $OO RI WKHVH IDFWRUV SHUWDLQLQJ WR LQYHQWRU\ FRXOG KDYH D PDWHULDO DGYHUVH HIIHFW RQ WKH FRPSDQ\¶V EXVLQHVV 7KH FRPSDQ\ LV VXEMHFW WR HQYLURQPHQWDO ODZV DQG UHJXODWLRQV WKDW FRXOG PDWHULDOO\ DGYHUVHO\ DIIHFW LWV EXVLQHVV 7KH FRPSDQ\ LV VXEMHFW WR D ZLGH DQG HYHU FKDQJLQJ YDULHW\ RI LQWHUQDWLRQDO DQG 8 6 IHGHUDO VWDWH DQG ORFDO ODZV DQG UHJXODWLRQV FRPSOLDQFH ZLWK ZKLFK PD\ UHTXLUH VXEVWDQWLDO H[SHQVH 2I SDUWLFXODU QRWH DUH WZR (XURSHDQ 8QLRQ ³(8´

GLUHFWLYHV NQRZQ DV WKH 5HVWULFWLRQ RI &HUWDLQ +D]DUGRXV 6XEVWDQFHV 'LUHFWLYH ³5R+6´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¶V FXUUHQWO\ RU IRUPHUO\ RZQHG OHDVHG RU RSHUDWHG SURSHUW\ DV ZHOO DV IRU GDPDJHV WR SURSHUW\ RU QDWXUDO UHVRXUFHV DQG IRU SHUVRQDO LQMXU\ DULVLQJ RXW RI VXFK FRQWDPLQDWLRQ $V WKH GLVWULEXWLRQ EXVLQHVV LQ JHQHUDO GRHV QRW LQYROYH WKH PDQXIDFWXUH RI SURGXFWV LW LV W\SLFDOO\ QRW VXEMHFW WR VLJQLILFDQW OLDELOLW\ LQ WKLV DUHD +RZHYHU WKHUH PD\ EH RFFDVLRQV LQFOXGLQJ WKURXJK DFTXLVLWLRQV ZKHUH HQYLURQPHQWDO OLDELOLW\ DULVHV 6XFK OLDELOLW\ PD\ EH MRLQW DQG VHYHUDO PHDQLQJ WKDW WKH FRPSDQ\ FRXOG EH KHOG UHVSRQVLEOH IRU PRUH WKDQ LWV VKDUH RI WKH OLDELOLW\ LQYROYHG RU HYHQ WKH HQWLUH VKDUH ,Q DGGLWLRQ WKH SUHVHQFH RI HQYLURQPHQWDO FRQWDPLQDWLRQ FRXOG DOVR LQWHUIHUH ZLWK RQJRLQJ RSHUDWLRQV RU DGYHUVHO\ DIIHFW WKH FRPSDQ\¶V DELOLW\ WR VHOO RU OHDVH LWV SURSHUWLHV 7KH GLVFRYHU\ RI FRQWDPLQDWLRQ IRU ZKLFK WKH FRPSDQ\ LV UHVSRQVLEOH RU WKH HQDFWPHQW RI QHZ ODZV DQG UHJXODWLRQV RU FKDQJHV LQ KRZ H[LVWLQJ UHTXLUHPHQWV DUH HQIRUFHG FRXOG UHTXLUH WKH FRPSDQ\ WR LQFXU FRVWV IRU FRPSOLDQFH RU VXEMHFW LW WR

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

XQH[SHFWHG OLDELOLWLHV 7KH IRUHJRLQJ PDWWHUV FRXOG PDWHULDOO\ DGYHUVHO\ DIIHFW WKH FRPSDQ\¶V EXVLQHVV 7KH FRPSDQ\ LV FXUUHQWO\ LQYROYHG LQ WKH LQYHVWLJDWLRQ DQG UHPHGLDWLRQ RI HQYLURQPHQWDO PDWWHUV DW WZR VLWHV DV D UHVXOW RI LWV :\OH (OHFWURQLFV DFTXLVLWLRQ DQG WKH FRPSDQ\ LV LQ OLWLJDWLRQ UHODWHG WR WKRVH VLWHV $V D UHVXOW RI LWV DFTXLVLWLRQ RI :\OH (OHFWURQLFV ³:\OH´ IURP WKH 9(%$ *URXS ³9(%$´ LQ WKH FRPSDQ\ DVVXPHG :\OH¶V RXWVWDQGLQJ OLDELOLWLHV LQFOXGLQJ WKH UHVSRQVLELOLW\ IRU FHUWDLQ HQYLURQPHQWDO FRQWDPLQDWLRQ DW VLWHV IRUPHUO\ RZQHG E\ :\OH 7KH DJUHHPHQW SXUVXDQW WR ZKLFK WKH FRPSDQ\ ERXJKW :\OH IURP 9(%$ FRQWDLQV DQ LQGHPQLILFDWLRQ IURP 9(%$ WR WKH FRPSDQ\ IRU DOO RI WKH FRVWV DVVRFLDWHG ZLWK WKH :\OH HQYLURQPHQWDO REOLJDWLRQV 7ZR VLWHV DUH NQRZQ WR KDYH VXFK FRQWDPLQDWLRQ RQH DW 1RUFR &DOLIRUQLD DQG WKH RWKHU DW +XQWVYLOOH $ODEDPD DQG WKH FRPSDQ\ KDV WKXV IDU ERUQH PRVW RI WKH FRVW RI WKH LQYHVWLJDWLRQ DQG UHPHGLDWLRQ RI WKH 1RUFR DQG +XQWVYLOOH VLWHV XQGHU WKH GLUHFWLRQ RI WKH FRJQL]DQW VWDWH DJHQFLHV 7KH FRPSDQ\ KDV H[SHQGHG DSSUR[LPDWHO\ PLOOLRQ WR GDWH LQ FRQQHFWLRQ ZLWK WKHVH VLWHV ,Q DGGLWLRQ WKH FRPSDQ\ ZDV QDPHG DV D GHIHQGDQW LQ D SULYDWH ODZVXLW ILOHG LQ FRQQHFWLRQ ZLWK DOOHJHG FRQWDPLQDWLRQ DW D VPDOO LQGXVWULDO EXLOGLQJ IRUPHUO\ OHDVHG E\ :\OH /DERUDWRULHV LQ (O 6HJXQGR &DOLIRUQLD 7KH ODZVXLW ZDV VHWWOHG EXW WKH SRVVLELOLW\ UHPDLQV WKDW JRYHUQPHQW HQWLWLHV RU RWKHUV PD\ DWWHPSW WR LQYROYH WKH FRPSDQ\ LQ IXUWKHU FKDUDFWHUL]DWLRQ RU UHPHGLDWLRQ RI JURXQGZDWHU LVVXHV LQ WKH DUHD 9(%$¶V VXFFHVVRU LQ LQWHUHVW ( 21 $* DFNQRZOHGJHG OLDELOLW\ XQGHU WKH 9(%$ FRQWUDFWXDO LQGHPQLWLHV ZLWK UHVSHFW WR WKH 1RUFR DQG +XQWVYLOOH VLWHV DQG PDGH D VPDOO LQLWLDO SD\PHQW EXW KDV VXEVHTXHQWO\ UHIXVHG WR PDNH IXUWKHU SD\PHQWV 7KH FRPSDQ\ LV HQJDJHG LQ OLWLJDWLRQ DJDLQVW ( 21 $* DQG FHUWDLQ RWKHU SDUWLHV LQ WKH IHGHUDO FRXUWV RI WKH 8QLWHG 6WDWHV DQG LQ WKH )UDQNIXUW DP 0DLQ 5HJLRQDO &RXUW LQ *HUPDQ\ 7KH FRPSDQ\ EHOLHYHV VWURQJO\ LQ WKH PHULWV RI LWV FDVHV DQG WKH SUREDELOLW\ RI UHFRYHU\ IURP ( 21 $* EXW WKHUH FDQ EH QR JXDUDQW\ RI WKH RXWFRPH RI OLWLJDWLRQ DQG VKRXOG WKH FRPSDQ\ ORVH RQ DOO RI LWV FODLPV LQ ERWK FDVHV LW ZRXOG EHDU DOO RI WKH FRVW RI WKH :\OH HQYLURQPHQWDO REOLJDWLRQV %HFDXVH FKDUDFWHUL]DWLRQ DQG UHPHGLDO GHVLJQ LV QRW \HW FRPSOHWH DW DQ\ RI WKHVH VLWHV WKH IXWXUH FRVWV LQ H[FHVV RI DFFUXHG FRVWV DVVRFLDWHG WKHUHZLWK DUH DV \HW XQGHWHUPLQHG DQG FRXOG KDYH D PDWHULDO DGYHUVH HIIHFW RQ WKH FRPSDQ\¶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¶V DOOHJDWLRQV RI GDPDJHV LQ WKH 1RUFR PDWWHU SHQGLQJ LQ 5LYHUVLGH &RXQW\ KDYH PHULW WKHUH FDQ EH QR JXDUDQW\ UHJDUGLQJ WKH RXWFRPH RI DQ\ RI WKH PDWWHUV DQG VKRXOG WKH FRPSDQ\ EH IRXQG WR EH OLDEOH IRU GDPDJHV DQG ( 21 $* IRXQG QRW WR EH OLDEOH WR LQGHPQLI\ WKH FRPSDQ\ IRU WKRVH GDPDJHV DQG WKRVH FRVWV WKDW ZLOO EH LQFXUUHG LQ WKH IXWXUH LW FRXOG KDYH D PDWHULDO DGYHUVH HIIHFW RQ WKH FRPSDQ\¶V EXVLQHVV 7KH FRPSDQ\ PD\ QRW KDYH DGHTXDWH RU FRVW HIIHFWLYH OLTXLGLW\ RU FDSLWDO UHVRXUFHV 7KH FRPSDQ\ QHHGV FDVK RU FRPPLWWHG OLTXLGLW\ IDFLOLWLHV WR PDNH LQWHUHVW SD\PHQWV RQ DQG WR UHILQDQFH LQGHEWHGQHVV DQG IRU JHQHUDO FRUSRUDWH SXUSRVHV VXFK DV IXQGLQJ LWV RQJRLQJ ZRUNLQJ FDSLWDO DFTXLVLWLRQ DQG FDSLWDO H[SHQGLWXUH QHHGV LQFOXGLQJ WKH FRPSDQ\¶V QHZ (QWHUSULVH 5HVRXUFH 3ODQQLQJ V\VWHP $W 'HFHPEHU WKH FRPSDQ\ KDG FDVK DQG FDVK HTXLYDOHQWV RI PLOOLRQ ,Q DGGLWLRQ WKH FRPSDQ\ FXUUHQWO\ KDV DFFHVV WR FRPPLWWHG FUHGLW OLQHV RI ELOOLRQ 7KH FRPSDQ\¶V DELOLW\ WR VDWLVI\ LWV FDVK QHHGV GHSHQGV RQ LWV DELOLW\ WR JHQHUDWH FDVK IURP RSHUDWLRQV DQG WR DFFHVV WKH ILQDQFLDO PDUNHWV ERWK RI ZKLFK DUH VXEMHFW WR JHQHUDO HFRQRPLF ILQDQFLDO FRPSHWLWLYH OHJLVODWLYH UHJXODWRU\ DQG RWKHU IDFWRUV WKDW DUH EH\RQG LWV FRQWURO 7KH FRPSDQ\ PD\ LQ WKH IXWXUH QHHG WR DFFHVV WKH ILQDQFLDO PDUNHWV WR VDWLVI\ LWV FDVK QHHGV 7KH FRPSDQ\¶V DELOLW\ WR REWDLQ H[WHUQDO ILQDQFLQJ LV DIIHFWHG E\ LWV GHEW UDWLQJV $Q\ LQFUHDVH LQ WKH FRPSDQ\¶V OHYHO RI GHEW FKDQJH LQ VWDWXV RI LWV GHEW IURP XQVHFXUHG WR VHFXUHG GHEW RU GHWHULRUDWLRQ RI LWV RSHUDWLQJ

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

UHVXOWV PD\ FDXVH D UHGXFWLRQ LQ LWV FXUUHQW GHEW UDWLQJV $Q\ GRZQJUDGH LQ WKH FRPSDQ\¶V FXUUHQW GHEW UDWLQJ FRXOG LPSDLU WKH FRPSDQ\¶V DELOLW\ WR REWDLQ DGGLWLRQDO ILQDQFLQJ RQ DFFHSWDEOH WHUPV 8QGHU WKH WHUPV RI DQ\ H[WHUQDO ILQDQFLQJ WKH FRPSDQ\ PD\ LQFXU KLJKHU WKDQ H[SHFWHG ILQDQFLQJ H[SHQVHV DQG EHFRPH VXEMHFW WR DGGLWLRQDO UHVWULFWLRQV DQG FRYHQDQWV )RU H[DPSOH WKH FRPSDQ\¶V H[LVWLQJ GHEW DJUHHPHQWV FRQWDLQ UHVWULFWLYH FRYHQDQWV LQFOXGLQJ FRYHQDQWV UHTXLULQJ FRPSOLDQFH ZLWK VSHFLILHG ILQDQFLDO UDWLRV DQG D IDLOXUH WR FRPSO\ ZLWK WKHVH RU DQ\ RWKHU FRYHQDQWV PD\ UHVXOW LQ DQ HYHQW RI GHIDXOW $Q LQFUHDVH LQ WKH FRPSDQ\¶V ILQDQFLQJ FRVWV RU D EUHDFK RI GHEW LQVWUXPHQW FRYHQDQWV FRXOG KDYH D PDWHULDO DGYHUVH HIIHFW RQ WKH FRPSDQ\¶V EXVLQHVV 7KH DJUHHPHQWV JRYHUQLQJ VRPH RI WKH FRPSDQ\¶V ILQDQFLQJ DUUDQJHPHQWV FRQWDLQ YDULRXV FRYHQDQWV DQG UHVWULFWLRQV WKDW OLPLW WKH GLVFUHWLRQ RI PDQDJHPHQW LQ RSHUDWLQJ WKH EXVLQHVV DQG FRXOG SUHYHQW WKH FRPSDQ\ IURP HQJDJLQJ LQ VRPH DFWLYLWLHV WKDW PD\ EH EHQHILFLDO WR LWV EXVLQHVV 7KH DJUHHPHQWV JRYHUQLQJ WKH FRPSDQ\¶V ILQDQFLQJV FRQWDLQ YDULRXV FRYHQDQWV DQG UHVWULFWLRQV WKDW LQ FHUWDLQ FLUFXPVWDQFHV FRXOG OLPLW LWV DELOLW\ WR

‡ ‡ ‡ ‡ ‡ ‡

JUDQW OLHQV RQ DVVHWV PDNH UHVWULFWHG SD\PHQWV LQFOXGLQJ SD\LQJ GLYLGHQGV RQ FDSLWDO VWRFN RU UHGHHPLQJ RU UHSXUFKDVLQJ FDSLWDO VWRFN PDNH LQYHVWPHQWV PHUJH FRQVROLGDWH RU WUDQVIHU DOO RU VXEVWDQWLDOO\ DOO RI LWV DVVHWV LQFXU DGGLWLRQDO GHEW RU HQJDJH LQ FHUWDLQ WUDQVDFWLRQV ZLWK DIILOLDWHV

$V D UHVXOW RI WKHVH FRYHQDQWV DQG UHVWULFWLRQV WKH FRPSDQ\ PD\ EH OLPLWHG LQ KRZ LW FRQGXFWV LWV EXVLQHVV DQG PD\ EH XQDEOH WR UDLVH DGGLWLRQDO GHEW FRPSHWH HIIHFWLYHO\ RU PDNH LQYHVWPHQWV 7KH FRPSDQ\¶V IDLOXUH WR KDYH ORQJ WHUP VDOHV FRQWUDFWV PD\ KDYH D PDWHULDO DGYHUVH HIIHFW RQ LWV EXVLQHVV 0RVW RI WKH FRPSDQ\¶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¶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¶V EXVLQHVV 7KH FRPSDQ\¶V QRQ 8 6 ORFDWLRQV UHSUHVHQW D VLJQLILFDQW SRUWLRQ RI LWV VDOHV DQG FRQVHTXHQWO\ WKH FRPSDQ\ LV LQFUHDVLQJO\ H[SRVHG WR ULVNV DVVRFLDWHG ZLWK RSHUDWLQJ LQWHUQDWLRQDOO\ ,Q DQG DSSUR[LPDWHO\ DQG UHVSHFWLYHO\ RI WKH FRPSDQ\¶V VDOHV FDPH IURP LWV RSHUDWLRQV RXWVLGH WKH 8QLWHG 6WDWHV $V D UHVXOW RI WKH FRPSDQ\¶V LQWHUQDWLRQDO VDOHV DQG ORFDWLRQV LWV RSHUDWLRQV DUH VXEMHFW WR D YDULHW\ RI ULVNV WKDW DUH VSHFLILF WR LQWHUQDWLRQDO RSHUDWLRQV LQFOXGLQJ WKH IROORZLQJ ‡ ‡

‡ ‡ ‡ ‡ ‡ ‡

LPSRUW DQG H[SRUW UHJXODWLRQV WKDW FRXOG HURGH SURILW PDUJLQV RU UHVWULFW H[SRUWV WKH EXUGHQ DQG FRVW RI FRPSOLDQFH ZLWK LQWHUQDWLRQDO ODZV WUHDWLHV DQG WHFKQLFDO VWDQGDUGV DQG FKDQJHV LQ WKRVH UHJXODWLRQV SRWHQWLDO UHVWULFWLRQV RQ WUDQVIHUV RI IXQGV IRUHLJQ FXUUHQF\ IOXFWXDWLRQV LPSRUW DQG H[SRUW GXWLHV DQG YDOXH DGGHG WD[HV WUDQVSRUWDWLRQ GHOD\V DQG LQWHUUXSWLRQV XQFHUWDLQWLHV DULVLQJ IURP ORFDO EXVLQHVV SUDFWLFHV DQG FXOWXUDO FRQVLGHUDWLRQV DQG SRWHQWLDO PLOLWDU\ FRQIOLFWV DQG SROLWLFDO ULVNV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

)XUWKHU WKH FRPSDQ\¶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¶V LQWHUQDO FRQWUROV RQ D UHJXODU EDVLV WKHVH FRQWUROV PD\ QRW DOZD\V EH HIIHFWLYH 7KHUH DUH LQKHUHQW OLPLWDWLRQV RQ WKH HIIHFWLYHQHVV RI LQWHUQDO FRQWUROV LQFOXGLQJ FROOXVLRQ PDQDJHPHQW RYHUULGH DQG IDLOXUH LQ KXPDQ MXGJPHQW ,Q DGGLWLRQ FRQWURO SURFHGXUHV DUH GHVLJQHG WR UHGXFH UDWKHU WKDQ HOLPLQDWH EXVLQHVV ULVNV ,I WKH FRPSDQ\ IDLOV WR PDLQWDLQ DQ HIIHFWLYH V\VWHP RI LQWHUQDO FRQWUROV RU LI PDQDJHPHQW RU WKH FRPSDQ\¶V LQGHSHQGHQW UHJLVWHUHG SXEOLF DFFRXQWLQJ ILUP GLVFRYHUV PDWHULDO ZHDNQHVVHV LQ WKH FRPSDQ\¶V LQWHUQDO FRQWUROV LW PD\ EH XQDEOH WR SURGXFH UHOLDEOH ILQDQFLDO UHSRUWV RU SUHYHQW IUDXG ZKLFK FRXOG KDYH D PDWHULDO DGYHUVH HIIHFW RQ WKH FRPSDQ\¶V EXVLQHVV ,Q DGGLWLRQ WKH FRPSDQ\ PD\ EH VXEMHFW WR VDQFWLRQV RU LQYHVWLJDWLRQ E\ UHJXODWRU\ DXWKRULWLHV VXFK DV WKH 6(& RU WKH 1<6( $Q\ VXFK DFWLRQV FRXOG UHVXOW LQ DQ DGYHUVH UHDFWLRQ LQ WKH ILQDQFLDO PDUNHWV GXH WR D ORVV RI FRQILGHQFH LQ WKH UHOLDELOLW\ RI WKH FRPSDQ\¶V ILQDQFLDO VWDWHPHQWV ZKLFK FRXOG FDXVH WKH PDUNHW SULFH RI LWV FRPPRQ VWRFN WR GHFOLQH RU OLPLW WKH FRPSDQ\¶V DFFHVV WR FDSLWDO 7KH UHJXODWRU\ DXWKRULWLHV LQ WKH MXULVGLFWLRQV IRU ZKLFK WKH FRPSDQ\ VKLSV SURGXFW FRXOG OHY\ VXEVWDQWLDO ILQHV RQ WKH FRPSDQ\ RU OLPLW LWV DELOLW\ WR H[SRUW DQG UH H[SRUW SURGXFWV LI WKH FRPSDQ\ VKLSV SURGXFW LQ YLRODWLRQ RI DSSOLFDEOH H[SRUW UHJXODWLRQV $ VLJQLILFDQW SHUFHQWDJH RI WKH FRPSDQ\¶V VDOHV DUH PDGH RXWVLGH RI WKH 8QLWHG 6WDWHV WKURXJK WKH H[SRUWLQJ DQG UH H[SRUWLQJ RI SURGXFW 0DQ\ RI WKH SURGXFWV WKH FRPSDQ\ VHOOV DUH HLWKHU PDQXIDFWXUHG LQ WKH 8QLWHG 6WDWHV RU EDVHG RQ 8 6 WHFKQRORJ\ ³8 6 3URGXFWV´ $V D UHVXOW LQ DGGLWLRQ WR WKH ORFDO MXULVGLFWLRQV¶ H[SRUW UHJXODWLRQV DSSOLFDEOH WR LQGLYLGXDO VKLSPHQWV 8 6 3URGXFWV DUH VXEMHFW WR WKH ([SRUW $GPLQLVWUDWLRQ 5HJXODWLRQV ³($5´ ZKHQ H[SRUWHG DQG UH H[SRUWHG WR DQG IURP DOO LQWHUQDWLRQDO MXULVGLFWLRQV /LFHQVHV RU SURSHU OLFHQVH H[FHSWLRQV PD\ EH UHTXLUHG E\ ORFDO MXULVGLFWLRQV¶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¶V EXVLQHVV 7KH FRPSDQ\ UHOLHV KHDYLO\ RQ LWV LQWHUQDO LQIRUPDWLRQ V\VWHPV ZKLFK LI QRW SURSHUO\ IXQFWLRQLQJ FRXOG PDWHULDOO\ DGYHUVHO\ DIIHFW WKH FRPSDQ\¶V EXVLQHVV 7KH FRPSDQ\¶V FXUUHQW JOREDO RSHUDWLRQV UHVLGH RQ PXOWLSOH WHFKQRORJ\ SODWIRUPV 7KHVH SODWIRUPV DUH VXEMHFW WR HOHFWULFDO RU WHOHFRPPXQLFDWLRQV RXWDJHV FRPSXWHU KDFNLQJ RU RWKHU JHQHUDO V\VWHP IDLOXUH ZKLFK FRXOG KDYH D PDWHULDO DGYHUVH HIIHFW RQ WKH FRPSDQ\¶V EXVLQHVV %HFDXVH PRVW RI WKH FRPSDQ\¶V V\VWHPV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

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¶V DELOLW\ WR SHUIRUP QHFHVVDU\ EXVLQHVV RSHUDWLRQV ZKLFK FRXOG PDWHULDOO\ DGYHUVHO\ DIIHFW WKH FRPSDQ\¶V EXVLQHVV 7KH FRPSDQ\ PD\ EH VXEMHFW WR LQWHOOHFWXDO SURSHUW\ ULJKWV FODLPV ZKLFK DUH FRVWO\ WR GHIHQG FRXOG UHTXLUH SD\PHQW RI GDPDJHV RU OLFHQVLQJ IHHV DQG FRXOG OLPLW WKH FRPSDQ\¶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¶V RSHUDWLQJ H[SHQVHV DQG KDUP LWV RSHUDWLQJ UHVXOWV DQG ILQDQFLDO FRQGLWLRQ $OVR UR\DOW\ RU OLFHQVH DUUDQJHPHQWV PD\ QRW EH DYDLODEOH DW DOO 7KH FRPSDQ\ PD\ KDYH WR VWRS VHOOLQJ FHUWDLQ SURGXFWV RU XVLQJ WHFKQRORJLHV ZKLFK FRXOG DIIHFW WKH FRPSDQ\¶V DELOLW\ WR FRPSHWH HIIHFWLYHO\ ,WHP % 8QUHVROYHG 6WDII &RPPHQWV 1RQH

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

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³7HNHOHF´ IURP 7HNHOHF $LUWURQLF 6$ ³$LUWURQLF´ DQG FHUWDLQ RWKHU VHOOLQJ VKDUHKROGHUV 6XEVHTXHQW WR WKH FORVLQJ RI WKH DFTXLVLWLRQ 7HNHOHF UHFHLYHG D SURGXFW OLDELOLW\ FODLP LQ WKH DPRXQW RI ¼ PLOOLRQ 7KH SURGXFW OLDELOLW\ FODLP ZDV WKH VXEMHFW RI D )UHQFK OHJDO SURFHHGLQJ VWDUWHG E\ WKH FODLPDQW LQ XQGHU ZKLFK VHSDUDWH GHWHUPLQDWLRQV ZHUH PDGH DV WR ZKHWKHU WKH SURGXFWV WKDW DUH VXEMHFW WR WKH FODLP ZHUH GHIHFWLYH DQG WKH DPRXQW RI GDPDJHV VXVWDLQHG E\ WKH SXUFKDVHU 7KH PDQXIDFWXUHU RI WKH SURGXFWV DOVR SDUWLFLSDWHG LQ WKLV SURFHHGLQJ 7KH FODLPDQW KDV FRPPHQFHG OHJDO SURFHHGLQJV DJDLQVW 7HNHOHF DQG LWV LQVXUHUV WR UHFRYHU GDPDJHV LQ WKH DPRXQW RI ¼ PLOOLRQ DQG H[SHQVHV RI ¼ PLOOLRQ SOXV LQWHUHVW (QYLURQPHQWDO DQG 5HODWHG 0DWWHUV :\OH &ODLPV ,Q FRQQHFWLRQ ZLWK WKH SXUFKDVH RI :\OH IURP 9(%$ LQ WKH FRPSDQ\ DVVXPHG FHUWDLQ RI WKH WKHQ RXWVWDQGLQJ REOLJDWLRQV RI :\OH LQFOXGLQJ LWV LQGHPQLILFDWLRQ RI WKH SXUFKDVHUV RI LWV :\OH /DERUDWRULHV GLYLVLRQ IRU HQYLURQPHQWDO FOHDQ XS FRVWV DVVRFLDWHG ZLWK DQ\ WKHQ H[LVWLQJ FRQWDPLQDWLRQ RU YLRODWLRQ RI HQYLURQPHQWDO UHJXODWLRQV 8QGHU WKH WHUPV RI WKH FRPSDQ\¶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¶V OLDELOLWLHV ( 21 $* DFNQRZOHGJHG OLDELOLW\ XQGHU WKH WHUPV RI WKH 9(%$ FRQWUDFW LQ FRQQHFWLRQ ZLWK WKH 1RUFR DQG +XQWVYLOOH VLWHV DQG PDGH DQ LQLWLDO SDUWLDO SD\PHQW 1HLWKHU WKH FRPSDQ\¶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¶ UHVSHFWLYH ULJKWV DQG REOLJDWLRQV LQ FRQQHFWLRQ ZLWK WKH 5LYHUVLGH &RXQW\ OLWLJDWLRQ GLVFXVVHG EHORZ DQG RWKHU FRVWV DVVRFLDWHG ZLWK WKH 1RUFR VLWH 7KH FRXUW KDV UXOHG WKDW WKH HQIRUFHPHQW DQG LQWHUSUHWDWLRQ RI ( 21 $*¶V FRQWUDFWXDO REOLJDWLRQV DUH PDWWHUV IRU D FRXUW LQ *HUPDQ\ D UXOLQJ ZLWK ZKLFK WKH FRPSDQ\ GLVDJUHHV DQG ZKLFK LW LV DSSHDOLQJ 1HYHUWKHOHVV LQ 2FWREHU WKH FRPSDQ\ ILOHG D UHODWHG DFWLRQ ZLWK UHJDUG WR VXFK PDWWHUV DJDLQVW ( 21 $* LQ WKH )UDQNIXUW DP 0DLQ 5HJLRQDO &RXUW LQ *HUPDQ\

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

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¶V QHW FRVWV IRU VXFK LQGHPQLILHG PDWWHUV PD\ YDU\ IURP SHULRG WR SHULRG DV HVWLPDWHV RI UHFRYHULHV DUH QRW DOZD\V UHFRJQL]HG LQ WKH VDPH SHULRG DV WKH DFFUXDO RI HVWLPDWHG H[SHQVHV ,Q WKH FRPSDQ\ UHFRUGHG D FKDUJH RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV UHODWHG WR WKH HQYLURQPHQWDO PDWWHUV DULVLQJ RXW RI WKH FRPSDQ\¶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¶V ILQDQFLDO SRVLWLRQ OLTXLGLW\ RU UHVXOWV RI RSHUDWLRQV ,WHP 6XEPLVVLRQ RI 0DWWHUV WR D 9RWH RI 6HFXULW\ +ROGHUV 1RQH

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

3$57 ,, ,WHP 0DUNHW IRU 5HJLVWUDQW¶V &RPPRQ (TXLW\ DQG 5HODWHG 6WRFNKROGHU 0DWWHUV 0DUNHW ,QIRUPDWLRQ 7KH FRPSDQ\¶V FRPPRQ VWRFN LV OLVWHG RQ WKH 1<6( WUDGLQJ V\PERO ³$5:´ 7KH KLJK DQG ORZ VDOHV SULFHV GXULQJ HDFK TXDUWHU RI DQG ZHUH DV IROORZV <HDU +LJK /RZ )RXUWK 4XDUWHU 7KLUG 4XDUWHU 6HFRQG 4XDUWHU )LUVW 4XDUWHU )RXUWK 4XDUWHU 7KLUG 4XDUWHU 6HFRQG 4XDUWHU )LUVW 4XDUWHU +ROGHUV 2Q )HEUXDU\ WKHUH ZHUH DSSUR[LPDWHO\ VKDUHKROGHUV RI UHFRUG RI WKH FRPSDQ\¶V FRPPRQ VWRFN 'LYLGHQG +LVWRU\ 7KH FRPSDQ\ GLG QRW SD\ FDVK GLYLGHQGV RQ LWV FRPPRQ VWRFN GXULQJ RU :KLOH WKH %RDUG RI 'LUHFWRUV FRQVLGHUV WKH SD\PHQW RI GLYLGHQGV RQ WKH FRPPRQ VWRFN IURP WLPH WR WLPH WKH GHFODUDWLRQ RI IXWXUH GLYLGHQGV ZLOO EH GHSHQGHQW XSRQ WKH FRPSDQ\¶V HDUQLQJV ILQDQFLDO FRQGLWLRQ DQG RWKHU UHOHYDQW IDFWRUV LQFOXGLQJ GHEW FRYHQDQWV (TXLW\ &RPSHQVDWLRQ 3ODQ ,QIRUPDWLRQ 7KH IROORZLQJ WDEOH VXPPDUL]HV LQIRUPDWLRQ DV RI 'HFHPEHU UHODWLQJ WR WKH 2PQLEXV ,QFHQWLYH 3ODQ ZKLFK ZDV DSSURYHG E\ WKH FRPSDQ\¶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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

3HUIRUPDQFH *UDSK 7KH IROORZLQJ JUDSK FRPSDUHV WKH SHUIRUPDQFH RI WKH FRPSDQ\¶V FRPPRQ VWRFN IRU WKH SHULRGV LQGLFDWHG ZLWK WKH SHUIRUPDQFH RI WKH 6WDQGDUG 3RRU¶V 6WRFN ,QGH[ ³6 3 6WRFN ,QGH[´ DQG WKH DYHUDJH SHUIRUPDQFH RI D JURXS FRQVLVWLQJ RI WKH FRPSDQ\¶V SHHU FRPSDQLHV RQ D OLQH RI EXVLQHVV EDVLV 7KH FRPSDQLHV LQFOXGHG LQ WKH 3HHU *URXS DUH $YQHW ,QF %HOO 0LFURSURGXFWV ,QF -DFR (OHFWURQLFV ,QF DQG 1X +RUL]RQV (OHFWURQLFV &RUS 7KH JUDSK DVVXPHV LQYHVWHG RQ 'HFHPEHU LQ WKH FRPSDQ\ WKH 6 3 6WRFN ,QGH[ DQG WKH 3HHU *URXS 7RWDO UHWXUQ LQGLFHV UHIOHFW UHLQYHVWPHQW RI GLYLGHQGV DQG DUH ZHLJKWHG RQ WKH EDVLV RI PDUNHW FDSLWDOL]DWLRQ DW WKH WLPH RI HDFK UHSRUWHG GDWD SRLQW

$UURZ (OHFWURQLFV 3HHU *URXS 6 3 6WRFN ,QGH[

8QUHJLVWHUHG 6DOHV RI (TXLW\ 6HFXULWLHV DQG 8VH RI 3URFHHGV ,Q )HEUXDU\ WKH %RDUG RI 'LUHFWRUV DXWKRUL]HG WKH FRPSDQ\ WR UHSXUFKDVH XS WR PLOOLRQ RI WKH FRPSDQ\¶V RXWVWDQGLQJ FRPPRQ VWRFN WKURXJK D VKDUH UHSXUFKDVH SURJUDP WKH ³SURJUDP´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¶V RXWVWDQGLQJ FRPPRQ VWRFN LQ VXFK DPRXQWV DV WR RIIVHW WKH GLOXWLRQ IURP WKH H[HUFLVH RI VWRFN RSWLRQV DQG RWKHU VWRFN EDVHG FRPSHQVDWLRQ SODQV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

7KH IROORZLQJ WDEOH VKRZV WKH VKDUH UHSXUFKDVH DFWLYLW\ IRU HDFK RI WKH WKUHH PRQWKV LQ WKH TXDUWHU HQGHG 'HFHPEHU 7RWDO 1XPEHU RI 6KDUHV $SSUR[LPDWH 'ROODU 7RWDO 3XUFKDVHG DV 9DOXH RI 6KDUHV 1XPEHU RI $YHUDJH 3DUW RI 3XEOLFO\ WKDW 0D\ <HW EH 6KDUHV 3ULFH 3DLG $QQRXQFHG 3XUFKDVHG 8QGHU 0RQWK 3XUFKDVHG SHU 6KDUH 3URJUDP WKH 3URJUDP 2FWREHU WKURXJK 1RYHPEHU WKURXJK 'HFHPEHU WKURXJK 7RWDO

7KH DSSUR[LPDWH GROODU YDOXH RI VKDUHV UHIOHFWV WKH PLOOLRQ DXWKRUL]HG IRU UHSXUFKDVH XQGHU WKH SURJUDP LQ

)HEUXDU\ OHVV WKH DSSUR[LPDWH GROODU YDOXH RI WKH VKDUHV WKDW ZHUH SXUFKDVHG XQGHU WKH SURJUDP WR GDWH ,Q 'HFHPEHU WKH %RDUG RI 'LUHFWRUV DXWKRUL]HG WKH FRPSDQ\ WR UHSXUFKDVH DQ DGGLWLRQDO PLOOLRQ RI WKH FRPSDQ\¶V RXWVWDQGLQJ FRPPRQ VWRFN

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

,WHP 6HOHFWHG )LQDQFLDO 'DWD 7KH IROORZLQJ WDEOH VHWV IRUWK FHUWDLQ VHOHFWHG FRQVROLGDWHG ILQDQFLDO GDWD DQG VKRXOG EH UHDG LQ FRQMXQFWLRQ ZLWK WKH FRPSDQ\¶V FRQVROLGDWHG ILQDQFLDO VWDWHPHQWV DQG UHODWHG QRWHV DSSHDULQJ HOVHZKHUH LQ WKLV DQQXDO UHSRUW RQ )RUP . GROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD )RU WKH \HDUV HQGHG 'HFHPEHU D I E I F

G

H 6DOHV 2SHUDWLQJ LQFRPH 1HW LQFRPH 1HW LQFRPH SHU VKDUH %DVLF 'LOXWHG $W 'HFHPEHU $FFRXQWV UHFHLYDEOH DQG LQYHQWRULHV 7RWDO DVVHWV /RQJ WHUP GHEW 6KDUHKROGHUV¶ HTXLW\

D

E

F

G

H

2SHUDWLQJ LQFRPH DQG QHW LQFRPH LQFOXGH UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJHV RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV DQG DQ LQFRPH WD[ EHQHILW RI PLOOLRQ QHW SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV SULQFLSDOO\ GXH WR D UHGXFWLRQ LQ GHIHUUHG LQFRPH WD[HV DV D UHVXOW RI WKH VWDWXWRU\ UDWH FKDQJH LQ *HUPDQ\ LQ 2SHUDWLQJ LQFRPH DQG QHW LQFRPH LQFOXGH UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJHV RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV D FKDUJH UHODWHG WR D SUH DFTXLVLWLRQ ZDUUDQW\ FODLP RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV DQG D FKDUJH UHODWHG WR SUH DFTXLVLWLRQ HQYLURQPHQWDO PDWWHUV DULVLQJ RXW RI WKH FRPSDQ\¶V SXUFKDVH RI :\OH RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV 1HW LQFRPH DOVR LQFOXGHV D ORVV RQ SUHSD\PHQW RI GHEW RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV DQG WKH UHGXFWLRQ RI WKH SURYLVLRQ IRU LQFRPH WD[HV RI PLOOLRQ SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV DQG WKH UHGXFWLRQ RI LQWHUHVW H[SHQVH RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV UHODWHG WR WKH VHWWOHPHQW RI FHUWDLQ LQFRPH WD[ PDWWHUV 2SHUDWLQJ LQFRPH DQG QHW LQFRPH LQFOXGH UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJHV RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU DQG SHU VKDUH RQ D EDVLF DQG GLOXWHG EDVLV UHVSHFWLYHO\ DQG DQ DFTXLVLWLRQ LQGHPQLILFDWLRQ FUHGLW RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU SHU VKDUH RQ D EDVLF EDVLV 1HW LQFRPH DOVR LQFOXGHV D ORVV RQ SUHSD\PHQW RI GHEW RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU DQG SHU VKDUH RQ D EDVLF DQG GLOXWHG EDVLV UHVSHFWLYHO\ DQG D ORVV RI PLOOLRQ SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV RQ WKH ZULWH GRZQ RI DQ LQYHVWPHQW 2SHUDWLQJ LQFRPH DQG QHW LQFRPH LQFOXGH UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJHV RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU DQG SHU VKDUH RQ D EDVLF DQG GLOXWHG EDVLV UHVSHFWLYHO\ DQ DFTXLVLWLRQ LQGHPQLILFDWLRQ FUHGLW GXH WR D FKDQJH LQ HVWLPDWH RI PLOOLRQ DQG SHU VKDUH RQ D EDVLF DQG GLOXWHG EDVLV UHVSHFWLYHO\ DQG DQ LPSDLUPHQW FKDUJH RI PLOOLRQ DQG SHU VKDUH RQ D EDVLF DQG GLOXWHG EDVLV UHVSHFWLYHO\ 1HW LQFRPH DOVR LQFOXGHV D ORVV RQ SUHSD\PHQW RI GHEW RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU DQG SHU VKDUH RQ D EDVLF DQG GLOXWHG EDVLV UHVSHFWLYHO\ DQG D ORVV RI PLOOLRQ SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV RQ WKH ZULWH GRZQ RI DQ LQYHVWPHQW 2SHUDWLQJ LQFRPH DQG QHW LQFRPH LQFOXGH UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJHV RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV DQG DQ DFTXLVLWLRQ LQGHPQLILFDWLRQ FKDUJH GXH WR D FKDQJH LQ HVWLPDWH RI PLOOLRQ SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV 1HW LQFRPH DOVR LQFOXGHV D ORVV RQ SUHSD\PHQW RI GHEW RI PLOOLRQ PLOOLRQ

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV

I

2SHUDWLQJ LQFRPH DQG QHW LQFRPH LQFOXGH VWRFN RSWLRQ H[SHQVH RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV DQG PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV IRU DQG UHVSHFWLYHO\ UHVXOWLQJ IURP WKH FRPSDQ\¶V DGRSWLRQ RI )LQDQFLDO $FFRXQWLQJ 6WDQGDUGV %RDUG ³)$6%´ 6WDWHPHQW 1R UHYLVHG ³6KDUH %DVHG 3D\PHQW ´ DQG WKH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ 6WDII $FFRXQWLQJ %XOOHWLQ 1R FROOHFWLYHO\ ³6WDWHPHQW 1R 5 ´

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

,WHP 0DQDJHPHQW¶V 'LVFXVVLRQ DQG $QDO\VLV RI )LQDQFLDO &RQGLWLRQ DQG 5HVXOWV RI 2SHUDWLRQV 2YHUYLHZ 7KH FRPSDQ\ LV D JOREDO SURYLGHU RI SURGXFWV VHUYLFHV DQG VROXWLRQV WR LQGXVWULDO DQG FRPPHUFLDO XVHUV RI HOHFWURQLF FRPSRQHQWV DQG HQWHUSULVH FRPSXWLQJ VROXWLRQV 7KH FRPSDQ\ GLVWULEXWHV HOHFWURQLF FRPSRQHQWV WR 2(0V DQG &0V WKURXJK LWV JOREDO FRPSRQHQWV EXVLQHVV VHJPHQW DQG SURYLGHV HQWHUSULVH FRPSXWLQJ VROXWLRQV WR 9$5V WKURXJK LWV JOREDO (&6 EXVLQHVV VHJPHQW )RU DSSUR[LPDWHO\ RI WKH FRPSDQ\¶V VDOHV FRQVLVWHG RI HOHFWURQLF FRPSRQHQWV DQG DSSUR[LPDWHO\ RI WKH FRPSDQ\¶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¶V EXVLQHVV LQLWLDWLYHV WR JURZ VDOHV IDVWHU WKDQ WKH PDUNHW JURZ SURILWV IDVWHU WKDQ VDOHV DQG LQFUHDVH UHWXUQ RQ LQYHVWHG FDSLWDO 7R DFKLHYH LWV ILQDQFLDO REMHFWLYHV WKH FRPSDQ\ VHHNV WR FDSWXUH VLJQLILFDQW RSSRUWXQLWLHV WR JURZ DFURVV SURGXFWV PDUNHWV DQG JHRJUDSKLHV 7R VXSSOHPHQW LWV RUJDQLF JURZWK VWUDWHJ\ WKH FRPSDQ\ ORRNV WR PDNH VWUDWHJLF DFTXLVLWLRQV WR EURDGHQ LWV SURGXFW RIIHULQJV LQFUHDVH LWV PDUNHW VKDUH DQG RU H[SDQG LWV JHRJUDSKLF UHDFK ,QYHVWPHQWV QHHGHG WR IXQG WKLV JURZWK DUH GHYHORSHG WKURXJK FRQWLQXRXV FRUSRUDWH ZLGH LQLWLDWLYHV WR LPSURYH SURILWDELOLW\ DQG LQFUHDVH HIIHFWLYH DVVHW XWLOL]DWLRQ 2Q 0DUFK WKH FRPSDQ\ DFTXLUHG .H\/LQN IURP $JLO\V\V IRU D SXUFKDVH SULFH RI PLOOLRQ LQ FDVK ZKLFK LQFOXGHG DFTXLVLWLRQ FRVWV DQG ILQDO DGMXVWPHQWV EDVHG XSRQ D FORVLQJ DXGLW 7KH FRPSDQ\ DOVR HQWHUHG LQWR D ORQJ WHUP SURFXUHPHQW DJUHHPHQW ZLWK $JLO\V\V .H\/LQN D OHDGLQJ HQWHUSULVH FRPSXWLQJ VROXWLRQV GLVWULEXWRU SURYLGHV FRPSOH[ VROXWLRQV IURP LQGXVWU\ OHDGLQJ PDQXIDFWXUHUV WR PRUH WKDQ UHVHOOHU SDUWQHUV .H\/LQN KDV ORQJ VWDQGLQJ UHVHOOHU UHODWLRQVKLSV WKDW SURYLGH WKH FRPSDQ\ ZLWK VLJQLILFDQW FURVV VHOOLQJ RSSRUWXQLWLHV .H\/LQN¶V KLJKO\ H[SHULHQFHG VDOHV DQG PDUNHWLQJ SURIHVVLRQDOV VWUHQJWKHQ WKH FRPSDQ\¶V H[LVWLQJ UHODWLRQVKLSV ZLWK 9$5V DQG SRVLWLRQ WKH FRPSDQ\ WR DWWUDFW QHZ UHODWLRQVKLSV 7RWDO .H\/LQN VDOHV IRU LQFOXGLQJ HVWLPDWHG UHYHQXHV DVVRFLDWHG ZLWK WKH DERYH PHQWLRQHG SURFXUHPHQW DJUHHPHQW ZHUH DSSUR[LPDWHO\ ELOOLRQ 2Q 'HFHPEHU WKH FRPSDQ\ DFTXLUHG ,Q7HFKQRORJ\ ZKLFK GHOLYHUV VWRUDJH DQG VHFXULW\ VROXWLRQV WR 9$5V LQ WKH 8QLWHG .LQJGRP 7RWDO ,Q7HFKQRORJ\ VDOHV IRU ZHUH DSSUR[LPDWHO\ PLOOLRQ 7KH ,Q7HFKQRORJ\ DFTXLVLWLRQ LQFUHDVHG WKH FRPSDQ\¶V RIIHULQJ RI VRIWZDUH DQG VHFXULW\ SURGXFWV DQG IXUWKHU H[SDQGHG WKH FRPSDQ\¶V (&6 EXVLQHVV LQWR WKH 8QLWHG .LQJGRP 2Q 1RYHPEHU WKH FRPSDQ\ DFTXLUHG $OWHUQDWLYH 7HFKQRORJ\ ZKLFK VXSSRUWV 9$5V LQ GHOLYHULQJ VRIWZDUH VROXWLRQV WKDW RSWLPL]H DFFHOHUDWH PRQLWRU DQG VHFXUH DQ HQG XVHU¶V QHWZRUN 7RWDO $OWHUQDWLYH 7HFKQRORJ\ VDOHV IRU ZHUH DSSUR[LPDWHO\ PLOOLRQ RI ZKLFK PLOOLRQ ZHUH LQFOXGHG LQ WKH FRPSDQ\¶V FRQVROLGDWHG UHVXOWV RI RSHUDWLRQV IURP WKH DFTXLVLWLRQ GDWH &RQVROLGDWHG VDOHV IRU JUHZ E\ FRPSDUHG ZLWK WKH \HDU HDUOLHU SHULRG SULPDULO\ DV D UHVXOW RI WKH LPSDFW RI DFTXLVLWLRQV WKH FRPSDQ\¶V LQFUHDVHG IRFXV RQ VDOHV UHODWHG LQLWLDWLYHV DQG WKH LPSDFW RI D ZHDNHU 8 6 GROODU RQ WKH WUDQVODWLRQ RI WKH FRPSDQ\¶V LQWHUQDWLRQDO ILQDQFLDO VWDWHPHQWV 7KLV LQFUHDVH ZDV RIIVHW LQ SDUW E\ FRQWLQXHG ZHDNQHVV DW ODUJH HOHFWURQLF PDQXIDFWXULQJ VHUYLFHV ³(06´ FXVWRPHUV LQ WKH JOREDO FRPSRQHQWV EXVLQHVV VHJPHQW DQG WKH FRPSDQ\¶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¶V LQFUHDVHG IRFXV RQ VDOHV UHODWHG LQLWLDWLYHV ,Q WKH JOREDO FRPSRQHQWV EXVLQHVV VHJPHQW VDOHV IRU LQFUHDVHG E\ FRPSDUHG ZLWK WKH \HDU HDUOLHU SHULRG SULPDULO\ GXH WR WKH FRPSDQ\¶V LQFUHDVHG IRFXV RQ VDOHV UHODWHG LQLWLDWLYHV DQG WKH LPSDFW RI D ZHDNHU 8 6 GROODU RQ WKH WUDQVODWLRQ RI WKH FRPSDQ\¶V LQWHUQDWLRQDO ILQDQFLDO VWDWHPHQWV RIIVHW LQ SDUW E\ WKH DIRUHPHQWLRQHG FRQWLQXHG ZHDNQHVV DW ODUJH (06

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

FXVWRPHUV DQG WKH FRPSDQ\¶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¶V UHVXOWV IRU WKH \HDUV HQGHG 'HFHPEHU DQG ‡ ‡ ‡ ‡ ‡ ‡

UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJHV RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV LQ DQG PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV LQ DQ LQFRPH WD[ EHQHILW RI PLOOLRQ QHW SULQFLSDOO\ GXH WR D UHGXFWLRQ LQ GHIHUUHG LQFRPH WD[HV DV D UHVXOW RI WKH VWDWXWRU\ UDWH FKDQJH LQ *HUPDQ\ LQ D FKDUJH UHODWHG WR D SUH DFTXLVLWLRQ ZDUUDQW\ FODLP RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV LQ D FKDUJH UHODWHG WR SUH DFTXLVLWLRQ HQYLURQPHQWDO PDWWHUV DULVLQJ IURP WKH FRPSDQ\¶V SXUFKDVH RI :\OH RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV LQ D ORVV RQ SUHSD\PHQW RI GHEW RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV LQ DQG D UHGXFWLRQ RI WKH SURYLVLRQ IRU LQFRPH WD[HV RI PLOOLRQ RI ZKLFK PLOOLRQ UHODWHG WR WD[ \HDUV SULRU WR DQG WKH UHGXFWLRQ RI LQWHUHVW H[SHQVH RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RI ZKLFK PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV UHODWHG WR WD[ \HDUV SULRU WR UHODWHG WR WKH VHWWOHPHQW RI FHUWDLQ LQFRPH WD[ PDWWHUV LQ

0RVW RI WKH FRPSDQ\¶V VDOHV DUH PDGH RQ DQ RUGHU E\ RUGHU EDVLV UDWKHU WKDQ WKURXJK ORQJ WHUP VDOHV FRQWUDFWV $V VXFK WKH QDWXUH RI WKH FRPSDQ\¶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¶V LQFUHDVHG IRFXV RQ VDOHV UHODWHG LQLWLDWLYHV ,Q WKH JOREDO FRPSRQHQWV EXVLQHVV VHJPHQW VDOHV IRU LQFUHDVHG E\ FRPSDUHG ZLWK WKH \HDU HDUOLHU SHULRG SULPDULO\ GXH WR WKH FRPSDQ\¶V LQFUHDVHG IRFXV RQ VDOHV UHODWHG LQLWLDWLYHV DQG WKH LPSDFW RI D ZHDNHU 8 6 GROODU RQ WKH WUDQVODWLRQ RI WKH FRPSDQ\¶V LQWHUQDWLRQDO ILQDQFLDO VWDWHPHQWV RIIVHW LQ SDUW E\ FRQWLQXHG ZHDNQHVV DW ODUJH (06 FXVWRPHUV DQG WKH FRPSDQ\¶V LQLWLDWLYH WR H[LW ORZHU PDUJLQ EXVLQHVV LQ WKH $VLD 3DFLILF UHJLRQ 7KH WUDQVODWLRQ RI WKH FRPSDQ\¶V LQWHUQDWLRQDO ILQDQFLDO VWDWHPHQWV LQWR 8 6 GROODUV UHVXOWHG LQ LQFUHDVHG VDOHV RI PLOOLRQ IRU FRPSDUHG ZLWK WKH \HDU HDUOLHU SHULRG GXH WR D ZHDNHU 8 6 GROODU ([FOXGLQJ WKH LPSDFW RI IRUHLJQ FXUUHQF\ WKH FRPSDQ\¶V VDOHV LQFUHDVHG E\ LQ &RQVROLGDWHG VDOHV IRU LQFUHDVHG E\ ELOOLRQ RU FRPSDUHG ZLWK WKH \HDU HDUOLHU SHULRG 7KH LQFUHDVH ZDV GULYHQ E\ DQ LQFUHDVH LQ WKH JOREDO FRPSRQHQWV EXVLQHVV VHJPHQW RI ELOOLRQ RU DQG DQ LQFUHDVH LQ WKH JOREDO (&6 EXVLQHVV VHJPHQW RI PLOOLRQ RU FRPSDUHG ZLWK WKH \HDU HDUOLHU SHULRG 7KH JURZWK LQ WKH JOREDO FRPSRQHQWV EXVLQHVV VHJPHQW IRU ZDV SULPDULO\ GULYHQ E\ WKH VDOHV LQFUHDVH LQ WKH 1RUWK $PHULFDQ &RPSRQHQWV ³1$&´ EXVLQHVVHV RI WKH VDOHV LQFUHDVH LQ WKH (0($6$ FRPSRQHQWV EXVLQHVVHV RI DQG WKH VDOHV LQFUHDVH LQ WKH $VLD 3DFLILF FRPSRQHQWV EXVLQHVVHV RI RQ D SUR IRUPD EDVLV DV WKRXJK WKH 8OWUD 6RXUFH 7HFKQRORJ\ &RUS ³8OWUD 6RXUFH´ DFTXLVLWLRQ RFFXUUHG RQ -DQXDU\ 7KH VDOHV LQFUHDVH LQ WKH 1$& EXVLQHVVHV RI FRPSDUHG ZLWK WKH \HDU

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

HDUOLHU SHULRG ZDV SULPDULO\ GULYHQ E\ WKH VWUHQJWK RI GHPDQG IRU VHPLFRQGXFWRUV DQG SDVVLYH HOHFWURPHFKDQLFDO DQG FRQQHFWRU SURGXFWV IURP WKH FRPSDQ\¶V EURDG FXVWRPHU EDVH DV ZHOO DV WKH FRPSDQ\¶V IRFXV RQ VDOHV UHODWHG LQLWLDWLYHV IRU SDVVLYH HOHFWURPHFKDQLFDO DQG FRQQHFWRU SURGXFWV 7KH VDOHV LQFUHDVH LQ WKH (0($6$ FRPSRQHQWV EXVLQHVVHV RI FRPSDUHG ZLWK WKH \HDU HDUOLHU SHULRG ZDV SULPDULO\ GXH WR WKH LQFUHDVHG HQG PDUNHW GHPDQG LQ WKLV UHJLRQ DV ZHOO DV WKH FRPSDQ\¶V LQFUHDVHG IRFXV RQ VDOHV UHODWHG LQLWLDWLYHV 7KH LQFUHDVH LQ WKH $VLD 3DFLILF FRPSRQHQWV EXVLQHVVHV RI RQ D SUR IRUPD EDVLV DV WKRXJK WKH 8OWUD 6RXUFH DFTXLVLWLRQ RFFXUUHG RQ -DQXDU\ FRPSDUHG ZLWK WKH \HDU HDUOLHU SHULRG ZDV GXH WR WKH UHJLRQ¶V VWURQJ PDUNHW JURZWK FRXSOHG ZLWK WKH FRPSDQ\¶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¶V LQWHUQDWLRQDO ILQDQFLDO VWDWHPHQWV LQWR 8 6 GROODUV UHVXOWHG LQ LQFUHDVHG VDOHV RI PLOOLRQ IRU FRPSDUHG ZLWK WKH \HDU HDUOLHU SHULRG GXH WR D ZHDNHU 8 6 GROODU ([FOXGLQJ WKH LPSDFW RI IRUHLJQ FXUUHQF\ WKH FRPSDQ\¶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¶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¶V FRQWLQXHG HIIRUWV WR UHGXFH UHDO HVWDWH FRVWV DQG LQWHJUDWLRQ FKDUJHV RI PLOOLRQ SULPDULO\ UHODWHG WR WKH DFTXLVLWLRQ RI .H\/LQN

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

7KH UHVWUXFWXULQJ FKDUJH RI PLOOLRQ LQ LQFOXGHV SHUVRQQHO FRVWV RI PLOOLRQ UHODWHG WR WKH HOLPLQDWLRQ RI DSSUR[LPDWHO\ SRVLWLRQV SULPDULO\ ZLWKLQ PXOWLSOH IXQFWLRQV LQ 1RUWK $PHULFD ZLWKLQ WKH FRPSDQ\¶V HOHFWURQLF FRPSRQHQWV VHJPHQW UHODWHG WR WKH FRPSDQ\¶V FRQWLQXHG IRFXV RQ RSHUDWLRQDO HIILFLHQF\ )DFLOLWLHV LQFOXGHV D UHVWUXFWXULQJ FUHGLW RI PLOOLRQ SULPDULO\ UHODWHG WR D JDLQ RQ WKH VDOH RI WKH +DUORZ (QJODQG IDFLOLW\ RI PLOOLRQ WKDW ZDV YDFDWHG LQ RIIVHW E\ IDFLOLWLHV FRVWV RI PLOOLRQ SULPDULO\ UHODWHG WR H[LW DFWLYLWLHV IRU D YDFDWHG IDFLOLW\ LQ (XURSH GXH WR WKH FRPSDQ\¶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¶V JOREDO FRPSRQHQWV EXVLQHVV VHJPHQW UHODWHG WR WKH RXWVRXUFLQJ RI FHUWDLQ DGPLQLVWUDWLYH IXQFWLRQV DQG WKH FORVXUH RI D ZDUHKRXVH IDFLOLW\ )DFLOLWLHV FRVWV RI PLOOLRQ UHODWHG WR H[LW DFWLYLWLHV IRU WKUHH YDFDWHG IDFLOLWLHV LQ (XURSH GXH WR WKH FRPSDQ\¶V FRQWLQXHG HIIRUWV WR UHGXFH UHDO HVWDWH FRVWV $OVR LQFOXGHG LQ WKH UHVWUXFWXULQJ FKDUJH LV D FKDUJH UHODWHG WR WKH ZULWH GRZQ RI FHUWDLQ FDSLWDOL]HG VRIWZDUH LQ (XURSH RI PLOOLRQ 7KLV ZULWH GRZQ UHVXOWHG IURP WKH FRPSDQ\¶V GHFLVLRQ LQ WKH IRXUWK TXDUWHU RI WR LPSOHPHQW D JOREDO (QWHUSULVH 5HVRXUFH 3ODQQLQJ ³(53´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¶V JOREDO FRPSRQHQWV EXVLQHVV VHJPHQW DQG VKDUHG VHUYLFH IXQFWLRQ UHODWHG WR WKH FRPSDQ\¶V FRQWLQXHG IRFXV RQ RSHUDWLRQDO HIILFLHQF\ )DFLOLWLHV LQFOXGHV D UHVWUXFWXULQJ FUHGLW RI PLOOLRQ SULPDULO\ UHODWHG WR D JDLQ RQ WKH VDOH RI D IDFLOLW\ LQ 1RUWK $PHULFD RI PLOOLRQ WKDW ZDV YDFDWHG LQ GXH WR WKH FRPSDQ\¶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¶V WKHQ RXWVWDQGLQJ REOLJDWLRQV $PRQJ WKH REOLJDWLRQV WKH FRPSDQ\ DVVXPHG ZDV :\OH¶V LQGHPQLILFDWLRQ RI WKH SXUFKDVHUV RI RQH RI LWV GLYLVLRQV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

:\OH /DERUDWRULHV IRU FRVWV DVVRFLDWHG ZLWK WKHQ H[LVWLQJ FRQWDPLQDWLRQ RU YLRODWLRQ RI HQYLURQPHQWDO UHJXODWLRQV 8QGHU WKH WHUPV RI WKH FRPSDQ\¶V SXUFKDVH RI :\OH 9(%$ DJUHHG WR LQGHPQLI\ WKH FRPSDQ\ IRU DPRQJ RWKHU WKLQJV FRVWV UHODWHG WR HQYLURQPHQWDO SROOXWLRQ DVVRFLDWHG ZLWK :\OH LQFOXGLQJ WKRVH DVVRFLDWHG ZLWK LWV SULRU VDOH RI :\OH /DERUDWRULHV 9(%$ KDV VLQFH PHUJHG ZLWK ( 21 $* D *HUPDQ EDVHG PXOWLQDWLRQDO FRQJORPHUDWH 7KH FRPSDQ\¶V QHW FRVWV IRU VXFK LQGHPQLILHG PDWWHUV PD\ YDU\ IURP SHULRG WR SHULRG DV HVWLPDWHV RI UHFRYHULHV DUH QRW DOZD\V UHFRJQL]HG LQ WKH VDPH SHULRG DV WKH DFFUXDO RI HVWLPDWHG H[SHQVHV 'XULQJ WKH FRPSDQ\ UHFRUGHG D FKDUJH RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV UHODWHG WR WKH HQYLURQPHQWDO PDWWHUV DULVLQJ RXW RI WKH FRPSDQ\¶V SXUFKDVH RI :\OH $FTXLVLWLRQ ,QGHPQLILFDWLRQ ,Q 7HNHOHF D )UHQFK VXEVLGLDU\ RI WKH FRPSDQ\ HQWHUHG LQWR D VHWWOHPHQW DJUHHPHQW ZLWK $LUWURQLF SXUVXDQW WR ZKLFK $LUWURQLF SDLG ¼ PLOOLRQ DSSUR[LPDWHO\ PLOOLRQ WR 7HNHOHF LQ IXOO VHWWOHPHQW RI DOO RI 7HNHOHF¶V FODLPV IRU LQGHPQLILFDWLRQ XQGHU WKH SXUFKDVH DJUHHPHQW 7KH FRPSDQ\ UHFRUGHG WKH QHW DPRXQW RI WKH VHWWOHPHQW RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU SHU VKDUH RQ D EDVLF EDVLV DV DQ DFTXLVLWLRQ LQGHPQLILFDWLRQ FUHGLW 2SHUDWLQJ ,QFRPH 7KH FRPSDQ\ UHFRUGHG RSHUDWLQJ LQFRPH RI PLOOLRQ LQ DV FRPSDUHG ZLWK RSHUDWLQJ LQFRPH RI PLOOLRQ LQ 6HOOLQJ JHQHUDO DQG DGPLQLVWUDWLYH H[SHQVHV LQFUHDVHG E\ PLOOLRQ RU LQ RQ D VDOHV LQFUHDVH RI FRPSDUHG ZLWK 7KH GROODU LQFUHDVH LQ VHOOLQJ JHQHUDO DQG DGPLQLVWUDWLYH H[SHQVHV LQ DV FRPSDUHG ZLWK WKH \HDU HDUOLHU SHULRG ZDV SULPDULO\ GXH WR VHOOLQJ JHQHUDO DQG DGPLQLVWUDWLYH H[SHQVHV LQFXUUHG E\ $OWHUQDWLYH 7HFKQRORJ\ ,Q7HFKQRORJ\ DQG .H\/LQN KLJKHU VHOOLQJ H[SHQVHV WR VXSSRUW LQFUHDVHG VDOHV DQG WKH LPSDFW RI IRUHLJQ H[FKDQJH UDWHV 6HOOLQJ JHQHUDO DQG DGPLQLVWUDWLYH H[SHQVHV DV D SHUFHQWDJH RI VDOHV ZDV DQG IRU DQG UHVSHFWLYHO\ 7KH GHFUHDVH LQ VHOOLQJ JHQHUDO DQG DGPLQLVWUDWLYH H[SHQVHV DV D SHUFHQWDJH RI VDOHV FRPSDUHG ZLWK WKH \HDU HDUOLHU SHULRG ZDV SULPDULO\ WKH UHVXOW RI WKH DFTXLVLWLRQV RI $OWHUQDWLYH 7HFKQRORJ\ ,Q7HFKQRORJ\ DQG .H\/LQN ZKLFK KDYH ORZHU VHOOLQJ JHQHUDO DQG DGPLQLVWUDWLYH H[SHQVHV DV D SHUFHQWDJH RI VDOHV DQG WKH FRPSDQ\¶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¶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³FRQYHUWLEOH GHEHQWXUHV´ DQG UHSXUFKDVHG PLOOLRQ SULQFLSDO DPRXQW RI LWV VHQLRU QRWHV GXH LQ -DQXDU\ 7KH UHODWHG ORVV RQ

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

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³,QFRPH 7D[HV´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³,QFRPH 7D[HV´ EHORZ ZKLFK UHVXOWHG LQ D UHGXFWLRQ RI UHODWHG LQWHUHVW H[SHQVH RI PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV RI ZKLFK PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV

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

SULQFLSDOO\ GXH WR D UHGXFWLRQ LQ GHIHUUHG LQFRPH WD[HV DV D UHVXOW RI WKH VWDWXWRU\ WD[ UDWH FKDQJH LQ *HUPDQ\ 7KHVH GHIHUUHG LQFRPH WD[HV SULPDULO\ UHODWHG WR WKH DPRUWL]DWLRQ RI LQWDQJLEOH DVVHWV IRU LQFRPH WD[ SXUSRVHV ZKLFK DUH QRW DPRUWL]HG IRU DFFRXQWLQJ SXUSRVHV 7KH FRPSDQ\¶V SURYLVLRQ IRU LQFRPH WD[HV DQG HIIHFWLYH WD[ UDWH IRU ZHUH LPSDFWHG E\ WKH DIRUHPHQWLRQHG LQFRPH WD[ EHQHILW DQG WKH SUHYLRXVO\ GLVFXVVHG UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJHV ([FOXGLQJ WKH LPSDFW RI WKH DIRUHPHQWLRQHG LQFRPH WD[ EHQHILW DQG UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJHV WKH FRPSDQ\¶V HIIHFWLYH WD[ UDWH ZDV IRU 7KH FRPSDQ\ UHFRUGHG D SURYLVLRQ IRU LQFRPH WD[HV RI PLOOLRQ DQ HIIHFWLYH WD[ UDWH RI IRU 'XULQJ WKH FRPSDQ\ VHWWOHG FHUWDLQ LQFRPH WD[ PDWWHUV FRYHULQJ PXOWLSOH \HDUV $V D UHVXOW RI WKH VHWWOHPHQW RI WKH WD[ PDWWHUV WKH FRPSDQ\ UHFRUGHG D UHGXFWLRQ RI WKH SURYLVLRQ IRU LQFRPH WD[HV RI PLOOLRQ SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV RI ZKLFK PLOOLRQ SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV UHODWHG WR WD[ \HDUV SULRU WR 7KH FRPSDQ\¶V SURYLVLRQ

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

IRU LQFRPH WD[HV DQG HIIHFWLYH WD[ UDWH ZHUH LPSDFWHG E\ WKH SUHYLRXVO\ GLVFXVVHG UHVROXWLRQ RI FHUWDLQ LQFRPH WD[ PDWWHUV UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJHV SUH DFTXLVLWLRQ ZDUUDQW\ FODLP DQG SUH DFTXLVLWLRQ HQYLURQPHQWDO PDWWHUV ([FOXGLQJ WKH LPSDFW UHODWHG WR WD[ \HDUV SULRU WR RI WKH SUHYLRXVO\ GLVFXVVHG UHVROXWLRQ RI FHUWDLQ LQFRPH WD[ PDWWHUV UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJHV SUH DFTXLVLWLRQ ZDUUDQW\ FODLP DQG SUH DFTXLVLWLRQ HQYLURQPHQWDO PDWWHUV WKH FRPSDQ\¶V HIIHFWLYH WD[ UDWH ZDV IRU 7KH FRPSDQ\ UHFRUGHG D SURYLVLRQ IRU LQFRPH WD[HV RI PLOOLRQ DQ HIIHFWLYH WD[ UDWH RI IRU 7KH FRPSDQ\¶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¶V HIIHFWLYH WD[ UDWH ZDV IRU 7KH FRPSDQ\¶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¶V SXUFKDVH RI :\OH RI PLOOLRQ D ORVV RQ SUHSD\PHQW RI GHEW RI PLOOLRQ DQG WKH UHGXFWLRQ RI WKH SURYLVLRQ IRU LQFRPH WD[HV RI PLOOLRQ DQG WKH UHGXFWLRQ RI LQWHUHVW H[SHQVH QHW RI UHODWHG WD[HV RI PLOOLRQ UHODWHG WR WKH VHWWOHPHQW RI FHUWDLQ LQFRPH WD[ PDWWHUV WRWDOLQJ PLOOLRQ 7KH FRPSDQ\ UHFRUGHG QHW LQFRPH RI PLOOLRQ IRU FRPSDUHG ZLWK PLOOLRQ LQ WKH \HDU HDUOLHU SHULRG 7KH LQFUHDVH LQ QHW LQFRPH LQ FRPSDUHG ZLWK WKH \HDU HDUOLHU SHULRG ZDV GXH WR LQFUHDVHG VDOHV WKH LPSDFW RI HIILFLHQF\ LQLWLDWLYHV UHGXFLQJ RSHUDWLQJ H[SHQVHV DQG WR D OHVVHU H[WHQW WKH DFTXLVLWLRQV RI '16 8OWUD 6RXUFH DQG $OWHUQDWLYH 7HFKQRORJ\ ,QFOXGHG LQ WKH UHVXOWV IRU DUH WKH SUHYLRXVO\ GLVFXVVHG UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJHV RI PLOOLRQ DFTXLVLWLRQ LQGHPQLILFDWLRQ FUHGLW RI PLOOLRQ ORVV RQ SUHSD\PHQW RI GHEW RI PLOOLRQ DQG ORVV RQ WKH ZULWH GRZQ RI DQ LQYHVWPHQW RI PLOOLRQ 1HW LQFRPH IRU DQG LQFOXGHG VWRFN RSWLRQ H[SHQVH RI PLOOLRQ DQG PLOOLRQ UHVSHFWLYHO\ UHVXOWLQJ IURP WKH FRPSDQ\¶V DGRSWLRQ RI 6WDWHPHQW 1R 5 /LTXLGLW\ DQG &DSLWDO 5HVRXUFHV $W 'HFHPEHU DQG WKH FRPSDQ\ KDG FDVK DQG FDVK HTXLYDOHQWV RI PLOOLRQ DQG PLOOLRQ UHVSHFWLYHO\ 'XULQJ WKH QHW DPRXQW RI FDVK SURYLGHG E\ WKH FRPSDQ\¶V RSHUDWLQJ DFWLYLWLHV ZDV PLOOLRQ WKH QHW DPRXQW RI FDVK XVHG IRU LQYHVWLQJ DFWLYLWLHV ZDV PLOOLRQ DQG WKH QHW DPRXQW RI FDVK XVHG IRU ILQDQFLQJ DFWLYLWLHV ZDV PLOOLRQ 7KH HIIHFW RI H[FKDQJH UDWH FKDQJHV RQ FDVK ZDV DQ LQFUHDVH RI PLOOLRQ 'XULQJ WKH QHW DPRXQW RI FDVK SURYLGHG E\ WKH FRPSDQ\¶V RSHUDWLQJ DFWLYLWLHV ZDV PLOOLRQ WKH QHW DPRXQW RI FDVK XVHG IRU LQYHVWLQJ DFWLYLWLHV ZDV PLOOLRQ DQG WKH QHW DPRXQW RI FDVK XVHG IRU ILQDQFLQJ DFWLYLWLHV ZDV PLOOLRQ 7KH HIIHFW RI H[FKDQJH UDWH FKDQJHV RQ FDVK ZDV DQ LQFUHDVH RI PLOOLRQ 'XULQJ WKH QHW DPRXQW RI FDVK SURYLGHG E\ WKH FRPSDQ\¶V RSHUDWLQJ DFWLYLWLHV ZDV PLOOLRQ WKH QHW DPRXQW RI FDVK XVHG IRU LQYHVWLQJ DFWLYLWLHV ZDV PLOOLRQ DQG WKH QHW DPRXQW RI FDVK XVHG IRU ILQDQFLQJ DFWLYLWLHV ZDV PLOOLRQ 7KH HIIHFW RI H[FKDQJH UDWH FKDQJHV RQ FDVK ZDV D GHFUHDVH RI

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

PLOOLRQ &DVK )ORZV IURP 2SHUDWLQJ $FWLYLWLHV 7KH FRPSDQ\ PDLQWDLQV D VLJQLILFDQW LQYHVWPHQW LQ DFFRXQWV UHFHLYDEOH DQG LQYHQWRULHV $V D SHUFHQWDJH RI WRWDO DVVHWV DFFRXQWV UHFHLYDEOH DQG LQYHQWRULHV ZHUH DSSUR[LPDWHO\ DQG DW 'HFHPEHU DQG UHVSHFWLYHO\ 7KH QHW DPRXQW RI FDVK SURYLGHG E\ WKH FRPSDQ\¶V RSHUDWLQJ DFWLYLWLHV GXULQJ ZDV PLOOLRQ (DUQLQJV IURP RSHUDWLRQV DGMXVWHG IRU QRQ FDVK LWHPV D UHGXFWLRQ LQ LQYHQWRU\ DQG DQ LQFUHDVH LQ DFFRXQWV SD\DEOH DQG DFFUXHG H[SHQVHV ZHUH WKH SULPDU\ VRXUFHV RI FDVK 7KLV ZDV RIIVHW LQ SDUW E\ DQ LQFUHDVH LQ DFFRXQWV UHFHLYDEOH VXSSRUWLQJ LQFUHDVHG VDOHV 7KH QHW DPRXQW RI FDVK SURYLGHG E\ WKH FRPSDQ\¶V RSHUDWLQJ DFWLYLWLHV GXULQJ ZDV PLOOLRQ SULPDULO\ GXH WR HDUQLQJV IURP RSHUDWLRQV DGMXVWHG IRU QRQ FDVK LWHPV RIIVHW LQ SDUW E\ LQFUHDVHG LQYHQWRU\ SXUFKDVHV DQG LQFUHDVHG DFFRXQWV UHFHLYDEOH VXSSRUWLQJ LQFUHDVHG VDOHV LQ WKH JOREDO FRPSRQHQWV EXVLQHVVHV 7KH QHW DPRXQW RI FDVK SURYLGHG E\ WKH FRPSDQ\¶V RSHUDWLQJ DFWLYLWLHV GXULQJ ZDV PLOOLRQ (DUQLQJV IURP RSHUDWLRQV DGMXVWHG IRU QRQ FDVK LWHPV DQG DQ LQFUHDVH LQ DFFRXQWV SD\DEOH ZHUH WKH SULPDU\ VRXUFHV RI FDVK 7KLV ZDV RIIVHW LQ SDUW E\ DQ LQFUHDVH LQ DFFRXQWV UHFHLYDEOH VXSSRUWLQJ LQFUHDVHG VDOHV :RUNLQJ FDSLWDO DV D SHUFHQWDJH RI VDOHV ZDV DQG LQ DQG UHVSHFWLYHO\ &DVK )ORZV IURP ,QYHVWLQJ $FWLYLWLHV 7KH QHW DPRXQW RI FDVK XVHG IRU LQYHVWLQJ DFWLYLWLHV GXULQJ ZDV PLOOLRQ SULPDULO\ UHIOHFWLQJ PLOOLRQ RI FDVK FRQVLGHUDWLRQ SDLG IRU DFTXLUHG EXVLQHVVHV DQG PLOOLRQ IRU FDSLWDO H[SHQGLWXUHV ZKLFK LQFOXGHV PLOOLRQ RI FDSLWDO H[SHQGLWXUHV UHODWHG WR WKH FRPSDQ\¶V JOREDO (53 LQLWLDWLYH 7KLV ZDV RIIVHW LQ SDUW E\ PLOOLRQ RI FDVK SURFHHGV SULPDULO\ UHODWHG WR WKH VDOH RI WKH FRPSDQ\¶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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

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¶V VHQLRU QRWHV WKDW ZHUH UHSDLG LQ -DQXDU\ LQ DFFRUGDQFH ZLWK WKHLU WHUPV DQG UHSXUFKDVHV RI FRPPRQ VWRFN RI PLOOLRQ XQGHU WKH FRPSDQ\¶V VKDUH UHSXUFKDVH SURJUDP ZHUH WKH SULPDU\ XVHV RI FDVK 7KLV ZDV RIIVHW LQ SDUW E\ QHW SURFHHGV IURP ORQJ WHUP ERUURZLQJV RI PLOOLRQ ZKLFK LQFOXGH SURFHHGV IURP D PLOOLRQ WHUP ORDQ GXH LQ SURFHHGV IURP WKH H[HUFLVH RI VWRFN RSWLRQV RI PLOOLRQ DQG PLOOLRQ UHODWHG WR H[FHVV WD[ EHQHILWV IURP VWRFN EDVHG FRPSHQVDWLRQ DUUDQJHPHQWV 7KH QHW DPRXQW RI FDVK XVHG IRU ILQDQFLQJ DFWLYLWLHV GXULQJ ZDV PLOOLRQ SULPDULO\ UHIOHFWLQJ PLOOLRQ XVHG WR UHSXUFKDVH FRQYHUWLEOH GHEHQWXUHV DQG VHQLRU QRWHV PLOOLRQ LQ RWKHU ORQJ WHUP GHEW UHSD\PHQWV DQG PLOOLRQ RI QHW UHSD\PHQWV RI VKRUW WHUP ERUURZLQJV RIIVHW LQ SDUW E\ PLOOLRQ RI SURFHHGV IURP WKH H[HUFLVH RI VWRFN RSWLRQV DQG PLOOLRQ UHODWLQJ WR H[FHVV WD[ EHQHILWV IURP VWRFN EDVHG FRPSHQVDWLRQ DUUDQJHPHQWV 'XULQJ WKH FRPSDQ\ UHGHHPHG WKH WRWDO DPRXQW RXWVWDQGLQJ RI PLOOLRQ SULQFLSDO DPRXQW PLOOLRQ DFFUHWHG YDOXH RI LWV FRQYHUWLEOH GHEHQWXUHV DQG UHSXUFKDVHG PLOOLRQ SULQFLSDO DPRXQW RI LWV VHQLRU QRWHV GXH LQ -DQXDU\ 7KH UHODWHG ORVV RQ WKH UHGHPSWLRQ DQG UHSXUFKDVH LQFOXGLQJ DQ\ UHODWHG SUHPLXP SDLG ZULWH RII RI GHIHUUHG ILQDQFLQJ FRVWV DQG FRVW RI WHUPLQDWLQJ D SRUWLRQ RI WKH UHODWHG LQWHUHVW UDWH VZDSV DJJUHJDWHG PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV $V D UHVXOW RI WKHVH WUDQVDFWLRQV QHW LQWHUHVW H[SHQVH ZDV UHGXFHG E\ DSSUR[LPDWHO\ PLOOLRQ IURP WKH GDWHV RI UHGHPSWLRQ DQG UHSXUFKDVH WKURXJK WKH UHVSHFWLYH PDWXULW\ GDWHV EDVHG RQ LQWHUHVW UDWHV LQ HIIHFW DW WKH WLPH RI WKH UHGHPSWLRQ DQG UHSXUFKDVH 7KH QHW DPRXQW RI FDVK XVHG IRU ILQDQFLQJ DFWLYLWLHV GXULQJ ZDV PLOOLRQ SULPDULO\ UHIOHFWLQJ PLOOLRQ XVHG WR UHSXUFKDVH FRQYHUWLEOH GHEHQWXUHV DQG VHQLRU QRWHV DQG RWKHU UHSD\PHQWV RI ORQJ WHUP ERUURZLQJV RI PLOOLRQ RIIVHW LQ SDUW E\ PLOOLRQ RI SURFHHGV IURP WKH H[HUFLVH RI VWRFN RSWLRQV DQG DQ LQFUHDVH LQ VKRUW WHUP ERUURZLQJV RI PLOOLRQ 'XULQJ WKH FRPSDQ\ UHSXUFKDVHG WKURXJK D VHULHV RI WUDQVDFWLRQV PLOOLRQ DFFUHWHG YDOXH RI LWV FRQYHUWLEOH GHEHQWXUHV 7KH UHODWHG ORVV RQ WKH UHSXUFKDVHV LQFOXGLQJ WKH SUHPLXP SDLG DQG WKH ZULWH RII RI UHODWHG GHIHUUHG ILQDQFLQJ FRVWV DJJUHJDWHG PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU DQG SHU VKDUH RQ D EDVLF DQG GLOXWHG EDVLV UHVSHFWLYHO\ $OVR GXULQJ WKH FRPSDQ\ UHSXUFKDVHG WKURXJK D VHULHV RI WUDQVDFWLRQV PLOOLRQ SULQFLSDO DPRXQW RI LWV VHQLRU QRWHV GXH LQ -DQXDU\ 7KH SUHPLXP SDLG WKH UHODWHG GHIHUUHG ILQDQFLQJ FRVWV ZULWWHQ RII XSRQ WKH UHSXUFKDVH RI WKLV GHEW DQG WKH ORVV IRU WHUPLQDWLQJ WKH UHODWHG LQWHUHVW UDWH VZDSV DJJUHJDWHG PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV 7KHVH FKDUJHV WRWDOHG PLOOLRQ PLOOLRQ QHW RI UHODWHG WD[HV RU DQG SHU VKDUH RQ D EDVLF DQG GLOXWHG EDVLV UHVSHFWLYHO\ LQFOXGLQJ PLOOLRQ LQ FDVK $V D UHVXOW RI WKHVH WUDQVDFWLRQV QHW LQWHUHVW H[SHQVH ZDV UHGXFHG E\ DSSUR[LPDWHO\ PLOOLRQ IURP WKH GDWHV RI UHSXUFKDVH WKURXJK WKH UHGHPSWLRQ GDWH EDVHG RQ LQWHUHVW UDWHV LQ HIIHFW DW WKH WLPH RI WKH UHSXUFKDVHV ,Q -DQXDU\ WKH FRPSDQ\ DPHQGHG DQG UHVWDWHG LWV EDQN FUHGLW DJUHHPHQW DQG DPRQJ RWKHU WKLQJV LQFUHDVHG WKH UHYROYLQJ FUHGLW IDFLOLW\ VL]H IURP PLOOLRQ WR PLOOLRQ DQG DOVR HQWHUHG LQWR D PLOOLRQ WHUP ORDQ ,QWHUHVW RQ ERUURZLQJV XQGHU WKH UHYROYLQJ FUHGLW IDFLOLW\ LV EDVHG RQ D EDVH UDWH RU D HXUR FXUUHQF\ UDWH SOXV D VSUHDG EDVHG RQ WKH FRPSDQ\¶V FUHGLW UDWLQJV DW 'HFHPEHU 7KH FUHGLW IDFLOLW\ PDWXUHV LQ -DQXDU\ 7KH IDFLOLW\ IHH UHODWHG WR WKH FUHGLW IDFLOLW\ LV 7KH PLOOLRQ WHUP ORDQ LV UHSD\DEOH LQ IXOO LQ -DQXDU\ ,QWHUHVW RQ WKH WHUP ORDQ LV EDVHG RQ D EDVH UDWH RU HXUR FXUUHQF\ UDWH SOXV D VSUHDG EDVHG RQ WKH FRPSDQ\¶V FUHGLW UDWLQJV DW 'HFHPEHU 7KH FRPSDQ\ KDV DQ DVVHW VHFXULWL]DWLRQ SURJUDP FROODWHUDOL]HG E\ DFFRXQWV UHFHLYDEOH RI FHUWDLQ RI LWV 1RUWK $PHULFDQ VXEVLGLDULHV ,Q 0DUFK WKH FRPSDQ\ UHQHZHG LWV DVVHW VHFXULWL]DWLRQ SURJUDP DQG DPRQJ RWKHU WKLQJV LQFUHDVHG LWV VL]H IURP PLOOLRQ WR PLOOLRQ DQG H[WHQGHG LWV WHUP WR D WKUHH \HDU FRPPLWPHQW PDWXULQJ LQ 0DUFK ,QWHUHVW RQ ERUURZLQJV LV EDVHG RQ D EDVH UDWH RU D FRPPHUFLDO SDSHU UDWH SOXV D VSUHDG ZKLFK LV EDVHG RQ WKH FRPSDQ\¶V FUHGLW UDWLQJV DW 'HFHPEHU 7KH IDFLOLW\

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

IHH LV 7KH FRPSDQ\ KDG QR RXWVWDQGLQJ ERUURZLQJV XQGHU LWV UHYROYLQJ FUHGLW IDFLOLW\ RU LWV DVVHW VHFXULWL]DWLRQ SURJUDP DW 'HFHPEHU DQG 7KH UHYROYLQJ FUHGLW IDFLOLW\ DQG DVVHW VHFXULWL]DWLRQ SURJUDP LQFOXGH WHUPV DQG FRQGLWLRQV ZKLFK OLPLW WKH LQFXUUHQFH RI DGGLWLRQDO ERUURZLQJV OLPLW WKH FRPSDQ\¶V DELOLW\ WR SD\ FDVK GLYLGHQGV RU UHSXUFKDVH VWRFN DQG UHTXLUH WKDW FHUWDLQ ILQDQFLDO UDWLRV EH PDLQWDLQHG DW GHVLJQDWHG OHYHOV 7KH FRPSDQ\ ZDV LQ FRPSOLDQFH ZLWK DOO RI WKH FRYHQDQWV DV RI 'HFHPEHU 7KH FRPSDQ\ LV FXUUHQWO\ QRW DZDUH RI DQ\ HYHQWV ZKLFK ZRXOG FDXVH QRQ FRPSOLDQFH LQ WKH IXWXUH &RQWUDFWXDO 2EOLJDWLRQV 3D\PHQWV GXH XQGHU FRQWUDFWXDO REOLJDWLRQV DW 'HFHPEHU DUH DV IROORZV LQ WKRXVDQGV :LWKLQ $IWHU <HDU <HDUV <HDUV <HDUV 'HEW ,QWHUHVW RQ ORQJ WHUP GHEW &DSLWDO OHDVHV ± 2SHUDWLQJ OHDVHV 3XUFKDVH REOLJDWLRQV D

2WKHU E

D

E

7RWDO

$PRXQWV UHSUHVHQW DQ HVWLPDWH RI QRQ FDQFHODEOH LQYHQWRU\ SXUFKDVH RUGHUV DQG RWKHU FRQWUDFWXDO REOLJDWLRQV UHODWHG WR LQIRUPDWLRQ WHFKQRORJ\ DQG IDFLOLWLHV DV RI 'HFHPEHU 0RVW RI WKH FRPSDQ\¶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

8QGHU WKH WHUPV RI YDULRXV MRLQW YHQWXUH DJUHHPHQWV WKH FRPSDQ\ LV UHTXLUHG WR SD\ LWV SUR UDWD VKDUH RI WKH WKLUG SDUW\ GHEW RI FHUWDLQ RI LWV MRLQW YHQWXUHV LQ WKH HYHQW WKDW WKH MRLQW YHQWXUHV DUH XQDEOH WR PHHW WKHLU REOLJDWLRQV $W 'HFHPEHU WKH FRPSDQ\¶V SUR UDWD VKDUH RI WKLV GHEW ZDV DSSUR[LPDWHO\ PLOOLRQ $OVR DV GLVFXVVHG LQ 1RWH RI WKH 1RWHV WR &RQVROLGDWHG )LQDQFLDO 6WDWHPHQWV HIIHFWLYH -DQXDU\ WKH FRPSDQ\ DGRSWHG WKH SURYLVLRQV RI )$6% ,QWHUSUHWDWLRQ 1R ³$FFRXQWLQJ IRU 8QFHUWDLQW\ LQ ,QFRPH 7D[HV ² DQ LQWHUSUHWDWLRQ RI )$6% 6WDWHPHQW 1R ´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¶V RXWVWDQGLQJ FRPPRQ VWRFN WKURXJK D VKDUH UHSXUFKDVH SURJUDP WKH ³SURJUDP´ $V RI 'HFHPEHU WKH FRPSDQ\ UHSXUFKDVHG VKDUHV XQGHU WKLV SURJUDP ZLWK D PDUNHW YDOXH RI PLOOLRQ ,Q 'HFHPEHU WKH %RDUG RI 'LUHFWRUV DXWKRUL]HG WKH FRPSDQ\ WR UHSXUFKDVH DQ DGGLWLRQDO PLOOLRQ RI WKH FRPSDQ\¶V RXWVWDQGLQJ FRPPRQ VWRFN LQ VXFK DPRXQWV DV WR RIIVHW WKH GLOXWLRQ IURP WKH H[HUFLVH RI VWRFN RSWLRQV DQG RWKHU VWRFN EDVHG FRPSHQVDWLRQ SODQV 2II %DODQFH 6KHHW $UUDQJHPHQWV 7KH FRPSDQ\ KDV QR RII EDODQFH VKHHW ILQDQFLQJ RU XQFRQVROLGDWHG VSHFLDO SXUSRVH HQWLWLHV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

&ULWLFDO $FFRXQWLQJ 3ROLFLHV DQG (VWLPDWHV 7KH FRPSDQ\¶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

7KH FRPSDQ\ UHFRJQL]HV UHYHQXH LQ DFFRUGDQFH ZLWK WKH 6(& 6WDII $FFRXQWLQJ %XOOHWLQ 1R ³5HYHQXH 5HFRJQLWLRQ´ ³6$% ´ 8QGHU 6$% UHYHQXH LV UHFRJQL]HG ZKHQ WKHUH LV SHUVXDVLYH HYLGHQFH RI DQ DUUDQJHPHQW GHOLYHU\ KDV RFFXUUHG RU VHUYLFHV DUH UHQGHUHG WKH VDOHV SULFH LV GHWHUPLQDEOH DQG FROOHFWLELOLW\ LV UHDVRQDEO\ DVVXUHG 5HYHQXH W\SLFDOO\ LV UHFRJQL]HG DW WLPH RI VKLSPHQW 6DOHV DUH UHFRUGHG QHW RI GLVFRXQWV UHEDWHV DQG UHWXUQV $ SRUWLRQ RI WKH FRPSDQ\¶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³(,7)´ ,VVXH 1R ³5HSRUWLQJ 5HYHQXH *URVV DV D 3ULQFLSDO YHUVXV 1HW DV DQ $JHQW ´

7KH FRPSDQ\ PDLQWDLQV DOORZDQFHV IRU GRXEWIXO DFFRXQWV IRU HVWLPDWHG ORVVHV UHVXOWLQJ IURP WKH LQDELOLW\ RI LWV FXVWRPHUV WR PDNH UHTXLUHG SD\PHQWV 7KH DOORZDQFHV IRU GRXEWIXO DFFRXQWV DUH GHWHUPLQHG XVLQJ D FRPELQDWLRQ RI IDFWRUV LQFOXGLQJ WKH OHQJWK RI WLPH WKH UHFHLYDEOHV DUH RXWVWDQGLQJ WKH FXUUHQW EXVLQHVV HQYLURQPHQW DQG KLVWRULFDO H[SHULHQFH

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

7KH FRPSDQ\ DVVHVVHV LWV ORQJ WHUP LQYHVWPHQWV DFFRXQWHG IRU DV DYDLODEOH IRU VDOH RQ D TXDUWHUO\ EDVLV WR GHWHUPLQH ZKHWKHU GHFOLQHV LQ PDUNHW YDOXH EHORZ FRVW DUH RWKHU WKDQ WHPSRUDU\ :KHQ WKH GHFOLQH LV GHWHUPLQHG WR EH RWKHU WKDQ WHPSRUDU\ WKH FRVW EDVLV IRU WKH LQGLYLGXDO VHFXULW\ LV UHGXFHG DQG D ORVV LV UHDOL]HG LQ WKH FRPSDQ\¶V FRQVROLGDWHG VWDWHPHQW RI RSHUDWLRQV LQ WKH SHULRG LQ ZKLFK LW RFFXUV :KHQ WKH GHFOLQH LV GHWHUPLQHG WR EH WHPSRUDU\ WKH XQUHDOL]HG ORVVHV DUH LQFOXGHG LQ WKH VKDUHKROGHUV¶ HTXLW\ VHFWLRQ LQ WKH FRPSDQ\¶V FRQVROLGDWHG EDODQFH VKHHWV LQ ³2WKHU ´ 7KH FRPSDQ\ PDNHV VXFK GHWHUPLQDWLRQ EDVHG XSRQ WKH TXRWHG PDUNHW SULFH ILQDQFLDO FRQGLWLRQ RSHUDWLQJ UHVXOWV RI WKH LQYHVWHH DQG WKH FRPSDQ\¶V LQWHQW DQG DELOLW\ WR UHWDLQ WKH LQYHVWPHQW RYHU D SHULRG RI WLPH ZKLFK ZRXOG EH VXIILFLHQW WR DOORZ IRU DQ\ UHFRYHU\ LQ PDUNHW YDOXH ,Q DGGLWLRQ WKH FRPSDQ\ DVVHVVHV WKH IROORZLQJ IDFWRUV

EURDG HFRQRPLF IDFWRUV LPSDFWLQJ WKH LQYHVWHH¶V LQGXVWU\ SXEOLFO\ DYDLODEOH IRUHFDVWV IRU VDOHV DQG HDUQLQJV JURZWK IRU WKH LQGXVWU\ DQG LQYHVWHH DQG WKH F\FOLFDO QDWXUH RI WKH LQYHVWHH¶V LQGXVWU\

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

7KH FRPSDQ\ FRXOG SRWHQWLDOO\ KDYH DQ LPSDLUPHQW FKDUJH LQ IXWXUH SHULRGV LI DPRQJ RWKHU IDFWRUV WKH LQYHVWHH¶V IXWXUH HDUQLQJV GLIIHU IURP FXUUHQWO\ DYDLODEOH IRUHFDVWV ‡

7KH FDUU\LQJ YDOXH RI WKH FRPSDQ\¶V GHIHUUHG WD[ DVVHWV LV GHSHQGHQW XSRQ WKH FRPSDQ\¶V DELOLW\ WR JHQHUDWH VXIILFLHQW IXWXUH WD[DEOH LQFRPH LQ FHUWDLQ WD[ MXULVGLFWLRQV 6KRXOG WKH FRPSDQ\ GHWHUPLQH WKDW LW LV PRUH OLNHO\ WKDQ QRW WKDW VRPH SRUWLRQ RU DOO RI LWV GHIHUUHG WD[ DVVHWV ZLOO QRW EH UHDOL]HG D YDOXDWLRQ DOORZDQFH WR WKH GHIHUUHG WD[ DVVHWV ZRXOG EH HVWDEOLVKHG LQ WKH SHULRG VXFK GHWHUPLQDWLRQ ZDV PDGH

‡

,W LV WKH FRPSDQ\¶V SROLF\ WR SURYLGH IRU XQFHUWDLQ WD[ SRVLWLRQV DQG WKH UHODWHG LQWHUHVW DQG SHQDOWLHV EDVHG XSRQ PDQDJHPHQW¶V DVVHVVPHQW RI ZKHWKHU D WD[ EHQHILW LV PRUH OLNHO\ WKDQ QRW WR EH VXVWDLQHG XSRQ H[DPLQDWLRQ E\ WD[ DXWKRULWLHV $W 'HFHPEHU WKH FRPSDQ\ EHOLHYHV LW KDV DSSURSULDWHO\ DFFRXQWHG IRU DQ\ XQUHFRJQL]HG WD[ EHQHILWV 7R WKH H[WHQW WKH FRPSDQ\ SUHYDLOV LQ PDWWHUV IRU ZKLFK D OLDELOLW\ IRU DQ XQUHFRJQL]HG WD[ EHQHILW LV HVWDEOLVKHG RU LV UHTXLUHG WR SD\ DPRXQWV LQ H[FHVV RI WKH OLDELOLW\ WKH FRPSDQ\¶V HIIHFWLYH WD[ UDWH LQ D JLYHQ ILQDQFLDO VWDWHPHQW SHULRG PD\ EH DIIHFWHG

‡

7KH FRPSDQ\ XVHV YDULRXV ILQDQFLDO LQVWUXPHQWV LQFOXGLQJ GHULYDWLYH ILQDQFLDO LQVWUXPHQWV IRU SXUSRVHV RWKHU WKDQ WUDGLQJ 'HULYDWLYHV XVHG DV SDUW RI WKH FRPSDQ\¶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¶ HTXLW\ VHFWLRQ LQ WKH FRPSDQ\¶V FRQVROLGDWHG EDODQFH VKHHWV LQ ³2WKHU ´ 7KH LQHIIHFWLYH SRUWLRQ RI WKH LQWHUHVW UDWH VZDS LI DQ\ LV UHFRUGHG LQ ³,QWHUHVW H[SHQVH QHW´ LQ WKH FRPSDQ\¶V FRQVROLGDWHG VWDWHPHQWV RI RSHUDWLRQV

‡

7KH HIIHFWLYH SRUWLRQ RI WKH FKDQJH LQ WKH IDLU YDOXH RI GHULYDWLYHV GHVLJQDWHG DV QHW LQYHVWPHQW KHGJHV DUH UHFRUGHG LQ ³)RUHLJQ FXUUHQF\ WUDQVODWLRQ DGMXVWPHQW´ LQFOXGHG LQ WKH FRPSDQ\¶V FRQVROLGDWHG EDODQFH VKHHWV DQG DQ\ LQHIIHFWLYH SRUWLRQ LV UHFRUGHG LQ HDUQLQJV 7KH FRPSDQ\ XVHV WKH K\SRWKHWLFDO GHULYDWLYH PHWKRG WR DVVHVV WKH HIIHFWLYHQHVV RI LWV QHW LQYHVWPHQW KHGJH RQ D TXDUWHUO\ EDVLV

‡

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

‡

7KH FRPSDQ\ UHFRUGHG FKDUJHV LQ FRQQHFWLRQ ZLWK UHVWUXFWXULQJ LWV EXVLQHVVHV DQG WKH LQWHJUDWLRQ RI DFTXLUHG EXVLQHVVHV 7KHVH LWHPV SULPDULO\ LQFOXGH HPSOR\HH VHSDUDWLRQ FRVWV DQG HVWLPDWHV UHODWHG WR WKH FRQVROLGDWLRQ RI IDFLOLWLHV QHW RI VXE OHDVH LQFRPH FRQWUDFWXDO REOLJDWLRQV DQG WKH YDOXDWLRQ RI FHUWDLQ DVVHWV $FWXDO DPRXQWV FRXOG EH GLIIHUHQW IURP WKRVH HVWLPDWHG

‡

(IIHFWLYH -DQXDU\ WKH FRPSDQ\ DGRSWHG WKH SURYLVLRQV RI 6WDWHPHQW 1R 5 ZKLFK UHTXLUHV VKDUH EDVHG SD\PHQW ³6%3´ DZDUGV H[FKDQJHG IRU HPSOR\HH VHUYLFHV WR EH PHDVXUHG DW IDLU YDOXH DQG H[SHQVHG LQ WKH FRQVROLGDWHG VWDWHPHQWV RI RSHUDWLRQV RYHU WKH UHTXLVLWH HPSOR\HH VHUYLFH SHULRG 3ULRU WR -DQXDU\ WKH FRPSDQ\ DFFRXQWHG IRU 6%3 DZDUGV XQGHU $FFRXQWLQJ 3ULQFLSOHV %RDUG 2SLQLRQ 1R ³$FFRXQWLQJ IRU 6WRFN ,VVXHG WR (PSOR\HHV ´ ZKLFK XWLOL]HG WKH LQWULQVLF YDOXH PHWKRG DQG GLG QRW UHTXLUH DQ\ H[SHQVH WR EH UHFRUGHG LQ WKH FRQVROLGDWHG ILQDQFLDO VWDWHPHQWV LI WKH H[HUFLVH SULFH RI WKH DZDUG ZDV QRW OHVV WKDQ WKH PDUNHW SULFH RI WKH XQGHUO\LQJ VWRFN RQ WKH GDWH RI JUDQW 7KH FRPSDQ\ HOHFWHG WR DGRSW IRU SHULRGV SULRU WR -DQXDU\ WKH GLVFORVXUH UHTXLUHPHQWV RI )$6% 6WDWHPHQW 1R ³$FFRXQWLQJ IRU 6WRFN %DVHG &RPSHQVDWLRQ ´ DV DPHQGHG E\ )$6% 6WDWHPHQW 1R ³$FFRXQWLQJ IRU 6WRFN %DVHG &RPSHQVDWLRQ ² 7UDQVLWLRQ DQG 'LVFORVXUH ´ ZKLFK XVHG D IDLU YDOXH EDVHG PHWKRG RI DFFRXQWLQJ IRU 6%3 DZDUGV 7KH FRPSDQ\ DGRSWHG WKH PRGLILHG SURVSHFWLYH WUDQVLWLRQ PHWKRG SURYLGHG IRU XQGHU 6WDWHPHQW 1R 5 DQG DFFRUGLQJO\ GLG QRW UHVWDWH SULRU SHULRG DPRXQWV 7KH IDLU YDOXH RI VWRFN RSWLRQV LV GHWHUPLQHG XVLQJ WKH %ODFN 6FKROHV YDOXDWLRQ PRGHO DQG WKH DVVXPSWLRQV VKRZQ LQ 1RWH RI WKH

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

1RWHV WR &RQVROLGDWHG )LQDQFLDO 6WDWHPHQWV ³1RWH ´ 7KH DVVXPSWLRQV XVHG LQ FDOFXODWLQJ WKH IDLU YDOXH RI 6%3 DZDUGV UHSUHVHQW PDQDJHPHQW¶V EHVW HVWLPDWHV 7KH FRPSDQ\¶V HVWLPDWHV PD\ EH LPSDFWHG E\ FHUWDLQ YDULDEOHV LQFOXGLQJ EXW QRW OLPLWHG WR VWRFN SULFH YRODWLOLW\ HPSOR\HH VWRFN RSWLRQ H[HUFLVH EHKDYLRUV DGGLWLRQDO VWRFN RSWLRQ JUDQWV HVWLPDWHV RI IRUIHLWXUHV DQG UHODWHG WD[ LPSDFWV 6HH 1RWH IRU D IXUWKHU GLVFXVVLRQ RQ VWRFN EDVHG FRPSHQVDWLRQ ‡

7KH FRVWV DQG REOLJDWLRQV RI WKH FRPSDQ\¶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

‡

7KH FRPSDQ\ SHUIRUPV DQ DQQXDO LPSDLUPHQW WHVW DV RI WKH ILUVW GD\ RI WKH IRXUWK TXDUWHU RU HDUOLHU LI LQGLFDWRUV RI SRWHQWLDO LPSDLUPHQW H[LVW WR HYDOXDWH JRRGZLOO *RRGZLOO LV FRQVLGHUHG LPSDLUHG LI WKH FDUU\LQJ DPRXQW RI WKH UHSRUWLQJ XQLW H[FHHGV LWV HVWLPDWHG IDLU YDOXH ,Q DVVHVVLQJ WKH UHFRYHUDELOLW\ RI JRRGZLOO WKH FRPSDQ\ UHYLHZV ERWK TXDQWLWDWLYH DQG TXDOLWDWLYH IDFWRUV WR VXSSRUW LWV DVVXPSWLRQV ZLWK UHJDUG WR IDLU YDOXH 7KH IDLU YDOXH RI D UHSRUWLQJ XQLW LV HVWLPDWHG XVLQJ D ZHLJKWHG DYHUDJH PXOWLSOH RI HDUQLQJV EHIRUH LQWHUHVW DQG WD[HV IURP FRPSDUDEOH FRPSDQLHV ,Q GHWHUPLQLQJ WKH IDLU YDOXH WKH FRPSDQ\ PDNHV FHUWDLQ MXGJPHQWV LQFOXGLQJ WKH LGHQWLILFDWLRQ RI UHSRUWLQJ XQLWV DQG WKH VHOHFWLRQ RI FRPSDUDEOH FRPSDQLHV ,I WKHVH HVWLPDWHV RU WKHLU UHODWHG DVVXPSWLRQV FKDQJH LQ WKH IXWXUH DV D UHVXOW RI FKDQJHV LQ VWUDWHJ\ DQG RU PDUNHW FRQGLWLRQV WKH FRPSDQ\ PD\ EH UHTXLUHG WR UHFRUG DQ LPSDLUPHQW FKDUJH

‡

6KLSSLQJ DQG KDQGOLQJ FRVWV PD\ EH UHSRUWHG DV HLWKHU D FRPSRQHQW RI FRVW RI SURGXFWV VROG RU VHOOLQJ JHQHUDO DQG DGPLQLVWUDWLYH H[SHQVHV 7KH FRPSDQ\ UHSRUWV VKLSSLQJ DQG KDQGOLQJ FRVWV SULPDULO\ UHODWHG WR RXWERXQG IUHLJKW LQ WKH FRQVROLGDWHG VWDWHPHQWV RI RSHUDWLRQV DV D FRPSRQHQW RI VHOOLQJ JHQHUDO DQG DGPLQLVWUDWLYH H[SHQVHV ,I WKH FRPSDQ\ LQFOXGHG VXFK FRVWV LQ FRVW RI SURGXFWV VROG JURVV SURILW PDUJLQ DV D SHUFHQWDJH RI VDOHV IRU ZRXOG GHFUHDVH IURP WR ZLWK QR LPSDFW RQ UHSRUWHG HDUQLQJV

,PSDFW RI 5HFHQWO\ ,VVXHG $FFRXQWLQJ 6WDQGDUGV ,Q 'HFHPEHU WKH )$6% LVVXHG 6WDWHPHQW RI )LQDQFLDO $FFRXQWLQJ 6WDQGDUGV 1R UHYLVHG ³%XVLQHVV &RPELQDWLRQV´ ³6WDWHPHQW 1R 5 ´ 6WDWHPHQW 1R 5 FKDQJHV WKH UHTXLUHPHQWV IRU DQ DFTXLUHU¶V UHFRJQLWLRQ DQG PHDVXUHPHQW RI WKH DVVHWV DFTXLUHG DQG WKH OLDELOLWLHV DVVXPHG LQ D EXVLQHVV FRPELQDWLRQ 6WDWHPHQW 1R 5 LV HIIHFWLYH IRU DQQXDO SHULRGV EHJLQQLQJ DIWHU 'HFHPEHU DQG VKRXOG EH DSSOLHG SURVSHFWLYHO\ IRU DOO EXVLQHVV FRPELQDWLRQV HQWHUHG LQWR DIWHU WKH GDWH RI DGRSWLRQ ,Q 'HFHPEHU WKH )$6% LVVXHG 6WDWHPHQW RI )LQDQFLDO $FFRXQWLQJ 6WDQGDUGV 1R ³1RQFRQWUROOLQJ ,QWHUHVWV LQ &RQVROLGDWHG )LQDQFLDO 6WDWHPHQWV ² DQ DPHQGPHQW RI $5% 1R ´ ³6WDWHPHQW 1R ´ 6WDWHPHQW 1R UHTXLUHV L WKDW QRQFRQWUROOLQJ PLQRULW\ LQWHUHVWV EH UHSRUWHG DV D FRPSRQHQW RI VKDUHKROGHUV¶ HTXLW\ LL WKDW QHW LQFRPH DWWULEXWDEOH WR WKH SDUHQW DQG WR WKH QRQFRQWUROOLQJ LQWHUHVW EH VHSDUDWHO\ LGHQWLILHG LQ WKH FRQVROLGDWHG VWDWHPHQW RI RSHUDWLRQV LLL WKDW FKDQJHV LQ D SDUHQW¶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¶V FRQVROLGDWHG ILQDQFLDO SRVLWLRQ DQG UHVXOWV RI RSHUDWLRQV ,Q 6HSWHPEHU WKH )$6% LVVXHG 6WDWHPHQW RI )LQDQFLDO $FFRXQWLQJ 6WDQGDUGV 1R ³)DLU 9DOXH 0HDVXUHPHQWV´ ³6WDWHPHQW 1R ´ ZKLFK GHILQHV IDLU YDOXH HVWDEOLVKHV D IUDPHZRUN IRU PHDVXULQJ IDLU YDOXH DQG H[SDQGV GLVFORVXUHV DERXW IDLU YDOXH PHDVXUHPHQWV 6WDWHPHQW 1R DSSOLHV WR RWKHU DFFRXQWLQJ SURQRXQFHPHQWV WKDW UHTXLUH RU SHUPLW IDLU YDOXH PHDVXUHPHQWV DQG DFFRUGLQJO\ GRHV QRW UHTXLUH DQ\ QHZ IDLU YDOXH PHDVXUHPHQWV 6WDWHPHQW 1R LV HIIHFWLYH IRU ILVFDO \HDUV EHJLQQLQJ DIWHU 1RYHPEHU IRU ILQDQFLDO DVVHWV DQG OLDELOLWLHV DV ZHOO DV IRU DQ\ RWKHU DVVHWV DQG OLDELOLWLHV WKDW DUH FDUULHG DW IDLU YDOXH RQ D UHFXUULQJ EDVLV DQG VKRXOG EH DSSOLHG SURVSHFWLYHO\ 7KH DGRSWLRQ RI WKH SURYLVLRQV RI 6WDWHPHQW 1R UHODWHG WR ILQDQFLDO DVVHWV DQG OLDELOLWLHV DQG RWKHU DVVHWV DQG OLDELOLWLHV WKDW DUH FDUULHG DW

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

IDLU YDOXH RQ D UHFXUULQJ EDVLV LV QRW DQWLFLSDWHG WR PDWHULDOO\ LPSDFW WKH FRPSDQ\¶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¶V LPSOHPHQWDWLRQ RI LWV QHZ JOREDO ILQDQFLDO V\VWHP DQG WKH FRPSDQ\¶V SODQQHG LPSOHPHQWDWLRQ RI LWV QHZ HQWHUSULVH UHVRXUFH SODQQLQJ V\VWHP FKDQJHV LQ SURGXFW VXSSO\ SULFLQJ DQG FXVWRPHU GHPDQG FRPSHWLWLRQ RWKHU YDJDULHV LQ WKH JOREDO FRPSRQHQWV DQG JOREDO (&6 PDUNHWV FKDQJHV LQ UHODWLRQVKLSV ZLWK NH\ VXSSOLHUV LQFUHDVHG SURILW PDUJLQ SUHVVXUH WKH HIIHFWV RI DGGLWLRQDO DFWLRQV WDNHQ WR EHFRPH PRUH HIILFLHQW RU ORZHU FRVWV DQG WKH FRPSDQ\¶V DELOLW\ WR JHQHUDWH DGGLWLRQDO FDVK IORZ )RUZDUG ORRNLQJ VWDWHPHQWV DUH WKRVH VWDWHPHQWV ZKLFK DUH QRW VWDWHPHQWV RI KLVWRULFDO IDFW 7KHVH IRUZDUG ORRNLQJ VWDWHPHQWV FDQ EH LGHQWLILHG E\ IRUZDUG ORRNLQJ ZRUGV VXFK DV ³H[SHFWV ´ ³DQWLFLSDWHV ´ ³LQWHQGV ´ ³SODQV ´ ³PD\ ´ ³ZLOO ´ ³EHOLHYHV ´ ³VHHNV ´ ³HVWLPDWHV ´ DQG VLPLODU H[SUHVVLRQV 6KDUHKROGHUV DQG RWKHU UHDGHUV DUH FDXWLRQHG QRW WR SODFH XQGXH UHOLDQFH RQ WKHVH IRUZDUG ORRNLQJ VWDWHPHQWV ZKLFK VSHDN RQO\ DV RI WKH GDWH RQ ZKLFK WKH\ DUH PDGH 7KH FRPSDQ\ XQGHUWDNHV QR REOLJDWLRQ WR XSGDWH SXEOLFO\ RU UHYLVH DQ\ RI WKH IRUZDUG ORRNLQJ VWDWHPHQWV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

,WHP $ 4XDQWLWDWLYH DQG 4XDOLWDWLYH 'LVFORVXUHV $ERXW 0DUNHW 5LVN 7KH FRPSDQ\ LV H[SRVHG WR PDUNHW ULVN IURP FKDQJHV LQ IRUHLJQ FXUUHQF\ H[FKDQJH UDWHV DQG LQWHUHVW UDWHV )RUHLJQ &XUUHQF\ ([FKDQJH 5DWH 5LVN 7KH FRPSDQ\ DV D ODUJH JOREDO RUJDQL]DWLRQ IDFHV H[SRVXUH WR DGYHUVH PRYHPHQWV LQ IRUHLJQ FXUUHQF\ H[FKDQJH UDWHV 7KHVH H[SRVXUHV PD\ FKDQJH RYHU WLPH DV EXVLQHVV SUDFWLFHV HYROYH DQG FRXOG PDWHULDOO\ LPSDFW WKH FRPSDQ\¶V ILQDQFLDO UHVXOWV LQ WKH IXWXUH 7KH FRPSDQ\¶V SULPDU\ H[SRVXUH UHODWHV WR WUDQVDFWLRQV LQ ZKLFK WKH FXUUHQF\ FROOHFWHG IURP FXVWRPHUV LV GLIIHUHQW IURP WKH FXUUHQF\ XWLOL]HG WR SXUFKDVH WKH SURGXFW VROG LQ (XURSH WKH $VLD 3DFLILF UHJLRQ &DQDGD DQG /DWLQ $PHULFD 7KH FRPSDQ\¶V SROLF\ LV WR KHGJH VXEVWDQWLDOO\ DOO VXFK FXUUHQF\ H[SRVXUHV IRU ZKLFK QDWXUDO KHGJHV GR QRW H[LVW 1DWXUDO KHGJHV H[LVW ZKHQ SXUFKDVHV DQG VDOHV ZLWKLQ D VSHFLILF FRXQWU\ DUH ERWK GHQRPLQDWHG LQ WKH VDPH FXUUHQF\ DQG WKHUHIRUH QR H[SRVXUH H[LVWV WR KHGJH ZLWK D IRUHLJQ H[FKDQJH IRUZDUG RSWLRQ RU VZDS FRQWUDFWV FROOHFWLYHO\ WKH ³IRUHLJQ H[FKDQJH FRQWUDFWV´ ,Q PDQ\ UHJLRQV LQ $VLD IRU H[DPSOH VDOHV DQG SXUFKDVHV DUH SULPDULO\ GHQRPLQDWHG LQ 8 6 GROODUV UHVXOWLQJ LQ D ³QDWXUDO KHGJH ´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¶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¶V LQWHUQDWLRQDO RSHUDWLRQV ,Q 0D\ WKH FRPSDQ\ HQWHUHG LQWR D FURVV FXUUHQF\ VZDS ZLWK D PDWXULW\ GDWH RI -XO\ IRU DSSUR[LPDWHO\ PLOOLRQ RU ͎ PLOOLRQ WKH ³ FURVV FXUUHQF\ VZDS´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͎ PLOOLRQ WKH ³ FURVV FXUUHQF\ VZDS´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¶V LQWHUHVW H[SHQVH LQ SDUW LV VHQVLWLYH WR WKH JHQHUDO OHYHO RI LQWHUHVW UDWHV LQ 1RUWK $PHULFD (XURSH DQG WKH $VLD 3DFLILF UHJLRQ 7KH FRPSDQ\ KLVWRULFDOO\ KDV PDQDJHG LWV H[SRVXUH WR LQWHUHVW UDWH ULVN WKURXJK WKH SURSRUWLRQ RI IL[HG UDWH DQG IORDWLQJ UDWH GHEW LQ LWV WRWDO GHEW SRUWIROLR $GGLWLRQDOO\ WKH FRPSDQ\ XWLOL]HV LQWHUHVW UDWH VZDSV LQ RUGHU WR PDQDJH LWV WDUJHWHG PL[ RI IL[HG DQG IORDWLQJ UDWH GHEW $W 'HFHPEHU DSSUR[LPDWHO\ RI WKH FRPSDQ\¶V GHEW ZDV VXEMHFW WR IL[HG UDWHV DQG RI LWV GHEW ZDV VXEMHFW WR IORDWLQJ UDWHV $ RQH SHUFHQWDJH SRLQW FKDQJH LQ DYHUDJH LQWHUHVW UDWHV ZRXOG QRW PDWHULDOO\ LPSDFW LQWHUHVW H[SHQVH QHW RI LQWHUHVW LQFRPH LQ 7KLV ZDV GHWHUPLQHG E\ FRQVLGHULQJ WKH LPSDFW RI D K\SRWKHWLFDO LQWHUHVW UDWH RQ WKH FRPSDQ\¶V DYHUDJH IORDWLQJ UDWH RQ LQYHVWPHQWV DQG RXWVWDQGLQJ

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

GHEW 7KLV DQDO\VLV GRHV QRW FRQVLGHU WKH HIIHFW RI WKH OHYHO RI RYHUDOO HFRQRPLF DFWLYLW\ WKDW FRXOG H[LVW ,Q WKH HYHQW RI D FKDQJH LQ WKH OHYHO RI HFRQRPLF DFWLYLW\ ZKLFK PD\ DGYHUVHO\ LPSDFW LQWHUHVW UDWHV WKH FRPSDQ\ FRXOG OLNHO\ WDNH DFWLRQV WR IXUWKHU PLWLJDWH DQ\ SRWHQWLDO QHJDWLYH H[SRVXUH WR WKH FKDQJH +RZHYHU GXH WR WKH XQFHUWDLQW\ RI WKH VSHFLILF DFWLRQV WKDW PLJKW EH WDNHQ DQG WKHLU SRVVLEOH HIIHFWV WKH VHQVLWLYLW\ DQDO\VLV DVVXPHV QR FKDQJHV LQ WKH FRPSDQ\¶V ILQDQFLDO VWUXFWXUH ,Q 'HFHPEHU WKH FRPSDQ\ HQWHUHG LQWR DQ LQWHUHVW UDWH VZDS WKH ³ VZDS´ ZLWK D QRWLRQDO DPRXQW RI PLOOLRQ 7KH VZDS PRGLILHV WKH FRPSDQ\¶V LQWHUHVW UDWH H[SRVXUH E\ HIIHFWLYHO\ FRQYHUWLQJ WKH YDULDEOH UDWH DW 'HFHPEHU RQ D SRUWLRQ RI LWV PLOOLRQ WHUP ORDQ WR D IL[HG UDWH RI SHU DQQXP WKURXJK 'HFHPEHU 7KH VZDS LV FODVVLILHG DV D FDVK IORZ KHGJH DQG KDG D QHJDWLYH IDLU YDOXH RI PLOOLRQ DW 'HFHPEHU ,Q -XQH WKH FRPSDQ\ HQWHUHG LQWR D VHULHV RI LQWHUHVW UDWH VZDSV WKH ³ VZDSV´ ZLWK DQ DJJUHJDWH QRWLRQDO DPRXQW RI PLOOLRQ 7KH VZDSV PRGLI\ WKH FRPSDQ\¶V LQWHUHVW UDWH H[SRVXUH E\ HIIHFWLYHO\ FRQYHUWLQJ WKH IL[HG VHQLRU QRWHV WR D IORDWLQJ UDWH EDVHG RQ WKH VL[ PRQWK 8 6 GROODU /,%25 SOXV D VSUHDG DQ HIIHFWLYH UDWH RI DQG DW 'HFHPEHU DQG UHVSHFWLYHO\ DQG D SRUWLRQ RI WKH IL[HG VHQLRU QRWHV WR D IORDWLQJ UDWH DOVR EDVHG RQ WKH VL[ PRQWK 8 6 GROODU /,%25 SOXV D VSUHDG DQ HIIHFWLYH UDWH RI DQG DW 'HFHPEHU DQG UHVSHFWLYHO\ WKURXJK WKHLU PDWXULWLHV 7KH VZDSV DUH FODVVLILHG DV IDLU YDOXH KHGJHV DQG KDG D IDLU YDOXH RI PLOOLRQ DQG D QHJDWLYH IDLU YDOXH RI PLOOLRQ DW 'HFHPEHU DQG UHVSHFWLYHO\

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

,WHP )LQDQFLDO 6WDWHPHQWV DQG 6XSSOHPHQWDU\ 'DWD 5(3257 2) (5167 <281* //3 ,1'(3(1'(17 5(*,67(5(' 38%/,& $&&2817,1* ),50 7KH %RDUG RI 'LUHFWRUV DQG 6KDUHKROGHUV $UURZ (OHFWURQLFV ,QF :H KDYH DXGLWHG WKH DFFRPSDQ\LQJ FRQVROLGDWHG EDODQFH VKHHWV RI $UURZ (OHFWURQLFV ,QF WKH ³FRPSDQ\´ DV RI 'HFHPEHU DQG DQG WKH UHODWHG FRQVROLGDWHG VWDWHPHQWV RI RSHUDWLRQV VKDUHKROGHUV¶ HTXLW\ DQG FDVK IORZV IRU HDFK RI WKH WKUHH \HDUV LQ WKH SHULRG HQGHG 'HFHPEHU 2XU DXGLWV DOVR LQFOXGHG WKH ILQDQFLDO VWDWHPHQW VFKHGXOH OLVWHG LQ WKH ,QGH[ DW ,WHP D 7KHVH ILQDQFLDO VWDWHPHQWV DQG WKH VFKHGXOH DUH WKH UHVSRQVLELOLW\ RI WKH FRPSDQ\¶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³$FFRXQWLQJ IRU 6DEEDWLFDO /HDYH DQG 2WKHU 6LPLODU %HQHILWV 3XUVXDQW WR )$6% 6WDWHPHQW 1R ´ DQG DV GLVFXVVHG LQ 1RWH WR WKH FRQVROLGDWHG ILQDQFLDO VWDWHPHQWV WKH FRPSDQ\ DGRSWHG )$6% ,QWHUSUHWDWLRQ 1R ³$FFRXQWLQJ IRU 8QFHUWDLQW\ LQ ,QFRPH 7D[HV ² DQ LQWHUSUHWDWLRQ RI )$6% 6WDWHPHQW 1R ´ HIIHFWLYH -DQXDU\ $V GLVFXVVHG LQ 1RWH WR WKH FRQVROLGDWHG ILQDQFLDO VWDWHPHQWV WKH FRPSDQ\ DGRSWHG 6WDWHPHQW RI )LQDQFLDO $FFRXQWLQJ 6WDQGDUGV 1R ³(PSOR\HUV¶ $FFRXQWLQJ IRU 'HILQHG %HQHILW 3HQVLRQ DQG 2WKHU 3RVWUHWLUHPHQW 3ODQV DQ DPHQGPHQW RI )$6% 6WDWHPHQWV 1R DQG 5 ´ HIIHFWLYH 'HFHPEHU $V GLVFXVVHG LQ 1RWH WR WKH FRQVROLGDWHG ILQDQFLDO VWDWHPHQWV WKH FRPSDQ\ DGRSWHG 6WDWHPHQW RI )LQDQFLDO $FFRXQWLQJ 6WDQGDUGV 1R 5 ³6KDUH %DVHG 3D\PHQW ´ DV UHYLVHG HIIHFWLYH -DQXDU\ :H DOVR KDYH DXGLWHG LQ DFFRUGDQFH ZLWK WKH VWDQGDUGV RI WKH 3XEOLF &RPSDQ\ $FFRXQWLQJ 2YHUVLJKW %RDUG 8QLWHG 6WDWHV WKH HIIHFWLYHQHVV RI $UURZ (OHFWURQLFV ,QF ¶V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ DV RI 'HFHPEHU EDVHG RQ FULWHULD HVWDEOLVKHG LQ ,QWHUQDO &RQWURO ,QWHJUDWHG )UDPHZRUN LVVXHG E\ WKH &RPPLWWHH RI 6SRQVRULQJ 2UJDQL]DWLRQV RI WKH 7UHDGZD\ &RPPLVVLRQ DQG RXU UHSRUW GDWHG )HEUXDU\ H[SUHVVHG DQ XQTXDOLILHG RSLQLRQ WKHUHRQ V (5167 <281* //3 1HZ <RUN 1HZ <RUN )HEUXDU\

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& &2162/,'$7(' 67$7(0(176 2) 23(5$7,216 ,Q WKRXVDQGV H[FHSW SHU VKDUH GDWD

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

6HH DFFRPSDQ\LQJ QRWHV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& &2162/,'$7(' %$/$1&( 6+((76 ,Q WKRXVDQGV H[FHSW SDU YDOXH

$66(76 &XUUHQW DVVHWV &DVK DQG FDVK HTXLYDOHQWV $FFRXQWV UHFHLYDEOH QHW ,QYHQWRULHV 3UHSDLG H[SHQVHV DQG RWKHU DVVHWV 7RWDO FXUUHQW DVVHWV 3URSHUW\ SODQW DQG HTXLSPHQW DW FRVW /DQG %XLOGLQJV DQG LPSURYHPHQWV 0DFKLQHU\ DQG HTXLSPHQW /HVV $FFXPXODWHG GHSUHFLDWLRQ DQG DPRUWL]DWLRQ 3URSHUW\ SODQW DQG HTXLSPHQW QHW ,QYHVWPHQWV LQ DIILOLDWHG FRPSDQLHV &RVW LQ H[FHVV RI QHW DVVHWV RI FRPSDQLHV DFTXLUHG 2WKHU DVVHWV 7RWDO DVVHWV /,$%,/,7,(6 $1' 6+$5(+2/'(56¶ (48,7< &XUUHQW OLDELOLWLHV $FFRXQWV SD\DEOH $FFUXHG H[SHQVHV 6KRUW WHUP ERUURZLQJV LQFOXGLQJ FXUUHQW SRUWLRQ RI ORQJ WHUP GHEW 7RWDO FXUUHQW OLDELOLWLHV /RQJ WHUP GHEW 2WKHU OLDELOLWLHV 6KDUHKROGHUV¶ HTXLW\ &RPPRQ VWRFN SDU YDOXH $XWKRUL]HG VKDUHV LQ DQG ,VVXHG DQG VKDUHV LQ DQG UHVSHFWLYHO\ &DSLWDO LQ H[FHVV RI SDU YDOXH 5HWDLQHG HDUQLQJV )RUHLJQ FXUUHQF\ WUDQVODWLRQ DGMXVWPHQW 2WKHU /HVV 7UHDVXU\ VWRFN DQG VKDUHV LQ DQG UHVSHFWLYHO\ DW FRVW 7RWDO VKDUHKROGHUV¶ HTXLW\ 7RWDO OLDELOLWLHV DQG VKDUHKROGHUV¶ HTXLW\

6HH DFFRPSDQ\LQJ QRWHV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\

'HFHPEHU


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& &2162/,'$7(' 67$7(0(176 2) &$6+ )/2:6 ,Q WKRXVDQGV

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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& &2162/,'$7(' 67$7(0(176 2) 6+$5(+2/'(56¶ (48,7< ,Q WKRXVDQGV

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

$PRUWL]DWLRQ RI VWRFN EDVHG FRPSHQVDWLRQ ([HUFLVH RI VWRFN RSWLRQV 7D[ EHQHILWV UHODWHG WR H[HUFLVH RI VWRFN RSWLRQV 5HVWULFWHG VWRFN DZDUGV QHW $GMXVWPHQW WR LQLWLDOO\ DSSO\ )$6% 6WDWHPHQW 1R 2WKHU %DODQFH DW 'HFHPEHU

&RPPRQ &DSLWDO 6WRFN LQ ([FHVV DW 3DU RI 3DU 9DOXH 9DOXH

7RWDO

)RUHLJQ 8QDPRUWL]HG &XUUHQF\ (PSOR\HH 2WKHU 7UDQVODWLRQ 7UHDVXU\ 6WRFN &RPSUHKHQVLYH $GMXVWPHQW 6WRFN $ZDUGV ,QFRPH /RVV

5HWDLQHG (DUQLQJV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& &2162/,'$7(' 67$7(0(176 2) 6+$5(+2/'(56¶ (48,7< FRQWLQXHG

,Q WKRXVDQGV

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

6HH DFFRPSDQ\LQJ QRWHV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\

7RWDO


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

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¶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¶ HTXLW\ VHFWLRQ LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG EDODQFH VKHHWV LQ ³2WKHU ´ 7KH LQHIIHFWLYH SRUWLRQ RI WKH LQWHUHVW UDWH VZDS LI DQ\ LV UHFRUGHG LQ ³,QWHUHVW H[SHQVH QHW´ LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG VWDWHPHQWV RI RSHUDWLRQV 1HW ,QYHVWPHQW +HGJH 7KH HIIHFWLYH SRUWLRQ RI WKH FKDQJH LQ WKH IDLU YDOXH RI GHULYDWLYHV GHVLJQDWHG DV QHW LQYHVWPHQW KHGJHV DUH UHFRUGHG LQ ³)RUHLJQ FXUUHQF\ WUDQVODWLRQ DGMXVWPHQW´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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

,GHQWLILDEOH ,QWDQJLEOH $VVHWV 7KH FRPSDQ\ DVFULEHV YDOXH WR FHUWDLQ LGHQWLILDEOH LQWDQJLEOH DVVHWV ZKLFK SULPDULO\ FRQVLVW RI FXVWRPHU UHODWLRQVKLSV DQG RWKHU LQWDQJLEOH DVVHWV FRQVLVWLQJ RI QRQ FRPSHWLWLRQ DJUHHPHQWV FXVWRPHU GDWDEDVHV DQG VDOHV EDFNORJ DV D UHVXOW RI DFTXLVLWLRQV ,GHQWLILDEOH LQWDQJLEOH DVVHWV DUH LQFOXGHG LQ ³2WKHU DVVHWV´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³$FFRXQWLQJ IRU WKH &RVWV RI &RPSXWHU 6RIWZDUH 'HYHORSHG RU 2EWDLQHG IRU ,QWHUQDO 8VH ´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¶V %RDUG RI 'LUHFWRUV DUH FRQVLGHUHG LQ GHWHUPLQLQJ ZKHWKHU WKH HTXLW\ PHWKRG RI DFFRXQWLQJ LV DSSURSULDWH 7KH FRPSDQ\ UHFRUGV LWV LQYHVWPHQWV LQ HTXLW\ PHWKRG LQYHVWHHV PHHWLQJ WKHVH FKDUDFWHULVWLFV DV ³,QYHVWPHQWV LQ DIILOLDWHG FRPSDQLHV´ LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG EDODQFH VKHHWV $OO RWKHU HTXLW\ LQYHVWPHQWV ZKLFK FRQVLVW RI LQYHVWPHQWV IRU ZKLFK WKH FRPSDQ\ GRHV QRW KDYH WKH DELOLW\ WR H[HUFLVH VLJQLILFDQW LQIOXHQFH DUH DFFRXQWHG IRU XQGHU WKH FRVW PHWKRG LI SULYDWH RU DV DYDLODEOH IRU VDOH LI SXEOLF DQG DUH LQFOXGHG LQ ³2WKHU DVVHWV´ LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG EDODQFH VKHHWV 8QGHU WKH FRVW PHWKRG RI DFFRXQWLQJ LQYHVWPHQWV DUH FDUULHG DW FRVW DQG DUH DGMXVWHG RQO\ IRU RWKHU WKDQ WHPSRUDU\ GHFOLQHV LQ UHDOL]DEOH YDOXH DQG DGGLWLRQDO LQYHVWPHQWV ,I FODVVLILHG DV DYDLODEOH IRU VDOH WKH FRPSDQ\ DFFRXQWV IRU WKH FKDQJHV LQ WKH IDLU YDOXH ZLWK XQUHDOL]HG JDLQV RU ORVVHV UHIOHFWHG LQ WKH VKDUHKROGHUV¶ HTXLW\ VHFWLRQ LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG EDODQFH VKHHWV LQ ³2WKHU ´ 7KH FRPSDQ\ DVVHVVHV LWV ORQJ WHUP LQYHVWPHQWV DFFRXQWHG IRU DV DYDLODEOH IRU VDOH RQ D TXDUWHUO\ EDVLV WR GHWHUPLQH ZKHWKHU GHFOLQHV LQ PDUNHW YDOXH EHORZ FRVW DUH RWKHU WKDQ WHPSRUDU\ :KHQ WKH GHFOLQH LV GHWHUPLQHG WR EH RWKHU WKDQ WHPSRUDU\ WKH FRVW EDVLV IRU WKH LQGLYLGXDO VHFXULW\ LV UHGXFHG DQG D ORVV LV UHDOL]HG LQ WKH FRPSDQ\¶V FRQVROLGDWHG VWDWHPHQW RI RSHUDWLRQV LQ WKH SHULRG LQ ZKLFK LW RFFXUV :KHQ WKH GHFOLQH LV GHWHUPLQHG WR EH WHPSRUDU\ WKH XQUHDOL]HG ORVVHV DUH LQFOXGHG LQ WKH VKDUHKROGHUV¶ HTXLW\ VHFWLRQ LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG EDODQFH VKHHWV LQ ³2WKHU ´ 7KH FRPSDQ\ PDNHV VXFK GHWHUPLQDWLRQ EDVHG XSRQ WKH TXRWHG PDUNHW SULFH ILQDQFLDO FRQGLWLRQ RSHUDWLQJ UHVXOWV RI WKH LQYHVWHH DQG WKH FRPSDQ\¶V LQWHQW DQG DELOLW\ WR UHWDLQ WKH LQYHVWPHQW RYHU D SHULRG RI WLPH ZKLFK ZRXOG EH VXIILFLHQW WR DOORZ IRU DQ\ UHFRYHU\ LQ PDUNHW YDOXH ,Q DGGLWLRQ WKH FRPSDQ\ DVVHVVHV WKH IROORZLQJ IDFWRUV

‡ ‡ ‡

EURDG HFRQRPLF IDFWRUV LPSDFWLQJ WKH LQYHVWHH¶V LQGXVWU\ SXEOLFO\ DYDLODEOH IRUHFDVWV IRU VDOHV DQG HDUQLQJV JURZWK IRU WKH LQGXVWU\ DQG LQYHVWHH DQG WKH F\FOLFDO QDWXUH RI WKH LQYHVWHH¶V LQGXVWU\

7KH FRPSDQ\ FRXOG SRWHQWLDOO\ KDYH DQ LPSDLUPHQW FKDUJH LQ IXWXUH SHULRGV LI DPRQJ RWKHU IDFWRUV WKH LQYHVWHH¶V IXWXUH HDUQLQJV GLIIHU IURP FXUUHQWO\ DYDLODEOH IRUHFDVWV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

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¶ HTXLW\ LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG EDODQFH VKHHWV 7KH UHVXOWV RI LQWHUQDWLRQDO RSHUDWLRQV DUH WUDQVODWHG DW WKH PRQWKO\ DYHUDJH H[FKDQJH UDWHV ,QFRPH 7D[HV ,QFRPH WD[HV DUH DFFRXQWHG IRU XQGHU WKH OLDELOLW\ PHWKRG 'HIHUUHG WD[HV UHIOHFW WKH WD[ FRQVHTXHQFHV RQ IXWXUH \HDUV RI GLIIHUHQFHV EHWZHHQ WKH WD[ EDVHV RI DVVHWV DQG OLDELOLWLHV DQG WKHLU ILQDQFLDO UHSRUWLQJ DPRXQWV 7KH FDUU\LQJ YDOXH RI WKH FRPSDQ\¶V GHIHUUHG WD[ DVVHWV LV GHSHQGHQW XSRQ WKH FRPSDQ\¶V DELOLW\ WR JHQHUDWH VXIILFLHQW IXWXUH WD[DEOH LQFRPH LQ FHUWDLQ WD[ MXULVGLFWLRQV 6KRXOG WKH FRPSDQ\ GHWHUPLQH WKDW LW LV PRUH OLNHO\ WKDQ QRW WKDW VRPH SRUWLRQ RU DOO RI LWV GHIHUUHG DVVHWV ZLOO QRW EH UHDOL]HG D YDOXDWLRQ DOORZDQFH WR WKH GHIHUUHG WD[ DVVHWV ZRXOG EH HVWDEOLVKHG LQ WKH SHULRG VXFK GHWHUPLQDWLRQ ZDV PDGH ,W LV WKH FRPSDQ\¶V SROLF\ WR SURYLGH IRU XQFHUWDLQ WD[ SRVLWLRQV DQG WKH UHODWHG LQWHUHVW DQG SHQDOWLHV EDVHG XSRQ PDQDJHPHQW¶V DVVHVVPHQW RI ZKHWKHU D WD[ EHQHILW LV PRUH OLNHO\ WKDQ QRW WR EH VXVWDLQHG XSRQ H[DPLQDWLRQ E\ WD[ DXWKRULWLHV $W 'HFHPEHU WKH FRPSDQ\ EHOLHYHV LW KDV DSSURSULDWHO\ DFFRXQWHG IRU DQ\ XQUHFRJQL]HG WD[ EHQHILWV 7R WKH H[WHQW WKH FRPSDQ\ SUHYDLOV LQ PDWWHUV IRU ZKLFK D OLDELOLW\ IRU DQ XQUHFRJQL]HG WD[ EHQHILW LV HVWDEOLVKHG RU LV UHTXLUHG WR SD\ DPRXQWV LQ H[FHVV RI WKH OLDELOLW\ WKH FRPSDQ\¶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¶V FURVV FXUUHQF\ VZDSV IRUHLJQ FXUUHQF\ WUDQVODWLRQ DGMXVWPHQWV LQFOXGHG LQ FRPSUHKHQVLYH LQFRPH ZHUH QRW WD[ HIIHFWHG DV LQYHVWPHQWV LQ LQWHUQDWLRQDO DIILOLDWHV DUH GHHPHG WR EH SHUPDQHQW

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

6WRFN %DVHG &RPSHQVDWLRQ (IIHFWLYH -DQXDU\ WKH FRPSDQ\ DGRSWHG WKH SURYLVLRQV RI )LQDQFLDO $FFRXQWLQJ 6WDQGDUGV %RDUG ³)$6%´

6WDWHPHQW 1R UHYLVHG ³6KDUH %DVHG 3D\PHQW´ DQG WKH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ 6WDII $FFRXQWLQJ %XOOHWLQ 1R FROOHFWLYHO\ ³6WDWHPHQW 1R 5 ´ ZKLFK UHTXLUHV VKDUH EDVHG SD\PHQW ³6%3´ DZDUGV H[FKDQJHG IRU HPSOR\HH VHUYLFHV WR EH PHDVXUHG DW IDLU YDOXH DQG H[SHQVHG LQ WKH FRQVROLGDWHG VWDWHPHQWV RI RSHUDWLRQV RYHU WKH UHTXLVLWH HPSOR\HH VHUYLFH SHULRG 3ULRU WR -DQXDU\ WKH FRPSDQ\ DFFRXQWHG IRU 6%3 DZDUGV XQGHU $FFRXQWLQJ 3ULQFLSOHV %RDUG 2SLQLRQ 1R ³$FFRXQWLQJ IRU 6WRFN ,VVXHG WR (PSOR\HHV ´ ZKLFK XWLOL]HG WKH LQWULQVLF YDOXH PHWKRG DQG GLG QRW UHTXLUH DQ\ H[SHQVH WR EH UHFRUGHG LQ WKH FRQVROLGDWHG ILQDQFLDO VWDWHPHQWV LI WKH H[HUFLVH SULFH RI WKH DZDUG ZDV QRW OHVV WKDQ WKH PDUNHW SULFH RI WKH XQGHUO\LQJ VWRFN RQ WKH GDWH RI JUDQW 7KH FRPSDQ\ HOHFWHG WR DGRSW IRU SHULRGV SULRU WR -DQXDU\ WKH GLVFORVXUH UHTXLUHPHQWV RI )$6% 6WDWHPHQW 1R ³$FFRXQWLQJ IRU 6WRFN %DVHG &RPSHQVDWLRQ ´ DV DPHQGHG E\ )$6% 6WDWHPHQW 1R ³$FFRXQWLQJ IRU 6WRFN %DVHG &RPSHQVDWLRQ ² 7UDQVLWLRQ DQG 'LVFORVXUH´ FROOHFWLYHO\ ³6WDWHPHQW 1R ´ ZKLFK XVHG D IDLU YDOXH EDVHG PHWKRG RI DFFRXQWLQJ IRU 6%3 DZDUGV 6WDWHPHQW 1R 5 UHTXLUHV FRPSDQLHV WR UHFRUG FRPSHQVDWLRQ H[SHQVH IRU VWRFN RSWLRQV PHDVXUHG DW IDLU YDOXH RQ WKH GDWH RI JUDQW XVLQJ DQ RSWLRQ SULFLQJ PRGHO 7KH IDLU YDOXH RI WKH FRPSDQ\¶V VWRFN RSWLRQV LV GHWHUPLQHG XVLQJ WKH %ODFN 6FKROHV YDOXDWLRQ PRGHO ZKLFK LV FRQVLVWHQW ZLWK WKH FRPSDQ\¶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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

7KH IROORZLQJ WDEOH SUHVHQWV WKH FRPSDQ\¶V SUR IRUPD QHW LQFRPH DQG EDVLF DQG GLOXWHG QHW LQFRPH SHU VKDUH IRU WKH \HDU HQGHG 'HFHPEHU KDG FRPSHQVDWLRQ H[SHQVH EHHQ GHWHUPLQHG LQ DFFRUGDQFH ZLWK WKH IDLU YDOXH PHWKRG RI DFFRXQWLQJ DW WKH JUDQW GDWHV IRU DZDUGV XQGHU WKH FRPSDQ\¶V YDULRXV VWRFN EDVHG FRPSHQVDWLRQ SODQV 1HW LQFRPH DV UHSRUWHG ,PSDFW RI VWRFN EDVHG HPSOR\HH FRPSHQVDWLRQ H[SHQVH GHWHUPLQHG XQGHU WKH IDLU YDOXH PHWKRG IRU DOO DZDUGV QHW RI UHODWHG WD[HV

3UR IRUPD QHW LQFRPH 1HW LQFRPH SHU VKDUH %DVLF DV UHSRUWHG %DVLF SUR IRUPD 'LOXWHG DV UHSRUWHG 'LOXWHG SUR IRUPD

7KH IDLU YDOXH RI 6%3 DZDUGV ZDV HVWLPDWHG XVLQJ WKH %ODFN 6FKROHV YDOXDWLRQ PRGHO ZLWK WKH IROORZLQJ ZHLJKWHG DYHUDJH DVVXPSWLRQV IRU WKH \HDUV HQGHG 'HFHPEHU 9RODWLOLW\ SHUFHQW ([SHFWHG WHUP LQ \HDUV 5LVN IUHH LQWHUHVW UDWH SHUFHQW

9RODWLOLW\ LV PHDVXUHG XVLQJ KLVWRULFDO GDLO\ SULFH FKDQJHV RI WKH FRPSDQ\¶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¶V RSHUDWLRQV DUH FODVVLILHG LQWR WZR UHSRUWDEOH EXVLQHVV VHJPHQWV JOREDO FRPSRQHQWV DQG JOREDO HQWHUSULVH FRPSXWLQJ VROXWLRQV ³(&6´ 5HYHQXH 5HFRJQLWLRQ 7KH FRPSDQ\ UHFRJQL]HV UHYHQXH LQ DFFRUGDQFH ZLWK WKH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ 6WDII $FFRXQWLQJ %XOOHWLQ 1R ³5HYHQXH 5HFRJQLWLRQ´ ³6$% ´ 8QGHU 6$% UHYHQXH LV UHFRJQL]HG ZKHQ WKHUH LV SHUVXDVLYH HYLGHQFH RI DQ DUUDQJHPHQW GHOLYHU\ KDV RFFXUUHG RU VHUYLFHV DUH UHQGHUHG WKH VDOHV SULFH LV GHWHUPLQDEOH DQG FROOHFWLELOLW\ LV UHDVRQDEO\ DVVXUHG 5HYHQXH W\SLFDOO\ LV UHFRJQL]HG DW WLPH RI VKLSPHQW 6DOHV DUH UHFRUGHG QHW RI GLVFRXQWV UHEDWHV DQG UHWXUQV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

$ SRUWLRQ RI WKH FRPSDQ\¶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³(,7)´ ,VVXH 1R ³5HSRUWLQJ 5HYHQXH *URVV DV D 3ULQFLSDO YHUVXV 1HW DV DQ $JHQW ´ 6KLSSLQJ DQG +DQGOLQJ &RVWV 6KLSSLQJ DQG KDQGOLQJ FRVWV LQFOXGHG LQ VHOOLQJ JHQHUDO DQG DGPLQLVWUDWLYH H[SHQVHV WRWDOHG DQG LQ DQG UHVSHFWLYHO\ 6DEEDWLFDO /LDELOLW\ (IIHFWLYH -DQXDU\ WKH FRPSDQ\ DGRSWHG (,7) ,VVXH 1R ³$FFRXQWLQJ IRU 6DEEDWLFDO /HDYH DQG 2WKHU 6LPLODU %HQHILWV 3XUVXDQW WR )$6% 6WDWHPHQW 1R ´ ³(,7) ,VVXH 1R ´ (,7) ,VVXH 1R UHTXLUHV WKDW FRPSHQVDWLRQ H[SHQVH DVVRFLDWHG ZLWK D VDEEDWLFDO OHDYH RU RWKHU VLPLODU EHQHILW DUUDQJHPHQWV EH DFFUXHG RYHU WKH UHTXLVLWH VHUYLFH SHULRG GXULQJ ZKLFK DQ HPSOR\HH HDUQV WKH EHQHILW 8SRQ DGRSWLRQ WKH FRPSDQ\ UHFRJQL]HG D OLDELOLW\ RI DQG D FXPXODWLYH HIIHFW DGMXVWPHQW WR UHWDLQHG HDUQLQJV RI QHW RI UHODWHG WD[HV ,PSDFW RI 5HFHQWO\ ,VVXHG $FFRXQWLQJ 6WDQGDUGV ,Q 'HFHPEHU WKH )$6% LVVXHG 6WDWHPHQW RI )LQDQFLDO $FFRXQWLQJ 6WDQGDUGV 1R UHYLVHG ³%XVLQHVV &RPELQDWLRQV´ ³6WDWHPHQW 1R 5 ´ 6WDWHPHQW 1R 5 FKDQJHV WKH UHTXLUHPHQWV IRU DQ DFTXLUHU¶V UHFRJQLWLRQ DQG PHDVXUHPHQW RI WKH DVVHWV DFTXLUHG DQG WKH OLDELOLWLHV DVVXPHG LQ D EXVLQHVV FRPELQDWLRQ 6WDWHPHQW 1R 5 LV HIIHFWLYH IRU DQQXDO SHULRGV EHJLQQLQJ DIWHU 'HFHPEHU DQG VKRXOG EH DSSOLHG SURVSHFWLYHO\ IRU DOO EXVLQHVV FRPELQDWLRQV HQWHUHG LQWR DIWHU WKH GDWH RI DGRSWLRQ ,Q 'HFHPEHU WKH )$6% LVVXHG 6WDWHPHQW RI )LQDQFLDO $FFRXQWLQJ 6WDQGDUGV 1R ³1RQFRQWUROOLQJ ,QWHUHVWV LQ &RQVROLGDWHG )LQDQFLDO 6WDWHPHQWV ² DQ DPHQGPHQW RI $5% 1R ´ ³6WDWHPHQW 1R ´ 6WDWHPHQW 1R UHTXLUHV L WKDW QRQFRQWUROOLQJ PLQRULW\ LQWHUHVWV EH UHSRUWHG DV D FRPSRQHQW RI VKDUHKROGHUV¶ HTXLW\ LL WKDW QHW LQFRPH DWWULEXWDEOH WR WKH SDUHQW DQG WR WKH QRQFRQWUROOLQJ LQWHUHVW EH VHSDUDWHO\ LGHQWLILHG LQ WKH FRQVROLGDWHG VWDWHPHQW RI RSHUDWLRQV LLL WKDW FKDQJHV LQ D SDUHQW¶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¶V FRQVROLGDWHG ILQDQFLDO SRVLWLRQ DQG UHVXOWV RI RSHUDWLRQV ,Q 6HSWHPEHU WKH )$6% LVVXHG 6WDWHPHQW RI )LQDQFLDO $FFRXQWLQJ 6WDQGDUGV 1R ³)DLU 9DOXH 0HDVXUHPHQWV´ ³6WDWHPHQW 1R ´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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

SURYLVLRQV RI 6WDWHPHQW 1R UHODWHG WR ILQDQFLDO DVVHWV DQG OLDELOLWLHV DQG RWKHU DVVHWV DQG OLDELOLWLHV WKDW DUH FDUULHG DW IDLU YDOXH RQ D UHFXUULQJ EDVLV LV QRW DQWLFLSDWHG WR PDWHULDOO\ LPSDFW WKH FRPSDQ\¶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³$JLO\V\V´ VXEVWDQWLDOO\ DOO RI WKH DVVHWV DQG RSHUDWLRQV RI WKHLU .H\/LQN 6\VWHPV *URXS EXVLQHVV ³.H\/LQN´ IRU D SXUFKDVH SULFH RI LQ FDVK ZKLFK LQFOXGHG DFTXLVLWLRQ FRVWV DQG ILQDO DGMXVWPHQWV EDVHG XSRQ D FORVLQJ DXGLW 7KH FRPSDQ\ DOVR HQWHUHG LQWR D ORQJ WHUP SURFXUHPHQW DJUHHPHQW ZLWK $JLO\V\V .H\/LQN D OHDGLQJ HQWHUSULVH FRPSXWLQJ VROXWLRQV GLVWULEXWRU SURYLGHV FRPSOH[ VROXWLRQV IURP LQGXVWU\ OHDGLQJ PDQXIDFWXUHUV WR PRUH WKDQ UHVHOOHU SDUWQHUV .H\/LQN KDV ORQJ VWDQGLQJ UHVHOOHU UHODWLRQVKLSV WKDW SURYLGH WKH FRPSDQ\ ZLWK VLJQLILFDQW FURVV VHOOLQJ RSSRUWXQLWLHV .H\/LQN¶V KLJKO\ H[SHULHQFHG VDOHV DQG PDUNHWLQJ SURIHVVLRQDOV VWUHQJWKHQ WKH FRPSDQ\¶V H[LVWLQJ UHODWLRQVKLSV ZLWK YDOXH DGGHG UHVHOOHUV ³9$5V´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

$FFUXHG H[SHQVHV

2WKHU OLDELOLWLHV

1HW FRQVLGHUDWLRQ SDLG

7KH SUHOLPLQDU\ DOORFDWLRQ LV VXEMHFW WR UHILQHPHQW DV WKH FRPSDQ\ KDV QRW \HW FRPSOHWHG LWV ILQDO HYDOXDWLRQ RI WKH IDLU YDOXH RI WKH DVVHWV DFTXLUHG DQG OLDELOLWLHV DVVXPHG LQFOXGLQJ WKH ILQDO YDOXDWLRQ RI DQ\ SRWHQWLDO LQWDQJLEOH DVVHWV FUHDWHG WKURXJK WKLV DFTXLVLWLRQ 7KH FRVW LQ H[FHVV RI QHW DVVHWV RI FRPSDQLHV DFTXLUHG UHODWHG WR WKH .H\/LQN DFTXLVLWLRQ ZDV UHFRUGHG LQ WKH FRPSDQ\¶V JOREDO (&6 EXVLQHVV VHJPHQW 6XEVWDQWLDOO\ DOO RI WKH LQWDQJLEOH DVVHWV UHODWHG WR WKH .H\/LQN DFTXLVLWLRQ DUH H[SHFWHG WR EH GHGXFWLEOH IRU LQFRPH WD[ SXUSRVHV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

7KH IROORZLQJ WDEOH VXPPDUL]HV WKH FRPSDQ\¶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³$GLODP´ D OHDGLQJ HOHFWURQLF FRPSRQHQW GLVWULEXWRU LQ $XVWUDOLD DQG 1HZ =HDODQG 7RWDO $GLODP VDOHV IRU ZHUH DSSUR[LPDWHO\ 7KH LPSDFW RI WKH DFTXLVLWLRQ RI WKH FRPSRQHQW GLVWULEXWLRQ EXVLQHVV RI $GLODP ZDV QRW PDWHULDO WR WKH FRPSDQ\¶V FRQVROLGDWHG ILQDQFLDO SRVLWLRQ DQG UHVXOWV RI RSHUDWLRQV ,Q 6HSWHPEHU WKH FRPSDQ\ DFTXLUHG &HQWLD *URXS /LPLWHG DQG $.6 *URXS $% ³&HQWLD $.6´ VSHFLDOW\ GLVWULEXWRUV RI DFFHVV LQIUDVWUXFWXUH VHFXULW\ DQG YLUWXDOL]DWLRQ VRIWZDUH VROXWLRQV LQ (XURSH 7RWDO &HQWLD $.6 VDOHV IRU WKH IXOO \HDU RI ZHUH DSSUR[LPDWHO\ 7KH LPSDFW RI WKH &HQWLD $.6 DFTXLVLWLRQV ZHUH QRW PDWHULDO WR WKH FRPSDQ\¶V FRQVROLGDWHG ILQDQFLDO SRVLWLRQ DQG UHVXOWV RI RSHUDWLRQV ,Q 1RYHPEHU WKH FRPSDQ\ DFTXLUHG 8QLYHUVH (OHFWURQ &RUSRUDWLRQ ³8(&´ D GLVWULEXWRU RI VHPLFRQGXFWRU DQG PXOWLPHGLD SURGXFWV LQ -DSDQ 8(& LV EDVHG LQ 7RN\R -DSDQ 7RWDO 8(& VDOHV IRU WKH IXOO \HDU ZHUH DSSUR[LPDWHO\ 7KH LPSDFW RI WKH 8(& DFTXLVLWLRQ ZDV QRW PDWHULDO WR WKH FRPSDQ\¶V FRQVROLGDWHG ILQDQFLDO SRVLWLRQ DQG UHVXOWV RI RSHUDWLRQV 2Q 1RYHPEHU WKH FRPSDQ\ DFTXLUHG $OWHUQDWLYH 7HFKQRORJ\ ,QF ³$OWHUQDWLYH 7HFKQRORJ\´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¶V QHWZRUNV 7RWDO $OWHUQDWLYH 7HFKQRORJ\ VDOHV IRU ZHUH DSSUR[LPDWHO\ RI ZKLFK ZHUH LQFOXGHG LQ WKH FRPSDQ\¶V FRQVROLGDWHG UHVXOWV RI RSHUDWLRQV IURP WKH DFTXLVLWLRQ GDWH 7KH FDVK FRQVLGHUDWLRQ SDLG QHW RI FDVK DFTXLUHG ZDV 2Q 'HFHPEHU WKH FRPSDQ\ DFTXLUHG ,Q7HFKQRORJ\ SOF¶V VWRUDJH DQG VHFXULW\ GLVWULEXWLRQ EXVLQHVV ³,Q7HFKQRORJ\´ IRU D SXUFKDVH SULFH RI ZKLFK LQFOXGHG DFTXLVLWLRQ FRVWV ,Q7HFKQRORJ\ ZKLFK LV KHDGTXDUWHUHG LQ +DUURJDWH (QJODQG KDV DSSUR[LPDWHO\ HPSOR\HHV DQG GHOLYHUV VWRUDJH DQG VHFXULW\ VROXWLRQV WR 9$5V LQ WKH 8QLWHG .LQJGRP 7RWDO ,Q7HFKQRORJ\ VDOHV IRU ZHUH DSSUR[LPDWHO\ 7KH FDVK FRQVLGHUDWLRQ SDLG ZDV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

7KH IROORZLQJ WDEOH VXPPDUL]HV WKH DOORFDWLRQ RI WKH QHW FRQVLGHUDWLRQ SDLG WR WKH IDLU YDOXH RI WKH DVVHWV DFTXLUHG DQG OLDELOLWLHV DVVXPHG IRU WKH $OWHUQDWLYH 7HFKQRORJ\ DQG ,Q7HFKQRORJ\ DFTXLVLWLRQV ³ DFTXLVLWLRQV´ $FFRXQWV UHFHLYDEOH QHW ,QYHQWRULHV 3UHSDLG H[SHQVHV DQG RWKHU DVVHWV 3URSHUW\ SODQW DQG HTXLSPHQW &RVW LQ H[FHVV RI QHW DVVHWV RI FRPSDQLHV DFTXLUHG ,GHQWLILDEOH LQWDQJLEOH DVVHWV $FFRXQWV SD\DEOH

$FFUXHG H[SHQVHV

2WKHU OLDELOLWLHV

1HW FRQVLGHUDWLRQ SDLG

'XULQJ WKH IRXUWK TXDUWHU RI WKH FRPSDQ\ FRPSOHWHG LWV YDOXDWLRQ RI LGHQWLILDEOH LQWDQJLEOH DVVHWV 7KH FRPSDQ\ DOORFDWHG RI WKH SXUFKDVH SULFH WR LQWDQJLEOH DVVHWV UHODWLQJ WR FXVWRPHU UHODWLRQVKLSV ZLWK D ZHLJKWHG DYHUDJH XVHIXO OLIH RI DSSUR[LPDWHO\ WHQ \HDUV DQG RWKHU LQWDQJLEOH DVVHWV FRQVLVWLQJ RI QRQ FRPSHWLWLRQ DJUHHPHQWV DQG VDOHV EDFNORJ RI ZLWK XVHIXO OLYHV UDQJLQJ IURP RQH WR WKUHH \HDUV 7KHVH LGHQWLILDEOH LQWDQJLEOH DVVHWV DUH LQFOXGHG LQ ³2WKHU DVVHWV´ LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG EDODQFH VKHHWV 7KH IROORZLQJ WDEOH VXPPDUL]HV WKH FRPSDQ\¶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³6.<'$7$´ D YDOXH DGGHG GLVWULEXWRU RI GDWD VWRUDJH VROXWLRQV LQ 0LVVLVVDXJD 2WWDZD DQG &DOJDU\ DV ZHOO DV /DYDO 4XHEHF 7RWDO 6.<'$7$ VDOHV IRU ZHUH DSSUR[LPDWHO\ 7KH LPSDFW RI WKH 6.<'$7$ DFTXLVLWLRQ ZDV QRW GHHPHG WR EH PDWHULDO WR WKH FRPSDQ\¶V FRQVROLGDWHG ILQDQFLDO SRVLWLRQ DQG UHVXOWV RI RSHUDWLRQV 2Q 'HFHPEHU WKH FRPSDQ\ DFTXLUHG '16LQW FRP $* ³'16´ IRU D SXUFKDVH SULFH RI ZKLFK LQFOXGHG FDVK DFTXLUHG DV ZHOO DV DFTXLVLWLRQ FRVWV ,Q DGGLWLRQ WKHUH ZDV WKH DVVXPSWLRQ RI LQ GHEW '16 LV D GLVWULEXWRU RI PLG UDQJH FRPSXWHU SURGXFWV LQ &HQWUDO 1RUWKHUQ DQG (DVWHUQ (XURSH DQG LV RQH RI WKH ODUJHVW VXSSOLHUV RI 6XQ 0LFURV\VWHPV ,QF SURGXFWV LQ (XURSH ,Q '16 KDG VDOHV LQ H[FHVV RI 7KH FDVK FRQVLGHUDWLRQ SDLG QHW RI FDVK DFTXLUHG RI ZDV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

,Q 'HFHPEHU WKURXJK D VHULHV RI WUDQVDFWLRQV WKH FRPSDQ\ DFTXLUHG RI WKH FRPPRQ VKDUHV RI 8OWUD 6RXUFH 7HFKQRORJ\ &RUS ³8OWUD 6RXUFH´ IRU D SXUFKDVH SULFH RI ZKLFK LQFOXGHG FDVK DFTXLUHG DV ZHOO DV DFTXLVLWLRQ FRVWV ,Q DGGLWLRQ 8OWUD 6RXUFH KDG LQ GHEW DQG LQ FDVK 8OWUD 6RXUFH LV RQH RI WKH OHDGLQJ HOHFWURQLF FRPSRQHQWV GLVWULEXWRUV LQ 7DLZDQ ZLWK VDOHV RIILFHV DQG GLVWULEXWLRQ FHQWHUV LQ 7DLZDQ +RQJ .RQJ DQG WKH 3HRSOH¶V 5HSXEOLF RI &KLQD ,Q 8OWUD 6RXUFH KDG VDOHV LQ H[FHVV RI 7KH FDVK FRQVLGHUDWLRQ SDLG QHW RI FDVK DFTXLUHG ZDV 7KH IROORZLQJ WDEOH VXPPDUL]HV WKH FRPSDQ\¶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³&RQQHNWURQ´ D SDVVLYH HOHFWURPHFKDQLFDO DQG FRQQHFWRUV GLVWULEXWRU LQ $XVWUDOLD DQG 1HZ =HDODQG 7KH LPSDFW RI WKH &RQQHNWURQ DFTXLVLWLRQ ZDV QRW GHHPHG WR EH PDWHULDO WR WKH FRPSDQ\¶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³+\QHWLF´ +\QHWLF LV EDVHG LQ ,QGLD 7KH LPSDFW RI WKH DFTXLVLWLRQ RI +\QHWLF ZDV QRW PDWHULDO WR WKH FRPSDQ\¶V FRQVROLGDWHG ILQDQFLDO SRVLWLRQ DQG UHVXOWV RI RSHUDWLRQV $GGLWLRQDOO\ GXULQJ DQG WKH FRPSDQ\ PDGH SD\PHQWV RI DQG UHVSHFWLYHO\ ZKLFK ZHUH FDSLWDOL]HG DV FRVW LQ H[FHVV RI QHW DVVHWV RI FRPSDQLHV DFTXLUHG SDUWLDOO\ RIIVHW E\ WKH FDUU\LQJ YDOXH RI WKH UHODWHG PLQRULW\ LQWHUHVW WR LQFUHDVH LWV RZQHUVKLS LQWHUHVW LQ RWKHU PDMRULW\ RZQHG VXEVLGLDULHV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

&RVW LQ ([FHVV RI 1HW $VVHWV RI &RPSDQLHV $FTXLUHG &RVW LQ H[FHVV RI QHW DVVHWV RI FRPSDQLHV DFTXLUHG DOORFDWHG WR WKH FRPSDQ\¶V EXVLQHVV VHJPHQWV DUH DV IROORZV *OREDO &RPSRQHQWV *OREDO (&6 7RWDO 'HFHPEHU $FTXLVLWLRQV 2WKHU SULPDULO\ IRUHLJQ FXUUHQF\ WUDQVODWLRQ

'HFHPEHU $FTXLVLWLRQV 2WKHU SULPDULO\ IRUHLJQ FXUUHQF\ WUDQVODWLRQ

'HFHPEHU

$OO H[LVWLQJ DQG IXWXUH FRVW LQ H[FHVV RI QHW DVVHWV RI FRPSDQLHV DFTXLUHG DUH VXEMHFW WR DQ DQQXDO LPSDLUPHQW WHVW DV RI WKH ILUVW GD\ RI WKH IRXUWK TXDUWHU RI HDFK \HDU RU HDUOLHU LI LQGLFDWRUV RI SRWHQWLDO LPSDLUPHQW H[LVW ,QYHVWPHQWV $IILOLDWHG &RPSDQLHV 7KH FRPSDQ\ KDV D LQWHUHVW LQ VHYHUDO MRLQW YHQWXUHV ZLWK 0DUXEXQ &RUSRUDWLRQ FROOHFWLYHO\ ³0DUXEXQ $UURZ´ DQG D LQWHUHVW LQ $OWHFK ,QGXVWULHV 3W\ /WG ³$OWHFK ,QGXVWULHV´ D MRLQW YHQWXUH ZLWK $OOLHG 7HFKQRORJLHV /LPLWHG 7KHVH LQYHVWPHQWV DUH DFFRXQWHG IRU XVLQJ WKH HTXLW\ PHWKRG 7KH IROORZLQJ WDEOH SUHVHQWV WKH FRPSDQ\¶V LQYHVWPHQW LQ 0DUXEXQ $UURZ WKH FRPSDQ\¶V LQYHVWPHQW DQG ORQJ WHUP QRWH UHFHLYDEOH LQ $OWHFK ,QGXVWULHV DQG WKH FRPSDQ\¶V RWKHU HTXLW\ LQYHVWPHQWV DW 'HFHPEHU 0DUXEXQ $UURZ $OWHFK ,QGXVWULHV 2WKHU

7KH HTXLW\ LQ HDUQLQJV ORVV RI DIILOLDWHG FRPSDQLHV IRU WKH \HDUV HQGHG 'HFHPEHU FRQVLVW RI WKH IROORZLQJ 0DUXEXQ $UURZ $OWHFK ,QGXVWULHV 2WKHU

8QGHU WKH WHUPV RI YDULRXV MRLQW YHQWXUH DJUHHPHQWV WKH FRPSDQ\ LV UHTXLUHG WR SD\ LWV SUR UDWD VKDUH RI WKH WKLUG SDUW\ GHEW RI FHUWDLQ RI LWV MRLQW YHQWXUHV LQ WKH HYHQW WKDW WKH MRLQW YHQWXUHV DUH XQDEOH WR PHHW WKHLU REOLJDWLRQV $W 'HFHPEHU WKH FRPSDQ\¶V SUR UDWD VKDUH RI WKLV GHEW ZDV DSSUR[LPDWHO\ 7KH FRPSDQ\ EHOLHYHV WKHUH LV VXIILFLHQW HTXLW\ LQ WKH MRLQW YHQWXUHV WR PHHW WKHLU REOLJDWLRQV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

,QYHVWPHQW 6HFXULWLHV 7KH FRPSDQ\ KDV D HTXLW\ RZQHUVKLS LQWHUHVW LQ :3* +ROGLQJV &R /WG ³:3*´ DQG DQ HTXLW\ RZQHUVKLS LQWHUHVW LQ 0DUXEXQ &RUSRUDWLRQ ³0DUXEXQ´ ZKLFK DUH DFFRXQWHG IRU DV DYDLODEOH IRU VDOH VHFXULWLHV 7KH IDLU YDOXH RI WKH FRPSDQ\¶V DYDLODEOH IRU VDOH VHFXULWLHV DUH DV IROORZV DW 'HFHPEHU 0DUXEXQ :3* &RVW EDVLV 8QUHDOL]HG KROGLQJ JDLQ ORVV

)DLU YDOXH

0DUXEXQ

:3*

7KH FRPSDQ\ KDV FRQFOXGHG WKDW DQ RWKHU WKDQ WHPSRUDU\ GHFOLQH KDV QRW RFFXUUHG LQ LWV LQYHVWPHQW LQ 0DUXEXQ ,Q PDNLQJ WKLV GHWHUPLQDWLRQ WKH FRPSDQ\ FRQVLGHUHG LWV LQWHQW DQG DELOLW\ WR KROG WKH LQYHVWPHQW XQWLO WKH FRVW LV UHFRYHUHG WKH ILQDQFLDO FRQGLWLRQ DQG QHDU WHUP SURVSHFWV RI 0DUXEXQ WKH PDJQLWXGH RI WKH ORVV FRPSDUHG WR WKH LQYHVWPHQW¶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¶V LQYHVWPHQW LQ 0DUXEXQ LV 7KH IDLU YDOXH RI WKHVH LQYHVWPHQWV DUH LQFOXGHG LQ ³2WKHU DVVHWV´ LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG EDODQFH VKHHWV DQG WKH UHODWHG QHW XQUHDOL]HG KROGLQJ JDLQV DQG ORVVHV DUH LQFOXGHG LQ ³2WKHU´ LQ WKH VKDUHKROGHUV¶ HTXLW\ VHFWLRQ LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG EDODQFH VKHHWV $FFRXQWV 5HFHLYDEOH 7KH FRPSDQ\ KDV DQ DVVHW VHFXULWL]DWLRQ SURJUDP FROODWHUDOL]HG E\ DFFRXQWV UHFHLYDEOH RI FHUWDLQ RI LWV 1RUWK $PHULFDQ VXEVLGLDULHV ,Q 0DUFK WKH FRPSDQ\ UHQHZHG WKH DVVHW VHFXULWL]DWLRQ SURJUDP DQG DPRQJ RWKHU WKLQJV LQFUHDVHG LWV VL]H IURP WR DQG H[WHQGHG LWV WHUP WR D WKUHH \HDU FRPPLWPHQW PDWXULQJ LQ 0DUFK 7KH DVVHW VHFXULWL]DWLRQ SURJUDP LV FRQGXFWHG WKURXJK $UURZ (OHFWURQLFV )XQGLQJ &RUSRUDWLRQ ³$)&´ D ZKROO\ RZQHG EDQNUXSWF\ UHPRWH VXEVLGLDU\ 7KH DVVHW VHFXULWL]DWLRQ SURJUDP GRHV QRW TXDOLI\ IRU VDOH WUHDWPHQW XQGHU )$6% 6WDWHPHQW 1R ³$FFRXQWLQJ IRU 7UDQVIHUV DQG 6HUYLFLQJ RI )LQDQFLDO $VVHWV DQG ([WLQJXLVKPHQWV RI /LDELOLWLHV ´ $FFRUGLQJO\ WKH DFFRXQWV UHFHLYDEOH DQG UHODWHG GHEW REOLJDWLRQ UHPDLQ RQ WKH FRPSDQ\¶V FRQVROLGDWHG EDODQFH VKHHW ,QWHUHVW RQ ERUURZLQJV LV EDVHG RQ D EDVH UDWH RU D FRPPHUFLDO SDSHU UDWH SOXV D VSUHDG ZKLFK LV EDVHG RQ WKH FRPSDQ\¶V FUHGLW UDWLQJV DW 'HFHPEHU 7KH IDFLOLW\ IHH LV 7KH FRPSDQ\ KDG QR RXWVWDQGLQJ ERUURZLQJV XQGHU WKH SURJUDP DW 'HFHPEHU DQG $FFRXQWV UHFHLYDEOH QHW FRQVLVWV RI WKH IROORZLQJ DW 'HFHPEHU $FFRXQWV UHFHLYDEOH $OORZDQFH IRU GRXEWIXO DFFRXQWV $FFRXQWV UHFHLYDEOH QHW

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

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

6KRUW WHUP ERUURZLQJV LQ YDULRXV FRXQWULHV DUH SULPDULO\ XWLOL]HG WR VXSSRUW WKH ZRUNLQJ FDSLWDO UHTXLUHPHQWV RI FHUWDLQ LQWHUQDWLRQDO RSHUDWLRQV 7KH ZHLJKWHG DYHUDJH LQWHUHVW UDWHV RQ WKHVH ERUURZLQJV DW 'HFHPEHU DQG ZHUH DQG UHVSHFWLYHO\ /RQJ WHUP GHEW FRQVLVWV RI WKH IROORZLQJ DW 'HFHPEHU VHQLRU QRWHV GXH %DQN WHUP ORDQ GXH VHQLRU QRWHV GXH VHQLRU GHEHQWXUHV GXH VHQLRU GHEHQWXUHV GXH &URVV FXUUHQF\ VZDS GXH &URVV FXUUHQF\ VZDS GXH ,QWHUHVW UDWH VZDSV 2WKHU REOLJDWLRQV ZLWK YDULRXV LQWHUHVW UDWHV DQG GXH GDWHV

7KH VHQLRU GHEHQWXUHV DUH QRW UHGHHPDEOH SULRU WR WKHLU PDWXULW\ 7KH VHQLRU QRWHV VHQLRU QRWHV DQG VHQLRU GHEHQWXUHV PD\ EH FDOOHG DW WKH RSWLRQ RI WKH FRPSDQ\ VXEMHFW WR ³PDNH ZKROH´ FODXVHV 7KH HVWLPDWHG IDLU PDUNHW YDOXH DW 'HFHPEHU DV D SHUFHQWDJH RI SDU YDOXH LV DV IROORZV VHQLRU QRWHV GXH VHQLRU QRWHV GXH VHQLRU QRWHV GXH VHQLRU GHEHQWXUHV GXH VHQLRU GHEHQWXUHV GXH

7KH FRPSDQ\¶V EDQN WHUP ORDQ FURVV FXUUHQF\ VZDSV LQWHUHVW UDWH VZDSV DQG RWKHU REOLJDWLRQV DSSUR[LPDWH WKHLU IDLU YDOXH

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

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¶V FUHGLW UDWLQJV DW 'HFHPEHU 7KH FRPSDQ\ KDG QR RXWVWDQGLQJ ERUURZLQJV XQGHU WKH FUHGLW IDFLOLW\ DW 'HFHPEHU DQG 7KH FUHGLW IDFLOLW\ PDWXUHV LQ -DQXDU\ 7KH IDFLOLW\ IHH UHODWHG WR WKH FUHGLW IDFLOLW\ LV 7KH WHUP ORDQ LV UHSD\DEOH LQ IXOO LQ -DQXDU\ ,QWHUHVW RQ WKH WHUP ORDQ LV EDVHG RQ D EDVH UDWH RU D HXUR FXUUHQF\ UDWH SOXV D VSUHDG EDVHG RQ WKH FRPSDQ\¶V FUHGLW UDWLQJV DW 'HFHPEHU 7KH UHYROYLQJ FUHGLW IDFLOLW\ DQG WKH DVVHW VHFXULWL]DWLRQ SURJUDP LQFOXGH WHUPV DQG FRQGLWLRQV ZKLFK OLPLW WKH LQFXUUHQFH RI DGGLWLRQDO ERUURZLQJV OLPLW WKH FRPSDQ\¶V DELOLW\ WR SD\ FDVK GLYLGHQGV RU UHSXUFKDVH VWRFN DQG UHTXLUH WKDW FHUWDLQ ILQDQFLDO UDWLRV EH PDLQWDLQHG DW GHVLJQDWHG OHYHOV 7KH FRPSDQ\ ZDV LQ FRPSOLDQFH ZLWK DOO RI WKH FRYHQDQWV DV RI 'HFHPEHU 7KH FRPSDQ\ LV FXUUHQWO\ QRW DZDUH RI DQ\ HYHQWV ZKLFK ZRXOG FDXVH QRQ FRPSOLDQFH LQ WKH IXWXUH 'XULQJ WKH FRPSDQ\ UHGHHPHG WKH WRWDO DPRXQW RXWVWDQGLQJ RI SULQFLSDO DPRXQW DFFUHWHG YDOXH RI LWV ]HUR FRXSRQ FRQYHUWLEOH GHEHQWXUHV GXH LQ ³FRQYHUWLEOH GHEHQWXUHV´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͎ WKH ³ FURVV FXUUHQF\ VZDS´ WR KHGJH D SRUWLRQ RI LWV QHW LQYHVWPHQW LQ HXUR GHQRPLQDWHG QHW DVVHWV 7KH FURVV FXUUHQF\ VZDS LV GHVLJQDWHG DV D QHW LQYHVWPHQW KHGJH DQG HIIHFWLYHO\ FRQYHUWV WKH LQWHUHVW H[SHQVH RQ RI ORQJ WHUP GHEW IURP 8 6 GROODUV WR HXURV $V WKH QRWLRQDO DPRXQW RI WKH FURVV FXUUHQF\ VZDS LV H[SHFWHG WR HTXDO D

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

FRPSDUDEOH DPRXQW RI KHGJHG QHW DVVHWV QR PDWHULDO LQHIIHFWLYHQHVV LV H[SHFWHG 7KH FURVV FXUUHQF\ VZDS KDG D QHJDWLYH IDLU YDOXH RI DQG DW 'HFHPEHU DQG UHVSHFWLYHO\ ,Q 2FWREHU WKH FRPSDQ\ HQWHUHG LQWR D FURVV FXUUHQF\ VZDS ZLWK D PDWXULW\ GDWH RI 2FWREHU IRU DSSUR[LPDWHO\ RU ͎ WKH ³ FURVV FXUUHQF\ VZDS´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³IRUHLJQ H[FKDQJH FRQWUDFWV´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³ VZDS´ ZLWK D QRWLRQDO DPRXQW RI 7KH VZDS PRGLILHV WKH FRPSDQ\¶V LQWHUHVW UDWH H[SRVXUH E\ HIIHFWLYHO\ FRQYHUWLQJ WKH YDULDEOH UDWH DW 'HFHPEHU RQ D SRUWLRQ RI LWV WHUP ORDQ WR D IL[HG UDWH RI SHU DQQXP WKURXJK 'HFHPEHU 7KH VZDS LV FODVVLILHG DV D FDVK IORZ KHGJH DQG KDG D QHJDWLYH IDLU YDOXH RI DW 'HFHPEHU ,Q -DQXDU\ WKH FRPSDQ\ HQWHUHG LQWR DQ LQWHUHVW UDWH VZDS WKH ³ VZDS´ ZLWK D QRWLRQDO DPRXQW RI 7KH VZDS PRGLILHV WKH FRPSDQ\¶V LQWHUHVW UDWH H[SRVXUH E\ HIIHFWLYHO\ FRQYHUWLQJ WKH YDULDEOH UDWH DW -DQXDU\ RQ D SRUWLRQ RI LWV WHUP ORDQ WR D IL[HG UDWH RI SHU DQQXP WKURXJK 'HFHPEHU ,Q -XQH WKH FRPSDQ\ HQWHUHG LQWR D VHULHV RI LQWHUHVW UDWH VZDSV WKH ³ VZDSV´ ZLWK DQ DJJUHJDWH QRWLRQDO DPRXQW RI 7KH VZDSV PRGLI\ WKH FRPSDQ\¶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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

,QFRPH 7D[HV 7KH SURYLVLRQ IRU LQFRPH WD[HV IRU WKH \HDUV HQGHG 'HFHPEHU FRQVLVWV RI WKH IROORZLQJ &XUUHQW )HGHUDO 6WDWH ,QWHUQDWLRQDO 'HIHUUHG )HGHUDO 6WDWH ,QWHUQDWLRQDO

7KH SULQFLSDO FDXVHV RI WKH GLIIHUHQFH EHWZHHQ WKH 8 6 IHGHUDO VWDWXWRU\ WD[ UDWH RI DQG HIIHFWLYH LQFRPH WD[ UDWHV IRU WKH \HDUV HQGHG 'HFHPEHU DUH DV IROORZV 8QLWHG 6WDWHV ,QWHUQDWLRQDO ,QFRPH EHIRUH LQFRPH WD[HV DQG PLQRULW\ LQWHUHVW 3URYLVLRQ DW VWDWXWRU\ UDWH 6WDWH WD[HV QHW RI IHGHUDO EHQHILW ,QWHUQDWLRQDO HIIHFWLYH WD[ UDWH GLIIHUHQWLDO

2WKHU QRQ GHGXFWLEOH H[SHQVHV &KDQJHV LQ WD[ DFFUXDOV DQG UHVHUYHV 2WKHU

3URYLVLRQ IRU LQFRPH WD[HV

'XULQJ WKH FRPSDQ\ UHFRUGHG DQ LQFRPH WD[ EHQHILW RI QHW SULQFLSDOO\ GXH WR D UHGXFWLRQ LQ GHIHUUHG LQFRPH WD[HV DV D UHVXOW RI WKH VWDWXWRU\ WD[ UDWH FKDQJH LQ *HUPDQ\ 7KHVH GHIHUUHG LQFRPH WD[HV SULPDULO\ UHODWHG WR WKH DPRUWL]DWLRQ RI LQWDQJLEOH DVVHWV IRU LQFRPH WD[ SXUSRVHV ZKLFK DUH QRW DPRUWL]HG IRU DFFRXQWLQJ SXUSRVHV 'XULQJ WKH FRPSDQ\ VHWWOHG FHUWDLQ LQFRPH WD[ PDWWHUV FRYHULQJ PXOWLSOH \HDUV $V D UHVXOW RI WKH VHWWOHPHQW RI WKH WD[ PDWWHUV WKH FRPSDQ\ UHFRUGHG D UHGXFWLRQ RI LQ ³3URYLVLRQ IRU LQFRPH WD[HV ´ RI ZKLFK UHODWHG WR WD[ \HDUV SULRU WR LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG VWDWHPHQWV RI RSHUDWLRQV ,Q FRQQHFWLRQ ZLWK WKH VHWWOHPHQW RI WKH WD[ PDWWHUV DQ DFFUXDO RI QHW RI UHODWHG WD[HV IRU UHODWHG LQWHUHVW FRVWV RI ZKLFK UHODWHG WR WD[ \HDUV SULRU WR ZDV UHYHUVHG DQG DFFRUGLQJO\ WKH FRPSDQ\ UHFRUGHG D UHGXFWLRQ LQ ³,QWHUHVW H[SHQVH QHW´ LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG VWDWHPHQWV RI RSHUDWLRQV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

(IIHFWLYH -DQXDU\ WKH FRPSDQ\ DGRSWHG WKH SURYLVLRQV RI )$6% ,QWHUSUHWDWLRQ 1R ³$FFRXQWLQJ IRU 8QFHUWDLQW\ LQ ,QFRPH 7D[HV ² DQ LQWHUSUHWDWLRQ RI )$6% 6WDWHPHQW 1R ´ ³),1 ´ ),1 SUHVFULEHV D UHFRJQLWLRQ WKUHVKROG DQG D PHDVXUHPHQW DWWULEXWH IRU WKH ILQDQFLDO VWDWHPHQW UHFRJQLWLRQ DQG PHDVXUHPHQW RI WD[ SRVLWLRQV WDNHQ RU H[SHFWHG WR EH WDNHQ LQ D WD[ UHWXUQ )RU WKRVH EHQHILWV WR EH UHFRJQL]HG D WD[ SRVLWLRQ PXVW EH PRUH OLNHO\ WKDQ QRW WR EH VXVWDLQHG XSRQ H[DPLQDWLRQ E\ WD[LQJ DXWKRULWLHV 7KHUH ZDV QRW D PDWHULDO LPSDFW RQ WKH FRPSDQ\¶V FRQVROLGDWHG ILQDQFLDO SRVLWLRQ DQG UHVXOWV RI RSHUDWLRQV DV D UHVXOW RI WKH DGRSWLRQ RI WKH SURYLVLRQV RI ),1 $W 'HFHPEHU WKH FRPSDQ\ KDG D OLDELOLW\ IRU XQUHFRJQL]HG WD[ EHQHILWV RI RI ZKLFK LI UHFRJQL]HG ZRXOG IDYRUDEO\ DIIHFW WKH FRPSDQ\¶V HIIHFWLYH WD[ UDWH DQG DQ DFFUXDO RI IRU WKH SD\PHQW RI UHODWHG LQWHUHVW 7KH FRPSDQ\ GRHV QRW EHOLHYH WKHUH ZLOO EH DQ\ PDWHULDO FKDQJHV LQ LWV XQUHFRJQL]HG WD[ SRVLWLRQV RYHU WKH QH[W WZHOYH PRQWKV ,QWHUHVW FRVWV UHODWHG WR XQUHFRJQL]HG WD[ EHQHILWV DUH FODVVLILHG DV D FRPSRQHQW RI ³,QWHUHVW H[SHQVH QHW´ LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG VWDWHPHQWV RI RSHUDWLRQV 3HQDOWLHV LI DQ\ DUH UHFRJQL]HG DV D FRPSRQHQW RI ³6HOOLQJ JHQHUDO DQG DGPLQLVWUDWLYH H[SHQVHV ´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

,Q PDQ\ FDVHV WKH FRPSDQ\¶V XQFHUWDLQ WD[ SRVLWLRQV DUH UHODWHG WR WD[ \HDUV WKDW UHPDLQ VXEMHFW WR H[DPLQDWLRQ E\ WD[ DXWKRULWLHV 7KH IROORZLQJ GHVFULEHV WKH RSHQ WD[ \HDUV E\ PDMRU WD[ MXULVGLFWLRQ DV RI 'HFHPEHU 8QLWHG 6WDWHV ± )HGHUDO ± SUHVHQW 8QLWHG 6WDWHV ± 6WDWH ± SUHVHQW *HUPDQ\ D

± SUHVHQW +RQJ .RQJ ± SUHVHQW ,WDO\ D

± SUHVHQW 6ZHGHQ ± SUHVHQW 8QLWHG .LQJGRP ± SUHVHQW D ,QFOXGHV IHGHUDO DV ZHOO DV ORFDO MXULVGLFWLRQV 'HIHUUHG LQFRPH WD[HV DUH SURYLGHG IRU WKH HIIHFWV RI WHPSRUDU\ GLIIHUHQFHV EHWZHHQ WKH WD[ EDVLV RI DQ DVVHW RU OLDELOLW\ DQG LWV UHSRUWHG DPRXQW LQ WKH FRQVROLGDWHG EDODQFH VKHHWV 7KHVH WHPSRUDU\ GLIIHUHQFHV UHVXOW LQ WD[DEOH RU GHGXFWLEOH DPRXQWV LQ IXWXUH \HDUV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

7KH VLJQLILFDQW FRPSRQHQWV RI WKH FRPSDQ\¶V GHIHUUHG WD[ DVVHWV DQG OLDELOLWLHV LQFOXGHG SULPDULO\ LQ ³3UHSDLG H[SHQVHV DQG RWKHU DVVHWV ´ ³2WKHU DVVHWV ´ DQG ³2WKHU OLDELOLWLHV´ LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG EDODQFH VKHHWV FRQVLVW RI WKH IROORZLQJ DW 'HFHPEHU 'HIHUUHG WD[ DVVHWV 1HW RSHUDWLQJ ORVV FDUU\IRUZDUGV &DSLWDO ORVV FDUU\IRUZDUGV ,QYHQWRU\ DGMXVWPHQWV $OORZDQFH IRU GRXEWIXO DFFRXQWV $FFUXHG H[SHQVHV 3HQVLRQ FRVWV 'HULYDWLYH ILQDQFLDO LQVWUXPHQWV ,QWHJUDWLRQ DQG UHVWUXFWXULQJ UHVHUYHV 2WKHU 9DOXDWLRQ DOORZDQFH

7RWDO GHIHUUHG WD[ DVVHWV 'HIHUUHG WD[ OLDELOLWLHV *RRGZLOO

2WKHU

7RWDO GHIHUUHG WD[ OLDELOLWLHV

7RWDO QHW GHIHUUHG WD[ DVVHWV

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¶V LQWHUQDWLRQDO RSHUDWLRQV ,QFRPH WD[HV SDLG QHW RI LQFRPH WD[HV UHIXQGHG DPRXQWHG WR DQG LQ DQG UHVSHFWLYHO\ 5HVWUXFWXULQJ ,QWHJUDWLRQ DQG 2WKHU &KDUJHV 7KH FRPSDQ\ UHFRUGHG UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJHV RI QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV DQG QHW RI UHODWHG WD[HV RU DQG SHU VKDUH

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

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¶V FRQWLQXHG HIIRUWV WR UHGXFH UHDO HVWDWH FRVWV DQG LQWHJUDWLRQ FKDUJHV RI SULPDULO\ UHODWHG WR WKH DFTXLVLWLRQ RI .H\/LQN 7KH IROORZLQJ WDEOH SUHVHQWV WKH UHVWUXFWXULQJ FKDUJH DQG DFWLYLW\ IRU 3HUVRQQHO &RVWV 5HVWUXFWXULQJ FKDUJH 3D\PHQWV SURFHHGV )RUHLJQ FXUUHQF\ WUDQVODWLRQ 'HFHPEHU

)DFLOLWLHV

2WKHU

7RWDO

7KH UHVWUXFWXULQJ FKDUJH RI LQ LQFOXGHV SHUVRQQHO FRVWV RI UHODWHG WR WKH HOLPLQDWLRQ RI DSSUR[LPDWHO\ SRVLWLRQV SULPDULO\ ZLWKLQ PXOWLSOH IXQFWLRQV LQ 1RUWK $PHULFD ZLWKLQ WKH FRPSDQ\¶V JOREDO FRPSRQHQWV EXVLQHVV VHJPHQW UHODWHG WR WKH FRPSDQ\¶V FRQWLQXHG IRFXV RQ RSHUDWLRQDO HIILFLHQF\ )DFLOLWLHV LQFOXGHV D UHVWUXFWXULQJ FUHGLW RI SULPDULO\ UHODWHG WR D JDLQ RQ WKH VDOH RI WKH +DUORZ (QJODQG IDFLOLW\ RI WKDW ZDV YDFDWHG LQ RIIVHW E\ IDFLOLWLHV FRVWV RI SULPDULO\ UHODWHG WR H[LW DFWLYLWLHV IRU D YDFDWHG IDFLOLW\ LQ (XURSH GXH WR WKH FRPSDQ\¶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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\

2WKHU

7RWDO


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

7KH UHVWUXFWXULQJ FKDUJH RI LQ LQFOXGHV SHUVRQQHO FRVWV RI UHODWHG WR WKH HOLPLQDWLRQ RI DSSUR[LPDWHO\ SRVLWLRQV SULPDULO\ ZLWKLQ PXOWLSOH IXQFWLRQV LQ 1RUWK $PHULFD ZLWKLQ WKH FRPSDQ\¶V JOREDO FRPSRQHQWV EXVLQHVV VHJPHQW UHODWHG WR WKH RXWVRXUFLQJ RI FHUWDLQ DGPLQLVWUDWLYH IXQFWLRQV DQG WKH FORVXUH RI D ZDUHKRXVH IDFLOLW\ )DFLOLWLHV FRVWV RI UHODWHG WR H[LW DFWLYLWLHV IRU WKUHH YDFDWHG IDFLOLWLHV LQ (XURSH GXH WR WKH FRPSDQ\¶V FRQWLQXHG HIIRUWV WR UHGXFH UHDO HVWDWH FRVWV $OVR LQFOXGHG LQ WKH UHVWUXFWXULQJ FKDUJH LV D FKDUJH UHODWHG WR WKH ZULWH GRZQ RI FHUWDLQ FDSLWDOL]HG VRIWZDUH LQ (XURSH RI 7KLV ZULWH GRZQ UHVXOWHG IURP WKH FRPSDQ\¶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

3D\PHQWV SURFHHGV 1RQ FDVK XVDJH )RUHLJQ FXUUHQF\ WUDQVODWLRQ 'HFHPEHU 5HVWUXFWXULQJ FKDUJH FUHGLW

3D\PHQWV )RUHLJQ FXUUHQF\ WUDQVODWLRQ 'HFHPEHU 5HVWUXFWXULQJ FKDUJH FUHGLW

3D\PHQWV 'HFHPEHU

2WKHU

7RWDO

7KH UHVWUXFWXULQJ FKDUJH RI LQ LQFOXGHV SHUVRQQHO FRVWV RI UHODWHG WR WKH HOLPLQDWLRQ RI DSSUR[LPDWHO\ SRVLWLRQV DFURVV PXOWLSOH ORFDWLRQV SULPDULO\ ZLWKLQ WKH FRPSDQ\¶V JOREDO FRPSRQHQWV EXVLQHVV VHJPHQW DQG VKDUHG VHUYLFH IXQFWLRQ UHODWHG WR WKH FRPSDQ\¶V FRQWLQXHG IRFXV RQ RSHUDWLRQDO HIILFLHQF\ )DFLOLWLHV LQFOXGHV D UHVWUXFWXULQJ FUHGLW RI SULPDULO\ UHODWHG WR D JDLQ RQ WKH VDOH RI D IDFLOLW\ LQ 1RUWK $PHULFD RI WKDW ZDV YDFDWHG LQ GXH WR WKH FRPSDQ\¶V FRQWLQXHG HIIRUWV WR UHGXFH UHDO HVWDWH FRVWV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

5HVWUXFWXULQJ $FFUXDO 5HODWHG WR 2WKHU $FWLRQV 7DNHQ 3ULRU WR 7KH IROORZLQJ WDEOH SUHVHQWV WKH DFWLYLW\ GXULQJ DQG LQ WKH UHPDLQLQJ UHVWUXFWXULQJ DFFUXDO UHODWHG WR RWKHU DFWLRQV WDNHQ SULRU WR 3HUVRQQHO &RVWV )DFLOLWLHV 2WKHU 7RWDO 'HFHPEHU 5HVWUXFWXULQJ FKDUJH FUHGLW

3D\PHQWV

5HFODVVLILFDWLRQ 1RQ FDVK XVDJH

)RUHLJQ FXUUHQF\ WUDQVODWLRQ

'HFHPEHU 5HVWUXFWXULQJ FKDUJH FUHGLW

3D\PHQWV

)RUHLJQ FXUUHQF\ WUDQVODWLRQ

'HFHPEHU 5HVWUXFWXULQJ FKDUJH FUHGLW

3D\PHQWV

)RUHLJQ FXUUHQF\ WUDQVODWLRQ 'HFHPEHU

,QWHJUDWLRQ ,QFOXGHG LQ WKH UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJHV UHIHUHQFHG DERYH LQ LV DQ LQWHJUDWLRQ FKDUJH RI SULPDULO\ UHODWHG WR WKH DFTXLVLWLRQ RI .H\/LQN 7KH IROORZLQJ WDEOH SUHVHQWV WKH LQWHJUDWLRQ FKDUJH DQG DFWLYLW\ IRU DQG 3HUVRQQHO &RVWV )DFLOLWLHV 'HFHPEHU ,QWHJUDWLRQ FRVWV D

3D\PHQWV 5HFODVVLILFDWLRQ )RUHLJQ FXUUHQF\ WUDQVODWLRQ 'HFHPEHU 3D\PHQWV 5HFODVVLILFDWLRQ 1RQ FDVK XVDJH )RUHLJQ FXUUHQF\ WUDQVODWLRQ 'HFHPEHU ,QWHJUDWLRQ FRVWV E

3D\PHQWV )RUHLJQ FXUUHQF\ WUDQVODWLRQ 'HFHPEHU

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\

2WKHU

7RWDO


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

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‡ 7KH SHUVRQQHO FRVWV DFFUXDOV RI WR FRYHU FRVWV DVVRFLDWHG ZLWK WKH WHUPLQDWLRQ RI SHUVRQQHO ZKLFK DUH SULPDULO\ H[SHFWHG WR EH VSHQW ZLWKLQ RQH \HDU ‡ 7KH IDFLOLWLHV DFFUXDOV WRWDOLQJ UHODWH WR YDFDWHG OHDVHV ZLWK VFKHGXOHG SD\PHQWV RI LQ LQ LQ LQ LQ DQG WKHUHDIWHU ‡ 2WKHU DFFUXDOV RI DUH H[SHFWHG WR EH XWLOL]HG RYHU VHYHUDO \HDUV $FTXLVLWLRQ ,QGHPQLILFDWLRQ ,Q 7HNHOHF (XURSH 6$ ³7HNHOHF´ D )UHQFK VXEVLGLDU\ RI WKH FRPSDQ\ HQWHUHG LQWR D VHWWOHPHQW DJUHHPHQW ZLWK 7HNHOHF $LUWURQLF 6$ ³$LUWURQLF´ SXUVXDQW WR ZKLFK $LUWURQLF SDLG ¼ DSSUR[LPDWHO\ WR 7HNHOHF LQ IXOO VHWWOHPHQW RI DOO RI 7HNHOHF¶V FODLPV IRU LQGHPQLILFDWLRQ XQGHU WKH SXUFKDVH DJUHHPHQW 7KH FRPSDQ\ UHFRUGHG WKH QHW DPRXQW RI WKH VHWWOHPHQW RI QHW RI UHODWHG WD[HV RU SHU VKDUH RQ D EDVLF EDVLV DV DQ DFTXLVLWLRQ LQGHPQLILFDWLRQ FUHGLW 6KDUHKROGHUV¶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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\

7UHDVXU\ 6WRFN

&RPPRQ 6WRFN 2XWVWDQGLQJ


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

7KH FRPSDQ\ KDV DXWKRUL]HG VKDUHV RI VHULDO SUHIHUUHG VWRFN ZLWK D SDU YDOXH RI RQH GROODU 7KHUH ZHUH QR VKDUHV RI VHULDO SUHIHUUHG VWRFN RXWVWDQGLQJ DW 'HFHPEHU DQG ,Q WKH FRPSDQ\ SDLG D GLYLGHQG RI RQH SUHIHUUHG VKDUH SXUFKDVH ULJKW RQ HDFK RXWVWDQGLQJ VKDUH RI FRPPRQ VWRFN (DFK ULJKW DV DPHQGHG HQWLWOHV D VKDUHKROGHU WR SXUFKDVH RQH RQH KXQGUHGWK RI D VKDUH RI D QHZ VHULHV RI SUHIHUUHG VWRFN DW DQ H[HUFLVH SULFH RI ILIW\ GROODUV WKH ³H[HUFLVH SULFH´ 7KH ULJKWV DUH H[HUFLVDEOH RQO\ LI D SHUVRQ RU JURXS DFTXLUHV RU PRUH RI WKH FRPSDQ\¶V FRPPRQ VWRFN RU DQQRXQFHV D WHQGHU RU H[FKDQJH RIIHU WKDW ZLOO UHVXOW LQ VXFK SHUVRQ RU JURXS DFTXLULQJ RU PRUH RI WKH FRPSDQ\¶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¶V RXWVWDQGLQJ FRPPRQ VWRFN WKURXJK D VKDUH UHSXUFKDVH SURJUDP WKH ³SURJUDP´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¶V RXWVWDQGLQJ FRPPRQ VWRFN LQ VXFK DPRXQWV DV WR RIIVHW WKH GLOXWLRQ IURP WKH H[HUFLVH RI VWRFN RSWLRQV DQG RWKHU VWRFN EDVHG FRPSHQVDWLRQ SODQV 1HW ,QFRPH 3HU 6KDUH 7KH IROORZLQJ WDEOH VHWV IRUWK WKH FDOFXODWLRQ RI QHW LQFRPH SHU VKDUH RQ D EDVLF DQG GLOXWHG EDVLV IRU WKH \HDUV HQGHG 'HFHPEHU VKDUHV LQ WKRXVDQGV 1HW LQFRPH DV UHSRUWHG $GMXVWPHQW IRU LQWHUHVW H[SHQVH RQ FRQYHUWLEOH GHEHQWXUHV QHW RI WD[ 1HW LQFRPH DV DGMXVWHG 1HW LQFRPH SHU VKDUH %DVLF 'LOXWHG D

:HLJKWHG DYHUDJH VKDUHV RXWVWDQGLQJ EDVLF 1HW HIIHFW RI YDULRXV GLOXWLYH VWRFN EDVHG FRPSHQVDWLRQ DZDUGV 1HW HIIHFW RI GLOXWLYH FRQYHUWLEOH GHEHQWXUHV :HLJKWHG DYHUDJH VKDUHV RXWVWDQGLQJ GLOXWHG

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

D 7KH HIIHFW RI RSWLRQV WR SXUFKDVH DQG VKDUHV IRU WKH \HDUV HQGHG 'HFHPEHU DQG UHVSHFWLYHO\ ZDV H[FOXGHG IURP WKH FDOFXODWLRQ RI QHW LQFRPH SHU VKDUH RQ D GLOXWHG EDVLV DV WKHLU HIIHFW LV DQWL GLOXWLYH (PSOR\HH 6WRFN 3ODQV 2PQLEXV 3ODQ 7KH FRPSDQ\ PDLQWDLQV WKH $UURZ (OHFWURQLFV ,QF 2PQLEXV ,QFHQWLYH 3ODQ WKH ³2PQLEXV 3ODQ´ ZKLFK UHSODFHG WKH $UURZ (OHFWURQLFV ,QF 6WRFN 2SWLRQ 3ODQ WKH $UURZ (OHFWURQLFV ,QF 5HVWULFWHG 6WRFN 3ODQ WKH 1RQ (PSOR\HH 'LUHFWRUV 6WRFN 2SWLRQ 3ODQ WKH 1RQ (PSOR\HH 'LUHFWRUV 'HIHUUDO 3ODQ DQG WKH &(2 %RQXV 3ODQ FROOHFWLYHO\ WKH ³3ULRU 3ODQV´ 7KH 2PQLEXV 3ODQ EURDGHQV WKH DUUD\ RI HTXLW\ DOWHUQDWLYHV DYDLODEOH WR WKH FRPSDQ\ ZKHQ GHVLJQLQJ FRPSHQVDWLRQ LQFHQWLYHV 7KH 2PQLEXV 3ODQ SHUPLWV WKH JUDQW RI FDVK EDVHG DZDUGV QRQ TXDOLILHG VWRFN RSWLRQV LQFHQWLYH VWRFN RSWLRQV ³,62V´ VWRFN DSSUHFLDWLRQ ULJKWV UHVWULFWHG VWRFN UHVWULFWHG VWRFN XQLWV SHUIRUPDQFH VKDUHV SHUIRUPDQFH XQLWV FRYHUHG HPSOR\HH DQQXDO LQFHQWLYH DZDUGV DQG RWKHU VWRFN EDVHG DZDUGV 7KH &RPSHQVDWLRQ &RPPLWWHH RI WKH FRPSDQ\¶V %RDUG RI 'LUHFWRUV WKH ³&RPSHQVDWLRQ &RPPLWWHH´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¶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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\

$JJUHJDWH ,QWULQVLF 9DOXH


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

7KH DJJUHJDWH LQWULQVLF YDOXH LQ WKH WDEOH DERYH UHSUHVHQWV WKH WRWDO SUH WD[ LQWULQVLF YDOXH WKH GLIIHUHQFH EHWZHHQ WKH FRPSDQ\¶V FORVLQJ VWRFN SULFH RQ WKH ODVW WUDGLQJ GD\ RI DQG WKH H[HUFLVH SULFH PXOWLSOLHG E\ WKH QXPEHU RI LQ WKH PRQH\ RSWLRQV WKDW ZRXOG KDYH EHHQ UHFHLYHG E\ WKH RSWLRQ KROGHUV KDG DOO RSWLRQ KROGHUV H[HUFLVHG WKHLU RSWLRQV RQ 'HFHPEHU 7KLV DPRXQW FKDQJHV EDVHG RQ WKH PDUNHW YDOXH RI WKH FRPSDQ\¶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¶V FRPPRQ VWRFN RQ WKH GDWH RI JUDQW 6XFK DZDUGV ZLOO EH HDUQHG RQO\ LI SHUIRUPDQFH JRDOV RYHU SHUIRUPDQFH SHULRGV HVWDEOLVKHG E\ RU XQGHU WKH GLUHFWLRQ RI WKH &RPSHQVDWLRQ &RPPLWWHH DUH PHW 7KH SHUIRUPDQFH JRDOV DQG SHULRGV PD\ YDU\ IURP SDUWLFLSDQW WR SDUWLFLSDQW JURXS WR JURXS DQG WLPH WR WLPH 7KH SHUIRUPDQFH VKDUHV ZLOO EH GHOLYHUHG LQ FRPPRQ VWRFN DW WKH HQG RI WKH VHUYLFH SHULRG EDVHG RQ WKH FRPSDQ\¶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¶V %RDUG RI 'LUHFWRUV WKH ³%RDUG´ VKDOO VHW WKH DPRXQWV DQG W\SHV RI HTXLW\ DZDUGV WKDW VKDOO EH JUDQWHG WR DOO QRQ HPSOR\HH GLUHFWRUV RQ D SHULRGLF QRQGLVFULPLQDWRU\ EDVLV SXUVXDQW WR WKH 2PQLEXV 3ODQ DV ZHOO DV DQ\ DGGLWLRQDO DPRXQWV LI DQ\ WR EH DZDUGHG DOVR RQ D SHULRGLF QRQGLVFULPLQDWRU\ EDVLV EDVHG RQ HDFK RI WKH IROORZLQJ WKH QXPEHU RI FRPPLWWHHV RI WKH %RDUG RQ ZKLFK D QRQ HPSOR\HH GLUHFWRU VHUYHV VHUYLFH RI D QRQ HPSOR\HH GLUHFWRU DV WKH FKDLU RI D &RPPLWWHH RI WKH %RDUG VHUYLFH RI D QRQ HPSOR\HH GLUHFWRU DV &KDLUPDQ RI WKH %RDUG RU /HDG 'LUHFWRU RU WKH ILUVW VHOHFWLRQ RU DSSRLQWPHQW RI DQ LQGLYLGXDO WR WKH %RDUG DV D QRQ HPSOR\HH GLUHFWRU 1RQ HPSOR\HH GLUHFWRUV FXUUHQWO\ UHFHLYH DQQXDO DZDUGV RI UHVWULFWHG VWRFN XQLWV YDOXHG DW 7KH UHVWULFWHG VWRFN XQLWV ZLOO YHVW RQH \HDU IURP GDWH RI JUDQW DQG DUH VXEMHFW WR IXUWKHU UHVWULFWLRQV XQWLO RQH \HDU IROORZLQJ WKH GLUHFWRU¶V VHSDUDWLRQ IURP WKH %RDUG $OO UHVWULFWHG VWRFN XQLWV DUH VHWWOHG LQ FRPPRQ VWRFN DIWHU WKH UHVWULFWLRQ SHULRG 8QOHVV D QRQ HPSOR\HH GLUHFWRU JLYHV QRWLFH VHWWLQJ IRUWK D GLIIHUHQW SHUFHQWDJH RI HDFK GLUHFWRU¶V DQQXDO UHWDLQHU IHH LV GHIHUUHG DQG FRQYHUWHG LQWR XQLWV EDVHG RQ WKH IDLU PDUNHW YDOXH RI WKH FRPSDQ\¶V VWRFN DV RI WKH GDWH LW ZDV SD\DEOH 8SRQ D QRQ HPSOR\HH GLUHFWRU¶V UHWLUHPHQW IURP WKH %RDUG HDFK XQLW LQ WKHLU GHIHUUDO DFFRXQW ZLOO EH FRQYHUWHG LQWR D VKDUH RI FRPSDQ\ VWRFN DQG GLVWULEXWHG WR WKH QRQ

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

HPSOR\HH GLUHFWRU DV VRRQ DV SUDFWLFDEOH IROORZLQJ VXFK GDWH 6XPPDU\ RI 1RQ 9HVWHG 6KDUHV 7KH IROORZLQJ LQIRUPDWLRQ VXPPDUL]HV WKH FKDQJHV LQ QRQ YHVWHG SHUIRUPDQFH VKDUHV UHVWULFWHG VWRFN UHVWULFWHG VWRFN XQLWV DQG QRQ HPSOR\HH GLUHFWRU DZDUGV IRU :HLJKWHG $YHUDJH *UDQW 'DWH 6KDUHV )DLU 9DOXH 1RQ YHVWHG VKDUHV DW 'HFHPEHU *UDQWHG 9HVWHG )RUIHLWHG 1RQ YHVWHG VKDUHV DW 'HFHPEHU

$V RI 'HFHPEHU WKHUH ZDV RI WRWDO XQUHFRJQL]HG FRPSHQVDWLRQ FRVW UHODWHG WR QRQ YHVWHG VKDUHV ZKLFK LV H[SHFWHG WR EH UHFRJQL]HG RYHU D ZHLJKWHG DYHUDJH SHULRG RI \HDUV 7KH WRWDO IDLU YDOXH RI VKDUHV YHVWHG IRU DQG ZDV DQG UHVSHFWLYHO\ 6WRFN 2ZQHUVKLS 3ODQ 7KH FRPSDQ\ PDLQWDLQV D QRQFRQWULEXWRU\ HPSOR\HH VWRFN RZQHUVKLS SODQ ZKLFK HQDEOHV PRVW 1RUWK $PHULFDQ HPSOR\HHV WR DFTXLUH VKDUHV RI WKH FRPSDQ\¶V FRPPRQ VWRFN &RQWULEXWLRQV ZKLFK DUH GHWHUPLQHG E\ WKH %RDUG DUH LQ WKH IRUP RI FRPPRQ VWRFN RU FDVK ZKLFK LV XVHG WR SXUFKDVH WKH FRPSDQ\¶V FRPPRQ VWRFN IRU WKH EHQHILW RI SDUWLFLSDWLQJ HPSOR\HHV &RQWULEXWLRQV WR WKH SODQ IRU DQG DPRXQWHG WR DQG UHVSHFWLYHO\ (PSOR\HH %HQHILW 3ODQV 2Q 'HFHPEHU WKH FRPSDQ\ DGRSWHG WKH SURYLVLRQV RI )$6% 6WDWHPHQW 1R ³(PSOR\HUV¶ $FFRXQWLQJ IRU 'HILQHG %HQHILW 3HQVLRQ DQG 2WKHU 3RVWUHWLUHPHQW 3ODQV DQ DPHQGPHQW RI )$6% 6WDWHPHQWV 1R DQG 5 ´ ³6WDWHPHQW 1R ´ ZKLFK UHTXLUHG WKH FRPSDQ\ WR UHFRJQL]H WKH IXQGHG VWDWXV RI LWV GHILQHG EHQHILW SODQV LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG EDODQFH VKHHW DW 'HFHPEHU ZLWK WKH FRUUHVSRQGLQJ DGMXVWPHQW WR DFFXPXODWHG RWKHU FRPSUHKHQVLYH LQFRPH QHW RI WD[ 7KH DGMXVWPHQW WR DFFXPXODWHG RWKHU FRPSUHKHQVLYH LQFRPH XSRQ DGRSWLRQ UHSUHVHQWV WKH QHW XQUHFRJQL]HG DFWXDULDO ORVVHV XQUHFRJQL]HG SULRU VHUYLFH FRVWV DQG XQUHFRJQL]HG WUDQVLWLRQ REOLJDWLRQ UHPDLQLQJ IURP WKH LQLWLDO DGRSWLRQ RI )$6% 6WDWHPHQW 1R ³(PSOR\HUV¶ $FFRXQWLQJ IRU 3HQVLRQV´ ³6WDWHPHQW 1R ´ ZKLFK ZHUH SUHYLRXVO\ QHWWHG DJDLQVW WKH IXQGHG VWDWXV LQ WKH FRPSDQ\¶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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

7KH LQFUHPHQWDO HIIHFWV RI DGRSWLQJ WKH SURYLVLRQV RI 6WDWHPHQW 1R RQ WKH FRPSDQ\¶V FRQVROLGDWHG EDODQFH VKHHW DW 'HFHPEHU LV DV IROORZV 3ULRU WR (IIHFW RI $GRSWLQJ $GRSWLQJ 6WDWHPHQW 6WDWHPHQW 1R 1R $V 5HSRUWHG 3HQVLRQ DVVHWV ,QWDQJLEOH DVVHWV 1HW GHIHUUHG WD[ DVVHWV 3HQVLRQ OLDELOLWLHV $FFXPXODWHG RWKHU FRPSUHKHQVLYH ORVV

3HQVLRQ DVVHWV DQG LQWDQJLEOH DVVHWV DUH LQFOXGHG LQ ³2WKHU DVVHWV´ LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG EDODQFH VKHHWV 1HW GHIHUUHG WD[ DVVHWV DUH LQFOXGHG SULPDULO\ LQ ³3UHSDLG H[SHQVHV DQG RWKHU DVVHWV ´ ³2WKHU DVVHWV ´ DQG ³2WKHU OLDELOLWLHV´ LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG EDODQFH VKHHWV 3HQVLRQ OLDELOLWLHV DUH LQFOXGHG LQ ³2WKHU OLDELOLWLHV´ LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG EDODQFH VKHHWV $FFXPXODWHG RWKHU FRPSUHKHQVLYH LQFRPH LV LQFOXGHG LQ ³2WKHU´ LQ WKH VKDUHKROGHUV¶ HTXLW\ VHFWLRQ LQ WKH DFFRPSDQ\LQJ FRQVROLGDWHG EDODQFH VKHHWV 3ULRU WR WKH DGRSWLRQ RI 6WDWHPHQW 1R PLQLPXP SHQVLRQ OLDELOLW\ DGMXVWPHQWV ZHUH UHTXLUHG WR UHFRJQL]H D OLDELOLW\ HTXDO WR WKH XQIXQGHG DFFXPXODWHG EHQHILW REOLJDWLRQ $W 'HFHPEHU SULRU WR DGRSWLQJ 6WDWHPHQW 1R WKH FRPSDQ\ KDG DFFXPXODWHG DGGLWLRQDO PLQLPXP SHQVLRQ OLDELOLWLHV RI UHODWHG WR WKH FRPSDQ\¶V HPSOR\HH EHQHILW SODQV ZKLFK ZHUH UHFRUGHG LQ ³2WKHU OLDELOLWLHV´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³6(53´

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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

7KH FRPSDQ\ DFTXLUHG :\OH (OHFWURQLFV ³:\OH´ LQ :\OH DOVR VSRQVRUHG DQ XQIXQGHG 6(53 IRU FHUWDLQ RI LWV H[HFXWLYHV %HQHILW DFFUXDOV IRU WKH :\OH 6(53 ZHUH IUR]HQ DV RI 'HFHPEHU 7KHUH DUH SDUWLFLSDQWV LQ WKLV SODQ 7KH FRPSDQ\ XVHV D 'HFHPEHU PHDVXUHPHQW GDWH IRU WKH $UURZ 6(53 DQG WKH :\OH 6(53 3HQVLRQ LQIRUPDWLRQ IRU WKH \HDUV HQGHG 'HFHPEHU LV DV IROORZV $FFXPXODWHG EHQHILW REOLJDWLRQ &KDQJHV LQ SURMHFWHG EHQHILW REOLJDWLRQ 3URMHFWHG EHQHILW REOLJDWLRQ DW EHJLQQLQJ RI \HDU 6HUYLFH FRVW $UURZ 6(53

,QWHUHVW FRVW $FWXDULDO JDLQ ORVV

%HQHILWV SDLG

3URMHFWHG EHQHILW REOLJDWLRQ DW HQG RI \HDU )XQGHG VWDWXV

&RPSRQHQWV RI QHW SHULRGLF SHQVLRQ FRVW 6HUYLFH FRVW $UURZ 6(53

,QWHUHVW FRVW $PRUWL]DWLRQ RI QHW ORVV $PRUWL]DWLRQ RI SULRU VHUYLFH FRVW $UURZ 6(53

$PRUWL]DWLRQ RI WUDQVLWLRQ REOLJDWLRQ $UURZ 6(53

1HW SHULRGLF SHQVLRQ FRVW :HLJKWHG DYHUDJH DVVXPSWLRQV XVHG WR GHWHUPLQH EHQHILW REOLJDWLRQ 'LVFRXQW UDWH 5DWH RI FRPSHQVDWLRQ LQFUHDVH $UURZ 6(53

:HLJKWHG DYHUDJH DVVXPSWLRQV XVHG WR GHWHUPLQH QHW SHULRGLF SHQVLRQ FRVW 'LVFRXQW UDWH 5DWH RI FRPSHQVDWLRQ LQFUHDVH $UURZ 6(53

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¶V DVVXPSWLRQV XVHG WR GHWHUPLQH WKH EHQHILW REOLJDWLRQ

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

%HQHILW SD\PHQWV DUH H[SHFWHG WR EH SDLG DV IROORZV 'HILQHG %HQHILW 3ODQ :\OH SURYLGHG UHWLUHPHQW EHQHILWV IRU FHUWDLQ HPSOR\HHV XQGHU D GHILQHG EHQHILW SODQ %HQHILWV XQGHU WKLV SODQ ZHUH IUR]HQ DV RI 'HFHPEHU DQG IRUPHU SDUWLFLSDQWV PD\ QRZ SDUWLFLSDWH LQ WKH FRPSDQ\¶V HPSOR\HH VWRFN RZQHUVKLS DQG N SODQV 7KH FRPSDQ\ XVHV D 'HFHPEHU PHDVXUHPHQW GDWH IRU WKLV SODQ 3HQVLRQ LQIRUPDWLRQ IRU WKH \HDUV HQGHG 'HFHPEHU LV DV IROORZV $FFXPXODWHG EHQHILW REOLJDWLRQ &KDQJHV LQ SURMHFWHG EHQHILW REOLJDWLRQ 3URMHFWHG EHQHILW REOLJDWLRQ DW EHJLQQLQJ RI \HDU ,QWHUHVW FRVW $FWXDULDO JDLQ ORVV

%HQHILWV SDLG

3URMHFWHG EHQHILW REOLJDWLRQ DW HQG RI \HDU &KDQJHV LQ SODQ DVVHWV )DLU YDOXH RI SODQ DVVHWV DW EHJLQQLQJ RI \HDU $FWXDO UHWXUQ RQ SODQ DVVHWV %HQHILWV SDLG

)DLU YDOXH RI SODQ DVVHWV DW HQG RI \HDU )XQGHG VWDWXV

&RPSRQHQWV RI QHW SHULRGLF SHQVLRQ FRVW ,QWHUHVW FRVW ([SHFWHG UHWXUQ RQ SODQ DVVHWV

$PRUWL]DWLRQ RI QHW ORVV 1HW SHULRGLF SHQVLRQ FRVW :HLJKWHG DYHUDJH DVVXPSWLRQV XVHG WR GHWHUPLQH EHQHILW REOLJDWLRQ 'LVFRXQW UDWH ([SHFWHG UHWXUQ RQ SODQ DVVHWV :HLJKWHG DYHUDJH DVVXPSWLRQV XVHG WR GHWHUPLQH QHW SHULRGLF SHQVLRQ FRVW 'LVFRXQW UDWH ([SHFWHG UHWXUQ RQ SODQ DVVHWV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

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¶V DVVXPSWLRQV XVHG WR GHWHUPLQH WKH EHQHILW REOLJDWLRQ 7KH FRPSDQ\ PDNHV FRQWULEXWLRQV WR WKH SODQ VR WKDW PLQLPXP FRQWULEXWLRQ UHTXLUHPHQWV DV GHWHUPLQHG E\ JRYHUQPHQW UHJXODWLRQV DUH PHW 7KH FRPSDQ\ ZDV QRW UHTXLUHG WR PDNH D FRQWULEXWLRQ LQ DQG H[SHFWV WR PDNH DQ HVWLPDWHG FRQWULEXWLRQ LQ RI %HQHILW SD\PHQWV DUH H[SHFWHG WR EH SDLG DV IROORZV 7KH SODQ DVVHW DOORFDWLRQV DW 'HFHPEHU DUH DV IROORZV (TXLWLHV )L[HG LQFRPH &DVK

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¶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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

$JJUHJDWH PLQLPXP UHQWDO FRPPLWPHQWV XQGHU DOO QRQ FDQFHODEOH RSHUDWLQJ OHDVHV H[FOXVLYH RI UHDO HVWDWH WD[HV LQVXUDQFH DQG OHDVHV UHODWHG WR IDFLOLWLHV FORVHG DV D UHVXOW RI WKH LQWHJUDWLRQ RI DFTXLUHG EXVLQHVVHV DQG WKH UHVWUXFWXULQJ RI WKH FRPSDQ\ DUH DV IROORZV 7KHUHDIWHU &RQWLQJHQFLHV 7HNHOHF 0DWWHUV ,Q WKH FRPSDQ\ SXUFKDVHG 7HNHOHF IURP $LUWURQLF DQG FHUWDLQ RWKHU VHOOLQJ VKDUHKROGHUV 6XEVHTXHQW WR WKH FORVLQJ RI WKH DFTXLVLWLRQ 7HNHOHF UHFHLYHG D SURGXFW OLDELOLW\ FODLP LQ WKH DPRXQW RI ͎ 7KH SURGXFW OLDELOLW\ FODLP ZDV WKH VXEMHFW RI D )UHQFK OHJDO SURFHHGLQJ VWDUWHG E\ WKH FODLPDQW LQ XQGHU ZKLFK VHSDUDWH GHWHUPLQDWLRQV ZHUH PDGH DV WR ZKHWKHU WKH SURGXFWV WKDW DUH VXEMHFW WR WKH FODLP ZHUH GHIHFWLYH DQG WKH DPRXQW RI GDPDJHV VXVWDLQHG E\ WKH SXUFKDVHU 7KH PDQXIDFWXUHU RI WKH SURGXFWV DOVR SDUWLFLSDWHG LQ WKLV SURFHHGLQJ 7KH FODLPDQW KDV FRPPHQFHG OHJDO SURFHHGLQJV DJDLQVW 7HNHOHF DQG LWV LQVXUHUV WR UHFRYHU GDPDJHV LQ WKH DPRXQW RI ͎ DQG H[SHQVHV RI ͎ SOXV LQWHUHVW (QYLURQPHQWDO DQG 5HODWHG 0DWWHUV :\OH &ODLPV ,Q FRQQHFWLRQ ZLWK WKH SXUFKDVH RI :\OH IURP WKH 9(%$ *URXS ³9(%$´ LQ WKH FRPSDQ\ DVVXPHG FHUWDLQ RI WKH WKHQ RXWVWDQGLQJ REOLJDWLRQV RI :\OH LQFOXGLQJ LWV LQGHPQLILFDWLRQ RI WKH SXUFKDVHUV RI LWV :\OH /DERUDWRULHV GLYLVLRQ IRU HQYLURQPHQWDO FOHDQ XS FRVWV DVVRFLDWHG ZLWK DQ\ WKHQ H[LVWLQJ FRQWDPLQDWLRQ RU YLRODWLRQ RI HQYLURQPHQWDO UHJXODWLRQV 8QGHU WKH WHUPV RI WKH FRPSDQ\¶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±WUDGHG *HUPDQ FRQJORPHUDWH LQ -XQH DQG WKH FRPELQHG HQWLW\ LV QRZ NQRZQ DV ( 21 $* ZKLFK UHPDLQV UHVSRQVLEOH IRU 9(%$¶V OLDELOLWLHV ( 21 $* DFNQRZOHGJHG OLDELOLW\ XQGHU WKH WHUPV RI WKH 9(%$ FRQWUDFW LQ FRQQHFWLRQ ZLWK WKH 1RUFR DQG +XQWVYLOOH VLWHV DQG PDGH DQ LQLWLDO SDUWLDO SD\PHQW 1HLWKHU WKH FRPSDQ\¶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¶ UHVSHFWLYH ULJKWV DQG REOLJDWLRQV LQ FRQQHFWLRQ ZLWK WKH 5LYHUVLGH &RXQW\ OLWLJDWLRQ GLVFXVVHG EHORZ DQG RWKHU FRVWV DVVRFLDWHG ZLWK WKH 1RUFR VLWH 7KH FRXUW KDV UXOHG WKDW WKH HQIRUFHPHQW DQG LQWHUSUHWDWLRQ RI ( 21 $*¶V FRQWUDFWXDO REOLJDWLRQV DUH PDWWHUV IRU D FRXUW LQ *HUPDQ\ D UXOLQJ ZLWK ZKLFK WKH FRPSDQ\ GLVDJUHHV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

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±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± 1RUFR ,Q 2FWREHU WKH FRPSDQ\ HQWHUHG LQWR D FRQVHQW GHFUHH DPRQJ LW :\OH /DERUDWRULHV DQG WKH &DOLIRUQLD 'HSDUWPHQW RI 7R[LF 6XEVWDQFH &RQWURO WKH ³'76&´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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

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¶V QHW FRVWV IRU VXFK LQGHPQLILHG PDWWHUV PD\ YDU\ IURP SHULRG WR SHULRG DV HVWLPDWHV RI UHFRYHULHV DUH QRW DOZD\V UHFRJQL]HG LQ WKH VDPH SHULRG DV WKH DFFUXDO RI HVWLPDWHG H[SHQVHV 'XULQJ WKH FRPSDQ\ UHFRUGHG D FKDUJH RI QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV UHODWHG WR WKH HQYLURQPHQWDO PDWWHUV DULVLQJ RXW RI WKH FRPSDQ\¶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¶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¶V SKLORVRSK\ RI PD[LPL]LQJ RSHUDWLQJ HIILFLHQFLHV WKURXJK WKH FHQWUDOL]DWLRQ RI FHUWDLQ IXQFWLRQV VHOHFWHG IL[HG DVVHWV DQG UHODWHG GHSUHFLDWLRQ DV ZHOO DV ERUURZLQJV DUH QRW GLUHFWO\ DWWULEXWDEOH WR WKH LQGLYLGXDO RSHUDWLQJ VHJPHQWV DQG DUH LQFOXGHG LQ WKH FRUSRUDWH EXVLQHVV VHJPHQW (IIHFWLYH $SULO WKH FRPSDQ\¶V EXVLQHVV VHJPHQWV ZHUH UHDOLJQHG DV SDUW RI WKH FRPSDQ\¶V FRQWLQXHG HIIRUWV WR VWUHQJWKHQ LWV PDUNHW OHDGHUVKLS SRVLWLRQ VWUHDPOLQH WKH EXVLQHVV DQG IXUWKHU OHYHUDJH FRVW V\QHUJLHV JOREDOO\ 7KH FRPSDQ\¶V JOREDO FRPSRQHQWV EXVLQHVV VHJPHQW ZDV IRUPHG WR

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

EULQJ D VLQJOH JOREDO RUJDQL]DWLRQ WR OHYHUDJH WKH FROOHFWLYH HQWHUSULVH WR VSHHG VHUYLFHV DQG VROXWLRQV WR FXVWRPHUV DQG VXSSOLHUV 7KH FRPSDQ\¶V JOREDO (&6 EXVLQHVV VHJPHQW ZDV IRUPHG WR EULQJ D VLQJOH RUJDQL]DWLRQ ZLWK DQ H[SDQGHG JHRJUDSKLF UHDFK LQFUHDVHG H[SRVXUH LQ IDVWHU JURZLQJ SURGXFW VHJPHQWV DQG D PRUH UREXVW FXVWRPHU DQG VXSSOLHU EDVH $V D UHVXOW WKH 8. 0LFURWURQLFD $7' LQ 6SDLQ DQG $UURZ &RPSXWHU 3URGXFWV LQ )UDQFH EXVLQHVVHV SUHYLRXVO\ LQFOXGHG LQ WKH FRPSXWHU SURGXFWV EXVLQHVV VHJPHQW ZHUH WUDQVLWLRQHG LQWR WKH FRPSDQ\¶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

*OREDO (&6 E

&RUSRUDWH D E

&RQVROLGDWHG

D ,QFOXGHV UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJHV RI DQG LQ DQG D FKDUJH UHODWHG WR D SUH DFTXLVLWLRQ ZDUUDQW\ FODLP RI D FKDUJH UHODWHG WR SUH DFTXLVLWLRQ HQYLURQPHQWDO PDWWHUV DULVLQJ RXW RI WKH FRPSDQ\¶V SXUFKDVH RI :\OH RI LQ DQG DQ DFTXLVLWLRQ LQGHPQLILFDWLRQ FUHGLW RI LQ E ,QFOXGHV VWRFN RSWLRQ H[SHQVH RI DQG LQ JOREDO FRPSRQHQWV JOREDO (&6 DQG FRUSRUDWH UHVSHFWLYHO\ LQ DQG DQG LQ JOREDO FRPSRQHQWV JOREDO (&6 DQG FRUSRUDWH UHVSHFWLYHO\ LQ UHVXOWLQJ IURP WKH FRPSDQ\¶V DGRSWLRQ RI 6WDWHPHQW 1R 5 7RWDO DVVHWV E\ VHJPHQW DW 'HFHPEHU DUH DV IROORZV *OREDO FRPSRQHQWV *OREDO (&6 &RUSRUDWH &RQVROLGDWHG

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

6DOHV E\ JHRJUDSKLF DUHD IRU WKH \HDUV HQGHG 'HFHPEHU DUH DV IROORZV 1RUWK $PHULFD F

(0($6$ $VLD 3DFLILF

F ,QFOXGHV VDOHV UHODWHG WR WKH 8QLWHG 6WDWHV RI DQG LQ DQG UHVSHFWLYHO\ 1HW SURSHUW\ SODQW DQG HTXLSPHQW E\ JHRJUDSKLF DUHD DW 'HFHPEHU LV DV IROORZV 1RUWK $PHULFD G

(0($6$ $VLD 3DFLILF

G ,QFOXGHV QHW SURSHUW\ SODQW DQG HTXLSPHQW UHODWHG WR WKH 8QLWHG 6WDWHV RI DQG LQ DQG UHVSHFWLYHO\ 4XDUWHUO\ )LQDQFLDO 'DWD 8QDXGLWHG

$ VXPPDU\ RI WKH FRPSDQ\¶V FRQVROLGDWHG TXDUWHUO\ UHVXOWV RI RSHUDWLRQV DUH DV IROORZV )LUVW 6HFRQG 7KLUG 4XDUWHU 4XDUWHU 4XDUWHU 6DOHV *URVV SURILW 1HW LQFRPH E F G 1HW LQFRPH SHU VKDUH D %DVLF E F G 'LOXWHG E F G 6DOHV *URVV SURILW 1HW LQFRPH I J K 1HW LQFRPH SHU VKDUH D %DVLF I J K 'LOXWHG I J K

)RXUWK 4XDUWHU H

H

H

L

L

L

D 4XDUWHUO\ QHW LQFRPH SHU VKDUH LV FDOFXODWHG XVLQJ WKH ZHLJKWHG DYHUDJH QXPEHU RI VKDUHV RXWVWDQGLQJ GXULQJ HDFK TXDUWHUO\ SHULRG ZKLOH QHW LQFRPH SHU VKDUH IRU WKH IXOO \HDU LV FDOFXODWHG XVLQJ WKH ZHLJKWHG DYHUDJH QXPEHU RI VKDUHV RXWVWDQGLQJ GXULQJ WKH \HDU 7KHUHIRUH WKH VXP RI WKH QHW LQFRPH SHU VKDUH IRU HDFK RI WKH IRXU TXDUWHUV PD\ QRW HTXDO WKH QHW LQFRPH SHU VKDUH IRU WKH IXOO \HDU

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 127(6 72 &2162/,'$7(' ),1$1&,$/ 67$7(0(176 'ROODUV LQ WKRXVDQGV H[FHSW SHU VKDUH GDWD

E ,QFOXGHV D UHVWUXFWXULQJ DQG LQWHJUDWLRQ FUHGLW QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV F ,QFOXGHV D UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJH QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV G ,QFOXGHV D UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJH QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV DQG DQ LQFRPH WD[ EHQHILW QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV SULQFLSDOO\ GXH WR D UHGXFWLRQ LQ GHIHUUHG LQFRPH WD[HV DV D UHVXOW RI WKH VWDWXWRU\ UDWH FKDQJH LQ *HUPDQ\ H ,QFOXGHV D UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJH QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV I ,QFOXGHV D UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJH QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV DQG D ORVV RQ SUHSD\PHQW RI GHEW QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV J ,QFOXGHV D UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJH QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV K ,QFOXGHV D UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJH QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV L ,QFOXGHV D FKDUJH UHODWHG WR D SUH DFTXLVLWLRQ ZDUUDQW\ FODLP QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV D FKDUJH UHODWHG WR WKH SUH DFTXLVLWLRQ HQYLURQPHQWDO PDWWHUV DULVLQJ RXW RI WKH FRPSDQ\¶V SXUFKDVH RI :\OH QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV DQG D UHVWUXFWXULQJ DQG LQWHJUDWLRQ FKDUJH QHW RI UHODWHG WD[HV RU SHU VKDUH RQ ERWK D EDVLF DQG GLOXWHG EDVLV $OVR LQFOXGHV WKH UHGXFWLRQ RI WKH SURYLVLRQ IRU LQFRPH WD[HV RI DQG WKH UHGXFWLRQ RI LQWHUHVW H[SHQVH RI QHW RI UHODWHG WD[HV UHODWHG WR WKH VHWWOHPHQW RI FHUWDLQ LQFRPH WD[ PDWWHUV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

,WHP &KDQJHV LQ DQG 'LVDJUHHPHQWV ZLWK $FFRXQWDQWV RQ $FFRXQWLQJ DQG )LQDQFLDO 'LVFORVXUH 1RQH ,WHP $ &RQWUROV DQG 3URFHGXUHV 'LVFORVXUH &RQWUROV DQG 3URFHGXUHV 7KH FRPSDQ\¶V PDQDJHPHQW XQGHU WKH VXSHUYLVLRQ DQG ZLWK WKH SDUWLFLSDWLRQ RI WKH FRPSDQ\¶V &KLHI ([HFXWLYH 2IILFHU DQG &KLHI )LQDQFLDO 2IILFHU FDUULHG RXW DQ HYDOXDWLRQ RI WKH HIIHFWLYHQHVV RI WKH GHVLJQ DQG RSHUDWLRQ RI WKH FRPSDQ\¶V GLVFORVXUH FRQWUROV DQG SURFHGXUHV DV RI 'HFHPEHU WKH ³(YDOXDWLRQ´ %DVHG XSRQ WKH (YDOXDWLRQ WKH FRPSDQ\¶V &KLHI ([HFXWLYH 2IILFHU DQG &KLHI )LQDQFLDO 2IILFHU FRQFOXGHG WKDW WKH FRPSDQ\¶V GLVFORVXUH FRQWUROV DQG SURFHGXUHV DV GHILQHG LQ ([FKDQJH $FW 5XOH D H

DUH HIIHFWLYH 0DQDJHPHQW¶V 5HSRUW RQ ,QWHUQDO &RQWURO 2YHU )LQDQFLDO 5HSRUWLQJ 7KH FRPSDQ\¶V PDQDJHPHQW LV UHVSRQVLEOH IRU HVWDEOLVKLQJ DQG PDLQWDLQLQJ DGHTXDWH ³LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ´ DV GHILQHG LQ ([FKDQJH $FW 5XOHV D I DQG G I

0DQDJHPHQW HYDOXDWHV WKH HIIHFWLYHQHVV RI WKH FRPSDQ\¶V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ XVLQJ WKH FULWHULD VHW IRUWK E\ WKH &RPPLWWHH RI 6SRQVRULQJ 2UJDQL]DWLRQV RI WKH 7UHDGZD\ &RPPLVVLRQ LQ ,QWHUQDO &RQWURO ± ,QWHJUDWHG )UDPHZRUN 0DQDJHPHQW XQGHU WKH VXSHUYLVLRQ DQG ZLWK WKH SDUWLFLSDWLRQ RI WKH FRPSDQ\¶V &KLHI ([HFXWLYH 2IILFHU DQG &KLHI )LQDQFLDO 2IILFHU DVVHVVHG WKH HIIHFWLYHQHVV RI WKH FRPSDQ\¶V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ DV RI 'HFHPEHU DQG FRQFOXGHG WKDW LW LV HIIHFWLYH 7KH FRPSDQ\ DFTXLUHG VXEVWDQWLDOO\ DOO RI WKH DVVHWV DQG RSHUDWLRQV RI WKH .H\/LQN 6\VWHPV *URXS EXVLQHVV ³.H\/LQN´

LQ 0DUFK &HQWLD *URXS /LPLWHG DQG $.6 *URXS $% ³&HQWLD $.6´ LQ 6HSWHPEHU DQG 8QLYHUVH (OHFWURQ &RUSRUDWLRQ ³8(&´ LQ 1RYHPEHU 7KH FRPSDQ\ KDV H[FOXGHG .H\/LQN &HQWLD $.6 DQG 8(& IURP LWV DVVHVVPHQW RI DQG FRQFOXVLRQ RQ WKH HIIHFWLYHQHVV RI WKH FRPSDQ\¶V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ .H\/LQN &HQWLD $.6 DQG 8(& DFFRXQWHG IRU SHUFHQW RI WRWDO DVVHWV SHUFHQW H[FOXGLQJ FRVW LQ H[FHVV RI QHW DVVHWV RI FRPSDQLHV DFTXLUHG UHFRUGHG LQ FRQQHFWLRQ ZLWK WKHVH DFTXLVLWLRQV DQG SHUFHQW RI QHW DVVHWV DV RI 'HFHPEHU DQG SHUFHQW RI WKH FRPSDQ\¶V FRQVROLGDWHG VDOHV DQG SHUFHQW RI WKH FRPSDQ\¶V FRQVROLGDWHG QHW LQFRPH IRU WKH \HDU HQGHG 'HFHPEHU 7KH FRPSDQ\¶V LQGHSHQGHQW UHJLVWHUHG SXEOLF DFFRXQWLQJ ILUP (UQVW <RXQJ //3 KDV DXGLWHG WKH HIIHFWLYHQHVV RI WKH FRPSDQ\¶V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ DV RI 'HFHPEHU DV VWDWHG LQ WKHLU UHSRUW ZKLFK LV LQFOXGHG KHUHLQ

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

5(3257 2) (5167 <281* //3 ,1'(3(1'(17 5(*,67(5(' 38%/,& $&&2817,1* ),50 7KH %RDUG RI 'LUHFWRUV DQG 6KDUHKROGHUV $UURZ (OHFWURQLFV ,QF :H KDYH DXGLWHG $UURZ (OHFWURQLFV ,QF ¶V WKH ³FRPSDQ\´ LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ DV RI 'HFHPEHU EDVHG RQ FULWHULD HVWDEOLVKHG LQ ,QWHUQDO &RQWURO²,QWHJUDWHG )UDPHZRUN LVVXHG E\ WKH &RPPLWWHH RI 6SRQVRULQJ 2UJDQL]DWLRQV RI WKH 7UHDGZD\ &RPPLVVLRQ WKH ³&262 FULWHULD´ 7KH FRPSDQ\¶V PDQDJHPHQW LV UHVSRQVLEOH IRU PDLQWDLQLQJ HIIHFWLYH LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ DQG IRU LWV DVVHVVPHQW RI WKH HIIHFWLYHQHVV RI LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ LQFOXGHG LQ WKH DFFRPSDQ\LQJ 0DQDJHPHQW¶V 5HSRUW RI ,QWHUQDO &RQWURO RYHU )LQDQFLDO 5HSRUWLQJ 2XU UHVSRQVLELOLW\ LV WR H[SUHVV DQ RSLQLRQ RQ WKH FRPSDQ\¶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¶V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ LV D SURFHVV GHVLJQHG WR SURYLGH UHDVRQDEOH DVVXUDQFH UHJDUGLQJ WKH UHOLDELOLW\ RI ILQDQFLDO UHSRUWLQJ DQG WKH SUHSDUDWLRQ RI ILQDQFLDO VWDWHPHQWV IRU H[WHUQDO SXUSRVHV LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV $ FRPSDQ\¶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¶V DVVHWV WKDW FRXOG KDYH D PDWHULDO HIIHFW RQ WKH ILQDQFLDO VWDWHPHQWV %HFDXVH RI LWV LQKHUHQW OLPLWDWLRQV LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ PD\ QRW SUHYHQW RU GHWHFW PLVVWDWHPHQWV $OVR SURMHFWLRQV RI DQ\ HYDOXDWLRQ RI HIIHFWLYHQHVV WR IXWXUH SHULRGV DUH VXEMHFW WR WKH ULVN WKDW FRQWUROV PD\ EHFRPH LQDGHTXDWH EHFDXVH RI FKDQJHV LQ FRQGLWLRQV RU WKDW WKH GHJUHH RI FRPSOLDQFH ZLWK WKH SROLFLHV RU SURFHGXUHV PD\ GHWHULRUDWH $V LQGLFDWHG LQ WKH DFFRPSDQ\LQJ 0DQDJHPHQW¶V 5HSRUW RQ ,QWHUQDO &RQWURO 2YHU )LQDQFLDO 5HSRUWLQJ PDQDJHPHQW¶V DVVHVVPHQW RI DQG FRQFOXVLRQ RQ WKH HIIHFWLYHQHVV RI LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ GLG QRW LQFOXGH WKH LQWHUQDO FRQWUROV RI WKH .H\/LQN 6\VWHPV *URXS EXVLQHVV ³.H\/LQN´ &HQWLD *URXS /LPLWHG ³&HQWLD´ $.6 *URXS $% ³$.6´ DQG 8QLYHUVH (OHFWURQ &RUSRUDWLRQ ³8(&´ DFTXLUHG E\ WKH FRPSDQ\ GXULQJ DQG ZKLFK ZHUH LQFOXGHG LQ WKH FRPSDQ\¶V FRQVROLGDWHG ILQDQFLDO VWDWHPHQWV DQG ZKLFK FRQVWLWXWHG SHUFHQW RI WRWDO DVVHWV SHUFHQW H[FOXGLQJ FRVW LQ H[FHVV RI QHW DVVHWV RI FRPSDQLHV DFTXLUHG UHFRUGHG LQ FRQQHFWLRQ ZLWK WKHVH DFTXLVLWLRQV DQG SHUFHQW RI QHW DVVHWV DV RI 'HFHPEHU DQG SHUFHQW RI WKH FRPSDQ\¶V FRQVROLGDWHG VDOHV DQG SHUFHQW RI WKH FRPSDQ\¶V FRQVROLGDWHG QHW LQFRPH IRU WKH \HDU WKHQ HQGHG 2XU DXGLW RI LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ RI WKH FRPSDQ\ DOVR GLG QRW LQFOXGH DQ HYDOXDWLRQ RI WKH LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ RI .H\/LQN &HQWLD $.6 DQG 8(& ,Q RXU RSLQLRQ $UURZ (OHFWURQLFV ,QF PDLQWDLQHG LQ DOO PDWHULDO UHVSHFWV HIIHFWLYH LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ DV RI 'HFHPEHU EDVHG RQ WKH &262 FULWHULD :H KDYH DOVR DXGLWHG LQ DFFRUGDQFH ZLWK WKH VWDQGDUGV RI WKH 3XEOLF &RPSDQ\ $FFRXQWLQJ 2YHUVLJKW %RDUG 8QLWHG 6WDWHV WKH FRQVROLGDWHG EDODQFH VKHHWV RI $UURZ (OHFWURQLFV ,QF DV RI 'HFHPEHU DQG DQG WKH UHODWHG FRQVROLGDWHG VWDWHPHQWV RI RSHUDWLRQV VKDUHKROGHUV¶ HTXLW\ DQG FDVK IORZV IRU HDFK RI WKH WKUHH \HDUV LQ WKH SHULRG HQGHG 'HFHPEHU DQG RXU UHSRUW GDWHG )HEUXDU\ H[SUHVVHG DQ XQTXDOLILHG RSLQLRQ WKHUHRQ V (5167 <281* //3 1HZ <RUN 1HZ <RUN )HEUXDU\

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

&KDQJHV LQ ,QWHUQDO &RQWURO 2YHU )LQDQFLDO 5HSRUWLQJ 7KHUH ZDV QR FKDQJH LQ WKH FRPSDQ\¶V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ WKDW RFFXUUHG GXULQJ WKH FRPSDQ\¶V PRVW UHFHQW ILVFDO TXDUWHU WKDW KDV PDWHULDOO\ DIIHFWHG RU LV UHDVRQDEO\ OLNHO\ WR PDWHULDOO\ DIIHFW WKH FRPSDQ\¶V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ ,WHP % 2WKHU ,QIRUPDWLRQ 1RQH

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

3$57 ,,, ,WHP 'LUHFWRUV DQG ([HFXWLYH 2IILFHUV RI WKH 5HJLVWUDQW 6HH ³([HFXWLYH 2IILFHUV´ LQ 3DUW , RI WKLV DQQXDO UHSRUW RQ )RUP . ,Q DGGLWLRQ WKH LQIRUPDWLRQ VHW IRUWK XQGHU WKH KHDGLQJV ³(OHFWLRQ RI 'LUHFWRUV´ DQG ³6HFWLRQ $ %HQHILFLDO 2ZQHUVKLS 5HSRUWLQJ &RPSOLDQFH´ LQ WKH FRPSDQ\¶V 3UR[\ 6WDWHPHQW ILOHG LQ FRQQHFWLRQ ZLWK WKH $QQXDO 0HHWLQJ RI 6KDUHKROGHUV VFKHGXOHG WR EH KHOG RQ 0D\ DUH LQFRUSRUDWHG KHUHLQ E\ UHIHUHQFH ,QIRUPDWLRQ DERXW WKH FRPSDQ\¶V DXGLW FRPPLWWHH ILQDQFLDO H[SHUWV VHW IRUWK XQGHU WKH KHDGLQJ ³7KH %RDUG DQG LWV &RPPLWWHHV´ LQ WKH FRPSDQ\¶V 3UR[\ 6WDWHPHQW ILOHG LQ FRQQHFWLRQ ZLWK WKH $QQXDO 0HHWLQJ RI 6KDUHKROGHUV VFKHGXOHG WR EH KHOG RQ 0D\ LV LQFRUSRUDWHG KHUHLQ E\ UHIHUHQFH ,QIRUPDWLRQ DERXW WKH FRPSDQ\¶V FRGH RI HWKLFV JRYHUQLQJ WKH &KLHI ([HFXWLYH 2IILFHU &KLHI )LQDQFLDO 2IILFHU DQG &RUSRUDWH &RQWUROOHU NQRZQ DV WKH ³)LQDQFH &RGH RI (WKLFV ´ DV ZHOO DV D FRGH RI HWKLFV JRYHUQLQJ DOO HPSOR\HHV NQRZQ DV WKH ³:RUOGZLGH &RGH RI %XVLQHVV &RQGXFW DQG (WKLFV ´ LV DYDLODEOH IUHH RI FKDUJH RQ WKH FRPSDQ\¶V ZHEVLWH DW KWWS ZZZ DUURZ FRP DQG LV DYDLODEOH LQ SULQW WR DQ\ VKDUHKROGHU XSRQ UHTXHVW ,QIRUPDWLRQ DERXW WKH FRPSDQ\¶V ³&RUSRUDWH *RYHUQDQFH *XLGHOLQHV´ DQG ZULWWHQ FRPPLWWHH FKDUWHUV IRU WKH FRPSDQ\¶V $XGLW &RPPLWWHH &RPSHQVDWLRQ &RPPLWWHH DQG &RUSRUDWH *RYHUQDQFH &RPPLWWHH LV DYDLODEOH IUHH RI FKDUJH RQ WKH FRPSDQ\¶V ZHEVLWH DW KWWS ZZZ DUURZ FRP DQG LV DYDLODEOH LQ SULQW WR DQ\ VKDUHKROGHU XSRQ UHTXHVW ,WHP ([HFXWLYH &RPSHQVDWLRQ 7KH LQIRUPDWLRQ VHW IRUWK XQGHU WKH KHDGLQJ ³&RPSHQVDWLRQ 'LVFXVVLRQ DQG $QDO\VLV´ LQ WKH FRPSDQ\¶V 3UR[\ 6WDWHPHQW ILOHG LQ FRQQHFWLRQ ZLWK WKH $QQXDO 0HHWLQJ RI 6KDUHKROGHUV VFKHGXOHG WR EH KHOG RQ 0D\ LV LQFRUSRUDWHG KHUHLQ E\ UHIHUHQFH ,WHP 6HFXULW\ 2ZQHUVKLS RI &HUWDLQ %HQHILFLDO 2ZQHUV DQG 0DQDJHPHQW DQG 5HODWHG 6WRFNKROGHU 0DWWHUV 7KH LQIRUPDWLRQ UHTXLUHG E\ ,WHP LV LQFOXGHG LQ WKH FRPSDQ\¶V 3UR[\ 6WDWHPHQW ILOHG LQ FRQQHFWLRQ ZLWK WKH $QQXDO 0HHWLQJ RI 6KDUHKROGHUV VFKHGXOHG WR EH KHOG RQ 0D\ DQG LV LQFRUSRUDWHG KHUHLQ E\ UHIHUHQFH ,WHP &HUWDLQ 5HODWLRQVKLSV DQG 5HODWHG 7UDQVDFWLRQV 7KH LQIRUPDWLRQ UHTXLUHG E\ ,WHP LV LQFOXGHG LQ WKH FRPSDQ\¶V 3UR[\ 6WDWHPHQW ILOHG LQ FRQQHFWLRQ ZLWK WKH $QQXDO 0HHWLQJ RI 6KDUHKROGHUV VFKHGXOHG WR EH KHOG RQ 0D\ DQG LV LQFRUSRUDWHG KHUHLQ E\ UHIHUHQFH ,WHP 3ULQFLSDO $FFRXQWLQJ )HHV DQG 6HUYLFHV 7KH LQIRUPDWLRQ VHW IRUWK XQGHU WKH KHDGLQJ ³3ULQFLSDO $FFRXQWLQJ )LUP )HHV´ LQ WKH FRPSDQ\¶V 3UR[\ 6WDWHPHQW ILOHG LQ FRQQHFWLRQ ZLWK WKH $QQXDO 0HHWLQJ RI 6KDUHKROGHUV VFKHGXOHG WR EH KHOG RQ 0D\ LV LQFRUSRUDWHG KHUHLQ E\ UHIHUHQFH

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

3$57 ,9 ,WHP ([KLELWV DQG )LQDQFLDO 6WDWHPHQW 6FKHGXOHV D 7KH IROORZLQJ GRFXPHQWV DUH ILOHG DV SDUW RI WKLV UHSRUW

)LQDQFLDO 6WDWHPHQWV 5HSRUW RI (UQVW <RXQJ //3 ,QGHSHQGHQW 5HJLVWHUHG 3XEOLF $FFRXQWLQJ )LUP &RQVROLGDWHG 6WDWHPHQWV RI 2SHUDWLRQV IRU WKH \HDUV HQGHG 'HFHPEHU DQG &RQVROLGDWHG %DODQFH 6KHHWV DV RI 'HFHPEHU DQG &RQVROLGDWHG 6WDWHPHQWV RI &DVK )ORZV IRU WKH \HDUV HQGHG 'HFHPEHU DQG &RQVROLGDWHG 6WDWHPHQWV RI 6KDUHKROGHUV¶ (TXLW\ IRU WKH \HDUV HQGHG 'HFHPEHU DQG 1RWHV WR &RQVROLGDWHG )LQDQFLDO 6WDWHPHQWV )LQDQFLDO 6WDWHPHQW 6FKHGXOH 6FKHGXOH ,, ± 9DOXDWLRQ DQG 4XDOLI\LQJ $FFRXQWV $OO RWKHU VFKHGXOHV DUH RPLWWHG VLQFH WKH UHTXLUHG LQIRUPDWLRQ LV QRW SUHVHQW RU LV QRW SUHVHQW LQ DPRXQWV VXIILFLHQW WR UHTXLUH VXEPLVVLRQ RI WKH VFKHGXOH RU EHFDXVH WKH LQIRUPDWLRQ UHTXLUHG LV LQFOXGHG LQ WKH FRQVROLGDWHG ILQDQFLDO VWDWHPHQWV LQFOXGLQJ WKH QRWHV WKHUHWR ([KLELWV 6HH ,QGH[ RI ([KLELWV LQFOXGHG RQ SDJHV

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\

3DJH


7DEOH RI &RQWHQWV

,1'(; 2) (;+,%,76

([KLELW 1XPEHU D

E

F

G

D L

D LL

D LLL

E

D L

([KLELW 6KDUH 3XUFKDVH $JUHHPHQW GDWHG DV RI )HEUXDU\ E\ DQG EHWZHHQ $UURZ (OHFWURQLFV ,QF 7HNHOHF $LUWURQLF =HGWHN ,QYHVWLWHFK DQG 1DWHF LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW J WR WKH FRPSDQ\¶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¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R $JUHHPHQW IRU 6DOH DQG 3XUFKDVH RI 6KDUHV RI '16LQW FRP $* GDWHG DV RI 2FWREHU E\ DQG EHWZHHQ WKH FRPSDQ\ DQG WKH 6HOOHUV UHIHUUHG WR WKHUHLQ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW WR WKH FRPSDQ\¶V 4XDUWHUO\ 5HSRUW RQ )RUP 4 IRU WKH TXDUWHU HQGHG 6HSWHPEHU &RPPLVVLRQ )LOH 1R $VVHW 3XUFKDVH $JUHHPHQW GDWHG -DQXDU\ IRU VDOH RI FHUWDLQ DVVHWV RI .H\/LQN 6\VWHPV D EXVLQHVV RI $JLO\V\V ,QF DQG $JLO\V\V &DQDGD ,QF WR $UURZ (OHFWURQLFV ,QF $UURZ (OHFWURQLFV &DQDGD /WG DQG 6XSSRUW 1HW ,QF LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW H WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R 5HVWDWHG &HUWLILFDWH RI ,QFRUSRUDWLRQ RI WKH FRPSDQ\ DV DPHQGHG LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW D WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R &HUWLILFDWH RI $PHQGPHQW RI WKH &HUWLILFDWH RI ,QFRUSRUDWLRQ RI $UURZ (OHFWURQLFV ,QF GDWHG DV RI $XJXVW LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW WR WKH FRPSDQ\¶V 4XDUWHUO\ 5HSRUW RQ )RUP 4 IRU WKH TXDUWHU HQGHG 6HSWHPEHU &RPPLVVLRQ )LOH 1R &HUWLILFDWH RI $PHQGPHQW RI WKH 5HVWDWHG &HUWLILFDWH RI ,QFRUSRUDWLRQ RI WKH FRPSDQ\ GDWHG DV RI 2FWREHU LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW D LLL WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R $PHQGHG &RUSRUDWH %\ /DZV GDWHG -XO\ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW LL WR WKH FRPSDQ\¶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¶V &XUUHQW 5HSRUW RQ )RUP . GDWHG 0DUFK &RPPLVVLRQ )LOH 1R

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

([KLELW 1XPEHU D LL

D LLL

D LY

D Y

D YL

E L

E LL

E LLL

E LY

E Y

E YL

([KLELW )LUVW $PHQGPHQW GDWHG -XQH WR WKH 5LJKWV $JUHHPHQW LQ D L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW E WR WKH FRPSDQ\¶V &XUUHQW 5HSRUW RQ )RUP . GDWHG -XQH &RPPLVVLRQ )LOH 1R 6HFRQG $PHQGPHQW GDWHG -XQH WR WKH 5LJKWV $JUHHPHQW LQ D L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW L LLL WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R 7KLUG $PHQGPHQW GDWHG -XO\ WR WKH 5LJKWV $JUHHPHQW LQ D L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW L LY WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R )RXUWK $PHQGPHQW GDWHG $XJXVW WR WKH 5LJKWV $JUHHPHQW LQ D L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW L Y WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R )LIWK $PHQGPHQW GDWHG )HEUXDU\ WR WKH 5LJKWV $JUHHPHQW LQ D L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW WR WKH FRPSDQ\¶V &XUUHQW 5HSRUW RQ )RUP $ $ GDWHG 0DUFK &RPPLVVLRQ )LOH 1R ,QGHQWXUH GDWHG DV RI -DQXDU\ EHWZHHQ WKH FRPSDQ\ DQG WKH %DQN RI 0RQWUHDO 7UXVW &RPSDQ\ DV 7UXVWHH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW E L WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R 2IILFHUV¶ &HUWLILFDWH DV GHILQHG E\ WKH ,QGHQWXUH LQ E L DERYH GDWHG DV RI -DQXDU\ ZLWK UHVSHFW WR WKH FRPSDQ\¶V 6HQLRU 1RWHV GXH DQG 6HQLRU 'HEHQWXUHV GXH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW E LL WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R 2IILFHUV¶ &HUWLILFDWH DV GHILQHG E\ WKH LQGHQWXUH LQ E L DERYH GDWHG DV RI -DQXDU\ ZLWK UHVSHFW WR WKH 6HQLRU 'HEHQWXUHV GXH GDWHG DV RI 0D\ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW E LLL WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R 6XSSOHPHQWDO ,QGHQWXUH GDWHG DV RI )HEUXDU\ EHWZHHQ WKH FRPSDQ\ DQG 7KH %DQN RI 1HZ <RUN DV VXFFHVVRU WR WKH %DQN RI 0RQWUHDO 7UXVW &RPSDQ\ DV WUXVWHH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW WR WKH FRPSDQ\¶V &XUUHQW 5HSRUW RQ )RUP . GDWHG 0DUFK &RPPLVVLRQ )LOH 1R 6XSSOHPHQWDO ,QGHQWXUH GDWHG DV RI 'HFHPEHU EHWZHHQ WKH FRPSDQ\ DQG 7KH %DQN RI 1HZ <RUN DV VXFFHVVRU WR WKH %DQN RI 0RQWUHDO 7UXVW &RPSDQ\ DV WUXVWHH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW E YL WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R 6XSSOHPHQWDO ,QGHQWXUH GDWHG DV RI 0DUFK EHWZHHQ WKH FRPSDQ\ DQG 7KH %DQN RI 1HZ <RUN DV VXFFHVVRU WR WKH %DQN RI 0RQWUHDO 7UXVW &RPSDQ\ DV WUXVWHH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW E YLL WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

([KLELW 1XPEHU D

E

F

G L

G LL

G LLL

G LY

G Y

G YL

H L

H LL

I

J

([KLELW $UURZ (OHFWURQLFV 6DYLQJV 3ODQ DV DPHQGHG DQG UHVWDWHG RQ -DQXDU\ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW D WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R :\OH (OHFWURQLFV 5HWLUHPHQW 3ODQ DV DPHQGHG DQG UHVWDWHG RQ 0DUFK LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW E WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R $UURZ (OHFWURQLFV 6WRFN 2ZQHUVKLS 3ODQ DV DPHQGHG DQG UHVWDWHG RQ 0DUFK LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW E WR WKH FRPSDQ\¶V 4XDUWHUO\ 5HSRUW RQ )RUP 4 IRU WKH TXDUWHU HQGHG $SULO &RPPLVVLRQ )LOH 1R $UURZ (OHFWURQLFV ,QF 2PQLEXV ,QFHQWLYH 3ODQ DV RI 0D\ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW G WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R )RUP RI 6WRFN 2SWLRQ $ZDUG $JUHHPHQW 6HQLRU 0DQDJHPHQW XQGHU G L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW WR WKH FRPSDQ\¶V &XUUHQW 5HSRUW RQ )RUP . GDWHG -XQH &RPPLVVLRQ )LOH 1R )RUP RI 6WRFN 2SWLRQ $ZDUG $JUHHPHQW 2WKHU XQGHU G L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW WR WKH FRPSDQ\¶V &XUUHQW 5HSRUW RQ )RUP . GDWHG -XQH &RPPLVVLRQ )LOH 1R )RUP RI 6WRFN 2SWLRQ $ZDUG $JUHHPHQW XQGHU G L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW WR WKH FRPSDQ\¶V &XUUHQW 5HSRUW RQ )RUP . GDWHG 0DUFK &RPPLVVLRQ )LOH 1R )RUP RI 3HUIRUPDQFH 6KDUH $ZDUG $JUHHPHQW XQGHU G L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW WR WKH FRPSDQ\¶V &XUUHQW 5HSRUW RQ )RUP . GDWHG $XJXVW &RPPLVVLRQ )LOH 1R )RUP RI 5HVWULFWHG 6WRFN $ZDUG $JUHHPHQW XQGHU G L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW WR WKH FRPSDQ\¶V &XUUHQW 5HSRUW RQ )RUP . GDWHG 6HSWHPEHU &RPPLVVLRQ )LOH 1R $UURZ (OHFWURQLFV ,QF 6WRFN 2SWLRQ 3ODQ DV DPHQGHG DQG UHVWDWHG HIIHFWLYH )HEUXDU\ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW G L WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R 3D\LQJ $JHQF\ $JUHHPHQW GDWHG 1RYHPEHU E\ DQG EHWZHHQ $UURZ (OHFWURQLFV ,QF DQG :DFKRYLD %DQN 1 $ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW G LLL WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R 5HVWULFWHG 6WRFN 3ODQ RI $UURZ (OHFWURQLFV ,QF DV DPHQGHG DQG UHVWDWHG HIIHFWLYH )HEUXDU\ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW H L WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R 1RQ (PSOR\HH 'LUHFWRUV 6WRFN 2SWLRQ 3ODQ DV RI 0D\ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW I WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

([KLELW 1XPEHU K

L

M

N L

N LL

N LLL

N LY

N Y

N YL

N YLL

N YLLL

N L[

([KLELW 1RQ (PSOR\HH 'LUHFWRUV 'HIHUUDO 3ODQ DV RI 0D\ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW G WR WKH FRPSDQ\¶V 5HJLVWUDWLRQ 6WDWHPHQW RQ )RUP 6 5HJLVWUDWLRQ 1R $UURZ (OHFWURQLFV ,QF 6XSSOHPHQWDO ([HFXWLYH 5HWLUHPHQW 3ODQ DV DPHQGHG HIIHFWLYH -DQXDU\ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW K WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R $UURZ (OHFWURQLFV ,QF ([HFXWLYH 'HIHUUHG &RPSHQVDWLRQ 3ODQ DV RI 2FWREHU LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW M WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R (PSOR\PHQW $JUHHPHQW GDWHG DV RI -DQXDU\ E\ DQG EHWZHHQ WKH FRPSDQ\ DQG 0LFKDHO - /RQJ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW F Y WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R (PSOR\PHQW $JUHHPHQW GDWHG DV RI 'HFHPEHU E\ DQG EHWZHHQ WKH FRPSDQ\ DQG 3HWHU 6 %URZQ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW L YLL WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R (PSOR\PHQW $JUHHPHQW GDWHG DV RI -DQXDU\ E\ DQG EHWZHHQ WKH FRPSDQ\ DQG 3DXO - 5HLOO\ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW L [ WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R (PSOR\PHQW $JUHHPHQW GDWHG DV RI )HEUXDU\ E\ DQG EHWZHHQ WKH FRPSDQ\ DQG :LOOLDP ( 0LWFKHOO LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW L [L WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R $PHQGPHQW GDWHG DV RI 0DUFK WR WKH (PSOR\PHQW $JUHHPHQW GDWHG DV RI )HEUXDU\ E\ DQG EHWZHHQ WKH FRPSDQ\ DQG :LOOLDP ( 0LWFKHOO LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW WR WKH FRPSDQ\¶V &XUUHQW 5HSRUW RQ )RUP . GDWHG 0DUFK &RPPLVVLRQ )LOH 1R (PSOR\PHQW $JUHHPHQW GDWHG DV RI $XJXVW E\ DQG EHWZHHQ WKH FRPSDQ\ DQG 9LQFHQW 0HOYLQ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW WR WKH FRPSDQ\¶V &XUUHQW 5HSRUW RQ )RUP . GDWHG 6HSWHPEHU &RPPLVVLRQ )LOH 1R (PSOR\PHQW $JUHHPHQW GDWHG DV RI -DQXDU\ E\ DQG EHWZHHQ WKH FRPSDQ\ DQG .HYLQ *LOUR\ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW WR WKH FRPSDQ\¶V &XUUHQW 5HSRUW RQ )RUP . GDWHG 'HFHPEHU &RPPLVVLRQ )LOH 1R (PSOR\PHQW $JUHHPHQW GDWHG DV RI )HEUXDU\ E\ DQG EHWZHHQ WKH FRPSDQ\ DQG -RKQ 3 0F0DKRQ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW WR WKH FRPSDQ\¶V &XUUHQW 5HSRUW RQ )RUP . GDWHG )HEUXDU\ &RPPLVVLRQ )LOH 1R (PSOR\PHQW $JUHHPHQW GDWHG DV RI -DQXDU\ E\ DQG EHWZHHQ WKH FRPSDQ\ DQG 0 &DWKHULQH 0RUULV LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW WR WKH FRPSDQ\¶V &XUUHQW 5HSRUW RQ )RUP . GDWHG )HEUXDU\ &RPPLVVLRQ )LOH 1R

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

([KLELW 1XPEHU N [

N [L

N [LL

N [LLL

O L

O LL

P

Q L

Q LL

([KLELW )RUP RI DJUHHPHQW EHWZHHQ WKH FRPSDQ\ DQG DOO FRUSRUDWH RIILFHUV LQFOXGLQJ WKH HPSOR\HHV SDUW\ WR WKH (PSOR\PHQW $JUHHPHQWV OLVWHG LQ N LL [Y DERYH SURYLGLQJ H[WHQGHG VHSDUDWLRQ EHQHILWV XQGHU FHUWDLQ FLUFXPVWDQFHV LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW F L[ WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R )RUP RI DJUHHPHQW EHWZHHQ WKH FRPSDQ\ DQG QRQ FRUSRUDWH RIILFHUV SURYLGLQJ H[WHQGHG VHSDUDWLRQ EHQHILWV XQGHU FHUWDLQ FLUFXPVWDQFHV LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW F [ WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R *UDQWRU 7UXVW $JUHHPHQW DV DPHQGHG DQG UHVWDWHG RQ 1RYHPEHU E\ DQG EHWZHHQ $UURZ (OHFWURQLFV ,QF DQG :DFKRYLD %DQN 1 $ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW L [YLL WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R )LUVW $PHQGPHQW GDWHG 6HSWHPEHU WR WKH DPHQGHG DQG UHVWDWHG *UDQWRU 7UXVW $JUHHPHQW LQ N [LL DERYH E\ DQG EHWZHHQ $UURZ (OHFWURQLFV ,QF DQG :DFKRYLD %DQN 1 $ LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW D WR WKH FRPSDQ\¶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¶V 5HJLVWUDWLRQ 6WDWHPHQW RQ )RUP 6 5HJLVWUDWLRQ 1R 6HQLRU ([FKDQJH 1RWHV GXH GDWHG DV RI -XQH DPRQJ $UURZ (OHFWURQLFV ,QF DQG *ROGPDQ 6DFKV &R -30RUJDQ DQG %DQN RI $PHULFD 6HFXULWLHV //& DV MRLQW ERRN UXQQLQJ PDQDJHUV &UHGLW 6XLVVH )LUVW %RVWRQ DV OHDG PDQDJHU DQG )OHHW 6HFXULWLHV ,QF +6%& 6FRWLD &DSLWDO DQG :DFKRYLD 6HFXULWLHV DV FR PDQDJHUV LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW WR WKH FRPSDQ\¶V &XUUHQW 5HSRUW RQ )RUP . GDWHG -XQH &RPPLVVLRQ )LOH 1R $PHQGHG DQG 5HVWDWHG )LYH <HDU &UHGLW $JUHHPHQW GDWHG DV RI -DQXDU\ DPRQJ $UURZ (OHFWURQLFV ,QF DQG FHUWDLQ RI LWV VXEVLGLDULHV DV ERUURZHUV WKH OHQGHUV IURP WLPH WR WLPH SDUW\ WKHUHWR -30RUJDQ &KDVH %DQN 1 $ DV DGPLQLVWUDWLYH DJHQW DQG %DQN RI $PHULFD 1 $ 7KH %DQN RI 1RYD 6FRWLD %13 3DULEDV DQG :DFKRYLD %DQN 1DWLRQDO $VVRFLDWLRQ DV V\QGLFDWLRQ DJHQWV LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW Q WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW GDWHG DV RI 0DUFK E\ DQG DPRQJ $UURZ (OHFWURQLFV )XQGLQJ &RUSRUDWLRQ $UURZ (OHFWURQLFV ,QF LQGLYLGXDOO\ DQG DV 0DVWHU 6HUYLFHU WKH VHYHUDO &RQGXLW ,QYHVWRUV $OWHUQDWH ,QYHVWRUV DQG )XQGLQJ $JHQWV DQG %DQN RI $PHULFD 1DWLRQDO $VVRFLDWLRQ DV DGPLQLVWUDWLYH DJHQW LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW P L WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R $PHQGPHQW 1R WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW GDWHG DV RI 1RYHPEHU WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW LQ R L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW P LL

WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

([KLELW 1XPEHU Q LLL

Q LY

Q Y

Q YL

Q YLL

Q YLLL

Q L[

Q [

Q [L

Q [LL

Q [LLL

([KLELW $PHQGPHQW 1R WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW GDWHG DV RI 'HFHPEHU WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW LQ R L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW P LLL

WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R $PHQGPHQW 1R WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW GDWHG DV RI 0DUFK WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW LQ R L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW P LY

WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R $PHQGPHQW 1R WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW GDWHG DV RI 0DUFK WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW LQ R L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW Q Y WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R $PHQGPHQW 1R WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW GDWHG DV RI 0D\ WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW LQ R L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW Q YL

WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R $PHQGPHQW 1R WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW GDWHG DV RI 6HSWHPEHU WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW LQ R L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW Q YLL

WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R $PHQGPHQW 1R WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW GDWHG DV RI )HEUXDU\ WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW LQ R L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW WR WKH FRPSDQ\¶V &XUUHQW 5HSRUW RQ )RUP . GDWHG )HEUXDU\ &RPPLVVLRQ )LOH 1R $PHQGPHQW 1R WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW GDWHG DV RI $SULO WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW LQ R L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW Q L[

WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R $PHQGPHQW 1R WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW GDWHG DV RI $XJXVW WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW LQ R L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW Q [ WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R $PHQGPHQW 1R WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW GDWHG DV RI )HEUXDU\ WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW LQ R L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW Q [L

WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R $PHQGPHQW 1R WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW GDWHG DV RI $XJXVW WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW LQ R L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW E WR WKH FRPSDQ\¶V 4XDUWHUO\ 5HSRUW RQ )RUP 4 IRU WKH TXDUWHU HQGHG 6HSWHPEHU &RPPLVVLRQ )LOH 1R $PHQGPHQW 1R WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW GDWHG DV RI )HEUXDU\ WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW LQ R L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW R [LLL

WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

([KLELW 1XPEHU Q [LY

Q [Y

Q [YL

R

L

LL

L

LL

([KLELW $PHQGPHQW 1R WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW GDWHG DV RI )HEUXDU\ WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW LQ R L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW R [LY

WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R $PHQGPHQW 1R WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW GDWHG DV RI 2FWREHU WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW LQ R L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW R [Y WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R $PHQGPHQW 1R WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW GDWHG DV RI )HEUXDU\ WR WKH 7UDQVIHU DQG $GPLQLVWUDWLRQ $JUHHPHQW LQ R L DERYH LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW R [YL

WR WKH FRPSDQ\¶V $QQXDO 5HSRUW RQ )RUP . IRU WKH \HDU HQGHG 'HFHPEHU &RPPLVVLRQ )LOH 1R )RUP RI ,QGHPQLILFDWLRQ $JUHHPHQW EHWZHHQ WKH FRPSDQ\ DQG HDFK GLUHFWRU LQFRUSRUDWHG E\ UHIHUHQFH WR ([KLELW J WR WKH FRPSDQ\¶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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

$552: (/(&7521,&6 ,1& 6&+('8/( ,, 9$/8$7,21 $1' 48$/,)<,1* $&&28176 ,Q WKRXVDQGV

%DODQFH DW &KDUJHG )RU WKH WKUHH \HDUV HQGHG EHJLQQLQJ WR 'HFHPEHU RI \HDU LQFRPH 2WKHU D $OORZDQFH IRU GRXEWIXO DFFRXQWV

:ULWH GRZQ

%DODQFH DW HQG RI \HDU

D 5HSUHVHQWV WKH DOORZDQFH IRU GRXEWIXO DFFRXQWV RI WKH EXVLQHVVHV DFTXLUHG E\ WKH FRPSDQ\ GXULQJ DQG

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


7DEOH RI &RQWHQWV

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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


([KLELW

$552: (/(&7521,&6 ,1& 68%6,',$5,(6 2UJDQL]DWLRQDO /HJDO (QWLW\ 6WUXFWXUH $V RI 'HFHPEHU

$UURZ (OHFWURQLFV ,QF D 1HZ <RUN FRUSRUDWLRQ $UURZ (OHFWURQLFV ,QWHUQDWLRQDO ,QF D 9LUJLQ ,VODQGV FRUSRUDWLRQ ROG ',6&

$UURZ (OHFWURQLFV &DQDGD /WG D &DQDGLDQ FRUSRUDWLRQ 6FKX\ONLOO 0HWDOV RI 3ODQW &LW\ ,QF D 'HODZDUH FRUSRUDWLRQ $UURZ (OHFWURQLFV ,QWHUQDWLRQDO ,QF D 'HODZDUH FRUSRUDWLRQ ROG )6&

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

E $UURZ (OHFWURQLFV 6RXWK $IULFD //3 RZQHG D 6RXWK $IULFDQ OLPLWHG SDUWQHUVKLS F $UURZ (OHFWURQLFV (0($6$ ,QF D 'HODZDUH FRPSDQ\ G $UURZ +ROGLQJV 'HODZDUH //& D 'HODZDUH FRPSDQ\ L $UURZ ,QWHUQDWLRQDO +ROGLQJV / 3 D &D\PDQ FRPSDQ\ RZQHG

H $UURZ ,QWHUQDWLRQDO +ROGLQJV / 3 D &D\PDQ FRPSDQ\ RZQHG

L $UURZ (OHFWURQLFV ,QWHUQDWLRQDO +ROGLQJV //& D 'HODZDUH FRPSDQ\ $UURZ (OHFWURQLFV +ROGLQJV 9DJ\RQNH]HOR .IW D +XQJDULDQ FRPSDQ\ RZQHG

LL $UURZ (OHFWURQLFV +ROGLQJV 9DJ\RQNH]HOR .IW D +XQJDULDQ FRPSDQ\ RZQHG

$UURZ (OHFWURQLFV (0($6$ 6 U O DQ ,WDOLDQ FRPSDQ\ D $UURZ (OHFWURQLFV (XURSH //& D 'HODZDUH FRPSDQ\ E $5: (OHFWURQLFV /WG DQ ,VUDHOL FRPSDQ\ L $UURZ 5DSDF /WG DQ ,VUDHOL FRPSDQ\ F $UURZ (OHFWURQLFV 6HUYLFHV 6 U O DQ ,WDOLDQ FRPSDQ\ L % 9 $UURZ (OHFWURQLFV '/& D 1HWKHUODQGV FRPSDQ\ RZQHG

G % 9 $UURZ (OHFWURQLFV '/& D 1HWKHUODQGV FRPSDQ\ RZQHG

L $UURZ (OHFWURQLFV 8. +ROGLQJ /WG D 8. FRPSDQ\ $UURZ (OHFWURQLFV 8. /WG D 8. FRPSDQ\ $UURZ 1RUWKHUQ (XURSH /WG D 8. FRPSDQ\ GRUPDQW

D -HUP\Q +ROGLQJV /WG D 8. FRPSDQ\ GRUPDQW

L +DZNH (OHFWURQLFV /WG D 8. FRPSDQ\ GRUPDQW

LL ,PSXOVH (OHFWURQLFV /WG D 8. FRPSDQ\ GRUPDQW

LLL ,QYDGHU (OHFWURPHFKDQLFDO 'LVWULEXWLRQ /WG D 8. FRPSDQ\ GRUPDQW

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


([KLELW

$552: (/(&7521,&6 ,1& 68%6,',$5,(6 2UJDQL]DWLRQDO /HJDO (QWLW\ 6WUXFWXUH $V RI 'HFHPEHU

LY -HUP\Q 'HYHORSPHQW /WG D 8. FRPSDQ\ GRUPDQW

Y -HUP\Q 'LVWULEXWLRQ /WG D 8. FRPSDQ\ GRUPDQW

YL -HUP\Q (OHFWURQLFV /WG D 8. FRPSDQ\ GRUPDQW

YLL -HUP\Q 0DQXIDFWXULQJ /WG D 8. FRPSDQ\ GRUPDQW

YLLL 0RJXO (OHFWURQLFV /WG D 8. FRPSDQ\ GRUPDQW

E 55 (OHFWURQLFV /WG D 8. FRPSDQ\ GRUPDQW

L $UURZ (OHFWURQLFV /WG D 8. FRPSDQ\ GRUPDQW

F 7HFKGLV /WG D 8. FRPSDQ\ GRUPDQW

L 0LFURSURFHVVRU 0HPRU\ 'LVWULEXWLRQ /WG D 8. FRPSDQ\ GRUPDQW

LL 5DSLG 6LOLFRQ /WG D 8. FRPSDQ\ GRUPDQW

LLL 7HNGLV /WG D 8. FRPSDQ\ GRUPDQW

LY 7HFGLV /WG D 8. FRPSDQ\ GRUPDQW

G $[LRP (OHFWURQLFV /WG D 8. FRPSDQ\ GRUPDQW

0XOWLFKLS /WG D 8. FRPSDQ\ D 0LFURWURQLFD /WG D 8. FRPSDQ\ LL $UURZ (XURSH *PE+ D *HUPDQ FRPSDQ\ $UURZ +ROGLQJ 6RXWK (XURSH 6 U O DQ ,WDOLDQ FRPSDQ\ RZQHG

D (', (OHFWURQLFV 'LVWULEXWLRQ ,QWHUQDWLRQDO )UDQFH 6 $ D )UHQFK FRPSDQ\ L $UURZ )UDQFH 6 $ D )UHQFK FRPSDQ\ RZQHG

D 0LUFURWURQLFD )UDQFH 6DUO D )UHQFK FRPSDQ\ E 0XOWLFKLS (OHNWURQLN *PE+ D *HUPDQ FRPSDQ\ E $UURZ )UDQFH 6 $ D )UHQFK FRPSDQ\ RZQHG

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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


([KLELW

$552: (/(&7521,&6 ,1& 68%6,',$5,(6 2UJDQL]DWLRQDO /HJDO (QWLW\ 6WUXFWXUH $V RI 'HFHPEHU

LL -DFRE +DWWHODQG (OHFWURQLF ,, $6 D 1RUZHJLDQ FRPSDQ\ LLL $UURZ )LQODQG 2< D )LQQLVK FRPSDQ\ LY $UURZ 'HQPDUN $S6 D 'DQLVK FRPSDQ\ Y $UURZ &RPSRQHQWV 6ZHGHQ $% D 6ZHGLVK FRPSDQ\ D $UURZ 1RUGLF &RPSRQHQWV $% D 6ZHGLVK FRPSDQ\ YL $UURZ 1RUZD\ $ 6 D 1RUZHJLDQ FRPSDQ\ $UURZ &HQWUDO (XURSH *PE+ D *HUPDQ FRPSDQ\ D $UURZ (OHFWURQLFV 5XVV 222 5XVVLD RZQHG

E $UURZ &( ,QWHUQDWLRQDO *PE+ D *HUPDQ FRPSDQ\ L ,QGXVWUDGH $* D 6ZLVV FRPSDQ\ LL $UURZ (OHFWURQLFV +XQJDU\ .HUHVNHGHOPL %W D +XQJDULDQ FRPSDQ\ RZQHG

LLL 6SRHUOH +XQJDU\ .HUHVNHGHOPL .IW D +XQJDULDQ FRPSDQ\ D $UURZ (OHFWURQLFV +XQJDU\ .HUHVNHGHOPL %W D +XQJDULDQ FRPSDQ\ RZQHG

LY 7HNSDU 6 S U O D %HOJLDQ FRPSDQ\ GRUPDQW

F 3URHOHFWURQ %DXOHOHPHQWH ² 9HUWULHEVJHVHOOVFKDIW PE+ D *HUPDQ FRPSDQ\ G 0LFURWURQLFD +DQGHOVJHVHOOFKDIW IXU &RPSRQHQWV *HUDWH XQG 6\VWHPH PE+ D *HUPDQ FRPSDQ\ H 8QLHOHFWURQLF *PE+ D *HUPDQ FRPSDQ\ I 6DVFR +RO] *PE+ D *HUPDQ FRPSDQ\ L $UURZ (OHFWURQLFV 5XVV 222 5XVVLD RZQHG

LL $UURZ (OHFWURQLFV 6ORYDNLD V U R

J '/& 'LVWULEXWLRQ /RJLVWLF &HQWHU *PE+ D *HUPDQ FRPSDQ\ GRUPDQW

K $UURZ (OHFWURQLFV &]HFK 5HSXEOLF V U R D &]HFK FRPSDQ\ L $UURZ (OHFWURQLFV 3RODQG 6S ] R R D 3ROLVK FRPSDQ\ M 6SRHUOH (DVWHUQ (XURSH *PE+ D *HUPDQ FRPSDQ\ L $UURZ (OHFWURQLFV 8NUDLQH //& D 8NUDLQLDQ FRPSDQ\ N $UURZ (OHFWURQLFV 6ORYDNLD V U R RZQHG

3RZHU DQG 6LJQDO *URXS *PE+ D *HUPDQ FRPSDQ\ '16LQW FRP $* D *HUPDQ FRPSDQ\ D 'LJLWDO 1HWZRUN 6HUYLFHV 'HXWVFKODQG D *HUPDQ FRPSDQ\ E 'LJLWDO 1HWZRUN 6HUYLFHV *HV P E + DQ $XVWULDQ FRPSDQ\ F 'LJLWDO 1HWZRUN 6HUYLFHV 6ZHGHQ $% D 6ZHGLVK FRPSDQ\ L $.6 1RUGLF *URXS $% 6ZHGHQ D 6ZHGLVK FRPSDQ\ $.6 *URXS 'HQPDUN $ 6 D 'DQLVK FRPSDQ\

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


([KLELW

$552: (/(&7521,&6 ,1& 68%6,',$5,(6 2UJDQL]DWLRQDO /HJDO (QWLW\ 6WUXFWXUH $V RI 'HFHPEHU

$.6 *URXS $% 6ZHGHQ D 6ZHGLVK FRPSDQ\ D $.6 &RQVXOWLQJ (GXFDWLRQ $% 6ZHGHQ D 6ZHGLVK FRPSDQ\ $.6 *URXS 2< )LQODQG D )LQQLVK FRPSDQ\ $.6 *URXS $ 6 1RUZD\ D 1RUZHJLDQ FRPSDQ\ G '16 1HWZRUN 7HFKQRORJLHV $ 6 D 'DQLVK FRPSDQ\ H 'LJLWDO 1HWZRUN 6HUYLFHV 1RUZD\ $6 D 1RUZHJLDQ FRPSDQ\ I '16 )LQODQG 2< D )LQQLVK FRPSDQ\ J '16 3ROVND 6S ] R R D 3ROLVK FRPSDQ\ L ,7/ 3ROVND 6S ] R R D 3ROLVK FRPSDQ\ RZQHG

K '16 +XQJDULD .IW D +XQJDULDQ FRPSDQ\ L 6RIW 7URQLN D V D &]HFK FRPSDQ\ M 6RIW 7URQLN 6. V U R D 6ORYDNLDQ FRPSDQ\ N ,QWHUQHW 6HFXULW\ $* DQ $XVWULDQ FRPSDQ\ O '16 G R R D &URDWLDQ FRPSDQ\ P 'LJLWDO 1HWZRUN 6HUYLFHV 8. /LPLWHG D 8. FRPSDQ\ L &HQWLD *URXS /WG 8. D 8. FRPSDQ\ &HQWLD /WG 8. D 8. FRPSDQ\ Q '16 G R R D 6ORYHQLDQ FRPSDQ\ R 'LJLWDO 1HWZRUN 6HUYLFHV 65/ D 5RPDQLDQ FRPSDQ\ LLL $UURZ (OHFWURQLFV 6ZHGHQ .% D 6ZHGLVK SDUWQHUVKLS RZQHG

LY $UURZ +ROGLQJ 6RXWK (XURSH 6 U O DQ ,WDOLDQ FRPSDQ\ RZQHG

$UURZ (OHFWURQLFV 6RXWK $IULFD //3 RZQHG D 6RXWK $IULFDQ OLPLWHG SDUWQHUVKLS $UURZ $OWHFK +ROGLQJV 3W\ /WG RZQHG D 6RXWK $IULFDQ FRPSDQ\ D $UURZ $OWHFK 'LVWULEXWLRQ 3W\ /WG D 6RXWK $IULFDQ FRPSDQ\ E (UI +XJKHV 3W\ /LPLWHG D 6RXWK $IULFDQ FRPSDQ\ $UURZ %UDVLO 6 $ D %UD]LOLDQ FRPSDQ\ RZQHG

(ONR & ( 6 $ DQ $UJHQWLQHDQ FRPSDQ\ RZQHG

D 7(& 7HFQRORJLD /WGD D %UD]LOLDQ FRPSDQ\ RZQHG

(XURFRPSRQHQWHV 6 $ DQ $UJHQWLQHDQ FRPSDQ\ RZQHG GRUPDQW

0DFRP 6 $ DQ $UJHQWLQHDQ FRPSDQ\ RZQHG GRUPDQW

&RPSDQLD GH 6HPLFRQGXFWRUHV \ &RPSRQHQWHV 6 $ DQ $UJHQWLQHDQ FRPSDQ\ RZQHG GRUPDQW

&RPSRQHQWV $JHQW &D\PDQ /LPLWHG D &D\PDQ ,VODQGV FRPSDQ\ D $UURZ &RPSRQHQWV $JHQW /WG D +RQJ .RQJ FRPSDQ\ L $UURZ (OHFWURQLFV &KLQD 7UDGLQJ &R /WG D &KLQHVH FRPSDQ\ E $UURZ (OHFWURQLFV &KLQD /WG D +RQJ .RQJ FRPSDQ\ L $UURZ (OHFWURQLFV 6KDQJKDL &R /WG D &KLQHVH FRPSDQ\ LL $UURZ (OHFWURQLFV 6KHQ]KHQ &R /WG D &KLQHVH FRPSDQ\ LLL $UURZ (OHFWURQLFV 'LVWULEXWLRQ 6KDQJKDL &R /WG D &KLQHVH FRPSDQ\ F $UURZ (OHFWURQLFV $VLD /LPLWHG D +RQJ .RQJ FRPSDQ\

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


([KLELW

$552: (/(&7521,&6 ,1& 68%6,',$5,(6 2UJDQL]DWLRQDO /HJDO (QWLW\ 6WUXFWXUH $V RI 'HFHPEHU

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

LLL 7/: (OHFWURQLFV /WG D +RQJ .RQJ FRPSDQ\ /LWH 2Q .RUHD /WG D .RUHDQ FRPSDQ\ RZQHG

LY &UHDWLYH 0RGHO /LPLWHG D +RQJ .RQJ FRPSDQ\ Y 8OWUD 6RXUFH 7HFKQRORJ\ &RUS D 7DLZDQHVH FRPSDQ\ RZQHG

YL &KLQ &KL ,QYHVWPHQW &R /WG D 7DLZDQHVH FRPSDQ\ $UURZ $VLD 'LVWULEXWLRQ /LPLWHG D +RQJ .RQJ FRPSDQ\ $UURZ (OHFWURQLFV /RJLVWLFV 6GQ %KG D 0DOD\VLDQ FRPSDQ\ $UURZ (OHFWURQLFV &, /WG D &D\PDQ ,VODQGV FRPSDQ\ D $UURZ (OHFWURQLFV -DSDQ *. D -DSDQHVH FRPSDQ\ L 8QLYHUVH (OHFWURQ &RUSRUDWLRQ E 0DUXEXQ $UURZ $VLD /WG D %ULWLVK 9LUJLQ ,VODQGV FRPSDQ\ RZQHG

L 0DUXEXQ $UURZ +. /LPLWHG D +RQJ .RQJ FRPSDQ\ 0DUXEXQ $UURZ 6KDQJKDL &R /WG D &KLQHVH FRPSDQ\ LL 0DUXEXQ $UURZ 6 3WH /WG D 6LQJDSRUH FRPSDQ\ 0DUXEXQ $UURZ 7KDLODQG &R /WG D 7KDLODQG FRPSDQ\ 0DUXEXQ $UURZ 3KLOLSSLQHV ,QF D )LOLSLQR FRPSDQ\ 0DUXEXQ $UURZ 0 6GQ %KG 0DOD\VLD D 0DOD\VLDQ FRPSDQ\ 0DUXEXQ $UURZ 86$ //& D 'HODZDUH OLPLWHG OLDELOLW\ FRPSDQ\ RZQHG

$UURZ (OHFWURQLFV 0H[LFR 6 GH 5 / GH & 9 D 0H[LFDQ FRPSDQ\ 'LFRSHO ,QF D 8 6 FRPSDQ\ $UURZ &RPSRQHQWV 0H[LFR 6 $ GH & 9 D 0H[LFDQ FRPSDQ\ :\OH (OHFWURQLFV ,QF D %DUEDGRV FRPSDQ\

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


([KLELW

$552: (/(&7521,&6 ,1& 68%6,',$5,(6 2UJDQL]DWLRQDO /HJDO (QWLW\ 6WUXFWXUH $V RI 'HFHPEHU

:\OH (OHFWURQLFV GH 0H[LFR 6 GH 5 / GH & 9 D 0H[LFDQ FRPSDQ\ :\OH (OHFWURQLFV &DULEEHDQ &RUS D 3XHUWR 5LFDQ FRPSDQ\ H&KLSV&DQDGD ,QF D &DQDGLDQ FRPSDQ\ GRUPDQW

0DUXEXQ &RUSRUDWLRQ D -DSDQHVH FRPSDQ\ RZQHG

:3* +ROGLQJ &R /WG D 7DLZDQHVH FRPSDQ\ RZQHG

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


$552: (/(&7521,&6 ,1&

(;+,%,7

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

5HJLVWUDWLRQ 6WDWHPHQW )RUP 6 1R

5HJLVWUDWLRQ 6WDWHPHQW )RUP 6 1R

5HJLVWUDWLRQ 6WDWHPHQW )RUP 6 1R

5HJLVWUDWLRQ 6WDWHPHQW )RUP 6 1R

5HJLVWUDWLRQ 6WDWHPHQW )RUP 6 1R

V (5167 <281* //3 1HZ <RUN 1HZ <RUN )HEUXDU\

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


([KLELW L

$UURZ (OHFWURQLFV ,QF &HUWLILFDWLRQ RI &KLHI ([HFXWLYH 2IILFHU 3XUVXDQW WR 6HFWLRQ RI WKH 6DUEDQHV 2[OH\ $FW RI , :LOOLDP ( 0LWFKHOO &KDLUPDQ 3UHVLGHQW DQG &KLHI ([HFXWLYH 2IILFHU FHUWLI\ WKDW , KDYH UHYLHZHG WKLV DQQXDO UHSRUW RQ )RUP . RI $UURZ (OHFWURQLFV ,QF WKH ³UHJLVWUDQW´

%DVHG RQ P\ NQRZOHGJH WKLV DQQXDO UHSRUW GRHV QRW FRQWDLQ DQ\ XQWUXH VWDWHPHQW RI D PDWHULDO IDFW RU RPLW WR VWDWH D PDWHULDO IDFW QHFHVVDU\ WR PDNH WKH VWDWHPHQWV PDGH LQ OLJKW RI WKH FLUFXPVWDQFHV XQGHU ZKLFK VXFK VWDWHPHQWV ZHUH PDGH QRW PLVOHDGLQJ ZLWK UHVSHFW WR WKH SHULRG FRYHUHG E\ WKLV DQQXDO UHSRUW

%DVHG RQ P\ NQRZOHGJH WKH ILQDQFLDO VWDWHPHQWV DQG RWKHU ILQDQFLDO LQIRUPDWLRQ LQFOXGHG LQ WKLV DQQXDO UHSRUW IDLUO\ SUHVHQW LQ DOO PDWHULDO UHVSHFWV WKH ILQDQFLDO FRQGLWLRQ UHVXOWV RI RSHUDWLRQV DQG FDVK IORZV RI WKH UHJLVWUDQW DV RI DQG IRU WKH SHULRGV SUHVHQWHG LQ WKLV DQQXDO UHSRUW

7KH UHJLVWUDQW¶V RWKHU FHUWLI\LQJ RIILFHU DQG , DUH UHVSRQVLEOH IRU HVWDEOLVKLQJ DQG PDLQWDLQLQJ GLVFORVXUH FRQWUROV DQG SURFHGXUHV DV GHILQHG LQ ([FKDQJH $FW 5XOHV D H DQG G H

DQG LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ DV GHILQHG LQ ([FKDQJH $FW 5XOHV D I DQG G I

IRU WKH UHJLVWUDQW DQG KDYH

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¶V GLVFORVXUH FRQWUROV DQG SURFHGXUHV DQG SUHVHQWHG LQ WKLV DQQXDO UHSRUW RXU FRQFOXVLRQV DERXW WKH HIIHFWLYHQHVV RI WKH GLVFORVXUH FRQWUROV DQG SURFHGXUHV DV RI WKH HQG RI WKH SHULRG FRYHUHG E\ WKLV DQQXDO UHSRUW EDVHG RQ VXFK HYDOXDWLRQ DQG G GLVFORVHG LQ WKLV DQQXDO UHSRUW DQ\ FKDQJH LQ WKH UHJLVWUDQW¶V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ WKDW RFFXUUHG GXULQJ WKH UHJLVWUDQW¶V PRVW UHFHQW ILVFDO TXDUWHU WKH UHJLVWUDQW¶V IRXUWK ILVFDO TXDUWHU LQ WKH FDVH RI DQ DQQXDO UHSRUW WKDW KDV PDWHULDOO\ DIIHFWHG RU LV UHDVRQDEO\ OLNHO\ WR PDWHULDOO\ DIIHFW WKH UHJLVWUDQW¶V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ DQG

7KH UHJLVWUDQW¶V RWKHU FHUWLI\LQJ RIILFHU DQG , KDYH GLVFORVHG EDVHG RQ RXU PRVW UHFHQW HYDOXDWLRQ RI LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ WR WKH UHJLVWUDQW¶V DXGLWRUV DQG WKH DXGLW FRPPLWWHH RI WKH UHJLVWUDQW¶V ERDUG RI GLUHFWRUV RU SHUVRQV SHUIRUPLQJ WKH HTXLYDOHQW IXQFWLRQV

D DOO VLJQLILFDQW GHILFLHQFLHV DQG PDWHULDO ZHDNQHVVHV LQ WKH GHVLJQ RU RSHUDWLRQ RI LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ ZKLFK DUH UHDVRQDEO\ OLNHO\ WR DGYHUVHO\ DIIHFW WKH UHJLVWUDQW¶V DELOLW\ WR UHFRUG SURFHVV VXPPDUL]H DQG UHSRUW ILQDQFLDO LQIRUPDWLRQ DQG

E DQ\ IUDXG ZKHWKHU RU QRW PDWHULDO WKDW LQYROYHV PDQDJHPHQW RU RWKHU HPSOR\HHV ZKR KDYH D VLJQLILFDQW UROH LQ WKH UHJLVWUDQW¶V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ 'DWH )HEUXDU\ %\ V :LOOLDP ( 0LWFKHOO :LOOLDP ( 0LWFKHOO &KDLUPDQ 3UHVLGHQW DQG &KLHI ([HFXWLYH 2IILFHU

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


([KLELW LL

$UURZ (OHFWURQLFV ,QF &HUWLILFDWLRQ RI &KLHI )LQDQFLDO 2IILFHU 3XUVXDQW WR 6HFWLRQ RI WKH 6DUEDQHV 2[OH\ $FW RI , 3DXO - 5HLOO\ 6HQLRU 9LFH 3UHVLGHQW DQG &KLHI )LQDQFLDO 2IILFHU FHUWLI\ WKDW , KDYH UHYLHZHG WKLV DQQXDO UHSRUW RQ )RUP . RI $UURZ (OHFWURQLFV ,QF WKH ³UHJLVWUDQW´

%DVHG RQ P\ NQRZOHGJH WKLV DQQXDO UHSRUW GRHV QRW FRQWDLQ DQ\ XQWUXH VWDWHPHQW RI D PDWHULDO IDFW RU RPLW WR VWDWH D PDWHULDO IDFW QHFHVVDU\ WR PDNH WKH VWDWHPHQWV PDGH LQ OLJKW RI WKH FLUFXPVWDQFHV XQGHU ZKLFK VXFK VWDWHPHQWV ZHUH PDGH QRW PLVOHDGLQJ ZLWK UHVSHFW WR WKH SHULRG FRYHUHG E\ WKLV DQQXDO UHSRUW

%DVHG RQ P\ NQRZOHGJH WKH ILQDQFLDO VWDWHPHQWV DQG RWKHU ILQDQFLDO LQIRUPDWLRQ LQFOXGHG LQ WKLV DQQXDO UHSRUW IDLUO\ SUHVHQW LQ DOO PDWHULDO UHVSHFWV WKH ILQDQFLDO FRQGLWLRQ UHVXOWV RI RSHUDWLRQV DQG FDVK IORZV RI WKH UHJLVWUDQW DV RI DQG IRU WKH SHULRGV SUHVHQWHG LQ WKLV DQQXDO UHSRUW

7KH UHJLVWUDQW¶V RWKHU FHUWLI\LQJ RIILFHU DQG , DUH UHVSRQVLEOH IRU HVWDEOLVKLQJ DQG PDLQWDLQLQJ GLVFORVXUH FRQWUROV DQG SURFHGXUHV DV GHILQHG LQ ([FKDQJH $FW 5XOHV D H DQG G H

DQG LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ DV GHILQHG LQ ([FKDQJH $FW 5XOHV D I DQG G I

IRU WKH UHJLVWUDQW DQG KDYH

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¶V GLVFORVXUH FRQWUROV DQG SURFHGXUHV DQG SUHVHQWHG LQ WKLV DQQXDO UHSRUW RXU FRQFOXVLRQV DERXW WKH HIIHFWLYHQHVV RI WKH GLVFORVXUH FRQWUROV DQG SURFHGXUHV DV RI WKH HQG RI WKH SHULRG FRYHUHG E\ WKLV DQQXDO UHSRUW EDVHG RQ VXFK HYDOXDWLRQ DQG G GLVFORVHG LQ WKLV DQQXDO UHSRUW DQ\ FKDQJH LQ WKH UHJLVWUDQW¶V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ WKDW RFFXUUHG GXULQJ WKH UHJLVWUDQW¶V PRVW UHFHQW ILVFDO TXDUWHU WKH UHJLVWUDQW¶V IRXUWK ILVFDO TXDUWHU LQ WKH FDVH RI DQ DQQXDO UHSRUW WKDW KDV PDWHULDOO\ DIIHFWHG RU LV UHDVRQDEO\ OLNHO\ WR PDWHULDOO\ DIIHFW WKH UHJLVWUDQW¶V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ DQG

7KH UHJLVWUDQW¶V RWKHU FHUWLI\LQJ RIILFHU DQG , KDYH GLVFORVHG EDVHG RQ RXU PRVW UHFHQW HYDOXDWLRQ RI LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ WR WKH UHJLVWUDQW¶V DXGLWRUV DQG WKH DXGLW FRPPLWWHH RI WKH UHJLVWUDQW¶V ERDUG RI GLUHFWRUV RU SHUVRQV SHUIRUPLQJ WKH HTXLYDOHQW IXQFWLRQV

D DOO VLJQLILFDQW GHILFLHQFLHV DQG PDWHULDO ZHDNQHVVHV LQ WKH GHVLJQ RU RSHUDWLRQ RI LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ ZKLFK DUH UHDVRQDEO\ OLNHO\ WR DGYHUVHO\ DIIHFW WKH UHJLVWUDQW¶V DELOLW\ WR UHFRUG SURFHVV VXPPDUL]H DQG UHSRUW ILQDQFLDO LQIRUPDWLRQ DQG

E DQ\ IUDXG ZKHWKHU RU QRW PDWHULDO WKDW LQYROYHV PDQDJHPHQW RU RWKHU HPSOR\HHV ZKR KDYH D VLJQLILFDQW UROH LQ WKH UHJLVWUDQW¶V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ 'DWH )HEUXDU\ %\ V 3DXO - 5HLOO\ 3DXO - 5HLOO\ 6HQLRU 9LFH 3UHVLGHQW DQG &KLHI )LQDQFLDO 2IILFHU

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


([KLELW L

$UURZ (OHFWURQLFV ,QF &HUWLILFDWLRQ RI &KLHI ([HFXWLYH 2IILFHU 3XUVXDQW WR 8 6 & 6HFWLRQ $V $GRSWHG 3XUVXDQW WR 6HFWLRQ RI WKH 6DUEDQHV 2[OH\ $FW RI ³6HFWLRQ ´

,Q FRQQHFWLRQ ZLWK WKH $QQXDO 5HSRUW RQ )RUP . RI $UURZ (OHFWURQLFV ,QF WKH ³FRPSDQ\´ IRU WKH \HDU HQGHG 'HFHPEHU WKH ³5HSRUW´ , :LOOLDP ( 0LWFKHOO &KDLUPDQ 3UHVLGHQW DQG &KLHI ([HFXWLYH 2IILFHU RI WKH FRPSDQ\ FHUWLI\ SXUVXDQW WR WKH UHTXLUHPHQWV RI 6HFWLRQ WKDW WR WKH EHVW RI P\ NQRZOHGJH 7KH 5HSRUW IXOO\ FRPSOLHV ZLWK WKH UHTXLUHPHQWV RI 6HFWLRQ D RU G RI WKH 6HFXULWLHV ([FKDQJH $FW RI DQG

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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


([KLELW LL

$UURZ (OHFWURQLFV ,QF &HUWLILFDWLRQ RI &KLHI )LQDQFLDO 2IILFHU 3XUVXDQW WR 8 6 & 6HFWLRQ $V $GRSWHG 3XUVXDQW WR 6HFWLRQ RI WKH 6DUEDQHV 2[OH\ $FW RI ³6HFWLRQ ´

,Q FRQQHFWLRQ ZLWK WKH $QQXDO 5HSRUW RQ )RUP . RI $UURZ (OHFWURQLFV ,QF WKH ³FRPSDQ\´ IRU WKH \HDU HQGHG 'HFHPEHU WKH ³5HSRUW´ , 3DXO - 5HLOO\ 6HQLRU 9LFH 3UHVLGHQW DQG &KLHI )LQDQFLDO 2IILFHU RI WKH FRPSDQ\ FHUWLI\ SXUVXDQW WR WKH UHTXLUHPHQWV RI 6HFWLRQ WKDW WR WKH EHVW RI P\ NQRZOHGJH 7KH 5HSRUW IXOO\ FRPSOLHV ZLWK WKH UHTXLUHPHQWV RI 6HFWLRQ D RU G RI WKH 6HFXULWLHV ([FKDQJH $FW RI DQG

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

6RXUFH $552: (/(&7521,&6 ,1 . )HEUXDU\


Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.