-965;*6=,9 9(-*69769(;,*644
$LU&RPPRGRUH3DXO7KRPDV0%(%6F5$)
'LUHFWRU&RUSRUDWH&RPPXQLFDWLRQ5$) 0LQLVWU\R...
61 downloads
1009 Views
5MB Size
Report
This content was uploaded by our users and we assume good faith they have the permission to share this book. If you own the copyright to this book and it is wrongfully on our website, we offer a simple DMCA procedure to remove your content from our site. Start by pressing the button below!
Report copyright / DMCA form
-965;*6=,9 9(-*69769(;,*644<50*(;065:
9(-
)RUHZRUG
>
$LU&RPPRGRUH3DXO7KRPDV0%(%6F5$)
'LUHFWRU&RUSRUDWH&RPPXQLFDWLRQ5$) 0LQLVWU\RI'HIHQFH 5RRP 0HWURSROH%XLOGLQJ 1RUWKXPEHUODQG$YHQXH :&1%3
HOFRPHWR5$)WKHDQQXDOFRUSRUDWHFRPPXQLFDWLRQSXEOLFDWLRQRIWKH 5$)ZKLFKLVWKHWKLUGHOHPHQWRIDIDPLO\RISXEOLFDWLRQVWKDWLQFOXGHV¶3UHVHQWLQJ WKH5R\DO$LU)RUFH·DQG¶$LUFUDIW :HDSRQV·SURYHGWREHDPRPHQWRXV \HDUIRUDLUSRZHUDQGDYLDWLRQLQJHQHUDO(DUO\LQWKH\HDUWKH5$)PDGHDPDMRU FRQWULEXWLRQWRWKHDLUFDPSDLJQLQWKH*XOI:DU$WWKHYHU\HQGRIWKH\HDUZHSOD\HG RXUIXOOSDUWLQFHOHEUDWLQJWKHWKDQQLYHUVDU\RIPDQQHGSRZHUHGÁLJKWDQGWKH 5$)·VFRQWULEXWLRQWRWKHWUHPHQGRXVDFKLHYHPHQWVRYHUPRVWRIWKDWWLPH 5$)SURYLGHVDQLQVLJKWLQWRWKHEDWWOHZLQQLQJFDSDELOLWLHVWKDWWKH5$)IURQWOLQH FRPPLWWHGWRWKHVXFFHVVIXOVKDSLQJRIWKHEDWWOHVSDFHRYHU,UDTGXULQJ2SHUDWLRQ7(/,& ZKLFKZDVWKHFRGHQDPHJLYHQWRWKHZDULQ,UDT,WLVLPSRVVLEOHWRFRYHUDOOWKH5$)·V UROHVLQDQ\GHSWKDQGPRVWRIRXUIRFXVLQWKLV\HDU·VHGLWLRQLVRQHOHPHQWVRIWKHIDVWMHW ÁHHWDQGWKHRWKHUDVVHWVWKDWFRQWULEXWHWRFRPELQHGDLURSHUDWLRQV+DYLQJZULWWHQDERXW WKHDLUWUDQVSRUWUROHDQGWKH&LQSDUWLFXODUDQGWKHVXSSRUWKHOLFRSWHUIRUFHLQZH KDYHFKRVHQWRKLJKOLJKWWKHZRUNRIVRPHRIWKHRWKHUFRPEDWVXSSRUWIRUFHHOHPHQWVRQ WKHJURXQG1R$&&IRUH[DPSOHZDVDQLQWHJUDOSDUWRIWKHWRWDO5$)DLUFDPSDLJQIRUFH RIRYHUSHUVRQQHO+RZHYHUQRWZLWKVWDQGLQJRSHUDWLRQVLQWKH0LGGOH(DVWZRUN DOVRFRQWLQXHGDSDFHLQWKH8.DQGRXUFRYHUDJHRI2SHUDWLRQ7(/,&LVFRPSOHPHQWHG ZLWKDUWLFOHVVXFKDVWKH45$UROHLQWKH8.6TXDGURQ·VWUDLQLQJUROHDW5$)/HHPLQJ DQGWKHYDOXHRIÁLJKWVLPXODWRUVDVDYLWDOSDUWRIWKH5$)·VLQWHJUDWHGWUDLQLQJV\VWHP ZLOOEHWKHWKGLVSOD\VHDVRQRIWKH5HG$UURZVDQGWRPDUNWKHHYHQWZHWDNH DORRNDWKRZRQHWHDPPHPEHUPDGHWKHWUDQVLWLRQIURPWKHIURQWOLQHWRWKHZRUOG·V SUHPLHUDHUREDWLFWHDP%XWDVZHKLJKOLJKWUHJXODUO\WKH5$)FRQWLQXHVWRSURPRWH DGYHQWXURXVVSRUWLQJDFWLYLWLHVDQGWKLV\HDUZHWDNHDFORVHORRNDW6SRUW*OLGLQJ:HDUH DOVRDFXWHO\DZDUHRIRXUSODFHDVD6HUYLFHLQVRFLHW\DWODUJHDQG,DPSDUWLFXODUO\SOHDVHG WRLQFOXGHDQDUWLFOHRQWKH+HDUWVWRQH)HVWLYDORI)OLJKWZKLFKDLPVWRH[KLELW5$)OLIHWRDQ DXGLHQFHWKDWZHGRQRWDOZD\VKDYHWKHRSSRUWXQLW\WRFRQWDFW $IWHUVRPHô\HDUVDV'&&5$) ,DPVRRQWRPRYHRQWRP\QH[WDSSRLQWPHQWDQG, ZRXOGOLNHWRUHFRUGP\JUDWLWXGHWRWKH(GLWRU6TXDGURQ/HDGHU%ULDQ+DQG\DQGDOOWKRVH ZKRKDYHFRQWULEXWHGWRDUWLFOHVDQGLPDJHVRYHUWKHSUHYLRXVWKUHHHGLWLRQV:HKDYHEHHQ DEOHWRVKRZKRZWKH5$)RIWRGD\UHFUXLWVDQGWUDLQVRUGLQDU\SHRSOHWRGRH[WUDRUGLQDU\ WKLQJVLQDGLYHUVHUDQJHRIUROHVDQGZLWKFDSDELOLWLHVWKDWDUHDWWKHOHDGLQJHGJHRI WHFKQRORJ\0RVWLPSRUWDQWO\ZHWUDLQDQGÀJKWDVDWHDPWRZLQ )XUWKHULQIRUPDWLRQRQWKH5$)DQGFRSLHVRIRXURWKHUSXEOLFDWLRQVFDQEHIRXQG RQRXUZHEVLWHDWZZZUDIPRGXNRU\RXFDQZULWHWRWKH(GLWRU5$)DW5$) 8[EULGJH0LGGOHVH[8%5=$OWHUQDWLYHO\LI\RXDUHLQWHUHVWHGLQDFDUHHULQWKH 5$)\RXFDQÀQGRXWPRUHE\FDOOLQJRUE\YLVLWLQJWKH5$)FDUHHUV ZHEVLWHDWZZZUDIFDUHHUVFRP
&RQWHQWV
5$)0XVHXP0LOHVWRQHVRI)OLJKW
2S7(/,&+DUULHU*5
$MD\6ULYDVWDYD%6F+RQV
)OLJKW/LHXWHQDQW'RPLQLF+XUOH\%(QJ+RQV
6TXDGURQ )OLJKW/LHXWHQDQW*DUHWK3UHQGHUJDVW%$ 2S7(/,&('6HQWU\ )OLJKW/LHXWHQDQW/R]5XVKPHUH06F
)OLJKW6LPXODWLRQ *URXS&DSWDLQ9LQFH6PLWK0%$06F)5$H6 2S7(/,&*55HFRQQDLVVDQFH )OLJKW/LHXWHQDQW$QG\:ULJKW%6F 4XLFN5HDFWLRQ$OHUW5$)/HXFKDUV )OLJKW/LHXWHQDQWV3KLO6WHZDUW%(QJ DQG5RU\+HGHUPDQ0(QJ 2S7(/,&9&7DQNHU 6TXDGURQ/HDGHU+XJK'DYLV
-RLQLQJWKH5HGV 5DFKHO9RLJW%$+RQV 2S7(/,&1XPEHU$&& :LQJ&RPPDQGHU%RE-RQHV 6SRUW*OLGLQJZLWKWKH5$) 6HUJHDQW3HWH6WUDWWHQ +HDUWVWRQH)HVWLYDORI)OLJKW 6LWDNXPDUL
(GLWRU6TXDGURQ/HDGHU%ULDQ+DQG\
5$)0XVHXP+HQGRQ $MD\6ULYDVWDYD
6U+LJLTILYHZ[OL^VYSKSVVRLKIHJRVU [OLÄYZ[`LHYZVMWV^LYLKÅPNO[[OL9V`HS(PY -VYJL4\ZL\TSLK[OLJLSLIYH[PVUZPU[OL<2^P[O [OLVWLUPUNVM[^VUL^WLYTHULU[L_OPIP[PVUOHSSZ JLSLIYH[PUN [OL OPZ[VY` VM H]PH[PVU! º4PSLZ[VULZ VM -SPNO[»HUK[OLº.YHOHTL>OP[L-HJ[VY`»
/
LV5R\DO+LJKQHVV7KH3ULQFH3KLOLS'XNHRI (GLQEXUJKSHUIRUPHGWKHRSHQLQJFHUHPRQ\DW +HQGRQDPRQJVWDVHOHFWLRQRILQWHUQDWLRQDO9,3V DQGGLVWLQJXLVKHG5$)JXHVWV(YHQWVRQWKHGD\ LQFOXGHGDÁ\SDVWE\WKH5HG$UURZVLQGLDPRQG QLQHIRUPDWLRQDIXOOJXDUGRIKRQRXUE\WKH 4XHHQ·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¶0LOHVWRQHV·WUHDWPHQWZKLFKLVJXDUDQWHHGWRFKDQJH FRQFHSWVDQGLGHDVDERXWDYLDWLRQPXVHXPV 7KHGUDPDEHJLQVDWWKHHQWUDQFHLWVHOIZKLFKLV KLJKOLJKWHGE\¶6N\'DQFH·DODQGPDUNVFXOSWXUH UHDFKLQJRYHUIHHWLQWRWKHVN\7KHVROLGVWHHO VWUXFWXUHFDSWXUHVWKHH[KLODUDWLRQRISRZHUHGÁLJKW DQGHQFDSVXODWHVDVSHFWVRIDLUFUDIWVWUXFWXUHDLUÁRZ VSHHGDQGDHURG\QDPLFV6WHSSLQJLQWRWKHUHFHSWLRQ DUHDYLVLWRUVFRPHIDFHWRIDFHZLWKWKHXQPLVWDNDEOH SURÀOHRIDVKLQLQJVLOYHU0N,;6SLWÀUHDWWDFKHGWRWKH ZDOO7KHUHSOLFD6SLWÀUHLVSODFHGQH[WWRDGLVSOD\RI URXQGHOVWKURXJKWKHDJHV,QVLGHWKHH[KLELWLRQKDOO LWVHOILVDJURXQGEUHDNLQJGLVSOD\RIDLUFUDIWZKLFK VSDQVWKHKLVWRU\RISRZHUHGÁLJKWIURPWKH%OHULRW ;,WRWKH7\SKRRQ+LJKOLJKWVLQFOXGHWKH0RVTXLWR 6RSZLWK&DPHO.DZDVDNL.L3'0XVWDQJ 0H+DUULHU0HVVHUVFKPLWW%I*DQGPDQ\ PRUH(DFKDLUFUDIWUHSUHVHQWVDKLVWRULFPLOHVWRQH LQWKHKLVWRU\RIDYLDWLRQDQGWKHZD\LQZKLFKWKH\
DUHSUHVHQWHGDOORZVWKHYLVLWRUWRDSSUHFLDWHHYHU\ DVSHFWRIWKHLUEULOOLDQFH 0LOHVWRQHVRI)OLJKWLVWDLORUHGWRDQDXGLHQFHWKDW GHPDQGVWREHHQWHUWDLQHGZKLOHEHLQJHGXFDWHG WKHUHIRUHLQDGGLWLRQWRWKHDLUFUDIWWKHUHDUH DQXPEHURIIHDWXUHVWKDWDOORZYLVLWRUVWRJHWIXOO\ LQYROYHGLQWKHGLVSOD\V7KHWRXFKVFUHHQSOLQWKV JLYHDIXOOKLVWRU\RIHDFKRIWKHDLUFUDIWRQGLVSOD\ ZLWKGLJLWLVHG'LPDJHVDUFKLYHÀOPIRRWDJH DQGLPSRUWDQWIDFWV7KH\HDUVWLPHOLQHZDOO LVDQH[WUDRUGLQDU\UHYLHZRIWKHÀUVW\HDUVRI SRZHUHGIOLJKWDQGKLJKOLJKWV5$)DQGDYLDWLRQ KLVWRU\DORQJVLGHPDMRUVRFLDODQGSROLWLFDOHYHQWV 2WKHUIHDWXUHVLQFOXGHDJULSSLQJ'ÀOPRIWKH 7\SKRRQLQÁLJKWFRPSOHWHZLWK'VSHFWDFOHV DQG D7\SKRRQVLPXODWRUULGHLQWKH5$)7RGD\VHFWLRQ $QDGGLWLRQDODWWUDFWLRQRQWKHÀUVWÁRRULV7KH &HQWXU\ZKLFKLVDPLQXWHDZHLQVSLULQJÀOP VSHFLDOO\FRPPLVVLRQHGE\WKH0XVHXPWKDWXVHVDOO WKHPRGHUQIDFLOLWLHVRIVSOLWVFUHHQDQGIDVWSDFHG HGLWLQJWRPDNHDIDQWDVWLFWULEXWHWR\HDUVRI SRZHUHGÁLJKW3URMHFWHGRQWRDKXJHVFUHHQLWVHWV WKHPRRGIRUZKDWWKHYLVLWRULVDERXWWRH[SHULHQFH 7KHUHLVDOVRDQ$LU7UDIÀF&RQWURO7RZHURQWKHWRS Á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ÀUVWSXUSRVHEXLOWDLUFUDIWIDFWRU\LQ
0LOHVWRQHVRI)OLJKW
WKHFRXQWU\DQGSDUWRI&ODXGH *UDKDPH:KLWH·VRULJLQDO ZRUNVKDVEHHQGLVPDQWOHGDQG UHFRQVWUXFWHGRQ5$)0XVHXPODQG WREHFRPHDQHZH[KLELWLRQKDOO 7KURXJKFDUHIXOUHVWRUDWLRQLWVWDQGV DVDEUHDWKWDNLQJH[DPSOHRIDQ LPSRUWDQWLQGXVWULDOEXLOGLQJRIWKH WLPH7KHEXLOGLQJZLWKLWVWKUHH VWRUH\RIILFHRYHUORRNLQJWKHPDLQ ÁRRUKDVEHHQSDLQVWDNLQJO\UHVWRUHG XVLQJDVPDQ\RIWKHRULJLQDOOLJKW VZLWFKHVUDGLDWRUVGRRUVZLQGRZ IUDPHVDQGSDLQWFRORXUVDVSRVVLEOH ,WVWDQGVVWUXFWXUDOO\FRPSOHWHZLWK LWVÀYHKXJHWLPEHU¶%HOIDVW7UXVVHV· VSDQQLQJWKHIXOOZLGWKRIWKH EXLOGLQJ(YHQWKHWRLOHWVRUVKRXOG ZHVD\ZDWHUFORVHWV" DQGXULQDO VWDOOVKDYHEHHQFDUHIXOO\UHVWRUHG FRPSOHWHZLWKDXWKHQWLF¶&UDSSHU · SXOOFKDLQVDQGUHHQDPHOOHG\HDU ROGZDVKEDVLQV 7KHUHVWRUDWLRQZRUNREYLRXVO\ WRRNLQWRDFFRXQWPRGHUQEXLOGLQJ UHJXODWLRQVRWKHUZLVHWKHVLWHZRXOG EHLQDFFHVVLEOHWRWKHSXEOLF6R ZKLOVWH[WHUQDOO\LGHQWLFDOWRWKH RULJLQDOEXLOGLQJLQWHUQDOGLIIHUHQFHV LQFOXGHDOLIWDVHFRQGVWDLUFDVHDQG DQLQWHUQDOZDOO(QJOLVK+HULWDJHDQG RWKHUERGLHVKDYHEHHQSDUWLFXODUO\ KHOSIXOWKURXJKRXWWKHUHEXLOGLQJ SURFHVV,QLWVQHZSRVLWLRQLWVLWVZLWK RWKHUSHULRGEXLOGLQJVOHIWIURPWKH LQWHUZDU\HDUVZKHQ+HQGRQZDVDQ LPSRUWDQW5$)6WDWLRQ,WGLVSOD\V WKH5$)0XVHXP·VFROOHFWLRQRIHDUO\ DLUFUDIWDQGDVVRFLDWHGH[KLELWVLQD VHWWLQJVLPLODUWRLWVRULJLQDOSXUSRVH :DONLQJLQWRWKH*UDKDPH:KLWH IDFWRU\LVOLNHWDNLQJDWULSEDFNLQ WLPHWRWKHHDUO\GD\VRIDYLDWLRQ DQGLVDQDEVROXWHO\DXWKHQWLFDQG URPDQWLFH[SHULHQFH+RZHYHULWLV QRWMXVWWKHVLJKWRIFODVVLFVVXFKDV WKH6RSZLWK7ULSODQH&DXGURQ*,,,
$YUR.RU9LFNHUV9LP\ZKLFK WDNHVWKHYLVLWRUEDFNLQWLPHEXWWKH SXUHHVVHQFHRIWKHEXLOGLQJLWVHOI 7KHFKDQJHVWRWKH+HQGRQVLWH KDYHPHDQWWKDWWKHROGHUGLVSOD\V KDYHEHHQJLYHQDIUHVKOHDVHRIOLIH 7KHKLVWRULFKDQJDUVQRZKDYHWKHPHG DUHDVWKDWLQFOXGH¶:LQJV2YHU:DWHU· DQG¶5$)$URXQGWKH:RUOG·ZKLOH WKH%RPEHU+DOOQRZVWDQGVZLWKDQ HYHQJUHDWHUVHQVHRIJUDYLWDV:LWK WKHH[WUDGLVSOD\VSDFHDYDLODEOHWKH DLUFUDIWUDGLDWHIDUPRUHG\QDPLVP $QRWKHUQHZDGGLWLRQLVWKHH[SDQGHG $HURQDXWV,QWHUDFWLYH&HQWUH,WLV DIXUWKHUH[DPSOHRIKRZWKH5$) 0XVHXPLVFRQVLVWHQWO\XSGDWLQJLWVHOI WRDWWUDFWQHZHUDQG\RXQJHUYLVLWRUV 7KHLQWHUDFWLYHFHQWUHLVGHVLJQHGDV DIXQDQGKDQGVRQZD\RIOHDUQLQJ DERXWWKHSULQFLSOHVRIIOLJKWDQG DHURQDXWLFDOHQJLQHHULQJ,WLQFOXGHV D¶'URS=RQH·¶+RW$LU%DOORRQ·¶-HW 3LORW7HVW·$QWL*UDYLW\%DOODQGPRUH ,WLVDGHOLJKWIXODUHDDQGDJDOOHU\WKH YLVLWRUZLOOQRWZDQWWROHDYH 7KH+HQGRQVLWHQRZVWDQGVDVD PDJQLILFHQWODQGPDUNIRU/RQGRQ DVZHOODVIRUDYLDWLRQLWVHOI,QWRWDO WKHQHZGHYHORSPHQWVDUHWKHUHVXOW RIVL[\HDUVRIZRUND
PLOOLRQ GHYHORSPHQWEXGJHWRYHUDLUFUDIW PRYHPHQWVDQG\HDUVRIDYLDWLRQ KLVWRU\7KH0LOHVWRQHVRI)OLJKW EXLOGLQJDQGWKHDGMDFHQW*UDKDPH :KLWH)DFWRU\PDNHDVWULNLQJ MX[WDSRVLWLRQ7KHIXWXULVWLFDQGWKH KLVWRULFERWKFRPELQLQJIRUFHVWRFUHDWH DZRUOGFODVVKRPHIRUWKHEHVWDLUIRUFH PXVHXPLQWKHZRUOG
5R\DO$LU)RUFH0XVHXP *UDKDPH3DUN:D\ /RQGRQ 1:// 7HO
+$55,(5*5
6WLYH[PVU
>
RNHQ\HWDJDLQE\WKHVRXQGRIDIWHUEXUQHUV:HOO,JXHVV ,VKRXOGQ·WFRPSODLQDV,ZLOOEHPDNLQJDVLPLODUUDFNHW LQDIHZKRXUVWLPH&DQ·WKHOSEXWZRQGHUZKHUHWKH\DUH JRLQJ,VWKHLUPLVVLRQWKHVDPHDVPLQH" $VDPHPEHURI)LJKWHU 6TXDGURQ,ZDVSDUWRID +DUULHU*5GHWDFKPHQWEDVHGLQ.XZDLWDORQJZLWKRXU VLVWHU,9$& 6TXDGURQ:HOHIWRXUIDPLOLHVDQGKRPHVDW 5$)&RWWHVPRUHRQDIRJJ\6DWXUGD\PRUQLQJLQ)HEUXDU\ $WWKHWLPH,KDGEHHQRQWKH6TXDGURQIRUQHDUO\ VL[PRQWKVDQGZDVRQHRIWKHPRUHMXQLRUPHPEHUVRIWKH WHDP'XULQJ2SHUDWLRQ7(/,&RXUPLVVLRQDORQJZLWK PDQ\RWKHU5$)DQGPXOWLQDWLRQDODLUFUDIWZDVWRÁ\LQWR ,UDTWRHQJDJHVSHFLÀHGWDUJHWVDQGSURYLGHDLUVXSSRUWIRU JURXQGRSHUDWLRQV1RWKLQJFRXOGHYHUJLYHDIXOODFFRXQW RIWKHIHHOLQJVDQGVLJKWVRIWKHPLVVLRQVZHÁHZDOWKRXJK WKLVDUWLFOHDWWHPSWVWRJLYHDÁDYRXURIZKDWWKHDLUFUHZ ZKRÁHZVWULNHDLUFUDIWLQWR,UDTZHQWWKURXJK $VDGD\¶SOD\HU·P\ZRUNLQJURXWLQHQRUPDOO\VWDUWHG
MXVWDIWHUPLGQLJKWZDNLQJEOHDU\H\HGWRWKHVFUHHFKRI WKHDODUPFORFN:LWKKRXURSHUDWLRQVWKHEDVHZDV QHYHUTXLHWEXW\RXJRWXVHGWRLW$TXLFNVKRZHUVOLSRQ WKHÁ\LQJVXLWDQGVWUDLJKWRXWRIWKHGRRUWREUHDNIDVWWR HDWZKDWHYHU\RXUERG\FRXOGVWRPDFKDWWKDWWLPHLQWKH PRUQLQJ2QDUULYDOLQRSHUDWLRQVIRUWKHPHWHRURORJLFDO EULHI\RXZRXOGJUHHWWKHRWKHUSLORWVWKDWZRXOGHLWKHU EHÁ\LQJLQWKHIRUPDWLRQZLWK\RXRUZRXOGEHDLUERUQH DURXQGWKHVDPHWLPH
;,30*
)OLJKW/LHXWHQDQW'RPLQLF+XUOH\
KHDGTXDUWHUVZHZHUHJLYHQDYHU\VSHFLÀFWDUJHW RUDUHDWKDWZRXOGKDYHEHHQFOHDUHGERWKPLOLWDULO\ DQGSROLWLFDOO\7DUJHWVZHUHFKRVHQWRDFKLHYHDQ RYHUDOOHIIHFWDVRSSRVHGWRLQGLYLGXDOGHVWUXFWLRQ DQGZHSLORWVZHUHWKHODVWOLQNLQDORQJGHFLVLRQ PDNLQJFKDLQ7KDWGLGQRWUHOHDVHXVIURPRXU UHVSRQVLELOLWLHVDQGZHQHHGHGDOOWKHKRXUVDYDLODEOH WRVWXG\WKHSODQLQGHWDLOEHIRUHZHJRWDQ\ZKHUH QHDUWKHDLUFUDIW 7KHÀUVWWDVNZDVWRHVWDEOLVKWKHELJSLFWXUHRIWKH SDFNDJHRIDLUFUDIWWKDWZHZRXOGEHLQYROYHGZLWK ZKRHOVHZRXOGEHRXWWKHUHZKDWFDSDELOLWLHVGLG WKH\KDYHZKDWZDVH[SHFWHGIURPP\IRUPDWLRQ" 7KHQFDPHWKHWDVNRIHQVXULQJWKDWDOOWKHDLUFUDIW ZRXOGEHGHFRQÁLFWHGIURPHDFKRWKHU:LWKRYHU DLUFUDIWJRLQJWRWKHVDPHDUHDRIVN\WKHFKDQFH RIKLWWLQJDQRWKHUIULHQGO\ DLUFUDIWZDVYHU\UHDO XQOHVVDVROLGSODQZDVLQIRUFHDQGDOOHYHQWXDOLWLHV VXFKDVSRRUZHDWKHUKDGEHHQFRQVLGHUHG7KHUH ZRXOGEHOLWWOHRSSRUWXQLW\WRVRUWDQ\WKLQJRXWRQFH LQWKHDLU +DUULHUFRPEDWÁ\LQJLVXVXDOO\FDUULHGRXWDVD SDLURIDLUFUDIWDQGVRLVWKHSODQQLQJ:HZRXOG QHHGWRZRUNFORVHO\WRFRPSOHWHWKHSODQLQWLPH -XVWDVLWZLOOEHLQWKHDLUZHPXVWWUXVWDQGUHO\ RQHDFKRWKHUGXULQJWKHSODQQLQJSKDVHDVWKHUH LVQ·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Á\LQJZDVWKH EULHILQJERWKE\WKHIRUPDWLRQOHDGHUDQGWKH VXSHUYLVRU\FKDLQ:LWKVXIÀFLHQWWUDLQLQJWKHEULHI FRXOGFRQFHQWUDWHRQWKHQXDQFHVRIRXUSDUWLFXODU PLVVLRQZLWK¶VWDQGDUGRSHUDWLQJSURFHGXUHV· FRYHULQJWKHUHVW$VHQLRUSLORWQRWÁ\LQJWKDWGD\ EXWDFWLQJLQDSXUHO\VXSHUYLVRU\UROHDFWHGDVD VSRWFKHFNHUWRPDNHVXUHQRWKLQJKDGEHHQPLVVHG DQGWKDWWKHIRUPDWLRQXQGHUVWRRGLWVSODFHLQWKH RSHUDWLRQDOSODQ :LWKWKHEULHÀQJFRPSOHWHLWZDVRQWRDEXVWR GULYHDFURVVWKHGHVHUWVDQGWRWKHÁ\LQJVLGH:H
ZHUHJUHHWHGE\WKH¶VTXLSSHUV·WKHIO\LQJ FORWKLQJVSHFLDOLVWVZLWKWKHVWDQGDUGFXWWLQJ EDQWHUUHTXLUHGEHIRUHDOOVRUWLHV¶.LWWLQJ XS·ZRXOGWDNHDERXWPLQXWHVZLWKDQWL* WURXVHUVFRPEDWVXUYLYDOZDLVWFRDWOLIHMDFNHW JORYHVDQGKHOPHW%HLQJKDQGHGURXQGVIRU \RXUSLVWROUHPLQGHGXVWKDWWKLVZDVQRWMXVW VRPHURXWLQHWUDLQLQJPLVVLRQ$Q\QHUYHV XVXDOO\DSSHDUHGLQWKHIHZTXLHWPRPHQWV ZKLOVWZDONLQJRXWWRWKHDLUFUDIW $SSURDFKLQJWKHDLUFUDIWVKHOWHUDQDLUFUDIW VORZO\DSSHDUHGORRNLQJZDUKDUGHQHGIURP DOOWKHÁLJKWVDQGGXVWVWRUPVWKDWLWKDGKDG WRHQGXUH0DUNLQJVRIERPEVRUZHDSRQV GURSSHGZHUHSDLQWHGRQWKHVLGHRIWKH DLUFUDIWDVKDVDOZD\VEHHQWKHZD\RIWKH 5$):HDSRQVKXQJRIIHDFKS\ORQZLWKUHG ZDUQLQJÁDJVDWWDFKHGZDLWLQJWREHUHPRYHG DQDLUFUDIWEXLOWIRURQHSXUSRVHDQGRQH SXUSRVHDORQH 7KHJURXQGFUHZDSSHDUHGIURPZKHUHYHU WKH\KDGPDQDJHGWRÀQGVKDGHZLWKDVPLOH RQWKHLUIDFHEXWLWZDVDOZD\VDVREHU DWPRVSKHUH$TXLFNFKHFNWKDWHYHU\WKLQJ RQWKHRXWVLGHRIWKHDLUFUDIWZDV2.EHIRUH FOLPELQJWKHODGGHUDQGVXUYH\LQJ¶WKHRIÀFH· $IHZPRUHFKHFNVEHIRUHHDVLQJGRZQRQWR WKHVHDWDQGVWUDSSLQJLQ1RZWKHUHZHUH RQO\WKRXJKWVRIWKHWDVNLQKDQG:LWKWKH DLUFUDIWUHDG\WKHUHZHUHDIHZPLQXWHVRI VLOHQWFRQWHPSODWLRQEHIRUHWKHLQLWLDOUDGLR FKHFNLQ$FKDQFHIRUDTXLFNUXQWKURXJKRI WKHPHPRULVHGWDUJHWVDFWLRQVLIWKUHDWHQHG P\UHVSRQVLELOLWLHVWRWKHIRUPDWLRQDQGWR WKHRYHUDOOSDFNDJH)URPFKHFNLQRQZDUGV
WKHUHZDVOLWWOHWLPHWRUHÁHFWHYHU\WKLQJZDV IRFXVVHGRQWKHWDVNDKHDG :LWKVRPDQ\DLUFUDIWWD[\LQJFRPSOHWLQJ ILQDODUPDPHQWFKHFNVDQGWDNLQJRIIDQG ODQGLQJWKHDLUÀHOGZDVDQH[FHSWLRQDOO\EXV\ SODFH7KHUHZDVQRSODFHIRUSRRUJURXQG PDQRHXYULQJWKURXJKDODFNRIFRQFHQWUDWLRQ HYHQZKLOHFKHFNLQJDQGGRXEOHFKHFNLQJWKH DLUFUDIWDQGLWVV\VWHPV$VZHDSSURDFKHG WKHGHSDUWXUHHQGRIWKHUXQZD\WKHFDQRS\ ZDVVODPPHGVKXWDQGWKHÀQDOFKHFNVZHUH FRPSOHWHG6HDOHGLQWKHFRFNSLWDORQH \RXWRRNDGHHSEUHDWKDQGZDLWHGIRU\RXU ZLQJPDQWRFDOOUHDG\2QKLVFDOOZHUROOHG RQWRWKHUXQZD\DQGVODPPHGWKHHQJLQHWR IXOOSRZHU7KHHQJLQHZKLFKKDGMXVWEHHQ DTXLHWUHYHUEHUDWLRQLQWKHEDFNJURXQGRI \RXUFRQFHQWUDWLRQQRZH[SORGHGLQWRDURDU DVWKHWDNHRIIUROOEHJDQ
ZHUHSOD\LQJRXUSDUWLQWKHRYHUDOOSODQ $VVXFKZHZHUHSDVVHGIURPDJHQF\WR DJHQF\WRFRQÀUPZHZHUHDZDUHRIWKH ODWHVWLQWHOOLJHQFHDQGWRFKHFNDOORIRXU V\VWHPVZHUHIXQFWLRQLQJFRUUHFWO\ZLWK WKHP$GRXEOHFOLFNRQWKHUDGLRPDGH \RXORRNDW\RXUZLQJPDQWRFKHFNKLV GHIHQVLYHDLGVV\VWHPVDVÁDUHVGURSSHG IURPKLVDLUFUDIW
DQGZLWKIXOOSRZHURQFOLPEDZD\WRVHH WKHWDQNHU·VQH[W¶WUDGH·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·V GHIHQVLYHDLGVWHOOLQJ\RXWKDW\RXZHUH EHLQJLQWHUURJDWHGE\VRPHUDGDUEHLW IULHQGRUIRH 'HSHQGLQJRQWKHIHURFLW\RIWKHJURXQG RSHUDWLRQVZHZHUHDOORFDWHGWRWKRVHLQ PRVWQHHGRIRXUDVVLVWDQFH7KHIRUPDWLRQ FKDQJHGIURPIUHTXHQF\WRIUHTXHQF\XQWLO ZHVSRNHWRD)RUZDUG$LU&RQWUROOHU )$& 7KHVWUHVVLQD)$&·VYRLFHFRXOG WHOOXVZKDWZDVJRLQJRQDVKHFDPHXS RQIUHTXHQF\6RPHZHUHMXVWYLVXDOZLWK WKHHQHP\VRPHZHUHXQVXUHRIHQHP\ SRVLWLRQVDQGVRPHZHUHXQGHUFRQWLQXRXV ÀUHIURPRSSRVLQJIRUFHVRUVQLSHUV7KH VRXQGRIULFRFKHWVRUH[SORVLRQVFRPLQJ WKURXJKRQWKH)$&·VUDGLRDOZD\V
UHPLQGHG\RXMXVWKRZVHULRXVWKHWDVN ZDV1RZWKH\HDUVRIWUDLQLQJNLFNHGLQ DQG\RXNQHZZKDWZDVUHTXLUHG
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Á\LQJFDUHHUV 2WKHUDLUFUDIWZHUHRQIUHTXHQF\KDYLQJ MXVWODQGHGRUVWLOOZDLWLQJWRWDNHRII$V WKHDLUÀHOGFDPHLQWRYLHZ\RXFRXOGVHH DLUFUDIWDOORYHULWDUPLQJGHDUPLQJ EULQJLQJWKLQJVLQDQGWDNLQJWKLQJVRXW $V\RXWRXFKHGGRZQWKHSUHVVXUHÀQDOO\ HDVHGVORZLQJWKHDLUFUDIWGRZQPDNLQJ WKHHMHFWRUVHDWVDIHDQGWKURZLQJRSHQ WKHFDQRS\WRIHHOWKHZDUPEUHH]HDFURVV \RXUIDFHIRUWKHÀUVWWLPHLQÀYHKRXUV :LWKWKHR[\JHQPDVNDZD\IURP\RXU IDFHDGHHSEUHDWKRIWKHIUHVKDLUIHOWYHU\ JRRGLQGHHG2QDUULYDODWWKHGLVSHUVDO DUHD\RXZHUHPHWE\WKHVPLOLQJIDFHV RIWKHHQJLQHHUVDOZD\VSOHDVHGWRVHH \RXKRPHDOWKRXJKWKH\ZRXOGQHYHU VD\WKDW $VVRRQDV\RXVKXWGRZQ WKH¶EDQWHU·VWDUWHGWRÁ\,WZDVJRRGWR EH¶KRPH·:HZRXOGGHNLWDQGUHWXUQ WRWKHLQWHOOLJHQFHVWDIIIRUGHEULHÀQJ
:LWKWKLVFRPSOHWHHDFKIRUPDWLRQDQGWKHSDFNDJHDVDZKROHZRXOGEHGHEULHIHGWRDQDO\VH HYHU\DVSHFWRIWKHVRUWLHIURPJHWWLQJWRZRUNWRWKHGHEULHILWVHOIEXWPRVWRIDOOFRQFHQWUDWLQJRQ WKHWDUJHWZRUN$Q\OHVVRQVOHDUQHGZHUHIHGEDFNWRLPSURYHWKHV\VWHP0HDQZKLOHWKHHQJLQHHUV ZRUNHGIXULRXVO\WRSUHSDUHWKHMHWVIRUWKHQH[WVRUWLHUHIXHOOLQJUHDUPLQJLIQHFHVVDU\DQGFKHFNLQJ WKHPWKRURXJKO\ 7KHQUHOD[XQWLOWKHQH[WVRUWLH
,1727+(+251(7·6 )OLJKW/LHXWHQDQW*DUHWK3UHQGHUJDVW
)HZLKH[9(-3LLTPUNPU5VY[O@VYRZOPYLHUK LX\PWWLK^P[O/H^RMHZ[QL[[YHPUPUNHPYJYHM[ :X\HKYVUJVSSVX\PHSS`RUV^UHZº;OL;VU» PZ OVTL [V [OL 5H]PNH[VY;YHPUPUN
)
DVHGDW5$)/HHPLQJLQ1RUWK
$WWDFNFRXUVHZKLFKFRQFHQWUDWHVRQWKH VNLOOVQHHGHGWRSODQDQGH[HFXWHVXFFHVVIXO PLVVLRQVLQDKLJKVWUHVVKLJKZRUNORDG HQYLURQPHQW%XWIRUHYHU\KRXULQWKHDLU WKHUHDUHPDQ\KRXUVRIFDUHIXOSODQQLQJRQ WKHJURXQGEHIRUHKDQG DP,QWRWKHGDLO\PHWHRURORJLFDO EULHÀQJZKHUHZHGLVFRYHUQRWRQO\WKH ZHDWKHUIRUWKHFRPLQJKRXUVEXWDOVRWKH VHUYLFHDELOLW\VWDWHRIWKHDLUFUDIWWKHVWDWXV RIWKHDLUÀHOGDQGLWVQRPLQDWHGGLYHUVLRQ DLUÀHOGVDQGDQ\RWKHULQIRUPDWLRQHVVHQWLDO WRWKHVDIHFRQGXFWRIÁLJKWRSHUDWLRQV$V IDUDVP\VRUWLHLVFRQFHUQHGWKHEHVWZHDWKHU FRQGLWLRQVDUHLQQRUWKZHVW(QJODQGDQG LQWRVRXWKZHVW6FRWODQGJUHDWYLVLELOLW\RQD JLQFOHDUGD\ DP)OLJKW/LHXWHQDQW0DUN¶%RXOW\· %RXOWRQLVWKHQDYLJDWLRQVSHFLDOLVWZKRKDV EHHQGHVLJQDWHGWRJLYHPHP\WDVNLQJIRU WRGD\·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·V DYRLGDQFHDQGZDUQLQJQRWLFHVWRHQVXUH WKHUHDUHQRREYLRXVFRQÁLFWVDQGWKHQPRYH RQWRFRQVLGHUWKHWDUJHWVLQPRUHGHWDLO DP7DUJHWSODQQLQJLVFRQGXFWHGXVLQJ 2UGQDQFH6XUYH\PDSVZKLFKDOORZ
1(67
KLJKOHYHOVRIDFFXUDF\DQGDJUHDWHUDSSUHFLDWLRQRIWKHWHUUDLQLQWKHWDUJHWDUHD )LUVWWKHWDUJHWLVLGHQWLÀHGDQGWKHQ,ORRNIRUDVXLWDEOH,QLWLDO3RLQW,3 ZKLFK LVZKHUHWKHUXQLQWRWKHWDUJHWEHJLQVLWKDVWREHODUJHREYLRXVDQGLGHDOO\ KDYHYHUWLFDOH[WHQWDKLOOWRSZRRGORRNVSURPLVLQJ)URPWKHUHWKHUXQWR WDUJHWLVDERXWVHFRQGVORQJZLWKDÀ[DIWHUVHFRQGVWRFRQÀUPWUDFNLQJDQG WLPLQJ0\OD\GRZQDWWDFNZLOOGHVWUR\RUVXSSUHVVDQ\HQHP\GHIHQFHVLQWKH WDUJHWDUHDMXVWÀYHVHFRQGVEHIRUHP\ZLQJPDQZLOOXVHDGLYHDWWDFNSURÀOHWR JLYHLQFUHDVHGSHQHWUDWLRQIRUWKHZHDSRQSHUIHFWIRUDFRQFUHWHVWUXFWXUHVXFKDV WKHEULGJH DP7KHVHFRQGWDUJHWWKHEXLOGLQJUHTXLUHVDPRUHFRPSOLFDWHGSURÀOHWKH VHFRQGVSOLW:LWKWKLVSURÀOHWKHOHDGHUDQGWKHZLQJPDQVSOLWDSDUWWKUHH PLQXWHVEHIRUHWKHWDUJHWLVUHDFKHGDQGXVHFRPSOHWHO\GLIIHUHQW,3VUXQQLQJLQ WRKLWWKHWDUJHWIURPWZRGLUHFWLRQVPD[LPLVLQJERWKZHDSRQHIIHFWLYHQHVVDQG WKHHOHPHQWRIVXUSULVHEHIRUHUHMRLQLQJLQWRIRUPDWLRQWZRPLQXWHVDIWHUWKH DWWDFN7KLVWDUJHWSUHVHQWVPRUHSUREOHPVKRZHYHUWKHUHLVDQRWLÀHGDYRLGDQFH DUHDFORVHWRWKHWDUJHWWKDWPXVWQRWEHHQFURDFKHGRQDQGWKHUHDUHVHYHUDO YLOODJHVLQWKHDUHDQRQHRIZKLFKDUHWREHRYHUÁRZQLQDFFRUGDQFHZLWK5$) SROLF\$IWHUDFRXSOHRIPLQXWHVWKLQNLQJ,GHFLGHRQWKHEHVWFRPSURPLVHDQG KDQGRYHUWKHWDUJHWSODQQLQJIRUP\ZLQJPDQWRFRPSOHWH
DP:LWKWKHÀQDOWDUJHWSODQQLQJXQGHUZD\P\QH[WSULRULW\LVWRSODQ WKHURXWHWRDQGIURPWKHWDUJHW7KLVLVGRQHRQDFKDUWZKLFKJLYHV VXIÀFLHQWGHWDLOWRHQDEOHDFFXUDWHQDYLJDWLRQZKLOHÁ\LQJDWNWVDERXW HLJKWPLOHVSHUPLQXWH $JDLQ,DPFRQVWUDLQHGE\WKHUXOHVIRUORZÁ\LQJIRU H[DPSOHVWD\LQJFOHDURIWRZQVDQGRWKHUDYRLGDQFHDUHDVVXFKDVQDWXUHUHVHUYHV DQGWDFWLFDOFRQVLGHUDWLRQVVXFKDVWKHSUHIHUHQFHIRUXVLQJYDOOH\VUDWKHUWKDQ H[SRVLQJWKHIRUPDWLRQE\Á\LQJRYHUKLJKJURXQG$XVXDOURXWHODVWVIRUDERXW DQKRXUFRYHULQJDURXQGPLOHV$WWKLVVWDJHSODQQLQJPXVWEHPHWLFXORXV HVSHFLDOO\ZLWKUHJDUGWRWLPLQJLQRUGHUWRDFKLHYHWKHREMHFWLYH DP+DYLQJFRPSOHWHGWKHWDUJHWSODQQLQJP\ZLQJPDQPDNHVWKH QHFHVVDU\ERRNLQJVIRUORZOHYHOÁLJKWDQGHQVXUHVWKDWWKHUHLVQRFRQÁLFWZLWK RWKHUVRUWLHVLQRXULQWHQGHGRSHUDWLQJDUHD+HWKHQEHJLQVSKRWRFRS\LQJWKH WDUJHWPDSVIRUDOOPHPEHUVRIWKHIRUPDWLRQ DP:LWKWKHURXWHSODQQLQJFRPSOHWH,WXUQP\DWWHQWLRQWRWKHIXHOSODQ )XHOFDOFXODWLRQVGHSHQGXSRQERWKKRZPXFKIXHOLVQHHGHGWRÁ\WKHURXWHDQG KRZPXFKIXHOLVUHTXLUHGWRGLYHUWIURPEDVHLIZHUHWXUQEXWFDQQRWODQGIRU DQ\UHDVRQ)URPWKHVHÀJXUHVDSODQQHGIXHOUHTXLUHPHQWLVFDOFXODWHGDQGLV DQQRWDWHGRQWRWKHPDSDWLQWHUYDOVRIWLPHRIQRJUHDWHUWKDQWHQPLQXWHV$V VRRQDV\RXDUHDLUERUQHIXHOLVRQHRIWKHPRVWLPSRUWDQWFRQVLGHUDWLRQV
DP7KHILQDOPLQXWHVEHIRUHWKHIOLJKW EULHÀQJLVWDNHQXSZLWKSKRWRFRS\LQJWKHURXWH PDSVFRPSOHWLQJEULHILQJVOLGHVHQWHULQJWKH ZD\SRLQWVRIWKHURXWHLQWRRXU*OREDO3RVLWLRQLQJ 6\VWHP*36 XQLWVJDWKHULQJODWHVWZHDWKHU LQIRUPDWLRQDQGDLUÀHOGVWDWHVDQGVWXG\LQJWKH URXWHDQGWKHWDUJHWV*RRGWDUJHWVWXG\HQDEOHV \RXWRKDYHDFOHDUPHQWDOSLFWXUHRIWKHUXQLQWR WKHWDUJHWDQGGUDPDWLFDOO\LQFUHDVHVWKHFKDQFHVRI VXFFHVV DP$IWHUDWLPHFKHFNWRHQVXUH V\QFKURQLVDWLRQIRUWKHWDUJHWUXQVWKHEULHÀQJ EHJLQV$WWKLVVWDJHWKHWZRFUHZVDUHDVVHPEOHG DQGDOOLQIRUPDWLRQIRUWKHVRUWLHLVFRQVLGHUHG7KLV PD\EHWKHÀUVWWLPHWKDWVRPHPHPEHUVRIWKH FUHZKDYHVHHQWKHURXWHDQGWDUJHWVDQGVRHDFK DVSHFWPXVWEHFRYHUHGLQGHWDLOLQFOXGLQJUHOHYDQW DYRLGDQFHDUHDV$VOHDGHU,EULHIWKHZD\,ZDQW WKHVRUWLHWREHFRQGXFWHGDQGWKHFRQWLQJHQF\SODQV IRUEDGZHDWKHUHPHUJHQFLHVRUHQHP\HQJDJHPHQW
DP:LWKKDOIDQKRXUWR¶VWUDSLQ·LWLVWLPH IRUDÀQDOEULHI2QFHPRUHZHFKHFNDQ\WKLQJ WKDWPD\KDYHDQLPSDFWRQRXUVRUWLHWKLVWLPHLQ IURQWRIDQDXWKRULVLQJRIÀFHUZKRZLOOJLYHXVWKH OHJDOFOHDUDQFHWRÁ\7KUHHKRXUVDIWHUWKHLQLWLDO WDVNLQJLWLVÀQDOO\WLPHWRZDONWRWKHMHWV DP7KHNLWWLQJXSVWDUWXSDQGFKHFNLQ KDYHJRQHZLWKRXWDKLWFKEXWZKLOHZDLWLQJWR WDNHRIIZHDUHRUGHUHGWRKROGIRUD7RUQDGR UHWXUQLQJWREDVHZLWKDIXHOSUREOHP%\WKHWLPH ZHÀQDOO\GHSDUWZHDUHWKUHHPLQXWHVODWHVR, TXLFNO\EULHIP\ZLQJPDQRQDSODQWRFXWVKRUW WKURXJKWKHYDOOH\VRIWKH/DNH'LVWULFWDIWHUWKH ÀUVWWDUJHW SP,QWR¶EDWWOHIRUPDWLRQ·RYHUWKH
JHWWLQJFORVHWRWKHÀUVWWDUJHWDQGVR,WXUQP\DWWHQWLRQWRWKHWDUJHWEULHIIRUP\SLORW¶7DUJHW;UD\ LVDOD\GRZQDWWDFNRQDEULGJHRQDWUDFNRIGHJUHHVIRURQHPLQXWHÀYHVHFRQGV7KH,3LVDODUJH KLOOWRSZRRGRQWKHIDUVLGHRIWKH0
SP&ORVHEXWVWLOOQRVLJQRI WKHWDUJHW,VHHVHYHUDOEXLOGLQJVEXW WKH\DUHIDUWRRFORVHDQGKDYHQRQH RIWKHIHDWXUHV,DPH[SHFWLQJ,ORRN EH\RQGWKHP·:RRGMXVWOHIWRI WKHQRVHWZRPLOHV·7KHSLORWVKLIWV WKHDLUFUDIWDQGSODFHVWKHZRRGV RQWKHQRVH¶7DUJHWLVFRQFHDOHG 6WDQGE\*RWWKHFKLPQH\V:KLWH EXLOGLQJRQWKHQRVH\RXUWDUJHW· SP:HVFUHDPRYHUWKHWDUJHW RQWLPHEXWWKHHODWLRQJLYHVZD\WR GHWHUPLQDWLRQZHPXVWQRZJHWEDFN LQWRIRUPDWLRQDQGUHWXUQWREDVHVDIHO\ 7KHUHLVQRWLPHWRUHOD[WKHPLVVLRQLV QRWRYHUXQWLO\RXDUHVDWLQWKHEDU SP7KHIRUPDWLRQUHMRLQJRHV DVSODQQHGDQGZHWXUQVRXWKIRU KRPH SP+RWVZHDW\EXWVDWLVÀHG ERWKFUHZVZDONEDFNWRWKH2SHUDWLRQV %ORFNWRGHEULHIZLWKWKHDXWKRULVLQJ RIÀFHU3OHDVHGZLWKP\SHUIRUPDQFH ,KHDGIRUWKHGHEULHIZLWKP\SLORW ZKRZLOODVVHVVP\ÀYHKRXUORQJ SHUIRUPDQFHLQRYHUGLIIHUHQWDUHDV 7KHVRUWLHLVQRWRYHU\HW $QGLQW\SLFDO6TXDGURQIDVKLRQ P\GD\LVQRWRYHU\HWHLWKHU SP7KHGHEULHIIURPP\ PRUQLQJVRUWLHQRZRYHU,·PHQMR\LQJ DOLJKWDQGQXWULWLRXVOXQFKRISLHDQG FKLSVLQWKHDLUFUHZIHHGHU1H[WWRPH DUHWKHXQPLVWDNDEOHFKLVHOHGIHDWXUHV RIDKDUGHQHG¶ÀJKWHUMRFN·ZHOO 2.IRUPHU7RUQDGR)SLORW)OLJKW /LHXWHQDQW&ROLQ¶%UXII\·%URXJK+H RIIHUVPHDEDFNVHDWWULSRQDQDLU FRPEDWVRUWLHODXQFKLQJDWSP 7KHGD\QHYHUVWRSVRQ6TXDGURQ SP:HUHFRQYHQHDWWKH RSHUDWLRQVGHVNZKHUH%UXII\JLYHVPH DTXLFNRYHUYLHZRIWKHVRUWLH:HDUH WDVNHGWRDFWDVDEDQGLWÁ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
WRHMHFWLQWRWKHFROGVHDDQGWKH *SDQWVSUHYHQW*LQGXFHGORVVRI FRQVFLRXVQHVVZKHQSHUIRUPLQJKLJK HQHUJ\PDQRHXYUHV SP/LQHGXSRQWKHUXQZD\D TXLFNFKHFNRIWKHV\VWHPVFRQÀUPV ZHDUH¶JRRGWRJR·%UXII\VHOHFWV PD[LPXPSRZHUDQGZHWDNHRIILQWR WKHEXUQLQJEOXH SP2QWUDQVIHUWRWKH)LJKWHU &RQWUROOHUVZHDUHGLUHFWHGWRRXUDUHD DQGSRVLWLRQHGWRDOORZWKH7RUQDGRVWR EHJLQWKHLULQWHUFHSW SP2YHUWKHUDGLRZHKHDUWKH 7RUQDGRFUHZVDQG)LJKWHU&RQWUROOHUV FRQÀUPRXUSRVLWLRQ·7KUHDW(DVW PLOHV6XVSHFWHGEDQGLW&RPPLW· 7KH\DUHRQWKHLUZD\ SP,FDWFKDJOLPSVHRID 7RUQDGRDVWKHVXQJOLQWVRIILWVFDQRS\ EXWWKH\·YHVHHQXVWRR¶%ODFNVPLWK 2QH,'VRQHEDQGLWKHDGLQJ:HVW· 7KH)LJKWHU&RQWUROOHUUHVSRQGV LPPHGLDWHO\¶+RVWLOH&OHDUWR HQJDJH· SP7KHÀJKWLVRQ:HSXOOLQWR DKDUGOHIWWXUQWRGHQ\WKH7RUQDGR DVKRWDQGXVHRXUHQHUJ\WRFOLPE, FDQIHHOP\QHFNVWUDLQLQJXQGHUWKH* IRUFHDV,VWULYHWRNHHSYLVXDOFRQWDFW ZLWKWKH7RUQDGRQRZLQRXUUHDU VHFWRU,NHHSDUXQQLQJFRPPHQWDU\WR %UXII\LQIRUPLQJKLPRIWKH7RUQDGR·V SRVLWLRQDVZHPDQRHXYUHKDUGWR SUHYHQWDPLVVLOHHQJDJHPHQW SP%UXII\VHHVDFKDQFHWR¶WXUQ WKHWDEOHV·DQGZHGLYHIRUWKHGHFN WXUQLQJDQGEXUQLQJUHFRPPLWWLQJ RQWRWKH7RUQDGR7KHJUHDWHUDJLOLW\RI WKH+DZNJLYHVXVDVOLJKWDGYDQWDJH DQGZHSRVLWLRQIRUDJXQVNLOO SP-XVWRQHPRUH VHFRQG$ÁDVKLQWKHPLUURUVDQG, DPDZDUHRIWKHVHFRQG7RUQDGRDQ LQVWDQWEHIRUHWKHVLPXODWHGPLVVLOH LVLQWKHDLU¶%ODFNVPLWK)R[· :HKDGZHOODQGWUXO\WDNHQWKHEDLW PDNLQJXVDQHDV\WDUJHWIRUWKHVHFRQG 7RUQDGR SP¶%ODFNVPLWKWHUPLQDWH·7KH HQJDJHPHQWRYHUZHUHSRVLWLRQIRUWKH QH[WUXQ SP$IWHUWKUHHPRUHKLJK VSHHGKLJKHQHUJ\HQJDJHPHQWVWKH 6TXDGURQMHWVKDYHDFKLHYHGWKHLU WUDLQLQJREMHFWLYHVDQGZHUHWXUQWR EDVH SP$IWHUDTXLFNWHOHSKRQH GHEULHIZLWKWKH7RUQDGRFUHZVLWLV WLPHÀQDOO\WRKHDGIRUWKHEDU,WKDV EHHQDW\SLFDOGD\RQ7KH7RQKDUG ZRUNKHFWLFEXWHQMR\DEOH1RZ ZKHUH·VWKDWSLQW,RUGHUHG"
('6(175<
6WLYH[PVU
0
WLVDPDQGZHDUHVRPHZKHUHRYHU1RUWKHUQ6DXGL $UDELDKDYLQJMXVWFURVVHGWKHERUGHUIURP,UDTDQGWKUHH PLQXWHVIURP¶ELQJR·WKHSRLQWDWZKLFKZHKDYHWRKHDG IRUKRPHLIZHGRQRWJHWPRUHIXHO´R·FORFNPLOHVµ VD\VWKHZHDSRQVV\VWHPVRSHUDWRUORRNLQJDWWKHVFUHHQ RIKLVZHDWKHUUDGDU´7KDWORRNVJRRG6NLSSHUKH·VLQ WKHOHIWWXUQUROOLQJRXWLQIURQWµVD\VRQHRIWKHZHDSRQV FRQWUROOHUVVLWWLQJVRPHIWLQWKHFDELQEHKLQGPHDQG ORRNLQJLQWHQWO\DWWKHUDGDUGLVSOD\LQIURQWRIKLP:H SRSRXWRIDSDWFKRIFORXGLQWREULJKWPRUQLQJVXQVKLQH DQGDOPRVWLPPHGLDWHO\WKHFRSLORWFDOOV´9LVXDOµ7ZR PLQXWHVODWHUZLWKWKHÁLJKWHQJLQHHUKDYLQJUXQWKURXJK WKHQHFHVVDU\FKHFNOLVWVDQGWKHWDFWLFDOGLUHFWRUFRQÀUPLQJ WKDWHYHU\WKLQJLVUHDG\ZHVLWIWEHKLQGWKH86$).& WDQNHU,WDNHFRQWUROIURPWKHFRSLORWZKRKDVEHHQÁ\LQJ XSWRWKLVSRLQWVHWWOHP\VHOIGRZQDQGKDYLQJUHFHLYHG FOHDUDQFHWRPDNHFRQWDFWJHQWO\SXVKWKHWKURWWOHVWRVWDUW PRYLQJIRUZDUG´VWDELOLVHWKHUH &217$&7µDQQRXQFHVWKHFRSLORW´)XHOÁRZVµFDOOV WKHÁLJKWHQJLQHHUDQGWKHUHLVDQDXGLEOHVLJKRIUHOLHI )RXUWHHQPLQXWHVODWHUKDYLQJPDQDJHGWRPDLQWDLQFRQWDFW WKHOERIIORDGLVFRPSOHWH´5HTXHVWGLVFRQQHFWµWKH FRSLORWWUDQVPLWVWRWKHWDQNHUFUHZDQGZHKHDUWKH¶FOXQN· DVWKHÁ\LQJERRPXQSOXJVIURPWKHURRIDIHZIHHWEHKLQG XV:HPRYHEDFNDQGGRZQIURPWKHWDQNHUWRJDLQVDIH VHSDUDWLRQDQGEHJLQSUHSDULQJWRUHWXUQWRRXURUELWDUHD RYHU,UDTIRUWKHVHFRQGKDOIRIRXUHLJKWKRXU¶RQVWDWLRQ· SHULRG,WLVRYHUKRXUVVLQFHZHJRWRQWKHFUHZEXVWR PDNHWKHMRXUQH\IURPRXUDFFRPPRGDWLRQWRZRUNLWZLOO EHDQRWKHUHLJKWKRXUVEHIRUHZHDUULYHEDFNWKHUH6RZKDW DUHZHGRLQJZK\DUHZHGRLQJLWDQGKRZGLGZHJHWKHUH" %DFNJURXQG $VWKH,UDTLSROLWLFDOVLWXDWLRQFRQWLQXHGWRGHWHULRUDWH GXULQJWKHODWWHUSDUWRIWKH('&RPSRQHQWDW 5$):DGGLQJWRQZDVDOUHDG\EXV\SODQQLQJLWVSRVVLEOH LQYROYHPHQWLQDQ\SRWHQWLDOPLOLWDU\FDPSDLJQ7KLVZDV SDUWLFXODUO\FKDOOHQJLQJDVWKH&RPSRQHQWZDVVWLOODFWLYHO\ LQYROYHGLQ2SHUDWLRQ25$&/(LQVXSSRUWRIZKLFKFUHZV KDGÁRZQGDLO\PLVVLRQVRYHU$IJKDQLVWDQVLQFH2FWREHU 7KLVFRPPLWPHQWZDVÀQDOO\OLIWHGDQGDVDUHVXOW WKHODVWFUHZVZHUHEDFNDW5$):DGGLQJWRQE\WKHHQGRI -DQXDU\DOORZLQJDWWHQWLRQWREHWXUQHGIXOO\WRZDUGV WKH,UDTWKHDWUHRIRSHUDWLRQV 5$):DGGLQJWRQEHFDPHDYHULWDEOHKLYHRIDFWLYLW\ ZLWKWKHZKROH6WDWLRQSXOOLQJWRJHWKHUWRHQVXUHWKDW WKRVHSHUVRQQHOOLDEOHWRGHSOR\ZHUHIXOO\SUHSDUHGIRUDOO IRUHVHHDEOHHYHQWXDOLWLHV,QWKHEHVWWUDGLWLRQVRIWKH5$) WKHFKDOOHQJHZDVPHWDQGQLQHRSHUDWLRQDOFUHZVDQGIRXU ('DLUFUDIWZHUHPDGHDYDLODEOHZLWKWKHDLPRIRIIHULQJD KRXUVDGD\('SUHVHQFHIRUDVORQJDVZDVQHFHVVDU\ 7KHVHFUHZVFRQVLVWHGRISHUVRQQHOIURP6TXDGURQ 6TXDGURQDQGWKH6HQWU\6WDQGDUGV8QLWWRJHWKHUZLWK
IRUPHUFUHZPHPEHUVZKRKDGEHHQUHFDOOHGDQGUHTXDOLÀHG VSHFLILFDOO\WRVXSSRUWWKH2SHUDWLRQ,QWKHHQGVSDFH DYDLODEOHDWRXUGHSOR\HGRSHUDWLQJEDVHGLFWDWHGWKDWRQO\ VL[FUHZVZRXOGEHDEOHWRGHSOR\VRWKHZRUNORDGZRXOG EHLQFUHDVHGVLJQLÀFDQWO\(YHQWXDOO\WKHRUGHUWRGHSOR\ DUULYHGDQGGXULQJWKHODVWZHHNRI)HEUXDU\DQGWKHÀUVW ZHHNRI0DUFKDOOVL[FUHZVWRJHWKHUZLWKDODUJH QXPEHURIVXSSRUWSHUVRQQHOPDGHWKHLUZD\E\YDULRXV PHDQVWR3ULQFH6XOWDQ$LU%DVH36$% LQWKH.LQJGRPRI 6DXGL$UDELD2QFHWKHUHSUHSDUDWLRQVFRQWLQXHGERWKRQ WKHJURXQGDQGLQWKHDLUZLWKZRUNXSWUDLQLQJEHJLQQLQJ LQHDUQHVW:KHQ2SHUDWLRQ7(/,&FRPPHQFHGRQ 0DUFKWKH('&RPSRQHQWZDVUHDG\IRUWKHFKDOOHQJH WKDWOD\DKHDG 7KH7DVN 7KH('6HQWU\LVNQRZQWRPDQ\DVWKH$:$&6 ZKLFKVWDQGVIRU$LUERUQH(DUO\:DUQLQJDQG&RQWURO 6\VWHPKRZHYHUWKLVQDPHRQO\UHÁHFWVSDUWRIWKHUROH SOD\HGE\WKHDLUFUDIWLQDPRGHUQDLUEDWWOH7KHUHDUHD QXPEHURIUROHVXQGHUWDNHQVLPXOWDQHRXVO\E\HDFKFUHZ WKDWFDQLQVLPSOHWHUPVEHGHVFULEHGDVDLUERUQHDLU WUDIÀFFRQWURODLUERUQHHDUO\ZDUQLQJRISRWHQWLDOWKUHDWV IURQWOLQHFRPPDQGDQGFRQWURORIDLUERUQHDVVHWVWKH SURYLVLRQRIFORVHDLUVXSSRUWWRJURXQGXQLWVDQGDOVR FRPPXQLFDWLRQVUHOD\,QJHQHUDOWKHUROHRIWKH('LVWR DFWDVWKHIRFDOSRLQWIRUWKHPDQDJHPHQWRIWKHDLUEDWWOH :LWKLQ2SHUDWLRQ7(/,&WKH5$)('VVKDUHGWKHVH WDVNVZLWKWKH86$)(&VDQGWKH861DY\(VZLWK HDFK¶RQVWDWLRQ·DLUFUDIWEHLQJUHVSRQVLEOHIRUDGLIIHUHQW JHRJUDSKLFDODUHDDQGWKHUHIRUHKDYLQJVOLJKWO\GLIIHUHQW RSHUDWLRQDOUHVSRQVLELOLWLHV
;,30*
)OLJKW/LHXWHQDQW/R]5XVKPHUH
:LWKWKHUHTXLUHPHQWWRSURYLGHDFRQWLQXRXV('SUHVHQFH RYHUWKHWKHDWUHRIRSHUDWLRQVWKHGD\ZDVVSOLWLQWRWKUHHHLJKW KRXURQVWDWLRQSHULRGVZLWKHDFKFUHZKDQGLQJWKHWDVNVRYHU GLUHFWO\WRWKHQH[WRQH:LWKWZRKRXUWUDQVLWVWRDQGIURP36$% DWHLWKHUHQGRIWKHRQVWDWLRQSHULRGWKLVUHVXOWHGLQDQDYHUDJH ÁLJKWWLPHRIKRXUVIRUHDFKPLVVLRQÁRZQDQGZLWKVL[FUHZV GHSOR\HGHDFKFUHZÁHZRQRQHGD\ZLWKWKHQH[WGD\RII WKURXJKRXWWKH2SHUDWLRQ $'D\,Q7KH/LIH ,WLVSPDQGP\ZRUNLQJ¶GD\·LVMXVWDERXWWRVWDUW, KHDGRQRYHUWRWKH86¶FKRZKDOO·WRJUDEDPHDORSHQKRXUV DGD\EXWEUHDNIDVWLVQRWRQWKHPHQXDWWKLVWLPHRIQLJKW ,WKHQJUDEP\NLWZKLFKFRQVLVWVRIP\QRUPDOÁLJKWEDJV WRJHWKHUZLWKP\FKHPLFDOSURWHFWLRQVXLWUHVSLUDWRUNHYODU KHOPHWDQGVXUYLYDO¶JUDEEDJ·LQFDVHRIDQXQSODQQHGZDONLQ WKHGHVHUW %\WKHWLPH,KDYHGRQHWKLVLWLVSPDQGWLPH WRJHWRQWKHFUHZEXVZKLFKZLOOWDNHPHDQGWKHRWKHUFUHZ PHPEHUVWRWKHRSHUDWLRQVFRPSOH[DPLQXWHGULYHIURP WKHDFFRPPRGDWLRQ 2QFHDW¶RSV·LWLVWLPHWRJHWRQZLWKWKHSUHSDUDWLRQVIRUWKH IRUWKFRPLQJPLVVLRQ7KHDLUFUDIWHQJLQHHUVKDYHEHHQZRUNLQJ DURXQGWKHFORFNWRHQVXUHWKDWDVHUYLFHDEOHDLUFUDIWLVDYDLODEOH IRUWKLVDQGHYHU\RWKHUPLVVLRQ:LWKRQO\DIUDFWLRQRIWKH HTXLSPHQWDQGVSDUHVWKDWWKH\ZRXOGQRUPDOO\EHDEOHWRGUDZ RQEDFNDW5$):DGGLQJWRQWKHLUDFKLHYHPHQWVLQWKHH[WUHPHO\ KRWDQGGXVW\GHVHUWFRQGLWLRQVKDYHHDUQHGWKHPWKHQLFNQDPH ¶WKHPDJLFLDQV·1R('PLVVLRQZDVORVWGXULQJWKHHQWLUH 2SHUDWLRQDFOHDUWHVWLPRQ\WRWKHLUWLUHOHVVZRUN $TXLFNFKDW ZLWKWKHHQJLQHHUVWHOOVXVZKLFKZLOOEHWRQLJKW·VDLUFUDIWDQG DQ\OLPLWDWLRQVLWPLJKWKDYH7KHÁLJKWHQJLQHHUWKHQVHWVDERXW KLVSUHÁLJKWSUHSDUDWLRQVZKLOH,WKHFRSLORWDQGWKHZHDSRQV
V\VWHPVRSHUDWRUWDNHDORRNDWWKHZHDWKHUIRUHFDVWDQG WKHÁLJKWSODQ 0HDQZKLOHWKHPLVVLRQFUHZLVEXV\ZLWKWKHLU RZQSUHSDUDWLRQV'XULQJWKHGD\WKHLQWHOOLJHQFH DQGEULHÀQJVWDIIIURP5$):DGGLQJWRQ·V2SHUDWLRQV 6XSSRUW6TXDGURQKDYHEHHQEXV\REWDLQLQJDQG SUHSDULQJWKHPDQ\GRFXPHQWVHVVHQWLDOWRWKHPLVVLRQ 'RFXPHQWVVXFKDVWKH¶$LU7DVNLQJ2UGHU·ZKLFK RXWOLQHVDOOSODQQHGVRUWLHVGXULQJRXURQVWDWLRQSHULRG DQGWKH¶$LUVSDFH&RQWURO2UGHU·ZKLFKH[SODLQVWKH PDQ\UXOHVIRURSHUDWLQJZLWKLQWKHWKHDWUHWRJHWKHU ZLWKWKHGDLO\¶6SHFLDO,QVWUXFWLRQV·,WLVQRZWLPHIRU WKHPLVVLRQFUHZWRH[DPLQHWKHVHGRFXPHQWVLQGHWDLO DQGFRPHXSZLWKDZRUNLQJSODQ:HDOVRUHFHLYHD FUHZLQWHOOLJHQFHEULHÀQJIURPWKHLQWHOOLJHQFHVWDIIZKR KDYHDOVRGHSOR\HGZLWKXV$PRQJRWKHUWKLQJVWKH EULHILQJJLYHVDQLGHDRIZKHUHSRWHQWLDOWKUHDWV PLJKWH[LVW
6KRUWO\DIWHUPLGQLJKWWKHIOLJKWHQJLQHHU FRPPXQLFDWLRQVRSHUDWRUDQGWKHFRPPXQLFDWLRQV GLVSOD\VDQGUDGDUWHFKQLFLDQVKHDGRXWWRWKHDLUFUDIW WRVWDUWWKHLUSUHÁLJKWFKHFNV7KHWKUHHDLUERUQH WHFKQLFLDQVDUHXQLTXHWRWKH('DQGDOORZWKH SRWHQWLDOWRVROYHWHFKQLFDOSUREOHPVZKLOVWDLUERUQH 7KH\KDYHRQPDQ\RFFDVLRQVVDYHGDPLVVLRQWKDW ZRXOGRWKHUZLVHKDYHEHHQORVW 0HDQZKLOHWKHUHPDLQGHURIWKHFUHZJHWVWRJHWKHU IRUDÀQDOPLVVLRQEULHIWRHQVXUHWKDWHYHU\WKLQJKDV EHHQFRYHUHGDQGWKDWDVHQVLEOHSODQH[LVWV$WDP ZHFOLPERQERDUGWKHFUHZEXVIRUWKHPLQXWHWULS WRWKHDHURSODQH2QFHWKHUHHYHU\ERG\JHWVRQZLWK LQGLYLGXDOSUHÁLJKWFKHFNV$VWKHFDSWDLQ,OLDLVH ZLWKWKHFUHZFKLHIDQGKLVWHDPH[DPLQHWKHDLUFUDIW GRFXPHQWDWLRQDQGFRPSOHWHWKHQHFHVVDU\SDSHUZRUN ZKLOVWWKHFRSLORWZHDSRQVV\VWHPVRIÀFHUDQGÁLJKW HQJLQHHUFRQWLQXHZLWKWKHFRFNSLWFKHFNV,DOVROLDLVH
ZLWKWKHWDFWLFDOGLUHFWRU7' ZKRLVLQFKDUJHRIPLVVLRQFRQWURO WRHQVXUHWKDWHYHU\WKLQJLVUHDG\$WDPZHFRPPHQFH HQJLQHVWDUWDQGÀYHPLQXWHVODWHURXUIRXU&)0HQJLQHVDUH KXPPLQJTXLHWO\7KHWD[\RXWWRWKHUXQZD\LVQRWWREHWDNHQ OLJKWO\DVWKHDLUÀHOGLVLQFUHGLEO\EXV\DQGDJURXQGFROOLVLRQ LVDGLVWLQFWSRVVLELOLW\LQWKHGDUN:HZDLWWRHQWHUWKHUXQZD\ ZKLOHRWKHUDLUFUDIWODQGWKHLUEULJKWODQGLQJOLJKWVDSSHDULQJ RXWRIQRZKHUHDVWKH\DUHVZLWFKHGRQDWWKHODVWPLQXWHEHIRUH ODQGLQJ$VWKHODVWDLUFUDIWFOHDUVWKHUXQZD\ZHDUHJLYHQ FOHDUDQFHWRWDNHRII$IHZÀQDOFKHFNVDQGLW·VWLPHWRSXVK RSHQWKHWKURWWOHVDQGXQOHDVKWKHOEVRIWKUXVWSURYLGHG E\HDFKRIRXUIRXUHQJLQHV9HU\VRRQGHVSLWHZHLJKLQJVRPH OEVRXUDLUFUDIWKDVUHDFKHGWDNHRIIVSHHG,HDVHEDFNRQ WKHFRQWUROFROXPQDQGDFRXSOHRIVHFRQGVODWHUZHDUHDLUERUQH FOLPELQJLQWRWKHQLJKWVN\ :KLOVW,ZRUNZLWKWKHÁLJKWGHFNFUHZWRJHWXVVDIHO\WRRXU GHVLJQDWHGRUELWDUHDWKHPLVVLRQFUHZDUHEXV\VHWWLQJXSWKHLU NLW(DFKFRQVROHPXVWEHEURXJKWWROLIHFRPPXQLFDWLRQVDQG GDWDOLQNVKDYHWREHHVWDEOLVKHGDQGWKHPDLQPLVVLRQUDGDUKDV WREHEURXJKWRQOLQH2XUMRERQWKHÁLJKWGHFNLVKHOSHGE\ JURXQGDJHQFLHVWKH86$)(VDQGRQFHRXURZQUDGDULVXS DQGUXQQLQJRXURZQPLVVLRQFUHZDOOKHOSLQJWRHQVXUHWKDW ZHWUDQVLWVDIHO\WKURXJKVRPHYHU\EXV\DLUVSDFH2QFHWKH LQHYLWDEOHWHFKQLFDOSUREOHPVKDYHEHHQUHVROYHGWKHPLVVLRQ FUHZWDNHDIHZPLQXWHVWRUHOD[DQGSHUKDSVJUDEDELWHWRHDW DVWKH\NQRZWKDWRQFHZHDUHRQVWDWLRQWKHRSSRUWXQLWLHVWR WDNHDEUHDNZLOOEHOLPLWHG%HIRUHORQJZHDUHSUHSDULQJWRWDNH RYHUWKHPLVVLRQIURPWKH('ZKLFKKDVEHHQRQVWDWLRQIRUWKH SUHYLRXVHLJKWKRXUV$LUFUDIWWRDLUFUDIWEULHÀQJVDUHXQGHUWDNHQ VRWKDWDOODVVHWVXQGHUFRQWUROH[SHULHQFHDVHDPOHVVWUDQVLWLRQ DQGLWLVRQO\ZKHQERWK7'VDUHKDSS\WKDWWKHKDQGRYHUWDNHV
SODFH7KH¶RQVWDWLRQ·FDOOLVPDGH DQGWKHGD\·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¶EDQWHU·GXULQJTXLHWHUPRPHQWVWKH OHYHORISURIHVVLRQDOLVPLVH[WUHPHO\KLJK7KH ('&RPSRQHQWSULGHVLWVHOILQSURYLGLQJWKH YHU\EHVWVHUYLFHSRVVLEOHWRDOOZHZRUNZLWK DQGWKHH[FHSWLRQDOWHDPZRUNGHPRQVWUDWHGE\ WKHFUHZVHQVXUHVWKDWWKLVLVDFKLHYHG $VIDUDVWKHÁLJKWGHFNLVFRQFHUQHGWKH DLUUHIXHOOLQJ$5 VORWLQWKHPLGGOHRIWKH PLVVLRQLVWKHSHULRGRIKLJKHVWZRUNORDG7KH VXFFHVVIXOFRPSOHWLRQRIWKLV$5WDVNLVDJDLQ GRZQWRWKHZKROHFUHZQRWWRPHQWLRQWKH VNLOOVRIWKHWDQNHUFUHZVLQYROYHGZLWKRXW ZKRVHVXSSRUWZHZRXOGKDYHEHHQXQDEOHWR DFKLHYHRXUPLVVLRQ'XULQJWKH2SHUDWLRQ WKH('VZHUHUHIXHOOHGERWKE\GD\DQG E\QLJKWE\86$)DQG$LU1DWLRQDO*XDUG
.&V86$).&VDQG5$)7ULVWDUDQG 9&WDQNHUVSRVVLEOHEHFDXVHWKH('LVWKH RQO\5$)DLUFUDIWWREHÀWWHGIRUERWKWKH3UREH DQG'URJXH8. DQG%RRPDQG5HFHSWDFOH86 $5PHWKRGV $IWHU$5ZHUHWXUQRQVWDWLRQIRUWKHVHFRQG KDOIRIWKHPLVVLRQDQGWKHQDWWKHHQGRIWKH HLJKWKRXUSHULRGZHKDYHWRHQVXUHDVPRRWK KDQGRYHUWRWKHDLUFUDIWWDNLQJRYHUIURPXV 2QFHRIIVWDWLRQWKHPLVVLRQFUHZVWDUWWR UHOD[ZKLOVWWKHÁLJKWGHFNFUHZGHDOVZLWK WKHUHFRYHU\WREDVH$IWHUDWZRKRXUWUDQVLW GRGJLQJWKXQGHUVWRUPVRQWKHZD\ZHPDNH RXUDSSURDFKWR36$%KDYLQJWRSHHUWKURXJK EORZLQJGXVWWRVHHWKHUXQZD\/DQGLQJDW SPZHH[SHULHQFHWKHIXOOKHDWRIWKH6DXGL $UDELDQDIWHUQRRQDOZD\VDVKRFNDIWHUKRXUV VSHQWLQDQDLUFRQGLWLRQHGWXEH $IWHUWKHÁ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
)/,*+76,08/$7,21
:KDWLVD6LPXODWRU" 7KHW\SHRIVRUWLHDOUHDG\GHVFULEHGFDQRQO\EH XQGHUWDNHQRQH[SHQVLYHKLJKILGHOLW\IXOOPLVVLRQ VLPXODWRUV+RZHYHUWKHWHUP¶VLPXODWLRQ·FRYHUVDZLGH UDQJHRIV\QWKHWLFWUDLQLQJGHYLFHVIURPVPDOOGHVNWRS WUDLQHUVVXFKDVWKRVHLQDQDXWRPDWHGFODVVURRPWKURXJK WRKLJKÀGHOLW\UHDOWLPHPDFKLQHVOLNHWKRVHFXUUHQWO\EHLQJ XVHGLQWKHGHYHORSPHQWRIWKH7\SKRRQ)DQGWKH-RLQW &RPEDW$LUFUDIW,QEHWZHHQWKHVHOLPLWVWKHUHDUHDUDQJHRI SDUWWDVNWUDLQHUVWKDWDUHXVHGIRUWHDFKLQJVSHFLÀFDVSHFWV RIÁ\LQJVXFKDVGHYHORSLQJPRWRUVNLOOVIRU+DQGV2Q 7KURWWOH$QG6WLFNFRQWUROV\VWHPV
,QIDFWZHDOOHQFRXQWHUVLPXODWRUVRQDUHJXODU EDVLVSUREDEO\ZLWKRXWUHDOLVLQJLW7KHÁLJKW VLPXODWLRQSURJUDPPHIRU\RXU3&RUWKHIXQIDLU ULGHRIIHULQJ\RXDWULSZLWKWKH5HG$UURZVDUH ERWKH[DPSOHVRIÁLJKWVLPXODWRUVDOEHLWXVHGIRU HQWHUWDLQPHQWUDWKHUWKDQLQDWUDLQLQJUROH
SHRSOHWRH[SHULHQFH¶Á\LQJ·7KH/LQN7UDLQHUDVLW EHFDPHNQRZQZDVÀQDOO\HPSOR\HGLQLWVGHVLJQHG UROHZKHQLQWKH86$UP\$LU&RUSVERXJKWD QXPEHURIWKHPDFKLQHVWREHXVHGIRUSLORWWUDLQLQJ 1RZWKHÁLJKWVLPXODWRUKDGDUULYHG
'HYHORSPHQWRIWKH)OLJKW6LPXODWRU 6LQFHWKHEHJLQQLQJRIKHDYLHUWKDQDLUÁLJKW ZRXOGEHDYLDWRUVKDYHVWUXJJOHGZLWKWKHGLIÀFXOWLHV RIOHDUQLQJWKHQHFHVVDU\VNLOOV9DULRXVWUDLQLQJ GHYLFHVZHUHGHYHORSHGLQWKHSHULRGXSWRDQGGXULQJ WKH)LUVW:RUOG:DUEXWLWZDVQRWXQWLOWKHODWHV WKDWWKHÀUVWWUXO\VXFFHVVIXOWUDLQHUZDVEXLOW
(GZLQ/LQNKDGDGHVLUHWRÁ\EXWFRXOGQRW UHDOLVHKLVGUHDPGXHWRWKHKLJKFRVWVRIÁ\LQJ OHVVRQVLQWKHSHULRGRIWKH*UHDW'HSUHVVLRQ+H VDZWKHSRWHQWLDOWRGHYHORSÁ\LQJVNLOOVLQDJURXQG EDVHGWUDLQHUVRORQJDVWKDWGHYLFHFRXOGPLPLFDQ DLUFUDIW·VUHVSRQVHWRMR\VWLFNPRYHPHQW+HXVHGWKH WHFKQRORJ\RIKLVIDWKHU·VRUJDQFRPSDQ\WRGHYHORS DSQHXPDWLFDOO\SRZHUHGGHYLFHDQGWKHIRUHUXQQHU RIWKHPRGHUQGD\ÁLJKWVLPXODWRUZDVERUQ,WZDV QRWDQRYHUQLJKWVXFFHVVKRZHYHUDQGLQLWLDOO\LWZDV ERXJKWE\IDLURZQHUVDVDQDPXVHPHQWGHYLFHIRU
2YHUWKHVXEVHTXHQW\HDUVWKHGHYHORSPHQWRIWKHÁLJKW VLPXODWRUKDVEHHQGHSHQGHQWXSRQRWKHUWHFKQRORJLFDO GHYHORSPHQWV7KHULVHRIWKHVFLHQFHRIDHURQDXWLFV OHGWRWKHGHYHORSPHQWRIPDWKHPDWLFDOPRGHOVWKDW HQFDSVXODWHGDQDLUFUDIW·VÁLJKWFKDUDFWHULVWLFV7KH KLWDQGPLVVDGMXVWPHQWVRIHDUO\GHYLFHVFRXOGQRZ EHUHSODFHGZLWKDVFLHQWLÀFDSSOLFDWLRQRIDFFXUDWHO\ GHÀQHGPHWULFV'HYHORSPHQWRIWKHDQDORJXHDQG VXEVHTXHQWO\WKHGLJLWDOFRPSXWHUSURGXFHGKXJH DGYDQFHVLQVLPXODWRUFDSDELOLW\7KHVHGHYHORSPHQWV FRQWLQXHDVFRPSXWHUVLQFUHDVHLQSRZHUEXWGHFUHDVH LQERWKFRVWDQGVL]H$PRGHUQÁLJKWVLPXODWRUPD\ ZHOOEHGULYHQE\DFROOHFWLRQRI3&VLQVWHDGRIUDFNVRI HOHFWURQLFVDQGPDLQIUDPHFRPSXWHUVWKDWZRXOGKDYH EHHQWKHFDVHQRWWRRPDQ\\HDUVDJR 3HUKDSVWKHVLQJOHPRVWVLJQLÀFDQWGHYHORSPHQW LQÁLJKWVLPXODWRUWHFKQRORJ\FDPHLQWKHVZLWK WKHLQWURGXFWLRQRIYLVXDOV\VWHPV7KHHDUO\V\VWHPV LQYROYHGFDPHUDVWUDFNLQJDFURVVDVFDOHPRGHO VXSSO\LQJDSLFWXUHZKLFKZDVGLVSOD\HGWRWKHDLUFUHZ RQDVFUHHQ1RZWKHLPDJHLVFRPSXWHUJHQHUDWHG
WDNLQJLQWRDFFRXQWYDULDEOHVVXFKDV WKHWLPHRIGD\DQGSUHYDLOLQJZHDWKHU FRQGLWLRQV)RUDLUFUDIWWKDWDUHXVHG IRUQLJKWRSHUDWLRQVWKHV\VWHPKDV KDGWRSURYLGHWKHRXWRIWKHZLQGRZ YLVXDOVFHQHFRPSDWLEOHZLWKWKDWVHHQ WKURXJKQLJKWYLVLRQJRJJOHV7KH GLVSOD\V\VWHPVKDYHEHHQGHYHORSHG VRWKDWWKHDLUFUHZPD\VHHDPXOWL FKDQQHOLPDJHSURMHFWHGRQWRDGLVSOD\ VFUHHQWKDWKDVEHHQ¶ZUDSSHGDURXQG· WRIRUPDGRPHHQFDSVXODWLQJWKH FRFNSLW)XUWKHUGHYHORSPHQWVFDQ SXWWKHLPDJHGLUHFWO\RQWRWKHDLUFUHZ KHOPHWYLVRUVRQRPDWWHUZKHUHWKH SLORWRUZHDSRQVV\VWHPVRIÀFHUORRNV WKHFRUUHFWYLHZRIWKHVLPXODWHG RXWVLGHZRUOGLVSRUWUD\HG
WKHUHTXLUHGOHYHORIWUDLQLQJDQGLQ VRPHFDVHVFRXOGUHVXOWLQDQHJDWLYH WUDLQLQJHIIHFWUHVXOWLQJLQDSDUWLFXODU DVSHFWKDYLQJWREHUHWDXJKWLQWKHUHDO DLUFUDIW
+RZUHDOLVUHDO" ,IWKHUHDOHQYLURQPHQWLVQRWDOZD\V WKHEHVWRQHIRUWUDLQLQJWKHQZK\GR ZHVWULYHIRUUHDOLVP"7KHVKRUWDQVZHU LVWKDWZHGRQRW7KHUHDUHGHJUHHVRI UHDOLVPGHSHQGLQJXSRQWKHWUDLQLQJ WDVN,I\RXDUHDWWHPSWLQJWRWHDFK DFRQFHSWVXFKDVUDGDULQWHUFHSWLRQ WKHQ\RXGRQRWUHTXLUHDGHYLFHZLWK DPXOWLFKDQQHOGD\QLJKWYLVXDO V\VWHP+RZHYHULIWKHWUDLQLQJWDVN LVWRXQGHUWDNHDQLJKWDWWDFNRYHU KRVWLOHWHUULWRU\WKHQHYHU\DVSHFWRI WKDWGHYLFH·VRSHUDWLRQQHHGVWREHDV 6LPXODWLRQ·VSODFHLQ5$)WUDLQLQJ WUXHDUHSUHVHQWDWLRQRIWKHUHDOZRUOG 1RPDWWHUKRZIDUVLPXODWRUVDUH GHYHORSHGDQGKRZ¶UHDO·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ÁLJKWVLPXODWRU·VUROHLVWZRIROG WKHVDPHDQGKDYHWKHVDPHHIIHFWDV WKH\GRRQWKHUHDODLUFUDIW+RZHYHU ÀUVWO\JHWWLQJDWUDLQHHWRDSDUWLFXODU LWLVQRWTXLWHVRFULWLFDOIRUFRFNSLW VWDQGDUGRIDELOLW\DQGVHFRQGO\ PDLQWDLQLQJWKDWLQGLYLGXDO·VVWDQGDUG GLVSOD\V$QLQVWUXPHQWPD\EHWKH UHDODQDORJXHGHYLFHEXWFRXOGHTXDOO\ GXULQJRSHUDWLRQDOHPSOR\PHQW EHDFRPSXWHUJHQHUDWHGGLVSOD\RQ :LWKLQWKHVHUROHVVLPXODWRUVKDYH DVFUHHQZKDWLVLPSRUWDQWLVWKDWWKH WUDLQLQJIXQFWLRQVZKLFKIDOOLQWRD LQVWUXPHQWORRNVDQGRSHUDWHVOLNHWKH QXPEHURIFDWHJRULHV UHDOWKLQJ 7KHUHDUHGHJUHHVRIUHDOLW\ y2SHUDWLRQRIWKHV\VWHPLQQRUPDO GHSHQGHQWXSRQWKHUHTXLUHPHQWIRU PRGHV WKHWUDLQHUEXWZKDWPXVWEHDYRLGHG LVDGHYLFHUHFHLYLQJFRPPHQWVVXFK y2SHUDWLRQRIWKHV\VWHPLQGHJUDGHG DV¶:HOOLW·VRQO\WKHVLPXODWRU·RU¶2I PRGHV FRXUVH\RXGRQ·WGRLWOLNHWKDWLQWKH y'HDOLQJZLWKHPHUJHQFLHVVXFKDVÀUH UHDODLUFUDIW· DQGHQJLQHÁDPHRXW 6LPXODWLRQRU/LYH7UDLQLQJ" $LUFUHZGRQRWMRLQWKH5$)WRÁ\ y3UDFWLVLQJV\VWHPPLVVLRQFDSDELOLW\ VLPXODWRUVDQGJURXQGFUHZGRQRW MRLQWRZRUNRQHOHFWURQLFIDFVLPLOHV 7RDFFRPSOLVKDOORIWKHVHWDVNV RIHQJLQHVRUUDGDUXQLWV3LORWVZDQW WKHVLPXODWLRQKDVWREHVXIÀFLHQWO\ DFFXUDWHRUUHDOIRUWKHWUDLQHHWRJDLQ WRÁ\DQGWHFKQLFLDQVZDQWWRJHWWKHLU KDQGVGLUW\+RZHYHUIRUWUDLQLQJ WKHUHTXLUHGOHYHORIWUDLQLQJIURP WKHGHYLFH$VKRUWIDOOLQWKHUHTXLUHG SXUSRVHVWKHUHDOHTXLSPHQWGRHVQRW QHFHVVDULO\SURYLGHWKHLGHDOWUDLQLQJ OHYHORIUHDOLVPZLOOIDLOWRDFKLHYH
HQYLURQPHQW7KHUHLVDEDODQFHWR EHVWUXFNEHWZHHQV\QWKHWLFDQGOLYH WUDLQLQJDEDODQFHWKDWLVGHSHQGHQW XSRQDQXPEHURIIDFWRUV y &RVW 7\SLFDOO\WKHFRVWVRIRSHUDWLQJ DVLPXODWRUDUHDSSUR[LPDWHO\RI WKRVHDVVRFLDWHGZLWKRSHUDWLQJDUHDO DLUFUDIW,IWKHWUDLQLQJWDVNLQYROYHG ÀULQJZHDSRQVWKHQWKHÀJXUHZRXOG EHVLJQLÀFDQWO\UHGXFHGWROHVVWKDQ RIWKHOLYHFRVW y 2SHUDWLRQDO&DSDELOLW\ 8VLQJDQ DLUFUDIWIRUWUDLQLQJSXUSRVHVPD\ UHGXFHDVTXDGURQ·VRSHUDWLRQDO FDSDELOLW\RUDGGLWLRQDODLUFUDIW PD\KDYHWREHSXUFKDVHGWRHQVXUH DYDLODELOLW\WRPHHWLWVWUDLQLQJUROH y )HDVLELOLW\,VLWSRVVLEOHWRXQGHUWDNH WKHWUDLQLQJLQWKHVLPXODWRURUPXVW LWEHXQGHUWDNHQLQWKHUHDODLUFUDIWRU YLFHYHUVD" y (PHUJHQFLHV,WZRXOGQRWEH SUDFWLFDOWRWUDLQIRUHPHUJHQFLHVLQD UHDODLUFUDIWHVSHFLDOO\LIWKHH[HUFLVH LQYROYHGDQHQJLQHÀUHWKDWUHVXOWHG LQWKHFUHZKDYLQJWRHMHFW y :DU5ROH6LPXODWLRQDOORZVIRU VRPHXQLTXHRSSRUWXQLWLHVZKHQ WUDLQLQJIRUKRVWLOLWLHV1HZWDFWLFV DQGWHFKQLTXHVFDQEHSUDFWLVHG LQFRPSOHWHVHFUHF\ZLWKRXW ZRUU\LQJDERXWSRWHQWLDOHQHP\ IRUFHVHDYHVGURSSLQJRQ\RXU FRPPXQLFDWLRQVRUPRQLWRULQJ \RXUHOHFWURQLFZDUIDUHHPLVVLRQV
y (QYLURQPHQW3URWHFWLRQ7KH5$) WDNHVYHU\VHULRXVO\LWVREOLJDWLRQWR UHGXFHWKHHQYLURQPHQWDOLPSDFWRI RSHUDWLRQV8VLQJVLPXODWRUVUDWKHU WKDQWKHUHDODLUFUDIWJRHVVRPHZD\ WRUHGXFLQJERWKQRLVHDQGH[KDXVW JDVSROOXWLRQ y $LUVSDFH:LWKWKHHYHULQFUHDVLQJ DPRXQWRIDLUWUDYHOWKHVNLHVDUH EHFRPLQJPRUHDQGPRUHFRQJHVWHG $Q\WUDLQLQJXQGHUWDNHQRQD VLPXODWRUDVVLVWVLQUHGXFLQJWKLV FRQJHVWLRQ y $LUFUDIW)DWLJXH$LUFUDIWIDWLJXHLV PHDVXUHGE\WKHDPRXQWRIVWUHVV DQGWKHQXPEHURIKRXUVIORZQ 5HGXFLQJVWUHVVDQGWKHQXPEHURI Á\LQJKRXUVH[WHQGVWKHRSHUDWLRQDO OLIHRIDLUFUDIW 6LPXODWRU2SHUDWLRQ 6LQFHWKHHQGRIWKH&ROG:DUWKHUH KDVEHHQHPSKDVLVRQUHGXFLQJWKH VL]HRIRXUDUPHGIRUFHV3ULRULW\KDV EHHQWRXWLOLVHXQLIRUPHGSHUVRQQHOLQ IURQWOLQHUROHVDQGZKHUHSRVVLEOH SODFHVXSSRUWUROHVZLWKFRQWUDFWRUV )OLJKWVLPXODWRUWUDLQLQJLVRQHVXFK VXSSRUWDFWLYLW\WKDWLVQRZZKROO\ VXSSRUWHGE\LQGXVWU\7KHSURFHVVIRU LQYROYLQJLQGXVWU\LVZLWKWKHXVHRI ORQJWHUPVHUYLFHSURYLVLRQFRQWUDFWV XQGHUWKH*RYHUQPHQW·V3XEOLF3ULYDWH 3DUWQHUVKLSVDQG3ULYDWH)LQDQFH ,QLWLDWLYHV6XFKFRQWUDFWVUHVXOWLQD SD\DV\RXJRW\SHRIVHUYLFHZKHUH HDFKVRUWLHLVFRVWHGDQGSDLGIRUDW WKHWLPHRIXVH*RQHDUHWKHGD\VRI
:LGHDUHD1HWZRUNVXFKWKDWWKH\DUHDOO LQYROYHGLQWKHVDPHVFHQDULR,QLWLDOO\ WKLVZLOOLQYROYHGHYLFHVZLWKLQDQDWLRQ·V IRUFHVEXWXOWLPDWHO\ZLOOUHVXOWLQOLQNLQJ IRUFHVIURPDOORIDFRDOLWLRQ·VQDWLRQV 7HFKQRORJ\GHPRQVWUDWLRQSURMHFWVLQ 0DMRU8.6LPXODWLRQSURJUDPPHV WKLVDUHDKDYHPHWZLWKVRPHVXFFHVVEXW 7KH5$)DVZHOODVWKHRWKHU6HUYLFHV WKHUHDUHDODUJHQXPEHURIFKDOOHQJHV SODFHVDKHDY\UHOLDQFHRQKDYLQJÁLJKW VLPXODWLRQGHYLFHVWRVXSSRUWWKHPDMRULW\ IRUERWKWKHHQJLQHHUVDQGQDWLRQDOIRUFH RIFXUUHQWDLUFUDIWRSHUDWLRQV6RPHÁLJKW FRPPDQGHUVWRRYHUFRPH3UREOHPVVXFK DVSDVVLQJGDWDWKRXVDQGVRIPLOHVLQUHDO VLPXODWRUVKDYHEHHQLQH[LVWHQFHIRUD WLPHLQDIRUPDWWKDWFDQEHXQGHUVWRRG QXPEHURI\HDUVDQGVRPHDUHVWLOOLQWKH E\WKHWDUJHWPDFKLQHPD\ZHOOSURYH SODQQLQJSKDVH0DMRUFRQWUDFWVSURYLGH HDVLHUWRVROYHWKDQWKHFROOHFWLYH V\QWKHWLFÁ\LQJWUDLQLQJVHUYLFHVWDNLQJ DJUHHPHQWRIIRUFHFRPPDQGHUVWRVKDUH DLUFUHZIURPHOHPHQWDU\Á\LQJWKURXJK WKHUHVXOWDQWLQWHOOLJHQFH WKHYDULRXVURXWHVRIPXOWLHQJLQHIDVW 7KH02'·VLQYROYHPHQWLQWKLVIXWXUH MHWRUURWDU\ZLQJRSHUDWLRQVWRWKH UROHIRUÁ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y 7\SKRRQ) DGGLWLRQDOV\QWKHWLFWUDLQLQJGHYLFHVZLOO EHUHTXLUHGWKHSULPDU\UHTXLUHPHQWRI y $LUERUQH6WDQG2II5DGDU ZKLFKZLOOEHWKHDELOLW\WRFRQQHFWWR RWKHUSODWIRUPW\SHGHYLFHVRUQHWZRUNV y $07UDQVSRUW RIGHYLFHV y 0LOLWDU\)O\LQJ7UDLQLQJ6HUYLFH :KDWHYHUWKHRXWFRPHWKHIXWXUH·V EULJKWWKHIXWXUH·VVLPXODWLRQ y )XWXUH6WUDWHJLF7DQNHU$LUFUDIW KLJKFDSLWDOH[SHQGLWXUHDQGUXQQLQJ FRVWVEHLQJERUQHE\WKH5$)LQGXVWU\ QRZWDNHVRQDVKDUHGUHVSRQVLELOLW\IRU SURYLGLQJDSURIHVVLRQDOWUDLQLQJVHUYLFH
y 0HUOLQ+HOLFRSWHU 7KHIXWXUHIRU6LPXODWLRQ ,QGXVWU\VWULYHVFRQVWDQWO\IRU LPSURYHPHQWVLQUHDOLVPDQGWKHVH LPSURYHPHQWVZLOOXQGRXEWHGO\PDQLIHVW WKHPVHOYHVLQHYHUEHWWHUYLVXDOV\VWHPV DQGPRUHDFFXUDWHGDWDEDVHVWKDWFDQ EHGHYHORSHGDWVKRUWQRWLFH7KLVUDSLG JHQHUDWLRQRIVFHQDULRVLVUHTXLUHGWR VXSSRUWFXUUHQWRSHUDWLRQDOFULWHULD :HKDYHPRYHGDZD\IURPDWLPHRI NQRZLQJRXUHQHP\DQGXVLQJDVSHFLÀHG VHULHVRIRSHUDWLRQDOVFHQDULRVWRDQHUD UHTXLULQJUDSLGUHDFWLRQWRWKUHDWVDV WKH\DULVHDQ\ZKHUHLQWKHZRUOG7KHVH QHZHURSHUDWLRQVZKLFKLQYROYHWKH5$) ZRUNLQJDORQJVLGHRWKHUIRUFHVZLWKLQD FRDOLWLRQJLYHULVHWRDVLWXDWLRQZKHUHE\D JURXQGFRQWUROOHUIURPRQHQDWLRQFRQWUROV DQ$:$&VDLUFUDIWIURPDQRWKHUGLUHFWLQJ DWWDFNDLUFUDIWIURPDWKLUGQDWLRQLQ VXSSRUWRIJURXQGIRUFHVIURPDIRXUWK 7KHJUHDWHVWFKDQJHLQÁLJKWVLPXODWRU XVDJHZLOOEHWRVLPXODWHWKLVW\SHRI PXOWLQDWLRQDOFRDOLWLRQRSHUDWLRQ,WZLOO UHTXLUHGHYLFHVWREHLQWHUOLQNHGYLDD
*55HFRQQDLVVDQFH
6WLYH[PVU
0
;,30*
)OLJKW/LHXWHQDQW$QG\:ULJKW
;
KHÀYHPLQXWHGULYHRQWKHFUHZEXVIURPWKHRSHUDWLRQVEXLOGLQJWR P\7RUQDGR*5KDGQRWVWUXFNPHDVUHPDUNDEOHDWWKHWLPH,I,KDG NQRZQWKLVZDVWREHP\ÀQDO5$37255HFRQQDLVVDQFH$LUERUQH 3RGIRU7RUQDGR VRUWLHRIWKH,UDT:DU,PLJKWKDYHUHÁHFWHGRQWKH UHFRQQDLVVDQFHPLVVLRQVWKDW,KDGÁRZQGXULQJWKHODVWWZRPRQWKV RUFRQVLGHUHGZKDWLPSDFWP\FRQWULEXWLRQKDGPDGHWRWKHZDU%XW WKLVZDVQRWWKHWLPHIRUUHÁHFWLRQRUFRQVLGHUDWLRQ7KHRQO\WKLQJ RQP\PLQGZDVZKDW,DOZD\VWKRXJKWDERXWGXULQJWKHÀQDOTXLHW PRPHQWVSUHFHGLQJDKHFWLFZDUVRUWLHWKHWDVNDKHDG 5HFRQQDLVVDQFHZDVRQHRIWKHPRVWFUXFLDOUROHVWKHIDVWMHWIRUFH FRXOGRIIHUWKH&RDOLWLRQ&RPPDQGHUVLQWKH*XOIDQG5$3725 ERDVWHGWZRDWWULEXWHVWKDWDSSHDOHGWRWKH&KLHIV)LUVWO\HYHQZKHQ ZRUNLQJWHQVRIPLOHVDZD\IURPDVXEMHFWEHLQJSKRWRJUDSKHG 5$3725LVFDSDEOHRIFDSWXULQJVWDUWOLQJO\KLJKUHVROXWLRQLPDJHV HYHQDWQLJKW6HFRQGO\LWGRHVQ·WWDNHDJUHDWGHDORIWUDLQLQJWRWHDFK DEVROXWHEHJLQQHUVKRZWRXVH5$3725HIIHFWLYHO\(YHQDÀUVWWRXULVW ¶VWLFNPRQNH\·IURPDERPEHUVTXDGURQLVFDSDEOHRISXWWLQJWKH 5$3725LQWRWKHULJKWELWRIVN\WRPHHWWKHSDUDPHWHUVUHTXLUHGIRU VXFFHVVIXOUHFRQQDLVVDQFH ,KDGDUULYHGDW$OL$O6DOHPDLUÀHOGLQ.XZDLWRQ-DQXDU\ KDYLQJÁRZQDQDLUFUDIWRXWIURPWKH8.YLD&\SUXV%\PLG0DUFK 6TXDGURQZDVUHLQIRUFHGZLWKFUHZVIURP,,$& ;,,,,;% DQG 6TXDGURQVDWRWDORISLORWVDQGZHDSRQVV\VWHPVRIÀFHUV :62V KDGDPDOJDPDWHGWRHVWDEOLVKDQHZPXOWLUROH&RPEDW $LU:LQJ2Q0DUFK2&6TXDGURQDGGUHVVHGWKH:LQJ :LWKZDUMXVWWZRGD\VDZD\KHH[SODLQHGWKDWLQDGGLWLRQWRWKHLU FRQYHQWLRQDOERPELQJUROHVHDFK*5VTXDGURQZRXOGXQGHUWDNH VSHFLÀFVSHFLDOLW\PLVVLRQV$VWKHWDVNLQJZDVUHYHDOHG,FRXOGQ·W KHOSIHHOLQJOLNHWKHODVWNLGWRJHWSLFNHGIRUSOD\JURXQGIRRWEDOO :KLOVWWKHRWKHUVTXDGURQVZRXOGEHFDUU\LQJRXWDGGLWLRQDO ¶VH[LHU·MREVLQFOXGLQJÀULQJ$LU/DXQFKHG$QWL5DGLDWLRQ0LVVLOHV $/$50V ODXQFKLQJWKHEUDQGQHZ6WRUP6KDGRZ&UXLVHPLVVLOH RUFDUU\LQJRXWORZOHYHO6FXGKXQWLQJVRUWLHV6TXDGURQZDVWR PDLQWDLQLWVPHGLXPOHYHOUHFRQQDLVVDQFHUROH$QGVRLWKDGFRPHWR SDVVWKDWE\GD\RI2SHUDWLRQ7(/,&,KDGÁRZQZDUVRUWLHVRI ZKLFKKDGEHHQGHGLFDWHGUHFRQQDLVVDQFHÁLJKWV7LPHKDGEOXUUHG VLQFH1LJKW2QHZKHQ,KDGÁRZQP\ÀUVWPLVVLRQDQLJKW5$3725 VRUWLHKRZHYHUWRGD\ZRXOGVWDQGRXWLQP\PHPRU\PRUHUHDGLO\ WKDQDQ\RWKHUUHFRQQDLVVDQFHVRUWLH,KDGÁRZQ7KHÀYHKRXUHSLF WKDWOD\DKHDGZRXOGWDNHPHRYHUWKHPDMRULW\RISRSXODWHG,UDTDQG DOWKRXJK,GLGQRWNQRZLWDWWKHWLPHWKLVWULSZRXOGPDUNWKHHQGRI WKHZDUWDVNWKDW,KDGVWDUWHGRQO\ZHHNVSUHYLRXVO\ ,KDGZRNHQWRWKHGURQHRIDQXQVHHQ&+HUFXOHVZKLFKZDV WD[\LQJDIHZKXQGUHG\DUGVIURPP\DFFRPPRGDWLRQEORFN7KH PRUQLQJKDGDOUHDG\VHHQWKHGDLO\JDWKHULQJRIRXUIRXUPDQVTXDG 7KHWZHOYH6TXDGURQFUHZVKDGEHHQVSOLWLQWRVL[SDLUVZLWKHDFK SDLUDOZD\VRSHUDWLQJWRJHWKHUDVDWHDP0\ZLQJPDQSLORW¶%RQHV· DQGKLV:62¶&UDZIV·ZHUHRXUWHDP·VRIÀFLDOOHDGHUVDOWKRXJKWKH ÁLJKWOHDGZDVJHQHUDOO\VSOLWZLWKP\:62¶+6·DQGPH7RGD\ %RQHVZDVOHDGLQJWKHPLVVLRQDQGP\MREZRXOGEHWRÁ\LQFRYHU SRVLWLRQDVDORRNRXWDQGLQFRQVWDQWUHDGLQHVVWRWDNHWKHOHDGVKRXOG DQ\WKLQJKDSSHQWRKLVDLUFUDIWRULWVHTXLSPHQW
7KHZRUNLQJGD\KDGEHJXQZLWKD PHWHRURORJLFDOEULHÀQJIROORZHGE\DQLQWHOOLJHQFH RYHUYLHZ86PDULQHVZHUHDOUHDG\SDWUROOLQJ %DJKGDGDQG6DGGDPKDGUHSXWHGO\ÁHGQRUWK WRKLVKRPHWRZQRI7LNULWOHDYLQJRQO\DIHZ RIKLVDFRO\WHVWRRIIHUUHVLVWDQFHLQKLVDEVHQFH )ROORZLQJWKHEULHÀQJVZHVHWDERXWRXUSODQQLQJ WDVN7KHSLORWVDOZD\VWRRNFDUHRIWKHGRPHVWLFV RIÁ\LQJDORQJZLWKWKHFRPPXQLFDWLRQVSODQDQG GHFRQÁLFWLRQIURPWKHQXPHURXVRWKHU&RDOLWLRQ DLUFUDIW:HZHUHDOVRUHVSRQVLEOHIRUFRQWDFWLQJ WKH86$))SLORWVZKRZRXOGEHHVFRUWLQJ DQGSURWHFWLQJXVGXULQJWKHKLJKULVNSRUWLRQ RIRXUPLVVLRQ7KH:62VKDGWKHRQHURXVWDVN RIDQDO\VLQJWKHUHFRQQDLVVDQFHWDVNLQJDQGWKHQ SODQQLQJZKHUHZHZRXOGKDYHWRÁ\WRFROOHFWDOO RIWKHLPDJHVUHTXLUHGIURPRXUVRUWLH :LWKWKHSODQÀQLVKHGZHPRYHGLQWRWKH PDLQEULHÀ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ÀQDO¶RXWEULHI·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ÀHG DVIXQFWLRQDO DQGZH
KDGHVWDEOLVKHGFRQWDFWZLWKWKHDLUERUQH¶H\HLQ WKHVN\·WKHSDWUROOLQJ$:$&6DLUFUDIW:LWKDOO WKHWLFNVLQWKHULJKWER[HVZHKHDGHGQRUWKZHVW WRZDUGV%DJKGDGDFURVVWKHÁDWIHDWXUHOHVVVDQGSLW WKDWFRQVWLWXWHV6RXWKHUQ,UDT%\QRZPRVWRI WKHHQHP\$QWL$LUFUDIW$UWLOOHU\$$$ RSHUDWRUV KDGÁHGWKHDUHDWRRVFDUHGE\WKHSUR[LPLW\RIVR PDQ\&RDOLWLRQWURRSV 7KHPHGLXPOHYHOWUDQVLWWRRXUUHQGH]YRXV59 ZLWKRXUÀUVWUHIXHOOLQJWDQNHUWRRNXVRYHUKHDG 7DOLODLUÀHOGZKLFKKDGDOUHDG\EHHQDQQH[HGE\ $PHULFDQ$¶7DQNEXVWHUV·DQGZHZHUHVRRQ Á\LQJDWIHHWEHKLQGDQ5$)7ULVWDUWDQNHU DERYHRQHRIWKHVHYHQZRQGHUVRIWKHZRUOG7KH +DQJLQJ*DUGHQVRI%DE\ORQ$VZHZHUHQRZ UHIXHOOLQJRYHUHQHP\WHUULWRU\,ZDVSDUWLFXODUO\ WHQVH2QDSUHYLRXVQLJKWVRUWLH,KDGVSHQW PLQXWHVWU\LQJWRFRQQHFWZLWKDQXQOLW86.& WDQNHULQSLWFKGDUNQHVVZKLFKKDGVHWXSDWRZOLQH LQWKHPLGGOHRIDVTXDOOOLQHRIWKXQGHUVWRUPV )ROORZLQJDORWRIHIIRUWDORWRISHUVSLUDWLRQDQG VRPH¶FRORXUIXO·ODQJXDJH+6DQG,HYHQWXDOO\KDG WRÁ\KRPHZLWKMXVWHQRXJKIXHOWRUHDFK$OL$O 6DOHP,KDGQHYHUIDLOHGWRKLWWKHEDVNHWEHIRUH DQGWRGD\,ZDVGHWHUPLQHGWRPDNHDPHQGV7KLV WLPHP\UHIXHOOLQJSUREHKLWWKHGURJXHDWWKHÀUVW DWWHPSW7ZHQW\PLQXWHVODWHU%RQHVDQG,ZHUHRQ RXUZD\QRUWKZLWKIXOOIXHOWDQNVIRUWKHÀUVWSDUWRI RXUUHFRQQDLVVDQFHWDVN 2XUÀUVWVHFWLRQRIÀOPLQJZRXOGRFFXUDURXQG WKHRXWVNLUWVRI%DJKGDGDQDUHDZHKDGEHFRPH YHU\IDPLOLDUZLWKRYHUWKHODVWIHZZHHNV7RGD\ &UDZIVZRXOGEHXVLQJKLV5$3725WRFRPSOHWH WKHWDVNZKLOVW,ÁHZP\MHWRQDSDUDOOHOWUDFN DSSUR[LPDWHO\NLORPHWUHVDZD\0\MREZDVWR DFWDVDORRNRXWDQGWRSURYLGHFRYHUDVWKH\ÁHZ WKURXJKDUHODWLYHO\KLJKULVNDUHD:KHQRSHUDWLQJ 5$3725WKHDLUFUDIWKDVWREHÁRZQVWUDLJKWDQG OHYHOIRUDVLJQLÀFDQWSHULRGWRUHFRUGWKHWDUJHW LPDJHV7KLVIRUFHVWKH7RUQDGRWRÁ\DKLJKO\ SUHGLFWDEOHÁLJKWSURÀOHZKLFKZDVDUJXDEO\WKH VWURQJHVWUHDVRQIRURXUGLVOLNHRIWKHWDVN(YHQ ZLWKDVKDUSH\HGZLQJPDQDW\RXUVLGHWKHUHLVQR GHQ\LQJWKHIDFWWKDWZKHQ\RXDUHWDNLQJSKRWRV \RXDUHTXLWHVLPSO\DVLWWLQJGXFN(DUOLHULQWKH ZDUZHKDGEHHQH[WUHPHO\QHUYRXVDERXW Á\LQJFORVHWR%DJKGDGDV 6DGGDPKDGORFDWHG PRVWRIKLV6$0V LQWKHFLW\
FUHDWLQJDKXJH0LVVLOH(QJDJHPHQW=RQH%XWRQFH %DJKGDGKDGEHHQWDNHQE\$PHULFDQJURXQGIRUFHV PRVWRI6DGGDP·VWDFWLFDO6$0VKDGIDOOHQVLOHQW7RGD\ ZHZHUHHVFRUWHGE\WZR)¶:LOG:HDVHOV·2XU
XQFKDUWHGWHUULWRU\IRUWKHÀUVWWLPH$VZHUHDFKHG 7DTDGGXPDLUÀHOGWRWKHVRXWKRIWKHFLW\ZHWXUQHG QRUWKWRRYHUÁ\%DJKGDG¶+LJK6WUHHW·VRPHWKLQJWKDW ZRXOGKDYHEHHQXQWKLQNDEOHWZRZHHNVDJRDQGSODLQ VXLFLGHDWWKHEHJLQQLQJRIWKHZDU:LWKRXUH\HVSHHOHG ZHSUHVVHGRQ:HKDGVHHQ%DJKGDGRQDQXPEHURI RFFDVLRQVRYHUWKHSDVWWZRZHHNVERWKIURPWKHRXWVNLUWV RIWKHFLW\DQGRQWKHQXPHURXVWHOHYLVLRQUHSRUWVWKDW ZHUHGRPLQDWLQJWKHKRXUQHZV+RZHYHULWGLGQ·W SUHYHQWXVIURPH[SHULHQFLQJDUDWKHUVXUUHDOIHHOLQJRI Á\LQJRYHUWKHFHQWUHRIWKHFLW\DQGVHHLQJWKHLPSUHVVLYH SDUDGHVTXDUHZLWKLWVFURVVHGVFLPLWDUVRIZDWFKLQJWKH 0LQLVWU\RI,QIRUPDWLRQVPRXOGHULQJDZD\GD\VDIWHU LWKDGEHHQERPEHGDQGRIUHDOLVLQJKRZRUJDQLVHGWKH VXEXUEVORRNHGZLWKWKHLU86VW\OHEORFNVWUHHWV\VWHP ,WZDVDOPRVWOLNHVRPHSHUYHUVHVLJKWVHHLQJWRXURID VLJQLÀFDQWKLVWRULFDOVLWH %DJKGDGZDVVRRQEHKLQGXV:HELGIDUHZHOOWR RXU)HVFRUWDLUFUDIWDQGPRYHGQRUWKWRZDUGVWKH WRZQRI7LNULW7KLVZDVWKHIXUWKHVWQRUWKDQ\RIXVKDG WUDYHOOHGIURP$OL$O6DOHPDQGZLWKRYHUKDOIRIRXU UHFRQQDLVVDQFHPLVVLRQFRPSOHWHGP\PLQGEHJDQWR WXUQWRWKHQH[WWDVNWKHVHFRQGRIRXUUHIXHOOLQJWDQNHU EUDFNHWV+RZHYHULWKDGVHHPHGWKDW,KDGMXPSHGWKH JXQVOLJKWO\DV&UDZIV·YRLFHFUDFNOHGRYHUWKHDLUZDYHV +LV5$3725SRGKDGIDLOHGDQG+6DQG,ZHUHJRLQJWR KDYHWRSLFNXSWKHUHVWRIWKHWDVN,PXWWHUHGDOLWWOHFXUVH WRP\VHOIDV,UHDOLVHGWKDWWKHUROHVZHUHWREHUHYHUVHG DQG%RQHVKDGWKHOX[XU\RIEHLQJIUHHWRPDQRHXYUH ZKLOVW,KDGWRUHYHUWWRÁ\LQJVWUDLJKWDQGOHYHOWRWDNH P\SLFWXUHV :HRQO\WRRNDFRXSOHPRUHVZDWKHVRILPDJHVSULRUWR
RXU59ZLWKWKH86$).&RYHUWKHVRXWKHUQ7XUNLVK PRXQWDLQV:HKDGEHHQIRUFHGWRFOLPEWRPHHWWKH WDQNHUDVWKHUHZDVDSRVVLELOLW\WKDWWKH,UDTLVPLJKW FDUU\DOLJKWZHLJKWKDQGKHOG6$0XSDKLOOIRUDFKHHN\ ¶SRWVKRW·DWXVZKLOHZHZHUHWDQNLQJ:KLOVWWKLVJDLQ LQDOWLWXGHPDGHWDFWLFDOVHQVHLWPDGHP\*5HYHQ KDUGHUWRKDQGOH7KH7RUQDGRLVDVXSHUEDLUFUDIWEXW LWGRHVQRWOLNHRSHUDWLQJ¶+RWDQG+LJK·DQGLWWRRND JUHDWGHDORIFRHUFLRQWRFRD[P\DHURSODQHWRZDUGVWKH WDQNHU·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Á\FORVHWRRQHRI,UDT·VPRVWSRWHQW6$0VLWHV D)UHQFK5RODQGPLVVLOHV\VWHP'HVSLWHWKHLUVKRUW UDQJHWKHVH6$0VFHUWDLQO\ZDUUDQWHGFDXWLRQ%RWK %RQHVDQG,KDGEHHQ¶LOOXPLQDWHG·E\YDULRXV5RODQG WDUJHWWUDFNLQJUDGDUVVLQFH1LJKW2QHDQGQHLWKHURIXV ZDVLQWHUHVWHGLQUHSHDWLQJWKHH[SHULHQFH2XUORRNRXW ZDVLQWHQVLÀHGDVZHVNLUWHGRXUZD\DURXQGWKH5RODQG 0LVVLOH(QJDJHPHQW=RQHEHIRUHFRQWLQXLQJRXUMRXUQH\ VRXWK%HIRUHORQJZHKDGSDVVHGEHWZHHQ0DQGDOD\ DQG%DJKGDGDQGKDGWXUQHGVRXWKHDVWWRIROORZWKH 7LJULV5LYHUDVLWJHQWO\PHDQGHUHGWRZDUGVWKH3HUVLDQ *XOI7KHMRXUQH\ZRXOGWDNHXVSDVW$O.XWWKHKRPH RI6DGGDP·VLQIDPRXV5HSXEOLFDQ*XDUGDQGWKH ORFDWLRQRIVRPHRIWKHÀHUFHVWÀJKWLQJHQFRXQWHUHGE\ WKH&RDOLWLRQGXULQJWKHFRQÁLFW7KH%DVUDKURDGZDV QRZOHDGLQJXVEDFNWR.XZDLWDQGDVZHVKDGRZHGLW DZD\IURP$O.XWWKHURDGKLW$O$PDUDKDQGWKHQOLNH XVWXUQHGVRXWKWRZDUGV,UDT·VVHFRQGFLW\7KLVÀQDO OHJRIRXUMRXUQH\KDGFHUWDLQO\EHFRPHDIDPLOLDUDUHD RYHUWKHSUHYLRXVPRQWK:HKDGZRUNHGKHUHE\QLJKW DQGE\GD\WDNHQSKRWRJUDSKVVWUXJJOHGWRJHWLPDJHV LQEDGZHDWKHUGURSSHGERPEVUHDFWHGWR$$$DQG IUHWWHGDERXWWKH3DWULRW0LVVLOH%DWWHU\LQGLFDWLRQVRQ RXUUDGDUZDUQLQJUHFHLYHUV6RRQDIWHUZHKDGSDVVHG %DVUDK,IHOWDZDYHRIUHOLHYHGQRQFKDODQFHSDVVRYHU PHDV+6LQIRUPHGWKH$:$&6FRQWUROOHUWKDWZHZHUH VDIHO\EDFNLQVLGH.XZDLWLDLUVSDFH
$VXVXDOWKHVDPHHQJLQHHUVZKRKDGVHHQXVRII JUHHWHGXVIRUWKHDLUFUDIWVKXWGRZQ%HIRUH,KDGXQ VWUDSSHGDQGUHDFKHGWKHERWWRPRIWKHVWHSVWKHWHDP IURPWKH7DFWLFDO,PDJHU\:LQJ7,: KDGUHPRYHGWKH WDSHIURPRXU5$3725SRG7,:FRPSULVHVDQXPEHU RISKRWRJUDSKLFLPDJHU\H[SHUWVZKRZRXOGVSHQGWKH QH[WIHZKRXUVVFUXWLQLVLQJRXUSKRWRJUDSKLFHIIRUWV $OWKRXJKWKHDQDO\VWV·WDVNZDVRQO\MXVWEHJLQQLQJ 5$3725·VMREIRUWKLVPLVVLRQZDVFRPSOHWH0RUH LPSRUWDQWO\VRZDVRXUV ,I,KDGNQRZQ,ZDVQ·WJRLQJWRÁ\ZLWK5$3725 DJDLQ,PLJKWKDYHWDNHQRQHODVWORRNRYHUP\VKRXOGHU DWWKHZRUOG·VPRVWH[SHQVLYH¶%R[%URZQLH·,PLJKW HYHQKDYHUHJDUGHGLWZLWKVRPHSHFXOLDUDIIHFWLRQ $IWHUDOOGHVSLWHRXUGLVOLNHRIWKHWDVNWKHZRUNWKDW 6TXDGURQKDGFRPSOHWHGZLWK5$3725KDGSURYLGHG DQHVVHQWLDOLQSXWWRERWKWKHODQGDQGDLUEDWWOHVRI 2SHUDWLRQ7(/,&+RZHYHUIRUPH5$3725KDGRIIHUHG DPXFKJUHDWHUSULYLOHJHGHVSLWHWKHGLIÀFXOWLHVDQG
WKHGDQJHUP\UHFRQQDLVVDQFHPLVVLRQVKDGWDNHQPH RYHUWKHOHQJWKDQGEUHDGWKRIWKHFRXQWU\RI,UDTDQG DOORZHGPHWRVHHVRPHRILWVJHRJUDSK\DQGDSSUHFLDWH VRPHRILWVIDVFLQDWLQJKLVWRU\:LWKRXW5$3725WKLV ZRXOGSUREDEO\QHYHUKDYHRFFXUUHGDQGP\PHPRULHV RIWKH*XOIZRXOGEHFRQÀQHGWRQLJKW&$6PLVVLRQVDQG GURSSLQJODVHUJXLGHGERPEVRQWRXQVHHQWDUJHWV )RUQRZWKRXJK,ZDVWRUHWDLQP\UHVHQWPHQWIRU WKHFXUVHGWKLQJ0\EDFNDFKHG,ZDVGHK\GUDWHG DQGP\EODGGHUZDVWKHVL]HRIDIRRWEDOO$V,JUHHWHG %RQHVDWWKHHQJLQHHUV·KXWZHFRQVROHGRXUVHOYHV ZLWKWKHWKRXJKWWKDWDIWHUWKHXVXDOURXQGRIGHEULHIV RXUGD\ZRXOGEHRYHU7KHÀUVWGHEULHIZDVXVXDOO\ FDUULHGRXWZLWKRXULQWHOOLJHQFHWHDPEHIRUHWKHMHWV ZHUHHYHQVLJQHGEDFNWRWKHHQJLQHHUV+RZHYHUDVWKH 6TXDGURQ,QWHOOLJHQFH2IÀFHUPDGHKLVZD\WRZDUGVPH SHQLQKDQG,UHDOLVHGWKDW,KDGDPXFKPRUHSUHVVLQJ HQJDJHPHQWKDYLQJEHHQVWUDSSHGWRD¶EDQJVHDW·IRUVL[ KRXUV,PDGHP\H[FXVHVDQGKHDGHGIRUWKHEDWKURRP
48,&.5($&7,21$/(57 )OLJKW/LHXWHQDQWV3KLO6WHZDUW 5RU\+HGHUPDQ
6
Q&KULVWPDV'D\D7XSROHY7X%HDUPDULWLPH UHFRQQDLVVDQFHDLUFUDIWWDNHVRIIIURPLWVEDVHLQWKH %DOWLFDQGFOLPEVWRLWVFUXLVHDOWLWXGHRIIHHW )O\LQJDWPSKLWLVDUPHGZLWKDLUWRVXUIDFH PLVVLOHVDQGUHDUZDUGIDFLQJUDGDUJXLGHGPP FDQQRQV,WKDVDUDQJHWKDWFDQWDNHLWWR&XEDDQG PRVWRIWKHZD\EDFNDQGKDVEHHQWKHPDLQVWD\RI 6RYLHWQDYDODYLDWLRQVLQFHEHIRUHWKH&ROG:DU1RZ Á\LQJXQGHUWKH5XVVLDQÁDJLWVFDSDFLW\WRFDUU\ VRQDUEXR\VDQGWRUSHGRHVFDSDEOHRIÀQGLQJDQG GHVWUR\LQJVXEPDULQHVRUWRODXQFKDQXFOHDUFUXLVH PLVVLOHKDVQRWGLPLQLVKHG$VLWURXQGV1RUZD\WKH %HDUGHVFHQGVEHORZUDGDUFRYHUDJHDQGFRQWLQXHVRQ LWVPLVVLRQWRWHVW%ULWDLQ·VDLUGHIHQFHV1RZDWORZ OHYHODQGSRLQWLQJVWUDLJKWDW6FRWODQG·VFDSLWDOLWLV RQO\DPDWWHURIWLPHEHIRUHLWUHDFKHVVLPXODWHGÀULQJ UDQJHIRULWVFUXLVHPLVVLOHV6XGGHQO\WKHDLUFUDIW·V UDGDUZDUQLQJUHFHLYHUVRXQGVLWVDODUP/RRNLQJ RXWVLGHDIXOO\DUPHG7RUQDGR))LJKWHUVLWVMXVWRII WKHZLQJÁ\LQJDWWKHVDPHVSHHGKROGLQJIRUPDWLRQ 7KH%HDUFOLPEVDQGWXUQVEDFNWRKRPHHVFRUWHGE\WKH 7RUQDGR)%ULWDLQKDVSDVVHGWKHWHVW7KLVKRZHYHU LVQR7RP&ODQF\QRYHOQRUD6WHYHQ6SLHOEHUJÀOP EXWLVYHU\PXFKUHDOLW\,WLVDJDPHRIFDWDQGPRXVH WKDWKDVEHHQSOD\HGPDQ\WLPHVWKURXJKRXWWKH&ROG :DUDQGLWPD\VXUSULVHPDQ\UHDGHUVWRNQRZLWLV VWLOOEHLQJSOD\HGWRGD\
6RZKDWKDSSHQHGEHWZHHQWKH%HDUWDNLQJRIIDQG EHLQJLQWHUFHSWHGE\WKH4XLFN5HDFWLRQ$OHUW45$ DLUFUDIW" 7KH+LVWRU\ :KLOVWWKHXVHRIDPLOLWDU\UHDFWLRQIRUFHFDSDEOH RIUHVSRQGLQJWRDQHQHP\·VDFWLRQVKDVEHHQDURXQG IRUFHQWXULHVLWVÀUVWXVHLQWKHDLUERUQHHQYLURQPHQW RFFXUUHGGXULQJWKH)LUVW:RUOG:DU7KHDUULYDORI DLUVKLSVRYHU%ULWDLQIURPRQZDUGVPDGHDGHHS LPSUHVVLRQRQWKHFLYLOLDQSRSXODWLRQDQGLQUHVSRQVH %ULWLVKQLJKWÁ\LQJDLUFUDIWZHUHGHSOR\HGWRWU\WR LQWHUFHSWWKHP2Q6HSWHPEHUD%(FELSODQH SLORWHGE\/LHXWHQDQW:LOOLDP/HHIH5RELQVRQVKRW GRZQ=HSSHOLQ6/DQGWKLVKHUDOGHGRQHRIWKHYHU\ ÀUVWUHFRUGHGLQWHUFHSWVDJDLQVWDQHQHP\DLUFUDIW ,Q*HUPDQ*RWKDERPEHUVEHJDQIRUPDWLRQ ERPELQJUDLGVRYHU/RQGRQOHDYLQJDLUGHIHQFHV WRWDOO\XQSUHSDUHG&RQVHTXHQWO\WDFWLFVZHUHIXUWKHU GHYHORSHGWRHQDEOHRXUDLUFUDIWWRLQWHUFHSWWKHP :RUOG:DU,,VDZDYLWDOVKLIWLQWKHUROHRIDLU SRZHUDQGLWVRRQEHFDPHDSSDUHQWWKDWWKHXVHRIDLU SRZHUFRXOGKDYHDVLJQLÀFDQWLQÁXHQFHRQDQHQHP\·V DELOLW\WRZDJHZDU7KLVZDVGHPRQVWUDWHGGXULQJ WKH*HUPDQ%OLW]NULHJVWUDWHJ\LQZKLFKDLUFUDIWZHUH XVHGDV¶Á\LQJDUWLOOHU\·DQGRYHUZKHOPHGWKH$OOLHG GHIHQFHV,QUHVSRQVH%ULWDLQGHYHORSHGWKHZRUOG·V
5$)/(8&+$56
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·V$X[LOLDU\$LU)RUFH XVHGWKLVLQIRUPDWLRQWREXLOGDVWUDWHJLFDLUSLFWXUH E\PRYLQJZRRGHQEORFNVDURXQGDPDS&RQWUROOHUV ZKRVWRRGDERYHWKHVHPDSVWKHQGHFLGHGZKHQDQG ZKHUHRXUIRUFHVZRXOGPHHWWKH/XIWZDIIHDQGLQZKDW VWUHQJWK&RQWUROOHUVDWVHFWRUOHYHOFRXOGWKHQVFUDPEOH +XUULFDQHDQG6SLWÀUHVTXDGURQVDQGGLUHFWWKHPRQWR WKHLUWDUJHWVE\UDGLR7KLVV\VWHPFDPHLQWRLWVRZQ GXULQJWKH%DWWOHRI%ULWDLQDQGHQDEOHGWKH5$)WR XWLOLVHLWVVFDUFHUHVRXUFHVDQGGHIHDWWKHQXPHULFDOO\ VXSHULRU/XIWZDIIH:RUOG:DU,,KDGVKRZQH[DFWO\ ZKDWDFRXQWU\FRXOGGRWRLWVHQHPLHVZLWKFRPPDQG RIWKHDLU )ROORZLQJWKHHQGRIWKH6HFRQG:RUOG:DUDLU GHIHQFHVTXDGURQVDVVXPHGDPXFKPRUHUHOD[HGVWDWXV
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ÀJKWHULQWHUFHSWLRQÁLJKWVZLWKWKH LQWURGXFWLRQRIWKH'H+DYLOODQG9DPSLUH1),Q DGGLWLRQWRWKH9DPSLUHWKHQLJKWÀJKWHUÁLJKWVZHUH XQGHUWDNHQE\0HWHRU1)DQGODWWHUO\-DYHOLQ )$:DLUFUDIW 45$DVZHNQRZLWWRGD\ZDVGHYHORSHGDIWHUWKH LQWURGXFWLRQRIWKH/LJKWQLQJLQWKHHDUO\V 6TXDGURQIRUPHGDW5$)/HXFKDUVLQ)HEUXDU\ FRQYHUWLQJWRWKH/LJKWQLQJ0NLQ$XJXVW7KH 45$¶VKHGV·ZKHUHWKH45$DLUFUDIWVWRRGRQUHDGLQHVV DWWKHVLGHRIWKHUXQZD\IDFLQJHDVWZHUHFRQVWUXFWHG LQ6KRUWO\DIWHUWKLVWKHPD[LPXPVFUDPEOHWLPH ZDVUHGXFHGWRMXVWPLQXWHV,Q6TXDGURQ LQWURGXFHGWKHXVHRIPPVWLOOSKRWRJUDSK\WRNHHSD UHFRUGRIDQ\WKLQJWKDWZDVLQWHUFHSWHGZKLFKFRXOGEH
XVHGDVDVRXUFHRILQWHOOLJHQFH7KH 45$DLUFUDIWDW/HXFKDUVVWLOOFDUU\ ZHWÀ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ÀJKWHUFUHZFRQQHFWHGE\WHOHSKRQH WRDUDGDURSHUDWRU,IDSRWHQWLDOO\ KRVWLOHDLUFUDIWFURVVHVDFHUWDLQ DLUVSDFHERXQGDU\WKHQWKHRUGHU WRVFUDPEOHLVJLYHQSLORWVDQG ZHDSRQVV\VWHPVRIÀFHUVUXQWR WKHLUDLUFUDIWDQGODXQFKLQWRWKH VN\$OO\RXQHHGLVDÀJKWHUDLUFUDIW DJURXQGEDVHGUDGDUDQGHQRXJK SHRSOHRQGXW\WRRSHUDWHWKHP 8QIRUWXQDWHO\WKHWDVNDWKDQGLV QRWWKDWVLPSOH$IDVWMHWZLOOWDNH DILQLWHDPRXQWRIWLPHWRWUDYHO DFURVVWKH8.·VDLUVSDFHDQGLW UHTXLUHVPRUHWKDQRQHUDGDUKHDG WRFRRUGLQDWHDQGVFDQDQDUHDWKH VL]HRIWKH8. 7KHUHDUHUDGDUVLWHVDOODFURVVWKH
8.WUDFNLQJDOOLQFRPLQJDLUWUDIÀF /HW·VSXWWKDWLQWRSHUVSHFWLYHDW +HDWKURZDQDLUFUDIWLVWDNLQJRII RUODQGLQJHYHU\PLQXWHVRWKDWLV DLUFUDIWLQDKRXUSHULRG \RXDOVRKDYH*DWZLFN/XWRQ 6WDQVWHG0DQFKHVWHUDQG1HZFDVWOH ,QWHUQDWLRQDODLUSRUWVWRQDPH DIHZDVZHOODVDOOWKHVPDOOHU UHJLRQDODLUSRUWV1RZWDNHDOO WKHDLUFUDIWWKDWDUHMXVWRYHUÁ\LQJ WKH8.WRGHVWLQDWLRQVLQ(XURSH RU1RUWK$PHULFD$GGWKDWWRDOO WKHUHFUHDWLRQDOWUDIÀFRLOULJIHUU\ ÁLJKWVSROLFHDQGDLUDPEXODQFH KHOLFRSWHUVDQGWKHQXPEHUEHFRPHV PRUHLQWKHUHJLRQRILQ KRXUV1RZWU\DQGVSRWWKH%HDU :HOOWKDW·VH[DFWO\ZKDWDÀ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ÀUVWE\DÀJKWHUFRQWUROOHUZKR KDGVSRWWHGVRPHWKLQJXQWRZDUG :KDWLVLW":KHUHKDVLWFRPHIURP"
:KRVKRXOGEHLQUDGLRFRQWDFWZLWK LW":KHUHLVLWKHDGLQJ",IWKHFRQWDFW ZDUUDQWVIXUWKHULQYHVWLJDWLRQWKH 0DVWHU&RQWUROOHUZRXOGWKHQFRQWDFW WKH45$VWDWLRQE\WHOHSKRQHLQLWLDOO\ WRDOHUWWKHFUHZ7KHQ&$2&ZRXOG EHFRQWDFWHGE\GDWDOLQNVKRZQWKH WUDFNLQIRUPDWLRQDQGWKH\ZRXOG WKHQIRUPXODWHDSODQ6KRXOGWKH VLWXDWLRQEHPRUHXUJHQWWKHFUHZ ZRXOGEHVFUDPEOHGLPPHGLDWHO\DQG EHJLYHQGHWDLOVE\7HOHEULHIDÀ[HGOLQH WKDWEURDGFDVWVGLUHFWWRWKH6WDWLRQ 2SHUDWLRQVURRP$LU7UDIÀF&RQWURO WKH45$EXLOGLQJDQGWKH45$DLUFUDIW FRFNSLWVLPXOWDQHRXVO\ )RUWXQDWHO\WKHOHVVRQVOHDUQWRYHU WKHSDVW\HDUVKDYHOHIWXVLQJRRG VWHDG(YHU\RQHFRQFHUQHGQRZNQRZV ZKDWWRGRDQGWKHZHOORLOHGPDFKLQH ZLQGVXS,IWKHDLUFUHZDUHJLYHQSULRU ZDUQLQJRIDSRVVLEOHVFUDPEOHWKLV DOORZVWKHPWRFRPHWR¶&RFNSLWUHDG\· VWDWXV)XOO\NLWWHGXSDQGVWUDSSHGLQ WKHSLORWDQGZHDSRQVV\VWHPVRIÀFHU KDYHWKHDLUFUDIWSRZHUHGXSUHDG\ WRVWDUWWKHHQJLQHVDQGWD[\ULJKW DZD\7KLVZRXOGKDSSHQLIDUDGDU FRQWDFWZDVPDGHE\WKH&5&EXWWRR
IDUDZD\WREHRIFRQFHUQRULIDQRWKHU FRXQWU\KDGPDGHFRQWDFWDQGZDV H[SHFWLQJWRKDQGRYHUFRQWURORIWKH LQFLGHQWWRWKH8.RQFHWKHXQNQRZQ DLUFUDIWDSSURDFKHGRXUDLUVSDFH7KH PHVVDJHWRVFUDPEOHFRPHVLQDÀ[HG IRUPDWDQGFRQWDLQVDOOWKHLQLWLDO LQIRUPDWLRQWKH45$FUHZQHHGWR VWDUWKHDGLQJLQWKHULJKWGLUHFWLRQ 7KLVPHVVDJHDOVRFRQWDLQVRQHRI WKHIROORZLQJLQVWUXFWLRQV ,QWHUFHSWWRJHWLQWRDIDYRXUDEOH SRVLWLRQUHODWLYHWRWKHXQLGHQWLÀHG ERJH\ DLUFUDIWDQGDZDLWIXUWKHU LQVWUXFWLRQV 6KDGRZIROORZWKHERJH\DWDVDIH GLVWDQFH ,GHQWLI\WRFORVHWRDGLVWDQFH WKDWDOORZVYLVXDOLGHQWLÀFDWLRQRIWKH ERJH\LWVW\SHPDUNLQJVDQGZHDSRQ ORDG ,QWHUYHQHWRDFWLYHO\GHPRQVWUDWH WRWKHERJH\WKDWKHLVWRFRPSO\ ZLWKWKHLQWHUQDWLRQDOO\UHFRJQLVHG SURFHGXUHVIRULQWHUFHSWLRQ (QJDJHWKHDLUFUDIWLVKRVWLOHRULV NQRZQWRKDYHKRVWLOHLQWHQWLRQVDQG PXVWEHGHVWUR\HG
45$$'D\,Q7KH/LIH 7KHGD\IRUWKHDLUFUHZVWDUWVDWQLQHDPDQGODVWVIRUKRXUVKRZHYHU WKHHQJLQHHUVDOORFDWHGWR45$ZLOOEHRQGXW\IRUGD\V$OOWKUHH7RUQDGR )VTXDGURQVDW5$)/HXFKDUV1RVDQG5 VKDUHWKHDLUFUHZDQG HQJLQHHULQJPDQQLQJ7KHÀUVWHYHQWLVWKHKDQGRYHUEULHIWKHRQJRLQJ FUHZLVEULHIHGRQWKHFXUUHQWDLUÀHOGZHDWKHUDQGLQWHOOLJHQFHVWDWHVWKDW FRXOGEHDIDFWRUVKRXOGDVFUDPEOHEHGHFODUHG2QFHWKLVKDQGRYHUSURFHVV LVFRPSOHWHWKHDLUFUHZGRQRUSUHSRVLWLRQHTXLSPHQWQHDUWKHDLUFUDIWDQG WKHZDLWLQJEHJLQV 45$RSHUDWHVIURPDSXUSRVHEXLOWVLWHWKDWHQFRPSDVVHVHYHU\WKLQJ UHTXLUHGE\WKHZKROHWHDP:LWKWKHVHWXSFHQWUHGRQWKHQHFHVVLW\ WRJHWDQDLUFUDIWDLUERUQHLQDYHU\VKRUWWLPHWKHDLUFUHZDQGJURXQG FUHZUHPDLQRQVLWHIRUWKHGXUDWLRQRIWKHLUGXW\UHDG\WRVSULQJLQWR DFWLRQDWDQ\WLPHRIWKHGD\RUQLJKW7KH\WKHUHIRUHUHO\RQWKHUHVWRIWKH VHFWLRQVWRSURYLGHWKHQHFHVVDU\VXSSRUW7KH45$EXLOGLQJORFDWHGQH[W WRWKH+DUGHQHG$LUFUDIW6KHOWHUKDVDFUHZURRPEHGURRPVDQGSODFHVIRU SHUVRQQHOWRUHOD[E\ZDWFKLQJ79UHDGLQJRUSOD\LQJJDPHVDQGDOVRRIÀFHV ZKHUHWKHSDSHUZRUNPRXQWDLQFDQEHWDFNOHGGXULQJWKHTXLHWKRXUV6LQFH MRXUQH\VDFURVVWKHDLUÀHOGWRWKHVKRSRUWRWKH0HVVIRUOXQFKDUHQRWDQ RSWLRQWKHPHDOVDUHSUHSDUHGLQWKH45$NLWFKHQE\DUHVLGHQWFKHIDQG HDWHQRQVLWH'U\UDWLRQVDUHDYDLODEOHDWRWKHUWLPHVIRUVQDFNV 1RWRQO\DUHWKHUHSHRSOHUHDG\DWWKHDLUFUDIWVLWHEXWDOVRWKHUHDUH DKRVWRIVHFWLRQVRQGXW\RURQFDOODW5$)/HXFKDUVWRFRQWULEXWHWRZDUGV WKH45$SURFHVVDWDQ\JLYHQWLPH7KHVHLQFOXGH$LU7UDIÀF&RQWURODQG WKH6WDWLRQ2SHUDWLRQV5RRPZKLFKDUHPDQQHGSHUPDQHQWO\DQGKDYH VLPLODUIDFLOLWLHVWRWKH45$EXLOGLQJWRDFFRPPRGDWHGXW\SHUVRQQHODW DOOWLPHV6DIHW\(TXLSPHQWÀWWHUVDUHUHDG\WRUHSODFHRUUHSDLUDQ\RIWKH DLUFUHZHTXLSPHQWDVVHPEO\VXFKDVPLFURSKRQHVRUR[\JHQPDVNV7KH 0HWHRURORJLFDO2IÀFHXSGDWHVWKHDLUFUHZRQWKHZHDWKHUVLWXDWLRQWKH\ DUHOLNHO\WRHQFRXQWHUVKRXOGWKH\VFUDPEOH7KH%LUG&RQWURO8QLWNHHSV WKHDLUÀHOGFOHDURIELUGVVRLWLVVDIHWRRSHUDWHIURPZKHQFDOOHGIRUDQG WKH$LUÀHOG$UUHVWRUFDEOH7HDPDQG*URXQG5DGLR6HFWLRQPDLQWDLQWKH DLUÀHOGIDFLOLWLHV)LUHDQG&UDVK5HVFXHFRYHULVDYDLODEOHVKRXOGWKHZRUVW KDSSHQDVWKHDLUFUDIWJHWVDLUERUQHRUDVLWUHFRYHUVDQGDIWHUODQGLQJWKH 3KRWRJUDSKLF6HFWLRQLVDWKDQGWRGHYHORSDQ\ÀOPWKHFUHZKDVRIWKH LQWHUFHSWHGDLUFUDIW $VVXPLQJWKHUHLVQRSULRUZDUQLQJWKHQWKHVFUDPEOHFDQFRPHDVD VXUSULVH7KH7HOHEULHIEODUHVRXWWKHVFUDPEOHPHVVDJHWKHDLUFUHZMXPS IURPWKHLUVHDWVLQIURQWRIWKH79RUWKURZGRZQWKHLUERRNDQGZUHVWOH ZLWKLPPHUVLRQVXLWVDQGOLIHMDFNHWVWKDWDUHRQO\HYHUDQDUP·VOHQJWK DZD\:LWKWKHLQWHUFHSWORFDWLRQSRWHQWLDOO\VHYHUDOKXQGUHGPLOHVRXW RYHUWKHVHDDQ\FKDQFHRIHMHFWLQJIURPWKHDLUFUDIWLVQRWWDNHQOLJKWO\DQG FUHZVPXVWDOZD\VEHIXOO\GUHVVHGWRVXUYLYHWKHPRVWXQOLNHO\RIHYHQWV 5HJDUGOHVVRIWKHZHDWKHUDVFUDPEOHVRUWLHZLWKDLUUHIXHOOLQJFDQODVW DERXWHLJKWKRXUV7KHIXOODLUERUQHRXWÀWFRQVWLWXWHVWKHUPDOXQGHUZHDU DIXOOERG\¶ZRROO\EHDU·VXLWLQWHUQDODQWL*WURXVHUVH[WHUQDOLPPHUVLRQ VXLWDQGDOLIHMDFNHW7KHKHOPHWDQGJORYHVFRPSOHWHWKHVHW+RZHYHU DQ\WLPHVSHQWGRQQLQJFXPEHUVRPHFORWKLQJDIWHUWKHVFUDPEOHPHVVDJH LVWLPHZDVWHG&UHZVW\SLFDOO\ZHDUWKHXQGHUJDUPHQWVZLWKWKHRXWHU LPPHUVLRQVXLWQHDUE\RUGRQQHGEXWWLHGDURXQGWKHZDLVWZKLOHZDLWLQJ 'XULQJZDUPHUZHDWKHUWKHUPDOVDQGLPPHUVLRQVXLWDUHDPLQLPXPDV VXUYLYDOWLPHVLQWKHVHDQHDUWKH$UFWLF&LUFOHFDQEHVKRUWHYHQDWWKHSHDN RI6XPPHU0HDQZKLOHWKHJURXQGFUHZUXVKWRWKH¶VKHG·LQSUHSDUDWLRQ IRUWKHFUHZLQDQGUDSLGVWDUWXSWKHFORFNLVVWLOOWLFNLQJ45$LVEHLQJ ODXQFKHGDQGKDVRQO\DIHZPLQXWHVWRJHWDLUERUQH
7KH6FUDPEOH ´/HXFKDUV6FUDPEOH9HFWRUFOLPEDQJHOV&RQWDFW %XFKDQSULPDU\WDGVHFRQGDU\6FUDPEOH6FUDPEOH 6FUDPEOH$FNQRZOHGJHµ 7KHFUHZVDFNQRZOHGJHWKHVFUDPEOHFDOODQGUXQWRWKHLUDLUFUDIW ZUHVWOLQJZLWKWKHLUVXUYLYDOHTXLSPHQW0LQXWHVODWHUWKH\DUH DFFHOHUDWLQJWKURXJKPSKDQGVPRRWKO\URWDWHWKHÀJKWHURIIWKH UXQZD\WXUQLQJDQGFOLPELQJDVGLUHFWHGE\WKHVFUDPEOHPHVVDJH :LWKLQVHFRQGVWKHLUDLUFUDIWKDVDFFHOHUDWHGWRLQWHUFHSWVSHHG DQGIXUWKHULQIRUPDWLRQLVUHFHLYHGDERXWWKHXQNQRZQDLUFUDIW DSSURDFKLQJWKH8.·VDLUVSDFH ´/HXFKDUV%XFKDQ%RJH\HDVWEXOOVH\HIDVWORZ LQWHUURJDWHµ 7KHFUHZSRVLWLRQWKHDLUFUDIWEHKLQGWKHXQNQRZQDLUFUDIWDQG PRYHXSLQWRDSRVLWLRQWRLGHQWLI\LW ´/HXFKDUVWDOO\,GHQWLI\RQH78%HDU5HTXHVWLQVWUXFWLRQVµ 0RPHQWVODWHUWKHÀJKWHUHDVHVLWVHOIRQWRWKHOHIWZLQJRIWKH%HDU DQGWKHRQHWLPH&ROG:DUHQHPLHVDUHFORVHHQRXJKWRVHHHDFK RWKHU7KH%HDUFUHZDFNQRZOHGJHWKHLQWHUFHSWWKLVLVSHDFHWLPHDQG WKH\WXUQIRUKRPHWKHFDWDQGPRXVHJDPHKDVEHHQSOD\HGDJDLQ 2QFHPRUHWKH$LU'HIHQFHQHWZRUNRIWKH8.KDVSDVVHGWKHWHVW )RUWKHIRUHVHHDEOHIXWXUHWKLVURXQGWKHFORFNYLJLOLVPDLQWDLQHG E\DFRRUGLQDWHGWHDPUHDG\WRLPSOHPHQWDSURFHVVWKDWKDVEHHQ HYROYLQJVLQFHWKHDGYHQWRIDLUFUDIW7RGD\ZHNQRZLWDV45$DQG UHJXODUSUDFWLFHHQVXUHVWKDWWKHV\VWHPRISURWHFWLQJRXUVNLHVLVDV HIÀFLHQWDVZHFDQPDNHLW7KHQRWWRRGLVWDQWIXWXUHZLOOVHHWKH LQWURGXFWLRQRI7\SKRRQ)DLUFUDIWLQWKH45$UROHDOORZLQJWKH SUDFWLFHRIGHIHQGLQJWKH1DWLRQ·VDLUVSDFHWRHYROYHLQOLQHZLWKWKH PRUHFDSDEOHDLUFUDIW8QWLOWKHQDQGIRUHYHU\PLQXWHLQEHWZHHQ WKH5$)·V7RUQDGR)FUHZVWKHÀJKWHUFRQWUROOHUVDQGDZKROH YDULHW\RIRWKHUVXSSRUWVWDIIVLWDQGZDLW
9&7$1.(5
6WLYH[PVU
0
QODWH)HEUXDU\WKH9&$LU5HIXHOOLQJ$5 :LQJ PDGHXSRIFUHZVIURPDQG6TXDGURQVEDVHGDW5$) %UL]H1RUWRQGHSOR\HGVHYHQDLUFUDIWDQGFUHZVWRWKH 3ULQFH6XOWDQ5R\DO6DXGL$LU)RUFH%DVHPLOHVVRXWK HDVWRI5L\DGKWRVXSSRUWRIIHQVLYHRSHUDWLRQVLQWKH*XOI %HFDXVHRIWKHVXSHUEIRUZDUGSODQQLQJJRRGSULRULWLVLQJ DQGFDQGRDWWLWXGHRIWKH5$)GHWDFKPHQWZKLFKZDV DOUHDG\WKHUHZHZHUHDEOHWRGHFODUHRXUVHOYHVRSHUDWLRQDO RQ0DUFK 3ULRUWRWKHRXWEUHDNRIKRVWLOLWLHVWKH:LQJKDGEHHQ Á\LQJLQVXSSRUWRIWKHSROLFLQJRSHUDWLRQVRIWKHVRXWKHUQ ,UDT1RÁ\=RQHEXWRXUÀUVWZDUPLVVLRQRQWKHHYHQLQJ RI0DUFKVLJQDOOHGDUDSLGLQFUHDVHLQRXUWDVNLQJUDWH 7KHGDLO\DYHUDJHLQFUHDVHGIURPWKUHHPLVVLRQVWRHLJKWRU QLQHDGD\DVZHKHOSHGWRSURYLGHKRXU$5VXSSRUWWR WKH&RDOLWLRQDLUIRUFHV:HZHUHDOVRGRZQWRVL[DLUFUDIW DQGQLQHFUHZVDVRQHDLUFUDIWKDGEHHQWUDQVIHUUHGWR5$) $NURWLULLQ&\SUXVWRRSHUDWHLQWKHDHURPHGLFDOHYDFXDWLRQ UROH%\WKHHQGRIWKHPRQWKRXUWDQNHUVZHUHURXWLQHO\ RSHUDWLQJDFURVVWKH,UDTLERUGHUZKLFKZDVDUDGLFDOFKDQJH IURPWKHÀUVW*XOI:DUZKHQWKH9&·VODFNRIPLVVLOH ZDUQLQJHTXLSPHQWDQGOLWWOHRUQRVHOIGHIHQFHHTXLSPHQW PHDQWZHDOZD\VRSHUDWHGRQWKHIULHQGO\VLGHRIWKHERUGHU $OWKRXJKWKHDLUVSDFHQRUWKRIWKHERUGHUZDVGHHPHGWR EHVDIHWKH¶FRQFHQWUDWHGWKUXVW·RIWKHJURXQGFDPSDLJQ PHDQWZHZHUHRSHUDWLQJRYHUJURXQGZKLFKKDGQRWEHHQ FRPSOHWHO\FOHDUHGE\IULHQGO\IRUFHV6XUIDFHWRDLUÀULQJ E\URDPLQJHQHP\WURRSVZDVDOZD\VDULVNEXWVXFKHYHQWV ZHUHIDLUO\XQXVXDODQGUDUHO\YHU\DFFXUDWH'D\E\GD\ WKH$5WUDFNVPRYHGIXUWKHUDQGIXUWKHUQRUWKXQWLOZHZHUH RSHUDWLQJFORVHWR%DJKGDGDQGFRXOGVHHLQWKHGLVWDQFHWKH ÀJKWLQJDURXQGWKHFLW\ $VWKHZDUSURJUHVVHGRXUWDVNLQJLQVXSSRUWRI&RDOLWLRQ DLUIRUFHVEHFDPHPRUHYDULHGDQGZHZHUHUHTXLUHGWR UHVSRQGRIWHQDWVKRUWQRWLFHWRFRQVWDQWO\FKDQJLQJ SDWWHUQVLQWKHDLUSLFWXUH0LVVLRQVZHUHDOZD\VSUH SODQQHGEXWLWZDVWKH$5ÁH[LELOLW\ZHZHUHDEOHWRRIIHU WKDWPDGHOLIHVRLQWHUHVWLQJDVZHQHYHUNQHZZKDWZDV ¶DURXQGWKHFRUQHU·RQFHZHZHUHDLUERUQH1RWZRVRUWLHV ZHUHHYHUWKHVDPHEXWDW\SLFDOVRUWLHZRXOGKDYHEHHQ FRQGXFWHGDORQJWKHIROORZLQJOLQHV SP7KHDFFRPPRGDWLRQDUHDLVDZD\IURPWKH DLUÀHOGVRWKHFUHZWDNHDPLQXWHVKXWWOHEXVWULSWR ¶2SHUDWLRQV7RZQ·ZKHUHWKHPDLQEULHÀQJIDFLOLWLHVDUH VLWXDWHG DP7KHPLVVLRQIROGHULVFROOHFWHGIURP2SHUDWLRQV DQGLQLWLDOPLVVLRQSODQQLQJLVFRPSOHWHG DP3ULRUWRILQLVKLQJWKHPLVVLRQSODQQLQJZH DWWHQGD86$)LQWHOOLJHQFHEULHILQJZKLFKEULQJVXVXS WRGDWHZLWKWKHODWHVWZDUVLWXDWLRQERWKRQWKHJURXQG DQGLQWKHDLU
DP:LWKPLVVLRQSODQQLQJFRPSOHWHZHUHPRYHDOO SHUVRQDOHIIHFWVIURPRXUFORWKLQJKDQGLQRXU5$),' FDUGVFROOHFWRXU:DU,'FDUGVDQGFRPSOHWHWKH&RPEDW 6HDUFKDQG5HVFXHGRFXPHQWDWLRQ DP7KHÀQDOFUHZEULHÀQJLVFDUULHGRXWLQWKH SUHVHQFHRIWKHDXWKRULVLQJRIÀFHU7KHDXWKRULVLQJRIÀFHULV QRUPDOO\RQGXW\LQWKHRSHUDWLRQVURRPIRUDKUSHULRG DQGLVIXOO\XSWRVSHHGZLWKWKHODWHVWGHYHORSPHQWVRIWKH ZDUDQGWKHQDWXUHRIRXUPLVVLRQ+LVUROHLVWRHQVXUHRXU PLVVLRQSUHSDUDWLRQLVFRUUHFWDQGWKRURXJKDQGWKDWFUHZV DUHLQJRRGSK\VLFDODQGPHQWDOFRQGLWLRQWRÁ\ DP7KHFUHZEXVWDNHVXVDFURVVWKHDLUÀHOGWRWKH ÁLJKWOLQHWRERDUGWKHDLUFUDIWDOORFDWHGIRUWRQLJKW·V PLVVLRQ DP3UHÁLJKWFKHFNVRIWKHDLUFUDIWDUHFRPSOHWHG HQJLQHVVWDUWHGDQGZHWD[\RXWDWWKHDOORWWHGWLPHPDNLQJ VXUHZHDUHLQWKHFRUUHFWSRVLWLRQLQWKHWDNHRIITXHXH DP$LUERUQH:HMRLQWKHGHVLJQDWHGDLUWUDQVLWURXWHV GHWDLOHGLQRXUPLVVLRQSODQDQGVWDUWWKHWUDQVLWÁLJKWWRRXU $5RSHUDWLQJDUHD DP7KH-RLQW7DFWLFDO,QIRUPDWLRQ'LVWULEXWLRQ6\VWHP -7,'6 LVVZLWFKHGRQ0RVWRIWKHWUDQVLWWLPHLVVSHQW PRQLWRULQJERWKWKHRQERDUGDLUFUDIWUDGDUGLVSOD\DQG WKH-7,'6WRHQVXUHZHGRQRWFROOLGHZLWKRWKHUIULHQGO\ DLUFUDIWLQZKDWLVDYHU\EXV\SLHFHRIDLUVSDFH DP:HFKDQJHUDGLRIUHTXHQF\WRRXU$LUERUQH(DUO\ :DUQLQJDQG&RQWURO6\VWHP$:$&6 DLUFUDIWDQGFRQWDFW LWVFRPPDQGHUZLWKRXUFDOOVLJQDQGRXUPLVVLRQGHWDLOV DP$VZHDSSURDFKWKH,UDTLERUGHUZHFDUU\RXW WKH¶KRVWLOHDFWLRQ·FKHFNOLVWEXWOHDYHWKHDLUFUDIWOLJKWV RQIXOOEULJKWQHVVDWWKLVVWDJHWKHULVNRIFROOLVLRQZLWKD IULHQGO\DLUFUDIWLVDKLJKHUULVNWKDQWKDWSRVHGE\HQHP\ JURXQGILUH
;,30*
6TXDGURQ/HDGHU+XJK'DYLV
DP:HDUHQRZHVWDEOLVKHGRQRXU$5WUDFNQRUWKRIWKH,UDTLERUGHU -7,'6LVXVHGWRVSRWRXULQFRPLQJIDVWMHWUHFHLYHUDLUFUDIWRQWKLVRFFDVLRQ WKH\DUHIRXU5$)7RUQDGRVKHDGLQJQRUWKIRUDVWULNHPLVVLRQQHDU%DJKGDG 2QFHZHLGHQWLI\WKHIRUPDWLRQZHPDNHVXUHZHDUHLQWKHFRUUHFWSRVLWLRQWR HIIHFWDVSHHG\MRLQXS DP7KHILUVWUHIXHOOLQJVHULDOLVFRPSOHWHDQGWKH7RUQDGRVOHDYH WRFRQWLQXHZLWKWKHLUPLVVLRQ$VWKH7RUQDGRVDUHGXHWRFRPHEDFNWR XVDIWHUWKH\KDYHFRPSOHWHGWKHLUWDVNWKH\DUHWUDFNHGZLWK-7,'6$V ORQJDVWKH7RUQDGRVVWD\LQ$:$&6FRYHUZHZLOOEHDEOHWRPDLQWDLQD UDQJHDQGEHDULQJRQWKHPDOORZLQJXVWRIROORZWKHPZKHUHYHUWKH\JR 7KH-7,'6FDQDOVREHORDGHGZLWKWKHDLUVSDFHSODQWRJLYHXVDQLQVWDQW SLFWRULDOSUHVHQWDWLRQRIWKHDLUVSDFHLQFOXGLQJRXURZQSRVLWLRQDQGWKDW RIRWKHUDLUFUDIW DP:HKHDUDSDLURIÀJKWHUDLUFUDIWUHWXUQLQJWKDWDUHYHU\VKRUWRI IXHODQGDUHXUJHQWO\ORRNLQJIRUDSUREHDQGGURJXHWDQNHU$VZHKDYH VSDUHIXHORQERDUGDQGDUHLQDJRRGSRVLWLRQWRKHOSZHRIIHURXUVHUYLFHV WRWKHFRQWUROOLQJ$:$&6DLUFUDIW7KH$:$&6FRPPDQGHUJLYHVWKHÀJKWHU DLUFUDIWYHFWRUVWRRXUSRVLWLRQEXWWKHZHDWKHULVSRRUDQGWKHÀJKWHUVDUH KDYLQJWURXEOHÀQGLQJXV7KH-7,'6FKRRVHVWKLVPRPHQWWRIDLODQGKDVWR EHUHVHW$IWHUDORWRIZHDYLQJDERXWWKHVN\ZHÀQDOO\PDQDJHWRJHWWKH ÀJKWHUVRQRXUZLQJEXWWKHMRLQXSKDVWDNHQWRRORQJDQGWKHÀJKWHUVGR QRWKDYHHQRXJKIXHOWRDWWHPSWDQ$5FRQWDFW6RZLWKD¶WKDQNVEXWQR WKDQNV·WKH\KHDGRIIWRWKHLUGLYHUVLRQDLUÀ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ÀQLVK$VVRRQDVWKH3URZOHU KDVGHSDUWHGZHVWDUWWXUQLQJVRXWKDJDLQDQGVLJQDOZLWKRXUOLJKWVIRUWKH +RUQHWVWRJRDVWHUQ7KH\TXLFNO\PDNHFRQWDFWDQGZHFRQWLQXHWKHWXUQ WRUROORXWVRXWKERXQGVRWKH\FDQMRLQWKHLUWUDQVLWURXWHEDFNWRWKHLUFDUULHU DIWHUWKH\KDYHÀQLVKHGUHIXHOOLQJ DP7KH)VKDYHKDGWKHLUJDVDQGJRQH7LPHIRUDFXSRIWHDZKLOH ZHZDLWIRURXUQH[WVHWRIUHFHLYHUVWKH5$)7RUQDGRVZHUHIXHOOHGHDUOLHU WRFRPHEDFNWRXVDWDP DP-7,'6WHOOVXVWKDWRXUUHFHLYHUVDUHLQERXQG7KH\DUHFRPLQJEDFN HDUO\:HVWDUWKHDGLQJWRZDUGVWKHQRUWKHUQHQGRIWKHWUDFNWRVKRUWHQWKH GLVWDQFHWKH\KDYHWRÁ\WRMRLQXSZLWKXV DP2XUÀUVWJURXSRIUHFHLYHUVDUHQRZEDFNRQRXUZLQJDQGRQHSDLU VWLOOKDYHWKHLUZHDSRQVRQERDUG&KDQJHRISODQ7KHÀUVWSDLUZDQWWRJR KRPHDVSODQQHGEXWWKHVHFRQGSDLUZDQWDVPXFKJDVDVZHFDQVSDUHVR WKH\FDQJREDFNRQWDVNDQGWKHQUHWXUQPLQXWHVODWHUIRUDSRVWVWULNH UHIXHORQWKHZD\KRPH5DSLGFDOFXODWLRQVKRZVZHFDQMXVWDERXWPDQDJH WRUHIXHOWKHVHFRQGSDLUEHIRUHWKH\JREDFNRQWDVNEXWZHNQRZWKDWZH ZLOOQRWKDYHHQRXJKIXHOWRZDLWIRUWKHPWRFRPHEDFNDJDLQDIWHUWKHLU PLVVLRQ DP7KHJX\VJRLQJEDFNRQWDVNDUHJHWWLQJDELWORZRQJDVVRZH DJUHHWRJLYHWKHPNJVHDFKWRHQDEOHWKHPWRKROGZLWKXVZKLOHZH ÀOOXSWKHKRPHZDUGERXQGSDLUDQGWU\WRZRUNRXWZKHUHZHDUHJRLQJWR JHWWKHH[WUDIXHOIURP7KH$:$&6FRQWUROOHUVKDYHWKHLUKDQGVIXOODWWKH PRPHQWVRUWLQJRXWDQRWKHUSUREOHPIROORZLQJDVXUIDFHWRDLUÀULQJLQFLGHQW RQDQDGMDFHQW$5WUDFNVRWKH\DUHWRREXV\WRKHOSXVVRUWRXWRXUSUREOHP DP:HVZDSWKHUHFHLYHUVDURXQGWRSDVVIXHOWRWKHSDLUKHDGLQJKRPH 0HDQZKLOHWKHFDSWDLQLVVWXG\LQJWKH$LU7DVNLQJ2UGHU$72 WRWU\WRÀQG DQRWKHUWDQNHUZLWKVSDUHJDVZHDOZD\VFDUU\WKHHQWLUH$72IRURXUPLVVLRQ SHULRGSOXVDELWHLWKHUVLGHIRUH[DFWO\WKLVHYHQWXDOLW\2XUZHDSRQV V\VWHPVRIÀFHU:62 KDVUHVXUUHFWHGWKH-7,'6DQGLVEXV\VHDUFKLQJIRU RWKHU5$)WDQNHUVWKDWPD\EHDEOHWRKHOS DP2QHSDLURI7RUQDGRVLVQRZRQWKHZD\KRPHWKHRWKHUSDLU LVEDFNLQFRQWDFWDJDLQWDNLQJRQPRUHIXHO7KHFRS\RIWKH$72ZH
FDUU\VKRZVDQRWKHU9&WDQNHULVDLUERUQHEXWLWVHHPV XQOLNHO\WKDWKHZLOOKDYHDQ\VSDUHJDVDUDGLRFDOO FRQÀUPVRXUWKRXJKWV7KH:62VHDUFKLQJWKH-7,'6VSRWV D7ULVWDUWDQNHUKHDGLQJKRPHWR%DKUDLQDFKHFNRIWKH $72ÀQGVDFDOOVLJQIRUKLPDQGZHJLYHKLPDFDOOQR OXFNDJDLQKHKDVYHU\OLWWOHIXHOOHIWDQGKHQHHGVWRJHW EDFNRQWKHJURXQGDVTXLFNO\DVSRVVLEOHWRUHIXHODQGWXUQ DURXQGIRUWKHQH[WWDVN:HEDQWHUZLWKKLPDERXWEHLQJ PRUHLQWHUHVWHGLQJHWWLQJEDFNWRWKHEDUZHOLYHLQDYHU\ QRQDOFRKROHQYLURQPHQWLQ6DXGL$UDELDZKLOHWKH7ULVWDU FUHZVEDVHGLQ%DKUDLQFDQUHWLUHWRDEDUZKHQWKH\DUHRII GXW\ DQGELGKLPIDUHZHOO:HVWDUWH[DPLQLQJWKH$72 DJDLQWKHUHLVQRWKLQJHOVHVKRZLQJRQ-7,'6H[FHSWWZR 86$).&VDQGWKH$72VKRZVWKH\DUHERWK¶)O\LQJ %RRP·WDQNHUVZKLFKDUHQRWVXLWDEOHIRURXU7RUQDGRV7KH RQO\RWKHU9&ZHFDQÀQGRQWKH$72ZLOOMXVWEHJHWWLQJ DLUERUQHIURP3ULQFH6XOWDQ$LU%DVH$% :HVHHIURP -7,'6WKDWDWRZOLQHQRUWKRIXVLVHPSW\DWRXUKHLJKW
DQGDVNWKH7RUQDGRVLIWKH\ZDQWWRKHDGQRUWKVRZH FDQOHDYHWKHPIXOORIIXHODVIDUWRWKHQRUWKDVZHFDQ JR7KH\DJUHH2XU$:$&6FRPPDQGHUVWLOOKDVKLV RZQSUREOHPVEXWJLYHVXVSHUPLVVLRQWRKHDGQRUWK $VZHWXUQQRUWKWKH:62VFDQVWKH-7,'6SLFWXUHVRXWK RIXVWRVHHLIKHFDQVHHWKHRWKHU9&WDQNHUFOLPELQJRXW IURP3ULQFH6XOWDQ$%$PD]LQJO\LW·VDOUHDG\KDOIZD\XS WKHWUDQVLWFRUULGRUDQGPXVWEHUXQQLQJDWOHDVWWR PLQXWHVHDUO\:HPHDVXUHKLVUDQJHRQ-7,'6DQGGHFLGH KHLVFORVHHQRXJKIRUDUDGLRFDOO,WVHHPVWKH&RPELQHG $LU2SHUDWLRQV&HQWUHVFUDPEOHGKLPHDUO\WRPHHWVRPH RWKHUUHFHLYHUVDQGKHKDVWKHJDVDQGWKHWLPHWRUHIXHORXU 7RUQDGRVDIWHUWKHLUVWULNHPLVVLRQDVPRVWRIKLVRULJLQDO $5SODQKDVEHHQFDQFHOOHG:HDVNKLPWRFRQÀUPWKDWKH LVVWLOOJRLQJWRWKH$5WUDFNVWDWHGLQWKH$72EXWZHÀQG KHLVJRLQJWRDQRWKHUWUDFN:HSDVVWKHLQIRUPDWLRQWRWKH 7RUQDGRV7KH\DUHKDSS\ZLWKWKHFKDQJHLQDUUDQJHPHQWV VRZHFRQÀUPZLWKERWKWKHWDQNHUDQGWKH7RUQDGRVWKH
GHWDLOVRIWKHQHZUHQGH]YRXVWLPHDQGSRVLWLRQDQGIXHOORDG UHTXLUHGWRPDNHVXUHWKH\DUHDOO¶VLQJLQJIURPWKHVDPHK\PQ VKHHW·7KH-7,'6SLFWXUHLVQRZVFDQQHGQRUWKDJDLQWRFRYHURXU HQWU\LQWRWKHQHZ$5WUDFN7KHUHLVD86$).&Á\LQJ IHHWDERYHRXUOHYHOZLWKDSDLURI)VLQERXQGWRKLP)XUWKHU QRUWKDQGRXWWRWKHHDVWZHFDQVHHPRUHÀJKWHUVRQFRPEDWDLU SDWURODQGEHORZWKHPPRUHIDVWMHWVLQERXQGWRWDUJHWVDURXQG %DJKGDG DP7KH7RUQDGRVDUHVWLOOWDNLQJJDVEXWZHDUHIDVW DSSURDFKLQJRXURZQPLQLPXPIXHOVWDWH$TXLFNGHFLVLRQLV PDGHWRDEDQGRQWKHKROGLQJIXHOUHTXLUHPHQWIRURXUUHWXUQ WR3ULQFH6XOWDQ$%DQGDVWKHZHDWKHUWKHUHLVJRRGZHDOVR QRPLQDWHDGLYHUVLRQDLUÀHOGZKLFKLVFORVHUWR3ULQFH6XOWDQ$% WKDQRXURULJLQDOSODQQHGGLYHUVLRQDLUÀHOG7KLVHQDEOHVXVWR JLYHPRUHIXHOWRWKH7RUQDGRV:HFKHFNWRVHHKRZPXFKPRUH IXHOWKH\WKLQNWKH\DUHJRLQJWRZDQWDQGDUHUHOLHYHGWRÀQG WKDWWKHH[WUDIXHOZHKDYHDOORFDWHGWKHPZLOOPHHWWKHLUQHHGV DP7KH7RUQDGRVDUHIXOODQGGHSDUWRQWKHLUPLVVLRQ:H DUHGRZQWRNJVDERYHRXUPLQLPXPIXHOUHTXLUHPHQWVR ZHJHWSHUPLVVLRQIURPWKH$:$&6WRKHDGKRPHDIWHUJLYLQJ KLPGHWDLOVRIWKHQHZ$5UHQGH]YRXVZHKDYHDUUDQJHGIRURXU GHSDUWLQJÀJKWHUV:HVWDUWFOLPELQJWRDKLJKHUOHYHOWRVDYHIXHO MHWHQJLQHVDUHPXFKPRUHIXHOHIÀFLHQWDWKLJKOHYHOV DQGWR PDNHDQ\WULJJHUKDSS\,UDTL·VMREKDUGHUDQGKHDGVRXWKWRMRLQ WKHWUDQVLWFRUULGRUVKRPH DP'XULQJWKHUHFRYHU\WR3ULQFH6XOWDQ$%ZHDUHWROG ZHDUHQXPEHUVHYHQLQWKHTXHXHWRODQGDQGWKDWZHDUHWRHQWHU WKHKROGLQJSDWWHUQWRDZDLWRXUÀQDODSSURDFKFOHDUDQFH:H DGYLVHWKHFRQWUROOHUWKDWZHRQO\KDYHHLJKWPLQXWHVKROGLQJIXHO UHPDLQLQJDQGWKDWE\WKHWLPHZHDFWXDOO\JHWWRWKHKROGZH ZLOOQRWKDYHDQ\KROGLQJIXHOOHIW,PPHGLDWHO\ZHDUHWROGZH DUHQRZQXPEHUWZRWRODQGDQGDUHJLYHQYHFWRUVIRUWKHÀQDO DSSURDFKWRWKHUXQZD\WRIROORZEHKLQGDQ($DLUFUDIWZKLFKKDV EHHQFOHDUHGWRODQG DP:HÀQDOO\ODQGDQGDIWHUWD[\LQJWRWKHUHIXHOOLQJSLWV ZHKDQGWKHMHWRYHUWRRXUJURXQGFUHZ)RUWXLWRXVO\ZHKDYH QRWEURNHQDQ\WKLQJVRWKHHQJLQHHUVDUHLQDJRRGPRRG7KH\ DUHPRUHSOHDVHGWKDQZHDUHWKDWRXUODQGLQJZDVQRWGHOD\HGDV RQHRIRXURWKHU9&VQHHGVDQHQJLQHFKDQJHVRRXUDLUFUDIWLV QHHGHGXUJHQWO\IRUDTXLFNWXUQURXQG DP:HFRPSOHWHWKHSRVWPLVVLRQUHSRUWDQGILQDO GHEULHÀQJLQ2SHUDWLRQVFROOHFWRXUSHUVRQDOHIIHFWVZDOOHWVDQG ,'FDUGVDQGZDONWRWKHEXVVWRSWRFDWFKWKHVKXWWOHEXVKRPH IRUEUHDNIDVW$QRWKHUEXV\GD\LVRYHU %\WKHHQGRIWKHZDUWKHVL[DLUFUDIWRIWKH9&WDQNHU GHWDFKPHQWKDGÁRZQDWRWDORIPLVVLRQVRYHUDSHULRGRI GD\VZLWKDQDYHUDJHVRUWLHOHQJWKRIKRXUVPLQXWHV 2XUVXFFHVVUDWHZDVZHGLGQRWORVHDQ\VRUWLHVGXH WRDLUFUDIWXQVHUYLFHDELOLWLHVZKLFKLVDGHVHUYHGWULEXWHWRWKH KDUGZRUNDQGGHGLFDWLRQRIRXUJURXQGFUHZVZKRNHSWWKHVH ROGDLUFUDIWÁ\LQJLQYHU\GLIILFXOWFRQGLWLRQV:HIOHZDWRWDO RIKRXUVDQGWUDQVIHUUHGWRQQHVRIIXHODTXDUWHURI ZKLFKZDVJLYHQWRWKH86IRUFHV-7,'6ZDVDJUHDWVXFFHVVEXW VRIWZDUHIDLOXUHVPDGHLWORFNXSIDUPRUHIUHTXHQWO\WKDQZH ZRXOGKDYHZLVKHGKRZHYHURQWZRRFFDVLRQVLWVDYHGXVIURP SRVVLEOHPLGDLUFROOLVLRQVVR,UHPDLQDQDUGHQW-7,'6IDQ)URP DSHUVRQDOSRLQWRIYLHZLWZDVDJUHDWSOHDVXUHWRKDYHWDNHQ SDUWLQDQRSHUDWLRQZKLFKZDVZHOOOHGDQGZHOOVXSSRUWHG )XUWKHUPRUHRQHDVSHFWWKDWZDVDSSUHFLDWHGE\DOOPHPEHUVRI WKH5$)$5:LQJERWKDLUFUHZDQGJURXQGFUHZDOLNHZDVWKH VHQVHRILGHQWLW\JHQHUDWHGE\EHLQJRQHXQLWZLWKDFRPPRQ SXUSRVH $VDÀQDOFRPPHQW,PXVWSD\WULEXWHWRWKHVXSSRUWVWDIIDW 3ULQFH6XOWDQ$%:HWHQGWRIRUJHWKRZUHOLDQWZHDUHRQWKHLU VXSSRUWWRKHOSXVJHWRXUMREGRQH*X\V\RXZHUHUHDOO\JUHDW \RXJRWLWDEVROXWHO\ULJKWDQGZHRZH\RXDELJWKDQN\RX
-2,1,1*
(JRUV^SLKNLKHZVULVM[OL ^VYSK»ZWYLTPLYHLYVIH[PJ [LHTZ[OL9(-(LYVIH[PJ ;LHTTVYLJVTTVUS` RUV^UHZ[OL9LK(YYV^Z L_PZ[Z[VWYVTV[L[OL 9(-»ZJVYWVYH[LPTHNL [VJVU[YPI\[L[V+LMLUJL +PWSVTHJ`HUK[VZ\WWVY[ ^PKLY)YP[PZOPU[LYLZ[Z [OYV\NO[OLWYVTV[PVUVM )YP[PZOPUK\Z[Y`V]LYZLHZ
7+(5('6
5DFKHO9RLJW
*
RPPDQGHGE\6TXDGURQ/HDGHU&DUO¶6SLNH·-HSVRQWKH 6TXDGURQFRQVLVWVRIRYHURIÀFHUVDQGDLUPHQRU DLUZRPHQZKRDUHVHOHFWHGIURPSHUVRQQHOVHUYLQJLQWKH 5$)$SSURDFKLQJWKHLUWKGLVSOD\VHDVRQWKH7HDPKDV QRZSHUIRUPHGRYHUGLVSOD\VLQGLIIHUHQWFRXQWULHV $OOQLQH5HG$UURZVGLVSOD\SLORWVDUHIDVWMHWSLORWVVHOHFWHG IURPIURQWOLQH5$)VTXDGURQV7KHFXUUHQW7HDPLQFOXGHV SLORWVIURP-DJXDU*57RUQDGR*57RUQDGR)DQG +DUULHU*5VTXDGURQV7REHHOLJLEOHIRUVHOHFWLRQSLORWV PXVWKDYHÁRZQDPLQLPXPRIIDVWMHWÁ\LQJKRXUV KDYHFRPSOHWHGDWOHDVWRQHWRXURIGXW\ZLWKDIURQWOLQH 5$)VTXDGURQDQGKDYHEHHQDVVHVVHGDVDERYHDYHUDJH SLORWVLQSUHYLRXVÁ\LQJUHSRUWV&RPSHWLWLRQLVLQWHQVH EHWZHHQDQGSLORWVDSSO\HDFK\HDUIRUWKHWZRRUWKUHH GLVSOD\SLORWYDFDQFLHV 7KHVHOHFWLRQSURFHVVLVXQOLNHDQ\RWKHULQWKH5$) DVWKHGHFLVLRQVDUHPDGHGHPRFUDWLFDOO\E\WKH7HDP PHPEHUVJXLGHGE\WKH7HDP/HDGHU7RUHGXFHWKH WRDSSOLFDQWVWRDPRUHPDQDJHDEOHVKRUWOLVWRIQLQH FDQGLGDWHVWKH7HDP/HDGHUÀUVWUHYLHZVWKHÁ\LQJUHSRUWV RIHYHU\DSSOLFDQWGDWLQJEDFNWRWKHLUYHU\ÀUVW5$)Á\LQJ VRUWLH7KLVJLYHVDUHOLDEOHRYHUYLHZRIHDFKFDQGLGDWH·V FDSDELOLWLHVVWUHQJWKVDQGZHDNQHVVHV)ROORZLQJWKLV LQLWLDOUHYLHZHDFKFDQGLGDWHLVGLVFXVVHGLQGHWDLOE\WKH 7HDPPHPEHUVDQGQLQHDUHFKRVHQIRUWKHQH[WVWDJHRIWKH VHOHFWLRQSURFHGXUH 7KHQLQHVKRUWOLVWHGFDQGLGDWHVDUHLQYLWHGWRVSHQGD ZHHNRQWKH6TXDGURQZLWKWKH7HDP7KLV¶6KRUWOLVW :HHN·HQDEOHVWKH7HDPWRH[DPLQHSRWHQWLDOFDQGLGDWHV IRUWKHLUVXLWDELOLW\DV7HDPSLORWVDVVXLWDEOHDPEDVVDGRUV IRUWKH5$)DQGDVWHDPSOD\HUV7KH6KRUWOLVW:HHNFDQ EHVRPHZKDWGDXQWLQJDVLWPHDQVWKDWWKHFDQGLGDWHV DUHXQGHUFRQVWDQWH[DPLQDWLRQERWKSURIHVVLRQDOO\DQG SHUVRQDOO\WKURXJKRXWWKHSHULRG)RU)OLJKW/LHXWHQDQW 'DQ6LPPRQVZKRZDVDÀUVW\HDUSLORWZLWKWKH5HG $UURZVLQWKHH[SHULHQFHRI6KRUWOLVW:HHNLVDYLYLG PHPRU\¶
HYHU\WKLQJ,KDGVDLGWKLQNLQJRIWKHIDUPRUHLQWHOOLJHQW FRQWULEXWLRQV,FRXOGKDYHPDGH· $QLPSRUWDQWSDUWRI6KRUWOLVW:HHNLVWKHÁ\LQJWHVW6NLOO DQGH[SHULHQFHKDYHDOUHDG\EHHQGHWHUPLQHGE\GHWDLOHG H[DPLQDWLRQRISUHYLRXVÁ\LQJUHSRUWVWKHUHIRUHWKHÁ\LQJ WHVWLVGHVLJQHGWRPHDVXUHWKHDSSOLFDQW·VDSWLWXGHIRU IRUPDWLRQDHUREDWLFÁ\LQJDQGWRPHDVXUHWKHLUFDSDFLW\IRU OHDUQLQJ:LWKDOLPLWHGSHULRGRI:LQWHUWUDLQLQJDYDLODEOH
WRSUHSDUHIRUWKHIROORZLQJ\HDU·VVHDVRQLWLVYLWDO WKDWDOOSLORWVFDQOHDUQWKHGLVSOD\VHTXHQFHLQWKDW VDPHOLPLWHGSHULRG&DQGLGDWHVDUHSXWWKURXJK WKHLUSDFHVE\WKH7HDP/HDGHUDQGWKH6TXDGURQ·V ([HFXWLYH2IILFHU¶,ZDVH[WUHPHO\QHUYRXV· UHPHPEHUV'DQ6LPPRQV¶DOOQLQHSLORWVRQWKH VKRUWOLVWZHUHJLYHQWKHVDPHWDVNV:HEHJDQE\ EHLQJVKRZQWKHFRUUHFWIRUPDWLRQUHIHUHQFHVWR Á\DORRSLQ¶'LDPRQG·IRUPDWLRQ:HZHUHWKHQ DVNHGWRSHUIRUPWKHPDQRHXYUHDJDLQDQGLWZDV RXUOHDUQLQJFXUYHWKDWZDVEHLQJDVVHVVHGLQ VKRUWKRZTXLFNO\ZHUHZHDEOHWRLPSURYHRXU SHUIRUPDQFH7KLVZDVIROORZHGE\WZRUROOVDOVRLQ 'LDPRQGIRUPDWLRQDQGWZRORRSVDQGWZRUROOVLQ ¶%DWWOH·IRUPDWLRQ7KHZKROHSURFHVVLVVRPHZKDW DOLHQWRQRUPDOIDVWMHWSLORWRSHUDWLRQVEHFDXVH \RXDUHÁ\LQJIURPWKHEDFNVHDWRIWKHDLUFUDIWD SRVLWLRQWKDWLVXQIDPLOLDUWRPRVWRIXV5$)SLORWV DUHDOZD\VWDXJKWWREHH[FHSWLRQDOO\VHOIFULWLFDO DQGDVDUHVXOWDOORIXVZHUHDEVROXWHO\FRQYLQFHG ZHKDGQRWGRQHYHU\ZHOODWDOO· $QRWKHUPDMRUHYHQWGXULQJ6KRUWOLVW:HHNLVWKH IRUPDOLQWHUYLHZ7KHLQWHUYLHZSDQHOFRQVLVWVRI WKH&RPPDQGDQWRIWKH&HQWUDO)O\LQJ6FKRRO&)6 DVWKH5HG$UURZV·RSHUDWLRQVIDOOZLWKLQKLVDUHD RIUHVSRQVLELOLW\ WKH&)6VWDII:LQJ&RPPDQGHU ZKRDFWVDVVHQLRUÁ\LQJVXSHUYLVRUIRUWKH7HDP DQGWKH7HDP/HDGHU7KHLQWHUYLHZLVGHVLJQHGWR H[SORUHWKHFDQGLGDWH·VPRWLYDWLRQIRUZDQWLQJWR MRLQWKH7HDPWKHLUXQGHUVWDQGLQJRIWKH7HDP·V UROHDQGWKHLUDELOLW\WRDFWDVDPEDVVDGRUVIRUWKH 5$)¶7KHODVWIRUPDOLQWHUYLHZ,XQGHUZHQWZDV ZKHQ,DSSOLHGWRMRLQWKH5$)RYHU\HDUVEHIRUH· VDLG'DQ¶VR,ZDVQRWSDUWLFXODUO\ORRNLQJIRUZDUG WRWKHH[SHULHQFH7KHNLQGRIGLIÀFXOWTXHVWLRQV WKDW\RXJHWDVNHGDWD5HG$UURZVLQWHUYLHZKDYH EHFRPHSDUWRI5$)IRONORUHVR,ZDVZHOODZDUH WKDWLWZRXOGQRWEHDQHDV\SDUWRIWKHVHOHFWLRQ SURFHVV· 'XULQJWKHZHHNVSHQWZLWKWKH7HDPWKH FDQGLGDWHVDOVRÁ\WKUHHWLPHVDGD\DVSDVVHQJHUV GXULQJWKHFXUUHQW7HDP·VSUDFWLFHVHVVLRQV7KLV JLYHVWKHFDQGLGDWHVDEHWWHULGHDRIWKHNLQGRI Á\LQJWKH\ZRXOGH[SHULHQFHLIWKH\ZHUHVXFFHVVIXO LQMRLQLQJWKH7HDPDQGLWWHVWVWKHLUDELOLW\WR FRSHZLWKDQLQWHQVLYHDQGSK\VLFDOO\H[KDXVWLQJ Á\LQJVFKHGXOH$IWHUWKHZRUNLQJGD\ÀQLVKHVWKH FDQGLGDWHVSDUWLFLSDWHLQDFDUHIXOO\GHVLJQHGVRFLDO VFKHGXOHZLWKWKHFXUUHQW7HDPSLORWV¶7HDPZRUN LVMXVWDVLPSRUWDQWDQHOHPHQWDVÁ\LQJVNLOOLQ FRPSOHWLQJDVDIHDQGVXFFHVVIXOVHDVRQRIGLVSOD\V· VD\V7HDP/HDGHU6TXDGURQ/HDGHU6SLNH-HSVRQ ¶:KHQ\RXDUHÁ\LQJKLJKVSHHGDHUREDWLFVDVFORVH DVVL[IHHWDSDUW\RXPXVWKDYHDEVROXWHIDLWKDQG WUXVWLQ\RXUWHDPPDWHVDQGZKHQ\RXVSHQG DKXJHSURSRUWLRQRI\RXUWLPHWRJHWKHURQWKH JURXQG\RXPXVWKDYHJRRGSHUVRQDOUHODWLRQVKLSV )RUWKHVHUHDVRQVDQHVVHQWLDODVSHFWRI6KRUWOLVW :HHNLVVRFLDOWLPHJHWWLQJWRNQRZWKHFDQGLGDWHV SHUVRQDOO\6SHQGLQJWLPHZLWKWKHPIRUVHYHQGD\V LVDJRRGZD\RIHQVXULQJWKDW\RXJHWWRVHHWKHUHDO SHUVRQUDWKHUWKDQVHHLQJDQ¶LQWHUYLHZSHUVRQD·· $IWHUWKHVHYHQGD\VDUHRYHUWKHFDQGLGDWHV UHWXUQWRWKHLUVTXDGURQVDQGWKHWKRURXJKDQG VRPHWLPHVGLIILFXOWSURFHVVRIGHPRFUDWLF7HDP GHFLVLRQPDNLQJEHJLQV1RRXWVLGHUKDVHYHUEHHQ
DGPLWWHGWRWKLVSURFHVV2QFHDILQDOVHOHFWLRQ RIWKUHHSLORWVKDVEHHQPDGHDOOWKHFDQGLGDWHV DUHWHOHSKRQHGSHUVRQDOO\E\WKH7HDP/HDGHUWR LQIRUPWKHPRIWKHGHFLVLRQ¶,KHDUGWKDW,KDGEHHQ VXFFHVVIXOÀYHGD\VDIWHU6KRUWOLVW:HHNHQGHG·VDLG 'DQ¶,KDGZDQWHGWRMRLQWKH5HG$UURZVVLQFHWKH DJHRIÀYHDQGLWZDVWKHPRVWDPD]LQJIHHOLQJ, ZDVFRQYLQFHGWKDW,ZRXOGQRWEHVHOHFWHGDQGLW WRRNDORQJWLPHIRULWWRVLQNLQIRUPRVWRIP\ÀUVW \HDURQWKH7HDPLQIDFW· 7KHQH[WVWDJHIRUWKHWKUHHQHZWHDPPHPEHUV LVDSHULRGRIUHIUHVKHUWUDLQLQJDW5$)9DOOH\$OO 5$)DGYDQFHGIDVWMHWWUDLQLQJLVGRQHRQWKH+DZN 70NWKHDLUFUDIWDOVRÁRZQE\WKH5HG$UURZV VRDOOQHZ5HG$UURZVSLORWVZLOOKDYHÁRZQWKH DLUFUDIWLQWHQVLYHO\HDUOLHULQWKHLU5$)FDUHHUV +RZHYHUWKH\ZLOOKDYHÁRZQDGLIIHUHQWIURQWOLQH DLUFUDIWVLQFHWKHQDQGDGHJUHHRIUHIDPLOLDULVDWLRQ ZLWKWKH+DZNLVQHFHVVDU\2QFHWKLVFRQYHUVLRQ FRXUVHLVFRPSOHWHWKHSLORWVMRLQWKHH[LVWLQJ 7HDPIRUWKHODVWIHZZHHNVRIWKHFXUUHQWGLVSOD\ VHDVRQ7KLVJLYHVWKHPXVHIXOH[SHULHQFHRIWKHOLIH RIDGLVSOD\SLORWDQGRIVRPHRIWKH5HG$UURZV· VWDQGDUGRSHUDWLQJSURFHGXUHV 7UDLQLQJEHJLQVLQHDUQHVWWKHGD\DIWHUWKHWKUHH GHSDUWLQJSLORWVOHDYHWKH7HDPJHQHUDOO\LQPLG 1RYHPEHU:LQWHUWUDLQLQJLVLQWHQVLYHDQGODVWVIRU EHWZHHQVL[DQGVHYHQPRQWKVXQWLOWKHEHJLQQLQJ RIWKHGLVSOD\VHDVRQLQ0D\RIWKHIROORZLQJ\HDU 'DQUHPHPEHUVKLVÀUVW:LQWHUWUDLQLQJVHDVRQ¶, FDQKRQHVWO\VD\WKDWWKH:LQWHUWUDLQLQJSHULRG ZDVWKHKDUGHVW,KDGHYHUZRUNHGLQP\OLIH, VSHQWPRVWRIWKHWLPHWKLQNLQJ´,DPQHYHUJRLQJ WREHDEOHWRPDVWHUWKLV,DPJRLQJWREHWKHRQO\ 5HG$UURZVSLORWZKRGLGQRWPDNHWKHJUDGHµ,W LVGLIÀFXOWWRH[SODLQKRZSK\VLFDOO\DQGPHQWDOO\ H[KDXVWLQJWKHZKROHSURFHVVLV· ¶'XULQJ:LQWHUWUDLQLQJP\GD\VWDUWHGDWDP ZKHQ,OHIWKRPHWRGULYHWRZRUN,WKHQVSHQWWKH ÀUVWIHZPLQXWHVLQWKHRIÀFHFDWFKLQJXSZLWKVRPH RIP\VHFRQGDU\GXWLHV:HDUHHDFKJLYHQWDVNV XQUHODWHGWRÁ\LQJEXWZKLFKDVVLVWZLWKWKHJHQHUDO UXQQLQJRIWKH6TXDGURQ7KHPRVWWLPHFRQVXPLQJ VHFRQGDU\GXW\,KDGODVW:LQWHUZDVFRRUGLQDWLQJ WKHVXSSO\RIIUDPHGSULQWVZKLFKWKH7HDP/HDGHU SUHVHQWVWRWKHYLVLWRUVZHKRVWHDFKGD\DQG HQVXULQJWKDWWKHRWKHUSLORWVSURYLGHGWKHKXQGUHGV RIDXWRJUDSKVWKDWDUHUHTXHVWHGIURPWKH7HDPHDFK ZHHN,WVRXQGVIDLUO\VLPSOHDQGVWUDLJKWIRUZDUG
EXWZLWKOLWWOHRUQRVSDUHWLPHEHWZHHQWUDLQLQJ VHVVLRQVWKLVZDVRIWHQDGLIÀFXOWWDVN 7KHÀUVW6TXDGURQHYHQWRIWKHGD\LVWKH PHWHRURORJLFDOEULHÀQJDWDP'XULQJWKH EULHÀQJZHDUHJLYHQXSWRGDWHQHZVRIWKH ZHDWKHUFRQGLWLRQVH[SHFWHGGXULQJWKHGD\ LQIRUPDWLRQDERXW$LU7UDIÀF&RQWUROSURFHGXUHV ZKLFKDLUFUDIWZLOOEHDYDLODEOHIRUXVHDQGDQ\ YLVLWRUVWRWKH6TXDGURQ$IWHUWKHEULHÀQJZH KDYHPLQXWHVWRSUHSDUHRXUVHOYHVIRUWKHÀUVW Á\LQJVRUWLHEULHÀQJRIWKHGD\:KHQ,ÀUVW DUULYHGRQWKH6TXDGURQWUDLQLQJVRUWLHVZRXOG FRQVLVWRIIRUPDWLRQVRIIRXUDLUFUDIWWKH%RVVWKH 7HDP/HDGHU WKHRWKHUWZRÀUVW\HDUSLORWVDQG P\VHOI:HEULHIHGIRUPLQXWHVSULRUWRHDFK VRUWLH'XULQJHDFKEULHÀQJWKH%RVVUHPLQGHG XVRIWKHOHDUQLQJSRLQWVIURPWKHSUHYLRXVVRUWLH DQGWKHQWDONHGWKURXJKLQGHWDLOZKDWZHZRXOG EHGRLQJLQWKHQH[WVRUWLH (DFKVRUWLHODVWVPLQXWHV,WGRHVQRW VRXQGORQJEXWWKDWLVPLQXWHVRIFRPSOHWH FRQFHQWUDWLRQ\RXUOLIHGHSHQGVRQLW$ORWRI WKHWUDLQLQJLVGHVLJQHGWRHQVXUHWKDW\RXFDQ IROORZWKHFRUUHFWVDIHFRXUVHRIDFWLRQZKDWHYHU VLWXDWLRQ\RXÀQG\RXUVHOILQ:HKDYH¶HVFDSH URXWHV·IURPHYHU\PDQRHXYUHDQGIRUPDWLRQ VKDSHWRHQVXUHWKDWZHFDQUHPRYHRXUVHOYHVLQ FDVHRIHPHUJHQF\EXWZLWKRXWHQGDQJHULQJDQ\ RWKHUDLUFUDIW:HSUDFWLFHLQWHQVLYHO\RYHUDQG RYHUXQWLOZHKDYHJRWLWULJKWWRWKHVWDQGDUG WKDWSHRSOHH[SHFWRIWKH5HG$UURZV(DFKVRUWLH LVÀOPHGIURPWKHJURXQGE\DVDIHW\FDPHUDPDQ ZKLFKJLYHVXVDFRPSOHWHYLGHRRIWKHÁLJKWIURP ZKLFKZHFDQFRQGXFWDGHWDLOHGGHEULHI 7KHGHEULHIZKLFKEHJLQVPLQXWHVDIWHUZH ODQGIURPWKHVRUWLHFHQWUHVDURXQGZDWFKLQJWKH PLQXWHYLGHRIUDPHE\IUDPH7R JLYH\RXDQLGHDRIWKH OHYHORI
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
WKRVHÀUVWIHZPRQWKVRI:LQWHUWUDLQLQJ0\ VWDQGDUGSURFHGXUHZDVWRDUULYHKRPHFRPSODLQ DERXWKRZEDGO\,WKRXJKW,KDGGRQHWKDWGD\ DQGWKHQLPPHGLDWHO\IDOODVOHHSDWWKHGLQQHU WDEOH 7KHWUDLQLQJURXWLQHFRQWLQXHVWKURXJKRXWWKH :LQWHUDQGPRVWGD\VZHKDYHYLVLWRUVVSHQGLQJ WKHGD\ZLWKXVWRJHWDQLQVLJKWLQWRWKHZRUN EHKLQGWKHVFHQHV,WLVDOZD\VDSULYLOHJHWR H[SODLQWRYLVLWRUVKRZZHSXWWRJHWKHUWKH GLVSOD\EXWLWGHÀQLWHO\DGGVSUHVVXUHGXHWRWKH KHDY\GHPDQGVRQRXUWLPH$VRXUIRXUVKLS IRUPDWLRQLPSURYHVPRUHDLUFUDIWDUHDGGHGLQWR WKHIRUPDWLRQDQGZHEHJLQWRSXWLQGLYLGXDO PDQRHXYUHVWRJHWKHUWRVWDUWWREXLOGWKHGLVSOD\ VHTXHQFHIRUWKHIROORZLQJ6XPPHU·VGLVSOD\ VHDVRQ7KHÀQDOVHTXHQFHLVFKRVHQMXVWEHIRUH &KULVWPDVE\WKH7HDPPHPEHUV$QLPSRUWDQW PLOHVWRQHLVZKHQDOOQLQHDLUFUDIWÁ\WRJHWKHU IRUWKHÀUVWWLPH,UHPHPEHULWDVEHLQJTXLWHDQ HPRWLRQDOH[SHULHQFHLWZDVWKHÀUVWJOLPPHURI KRSHWKDW,DFWXDOO\PLJKWEHXSWRWKHMRE 7KHPDMRULW\RI:LQWHUWUDLQLQJLVGRQHDWRXU KRPHEDVHRI5$)6FDPSWRQLQ/LQFROQVKLUH +RZHYHUWKHZHDWKHULQWKH8.LVQRWDOZD\V FRPSDWLEOHZLWKWKHWUDLQLQJZHQHHGWRGR7R SUDFWLVHWKHORRSLQJPDQRHXYUHVIRUH[DPSOH ZHQHHGDPLQLPXPFORXGEDVHRIIHHW 6RWRJXDUDQWHHVXLWDEOHZHDWKHUFRQGLWLRQV ZHFRPSOHWHWZRWUDLQLQJGHWDFKPHQWVDW5$) $NURWLULLQ&\SUXVZKHUHZHFDQEHVXUHRI FOHDUEOXHVNLHV*RLQJDZD\DVDWHDPDOVR HQDEOHVXVWRFRQFHQWUDWHHQWLUHO\RQRXUGLVSOD\ Á\LQJZLWKRXWWKHGLVWUDFWLRQVRI¶UHDOOLIH·EDFN KRPHDW6FDPSWRQ 7KHVHFRQGRIWKHWZRWUDLQLQJGHWDFKPHQWV NQRZQDV([HUFLVH635,1*+$:.RFFXUVLQ $SULODQGIRUPVWKHODVWPDMRUSHULRGRIWUDLQLQJ EHIRUHWKHVWDUWRIWKH6XPPHUGLVSOD\VHDVRQ 'XULQJWKLVGHWDFKPHQWZHSXWWKHÀQDOSROLVK RQWKHGLVSOD\DQGFRPSOHWHWKHÀQDOZRUNXS SULRUWRRXUELGWREHDZDUGHG3XEOLF'LVSOD\ $XWKRULW\3'$ E\RXU&RPPDQGHULQ&KLHI :HQHHGWREHJUDQWHGWKLVGLVSOD\DXWKRULW\ EHIRUHZHDUHDEOHWRSHUIRUPEHIRUHWKHSXEOLF GXULQJWKH6XPPHUPRQWKV7KH&RPPDQGHU LQ&KLHIVSHQGVVHYHUDOGD\VZLWKWKH7HDPERWK Á\LQJDVDSDVVHQJHUGXULQJWUDLQLQJVRUWLHVDQG WKHQZDWFKLQJWKHGLVSOD\IURPWKHJURXQG,I KHLVVDWLVÀHGWKDWRXUSHUIRUPDQFHLVVDIHDQG XSWRWKHKLJKVWDQGDUGVH[SHFWHGRIWKH7HDP KHJUDQWV3'$,WZRXOGEHDQXQGHUVWDWHPHQW WRVD\WKDWWKLVLVDELJRFFDVLRQIRUXV$VVRRQ DV3'$KDVEHHQJUDQWHGLWLVWUDGLWLRQDOIRUWKH 7HDPWRFKDQJHLQWRWKHUHGÁ\LQJVXLWVZRUQ RQO\GXULQJWKH6XPPHUGLVSOD\VHDVRQ$IWHU VL[PRQWKVRIVHOIGRXEWDQGZRUU\VRPHWLPHV YHUJLQJRQGHVSDLU,EHJDQWRIHHOOLNHD¶SURSHU· 5HG$UURZIRUWKHÀUVWWLPH·
3RVW6FULSW$IWHUDVXFFHVVIXOÀUVW\HDURQWKH 5HG$UURZV)OLJKW/LHXWHQDQW'DQ6LPPRQVZDV FKRVHQWREHFRPHRQHRIWKHSUHVWLJLRXV¶6\QFKUR 3DLU·DQGZLOOÁ\DV5HGLQWKHVHDVRQ
1XPEHU$&&
6WLYH[PVU :V[OLYL^L^LYLKLWSV`LK[V[OLOPNOLZ[WVPU[PU*`WY\ZPUTPK >PU[LYILMVYLILPUNYL[HZRLK[VZV\[OLYUJLU[YHS0YHXQ\Z[HZ[OL KLZLY[JVUKP[PVUZYLHJOLK[OLPYTVZ[PUOVZWP[HISL1\Z[HUV[OLY `LHYPU[OLSPMLVM5\TILY(PY*VU[YVS*LU[YL
+RZWRJRIURP&WR&LQQLQHZHHNV
;,30*
:LQJ&RPPDQGHU%RE-RQHV
;
RVWDUWDWWKHEHJLQQLQJ1XPEHU$LU&RQWURO &HQWUHRUDVLWLVPRUHFRPPRQO\NQRZQ$&& ZDVÀUVWIRUPHGVRPH\HDUVDJREXWZLWKLQVL[ PRQWKVIRXQGLWVHOIRQDQRSHUDWLRQDOGHSOR\PHQWLQ VXSSRUWRIWKH%ULWLVK*RYHUQPHQW·VUHVSRQVHWRWKH 5KRGHVLDQ8QLODWHUDO'HFODUDWLRQRI,QGHSHQGHQFH RI1RYHPEHU7KH8QLWGHSOR\HGWR/XVDND =DPELDIURP'HFHPEHUWR$XJXVWDQG FRQGXFWHGVXUYHLOODQFHRIWKHERUGHUDLUVSDFHDQG FRQWUROOHGWKH-DYHOLQVRI6TXDGURQEDVHGDW /XVDNDDQG1GROD$QGWKDWZDVLWDSDUWIURP DEULHIH[FXUVLRQWRVXSSRUWWKH)DONODQGV:DULQ WKHUHZHUHQRPRUHRSHUDWLRQDOGHSOR\PHQWV &RQVHTXHQWO\WKH8QLWZDVGLVEDQGHGLQ1RYHPEHU DQGUHYHUWHGHYHQWXDOO\WREHLQJFDOOHG 1XPEHU6LJQDOV8QLW+RZHYHURQHRI WKHOHVVRQVLGHQWLÀHGIURPWKH*XOI:DULQ ZDVWKDWWKH5$)ODFNHGDWUXO\H[SHGLWLRQDU\DLU FDSDELOLW\2QHRIPDQ\RUJDQL]DWLRQDOFKDQJHV WKDWIROORZHGVDZ1XPEHU6LJQDOV8QLWUHORFDWH WR5$)%RXOPHULQ1RUWKXPEHUODQGDQG$&&ZDV ÀQDOO\UHHVWDEOLVKHGWKHUHLQ 7RGD\$&&LVGHFODUHGWRWKH8.·V-RLQW5DSLG 5HDFWLRQ)RUFHZKLFKPHDQVWKDWWKH8QLW·VSHUVRQQHO DQGHTXLSPHQWDUHFRQVWDQWO\KHOGDWDKLJKVWDWHRI UHDGLQHVVVRWKDWWKH\FDQGHSOR\UDSLGO\DQ\ZKHUH LQWKHZRUOGWRSURYLGHDJURXQGEDVHGWDFWLFDODLU FRPPDQGDQGFRQWUROFDSDELOLW\)RUWKRVHRI\RX ZKRDUHIDPLOLDUZLWKWKH5$)·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
5HFRJQL]HG$LU3LFWXUH5$3 ZKLFKPHDQVNQRZLQJ ZKDWHYHU\Á\LQJDLUSODWIRUPLVLQRXUGHVLJQDWHG DLUVSDFH,IDQ\WKLQJIOLHVWKURXJKRXUDLUVSDFH ZHZLOONQRZZKDWLWLVZKHUHLWKDVFRPHIURP DQGZKHUHLWLVJRLQJ,IZHGRQ·WWKHQZHXVHRXU :HDSRQV&RQWUROOHUVWRGLUHFWÀJKWHUDLUFUDIWWRZDUGV DQ\XQNQRZQDLUSODWIRUPVVRWKDWWKHSLORWVFDQ PDNHDYLVXDOLGHQWLÀFDWLRQ7RFRQWUROWKHÀ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ÀQGRXUVHOYHVLQ&\SUXVLQ -DQXDU\":HOOWUXWKIXOO\DQGIRURQFHOXFN ZDVRQRXUVLGH:LWKWKH¶6HFRQG*XOI:DU·PLOLWDU\ SUHSDUDWLRQVZHOOXQGHUZD\SROLWLFDOGHYHORSPHQWV UHVXOWHGLQWKHIDFLOLWLHVRIVRPHQHLJKERXULQJ FRXQWULHVWR,UDTQRWEHLQJDYDLODEOHWR&RDOLWLRQ SDUWQHUVLQWXUQWKLVPHDQWWKDWWKH$:$&6FRXOG QRWRSHUDWHIURPLWVHVWDEOLVKHG0HGLWHUUDQHDQ EDVHV7KHUHVXOWZDVDUHTXLUHPHQWWRSURYLGHD VXUYHLOODQFHUDGDULQ&\SUXVZKHUH5$)$NURWLUL ZDVWRSOD\VXFKDSLYRWDOUROHDVD)RUZDUG 0RXQWLQJ%DVH)RUWXQDWHO\$&&KDGDOUHDG\
GHSOR\HGRQHRILWVUDGDUVWR0RXQW2O\PSXV LQ&\SUXVDQXPEHURI\HDUVDJRDQGVRLWZDV GHFLGHGWKDWWKH8QLWVKRXOGGHSOR\WRSURYLGH D5$3WZR:HDSRQV&RQWURORSHUDWRUSRVLWLRQV DQGHDUO\ZDUQLQJRIDQ\SRWHQWLDODLUDWWDFN DJDLQVW5$)$NURWLUL2Q-DQXDU\$&& HPEDUNHGRQLWVÀUVWRSHUDWLRQDOGHSOR\PHQWIRU \HDUVDQGPRQWKV 7KHUHZDVVRPHWKLQJTXLWHVXUUHDODERXW GHSOR\LQJWR0RXQW2O\PSXVLQGHHSHVW ZLQWHUZKHQRIDOORWKHUIRUFHVHPEDUNLQJ RQ2SHUDWLRQ7(/,&ZHUHEHLQJVHQWLQWRKRW GHVHUWFRQGLWLRQV1RQHWKHOHVVWKHVQRZIDOO LQFLGHQWDOO\WKHZRUVWRQ&\SUXVIRU\HDUV ZDVVRPHWKLQJGLIIHUHQWDOWKRXJKGD\VXSRQGD\V RIEOL]]DUGDQG¶ZKLWHRXW·FRQGLWLRQVSURYLGHG MXVWDVPXFKRIDFKDOOHQJHDVZRUNLQJLQGHVHUW VDQGVWRUPV7KHFROGHVWWHPSHUDWXUHWKDWZH HQGXUHGLQWKHZLQGFKLOOZDVUHFRUGHGDW& +RZHYHUWKHZRUNURXWLQHZDVTXLFNO\HVWDEOLVKHG DQGZHGHFODUHGD)XOO2SHUDWLQJ&DSDELOLW\RQ )HEUXDU\)URPWKHQRQZHSURYLGHGDQ DLUSLFWXUHWRWKHKLJKHUFRPPDQGKHDGTXDUWHUVLQ &\SUXVWKH:LQJ2SHUDWLRQV&HQWUHDW5$)$NURWLUL DQGWRWKH861DY\·VWK)OHHWZKLFKZDVRSHUDWLQJ LQWKHHDVWHUQ0HGLWHUUDQHDQ,QLWLDOO\ZHKDG H[SHFWHGWRSURYLGHDQDLUFUDIWFRQWUROVHUYLFHWR WKHVPDOOFRQWLQJHQWRI5$)DLUFUDIWEDVHGDW $NURWLUL+RZHYHUWKHXQDYDLODELOLW\RIEDVHV LQ7XUNH\UHVXOWHGLQDODUJHSURSRUWLRQRIWKH 86$)·VDLUUHIXHOOLQJDLUFUDIWUHORFDWLQJWR&\SUXV ZKLFKLQWXUQSURYLGHGFRQVLGHUDEO\PRUHFRQWURO ZRUNIRU$&&WKDQZHKDGDQWLFLSDWHG:LWK WZR861DY\1LPLW]FODVVDLUFUDIWFDUULHUVLQWKH DUHDHDFKZLWKLWVRZQFRPEDWDLUJURXSRQERDUG WKHZRUNXSWKHSKDVHRIWKH2SHUDWLRQOHDGLQJ XSWRKRVWLOLWLHV ZDVLQWHQVHEXWWKURXJKJRRG FRRUGLQDWLRQZLWKWKH861DY\ZHSURYLGHGDOOWKDW WKH\UHTXLUHG)RUPXFKRIWKHZDUÀJKWLQJSHULRG ZHFRQWLQXHGWRSURYLGHD5$3DQGFRQWUROOHGDOO ZLGHERGLHGPLOLWDU\DLUFUDIWRSHUDWLQJIURP5$) $NURWLULDQGLQWKHVSDFHRIVL[ZHHNVFRQWUROOHG RYHUPLVVLRQV 0HDQZKLOHDVWKHÀJKWLQJFRQWLQXHG$&& ZDVDOUHDG\EHLQJFRQVLGHUHGIRUDIXUWKHUWDVN LQWKHSRVWFRQÁLFWSKDVHRIWKH2SHUDWLRQ7KH 86&HQWUDO&RPPDQGZDVHDJHUWRVWDQGGRZQ DQXPEHURIWKH86JURXQGUDGDUXQLWVWKDW KDGEHHQKHDYLO\WDVNHGVLQFHWKHEHJLQQLQJRI WKH¶:DURQ7HUURULVP·LQ2FWREHU7KURXJK WKH8.·V3HUPDQHQW-RLQW+HDGTXDUWHUVWKHRUGHU FDPHIRU$&&WRGHSOR\WR,UDT:LWK$&&·V WDVNLQ&\SUXVFRPSOHWHWKH8QLWUHWXUQHGWR 5$)%RXOPHURQ$SULOIRUDTXLFNSHULRG RIUHFXSHUDWLRQWUDLQLQJDQGUHNLWWLQJEHIRUH UHGHSOR\LQJWR,UDTLQPLG0D\ 7DOOLO$LU%DVHDIRUPHU,UDTL$LU)RUFHDLUÀHOG ZDVWREHRXUQH[WGHVWLQDWLRQ7DOOLOVLWVRQWKH HGJHRIWKH(XSKUDWHV5LYHUÁRRGSODLQVDQGLV VXUURXQGHGE\DUDEOHODQG7DOOLOKRZHYHUVLWVLQ DGXVWERZOGXVWWKDWLVIUHTXHQWO\ZKLSSHGXS LQWRZKDWWKHORFDOVUHIHUWRDV¶VLPRRPV·WRUQDGR OLNHZLQGVWKDWSURYLGHDIDVFLQDWLQJVLJKW7KH VDPHFDQQRWEHVDLGIRUWKHVDQGVWRUPVZKLFKDW WKDWWLPHRI\HDUFDQODVWIRUGD\VDWDWLPHDQG UHGXFHYLVLELOLW\WRPHWUHVRUOHVV-XVWWRWKH
QRUWKRI7DOOLO$LU%DVHLVWKHWHPSOHRI8UDÀQH 0HVRSRWDPLDQH[DPSOHRID=LJJXUDWDVWHSSHG WHPSOHSODWIRUP DQGLVSXUSRUWHGO\WKHELUWKSODFH RI$EUDKDPWKH¶*UHDW0DQRIWKH2OG7HVWDPHQW· :LWKLQWKHDLUÀHOGWKHLQIUDVWUXFWXUHKDGEHHQ KHDYLO\GDPDJHGRYHUWKHFRXUVHRIERWK*XOI :DUVEXWWKHUXQZD\VZHUHOHIWLQUHPDUNDEO\ JRRGFRQGLWLRQ86IRUFHVHQWHUHG7DOOLOWRZDUGV WKHHQGRI0DUFKVHFXUHGWKHDLUÀHOGDQGSXVKHG WKHEDWWOHRQWKURXJKWKHORFDOWRZQRI$Q 1DVLUL\DKVL[NLORPHWUHVQRUWKRI7DOOLO%\WKH WLPH$&&DUULYHGWKHRIÀFLDOZDUÀJKWLQJKDG ÀQLVKHGDOWKRXJKQRRQHVHHPHGWRKDYHWROGWKH ,UDTLIRUFHVDQGVSRUDGLFÀJKWLQJZDVVWLOOJRLQJ RQ¶RXWVLGHWKHZLUH·DOWKRXJKEHFRPLQJPRUHDQG PRUHVSRUDGLF7KHWKUHDWZDVVWLOOYHU\UHDO ZLWQHVVHGE\WKHFRQVWDQWPRYHPHQWRIDUPRXUHG URDGFRQYR\VPRYLQJLQWRDQGRXWRIWKH$LU %DVHDQGDLUFUDIWFUHZVXVLQJWKHDLUÀHOGDWQLJKW ZLWKRQO\QLJKWYLVLRQJRJJOHVWRDVVLVWWKHP 7KH$&&DGYDQFHSDUW\ZDVGHSOR\HG WR7DOOLO$LU%DVHRQ0D\ZLWKWKHPDLQ SDUW\RISHUVRQQHODQGHTXLSPHQWGHSOR\LQJ EHWZHHQ0D\DQG-XQH:HVLWHG WKHUDGDULQWKHQRUWKZHVWVHFWRURIWKHDLUÀHOG DQGSODFHGWKH7$&&LQVLGHRQHRIWKHGLVXVHG +DUGHQHG$LUFUDIW6KHOWHUVWKDWKDGEHHQGDPDJHG GXULQJWKH)LUVW*XOI:DUDERXWKDOIDPLOHVRXWK RIWKHUDGDU:LWKWKHWULFNOHIHHGRIHTXLSPHQW WKHGHWDFKPHQWZDVTXLFNO\DEOHWREXLOGWKHUDGDU HVWDEOLVKWKH7$&&DQGFRQFHQWUDWHRQJHWWLQJ WKHHTXLSPHQWLQWRDVHUYLFHDEOHFRQGLWLRQ2QH RIWKHPRVWVLJQLÀFDQWFKDOOHQJHVIDFLQJXVZDV WKHLQFHVVDQWKHDW1RWWKHKLJK&WRORZ& WHPSHUDWXUHVZHKDGEHHQWROGWRH[SHFWEXWWKH KLJKVDQGORZVZHIRXQGRXUVHOYHVZRUNLQJ LQ:HQHHGHGWRGULQNDPLQLPXPRIVL[WRHLJKW OLWUHVRIZDWHUDGD\WRDYRLGGHK\GUDWLRQDQG ZHOLYHGRIIPDQUDWLRQSDFNVIRRGGHVLJQHG ZLWKRXWÁDYRXUEXWWRVWRS\RXIURPIHHOLQJ KXQJU\WKUHHWLPHVDGD\,WLVDFUHGLWWRDOOWKH SUHGHSOR\PHQWWUDLQLQJWKDW$&&DQGDWWDFKHG SHUVRQQHOXQGHUWRRNWKDWQRRQHVXIIHUHGWKH HIIHFWVRIKHDWVWUHVVRUGHK\GUDWLRQ 7KURXJKDOOWKLVRXUHQJLQHHULQJFUHZV PDQDJHGWRJHWWKHUDGDUZRUNLQJVR,FRXOG GHFODUHDQ,QLWLDO2SHUDWLQJ&DSDELOLW\RQ0D\ ,WWRRNDQRWKHUZHHNWRJHWWKHODVWHOHPHQWVLQ SODFHDQGZHGHFODUHGD)XOO2SHUDWLQJ&DSDELOLW\ DWDPRQ-XQH7KHIROORZLQJGD\VZHUH QRWZLWKRXWVLJQLÀFDQWHQJLQHHULQJFKDOOHQJHV DVLQWKRVHHDUO\GD\VLQ7DOOLOWKHDLUWHPSHUDWXUH FRQVLVWHQWO\UHDFKHGRYHU&,QIDFWRQWKH DIWHUQRRQRI-XQHWKHDPELHQWDLUWHPSHUDWXUH RQWKHDLUÀHOGUHDFKHGDVWDJJHULQJO\KRW& E\SP:LWKDIRUHWDVWHRIWKH6XPPHUWR FRPHHYHU\RQHUHDOLVHGWKDWLWZRXOGEHD FRQVWDQWÀJKWWRNHHSWKHVHQVLWLYHHTXLSPHQWFRRO HQRXJKWRIXQFWLRQ%\-XQHWKH&RPELQHG$LU 2SHUDWLRQV&HQWUH&$2& ZDVFRQÀGHQWHQRXJK LQRXUDELOLW\WRSHUIRUPRXUWDVNVUHOLDEO\WKDWWKH\ WRRNWKHGHFLVLRQWRVWDQGGRZQWKH860DULQH &RUSV8QLWZHKDGEHHQVHQWRXWWRUHSODFH 2YHUWKHIROORZLQJGD\VDQGQLJKWVDQGZLWK PXFKLQJHQXLW\DQGJXLOHPDQ\RIWKHVROXWLRQV ZRXOGKDYHKDG+HDWK5RELQVRQEHDPLQJZLWK
SULGH RXUHQJLQHHUVZRUNHGZRQGHUVDQGPDQDJHGWRNHHS WKH8QLWRSHUDWLRQDO:HNQHZZHZHUHLQIRUDGLIÀ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Á\LQJLQVXSSRUWRIWKH86JURXQGIRUFHVWKDWZHUHVWLOO HQFRXQWHULQJODUJHSRFNHWVRIUHVLVWDQFHLQWKHFHQWUDODQG QRUWKHUQUHJLRQVRI,UDTQHHGHGHYHU\RQHWREHSDUWLFXODUO\ IRFXVHGRQWKHLUWDVN:HZHUHDOVRDOORFDWHGWZRDLUUHIXHOOLQJ DUHDVWRFRQWURODQGPXFKRIWKHQRQFRPEDWVXSSRUW WUDIÀFVXFKDVPLOLWDU\DLUWUDQVSRUWDLUFUDIW DOVRFDOOHGXS ¶&URZEDU·$&&·VRSHUDWLRQDOFDOOVLJQIRUDVHUYLFH $OOWKLVSURYLGHGYDOXDEOHSUHSDUDWLRQIRUWKHHYHQWVRI -XQHZKHQDJURXQGLQFLGHQWZDVUHSRUWHGLQWKH QRUWKHDVWRIRXUDUHDRIRSHUDWLRQV:HZHUHWDVNHGE\WKH &$2&WRFRQWURO)(DQG)$ÀJKWHUERPEHUDLUFUDIW WRDVVLVWZLWKDVLWXDWLRQWKDWKDGGHYHORSHGWRWKHVRXWKRI $O$PDUDKDSSUR[LPDWHO\NLORPHWUHVQRUWKRI%DVUD%\ XVLQJWKHDLUUHIXHOOLQJDLUFUDIWWRDFWDVDFRPPXQLFDWLRQV UHOD\SODWIRUPZHZHUHDEOHWRVWD\LQFRQWDFWZLWKWKHÀJKWHU DLUFUDIWIRUPXFKRIWKHLUVRUWLHVDQGWKURXJKDQDWPRVSKHULF TXLUNZHZHUHDOVRDEOHWRVSHDNGLUHFWO\WRD%ULWLVK$UP\ KHOLFRSWHUWKDWZDVDOVRZRUNLQJLQWKHDUHDLQVXSSRUWRI WKHPLVVLRQ7KHÀ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ÀJKWHUERPEHU$WWKHWLPHRIZULWLQJZHKDGSURYLGHGD FRQWUROVHUYLFHWRRYHUPLVVLRQVEXWLWZDVQRWLFHDEOH WKDWWKHOHYHORIPLOLWDU\WUDIÀFZDVEHJLQQLQJWRUHFHGHDV WKHJURXQGFRQGLWLRQVEHFDPHPRUHEHQLJQ$VDUHVXOWWKH QXPEHURIFLYLOLDQDLUVSDFHXVHUVEHJDQWRLQFUHDVHDQGDWODVW DGHJUHHRIQRUPDOLW\VWDUWHGWRUHWXUQ+RZHYHUWKHUHZDV VWLOODVLJQLÀFDQWDPRXQWRILQVWDELOLW\WKURXJKRXW,UDTDQG WKHUHZDVWKHSRVVLELOLW\WKDWUHVLVWDQFHFRXOGÁDUHXSDJDLQ DQGZHPLJKWEHFDOOHGXSRQWRSURYLGHDLUSRZHUWRVXSSRUW JURXQGIRUFHV $VRXU$PHULFDQFROOHDJXHVZRXOGVD\¶LW·VEHHQRQH KHOOXYD\HDU·$&&ZLOOFRQWLQXHWRVXSSRUW2SHUDWLRQ 7(/,&XQWLORXUSUHVHQFHLVQRORQJHUUHTXLUHG7KH8QLW·V VXFFHVVIXOFRQWULEXWLRQWRWKH2SHUDWLRQKDVVKRZQWKDWWKH 5$)KDVDQRWKHU¶VWULQJWRLWVERZ·WRRIIHUD&RDOLWLRQIRUFHRI WKHIXWXUH7KHZKROHH[SHULHQFHKDVEHHQKXJHO\UHZDUGLQJ IRUDQ\RQHWKDWKDVEHHQGLUHFWO\LQYROYHGDQGZHKDYHSURYHG WKDWXQGHUWKHPRVWWHVWLQJRIFRQGLWLRQVLQDGHPDQGLQJ RSHUDWLRQDOWKHDWUH$&&LVXSWRWKHMRE
6RWKDW·VKRZ\RXJHWIURP&WR&LQQLQHZHHNV
63257*/,',1*:,7+ 6HUJHDQW3HWH6WUDWWHQ
.SPKPUNZPSLU[S`HSVUNZPKLHZOLLY NYHUP[L YVJRMHJL H[ MLL[ HUKNSHUJPUNHJYVZZ[OLUHYYV^ ]HSSL` [V [OL KLZLY[LK NYL`PUN ZRPZSVWLZ*VYWVYHS4H[[:TP[O HU9(-[LJOUPJPHUWVUKLYZOPZ UL_[TV]L
4
DWWLVRQWKHUHWXUQOHJRIDÀYHKRXUFURVVFRXQWU\ VRDULQJÁLJKWWKURXJKWKH6RXWKHUQ)UHQFK$OSV $OWKRXJKWKHPHWUHVSDQXOWUDPRGHUQJOLGHU KHLVÁ\LQJZLOOWUDYHODURXQGNPIRUHYHU\ PHWUHVORVVRIKHLJKW0DWWLVVWLOOVRPHNP IURPKLVEDVHDLUÀHOGDQGQHHGVWRFURVVDIW KLJKULGJHWRSURJUHVVLQWRWKHQH[WYDOOH\RQKLV URXWHVRXWK 7KHZLQGGHÁHFWHGXSZDUGVE\KLVFKRVHQURFN IDFHLVNHHSLQJKLPDLUERUQHEXWLWLVQRWVWURQJ HQRXJKWROLIWKLPWKDWH[WUDIHHW+LVRSWLRQV DUHVHYHUHO\OLPLWHG$QHPHUJHQF\ODQGLQJDWRQH RIWKHIHZUHPRWHVWULSVLQWKLVDUHDZRXOGPHDQD WZRGD\URDGUHFRYHU\YLD*UHQREOHVRLWLVWLPH IRUPD[LPXPFRQFHQWUDWLRQ6XGGHQO\KHVSRWVD EHDXWLIXOVLJKWDQHDJOHWXUQLQJHIIRUWOHVVO\ZLQJV RXWVWUHWFKHGDERYHDQHDUE\URFN\RXWFURS(YHQ EHWWHUWKHPDJQLÀFHQWFUHDWXUHLVFOLPELQJIDVWD VXUHVLJQRIWKHXSFXUUHQWWKDW0DWWQHHGV$VKH RYHUÁLHVWKHVDPHVRXWKIDFLQJURFN0DWWIHHOV KLVJOLGHUVXUJHXSZDUGV,PPHGLDWHO\KHPLUURUV WKHHDJOH·VWXUQDQGDVWKH\ERWKVSLUDOXSLQWKH VXQZDUPHGULVLQJDLUKHZDWFKHVWKHPRXQWDLQIDOO DZD\EHQHDWKKLP %XWKRZGRHVKHVWD\DLUERUQHDQGWUDYHO KXQGUHGVRIPLOHVZLWKRXWSRZHU" 7KHDLUÁRZLQJRYHUWKHZLQJVRIDQDLUFUDIW PRYLQJWKURXJKWKHVN\SURYLGHVWKHXSIRUFH RUOLIWWKDWVXSSRUWVWKHZHLJKWRIWKHDLUFUDIW$ WRQQHMXPERMHWZLOOQHHGWRÁ\DWPSKWR SURYLGHHQRXJKOLIWZKHUHDVDOEJOLGHUPD\ RQO\QHHGWRÁ\DWPSK%XWXQOLNHDMXPER WKDWLVHTXLSSHGZLWKSRZHUIXOHQJLQHVWRSXVKLW WKURXJKWKHDLUDJOLGHUKDVWRÁ\DGRZQKLOOSDWK WRNHHSWKHDLUÁRZLQJDWDVXIÀFLHQWVSHHGRYHU LWVZLQJV6RLIDJOLGHULVDOZD\VÁ\LQJDJHQWOH GRZQKLOOVORSHKRZFDQLWVWD\DLUERUQHIRUORQJHU WKDQDIHZPLQXWHVDWDWLPHOHWDORQHÁ\KXQGUHGV RIPLOHVZLWKRXWODQGLQJ"7KHDQVZHULVIDLUO\ VLPSOH,IWKHDLULVULVLQJIDVWHUWKDQWKHJOLGHULV
GHVFHQGLQJWKHQHWUHVXOWLVDJOLGHUWKDWLVULVLQJ 7KHIDVWHUWKHDLUULVHVWKHJUHDWHUWKHJOLGHU·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ÁLHVVWUDLJKWIRUDIHZPLOHVVRPHWLPHV LQVLQNLQJDLUEXWKRSHIXOO\LQULVLQJDLUDQG HYHQWXDOO\KDYLQJFRQYHUWHGWKHKHLJKWJDLQHGLQWR GLVWDQFHÁRZQDW\SLFDOUDWLRLVPLOHVIRUHYHU\ IHHWRIKHLJKWORVW WKHSLORWDJDLQFLUFOHVLQD WKHUPDOWRUHJDLQKHLJKWDQGVRWKHÁLJKWFRQWLQXHV 2IFRXUVHVHHLQJULVLQJDLULVQH[WWR LPSRVVLEOH*OLGHUSLORWVUHO\RQYLVXDOFXHV OLNHWKHWHOOWDOHFRWWRQZRROOLNHFORXGVWKDW PDUNWKHWRSRIFROXPQVRIULVLQJWKHUPDOVRUE\ QRWLQJELUGVVSLUDOOLQJXSZDUGVZLWKRXWÁDSSLQJ WKHLUZLQJVOLNHWKHHDJOHPHQWLRQHGHDUOLHU ,QVWUXPHQWVLQWKHJOLGHUVKRZZKHWKHUWKHJOLGHU LVGHVFHQGLQJRUULVLQJ6RE\FRPELQLQJWKH ELJSLFWXUHFXHVOLNHFORXGVDQGRWKHUXVHUVRI WKHUPDOVZLWKLQVWUXPHQWUHDGLQJVLQWKHJOLGHU DQH[SHULHQFHGJOLGHUSLORWFDQEXLOGDPHQWDO SLFWXUHRIZKHUHWKHWKHUPDOVDUHULVLQJ,WLVQRW XQFRPPRQIRUJOLGHUSLORWVLQWKH8.WRXWLOLVH WKHUPDOVGXULQJDQDIWHUQRRQWRÁ\SODQQHG URXWHVRIPRUHWKDQPLOHVZLWKRXWODQGLQJ,Q FRXQWULHVWKDWHQMR\VWURQJHUVXQOLJKWWKHPRUH SRZHUIXOWKHUPDOVHQDEOHJOLGHUVWRFOLPEKLJKHU
7+(5$)
DQGIDVWHUDOORZLQJPXFKJUHDWHUGLVWDQFHVWREH FRYHUHGLQDVLPLODUWLPH 0HDQZKLOHPLQXWHVODWHUEDFNRYHUWKHURFNIDFH KDYLQJJDLQHGDIHZWKRXVDQGIHHW0DWWOHYHOVRII DERYHWKHVQRZWRSSHGPRXQWDLQSHDNV6DIHO\FOHDU RIWKHMDJJHGURFNVKHKDVDEUHDWKLQJVSDFHWRDEVRUE WKHDZHVRPHEHDXW\RIWKHODQGVFDSHDQGWRUHÁHFWRQ WKHWRSFODVVWUDLQLQJWKDWJRWKLPWKHUH 0DWWVWDUWHGÁ\LQJZLWKWKH5$)*OLGLQJ 6RDULQJ $VVRFLDWLRQ5$)*6$ WKH5$)·VVSRUWJOLGLQJ RUJDQLVDWLRQZKLFKRZQVJOLGHUVGLVWULEXWHGDW 5$)*6$FOXEVORFDWHGRQPLOLWDU\DLUÀHOGVWKURXJKRXW WKH8.6L[RIWKRVHJOLGHUVDUHXVHGIRUPLGZHHN FRXUVHVKHOGDWWKH-RLQW6HUYLFHV$GYHQWXUH7UDLQLQJ *OLGLQJ&HQWUHDW5$)%LFHVWHULQ2[IRUGVKLUHZKHUH 0DWWKDGKLVÀUVWWDVWHRIVRDULQJÁLJKW3HUVRQQHO RIDOOUDQNVDQGDOOWKUHH6HUYLFHVFDQH[SHULHQFH DGYHQWXURXVWUDLQLQJWKURXJKWKHPHGLXPRIJOLGLQJ RQWKHVHFRXUVHVDQGDVHFRQGDU\DLPLVWRWUDLQ SHRSOHIRUVRORÁLJKW$VXUSULVLQJQXPEHUDFKLHYH WKDWVWDQGDUGDIWHUMXVWÀYHGD\V·WUDLQLQJZLWKRXW DQ\SUHYLRXVJOLGLQJH[SHULHQFHDQG0DWWZDVRQH RIWKHP9HU\HDUO\LQKLV6HUYLFHFDUHHULQFLGHQWDOO\ KDYLQJDOUHDG\MRLQHGDQ5$)*6$FOXE 0DWW DWWHQGHGWKH%LFHVWHUFRXUVHDQGZDVTXLFNO\ELWWHQ E\WKHJOLGLQJ¶EXJ·2YHUWKHQH[WPRQWKVKHEXLOW RQWKLVEDVLFWUDLQLQJE\ZRUNLQJDQGÁ\LQJDWKLV ORFDO5$)*6$FOXEGXULQJKLVRIIGXW\WLPH,QSRRU ZHDWKHUKLVHQJLQHHULQJDQGDGPLQLVWUDWLYHVNLOOVZHUH SXWWRJRRGXVHLQKHOSLQJZLWKWKHVPRRWKUXQQLQJ RIWKHFOXE:KHQFRQGLWLRQVZHUHVXLWDEOHIRUÁ\LQJ KHOHDUQHGKRZWRJHWDLUERUQHWRH[SORLWGLIIHUHQW VRXUFHVRIULVLQJDLUWRVWD\DORIWDQGWRGHDOZLWKDOO WKHFKDOOHQJHVRIÁ\LQJDQHQJLQHOHVVDLUFUDIWRXWRI JOLGLQJUDQJHRIKLVKRPHDLUÀHOG 7KHQH[WVWHSZDVWROHDUQKRZWRÁ\DJOLGHUDFURVV FRXQWU\DWKLJKVSHHGIROORZLQJDSUHSODQQHGURXWH
RYHUDQXPEHURIJURXQGIHDWXUHV:KLOVWFURVV FRXQWU\WUDLQLQJLVDYDLODEOHLQWKH8.WKHUHDUHIHZ EHWWHUSODFHVWRGHYHORSWKLVVNLOOWKDQWKHHQRUPRXV GU\SODLQVRI$XVWUDOLDZKHUHKRXUVRIVXQVKLQH DQGHQGOHVVÁ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ÀUVWIXOOVHDVRQRIJOLGLQJDWKLV ORFDO5$)*6$FOXE0DWWORVWQRWLPHLQDSSO\LQJIRU DSODFHRQKLVÀUVW5$)*6$H[SHGLWLRQWR'DUOLQJ 'RZQVDERXWNPZHVWRI%ULVEDQH$XVWUDOLD $W\SLFDOGD\RQWKH5$)*6$H[SHGLWLRQWR 'DUOLQJ'RZQVVWDUWVZLWKDZDNHXSFDOOE\WKHORFDO .RRNDEXUUDVDVWKHHDUO\PRUQLQJVXQVWDUWVWRKHDW XSWKHEXVWOLQJEXQNKRXVHDFFRPPRGDWLRQ$IWHU EUHDNIDVWWKHZKROHWHDPKHOSVWRSUHSDUHWKHJOLGHUV IRUÁLJKWZKLFKLQFOXGHVÀOOLQJXSWKHZDWHUWDQNV LQWKHJOLGHU·VZLQJV$JOLGHUFDQQHDUO\GRXEOHLWV ZHLJKWZLWKWKLVDGGHGZDWHUEDOODVWDQGJLYHQD ZHDWKHUIRUHFDVWWKDWVXJJHVWVVWURQJWKHUPDOVPRVW JOLGHUSLORWVZLOOORDGXSWKHLUJOLGHUVZLWKJDOORQV DQGJDOORQVRIZDWHUQHDUO\JDOORQVLQVRPHFDVHV SULRUWRJHWWLQJDLUERUQHWKXVDOORZLQJWKHKLJKHVW SRVVLEOHFUXLVLQJVSHHGVWREHDFKLHYHGEHWZHHQ WKHUPDOV7KHEHVWJOLGHSHUIRUPDQFHRIDQ\SDUWLFXODU DLUFUDIWLVÀ[HGVD\ZKLFKPHDQVWKDWIRUHYHU\ PHWUHVWKHJOLGHUWUDYHOVIRUZDUGLWZLOOGHVFHQG
RQHPHWUH7KHDGGLWLRQRIH[WUD ZHLJKWKRZHYHUPHDQVWKDWWKLVEHVW JOLGHSHUIRUPDQFHFDQEHDWWDLQHG DWKLJKHUVSHHGV7KLVKHOSVWKH JOLGHUSLORWZKHQKHRUVKHZDQWVWR FRYHUORQJFURVVFRXQWU\GLVWDQFHVLQ WKHVKRUWHVWSRVVLEOHWLPHRUZKHQ Á\LQJWKURXJKVLQNLQJDLUGXULQJ WKHVHDUFKIRUQHZWKHUPDOV%XWWKH GLVDGYDQWDJHRIDGGLWLRQDOZHLJKW PHDQVWKDWVWURQJHUWKHUPDOVDUH QHHGHGWRNHHSWKHJOLGHUDORIW VRLIWKHZHDWKHUFKDQJHVDQGWKH WKHUPDOVEHFRPHZHDNWKHZDWHU EDOODVWFDQEHMHWWLVRQHGWRPDNH WKHJOLGHUOLJKWHUDQGKHOSLWJDLQ DOWLWXGHPRUHHDVLO\ $IWHUDOOWKHDLUFUDIWDUH SUHSDUHG0DWWDORQJZLWKWKH RWKHU6HUYLFHPHQDQGZRPHQRQ WKHH[SHGLWLRQWKHQUHFHLYHVD FRPSUHKHQVLYHEULHÀQJZKLFK LQFOXGHVDIRUHFDVWRIWKHGD\·V ZHDWKHUDQ\DLUVSDFHZDUQLQJVDQG GHWDLOVRIWKHFURVVFRXQWU\URXWHVWR EHÁRZQ$OWKRXJK0DWWLVDUHODWLYH EHJLQQHUFRPSDUHGZLWKVRPHRIWKH RWKHUVZKRKDYHWKRXVDQGVRIÁ\LQJ KRXUVEHWZHHQWKHPKHLVWDVNHG ZLWKÁ\LQJDNPWULDQJXODUURXWH DURXQGWZRWXUQLQJSRLQWVDJUDLQ VLORDQGDUDLOZD\MXQFWLRQZKLFKDUH HDV\WRVSRWIURPWKHDLU7KHPRUH H[SHULHQFHGSLORWVSODQWRÁ\PRUH WKDQGRXEOHWKDWGLVWDQFHDNP URXWHXVLQJWKUHHWXUQLQJSRLQWV 1DYLJDWLRQRYHUWKHQHDUIHDWXUHOHVV WHUUDLQLVJUHDWO\DVVLVWHGE\RQ ERDUGVDWHOOLWHQDYLJDWLRQHTXLSPHQW EXWGHVSLWHWKHKHOSIXOWHFKQRORJ\ 0DWWLVNHHQWRSLFNXSWLSVIURPKLV PRUHH[SHULHQFHGFROOHDJXHVKRZWR VSRWWKHEHVWVRXUFHVRIULVLQJDLUIRU H[DPSOHRUWKHEHVWZD\WRQHJRWLDWH WKHWKXQGHUVWRUPVWKDWFDQGHYHORS LQWKHDIWHUQRRQV)RROKDUG\JOLGHU SLORWVLQWKHSDVWKDYHGHOLEHUDWHO\ Á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
WKDWLIRQO\KHFRXOGILQGDQRWKHU WKHUPDOWROLIWKLVJOLGHUWR IHHWKHZRXOGEHDEOHWRFRPSOHWHWKH NPURXWHFRPIRUWDEO\$WMXVW IHHWWKRXJKKHKDVWRVWDUWSODQQLQJ IRUDODQGLQJDZD\IURPKLVKRPH DLUÀHOG,IKHGRHVQRWÀQGDVRXUFH RIOLIWWKHJURXQGLVRQO\PLQXWHV DZD\$VKHRYHUÁLHVDQRXWEDFN VHWWOHPHQWDVVHVVLQJSRWHQWLDO ODQGLQJVLWHVKHIHHOVWKHJOLGHUVXUJH XSZDUGV+LVLQVWUXPHQWVLQGLFDWH WKDWKHKDVÁRZQLQWRDWKHUPDOVR 0DWWFDUHIXOO\WXUQVKLVDLUFUDIWWR VWD\ZLWKLQWKHJHQWO\ULVLQJDLU$ FRXSOHRIWXUQVODWHUWKHDOWLPHWHU VKRZVVWHDGLO\LQFUHDVLQJKHLJKWDQG 0DWWUHOD[HVVOLJKWO\$IWHUDERXW PLQXWHVRIFLUFOLQJKHFKHFNV KLVFDOFXODWLRQVDQGVHWVRIIRQWKH VWUDLJKWNPORQJJOLGHDFURVVWKH ÁDWWHUUDLQWRZDUGVKRPHDQGDZHOO GHVHUYHGFRROEHHU+LVÀUVWNP ÁLJKWKDVWDNHQRQO\DERXWIRXU KRXUVRIÁ\LQJDJRRGSHUIRUPDQFH 7KHQH[WWLPH0DWWH[SHULHQFHV WKLVVHQVHRISHUVRQDODFKLHYHPHQWLV RQKLVVHFRQG5$)*6$H[SHGLWLRQ WKLVWLPHLQWKH6RXWKHUQ(XURSHDQ $OSV7KDQNVWRWKDWHDJOHKHKDV JDLQHGHQRXJKKHLJKWWRVHOHFWD IDVWURXWHKRPHWKURXJKWKHSHDNV DQGIURPWKHQRQWKHÁLJKWJRHV VPRRWKO\7KHUHLVQRWKLQJTXLWH OLNHWKHVDWLVIDFWLRQKHIHHOVZKHQ KHFURVVHVWKHODVWULGJHRQKLVÁLJKW DQGWKHEDVHDLUÀHOGFRPHVLQWRYLHZ +LVH[SHULHQFHVDWKLVKRPH5$)*6$ FOXEDQGLQ$XVWUDOLDKDYHJLYHQKLP WKHVNLOOVDQGMXGJHPHQWWRWDFNOH VRPHRI(XURSH·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
+($576721()(67,9$/ >OH[ SPURZ Ä]L MYVU[SPUL 9(- ZX\HKYVUZ [^V YLZLY]L ZX\HKYVUZ VUL ZLHYJO HUK YLZJ\L \UP[ [^V HPY Z[H[PVUZ HUK HU 0UKPHU KHUJLY& ;OL HUZ^LY PZ H WOV[VNYHWOLY HUK HU VYNHUPZH[PVU JHSSLK /LHY[Z[VUL /VWLM\SS` [OL X\LZ[PVU ^PSS YLMLY[VL]LUTVYL9(-\UP[ZIHZLZHUKWLYZVUULS I`[OL[PTLH-LZ[P]HSVM-SPNO[PZZ[HNLKPUUVY[O LHZ[,UNSHUKPU1\S`VM[OPZ`LHY
/
HDUWVWRQHZKRVHGLUHFWRU6LWDNXPDULLVZHOO NQRZQRQVWDJHZKLFKH[SODLQVWKHÀ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ÁRZQLQWR HDFKORFDWLRQRQ5$)DLUFUDIW7KHUHVXOWZDV DUHTXHVWIURP+HDUWVWRQHWREHDOORZHGWR FRYHUVRPHRIWKH5$)XQLWVWKDWKDGEHHQ LQYROYHGLQWKHYDULRXVFDPSDLJQV 7KHÀUVWDVVLJQPHQWORRNHGDWWKHZRUN RI5$)/RVVLHPRXWKDQGWKHIRXU7RUQDGR VTXDGURQVEDVHGWKHUH7KLVZDVDOPRVW LPPHGLDWHO\H[WHQGHGWRLQFOXGH')OLJKW RI6TXDGURQDQGWKHLU6HD.LQJ+$5
2))/,*+7
KHOLFRSWHUV3KRWRJUDSK\SURMHFWVDOZD\VVWDUW DJDLQVWWKHEDFNGURSWKDWDOPRVWHYHU\RQHORYHV SKRWRJUDSKVEXWDOPRVWHYHU\RQHKDWHVKDYLQJ WKHLUSKRWRJUDSKWDNHQ7KHHDVLHVWZD\DURXQG WKLVSUREOHPLVWRFUHDWHVFHQDULRVDQGWRSRVH HYHU\WKLQJLQWKHP\RXJHWPRVWRIZKDW\RX ZDQWDQGWKHZKROHSURFHVVLVFRPSOHWHGDV TXLFNO\DVSRVVLEOH7KDWLVQRWDQGQHYHUKDV EHHQWKHEULHIIRUD+HDUWVWRQHGRFXPHQWDU\ +HDUWVWRQH·VLGHDLVWRVKRZWKLQJVWKDWKDYH UHDOO\KDSSHQHGDQGJDLQDQLQVLJKWLQWRRWKHU SHRSOHV·OLYHV,QDQDJHRIVSLQDQGWKHPRGHUQ PHGLDLWFDQFHUWDLQO\VHHPUDWKHUROGIDVKLRQHG EXWZKHQLWZRUNVWKHGLIIHUHQFHLVFOHDUDQG WKHUHVXOWVDUHZRUWKWKHHIIRUW:LWKWKHKHOSRI WKH&RUSRUDWH&RPPXQLFDWLRQ2IÀFHUDW5$) /RVVLHPRXWK)OLJKW/LHXWHQDQW-LP$QGHUVRQ 1LFNZDVDEOHWRFRYHUDVPDQ\RIWKHVHFWLRQV DQGRSHUDWLRQVDW5$)/RVVLHPRXWKDVSRVVLEOH LQWKHWLPHDYDLODEOH:KHQWKHSKRWRJUDSKV ZHUHFLUFXODWHGDIWHUWKHVKRRWHYHU\RQHDJUHHG WKDWWKHUHVXOWVZHUHGLIIHUHQWDQGTXLWHVSHFLDO DQGWKHSURMHFWJDLQHGPRPHQWXP 'RFXPHQWDULHVDERXWWKH5$)RIWHQ FRQFHQWUDWHRQWKHDLUFUDIWDQGWKHLUFUHZVDW WKHULVNRILJQRULQJWKHSHRSOHLQWKHVXSSRUW GHSDUWPHQWVZLWKRXWZKRVHZRUNDQG GHGLFDWLRQWKHDLUFUDIWZRXOGQHYHUÁ\7KH +HDUWVWRQHGRFXPHQWDU\DW5$)/RVVLHPRXWK DOPRVWFRPSOHWHO\UHYHUVHGWKLVSURFHVVDQG WKHVXSSRUWSHUVRQQHODUHDQLQWHJUDOSDUWRIWKH HQGSURGXFW+DYLQJEURXJKWKLVXVXDOVNLOOV WRDVWRU\DERXWSHRSOH1LFNIRXQGKLPVHOI DWWKHVLGHRIWKHUXQZD\SKRWRJUDSKLQJWKH 7RUQDGR*5DLUFUDIWWKDWWKHJURXQGVWDII VXSSRUW:KHQWKHSLFWXUHVZHUHVHHQWKH UHVSRQVHRIRQHSLORWZDVW\SLFDO¶:HVKRXOG JHW\RXLQWKHDLU·)RUWXQDWHO\WKH6WDWLRQ &RPPDQGHU*URXS&DSWDLQ6WHYH +LOOLHUDJUHHGDQGDXWKRULVHG1LFN WRÁ\DVRUWLHZLWK6TXDGURQ
&RPSLOHGE\6LWDNXPDUL
7KHVRUWLHZDVDUHVRXQGLQJVXFFHVVDQG WKHSKRWRJUDSKVWDNHQE\1LFNZHUHYHU\ HQWKXVLDVWLFDOO\UHFHLYHG ,WZDVDWWKLVSRLQWWKDWWKHFRQFHSWRI DQH[WHQGHGGRFXPHQWDU\ORRNLQJDWRWKHU 5$)6WDWLRQVDQG6TXDGURQVZDVÀUVW GLVFXVVHG&RYHUDJHZDVH[WHQGHGWR5$) /HXFKDUVDQGWKH7RUQDGR)VTXDGURQV EDVHGWKHUHDQGDQH[KLELWLRQRIWKH PDWHULDOREWDLQHGZDVVWDJHGDVSDUWRIWKH 5$)/HXFKDUV%DWWOHRI%ULWDLQ$LUVKRZLQ )RUWKHSRVVLELOLW\RIPDNLQJWKH GRFXPHQWDU\PXFKPRUHFRPSUHKHQVLYH LVEHLQJVWXGLHG7KHUHLVDORWRIZRUN LQYROYHGIRUWKH5$)DW&RPPDQG6WDWLRQ DQG6TXDGURQOHYHODQGIRUWKH+HDUWVWRQH WHDPEXWWKHIHHOLQJERWKIRU+HDUWVWRQH DQGWKH5$)LVWKDWWKLVLVDQLPSRUWDQW LQLWLDWLYHWKDWMXVWLÀHVWKHHIIRUWEHLQJ H[SHQGHGWRPDNHLWDUHDOLW\ 6LPSO\JHWWLQJWKHSKRWRJUDSKVDQG WHOOLQJWKHVWRU\KRZHYHUJRRGWKHLPDJHV PLJKWQRWEHHQRXJKWRPDNHDOOWKLV HIIRUWZRUWKZKLOHEXWWKHUHLVDJHQXLQH XQGHUO\LQJDLPIRUWKHGRFXPHQWDU\ +HDUWVWRQHVHHVLWVUROHDVFKDOOHQJLQJ PLVFRQFHSWLRQVDQGSODFLQJWKHLVVXHVLQ WKHQHZVLQWKHFRQWH[WWKDWDOOVLGHVRID TXHVWLRQRUHYHQWZLOODOZD\VEHXOWLPDWHO\ DERXWWKHSHRSOHLQYROYHGDQGWKDWSHRSOH WKHZRUOGRYHUDUHQHYHUWKDWGLIIHUHQW +DYLQJVHHQWKHZRUNWKHGRFXPHQWDU\ ZDVSURGXFLQJWKH5$)VDZLWDVDQ RSSRUWXQLW\WRLQFUHDVHLWVRSHQQHVVDQG LWVDFFHVVLELOLW\DQGWRLPSURYHWKHSXEOLF·V XQGHUVWDQGLQJRIWKHZRUNWKDWLWGRHV,W DOVRDOORZVWKH5$)WRUHDFKDQDXGLHQFH WKDWLWGRHVQRWDOZD\VKDYHWKHRSSRUWXQLW\ WRFRQWDFWRUKDYHDQRSHQGLDORJXHZLWK 7KH+HDUWVWRQHGRFXPHQWDU\PDNHVQR GHPDQGVWKDWHYHU\RQHVKRXOGDJUHHZLWK LWVFRQWHQWEXWDVNVWKDWWKH\ORRNDQG FRQVLGHUEHIRUHUHDFKLQJDMXGJHPHQWDQG
FRQWLQXHWDONLQJHYHQLIWKHUHDUHGLIIHULQJ YLHZV7KHDUPHGIRUFHVRIDGHPRFUDF\ VHUYHWKHJRYHUQPHQWDQGWKHSHRSOHRID FRXQWU\DQGDUHXOWLPDWHO\DFFRXQWDEOHWR WKHP&RQWDFWDQGXQGHUVWDQGLQJDUHDQ HVVHQWLDOIRXQGDWLRQRIWKDWDFFRXQWDELOLW\ 1RWRQO\LVWKHUHDGRFXPHQWDU\EXW WKHUHLVDOVRDQHYHQW7KH)HVWLYDORI)OLJKW 7KLVZLOOUXQDVDZHHNORQJHYHQWLQ-XO\ LQ1HZFDVWOHXSRQ7\QH7KHFRUHRI WKLVHYHQWZLOOEHDQH[KLELWLRQIHDWXULQJWKH 5$)SKRWRGRFXPHQWDU\DQGRWKHUUHODWHG +HDUWVWRQHVWRULHVDQGDURXQGWKLVFRUH ZLOOEHDVHOHFWLRQRIVSHDNHUVLQFOXGLQJ VRPHRIWKHDLUFUHZIHDWXUHGLQWKHSLFWXUHV WR¶EULQJWKHVWRU\WROLIH·$GGHGWRWKH H[KLELWLRQZLOOEHFRQWULEXWLRQVIURPWKH PDMRUIDLWKVDQGFXOWXUDOFRPPXQLWLHVIRU ZKRPÁ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ÀFHQW NLWHVWREHGLVSOD\HGDQGÁRZQDWWKH HYHQW)LQDOO\WKHHYHQWZLOOFRQFOXGHZLWK DVSHFWDFXODUGDQFHGUDPDRQWKHWKHPH RIÁLJKWLQYROYLQJPDQ\GLIIHUHQWHWKQLF FRPPXQLWLHVUHVLGHQWLQ%ULWDLQ 7KH+HDUWVWRQH)HVWLYDORI)OLJKWD GRFXPHQWDU\FRPLQJWRDQ5$)DLUVWDWLRQ QHDU\RXDQGDQH[KLELWLRQWRORRNRXWIRU
#$#$!"%#(!!" #" " ($"#
(#"#!! #!!!"#( ! ! &#%!("#!$#%# ! " #!!" "#"# "#!#!"#!!" %!""#!! # #!# !!( !!!#$#!!# % $"!%"#$!&"#
( ! ! %$" %!( %$" $ $ #!$# !!"#% ! #! !! "'$!##!"!$
)(*2*6=,9
5R\DO$LU)RUFH &RUSRUDWH&RPPXQLFDWLRQ *UDSKLF'HVLJQ7RQ\5REHUWV'&&6*UDSKLFV (GLWRULDO6XSSRUW6TXDGURQ/HDGHU$QG\3HUNLQV-6&6& 3ULQWHGLQWKH8.IRU&2,&RPPXQLFDWLRQV$,5) 3ULQWHGE\%HOPRQW3UHVV 3KRWRJUDSKLF&UHGLWV 6JW-DFN3ULWFKDUG6JW.HYLQ*UD\7HFK6JW&HGULF5XGLVLOO &SO&UDLJ)U\HU&SO0DUF-RKQVRQ&SO3DXO6D[E\ 6$&6DUDK%XUURZV(-YDQ.RQLQJVYHOG*HRIIUH\/HH +HDUWVWRQH1LFN6LGOH5HXWHUV5XVVHOO%R\FH%$(6\VWHPV 7KDOHV7UDLQLQJ 6LPXODWLRQ5$)/HHPLQJ5$)/HXFKDUV &URZQ&RS\ULJKW
ZZZUDIPRGXN