Plain-text annual report
Dear Fellow Shareholders,
Novanta delivered a landmark year in 2021. We achieved unprecedented levels of sales, bookings and profit, despite
some significant disruptions in our supply chain and factory operations. As a result of continued investments during
the pandemic, Novanta’s long-term strategic positioning is as good as it has ever been. We booked record design
wins, have a strong innovation pipeline with a continued high level of new product introductions, and enhanced our
robotics exposure with the acquisition and integration of two great businesses (ATI and IMS).
Full year reported revenue was $707 million, a year-over-year increase of 20%, and our Organic Revenue Growth(1)
was approximately 10%. Full year Adjusted EBITDA(1) was $153 million, which is up 26% year over year versus
2020; and, full year Adjusted Diluted Earnings Per Share(1) was $2.62, an increase of 34% versus 2020. We ended
the year with record backlog of $569 million, and close to $1 billion of full year bookings.
We remain laser focused on growing faster than the market with proprietary motion, vision and photonics
capabilities in high growth markets driven by secular industry 4.0, precision medicine and healthcare productivity
trends. We continue to invest heavily in innovation and commercial capabilities to enhance our proprietary
technology position and long-term sustainable growth potential in secular growth applications such as Robotic
Surgery, Minimally Invasive Surgery, DNA Sequencing, Advanced Material Processing and Precision Automation
& Robotics. We are also expanding into intelligent subsystems, resulting in higher content in these applications.
In 2021, we saw excellent momentum and success in our efforts to introduce new innovations to our customers. We
are very excited about the 19 product launches in 2021, which will contribute meaningfully to our growth trajectory
in future years. In 2021, Our vitality index(2) was above 25% of sales, versus mid-single digit percentages a few
years ago. Design wins more than doubled year over year in 2021, which is a huge accomplishment for our
commercial teams. We saw strong design wins in our minimally invasive surgery business, as well as our laser beam
steering and precision motion businesses in high-growth application areas such as surgical robotics, laser-additive
manufacturing, micromachining, and electric vehicle battery welding.
We also had success in 2021 by closing on two excellent acquisitions. In the third quarter we acquired ATI and IMS,
both into our Precision Motion segment. These are both fantastic businesses which are excellent strategic additions
to Novanta, expanding our positions in high growth markets. Both businesses are progressing very well with a strong
market tailwind in robotics and automation demand. We are also very impressed by the performance and the
engagement of the ATI and IMS teams and their strong pull for the Novanta Growth System tools. Acquisitions
continue to be the primary focus of Novanta’s capital deployment
Overall, this impressive year comes directly as a result of the tireless efforts of our dedicated teams. I remain
incredibly impressed with how the Novanta team stuck together, continued innovating, and welcomed new
coworkers into our family, all while working remotely and socially distanced. This year reminded me what an
incredible team can achieve when adequately set up for success. The investments we have made over the past years
– to refine the Novanta Growth System, our toolkit and set of practices to drive continuous improvement and
accelerate innovations in high growth markets, and to build The Novanta Way, our culture which is based on
collaboration, inclusion and trust – have paid dividends these last two years. They have been the glue that kept us
motivated and mobilized behind our vision: to deliver innovations that matter.
So, in summary, we feel very good as we enter 2022 with record levels of backlog and continued strong demand
from our customers. We continue to broaden our exposure to medical and industrial applications that have long-
term secular trends, such as robotics and automation, healthcare productivity and precision medicine. And we
continue to invest in the Novanta Way and our people as we believe a healthy culture with an engaged, diverse and
aligned workforce is an integral part of building and sustaining our long term competitive advantage.
In closing, I would like to thank our customers, our employees, and you, our shareholders, for your ongoing support.
I am particularly grateful for the dedication and strong contribution of our teams of committed Novanta employees
that are showing tremendous agility and resilience during these times.
Yours truly,
/s/ Matthijs Glastra
Chairperson and Chief Executive Officer
April 8, 2022
(1) A non-GAAP financial measures. Reconciliations of GAAP to non-GAAP financial measures can be found beginning on page 111.
(2) We define vitality index as the percentage of total revenue from new products launched in the last 4 years.
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Z(cid:215)TN (cid:151)
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Z(cid:215)TN (cid:151)(cid:151)(cid:151)
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b*Y4 NIi e1,4 Ngj‘ @(44x,q iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii
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Laser Beam Delivery
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Medical Insufflators,
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1W *TS+ #22(xP AY.1,* 12 e1,4 Ngj‘i
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(cid:154)o(cid:136)Ø(cid:132) (cid:211)Ø}”q؇
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Diversity and Inclusion
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Compensation and Benefits
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Growth and Development
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Safety and Wellbeing of Our Employees
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[S+S2WY\*S2U 1(, t1,Q+.x\Y+k x2[ .,1’S[S2U 4x+Q+ *1 *T1+Y Y4.P1qYY+ tT1 4(+* vY .Tq+S\xPPq .,Y+Y2* S2 1(, Wx\SPS*SY+i 8Y Yr.Y\* *1
\12*S2(Y *TY+Y 4Yx+(,Y+ (2*SP tY [Y*Y,4S2Y *Tx* *TY !D:b~jNF .x2[Y4S\ S+ x[Y-(x*YPq \12*xS2Y[ W1, .(,.1+Y+ 1W 1(, v(+S2Y++i 8Y
4xq *xQY W(,*TY, x\*S12+ x+ U1’Y,24Y2* x(*T1,S*SY+ ,Y-(S,Y 1, ,Y\144Y2[ 1, x+ tY [Y*Y,4S2Y *1 vY S2 *TY vY+* S2*Y,Y+* 1W 1(,
Y4.P1qYY+i
(cid:211)DŁ˘wt˘(cid:204)ow”qD
8Y Tx’Y x[1.*Y[ x2[ x,Y S4.PY4Y2*S2U *TY ]x*S12xP b2+*S*(*Y 1W @*x2[x,[+ x2[ >Y\T21P1Uq n]b@>m !qvY,+Y\(,S*q e,x4Yt1,Q
n!@emi >TY ]b@> !@e S2*YU,x*Y+ S2[(+*,q +*x2[x,[+ x2[ vY+* .,x\*S\Y+ *1 TYP. 1,Ux2Sox*S12+ 4x2xUY *TYS, \qvY,+Y\(,S*q ,S+Q+i >TY
]b@> !@e TYP.+ 1,Ux2Sox*S12+ (2[Y,+*x2[ *TYS, \qvY,+Y\(,S*q ,S+Q+ n*T,Yx*+k ’(P2Y,xvSPS*SY+ x2[ S4.x\*+m x2[ T1t *1 ,Y[(\Y *TY+Y ,S+Q+
tS*T \(+*14SoY[ 4Yx+(,Y+k +(\T x+ 1,Ux2Sox*S12jtS[Y \qvY,+Y\(,S*q xtx,Y2Y++ *,xS2S2Ui #[[S*S12xPPqk tY 4xS2*xS2 \qvY,+Y\(,S*q
S2+(,x2\Y *1 4S*SUx*Y ,S+Q+ ,YPx*Y[ *1 \qvY,jx**x\Q+ x2[ 1*TY, +Y\(,S*q v,Yx\TY+% T1tY’Y,k +(\T S2+(,x2\Y \1’Y,xUY 4xq vY (2x’xSPxvPY
1, S2+(WWS\SY2* *1 \1’Y, xPP P1++Y+ 1, xPP *q.Y+ 1W \PxS4+ *Tx* 4xq x,S+Y S2 *TY \12*S2(xPPq Y’1P’S2U x,Yx+ 1W \qvY, ,S+Qi
>TY !14.x2q;+ #([S* !144S**YY S+ ,Y+.12+SvPY W1, *TY 1’Y,+SUT* 1W \qvY,+Y\(,S*q ,S+Q+i >TY #([S* !144S**YY ,Y’SYt+
-(x,*Y,Pq tS*T 4x2xUY4Y2* x2[ S2*Y,2xP x([S* *TY !14.x2q;+ \qvY,+Y\(,S*q .,1U,x4 x2[ ,YPx*Y[ 4x**Y,+i
>TY,Y Tx’Y vYY2 21 4x*Y,SxP S2W1,4x*S12 +Y\(,S*q v,Yx\TY+ W1, *TY qYx,+ Y2[Y[ ~Y\Y4vY, LNk MgMNk MgMgk x2[ MgNFk
,Y+.Y\*S’YPqi fr.Y2+Y+ S2\(,,Y[ S2 \122Y\*S12 tS*T S2W1,4x*S12 +Y\(,S*q v,Yx\TY+ Tx’Y vYY2 S44x*Y,SxP W1, *TY qYx,+ Y2[Y[ ~Y\Y4vY,
LNk MgMNk MgMgk x2[ MgNFk ,Y+.Y\*S’YPqi
(cid:157)(cid:128)m˘w(cid:132)(cid:136)˘(cid:132)q T˘(cid:192)o‡Øq”(cid:128)(cid:132)
D(, \(,,Y2* x2[ \12*Y4.Px*Y[ x\*S’S*SY+ x2[ *TY .,1[(\*+ x2[ .,1\Y++Y+ *Tx* tSPP ,Y+(P* W,14 +(\T x\*S’S*SY+ x,Y +(vRY\* *1
+(v+*x2*SxP U1’Y,24Y2* ,(PY+ x2[ ,YU(Px*S12+k v1*T S2 *TY <2S*Y[ @*x*Y+ x2[ S2*Y,2x*S12xPPqi @(\T ,(PY+ x2[ ,YU(Px*S12+ x,Y +(vRY\* *1
\Tx2UY vq *TY U1’Y,2S2U xUY2\SY+k x2[ tY 412S*1, *T1+Y \Tx2UY+ \P1+YPqi
Environmental Regulations
^1+* 1W 1(, .,1[(\*S12 Wx\SPS*SY+ x,Y +(vRY\* *1 ’x,S1(+ WY[Y,xPk +*x*Yk P1\xPk x2[h1, W1,YSU2 Y2’S,124Y2*xP ,YU(Px*S12+ ,YPx*Y[ *1
*TY (+Yk +*1,xUYk Tx2[PS2Uk x2[ [S+.1+xP 1W ,YU(Px*Y[ 4x*Y,SxP+k \TY4S\xP+k x2[ \Y,*xS2 tx+*Y .,1[(\*+i
8Y 4xq Wx\Y S2\,Yx+S2U \14.PYrS*q S2 1(, .,1[(\* [Y+SU2+ x2[ .,1\(,Y4Y2* 1.Y,x*S12+ [(Y *1 *TY Y’1P’S2U 2x*(,Y 1W .,1[(\*
\14.PSx2\Y +*x2[x,[+i >T1+Y +*x2[x,[+ 4xq S4.x\* *TY 4x*Y,SxP \14.1+S*S12 1W 1(, .,1[(\*+ Y2*Y,S2U +.Y\SWS\ 4x,QY*+i @(\T
,YU(Px*S12+ tY2* S2*1 YWWY\* S2 *TY f(,1.Yx2 <2S12 nVfTY AY+*,S\*S12 1W cxox,[1(+ @(v+*x2\Y+ ~S,Y\*S’Y? nVA1c@?mm
x2[ S2 MggH nVAYUS+*,x*S12k f’xP(x*S12k #(*T1,S+x*S12 x2[ AY+*,S\*S12 1W !TY4S\xP+? nVAf#!c?mmk x2[ S2 !TS2x S2 MggH
nV^x2xUY4Y2* ^Y*T1[+ W1, !12*,1PPS2U C1PP(*S12 !x(+Y[ vq fPY\*,12S\ b2W1,4x*S12 C,1[(\*+ AYU(Px*S12? nV!TS2xjA1c@?mmi
Ng
D(, \x.S*xP Yr.Y2[S*(,Y+k Yx,2S2U+k x2[ \14.Y*S*S’Y .1+S*S12 Tx’Y 21* vYY2k x2[ x,Y 21* Yr.Y\*Y[ *1 vYk 4x*Y,SxPPq xWWY\*Y[ vq
1(, \14.PSx2\Y tS*T WY[Y,xPk +*x*Yk x2[ P1\xP Y2’S,124Y2*xP .,1’S+S12+ *Tx* Tx’Y vYY2 Y2x\*Y[ 1, x[1.*Y[ *1 ,YU(Px*Y *TY [S+*,Sv(*S12 1W
4x*Y,SxP+ S2*1 *TY Y2’S,124Y2*i
Medical Device Regulations
!Y,*xS2 .,1[(\*+ 4x2(Wx\*(,Y[ vq (+ x,Y S2*YU,x*Y[ S2*1 +q+*Y4+ vq 1(, \(+*14Y,+ *Tx* x,Y +(vRY\* *1 ,YU(Px*S12 vq *TY eY[Y,xP
e11[ x2[ ~,(U #[4S2S+*,x*S12 nV*TY e~#?m x2[ W1,YSU2 ,YU(Px*1,q x(*T1,S*SY+i 8Y 4(+* \14.Pq tS*T \Y,*xS2 -(xPS*q \12*,1P
4Yx+(,Y4Y2*+ S2 1,[Y, W1, 1(, .,1[(\*+ *1 vY YWWY\*S’YPq (+Y[ S2 1(, \(+*14Y,+; Y2[ .,1[(\*+i ]12j\14.PSx2\Y tS*T -(xPS*q \12*,1P
4Yx+(,Y4Y2*+ \1(P[ ,Y+(P* S2 WS2Y+k .Y2xP*SY+k x2[ P1++ 1W v(+S2Y++ tS*T 1(, \(+*14Y,+i
8Y x,Y xP+1 +(vRY\* *1 \Y,*xS2 4Y[S\xP [Y’S\Y ,YU(Px*S12+i ^Y[S\xP [Y’S\Y+ x,Y +(vRY\* *1 Yr*Y2+S’Y x2[ ,SU1,1(+ ,YU(Px*S12 vq
*TY e~# x2[ 1*TY, WY[Y,xPk +*x*Yk P1\xP x2[ W1,YSU2 x(*T1,S*SY+ x+ tYPP x+ 21*SWSY[ v1[SY+i b2 *TY <2S*Y[ @*x*Y+k *TY eY[Y,xP e11[k ~,(U
x2[ !1+4Y*S\ #\* n*TY Ve~!#?m x2[ ,YPx*Y[ ,YU(Px*S12+ U1’Y,2 *TY \12[S*S12+ 1W +xWY*qk YWWS\x\qk \PYx,x2\Yk x..,1’xPk 4x2(Wx\*(,S2Uk
-(xPS*q +q+*Y4 ,Y-(S,Y4Y2*+k PxvYPS2Uk .x\QxUS2Uk [S+*,Sv(*S12k +*1,xUYk ,Y\1,[QYY.S2Uk ,Y.1,*S2Uk 4x,QY*S2Uk x[’Y,*S+S2Uk x2[
.,141*S12 1W 4Y[S\xP [Y’S\Y+i
FDA Premarket Clearance and Approval Requirements
<2PY++ x2 YrY4.*S12 x..PSY+k Yx\T 4Y[S\xP [Y’S\Y \144Y,\SxPPq [S+*,Sv(*Y[ S2 *TY <2S*Y[ @*x*Y+ ,Y-(S,Y+ YS*TY, e~# \PYx,x2\Y
1W x JNgnQm .,Y4x,QY* 21*SWS\x*S12 1, x..,1’xP 1W x .,Y4x,QY* x..,1’xP x..PS\x*S12 nVC^#?mi <2[Y, *TY e~!#k 4Y[S\xP [Y’S\Y+ x,Y
\Px++SWSY[ S2*1 12Y 1W *T,YY \Px++Y+X!Px++ bk !Px++ bb 1, !Px++ bbbX[Y.Y2[S2U 12 *TY [YU,YY 1W ,S+Q x++1\Sx*Y[ tS*T Yx\T 4Y[S\xP
[Y’S\Y x2[ *TY Yr*Y2* 1W 4x2(Wx\*(,Y, x2[ ,YU(Px*1,q \12*,1P 2YY[Y[ *1 Y2+(,Y S*+ +xWY*q x2[ YWWY\*S’Y2Y++i !Px++ b S2\P([Y+ [Y’S\Y+
tS*T *TY P1tY+* ,S+Q *1 *TY .x*SY2* x2[ x,Y *T1+Y W1, tTS\T +xWY*q x2[ YWWY\*S’Y2Y++ \x2 vY x++(,Y[ vq x[TY,Y2\Y *1 *TY e~#;+ dY2Y,xP
!12*,1P+ W1, 4Y[S\xP [Y’S\Y+k tTS\T S2\P([Y \14.PSx2\Y tS*T *TY x..PS\xvPY .1,*S12+ 1W *TY B(xPS*q @q+*Y4 AYU(Px*S12 n*TY VB@A?mk
Wx\SPS*q ,YUS+*,x*S12 x2[ .,1[(\* PS+*S2Uk ,Y.1,*S2U 1W x[’Y,+Y 4Y[S\xP Y’Y2*+k x2[ *,(*TW(P x2[ 212j4S+PYx[S2U PxvYPS2Uk x[’Y,*S+S2Uk x2[
.,141*S12xP 4x*Y,SxP+i !Px++ bb [Y’S\Y+ x,Y +(vRY\* *1 *TY e~#;+ dY2Y,xP !12*,1P+ x2[ +.Y\SxP \12*,1P+ x+ [YY4Y[ 2Y\Y++x,q vq *TY
e~# *1 Y2+(,Y *TY +xWY*q x2[ YWWY\*S’Y2Y++ 1W *TY [Y’S\Yi >TY+Y +.Y\SxP \12*,1P+ \x2 S2\P([Y .Y,W1,4x2\Y +*x2[x,[+k .1+*4x,QY*
+(,’YSPPx2\Yk .x*SY2* ,YUS+*,SY+ x2[ e~# U(S[x2\Y [1\(4Y2*+i 8TSPY 41+* !Px++ b [Y’S\Y+ x,Y YrY4.* W,14 *TY JNgnQm .,Y4x,QY*
21*SWS\x*S12 ,Y-(S,Y4Y2*k 4x2(Wx\*(,Y,+ 1W 41+* !Px++ bb [Y’S\Y+ x,Y ,Y-(S,Y[ *1 +(v4S* *1 *TY e~# x .,Y4x,QY* 21*SWS\x*S12 (2[Y,
@Y\*S12 JNgnQm 1W *TY e~!#k ,Y-(Y+*S2U .Y,4S++S12 *1 \144Y,\SxPPq [S+*,Sv(*Y *TY [Y’S\Yi >TY e~#;+ .Y,4S++S12 *1 \144Y,\SxPPq
[S+*,Sv(*Y x [Y’S\Y +(vRY\* *1 x JNgnQm .,Y4x,QY* 21*SWS\x*S12 S+ UY2Y,xPPq Q21t2 x+ JNgnQm \PYx,x2\Yi ~Y’S\Y+ [YY4Y[ vq *TY e~# *1
.1+Y *TY U,Yx*Y+* ,S+Q+k +(\T x+ PSWYj+(+*xS2S2Uk PSWYj+(..1,*S2U 1, +14Y S4.Px2*xvPY [Y’S\Y+k 1, [Y’S\Y+ *Tx* Tx’Y x 2Yt S2*Y2[Y[ (+Y 1,
(+Y x[’x2\Y[ *Y\T21P1Uq *Tx* S+ 21* +(v+*x2*SxPPq Y-(S’xPY2* *1 *Tx* 1W x PYUxPPq 4x,QY*Y[ [Y’S\Yk x,Y .Px\Y[ S2 !Px++ bbbk ,Y-(S,S2U
x..,1’xP 1W x C^#i @14Y .,Yjx4Y2[4Y2* [Y’S\Y+ x,Y (2\Px++SWSY[k v(* x,Y +(vRY\* *1 *TY e~#;+ .,Y4x,QY* 21*SWS\x*S12 x2[ \PYx,x2\Y
.,1\Y++ S2 1,[Y, *1 vY \144Y,\SxPPq [S+*,Sv(*Y[i b2 4x2q \x+Y+k 1(, \(+*14Y,+ x,Y ,Y+.12+SvPY W1, \14.PSx2\Y tS*T *TY e~#;+
,Y-(S,Y4Y2*+ x..PS\xvPY *1 4Y[S\xP [Y’S\Y+i c1tY’Y,k tY xP+1 \(,,Y2*Pq 4x,QY* \Y,*xS2 !Px++ bb 4Y[S\xP [Y’S\Y .,1[(\*+
S2[Y.Y2[Y2*Pq *Tx* x,Y +(vRY\* *1 *TY+Y ,Y-(S,Y4Y2*+i
510(k) Marketing Clearance Pathway
>1 1v*xS2 JNgnQm \PYx,x2\Yk tY 4(+* +(v4S* *1 *TY e~# x .,Y4x,QY* 21*SWS\x*S12 +(v4S++S12 [Y412+*,x*S2U *Tx* *TY .,1.1+Y[
[Y’S\Y S+ ==+(v+*x2*SxPPq Y-(S’xPY2*;; *1 x .,Y[S\x*Y [Y’S\Y xP,Yx[q 12 *TY 4x,QY*i # .,Y[S\x*Y [Y’S\Y S+ x PYUxPPq 4x,QY*Y[ [Y’S\Y *Tx*
S+ 21* +(vRY\* *1 .,Y4x,QY* x..,1’xPk SiYik x [Y’S\Y *Tx* tx+ PYUxPPq 4x,QY*Y[ .,S1, *1 ^xq MGk NFHI n.,Yjx4Y2[4Y2*+ [Y’S\Ym x2[ W1,
tTS\T x C^# S+ 21* ,Y-(S,Y[k x [Y’S\Y *Tx* Tx+ vYY2 ,Y\Px++SWSY[ W,14 !Px++ bbb *1 !Px++ bb 1, !Px++ bk 1, x [Y’S\Y *Tx* tx+ W1(2[
+(v+*x2*SxPPq Y-(S’xPY2* *T,1(UT *TY JNgnQm .,1\Y++i >TY e~#;+ JNgnQm \PYx,x2\Y .,1\Y++ (+(xPPq *xQY+ W,14 2S2Y *1 *tYP’Y 412*T+k
v(* 4xq *xQY +SU2SWS\x2*Pq P12UY,i >TY e~# 4xq ,Y-(S,Y x[[S*S12xP S2W1,4x*S12k S2\P([S2U \PS2S\xP [x*xk *1 4xQY x [Y*Y,4S2x*S12
,YUx,[S2U +(v+*x2*SxP Y-(S’xPY2\Yi
bW *TY e~# xU,YY+ *Tx* *TY [Y’S\Y S+ +(v+*x2*SxPPq Y-(S’xPY2* *1 x .,Y[S\x*Y [Y’S\Y \(,,Y2*Pq 12 *TY 4x,QY*k S* tSPP U,x2* JNgnQm
\PYx,x2\Y *1 \144Y,\SxPPq 4x,QY* *TY [Y’S\Yi bW *TY e~# [Y*Y,4S2Y+ *Tx* *TY [Y’S\Y S+ V21* +(v+*x2*SxPPq Y-(S’xPY2*? *1 x .,Y’S1(+Pq
\PYx,Y[ [Y’S\Yk *TY [Y’S\Y S+ x(*14x*S\xPPq [Y+SU2x*Y[ x+ x !Px++ bbb [Y’S\Yi >TY [Y’S\Y +.12+1, 4(+* *TY2 W(PWSPP 41,Y ,SU1,1(+ C^#
,Y-(S,Y4Y2*+k 1, \x2 ,Y-(Y+* x ,S+Qjvx+Y[ \Px++SWS\x*S12 [Y*Y,4S2x*S12 W1, *TY [Y’S\Y S2 x\\1,[x2\Y tS*T *TY V[Y 21’1? .,1\Y++k tTS\T
S+ x ,1(*Y *1 4x,QY* W1, 21’YP 4Y[S\xP [Y’S\Y+ *Tx* x,Y P1t *1 41[Y,x*Y ,S+Q x2[ x,Y 21* +(v+*x2*SxPPq Y-(S’xPY2* *1 x .,Y[S\x*Y [Y’S\Yi
#W*Y, x [Y’S\Y ,Y\YS’Y+ JNgnQm 4x,QY*S2U \PYx,x2\Yk x2q 41[SWS\x*S12 *Tx* \1(P[ +SU2SWS\x2*Pq xWWY\* S*+ +xWY*q 1, YWWY\*S’Y2Y++k 1,
*Tx* t1(P[ \12+*S*(*Y x 4xR1, \Tx2UY 1, 41[SWS\x*S12 S2 S*+ S2*Y2[Y[ (+Yk tSPP ,Y-(S,Y x 2Yt JNgnQm 4x,QY*S2U \PYx,x2\Y 1,k [Y.Y2[S2U
12 *TY 41[SWS\x*S12k x [Y 21’1 \Px++SWS\x*S12 1, C^# x..,1’xPi >TY e~# ,Y-(S,Y+ Yx\T 4x2(Wx\*(,Y, *1 [Y*Y,4S2Y tTY*TY, *TY
.,1.1+Y[ \Tx2UY ,Y-(S,Y+ +(v4S++S12 1W x JNgnQm 1, x C^# S2 *TY WS,+* S2+*x2\Yk v(* *TY e~# \x2 ,Y’SYt x2q +(\T [Y\S+S12 x2[
[S+xU,YY tS*T x 4x2(Wx\*(,Y,;+ [Y*Y,4S2x*S12i ^x2q 4S21, 41[SWS\x*S12+ x,Y x\\14.PS+TY[ vq x PY**Y,j*1jWSPY S2 tTS\T *TY
4x2(Wx\*(,Y, [1\(4Y2*+ *TY \Tx2UY S2 x2 S2*Y,2xP PY**Y,j*1jWSPYi >TY PY**Y,j*1jWSPY S+ .,Y.x,Y[ vq *TY 4x2(Wx\*(,Y, S2 PSY( 1W +(v4S**S2U
NN
x 2Yt JNgnQm *1 1v*xS2 \PYx,x2\Y W1, Y’Y,q \Tx2UYi >TY e~# \x2 xPtxq+ ,Y’SYt *TY+Y PY**Y,+j*1jWSPY S2 x2 S2+.Y\*S12i bW *TY e~#
[S+xU,YY+ tS*T x 4x2(Wx\*(,Y,;+ [Y*Y,4S2x*S12k *TY e~# \x2 ,Y-(S,Y *TY 4x2(Wx\*(,Y, *1 \Yx+Y 4x,QY*S2U x2[h1, ,Y-(Y+* *TY ,Y\xPP 1W
*TY 41[SWSY[ [Y’S\Y (2*SP JNgnQm 4x,QY*S2U \PYx,x2\Y 1, C^# x..,1’xP S+ 1v*xS2Y[i b2 *TY+Y \S,\(4+*x2\Y+k tY 4xq xP+1 vY +(vRY\* *1
+SU2SWS\x2* ,YU(Px*1,q WS2Y+ 1, .Y2xP*SY+i
Post-market Regulations
#W*Y, x [Y’S\Y S+ \PYx,Y[ 1, x..,1’Y[ W1, 4x,QY*S2Uk 2(4Y,1(+ x2[ .Y,’x+S’Y ,YU(Px*1,q ,Y-(S,Y4Y2*+ \12*S2(Y *1 x..Pqi >TY+Y
S2\P([YE
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Y+*xvPS+T4Y2* ,YUS+*,x*S12 x2[ [Y’S\Y PS+*S2U tS*T *TY e~#%
B@A ,Y-(S,Y4Y2*+k tTS\T ,Y-(S,Y 4x2(Wx\*(,Y,+k S2\P([S2U *TS,[j.x,*q 4x2(Wx\*(,Y,+k *1 W1PP1t +*,S2UY2* [Y+SU2k *Y+*S2Uk
\12*,1Pk [1\(4Y2*x*S12 x2[ 1*TY, -(xPS*q x++(,x2\Y .,1\Y[(,Y+ [(,S2U xPP x+.Y\*+ 1W *TY [Y+SU2 x2[ 4x2(Wx\*(,S2U .,1\Y++%
PxvYPS2U x2[ 4x,QY*S2U ,YU(Px*S12+k tTS\T ,Y-(S,Y *Tx* .,141*S12 S+ *,(*TW(Pk 21* 4S+PYx[S2U x2[ WxS,Pq vxPx2\Y[k .,1’S[Y+
x[Y-(x*Y [S,Y\*S12+ W1, (+Y x2[ *Tx* xPP \PxS4+ x,Y +(v+*x2*Sx*Y[k x2[ xP+1 .,1TSvS* *TY .,141*S12 1W .,1[(\*+ W1,
(2x..,1’Y[ 1, V1WWjPxvYP? (+Y+ x2[ S4.1+Y 1*TY, ,Y+*,S\*S12+ 12 PxvYPS2U%
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Data Privacy and Security Laws and Regulations
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Our results of operations could be adversely affected by economic and political conditions and the effects of these conditions
on our customers businesses, capital expenditures and levels of business activities.
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The COVID-19 pandemic has adversely impacted and is expected to have prolonged adverse impacts on our business and
results of operations.
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Our business success depends upon our ability to respond to fluctuations in product demand, but doing so may require us to
incur costs despite limited visibility into future business declines.
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The success of our business depends on our ability to continuously innovate, to introduce new products in a timely manner,
and to manage transitions to new product innovations effectively.
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Customer order timing and other factors beyond our control may cause our operating results to fluctuate from period to
period.
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*1 WP(\*(x*Y W,14 .Y,S1[ *1 .Y,S1[i @(\T Wx\*1,+ S2\P([YE
•
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WP(\*(x*S12+ S2 1(, \(+*14Y,+; v(+S2Y++Y+%
[Y\S+S12+ vq \(+*14Y,+ *1 ,Y[(\Y *TYS, .(,\Tx+Y+ 1W 1(, .,1[(\*+%
*S4S2U x2[ ,Y\1U2S*S12 1W ,Y’Y2(Y+ W,14 \(+*14Y, 1,[Y,+%
*S4S2U x2[ 4x,QY* x\\Y.*x2\Y 1W 2Yt .,1[(\*+ 1, Y2Tx2\Y4Y2*+ S2*,1[(\Y[ vq (+ 1, 1(, \14.Y*S*1,+%
x’xSPxvSPS*q x2[ .,S\S2U 1W .x,*+ W,14 1(, +(..PSY,+ x2[ *TY 4x2(Wx\*(,S2U \x.x\S*q 1W 1(, +(v\12*,x\*1,+%
\Tx2UY+ S2 *TY .,S\Y+ 1W 1(, .,1[(\*+ 1, 1W 1(, \14.Y*S*1,+; .,1[(\*+% x2[
WP(\*(x*S12+ S2 W1,YSU2 \(,,Y2\q Yr\Tx2UY ,x*Y+i
8Y ,Y\YS’Y[ S2 *TY .x+*k x2[ 4xq ,Y\YS’Y S2 *TY W(*(,Yk +Y’Y,xP Px,UY 1,[Y,+ S2 12Y -(x,*Y, W,14 x \(+*14Y, x2[ *TY2 ,Y\YS’Y 21
1,[Y,+ W,14 *Tx* \(+*14Y, S2 *TY 2Yr* -(x,*Y,i #+ x ,Y+(P*k *TY *S4S2U 1W ,Y’Y2(Y ,Y\1U2S*S12 W,14 \(+*14Y, 1,[Y,+ \x2 \x(+Y
+SU2SWS\x2* WP(\*(x*S12+ S2 1(, 1.Y,x*S2U ,Y+(P*+ W,14 -(x,*Y, *1 -(x,*Y,i b2 x[[S*S12k 1(, +xPY+ x,Y ,Yx\*S’Y *1 \Tx2UY+ S2 1(, \(+*14Y,+;
v(+S2Y++Y+i e1, S2+*x2\Yk x \(+*14Y, *Tx* .Px\Y[ x Px,UY 1,[Y, S2 12Y .Y,S1[ \1(P[ +(v+Y-(Y2*Pq Yr.Y,SY2\Y x [1t2*(,2 S2 v(+S2Y++ x2[k
x+ x ,Y+(P*k \1(P[ \x2\YP x2 1,[Y, 1, ,Y[(\Y *TY x41(2* 1W .,1[(\*+ S* .(,\Tx+Y+ W,14 (+ S2 W(*(,Y .Y,S1[+i
~YPxq+ S2 +TS.4Y2*+ 2Yx, *TY Y2[ 1W x ,Y.1,*S2U .Y,S1[ [(Y *1 ,Y+\TY[(PS2U 1, \x2\YPPx*S12 vq \(+*14Y,+ 1, (2Yr.Y\*Y[
.,1[(\*S12 [YPxq+ Yr.Y,SY2\Y[ vq (+ 4xq \x(+Y ,Y’Y2(Y S2 *TY .Y,S1[ *1 [Y\PS2Y +SU2SWS\x2*Pq x2[ 4xq Tx’Y x 4x*Y,SxP x[’Y,+Y YWWY\*
12 1(, 1.Y,x*S2U ,Y+(P*+ W1, *Tx* .Y,S1[i
b2 x[[S*S12k tY 1, 1(, \14.Y*S*1,+ 4xq ,xS+Y 1, P1tY, .,S\Y+ 1W .,1[(\*+ S2 ,Y+.12+Y *1 4x,QY* [Y4x2[+ 1, \14.Y*S*S’Y
.,Y++(,Y+i bW tY P1tY, *TY .,S\Y+ 1W 1(, .,1[(\*+k 1, SW 1(, \14.Y*S*1,+ P1tY, *TY .,S\Y+ 1W *TYS, .,1[(\*+ +(\T *Tx* [Y4x2[ W1, 1(,
.,1[(\*+ tYxQY2+k 1(, ,Y’Y2(Y W1, 12Y 1, 41,Y -(x,*Y,+ 4xq [Y\PS2Y x2[ 1(, 1.Y,x*S2U ,Y+(P*+ t1(P[ vY x[’Y,+YPq xWWY\*Y[i
#+ x ,Y+(P* 1W *TY+Y Wx\*1,+k 1(, ,Y+(P*+ 1W 1.Y,x*S12+ W1, x2q -(x,*Y, x,Y 21* 2Y\Y++x,SPq S2[S\x*S’Y 1W ,Y+(P*+ *1 vY Yr.Y\*Y[ S2
W(*(,Y .Y,S1[+i
If we experience a significant disruption in, or breach in security of, our or our third-party providers information
technology systems, our business may be adversely affected.
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1.Y,x*S12+i 8Y 1.Y,x*Y +14Y 1W *TY+Y b> @q+*Y4+ 1(,+YP’Y+ x2[ xP+1 ,YPq 12 b> @q+*Y4+ .,1’S[Y[ vq *TS,[ .x,*SY+ *1 ,(2 1(, v(+S2Y++k
S2\P([S2U *1 S2*Y,x\* tS*T 1(, Y4.P1qYY+ x2[ 1(, \(+*14Y,+ x2[ +(..PSY,+i >TY+Y S2*Y,x\*S12+ S2\P([Yk v(* x,Y 21* PS4S*Y[ *1k 1,[Y,S2U
x2[ 4x2xUS2U 4x*Y,SxP+ W,14 +(..PSY,+k \12’Y,*S2U 4x*Y,SxP+ *1 WS2S+TY[ .,1[(\*+k +TS..S2U .,1[(\* *1 \(+*14Y,+k .,1\Y++S2U
*,x2+x\*S12+k +(44x,SoS2U x2[ ,Y.1,*S2U ,Y+(P*+ 1W 1.Y,x*S12+k \14.PqS2U tS*T ,YU(Px*1,qk PYUxP x2[ *xr ,Y-(S,Y4Y2*+k x2[ 1*TY,
.,1\Y++Y+ 2Y\Y++x,q *1 4x2xUY 1(, v(+S2Y++i 8Y [1 21* \12*,1P 1(, *TS,[j.x,*q +Y,’S\Y .,1’S[Y,+ x2[ tY [1 21* 4xS2*xS2 ,Y[(2[x2*
+q+*Y4+ W1, +14Y 1W +(\T +Y,’S\Y+k S2\,Yx+S2U 1(, ’(P2Y,xvSPS*q *1 .,1vPY4+ tS*T +(\T +Y,’S\Y+i b2 x[[S*S12k S2 *TY 1,[S2x,q \1(,+Y 1W
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S2W1,4x*S12i
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[Y+*,(\*S’Y 1, [S+,(.*S’Y +1W*tx,Y nW1, Yrx4.PYk ,x2+14tx,Ym x2[ x**Y4.*+ *1 4S+x..,1.,Sx*Y \(+*14Y, S2W1,4x*S12 x2[ \x(+Y +q+*Y4
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4xU2S*([Y 1W \qvY,x**x\Q+ *1 x\\YPY,x*Y x+ x**x\QY,+ x,Y vY\14S2U 41,Y +1.TS+*S\x*Y[k W1, Yrx4.PYk vq (+S2U *Y\T2S-(Y+ [Y+SU2Y[ *1
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S[Y2*SWqk S2’Y+*SUx*Y 1, ,Y4Y[Sx*Y x**x\Q+ S2 *TY W(*(,Yi
NH
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+(..PSY,+k S* \1(P[ ,Y+(P* S2 *TY P1++ 1W ,Y’Y2(Y x2[ \(+*14Y,+ x+ tYPP x+ +SU2SWS\x2* ,Y+.12+Y x2[ 4S*SUx*S12 \1+*+k tTS\T t1(P[
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1, 1*TY, PSxvSPS*SY+ *Tx* \1(P[ PYx[ *1 +(v+*x2*SxP [x4xUY+k WS2Y+k .Y2xP*SY+ x2[ PYUxP \1+*+i 8Y xP+1 Yr.Y2[ +(v+*x2*SxP x41(2*+ *1
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S2\,Yx+Y +(\T Yr.Y2[S*(,Y+k tTS\T t1(P[ x[’Y,+YPq xWWY\* 1(, ,Y+(P*+ 1W 1.Y,x*S12+i
D(, S2+(,x2\Y .1PS\SY+ 4xq 1, 4xq 21* \1’Y, ’x,S1(+ \qvY,+Y\(,S*q ,S+Q+ x2[ PSxvSPS*SY+k x2[ Y’Y2 SW \1’Y,xUY YrS+*+k *TY,Y \x2 vY
21 U(x,x2*YY *Tx* x2q 1, xPP \1+*+ 1, P1++Y+ S2\(,,Y[ t1(P[ vY .x,*SxPPq 1, W(PPq S2+(,Y[i
Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards, and
other requirements may adversely impact our business and financial results.
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x ,Y\1,[ 1W *TYS, [x*x .,1\Y++S2U x2[ S4.PY4Y2* .1PS\SY+ x+ .x,* 1W S*+ 4x2[x*Y[ .,S’x\q U1’Y,2x2\Y W,x4Yt1,Qi b* xP+1 ,Y-(S,Y+ [x*x
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.Y,+12xP [x*x% S2*,1[(\Y+ 4x2[x*1,q [x*x v,Yx\T 21*SWS\x*S12 ,Y-(S,Y4Y2*+% x2[ +Y*+ TSUTY, +*x2[x,[+ W1, [x*x \12*,1PPY,+ *1
[Y412+*,x*Y *Tx* *TYq Tx’Y 1v*xS2Y[ ’xPS[ \12+Y2* W1, \Y,*xS2 [x*x .,1\Y++S2U x\*S’S*SY+i 8Y x,Y +(vRY\* *1 *TY +(.Y,’S+S12 1W P1\xP [x*x
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x\*S12 *q.Y PS*SUx*S12 tTY,Y S2[S’S[(xP+ +(WWY,Y[ Tx,4i #412U 1*TY, ,Y-(S,Y4Y2*+k *TY d~CA ,YU(Px*Y+ *,x2+WY,+ 1W .Y,+12xP [x*x
+(vRY\* *1 *TY d~CA *1 *TS,[ \1(2*,SY+ *Tx* Tx’Y 21* vYY2 W1(2[ *1 .,1’S[Y x[Y-(x*Y .,1*Y\*S12 *1 +(\T .Y,+12xP [x*xk S2\P([S2U *TY
<2S*Y[ @*x*Y+k x2[ *TY YWWS\x\q x2[ P12UY’S*q 1W \(,,Y2* *,x2+WY, 4Y\Tx2S+4+ vY*tYY2 *TY f< x2[ *TY <2S*Y[ @*x*Y+ ,Y4xS2+ (2\Y,*xS2i
e1, Yrx4.PYk S2 MgNIk *TY f< x2[ <2S*Y[ @*x*Y+ xU,YY[ *1 x *,x2+WY, W,x4Yt1,Q W1, [x*x *,x2+WY,,Y[ W,14 *TY f< *1 *TY <2S*Y[ @*x*Y+k
\xPPY[ *TY C,S’x\q @TSYP[i c1tY’Y,k S2 a(Pq MgMgk *TY !1(,* 1W a(+*S\Y 1W *TY f< nV!afTY+Y
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Pxt+ U1’Y,2S2U x\\Y++ *1 .Y,+12xP [x*x S2 *TY ,Y\S.SY2* \1(2*,q x2[ \12+S[Y,+ tTY*TY, +(..PY4Y2*x,q 4Yx+(,Y+ *Tx* .,1’S[Y .,S’x\q
.,1*Y\*S12+ x[[S*S12xP *1 *T1+Y .,1’S[Y[ (2[Y, @!!+ tSPP 2YY[ *1 vY S4.PY4Y2*Y[ *1 Y2+(,Y x2 Y++Y2*SxPPq Y-(S’xPY2* PY’YP 1W [x*x
.,1*Y\*S12 *1 *Tx* xWW1,[Y[ S2 *TY ff#i >TY f(,1.Yx2 !144S++S12 S++(Y[ ,Y’S+Y[ @!!+ 12 a(2Y Kk MgMN *1 x\\1(2* W1, *TY [Y\S+S12 1W
*TY !af< x2[ ,Y\144Y2[x*S12+ 4x[Y vq *TY f(,1.Yx2 ~x*x C,1*Y\*S12 "1x,[i >TY ,Y’S+Y[ @!!+ 4(+* vY (+Y[ W1, ,YPY’x2* 2Yt [x*x
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~Y\Y4vY, MHk MgMMi >TY,Y S+ +14Y (2\Y,*xS2*q x,1(2[ tTY*TY, *TY ,Y’S+Y[ \Px(+Y+ \x2 vY (+Y[ W1, xPP *q.Y+ 1W [x*x *,x2+WY,+k
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+S2\Y ax2(x,q Nk MgMNk \14.x2SY+ Tx’Y Tx[ *1 \14.Pq tS*T v1*T *TY d~CA x2[ *TY d~CA x+ S2\1,.1,x*Y[ S2*1 <2S*Y[ ‘S2U[14
2x*S12xP Pxtk *TY Px**Y, ,YUS4Y Tx’S2U *TY xvSPS*q *1 +Y.x,x*YPq WS2Y (. *1 *TY U,Yx*Y, 1W &NHiJ 4SPPS12 1, K3 1W UP1vxP ,Y’Y2(Yi >TY
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!144S++S12 Tx+ x[1.*Y[ x2 x[Y-(x\q [Y\S+S12 S2 Wx’1, 1W *TY <2S*Y[ ‘S2U[14k Y2xvPS2U [x*x *,x2+WY,+ W,14 f< 4Y4vY, +*x*Y+ *1 *TY
<2S*Y[ ‘S2U[14 tS*T1(* x[[S*S12xP +xWYU(x,[+i c1tY’Y,k *TY <‘ x[Y-(x\q [Y\S+S12 tSPP x(*14x*S\xPPq Yr.S,Y S2 a(2Y MgMJ (2PY++ *TY
f(,1.Yx2 !144S++S12 ,Yjx++Y++Y+ x2[ ,Y2Yt+hYr*Y2[+ *Tx* [Y\S+S12i
b2 *TY <2S*Y[ @*x*Y+k !xPSW1,2Sx Tx+ Y2x\*Y[ *TY !xPSW1,2Sx !12+(4Y, C,S’x\q #\* n*TY V!!C#?mk tTS\T *11Q YWWY\* 12 ax2(x,q Nk
MgMgi >TY !!C# \,Yx*Y+ S2[S’S[(xP .,S’x\q ,SUT*+ W1, !xPSW1,2Sx \12+(4Y,+ x2[ S2\,Yx+Y+ *TY .,S’x\q x2[ +Y\(,S*q 1vPSUx*S12+ 1W
Y2*S*SY+ Tx2[PS2U \Y,*xS2 .Y,+12xP [x*xi >TY !!C# .,1’S[Y+ W1, \S’SP .Y2xP*SY+ W1, ’S1Px*S12+k x+ tYPP x+ x .,S’x*Y ,SUT* 1W x\*S12 W1, [x*x
v,Yx\TY+ *Tx* S+ Yr.Y\*Y[ *1 S2\,Yx+Y [x*x v,Yx\T PS*SUx*S12i #[[S*S12xPPqk *TY !xPSW1,2Sx C,S’x\q ASUT*+ #\* n*TY V!CA#?m tx+ ,Y\Y2*Pq
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!xPSW1,2Sxk S2\P([S2U x[[S*S12xP \12+(4Y, ,SUT*+ .,1\Y++Y+k PS4S*x*S12+ 12 [x*x (+Y+k 2Yt x([S* ,Y-(S,Y4Y2*+ W1, TSUTY, ,S+Q [x*xk x2[
1.*j1(*+ W1, \Y,*xS2 (+Y+ 1W +Y2+S*S’Y [x*xi b* tSPP xP+1 \,Yx*Y x 2Yt !xPSW1,2Sx [x*x .,1*Y\*S12 xUY2\q x(*T1,SoY[ *1 S++(Y +(v+*x2*S’Y
NG
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YWWY\* 12 ax2(x,q Nk MgMLk x2[ x[[S*S12xP \14.PSx2\Y S2’Y+*4Y2* x2[ .1*Y2*SxP v(+S2Y++ .,1\Y++ \Tx2UY+ 4xq vY ,Y-(S,Y[i >TY !!C#
x2[ !CA# 4xq S2\,Yx+Y 1(, \14.PSx2\Y \1+*+ x2[ .1*Y2*SxP PSxvSPS*qi @S4SPx, Pxt+ Tx’Y .x++Y[ S2 :S,US2Sx x2[ !1P1,x[1k x2[ Tx’Y
vYY2 .,1.1+Y[ x* *TY WY[Y,xP PY’YP x2[ S2 1*TY, +*x*Y+i #2q PSxvSPS*q W,14 1(, WxSP(,Y *1 \14.Pq tS*T *TY ,Y-(S,Y4Y2*+ 1W *TY+Y Pxt+
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8Y Tx’Y S2’Y+*Y[k x2[ \12*S2(Y *1 S2’Y+*k T(4x2 x2[ *Y\T21P1Uq ,Y+1(,\Y+ S2 1(, d~CA x2[ !!C# \14.PSx2\Y YWW1,*+ x2[ 1(,
[x*x .,S’x\q \14.PSx2\Y YWW1,*+ S2 UY2Y,xPi >TY+Y \14.PSx2\Y YWW1,*+ 4xq vY *S4YjS2*Y2+S’Y x2[ \1+*Pqi ~Y+.S*Y *T1+Y YWW1,*+k *TY,Y S+ x
,S+Q *Tx* tY 4xq vY +(vRY\* *1 WS2Y+ x2[ .Y2xP*SY+k PS*SUx*S12 x2[ ,Y.(*x*S12xP Tx,4 SW tY WxSP *1 .,1*Y\* *TY .,S’x\q 1W *TS,[ .x,*q [x*x 1,
*1 \14.Pq tS*T *TY d~CAk !!C# 1, 1*TY, x..PS\xvPY ,YUS4Y+i
Changes in foreign currency rates could have a material adverse effect on our financial position, results of operations, and
cash flows.
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Others may violate our intellectual property rights and cause us to incur significant costs to protect our rights.
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Our operating results would suffer if we are unable to successfully defend against infringement claims by third parties.
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We operate in highly competitive industries and, if we lose competitive advantages, our business would suffer adverse
consequences.
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Our results of operations will be adversely affected if we fail to successfully integrate recent and future acquisitions or to
grow the acquired businesses as planned.
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If we do not attract and retain our key personnel, our ability to execute our business strategy will be limited.
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We have undertaken restructuring and realignment activities in the past, and we will continue to assess our operating and
cost structure in the future. These actions may not improve our financial position, and may ultimately prove detrimental to our
operations and sales.
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Product defects or problems with integrating our products with other vendors products used by our customers may seriously
harm our business and reputation.
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Disruptions in the supply of certain key components and other goods from our suppliers, including limited or single source
suppliers, have adversely affected the results of our business operations, and could damage our relationships with customers.
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If we fail to accurately forecast component and raw material requirements for our products, we could incur additional costs
and experience significant delays in shipments, which could have an adverse effect on the results of our business operations, and
could damage our relationships with customers.
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Production difficulties and product delivery delays or disruptions could have a material adverse effect on our business.
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Our products and operations are subject to various foreign and U.S. federal and state healthcare laws and regulations, which
could expose us to penalties.
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Our business is indirectly subject to healthcare industry cost containment and healthcare reform measures that could result
in reduced sales of our products.
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Novanta Inc. may be subject to U.S. federal income taxation even though it is a non-U.S. corporation.
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Our existing indebtedness could adversely affect our future business, financial condition and results of operations.
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(cid:151)q˘(cid:136) E(cid:136) Managements Discussion and Analysis of Financial Condition and Results of Operations
Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in
conjunction with the Consolidated Financial Statements and Notes included in Item 8 of this Annual Report on Form 10-K. The
MD&A contains certain forward looking statements within the meaning of the United States Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve
risks, uncertainties and assumptions. These forward-looking statements include, but are not limited to, anticipated impacts of the
COVID-19 pandemic on our business, our financial results and our financial condition; our belief that the Purchasing Managers
Index (PMI) may provide an indication of the impact of general economic conditions on our sales into the advanced industrial end
market; our strategy; anticipated financial performance; expected liquidity and capitalization; drivers of revenue growth and our
growth expectations in various markets; managements plans and objectives for future operations, expenditures and product
development, and investments in research and development; business prospects; potential of future product releases and expansion of
our product and service offerings; anticipated revenue performance; industry trends; market conditions; our competitive positions;
changes in economic and political conditions, including supply chain disruptions and constraints and inflationary pressures; changes
in accounting principles; changes in actual or assumed tax liabilities; expectations regarding tax exposures; anticipated reinvestment
of future earnings and dividend policy; anticipated expenditures in regard to the Companys benefit plans; future acquisitions and
integration and anticipated benefits from acquisitions and dispositions; anticipated economic benefits and expected costs of
restructuring programs; ability to repay our indebtedness; our intentions regarding the use of cash; expectations regarding legal and
regulatory requirements, including environmental requirements, and our compliance thereto; and other statements that are not
historical facts. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of
various important factors, including those set forth in Item 1A of this Annual Report on Form 10-K under the heading Risk Factors.
The words anticipates, believes, expects, intends, future, estimates, plans, could, would, should,
potential, continues, and similar words or expressions (as well as other words or expressions referencing future events,
conditions or circumstances) identify forward looking statements. Readers should not place undue reliance on any such forward
looking statements, which speak only as of the date they are made. Management and the Company disclaim any obligation to publicly
update or revise any such statements to reflect any change in its expectations or in events, conditions, or circumstances on which any
such statements may be based, or that may affect the likelihood that actual results will differ from those contained in the forward
looking statements, except as required under applicable law.
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.1+S*S’YPq S4.x\*Y[ 1(, ,Y’Y2(Y vq 5NMiJ 4SPPS12k 1, MiN3k S2 MgMNi
D.Y,x*S2U S2\14Y W1, MgMN tx+ 5IKiN 4SPPS12k x2 S2\,Yx+Y 1W 5GiM 4SPPS12k 1, NKiI3k ’Y,+(+ MgMgi >TS+ S2\,Yx+Y tx+ .,S4x,SPq
x**,Sv(*xvPY *1 x2 S2\,Yx+Y S2 U,1++ .,1WS* 1W 5JJiG 4SPPS12 41+*Pq x**,Sv(*xvPY *1 TSUTY, ,Y’Y2(Yk .x,*SxPPq 1WW+Y* vq x2 S2\,Yx+Y S2
,Y+Yx,\T x2[ [Y’YP1.4Y2* x2[ Y2US2YY,S2U nVA0~?m Yr.Y2+Y+ 1W 5NNiJ 4SPPS12k +YPPS2Uk UY2Y,xP x2[ x[4S2S+*,x*S’Y nV@d0#?m
Yr.Y2+Y+ 1W 5NFiL 4SPPS12 x2[ ,Y+*,(\*(,S2Uk x\-(S+S*S12k x2[ ,YPx*Y[ \Tx,UY+ 1W 5NKiM 4SPPS12i
"x+S\ Yx,2S2U+ .Y, \14412 +Tx,Y nVvx+S\ fC@?m 1W 5NiKM S2 MgMN S2\,Yx+Y[ 5giNJ W,14 *TY vx+S\ fC@ 1W 5NiMH S2 MgMgi ~SP(*Y[
Yx,2S2U+ .Y, \14412 +Tx,Y nV[SP(*Y[ fC@?m 1W 5NiKN S2 MgMN S2\,Yx+Y[ 5giNI W,14 *TY [SP(*Y[ fC@ 1W 5NiMJ S2 MgMgi >TY S2\,Yx+Y 1W
vx+S\ fC@ x2[ [SP(*Y[ fC@ tx+ .,S4x,SPq x**,Sv(*xvPY *1 x2 S2\,Yx+Y S2 1.Y,x*S2U S2\14Y 1WW+Y* vq *TY S2\,Yx+Y 1W S2\14Y *xr
.,1’S+S12i
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tx+ S2\P([Y[ S2 1(, #22(xP AY.1,* 12 e1,4 Ngj‘ W1, *TY qYx, Y2[Y[ ~Y\Y4vY, LNk MgMg (2[Y, Cx,* bbk b*Y4 Hk V^x2xUY4Y2*;+
~S+\(++S12 x2[ #2xPq+S+ 1W eS2x2\SxP C1+S*S12 x2[ AY+(P*+ 1W D.Y,x*S12+k? tTS\T tx+ WSPY[ tS*T *TY @f! 12 ^x,\T Nk MgMNi
LI
>TY W1PP1tS2U *xvPY +Y*+ W1,*T 1(, ,Y+(P*+ 1W 1.Y,x*S12+ x+ x .Y,\Y2*xUY 1W ,Y’Y2(Y W1, *TY qYx,+ S2[S\x*Y[E
X(cid:131)X[
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Revenue
Nggig3
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>TY W1PP1tS2U *xvPY +Y*+ W1,*T Yr*Y,2xP ,Y’Y2(Y vq ,Y.1,*xvPY +YU4Y2* W1, MgMN x2[ MgMg n[1PPx,+ S2 *T1(+x2[+mE
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Photonics
5
5
X(cid:131)X[
X(cid:131)X(cid:131)
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5
5
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! (cid:211)‰Ø(cid:132)(cid:192)˘
X(cid:131)X[ mt(cid:136) X(cid:131)X(cid:131)
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x[’x2\Y[ S2[(+*,SxP 4x,QY* x+ x ,Y+(P* 1W S2\,Yx+Y+ S2 S2[(+*,SxP 4x2(Wx\*(,S2U +.Y2[S2U x+ \14.x,Y[ *1 MgMgk tTS\T tx+ S4.x\*Y[ vq
!D:b~jNF .x2[Y4S\i
Vision
:S+S12 +YU4Y2* ,Y’Y2(Y S2 MgMN S2\,Yx+Y[ vq 5giK 4SPPS12k 1, giM3k ’Y,+(+ MgMgk .,S4x,SPq WPx* [(Y *1 \12+S+*Y2* \(+*14Y,
[Y4x2[ [q2x4S\+ W,14 1(, 4S2S4xPPq S2’x+S’Y +(,UY,q nV^b@?m .,1[(\*+ x+ x ,Y+(P* 1W [YWY,,xP+ 1W YPY\*S’Y +(,US\xP .,1\Y[(,Y+ [(,S2U
*TY !D:b~jNF .x2[Y4S\i
Precision Motion
C,Y\S+S12 ^1*S12 +YU4Y2* ,Y’Y2(Y S2 MgMN S2\,Yx+Y[ vq 5GMiF 4SPPS12k 1, IKiN3k ’Y,+(+ MgMgk .,S4x,SPq [(Y *1 x2 S2\,Yx+Y S2
[Y4x2[ S2 x[’x2\Y[ S2[(+*,SxP 4x,QY* x2[ \Y,*xS2 4Y[S\xP ,1v1*S\ x..PS\x*S12+ x+ tYPP x+ x2 xUU,YUx*Y 1W 5KLiM 4SPPS12 ,Y’Y2(Y
\12*,Sv(*S12+ W,14 *TY #>b x2[ @f^ x\-(S+S*S12+i
LH
Gross Profit
>TY W1PP1tS2U *xvPY +Y*+ W1,*T *TY U,1++ .,1WS* x2[ U,1++ .,1WS* 4x,US2 W1, Yx\T 1W 1(, ,Y.1,*xvPY +YU4Y2*+ W1, MgMN x2[ MgMg
n[1PPx,+ S2 *T1(+x2[+mE
d,1++ .,1WS*E
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d,1++ .,1WS* 4x,US2E
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:S+S12
C,Y\S+S12 ^1*S12
>1*xP
X(cid:131)X[
X(cid:131)X(cid:131)
5
5
NgHkFFL
NggkGFg
FFkLKJ
nHkFggm
LggkLMG
5
5
KIiJ3
LGiJ3
KIiG3
KMiJ3
GFkgIg
NggkMIH
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MKKkJNH
KKiI3
LGiL3
KJiN3
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d,1++ .,1WS* x2[ U,1++ .,1WS* 4x,US2 \x2 vY S2WP(Y2\Y[ vq x 2(4vY, 1W Wx\*1,+k S2\P([S2U .,1[(\* 4Srk .,S\S2Uk ’1P(4Yk
4x2(Wx\*(,S2U YWWS\SY2\SY+ x2[ (*SPSox*S12k \1+*+ W1, ,xt 4x*Y,SxP+ x2[ 1(*+1(,\Y[ 4x2(Wx\*(,S2Uk TYx[\1(2*k S2’Y2*1,q 1v+1PY+\Y2\Y
x2[ tx,,x2*q Yr.Y2+Y+i
Photonics
CT1*12S\+ +YU4Y2* U,1++ .,1WS* W1, MgMN S2\,Yx+Y[ 5NGiF 4SPPS12k 1, MNiL3k ’Y,+(+ MgMgk .,S4x,SPq [(Y *1 x2 S2\,Yx+Y S2 v1*T
,Y’Y2(Y x2[ U,1++ .,1WS* 4x,US2i CT1*12S\+ +YU4Y2* U,1++ .,1WS* 4x,US2 tx+ KIiJ3 W1, MgMNk ’Y,+(+ x U,1++ .,1WS* 4x,US2 1W KKiI3
W1, MgMgi >TY S2\,Yx+Y S2 U,1++ .,1WS* 4x,US2 tx+ .,S4x,SPq x**,Sv(*xvPY *1 TSUTY, Wx\*1,q (*SPSox*S12 x++1\Sx*Y[ tS*T TSUTY, .,1[(\*S12
’1P(4Y+i
Vision
:S+S12 +YU4Y2* U,1++ .,1WS* W1, MgMN S2\,Yx+Y[ 5giI 4SPPS12k 1, giI3k ’Y,+(+ MgMgk .,S4x,SPq WPx* [(Y *1 \12+S+*Y2* \(+*14Y,
[Y4x2[ [q2x4S\+ W,14 1(, ^b@ .,1[(\*+ x+ x ,Y+(P* 1W [YWY,,xP+ 1W YPY\*S’Y +(,US\xP .,1\Y[(,Y+ [(,S2U *TY !D:b~jNF .x2[Y4S\i
:S+S12 +YU4Y2* U,1++ .,1WS* 4x,US2 tx+ LGiJ3 W1, MgMNk \14.x,Y[ tS*T x U,1++ .,1WS* 4x,US2 1W LGiL3 W1, MgMgi
Precision Motion
C,Y\S+S12 ^1*S12 +YU4Y2* U,1++ .,1WS* W1, MgMN S2\,Yx+Y[ 5KNiN 4SPPS12k 1, HgiJ3k ’Y,+(+ MgMgk .,S4x,SPq [(Y *1 x2 S2\,Yx+Y S2
v1*T ,Y’Y2(Y x2[ U,1++ .,1WS* 4x,US2i C,Y\S+S12 ^1*S12 +YU4Y2* U,1++ .,1WS* 4x,US2 tx+ KIiG3 W1, MgMNk \14.x,Y[ tS*T x U,1++
.,1WS* 4x,US2 1W KJiN3 W1, MgMgi >TY S2\,Yx+Y S2 U,1++ .,1WS* 4x,US2 tx+ .,S4x,SPq x**,Sv(*xvPY *1 TSUTY, Wx\*1,q (*SPSox*S12 x++1\Sx*Y[
tS*T TSUTY, .,1[(\*S12 ’1P(4Y+ x2[ Wx’1,xvPY qYx, 1’Y, qYx, \14.x,S+12 [(Y *1 TSUTY, S2’Y2*1,q 1v+1PY+\Y2\Y S2 *TY .,S1, qYx,k 1WW+Y*
vq TSUTY, .(,\Tx+Y[ S2*x2USvPY x++Y* x41,*Sox*S12 1W 5MiJ 4SPPS12 x2[ x2 S2\,Yx+Y S2 *TY x41,*Sox*S12 1W x\-(S+S*S12 S2’Y2*1,q WxS,
’xP(Y x[R(+*4Y2*+ 1W 5NiK 4SPPS12i
Operating Expenses
>TY W1PP1tS2U *xvPY +Y*+ W1,*T 1.Y,x*S2U Yr.Y2+Y+ W1, MgMN x2[ MgMg n[1PPx,+ S2 *T1(+x2[+mE
AY+Yx,\T x2[ [Y’YP1.4Y2* x2[ Y2US2YY,S2U
@YPPS2Uk UY2Y,xP x2[ x[4S2S+*,x*S’Y
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AY+*,(\*(,S2U x2[ x\-(S+S*S12 ,YPx*Y[ \1+*+
>1*xP
X(cid:131)X[
X(cid:131)X(cid:131)
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5
5
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NgFkGJL
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NGGkIMF
5
5
! (cid:211)‰Ø(cid:132)(cid:192)˘
X(cid:131)X[ mt(cid:136) X(cid:131)X(cid:131)
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NGiH3
LHLig3
MJiL3
Research and Development and Engineering Expenses
AY+Yx,\T x2[ [Y’YP1.4Y2* x2[ Y2US2YY,S2U nVA0~?m Yr.Y2+Y+ x,Y .,S4x,SPq \14.,S+Y[ 1W Y4.P1qYY \14.Y2+x*S12 x2[ ,YPx*Y[
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Yr.Y2+Y+ S2\,Yx+Y[ S2 *Y,4+ 1W *1*xP [1PPx,+ .,S4x,SPq [(Y *1 TSUTY, \14.Y2+x*S12 ,YPx*Y[ Yr.Y2+Y+ x2[ A0~ Yr.Y2+Y+ W,14
x\-(S+S*S12+i
Selling, General and Administrative Expenses
@YPPS2Uk UY2Y,xP x2[ x[4S2S+*,x*S’Y nV@d0#?m Yr.Y2+Y+ S2\P([Y \1+*+ W1, +xPY+ x2[ 4x,QY*S2Uk +xPY+ x[4S2S+*,x*S12k WS2x2\Yk
T(4x2 ,Y+1(,\Y+k PYUxPk S2W1,4x*S12 +q+*Y4+ x2[ YrY\(*S’Y 4x2xUY4Y2*i
@d0# Yr.Y2+Y+ tY,Y 5NMFiM 4SPPS12k 1, NGiL3 1W ,Y’Y2(Yk S2 MgMNk ’Y,+(+ 5NgFiF 4SPPS12k 1, NGiI3 1W ,Y’Y2(Yk S2 MgMgi
@d0# Yr.Y2+Y+ S2\,Yx+Y[ S2 *Y,4+ 1W *1*xP [1PPx,+ .,S4x,SPq [(Y *1 *TY ,YjY+*xvPS+T4Y2* 1W Y4.P1qYY v12(+ .Px2+ S2 MgMN x2[ 1*TY,
\14.Y2+x*S12 ,YPx*Y[ S2\,Yx+Y+k x2[ @d0# Yr.Y2+Y+ W,14 x\-(S+S*S12+i
Amortization of Purchased Intangible Assets
#41,*Sox*S12 1W .(,\Tx+Y[ S2*x2USvPY x++Y*+ S+ \Tx,UY[ *1 1(, CT1*12S\+k :S+S12 x2[ C,Y\S+S12 ^1*S12 +YU4Y2*+i #41,*Sox*S12
1W [Y’YP1.Y[ *Y\T21P1USY+ S+ S2\P([Y[ S2 \1+* 1W ,Y’Y2(Y S2 *TY \12+1PS[x*Y[ +*x*Y4Y2* 1W 1.Y,x*S12+i #41,*Sox*S12 1W \(+*14Y,
,YPx*S12+TS.+k *,x[Y4x,Q+k *,x[Y 2x4Y+k vx\QP1U x2[ 1*TY, S2*x2USvPY+ x,Y S2\P([Y[ S2 1.Y,x*S2U Yr.Y2+Y+ S2 *TY \12+1PS[x*Y[ +*x*Y4Y2*
1W 1.Y,x*S12+i
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,Y’Y2(Yk tx+ 5NIiI 4SPPS12k 1, MiL3 1W ,Y’Y2(Yk S2 MgMNk ’Y,+(+ 5NKig 4SPPS12k 1, MiK3 1W ,Y’Y2(Yk S2 MgMgi >TY S2\,Yx+Y S2 *Y,4+ 1W
*1*xP [1PPx,+ tx+ *TY ,Y+(P* 1W 41,Y x\-(S,Y[ S2*x2USvPY x++Y*+ W,14 \(,,Y2* qYx, x\-(S+S*S12+i
Restructuring, Acquisition, and Related Costs
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W1, \14.PY*Y[ x\-(S+S*S12+k x\-(S+S*S12 \1+*+ ,YPx*Y[ *1 W(*(,Y .1*Y2*SxP x\-(S+S*S12+ x2[ WxSPY[ x\-(S+S*S12+k x2[ \Tx2UY+ S2 WxS, ’xP(Y 1W
\12*S2UY2* \12+S[Y,x*S12+i
8Y ,Y\1,[Y[ ,Y+*,(\*(,S2U x2[ x\-(S+S*S12 ,YPx*Y[ \1+*+ 1W 5NGig 4SPPS12 S2 MgMNk ’Y,+(+ 5LiG 4SPPS12 S2 MgMgi >TY S2\,Yx+Y S2
,Y+*,(\*(,S2Uk x\-(S+S*S12k x2[ ,YPx*Y[ \1+*+ ’Y,+(+ *TY .,S1, qYx, tx+ .,S4x,SPq [(Y *1 x2 S2\,Yx+Y S2 x\-(S+S*S12 ,YPx*Y[ .,1WY++S12xP
+Y,’S\Y WYY+ 1W 5JiK 4SPPS12k x\-(S+S*S12 ,YPx*Y[ \12*S2UY2* \12+S[Y,x*S12 S2\,Yx+Y 1W 5KiF 4SPPS12 .,S4x,SPq x+ ,Y+(P* 1W x ,Y[(\*S12 S2
*TY WxS, ’xP(Y 1W \12*S2UY2* \12+S[Y,x*S12+ S2 MgMgk x2[ ,Y+*,(\*(,S2U \1+*+ 1W 5LiF 4SPPS12 .,S4x,SPq ,YPx*Y[ *1 *TY MgMg ,Y+*,(\*(,S2U
.Px2i
Operating Income (Loss) by Segment
>TY W1PP1tS2U *xvPY +Y*+ W1,*T 1.Y,x*S2U S2\14Y nP1++m vq +YU4Y2* W1, MgMN x2[ MgMg nS2 *T1(+x2[+mE
]}˘wØq”(cid:132)(cid:192) (cid:151)(cid:132)(cid:204)(cid:128)(cid:136)˘ (cid:153)(cid:143)(cid:128)tt(cid:151)
CT1*12S\+
:S+S12
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N(cid:128)q؇
Photonics
X(cid:131)X[
X(cid:131)X(cid:131)
5
5
KIkHFM
NHkIFK
JMkIHI
nJLkNgGm
IKkgJK
5
5
LKkggN
NIkLJK
LNkIIL
nMIkNLgm
JJkGGG
CT1*12S\+ +YU4Y2* 1.Y,x*S2U S2\14Y tx+ 5KIiG 4SPPS12k 1, MgiN3 1W ,Y’Y2(Yk S2 MgMNk ’Y,+(+ 5LKig 4SPPS12k 1, NHig3 1W
,Y’Y2(Yk S2 MgMgi >TY S2\,Yx+Y S2 1.Y,x*S2U S2\14Y tx+ .,S4x,SPq [(Y *1 x2 S2\,Yx+Y S2 U,1++ .,1WS* 1W 5NGiF 4SPPS12k .x,*SxPPq 1WW+Y* vq
S2\,Yx+Y+ S2 A0~ +.Y2[S2U 1W 5MiM 4SPPS12 x2[ ,Y+*,(\*(,S2Uk x\-(S+S*S12k x2[ ,YPx*Y[ \Tx,UY+ 1W 5KiH 4SPPS12i
Vision
:S+S12 +YU4Y2* 1.Y,x*S2U S2\14Y tx+ 5NHiH 4SPPS12k 1, IiG3 1W ,Y’Y2(Yk S2 MgMNk ’Y,+(+ 5NIiK 4SPPS12k 1, IiL3 1W ,Y’Y2(Yk S2
MgMgi >TY S2\,Yx+Y S2 1.Y,x*S2U S2\14Y tx+ .,S4x,SPq [(Y *1 x2 S2\,Yx+Y S2 U,1++ .,1WS* 1W 5giI 4SPPS12k x [Y\,Yx+Y S2 @d0# Yr.Y2+Y+
1W 5NiH 4SPPS12k x2[ x [Y\,Yx+Y S2 ,Y+*,(\*(,S2Uk x\-(S+S*S12k x2[ ,YPx*Y[ \Tx,UY+ 1W 5NiK 4SPPS12k .x,*SxPPq 1WW+Y* vq x2 S2\,Yx+Y S2 A0~
Yr.Y2+Y+ 1W 5MiI 4SPPS12i
LF
Precision Motion
C,Y\S+S12 ^1*S12 +YU4Y2* 1.Y,x*S2U S2\14Y tx+ 5JMiH 4SPPS12k 1, MKiG3 1W ,Y’Y2(Yk S2 MgMNk ’Y,+(+ 5LNiH 4SPPS12k 1, MKiJ3 1W
,Y’Y2(Yk S2 MgMgi >TY S2\,Yx+Y S2 1.Y,x*S2U S2\14Y tx+ .,S4x,SPq [(Y *1 x2 S2\,Yx+Y S2 U,1++ .,1WS* 1W 5KNiN 4SPPS12k .x,*SxPPq 1WW+Y* vq
x2 S2\,Yx+Y S2 ,Y+*,(\*(,S2Uk x\-(S+S*S12k x2[ ,YPx*Y[ \Tx,UY+ 1W 5JiG 4SPPS12k A0~ +.Y2[S2U 1W 5IiG 4SPPS12k @d0# Yr.Y2+Y 1W 5JiM
4SPPS12 x2[ x41,*Sox*S12 1W .(,\Tx+Y[ S2*x2USvPY x++Y*+ Yr.Y2+Y 1W 5MiL 4SPPS12i
Unallocated Corporate and Shared Services
<2xPP1\x*Y[ \1,.1,x*Y x2[ +Tx,Y[ +Y,’S\Y+ \1+*+ .,S4x,SPq ,Y.,Y+Y2* \1+*+ 1W \1,.1,x*Y x2[ +Tx,Y[ @d0# W(2\*S12+ x2[ 1*TY,
.(vPS\ \14.x2q \1+*+ *Tx* x,Y 21* xPP1\x*Y[ *1 *TY 1.Y,x*S2U +YU4Y2*+k S2\P([S2U \Y,*xS2 ,Y+*,(\*(,S2U x2[ 41+* x\-(S+S*S12 ,YPx*Y[
\1+*+i
<2xPP1\x*Y[ \1,.1,x*Y x2[ +Tx,Y[ +Y,’S\Y+ \1+*+ W1, MgMN S2\,Yx+Y[ vq 5MHig 4SPPS12k 1, NgLiM3k W,14 MgMgk .,S4x,SPq [(Y *1 x2
S2\,Yx+Y S2 @d0# +.Y2[S2U 1W 5NHiN 4SPPS12 41+*Pq ,YPx*Y[ *1 *TY ,YjY+*xvPS+T4Y2* 1W Y4.P1qYY v12(+ .Px2+ S2 MgMN x2[ 1*TY,
\14.Y2+x*S12 ,YPx*Y[ S2\,Yx+Y+k x2 S2\,Yx+Y S2 x\-(S+S*S12 ,YPx*Y[ \1+*+ 1W 5JiL 4SPPS12 x2[ x2 S2\,Yx+Y S2 \1+*+ ,YPx*Y[ *1 !D:b~jNF
*Y+*S2U W1, Y4.P1qYY+ 1W 5LiL 4SPPS12 S2\P([Y[ S2 \1+* 1W ,Y’Y2(Yi
Interest Income (Expense), Foreign Exchange Transaction Gains (Losses), and Other Income (Expense), Net
>TY W1PP1tS2U *xvPY +Y*+ W1,*T S2*Y,Y+* S2\14Y nYr.Y2+Ymk W1,YSU2 Yr\Tx2UY *,x2+x\*S12 UxS2+ nP1++Y+mk x2[ 1*TY, S2\14Y
nYr.Y2+Ym W1, MgMN x2[ MgMg nS2 *T1(+x2[+mE
b2*Y,Y+* S2\14Y nYr.Y2+Ymk 2Y*
e1,YSU2 Yr\Tx2UY *,x2+x\*S12 UxS2+ nP1++Y+mk 2Y*
D*TY, S2\14Y nYr.Y2+Ymk 2Y*
X(cid:131)X[
X(cid:131)X(cid:131)
5
5
5
nHkLGHm 5
nNMHm 5
nLIGm 5
nIkJIKm
nFKMm
MN
Interest Income (Expense), Net
]Y* S2*Y,Y+* Yr.Y2+Y tx+ 5HiK 4SPPS12 S2 MgMN ’Y,+(+ 5IiI 4SPPS12 S2 MgMgi >TY S2\,Yx+Y S2 2Y* S2*Y,Y+* Yr.Y2+Y tx+ .,S4x,SPq
[(Y *1 x2 S2\,Yx+Y S2 x’Y,xUY [Yv* PY’YP+ 1WW+Y* vq x [Y\,Yx+Y S2 *TY tYSUT*Y[ x’Y,xUY S2*Y,Y+* ,x*Y 12 1(, +Y2S1, \,Y[S* Wx\SPS*SY+i >TY
tYSUT*Y[ x’Y,xUY S2*Y,Y+* ,x*Y 12 1(, +Y2S1, \,Y[S* Wx\SPS*SY+ tx+ MiNI3 x2[ MiLM3 [(,S2U MgMN x2[ MgMgk ,Y+.Y\*S’YPqi b2\P([Y[ S2
2Y* S2*Y,Y+* Yr.Y2+Y tx+ 212j\x+T S2*Y,Y+* Yr.Y2+Y 1W x..,1rS4x*YPq 5NiM 4SPPS12 x2[ 5Nig 4SPPS12 S2 MgMN x2[ MgMgk ,Y+.Y\*S’YPqk
,YPx*Y[ *1 *TY x41,*Sox*S12 1W [YWY,,Y[ WS2x2\S2U \1+*+ 12 1(, [Yv*i
Foreign Exchange Transaction Gains (Losses), Net
e1,YSU2 Yr\Tx2UY *,x2+x\*S12 UxS2+ nP1++Y+mk 2Y*k tY,Y 5giN 4SPPS12 1W 2Y* P1++Y+ S2 MgMN ’Y,+(+ 5giF 4SPPS12 1W 2Y* P1++Y+ S2
MgMgk .,S4x,SPq [(Y *1 \Tx2UY+ S2 *TY ’xP(Y 1W *TY TY YWWY\*S’Y *xr ,x*Y
W1, MgMN tx+ NgiK3 1W S2\14Y vYW1,Y S2\14Y *xrY+k \14.x,Y[ *1 x2 YWWY\*S’Y *xr ,x*Y 1W Gig3 1W S2\14Y vYW1,Y S2\14Y *xrY+ W1,
MgMgi D(, YWWY\*S’Y *xr ,x*Y W1, MgMN [SWWY,Y[ W,14 *TY !x2x[Sx2 +*x*(*1,q ,x*Y 1W MFig3 .,S4x,SPq [(Y *1 *TY 4Sr 1W S2\14Y Yx,2Y[ S2
R(,S+[S\*S12+ tS*T ’x,qS2U *xr ,x*Y+k 5MiI 4SPPS12 vY2YWS* W,14 TY !#Af@
#\* S+ x2 Y4Y,UY2\q Y\1214S\ +*S4(P(+ .x\QxUY tTS\Tk x412U 1*TY, *TS2U+k \12*xS2+ 2(4Y,1(+ .,1’S+S12+ \12\Y,2S2U S2\14Y *xrY+i
>TY !#Af@ #\* [S[ 21* Tx’Y x 4x*Y,SxP S4.x\* 12 1(, S2\14Y *xrY+ 1, ,YPx*Y[ [S+\P1+(,Y+i
Net Income
>TY \12+1PS[x*Y[ 2Y* S2\14Y tx+ 5JgiL 4SPPS12 W1, *TY qYx, Y2[Y[ ~Y\Y4vY, LNk MgMNk \14.x,Y[ *1 5KKiJ 4SPPS12 W1, *TY qYx,
Y2[Y[ ~Y\Y4vY, LNk MgMgk ,YWPY\*S2U *TY S4.x\* 1W *TY Wx\*1,+ [Y+\,SvY[ xv1’Yi
(cid:143)”zo”(cid:201)”qD Ø(cid:132)(cid:201) (cid:211)Ø}”q؇ T˘t(cid:128)ow(cid:204)˘t
8Y x++Y++ 1(, PS-(S[S*q S2 *Y,4+ 1W 1(, xvSPS*q *1 UY2Y,x*Y \x+T *1 W(2[ 1(, 1.Y,x*S2Uk S2’Y+*S2Uk x2[ WS2x2\S2U x\*S’S*SY+i D(,
.,S4x,q 12U1S2U \x+T ,Y-(S,Y4Y2*+ x,Y W(2[S2U 1.Y,x*S12+k \x.S*xP Yr.Y2[S*(,Y+k S2’Y+*4Y2*+ S2 v(+S2Y++Y+k x2[ ,Y.xq4Y2* 1W 1(, [Yv*
x2[ ,YPx*Y[ S2*Y,Y+* .xq4Y2*+i D(, .,S4x,q +1(,\Y+ 1W PS-(S[S*q x,Y \x+T WP1t+ W,14 1.Y,x*S12+ x2[ v1,,1tS2U+ (2[Y, 1(, ,Y’1P’S2U
\,Y[S* Wx\SPS*qi 8Y vYPSY’Y 1(, W(*(,Y 1.Y,x*S2U \x+T WP1t+ tSPP vY +(WWS\SY2* *1 4YY* 1(, W(*(,Y 1.Y,x*S2U x2[ \x.S*xP Yr.Y2[S*(,Y \x+T
2YY[+ W1, *TY W1,Y+YYxvPY W(*(,Yk S2\P([S2U x* PYx+* *TY 2Yr* NM 412*T+i >TY x’xSPxvSPS*q 1W v1,,1tS2U \x.x\S*q (2[Y, 1(, ,Y’1P’S2U
\,Y[S* Wx\SPS*q .,1’S[Y+ x21*TY, .1*Y2*SxP +1(,\Y 1W PS-(S[S*q W1, x2q W(*(,Y \x.S*xP Yr.Y2[S*(,Y+ x2[ 1*TY, PS-(S[S*q 2YY[+i b2 x[[S*S12k
tY Tx’Y *TY xvSPS*q *1 Yr.x2[ 1(, v1,,1tS2U \x.x\S*q vq (. *1 5Mggig 4SPPS12 vq YrY,\S+S2U *TY x\\1,[S12 WYx*(,Y (2[Y, 1(, ,Y’1P’S2U
\,Y[S* xU,YY4Y2*i 8Y 4xq +YYQ *1 ,xS+Y x[[S*S12xP \x.S*xPk tTS\T \1(P[ vY S2 *TY W1,4 1W v12[+k \12’Y,*SvPY [Yv* 1, .,YWY,,Y[ 1,
\14412 Y-(S*qk *1 W(2[ v(+S2Y++ [Y’YP1.4Y2* x\*S’S*SY+ 1, 1*TY, W(*(,Y S2’Y+*S2U \x+T ,Y-(S,Y4Y2*+k +(vRY\* *1 x..,1’xP vq *TY PY2[Y,+
S2 *TY >TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2*i >TY,Y S+ 21 x++(,x2\Y *Tx* +(\T \x.S*xP tSPP vY x’xSPxvPY 12 ,Yx+12xvPY *Y,4+ 1,
x* xPPi
@SU2SWS\x2* Wx\*1,+ xWWY\*S2U *TY 4x2xUY4Y2* 1W 1(, 12U1S2U \x+T ,Y-(S,Y4Y2*+ x,Y *TY x[Y-(x\q 1W x’xSPxvPY vx2Q PS2Y+ 1W \,Y[S*
x2[ 1(, xvSPS*q *1 x**,x\* P12U *Y,4 \x.S*xP tS*T +x*S+Wx\*1,q *Y,4+i >TY +1(,\Y+ 1W 1(, PS-(S[S*q x,Y +(vRY\* *1 xPP 1W *TY ,S+Q+ 1W 1(,
v(+S2Y++ x2[ \1(P[ vY x[’Y,+YPq xWWY\*Y[ vqk x412U 1*TY, Wx\*1,+k ,S+Q+ x++1\Sx*Y[ tS*T Y’Y2*+ 1(*+S[Y 1W 1(, \12*,1Pk +(\T x+
Y\1214S\ \12+Y-(Y2\Y+ 1W *TY !D:b~jNF .x2[Y4S\k t1,+Y2S2U +(..Pq \TxS2 [S+,(.*S12+ x2[ YPY\*,12S\+ x2[ 1*TY, 4x*Y,SxP +T1,*xUY+k
x [Y\,Yx+Y S2 [Y4x2[ W1, 1(, .,1[(\*+k 1(, xvSPS*q *1 S2*YU,x*Y \(,,Y2* x2[ W(*(,Y x\-(S+S*S12+k [Y*Y,S1,x*S12 S2 \Y,*xS2 WS2x2\SxP ,x*S1+k
x’xSPxvSPS*q 1W v1,,1tS2U+ (2[Y, 1(, ,Y’1P’S2U \,Y[S* Wx\SPS*qk x2[ 4x,QY* \Tx2UY+ S2 UY2Y,xPi @YY VAS+Q+ AYPx*S2U *1 D(, !14412
@Tx,Y+ x2[ D(, !x.S*xP @*,(\*(,Y? S2\P([Y[ S2 b*Y4 N# 1W *TS+ #22(xP AY.1,* 12 e1,4 Ngj‘i
D(, xvSPS*q *1 4xQY .xq4Y2*+ 12 1(, S2[Yv*Y[2Y++ x2[ *1 W(2[ 1(, 1.Y,x*S12+ 4xq vY [Y.Y2[Y2* (.12 *TY Yx,2S2U+ x2[ *TY
[S+*,Sv(*S12 1W W(2[+ W,14 1(, +(v+S[Sx,SY+i _1\xP Pxt+ x2[ ,YU(Px*S12+ x2[h1, *TY *Y,4+ 1W 1(, S2[Yv*Y[2Y++ ,Y+*,S\* \Y,*xS2 1W 1(,
+(v+S[Sx,SY+ W,14 .xqS2U [S’S[Y2[+ x2[ *,x2+WY,,S2U x++Y*+ *1 (+i >TY,Y S+ 21 x++(,x2\Y *Tx* x..PS\xvPY Pxt+ x2[ ,YU(Px*S12+ x2[h1, *TY
*Y,4+ 1W 1(, S2[Yv*Y[2Y++ tSPP .Y,4S* 1(, +(v+S[Sx,SY+ *1 .,1’S[Y (+ tS*T +(WWS\SY2* [S’S[Y2[+k [S+*,Sv(*S12+ 1, P1x2+ tTY2 2Y\Y++x,qi
#+ 1W ~Y\Y4vY, LNk MgMNk 5HHiL 4SPPS12 1W 1(, 5NNHiK 4SPPS12 \x+T x2[ \x+T Y-(S’xPY2*+ tx+ TYP[ vq 1(, +(v+S[Sx,SY+ 1(*+S[Y 1W
]1,*T #4Y,S\xi dY2Y,xPPqk 1(, S2*Y2* S+ *1 (+Y \x+T TYP[ S2 *TY+Y W1,YSU2 +(v+S[Sx,SY+ *1 W(2[ 1(, P1\xP 1.Y,x*S12+ 1, x\-(S+S*S12+ vq
*T1+Y P1\xP +(v+S[Sx,SY+ x2[ *1 .xq [1t2 v1,,1tS2U+ (2[Y, 1(, +Y2S1, \,Y[S* Wx\SPS*SY+i #..,1rS4x*YPq 5NIKiI 4SPPS12 1W 1(,
1(*+*x2[S2U v1,,1tS2U+ (2[Y, 1(, +Y2S1, \,Y[S* Wx\SPS*SY+ tY,Y TYP[ S2 1(, +(v+S[Sx,SY+ 1(*+S[Y 1W ]1,*T #4Y,S\x x+ 1W ~Y\Y4vY, LNk
MgMNi #[[S*S12xPPqk tY 4xq (+Y S2*Y,\14.x2q P1x2+ *1 x[[,Y++ +T1,*j*Y,4 \x+T WP1t 2YY[+ W,14 ’x,S1(+ +(v+S[Sx,SY+i
8Y [YWY,,Y[ 5MiG 4SPPS12 1W TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2*k 1,SUS2xPPq \12+S+*S2U 1W x 5Nggig
4SPPS12 TY @Y2S1, !,Y[S* ex\SPS*SY+ 4x*(,Y S2 ~Y\Y4vY, MgMKi >TY *Y,4
P1x2 Wx\SPS*q ,Y-(S,Y+ -(x,*Y,Pq +\TY[(PY[ .,S2\S.xP ,Y.xq4Y2*+ 1W x..,1rS4x*YPq /NiN 4SPPS12 vYUS22S2U S2 ^x,\T MgMg tS*T *TY
,Y4xS2S2U .,S2\S.xP vxPx2\Y [(Y (.12 4x*(,S*qi 8Y 4xq 4xQY x[[S*S12xP .,S2\S.xP .xq4Y2*+ x* x2q *S4Yk tTS\T tSPP ,Y[(\Y *TY 2Yr*
-(x,*Y,Pq S2+*xPP4Y2* .xq4Y2* [(Yi 8Y 4xq 4xQY .xq4Y2*+ *1 .xq [1t2 1(, ,Y’1P’S2U \,Y[S* Wx\SPS*q tS*T \x+T 12 Tx2[ x2[ \x+T
UY2Y,x*Y[ W,14 W(*(,Y 1.Y,x*S12+ x* x2q*S4Y (2*SP 4x*(,S*qi
D2 ^x,\T MHk MgMgk tY Y2*Y,Y[ S2*1 *TY eS,+* #4Y2[4Y2* *1 *TY >TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2* x2[ YrY,\S+Y[
x .1,*S12 1W *TY (2\144S**Y[ x\\1,[S12 WYx*(,Yi >TY eS,+* #4Y2[4Y2* S2\,Yx+Y[ *TY ,Y’1P’S2U \,Y[S* Wx\SPS*q \144S*4Y2* (2[Y, *TY
>TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2* vq 5NKJig 4SPPS12k W,14 5LJgig 4SPPS12 *1 5KFJig 4SPPS12k x2[ ,Y+Y* *TY (2\144S**Y[
x\\1,[S12 WYx*(,Y *1 5Mggig 4SPPS12 W1, .1*Y2*SxP W(*(,Y Yr.x2+S12i
D2 a(2Y Mk MgMgk tY Y2*Y,Y[ S2*1 *TY @Y\12[ #4Y2[4Y2* *1 *TY >TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2*i >TY @Y\12[
#4Y2[4Y2* ,Y’S+Y[ 1(, \12+1PS[x*Y[ PY’Y,xUY ,x*S1 [YWS2S*S12 nx+ [YWS2Y[ S2 *TY >TS,[ x4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2*m
xPP1tS2U W1, *TY (+Y 1W (. *1 5MJ 4SPPS12 (2,Y+*,S\*Y[ \x+T x2[ \x+T Y-(S’xPY2*+ x+ x ,Y[(\*S12 *1 \12+1PS[x*Y[ W(2[Y[ S2[Yv*Y[2Y++ nx+
[YWS2Y[ S2 *TY >TS,[ x4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2*mi
D2 D\*1vY, Jk MgMNk tY Y2*Y,Y[ S2*1 *TY e1(,*T #4Y2[4Y2* *1 *TY >TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2* *1 YrY,\S+Y
*TY x\\1,[S12 WYx*(,Yi >TY e1(,*T #4Y2[4Y2* S2\,Yx+Y[ *TY ,Y’1P’S2U \,Y[S* Wx\SPS*q \144S*4Y2* (2[Y, *TY >TS,[ #4Y2[Y[ x2[
AY+*x*Y[ !,Y[S* #U,YY4Y2* vq 5Mggig 4SPPS12k W,14 5KFJig 4SPPS12 *1 5IFJig 4SPPS12k x2[ ,Y+Y* *TY (2\144S**Y[ x\\1,[S12 WYx*(,Y *1
5Mggig 4SPPS12 W1, .1*Y2*SxP W(*(,Y Yr.x2+S12i
#+ 1W ~Y\Y4vY, LNk MgMNk tY Tx[ 5FMig n/GNiNm 4SPPS12 *Y,4 P1x2 x2[ 5LKIiI 4SPPS12 ,Y’1P’Y, v1,,1tS2U+ 1(*+*x2[S2U (2[Y,
1(, @Y2S1, !,Y[S* ex\SPS*SY+i >TY v1,,1tS2U+ 1(*+*x2[S2U (2[Y, *TY @Y2S1, !,Y[S* ex\SPS*SY+ vYx, S2*Y,Y+* x* ,x*Y+ vx+Y[ 12 nxm *TY "x+Y
Ax*Yk x+ [YWS2Y[ S2 *TY >TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2*k .P(+ x 4x,US2 ,x2US2U vY*tYY2 giMJ3 *1 NiMJ3 .Y, x22(4k
[Y*Y,4S2Y[ vq ,YWY,Y2\Y *1 1(, \12+1PS[x*Y[ PY’Y,xUY ,x*S1k 1, nvm *TY f(,1\(,,Y2\q Ax*Yk x+ [YWS2Y[ S2 *TY >TS,[ #4Y2[Y[ x2[
AY+*x*Y[ !,Y[S* #U,YY4Y2*k .P(+ x 4x,US2 ,x2US2U vY*tYY2 NiMJ3 x2[ MiMJ3 .Y, x22(4k [Y*Y,4S2Y[ vq ,YWY,Y2\Y *1 1(, \12+1PS[x*Y[
PY’Y,xUY ,x*S1i b2 x[[S*S12k tY x,Y 1vPSUx*Y[ *1 .xq x \144S*4Y2* WYY 12 *TY (2(+Y[ .1,*S12 1W *TY ,Y’1P’S2U \,Y[S* Wx\SPS*qk ,x2US2U
vY*tYY2 giMg3 x2[ giKg3 .Y, x22(4k [Y*Y,4S2Y[ vq ,YWY,Y2\Y *1 1(, \12+1PS[x*Y[ PY’Y,xUY ,x*S1i #+ 1W ~Y\Y4vY, LNk MgMNk tY Tx[
1(*+*x2[S2U v1,,1tS2U+ (2[Y, *TY >TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2* [Y214S2x*Y[ S2 f(,1 x2[ TY >TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2* \12*xS2+ ’x,S1(+ \1’Y2x2*+ *Tx*k tY vYPSY’Yk x,Y (+(xP x2[ \(+*14x,q W1,
*TS+ *q.Y 1W xU,YY4Y2*k S2\P([S2U x 4xrS4(4 xPP1tY[ PY’Y,xUY ,x*S1 x2[ x 4S2S4(4 ,Y-(S,Y[ WSrY[ \Tx,UY \1’Y,xUY ,x*S1 nx+ [YWS2Y[
S2 *TY >TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2*mi >TY W1PP1tS2U *xvPY +(44x,SoY+ *TY+Y WS2x2\SxP \1’Y2x2*+ x2[ 1(, \14.PSx2\Y
*TY,YtS*T x+ 1W ~Y\Y4vY, LNk MgMNE
^xrS4(4 \12+1PS[x*Y[ PY’Y,xUY ,x*S1
^S2S4(4 \12+1PS[x*Y[ WSrY[ \Tx,UY \1’Y,xUY ,x*S1
T˘zo”w˘(cid:136)˘(cid:132)q
(cid:215)(cid:204)qo؇ (cid:210)˘(cid:204)˘(cid:136)Ł˘w U[(cid:142)
X(cid:131)X[
LiJg
NiJg
MiKG
NMiMg
b2 x[[S*S12k *TY >TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2* \12*xS2+ ’x,S1(+ 1*TY, \(+*14x,q ,Y.,Y+Y2*x*S12+k tx,,x2*SY+
x2[ \1’Y2x2*+ x..PS\xvPY *1 *TY !14.x2q x2[ S*+ +(v+S[Sx,SY+k S2\P([S2UE nSm PS4S*x*S12+ 12 \Y,*xS2 .xq4Y2*+% nSSm PS4S*x*S12+ 12
W(2[x4Y2*xP \Tx2UY+ S2’1P’S2U *TY !14.x2q% nSSSm PS4S*x*S12+ 12 *TY [S+.1+S*S12 1W x++Y*+% x2[ nS’m PS4S*x*S12+ 12 S2[Yv*Y[2Y++k
S2’Y+*4Y2*+k x2[ PSY2+i
Cash Flows
!x+T x2[ \x+T Y-(S’xPY2*+ *1*xPY[ 5NNHiK 4SPPS12 x* ~Y\Y4vY, LNk MgMNk ’Y,+(+ 5NMJiN 4SPPS12 x* ~Y\Y4vY, LNk MgMgi >TY 2Y*
[Y\,Yx+Y S2 \x+T x2[ \x+T Y-(S’xPY2*+ S+ .,S4x,SPq x**,Sv(*xvPY *1 \x+T \12+S[Y,x*S12+ .xS[ W1, *TY #>b x2[ @f^ x\-(S+S*S12+ 1W 5MGKiH
4SPPS12 n2Y* 1W \x+T x\-(S,Y[ 1W 5NKiI 4SPPS12mk 5LMiK 4SPPS12 1W [Yv* ,Y.xq4Y2*+k 5LgiG 4SPPS12 1W Y4.P1qYY .xq,1PP tS*TT1P[S2U *xr
.xq4Y2*+ (.12 ’Y+*S2U 1W +Tx,Yjvx+Y[ \14.Y2+x*S12 xtx,[+k 5Mgig 4SPPS12 \x.S*xP Yr.Y2[S*(,Y+k x2[ 5GiH 4SPPS12 .xq4Y2* W1, *TY
.(,\Tx+Y 1W x v(SP[S2U (2[Y, x WS2x2\Y PYx+Y xU,YY4Y2*i >TY+Y \x+T 1(*WP1t+ tY,Y .x,*SxPPq 1WW+Y* vq v1,,1tS2U+ (2[Y, 1(, ,Y’1P’S2U
\,Y[S* Wx\SPS*q 1W 5MGgig 4SPPS12 (+Y[ *1 W(2[ *TY \x+T \12+S[Y,x*S12+ .xS[ W1, *TY #>b x2[ @f^ x\-(S+S*S12+ x2[ \x+T .,1’S[Y[ vq
1.Y,x*S2U x\*S’S*SY+ 1W 5FKiI 4SPPS12i
>TY W1PP1tS2U *xvPY +(44x,SoY+ 1(, \x+T x2[ \x+T Y-(S’xPY2* vxPx2\Y+k \x+T WP1t+ x2[ (2(+Y[ v1,,1tS2U \x.x\S*q x’xSPxvPY
(2[Y, 1(, ,Y’1P’S2U \,Y[S* Wx\SPS*q W1, *TY qYx,+ S2[S\x*Y[ nS2 *T1(+x2[+mE
!x+T x2[ \x+T Y-(S’xPY2*+k Y2[ 1W qYx,
]Y* \x+T .,1’S[Y[ vq 1.Y,x*S2U x\*S’S*SY+
]Y* \x+T (+Y[ S2 S2’Y+*S2U x\*S’S*SY+
]Y* \x+T .,1’S[Y[ vq n(+Y[ S2m WS2x2\S2U x\*S’S*SY+
<2(+Y[ v1,,1tS2U \x.x\S*q x’xSPxvPY (2[Y, ,Y’1P’S2U \,Y[S* Wx\SPS*qk Y2[ 1W
qYx,
5
5
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5
X(cid:131)X[
5
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5
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5
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X(cid:131)X(cid:131)
NMJkgJK
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5
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Operating Cash Flows
!x+T .,1’S[Y[ vq 1.Y,x*S2U x\*S’S*SY+ tx+ 5FKiI 4SPPS12 S2 MgMNk ’Y,+(+ 5NKgiM 4SPPS12 S2 MgMgi !x+T .,1’S[Y[ vq 1.Y,x*S2U
x\*S’S*SY+ [Y\,Yx+Y[ W,14 *TY .,S1, qYx, .,S4x,SPq [(Y *1 x2 S2\,Yx+Y S2 x\\1(2*+ ,Y\YS’xvPY x2[ S2’Y2*1,SY+ [(Y *1 S2\,Yx+Y+ S2 ,Y’Y2(Y
x2[ [Y4x2[k x2[ x2 5GiL 4SPPS12 .xq4Y2* S2 x\\1,[x2\Y tS*T x2 x\-(S+S*S12 Yx,21(* x,,x2UY4Y2* *Tx* tx+ ,Y\1,[Y[ x+ \14.Y2+x*S12k
.x,*SxPPq 1WW+Y* vq x2 S2\,Yx+Y S2 [xq+ .xqxvPY+ 1(*+*x2[S2U x2[ +(v+*x2*SxPPq 21 v12(+ .xq1(* S2 MgMN x+ x ,Y+(P* 1W *TY YPS4S2x*S12 1W
1(, MgMg x22(xP Y4.P1qYY \x+T v12(+ .Px2 tTS\T tx+ ,Y.Px\Y[ tS*T x +.Y\SxP 12Yj*S4Y ,Y+*,S\*Y[ +*1\Q (2S* U,x2* *1 Y4.P1qYY+ S2
#.,SP MgMgi
!x+T .,1’S[Y[ vq 1.Y,x*S2U x\*S’S*SY+ W1, MgMg tx+ .1+S*S’YPq S4.x\*Y[ vq x2 S2\,Yx+Y S2 1(, S2’Y2*1,q *(,21’Y, ,x*S1 W,14 LiN
x* ~Y\Y4vY, LNk MgNF *1 LiH x* ~Y\Y4vY, LNk MgMg x2[ x [Y\,Yx+Y S2 x\\1(2*+ ,Y\YS’xvPYk 1WW+Y* vq x [Y\,Yx+Y S2 1(, [xq+ .xqxvPY+
1(*+*x2[S2U tTS\T [Y\,Yx+Y[ W,14 JL [xq+ x* ~Y\Y4vY, LNk MgNF *1 KJ [xq+ x* ~Y\Y4vY, LNk MgMgi ~(,S2U MgMgk tY .xS[ *TY MgNF
x22(xP Y4.P1qYY \x+T v12(+Y+ tTS\T Tx[ vYY2 x\\,(Y[ W1, x+ 1W ~Y\Y4vY, LNk MgNFi
Investing Cash Flows
!x+T (+Y[ S2 S2’Y+*S2U x\*S’S*SY+ tx+ 5LgIiH 4SPPS12 S2 MgMNk .,S4x,SPq [,S’Y2 vq *TY #>b x2[ @f^ x\-(S+S*S12+i b2 \122Y\*S12
tS*T *TY+Y x\-(S+S*S12+k tY .xS[ \x+T \12+S[Y,x*S12+ 1W 5MGKiH 4SPPS12 n2Y* 1W \x+T x\-(S,Y[ 1W 5NKiI 4SPPS12mi 8Y xP+1 .xS[ \x.S*xP
Yr.Y2[S*(,Y+ 1W 5Mgig 4SPPS12 x2[ x \12*S2UY2* \12+S[Y,x*S12 .xq4Y2* 1W 5MiM 4SPPS12 ,YPx*Y[ *1 1(, MgNI x++Y* x\-(S+S*S12 1W ’S[Y1
+SU2xP .,1\Y++S2U x2[ 4x2xUY4Y2* *Y\T21P1USY+i
!x+T (+Y[ S2 S2’Y+*S2U x\*S’S*SY+ tx+ 5NLiM 4SPPS12 S2 MgMgk .,S4x,SPq [,S’Y2 vq \x.S*xP Yr.Y2[S*(,Y+ 1W 5NgiJ 4SPPS12 x2[ x
\12*S2UY2* \12+S[Y,x*S12 .xq4Y2* 1W 5MiI 4SPPS12 ,YPx*Y[ *1 1(, MgNI x++Y* x\-(S+S*S12 1W ’S[Y1 +SU2xP .,1\Y++S2U x2[ 4x2xUY4Y2*
*Y\T21P1USY+i
KL
8Y Tx’Y 21 4x*Y,SxP \144S*4Y2*+ *1 .(,\Tx+Y .,1.Y,*qk .Px2* x2[ Y-(S.4Y2* x+ 1W ~Y\Y4vY, LNk MgMNi 8Y Yr.Y\* *1 (+Y
x..,1rS4x*YPq 5MJ 4SPPS12 *1 5Lg 4SPPS12 S2 MgMM W1, \x.S*xP Yr.Y2[S*(,Y+ ,YPx*Y[ *1 S2’Y+*4Y2*+ S2 2Yt .,1.Y,*qk .Px2* x2[ Y-(S.4Y2*
W1, 1(, YrS+*S2U v(+S2Y++Y+i
Financing Cash Flows
!x+T .,1’S[Y[ vq WS2x2\S2U x\*S’S*SY+ tx+ 5MgKiG 4SPPS12 S2 MgMNk .,S4x,SPq [(Y *1 5MGgig 4SPPS12 1W v1,,1tS2U+ (2[Y, 1(,
,Y’1P’S2U \,Y[S* Wx\SPS*q (+Y[ *1 W(2[ *TY \x+T \12+S[Y,x*S12+ .xS[ W1, *TY #>b x2[ @f^ x\-(S+S*S12+k .x,*SxPPq 1WW+Y* vq 5LMiK 4SPPS12
1W *Y,4 P1x2 x2[ ,Y’1P’S2U \,Y[S* Wx\SPS*q ,Y.xq4Y2*+k 5LgiG 4SPPS12 1W .xq,1PP *xr .xq4Y2*+ (.12 ’Y+*S2U 1W +Tx,Yjvx+Y[ \14.Y2+x*S12
xtx,[+k x2 5GiH 4SPPS12 .xq4Y2* W1, *TY .(,\Tx+Y 1W x v(SP[S2U (2[Y, x WS2x2\Y PYx+Y xU,YY4Y2*k x2[ 5NiG 4SPPS12 1W \12*S2UY2*
\12+S[Y,x*S12 .xq4Y2*+ ,YPx*Y[ *1 .,S1, qYx, x\-(S+S*S12+i
!x+T (+Y[ S2 WS2x2\S2U x\*S’S*SY+ tx+ 5GKiK 4SPPS12 S2 MgMgk .,S4x,SPq [(Y *1 5LJiK 4SPPS12 S2 ,Y.xq4Y2*+ 1W v1,,1tS2U+ (2[Y,
1(, @Y2S1, !,Y[S* ex\SPS*SY+k 5LNig 4SPPS12 .xq4Y2*+ 1W [YWY,,Y[ x2[ Y+\,1tY[ .(,\Tx+Y .,S\Y ,YPx*Y[ *1 .,S1, qYx, x\-(S+S*S12+k 5GiI
4SPPS12 1W Y4.P1qYY .xq,1PP tS*TT1P[S2U *xr .xq4Y2*+ (.12 ’Y+*S2U 1W +Tx,Yjvx+Y[ \14.Y2+x*S12 xtx,[+k 5JiJ 4SPPS12 1W ,Y.(,\Tx+Y+
1W \14412 +Tx,Y+k x2[ 5NiI 4SPPS12 1W WYY+ .xS[ S2 \122Y\*S12 tS*T *TY eS,+* #4Y2[4Y2* *1 1(, >TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S*
#U,YY4Y2*i
b2 MgMMk tY x,Y \12*,x\*(xPPq ,Y-(S,Y[ *1 4xQY 5JiN 4SPPS12 S2 ,Y.xq4Y2*+ (2[Y, 1(, *Y,4 P1x2 Wx\SPS*qi b2 x[[S*S12k tY 4xq
4xQY 1.*S12xP ,Y.xq4Y2*+ (2[Y, 1(, *Y,4 P1x2 x2[ ,Y’1P’S2U \,Y[S* Wx\SPS*q W,14 *S4Y *1 *S4Y tS*T x’xSPxvPY \x+T UY2Y,x*Y[ W,14
W(*(,Y 1.Y,x*S2U x\*S’S*SY+i
Pension Plans
8Y 4xS2*xS2 x [YWS2Y[ vY2YWS* .Y2+S12 .Px2 n*TY VY\T21P1USY+ <‘ _S4S*Y[k x tT1PPq 1t2Y[ +(v+S[Sx,q
1W *TY !14.x2qi D(, TY
,Y+(P*+ 1W W(2[S2U ’xP(x*S12+ [Y.Y2[ 12 v1*T *TY W(2[S2U [YWS\S* x2[ *TY x++(4.*S12+ (+Y[k +(\T x+ x++Y* ,Y*(,2+k [S+\1(2* ,x*Y+k
41,*xPS*q ,x*Y+k ,Y*xSP .,S\Y S2WPx*S12 x2[ 1*TY, 4x,QY* [,S’Y2 x++(4.*S12+i fx\T x++(4.*S12 (+Y[ ,Y.,Y+Y2*+ 12Y Y+*S4x*Y 1W 4x2q
.1++SvPY W(*(,Y 1(*\14Y+i >TY WS2xP \1+* *1 (+ tSPP vY [Y*Y,4S2Y[ vq Y’Y2*+ x+ *TYq x\*(xPPq vY\14Y Q21t2k S2\P([S2U x\*(xP ,Y*(,2 12
.Px2 x++Y*+ x2[ .Y2+S12 .xq4Y2*+ *1 .Px2 .x,*S\S.x2*+i #+ 1W ~Y\Y4vY, LNk MgMNk *TY WxS, ’xP(Y 1W .Px2 x++Y*+ Yr\YY[Y[ *TY .,1RY\*Y[
vY2YWS* 1vPSUx*S12 (2[Y, *TY TY *Y,4 P1x2 S+ .xqxvPY S2 -(x,*Y,Pq S2+*xPP4Y2*+ 1W x..,1rS4x*YPq /NiN
4SPPS12 n5NiL 4SPPS12m tS*T *TY WS2xP S2+*xPP4Y2* 1W /IGiH 4SPPS12 n5HHiF 4SPPS12m [(Y (.12 4x*(,S*q S2 ~Y\Y4vY, MgMKi "1,,1tS2U+
(2[Y, *TY ,Y’1P’S2U \,Y[S* Wx\SPS*q x,Y [(Y x* 4x*(,S*q S2 ~Y\Y4vY, MgMKi
#+ 1W ~Y\Y4vY, LNk MgMNk *TY W(*(,Y S2*Y,Y+* .xq4Y2*+ (2[Y, 1(, @Y2S1, !,Y[S* ex\SPS*SY+ x,Y Yr.Y\*Y[ *1 vY x..,1rS4x*YPq
5LLiM 4SPPS12k tS*T 5NNiJ 4SPPS12 .xqxvPY tS*TS2 *TY 2Yr* *tYP’Y 412*T+i >TY+Y Y+*S4x*Y+ x,Y vx+Y[ 12 \(,,Y2* S2*Y,Y+* ,x*Y+ 12
WP1x*S2U ,x*Y 1vPSUx*S12+k x+ [YWS2Y[ S2 *TY >TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2*k W1, *TY ,Y4xS2[Y, 1W *TY \12*,x\*(xP PSWY 1W
v1*T *TY *Y,4 P1x2 x2[ 1(*+*x2[S2U v1,,1tS2U+ (2[Y, *TY ,Y’1P’S2U \,Y[S* Wx\SPS*qk x2[ *TY \(,,Y2* \144S*4Y2* WYY ,x*Y tx+ (+Y[ W1,
*TY (2(+Y[ \144S*4Y2*+ (2[Y, ,Y’1P’S2U \,Y[S* Wx\SPS*q x+ 1W ~Y\Y4vY, LNk MgMNi @YY ]1*Y NNk V~Yv*k? S2 *TY !12+1PS[x*Y[ eS2x2\SxP
@*x*Y4Y2*+ W1, W(,*TY, [Y*xSP+ 1W 1(, [Yv* 1vPSUx*S12+ x2[ *TY *S4S2U 1W Yr.Y\*Y[ W(*(,Y .xq4Y2*+i
Operating and Finance Leases
8Y Y2*Y,Y[ S2*1 ’x,S1(+ PYx+Y xU,YY4Y2*+ W1, 1WWS\Y x2[ 4x2(Wx\*(,S2U Wx\SPS*SY+k ’YTS\PY+k x2[ Y-(S.4Y2* (+Y[ S2 *TY 21,4xP
\1(,+Y 1W v(+S2Y++i <2[S+\1(2*Y[ 1.Y,x*S2U x2[ WS2x2\Y PYx+Y 1vPSUx*S12+ tY,Y 5HKiL 4SPPS12k tS*T 5NgiN 4SPPS12 .xqxvPY tS*TS2 NM
KK
412*T+i @YY ]1*Y NMk V_Yx+Y+k? S2 *TY !12+1PS[x*Y[ eS2x2\SxP @*x*Y4Y2*+ W1, W(,*TY, [Y*xSP+ 1W 1(, 1vPSUx*S12+ x2[ *TY *S4S2U 1W
Yr.Y\*Y[ W(*(,Y .xq4Y2*+i
Purchase Obligations
C(,\Tx+Y 1vPSUx*S12+ ,Y.,Y+Y2* x2 Y+*S4x*Y 1W xPP 1.Y2 .(,\Tx+Y 1,[Y,+ x2[ \12*,x\*(xP 1vPSUx*S12+ S2 *TY 1,[S2x,q \1(,+Y 1W
v(+S2Y++ W1, tTS\T tY Tx’Y 21* ,Y\YS’Y[ *TY U11[+ 1, +Y,’S\Y+i #+ 1W ~Y\Y4vY, LNk MgMNk tY Tx[ 5NIFiI 4SPPS12 1W .(,\Tx+Y
1vPSUx*S12+k tS*T 5NIHiN 4SPPS12 .xqxvPY tS*TS2 *TY 2Yr* *tYP’Y 412*T+i
Contingent Consideration and Earn-outs
#+ 1W ~Y\Y4vY, LNk MgMNk *1*xP Y+*S4x*Y[ .xq4Y2*+ W1, \12*S2UY2* \12+S[Y,x*S12+ x2[ Yx,2j1(*+ x\\,(Y[ W1, S2 *TY \12+1PS[x*Y[
vxPx2\Y +TYY* x41(2*Y[ *1 5JgiF 4SPPS12k tS*T 5KHiJ 4SPPS12 Y+*S4x*Y[ .xq4Y2*+ [(Y tS*TS2 *TY 2Yr* *tYP’Y 412*T+i @YY ]1*Y Hk
VexS, :xP(Y ^Yx+(,Y4Y2*+?k S2 *TY !12+1PS[x*Y[ eS2x2\SxP @*x*Y4Y2*+ W1, W(,*TY, S2W1,4x*S12 ,YPx*Y[ *1 *TY WxS, ’xP(Y+ 1W 1(,
1vPSUx*S12+ (2[Y, *TY \12*S2UY2* \12+S[Y,x*S12 x2[ Yx,2j1(* x,,x2UY4Y2*+i
(cid:211)w”q”(cid:204)؇ (cid:215)(cid:204)(cid:204)(cid:128)o(cid:132)q”(cid:132)(cid:192) Z(cid:128)‡”(cid:204)”˘t Ø(cid:132)(cid:201) £tq”(cid:136)Øq˘t
>TY .,Y.x,x*S12 1W WS2x2\SxP +*x*Y4Y2*+ S2 \12W1,4S*q tS*T x\\1(2*S2U .,S2\S.PY+ UY2Y,xPPq x\\Y.*Y[ S2 *TY TS+ UY2Y,xPPq 1\\(,+ (.12
+TS.4Y2* tTY2 *TY *S*PY x2[ ,S+Q 1W P1++ .x++ *1 *TY \(+*14Y,i >TY ’x+* 4xR1,S*q 1W 1(, ,Y’Y2(Y S+ UY2Y,x*Y[ W,14 *TY +xPY 1W [S+*S2\*
.,1[(\*+i AY’Y2(Y S+ 4Yx+(,Y[ x+ *TY x41(2* 1W \12+S[Y,x*S12 tY Yr.Y\* *1 ,Y\YS’Y S2 Yr\Tx2UY W1, +(\T .,1[(\*+k tTS\T S+ UY2Y,xPPq
x* \12*,x\*(xPPq +*x*Y[ .,S\Y+i @xPY+ *xrY+ x2[ ’xP(Y x[[Y[ *xrY+ \1PPY\*Y[ \12\(,,Y2*Pq tS*T ,Y’Y2(Y UY2Y,x*S2U x\*S’S*SY+ x,Y Yr\P([Y[
W,14 ,Y’Y2(Yi
@(v+*x2*SxPPq xPP 1W 1(, ,Y’Y2(Y S+ ,Y\1U2SoY[ x* x .1S2* S2 *S4Yk (.12 +TS.4Y2*k ,x*TY, *Tx2 1’Y, *S4Yi #* *TY ,Y-(Y+* 1W 1(,
\(+*14Y,+k tY 4xq .Y,W1,4 .,1WY++S12xP +Y,’S\Y+k UY2Y,xPPq W1, *TY 4xS2*Y2x2\Y x2[ ,Y.xS, 1W .,1[(\*+ .,Y’S1(+Pq +1P[ *1 *T1+Y
\(+*14Y,+ x2[ W1, Y2US2YY,S2U +Y,’S\Y+i C,1WY++S12xP +Y,’S\Y+ x,Y *q.S\xPPq +T1,* S2 [(,x*S12k 41+*Pq PY++ *Tx2 12Y 412*Tk x2[ *1*xP PY++
*Tx2 L3 1W 1(, \12+1PS[x*Y[ ,Y’Y2(Yi AY’Y2(Y S+ *q.S\xPPq ,Y\1U2SoY[ x* x .1S2* S2 *S4Y tTY2 \12*,1P *,x2+WY,+ *1 *TY \(+*14Y, (.12
\14.PY*S12 1W .,1WY++S12xP +Y,’S\Y+i >TY+Y +Y,’S\Y+ UY2Y,xPPq S2’1P’Y x +S2UPY [S+*S2\* .Y,W1,4x2\Y 1vPSUx*S12i >TY \12+S[Y,x*S12
Yr.Y\*Y[ *1 vY ,Y\YS’Y[ S2 Yr\Tx2UY W1, +(\T +Y,’S\Y+ S+ 21,4xPPq *TY \12*,x\*(xPPq +*x*Y[ x41(2*i
8Y 1\\x+S12xPPq +YPP +Y.x,x*YPq .,S\Y[ 212j+*x2[x,[hYr*Y2[Y[ tx,,x2*q +Y,’S\Y+ 1, .,Y’Y2*x*S’Y 4xS2*Y2x2\Y .Px2+ tS*T *TY +xPY
1W .,1[(\*+i >TY *,x2+WY, 1W \12*,1P 1’Y, *TY +Y,’S\Y .Px2+ S+ 1’Y, *S4Yi 8Y ,Y\1U2SoY *TY ,YPx*Y[ ,Y’Y2(Y ,x*xvPq 1’Y, *TY *Y,4+ 1W *TY
+Y,’S\Y .Px2+i >TY *,x2+x\*S12 .,S\Y 1W x \12*,x\* S+ xPP1\x*Y[ *1 Yx\T .Y,W1,4x2\Y 1vPSUx*S12 vx+Y[ 12 S*+ ,YPx*S’Y +*x2[xP12Y +YPPS2U
.,S\Yi @*x2[xP12Y +YPPS2U .,S\Y+ x,Y UY2Y,xPPq [Y*Y,4S2Y[ vx+Y[ 12 *TY .,S\Y+ \Tx,UY[ *1 \(+*14Y,+ 1, (+S2U *TY Yr.Y\*Y[ \1+* .P(+ x
4x,US2i
8Y x\\1(2* W1, +TS..S2U x2[ Tx2[PS2U x\*S’S*SY+ *Tx* 1\\(, xW*Y, *TY *,x2+WY, 1W \12*,1P 1’Y, *TY ,YPx*Y[ U11[+ x+ W(PWSPP4Y2*
x\*S’S*SY+ ,x*TY, *Tx2 .Y,W1,4x2\Y 1vPSUx*S12+i >TY +TS..S2U x2[ Tx2[PS2U WYY+ \Tx,UY[ *1 \(+*14Y,+ x,Y ,Y\1U2SoY[ x+ ,Y’Y2(Y x2[ *TY
,YPx*Y[ \1+*+ x,Y ,Y\1,[Y[ S2 \1+* 1W ,Y’Y2(Y x* *TY *S4Y 1W *,x2+WY, 1W \12*,1Pi
8Y UY2Y,xPPq .,1’S[Y tx,,x2*SY+ W1, 1(, .,1[(\*+i >TY +*x2[x,[ tx,,x2*q .Y,S1[ S+ *q.S\xPPq NM 412*T+ *1 LI 412*T+i >TY
+*x2[x,[ tx,,x2*q .Y,S1[ W1, .,1[(\* +xPY+ S+ x\\1(2*Y[ W1, (2[Y, *TY .,1’S+S12+ 1W #@! KJgk V!12*S2UY2\SY+k? x+ tY Tx’Y *TY xvSPS*q
KJ
*1 x+\Y,*xS2 *TY PSQYPST11[ 1W *TY PSxvSPS*q x2[ \x2 ,Yx+12xvPq Y+*S4x*Y *TY x41(2* 1W *TY PSxvSPS*qi # .,1’S+S12 W1, *TY Y+*S4x*Y[ \1+*
,YPx*Y[ *1 tx,,x2*q S+ ,Y\1,[Y[ *1 \1+* 1W ,Y’Y2(Y x* *TY *S4Y ,Y’Y2(Y S+ ,Y\1U2SoY[i D(, Y+*S4x*Y 1W *TY \1+*+ *1 +Y,’S\Y tx,,x2*q
1vPSUx*S12+ S+ vx+Y[ 12 TS+*1,S\xP Yr.Y,SY2\Y x2[ Yr.Y\*x*S12+ 1W W(*(,Y \12[S*S12+i >1 *TY Yr*Y2* 1(, Yr.Y,SY2\Y S2 tx,,x2*q \PxS4+ 1,
\1+*+ x++1\Sx*Y[ tS*T +Y,’S\S2U *T1+Y \PxS4+ [SWWY, W,14 *TY 1,SUS2xP Y+*S4x*Y+k ,Y’S+S12+ *1 *TY Y+*S4x*Y[ tx,,x2*q PSxvSPS*q x,Y
,Y\1,[Y[ x* *Tx* *S4Yk tS*T x2 1WW+Y**S2U Y2*,q ,Y\1,[Y[ *1 \1+* 1W ,Y’Y2(Yi
8Y Yr.Y2+Y S2\,Y4Y2*xP [S,Y\* \1+*+ 1W 1v*xS2S2U x \12*,x\* tTY2 S2\(,,Y[ SW *TY Yr.Y\*Y[ x41,*Sox*S12 .Y,S1[ S+ 12Y qYx, 1,
PY++i >TY+Y \1+*+ x,Y ,Y\1,[Y[ tS*TS2 +YPPS2Uk UY2Y,xP x2[ x[4S2S+*,x*S’Y Yr.Y2+Y+ S2 *TY \12+1PS[x*Y[ +*x*Y4Y2* 1W 1.Y,x*S12+i 8Y [1
21* x[R(+* *TY .,14S+Y[ x41(2* 1W \12+S[Y,x*S12 W1, *TY YWWY\*+ 1W x WS2x2\S2U \14.12Y2* vY\x(+Y *TY *S4Y .Y,S1[ vY*tYY2 *TY *,x2+WY,
1W x .,14S+Y[ U11[ *1 x \(+*14Y, x2[ *TY \(+*14Y,;+ .xq4Y2* W1, *Tx* U11[ S+ *q.S\xPPq 12Y qYx, 1, PY++i
Inventories. b2’Y2*1,SY+k tTS\T S2\P([Y 4x*Y,SxP+ x2[ \12’Y,+S12 \1+*+k x,Y +*x*Y[ x* *TY P1tY, 1W \1+* 1, 2Y* ,YxPSoxvPY ’xP(Yk
(+S2U *TY WS,+*jS2k WS,+*j1(* 4Y*T1[i !1+* S2\P([Y+ *TY \1+* 1W .(,\Tx+Y[ 4x*Y,SxP+k S2v1(2[ W,YSUT* \Tx,UY+k \(+*14+ [(*SY+ x2[ *,x[Y
*x,SWW+ 12 S4.1,*Y[ 4x*Y,SxP+ x2[ \14.12Y2*+k Yr*Y,2xP x2[ S2*Y,2xP .,1\Y++S2U x2[ x..PS\xvPY Pxv1, x2[ 1’Y,TYx[ \1+*+i ]Y* ,YxPSoxvPY
’xP(Y S+ *TY Y+*S4x*Y[ +YPPS2U .,S\Y S2 *TY 1,[S2x,q \1(,+Y 1W v(+S2Y++k PY++ ,Yx+12xvPq .,Y[S\*xvPY \1+*+ 1W \14.PY*S12k +*1,xUYk
[S+.1+xP x2[ *,x2+.1,*x*S12i
8Y ,YU(Px,Pq ,Y’SYt S2’Y2*1,q -(x2*S*SY+ 12 Tx2[ x2[k tTY2 2Y\Y++x,qk ,Y\1,[ .,1’S+S12+ W1, Yr\Y++ x2[ 1v+1PY*Y S2’Y2*1,q
vx+Y[ 12 YS*TY, 1(, W1,Y\x+*Y[ .,1[(\* [Y4x2[ x2[ .,1[(\*S12 ,Y-(S,Y4Y2*+ 1, *,xSPS2U TS+*1,S\xP (+xUY 1W *TY .,1[(\*i bW 1(, +xPY+ [1
21* 4x*Y,SxPSoY x+ .Px22Y[ 1, x* TS+*1,S\xP PY’YP+k tY 4xq Tx’Y *1 S2\,Yx+Y 1(, ,Y+Y,’Y W1, Yr\Y++ x2[ 1v+1PY*Y S2’Y2*1,qk tTS\T t1(P[
,Y[(\Y 1(, 1.Y,x*S2U S2\14Yi bW x\*(xP 4x,QY* \12[S*S12+ x,Y 41,Y Wx’1,xvPY *Tx2 x2*S\S.x*Y[k S2’Y2*1,q .,Y’S1(+Pq t,S**Y2 [1t2 4xq
vY +1P[k ,Y+(P*S2U S2 P1tY, \1+* 1W ,Y’Y2(Y x2[ TSUTY, 1.Y,x*S2U S2\14Y *Tx2 Yr.Y\*Y[ S2 *Tx* .Y,S1[i
Share-Based Compensation. 8Y ,Y\1,[ Yr.Y2+Y+ x++1\Sx*Y[ tS*T +Tx,Yjvx+Y[ \14.Y2+x*S12 xtx,[+ *1 Y4.P1qYY+ x2[ [S,Y\*1,+
vx+Y[ 12 *TY WxS, ’xP(Y 1W xtx,[+ x+ 1W *TY U,x2* [x*Yi b2 x[[S*S12 *1 +Y,’S\Yjvx+Y[ xtx,[+ U,x2*Y[ *1 x tS[Y, Y4.P1qYY vx+Yk tY
*q.S\xPPq U,x2* *T,YY *q.Y+ 1W .Y,W1,4x2\Yjvx+Y[ xtx,[+ *1 \Y,*xS2 4Y4vY,+ 1W *TY YrY\(*S’Y 4x2xUY4Y2* *Yx4E 212jd##C fC@
.Y,W1,4x2\Yjvx+Y[ ,Y+*,S\*Y[ +*1\Q (2S*+ nVfC@jC@<+?mk 1.Y,x*S2U \x+T WP1t .Y,W1,4x2\Yjvx+Y[ ,Y+*,S\*Y[ +*1\Q (2S*+ nVD!ejC@<+?mk
x2[ ,YPx*S’Y *1*xP +Tx,YT1P[Y, ,Y*(,2 .Y,W1,4x2\Yjvx+Y[ ,Y+*,S\*Y[ +*1\Q (2S*+ nV>@AjC@<+?mi
e1, +Tx,Yjvx+Y[ \14.Y2+x*S12 xtx,[+ *Tx* ’Y+* 1’Y, *S4Y vx+Y[ 12 Y4.P1q4Y2*k *TY x++1\Sx*Y[ Yr.Y2+Y+ x,Y ,Y\1U2SoY[ S2 *TY
\12+1PS[x*Y[ +*x*Y4Y2* 1W 1.Y,x*S12+ ,x*xvPq 1’Y, *TY ’Y+*S2U .Y,S1[ 1W *TY xtx,[+k 2Y* 1W Y+*S4x*Y[ W1,WYS*(,Y+i
e1, fC@jC@<+ x2[ D!ejC@<+k +Tx,Yjvx+Y[ \14.Y2+x*S12 Yr.Y2+Y+ x,Y ,Y\1U2SoY[ ,x*xvPq 1’Y, *TY ’Y+*S2U .Y,S1[ tTY2 S* S+
.,1vxvPY *Tx* +.Y\SWSY[ .Y,W1,4x2\Y *x,UY*+ x,Y Yr.Y\*Y[ *1 vY x\TSY’Y[ vx+Y[ 12 4x2xUY4Y2*;+ .,1RY\*S12+ x+ 1W *TY Y2[ 1W Yx\T
.Y,S1[i ^x2xUY4Y2*;+ .,1RY\*S12+ x,Y ,Y’S+Y[k SW 2Y\Y++x,qk S2 +(v+Y-(Y2* .Y,S1[+ tTY2 (2[Y,PqS2U Wx\*1,+ \Tx2UY *TY Y+*S4x*Y[
.,1vxvSPS*q 1W x\TSY’S2U *TY .Y,W1,4x2\Y *x,UY*+ x+ tYPP x+ *TY PY’YP+ 1W x\TSY’Y4Y2*i 8TY2 *TY Y+*S4x*Y[ x\TSY’Y4Y2* PY’YP+ x,Y
x[R(+*Y[ x* x Px*Y, [x*Yk x \(4(Px*S’Y x[R(+*4Y2* *1 *TY +Tx,Yjvx+Y[ \14.Y2+x*S12 Yr.Y2+Y .,Y’S1(+Pq ,Y\1U2SoY[ t1(P[ vY ,Y-(S,Y[i
#\\1,[S2UPqk +Tx,Yjvx+Y[ \14.Y2+x*S12 Yr.Y2+Y+ x++1\Sx*Y[ tS*T fC@jC@<+ x2[ D!ejC@<+ 4xq [SWWY, +SU2SWS\x2*Pq W,14 .Y,S1[ *1
.Y,S1[ vx+Y[ 12 \Tx2UY+ *1 v1*T *TY .,1vxvSPS*q x2[ *TY PY’YP 1W x\TSY’Y4Y2* xUxS2+* .Y,W1,4x2\Y *x,UY*+i
e1, >@AjC@<+k +Tx,Yjvx+Y[ \14.Y2+x*S12 Yr.Y2+Y+ x,Y ,Y\1U2SoY[ vx+Y[ 12 *TY WxS, ’xP(Y 1W *TY >@AjC@<+k tTS\T S+
[Y*Y,4S2Y[ (+S2U *TY ^12*Yj!x,P1 +S4(Px*S12 ’xP(x*S12 41[YP x+ 1W *TY [x*Y 1W U,x2*i @Tx,Y[jvx+Y[ \14.Y2+x*S12 Yr.Y2+Y+ ,YPx*Y[ *1
>@AjC@<+ x,Y ,Y\1U2SoY[ 12 x +*,xSUT*jPS2Y vx+S+ W,14 *TY U,x2* [x*Y *1 *TY Y2[ 1W *TY .Y,W1,4x2\Y .Y,S1[k tTS\T S+ UY2Y,xPPq *T,YY
qYx,+k ,YUx,[PY++ 1W tTY*TY, *TY *x,UY* ,YPx*S’Y *1*xP +Tx,YT1P[Y, ,Y*(,2 S+ x\TSY’Y[i >TY ^12*Y !x,P1 +S4(Px*S12 41[YP (*SPSoY+
4(P*S.PY S2.(* ’x,SxvPY+ *Tx* [Y*Y,4S2Y *TY .,1vxvSPS*q 1W +x*S+WqS2U *TY .Y,W1,4x2\Y \12[S*S12+ +*S.(Px*Y[ S2 *TY U,x2* xU,YY4Y2* S2 x
Px,UY 2(4vY, 1W +S4(Px*Y[ +\Y2x,S1+i ‘Yq x++(4.*S12+ W1, *TY ^12*Y !x,P1 +S4(Px*S12 41[YP S2\P([Y ,S+QjW,YY S2*Y,Y+* ,x*Y x2[
Yr.Y\*Y[ +*1\Q .,S\Y ’1Px*SPS*q 1W v1*T *TY !14.x2q;+ \14412 +Tx,Y+ x2[ *TY A(++YPP Mggg S2[Yri
Valuation of Long-lived Assets. >TY .(,\Tx+Y .,S\Y tY .xq W1, x\-(S,Y[ \14.x2SY+ S+ xPP1\x*Y[ WS,+* *1 *TY S[Y2*SWSxvPY x++Y*+
x\-(S,Y[ x2[ PSxvSPS*SY+ x++(4Y[ x* *TYS, WxS, ’xP(Yi #2q Yr\Y++ .(,\Tx+Y .,S\Y S+ *TY2 xPP1\x*Y[ *1 U11[tSPPi 8Y 4xQY ’x,S1(+
x++(4.*S12+ x2[ Y+*S4x*Y+ S2 1,[Y, *1 x++SU2 WxS, ’xP(Y *1 x\-(S,Y[ *x2USvPY x2[ S2*x2USvPY x++Y*+ x2[ PSxvSPS*SY+i ‘Yq x++(4.*S12+
*q.S\xPPq S2\P([Y ,Y’Y2(Y U,1t*T ,x*Y+ x2[ .,1RY\*Y[ \x+T WP1t+k [S+\1(2* ,x*Y+k ,1qxP*q ,x*Y+k *Y\T21P1Uq 1v+1PY+\Y2\Y \(,’Y+k x2[
\(+*14Y, x**,S*S12 ,x*Y+k x412U 1*TY,+i #\*(xP \x+T WP1t+ 4xq ’x,q W,14 W1,Y\x+*+ (+Y[ *1 ’xP(Y *TY+Y x++Y*+ x* *TY *S4Y 1W *TY v(+S2Y++
\14vS2x*S12i
D(, 41+* +SU2SWS\x2* S[Y2*SWSxvPY S2*x2USvPY x++Y*+ x,Y \(+*14Y, ,YPx*S12+TS.+k x\-(S,Y[ *Y\T21P1USY+k *,x[Y4x,Q+ x2[ *,x[Y
2x4Y+i b2 x[[S*S12 *1 1(, ,Y’SYt 1W *TY \x,,qS2U ’xP(Y 1W Yx\T x++Y*k *TY Y+*S4x*Y[ (+YW(P PSWY x++(4.*S12+ W1, S[Y2*SWSxvPY S2*x2USvPY
x++Y*+k S2\P([S2U *TY \Px++SWS\x*S12 1W \Y,*xS2 S2*x2USvPY x++Y*+ x+ VS2[YWS2S*YjPS’Y[k? x,Y ,Y’SYtY[ 12 x .Y,S1[S\ vx+S+ *1 [Y*Y,4S2Y SW
\Tx2UY+ S2 \S,\(4+*x2\Y+ tx,,x2* ,Y’S+S12+ *1 *TY4i #PP [YWS2S*YjPS’Y[ S2*x2USvPY x++Y*+ x,Y x41,*SoY[ 1’Y, *TY .Y,S1[+ S2 tTS\T *TYS,
Y\1214S\ vY2YWS*+ x,Y Yr.Y\*Y[ *1 vY ,YxPSoY[i
KI
b4.xS,4Y2* x2xPq+Y+ 1W U11[tSPP x2[ S2[YWS2S*YjPS’Y[ S2*x2USvPY x++Y*+ x,Y \12[(\*Y[ S2 x\\1,[x2\Y tS*T #@! LJgk
Vb2*x2USvPY+Xd11[tSPP x2[ D*TY,i? 8Y *Y+* 1(, U11[tSPP vxPx2\Y+ x22(xPPq x+ 1W *TY vYUS22S2U 1W *TY +Y\12[ -(x,*Y, 1, 41,Y
W,Y-(Y2*Pq SW S2[S\x*1,+ x,Y .,Y+Y2*k 1, \Tx2UY+ S2 \S,\(4+*x2\Y+ +(UUY+*k *Tx* x2 S4.xS,4Y2* 4xq YrS+*i @T1(P[ *TY WxS, ’xP(Y 1W 1(,
U11[tSPP 1, S2[YWS2S*YjPS’Y[ S2*x2USvPY x++Y*+ [Y\PS2Y vY\x(+Y 1W ,Y[(\Y[ 1.Y,x*S2U .Y,W1,4x2\Yk 4x,QY* [Y\PS2Y+ 1, 1*TY, S2[S\x*1,+ 1W
S4.xS,4Y2*k 1, x+ x ,Y+(P* 1W \Tx2UY+ S2 *TY [S+\1(2* ,x*Yk \Tx,UY+ W1, S4.xS,4Y2* P1++ 4xq vY 2Y\Y++x,qi
8Y Y’xP(x*Y 1(, U11[tSPPk S2*x2USvPY x++Y*+ x2[ 1*TY, P12UjPS’Y[ x++Y*+ W1, S4.xS,4Y2* x* *TY ,Y.1,*S2U (2S* PY’YP+ tTS\T S+
UY2Y,xPPq x* PYx+* 12Y PY’YP vYP1t 1(, ,Y.1,*xvPY +YU4Y2*+i 8Y Tx’Y *TY 1.*S12 1W WS,+* .Y,W1,4S2U x -(xPS*x*S’Y x++Y++4Y2* *1
[Y*Y,4S2Y tTY*TY, S* S+ 2Y\Y++x,q *1 .Y,W1,4 *TY -(x2*S*x*S’Y S4.xS,4Y2* *Y+*i b2 .Y,W1,4S2U *TY -(xPS*x*S’Y x++Y++4Y2*k tY ,Y’SYt
Wx\*1,+ v1*T +.Y\SWS\ *1 *TY ,Y.1,*S2U (2S* x2[ *1 *TY !14.x2q x+ x tT1PYk +(\T x+ WS2x2\SxP .Y,W1,4x2\Yk 4x\,1Y\1214S\ \12[S*S12+k
S2[(+*,q x2[ 4x,QY* \12+S[Y,x*S12+k x2[ *TY WxS, ’xP(Y 1W Yx\T ,Y.1,*S2U (2S* x+ 1W *TY Px+* ’xP(x*S12 [x*Yi bW tY YPY\* *TS+ 1.*S12 x2[
vYPSY’Yk x+ x ,Y+(P* 1W *TY -(xPS*x*S’Y x++Y++4Y2*k *Tx* S* S+ 41,Y PSQYPq *Tx2 21* *Tx* *TY \x,,qS2U ’xP(Y 1W U11[tSPP S+ 21* ,Y\1’Y,xvPYk
*TY -(x2*S*x*S’Y S4.xS,4Y2* *Y+* S+ ,Y-(S,Y[% 1*TY,tS+Yk 21 W(,*TY, *Y+*S2U S+ ,Y-(S,Y[i
#P*Y,2x*S’YPqk tY 4xq YPY\* *1 vq.x++ *TY -(xPS*x*S’Y x++Y++4Y2* x2[ .Y,W1,4 *TY -(x2*S*x*S’Y S4.xS,4Y2* *Y+* S2+*Yx[i >TS+
x..,1x\T ,Y-(S,Y+ x \14.x,S+12 1W *TY \x,,qS2U ’xP(Y 1W Yx\T 1W 1(, ,Y.1,*S2U (2S*+ *1 *TY WxS, ’xP(Y 1W *TY+Y ,Y.1,*S2U (2S*+i bW *TY
\x,,qS2U ’xP(Y 1W x ,Y.1,*S2U (2S* Yr\YY[+ S*+ WxS, ’xP(Yk x2 S4.xS,4Y2* \Tx,UY S+ ,Y\1,[Y[ W1, *TY [SWWY,Y2\Yi >TY WxS, ’xP(Y 1W x
,Y.1,*S2U (2S* S+ Y+*S4x*Y[ .,S4x,SPq (+S2U x [S+\1(2*Y[ \x+T WP1t nV~!e?m 4Y*T1[i >TY ~!e 4Y*T1[ ,Y-(S,Y+ *Tx* tY W1,Y\x+* W(*(,Y
\x+T WP1t+ W1, Yx\T 1W *TY ,Y.1,*S2U (2S*+ x2[ [S+\1(2* *TY \x+T WP1t +*,Yx4+ vx+Y[ 12 x tYSUT*Y[ x’Y,xUY \1+* 1W \x.S*xP nV8#!!?m
*Tx* S+ [Y,S’Y[k S2 .x,*k W,14 \14.x,xvPY \14.x2SY+ tS*TS2 +S4SPx, S2[(+*,SY+i >TY ~!e \xP\(Px*S12+ xP+1 S2\P([Y x *Y,4S2xP ’xP(Y
\xP\(Px*S12 *Tx* S+ vx+Y[ (.12 x2 Yr.Y\*Y[ P12Uj*Y,4 U,1t*T ,x*Y W1, *TY x..PS\xvPY ,Y.1,*S2U (2S*i >TY \x,,qS2U ’xP(Y+ 1W Yx\T
,Y.1,*S2U (2S* S2\P([Y x++Y*+ x2[ PSxvSPS*SY+ tTS\T ,YPx*Y *1 *TY ,Y.1,*S2U (2S*;+ 1.Y,x*S12+i #[[S*S12xPPqk ,Y.1,*S2U (2S*+ *Tx* vY2YWS*
W,14 \1,.1,x*Y x++Y*+ 1, PSxvSPS*SY+ x,Y xPP1\x*Y[ x .1,*S12 1W *T1+Y \1,.1,x*Y x++Y*+ x2[ PSxvSPS*SY+ 12 x .,1.1,*S12xP vx+S+i
8Y x++Y++ S2[YWS2S*YjPS’Y[ S2*x2USvPY x++Y*+ W1, S4.xS,4Y2* 12 x2 x22(xP vx+S+k x2[ 41,Y W,Y-(Y2*Pq SW S4.xS,4Y2* S2[S\x*1,+ x,Y
S[Y2*SWSY[i 8Y xP+1 .Y,S1[S\xPPq ,Yx++Y++ *TYS, \12*S2(S2U \Px++SWS\x*S12 x+ S2[YWS2S*YjPS’Y[ S2*x2USvPY x++Y*+i b4.xS,4Y2* YrS+*+ SW *TY
WxS, ’xP(Y 1W *TY S2*x2USvPY x++Y* S+ PY++ *Tx2 S*+ \x,,qS2U ’xP(Yi #2 S4.xS,4Y2* \Tx,UY Y-(xP *1 *TY [SWWY,Y2\Y S+ ,Y\1,[Y[ *1 ,Y[(\Y *TY
\x,,qS2U ’xP(Y *1 S*+ WxS, ’xP(Yi
8Y Y’xP(x*Y x41,*SoxvPY S2*x2USvPY x++Y*+ x2[ 1*TY, P12UjPS’Y[ x++Y*+ W1, S4.xS,4Y2* S2 x\\1,[x2\Y tS*T #@! LIgjNgjLJjNJk
Vb4.xS,4Y2* 1, ~S+.1+xP 1W _12Uj_S’Y[ #++Y*+k? tTY2Y’Y, \Tx2UY+ S2 Y’Y2*+ 1, \S,\(4+*x2\Y+ S2[S\x*Y *Tx* *TY \x,,qS2U ’xP(Y+ 1W *TY
,Y.1,*S2U (2S*+ 4xq Yr\YY[ *TY (2[S+\1(2*Y[ \x+T WP1t W1,Y\x+*+ x**,Sv(*xvPY *1 *TY ,Y.1,*S2U (2S*+i bW (2[S+\1(2*Y[ \x+T WP1t W1,Y\x+*+
S2[S\x*Y *Tx* *TY \x,,qS2U ’xP(Y 1W [YWS2S*YjPS’Y[ S2*x2USvPY x++Y*+ 1, 1*TY, P12UjPS’Y[ x++Y*+ 4xq 21* vY ,Y\1’Y,xvPYk x WxS, ’xP(Y
x++Y++4Y2* S+ .Y,W1,4Y[i e1, S2*x2USvPY x++Y*+k WxS, ’xP(Y Y+*S4x*Y+ x,Y [Y,S’Y[ W,14 [S+\1(2*Y[ \x+T WP1t W1,Y\x+*+i e1, 1*TY, P12Uj
PS’Y[ x++Y*+ n.,S4x,SPq .,1.Y,*qk .Px2* x2[ Y-(S.4Y2*mk WxS, ’xP(Y Y+*S4x*Y+ x,Y [Y,S’Y[ W,14 *TY +1(,\Y+ 41+* x..,1.,Sx*Y W1, *TY
.x,*S\(Px, x++Y* x2[ Tx’Y TS+*1,S\xPPq S2\P([Y[ +(\T x..,1x\TY+ x+ +xPY+ \14.x,S+12 x..,1x\T x2[ ,Y.Px\Y4Y2* \1+* x..,1x\Ti bW WxS,
’xP(Y S+ PY++ *Tx2 \x,,qS2U ’xP(Yk x2 S4.xS,4Y2* \Tx,UY Y-(xP *1 *TY [SWWY,Y2\Y S+ ,Y\1,[Y[i 8Y xP+1 ,Y’SYt *TY (+YW(P PSWY x2[ ,Y+S[(xP
’xP(Y x++(4.*S12+ W1, [YWS2S*YjPS’Y[ S2*x2USvPY x++Y*+ x2[ 1*TY, P12UjPS’Y[ x++Y*+ 12 x .Y,S1[S\ vx+S+ *1 [Y*Y,4S2Y SW \Tx2UY+ S2
\S,\(4+*x2\Y+ tx,,x2* ,Y’S+S12+ *1 *TY4i
ex\*1,+ tTS\T 4xq *,SUUY, x2 S4.xS,4Y2* 1W 1(, U11[tSPPk S2*x2USvPY x++Y*+ x2[ 1*TY, P12UjPS’Y[ x++Y*+ S2\P([Y *TY W1PP1tS2UE
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+SU2SWS\x2* (2[Y,.Y,W1,4x2\Y ,YPx*S’Y *1 TS+*1,S\xP 1, .,1RY\*Y[ W(*(,Y 1.Y,x*S2U ,Y+(P*+%
\Tx2UY+ S2 1(, (+Y 1W *TY x\-(S,Y[ x++Y*+ 1, *TY +*,x*YUq W1, 1(, 1’Y,xPP v(+S2Y++%
P12Uj*Y,4 2YUx*S’Y S2[(+*,q 1, Y\1214S\ *,Y2[+%
*Y\T21P1US\xP \Tx2UY+ 1, [Y’YP1.4Y2*+%
\Tx2UY+ S2 \14.Y*S*S12%
P1++ 1W QYq \(+*14Y,+ 1, .Y,+122YP%
x[’Y,+Y R([S\SxP 1, PYUS+Px*S’Y 1(*\14Y+ 1, .1PS*S\xP [Y’YP1.4Y2*+%
+SU2SWS\x2* [Y\PS2Y+ S2 1(, +*1\Q .,S\Y W1, x +(+*xS2Y[ .Y,S1[ 1W *S4Y% x2[
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>TY 1\\(,,Y2\Y 1W x2q 1W *TY+Y Y’Y2*+ 1, x2q 1*TY, (2W1,Y+YYxvPY Y’Y2*+ 1, \S,\(4+*x2\Y+ *Tx* 4x*Y,SxPPq xWWY\* W(*(,Y 1.Y,x*S2U
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*TY V\12+1PS[x*Y[ WS2x2\SxP +*x*Y4Y2*+?mi 8Y xP+1 Tx’Y x([S*Y[ *TY !14.x2qp+ S2*Y,2xP \12*,1P 1’Y, WS2x2\SxP ,Y.1,*S2U x+ 1W ~Y\Y4vY,
LNk MgMNk vx+Y[ 12 \,S*Y,Sx Y+*xvPS+TY[ S2 b2*Y,2xP !12*,1P j b2*YU,x*Y[ e,x4Yt1,Q nMgNLm S++(Y[ vq *TY !144S**YY 1W @.12+1,S2U
D,Ux2Sox*S12+ 1W *TY >,Yx[txq !144S++S12 n!D@Dmi
b2 1(, 1.S2S12k *TY \12+1PS[x*Y[ WS2x2\SxP +*x*Y4Y2*+ ,YWY,,Y[ *1 xv1’Y .,Y+Y2* WxS,Pqk S2 xPP 4x*Y,SxP ,Y+.Y\*+k *TY WS2x2\SxP .1+S*S12 1W
*TY !14.x2q x+ 1W ~Y\Y4vY, LNk MgMN x2[ MgMgk x2[ *TY ,Y+(P*+ 1W S*+ 1.Y,x*S12+ x2[ S*+ \x+T WP1t+ W1, Yx\T 1W *TY *T,YY qYx,+ S2 *TY
.Y,S1[ Y2[Y[ ~Y\Y4vY, LNk MgMN S2 \12W1,4S*q tS*T x\\1(2*S2U .,S2\S.PY+ UY2Y,xPPq x\\Y.*Y[ S2 *TY <2S*Y[ @*x*Y+ 1W #4Y,S\xi #P+1 S2
1(, 1.S2S12k *TY !14.x2q 4xS2*xS2Y[k S2 xPP 4x*Y,SxP ,Y+.Y\*+k YWWY\*S’Y S2*Y,2xP \12*,1P 1’Y, WS2x2\SxP ,Y.1,*S2U x+ 1W ~Y\Y4vY, LNk
MgMNk vx+Y[ 12 \,S*Y,Sx Y+*xvPS+TY[ S2 b2*Y,2xP !12*,1P j b2*YU,x*Y[ e,x4Yt1,Q nMgNLm S++(Y[ vq *TY !D@Di
(cid:213)Øt”t ˆ(cid:128)w ]}”(cid:132)”(cid:128)(cid:132)t
>TY !14.x2qp+ 4x2xUY4Y2* S+ ,Y+.12+SvPY W1, *TY+Y \12+1PS[x*Y[ WS2x2\SxP +*x*Y4Y2*+k W1, 4xS2*xS2S2U YWWY\*S’Y S2*Y,2xP \12*,1P 1’Y,
WS2x2\SxP ,Y.1,*S2Uk x2[ W1, S*+ x++Y++4Y2* 1W *TY YWWY\*S’Y2Y++ 1W S2*Y,2xP \12*,1P 1’Y, WS2x2\SxP ,Y.1,*S2Uk S2\P([Y[ S2 ^x2xUY4Y2*;+
#22(xP AY.1,* 12 b2*Y,2xP !12*,1P 1’Y, eS2x2\SxP AY.1,*S2U x..Yx,S2U (2[Y, b*Y4 F#i D(, ,Y+.12+SvSPS*q S+ *1 Yr.,Y++ 1.S2S12+ 12 *TY
!14.x2q;+ \12+1PS[x*Y[ WS2x2\SxP +*x*Y4Y2*+ x2[ 12 *TY !14.x2qp+ S2*Y,2xP \12*,1P 1’Y, WS2x2\SxP ,Y.1,*S2U vx+Y[ 12 1(, x([S*+i 8Y
x,Y x .(vPS\ x\\1(2*S2U WS,4 ,YUS+*Y,Y[ tS*T *TY C(vPS\ !14.x2q #\\1(2*S2U D’Y,+SUT* "1x,[ n<2S*Y[ @*x*Y+m nC!#D"m x2[ x,Y
,Y-(S,Y[ *1 vY S2[Y.Y2[Y2* tS*T ,Y+.Y\* *1 *TY !14.x2q S2 x\\1,[x2\Y tS*T *TY T1+Y +*x2[x,[+ ,Y-(S,Y *Tx* tY .Px2 x2[ .Y,W1,4 *TY x([S*+
*1 1v*xS2 ,Yx+12xvPY x++(,x2\Y xv1(* tTY*TY, *TY \12+1PS[x*Y[ WS2x2\SxP +*x*Y4Y2*+ x,Y W,YY 1W 4x*Y,SxP 4S++*x*Y4Y2*k tTY*TY, [(Y *1
Y,,1, 1, W,x([k x2[ tTY*TY, YWWY\*S’Y S2*Y,2xP \12*,1P 1’Y, WS2x2\SxP ,Y.1,*S2U tx+ 4xS2*xS2Y[ S2 xPP 4x*Y,SxP ,Y+.Y\*+i
D(, x([S*+ 1W *TY \12+1PS[x*Y[ WS2x2\SxP +*x*Y4Y2*+ S2\P([Y[ .Y,W1,4S2U .,1\Y[(,Y+ *1 x++Y++ *TY ,S+Q+ 1W 4x*Y,SxP 4S++*x*Y4Y2* 1W *TY
\12+1PS[x*Y[ WS2x2\SxP +*x*Y4Y2*+k tTY*TY, [(Y *1 Y,,1, 1, W,x([k x2[ .Y,W1,4S2U .,1\Y[(,Y+ *Tx* ,Y+.12[ *1 *T1+Y ,S+Q+i @(\T
.,1\Y[(,Y+ S2\P([Y[ Yrx4S2S2Uk 12 x *Y+* vx+S+k Y’S[Y2\Y ,YUx,[S2U *TY x41(2*+ x2[ [S+\P1+(,Y+ S2 *TY \12+1PS[x*Y[ WS2x2\SxP
+*x*Y4Y2*+i D(, x([S*+ xP+1 S2\P([Y[ Y’xP(x*S2U *TY x\\1(2*S2U .,S2\S.PY+ (+Y[ x2[ +SU2SWS\x2* Y+*S4x*Y+ 4x[Y vq 4x2xUY4Y2*k x+ tYPP
x+ Y’xP(x*S2U *TY 1’Y,xPP .,Y+Y2*x*S12 1W *TY \12+1PS[x*Y[ WS2x2\SxP +*x*Y4Y2*+i D(, x([S* 1W S2*Y,2xP \12*,1P 1’Y, WS2x2\SxP ,Y.1,*S2U
S2\P([Y[ 1v*xS2S2U x2 (2[Y,+*x2[S2U 1W S2*Y,2xP \12*,1P 1’Y, WS2x2\SxP ,Y.1,*S2Uk x++Y++S2U *TY ,S+Q *Tx* x 4x*Y,SxP tYxQ2Y++ YrS+*+k x2[
*Y+*S2U x2[ Y’xP(x*S2U *TY [Y+SU2 x2[ 1.Y,x*S2U YWWY\*S’Y2Y++ 1W S2*Y,2xP \12*,1P vx+Y[ 12 *TY x++Y++Y[ ,S+Qi D(, x([S*+ xP+1 S2\P([Y[
.Y,W1,4S2U +(\T 1*TY, .,1\Y[(,Y+ x+ tY \12+S[Y,Y[ 2Y\Y++x,q S2 *TY \S,\(4+*x2\Y+i 8Y vYPSY’Y *Tx* 1(, x([S*+ .,1’S[Y x ,Yx+12xvPY
vx+S+ W1, 1(, 1.S2S12+i
#+ [Y+\,SvY[ S2 ^x2xUY4Y2*;+ #22(xP AY.1,* 12 b2*Y,2xP !12*,1P 1’Y, eS2x2\SxP AY.1,*S2Uk 4x2xUY4Y2* Tx+ Yr\P([Y[ #>b b2[(+*,SxP
#(*14x*S12k b2\i nV#>b?m x2[ @\T2YS[Y, fPY\*,S\ ^1*S12 <@#k b2\i nV@f^?m W,14 S*+ x++Y++4Y2* 1W S2*Y,2xP \12*,1P 1’Y, WS2x2\SxP
,Y.1,*S2U x+ 1W ~Y\Y4vY, LNk MgMNk vY\x(+Y *TYq tY,Y x\-(S,Y[ vq *TY !14.x2q S2 .(,\Tx+Y v(+S2Y++ \14vS2x*S12+ [(,S2U MgMNi 8Y
Tx’Y xP+1 Yr\P([Y[ #>b x2[ @f^ W,14 1(, x([S* 1W S2*Y,2xP \12*,1P 1’Y, WS2x2\SxP ,Y.1,*S2Ui #>b x2[ @f^ x,Y tT1PPqj1t2Y[
+(v+S[Sx,SY+ tT1+Y *1*xP x++Y*+ x2[ *1*xP ,Y’Y2(Y+ Yr\P([Y[ W,14 4x2xUY4Y2*;+ x++Y++4Y2* x2[ 1(, x([S* 1W S2*Y,2xP \12*,1P 1’Y,
WS2x2\SxP ,Y.1,*S2U ,Y.,Y+Y2* x..,1rS4x*YPq J3 x2[ N3 1W *1*xP x++Y*+k ,Y+.Y\*S’YPq x2[ x..,1rS4x*YPq J3 x2[ N3 1W *1*xP ,Y’Y2(Y+k
,Y+.Y\*S’YPqk 1W *TY ,YPx*Y[ \12+1PS[x*Y[ WS2x2\SxP +*x*Y4Y2* x41(2*+ x+ 1W x2[ W1, *TY qYx, Y2[Y[ ~Y\Y4vY, LNk MgMNi
(cid:210)˘ˆ”(cid:132)”q”(cid:128)(cid:132) Ø(cid:132)(cid:201) (cid:143)”(cid:136)”qØq”(cid:128)(cid:132)t (cid:128)ˆ (cid:151)(cid:132)q˘w(cid:132)؇ (cid:211)(cid:128)(cid:132)qw(cid:128)‡ (cid:128)m˘w (cid:160)”(cid:132)Ø(cid:132)(cid:204)”؇ T˘}(cid:128)wq”(cid:132)(cid:192)
# \14.x2q;+ S2*Y,2xP \12*,1P 1’Y, WS2x2\SxP ,Y.1,*S2U S+ x .,1\Y++ [Y+SU2Y[ *1 .,1’S[Y ,Yx+12xvPY x++(,x2\Y ,YUx,[S2U *TY ,YPSxvSPS*q 1W
WS2x2\SxP ,Y.1,*S2U x2[ *TY .,Y.x,x*S12 1W WS2x2\SxP +*x*Y4Y2*+ W1, Yr*Y,2xP .(,.1+Y+ S2 x\\1,[x2\Y tS*T UY2Y,xPPq x\\Y.*Y[ x\\1(2*S2U
.,S2\S.PY+i # \14.x2q;+ S2*Y,2xP \12*,1P 1’Y, WS2x2\SxP ,Y.1,*S2U S2\P([Y+ *T1+Y .1PS\SY+ x2[ .,1\Y[(,Y+ *Tx* nSm .Y,*xS2 *1 *TY
4xS2*Y2x2\Y 1W ,Y\1,[+ *Tx*k S2 ,Yx+12xvPY [Y*xSPk x\\(,x*YPq x2[ WxS,Pq ,YWPY\* *TY *,x2+x\*S12+ x2[ [S+.1+S*S12+ 1W *TY x++Y*+ 1W *TY
\14.x2q% nSSm .,1’S[Y ,Yx+12xvPY x++(,x2\Y *Tx* *,x2+x\*S12+ x,Y ,Y\1,[Y[ x+ 2Y\Y++x,q *1 .Y,4S* .,Y.x,x*S12 1W WS2x2\SxP +*x*Y4Y2*+ S2
x\\1,[x2\Y tS*T UY2Y,xPPq x\\Y.*Y[ x\\1(2*S2U .,S2\S.PY+k x2[ *Tx* ,Y\YS.*+ x2[ Yr.Y2[S*(,Y+ 1W *TY \14.x2q x,Y vYS2U 4x[Y 12Pq S2
x\\1,[x2\Y tS*T x(*T1,Sox*S12+ 1W 4x2xUY4Y2* x2[ [S,Y\*1,+ 1W *TY \14.x2q% x2[ nSSSm .,1’S[Y ,Yx+12xvPY x++(,x2\Y ,YUx,[S2U
.,Y’Y2*S12 1, *S4YPq [Y*Y\*S12 1W (2x(*T1,SoY[ x\-(S+S*S12k (+Yk 1, [S+.1+S*S12 1W *TY \14.x2q;+ x++Y*+ *Tx* \1(P[ Tx’Y x 4x*Y,SxP YWWY\*
12 *TY WS2x2\SxP +*x*Y4Y2*+i
JM
"Y\x(+Y 1W S*+ S2TY,Y2* PS4S*x*S12+k S2*Y,2xP \12*,1P 1’Y, WS2x2\SxP ,Y.1,*S2U 4xq 21* .,Y’Y2* 1, [Y*Y\* 4S++*x*Y4Y2*+i #P+1k .,1RY\*S12+
1W x2q Y’xP(x*S12 1W YWWY\*S’Y2Y++ *1 W(*(,Y .Y,S1[+ x,Y +(vRY\* *1 *TY ,S+Q *Tx* \12*,1P+ 4xq vY\14Y S2x[Y-(x*Y vY\x(+Y 1W \Tx2UY+ S2
\12[S*S12+k 1, *Tx* *TY [YU,YY 1W \14.PSx2\Y tS*T *TY .1PS\SY+ 1, .,1\Y[(,Y+ 4xq [Y*Y,S1,x*Yi
(cid:211)w”q”(cid:204)؇ (cid:215)o(cid:201)”q (cid:141)Øqq˘wt
>TY \,S*S\xP x([S* 4x**Y,+ \144(2S\x*Y[ vYP1t x,Y 4x**Y,+ x,S+S2U W,14 *TY \(,,Y2* .Y,S1[ x([S* 1W *TY \12+1PS[x*Y[ WS2x2\SxP
+*x*Y4Y2*+ *Tx* tY,Y \144(2S\x*Y[ 1, ,Y-(S,Y[ *1 vY \144(2S\x*Y[ *1 *TY x([S* \144S**YY x2[ *Tx* nSm ,YPx*Y *1 x\\1(2*+ 1,
[S+\P1+(,Y+ *Tx* x,Y 4x*Y,SxP *1 *TY \12+1PS[x*Y[ WS2x2\SxP +*x*Y4Y2*+ x2[ nSSm S2’1P’Y[ 1(, Y+.Y\SxPPq \TxPPY2US2Uk +(vRY\*S’Yk 1,
\14.PYr R([U4Y2*+i >TY \144(2S\x*S12 1W \,S*S\xP x([S* 4x**Y,+ [1Y+ 21* xP*Y, S2 x2q txq 1(, 1.S2S12 12 *TY \12+1PS[x*Y[ WS2x2\SxP
+*x*Y4Y2*+k *xQY2 x+ x tT1PYk x2[ tY x,Y 21*k vq \144(2S\x*S2U *TY \,S*S\xP x([S* 4x**Y,+ vYP1tk .,1’S[S2U +Y.x,x*Y 1.S2S12+ 12 *TY
\,S*S\xP x([S* 4x**Y,+ 1, 12 *TY x\\1(2*+ 1, [S+\P1+(,Y+ *1 tTS\T *TYq ,YPx*Yi
Acquisitions of ATI Industrial Automation, Inc. and Schneider Electric Motion USA, Inc. Valuation of Developed Technologies and
Customer Relationships Intangible Assets
#+ [Y+\,SvY[ S2 ]1*Y K *1 *TY \12+1PS[x*Y[ WS2x2\SxP +*x*Y4Y2*+k *TY !14.x2q \14.PY*Y[ *TY x\-(S+S*S12+ 1W #>b b2[(+*,SxP
#(*14x*S12k b2\i n#>bm x2[ @\T2YS[Y, fPY\*,S\ ^1*S12 <@#k b2\i n@f^m S2 MgMNi >TY x\-(S+S*S12 1W #>b ,Y+(P*Y[ S2 x 5MLiF 4SPPS12
\(+*14Y, ,YPx*S12+TS.+ S2*x2USvPY x++Y* x2[ x 5NFiG 4SPPS12 [Y’YP1.Y[ *Y\T21P1USY+ S2*x2USvPY x++Y* vYS2U ,Y\1,[Y[k x2[ *TY x\-(S+S*S12
1W @f^ ,Y+(P*Y[ S2 x 5KNiH 4SPPS12 \(+*14Y, ,YPx*S12+TS.+ S2*x2USvPY x++Y* x2[ x 5FiN 4SPPS12 [Y’YP1.Y[ *Y\T21P1USY+ S2*x2USvPY x++Y*
vYS2U ,Y\1,[Y[i #++Y*+ x\-(S,Y[ x2[ PSxvSPS*SY+ x++(4Y[ Tx’Y vYY2 ,Y\1,[Y[ vq 4x2xUY4Y2* x* *TYS, Y+*S4x*Y[ WxS, ’xP(Y+ x+ 1W *TY
x\-(S+S*S12 [x*Y+i >TY WxS, ’xP(Y+ 1W S2*x2USvPY x++Y*+ tY,Y vx+Y[ 12 ’xP(x*S12+ (+S2U x2 S2\14Y x..,1x\Tk +.Y\SWS\xPPq *TY 4(P*Sj
.Y,S1[ Yr\Y++ Yx,2S2U+ 4Y*T1[ W1, \(+*14Y, ,YPx*S12+TS.+ x2[ *TY ,YPSYWjW,14j,1qxP*q 4Y*T1[ W1, [Y’YP1.Y[ *Y\T21P1USY+i >TY .,1\Y++
W1, Y+*S4x*S2U *TY WxS, ’xP(Y+ 1W *TY+Y S[Y2*SWSxvPY S2*x2USvPY x++Y*+ ,Y-(S,Y+ *TY (+Y 1W +SU2SWS\x2* Y+*S4x*Y+ x2[ x++(4.*S12+ vq
4x2xUY4Y2*k S2\P([S2U ,Y’Y2(Y U,1t*T ,x*Y+k \(+*14Y, x**,S*S12 ,x*Y+k ,1qxP*q ,x*Y+k [S+\1(2* ,x*Y+k *Y\T21P1Uq 1v+1PY+\Y2\Y \(,’Y+k
x2[ f"b>~# 4x,US2+i
>TY .,S2\S.xP \12+S[Y,x*S12+ W1, 1(, [Y*Y,4S2x*S12 *Tx* .Y,W1,4S2U .,1\Y[(,Y+ ,YPx*S2U *1 *TY ’xP(x*S12 1W *TY [Y’YP1.Y[ *Y\T21P1USY+
x2[ \(+*14Y, ,YPx*S12+TS.+ S2*x2USvPY x++Y*+ x\-(S,Y[ S2 *TY #>b x2[ @f^ x\-(S+S*S12+ S+ x \,S*S\xP x([S* 4x**Y, x,Y nSm *TY +SU2SWS\x2*
R([U4Y2* vq 4x2xUY4Y2* tTY2 [Y*Y,4S2S2U *TY WxS, ’xP(Y 1W *TY [Y’YP1.Y[ *Y\T21P1USY+ x2[ \(+*14Y, ,YPx*S12+TS.+ x++Y*+k nSSm x TSUT
[YU,YY 1W x([S*1, R([U4Y2*k +(vRY\*S’S*qk x2[ YWW1,* S2 .Y,W1,4S2U .,1\Y[(,Y+ x2[ Y’xP(x*S2U 4x2xUY4Y2*;+ +SU2SWS\x2* x++(4.*S12+
,YPx*Y[ *1 ,Y’Y2(Y U,1t*T ,x*Y+k ,1qxP*q ,x*Y+k [S+\1(2* ,x*Y+k x2[ *Y\T21P1Uq 1v+1PY+\Y2\Y \(,’Y+ (+Y[ S2 *TY ’xP(x*S12 1W *TY
[Y’YP1.Y[ *Y\T21P1USY+ S2*x2USvPY x++Y*+ x2[ *TY ,Y’Y2(Y U,1t*T ,x*Y+k [S+\1(2* ,x*Y+k \(+*14Y, x**,S*S12 ,x*Y+k x2[ f"b>~# 4x,US2+
(+Y[ S2 *TY ’xP(x*S12 1W *TY \(+*14Y, ,YPx*S12+TS.+ S2*x2USvPY x++Y*+k x2[ nSSSm *TY x([S* YWW1,* S2’1P’Y[ *TY (+Y 1W .,1WY++S12xP+ tS*T
+.Y\SxPSoY[ +QSPP x2[ Q21tPY[UYi
#[[,Y++S2U *TY 4x**Y, S2’1P’Y[ .Y,W1,4S2U .,1\Y[(,Y+ x2[ Y’xP(x*S2U x([S* Y’S[Y2\Y S2 \122Y\*S12 tS*T W1,4S2U 1(, 1’Y,xPP 1.S2S12
12 *TY \12+1PS[x*Y[ WS2x2\SxP +*x*Y4Y2*+i >TY+Y .,1\Y[(,Y+ S2\P([Y[ *Y+*S2U *TY YWWY\*S’Y2Y++ 1W \12*,1P+ ,YPx*S2U *1 *TY x\-(S+S*S12
x\\1(2*S2Uk S2\P([S2U \12*,1P+ 1’Y, 4x2xUY4Y2*;+ nSm ’xP(x*S12 1W *TY [Y’YP1.Y[ *Y\T21P1USY+ x2[ \(+*14Y, ,YPx*S12+TS.+ S2*x2USvPY
x++Y*+ x2[ nSSm [Y’YP1.4Y2* 1W +SU2SWS\x2* x++(4.*S12+ ,YPx*Y[ *1 ,Y’Y2(Y U,1t*T ,x*Y+k \(+*14Y, x**,S*S12 ,x*Y+k ,1qxP*q ,x*Y+k [S+\1(2*
,x*Y+k *Y\T21P1Uq 1v+1PY+\Y2\Y \(,’Y+ x2[ f"b>~# 4x,US2+i >TY+Y .,1\Y[(,Y+ xP+1 S2\P([Y[k x412U 1*TY,+k nSm ,Yx[S2U *TY .(,\Tx+Y
xU,YY4Y2*+ x2[ nSSm *Y+*S2U 4x2xUY4Y2*;+ .,1\Y++ W1, [Y*Y,4S2S2U *TY WxS, ’xP(Y 1W *TY [Y’YP1.Y[ *Y\T21P1USY+ x2[ \(+*14Y,
,YPx*S12+TS.+ S2*x2USvPY x++Y*+i >Y+*S2U 4x2xUY4Y2*;+ .,1\Y++ S2\P([Y[ Y’xP(x*S2U *TY x..,1.,Sx*Y2Y++ 1W *TY 4(P*Sj.Y,S1[ Yr\Y++
Yx,2S2U+ x2[ ,YPSYWjW,14j,1qxP*q ’xP(x*S12 4Y*T1[+k *Y+*S2U *TY \14.PY*Y2Y++ x2[ x\\(,x\q 1W (2[Y,PqS2U [x*x (+Y[ vq 4x2xUY4Y2*k
x2[ Y’xP(x*S2U *TY ,Yx+12xvPY2Y++ 1W 4x2xUY4Y2*;+ +SU2SWS\x2* x++(4.*S12+ ,YPx*Y[ *1 *TY ,Y’Y2(Y U,1t*T ,x*Y+k ,1qxP*q ,x*Y+k [S+\1(2*
,x*Y+k x2[ *Y\T21P1Uq 1v+1PY+\Y2\Y \(,’Y+ (+Y[ S2 *TY ’xP(x*S12 1W *TY [Y’YP1.Y[ *Y\T21P1USY+ S2*x2USvPY x++Y*+ x2[ *TY ,Y’Y2(Y
U,1t*T ,x*Y+k [S+\1(2* ,x*Y+k \(+*14Y, x**,S*S12 ,x*Y+k x2[ f"b>~# 4x,US2+ (+Y[ S2 *TY ’xP(x*S12 1W *TY \(+*14Y, ,YPx*S12+TS.+
S2*x2USvPY x++Y*+i f’xP(x*S2U *TY ,Yx+12xvPY2Y++ 1W *TY ,Y’Y2(Y U,1t*T ,x*Y+ S2 *TY ’xP(x*S12 1W [Y’YP1.Y[ *Y\T21P1USY+ x2[ ,Y’Y2(Y
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Basis of Presentation
>TY+Y \12+1PS[x*Y[ WS2x2\SxP +*x*Y4Y2*+ Tx’Y vYY2 .,Y.x,Y[ vq *TY !14.x2q S2 <2S*Y[ @*x*Y+ nVTY \12+1PS[x*Y[ WS2x2\SxP +*x*Y4Y2*+ S2\P([Y *TY x\\1(2*+ 1W ]1’x2*x b2\i x2[ S*+ +(v+S[Sx,SY+i b2*Y,\14.x2q x\\1(2*+ x2[
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Use of Estimates
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Foreign Currency Translation
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Accounts Receivable and Credit Losses
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b2’Y2*1,SY+k tTS\T S2\P([Y 4x*Y,SxP+ x2[ \12’Y,+S12 \1+*+k x,Y +*x*Y[ x* *TY P1tY, 1W \1+* 1, 2Y* ,YxPSoxvPY ’xP(Yk (+S2U *TY
WS,+*jS2k WS,+*j1(* 4Y*T1[i !1+* S2\P([Y+ *TY \1+* 1W .(,\Tx+Y[ 4x*Y,SxP+k S2v1(2[ W,YSUT* x2[ [(*SY+k Yr*Y,2xP x2[ S2*Y,2xP .,1\Y++S2U
x2[ x..PS\xvPY Pxv1, x2[ 1’Y,TYx[ \1+*+i ]Y* ,YxPSoxvPY ’xP(Y S+ *TY Y+*S4x*Y[ +YPPS2U .,S\Y S2 *TY 1,[S2x,q \1(,+Y 1W v(+S2Y++k PY++
,Yx+12xvPq .,Y[S\*xvPY \1+*+ 1W \14.PY*S12k +*1,xUYk [S+.1+xP x2[ *,x2+.1,*x*S12i >TY !14.x2q .Y,S1[S\xPPq ,Y’SYt+ -(x2*S*SY+ 1W
S2’Y2*1,SY+ 12 Tx2[ x2[ \14.x,Y+ *TY+Y x41(2*+ *1 *TY Yr.Y\*Y[ (+Y 1W Yx\T .,1[(\*i >TY !14.x2q ,Y\1,[+ x \Tx,UY *1 \1+* 1W
,Y’Y2(Y W1, *TY x41(2* ,Y-(S,Y[ *1 ,Y[(\Y *TY \x,,qS2U ’xP(Y 1W S2’Y2*1,q *1 *TY 2Y* ,YxPSoxvPY ’xP(Yi
Property, Plant and Equipment
C,1.Y,*qk .Px2* x2[ Y-(S.4Y2* x,Y ,Y\1,[Y[ x* \1+*k x[R(+*Y[ W1, x2q S4.xS,4Y2*k PY++ x\\(4(Px*Y[ [Y.,Y\Sx*S12i >TY !14.x2q
(+Y+ *TY +*,xSUT*jPS2Y 4Y*T1[ *1 \xP\(Px*Y *TY [Y.,Y\Sx*S12 1W S*+ .,1.Y,*qk .Px2* x2[ Y-(S.4Y2* 1’Y, *TYS, Y+*S4x*Y[ (+YW(P PS’Y+i
f+*S4x*Y[ (+YW(P PS’Y+ ,x2UY W,14 Ng *1 Lg qYx,+ W1, v(SP[S2U+ x2[ v(SP[S2U S4.,1’Y4Y2*+k x2[ L *1 Ng qYx,+ W1, 4x\TS2Y,q x2[
Y-(S.4Y2*i _Yx+YT1P[ S4.,1’Y4Y2*+ x,Y [Y.,Y\Sx*Y[ 1’Y, *TY PY++Y, 1W *TYS, (+YW(P PS’Y+ 1, *TY PYx+Y *Y,4+k S2\P([S2U x2q ,Y2YtxP
.Y,S1[ 1.*S12+ *Tx* x,Y ,Yx+12xvPq x++(,Y[ 1W vYS2U YrY,\S+Y[i AY.xS,+ x2[ 4xS2*Y2x2\Y \1+*+ x,Y Yr.Y2+Y[ x+ S2\(,,Y[i !Y,*xS2 \1+*+
*1 [Y’YP1. +1W*tx,Y W1, S2*Y,2xP (+Y x,Y \x.S*xPSoY[ tTY2 *TY \,S*Y,Sx (2[Y, #\\1(2*S2U @*x2[x,[+ !1[SWS\x*S12 nV#@!?m LJgjKgk
Vb2*Y,2xPj<+Y @1W*tx,Yk? x,Y 4Y*i
Goodwill, Intangible Assets and Long-Lived Assets
d11[tSPP ,Y.,Y+Y2*+ *TY Yr\Y++ 1W *TY .(,\Tx+Y .,S\Y 1’Y, *TY *x2USvPY x++Y*+k S[Y2*SWSxvPY S2*x2USvPY x++Y*+ x2[ x++(4Y[
PSxvSPS*SY+ x\-(S,Y[ S2 x v(+S2Y++ \14vS2x*S12i #PP1\x*S12+ 1W *TY .(,\Tx+Y .,S\Y x,Y vx+Y[ (.12 x ’xP(x*S12 1W *TY WxS, ’xP(Y 1W x++Y*+
x\-(S,Y[ x2[ PSxvSPS*SY+ x++(4Y[ x+ 1W *TY x\-(S+S*S12 [x*Yi d11[tSPP x2[ S2[YWS2S*YjPS’Y[ S2*x2USvPY+ x,Y 21* x41,*SoY[ v(* x,Y
x++Y++Y[ W1, S4.xS,4Y2* x* PYx+* x22(xPPq *1 Y2+(,Y *TYS, \(,,Y2* WxS, ’xP(Y+ Yr\YY[ *TYS, \x,,qS2U ’xP(Y+i
>TY !14.x2q;+ 41+* +SU2SWS\x2* S2*x2USvPY x++Y*+ x,Y \(+*14Y, ,YPx*S12+TS.+k .x*Y2*+ x2[ [Y’YP1.Y[ *Y\T21P1USY+k *,x[Y4x,Q+
x2[ *,x[Y 2x4Y+i >TY WxS, ’xP(Y+ 1W S2*x2USvPY x++Y*+ x,Y vx+Y[ 12 ’xP(x*S12+ (+S2U x2 S2\14Y x..,1x\Tk tS*T Y+*S4x*Y+ x2[
x++(4.*S12+ .,1’S[Y[ vq 4x2xUY4Y2* 1W *TY x\-(S,Y[ \14.x2SY+ x2[ *TY !14.x2qi >TY .,1\Y++ W1, Y+*S4x*S2U *TY WxS, ’xP(Y+ 1W
S[Y2*SWSxvPY S2*x2USvPY x++Y*+ ,Y-(S,Y+ *TY (+Y 1W +SU2SWS\x2* Y+*S4x*Y+ x2[ x++(4.*S12+k S2\P([S2U ,Y’Y2(Y U,1t*T ,x*Y+k \(+*14Y,
x**,S*S12 ,x*Y+k ,1qxP*q ,x*Y+k [S+\1(2* ,x*Y+ x2[ .,1RY\*Y[ W(*(,Y \x+T WP1t+i #PP [YWS2S*YjPS’Y[ S2*x2USvPY x++Y*+ x,Y x41,*SoY[ 1’Y, *TY
.Y,S1[+ S2 tTS\T *TYS, Y\1214S\ vY2YWS*+ x,Y Yr.Y\*Y[ *1 vY ,YxPSoY[i >TY !14.x2q ,Y’SYt+ *TY (+YW(P PSWY x++(4.*S12+k S2\P([S2U
*TY \Px++SWS\x*S12 1W \Y,*xS2 S2*x2USvPY x++Y*+ x+ VS2[YWS2S*YjPS’Y[k? 12 x .Y,S1[S\ vx+S+ *1 [Y*Y,4S2Y SW \Tx2UY+ S2 \S,\(4+*x2\Y+
tx,,x2* ,Y’S+S12+ *1 *TY4i !1+*+ x++1\Sx*Y[ tS*T .x*Y2* x2[ S2*YPPY\*(xP .,1.Y,*q x..PS\x*S12+k ,Y2YtxP+ 1, Yr*Y2+S12+ x,Y *q.S\xPPq
Yr.Y2+Y[ x+ S2\(,,Y[i
>TY !14.x2q Y’xP(x*Y+ S*+ U11[tSPPk S2*x2USvPY x++Y*+ x2[ 1*TY, P12UjPS’Y[ x++Y*+ W1, S4.xS,4Y2* x* *TY ,Y.1,*S2U (2S* PY’YP
tTS\T S+ x* PYx+* 12Y PY’YP vYP1t *TY ,Y.1,*xvPY +YU4Y2*+i
Impairment Charges
b4.xS,4Y2* x2xPq+Y+ 1W U11[tSPP x2[ S2[YWS2S*YjPS’Y[ S2*x2USvPY x++Y*+ x,Y \12[(\*Y[ S2 x\\1,[x2\Y tS*T #@! LJgk
Vb2*x2USvPY+ Xd11[tSPP x2[ D*TY,i? >TY !14.x2q .Y,W1,4+ S*+ U11[tSPP S4.xS,4Y2* *Y+* x22(xPPq x+ 1W *TY vYUS22S2U 1W *TY
+Y\12[ -(x,*Y, 1, 41,Y W,Y-(Y2*Pq SW S2[S\x*1,+ x,Y .,Y+Y2* 1, \Tx2UY+ S2 \S,\(4+*x2\Y+ +(UUY+* *Tx* x2 S4.xS,4Y2* 4xq YrS+*i
IN
(cid:140)]I(cid:215)(cid:140)N(cid:215) (cid:151)(cid:140)(cid:211)(cid:136)
(cid:140)]N£Q N] (cid:211)](cid:140)Q](cid:143)(cid:151)(cid:210)(cid:215)N£(cid:210) (cid:160)(cid:151)(cid:140)(cid:215)(cid:140)(cid:211)(cid:151)(cid:215)(cid:143) QN(cid:215)N£(cid:141)£(cid:140)NQ (cid:229) (cid:153)(cid:211)(cid:128)(cid:132)q”(cid:132)o˘(cid:201)(cid:151)
(cid:215)Q ](cid:160) (cid:210)£(cid:211)£(cid:141)(cid:213)£T U[(cid:142) X(cid:131)X[
>TY !14.x2q Tx+ *TY 1.*S12 1W WS,+* .Y,W1,4S2U x -(xPS*x*S’Y x++Y++4Y2* *1 [Y*Y,4S2Y tTY*TY, S* S+ 2Y\Y++x,q *1 .Y,W1,4 *TY
-(x2*S*x*S’Y S4.xS,4Y2* *Y+*i b2 .Y,W1,4S2U *TY -(xPS*x*S’Y x++Y++4Y2*k *TY !14.x2q ,Y’SYt+ Wx\*1,+ v1*T +.Y\SWS\ *1 *TY ,Y.1,*S2U
(2S* x2[ *1 *TY !14.x2q x+ x tT1PYk +(\T x+ WS2x2\SxP .Y,W1,4x2\Yk 4x\,1Y\1214S\ \12[S*S12+k S2[(+*,q x2[ 4x,QY* \12+S[Y,x*S12+k
x2[ *TY WxS, ’xP(Y 1W Yx\T ,Y.1,*S2U (2S* x* *TY Px+* ’xP(x*S12 [x*Yi bW *TY !14.x2q YPY\*+ *TS+ 1.*S12 x2[ vYPSY’Y+k x+ x ,Y+(P* 1W *TY
-(xPS*x*S’Y x++Y++4Y2*k *Tx* S* S+ 41,Y PSQYPq *Tx2 21* *Tx* *TY \x,,qS2U ’xP(Y 1W *TY ,Y.1,*S2U (2S* Yr\YY[+ S*+ WxS, ’xP(Yk *TY
-(x2*S*x*S’Y S4.xS,4Y2* *Y+* S+ ,Y-(S,Y[% 1*TY,tS+Yk 21 W(,*TY, *Y+*S2U S+ ,Y-(S,Y[i
#P*Y,2x*S’YPqk *TY !14.x2q 4xq YPY\* *1 vq.x++ *TY -(xPS*x*S’Y x++Y++4Y2* x2[ .Y,W1,4 *TY -(x2*S*x*S’Y S4.xS,4Y2* *Y+*
S2+*Yx[i >TS+ x..,1x\T ,Y-(S,Y+ x \14.x,S+12 1W *TY \x,,qS2U ’xP(Y 1W Yx\T ,Y.1,*S2U (2S* *1 S*+ Y+*S4x*Y[ WxS, ’xP(Yi >TY WxS, ’xP(Y 1W
x ,Y.1,*S2U (2S* S+ Y+*S4x*Y[ .,S4x,SPq (+S2U x [S+\1(2*Y[ \x+T WP1t nV~!e?m 4Y*T1[ tS*T x tYSUT*Y[ x’Y,xUY \1+* 1W \x.S*xPi bW *TY
\x,,qS2U ’xP(Y 1W x ,Y.1,*S2U (2S* Yr\YY[+ S*+ WxS, ’xP(Yk x2 S4.xS,4Y2* \Tx,UY S+ ,Y\1,[Y[ W1, *TY [SWWY,Y2\Yi
>TY !14.x2q x++Y++Y+ S2[YWS2S*YjPS’Y[ S2*x2USvPY x++Y*+ W1, S4.xS,4Y2* 12 x2 x22(xP vx+S+ x+ 1W *TY vYUS22S2U 1W *TY +Y\12[
-(x,*Y,k x2[ 41,Y W,Y-(Y2*Pq SW S2[S\x*1,+ x,Y .,Y+Y2*k 1, \Tx2UY+ S2 \S,\(4+*x2\Y+ +(UUY+*k *Tx* x2 S4.xS,4Y2* 4xq YrS+*i >TY
!14.x2q tSPP xP+1 ,Yx++Y++ *TY \12*S2(S2U \Px++SWS\x*S12 1W *TY+Y S2*x2USvPY x++Y*+ x+ S2[YWS2S*YjPS’Y[ tTY2 \S,\(4+*x2\Y+ \Tx2UY
+(\T *Tx* *TY (+YW(P PSWY 4xq 21 P12UY, vY \12+S[Y,Y[ S2[YWS2S*Yi >TY WxS, ’xP(Y+ 1W *TY !14.x2q;+ S2[YWS2S*YjPS’Y[ S2*x2USvPY x++Y*+
x,Y [Y*Y,4S2Y[ (+S2U *TY ,YPSYW W,14 ,1qxP*q 4Y*T1[k vx+Y[ 12 W1,Y\x+*Y[ ,Y’Y2(Y+ x2[ Y+*S4x*Y[ ,1qxP*q ,x*Y+i bW *TY WxS, ’xP(Y 1W x2
S2[YWS2S*YjPS’Y[ S2*x2USvPY x++Y* S+ PY++ *Tx2 S*+ \x,,qS2U ’xP(Yk x2 S4.xS,4Y2* \Tx,UY S+ ,Y\1,[Y[ W1, *TY [SWWY,Y2\Y vY*tYY2 *TY
\x,,qS2U ’xP(Y x2[ *TY WxS, ’xP(Y 1W *TY S4.xS,Y[ x++Y*i
>TY \x,,qS2U x41(2*+ 1W [YWS2S*YjPS’Y[ P12UjPS’Y[ x++Y*+ x,Y ,Y’SYtY[ W1, S4.xS,4Y2* tTY2Y’Y, \Tx2UY+ S2 Y’Y2*+ 1,
\S,\(4+*x2\Y+ S2[S\x*Y *Tx* *TYS, \x,,qS2U ’xP(Y+ 4xq 21* vY ,Y\1’Y,xvPYi >TY ,Y\1’Y,xvSPS*q 1W *TY \x,,qS2U ’xP(Y S+ UY2Y,xPPq
[Y*Y,4S2Y[ vq \14.x,S+12 1W *TY \x,,qS2U ’xP(Y 1W *TY x++Y* U,1(. *1 S*+ (2[S+\1(2*Y[ W(*(,Y \x+T WP1t+i 8TY2 *TS+ *Y+* S2[S\x*Y+ x
.1*Y2*SxP W1, S4.xS,4Y2*k x WxS, ’xP(Y x++Y++4Y2* S+ .Y,W1,4Y[i D2\Y x2 S4.xS,4Y2* S+ [Y*Y,4S2Y[ x2[ 4Yx+(,Y[k x2 S4.xS,4Y2*
\Tx,UY S+ ,Y\1,[Y[ W1, *TY [SWWY,Y2\Y vY*tYY2 *TY \x,,qS2U ’xP(Y x2[ *TY WxS, ’xP(Y 1W *TY S4.xS,Y[ x++Y*i
Revenue Recognition
@YY ]1*Y L W1, *TY !14.x2q;+ ,Y’Y2(Y ,Y\1U2S*S12 .1PS\qi
Leases
>TY !14.x2q PYx+Y+ \Y,*xS2 Y-(S.4Y2* x2[ Wx\SPS*SY+i >TY !14.x2q [Y*Y,4S2Y+ SW x2 x,,x2UY4Y2* S+ x PYx+Y x* S2\Y.*S12i
D.Y,x*S2U PYx+Y ,SUT*j1Wj(+Y x++Y*+ x,Y S2\P([Y[ S2 1.Y,x*S2U PYx+Y x++Y*+ 12 *TY \12+1PS[x*Y[ vxPx2\Y +TYY*i D.Y,x*S2U PYx+Y
PSxvSPS*SY+ x,Y S2\P([Y[ S2 \(,,Y2* .1,*S12 1W 1.Y,x*S2U PYx+Y PSxvSPS*SY+ x2[ 1.Y,x*S2U PYx+Y PSxvSPS*SY+ 12 *TY \12+1PS[x*Y[ vxPx2\Y +TYY*
vx+Y[ 12 *TY *S4S2U 1W W(*(,Y PYx+Y .xq4Y2*+i eS2x2\Y PYx+Y x++Y*+ x,Y S2\P([Y[ S2 .,1.Y,*qk .Px2* x2[ Y-(S.4Y2*i eS2x2\Y PYx+Y
PSxvSPS*SY+ x,Y S2\P([Y[ S2 x\\,(Y[ Yr.Y2+Y+ x2[ 1*TY, \(,,Y2* PSxvSPS*SY+ x2[ 1*TY, PSxvSPS*SY+ 12 *TY \12+1PS[x*Y[ vxPx2\Y +TYY* vx+Y[
12 *TY *S4S2U 1W W(*(,Y PYx+Y .xq4Y2*+i _Yx+Y+ tS*T x2 S2S*SxP *Y,4 1W *tYP’Y 412*T+ 1, PY++ x,Y 21* ,Y\1U2SoY[ 12 *TY vxPx2\Y +TYY*i
>TY !14.x2q ,Y\1U2SoY+ PYx+Y Yr.Y2+Y 12 x +*,xSUT*jPS2Y vx+S+ 1’Y, *TY PYx+Y *Y,4i ^x2q 1W *TY !14.x2q;+ PYx+Y x,,x2UY4Y2*+
S2\P([Y v1*T PYx+Y nYiUik WSrY[ .xq4Y2*+ S2\P([S2U ,Y2*m x2[ 212jPYx+Y \14.12Y2*+ nYiUik \14412jx,Yx 4xS2*Y2x2\Y 1, 1*TY,
.,1.Y,*q 4x2xUY4Y2* \1+*+mi >TY !14.x2q x\\1(2*+ W1, PYx+Y x2[ 212jPYx+Y \14.12Y2*+ +Y.x,x*YPqi
^1+* PYx+Y+ TYP[ vq *TY !14.x2q [1 21* .,1’S[Y x2 S4.PS\S* ,x*Yi >TY !14.x2q (+Y+ S*+ S2\,Y4Y2*xP v1,,1tS2U ,x*Y W1, *TY
+x4Y R(,S+[S\*S12 x2[ *Y,4 x+ *TY x++1\Sx*Y[ PYx+Y vx+Y[ 12 *TY S2W1,4x*S12 x’xSPxvPY x* *TY PYx+Y \144Y2\Y4Y2* [x*Y *1 [Y*Y,4S2Y
*TY .,Y+Y2* ’xP(Y 1W W(*(,Y PYx+Y .xq4Y2*+i <.12 x[1.*S12 1W #@! GKMk V_Yx+Y+?k *TY !14.x2q (+Y[ *TY S2\,Y4Y2*xP v1,,1tS2U ,x*Y
x+ 1W ax2(x,q Nk MgNF W1, 1.Y,x*S2U PYx+Y+ *Tx* \144Y2\Y[ .,S1, *1 *Tx* [x*Yi >TY !14.x2q Tx+ x \Y2*,xPPq 4x2xUY[ *,Yx+(,q
W(2\*S12% *TY,YW1,Yk *TY !14.x2q x..PSY+ x .1,*W1PS1 x..,1x\T W1, [Y*Y,4S2S2U *TY S2\,Y4Y2*xP v1,,1tS2U ,x*Y vx+Y[ 12 *TY
x..PS\xvPY PYx+Y *Y,4+ x2[ *TY \(,,Y2* Y\1214S\ Y2’S,124Y2*i
Research and Development and Engineering Costs
AY+Yx,\T x2[ [Y’YP1.4Y2* x2[ Y2US2YY,S2U nVA0~?m Yr.Y2+Y+ x,Y .,S4x,SPq \14.,S+Y[ 1W Y4.P1qYY ,YPx*Y[ Yr.Y2+Y+ x2[
\1+* 1W 4x*Y,SxP+ W1, A0~ .,1RY\*+i >TY+Y \1+*+ x,Y Yr.Y2+Y[ x+ S2\(,,Y[i
IM
(cid:140)]I(cid:215)(cid:140)N(cid:215) (cid:151)(cid:140)(cid:211)(cid:136)
(cid:140)]N£Q N] (cid:211)](cid:140)Q](cid:143)(cid:151)(cid:210)(cid:215)N£(cid:210) (cid:160)(cid:151)(cid:140)(cid:215)(cid:140)(cid:211)(cid:151)(cid:215)(cid:143) QN(cid:215)N£(cid:141)£(cid:140)NQ (cid:229) (cid:153)(cid:211)(cid:128)(cid:132)q”(cid:132)o˘(cid:201)(cid:151)
(cid:215)Q ](cid:160) (cid:210)£(cid:211)£(cid:141)(cid:213)£T U[(cid:142) X(cid:131)X[
Share-Based Compensation
>TY !14.x2q ,Y\1,[+ Yr.Y2+Y+ x++1\Sx*Y[ tS*T +Tx,Yjvx+Y[ \14.Y2+x*S12 xtx,[+ *1 Y4.P1qYY+ x2[ [S,Y\*1,+ vx+Y[ 12 *TY
WxS, ’xP(Y 1W xtx,[+ x+ 1W *TY U,x2* [x*Yi e1, +Tx,Yjvx+Y[ \14.Y2+x*S12 xtx,[+ *Tx* ’Y+* 1’Y, *S4Y vx+Y[ 12 Y4.P1q4Y2*k *TY
x++1\Sx*Y[ Yr.Y2+Y+ x,Y ,Y\1U2SoY[ S2 *TY \12+1PS[x*Y[ +*x*Y4Y2*+ 1W 1.Y,x*S12+ ,x*xvPq 1’Y, *TY ,Y+.Y\*S’Y ’Y+*S2U .Y,S1[+k 2Y* 1W
Y+*S4x*Y[ W1,WYS*(,Y+i
>TY !14.x2q xP+1 U,x2*+ *T,YY *q.Y+ 1W .Y,W1,4x2\Yjvx+Y[ xtx,[+ *1 \Y,*xS2 4Y4vY,+ 1W *TY YrY\(*S’Y 4x2xUY4Y2* *Yx4E
212jd##C Yx,2S2U+ .Y, +Tx,Y .Y,W1,4x2\Yjvx+Y[ ,Y+*,S\*Y[ +*1\Q (2S*+ nVfC@jC@<+?mk 1.Y,x*S2U \x+T WP1t .Y,W1,4x2\Yjvx+Y[
,Y+*,S\*Y[ +*1\Q (2S*+ nVD!ejC@<+?mk x2[ ,YPx*S’Y *1*xP +Tx,YT1P[Y, ,Y*(,2 .Y,W1,4x2\Yjvx+Y[ ,Y+*,S\*Y[ +*1\Q (2S*+ nV>@AjC@<+?mi
@Tx,Yjvx+Y[ \14.Y2+x*S12 Yr.Y2+Y+ x++1\Sx*Y[ tS*T fC@jC@<+ x2[ D!ejC@<+ x,Y ,Y\1U2SoY[ ,x*xvPq 1’Y, *TYS, ’Y+*S2U .Y,S1[+
tTY2 S* S+ .,1vxvPY *Tx* *TY .Y,W1,4x2\Y *x,UY*+ x,Y Yr.Y\*Y[ *1 vY x\TSY’Y[ vx+Y[ 12 4x2xUY4Y2*;+ .,1RY\*S12+i ^x2xUY4Y2*;+
.,1RY\*S12+ x,Y ,Y’S+Y[k SW 2Y\Y++x,qk S2 +(v+Y-(Y2* .Y,S1[+ tTY2 (2[Y,PqS2U Wx\*1,+ \Tx2UY *TY Y’xP(x*S12 1W *TY .,1vxvSPS*q 1W
x\TSY’S2U *TY .Y,W1,4x2\Y *x,UY*+ x+ tYPP x+ *TY Y+*S4x*Y[ PY’YP+ 1W x\TSY’Y4Y2*i 8TY2 *TY Y+*S4x*Y[ x\TSY’Y4Y2* PY’YP+ x,Y
x[R(+*Y[ x* x Px*Y, [x*Yk x \(4(Px*S’Y x[R(+*4Y2* *1 *TY +Tx,Yjvx+Y[ \14.Y2+x*S12 Yr.Y2+Y .,Y’S1(+Pq ,Y\1U2SoY[ t1(P[ vY ,Y\1,[Y[
S2 *TY .Y,S1[ +(\T [Y*Y,4S2x*S12 S+ 4x[Yi #\\1,[S2UPqk +Tx,Yjvx+Y[ \14.Y2+x*S12 Yr.Y2+Y+ x++1\Sx*Y[ tS*T fC@jC@<+ x2[ D!ej
C@<+ 4xq [SWWY, +SU2SWS\x2*Pq W,14 .Y,S1[ *1 .Y,S1[ vx+Y[ 12 \Tx2UY+ *1 v1*T *TY .,1vxvSPS*q x2[ *TY PY’YP 1W x\TSY’Y4Y2* xUxS2+*
.Y,W1,4x2\Y *x,UY*+i @Tx,Yjvx+Y[ \14.Y2+x*S12 Yr.Y2+Y+ x++1\Sx*Y[ tS*T >@AjC@<+ x,Y vx+Y[ 12 *TY U,x2*j[x*Y WxS, ’xP(Yk
[Y*Y,4S2Y[ (+S2U *TY ^12*Yj!x,P1 ’xP(x*S12 41[YPk x2[ x,Y ,Y\1U2SoY[ 12 x +*,xSUT*jPS2Y vx+S+ W,14 *TY U,x2* [x*Y *1 *TY Y2[ 1W *TY
.Y,W1,4x2\Y .Y,S1[i !14.Y2+x*S12 Yr.Y2+Y+ x++1\Sx*Y[ tS*T >@AjC@<+ tSPP 21* vY xWWY\*Y[ vq *TY 2(4vY, 1W \14412 +Tx,Y+ *Tx*
tSPP (P*S4x*YPq vY S++(Y[ (.12 ’Y+*S2U x* *TY Y2[ 1W *TY .Y,W1,4x2\Y .Y,S1[i
Advertising Costs
#[’Y,*S+S2U \1+*+ x,Y Yr.Y2+Y[ *1 +YPPS2Uk UY2Y,xP x2[ x[4S2S+*,x*S’Y Yr.Y2+Y+ x+ S2\(,,Y[ x2[ tY,Y 21* 4x*Y,SxP W1, MgMNk
MgMg x2[ MgNFi
Restructuring, Acquisition and Related Costs
>TY !14.x2q x\\1(2*+ W1, S*+ ,Y+*,(\*(,S2U x\*S’S*SY+ S2 x\\1,[x2\Y tS*T *TY .,1’S+S12+ 1W #@! KMgk VfrS* 1, ~S+.1+xP !1+*
DvPSUx*S12+i? >TY !14.x2q 4xQY+ x++(4.*S12+ ,YPx*Y[ *1 *TY x41(2*+ 1W Y4.P1qYY +Y’Y,x2\Y vY2YWS*+ x2[ ,YPx*Y[ \1+*+k (+YW(P
PS’Y+ x2[ ,Y+S[(xP ’xP(Y 1W P12UjPS’Y[ x++Y*+k x2[ [S+\1(2* ,x*Y+i f+*S4x*Y+ x2[ x++(4.*S12+ x,Y vx+Y[ 12 *TY vY+* S2W1,4x*S12
x’xSPxvPY x* *TY *S4Y *TY 1vPSUx*S12 S+ ,Y\1U2SoY[i >TY+Y Y+*S4x*Y+ x,Y ,Y’SYtY[ x2[ ,Y’S+Y[ x+ Wx\*+ x2[ \S,\(4+*x2\Y+ [S\*x*Yi
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.,1WY++S12xP 1, \12+(P*S2U WYY+k x,Y Yr.Y2+Y[ x+ S2\(,,Y[i #\-(S+S*S12 ,YPx*Y[ \1+*+ xP+1 S2\P([Y Yr.Y2+Y+ ,Y\1U2SoY[ (2[Y, Yx,2j1(*
xU,YY4Y2*+ S2 \122Y\*S12 tS*T x\-(S+S*S12+i
Accounting for Income Taxes
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x2[ PSxvSPS*SY+ x,Y ,Y\1U2SoY[ W1, *TY Y+*S4x*Y[ W(*(,Y *xr \12+Y-(Y2\Y+ x**,Sv(*xvPY *1 *Y4.1,x,q [SWWY,Y2\Y+ vY*tYY2 *TY WS2x2\SxP
+*x*Y4Y2* \x,,qS2U x41(2*+ 1W x++Y*+ x2[ PSxvSPS*SY+ x2[ *TYS, ,Y+.Y\*S’Y *xr vx+Y+i >TS+ 4Y*T1[ xP+1 ,Y-(S,Y+ *TY ,Y\1U2S*S12 1W
W(*(,Y *xr vY2YWS*+k +(\T x+ 2Y* 1.Y,x*S2U P1++ \x,,qW1,tx,[+k *1 *TY Yr*Y2* *Tx* S* S+ 41,Y PSQYPq *Tx2 21* *Tx* +(\T vY2YWS*+ tSPP vY
,YxPSoY[i ~YWY,,Y[ *xr x++Y*+ x2[ PSxvSPS*SY+ x,Y 4Yx+(,Y[ (+S2U Y2x\*Y[ *xr ,x*Y+ S2 YWWY\* W1, *TY qYx, S2 tTS\T *TY *Y4.1,x,q
[SWWY,Y2\Y+ x,Y Yr.Y\*Y[ *1 vY ,Y\1’Y,Y[ 1, +Y**PY[i # ’xP(x*S12 xPP1tx2\Y S+ Y+*xvPS+TY[ *1 ,Y[(\Y *TY [YWY,,Y[ *xr x++Y*+ SW S* S+
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.Y,S1[S\xPPq *1 [Y*Y,4S2Y tTY*TY, S* S+ 41,Y PSQYPq *Tx2 21* *Tx* *TY *xr vY2YWS*+ tSPP vY ,YxPSoY[ S2 *TY W(*(,Y x2[ SW x2q YrS+*S2U
’xP(x*S12 xPP1tx2\Y +T1(P[ vY ,YPYx+Y[i
>TY 4xR1,S*q 1W *TY !14.x2q;+ v(+S2Y++ x\*S’S*SY+ x,Y \12[(\*Y[ *T,1(UT S*+ +(v+S[Sx,SY+ 1(*+S[Y 1W !x2x[xi fx,2S2U+ W,14
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Yx,2S2U+ *Tx* *TY !14.x2q S2*Y2[+ *1 ,Y.x*,Sx*Y W,14 x2q +(\T +(v+S[Sx,SY+k *TY !14.x2q ,Y\1U2SoY+ [YWY,,Y[ *xr PSxvSPS*SY+ 12 +(\T
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Foreign Currency Contracts
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#@< MgNFjNM +S4.PSWSY+ *TY
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1.Y,x*S12+ x2[ S2\14Y 1, x UxS2 W,14
1*TY, S*Y4+% nSSm *TY Yr\Y.*S12 *1 *TY
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S2’Y+*4Y2*+ tTY2 x W1,YSU2
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S2’Y+*4Y2* n1, ’S\Yj’Y,+xm% x2[ nSSSm
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qYx,j*1j[x*Y P1++ Yr\YY[+ *TY
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#@< MgMNjgG ,Y-(S,Y+ *Tx* Y2*S*SY+
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tTS\T ,Y-(S,Y+ Y2*S*SY+ *1 ,Y\1U2SoY ,Y’Y2(Y S2 x txq *Tx* [Y.S\*+ *TY *,x2+WY, 1W \12*,1P 1’Y, U11[+ 1, +Y,’S\Y+ *1 \(+*14Y,+ x* x2
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\12\(,,Y2*Pq tS*T ,Y’Y2(Y UY2Y,x*S2U x\*S’S*SY+ x,Y Yr\P([Y[ W,14 ,Y’Y2(Yi
Performance Obligations
@(v+*x2*SxPPq xPP 1W *TY !14.x2q;+ ,Y’Y2(Y S+ ,Y\1U2SoY[ x* x .1S2* S2 *S4Yk (.12 +TS.4Y2*k ,x*TY, *Tx2 1’Y, *S4Yi
#* *TY ,Y-(Y+* 1W S*+ \(+*14Y,+k *TY !14.x2q 4xq .Y,W1,4 .,1WY++S12xP +Y,’S\Y+k UY2Y,xPPq W1, *TY 4xS2*Y2x2\Y x2[ ,Y.xS, 1W
.,1[(\*+ .,Y’S1(+Pq +1P[ *1 *T1+Y \(+*14Y,+ x2[ W1, Y2US2YY,S2U +Y,’S\Y+i C,1WY++S12xP +Y,’S\Y+ x,Y *q.S\xPPq +T1,* S2 [(,x*S12k
41+*Pq PY++ *Tx2 12Y 412*Tk x2[ xUU,YUx*Y *1 PY++ *Tx2 L3 1W *TY !14.x2q;+ \12+1PS[x*Y[ ,Y’Y2(Yi AY’Y2(Y S+ *q.S\xPPq ,Y\1U2SoY[
x* x .1S2* S2 *S4Y tTY2 \12*,1P *,x2+WY,+ *1 *TY \(+*14Y, (.12 \14.PY*S12 1W .,1WY++S12xP +Y,’S\Y+i >TY+Y +Y,’S\Y+ UY2Y,xPPq S2’1P’Y
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\12*,x\*(xPPq +*x*Y[ x41(2*i
>TY !14.x2q 1\\x+S12xPPq +YPP+ +Y.x,x*YPq .,S\Y[ 212j+*x2[x,[hYr*Y2[Y[ tx,,x2*q +Y,’S\Y+ 1, .,Y’Y2*x*S’Y 4xS2*Y2x2\Y .Px2+
tS*T *TY +xPY 1W .,1[(\*+i >TY *,x2+WY, 1W \12*,1P 1’Y, *TY +Y,’S\Y .Px2+ S+ 1’Y, *S4Yi >TY !14.x2q ,Y\1U2SoY+ *TY ,YPx*Y[ ,Y’Y2(Y
,x*xvPq 1’Y, *TY *Y,4+ 1W *TY +Y,’S\Y .Px2+i >TY *,x2+x\*S12 .,S\Y 1W x \12*,x\* S+ xPP1\x*Y[ *1 Yx\T .Y,W1,4x2\Y 1vPSUx*S12 vx+Y[ 12
S*+ ,YPx*S’Y +*x2[xP12Y +YPPS2U .,S\Yi @*x2[xP12Y +YPPS2U .,S\Y+ x,Y UY2Y,xPPq [Y*Y,4S2Y[ vx+Y[ 12 *TY .,S\Y+ \Tx,UY[ *1 \(+*14Y,+ 1,
(+S2U *TY Yr.Y\*Y[ \1+* .P(+ x 4x,US2i
Shipping & Handling Costs
>TY !14.x2q x\\1(2*+ W1, +TS..S2U x2[ Tx2[PS2U x\*S’S*SY+ *Tx* 1\\(, xW*Y, *TY *,x2+WY, 1W \12*,1P 1’Y, *TY ,YPx*Y[ U11[+ x+
W(PWSPP4Y2* x\*S’S*SY+ ,x*TY, *Tx2 .Y,W1,4x2\Y 1vPSUx*S12+i >TY +TS..S2U x2[ Tx2[PS2U WYY+ \Tx,UY[ *1 \(+*14Y,+ x,Y ,Y\1U2SoY[ x+
,Y’Y2(Y x2[ *TY ,YPx*Y[ \1+*+ x,Y ,Y\1,[Y[ S2 \1+* 1W ,Y’Y2(Y x* *TY *S4Y 1W *,x2+WY, 1W \12*,1Pi
IJ
(cid:140)]I(cid:215)(cid:140)N(cid:215) (cid:151)(cid:140)(cid:211)(cid:136)
(cid:140)]N£Q N] (cid:211)](cid:140)Q](cid:143)(cid:151)(cid:210)(cid:215)N£(cid:210) (cid:160)(cid:151)(cid:140)(cid:215)(cid:140)(cid:211)(cid:151)(cid:215)(cid:143) QN(cid:215)N£(cid:141)£(cid:140)NQ (cid:229) (cid:153)(cid:211)(cid:128)(cid:132)q”(cid:132)o˘(cid:201)(cid:151)
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Warranties
>TY !14.x2q UY2Y,xPPq .,1’S[Y+ tx,,x2*SY+ W1, S*+ .,1[(\*+i >TY +*x2[x,[ tx,,x2*q .Y,S1[ S+ *q.S\xPPq NM 412*T+ *1 LI
412*T+i >TY +*x2[x,[ tx,,x2*q .Y,S1[ W1, .,1[(\* +xPY+ S+ x\\1(2*Y[ W1, (2[Y, *TY .,1’S+S12+ 1W #@! KJgk V!12*S2UY2\SY+k? x+ *TY
!14.x2q Tx+ *TY xvSPS*q *1 x+\Y,*xS2 *TY PSQYPST11[ 1W *TY PSxvSPS*q x2[ \x2 ,Yx+12xvPq Y+*S4x*Y *TY x41(2* 1W *TY PSxvSPS*qi #
.,1’S+S12 W1, *TY Y+*S4x*Y[ tx,,x2*q \1+* S+ ,Y\1,[Y[ S2 \1+* 1W ,Y’Y2(Y x* *TY *S4Y ,Y’Y2(Y S+ ,Y\1U2SoY[i >TY !14.x2q;+ Y+*S4x*Y
1W \1+*+ *1 +Y,’S\Y *TY tx,,x2*q 1vPSUx*S12+ S+ vx+Y[ 12 TS+*1,S\xP Yr.Y,SY2\Y x2[ Yr.Y\*x*S12+ 1W W(*(,Y \12[S*S12+i >1 *TY Yr*Y2* *Tx*
*TY !14.x2q;+ Yr.Y,SY2\Y S2 tx,,x2*q \PxS4+ 1, \1+*+ x++1\Sx*Y[ tS*T +Y,’S\S2U *T1+Y \PxS4+ [SWWY, W,14 *TY 1,SUS2xP Y+*S4x*Y+k
,Y’S+S12+ *1 *TY Y+*S4x*Y[ tx,,x2*q PSxvSPS*q x,Y ,Y\1,[Y[ x* *Tx* *S4Yk tS*T x2 1WW+Y**S2U x[R(+*4Y2* *1 \1+* 1W ,Y’Y2(Yi
Practical Expedients and Exemptions
>TY !14.x2q Yr.Y2+Y+ S2\,Y4Y2*xP [S,Y\* \1+*+ 1W 1v*xS2S2U x \12*,x\* tTY2 S2\(,,Y[ SW *TY Yr.Y\*Y[ x41,*Sox*S12 .Y,S1[ S+
12Y qYx, 1, PY++i >TY+Y \1+*+ x,Y ,Y\1,[Y[ tS*TS2 +YPPS2Uk UY2Y,xP x2[ x[4S2S+*,x*S’Y Yr.Y2+Y+ S2 *TY \12+1PS[x*Y[ +*x*Y4Y2* 1W
1.Y,x*S12+i
>TY !14.x2q [1Y+ 21* x[R(+* *TY .,14S+Y[ x41(2* 1W \12+S[Y,x*S12 W1, *TY YWWY\*+ 1W x WS2x2\S2U \14.12Y2* vY\x(+Y *TY *S4Y
.Y,S1[ vY*tYY2 *TY *,x2+WY, 1W x .,14S+Y[ U11[ *1 x \(+*14Y, x2[ *TY \(+*14Y,;+ .xq4Y2* W1, *Tx* U11[ S+ *q.S\xPPq 12Y qYx, 1, PY++i
>TY !14.x2q [1Y+ 21* [S+\P1+Y *TY ’xP(Y 1W *TY ,Y4xS2S2U .Y,W1,4x2\Y 1vPSUx*S12 W1, \12*,x\*+ tS*T x2 1,SUS2xP Yr.Y\*Y[ PY2U*T 1W
12Y qYx, 1, PY++i
Contract Liabilities
!12*,x\* PSxvSPS*SY+ \12+S+* 1W [YWY,,Y[ ,Y’Y2(Y x2[ x[’x2\Y .xq4Y2*+ W,14 \(+*14Y,+k S2\P([S2U x41(2*+ *Tx* x,Y ,YW(2[xvPYi
>TY+Y \12*,x\* PSxvSPS*SY+ x,Y \Px++SWSY[ x+ YS*TY, \(,,Y2* 1, P12Uj*Y,4 PSxvSPS*SY+ S2 *TY \12+1PS[x*Y[ vxPx2\Y +TYY* vx+Y[ 12 *TY *S4S2U
1W tTY2 *TY !14.x2q Yr.Y\*+ *1 ,Y\1U2SoY *TY ,YPx*Y[ ,Y’Y2(Yi #+ 1W ~Y\Y4vY, LNk MgMN x2[ ~Y\Y4vY, LNk MgMgk \12*,x\*
PSxvSPS*SY+ tY,Y 5HiL 4SPPS12 x2[ 5IiJ 4SPPS12k ,Y+.Y\*S’YPqk x2[ x,Y S2\P([Y[ S2 x\\,(Y[ Yr.Y2+Y+ x2[ 1*TY, \(,,Y2* PSxvSPS*SY+ x2[
1*TY, PSxvSPS*SY+ S2 *TY x\\14.x2qS2U \12+1PS[x*Y[ vxPx2\Y +TYY*+i >TY S2\,Yx+Y S2 *TY \12*,x\* PSxvSPS*q vxPx2\Y [(,S2U *TY qYx, Y2[Y[
~Y\Y4vY, LNk MgMN S+ .,S4x,SPq [(Y *1 \x+T .xq4Y2*+ ,Y\YS’Y[ S2 x[’x2\Y 1W +x*S+WqS2U .Y,W1,4x2\Y 1vPSUx*S12+ x2[ x\-(S,Y[
\12*,x\* PSxvSPS*SY+ 1W 5Mig 4SPPS12 W,14 \(,,Y2* qYx, x\-(S+S*S12+k .x,*SxPPq 1WW+Y* vq 5JiI 4SPPS12 1W ,Y’Y2(Y ,Y\1U2SoY[ [(,S2U *TY
qYx, *Tx* tx+ S2\P([Y[ S2 *TY \12*,x\* PSxvSPS*q vxPx2\Y x* ~Y\Y4vY, LNk MgMgi
Disaggregated Revenue
@YY ]1*Y NG W1, *TY !14.x2q;+ [S+xUU,YUx*S12 1W ,Y’Y2(Y vq +YU4Y2*k UY1U,x.Tq x2[ Y2[ 4x,QY*i
Q(cid:136) (cid:213)ot”(cid:132)˘tt (cid:211)(cid:128)(cid:136)Ł”(cid:132)Øq”(cid:128)(cid:132)t
X(cid:131)X[ (cid:215)(cid:204)zo”t”q”(cid:128)(cid:132)t
D2 #(U(+* Lgk MgMNk *TY !14.x2q x\-(S,Y[ Ngg3 1W *TY 1(*+*x2[S2U +Tx,Y+ 1W #>b b2[(+*,SxP #(*14x*S12k b2\i nV#>b?mk x2
#.Yrk ]1,*T !x,1PS2xjvx+Y[ PYx[S2U +(..PSY, 1W S2*YPPSUY2* Y2[j1Wjx,4 *Y\T21P1Uq +1P(*S12+ *1 Df^+ W1, x[’x2\Y[ S2[(+*,SxP x2[
+(,US\xP ,1v1*+ W1, x2 S2S*SxP \x+T .(,\Tx+Y .,S\Y 1W 5NIFiM 4SPPS12k 2Y* 1W \x+T x\-(S,Y[ x2[ Y+*S4x*Y[ t1,QS2U \x.S*xP x[R(+*4Y2*+k
x2[ 5KKig 4SPPS12 Y+*S4x*Y[ WxS, ’xP(Y 1W \12*S2UY2* \12+S[Y,x*S12i >TY \12*S2UY2* \12+S[Y,x*S12 tSPP vY .xqxvPY S2 MgMM vx+Y[ 12 x
4(P*S.PY 1W *TY +*x2[xP12Y #>b #[R(+*Y[ f"b>~#k x+ [YWS2Y[ S2 *TY .(,\Tx+Y x2[ +xPY xU,YY4Y2*k W1, *TY WS+\xP qYx, Y2[Y[
~Y\Y4vY, LNk MgMNi >TY S2S*SxP \x+T .(,\Tx+Y .,S\Y tx+ WS2x2\Y[ tS*T v1,,1tS2U+ (2[Y, *TY !14.x2q;+ ,Y’1P’S2U \,Y[S* Wx\SPS*q
x2[ \x+T x’xSPxvPY 12 Tx2[i >TY !14.x2q Yr.Y\*+ *Tx* *TY x[[S*S12 1W #>b tSPP \14.PY4Y2* x2[ x[[ S2*YPPSUY2* *Y\T21P1Uq
+1P(*S12+ *1 W(,*TY, Yr.x2[ *TY !14.x2q;+ .1+S*S12 S2 4S++S12 \,S*S\xP ,1v1*S\ x..PS\x*S12+ tS*TS2 *TY C,Y\S+S12 ^1*S12 ,Y.1,*xvPY
+YU4Y2*i
D2 #(U(+* LNk MgMNk *TY !14.x2q x\-(S,Y[ Ngg3 1W *TY 1(*+*x2[S2U +Tx,Y+ 1W @\T2YS[Y, fPY\*,S\ ^1*S12 <@#k b2\i
nV@f^?mk x ^x,Pv1,1(UTk !122Y\*S\(*jvx+Y[ 4x2(Wx\*(,Y, 1W S2*YU,x*Y[ 41*S12 \12*,1P +1P(*S12+ x2[ YPY\*,12S\ \12*,1P+ W1,
x(*14x*S12 Y-(S.4Y2* W1, x *1*xP .(,\Tx+Y .,S\Y 1W 5NNKiH 4SPPS12k 2Y* 1W \x+T x\-(S,Y[ x2[ t1,QS2U \x.S*xP x[R(+*4Y2*+i >TY
x\-(S+S*S12 tx+ WS2x2\Y[ tS*T v1,,1tS2U+ (2[Y, *TY !14.x2q;+ ,Y’1P’S2U \,Y[S* Wx\SPS*qi >TY !14.x2q Yr.Y\*+ *Tx* *TY x[[S*S12 1W
@f^ tSPP \14.PY4Y2* x2[ Yr.x2[ *TY !14.x2q;+ .,Y+Y2\Y S2 PSWY +\SY2\Y x..PS\x*S12+ x2[ +1P(*S12+ W1, S2[(+*,SxP x(*14x*S12
x..PS\x*S12+ tS*TS2 *TY C,Y\S+S12 ^1*S12 ,Y.1,*xvPY +YU4Y2*i
II
(cid:140)]I(cid:215)(cid:140)N(cid:215) (cid:151)(cid:140)(cid:211)(cid:136)
(cid:140)]N£Q N] (cid:211)](cid:140)Q](cid:143)(cid:151)(cid:210)(cid:215)N£(cid:210) (cid:160)(cid:151)(cid:140)(cid:215)(cid:140)(cid:211)(cid:151)(cid:215)(cid:143) QN(cid:215)N£(cid:141)£(cid:140)NQ (cid:229) (cid:153)(cid:211)(cid:128)(cid:132)q”(cid:132)o˘(cid:201)(cid:151)
(cid:215)Q ](cid:160) (cid:210)£(cid:211)£(cid:141)(cid:213)£T U[(cid:142) X(cid:131)X[
Allocation of Purchase Price
>TY x\-(S+S*S12+ 1W #>b x2[ @f^ Tx’Y vYY2 x\\1(2*Y[ W1, x+ v(+S2Y++ \14vS2x*S12+i >TY .(,\Tx+Y .,S\Y W1, Yx\T x\-(S+S*S12
S+ xPP1\x*Y[ vx+Y[ (.12 x ’xP(x*S12 1W *TY WxS, ’xP(Y+ 1W x++Y*+ x\-(S,Y[ x2[ PSxvSPS*SY+ x++(4Y[i #++Y*+ x\-(S,Y[ x2[ PSxvSPS*SY+
x++(4Y[ Tx’Y vYY2 ,Y\1,[Y[ x* *TYS, Y+*S4x*Y[ WxS, ’xP(Y+ x+ 1W *TY x\-(S+S*S12 [x*Y+i >TY WxS, ’xP(Y+ 1W S2*x2USvPY x++Y*+ tY,Y vx+Y[
12 ’xP(x*S12+ (+S2U x2 S2\14Y x..,1x\Tk +.Y\SWS\xPPq *TY 4(P*Sj.Y,S1[ Yr\Y++ Yx,2S2U+ 4Y*T1[ W1, \(+*14Y, ,YPx*S12+TS.+ x2[ *TY
,YPSYWjW,14j,1qxP*q 4Y*T1[ W1, [Y’YP1.Y[ *Y\T21P1USY+k *,x[Y4x,Q+ x2[ *,x[Y 2x4Y+i >TY .,1\Y++ W1, Y+*S4x*S2U *TY WxS, ’xP(Y+ 1W
S[Y2*SWSxvPY S2*x2USvPY x++Y*+ ,Y-(S,Y+ *TY (+Y 1W +SU2SWS\x2* Y+*S4x*Y+ x2[ x++(4.*S12+k S2\P([S2U ,Y’Y2(Y U,1t*T ,x*Y+k \(+*14Y,
x**,S*S12 ,x*Y+k ,1qxP*q ,x*Y+k [S+\1(2* ,x*Y+k *Y\T21P1Uq 1v+1PY+\Y2\Y \(,’Y+k x2[ f"b>~# 4x,US2+i >TY Yr\Y++ 1W *TY .(,\Tx+Y .,S\Y
1’Y, *TY WxS, ’xP(Y+ 1W *x2USvPY x++Y*+k S[Y2*SWSxvPY S2*x2USvPY x++Y*+ x2[ x++(4Y[ PSxvSPS*SY+ tx+ ,Y\1,[Y[ x+ U11[tSPP W1, Yx\T
x\-(S+S*S12i >TY !14.x2q;+ Y+*S4x*Y+ x2[ x++(4.*S12+ S2 [Y*Y,4S2S2U *TY Y+*S4x*Y[ WxS, ’xP(Y+ 1W \Y,*xS2 x++Y*+ x2[ PSxvSPS*SY+ x,Y
+(vRY\* *1 \Tx2UY tS*TS2 *TY 4Yx+(,Y4Y2* .Y,S1[ n(. *1 12Y qYx, W,14 *TY x\-(S+S*S12 [x*Ym x+ x ,Y+(P* 1W x[[S*S12xP S2W1,4x*S12
1v*xS2Y[ tS*T ,YUx,[+ *1 Wx\*+ x2[ \S,\(4+*x2\Y+ *Tx* YrS+*Y[ x+ 1W *TY x\-(S+S*S12 [x*Yi
ATI
"x+Y[ (.12 x .,YPS4S2x,q ’xP(x*S12k *TY *1*xP .(,\Tx+Y .,S\Yk S2\P([S2U 4Yx+(,Y4Y2* .Y,S1[ x[R(+*4Y2*+k W1, #>b tx+
xPP1\x*Y[ x+ W1PP1t+ nS2 *T1(+x2[+mE
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D.Y,x*S2U PYx+Y PSxvSPS*SY+
D*TY, PSxvSPS*SY+
>1*xP PSxvSPS*SY+ x++(4Y[
>1*xP x++Y*+ x\-(S,Y[k 2Y* 1W PSxvSPS*SY+ x++(4Y[
_Y++E \x+T x\-(S,Y[
_Y++E \12*S2UY2* \12+S[Y,x*S12
b2S*SxP .(,\Tx+Y .,S\Yk 2Y* 1W \x+T x\-(S,Y[
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(cid:215)‡‡(cid:128)(cid:204)Øq”(cid:128)(cid:132)
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5
5
@(v+Y-(Y2* *1 *TY .,YPS4S2x,q ’xP(x*S12k x[[S*S12xP S2W1,4x*S12 *Tx* YrS+*Y[ x+ 1W *TY x\-(S+S*S12 [x*Y vY\x4Y x’xSPxvPY *Tx*
,Y+(P*Y[ S2 x[R(+*4Y2*+ *1 \Y,*xS2 S2.(*+ (+Y[ W1, *TY [Y*Y,4S2x*S12 1W Y+*S4x*Y[ WxS, ’xP(Y 1W *TY \12*S2UY2* \12+S[Y,x*S12i >TY+Y
\Tx2UY+ ,Y+(P*Y[ S2 x 5HiF 4SPPS12 [Y\,Yx+Y *1 *TY PSxvSPS*q x2[ x 5giK 4SPPS12 S2\,Yx+Y *1 S[Y2*SWSxvPY S2*x2USvPY x++Y*+i #[R(+*4Y2*+
*1 *TY .,YPS4S2x,q .(,\Tx+Y .,S\Y xPP1\x*S12 ,Y+(P*Y[ S2 x [Y\,Yx+Y *1 U11[tSPP 1W 5GiL 4SPPS12i #+ 1W ~Y\Y4vY, LNk MgMNk *TY
t1,QS2U \x.S*xP x[R(+*4Y2*+ Tx[ 21* vYY2 WS2xPSoY[ x2[ tY,Y Y+*S4x*Y[ *1 vY x \x+T ,Y\YS.* 1W 5giG 4SPPS12i >TY .(,\Tx+Y .,S\Y
xPP1\x*S12 S+ .,YPS4S2x,q x+ *TY !14.x2q S+ S2 *TY .,1\Y++ 1W \1PPY\*S2U x[[S*S12xP S2W1,4x*S12 W1, *TY ’xP(x*S12 1W S2’Y2*1,SY+k 1*TY,
PSxvSPS*SY+k \12*S2UY2* \12+S[Y,x*S12 x2[ (2,Y\1U2SoY[ *xr vY2YWS*+i
IH
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>TY WxS, ’xP(Y 1W S2*x2USvPY x++Y*+ W1, #>b S+ \14.,S+Y[ 1W *TY W1PP1tS2U n[1PPx, x41(2*+ S2 *T1(+x2[+mE
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5
5
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>TY .(,\Tx+Y .,S\Y xPP1\x*S12 ,Y+(P*Y[ S2 5JMiG 4SPPS12 1W S[Y2*SWSxvPY S2*x2USvPY x++Y*+ x2[ 5NLKiK 4SPPS12 1W U11[tSPPi
d11[tSPP x41(2*S2U *1 5NLKiK 4SPPS12 S+ Yr.Y\*Y[ *1 vY [Y[(\*SvPY W1, TY U11[tSPP ,Y\1,[Y[ ,Y.,Y+Y2*+ *TY x2*S\S.x*Y[ S2\,Y4Y2*xP ’xP(Y 1W W(*(,Y \x+T WP1t+
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!14.x2q;+ \(+*14Y, vx+Y% nSSm #>b;+ xvSPS*q *1 U,1t *TY v(+S2Y++ *T,1(UT 2Yt .,1[(\* S2*,1[(\*S12+% x2[ nSSSm \1+* S4.,1’Y4Y2*+
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Unaudited Pro Forma Information
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G˘”(cid:192)‰q˘(cid:201) (cid:215)m˘wØ(cid:192)˘
(cid:215)(cid:136)(cid:128)wq”AØq”(cid:128)(cid:132)
Z˘w”(cid:128)(cid:201)
5
5
NNkLJJ
NNkGgg
NkMMJ
LLL
MKkHNL
NJ qYx,+
NJ qYx,+
Ng qYx,+
J 412*T+
!(+*14Y, ,YPx*S12+TS.+ x2[ vx\QP1U W1, #Adf@ tY,Y ’xP(Y[ (+S2U *TY 4(P*Sj.Y,S1[ Yr\Y++ Yx,2S2U+ 4Y*T1[i ~Y’YP1.Y[
*Y\T21P1Uq x2[ *,x[Y4x,Q+ x2[ *,x[Y 2x4Y+ W1, #Adf@ tY,Y ’xP(Y[ (+S2U *TY ,YPSYWjW,14j,1qxP*q 4Y*T1[i
>TY .(,\Tx+Y .,S\Y xPP1\x*S12 ,Y+(P*Y[ S2 5MKiH 4SPPS12 1W S[Y2*SWSxvPY S2*x2USvPY x++Y*+ x2[ 5KLig 4SPPS12 1W U11[tSPPi #+ *TY
#Adf@ x\-(S+S*S12 tx+ x2 x\-(S+S*S12 1W 1(*+*x2[S2U \14412 +Tx,Y+k 212Y 1W *TY ,Y+(P*S2U U11[tSPP S+ [Y[(\*SvPY W1, S2\14Y *xr
.(,.1+Y+i b2*x2USvPY x++Y*+ x,Y vYS2U x41,*SoY[ 1’Y, *TYS, tYSUT*Y[ x’Y,xUY (+YW(P PS’Y+ .,S4x,SPq vx+Y[ (.12 *TY .x**Y,2 S2 tTS\T
x2*S\S.x*Y[ Y\1214S\ vY2YWS*+ W,14 +(\T x++Y*+ x,Y Yr.Y\*Y[ *1 vY ,YxPSoY[i >TY U11[tSPP ,Y\1,[Y[ ,Y.,Y+Y2*+ *TY x2*S\S.x*Y[
S2\,Y4Y2*xP ’xP(Y 1W W(*(,Y \x+T WP1t+ .1*Y2*SxPPq x**,Sv(*xvPY *1E nSm Yr.Y\*Y[ W(*(,Y vY2YWS*+ W,14 x[’x2\S2U *TY !14.x2q;+
.T1*12S\jvx+Y[ .,1[(\* ,1x[4x. *T,1(UT *TY x[[S*S12 1W A0~ \x.xvSPS*SY+ W,14 #Adf@% nSSm #Adf@;+ xvSPS*q *1 U,1t *TY v(+S2Y++
tS*T YrS+*S2U x2[ 2Yt \(+*14Y,+k S2\P([S2U PY’Y,xUS2U *TY !14.x2q;+ \(+*14Y, vx+Y% nSSSm #Adf@;+ xvSPS*q *1 U,1t *TY v(+S2Y++
*T,1(UT 2Yt .,1[(\* S2*,1[(\*S12+% x2[ nS’m \1+* S4.,1’Y4Y2*+ [(Y *1 *TY S2*YU,x*S12 1W #Adf@;+ 1.Y,x*S12+ S2*1 *TY !14.x2q;+
YrS+*S2U S2W,x+*,(\*(,Yi
>TY 1.Y,x*S2U ,Y+(P*+ 1W #Adf@ tY,Y S2\P([Y[ S2 *TY !14.x2q;+ ,Y+(P*+ 1W 1.Y,x*S12+ vYUS22S2U 12 a(Pq LNk MgNFi #Adf@
\12*,Sv(*Y[ ,Y’Y2(Y+ 1W 5KiF 4SPPS12 x2[ x P1++ vYW1,Y S2\14Y *xrY+ 1W 5LiJ 4SPPS12 W1, *TY qYx, Y2[Y[ ~Y\Y4vY, LNk MgNFi _1++
vYW1,Y S2\14Y *xrY+ W1, *TY qYx, Y2[Y[ ~Y\Y4vY, LNk MgNF S2\P([Y[ x41,*Sox*S12 1W S2’Y2*1,q WxS, ’xP(Y x[R(+*4Y2*+ x2[ .(,\Tx+Y[
S2*x2USvPY x++Y*+ 1W 5MiM 4SPPS12i
Med X Change and Ingenia
>TY WS2xP .(,\Tx+Y .,S\Y xPP1\x*S12 W1, ^Y[ 7 !Tx2UY x2[ b2UY2Sx S+ x+ W1PP1t+ nS2 *T1(+x2[+mE
!x+T
#\\1(2*+ ,Y\YS’xvPY
b2’Y2*1,SY+
C,1.Y,*qk .Px2* x2[ Y-(S.4Y2*
b2*x2USvPY x++Y*+
d11[tSPP
D*TY, x++Y*+
>1*xP x++Y*+ x\-(S,Y[
#\\1(2*+ .xqxvPY
~YWY,,Y[ *xr PSxvSPS*SY+
D*TY, PSxvSPS*SY+
>1*xP PSxvSPS*SY+ x++(4Y[
>1*xP x++Y*+ x\-(S,Y[k 2Y* 1W PSxvSPS*SY+ x++(4Y[
_Y++E \x+T x\-(S,Y[
>1*xP .(,\Tx+Y .,S\Yk 2Y* 1W \x+T x\-(S,Y[
_Y++E \12*S2UY2* \12+S[Y,x*S12
_Y++E .(,\Tx+Y .,S\Y T1P[vx\Q
]Y* \x+T (+Y[ W1, x\-(S+S*S12 1W v(+S2Y++Y+
HN
(cid:215)(cid:136)(cid:128)o(cid:132)q
Nkggg
NkHLF
MkLHM
KFI
MMkLHI
NLkLGG
IgN
KNkFHM
IgK
MkLFF
FNg
LkFNL
LGkgJF
Nkggg
LHkgJF
IkJIF
FgJ
MFkJGJ
5
5
(cid:140)]I(cid:215)(cid:140)N(cid:215) (cid:151)(cid:140)(cid:211)(cid:136)
(cid:140)]N£Q N] (cid:211)](cid:140)Q](cid:143)(cid:151)(cid:210)(cid:215)N£(cid:210) (cid:160)(cid:151)(cid:140)(cid:215)(cid:140)(cid:211)(cid:151)(cid:215)(cid:143) QN(cid:215)N£(cid:141)£(cid:140)NQ (cid:229) (cid:153)(cid:211)(cid:128)(cid:132)q”(cid:132)o˘(cid:201)(cid:151)
(cid:215)Q ](cid:160) (cid:210)£(cid:211)£(cid:141)(cid:213)£T U[(cid:142) X(cid:131)X[
>TY WxS, ’xP(Y 1W S2*x2USvPY x++Y*+ W1, ^Y[ 7 !Tx2UY x2[ b2UY2Sx S+ \14.,S+Y[ 1W *TY W1PP1tS2U n[1PPx, x41(2*+ S2
*T1(+x2[+mE
~Y’YP1.Y[ *Y\T21P1USY+
!(+*14Y, ,YPx*S12+TS.+
>,x[Y4x,Q+ x2[ *,x[Y 2x4Y+
"x\QP1U
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£tq”(cid:136)Øq˘(cid:201) (cid:160)Ø”w I؇o˘
(cid:141)˘(cid:201) F (cid:211)‰Ø(cid:132)(cid:192)˘
5
NkGgg 5
FkFgg
Lgg
Mgg
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(cid:151)(cid:132)(cid:192)˘(cid:132)”Ø
FkMHM
JIJ
LLF
X
NgkNHI
5
G˘”(cid:192)‰q˘(cid:201) (cid:215)m˘wØ(cid:192)˘
(cid:215)(cid:136)(cid:128)wq”AØq”(cid:128)(cid:132)
Z˘w”(cid:128)(cid:201)
Ng qYx,+
NJ qYx,+
F qYx,+
H 412*T+
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4Y*T1[i ~Y’YP1.Y[ *Y\T21P1Uq W1, ^Y[ 7 !Tx2UY x2[ b2UY2Sx tY,Y ’xP(Y[ (+S2U *TY ,YPSYW W,14 ,1qxP*q x2[ 4(P*Sj.Y,S1[ Yr\Y++
Yx,2S2U+ 4Y*T1[+k ,Y+.Y\*S’YPqi >,x[Y4x,Q+ x2[ *,x[Y 2x4Y+ W1, v1*T ^Y[ 7 !Tx2UY x2[ b2UY2Sx tY,Y ’xP(Y[ (+S2U *TY ,YPSYWjW,14j
,1qxP*q 4Y*T1[i
>TY !14.x2q ,Y\1,[Y[ x2 xUU,YUx*Y WxS, ’xP(Y 1W 5MMiK 4SPPS12 1W S[Y2*SWSxvPY S2*x2USvPY x++Y*+ W,14 *TY ^Y[ 7 !Tx2UY x2[
b2UY2Sx x\-(S+S*S12+i b2*x2USvPY x++Y*+ x,Y vYS2U x41,*SoY[ 1’Y, *TYS, tYSUT*Y[ x’Y,xUY (+YW(P PS’Y+ .,S4x,SPq vx+Y[ (.12 *TY .x**Y,2
S2 tTS\T x2*S\S.x*Y[ Y\1214S\ vY2YWS*+ W,14 +(\T x++Y*+ x,Y Yr.Y\*Y[ *1 vY ,YxPSoY[i
>TY !14.x2q ,Y\1,[Y[ 5NLiK 4SPPS12 1W U11[tSPP W,14 *TY+Y x\-(S+S*S12+i d11[tSPP x41(2*S2U *1 5IiM 4SPPS12 W,14 *TY ^Y[
7 !Tx2UY x\-(S+S*S12 S+ Yr.Y\*Y[ *1 vY W(PPq [Y[(\*SvPY W1, S2\14Y *xr .(,.1+Y+i d11[tSPP x41(2*S2U *1 5HiM 4SPPS12 W,14 *TY
b2UY2Sx x\-(S+S*S12 S+ 21* Yr.Y\*Y[ *1 vY [Y[(\*SvPY W1, S2\14Y *xr .(,.1+Y+i >TY U11[tSPP ,Y\1,[Y[ ,Y.,Y+Y2*+ *TY x2*S\S.x*Y[
S2\,Y4Y2*xP ’xP(Y 1W W(*(,Y \x+T WP1t+ .1*Y2*SxPPq x**,Sv(*xvPY *1E nSm *TY xvSPS*q 1W ^Y[ 7 !Tx2UY x2[ b2UY2Sx *1 U,1t *TY v(+S2Y++
tS*T YrS+*S2U x2[ 2Yt \(+*14Y,+k S2\P([S2U PY’Y,xUS2U *TY !14.x2q;+ \(+*14Y, vx+Y% nSSm *TYS, xvSPS*q *1 U,1t *TY v(+S2Y++Y+
*T,1(UT 2Yt .,1[(\* S2*,1[(\*S12+% x2[ nSSSm \1+* S4.,1’Y4Y2*+ [(Y *1 *TY S2*YU,x*S12 1W ^Y[ 7 !Tx2UY x2[ b2UY2Sx 1.Y,x*S12+ S2*1
*TY !14.x2q;+ YrS+*S2U S2W,x+*,(\*(,Yi
>TY 1.Y,x*S2U ,Y+(P*+ 1W ^Y[ 7 !Tx2UY x2[ b2UY2Sx tY,Y S2\P([Y[ S2 *TY !14.x2q;+ ,Y+(P*+ 1W 1.Y,x*S12+ vYUS22S2U 12 *TY
,Y+.Y\*S’Y x\-(S+S*S12 [x*Y+i >TY+Y x\-(S+S*S12+ \12*,Sv(*Y[ ,Y’Y2(Y+ 1W 5HiF 4SPPS12 x2[ x2 S2\14Y vYW1,Y S2\14Y *xrY+ 1W 5giI
4SPPS12 W1, *TY qYx, Y2[Y[ ~Y\Y4vY, LNk MgNFi b2\14Y vYW1,Y S2\14Y *xrY+ W1, *TY qYx, Y2[Y[ ~Y\Y4vY, LNk MgNF S2\P([Y[
x41,*Sox*S12 1W S2’Y2*1,q WxS, ’xP(Y x[R(+*4Y2*+ x2[ .(,\Tx+Y[ S2*x2USvPY x++Y*+ 1W 5NiJ 4SPPS12i
(cid:215)(cid:204)zo”t”q”(cid:128)(cid:132) (cid:211)(cid:128)tqt
>TY !14.x2q ,Y\1U2SoY[ x\-(S+S*S12 \1+*+ 1W 5Jig 4SPPS12k oY,1 x2[ 5NiI 4SPPS12 S2 *TY qYx,+ Y2[Y[ ~Y\Y4vY, LNk MgMNk MgMg
x2[ MgNFk ,Y+.Y\*S’YPqk ,YPx*Y[ *1 *TY x\-(S+S*S12+ *Tx* 1\\(,,Y[ [(,S2U *TY+Y qYx,+i >TY+Y \1+*+ \12+S+*Y[ 1W WS2[Y,+; WYY+k PYUxPk
’xP(x*S12 x2[ 1*TY, .,1WY++S12xP 1, \12+(P*S2U WYY+i >TY+Y x41(2*+ tY,Y S2\P([Y[ S2 ,Y+*,(\*(,S2U x2[ x\-(S+S*S12 ,YPx*Y[ \1+*+ S2 *TY
\12+1PS[x*Y[ +*x*Y4Y2*+ 1W 1.Y,x*S12+i
HM
(cid:140)]I(cid:215)(cid:140)N(cid:215) (cid:151)(cid:140)(cid:211)(cid:136)
(cid:140)]N£Q N] (cid:211)](cid:140)Q](cid:143)(cid:151)(cid:210)(cid:215)N£(cid:210) (cid:160)(cid:151)(cid:140)(cid:215)(cid:140)(cid:211)(cid:151)(cid:215)(cid:143) QN(cid:215)N£(cid:141)£(cid:140)NQ (cid:229) (cid:153)(cid:211)(cid:128)(cid:132)q”(cid:132)o˘(cid:201)(cid:151)
(cid:215)Q ](cid:160) (cid:210)£(cid:211)£(cid:141)(cid:213)£T U[(cid:142) X(cid:131)X[
M(cid:136) (cid:215)(cid:204)(cid:204)o(cid:136)o‡Øq˘(cid:201) ]q‰˘w (cid:211)(cid:128)(cid:136)}w˘‰˘(cid:132)t”m˘ (cid:143)(cid:128)tt
D*TY, \14.,YTY2+S’Y S2\14Y nP1++m S+ [YWS2Y[ x+ 1*TY, \Tx2UY+ S2 +*1\QT1P[Y,+; Y-(S*q *Tx* [1 21* ,Y.,Y+Y2* *,x2+x\*S12+ tS*T
+*1\QT1P[Y,+ 1, S2 *TY !14.x2q;+ +*1\Qi !Tx2UY+ S2 x\\(4(Px*Y[ 1*TY, \14.,YTY2+S’Y P1++ tY,Y x+ W1PP1t+ nS2 *T1(+x2[+mE
N(cid:128)q؇ (cid:215)(cid:204)(cid:204)o(cid:136)o‡Øq˘(cid:201)
]q‰˘w
(cid:211)(cid:128)(cid:136)}w˘‰˘(cid:132)t”m˘
(cid:151)(cid:132)(cid:204)(cid:128)(cid:136)˘ (cid:153)(cid:143)(cid:128)tt(cid:151)
(cid:211)o(cid:136)o‡Øq”m˘
NwØ(cid:132)t‡Øq”(cid:128)(cid:132)
(cid:215)(cid:201)•otq(cid:136)˘(cid:132)qt
Z˘(cid:132)t”(cid:128)(cid:132)
(cid:143)”ØŁ”‡”qD
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D*TY, \14.,YTY2+S’Y S2\14Y nP1++m
#41(2*+ ,Y\Px++SWSY[ W,14 x\\(4(Px*Y[ 1*TY, \14.,YTY2+S’Y P1++ nNm
"xPx2\Y x* ~Y\Y4vY, LNk MgNF
D*TY, \14.,YTY2+S’Y S2\14Y nP1++m
#41(2*+ ,Y\Px++SWSY[ W,14 x\\(4(Px*Y[ 1*TY, \14.,YTY2+S’Y P1++ nNm
"xPx2\Y x* ~Y\Y4vY, LNk MgMg
D*TY, \14.,YTY2+S’Y S2\14Y nP1++m
#41(2*+ ,Y\Px++SWSY[ W,14 x\\(4(Px*Y[ 1*TY, \14.,YTY2+S’Y P1++ nNm
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5
5
nMMkJMHm 5
LkKMG
FGI
nNGkNNLm
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nNkJGKm
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nNMkGIIm 5
nNMkKGJm 5
LkMIH
X
nFkMNGm
IkFMM
X
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nLkKJHm
X
nJkHJLm 5
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NIN
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Goodwill
>TY W1PP1tS2U *xvPY +(44x,SoY+ \Tx2UY+ S2 U11[tSPP [(,S2U *TY qYx, Y2[Y[ ~Y\Y4vY, LNk MgMN nS2 *T1(+x2[+mE
"xPx2\Y x* vYUS22S2U 1W qYx,
d11[tSPP W,14 \(,,Y2* qYx, x\-(S+S*S12+
fWWY\* 1W W1,YSU2 Yr\Tx2UY ,x*Y \Tx2UY+
"xPx2\Y x* Y2[ 1W qYx,
(cid:210)˘(cid:204)˘(cid:136)Ł˘w U[(cid:142) X(cid:131)X[
MGJkFGg
MgMkHNN
nFkNFNm
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5
5
d11[tSPP vq ,Y.1,*xvPY +YU4Y2* x+ 1W ~Y\Y4vY, LNk MgMN tx+ x+ W1PP1t+ nS2 *T1(+x2[+mE
d11[tSPP
#\\(4(Px*Y[ S4.xS,4Y2* 1W U11[tSPP
>1*xP
T˘}(cid:128)wqØŁ‡˘ Q˘(cid:192)(cid:136)˘(cid:132)q
Z‰(cid:128)q(cid:128)(cid:132)”(cid:204)t
5
5
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nNgMkKINm
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5
5
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d11[tSPP
#\\(4(Px*Y[ S4.xS,4Y2* 1W U11[tSPP
>1*xP
T˘}(cid:128)wqØŁ‡˘ Q˘(cid:192)(cid:136)˘(cid:132)q
Z‰(cid:128)q(cid:128)(cid:132)”(cid:204)t
5
5
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nNgMkKINm
NNIkgJI
5
5
I”t”(cid:128)(cid:132)
NIJkNFJ
nLNkHMMm
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HL
Zw˘(cid:204)”t”(cid:128)(cid:132)
(cid:141)(cid:128)q”(cid:128)(cid:132)
MJJkKFg
nNHkgKIm
MLGkKKK
5
5
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ILgkHMF
nNJNkMMFm
KHFkJgg
Zw˘(cid:204)”t”(cid:128)(cid:132)
(cid:141)(cid:128)q”(cid:128)(cid:132)
JLkKFH
nNHkgKIm
LIkKJN
5
5
N(cid:128)q؇
KLHkMgF
nNJNkMMFm
MGJkFGg
5
5
5
5
(cid:140)]I(cid:215)(cid:140)N(cid:215) (cid:151)(cid:140)(cid:211)(cid:136)
(cid:140)]N£Q N] (cid:211)](cid:140)Q](cid:143)(cid:151)(cid:210)(cid:215)N£(cid:210) (cid:160)(cid:151)(cid:140)(cid:215)(cid:140)(cid:211)(cid:151)(cid:215)(cid:143) QN(cid:215)N£(cid:141)£(cid:140)NQ (cid:229) (cid:153)(cid:211)(cid:128)(cid:132)q”(cid:132)o˘(cid:201)(cid:151)
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Intangible Assets
b2*x2USvPY x++Y*+ x+ 1W ~Y\Y4vY, LNk MgMN x2[ MgMgk ,Y+.Y\*S’YPqk x,Y +(44x,SoY[ x+ W1PP1t+ n[1PPx, x41(2*+ S2 *T1(+x2[+mE
#41,*SoxvPY S2*x2USvPY x++Y*+E
Cx*Y2*+ x2[ [Y’YP1.Y[ *Y\T21P1USY+
!(+*14Y, ,YPx*S12+TS.+
!(+*14Y, vx\QP1U
>,x[Y4x,Q+ x2[ *,x[Y 2x4Y+
#41,*SoxvPY S2*x2USvPY x++Y*+
]12jx41,*SoxvPY S2*x2USvPY x++Y*+E
>,x[Y 2x4Y+
>1*xP
#41,*SoxvPY S2*x2USvPY x++Y*+E
Cx*Y2*+ x2[ [Y’YP1.Y[ *Y\T21P1USY+
!(+*14Y, ,YPx*S12+TS.+
>,x[Y4x,Q+ x2[ *,x[Y 2x4Y+
#41,*SoxvPY S2*x2USvPY x++Y*+
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>,x[Y 2x4Y+
>1*xP
(cid:210)˘(cid:204)˘(cid:136)Ł˘w U[(cid:142) X(cid:131)X[
(cid:157)w(cid:128)tt (cid:211)ØwwD”(cid:132)(cid:192)
(cid:215)(cid:136)(cid:128)o(cid:132)q
(cid:215)(cid:204)(cid:204)o(cid:136)o‡Øq˘(cid:201)
(cid:215)(cid:136)(cid:128)wq”AØq”(cid:128)(cid:132)
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Impairment Charges
>TY !14.x2q [S[ 21* Tx’Y x2q U11[tSPP 1, S2[YWS2S*YjPS’Y[ S2*x2USvPY x++Y* S4.xS,4Y2* \Tx,UY+ [(,S2U MgMNk MgMg 1, MgNFi
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x,Y \12+S[Y,Y[ 1v+Y,’xvPY x2[ *TY *TS,[ S+ \12+S[Y,Y[ (21v+Y,’xvPYE
_Y’YP NE B(1*Y[ .,S\Y+ W1, S[Y2*S\xP x++Y*+ 1, PSxvSPS*SY+ S2 x\*S’Y 4x,QY*+ tTS\T *TY !14.x2q \x2 x\\Y++
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Current Assets and Liabilities
>TY !14.x2q;+ \x+T Y-(S’xPY2*+ x,Y TSUTPq PS-(S[ S2’Y+*4Y2*+ tS*T 1,SUS2xP 4x*(,S*SY+ 1W *T,YY 412*T+ 1, PY++k tTS\T
,Y.,Y+Y2* x2 x++Y* *TY !14.x2q 4Yx+(,Y+ x* WxS, ’xP(Y 12 x ,Y\(,,S2U vx+S+i >TY !14.x2q [Y*Y,4S2Y+ *TY WxS, ’xP(Y 1W \x+T
Y-(S’xPY2*+ (+S2U x 4x,QY* x..,1x\T vx+Y[ 12 -(1*Y[ .,S\Y+ S2 x\*S’Y 4x,QY*+i >TY WxS, ’xP(Y+ 1W \x+T Y-(S’xPY2*+k x\\1(2*+
,Y\YS’xvPYk S2\14Y *xrY+ ,Y\YS’xvPYk x\\1(2*+ .xqxvPYk S2\14Y *xrY+ .xqxvPY x2[ x\\,(Y[ Yr.Y2+Y+ x2[ 1*TY, \(,,Y2* PSxvSPS*SY+
x..,1rS4x*Y *TYS, \x,,qS2U ’xP(Y+ vY\x(+Y 1W *TYS, +T1,*j*Y,4 2x*(,Yi
Foreign Currency Contracts
>TY !14.x2q x[[,Y++Y+ 4x,QY* ,S+Q+ W,14 \Tx2UY+ S2 W1,YSU2 \(,,Y2\q Yr\Tx2UY ,x*Y+ *T,1(UT x ,S+Q 4x2xUY4Y2* .,1U,x4
*Tx* S2\P([Y+ *TY (+Y 1W [Y,S’x*S’Y WS2x2\SxP S2+*,(4Y2*+ *1 4S*SUx*Y \Y,*xS2 vxPx2\Y +TYY* W1,YSU2 \(,,Y2\q *,x2+x\*S12 Yr.1+(,Y+i >TY
!14.x2q (+Y+ W1,YSU2 \(,,Y2\q W1,tx,[ \12*,x\*+ x+ x .x,* 1W S*+ +*,x*YUq *1 4x2xUY Yr.1+(,Y+ ,YPx*Y[ *1 W1,YSU2 \(,,Y2\q
[Y214S2x*Y[ 412Y*x,q x++Y*+ x2[ PSxvSPS*SY+i
Contingent Considerations
D2 #(U(+* Lgk MgMNk *TY !14.x2q x\-(S,Y[ #>bi <2[Y, *TY .(,\Tx+Y x2[ +xPY xU,YY4Y2* W1, *TY #>b x\-(S+S*S12k *TY W1,4Y,
+Tx,YT1P[Y,+ 1W #>b x,Y YPSUSvPY *1 ,Y\YS’Y \12*S2UY2* \12+S[Y,x*S12 vx+Y[ 12 #>b;+ WS+\xP qYx, MgMN #[R(+*Y[ f"b>~#k x+ [YWS2Y[
S2 *TY .(,\Tx+Y x2[ +xPY xU,YY4Y2*i >TY \12*S2UY2* \12+S[Y,x*S12 tSPP vY .xqxvPY S2 MgMMi >TY .,YPS4S2x,q WxS, ’xP(Y 1W *TY
\12*S2UY2* \12+S[Y,x*S12 tx+ [Y*Y,4S2Y[ vx+Y[ 12 *TY ^12*Y !x,P1 ’xP(x*S12 4Y*T1[ x2[ tx+ ,Y\1,[Y[ x+ .x,* 1W *TY .(,\Tx+Y .,S\Y
x+ 1W *TY x\-(S+S*S12 [x*Yi D2\Y *TY WxS, ’xP(Y 1W *TY \12*S2UY2* \12+S[Y,x*S12 S+ WS2xPSoY[k +(v+Y-(Y2* \Tx2UY+ S2 *TY Y+*S4x*Y[ WxS,
’xP(Y x,Y ,Y\1,[Y[ S2 *TY \12+1PS[x*Y[ +*x*Y4Y2* 1W 1.Y,x*S12+ S2 ,Y+*,(\*(,S2Uk x\-(S+S*S12k x2[ ,YPx*Y[ \1+*+ (2*SP *TY PSxvSPS*q S+
W(PPq +Y**PY[i >TY WxS, ’xP(Y 1W *TY \12*S2UY2* \12+S[Y,x*S12 tx+ 5KKig 4SPPS12i
D2 a(Pq LNk MgNFk *TY !14.x2q x\-(S,Y[ #Adf@i <2[Y, *TY .(,\Tx+Y x2[ +xPY xU,YY4Y2* W1, *TY #Adf@ x\-(S+S*S12k *TY
W1,4Y, 1t2Y, 1W #Adf@ S+ YPSUSvPY *1 ,Y\YS’Y \12*S2UY2* \12+S[Y,x*S12 vx+Y[ 12 *TY x\TSY’Y4Y2* 1W \Y,*xS2 ,Y’Y2(Y *x,UY*+ vq *TY
!14.x2q W,14 #(U(+* MgNF *T,1(UT ~Y\Y4vY, MgMIi >TY (2[S+\1(2*Y[ ,x2UY 1W .1++SvPY \12*S2UY2* \12+S[Y,x*S12 S+ oY,1 *1 /Ngig
4SPPS12 n5NNiN 4SPPS12mi bW *TY ,Y’Y2(Y *x,UY*+ x,Y x\TSY’Y[k *TY \12*S2UY2* \12+S[Y,x*S12 t1(P[ vY .xqxvPY x22(xPPq tS*T *TY WS,+*
.xq4Y2* [(Y S2 *TY WS,+* -(x,*Y, 1W MgMNi >TY Y+*S4x*Y[ WxS, ’xP(Y 1W *TY \12*S2UY2* \12+S[Y,x*S12 1W /HiN 4SPPS12 n5HiF 4SPPS12m tx+
[Y*Y,4S2Y[ vx+Y[ 12 *TY ^12*Y !x,P1 ’xP(x*S12 4Y*T1[ x2[ tx+ ,Y\1,[Y[ x+ .x,* 1W *TY .(,\Tx+Y .,S\Y x+ 1W *TY x\-(S+S*S12 [x*Yi
@(v+Y-(Y2* \Tx2UY+ S2 *TY Y+*S4x*Y[ WxS, ’xP(Y 1W *TY \12*S2UY2* \12+S[Y,x*S12 PSxvSPS*q x,Y ,Y\1,[Y[ S2 *TY \12+1PS[x*Y[ +*x*Y4Y2* 1W
1.Y,x*S12+ S2 ,Y+*,(\*(,S2Uk x\-(S+S*S12k x2[ ,YPx*Y[ \1+*+ (2*SP *TY PSxvSPS*q S+ W(PPq +Y**PY[i ~(,S2U MgMgk *TY WxS, ’xP(Y 1W *TY
\12*S2UY2* \12+S[Y,x*S12 tx+ x[R(+*Y[ *1 /KiN 4SPPS12 n5JiN 4SPPS12mi b2 ^x,\T MgMNk *TY !14.x2q 4x[Y *TY WS,+* S2+*xPP4Y2*
.xq4Y2* 1W /giK 4SPPS12 n5giK 4SPPS12mk tTS\T S+ S2\P([Y[ S2 \x+T WP1t+ W,14 WS2x2\S2U x\*S’S*SY+ S2 *TY \12+1PS[x*Y[ +*x*Y4Y2* 1W
\x+T WP1t+ W1, *TY qYx, Y2[Y[ ~Y\Y4vY, LNk MgMNi ~(,S2U MgMNk *TY WxS, ’xP(Y 1W *TY \12*S2UY2* \12+S[Y,x*S12 tx+ x[R(+*Y[ *1 /LiL
4SPPS12 n5LiG 4SPPS12mi >TY,Y tY,Y 21 1*TY, \Tx2UY+ S2 *TY WxS, ’xP(Y 1W *TY \12*S2UY2* \12+S[Y,x*S12 [(,S2U *TY qYx, Y2[Y[
~Y\Y4vY, LNk MgMNi
D2 #.,SP NIk MgNFk *TY !14.x2q x\-(S,Y[ b2UY2Sxi <2[Y, *TY .(,\Tx+Y x2[ +xPY xU,YY4Y2* W1, *TY b2UY2Sx x\-(S+S*S12k *TY
+Tx,YT1P[Y,+ 1W b2UY2Sx x,Y YPSUSvPY *1 ,Y\YS’Y \12*S2UY2* \12+S[Y,x*S12 vx+Y[ 12 *TY x\TSY’Y4Y2* 1W \Y,*xS2 ,Y’Y2(Y *x,UY*+ vq *TY
!14.x2q W,14 #.,SP MgNF *T,1(UT ^x,\T MgMMi >TY (2[S+\1(2*Y[ ,x2UY 1W .1++SvPY \12*S2UY2* \12+S[Y,x*S12 S+ oY,1 *1 /Gig 4SPPS12
n5Fig 4SPPS12mi bW *TY ,Y’Y2(Y *x,UY*+ x,Y x\TSY’Y[k *TY \12*S2UY2* \12+S[Y,x*S12 t1(P[ vY .xqxvPY S2 \x+T S2 *T,YY x22(xP
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S2+*xPP4Y2*+ W,14 MgMg *1 MgMMi >TY Y+*S4x*Y[ WxS, ’xP(Y 1W *TY \12*S2UY2* \12+S[Y,x*S12 1W /JiG 4SPPS12 n5IiI 4SPPS12m tx+
[Y*Y,4S2Y[ vx+Y[ 12 *TY ^12*Y !x,P1 ’xP(x*S12 4Y*T1[ x2[ tx+ ,Y\1,[Y[ x+ .x,* 1W *TY .(,\Tx+Y .,S\Y x+ 1W *TY x\-(S+S*S12 [x*Yi
@(v+Y-(Y2* \Tx2UY+ S2 *TY Y+*S4x*Y[ WxS, ’xP(Y 1W *TY \12*S2UY2* \12+S[Y,x*S12 PSxvSPS*q x,Y ,Y\1,[Y[ S2 *TY \12+1PS[x*Y[ +*x*Y4Y2* 1W
1.Y,x*S12+ S2 ,Y+*,(\*(,S2Uk x\-(S+S*S12k x2[ ,YPx*Y[ \1+*+ (2*SP *TY PSxvSPS*q S+ W(PPq +Y**PY[i >TY !14.x2q 4x[Y *TY WS,+* S2+*xPP4Y2*
.xq4Y2* 1W /Nig 4SPPS12 n5NiN 4SPPS12m S2 ^xq MgMg x2[ *TY +Y\12[ S2+*xPP4Y2* .xq4Y2* 1W /NiM 4SPPS12 n5NiK 4SPPS12m S2 ^xq MgMNi
>TY+Y S2+*xPP4Y2* .xq4Y2*+ x,Y ,Y.1,*Y[ x+ \x+T 1(*WP1t+ W,14 WS2x2\S2U x\*S’S*SY+ S2 *TY \12+1PS[x*Y[ +*x*Y4Y2* 1W \x+T WP1t+ W1,
*TY ,Y+.Y\*S’Y .Y,S1[+i ~(,S2U MgMgk *TY WxS, ’xP(Y 1W *TY \12*S2UY2* \12+S[Y,x*S12 tx+ x[R(+*Y[ *1 /MiL 4SPPS12 n5MiF 4SPPS12mi
~(,S2U MgMNk *TY WxS, ’xP(Y 1W *TY \12*S2UY2* \12+S[Y,x*S12 tx+ x[R(+*Y[ *1 /NiJ 4SPPS12 n5NiH 4SPPS12mi
D2 ~Y\Y4vY, NKk MgNIk *TY !14.x2q x\-(S,Y[ \Y,*xS2 ’S[Y1 +SU2xP .,1\Y++S2U x2[ 4x2xUY4Y2* *Y\T21P1USY+ (+Y[ S2 4Y[S\xP
’S+(xPSox*S12 +1P(*S12+i <2[Y, *TY .(,\Tx+Y x2[ +xPY xU,YY4Y2*k *TY W1,4Y, 1t2Y,+ x,Y YPSUSvPY *1 ,Y\YS’Y \12*S2UY2* \12+S[Y,x*S12
vx+Y[ 12 *TY x\TSY’Y4Y2* 1W \Y,*xS2 ,Y’Y2(Y *x,UY*+ vq *TY !14.x2q W,14 MgNG *1 MgMN W,14 .,1[(\*+ (*SPSoS2U *TY x\-(S,Y[
*Y\T21P1USY+i >TY (2[S+\1(2*Y[ ,x2UY 1W .1++SvPY \12*S2UY2* \12+S[Y,x*S12 S+ oY,1 *1 /JiJ 4SPPS12 n5IiI 4SPPS12mi bW *TY ,Y’Y2(Y
*x,UY*+ x,Y x\TSY’Y[k *TY \12*S2UY2* \12+S[Y,x*S12 t1(P[ vY .xqxvPY S2 \x+T S2 W1(, S2+*xPP4Y2*+ W,14 MgNF *1 MgMMi #+ *TY x\-(S,Y[
x++Y*+ [S[ 21* 4YY* *TY [YWS2S*S12 1W x v(+S2Y++k *TY WxS, ’xP(Y 1W *TY \12*S2UY2* \12+S[Y,x*S12 S+ ,Y\1U2SoY[ tTY2 .,1vxvPY x2[
Y+*S4xvPY x2[ S+ \x.S*xPSoY[ x+ .x,* 1W *TY \1+* 1W *TY x\-(S,Y[ x++Y*+i @(v+Y-(Y2* \Tx2UY+ S2 *TY Y+*S4x*Y[ WxS, ’xP(Y 1W *TS+
\12*S2UY2* PSxvSPS*q x,Y ,Y\1,[Y[ x+ x[R(+*4Y2*+ *1 *TY \x,,qS2U ’xP(Y 1W *TY x++Y*+ x\-(S,Y[ x2[ x41,*SoY[ 1’Y, *TY ,Y4xS2S2U (+YW(P
PSWY 1W *TY (2[Y,PqS2U x++Y*+i >TY !14.x2q 4x[Y *TY WS,+* S2+*xPP4Y2* .xq4Y2* 1W /MiK 4SPPS12 n5MiI 4SPPS12m S2 eYv,(x,q MgMg x2[
*TY +Y\12[ S2+*xPP4Y2* .xq4Y2* 1W /NiG 4SPPS12 n5MiM 4SPPS12m S2 eYv,(x,q MgMNi >TY+Y S2+*xPP4Y2* .xq4Y2*+ x,Y ,Y.1,*Y[ x+ \x+T
WP1t+ W,14 S2’Y+*S2U x\*S’S*SY+ S2 *TY \12+1PS[x*Y[ +*x*Y4Y2* 1W \x+T WP1t+ W1, *TY ,Y+.Y\*S’Y .Y,S1[+i #+ 1W ~Y\Y4vY, LNk MgMNk *TY
!14.x2q ,Y\1,[Y[ x \(,,Y2* PSxvSPS*q 1W /NiM 4SPPS12 n5NiK 4SPPS12m W1, *TY *TS,[ x2[ Px+* S2+*xPP4Y2* .xq4Y2*k tTS\T S+ Yr.Y\*Y[ *1
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vx+S+ x+ 1W ~Y\Y4vY, LNk MgMN nS2 *T1(+x2[+mE
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Inventories
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Property, Plant and Equipment, Net
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(cid:210)˘(cid:204)˘(cid:136)Ł˘w U[(cid:142)
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(cid:210)˘(cid:204)˘(cid:136)Ł˘w U[(cid:142)
X(cid:131)X[
X(cid:131)X(cid:131)
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5
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5
5
5
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~Y.,Y\Sx*S12 Yr.Y2+Y
5
!˘Øw £(cid:132)(cid:201)˘(cid:201) (cid:210)˘(cid:204)˘(cid:136)Ł˘w U[(cid:142)
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Accrued Expenses and Other Current Liabilities
>TY W1PP1tS2U *xvPY +(44x,SoY+ x\\,(Y[ Yr.Y2+Y+ x2[ 1*TY, \(,,Y2* PSxvSPS*SY+ x+ 1W *TY [x*Y+ S2[S\x*Y[ nS2 *T1(+x2[+mE
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D*TY,
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(cid:210)˘(cid:204)˘(cid:136)Ł˘w U[(cid:142)
X(cid:131)X[
X(cid:131)X(cid:131)
5
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(cid:140)]N£Q N] (cid:211)](cid:140)Q](cid:143)(cid:151)(cid:210)(cid:215)N£(cid:210) (cid:160)(cid:151)(cid:140)(cid:215)(cid:140)(cid:211)(cid:151)(cid:215)(cid:143) QN(cid:215)N£(cid:141)£(cid:140)NQ (cid:229) (cid:153)(cid:211)(cid:128)(cid:132)q”(cid:132)o˘(cid:201)(cid:151)
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Accrued Warranty
>TY W1PP1tS2U *xvPY +(44x,SoY+ \Tx2UY+ S2 x\\,(Y[ tx,,x2*q W1, *TY .Y,S1[+ S2[S\x*Y[ nS2 *T1(+x2[+mE
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X(cid:131)X(cid:131)
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5
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5
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Other Long Term Liabilities
>TY W1PP1tS2U *xvPY +(44x,SoY+ 1*TY, P12U *Y,4 PSxvSPS*SY+ x+ 1W *TY [x*Y+ S2[S\x*Y[ nS2 *T1(+x2[+mE
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[[(cid:136) (cid:210)˘Łq
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5
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(cid:210)˘(cid:204)˘(cid:136)Ł˘w U[(cid:142)
X(cid:131)X[
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>1*xP @Y2S1, !,Y[S* ex\SPS*SY+
5
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5
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Senior Credit Facilities
D2 ~Y\Y4vY, LNk MgNFk *TY !14.x2q Y2*Y,Y[ S2*1 x2 x4Y2[Y[ x2[ ,Y+*x*Y[ \,Y[S* xU,YY4Y2* nx+ x4Y2[Y[k *TY V>TS,[
#4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2*?m tS*T YrS+*S2U PY2[Y,+ W1, x2 xUU,YUx*Y \,Y[S* Wx\SPS*q 1W 5KJgig 4SPPS12k 1,SUS2xPPq
\12+S+*S2U 1W x 5Nggig 4SPPS12 TY @Y2S1, !,Y[S* ex\SPS*SY+ 4x*(,Y S2
~Y\Y4vY, MgMKi >TY >TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2* x4Y2[Y[ x2[ ,Y+*x*Y[ *TY @Y\12[ #4Y2[Y[ x2[ AY+*x*Y[
!,Y[S* #U,YY4Y2* [x*Y[ x+ 1W ^xq NFk MgNIi
D2 ^x,\T MHk MgMgk *TY !14.x2q Y2*Y,Y[ S2*1 x2 x4Y2[4Y2* n*TY VeS,+* #4Y2[4Y2*?m *1 *TY >TS,[ #4Y2[Y[ x2[ AY+*x*Y[
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5KFJig 4SPPS12k x2[ ,Y+Y* *TY (2\144S**Y[ x\\1,[S12 WYx*(,Y *1 5Mggig 4SPPS12 W1, .1*Y2*SxP W(*(,Y Yr.x2+S12i
GN
(cid:140)]I(cid:215)(cid:140)N(cid:215) (cid:151)(cid:140)(cid:211)(cid:136)
(cid:140)]N£Q N] (cid:211)](cid:140)Q](cid:143)(cid:151)(cid:210)(cid:215)N£(cid:210) (cid:160)(cid:151)(cid:140)(cid:215)(cid:140)(cid:211)(cid:151)(cid:215)(cid:143) QN(cid:215)N£(cid:141)£(cid:140)NQ (cid:229) (cid:153)(cid:211)(cid:128)(cid:132)q”(cid:132)o˘(cid:201)(cid:151)
(cid:215)Q ](cid:160) (cid:210)£(cid:211)£(cid:141)(cid:213)£T U[(cid:142) X(cid:131)X[
D2 D\*1vY, Jk MgMNk *TY !14.x2q Y2*Y,Y[ S2*1 x2 x4Y2[4Y2* n*TY Ve1(,*T #4Y2[4Y2*?m *1 *TY >TS,[ #4Y2[Y[ x2[ AY+*x*Y[
!,Y[S* #U,YY4Y2* *1 YrY,\S+Y *TY x\\1,[S12 1.*S12i >TY e1(,*T #4Y2[4Y2* S2\,Yx+Y[ *TY ,Y’1P’S2U \,Y[S* Wx\SPS*q \144S*4Y2*
(2[Y, *TY >TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2* vq 5Mggig 4SPPS12k W,14 5KFJig 4SPPS12 *1 5IFJig 4SPPS12k x2[ ,Y+Y* *TY
(2\144S**Y[ x\\1,[S12 WYx*(,Y *1 5Mggig 4SPPS12 W1, .1*Y2*SxP W(*(,Y Yr.x2+S12i
>TY v1,,1tS2U+ 1(*+*x2[S2U (2[Y, *TY @Y2S1, !,Y[S* ex\SPS*SY+ vYx, S2*Y,Y+* x* ,x*Y+ vx+Y[ 12 nxm *TY "x+Y Ax*Yk x+ [YWS2Y[ S2
*TY >TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2*k .P(+ x 4x,US2 ,x2US2U vY*tYY2 giMJ3 *1 NiMJ3 .Y, x22(4k [Y*Y,4S2Y[ vq
,YWY,Y2\Y *1 *TY !14.x2q;+ \12+1PS[x*Y[ PY’Y,xUY ,x*S1k 1, nvm *TY f(,1\(,,Y2\q Ax*Yk x+ [YWS2Y[ S2 *TY >TS,[ #4Y2[Y[ x2[
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PY’Y,xUY ,x*S1i
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x..PS\xvPY *1 *TY !14.x2q x2[ S*+ +(v+S[Sx,SY+k S2\P([S2Uk x412U 1*TY,+E nSm PS4S*x*S12+ 12 ,Y+*,S\*Y[ .xq4Y2*+k S2\P([S2U [S’S[Y2[
.xq4Y2*+ x2[ +*1\Q ,Y.(,\Tx+Y+k .,1’S[Y[ *Tx* *TY !14.x2q x2[ S*+ +(v+S[Sx,SY+ 4xq ,Y.(,\Tx+Y *TYS, Y-(S*q S2*Y,Y+*+ +1 P12U x+k
S44Y[Sx*YPq xW*Y, US’S2U YWWY\* *1 *TY ,Y.(,\Tx+Yk *TY !14.x2q;+ \12+1PS[x*Y[ PY’Y,xUY ,x*S1 S+ 21 41,Y *Tx2 LiMJENiggk tS*T x +*Y.
(. *1 LiHJENigg W1, W1(, \12+Y\(*S’Y -(x,*Y,+ W1PP1tS2U x2 x\-(S+S*S12 tS*T x2 xUU,YUx*Y \12+S[Y,x*S12 U,Yx*Y, *Tx2 1, Y-(xP *1 5Jgig
4SPPS12k x2[ *TY +x*S+Wx\*S12 1W 1*TY, \(+*14x,q \12[S*S12+% nSSm PS4S*x*S12+ 12 W(2[x4Y2*xP \Tx2UY+ S2’1P’S2U *TY !14.x2q x2[ S*+
+(v+S[Sx,SY+% nSSSm PS4S*x*S12+ 12 *TY [S+.1+S*S12 1W x++Y*+% x2[ nS’m PS4S*x*S12+ 12 S2[Yv*Y[2Y++k S2’Y+*4Y2*+k x2[ PSY2+i >TY >TS,[
#4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2* xP+1 ,Y-(S,Y+ *TY !14.x2q *1 +x*S+Wq \Y,*xS2 WS2x2\SxP \1’Y2x2*+k +(\T x+ 4xS2*xS2S2U x
4S2S4(4 \12+1PS[x*Y[ WSrY[ \Tx,UY \1’Y,xUY ,x*S1 1W NiJgENigg x2[ x 4xrS4(4 \12+1PS[x*Y[ PY’Y,xUY ,x*S1 1W LiJgENiggi >TY
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xUU,YUx*Y \12+S[Y,x*S12 U,Yx*Y, *Tx2 1, Y-(xP *1 5Jgig 4SPPS12i
#+ 1W ~Y\Y4vY, LNk MgMNk *TY 1(*+*x2[S2U .,S2\S.xP (2[Y, *TY !14.x2q;+ *Y,4 P1x2 Wx\SPS*q S+ +\TY[(PY[ *1 vY ,Y.xS[ x+
W1PP1t+ nS2 *T1(+x2[+mE
MgMM
MgML
MgMK
>1*xP [Yv* ,Y.xq4Y2*+
Zw”(cid:132)(cid:204)”}؇ (cid:215)(cid:136)(cid:128)o(cid:132)q
JkNMI
5
JkNMI
GNkHJL
FMkggJ
5
>TY 1(*+*x2[S2U .,S2\S.xP vxPx2\Y (2[Y, *TY *Y,4 P1x2 Wx\SPS*q S+ .xqxvPY S2 -(x,*Y,Pq S2+*xPP4Y2*+ 1W /NiN 4SPPS12 vYUS22S2U S2
^x,\T MgMgk tS*T *TY ,Y4xS2S2U vxPx2\Y [(Y (.12 4x*(,S*qi >TY !14.x2q 4xq 4xQY x[[S*S12xP .,S2\S.xP .xq4Y2*+ x* x2q *S4Yk
tTS\T tSPP ,Y[(\Y *TY 2Yr* -(x,*Y,Pq S2+*xPP4Y2* .xq4Y2* [(Yi "1,,1tS2U+ (2[Y, *TY ,Y’1P’S2U \,Y[S* Wx\SPS*q 4xq vY ,Y.xS[ x*
x2q*S4Y *T,1(UT ~Y\Y4vY, MgMKi >TY !14.x2q 4xq vY ,Y-(S,Y[ *1 .,Y.xq 1(*+*x2[S2U P1x2+ (2[Y, *TY >TS,[ #4Y2[Y[ x2[
AY+*x*Y[ !,Y[S* #U,YY4Y2* tS*T *TY 2Y* .,1\YY[+ 1W \Y,*xS2 x++Y* [S+.1+S*S12+ x2[ S2\(,,Y2\Y+ 1W \Y,*xS2 [Yv*i #* *TY YPY\*S12 1W *TY
!14.x2qk x2[ +1 P12U x+ 21 [YWx(P* +TxPP Tx’Y 1\\(,,Y[k *TY !14.x2q 4xq ,YS2’Y+* xPPk 1, x2q .1,*S12k 1W *TY 2Y* .,1\YY[+ W,14
+(\T x++Y* [S+.1+S*S12+ 1, S2\(,,Y2\Y+ 1W [Yv* tS*TS2 x qYx,i
#+ 1W ~Y\Y4vY, LNk MgMNk *TY !14.x2q Tx[ 5LKGiK 4SPPS12 x’xSPxvPY *1 vY [,xt2 (2[Y, *TY ,Y’1P’S2U \,Y[S* Wx\SPS*qi
fr\P([S2U \144S*4Y2* WYY+k *TY tYSUT*Y[ x’Y,xUY S2*Y,Y+* ,x*Y W1, *TY @Y2S1, !,Y[S* ex\SPS*SY+ tx+ x..,1rS4x*YPq MiLL3 x+ 1W
~Y\Y4vY, LNk MgMNi >TY \144S*4Y2* WYY ,x*Y W1, *TY (2(+Y[ \144S*4Y2*+ (2[Y, *TY ,Y’1P’S2U \,Y[S* Wx\SPS*q tx+ x..,1rS4x*YPq
giKg3 x+ 1W ~Y\Y4vY, LNk MgMNi
Guarantees
>TY @Y2S1, !,Y[S* ex\SPS*SY+ S+ U(x,x2*YY[ vq ]1’x2*x b2\ik ]1’x2*x !1,.1,x*S12k ]~@ @(,US\xP b4xUS2U __!k ^Y[ 7
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b2’Y+*4Y2*+ c1P[S2U _S4S*Y[ x2[ ]1’x2*x >Y\T21P1USY+ <‘ _S4S*Y[ n\1PPY\*S’YPqk Vd(x,x2*1,+?mi fx\T d(x,x2*1,k R1S2*Pq x2[
+Y’Y,xPPqk (2\12[S*S12xPPq U(x,x2*YY+ *TY [(Y x2[ .(2\*(xP .xq4Y2* 1W *TY .,S2\S.xPk S2*Y,Y+* x2[ WYY+ (2[Y, *TY @Y2S1, !,Y[S*
ex\SPS*SY+k tTY2 [(Y x2[ .xqxvPYk tTY*TY, x* 4x*(,S*qk vq ,Y-(S,Y[ .,Y.xq4Y2*k vq x\\YPY,x*S12 1, 1*TY,tS+Yi b2 x[[S*S12k d(x,x2*1,+
U(x,x2*YY *TY [(Y x2[ .(2\*(xP .xq4Y2*k WYY+ x2[ S2*Y,Y+* 12 *TY 1’Y,[(Y .,S2\S.xP 1W *TY @Y2S1, !,Y[S* ex\SPS*SY+ x2[ *TY [(Y x2[
.(2\*(xP .Y,W1,4x2\Y 1W xPP 1vPSUx*S12+ 1W *TY !14.x2q S2 x\\1,[x2\Y tS*T *TY *Y,4+ 1W *TY >TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S*
GM
(cid:140)]I(cid:215)(cid:140)N(cid:215) (cid:151)(cid:140)(cid:211)(cid:136)
(cid:140)]N£Q N] (cid:211)](cid:140)Q](cid:143)(cid:151)(cid:210)(cid:215)N£(cid:210) (cid:160)(cid:151)(cid:140)(cid:215)(cid:140)(cid:211)(cid:151)(cid:215)(cid:143) QN(cid:215)N£(cid:141)£(cid:140)NQ (cid:229) (cid:153)(cid:211)(cid:128)(cid:132)q”(cid:132)o˘(cid:201)(cid:151)
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tTY2 [(Y S2 x\\1,[x2\Y tS*T *TY *Y,4+ 1W *TY Yr*Y2+S12 1, ,Y2YtxPk x* +*x*Y[ 4x*(,S*qk vq x\\YPY,x*S12 1, 1*TY,tS+Yi
>TY 1vPSUx*S12+ 1W Yx\T d(x,x2*1, x,Y PS4S*Y[ *1 *TY 4xrS4(4 x41(2*k xW*Y, US’S2U YWWY\* *1 xPP 1*TY, \12*S2UY2* x2[ WSrY[
PSxvSPS*SY+ 1, x2q \1PPY\*S12+ W,14k 1, .xq4Y2*+ 4x[Y vq 1, 12 vYTxPW 1Wk x2q 1*TY, d(x,x2*1,i fx\T d(x,x2*1, *Tx* 4xQY+ x .xq4Y2*
1, [S+*,Sv(*S12 (2[Y, x d(x,x2*YY S+ Y2*S*PY[ *1 x \12*,Sv(*S12 W,14 Yx\T 1*TY, d(x,x2*1, 1W S*+ .,1 ,x*x +Tx,Y vx+Y[ 12 *TY x[R(+*Y[
2Y* x++Y*+ 1W Yx\T d(x,x2*1,i bW x* x2q *S4Y x2q .xq4Y2* 1W x2q 1W *TY 1vPSUx*S12+ 1W *TY d(x,x2*1,+ S+ ,Y+\S2[Y[ 1, 4(+* 1*TY,tS+Y
vY ,Y*(,2Y[ (.12 *TY S2+1P’Y2\qk vx2Q,(.*\q 1, ,Y1,Ux2Sox*S12 1W *TY !14.x2qk x d(x,x2*1, 1, 1*TY,tS+Yk *TY d(x,x2*YY+ tSPP
\12*S2(Y *1 vY YWWY\*S’Y 1, vY ,YS2+*x*Y[k x+ *TY \x+Y 4xq vYk x+ *T1(UT +(\T .xq4Y2* Tx[ 21* vYY2 4x[Yi
fx\T d(x,x2*1, 4xq vY ,YPYx+Y[ W,14 S*+ 1vPSUx*S12+ (2[Y, S*+ ,Y+.Y\*S’Y d(x,x2*YY x2[ S*+ 1vPSUx*S12+ (2[Y, *TY >TS,[
#4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2* (.12 *TY 1\\(,,Y2\Y 1W \Y,*xS2 Y’Y2*+k S2\P([S2Uk v(* 21* PS4S*Y[ *1E nSm *TY d(x,x2*1,
\Yx+S2U *1 vY x +(v+S[Sx,q% 1, nSSm .xq4Y2* S2 W(PP 1W *TY .,S2\S.xP x2[ x\\,(Y[ x2[ (2.xS[ S2*Y,Y+* 12 *TY @Y2S1, !,Y[S* ex\SPS*SY+ x2[
xPP 1*TY, 1vPSUx*S12+i
>TY 4xrS4(4 .1*Y2*SxP x41(2* 1W W(*(,Y .xq4Y2*+ *Tx* *TY d(x,x2*1,+ \1(P[ vY ,Y-(S,Y[ *1 4xQY (2[Y, *TY d(x,x2*YY S+ *TY
.,S2\S.xP x41(2* 1W *TY @Y2S1, !,Y[S* ex\SPS*SY+ .P(+ xPP x\\,(Y[ x2[ (2.xS[ S2*Y,Y+* *TY,Y12i c1tY’Y,k x+ 1W ~Y\Y4vY, LNk MgMNk *TY
d(x,x2*1,+ tY,Y 21* Yr.Y\*Y[ *1 vY ,Y-(S,Y[ *1 .Y,W1,4 (2[Y, *TY d(x,x2*YYi
Liens
>TY !14.x2q;+ 1vPSUx*S12+ (2[Y, *TY @Y2S1, !,Y[S* ex\SPS*SY+ x,Y +Y\(,Y[k 12 x +Y2S1, vx+S+k vq x PSY2 12 +(v+*x2*SxPPq xPP 1W
*TY x++Y*+ 1W ]1’x2*x b2\i >TY >TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2* xP+1 \12*xS2+ \(+*14x,q Y’Y2*+ 1W [YWx(P*i
Deferred Financing Costs
b2 \122Y\*S12 tS*T *TY YrY\(*S12 1W *TY >TS,[ #4Y2[Y[ x2[ AY+*x*Y[ !,Y[S* #U,YY4Y2*k *TY eS,+* #4Y2[4Y2*k x2[ *TY e1(,*T
#4Y2[4Y2*k *TY !14.x2q \x.S*xPSoY[ x2 x[[S*S12xP 5JiM 4SPPS12 1W [YWY,,Y[ WS2x2\S2U \1+*+i >TY !14.x2q xPP1\x*Y[ *TY+Y \1+*+
vY*tYY2 *TY *Y,4 P1x2 x2[ *TY ,Y’1P’S2U \,Y[S* Wx\SPS*q vx+Y[ 12 *TY 4xrS4(4 v1,,1tS2U \x.x\S*q x2[ x41,*SoY+ *TY \1+*+ 12 x
+*,xSUT*jPS2Y vx+S+ 1’Y, *TY *Y,4 1W *TY @Y2S1, !,Y[S* ex\SPS*SY+i C,Y’S1(+Pq (2x41,*SoY[ [YWY,,Y[ WS2x2\S2U \1+*+ tSPP \12*S2(Y *1 vY
x41,*SoY[i ]12j\x+T S2*Y,Y+* Yr.Y2+Y ,YPx*Y[ *1 *TY x41,*Sox*S12 1W *TY [YWY,,Y[ WS2x2\S2U \1+*+ tx+ 5NiM 4SPPS12k 5Nig 4SPPS12 x2[
5NiN 4SPPS12 S2 MgMNk MgMg x2[ MgNFk ,Y+.Y\*S’YPqi <2x41,*SoY[ [YWY,,Y[ WS2x2\S2U \1+*+ x,Y .,Y+Y2*Y[ x+ x ,Y[(\*S12 *1 *TY [Yv*
vxPx2\Y+ 12 *TY \12+1PS[x*Y[ vxPx2\Y +TYY*+i
Fair Value of Debt
#+ 1W ~Y\Y4vY, LNk MgMN x2[ MgMgk *TY 1(*+*x2[S2U vxPx2\Y 1W *TY !14.x2q;+ [Yv* x..,1rS4x*Y[ S*+ WxS, ’xP(Y vx+Y[ 12
\(,,Y2* ,x*Y+ x’xSPxvPY *1 *TY !14.x2q W1, [Yv* 1W *TY +x4Y 4x*(,S*SY+i >TY WxS, ’xP(Y 1W *TY !14.x2q;+ [Yv* S+ \Px++SWSY[ x+ _Y’YP M
(2[Y, *TY WxS, ’xP(Y TSY,x,\Tqi
[X(cid:136) (cid:143)˘Øt˘t
^1+* PYx+Y+ TYP[ vq *TY !14.x2q Yr.S,Y vY*tYY2 MgMM x2[ MgLIi b2 *TY TY YrY,\S+Y 1W PYx+Y ,Y2YtxP 1, *Y,4S2x*S12 1.*S12 S+ x* *TY !14.x2q;+ +1PY [S+\,Y*S12% *TY,YW1,Yk *TY
4xR1,S*q 1W ,Y2YtxP+ *1 Yr*Y2[ *TY PYx+Y *Y,4+ x,Y 21* S2\P([Y[ S2 *TY !14.x2q;+ ,SUT*j1Wj(+Y x++Y*+ x2[ 1.Y,x*S2U PYx+Y PSxvSPS*SY+ x+
*TYq x,Y 21* ,Yx+12xvPq \Y,*xS2 1W vYS2U YrY,\S+Y[i >TY !14.x2q ,YU(Px,Pq Y’xP(x*Y+ *TY ,Y2YtxP 1.*S12+ x2[ S2\P([Y+ *TY ,Y2YtxP
.Y,S1[+ S2 *TY PYx+Y *Y,4 tTY2 *TYq x,Y ,Yx+12xvPq \Y,*xS2 1W vYS2U YrY,\S+Y[i >TY [Y.,Y\SxvPY PSWY 1W ,SUT*j1Wj(+Y x++Y*+ x2[
PYx+YT1P[ S4.,1’Y4Y2*+ S+ PS4S*Y[ *1 *TY Yr.Y\*Y[ PYx+Y *Y,4+i
GL
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(cid:140)]N£Q N] (cid:211)](cid:140)Q](cid:143)(cid:151)(cid:210)(cid:215)N£(cid:210) (cid:160)(cid:151)(cid:140)(cid:215)(cid:140)(cid:211)(cid:151)(cid:215)(cid:143) QN(cid:215)N£(cid:141)£(cid:140)NQ (cid:229) (cid:153)(cid:211)(cid:128)(cid:132)q”(cid:132)o˘(cid:201)(cid:151)
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>TY W1PP1tS2U *xvPY +(44x,SoY+ *TY \14.12Y2*+ 1W PYx+Y \1+*+ S2\P([Y[ S2 *TY +*x*Y4Y2*+ 1W 1.Y,x*S12+ W1, *TY .Y,S1[+
S2[S\x*Y[ nS2 *T1(+x2[+mE
D.Y,x*S2U PYx+Y \1+*
eS2x2\Y PYx+Y \1+*
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b2*Y,Y+* 12 PYx+Y PSxvSPS*SY+
:x,SxvPY PYx+Y \1+*
>1*xP PYx+Y \1+*
5
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!˘Øw £(cid:132)(cid:201)˘(cid:201) (cid:210)˘(cid:204)˘(cid:136)Ł˘w U[(cid:142)
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Yr\Y.* PYx+Y *Y,4 x2[ [S+\1(2* ,x*YmE
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D.Y,x*S2U PYx+Y ,SUT*j1Wj(+Y x++Y*+
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>1*xP 1.Y,x*S2U PYx+Y PSxvSPS*SY+
(cid:160)”(cid:132)Ø(cid:132)(cid:204)˘ ‡˘Øt˘t=
C,1.Y,*qk .Px2* x2[ Y-(S.4Y2*k U,1++
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Y-(S.4Y2*k 2Y*
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G˘”(cid:192)‰q˘(cid:201)(cid:139)Øm˘wØ(cid:192)˘ w˘(cid:136)Ø”(cid:132)”(cid:132)(cid:192) ‡˘Øt˘ q˘w(cid:136) (cid:153)”(cid:132) D˘Øwt(cid:151)=
D.Y,x*S2U PYx+Y+
eS2x2\Y PYx+Y+
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X(cid:131)X(cid:131)
5
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>TY W1PP1tS2U *xvPY .,1’S[Y+ *TY [Y*xSP+ 1W \x+T WP1t S2W1,4x*S12 ,YPx*Y[ *1 PYx+Y+ W1, *TY .Y,S1[+ S2[S\x*Y[ nS2 *T1(+x2[+mE
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D.Y,x*S2U \x+T WP1t+ W,14 WS2x2\Y PYx+Y+
D.Y,x*S2U \x+T WP1t+ W,14 1.Y,x*S2U PYx+Y+
eS2x2\S2U \x+T WP1t+ W,14 WS2x2\Y PYx+Y+
Qo}}‡˘(cid:136)˘(cid:132)q؇ (cid:132)(cid:128)(cid:132)(cid:139)(cid:204)Øt‰ ”(cid:132)ˆ(cid:128)w(cid:136)Øq”(cid:128)(cid:132)=
ASUT*j1Wj(+Y x++Y*+ 1v*xS2Y[ S2 Yr\Tx2UY W1, 2Yt
1.Y,x*S2U PYx+Y PSxvSPS*SY+
ASUT*j1Wj(+Y x++Y*+ 1v*xS2Y[ S2 Yr\Tx2UY W1, 2Yt
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v(SP[S2U (2[Y, x WS2x2\Y PYx+Y xU,YY4Y2* S2 dY,4x2qi >TY \x+T .xq4Y2* S+ .,Y+Y2*Y[ x+ x \x+T 1(*WP1t W,14 WS2x2\S2U x\*S’S*SY+ S2
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x+ W1PP1t+ nS2 *T1(+x2[+mE
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MgMM
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Preferred Shares
b2 ^xq MgMNk *TY !14.x2q;+ +Tx,YT1P[Y,+ x..,1’Y[ x +.Y\SxP ,Y+1P(*S12 *1 x4Y2[ *TY !14.x2q;+ x,*S\PY+ *1 x(*T1,SoY (. *1
Hig 4SPPS12 .,YWY,,Y[ +Tx,Y+ W1, W(*(,Y S++(x2\Yi >TY !14.x2q;+ "1x,[ 1W ~S,Y\*1,+ S+ x(*T1,SoY[ *1 [Y+SU2x*Y x2[ S++(Y 12Y 1, 41,Y
+Y,SY+ 1W .,YWY,,Y[ +Tx,Y+k WSr *TY ,SUT*+k .,YWY,Y2\Y+ x2[ [Y+SU2x*S12k x+ [YY4Y[ 2Y\Y++x,q 1, x[’S+xvPYk ,YPx*S2U *1 *TY .,YWY,,Y[
+Tx,Y+k .,1’S[Y[ *Tx* 21 +Tx,Y+ 1W x2q +Y,SY+ 4xq vY Y2*S*PY[ *1 41,Y *Tx2 12Y ’1*Y .Y, +Tx,Yi #+ 1W ~Y\Y4vY, LNk MgMNk 21 .,YWY,,Y[
+Tx,Y+ Tx[ vYY2 S++(Y[ x2[ 1(*+*x2[S2Ui
Common Shares
>TY !14.x2q Tx+ x2 (2PS4S*Y[ 2(4vY, 1W 212j.x, ’xP(Y \14412 +Tx,Y+ x(*T1,SoY[ W1, S++(x2\Yi c1P[Y,+ 1W \14412 +Tx,Y+
x,Y Y2*S*PY[ *1 12Y ’1*Y .Y, +Tx,Yi c1P[Y,+ 1W \14412 +Tx,Y+ x,Y Y2*S*PY[ *1 ,Y\YS’Y [S’S[Y2[+k SW x2[ tTY2 [Y\Px,Y[ vq *TY "1x,[ 1W
~S,Y\*1,+k x2[ *1 +Tx,Y ,x*xvPq S2 *TY !14.x2q;+ x++Y*+ PYUxPPq x’xSPxvPY W1, [S+*,Sv(*S12 *1 +Tx,YT1P[Y,+ S2 *TY Y’Y2* 1W PS-(S[x*S12i
c1P[Y,+ 1W \14412 +Tx,Y+ Tx’Y 21 ,Y[Y4.*S12 1, \12’Y,+S12 ,SUT*+i
Common Share Repurchases
>TY !14.x2q;+ "1x,[ 1W ~S,Y\*1,+ 4xq x..,1’Y +Tx,Y ,Y.(,\Tx+Y .Px2+ W,14 *S4Y *1 *S4Yi <2[Y, *TY+Y ,Y.(,\Tx+Y .Px2+k
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GJ
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,Y.(,\Tx+Y .Px2+k x2[ *TY .Px2+ 4xq vY +(+.Y2[Y[ 1, [S+\12*S2(Y[ x* x2q *S4Yi >TY !14.x2q Yr.Y\*+ *1 W(2[ +Tx,Y ,Y.(,\Tx+Y+
*T,1(UT \x+T 12 Tx2[ x2[ \x+T UY2Y,x*Y[ W,14 1.Y,x*S12+i
b2 D\*1vY, MgNGk *TY !14.x2q;+ "1x,[ 1W ~S,Y\*1,+ x..,1’Y[ x +Tx,Y ,Y.(,\Tx+Y .Px2 n*TY VMgNG AY.(,\Tx+Y CPx2?m
x(*T1,SoS2U *TY ,Y.(,\Tx+Y 1W 5MJig 4SPPS12 t1,*T 1W \14412 +Tx,Y+i @Tx,Y ,Y.(,\Tx+Y+ Tx’Y vYY2 4x[Y (2[Y, *TY MgNG AY.(,\Tx+Y
CPx2 .(,+(x2* *1 A(PY NgvjNG (2[Y, *TY @Y\(,S*SY+ fr\Tx2UY #\* 1W NFLKi ~(,S2U MgMgk *TY !14.x2q ,Y.(,\Tx+Y[ IJ *T1(+x2[
+Tx,Y+ W1, x2 xUU,YUx*Y .(,\Tx+Y .,S\Y 1W 5JiJ 4SPPS12 x* x2 x’Y,xUY .,S\Y 1W 5GKiJJ .Y, +Tx,Yi ~(,S2U MgNFk *TY !14.x2q
,Y.(,\Tx+Y[ NNF *T1(+x2[ +Tx,Y+ W1, x2 xUU,YUx*Y .(,\Tx+Y .,S\Y 1W 5Ngig 4SPPS12 x* x2 x’Y,xUY .,S\Y 1W 5GLiHN .Y, +Tx,Y (2[Y, *TY
MgNG AY.(,\Tx+Y CPx2i >TY !14.x2q Tx[ 5FiJ 4SPPS12 x’xSPxvPY W1, +Tx,Y ,Y.(,\Tx+Y+ (2[Y, *TY MgNG AY.(,\Tx+Y CPx2 x+ 1W
~Y\Y4vY, LNk MgMNi
b2 eYv,(x,q MgMgk *TY !14.x2q;+ "1x,[ 1W ~S,Y\*1,+ x..,1’Y[ x 2Yt +Tx,Y ,Y.(,\Tx+Y .Px2 n*TY VMgMg AY.(,\Tx+Y CPx2?m
x(*T1,SoS2U *TY ,Y.(,\Tx+Y 1W x2 x[[S*S12xP 5Jgig 4SPPS12 t1,*T 1W \14412 +Tx,Y+k YWWY\*S’Y xW*Y, *TY \14.PY*S12 1W *TY MgNG
AY.(,\Tx+Y CPx2i ]1 +Tx,Y+ Tx’Y vYY2 ,Y.(,\Tx+Y[ (2[Y, *TY MgMg AY.(,\Tx+Y CPx2 *1 [x*Yi
#+ 1W ~Y\Y4vY, LNk MgMNk *TY !14.x2q Tx[ 5JFiJ 4SPPS12 x’xSPxvPY (2[Y, *TY MgNG x2[ MgMg +Tx,Y ,Y.(,\Tx+Y .Px2+ W1,
W(*(,Y +Tx,Y ,Y.(,\Tx+Y+i
2010 Incentive Award Plan
b2 ]1’Y4vY, MgNgk *TY !14.x2q;+ +Tx,YT1P[Y,+ x..,1’Y[ *TY MgNg b2\Y2*S’Y #tx,[ CPx2 (2[Y, tTS\T *TY !14.x2q 4xq
U,x2* +Tx,Yjvx+Y[ \14.Y2+x*S12 xtx,[+ *1 Y4.P1qYY+k \12+(P*x2*+ x2[ [S,Y\*1,+i b2 ^xq MgMNk *TY !14.x2q;+ +Tx,YT1P[Y,+
x..,1’Y[ x2 x4Y2[Y[ x2[ ,Y+*x*Y[ MgNg b2\Y2*S’Y #tx,[ CPx2 nx+ x4Y2[Y[k *TY V#4Y2[Y[ x2[ AY+*x*Y[ MgNg b2\Y2*S’Y CPx2?mi >TY
4xrS4(4 2(4vY, 1W +Tx,Y+ tTS\T \x2 vY S++(Y[ .(,+(x2* *1 *TY #4Y2[Y[ x2[ AY+*x*Y[ MgNg b2\Y2*S’Y CPx2 S+ IkNKGkINLk +(vRY\* *1
x[R(+*4Y2* x+ +Y* W1,*T S2 *TY #4Y2[Y[ x2[ AY+*x*Y[ MgNg b2\Y2*S’Y CPx2i >TY #4Y2[Y[ x2[ AY+*x*Y[ MgNg b2\Y2*S’Y CPx2 .,1’S[Y+
W1, *TY U,x2* 1W S2\Y2*S’Y +*1\Q 1.*S12+k 212j-(xPSWSY[ +*1\Q 1.*S12+k ,Y+*,S\*Y[ +*1\Qk ,Y+*,S\*Y[ +*1\Q (2S*+k +*1\Q x..,Y\Sx*S12 ,SUT*+k
[YWY,,Y[ +*1\Qk [YWY,,Y[ +*1\Q (2S*+k [S’S[Y2[ Y-(S’xPY2*+k .Y,W1,4x2\Y xtx,[+ x2[ +*1\Q .xq4Y2*+ n\1PPY\*S’YPq ,YWY,,Y[ *1 x+
V#tx,[+?mi >TY #4Y2[Y[ x2[ AY+*x*Y[ MgNg b2\Y2*S’Y CPx2 .,1’S[Y+ W1, +.Y\SWS\ PS4S*+ 12 *TY 2(4vY, 1W +Tx,Y+ tS*T ,Y+.Y\* *1
#tx,[+ *Tx* 4xq vY U,x2*Y[ *1 x2q .Y,+12 [(,S2U x2q \xPY2[x, qYx, x2[ *TY x41(2* 1W \x+T *Tx* \x2 vY .xS[ tS*T ,Y+.Y\* *1 #tx,[+
*1 x2q 12Y .Y,+12 [(,S2U x2q \xPY2[x, qYx,i >TY #4Y2[Y[ x2[ AY+*x*Y[ MgNg b2\Y2*S’Y CPx2 tSPP Yr.S,Y x2[ 21 W(,*TY, #tx,[+ 4xq
vY U,x2*Y[ xW*Y, ^xq NLk MgLNi #+ 1W ~Y\Y4vY, LNk MgMNk *TY,Y tY,Y MkMKMkGGg +Tx,Y+ x’xSPxvPY W1, W(*(,Y xtx,[+ (2[Y, *TY
#4Y2[Y[ x2[ AY+*x*Y[ MgNg b2\Y2*S’Y CPx2i
@Tx,Y+ +(vRY\* *1 #tx,[+ *Tx* Tx’Y Yr.S,Y[k W1,WYS*Y[ 1, +Y**PY[ S2 \x+Tk 1, ,Y.(,\Tx+Y[ vq *TY !14.x2q x* *TY +x4Y .,S\Y .xS[
vq *TY xtx,[YY 4xq vY x[[Y[ vx\Q *1 *TY 2(4vY, 1W +Tx,Y+ x’xSPxvPY W1, U,x2* (2[Y, *TY #4Y2[Y[ x2[ AY+*x*Y[ MgNg b2\Y2*S’Y CPx2
x2[ 4xq vY U,x2*Y[ x+ 2Yt #tx,[+i ]1*tS*T+*x2[S2U *TY W1,YU1S2Uk *TY W1PP1tS2U +Tx,Y+ tSPP 21* vY x[[Y[ vx\Q *1 *TY 2(4vY, 1W
+Tx,Y+ x’xSPxvPY W1, U,x2*E nxm +Tx,Y+ *Tx* x,Y (+Y[ *1 .xq *TY YrY,\S+Y .,S\Y W1, x2 1.*S12k nvm +Tx,Y+ *Y2[Y,Y[ 1, tS*TTYP[ *1 .xq
*xrY+ tS*T ,Y+.Y\* *1 x2q #tx,[ n1*TY, *Tx2 1.*S12+ x2[ +*1\Q x..,Y\Sx*S12 ,SUT*+m *1 *TY Yr*Y2* *TYq Yr\YY[ *TY 2(4vY, 1W +Tx,Y+
tS*T x WxS, 4x,QY* ’xP(Y Y-(xP *1 *TY *xr PSxvSPS*q vx+Y[ 12 4S2S4(4 tS*TT1P[S2U ,x*Y+k n\m +Tx,Y+ *Y2[Y,Y[ 1, tS*TTYP[ *1 .xq *xrY+
tS*T ,Y+.Y\* *1 1.*S12+ x2[ +*1\Q x..,Y\Sx*S12 ,SUT*+k n[m +Tx,Y+ +(vRY\* *1 x +*1\Q x..,Y\Sx*S12 ,SUT* *Tx* x,Y 21* S++(Y[ S2 \122Y\*S12
tS*T *TY +*1\Q +Y**PY4Y2* 1W *TY +*1\Q x..,Y\Sx*S12 ,SUT* 12 YrY,\S+Y *TY,Y1Wk x2[ nYm +Tx,Y+ .(,\Tx+Y[ 12 *TY 1.Y2 4x,QY* tS*T *TY
\x+T .,1\YY[+ W,14 *TY YrY,\S+Y 1W 1.*S12+i @Tx,Y+ S++(Y[ *1 +x*S+Wq #tx,[+ (2[Y, *TY #4Y2[Y[ x2[ AY+*x*Y[ MgNg b2\Y2*S’Y CPx2
4xq vY .,Y’S1(+Pq x(*T1,SoY[ v(* (2S++(Y[ +Tx,Y+k *,Yx+(,q +Tx,Y+ 1, +Tx,Y+ ,Y.(,\Tx+Y[ 12 *TY 1.Y2 4x,QY*i
GI
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Share-Based Compensation Expense
>TY *xvPY vYP1t +(44x,SoY+ +Tx,Yjvx+Y[ \14.Y2+x*S12 Yr.Y2+Y ,Y\1,[Y[ S2 1.Y,x*S2U S2\14Y nS2 *T1(+x2[+mE
@YPPS2Uk UY2Y,xP x2[ x[4S2S+*,x*S’Y
AY+Yx,\T x2[ [Y’YP1.4Y2* x2[ Y2US2YY,S2U
!1+* 1W ,Y’Y2(Y
AY+*,(\*(,S2U x2[ x\-(S+S*S12 ,YPx*Y[ \1+*+
>1*xP +Tx,Yjvx+Y[ \14.Y2+x*S12 Yr.Y2+Y
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5
5
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4SPPS12 x2[ 5giF 4SPPS12k ,Y+.Y\*S’YPqk ,YPx*Y[ *1 ,Y+*,S\*Y[ +*1\Q (2S*+ x2[ [YWY,,Y[ +*1\Q (2S*+ U,x2*Y[ *1 *TY 4Y4vY,+ 1W *TY
!14.x2q;+ "1x,[ 1W ~S,Y\*1,+i
#+ 1W ~Y\Y4vY, LNk MgMNk *TY !14.x2q;+ 1(*+*x2[S2U Y-(S*q xtx,[+ W1, tTS\T \14.Y2+x*S12 Yr.Y2+Y tSPP vY ,Y\1U2SoY[ S2
*TY W(*(,Y \12+S+*Y[ 1W *S4Yjvx+Y[ ,Y+*,S\*Y[ +*1\Q (2S*+ x2[ .Y,W1,4x2\Y +*1\Q (2S*+ U,x2*Y[ (2[Y, *TY #4Y2[Y[ x2[ AY+*x*Y[ MgNg
b2\Y2*S’Y CPx2i >TY !14.x2q Yr.Y\*+ *1 ,Y\1,[ x2 xUU,YUx*Y +Tx,Yjvx+Y[ \14.Y2+x*S12 Yr.Y2+Y 1W 5LNiK 4SPPS12k 2Y* 1W Y+*S4x*Y[
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Restricted Stock Units and Deferred Stock Units
>TY !14.x2q;+ ,Y+*,S\*Y[ +*1\Q (2S*+ nVA@<+?m Tx’Y UY2Y,xPPq vYY2 S++(Y[ *1 Y4.P1qYY+ tS*T ’Y+*S2U .Y,S1[+ ,x2US2U W,14
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U,x2*i >TY,Y tY,Y FN *T1(+x2[ x2[ NIM *T1(+x2[ ~@<+ 1(*+*x2[S2U x+ 1W ~Y\Y4vY, LNk MgMN x2[ ~Y\Y4vY, LNk MgMgk ,Y+.Y\*S’YPqk
tTS\T tY,Y S2\P([Y[ S2 *TY \xP\(Px*S12 1W tYSUT*Y[ x’Y,xUY vx+S\ +Tx,Y+ 1(*+*x2[S2U W1, *TY ,Y+.Y\*S’Y .Y,S1[+i
>TY *xvPY vYP1t +(44x,SoY+ x\*S’S*SY+ [(,S2U MgMN ,YPx*S2U *1 ,Y+*,S\*Y[ x2[ [YWY,,Y[ +*1\Q (2S*+ S++(Y[ x2[ 1(*+*x2[S2U (2[Y,
*TY #4Y2[Y[ x2[ AY+*x*Y[ MgNg b2\Y2*S’Y CPx2E
<2’Y+*Y[ x* ~Y\Y4vY, LNk MgMg
d,x2*Y[
:Y+*Y[
e1,WYS*Y[
<2’Y+*Y[ x* ~Y\Y4vY, LNk MgMN
fr.Y\*Y[ *1 ’Y+* x+ 1W ~Y\Y4vY, LNk MgMN
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Ø(cid:132)(cid:201) (cid:210)˘ˆ˘ww˘(cid:201)
G˘”(cid:192)‰q˘(cid:201)
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(cid:215)m˘wØ(cid:192)˘ (cid:157)wØ(cid:132)q
(cid:153)(cid:151)(cid:132) q‰(cid:128)otØ(cid:132)(cid:201)t(cid:151)
(cid:210)Øq˘ (cid:160)Ø”w I؇o˘
JGiHF
5
IMJ
NLHiFg
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5
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T˘(cid:136)Ø”(cid:132)”(cid:132)(cid:192) I˘tq”(cid:132)(cid:192)
Z˘w”(cid:128)(cid:201) (cid:153)(cid:151)(cid:132) D˘Øwt(cid:151)
(cid:215)(cid:192)(cid:192)w˘(cid:192)Øq˘
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I؇o˘ (cid:153)[(cid:151)
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\14412 +*1\Q 12 ~Y\Y4vY, LNk MgMN [(Y *1 *TY Wx\* *Tx* *TY ,Y+*,S\*Y[ +*1\Q (2S*+ \x,,q x 5g .(,\Tx+Y .,S\Yi
>TY *1*xP WxS, ’xP(Y 1W ,Y+*,S\*Y[ +*1\Q (2S*+ x2[ [YWY,,Y[ +*1\Q (2S*+ *Tx* ’Y+*Y[ S2 MgMNk vx+Y[ 12 *TY 4x,QY* .,S\Y 1W *TY
(2[Y,PqS2U +Tx,Y+ 12 *TY [xq 1W ’Y+*S2Uk tx+ 5IGiJ 4SPPS12i
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Performance Stock Units
>TY !14.x2q *q.S\xPPq U,x2*+ *t1 *q.Y+ 1W .Y,W1,4x2\Yjvx+Y[ +*1\Q xtx,[+ *1 \Y,*xS2 4Y4vY,+ 1W *TY YrY\(*S’Y 4x2xUY4Y2*
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vx+Y[ ,Y+*,S\*Y[ +*1\Q (2S*+ nV>@AjC@<+?mi "1*T *q.Y+ 1W .Y,W1,4x2\Yjvx+Y[ ,Y+*,S\*Y[ +*1\Q (2S*+ UY2Y,xPPq \PSWW ’Y+* 12 *TY WS,+*
[xq W1PP1tS2U *TY Y2[ 1W x *T,YYjqYx, .Y,W1,4x2\Y .Y,S1[i
>TY 2(4vY, 1W \14412 +Tx,Y+ *1 vY S++(Y[ (.12 +Y**PY4Y2* W1PP1tS2U ’Y+*S2U 1W *TY fC@jC@<+ S+ [Y*Y,4S2Y[ vx+Y[ 12 *TY
!14.x2q;+ \(4(Px*S’Y 212jd##C fC@ 1’Y, *TY *T,YYjqYx, .Y,W1,4x2\Y .Y,S1[ xUxS2+* *TY *x,UY* Y+*xvPS+TY[ vq *TY !14.x2q;+
"1x,[ 1W ~S,Y\*1,+ x* *TY *S4Y 1W U,x2* x2[ tSPP vY S2 *TY ,x2UY 1W oY,1 *1 Mgg3 1W *TY *x,UY* 2(4vY, 1W +Tx,Y+i >TY !14.x2q
,Y\1U2SoY+ \14.Y2+x*S12 Yr.Y2+Y ,x*xvPq 1’Y, *TY .Y,W1,4x2\Y .Y,S1[ vx+Y[ 12 *TY 2(4vY, 1W +Tx,Y+ *Tx* x,Y [YY4Y[ .,1vxvPY 1W
’Y+*S2U x* *TY Y2[ 1W *TY *T,YYjqYx, .Y,W1,4x2\Y \q\PYi >TS+ .,1vxvSPS*q x++Y++4Y2* S+ .Y,W1,4Y[ -(x,*Y,Pq x2[ *TY \(4(Px*S’Y YWWY\*
1W x \Tx2UY S2 *TY Y+*S4x*Y[ \14.Y2+x*S12 Yr.Y2+Yk SW x2qk S+ ,Y\1U2SoY[ S2 *TY \12+1PS[x*Y[ +*x*Y4Y2* 1W 1.Y,x*S12+ S2 *TY .Y,S1[ S2
tTS\T +(\T [Y*Y,4S2x*S12 S+ 4x[Yi
>TY 2(4vY, 1W \14412 +Tx,Y+ *1 vY S++(Y[ (.12 +Y**PY4Y2* W1PP1tS2U ’Y+*S2U 1W *TY >@AjC@<+ S+ [Y*Y,4S2Y[ vx+Y[ 12 *TY
,YPx*S’Y 4x,QY* .Y,W1,4x2\Y 1W *TY !14.x2q;+ \14412 +*1\Q \14.x,Y[ *1 *TY A(++YPP Mggg b2[Yr 1’Y, *TY *T,YYjqYx, .Y,W1,4x2\Y
.Y,S1[ (+S2U x .xq1(* W1,4(Px Y+*xvPS+TY[ vq *TY !14.x2q;+ "1x,[ 1W ~S,Y\*1,+ x* *TY *S4Y 1W U,x2* x2[ tSPP vY S2 *TY ,x2UY 1W oY,1
*1 Mgg3 1W *TY *x,UY* 2(4vY, 1W +Tx,Y+i >TY !14.x2q ,Y\1U2SoY+ *TY ,YPx*Y[ \14.Y2+x*S12 Yr.Y2+Y vx+Y[ 12 *TY WxS, ’xP(Y 1W *TY
>@AjC@<+k [Y*Y,4S2Y[ (+S2U *TY ^12*Yj!x,P1 ’xP(x*S12 41[YP x+ 1W *TY U,x2* [x*Yk 12 x +*,xSUT*jPS2Y vx+S+ W,14 *TY U,x2* [x*Y *1
*TY Y2[ 1W *TY *T,YYjqYx, .Y,W1,4x2\Y .Y,S1[i !14.Y2+x*S12 Yr.Y2+Y tSPP 21* vY xWWY\*Y[ vq *TY 2(4vY, 1W >@AjC@<+ *Tx* tSPP
x\*(xPPq ’Y+* x* *TY Y2[ 1W *TY *T,YYjqYx, .Y,W1,4x2\Y .Y,S1[i
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AY[(\*S12+ *1 *xr .1+S*S12+ ,Y+(P*S2U W,14 x Px.+Y 1W *TY x..PS\xvPY
+*x*(*Y 1W PS4S*x*S12+
@Y**PY4Y2*+ tS*T *xr x(*T1,S*SY+
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MgMN x2[ MgMgk *TY !14.x2q Tx[ x..,1rS4x*YPq 5giI 4SPPS12 x2[ 5giH 4SPPS12k ,Y+.Y\*S’YPqk 1W x\\,(Y[ S2*Y,Y+* x2[ .Y2xP*SY+
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4SPPS12k 5giM 4SPPS12 x2[ 5giN 4SPPS12k ,Y+.Y\*S’YPqk 1W Yr.Y2+Y W1, x2 S2\,Yx+Y n[Y\,Yx+Ym S2 S2*Y,Y+* x2[ .Y2xP*SY+ ,YPx*Y[ *1
(2\Y,*xS2 *xr .1+S*S12+i
FI
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>TY !14.x2q WSPY+ S2\14Y *xr ,Y*(,2+ S2 !x2x[xk *TY TY !14.x2q;+ S2\14Y *xr ,Y*(,2+ 4xq vY ,Y’SYtY[ vq *xr x(*T1,S*SY+ S2 *TY W1PP1tS2U \1(2*,SY+ W1, *TY W1PP1tS2U .Y,S1[+
(2[Y, *TY x..,1.,Sx*Y +*x*(*Y 1W PS4S*x*S12+E
<2S*Y[ @*x*Y+
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MgNH j C,Y+Y2*
MgMg j C,Y+Y2*
MgNH j C,Y+Y2*
MgNH j C,Y+Y2*
MgNM j C,Y+Y2*
MgNI j C,Y+Y2*
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>TY W1PP1tS2U *xvPY +(44x,SoY+ ,Y+*,(\*(,S2U x2[ x\-(S+S*S12 ,YPx*Y[ \1+*+ ,Y\1,[Y[ S2 *TY x\\14.x2qS2U \12+1PS[x*Y[
+*x*Y4Y2*+ 1W 1.Y,x*S12+ nS2 *T1(+x2[+mE
MgMg ,Y+*,(\*(,S2U
MgNF ,Y+*,(\*(,S2U
MgNG ,Y+*,(\*(,S2U
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#\-(S+S*S12 x2[ ,YPx*Y[ \Tx,UY+
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5
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2020 Restructuring
#+ x ,Y+(P* 1W *TY !14.x2q;+ 12U1S2U Y’xP(x*S12+ x2[ YWW1,*+ *1 ,Y[(\Y S*+ 1.Y,x*S2U \1+*+k tTSPY S4.,1’S2U YWWS\SY2\q x2[
YWWY\*S’Y2Y++k *TY !14.x2q S2S*Sx*Y[ *TY MgMg ,Y+*,(\*(,S2U .,1U,x4 S2 *TY *TS,[ -(x,*Y, 1W MgMgi >TS+ .,1U,x4 S+ W1\(+Y[ 12
,Y[(\S2U 1.Y,x*S2U \14.PYrS*q S2 *TY !14.x2qk S2\P([S2U ,Y[(\S2U S2W,x+*,(\*(,Y \1+*+ x2[ +*,Yx4PS2S2U *TY !14.x2q;+ 1.Y,x*S2U
41[YP *1 vY**Y, +Y,’Y S*+ \(+*14Y,+i b2 x[[S*S12k *TY .,1U,x4 Tx+ vYY2 W1\(+Y[ 12 \1+* ,Y[(\*S12 x\*S12+ *Tx* S4.,1’Y U,1++ 4x,US2+
W1, *TY 1’Y,xPP \14.x2qi b2 MgMNk *TY !14.x2q ,Y\1,[Y[ 5GiN 4SPPS12 S2 +Y’Y,x2\Y x2[ 1*TY, \1+*+ S2 \122Y\*S12 tS*T *TY MgMg
,Y+*,(\*(,S2U .,1U,x4i >TY !14.x2q x2*S\S.x*Y+ \14.PY*S2U *TY MgMg ,Y+*,(\*(,S2U .,1U,x4 S2 *TY W1(,*T -(x,*Y, 1W MgMM x2[
Yr.Y\*+ *1 S2\(, x[[S*S12xP ,Y+*,(\*(,S2U \Tx,UY+ vY*tYY2 5LiJ 4SPPS12 x2[ 5KiJ 4SPPS12 ,YPx*Y[ *1 *TY MgMg ,Y+*,(\*(,S2U .,1U,x4 S2
*TY 2Yr* *tYP’Y 412*T+i
>TY W1PP1tS2U *xvPY +(44x,SoY+ ,Y+*,(\*(,S2U \1+*+ x++1\Sx*Y[ tS*T *TY MgMg ,Y+*,(\*(,S2U .,1U,x4 vq ,Y.1,*xvPY +YU4Y2* nS2
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CT1*12S\+
:S+S12
C,Y\S+S12 ^1*S12
<2xPP1\x*Y[ !1,.1,x*Y x2[
@Tx,Y[ @Y,’S\Y+
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5
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(cid:140)]I(cid:215)(cid:140)N(cid:215) (cid:151)(cid:140)(cid:211)(cid:136)
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2019 Restructuring
~(,S2U *TY W1(,*T -(x,*Y, 1W MgNGk *TY !14.x2q S4.PY4Y2*Y[ x ,Y+*,(\*(,S2U .Px2 S2*Y2[Y[ *1 ,YxPSU2 1.Y,x*S12+k ,Y[(\Y \1+*+k
x\TSY’Y 1.Y,x*S12xP YWWS\SY2\SY+ x2[ W1\(+ ,Y+1(,\Y+ 12 U,1t*T S2S*Sx*S’Y+i b2 MgMNk *TY !14.x2q ,Y\1,[Y[ 5giM 4SPPS12 S2 +Y’Y,x2\Y
x2[ ,YPx*Y[ \1+*+ S2 \122Y\*S12 tS*T *TY MgNF ,Y+*,(\*(,S2U .Px2i #+ 1W ~Y\Y4vY, LNk MgMNk *TY !14.x2q S2\(,,Y[ \(4(Px*S’Y \1+*+
,YPx*Y[ *1 *TS+ ,Y+*,(\*(,S2U .Px2 *1*xPS2U 5Fig 4SPPS12i >TY MgNF ,Y+*,(\*(,S2U .,1U,x4 tx+ \14.PY*Y[ S2 *TY WS,+* -(x,*Y, 1W MgMNi
Rollforward of Accrued Expenses Related to Restructuring
>TY W1PP1tS2U *xvPY +(44x,SoY+ *TY x\\,(xP x\*S’S*SY+k vq \14.12Y2*k ,YPx*Y[ *1 *TY !14.x2q;+ ,Y+*,(\*(,S2U \Tx,UY+ ,Y\1,[Y[
S2 *TY x\\14.x2qS2U \12+1PS[x*Y[ vxPx2\Y +TYY*+ nS2 *T1(+x2[+mE
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AY+*,(\*(,S2U \Tx,UY+
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5
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Acquisition and Related Charges
#\-(S+S*S12 x2[ ,YPx*Y[ \1+*+ S2\(,,Y[ S2 \122Y\*S12 tS*T v(+S2Y++ \14vS2x*S12+k .,S4x,SPq S2\P([S2U WS2[Y,+; WYY+k PYUxPk
’xP(x*S12 x2[ 1*TY, .,1WY++S12xP 1, \12+(P*S2U WYY+k *1*xPY[ 5JiF 4SPPS12k 5giI 4SPPS12k x2[ 5JiL 4SPPS12 [(,S2U MgMNk MgMgk x2[
MgNFk ,Y+.Y\*S’YPqi >TY !14.x2q S2\(,,Y[ 5NiF 4SPPS12 x2[ 5NiH 4SPPS12 S2 PYUxP \1+*+ ,YPx*Y[ *1 x [S+.(*Y S2’1P’S2U x \14.x2q *Tx*
tx+ x\-(S,Y[ S2 MgNF [(,S2U MgMN x2[ MgMgk ,Y+.Y\*S’YPqi #\-(S+S*S12 ,YPx*Y[ \1+*+ ,Y\1U2SoY[ (2[Y, Yx,2j1(* xU,YY4Y2*+ S2
\122Y\*S12 tS*T x\-(S+S*S12+ *1*xPY[ 5NiF 4SPPS12k 5nLigm 4SPPS12k x2[ 5MiI 4SPPS12 [(,S2U MgMNk MgMgk x2[ MgNFk ,Y+.Y\*S’YPqi >TY
x\-(S+S*S12 ,YPx*Y[ \1+*+ W1, MgMN tY,Y 5ngiJm 4SPPS12k 5MiJ 4SPPS12k 5Mig 4SPPS12 x2[ 5JiH 4SPPS12 W1, CT1*12S\+k :S+S12k C,Y\S+S12
^1*S12k x2[ <2xPP1\x*Y[ !1,.1,x*Y x2[ @Tx,Y[ @Y,’S\Y+ ,Y.1,*xvPY +YU4Y2*+k ,Y+.Y\*S’YPqi
[E(cid:136) (cid:211)(cid:128)(cid:136)(cid:136)”q(cid:136)˘(cid:132)qt Ø(cid:132)(cid:201) (cid:211)(cid:128)(cid:132)q”(cid:132)(cid:192)˘(cid:132)(cid:204)”˘t
Purchase Commitments
#+ 1W ~Y\Y4vY, LNk MgMNk *TY !14.x2q Tx[ .(,\Tx+Y \144S*4Y2*+ .,S4x,SPq W1, S2’Y2*1,q .(,\Tx+Y+ 1W 5NIFiI 4SPPS12i
>TY+Y .(,\Tx+Y \144S*4Y2*+ x,Y Yr.Y\*Y[ *1 vY S2\(,,Y[ x+ W1PP1t+E 5NIHiN 4SPPS12 S2 MgMM x2[ 5MiJ 4SPPS12 S2 MgMLi
Legal Proceedings
b2 #.,SP MgMgk *TY !14.x2q ,Y\YS’Y[ 21*SWS\x*S12 1W x2 x,vS*,x*S12 [Y4x2[ WSPY[ tS*T *TY #4Y,S\x2 #,vS*,x*S12 #++1\Sx*S12
xUxS2+* x v(+S2Y++ x\-(S,Y[ vq *TY !14.x2q S2 a(2Y MgNFi >TY x,vS*,x*S12 [Y4x2[ tx+ WSPY[ vq x \12*,x\* \1(2*Y,.x,*q *1 x R1S2*
.,1[(\* [Y’YP1.4Y2* xU,YY4Y2* Y2*Y,Y[ S2*1 vq *TY v(+S2Y++ vYW1,Y *TY !14.x2q x\-(S,Y[ S*i >TY x,vS*,x*S12 [Y4x2[ xPPYUY[ v,Yx\T
1W \12*,x\* x2[ 1*TY, \PxS4+ x,S+S2U 1(* 1W xPPYUx*S12+ *Tx* *TY v(+S2Y++ WxSPY[ *1 Y2UxUY S2 ,Y-(S,Y[ 4x,QY*S2U x\*S’S*SY+ W1, *TY
.,1[(\* [Y’YP1.Y[ (2[Y, *TY R1S2* .,1[(\* [Y’YP1.4Y2* xU,YY4Y2*i >TY \PxS4x2* +1(UT* \14.Y2+x*1,q x2[ .(2S*S’Y [x4xUY+k P1+*
.,1WS*+ x2[ 1*TY, ,YPSYWi ~(,S2U *TY +Y\12[ -(x,*Y, 1W MgMNk *TY x,vS*,x*1, W1,4xPPq \P1+Y[ *TY x,vS*,x*S12 .(,+(x2* *1 x +Y**PY4Y2*
vY*tYY2 *TY .x,*SY+i ]1 WS2x2\SxP [x4xUY+ .xq4Y2*+ tY,Y 4x[Y vq *TY !14.x2qi
>TY !14.x2q S+ +(vRY\* *1 ’x,S1(+ 1*TY, PYUxP .,1\YY[S2U+ x2[ \PxS4+ *Tx* x,S+Y S2 *TY 1,[S2x,q \1(,+Y 1W v(+S2Y++i >TY
!14.x2q ,Y’SYt+ *TY +*x*(+ 1W Yx\T +SU2SWS\x2* 4x**Y, x2[ x++Y++Y+ *TY .1*Y2*SxP WS2x2\SxP Yr.1+(,Y 12 x -(x,*Y,Pq vx+S+i bW *TY
.1*Y2*SxP P1++ W,14 x2q \PxS4 1, PYUxP .,1\YY[S2U S+ \12+S[Y,Y[ .,1vxvPY x2[ *TY x41(2* \x2 vY ,Yx+12xvPq Y+*S4x*Y[k *TY !14.x2q
x\\,(Y+ x PSxvSPS*q W1, *TY Y+*S4x*Y[ P1++i @SU2SWS\x2* R([U4Y2* S+ ,Y-(S,Y[ S2 v1*T *TY [Y*Y,4S2x*S12 1W .,1vxvSPS*q x2[ *TY
FG
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[Y*Y,4S2x*S12 x+ *1 tTY*TY, x2 Yr.1+(,Y S+ ,Yx+12xvPq Y+*S4xvPYi "Y\x(+Y 1W (2\Y,*xS2*SY+ ,YPx*Y[ *1 *TY+Y 4x**Y,+k x\\,(xP+ x,Y
vx+Y[ 12Pq 12 *TY vY+* S2W1,4x*S12 x’xSPxvPY x+ 1W *TY [x*Y 1W *TY \12+1PS[x*Y[ vxPx2\Y +TYY*i #+ x[[S*S12xP S2W1,4x*S12 vY\14Y+
x’xSPxvPYk *TY !14.x2q ,Yx++Y++Y+ *TY .1*Y2*SxP PSxvSPS*q ,YPx*Y[ *1 x2q .Y2[S2U \PxS4+ x2[ PS*SUx*S12 x2[ 4xq ,Y’S+Y S*+ Y+*S4x*Y+i
>TY !14.x2q [1Y+ 21* vYPSY’Y *Tx* *TY 1(*\14Y 1W *TY+Y \PxS4+ tSPP Tx’Y x 4x*Y,SxP x[’Y,+Y YWWY\* (.12 S*+ \12+1PS[x*Y[ WS2x2\SxP
+*x*Y4Y2*+ v(* *TY,Y \x2 vY 21 x++(,x2\Y *Tx* x2q +(\T \PxS4+k 1, x2q +S4SPx, \PxS4+k t1(P[ 21* Tx’Y x 4x*Y,SxP x[’Y,+Y YWWY\* (.12
S*+ \12+1PS[x*Y[ WS2x2\SxP +*x*Y4Y2*+i
Guarantees and Indemnifications
b2 *TY 21,4xP \1(,+Y 1W S*+ 1.Y,x*S12+k *TY !14.x2q YrY\(*Y+ xU,YY4Y2*+ *Tx* .,1’S[Y W1, S2[Y42SWS\x*S12 x2[ U(x,x2*YY+ *1
\1(2*Y,.x,*SY+ S2 *,x2+x\*S12+ +(\T x+ v(+S2Y++ [S+.1+S*S12+k +xPY 1W x++Y*+k +xPY 1W .,1[(\*+ x2[ 1.Y,x*S2U PYx+Y+i #[[S*S12xPPqk *TY
vqjPxt+ 1W *TY !14.x2q ,Y-(S,Y S* *1 S2[Y42SWq \Y,*xS2 \(,,Y2* 1, W1,4Y, [S,Y\*1,+k 1WWS\Y,+k x2[ Y4.P1qYY+ 1W *TY !14.x2q xUxS2+*
Yr.Y2+Y+ S2\(,,Y[ vq *TY4 S2 \122Y\*S12 tS*T Yx\T .,1\YY[S2U S2 tTS\T TY 1, +TY S+ S2’1P’Y[ x+ x ,Y+(P* 1W +Y,’S2U 1, Tx’S2U +Y,’Y[
S2 \Y,*xS2 \x.x\S*SY+i b2[Y42SWS\x*S12 S+ 21* x’xSPxvPY tS*T ,Y+.Y\* *1 x .,1\YY[S2U x+ *1 tTS\T S* Tx+ vYY2 x[R([S\x*Y[ *Tx* *TY .Y,+12
[S[ 21* x\* S2 U11[ WxS*T S2 *TY ,Yx+12xvPY vYPSYW *Tx* *TY x\*S12 tx+ S2 *TY vY+* S2*Y,Y+*+ 1W *TY !14.x2qi !Y,*xS2 1W *TY !14.x2q;+
1WWS\Y,+ x2[ [S,Y\*1,+ x,Y xP+1 x .x,*q *1 S2[Y42SWS\x*S12 xU,YY4Y2*+ tS*T *TY !14.x2qi >TY+Y S2[Y42SWS\x*S12 xU,YY4Y2*+ .,1’S[Yk
x412U 1*TY, *TS2U+k *Tx* *TY [S,Y\*1, x2[ 1WWS\Y, +TxPP vY S2[Y42SWSY[ *1 *TY W(PPY+* Yr*Y2* .Y,4S**Y[ vq x..PS\xvPY Pxt xUxS2+* xPP
Yr.Y2+Y+k R([U4Y2*+k WS2Y+ x2[ x41(2*+ .xS[ S2 +Y**PY4Y2* x\*(xPPq x2[ ,Yx+12xvPq S2\(,,Y[ vq +(\T 1WWS\Y, 1, [S,Y\*1, S2 \122Y\*S12
tS*T x2q .,1\YY[S2U vq ,Yx+12 1W TS+ 1, TY, ,YPx*S12+TS. tS*T *TY !14.x2qi b2 x[[S*S12k *TY S2[Y42SWS\x*S12 xU,YY4Y2*+ .,1’S[Y W1,
*TY x[’x2\Y4Y2* 1W Yr.Y2+Y+ S2\(,,Y[ vq +(\T [S,Y\*1, 1, 1WWS\Y, S2 \122Y\*S12 tS*T x2q .,1\YY[S2U \1’Y,Y[ vq *TY S2[Y42SWS\x*S12
xU,YY4Y2*k +(vRY\* *1 *TY \12[S*S12+ +Y* W1,*T *TY,YS2 x2[ *1 *TY Yr*Y2* +(\T x[’x2\Y4Y2* S+ 21* .,1TSvS*Y[ vq Pxti >TY
S2[Y42SWS\x*S12 xU,YY4Y2*+ xP+1 +Y* 1(* *TY .,1\Y[(,Y+ W1, [Y*Y,4S2S2U Y2*S*PY4Y2* *1 S2[Y42SWS\x*S12k *TY ,Y-(S,Y4Y2*+ ,YPx*S2U *1
21*S\Y x2[ [YWY2+Y 1W \PxS4+ W1, tTS\T S2[Y42SWS\x*S12 S+ +1(UT*k *TY .,1\Y[(,Y+ W1, Y2W1,\Y4Y2* 1W S2[Y42SWS\x*S12 ,SUT*+k *TY
PS4S*x*S12+ 12 x2[ Yr\P(+S12+ W,14 S2[Y42SWS\x*S12k x2[ *TY 4S2S4(4 PY’YP+ 1W [S,Y\*1,+; x2[ 1WWS\Y,+; PSxvSPS*q S2+(,x2\Y *1 vY
4xS2*xS2Y[ vq *TY !14.x2qi
D2 a(Pq Nk MgNLk *TY !14.x2q .,1’S[Y[ x d(x,x2*YY n*TY Vd(x,x2*YY?m S2 Wx’1, 1W *TY *,(+*YY+ 1W *TY Y\T21P1USY+ <‘ _S4S*Y[k x tT1PPq 1t2Y[ +(v+S[Sx,q 1W ]1’x2*x b2\i
Credit Risks and Other Uncertainties
>TY !14.x2q 4xS2*xS2+ WS2x2\SxP S2+*,(4Y2*+ +(\T x+ \x+T x2[ \x+T Y-(S’xPY2*+ x2[ *,x[Y ,Y\YS’xvPY+i e,14 *S4Y *1 *S4Yk
\Y,*xS2 1W *TY+Y S2+*,(4Y2*+ 4xq +(vRY\* *TY !14.x2q *1 \12\Y2*,x*S12+ 1W \,Y[S* ,S+Q tTY,Yvq 12Y S2+*S*(*S12 4xq T1P[ x +SU2SWS\x2*
.1,*S12 1W *TY \x+T x2[ \x+T Y-(S’xPY2*+k 1, 12Y \(+*14Y, 4xq ,Y.,Y+Y2* x Px,UY .1,*S12 1W *TY x\\1(2*+ ,Y\YS’xvPY vxPx2\Y+i
>TY,Y tx+ 21 +SU2SWS\x2* \12\Y2*,x*S12 1W \,Y[S* ,S+Q ,YPx*Y[ *1 *TY !14.x2q;+ .1+S*S12 S2 *,x[Y x\\1(2*+ ,Y\YS’xvPY x+ 21
S2[S’S[(xP \(+*14Y, ,Y.,Y+Y2*Y[ Ng3 1, 41,Y 1W *TY !14.x2q;+ 1(*+*x2[S2U x\\1(2*+ ,Y\YS’xvPY x* ~Y\Y4vY, LNk MgMN x2[ MgMgi
!,Y[S* ,S+Q tS*T ,Y+.Y\* *1 *,x[Y x\\1(2*+ ,Y\YS’xvPY+ S+ UY2Y,xPPq 4S2S4SoY[ vY\x(+Y 1W *TY [S’Y,+SWS\x*S12 1W *TY !14.x2q;+
1.Y,x*S12+k x+ tYPP x+ S*+ Px,UY \(+*14Y, vx+Y x2[ S*+ UY1U,x.TS\ [S+.Y,+S12i
!Y,*xS2 1W *TY \14.12Y2*+ x2[ 4x*Y,SxP+ S2\P([Y[ S2 *TY !14.x2q;+ .,1[(\*+ x,Y \(,,Y2*Pq 1v*xS2Y[ W,14 +S2UPY +1(,\Y
+(..PSY,+i >TY,Y \x2 vY 21 x++(,x2\Y *Tx* x [S+,(.*S12 1W *TY +(..Pq 1W +(\T \14.12Y2*+ x2[ 4x*Y,SxP+ t1(P[ 21* \,Yx*Y +(v+*x2*SxP
4x2(Wx\*(,S2U [YPxq+ x2[ x[[S*S12xP \1+* *1 *TY !14.x2qi
>TY !14.x2q;+ 1.Y,x*S12+ S2’1P’Y x 2(4vY, 1W 1*TY, ,S+Q+ x2[ (2\Y,*xS2*SY+ S2\P([S2Uk v(* 21* PS4S*Y[ *1k *TY YWWY\*+ 1W
UY2Y,xP Y\1214S\ \12[S*S12+k ,x.S[Pq \Tx2US2U *Y\T21P1USY+k x2[ S2*Y,2x*S12xP 1.Y,x*S12+i
[B(cid:136) Q˘(cid:192)(cid:136)˘(cid:132)q (cid:151)(cid:132)ˆ(cid:128)w(cid:136)Øq”(cid:128)(cid:132)
Reportable Segments
>TY !14.x2q;+ !TSYW D.Y,x*S2U ~Y\S+S12 ^xQY, nV!D~^?m S+ 1(, !TSYW frY\(*S’Y DWWS\Y,i >TY !D~^ (*SPSoY+ WS2x2\SxP
S2W1,4x*S12 *1 4xQY [Y\S+S12+ xv1(* xPP1\x*S2U ,Y+1(,\Y+ x2[ x++Y++S2U .Y,W1,4x2\Y W1, *TY Y2*S,Y !14.x2qi >TY !14.x2q
Y’xP(x*Y+ *TY .Y,W1,4x2\Y 1Wk x2[ xPP1\x*Y+ ,Y+1(,\Y+ *1k S*+ +YU4Y2*+ vx+Y[ 12 ,Y’Y2(Yk U,1++ .,1WS* x2[ 1.Y,x*S2U .,1WS*i >TY
!14.x2q;+ ,Y.1,*xvPY +YU4Y2*+ Tx’Y vYY2 S[Y2*SWSY[ vx+Y[ 12 \14412xPS*q x2[ x[Rx\Y2\q 1W *Y\T21P1USY+k x..PS\x*S12+ x2[
FF
(cid:140)]I(cid:215)(cid:140)N(cid:215) (cid:151)(cid:140)(cid:211)(cid:136)
(cid:140)]N£Q N] (cid:211)](cid:140)Q](cid:143)(cid:151)(cid:210)(cid:215)N£(cid:210) (cid:160)(cid:151)(cid:140)(cid:215)(cid:140)(cid:211)(cid:151)(cid:215)(cid:143) QN(cid:215)N£(cid:141)£(cid:140)NQ (cid:229) (cid:153)(cid:211)(cid:128)(cid:132)q”(cid:132)o˘(cid:201)(cid:151)
(cid:215)Q ](cid:160) (cid:210)£(cid:211)£(cid:141)(cid:213)£T U[(cid:142) X(cid:131)X[
\(+*14Y,+ x412U+* *TY !14.x2q;+ S2[S’S[(xP .,1[(\* PS2Y+i >TY !14.x2q [Y*Y,4S2Y[ *Tx* [S+\P1+S2U ,Y’Y2(Y vq +.Y\SWS\ .,1[(\*
tx+ S4.,x\*S\xvPY [(Y *1 *TY TSUTPq \(+*14SoY[ x2[ Yr*Y2+S’Y .1,*W1PS1 1W *Y\T21P1USY+ 1WWY,Y[ *1 \(+*14Y,+i
"x+Y[ (.12 *TY S2W1,4x*S12 .,1’S[Y[ *1 *TY !D~^k *TY !14.x2q Tx+ [Y*Y,4S2Y[ S* 1.Y,x*Y+ S2 *T,YY ,Y.1,*xvPY +YU4Y2*+E
CT1*12S\+k :S+S12k x2[ C,Y\S+S12 ^1*S12i >TY ,Y.1,*xvPY +YU4Y2*+ x2[ *TYS, .,S2\S.xP x\*S’S*SY+ \12+S+* 1W *TY W1PP1tS2UE
Photonics
>TY CT1*12S\+ +YU4Y2* [Y+SU2+k 4x2(Wx\*(,Y+ x2[ 4x,QY*+ .T1*12S\+jvx+Y[ +1P(*S12+k S2\P([S2U Px+Y, +\x22S2Uk Px+Y, vYx4
[YPS’Y,qk !DM Px+Y,k +1PS[ +*x*Y Px+Y,k (P*,xWx+* Px+Y,k x2[ 1.*S\xP PSUT* Y2US2Y .,1[(\*+ *1 \(+*14Y,+ t1,P[tS[Yi >TY +YU4Y2* +Y,’Y+
TSUTPq [Y4x2[S2U .T1*12S\+jvx+Y[ x..PS\x*S12+ W1, x[’x2\Y[ S2[(+*,SxP .,1\Y++Y+k 4Y*,1P1Uqk 4Y[S\xP x2[ PSWY +\SY2\Y S4xUS2Uk
~]# +Y-(Y2\S2Uk x2[ 4Y[S\xP Px+Y, .,1\Y[(,Y+i >TY ’x+* 4xR1,S*q 1W *TY +YU4Y2*;+ .,1[(\* 1WWY,S2U+ x,Y +1P[ *1 Df^ \(+*14Y,+i
>TY +YU4Y2* +YPP+ *TY+Y .,1[(\*+ v1*T [S,Y\*Pqk (*SPSoS2U x TSUTPq *Y\T2S\xP +xPY+ W1,\Yk x2[ S2[S,Y\*Pqk *T,1(UT ,Y+YPPY,+ x2[
[S+*,Sv(*1,+i
Vision
>TY :S+S12 +YU4Y2* [Y+SU2+k 4x2(Wx\*(,Y+ x2[ 4x,QY*+ x ,x2UY 1W 4Y[S\xP U,x[Y *Y\T21P1USY+k S2\P([S2U 4Y[S\xP S2+(WWPx*1,+k
.(4.+ x2[ ,YPx*Y[ [S+.1+xvPY+% ’S+(xPSox*S12 +1P(*S12+% tS,YPY++ *Y\T21P1USY+k ’S[Y1 ,Y\1,[Y, x2[ ’S[Y1 S2*YU,x*S12 *Y\T21P1USY+ W1,
1.Y,x*S2U ,114 S2*YU,x*S12+% 1.*S\xP [x*x \1PPY\*S12 x2[ 4x\TS2Y ’S+S12 *Y\T21P1USY+% ,x[S1 W,Y-(Y2\q S[Y2*SWS\x*S12 *Y\T21P1USY+%
*TY,4xP \Tx,* ,Y\1,[Y,+% +.Y\*,14Y*,q *Y\T21P1USY+% x2[ Y4vY[[Y[ *1(\T +\,YY2 +1P(*S12+i >TY ’x+* 4xR1,S*q 1W *TY +YU4Y2*;+
.,1[(\* 1WWY,S2U+ x,Y +1P[ *1 Df^ \(+*14Y,+i >TY +YU4Y2* +YPP+ *TY+Y .,1[(\*+ v1*T [S,Y\*Pqk (*SPSoS2U x TSUTPq *Y\T2S\xP +xPY+ W1,\Yk
x2[ S2[S,Y\*Pqk *T,1(UT ,Y+YPPY,+ x2[ [S+*,Sv(*1,+i
Precision Motion
>TY C,Y\S+S12 ^1*S12 +YU4Y2* [Y+SU2+k 4x2(Wx\*(,Y+ x2[ 4x,QY*+ 1.*S\xP x2[ S2[(\*S’Y Y2\1[Y,+k .,Y\S+S12 41*1,+k +Y,’1
[,S’Y+ x2[ 41*S12 \12*,1P +1P(*S12+k S2*YU,x*Y[ +*Y..Y, 41*1,+k S2*YPPSUY2* ,1v1*S\ Y2[j1Wjx,4 *Y\T21P1Uq +1P(*S12+k xS, vYx,S2U+k x2[
xS, vYx,S2U +.S2[PY+ *1 \(+*14Y,+ t1,P[tS[Yi >TY ’x+* 4xR1,S*q 1W *TY +YU4Y2*;+ .,1[(\* 1WWY,S2U+ x,Y +1P[ *1 Df^ \(+*14Y,+i >TY
+YU4Y2* +YPP+ *TY+Y .,1[(\*+ v1*T [S,Y\*Pqk (*SPSoS2U x TSUTPq *Y\T2S\xP +xPY+ W1,\Yk x2[ S2[S,Y\*Pqk *T,1(UT ,Y+YPPY,+ x2[ [S+*,Sv(*1,+i
Reportable Segment Financial Information
AY’Y2(Yk U,1++ .,1WS*k 1.Y,x*S2U S2\14Y nP1++mk [Y.,Y\Sx*S12 x2[ x41,*Sox*S12 Yr.Y2+Y+k x\\1(2*+ ,Y\YS’xvPY x2[ S2’Y2*1,SY+
vq ,Y.1,*xvPY +YU4Y2*+ tY,Y x+ W1PP1t+ nS2 *T1(+x2[+mE
T˘m˘(cid:132)o˘
CT1*12S\+
:S+S12
C,Y\S+S12 ^1*S12
N(cid:128)q؇
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CT1*12S\+
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C,Y\S+S12 ^1*S12
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N(cid:128)q؇
!˘Øw £(cid:132)(cid:201)˘(cid:201) (cid:210)˘(cid:204)˘(cid:136)Ł˘w U[(cid:142)
X(cid:131)X(cid:131)
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5
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(cid:140)]N£Q N] (cid:211)](cid:140)Q](cid:143)(cid:151)(cid:210)(cid:215)N£(cid:210) (cid:160)(cid:151)(cid:140)(cid:215)(cid:140)(cid:211)(cid:151)(cid:215)(cid:143) QN(cid:215)N£(cid:141)£(cid:140)NQ (cid:229) (cid:153)(cid:211)(cid:128)(cid:132)q”(cid:132)o˘(cid:201)(cid:151)
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5
5
5
5
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Geographic Information
>TY !14.x2q xUU,YUx*Y+ UY1U,x.TS\ ,Y’Y2(Y vx+Y[ 12 *TY \(+*14Y, P1\x*S12 tTY,Y .,1[(\*+ x,Y +TS..Y[i AY’Y2(Y W,14
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5
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5
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FACTORS AFFECTING FUTURE PERFORMANCE
Certain statements in this release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on current
expectations and assumptions that are subject to risks and uncertainties. All statements contained in this Annual Report that do not relate to matters of historical fact
should be considered forward-looking statements, and are generally identified by words such as “expect,” “intend,” “anticipate,” “estimate,” “believe,” “future,” “could,”
“should,” “plan,” “aim,” and other similar expressions. These forward-looking statements include, but are not limited to, statements regarding anticipated financial
performance and financial position, including expectations regarding market conditions; statements regarding the COVID-19 pandemic; expectations regarding product
launches; our ability to fund future acquisitions; and other statements that are not historical facts. These forward-looking statements are neither promises nor guarantees,
but involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. Our actual results could differ
materially from those anticipated in these forward-looking statements for many reasons, including, but not limited to, the following: economic and political conditions
and the effects of these conditions on our customers’ businesses, capital expenditures and level of business activities; risks associated with the COVID-19 pandemic and
other events outside our control; our dependence upon our ability to respond to fluctuations in product demand; our ability to continually innovate, introduce new products
in a timely manner and successfully commercialize our innovations; customer order timing and other similar factors beyond our control; disruptions or breaches in security
of our or our third-party providers’ information technology systems; our failure to comply with data protection, privacy and security laws, regulations, standards and other
requirements; changes in interest rates, credit ratings or foreign currency exchange rates; our reliance on international operations; our increased outsourcing of components
manufacturing to manufacturers outside the U.S.; our exposure to increased tariffs, trade restrictions or taxes on our products; negative effects on global economic
conditions, financial markets and our business as a result of the United Kingdom’s withdrawal from the European Union; violations of our intellectual property rights and
our ability to protect our intellectual property against infringement by third parties; risk of losing our competitive advantage; our failure to successfully integrate recent
and future acquisitions into our business; our ability to attract and retain key personnel; our restructuring and realignment activities and disruptions to our operations as a
result of consolidation of our operations; product defects or problems integrating our products with other vendors’ products; disruptions in the supply of certain key
components or other goods from our suppliers; our failure to accurately forecast component and raw material requirements leading to excess inventories or delays in the
delivery of our products; production difficulties and product delivery delays or disruptions; our exposure to medical device regulations, which may impede or hinder the
approval or sale of our products and, in some cases, may ultimately result in an inability to obtain approval of certain products or may result in the recall or seizure of
previously approved products; potential penalties for violating foreign, U.S. federal, and state healthcare laws and regulations; impact of healthcare industry cost
containment and healthcare reform measures; changes in governmental regulations affecting our business or products; our failure to implement new information
technology systems and software successfully; our failure to realize the full value of our intangible assets; increasing scrutiny and changing expectations from investors,
customers, and governments with respect to environmental, social and governance policies and practices leading to higher costs and other risks, being subject to U.S.
federal income taxation even though we are a non-U.S. corporation; any need for additional capital to adequately respond to business challenges or opportunities and
repay or refinance our existing indebtedness, which may not be available on acceptable terms or at all; our existing indebtedness limiting our ability to engage in certain
activities; and the important factors described in Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2021 included in this Annual Report and
in the Company’s future filings with the Securities and Exchange Commission (the “SEC”). Such statements are based on management’s beliefs and assumptions and on
information currently available to the Company’s management. The Company disclaims any obligation to update any forward-looking statements as a result of
developments occurring after the date of this document except as required by law.
FORM 10-K
This Annual Report to Shareholders includes a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, excluding exhibits, as filed with
the SEC and available through our website at https://www.novanta.com. We will, upon written request and payment of an appropriate processing fee, provide our
shareholders with copies of the exhibits to our Annual Report on Form 10-K. Please address your request to Novanta Inc., 125 Middlesex Turnpike, Bedford, MA 01730,
Attention: Investor Relations.
_______________________________________________________________________________________________________________________________________
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
This Annual Report contains the non-GAAP financial measures of Adjusted EBITDA, Organic Revenue Growth and Adjusted Diluted EPS. A tabular reconciliation of
these non-GAAP financial measures to the most comparable GAAP measures are set forth below.
Adjusted EBITDA (Non-GAAP): (1)
(in thousands of U.S. dollars)
Consolidated Net Income (GAAP)
Interest (income) expense, net
Income tax provision
Depreciation and amortization
Share-based compensation
Restructuring and acquisition related costs
Acquisition inventory fair value adjustments
Employee COVID-19 testing costs
Other non-operating income (expense), net
Adjusted EBITDA (non-GAAP)
Adjusted EBITDA Margin (non-GAAP)
(1)
Year Ended December 31,
2021
(Unaudited)
2020
(Unaudited)
$
$
50,331 $
7,387
5,841
43,126
22,557
18,020
1,411
3,568
495
152,736 $
21.6%
44,521
6,564
3,882
38,293
22,535
3,810
188
275
921
120,989
20.5%
The Company defines Adjusted EBITDA as the consolidated net income before deducting interest (income) expense, income taxes, depreciation, amortization, non-cash share-based compensation,
restructuring, acquisition and divestiture related costs, acquisition fair value adjustments, costs directly related to employee COVID-19 testing, other non-operating income (expense) items,
including foreign exchange gains (losses), and net periodic pension costs of the Company’s frozen U.K. defined benefit pension plan. The Company defines Adjusted EBITDA Margin as Adjusted
EBITDA as a percentage of Revenue. The Company believes Adjusted EBITDA and Adjusted EBITDA Margin provide useful and supplementary information to investors regarding the operating
results of the Company because of the significant changes that have occurred outside of the Company’s day-to-day business in accordance with the execution of the Company’s strategy. This
strategy includes streamlining the Company’s existing operations through site and functional consolidations, strategic divestitures and product line closures, expanding the Company’s business
through significant internal investments, and broadening the Company’s product and service offerings through acquisition of innovative and complementary technologies and solutions. The
financial impact of certain elements of these activities, particularly acquisitions, divestitures, and site and functional restructurings, is often large relative to the Company’s overall financial
performance and can adversely affect the comparability of its operating results and investors’ ability to analyze the business from period to period. Adjusted EBITDA is used by management to
evaluate operating performance, communicate financial results to the Board of Directors, benchmark results against historical performance and the performance of peers, and evaluate investment
opportunities, including acquisitions and divestitures. In addition, Adjusted EBITDA is used as one of the performance metrics to determine bonus payments for senior management and employees.
Accordingly, the Company believes that these non-GAAP measures provide greater transparency and insight into management’s method of analysis. In evaluating Adjusted EBITDA, you should
be aware that, in the future, the Company may incur expenses that are the same as, or similar to, some of the adjustments listed above.
110
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Continued)
Organic Revenue Growth/(Decline) (Non-GAAP): (1)
Reported Revenue Growth/(Decline) (GAAP)
Less: Change attributable to acquisitions
Plus: Change due to foreign currency
Organic Revenue Growth/(Decline) (non-GAAP)
(1)
Year Ended December 31, 2021
Compared to
Year Ended December 31, 2020
(Unaudited)
19.7%
7.3%
(2.1%)
10.3%
The Company defines the term “organic revenue” as revenue excluding the impact from business acquisitions, divestitures, product line discontinuations, and the effect of foreign currency
translation. The Company uses the related term “organic revenue growth/(decline)” to refer to the financial performance metric of comparing current period organic revenue with the reported
revenue of the corresponding period in the prior year. The Company believes that this non-GAAP financial measure, when taken together with our GAAP financial measures, allows the
Company and its investors to better measure the Company’s performance and evaluate long-term performance trends. Organic revenue growth/(decline) also facilitates easier comparisons of the
Company’s performance with prior and future periods and relative comparisons to its peers. The Company excludes the effect of foreign currency translation from these measures because
foreign currency translation is subject to volatility and can obscure underlying business trends. The Company excludes the effect of acquisitions and divestitures because these activities can vary
dramatically between reporting periods and between the Company and its peers, which the Company believes makes comparisons of long-term performance trends difficult for management and
investors. Organic Revenue Growth/(Decline) is also used as a performance metric to determine bonus payments for senior management and employees.
Adjusted Diluted EPS (Non-GAAP): (1)
(in thousands of U.S. dollars except per share amounts)
Net income (GAAP)
Diluted EPS (GAAP)
Non-GAAP adjustments:
Amortization of intangible assets (2)
Restructuring costs (3)
Acquisition related costs (3)
Acquisition fair value adjustments (3)
Employee COVID-19 testing costs (4)
Foreign exchange transaction (gains) losses, net (5)
Total Non-GAAP adjustments before income taxes
Tax effect of non-GAAP adjustments (6)
Non-GAAP tax adjustments (6)
Adjusted net income (Non-GAAP)
Adjusted Diluted EPS (Non-GAAP)
Weighted-average shares outstanding - Diluted
Year Ended December 31,
2021
(Unaudited)
2020
(Unaudited)
$
$
50,331 $
1.41 $
44,521
1.25
29,865
8,341
9,679
1,411
3,568
127
52,991
10,815
(1,370)
93,877 $
2.62 $
35,781
25,093
4,477
(667)
188
275
942
30,308
5,482
(35)
69,382
1.95
35,654
$
$
(1)
The Company believes Adjusted Diluted EPS provides useful and supplementary information to investors regarding the operating performance of the Company because Adjusted Diluted EPS is
used by management to evaluate operating performance, communicate financial results to the Board of Directors, and benchmark results against historical performance and the performance of
peers. The Company also uses Adjusted Diluted EPS as a measurement for performance-based restricted stock units issued to certain executives. Accordingly, the Company believes this non-
GAAP measure provides greater transparency and insight into management’s method of analysis. In evaluating Adjusted Diluted EPS, you should be aware that in the future the Company may
incur expenses that are the same as, or similar to, some of the adjustments listed above.
(2) Amortization of acquired intangible assets and acquisition fair value adjustments are excluded from Adjusted Diluted EPS because (i) these amounts are non-cash; (ii) the Company cannot
(3)
(4)
(5)
(6)
influence the timing and amount of future expense recognition; and (iii) excluding such expenses provides investors and management better visibility into the components of operating costs.
These amounts relate to the Company’s restructuring programs, business acquisitions, divestitures and related activities. Such expenses are excluded from the calculation of Adjusted Diluted EPS
due to the significant changes that have occurred outside of the Company’s day-to-day business as a result of the execution of the Company’s strategy. The financial impact of certain elements
of these activities, particularly acquisitions, divestures, and site and functional restructurings, is often large relative to the Company’s overall financial performance and can adversely affect the
comparability of its operating results and investors’ ability to analyze the business from period to period.
The Company excludes costs directly related to employee COVID-19 testing as these costs are unique to the current pandemic and had a significant impact on our operating results.
The Company excludes foreign exchange transaction gains (losses) as the Company cannot fully influence the timing and amount of foreign currency transaction gains (losses).
The Company excludes significant discrete income tax expenses (benefits) related to releases of valuation allowances, benefits or expenses associated with the completion of tax audits, effects of
changes in tax laws, effects of acquisition related tax planning actions on our effective tax rate, and the income tax effect of non-GAAP adjustments above.
Non-GAAP financial measures should not be considered as substitutes for, or superior to, measures of financial performance prepared in accordance with GAAP. They
are limited in value because they exclude charges that have a material effect on the Company’s reported results and, therefore, should not be relied upon as the sole
financial measures to evaluate the Company’s financial results. The non-GAAP financial measures are meant to supplement, and to be viewed in conjunction with,
GAAP financial measures.
111
CORPORATE INFORMATION
EXECUTIVE OFFICERS
Matthijs Glastra
Chairperson and Chief Executive Officer
Robert J. Buckley
Chief Financial Officer
Brian S. Young
Chief Human Resources Officer
BOARD OF DIRECTORS
Matthijs Glastra
Chairperson of the Board of Directors, Novanta Inc.
Lonny J. Carpenter, Lead Director
Former Group President, Stryker Corporation
Brian D. King
Former President and Chief Executive Officer,
Viant Medical, LLC
Ira J. Lamel
Former Executive Vice President and Chief Financial
Officer, The Hain Celestial Group, Inc.
Maxine L. Mauricio
Executive Vice President, General Counsel and Secretary,
EMCOR Group, Inc.
Katherine A. Owen
Former Vice President and Advisor to the CEO,
Stryker Corporation
Thomas N. Secor
Managing Director, Morningside Heights Capital,
an investment firm
SHAREHOLDER INFORMATION
CORPORATE HEADQUARTERS
Novanta Inc.
125 Middlesex Turnpike
Bedford, MA 01730
U.S.A.
Phone: 1-781-266-5700
Fax: 1-781-266-5114
WEBSITE
https://www.novanta.com
ANNUAL MEETING OF SHAREHOLDERS
Thursday, May 12, 2022 at 2:00 p.m. (ET)
Virtually at:
www.virtualshareholdermeeting.com/NOVT2022
An Annual Report, a Management Proxy Circular and a
form of Proxy will be furnished to each shareholder as of the
record date of March 31, 2022.
AUDITORS
PricewaterhouseCoopers LLP
101 Seaport Boulevard
Boston, MA 02210
TRANSFER AGENT
Computershare Investor Services
100 University Ave.
8th Floor, North Tower
Toronto, Ontario, M5J 2Y1, Canada
Phone: 1-800-564-6253
Fax: 1-888-453-0330
service@computershare.com
STOCK EXCHANGE
Novanta Inc.’s common shares are listed and traded on the
Nasdaq Global Select Market under the ticker symbol
“NOVT”.
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