%22.

&+$37(5

&KDOOHQJH<RXUVHOI$QVZHUV 
/LQGD6&RVWDQ]R3K'
3K\VLRORJ\

&KDSWHU
6ROXWLRQ%QHJDWLYHRU6ROXWLRQ$SRVLWLYH
PPRO/XUHD
,QFUHDVHV
8SVWURNHRIWKHDFWLRQSRWHQWLDO
TXDQWD
%RWXOLQXVWR[LQ
$FWLRQSRWHQWLDOLQQHUYHILEHURSHQLQJ&DFKDQQHOVLQSUHV\QDSWLFWHUPLQDO$&KUHOHDVH
IURPSUHV\QDSWLFWHUPLQDOELQGLQJRI$&KWRQLFRWLQLFUHFHSWRUVRSHQLQJOLJDQGJDWHGLRQ
FKDQQHOV0(33(33DFWLRQSRWHQWLDOLQPXVFOHILEHU
$SSUR[LPDWHO\HTXDOWR+LQW3DVVLYHWHQVLRQLVQHJOLJLEOHLQWKLVUDQJH
6XEVWDQFH3YDVRSUHVVLQ
'RXEOH+LQW&  ,IERWKVLGHVGRXEOHG&  
O'RSDGRSDPLQHQRUHSLQHSKULQH
,QFUHDVLQJQHUYHGLDPHWHULQFUHDVHVLQFUHDVLQJLQWHUQDOUHVLVWDQFH5LGHFUHDVHV
LQFUHDVLQJPHPEUDQHUHVLVWDQFH5PLQFUHDVHVGHFUHDVLQJPHPEUDQHFDSDFLWDQFH&P
LQFUHDVHVLQFUHDVLQJOHQJWKFRQVWDQWLQFUHDVHVLQFUHDVLQJWLPHFRQVWDQWGHFUHDVHV
'HSRODUL]HVFDXVHVPXVFOHZHDNQHVVE\FORVLQJLQDFWLYDWLRQJDWHVRQ1DFKDQQHOVVRWKDW
WKH\DUHXQDYDLODEOHWRFDUU\1DFXUUHQWIRUXSVWURNHRIPXVFOHDFWLRQSRWHQWLDO
&RQIRUPDWLRQDOFKDQJHLQP\RVLQWKDWUHGXFHVLWVDIILQLW\IRUDFWLQ

1LFRWLQLFUHFHSWRUDQWDJRQLVWLQKLELWRURIFKROLQHUHXSWDNHLQKLELWRURI$&KUHOHDVH
:DWHUIORZVIURP$WR%+LQW&DOFXODWHGHIIRI6ROXWLRQ%LVKLJKHUWKDQWKDWRI6ROXWLRQ
$DQGZDWHUIORZVIURPORZWRKLJKHII

&KDSWHU
'LODWLRQRIDLUZD\VUHOD[DWLRQRIEODGGHUZDOO
0XVFDULQLFVSKLQFWHU
*DQJOLDLQRUQHDUWDUJHWWLVVXHV+LQWV$OOSRVWJDQJOLRQLFQHXURQVKDYHQLFRWLQLFUHFHSWRUV
VZHDWJODQGVKDYHV\PSDWKHWLFFKROLQHUJLFLQQHUYDWLRQDOOSUHJDQJOLRQLFQHXURQVDUH
FKROLQHUJLF
,QKLELWVRUEORFNVUHFHSWRUV
(IIHFWRIHSLQHSKULQHWRLQFUHDVHFDUGLDFFRQWUDFWLOLW\HIIHFWRIHSLQHSKULQHWRLQFUHDVHKHDUW
UDWH
3KHQ\OHWKDQRODPLQHNPHWK\OWUDQVIHUDVH
DGUHQHUJLFDJRQLVWZRXOGFRQVWULFWYDVFXODUVPRRWKPXVFOHIXUWKHUHOHYDWLQJEORRG
SUHVVXUHDGUHQHUJLFDJRQLVWZRXOGLQFUHDVHKHDUWUDWHDQGFRQWUDFWLOLW\IXUWKHUHOHYDWLQJ
EORRGSUHVVXUH
0XVFDULQLFFRQWUDFWLRQPXVFDULQLFUHOD[DWLRQ
TELQGVWR*'3TELQGVWR*73DFWLYDWLRQRISKRVSKROLSDVH&JHQHUDWLRQRI,3UHOHDVH
RI&DIURPLQWUDFHOOXODUVWRUHVDFWLYDWLRQRISURWHLQNLQDVH
6ORZLQJRIFRQGXFWLRQYHORFLW\LQ$9QRGHJDVWULFDFLGVHFUHWLRQHUHFWLRQVZHDWLQJRQDKRW
GD\

&KDSWHU
5LJKWRSWLFQHUYH
7RWKHOHIW+LQW3RVWURWDWRU\Q\VWDJPXVLVLQWKHRSSRVLWHGLUHFWLRQRIWKHRULJLQDOURWDWLRQ
2QH
.QHHMHUNUHIOH[VWUHWFKUHIOH[+LQW.QHHMHUNLVDQH[DPSOHRIVWUHWFKUHIOH[
3KDVLF

/LJKWFRQYHUVLRQRIcisUKRGRSVLQWRDOOtransUKRGRSVLQWUDQVGXFLQGHFUHDVHGF\FOLF
*03FOR
VXUHRI1DFKDQQHOVK\SHUSRODUL]DWLRQUHOHDVHRIQHXURWUDQVPLWWHU
MoreQHJDWLYHdecreasesOLNHOLKRRGRIDFWLRQSRWHQWLDOV
*ROJLWHQGRQRUJDQVDFWLYDWHG
,DDIIHUHQWILEHUVXQFKDQJHG+LQW,DDIIHUHQWVDUHLQYROYHGLQWKHVWUHWFKUHIOH[
,EDIIHUHQWILEHUVDFWLYDWHG
,QKLELWRU\LQWHUQHXURQVDFWLYDWHG
PRWRQHXURQVLQKLELWHG
3URWHLQJOXFRVH.
,QLWLDOURWDWLRQWRWKHULJKWULJKWFDQDOLVDFWLYDWHGKHDGVWRSVURWDWLQJOHIWFDQDOLV
DFWLYDWHG
:LGHUPRUHFRPSOLDQWORZHU

&KDSWHU
PP+JP/PLQRUPP+J/PLQ
PLOOLVHFRQGV+LQWVHFRQGVLQDPLQXWH
9HQWULFXODUDFWLRQSRWHQWLDO&DUHOHDVHIURPVDUFRSODVPLFUHWLFXOXP&DELQGLQJWR
WURSRQLQ&WHQVLRQ&DDFFXPXODWLRQE\VDUFRSODVPLFUHWLFXOXP
+LQW+HDUWUDWHLVQRWQHHGHGIRUWKHFDOFXODWLRQ
,VRYROXPHWULFUHOD[DWLRQ+LQW9HQWULFOHLVILOOLQJGXULQJDWULDOV\VWROH
,QFUHDVHGLQFUHDVHG
P/+LQW)LUVWFDOFXODWHVWURNHYROXPHIURPFDUGLDFRXWSXWDQGKHDUWUDWHWKHQXVH
FDOFXODWHGVWURNHYROXPHDQGVWDWHGHQGGLDVWROLFYROXPHWRFDOFXODWHHQGV\VWROLFYROXPH
1HWILOWUDWLRQGULYLQJIRUFHLVPP+J
$OOZLOOGHFUHDVH
(QGGLDVWROLFYROXPHRUSUHORDG
,QFUHDVHGSKRVSKRU\ODWLRQRISKRVSKRODPEDQLQFUHDVHGDFWLRQSRWHQWLDOGXUDWLRQ

3KDVH
([FLWDELOLW\
,QFUHDVHGKHDUWUDWH+LQW(DFKFKDQJHE\LWVHOIOHDGVWRLQFUHDVHGKHDUWUDWH
+HDUWUDWHUHVLVWDQFHRIFXWDQHRXVYDVFXODUEHGVDQJLRWHQVLQ,,OHYHOV+LQW8QVWUHVVHG
YROXPHGHFUHDVHVGXHWRYHQRFRQVWULFWLRQ
'HFUHDVHGUDGLXV+LQW7 3U7KXVLI3LQFUHDVHVUPXVWGHFUHDVHWRPDLQWDLQD
FRQVWDQWZDOOWHQVLRQ
3XOPRQDU\+LQW3XOPRQDU\EORRGIORZLVRIFDUGLDFRXWSXW
,QFUHDVHGFRQWUDFWLOLW\+LQWV(QGGLDVWROLFYROXPHLVSUHORDGDQGDRUWLFSUHVVXUHLV
DIWHUORDG
5DSLGYHQWULFXODUHMHFWLRQ
'HFUHDVHGGHFUHDVHG
'HFUHDVHGFDUGLDFRXWSXWFDXVHGE\LQFUHDVHGDRUWLFSUHVVXUH+LQW3UHVVXUHZRUNLVPRUH
FRVWO\WKDQYROXPHZRUN
7RWDOUHVLVWDQFHGHFUHDVHVIURPWR
%ORRGYHVVHO$+LQW9HORFLW\ IORZDUHD
'LFURWLFQRWFKDUWHULDOSUHVVXUHWUDFH
UHFHSWRUVVLQRDWULDOQRGHDQGYHQWULFXODUPXVFOH
/PD[/HQJWKWHQVLRQFXUYH
5DGLXVWRWKHIRXUWKSRZHUUHVLVWDQFHRIEORRGYHVVHOVRUUHVLVWDQFHHTXDWLRQ
3KRVSKRODPEDQVDUFRSODVPLFUHWLFXOXP
1HJDWLYHGURPRWURSLFHIIHFW$9QRGH
3XOVHSUHVVXUHDUWHULHVRUDUWHULDOSUHVVXUH
1RUPDODXWRPDWLFLW\6$QRGH
(MHFWLRQIUDFWLRQYHQWULFOH
5DSLGYHQWULFXODUHMHFWLRQLVRYROXPHWULFYHQWULFXODUUHOD[DWLRQ
'LDPHWHURIVSODQFKQLFDUWHULROHV735

(QGV\VWROLFYROXPH
6\PSDWKHWLFHIIHFWWRLQFUHDVHFRQWUDFWLOLW\

&KDSWHU
P/
0LOOLOLWHUVRUOLWHUV+LQW)(9LVWKHYROXPHH[SLUHGLQWKHILUVWVHFRQGRIIRUFHGH[SLUDWLRQ
QRWDIUDFWLRQDOYROXPH
PP+J+LQW>@
P/PLQPP+J+LQW9&2 'O3+LQW3&2LQURRPDLU >3EPP+J@
DQG3&2LQEORRGLVLQLWLDOO\]HUR
,QFUHDVHG+FRQFHQWUDWLRQLQFUHDVHG3FRLQFUHDVHGGLSKRVSKRJO\FHUDWH'3*
FRQFHQWUDWLRQ+LQW,QFUHDVHG3 ULJKWVKLIW
1RQHRIFKDQJHVOLVWHGFDXVHVDFKDQJHLQ2ELQGLQJFDSDFLW\RIKHPRJORELQ+LQW2
ELQGLQJFDSDFLW\LVWKHPLOOLOLWHURI2ERXQGWRJRIKHPRJORELQDWVDWXUDWLRQ5LJKW
DQGOHIWVKLIWVFKDQJHWKHSHUFHQWVDWXUDWLRQEXWGRQRWDOWHUWKHDPRXQWRI2WKDWFDQEH
ERXQGDWVDWXUDWLRQ
3RLVGHFUHDVHGDQG3FRLVLQFUHDVHG
3DR
%ORRGIORZYHQWLODWLRQ3FR


GHIHFWVILEURVLVULJKWWROHIWVKXQW

,QVSLUDWRU\FDSDFLW\
9LWDOFDSDFLW\)(9+LQW)(9)9&LVGHFUHDVHGLQREVWUXFWLYHEXWLQFUHDVHGLQ
UHVWULFWLYH
/PLQXWH+LQWV&DOFXODWH9GILUVWDVP/6HYHUDORIWKHJLYHQYDOXHVDUHQRW
QHHGHGIRUWKHFDOFXODWLRQ
)5&LQFUHDVHV
$LUZD\SUHVVXUH FP+2DQGLQWUDSOHXUDOSUHVVXUH FP+2

+LJKDOWLWXGH
'HFUHDVHG3L2GHFUHDVHG3D2GHFUHDVHG3D2K\SHUYHQWLODWLRQGHFUHDVHG3D&2
LQFUHDVHGS+
)(9IRUFHGYLWDOFDSDFLW\FXUYHRUPHDVXUHPHQW
 OXQJUHJLRQZKHUHWKHUHLVDLUZD\REVWUXFWLRQRUVKXQW
3D!3DDSH[RIOXQJ
$IWHUORDGRIULJKWYHQWULFOHSXOPRQDU\DUWHU\RUSXOPRQDU\DUWHULDOSUHVVXUH
FKDLQVIHWDOKHPRJORELQ
32KHPRJORELQGLVVRFLDWLRQFXUYH
6ORSHRISUHVVXUHYROXPHFXUYHFRPSOLDQFH
1RUPDOSUHVVXUHORZHUWKDQ3ELQWUDSOHXUDOVSDFH
'ODOYHRODUSXOPRQDU\FDSLOODU\EDUULHU
3RPP+JVWLPXODWHVEUHDWKLQJSHULSKHUDOFKHPRUHFHSWRUVRUFDURWLGERGLHV
(TXDOWRV\VWHPLFDUWHULDO3R
'HFUHDVH

&KDSWHU
(IIHUHQWDUWHULROH
$WDOOSODVPDJOXFRVHFRQFHQWUDWLRQVEHORZWKUHVKROG
2QFRWLFSUHVVXUHLVLQFUHDVHG+LQW0RUHIOXLGILOWHUHGRXWRIJORPHUXODUFDSLOODULHVOHDGVWR
LQFUHDVHGSODVPDSURWHLQFRQFHQWUDWLRQ
%HORZ7P+LQW%HORZ7PWKHDVVXPSWLRQWKDWUHQDOYHLQ3$+LVFRUUHFW
P2VP/+LQWV1HZWRWDOERG\ZDWHU /1D&OGLVVRFLDWHVLQWRWZRSDUWLFOHVQHZ
WRWDOERG\RVPROHV P2VP
8QFKDQJHG+LQW,I*)5LVFRQVWDQWDQGXULQHIORZUDWHLQFUHDVHVXULQHLQXOLQFRQFHQWUDWLRQ
GHFUHDVHV
,QFUHDVHG

%RZPDQ
VVSDFHRUHDUO\SUR[LPDOFRQYROXWHGWXEXOH+LQW>7)3@LQXOLQLVORZHVWEHIRUHDQ\
ZDWHUUHDEVRUSWLRQKDVRFFXUUHG
%RZPDQ
VVSDFHRUHDUO\SUR[LPDOFRQYROXWHGWXEXOH
'HFUHDVHG+LQW1D.&OFRWUDQVSRUWHULVUHTXLUHGIRUFRXQWHUFXUUHQW
PXOWLSOLFDWLRQZKLFKHVWDEOLVKHVFRUWLFRSDSLOODU\JUDGLHQW
&HQWUDOGLDEHWHVLQVLSLGXV
'HFUHDVHG
PJPLQRUDPRXQWWLPH
'HFUHDVHG
/DFNRILQVXOLQVSLURQRODFWRQHK\SHURVPRODULW\
,QKLELWLRQRI1DSKRVSKDWHFRWUDQVSRUWGHFUHDVHGXULQDU\&DH[FUHWLRQ
1HWUHDEVRUSWLRQPJPLQ
0LGSRLQWRIGLVWDOFRQYROXWHGWXEXOHRUHDUO\GLVWDOWXEXOH
&OHDUDQFHRI3$+EHORZ7P+LQWV&OHDUDQFHRIJOXFRVHEHORZWKUHVKROGLV]HURFOHDUDQFH
RILQXOLQLV*)5FOHDUDQFHRI3$+EHORZ7PLV53)
.RQDYHU\KLJKSRWDVVLXPGLHWLQXOLQ1D+&2JOXFRVHEHORZWKUHVKROG

&KDSWHU
:HDNDFLG$
P(T/
,QFUHDVHG+LQWFRPSHQVDWRU\K\SHUYHQWLODWLRQIRUPHWDEROLFDFLGRVLV
'LDUUKHDVDOLF\ODWHRYHUGRVHFKURQLFUHQDOIDLOXUH
/RRSGLXUHWLFVWKLD]LGHGLXUHWLFV+LQW&DUERQLFDQK\GUDVHLQKLELWRUVDQG.VSDULQJ
GLXUHWLFVSURGXFHPHWDEROLFDFLGRVLV
0HWDEROLFDFLGRVLVDQLRQJDSLVP(T/
P2VP/
9RPLWLQJPRUSKLQHRYHUGRVHREVWUXFWLYHOXQJGLVHDVHK\SHUDOGRVWHURQLVP

)LOWUDWLRQRI+&2DFURVVJORPHUXODUFDSLOODULHV1D+H[FKDQJHFRQYHUVLRQRI+&2
WR+&2FRQYHUVLRQRI+&2WR&2DQG+2FRQYHUVLRQRI+&2WR+DQG+&2


IDFLOLWDWHGGLIIXVLRQRI+&2

P(TGD\
7KHSDWLHQWZLWKFKURQLFUHVSLUDWRU\DFLGRVLVZLOOKDYHWKHKLJKHU+&2DQGWKHKLJKHUS+
FORVHUWRQRUPDO
1RPHWDEROLFDFLGRVLVDQGUHVSLUDWRU\DFLGRVLV
'HFUHDVHVWRZDUGQRUPDO
)LOWHUHGORDGRI+32+LQWV$PRXQWRI+LQWKHXULQHLVGHWHUPLQHGE\XULQDU\
EXIIHUVXULQHS+LVIUHH+FRQFHQWUDWLRQQRWDPRXQWRI+0RVW1+LQXULQHLV
V\QWKHVL]HGLQSUR[LPDOWXEXOHFHOOVQRWILOWHUHG
'LDEHWLFNHWRDFLGRVLV

&KDSWHU
&RQWUDFWLRQRIWKHJDOOEODGGHUVWLPXODWLRQRI+&2VHFUHWLRQVWLPXODWLRQRISDQFUHDWLF
HQ]\PHVHFUHWLRQ
'HFUHDVHGLQWUDFHOOXODUF\FOLF$03OHYHOV
/HVVQHJDWLYH+LQW0HPEUDQHSRWHQWLDOVDUHH[SUHVVHGDVLQWUDFHOOXODUSRWHQWLDOZLWK
UHVSHFWWRH[WUDFHOOXODUSRWHQWLDO
$EVRUSWLRQRIPRUHVROXWHWKDQZDWHU
,QFUHDVHVF\FOLF$03OHYHOVDFWLYDWHVVVXEXQLWRI*73ELQGLQJSURWHLQ
6XFURVH
(PXOVLILFDWLRQRIOLSLGVLQWKHLQWHVWLQDOOXPHQDFWLRQRISDQFUHDWLFOLSDVHPLFHOOHV
IRUPDWLRQRIFKROHVWHUROHVWHUFK\ORPLFURQV
+&2
7U\SVLQRJHQWRWU\SVLQSURFDUER[\SHSWLGDVHWRFDUER[\SHSWLGDVH
'XRGHQXP

*DVWULQVHFUHWLRQ*FHOOVRUJDVWULFDQWUXP
1DELOHVDOWFRWUDQVSRUWLOHXP
+.$73DVHJDVWULFSDULHWDOFHOOV
,QWULQVLFIDFWRUVHFUHWLRQJDVWULFSDULHWDOFHOOV
2PHSUD]ROHDFWLRQ+.$73DVHLQJDVWULFSDULHWDOFHOOV
1DJOXFRVHFRWUDQVSRUWHUDSLFDOOXPLQDOPHPEUDQHRILQWHVWLQDOHSLWKHOLDOFHOOV
6HFRQGDU\ELOHDFLGVRUELOHVDOWVLQWHVWLQDOOXPHQ
,QKLELWLRQRI+.$73DVH
,QFUHDVHGERG\IDWLQFUHDVHGLQVXOLQOHYHOV
&RQWUDFWLRQRIFLUFXODUPXVFOHDFWLRQRIDFHW\OFKROLQHRQFLUFXODUPXVFOH

&KDSWHU
&RUWLVRO'HFUHDVHG
$&7+,QFUHDVHG
%ORRGJOXFRVH'HFUHDVHG
$'+,QFUHDVHG
8ULQHRVPRODULW\'HFUHDVHGRUGLOXWHRUK\SRVPRWLF
6HUXP.'HFUHDVHG
%ORRGSUHVVXUH,QFUHDVHG
5HQLQ'HFUHDVHG+LQW,QFUHDVHGEORRGSUHVVXUHLQKLELWVUHQLQVHFUHWLRQ
$&7+,QFUHDVHG
&RUWLVRO,QFUHDVHG
%ORRGJOXFRVH,QFUHDVHG
6HUXP&D'HFUHDVHG
6HUXPSKRVSKDWH,QFUHDVHG
8ULQDU\F\FOLF$03'HFUHDVHG
3URODFWLQ,QFUHDVHG
$'+'HFUHDVHG

6HUXPRVPRODULW\,QFUHDVHG+LQWGXHWRGHFUHDVHG$'+
37+1RFKDQJH
7'HFUHDVHG
76+,QFUHDVHG
%DVDOPHWDEROLFUDWH'HFUHDVHG
7UHVLQXSWDNH'HFUHDVHG+LQWGXHWRGHFUHDVHG7OHYHOV
$&7+,QFUHDVHG
&RUWLVRO'HFUHDVHG
'HR[\FRUWLFRVWHURQH'2&'HFUHDVHG
$OGRVWHURQH'HFUHDVHG
'HK\GURHSLDQGURVWHURQH'+($,QFUHDVHG+LQWVKXQWLQJRILQWHUPHGLDWHVWRZDUG
DGUHQDODQGURJHQV
8ULQDU\NHWRVWHURLGV,QFUHDVHG
$&7+'HFUHDVHG
&RUWLVRO'HFUHDVHG+LQWGHFUHDVHGVHFUHWLRQRIendogenousFRUWLVRO
6HUXP&D,QFUHDVHG
37+'HFUHDVHG+LQW,QFUHDVHGVHUXP&DLQKLELWVHQGRJHQRXV37+VHFUHWLRQ
%ORRGSUHVVXUH,QFUHDVHG+LQW0LQHUDORFRUWLFRLGVDFFXPXODWHWROHIWRIEORFN
%ORRGJOXFRVH'HFUHDVHG
'+($'HFUHDVHG
$OGRVWHURQH'HFUHDVHG+LQW([FHVVGHR[\FRUWLFRVWHURQHDQGFRUWLFRVWHURQHFDXVH
LQFUHDVHGEORRGSUHVVXUHZKLFKLQKLELWVUHQLQVHFUHWLRQ

&KDSWHU
+\SRWKDODPLFG\VIXQFWLRQ
&KROHVWHUROWRSUHJQHQRORQH
K\GUR[\ODVH
+&*

3ODFHQWDIHWDOOLYHUIHWDODGUHQDOFRUWH[
'D\V
'D\V
7HVWHVPXVFOHPDVVHSLGLG\PLVGHHSHQLQJRIWKHYRLFH
0DOHSKHQRW\SHWHVWHVYDJLQD
7HVWRVWHURQHHVWUDGLRO

&RS\ULJKW(OVHYLHU,QF$OOULJKWVUHVHUYHG