WK&RQJUHVVVW6HVVLRQ

+RXVH'RFXPHQW1R

)('(5$/75$'(&200,66,21

:$6+,1*721

5(3257

21

027259(+,&/(,1'8675<

38568$1772-2,175(62/87,211R

+-5(6

6(9(17<),)7+&21*5(667+,5'6(66,21

-XQH5HIHUUHGWRWKH&RPPLWWHHRQ,QWHUVWDWHDQG)RUHLJQ

&RPPHUFHDQGRUGHUHGWREHSULQWHGZLWKLOOXVWUDWLRQV

81,7('67$7(6

*29(510(1735,17,1*2)),&(

:$6+,1*721
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE


)('(5$/75$'(&200,66,21

,WLVGLIILFXOWWRHVWLPDWHWKHH[WHQWWRZKLFKWKHGHFOLQLQJUDWHRI

SRSXODWLRQJURZWKKDVDIIHFWHGVDOHVRIPRWRUYHKLFOHVLQWKHSHULRG

VLQFHDVFRPSDUHGZLWKWKHSUHFHGLQJWZRGHFDGHV7KHSRVVL

ELOLW\WKDWLWZLOOEHFRPHDQLQFUHDVLQJO\LPSRUWDQWIDFWRULQWKHIXWXUH

PXVWEHUHFRJQL]HG

7KHXQLWVDOHVWUHQGRIPRWRUYHKLFOHVIRUPRUHUHFHQW\HDUVVHHPV

WRUHIOHFWWKHLQFUHDVLQJO\GHSUHVVLQJHIIHFWRIDGYHUVHHFRQRPLFFRQ

GLWLRQVRQXQLWVDOHVDVFRPSDUHGZLWKWKHHDUOLHUGHFDGHVRIWKH

LQGXVWU\
VKLVWRU\7KDWFKDQJHGHFRQRPLFFRQGLWLRQVRIDUHODWLYHO\

SHUPDQHQWFKDUDFWHUPXVWEHIDFHGE\WKHPRWRUYHKLFOHLQGXVWU\LV

UHDGLO\DSSDUHQWEXWZKDWWKHLULPSDFWRQWKHLQGXVWU\ZLOOEHRUWKH

XQLWVFRPSULVLQJLWRQO\WKHIXWXUHZLOOUHYHDO

6HFWLRQ&RQFHQWUDWLRQLQWKH6DOHRI0RWRU9HKLFOHV

$VVKRZQLQVHFWLRQSDJHRIWKLVFKDSWHUWKHUHKDVEHHQD

WUHPHQGRXVLQFUHDVHLQXQLWSURGXFWLRQRIPRWRUYHKLFOHVLQWKHUHOD

WLYHO\VKRUWSHULRGVLQFH$OVRDSSDUHQWZDVWKHLQFUHDVLQJ

HIIHFWRIIOXFWXDWLQJGHPDQGRQWKHLQGXVWU\SDUWLFXODUO\DIWHUWKH

:RUOG:DU$VWKHWRWDOQXPEHURIXQLWVSURGXFHGE\WKHLQGXVWU\

ZDVLQFUHDVLQJDGHFOLQLQJWUHQGLQWKHQXPEHURIPRWRUYHKLFOHPDQ

XIDFWXUHUVZDVGHYHORSLQJ$QHDUO\VWXG\RIPDQXIDFWXUHUPRUWDOLW\

VKRZHGWKDWDOWKRXJKPDQ\SDSHUFRPSDQLHVZHUHIRUPHGWKDW

QHYHUHQJDJHGLQDFWXDOSDVVHQJHUFDUSURGXFWLRQRQO\DSSUR[LPDWHO\

GLIIHUHQWFRPSDQLHVPDQXIDFWXUHGSDVVHQJHUFDUVFRPPHUFLDOO\

GXULQJWKHSHULRGWKDWKDGHLWKHUJRQHRXWRIEXVLQHVV

RUKDGEHHQDFTXLUHGE\DFRPSHWLWRUGXULQJWKHSHULRGDQGWKDW

UHPDLQHGLQ7KLVDSSHDUVHVVHQWLDOO\FRUUHFWIRUWKH&HQVXV

RI0DQXIDFWXUHVLQOLVWVVHSDUDWHPDQXIDFWXUHUVRISDVVHQJHU

YHKLFOHV7KDWWKHWUHQGWRZDUGIHZHUFRPSDQLHVFRQWLQXHGLVVKRZQ

E\WKH&HQVXVRI0DQXIDFWXUHVZKLFKOLVWVRQO\VHSDUDWH

SDVVHQJHUYHKLFOHPDQXIDFWXUHUVQRWLQFOXGLQJPDNHUVRIEXVVHVDQG

WD[LFDEVDQGDVRI0DUFK $XWRPRELOH0DQXIDFWXUHUV$VVR

FLDWLRQUHSRUWHGLQDOHWWHUWRWKH&RPPLVVLRQWKDWDWWKHSUHVHQWWLPH

WKHUHZHUHFRPSDQLHVPDQXIDFWXULQJJDVROLQHSDVVHQJHUDXWRPR

ELOHVRQDFRPPHUFLDOVFDOHLQWKH8QLWHG6WDWHV

:LWKWKHQXPEHURIPRWRUYHKLFOHSURGXFHUVGHFUHDVLQJWKURXJK

UHWLUHPHQWVIURPEXVLQHVVPHUJHUVDQGFRQVROLGDWLRQVDQGZLWKUDSLG

LQFUHDVHLQGHPDQGODUJHVFDOHSURGXFWLRQKDVEHHQWKHUHVXOW1R
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

DWWHPSWZLOOEHPDGHWRH[SODLQWKHPDUNHGGHFUHDVHLQWKHQXPEHU
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

RISDVVHQJHUFDUPDQXIDFWXUHUVDQGWKHGHFUHDVHLQWKHQXPEHURI

PDQXIDFWXUHUVRIPRVWRIWKHRWKHUW\SHVRIPRWRUYHKLFOHVH[FHSWWR

SRLQWRXWWKDWHFRQRP\RIPDVVSURGXFWLRQLQWURGXFWLRQRI\HDUO\

PRGHOVDQGWKHLQFUHDVLQJLPSRUWDQFHRIWKHVW\OHIDFWRUWKHODUJH

DPRXQWRIFDSLWDOUHTXLUHGWRILQDQFHQHZPRGHOVLQJRRGDQGEDG

\HDUVDOOIDYRUHGWKHODUJHPDQXIDFWXULQJFRPSDQ\ZLWKKXJHFDSLWDO

DQGHTXLSPHQWUHVRXUFHV

7KHH[WHQWDQGGLUHFWLRQRIFRQFHQWUDWLRQLQWKHPRWRUYHKLFOH

LQGXVWU\EDVHGXSRQGDWDIXUQLVKHGE\WKHFRPSDQLHVDUHFOHDUO\

LQGLFDWHGLQWKHIROORZLQJWDEOHZKLFKVKRZVWKHQXPEHURIPRWRU

YHKLFOHVSDVVHQJHUDQGWUXFNVROGE\WKHSULQFLSDOPRWRUYHKLFOH

PDQXIDFWXULQJJURXSVGXULQJDOWHUQDWH\HDUVIURPWRLQ

FOXVLYHDVZHOODVWKHSURSRUWLRQRIWRWDOPRWRUYHKLFOHVDOHVDFFRXQWHG

IRUE\HDFK

(SVWHLQ5&7KH$XWRPRELLH,QGXVWU\SS
5(325721027259(+,&/(,1'8675<

7DEOH&RPSDULVRQRIQXPEHUDQGSURSRUWLRQRIPRWRUYHKLFOHVSDVVHQJHUDQG

WUXFNVROGE\WKHSULQFLSDOPDQXIDFWXUHUVGXULQJDOWHUQDWH\HDUVIURPWR

6XEWRWDO

&KU\VOHU

&RUSRUD

WLRQ)RUG

0RWRU&R

*HQHUDO

0RWRUV

&RUSRUD

WLRQVDOHV

$OORWKHU

PDQXIDF

WXUHUV

VDOHVH[

FHSWFRY

HUHGLQ

&RPPLV

VLRQ
V

LQTXLU\

7RWDO

QXPEHURI

PRWRU

YHKLFOHV

VROGE\DOO

PDQXIDF

WXUHUVL

6XEWRWDO

+XGVRQ

7RWDOVDOHV

FRPSD

QLHVFRYHUHG

LQ&RP

PLVVLRQ
V

LQTXLU\

<HDU

&KU\VOHU

&RUSRUD
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

WLRQVDOHV
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

)RUG

0RWRU

&RVDOHV

*HQHUDO

0RWRUV

&RUSRUD

WLRQVDOHV

1DVK

3DFNDUG

6WXGHEDNHU

VDOHV

8QLWV

8QLWV

8QLWV

8QLWV

8QLWV

8QLWV

8QLWV



















LV,,+,












)('(5$/75$'(&200,66,21

7KHFKDQJHLQSURSRUWLRQRIWRWDOVDOHVIURPDOPRVWSHUFHQWLQ

WROHVVWKDQSHUFHQWLQDFFRXQWHGIRUE\PRWRUYHKLFOH

PDQXIDFWXUHUVRWKHUWKDQWKHVHYHQFRPSDQLHVLQFOXGHGLQWKH&RP

PLVVLRQ
VLQTXLU\UDLVHVWKHTXHVWLRQRIKRZHDFKRIWKHVHYHQFRP

SDQLHVKDYHIDUHGVLQFH%ULHIO\DVVKRZQDERYHLQFUHDVHG

VDOHVE\WKH%LJ7KUHHDFFRXQWHGIRUWKHLULQFUHDVHGSURSRUWLRQRI

WRWDOVDOHVZKLOHWKHIRXULQGHSHQGHQWVKDYHZLWKGLIILFXOW\PDLQ

WDLQHGWKHLURZQRUVKRZQVRPHORVV6LQFHWKHSHDN\HDURI

ZKHQWKH%LJ7KUHHVROGDERXWSHUFHQWRIWRWDOVDOHVRIPRWRU

YHKLFOHVDQGWKHLQGHSHQGHQWVVROGOHVVWKDQSHUFHQWWKHIRUPHU

JURXSLQFUHDVHGLWVSURSRUWLRQLQDQGZKLOHWKH

ODWWHUJURXSVKRZHGDGHFUHDVHWRDERXWSHUFHQWLQDQRWKHU

GHFUHDVHLQWROHVVWKDQSHUFHQWDQGDVOLJKWLQFUHDVHRYHU

LQ:KLOHWKH%LJ7KUHHVKRZHGDQHWLQFUHDVHRYHUWKHLU

SURSRUWLRQRISHUFHQWPWRSHUFHQWLQWKHLQGHSHQG

HQWVVKRZHGDQHWORVVGURSSLQJIURPDSSUR[LPDWHO\SHUFHQWWR

DERXWSHUFHQWRIWKHWRWDO

2IWKH%LJ7KUHH)RUG0RWRU&RZDVWKHGRPLQDQWFRPSDQ\LQ

SRLQWRIXQLWVDOHVXSWRWKHFKDQJHIURPPRGHO7WRPRGHO$LQ

DFFRXQWLQJIRUDSURSRUWLRQRIWRWDOVDOHVDVKLJKDVSHUFHQWLQ

DQGSHUFHQWLQEXWDIWHULWZDVXQDEOHWRUHJDLQLWV

IRUPHUOHDGLQJSRVLWLRQ)URPDSURSRUWLRQRIWRWDOVDOHVLQRI

SHUFHQWWKHFRPSDQ\SURSRUWLRQGHFUHDVHGWRSHUFHQWLQ

*HQHUDO0RWRUV&RUSRUDWLRQXSWRKDGQRWH[FHHGHGSHU

FHQWRIWRWDOVDOHVEXWLQWKH\HDU)RUG0RWRU&RSURGXFWLRQ

ZDVORZGXHWRFKDQJHRIPRGHOVLWVSURSRUWLRQRIWRWDOVDOHVRIPRWRU

YHKLFOHVDEUXSWO\LQFUHDVHGWRSHUFHQW$VZRXOGEHH[SHFWHG

WKLVLQFUHDVHZDVDFFRXQWHGIRUSULQFLSDOO\E\DQLQFUHDVHLQWKHSUR

SRUWLRQRI&KHYUROHWVVROGIURPSHUFHQWRIWRWDOXQLWVDOHVLQ

WRDOPRVWSHUFHQWLQ0XFKRIWKLVJDLQZDVUHWDLQHGE\

&KHYUROHWIRULQVXEVHTXHQW\HDUSHULRGVLWVSURSRUWLRQRIWRWDO

VDOHVGLGQRWIDOOEHORZSHUFHQWDQGLQDQGVRPHZKDW

H[FHHGHGSHUFHQW([FHSWIRUWKH&KHYUROHWGLYLVLRQQRRWKHU

*HQHUDO0RWRUVGLYLVLRQVKRZHGDQ\VLJQLILFDQWLQFUHDVHLQLWVSUR

SRUWLRQRIWRWDOPRWRUYHKLFOHVDOHV,QWRWDOQXPEHURIPRWRU

YHKLFOHXQLWVVROGKRZHYHU*HQHUDO0RWRUV&RUSRUDWLRQOHGDOORWKHU

FRPSDQLHVLQDFFRXQWLQJIRUDERXWSHUFHQWRIWRWDOVDOHV
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

&KU\VOHU&RUSRUDWLRQZKLFKFDPHLQWRWKHSLFWXUHLQDF
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

FRXQWHGIRURQO\DERXWSHUFHQWRIWRWDOVDOHVLQEXWE\

KDGDOPRVWWULSOHGLWVSURSRUWLRQE\DFFRXQWLQJIRUDSSUR[LPDWHO\

SHUFHQWRIWRWDOPRWRUYHKLFOHVDOHV7KH3O\PRXWKGLYLVLRQ

VKRZHGWKHJUHDWHVWLQFUHDVHLQSURSRUWLRQRIWRWDOVDOHVULVLQJIURP

DERXWSHUFHQWLQWRSHUFHQWLQDQGVKRZLQJDSURSRU

WLRQLQRISHUFHQW7KH'RGJHGLYLVLRQVKRZHGDVWHDG\

LQFUHDVHLQSURSRUWLRQRIWRWDOVDOHVZLWKDQLQFUHDVHIURPSHUFHQW

LQWRSHUFHQWLQ)RUWKHDOWHUQDWH\HDUSHULRGVVKRZQ

&KU\VOHUH[FHHGHGWKH)RUGSURSRUWLRQRIWRWDOVDOHVLQDQG

2IWKHIRXUOHDGLQJLQGHSHQGHQWVRQO\6WXGHEDNHU&RUSRUDWLRQ

DQG3DFNDUG0RWRU&DU&RVKRZHGDQLQFUHDVHLQWKHSURSRUWLRQRI

WRWDOVDOHVVLQFH7KHVHLQFUHDVHVZHUHRIIVHWE\HYHQJUHDWHU

GHFUHDVHVLQSURSRUWLRQRIWRWDOVDOHVVXIIHUHGE\+XGVRQ0RWRU&DU

&RDQG1DVK.HOYLQDWRU&RUSRUDWLRQ

,WLVDSSDUHQWWKDWVDOHVRIPRWRUYHKLFOHVLQWKH8QLWHG6WDWHVDUH

GRPLQDWHGE\WKH%LJ7KUHH*HQHUDO0RWRUV&RUSRUDWLRQ&KU\VOHU
5(325721027259(+,&/(,1'8675<

&RUSRUDWLRQDQG)RUG0RWRU&R7KDWWKHUHPDLQLQJPRWRU

YHKLFOHPDQXIDFWXUHUVDUHRIEXWPLQRULPSRUWDQFHLVLQGLFDWHGE\

WKHLUUHODWLYHO\VPDOOSURSRUWLRQRIWRWDOPRWRUYHKLFOHVDOHVDQGWKH

LQFUHDVLQJGLIILFXOW\LQYROYHGLQPDLQWDLQLQJHYHQWKHLUSUHVHQWUHODWLYH

SRVLWLRQV

&RQFHQWUDWLRQLQWKHVDOHRISDVVHQJHUFDUV$VSDVVHQJHUFDUVFRP

SULVHDODUJHSDUWRIWRWDOPRWRUYHKLFOHVDOHVWKHSURSRUWLRQRIWRWDO

SDVVHQJHUFDUVDOHVVROGE\WKHOHDGLQJPDQXIDFWXULQJJURXSVIROORZV

LQJHQHUDOWKHWUHQGVKRZQIRUFRPELQHGVDOHVRISDVVHQJHUFDUVDQG

WUXFNVH[FHSWWKDWWKHGHJUHHRIFRQFHQWUDWLRQLVPRUHSURQRXQFHG

7KHIROORZLQJWDEOHVKRZVWKHQXPEHUDQGSURSRUWLRQRIWRWDOXQLW

SDVVHQJHUFDUVDOHVEDVHGXSRQGDWDIXUQLVKHGE\WKHFRPSDQLHVDF

FRXQWHGIRUE\WKHOHDGLQJPDQXIDFWXULQJJURXSVE\DOWHUQDWH\HDUVIRU

WKHSHULRG

7DEOH&RPSDULVRQRIQXPEHUDQGSURSRUWLRQRISDVVHQJHUPRWRUYHKLFOHVVROG

E\WKHSULQFLSDOPDQXIDFWXUHUVGXULQJDOWHUQDWH\HDUVIURPWR

<HDU

7RWDOQXP

EHUSDVVHQ

JHUPRWRU

YHKLFOHV

VROGE\

DOOPDQX

IDFWXUHUV

&KU\VOHU

&RUSRUD

WLRQVDOHV

)RUG

0RWRU

&RVDOHV

6XEWRWDO

&KU\VOHU

&RUSRUD

WLRQ)RUG

0RWRU&R

*HQHUDO

0RWRUV
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

&RUSRUD
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

WLRQVDOHV

6XEWRWDO

+XGVRQ

1DVK3DFN

DUG6WXGH

EDNHUSDV

HQJHUFDU

VDOHV

7RWDOSDV

VHQJHUFDU

VDOHVFRP

SDQLHVFRY

HUHGLQ

&RPPLV

VLRQ
VLQ

TXLU\

*HQHUDO

0RWRUV&RU

SRUDWLRQ

SDVVHQFHU

FDUVDOHV

8QL8

8QL8

8QL8

8QLWV


















)('(5$/75$'(&200,66,21

RIWKLVQXPEHUWKH%LJ7KUHH*HQHUDO0RWRUV)RUGDQG&KU\VOHU

VROGDOPRVWSHUFHQWWKHLQGHSHQGHQWV+XGVRQ1DVK3DFNDUGDQG

6WXGHEDNHUVROGSHUFHQWDQGWKHUHPDLQLQJPDQXIDFWXUHUVDSSUR[L

PDWHO\SHUFHQW7KHWUHQGWRZDUGFRQFHQWUDWLRQFRQWLQXHGIRULQ

RIWRWDOXQLWVDOHVRISDVVHQJHUFDUVRIWKH%LJ7KUHH

SURSRUWLRQKDGLQFUHDVHGWRDOPRVWSHUFHQWWKHIRXUOHDGLQJLQGH

SHQGHQWVKDGGHFUHDVHGWRDSSUR[LPDWHO\SHUFHQWDQGWKHUHPDLQLQJ

PDQXIDFWXUHUVRISDVVHQJHUFDUVDFFRXQWHGIRUVRPHZKDWRYHU

SHUFHQW,WLVLQWHUHVWLQJWRQRWHWKDWWKHVHYHQPRWRUYHKLFOHPDQX

IDFWXULQJFRPSDQLHVLQFOXGHGLQWKH&RPPLVVLRQ
VLQTXLUYDFFRXQWHG

IRUSHUFHQWRIWRWDOXQLWVDOHVRISDVVHQJHUFDUVLQ&KU\VOHU

&RUSRUDWLRQDQG1DVK0RWRU&DU&RZHUHQRWLQH[LVWHQFHIRU

SHUFHQWLQDQGDOPRVWSHUFHQWLQ

7KH)RUG0RWRU&RZKLOHGRPLQDQWLQVDOHVRISDVVHQJHUFDUVXQWLO

QHYHUUHJDLQHGLWVSRVLWLRQDIWHUFKDQJLQJIURPPRGHO7WRPRGHO

$LQWKDW\HDU,WVSURSRUWLRQRIWRWDOXQLWVDOHVRISDVVHQJHUFDUH

UHDFKHGDSHDNRIDOPRVWSHUFHQWLQEXWGURSSHGWRDERXW

SHUFHQWLQ$IWHUZKHQ)RUGSDVVHQJHUFDUVDOHVFRP

SULVHGOHVVWKDQSHUFHQWRIWKHWRWDOWKHSURSRUWLRQRIWRWDOXQLW

VDOHVRISDVVHQJHUFDUVE\DOWHUQDWH\HDUVH[FHHGHGSHUFHQWRQO\

RQFHDQGLQDFFRXQWHGIRUDERXWSHUFHQW

&KHYUROHW'LYLVLRQRI*HQHUDO0RWRUV&RUSRUDWLRQZLWKDSURSRU

WLRQRIWRWDOVDOHVLQRIDERXWSHUFHQWDEUXSWO\LQFUHDVHGWR

DERXWSHUFHQWRIWRWDOXQLWSDVVHQJHUFDUVDOHVLQ,QWKH

LQWHUYHQLQJDOWHUQDWH\HDUVIURPWR&KHYUROHW
VSURSRUWLRQ

RIWRWDOXQLWVDOHVKDVQRWIDOOHQEHORZSHUFHQWH[FHHGHGSHUFHQW

LQDQGDQGDFFRXQWHGIRUSHUFHQWLQ$OORIWKH

UHPDLQLQJ*HQHUDO0RWRUV'LYLVLRQVVKRZHGDQLQFUHDVHGSURSRUWLRQ

RIWRWDOXQLWVDOHVLQRYHUEXWRQO\PRGHUDWHLQH[WHQW

2IWKH%LJ7KUHH*HQHUDO0RWRUV&RUSRUDWLRQLVE\IDUWKHOHDGLQJ

SURGXFHURISDVVHQJHUFDUVDFFRXQWLQJIRUDSSUR[LPDWHO\SHUFHQW

RIWRWDOXQLWVDOHVLQ

7KH3O\PRXWK'LYLVLRQRI&KU\VOHU&RUSRUDWLRQVKRZHGDQLQFUHDVH

LQSURSRUWLRQRIWRWDOXQLWVDOHVRISDVVHQJHUFDUVIURPSHUFHQWLQ

WRSHUFHQWLQ7KH'RGJH'LYLVLRQDFFRXQWLQJIRU

DERXWSHUFHQWRIWRWDOXQLWVDOHVLQKDGLQFUHDVHGLWVSURSRU

WLRQWRSHUFHQWLQ&KU\VOHU&RUSRUDWLRQDUHODWLYHQHZ

3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

FRPHULQWKHSDVVHQJHUFDUILHOGDFFRXQWLQJIRUDERXWSHUFHQWRI
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

XQLWSDVVHQJHUFDUVDOHVLQKDGE\LQFUHDVHGLWVSURSRUWLRQ

WRSHUFHQWDQGE\ZLWKDSURSRUWLRQRISHUFHQWDJDLQ

UHJDLQHGVHFRQGSODFHKHOGLQEXWORVWWR)RUGLQ

1HZYHKLFOHUHJLVWUDWLRQVLQSRLQWWRHYHQJUHDWHUFRQFHQ

WUDWLRQLQVDOHVWKDQKDGSUHYLRXVO\H[LVWHG'DWDUHSRUWHGLQ$XWR

PRWLYH,QGXVWULHV)HEUXDU\SDJHXVLQJ5/3RON

&RILJXUHVVKRZWKDWWKH%LJ7KUHHSURSRUWLRQRIWRWDOXQLWQHZ

SDVVHQJHUFDUUHJLVWUDWLRQVZDVDSSUR[LPDWHO\SHUFHQWRUJUHDWHU

WKDQWKHLUSURSRUWLRQRIWRWDOVDOHVLQWKHIRXUOHDGLQJ,QGH

SHQGHQWVVKRZDFRPELQHGSURSRUWLRQRIDERXWSHUFHQWZKLFK

ZDVOHVVWKDQLQDQGSDVVHQJHUFDUPDQXIDFWXUHUVRWKHUWKDQ

WKHVHYHQLQFOXGHGLQWKH&RPPLVVLRQ
VLQTXLU\DFFRXQWHGIRUEXW

SHUFHQWRIWRWDOQHZFDUUHJLVWUDWLRQVLQDVFRPSDUHGZLWKRYHU

SHUFHQWRIWRWDOVDOHVRISDVVHQJHUFDUVLQ2IWKH%LJ

7KUHH*HQHUDO0RWRUVFRQWLQXHGWROHDGLQZLWKDSURSRUWLRQ

RIWRWDOQHZSDVVHQJHUFDUUHJLVWUDWLRQVRISHUFHQW&KU\VOHU
5(325721027259(+,&/(,1'8675<

&RUSRUDWLRQUDQNHGVHFRQGZLWKQHDUO\SHUFHQWDQG)RUG0RWRU

&RWKLUGZLWKSHUFHQW

7KHIROORZLQJFKDUWVKRZVJUDSKLFDOO\WKHWUHQGRIFRQFHQWUDWLRQ

LQPDQXIDFWXUHUVDOHVRISDVVHQJHUFDUVE\DOWHUQDWH\HDUV

&KDUI3URSRUWLRQRI7RWDO8QLW3DVVHQJHU&DU6DOHV

$FFRXQWHGIRUE\(DFKRIWKH
%LJ7KUHHWKH)RXU
,QGHSHQ

GHQWV+XGVRQ1DVK3DFNDUG6WXGHEDNHU&RPELQHGDQG$OO

2WKHU0DQXIDFWXUHUVRI3DVVHQJHU&DUV

IRUWKH$OWHUQDWH<HDUV

+URZWRHSH+D YUVIIXRVRQW0LV0ILLDH!DR'IR6UYRH0UW[A2UIHD$KVV XVDID0W.P.ULWYW[V

,PSRUWDQFHRIORZSULFHGFDUVDOHV7KH)RUG0RWRU&RPRGHO7

SDVVHQJHUFDUGRPLQDWHGWKHORZSULFHGILHOGXQWLOWKHFKDQJHWR

PRGHO$ZDVPDGHLQDOWKRXJK*HQHUDO0RWRUV
ORZSULFH

FDU&KHYUROHWZDVEHFRPLQJRILQFUHDVLQJLPSRUWDQFH0RGHO7

)RUGDFFRXQWHGIRUSHUFHQWRIWRWDOXQLWSDVVHQJHUFDUVDOHVLQ

ZKLOH&KHYUROHWDFFRXQWHGIRUDERXWSHUFHQWEXWLQ

ZKHQPRGHO7DFFRXQWHGIRUDERXWWKHVDPHSURSRUWLRQRIWRWDOXQLW

VDOHVDVLQ&KHYUROHWKDGLQFUHDVHGLWVSURSRUWLRQWRDOPRVW

SHUFHQW,QZKHQWKHFKDQJHWRPRGHO$ZDVEHLQJPDGH
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE


)('(5$/75$'(&200,66,21

)RUGVROGRQO\SHUFHQWRIDOOSDVVHQJHUFDUVDQG&KHYUROHWVROG

DOPRVWSHUFHQWEXWLQZKHQSHDNVDOHVRISDV

VHQJHUXQLWVZHUHPDGH&KHYUROHW
VSURSRUWLRQGURSSHGEDFNWR

DERXWSHUFHQW)RUG
VLQFUHDVHGWRSHUFHQWDQGDQHZFRPHULQ

WKHORZSULFHILHOG&KU\VOHU&RUSRUDWLRQ
V3O\PRXWKDFFRXQWHGIRU

DSSUR[LPDWHO\SHUFHQWRIWRWDOXQLWSDVVHQJHUFDUVDOHV

6XEVHTXHQWO\3O\PRXWKDOWKRXJKLQFUHDVLQJLWVSURSRUWLRQRI

WRWDOXQLWSDVVHQJHUFDUVDOHVVXEVWDQWLDOO\VWLOOUHPDLQHGLQWKLUG

SODFHLQZLWKDSURSRUWLRQRIDSSUR[LPDWHO\SHUFHQW)RUG

UHJDLQHGILUVWSODFHIURP&KHYUROHWLQZLWKDSURSRUWLRQRI

DOPRVWSHUFHQWEXWIHOOEDFNWRVHFRQGSODFHLQZLWKDSUR

SRUWLRQRIDERXWSHUFHQWDQG&KHYUROHWKHOGILUVWSODFHLQWKH

DOWHUQDWH\HDUSHULRGVRIDQGZLWKSURSRUWLRQVRI

WRWDOSDVVHQJHUFDUVDOHVRISHUFHQWSHUFHQWDQGSHUFHQW

UHVSHFWLYHO\

&RPELQHGXQLWVDOHVRIORZSULFHGSDVVHQJHUFDUVE\WKH%LJ

7KUHHVKRZWKHLULQFUHDVLQJGRPLQDQFHLQWKLVILHOGIRULQFRP

ELQHGXQLWVDOHVRI&KHYUROHW)RUGDQG3O\PRXWKFDUVDFFRXQWHGIRU

QHDUO\SHUFHQWRIWRWDOSDVVHQJHUFDUVDOHVLQIRUDOPRVW

SHUFHQWLQIRUSHUFHQWLQIRUQHDUO\SHUFHQWDQGLQ

IRUDOPRVWSHUFHQW,WLVVLJQLILFDQWWKDWWKHWKUHHORZ

IULFHGFDUV&KHYUROHW)RUGDQG3O\PRXWKDFFRXQWHGIRUWKHLU

DUJHVWSURSRUWLRQRIWRWDOXQLWVDOHVLQD\HDURIVHYHUHGHSUHV

VLRQZKLOHLQZLWKEXVLQHVVUHODWLYHO\LPSURYHGWKHSURSRUWLRQ

RIWRWDOXQLWSDVVHQJHUFDUVDOHVIRUWKHWKUHHORZSULFHFDUVGHFUHDVHG

WRDSSUR[LPDWHO\SHUFHQW

5/3RON &RQHZFDUUHJLVWUDWLRQILJXUHVDVUHSRUWHGLQ$XWR

PRWLYH,QGXVWULHV)HEUXDU\SDJHVKRZWKDWLQ

&KHYUROHWOHGLQWKHORZSULFHGILHOGZLWKDSURSRUWLRQRISHUFHQW

RIWRWDOQHZSDVVHQJHUFDUUHJLVWUDWLRQVRI)RUGZDVVHFRQG

ZLWKDSURSRUWLRQRISHUFHQWDQG3O\PRXWKZDVWKLUGZLWKD

SURSRUWLRQRISHUFHQWRUWKHFRPELQHGQHZSDVVHQJHUFDUUHJLV

WUDWLRQVDFFRXQWHGIRUE\WKH%LJ7KUHHORZSULFHGFDUVZDVDERXW

SHUFHQW7ZRRWKHUFDUVLQWKHORZSULFHGUDQJH:LOO\V:KLSSHW

DQG$XVWLQ%DQWDPWRJHWKHUDFFRXQWHGIRUOHVVWKDQSHUFHQWRI

QHZFDUUHJLVWUDWLRQVLQ

,WLVDSSDUHQWWKDWVDOHVRIQHZSDVVHQJHUFDUVVLQFHKDYHEHHQ
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

SUHGRPLQDQWO\LQWKHORZSULFHGFODVVDQGWKDW*HQHUDO0RWRUV
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

)RUGDQG&KU\VOHUGRPLQDWHWKLVILHOGDVWKH\GRWKHVDOHRIQHZ

SDVVHQJHUFDUVLQJHQHUDO,WVKRXOGEHSRLQWHGRXWKRZHYHUWKDW

ZKHUHDV)RUG0RWRU&RGRPLQDWHGWKHORZSULFHGILHOGSULRUWR

QRZWZRDGGLWLRQDOSRZHUIXORUJDQL]DWLRQV*HQHUDO0RWRUVDQG

&KU\VOHUDUHLPSRUWDQWFRQWHQGHUVIRUWKLVPDUNHW0RUHUHFHQWO\

6WXGHEDNHU&RUSRUDWLRQDQQRXQFHGLWVHQWUDQFHLQWRWKHORZSULFHG

SDVVHQJHUFDUILHOGZKLFKLVLQGLFDWLYHRIZKHUHWKHJUHDWHVWVDOHV

SRVVLELOLWLHVDUHWKRXJKWWRH[LVW

0DQXIDFWXUHUV
SULFHFRPSHWLWLRQLQORZSULFHGFDUV1RWZLWKVWDQG

LQJWKHKLJKGHJUHHRIFRQFHQWUDWLRQLQWKHVDOHRIORZSULFHGSDVVHQJHU

FDUVDFWLYHFRPSHWLWLRQIRUWKLVPDUNHWVWLOOH[LVWV,WDSSHDUVWKDW

)RUG0RWRU&RLVODUJHO\UHVSRQVLEOHIRUWKLVFRPSHWLWLYHVLWXDWLRQ

6LQFHLQWURGXFLQJPRGHO7LQWKH)RUG0RWRU&RIROORZHGWKH

SROLF\RIGHFUHDVLQJWKHSULFHRILWVSURGXFWHYHQZKHQDWWLPHVWKH

GHPDQGZDVJUHDWHUWKDQSURGXFWLRQDQGWKHUHZHUHQRFRPSHWLWRUV

LQWKHORZSULFHGILHOG)XUWKHUPRUH)RUGKDVQHYHUEHHQDPHPEHU
5(325721027259(+,&/(,1'8675<

RIWKHSRZHUIXOPRWRUYHKLFOHPDQXIDFWXUHUV
WUDGHJURXS$XWR

PRELOH0DQXIDFWXUHUV$VVRFLDWLRQRULWVSUHGHFHVVRURUJDQL]DWLRQV

EXWIROORZHGDQLQGHSHQGHQWFRXUVHZLWKUHVSHFWWRSURGXFWLRQSULFH

DQGVDOHVSROLFLHV7KLVLQGHSHQGHQFHRIDFWLRQKDVEHHQDNHHQGLV

DSSRLQWPHQWWRRWKHUPRUHFRRSHUDWLYHPLQGHGPRWRUYHKLFOHPDQX

IDFWXUHUVLQWKHLQGXVWU\SDUWLFXODUO\LQWKHORZSULFHILHOGIRULW

FRPSHOOHGWKHPWRSULFHWKHLUFDUVORZHUWKDQRWKHUZLVHPLJKWKDYH

EHHQWKHFDVH([FHUSWVIURPWKHPLQXWHVRIPHHWLQJVRIWKHVDOHV

PDQDJHUV
FRPPLWWHHRIWKH1DWLRQDO$XWRPRELOH&KDPEHURI&RP

PHUFHQRZWKH$XWRPRELOH0DQXIDFWXUHUV$VVRFLDWLRQVXEVWDQWLDWH

WKLVDVZHOODVLQGLFDWHZKDWPLJKWKDYHWDNHQSODFHLQWKHORZSULFH

ILHOGQRZGRPLQDWHGE\&KHYUROHW)RUGDQG&KU\VOHUKDG)RUG

0RWRU&REHHQPRUHFRRSHUDWLYHO\LQFOLQHG

$WDPHHWLQJRIWKHVDOHVPDQDJHUV
FRPPLWWHHRIWKHPDQXIDF

WXUHUV
DVVRFLDWLRQKHOGRQ2FWREHUZKLOHWKHVXEMHFWRI

GHFUHDVLQJWKHQXPEHURISDVVHQJHUFDUPRGHOVDQGRSWLRQVZDV

EHLQJGLVFXVVHG0U*UDQWFKDLUPDQRIWKHFRPPLWWHHDQGYLFH

SUHVLGHQWRI*HQHUDO0RWRUV&RUSRUDWLRQPDGHWKHIROORZLQJLQIRUPD

WLYHVWDWHPHQW

  ,QRWLFHGWKHVSUHDGEHWZHHQWKHVHGDQDQGFRDFKZKLFKLVDYHU\

DJJUDYDWLQJVXEMHFW:HDUHSULFLQJFRDFKHVWRRORZLQWKHORZSULFHGILHOGLQ

UHODWLRQWRWKHVHGDQ:KHQWKH)RUGPRGHO$FDPHRXWFRDFKHVZHUHPRUH

SRWHQWWKDQQRZ7KH\ZHUHWKHNH\VWRQHRIWKHVLWXDWLRQ+HIL[HGWKHSULFH

RIWKHFRDFKEHORZWKHSRLQWDWZKLFKLWVKRXOGKDYHEHHQIL[HGIURPDFRVW

VWDQGSRLQW:HIROORZHGVXLWDQGKDYHEHHQGRLQJLWHYHUVLQFHDQGVRKDVKH

,IZHLQFUHDVHGRXUFRDFKSULFHLWLVTXLWHFHUWDLQWKHFRQGLWLRQZRXOG

FKDQJH  

6RPHPRQWKVODWHURQ'HFHPEHUDWDQRWKHUPHHWLQJRI

WKHVDOHVPDQDJHUV
FRPPLWWHH0U*UDQWPDGHLQSDUWWKHIROORZLQJ

VLJQLILFDQWVWDWHPHQWVLQWKHFRXUVHRIDFRPPLWWHHGLVFXVVLRQRI

DGYHUWLVLQJGHOLYHUHGSULFHVDQGDSURSRVHGFDUJUHDVLQJSODQ

  ,UHDOO\FDQ
WYLVXDOL]H&KHYUROHWJRLQJLQZLWKRXW)RUGLQWKH

SLFWXUH6D\IRUH[DPSOH)RUGFRPHVLQWRWKHPDUNHWQH[WVSULQJZLWKDORZ

SULFHFDUDQGZHZLOOVD\KHIROORZVKLVXVXDOPHWKRGRIJHWWLQJDORWRISXEOLFLW\

DQGZHZLOOVD\KLVSUHVHQW)RUGLVSULFHGDWDQGVD\KHVKRXOGFRPHRXWDW

RUDQGZHZLOOVD\WKDW&KHYUROHWGHFLGHGWRPDNHDPRYHWRFKHFNPDWH

KLPRUORZHUWKHLUSULFHV,IZHZHUHERXQGE\DJUHHPHQWDQGLIZHFRXOGQ
W

JRLQWRWKHQHZVSDSHUVGRZQLQWKDWDUHDZKHUHSULFHLVVRYLWDODIDFWRUZLWK
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

DQ\WKLQJEXWGHOLYHUHGSULFHVZHZRXOGEHXQGHUDWHUULEOHKDQGLFDS  
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

  0\MXGJPHQWLVWKDWDIWHUWDONLQJZLWKWKHRIILFLDOVRIWKH&RUSRUD

WLRQ&KHYUROHWLVQRWJRLQJWRGRLWXQOHVV)RUGFRPHVLQ7KDWLVP\MXGJPHQW

DIWHUWDONLQJZLWKWKHVHPHQDQG0U.QXGVHQLVJRLQJWRSUREDEO\ZLQRXWDV

WKH\NQRZKHZRQ
WZDQWWRSODFHKLPVHOILQDSRVLWLRQVRWKDWLI)RUGPDNHVD

PRYHKHFDQ
WPDNHDPRYH  

  0U)RUGZKRZRQ
WSOD\LVSUHWW\PXFKWKHSULFHVHWWHULQWKLV

LQGXVWU\,
OOEHWLI0U)RUG
VFDUVZHUHKLJKHURXUVZRXOGEHKLJKHU

:HFDUHDERXW)RUG:HKDYHEHHQVWUXJJOLQJZLWKKLPIRU\HDUV  

)RUG0RWRU&R
VLQGHSHQGHQFHZLWKUHVSHFWWRSULFHRISDVVHQJHU

FDUVPWKHORZSULFHILHOGLVLOOXVWUDWHGE\WKHSULFHDFWLYLWLHVRI*HQHUDO

0RWRUV&RUSRUDWLRQ&KHYUROHW'LYLVLRQDQG&KU\VOHU&RUSRUDWLRQ

3O\PRXWK'LYLVLRQLQ3ULFHVRQFHUWDLQ&KHYUROHWDQG3O\PRXWK

PRGHOVZHUHLQFUHDVHGHIIHFWLYHLQ$SULORIWKDW\HDUGXHWRFODLPHG

LQFUHDVHLQSURGXFWLRQFRVWVEXW)RUGPDGHQRFKDQJHLQKLVSULFH

VFKHGXOH,QWKHPRQWKIROORZLQJERWK&KHYUROHWDQG3O\PRXWK

IHOORIILQVDOHVZKLOH)RUGVKRZHGDQLQFUHDVH,QRUGHUWRUHJDLQ

WKHLUUHVSHFWLYHVDOHVSRVLWLRQVERWK&KHYUROHWDQG3O\PRXWKIRXQG

LWQHFHVVDU\WRDQQRXQFHSULFHUHGXFWLRQVLQ-XQHRQWKHPRGHOV

SUHYLRXVO\PFUHDVHGLQSULFH


)('(5$/75$'(&200,66,21

,QFRQWUDVWWR)RUG0RWRU&R
VLQGHSHQGHQFHRIDFWLRQDZLOOLQJ

QHVVWRFRRSHUDWHRQYDULRXVSROLFLHVSHUYDGHVWKHPHPEHUVKLSRIWKH

$XWRPRELOH0DQXIDFWXUHUV$VVRFLDWLRQQDWXUDOO\GRPLQDWHGE\WKH

JLDQWVLQWKDWRUJDQL]DWLRQ*HQHUDO0RWRUV&RUSRUDWLRQDQG&KU\VOHU

&RUSRUDWLRQ,QWKHPLQXWHVRIWKHVDOHVPDQDJHUV
PHHWLQJ1DWLRQDO

$XWRPRELOH&KDPEHURI&RPPHUFHKHOG6HSWHPEHUWKH

IROORZLQJVWDWHPHQWDSSHDUHG

  3ULFHFKDQJHV7KHFRPPLWWHHDJUHHGWKDWWKHPHPEHUVRIWKH

1DWLRQDO$XWRPRELOH&KDPEHURI&RPPHUFHZRXOGQRWFKDQJHSULFHVRQDQ\FDU

PRGHOVIURPWKHGD\SUHFHGLQJWKH1HZ<RUNVKRZXQWLOWKHFORVLQJGDWHRIWKH

&KLFDJRVKRZ  

$VWDWHPHQWPDGHE\0U)LHOGVD&KU\VOHU&RUSRUDWLRQH[HFXWLYH

DWD1DWLRQDO$XWRPRELOH&KDPEHURI&RPPHUFHVDOHVPDQDJHUV

FRPPLWWHHPHHWLQJKHOG'HFHPEHULQWKHFRXUVHRIGLVFXVVLQJ

DGYHUWLVHGGHOLYHUHGSULFHVIXUWKHULOOXVWUDWHVWKHFRRSHUDWLYHVSLULW

RIWKHDVVRFLDWLRQ
VPHPEHUVKLS7KHUHLVQRUHDVRQWREHOLHYHWKDW

WKHVLWXDWLRQKDVFKDQJHGIRUPDVZHOODVLQ0U*UDQW

YLFHSUHVLGHQWRI*HQHUDO0RWRUVZDVFKDLUPDQRIWKHFRPPLWWHHDQG

0U)LHOGV&KU\VOHU&RUSRUDWLRQ0U*LOPDQ3DFNDUG0RWRU&DU

&RDQG0U+RIIPDQ6WXGHEDNHU&RUSRUDWLRQZHUHPHPEHUVRI

WKLVLPSRUWDQWFRPPLWWHH0U)LHOGV
UHPDUNIROORZV

  3O\PRXWKZLOOJRLI&KHYUROHWJRHV:HGRQ
WFDUHDERXW)RUG

,IZHDOOVWXFNWRJHWKHUWKHZD\ZHDOZD\VKDYHZHZRXOGQ
WFDUHZKHWKHUKH

FDPHLQRUQRWEXWHYHQWXDOO\)RUGZRXOGFRPHLQ  

,QHUWLDRIFRPSOH[ODUJHVFDOHPRWRUYHKLFOHPDQXIDFWXULQJ$VHDUO\

DVZKHQ*HQHUDO0RWRUV&RUSRUDWLRQDFFRXQWHGIRUVRPHZKDW

OHVVWKDQSHUFHQWRIWRWDOXQLWPRWRUYHKLFOHVDOHVJUHDWVL]HZDV

IRXQGWRKDYHGHILQLWHOLPLWDWLRQV7KHGLIILFXOW\RIRYHUFRPLQJWKH

LQHUWLDRIJUHDWVL]HLQDQRUJDQL]DWLRQOLNH*HQHUDO0RWRUV&RUSRUD

WLRQZDVGLVFXVVHGE\$OIUHG36ORDQDWDPHHWLQJRIWKHFRPSDQ\
V

VDOHVFRPPLWWHHKHOG-XO\DVIROORZV

*HQHUDO0RWRUVVKRXOGEHPRUHSURJUHVVLYHLQWKLVDQGRWKHUGLUHFWLRQV,Q

SUDFWLFDOO\DOORXUDFWLYLWLHVZHVHHPWRVXIIHUIURPWKHLQHUWLDUHVXOWLQJIURPRXU

JUHDWVL]H,WVHHPVWREHKDUGIRUXVWRJHWDFWLRQZKHQLWFRPHVWRDPDWWHU

RISXWWLQJRXULGHDVDFURVV7KHUHDUHVRPDQ\SHRSOHLQYROYHGDQGLWUHTXLUHV

VXFKDWUHPHQGRXVHIIRUWWRSXWVRPHWKLQJQHZLQWRHIIHFWWKDWDQHZLGHDLVOLNHO\

WREHFRQVLGHUHGLQVLJQLILFDQWLQFRPSDULVRQZLWKWKHHIIRUWWKDWLWWDNHVWRSXW
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

LWDFURVV
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

,FDQ
WKHOSEXWIHHOWKDW*HQHUDO0RWRUVKDVPLVVHGDORWE\UHDVRQRIWKLV

LQHUWLD<RXKDYHQRLGHDKRZPDQ\WKLQJVFRPHXSIRUFRQVLGHUDWLRQLQWKH

WHFKQLFDOFRPPLWWHHDQGHOVHZKHUHWKDWDUHGLVFXVVHGDQGDJUHHGXSRQDVWR

SULQFLSOHZHOOLQDGYDQFHEXWWRRIUHTXHQWO\ZHIDLOWRSXWWKHLGHDVLQWRHIIHFW

XQWLOFRPSHWLWLRQIRUFHVXVWRGRVR6RPHWLPHV,DPDOPRVWIRUFHGWRWKHFRQ

FOXVLRQWKDW*HQHUDO0RWRUVLVVRODUJHDQGLWVLQHUWLDVRJUHDWWKDWLWLVLPSRVVLEOH

IRUXVWRUHDOO\EHOHDGHUV

3HUKDSVLWZRXOGEHVDIHVWIRUXVWROHWWKHRWKHUIHOORZWDNHWKHLQLWLDWLYHDQG

WKHQEHVDWLVILHGWRIROORZKLPDVEHVWZHFDQ,WVHHPVDSLW\KRZHYHUWKDWZLWK

RXUUHVRXUFHVDQGDELOLW\ZHFDQ
WEHDOLWWOHPRUHDJJUHVVLYH

6HFWLRQ([SRUWVDQG,PSRUWVRI0RWRU9HKLFOHV

,QRIXQLWVVROGRUSHUFHQWZHUHH[SRUWHG

,QWKHVDPH\HDURQO\XQLWVQHZDQGXVHGZHUHLPSRUWHG7KH

LPSRUWDQFHRIH[SRUWVDQGLPSRUWVRIPRWRUYHKLFOHVLQWHUPVRIFRP

SOHWHPRWRUYHKLFOHRUFKDVVLVXQLWVLVVKRZQLQWKHIROORZLQJWDEXODWLRQ

FRYHULQJWKHSHULRG

86'HSDUWPHQWRI&RPPHUFH%XUHDXR)RUHLJQDQG'RPHVWLF&RPPHUFH$XWRPRWLYH$HURQDXWLFV

7UDGH'LYLVLRQ
&+$37(5;9,,)$&725<35,&(6$1'48$/,7<2)&$56

6HFWLRQ,QWURGXFWLRQ

7KHUHDUHSUHVHQWHGLQWKLVFKDSWHUFHUWDLQGDWDUHVSHFWLQJWUHQGV

RIIDFWRU\SULFHVDQGLPSRUWDQWLPSURYHPHQWVLQSDVVHQJHUDXWRPR

ELOHVSDUWLFXODUO\GXULQJWKHSDVW\HDUV'XULQJWKHSHULRGEH

JLQQLQJZLWK-DQXDU\WKHODUJHPDMRULW\RIDXWRPRELOH

PDQXIDFWXUHUVMRLQHGLQDSDWHQWSRROLQJDJUHHPHQWZKHUHE\WKH\

ZHUHUHOLHYHGRIWKHQHFHVVLW\RIVSHQGLQJWLPHDQGPXFKPRQH\LQ

GHIHQGLQJSDWHQWOLWLJDWLRQ7KLVHQDEOHGWKHVHPDQXIDFWXUHUVWR

GHYRWHWKHLUHQHUJLHVDQGUHVRXUFHVWRPDQXIDFWXULQJWKHPRVWVDOHDEOH

FDUSRVVLEOH$QRWDEOHH[FHSWLRQZDVWKHFDVHRIWKH)RUG0RWRU

&RZOLLFKZDVGHQLHGPHPEHUVKLSLQWKHDVVRFLDWLRQDQGZDVIRUFHG

WRGHIHQGKLJKO\H[SHQVLYHSDWHQWOLWLJDWLRQZKLFKLWILQDOO\ZRQLQ

WKH8QLWHG6WDWHV6XSUHPH&RXUW

7KHWUHPHQGRXVJURZWKLQFRQVXPHUGHPDQGHQDEOHGDXWRPRELOH

PDQXIDFWXUHUVWRJUHDWO\UHGXFHFRVWVWKURXJKXQSURYHGPHWKRGV

RIPDVVSURGXFWLRQ5HGXFHGFRVWVDUHRIFRXUVHWKHQDWXUDOEDVLV

IRUSULFHUHGXFWLRQVLQDFRPSHWLWLYHLQGXVWU\3DUWRIWKLVUHGXFWLRQ

LQFRVWZDVSDVVHGRQWRWKHFRQVXPHUWKURXJKLPSURYHGSURGXFWV

DQGUHGXFHGSULFHVDQGSDUWRILWZDVUHWDLQHGE\WKHPDQXIDFWXUHU

7KHSUHFHGLQJFKDSWHUVGHYRWHGWRWKHVHYHQOHDGLQJDXWRPRELOH

PDQXIDFWXUHUVVKRZWKDWVRPHRIWKHPLQSDUWLFXODUPDGHYHU\

ODUJHSURILWVZKLFKLQGLFDWHVWKDWIRUWKHPDWOHDVWSULFHUHGXFWLRQV

DQGDGGHGLPSURYHPHQWVZHUHQRWFRPPHQVXUDWHZLWKUHGXFWLRQLQ

PDQXIDFWXULQJFRVWV

,PSURYHPHQWVLQPRWRUYHOXFOHVKDYHFRPHIURPPDQ\VRXUFHV

'HYHORSPHQWVLQ(XURSHKDYHEHHQXWLOL]HGE\$PHULFDQPDQXIDF

WXUHUVLPSURYHPHQWVLQSDUWVDQGDFFHVVRULHVPDQ\GHYHORSHGE\

SDUWVDQGDFFHVVRU\PDQXIDFWXUHUVKDYHFRQWULEXWHGWRWKHPRGHUQ

FDUIDFWRU\PDFKLQHU\DQGWRROPDQXIDFWXUHUVKDYHPDGHSRVVLEOH

HFRQRPLHVLQSURGXFWLRQDGYDQFHPHQWVLQRWKHULQGXVWULHVVXFKDV

LQHOHFWULFUHIULJHUDWLRQKDYHDOVRFRQWULEXWHGWRWRGD\
VSURGXFW

7KHHDVHRIGULYLQJDQGJUHDWHUVDIHW\RIWRGD\
VDXWRPRELOHDUH

DPRQJWKHPRVWLPSRUWDQWUHFHQWLPSURYHPHQWV0RGHUQIRXU

ZKHHOK\GUDXOLFEUDNHVVDIHW\JODVVORZHUFHQWHURIJUDYLW\DOOVWHHO

ERGLHVHDVLHUDQGPRUHGHSHQGDEOHVWHHULQJTXLHWHUDQGPRUHHIILFLHQW

WUDQVPLVVLRQHDVLHUVKLIWLQJRIJHDUVJUHDWHUVDIHO\LQFUHDVHGSRZHU

DQGGXUDELOLW\DQGLQFUHDVHGULGLQJFRPIRUWDUHDPRQJWKHPRUH

UHFHQWFRQWULEXWLRQVZKLFKKDYHEHHQPDGHVWDQGDUGRQWRGD\
V
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

FDUV6RPHRIWKHVHDQGRWKHULPSURYHPHQWVKDYHEHHQGHYHORSHG
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

E\SUHVHQWPDQXIDFWXUHUVRWKHUVE\FRPSDQLHVQRORQJHUSURGXFLQJ

SDVVHQJHUFDUVDQGVWLOORWKHUVE\SDUWVPDQXIDFWXUHUV,QWKHODWWHU

FDVHKRZHYHUWKHSDUWVPDQXIDFWXUHUKDGWRVHOOKLVLPSURYHPHQW

WRDFDUPDQXIDFWXUHU

6HHSDJHHWVHT

6HHSDJH


5(325721027259(+,&/(,1'8675<



6HFWLRQ6FRSHRI&KDSWHU

0HWKRGRIWUHDWPHQW,QRUGHUWRGHYHORSPRUHLQGHWDLOWKHVXEMHFW

RIZKDWWKHPRWRUYHKLFOHSXUFKDVHURIWRGD\UHFHLYHVIRUKLVDXWR

PRELOHGROODUDVFRPSDUHGZLWKZKDWKHUHFHLYHGDSSUR[LPDWHO\

\HDUVDJRSULFHDQGVSHFLILFDWLRQVGDWDRQUHDVRQDEO\FRPSDUDEOH

IRXUGRRUVHGDQVZHUHREWDLQHGIURPOHDGLQJPDQXIDFWXUHUV,QIRU

PDWLRQVXEPLWWHGE\WKHIROORZLQJFRPSDQLHVZLOOEHFRQVLGHUHG

DOWKRXJKGDWDIURPWKHUHPDLQLQJFRPSDQLHVZRXOGSUREDEO\VKRZ

VLPLODUUHVXOWV&KU\VOHU&RUSRUDWLRQ)RUG0RWRU&R*HQHUDO

0RWRUV&RUSRUDWLRQ+XGVRQ0RWRU&DU&R1DVK.HOYLQDWRU&RU

SRUDWLRQ3DFNDUG0RWRU&DU&RDQG6WXGHEDNHU&RUSRUDWLRQ

'XHWRWKHPDQ\LPPHDVXUDEOHHOHPHQWVLQYROYHGQRPDWKHPDWLFDO

H[DFWQHVVFDQEHDWWDLQHG+RZHYHUE\UHYLHZLQJVRPHRIWEHSHU

WLQHQWIDFWRUVDYDLODEOHLWLVSRVVLEOHWRIRUPDUHDVRQDEO\GHILQLWH

RSLQLRQHYHQWKRXJKQRWLQWKHIRUPRIDPDWKHPDWLFDOTXDQWLW\2I

LPSRUWDQFHLQWKLVVWXG\ZLOOEHDQH[DPLQDWLRQRIWKHSULFHWUHQG

RIVSHFLILHGIRXUGRRUVHGDQPRGHOVIREIDFWRU\UHODWLYHWRZHLJKW

OHQJWKRIZKHHOEDVHQXPEHURIF\OLQGHUVDQGPD[LPXPEUDNHKRUVH

SRZHUDOVRDFRPSDULVRQZLOOEHPDGHEHWZHHQYDULRXVSHULRGVRI

FHUWDLQIHDWXUHVVXFKDVW\SHRIWUDQVPLVVLRQW\SHRIVKRFNDEVRUEHUV

W\SHRIEUDNHVDQGWKHHTXLSPHQWDQGDFFHVVRULHVLQFOXGHGLQWKH

IDFWRU\IRESULFH

$VDIXUWKHUDLGWRWKHUHDGHULQHYDOXDWLQJWKHWUHQGRISXUFKDVLQJ

SRZHURIWKHDXWRPRWLYHGROODUGXULQJWKHODVWRU\HDUVWKHUH

LVDOVRSUHVHQWHGXVXDOO\LQFKURQRORJLFDORUGHUWKHDXWRPRWLYH

HQJLQHHULQJDQGRWKHUSURGXFWLPSURYHPHQWFRQWULEXWLRQVRIHDFKRI

WKHFRPSDQLHVLQFOXGHGLQWKLVGLVFXVVLRQDVVXEPLWWHGE\WKHPWR

WKH&RPPLVVLRQ7KLVLQIRUPDWLRQZLOOLQGLFDWHWKHVFRSHDQGYDULHW\

RIPRWRUYHKLFOHLPSURYHPHQWVZKLFKLWLVFODLPHGKDYHDGGHGVR

PXFKWRWKHPRWRUYHKLFOHRIWRGD\LQWHUPVRIVDIHW\SRZHUFRPIRUW

HIILFLHQF\DQGEHDXW\

3ULFHWUHQGVDQGPRWRUYHKLFOHW\SHV,QFRQVLGHULQJWKHSULFHWUHQGV

RQIRXUGRRUVHGDQVLQWKLVVHFWLRQLWVKRXOGEHUHPHPEHUHGWKDWLQ

RUFORVHGPRWRUYHKLFOHVZHUHSULFHGUHODWLYHO\KLJKDV

FRPSDUHGWRRSHQPRGHOVEHFDXVHWKHPDMRUSURSRUWLRQRIFDUVVROG

ZHUHRIWKHODWWHUW\SRDQGTXDQWLW\SURGXFWLRQRIFORVHGERGLHVKDG

DV\HWQRWEHHQSHUIHFWHG7KXVWKHDPRXQWRISULFHUHGXFWLRQLQWKH
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

HDUO\\HDUVRIWKHSHULRGXQGHUFRQVLGHUDWLRQLVVRPHZKDWDFFHQWXDWHG
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

DVFRPSDUHGZLWKWKDWIRURSHQFDUV$VFORVHGPRGHOSURGXFWLRQ

PHWKRGVZHUHUDSLGO\LPSURYHGDQGXQLWYROXPHLQFUHDVHGRSHUDWLQJ

HFRQRPLHVUHDOL]HGZHUHGXHWRWKHFRPSHWLWLYHVLWXDWLRQDWOHDVWLQ

SDUWSDVVHGRQWRWKHPRWRUYHKLFOHSXUFKDVHU$VLPLODUSULFHWUHQG

UHVXOWHGZKHQWRXULQJFDUVZHUHILUVWSODFHGRQWKHPDUNHW3ULFHV

ZHUHUHODWLYHO\KLJKRQWRXULQJFDUVWREHJLQZLWKEXWDVSURGXFWLRQ

HFRQRPLHVZHUHUHDOL]HGGXHWRWHFKQRORJLFDOLPSURYHPHQWVDQGLQ

FUHDVHGYROXPHSULFHVWRWKHFRQVXPHUZHUHUHGXFHG&RPSDUHG

ZLWKWKHWUHQGRISULFHVRQIRXUGRRUVHGDQVVLQFHKRZHYHUD

VLPLODUDQDO\VLVIRUWRXULQJFDUVZRXOGVKRZDVRPHZKDWOHVVSUHFLSL

WRXVGHFUHDVHDOWKRXJKERWKRSHQDQGFORVHGPRGHOVKDYHVKRZQD

VLJQLILFDQWQHWGHFUHDVHLQSULFH

6LJQLILFDQWFKDQJHVKDYHWDNHQSODFHLQFRQVXPHUFDUSUHIHUHQFHV

VLQFH7KLUW\IRXUSHUFHQWRISDVVHQJHUFDUVDOHVLQWKH8QLWHG

6WDWHVDQG&DQDGDLQZHUHFORVHGPRGHOVZKHUHDVLQWKH


)('(5$/75$'(&200,66,21

SURSRUWLRQZDVSHUFHQWDQGLQDOPRVWSHUFHQW:KLOH

WKHSURSRUWLRQVRIWRWDO8QLWHG6WDWHVDQG&DQDGLDQSDVVHQJHUFDU

VDOHVLQIRUFRXSHVDQGWZRGRRUVHGDQVZHUHSHUFHQWDQG

SHUFHQWUHVSHFWLYHO\E\WKH\KDGFKDQJHGWRSHUFHQWDQG

SHUFHQWUHVSHFWLYHO\,QDOPRVWSHUFHQWRIDOOSDVVHQJHUFDUV

VROGLQWKH8QLWHG6WDWHVDQG&DQDGDZHUHIRXUGRRUVHGDQV$V

ZRXOGEHH[SHFWHGGXHWRWKHVPDOOYROXPHSURGXFHGWKHUHODWLYHO\

IHZWRXULQJFDUVQRZVROGDUHSULFHGKLJKHUWKDQFORVHGPRGHOV

)DFWRU\SULFHV7KDWWKHSULFHDQDO\VLVLQWKLVFKDSWHULVEDVHGRQ

IREIDFWRU\SULFHVZDVQHFHVVDU\IRUSXUSRVHVRIXQLIRUPLW\:KDW

WKHXOWLPDWHSXUFKDVHUSDLGIRUDIRXUGRRUVHGDQRIDQ\SDUWLFXODU

PDNHDWGHVWLQDWLRQYDULHVZLWKWKHDPRXQWRIIUHLJKWFKDUJHVIRU

DGGLWLRQDODFFHVVRULHVDQGHTXLSPHQWQRWLQFOXGHGLQWKHOLVWSULFH

ORDGLQJDQGXQORDGLQJFKDUJHVFRQGLWLRQLQJDQGDGYHUWLVLQJFKDUJHV

HWFDQGLQVRPHFDVHVDUELWUDU\FKDUJHVDGGHGE\WKHORFDOGHDOHU

$QRWKHUIDFWRUWHQGLQJWRGLVWRUWWKHUHDOSULFHSDLGE\WKHXOWLPDWH

QHZFDUSXUFKDVHULVWKHXVHGFDUWDNHQLQDVSDUWSD\PHQWRQDQHZ

FDU$VWKLVSUDFWLFHKDVEHFRPHSURJUHVVLYHO\PRUHSUHYDOHQWLQ

PRUHUHFHQW\HDUVWKHDOOHJHGRYHUDOORZDQFHVRQXVHGFDUVWDNHQRQ

QHZFDUVDOHVDFWWRREVFXUHZKDWWKHXOWLPDWHSXUFKDVHURIDQHZ

FDUDFWXDOO\SDLGIRULW

6HFWLRQ&KU\VOHU&RUSRUDWLRQ

3ULFHWUHQGRI&KU\VOHU&RUSRUDWLRQIRXUGRRUVHGDQV

7DEOHVKRZVWKHWUHQGRIIDFWRU\OLVWSULFHVLQFOXGLQJ)HGHUDO

WD[ZHLJKWSULFHSHUSRXQGZKHHOEDVHQXPEHURIF\OLQGHUVPD[L

PXPEUDNHKRUVHSRZHUDQGSULFHSHUEUDNHKRUVHSRZHUIRUD&KU\VOHU

IRXUGRRUVHGDQIRUWKHSHULRGDQGIRUD3O\PRXWKIRXU

GRRUVHGDQIRUWKHSHULRG

7DEOH)REIDFWRU\SULFHLQFOXGLQJ)HGHUDO
D[SULFHLQGH[ZHLJKWSULFH

SHUSRXQGZKHHOEDVHQXPEHURIF\OLQGHUVPD[LPXPEUDNHKRUVHSRZHUDQGSULFH

SHUPD[LPXPEUDNHKRUVHSRZHUIRU&KU\VOHU&RUSRUDWLRQ&KU\VOHU-DQG3O\

PRXWKIRXUGRRUVHGDQVIRUWKHSHULRG

'DWH

!!6I

VL

RDJ

RB
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

RV
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

ZR

2WD

7!2

kVL

 

p

V



DDF

=DV

-XQH

-DQXDU\

$XHXVW

-XO\

-DQXDU\

0D\

-XQH

$XJXVW

'HFHPEHU

0DUFK

-XO\

)HEUXDU\

0D\

)HEUXDU\

-XQH

2FWREHU

'HFHPEHU

)HEUXDU\
5(325721027259(+,&/(,1'8675<



7DEOH)REIDFWRU\SULFHLQFOXGLQJ)HGHUDOWD[SULFHLQGH[ZHLJKWSULFH

SHUSRXQGZKHHOEDVHQXPEHURIF\OLQGHUVPD[LPXPEUDNHKRUVHSRZHUDQGSULFH

SHUPD[LPXPEUDNHKRUVHSRZHUIRU&KU\VOHU&RUSRUDWLRQ&KU\VOHUDQG3O\

PRXWKIRXUGRRUVHGDQVIRUWKHSHULRG&RQWLQXHG

EIDFWRU\

LQFOXGLQJ

UDOWD[

VLQGH[

WSRXQGV

HOEDVH

DFKHV

PPEUDNH

VHSRZHU

SHUPD[L

QEUDNH

SRZHU

'DWH

0RGHO

 

E

6

)HGHUH

)

SUOFW

)HGH

LV

:HLJK

- 



3ULFH

PXL

,KRUVL

3O\PRXWK

&RQWLQXHG
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

3P
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

$SULO

3&;;

















VWDQGDUG

-DQXDU\

$SULO

3)

















3)














)('(5$/75$'(&200,66,21

KRUVHSRZHUWKDQGLGWKHSXUFKDVHULQ)XUWKHUPRUHWKH-XQH

3O\PRXWK4RQO\KDGDVSXUJHDUWKUHHVSHHGVWDQGDUGWUDQV

PLVVLRQDIRXUZKHHOH[WHULRUK\GUDXOLFEUDNLQJV\VWHPQRVKRFN

DEVRUEHUVIRXU)LVNHE\IRXUSO\WLUHVDQGVSHFLDOHTXLSPHQWRI

VSDUHZKHHODQGULPZKLOHWKH3O\PRXWK5RDGNLQJKDGDFRP

SOHWHKHOLFDOWKUHHVSHHGVWDQGDUGW\SHWUDQVPLVVLRQIRXUZKHHO

LQWHUQDOK\GUDXOLFEUDNHVK\GUDXOLFGRXEOHDFWLQJVKRFNDEVRUEHUV

ILYHE\IRXUSO\*RRG\HDUWLUHVDQGVSHFLDOHTXLSPHQWRI

UDGLDWRURUQDPHQWEXPSHUJURXSDQGVSDUHVWHHOZKHHO

:KHQWKHSULFHWUHQGRIWKHIRXUGRRUVHGDQDVVKRZQE\WKHSULFH

LQGH[LVFRPSDUHGZLWKWKHWUHQGRISULFHSHUSRXQGRIFDUDQGWKH

SULFHSHUEUDNHKRUVHSRZHULWZLOOEHVHHQWKDWZKLOHWKHSULFHLQGH[

GURSSHGIURPDVRI-XQHWRDVRI$SULORUSHUFHQW

WKHSULFHSHUSRXQGRIFDUGHFUHDVHGIURPFHQWVWRFHQWVRU

SHUFHQWDQGWKHSULFHSHUEUDNHKRUVHSRZHUGHFUHDVHGIURP

WRRUSHUFHQW)URP$SULOWR6HSWHPEHU

WKHSULFHLQGH[LQFUHDVHGIURPWRRUSHUFHQWZKLOHWKH

SULFHSHUSRXQGLQFUHDVHGIURPFHQWVWRFHQWVRUSHUFHQW

DQGWKHSULFHSHUEUDNHKRUVHSRZHULQFUHDVHGIURPWRRU

SHUFHQW

6HFWLRQ)RUG0RWRU&R

3ULFHWUHQGRI)RUG0RWRU&RMRXUGRRUVHGDQV7KH

IROORZLQJWDEOHVXPPDUL]HVSULFHDQGVHOHFWHGVSHFLILFDWLRQVLQIRUPD

WLRQIRUWKH)RUGVWDQGDUG)RUGRUVHGDQIRUWKHSHULRG

7DEOH)REIDFWRU\SULFHLQFOXGLQJ)HGHUDOWD[SULFHLQGH[ZHLJKWSULFH

SHUSRXQGZKHHOEDVHQXPEHURIF\OLQGHUVPD[LPXPEUDNHKRUVHSRZHUDQG

SULFHSHUPD[LPXPEUDNHKRUVHSRZHUIRU)RUG0RWRU&R6WDQGDUG)RUGRU6HGDQV

IRUWKHSHULRG

2FW

'HF

)HE

-XQH

$SU

$SU

1RY

-XQH

-DQ
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

0DU
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

'R

)HE

'R

'HF

-XQH

2FW

1RY

'R

-DQ

'R

$XJ

'R

2FW

'R

1RY

'R

)RE

IDFWRU\

SULFHLQ

FOXGLQJ

)HGHUDO

WD[

3ULFH

LQGH[





3ULFH

SHU

SRXQG

:KHHO

1XP

EHURI

F\OLQ
5(325721027259(+,&/(,1'8675<



WD[6XFKDFDUZHLJKHGSRXQGVKDGDZKHHOEDVHRI

LQFKHVKDGIRXUF\OLQGHUVDQGGHOLYHUHGDPD[LPXPEUDNHKRUVH

SRZHURI6RPH\HDUVODWHUWKLVPRGHO7RZQHUFRXOGSXUFKDVH

D)RUG9VWDQGDUG)RUGRUVHGDQIRUIREIDFWRU\ZKLFK

LQFOXGHG)HGHUDOWD[&RPSDUHGZLWKWKHPRGHO7SXUFKDVHG

LQLWZHLJKHGSRXQGVRUSRXQGVPRUHWKHZKHHOEDVH

ZDVLQFKHVRULQFKHVORQJHULWZDVHLJKWF\OLQGHUHGLQVWHDGRI

IRXUDQGPD[LPXPEUDNHKRUVHSRZHUZDVRUDOPRVWPRUHWKDQ

LQ

-XVWDVVWULNLQJLVWKHFRPSDULVRQEHWZHHQWKHPRGHO7DQG

WKH)RUGRU9DVRPHZKDWOHVVSRZHUIXOFDU7KH9*IRE

IDFWRU\OLVWSULFHDVRI1RYHPEHUZDVZELFKLQFOXGHG

)HGHUDOWD[7KHOLVWSULFHRIWKHFDUZDVDSSUR[LPDWHO\

OHVV,QDGGLWLRQWKHPRGHOZHLJKHGDOPRVWSRXQGV

PRUHKDGLQFKHVPRUHZKHHOEDVHKDGIRXUPRUHF\OLQGHUVDQGD

PD[LPXPEUDNHKRUVHSRZHUWKDWH[FHHGHGWKHRIE\,Q

WKHPRGHO7RZQHUSDLGFHQWVSHUSRXQGIRUKLVFDUDQG

SHUPD[LPXPEUDNHKRUVHSRZHUZKLOHLQIRUD)RUG

9KHZRXOGKDYHSDLGFHQWVSHUSRXQGRUDSSUR[LPDWHO\

SHUFHQWOHVVDQGSHUEUDNHKRUVHSRZHURUDERXWSHUFHQWOHVV

WKDQLQ)RUWKH)RUG9WKHSULFHSHUSRXQGZDVFHQWV

RUDERXWSHUFHQWOHVVSHUSRXQGWKDQWKHPRGHO7RIDQGWKH

FRVWSHUEUDNHKRUVHSRZHURIZDVDSSUR[LPDWHO\SHUFHQW

OHVV

7KHSULFHLQGH[FRYHULQJWKHSHULRGIRUWKH)RUGRU)RUG

VHGDQJLYHVQRLQGLFDWLRQRIWKHLQFUHDVHGVDIHW\JUHDWHUFRPIRUW

EHDXW\GHSHQGDELOLW\DQGRWKHUDGGHGLPSURYHPHQWV7RWKURZ

VRPHOLJKWRQWKLVSKDVHRIWKHVXEMHFWLWLVUHYHDOLQJWRFRPSDUHZKDW

NLQGRIDFDUWKH)RUGSXUFKDVHUJRWDVFRPSDUHGZLWKWKH

)RUGLQDGGLWLRQWRFHUWDLQIHDWXUHVDOUHDG\HQXPHUDWHG7KH

PRGHO7DVRI2FWREHUKDGDSODQHWDU\W\SHRIWUDQVPLVVLRQ

WZRQRQHQHUJL]LQJPHFKDQLFDOEUDNHVQRVKRFNDEVRUEHUVIRXU

SO\E\.WLUHVDQGVSHFLDOHTXLSPHQWFRQVLVWLQJRIDVSDUHULP

ZKHUHDVWKH)RUGRUVHGDQ9DQGDVRI1RYHPEHU

KDGDWKUHHVSHHGVHOHFWLYHV\QFKURPHVKJHDUIRXUZKHHOQRQ

HQHUJL]LQJK\GUDXOLFEUDNHVGRXEOHDFWLQJK\GUDXOLFVKRFNDEVRUEHUV

ILYHIRXUSO\E\9RUE\9WLUHVEXPSHUV

3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

IURQWDQGUHDUEXPSHUJXDUGVVSDUHZKHHOVSDUHWLUHORFNDQGEDQG
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

DVVHPEO\SUHVVXUHFKDVVLVOXEULFDWLQJV\VWHPWZLQKRUQVFLJDU

OLJKWHUKHDGOLJKWEHDPLQGLFDWRUPLUURUVXQYLVRUDQGFRORURSWLRQ

IURPDYDULHW\RIFRORUV

$OPRVWDVVWULNLQJDVWKHFRPSDULVRQRIWKHPRGHO7ZLWKWKH

9RILVWKDWRIWKHPRGHO7DQGWKHPRGHO%RI

ZKLFKZDVWKHODVWIRXUF\OLQGHU)RUGRUVWDQGDUGVHGDQUHJXODUO\

PDQXIDFWXUHGE\WKH)RUG0RWRU&R%ULHIO\VWDWHGWKHPRGHO

FRVWIREIDFWRU\LQFOXGLQJ)HGHUDOWD[DERXWOHVVLWZHLJKHG

SRXQGVPRUHFRVWFHQWVOHVVSHUSRXQGRIDXWRPRELOHWKH

ZKHHOEDVHZDVLQFKHVORQJHUWKHPD[LPXPEUDNHKRUVHSRZHUZDV

JUHDWHUE\ZKLFKZDVUHIOHFWHGLQDORZHUFRVWSHUEUDNHKRUVHSRZHU

RIDSSUR[LPDWHO\-XVWDVWKH1RYHPEHUPRGHO9ZDV

LQPDQ\UHVSHFWVIDUVXSHULRUWRWKHPRGHO%RIWKHODWWHUPRGHO

LQWXUQZDVIDUVXSHULRUWRWKHPRGHO7LQWHUPVRISRZHUVDIHW\DQG

FRPIRUW

8VLQJWKHPRGHO%)RUG)RUGRUVHGDQIREOLVWSULFHRI)HEUXDU\

DVWKHSULFHLQGH[RQ2FWREHUZDVZKLOHRQ


)('(5$/75$'(&200,66,21

1RYHPEHULWZDVIRUWKH)RUG9DQGIRUWKH9

'XULQJWKLVVDPHSHULRGWKHSULFHSHUSRXQGGHFUHDVHGIURP

FHQWVLQWRFHQWVLQDQGLQFUHDVHGLQWRFHQWV

IRUWKH9DQGWRFHQWVIRUWKH9:KLOHWKHUHZDVDQ

LQFUHDVHLQSULFHIURPWR)HGHUDOWD[LQFOXGHGRI

SHUFHQWIRUWKH9DQGSHUFHQWIRUWKH9WKHLQFUHDVHLQ

SULFHSHUSRXQGIURPWKHEDVHSHULRGZDVSHUFHQWDQG

SHUFHQWUHVSHFWLYHO\ZKLOHWKHSULFHSHUEUDNHKRUVHSRZHUIRUWKH

9LQFUHDVHGDERXWSHUFHQWDQGIRUWKH9LWGHFUHDVHG

DSSUR[LPDWHO\SHUFHQW

$VWKHEDVHSHULRGPRGHO%)RUGZDVQRWRIWKH9W\SHDPRUH

FRPSDUDEOHFDUZLWKWKH9ZDVWKH)RUG9RI)HEUXDU\

7KLVFDUKDGDIDFWRU\OLVWSULFHRIZKLFKLQFOXGHG

)HGHUDOWD[DVFRPSDUHGZLWKWKH)RUG9RI1RYHPEHU

SULFHGDSSUR[LPDWHO\6KLJKHURUSHUFHQW$VIDUDVZHLJKW

IRUWKHWZRPRGHOVZDVFRQFHUQHGWKHSULFHSHUSRXQGLQFUHDVHG

FHQWVSHUSRXQGRUDERXWSHUFHQWDQGWKHSULFHSHUEUDNHKRUVH

SRZHULQFUHDVHGRUSHUFHQW7KHFDUZDVKHDYLHUE\

SRXQGVEXWWKHZKHHOEDVHOHQJWKZDVWKHVDPHDVWKH9

WKHQXPEHURIF\OLQGHUVZDVWKHVDPHDQGWKHPD[LPXPEUDNH

KRUVHSRZHUDSSUR[LPDWHO\WKHVDPH$VFRPSDUHGZLWKWKHHTXLS

PHQWLQFOXGHGLQWKH9IDFWRU\SULFHDVOLVWHGRQSDJHWKH

9LQFOXGHGDVSHHGVHOHFWLYHVOLGLQJJHDUW\SHRIWUDQV

PLVVLRQIRXUZKHHOQRQHQHUJL]LQJPHFKDQLFDOEUDNHVGRXEOHDFWLQJ

K\GUDXOLFVKRFNDEVRUEHUVIRXUIRXUSO\E\WLUHVDVSDUH

VWHHOZKHHODQGDVDIHW\JODVVZLQGVKLHOG

*HQHUDO0RWRUV&RUSRUDWLRQ

3ULFHWUHQG-RXUGRRUVHGDQV7KHIROORZLQJWDEOHVXPPDUL]HV

SULFHDQGVSHFLILFDWLRQVGDWDIRU*HQHUDO0RWRUV&RUSRUDWLRQ2OGV

PRELOHIRXUGRRUVHGDQVIRUWKHSHULRG

7DEOH)REIDFWRU\SULFHLQFOXGLQJ)HGHUDOWD[SULFHLQGH[ZHLJKWSULFH

SHUSRXQGZKHHOEDVHQXPEHURIF\OLQGHUVPD[LPXPEUDNHKRUVHSRZHUDQGSULFH

SHUPD[LPXPEUDNHKRUVHSRZHUIRU*HQHUDO0RWRUV&RUSRUDWLRQ2OGVPRELOHIRXU

GRRUVHGDQVIRUWKHSHULRG

%DWH



-XO\
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

6HSW
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

-DQ

$XN

$XS

-XQH











-XO\



-DQ

$SU

-XQH







A

0RGHO















)

)

)

)

)

)

)
5(325721027259(+,&/(,1'8675<

7KHPRGHO2OGVPRELOHIRXUGRRUVHGDQLQFOXGLQJ)HG

HUDOWD[VROGDWWKHIDFWRU\IRU7KLVFDUZHLJKHG

SRXQGVKDGDZKHHOEDVHOHQJWKRILQFKHVZDVVL[F\OLQGHUHGDQG

GHOLYHUHGDPD[LPXPEUDNHKRUVHSRZHURI6RPH\HDUVODWHU

WKHPRGHO)LQFOXGLQJ)HGHUDOWD[FRVWDWWKH

IDFWRU\RUDOPRVWSHUFHQWOHVVWKDQLQ7KHSXUFKDVHU

RIDQ2OGVPRELOHIRUOHVVUHFHLYHGDOPRVWSRXQGVPRUH

FDUZLWKDZKHHOEDVHLQFKHVORQJHUDQGPD[LPXPEUDNHKRUVH

SRZHUJUHDWHUE\WKDQLQ7KHQHWGRZQZDUGWUHQGLQSULFH

RIWKH2OGVPRELOHIRXUGRRUVHGDQLVIXUWKHUHPSKDVL]HGE\WKHSULFH

SHUSRXQGRIFDUZKLFKLQZDVFHQWVEXWPKDGGHFUHDVHG

WRFHQWVRUDGHFUHDVHRIDERXWSHUFHQW$PDUNHGGHFUHDVH

LQSULFHLQWHUPVRIFRPSDUDWLYHFRVWSHUPD[LPXPEUDNHKRUVHSRZHU

DOVRWRRNSODFHIRUZKLOHWKHFRVWSHUPD[LPXPEUDNHKRUVHSRZHUZDV

LQLQLWKDGGURSSHGWRRUDGHFUHDVHRIDERXW

SHUFHQW

'HVSLWHUHGXFWLRQVLQWKHSULFHRIWKHPRGHODVFRPSDUHGZLWK

WKHPRGHOVLJQLILFDQWLPSURYHPHQWVZHUHLQFOXGHGLQWKHODWWHU

PRGHOQRWIRXQGLQWKHIRUPHU7KH2OGVPRELOHKDGDWKUHH

VSHHGVOLGLQJVSXUJHDUW\SHRIWUDQVPLVVLRQWZRZKHHOPHFKDQLFDO

EUDNHVVKRFNDEVRUEHUVLQWKHIRUPRIVQXEEHUVRQDOOIRXUVSULQJV

DQGIRXUE\WLUHV,QWKHW\SHRIWUDQVPLVVLRQZDVV\QFKUR

PHVKZLWKVLOHQWVHFRQGVSHHGJHDUEUDNHVFRQVLVWHGRIIRXUZKHHO

K\GUDXOLFVWKHUHZHUHGRXEOHDFWLRQK\GUDXOLFVKRFNDEVRUEHUVRQDOO

IRXUVSULQJVDQGILYHE\WLUHVZHUHLQFOXGHG

6SHFLDOHTXLSPHQWIHDWXUHVDQGLPSURYHPHQWVLQFOXGHGLQFDUSULFH

DWQRH[WUDFRVWDVGHVFULEHGE\*HQHUDO0RWRUVFRQVLVWHGLQRI

FRZOOLJKWVRQDOOPRGHOVKHDWHUXQLWJURXSLQJRILQVWUXPHQWVWUDQV

PLVVLRQORFNDQG'XFRILQLVKZKLOHLQWKHOLVWFRQVLVWHGRID

ORQJHUZKHHOEDVHTXDGULFRLOVSULQJLQJIRXUZD\VWDELOL]DWLRQODWHUDO

VWDELOL]HUEDUDWUHDUZLGHUUDQJHYLVLRQLQERGLHVKDQGLVKLIWJHDU

FRQWUROGXDOFHQWHUFRQWUROVWHHULQJURRPLHUERGLHVJUDQRVHDOHGFDP

VKDIWVSKRVSKDWHFRDWHGIRUIDVWHUEUHDNLQDQGEHWWHUEHDULQJVXU

IDFHVLQGLYLGXDOO\ORFNHGIURQWYHQWLSDQHVVDIWLVHDOHGERGLHVSUR

WHFWLRQDJDLQVWIXPHVODUJHUVXQYLVRUOHDWKHUIDFHGDUPUHVWVIURQW

LPSURYHGVKRFNDEVRUEHUVUHDUWUXQNEXPSHUVDQGEXPSHUJXDUGV

IURQWDQGUHDUDQGVDIHW\JODVVWKURXJKRXW

7KHSULFHLQGH[IRUDIRXUGRRU2OGVPRELOHIRUWKHDSSUR[LPDWHO\
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

\HDUSHULRGZDVORZHVW-DQXDU\ZKHQLWVWRRGDW
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

3UHYLRXVWRWKDWWKHSULFHLQGH[VWRRGDWLQDW

ODWHLQPRGHODWLQDWLQDJDLQDW

LQDQGDQDEUXSWGURSWRLQ)URPWKHORZSRLQWLQ

WKHSULFHLQGH[URVHWRLQDQGGURSSHGEDFNVOLJKWO\WR

LQ

,WLVLQWHUHVWLQJWRQRWHWKDWWKHPRGHOZKLFKHDUO\LQZDV

SULFHGORZHVWIRUWKHSHULRGXQGHUFRQVLGHUDWLRQFRPSDUHGZLWKWKH

PRGHOZDVSULFHGDOPRVWORZHURUSHUFHQWOHVVZDV

SRXQGVKHDYLHUZDVLQFKHVORQJHULQZKHHOEDVHDQGKDGPRUH

PD[LPXPEUDNHKRUVHSRZHULQDGGLWLRQWRKDYLQJDV\QFKURPHVKW\SH

RIWUDQVPLVVLRQZLWKVLOHQWVHFRQGVSHHGJHDUIRXUZKHHOPHFKDQLFDO

EUDNHVGRXEOHDFWLQJK\GUDXOLFVKRFNDEVRUEHUVRQDOOIRXUVSULQJVDV

ZHOODVRWKHULPSURYHGIHDWXUHVQRWIRXQGRQWKHHDUOLHUPRGHO

7KHPRGHODVFRPSDUHGZLWKWKHPRGHOMXVWGHVFULEHG

ZDVSRXQGVKHDYLHUKDGLQFKHVPRUHZKHHOEDVHKDGPRUH


)('(5$/75$'(&200,66,21

PD[LPXPEUDNHKRUVHSRZHUDQGLQDGGLWLRQFHUWDLQLPSURYHPHQWV

DVQRWHGDERYH+RZHYHUWKHSULFHSHUSRXQGRIFDULQZDV

DOPRVWFHQWVJUHDWHUWKHSULFHSHUPD[LPXPEUDNHKRUVHSRZHUZDV

FHQWVJUHDWHUDQGWKHIDFWRU\SULFHRIWKHFDULQFUHDVHGDOPRVW

SHUFHQWRYHUWKH-DQXDU\SULFH

&KHYUROHW'XHWRLWVLPSRUWDQFHLQWKHORZSULFHGPRWRUYHKLFOH

JURXSSULFHDQGVSHFLILFDWLRQVGDWDIRU&KHYUROHWIRXUGRRUVHGDQV

ZDVWRKDYHEHHQLQFOXGHGLQWKLVGLVFXVVLRQLQDGGLWLRQWRWKH2OGV

PRELOHGDWD+RZHYHUEHFDXVHRIWKHIDFWWKDWWKHLQIRUPDWLRQ

RULJLQDOO\UHTXHVWHGIURP*HQHUDO0RWRUV&RUSRUDWLRQDERXW&KHYUR

OHWZKHQUHFHLYHGZDVQRWFRPSOHWHDQGDIWHUUHSHDWHGUHTXHVWVWKH

PLVVLQJLQIRUPDWLRQZDVQRWIXUQLVKHGLWZDVQHFHVVDU\WRRPLWDQ\

GLVFXVVLRQDERXW&KHYUROHWSULFHVDQGVSHFLILFDWLRQV

6HFWLRQ+XGVRQ0RWRU&DU&R

3ULFHWUHQGRI+XGVRQ0RWRU&DU&RIRXUGRRUVHGDQV

3ULFHDQGVSHFLILFDWLRQVGDWDIRUWKH+XGVRQIRXUGRRUVWDQGDUGVHGDQ

LVVXPPDUL]HGLQWKHIROORZLQJWDEOHIRUWKHSHULRG

7DEOH)REIDFWRU\SULFHLQFOXGLQJ)HGHUDOWD[SULFHLQGH[ZHLJKWSULFH

SHUSRXQGZKHHOEDVHQXPEHURIF\OLQGHUVPD[LPXPEUDNHKRUVHSRZHUDQG

SULFHSHUPD[LPXPEUDNHKRUVHSRZHUIRU+XGVRQ0RWR&DU&R6WDQGDUGGRRU

VHGDQVIRUWKHSHULRG

'DWH

1RY

0DU

-XQH

1RY

$SU

0D\

$XJ

2FW

)HE

0DU

-XQH

-XO\

2FW

-DQ

'HF
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

'HF
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

'HHVR

$XJ

1RY

'HF

'HF

)HE

-DQ

$SU

-XQH

'HF

1RY

2FW

$SU

$8.

6HSW

HSW

0RGHO

(VWLPDWHG)HG

HUDOWD[

)REIDFWRU\

OLVWSULFHLQ

HOXGLQJ)HGHU

DOWD[

3ULFHLQGH[

 

:HLJKW

3ULFHSHUSRXQG

3RXQGV

&HQWV






5(325721027259(+,&/(,1'8675<



7KHPRGHO2+XGVRQGRRUVHGDQZDVSULFHGDWIRE

IDFWRU\LQFOXGLQJ)HGHUDOWD[RIRQ1RYHPEHU

EXWRQ-XQHIRUWKHVDPHPRGHOWKHSULFHKDGEHHQLQFUHDVHG

WRZKLFKLQFOXGHG)HGHUDOWD[RI)RUSXUSRVHVRI

FRPSDULVRQZLWKWKH+XGVRQGRRUVHGDQDQQRXQFHG6HSWHPEHU

KRZHYHUWKHSULFHZLOOEHXVHG,WVKRXOGEHQRWHG

WKDWWKHPD[LPXPEUDNHKRUVHSRZHUUDWLQJZDVQRWDYDLODEOHXQWLO

DOWKRXJKLQIRUPDWLRQZDVIXUQLVKHGWRWKHHIIHFWWKDWWKH

6XSHU+XGVRQGHYHORSHGDSSUR[LPDWHO\KRUVHSRZHU&RPSDUHG

ZLWKWKH+XGVRQGRRUVHGDQWKH6HSWHPEHUPRGHO

+XGVRQFRVWOHVVRUDGHFUHDVHRISHUFHQWWKHZHLJKW

GHFUHDVHGIURPWRSRXQGVWKHSULFHSHUSRXQGGHFUHDVHG

DERXWSHUFHQWRUFHQWVWKHZKHHOEDVHGHFUHDVHGIURPWR

LQFKHVWKHQXPEHURIF\OLQGHUVZDVLQFUHDVHGE\DQGDVWKH

+XGVRQKDGDPD[LPXPEUDNHKRUVHSRZHURILWLVSURE

DEO\VDIHWRDVVXPHWKDWWKHEUDNHKRUVHSRZHUZDVLQFUHDVHGE\DW

OHDVW2WKHUVLJQLILFDQWSRLQWVRIGLIIHUHQFHEHWZHHQWKH

PRGHODQGWKHPRGHOFRQFHUQPHFKDQLFDOHTXLSPHQWDFFHVVRULHV

HWF)RUH[DPSOHWKH+XGVRQKDGDVSHHGDQGUHYHUVHVSXU

JHDUW\SHRIWUDQVPLVVLRQZKHHOPHFKDQLFDOEUDNHVQRVKRFNDE

VRUEHUVIRXUSO\E\EDOORRQWLUHVGHPRXQWDEOHULPVDQGQR

VSDUHZKHHOWLUHRUEXPSHUV,QFRQWUDVWWKH+XGVRQKDGD

VSHHGDQGUHYHUVHVSLUDODQGVSXUJHDUW\SHRIWUDQVPLVVLRQZKHHO

K\GUDXOLFEUDNHVK\GUDXOLFVKRFNDEVRUEHUVILYHSO\E\DLU

ZKHHOWLUHVVSDUHZKHHODQGEXPSHUV

2ILQWHUHVWLVDFRPSDULVRQRIWKHILUVWF\OLQGHU+XGVRQDQ

QRXQFHGDVRI'HFHPEHUZLWKWKHF\OLQGHU+XGVRQ

DQQRXQFHG6HSWHPEHU&RPSDUHGZLWKWKH+XGVRQ

WKHPRGHOZDVSULFHGDWOHVVRUDGHFUHDVHRIDSSUR[L

PDWHO\SHUFHQWLWVZHLJKWZDVDSSUR[LPDWHO\WKHVDPHWKHSULFH

SHUSRXQGZDVFHQWVOHVVRUDGHFUHDVHRIDOPRVWSHUFHQWWKH

ZKHHOEQVHZDVLQFKHVORQJHUWKHPD[LPXPEUDNHKRUVHSRZHUZDV

JUHDWHUDQGWKHSULFHSHUPD[LPXPEUDNHKRUVHSRZHUZDV

OHVVRUDGHFUHDVHRIDOPRVWSHUFHQW'LIIHUHQFHVLQVSHFLILFDWLRQV

ZHUHPDLQO\DVIROORZV7KH+XGVRQKDGZKHHOPHFKDQLFDO

EUDNHVIRXUSO\E\EDOORRQWLUHVGHPRXQWDEOHULPVQR

EXPSHUVDQGQRVSDUHWLUHDVFRPSDUHGZLWKRWKHUHTXLSPHQWDQG
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

DFFHVVRULHVDVOLVWHGDERYHIRUWKH+XGVRQVHGDQ
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

$JDLQLQWKHFDVHRIWKHSULFHWUHQGRIWKHIRXUGRRU+XGVRQVHGDQ

LVLOOXVWUDWHGWKHIXWLOLW\RIDWWHPSWLQJWRHYDOXDWHWKHVLJQLILFDQFHRI

FKDQJHVLQSULFHRUWKHSXUFKDVLQJSRZHURIWKHDXWRPRWLYHGROODU

ZLWKRXWDWWKHVDPHWLPHFRQVLGHULQJWKHIDFWRUVPRUHGLIILFXOWWR

PHDVXUHZKLFKKDYHMXVWEHHQGLVFXVVHGDQGZKLFKDUHVXPPDUL]HG

LQWDEOH3ULFHUHGXFWLRQVZLWKLQWKHPRGHO\HDUXVXDOO\IRU

WKHSXUSRVHRIOLTXLGDWLQJVWRFNVRIFDUVSULRUWRWKHLQWURGXFWLRQRI

QHZPRGHOVZHUHPDGHLQDQG
IHGHUDOWEDGHFRPPLVVLRQ

6HFWLRQ1DVK.HOYLQDWRU&RUSRUDWLRQ

3ULFHWUHQGRM1DVK.HOYLQDWRU&RUSRUDWLRQMRXUGRRUVHGDQV

7KHWUHQGRISULFHVDQGVSHFLILFDWLRQVIRU1DVKIRXUGRRUVHGDQV

IURPWRLVVXPPDUL]HGIRUPRUHLPSRUWDQWGHWDLOVLQWKH

IROORZLQJWDEOH

7DEOH)REIDFWRU\SULFHLQFOXGLQJ)HGHUDOWD[SULFHLQGH[ZHLJKWSULFH

SHUSRXQGZKHHOEDVHQXPEHURIF\OLQGHUVPD[LPXPEUDNHKRUVHSRZHUDQGSULFH

SHUPD[LPXPEUDNHKRUVHSRZHUIRU1DVK.HOYLQDWRU&RUSRUDWLRQIRUWKHSHULRG

;

'DWH

-XO\

0DU

-XO\

1RY

-XO\

-XQH

)HE

-XQH,

2FW

-DQ

2FW

-XQH

'HF

2FW

-DQ

6HSW

-DQ

0DU

1RY

2FW,

$XJ

2FW

)REIDFWRU\

SULFHLQFOXGLQJ

)HGHUDOWD[

3ULFHLQGH[




3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

1XPEHURIF\OLQ
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

GHUV

>0D[LPXPEUDNH

KRUVHSRZHU

OL

IO

M:HLJKWSRXQGV

3ULFHSHUSRXQG



0RGHO

)HGHUDOWD[

&HQWV

aL





















26









8!L
5(325721027259(+,&/(,1'8675<



WUDQVPLVVLRQGULYHVKDIWQRVKRFNDEVRUEHUVDQGE\IRXUSO\

VWDQGDUGWLUHVZKLOHWKHPRGHOKDGDVHOHFWLYHV\QFKURPHVK

W\SHRIWUDQVPLVVLRQIRXUZKHHOK\GUDXOLFEUDNHVGLUHFWDFWLQJ

WZRZD\K\GUDXOLFVKRFNDEVRUEHUVDQGE\IRXUSO\VWDQGDUG

WLUHV

7KHSULFHRIWKH1DVKIRXUGRRUVHGDQPRGHODVRI2FWREHU

XVHGDVWKHEDVHIRUWKHSULFHLQGH[VKRZVDQHYHQJUHDWHU

GLIIHUHQFHLQDXWRPRWLYHYDOXHRYHUWKHPRGHOWKDQGLGWKH

PRGHO7KHUHZDVDGHFUHDVHLQWKHIRESULFHRIDOPRVW

RUDSSUR[LPDWHO\SHUFHQWWKHZHLJKWKDGLQFUHDVHGSRXQGV

WKHSULFHSHUSRXQGRIFDUKDGGHFUHDVHGFHQWVRUDSSUR[QQDWHO\

SHUFHQWWKHZKHHOEDVHZDVDOPRVWLQFKHVORQJHUWKHEUDNH

KRUVHSRZHUKDGLQFUHDVHGIURPWRDQGWKHSULFHSHUEUDNH

KRUVHSRZHUKDGGHFUHDVHGIURPWRRUDSSUR[LPDWHO\

SHUFHQW$VFRPSDUHGZLWKWKHPRGHO1DVKIRXUGRRU

VHGDQWKHPRGHORIKDGDVHOHFWLYHW\SHV\QFKURPHVK

WUDQVPLVVLRQIRXUZKHHOPHFKDQLFDOEUDNHVWZRZD\K\GUDXOLF

VKRFNDEVRUEHUVDQGE\IRXUSO\VWDQGDUGWLUHV

6HFWLRQ3DFNDUG0RWRU&DU&R

3ULFHWUHQGRM3DFNDUG0RWRU&DU&RMRXUGRRUVHGDQV

3ULFHDQGVSHFLILFDWLRQVLQIRUPDWLRQDVVXSSOLHGE\WKH3DFNDUG

0RWRU&DU&RUHODWLYHWRLWV6XSHUPRGHOIRXUGRRUVHGDQLV

VXPPDUL]HGLQWKHIROORZLQJWDEOHIRUWKHSHULRG

7DEOH)REIDFWRU\SULFHLQFOXGLQJ)HGHUDOOD[SULFHLQGH[ZHLJKWSULFH

SHUSRXQGZKHHOEDVHQXPEHURIF\OLQGHUVPD[LPXPEUDNHKRUVHSRZHUDQG

SULFHSHUPD[LPXPEUDNHKRUVHSRZHUIRU3DFNDUG0RWRU&DU&R6XSHUGRRU

VHGDQVIRUWKHSHULRG

)HGHUDOWD[

)REIDFWRU\

SULFHLQFOXGLQJ

)HGHUDOWD[

3ULFHLQGH[

 

:HLJKWSRXQGV

3ULFHSHUSRXQG

FHQWV

:KHHOEDVH
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

LQFKHV
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

1XPEHURIF\O

LQGHUV

0D[LPXPEUDNH

KRUVHSRZHU

3ULFHSHUPD[L

PXPEUDNH

KRUVHSRZHU

6














































)('(5$/75$'(&200,66,21

$3DFNDUG6XSHUIRXUGRRUVHGDQDVRI'HFHPEHUFRVW

IREIDFWRU\LQFOXGLQJ)HGHUDOWD[ZKLOHWKH

6XSHUIRXUGRRUVHGDQDVRI-DQXDU\LQFOXGLQJ

)HGHUDOWD[FRVWIREIDFWRU\$VRI6HSWHPEHU

WKH6XSHULQFOXGLQJ)HGHUDOWD[ZDVSULFHGIREIDFWRU\

DW:LWKUHVSHFWWRWKHVHWKUHHPRGHOVWKHZHLJKWFKDQJHG

IURPSRXQGVLQWRSRXQGVLQWRSRXQGV

LQSQFHSHUSRXQGFKDQJHGIURPFHQWVLQWR

FHQWVLQWRFHQWVLQWKHOHQJWKRIZKHHOEDVHFKDQJHG

IURPLQFKHVLQWRLQFKHVLQWRLQFKHVLQ

PD[LPXPEUDNHKRUVHSRZHUFKDQJHGIURPLQWRLQ

WRLQDQGWKHSULFHSHUPD[LPXPEUDNHKRUVHSRZHUGHFUHDVHG

IURPLQWRLQWRLQ

7KHSXUFKDVHURID6XSHUIRXUGRRUVHGDQSDLGLQFOXGLQJ

)HGHUDOWD[OHVVWKDQIRUWKH3DFNDUGRUDGHFUHDVH

RIDOPRVWSHUFHQWIRUZKLFKKHUHFHLYHGDFDUSRXQGVKHDYLHU

LQFKVKRUWHULQZKHHOEDVHDQGPD[LPXPEUDNHKRUVHSRZHU

PRUHWKDQLQ7KHFRVWSHUSRXQGLQWKHPRGHODVFRP

SDUHGZLWKWKHPRGHOZDVFHQWVOHVVRUDGHFUHDVHRIDERXW

SHUFHQWDQGWKHFRVWSHUEUDNHKRUVHSRZHUZDVOHVVRUD

GHFUHDVHRISHUFHQW,QFRPSDULVRQZLWKWKHPRGHOWKH

PRGHO3DFNDUG6XSHUDOWKRXJKZHLJKLQJSRXQGVOHVVDQGKDYLQJ

DZKHHOEDVHLQFKHVVKRUWHUZDVLQFOXGLQJ)HGHUDOWD[DOPRVW

SHUFHQWOHVVLQIDFWRU\IRESULFHDOPRVWSHUFHQWOHVVLQSULFH

SHUSRXQGGHOLYHUHGDOPRVWSHUFHQWJUHDWHUPD[LPXPEUDNH

KRUVHSRZHUZKLFKFRVWSHUEUDNHKRUVHSRZHUDOPRVWSHUFHQWOHVV

7KH3DFNDUGRI'HFHPEHUZDVZKDWPLJKWEHFODVVHG

DOX[XU\FDUDVFRPSDUHGZLWKRWKHUSDVVHQJHUFDUVRIWKDWSHULRG

7KLVFDUZKLFKVROGIREIDFWRU\IRUDOPRVWKDGWKUHHVSHHG

VHOHFWLYHW\SHWUDQVPLVVLRQPHFKDQLFDOEUDNHV:DWVRQVKRFNDEVRUE

HUVILYHE\KLJKSUHVVXUHWLUHVDQGLQFOXGHGZHUHWKHIROORZLQJ

VWDQGDUGDFFHVVRULHVDQGHTXLSPHQW

(OHFWULFVWDUWHUJHQHUDWRUDQGVWRUDJHEDWWHU\

6SHHGRPHWHUDQGFORFN

(OHFWULFKHDGDX[LOLDU\SDUNLQJLQVWUXPHQWERDUGWRQQHDXDQGFRPELQHG

WDLODQGVLJQDOOLJKWV

+HDGDX[LOLDU\DQGSDUNLQJOLJKWVFRPELQHGLQRQHUHIOHFWRU
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

1RQJODUHOHQVHV
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

7DLOODPSFRPELQHGZLWKHOHFWULFOLFHQVHWDJLOOXPLQDWRU

0RWRUGULYHQKRUQ

&RPSOHWHWRROHTXLSPHQWLQFOXGLQJWRQMDFN

5HDUFDUULHUIRURQHH[WUDZKHHOZLWKVHOIFRQWDLQHGORFN

2QHH[WUDZKHHOZLWKVSDUHWLUHDQGWLUHFRYHU

:KHHOFKDQJLQJHTXLSPHQW

6WDELODWRUVIURQWDQGUHDU

0RWRPHWHUJDVROLQHJDJHRQGDVKIURQWDQGUHDUEXPSHUVDQGDXWRPDWLF

UDGLDWRUDLUIORZUHJXODWRU

5HDUYLHZPLUURUDXWRPDWLFZLQGVKLHOGFOHDQHUDQGFLJDUOLJKWHURQLQVWUX

PHQWERDUG

(QFORVHGFDUVKDYHVPRNLQJDQGYDQLW\FDVHVH[FHSWIRXUSDVVHQJHUFRXSH

ZKLFKKDVYDQLW\FDVHRQO\
5(325721027259(+,&/(,1'8675<



$SSUR[LPDWHO\\HDUVODWHUD3DFNDUG6XSHUIRXUGRRUVHGDQ

VROGIREIDFWRU\LQFOXGLQJ)HGHUDOWD[IRUDOPRVWDQGZDV

HTXLSSHGZLWKVHOHFWLYHVLOHQWV\QFKURQL]HGW\SHRIWUDQVPLVVLRQ

K\GUDXOLFEUDNHV'HOFRVKRFNDEVRUEHUVILYHIRXUSO\E\WLUHV

DQGVWDQGDUGDFFHVVRULHVDQGHTXLSPHQWDVIROORZV

7ZRPDWFKHGWRQHHOHFWULFKRUQV

7ZRZLQGVKLHOGZLSHUV

7ZRDGMXVWDEOHVXQYLVRUV

5HDUYLHZPLUURU

5REHFRUGVXSSRUW

)RRWUHVWLQUHDUFRPSDUWPHQW

&DUSHWVIURQWDQGUHDU

$GMXVWDEOHGULYHU
VVHDW

7ZRWDLODQGVWRSOLJKWV

)URQWDQGUHDUFRPSDUWPHQWDVKWUD\VDQGFLJDUOLJKWHUV

'RPHUHDOFRPSDUWPHQWUHDGLQJOLJKWV

+HDGOLJKWEHDPFRQWUROE\IRRWVZLWFK

7RJJOHJULSVWUDSV

%XLOWLQDHULDOIRUUDGLR

2LOEDWKDLUFOHDQHU

)URQWDQGUHDUEXPSHUVDQGEXPSHUJXDUGV

7RROVDQGMDFN

)URQWDQGUHDUMDFNSDGV

2QHVSDUHZKHHODQGZKHHOFRPSDUWPHQWORFN

/DUJHFDSDFLW\EXLOWLQWUXQNVRQDOOFORVHGPRGHOV

,QGHSHQGHQWIURQWZKHHOVXVSHQVLRQ

(OHFWULFFORFNIURQW

*ORYHFRPSDUWPHQWGRRUORFN

$UPUHVWVIURQWGRRUV

$UPUHVWUHDUFHQWHU

5HPRWHFRQWUROJHDUVKLIW

5DGLDWRURUQDPHQW

9DFXXPERRVWHUSXPS

6WDELOL]HU

&KURPHZKHHOULQJVILYHDQGVL[ZKHHO

6SDUHWLUHDQGWXEH

$OWKRXJKWKHSULFHWUHQGLQGH[RIWKH3DFNDUGIRXUGRRUVHGDQ
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

GRHVQRWIXOO\LQGLFDWHWKHPDUNHGGLIIHUHQFHLQZKDWWKHSXUFKDVHU
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

RIRQHUHFHLYHGIRUKLVDXWRPRWLYHGROODULQDVFRPSDUHGZLWK

LWGRHVVKRZWKDWIURPXVLQJWKH-DQXDU\PRGHO

SULFHDVDEDVHWKHSULFHGHFUHDVHGIURPWRLQ7KH

3DFNDUGSULFHVHULHVDOVRJLYHHYLGHQFHRIVXEVWDQWLDOUHGXFWLRQVLQ

SULFHDIWHUWKHPRGHOVHDVRQZDVXQGHUZDYDVHYLGHQFHGE\VXFK

UHGXFWLRQVLQDQG$QHWSULFH

LQFUHDVHZLWKLQDPRGHOVHDVRQZDVUHSRUWHGRQO\LQ

"


IHGHUDOWUDGHFRPPLVVLRQ

6HFWLRQ6WXGHEDNHU&RUSRUDWLRQ

3ULFHWUHQGRI6WXGHEDNHU&RUSRUDWLRQMRXUGRRUVHGDQV

7KHIROORZLQJWDEOHSUHVHQWVSULFHDQGVSHFLILFDWLRQVGDWDIRU6WXGH

EDNHUIRXUGRRUVHGDQVIRUWKHSHULRG

7DEOH)REIDFWRU\SULFHLQFOXGLQJ)HGHUDOWD[SULFHLQGH[ZHLJKWSULFH

SHUSRXQGZKHHOEDVHQXPEHURIF\OLQGHUVPD[LPXPEUDNHKRUVHSRZHUDQGSULFH

SHUPD[LPXPEUDNHKRUVHSRZHUIRU6WXGHEDNHU&RUSRUDWLRQIRXUGRRUVHGDQVIRU

WKHSHULRG

'DWH

$XH

-DQ

$SU

$XJ

-DQ

-XQH

6HSW

HSW

0D\

-XQH

0DY

1RY

)HE

'HF

)HE

-XOY

'HH

1RY

'HF

0DU,

1RY

2FW

'HF

-DQ

0DU

$SU

-XQH

1RY
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

-DQ/
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

0DU

2FW

$XJ

6HSW

1RY

6HSW

0RGHO

.LW

(5

(5

(5

(5

(8

(8

2(

2(

2)

4/

,,

4/

















$

$

$

$

$
5(325721027259(+,&/(,1'8675<



7KHVHVLJQLILFDQWGLIIHUHQFHVLQWKHSXUFKDVLQJYDOXHRIWKHDXWRPR

WLYHGROODUDUHIXUWKHUHPSKDVL]HGE\DFRPSDULVRQRIWKHDFFHVVRULHV

DQGHTXLSPHQWLQFOXGHGLQWKHSULFHRIWKHDQGWKHIRXU

GRRUVHGDQV7KHHDUOLHUPRGHOKDGDVWDQGDUG6$(JHDUVKLIW

ZKHHOPHFKDQLFDOEUDNHVQRVKRFNDEVRUEHUVIRXUSO\E\

EDOORRQQRQVNLGWLUHVPRKDLUWULPDQGZRRGZKHHOVZKHUHDVWKH

PRGHODQQRXQFHG6HSWHPEHUKDGDPRGHO7:DUQHUJHDU

W\SHRIWUDQVPLVVLRQZLWKJHDUVKLIWOHYHUORFDWHGRQVWHHULQJFROXPQ

RSHUDWHGPHFKDQLFDOO\ZKHHO/RFNKHHGK\GUDXOLFEUDNHVLQFOXGLQJ

DXWRPDWLFKLOOKROGHU+RXGDLOOHWZRZD\VKRFNDEVRUEHUVILYHSO\

E\)LUHVWRQHWLUHVEXPSHUV3ODQDUVXVSHQVLRQVDIHW\JODVVDOO

DURXQGWZRWDLOOLJKWVWZRVXQYLVRUVWZRZLQGVKLHOGZLSHUVILYH

SDLQWHGGLVNZKHHOVFORWKXSKROVWHU\UREHFRUGUHDUDVKUHFHLYHUV

UHDUDUPUHVWVDQGPHWDOVSULQJFRYHUV

6HFWLRQ(YROXWLRQRIWKH$XWRPRELOH

6RXUFHVRILQIRUPDWLRQ7KHKLVWRU\RIWKHHYROXWLRQRIWKHDXWR

PRELOHDVSUHVHQWHGLQWKLVFKDSWHULVEDVHGXSRQLQIRUPDWLRQ

REWDLQHGE\WKH&RPPLVVLRQIURPYDULRXVVRXUFHV7KHVWRU\RI

GHYHORSPHQWVSULRUWRSDUWLFXODUO\LVEDVHGODUJHO\XSRQLQIRU

PDWLRQRQ08HVWRQHVRIWKH$XWRPRELOH,QGXVWU\FRPSLOHGIURP

YDULRXVSXEOLVKHGVRXUFHVE\PHPEHUVRIWKHVWDIIRIWKH$XWRPRELOH

0DQXIDFWXUHUV$VVRFLDWLRQDQGXSRQLQIRUPDWLRQFRQWDLQHGLQ$UWKXU

3RXQG
VVWRU\RI*HQHUDO0RWRUVHQWLWOHG7KH7XUQLQJ:KHHO

7KHVWRU\RILPSURYHPHQWVRIWKHDXWRPRELOHLQWKH8QLWHG6WDWHV

SDUWLFXODUO\WKRVHSLRQHHUHGE\WKHQRZH[LVWLQJ$PHULFDQDXWRPRELOH

PDQXIDFWXUHUVLVEDVHGODUJHO\XSRQLQIRUPDWLRQIXUQLVKHGE\WKH

UHVSHFWLYHPDQXIDFWXUHUV2WKHUVRXUFHVRILQIRUPDWLRQDUHUHIHUUHG

WRPWKHWH[W

6WHDPSURSHOOHGPRWRUYHKLFOHV$YDLODEOHKLVWRULFDOUHFRUGVLQGLFDWH

WKDWWKHSRVVLELOLW\RIRSHUDWLQJDURDGYHKLFOHE\VWHDPZDVYLVXDOL]HG

DVIDUEDFNDVWKHVHYHQWHHQWKFHQWXU\:KLOHFRQVLGHUDEOHH[SHUL

PHQWDWLRQZDVLQSURJUHVVDQGHIIRUWVPDGHWRXVHVWHDPIRUWKHSUR

(XOVLRQRIURDGYHKLFOHVGXULQJWKHHLJKWHHQWKFHQWXU\ERWKLQWKH

UQLWHG6WDWHVDQGDEURDGLWZDVQRWXQWLOWKDWZKDWKDVEHHQ

WHUPHGWKHILUVWUHDOVXFFHVVIXOVWHDPGULYHQFDUULDJHZKLFKRSHQHG

PHQ
VPLQGVWRWKHFRPPHUFLDODQGSOHDVXUHSRVVLELOLWLHVRIWKHVH

YHKLFOHVZDVEXLOW,QSHUIRUPDQFHFRQWHVWVKHOGLQWKH
VLQ
3XEOLF'RPDLQ*RRJOHGLJLWL]HGKWWSZZZKDWKLWUXVWRUJDFFHVVBXVHSGJRRJOH

ZKLFKERWKVWHDPGULYHQDQGJDVROLQHGULYHQFDUVFRPSHWHGWKH
*HQHUDWHGRQ*07KWWSKGOKDQGOHQHWXFE

VWHDPGULYHQFDUILUVWZDVWKHZLQQHUDQGODWHUJDVROLQHGULYHQFDUV

ZHUHWKHZLQQHUV7KHFRQWLQXHGVXFFHVVRIWKHJDVROLQHGULYHQFDUV

OHGXOWLPDWHO\WRFRPSOHWHDEDQGRQPHQWRIWKHVWHDPGULYHQW\SHRI

DXWRPRELOH

$PHULFDQVHOISURSHOOHGYHKLFOHVILUVWSXWRQWKHURDGZHUHSRZHUHG

E\VWHDP,QWKH
VWKHVHYHUDOVWHDPGULYHQDXWRPRELOHVWKDW

ZHUHDPRQJWKHOHDGHUVRIWKHGD\LQFOXGHGWKH:KLWHDQG6WDQOH\
V

/RFRPRELOHLQ$PHULFD/RFRPRELOHZDVVXFKDVXFFHVVWKDWLW

IRXQGDPDUNHWLQ(QJODQGLQEXWLQLWZDVGURSSHGLQ

(QJODQGLQIDYRURIWKHLQWHUQDOFRPEXVWLRQHQJLQHG2OGVPRELOH

0DQXIDFWXUHRIWKHIDPRXVGH'LRQ%RXWRQVWHDPFDUZDVJLYHQXS

LQ)UDQFHEHIRUHWKHWXUQRIWKHFHQWXU\DQGQRWORQJDIWHUWKH

SURGXFWLRQRI:KLWHVDQGORFRPRELOHVZDVGLVFRQWLQXHG:KLOHWKH

WUHQGLQIDYRURIWKHLQWHUQDOFRPEXVWLRQHQJLQHDSSHDUVWRKDYH