Annual Report 2006

Transcription

Annual Report 2006
$QQXDO5HSRUW
.H\UDWLRV
.H\UDWLRVRIWKH%HUHQW]HQ*URXSLQOLQHZLWK,)56
&KDQJH
YV
6DOHVUHYHQXH
6SLULWVGLYLVLRQLQ(85PLOOLRQ
33
LQ(85PLOOLRQ
!
(%,7PDUJLQLQ
33
1HWSURILWORVVIRUWKH\HDULQ(85PLOOLRQ
!
!
$OFRKROIUHH%HYHUDJHVGLYLVLRQLQ(85PLOOLRQ
7RWDORSHUDWLQJSHUIRUPDQFH
(%,7'$EHIRUHUHVWUXFWXULQJDWHTXLW\LQFRPH
LQ(85PLOOLRQ
(%,7'$PDUJLQLQ
(%,7EHIRUHUHVWUXFWXULQJDWHTXLW\LQFRPH
&DVKIORZUHOHYDQWWRHFRQRPLFVXFFHVV
LQ(85PLOOLRQ
0DWHULDOFRVWUDWLRLQ
33
6WDIIFRVWUDWLRLQ
33
'HSUHFLDWLRQDQGDPRUWLVDWLRQUDWLRLQ
33
2WKHURSHUDWLQJH[SHQVHUDWLRLQ
33
%DODQFHVKHHWWRWDOLQ(85PLOOLRQ
33
(TXLW\UDWLRLQ
1XPEHURIHPSOR\HHV\HDUHQG
6KDUHSULFH\HDUHQG
'LYLGHQGSUHIHUHQFHVKDUHVLQ(85
'LYLGHQGRUGLQDU\VKDUHVLQ(85
%RRNYDOXHSHUVKDUHLQ(85
3URSRVHG
%HUHQW]HQ*UXSSH$*
7KH%HUHQW]HQ*URXSLVRQHRI*HUPDQ\pVOHDGLQJEHYHUDJHJURXSV:HIRFXVRQWKHFRUH
EUDQGV%HUHQW]HQDQG3XVFKNLQLQYROXPHVHJPHQWVRIWKHVSLULWVPDUNHWDQGWKH9LYDULV
EUDQGLQWKHPDUNHWIRUUHIUHVKPHQWGULQNV,QWHUQDWLRQDOO\ZHWDNHDGYDQWDJHRIJURZWK
RSSRUWXQLWLHVZLWKRXUFRUHEUDQGV
%UDQGVXSSRUWDQGLQQRYDWLRQVDVZHOODVH[FHOOHQWDQGPRWLYDWHGHPSOR\HHVIRUPWKHEDVLV
RI%HUHQW]HQpVSURILWDEOHDQGVXVWDLQHGJURZWK$VZHKDYHVSHFLDOLVHGLQEHYHUDJHVZKLFK
DUHVRXUFHVRIIXQDQGSOHDVXUHZHDOVRSURYLGHDOLWWOHMRLHGHYLYUH
-RLHGHYLYUH
&ROORTXLDOO\SOHDVXUHFKHHUMR\
.H\ZRUGH[SUHVVLQJDUDQJHRIFRQFHSWVZKLFKDUHGLIILFXOW
WRSLQGRZQEXWZKLFKFRQVWLWXWHWKHKDSSLQHVVDQG
FRQWHQWPHQWRIDOLIHDIILUPLQJSHUVRQ
—2XWWRWKHFRXQWU\
DWWKHZHHNHQG
VLWWLQJZLWKIULHQGVLQ
WKHJDUGHQr,WpVDV
UHIUHVKLQJDVDPLQL
KROLGD\ˆ
—5XVKLQJWKURXJK
WKHLF\FROG
ZLWKWKHZLQG
ZKLVWOLQJLQ\RXU
HDUVtIRUPHWKHUHpV
QRWKLQJEHWWHUˆ
—+DUYHVWLQJLVRYHU
DQG\RXFDQVHH
DOO\RXUKDUGZRUNKDV
SDLGRII7KDWpVRQH
JRRGUHDVRQWRIHHO
FRQWHQWˆ
—)ODPHQFR
JXLWDUV
WHPSHUDPHQWDO
GDQFHtIRUPHWKH
VHGXFWLYHVLGHRI
6SDLQˆ
—1RUZD\pVXQLTXH
FRXQWU\VLGH%HLQJ
RXWGRRUVZKHUHQRRQH
FDQUHDFKPHWKH
SHUIHFWFKDQJHIURP
VLWWLQJEHKLQGP\GHVNˆ
7KHWDVWHRIMR\
—'DGVD\V\RX
FDQRQO\PDNHWKH
QDWLRQDOWHDPLI\RX
WUDLQSURSHUO\t
KRZEULOOLDQW
ZRXOGWKDWEH"ˆ
&RQWHQWV
, /HWWHUWR6KDUHKROGHUV
, 5HSRUWRIWKH6XSHUYLVRU\%RDUG
, 0DQDJHPHQW5HSRUW
_
%XVLQHVVDQGJHQHUDOFRQGLWLRQV
_
,QFRPHVLWXDWLRQ
_
)LQDQFLDOVLWXDWLRQ
_
$VVHWVVLWXDWLRQ
_
5HPXQHUDWLRQUHSRUW
_
6XSSOHPHQWDU\UHSRUW
_
5LVNUHSRUW
_
)RUHFDVWUHSRUW
, &RUSRUDWH*RYHUQDQFH
, &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV
, $XGLW2SLQLRQ
, $FNQRZOHGJHPHQWV
/(77(5726+$5(+2/'(56
7KHEHDULQWKHPDQ
,PDJLQHDQLFHFROGJODVVRI3XVFKNLQYRGNDDQGJLYH
WKHYRGNDDIHZPLQXWHVWREUHDWKH,WVKRXOGEHFU\VWDO
FOHDU)LUVWFKHFNWKHFRORXU1RZOHW\RXUQRVHHQMR\
7KHQVLSMXVWDVPDOOGURS7DNHLQVRPHR[\JHQZLWKLW
DQGqFKHZr)LQDOO\VZDOORZWKHGULQNDQGFRQFHQWUDWH
RQWKHqHQGrLHKRZORQJWKHWDVWHVWD\VLQ\RXU
PRXWKDQGRQ\RXUSDODWH:KHWKHUQHDWDVKHUHRU
DVWKHVWDUWLQJSRLQWIRUDORQJGULQNt3XVFKNLQLVQRW
IRUqIUDXGVr3XVFKNLQLVIRUWUXHLQGLYLGXDOLVWVZKR
NQRZZKDWWKH\ZDQW
7KHWDVWHRIMR\
'HU9RUVWDQG
$[HO'DKP
&KDLUPDQRIWKH%RDUGRI
'LUHFWRUV
\HDUVDW%HUHQW]HQ
0D[3HOLNDQ
QRWSLFWXUHG
0HPEHURIWKH%RDUGRI
'LUHFWRUV
\HDUVDW%HUHQW]HQ
7KH0DQDJHPHQW
%HUQKDUG%ULQNPDQQ
0DUNHWLQJ6DOHV
$OFRKROIUHH%HYHUDJHV
\HDUVDW%HUHQW]HQ
5RODQG(QJHOV
3ULYDWH6HFRQGDU\%UDQGV
\HDUVDW%HUHQW]HQ
5DLQHU(QJOLVFK
5'3XUFKDVLQJ7HFKQRORJ\
4$/RJLVWLFV
6SLULWV
\HDUVDW%HUHQW]HQ
&KULVWLDQ%HUHQW]HQ
t*HQHUDO0DQDJHUt
5'7HFKQRORJ\/RJLVWLFV
$OFRKROIUHH%HYHUDJHV
\HDUVDW%HUHQW]HQ
5DOI%UØKÒIQHU
t*HQHUDO0DQDJHUt
)LQDQFHV,73HUVRQ
\HDUVDW%HUHQW]HQ
'LHWPDU6SLOOH
0DUNHWLQJ1DWLRQDO
,QWHUQDWLRQDO
6SLULWV
\HDUVDW%HUHQW]HQ
5XGL6HHOHU
'RPHVWLF6DOHV
6SLULWV
\HDUVDW%HUHQW]HQ
$QGUHZ3DVKOH\
,QWHUQDWLRQDO6DOHV
6SLULWV
\HDUVDW%HUHQW]HQ
/DGLHVDQG*HQWOHPHQ
:HDUHVXUH\RXpOOEHIDPLOLDUZLWKWKHSURYHUEq$QHZEURRPVZHHSVFOHDQr2QDFRPSDQ\
OHYHOWKLVPHDQVWKDWQHZHPSOR\HHVRUDQHZPDQDJHPHQWOLNHWRFKDQJHWKHZD\WKLQJVDUH
GRQH3DUWLFXODUO\ZKHQWKH\ILUVWEHJLQ,QWKHILUVWGD\VDQHZPDQDJHPHQWFDQEUHDNZLWK
WKHSDVWDQGWDNHDG\QDPLFQHZFRXUVHZLWKGHILQHGJRDOV7KDWpVZKDWWKH\VD\
$W%HUHQW]HQLWpVQRWDTXHVWLRQRIWKHQHZPDQDJHPHQWZDQWLQJWRFKDQJHVRPHWKLQJ7KHUH
DUHDORWRIWKLQJVZHPXVWFKDQJH$QGZHPXVWFKDQJHWKHPQRZ7RPDNHFKDQJHV\RX
PXVWILUVWVWDUWE\WDNLQJDQHXWUDOORRNDWWKHVLWXDWLRQ$ORRNDWWKHSDVWILQDQFLDO\HDUJLYHV
FOHDULQGLFDWLRQVRIZKHUHDQGZK\VRPHWKLQJKDVWREHGRQH/RRNLQJDWWKHODUJHVWSRVVLEOH
NH\ILJXUHIRUWKHEXVLQHVVYROXPHWKH%HUHQW]HQ*URXSJHQHUDWHGVDOHVUHYHQXHRI(85
PLOOLRQLQFOXGLQJVSLULWVWD[LQ&RQVROLGDWHGVDOHVH[FOXGLQJVSLULWVWD[DPRXQWHGWR(85
PLOOLRQ*RRGQHZVLVWKDW9LYDULVZLWKWKH$OFRKROIUHH%HYHUDJHVGLYLVLRQKDVJURZQ
+RZHYHU%HUHQW]HQpVFRUHEXVLQHVVLVVSLULWVZKHUHVDOHVUHYHQXHVRI(85PLOOLRQZHUH
JHQHUDWHG/DVW\HDU(85PLOOLRQZDVJHQHUDWHGODVW\HDULQWKHSULPDU\PDUNHW*HUPDQ\
)LYH\HDUVDJRGRPHVWLFVDOHVRIVSLULWVZHUHFORVHWR(85PLOOLRQLQ*HUPDQ\7HQ\HDUV
DJRVDOHVH[FHHGHG(85PLOOLRQtQRWLQFOXGLQJWKHEUDQGVDQGSURGXFWVVXFKDV+DQVHQ
DQG%RPPHUOXQGHUZKLFKKDYHEHHQDFTXLUHGVLQFHWKHQDQGQRWLQFOXGLQJOLFHQFHEUDQGV
7RFRPHEDFNWRFRQVROLGDWHGVDOHVLQFOXGLQJVSLULWVWD[LQDQGFDOFXODWHGLQ'0DUN
%HUHQW]HQZDVDFRPSDQ\ZKRVHWXUQRYHUDPRXQWHGWRELOOLRQVDQGWKHQXPEHURQHRQWKH
*HUPDQVSLULWVPDUNHW
7KHSRLQWKHUHLVQRWWRFRQMXUHXSDSDVWILOOHGZLWKJORU\$IWHUDOOLWLVDOVRWUXHWKDWWKH
HFRQRPLFHQYLURQPHQWWKHVSLULWVPDUNHWDQGFRQVXPHUKDELWVKDYHDOOFKDQJHG+RZHYHU
WKHUHLVQRGHQ\LQJWKDW%HUHQW]HQKDVORVWDORWRIJURXQG2IFRXUVH%HUHQW]HQKDVDOVR
GRQHDORWRIWKLQJVULJKW1XPHURXVWDVNVKDYHEHHQVROYHGDQGRSSRUWXQLWLHVKDYHEHHQ
WDNHQtLQWKHFRQVROLGDWLRQRIWKHVSLULWVPDUNHWGXHWRWKHVNLOIXOSXUFKDVHDQGGLVSRVDORI
SDUWLFLSDWLRQVZLWKWKHFRQWLQXHGGHYHORSPHQWRILQWHUQDWLRQDOPDUNHWVWKHVWUHDPOLQLQJRI
SDUWVRIWKH&RPSDQ\DQG9LYDULVpVUHFHQWVXFFHVVIXOZRUNRQEHKDOIRIDQGZLWK3HSVL&R7KLV
KHOSVXVWRGD\
+RZHYHUWKHPHVVDJHIURPWKHEXVLQHVVILJXUHVLVLWLVQRWHQRXJKDQGZHFDQQRWFRQWLQXHDV
ZHDUH1RWRQO\KDYHVDOHVVKUXQN'HFOLQLQJEUDQGVDOHVLQFRQMXQFWLRQZLWKLQFUHDVLQJWUDGH
EUDQGVEXVLQHVVDQGUHGXFHGPDUJLQVLQDOODUHDVXQGHUPLQHWKHSHUIRUPDQFH*LYHQWKLVVDOHV
VWUXFWXUHDQ\LQFUHDVHLQWKHFRVWVRIUDZPDWHULDOVKDVDJUHDWHULPSDFWRQHDUQLQJV)L[HG
FRVWVLQUHODWLRQWRIDOOLQJVDOHVDUHWRRKLJK$QGWKHIXQGDPHQWDOO\DSSURSULDWHFRVWUHGXFWLRQ
7UDGHEUDQGVDUHQRWGHQLJUDWLQJIRUDEUDQGPDQXIDFWXULQJFRPSDQ\DQGQRUDUHWKH\IRU
%HUHQW]HQWKH\DUHSDUWRIRXUEXVLQHVV3DUWLFXODUO\DWDWLPHZKHQFRQVXPHUVDUHEHFRPLQJ
LQFUHDVLQJO\SULFHRULHQWHGLQWKHLUSXUFKDVLQJKDELWVDQGZKHQLQPDQ\SURGXFWILHOGVHYHU\
WKLUGSURGXFWLVERXJKWLQWKHUHWDLOEDUJDLQRXWOHWVDVDOHDGLQJPDQXIDFWXUHURITXDOLW\
SURGXFWVLQ*HUPDQ\ZHDLPWRSURYLGHVXFKFXVWRPHUVZLWKJRRGEDVLVTXDOLW\7RGRVR
ZHDUHPDNLQJHYHU\HIIRUWLQWHUPVRISXUFKDVLQJPDQXIDFWXULQJDQGPDUNHWLQJHIILFLHQF\WR
DYRLGKDYLQJWRSURYLGHRXUSURGXFWVDWVLJQLILFDQWO\KLJKHUSULFHVWKDQVRPHFRPSHWLWRUVLQ
WKLVILHOGZKRKDYHXQIRUWXQDWHO\FHDVHGWRPDQXIDFWXUHDQGVXSSO\TXDOLW\SURGXFWV+RZHYHU
WUDGHEUDQGVDUHQRWWKHNH\WRKLJKHUVDOHVDQGHDUQLQJV7KLVFDQRQO\EHWKH%HUHQW]HQ
*URXSpVEUDQGVtZLWKSURSHUPDQDJHPHQWDQGWKHULJKWVXSSRUW7KH\ZLOOWKHQDSSHDOWR
WKHFRQVXPHUJURXSZKLFKWKH&RPSDQ\KDVORVWLQUHFHQW\HDUV7KH\ZLOOWKHQSURPRWH
LQQRYDWLRQVZKLFKDUHQRWRWKHUZLVHQRWLFHGRQWKHVKHOYHV7KLVLVQRWSRVVLEOHZLWKRXW
LQYHVWPHQWLQWKHPDUNHW7KLVPXVWEHIDUJUHDWHUWKDQUHFHQWEUDQGLQYHVWPHQWV&DQZH
DIIRUGLW"7KDWLVWKHZURQJTXHVWLRQZHPXVWPDNHWKHVHLQYHVWPHQWV,IZHGRQRWLQYHVW
VDOHVZLOOIXUWKHUGHFOLQHDQGLWZLOOEHFRPHPRUHGLIILFXOWWRJHQHUDWHDFFHSWDEOHUHWXUQVIRUWKH
VKDUHKROGHUV:HFDQLQYHVWEHFDXVH%HUHQW]HQKDVVROLGILQDQFLQJ:HVKRXOGLQYHVWEHFDXVH
IURPWRGD\pVSRLQWRIYLHZWKLVLVWKHULJKWSDWKWRWDNHLQRUGHUWRXVHWKHDYDLODEOHFDSLWDO
PHDQLQJIXOO\DQGWRUHWXUQDVTXLFNO\DVSRVVLEOHWRWKHJURZWKWUDFNDQGDFKLHYHDQDFFHSWDEOH
UHWXUQRQHTXLW\
7KLVSDWKLVQHLWKHUHDV\QRUVKRUW7KHUHLVDORWWRFDWFKXSRQLQWHUPVRIEUDQGOHDGHUVKLS
LQQRYDWLRQDQGPDUNHWGHYHORSPHQW,QWHQVHFRPSHWLWLRQDQGRXURZQTXDOLW\VWDQGDUGV
UHTXLUHLPSURYHPHQWVLQWKHRUJDQLVDWLRQRIWKHSURGXFWLRQFKDLQDVDZKROHtDOWKRXJK
VLJQLILFDQWSURJUHVVKDVEHHQDFKLHYHGKHUH
7KHSDWKLVVWUHZQZLWKULVNV+RZHYHUWKHVHDUHHQWUHSUHQHXULDOULVNVZKLFKZHFDQKDQGOH
UHVSRQVLEO\7KHREMHFWLYHLVWRPDNH%HUHQW]HQRQFHDJDLQDIDVWRSHUDWLQJLQQRYDWLYHPDUNHW
SOD\HUWKDWFDQUHO\RQLWVRZQEUDQGV7RGRVRZHQHHGPRUHWKDQGD\V:HQHHGVHYHUDO
\HDUVDQGDWOHDVWLQWKHHDUO\VWDJHVZHDQWLFLSDWHORVVHV1HYHUWKHOHVVZHDUHVXUHWKDWWKH
QHJDWLYHWUHQGRIWKHSDVWFDQEHEURNHQEHFDXVHWKLV&RPSDQ\KDVDVWURQJFRUHtDVZHOODV
EUDQGVZKRVHSRWHQWLDOPXVWEHUHDZDNHQHG
+DVHOØQQH0DUFK
$[HO'DKP
&KDLUPDQRIWKH%RDUGRI'LUHFWRUV
0D[3HOLNDQ
0HPEHURIWKH%RDUGRI'LUHFWRUV
$XGLW2SLQLRQ&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV&RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG /HWWHUWR6KDUHKROGHUV PHDVXUHVKDYHPHDQWWKDWWKHUHTXLUHGLQYHVWPHQWVLQEUDQGVZHUHOHVVWKDQDGHTXDWH
%HUHQW]HQKDVDOZD\VVHHQLWVHOIDVDQLQQRYDWLYHPDQXIDFWXUHURIEUDQGHGDUWLFOHVtRQHRI
WKHOHDGLQJPDQXIDFWXUHUVRIEUDQGVSLULWV$QGWKHUHDOLW\",QRYHU(85PLOOLRQZDV
LQYHVWHGLQPDUNHWLQJ,QWKLVILJXUHZDV(85PLOOLRQDQGLQ(85PLOOLRQ
$QGRQO\DIUDFWLRQRIWKHVHLQYHVWPHQWVZDVLQYHVWHGLQGLUHFWO\LQIRUPLQJFRQVXPHUV
RXUFXVWRPHUVRIKRZJRRGLQWHUHVWLQJDQGDWWUDFWLYHRXUSURGXFWVDUHLQqWUDGLWLRQDOr
FRPPXQLFDWLRQXVLQJPDVVPHGLDDQGLQFRQVXPHUSURPRWLRQFDPSDLJQV(YHQLIWKHVH
ILJXUHVGRQRWH[SODLQWKHGHYHORSPHQWDVDZKROHRQHWKLQJLVFOHDUDOHDGLQJEUDQG
PDQXIDFWXUHURSHUDWHVGLIIHUHQWO\
5(32572)7+(683(59,625<%2$5'
7KHWUDGLWLRQDO:HVW
SKDOLDQRULJLQDO
6RPHWKLQJVZLOOEHWKHVDPHLQDKXQGUHG\HDUVDV
WKH\DUHWRGD\%HFDXVHWKH\FRXOGQpWEHEHWWHUHG
*HUPDQVKDYHEHHQGULQNLQJ.RUQIRUDOPRVW\HDUV
DQGHYHQWRGD\LWLVVWLOORQHRIWKHPRVWSRSXODUVSLULWV
:LWK:HVWSKDOLDQGLVWLOODWLRQH[SHUWLVHSDVVHGGRZQYLD
VHYHUDOJHQHUDWLRQVDQGUHILQHGLQZRRGHQEDUUHOV
6WURWKPDQQ:HL]HQNRUQKDVWKDWILQHPLOGPDWXULW\VR
EHORYHGRI.RUQFRQQRLVVHXUV
:KHWKHULQDVRFLDOJDWKHULQJZLWKIRRGRUVLPSO\WR
URXQGRIIWKHGD\LQVW\OHt6WURWKPDQQLVEHVWHQMR\HG
GURSE\GURS7KHWDVWHRIMR\
5HSRUWRIWKH6XSHUYLVRU\%RDUG
/DGLHVDQG*HQWOHPHQ
,QWKHILQDQFLDO\HDUWKH6XSHUYLVRU\%RDUGDQGWKH%RDUGRI'LUHFWRUVFRQVXOWHGRQWKH
*URXSpVSRVLWLRQDQGGHYHORSPHQWLWVEXVLQHVVSROLF\DQGQXPHURXVWRSLFVFXUUHQWO\UHOHYDQW
WRWKH&RPSDQ\LQILYHPHHWLQJV
2QWKHEDVLVRIUHJXODUZULWWHQUHSRUWVE\WKH%RDUGRI'LUHFWRUVDVZHOODVLQWKHFRQWH[WRI
LQGLYLGXDOWDONVWKH6XSHUYLVRU\%RDUGGLVFXVVHGNH\EXVLQHVVWUDQVDFWLRQVZLWKWKH%RDUG
RI'LUHFWRUVFDUHIXOO\PRQLWRUHGPDQDJHPHQWDQGRIIHUHGVXSSRUWDQGDGYLFHRQPDWHULDO
LQGLYLGXDOPHDVXUHV:KHUH%RDUGGHFLVLRQVUHTXLUHGWKHDSSURYDORIWKH6XSHUYLVRU\%RDUG
WKH6XSHUYLVRU\%RDUGZDVQRWLILHGGHDOWZLWKWKHUHVSHFWLYHLVVXHVLQGHWDLODQGJUDQWHGLWV
DSSURYDOZKHUHDSSOLFDEOH7KHSHUPDQHQWFRPPLWWHHVIRUILQDQFHDQGKXPDQUHVRXUFHV
FRQWLQXHGWKHLUDFWLYLWLHV
$QLPSRUWDQWFRPSRQHQWRIWKHZRUNRIWKH6XSHUYLVRU\%RDUGDQGLWVFRPPLWWHHVZDVWKH
IXUWKHUGHYHORSPHQWRIWKH&RPSDQ\,QYLHZRIWKLVWKHVLPSOLILFDWLRQRIFRUSRUDWHVWUXFWXUHV
WKHRSSRUWXQLWLHVDQGULVNVRIWKH&RPSDQ\DQGWKHPHGLXPWHUPFRUSRUDWHVWUDWHJ\ZHUHWKH
VXEMHFWRILQGHSWKDQDO\VHVXQGHUWDNHQWRJHWKHUZLWKWKH%RDUGRI'LUHFWRUV$QRWKHUWRSLFLQ
WKLVUHVSHFWZDVWKHDSSRLQWPHQWRIDQHZ%RDUGRI'LUHFWRUV$IWHULPSOHPHQWDWLRQRIWKHFRVW
UHGXFWLRQSURJUDPPHLQWKH6XSHUYLVRU\%RDUGSUHSDUHGDPRUHKHDYLO\PDUNHW
RULHQWHGDOLJQPHQWRIFRUSRUDWHVWUDWHJ\ZLWKWKHDSSRLQWPHQWRIDQHZ%RDUGRI'LUHFWRUV
7KH6XSHUYLVRU\%RDUGDOVRPRQLWRUHGWKHIXUWKHUGHYHORSPHQWRIWKH&RUSRUDWH*RYHUQDQFH
&RGH$MRLQWGHFODUDWLRQRIFRPSOLDQFHZDVUHVROYHGDQGSXEOLVKHGRQ1RYHPEHU
E\WKH6XSHUYLVRU\%RDUGDQGWKH%RDUGRI'LUHFWRUVLQDFFRUGDQFHZLWK$UWLFOHRIWKH
*HUPDQ6WRFN&RUSRUDWLRQ$FW7KLVGHFODUDWLRQLVSHUPDQHQWO\DYDLODEOHWRVKDUHKROGHUVDWWKH
&RPSDQ\pVLQWHUQHWVLWH
)ROORZLQJWKHDSSRLQWPHQWRI3ULFHZDWHUKRXVH&RRSHUV$NWLHQJHVHOOVFKDIW2VQDEUØFN
E\WKH$QQXDO*HQHUDO0HHWLQJRQ-XQHWKH6XSHUYLVRU\%RDUGLVVXHGWKHDXGLW
PDQGDWH7KHDQQXDOILQDQFLDOVWDWHPHQWVDQGWKHPDQDJHPHQWUHSRUWRI%HUHQW]HQ
*UXSSH$NWLHQJHVHOOVFKDIWDQGWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDQGWKHFRQVROLGDWHG
PDQDJHPHQWUHSRUWIRUWKHILQDQFLDO\HDULQFOXGLQJWKHDFFRXQWVZHUHDXGLWHGE\
3ULFHZDWHUKRXVH&RRSHUV$NWLHQJHVHOOVFKDIWDQGLVVXHGZLWKDQXQTXDOLILHGDXGLWRSLQLRQ
7KH6XSHUYLVRU\%RDUG)LQDQFLDO&RPPLWWHHWKRURXJKO\H[DPLQHGWKHILQDQFLDOVWDWHPHQWV
LQFOXGLQJWKHUHSRUWE\WKH%RDUGRI'LUHFWRUVRQIXWXUHULVNVDQGWKHULVNHDUO\ZDUQLQJV\VWHP
LQFRQVXOWDWLRQZLWKWKHDXGLWRUDQGUHSRUWHGRQWKLVWRWKH6XSHUYLVRU\%RDUG7KH6XSHUYLVRU\
%RDUGDOVRH[DPLQHGWKHVHGRFXPHQWVDQGGLVFXVVHGWKHPLQWKHSUHVHQFHRIWKHDXGLWRU
7KH6XSHUYLVRU\%RDUGFRQFXUVZLWKWKHUHVXOWRIWKHDXGLWRIWKHDQQXDOILQDQFLDOVWDWHPHQWV
SUHSDUHGE\WKH%RDUGRI'LUHFWRUVDQGWKHILQDOUHVXOWVRILWVRZQH[DPLQDWLRQGRQRWJLYH
ULVHWRDQ\REMHFWLRQV,QLWVPHHWLQJRQ0DUFKWKH6XSHUYLVRU\%RDUGDSSURYHGDQG
WKHUHE\DGRSWHGWKHDQQXDOILQDQFLDOVWDWHPHQWVRI%HUHQW]HQ*UXSSH$*DQGWKHFRQVROLGDWHG
ILQDQFLDOVWDWHPHQWVSUHSDUHGE\WKH%RDUGRI'LUHFWRUVIRUWKHILQDQFLDO\HDUDQG
DSSURYHGWKHSURSRVDOE\WKH%RDUGRI'LUHFWRUVIRUWKHDSSURSULDWLRQRISURILW
$IWHUWKHFRQFOXVLRQRIWKHFRVWUHGXFWLRQSURJUDPPHWKHVSHDNHURIWKH%RDUG
RI'LUHFWRUV'U-DQ%%HUHQW]HQDQG$QGUHDV5RVWWKHPHPEHURIWKH%RDUGRI'LUHFWRUV
UHVSRQVLEOHIRU)LQDQFHDQG7HFKQRORJ\OHIWWKH&RPSDQ\RQ-XQHDQG'HFHPEHU
UHVSHFWLYHO\7KHPHPEHURIWKH%RDUGRI'LUHFWRUVUHVSRQVLEOHIRUPDUNHWLQJDQGVDOHV
+DQV:HUQHU1DJHOOHIWWKHPDQDJHPHQWRQ-DQXDU\
2Q'HFHPEHU$[HO'DKPZDVDSSRLQWHGWRWKH%RDUGRI'LUHFWRUV%HWZHHQ
DQG0U'DKPKHOGVKDUHGUHVSRQVLELOLW\IRU%HUHQW]HQpVEUDQGEXVLQHVVDQGLQWHQGV
WRFRQFHQWUDWHDQGLQWHQVLI\PDUNHWGHYHORSPHQWRQWKHFRUHEUDQGV7REHJLQZLWKKHZLOO
PDQDJHWKH&RPSDQ\DVVROHPHPEHURIWKH%RDUGRI'LUHFWRUV7RPDNHWKLVSRVVLEOHD
FKDQJHWRWKH&RPSDQ\pV$UWLFOHVRI$VVRFLDWLRQZLOOEHSURSRVHGWRWKH$QQXDO*HQHUDO
0HHWLQJWRWDNHSODFHRQ0D\2Q)HEUXDU\0D[3HOLNDQZDVDSSRLQWHGWRWKH
%RDUGRI'LUHFWRUVIRUWKHSHULRGXQWLOWKH$QQXDO*HQHUDO0HHWLQJ
2Q-DQXDU\-ÒUJ-DFREZDVDSSRLQWHGDVDPHPEHURIWKH6XSHUYLVRU\%RDUGE\WKH
GLVWULFWFRXUWDQGHOHFWHGDV&KDLUPDQRIWKH6XSHUYLVRU\%RDUGDWWKHPHHWLQJKHOGRQ
)HEUXDU\,QDFFRUGDQFHZLWKWKH&RUSRUDWH*RYHUQDQFH&RGH0U-DFREZDVDSSRLQWHGDV
PHPEHURIWKH6XSHUYLVRU\%RDUGRQ-XQHE\WKH$QQXDO*HQHUDO0HHWLQJ
:LWKHIIHFWRIWKHHQGRI)HEUXDU\5ROI5LFKWHUVWHSSHGGRZQIURPWKH6XSHUYLVRU\
%RDUG+HZDVUHSODFHGE\*UHJRU:LHOZKRZDVDSSRLQWHGE\WKH$QQXDO*HQHUDO0HHWLQJ
RQ0D\0U:LHOMRLQHGWKH6XSHUYLVRU\%RDUGZKHQ0U5LFKWHUpVUHVLJQDWLRQIURPWKH
6XSHUYLVRU\%RDUGEHFDPHHIIHFWLYH7KH$QQXDO*HQHUDO0HHWLQJRI-XQHHOHFWHG+DQV
5HLQKDUG$EHOVWRUHSODFH5ROI5LFKWHULQWKH6XSHUYLVRU\%RDUG:LWKWKHHOHFWLRQRI0U$EHOV
0U:LHOOHIWWKH6XSHUYLVRU\%RDUG:HZRXOGOLNHWRWDNHWKLVRSSRUWXQLW\WRH[WHQGRXUWKDQNV
WR0U5LFKWHUDQG0U:LHOIRUWKHLUVXSSRUWDQGFRQVWUXFWLYHFRRSHUDWLRQ
7KH6XSHUYLVRU\%RDUGH[SUHVVHVLWVJUDWLWXGHWRDOO%HUHQW]HQHPSOR\HHVDQGWKH%RDUGRI
'LUHFWRUVIRUWKHLUZRUNDQGWKDQNVWKHVKDUHKROGHUVIRUWKHLUFRQILGHQFHLQWKH&RPSDQ\
+DVHOØQQH0DUFK
-ÒUJ-DFRE
&KDLUPDQRIWKH6XSHUYLVRU\%RDUG
$XGLW2SLQLRQ&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV&RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW 5HSRUWRIWKH6XSHUYLVRU\%RDUG /HWWHUWR6KDUHKROGHUV
*52830$1$*(0(175(3257
&UXQFK\IUXLW\IXQ
1DWXUDOQHVVFRQYLYLDOLW\DQGMRLHGHYLYUH7KH
%HUHQW]HQEUDQGVWDQGVIRUWKLVLQVWLQFWLYH
VSRQWDQHRXVDWWLWXGHWROLIH7KHEUDQGLVV\QRQ\PRXV
ZLWKWKHHQMR\PHQWRIIUXLWIODYRXUHGVSLULWV7KLVVWDUWV
ZLWKWKHSURGXFW%HUHQW]HQ$SIHOLVSURGXFHG
DFFRUGLQJWRDWUDGLWLRQDOUHFLSHZLWKWKHMXLFHRI
GHOLFLRXVO\FUXQFK\DSSOHV:LWKWKHQHZUHGXFHG
R[\JHQILOOLQJWHFKQLTXHLQWURGXFHGODVW\HDURXUPDVWHU
GLVWLOOHUVKDYHPDQDJHGWRLPSURYHZKDWZDVJRRGWR
VWDUWZLWK4XDOLW\LVWKHVXPRIWKHLQGLYLGXDO
LQJUHGLHQWV7KHUHVXOWLVWKHIXQRIIUXLWILOOHG
LQGXOJHQFHWKHWDVWHRIMR\
%XVLQHVVDQGJHQHUDOFRQGLWLRQV
*URXS0DQDJHPHQW5HSRUW
%XVLQHVVDQGJHQHUDOFRQGLWLRQV
2YHUDOOHFRQRP\
,QWKHILQDQFLDO\HDUJURVVGRPHVWLFSURGXFWLQ*HUPDQ\JUHZLQUHDOWHUPVE\
*HUPDQFRQWULEXWLRQVWRJURZWKZHUHVLJQLILFDQWO\KLJKHUDVDUHVXOWLQSDUWLFXODURIKLJKHU
LQYHVWPHQWVLQHTXLSPHQWDQGFRQVWUXFWLRQ3ULYDWHFRQVXPSWLRQLQFUHDVHGE\DWRWDORI
ZLWKDVOLJKWLQFUHDVHLQQHWZDJHVDQGVDODULHV7KHH[WUDH[SHQGLWXUHIRUFRQVXPHUJRRGV
FRQFHQWUDWHGSULPDULO\RQQRQIRRGJRRGV
'HYHORSPHQWVLQWKHEHYHUDJHVPDUNHW
,QFRQVXPHUVSHQGLQJRQEHYHUDJHVIROORZHGORQJHVWDEOLVKHGWUHQGV:LWKWRWDO
H[SHQGLWXUHRI(85ELOOLRQWKHDPRXQWVSHQWRQDOFRKROLFEHYHUDJHVLQWKHODVWWHQ
\HDUVIHOOIURPWRFRUUHVSRQGLQJWRDYROXPHRI(85ELOOLRQ
,QWKHORQJWHUPFRPSDULVRQWKHVKDUHRIDOFRKROIUHHEHYHUDJHVVOLJKWO\LQFUHDVHG5HFHQW
ILJXUHVVKRZWKDWRIWKHGULQNVEXGJHWRU(85ELOOLRQZDVVSHQWRQ
VXFKEHYHUDJHV
,QUHWDLOIRRGRXWOHWVWKHUHKDVEHHQOLWWOHFKDQJHLQVSLULWVVDOHVZLWKPLOOLRQO
ERWWOHV:LWKVOLJKWO\KLJKHUSULFHVVDOHVIURPVSLULWVLQFUHDVHGE\WR(85ELOOLRQ
7KHPDUNHWVKDUHRIWUDGHEUDQGVLQFUHDVHGVOLJKWO\7KH\DFFRXQWHGIRUPLOOLRQO
ERWWOHVDQG(85PLOOLRQZKLFKFRUUHVSRQGHGWRRIVDOHVRU
RIWKHPDUNHWoVVDOHVYROXPH
7KHWUHQGWRKLJKHUFRQVXPSWLRQGLGQRWH[WHQGWRWKDWSDUWRIWKHFDWHULQJWUDGHZKLFKLV
LPSRUWDQWWR%HUHQW]HQ2YHUDOODOWKRXJKVDOHVUHYHQXHVLQWKHLQGXVWU\ZHUHVRPHZKDWKLJKHU
WKDQLQWKHSUHYLRXV\HDUEXVLQHVVLQSXEOLFKRXVHVZDVDJDLQZHDNHUZLWKDSULFHDGMXVWHG
GHFOLQHRI
&RQVXPSWLRQRIDOFRKROIUHHEHYHUDJHVLQFUHDVHGDVDUHVXOWRIWKH)RRWEDOO:RUOG&XS
7XUQRYHUZDVXSE\DURXQGRYHUDQGVDOHVUHYHQXHVE\
7KHPDUNHWVKDUHRIGLVFRXQWHUVLQFUHDVHGWRRIWXUQRYHU
6DOHVGHYHORSPHQW
7KHFKDQJHLQWKHVWUXFWXUHRIWKHEHYHUDJHVPDUNHWKDVOHGWRLQWHUQDWLRQDOLVDWLRQRIWKH
SURGXFWUDQJHFRQFHQWUDWLRQRQVDOHVFKDQQHOVJURZLQJPDUNHWLQIOXHQFHRIGLVFRXQWHUV
LQWHQVLYHSULFHFRPSHWLWLRQDQGVXVWDLQHGSULFHVHQVLWLYLW\RQWKHSDUWRIFRQVXPHUV
%HUHQW]HQKDVDGDSWHGWRWKHVHORQJWHUPFKDQJHVZLWKDQLQWHUQDWLRQDOSURGXFWUDQJHDQG
PHDVXUHVDLPHGDWFRVWUHGXFWLRQDQGLQFUHDVHGSURGXFWLYLW\$WWKHVDPHWLPHRUJDQLVDWLRQDO
SURGXFWLRQDQGORJLVWLFVVWUXFWXUHVZHUHDGDSWHGWRWKHFKDQJHGFRPSHWLWLYHFRQGLWLRQVLQ
RUGHUWRPDNHEHWWHUXVHRIWKHFDSDFLWLHVDYDLODEOH
'HVSLWHH[WHQVLYHDGMXVWPHQWVWKHORQJWHUPGHFOLQHLQEXVLQHVVFRQWLQXHGGXULQJWKH
UHSRUWLQJ\HDU6DOHVRIVSLULWVGHFOLQHGRYHUDOOWR(85PLOOLRQZKLOHWXUQRYHU
ZLWKVSLULWVUHPDLQHGDOPRVWXQFKDQJHGDWPLOOLRQOERWWOHV,Q*HUPDQ\VDOHV
UHDFKHG(85PLOOLRQ(85PLOOLRQRIZKLFKZDVDWWULEXWDEOHWREUDQG
SURGXFWV7KHVSLULWVEXVLQHVVRXWVLGH*HUPDQ\LQFUHDVHGVOLJKWO\WXUQRYHULQFUHDVHGWR
PLOOLRQOERWWOHVZLWKVDOHVUHYHQXHVDW(85PLOOLRQ
,QWKHDOFRKROIUHHEHYHUDJHVGLYLVLRQWXUQRYHULQFUHDVHGWRPLOOLRQKHFWROLWUHVDVD
UHVXOWRIZKLFKVDOHVLQFUHDVHGWR(85PLOOLRQ
2YHUDOOZLWK(85PLOOLRQFRQVROLGDWHGVDOHVJHQHUDWHGE\%HUHQW]HQLQ
H[FOXGLQJVSLULWVWD[ZHUHDOPRVWXQFKDQJHG$FFRXQWLQJIRUVSLULWVWD[FRQVROLGDWHGVDOHV
ZHUH(85PLOOLRQ
6SLULWV
7KH&RPSDQ\DFKLHYHGVDOHVUHYHQXHVRI(85PLOOLRQLQZLWKEUDQGSURGXFWV
DQGDWXUQRYHURIPLOOLRQOERWWOHV7KHFRUHEUDQGV%HUHQW]HQDQG3XVFKNLQ
PDGHWKHKLJKHVWFRQWULEXWLRQVWRVDOHVDQGHDUQLQJV,QWKHYRGNDPDUNHWVHJPHQWZKLFK
LQFUHDVHGVLJQLILFDQWO\LQ3XVFKNLQZDVDPRQJWKHEUDQGVZLWKWKHEHVWWXUQRYHUDQG
VDOHVGHYHORSPHQW7KH%HUHQW]HQEUDQGPDLQWDLQHGLWVOHDGLQJPDUNHWSRVLWLRQIRUIUXLWEDVHG
VSLULWV)RUWKHILUVWWLPHLQGHSRVLWZDVOHYLHGRQVSLULWEDVHGPL[HGGULQNV$VDUHVXOW
WKHWXUQRYHUIRUVXFKSURGXFWVGHFOLQHGFRQVLGHUDEO\7KHVWURQJHVWEUDQGLQWKLVVHFWRU3RODU
/LPHVZDVVLJQLILFDQWO\DIIHFWHGE\WKHHIIHFWVRIWKLVQHZUHJXODWLRQ
7KHPDUNHWVLJQLILFDQFHRIWUDGLWLRQDO1RUWK*HUPDQVSLULWVLVLQORQJWHUPGHFOLQH,Q
WKLVGHYHORSPHQWGHFHOHUDWHGLQWKHFDVHRI.RUQDQG$TXDYLW7KH%HUHQW]HQ6WURWKPDQQDQG
%RPPHUOXQGHUEUDQGVKDYHVWDELOLVHGLQWKLVHQYLURQPHQW
$XGLW2SLQLRQ&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV&RUSRUDWH*RYHUQDQFH 0DQDJHPHQW5HSRUW 5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
%XVLQHVVDQGJHQHUDOFRQGLWLRQV
%XVLQHVVDQGJHQHUDOFRQGLWLRQV
7KHFRQWULEXWLRQWREXVLQHVVPDGHE\LQWHUQDWLRQDOSUHPLXPOLFHQFHEUDQGVVXFKDV/LFRU
/LQLH$TXDYLWDQG9HFFKLD5RPDJQDDJDLQLQFUHDVHGLQ:LWKVXVWDLQHGPDUNHWVXFFHVV
WKHIUXLWOLTXHXU/LFRUKDVEHFRPH%HUHQW]HQpVKLJKHVWWXUQRYHUOLFHQFHSURGXFW
7XUQRYHUZLWKORZFRVWSULYDWHDQGVHFRQGDU\EUDQGVZKLFKDUHRQHHOHPHQWRIWKHSURGXFW
UDQJHLQUHWDLOIRRGRXWOHWVZDVPLOOLRQOERWWOHV7KHLUFRQWULEXWLRQVWRVDOHV
DQGHDUQLQJVZHUHORZHUWKDQLQWKHSUHYLRXV\HDU
$OFRKROIUHHEHYHUDJHV
7KHVXEVLGLDU\9LYDULV*HWUÀQNH*PE+&R.*PDUNHWVDOFRKROIUHHEHYHUDJHVLQWKH
QRUWKHUQSDUWRI*HUPDQ\DQGWKHQHZIHGHUDOVWDWHV$VSDUWRIDVWUDWHJLFSDUWQHUVKLS9LYDULV
KDVEHFRPHWKHODUJHVW*HUPDQOLFHQVHHRI3HSVL&RDQGFRQVLGHUDEO\H[SDQGHGLWVEXVLQHVV
YROXPHLQGXHWRDVLJQLILFDQWLQFUHDVHLQWKHVL]HRILWVVDOHVDUHD%XVLQHVVZLWKLWVRZQ
EUDQGVZKLFKWDUJHWWKHKHDOWK\OLIHVW\OHDQGVSRUWVVHFWRUZDVVWDEOH
,QYHVWPHQWVDQGSURGXFWLRQ
7KHLQYHVWPHQWVLQPRGHUQLVLQJDQGLPSURYLQJHIILFLHQF\LQWKHSURGXFWLRQIDFLOLWLHVFRQWLQXHG
LQ7KHQHZVPDOOERWWOHIDFLOLW\LQ0LQGHQZDVFRPSOHWHG+LJKHUSURGXFWLYLW\LVWREH
DFKLHYHGLQIXWXUHE\FHQWUDOLVDWLRQRIVPDOOFRQWDLQHUILOOLQJ7KHH[SDQVLRQRIFDSDFLWLHVLQ
WKHGLVWLOOHU\LQ+DVHOØQQHZDVFRPSOHWHGDWWKHHQGRIWKH\HDUDQGLVH[SHFWHGWRPDNHWKH
&RPSDQ\OHVVGHSHQGHQWRQWKHUDZPDWHULDOVPDUNHWVLQWKHPHGLXPWHUPZKLOHHQVXULQJ
WKDWUDZPDWHULDOVDUHRIWKHKLJKHVWTXDOLW\5HGXFHGR[\JHQILOOLQJRIIUXLWEDVHG%HUHQW]HQ
SURGXFWVZDVLQWURGXFHGDW+DVHOØQQHDQGFRQWULEXWHVWRWKHTXDOLW\OHDGHUVKLSLQWKLVGHFLVLYH
PDUNHWVHJPHQWIRU%HUHQW]HQ
7KHVXEVLGLDU\9LYDULVKDVLQVWDOOHGDERWWOLQJSODQWIRU3(7GLVSRVDEOHSDFNDJLQJLQRUGHUWR
FRYHUWKHLQFUHDVHLQGHPDQGIRUGLVSRVDEOHERWWOHVUHVXOWLQJIURPWKH3DFNDJLQJ2UGLQDQFH
ZKLFKFDPHLQWRHIIHFWRQ0D\
$WRWDORI(85PLOOLRQZDVVSHQWRQWKLVSURMHFW
3URFXUHPHQWPDUNHW
%HUHQW]HQpVXVHRIUDZPDWHULDOVDQGJRRGVLVPDLQO\FRQFHUQHGZLWKEDVLFSURGXFWVIRUWKH
PDQXIDFWXUHRIVSLULWVVXFKDVDJUDULDQDOFRKRODQGIUXLWSXOSDVZHOODVIUXLWMXLFHVJODVV
ERWWOHVDQGPDWHULDOVIRUSURGXFWSUHVHQWDWLRQSDFNDJLQJDQGVDOHVSURPRWLRQ,QWKHDOFRKRO
IUHHEHYHUDJHVGLYLVLRQZKLFKSURPRWHVPLQHUDOZDWHUIURPRXURZQVRXUFHVWKHPDLQ
UHTXLUHPHQWLVIRUJODVVDQG3(7ERWWOHVDVZHOODVSUHVHQWDWLRQPDWHULDOV)RUWKHPDUNHWLQJ
RUPDQXIDFWXUHRILQWHUQDWLRQDOOLFHQFHSURGXFWVODUJHDPRXQWVRIVSLULWVVXFK/LFRUDQG
FRQFHQWUDWHVIRU3HSVL&RSURGXFWVDUHERXJKWLQ
7KHUHZHUHSULFHLQFUHDVHVSDUWLFXODUO\IRUUDZPDWHULDOVDQGJODVVZKLFKUHVXOWHGLQ
LQFUHDVHGFRVWRIPDWHULDOV7KHPDUNHWVXFFHVVRISUHPLXPVSLULWVPDUNHWHGRQOLFHQFHDQG
WKHH[SDQVLRQRIFRRSHUDWLRQZLWK3HSVL&RDOVRFRQWULEXWHGWRKLJKHUFRVWRIPDWHULDOV$V
SXUFKDVHSULFHVIRUOLFHQFHSURGXFWVDUHPDLQO\UHJXODWHGE\ORQJWHUPDJUHHPHQWVWKLVLVD
YROXPHHIIHFW
3HUVRQQHODQGVRFLDOIXQFWLRQ
,QWKH%HUHQW]HQ*URXSHPSOR\HGDQDYHUDJHRISHRSOHRIWKHVHZHUHEHLQJ
WUDLQHG$WWKHHQGRIWKH\HDUWKHUHZDVDOPRVWQRFKDQJHLQWKHQXPEHURIHPSOR\HHV
LQFRPSDULVRQWRWKHSUHYLRXV\HDURIWKHVHZHUH\RXQJSHRSOHEHLQJWUDLQHG
5HVHDUFKDQGGHYHORSPHQW
,QQRYDWLRQVWDVWHLPSURYHPHQWVDQGYDULDWLRQVDUHDNH\IDFWRULQWKHIRRGDQGOX[XU\DUWLFOHV
LQGXVWU\LQRUGHUWRPDNHWKHSURGXFWUDQJHDWWUDFWLYHWRWKHFRQVXPHUDQGWRXVHFRQVXPHU
SRWHQWLDO7KHUHLVFORVHFRRSHUDWLRQEHWZHHQPDUNHWUHVHDUFKPDUNHWOHDGHUVKLSDQGSURGXFW
GHYHORSPHQWLQ%HUHQW]HQpVLQQRYDWLRQPDQDJHPHQWLQRUGHUWRGHYHORSLQQRYDWLRQVDV
VFKHGXOHGDQGLQDFRQWLQXRXVPDQQHU$WWKHHQGRIWKHUHSRUWLQJ\HDUWKHLQQRYDWLRQSLSHOLQH
RIWKH%HUHQW]HQEUDQGZDVUHYLVHGWRWDNHLQWRDFFRXQWFKDQJHVLQWKHPDUNHWGHYHORSPHQW
IURP
1HZFRXQWU\VSHFLILFSURGXFWYDULDWLRQVZHUHGHYHORSHGIRULPSRUWDQWPDUNHWVDEURDG
)RUERWWOLQJIUXLWEDVHGVSLULWV%HUHQW]HQKDVGHYHORSHGORZR[\JHQERWWOLQJWHFKQLTXHVZKLFK
ZHUHXVHGLQIRUWKHILUVWWLPHLQSURGXFWLRQ7KH\UHGXFHR[LGDWLRQHIIHFWVDQGJXDUDQWHH
WKDWSURGXFWVVWD\IUHVKHUIRUORQJHUZLWKRXWWKHXVHRISUHVHUYDWLYHV
)RUDOFRKROIUHHEHYHUDJHV9LYDULVSUHVHQWHGIXUWKHUWUHQGSURGXFWVIRUWKHKHDOWK\OLIHVW\OH
DQGVSRUWVVHJPHQW7KLVLQFOXGHGWKHLVRWRQLFIXQFWLRQDOGULQNV9LYDULV6SRUW*UHHQDQG
6SRUW2UDQJHDVZHOODVDQRWKHUORZHUFDORULHYDULHW\RIWKHQRQDOFRKROGLHWEHYHUDJHq*ROGHQ
$SSOHr7KHQHZSURGXFWVDUHDOVRDYDLODEOHLQXVHUIULHQGO\QRGHSRVLW3(7FRQWDLQHUV
7KURXJKLWVKLJKOHYHOFHUWLILFDWLRQLQDFFRUGDQFHZLWKWKH,QWHUQDWLRQDO)RRG6WDQGDUGZKLFKLV
EDVHGRQWKHTXDOLW\DVVXUDQFHVWDQGDUGXQGHU',1,62ERWKORFDWLRQVKDYHRQFHDJDLQ
IXOO\PHWDOOWKHLQGXVWU\pVTXDOLW\UHTXLUHPHQWV
3URGXFWLRQZDVDOVRFHUWLILHGLQDFFRUGDQFHZLWKWKH(82UJDQLF5HJXODWLRQ$VDUHVXOWRI
FHUWLILFDWLRQSXUVXDQWWR,),6,)6$)HHG,QJUHGLHQWV6WDQGDUGWKHLQFUHDVLQJYROXPHVRI
$XGLW2SLQLRQ&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV&RUSRUDWH*RYHUQDQFH 0DQDJHPHQW5HSRUW 5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
%XVLQHVVDQGJHQHUDOFRQGLWLRQV
%XVLQHVVDQGJHQHUDOFRQGLWLRQV
VHFRQGDU\SURGXFWVUHODWHGWRWKHH[SDQVLRQRIWKHGLVWLOOHU\LQ+DVHOØQQHVXFKDVZKHDW
UHVLGLXPFDQEHUHF\FOHGDVDQLPDOIHHGWKXVVDYLQJUHVRXUFHV
7KHLQWHUQDOJDVFKURPDWRJUDSKLFDQDO\VLVZDVDOVRH[SDQGHGLQFRQQHFWLRQZLWKWKH
LQFUHDVLQJSURGXFWLRQRIZKHDWGLVWLOODWHV:LWKUHJDUGWRH[WHUQDODQDO\WLFDOLQYHVWLJDWLRQVLQ
VSLULWV%HUHQW]HQZRUNVZLWKWKHDFFUHGLWHGODERUDWRU\DWWKH,QVWLWXWHIRU)HUPHQWDWLRQDQG
%LRWHFKQRORJ\LQ%HUOLQ
'LUHFWH[SHQGLWXUHRQUHVHDUFKGHYHORSPHQWDQGTXDOLW\DVVXUDQFHLQFOXGLQJSHUVRQQHOFRVWV
WRWDOOHG(85PLOOLRQ
,QWKHUHSRUWLQJ\HDUQXPHURXVPHDVXUHVZHUHDJDLQFDUULHGRXWWRLPSURYHWKHHQYLURQPHQWDO
DQGHQHUJ\EDODQFH,7WRROVIRUWKHFUHDWLRQRIHQYLURQPHQWDOFRQFHSWVDQGUHSRUWVZHUH
IXOO\XSGDWHGDQGXVHUVUHFHLYHGWKHDSSURSULDWHWUDLQLQJ%HUHQW]HQKDVWDNHQFRPPHUFLDO
DQGWHFKQLFDODGYLFHLQRUGHUWRRSWLPLVHHQHUJ\FRVWVHJIRUWKH$VVRFLDWLRQRI(QHUJ\
3XUFKDVHUV+DQQRYHUDQG&RVW&RQVXOW+DPEXUJ
([SHQGLWXUHRQZDVWHZDVWHZDWHUDQGH[KDXVWDLUDPRXQWHGWR(85PLOOLRQ7KH
FRVWVIRU'XDOH6\VWHP'HXWVFKODQGWKHq*UHHQ'RWrWRWDOOHG(85PLOOLRQ(QHUJ\
FRVWVDPRXQWHGWR(85PLOOLRQ
2WKHULPSRUWDQWHYHQWVRIWKHILQDQFLDO\HDU
,QWKHUHSRUWLQJ\HDU%HUHQW]HQFOHDUHGWKHZD\IRUDEUDQGRULHQWHGDOLJQPHQWRIWKHFRUSRUDWH
VWUDWHJ\E\DSSRLQWLQJDQHZ%RDUGRI'LUHFWRUV$IWHUWKHFRQFOXVLRQRIWKHFRVW
UHGXFWLRQSURJUDPPHWKHVSHDNHURIWKH%RDUGRI'LUHFWRUV'U-DQ%%HUHQW]HQDQG$QGUHDV
5RVWWKHPHPEHURIWKH%RDUGRI'LUHFWRUVUHVSRQVLEOHIRU)LQDQFHDQG7HFKQRORJ\OHIWWKH
&RPSDQ\RQ'HFHPEHUDQG-XQHUHVSHFWLYHO\7KHPHPEHURIWKH%RDUGRI
'LUHFWRUVUHVSRQVLEOHIRUPDUNHWLQJDQGVDOHV+DQV:HUQHU1DJHOOHIWWKHPDQDJHPHQWRQ
-DQXDU\
2Q'HFHPEHU$[HO'DKPZDVDSSRLQWHG&KDLUPDQRIWKH%RDUGRI'LUHFWRUV0U
'DPPSUHYLRXVO\VKDUHGUHVSRQVLELOLW\IRU%HUHQW]HQpVEUDQGEXVLQHVVIURPWR,Q
FRQMXQFWLRQZLWKDPDQDJHPHQWWHDPFRPSULVLQJHLJKWPHPEHUVKHLVWRLQWHQVLI\PDUNHW
GHYHORSPHQWDQGFRQFHQWUDWHRQWKHPDLQEUDQGV2Q)HEUXDU\0D[3HOLNDQZDV
DSSRLQWHGWRWKH%RDUGRI'LUHFWRUVIRUWKHSHULRGXQWLOWKH$QQXDO*HQHUDO0HHWLQJ
&RQWUROV\VWHPV
7KHSURILWDELOLW\RULHQWHGFRQWURODQGSODQQLQJDW*URXSDQGEXVLQHVVOHYHOLVFDUULHGRXWRQ
WKHEDVLVRIWKHNH\ILJXUHV(%,7(DUQLQJVEHIRUH,QWHUHVWDQG7D[HV(%,7'$(DUQLQJVEHIRUH
,QWHUHVW7D[HV'HSUHFLDWLRQDQG$PRUWLVDWLRQDQGWKH(%,7(%,7'$PDUJLQEDVHGRQVDOHV
0RUHRYHUVWUDWHJLFDQGRSHUDWLRQDOFRVWREMHFWLYHVDUHSXUVXHGXVLQJWKHNH\ILJXUHVUHODWLQJ
WRWKHPDWHULDOVFRVWUDWLRVWDIIFRVWVUDWLRGHSUHFLDWLRQDQGDPRUWLVDWLRQUDWLRDQGWKHRWKHU
RSHUDWLQJH[SHQVHUDWLRZKLFKDUHGHILQHGDVWKHUHODWLRQVKLSRIWKHUHOHYDQWFRVWHOHPHQWWR
WKHRYHUDOOSHUIRUPDQFH,QWKHGLYLVLRQVWKHEDVLVRIFRQWUROLVWKHSURGXFWDQGFXVWRPHU
UHODWHGSURILWFRQWULEXWLRQ
7KHFHQWUDOFRQWUROTXDQWLW\RIOLTXLGLW\DWDOOOHYHOVLVWKHFDVKIORZUHOHYDQWWRHFRQRPLF
VXFFHVVLHWKHFRQVROLGDWHGQHWLQFRPHEHIRUHLQWHUHVWWD[HVRQLQFRPHDQGGHSUHFLDWLRQ
DPRUWLVDWLRQDGMXVWHGIRUFRPSRQHQWVQRWLPSDFWLQJFDVK
7KHSODQQLQJDQGRSWLPLVDWLRQRIWKH*URXSDVVHWVDQGILQDQFLDOSRVLWLRQLVFRQGXFWHGXVLQJ
WKHNH\ILJXUHVRIWKHHTXLW\UDWLRZRUNLQJFDSLWDODQGQHWILQDQFLDOOLDELOLWLHVRUILQDQFLDOIXQGV
)RULQYHVWPHQWVWKDWH[FHHGDGHILQHGDPRXQWWDUJHW\LHOGVDUHGHILQHGIRUWKHSXUSRVHVRI
DUHWXUQRQLQYHVWPHQW52,7KLVNH\ILJXUHLVGHWHUPLQHGEDVHGRQDG\QDPLFLQYHVWPHQW
FDOFXODWLRQPHWKRGWKHFDOFXODWRU\LQWHUHVWUDWHLVEDVHGRQWKH&RPSDQ\pVWRWDOFDSLWDOFRVWV
$XGLW2SLQLRQ&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV&RUSRUDWH*RYHUQDQFH 0DQDJHPHQW5HSRUW 5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
%XVLQHVVDQGJHQHUDOFRQGLWLRQV
%XVLQHVVDQGJHQHUDOFRQGLWLRQV
7KHIROORZLQJWDEOHVKRZVWKHGHYHORSPHQWRIWKHLPSRUWDQWNH\ILJXUHV
7RWDORSHUDWLQJSHUIRUPDQFHLQ(85PLOOLRQ
&KDQJHRYHUSUHYLRXV\HDULQ
(%,7LQ(85PLOOLRQ
&KDQJHRYHUSUHYLRXV\HDULQ
!
(%,7'$PDUJLQLQ
&KDQJHRYHUSUHYLRXV\HDULQSRLQWV
(%,7'$LQ(85PLOOLRQ
&KDQJHRYHUSUHYLRXV\HDULQ
(%,7'$PDUJLQLQ
&KDQJHRYHUSUHYLRXV\HDULQSRLQWV
0DWHULDOFRVWUDWLRLQ
&KDQJHRYHUSUHYLRXV\HDULQSRLQWV
6WDIIFRVWUDWLRLQ
&KDQJHRYHUSUHYLRXV\HDULQSRLQWV
'HSUHFLDWLRQDQGDPRUWLVDWLRQUDWLRLQ
&KDQJHRYHUSUHYLRXV\HDULQSRLQWV
2WKHURSHUDWLQJH[SHQVHUDWLRLQ
&KDQJHRYHUSUHYLRXV\HDULQSRLQWV
&DVKIORZUHFRJQLVHGDVLQFRPHLQ(85PLOOLRQ
&KDQJHRYHUSUHYLRXV\HDULQ
!
:RUNLQJFDSLWDOLQ(85PLOOLRQ
&KDQJHRYHUSUHYLRXV\HDULQ
)LQDQFLDOIXQGVLQ(85PLOOLRQ
&KDQJHRYHUSUHYLRXV\HDULQ
&RQFOXGLQJDVVHVVPHQWRIWKHILQDQFLDO\HDU
'XULQJWKHUHSRUWLQJ\HDU%HUHQW]HQFRQFOXGHGWKHVHFRQGSKDVHRIWKHFRVWUHGXFWLRQ
DQGSURGXFWLYLW\LPSURYHPHQWSURJUDPPHLQLWLDWHGLQ7KHSURJUDPPHIRFXVHGRQ
LQYHVWPHQWVLQWKHSURGXFWLRQVLWHV+DVHOØQQHDQG0LQGHQDVZHOODVLPSOHPHQWDWLRQRID
QHZFRQFHSWIRUFHQWUDOORJLVWLFV7KHWDUJHWHGGHYHORSPHQWRI(XURSHDQPDUNHWVZLWKJURZWK
RSSRUWXQLWLHVDQGWKHDGGLWLRQRISUHPLXPOLFHQFHEUDQGVWRWKHGRPHVWLFSRUWIROLRZHUH
FRQWLQXHG
7KHVHLQLWLDWLYHVFRQWULEXWHGWRRSHQLQJXSQHZPDUNHWVDQGVHJPHQWVDQGWRFRXQWHUDFWLQJ
WKHLQFUHDVLQJFRVWSUHVVXUH+RZHYHUPHDVXUHGDJDLQVWWKHSRWHQWLDORIWKHEUDQGEXVLQHVV
ZLWKVSLULWVRQWKH*HUPDQPDUNHWWKHLUHIIHFWVRQVDOHVDQGHDUQLQJVZHUHOLPLWHG7KH
REMHFWLYHRIJHQHUDWLQJDEDODQFHGRSHUDWLQJUHVXOWLQZDVDFKLHYHGSULPDULO\WKURXJK
SUHFLVHFRVWPDQDJHPHQW,QRUGHUWRFKDQJHWKHWUHQGLQFRUHEXVLQHVVLQFUHDVHWKHYDOXHRI
WKHVDOHVVWUXFWXUHDQGWKXVVWUHQJWKHQHDUQLQJSRZHULQWKHPHGLXPWHUPLQ%HUHQW]HQ
SUHSDUHGPHDVXUHVWRLQWHQVLI\GHYHORSPHQWRIWKHGRPHVWLFPDUNHW,QDQG
WKLVSURJUDPPHLVWREHLQWHQVLILHGE\DQHZPDQDJHPHQWWHDPRQWKHEDVLVRIWKHPRUH
VWUHDPOLQHGFRUSRUDWHVWUXFWXUHV
$XGLW2SLQLRQ&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV&RUSRUDWH*RYHUQDQFH 0DQDJHPHQW5HSRUW 5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
%XVLQHVVDQGJHQHUDOFRQGLWLRQV
,QFRPHILQDQFLDODQGDVVHWVVLWXDWLRQ
,QFRPHILQDQFLDODQGDVVHWVVLWXDWLRQ
,QFRPHVLWXDWLRQ
7KHIROORZLQJWDEOHVKRZVWKHGHYHORSPHQWRIWKHLQFRPHVLWXDWLRQ7KHSHUVRQQHOFRVWV
GHSUHFLDWLRQDQGDPRUWLVDWLRQDQGRWKHURSHUDWLQJH[SHQVHVLQZHUHDGMXVWHGIRU
UHVWUXFWXULQJH[SHQVHV
(85WKRXVDQG
6DOHV
&KDQJHLQLQYHQWRULHV
7RWDORSHUDWLQJSHUIRUPDQFH
(85WKRXVDQG
&KDQJH
(85WKRXVDQG
&RVWRIPDWHULDOV
*URVVSURILW
2WKHURSHUDWLQJLQFRPH
([SHQGLWXUHLQFRPHIURPLQYHVWPHQWV
YDOXHGDWHTXLW\
QD
3HUVRQQHOFRVWV
'HSUHFLDWLRQDQGDPRUWLVDWLRQ
2WKHURSHUDWLQJH[SHQVHV
2SHUDWLQJH[SHQGLWXUH
2WKHULQFRPH
2SHUDWLQJUHVXOW
)LQDQFLDOSDUWLFLSDWLRQVUHVXOW
(DUQLQJVEHIRUHWD[
QD
5HVWUXFWXULQJH[SHQVHV
7D[HVRQLQFRPH
!
&RQVROLGDWHGQHWLQFRPHORVV
QD
&RVWRIPDWHULDOV
:LWKDVOLJKWLQFUHDVHLQWRWDORSHUDWLQJSHUIRUPDQFHRI(85(85PLOOLRQWKH
FRVWRIPDWHULDOVURVHWR(85PLOOLRQ7KLVFRUUHVSRQGVWRRIWKH
WRWDORSHUDWLQJSHUIRUPDQFH0DMRUFDXVHVRIWKHKLJKHUFRVWUDWLRZHUHSULFHLQFUHDVHVIRU
LPSRUWDQWUDZPDWHULDOVDQGSUHVHQWDWLRQPDWHULDOVYROXPHHIIHFWVIURPWKHKLJKHULQFUHDVHG
XQLWVDOHVVKDUHRIWKHSURGXFWVDIIHFWHGE\WKHVHSULFHLQFUHDVHVDQGWKHKLJKHUXQLWVDOHV
VKDUHRIGLVWULEXWLRQDQGOLFHQFHEUDQGVSOXVRWKHUHIIHFWVRIVKLIWVLQWKHSURGXFWDQGVHJPHQW
PL[
2WKHURSHUDWLQJLQFRPH
2WKHURSHUDWLQJLQFRPHRI(85PLOOLRQPDLQO\FRQFHUQVFRVWVDQGRWKHUUHIXQGV
RIEXVLQHVVSDUWQHUVLQFRQQHFWLRQZLWKOLFHQFHDQGPDUNHWLQJDJUHHPHQWVRI(85
PLOOLRQUHYHUVDORIOLDELOLWLHVDQGDFFUXDOVRI(85PLOOLRQGHSRVLWVHWWOHPHQWVRI(85
PLOOLRQDQGLQFRPHIURPZDVWHUHF\FOLQJRI(85PLOOLRQ
,QFRPHIURPLQYHVWPHQWVYDOXHGDWHTXLW\
,QFRPHIURPLQYHVWPHQWVKHOGDWHTXLW\RI(85tPLOOLRQPDLQO\LQFOXGHVWUDQVODWLRQ
GLIIHUHQFHVLQFRQQHFWLRQZLWKGLVWULEXWLRQVIURPWKHVDOHRI$UFXV*UXSSHQ$6$E\WKHVXE
KROGLQJVFRPSDQ\6XFUD$6,QWKHSUHYLRXV\HDUWKLVLWHPZDVFRQWDLQHGLQWKHVKDUHRIWKH
SURILWIURPWKLVWUDQVDFWLRQDVVLJQHGWR%HUHQW]HQ
3HUVRQQHOFRVWV
3HUVRQQHOFRVWVLQWKHUHSRUWLQJ\HDUWRWDOOHG(85PLOOLRQ'XULQJWKHUHSRUWLQJ
\HDUWKLVFRQWDLQHGVSHFLDOHIIHFWVDQGHIIHFWVQRWUHODWLQJWRWKHSHULRGLQFRQQHFWLRQZLWK
WKHGHSDUWXUHDQGWKHYDULDEOHUHPXQHUDWLRQRIPHPEHUVRIPDQDJHPHQW7KHSHUVRQQHO
UHTXLUHPHQWDOVRLQFUHDVHGGXHWRWKHH[SDQVLRQRIWKHVDOHVDUHDIRUDOFRKROIUHHEHYHUDJHV
GXULQJWKHSHDNWLPHVRIWKHVHDVRQ$IWHUDGMXVWPHQWIRURQHWLPHFKDUJHVDYHUDJHSHUVRQQHO
FRVWVWRWDOOHG(852QWKLVEDVLVWKHSHUVRQQHOFRVWUDWLRZDV
RIWKHWRWDORSHUDWLQJSHUIRUPDQFH
'HSUHFLDWLRQDQGDPRUWLVDWLRQ
'HSUHFLDWLRQDQGDPRUWLVDWLRQGHFUHDVHGE\(85PLOOLRQWR(85PLOOLRQFRPSDUHG
ZLWKWKHSUHYLRXV\HDU7KHPDLQUHDVRQIRUWKLVZDVWKHHQGRIWKHGHSUHFLDWLRQDQG
DPRUWLVDWLRQSHULRGVIRUYDULRXVSURGXFWLRQIDFLOLWLHV0DMRUUHSODFHPHQWDQGQHZLQYHVWPHQWV
ZHUHPDGHLQWKHVHFRQGKDOIRIWKH\HDUDQGZHUHGHSUHFLDWHGSURUDWD
2WKHURSHUDWLQJH[SHQVHV
7KLVLWHPVRIRWKHURSHUDWLQJH[SHQVHVWRWDOOLQJ(85PLOOLRQLQFOXGHFRVWVIRU
FRPPXQLFDWLRQZLWKHQGFRQVXPHUVDQGWUDGLQJSDUWQHUVZKLFKGHFOLQHGWR(85
PLOOLRQLQYLHZRIWKHH[WHQVLYHUHVWUDLQWLQUHVSHFWWRWUDGLWLRQDOFRPPXQLFDWLRQPHDVXUHV
$XGLW2SLQLRQ&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV&RUSRUDWH*RYHUQDQFH 0DQDJHPHQW5HSRUW 5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
,QFRPHILQDQFLDODQGDVVHWVVLWXDWLRQ
,QFRPHILQDQFLDODQGDVVHWVVLWXDWLRQ
7UDQVSRUWORJLVWLFVDQGVLPLODUFRVWVWRWDOOHG(85PLOOLRQZLWKIXUWKHULQFUHDVHVLQ
WXUQRYHURXWVLGH*HUPDQ\DQGKLJKHUIXHOSULFHV([SHQVHVIRUOHJDODQGFRQVXOWDQF\FRVWVDOVR
GHFUHDVHGWR(85PLOOLRQDQGRWKHUH[SHQVHVWRPLOOLRQ
2SHUDWLQJH[SHQGLWXUHDQGUHVWUXFWXULQJFRVWV
7KH*URXSpVRYHUDOOWRWDOFRVWVH[FOXGLQJWKHFRVWRIPDWHULDOVWRWDOOHG(85PLOOLRQ
LQ&RVWUHGXFWLRQDQGUHVWUXFWXULQJPHDVXUHVGLGQRWUHVXOWLQDQ\IXUWKHUH[SHQVHV
GXULQJWKHUHSRUWLQJ\HDULQWKHSUHYLRXV\HDUWKHVHUHVXOWHGLQH[SHQVHVRI(85PLOOLRQ
)LQDQFLDOUHVXOW
$ORQJZLWKLQWHUHVWH[SHQGLWXUHIRUVKRUWWHUPDQGORQJWHUPORDQVWKHq,QWHUHVWDQGVLPLODU
H[SHQVHVrLWHPFRQWDLQVWKHFRVWVIRUILQDQFHOHDVLQJIDFWRULQJDQGIRUIDLWLQJDVZHOODV
JXDUDQWHHSURYLVLRQV7KHKLJKOLTXLGLW\IORZIURPWKH6XFUD$6GLVWULEXWLRQVUHGXFHGWKH
ILQDQFLQJUHTXLUHPHQW$VDUHVXOWWKHLQWHUHVWH[SHQVHVIHOOWR(85PLOOLRQDQG
LQWHUHVWLQFRPHLQFUHDVHGWR(85PLOOLRQ2YHUDOOWKHILQDQFLDOUHVXOWLQFUHDVHGWR
(85tPLOOLRQ
7D[HV
7D[H[SHQGLWXUHFRQVLVWVRIWUDGHLQFRPHWD[IURPWKHH[WHUQDOWD[DXGLWVIRUWKHt
ILQDQFLDO\HDUVZKLFKZHUHFRQFOXGHGLQDQGFRUSRUDWLRQWD[RIIRUHLJQVXEVLGLDULHV
(IIHFWVIURPWKHYDOXDWLRQRIGHIHUUHGWD[HVLQDFFRUGDQFHZLWK,$6UHVXOWLQJIURP
WHPSRUDU\GLIIHUHQFHVEHWZHHQWKHFRPPHUFLDODQGWD[EDODQFHVKHHWRUIURPWDNLQJLQWR
DFFRXQWDQGYDOXDWLQJORVVFDUU\IRUZDUGVQRW\HWXVHGIRUWD[SXUSRVHVGLGQRWLQIOXHQFHWD[
H[SHQGLWXUH
5HVXOW
7KHRSHUDWLQJUHVXOWZDV(85PLOOLRQLQ7KH\HDURQ\HDUFRPSDULVRQLV
LPSDFWHGPDLQO\E\WKHLQFRPHIURPLQYHVWPHQWVYDOXHGDWHTXLW\ZKLFKLQFRQWDLQHGWKH
SURILWIURPWKHVDOHRIWKH$UFXVVKDUHV$VWKHVXEKROGLQJFRPSDQ\6XFUD$6GRHVQRWKDYH
DQ\RSHUDWLQJEXVLQHVVRILWVRZQQRPDMRULQFRPHLVGXHIROORZLQJWKHVDOHRI$UFXV$IWHU
DGMXVWPHQWIRUWKLVHIIHFWWKHRSHUDWLQJUHVXOWZDV(85tPLOOLRQLQ7KHLQFUHDVHLQ
WKHDGMXVWHGRSHUDWLQJUHVXOWWR(85PLOOLRQIRUZDVSULPDULO\WKHUHVXOWRIKLJKHU
RWKHULQFRPHDQGWDUJHWHGFRVWPDQDJHPHQW7KHFRQVROLGDWHGQHWLQFRPHORVVZDV(85t
PLOOLRQ
:HZLOOSURSRVHWRWKH$QQXDO*HQHUDO0HHWLQJWKHSD\PHQWRIDGLYLGHQGRI(85SHU
SUHIHUHQFHVKDUHDQG(85SHURUGLQDU\VKDUHIRUWKHILQDQFLDO\HDU
)LQDQFLDOVLWXDWLRQ
,QYLHZRIWKHFRQVLGHUDEOHOLTXLGLW\LQIORZVIROORZLQJWKHVDOHRIWKH$UFXVLQYHVWPHQWWKHNH\
REMHFWLYHLQWHUPVRIILQDQFLDOPDQDJHPHQWLQWKHILQDQFLDO\HDUZDVWREDODQFHH[WHUQDO
ILQDQFHDQGOLTXLGDVVHWVZLWKWKHEHVWSRVVLEOHHIIHFWRQFRVWVDQGLQFRPH$IXUWKHUIRFXV
ZDVWKHKHGJLQJRIVKRUWWHUPDQGORQJWHUPH[WHUQDOILQDQFHFRPSRQHQWVZKLFKDUHQHFHVVDU\
EHFDXVHRIIHDWXUHVVSHFLILFWRWKHLQGXVWU\
7KH*URXSpVEDODQFHVKHHWWRWDODWWKHHQGRIWKHILQDQFLDO\HDUZDV(85
PLOOLRQ6KDUHKROGHUVpHTXLW\RI(85PLOOLRQUHSUHVHQWVDVKDUHRIRI
WKH*URXSEDODQFHVKHHWWRWDO
$IXUWKHU(85PLOOLRQZHUHDWWKH&RPSDQ\pVGLVSRVDODVORQJWHUPH[WHUQDOILQDQFH
IRUPRUHWKDQRQH\HDURIWKLVZHUHILQDQFLDOGHEWVLHLQWHUHVWEHDULQJORDQV
IURPEDQNVDQGOLDELOLWLHVIURPILQDQFHOHDVLQJDJUHHPHQWVRIPRUHWKDQRQH\HDUpVGXUDWLRQ
7KHORQJWHUPOLDELOLWLHVFRUUHVSRQGHGWRRIWKH*URXSpVGHEWSRVWHGDWWKHHQG
RI'HFHPEHU
$XGLW2SLQLRQ&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV&RUSRUDWH*RYHUQDQFH 0DQDJHPHQW5HSRUW 5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
,QFRPHILQDQFLDODQGDVVHWVVLWXDWLRQ
,QFRPHILQDQFLDODQGDVVHWVVLWXDWLRQ
7KHOLTXLGLW\UDWLRRIWKHORQJWHUPDVVHWVIURPHTXLW\DQGORQJWHUPH[WHUQDOILQDQFH
FRPSRQHQWVZDV(85
%HUHQW]HQKDVYDULRXVVRXUFHVIRUFRUSRUDWHILQDQFLQJZLWKVKRUWWHUPH[WHUQDOIXQGVZKLFK
WRWDOOHG(85PLOOLRQRURIWKHEDODQFHVKHHWWRWDORQWKHEDODQFH
VKHHWGDWH
([WHUQDOILQDQFLQJIRFXVHGRQWKHWHPSRUDU\UHFRXUVHWRVKRUWWHUPFUHGLWOLQHVDQGWKHVDOH
RIUHFHLYDEOHVZLWKQRQUHFRXUVHXQGHUIDFWRULQJDQGIRUIDLWLQJDJUHHPHQWV$W\HDUHQGWKH
*URXSKDGDWRWDORI(85PLOOLRQDWLWVGLVSRVDODVVKRUWWHUPFUHGLWOLQHVDQG
(85PLOOLRQLQIRUIDLWLQJOLQHV7KHVKRUWWHUPH[WHUQDOFUHGLWILQDQFHKDVLQWHUHVW
DJUHHPHQWVEDVHGRQWKHUHIHUHQFHUDWHV(21,$RU(85,%25ZKLFKDUHEHLQJLQFUHDVHGE\D
IL[HGLQWHUHVWPDUJLQ$W\HDUHQGDWRWDORI(85PLOOLRQRIWKHVKRUWWHUPOLDELOLWLHV
ZDVLQWHUHVWUHODWHG
8SDQGLQFOXGLQJLWZDVSRVVLEOHWRXVHWKHVWDWXWRU\UHJXODWLRQRQGHIHUPHQWRIWKH
VSLULWVWD[WRILQDQFHUHFHLYDEOHVEHWZHHQ-DQXDU\DQG1RYHPEHU$W\HDUHQGWKHGHIHUUDO
HIIHFWZDVWHPSRUDULO\OLIWHGDVWKHQVSLULWVWD[HVEHFDPHGXHIRUWZRPRQWKVRQDSD\PHQW
GDWH7KHUHIRUHWKHVKRUWWHUPILQDQFLQJUHTXLUHPHQWZDVDWLWVJUHDWHVWRQWKHEDODQFHVKHHW
GDWHWRWDOOLQJ(85PLOOLRQLQ)URP-DQXDU\WKHGDWHIRUSD\PHQWRI
WKHVSLULWVWD[ZDVVKRUWHQHGIURPWRGD\VDIWHUWKHWD[OLDELOLW\LVSURGXFHG,QUHWXUQ
WKHKLJKHUWD[EXUGHQLQ'HFHPEHUZDVOLIWHG:LWKHIIHFWRIWKHILQDQFLDO\HDUWKH
GHIHUUDOHIIHFWZKLFKKDVEHHQVKRUWHQHGE\GD\VZLOOOHDGWRDQLQFUHDVHLQWKHZRUNLQJ
FDSLWDOGXULQJWKH\HDU+RZHYHUGXHWRWKHODVWGRXEOHSD\PHQWRIRQO\HOHYHQVSLULWV
WD[SD\PHQWVDUHWREHPDGHLQWKHQHZILQDQFLDO\HDUDQGWKHOLTXLGLW\EXUGHQGXHWRWKHSDVW
UHJXODWLRQZLOOQRORQJHUDSSO\DVRIWKHHQGRIWKH\HDU
$VLQSUHYLRXV\HDUVWKHILQDQFLQJRIDFTXLVLWLRQVIRUWKHYHKLFOHIOHHWDQGFHUWDLQVPDOOHU
RIILFHIXUQLWXUHDQGHTXLSPHQWLWHPVZDVPDGHYLDOHDVLQJ7RWDOOLDELOLWLHVZKLFKVKRXOGEH
YDOXHGDFFRUGLQJWRWKHFODVVLILFDWLRQFULWHULDRI,$6DVRSHUDWLQJOHDVLQJDQGVKRXOGQRWEH
HQWHUHGLQWKHEDODQFHVKHHWE\WKHOHVVHHDPRXQWHGWR(85PLOOLRQRQEDODQFHVKHHW
GDWH7KHUHZHUHDOVRILQDQFHOHDVLQJDJUHHPHQWVIURPWKHSUHYLRXV\HDUVIRUWKHDFTXLVLWLRQ
RIWDQJLEOHDVVHWVVXFKDVWHFKQLFDOHTXLSPHQWDQGPDFKLQHU\SOXVRIILFHIXUQLWXUHDQG
HTXLSPHQWRIRYHU(85PLOOLRQ7KHXQGHUO\LQJFXUUHQWDVVHWVZHUHYDOXHGDW(85
PLOOLRQDWEDODQFHVKHHWGDWHFRPSDUHGWRILQDQFLDOGHEWVRI(85PLOOLRQ
7KHGHYHORSPHQWRIOLTXLGLW\LVVKRZQRQWKHEDVLVRIWKHIORZRIIXQGVVWDWHPHQW
%\FRQWUDVWZLWKWKHSUHYLRXV\HDULQZKLFKVKRUWWHUPILQDQFLDOOLDELOLWLHVDJDLQVWIRUWDLVWVZHUH
DOVRLQFOXGHGLQWKHILQDQFLDOIXQGVILQDQFLDOIXQGVLQWKHUHSRUWLQJ\HDUDUHGHILQHGDVWKH
EDODQFHRIWKHLWHPVq&DVKDQGFDVKHTXLYDOHQWVrDQGq6KRUWWHUPILQDQFLDOGHEWVr)RUWKLV
RQO\WKHGLUHFWO\DYDLODEOHH[WHUQDOILQDQFHFRPSRQHQWVDVSDUWRIWKHDIRUHPHQWLRQHGZRUNLQJ
FDSLWDOFDVKOLQHVDUHUHSUHVHQWHGDVH[WHUQDOILQDQFHFRPSRQHQWV7KHILJXUHVIRUWKHSUHYLRXV
\HDUZHUHDGMXVWHG
)ORZRIIXQGVVWDWHPHQWIRUWKHSHULRG-DQXDU\WR'HFHPEHU
&KDQJH
(85WKRXVDQG (85WKRXVDQG (85WKRXVDQG
&RQVROLGDWHGQHWLQFRPHORVV
,QWHUHVWRXWIORZVLQIORZV
'HSUHFLDWLRQDQGDPRUWLVDWLRQRQLQWDQJLEOHDVVHWVWDQJLEOH
DVVHWV,)56
2WKHUQRQFDVKHIIHFWV
/RVVIURPGLVSRVDORIORQJWHUPDVVHWV
,QWHULPEDODQFHFDVKIORZUHOHYDQWWRHFRQRPLFVXFFHVV
'HFUHDVHLQFUHDVHLQDFFUXDOV
,QFUHDVHLQRWKHUDVVHWV
,QFUHDVHGHFUHDVHLQOLDELOLWLHVIURPVSLULWVWD[
'HFUHDVHLQFUHDVHLQRWKHUOLDELOLWLHV
1HWLQIORZRIIXQGVIURPFXUUHQWDFWLYLWLHV
,QIORZVIURPGLVSRVDOVRIWDQJLEOHDVVHWV
5HVXOWIURPLQYHVWPHQWYDOXHGDWHTXLW\
,QIORZVIURPGLVSRVDOVRILQWDQJLEOHDVVHWV
2XWIORZVIRULQYHVWPHQWVLQWDQJLEOHDVVHWV
,QIORZVIURPLQYHVWPHQWVYDOXHGDWHTXLW\
,QIORZVIURPGLVSRVDOVRIILQDQFLDODVVHWV
2XWIORZVIRULQYHVWPHQWVLQILQDQFLDODVVHWV
2XWIORZVIRULQYHVWPHQWVLQLQWDQJLEOHDVVHWV
1HWLQIORZRXWIORZRIIXQGVIURPLQYHVWPHQWDFWLYLWLHV
,QIORZVIURPORDQV
,QIORZVIURPIRUIDLWLVW
2XWIORZVIURPWKHUHSD\PHQWRIORDQV
2XWIORZVIRUWKHUHSD\PHQWRIOLDELOLWLHVWRIRUIDLWLVW
'LYLGHQGGLVWULEXWLRQ
1HWRXWIORZRIIXQGVIURPILQDQFLQJDFWLYLWLHV
&KDQJHVLQFDVK
6KRUWWHUPILQDQFLDOGHEWV
/LTXLGIXQGV
)LQDQFLDOIXQGVDWWKHEHJLQQLQJRIWKHSHULRG
6KRUWWHUPILQDQFLDOGHEWV
/LTXLGIXQGV
)LQDQFLDOIXQGVDWWKHHQGRIWKHSHULRG
$XGLW2SLQLRQ&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV&RUSRUDWH*RYHUQDQFH 0DQDJHPHQW5HSRUW 5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
,QFRPHILQDQFLDODQGDVVHWVVLWXDWLRQ
,QFRPHILQDQFLDODQGDVVHWVVLWXDWLRQ
7KHFDVKIORZUHOHYDQWWRHFRQRPLFVXFFHVVWRWDOOHG(85PLOOLRQ7KLVLVGXHWRWKH
DGMXVWPHQWFDUULHGRXWLQWKHSUHYLRXV\HDUIRUWKHUHVXOWRIWKH6XFD$6SDUWLFLSDWLRQYDOXHGDW
HTXLW\RI(85PLOOLRQQRWIXOO\LPSDFWLQJIXQGVWKHSDUWRIZKLFKLPSDFWHGIXQGVZDVDQG
LVWREHUHSRUWHGLQLQYHVWPHQWDFWLYLWLHV
7KHFDVKIORZIURPFXUUHQWDFWLYLWLHVDOVRLQFOXGHVSD\PHQWVUHODWHGWRZRUNLQJFDSLWDODQG
LQFUHDVHGIURP(85PLOOLRQLQWKHSUHYLRXV\HDUWR(85PLOOLRQ/RZHUSD\PHQWVIRU
VSLULWVWD[ZHUHFRXQWHUHGE\KLJKHUSD\PHQWVIRUPDUNHWLQJDQGVDOHVOLDELOLWLHVDVZHOODV
ERQXVHV,QWRWDOSD\PHQWWUDQVDFWLRQVPDLQO\UHSRUWLQJGDWHUHODWHGUHVXOWHGLQRXWIORZVRI
(85PLOOLRQ
,QYHVWPHQWDFWLYLWLHVSURGXFHGDQLQIORZRIIXQGVRI(85PLOOLRQ7KHLQFUHDVHLQ
RXWIORZVIRULQYHVWPHQWVLQORQJWHUPDVVHWVRI(85PLOOLRQIURP(85PLOOLRQ
LQFRPSDULVRQWRZDVILQDQFHGWKURXJKSD\PHQWUHFHLSWVIURPWKHVDOHRIWKH$UFXV
SDUWLFLSDWLRQ7KHVHDPRXQWHGWR(85PLOOLRQLQWKHUHSRUWLQJ\HDUDQGFRPSULVHGLYLGHQG
GLVWULEXWLRQVIRUWKHUHVXOWVRIWKHSUHYLRXV\HDUV,QIORZVIURPWKHVDOHRIRWKHUORQJWHUP
DVVHWVWRWDOOHG(85PLOOLRQ
7KHQHWRXWIORZIURPILQDQFLQJDFWLYLWLHVRI(85PLOOLRQ(85PLOOLRQORZHUWKDQLQ
FDQEHDWWULEXWHGWRWKHFKDQJHLQWKHIRUWIDLWLVWYROXPH'XHWKHLPSURYHGILQDQFLDO
VLWXDWLRQLQWKHILQDQFLQJRIWKHGRXEOHVSLULWVWD[SD\PHQWVLQZDVPDLQO\WKH
UHVXOWRIVKRUWWHUPEDQNOLQHVRIFUHGLWZLWKPRUHIDYRXUDEOHLQWHUHVWUDWHV$VDUHVXOWLQ
WKHSD\PHQWVIRUUHSD\PHQWRIOLDELOLWLHVWRIRUWIDLWLVWVZHUHGRZQ(85PLOOLRQLQ
FRPSDULVRQWR
6FKHGXOHGFUHGLWUHSD\PHQWVRI(85PLOOLRQDQGGLYLGHQGSD\PHQWVRI(85
PLOOLRQIRUDQGUHVXOWHGLQRXWIORZVIURPLQYHVWPHQWDFWLYLWLHVRI(85
PLOOLRQ
2YHUDOOILQDQFLDOIXQGVWRWDOOHG(85PLOOLRQDWWKHHQGRIWKH\HDU7KHVHFRQWDLQHG
ZRUNLQJFDSLWDOFDVKOLQHVXWLOLVHGDWEDODQFHVKHHWGDWHRI(85PLOOLRQ
$VVHWVVLWXDWLRQ
7KHIROORZLQJWDEOHDUUDQJHVDVVHWVDQGOLDELOLWLHVVRDVWRSURYLGHDEHWWHUFRPSDULVRQDVWR
KRZORQJWKHQHWDVVHWSRVLWLRQVDUHWLHGXS7KHDQWLFLSDWHGGLVWULEXWLRQLQWKHIROORZLQJ\HDU
IURPWKHVDOHRI$UFXVLVVKRZQVHSDUDWHO\
(85WKRXVDQG
(85WKRXVDQG
&KDQJH
(85WKRXVDQG
$66(76
/RQJWHUPDVVHWV
,QWDQJLEOHDVVHWV
7DQJLEOHDVVHWV
7UDGHUHFHLYDEOHV
'HIHUUHGWD[HV
$WHTXLW\YDOXHGSDUWLFLSDWLRQVDQG
RWKHUILQDQFLDODVVHWV
/RQJWHUPDQGPHGLXPWHUPDVVHWV
/RQJWHUPDVVHWVKHOGIRUGLVSRVDO
$WHTXLW\HYDOXDWHGSDUWLFLSDWLRQ
GLVWULEXWLRQLQIROORZLQJ\HDU
,QYHQWRULHV
7UDGHUHFHLYDEOHV
2WKHUDVVHWV
/LTXLGIXQGV
&XUUHQWDVVHWV
2WKHUORQJWHUPDFFUXDOV
/RQJWHUPILQDQFLDOGHEWV
/,$%,/,7,(6
6KDUHKROGHUVpHTXLW\
3HQVLRQDFFUXDOV
'HIHUUHGWD[OLDELOLWLHV
/LDELOLWLHVIURPVSLULWVWD[
2WKHUVKRUWWHUPDFFUXDOV
6KRUWWHUPILQDQFLDOGHEWV
7UDGHSD\DEOHV
2WKHUOLDELOLWLHV
/RQJWHUPOLDELOLWLHV
'HEWVIURPDVVHWVKHOGIRUGLVSRVDO
6KRUWWHUPOLDELOLWLHV
$XGLW2SLQLRQ&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV&RUSRUDWH*RYHUQDQFH 0DQDJHPHQW5HSRUW 5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
,QFRPHILQDQFLDODQGDVVHWVVLWXDWLRQ
,QFRPHILQDQFLDODQGDVVHWVVLWXDWLRQ
$W(85PLOOLRQDSSUR[LPDWHO\RI*URXSDVVHWVDUHLQYHVWHGLQORQJWHUPDQG
PHGLXPWHUPDVVHWVDVLQWKHSUHYLRXV\HDU7KHYDVWPDMRULW\RIFRQVLVWVRI
WDQJLEOHDVVHWVSURSHUW\PDFKLQHU\DQGRIILFHHTXLSPHQW2YHUDOOWDQJLEOHDVVHWVLQFUHDVHG
WR(85PLOOLRQ*URVVLQYHVWPHQWVLQWDQJLEOHDVVHWVRI(85PLOOLRQ
UHFODVVLILFDWLRQIURPORQJWHUPDVVHWVKHOGIRUVDOHRI(85PLOOLRQDQGWUDQVODWLRQHIIHFWVRI
(85PLOOLRQZHUHFRXQWHUHGE\GHSUHFLDWLRQDQGDPRUWLVDWLRQDVZHOODVERRNYDOXHORVVHV
RI(85PLOOLRQ
RIORQJWHUPDVVHWVDUHLQWDQJLEOHDVVHWV7KH\FRQVLVWRIVSLULWEUDQGULJKWVDQG
GLVWULEXWLRQULJKWVREWDLQHGWKURXJKFRPSDQ\DFTXLVLWLRQVRUEDVHGRQORQJHVWDEOLVKHGOLFHQFH
DJUHHPHQWV7KHVDOHVVKDUHRIWKHUHSRUWHGVSLULWEUDQGVLQWKHEUDQGHGVSLULWVEXVLQHVVZDV
,QWKHUHSRUWLQJ\HDU%HUHQW]HQLQYHVWHGDWRWDORI(85PLOOLRQLQLQWDQJLEOH
DVVHWVWDQJLEOHDVVHWVDQGRWKHUDVVHWV7KHIRFXVZDVRQDVPDOOERWWOLQJSODQWLQ0LQGHQ
DQGWKHRSWLPLVDWLRQRIRWKHUERWWOLQJSODQWVLQ0LQGHQDUHFWLILFDWLRQSODQWLQWKHGLVWLOOHU\
LQ+DVHOØQQHDQGLQVWDOOLQJD3(7ERWWOLQJSODQWIRUWKH9LYDULVVXEVLGLDU\7KHYDOXHRIWKHVH
SURMHFWVZKLFKZHUHFRPSOHWHGLQWKHUHSRUWLQJ\HDUWRWDOOHG(85PLOOLRQDQGLQFOXGHG
UHFODVVLILFDWLRQVIURPWKHSUHYLRXV\HDU
7KH$WHTXLW\YDOXHGSDUWLFLSDWLRQVDQG2WKHUILQDQFLDODVVHWVLWHPVDPRXQWLQJWR(85
PLOOLRQFRQVLVWHGSULPDULO\RIUHSD\PHQWORDQVLQ,QWKH\DOVRLQFOXGHGVKDUHV
LQWKHGLVWULEXWLRQRI6XFUD$6ZKLFKDUHQRWH[SHFWHGWREHUHFHLYHGXQWLO7KHVKDUH
RILQFRPHIURPWKHVDOHRI$UFXVZKLFKKDVQRW\HWEHHQUHFHLYHGZLOOEHUHSRUWHGLQFXUUHQW
DVVHWVDVDGLVWULEXWLRQIRUWKHIROORZLQJ\HDU7KHVKDUHVRIDURXQGLQWKHVXEKROGLQJ
FRPSDQ\68&5$ZLOOEHUHWDLQHGXQWLOWKHFRPSDQ\KDVIXOO\UHDOLVHGWKHUHPDLQLQJUHYHQXH
UHFHLYDEOHVIURPWKHVDOHRI$UFXVLQDVFRQWUDFWXDOO\DJUHHGDQG%HUHQW]HQKDVUHFHLYHG
WKHIXQGV,QWKHUHSRUWLQJ\HDUGLVWULEXWLRQVRI(85PLOOLRQZHUHPDGH
$WWKHODUJHVWVKDUHRIWKHPLOOLRQLQFXUUHQWDVVHWVFRQWLQXHV
FRQFHUQWUDGHUHFHLYDEOHV7KHLQYHQWRULHVVKDUHRIFXUUHQWDVVHWVLQFUHDVHGIURPWR
7KHLQFUHDVHLQLQYHQWRULHVZDVPDLQO\DWWULEXWDEOHWRWKHVWRUDJHRIZRUNLQSURJUHVVLQ
RUGHUWRVDIHJXDUGWKHDELOLW\WRVXSSO\LQWKHORQJWHUPDQGWRFDSLWDOLVDWLRQRIWKHVSLULWVWD[
IRUVSLULWVSURGXFWVZKLFKKDGQRW\HWEHHQLQYRLFHGDWEDODQFHVKHHWGDWHEXWZKLFKZHUHLQ
WKHSURFHVVRIEHLQJGHOLYHUHGDQGKDGOHIWWKHVRFDOOHGRSHQVSLULWVZDUHKRXVH
6XPPDU\RIWKHHFRQRPLFVLWXDWLRQ
%HUHQW]HQDFKLHYHGLWVSODQQHGWDUJHWRIHQGLQJWKHILQDQFLDO\HDUZLWKDEDODQFHG
FRQVROLGDWHGRSHUDWLQJUHVXOW$VDUHVXOWRIVSHFLDOHIIHFWVSDUWLFXODUO\LQFRQQHFWLRQZLWK
WKHLQFRPHIURPWKHVDOHRIWKH$UFXVSDUWLFLSDWLRQZKLFKLPSDFWHGHDUQLQJVLQWKHSUHYLRXV
\HDUWKH*URXSpVQHWSURILWIRUWKH\HDUZDVKLJKHULQWKDQLQ3D\PHQWUHFHLSWVLQ
FRQQHFWLRQZLWKWKLVWUDQVDFWLRQKDGDSRVLWLYHLPSDFWPDLQO\RQOLTXLGLW\GXULQJWKHUHSRUWLQJ
\HDU
7KHXQIDYRXUDEOHGHYHORSPHQWRIVDOHVVWUXFWXUHDQGJURVVSURILWZKLFKFRQWLQXHGLQLV
DFOHDULQGLFDWLRQWKDWWKHVXVWDLQHGJURZWKYROXPHZLWKEHWWHUHDUQLQJVFRQWULEXWLRQVLVWKH
KLJKHVWSULRULW\IRUVWUHQJWKHQLQJ%HUHQW]HQpVHDUQLQJSRZHU,QIXWXUHFRVWPDQDJHPHQWLV
DOVRWRPDNHDFRQWULEXWLRQWRUHYHUVLQJWKHQHJDWLYHGHYHORSPHQWRIWKHSDVW+RZHYHULQWKH
QH[WIHZ\HDUVFRUSRUDWHSROLF\ZLOOIRFXVRQH[SDQGLQJWKHEUDQGEXVLQHVVLQ*HUPDQ\
7RWKLVHQGLQQRYDWLRQVDUHWREHGHYHORSHGPDUNHWSURFHVVLQJLVWREHLQWHQVLILHGDQG
FRPPXQLFDWLRQZLWKWKHHQGFRQVXPHULVWREHLPSURYHG7KH&RPSDQ\pVILQDQFLQJZKLFK
FRQWLQXHVWREHUREXVWLVDQLPSRUWDQWEDVLVIRUWKHLQYHVWPHQWVUHTXLUHGLQWKLVUHVSHFW
$XGLW2SLQLRQ&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV&RUSRUDWH*RYHUQDQFH 0DQDJHPHQW5HSRUW 5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
,QFRPHILQDQFLDODQGDVVHWVVLWXDWLRQ
5HPXQHUDWLRQUHSRUW
5HPXQHUDWLRQUHSRUW
5HPXQHUDWLRQRIWKH6XSHUYLVRU\%RDUG
7KHUHPXQHUDWLRQRIWKH6XSHUYLVRU\%RDUGLVGHWHUPLQHGDWWKH$QQXDO*HQHUDO0HHWLQJ
DQGLVUHJXODWHGE\WKH$UWLFOHVRI$VVRFLDWLRQ,QDGGLWLRQWRDIL[HGFRPSRQHQWWKHDQQXDO
UHPXQHUDWLRQDOVRFRQWDLQVDYDULDEOHFRPSRQHQWZKLFKLVGHSHQGHQWRQWKHGLYLGHQG
GLVWULEXWHGSHURUGLQDU\VKDUHDVZHOODVUHPXQHUDWLRQIRUFRPPLWWHHPHPEHUVKLS
2QWKLVEDVLVPHPEHUVRIWKH6XSHUYLVRU\%RDUGUHFHLYHDIL[HGEDVLFUHPXQHUDWLRQDWWKHHQG
RIWKHILQDQFLDO\HDU$GGHGWRWKLVLVDYDULDEOHEDVLFUHPXQHUDWLRQLQVRIDUDVDFHUWDLQGLYLGHQG
tEDVLFDPRXQWSHURUGLQDU\VKDUHLVH[FHHGHG7KH&KDLUPDQRIWKH6XSHUYLVRU\%RDUG
UHFHLYHVWZLFHWKHIL[HGDQGYDULDEOHEDVLFUHPXQHUDWLRQDQGKLV'HSXW\UHFHLYHVRQHDQGD
KDOIWLPHVWKHIL[HGDQGYDULDEOHEDVLFUHPXQHUDWLRQ(DFKPHPEHURIWKH6XSHUYLVRU\%RDUG
FRPPLWWHHVDOVRUHFHLYHVDQDGGLWLRQDORIWKHIL[HGDQGYDULDEOHEDVLFUHPXQHUDWLRQ(DFK
FRPPLWWHH&KDLUPDQUHFHLYHVWZLFHWKLVDPRXQW6XSHUYLVRU\%RDUGPHPEHUVZKRZHUHQRWLQ
RIILFHIRUWKHZKROHRIWKHILQDQFLDO\HDUUHFHLYHDWZHOIWKRIWKHUHPXQHUDWLRQIRUWKHPRQWKLQ
ZKLFKWKHLUDFWLYLW\EHJDQ
5HPXQHUDWLRQ6\VWHPRIWKH%RDUGRI'LUHFWRUV
,QWKHUHSRUWLQJSHULRG'U-DQ%%HUHQW]HQXQWLO-XQH$QGUHDV5RVWXQWLO
'HFHPEHU+DQV:HUQHU1DJHO)HEUXDU\XQWLO2FWREHUDQG$[HO'DKP
VLQFH'HFHPEHUZHUHPHPEHUVRIWKH%RDUGRI'LUHFWRUV,QSD\PHQWVWRWKH
%RDUGRI'LUHFWRUVLQFUHDVHGWRDWRWDORI(85PLOOLRQDVDUHVXOWRIWKHGHSDUWXUHRI
PHPEHUVRIWKH%RDUGRI'LUHFWRUV
7KHUHPXQHUDWLRQRIWKH%RDUGRI'LUHFWRUVFRQVLVWVRIDPRQWKO\IL[HGZDJHYROXQWDU\
VSHFLDOSD\PHQWVDQGUHQWDOORZDQFHVVRFLDOVHFXULW\DOORZDQFHVDFRPSDQ\FDUZKLFKPD\
EHXVHGSULYDWHO\DQGLQVXUDQFHSURWHFWLRQDVZHOODVDFRPSDQ\DQGSULYDWHSHUVRQDOOLDELOLW\
DQGDFFLGHQWDOGDPDJHLQVXUDQFH,QDGGLWLRQWKH&RPSDQ\DOVRJHQHUDOO\WDNHVRXWDOLIH
LQVXUDQFHSROLF\IRUPHPEHUVRIWKH%RDUGRI'LUHFWRUV$QDGGLWLRQDOYDULDEOHUHPXQHUDWLRQ
ERQXVLVVSHFLILHGRQWKHEDVLVRIFRQVROLGDWHG(%,7IRUWKHSUHYLRXVILQDQFLDO\HDU,Q
PHPEHUVRIWKH%RDUGRI'LUHFWRUVUHFHLYHGQRERQXVHV
7KHWRWDOSD\PHQWVDOVRLQFOXGHSD\PHQWVUHVXOWLQJIURPWKHWHUPLQDWLRQRIWKHFRQWUDFWRI
HPSOR\PHQW,IDFRQWUDFWRIHPSOR\PHQWLVWHUPLQDWHGSUHPDWXUHO\WKHPHPEHUVRIWKH%RDUG
RI'LUHFWRUVDUHHQWLWOHGWRUHFHLYHDVHWWOHPHQWDVFRPSHQVDWLRQIRUDOOIXWXUHSD\PHQWVRU
WKH\DUHHQWLWOHGWRWUDQVLWLRQDOSD\PHQWVZKLFKDUHSDLGPRQWKO\6XFKSD\PHQWVHTXDWHWRWKH
PRQWKO\EDVLFUHPXQHUDWLRQRYHUWKHODVWWZHOYHPRQWKVSULRUWROHDYLQJWKH&RPSDQ\
,QWKHILQDQFLDO\HDUPHPEHUVRIWKH%RDUGRI'LUHFWRUVUHFHLYHGQRRSWLRQVWRREWDLQ
VKDUHV
6XSSOHPHQWDU\UHSRUW
1RHYHQWVRFFXUUHGDIWHUWKHHQGRIWKHILQDQFLDO\HDUWKDWVKRXOGEHUHSRUWHG
5LVNUHSRUW
5LVNPDQDJHPHQWV\VWHP
%HUHQW]HQpVULVNPDQDJHPHQWV\VWHPLVGHVLJQHGVRWKDWULVNVDUHLGHQWLILHGDVVHVVHG
DQGKDQGOHGWKURXJKDSSURSULDWHHDUO\UHFRJQLWLRQDQGVHFXULW\PHDVXUHV7KLVHQDEOHV
DQ\SRWHQWLDOGDPDJHWREHLGHQWLILHGWKHSUREDELOLW\RIRFFXUUHQFHWREHGHWHUPLQHGDQG
PHDVXUHVWREHSODQQHGDQGLPSOHPHQWHGVRWKDWWKH&RPSDQ\JRDOVFDQEHDFKLHYHG7KDQNV
WR*URXSZLGHUHSRUWLQJWKH%RDUGRI'LUHFWRUVLVLQDSRVLWLRQWRLGHQWLI\DQGFRQWUROULVNV
MHRSDUGLVLQJWKH&RPSDQ\pVFRQWLQXHGH[LVWHQFHDQGULVNVWKDWPD\KDYHDVLJQLILFDQWHIIHFW
RQWKHDVVHWVILQDQFLDODQGLQFRPHVLWXDWLRQ7KHULVNPDQDJHPHQWV\VWHPFRPSOLHVZLWKWKH
UHTXLUHPHQWVRIWKH&RQWURODQG7UDQVSDUHQF\LQ%XVLQHVVHV$FW.RQ7UD*LQFRQQHFWLRQZLWK
$UWLFOH,,RIWKH*HUPDQ6WRFN&RUSRUDWLRQ$FW$NW*
$XGLW2SLQLRQ&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV&RUSRUDWH*RYHUQDQFH 0DQDJHPHQW5HSRUW 5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
5HPXQHUDWLRQUHSRUW6XSSOHPHQWDU\UHSRUW5LVNUHSRUW
5LVNUHSRUW
'LUHFWULVNUHVSRQVLELOLW\LVWUDQVIHUUHGWRRSHUDWLRQDOHPSOR\HHVZKRUHSRUWQHZO\LGHQWLILHG
ULVNVDQGRQDTXDUWHUO\EDVLVWRWKHULVNPDQDJHU7KHULVNPDQDJHULQIRUPVWKH%RDUGRI
'LUHFWRUVDERXWLPSRUWDQWFKDQJHVDQGGHYHORSPHQWV7KHXSGDWLQJRIWKHV\VWHPLVFDUULHG
RXWE\DQDQQXDOLQYHQWRU\ZKLFKUHFRUGVDOOULVNVDVVHVVPHQWVDQGPHDVXUHVLQDPDQXDO
DQGSURYLGHVDQRXWORRNIRUWKHQH[WWZR\HDUV
(FRQRPLFULVNV
7KHRYHUDOOHFRQRPLFGHYHORSPHQWFDQKDYHDGLUHFWHIIHFWRQFRQVXPHUEHKDYLRXU$PDUNHG
ZRUVHQLQJRIWKHVLWXDWLRQFDQDFFHOHUDWHDQLQFUHDVHLQWKHPDUNHWVKDUHVRIGLVFRXQWHUVDV
ZHOODVDGHFOLQHLQFRQVXPHUH[SHQGLWXUHEHFDXVHFRQVXPHUVVZLWFKWRORZSULFHSURGXFWV
VXFKDVWUDGHEUDQGV7KLVFRXOGLQWHQVLI\WKHVTXHH]HRQPDUJLQVDQGGDPDJH%HUHQW]HQpV
LQFRPHVLWXDWLRQ%HUHQW]HQPDQDJHVWKLVULVNE\DFWLYHO\SUHVHOOLQJEUDQGHGDUWLFOHVYLDD
EDODQFHGFRPPXQLFDWLRQPL[DFWLYLWLHVLQWUDGLWLRQDOPHGLDZLWKFRQVXPHURULHQWHGHYHQWV
WKURXJKWRSURPRWLRQVDWWKHSRLQWRIVDOH3ODQQLQJIRUWKHEXVLQHVV\HDUVDLPVDW
VLJQLILFDQWO\VWUHQJWKHQLQJWKHFRPPXQLFDWLRQDQGPDUNHWLQJDFWLYLWLHVIRU%HUHQW]HQpVFRUH
EUDQGV
,QGXVWU\VSHFLILFULVNV
5HVWULFWLRQVRQWKHPDUNHWLQJRIDOFRKROLFEHYHUDJHVVXFKDVVDOHVUHVWULFWLRQVVSLULWVWD[
LQFUHDVHVDQWLDOFRKROFDPSDLJQVDQGDGYHUWLVLQJEDQVUHSUHVHQWSRWHQWLDOULVNVIRU%HUHQW]HQ
'LVFXVVLRQRQOLPLWLQJWKHDGYHUWLVLQJRIDOFRKROLFEHYHUDJHVFRQWLQXHVZLWKQRVWDWXWRU\
UHVWULFWLRQVFXUUHQWO\ORRPLQJRQWKHKRUL]RQ
/HJLVODWLYHPHDVXUHVVXFKDVVSHFLDOWD[HVDGYHUWLVLQJUHJXODWLRQVDQGWKH3DFNDJLQJ
2UGQDQFHZLWKLWVHIIHFWRQWKHUHJXODWLRQRIUHWXUQVKDYHKDGDVLJQLILFDQWLQIOXHQFHRQWKH
GULQNVLQGXVWU\%HUHQW]HQDFWLYHO\SDUWLFLSDWHVLQFRPPLWWHHVDQGDVVRFLDWLRQVWRIRUPXODWH
WKHFRQFHUQVRIWKHLQGXVWU\
2SHUDWLQJULVNV
7KHEUHDNGRZQRISURGXFWLRQIDFLOLWLHVRUSUHPLVHVFDQUHVXOWLQGHOLYHU\ERWWOHQHFNV2QJRLQJ
PDLQWHQDQFHZRUNDQGWKHFRQVWDQWDYDLODELOLW\RIWHFKQLFDOVHUYLFHVWKHUHIRUHPLQLPLVH
WKHOLNHOLKRRGRISODQWEUHDNGRZQV'LVWULEXWLQJSURGXFWLRQRYHUPXOWLSOHORFDWLRQVDOVR
HQVXUHVWKHDELOLW\WRVXSSO\,QDGGLWLRQDJUHHPHQWVKDYHEHHQUHDFKHGZLWKRWKHUVSLULWV
PDQXIDFWXUHUVWRSURYLGHSURGXFWLRQFDSDFLWLHVRQDPXWXDOEDVLVLQFDVHRIHPHUJHQF\DQG
WKHUHLVDEXVLQHVVLQWHUUXSWLRQLQVXUDQFHSROLF\
7KHVHFXULW\DQGVDIHW\DUUDQJHPHQWVIRUILUHSUHYHQWLRQDQGEUHDNLQVKDYHEHHQXSJUDGHGWR
WKHODWHVWWHFKQRORJLFDOVWDQGDUGVWKXVUHGXFLQJWKHHIIHFWVRIGDPDJHDQGGDPDJHSRWHQWLDO
7RPHHWWKHJURZLQJUHTXLUHPHQWVIURPVWDWXWRU\UHJXODWLRQVLQWKHILHOGRIWHFKQRORJ\VXFK
DVWKRVHIRUDFFLGHQWSUHYHQWLRQDQGHQYLURQPHQWDOSURWHFWLRQ%HUHQW]HQSURYLGHVWUDLQLQJ
DFWLYLWLHVIRULWVVWDII
$JUHHPHQWVZLWKORQJWHUPSXUFKDVHFRPPLWPHQWVIRUHTXLSPHQWQRZH[LVWRQO\WRDOLPLWHG
H[WHQW6XFKFRPPLWPHQWVDUHRQO\OLQNHGWRFHUWDLQGHYHORSPHQWVIRUJODVVERWWOHV4XDOLW\
VWDQGDUGVDUHHQVXUHGWKURXJKORQJVWDQGLQJSDUWQHUVKLSVQHZVXSSOLHUVDUHUHTXLUHGWR
XQGHUJRDGHILQHGTXDOLILFDWLRQSURFHVV
3HUVRQQHOULVNV
,QRUGHUWRHQVXUHWKHUHFUXLWPHQWUHTXLUHPHQWVIRULPSOHPHQWDWLRQRIWKHEXVLQHVVVWUDWHJ\
RUWRILOOVDODULHGDQGFRPPHUFLDOSRVLWLRQVRQDQRQJRLQJEDVLVPHGLXPWHUPSHUVRQQHO
SODQQLQJH[LVWVIRUDOOOHYHOVRIWKH&RPSDQ\
,7ULVNV
7KHEUHDNGRZQRIVHUYHUVRUSDUWVRIWKH,7QHWZRUNLVDULVNZKLFKLVFRXQWHUHGZLWKWKH
UHGXQGDQWGHVLJQRIVHUYHUV\VWHPVDVZHOODVWKHLPPHGLDWHDYDLODELOLW\RIUHSODFHPHQWSDUWV
DQGGDWDOLQHV6$3GDWDRIWKHPDQDJHPHQWLQIRUPDWLRQV\VWHPFDQEHUHVWRUHGZLWKLQRQH
KRXUYLDDVKDGRZGDWDEDVH$EDFNXSRIDOOGDWDVHWVLVJHQHUDWHGRQDGDLO\EDVLV)LUHZDOO
V\VWHPVYLUXVVFDQQHUVDQGWKHXSJUDGHWR6$35((LQSURYLGHDKLJKOHYHO
RIVHFXULW\LQWHUPVRIDFFHVVDXWKRULVDWLRQDQGH[WHUQDODFFHVV7KHOLNHOLKRRGRILQIRUPDWLRQ
V\VWHPVDQGGDWDVHWVEHLQJSODFHGDWULVNLVWKHUHIRUHUHJDUGHGDVOLPLWHG
)LQDQFLDOULVNV
3ULQFLSOHVDQGREMHFWLYHVRIILQDQFLDOPDQDJHPHQW
,QYLHZRIWKHIXUWKHUOLTXLGLW\LQIORZVIROORZLQJWKHVDOHRIWKH$UFXVLQYHVWPHQWWKHREMHFWLYHV
LQWHUPVRIILQDQFLDOPDQDJHPHQWLQZHUHWREDODQFHH[WHUQDOILQDQFHDQGOLTXLGDVVHWV
ZLWKWKHEHVWSRVVLEOHHIIHFWRQLQFRPH6KRUWWHUPH[WHUQDOILQDQFHFRPSRQHQWVZKLFKDUH
QHHGHGGXHWRLQGXVWU\VSHFLILFIHDWXUHVHYHQZLWKH[FHOOHQWHTXLW\UHVRXUFHVZHUHVHFXUHG
$XGLW2SLQLRQ&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV&RUSRUDWH*RYHUQDQFH 0DQDJHPHQW5HSRUW 5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
5LVNUHSRUW
5LVNUHSRUW
%HUHQW]HQEHQHILWVIURPDVRXQGHTXLW\EDVHDQGFUHGLWDJUHHPHQWVZLWKPDWXULW\ODVWLQJ
VHYHUDO\HDUV6XIILFLHQWFUHGLWOLQHVZHUHPDLQWDLQHGWRFRYHUUHTXLUHPHQWVIURPFXUUHQW
RSHUDWLRQV6KRUWWHUPFUHGLWOLQHVKDYHEHFRPHPRUHH[SHQVLYHGXHVROHO\WRLQFUHDVHG
UHIHUHQFHLQWHUHVWUDWHV
7DNLQJLQWRDFFRXQWWKHSRVLWLYHHIIHFWVRIWKHVDOHRIWKH$UFXVSDUWLFLSDWLRQRQOLTXLGLW\
WKHJHQHUDOILQDQFLQJUHTXLUHPHQWVKDYHEHHQVHFXUHGIRUWKHFRPLQJ\HDUHYHQLQOLJKWRI
LQFUHDVLQJH[SHQGLWXUHIRUPDUNHWGHYHORSPHQW&XUUHQF\ULVNVDUHUDWHGDVORZDV%HUHQW]HQpV
SURFXUHPHQWDQGVDOHVRSHUDWLRQVDUHIRFXVHGPDLQO\RQWKH(XUR]RQH
7KHFHQWUDOILQDQFLDOPDQDJHPHQWFRQWUROV%HUHQW]HQpVILQDQFLDOULVNV/LTXLGLW\DQGLQWHUHVW
UDWHULVNVFUHGLWZRUWKLQHVVULVNVDQGIRUHLJQFXUUHQF\ULVNVDUHPRQLWRUHG,QWKHVWULFWVHQVH
RIWKHZRUGILQDQFLDOLQVWUXPHQWVVZDSVGHULYDWLYHVHWFDUHQRWFXUUHQWO\XVHGZLWKLQWKH
*URXS
)LQDQFLDODVVHWV
$WHTXLW\YDOXHGSDUWLFLSDWLRQV
7KHSDUWLFLSDWLRQLQWKH1RUZHJLDQFRPSDQ\6XFUD$6RI2VORLVUHSRUWHGLQWKHEDODQFHVKHHW
LQDFFRUGDQFHZLWKWKHHTXLW\PHWKRG$VDUHVXOWRIWKHGLVSRVDORIWKH6XFUDVXEVLGLDU\$UFXV
*UXSSHQ2VORWKHERRNYDOXHUHSRUWHGRQEDODQFHVKHHWGDWHLVH[SHFWHGWREHOLTXLGDWHGLQ
DWWKHODWHVWE\PHDQVRIGLVWULEXWLRQVDQGFDSLWDOUHSD\PHQWV$OWKRXJKWKH1RUZHJLDQ
NURQHKDVH[SHULHQFHGFHUWDLQH[FKDQJHUDWHIOXFWXDWLRQVLQYLHZRIWKHUDQJHRIYRODWLOLW\LW
FDQQRWEHDVVXPHGWKDWWKHUHDUHDQ\IRUHLJQH[FKDQJHUDWHULVNVZKLFKWKUHDWHQWKHH[LVWHQFH
RIWKHFRPSDQ\
*URXSFRPSDQLHVDQGSDUWLFLSDWLRQV
6KDUHVLQFRPSDQLHVGLUHFWO\RULQGLUHFWO\KHOGE\WKHSDUHQWFRPSDQ\FRQVLVWH[FOXVLYHO\RI
JHQHUDOSDUWQHUFRPSDQLHVDQGqODEHOrFRPSDQLHVZKLFKDUHKHDGTXDUWHUHGLQWKH(XUR]RQH
DQGKDYHUHODWLYHO\IHZDVVHWV1RQHRIWKHULVNVFRQWUROOHGE\FHQWUDOILQDQFLDOPDQDJHPHQW
DUHRIUHOHYDQFHKHUH
5HFHLYDEOHV
7KHDFWXDOWHUPRISD\PHQWIRUWKHHQWLUH*URXSLVFXUUHQWO\DURXQGGD\V7KLVGRHV
QRWSURGXFHDQ\LQFUHDVHGOLTXLGLW\RULQWHUHVWULVNDVWKHUHDUHVXIILFLHQWVKRUWWHUPFUHGLW
OLQHVDYDLODEOHWRILQDQFHUHFHLYDEOHV7KHQHHGIRUWUDGLWLRQDOVKRUWWHUPFUHGLWOLQHVLVDOVR
UHGXFHGWKURXJKDOWHUQDWLYHIRUPVRIILQDQFHVXFKDVOHDVLQJIDFWRULQJDQGIRUIDLWLQJ
6RPHRIVDOHVDUHLQYRLFHGYLDEUDQFKRIILFHVZKLFKDOVRDVVXPHWKH
FUHGLWZRUWKLQHVVULVNVE\PHDQVRIGHOFUHGHUHDJUHHPHQWV,QDGGLWLRQWKHULVNRIGHIDXOWLV
FRYHUHGE\FRPPHUFLDOFUHGLWLQVXUDQFHV%DODQFHVRIRYHU(85$OFRKRO)UHH%HYHUDJHV
GLYLVLRQRURYHU(856SLULWVGLYLVLRQDUHIXOO\FUHGLWLQVXUHG/RDQVLQIRUHLJQ
FXUUHQFLHVDUHQRWDFFHSWHGDQGQRH[FKDQJHEXVLQHVVLVFRQGXFWHG(VVHQWLDOO\QRGHOLYHULHV
DUHPDGHWRFRPSDQLHVQRWNQRZQWRWKHEUDQFKRIILFHVZLWKRXWSULRUFUHGLWZRUWKLQHVV
DVVHVVPHQWVE\UDWLQJDJHQFLHV
&XUUHQF\ULVNVDUHUDWHGDVORZDV%HUHQW]HQpVRSHUDWLRQVDUHIRFXVHGRQWKH(XUR]RQH1R
WUDQVDFWLRQVDUHFRQFOXGHGZLWKFXVWRPHUVLQFRXQWULHVRIKLJKLQIODWLRQ
/LDELOLWLHV
/RQJWHUPFUHGLWLVUHGXFHGDVVFKHGXOHG$VWKHGHDGOLQHIRUSD\PHQWRIWKHVSLULWVWD[LVWR
EHUHGXFHGE\GD\VLQWKHDPRXQWRZLQJWRWKHVWDWHPXVWEHSDLGGD\VDIWHUWKH
WD[OLDELOLW\LVSURGXFHG7KLVLQFUHDVHVWKHUHTXLUHPHQWIRUVKRUWWHUPH[WHUQDOILQDQFHRYHUWKH
\HDUZKLFKZLOOEHFRYHUHGE\LQWHUQDOILQDQFHDQGVXIILFLHQWFUHGLWOLQHV
,QWHUHVWUDWHKHGJLQJLQVWUXPHQWVLQWKHIRUPRIILQDQFLDOLQVWUXPHQWVDUHQRWXVHG)RUORQJ
WHUPORDQVWKHUHDUHIL[HGLQWHUHVWUDWHDJUHHPHQWV$GGLWLRQDOVKRUWWHUPRSHUDWLQJOLQHV
DUHQRWFRQVWDQWO\XVHGGXULQJWKH\HDUZLWKWKHUHVXOWWKDWSRVVLEOHULVHVLQWKHLQWHUHVWUDWH
SRVHQRVLJQLILFDQWULVNWRWKHFRPSDQ\)RUHLJQFXUUHQF\ULVNVDUHFRQVLGHUHGWREHORZ
DVSURFXUHPHQWRSHUDWLRQVDUHPDLQO\IRFXVHGRQWKH(XUR]RQH1RQ(XURSHDQVXSSOLHUV
DUHPDLQO\ORFDWHGLQWKH86$DQG&DQDGD1REXVLQHVVLVFRQGXFWHGZLWKVXSSOLHUVIURP
FRXQWULHVZLWKKLJKLQIODWLRQUDWHV([FKDQJHUDWHIOXFWXDWLRQVDUHWKHUHIRUHFDOFXODEOH
$VDW'HFHPEHUWKHUHZHUHOLDELOLWLHVRI(85PLOOLRQLQIRUHLJQFXUUHQFLHV
6LQFHWKHH[FKDQJHUDWHVRIWKHFXUUHQFLHVFRQFHUQHGDUHVWDEOHWKHIRUHLJQFXUUHQF\ULVNLV
DOVRFRQVLGHUHGWREHORZKHUH
)LQDQFLDOLQVWUXPHQWVPDQDJHGDEURDG
)URPD*URXSYLHZSRLQWWKHUHFRYHUDELOLW\RIWKHDVVHWVDQGQRPLQDOYDOXHVRI%HUHQW]HQpV
OLDELOLWLHVLQWKH&]HFK5HSXEOLFDQG6ORYDNLDDUHVXEMHFWWRIRUHLJQFXUUHQF\IOXFWXDWLRQV
7KHLQIODWLRQDQGFXUUHQFLHVRIWKHVHFRXQWULHVKDYHEHHQUHODWLYHO\VWDEOHLQWKHUHFHQWSDVW
KRZHYHUVRWKHIRUHLJQFXUUHQF\ULVNZLOOQRWLQFUHDVHLQWKHPHGLXPWHUP)XUWKHUPRUHWKH
DVVHWVKHOGWKHUHIRUPDQLQVLJQLILFDQWSDUWRIWKHWRWDO*URXSDVVHWV
$XGLW2SLQLRQ&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV&RUSRUDWH*RYHUQDQFH 0DQDJHPHQW5HSRUW 5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
5LVNUHSRUW
5LVNUHSRUW)RUHFDVWUHSRUW
2WKHUULVNVDQGRYHUDOOULVN
7KH%RDUGRI'LUHFWRUVRI%HUHQW]HQDVVXPHWKDWRYHUDOOWKHULVNVDUHOLPLWHGDQGPDQDJHDEOH
DQGGRQRWWKUHDWHQWKH*URXSpVSURJUHVV%XVLQHVVSODQQLQJIRUDVVXPHVDVLJQLILFDQW
RSHUDWLQJORVVIRUZKLFKLVH[SHFWHGWREHORZHULQ,QWKHVFKHGXOHGFRXUVHRI
EXVLQHVVGHYHORSPHQWWKHORVVVLWXDWLRQLVPDLQO\WKHUHVXOWRIH[WHQVLYHLQYHVWPHQWVLQ
UHYLWDOLVLQJWKHFRUHEUDQGVPRUHLQWHQVLYHPDUNHWGHYHORSPHQWDQGWKHGHYHORSPHQWRIQHZ
SURGXFWV)URPWKHPDQDJHPHQWSHUVSHFWLYHWKHGHFOLQHLQVDOHVDQGHDUQLQJVLQSUHYLRXV
\HDUVZDVSULPDULO\WKHUHVXOWRIWKHIDFWWKDWFRPSDUDEOHLQYHVWPHQWVZHUHQRWPDGH$
FKDQJHLQVWUDWHJ\VHHPVWREHXUJHQWO\UHTXLUHGLQRUGHUWRJHQHUDWHPHGLXPWHUPJURZWKLQ
FRUHEXVLQHVVDQGWKXVLQFUHDVHHDUQLQJSRZHU
)RUHFDVWUHSRUW
,QUHFHQW\HDUVWKHFKDQJHLQWKHVWUXFWXUHRIWKHPDUNHWIRUVSLULWVDQGDOFRKROIUHHEHYHUDJHV
SDUWLFXODUO\WKHSULFHVHQVLWLYLW\DPRQJFRQVXPHUVDQGWKHJURZWKRIGLVFRXQWHUVZDV
LQWHQVLILHGE\JHQHUDOHFRQRPLFZHDNQHVV+RZHYHUKLJKHUHFRQRPLFJURZWKDVLQGLG
QRWUHVXOWLQDQ\QRWDEOHUHOLHI7KHJURZWKH[SHFWHGIRUZLOOSUREDEO\EHORZHUWKDQLQWKH
UHSRUWLQJ\HDUDQGKDYHOLWWOHLPSDFWRQWKHORQJWHUPWUHQGVLQWKHGULQNVLQGXVWU\
)ROORZLQJWKHVLPSOLILFDWLRQRIFRUSRUDWHVWUXFWXUHVLQ%HUHQW]HQpVDLPLV
WRJHQHUDWHVLJQLILFDQWO\KLJKHUEXVLQHVVYROXPHZLWKWKHFRUHEUDQGV7KHSODQIRUWKH
FRPLQJWZRILQDQFLDO\HDUVLVWRXVHIHDWXUHVRIWKHVWUXFWXUHFKDQJHVXFKDVSURGXFWUDQJH
GLIIHUHQWLDWLRQDQGWKHJURZLQJLPSRUWDQFHRILQQRYDWLRQVLQRUGHUWRLQFUHDVHWXUQRYHUDQG
VDOHVLQWKHFRUHPDUNHWRI*HUPDQ\$VFRQVXPHUVDOLJQWKHPVHOYHVWREUDQGVZKLFKKDYHD
FOHDULGHQWLW\LQDFRQVXPHUHQYLURQPHQWQRWQRWHGIRULWVFODULW\DQGEUDQGVZKLFKDUHDOZD\V
DYDLODEOHWKHPHDVXUHVIRFXVRQWKHXPEUHOODEUDQG%HUHQW]HQ$OWKRXJKLWLVZHOOHVWDEOLVKHG
LWKDVIDLOHGWRUHDFKLPSRUWDQWFRQVXPHUJURXSVRYHUUHFHQW\HDUV7KLVSRWHQWLDOLVWREH
PRELOLVHGWKURXJKULJRURXVEUDQGPDQDJHPHQWPDUNHWLQYHVWPHQWPRUHLQWHQVLYHPDUNHW
GHYHORSPHQWDQGQHZSURGXFWV
7KHILQDQFLDO\HDUZLOOEHGHILQHGWRDODUJHH[WHQWE\WKH&RPSDQ\pVFRQFHQWUDWLRQRQ
WKHXPEUHOODEUDQG%HUHQW]HQWKHPDUNHWODXQFKRILQQRYDWLYH%HUHQW]HQSURGXFWVDQGZLGH
UDQJLQJSURPRWLRQRIWKLVEUDQGLQ*HUPDQ\3ODQQHGIRUDUHWKHUHYLWDOLVDWLRQRIWKH
XPEUHOODEUDQG%HUHQW]HQDVZHOODVVLPLODUPHDVXUHVDLPHGDWVWUHQJWKHQLQJ3XVFKNLQWKH
&RPSDQ\pVVHFRQGPDLQEUDQG
,QDGGLWLRQWRWKHFRQVROLGDWLRQRIWKHEUDQGV%HUHQW]HQDQG3XVFKNLQLQWHUQDWLRQDOEXVLQHVV
ZLOOFRQWLQXHWRIRFXVRQ(XURSHDQJURZWKPDUNHWV7KHJUHDWHVWSULRULW\LVWRLQFUHDVHPDUNHW
SHQHWUDWLRQLQ(DVW(XURSHDQFRXQWULHVOLNHWKH&]HFK5HSXEOLFDQG6ORYDNLDZKHUH%HUHQW]HQ
KDVDOUHDG\DFKLHYHGDVWURQJSRVLWLRQ7KHSRUWIROLRRIOLFHQFHEUDQGVLVDOVRWREHVWUHDPOLQHG
VRWKDWPDUNHWLQJDFWLYLWLHVZLOOFRQFHQWUDWHRQNH\SURGXFWVZLWKJRRGVDOHVDQGHDUQLQJV
ILJXUHVVXFKDV/LQLH$TXDYLW/LFRUDQG9HFFKLD5RPDJQD
$VSDUWRIWKHVWUDWHJLFSDUWQHUVKLSZLWK3HSVL&RDQGIXUWKHUGHYHORSPHQWRILWVRZQEUDQGV
9LYDULVLVSODQQLQJWRFRQWLQXHH[SDQGLQJ
7KHUHYLHZRILQWHUQDOVWUXFWXUHVLVWREHDFFHOHUDWHGZLWKEHWWHULQWHJUDWLRQRIWKHSURGXFW
FKDLQLQWKHDUHDVRISXUFKDVLQJSURGXFWGHYHORSPHQWPDUNHWLQJDQGVDOHVDVZHOODV
SURGXFWLRQSODQQLQJDQGORJLVWLFV,QWKLVUHVSHFWWKHUHDUHIXUWKHUSRVVLELOLWLHVWRRSWLPLVHWKH
FRPSDQ\pVSHUIRUPDQFHZKLFKVKRXOGEHWDNHQDGYDQWDJHRIWRFRPSHQVDWHIRUWKHFRQWLQXLQJ
FRVWSUHVVXUH
$VDUHVXOWRIWKHVWUDWHJLFDOO\QHFHVVDU\LQYHVWPHQWVDQGWKHGHOD\HGHIIHFWVRIWKHVHPHDVXUHV
RQVDOHVDQGHDUQLQJV%HUHQW]HQLVDQWLFLSDWLQJDQHJDWLYHRSHUDWLQJUHVXOWIRUWKHQH[WWZR
ILQDQFLDO\HDUV7KHSODQQLQJLVRULHQWHGWRZDUGVJUDGXDOO\LPSURYLQJWKHHDUQLQJVVLWXDWLRQ
IURPZLWKWKHUHVXOWVRIWKHVHPHDVXUHV,QWKHPHGLXPWHUPWKHVWUDWHJLFSURJUDPPH
LVH[SHFWHGWROHDGWRVXEVWDQWLDOJURZWKFRQWULEXWLRQVDQGWRDQDFFHSWDEOHUHWXUQRQWKH
GHSOR\HGFDSLWDO
+DVHOØQQH)HEUXDU\
7KH%RDUGRI'LUHFWRUV
$[HO'DKP
0D[3HOLNDQ
$XGLW2SLQLRQ&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV&RUSRUDWH*RYHUQDQFH 0DQDJHPHQW5HSRUW 5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
)RUHFDVWUHSRUW
& 2 5 3 2 5 $7 ( * 2 9 ( 5 1 $ 1 & ( 7KHWHPSHUDPHQWDO
WDVWHRI6SDLQ
(YHU\RQHNQRZVWKDWQLJKWVDUHKRWDQGSDVVLRQDWH
LQ6SDLQ7KHSDUW\JRHUVRIWKH,EHULDQSHQLQVXODUILOO
WKHLUQLJKWVZLWKILUHDQGSDVVLRQtXQWLOWKHVXQ
FRPHVXS/LFRUWKHJHQWOHWHPSWDWLRQIURP
6SDLQEULQJVSUHFLVHO\WKLVIODLUWRRXUVKRUHV1RW
OHDVWEHFDXVHRILWVVHFUHWLQJUHGLHQWV/LFRULV
DVRXUFHRILQVSLUDWLRQIRUFUHDWLYHFRFNWDLOV2XU
UHFRPPHQGDWLRQq%ODQFRrWKDWLV/LFRUqFRQ
OHFKHrZLWKIUHVKFROGPLON+DYH\RXWULHGLW\HW"
7KHWDVWHRIMR\
&RUSRUDWH*RYHUQDQFH
&RUSRUDWH*RYHUQDQFHDW%HUHQW]HQ
7KHLPSOHPHQWDWLRQRIFRUSRUDWHJRYHUQDQFHDW%HUHQW]HQ*UXSSH$*LVPRQLWRUHGDQG
DGDSWHGDQQXDOO\E\WKH6XSHUYLVRU\%RDUGDQG%RDUGRI'LUHFWRUVRQWKHEDVLVRIVWDWXWRU\
UHJXODWLRQVDQGWKH*HUPDQ&RUSRUDWH*RYHUQDQFH&RGH
&RUSRUDWH*RYHUQDQFH5HSRUW
-RLQWGHFODUDWLRQRIFRPSOLDQFH
,Q1RYHPEHUWKH%RDUGRI'LUHFWRUVDQG6XSHUYLVRU\%RDUGRI%HUHQW]HQ*UXSSH$*
LVVXHGWKHLUDQQXDOGHFODUDWLRQRIFRQIRUPLW\ZLWKWKHUHFRPPHQGDWLRQVRIWKH*RYHUQPHQW
&RPPLVVLRQRQWKH*HUPDQ&RUSRUDWH&RGHSXUVXDQWWR6HFWLRQRIWKH*HUPDQ6WRFN
&RUSRUDWLRQ$FW
7KHFRPSDQ\FRQIRUPVWRWKHUHFRPPHQGDWLRQVRIWKH*RYHUQPHQW&RPPLVVLRQRQWKH
*HUPDQ&RUSRUDWH*RYHUQDQFH&RGH&RGHYHUVLRQRI-XQHSXEOLVKHGRQ-XO\
LQWKHHOHFWURQLF%XQGHVDQ]HLJHUZLWKWKHIROORZLQJH[FHSWLRQV&RQWUDU\WRWKH%RDUGRI
'LUHFWRUVWHPSRUDULO\KDGQHLWKHUD&KDLUPDQQRUD6SRNHVSHUVRQXQWLOWKHIXWXUH&KDLUPDQ
RIWKH%RDUGRI'LUHFWRUVWRRNXSKLVSRVWRQ'HFHPEHU'U-DQ%%HUHQW]HQZKRKDG
EHHQWKH6SRNHVPDQRIWKH%RDUGRI'LUHFWRUVIRUPDQ\\HDUVOHIWWKH%RDUGRI'LUHFWRUVDWWKH
HQGRI-XQH7KHDSSRLQWPHQWRID&KDLUPDQRU6SRNHVPDQIRUWKHIRUHVHHDEOHLQWHULP
WLPHZRXOGQRWKDYHVHUYHGDQ\VSHFLILFSXUSRVH
&RQWUDU\WRWKH$QQXDO*HQHUDO0HHWLQJRQ-XQHGHFLGHGWRH[HUFLVHWKHRSWLRQ
QRWWRGLVFORVHWKHUHPXQHUDWLRQRIWKH%RDUGRI'LUHFWRUVLQLQGLYLGXDOFRPSRQHQWV&RQWUDU\
WRWKHUHPXQHUDWLRQRIPHPEHUVRIWKH6XSHUYLVRU\%RDUGKDVQRWEHHQDOORFDWHGWR
LQGLYLGXDOFRPSRQHQWV7KHLQWUXVLRQRISULYDF\HQWDLOHGLQVXFKDSUDFWLFHZRXOGQRWEH
SURSRUWLRQDWHWRDQ\EHQHILWDFFUXHG
%RDUGRI'LUHFWRUVDQG6XSHUYLVRU\%RDUG
0HPEHUVRIWKH%RDUGRI'LUHFWRUVDQGWKH6XSHUYLVRU\%RDUGDUHOLVWHGRQSDJH7KH5HSRUW
RIWKH6XSHUYLVRU\%RDUGRQSDJHVDQGRIWKLV$QQXDO5HSRUWJLYHVLQIRUPDWLRQRQWKH
FRRSHUDWLRQEHWZHHQWKH%RDUGRI'LUHFWRUVDQG6XSHUYLVRU\%RDUG
5HPXQHUDWLRQUHSRUW
6XSHUYLVRU\%RDUG
7KHUHPXQHUDWLRQRIWKH6XSHUYLVRU\%RDUGLVUHJXODWHGE\WKH$UWLFOHVRI$VVRFLDWLRQRI
%HUHQW]HQ*UXSSH$*7KHUHPXQHUDWLRQIRUWKHILQDQFLDO\HDUVFRPSULVHVWKUHH
FRPSRQHQWVDIL[HGFRPSRQHQWDYDULDEOHFRPSRQHQWZKLFKLVGHSHQGHQWRQWKHGLYLGHQG
GLVWULEXWHGSHURUGLQDU\VKDUHDQGUHPXQHUDWLRQGHSHQGLQJRQPHPEHUVKLSRI6XSHUYLVRU\
%RDUGFRPPLWWHHV$FFRUGLQJWRWKHVHUHJXODWLRQVPHPEHUVRIWKH6XSHUYLVRU\%RDUGUHFHLYHD
IL[HGEDVLFUHPXQHUDWLRQDQQXDOO\DWWKHHQGRIWKHILQDQFLDO\HDU$YDULDEOHEDVLFUHPXQHUDWLRQ
LVDOVRSDLGLQVRIDUDVWKHGLYLGHQGSHURUGLQDU\VKDUHH[FHHGVDIL[HGDPRXQW7KH&KDLUPDQRI
WKH6XSHUYLVRU\%RDUGUHFHLYHVWZLFHWKHIL[HGDQGYDULDEOHEDVLFUHPXQHUDWLRQDQGKLV'HSXW\
UHFHLYHVRQHDQGDKDOIWLPHVWKHIL[HGDQGYDULDEOHEDVLFUHPXQHUDWLRQ
$OVRUHSRUWSXUVXDQWWRVXEVHFWLRQRIWKH*HUPDQ&RUSRUDWH*RYHUQDQFH&RGH
(DFKPHPEHURIWKH6XSHUYLVRU\%RDUGFRPPLWWHHVDOVRUHFHLYHVDQDGGLWLRQDORIWKHIL[HG
DQGYDULDEOHEDVLFUHPXQHUDWLRQGHSHQGLQJRQPHPEHUVKLSRI6XSHUYLVRU\%RDUGFRPPLWWHHV
(DFKFRPPLWWHH&KDLUPDQUHFHLYHVWZLFHWKLVDPRXQW6XSHUYLVRU\%RDUGPHPEHUVZKRZHUH
QRWLQRIILFHIRUWKHZKROHRIWKHILQDQFLDO\HDUUHFHLYHDWZHOIWKRIWKHUHPXQHUDWLRQIRUHDFK
PRQWKLQZKLFKWKH\FDUULHGRXWGXWLHV,QUHPXQHUDWLRQRIWKH6XSHUYLVRU\%RDUGWRWDOOHG
(85PLOOLRQ
%RDUGRI'LUHFWRUV
7KHUHPXQHUDWLRQRIWKH%RDUGRI'LUHFWRUVFRPSULVHVIL[HGDQGYDULDEOHFRPSRQHQWV7KHIL[HG
FRPSRQHQWVRIWKHUHPXQHUDWLRQFRPSULVHDPRQWKO\IL[HGZDJHYROXQWDU\VSHFLDOSD\PHQWV
DQGUHQWDOORZDQFHVVRFLDOVHFXULW\DOORZDQFHVDQGDFRPSDQ\FDUZKLFKPD\EHXVHGSULYDWHO\
,QDGGLWLRQWKH&RPSDQ\DOVRWDNHVRXWLQVXUDQFHSROLFLHVWRFRYHURIILFLDODQGSULYDWHSHUVRQDO
OLDELOLW\DQGDFFLGHQWDOGDPDJHDVZHOODVJHQHUDOO\DOLIHLQVXUDQFHSROLF\IRUPHPEHUVRI
WKH%RDUGRI'LUHFWRUV7KHYDULDEOHUHPXQHUDWLRQERQXVLVVSHFLILHGRQWKHEDVLVRI(%,7
(DUQLQJVEHIRUH,QWHUHVWDQG7D[HVLQWKH*URXSIRUWKHSUHYLRXVILQDQFLDO\HDU
7KHWRWDOSD\PHQWVDOVRLQFOXGHSD\PHQWVUHVXOWLQJIURPWKHWHUPLQDWLRQRIWKHFRQWUDFWRI
HPSOR\PHQW,IDFRQWUDFWRIHPSOR\PHQWLVWHUPLQDWHGSUHPDWXUHO\WKHPHPEHUVRIWKH%RDUG
RI'LUHFWRUVDUHHQWLWOHGWRUHFHLYHDVHWWOHPHQWDVFRPSHQVDWLRQIRUDOOIXWXUHSD\PHQWVRU
WKH\DUHHQWLWOHGWRWUDQVLWLRQDOSD\PHQWVZKLFKDUHSDLGPRQWKO\6XFKSD\PHQWVHTXDWHWRWKH
PRQWKO\EDVLFUHPXQHUDWLRQRYHUWKHODVWWZHOYHPRQWKVSULRUWROHDYLQJWKH&RPSDQ\
,QUHPXQHUDWLRQRIWKHPHPEHUVRIWKH%RDUGRI'LUHFWRUVWRWDOOHG(85
PLOOLRQ7KHPHPEHUVRIWKH%RDUGRI'LUHFWRUVGLGQRWUHFHLYHDQ\ERQXVHVLQQRUZHUH
WKH\RIIHUHGDQ\VKDUHRSWLRQV
2SHQDQGWUDQVSDUHQWFRPPXQLFDWLRQ
'LUHFWRUVo'HDOLQJV
,QDFFRUGDQFHZLWK$UWLFOHDVXEVHFWLRQRIWKH*HUPDQ6HFXULWLHV7UDGLQJ$FWWKHIROORZLQJ
VHFXULWLHVWUDGLQJDFWLYLWLHVZHUHGLVFORVHGE\PHPEHUVRIWKH%RDUGRI'LUHFWRUVLQ
3HUVRQ
UHTXLUHGWR
GLVFORVH
+DQV
:HUQHU
1DJHO
6WDWXV
7UDGLQJGD\
DQGSODFH
1DPHRIWKH
VHFXULW\
,6,1
7\SHRI
WUDQVDFWLRQ
8QLWILJXUH 3ULFHLQ 7UDQVDFWLRQ
(85
YROXPHLQ(85
0HPEHURIWKH
%RDUGRI'LUHFWRUV
RI%HUHQW]HQ
*UXSSH$*
)UDQNIXUW
%HUHQW]HQ
*UXSSH$*
SUHIHUHQFH
VKDUH
'(
3XUFKDVH
7UDQVSDUHQF\DQG,QIRUPDWLRQ
%HUHQW]HQ*UXSSH$*LQIRUPVLWVVKDUHKROGHUVLQYHVWRUVDQDO\VWVDQGWKHSXEOLFSURPSWO\
DQGLQHTXDOPHDVXUH7KH&RPSDQ\pVZHEVLWHDWZZZEHUHQW]HQJUXSSHGHLVDQLPSRUWDQW
PHGLXP7KLVSODWIRUPSURYLGHVSXEOLFDQGORQJWHUPDFFHVVWRWKHGHFODUDWLRQRIFRQIRUPLW\
ZLWKUHJDUGWRWKH&RUSRUDWH*RYHUQDQFH&RGHWKH&RPSDQ\pV$UWLFOHVRI$VVRFLDWLRQ
LQIRUPDWLRQRQWKH6XSHUYLVRU\%RDUGDQG%RDUGRI'LUHFWRUVSDUWLFXODUO\ILQDQFLDOUHSRUWV
GRFXPHQWVUHODWLQJWRWKH$QQXDO*HQHUDO0HHWLQJDQGDGKRFDQGRWKHUFRPPXQLFDWLRQVRQ
WKHRSHUDWLRQVRI%HUHQW]HQ*UXSSH$*
$XGLW2SLQLRQ&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH 0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
& 2 1 6 2 / , ' $7 ( ' ) , 1 $ 1 & , $ / 6 7$7 ( 0 ( 1 7 6 7KHZHOOWUDYHOOHG
1RUZHJLDQ
1RUZHJLDQVDUHKDSS\WRGULQN/LQLH$TXDYLWDWDQ\WLPH
ZKLFKFDOOVIRUDGURSRIVSLULWDIHZZRUOGVRIZHOFRPH
EHIRUHGLQQHUDWRDVWSULRUWRIRRGDQGDWOHDVWRQH
DIWHUZDUGV7KHUHpVHYHQDVKRWRILWLQWKHIDPRXV
qJUDYHGVDOPRQrPDULQDGH)RUGULQNLQJSOHDVXUHLWVHOI
WKHUHpVRQO\UHDOO\RQHZD\WRGULQNLWLFHFROGIURP
XQFKLOOHGRULJLQDOJODVVHV7KLVSDUWLFXODUO\HQKDQFHVWKH
PLOGDURPDDQGKLQWRIVKHUU\$QGWKHJODVVDOVR
FORXGVRYHUZKHQSRXUHGLQJLYLQJLWWKHULJKWORRN
:LWKHYHU\GURS\RXZLOOWDVWHWKHPDWXULW\WKDWFRPHV
IURPDMRXUQH\RIQDXWLFDOPLOHVZKLFKHDFK
ERWWOHRI/LQLH$TXDYLWWUDYHOVEHIRUHODQGLQJRQ\RXU
WDEOH6NRO7KHWDVWHRIMR\
&RQVROLGDWHGEDODQFHVKHHWDVRI'HFHPEHU
1RWH (85WKRXVDQG (85WKRXVDQG
$66(76
/RQJWHUPDVVHWV
,QWDQJLEOHDVVHWV
7DQJLEOHDVVHWV
$WHTXLW\YDOXHGSDUWLFLSDWLRQV
/RQJWHUPWUDGHUHFHLYDEOHV
2WKHUILQDQFLDODVVHWV
'HIHUUHGWD[UHIXQGFODLPV
7RWDOORQJWHUPDVVHWV
&XUUHQWDVVHWV
,QYHQWRULHV
6KRUWWHUPWUDGHUHFHLYDEOHV
&XUUHQWLQFRPHWD[FODLPV
&DVKDQGFDVKHTXLYDOHQWV
2WKHUFXUUHQWDVVHWV
7RWDOFXUUHQWDVVHWV
/,$%,/,7,(6
6KDUHKROGHUVpHTXLW\
6XEVFULEHGFDSLWDO
&DSLWDOUHVHUYHV
5HYHQXHUHVHUYHV
/RQJWHUPDVVHWVKHOGIRUGLVSRVDO
%$/$1&(6+((7727$/
7RWDOVKDUHKROGHUVpHTXLW\EHIRUHPLQRULWLHV
0LQRULW\VKDUHV
7RWDOVKDUHKROGHUVpHTXLW\
/RQJWHUPOLDELOLWLHV
/RQJWHUPILQDQFLDOOLDELOLWLHV
'HIHUUHGWD[OLDELOLWLHV
7RWDOORQJWHUPGHEWV
6KRUWWHUPOLDELOLWLHV
/LDELOLWLHVIURPVSLULWVWD[
6KRUWWHUPSURYLVLRQV
6KRUWWHUPILQDQFLDOOLDELOLWLHV
7UDGHSD\DEOHVDQGRWKHUOLDELOLWLHV
/RQJWHUPDFFUXDOV
7RWDOVKRUWWHUPGHEWV
'HEWVGLUHFWO\FRQQHFWHGWRWKHGLVSRVDORIDVVHWVKHOG
ILQDQFLDOOLDELOLWLHV
%$/$1&(6+((7727$/
&RQVROLGDWHGVWDWHPHQWRIHDUQLQJVIRUWKHSHULRGIURP-DQXDU\WR'HFHPEHU
1RWH (85WKRXVDQG (85WKRXVDQG
6DOHV
&KDQJHLQLQYHQWRULHV
2WKHURSHUDWLQJLQFRPH
&RVWRIPDWHULDOV
3HUVRQQHOFRVWV
'HSUHFLDWLRQDQGDPRUWLVDWLRQRQDVVHWV
2WKHURSHUDWLQJH[SHQVHV
5HVXOWRILQWHUHVWVYDOXHGDWHTXLW\
)LQDQFLDOLQFRPH
)LQDQFLDOH[SHQGLWXUH
)LQDQFLDOUHVXOW
5HVXOWEHIRUHWD[HVRQLQFRPH
,QFRPHWD[H[SHQGLWXUH
&RQVROLGDWHGQHWLQFRPHORVV
,QFOXGLQJRQ
0LQRULW\LQWHUHVWV
&DSLWDOVXSSOLHULQWHUHVWV
(DUQLQJVSHUVKDUHDIWHUHDUQLQJVWRFDSLWDOVXSSOLHUV
LQ(85SHUVKDUH
8QGLOXWHGHDUQLQJVSHURUGLQDU\VKDUH
8QGLOXWHGHDUQLQJVSHUSUHIHUHQFHVKDUH
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
.DSLWDOIOXVVUHFKQXQJIØUGLH=HLWYRP-DQXDUELV]XP'H]HPEHU
&RQVROLGDWHGDQQXDOSURILWORVV
(85WKRXVDQG (85WKRXVDQG
7D[HVRQLQFRPH
,QWHUHVWLQFRPH
,QWHUHVWH[SHQGLWXUH
'HSUHFLDWLRQDQGDPRUWLVDWLRQRQLQWDQJLEOHDVVHWVWDQJLEOHDVVHWV
5HVXOWIURPLQYHVWPHQWYDOXHGDWHTXLW\
2WKHUFRVWVLQFRPHQRWLPSDFWLQJFDVK
'HFUHDVHLQFUHDVHLQDFFUXDOV
/RVVHVIURPWKHGLVSRVDORIDVVHWV
,QFUHDVHLQDVVLJQPHQWRIUHFHLYDEOHVWKURXJKIDFWRULQJ
,QFUHDVHLQRWKHUDVVHWV
,QFUHDVHGHFUHDVHLQOLDELOLWLHVIURPVSLULWVWD[
'HFUHDVHLQFUHDVHLQRWKHUOLDELOLWLHV
&DVKJHQHUDWHGIURPFXUUHQWDFWLYLWLHV
3DLGWD[HVRQLQFRPH
,QWHUHVWUHFHLYHG
,QWHUHVWSDLG
1HWLQIORZRIIXQGVIURPFXUUHQWDFWLYLWLHV
,QIORZVIURPGLVSRVDOVRIWDQJLEOHDVVHWV
,QIORZVIURPGLVSRVDOVRILQWDQJLEOHDVVHWV
2XWIORZVIRULQYHVWPHQWVLQWDQJLEOHDVVHWV
2XWIORZVIRULQYHVWPHQWVLQLQWDQJLEOHDVVHWV
,QIORZVIURPLQYHVWPHQWVYDOXHGDWHTXLW\
,QIORZVIURPGLVSRVDOVRIILQDQFLDODVVHWV
2XWIORZVIRULQYHVWPHQWVLQILQDQFLDODVVHWV
1HWLQIORZRXWIORZRIIXQGVIURPLQYHVWPHQWDFWLYLWLHV
2XWIORZVIURPWKHUHSD\PHQWRIORDQV
,QIORZVIURPIRUIDLWLVW
2XWIORZVIRUWKHUHSD\PHQWRIOLDELOLWLHVWRIRUIDLWLVW
'LYLGHQGGLVWULEXWLRQ
1HWRXWIORZRIIXQGVIURPILQDQFLQJDFWLYLWLHV
&KDQJHVLQFDVK
,QIORZVIURPORDQV
)LQDQFLDOIXQGVDWWKHEHJLQQLQJRIWKHSHULRG
)LQDQFLDOIXQGVDWWKHHQGRIWKHSHULRG
6HJPHQWUHSRUWLQJE\GLYLVLRQ
9DOXHVLQ(85WKRXVDQG
6HJPHQWVDOHVUHYHQXH
7RWDORI
$OFRKROIUHH
7RWDORI
6SLULWV
EHYHUDJHV
VHJPHQWV
6SLULWV
EHYHUDJHV
VHJPHQWV
,QWHUVHJPHQWVDOHV
6DOHV
2WKHUVHJPHQWLQFRPH
$OFRKROIUHH
RIZKLFKUHVXOWRIDWHTXLW\
YDOXHGLQWHUHVWV
5HVWUXFWXULQJH[SHQVHV
)LQDQFLDOUHVXOW
5HVXOWEHIRUHWD[HVRQLQFRPH
,QFRPHWD[H[SHQGLWXUH
6HJPHQWH[SHQGLWXUH
RIZKLFKUHVXOWRIDWHTXLW\
YDOXHGLQWHUHVWV
6HJPHQWUHVXOWEHIRUHUHVWUXFWXULQJ
H[SHQVHVILQDQFLDOUHVXOWDQGWD[HV
RQLQFRPH
&RQVROLGDWHGQHWLQFRPHORVV
LQWHUVHJPHQWGHEWFRQVROLGDWLRQ
&DVKDQGFDVKHTXLYDOHQWV
2WKHUORQJWHUPDVVHWV
&XUUHQWDQGGHIHUUHGWD[UHFHLYDEOHV
6HJPHQWDVVHWV
RIZKLFKDWHTXLW\YDOXHGLQWHUHVWV
RIZKLFKDVVHWVKHOGIRUGLVSRVDO
&RQVROLGDWLRQV
*URXSDVVHWV
!!7KLVWDEOHLVFRQWLQXHGRQWKHIROORZLQJSDJH
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
6HJPHQWUHSRUWLQJE\GLYLVLRQ
9DOXHVLQ(85WKRXVDQG
$OFRKROIUHH
7RWDORI
$OFRKROIUHH
7RWDORI
6SLULWV
EHYHUDJHV
VHJPHQWV
6SLULWV
EHYHUDJHV
VHJPHQWV
6HJPHQWGHEWV
LQWHUVHJPHQWGHEWFRQVROLGDWLRQ
*URXSVKDUHKROGHUVoHTXLW\
)LQDQFLDOOLDELOLWLHV
&XUUHQWDQGGHIHUUHGWD[SD\DEOHV
&RQVROLGDWLRQV
*URXSOLDELOLWLHV
'HSUHFLDWLRQDQGDPRUWLVDWLRQ
'HSUHFLDWLRQDQGDPRUWLVDWLRQRQ
ORQJWHUPDVVHWVH[FOXGLQJRWKHU
UHFHLYDEOHVDQGILQDQFLDODVVHWV
8QVFKHGXOHGGHSUHFLDWLRQDQG
DPRUWLVDWLRQRQORQJWHUPDVVHWV
H[FOXGLQJRWKHUUHFHLYDEOHVDQG
ILQDQFLDODVVHWV
,QYHVWPHQWV
6HJPHQWLQYHVWPHQWLQORQJWHUP
DVVHWVH[FOXGLQJRWKHUUHFHLYDEOHV
DQGILQDQFLDODVVHWV
2WKHUVLJQLILFDQWQRQFDVKH[SHQVHV
6HJPHQWUHSRUWLQJE\UHJLRQ
9DOXHVLQ(85WKRXVDQG
*HUPDQ\
6DOHV
6HJPHQWDVVHWV
RIZKLFKDWHTXLW\YDOXHGLQWHUHVWV
RIZKLFKDVVHWVKHOGIRUGLVSRVDO
2XWVLGH
7RWDORI
*HUPDQ\
*HUPDQ\
VHJPHQWV
*HUPDQ\
2XWVLGH
VHJPHQWV
7RWDORI
LQWHUVHJPHQWGHEWFRQVROLGDWLRQ
&DVKDQGFDVKHTXLYDOHQWV
2WKHUUHFHLYDEOHVDQGILQDQFLDODVVHWV
'HIHUUHGWD[UHFHLYDEOHV
%DODQFHVKHHWWRWDO
&RQVROLGDWLRQV
6HJPHQWLQYHVWPHQWV
&RQVROLGDWHGHTXLW\VWDWHPHQWIRUWKHILQDQFLDO\HDU
9DOXHVLQ(85WKRXVDQG
3DUHQWFRPSDQ\
7RWDOVKDUH
6XEVFULEHGFDSLWDO
KROGHUVp
2UGLQDU\
3UHIHUHQFH
&DSLWDO
VKDUHV
VKDUHV
UHVHUYHV
UHVHUYHV
PLQRULWLHV
$VDW-DQXDU\
0LQRULW\
7RWDO
LQWHUHVWV
6KDUHKRO
GHUVpHTXLW\
5HYHQXH HTXLW\EHIRUH
'LYLGHQGVSDLG
2WKHUFKDQJHV
&RQVROLGDWHGQHWLQFRPHIRUWKH\HDU
&XUUHQF\WUDQVODWLRQGLIIHUHQFHV
$VDW'HFHPEHU
$VDW-DQXDU\
2YHUDOOFRQVROLGDWHGUHVXOW
'LYLGHQGVSDLG
2WKHUFKDQJHV
&RQVROLGDWHGQHWORVVIRUWKH\HDU
&XUUHQF\WUDQVODWLRQGLIIHUHQFHV
2YHUDOOFRQVROLGDWHGUHVXOW
$VDW'HFHPEHU
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
1RWHVIRUWKHILQDQFLDO\HDU
([SODQDWLRQRQWKHSULQFLSOHVDQGPHWKRGVRIWKHFRQVR
OLGDWHGILQDQFLDOVWDWHPHQWVRI%HUHQW]HQ*UXSSH$NWLHQ
JHVHOOVFKDIWLQDFFRUGDQFHZLWK,)56
$FFRXQWLQJSULQFLSOHV
7KHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVRI%HUHQW]HQ*UXSSH$*ZHUHSUHSDUHGRQ'HFHPEHU
LQOLQHZLWKWKH,QWHUQDWLRQDO)LQDQFLDO5HSRUWLQJ6WDQGDUGV,)56DQGWKHLQWHUSUHWDWLRQVRIWKH
,QWHUQDWLRQDO)LQDQFLDO5HSRUWLQJ,QWHUSUHWDWLRQV&RPPLWWHH,)5,&DVWKH\DUHWREHDSSOLHGZLWKLQ
WKH(XURSHDQ8QLRQ(8$OOWKHVWDWHPHQWVRIWKH,QWHUQDWLRQDO$FFRXQWLQJ6WDQGDUGV%RDUG,$6%
UHTXLULQJDSSOLFDWLRQKDYHEHHQWDNHQLQWRDFFRXQWDQGKDYHSURGXFHGDUHSUHVHQWDWLYHSLFWXUHRI
%HUHQW]HQ*UXSSH$*pVDFWXDODVVHWVILQDQFLDODQGLQFRPHVLWXDWLRQ
7KHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVRI%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWZHUHSUHSDUHGDVDW
'HFHPEHUIRUWKHILUVWWLPHLQOLQHZLWKWKH,QWHUQDWLRQDO)LQDQFLDO5HSRUWLQJ6WDQGDUGV,)56
DQGLQWHUSUHWDWLRQVRIWKH,QWHUQDWLRQDO)LQDQFLDO5HSRUWLQJ,QWHUSUHWDWLRQV&RPPLWWHH,)5,&7KH
FRQYHUVLRQRIWKHILQDQFLDOVWDWHPHQWVIURPWKH*HUPDQ&RPPHUFLDO&RGHWR,)56ZDVPDGHLQ
DFFRUGDQFHZLWKWKH,)56UHJXODWLRQVUHYLVHGq)LUVWWLPH$GRSWLRQRIWKH,QWHUQDWLRQDO)LQDQFLDO
5HSRUWLQJ6WDQGDUGVr
7KHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDUHLQOLQHZLWKWKHGLUHFWLYHRIWKH(XURSHDQ8QLRQRQJURXS
DFFRXQWLQJSULQFLSOHV'LUHFWLYH(8$VDFDSLWDOPDUNHWRULHQWHGSXEOLFOLPLWHGFRPSDQ\
KHDGTXDUWHUHGLQWKH(8%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWIURPWKHILQDQFLDO\HDURQZDUGVLV
REOLJHGWRSUHSDUHDQGSXEOLVKWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVXVLQJ$UWLFOHDRIWKH*HUPDQ
&RPPHUFLDO&RGHLQDFFRUGDQFHZLWK,)56DQGWKHUHJXODWLRQVWREHDSSOLHGXQGHUFRPPHUFLDOODZDV
H[WHQGHGXQGHU$UWLFOHDVXEVHFWLRQRIWKH*HUPDQ&RPPHUFLDO&RGH
7KHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVZHUHSUHSDUHGLQHXURV(85$OODPRXQWVDUHHQWHUHGLQ
WKRXVDQGVRIHXURV(85WKRXVDQG7KHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDUHEDVHGRQKLVWRULFDO
DFTXLVLWLRQFRVWVtOLPLWHGE\WKHIDLUYDOXHYDOXDWLRQRIILQDQFLDODVVHWVKHOGIRUVDOHDQGSUHSDUHGLQ
FRPSOLDQFHZLWKWKHVXEVHTXHQWO\GLVSOD\HGFRQVROLGDWLRQDQGDFFRXQWLQJSULQFLSOHV7KHVWDWHPHQWRI
HDUQLQJVKDVEHHQSUHSDUHGRQWKHWRWDOFRVWEDVLV
7RLPSURYHFODULW\DQGLQIRUPDWLRQDOYDOXHLQGLYLGXDOLWHPVDUHFRPELQHGLQWKHVWDWHPHQWRIHDUQLQJV
DQGWKHEDODQFHVKHHW7KHVHLWHPVDUHVKRZQVHSDUDWHO\DQGH[SODLQHGLQWKH1RWHV3UHSDULQJ
FRQVROLGDWHGILQDQFLDOVWDWHPHQWVLQOLQHZLWK,)56UHTXLUHVHVWLPDWHV)XUWKHUPRUHWKHDSSOLFDWLRQRI
FRPSDQ\ZLGHDFFRXQWLQJSROLFLHVUHTXLUHVPDQDJHPHQWYDOXDWLRQV7KRVHDUHDVZLWKDJUHDWHUGHJUHH
RIDVVHVVPHQWVFRSHLQWHUPVRIDVVXPSWLRQVDQGHVWLPDWHVRIFULWLFDOLPSRUWDQFHIRUWKHFRQVROLGDWHG
ILQDQFLDOVWDWHPHQWVDUHFRQWDLQHGLQWKHq(VWLPDWHVDQG$VVXPSWLRQVrQRWHV
,QWHUSUHWDWLRQVRIDQGFKDQJHVWRSXEOLVKHGVWDQGDUGV
ZKLFKDUHUHTXLUHGWREHDSSOLHGLQ
$PHQGPHQWWR,$6(PSOR\HH%HQHILWVt$FWXDULDO*DLQVDQG/RVVHV*URXS3ODQVDQG
'LVFORVXUHV
7KHPDLQHIIHFWRIWKLVDPHQGPHQWLVWRLQWURGXFHDQDGGLWLRQDORSWLRQLQUHODWLRQWRWKHUHFRJQLWLRQ
RIDFWXDULDOJDLQVDQGORVVHVIRUFHUWDLQSHQVLRQSODQV$FFRUGLQJO\DFWXDULDOJDLQVDQGORVVHVFDQ
EHVKRZQWRWKHLUIXOOH[WHQWLQD6WDWHPHQWRI5HFRJQLVHG,QFRPHDQG([SHQVH625,(RXWVLGHWKH
VWDWHPHQWRIHDUQLQJVLHWKH\FDQEHGLUHFWO\UHFRJQLVHGLQWKHHTXLW\$SSOLFDWLRQRIWKHFKDQJHVZLWK
UHJDUGWRq*URXS3ODQVrDQGq'LVFORVXUHVrLVELQGLQJ,QDFFRUGDQFHZLWKWKHUHJXODWLRQVRI,$6WKHLU
DSSOLFDWLRQPXVWEHUHWURVSHFWLYHIRUUHSRUWLQJSHULRGVZKLFKEHJLQRQRUDIWHU-DQXDU\7KH
q625,(RSWLRQrPXVWEHDSSOLHGUHWURVSHFWLYHO\SXUVXDQWWRWKHUHJXODWLRQVRI,$6,QDGGLWLRQIXUWKHU
LQIRUPDWLRQLVUHTXLUHG
7KLVLQFOXGHV
sLQSDUWLFXODUD'%2WUDQVLWLRQIRU-DQXDU\WR'HFHPEHUDQGDIDLUYDOXHRISODQDVVHWVWUDQVLWLRQ
IRU-DQXDU\WR'HFHPEHU
sDEUHDNGRZQRISODQDVVHWVE\FODVV
sH[SHFWHGRXWIORZVIRUSODQDVVHWVFRQWULEXWLRQVIRUWKHIROORZLQJILQDQFLDO\HDU
$PDQDJHPHQWDVVHVVPHQWKDVVKRZQWKDWWKHFXUUHQWDFFRXQWLQJJXLGHOLQHIRUSHQVLRQDFFUXDOVLVQRW
DIIHFWHGE\WKHDPHQGPHQWWR,$67KHDPHQGHGVWDQGDUGGRHVQRWUHVXOWLQDQ\DGMXVWPHQWRIWKH
LQIRUPDWLRQUHTXLUHGLQWKHQRWHV
1HZDFFRXQWLQJUHJXODWLRQV
7KH,QWHUQDWLRQDO$FFRXQWLQJ6WDQGDUGV%RDUG,$6%DQG,QWHUQDWLRQDO)LQDQFLDO5HSRUWLQJ
,QWHUSUHWDWLRQV&RPPLWWHH,)5,&KDYHDGRSWHGRUDUHVWLOOGHYHORSLQJIXUWKHUVWDQGDUGVDQG
LQWHUSUHWDWLRQV,Q-XQHWKH,$6%GHFLGHGWKDWQHZVWDQGDUGVFXUUHQWO\LQGHYHORSPHQWRU
VLJQLILFDQWFKDQJHVWRH[LVWLQJVWDQGDUGVGRQRWKDYHWREHDSSOLHGEHIRUH-DQXDU\7KHIROORZLQJ
DUHVLJQLILFDQWVWDQGDUGVFXUUHQWO\LQGHYHORSPHQWRUUHOHYDQWDPHQGPHQWVWRH[LVWLQJVWDQGDUGVZKLFK
ZLOOLPSDFWWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVRI%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIW
,)56)LQDQFLDOLQVWUXPHQWV
'LVFORVXUHDQG$PHQGPHQWWR,$63UHVHQWDWLRQRI)LQDQFLDO6WDWHPHQWVt&DSLWDO'LVFORVXUHV
,)56PDLQO\FRQFHUQVGLVFORVXUHDQGQRWHVLQIRUPDWLRQUHJDUGLQJILQDQFLDOLQVWUXPHQWVZKLFKZHUH
SUHYLRXVO\KDQGOHGE\,$6DQGSDUWO\,$67KHFKDQJHWR,$6LQWURGXFHVWKHUHTXLUHPHQWIRU
DGGLWLRQDOLQIRUPDWLRQFRQFHUQLQJWKHDPRXQWRIRZQHUFDSLWDODQGLWVPDQDJHPHQW7KHDGGLWLRQDO
LQIRUPDWLRQUHTXLUHGDVDUHVXOWRIWKHWZRLQQRYDWLRQVPDLQO\FRQFHUQVWKHVHQVLWLYLW\DQDO\VLVZLWK
UHJDUGWRH[LVWLQJPDUNHWULVNVDQGLQIRUPDWLRQRQFDSLWDOLQWKHVHQVHRIWKHFKDQJHWR,$6%RWK
VWDQGDUGVDUHELQGLQJIRUUHSRUWLQJSHULRGVEHJLQQLQJRQRUDIWHU-DQXDU\
,)562SHUDWLQJ6HJPHQWV
7KHUHDVRQIRUWKHFKDQJHLVWRKDUPRQLVHWKHUHJXODWLRQVRQVHJPHQWUHSRUWLQJFRQWDLQHGLQ,$6
DQG6)$6q'LVFORVXUHVRIDQ(QWHUSULVHDQG5HODWHG,QIRUPDWLRQr,Q,)56WKHqULVNDQGUHZDUGV
DSSURDFKrLVUHSODFHGE\WKHqPDQDJHPHQWDSSURDFKr,)56UHSODFHV,$6DQGLVELQGLQJIRU
ILQDQFLDO\HDUVEHJLQQLQJRQRUDIWHU-DQXDU\:HDUHFXUUHQWO\H[DPLQLQJWKHHIIHFWVRI,)56RQ
VHJPHQWUHSRUWLQJ
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
,$6$PHQGPHQWVWR,QFRPH7D[HV
$VSDUWRIWKHVKRUWWHUPFRQYHUJHQFHSURMHFWZLWKWKH)$6%LWLVSODQQHGWRDEROLVK,$6
RUFKDQJH,$6IIWKHH[FHSWLRQUHJXODWLRQZLWKUHIHUHQFHWRWKHILUVWWLPHIRUPDWLRQRIGHIHUUHG
WD[HV$FFRUGLQJWR,)56QRGHIHUUHGWD[HVDUHWREHIRUPHGRQWHPSRUDU\GLIIHUHQFHVZKLFKKDYH
LPSDFWHGQHLWKHUWKHFRPPHUFLDOODZQRUWKHWD[UHVXOWRURQWHPSRUDU\GLIIHUHQFHVIURPWKHUHFRJQLWLRQ
RIJRRGZLOO0RUHRYHUFKDQJHVDUHWREHPDGHWRWKHUHSRUWLQJRIGHIHUUHGWD[HV$ILUVW([SRVXUH'UDIW
('LVH[SHFWHGLQWKHILUVWVL[PRQWKVRI
(',$6$PHQGPHQWVWR3URYLVLRQV&RQWLQJHQW/LDELOLWLHVDQG&RQWLQJHQW$VVHWV
$FFRUGLQJWRWKHSUHYLRXVUHJXODWLRQRI,$6JUHDWLPSRUWDQFHLVDWWDFKHGWRWKHSUREDELOLW\RIRXWIORZ
,QFRQWUDVW(',$6GLIIHUHQWLDWHVEHWZHHQDQRQFRQWLQJHQWDQGDFRQWLQJHQWSDUWRIDOLDELOLW\7KH
QRQFRQWLQJHQWSDUWUHTXLUHGLVGLUHFWUHFRJQLWLRQRIDGHEW)XWXUHXQFHUWDLQWLHVDUHUHIOHFWHGRQO\LQWKH
FDOFXODWLRQRIWKHOHYHORIGHEW(',$67KLVFRXOGOHDGWRLQFUHDVHGUHFRJQLWLRQRIDFFUXDOV7KH
DGMXVWPHQWDSSOLHVWRILQDQFLDO\HDUVEHJLQQLQJIURP
(',$6$PHQGPHQWVWR,$63UHVHQWDWLRQRI)LQDQFLDO6WDWHPHQWV
7KHREMHFWLYHRIWKHVWDQGDUG3KDVH$3KDVH%LVWRLPSURYHWKHSUHVHQWDWLRQRIWKHHIIHFWVRI
EXVLQHVVDFWLYLWLHVRQWKHQHWDVVHWILQDQFLDODQGHDUQLQJVVLWXDWLRQ7KHSURMHFWLVEHLQJLPSOHPHQWHGLQ
FRQMXQFWLRQZLWKWKH)$6%,Q3KDVH$WKHVWDQGDUGIRUZKLFKLVH[SHFWHGLQWKHVHFRQGTXDUWHURI
WKHFRPSRQHQWVRIILQDQFLDOVWDWHPHQWVDUHGHILQHGDQGWKHIUHTXHQF\RIWKHLUSUHVHQWDWLRQVSHFLILHG,Q
WKH3KDVH%VWDQGDUGNH\UDWLRVDUHGHILQHGUHJXODWLRQVRQqUHF\FOLQJrDUHVSHFLILHGDQGRSHUDWLQJFDVK
IORZLVH[SODLQHG
6FRSHRIFRQVROLGDWLRQDQGDVVRFLDWHGFRPSDQLHV
+HDGTXDUWHUHGLQ+DVHOØQQH5LWWHUVWUDVVH+DVHOØQQH*HUPDQ\%HUHQW]HQ*UXSSH
$NWLHQJHVHOOVFKDIWPDQXIDFWXUHVDQGVHOOVVSLULWVDQGDOFRKROIUHHEHYHUDJHV7KHFRQVROLGDWHGILQDQFLDO
VWDWHPHQWVLQFOXGH%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWDQGVXEVLGLDULHVZKHUH%HUHQW]HQ*UXSSH
$NWLHQJHVHOOVFKDIWGLUHFWO\RULQGLUHFWO\KROGVDPDMRULW\RIWKHYRWLQJULJKWVLHFRPSDQLHVRYHUZKLFK
LQDFFRUGDQFHZLWK,$6UHYLVHGWKH*URXSKDVFRQWURORIWKHLUILQDQFLDODQGRSHUDWLQJSROLFLHV
FRQVWDQWO\VXSSRUWHGE\YRWLQJULJKWVH[FHHGLQJ,QFOXGLQJ%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIW
WKHFRQVROLGDWHGJURXSFRQVLVWVRIHLJKW*HUPDQDQGWZRQRQ*HUPDQ*URXSFRPSDQLHV
7KHIRUHLJQVXEVLGLDULHVDUHWKH&]HFKFRPSDQ\%HUHQW]HQ'LVWLOOHUV&5VURDQGWKH6ORYHQLDQ
FRPSDQ\%HUHQW]HQ'LVWLOOHUV6ORYDNLDVUR
1RQFRQVROLGDWHGFRPSDQLHVZHUHJHQHUDOSDUWQHUFRPSDQLHVDQGWKH/DEHO*PE+VZKLFKKDYHQR
EXVLQHVVRSHUDWLRQVRIWKHLURZQDVWKH\KDYHQRPDWHULDOLPSDFWRQWKH*URXSpVDVVHWVILQDQFLDODQG
LQFRPHVLWXDWLRQ7KHQRQFRQVROLGDWHGVXEVLGLDULHVDFFRXQWIRUOHVVWKDQRI*URXSVDOHVHDUQLQJV
DQGGHEW
$VVRFLDWHGFRPSDQLHVDUHFRPSDQLHVRQZKLFKWKH*URXSH[HUFLVHVDVLJQLILFDQWLQIOXHQFHEXW
ZKLFKLWGRHVQRWFRQWURO8QGHU,$6UHYLVHGDVLJQLILFDQWLQIOXHQFHLVDVVXPHGWRH[LVW
ZKHQWKHVKDUHKROGHUGLUHFWO\RULQGLUHFWO\KROGVEHWZHHQDQGRIWKHYRWLQJULJKWVLQWKH
DVVRFLDWHGFRPSDQ\6LQFH%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWKROGVDURXQGRIWKHYRWLQJULJKWV
LQ68&5$$62VOR1RUZD\68&5$$6LVUHSRUWHGDVDQDVVRFLDWHGFRPSDQ\RI%HUHQW]HQ*UXSSH
$NWLHQJHVHOOVFKDIWDQGLVLQFOXGHGLQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVLQDFFRUGDQFHZLWKWKHHTXLW\
PHWKRG
7KHIROORZLQJWDEOHVKRZVWKHNH\FRPSDQLHVZLWKLQWKH*URXS
6SLULWV
%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIW+DVHOØQQHSDUHQWFRPSDQ\
'HWKOHIIVHQ6SLULWXRVHQ*PE+)OHQVEXUJ
'HU%HUHQW]HQ+RI*PE++DVHOØQQH
=LQQDHU.ORVWHUVSLULWXRVHQ*PE+.ORVWHU=LQQD
'RRUQNDDW$NWLHQJHVHOOVFKDIW1RUGHQ
%HUHQW]HQ'LVWLOOHUV,QWHUQDWLRQDO*PE++DVHOØQQH
%HUHQW]HQ'LVWLOOHUV&5VUR6ODSDQLFHX%UQD&]HFK5HSXEOLF
%HUHQW]HQ'LVWLOOHUV6ORYDNLDVUR%UDWLVODYD6ORYDNLD
3DEVW5LFKDU]9HUWULHEV*PE+(OVIOHWK
6XFUD$62VOR1RUZD\DVVRFLDWHGFRPSDQ\
$OFRKROIUHHEHYHUDJHV
9LYDULV*HWUÀQNH*PE+&R.*+DVHOØQQH
6KDUHKROGLQJVDUHKHOGDVIROORZV
GLUHFWO\WKURXJK%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIW
LQGLUHFWO\WKURXJK%HUHQW]HQ'LVWLOOHUV,QWHUQDWLRQDO*PE+
7KHOLVWRISDUWLFLSDWLRQVSDJHRIWKH$QQXDO5HSRUWLVGHSRVLWHGDWWKH&RPPHUFLDO5HJLVWHU
2VQDEUØFNXQGHU+5%
+DQGHOVJHVHOOVFKDIW6&6SLULWXRVHQ&RQWRU*PE+&R2+*'RRUQNDDW%UHQQHUHLHQ*PE+DQG
.RUQEUHQQHUHL%HUHQW]HQ*PE+FRPSDQLHVZLWKDORZOHYHORIRSHUDWLQJDFWLYLWLHVZHUHWUDQVIHUUHGWR
%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWDVDUHVXOWRIWKHDFFXUDODVRI-DQXDU\RUZHUHPHUJHGZLWK
%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWLQDFFRUGDQFHZLWKWKH*HUPDQ7UDQVIRUPDWLRQ$FWDQGFRQWLQXHG
E\WKHODWWHUE\ZD\RIXQLYHUVDOVXFFHVVLRQ7KHEXVLQHVVDFWLYLWLHVRIWKHDERYHFRPSDQLHVZLOOLQIXWXUH
EHSHUIRUPHGE\%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIW
0RUHRYHUDVRI-DQXDU\HLJKWJHQHUDOSDUWQHUFRPSDQLHVDQGWKH/DEHO*PE+VZKLFKKDGQRW
SUHYLRXVO\EHHQFRQVROLGDWHGZHUHDOVRPHUJHGZLWK%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWLQDFFRUGDQFH
ZLWKWKH*HUPDQ7UDQVIRUPDWLRQ$FWDQGFRQWLQXHGE\WKHODWWHUE\ZD\RIXQLYHUVDOVXFFHVVLRQ7KHVH
SURFHGXUHVKDYHQRWKDGDQ\VLJQLILFDQWHIIHFWRQWKHFRQVROLGDWLRQ
,QDFFRUGDQFHZLWK$UWLFOHVXEVHFWLRQDQG$UWLFOHERIWKH*HUPDQ&RPPHUFLDO&RGHWKH
ODUJHSXEOLFOLPLWHGFRPSDQLHVDQGWKHODUJHSXEOLFOLPLWHGSXEOLFFRPSDQLHV&RDUHH[HUFLVLQJWKH
GLVFORVXUHRSWLRQJUDQWHGWRWKHPDVWKH\DOVRUHPDLQXQDIIHFWHGE\WKH,)56DFFRXQWLQJUHJXODWLRQV
VHH$WWDFKPHQW
&RQVROLGDWLRQSULQFLSOHVDQGFXUUHQF\WUDQVODWLRQ
7KHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDVRI'HFHPEHULQDFFRUGDQFHZLWK,)56ZHUHSUHSDUHG
LQHXURV(85WKHRSHUDWLQJFXUUHQF\RI%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIW7KHILQDQFLDOVWDWHPHQWV
RIWKH*HUPDQVXEVLGLDULHVLQFOXGHGLQWKHFRQVROLGDWLRQZHUHSUHSDUHGLQDFFRUGDQFHZLWK,$6
UHYLVHGFRQVROLGDWHGDQGLQGLYLGXDOILQDQFLDOVWDWHPHQWVLQDFFRUGDQFHZLWK,)56XVLQJXQLIRUP
DFFRXQWLQJDQGYDOXDWLRQPHWKRGV
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
$VDOOWKHQRQ*HUPDQVXEVLGLDULHVFRQGXFWWKHLURZQEXVLQHVVLQGHSHQGHQWO\RQDILQDQFLDOHFRQRPLF
DQGRUJDQLVDWLRQDOOHYHOWKHUHVSHFWLYHQDWLRQDOFXUUHQF\LVWKHRSHUDWLQJFXUUHQF\7KHWUDQVODWLRQRIWKH
EDODQFHVKHHWHQWULHVWKHUHIRUHWRRNSODFHDWWKHUDWHRIH[FKDQJHDWWKHEDODQFHVKHHWGDWHLWHPVLQWKH
VWDWHPHQWRIHDUQLQJVDUHWUDQVODWHGDWWKHDYHUDJHH[FKDQJHUDWHIRUWKH\HDU
'LIIHUHQFHVIURPWKHWUDQVODWLRQRIILQDQFLDOVWDWHPHQWVRIQRQ*HUPDQVXEVLGLDULHVDUHVKRZQZLWKQR
HIIHFWRQWKHQHWSURILWDQGDUHLWHPLVHGVHSDUDWHO\XQGHUUHYHQXHUHVHUYHV
7KHIROORZLQJH[FKDQJHUDWHVZHUHXVHGIRUFXUUHQF\WUDQVODWLRQDWWKH%HUHQW]HQ*UXSSH
$NWLHQJHVHOOVFKDIW
$YHUDJHH[FKDQJHUDWH
5HSRUWLQJGDWHUDWH
&]HFKNRUXQD
6ORYDNLDQNRUXQD
1RUZHJLDQNURQH
,QDEXVLQHVVDFTXLVLWLRQDOOLGHQWLILDEOHDVVHWVOLDELOLWLHVDQGFRQWLQJHQWOLDELOLWLHVRIWKHDFTXLUHG
FRPSDQ\DUHYDOXHGDWWKHLUIDLUYDOXHVDWWKHGDWHRIDFTXLVLWLRQ0LQRULWLHVDUHSRVWHGDFFRUGLQJWRWKHLU
VKDUHLQWKHIDLUYDOXHRIWKHLGHQWLILDEOHDVVHWVOLDELOLWLHVDQGFRQWLQJHQWOLDELOLWLHV
6KDUHVLQDVVRFLDWHGFRPSDQLHVDUHYDOXHGLQDFFRUGDQFHZLWKWKHQHWERRNYDOXHPHWKRGqDWHTXLW\r
LQDFFRUGDQFHZLWK,$6UHYLVHG7KHGDWHRIWKHVKDUHKROGLQJDFTXLVLWLRQLVFKRVHQDVWKH
ILUVWWLPHFRQVROLGDWLRQGDWHRIWKHHTXLW\DFFRXQWLQJ7KHSDUWLDOO\FRQVROLGDWHGILQDQFLDOVWDWHPHQWV
RIWKHDVVRFLDWHGFRPSDQ\ZKLFKZHUHSUHSDUHGLQDFFRUGDQFHZLWKFRXQWU\VSHFLILFDFFRXQWLQJ
SULQFLSOHVZHUHWDNHQDVDEDVLVIRUFRQVROLGDWLRQDVDQDVVRFLDWHGFRPSDQ\$GMXVWPHQWVLQOLQHZLWK
XQLIRUPDFFRXQWLQJDQGYDOXDWLRQPHWKRGVZHUHQRWPDGHLIWKH\GLGQRWVLJQLILFDQWO\RSSRVHXQLIRUP
DFFRXQWLQJDQGYDOXDWLRQPHWKRGVRI%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWDQGGRQRWVLJQLILFDQWO\
GHYLDWHIURP,)567KHGHYLDWLRQVRIWKHILQDQFLDOVWDWHPHQWVEDVHGRQHTXLW\DFFRXQWLQJIURPWKH
XQLIRUPDFFRXQWLQJDQGYDOXDWLRQPHWKRGVRI%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWDQGIURP,)56DUH
QRWGHHPHGWREHVLJQLILFDQW$FFRUGLQJO\QRDGMXVWPHQWVZHUHPDGH
6KDUHVLQFRPSDQLHVLQZKLFKPRUHWKDQRIYRWLQJULJKWVDUHKHOG/DEHO*PE+DUHQRWUHSRUWHGDW
HTXLW\LQWKHEDODQFHVKHHWDVWKH\DUHQRWFRQVLGHUHGUHOHYDQWWRWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV
+RZHYHUWKHSDUWLFLSDWLRQVDUHDOZD\VVKRZQZLWKWKHLUUHVSHFWLYHDFTXLVLWLRQFRVWVDVQRDFWLYHPDUNHW
H[LVWVIRUWKHVHFRPSDQLHVDQGFXUUHQWPDUNHWYDOXHVFDQQRWEHUHOLDEO\GHWHUPLQHGDWUHDVRQDEOH
H[SHQVH,ILQGLFDWLRQVDVWRWKHLUORZHUPDUNHWYDOXHH[LVWWKHVHVKDOOEHUHFRUGHG'HEWVZHUH
FRQVROLGDWHGE\RIIVHWWLQJUHFHLYDEOHVDQGOLDELOLWLHVRIWKHFRQVROLGDWHGFRPSDQLHV
,QWKHLQWHULPUHVXOWHOLPLQDWLRQLQFRPHIURPLQWUD*URXSWUDQVDFWLRQVEHWZHHQ*URXSFRPSDQLHVZDV
HOLPLQDWHG'HIHUUHGWD[HVDUHDPRUWLVHGLQDFFRUGDQFHZLWK,$6UHYLVHGIRUDQ\FKDQJHVWR
HDUQLQJVUHVXOWLQJIURPFRQVROLGDWLRQPHDVXUHVWKDWLPSDFWUHVXOWV,QFRPHDQGH[SHQGLWXUHIURPLQWUD
*URXSWUDQVDFWLRQVLQSDUWLFXODUIURPLQWHUQDOVDOHVDUHHOLPLQDWHGLQWKHVWDWHPHQWRIHDUQLQJV
$FFRXQWLQJDQGYDOXDWLRQPHWKRGV
5HDOLVDWLRQRIHDUQLQJVDQGH[SHQVHV
6DOHVDQGRWKHURSHUDWLQJLQFRPHDUHDOZD\VUHFRUGHGDWWKHWLPHWKHVHUYLFHVDUHSHUIRUPHGRUZKHQ
WKHJRRGVRUSURGXFWVKDYHEHHQGHOLYHUHGDQGWKXVWKHWUDQVIHURIULVNKDVWDNHQSODFH
2SHUDWLQJH[SHQVHVLPSDFWRQUHVXOWVDWWKHWLPHRIWKHSD\PHQWRUDWWKHWLPHRIWKHLUFUHDWLRQ
,QWHUHVWH[SHQVHVDQGLQWHUHVWLQFRPHDUHUHFRUGHGDVLPSDFWLQJRQUHVXOWV
,QWDQJLEOHDVVHWV
7UDGHPDUNVDQGEUDQGULJKWV
)RUWKHSXUSRVHVRIWKHEDODQFHVKHHWDILQLWHHFRQRPLFOLIHWLPHLVDVVXPHGIRUWUDGHPDUNVDQGEUDQG
ULJKWV7KH\DUHYDOXHGDWWKHLUKLVWRULFDFTXLVLWLRQFRVWVOHVVDFFXPXODWHGZULWHGRZQV7KH\DUHZULWWHQ
GRZQXVLQJWKHVWUDLJKWOLQHPHWKRGRYHUWKHLUHVWLPDWHGXVHIXOOLIHRI\HDUVLQWKHFDVHRIWKH
FRPSDQ\pVRZQWUDGHPDUNVRURYHUWKHFRQWUDFWXDOSHULRGLQWKHFDVHRIOLFHQVHGWUDGHPDUNV
&RPSXWHUVRIWZDUH
,QDFFRUGDQFHZLWK,$6UHYLVHGVRIWZDUHOLFHQVHVDUHFDSLWDOLVHGDWWKHLUDFTXLVLWLRQFRVW
SOXVWKHFRVWVIRUWKHLUWUDQVIHULQWRDFRQGLWLRQZKLFKLVUHDG\IRUXVH7KH\DUHGHSUHFLDWHGXVLQJWKH
VWUDLJKWOLQHPHWKRGRYHUDQHVWLPDWHGPD[LPXPXVHIXOOLIHRI\HDUV
6XSSO\ULJKWV
6XSSO\ULJKWVDUHUHSDLGRYHUWKHDJUHHGWHUPRQWKHEDVLVRIDUDWHFDOFXODWHGSHUWHUPRYHUWKHDQQXDO
DFTXLVLWLRQDPRXQWWKHLURSHUDWLQJXVHIXOOLIHEHLQJEHWZHHQDQG\HDUV
5HVHDUFKFRVWVDUHVKRZQDVFXUUHQWH[SHQVHVLQDFFRUGDQFHZLWK,$6UHYLVHG
%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWGLGQRWPDNHXVHRIWKHRSWLRQWRFDSLWDOLVHWKHLQWHUHVWUDWHRQ
ERUURZLQJVZLWKTXDOLILHGDVVHWV
$VVHWVZKLFKDUHVXEMHFWWRVFKHGXOHGGHSUHFLDWLRQDUHFKHFNHGIRUWKHLUUHTXLUHPHQWVLQWHUPVRI
LPSDLUPHQWDQGLIFRUUHVSRQGLQJHYHQWVRUFKDQJHVWRFLUFXPVWDQFHVVKRZWKDWWKHERRNYDOXHPD\
QRORQJHUEHUHFRYHUDEOH$QLPSDLUPHQWORVVLVUHFRUGHGLQWKHDPRXQWRIERRNYDOXHLQH[FHVVRIWKH
UHFRYHUDEOHDPRXQW7KHUHFRYHUDEOHDPRXQWLVWKHKLJKHURIWKHFXUUHQWPDUNHWYDOXHRIWKHDVVHWV
OHVVGLVSRVDOFRVWVDQGWKHXVHIXOYDOXH)RUWUDGHPDUNVDQGEUDQGULJKWVWKHFXUUHQWPDUNHWYDOXHLV
GHWHUPLQHGXVLQJWKHPXOWLSHULRGH[FHVVHDUQLQJVPHWKRG0((0
7DQJLEOHDVVHWV
7DQJLEOHDVVHWVDUHUHSRUWHGDWWKHLUKLVWRULFDFTXLVLWLRQPDQXIDFWXULQJFRVWVOHVVVFKHGXOHGGHSUHFLDWLRQ
DQGLIQHFHVVDU\ZLWKFRUUHVSRQGLQJLPSDLUPHQW$FTXLVLWLRQDQGRUPDQXIDFWXULQJFRVWVLQFOXGHWKH
H[SHQVHVGLUHFWO\DWWULEXWDEOHWRWKHDFTXLVLWLRQ)LQDQFLQJFRVWVDUHQRWFDSLWDOLVHGDVDFRPSRQHQWRI
WKHDFTXLVLWLRQPDQXIDFWXULQJFRVWV%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWDOZD\VVWDUWVWRGHSUHFLDWH
WDQJLEOHDVVHWVZKHQWKHDVVHWVDUHXVHG
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
,QYHVWPHQWLQIORZVUHFHLYHGDQGWD[IUHHFDSLWDOLQYHVWPHQWERQXVHVDUHWDNHQLQWRDFFRXQWE\UHGXFLQJ
WKHDFTXLVLWLRQPDQXIDFWXULQJFRVWVRIWKHDVVHWE\WKHDPRXQWRIWKHLQIORZDQGRUERQXV
6XEVHTXHQWDFTXLVLWLRQPDQXIDFWXULQJFRVWVDUHRQO\UHFRUGHGDVDFRPSRQHQWRIWKHDFTXLVLWLRQ
PDQXIDFWXULQJFRVWVRIWKHDVVHWZKHQLWLVSUREDEOHWKDWUHVXOWLQJIXWXUHHFRQRPLFEHQHILWVZLOOJRWR
WKH*URXSDQGWKHFRVWVRIWKHDVVHWVFDQGHGHWHUPLQHGUHOLDEO\$OORWKHUUHSDLUVDQGPDLQWHQDQFHDUH
UHFRUGHGDVDIIHFWLQJH[SHQVHVLQWKHVWDWHPHQWRIHDUQLQJVLQWKHILQDQFLDO\HDULQZKLFKWKH\RFFXU
5HDOHVWDWHLVQRWGHSUHFLDWHG7KHGHSUHFLDWLRQRIWDQJLEOHDVVHWVWDNHVSODFHH[FOXVLYHO\E\WKHVWUDLJKW
OLQHPHWKRG7KURXJKRXWWKH*URXSVFKHGXOHGGHSUHFLDWLRQLVEDVHGRQWKHIROORZLQJSHULRGVRIXVHIXO
ZRUNLQJOLIH
%XLOGLQJV
/DQGLPSURYHPHQWV
0DFKLQHU\DQGWHFKQLFDOHTXLSPHQW
2IILFHIXUQLWXUHDQGHTXLSPHQW 2WKHUHTXLSPHQW
WR\HDUV
WR\HDUV
WR\HDUV
WR\HDUV
WR\HDUV
7KHUHPDLQLQJERRNYDOXHVDQGSHULRGVRIHFRQRPLFXVHIXOZRUNLQJOLIHDUHFKHFNHGDWHDFKEDODQFH
VKHHWGDWHDQGDGMXVWHGLIQHFHVVDU\,IWKHUHDUHJURXQGVWREHOLHYHWKDWLPSDLUPHQWKDVRFFXUUHG
DQGWKDWWKHUHFRYHUDEOHDPRXQWLVEHORZWKHQHWDFTXLVLWLRQRUPDQXIDFWXULQJFRVWVWKHDVVHWV
DUHGHSUHFLDWHGLQYDOXH,IWKHUHDVRQVIRUGHSUHFLDWLRQQRORQJHUDSSO\WKH\DUHZULWWHQXSE\D
FRUUHVSRQGLQJDPRXQW
3URILWVDQGORVVHVIURPWKHGLVSRVDORIDVVHWVDUHGHWHUPLQHGDVWKHGLIIHUHQFHEHWZHHQWKHGLVSRVDO
UHYHQXHDQGWKHERRNYDOXHDQGDUHUHFRJQLVHGLQLQFRPH
7KHHFRQRPLFRZQHUVKLSRIOHDVHREMHFWVLVDWWULEXWHGWRWKHOHVVHHLQDFFRUGDQFHZLWK,$6UHYLVHG
LIWKHODWWHULVUHVSRQVLEOHIRUDOOPDWHULDOULVNVDQGRSSRUWXQLWLHVDVVRFLDWHGZLWKWKHREMHFW
ILQDQFLDOOHDVH,IWKHHFRQRPLFRZQHUVKLSLVDWWULEXWHGWRWKHFRPSDQLHVRI%HUHQW]HQ*UXSSH$*WKH
FDSLWDOLVDWLRQRIWKHOHDVHREMHFWWDNHVSODFHDWWKHWLPHWKHDJUHHPHQWLVVLJQHGUHJDUGLQJDFTXLVLWLRQ
DQGRUPDQXIDFWXULQJFRVWVRULIQHFHVVDU\DWWKHORZHUSUHVHQWYDOXHRIWKHPLQLPXPOHDVHSD\PHQWV
'HSUHFLDWLRQLVFDUULHGRXWtFRUUHVSRQGLQJWRFRPSDUDEOHDFTXLUHGWDQJLEOHDVVHWVtE\WKHVWUDLJKW
OLQHPHWKRGRYHUWKHZRUNLQJOLIHRURYHUWKHWHUPRIWKHOHDVHDJUHHPHQWLIWKLVLVVKRUWHU3D\PHQW
REOLJDWLRQVUHVXOWLQJIURPIXWXUHOHDVHUDWHVDUHGLVFRXQWHGDQGFDUULHGDVOLDELOLWLHV
/HDVHDJUHHPHQWVZLWKZKLFKDVXEVWDQWLDOSURSRUWLRQRIWKHULVNVDQGRSSRUWXQLWLHVFRQQHFWHGZLWKWKH
RZQHUVKLSRIWKHOHDVHREMHFWUHPDLQZLWKWKHOHVVRUDQGDUHFODVVLILHGDVRSHUDWLQJOHDVHV3D\PHQWV
PDGHLQFRQQHFWLRQZLWKRSHUDWLQJOHDVHVDUHUHFRUGHGLQWKHVWDWHPHQWRIHDUQLQJVXVLQJWKHVWUDLJKW
OLQHPHWKRGRYHUWKHWHUPRIWKHOHDVHDJUHHPHQW
)LQDQFLDODVVHWV
$WHTXLW\YDOXHGSDUWLFLSDWLRQV
,QDFFRUGDQFHZLWK,$6UHYLVHGSDUWLFLSDWLRQVDUHTXDOLILHGDVDVVRFLDWHGFRPSDQLHVLID
VLJQLILFDQWLQIOXHQFHRYHUFRPSDQ\SROLF\RIWKHDVVRFLDWHGFRPSDQ\FDQEHH[HUFLVHG,QDFFRUGDQFH
ZLWK,$6UHYLVHGDVLJQLILFDQWLQIOXHQFHH[LVWVLIWKHUHLVWKHRSWLRQRIEHLQJLQYROYHGLQ
GHFLVLRQVUHJDUGLQJILQDQFLDODQGFRPSDQ\SROLF\+RZHYHUFRQWURORYHURUMRLQWPDQDJHPHQWRI
WKHGHFLVLRQPDNLQJSURFHVVGRHVQRWFRQVWLWXWHDVLJQLILFDQWLQIOXHQFH,QDFFRUGDQFHZLWK,$6
UHYLVHGDVLJQLILFDQWLQIOXHQFHH[LVWVLIDVKDUHKROGHUKDVGLUHFWO\RULQGLUHFWO\RUPRUHRI
WKHYRWLQJULJKWVLQDQDVVRFLDWHGFRPSDQ\,QDFFRUGDQFHZLWK,$6UHYLVHGDVLJQLILFDQW
LQIOXHQFHZLOODOVREHDVVXPHGLIRQO\RQHRIVHYHUDOLQGLFDWRUVDSSOLHVIRULQVWDQFHPHPEHUVKLSRIWKH
PDQDJHPHQWRUVXSHUYLVRU\ERG\RURIDVLPLODUPDQDJHPHQWERG\RIWKHDVVRFLDWHGFRPSDQ\$IXUWKHU
LQGLFDWRULVPDWHULDOEXVLQHVVWUDQVDFWLRQVEHWZHHQWKHVKDUHKROGHUDQGWKHDVVRFLDWHGFRPSDQ\,I
WKHVHSUHUHTXLVLWHVH[LVWLWFDQEHDVVXPHGWKDW%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWKDVDVLJQLILFDQW
LQIOXHQFHRYHUWKHDVVRFLDWHGFRPSDQ\LQDFFRUGDQFHZLWK,)56,QDFFRUGDQFHZLWK,$6UHYLVHG
VKDUHVLQDQDVVRFLDWHGFRPSDQ\DUHUHSRUWHGLQWKHEDODQFHVKHHWLQDFFRUGDQFHZLWKWKHHTXLW\
PHWKRG
7KHVKDUHVLQWKHSDUWLFLSDWLRQVUHSRUWHGZLWKWKHHTXLW\PHWKRGLQWKHEDODQFHVKHHWDUHLQLWLDOO\
UHSRUWHGDWDFTXLVLWLRQFRVWDQGVXEVHTXHQWO\ZLWKWKHDGMXVWHGSURUDWDQHWDVVHWV7KHERRNYDOXHV
DUHLQFUHDVHGRUGHFUHDVHGDQQXDOO\E\WKHSURUDWDUHVXOWVGLVWULEXWHGGLYLGHQGVDQGRWKHUFKDQJHVLQ
VKDUHKROGHUVpHTXLW\&RPSDQLHVUHSRUWHGLQWKHEDODQFHVKHHWZLWKWKHHTXLW\PHWKRGDUHGHSUHFLDWHG
LQVRIDUDVWKHUHFRYHUDEOHDPRXQWLVOHVVWKDQWKHERRNYDOXH
2WKHUILQDQFLDODVVHWV
)LQDQFLDODVVHWVDUHDOZD\VGLYLGHGLQWRWKHIROORZLQJFDWHJRULHV
sILQDQFLDODVVHWVYDOXHGDWWKHLUIDLUYDOXHDQGUHFRJQLVHGLQLQFRPH
sORDQVDQGUHFHLYDEOHVH[WHQGHG
sILQDQFLDODVVHWVKHOGXQWLOILQDOPDWXULW\
sILQDQFLDODVVHWVDYDLODEOHIRUGLVSRVDO
7KHFODVVLILFDWLRQGHSHQGVRQWKHUHVSHFWLYHSXUSRVHIRUZKLFKWKHILQDQFLDODVVHWVZHUHDFTXLUHG7KH
PDQDJHPHQWGHWHUPLQHVWKHFODVVLILFDWLRQRIWKHILQDQFLDODVVHWVZKHQWKH\DUHUHSRUWHGIRUWKHILUVW
WLPHDQGFKHFNVWKHFODVVLILFDWLRQRQHDFKEDODQFHVKHHWGDWH
)LQDQFLDODVVHWVYDOXHGDWWKHLUIDLUYDOXHDQGUHFRJQLVHGLQLQFRPH
7KLVFDWHJRU\KDVWZRVXEFDWHJRULHVILQDQFLDODVVHWVZKLFKIURPWKHEHJLQQLQJZHUHKHOGDQGDOORFDWHG
IRUWUDGLQJSXUSRVHVDQGWKRVHZKLFKIURPWKHEHJLQQLQJZHUHFODVVLILHGDVqDWIDLUYDOXHDQGUHFRJQLVHG
LQLQFRPHr$ILQDQFLDODVVHWLVDOORFDWHGWRWKLVFDWHJRU\LILQSULQFLSOHLWZDVDFTXLUHGZLWKWKHLQWHQWLRQ
RIVHOOLQJLWLQWKHVKRUWWHUPRUWKLVZDVVWLSXODWHGE\WKHPDQDJHPHQW'HULYDWLYHVDUHDOVRFDWHJRULVHG
DVEHLQJKHOGIRUWUDGLQJSXUSRVHVXQOHVVWKH\DUHTXDOLILHGDVKHGJHV$VVHWVLQWKLVFDWHJRU\DUH
SRVWHGDVVKRUWWHUPDVVHWVLIWKH\DUHHLWKHUKHOGIRUWUDGLQJSXUSRVHVRUZLOOSUREDEO\EHUHDOLVHGZLWKLQ
PRQWKVRIWKHEDODQFHVKHHWGDWH%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWFXUUHQWO\KDVQRILQDQFLDO
LQVWUXPHQWVLQWKLVFDWHJRU\
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
/RDQVDQGUHFHLYDEOHVH[WHQGHG
/RDQVDQGUHFHLYDEOHVDUHQRQGHULYDWLYHILQDQFLDODVVHWVZLWKIL[HGRUGHWHUPLQDEOHSD\PHQWVZKLFKDUH
QRWOLVWHGRQDQDFWLYHPDUNHW7KH\DULVHZKHQWKH*URXSSURYLGHVPRQH\JRRGVRUVHUYLFHVGLUHFWO\WR
DGHEWRUZLWKRXWDQ\LQWHQWLRQRIWUDGLQJWKHUHFHLYDEOHV7KH\DUHUHJDUGHGDVVKRUWWHUPDVVHWVZLWKWKH
H[FHSWLRQRIWKRVHZKLFKRQO\IDOOGXHPRQWKVDIWHUWKHEDODQFHVKHHWGDWH7KHODWWHUDUHSRVWHGDV
ORQJWHUPDVVHWV/RDQVDQGUHFHLYDEOHVDUHSRVWHGLQWKHEDODQFHVKHHWXQGHUq7UDGHUHFHLYDEOHVrDQG
q2WKHUUHFHLYDEOHVr
)LQDQFLDODVVHWVKHOGXQWLOILQDOPDWXULW\
)LQDQFLDODVVHWVKHOGXQWLOILQDOPDWXULW\DUHQRQGHULYDWLYHILQDQFLDODVVHWVZLWKIL[HGRUGHWHUPLQDEOH
SD\PHQWVDQGIL[HGWHUPVIRUZKLFKWKH*URXSPDQDJHPHQWKDVWKHLQWHQWLRQDQGFDSDELOLW\RIKROGLQJ
XQWLOILQDOPDWXULW\%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWFXUUHQWO\KDVQRILQDQFLDOLQVWUXPHQWVLQWKLV
FDWHJRU\
)LQDQFLDODVVHWVDYDLODEOHIRUGLVSRVDO
)LQDQFLDODVVHWVDYDLODEOHIRUGLVSRVDODUHQRQGHULYDWLYHILQDQFLDODVVHWVZKLFKDUHHLWKHUWREHDOORFDWHG
WRWKLVFDWHJRU\RUZHUHQRWDOORFDWHGWRDQ\RIWKHRWKHUFDWHJRULHV7KH\DUHDOORFDWHGWRORQJWHUP
DVVHWVLIWKHPDQDJHPHQWGRHVQRWLQWHQGWRGLVSRVHRIWKHPZLWKLQPRQWKVRIWKHEDODQFHVKHHW
GDWH
6KDUHVLQVXEVLGLDULHVDQGSDUWLFLSDWLRQVDOVRFRXQWDVILQDQFLDODVVHWVDYDLODEOHIRUGLVSRVDO+RZHYHU
WKH\DUHDOZD\VVKRZQZLWKWKHLUUHVSHFWLYHDFTXLVLWLRQFRVWVDVQRDFWLYHPDUNHWH[LVWVIRUWKHVH
FRPSDQLHVDQGFXUUHQWPDUNHWYDOXHVFDQQRWEHUHOLDEO\GHWHUPLQHGDWUHDVRQDEOHH[SHQVH,ILQGLFDWLRQV
DVWRWKHLUORZHUPDUNHWYDOXHH[LVWWKHVHVKDOOEHUHFRUGHG
$OOSXUFKDVHVDQGVDOHVRIILQDQFLDODVVHWVDUHUHSRUWHGRQWKHGD\RIWUDGLQJWKHGD\RQZKLFKWKH
*URXSFRPPLWVLWVHOIWRWKHSXUFKDVHRUVDOHRIWKHDVVHW
)LQDQFLDODVVHWVZKLFKGRQRWEHORQJWRWKHFDWHJRU\qDIIHFWLQJWKHUHVXOWDWIDLUYDOXHrDUHLQLWLDOO\
UHSRUWHGDWWKHLUIDLUYDOXHOHVVWUDQVDFWLRQFRVWV7KH\DUHWDNHQRXWRIWKHERRNVLIWKHULJKWVWR
SD\PHQWVIURPWKHLQYHVWPHQWH[SLUHRUZHUHWUDQVIHUUHGDQGWKH*URXSKDVLQHVVHQFHWUDQVIHUUHGDOO
RSSRUWXQLWLHVDQGULVNVDULVLQJIURPRZQHUVKLS
/RDQVDQGUHFHLYDEOHVDQGILQDQFLDOLQYHVWPHQWVWREHKHOGXQWLOILQDOPDWXULW\DUHHQWHUHGRQWKH
EDODQFHVKHHWZLWKDFTXLVLWLRQFRVWVXVLQJWKHHIIHFWLYHUDWHPHWKRG,IGRXEWVDULVHDVWRUHFRYHUDELOLW\
WKHUHFHLYDEOHVDUHUHSRUWHGDWWKHORZHUPDUNHWYDOXH,QDGGLWLRQWRWKHUHTXLUHGLQGLYLGXDOYDOXH
DGMXVWPHQWVWKHLPSDLUPHQWULVNLVH[DPLQHGIRUJURXSVRIUHFHLYDEOHVWKDWGRQRWGLIIHULQWHUPV
RIFUHGLWULVNVOXPSVXPLQGLYLGXDOYDOXHDGMXVWPHQWVLQDFFRUGDQFHZLWK,$6UHYLVHG,Q
GHWHUPLQLQJWKHLQYHQWRU\RIUHFHLYDEOHVZKLFKDUHIUDXJKWZLWKULVNVFUHGLWLQVXUHGUHFHLYDEOHVDVZHOODV
WXUQRYHUWD[UHFHLYHGDUHGHGXFWHG
$WHDFKEDODQFHVKHHWGDWHFKHFNVDUHFDUULHGRXWDVWRZKHWKHUWKHUHDUHDQ\REMHFWLYHLQGLFDWLRQVIRU
LPSDLUPHQWRIDILQDQFLDODVVHWRUDJURXSRIILQDQFLDODVVHWV
)LQDQFLDOULVNIDFWRUV
'XHWRLWVEXVLQHVVDFWLYLW\%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWLVH[SRVHGWRYDULRXVILQDQFLDOULVNV
sIRUHLJQFXUUHQF\ULVNV
sFUHGLWULVNV
sLQWHUHVWUDWHULVNV
)RUHLJQFXUUHQF\ULVNV
,QWHUPVRIVDOHVWKHEXVLQHVVDFWLYLW\RI%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWLVIRFXVHGRQWKH
(XUR]RQH1RWUDQVDFWLRQVDUHFRQFOXGHGZLWKFXVWRPHUVLQFRXQWULHVRIKLJKLQIODWLRQ/LNHZLVHIRUHLJQ
FXUUHQF\ULVNVRQWKHSXUFKDVLQJVLGHDUHWREHDVVHVVHGDVORZ'HOLYHULHVDUHSULQFLSDOO\UHFHLYHGIURP
WKH(XUR]RQHDVZHOODVIURPWKH86$DQG&DQDGD
&UHGLWULVNV
7RDYRLGGHIDXOWVRQSD\PHQWFUHGLWLQIRUPDWLRQDQGKLVWRULFDOGDWDDUHFRQVXOWHGIURPEXVLQHVV
UHODWLRQVKLSV$GHTXDWHGLVFRXQWRQUHFHLYDEOHVDUHIRUPHGLQWKHFDVHRIUHFRJQLVDEOHULVNV
$SSUR[LPDWHO\RIVDOHVDUHLQYRLFHGYLDEUDQFKRIILFHVZKLFKDOVRWDNHRQWKHDGGLWLRQDOULVNYLDGHO
FUHGHUHDJUHHPHQWV,QDGGLWLRQWKHULVNRIGHIDXOWLVFRYHUHGE\FRPPHUFLDOFUHGLWLQVXUDQFHV%DODQFHV
RIRYHU(85$OFRKRO)UHH%HYHUDJHVGLYLVLRQRURYHU(856SLULWVGLYLVLRQDUHIXOO\FUHGLW
LQVXUHG7KHOLTXLGIXQGVDUHLQYHVWHGZLWKPDMRUEDQNV7KHUHLVQRVLJQLILFDQWGHIDXOWULVN
,QWHUHVWUDWHULVNV
7KH*URXSKDVLQWHUHVWEHDULQJDVVHWV+RZHYHUWKHOHYHORIWKHUHVXOWLQJLQWHUHVWLQFRPHLVRIQR
PDWHULDOVLJQLILFDQFHWRWKHFRQVROLGDWHGSURILWVDQGFDVKIORZ,QWKLVUHVSHFWFKDQJHVWRWKHPDUNHW
LQWHUHVWUDWHDUHDOVRLPPDWHULDO
7KHILQDQFLQJRIWKHGRXEOHVSLULWVWD[SD\PHQWDWWKHHQGRIWKH\HDUZDVFRYHUHGIRUWKHODVWWLPHLQ
E\DQLQWHUHVWUDWHFROODU
$GGLWLRQDOLQWHUHVWUDWHKHGJLQJLQVWUXPHQWVLQWKHIRUPRIILQDQFLDOLQVWUXPHQWVDUHQRWXVHG)RU
ORQJWHUPORDQVWKHUHDUHIL[HGLQWHUHVWUDWHDJUHHPHQWVLQDGGLWLRQVKRUWWHUPRSHUDWLQJOLQHVDUHQRW
FRQVWDQWO\XVHGGXULQJWKH\HDUZLWKWKHUHVXOWWKDWSRVVLEOHULVHVLQWKHLQWHUHVWUDWHSRVHQRVLJQLILFDQW
ULVNIRUWKHFRPSDQ\
,QYHQWRULHV
7KHLQYHQWRULHVDUHUHFRUGHGDWDFTXLVLWLRQDQGPDQXIDFWXULQJFRVWVRUDWORZHUQHWGLVSRVDOYDOXHV
qORZHURIFRVWDQGQHWUHDOLVDEOHYDOXHr7KHPDQXIDFWXULQJFRVWVFRQWDLQLQDGGLWLRQWRWKHLQGLYLGXDO
FRVWVZKLFKDUHJHQHUDOO\YDOXHGDWWKHPRYLQJDYHUDJHYDOXHDSSURSULDWHFRPSRQHQWVRIWKHUHTXLUHG
PDWHULDODQGSURGXFWLRQFRVWVDVZHOODVGHSUHFLDWLRQFDXVHGE\SURGXFWLRQZKLFKFDQEHDWWULEXWHG
GLUHFWO\WRWKHPDQXIDFWXULQJSURFHVV$GPLQLVWUDWLYHFRVWVDQGFRVWVUHODWLQJWRVRFLDOVHFXULW\DUHWDNHQ
LQWRDFFRXQWLIWKH\DUHWREHDOORFDWHGWRSURGXFWLRQ7KHLQYHQWRU\ULVNVZKLFKUHVXOWIURPDORZHUQHW
UHDOLVDEOHYDOXHIURPWKHSHULRGRIVWRUDJHLQYHQWRU\VKULQNDJHHWFDUHWDNHQLQWRDFFRXQWE\PHDQVRI
GHYDOXDWLRQ,IWKHUHDVRQVZKLFKKDYHOHGWRDGHYDOXDWLRQRILQYHQWRULHVQRORQJHUDSSO\WKHRULJLQDO
YDOXHLVUHLQVWDWHG
%\FRQWUDVWZLWKWKHSUHYLRXV\HDUVSLULWSURGXFWVZKLFKKDYHQRW\HWUHDFKHGPDWXULW\DUHUHSRUWHG
LQZRUNLQSURJUHVVUDWKHUWKDQLQUDZPDWHULDOVVXSSOLHVDQGSXUFKDVHGJRRGV)RUUHDVRQVRI
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
FRPSDULVRQWKHSUHYLRXV\HDUpVILJXUHRI(85WKRXVDQGZDVDGMXVWHGFI1RWH$FFRUGLQJO\WKH
FKDQJHVWRLQYHQWRULHVFI1RWHDQGWKHFRVWRIPDWHULDOVFI1RWHIRUWKHSUHYLRXV\HDUZHUH
DGMXVWHGE\WKLVDPRXQW
&DVKDQGFDVKHTXLYDOHQWV
&DVKDQGFDVKHTXLYDOHQWVLQFOXGHKDUGFDVKVLJKWGHSRVLWVDQGRWKHUVKRUWWHUPQHDUFDVKILQDQFLDO
DVVHWVZLWKDQRULJLQDOWLPHWRPDWXULW\RIDPD[LPXPRIWKUHHPRQWKV
'HIHUUHGWD[FODLPVDQGGHIHUUHGWD[OLDELOLWLHV
'HIHUUHGWD[HVDUHGHWHUPLQHGLQDFFRUGDQFHZLWK,$6UHYLVHG,QDFFRUGDQFHZLWKWKLV
SUREDEOHWD[EHQHILWVDQGWD[EXUGHQVDULVLQJLQWKHIXWXUHDUHUHSRUWHGLQWKHEDODQFHVKHHWIRU
WHPSRUDU\GLIIHUHQFHVEHWZHHQWKHERRNYDOXHVUHSRUWHGLQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDQG
WKHWD[YDOXDWLRQRIDVVHWVDQGOLDELOLWLHV([SHFWHGWD[VDYLQJVIURPWKHXVHRIWD[ORVVFDUU\IRUZDUGV
HVWLPDWHGDVEHLQJUHDOLVDEOHLQWKHIXWXUHDUHFDSLWDOLVHG
'HIHUUHGWD[HVRQWKHDVVHWVVLGHUHVXOWLQJIURPGHGXFWLEOHWHPSRUDU\GLIIHUHQFHVDQGWD[ORVV
FDUU\IRUZDUGVWKDWH[FHHGWKHGHIHUUHGWD[HVRQWKHOLDELOLWLHVVLGHUHVXOWLQJIURPWHPSRUDU\GLIIHUHQFHV
RQZKLFKWD[LVWREHSDLGDUHRQO\UHSRUWHGWRWKHH[WHQWWKDWLWFDQEHDFFHSWHGZLWKVXIILFLHQW
SUREDELOLW\WKDWHQRXJKWD[DEOHLQFRPHZLOOEHREWDLQHGWRUHDOLVHWKHFRUUHVSRQGLQJEHQHILW
$FFUXDOV
7KHDFWXDULDOYDOXDWLRQRIWKHSHQVLRQDFFUXDOVIRUWKHFRPSDQ\SHQVLRQVFKHPHWDNHVSODFHLQ
DFFRUGDQFHZLWKWKHSURMHFWHGXQLWFUHGLWPHWKRGVSHFLILHGLQ,$6UHYLVHG7KHGHILQHGEHQHILW
REOLJDWLRQ'%2LVGHWHUPLQHGHYHU\\HDUE\DQLQGHSHQGHQWDFWXDULDOH[SHUWXVLQJWKHH[SHFWDQF\
PHWKRG7KHSUHVHQWYDOXHRIWKH'%2LVGHWHUPLQHGE\GLVFRXQWLQJWKHH[SHFWHGIXWXUHRXWIORZVZLWK
WKHLQWHUHVWUDWHRILQGXVWULDOORDQVRIWKHKLJKHVWILQDQFLDOVWDQGLQJDQGWKHFRUUHVSRQGLQJOLIHVSDQ
RIWKHSHQVLRQREOLJDWLRQV,QWKLVDPRXQWHGWR$FWXDULDOJDLQVDQGORVVHVEDVHG
RQDGDSWDWLRQVGHYHORSHGIURPH[SHULHQFHDQGFKDQJHVLQDFWXDULDODVVXPSWLRQVDUHUHFRJQLVHGLQ
LQFRPHYHUWKHDYHUDJHUHPDLQLQJVHUYLFHWLPHRIWKHDVVHWVLQWKHFXUUHQWSHULRGDVDFRPSRQHQWRIWKH
SHQVLRQH[SHQVHVVKRZQLQWKHVWDWHPHQWRIHDUQLQJVLIWKH\DUHRXWVLGHDUDQJHRIRIWKHVFRSHRI
REOLJDWLRQ
2WKHUDFFUXDOVIRUSDUWWLPHSHQVLRQVDUHIRUPHGRQWKHEDVLVRIDFWXDULDOUHSRUWVZKLFKWDNHLQWR
DFFRXQWDVWKHEDVLVIRUFDOFXODWLRQWKHq$FWXDULDO7DEOHV*rE\.ODXV+HXEHFNIURPDQGDQ
LQWHUHVWUDWHRI
3D\PHQWVZKHQWKHZRUNLQJUHODWLRQVKLSFRPHVWRDQHQGDUHPDGHLIDQHPSOR\HHLVPDGHUHGXQGDQW
EHIRUHWKHVWDQGDUGUHWLUHPHQWDJHRUDQHPSOR\HHVWRSVZRUNLQJYROXQWDULO\IRUDOXPSVXPSD\PHQW
%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWLQFOXGHVOXPSVXPSD\PHQWVLILWFDQEHSURYHGWKHUHLVDQ
REOLJDWLRQWRHQGWKHFRQWUDFWRIHPSOR\PHQWRIFXUUHQWHPSOR\HHVLQDFFRUGDQFHZLWKDGHWDLOHGIRUPDO
SODQZKLFKFDQQRWEHPDGHUHWURVSHFWLYHO\
,QFRPHWD[DFFUXDOVFRQWDLQREOLJDWLRQVUHVXOWLQJIURPFXUUHQWLQFRPHWD[HV
2WKHUDFFUXDOVWDNHLQWRDFFRXQWFXUUHQWREOLJDWLRQVWRWKLUGSDUWLHVZKLFKUHODWHWRSDVWREOLJDWLRQVDQG
ZKLFKZLOOSUREDEO\UHVXOWLQDQRXWIORZRIUHVRXUFHVLQWKHIXWXUHWKHDPRXQWRIZKLFKFDQEHUHOLDEO\
HVWLPDWHG7KHDFFUXDOVDUHUHSRUWHGZLWKWKHLUVHWWOHPHQWDPRXQW/RQJWHUPDFFUXDOVDUHUHSRUWHG
ZLWKWKHLUGLVFRXQWHGVHWWOHPHQWDPRXQWRQWKHEDODQFHVKHHWGDWH$FFUXDOVDUHQRWQHWWHGDJDLQVW
LQGHPQLILFDWLRQFODLPV
/LDELOLWLHV
/RQJWHUPOLDELOLWLHVDUHHQWHUHGLQWKHEDODQFHVKHHWDWWKHLUDPRUWLVHGFRVW'LIIHUHQFHVEHWZHHQ
KLVWRULFDFTXLVLWLRQFRVWVDQGWKHUHSD\PHQWDPRXQWDUHWDNHQLQWRDFFRXQWLQDFFRUGDQFHZLWKWKH
HIIHFWLYHUDWHPHWKRG
6KRUWWHUPOLDELOLWLHVDUHUHSRUWHGZLWKWKHLUUHSD\PHQWRUVHWWOHPHQWDPRXQWV3OHDVHDOVRUHIHUWRWKH
QRWHVRQDFFRXQWLQJDQGYDOXDWLRQRIWKHILQDQFLDODVVHWV
)LQDQFLDOOLDELOLWLHVIURPILQDQFLDOOHDVHDUUDQJHPHQWVDUHLQGLFDWHGZLWKWKHSUHVHQWYDOXHRIWKHOHDVH
UDWHV
7KHVSLULWVDQGLPSRUWGXWLHVDQGWD[HVDUHFDUULHGDVOLDELOLWLHVIRUWKHDPRXQWRIWKHREOLJDWLRQVWRWKH
SULQFLSDOFXVWRPKRXVHVDQGDUHVKRZQLQDVHSDUDWHLWHPZLWKDYLHZWRLPSURYLQJWKHFODULW\RIWKH
FRQVROLGDWHGILQDQFLDOVWDWHPHQWV
&RQWLQJHQWOLDELOLWLHV
&RQWLQJHQWOLDELOLWLHVDUHQRWUHFRUGHGLQWKHEDODQFHVKHHW7KLVLVEHFDXVHWKH\UHSUHVHQWOLDELOLWLHV
ZKLFKUHVXOWIURPSDVWHYHQWVWKHH[LVWHQFHRIZKLFKKRZHYHUGHSHQGVRQDQXPEHURIXQFHUWDLQHYHQWV
ZKLFKFDQQRWEHFRQWUROOHGE\WKH&RPSDQ\$QH[LVWLQJREOLJDWLRQOHDGVZLWKDSUREDELOLW\RIOHVVWKDQ
WRDQRXWIORZRIUHVRXUFHV7KHFRQWLQJHQWOLDELOLWLHVDUHLQGLFDWHGLQWKHDSSHQGL[XQGHUQRWH
)RUHLJQFXUUHQFLHV
5HFHLYDEOHVDQGOLDELOLWLHVLQIRUHLJQFXUUHQFLHVDUHYDOXHGXVLQJWKHH[FKDQJHUDWHLQIRUFHRQWKHGD\RI
WKHEXVLQHVVWUDQVDFWLRQ*DLQVDQGORVVHVUHVXOWLQJIURPH[FKDQJHUDWHFKDQJHVXSWRWKHEDODQFHVKHHW
GDWHDUHLILPSRUWDQWWDNHQLQWRDFFRXQW7KHUHDUHQRSHQGLQJWUDQVDFWLRQVLQFRQQHFWLRQZLWKKHGJLQJ
PHDVXUHV
&HQWUDOJRYHUQPHQWH[SHQGLWXUH
,QDFFRUGDQFHZLWK,$6LQYHVWPHQWVXEVLGLHVDQGERQXVHVDUHWDNHQLQWRDFFRXQWDVD
UHGXFWLRQRIDFTXLVLWLRQDQGPDQXIDFWXULQJFRVWV
$VVXPSWLRQVDQGHVWLPDWHV
:KHQSUHSDULQJWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDVVXPSWLRQVKDYHEHHQPDGHDQGHVWLPDWHV
DSSOLHGZKLFKKDYHDQHIIHFWRQWKHVWDWHPHQWDQGDPRXQWRIWKHEDODQFHVKHHWDVVHWVOLDELOLWLHV
LQFRPHH[SHQGLWXUHDQGDQ\FRQWLQJHQWOLDELOLWLHV
7KHVHDVVXPSWLRQVDQGHVWLPDWHVSULPDULO\UHODWHWRMXGJHPHQWVUHJDUGLQJWKHYDOXHRILQWDQJLEOH
DVVHWVWKHGHWHUPLQDWLRQIRUWKH*URXSDVDZKROHRIHFRQRPLFXVHIXOOLYHVWKHUHFRYHUDELOLW\RI
UHFHLYDEOHVWKHEDODQFLQJDQGYDOXDWLRQRIDFFUXDOVDVZHOODVWKHUHDOLVDELOLW\RIIXWXUHWD[EXUGHQV
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
7KHSUHVHQWYDOXHRIWKHSHQVLRQREOLJDWLRQVGHSHQGVRQDQXPEHURIIDFWRUVZKLFKDUHEDVHGRQ
DFWXDULDODVVXPSWLRQV7KHDVVXPSWLRQVXVHGZKHQGHWHUPLQLQJWKHQHWH[SHQVHVDQGQHWLQFRPH
IRUSHQVLRQVLQFOXGHVWKHH[SHFWHGGLVFRXQWUDWH%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWGHWHUPLQHV
WKHDSSURSULDWHGLVFRXQWUDWHDWWKHHQGRIHDFK\HDU7KLVLVWKHLQWHUHVWUDWHZKLFKZLOOEHXVHGZKHQ
GHWHUPLQLQJWKHSUHVHQWYDOXHRIWKHH[SHFWHGIXWXUHFDVKLQIORZVIRUFRPSDULVRQZLWKWKHREOLJDWLRQ
2WKHUPDWHULDODVVXPSWLRQVZLWKSHQVLRQREOLJDWLRQVDUHEDVHGRQSUHYDLOLQJPDUNHWFRQGLWLRQV
7KHDVVXPSWLRQVDQGHVWLPDWLRQVDUHEDVHGRQSUHPLVHVLQDFFRUGDQFHZLWKWKHFXUUHQWVWDWHRI
NQRZOHGJHLQHDFKFDVH7KHDFWXDOYDOXHVFDQGHYLDWHLQLQGLYLGXDOFDVHVIURPWKHDVVXPSWLRQVDQG
HVWLPDWHVPDGH&KDQJHVDUHUHFRJQLVHGDVLQFRPHZKHQNQRZOHGJHLPSURYHVDQGKDVDQHIIHFWWKH
RSHUDWLQJUHVXOW
1RWHVWRWKH,)56EDODQFHVKHHW
'HYHORSPHQWRIFRQVROLGDWHGIL[HGDVVHWV
'HYHORSPHQWRIORQJWHUPDVVHWVLQWKHILQDQFLDO\HDU
$WHTXLW\
2WKHU
7RWDO
,QWDQJLEOH
7DQJLEOH
YDOXHG
ILQDQFLDO
IL[HG
DVVHWV
DVVHWV
SDUWLFLSDWLRQV
DVVHWV
DVVHWV
$FTXLVLWLRQDQGPDQXIDFWXULQJFRVWV
$VDW
(85WKRXVDQG (85WKRXVDQG (85WKRXVDQG (85WKRXVDQG (85WKRXVDQG
$GGLWLRQV
'LVSRVDOV
5HFODVVLILFDWLRQ
7UDQVODWLRQHIIHFWV
$VDW
$FFUXHGGHSUHFLDWLRQ
$VDW
$OORFDWLRQV
5HFODVVLILFDWLRQ
7UDQVODWLRQHIIHFWV
'LVSRVDO
$VDW
1HWERRNYDOXHV
1HWERRNYDOXHV
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
,QWDQJLEOHDVVHWV
'HYHORSPHQWRILQWDQJLEOHDVVHWVLQWKHILQDQFLDO\HDU
/LFHQFHVWUDGHPDUNVDQG
SDWHQWVHWFDVZHOODVOLFHQFHV
WRVXFKULJKWVDQGDVVHWV
(85WKRXVDQG
$FTXLVLWLRQDQGPDQXIDFWXULQJFRVWV
$VDW
$GGLWLRQV
'LVSRVDOV
5HFODVVLILFDWLRQ
7UDQVODWLRQHIIHFWV
$VDW
FFUXHGGHSUHFLDWLRQ
$VDW
$OORFDWLRQV
:ULWHXSV
'LVSRVDO
5HFODVVLILFDWLRQ
7UDQVODWLRQHIIHFWV
$VDW
1HWERRNYDOXHV
1HWERRNYDOXHV
,QGHWDLOWKHLQWDQJLEOHDVVHWVDUHFRPSULVHGDVIROORZV
%UDQGV
3XUFKDVHFRPPLWPHQWV
/LFHQFHV
2WKHULQWDQJLEOHDVVHWV
(85WKRXVDQG (85WKRXVDQG
7KHUHZDVQRGHSUHFLDWLRQUHTXLUHPHQWLQWKHILQDQFLDO\HDU
7KHEDVLVRIWKHFDOFXODWLRQZDVWKHSUHVHQWYDOXHRIWKHIXWXUHFDVKIORZEDVHGRQVKRUWDQGPHGLXP
WHUPSODQQLQJ7KHGLVFRXQWIDFWRUWRGHWHUPLQHWKHSUHVHQWYDOXHZDV
7KHUHDUHRZQHUVKLSDQGDYDLODELOLW\OLPLWDWLRQVIRULQWDQJLEOHDVVHWVLQWKHDPRXQWRI(85
WKRXVDQGSUHYLRXV\HDU(85WKRXVDQG7KLVUHODWHVWREUDQGVDVVLJQHGWRYDULRXVEDQNVIRU
FROODWHUDOSXUSRVHVIRUORQJWHUPEDQNOLDELOLWLHV7KHVHORDQVDUHH[WHQGHGWRWKHEDODQFHVKHHWGDWHRI
'HFHPEHUZLWK(85WKRXVDQGSUHYLRXV\HDU(85WKRXVDQG
7DQJLEOHDVVHWV
'HYHORSPHQWRIWDQJLEOHDVVHWVLQWKHILQDQFLDO\HDU
/DQGVLPLODU
ULJKWVDQGEXLO
GLQJVLQFOXGLQJ
2WKHU
$GYDQFH
EXLOGLQJVRQ
7HFKQLFDO
ODQGRZQHG
$FTXLVLWLRQDQGPDQXIDFWXULQJFRVWV
HTXLSPHQW SD\PHQWVDQG
HTXLSPHQW RIILFHIXUQLWXUH
DVVHWVXQGHU
7RWDOWDQJLEOH
E\RWKHUV DQGPDFKLQHU\ DQGHTXLSPHQW
FRQVWUXFWLRQ
DVVHWV
(85WKRXVDQG (85WKRXVDQG (85WKRXVDQG (85WKRXVDQG (85WKRXVDQG
$GGLWLRQV
'LVSRVDOV
$VDW
5HFODVVLILFDWLRQ
7UDQVODWLRQHIIHFWV
$VDW
$FFUXHGGHSUHFLDWLRQ
$VDW
$OORFDWLRQV
'LVSRVDO
$VDW
1HWERRNYDOXHV
1HWERRNYDOXHV
5HFODVVLILFDWLRQ
7UDQVODWLRQHIIHFWV
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
6LJQLILFDQWDGGLWLRQVWRIL[HGDVVHWVLQWKHUHSRUWLQJ\HDULQFOUHFODVVLILFDWLRQVIURPDVVHWVXQGHU
FRQVWUXFWLRQ
/DQGVLPLODU
7HFKQLFDO
ULJKWVDQG
2SWLPLVDWLRQRIERWWOLQJSODQWV0LQGHQ
QHZIORRU
2WKHU
$GYDQFH
HTXLSPHQW SD\PHQWVDQG
HTXLSPHQW RIILFHIXUQLWXUH
DVVHWVXQGHU
EXLOGLQJV DQGPDFKLQHU\ DQGHTXLSPHQW
FRQVWUXFWLRQ
(85WKRXVDQG (85WKRXVDQG (85WKRXVDQG (85WKRXVDQG
'HSDOOHWLVDWLRQ
&RQQHFWLRQRIWZROLQHV
%RWWOHWUDQVSRUW
3DFNDJLQJSODQW
%R[WUDQVSRUW
3DOOHWLVDWLRQ
/DEHOOLQJPDFKLQHFROGDGKHVLYHPDFKLQH
GLVSHQVLQJXQLW
3(7GLVSRVDEOHSDFNDJLQJSODQW
5HFWLI\LQJSODQW
(PSWLHVERWWOHVDQGFDVHV
([WHQVLRQRIZDWHUWUHDWPHQW
,VRILOOERWWOHU
&RQWDLQHUVIRUHPSWLHV
:DUHKRXVH*UØQHEHUJ
5RRILQJRIUDLOORDGLQJVWDWLRQ0LQGHQ
'LVSHQVHUV
2WKHU
,QWKHUHSRUWLQJSHULRG%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWUHFHLYHGDQLQYHVWPHQWLQIORZIURP
WKHVWDWHIRUDUDLOORDGLQJVWDWLRQLQ0LQGHQDPRXQWLQJWR(85WKRXVDQGSUHYLRXV\HDU(85
WKRXVDQG
9LYDULV*HWUÀQNH*PE+&R.*UHFHLYHGIRULWV*UØQHEHUJ%UDQGHQEXUJIDFLOLWLHVDOORFDWLRQVIRUDVVHWV
IURPWKHVWDWHWRWKHDPRXQWRI(85WKRXVDQGSUHYLRXV\HDU(85WKRXVDQG,QDFFRUGDQFH
ZLWK,$6WKHVHDOORFDWLRQVDUHGHGXFWHGZKHQGHWHUPLQLQJWKHDVVHWVRIWKHLQGLYLGXDOLWHPVLQWKH
WDQJLEOHDVVHWVDQGWKXVGLVWULEXWHGRYHUWKHOLIHVSDQRIWKHGHSUHFLDEOHDVVHWV
7KHUHDUHDYDLODELOLW\UHVWULFWLRQVLQWKHIRUPRIPRUWJDJHVDQGDVVLJQPHQWDVVHFXULW\IRULWHPV
FRQWDLQHGLQWDQJLEOHDVVHWVDPRXQWLQJWR(85WKRXVDQGSUHYLRXV\HDU(85WKRXVDQG
7KLVUHODWHVWRPRUWJDJHVJLYHQWRYDULRXVEDQNVIRUSXUSRVHVRIFROODWHUDOIRUORQJWHUPEDQNOLDELOLWLHV
$VDWWKHEDODQFHVKHHWGDWHWKHVHZHUHYDOXHGDW(85WKRXVDQGSUHYLRXV\HDU(85
WKRXVDQG
)LQDQFLDOOHDVHV
,Q%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWWKHUHDUHYDULRXVOHDVHDUUDQJHPHQWVZKLFKDUHFODVVLILHGDV
ILQDQFLDOOHDVHVGXHWRWKHVWUXFWXUHRIWKHDJUHHPHQWVDQGWKXVDUHWREHUHSRUWHGXQGHUIL[HGDVVHWV
7KHVHOHDVHDUUDQJHPHQWVDUHJHQHUDOO\FRQFOXGHGIRUDEDVLFWHUPRIEHWZHHQDQG\HDUVDQGDIWHU
WKHH[SLU\RIWKHEDVLFWHUPSURYLGHIRUWKHRSWLRQRIH[WHQGLQJWKHDJUHHPHQWRUWDNLQJRQWKHREMHFWRI
WKHOHDVHDWLWVFXUUHQWPDUNHWYDOXHRUDWDPRUHIDYRXUDEOHYDOXH7KHWUDQVIHURISURSHUW\LVVRPHWLPHV
DOVRDXWRPDWLF7KHLQWHUHVWUDWHVIRUPLQJWKHEDVLVRIWKHDJUHHPHQWVYDU\DFFRUGLQJWRWKHWLPHWKH
DJUHHPHQWZDVVLJQHG
$VVHWVZKLFKDUHXVHGDVSDUWRIWKHILQDQFLDOOHDVHDUUDQJHPHQWVDUHUHFRUGHGLQWKHWDQJLEOHIL[HG
DVVHWVZLWKDERRNYDOXHRI(85WKRXVDQGSUHYLRXV\HDU(85WKRXVDQG
)LQDQFLDOOHDVHDUUDQJHPHQWV
0LQLPXPOHDVHSD\PHQWV
7RWDO
3UHVHQWYDOXH
(85WKRXVDQG (85WKRXVDQG
8SWRRQH\HDU
%HWZHHQRQHDQGILYH\HDUV
$IWHUPRUHWKDQILYH\HDUV
)XWXUHILQDQFLQJFRVWVIURPILQDQFLDOOHDVHDUUDQJHPHQWV
3UHVHQWYDOXHRIWKHPLQLPXPOHDVHSD\PHQWVIURPILQDQFLDOOHDVHDUUDQJHPHQWV
7RWDO
3UHVHQWYDOXH
3UHVHQWYDOXHRIWKHPLQLPXPOHDVHSD\PHQWV
(85WKRXVDQG (85WKRXVDQG
8SWRRQH\HDU
%HWZHHQRQHDQGILYH\HDUV
$IWHUPRUHWKDQILYH\HDUV
3UHVHQWYDOXHRIWKHPLQLPXPOHDVHSD\PHQWVIURPILQDQFLDOOHDVHDUUDQJHPHQWV
2QHLPSRUWDQWOHDVHDUUDQJHPHQWLQLVDILOOLQJSURGXFWLRQOLQHIRUDOFRKROIUHHEHYHUDJHV
,QILQDQFLDOOHDVHSD\PHQWVDPRXQWHGWR(85WKRXVDQG'HSUHFLDWLRQDPRXQWHGWR(85
WKRXVDQG/HDVHSD\PHQWVIRUWKHIROORZLQJ\HDUDPRXQWWR(85WKRXVDQG
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
2SHUDWLQJOHDVHV
,QDGGLWLRQWRILQDQFLDOOHDVHDUUDQJHPHQWVWKHUHDUHYDULRXVUHQWDORUOHDVHDUUDQJHPHQWVWKDWDUH
FODVVLILHGDVRSHUDWLQJOHDVHVGXHWRWKHLUHFRQRPLFQDWXUH,QWKHFXUUHQW\HDU(85WKRXVDQG
SUHYLRXV\HDU(85WKRXVDQGRIUHQWDODQGOHDVHH[SHQVHVZHUHSDLGIRURSHUDWLQJOHDVH
DUUDQJHPHQWV)RUWKHIROORZLQJ\HDUOHDVHSD\PHQWVRI(85WKRXVDQGSUHYLRXV\HDU(85
WKRXVDQGDUHH[SHFWHG7KHLPSRUWDQWOHDVHDUUDQJHPHQWVFRQFHUQFRPSDQ\FDUVVRPHKLJKOLIWWUXFNV
VHYHUDOWHOHSKRQHLQVWDOODWLRQVDQGYDULRXVSKRWRFRSLHUV
$PRXQWDQGUHPDLQLQJWLPHWRPDWXULW\RIRSHUDWLQJOHDVHDUUDQJHPHQWV
(85WKRXVDQG (85WKRXVDQG
$PRXQWRIPLQLPXPOHDVHSD\PHQWVRIXSWRD\HDU
$PRXQWRIPLQLPXPOHDVHSD\PHQWVRIEHWZHHQRQHDQGILYH\HDUV
$PRXQWRIPLQLPXPOHDVHSD\PHQWVRIRYHUILYH\HDUV
7RWDORIPLQLPXPOHDVHSD\PHQWV
$WHTXLW\
7RWDODWHTXLW\
$WHTXLW\YDOXHGSDUWLFLSDWLRQV
'HYHORSPHQWRIWKHDWHTXLW\YDOXHGSDUWLFLSDWLRQVLQWKHILQDQFLDO\HDU
YDOXHG
YDOXHG
SDUWLFLSDWLRQV
SDUWLFLSDWLRQV
$FTXLVLWLRQDQGPDQXIDFWXULQJFRVWV
$VDW
(85WKRXVDQG (85WKRXVDQG
$GGLWLRQV
'LVSRVDOV
5HFODVVLILFDWLRQ
7UDQVODWLRQHIIHFWV
$VDW
$FFUXHGGHSUHFLDWLRQ
$VDW
$OORFDWLRQV
:ULWHXSV
'LVSRVDO
5HFODVVLILFDWLRQ
7UDQVODWLRQHIIHFWV
$VDW
1HWERRNYDOXHV
1HWERRNYDOXHV
7KHRQO\DWHTXLW\YDOXHGSDUWLFLSDWLRQUHSRUWHGLVWKHVKDUHLQ6XFUD$62VOR)RULWVSDUWWKH
ODWWHUKROGVRIWKHVKDUHVLQWKH$UFXV*UXSSHQ$6$2VOR6XFUD$6VROGWKHVHVKDUHVLQWKH
ILQDQFLDO\HDUDQGDVDUHVXOWRIWKHUHOLQTXLVKPHQWRIDFWLYHEXVLQHVVDFWLYLWLHVGLVWULEXWHGWR%HUHQW]HQ
*UXSSH$NWLHQJHVHOOVFKDIWWKHUHWDLQHGSUHYLRXV\HDUpVQHWHDUQLQJVRI(85WKRXVDQGSUHYLRXV
\HDUGLVWULEXWLRQVRI(85WKRXVDQGDQGFDSLWDOUHSD\PHQWVRI(85WKRXVDQG
,QWRWDOWKHVKDUHVLQDWHTXLW\YDOXHGSDUWLFLSDWLRQVGHYHORSHGDVIROORZV
(85WKRXVDQG (85WKRXVDQG
6WDUWRIWKH\HDU
6KDUHLQHDUQLQJV
'LVWULEXWLRQV
7UDQVODWLRQGLIIHUHQFHV
,PSDLUPHQWRIJRRGZLOO
(QGRIWKH\HDU
7KHHDUQLQJVIURPDWHTXLW\YDOXHGSDUWLFLSDWLRQVDUHDVIROORZV
(85WKRXVDQG (85WKRXVDQG
6KDUH
7UDQVODWLRQGLIIHUHQFHV
'HSUHFLDWLRQ
7KHVKDUHVRIWKH*URXSLQLWVSULQFLSDODWHTXLW\YDOXHGSDUWLFLSDWLRQV6XFUD$62VOR
1RUZD\ZKLFKLVQRWOLVWHGDUHDVIROORZV
$VVHWVLQ(85WKRXVDQG
/LDELOLWLHVLQ(85WKRXVDQG
6DOHVLQ(85WKRXVDQG
(DUQLQJVLQ(85WKRXVDQG
6KDUHLQ
7KURXJKWKHGLVSRVDORIWKHVKDUHVKHOGE\WKHDWHTXLW\YDOXHGSDUWLFLSDWLRQ68&5$$6LQWKH
FRPSDQLHVRIWKH$UFXV*URXSLQWKHDVVRFLDWHGEXVLQHVVDUHDZDVKHUHE\UHOLQTXLVKHGLQ
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
/RQJWHUPWUDGHUHFHLYDEOHV
(85WKRXVDQG (85WKRXVDQG
/RQJWHUPUHFHLYDEOHV
7KHORQJWHUPUHFHLYDEOHVRI(85WKRXVDQGEHDULQWHUHVWDWDQGDUHYDOXHGDWWKHLUQHWERRN
YDOXH7KH\IDOOGXHLQDSHULRGRIEHWZHHQDQG\HDUVSUHYLRXV\HDU(85WKRXVDQG
2WKHUILQDQFLDODVVHWV
'HYHORSPHQWRIRWKHUILQDQFLDODVVHWVLQWKHILQDQFLDO\HDU
9DOXHVLQ
(85WKRXVDQG
6KDUHVLQ
/RDQVWR
7RWDORWKHU
*URXS
*URXS
&RRSHUDWLYH
ILQDQFLDO
FRPSDQLHV
FRPSDQLHV
3DUWLFLSDWLRQV
2WKHUORDQV
6HFXULWLHV
VKDUHV
DVVHWV
$FTXLVLWLRQDQG
PDQXIDFWXULQJFRVWV
$VDW
$GGLWLRQV
'LVSRVDOV
$VDW
'LVSRVDO
$VDW
$FFUXHGGHSUHFLDWLRQ
$VDW
$OORFDWLRQV
1HWERRNYDOXHV
1HWERRNYDOXHV
q6KDUHVLQ*URXSFRPSDQLHVrGRQRWLQFOXGHQRQFRQVROLGDWHGJHQHUDOFRPSDQLHVDQG/DEHO
*PE+V,QWKHUHSRUWLQJ\HDUVHYHQFRPSDQLHVZHUHDFTXLUHGE\RUPHUJHGZLWK%HUHQW]HQ*UXSSH
$NWLHQJHVHOOVFKDIWIRUZKLFKDWRWDOERRNYDOXHRI(85WKRXVDQGZDVSRVWHGLQ6KDUHVLQ*URXS
FRPSDQLHVLQWKHSUHYLRXV\HDU(85WKRXVDQG
q2WKHUORDQVrFRQWDLQVPDQ\UHSD\PHQWORDQV
'HIHUUHGWD[FODLPV
7KHWD[HVRQLQFRPHSDLGRURZHGLQWKHLQGLYLGXDOFRXQWULHVDQGWKHGHIHUUHGWD[DFFUXDOVDQGGHIHUUDOV
DUHVKRZQDVWD[HVRQLQFRPH
7KHUHVXOWVEHIRUHWD[HVRQLQFRPHDQGWKHWD[HVRQLQFRPHDUHDSSRUWLRQHGDVIROORZVLQDFFRUGDQFH
ZLWKWKHLURULJLQ
(85WKRXVDQG (85WKRXVDQG
5HVXOWEHIRUHWD[HVRQLQFRPH
*HUPDQ\
2WKHUFRXQWULHV
3DLGDQGRURZHGWD[HV
*HUPDQ\RIZKLFKXQUHODWHGWRUHSRUWLQJSHULRG(85WKRXVDQG
2WKHUFRXQWULHVRIZKLFKXQUHODWHGWRUHSRUWLQJSHULRG(85WKRXVDQG
'HIHUUHGWD[HV
5HVXOWLQJIURPWLPHGLIIHUHQFHV
5HVXOWLQJIURPORVVFDUU\IRUZDUGV
5HVXOWLQJIURPXSYDOXDWLRQGHYDOXDWLRQ
5HVXOWLQJIURPUHYHUVDORIDQHDUOLHUGHYDOXDWLRQ
7D[HVRQLQFRPHLQVWDWHPHQWRIHDUQLQJV
,QWKHFXUUHQWILQDQFLDO\HDUFRUSRUDWLRQWD[H[SHQGLWXUHDQGWUDGHWD[H[SHQGLWXUHZHUHUHGXFHGE\XVLQJ
WD[ORVVFDUU\IRUZDUGVRI(85WKRXVDQGSUHYLRXV\HDU(85WKRXVDQGDQG(85WKRXVDQG
SUHYLRXV\HDU(85WKRXVDQGUHVSHFWLYHO\7KHUHDOLVDWLRQRIWD[ORVVFDUU\IRUZDUGVIURPSUHYLRXV
\HDUVUHVXOWHGLQLQDUHGXFWLRQRIWKHSDLGRURZHGLQFRPHWD[RI(85WKRXVDQGSUHYLRXV
\HDU(85WKRXVDQG
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
7KHGHIHUUHGWD[HVUHVXOWIURPWKHLQGLYLGXDOEDODQFHVKHHWLWHPVDVIROORZV
'HIHUUHGWD[HV
DVVHWV
$FFUXHGWD[HV 'HIHUUHGWD[HV
OLDELOLWLHV
DVVHWV
$FFUXHGWD[HV
OLDELOLWLHV
(85WKRXVDQG (85WKRXVDQG (85WKRXVDQG (85WKRXVDQG
$66(76
/RQJWHUPDVVHWV
7DQJLEOHDVVHWV
2WKHUILQDQFLDODVVHWV
,QWDQJLEOHDVVHWV
&XUUHQWDVVHWV
,QYHQWRULHV
6KRUWWHUPWUDGHUHFHLYDEOHV
2WKHUVKRUWWHUPDVVHWVORQJWHUP
DVVHWVKHOGIRUGLVSRVDO
/,$%,/,7,(6
/RQJWHUPOLDELOLWLHV
/RQJWHUPDFFUXDOV
6KRUWWHUPOLDELOLWLHV
&RUSRUDWLRQWD[ORVVFDUU\IRUZDUG
5HGXFWLRQDPRXQWORVVFDUU\IRUZDUG
7UDGHWD[ORVVFDUU\IRUZDUG
5HGXFWLRQDPRXQWORVVFDUU\IRUZDUG
2IZKLFKORQJWHUP
1HWWLQJ
'HYDOXDWLRQ
'HIHUUHGWD[HVRQWKHEDODQFHVKHHW
7KHWD[ORVVFDUU\IRUZDUGVVWLOOXQXVHGDVDW'HFHPEHUDQG'HFHPEHUDUHDVIROORZV
(85WKRXVDQG (85WKRXVDQG
)URPFRUSRUDWLRQWD[
)URPWUDGHWD[
1RGHIHUUHGWD[DVVHWVZHUHUHSRUWHGIRUORVVFDUU\IRUZDUGVLQWKHDPRXQWRI(85WKRXVDQGZLWK
FRUSRUDWLRQWD[DQG(85WKRXVDQGZLWKWUDGHWD[SUHYLRXV\HDU(85WKRXVDQGDQG(85
WKRXVDQGUHVSHFWLYHO\7KHUHLVQRWLPHOLPLWWRXVHWKHORVVFDUU\IRUZDUGVDFFRUGLQJWRWKH
FXUUHQWOHJLVODWLYHVLWXDWLRQ7KHDPRXQWRIGHGXFWLEOHWHPSRUDU\GLIIHUHQFHVZLWKRXWDFDSLWDOLVHGWD[
FODLPHTXDOV(85WKRXVDQGSUHYLRXV\HDU(85WKRXVDQG
7KHDFWXDOWD[H[SHQGLWXUHIRURI(85WKRXVDQGSUHYLRXV\HDU(85WKRXVDQGGHYLDWHV
E\(85WKRXVDQGSUHYLRXV\HDU(85WKRXVDQGIURPWKHH[SHFWHGWD[SURFHHGVRI(85
WKRXVDQGSUHYLRXV\HDU(85WKRXVDQGWD[H[SHQGLWXUHZKLFKZRXOGUHVXOWE\XVLQJDQH[SHFWHG
DYHUDJHWD[UDWHRQWKHSUHWD[UHVXOWVRIWKH*URXS
7KHUHDVRQVIRUWKHGLIIHUHQFHEHWZHHQWKHH[SHFWHGDQGDFWXDOWD[H[SHQGLWXUHLQFRPHLQWKH*URXSDUH
DVIROORZV
(85WKRXVDQG (85WKRXVDQG
&RQVROLGDWHGQHWLQFRPHORVVIRUWKH\HDUDIWHULQFRPHWD[HV
$FWXDOWD[HVRQLQFRPH
'HIHUUHGWD[HVRQLQFRPH
,QFRPHWD[H[SHQGLWXUH
5HVXOWEHIRUHWD[HVRQLQFRPH
7D[UDWHWREHXVHG
([SHFWHGWD[LQFRPHWD[H[SHQGLWXUH
&RPSHQVDWRU\DPRXQWDVWD[UHIXQGQRORQJHUDSSOLHV
7D[UHGXFWLRQVGXHWRWD[IUHHLQFRPHDPRQJRWKHUVDWHTXLW\YDOXHGVKDUHV
3DLGDQGRURZHGWD[HV
,QFRPHWD[H[SHQGLWXUHGXHWRGHIHUUHGWD[HV
7D[H[SHQGLWXUH
(IIHFWLYHWD[UDWHLQ
QD
7RFDOFXODWHWKHWD[UDWH
3HUFHQW
7D[EDVH
$YHUDJHWUDGHWD[
&RUSRUDWLRQWD[[
6ROLGDULW\VXUFKDUJH[
(TXDOVWD[UDWH
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
,QYHQWRULHV
5DZPDWHULDOV
6XSSOLHV
(85WKRXVDQG (85WKRXVDQG
3DFNDJLQJDQGSUHVHQWDWLRQPDWHULDO
5DZPDWHULDOVDQGVXSSOLHV
:RUNLQSURJUHVV
)LQLVKHGJRRGV
9DOXDWLRQDGMXVWPHQWVIRUILQLVKHGSURGXFWVQHWUHDOLVDEOHYDOXH
0HUFKDQGLVH
9DOXDWLRQDGMXVWPHQWVIRUPHUFKDQGLVHQHWUHDOLVDEOHYDOXH
)LQLVKHGSURGXFWVDQGJRRGV
,QYHQWRULHV
7KHPRUHYDOXDEOHVWRFNRIILQLVKHGJRRGVDQGZRUNLQSURJUHVVLVUHODWHGWRWKHVWRUDJHRIVSLULW
SURGXFWVZKLFKKDYHQRW\HWUHDFKHGPDWXULW\DVZHOODVWKHFDSLWDOLVDWLRQRIVSLULWVWD[OLDELOLWLHVIRU
VSLULWSURGXFWVLQWUDQVLWDVRIWKHUHSRUWLQJGDWH
6KRUWWHUPWUDGHUHFHLYDEOHV
*URVVLQYHQWRU\RIUHFHLYDEOHV
OHVVLQGLYLGXDOYDOXDWLRQDGMXVWPHQWV
7UDGHUHFHLYDEOHVtQHW
RIZKLFKORQJWHUPUHFHLYDEOHV
6KRUWWHUPVKDUH
(85WKRXVDQG (85WKRXVDQG
,QWKHODVWILQDQFLDO\HDULPSDLUPHQWVLQWKHDPRXQWRI(85WKRXVDQGSUHYLRXV\HDU(85
WKRXVDQGZHUHFDUULHGRXWRQWKHLQYHQWRU\RIWUDGHUHFHLYDEOHVDQGUHFRUGHGDVDIIHFWLQJH[SHQGLWXUH
DVWKHUHZHUHREMHFWLYHLQGLFDWLRQVWKDWWKHUHFHLYDEOHVDPRXQWVGXHZHUHQRWUHFRYHUDEOHLQIXOO
$VDWWKHEDODQFHVKHHWGDWHWUDGHUHFHLYDEOHVLQWKHDPRXQWRI(85WKRXVDQGSUHYLRXV\HDU
(85WKRXVDQGZHUHVROGWRD*HUPDQFRPPHUFLDOEDQNDVSDUWRIDIRUIDLWLQJDJUHHPHQW$V
WKHPDWHULDORSSRUWXQLWLHVDQGULVNVDVVRFLDWHGZLWKWKHGLVSRVDORIWKHUHFHLYDEOHVKDYHQRWEHHQ
WUDQVIHUUHGWKLVGRHVQRWOHDGWRDUHGXFWLRQRIWKHUHFHLYDEOHVVWDWHPHQW$VDWWKHEDODQFHVKHHWGDWH
WKHUHZDVDIDFWRULQJYROXPHRI(85WKRXVDQGSUHYLRXV\HDU(85WKRXVDQGZKLFKLQ
DFFRUGDQFHZLWK,$6DKDVFRUUHVSRQGLQJO\UHGXFHGWKHUHFHLYDEOHVSRVLWLRQ
&XUUHQWLQFRPHWD[FODLPV
(85WKRXVDQG (85WKRXVDQG
,QFRPHWD[FODLPVFRUSRUDWLRQWD[WUDGHWD[FDSLWDOJDLQVWD[
&UHGLWDEOHWD[
7KHFODLPVUHVXOWLQJIURPDFWXDOWD[HVIDOOGXHZLWKLQD\HDU
&DVKDQGFDVKHTXLYDOHQWV
(85WKRXVDQG (85WKRXVDQG
&DVKLQKDQGDQGDWEDQNV
6KRUWWHUPEDQNGHSRVLWV
,QDFFRUGDQFHZLWK,$6WKHILQDQFLDOIXQGVDUHH[SODLQHGLQWKHFRQVROLGDWHGIORZRIIXQGV
VWDWHPHQWDVIROORZV
(85WKRXVDQG (85WKRXVDQG
/LTXLGIXQGV
&DVKLQKDQG
&XUUHQWDFFRXQWFODLPVDJDLQVWEDQNV
7LPHGHSRVLWV
%DQNOLDELOLWLHVIDOOLQJGXHDWDQ\WLPH
&XUUHQWDFFRXQWFUHGLWV
7LPHGHSRVLWV
7KHWLPHGHSRVLWVDUHLQFOXGHGLQWKHILQDQFLDOIXQGVDVWKH\IRUPDQLQWHJUDOFRPSRQHQWRIWKHFDVK
PDQDJHPHQWDW%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWLQWKHVHQVHRI,$6
%\FRQWUDVWZLWKWKHSUHYLRXV\HDUpVILQDQFLDOVWDWHPHQWVWKHOLDELOLWLHVWRWKHIRUWDLVWDUHQRWUHSRUWHGLQ
ILQDQFLDOIXQGV7KHPDQDJHPHQWEHOLHYHVWKDWWKLVUHSRUWSURYLGHVPRUHUHOHYDQWLQIRUPDWLRQ
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
2WKHUVKRUWWHUPDVVHWV
(85WKRXVDQG (85WKRXVDQG
5HFHLYDEOHVIURPUHGXFWLRQLQSULFHRIVHFXULWLHVDQGIDFWRULQJ
5HLPEXUVHPHQWFODLPV
'HEWRUVZLWKFUHGLWEDODQFHV
$GYDQFHUHQWDOSD\PHQWV
5HFHLYDEOHIURPVSLULWVWD[SD\PHQWV
&ODLPVUHVXOWLQJIURPUHLQVXUDQFHSROLFLHV
&RPSHQVDWLRQSD\PHQWVIRUGLVWLOOLQJULJKWV
2WKHULWHPV
7KHRWKHUVKRUWWHUPDVVHWVDUHZLWKWKHH[FHSWLRQRIWKHqDGYDQFHUHQWDOSD\PHQWrDQGqFODLPV
UHVXOWLQJIURPUHLQVXUDQFHSROLFLHVrLWHPVSD\DEOHZLWKLQD\HDUDQGDUHWKHUHIRUHYDOXHGDWDFTXLVLWLRQ
FRVW
7KHDGYDQFHUHQWDOSD\PHQWVUHODWHWRDQDGYDQFHSD\PHQWPDGHLQIRUDUHQWDODJUHHPHQWZLWKD
WHUPRI\HDUV7KH\DUHUHYHUVHGE\PHDQVRILGHQWLFDODQQXDOLQVWDOPHQWV
/RQJWHUPDVVHWVKHOGIRUGLVSRVDO
(85WKRXVDQG (85WKRXVDQG
5HDOHVWDWHDVZHOODVDSURGXFWLRQIDFLOLW\
7HFKQLFDOHTXLSPHQW
,QWKHSUHYLRXV\HDUWKHFDWHJRU\q$VVHWVKHOGIRUVDOHrFRPSULVHGWZRUHDOHVWDWHSURSHUWLHVDQG
WHFKQLFDOHTXLSPHQW
7KHUHDOHVWDWHSURSHUWLHVDUHDWWZRIRUPHUSURGXFWLRQIDFLOLWLHVZKLFKKDYHQRZEHHQVKXWGRZQ,Q
WKHUHSRUWLQJ\HDUDUHDOHVWDWHSURSHUW\ZLWKDERRNYDOXHRI(85WKRXVDQGZDVVROG,QWKHYLHZ
RIWKHPDQDJHPHQWWKHRWKHULWHPRIUHDOHVWDWHQRORQJHUPHWWKHUHTXLUHPHQWVIRUFODVVLILFDWLRQLQ
DFFRUGDQFHZLWK,)56
7KHWHFKQLFDOIDFLOLWLHVUHSRUWHGXQGHU,)56LQZHUHGLVSRVHGRILQ-DQXDU\(DUO\UHOHDVH
IURPWKHOHDVLQJDJUHHPHQWUHTXLUHGH[SHQGLWXUHRI(85WKRXVDQG7KHUHZDVDOVRDOLDELOLW\RI(85
WKRXVDQGLQWKLVUHVSHFWVHH1RWHVRWKDWH[SHQGLWXUHLQWKHUHSRUWLQJ\HDUDPRXQWHGWR(85
WKRXVDQG
7KHDVVHWVUHSRUWHGLQWKHSHUYLRXV\HDUKDYHEHHQDOORFDWHGWRWKH6SLULWVVHJPHQW
6XEVFULEHGFDSLWDO
7KHVXEVFULEHGFDSLWDORI(85WKRXVDQGLVGLYLGHGLQWRRUGLQDU\VKDUHVDQGWKH
VDPHQXPEHURISUHIHUHQFHVKDUHVSUHYLRXV\HDURUGLQDU\VKDUHVDQGWKHVDPHQXPEHURI
SUHIHUHQFHVKDUHVZKLFKDUHLQWKHIRUPRIQRSDUVKDUHV
7KHRUGLQDU\VKDUHVDUHKHOGH[FOXVLYHO\E\WKH%HUHQW]HQ3DEVW5LFKDU]XQG:ROIIIDPLOLHV$OORUGLQDU\
VKDUHVDUHFRPELQHGLQWKH%HUHQW]HQVKDUHSRRO*E57KHUHPDLQLQJDXWKRULVHGFDSLWDODXWKRULVHVWKH
%RDUGRI'LUHFWRUVZLWKWKHDSSURYDORIWKH6XSHUYLVRU\%RDUGWRLQFUHDVHWKHHTXLW\FDSLWDOWRXSWR(85
PLOOLRQPD[LPXPE\0D\E\PHDQVRIRQHRUPRUHLVVXHVRIQHZRUGLQDU\EHDUHUVKDUHVDQG
RUQRQYRWLQJSUHIHUHQFHEHDUHUVKDUHVDJDLQVWSD\PHQWRIFDVKDQGRUQRQFDVKFDSLWDOFRQWULEXWLRQV
$UHVROXWLRQSDVVHGDWWKH$QQXDO*HQHUDO0HHWLQJRQ-XQHDXWKRULVHGWKH%RDUGRI'LUHFWRUVWR
DFTXLUHE\1RYHPEHUXSWRSUHIHUHQFHVKDUHVDQGWRHLWKHUUHVHOORUUHGHHPWKHVH
&DSLWDOUHVHUYHV
7KHFDSLWDOUHVHUYHVLQFOXGHWKHSUHPLXPUHVXOWLQJIURPWKHFDSLWDOLQFUHDVHVLQDQG,QWKH
ILQDQFLDO\HDU(85WKRXVDQGZDVZLWKGUDZQIURPWKHFDSLWDOUHVHUYHVDQGDOORFDWHGWRWKH
UHYHQXHUHVHUYHV
5HYHQXHUHVHUYHV
7KHUHYHQXHUHVHUYHVKDYHGHYHORSHGDVIROORZV
5HYHQXHUHVHUYHVRQ-DQXDU\
:LWKGUDZDOIURPWKHUHYHQXHUHVHUYHV
'LYLGHQG
'LIIHUHQFHUHVXOWLQJIURPFXUUHQF\FRQYHUVLRQ
&RQVROLGDWHGQHWLQFRPHORVV
5HYHQXHUHVHUYHVRQ'HFHPEHU
(85WKRXVDQG (85WKRXVDQG
,QWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVWKHFRQVROLGDWHGQHWORVVLQFRPHWKDWZDVJHQHUDWHGLQWKH
UHOHYDQW\HDUDOORFDWHGWRWKHFDSLWDOVXSSOLHUVLVDVVLJQHGWRWKHUHYHQXHUHVHUYHV
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
0LQRULW\VKDUHV
7KHEDODQFLQJLWHPIRUPLQRULWLHVLQWKHDPRXQWRI(85WKRXVDQGLVDWWULEXWDEOHWRWKHFRPSDQLHV
KHOGDVRWKHUILQDQFLDODVVHWVWKDWZHUHQRWLQFOXGHGLQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV$VSDUW
RIWKHFRPSDQ\ODZUHVWUXFWXULQJRIWKH%HUHQW]HQ*URXSLQWKHVKDUHVDWWULEXWDEOHWRPLQRULW\
VKDUHKROGHUVZHUHDFTXLUHGE\RUPHUJHGZLWK%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIW
6KRUWWHUPDFFUXDOV
7KHORQJWHUPDFFUXDOVDUHFRPSULVHGDVIROORZV
3HQVLRQDFFUXDOV
2WKHUORQJWHUPSURYLVLRQV
(85WKRXVDQG (85WKRXVDQG
3HQVLRQDFFUXDOV
3HQVLRQREOLJDWLRQVDQGVLPLODUREOLJDWLRQV
3HQVLRQDFFUXDOV
(85WKRXVDQG (85WKRXVDQG
7KHSHQVLRQREOLJDWLRQVUHODWHWRSD\PHQWVPDGHLQDFFRUGDQFHZLWKUHJXODWLRQVUHJDUGLQJWKHFRPSDQ\
SHQVLRQIXQG7KHUHDUHGHILQHGEHQHILWSODQV7KHIXQGSD\PHQWVDUHUHODWHGWRLQFRPHRUWLPHLQ
VHUYLFHLQDFFRUGDQFHZLWKWKHUHVSHFWLYHSD\PHQWSODQV1HZHPSOR\HHVGRQRWUHFHLYHDQ\SD\PHQWV
IURPWKHFRPSDQ\SHQVLRQSODQ
7KHREOLJDWLRQVDUHYDOXHGRQWKHEDVLVRIDFWXDULDOUHSRUWV7KH\DUHFDOFXODWHGXVLQJDQDVVXPHG
LQWHUHVWUDWHRISDSUHYLRXV\HDUSDDVDODU\JURZWKRISDSUHYLRXV\HDUSD
DQGDQLPSXWHGDGMXVWPHQWUDWHIRUDQQXLWLHVRISDSUHYLRXV\HDUSD7KHDFWXDULDO
YDOXDWLRQVIRUWKHDQGILQDQFLDO\HDUVDUHEDVHGRQWKH$FWXDULDO7DEOHV*RI.ODXV
+HXEHFN
7KHFKDQJHVLQWKHSURMHFWHGXQLWFUHGLWRIWKHSHQVLRQFRPPLWPHQWVDUHDVIROORZV
3HQVLRQFRPPLWPHQWDWWKHVWDUWRIWKH\HDU
([SHQGLWXUHIRUSHQVLRQFODLPVPDGHLQWKHILQDQFLDO\HDU
(85WKRXVDQG (85WKRXVDQG
%XGJHWFKDQJHV
%XGJHWVHWWOHPHQWV
$GGLWLRQRILQWHUHVWWRSHQVLRQFODLPVUHFHLYHGLQSUHYLRXV\HDUV
%XGJHWFXWV
$FWXDULDOJDLQVORVVHV
3HQVLRQEHQHILWVSDLGRXW
%XGJHWDVVHWVDWIDLUYDOXH
%XGJHWDVVHWVDWWKHVWDUWRIWKH\HDU
$FWXDOLQFRPHIURPEXGJHWDVVHWV
(PSOR\HUFRQWULEXWLRQV
3HQVLRQEHQHILWVSDLGRXW
%XGJHWDVVHWVDWWKHHQGRIWKH\HDU
3HQVLRQFRPPLWPHQWDWWKHHQGRIWKH\HDU
1HWDVVHWVREOLJDWLRQV
$GMXVWPHQWDPRXQWGXHWRQRQUHDOLVHGDFWXDULDOJDLQVORVVHV
1HWEDODQFHVKHHWREOLJDWLRQVDWWKHHQGRIWKH\HDU
7RWDOSHQVLRQFRPPLWPHQWV
2WKHUORQJWHUPSURYLVLRQV
7KHIROORZLQJDFFUXDOVDUHVKRZQVHSDUDWHO\DVRWKHUORQJWHUPDFFUXDOVLQWKH,)56EDODQFHVKHHW
(85WKRXVDQG (85WKRXVDQG
3DUWLDOUHWLUHPHQW
$QQLYHUVDU\H[SHQVHV
7KHUHLVDQDFWXDULDOUHSRUWGDWHG'HFHPEHUDYDLODEOHIRUSDUWLDOUHWLUHPHQWEHQHILWV7KH
YDOXDWLRQLVEDVHGRQWKH$FWXDULDO7DEOHV*E\.ODXV+HXEHFNDQGDQDVVXPHGLQWHUHVWUDWHRI
%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWKDVGHFLGHGWRIRUPORQJWHUPDFFUXDOVRQO\IRUFRQFOXGHG
DJUHHPHQWV%RWKWKHEORFNPRGHODQGWKHXQLIRUPGLVWULEXWLRQPRGHODUHXVHG
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
/RQJWHUPILQDQFLDOOLDELOLWLHV
(85WKRXVDQG (85WKRXVDQG
/RQJWHUPOLDELOLWLHVWREDQNV!XSWR\HDUV
/RQJWHUPOLDELOLWLHVWREDQNV\HDU
/HDVLQJOLDELOLWLHV!WR\HDUV
7KHOLDELOLWLHVUHVXOWLQJIURPOHDVLQJFRYHUWKHEDVLFUHQWVWREHSDLGGXULQJWKHWHUPRIWKHDJUHHPHQW
DQGUHVLGXDOYDOXHJXDUDQWHHVRIWKHOHVVHH
7KHORQJWHUPOLDELOLWLHVWREDQNVDVDW'HFHPEHUDUHDQQXLWLHVDQGDPRUWLVDEOHORDQVZLWK
LQWHUHVWUDWHVIOXFWXDWLQJEHWZHHQDQG
%UHDNGRZQ
0DWXULW\
(85WKRXVDQG (85WKRXVDQG
'HIHUUHGWD[OLDELOLWLHV
)RUDQH[SODQDWLRQRIWKHGHIHUUHGWD[OLDELOLWLHVSOHDVHVHHWKHWDEOHXQGHU1RWH
/LDELOLWLHVIURPVSLULWVWD[
6SLULWVWD[DQGLPSRUWGXWLHV
(85WKRXVDQG (85WKRXVDQG
7KLVFRQFHUQVWKHVSLULWVWD[DQQRXQFHGIRU'HFHPEHUZKLFKLVSD\DEOHRQ)HEUXDU\RIWKHIROORZLQJ
\HDUGXHWRWKHVSLULWVPRQRSRO\ODZ
6KRUWWHUPSURYLVLRQV
6KRUWWHUPSURYLVLRQVEUHDNGRZQDVIROORZV
7D[SURYLVLRQV
(85WKRXVDQG (85WKRXVDQG
2WKHUVKRUWWHUPSURYLVLRQV
7D[SURYLVLRQV
%UHDNGRZQ
(85WKRXVDQG (85WKRXVDQG
7UDGHLQFRPHWD[
3URSHUW\WD[
2WKHU
2WKHUVKRUWWHUPSURYLVLRQV
%UHDNGRZQ
/LWLJDWLRQULVNV
3URYLVLRQIRURQHURXVFRQWUDFWVUHODWLQJWRLQWHUHVWUDWHKHGJLQJ
(85WKRXVDQG (85WKRXVDQG
2WKHU
7KHSURYLVLRQIRUOLWLJDWLRQULVNVKDVEHHQUHYHUVHGVLQFHWKHRSSRVLWHSDUW\LVQRORQJHUSXUVXLQJWKH
FODLPV
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
6WDWHPHQWRIFKDQJHVLQSURYLVLRQVLQDFFRUGDQFHZLWK,)56
2WKHU
2WKHU
3HQVLRQ
ORQJWHUP
7D[
VKRUWWHUP
REOLJDWLRQV
SURYLVLRQV
SURYLVLRQV
SURYLVLRQV
7RWDO
(85WKRXVDQG (85WKRXVDQG (85WKRXVDQG (85WKRXVDQG (85WKRXVDQG
$VDW
&RQVXPSWLRQ
$GGLWLRQV
$FFUXHGLQWHUHVW
5HYHUVDO
$VDW
6KRUWWHUPILQDQFLDOOLDELOLWLHV
/LDELOLWLHVWREDQNV\HDU
/LDELOLWLHVWRIRUIDLWLVW\HDU
/HDVLQJOLDELOLWLHV
(85WKRXVDQG (85WKRXVDQG
7UDGHSD\DEOHVDQGRWKHUOLDELOLWLHV
7KLVLWHPLQFOXGHVRWKHUDFFUXDOVLQDGGLWLRQWRWUDGHSD\DEOHV
7UDGHSD\DEOHV
(85WKRXVDQG (85WKRXVDQG
0DUNHWLQJDQGVDOHVOLDELOLWLHVDVZHOODVERQXVHV
/LDELOLWLHVIRULQFRPHWD[YDOXHDGGHGWD[DQGRWKHUWD[HV
%RWWOHGHSRVLWV
2XWVWDQGLQJVXSSOLHULQYRLFHV
/LDELOLWLHVWRHPSOR\HHV
/LDELOLWLHVIURPZDJHFRPSRQHQWVQRWUHODWLQJWRWKHSHULRG
6KRUWWHUPOLDELOLWLHVIURPILQDQFLDODVVHWV
6RFLDOVHFXULW\OLDELOLWLHV
(DUO\WHUPLQDWLRQRIFRQVXOWDQF\DJUHHPHQWV
2WKHU
7KHEDODQFHVKHHWDPRXQWVRIWUDGHSD\DEOHVFRUUHVSRQGWRWKHPDUNHWYDOXHV7KH\DUHGXHZLWKLQWZHO
YHPRQWKV&XUUHQWWD[OLDELOLWLHVDUHQRWUHSRUWHGVHSDUDWHO\6KRUWWHUPOLDELOLWLHVIURPILQDQFLDODVVHWV
DUHVKRUWWHUPOLDELOLWLHVWREDQNVDQGOLDELOLWLHVWR*URXSFRPSDQLHV
'HEWVGLUHFWO\UHODWHGWRDVVHWVKHOGIRUVDOHILQDQFLDOOLDELOLWLHV
(85WKRXVDQG (85WKRXVDQG
6KRUWWHUPILQDQFLDOOLDELOLWLHVLQDFFRUGDQFHZLWK,)56
6HH1RWH
6WDWHPHQWRIOLDELOLWLHVQRWLQFOXGLQJGHIHUUHGWD[OLDELOLWLHV
7LPHWRPDWXULW\
\HDU
\HDUV
7RWDO
!\HDUV
(85WKRXVDQG (85WKRXVDQG (85WKRXVDQG (85WKRXVDQG (85WKRXVDQG
/LDELOLWLHVIURPVSLULWVWD[
)LQDQFLDOOLDELOLWLHV
7UDGHSD\DEOHVDQG
RWKHUOLDELOLWLHV
3HQVLRQDQGVLPLODUREOLJDWLRQV
2WKHUORQJWHUPSURYLVLRQV
6KRUWWHUPSURYLVLRQV
7RWDOSURYLVLRQV
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
1RWHVWRWKHVWDWHPHQWRIHDUQLQJV
6DOHV
6DOHVSULPDULO\UHODWHWRWKH6SLULWVGLYLVLRQ2WKHURSHUDWLQJLQFRPHEUHDNVGRZQDVIROORZV
(85WKRXVDQG (85WKRXVDQG
6SLULWV
'RPHVWLF
2XWVLGH*HUPDQ\
/HVVVSLULWVWD[
6SLULWVVHJPHQWH[FOVSLULWVWD[
$OFRKROIUHH%HYHUDJHVVHJPHQW
&KDQJH
6DOHV
&KDQJHVLQLQYHQWRULHV
:RUNLQSURJUHVV
)LQLVKHGJRRGV
&KDQJHLQLQYHQWRULHV
(85WKRXVDQG (85WKRXVDQG (85WKRXVDQG
2WKHURSHUDWLQJLQFRPH
2WKHURSHUDWLQJLQFRPHEUHDNVGRZQDVIROORZV
(85WKRXVDQG (85WKRXVDQG
&KDUJHVFRVWUHLPEXUVHPHQWV
5HYHUVDORIOLDELOLWLHV
6DOHVRIUHXVDEOHERWWOHVDQGGHSRVLWVHWWOHPHQWV
,QFRPHIURPXVHRIYHKLFOHV
5HYHUVDORIDFFUXDOV
:DVWHUHF\FOLQJ
2WKHULQFRPHQRWUHODWHGWRWKHSHULRG
5HYHUVDORIYDOXDWLRQDOORZDQFHV
,QFRPHIURPWKHGLVSRVDORIDVVHWV
5HQWDOLQFRPH
,QFRPHIURPWKHVDOHFRQYHUVLRQRISDUWLFLSDWLRQV'6'
2WKHU
7KHDPRXQWRIH[FKDQJHGLIIHUHQFHVFRQWDLQHGLQRWKHURSHUDWLQJLQFRPHWRWDOOHG(85WKRXVDQG
&RVWRIPDWHULDOV
7KHFRVWRIPDWHULDOVEUHDNVGRZQDVIROORZV
&RVWVIRUUDZPDWHULDOVDQGVXSSOLHVDQGSXUFKDVHGJRRGV
&RVWVIRUSXUFKDVHGVHUYLFHV
(85WKRXVDQG (85WKRXVDQG
3HUVRQQHOFRVWV
3HUVRQQHOFRVWVEUHDNGRZQDVIROORZV
:DJHVDQGVDODULHV
6RFLDOVHFXULW\FRQWULEXWLRQVDQGFRVWVIRUSHQVLRQVDQGVXSSRUW
(85WKRXVDQG (85WKRXVDQG
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
7KHQXPEHURIHPSOR\HHVLQWKH*URXSGHYHORSHGDVIROORZV
$QQXDODYHUDJH
<HDUHQG
6DODULHGHPSOR\HHV
,QGXVWULDOHPSOR\HHV
7UDLQHHVDQGDSSUHQWLFHV
%DVHGRQIXOOWLPHHTXLYDOHQWVWKHDQQXDODYHUDJHQXPEHURIHPSOR\HHVIHOOIURPWR
'HSUHFLDWLRQDQGDPRUWLVDWLRQRQDVVHWV
'HSUHFLDWLRQDQGDPRUWLVDWLRQEURNHGRZQDVIROORZV
6FKHGXOHGGHSUHFLDWLRQRQLQWDQJLEOHDVVHWVDQGIL[HGDVVHWV
'HSUHFLDWLRQRQFXUUHQWDVVHWV
,PSDLUPHQWRIDVVHWVKHOGIRUVDOH
(85WKRXVDQG (85WKRXVDQG
2WKHURSHUDWLQJH[SHQVHV
2WKHURSHUDWLQJH[SHQVHVPDLQO\FRQWDLQVFRVWVRIWKH6DOHVGLYLVLRQLQSDUWLFXODUIRUPDUNHWLQJDQG
DGYHUWLVLQJ7KHWRWDOLVPDGHXSDVIROORZV
(85WKRXVDQG (85WKRXVDQG
0DUNHWLQJLQFOXGLQJDGYHUWLVLQJ
2WKHUVDOHVFRVWV
0DLQWHQDQFH
5HQWDORIILFHDQGWUDQVDFWLRQFRVWV
q*UHHQ'RWrH[SHQVHV
)HHVFRQWULEXWLRQVDQGLQVXUDQFH
/HJDOFRQVXOWDQF\DQGDXGLWFRVWV
+LUHGVWDII
2WKHUWD[HV
2WKHU
7KHDPRXQWRIH[FKDQJHGLIIHUHQFHVFRQWDLQHGLQRWKHURSHUDWLQJH[SHQVHVWRWDOOHG(85WKRXVDQG
)LQDQFLDOUHVXOW
7KHILQDQFLDOUHVXOWLVDVIROORZV
,QFRPHIURPLQYHVWPHQWV
,QFRPHIURPVHFXULWLHVDQGORDQVIURPILQDQFLDODVVHWV
(85WKRXVDQG (85WKRXVDQG
2WKHULQWHUHVWDQGVLPLODULQFRPH
$PRUWLVDWLRQRQRWKHUILQDQFLDODVVHWV
,QWHUHVWDQGVLPLODUH[SHQVHV
&RVWVIURPORVVDVVXPSWLRQ
)LQDQFLDOUHVXOW
0LQRULW\LQWHUHVWV
6HH1RWH
(DUQLQJVSHUVKDUH
%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWKDVQRWLVVXHGDQ\VKDUHRSWLRQVRUFRQYHUWLEOHERQGV)RUWKLV
UHDVRQRQO\WKHGLOXWHGHDUQLQJVSHURUGLQDU\DQGSUHIHUHQFHVKDUHLVGHWHUPLQHG
'XULQJWKHILQDQFLDO\HDUWKHUHZDVQRFKDQJHLQWKHQXPEHURIRUGLQDU\DQGSUHIHUHQFHVKDUHV
$VLQDFFRUGDQFHZLWK,$6WKHZHLJKWHGDYHUDJHRIWKHFRPPHUFLDOO\DYDLODEOHRUGLQDU\VKDUHVRYHU
WKHFRXUVHRIWKHILQDQFLDO\HDUSOD\VDGHFLVLYHUROHLQGHWHUPLQLQJWKHXQGLOXWHGHDUQLQJVDILJXUHRI
FDQEHDVVXPHG
7KHUHDUHFXUUHQWO\QRSRWHQWLDOVKDUHV
,QDFFRUGDQFHZLWK$UWLFOHVXEVHFWLRQRIWKH$UWLFOHVRI$VVRFLDWLRQRI%HUHQW]HQ*UXSSH
$NWLHQJHVHOOVFKDIWLQWKHYHUVLRQGDWHG-XQHSUHIHUHQFHVKDUHKROGHUVUHFHLYHDFHQWKLJKHU
GLYLGHQGSHUSUHIHUHQFHVKDUHIURPWKHEDODQFHVKHHWSURILWWKDQRUGLQDU\VKDUHKROGHUVUHFHLYHSHU
RUGLQDU\VKDUH
7KHLQLWLDOYDOXHIRUFDOFXODWLQJWKHXQGLOXWHGHDUQLQJVSHUVKDUHLVWKHQHWSURILWIRUWKHSHULRGOHVV
PLQRULWLHV
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
7KHXQGLOXWHGHDUQLQJVSHURUGLQDU\DQGSUHIHUHQFHVKDUHLVFDOFXODWHGDVIROORZV
(85
(85
&RQVROLGDWHGQHWLQFRPHORVV
0LQRULWLHV
$GYDQFHGHGXFWLRQRIH[WUDGLYLGHQGIRUSUHIHUHQFHVKDUHKROGHUV
&RQVROLGDWHGQHWSURILWORVVIRUWKH\HDUDIWHUDGYDQFHGHGXFWLRQ
1XPEHURIRUGLQDU\VKDUHV
&RQVROLGDWHGQHWSURILWORVVUHODWHGWRRUGLQDU\VKDUHVDIWHUDGYDQFHGHGXFWLRQ
1XPEHURISUHIHUHQFHVKDUHV
&RQVROLGDWHGQHWSURILWORVVUHODWHGWRSUHIHUHQFHVKDUHVDIWHUDGYDQFHGHGXFWLRQ
8QGLOXWHG
8QGLOXWHG
'LYLGHQGSHUVKDUH
7KH%RDUGRI'LUHFWRUVLVSURSRVLQJWRGLVWULEXWHDGLYLGHQGRI(85SHURUGLQDU\VKDUHDQG
(85SHUSUHIHUHQFHVKDUHIRUWKHILQDQFLDO\HDU
2WKHUQRWHV
&DVKIORZVWDWHPHQW
7KHFDVKIORZVWDWHPHQWLVSUHVHQWHGVHSDUDWHO\
6HJPHQWUHSRUWLQJ
6HJPHQWUHSRUWLQJLVSUHVHQWHGVHSDUDWHO\
3ULPDU\UHSRUWLQJIRUPDW
6HJPHQWUHSRUWLQJWDNHVSODFHLQOLQHZLWK,$66HJPHQW5HSRUWLQJ7KHVHJPHQWUHSRUWVDUHEDVHG
RQWKH*URXSpVLQWHUQDOPDQDJHPHQWDQGUHSRUWLQJ
3ULPDU\UHSRUWLQJLVEDVHGRQWKHEXVLQHVVDUHDV,QVHJPHQWUHSRUWLQJUHODWHGEXVLQHVVDUHDV
DUHJURXSHGLQWRVHJPHQWVZLWKVLPLODUFXVWRPHUJURXSVSURGXFWVDQGSURGXFWLRQSURFHVVHV:H
GLIIHUHQWLDWHEHWZHHQWKH6SLULWV$OFRKROIUHH%HYHUDJHVDQG&HQWUDOGLYLVLRQV2WKHUDUHDVRIDFWLYLW\
ZLWKLQWKH*URXSDUHPDLQO\YHUWLFDOO\LQWHJUDWHGDFWLYLWLHVZLWKUHJDUGWRDFFRXQWLQJFRQWUROOLQJ
ILQDQFHVSHUVRQQHO,7DQGFRUSRUDWHFRPPXQLFDWLRQVZKLFKDUHSURFHVVHGFHQWUDOO\IRUWKH*URXS
FRPSDQLHV7KHUHLVQRVHSDUDWHO\UHSRUWDEOHVHJPHQWLQWKLVFDVH
6HJPHQWVDOHVFRUUHVSRQGWRWKHFRQVROLGDWHGVDOHVRIWKHVHJPHQW7KHVDPHDSSOLHVWRWKHVHJPHQW
UHVXOW7KLVFRQWDLQVH[SHQVHVLQFXUUHGGLUHFWO\E\WKHFRPSDQLHVFRPELQHGZLWKLQWKHUHVSHFWLYH
VHJPHQWDVZHOODVIRULQYRLFHVIRUFHQWUDOVHUYLFHV7KHVHUYLFHVUHODWHH[FOXVLYHO\WRYHUWLFDOO\LQWHJUDWHG
DFWLYLWLHVRIFHQWUDO*URXSDFWLYLWLHV
7KHVHJPHQWUHVXOWFRQVLVWVRIWKHVHJPHQWRSHUDWLQJUHVXOWSOXVWKHSDUWLFLSDWLRQVUHVXOW
6HJPHQWGHEWVFRQWDLQWKHFRQVROLGDWHGOLDELOLWLHVDQGDFFUXDOVRIWKHFRPSDQLHVLQDVHJPHQW)LQDQFLDO
OLDELOLWLHVDUHQRWDOORFDWHGWRVHJPHQWV7KHUHLVYHU\OLWWOHH[FKDQJHRIVHUYLFHVDPRQJWKHVHJPHQWV
7KHWUDQVIHUSULFHVLQWKH*URXSDUHDOLJQHGWRFRVWSULFH7KHUHDUHQRFRQVLGHUDEOHDVVHWVXVHGMRLQWO\
,QWKHILQDQFLDO\HDUWKHUHZHUHQRVLJQLILFDQWLPSDLUPHQWORVVHVRUUHYHUVDOVWREHUHFRUGHGLQWKH
QHWSURILWORVVIRUWKH\HDURUGLUHFWO\LQHTXLW\
6HFRQGDU\UHSRUWLQJIRUPDW
,QVHFRQGDU\UHSRUWLQJDGLVWLQFWLRQLVPDGHEHWZHHQ*HUPDQ\DQGRWKHUFRXQWULHV$VWKHSURSRUWLRQ
RIRWKHUUHJLRQVZLWKLQWKHVHFRQGDU\VHJPHQWq2WKHU&RXQWULHVrFRQWULEXWHVOHVVWKDQWRVDOHV
WKHUHLVQRIXUWKHUFODVVLILFDWLRQLQWKLVUHVSHFW
7KHNH\UDWLRVIRULQWHUQDWLRQDOEXVLQHVVUHSUHVHQWWKHEXVLQHVVRIRXU&]HFKFRPSDQ\%HUHQW]HQ
'LVWLOOHUV&5VUR6ODSQLFHX%UQR&]HFK5HSXEOLFDQGWKH6ORYDNLDQFRPSDQ\%HUHQW]HQ'LVWLOOHUV
6ORYDNLDVUR%UDWLVODYD6ORYDNLDDVZHOODVWKHLQWHUQDWLRQDOVSLULWVEXVLQHVV
6HJPHQWDVVHWVDQGLQYHVWPHQWVDUHDVVLJQHGDFFRUGLQJWRWKHKHDGTXDUWHUVRIWKHFRPSDQ\WRZKLFK
WKH\EHORQJ
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
2WKHUILQDQFLDOOLDELOLWLHVDQGFRQWLQJHQWOLDELOLWLHV
7KHIROORZLQJILQDQFLDODQGFRQWLQJHQWOLDELOLWLHVH[LVW
(85WKRXVDQG (85WKRXVDQG
/LDELOLWLHVIURPJXDUDQWHHVIRURWKHUOLDELOLWLHV
/LDELOLWLHVIURPDGLUHFWO\HQIRUFHDEOHXQOLPLWHGJXDUDQWHH
2EOLJDWLRQVXQGHUUHQWDODQGOHDVLQJDJUHHPHQWV
%\FRQWUDVWWRWKHSUHYLRXV\HDUpVILQDQFLDOVWDWHPHQWVWKHREOLJDWLRQVXQGHUUHQWDODQGOHDVLQJ
DJUHHPHQWVGRQRWLQFOXGHIXWXUHSD\PHQWREOLJDWLRQVIURPILQDQFLDOOHDVHDUUDQJHPHQWV7KH
PDQDJHPHQWEHOLHYHVWKDWWKLVUHSRUWSURYLGHVPRUHUHOHYDQWLQIRUPDWLRQ
)XWXUHSD\PHQWREOLJDWLRQVXQGHUUHQWDODQGOHDVLQJDJUHHPHQWVDVDW'HFHPEHUEUHDNGRZQDV
IROORZV
7LPHWR
7LPHWR
7LPHWR
PDWXULW\
PDWXULW\
PDWXULW\
\HDU
!WR\HDUV
!\HDUV
)XWXUHSD\PHQWREOLJDWLRQVXQGHUUHQWDODQGOHDVLQJDJUHHPHQWV
(85WKRXVDQG (85WKRXVDQG (85WKRXVDQG
7KHUHDUHDOVRGHFODUDWLRQVRIOLDELOLW\DVSDUWRIFXVWRPVIL[HGOLDELOLW\JXDUDQWHHVLQWKHDPRXQWRI(85
WKRXVDQGSUHYLRXV\HDU(85WKRXVDQG$WWKHHQGRIWKHILQDQFLDO\HDUDFWXDOVSLULWVWD[
OLDELOLWLHVLQWKHDPRXQWRI(85WKRXVDQGSUHYLRXV\HDU(85WKRXVDQGZHUHVHFXUHGRQ
WKHEDVLVRIWKHVHJXDUDQWHHV
(YHQWVDIWHUWKHEDODQFHVKHHWGDWH
,QWKHUHSRUWLQJ\HDU%HUHQW]HQFOHDUHGWKHZD\IRUDPRUHVWURQJO\EUDQGRULHQWHGDOLJQPHQWRIWKH
FRUSRUDWHVWUDWHJ\E\DSSRLQWLQJDQHZ%RDUGRI'LUHFWRUV$IWHUWKHVXFFHVVIXOFRQFOXVLRQRIWKH
FRVWUHGXFWLRQSURJUDPPHWKHVSHDNHURIWKH%RDUGRI'LUHFWRUV'U-DQ%%HUHQW]HQDQG
$QGUHDV5RVWWKHPHPEHURIWKH%RDUGRI'LUHFWRUVUHVSRQVLEOHIRU)LQDQFHDQG7HFKQRORJ\OHIWWKH
&RPSDQ\RQ-XQHDQG'HFHPEHUUHVSHFWLYHO\7KHPHPEHURIWKH%RDUGRI'LUHFWRUV
UHVSRQVLEOHIRUPDUNHWLQJDQGVDOHV+DQV:HUQHU1DJHOOHIWWKHPDQDJHPHQWRQ-DQXDU\
2Q'HFHPEHU$[HO'DKPZDVDSSRLQWHGWRWKH%RDUGRI'LUHFWRUV%HWZHHQDQG
0U'DKPKHOGVKDUHGUHVSRQVLELOLW\IRU%HUHQW]HQpVEUDQGEXVLQHVVDQGKHLQWHQGVWRFRQFHQWUDWHDQG
LQWHQVLI\PDUNHWGHYHORSPHQWRQWKHFRUHEUDQGV,QIXWXUH0U'DKPZLOOPDQDJHWKH&RPSDQ\DV
VROHPHPEHURIWKH%RDUGRI'LUHFWRUV$UHOHYDQWFKDQJHWRWKH&RPSDQ\pV$UWLFOHVRI$VVRFLDWLRQZLOO
EHSURSRVHGWRWKH$QQXDO*HQHUDO0HHWLQJWRWDNHSODFHRQ0D\2Q)HEUXDU\0D[
3HOLNDQZDVDSSRLQWHGWRWKH%RDUGRI'LUHFWRUVIRUWKHSHULRGXQWLOWKH$QQXDO*HQHUDO0HHWLQJ
'LVFORVXUHRIUHODWHGSDUWLHV
,QDFFRUGDQFHZLWK,$6UHODWHGSDUWLHVDUHSHUVRQVRUFRPSDQLHVZKLFKPD\KDYHDFRQWUROOLQJRU
VLJQLILFDQWLQIOXHQFHRYHUWKHFRPSDQ\
5HODWHGSDUWLHVZLWKZKLFKWKH%HUHQW]HQ*URXSFDUULHGRXWWUDQVDFWLRQVLQKDYHQRFRQWUROOLQJ
LQIOXHQFHRQWKHILQDQFLDODQGEXVLQHVVSROLFLHVRIWKH&RPSDQ\DVWKH\GRQRWGLUHFWO\RULQGLUHFWO\
KROGPRUHWKDQKDOIRIWKHYRWLQJULJKWVLQ%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIW$OWKRXJKWKHVHUHODWHG
SDUWLHVKDYHWKHSRVVLELOLW\RISOD\LQJDSDUWLQGHWHUPLQLQJWKH&RPSDQ\pVILQDQFLDODQGEXVLQHVVSROLF\
WKH\GRQRWKDYHVLJQLILFDQWLQIOXHQFHLQDFFRUGDQFHZLWK,$6
7UDQVDFWLRQVZLWKUHODWHGSDUWLHV
&DWHJRU\
2WKHU
2WKHU
1DWXUHRIWKHWUDQVDFWLRQV
([WHQWRIWKHWUDQVDFWLRQV
([WHQWRIWKHWUDQVDFWLRQV
(85WKRXVDQG
(85WKRXVDQG
/HDVLQJRISURSHUW\
DQGEXLOGLQJV
&RQVXOWDQF\VHUYLFHV
:LWKRXWH[FHSWLRQWKHWUDQVDFWLRQVZHUHFDUULHGRQQRUPDOPDUNHWWHUPV7KHWUDQVDFWLRQVKDYHEHHQ
SURFHVVHGLQIXOO7KHUHDUHQRRXWVWDQGLQJDPRXQWVUHFHLYDEOHVRUSD\DEOHV,WLVQRWQHFHVVDU\WR
PDNHSURYLVLRQVIRUGRXEWIXOUHFHLYDEOHV
2WKHULQIRUPDWLRQRQ*URXSDQGDVVRFLDWHGFRPSDQLHVKDVEHHQSURYLGHGDWRWKHUSRLQWVLQWKHVH
QRWHV
7KHUHODWLRQVKLSVRI%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWDQGLWVVXEVLGLDULHVLQDFFRUGDQFHZLWK,$6
DUHVKRZQLQWKHSUHVHQWDWLRQRIWKH*URXSpVVKDUHKROGLQJV
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
,QDFFRUGDQFHZLWK,$6WKHIROORZLQJUHPXQHUDWLRQVZHUHJUDQWHGWRWKHPHPEHUVRIWKH%RDUGRI
'LUHFWRUV0DQDJHPHQW%RDUG
7\SHRIUHPXQHUDWLRQ
5HPXQHUDWLRQVIURPFXUUHQWDFWLYLWLHV
(85WKRXVDQG (85WKRXVDQG
6DODULHVDQGRWKHUVKRUWWHUPSD\PHQWV
7HUPLQDWLRQEHQHILWV
2WKHUORQJWHUPSD\PHQWV
6KDUHEDVHGUHPXQHUDWLRQV
7RWDO
5HPXQHUDWLRQVDIWHUWHUPLQDWLRQ
7HUPLQDWLRQEHQHILWV
3HQVLRQSD\PHQWV
3HQVLRQDFFUXDOV
7RWDO
$WWKH$QQXDO*HQHUDO0HHWLQJRQ-XQHLWZDVGHFLGHGWRH[HUFLVHWKHRSWLRQSXUVXDQWWR$UWLFOH
VXEVHFWLRQRIWKH*HUPDQ&RPPHUFLDO&RGHQRWWRGLVFORVHWKHUHPXQHUDWLRQRIWKH%RDUGRI
'LUHFWRUVLQLQGLYLGXDOFRPSRQHQWV
'HFODUDWLRQRQWKH&RUSRUDWH*RYHUQDQFH&RGH
7KHGHFODUDWLRQRIFRQIRUPLW\ZLWKWKHUHFRPPHQGDWLRQVRIWKH*RYHUQPHQW&RPPLVVLRQRIWKH
*HUPDQ&RUSRUDWH*RYHUQDQFH&RGHZDVVXEPLWWHGLQDFFRUGDQFHZLWK$UWLFOHRIWKH*HUPDQ6WRFN
&RUSRUDWLRQ$FW7KHGHFODUDWLRQKDVEHHQPDGHSHUPDQHQWO\DYDLODEOHWRWKHVKDUHKROGHUVXQGHUZZZ
EHUHQW]HQJUXSSHGHRQWKH,QWHUQHW
([HPSWLRQULJKWV
7KHVHDUHH[HPSWLRQULJKWVZKLFKDOORZDFRPSDQ\WREHH[HPSWIURPWKHREOLJDWLRQWRSURGXFH
DQQXDOILQDQFLDOVWDWHPHQWVDQGDPDQDJHPHQWUHSRUWKDYHWKHPDXGLWHGDQGSXEOLVKWKHP$OLVW
RIWKHFRPSDQLHVZKLFKPDNHVXVHRIWKHVHH[HPSWLRQULJKWVLVVKRZQVHSDUDWHO\LQWKHOLVWRI*URXS
VKDUHKROGLQJV
([HFXWLYHERGLHVRI%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIW
%RDUGRI'LUHFWRUV
,QWKHILQDQFLDO\HDUWKHPHPEHUVRIWKH%RDUGRI'LUHFWRUVZHUH
$[HO'DKP%DVHO6ZLW]HUODQGVLQFH'HFHPEHU
0DUNHWLQJ6DOHV)LQDQFHDQG7HFKQRORJ\
&KDLUPDQRIWKH%RDUGRI'LUHFWRUV
2WKHUPDQGDWHV
'DKP'DWHQV\VWHPH$NWLHQJHVHOOVFKDIW'XVVHOGRUI6XSHUYLVRU\%RDUG
'U-DQ%%HUHQW]HQ+DVHOØQQH&RUSRUDWH6WUDWHJ\,QWHUQDWLRQDO6DOHVXQWLO-XQH
6SRNHVPDQIRUWKH%RDUGRI'LUHFWRUV
2WKHUPDQGDWHV
68&5$$61RUZD\%RDUG0HPEHU
'RRUQNDDW$NWLHQJHVHOOVFKDIW1RUGHQ6XSHUYLVRU\%RDUG
$QGUHDV5RVW-RUN)LQDQFHVDQG7HFKQRORJ\DQG3URMHFWVIURP'HFHPEHUXQWLO'HFHPEHU
+DQV:HUQHU1DJHO:HUWKHLP0DUNHWLQJDQG6DOHVDQG3URMHFWVVLQFH'HFHPEHU
IURP)HEUXDU\WR-DQXDU\
7KHIROORZLQJZDVDSSRLQWHGWRWKH%RDUGRI'LUHFWRUVDIWHUWKHHQGRIWKHILQDQFLDO\HDU
0D[3HOLNDQ+DQQRYHU,QWHULPPHPEHURIWKH%RDUGRI'LUHFWRUVVLQFH)HEUXDU\
2WKHUPDQGDWHV
.RKOHQVÀXUHZHUN+DQQRYHUH*/DDW]HQ6XSHUYLVRU\%RDUG
'LWKPDUVFKHU%UDXHUHL.DUO+LQW]*PE+&R.*0DUQH&KDLUPDQRIWKH6XSHUYLVRU\%RDUG
6XSHUYLVRU\%RDUG
,QWKHILQDQFLDO\HDUWKH6XSHUYLVRU\%RDUGZDVPDGHXSRIWKHIROORZLQJPHPEHUV
6KDUHKROGHUUHSUHVHQWDWLYHV
-ÒUJ-DFREVLQFH-DQXDU\&KDLUPDQVLQFH)HEUXDU\
0DQDJHPHQWFRQVXOWDQW.UHIHOG
+DQV'HWOHI%ÒVHO
%DQNHU+DPEXUJ
2WKHUPDQGDWHV
')'HXWVFKH)RUIDLW$NWLHQJHVHOOVFKDIW&RORJQH&KDLUPDQRIWKH6XSHUYLVRU\%RDUG
*HOVHQZDVVHU$NWLHQJHVHOOVFKDIW*HOVHQNLUFKHQ6XSHUYLVRU\%RDUG
%DQNKDXV/ÒEEHFNH*PE+&R.*%HUOLQ'HSXW\&KDLUPDQRIWKH$GYLVRU\%RDUG
7K\VVHQ.UXSS(OHYDWRU$NWLHQJHVHOOVFKDIW'XVVHOGRUI6XSHUYLVRU\%RDUG
3URI%UXQ+DJHQ+HQQHUNHV
/DZ\HU6WXWWJDUW
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
2WKHUPDQGDWHV
-2:$7$NWLHQJHVHOOVFKDIW'HWPROG&KDLUPDQRIWKH6XSHUYLVRU\%RDUG
8=,18W]$NWLHQJHVHOOVFKDIW8OP&KDLUPDQRIWKH6XSHUYLVRU\%RDUG
9%++ROGLQJ$NWLHQJHVHOOVFKDIW.RUQWDO0ØQFKLQJHQ&KDLUPDQRIWKH6XSHUYLVRU\%RDUG
%DXHUQIHLQG+ROGLQJ$NWLHQJHVHOOVFKDIW&KDLUPDQRIWKH6XSHUYLVRU\%RDUG
(TXLQHW$NWLHQJHVHOOVFKDIW)UDQNIXUW6XSHUYLVRU\%RDUGXQWLO1RYHPEHU
*UØQHQWKDO*PE+6WROEHUJ6XSHUYLVRU\%RDUGVLQFH'HFHPEHU
+DQV5HLQKDUG$EHOVVLQFH-XQH
0DQDJHPHQWFRQVXOWDQW'XVVHOGRUI
5ROI5LFKWHUXQWLO)HEUXDU\
/DZ\HU&RORJQH
2WKHUPDQGDWHV
$;$6HUYLFH$NWLHQJHVHOOVFKDIW&RORJQH6XSHUYLVRU\%RDUG
%52.$'$7$6RIWZDUHXQG6\VWHPKDXVIØU)LQDQ]GLHQVWOHLVWXQJHQ$NWLHQJHVHOOVFKDIW
'XVVHOGRUI6XSHUYLVRU\%RDUGXQWLO-XO\
)LQDQFLDO&RP$NWLHQJHVHOOVFKDIW0XQLFK6XSHUYLVRU\%RDUG
5RODQG5HFKWVVFKXW]YHUVLFKHUXQJV$NWLHQJHVHOOVFKDIW&RORJQH6XSHUYLVRU\%RDUG
)HOL[6HQJH
$XGLWRUWD[FRQVXOWDQW%UHPHQ
0DQIUHG*UHXQH'HSXW\&KDLUPDQ
,QGXVWULDORIILFHU*ÒWWLQJHQ
2WKHUPDQGDWHV
:HQWRUI9HUZDOWXQJV*PE+9HUPÒJHQVYHUZDOWXQJVJHVHOOVFKDIW2VWHURGH$GYLVRU\%RDUG
*UHJRU:LHOIURP)HEUXDU\WR-XQH
7D[FRQVXOWDQW/DQJHQIHOG
2WKHUPDQGDWHV
6WDGWZHUNH/DQJHQIHOG*PE+/DQJHQIHOG6XSHUYLVRU\%RDUG
(PSOR\HHUHSUHVHQWDWLYHV
%HUQKDUG'ØLQJ
(OHFWULFLDQ+HU]ODNH
:HUQHU(WPDQQ
,QGXVWULDORIILFHU%DZLQNHO
)ULHGULFK=LHOVGRUI
&RPPHUFLDOHPSOR\HH+DVHOØQQH
7RWDOUHPXQHUDWLRQRIWKH6XSHUYLVRU\%RDUGRI%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWIRUWKHILQDQFLDO
\HDUZDV(85WKRXVDQG
$XGLWRU
$WWKH$QQXDO*HQHUDO0HHWLQJRI%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWRQ-XQH
3ULFHZDWHUKRXVH&RRSHUV$NWLHQJHVHOOVFKDIW:LUWVFKDIWVSUØIXQJVJHVHOOVFKDIW2VQDEUØFNZDV
HOHFWHGDVDXGLWRURIWKHLQGLYLGXDODQGWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVRI%HUHQW]HQ*UXSSH
$NWLHQJHVHOOVFKDIW7KHIROORZLQJIHHVZHUHUHFRUGHGDVH[SHQVHLQWKHILQDQFLDO\HDU
(85WKRXVDQG
D7KHDXGLW
E2WKHUFHUWLILFDWLRQRUDVVHVVPHQWVHUYLFHV
F7D[FRQVXOWDWLRQ
G2WKHUVHUYLFHV
2Q)HEUXDU\WKH%RDUGRI'LUHFWRUVRI%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIWDSSURYHGWKH
SXEOLFDWLRQRIWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV
+DVHOØQQH)HEUXDU\
$[HO'DKP
0D[3HOLNDQ
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
/LVWRIWKHVKDUHKROGLQJVRI%HUHQW]HQ*UXSSH$*
DQGWKH*URXS
'LUHFWVXEVLGLDULHV
1DPHUHJLVWHUHGRIILFH
6KDUHKROGLQJ
LQ
.RUQEUHQQHUHL%HUHQW]HQ*PE+
IRUPHUO\%HUHQW]HQ%UHQQHUHLHQ9HUZDOWXQJ*PE++DVHOØQQH
%HUHQW]HQ'LVWLOOHUV,QWHUQDWLRQDO*PE++DVHOØQQH
'HU%HUHQW]HQ+RI*PE++DVHOØQQH
'HWKOHIIVHQ6SLULWXRVHQ*PE+)OHQVEXUJ
'RRUQNDDW$*1RUGHQ
(PLO0DJQXV*PE+'ØVVHOGRUI
-ØUJHQ:HEHU*PE+(OVIOHWK
/DQGZLUWKV*PE+(OVIOHWK
0DPSH0DUNHQYHUWULHE*PE+%HUOLQ
1RULV:HLQEUHQQHUHLHQ*PE+(OVIOHWK
3DEVW5LFKDU]9HUWULHEV*PE+(OVIOHWK
3LHUUH/RXJH&LH*PE+(OVIOHWK
3XVFKNLQ,QWHUQDWLRQDO*PE+%HUOLQ
6WURWKPDQQ6SLULWXRVHQ9HUZDOWXQJ*PE++DVHOØQQH
9LYDULV*HWUÀQNH*PE+&R.*+DVHOØQQH
:LQWHUDSIHO*HWUÀQNH*PE++DVHOØQQH
=LQQDHU.ORVWHUVSLULWXRVHQ*PE+.ORVWHU=LQQD
7KHUHLVDFRQWURODQGSURILWWUDQVIHUDJUHHPHQWLQH[LVWHQFH
,QDFFRUGDQFHZLWK$UWLFOHERIWKH*HUPDQ&RPPHUFLDO&RGHWKHVHFRPPHUFLDOSDUWQHUVKLSVDUHH[HPSWIURPWKHREOLJDWLRQWRSUHSDUH
DQQXDOILQDQFLDOVWDWHPHQWVDQGDPDQDJHPHQWUHSRUWLQOLQHZLWKWKHSURYLVLRQVIRUFDSLWDOFRPSDQLHVDQGWRKDYHWKHPDXGLWHGDQG
SXEOLVKHG
,QDFFRUGDQFHZLWK$UWLFOHRIWKH*HUPDQ&RPPHUFLDO&RGHWKHVHFDSLWDOFRPSDQLHVDUHH[HPSWIURPWKHREOLJDWLRQWRSUHSDUH
DQQXDOILQDQFLDOVWDWHPHQWVDQGDPDQDJHPHQWUHSRUWLQOLQHZLWKWKHSURYLVLRQVIRUFDSLWDOFRPSDQLHVDQGWRKDYHWKHPDXGLWHGDQG
SXEOLVKHG
7KHVHFRPSDQLHVDUHIXOO\FRQVROLGDWHGLQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVRI%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIW+DVHOØQQH
,QGLUHFWVXEVLGLDULHV
1DPHUHJLVWHUHGRIILFH
6KDUHKROGLQJ
LQ
*HUPDQFRPSDQLHV
'LH6WRQVGRUIHUHL:.RHUQHU*PE+&R.*+DVHOØQQH
)UHLKHUUY&UDPP%UHQQHUHLJXW+DUEDUQVHQ*PE++DUEDUQVHQ
*UØQHEHUJHU6SLULWXRVHQXQG*HWUÀQNHJHVHOOVFKDIWPE+*UØQHEHUJ
+DQVHQ*PE+&R.*)OHQVEXUJ
6FKORVV/ÒZHQEHUJ0LQHUDOEUXQQHQ*PE+*UØQHEHUJ
,QGLUHFWVXEVLGLDULHV
1DPHUHJLVWHUHGRIILFH
6KDUHKROGLQJ
LQ
1RQ*HUPDQFRPSDQLHV
%HUHQW]HQ'LVWLOOHUV&5VUR6ODSDQLFHX%UQD&]HFK5HSXEOLF
%HUHQW]HQ'LVWLOOHUV6ORYDNLDVUR%UDWLVODYD6ORYDNLD
'RXEOH4:KLVN\&RPSDQ\/WG/RQGRQ8.
+DQVHQ&DULELVFKH5XP0DDWVFKDSSLM$UXED19$UXED
6HFKVÀPWHUWURSIHQ*9HWWHUVS]RR-HOHQLD*RUD3RODQG
$VVRFLDWHGFRPSDQLHV
1DPHUHJLVWHUHGRIILFH
6KDUHKROGLQJ
LQ
6XFUD$62VOR1RUZD\
7KHVHFRPSDQLHVDUHIXOO\FRQVROLGDWHGLQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVRI%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIW+DVHOØQQH
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
$8',723,1,21
5HIUHVKLQJDQGWKLUVW
TXHQFKLQJ
9LYDULVLVXSWKHUHLQWKHILUVWOHDJXHZKDWHYHUWKHWDVWH
GLUHFWLRQ:KHWKHUDWKRPHGXULQJVSRUWRURQWKH
IRRWEDOOSLWFK9LYDULVLVWKHWDVW\UHIUHVKPHQW
9LYDULVLVDOVRDWUHQGVHWWHU:HDUHWKHYHU\ILUVWVRXUFH
WRRIIHUWKHSUDFWLFDOq6XSHU.DVWHQrOLJKWZHLJKW
FRQWDLQHU7KHQHZLVRWRQLFWKLUVWTXHQFKHUVLQWKH
UDQJHQRWRQO\WDVWHJRRGWKH\DOVRGR\RXJRRG7KH
LQJUHGLHQWV/FDUQLWLQHDQGSDODQWLQRVHKHOSDOOPXVFOHV
WRJDLQHQHUJ\DQGGHOD\IDWLJXH
7KHWDVWHRIMR\
$XGLW2SLQLRQ
:HDXGLWHGWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVFRQVLVWLQJRIFRQVROLGDWHGEDODQFH
VKHHWFRQVROLGDWHGSURILWDQGORVVVWDWHPHQWVWDWHPHQWRIFKDQJHVLQHTXLW\FDVKIORZ
VWDWHPHQWDQGQRWHVSUHSDUHGE\%HUHQW]HQ*UXSSH$NWLHQJHVHOOVFKDIW+DVHOØQQHDQGWKH
JURXSPDQDJHPHQWUHSRUWIRUWKHILQDQFLDO\HDUIURP-DQXDU\WR'HFHPEHU7KH
SUHSDUDWLRQRIWKHFRQVROLGDWHGDQQXDOVWDWHPHQWVDQGWKHJURXSPDQDJHPHQWUHSRUWLQ
DFFRUGDQFHZLWK,)56DVWKH\DUHWREHDSSOLHGLQWKH(8DQGWKHUHJXODWLRQVWREHDSSOLHGLQ
DFFRUGDQFHZLWK$UWLFOHDRIWKH*HUPDQ&RPPHUFLDO&RGHDVZHOODVWKHVXSSOHPHQWDU\
UHJXODWLRQVRIWKHVWDWXWHLVWKHUHVSRQVLELOLW\RIWKH%RDUGRI'LUHFWRUV2XUUHVSRQVLELOLW\LV
WRH[SUHVVDQRSLQLRQRQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDQGWKHJURXSPDQDJHPHQW
UHSRUWRQWKHEDVLVRIRXUDXGLW
:HSHUIRUPHGRXUDXGLWRIWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVSXUVXDQWWR$UWLFOHRIWKH
*HUPDQ&RPPHUFLDO&RGHLQDFFRUGDQFHZLWKJHQHUDOO\DFFHSWHG*HUPDQDXGLWLQJSULQFLSOHV
DVIRUPXODWHGE\WKH,QVWLWXWGHU:LUWVFKDIWVSUØIHU,':$FFRUGLQJWRWKHVHSULQFLSOHV
DQDXGLWPXVWEHSODQQHGDQGFDUULHGRXWLQVXFKDZD\DVWRVXIILFLHQWO\UHYHDOLQFRUUHFW
VWDWHPHQWVRULQIULQJHPHQWVZKLFKFRXOGKDYHDVLJQLILFDQWLPSDFWRQWKHSLFWXUHRIWKHQHW
DVVHWVILQDQFLDODQGHDUQLQJVVLWXDWLRQSUHVHQWHGE\WKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVLQ
OLQHZLWKWKHSULQFLSOHVRISURSHUDQGRUGHUO\DFFRXQWLQJZLWKDGHTXDWHFHUWDLQW\.QRZOHGJHRI
WKH*URXSpVEXVLQHVVDFWLYLW\DQGLWVHFRQRPLFDQGOHJDOHQYLURQPHQWDVZHOODVH[SHFWDWLRQV
RISRVVLEOHHUURUVDUHWDNHQLQWRFRQVLGHUDWLRQZKHQZHGHFLGLQJXSRQWKHLQGLYLGXDODFWLRQV
WREHFDUULHGRXWGXULQJWKHDXGLW'XULQJWKHDXGLWZHH[DPLQHIRUWKHPRVWSDUWE\VSRW
FKHFNVWKHHIIHFWLYHQHVVRIWKHLQWHUQDOPRQLWRULQJV\VWHPDQGWKHHYLGHQFHSURYLGHGWR
VXSSRUWWKHLQIRUPDWLRQLQWKHDFFRXQWLQJUHFRUGVFRQVROLGDWHGILQDQFLDOVWDWHPHQWVDQGWKH
JURXSPDQDJHPHQWUHSRUW7KHDXGLWLQYROYHVDVVHVVLQJWKHDQQXDOILQDQFLDOVWDWHPHQWVRI
WKHFRPSDQLHVLQFOXGHGLQWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWVWKHGHILQLWLRQRIWKHVFRSH
RIFRQVROLGDWLRQWKHDFFRXQWLQJPHWKRGVXVHGDQGVLJQLILFDQWHVWLPDWHVPDGHE\WKHOHJDO
UHSUHVHQWDWLYHVDQGFULWLFDOO\H[DPLQLQJWKHRYHUDOOSLFWXUHSUHVHQWHGE\WKHFRQVROLGDWHG
ILQDQFLDOVWDWHPHQWVDQGWKHJURXSPDQDJHPHQWUHSRUW:HEHOLHYHWKDWRXUDXGLWSURYLGHVD
UHDVRQDEOHEDVLVIRURXUDVVHVVPHQW
2XUDXGLWGLGQRWJLYHULVHWRDQ\REMHFWLRQV
,WLVRXURSLQLRQWKDWLQDFFRUGDQFHZLWKWKHNQRZOHGJHJDLQHGIURPRXUDXGLWWKH
FRQVROLGDWHGDQQXDOILQDQFLDOVWDWHPHQWVFRUUHVSRQGWR,)56DVWKH\DUHWREHDSSOLHGLQ
WKH(8DQGWKHVXSSOHPHQWDU\FRPPHUFLDOUHJXODWLRQVFRQWDLQHGLQ$UWLFOHDRIWKH
*HUPDQ&RPPHUFLDO&RGHDVZHOODVWKHVXSSOHPHQWDU\UHJXODWLRQVRIWKHVWDWXWHDQGWKDW
WKH\UHSUHVHQWDWUXHDQGIDLUDVVHVVPHQWRIWKH*URXSpVQHWDVVHWVILQDQFLDODQGHDUQLQJV
VLWXDWLRQWDNLQJLQWRDFFRXQWWKHVHUHJXODWLRQV7KHJURXSPDQDJHPHQWUHSRUWSUHVHQWVDQ
DFFXUDWHRYHUDOOSLFWXUHRIWKH*URXSpVVLWXDWLRQDQGDFFXUDWHO\GHVFULEHVWKHRSSRUWXQLWLHVDQG
ULVNVZLWKUHVSHFWWRIXWXUHGHYHORSPHQW
2VQDEUØFN)HEUXDU\
3ULFHZDWHUKRXVH&RRSHUV
$NWLHQJHVHOOVFKDIW
$XGLWLQJFRPSDQ\
*6WHJHPDQQ $XGLWRU
SS'U*6ROIULDQ
$XGLWRU
$XGLW2SLQLRQ &RQVROLGDWHG)LQDQFLDO6WDWHPHQWV&RUSRUDWH*RYHUQDQFH0DQDJHPHQW5HSRUW5HSRUWRIWKH6XSHUYLVRU\%RDUG/HWWHUWR6KDUHKROGHUV
$FNQRZOHGJHPHQWV
%HUHQW]HQ*UXSSH$*
5LWWHUVWUDVVH
+DVHOØQQH
*HUPDQ\
%HUHQW]HQ*UXSSHRQWKH,QWHUQHW
ZZZEHUHQW]HQJUXSSHGH
&RUSRUDWHFRPPXQLFDWLRQV
3KRQH
)D[
(PDLOSUHVVH#EHUHQW]HQGH
&RQFHSWDQG(GLWLQJ
2OLYHU%DUWHOW
/D\RXWDQG3URGXFWLRQ
FRORXUVHFJPEK2VQDEUØFN
ZZZFRORXUVGH
3KRWRJUDSKV
$GULDQ6FKUÒGHU2VQDEUØFN
ZZZFRORXUVGH
SKRWRFDVH
ZZZSKRWRFDVHFRP
7UDQVODWLRQ
(962IIHQEDFKDP0DLQ
7KLVUHSRUWLVDOVRDYDLODEOHLQ*HUPDQ
:HZLOOJODGO\VHQG\RXDFRS\RIWKHDQQXDOILQDQFLDOVWDWHPHQWVRI%HUHQW]HQ*UXSSH$*RQ
UHTXHVW
$OOGRFXPHQWVFDQEHGRZQORDGHGDWZZZEHUHQW]HQJUXSSHGHRQWKH,QWHUQHW
+RZZHVHHRXUVHOYHV
)RUDOPRVW\HDUVWKHQDPH%HUHQW]HQKDVVWRRGIRUWKHDUWRIILQHGLVWLOODWLRQDQGWKHSOHDVXUHRI
HQMR\PHQW7KLVYLVLRQLVDQGZLOOFRQWLQXHWRGLFWDWHRXUSKLORVRSK\DQGDFWLRQV
$VZHKDYHVSHFLDOLVHGLQEHYHUDJHVZKLFKDUHVRXUFHVRIIXQDQGSOHDVXUHZHDOVRSURYLGHDOLWWOHMRLHGH
YLYUH
2XUFRUSRUDWHYDOXHV
2XUHPSOR\HHVDQGRXUEUDQGVIRUPWKHEDVLVRIRXUVXFFHVVHQDEOLQJXVWRJHQHUDWHDSSURSULDWH
SURILWV
:HDFWLQDFFRUGDQFHZLWKWKHUHTXLUHPHQWVRIRXUFRQVXPHUVDQGFXVWRPHUV
$VZHDUHFRQVWDQWO\ZRUNLQJRQLQQRYDWLRQVDORQJWKHHQWLUHYDOXHDGGHGFKDLQZHDUHDEOHWROHDG
WKHPDUNHW
:HVWDQGRXWIURPRXUFRPSHWLWRUVGXHWRVXVWDLQHGTXDOLW\SURIHVVLRQDOLVPDQGUHOLDELOLW\
2XUPHGLXPVL]HDOORZVXVWREHTXLFNIOH[LEOHDQGHIILFLHQW
:HDUHSURXGRIWKHXQLTXHFRPELQDWLRQRIWUDGLWLRQDOURRWVDQGPRGHUQEUDQGPDQDJHPHQWZLWKLQ
RXU&RPSDQ\
:HVHWVWRUHE\RSHQQHVVKRQHVW\DQGUHVSHFWIRUWKHKDUGZRUNRIRWKHUV,WLVDOVRLPSRUWDQWWKDW
ZRUNLQJWRJHWKHUVKRXOGEHDVRXUFHRIIXQ
%HUHQW]HQ*UXSSH$*7KHWDVWHRIMR\

Similar documents

PDF file - Minn-StF

PDF file - Minn-StF ZRUOG0FODVV#KLJK0HQG#HVWDEOLVKPHQWV#WKDW#ELJ#FLWLHV#KDYH/#ZH¶YH#JRW#D#PL[#RI LQWHUHVWLQJ#FKRLFHV#WKDW#ZLOO#GHOLJKW#WKH#SDODWH#RI#HYHQ#WKH#PRVW#ZRUOG0ZHDU\ 1HZ# More information

notes to the financial statements - Bursa Malaysia Stock

notes to the financial statements - Bursa Malaysia Stock through labour unrest within the automotive sector and the country’s inadequate energy infrastructure, Pasdec Resources SA Limited (“PRSA”) recorded growth of 7.70% in revenue from ZAR176.6 million...

More information