partnered222cc.com

TableofContentsFiledPursuanttoRule424(b)(5)RegistrationNo.
333-235338Theinformationinthispreliminaryprospectussupplementisnotcompleteandmaybechanged.
Thispreliminaryprospectussupplementisnotanoffertosellthesecuritiesandisnotsolicitingofferstobuythesecuritiesinanyjurisdictionwheretheofferorsaleisnotpermitted.
SUBJECTTOCOMPLETION,DATEDDECEMBER4,2019PreliminaryProspectusSupplement(ToProspectusdatedDecember3,2019)US$JD.
com,Inc.
US$%Notesdue20US$%Notesdue20WeareofferingUS$ofour%notesdue20(the"20Notes")andUS$ofour%notesdue20(the"20Notes",togetherwiththe20Notes,the"Notes").
The20Noteswillmatureon,20andthe20Noteswillmatureon,20.
InterestontheNoteswillaccruefrom,20andbepayableonandofeachyear,beginningon,20.
WemayatouroptionredeemtheNotesatanytimepriortoforthe20Notesandpriortoforthe20Notes,inwholeorinpart,ineachcaseatapriceequaltothegreaterof100%oftheprincipalamountofsuchNotestoberedeemedandthemake-wholeamountplusaccruedandunpaidinterest,ifany,to(butnotincluding)theredemptiondate.
Inaddition,wemayatouroptionredeemtheNotesatanytimeonorafterforthe20Notesandonorafterforthe20Notes,inwholeorinpart,ineachcaseatapriceequalto100%oftheprincipalamountofsuchNotestoberedeemedplusaccruedandunpaidinterest,ifany,to(butnotincluding)theredemptiondate.
WemayalsoredeemtheNotesatanytimeupontheoccurrenceofcertaintaxevents.
Upontheoccurrenceofatriggeringevent,wemustmakeanoffertorepurchaseallNotesoutstandingatapurchasepriceequalto101%oftheirprincipalamount,plusaccruedandunpaidinterest,ifany,to(butnotincluding)thedateofrepurchase.
ForamoredetaileddescriptionoftheNotes,see"DescriptionoftheNotes"inthisprospectussupplement.
TheNotesareourseniorunsecuredobligationsandwillrankseniorinrightofpaymenttoallofourexistingandfutureobligationsexpresslysubordinatedinrightofpaymenttotheNotes;rankatleastequalinrightofpaymentwithallofourexistingandfutureunsecuredunsubordinatedobligations(subjecttoanypriorityrightspursuanttoapplicablelaw);beeffectivelysubordinatedtoallofourexistingandfuturesecuredobligations,totheextentofthevalueoftheassetsservingassecuritytherefor;andbestructurallysubordinatedtoallexistingandfutureobligationsandotherliabilitiesofoursubsidiariesandconsolidatedaffiliatedentities.
See"RiskFactors"beginningonpageS-15foradiscussionofcertainrisksthatshouldbeconsideredinconnectionwithaninvestmentintheNotes.
NeithertheSecuritiesandExchangeCommission(the"SEC")noranystatesecuritiescommissionhasapprovedordisapprovedoftheNotesordeterminedthatthisprospectussupplementortheaccompanyingprospectusisaccurateorcomplete.
Anyrepresentationtothecontraryisacriminaloffense.
PublicOfferingPrice(1)UnderwritingDiscountsProceedstoJD.
com,Inc.
(1)Per20Note%%%TotalUS$US$US$Per20Note%%%TotalUS$US$US$(1)Plusaccruedinterest,ifany,from,2019.
Approvalin-principlehasbeenreceivedforthelistingandquotationoftheNotesontheSingaporeExchangeSecuritiesTradingLimited("SGX-ST").
TheSGX-STassumesnoresponsibilityforthecorrectnessofanyofthestatementsmadeoropinionsexpressedorreportscontainedherein.
Approvalin-principleforthelistingandquotationofanyNotesontheSGX-STisnottobetakenasanindicationofthemeritsofus,oranyofoursubsidiariesorconsolidatedaffiliatedentities,oroftheNotes.
Currently,thereisnopublictradingmarketfortheNotes.
WeexpecttodelivertheNotestoinvestorsthroughthebook-entrydeliverysystemofTheDepositoryTrustCompanyanditsdirectparticipants,includingEuroclearBankSA/NV("Euroclear"),andClearstreamBankingS.
A.
("Clearstream"),onorabout,2019,whichisthefifthbusinessdayfollowingthedateofthisprospectussupplement.
PurchasersoftheNotesshouldnotethattradingoftheNotesmaybeaffectedbythissettlementdate.
JointBookrunnersandJointLeadManagersBofASecuritiesUBSJointLeadManagersBofASecuritiesUBSHSBCCo-ManagersBankofChinaDBSBankLtd.
StandardCharteredBankThedateofthisprospectussupplementis,2019.
TableofContentsTABLEOFCONTENTSProspectusSupplementABOUTTHISPROSPECTUSSUPPLEMENTS-1WHEREYOUCANFINDMOREINFORMATIONS-2INCORPORATIONOFCERTAINDOCUMENTSBYREFERENCES-3ECONOMICAREACONSIDERATIONSS-4FORWARD-LOOKINGSTATEMENTSS-5PROSPECTUSSUPPLEMENTSUMMARYS-6RISKFACTORSS-15CERTAINFINANCIALDATAS-19USEOFPROCEEDSS-32CAPITALIZATIONS-33DESCRIPTIONOFTHENOTESS-34TAXATIONS-45UNDERWRITINGS-49LEGALMATTERSS-54EXPERTSS-55ProspectusABOUTTHISPROSPECTUS1FORWARD-LOOKINGSTATEMENTS2OURCOMPANY3RISKFACTORS8USEOFPROCEEDS9DESCRIPTIONOFDEBTSECURITIES10LEGALOWNERSHIPOFDEBTSECURITIES26ENFORCEABILITYOFCIVILLIABILITIES28PLANOFDISTRIBUTION30LEGALMATTERS32EXPERTS33WHEREYOUCANFINDMOREINFORMATION34INCORPORATIONOFCERTAINDOCUMENTSBYREFERENCE35Youshouldrelyonlyontheinformationcontainedorincorporatedbyreferenceinthisprospectussupplementandtheaccompanyingprospectus.
Wehavenot,andtheunderwritershavenot,authorizedanyotherpersontoprovideyouwithdifferentinformation.
Ifanyoneprovidesyouwithdifferentorinconsistentinformation,youshouldnotrelyonit.
Wearenot,andtheunderwritersarenot,makinganoffertoselltheNotesinanyjurisdictionwheretheofferorsaleisnotpermitted.
Youshouldassumethattheinformationappearinginthisprospectussupplement,theaccompanyingprospectusandthedocumentsincorporatedbyreferenceisaccurateonlyasofeachoftheirrespectivedates.
Ourbusiness,financialcondition,resultsofoperationsandprospectsmayhavechangedsincethosedates.
Section309B(1)Notification—InconnectionwithSection309BoftheSecuritiesandFuturesAct,Chapter389ofSingapore,asmodifiedoramendedfromtimetotime(the"SFA")andtheSecuritiesandFutures(CapitalMarketsProducts)Regulations2018(the"CMPRegulations2018),wehavedetermined,andherebynotifyallpersons(includingrelevantpersons(asdefinedinSection309A(1)oftheSFA))thattheNotesareprescribedcapitalmarketsproducts(asdefinedintheCMPRegulations2018)andExcludedInvestmentProducts(asdefinedinMASNoticeSFA04-N12:NoticeontheSaleofInvestmentProductsandMASNoticeFAA-N16:NoticeonRecommendationsonInvestmentProducts).
TableofContentsABOUTTHISPROSPECTUSSUPPLEMENTThisdocumentconsistsoftwoparts.
Thefirstpartisthisprospectussupplement,whichdescribesthespecifictermsofthisofferingoftheNotesbyus.
Thesecondpart,thebaseprospectus,presentsmoregeneralinformationaboutthisoffering.
ThebaseprospectuswasincludedintheregistrationstatementonFormF-3(FileNo.
333-235338)thatwefiledwiththeSEConDecember3,2019andhasbeenupdatedsincethattimewithadditionalinformationthatisincorporatedbyreference.
Generally,whenwereferonlytothe"prospectus,"wearereferringtobothpartscombined,andwhenwerefertothe"accompanyingprospectus,"wearereferringtothebaseprospectusasupdatedthroughincorporationbyreference.
IfthedescriptionoftheofferingoftheNotesvariesbetweenthisprospectussupplementandtheaccompanyingprospectus,youshouldrelyontheinformationinthisprospectussupplement.
Youshouldnotconsideranyinformationinthisprospectussupplementortheaccompanyingprospectustobeinvestment,legalortaxadvice.
Youshouldconsultyourowncounsel,accountantsandotheradvisorsforlegal,tax,business,financialandrelatedadviceregardingthepurchaseofanyoftheNotesofferedbythisprospectussupplement.
Inthisprospectussupplement,unlessotherwiseindicatedorunlessthecontextotherwiserequires,"annualactivecustomeraccounts"refertocustomeraccountsthatmadeatleastonepurchaseduringthetwelvemonthsendedontherespectivedates,includingbothonlinedirectsalesandonlinemarketplace;"China"orthe"PRC"referstothePeople'sRepublicofChina,excluding,forthepurposesofthisprospectusonly,HongKong,MacauandTaiwan;"ordinaryshares"refertoourClassAandClassBordinaryshares,parvalueUS$0.
00002pershare;"RMB"referstothelegalcurrencyofChina;"U.
S.
dollars,""US$,""dollars"and"$"refertothelegalcurrencyoftheUnitedStates;and"we,""us,""ourcompany"and"our"refertoJD.
com,Inc.
,itssubsidiariesanditsconsolidatedvariableinterestentitiesandtheirsubsidiaries.
OurreportingcurrencyisRMB.
Unlessotherwisenoted,alltranslationsfromRMBtoU.
S.
dollarsandfromU.
S.
dollarstoRMBinthisprospectussupplementaremadeatarateofRMB7.
1477toUS$1.
00,theexchangerateineffectasofSeptember30,2019assetforthintheH.
10statisticalreleaseofTheBoardofGovernorsoftheFederalReserveSystem.
WemakenorepresentationthatanyRMBorU.
S.
dollaramountscouldhavebeen,orcouldbe,convertedintoU.
S.
dollarsorRMB,asthecasemaybe,atanyparticularrate,oratall.
OnNovember29,2019,theexchangeratewasRMB7.
0308toUS$1.
00.
Alldiscrepanciesinanytablebetweentheamountsidentifiedastotalamountsandthesumoftheamountslistedthereinareduetorounding.
S-1TableofContentsWHEREYOUCANFINDMOREINFORMATIONWearesubjecttothereportingrequirementsoftheSecuritiesExchangeActof1934,asamended,ortheExchangeAct,and,inaccordancewiththeExchangeAct,wefileannualreportsandotherinformationwiththeSEC.
InformationwefilewiththeSECcanbeobtainedovertheinternetattheSEC'swebsiteatwww.
sec.
gov.
ThisprospectussupplementispartofaregistrationstatementthatwefiledwiththeSEC,usinga"shelf"registrationprocessundertheSecuritiesActof1933,asamended,ortheSecuritiesAct,relatingtothesecuritiestobeoffered.
Thisprospectussupplementdoesnotcontainalloftheinformationsetforthintheregistrationstatement,certainpartsofwhichareomittedinaccordancewiththerulesandregulationsoftheSEC.
ForfurtherinformationwithrespecttoJD.
com,Inc.
andtheNotes,referenceisherebymadetotheregistrationstatementandtheprospectuscontainedtherein.
Theregistrationstatement,includingtheexhibitsthereto,maybeinspectedontheSEC'swebsite.
S-2TableofContentsINCORPORATIONOFCERTAINDOCUMENTSBYREFERENCETheSECallowsusto"incorporatebyreference"theinformationwefilewithorsubmittotheSEC,whichmeansthatwecandiscloseimportantinformationtoyoubyreferringyoutothosedocumentsthatareconsideredpartoftheaccompanyingprospectus.
InformationthatwefilewithorsubmittotheSECinthefutureandincorporatebyreferencewillautomaticallyupdateandsupersedethepreviouslyfiledinformation.
See"IncorporationofCertainDocumentsbyReference"intheaccompanyingprospectusformoreinformation.
Allofthedocumentsincorporatedbyreferenceareavailableatwww.
sec.
govunderJD.
com,Inc.
,CIKnumber0001549802.
OurannualreportonForm20-FforthefiscalyearendedDecember31,2018,asamendedbyAmendmentNo.
1thereto,filedwiththeSEConApril15,2019andJune28,2019,respectively(FileNo.
001-36450),orour2018Form20-F,andourcurrentreportonForm6-KwefurnishedtotheSEConDecember3,2019,arebothincorporatedbyreferenceintotheaccompanyingprospectus.
Asyoureadthedocumentsincorporatedbyreference,youmayfindinconsistenciesininformationfromonedocumenttoanother.
Ifyoufindinconsistencies,youshouldrelyonthestatementsmadeinthemostrecentdocument.
Wewillprovideacopyofanyoralloftheinformationthathasbeenincorporatedbyreferenceintotheaccompanyingprospectus,uponwrittenororalrequest,toanyperson,includinganybeneficialowneroftheNotes,towhomacopyofthisprospectussupplementisdelivered,atnocosttosuchperson.
Youmaymakesucharequestbywritingortelephoningusatthefollowingmailingaddressortelephonenumber:JD.
com,Inc.
20thFloor,BuildingA,No.
18Kechuang11StreetYizhuangEconomicandTechnologicalDevelopmentZoneDaxingDistrict,Beijing101111ThePeople'sRepublicofChina+86108911-8888Attention:InvestorRelationsS-3TableofContentsECONOMICAREACONSIDERATIONSTheNotesarenotintendedtobeoffered,sold,orotherwisemadeavailabletoandshouldnotbeoffered,sold,orotherwisemadeavailabletoanyretailinvestorintheEuropeanEconomicArea("EEA").
Forthesepurposes,aretailinvestorintheEEAmeansapersonwhoisone(ormore)of:(i)aretailclientasdefinedinpoint(11)ofArticle4(1)ofMiFIDII;or(ii)acustomerwithinthemeaningofDirective2002/92/EC(asamended,the"InsuranceMediationDirective"),wherethatcustomerwouldnotqualifyasaprofessionalclientasdefinedinpoint(10)ofArticle4(1)ofMiFIDII.
Consequently,nokeyinformationdocumentrequiredbyRegulation(EU)No1286/2014(the"PRIIPsRegulation")forofferingorsellingtheNotesorotherwisemakingthemavailabletoretailinvestorsintheEEAhasbeenpreparedandthereforeofferingorsellingtheNotesorotherwisemakingthemavailabletoanyretailinvestorintheEEAmaybeunlawfulunderthePRIIPsRegulation.
S-4TableofContentsFORWARD-LOOKINGSTATEMENTSThisprospectussupplement,theaccompanyingprospectusandthedocumentsincorporatedbyreferencecontainforward-lookingstatementsthatreflectourcurrentexpectationsandviewsoffutureevents.
Thesestatementsaremadeunderthe"safeharbor"provisionsoftheU.
S.
PrivateSecuritiesLitigationReformActof1995.
Youcanidentifytheseforward-lookingstatementsbyterminologysuchas"may,""will,""expect,""anticipate,""aim,""intend,""plan,""believe,""estimate,""is/arelikelyto,""future,""potential,""continue"orothersimilarexpressions.
Wehavebasedtheseforward-lookingstatementslargelyonourcurrentexpectationsandprojectionsaboutfutureeventsandfinancialtrendsthatwebelievemayaffectourfinancialcondition,resultsofoperations,businessstrategyandfinancialneeds.
Theseforward-lookingstatementsincludestatementsrelatingto,amongotherthings:ourgoalsandstrategies;ourfuturebusinessdevelopment,financialconditionsandresultsofoperations;theexpectedgrowthoftheretailandonlineretailmarketsinChina;ourexpectationsregardingdemandforandmarketacceptanceofourproductsandservices;ourexpectationsregardingourrelationshipswithcustomers,suppliersandthird-partysellers;ourplanstoinvestinourfulfillmentinfrastructureandtechnologyplatformaswellasnewbusinessinitiatives;competitioninourindustry;andrelevantgovernmentpoliciesandregulationsrelatingtoourindustry.
Theforward-lookingstatementsincludedinthisprospectussupplement,intheaccompanyingprospectusandinthedocumentsincorporatedbyreferencethereinaresubjecttorisks,uncertaintiesandassumptionsaboutourcompany.
Ouractualresultsofoperationsmaydiffermateriallyfromtheforward-lookingstatementsasaresultoftheriskfactorsdisclosedinthisprospectussupplement,intheaccompanyingprospectusandinthedocumentsincorporatedbyreferencetherein.
Wewouldliketocautionyounottoplaceunduerelianceontheseforward-lookingstatements.
Youshouldreadthesestatementsinconjunctionwiththeriskfactorsdisclosedherein,intheaccompanyingprospectusandinthedocumentsincorporatedbyreferencethereinforamorecompletediscussionoftherisksofaninvestmentinoursecurities.
Weoperateinarapidlyevolvingenvironment.
Newrisksemergefromtimetotimeanditisimpossibleforourmanagementtopredictallriskfactors,norcanweassesstheimpactofallfactorsonourbusinessortheextenttowhichanyfactor,orcombinationoffactors,maycauseactualresultstodifferfromthosecontainedinanyforward-lookingstatement.
Wedonotundertakeanyobligationtoupdateorrevisetheforward-lookingstatementsexceptasrequiredunderapplicablelaw.
S-5TableofContentsPROSPECTUSSUPPLEMENTSUMMARYThissummaryhighlightsinformationpresentedingreaterdetailelsewhere.
ThissummaryisnotcompleteanddoesnotcontainalltheinformationyoushouldconsiderbeforeinvestingintheNotes.
Youshouldcarefullyreadtheentireprospectusbeforeinvesting,including"RiskFactors,"andincludingthedocumentsincorporatedbyreference.
See"IncorporationofCertainDocumentsbyReference.
"Our2018Form20-F,whichcontainsourauditedconsolidatedfinancialstatementsasofDecember31,2017and2018andforeachofthethreeyearsendedDecember31,2018,andourcurrentreportonForm6-KfurnishedtotheSEConDecember3,2019,whichcontainsourunauditedinterimcondensedconsolidatedfinancialstatementsasofSeptember30,2019andfortheninemonthsendedSeptember30,2018and2019,arebothincorporatedbyreference.
JD.
com,Inc.
OverviewWearealeadingtechnology-drivene-commercecompanyandretailinfrastructureserviceproviderinChina.
Webelieve"BoundarylessRetail,"theideaofenablingconsumerstobuywhatevertheywant,whereverandwhenevertheywantit,representsthefutureretailtrendforourindustryasconsumersarebecomingmoreinvolvedinallaspectsofacompany'svaluechainandproactivelyinteractwithbusinesses.
Consumersnowadaysnotonlycontinueseekingout"lowcost"and"convenience,"butalsodemandmorepersonalizedanddiversifiedscenariosandparticipationatthesametime.
Theinteractionbetweentheseevolvingconsumerdemandsandtechnologyadvancementwillfurthertransformtheretailinfrastructureandexperience.
Wearefocusedonprovidingconsumerswithanenjoyableonlineretailexperience.
Throughourcontent-richanduser-friendlywebsitewww.
jd.
comandmobileapps,weofferawideselectionofauthenticproductsatcompetitivepriceswhicharedeliveredinaspeedyandreliablemanner.
Wealsoofferconvenientonlineandin-personpaymentoptionsandcomprehensivecustomerservices.
Inordertohavebettercontroloverfulfillmentandtoensurecustomersatisfaction,wehavebuiltourownnationwidefulfillmentinfrastructureandlast-miledeliverynetwork,staffedbyourownemployees,whichsupportsbothouronlinedirectsalesandouronlinemarketplacebusinesses.
Wehaveestablishedstrongrelationshipswithoursuppliersaswedevelopouronlinedirectsalesbusiness.
Furthermore,ouronlinemarketplacebusinesshasallowedustosignificantlyexpandourofferingsofproductsandservices.
Asaresultofoursuperiorcustomerexperience,ourbusinesshasgrownrapidly.
Weareatechnology-drivencompanyandhaveinvestedheavilyindevelopingourownhighlyscalableproprietarytechnologyplatformthatsupportsourrapidgrowthandenablesustoprovidevalue-addedtechnologyservices.
Inaddition,oursophisticatedbusinessintelligencesystemenablesustorefineourmerchandisesourcingstrategytomanageourinventoryturnoverandcontrolcostsandtoleverageourlargecustomerdatabasetocreatecustomizedproductrecommendationsandcost-effectiveandtargetedadvertising.
Growthinthenumberofouractivecustomeraccountsisakeydriverofourrevenuegrowth.
Wehad226.
6million,292.
5million,305.
3millionand334.
4millionannualactivecustomeraccountsin2016,2017,2018andforthetwelvemonthsendedSeptember30,2019,respectively.
Thisincreasewasprimarilydrivenbyoursuccessinattractingnewactivecustomeraccounts,aswellasbyoursuccessingeneratingrepeatpurchasesfromexistingcustomeraccounts.
Wehaveagrowingandloyalactivecustomerbase.
Overtheyears,ourcustomershaveshownloyaltytousthroughtheirincreasedactivitylevels.
Forexample,forthesamegroupofcustomeraccountsthatwereactivein2008,theiraveragenumberofpurchasesincreasedeachyearthereafter,fromapproximately3.
7in2008to4.
4in2009,6.
2in2010,10.
7in2011,14.
9in2012,16.
6in2013,18.
7in2014,21.
8in2015,25.
7in2016,30.
2in2017and31.
5in2018.
S-6TableofContentsWegeneratedtotalnetrevenuesofRMB258.
3billion,RMB362.
3billion,RMB462.
0billionandRMB406.
2billion(US$56.
8billion)in2016,2017,2018andfortheninemonthsendedSeptember30,2019,respectively.
WeincurrednetlossesfromcontinuingoperationsofRMB2,049million,RMB19million,andRMB2,801millionin2016,2017and2018,respectively,andgeneratednetincomefromcontinuingoperationsofRMB8,336million(US$1,166million)fortheninemonthsendedSeptember30,2019.
OnlineDirectSalesInouronlinedirectsalesbusiness,weacquireproductsfromsuppliersandsellthemdirectlytocustomers.
Wefosteraninteractiveusercommunitythatdiscusses,ratesandreviewsourproductsandservices.
WebelievewehavethelargestonlineproductreviewdatabaseofanyonlinedirectsalescompanyinChinawithapproximately5,423millionproductreviewsgeneratedbyourcustomersasofSeptember30,2019.
Aswenowofferawiderangeofproductcategoriesthroughouronlinedirectsalesbusinessmodel,netrevenuesfromelectronicsproducts,whichincludecomputers,mobilehandsetsandothermobiledigitalproducts,andhomeappliances,havedeclinedasapercentageofourtotalnetrevenues.
AsofSeptember30,2019,wesourcedproductsfromover24,000suppliers.
WebelievethatlargescaleandmarketleadingpositionarecriticaltosuccessintheonlineretailmarketinChinaandcanprovideimportantcompetitiveadvantagestous.
RetailInfrastructureOnlineMarketplace.
Inouronlinemarketplacebusiness,third-partysellersofferproductstocustomersonouronlinemarketplaceandpayuscommissionsontheirsales.
WelaunchedouronlinemarketplaceinOctober2010andhavebeenaddingnewproductsandservices,includingpremiuminternationalbrandssincethen.
AsofSeptember30,2019,thereweremorethan250,000third-partysellersonouronlinemarketplace.
Weprovidetransactionprocessingandbillingservicesonallordersplacedonouronlinemarketplaceandrequirethird-partysellerstomeetourstrictstandardsforauthenticityandreliability.
Wemonitorthird-partysellers'performanceandactivitiesonouronlinemarketplacecloselytoensurethattheymeetourrequirementsforauthenticproductsandhigh-qualitycustomerservice.
Wetagcertaintopstoresonourplatformas"JDHaodian(),"basedoneachthird-partymerchant'squalityofserviceduringtheentirepurchaseprocess.
Suchcertificationcanhelpthetopmerchantsimprovetheirsalesvolumesontheplatform.
Furthermore,itsetsabenchmarktoencourageothermerchantstoimprovetheirqualityofservice.
Weaimtooffercustomersthesamehigh-qualitycustomerexperienceregardlessofthesourceoftheproductstheychoose.
MarketingServices.
LeveragingourAIcapabilitiesandthecomprehensivedatasetaccumulatedfromawiderangeofbusinessscenariosalongtheentirevaluechain,weprovideavarietyofmarketingservicestosuppliers,merchantsandotherpartnersintheecosystemthroughourproprietaryadvertisementtechnologyplatform.
In2017,westartedtoofferoursuppliersandmerchantsanewfully-automatedmarketingplatformthatcanmaketargetedproductrecommendationstousersonwww.
jd.
comandourmobileappsandacrossourcontentpartnershipnetwork,drivingnewcustomersandrepeatpurchasesforadvertisersautomatically.
PoweredbyAI,theplatformonlyrequiresadvertiserstoinputthetotalbudget,unitbidpriceandoptimizationgoalstomarkettotheirtargetedaudiences,whichenablesadvertiserstolowertheiroperatingcostsandincreasetheirreturnsinaconvenientandefficientmanner.
Inaddition,wehaveformedstrategicpartnershipswithleadingmobileinternetcompanieswithanaimtoleveragetheirpowerfulbigdataresources,massiveuserbasesandAI-driventechnologiestostrengthencollaborationinprecisionmarketing,useraccesspointsandcontent-drivenmarketing.
JDLogisticsServices.
Timelyandreliablefulfillmentiscriticaltothesuccessofanonlineretailbusiness.
Giventhethenunderdevelopmentofthird-partyfulfillmentservicesinChinaintermsofbothwarehousingandlogisticsfacilitiesandlast-miledeliveryservices,wemadeastrategicdecisionin2007tobuildandoperateourownnationwidefulfillmentinfrastructure.
Webelievewehavethelargestfulfillmentinfrastructureofanye-commercecompanyinChina.
Weoperatedover650warehouseswithanaggregategrossfloorarea("GFA")ofS-7TableofContentsapproximately16millionsquaremetersin89citiesasofSeptember30,2019,andhad116,427deliverypersonnel,37,217warehousestaffand15,574customerservicepersonnelasofthesamedate.
Leveragingthisnationwidefulfillmentinfrastructure,wedeliveramajorityoftheordersdirectlytocustomersourselves.
In2019,wefurtherimprovedourefficiencyinmorecitiesaswecontinuedtoexpandour24-hourdeliveryserviceintheseareas.
AsofSeptember30,2019,wewereabletodeliverapproximately90%ofourdirectsalesordersinChinawithin24hours.
Leveragingouradvancedtechnologyandlogisticsexpertise,ourlogisticsbusiness,JDLogistics,provideslogisticsservicestobusinessesacrossawiderangeofindustriesincludingthosebeyonde-commerce.
Wehaveopenedupourtechnology-drivenfulfillmentinfrastructurebyofferingcomprehensivesupplychainsolutionstothird-partysellersonourmarketplaceandtomerchantsthatdonotsellproductsonouronlinemarketplace,includingwarehousingmanagement,transportation,delivery,after-saleservices,andlogisticstechnologysolutions,includingcloud-basedserviceanddataanalytics,oracombinationoftheseservices.
Wearededicatedtodevelopinganeffective,environmental-friendly,innovativeandsmart"greenlogisticssystem"throughdevelopingandpromotingtheuseofinnovativeandenvironmental-friendlymaterialsandaseriesoftechnologicalinnovations.
Inthesecondquarterof2018,toreduceproduct-to-customerdistanceandprovidecustomerswithinnovativedeliveryoptions,JDLogisticslaunchedthe"FlashDelivery"initiative,offeringdeliverytimesrangingfromseveralminutestoaboutonehourforselectedmerchandiseincertainareasbyoptimallyallocatingmerchandiseacrossitsdistributionnetwork,includingfront-linemetropolitandistributioncenters,deliverystationsandpartners'offlinestores,basedonitsanalysisofcustomerdemands.
Moreover,inOctober2018,JDLogisticsopenedupitsleadinglogisticsnetworktoconsumers,offeringparceldeliveryservicetousersincertainregions.
LeveragingJDLogistics'sextensivedeliverynetwork,usersintheseareascanconvenientlysenditemsintra-cityandthroughoutmostofmainlandChinawithJDLogistics'ssamefastandreliabledeliveryservice.
InApril2019,JDLogisticsintroduceditsnewcoldchainservicewhichutilizesidlecapacityintheindustrytooffercoldchaintransportservices.
CombinedwithJDLogistics'spreviouslylaunchedcoldchainservices,ithasformedaone-stopshopF2B2Ccoldchaindeliverysystemtomeettheservicedemandsofmanufacturers,merchants,andconsumers.
JDPropertyManagementGroup.
In2018,weestablishedourpropertymanagementgroup,JDPM,whichowns,developsandmanagesourlogisticsfacilitiesandotherrealestateproperties,tosupportJDLogisticsandthirdparties.
JDPMhasuniqueadvantagestosecurescarcelandresourcesaswecontinuetohelpboosteconomiesacrossChinathroughcreatingemploymentopportunitiesandcontributingtax,amongothers.
JDPMaimstodevelopitslogisticsassetportfolioswhilemaintainingstrongcapitaldiscipline.
Withtheexpansionofourassetportfolios,wehaveadoptedacapitalrecyclingstrategythroughourfundmanagementplatformandotherpartnerships.
Webelievethisstrategywillhelpfurtherexpandourassetportfolios,minimizeourrelatedfuturecapitalexpendituresandenhanceourreturns.
Currently,JDPMmanagespropertieswithatotalGFAofover10millionsquaremeters.
InFebruary2019,JDPMestablisheditsfirstlogisticspropertiesfund("CoreFund")andagreedtotransfercertainlogisticsfacilitiestoCoreFundatatotalgrossassetvalueofRMB10.
9billion.
Inthethirdquarterof2019,theclosingconditionsfortheassetgroupofcompletedlogisticsfacilitiesweremetandthereforewerecordedadisposalgainofRMB3.
0billionforthecompletedassets.
Fortheremaininglogisticsfacilitiesunderconstruction,wewillderecognizetheseassetsuponitscompletionandsatisfactionofthehandovercondition.
Omni-channelInitiatives.
Toachieveour"BoundarylessRetail"vision,weareexploringavarietyofomni-channelintegrationopportunitiesandinnovativebusinessmodels.
Webelievewearewell-positionedtoprovideomni-channelsolutionstocustomersandofflineretailersinselectlocationsinChinabycapitalizingonourstrongonlinepresenceandleveragingourstrategicpartnershipS-8TableofContentswithDadaNexusLimited("Dada-JDDaojia"),aleadingplatformoflocalon-demandretailanddeliveryinChina.
Dada-JDDaojiahaspartneredwithalargenumberofwell-knownchainretailersandmanyfirst-tierinternationalanddomesticFMCG(fast-movingconsumergoods)brandsbyleveragingDada-JDDaojia'scrowd-sourcingdeliverynetwork.
Dada-JDDaojiahasbeencooperatingwithJDLogisticstoprovidefaston-demanddeliveryservicesformerchantsandconsumers.
InJune2016,weenteredintoaseriesofagreementsinrelationtoourstrategicalliancewithWalmart.
WehavecollaboratedwithWalmartone-commerce,includinglaunchingaSam'sClubFlagshipStoreandWalmartChinaFlagshipStoreonJD.
com,Sam'sClubGlobalFlagshipStore,WalmartGlobalFlagshipStore,andASDAFlagshipStoreonJDWorldwide,andaone-hourdeliveryservicefromWalmartStoresinselectedcitiesthroughtheJDDaojiaapp,aswellasleveragingeachother'ssupplychaintoenhanceproductselectionforcustomersacrossChina.
Wehavealsoexperimentedwithotheromni-channelopportunities,aimedatofferingshoppersacrossChinafasterandmoreconvenientaccesstohigh-qualityproductsthroughmultiplechannels.
Toprovidecustomerswithamoredynamicandinteractiveintegratedomni-channelshoppingexperience,wehaveenabledsomeofourofflinepartnerswithavarietyofthelatesttechnologiessuchasfacialrecognition,productrecognition,andatrackingsystemforcustomers'in-storeactivities,amongothers.
Wehaveestablishedaclosedlooptoaccumulatealargevolumeofofflineshoppingdata,andthroughfurtheranalysisoftheintegratedonlineandofflinedataset,wecanofferdifferentiatedproductsineachofflinefranchisestorethatbestsuitspotentialcustomerdemands.
7FRESH,ourofflinefreshfoodmarketbrand,isanexampleofareal-worldtrialofour"BoundarylessRetail"vision.
InDecember2017,weopenedourfirst7FRESHstoreinBeijing'sYizhuangsuburbanarea.
Integratingadvancedsupplychainmanagementknow-howandcutting-edgestoragetechnologies,our7FRESHstoreisabletodeliverauniqueshoppingexperiencebyofferingmanyfreshproducts(includingfruit,flowers,vegetablesandqualityfreshseafood),providingfoodpreparationandcateringservicesandmakingavailablea30-minutedeliveryserviceforcustomerswithinthreekilometersofthestore.
AsofSeptember30,2019,wehadopened187FRESHstoresin8cities.
Webelieveour7FRESHbusinessmodelwillcontinuetoevolveaswestrivetopursueanenhancedshoppingexperienceforourconsumersandpartnersbyexploringavarietyofomni-channelopportunities,integratingqualityproductswithsuperiorservicesandprovidingfreshproducesupplychainsolutionstoourpartners.
RecentDevelopmentsInApril2019,wecompletedaninvestmentinJiangsuFiveStarApplianceCo.
,Ltd.
("JiangsuFiveStar"),oneoftheleadingofflineretailersofhomeappliancesandconsumerelectronicsinChina.
Weacquired46%ofJiangsuFiveStar'stotalsharesfromitsexistingshareholderforatotalpurchasepriceofRMB1.
27billionwithacombinationofcashandassumptionoftheseller'sdebt.
Followingthisinvestment,weandJiangsuFiveStarwillleverageeachother'sindustryexpertiseandstrengthtoexplorenewgrowthopportunitiesintheareaof"BoundarylessRetail"strategyandaimtoprovideconsumerswithafully-integrated,smartonlineandofflineshoppingexperience.
Inaddition,weprovidedaloanofRMB1.
03billiontotheseller.
Wearealsoentitledtocertaincollateralandinvestorrightspursuanttotherelateddefinitiveagreements.
OnMay10,2019,werenewedthestrategiccooperationagreementwithTencentHoldingsLimited("Tencent")foraperiodofthreeyearsstartingfromMay27,2019.
Tencentwillcontinuetoofferusprominentlevel1andlevel2accesspointsonitsWeixinplatformtoprovidetrafficsupport,andthetwocompaniesalsointendtocontinuetocooperateinanumberofareasincludingcommunications,advertisingandmembershipS-9TableofContentsservices,amongothers.
Itisestimatedthatsuchtrafficsupport,advertisingspendingandothercooperationwillamounttooverUS$800million,whichwillbepaidorspentoverthenextthreeyears.
WeagreedtoissuetoTencentacertainnumberofourClassAordinarysharesforatotalconsiderationofapproximatelyUS$250millionatprevailingmarketpricesatcertainpre-determineddatesduringthethree-yearperiod,ofwhich8,127,302ofourClassAordinaryshareswereissuedinMay2019.
InJune2019,wecompletedaninvestmentinAiHuiShouInternationalCo.
Ltd.
("AiHuiShou"),anonlinesecond-handconsumerelectronicstradingplatform.
Inconnectionwiththisinvestment,wemergedourPaipaiSecondhandbusinessintoAiHuiShouwithcertainexclusivetrafficresourcesforthenextfiveyears,andadditionallyinvestedcertainamountincashinexchangeforanon-controllinginterestinAiHuiShou.
InSeptember2019,weofficiallylaunchedoursociale-commerceplatform,Jingxi,aspartofourstrategytopenetrateintolower-tiercities.
JingxiisavailabletoconsumersacrossmultiplechannelsincludingthestandaloneJingxiapp,JingximiniprogramandaWeixinfirst-levelentrypoint.
Combiningsocialmediaandretail,Jingxiprovidesqualitygoodsandservicesatattractiveprices.
Jingxialsohaspartneredwithdomesticmanufacturersinoveronehundredindustrialclusters,servingasabridgebetweenmanufacturersandconsumers.
InNovember2019,ourhealthcaresubsidiary,JDHealthInternational,Inc.
("JDHealth")completedthenon-redeemableseriesApreferredsharefinancingwithagroupofthird-partyinvestors.
ThetotalamountoffinancingraisedwasUS$931million,representing13.
5%oftheownershipofJDHealthonafullydilutedbasis.
ChangeofOurIndependentRegisteredPublicAccountingFirmOnJune22,2019,weengagedDeloitteToucheTohmatsuCertifiedPublicAccountantsLLP("Deloitte")asourindependentregisteredpublicaccountingfirm,anddismissedPricewaterhouseCoopersZhongTianLLP("PwC").
Thechangeofourindependentregisteredpublicaccountingfirmhadbeenapprovedbytheauditcommitteeofourboard,andthedecisionwasnotmadeduetoanydisagreementsbetweenusandPwC.
ThereportsofPwConourconsolidatedfinancialstatementsforthefiscalyearsendedDecember31,2017and2018didnotcontainanadverseopinionoradisclaimerofopinionandwerenotqualifiedormodifiedastouncertainty,auditscopeoraccountingprinciple.
DuringthefiscalyearsendedDecember31,2017and2018andthesubsequentinterimperiodthroughJune22,2019,therehavebeenno(i)disagreementsbetweenusandPwConanymatterofaccountingprinciplesorpractices,financialstatementdisclosure,orauditscopeorprocedure,whichdisagreementsifnotresolvedtothesatisfactionofPwCwouldhavecausedthemtomakereferencetheretointheirreportsontheconsolidatedfinancialstatementsforsuchyears,or(ii)reportableeventsasdefinedinItem16F(a)(1)(v)oftheinstructionstoForm20-F.
WehaveprovidedPwCwithacopyofthedisclosureshereunderandrequiredunderItem16FofForm20-FandrequestedfromPwCaletteraddressedtotheSECindicatingwhetheritagreeswithsuchdisclosures.
AcopyofPwC'sletterdatedDecember3,2019isattachedasExhibit16.
1totheregistrationstatementonFormF-3filedwiththeSEConDecember3,2019.
DuringeachofthefiscalyearsendedDecember31,2017and2018andthesubsequentinterimperiodthroughJune22,2019,neitherwenoranyoneonbehalfofushasconsultedwithDeloitteregarding(i)theapplicationofaccountingprinciplestoaspecifictransaction,eithercompletedorproposed,orthetypeofauditopinionthatmightberenderedonourconsolidatedfinancialstatements,andneitherawrittenreportnororaladvicewasprovidedtousthatDeloitteconcludedwasanimportantfactorconsideredbyusinreachingadecisionastoanyaccounting,audit,orfinancialreportingissue,(ii)anymatterthatwasthesubjectofaS-10TableofContentsdisagreementpursuanttoItem16F(a)(1)(iv)oftheinstructionstoForm20-F,or(iii)anyreportableeventpursuanttoItem16F(a)(1)(v)oftheinstructionstoForm20-F.
CorporateInformationWeconductouroperationsinChinaprincipallythroughourwhollyownedsubsidiariesinChina.
WealsoconductpartofouroperationsinChinathroughourconsolidatedaffiliatedentitiesinChina,whichholdthelicensesandpermitsnecessarytooperateourwebsiteandcertainofourbusinesses.
OurAmericandepositaryshares,eachofwhichrepresentstwoClassAordinaryshares,parvalueUS$0.
00002pershare,ofourcompany,currentlytradeonTheNASDAQGlobalSelectMarketunderthesymbol"JD.
"Ourprincipalexecutiveofficesarelocatedat20thFloor,BuildingA,No.
18Kechuang11Street,YizhuangEconomicandTechnologicalDevelopmentZone,DaxingDistrict,Beijing101111,thePeople'sRepublicofChina.
Ourtelephonenumberatthisaddressis+86108911-8888.
WehaveappointedPuglisi&Associates,locatedat850LibraryAvenue,Suite204,Newark,Delaware19711,asouragentuponwhomprocessmaybeservedinanyactionbroughtagainstusunderthesecuritieslawsoftheUnitedStatesinconnectionwiththisoffering.
Ourcorporatewebsiteiswww.
jd.
com.
Informationappearingonourwebsiteisnotincorporatedbyreferenceintothisprospectussupplementortheaccompanyingprospectus.
S-11TableofContentsTheOfferingThesummarybelowdescribestheprincipaltermsoftheNotes.
Certainofthetermsdescribedbelowaresubjecttoimportantlimitationsandexceptions.
The"DescriptionoftheNotes"sectionofthisprospectussupplementandthe"DescriptionofDebtSecurities"sectionoftheaccompanyingprospectuscontainamoredetaileddescriptionofthetermsoftheNotes.
IssuerJD.
com,Inc.
NotesOfferedUS$aggregateprincipalamountof%notesdue20(the"20Notes")andUS$aggregateprincipalamountof%notesdue20(the"20Notes",andtogetherwiththe20Notes,the"Notes").
MaturityDatesThe20Noteswillmatureon,20andthe20Noteswillmatureon,20.
InterestRatesThe20Noteswillbearinterestatarateof%peryearandthe20Noteswillbearinterestatarateof%peryear.
InterestPaymentDatesand,beginningon,2019.
Interestwillaccruefrom,2019.
OptionalRedemptionWemayatouroptionredeemtheNotesofanyseriesatanytimepriortoforthe20Notesandpriortoforthe20Notes,inwholeorinpart,atapriceequaltothegreaterof(i)100%oftheprincipalamountoftheNotestoberedeemedand(ii)themake-wholeamount(asdefinedin"DescriptionoftheNotes")plus,ineachcase,accruedandunpaidinterest,ifany,ontheNotestoberedeemedto(butnotincluding)theredemptiondate.
Inaddition,wemayatouroptionredeemtheNotesatanytimeonorafterforthe20Notesandonorafterforthe20Notes,inwholeorinpart,ineachcaseatapriceequalto100%oftheprincipalamountofsuchNotestoberedeemedplusaccruedandunpaidinterest,ifany,to(butnotincluding)theredemptiondate.
See"DescriptionoftheNotes—OptionalRedemption.
"RepurchaseuponTriggeringEventUpontheoccurrenceofaTriggeringEvent(asdefinedin"DescriptionoftheNotes"),wemustmakeanoffertorepurchaseallNotesoutstandingatapurchasepriceequalto101%oftheirprincipalamount,plusaccruedandunpaidinterest,ifany,to(butnotincluding)thedateofrepurchase.
See"DescriptionoftheNotes—RepurchaseUponTriggeringEvent.
"RankingTheNoteswillbeourseniorunsecuredobligationsandwill:rankseniorinrightofpaymenttoallofourexistingandfutureobligationsexpresslysubordinatedinrightofpaymenttotheNotes;rankatleastequalinrightofpaymentwithallofourexistingandfutureunsecuredunsubordinatedobligations(subjecttoanypriorityrightspursuanttoapplicablelaw);S-12TableofContentsbeeffectivelysubordinatedtoallofourexistingandfuturesecuredobligations,totheextentofthevalueoftheassetsservingassecuritytherefor;andbestructurallysubordinatedtoallexistingandfutureobligationsandotherliabilitiesofoursubsidiariesandconsolidatedaffiliatedentities.
CovenantsWewillissuetheNotesunderanindenturewithTheBankofNewYorkMellon,astrustee.
Theindenturewill,amongotherthings,limitourabilitytoincurliensandconsolidate,mergeorsellallorsubstantiallyallofourassets.
ThesecovenantswillbesubjecttoanumberofimportantexceptionsandqualificationsandtheNotesandtheindenturedonototherwiserestrictorlimitourabilitytoincuradditionalindebtednessorenterintotransactionswith,ortopaydividendsormakeotherpaymentsto,affiliates.
Formoredetails,see"DescriptionoftheNotes.
"PaymentofAdditionalAmountsAllpaymentsofprincipal,premiumandinterestmadebyoronbehalfofusinrespectoftheNoteswillbemadewithoutwithholdingordeductionfor,oronaccountof,anypresentorfutureTaxes(asdefinedin"DescriptionofDebtSecurities—PaymentofAdditionalAmounts"intheaccompanyingprospectus)imposedorleviedbyorwithintheCaymanIslands,HongKong,thePRCoranyjurisdictionwhereweorourpayingagentareotherwiseconsideredbyataxingauthoritytobearesidentfortaxpurposes(ineachcase,includinganypoliticalsubdivisionoranyauthoritythereinorthereofhavingpowertotax),unlesssuchwithholdingordeductionofsuchTaxesisrequiredbylaw.
Ifwearerequiredtomakesuchwithholdingordeduction,wewillpaysuchadditionalamountsaswillresultinreceiptbyeachholderofanyNoteofsuchamountsaswouldhavebeenreceivedbysuchholderhadnosuchwithholdingordeductionofsuchTaxesbeenrequired,subjecttocertainexceptions.
See"DescriptionofDebtSecurities—PaymentofAdditionalAmounts"intheaccompanyingprospectus.
TaxRedemptionEachseriesoftheNotesmayberedeemedatanytime,atouroption,inwholebutnotinpart,ataredemptionpriceequalto100%oftheprincipalamountthereof,plusaccruedandunpaidinterest,ifany,to(butnotincluding)theredemptiondateintheeventwebecomeobligatedtopayadditionalamountsinrespectofNotesofsuchseriesasaresultofcertainchangesintaxlaw.
See"DescriptionofDebtSecurities—TaxRedemption"intheaccompanyingprospectus.
UseofProceedsWeintendtousethenetproceedsfromthisofferingforgeneralcorporatepurposesandrefinancing.
See"UseofProceeds.
"DenominationsTheNoteswillbeissuedinminimumdenominationsofUS$200,000andmultiplesofUS$1,000inexcessthereof.
S-13TableofContentsFormofNotesWewillissuetheNotesintheformofoneormorefullyregisteredglobalNotesregisteredinthenameofthenomineeofTheDepositoryTrustCompany,orDTC.
InvestorsmayelecttoholdtheinterestsintheglobalnotesthroughanyofDTC,ClearstreamorEuroclear,asdescribedundertheheading"DescriptionoftheNotes—Book-Entry;DeliveryandForm.
"FurtherIssuancesWemay,fromtimetotime,withouttheconsentoftheholdersoftheNotes,issueadditionalNoteshavingthesametermsandconditionsasanyseriesoftheNotesinallrespects(orinallrespectsexceptfortheissuedate,theissuepriceandthefirstpaymentofinterest).
AdditionalNotesissuedinthismannermaybeconsolidatedwiththepreviouslyoutstandingNotesoftherelevantseriestoconstituteasingleseriesoftheNotesofsuchseries.
WewillnotissueanyadditionalNoteswiththesameCUSIP,ISINorotheridentifyingnumberastheNotesofanyseriesofferedherebyunlesstheadditionalNotesarefungiblewiththeoutstandingNotesoftherelevantseriesforU.
S.
federalincometaxpurposes.
RiskFactorsYoushouldconsidercarefullyalltheinformationsetforthorincorporatedbyreferenceinthisprospectussupplementandtheaccompanyingprospectusand,inparticular,theriskfactorssetforthundertheheading"RiskFactors"beginningonpageS-10ofthisprospectussupplementandtheriskfactorssetforthinour2018Form20-F,whichisincorporatedbyreferenceintheaccompanyingprospectus,beforeinvestinginanyoftheNotesofferedhereby.
ListingApprovalin-principlehasbeenreceivedforthelistingandquotationoftheNotesontheSGX-ST.
TheNoteswillbetradedontheSGX-STinaminimumboardlotsizeofUS$200,000forsolongasanyoftheNotesarelistedontheSGX-ST.
SolongasanyoftheNotesarelistedontheSGX-STandtherulesoftheSGX-STsorequire,wewillappointandmaintainapayingagentinSingapore,wheretheNotesmaybepresentedorsurrenderedforpaymentorredemption,intheeventthattheglobalnotesareexchangedforNotesindefinitiveform.
Inaddition,intheeventthattheglobalnotesareexchangedforNotesindefinitiveform,announcementofsuchexchangewillbemadebyoronbehalfofourcompanythroughtheSGX-ST.
SuchannouncementwillincludeallmaterialinformationwithrespecttothedeliveryoftheNotesindefinitiveform,includingdetailsofthepayingagentinSingapore.
GoverningLawStateofNewYork.
Trustee,RegistrarandPayingAgentTheBankofNewYorkMellon.
S-14TableofContentsRISKFACTORSProspectivepurchasersoftheNotesshouldcarefullyconsidertherisksdescribedbelowinthisprospectussupplement,intheaccompanyingprospectusandinthedocumentsincorporatedbyreferenceintothisprospectussupplementbeforedecidingtopurchaseanyNotes.
Ourbusiness,resultsofoperations,financialconditionorprospectscouldbenegativelyaffectedifanyoftheserisksoccurs,andasaresult,thetradingpriceoftheNotescoulddeclineandyoucouldloseallorpartofyourinvestment.
RisksRelatingtotheNotesTheNoteswillbestructurallysubordinatedtoallobligationsofourexistingandfuturesubsidiariesandconsolidatedaffiliatedentities.
TheNoteswillnotbeguaranteedbyanyofourexistingorfuturesubsidiariesandconsolidatedaffiliatedentities,whotogetherholdsubstantiallyallofouroperatingassetsandconductsubstantiallyallofourbusiness.
Oursubsidiariesandconsolidatedaffiliatedentitieswillhavenoobligation,contingentorotherwise,topayamountsdueundertheNotesortomakeanyfundsavailabletopaythoseamounts,whetherbydividend,distribution,loanorotherpayment.
TheNoteswillbestructurallysubordinatedtoallindebtednessandotherobligationsofoursubsidiariesandconsolidatedaffiliatedentitiessuchthatintheeventoftheinsolvency,liquidation,reorganization,dissolutionorotherwindingupofanyofoursubsidiariesorconsolidatedaffiliatedentities,allofthatsubsidiary'sorconsolidatedaffiliatedentity'screditors(includingtradecreditors)andanyholdersofpreferredstockwouldbeentitledtopaymentinfulloutofthatsubsidiary'sorconsolidatedaffiliatedentity'sassetsbeforeanyremainingassetswouldbeavailabletoJD.
com,Inc.
tomakepaymentsdueontheNotes.
Inaddition,theindenturegoverningtheNoteswill,subjecttosomelimitations,permitthesesubsidiariesandconsolidatedaffiliatedentitiestoincuradditionalobligationsandwillnotcontainanylimitationontheamountofindebtednessorotherliabilities,suchastradepayables,thatmaybeincurredbythesesubsidiariesandconsolidatedaffiliatedentities.
Theindenturedoesnotrestricttheamountofadditionaldebtthatwemayincur.
TheNotesandtheindentureunderwhichtheNoteswillbeissueddonotlimittheamountofunsecureddebtthatmaybeincurredbyusoroursubsidiariesorconsolidatedaffiliatedentities,andtheypermitusandcertainofoursubsidiariesandconsolidatedaffiliatedentitiestoincursecureddebtwithoutequallyandratablysecuringtheNotesunderspecifiedcircumstances.
AsofSeptember30,2019,ourtotaldebtwasRMB10,187million(US$1,425million),includinglong-termloansintheamountofRMB3,183million(US$445million).
Afterthecompletionofthisoffering,weandoursubsidiariesandconsolidatedaffiliatedentitiesmayincuradditionaldebt,includingRMBdenominatedborrowingsordebtsecuritiesinChina.
Ourandoursubsidiaries'andconsolidatedaffiliatedentities'incurrenceofadditionaldebtmayhaveimportantconsequencesforyouasaholderoftheNotes,includingmakingitmoredifficultforustosatisfyourobligationswithrespecttotheNotes,alossinthemarketvalueofyourNotesandariskthatthecreditratingoftheNotesisloweredorwithdrawn.
TheNoteswillbeeffectivelysubordinatedtoanyofoursecuredobligationstotheextentofthevalueofthepropertysecuringthoseobligations.
TheNoteswillnotbesecuredbyanyofourassets.
Asaresult,theNoteswillbeeffectivelysubordinatedtoanyofoursecuredobligationswithrespecttotheassetsthatsecurethoseobligations.
Theeffectofthissubordinationisthatuponadefaultinpaymenton,ortheaccelerationof,anyofoursecuredobligations,orintheeventofourbankruptcy,insolvency,liquidation,dissolutionorreorganization,theproceedsfromthesaleofassetssecuringoursecuredobligationswillbeavailabletopayobligationsontheNotesonlyafterallsuchsecuredobligationshavebeenpaidinfull.
Asaresult,theholdersoftheNotesmayreceiveless,ratably,thantheholdersofsecureddebtintheeventofourbankruptcy,insolvency,liquidation,dissolutionorreorganization.
S-15TableofContentsWemaynotbeabletorepurchasetheNotesuponaTriggeringEvent.
UpontheoccurrenceofaTriggeringEventdescribedin"DescriptionoftheNotes—RepurchaseUponTriggeringEvent,"wewillberequiredtooffertorepurchasealloutstandingNotesat101%oftheirprincipalamount,plusaccruedandunpaidinterest,ifany,to(butnotincluding)thedateofrepurchase.
ThesourceoffundsforanypurchaseoftheNoteswouldbeouravailablecashorcashgeneratedfromoursubsidiaries'orconsolidatedaffiliatedentities'operationsorothersources,includingborrowings,salesofassetsorsalesofequity.
WemaynotbeabletorepurchasetheNotesuponaTriggeringEventbecausewemaynothavesufficientfinancialresourcestopurchaseallofthedebtsecuritiesthataretendereduponaTriggeringEventandrepayourotherindebtednessthatmaybecomedue.
Wemayrequireadditionalfinancingfromthirdpartiestofundanysuchpurchases,andwemaybeunabletoobtainfinancingonsatisfactorytermsoratall.
Further,ourabilitytorepurchasetheNotesmaybelimitedbylaw.
HoldersoftheNotesmaynotbeabletodeterminewhenaTriggeringEventgivingrisetotheirrighttohavetheNotesrepurchasedhasoccurred.
ThedefinitionofTriggeringEventintheindenturethatwillgoverntheNotesincludesaphraserelatingtooperating"substantiallyall"orderiving"substantiallyall"oftheeconomicbenefitsfromthebusinessoperationsconductedbytheGroup.
Thereisnopreciseestablisheddefinitionofthephrase"substantiallyall"underNewYorklaw.
Accordingly,theabilityofaholderoftheNotestorequireustorepurchaseitsNotesasaresultofaTriggeringEventmaybeuncertain.
ThetermsoftheindentureandtheNotesprovideonlylimitedprotectionagainstsignificantcorporateeventsthatcouldadverselyimpactyourinvestmentintheNotes.
WhiletheindentureandtheNotescontaintermsintendedtoprovideprotectiontoholdersoftheNotesupontheoccurrenceofcertaineventsinvolvingsignificantcorporatetransactions,thesetermsarelimitedandmaynotbesufficienttoprotectyourinvestmentintheNotes.
Certainimportantcorporateevents,suchasmergerorconsolidation,saleofallorsubstantiallyallofourassets,liquidationordissolutionandleveragedrecapitalizations,wouldnot,undertheindenturethatwillgoverntheNotes,constituteaTriggeringEventthatwouldrequireustorepurchasetheNotes,eventhoughthosecorporateeventscouldadverselyaffectourcapitalstructure,creditratingsorthevalueoftheNotes.
See"DescriptionoftheNotes—RepurchaseUponTriggeringEvent.
"TheindenturefortheNotesalsodoesnot:requireustomaintainanyfinancialratiosorspecificlevelsofnetworth,revenue,income,cashflowsorliquidity;limitourabilitytoincurobligationsthatareequalinrightofpaymenttotheNotes;restrictoursubsidiaries'orconsolidatedaffiliatedentities'abilitytoissueunsecuredsecuritiesorotherwiseincurunsecuredobligationsthatwouldbeseniortoourequityinterestsinoursubsidiariesorconsolidatedaffiliatedentitiesandthereforerankeffectivelyseniortotheNotes;limittheabilityofoursubsidiariesorconsolidatedaffiliatedentitiestoserviceindebtedness;restrictourabilitytorepurchaseorprepayanyotherofoursecuritiesorotherobligations;restrictourabilitytomakeinvestmentsortorepurchaseorpaydividendsormakeotherpaymentsinrespectofoursharesorothersecuritiesrankingjuniortotheNotes;orlimitourabilitytosell,mergeorconsolidateanyofoursubsidiariesorconsolidatedaffiliatedentities.
Asaresultoftheforegoing,whenevaluatingthetermsoftheNotes,youshouldbeawarethatthetermsoftheindentureandtheNotesdonotrestrictourabilitytoengagein,ortootherwisebeapartyto,avarietyofcorporatetransactions,circumstancesandeventsthatcouldhaveanadverseimpactonyourinvestmentintheNotes.
S-16TableofContentsAnactivetradingmarketfortheNotesmaynotdevelop,andthetradingpriceoftheNotescouldbemateriallyandadverselyaffected.
TheNotesareanewissueofsecuritiesforwhichthereiscurrentlynotradingmarket.
Approvalin-principlehasbeenreceivedforthelistingandquotationoftheNotesontheSGX-ST.
However,therecanbenoassurancethatwewillbeabletoobtainormaintainthatlistingorthatanactivetradingmarketwilldevelop.
Ifnoactivetradingmarketdevelops,youmaynotbeabletoresellyourNotesattheirfairmarketvalue,oratall.
FuturetradingpricesoftheNoteswilldependonmanyfactors,includingprevailinginterestrates,ouroperatingresultsandthemarketforsimilarsecurities.
WehavebeenadvisedthattheunderwritersintendtomakeamarketintheNotes,buttheunderwritersarenotobligatedtodosoandmaydiscontinuesuchmarketmakingactivityatanytimewithoutnotice.
ThereforetherecanbenoassurancethatanactivetradingmarketfortheNoteswilldeveloporbesustained.
IfanactivetradingmarketfortheNotesdoesnotdeveloporisnotmaintained,themarketpriceandliquidityoftheNotesmaybeadverselyaffected.
Inaddition,theNotesmaytradeatpricesthatarehigherorlowerthanthepriceatwhichtheNoteshavebeenissued.
ThepriceatwhichtheNotestradedependsonmanyfactors,including:prevailinginterestratesandinterestratevolatility,ourresultsofoperations,financialconditionandfutureprospects,changesinourindustryandcompetition,themarketconditionsforsimilarsecurities,andgeneraleconomicconditions,almostallofwhicharebeyondourcontrol.
Asaresult,therecanbenoassurancethatyouwillbeabletoreselltheNotesatattractivepricesoratall.
WemaybedeemedaPRC"residententerprise"underPRCtaxlaws,whichcouldsubjectinterestontheNotestoPRCwithholdingtaxandgainsonthesaleorothertransferoftheNotestoPRCincometaxandcould,undercertaincircumstances,permitustoredeemtheNotes.
Asdescribedinour2018Form20-F,wemaybedeemedaPRC"residententerprise"underPRCtaxlaws.
IfweareconsideredaPRCresidententerpriseunderthePRCEnterpriseIncomeTaxLaw,holdersofNoteswhoarenon-residententerprisesmaybesubjecttoPRCwithholdingtaxoninterestpaidbyusorPRCincometaxonanygainsrealizedfromthetransferofNotes,ifsuchincomeisconsideredtobederivedfromsourceswithinthePRC,atarateof10%,providedthatsuchnon-residententerpriseinvestor(i)hasnoestablishmentorpremisesinthePRC,or(ii)hasanestablishmentorpremisesinthePRCbutitsincomederivedfromthePRChasnorealconnectionwithsuchestablishmentorpremises.
Furthermore,ifweareconsideredaPRCresidententerpriseandrelevantPRCtaxauthoritiesconsiderinterestwepaywithrespecttotheNotesoranygainsrealizedfromthetransferofNotestobeincomederivedfromsourceswithinthePRC,suchinterestearnedbynon-residentindividualsmaybesubjecttoPRCwithholdingtaxandsuchgainrealizedbynon-residentindividualsmaybesubjecttoPRCindividualincometax,ineachcaseatarateof20%.
AnyPRCtaxliabilityoninterestorgaindescribedabovemaybereducedunderapplicabletaxtreaties.
However,itisunclearwhetherinpracticenon-residentholderswouldbeabletoobtainthebenefitsofincometaxtreatiesenteredintobetweenPRCandtheircountries.
Inaddition,ifweareconsideredaPRCresidententerprise,interestpayablebyustonon-residentholdersoftheNotesmaybesubjecttoPRCvalue-addedtaxatarateof6%andrelatedlocallevies,includingeducationalsurtaxandurbanmaintenanceandconstructiontaxatarateofupto0.
72%.
See"Taxation—PRCTaxation.
"IfweweredeemedaPRCresidententerpriseunderthePRCEnterpriseIncomeTaxLawandrequiredtowithholdtaxoninterestontheNotes,wewouldberequiredtopayadditionalamounts,subjecttocertainexceptions,asdescribedunder"DescriptionofDebtSecurities—PaymentofAdditionalAmounts"intheaccompanyingprospectus.
TherequirementtopayadditionalamountswillhaveanadverseimpactonourcashS-17TableofContentsflows.
Inaddition,asdescribedunder"DescriptionofDebtSecurities—TaxRedemption"intheaccompanyingprospectus,wemaybeabletoredeemtheNotesinwholeataredemptionpriceequalto100%oftheprincipalamountplusaccruedandunpaidinterestiftherequirementtopayadditionalamountsresultsfromachangeinlaw(orachangeintheofficialapplicationorinterpretationoflaw).
GovernmentalcontrolofcurrencyconversionmaylimitourabilitytoutilizeourrevenueseffectivelyandtosatisfyourobligationsundertheNotes.
ThePRCgovernmentimposescontrolsontheconvertibilityoftheRMBintoforeigncurrenciesand,incertaincases,theremittanceofcurrencyoutofChina.
WereceivesubstantiallyallofourrevenuesinRMB.
Underourcurrentcorporatestructure,ourcompanyintheCaymanIslandsmayrelyondividendpaymentsfromourPRCsubsidiariestofundanycashandfinancingrequirementswemayhave.
UnderexistingPRCforeignexchangeregulations,paymentsofcurrentaccountitems,suchasprofitdistributionsandtradeandservice-relatedforeignexchangetransactions,canbemadeinforeigncurrencieswithoutpriorapprovalfromSAFEbycomplyingwithcertainproceduralrequirements.
Therefore,ourwhollyforeign-ownedsubsidiariesinChinaareabletopaydividendsinforeigncurrenciestouswithoutpriorapprovalfromSAFE,subjecttotheconditionthattheremittanceofsuchdividendsoutsideofthePRCcomplieswithcertainproceduresunderPRCforeignexchangeregulation,suchastheoverseasinvestmentregistrationsbyourshareholdersortheultimateshareholdersofourcorporateshareholderswhoarePRCresidents.
ButapprovalfromorregistrationwithappropriategovernmentauthoritiesisrequiredwhereRMBistobeconvertedintoforeigncurrencyandremittedoutofChinatopaycapitalexpensessuchastherepaymentofloansdenominatedinforeigncurrencies.
ThePRCgovernmentmayalsoatitsdiscretionrestrictaccessinthefuturetoforeigncurrenciesforcurrentaccounttransactions.
Iftheforeignexchangecontrolsystempreventsusfromobtainingsufficientforeigncurrenciestosatisfyourforeigncurrencydemands,wemaynotbeabletosatisfyourobligationsundertheNotes.
RedemptionmayadverselyaffectyourreturnontheNotes.
WehavetherighttoredeemsomeoralloftheNotespriortomaturity.
WemayredeemtheNotesattimeswhenprevailinginterestratesarerelativelylow.
Accordingly,youmaynotbeabletoreinvesttheamountreceiveduponredemptioninacomparablesecurityataneffectiveinterestrateashighasthatoftheNotes.
OurcreditratingsmaynotreflectallrisksofyourinvestmentsintheNotes.
Ourcreditratingsareanassessmentbyratingagenciesofourabilitytopayourdebtswhendue.
Consequently,realoranticipatedchangesinourcreditratingswillgenerallyaffectthemarketvalueoftheNotes.
ThesecreditratingsmaynotreflectthepotentialimpactofrisksrelatingtothestructureormarketingoftheNotes.
Agencyratingsarenotarecommendationtobuy,sellorholdanysecurity,andmayberevisedorwithdrawnatanytimebytheissuingorganization.
Eachagency'sratingshouldbeevaluatedindependentlyofanyotheragency'srating.
Wemaymakeamendmentsormodificationstocertainprovisionsoftheindenture.
Undercertaincircumstancesasdescribedunder"DescriptionofDebtSecurities—ModificationandWaiver"intheaccompanyingprospectus,wemay,fromtimetotimeandwithouttheconsentofanyholderoftheNotesofanyseries,makecertainamendmentstotheindenture.
Further,undercertaincircumstancesasdescribedunder"DescriptionofDebtSecurities—ModificationandWaiver"intheaccompanyingprospectus,wemay,fromtimetotimeandwiththeconsentoftheholdersofnotlessthanamajorityinaggregateprincipalamountoftheapplicableseriesoftheoutstandingNotes,makecertainamendmentstotheindentureorchangeormodifytherightsoftheholdersofsuchNotes.
Iftherequisiteconsentsareobtained(ifrequired)and/ortherelevantconditionsaresatisfied(orwaived)andsuchamendmentsormodificationsbecomeoperative,allholdersoftheapplicableseriesoftheoutstandingNoteswillbeboundbythetermsoftheindentureasamended,whetherornotaholderoftheNotesdeliveredaconsent.
SuchamendmentsormodificationscouldmateriallyincreasethecreditrisksfacedbytheholdersoftheNotesorcouldotherwisebemateriallyadversetotheinterestsoftheholdersoftheNotes.
S-18TableofContentsCERTAINFINANCIALDATASetforthbelowarecertainconsolidatedstatementsofoperationsdataandcashflowdatafortheyearsendedDecember31,2016,2017and2018andcertainconsolidatedbalancesheetsdataasofDecember31,2016,2017and2018.
TheconsolidatedstatementsofoperationsdataandcashflowdatapresentedbelowfortheyearsendedDecember31,2016,2017and2018andtheconsolidatedbalancesheetsdataasofDecember31,2017and2018havebeenderivedfromourauditedconsolidatedfinancialstatementsthatareincludedinour2018Form20-Fandareincorporatedintotheaccompanyingprospectusbyreference.
TheconsolidatedbalancesheetdataasofDecember31,2016hasbeenderivedfromourauditedconsolidatedfinancialstatementsthatarenotincludedinour2018Form20-F.
OurauditedconsolidatedfinancialstatementsarepreparedinaccordancewithU.
S.
GAAP.
AsofJune30,2017,wedeconsolidatedourfinancebusinessoperatedbyBeijingJingdongFinancialTechnologyHoldingCo.
,Ltd.
(nowknownasBeijingJingdongDigitalTechnologyCo.
,Ltd.
,orJDDigits),asaresultofthereorganizationofJDDigits.
Accordingly,thehistoricalfinancialresultsofJDDigitsfortheperiodsfromJanuary1,2016toJune30,2017arereflectedinourconsolidatedfinancialstatementsasdiscontinuedoperations,asapplicable.
TheconsolidatedstatementsofoperationsdataandcashflowdatapresentedbelowfortheninemonthsendedSeptember30,2018and2019andtheconsolidatedbalancesheetsdataasofSeptember30,2019havebeenderivedfromourunauditedinterimcondensedconsolidatedfinancialstatementsfortheninemonthsendedSeptember30,2018and2019andasofSeptember30,2019,whicharecontainedinourcurrentreportonForm6-KfurnishedtotheSEConDecember3,2019andareincorporatedintotheaccompanyingprospectusbyreference.
Theunauditedinterimfinancialinformationhasbeenpreparedonthesamebasisasourauditedconsolidatedfinancialdata,otherthantheadoptionofASCTopic842fromJanuary1,2019.
Theconsolidatedfinancialinformationshouldbereadinconjunctionwith,andisqualifiedinitsentiretybyreferenceto,ourauditedconsolidatedfinancialstatementsforthethreeyearsendedDecember31,2018andasofDecember31,2017and2018andrelatednotesand"Item5.
OperatingandFinancialReviewandProspects"inour2018Form20-F,andourcurrentreportonForm6-KfurnishedtotheSEConDecember3,2019.
Ourhistoricalresultsdonotnecessarilyindicateresultsexpectedforanyfutureperiods,andtheresultsofoperationsfortheninemonthsendedSeptember30,2019arenotnecessarilyindicativeoftheresultstobeexpectedforthefullfiscalyearendingDecember31,2019.
FortheYearEndedDecember31,FortheNineMonthsEndedSeptember30,20162017201820182019RMBRMBRMBUS$RMBRMBUS$(inmillions,exceptforshare,pershareandperADSdata)SelectedConsolidatedStatementsofOperationsData:Netrevenues:Netproductrevenues237,944331,824416,10958,216295,877361,02250,509Netservicerevenues20,34630,50845,9116,42331,31045,1826,321Totalnetrevenues258,290362,332462,02064,639327,187406,20456,830Costofrevenues(222,935)(311,517)(396,066)(55,412)(280,405)(345,782)(48,377)Fulfillment(18,560)(25,865)(32,010)(4,478)(23,149)(25,973)(3,634)Marketing(10,159)(14,918)(19,237)(2,691)(12,884)(14,009)(1,960)Technologyandcontent(4,453)(6,652)(12,144)(1,699)(8,642)(11,028)(1,543)Generalandadministrative(3,436)(4,215)(5,160)(722)(3,765)(4,017)(562)Impairmentofgoodwillandintangibleassets——(22)(3)(22)——Gainondisposalsoflong-livedassets3,070430Income/(Loss)fromoperations(1)(2)(3)(1,253)(835)(2,619)(366)(1,680)8,4651,184S-19TableofContentsFortheYearEndedDecember31,FortheNineMonthsEndedSeptember30,20162017201820182019RMBRMBRMBUS$RMBRMBUS$(inmillions,exceptforshare,pershareandperADSdata)Shareofresultsofequityinvestees(2,782)(1,927)(1,113)(156)(942)(1,220)(171)Interestincome1,2272,5302,1182961,7281,191167Interestexpense(619)(964)(855)(120)(710)(505)(71)Others,net1,5441,31795144,0471,728242Income/(loss)beforetax(1,883)121(2,374)(332)2,4439,6591,351Incometaxexpenses(166)(140)(427)(60)(366)(1,323)(185)Netincome/(loss)fromcontinuingoperations(2,049)(19)(2,801)(392)2,0778,3361,166Netincome/(loss)fromdiscontinuedoperations,netoftax(1,365)7Netincome/(loss)(3,414)(12)(2,801)(392)2,0778,3361,166Netlossfromcontinuingoperationsattributabletonon-controllinginterestsshareholders(48)(135)(311)(43)(238)(216)(30)Netlossfromdiscontinuedoperationsattributabletonon-controllinginterestsshareholders(4)(5)Netincomefromcontinuingoperationsattributabletomezzanineequityclassifiednon-controllinginterestsshareholders—––20220Netincomefromdiscontinuedoperationsattributabletomezzanineequityclassifiednon-controllinginterestsshareholders445281Netincome/(loss)fromcontinuingoperationsattributabletoordinaryshareholders(2,001)116(2,492)(349)2,3138,5501,196Netlossfromdiscontinuedoperationsattributabletoordinaryshareholders(1,806)(269)Netincome/(loss)attributabletoordinaryshareholders(3,807)(153)(2,492)(349)2,3138,5501,196Netincome/(loss)pershareBasicContinuingoperations(0.
71)0.
04(0.
87)(0.
12)0.
812.
940.
41Discontinuedoperations(0.
64)(0.
09)Netincome/(loss)pershare(1.
36)(0.
05)(0.
87)(0.
12)0.
812.
940.
41DilutedContinuingoperations(0.
71)0.
04(0.
87)(0.
12)0.
792.
890.
40Discontinuedoperations(0.
64)(0.
09)Netincome/(loss)pershare(1.
36)(0.
05)(0.
87)(0.
12)0.
792.
890.
40S-20TableofContentsFortheYearEndedDecember31,FortheNineMonthsEndedSeptember30,20162017201820182019RMBRMBRMBUS$RMBRMBUS$(inmillions,exceptforshare,pershareandperADSdata)Netincome/(loss)perADS(4)BasicContinuingoperations(1.
43)0.
08(1.
73)(0.
24)1.
615.
880.
82Discontinuedoperations(1.
29)(0.
19)Netincome/(loss)perADS(2.
71)(0.
11)(1.
73)(0.
24)1.
615.
880.
82DilutedContinuingoperations(1.
43)0.
08(1.
73)(0.
24)1.
575.
770.
81Discontinuedoperations(1.
29)(0.
18)Netincome/(loss)perADS(2.
71)(0.
11)(1.
73)(0.
24)1.
575.
770.
81Weightedaveragenumberofshares:Basic2,804,767,8892,844,826,0142,877,902,6782,877,902,6782,872,165,6982,909,097,0862,909,097,086Diluted2,804,767,8892,911,461,8172,877,902,6782,877,902,6782,945,230,9992,963,008,8452,963,008,845Non-GAAPMeasures:(5)Non-GAAPnetincomefromcontinuingoperationsattributabletoordinaryshareholders2,0684,9683,4604842,7109,9391,391(1)Includesshare-basedcompensationexpensesasfollows:FortheYearEndedDecember31,FortheNineMonthsEndedSeptember30,20162017201820182019RMBRMBRMBUS$RMBRMBUS$(inmillions)Costofrevenues(17)(28)(72)(10)(48)(58)(8)Fulfillment(332)(426)(419)(59)(324)(304)(43)Marketing(87)(136)(190)(27)(138)(180)(25)Technologyandcontent(470)(671)(1,163)(163)(812)(964)(135)Generalandadministrative(1,154)(1,520)(1,816)(254)(1,301)(1,157)(162)(2)Includesamortizationofbusinesscooperationarrangementandintangibleassetsresultingfromassetsandbusinessacquisitionsasfollows:FortheYearEndedDecember31,FortheNineMonthsEndedSeptember30,20162017201820182019RMBRMBRMBUS$RMBRMBUS$(inmillions)Fulfillment(93)(164)(168)(24)(126)(124)(17)Marketing(1,222)(1,222)(1,232)(172)(921)(498)(70)Technologyandcontent(46)(84)(98)(14)(76)(75)(10)Generalandadministrative(248)(308)(308)(43)(230)(230)(32)(3)InApril2017,leveragingouradvancedtechnologyandlogisticsexpertise,weestablishedJDLogistics,anewbusinessgroupunderJD.
com,toprovidelogisticsservicestobusinessesacrossawiderangeofindustries.
AsJDLogisticshaschangedfromsupportingtheoverallJDplatformtoanindependentlyS-21TableofContentsoperatedbusinessunit,costrelatedtothelogisticsservicesprovidedtomerchantsandotherthirdpartiesarereclassifiedfromfulfillmentexpensestocostofrevenues.
TheamountoffulfillmentexpensesthathasbeenreclassifiedtoconformtothecurrentperiodfinancialstatementpresentationwasRMB2,561millionfortheyearendedDecember31,2016.
(4)EachADSrepresentstwoClassAordinaryshares.
(5)See"—Non-GAAPFinancialMeasures.
"AsofDecember31,AsofSeptember30,2016201720182019RMBRMBRMBUS$RMBUS$(inmillions,exceptforsharedata)SelectedConsolidatedBalanceSheetsData:Cashandcashequivalents15,56725,68834,2624,79332,1254,494Restrictedcash2,2944,1103,2404532,635369Short-terminvestments6,5488,5882,03628524,4663,423Inventories,net28,90941,70044,0306,16048,2656,753Accountsreceivable,net16,14116,35911,1101,5546,014841Investmentinequityinvestees14,62918,55131,3574,38738,5765,397Totalassets160,374184,055209,16529,263245,83234,393Accountspayable46,03674,33879,98511,19086,45012,095Nonrecoursesecuritizationdebt11,54917,1604,398615——Unsecuredseniornotes6,8316,4476,7869497,004980Totalliabilities119,154131,666132,33718,515152,11421,282Totalmezzanineequity(6)7,057—15,9612,23315,9642,233TotalJD.
com,Inc.
shareholders'equity33,89352,04159,7718,36275,89510,618Numberofoutstandingordinaryshares2,836,444,3972,852,663,4292,894,296,3552,894,296,3552,920,321,9412,920,321,941(6)InFebruary2018,weraisedfinancingforJDLogisticsfromthird-partyinvestorsinthetotalamountofUS$2.
5billionbyissuingseriesApreferredsharesofJDLogistics.
Uponthecompletionofthefinancing,thethird-partyinvestorsownapproximately19%oftheequityinterestsofJDLogisticsonafullydilutedbasis.
WedeterminedthattheseriesApreferredsharesshouldbeclassifiedasmezzanineequityupontheirissuancesincetheywerecontingentlyredeemable.
FortheYearEndedDecember31,FortheNineMonthsEndedSeptember30,20162017201820182019RMBRMBRMBUS$RMBRMBUS$(inmillions)SelectedConsolidatedCashFlowsData:Netcashprovidedbycontinuingoperatingactivities9,46729,34220,8812,92114,85324,7783,467Netcashusedindiscontinuedoperatingactivities(1,227)(2,486)Netcashprovidedbyoperatingactivities(7)8,24026,85620,8812,92114,85324,7783,467Netcashusedincontinuinginvestingactivities(17,069)(21,944)(26,079)(3,649)(23,891)(27,802)(3,890)Netcashusedindiscontinuedinvestingactivities(28,412)(17,871)Netcashusedininvestingactivities(7)(45,481)(39,815)(26,079)(3,649)(23,891)(27,802)(3,890)S-22TableofContentsFortheYearEndedDecember31,FortheNineMonthsEndedSeptember30,20162017201820182019RMBRMBRMBUS$RMBRMBUS$(inmillions)Netcashprovidedby/(usedin)continuingfinancingactivities8,6495,18011,2201,57015,141(515)(72)Netcashprovidedbydiscontinuedfinancingactivities32,05014,055Netcashprovidedby/(usedin)financingactivities40,69919,23511,2201,57015,141(515)(72)Effectofexchangeratechangesoncash,cashequivalentsandrestrictedcash727(642)1,6822361,812796111Netincrease/(decrease)incash,cashequivalentsandrestrictedcash4,1855,6347,7041,0787,915(2,743)(384)Cash,cashequivalentsandrestrictedcashatbeginningofyear/period19,97924,16429,7984,16929,79837,5025,247Cash,cashequivalentsandrestrictedcashatendofyear/period24,16429,79837,5025,24737,71334,7594,863Less:Cash,cashequivalentsandrestrictedcashofdiscontinuedoperationsatendofyear/period6,303Cash,cashequivalentsandrestrictedcashofcontinuingoperationsatendofyear/period17,86129,79837,5025,24737,71334,7594,863Non-GAAPMeasures:(8)Non-GAAPEBITDAfromcontinuingoperations3,4115,3015,6677944,19211,8451,657Freecashflowfromcontinuingoperations12,97117,697(7,857)(1,100)(3,856)19,6092,743(7)AsaresultofnewaccountingguidanceadoptedonJanuary1,2018,theconsolidatedstatementsofcashflowswereretrospectivelyadjustedtoincluderestrictedcashincashandcashequivalentswhenreconcilingthebeginning-of-periodandend-of-periodtotalamountsshownonthestatementofcashflows.
TheimpactoftheretrospectivereclassificationoncashflowsofoperatingactivitiesfortheyearsendedDecember31,2016and2017wasadecreaseofRMB527millionandanincreaseofRMB2,035million,respectively.
TheimpactoncashflowsofinvestingactivitiesfortheyearsendedDecember31,2016and2017wasanincreaseofRMB2,787millionandadecreaseofRMB2,317million,respectively.
(8)See"—Non-GAAPFinancialMeasures.
"Non-GAAPFinancialMeasuresInevaluatingourbusiness,weconsiderandusenon-GAAPmeasures,suchasnon-GAAPnetincome/(loss)attributabletoordinaryshareholders,non-GAAPEBITDAandfreecashflow,assupplementalmeasurestoreviewandassessouroperatingperformance.
Thepresentationofthesenon-GAAPfinancialmeasuresisnotintendedtobeconsideredinisolationorasasubstituteforthefinancialinformationpreparedandpresentedinaccordancewithU.
S.
GAAP.
Wedefinenon-GAAPnetincome/(loss)fromcontinuingoperationsattributabletoordinaryshareholdersasnetincome/(loss)fromcontinuingoperationsattributabletoordinaryshareholdersexcludingshare-basedcompensation,amortizationofintangibleassetsresultingfromassetsandbusinessacquisitions,effectsofbusinesscooperationarrangementsandnon-competeagreements,gain/(loss)ondisposals/S-23TableofContentsdeemeddisposalsofinvestments,reconcilingitemsontheshareofequitymethodinvestments,loss/(gain)fromfairvaluechangeoflong-terminvestments,impairmentofgoodwill,intangibleassetsandinvestments,gainandforeignexchangeimpactinrelationtodisposalsoflong-livedassetsandtaxeffectsonnon-GAAPadjustments.
Wedefinenon-GAAPEBITDAfromcontinuingoperationsasincome/(loss)fromoperationsfromcontinuingoperationsexcludingshare-basedcompensation,depreciationandamortization,effectsofbusinesscooperationarrangements,gainondisposalsoflong-livedassetsandimpairmentofgoodwillandintangibleassets.
WedefinefreecashflowfromcontinuingoperationsasoperatingcashflowfromcontinuingoperationsadjustingtheimpactfromJDBaitiaoreceivablesincludedintheoperatingcashflowfromcontinuingoperationsandcapitalexpenditures,netofproceedsfromdisposalsoflong-livedassets.
Capitalexpendituresincludepurchaseofproperty,equipmentandsoftware,cashpaidforconstructioninprogress,purchaseofintangibleassetsandlanduserights.
Wepresentthesenon-GAAPfinancialmeasuresbecausetheyareusedbyourmanagementtoevaluateouroperatingperformanceandformulatebusinessplans.
Non-GAAPnetincome/(loss)fromcontinuingoperationsattributabletoordinaryshareholdersandnon-GAAPEBITDAfromcontinuingoperationsreflectthecompany'songoingbusinessoperationsinamannerthatallowsmoremeaningfulperiod-to-periodcomparisons.
FreecashflowfromcontinuingoperationsenablesmanagementtoassessliquidityandcashflowwhiletakingintoaccounttheimpactfromJDBaitiaoreceivablesincludedintheoperatingcashflowfromcontinuingoperationsandthedemandsthattheexpansionoffulfillmentinfrastructureandtechnologyplatformhasplacedonourfinancialresources.
Wealsobelievethattheuseofthenon-GAAPmeasuresfacilitateinvestorstounderstandandevaluateourcurrentoperatingperformanceandfutureprospectsinthesamemannerasmanagementdoes,iftheysochoose.
Wealsobelievethatthenon-GAAPfinancialmeasuresprovideusefulinformationtobothmanagementandinvestorsbyexcludingcertainexpenses,gain/lossandotheritemsthatarenotexpectedtoresultinfuturecashpaymentsorthatarenon-recurringinnatureormaynotbeindicativeofourcoreoperatingresultsandbusinessoutlook.
Thesenon-GAAPfinancialmeasuresarenotdefinedunderU.
S.
GAAPandarenotpresentedinaccordancewithU.
S.
GAAP.
Thenon-GAAPfinancialmeasureshavelimitationsasanalyticaltools.
Ournon-GAAPfinancialmeasuresdonotreflectallitemsofincomeandexpensethataffectouroperationsornotrepresenttheresidualcashflowavailablefordiscretionaryexpenditures.
Further,thesenon-GAAPmeasuresmaydifferfromthenon-GAAPinformationusedbyothercompanies,includingpeercompanies,andthereforetheircomparabilitymaybelimited.
Wecompensatefortheselimitationsbyreconcilingeachofthenon-GAAPfinancialmeasurestothenearestU.
S.
GAAPperformancemeasure,allofwhichshouldbeconsideredwhenevaluatingourperformance.
Weencourageyoutoreviewourfinancialinformationinitsentiretyandnotrelyonasinglefinancialmeasure.
S-24TableofContentsThefollowingtablereconcilesournon-GAAPnetincome/(loss)fromcontinuingoperationsattributabletoordinaryshareholdersforeachoftheperiodsshowntothemostdirectlycomparablefinancialmeasurecalculatedandpresentedinaccordancewithU.
S.
GAAP,whichisnetincome/(loss)fromcontinuingoperationsattributabletoordinaryshareholders:FortheYearEndedDecember31,FortheNineMonthsEndedSeptember30,20162017201820182019RMBRMBRMBUS$RMBRMBUS$(inmillions)ReconciliationofNetIncome/(Loss)fromContinuingOperationsAttributabletoOrdinaryShareholderstoNon-GAAPNetIncomefromContinuingOperationsAttributabletoOrdinaryShareholders:Netincome/(loss)fromcontinuingoperationsattributabletoordinaryshareholders(2,001)116(2,492)(349)2,3138,5501,196Share-basedcompensation2,0602,7813,6605132,6232,663373Amortizationofintangibleassetsresultingfromassetsandbusinessacquisitions1,6091,7781,8062531,353738102Reconcilingitemsontheshareofequitymethodinvestments5391,0715828162330142Impairmentofgoodwill,intangibleassets,andinvestments1,960140615864211,751245Loss/(Gain)fromfairvaluechangeoflong-terminvestments,netoftax——1,513212(2,552)715100Gainandforeignexchangeimpactinrelationtodisposalsoflong-livedassets3,183)(445)Gainondisposals/deemeddisposalsofinvestments(1,228)—(1,320)(185)(1,428)(1,228)(172)Effectsofbusinesscooperationarrangementsandnon-competeagreements(871)(918)(1,035)(145)(776)(693)(96)Taxeffectsonnon-GAAPadjustments——1311813332546Non-GAAPnetincomefromcontinuingoperationsattributabletoordinaryshareholders2,0684,9683,4604842,7109,9391,391S-25TableofContentsThefollowingtablereconcilesournon-GAAPEBITDAfromcontinuingoperationsforeachoftheperiodsshowntothemostdirectlycomparablefinancialmeasurecalculatedandpresentedinaccordancewithU.
S.
GAAP,whichisincome/(loss)fromoperationsfromcontinuingoperations:FortheYearEndedDecember31,FortheNineMonthsEndedSeptember30,20162017201820182019RMBRMBRMBUS$RMBRMBUS$(inmillions)ReconciliationofIncome/(Loss)fromOperationsfromContinuingOperationstoNon-GAAPEBITDA:Income/(loss)fromoperationsfromcontinuingoperations(1,253)(835)(2,619)(366)(1,680)8,4651,184Share-basedcompensation2,0602,7813,6605132,6232,663373Depreciationandamortization3,4214,1935,5607783,9454,419618Effectsofbusinesscooperationarrangements(817)(838)(956)(134)(718)(632)(88)Gainondisposalsoflong-livedassets3,070)(430)Impairmentofgoodwillandintangibleassets——22322——Non-GAAPEBITDAfromcontinuingoperations3,4115,3015,6677944,19211,8451,657ThefollowingtablereconcilesourfreecashflowfromcontinuingoperationsforeachoftheperiodsshowntothemostdirectlycomparablefinancialmeasurecalculatedandpresentedinaccordancewithU.
S.
GAAP,whichisnetcashprovidedbyoperatingactivitiesfromcontinuingoperations:FortheYearEndedDecember31,FortheNineMonthsEndedSeptember30,20162017201820182019RMBRMBRMBUS$RMBRMBUS$(inmillions)ReconciliationofNetCashProvidedbyOperatingActivitiesfromContinuingOperationstoFreeCashFlowfromContinuingOperations:Netcashprovidedbyoperatingactivitiesfromcontinuingoperations9,46729,34220,8812,92114,85324,7783,467ImpactfromJDBaitiaoreceivablesincludedintheoperatingcashflow7,733(289)(7,369)(1,031)(1,575)(3,923)(550)Capitalexpenditures(4,229)(11,356)(21,369)(2,990)(17,134)(1,246)(174)Freecashflowfromcontinuingoperations12,97117,697(7,857)(1,100)(3,856)19,6092,743SetforthbelowisadiscussionofourunauditedstatementsofoperationsdatafortheninemonthsendedSeptember30,2018and2019.
ThediscussionofourauditedfinancialinformationforthethreeyearsendedDecember31,2018andasofDecember31,2017and2018issetforthin"Item5.
OperatingandFinancialReviewandProspectus"inour2018Form20-F,whichisincorporatedbyreferenceintotheaccompanyingprospectus.
NineMonthsEndedSeptember30,2019ComparedtoNineMonthsEndedSeptember30,2018NetRevenues.
Ourtotalnetrevenuesincreasedby24.
2%fromRMB327,187millionfortheninemonthsendedSeptember30,2018toRMB406,204million(US$56,830million)fortheninemonthsendedS-26TableofContentsSeptember30,2019,withincreasesinbothcategoriesofnetrevenues.
Netproductrevenuesincreasedby22.
0%fromRMB295,877millionfortheninemonthsendedSeptember30,2018toRMB361,022million(US$50,509million)fortheninemonthsendedSeptember30,2019.
Netservicerevenuesincreasedby44.
3%fromRMB31,310millionfortheninemonthsendedSeptember30,2018toRMB45,182million(US$6,321million)fortheninemonthsendedSeptember30,2019.
Theincreaseinourtotalnetrevenueswasprimarilyduetoourabilitytoexpandourcustomerbaseandenhancecustomerengagement.
Ourannualactivecustomeraccountsincreasedfrom305.
2millionforthetwelvemonthsendedSeptember30,2018to334.
4millionforthetwelvemonthsendedSeptember30,2019.
Theincreaseinournetservicerevenueswasalsoduetotheincreasingpenetrationofourlogisticsservicesamongourmerchantsandotherthirdparties.
Thefollowingtablebreaksdownourtotalnetrevenuesbythesecategories:FortheNineMonthsEndedSeptember30,20182019RMBRMBUS$(inmillions)Electronicsandhomeappliancesrevenues201,486235,97333,014Generalmerchandiserevenues94,391125,04917,495Netproductrevenues295,877361,02250,509Marketplaceandadvertisingrevenues23,07329,2074,086Logisticsandotherservicerevenues8,23715,9752,235Netservicerevenues31,31045,1826,321Totalnetrevenues327,187406,20456,830Costofrevenues.
Ourcostofrevenuesincreasedby23.
3%fromRMB280,405millionfortheninemonthsendedSeptember30,2018toRMB345,782million(US$48,377million)fortheninemonthsendedSeptember30,2019.
Thisincreasewasprimarilyduetothegrowthofouronlinedirectsalesbusiness.
Costsrelatedtothelogisticsservicesprovidedtomerchantsandotherpartnersalsoincreasedrapidlyalongwiththeexpansionofourlogisticsbusiness.
Fulfillmentexpenses.
Ourfulfillmentexpensesincreasedby12.
2%fromRMB23,149millionfortheninemonthsendedSeptember30,2018toRMB25,973million(US$3,634million)fortheninemonthsendedSeptember30,2019,primarilyduetotheincreaseinshippingcharges,paymentprocessingcharges,compensationcostsrelatingtofulfillmentpersonnelandleaseexpensesforourfulfillmentinfrastructure,correspondingwiththegrowthofoursalesvolume.
Fulfillmentexpensesasapercentageofnetrevenuesdecreasedto6.
4%fortheninemonthsendedSeptember30,2019,ascomparedto7.
1%fortheninemonthsendedSeptember30,2018,primarilyduetoenhancedlogisticscapacityutilizationandstaffproductivity.
Marketingexpenses.
Ourmarketingexpensesincreasedby8.
7%fromRMB12,884millionfortheninemonthsendedSeptember30,2018toRMB14,009million(US$1,960million)fortheninemonthsendedSeptember30,2019.
Thisincreasewasprimarilyduetoanincreaseinouradvertisingexpendituresonbothonlineandofflinechannels,fromRMB10,516millionfortheninemonthsendedSeptember30,2018toRMB11,732million(US$1,641million)fortheninemonthsendedSeptember30,2019,aswecontinuedtoenhanceourbrandrecognitionandtopromoteournewbusinessinitiatives.
Technologyandcontentexpenses.
Ourtechnologyandcontentexpensesincreasedby27.
6%fromRMB8,642millionfortheninemonthsendedSeptember30,2018toRMB11,028million(US$1,543million)fortheninemonthsendedSeptember30,2019aswecontinuedtoinvestintop-notchR&Dtalentandtechnologyinfrastructure.
Theincreaseinourtechnologyandcontentexpenseswasprimarilyattributabletotheincreasein(i)thedepreciationandamortizationexpensesinconnectionwithanincreaseinthenumberofserversandotherS-27TableofContentselectronicequipment,(ii)theIDCexpensesinconnectionwiththeexecutionofourstrategiesofcontinuouslyimprovingourmobile,bigdataandcloudcomputingtechnologies,and(iii)thecompensationcostsassociatedwithresearchanddevelopmentpersonnelandrelatingtohiringadditionalseniorandexperiencedtechnologypersonnel.
Generalandadministrativeexpenses.
Ourgeneralandadministrativeexpensesslightlyincreasedby6.
7%alongwiththeexpansionofourbusiness,fromRMB3,765millionfortheninemonthsendedSeptember30,2018toRMB4,017million(US$562million)fortheninemonthsendedSeptember30,2019.
GainonDisposalsofLong-LivedAssets.
Gainondisposalsoflong-livedassetsfortheninemonthsendedSeptember30,2018and2019werenilandRMB3,070million(US$430million),respectively.
Thegainondisposalsoflong-livedassetsfortheninemonthsendedSeptember30,2019wasprimarilyderivedfromdisposalsoflogisticsfacilitiestoCoreFund.
Shareofresultsofequityinvestees.
ShareofresultsofequityinvesteeswasalossofRMB1,220million(US$171million)fortheninemonthsendedSeptember30,2019,comparedtoalossofRMB942millionfortheninemonthsendedSeptember30,2018.
FortheninemonthsendedSeptember30,2019,ourshareofresultsofequityinvesteeswasprimarilyattributabletoimpairmentlossesrecognizedfromourequitymethodinvestmentsinBitautoandTuniuandlossespickedupfromourequitymethodinvestmentsinDadaandBitauto.
Others,Net.
Others,netwasRMB1,728million(US$242million)incomefortheninemonthsendedSeptember30,2019andRMB4,047millionincomefortheninemonthsendedSeptember30,2018.
Others,netmainlycontainsfairvaluechangeoflong-terminvestments.
NetIncome.
Asaresultoftheforegoing,wehadanetincomeofRMB8,336million(US$1,166million)andRMB2,077millionfortheninemonthsendedSeptember30,2019and2018,respectively.
SegmentInformationWehavetwooperatingsegments,namelyJDRetailandNewBusinesses.
JDRetailrepresentsourcoree-commercebusiness,andNewBusinessesincludelogisticsservicesprovidedtothirdparties,technologyservices,overseasbusiness,andonline-to-offlinewhichhasbeendeconsolidatedsinceitsmergerwithDadainApril2016.
JDDigitswaspreviouslyincludedinNewBusinesses,buthadbeendeconsolidatedfromourfinancialstatementssinceJune30,2017asaresultofitsreorganization.
S-28TableofContentsThetablebelowprovidesasummaryofouroperatingsegmentresultsfortheyearsendedDecember31,2016,2017and2018andfortheninemonthsendedSeptember30,2018and2019.
FortheYearEndedDecember31,NineMonthsEndedSeptember30,20162017201820182019RMBRMBRMBUS$RMBRMBUS$(inmillions)Netrevenues:JDRetail254,397356,020447,50262,608317,531389,16754,447NewBusinesses3,2976,02214,6652,0529,66916,4932,308Inter-segment*(223)(547)(1,103)(155)(731)(276)(40)Totalsegmentnetrevenues257,471361,495461,06464,505326,469405,38456,715Unallocateditems**819837956134718820115Totalconsolidatednetrevenues258,290362,332462,02064,639327,187406,20456,830Operatingincome/(loss):JDRetail2,2694,9567,0499865,55611,4791,606NewBusinesses(670)(2,070)(5,137)(719)(3,956)(3,315)(464)Totalsegmentoperatingincome1,5992,8861,9122671,6008,1641,142Unallocateditems**(2,852)(3,721)(4,531)(633)(3,280)30142Totalconsolidatedoperatingincome/(loss)(1,253)(835)(2,619)(366)(1,680)8,4651,184*Theinter-segmenteliminationsmainlyconsistofrevenuesfromservicesprovidedbyJDRetailtooverseasbusiness,andcertainservicesprovidedbyJDLogisticstothevendorsofJDRetail,whichwererecordedasadeductionofcostofrevenuesattheconsolidatedlevel.
**Unallocateditemsincludeshare-basedcompensation,amortizationofintangibleassetsresultingfromassetsandbusinessacquisitions,effectsofbusinesscooperationarrangements,gainondisposalsoflong-livedassets,andimpairmentofgoodwillandintangibleassets,whicharenotallocatedtosegments.
CashFlowsandWorkingCapitalAsofSeptember30,2019,wehadatotalofRMB59,226billion(US$8,286billion)incashandcashequivalents,restrictedcashandshort-terminvestments.
OurnetinventorieshaveincreasedfromRMB44.
0billionasofDecember31,2018toRMB48.
3billion(US$6.
8billion)asofSeptember30,2019.
Theincreasereflectedtheadditionalinventoryrequiredtosupportoursubstantiallyexpandedsalesvolumes.
Ourinventoryturnoverdayswere39.
1daysand35.
1daysfortheninemonthsendedSeptember30,2018and2019,respectively.
Inventoryturnoverdaysarethequotientofaverageinventorytocostofrevenuesofdirectsalesbusinessforthelasttwelvemonthsandthenmultipliedby360days.
Ourinventorybalanceswillfluctuateovertimeduetoanumberoffactors,includingexpansioninourproductselectionandchangesinourproductmix.
Ourinventorybalancestypicallyincreasewhenweprepareforspecialpromotionevents,suchastheanniversaryofthefoundingofourcompanyonJune18andChina'snewonlineshoppingfestivalonNovember11.
Ouraccountspayableprimarilyincludeaccountspayabletosuppliersassociatedwithourdirectsalesbusiness.
AsofDecember31,2018andSeptember30,2019,ouraccountspayableamountedtoRMB80.
0billionandRMB86.
4billion(US$12.
1billion),respectively.
Theincreasereflectedasignificantgrowthinoursalesvolumesandscaleofoperationsforourdirectsalesbusinessandtherelatedincreaseinproductssourcedfromoursuppliers.
Ouraccountspayableturnoverdaysfordirectsalesbusinesswere61.
7daysand56.
6daysfortheninemonthsendedSeptember30,2018and2019,respectively.
AccountspayableturnoverdaysarethequotientS-29TableofContentsofaverageaccountspayableofdirectsalesbusinesstocostofrevenuesofdirectsalesbusinessforthelasttwelvemonthsandthenmultipliedby360days.
Ouraccountsreceivableprimarilyincludeamountsduefromcustomersandonlinepaymentchannels.
AsofDecember31,2018andSeptember30,2019,ouraccountsreceivableamountedtoRMB11.
1billionandRMB6.
0billion(US$0.
8billion),respectively.
ThedecreasewasprimarilyduetoourderecognitionofaccountsreceivablerelatedtoconsumerfinancingthroughthesalestypearrangementsservicedbyJDDigits.
Fromearly2014,JDDigitsstartedtoprovideconsumerfinancingtoourcustomers.
ThebalancesofcurrentportionoffinancingprovidedtoourcustomersthataffectedaccountsreceivablebalancesamountedtoRMB6.
3billionandRMB1.
4billion(US$0.
2billion)asofDecember31,2018andSeptember30,2019,respectively.
Ouraccountsreceivableturnoverdaysexcludingtheimpactfromconsumerfinancingwere2.
3daysand3.
2daysfortheninemonthsendedSeptember30,2018and2019,respectively.
Accountsreceivableturnoverdaysarethequotientofaverageaccountsreceivabletototalnetrevenuesofthelasttwelvemonthsandthenmultipliedby360days.
Thefollowingtablesetsforthasummaryofourcashflowsfortheperiodsindicated:NineMonthsEndedSeptember30,20182019RMBRMBUS$(inmillions)SelectedConsolidatedCashFlowsData:Netcashprovidedbyoperatingactivities14,85324,7783,467Netcashusedininvestingactivities(23,891)(27,802)(3,890)Netcashprovidedby/(usedin)financingactivities15,141(515)(72)Effectofexchangeratechangesoncash,cashequivalentsandrestrictedcash1,812796111Netincrease/(decrease)incash,cashequivalentsandrestrictedcash7,915(2,743)(384)Cash,cashequivalentsandrestrictedcashatbeginningofperiod29,79837,5025,247Cash,cashequivalentsandrestrictedcashatendofperiod37,71334,7594,863OperatingActivitiesNetcashprovidedbyoperatingactivitiesintheninemonthsendedSeptember30,2019wasRMB24,778million(US$3,467million).
IntheninemonthsendedSeptember30,2019,theprincipalitemsaccountingforthedifferencebetweenournetcashprovidedbyoperatingactivitiesandournetincomewerecertainnon-cashexpenses,principallydepreciationandamortizationofRMB4,419million(US$618million),shareofresultsofequityinvesteesofRMB1,220million(US$171million)andshare-basedcompensationofRMB2,663million(US$373million),andchangesincertainworkingcapitalaccounts,principallyanincreaseinaccountspayableofRMB7,170million(US$1,003million),anincreaseinaccruedexpensesandothercurrentliabilitiesofRMB2,415million(US$338million),adecreaseofaccountsreceivableofRMB4,108million(US$575million)andanincreaseofoperatingleaseliabilitiesofRMB1,937million(US$271million),partiallyoffsetbyanincreaseinamountduefromrelatedpartiesofRMB2,182million(US$305million),anincreaseininventoriesofRMB4,249million(US$594million)andanincreaseofoperatingleaseright-of-useassetsofRMB1,708million(US$239million).
Theincreaseinouraccountspayablewasduetothegrowthofourbusiness.
Theincreaseinouraccruedexpensesandothercurrentliabilitieswasprimarilyduetothegrowthinpayrollandrelatedaccrualsprimarilyassociatedwiththeincreaseinourheadcount,thegrowthinouronlinemarketplacebusinesswhichresultedintheincreaseofvendordeposits,partiallyoffsetbythedecreaseinthepayabletoemployeesinrelationtotheexerciseofoptionsorpursuanttootherawards.
Theincreaseinouradvancefromcustomerswasduetotheincreaseinoursalesofprepaidcards.
Thedecreaseinaccountsreceivablewasduetothederecognitionofconsumerfinancingrelatedaccountsreceivablethroughsalestypearrangements.
Theincreaseinourinventorieswasduetothegrowthofourbusiness.
S-30TableofContentsNetcashprovidedbyoperatingactivitiesintheninemonthsendedSeptember30,2018wasRMB14,853million.
IntheninemonthsendedSeptember30,2018,theprincipalitemsaccountingforthedifferencebetweenournetcashprovidedbyoperatingactivitiesandournetlosswerecertainnon-cashexpenses,principallydepreciationandamortizationofRMB3,945million,shareofresultsofequityinvesteesofRMB942millionandshare-basedcompensationofRMB2,623million,andchangesincertainworkingcapitalaccounts,principallyanincreaseinaccountspayableofRMB4,406million,anincreaseinaccruedexpensesandothercurrentliabilitiesofRMB3,551million,adecreaseofinventoryofRMB1,926millionandadecreaseinamountduefromrelatedpartiesofRMB1,564million,partiallyoffsetbyanincreaseinprepaymentsandothercurrentassetsofRMB1,017million.
Theincreaseinouraccountspayablewasduetothegrowthofourbusiness.
Theincreaseinouraccruedexpensesandothercurrentliabilitieswasprimarilyduetothegrowthinpayrollandrelatedaccrualsprimarilyassociatedwiththeincreaseinourheadcount,thegrowthinouronlinemarketplacebusinesswhichresultedintheincreaseofvendordeposits,partiallyoffsetbythedecreaseinthepayabletoemployeesinrelationtotheexerciseofoptionsorpursuanttootherawards.
Thedecreaseinaccountsreceivablewasduetothederecognitionofconsumerfinancingrelatedaccountsreceivablethroughsalestypearrangements.
InvestingActivitiesNetcashusedininvestingactivitiesintheninemonthsendedSeptember30,2019wasRMB27,802million(US$3,890million),consistingprimarilyofthepurchaseofshort-terminvestments,investmentinequityinvestees,investmentsecurities,purchasesofproperty,equipmentandsoftwareandcashpaidforconstructioninprogress,partiallyoffsetbythecashreceivedduetomaturityofshort-terminvestments,cashreceivedfromdisposalofequityinvestmentsandcashreceivedfromthesalesoflong-livedassets.
NetcashusedininvestingactivitiesintheninemonthsendedSeptember30,2018wasRMB23,891million,consistingprimarilyofthepurchaseofshort-terminvestments,investmentinequityinvestees,investmentsecurities,purchasesofproperty,equipmentandsoftwareandcashpaidforconstructioninprogress,partiallyoffsetbythecashreceivedduetomaturityofshort-terminvestments,cashreceivedfromdisposalofequityinvestmentsandcashreceivedfromrepaymentsofloanstoJDDigits.
FinancingActivitiesNetcashusedinfinancingactivitiesintheninemonthsendedSeptember30,2019wasRMB515million(US$72million),consistingprimarilyoftherepaymentofshort-termborrowingsandnonrecoursesecuritizationdebt,partiallyoffsetbycapitalinjectionfromnon-controllinginterestsshareholdersandtherepaymentofshort-termborrowingsandnonrecoursesecuritizationdebt.
NetcashprovidedbyfinancingactivitiesintheninemonthsendedSeptember30,2018wasRMB15,141million,consistingprimarilyofproceedsfromissuanceofequitysecuritiesbyJD.
com,Inc.
andJDLogisticsandlong-termborrowings,partiallyoffsetbytherepaymentofshort-termborrowingsandnonrecoursesecuritizationdebt.
CapitalExpendituresWemadecapitalexpendituresofRMB17,134millionandRMB1,246million(US$174million)fortheninemonthsendedSeptember30,2018and2019,respectively.
OurcapitalexpendituresfortheninemonthsendedSeptember30,2018and2019consistedprimarilyofexpendituresrelatedtotheexpansionofourfulfillmentinfrastructure,technologyplatform,logisticsequipmentaswellasourofficebuildings.
Ourcapitalexpenditureswillcontinuetobesignificantintheforeseeablefutureasweexpandandimproveourfulfillmentinfrastructureandtechnologyplatformtomeettheneedsofouranticipatedgrowth.
Wecurrentlyplantofundtheseexpenditureswithourcurrentcash,cashequivalents,short-terminvestments,andanticipatedcashflowgeneratedfromouroperatingactivities.
S-31TableofContentsUSEOFPROCEEDSWeestimatethatthenetproceeds(afterunderwritingdiscountsandcommissionsandestimatednetofferingexpenses)fromthesaleoftheNoteswillbeapproximatelyUS$million.
WeplantousethenetproceedsfromthesaleoftheNotesforgeneralcorporatepurposesandrefinancing.
InusingtheproceedsfromourissuanceandsaleoftheNotes,wearepermittedunderPRClawsandregulationsasanoffshoreholdingcompanytoprovidefundingtoourwhollyforeign-ownedsubsidiariesinChinaonlythroughloansorcapitalcontributionsandtoothersubsidiariesinChinaandourconsolidatedaffiliatedentitiesonlythroughloans,subjecttotheapprovaloforapplicableregistrationwithgovernmentauthoritiesandlimitontheamountofcapitalcontributionsandloans.
Subjecttosatisfactionofapplicablegovernmentregistrationandapprovalrequirements,wemayextendinter-companyloanstoourwhollyforeign-ownedsubsidiariesinChinaormakeadditionalcapitalcontributionstothesesubsidiariestofundtheircapitalexpendituresorworkingcapital.
Foranincreaseofregisteredcapitalofourwhollyforeign-ownedsubsidiaries,weneedtoobtainapprovalfromorcompleterecord-filingformalitieswiththePRCMinistryofCommerceoritslocalcounterparts.
Ifweprovidefundingtoanyofourwhollyforeign-ownedsubsidiariesthroughloans,thetotalamountofsuchloanscannotexceedstatutorylimitsandmustberegisteredwiththelocalcounterpartoftheSAFE.
Wecannotassureyouthatwewillbeabletoobtainthesegovernmentregistrationsorapprovalsonatimelybasis,ifatall.
See"Item3.
D.
KeyInformation—RiskFactors—RisksRelatedtoOurCorporateStructure—PRCregulationofloanstoanddirectinvestmentinPRCentitiesbyoffshoreholdingcompaniesandgovernmentalcontrolofcurrencyconversionmaydelayorpreventusfrommakingloanstoourPRCsubsidiariesandconsolidatedvariableinterestentitiesormakingadditionalcapitalcontributionstoourwhollyforeign-ownedsubsidiariesinChina,whichcouldmateriallyandadverselyaffectourliquidityandourabilitytofundandexpandourbusiness"inour2018Form20-F,whichisincorporatedbyreferenceintotheaccompanyingprospectus.
S-32TableofContentsCAPITALIZATIONThefollowingtablesetsforthourconsolidatedtotalcapitalizationasofSeptember30,2019onanactualbasisandonanasadjustedbasistogiveeffecttotheissuanceoftheNotes,afterdeductingtheissuancecostsinthisofferingasiftheNoteswereissuedonthatday.
Thistableshouldbereadinconjunctionwith,andisqualifiedinitsentiretybyreferenceto,ourconsolidatedfinancialstatementsandthenotestheretoinour2018Form20-F,whichisincorporatedbyreferenceintotheaccompanyingprospectus.
AsofSeptember30,2019ActualAsAdjustedRMBUS$RMBUS$(inmillions)Long-termloans3,183445Long-termnotespayable(1)7,004980Notesofferedhereby——Totaldebt10,1871,425Totalmezzanineequity15,9642,233Totalshareholders'equity77,75410,878Totalcapitalization103,90514,536(1)Representsour3.
125%Notesdue2021and3.
875%Notesdue2026.
Afterthecompletionofthisoffering,wemayincuradditionaldebtintheregularcourseofourbusiness,includingRMB-denominatedborrowingsordebtsecuritiesinChina,whichmaymateriallyaffectourtotaldebtasprovidedinthetableabove.
S-33TableofContentsDESCRIPTIONOFTHENOTESThefollowingdescriptionisonlyasummaryofthematerialtermsoftheNotesanddoesnotpurporttobecomplete.
TheNoteswillbeissuedunderandgovernedbytheindenturedatedasofApril29,2016,assupplementedbythesecondsupplementalindenturetobedatedasof,2019,(assosupplemented,the"indenture"),betweenusandTheBankofNewYorkMellon,astrustee(the"trustee").
ThefollowingdescriptionofcertainmaterialtermsoftheNotesissubjectto,andisqualifiedinitsentiretybyreferenceto,theindenture,includingdefinitionsofspecifiedtermsusedintheindenture,andtotheTrustIndentureActof1939,asamended.
Weurgeyoutoreadtheindenturebecauseit,andnotthisdescription,definesyourrightsasabeneficialholderoftheNotes.
Aformoftheindenturehasbeenfiledasanexhibittotheregistrationstatementofwhichthisprospectussupplementandtheaccompanyingprospectusformapart.
Youmayalsorequestcopiesoftheindenturefromusatouraddresssetforthunder"WhereYouCanFindMoreInformation"intheaccompanyingprospectus.
Thissummarysupplementsthedescriptionofthedebtsecuritiesintheaccompanyingprospectusand,totheextentitisinconsistent,replacesthedescriptionintheaccompanyingprospectus.
Inthisdescription,referencestothe"Company,""we,""us"or"our"meanJD.
com,Inc.
onlyanddonotincludeanyofourSubsidiariesorConsolidatedAffiliatedEntities,unlessthecontextotherwiserequires.
GeneralThe20Notesandthe20Noteswilleachconstituteaseriesofsecuritiesundertheindenture.
The20NoteswillinitiallybeissuedinanaggregateprincipalamountofUS$andwillmatureon,20,andthe20NoteswillinitiallybeissuedinanaggregateprincipalamountofUS$andwillmatureon,20,unlessthe20Notesorthe20Notes,asthecasemaybe,areredeemedpriortotheirmaturitypursuanttotheindentureandthetermsthereof.
The20Noteswillbearinterestattherateof%perannumandthe20Noteswillbearinterestattherateof%perannum.
InterestontheNoteswillaccruefrom,2019andwillbepayablesemi-annuallyinarrearsonandofeachyear,beginningon,20,tothepersonsinwhosenamestheNotesareregisteredatthecloseofbusinessontheprecedingand,respectively,whichwerefertoastherecorddates.
Atmaturity,theNotesarepayableattheirprincipalamountplusaccruedandunpaidinterestthereon.
Inanycasewherethepaymentofprincipalof,premium(ifany)orinterestontheNotesisdueonadatethatisnotaBusinessDay(asdefinedundertheheading"OptionalRedemption"below),thenpaymentofprincipalof,premium(ifany)orinterestontheNotes,asthecasemaybe,shallbemadeonthenextsucceedingBusinessDayandnointerestshallaccruewithrespecttosuchpaymentfortheperiodfromandaftersuchdatethatisnotaBusinessDaytosuchnextsucceedingBusinessDay.
Interestshallbecalculatedonthebasisofa360-dayyearconsistingoftwelve30-daymonths.
TheNotesshallbedenominatedinminimumprincipalamountsofUS$200,000andinintegralmultiplesofUS$1,000inexcessthereof.
TheNoteswillbeissuedinglobalregisteredform.
RankingTheNoteswillbeourseniorunsecuredobligationsissuedundertheindenture.
TheNoteswillrankseniorinrightofpaymenttoallofourexistingandfutureobligationsexpresslysubordinatedinrightofpaymenttotheNotesandrankatleastequalinrightofpaymentwithallofourexistingandfutureunsecuredandunsubordinatedobligations(subjecttoanypriorityrightspursuanttoapplicablelaw).
However,theNoteswillbeeffectivelysubordinatedtoallofourexistingandfuturesecuredobligations,totheextentofthevalueoftheassetsservingassecuritytherefor,andbestructurallysubordinatedtoallexistingandfutureobligationsandotherliabilitiesofourControlledEntities.
IssuanceofAdditionalNotesWemay,fromtimetotime,withouttheconsentoftheholdersoftheNotes,issueadditionalNoteshavingthesametermsandconditionsasanyseriesoftheNotesinallrespects(orinallrespectsexceptfortheissueS-34TableofContentsdate,theissuepriceandthefirstpaymentofinterest).
AdditionalNotesissuedinthismannermaybeconsolidatedwiththepreviouslyoutstandingNotesoftherelevantseriestoconstituteasingleseriesoftheNotesofsuchseries.
WewillnotissueanyadditionalNoteswiththesameCUSIP,ISINorotheridentifyingnumberastheNotesofanyseriesofferedherebyunlesstheadditionalNotesarefungiblewiththeoutstandingNotesoftherelevantseriesforU.
S.
federalincometaxpurposes.
OptionalRedemptionWemay,atanytimeupongivingnotlessthan30normorethan60days'writtennoticetoholdersoftherelevantseriesoftheNotes(whichnoticeshallbeirrevocable),redeemthe20Notespriorto,inwholeorinpart,andthe20Notespriorto,inwholeorinpart,ineachcaseataredemptionamountequaltothegreaterof:100%oftheprincipalamountoftheNotestoberedeemed;andthemake-wholeamount,whichmeanstheamountdeterminedonthefifthBusinessDaybeforetheredemptiondateequaltothesumof(i)thepresentvalueoftheprincipalamountoftheNotestoberedeemed,assumingascheduledrepaymentthereofonthestatedmaturitydate,plus(ii)thepresentvalueoftheremainingscheduledpaymentsofinteresttoandincludingthestatedmaturitydate,ineachcasediscountedtotheredemptiondateonasemi-annualbasis(assuminga360-dayyearconsistingoftwelve30-daymonthsand,inthecaseofanincompletemonth,theactualnumberofdayselapsed)attheTreasuryYieldplusbasispointsinthecaseoftheNotesandbasispointsinthecaseoftheNotes,plus,ineachcase,accruedandunpaidinterestontheNotestoberedeemed,ifany,to,butnotincluding,theredemptiondate;providedthattheprincipalamountofaNoteremainingoutstandingafterredemptioninpartshallbeUS$200,000oranintegralmultipleofUS$1,000inexcessthereof.
Wemay,atanytimeupongivingnotlessthan30normorethan60days'writtennoticetoholdersoftherelevantseriesoftheNotes,redeemthe20Notesatanytimeonorafter,inwholeorinpart,andthe20Notesatanytimeonorafter,inwholeorinpart,ineachcaseataredemptionpriceequalto100%oftheprincipalamountoftheapplicableNotestoberedeemedplusaccruedandunpaidinterest,ifany,to(butnotincluding)thedateofredemption;providedthattheprincipalamountofaNoteremainingoutstandingafterredemptioninpartshallbeUS$200,000oranintegralmultipleofUS$1,000inexcessthereof.
"BusinessDay"meansadayotherthanaSaturday,SundayoradayonwhichbankinginstitutionsortrustcompaniesinTheCityofNewYork,HongKongorBeijingareauthorizedorobligatedbylaw,regulationorexecutiveordertoremainclosed.
"ComparableTreasuryIssue"meanstheUnitedStatesTreasurysecurityselectedbyanIndependentInvestmentBankerthatwouldbeutilized,atthetimeofselectionandinaccordancewithcustomaryfinancialpractice,inpricingnewissuesofcorporatedebtsecuritiesofcomparablematuritytotheremainingtermoftheNotesoftheapplicableseriestoberedeemed.
"ComparableTreasuryPrice"means,withrespecttoanyredemptiondate,(1)theaverageoftheReferenceTreasuryDealerQuotationsforsuchredemptiondate,afterexcludingthehighestandlowestofsuchReferenceTreasuryDealerQuotations,or(2)ifweobtainfewerthanthreesuchReferenceTreasuryDealerQuotations,theaverageofallquotationsobtained.
"IndependentInvestmentBanker"meansoneoftheReferenceTreasuryDealersappointedbyus.
"ReferenceTreasuryDealer"meanseachofanythreeinvestmentbanksofrecognizedstandingthatisaprimaryU.
S.
governmentsecuritiesdealerintheUnitedStates,selectedbyusingoodfaith.
S-35TableofContents"ReferenceTreasuryDealerQuotation"means,withrespecttoeachReferenceTreasuryDealerandanyredemptiondate,theaverage,asdeterminedbyus,ofthebidandaskedpricesfortheComparableTreasuryIssue(expressedineachcaseasapercentageofitsprincipalamount)quotedinwritingtousbysuchReferenceTreasuryDealerasof5:00p.
m.
,NewYorkCitytime,onthefifthBusinessDaybeforesuchredemptiondate.
"TreasuryYield"means,withrespecttoanyredemptiondate,therateperannumequaltothesemi-annualequivalentyieldtomaturity(computedasofthefifthBusinessDaybeforesuchredemptiondate)oftheComparableTreasuryIssue,calculatedusingapricefortheComparableTreasuryIssue(expressedasapercentageofitsprincipalamount)equaltotheComparableTreasuryPriceforsuchredemptiondate.
Thenoticeofredemptionwillbemailedatleast30butnotmorethan60daysbeforetheredemptiondatetoeachholderofrecordoftheNotestoberedeemedatitsregisteredaddress.
ThenoticeofredemptionfortheNoteswillstate,amongotherthings,theamountofNotestoberedeemed,theredemptiondate,themannerinwhichtheredemptionpricewillbecalculatedandtheplaceorplacesthatpaymentwillbemadeuponpresentationandsurrenderofNotestoberedeemed.
Unlesswedefaultinthepaymentoftheredemptionprice,interestwillceasetoaccrueonanyNotesthathavebeencalledforredemptionattheredemptiondate.
IflessthanalloftheNotesofaseriesaretoberedeemed,theNotesforredemptionwillbeselectedasfollows:(i)iftheNotesarelistedonasecuritiesexchangethenincompliancewiththerulesofsuchsecuritiesexchangeandiftheNotesareheldthroughtheclearingsystemsthenincompliancewiththerulesandproceduresoftheclearingsystems,or(ii)iftheNotesarenotlistedonasecuritiesexchangeorheldthroughtheclearingsystems,thenbylotorsuchothermethodasthetrusteeshalldeemtobefairandappropriateinitssoleandabsolutediscretionorasotherwiserequiredbyapplicablelaw.
TaxRedemptionWemaybeabletoredeemtheNotesofeachseriesfollowingtheoccurrenceofcertainchangesintaxlaw,asdescribedin"DescriptionofDebtSecurities—TaxRedemption"intheaccompanyingprospectus.
RepurchaseUponTriggeringEventIfaTriggeringEventoccurs,unlesswehaveexercisedourrighttoredeemtheNotesoftherelevantseriesasdescribedundertheheading"DescriptionofDebtSecurities—TaxRedemption"intheaccompanyingprospectusorundertheheading"OptionalRedemption"above,wewillberequiredtomakeanoffertorepurchaseallor,attheholder'soption,anypart(equaltoUS$200,000ormultiplesofUS$1,000inexcessthereof,providedthattheprincipalamountofanyNoteremainingafterpartialredemptionshallbeUS$200,000ormultiplesofUS$1,000inexcessthereof),ofeachholder'sNotespursuanttotheofferdescribedbelow(the"TriggeringEventOffer")onthetermssetforthintheindentureandtheNotesoftherelevantseries.
IntheTriggeringEventOffer,wewillberequiredtoofferpaymentincashequalto101%oftheaggregateprincipalamountofNotesrepurchasedplusaccruedandunpaidinterest,ifany,ontheNotesrepurchasedto,butnotincluding,thedateofpurchase(the"TriggeringEventPayment").
Within30daysfollowingaTriggeringEvent,wewillberequiredtomailanoticetoholdersoftheNotes,withacopytothetrustee,describingthetransactionortransactionsthatconstitutetheTriggeringEventandofferingtorepurchasetheNotesonthedatespecifiedinthenotice,whichdatewillbenoearlierthan30daysandnolaterthan60daysfromthedatesuchnoticeismailed(the"TriggeringEventPaymentDate"),pursuanttotheproceduresrequiredbytheNotesoftherelevantseriesanddescribedinsuchnotice.
OntheTriggeringEventPaymentDate,wewillberequired,totheextentlawful,to:acceptforpaymentallNotesorportionsofNotesproperlytenderedpursuanttotheTriggeringEventOffer;S-36TableofContentsdepositwiththerelevantpayingagentoneBusinessDaypriortotheTriggeringEventPaymentDateanamountofcashinU.
S.
dollarsequaltotheTriggeringEventPaymentinrespectofallNotesorportionsofNotesproperlytendered;anddeliverorcausetobedeliveredtothetrusteetheNotesproperlyacceptedtogetherwithanofficers'certificatestatingtheaggregateprincipalamountofNotesorportionsofNotesbeingpurchasedbyus.
Therelevantpayingagentwillberequiredtopromptlymail,toeachholderwhoproperlytenderedNotes,thepurchasepriceforsuchNotesproperlytendered,andthetrusteewillberequiredtopromptlyauthenticateandmail(orcausetobetransferredbybook-entry)toeachsuchholderanewNoteequalinprincipalamounttoanyunpurchasedportionoftheNotessurrendered,ifany;providedthateachnewNotewillbeinaprincipalamountofUS$200,000oramultipleofUS$1,000inexcessthereof.
WewillnotberequiredtomakeaTriggeringEventOfferuponaTriggeringEventifathirdpartymakessuchanofferinthemanner,atthetimesandotherwiseincompliancewiththerequirementsforanoffermadebyusandsuchthirdpartypurchasesallNotesproperlytenderedandnotwithdrawnunderitsoffer.
Intheeventthatsuchthirdpartyterminatesordefaultsonitsoffer,wewillberequiredtomakeaTriggeringEventOffertreatingthedateofsuchterminationordefaultasthoughitwerethedateoftheTriggeringEvent.
WewillcomplywiththerequirementsofRule14e-1undertheExchangeAct,totheextentapplicable,andanyothersecuritieslawsandregulationsthereundertotheextentthoselawsandregulationsareapplicableinconnectionwiththerepurchaseoftheNotesasaresultofaTriggeringEvent.
TotheextentthattheprovisionofanysuchsecuritieslawsorregulationsconflictswiththeTriggeringEventOfferprovisionsoftheNotes,wewillcomplywiththosesecuritieslawsandregulationsandwillnotbedeemedtohavebreachedourobligationsundertheTriggeringEventOfferprovisionsoftheNotesbyvirtueofanysuchconflict.
TherecanbenoassurancethatwewillhavesufficientfundsavailableatthetimeofaTriggeringEventtoconsummateaTriggeringEventOfferforallNotesthenoutstanding(orallNotesproperlytenderedbytheholdersofsuchNotes)andpaytheTriggeringEventPayment.
WemayalsobeprohibitedbytermsofotherindebtednessoragreementsfromrepurchasingtheNotesuponaTriggeringEvent,whichwouldrequireustorepaytherelevantindebtednessorterminatetherelevantagreementbeforewecanproceedwithaTriggeringEventOffer,andtherecanbenoassurancethatwewillbeabletoeffectsuchrepaymentortermination.
ThetrusteeshallnotberequiredtotakeanystepstoascertainwhetheraTriggeringEventoranyeventwhichcouldleadtoaTriggeringEventhasoccurredandshallnotbeliabletoanypersonsforanyfailuretodoso.
"CapitalStock"ofanyPersonmeansanyandallshares,interests,rightstopurchase,warrants,options,participationsorotherequivalentsoforinterestsin(howeverdesignated)equityofsuchPerson,includinganyPreferredSharesandlimitedliabilityorpartnershipinterests(whethergeneralorlimited),butexcludinganydebtsecuritiesconvertibleorexchangeableintosuchequity.
"ConsolidatedAffiliatedEntity"ofanyPersonmeansanycorporation,associationorotherentitywhichisorisrequiredtobeconsolidatedwithsuchPersonunderAccountingStandardsCodificationsubtopic810-10,Consolidation:Overall(includinganychanges,amendmentsorsupplementsthereto)or,ifsuchPersonpreparesitsfinancialstatementsinaccordancewithaccountingprinciplesotherthanU.
S.
GAAP,theequivalentofAccountingStandardsCodificationsubtopic810-10,Consolidation:Overallundersuchaccountingprinciples.
Unlessotherwisespecifiedherein,eachreferencetoaConsolidatedAffiliatedEntitywillrefertoaConsolidatedAffiliatedEntityofours.
"ControlledEntity"ofanyPersonmeansaSubsidiaryoraConsolidatedAffiliatedEntityofsuchPerson.
"Group"meanstheCompanyandourControlledEntities.
S-37TableofContents"Person"meansanyindividual,corporation,firm,limitedliabilitycompany,partnership,jointventure,undertaking,association,jointstockcompany,trust,unincorporatedorganization,trust,state,governmentoranyagencyorpoliticalsubdivisionthereoforanyotherentity(ineachcasewhetherornotbeingaseparatelegalentity).
"PreferredShares,"asappliedtotheCapitalStockofanycorporation,meansCapitalStockofanyclassorclasses(howeverdesignated)thatispreferredastothepaymentofdividendsuponliquidation,dissolutionorwindingup.
"Subsidiary"ofanyPersonmeans(a)anycorporation,associationorotherbusinessentity(otherthanapartnership,jointventure,limitedliabilitycompanyorsimilarentity)ofwhichmorethan50%ofthetotalordinaryvotingpowerofsharesofCapitalStockentitled(withoutregardtotheoccurrenceofanycontingency)tovoteintheelectionofdirectors,managersortrusteesthereof(orPersonsperformingsimilarfunctions)or(b)anypartnership,jointventurelimitedliabilitycompanyorsimilarentityofwhichmorethan50%ofthecapitalaccounts,distributionrights,totalequityandvotinginterestsorgeneralorlimitedpartnershipinterests,asapplicable,is,inthecaseofclauses(a)and(b),votingatthetimeownedorcontrolled,directlyorindirectly,by(1)suchPerson,(2)suchPersonandoneormoreSubsidiariesofsuchPersonor(3)oneormoreSubsidiariesofsuchPerson.
Unlessotherwisespecifiedherein,eachreferencetoaSubsidiarywillrefertoaSubsidiaryoftheCompany.
"TriggeringEvent"means(A)anychangeinoramendmenttothelaws,regulationsandrulesofthePRCortheofficialinterpretationorofficialapplicationthereof("ChangeinLaw")thatresultsin(x)theGroup(asinexistenceimmediatelysubsequenttosuchChangeinLaw),asawhole,beinglegallyprohibitedfromoperatingsubstantiallyallofthebusinessoperationsconductedbytheGroup(asinexistenceimmediatelypriortosuchChangeinLaw)asofthelastdateoftheperioddescribedinourconsolidatedfinancialstatementsforthemostrecentfiscalquarterand(y)webeingunabletocontinuetoderivesubstantiallyalloftheeconomicbenefitsfromthebusinessoperationsconductedbytheGroup(asinexistenceimmediatelypriortosuchChangeinLaw)inthesamemannerasreflectedinourconsolidatedfinancialstatementsforthemostrecentfiscalquarterand(B)wehavenotfurnishedtothetrustee,priortothedatethatistwelvemonthsafterthedateoftheChangeinLaw,anopinionfromanindependentfinancialadvisororexternallegalcounselstatingeither(1)weareabletocontinuetoderivesubstantiallyalloftheeconomicbenefitsfromthebusinessoperationsconductedbytheGroup(asinexistenceimmediatelypriortosuchChangeinLaw),takenasawhole,asreflectedinourconsolidatedfinancialstatementsforthemostrecentfiscalquarter(includingaftergivingeffecttoanycorporaterestructuringorreorganizationplanofours)or(2)suchChangeinLawwouldnotmateriallyadverselyaffectourabilitytomakeprincipal,premium(ifany)andinterestpaymentsontheNoteswhendue.
ThedefinitionofTriggeringEventincludesaphraserelatingtooperating"substantiallyall"orderiving"substantiallyall"oftheeconomicbenefitsfrom,thebusinessoperationsconductedbytheGroup.
Althoughthereisalimitedbodyofcaselawinterpretingthephrase"substantiallyall,"thereisnopreciseestablisheddefinitionofthephraseunderapplicablelaw.
Accordingly,theapplicabilityoftherequirementthatweoffertorepurchasetheNotesasaresultofaTriggeringEventmaybeuncertain.
PaymentofAdditionalAmountsAllpaymentsofprincipal,premiumandinterestmadebyoronbehalfofusinrespectoftheNotesofeachserieswillbemadewithoutwithholdingordeductionfor,oronaccountof,anypresentorfuturetaxes,duties,assessmentsorgovernmentalchargesofwhatevernatureimposedorleviedbyorwithintheCaymanIslands,HongKong,thePRCoranyjurisdictionwhereweorourpayingagentareotherwiseconsideredbyataxingauthoritytobearesidentfortaxpurposes,unlesssuchwithholdingordeductionofsuchtaxesisrequiredbylaw.
Ifwearerequiredtomakesuchwithholdingordeduction,wewill,subjecttocertainexceptions,paysuchadditionalamountsaswillresultinreceiptbyeachholderofanyNoteofsuchamountsaswouldhavebeenreceivedbysuchholderhadnosuchwithholdingordeductionofsuchtaxesbeenrequired,asdescribedin"DescriptionofDebtSecurities—PaymentofAdditionalAmounts"intheaccompanyingprospectus.
S-38TableofContentsModificationandWaiverTheprovisionsoftheindenturerelatingtomodificationandwaiver,whicharedescribedundertheheading"DescriptionofDebtSecurities—ModificationandWaiver"intheaccompanyingprospectus,willapplytotheNotes,withtheadditionalprovisionsthat:(i)weandthetrusteemaynot,withouttheconsentofeachholderoftheapplicableseriesoftheNotesaffectedthereby,reducetheamountofthepremiumpayableupontheredemptionorrepurchaseofanyseriesoftheNotesorchangethetimeatwhichanyseriesoftheNotesmayberedeemedorrepurchasedasdescribedaboveunder"—OptionalRedemption"or"—RepurchaseUponTriggeringEvent"whetherthroughanamendmentorwaiverofprovisionsinthecovenants,definitionsorotherwise(exceptthroughamendmentstothedefinitionof"TriggeringEvent");and(ii)weandthetrusteemay,withouttheconsentofanyholderoftheNotesofanyseries,amendtheindentureandtherelevantNotestoconformthetextoftheindentureortheNotestoanyprovisionofthis"DescriptionoftheNotes"totheextentthatsuchprovisioninthis"DescriptionoftheNotes"wasintendedtobeaverbatimrecitationofaprovisionoftheindentureortheNotesasevidencedbyanofficers'certificate.
LimitationonLiensSolongasanyNoteremainsoutstanding,wewillnotcreateorhaveoutstanding,andwewillensurethatnoneofourPrincipalControlledEntitieswillcreateorhaveoutstanding,anyLienuponthewholeoranypartoftheirrespectivepresentorfutureundertaking,assetsorrevenues(includinganyuncalledcapital)securinganyRelevantIndebtedness,oranyguaranteeorindemnityinrespectofanyRelevantIndebtednesseitherofusorofanyofourPrincipalControlledEntities,without(i)atthesametimeorpriortheretosecuringorguaranteeingtheNotes,asapplicable,equallyandratablytherewith(orinprioritythereto)or(ii)providingsuchothersecurityorguaranteefortheNotesasshallbeapprovedbyanactoftheholdersofeachseriesoftheNotesholdingatleastamajorityoftheprincipalamountofthatseriesoftheNotesthenoutstanding.
Theforegoingrestrictionwillnotapplyto:(i)anyLienarisingoralreadyarisenautomaticallybyoperationoflawwhichistimelydischargedordisputedingoodfaithbyappropriateproceedings;(ii)anyLieninrespectoftheobligationsofanyPersonwhichbecomesaPrincipalControlledEntityorwhichmergeswithorintousoraPrincipalControlledEntityafterthedateoftheindenturewhichisinexistenceatthedateonwhichitbecomesaPrincipalControlledEntityormergeswithorintousoraPrincipalControlledEntity;providedthatanysuchLienwasnotincurredinanticipationofsuchacquisitionorofsuchPersonbecomingaPrincipalControlledEntityorbeingmergedwithorintousoraPrincipalControlledEntity;(iii)anyLiencreatedoroutstandinginfavorofus;(iv)anyLieninrespectofRelevantIndebtednessofusoranyPrincipalControlledEntitywithrespecttowhichweorsuchPrincipalControlledEntityhaspaidmoneyordepositedmoneyorsecuritieswithafiscalagent,trusteeordepositorytopayordischargeinfulltheobligationsofusorsuchPrincipalControlledEntityinrespectthereof(otherthantheobligationthatsuchmoneyorsecuritiessopaidordeposited,andtheproceedstherefrom,besufficienttopayordischargesuchobligationsinfull);(v)anyLiencreatedinconnectionwithRelevantIndebtednessofusoranyPrincipalControlledEntitydenominatedinRMBandinitiallyoffered,marketedorissuedprimarilytoPersonsresidentinthePRC;(vi)anyLiencreatedinconnectionwithaprojectfinancedwith,orcreatedtosecure,Non-recourseObligations;orS-39TableofContents(vii)anyLienarisingoutoftherefinancing,extension,renewalorrefundingofanyRelevantIndebtednesssecuredbyanyLienpermittedbytheforegoingclause(ii)or(vi);providedthatsuchRelevantIndebtednessisnotincreasedbeyondtheprincipalamountthereof(togetherwiththecostsofsuchrefinancing,extension,renewalorrefunding)andisnotsecuredbyanyadditionalpropertyorassets.
"Lien"meansanymortgage,charge,pledge,lienorotherformofencumbranceorsecurityinterest.
"Non-recourseObligation"meansindebtednessorotherobligationssubstantiallyrelatedto(i)theacquisitionofassets(includinganypersonthatbecomesaControlledEntity)notpreviouslyownedbyusoranyofourControlledEntitiesor(ii)thefinancingofaprojectinvolvingthepurchase,development,improvementorexpansionofpropertiesofoursoranyofourControlledEntities,astowhichtheobligeewithrespecttosuchindebtednessorobligationhasnorecoursetousoranyofourPrincipalControlledEntitiesortoouroranysuchPrincipalControlledEntity'sassetsotherthantheassetswhichwereacquiredwiththeproceedsofsuchtransactionortheprojectfinancedwiththeproceedsofsuchtransaction(andtheproceedsthereof).
"PRC"meansthePeople'sRepublicofChina,excluding,forpurposesofthisdefinition,theHongKongSpecialAdministrativeRegion,theMacauSpecialAdministrativeRegionandTaiwan.
"PrincipalControlledEntities"atanytimeshallmeanoneofourControlledEntities(i)astowhichoneormoreofthefollowingconditionsis/aresatisfied:(a)itstotalrevenueor(inthecaseofoneofourControlledEntitieswhichhasoneormoreControlledEntities)consolidatedtotalrevenueattributabletousisatleast10%ofourconsolidatedtotalrevenue;(b)itsnetprofitor(inthecaseofoneofourControlledEntitieswhichhasoneormoreControlledEntities)consolidatednetprofitattributabletous(ineachcasebeforetaxationandexceptionalitems)isatleast10%ofourconsolidatednetprofit(beforetaxationandexceptionalitems);or(c)itsnetassetsor(inthecaseofoneofourControlledEntitieswhichhasoneormoreControlledEntities)consolidatednetassetsattributabletous(ineachcaseafterdeductingminorityinterestsinSubsidiaries)areatleast10%ofourconsolidatednetassets(afterdeductingminorityinterestsinSubsidiaries);allascalculatedbyreferencetothethenlatestauditedfinancialstatements(consolidatedor,asthecasemaybe,unconsolidated)ofourControlledEntityandourthenlatestauditedconsolidatedfinancialstatements;providedthat,inrelationtoparagraphs(a),(b)and(c)above:(1)inthecaseofacorporationorotherbusinessentitybecomingaControlledEntityaftertheendofthefinancialperiodtowhichourlatestconsolidatedauditedaccountsrelate,thereferencetoourthenlatestconsolidatedauditedaccountsandourControlledEntitiesforthepurposesofthecalculationaboveshall,untilourconsolidatedauditedaccountsforthefinancialperiodinwhichtherelevantcorporationorotherbusinessentitybecomesaControlledEntityareissued,bedeemedtobeareferencetothethenlatestconsolidatedauditedaccountsofusandourControlledEntitiesadjustedtoconsolidatethelatestauditedaccounts(consolidatedinthecaseofaControlledEntitywhichitselfhasControlledEntities)ofsuchControlledEntityinsuchaccounts;(2)ifatanyrelevanttimeinrelationtousoranyControlledEntitywhichitselfhasControlledEntities,noconsolidatedaccountsarepreparedandaudited,totalrevenue,netprofitornetassetsofusand/oranysuchControlledEntityshallbedeterminedonthebasisofproformaconsolidatedaccountspreparedforthispurposebyoronbehalfofus;(3)ifatanyrelevanttimeinrelationtoanyControlledEntity,noaccountsareaudited,itsnetassets(consolidated,ifappropriate)shallbedeterminedonthebasisofproformaaccountsS-40TableofContents(consolidated,ifappropriate)oftherelevantControlledEntitypreparedforthispurposebyoronbehalfofus;and(4)iftheaccountsofanyControlledEntity(notbeingaControlledEntityreferredtoinproviso(1)above)arenotconsolidatedwithouraccounts,thenthedeterminationofwhetherornotsuchControlledEntityisaPrincipalControlledEntityshallbebasedonaproformaconsolidationofitsaccounts(consolidated,ifappropriate)withourconsolidatedaccounts(determinedonthebasisoftheforegoing);or(ii)towhichistransferredallorsubstantiallyalloftheassetsofaControlledEntitywhichimmediatelypriortothetransferwasaPrincipalControlledEntity;providedthat,witheffectfromsuchtransfer,theControlledEntitywhichsotransfersitsassetsandundertakingsshallceasetobeaPrincipalControlledEntity(butwithoutprejudicetoparagraph(i)above)andtheControlledEntitytowhichtheassetsaresotransferredshallbecomeaPrincipalControlledEntity.
Anofficers'certificatedeliveredtothetrusteecertifyingingoodfaithastowhetherornotaControlledEntityisaPrincipalControlledEntityshallbeconclusiveintheabsenceofmanifesterrorandthetrusteeshallbeentitledtorelyconclusivelyuponsuchofficers'certificate(withoutfurtherinvestigationorenquiry)andshallnotbeliabletoanypersonforsoacceptingandrelyingonsuchofficers'certificate.
"RelevantIndebtedness"meansanyindebtednesswhichisintheformof,orrepresentedorevidencedby,bonds,notes,debentures,loanstockorothersecuritieswhichforthetimebeingare,orareintendedtobeorarecommonly,quoted,listedordealtinortradedonanystockexchangeorover-the-counterorothersecuritiesmarket.
LegalDefeasanceandCovenantDefeasanceTheprovisionsoftheindenturerelatingtolegaldefeasanceandcovenantdefeasance,whicharedescribedundertheheading"DescriptionofDebtSecurities—LegalDefeasanceandCovenantDefeasance"intheaccompanyingprospectus,willapplytotheNotes,andinaddition,wemayalsoexerciseCovenantDefeasancewithrespecttoourobligationsundertheindentureandtheNotesthataredescribedundertheheadings"—RepurchaseUponTriggeringEvent"and"—LimitationonLiens"above.
NoSinkingFundTheNoteswillnotbesubjectto,norentitledtothebenefitof,anysinkingfund.
Book-Entry;DeliveryandFormEachseriesoftheNoteswillberepresentedbyoneormoreglobalnotesthatwillbedepositedwithandregisteredinthenameofDTCoritsnomineefortheaccountsofitsparticipants,includingEuroclearBankSA/NV("Euroclear")asoperatoroftheEuroclearSystem,andClearstreamBankingS.
A.
("Clearstream").
WewillnotissuecertificatedNotes,exceptinthelimitedcircumstancesdescribedbelow.
TransfersofownershipinterestsintheglobalnoteswillbeeffectedonlythroughentriesmadeonthebooksofDTCparticipantsactingonbehalfofbeneficialowners.
YouwillnotreceivewrittenconfirmationfromDTCofyourpurchase.
ThedirectorindirectparticipantsthroughwhomyoupurchasedtheNotesshouldsendyouwrittenconfirmationsprovidingdetailsofyourtransactions,aswellasperiodicstatementsofyourholdings.
Thedirectandindirectparticipantsareresponsibleforkeepingaccurateaccountoftheholdingsoftheircustomerslikeyou.
Thelawsofsomestatesrequirethatcertainpurchasersofsecuritiestakephysicaldeliveryofsuchsecuritiesindefinitiveform.
Suchlimitsandsuchlawsmayimpairtheabilitytoown,transferorpledgebeneficialinterestsintheglobalnotes.
You,asthebeneficialownerofNotes,willnotreceivecertificatesrepresentingownershipinterestsintheglobalnotes,exceptinthefollowinglimitedcircumstances:(1)DTCnotifiesusthatitisunwillingorunabletoS-41TableofContentscontinueasdepositaryorifDTCceasestobeeligibleundertheindentureandwedonotappointasuccessordepositarywithin90days;or(2)aneventofdefaultwithrespecttotheNoteswillhaveoccurredandbecontinuing.
ThesecertificatedNoteswillberegisteredinsuchnameornamesasDTCwillinstructthetrustee.
ItisexpectedthatsuchinstructionsmaybebasedupondirectionsreceivedbyDTCfromparticipantswithrespecttoownershipofbeneficialinterestsinglobalnotes.
SolongasDTCoritsnomineeistheregisteredownerandholderoftheglobalnotes,DTCoritsnominee,asthecasemaybe,willbeconsideredthesoleownerorholderoftheNotesrepresentedbytheglobalnotesforallpurposesundertheindenturerelatingtotheNotes.
Exceptasprovidedabove,you,asthebeneficialownerofinterestsintheglobalnotes,willnotbeentitledtohaveNotesregisteredinyourname,willnotreceiveorbeentitledtoreceivephysicaldeliveryofNotesindefinitiveformandwillnotbeconsideredtheownerorholderthereofundertheindenture.
Accordingly,you,asthebeneficialowner,mustrelyontheproceduresofDTCand,ifyouarenotaDTCparticipant,ontheproceduresoftheDTCparticipantsthroughwhichyouownyourinterest,toexerciseanyrightsofaholderundertheindenture.
Neitherwe,thetrustee,noranyotheragentofoursoragentofthetrusteewillhaveanyresponsibilityorliabilityforanyaspectoftherecordsrelatingto,orpaymentsmadeonaccountof,beneficialownershipinterestsinglobalnotesorformaintaining,supervisingorreviewinganyrecordsrelatingtothebeneficialownershipinterests.
DTC'spracticeistocredittheaccountsofDTC'sdirectparticipantswithpaymentinamountsproportionatetotheirrespectiveholdingsinprincipalamountofbeneficialinterestinasecurityasshownontherecordsofDTC,unlessDTChasreasontobelievethatitwillnotreceivepaymentonthepaymentdate.
Theunderwriterswillinitiallydesignatetheaccountstobecredited.
BeneficialownersmayexperiencedelaysinreceivingdistributionsontheirNotesbecausedistributionswillinitiallybemadetoDTCandtheymustbetransferredthroughthechainofintermediariestothebeneficialowner'saccount.
PaymentsbyDTCparticipantstoyouwillbetheresponsibilityoftheDTCparticipantandnotofDTC,thetrustee,anyagentorus.
Accordingly,we,thetrusteeandanypayingagentwillhavenoresponsibilityorliabilityfor:anyaspectofDTC'srecordsrelatingto,orpaymentsmadeonaccountof,beneficialownershipinterestsintheNotesrepresentedbyaglobalsecuritiescertificate;anyotheraspectoftherelationshipbetweenDTCanditsparticipantsortherelationshipbetweenthoseparticipantsandtheownersofbeneficialinterestsinaglobalsecuritiescertificateheldthroughthoseparticipants;orthemaintenance,supervisionorreviewofanyofDTC'srecordsrelatingtothosebeneficialownershipinterests.
ConveyanceofnoticesandothercommunicationsbyDTCtodirectparticipants,bydirectparticipantstoindirectparticipants,andbydirectparticipantsandindirectparticipantstobeneficialownerswillbegovernedbyarrangementsamongthem,subjecttoanystatutoryorregulatoryrequirementsasmaybeineffectfromtimetotime.
Wehavebeeninformedthat,underDTC'sexistingpractices,ifwerequestanyactionofholdersofseniornotes,oranownerofabeneficialinterestinaglobalsecuritysuchasyoudesirestotakeanyactionwhichaholderoftheNotesisentitledtotakeundertheindenture,DTCwouldauthorizethedirectparticipantsholdingtherelevantbeneficialintereststotakesuchaction,andthosedirectparticipantsandanyindirectparticipantswouldauthorizebeneficialownersowningthroughthosedirectandindirectparticipantstotakesuchactionorwouldotherwiseactupontheinstructionsofbeneficialownersowningthroughthem.
ClearstreamandEuroclearhaveprovideduswiththefollowinginformation:ClearstreamClearstreamisincorporatedunderthelawsofLuxembourgasaprofessionaldepositary.
ClearstreamholdssecuritiesforitsparticipatingorganizationsandfacilitatestheclearanceandsettlementofsecuritiestransactionsbetweenClearstreamparticipantsthroughelectronicbook-entrychangesinaccountsofClearstreamparticipants,therebyeliminatingtheneedforphysicalmovementofcertificates.
ClearstreamprovidestoClearstreamS-42TableofContentsparticipants,amongotherthings,servicesforsafekeeping,administration,clearanceandsettlementofinternationallytradedsecuritiesandsecuritieslendingandborrowing.
Clearstreaminterfaceswithdomesticsecuritiesmarketsinseveralcountries.
Asaprofessionaldepositary,ClearstreamissubjecttoregulationbytheLuxembourgCommissionfortheSupervisionoftheFinancialSector(CommissiondeSurveillanceduSecteurFinancier).
Clearstreamparticipantsincludeunderwriters,securitiesbrokersanddealers,banks,trustcompanies,clearingcorporationsandcertainotherorganizationsandmayincludetheunderwriters.
Clearstream'sU.
S.
participantsarelimitedtosecuritiesbrokersanddealersandbanks.
IndirectaccesstoClearstreamisalsoavailabletoothers,suchasbanks,brokers,dealersandtrustcompaniesthatclearthroughormaintainacustodialrelationshipwithaClearstreamparticipanteitherdirectlyorindirectly.
DistributionswithrespecttotheNotesheldbeneficiallythroughClearstreamwillbecreditedtocashaccountsofClearstreamparticipantsinaccordancewithitsrulesandprocedures,totheextentreceivedbytheU.
S.
depositaryforClearstream.
EuroclearEuroclearwascreatedin1968toholdsecuritiesforparticipantsofEuroclearandtoclearandsettletransactionsbetweenEuroclearparticipantsthroughsimultaneouselectronicbook-entrydeliveryagainstpayment,therebyeliminatingtheneedforphysicalmovementofcertificatesandanyriskfromlackofsimultaneoustransfersofsecuritiesandcash.
Euroclearperformsvariousotherservices,includingsecuritieslendingandborrowingandinteractswithdomesticmarketsinseveralcountries.
EuroclearisoperatedbyEuroclearBankSA/NVundercontractwithEuroclearplc,aU.
K.
corporation.
AlloperationsareconductedbytheEuroclearoperator,andallEuroclearsecuritiesclearanceaccountsandEuroclearcashaccountsareaccountswiththeEuroclearoperator,notEuroclearplc.
EuroclearplcestablishespolicyforEuroclearonbehalfofEuroclearparticipants.
Euroclearparticipantsincludebanks,includingcentralbanks,securitiesbrokersanddealersandotherprofessionalfinancialintermediariesandmayincludetheunderwriters.
IndirectaccesstoEuroclearisalsoavailabletootherfirmsthatclearthroughormaintainacustodialrelationshipwithaEuroclearparticipant,eitherdirectlyorindirectly.
TheEuroclearoperatorisaBelgianbank.
AssuchitisregulatedbytheBelgianBankingandFinanceCommission.
SecuritiesclearanceaccountsandcashaccountswiththeEuroclearoperatoraregovernedbytheTermsandConditionsGoverningUseofEuroclearandtherelatedOperatingProceduresoftheEuroclearSystem,andapplicableBelgianlaw(collectively,the"TermsandConditions").
TheTermsandConditionsgoverntransfersofsecuritiesandcashwithinEuroclear,withdrawalsofsecuritiesandcashfromEuroclear,andreceiptsofpaymentswithrespecttosecuritiesinEuroclear.
AllsecuritiesinEuroclearareheldonafungiblebasiswithoutattributionofspecificcertificatestospecificclearanceaccounts.
TheEuroclearoperatoractsundertheTermsandConditionsonlyonbehalfofEuroclearparticipantsandhasnorecordoforrelationshipwithpersonsholdingthroughEuroclearparticipants.
DistributionswithrespecttotheNotesheldbeneficiallythroughEuroclearwillbecreditedtothecashaccountsofEuroclearparticipantsinaccordancewiththeTermsandConditions,totheextentreceivedbytheU.
S.
depositaryforEuroclear.
Euroclearhasfurtheradvisedusthatinvestorswhoacquire,holdandtransferinterestsintheNotesbybook-entrythroughaccountswiththeEuroclearoperatororanyothersecuritiesintermediaryaresubjecttothelawsandcontractualprovisionsgoverningtheirrelationshipwiththeirintermediary,aswellasthelawsandcontractualprovisionsgoverningtherelationshipbetweensuchanintermediaryandeachotherintermediary,ifany,standingbetweenthemselvesandtheglobalsecuritiescertificates.
S-43TableofContentsGlobalClearanceandSettlementProceduresInitialsettlementfortheNoteswillbemadeinimmediatelyavailablefunds.
SecondarymarkettradingbetweenDTCparticipantswilloccurintheordinarywayinaccordancewithDTCrulesandwillbesettledinimmediatelyavailablefundsusingDTC'sSameDayFundsSettlementSystem.
SecondarymarkettradingbetweenClearstreamparticipantsand/orEuroclearparticipantswilloccurintheordinarywayinaccordancewiththeapplicablerulesandoperatingproceduresofClearstreamandEuroclearandwillbesettledusingtheproceduresapplicabletoconventionaleurobondsinimmediatelyavailablefunds.
CrossmarkettransfersbetweenpersonsholdingdirectlyorindirectlythroughDTC,ontheonehand,anddirectlyorindirectlythroughClearstreamparticipantsorEuroclearparticipants,ontheother,willbeeffectedthroughDTCinaccordancewithDTCrulesonbehalfoftherelevantEuropeaninternationalclearingsystembyitsU.
S.
depositary;however,suchcrossmarkettransactionswillrequiredeliveryofinstructionstotherelevantEuropeaninternationalclearingsystembythecounterpartyinsuchsysteminaccordancewithitsrulesandproceduresandwithinitsestablisheddeadlines(Europeantime).
TherelevantEuropeaninternationalclearingsystemwill,ifthetransactionmeetsitssettlementrequirements,deliverinstructionstoitsU.
S.
depositarytotakeactiontoeffectfinalsettlementonitsbehalfbydeliveringorreceivingNotesthroughDTC,andmakingorreceivingpaymentinaccordancewithnormalproceduresforsamedayfundssettlementapplicabletoDTC.
ClearstreamparticipantsandEuroclearparticipantsmaynotdeliverinstructionsdirectlytotheirrespectiveU.
S.
depositaries.
Becauseoftimezonedifferences,creditsoftheNotesreceivedthroughClearstreamorEuroclearasaresultofatransactionwithaDTCparticipantwillbemadeduringsubsequentsecuritiessettlementprocessinganddatedthebusinessdayfollowingtheDTCsettlementdate.
SuchcreditsoranytransactionsinsuchNotessettledduringsuchprocessingwillbereportedtotherelevantEuroclearparticipantsorClearstreamparticipantsonsuchbusinessday.
CashreceivedinClearstreamorEuroclearasaresultofsalesoftheNotesbyorthroughaClearstreamparticipantoraEuroclearparticipanttoaDTCparticipantwillbereceivedwithvalueontheDTCsettlementdatebutwillbeavailableintherelevantClearstreamorEuroclearcashaccountonlyasofthebusinessdayfollowingsettlementinDTC.
AlthoughDTC,ClearstreamandEuroclearhaveagreedtotheforegoingproceduresinordertofacilitatetransfersofNotesamongparticipantsofDTC,ClearstreamandEuroclear,theyareundernoobligationtoperformorcontinuetoperformsuchproceduresandsuchproceduresmaybemodifiedordiscontinuedatanytime.
NeitherwenorthetrusteenorthepayingagentwillhaveanyresponsibilityfortheperformancebyDTC,EuroclearorClearstreamortheirrespectivedirectorindirectparticipantsoftheirobligationsundertherulesandproceduresgoverningtheiroperations.
S-44TableofContentsTAXATIONProspectiveinvestorsshouldconsulttheirtaxadvisorsregardingthepossibletaxconsequencesoftheownershipanddispositionoftheNotesunderthelawsoftheircountryofcitizenship,residence,ordomicile.
CaymanIslandsTaxationThefollowingisadiscussionofcertainCaymanIslandsincometaxconsequencesofaninvestmentintheNotes.
Thediscussionisageneralsummaryofpresentlaw,whichissubjecttoprospectiveandretroactivechange.
Itisnotintendedastaxadvice,doesnotconsideranyinvestor'sparticularcircumstances,anddoesnotconsidertaxconsequencesotherthanthosearisingunderCaymanIslandslaw.
UnderexistingCaymanIslandslaw,paymentsofinterestandprincipalontheNoteswillnotbesubjecttotaxationintheCaymanIslandsandnowithholdingwillberequiredonthepaymentofinterestandprincipaltoanyholderoftheNotes,norwillgainsderivedfromthedisposaloftheNotesbesubjecttoCaymanIslandsincomeorcorporationtax.
TheCaymanIslandscurrentlyhavenoincome,corporation,orcapitalgainstaxandnoestateduty,inheritancetax,orgifttax.
NostampdutyispayableinrespectoftheissueoftheNotes.
AninstrumentoftransferinrespectofaNoteisstampableifexecutedinorbroughtintotheCaymanIslands.
PRCTaxationThefollowingisasummaryofcertainPRCtaxconsequencesofthepurchase,ownership,anddispositionofNotestonon-residententerprisesandnon-residentindividuals.
Itisbaseduponapplicablelaws,rules,andregulationsineffectasofthedateofthisprospectussupplement,allofwhicharesubjecttochange(possiblywithretroactiveeffect).
Thisdiscussiondoesnotpurporttobeacomprehensivedescriptionofallthetaxconsiderationsthatmayberelevanttoadecisiontopurchase,own,ordisposeoftheNotesanddoesnotpurporttodealwithconsequencesapplicabletoallcategoriesofinvestors,someofwhichmaybesubjecttospecialrules.
PersonsconsideringthepurchaseofNotesshouldconsulttheirowntaxadvisorsconcerningthetaxconsequencesofthepurchase,ownership,anddispositionofNotes,includingsuchpossibleconsequencesunderthelawsoftheircountryofcitizenship,residence,ordomicile.
Asdescribedinour2018Form20-F,wemaybedeemedaPRC"residententerprise"underPRCtaxlaws.
See"Item10.
E.
AdditionalInformation—Taxation—People'sRepublicofChinaTaxation"onourAnnualReportonForm20-F.
IfweareconsideredaPRCresidententerpriseunderthePRCEnterpriseIncomeTaxLaw,holdersofNotesthatarenon-residententerprisesmaybesubjecttoPRCwithholdingtaxoninterestpaidbyusorPRCenterpriseincometaxonanygainsrealizedfromthetransferofNotes,ifsuchincomeisconsideredtobederivedfromsourceswithinthePRC,atarateof10%,providedthatsuchnon-residententerpriseinvestor(i)hasnoestablishmentorpremisesinthePRC,or(ii)hasanestablishmentorpremisesinthePRCbutitsincomederivedfromthePRChasnorealconnectionwithsuchestablishmentorpremises.
Furthermore,ifweareconsideredaPRCresidententerpriseandtherelevantPRCtaxauthoritiesconsiderinterestwepayontheNotesoranygainsrealizedfromthetransferofNotestobeincomederivedfromsourceswithinthePRC,suchinterestearnedbynon-residentindividualsmaybesubjecttoPRCwithholdingtaxandsuchgainrealizedbynon-residentindividualsmaybesubjecttoPRCindividualincometax,ineachcaseatarateof20%.
AnyPRCtaxliabilityoninterestorgaindescribedabovemaybereducedunderapplicabletaxtreaties.
However,itisunclearwhetherinpracticenon-residentholderswouldbeabletoobtainthebenefitsofincometaxtreatiesenteredintobetweenPRCandtheircountries.
Inaddition,ifweareconsideredaPRCresidententerpriseunderthePRCEnterpriseIncomeTaxLaw,interestpayablebyustonon-residentholdersoftheNotesmaybesubjecttoPRCvalue-addedtaxatarateof6%andrelatedlocallevies,includingeducationalsurtaxandurbanmaintenanceandconstructiontaxatarateofupto0.
72%.
IfwearenotdeemedaPRCresidententerprise,non-residententerpriseandnon-residentindividualholdersofNoteswillnotbesubjecttoPRCincometaxonanypaymentsofintereston,orgainsfromthetransferof,Notes.
S-45TableofContentsU.
S.
FederalIncomeTaxConsiderationsThefollowingdiscussionisasummaryofU.
S.
federalincometaxconsiderationsgenerallyapplicabletotheownershipanddispositionoftheNotesacquiredinthisofferingforcashatthe"issueprice,"whichisthefirstpriceatwhichasubstantialamountoftheNotesoftherelevantseriesissoldtothepublic.
ThisdiscussionappliesonlytoU.
S.
Holders(asdefinedbelow)whoholdtheNotesascapitalassetsforU.
S.
federalincometaxpurposes(generally,propertyheldforinvestment).
ThisdiscussionisbasedontheInternalRevenueCodeof1986,asamended(the"Code"),U.
S.
Treasuryregulationspromulgatedthereunder("Regulations"),publishedpositionsoftheInternalRevenueService,courtdecisionsandotherapplicableauthorities,allascurrentlyineffectasofthedatehereofandallofwhicharesubjecttochangeordifferinginterpretations(possiblywithretroactiveeffect).
ThisdiscussiondoesnotdescribealloftheU.
S.
federalincometaxconsiderationsthatmaybeapplicabletoU.
S.
HoldersinlightoftheirparticularcircumstancesorU.
S.
HolderssubjecttospecialtreatmentunderU.
S.
federalincometaxlaw,suchas:banks,insurancecompaniesandotherfinancialinstitutions;entitiestreatedaspartnershipsforU.
S.
federalincometaxpurposes,Scorporationsorotherpass-throughentities;tax-exemptentities;realestateinvestmenttrusts;regulatedinvestmentcompanies;dealersortradersinsecurities;certainformercitizensorresidentsoftheUnitedStates;personsthatelecttomarktheirsecuritiestomarket;personsholdingNotesaspartofa"straddle,"conversion,orotherintegratedtransaction;personsthathaveafunctionalcurrencyotherthantheU.
S.
dollar;andpersonsthatactuallyorconstructivelyown10%ormoreofourequity(byvoteorvalue).
Inaddition,thisdiscussiondoesnotaddressanyU.
S.
stateorlocalornon-U.
S.
taxconsiderationsoranyU.
S.
federalestate,gift,alternativeminimumtaxorMedicarecontributiontaxconsiderations.
U.
S.
HoldersshouldconsulttheirtaxadvisorsconcerningtheU.
S.
federalincometaxconsiderationstotheminlightoftheirparticularsituationaswellasanyconsiderationsarisingunderthelawsofanyothertaxingjurisdiction.
Forpurposesofthisdiscussion,a"U.
S.
Holder"isabeneficialownerofNotesthatisforU.
S.
federalincometaxpurposes:anindividualwhoisacitizenorresidentoftheUnitedStates;acorporation(orotherentitytreatedasacorporationforU.
S.
federalincometaxpurposes)createdororganizedinorunderthelawsoftheUnitedStates,anystatethereof,ortheDistrictofColumbia;anestatetheincomeofwhichissubjecttoU.
S.
federalincometaxationregardlessofitssource;oratrustthat(i)issubjecttotheprimarysupervisionofacourtwithintheUnitedStatesandthecontrolofoneormoreU.
S.
personsor(ii)hasavalidelectionineffectunderapplicableRegulationstobetreatedasaU.
S.
person.
Ifapartnership(orotherentityorarrangementtreatedasapartnershipforU.
S.
federalincometaxpurposes)holdstheNotes,theU.
S.
federalincometaxtreatmentofapartnerwillgenerallydependonthestatusofthepartnerandtheactivitiesofthepartnership.
PartnersinapartnershipholdingNotesshouldconsulttheirtaxadvisorsregardingthetaxconsiderationsgenerallyapplicabletothemoftheownershipanddispositionofNotes.
S-46TableofContentsInterestPaymentsPaymentsofstatedinterest(includinganyadditionalamounts)willgenerallybeincludedinaU.
S.
Holder'sincomeasordinaryincomeatthetimethatsuchpaymentsarereceivedoraccruedinaccordancewithsuchholder'susualmethodofaccountingforU.
S.
federalincometaxpurposes.
InterestincomeinrespectoftheNoteswillgenerallyconstituteforeign-sourceincomeforpurposesofdeterminingwhetheranyforeigntaxcreditisavailabletoaU.
S.
HolderundertheU.
S.
federalincometaxlawsandwillgenerallyconstitute"passivecategoryincome.
"Asdescribedin"—PRCTaxation,"ifwearedeemedtobeaPRCresidententerpriseunderthePRCEnterpriseIncomeTaxLaw,paymentsofinterestinrespectoftheNotesmaybesubjecttoPRCwithholdingtaxes.
ForU.
S.
federalincometaxpurposes,theamountofinterestincludibleintaxableincomewouldincludeanyamountswithheldinrespectofPRCtaxes.
IfPRCwithholdingtaxesapplytointerestpaidwithrespecttotheNotes,certainU.
S.
HoldersmaybeeligibleforareducedrateofPRCtaxesundertheincometaxtreatybetweentheUnitedStatesandthePRC(the"U.
S.
-PRCIncomeTaxTreaty")ifcertainrequirementsaremet.
Inaddition,subjecttocertainconditionsandlimitations,ifanyPRCincometaxesweretobepaidorwithheldoninterestandwerenonrefundableundertheU.
S.
-PRCIncomeTaxTreaty,aU.
S.
HoldermaybeentitledtoaforeigntaxcreditinrespectofanysuchPRCincometaxesor,alternatively,aU.
S.
Holdermaydeductsuchtaxesincomputingitstaxableincomeprovidedthatsuchholderdoesnotelecttoclaimaforeigntaxcreditfortherelevanttaxableyear.
AnelectiontodeductforeigntaxesinsteadofclaimingforeigntaxcreditsappliestoalltaxespaidoraccruedinthetaxableyeartoforeigncountriesandpossessionsoftheUnitedStates.
Therulesregardingforeigntaxcreditsanddeductionofforeigntaxesarecomplex.
U.
S.
Holdersshouldconsulttheirtaxadvisorsregardingtheavailabilityofforeigntaxcreditsordeductionsinlightoftheirparticularcircumstances.
SaleorOtherTaxableDispositionoftheNotesUponthesaleorothertaxabledispositionoftheNotes,aU.
S.
Holderwillgenerallyrecognizecapitalgainorlossequaltothedifferencebetweentheamountrealizedonthesaleorothertaxabledisposition(lessanyamountattributabletoaccruedbutunpaidinterest,whichwillgenerallybetaxableasinterestinthemannerdescribedabovetotheextentnotpreviouslyincludedinsuchholder'sgrossincome)andsuchholder'sadjustedtaxbasisintheNotes.
AU.
S.
Holder'sadjustedtaxbasisintheNoteswillgenerallyequalthecostoftheNotes.
Anycapitalgainorlosswillgenerallybelong-termcapitalgainorlossif,atthetimeofthesaleorothertaxabledisposition,suchholder'sholdingperiodintheNotesexceedsoneyear.
Long-termcapitalgainrecognizedbynon-corporateU.
S.
Holderswillgenerallybesubjecttotaxationatareducedrate.
Thedeductibilityofcapitallossesissubjecttolimitations.
Asdescribedin"—PRCTaxation,"ifwearedeemedtobeaPRCresidententerpriseunderthePRCEnterpriseIncomeTaxLaw,gainsfromthedispositionoftheNotesmaybesubjecttoPRCincometaxes.
AU.
S.
Holdermayuseforeigntaxcreditstooffsetonlytheportionofsuchholder'sU.
S.
taxliabilityconsideredtobeattributabletoforeign-sourceincome.
Generally,gainorlossfromthedispositionoftheNoteswillbeU.
S.
-sourceforforeigntaxcreditlimitationpurposes,whichwillgenerallylimittheavailabilityofforeigntaxcredits.
However,ifaU.
S.
HolderiseligibleforthebenefitsoftheU.
S.
-PRCIncomeTaxTreaty,suchholdermaybeabletoelecttotreatsuchgainasPRC-sourceincomeundertheU.
S.
-PRCIncomeTaxTreaty.
IfaU.
S.
HolderisnoteligibleforthebenefitsoftheTreatyordoesnotelecttotreatanygainasPRC-sourcegain,thensuchholderwouldgenerallynotbeabletouseanyforeigncreditarisingfromanyPRCtaximposedonthedispositionoftheNotes,unlesssuchcreditcanbeapplied(subjecttoapplicablelimitations)againsttaxdueonotherincometreatedasderivedfromnon-U.
S.
sources.
Therulesregardingforeigntaxcreditsanddeductionofforeigntaxesarecomplex.
U.
S.
HoldersshouldconsulttheirtaxadvisorsregardingtheireligibilityforbenefitsundertheU.
S.
-PRCIncomeTaxTreatyandtheavailabilityofforeigntaxcreditsordeductionsinlightoftheirparticularcircumstances.
S-47TableofContentsTHEPRECEDINGDISCUSSIONOFU.
S.
FEDERALINCOMETAXCONSIDERATIONSISINTENDEDFORGENERALINFORMATIONONLYANDDOESNOTCONSTITUTETAXADVICE.
U.
S.
HOLDERSSHOULDCONSULTTHEIRTAXADVISORSASTOTHEU.
S.
FEDERAL,STATE,LOCAL,ANDNON-U.
S.
TAXCONSIDERATIONSTOTHEMOFTHEOWNERSHIPANDDISPOSITIONOFTHENOTESINTHEIRPARTICULARCIRCUMSTANCES.
S-48TableofContentsUNDERWRITINGSubjecttothetermsandconditionscontainedintheunderwritingagreement,datedasofthedateofthisprospectussupplementbetweenusandtheunderwritersnamedbelow,forwhomBofASecurities,Inc.
andUBSAGHongKongBranchareactingasrepresentatives,wehaveagreedtoselltoeachunderwriter,andeachunderwriterhasseverallyagreedtopurchasefromus,theprincipalamountoftheNotesofeachseriessetforthoppositeitsnamebelow:UnderwritersPrincipalAmountof20NotesPrincipalAmountof20NotesBofASecurities,Inc.
UBSAGHongKongBranchTheHongkongandShanghaiBankingCorporationLimitedBankofChinaLimitedDBSBankLtd.
StandardCharteredBankTotalUS$US$TheunderwritersareofferingtheNotessubjecttotheiracceptanceoftheNotesfromus,andsubjecttopriorsale.
TheunderwritingagreementprovidesthattheobligationsoftheunderwriterstopurchasetheNotesaresubjecttoapprovalofcertainlegalmattersbycounselandtocertainotherconditions.
TheunderwritersmustpurchasealltheNotesiftheypurchaseanyoftheNotes.
Theunderwritersreservetherighttowithdraw,cancelormodifyofferstoinvestorsandtorejectordersinwholeorinpart.
TheunderwritersinitiallyproposetoofferpartoftheNotesofeachseriesdirectlytothepublicattheofferingpricesdescribedonthecoverpageofthisprospectussupplement.
AftertheinitialofferingoftheNotes,theunderwritersmayfromtimetotimevarytheofferingpricesandothersellingterms.
TheofferingoftheNotesbytheunderwritersissubjecttoreceiptandacceptanceandsubjecttotheunderwriters'righttorejectanyorderinwholeorinpart.
Certainoftheunderwritersarenotbroker-dealersregisteredwiththeSEC.
Therefore,totheextenttheyintendtomakeanyoffersorsalesofNotesintheUnitedStates,theywilldosoonlythroughoneormoreregisteredbroker-dealersincompliancewithapplicablesecuritieslawsandregulations,andFINRArules.
UBSAGHongKongBranchwilloffertheNotesintheUnitedStatesthroughitsregisteredbroker-dealeraffiliateUBSSecuritiesLLC.
StandardCharteredBankwillnoteffectanyoffersorsalesofanynotesintheUnitedStatesunlessitisthroughoneormoreU.
S.
registeredbroker-dealersaspermittedbytheregulationsofFINRA.
BankofChinaLimitedhasagreedtoofferandselltheNotesonlyoutsidetheUnitedStates.
Thefollowingtableshowstheunderwritingdiscountsthatwewillpaytotheunderwritersinconnectionwiththisoffering:PaidByUsPer20Note%Per20Note%TotalUS$Expensesassociatedwiththisofferingtobepaidbyus,otherthanunderwritingcommissionsanddiscounts,areestimatedtobeUS$million.
Wehaveagreedthat,foraperioduntil45daysafterthedateofclosing(whichisexpectedtobethefifthbusinessdayfollowingthedateofthisprospectussupplement),wewillnot,withoutthepriorwrittenconsentoftherepresentatives,offer,sell,contracttosellorotherwisedisposeofanydebtsecuritiesissuedorguaranteedbyus,otherthanindebtednessdominatedinRMBandinitiallyoffered,marketedorissuedprimarilytopersonsresidentinthePRC.
Therepresentativesintheirsolediscretionmayconsenttotheofferingandsaleofsuchsecuritiesbyusatanytimewithoutnotice.
Wehavealsoagreedtoindemnifytheunderwritersagainstcertainliabilities,includingliabilitiesundertheSecuritiesAct,orcontributetopaymentsthattheunderwritersmayberequiredtomakeinrespectofthoseliabilities.
S-49TableofContentsTheNoteswillconstituteanewclassofsecuritieswithnoestablishedtradingmarket.
Approvalin-principlehasbeenreceivedforthelistingandquotationoftheNotesontheSGX-ST.
However,wecannotassureyouthatthepricesatwhichtheNoteswillsellinthemarketafterthisofferingwillnotbelowerthantheinitialofferingpriceorthatanactivetradingmarketfortheNoteswilldevelopandcontinueafterthisoffering.
TheunderwritershaveadvisedusthattheycurrentlyintendtomakeamarketintheNotes.
However,theyarenotobligatedtodosoandtheymaydiscontinueanymarket-makingactivitieswithrespecttotheNotesatanytimewithoutnotice.
Accordingly,wecannotassureyouastotheliquidityof,orthetradingmarketfor,theNotes.
Theunderwriters(ortheiraffiliates)mayengageinover-allotment,stabilizingtransactions,syndicatecoveringtransactionsandpenaltybidstotheextentpermittedbyapplicablelawsandregulations.
Over-allotmentinvolvessalesinexcessoftheofferingsize,whichcreatesashortposition.
Stabilizingtransactionspermitbidstopurchasetheunderlyingsecuritysolongasthestabilizingbidsdonotexceedaspecifiedmaximum.
CoveringtransactionsinvolvepurchaseoftheNotesintheopenmarketafterthedistributionhasbeencompletedinordertocovershortpositions.
PenaltybidspermittheunderwriterstoreclaimasellingconcessionfromadealerwhentheNotesoriginallysoldbysuchdealerarepurchasedinastabilizingtransactionoracoveringtransactiontocovershortpositions.
NeitherwenortheunderwritersmakeanyrepresentationorpredictionastothedirectionormagnitudeofanyeffectthatthetransactionsdescribedabovemayhaveonthepriceoftheNotes.
Inaddition,neitherwenortheunderwritersmakeanyrepresentationthattheunderwriterswillengageinthesetransactionsorthatthesetransactions,oncecommenced,willnotbediscontinuedwithoutnotice.
WeexpecttodelivertheNotesagainstpaymentfortheNotesonoraboutthedatespecifiedinthelastparagraphofthecoverpageofthisprospectussupplement,whichwillbethefifthbusinessdayfollowingthedateofthepricingoftheNotes.
UnderRule15c6-1oftheExchangeAct,tradesinthesecondarymarketgenerallysettleinthreebusinessdays,andpurchaserswhowishtotradeNotesonthedateofpricingorthenextsucceedingbusinessdaywillberequired,byvirtueofthefactthattheNotesinitiallywillsettleinT+5,tospecifyalternativesettlementarrangementstopreventafailedsettlement.
PurchasersoftheNoteswhowishtotradetheNotesonthedateofpricingorthenextsucceedingbusinessdayshouldconsulttheirownadvisor.
TheaddressofBofASecurities,Inc.
isOneBryantPark,NewYork,NewYork,10036,UnitedStates.
TheaddressofUBSAGHongKongBranchis52/FTwoInternationalFinanceCentre,8FinanceStreet,Central,HongKong.
SalesOutsidetheUnitedStatesBritishVirginIslandsNoinvitationwillbemadedirectlyorindirectlytoanypersonresidentintheBVItosubscribeforanyoftheNotes.
CanadaTheNotesmaybesoldonlytopurchaserspurchasing,ordeemedtobepurchasing,asprincipalthatareaccreditedinvestors,asdefinedinNationalInstrument45-106ProspectusExemptionsorsubsection73.
3(1)oftheSecuritiesAct(Ontario),andarepermittedclients,asdefinedinNationalInstrument31-103RegistrationRequirements,ExemptionsandOngoingRegistrantObligations.
AnyresaleoftheNotesmustbemadeinaccordancewithanexemptionfrom,orinatransactionnotsubjectto,theprospectusrequirementsofapplicablesecuritieslaws.
SecuritieslegislationincertainprovincesorterritoriesofCanadamayprovideapurchaserwithremediesforrescissionordamagesifthisprospectussupplementandtheaccompanyingprospectuscontainamisrepresentation,providedthattheremediesforrescissionordamagesareexercisedbythepurchaserwithinthetimelimitprescribedbythesecuritieslegislationofthepurchaser'sprovinceorterritory.
Thepurchasershouldrefertoanyapplicableprovisionsofthesecuritieslegislationofthepurchaser'sprovinceorterritoryforparticularsoftheserightsorconsultwithalegaladvisor.
S-50TableofContentsPursuanttosection3A.
3(or,inthecaseofsecuritiesissuedorguaranteedbythegovernmentofanon-Canadianjurisdiction,section3A.
4)ofNationalInstrument33-105UnderwritingConflicts(NI33-105),theunderwritersarenotrequiredtocomplywiththedisclosurerequirementsofNI33-105regardingunderwriterconflictsofinterestinconnectionwiththisoffering.
CaymanIslandsNoNoteswillbeofferedorsoldtothepublicintheCaymanIslands.
EuropeanEconomicAreaProhibitionofSalestoRetailInvestorsTheNotesarenotintendedtobeoffered,soldorotherwisemadeavailabletoandshouldnotbeoffered,soldorotherwisemadeavailabletoanyretailinvestorintheEEA.
Forthesepurposestheexpression"retailinvestor"meansapersonwhoisone(ormore)ofthefollowing:(i)aretailclientasdefinedinpoint(11)ofArticle4(1)ofDirective2014/65/EUonMarketsinFinancialInstruments("MiFIDII");or(ii)acustomerwithinthemeaningofDirective(EU)2016/97,wherethatcustomerwouldnotqualifyasaprofessionalclientasdefinedinpoint(10)ofArticle4(1)ofMiFIDII.
ThisprospectussupplementhasbeenpreparedonthebasisthatanyofferofNotesinanyMemberStateoftheEEAwillbemadepursuanttoanexemptionunderRegulation(EU)2017/1129(the"ProspectusRegulation")fromtherequirementtopublishaprospectusforoffersofNotes.
ThisprospectussupplementisnotaprospectusforthepurposesoftheProspectusRegulation.
HongKongThisprospectussupplementandtheaccompanyingprospectushavenotbeenandwillnotberegisteredwiththeRegistrarofCompaniesinHongKong.
Accordingly,exceptasmentionedbelow,thisprospectussupplementmaynotbeissued,circulatedordistributedinHongKong.
Acopyofthisprospectussupplementandtheaccompanyingprospectusmay,however,beissuedtoprospectiveapplicantsfortheNotesinHongKonginamannerwhichdoesnotconstituteanofferoftheNotestothepublicinHongKongoranissue,circulationordistributioninHongKongofthisprospectussupplementandtheaccompanyingprospectusforthepurposesoftheCompanies(WindingUpandMiscellaneousProvisions)Ordinance(Chapter32oftheLawsofHongKong).
Noadvertisement,invitationordocumentrelatingtotheNotesmaybeissuedormaybeinthepossessionofanypersonotherthanwithrespecttotheNoteswhichareorareintendedtobedisposedofonlytopersonsoutsideHongKongoronlyto"professionalinvestors"withinthemeaningasdefinedintheSecuritiesandFuturesOrdinance(Chapter571oftheLawsofHongKong)andanyrulesmadethereunder.
JapanTheNoteshavenotbeenandwillnotberegisteredundertheFinancialInstrumentsandExchangeLawofJapan(theFinancialInstrumentsandExchangeLaw)andeachunderwriterhasagreedthatitwillnotofferorsellanyNotes,directlyorindirectly,inJapanorto,orforthebenefitof,anyresidentofJapan(whichtermasusedhereinmeansanypersonresidentinJapan,includinganycorporationorotherentityorganizedunderthelawsofJapan),ortoothersforre-offeringorresale,directlyorindirectly,inJapanortoaresidentofJapan,exceptpursuanttoanexemptionfromtheregistrationrequirementsof,andotherwiseincompliancewith,theFinancialInstrumentsandExchangeLawandanyotherapplicablelaws,regulationsandministerialguidelinesofJapan.
SingaporeThisprospectussupplementhasnotbeenregisteredasaprospectuswiththeMonetaryAuthorityofSingapore.
Accordingly,thisprospectussupplementandanyotherdocumentormaterialinconnectionwiththeS-51TableofContentsofferorsale,orinvitationforsubscriptionorpurchase,oftheNotesmaynotbecirculatedordistributed,normaytheNotesbeofferedorsold,orbemadethesubjectofaninvitationforsubscriptionorpurchase,whetherdirectlyorindirectly,toanypersoninSingaporeotherthan:(i)toaninstitutionalinvestor(asdefinedinSection4AoftheSFA)pursuanttoSection274oftheSFA,(ii)toarelevantperson(asdefinedinSection275(2)oftheSFA)pursuanttoSection275(1)oftheSFA,oranypersonpursuanttoSection275(1A)oftheSFA,andinaccordancewiththeconditionsspecifiedinSection275oftheSFAand(whereapplicable)Regulation3oftheSecuritiesandFutures(ClassesofInvestors)Regulations2018,or(iii)otherwisepursuantto,andinaccordancewiththeconditionsof,anyotherapplicableprovisionoftheSFA.
WheretheNotesaresubscribedorpurchasedunderSection275oftheSFAbyarelevantpersonwhichis:(a)acorporation(whichisnotanaccreditedinvestor(asdefinedinSection4AoftheSFA))thesolebusinessofwhichistoholdinvestmentsandtheentiresharecapitalofwhichisownedbyoneormoreindividuals,eachofwhomisanaccreditedinvestor;or(b)atrust(wherethetrusteeisnotanaccreditedinvestor)whosesolepurposeistoholdinvestmentsandeachbeneficiaryofthetrustisanindividualwhoisanaccreditedinvestor,securitiesorsecurities-basedderivativescontracts(eachtermasdefinedinSection2(1)oftheSFA)ofthatcorporationorthebeneficiaries'rightsandinterest(howsoeverdescribed)inthattrustshallnotbetransferredwithinsixmonthsafterthatcorporationorthattrusthasacquiredtheNotespursuanttoanoffermadeunderSection275oftheSFAexcept:(1)toaninstitutionalinvestorortoarelevantperson,ortoanypersonarisingfromanofferreferredtoinSection275(1A)orSection276(4)(i)(B)oftheSFA;or(2)wherenoconsiderationisorwillbegivenforthetransfer;or(3)wherethetransferisbyoperationoflaw;or(4)asspecifiedinSection276(7)oftheSFA;or(5)asspecifiedinRegulation37AoftheSecuritiesandFutures(OffersofInvestments)(SecuritiesandSecurities-basedDerivativesContracts)Regulations2018.
AnyreferencetotheSFAisareferencetotheSecuritiesandFuturesAct,Chapter289ofSingaporeandareferencetoanytermasdefinedintheSFAoranyprovisionintheSFAisareferencetothattermasmodifiedoramendedfromtimetotimeincludingbysuchofitssubsidiarylegislationasmaybeapplicableattherelevanttime.
ThePRCThisprospectussupplementandtheaccompanyingprospectusmaynotbecirculatedordistributedinthePRCandtheNotesmaynotbeofferedorsold,andwillnotbeofferedorsoldtoanypersonforre-offeringorresale,directlyorindirectly,toanyresidentofthePRC.
UnitedKingdomNoinvitationorinducementtoengageininvestmentactivity(withinthemeaningofsection21oftheFinancialServicesandMarketsAct2000("FSMA")receivedbytheunderwritersinconnectionwiththeissueorsaleoftheNotesmaybecommunicatedorcausedtobecommunicatedexceptincircumstancesinwhichsection21(1)ofFSMAdoesnotapplytotheunderwriters.
AllapplicableprovisionsofFSMAmustbecompliedwithrespecttoanythingdoneortobedonebytheunderwritersinrelationtoanyNotesin,fromorotherwiseinvolvingtheUnitedKingdom.
S-52TableofContentsOtherRelationshipsTheunderwritersandtheiraffiliatesarefullservicefinancialinstitutionsengagedinvariousactivities,whichmayincludesecuritiestrading,commercialandinvestmentbanking,financialadvising,investmentmanagement,investmentresearch,principalinvestment,hedging,financingandbrokerageactivities.
Certainoftheunderwritersandtheirrespectiveaffiliateshaveinthepastengaged,andmayinthefutureengage,intransactionswithandperformservices,includingfinancialadvisory,commercialbankingandinvestmentbankingservices,forusandouraffiliatesintheordinarycourseofbusinessforwhichtheyreceivedorwillreceivecustomaryfeesandexpenses.
Wemayenterintohedgingorotherderivativetransactionsaspartofourriskmanagementstrategywiththeunderwritersandtheiraffiliates,whichmayincludetransactionsrelatingtoourobligationsundertheNotes.
Ourobligationsunderthesetransactionsmaybesecuredbycashorothercollateral.
Intheordinarycourseoftheirvariousbusinessactivities,theunderwritersandtheirrespectiveaffiliatesmaymakeorholdabroadarrayofinvestmentsandactivelytradedebtandequitysecurities(orrelatedderivativesecurities)andfinancialinstruments(includingbankloans)fortheiraccountandfortheaccountsoftheircustomers,andsuchinvestmentandsecuritiesactivitiesmayinvolveoursecuritiesand/orinstruments,itsdirectorindirectsubsidiariesandconsolidatedaffiliatedentities.
Theunderwritersandtheirrespectiveaffiliatesmayalsomakeinvestmentrecommendationsand/orpublishorexpressindependentresearchviewsinrespectofsuchsecuritiesorinstrumentsandmayatanytimehold,orrecommendtoclientsthattheyacquire,longand/orshortpositionsinsuchsecuritiesandinstruments.
TheunderwritersorcertainoftheiraffiliatesmaypurchaseNotesandbeallocatedNotesforassetmanagementand/orproprietarypurposesandnotwithaviewtodistribution.
S-53TableofContentsLEGALMATTERSWearebeingrepresentedbySkadden,Arps,Slate,Meagher&FlomLLPwithrespecttolegalmattersofUnitedStatesfederalsecuritiesandNewYorkStatelaw,byMaplesandCalder(HongKong)LLPwithrespecttolegalmattersofCaymanIslandslawandbyZhongLunLawFirmwithrespecttolegalmattersofPRClaw.
TheunderwritersarebeingrepresentedbyDavisPolk&WardwellLLPwithrespecttolegalmattersofUnitedStatesfederalsecuritiesandNewYorkStatelawandJunHeLLPwithrespecttolegalmattersofPRClaw.
ThevalidityoftheNoteswillbepasseduponforusbySkadden,Arps,Slate,Meagher&FlomLLPandfortheunderwritersbyDavisPolk&WardwellLLP.
Skadden,Arps,Slate,Meagher&FlomLLPmayrelyuponMaplesandCalder(HongKong)LLPwithrespecttomattersgovernedbyCaymanIslandslawandZhongLunLawFirmwithrespecttomattersgovernedbyPRClaw,andDavisPolk&WardwellLLPmayrelyuponJunHeLLPwithrespecttomattersgovernedbyPRClaw.
S-54TableofContentsEXPERTSThefinancialstatementsandmanagement'sassessmentoftheeffectivenessofinternalcontroloverfinancialreporting(whichisincludedinManagement'sReportonInternalControloverFinancialReporting)incorporatedinthisProspectusbyreferencetotheAnnualReportonForm20-FfortheyearendedDecember31,2018havebeensoincorporatedinrelianceonthereportofPricewaterhouseCoopersZhongTianLLP,anindependentregisteredpublicaccountingfirm,givenontheauthorityofsaidfirmasexpertsinauditingandaccounting.
TheofficesofPricewaterhouseCoopersZhongTianLLParelocatedat6/FDBSBankTower,1318LuJiaZuiRingRoad,PudongNewArea,Shanghai200120,People'sRepublicofChina.
S-55TableofContentsPROSPECTUSJD.
com,Inc.
DebtSecuritiesWemayofferandselldebtsecuritiesfromtimetotime.
Thisprospectusmaynotbeusedtoconsummateanysalesofsecuritiesunlessaccompaniedbyaprospectussupplementwhichwilldescribethemethodandtermsoftheoffering.
Wewillprovidethespecifictermsofanyofferingandtheofferedsecuritiesinoneormoresupplementstothisprospectus.
Anyprospectussupplementmayalsoadd,updateorchangeinformationcontainedinthisprospectus.
Investinginoursecuritiesinvolvesrisks.
Youshouldcarefullyconsidertherisksdescribedunder"RiskFactors"onpage8ofthisprospectus,inanyaccompanyingprospectussupplementorinthedocumentsincorporatedbyreferenceintothisprospectusbeforemakingadecisiontoinvestinoursecurities.
Wemayofferandsellthesedebtsecuritiestoorthroughoneormoreagents,underwriters,dealersorotherthirdpartiesordirectlytooneormorepurchasersonacontinuousordelayedbasis.
Thenamesofanyunderwriterswillbestatedintheapplicableprospectussupplement.
NeithertheSecuritiesandExchangeCommissionnoranystatesecuritiescommissionhasapprovedordisapprovedofthesesecuritiesordeterminedifthisprospectusistruthfulorcomplete.
Anyrepresentationtothecontraryisacriminaloffense.
ThedateofthisprospectusisDecember3,2019.
TableofContentsTABLEOFCONTENTSABOUTTHISPROSPECTUS1FORWARD-LOOKINGSTATEMENTS2OURCOMPANY3RISKFACTORS8USEOFPROCEEDS9DESCRIPTIONOFDEBTSECURITIES10LEGALOWNERSHIPOFDEBTSECURITIES26ENFORCEABILITYOFCIVILLIABILITIES28PLANOFDISTRIBUTION30LEGALMATTERS32EXPERTS33WHEREYOUCANFINDMOREINFORMATION34INCORPORATIONOFCERTAINDOCUMENTSBYREFERENCE35Youshouldrelyonlyontheinformationcontainedorincorporatedbyreferenceintothisprospectus,intheapplicableprospectussupplementorinanyfreewritingprospectusfiledbyuswiththeSEC.
Wehavenotauthorizedanyotherpersontoprovideyouwithdifferentinformation.
Ifanyoneprovidesyouwithdifferentorinconsistentinformation,youshouldnotrelyonit.
Youshouldnotassumethattheinformationcontainedorincorporatedbyreferenceintothisprospectusandanyprospectussupplementorinanyfreewritingprospectusisaccurateasofanydateotherthantherespectivedatesthereof.
Ourbusiness,financialcondition,resultsofoperationsandprospectsmayhavechangedsincethosedates.
iTableofContentsABOUTTHISPROSPECTUSThisprospectusispartofaregistrationstatementthatwefiledwiththeU.
S.
SecuritiesandExchangeCommission,ortheSEC,usinga"shelf"registrationprocess.
Underthisshelfregistrationprocess,wemayofferandsellthedebtsecuritiesdescribedinthisprospectusinoneormoreofferings.
Thisprospectusprovidesyouwithageneraldescriptionofthedebtsecuritieswemayoffer.
Eachtimeweusethisprospectustoofferdebtsecurities,wewillprovideoneormoreprospectussupplementsthatwillcontainspecificinformationabouttheofferingandthetermsofthosedebtsecurities.
Wemayalsoadd,updateorchangeotherinformationcontainedinthisprospectusbymeansofaprospectussupplementorbyincorporatingbyreferenceinformationwefilewiththeSEC.
TheregistrationstatementonfilewiththeSECincludesexhibitsthatprovidemoredetailonthemattersdiscussedinthisprospectus.
Ifthereisanyinconsistencybetweentheinformationinthisprospectusandanyrelatedprospectussupplement,youshouldrelyontheinformationintheapplicableprospectussupplement.
Beforeyouinvestinanysecuritiesofferedbythisprospectus,youshouldreadthisprospectus,anyapplicableprospectussupplementsandtherelatedexhibitstotheregistrationstatementfiledwiththeSEC,togetherwiththeadditionalinformationdescribedundertheheadings"WhereYouCanFindMoreInformation"and"IncorporationofCertainDocumentsbyReference.
"Inthisprospectus,unlessotherwiseindicatedorunlessthecontextotherwiserequires,"annualactivecustomeraccounts"refertocustomeraccountsthatmadeatleastonepurchaseduringthetwelvemonthsendedontherespectivedates,includingbothonlinedirectsalesandonlinemarketplace;"China"orthe"PRC"referstothePeople'sRepublicofChina,excluding,forthepurposesofthisprospectusonly,HongKong,MacauandTaiwan;"ordinaryshares"refertoourClassAandClassBordinaryshares,parvalueUS$0.
00002pershare;"RMB"referstothelegalcurrencyofChina;"U.
S.
dollars,""US$,""dollars"and"$"refertothelegalcurrencyoftheUnitedStates;and"we,""us,""ourcompany"and"our"refertoJD.
com,Inc.
,itssubsidiariesanditsconsolidatedvariableinterestentitiesandtheirsubsidiaries.
Referencesinanyprospectussupplementto"theaccompanyingprospectus"aretothisprospectusandto"theprospectus"aretothisprospectusandtheapplicableprospectussupplementtakentogether.
Wearenotmakinganoffertosellthesecuritiesinanyjurisdictionwheretheofferorsaleisnotpermitted.
OurreportingcurrencyisRMB.
Unlessotherwisenoted,alltranslationsfromRMBtoU.
S.
dollarsandfromU.
S.
dollarstoRMBinthisprospectusaremadeatarateofRMB7.
1477toUS$1.
00,theexchangerateineffectasofSeptember30,2019assetforthintheH.
10statisticalreleaseofTheBoardofGovernorsoftheFederalReserveSystem.
WemakenorepresentationthatanyRMBorU.
S.
dollaramountscouldhavebeen,orcouldbe,convertedintoU.
S.
dollarsorRMB,asthecasemaybe,atanyparticularrate,oratall.
OnNovember29,2019,theexchangeratewasRMB7.
0308toUS$1.
00.
1TableofContentsFORWARD-LOOKINGSTATEMENTSThisprospectusandthedocumentsincorporatedbyreferencecontainforward-lookingstatementsthatreflectourcurrentexpectationsandviewsoffutureevents.
Thesestatementsaremadeunderthe"safeharbor"provisionsoftheU.
S.
PrivateSecuritiesLitigationReformActof1995.
Youcanidentifytheseforward-lookingstatementsbyterminologysuchas"may,""will,""expect,""anticipate,""aim,""intend,""plan,""believe,""estimate,""is/arelikelyto,""future,""potential,""continue"orothersimilarexpressions.
Wehavebasedtheseforward-lookingstatementslargelyonourcurrentexpectationsandprojectionsaboutfutureeventsandfinancialtrendsthatwebelievemayaffectourfinancialcondition,resultsofoperations,businessstrategyandfinancialneeds.
Theseforward-lookingstatementsincludestatementsrelatingto,amongotherthings:ourgoalsandstrategies;ourfuturebusinessdevelopment,financialconditionsandresultsofoperations;theexpectedgrowthoftheretailandonlineretailmarketsinChina;ourexpectationsregardingdemandforandmarketacceptanceofourproductsandservices;ourexpectationsregardingourrelationshipswithcustomers,suppliersandthird-partysellers;ourplanstoinvestinourfulfillmentinfrastructureandtechnologyplatformaswellasnewbusinessinitiatives;competitioninourindustry;andrelevantgovernmentpoliciesandregulationsrelatingtoourindustry.
Theforward-lookingstatementsincludedinthisprospectus,inthedocumentsincorporatedbyreferencehereinandinanyprospectussupplementaresubjecttorisks,uncertaintiesandassumptionsaboutourcompany.
Ouractualresultsofoperationsmaydiffermateriallyfromtheforward-lookingstatementsasaresultoftheriskfactorsdisclosedinthisprospectus,inthedocumentsincorporatedbyreferencehereinorinanyaccompanyingprospectussupplement.
Wewouldliketocautionyounottoplaceunduerelianceontheseforward-lookingstatements,andyoushouldreadthesestatementsinconjunctionwiththeriskfactorsdisclosedherein,inthedocumentsincorporatedbyreferencehereinorinanyaccompanyingprospectussupplementforamorecompletediscussionoftherisksofaninvestmentinoursecurities.
Weoperateinarapidlyevolvingenvironment.
Newrisksemergefromtimetotimeanditisimpossibleforourmanagementtopredictallriskfactors,norcanweassesstheimpactofallfactorsonourbusinessortheextenttowhichanyfactor,orcombinationoffactors,maycauseactualresultstodifferfromthosecontainedinanyforward-lookingstatement.
Wedonotundertakeanyobligationtoupdateorrevisetheforward-lookingstatementsexceptasrequiredunderapplicablelaw.
2TableofContentsOURCOMPANYOverviewWearealeadingtechnology-drivene-commercecompanyandretailinfrastructureserviceproviderinChina.
Webelieve"BoundarylessRetail,"theideaofenablingconsumerstobuywhatevertheywant,whereverandwhenevertheywantit,representsthefutureretailtrendforourindustryasconsumersarebecomingmoreinvolvedinallaspectsofacompany'svaluechainandproactivelyinteractwithbusinesses.
Consumersnowadaysnotonlycontinueseekingout"lowcost"and"convenience,"butalsodemandmorepersonalizedanddiversifiedscenariosandparticipationatthesametime.
Theinteractionbetweentheseevolvingconsumerdemandsandtechnologyadvancementwillfurthertransformtheretailinfrastructureandexperience.
Wearefocusedonprovidingconsumerswithanenjoyableonlineretailexperience.
Throughourcontent-richanduser-friendlywebsitewww.
jd.
comandmobileapps,weofferawideselectionofauthenticproductsatcompetitivepriceswhicharedeliveredinaspeedyandreliablemanner.
Wealsoofferconvenientonlineandin-personpaymentoptionsandcomprehensivecustomerservices.
Inordertohavebettercontroloverfulfillmentandtoensurecustomersatisfaction,wehavebuiltourownnationwidefulfillmentinfrastructureandlast-miledeliverynetwork,staffedbyourownemployees,whichsupportsbothouronlinedirectsalesandouronlinemarketplacebusinesses.
Wehaveestablishedstrongrelationshipswithoursuppliersaswedevelopouronlinedirectsalesbusiness.
Furthermore,ouronlinemarketplacebusinesshasallowedustosignificantlyexpandourofferingsofproductsandservices.
Asaresultofoursuperiorcustomerexperience,ourbusinesshasgrownrapidly.
Weareatechnology-drivencompanyandhaveinvestedheavilyindevelopingourownhighlyscalableproprietarytechnologyplatformthatsupportsourrapidgrowthandenablesustoprovidevalue-addedtechnologyservices.
Inaddition,oursophisticatedbusinessintelligencesystemenablesustorefineourmerchandisesourcingstrategytomanageourinventoryturnoverandcontrolcostsandtoleverageourlargecustomerdatabasetocreatecustomizedproductrecommendationsandcost-effectiveandtargetedadvertising.
Growthinthenumberofouractivecustomeraccountsisakeydriverofourrevenuegrowth.
Wehad226.
6million,292.
5million,305.
3millionand334.
4millionannualactivecustomeraccountsin2016,2017,2018andforthetwelvemonthsendedSeptember30,2019,respectively.
Thisincreasewasprimarilydrivenbyoursuccessinattractingnewactivecustomeraccounts,aswellasbyoursuccessingeneratingrepeatpurchasesfromexistingcustomeraccounts.
Wehaveagrowingandloyalactivecustomerbase.
Overtheyears,ourcustomershaveshownloyaltytousthroughtheirincreasedactivitylevels.
Forexample,forthesamegroupofcustomeraccountsthatwereactivein2008,theiraveragenumberofpurchasesincreasedeachyearthereafter,fromapproximately3.
7in2008to4.
4in2009,6.
2in2010,10.
7in2011,14.
9in2012,16.
6in2013,18.
7in2014,21.
8in2015,25.
7in2016,30.
2in2017and31.
5in2018.
WegeneratedtotalnetrevenuesofRMB258.
3billion,RMB362.
3billion,RMB462.
0billionandRMB406.
2billion(US$56.
8billion)in2016,2017,2018andfortheninemonthsendedSeptember30,2019,respectively.
WeincurrednetlossesfromcontinuingoperationsofRMB2,049million,RMB19million,andRMB2,801millionin2016,2017and2018,respectively,andgeneratednetincomefromcontinuingoperationsofRMB8,336million(US$1,166million)fortheninemonthsendedSeptember30,2019.
OnlineDirectSalesInouronlinedirectsalesbusiness,weacquireproductsfromsuppliersandsellthemdirectlytocustomers.
Wefosteraninteractiveusercommunitythatdiscusses,ratesandreviewsourproductsandservices.
WebelievewehavethelargestonlineproductreviewdatabaseofanyonlinedirectsalescompanyinChinawith3TableofContentsapproximately5,423millionproductreviewsgeneratedbyourcustomersasofSeptember30,2019.
Aswenowofferawiderangeofproductcategoriesthroughouronlinedirectsalesbusinessmodel,netrevenuesfromelectronicsproducts,whichincludecomputers,mobilehandsetsandothermobiledigitalproducts,andhomeappliances,havedeclinedasapercentageofourtotalnetrevenues.
AsofSeptember30,2019,wesourcedproductsfromover24,000suppliers.
WebelievethatlargescaleandmarketleadingpositionarecriticaltosuccessintheonlineretailmarketinChinaandcanprovideimportantcompetitiveadvantagestous.
RetailInfrastructureOnlineMarketplace.
Inouronlinemarketplacebusiness,third-partysellersofferproductstocustomersonouronlinemarketplaceandpayuscommissionsontheirsales.
WelaunchedouronlinemarketplaceinOctober2010andhavebeenaddingnewproductsandservices,includingpremiuminternationalbrandssincethen.
AsofSeptember30,2019,thereweremorethan250,000third-partysellersonouronlinemarketplace.
Weprovidetransactionprocessingandbillingservicesonallordersplacedonouronlinemarketplaceandrequirethird-partysellerstomeetourstrictstandardsforauthenticityandreliability.
Wemonitorthird-partysellers'performanceandactivitiesonouronlinemarketplacecloselytoensurethattheymeetourrequirementsforauthenticproductsandhigh-qualitycustomerservice.
Wetagcertaintopstoresonourplatformas"JDHaodian(),"basedoneachthird-partymerchant'squalityofserviceduringtheentirepurchaseprocess.
Suchcertificationcanhelpthetopmerchantsimprovetheirsalesvolumesontheplatform.
Furthermore,itsetsabenchmarktoencourageothermerchantstoimprovetheirqualityofservice.
Weaimtooffercustomersthesamehigh-qualitycustomerexperienceregardlessofthesourceoftheproductstheychoose.
MarketingServices.
LeveragingourAIcapabilitiesandthecomprehensivedatasetaccumulatedfromawiderangeofbusinessscenariosalongtheentirevaluechain,weprovideavarietyofmarketingservicestosuppliers,merchantsandotherpartnersintheecosystemthroughourproprietaryadvertisementtechnologyplatform.
In2017,westartedtoofferoursuppliersandmerchantsanewfully-automatedmarketingplatformthatcanmaketargetedproductrecommendationstousersonwww.
jd.
comandourmobileappsandacrossourcontentpartnershipnetwork,drivingnewcustomersandrepeatpurchasesforadvertisersautomatically.
PoweredbyAI,theplatformonlyrequiresadvertiserstoinputthetotalbudget,unitbidpriceandoptimizationgoalstomarkettotheirtargetedaudiences,whichenablesadvertiserstolowertheiroperatingcostsandincreasetheirreturnsinaconvenientandefficientmanner.
Inaddition,wehaveformedstrategicpartnershipswithleadingmobileinternetcompanieswithanaimtoleveragetheirpowerfulbigdataresources,massiveuserbasesandAI-driventechnologiestostrengthencollaborationinprecisionmarketing,useraccesspointsandcontent-drivenmarketing.
JDLogisticsServices.
Timelyandreliablefulfillmentiscriticaltothesuccessofanonlineretailbusiness.
Giventhethenunderdevelopmentofthird-partyfulfillmentservicesinChinaintermsofbothwarehousingandlogisticsfacilitiesandlast-miledeliveryservices,wemadeastrategicdecisionin2007tobuildandoperateourownnationwidefulfillmentinfrastructure.
Webelievewehavethelargestfulfillmentinfrastructureofanye-commercecompanyinChina.
Weoperatedover650warehouseswithanaggregategrossfloorarea("GFA")ofapproximately16millionsquaremetersin89citiesasofSeptember30,2019,andhad116,427deliverypersonnel,37,217warehousestaffand15,574customerservicepersonnelasofthesamedate.
Leveragingthisnationwidefulfillmentinfrastructure,wedeliveramajorityoftheordersdirectlytocustomersourselves.
In2019,wefurtherimprovedourefficiencyinmorecitiesaswecontinuedtoexpandour24-hourdeliveryserviceintheseareas.
AsofSeptember30,2019,wewereabletodeliverapproximately90%ofourdirectsalesordersinChinawithin24hours.
Leveragingouradvancedtechnologyandlogisticsexpertise,ourlogisticsbusiness,JDLogistics,provideslogisticsservicestobusinessesacrossawiderangeofindustriesincludingthosebeyonde-commerce.
Wehaveopenedupourtechnology-drivenfulfillmentinfrastructurebyofferingcomprehensivesupplychainsolutionstothird-partysellersonourmarketplaceandtomerchantsthatdonotsellproductsonouronlinemarketplace,includingwarehousingmanagement,transportation,delivery,after-saleservices,andlogisticstechnologysolutions,includingcloud-basedserviceanddataanalytics,oracombinationoftheseservices.
Wearededicated4TableofContentstodevelopinganeffective,environmental-friendly,innovativeandsmart"greenlogisticssystem"throughdevelopingandpromotingtheuseofinnovativeandenvironmental-friendlymaterialsandaseriesoftechnologicalinnovations.
Inthesecondquarterof2018,toreduceproduct-to-customerdistanceandprovidecustomerswithinnovativedeliveryoptions,JDLogisticslaunchedthe"FlashDelivery"initiative,offeringdeliverytimesrangingfromseveralminutestoaboutonehourforselectedmerchandiseincertainareasbyoptimallyallocatingmerchandiseacrossitsdistributionnetwork,includingfront-linemetropolitandistributioncenters,deliverystationsandpartners'offlinestores,basedonitsanalysisofcustomerdemands.
Moreover,inOctober2018,JDLogisticsopenedupitsleadinglogisticsnetworktoconsumers,offeringparceldeliveryservicetousersincertainregions.
LeveragingJDLogistics'sextensivedeliverynetwork,usersintheseareascanconvenientlysenditemsintra-cityandthroughoutmostofmainlandChinawithJDLogistics'ssamefastandreliabledeliveryservice.
InApril2019,JDLogisticsintroduceditsnewcoldchainservicewhichutilizesidlecapacityintheindustrytooffercoldchaintransportservices.
CombinedwithJDLogistics'spreviouslylaunchedcoldchainservices,ithasformedaone-stopshopF2B2Ccoldchaindeliverysystemtomeettheservicedemandsofmanufacturers,merchants,andconsumers.
JDPropertyManagementGroup.
In2018,weestablishedourpropertymanagementgroup,JDPM,whichowns,developsandmanagesourlogisticsfacilitiesandotherrealestateproperties,tosupportJDLogisticsandthirdparties.
JDPMhasuniqueadvantagestosecurescarcelandresourcesaswecontinuetohelpboosteconomiesacrossChinathroughcreatingemploymentopportunitiesandcontributingtax,amongothers.
JDPMaimstodevelopitslogisticsassetportfolioswhilemaintainingstrongcapitaldiscipline.
Withtheexpansionofourassetportfolios,wehaveadoptedacapitalrecyclingstrategythroughourfundmanagementplatformandotherpartnerships.
Webelievethisstrategywillhelpfurtherexpandourassetportfolios,minimizeourrelatedfuturecapitalexpendituresandenhanceourreturns.
Currently,JDPMmanagespropertieswithatotalGFAofover10millionsquaremeters.
InFebruary2019,JDPMestablisheditsfirstlogisticspropertiesfund("CoreFund")andagreedtotransfercertainlogisticsfacilitiestoCoreFundatatotalgrossassetvalueofRMB10.
9billion.
Inthethirdquarterof2019,theclosingconditionsfortheassetgroupofcompletedlogisticsfacilitiesweremetandthereforewerecordedadisposalgainofRMB3.
0billionforthecompletedassets.
Fortheremaininglogisticsfacilitiesunderconstruction,wewillderecognizetheseassetsuponitscompletionandsatisfactionofthehandovercondition.
Omni-channelInitiatives.
Toachieveour"BoundarylessRetail"vision,weareexploringavarietyofomni-channelintegrationopportunitiesandinnovativebusinessmodels.
Webelievewearewell-positionedtoprovideomni-channelsolutionstocustomersandofflineretailersinselectlocationsinChinabycapitalizingonourstrongonlinepresenceandleveragingourstrategicpartnershipwithDadaNexusLimited("Dada-JDDaojia"),aleadingplatformoflocalon-demandretailanddeliveryinChina.
Dada-JDDaojiahaspartneredwithalargenumberofwell-knownchainretailersandmanyfirst-tierinternationalanddomesticFMCG(fast-movingconsumergoods)brandsbyleveragingDada-JDDaojia'scrowd-sourcingdeliverynetwork.
Dada-JDDaojiahasbeencooperatingwithJDLogisticstoprovidefaston-demanddeliveryservicesformerchantsandconsumers.
InJune2016,weenteredintoaseriesofagreementsinrelationtoourstrategicalliancewithWalmart.
WehavecollaboratedwithWalmartone-commerce,includinglaunchingaSam'sClubFlagshipStoreandWalmartChinaFlagshipStoreonJD.
com,Sam'sClubGlobalFlagshipStore,WalmartGlobalFlagshipStore,andASDAFlagshipStoreonJDWorldwide,andaone-hourdeliveryservicefromWalmartStoresinselectedcitiesthroughtheJDDaojiaapp,aswellasleveragingeachother'ssupplychaintoenhanceproductselectionforcustomersacrossChina.
Wehavealsoexperimentedwithotheromni-channelopportunities,aimedatofferingshoppersacrossChinafasterandmoreconvenientaccesstohigh-qualityproductsthroughmultiplechannels.
Toprovidecustomerswithamoredynamicandinteractiveintegratedomni-channelshoppingexperience,wehaveenabledsomeofourofflinepartnerswithavarietyofthelatesttechnologiessuchasfacialrecognition,5TableofContentsproductrecognition,andatrackingsystemforcustomers'in-storeactivities,amongothers.
Wehaveestablishedaclosedlooptoaccumulatealargevolumeofofflineshoppingdata,andthroughfurtheranalysisoftheintegratedonlineandofflinedataset,wecanofferdifferentiatedproductsineachofflinefranchisestorethatbestsuitspotentialcustomerdemands.
7FRESH,ourofflinefreshfoodmarketbrand,isanexampleofareal-worldtrialofour"BoundarylessRetail"vision.
InDecember2017,weopenedourfirst7FRESHstoreinBeijing'sYizhuangsuburbanarea.
Integratingadvancedsupplychainmanagementknow-howandcutting-edgestoragetechnologies,our7FRESHstoreisabletodeliverauniqueshoppingexperiencebyofferingmanyfreshproducts(includingfruit,flowers,vegetablesandqualityfreshseafood),providingfoodpreparationandcateringservicesandmakingavailablea30-minutedeliveryserviceforcustomerswithinthreekilometersofthestore.
AsofSeptember30,2019,wehadopened187FRESHstoresin8cities.
Webelieveour7FRESHbusinessmodelwillcontinuetoevolveaswestrivetopursueanenhancedshoppingexperienceforourconsumersandpartnersbyexploringavarietyofomni-channelopportunities,integratingqualityproductswithsuperiorservicesandprovidingfreshproducesupplychainsolutionstoourpartners.
RecentDevelopmentsInApril2019,wecompletedaninvestmentinJiangsuFiveStarApplianceCo.
,Ltd.
("JiangsuFiveStar"),oneoftheleadingofflineretailersofhomeappliancesandconsumerelectronicsinChina.
Weacquired46%ofJiangsuFiveStar'stotalsharesfromitsexistingshareholderforatotalpurchasepriceofRMB1.
27billionwithacombinationofcashandassumptionoftheseller'sdebt.
Followingthisinvestment,weandJiangsuFiveStarwillleverageeachother'sindustryexpertiseandstrengthtoexplorenewgrowthopportunitiesintheareaof"BoundarylessRetail"strategyandaimtoprovideconsumerswithafully-integrated,smartonlineandofflineshoppingexperience.
Inaddition,weprovidedaloanofRMB1.
03billiontotheseller.
Wearealsoentitledtocertaincollateralandinvestorrightspursuanttotherelateddefinitiveagreements.
OnMay10,2019,werenewedthestrategiccooperationagreementwithTencentHoldingsLimited("Tencent")foraperiodofthreeyearsstartingfromMay27,2019.
Tencentwillcontinuetoofferusprominentlevel1andlevel2accesspointsonitsWeixinplatformtoprovidetrafficsupport,andthetwocompaniesalsointendtocontinuetocooperateinanumberofareasincludingcommunications,advertisingandmembershipservices,amongothers.
Itisestimatedthatsuchtrafficsupport,advertisingspendingandothercooperationwillamounttooverUS$800million,whichwillbepaidorspentoverthenextthreeyears.
WeagreedtoissuetoTencentacertainnumberofourClassAordinarysharesforatotalconsiderationofapproximatelyUS$250millionatprevailingmarketpricesatcertainpre-determineddatesduringthethree-yearperiod,ofwhich8,127,302ofourClassAordinaryshareswereissuedinMay2019.
InJune2019,wecompletedaninvestmentinAiHuiShouInternationalCo.
Ltd.
("AiHuiShou"),anonlinesecond-handconsumerelectronicstradingplatform.
Inconnectionwiththisinvestment,wemergedourPaipaiSecondhandbusinessintoAiHuiShouwithcertainexclusivetrafficresourcesforthenextfiveyears,andadditionallyinvestedcertainamountincashinexchangeforanon-controllinginterestinAiHuiShou.
InSeptember2019,weofficiallylaunchedoursociale-commerceplatform,Jingxi,aspartofourstrategytopenetrateintolower-tiercities.
JingxiisavailabletoconsumersacrossmultiplechannelsincludingthestandaloneJingxiapp,JingximiniprogramandaWeixinfirst-levelentrypoint.
Combiningsocialmediaandretail,Jingxiprovidesqualitygoodsandservicesatattractiveprices.
Jingxialsohaspartneredwithdomesticmanufacturersinoveronehundredindustrialclusters,servingasabridgebetweenmanufacturersandconsumers.
InNovember2019,ourhealthcaresubsidiary,JDHealthInternational,Inc.
("JDHealth")completedthenon-redeemableseriesApreferredsharefinancingwithagroupofthird-partyinvestors.
ThetotalamountoffinancingraisedwasUS$931million,representing13.
5%oftheownershipofJDHealthonafullydilutedbasis.
6TableofContentsChangeofOurIndependentRegisteredPublicAccountingFirmOnJune22,2019,weengagedDeloitteToucheTohmatsuCertifiedPublicAccountantsLLP("Deloitte")asourindependentregisteredpublicaccountingfirm,anddismissedPricewaterhouseCoopersZhongTianLLP("PwC").
Thechangeofourindependentregisteredpublicaccountingfirmhadbeenapprovedbytheauditcommitteeofourboard,andthedecisionwasnotmadeduetoanydisagreementsbetweenusandPwC.
ThereportsofPwConourconsolidatedfinancialstatementsforthefiscalyearsendedDecember31,2017and2018didnotcontainanadverseopinionoradisclaimerofopinionandwerenotqualifiedormodifiedastouncertainty,auditscopeoraccountingprinciple.
DuringthefiscalyearsendedDecember31,2017and2018andthesubsequentinterimperiodthroughJune22,2019,therehavebeenno(i)disagreementsbetweenusandPwConanymatterofaccountingprinciplesorpractices,financialstatementdisclosure,orauditscopeorprocedure,whichdisagreementsifnotresolvedtothesatisfactionofPwCwouldhavecausedthemtomakereferencetheretointheirreportsontheconsolidatedfinancialstatementsforsuchyears,or(ii)reportableeventsasdefinedinItem16F(a)(1)(v)oftheinstructionstoForm20-F.
WehaveprovidedPwCwithacopyofthedisclosureshereunderandrequiredunderItem16FofForm20-FandrequestedfromPwCaletteraddressedtotheSECindicatingwhetheritagreeswithsuchdisclosures.
AcopyofPwC'sletterdatedDecember3,2019isattachedasExhibit16.
1totheregistrationstatementonFormF-3ofwhichthisprospectusisapart.
DuringeachofthefiscalyearsendedDecember31,2017and2018andthesubsequentinterimperiodthroughJune22,2019,neitherwenoranyoneonbehalfofushasconsultedwithDeloitteregarding(i)theapplicationofaccountingprinciplestoaspecifictransaction,eithercompletedorproposed,orthetypeofauditopinionthatmightberenderedonourconsolidatedfinancialstatements,andneitherawrittenreportnororaladvicewasprovidedtousthatDeloitteconcludedwasanimportantfactorconsideredbyusinreachingadecisionastoanyaccounting,audit,orfinancialreportingissue,(ii)anymatterthatwasthesubjectofadisagreementpursuanttoItem16F(a)(1)(iv)oftheinstructionstoForm20-F,or(iii)anyreportableeventpursuanttoItem16F(a)(1)(v)oftheinstructionstoForm20-F.
CorporateInformationOurprincipalexecutiveofficesarelocatedat20thFloor,BuildingA,No.
18Kechuang11Street,YizhuangEconomicandTechnologicalDevelopmentZone,DaxingDistrict,Beijing101111,thePeople'sRepublicofChina.
Ourtelephonenumberatthisaddressis+86108911-8888.
WehaveappointedPuglisi&Associates,locatedat850LibraryAvenue,Suite204,Newark,Delaware19711,asouragentuponwhomprocessmaybeservedinanyactionbroughtagainstusunderthesecuritieslawsoftheUnitedStatesinconnectionwithanofferingofsecuritiesregisteredbytheregistrationstatementofwhichthisprospectusisapart.
Additionalinformationwithrespecttoourcompanyisincludedinthedocumentsincorporatedbyreferenceinthisprospectus,including(i)ourannualreportonForm20-FforthefiscalyearendedDecember31,2018,asamendedbyAmendmentNo.
1thereto,filedwiththeSEConApril15,2019andJune28,2019,respectively(FileNo.
001-36450)and(ii)ourcurrentreportonForm6-KfurnishedtotheSEConDecember3,2019(FileNo.
001-36450).
See"IncorporationofCertainDocumentsbyReference"inthisprospectus.
7TableofContentsRISKFACTORSInvestinginourdebtsecuritiesinvolvesrisk.
Beforeyoudecidetobuyourdebtsecurities,youshouldcarefullyconsidertherisksdescribedinourmostrecentannualreportonForm20-F,whichisincorporatedhereinbyreference,aswellastherisksthataredescribedintheapplicableprospectussupplementandinotherdocumentsincorporatedbyreferenceintothisprospectus.
Ifanyoftheserisksactuallyoccurs,ourbusiness,financialconditionandresultsofoperationscouldsuffer,andyoumayloseallorpartofyourinvestment.
Pleasesee"WhereYouCanFindMoreInformation"and"IncorporationofCertainDocumentsbyReference"forinformationonwhereyoucanfindthedocumentswehavefiledwithorfurnishedtotheSECandwhichareincorporatedintothisprospectusbyreference.
8TableofContentsUSEOFPROCEEDSExceptasmaybedescribedotherwiseinanaccompanyingprospectussupplement,weintendtousethenetproceedsfromthesaleofthedebtsecuritiesforgeneralcorporatepurposes.
9TableofContentsDESCRIPTIONOFDEBTSECURITIESThefollowingisasummaryofcertaingeneraltermsandprovisionsofthedebtsecuritiesandtheindenture,buttheyarenotcompleteandaresubjectto,andarequalifiedintheirentiretybyreferenceto,alloftheprovisionsoftheindenture,whichhasbeenfiledasanexhibittotheregistrationstatementofwhichthisprospectusisapart,includingthedefinitionsofspecifiedtermsusedintheindenture,andtotheTrustIndentureActof1939,asamended,orthe"TrustIndentureAct".
Theparticulartermsofthedebtsecuritiesofferedbyanyprospectussupplementandtheextentthesegeneralprovisionsmayapplytothedebtsecuritieswillbedescribedintheapplicableprospectussupplement.
Thetermsofthedebtsecuritieswillincludethosesetforthintheindenture,anyrelateddocumentsandthosemadeapartoftheindenturebytheTrustIndentureAct.
Youshouldreadthesummarybelow,theapplicableprospectussupplementandtheprovisionsoftheindentureandanyrelateddocumentsbeforeinvestinginourdebtsecurities.
Theprospectussupplementrelatingtoanyseriesofdebtsecuritiesthatwemayofferwillcontainthespecifictermsofthedebtsecurities.
Thesetermsmayincludethefollowing:thetitleandanylimitontheaggregateprincipalamountofthedebtsecurities;whetherthedebtsecuritieswillbesecuredorunsecured;whetherthedebtsecuritiesareseniororsubordinateddebtsecuritiesand,ifsubordinated,thetermsofsuchsubordination;thepercentageorpercentagesofprincipalamountatwhichsuchdebtsecuritieswillbeissued;theinterestrate(s)orthemethodfordeterminingtheinterestrate(s);thedatesonwhichinterestwillaccrueorthemethodfordeterminingdatesonwhichinterestwillaccrueanddatesonwhichinterestwillbepayable;therecorddatesforthedeterminationofholderstowhominterestispayableorthemethodfordeterminingsuchdates;thedatesonwhichthedebtsecuritiesmaybeissued,thematuritydateandotherdatesofpaymentofprincipal;redemptionorearlyrepaymentprovisions;authorizeddenominationsifotherthandenominationsof$2,000andmultiplesof$1,000inexcessthereof;theformofthedebtsecurities;amountofdiscountorpremium,ifany,withwhichsuchdebtsecuritieswillbeissued;whethersuchdebtsecuritieswillbeissuedinwholeorinpartintheformofoneormoreglobalsecurities;theidentityofthedepositaryforglobalsecurities;whetheratemporarysecurityistobeissuedwithrespecttosuchseriesandwhetheranyinterestpayablepriortotheissuanceofdefinitivesecuritiesoftheserieswillbecreditedtotheaccountofthepersonsentitledthereto;thetermsuponwhichbeneficialinterestsinatemporaryglobalsecuritymaybeexchangedinwholeorinpartforbeneficialinterestsinadefinitiveglobalsecurityorforindividualdefinitivesecurities;anycovenantsapplicabletotheparticulardebtsecuritiesbeingissued;anydefaultsandeventsofdefaultapplicabletotheparticulardebtsecuritiesbeingissued;anyprovisionsforthedefeasanceoftheparticulardebtsecuritiesbeingissuedinwholeorinpart;10TableofContentsanyadditionorchangeintheprovisionsrelatedtosatisfactionanddischarge;anyrestrictionorconditiononthetransferabilityofthedebtsecurities;thecurrency,currenciesorcurrencyunitsinwhichthepurchasepricefor,theprincipalofandanypremiumandanyintereston,suchdebtsecuritieswillbepayable;thetimeperiodwithinwhich,themannerinwhichandthetermsandconditionsuponwhichthepurchaserofthedebtsecuritiescanselectthepaymentcurrency;thesecuritiesexchange(s)orautomatedquotationsystem(s)onwhichthesecuritieswillbelistedoradmittedtotrading,asapplicable,ifany;ourobligationorrighttoredeem,purchaseorrepaydebtsecuritiesunderasinkingfund,amortizationoranalogousprovision;provisionsrelatingtothemodificationoftheindenturebothwithandwithouttheconsentofholdersofdebtsecuritiesissuedundertheindenture;placeorplaceswherewemaypayprincipal,premium,ifany,andinterestandwhereholdersmaypresentthedebtsecuritiesforregistrationoftransfer,exchangeorconversion;placeorplaceswherenoticesanddemandsrelatingtothedebtsecuritiesandtheindenturesmaybemade;ifotherthantheprincipalamountofthedebtsecurities,theportionoftheprincipalamountofthedebtsecuritiesthatispayableupondeclarationofaccelerationofmaturity;anyindexorformulausedtodeterminetheamountofpaymentsofprincipalof,premium(ifany)orinterestonthedebtsecuritiesandthemethodofdeterminingtheseamounts;anyprovisionsrelatingtocompensationandreimbursementofthetrustee;provisions,ifany,grantingspecialrightstoholdersofthedebtsecuritiesupontheoccurrenceofspecifiedevents;andadditionaltermsnotinconsistentwiththeprovisionsoftheindenture,exceptaspermittedbythetermsoftheindenture.
GeneralWemaysellthedebtsecurities,includingoriginalissuediscountsecurities,atparoratgreaterthandeminimisdiscountbelowtheirstatedprincipalamount.
Unlessweinformyouotherwiseinaprospectussupplement,wemayissueadditionaldebtsecuritiesofaparticularserieswithouttheconsentoftheholdersofthedebtsecuritiesofsuchseriesoutstandingatthetimeofissuance.
Anysuchadditionaldebtsecurities,togetherwithallotheroutstandingdebtsecuritiesofthatseries,willconstituteasingleseriesofdebtsecuritiesundertheindenture.
Suchadditionaldebtsecuritieswillhavethesametermsandconditionsastheapplicableseriesofdebtsecuritiesinallrespects(orinallrespectsexceptfortheissuedate,theissuepriceorthefirstpaymentofinterest),andwillvotetogetherasoneclassonallmatterswithrespecttosuchseriesofdebtsecurities.
WeshallnotissueanyadditionaldebtsecuritieswiththesameCUSIP,ISINorotheridentifyingnumberasoutstandingdebtsecuritiesissuedhereunderunlesstheadditionaldebtsecuritiesarefungiblewithsuchoutstandingdebtsecuritiesforU.
S.
federalincometaxpurposes.
Unlessweinformyouotherwiseintheapplicableprospectussupplement,thedebtsecuritieswillnotbelistedonanysecuritiesexchange.
Form,ExchangeandTransferThedebtsecuritieswillbeissuedinfullyregisteredformwithoutinterestcouponsand,unlessotherwiseindicatedintheapplicableprospectussupplement,inminimumdenominationsofUS$2,000andintegralmultiplesofUS$1,000inexcessthereof.
11TableofContentsTheentityperformingtheroleofmaintainingthelistofregisteredholdersiscalledthe"registrar.
"Theregistraractsasouragentforregisteringdebtsecuritiesinthenamesofholdersandtransferringregistereddebtsecurities.
Youmayexchangeortransferyourregistereddebtsecuritiesatthespecifiedofficeoftheregistrar.
Wemayalsoarrangeforadditionalregistrars,andmaychangeregistrars.
Wemayalsochoosetoactasourownregistrar.
Youwillnotberequiredtopayaservicechargeforanyregistrationoftransferorexchangeofdebtsecurities,butyoumayberequiredtopayanytaxorothergovernmentalchargeassociatedwiththeregistrationoftransferorexchange.
Theregistrationoftransferorexchangeofaregistereddebtsecuritywillonlybemadeifyouhavedulyendorsedthedebtsecurityorprovidedtheregistrarwithawritteninstrumentoftransfersatisfactoryinformtotheregistrar.
PaymentandPayingAgentsIfyourdebtsecuritiesareindefinitiveregisteredform,wewillpayinteresttoyouifyouarelistedintheregistrar'srecordsasadirectholderatthecloseofbusinessonaparticulardayinadvanceofeachduedateforinterest,evenifyounolongerownthedebtsecuritiesontheinterestduedate.
Thatparticulardayiscalledthe"recorddate"andwillbestatedintheapplicableprospectussupplement.
Wewillpayinterest,principal,additionalamountsandanyothermoneydueonglobalregistereddebtsecuritiespursuanttotheapplicableproceduresofthedepositaryor,ifthedebtsecuritiesarenotinglobalform,atofficesmaintainedforthatpurposeinNewYork,NewYork.
Theseofficesarecalled"payingagents.
"Wemayalsochoosetopayinterestbymailingchecks.
Wemayalsoarrangeforadditionalpaymentagents,andmaychangetheseagents,includingouruseofthetrustee'scorporatetrustoffice.
Wemayalsochoosetoactasourownpayingagent.
Regardlessofwhoactsaspayingagent,allmoneythatwepayasprincipal,premiumorinteresttoapayingagent,orthenheldbyusintrust,thatremainsunclaimedattheendoftwoyearsaftertheamountisduetodirectholderswillberepaidtous,orifthenheldbyus,dischargedfromtrust.
Afterthattwo-yearperiod,directholdersmaylookonlytousforpaymentandnottothetrustee,anyotherpayingagentoranyoneelse.
Streetnameandotherindirectholdersshouldconsulttheirbanksorbrokersforinformationonhowtheywillreceivepayments.
PaymentofAdditionalAmountsAllpaymentsofprincipal,premiumandinterestmadebyoronbehalfofusinrespectofthedebtsecuritiesofeachserieswillbemadewithoutwithholdingordeductionfor,oronaccountof,anypresentorfuturetaxes,duties,assessmentsorgovernmentalchargesofwhatevernature("Taxes")imposedorleviedbyorwithintheCaymanIslands,HongKong,thePRCoranyjurisdictionwhereweorourpayingagentareotherwiseconsideredbyataxingauthoritytobearesidentfortaxpurposes(ineachcase,includinganypoliticalsubdivisionoranyauthoritythereinorthereofhavingpowertotax)(the"RelevantJurisdiction"),unlesssuchwithholdingordeductionofsuchTaxesisrequiredbylaw.
Ifwearerequiredtomakesuchwithholdingordeduction,wewillpaysuchadditionalamounts("AdditionalAmounts")aswillresultinreceiptbyeachholderofanydebtsecuritiesofsuchamountsaswouldhavebeenreceivedbysuchholderhadnosuchwithholdingordeductionofsuchTaxesbeenrequired,exceptthatnosuchAdditionalAmountsshallbepayable:(i)inrespectofanysuchTaxesthatwouldnothavebeenimposed,deductedorwithheldbutfortheexistenceofanyconnection(whetherpresentorformer)betweentheholderorbeneficialownerofadebtsecurityandtheRelevantJurisdictionotherthanmerelyholdingsuchdebtsecurityorreceivingprincipal,premium(ifany)orinterestinrespectthereof(includingsuchholderorbeneficialownerbeingorhavingbeenanational,domiciliaryorresidentofsuchRelevantJurisdictionortreatedasaresidentthereoforbeingorhavingbeenphysicallypresentorengagedinatradeorbusinessthereinorhavingorhavinghadapermanentestablishmenttherein);12TableofContents(ii)inrespectofanydebtsecuritypresentedforpayment(wherepresentationisrequired)morethan30daysaftertherelevantdate,excepttotheextentthattheholderthereofwouldhavebeenentitledtosuchAdditionalAmountsonpresentingthesameforpaymentonthelastdayofsuch30-dayperiod.
Forthispurpose,the"relevantdate"inrelationtoanydebtsecuritymeansthelaterof(a)theduedateforsuchpaymentor(b)thedatesuchpaymentwasmadeordulyprovidedfor;(iii)inrespectofanyTaxesthatwouldnothavebeenimposed,deductedorwithheldbutforafailureoftheholderorbeneficialownerofadebtsecuritytocomplywithatimelyrequestbyusaddressedtotheholderorbeneficialownertoprovideinformationconcerningsuchholder'sorbeneficialowner'snationality,residence,identityorconnectionwithanyRelevantJurisdiction,ifandtotheextentthatdueandtimelycompliancewithsuchrequestisrequiredunderthetaxlawsofsuchjurisdictioninordertoreduceoreliminateanywithholdingordeductionastowhichAdditionalAmountswouldhaveotherwisebeenpayabletosuchholder;(iv)inrespectofanyTaxesimposedasaresultofadebtsecuritybeingpresentedforpayment(wherepresentationisrequired)intheRelevantJurisdiction,unlesssuchdebtsecuritycouldnothavebeenpresentedforpaymentelsewhere;(v)inrespectofanyestate,inheritance,gift,sale,transfer,personalpropertyorsimilarTaxes;(vi)toanyholderofadebtsecuritythatisafiduciary,partnershiporpersonotherthanthesolebeneficialownerofanypaymenttotheextentthatsuchpaymentwouldberequiredtobeincludedintheincomeunderthelawsofaRelevantJurisdiction,fortaxpurposes,ofabeneficiaryorsettlorwithrespecttothefiduciary,oramemberofthatpartnershiporabeneficialownerwhowouldnothavebeenentitledtosuchAdditionalAmountshadthatbeneficiary,settlor,partnerorbeneficialownerbeentheholderthereof;(vii)withrespecttoanywithholdingordeductionthatisimposedinconnectionwithSections1471-1474oftheInternalRevenueCodeof1986,asamended,andU.
S.
Treasuryregulationsthereunder("FATCA"),anyintergovernmentalagreementbetweentheUnitedStatesandanyotherjurisdictionimplementingorrelatingtoFATCAoranynon-U.
S.
law,regulationorguidanceenactedorissuedwithrespectthereto;(viii)anysuchTaxespayableotherwisethanbydeductionorwithholdingfrompaymentsunderorwithrespecttoanydebtsecurity;or(ix)anycombinationofTaxesreferredtointheprecedingitems(i)through(viii)above.
IntheeventthatanywithholdingordeductionfororonaccountofanyTaxesisrequiredandAdditionalAmountsarepayablewithrespectthereto,atleast10businessdayspriortoeachdateofpaymentofprincipalof,premium(ifany)orinterestonthedebtsecuritiesofanyseries,wewillfurnishtothetrusteeandthepayingagent,ifotherthanthetrustee,anofficers'certificatespecifyingtheamountrequiredtobewithheldordeductedonsuchpaymentstosuchholders,certifyingthatweshallpaysuchamountsrequiredtobewithheldtotheappropriategovernmentalauthorityandcertifyingtothefactthattheAdditionalAmountswillbepayableandtheamountssopayabletoeachholder,andthatwewillpaytothetrusteeorsuchpayingagenttheAdditionalAmountsrequiredtobepaid;providedthatnosuchofficers'certificatewillberequiredpriortoanydateofpaymentofprincipalof,premium(ifany)orinterestonsuchdebtsecuritiesiftherehasbeennochangewithrespecttothematterssetforthinapriorofficers'certificate.
Thetrusteeandeachpayingagentshallbeentitledtorelyonthefactthatanyofficers'certificatecontemplatedbythisparagraphhasnotbeenfurnishedasevidenceofthefactthatnowithholdingordeductionfororonaccountofanyTaxesisrequired.
Wecovenanttoindemnifythetrusteeandanypayingagentforandtoholdthemharmlessagainstanyloss,liabilityorreasonablyincurredexpensewithoutfraudulentactivity,grossnegligenceorwillfulmisconductontheirpartarisingoutoforinconnectionwithactionstakenoromittedbyanyoftheminrelianceonanysuchofficers'certificatefurnishedpursuanttothisparagraphoronthefactthatanyofficers'certificatecontemplatedbythisparagraphhasnotbeenfurnished.
13TableofContentsWheneverthereismentioned,inanycontext,thepaymentofprincipal,premiumorinterestinrespectofanydebtsecurity,suchmentionshallbedeemedtoincludethepaymentofAdditionalAmountsprovidedforintheindenture,totheextentthat,insuchcontext,AdditionalAmountsare,wereorwouldbepayableinrespectthereofpursuanttotheindenture.
TheforegoingprovisionsshallapplyinthesamemannerwithrespecttothejurisdictioninwhichanysuccessorPersontousoritspayingagentisorganizedorresidentfortaxpurposesoranyauthoritythereinorthereofhavingthepowertotax(a"SuccessorJurisdiction"),substitutingsuchSuccessorJurisdictionfortheRelevantJurisdiction.
OurobligationtomakepaymentsofAdditionalAmountsunderthetermsandconditionsdescribedabovewillsurviveanytermination,defeasanceordischargeoftheindenture.
TaxRedemptionEachseriesofdebtsecuritiesmayberedeemedatanytime,atouroption,inwholebutnotinpart,uponwrittennoticeasdescribedbelow,ataredemptionpriceequalto100%oftheprincipalamountthereof,togetherwithaccruedandunpaidinterest,ifany,to,butnotincluding,thedatefixedforredemption,if(i)asaresultofanychangein,oramendmentto,thelawsorregulationsoftheRelevantJurisdiction(or,inthecaseofAdditionalAmountspayablebyasuccessorPersontous,theapplicableSuccessorJurisdiction),oranychangeintheofficialapplicationorofficialinterpretationofsuchlawsorregulations,whichchangeoramendmentbecomeseffectiveonoraftertheissuedateoftheapplicableseriesofdebtsecurities(or,inthecaseofAdditionalAmountspayablebyasuccessorPersontous,thedateonwhichsuchsuccessorPersontousbecameasuccessortouspursuanttotheapplicableprovisionsoftheindenture)(a"TaxChange"),weoranysuchsuccessorPersontousis,orwouldbe,obligatedtopayAdditionalAmountsuponthenextpaymentofprincipal,premium(ifany)orinterestinrespectofsuchdebtsecuritiesand(ii)suchobligationcannotbeavoidedbyusoranysuchsuccessorPersontoustakingreasonablemeasuresavailabletoit,providedthatchangingourorsuchsuccessorPerson'sjurisdictionisnotareasonablemeasureforpurposesofthissection.
Priortothegivingofanynoticeofredemptionofdebtsecuritiespursuanttotheforegoing,weoranysuchsuccessorPersontousshalldelivertothetrustee(i)anoticeofsuchredemptionelection,(ii)anopinionofexternallegalcounseloranopinionofanindependenttaxconsultanttotheeffectthatweoranysuchsuccessorPersontousis,orwouldbecome,obligatedtopaysuchAdditionalAmountsastheresultofaTaxChangeand(iii)anofficers'certificatefromusoranysuchsuccessorPersontous,statingthatsuchamendmentorchangehasoccurred,describingthefactsleadingtheretoandstatingthatsuchrequirementcannotbeavoidedbyusoranysuchsuccessorPersontoustakingreasonablemeasuresavailabletoit.
Thetrusteeshallbeentitledtorelyconclusivelyuponsuchcertificateandopinionassufficientevidenceoftheconditionsprecedentdescribedabove,inwhicheventitshallbeconclusiveandbindingontherelevantholders.
Noticeofredemptionofdebtsecuritiesasprovidedaboveshallbegiventotheholdersnotlessthan30normorethan60dayspriortothedatefixedforredemption;providedthatnosuchnoticeofredemptionshallbegivenearlierthan90dayspriortotheearliestdateonwhichweoranysuchsuccessorPersontouswouldberequiredtopayAdditionalAmountsifapaymentinrespectofsuchdebtsecuritieswasthendue.
Noticehavingbeengiven,thedebtsecuritiesofthatseriesshallbecomedueandpayableonthedatefixedforredemptionandwillbepaidattheredemptionprice,togetherwithaccruedandunpaidinterest,ifany,to,butnotincluding,thedatefixedforredemption,attheplaceorplacesofpaymentandinthemannerspecifiedinthatseriesofthedebtsecurities.
Fromandaftertheredemptiondate,ifmoneysfortheredemptionofsuchdebtsecuritiesshallhavebeenmadeavailableasprovidedintheindentureforredemptionontheredemptiondate,thedebtsecuritiesofsuchseriesshallceasetobearinterest,andtheonlyrightoftheholdersofsuchdebtsecuritiesshallbetoreceivepaymentoftheredemptionpriceandaccruedandunpaidinterest,ifany,to,butnotincluding,thedatefixedforredemption.
14TableofContentsOpenMarketPurchasesWeoranyofourControlledEntitiesmay,inaccordancewithallapplicablelawsandregulations,atanytimepurchasethedebtsecuritiesissuedundertheindentureintheopenmarketorotherwiseatanyprice,solongassuchpurchasedoesnototherwiseviolatethetermsoftheindenture.
Thedebtsecuritiessopurchased,whileheldbyoronbehalfofusoranyofourControlledEntities,shallnotbedeemedtobeoutstandingforthepurposesofdeterminingwhethertheholdersoftherequisiteprincipalamountofoutstandingdebtsecuritieshavegivenanyrequest,demand,authorization,direction,notice,consentorwaiverhereunder.
ModificationandWaiverTheindenturecontainsprovisionspermittingusandthetrustee,withouttheconsentoftheholdersoftheapplicableseriesofdebtsecurities,toexecutesupplementalindenturesforcertainenumeratedpurposesintheindentureand,withtheconsentoftheholdersofnotlessthanamajorityinaggregateprincipalamountoftheapplicableseriesofdebtsecuritiesthenoutstandingundertheindenture,toadd,change,eliminateormodifyinanywaytheprovisionsoftheindentureoranysupplementalindenturesortochangeormodifyinanymannertherightsoftheholdersofsuchdebtsecurities.
Weandthetrusteemaynot,however,withouttheconsentofeachholderofthedebtsecuritiesoftheapplicableseriesaffectedthereby:(i)changetheStatedMaturityofanydebtsecurity;(ii)reducetheprincipalamountof,paymentsofinterestonorstatedtimeforpaymentofinterestonanydebtsecurity;(iii)changeanyobligationofourstopayAdditionalAmountswithrespecttoanydebtsecurity;(iv)changethecurrencyofpaymentoftheprincipalof,premium(ifany)orinterestonanydebtsecurity;(v)reducetheamountoftheprincipalofanoriginalissuediscountsecuritythatwouldbedueandpayableuponadeclarationofaccelerationofthematuritythereof;(vi)impairtherighttoinstitutesuitfortheenforcementofanypaymentdueonorwithrespecttoanydebtsecurity;(vii)reducetheabovestatedpercentageofoutstandingdebtsecuritiesnecessarytomodifyoramendtheindenture;(viii)reducethepercentageoftheaggregateprincipalamountofoutstandingdebtsecuritiesofthatseriesnecessaryforwaiverofcompliancewithcertainprovisionsoftheindentureorforwaiverofcertaindefaults;(ix)modifytheprovisionsoftheindenturewithrespecttomodificationandwaiver;(x)amend,changeormodifyanyprovisionoftheindentureortherelateddefinitionaffectingtherankingofanyseriesofdebtsecuritiesinamannerwhichadverselyaffectstheholdersofsuchdebtsecurities;or(xi)reducetheamountofthepremiumpayableupontheredemptionorrepurchaseofanyseriesofdebtsecuritiesorchangethetimeatwhichanyseriesofdebtsecuritiesmayberedeemedorrepurchasedasdescribedaboveunder"—TaxRedemption"orasdescribedintheapplicableprospectussupplement.
TheholdersofnotlessthanamajorityinprincipalamountofthedebtsecuritiesofanyseriesthenoutstandingmayonbehalfofallholdersofthedebtsecuritiesofthatserieswaiveanyexistingorpastDefaultorEventofDefaultanditsconsequencesundertheindenture,exceptacontinuingDefaultorEventofDefault(i)in15TableofContentsthepaymentofprincipalof,premium(ifany)orintereston(orAdditionalAmountpayableinrespectof),thedebtsecuritiesofsuchseriesthenoutstanding,inwhicheventtheconsentofallholdersofthedebtsecuritiesofsuchseriesthenoutstandingaffectedtherebyisrequired,or(ii)inrespectofacovenantorprovisionwhichundertheindenturecannotbemodifiedoramendedwithouttheconsentoftheholderofeachdebtsecurityofsuchseriesthenoutstandingaffectedthereby.
Anysuchwaiverswillbeconclusiveandbindingonallholdersofthatseriesofdebtsecurities,whetherornottheyhavegivenconsenttosuchwaivers,andonallfutureholdersofsuchdebtsecurities,whetherornotnotationofsuchwaiversismadeuponsuchdebtsecurities.
Anyinstrumentgivenbyoronbehalfofanyholderofadebtsecurityofthatseriesinconnectionwithanyconsenttoanysuchwaiverwillbeirrevocableoncegivenandwillbeconclusiveandbindingonallsubsequentholdersofsuchdebtsecurity.
Notwithstandingtheforegoing,withouttheconsentofanyholderofthesecurities,weandthetrusteemayamendtheindentureandtherelevantdebtsecuritiesto,amongotherthings:(i)cureanyambiguity,omission,defectorinconsistencycontainedintheindentureorinanysupplementalindenture;provided,however,thatsuchamendmentdoesnotmateriallyandadverselyaffecttherightsofholders;(ii)evidencethesuccessionofanothercorporationtotheCompany,orsuccessivesuccessions,andtheassumptionbysuchsuccessorofthecovenantsandobligationsoftheCompanycontainedinthedebtsecuritiesofoneormoreseriesandinthisindentureoranysupplementalindenture;(iii)complywiththerulesofanyapplicabledepositary;(iv)secureanyseriesofdebtsecurities;(v)addtothecovenantsandagreementsoftheCompany,tobeobservedthereafterandduringtheperiod,ifany,insuchsupplementalindentureorindenturesexpressed,andtoaddEventsofDefault,ineachcasefortheprotectionorbenefitoftheholdersofalloranyseriesofthedebtsecurities(andifsuchcovenants,agreementsandEventsofDefaultaretobeforthebenefitoffewerthanallseriesofdebtsecurities,statingthatsuchcovenants,agreementsandEventsofDefaultareexpresslybeingincludedforthebenefitofsuchseriesasshallbeidentifiedtherein),ortosurrenderanyrightorpowerhereinconferredupontheCompany;(vi)makeanychangeinanyseriesofdebtsecuritiesthatdoesnotadverselyaffectthelegalrightsundertheindentureofanyholderofsuchdebtsecuritiesinanymaterialrespect;(vii)evidenceandprovidefortheacceptanceofanappointmentundertheindentureofasuccessortrustee;providedthatthesuccessortrusteeisotherwisequalifiedandeligibletoactassuchunderthetermsthereof;(viii)conformthetextoftheindentureoranyseriesofthedebtsecuritiestoanyprovisionofthis"DescriptionofDebtSecurities"totheextentthatsuchprovisioninthisprospectuswasintendedtobeaverbatimrecitationofaprovisionoftheindentureorsuchseriesofthedebtsecuritiesasevidencedbyanofficers'certificate;(ix)makeanyamendmenttotheprovisionsoftheindenturerelatingtothetransferandlegendingofdebtsecuritiesaspermittedbytheindenture,including,butnotlimitedto,facilitatingtheissuanceandadministrationofanyseriesofthedebtsecuritiesor,ifincurredincompliancewiththeindenture,additionaldebtsecurities;provided,however,that(A)compliancewiththeindentureassoamendedwouldnotresultinanyseriesofthedebtsecuritiesbeingtransferredinviolationoftheSecuritiesActoranyapplicablesecuritieslawand(B)suchamendmentdoesnotmateriallyandadverselyaffecttherightsofholderstotransferdebtsecurities;(x)changeoreliminateanyoftheprovisionsoftheindenture;providedthatanysuchchangeoreliminationshallbecomeeffectiveonlywhenthereisnooutstandingdebtsecurityofanyseriescreatedpriortotheexecutionofsuchsupplementalindenturethatisentitledtothebenefitofsuchprovisionandastowhichsuchsupplementalindenturewouldapply;16TableofContents(xi)makeanyamendmenttotheindenturenecessarytoqualifytheindentureundertheTrustIndentureAct;(xii)addguarantorsorco-obligorswithrespecttoanyseriesofdebtsecurities;and(xiii)establishtheformandtermsofdebtsecuritiesofanyseriesaspermittedundertheindenture,ortoprovidefortheissuanceofadditionaldebtsecuritiesinaccordancewiththelimitationssetforthintheindenture,ortoaddtotheconditions,limitationsorrestrictionsontheauthorizedamount,termsorpurposesofissue,authenticationordeliveryofthedebtsecuritiesofanyseries,ashereinsetforth,orotherconditions,limitationsorrestrictionsthereaftertobeobserved.
Theconsentoftheholdersisnotnecessaryundertheindenturetoapprovetheparticularformofanyproposedamendment,supplementorwaiver.
Itissufficientifsuchconsentapprovesthesubstanceoftheproposedamendmentorsupplement.
Aconsenttoanyamendment,supplementorwaiverundertheindenturebyanyholdergiveninconnectionwithatenderofsuchholder'sdebtsecuritieswillnotberenderedinvalidbysuchtender.
Afteranamendment,supplementorwaiverundertheindenturebecomeseffective,wearerequiredtogivetotheholdersanoticebrieflydescribingsuchamendment,supplementorwaiver.
However,thefailuretogivesuchnoticetoalltheholders,oranydefectinthenoticewillnotimpairoraffectthevalidityoftheamendment,supplementorwaiver.
Consolidation,MergerandSaleofAssetsTheindentureprovidesthatwemaynotconsolidatewithormergeintoanyotherPersoninatransactioninwhichwearenotthesurvivingentity,orconvey,transferorleaseourpropertiesandassetssubstantiallyasanentiretyto,anyPersonunless:(i)anyPersonformedbysuchconsolidationorintowhichwearemergedortowhomwehaveconveyed,transferredorleasedourpropertiesandassetssubstantiallyasanentiretyisacorporation,partnership,trustorotherentityvalidlyexistingunderthelawsoftheCaymanIslandsorHongKongandsuchPersonexpresslyassumesbyindenturessupplementaltotheindentureallofourobligationsundertheindentureandthedebtsecuritiesissuedundertheindenture,includingtheobligationtopayAdditionalAmountswithrespecttoanyjurisdictioninwhichitisorganizedorresidentfortaxpurposes;(ii)immediatelyaftergivingeffecttothetransaction,noEventofDefault,andnoeventwhich,afternoticeorlapseoftimeorboth,wouldbecomeanEventofDefault,shallhaveoccurredandbecontinuing;and(iii)wehavedeliveredtothetrusteeanofficers'certificateandanopinionofexternallegalcounsel,eachstatingthatsuchconsolidation,merger,conveyance,transferorleaseandsuchsupplementalindenturescomplywiththeindentureandthatallconditionsprecedentthereinprovidedforrelatingtosuchtransactionhavebeencompliedwith.
PaymentsforConsentWewillnot,andwillnotpermitanyofourControlledEntitiesto,directlyorindirectly,payorcausetobepaidanyconsiderationtoorforthebenefitofanyholderofdebtsecuritiesofanyseriesfororasaninducementtoanyconsent,waiveroramendmentofanyofthetermsorprovisionsoftheindentureorthedebtsecuritiesofsuchseriesunlesssuchconsiderationisofferedtobepaidandispaidtoallholdersoftherelevantseriesofdebtsecuritiesthatconsent,waiveoragreetoamendinthetimeframesetforthinthesolicitationdocumentsrelatingtosuchconsent,waiveroramendment.
17TableofContentsEventsofDefaultUnderthetermsoftheindenture,eachofthefollowingconstitutesanEventofDefaultforaseriesofdebtsecuritiesunless,asotherwisestatedintheapplicableprospectussupplement,itiseitherinapplicabletoaparticularseriesoritisspecificallydeletedormodified:(i)failuretopayprincipalorpremiuminrespectofanydebtsecuritiesofthatseriesbytheduedateforsuchpayment(whetheratStatedMaturityoruponacceleration,repurchase,redemptionorotherwise);(ii)failuretopayinterestonanydebtsecuritiesofthatserieswithin30daysaftertheduedateforsuchpayment;(iii)wedefaultintheperformanceoforbreachourobligationsunderthe"—Consolidation,MergerandSaleofAssets"covenant;(iv)wedefaultintheperformanceoforbreachanycovenantoragreementintheindentureorunderthedebtsecuritiesofthatseries(otherthanadefaultspecifiedinclause(i),(ii)or(iii)above)andsuchdefaultorbreachcontinuesforaperiodof30consecutivedaysafterwrittennoticebythetrusteeortheholdersof25%ormoreinaggregateprincipalamountofthedebtsecuritiesofthatseries;(v)(1)thereoccurswithrespecttoanyofourindebtednessorindebtednessofanyofourPrincipalControlledEntities,whethersuchindebtednessnowexistsorshallhereafterbecreated,(A)aneventofdefaultthathasresultedintheholderthereofdeclaringtheprincipalofsuchindebtednesstobedueandpayablepriortoitsstatedmaturityor(B)afailuretomakeapaymentofprincipal,interestorpremiumwhendue(aftergivingeffecttotheexpirationofanyapplicablegraceperiodtherefor,a"PaymentDefault")and(2)theoutstandingprincipalamountofsuchindebtedness,togetherwiththeoutstandingprincipalamountofanyotherindebtednessofsuchPersonsunderwhichtherehasbeenaPaymentDefaultorthematurityofwhichhasbeensoaccelerated,isequaltoorexceedsthegreaterof(x)US$100,000,000(ortheDollarEquivalentthereof)and(y)2.
5%ofourTotalEquity;(vi)oneormorefinaljudgmentsorordersforthepaymentofmoneyarerenderedagainstusoranyofourPrincipalControlledEntitiesandarenotpaidordischarged,andthereisaperiodof90consecutivedaysfollowingentryofthefinaljudgmentororderthatcausestheaggregateamountforallsuchfinaljudgmentsorordersoutstandingandnotpaidordischargedagainstallsuchPersons(netofanyamountsthatourinsurancecarriershavepaidoragreedtopaywithrespecttheretounderapplicablepolicies)toexceedthegreaterof(x)US$100,000,000(ortheDollarEquivalentthereof)and(y)2.
5%ofourTotalEquity,duringwhichastayofenforcement,byreasonofapendingappealorotherwise,isnotineffect;(vii)theentrybyacourthavingjurisdictioninthepremisesof(i)adecreeororderforreliefinrespectofusoranyofourPrincipalControlledEntitiesinaninvoluntarycaseorproceedingunderanyapplicablebankruptcy,insolvencyorothersimilarlawor(ii)adecreeororderadjudgingusoranyofourPrincipalControlledEntitiesbankruptorinsolvent,orapprovingasfinalandnonappealableapetitionseekingreorganization,arrangement,adjustment,orcompositionoforinrespectofusoranyofourPrincipalControlledEntitiesunderanyapplicablebankruptcy,insolvencyorothersimilarlaw,orappointingacustodian,receiver,liquidator,assignee,trustee,sequestrator,orothersimilarofficialofusoranyofourPrincipalControlledEntitiesorofanysubstantialpartoftheirrespectiveproperty,ororderingthewindinguporliquidationoftheirrespectiveaffairs(oranysimilarreliefgrantedunderanyforeignlaws),andinanysuchcasethecontinuanceofanysuchdecreeororderforrelieforanysuchotherdecreeororderunstayedandineffectforaperiodof90consecutivecalendardays;(viii)thecommencementbyusoranyofourPrincipalControlledEntitiesofavoluntarycaseorproceedingunderanyapplicablefederal,stateorforeignbankruptcy,insolvencyorothersimilarlaworofanyothercaseorproceedingtobeadjudicatedbankruptorinsolvent,ortheconsentbyusoranyPrincipalControlledEntitytothe18TableofContentsentryofadecreeororderforreliefinrespectofusoranyofourPrincipalControlledEntitiesinaninvoluntarycaseorproceedingunderanyapplicablebankruptcy,insolvencyorothersimilarlaworthecommencementofanybankruptcyorinsolvencycaseorproceedingagainstusoranyPrincipalControlledEntity,orthefilingbyusoranyPrincipalControlledEntityofapetitionoranswerorconsentseekingreorganizationorreliefwithrespecttousoranyofourPrincipalControlledEntitiesunderanyapplicablebankruptcy,insolvencyorothersimilarlaw,ortheconsentbyusoranyPrincipalControlledEntitytothefilingofsuchpetitionortotheappointmentofortakingpossessionbyacustodian,receiver,liquidator,assignee,trustee,sequestrator,orothersimilarofficialofusoranyofourPrincipalControlledEntitiesorofanysubstantialpartoftheirrespectivepropertypursuanttoanysuchlaw,orthemakingbyusoranyofourPrincipalControlledEntitiesofageneralassignmentforthebenefitofcreditorsinrespectofanyindebtednessasaresultofaninabilitytopaysuchindebtednessasitbecomesdue,ortheadmissionbyusoranyofourPrincipalControlledEntitiesinwritingofourinabilitytopayourdebtsgenerallyastheybecomedue,orthetakingofcorporateactionbyusoranyofourPrincipalControlledEntitiesthatresolvestocommenceanysuchaction;(ix)thedebtsecuritiesofthatseriesortheindentureisorbecomesorisclaimedbyustobeunenforceable,invalidorceasestobeinfullforceandeffectotherwisethanispermittedbytheindenture;and(x)anyothereventofdefaultdescribedintheapplicableprospectussupplement.
However,adefaultunderclause(iv)oftheprecedingparagraphwillnotconstituteanEventofDefaultuntilthetrusteeortheholdersof25%inprincipalamountofthethenoutstandingdebtsecuritiesofthatseriesprovidewrittennoticetousofthedefaultandwedonotcuresuchdefaultwithinthetimespecifiedinclause(iv)oftheprecedingparagraphafterreceiptofsuchnotice.
IfanEventofDefault(otherthananEventofDefaultdescribedinclauses(vii)and(viii)above)shalloccurandbecontinuing,eitherthetrusteeortheholdersofatleast25%inaggregateprincipalamountofthedebtsecuritiesofthatseriesthenoutstandingbywrittennoticeasprovidedintheindenturemaydeclaretheunpaidprincipalamountofsuchdebtsecuritiesandanyaccruedandunpaidinterestthereon(andanyAdditionalAmountpayableinrespectthereof)tobedueandpayableimmediatelyuponreceiptofsuchnotice.
IfanEventofDefaultinclause(v)aboveshalloccur,thedeclarationofaccelerationofthedebtsecuritiesshallbeautomaticallyannulledifthedefaulttriggeringsuchEventofDefaultpursuanttoclause(v)shallberemediedorcuredbyusoranyofourPrincipalControlledEntitiesorwaivedbytheholdersoftherelevantindebtednesswithin30daysafterthedeclarationofaccelerationwithrespecttheretoandif(1)theannulmentoftheaccelerationofthedebtsecuritiesofthatserieswouldnotconflictwithanyjudgmentordecreeofacourtofcompetentjurisdictionand(2)allEventsofDefault,otherthanthenon-paymentofprincipal,premium(ifany)orinterestonthedebtsecuritiesofthatseriesthatbecameduesolelybecauseoftheaccelerationofthedebtsecuritiesofthatseries,havebeencuredorwaived.
IfanEventofDefaultinclauses(vii)or(viii)aboveshalloccur,theunpaidprincipalamountofallthedebtsecuritiesthenoutstandingandanyaccruedandunpaidinterestthereonwillautomatically,andwithoutanydeclarationorotheractionbythetrusteeoranyholderofsuchdebtsecurities,becomeimmediatelydueandpayable.
Afteradeclarationofaccelerationbutbeforeajudgmentordecreeforpaymentofthemoneyduehasbeenobtainedbythetrustee,theholdersofatleastamajorityinaggregateprincipalamountofthedebtsecuritiesofthatseriesthenoutstandingmay,undercertaincircumstances,waiveallpastdefaultsandrescindandannulsuchaccelerationif(1)rescissionwouldnotconflictwithanyjudgmentordecreeofacourtofcompetentjurisdictionand(2)allEventsofDefault,otherthanthenon-paymentofprincipal,premium,ifany,orinterestonsuchdebtsecuritiesthatbecameduesolelybecauseoftheaccelerationofsuchdebtsecurities,havebeencuredorwaived.
Forinformationastowaiverofdefaults,see"—ModificationandWaiver.
"Subjecttotheprovisionsoftheindenturerelatingtothedutiesofthetrustee,incaseanEventofDefaultshalloccurandbecontinuing,thetrusteewillbeundernoobligationtoexerciseanyofthetrustsorpowersvestedinitbytheindentureattherequest,orderordirectionofanyoftheholdersofdebtsecurities,unlesssuchholdersshallhaveofferedtothetrusteepre-funding,securityand/orindemnitysatisfactorytoitagainstthecosts,19TableofContentsexpensesandliabilitieswhichmaybeincurredthereinorthereby.
Subjecttocertainprovisions,includingthoserequiringpre-funding,securityand/orindemnificationofthetrustee,theholdersofamajorityinaggregateprincipalamountofthedebtsecuritiesofaseriesthenoutstandingwillhavetherighttodirectthetime,methodandplaceofconductinganyproceedingforanyremedyavailabletothetrusteeorexercisinganytrustorpowerconferredonthetrustee.
Noholderofanydebtsecurityofanyserieswillhaveanyrighttoinstituteanyproceeding,judicialorotherwise,withrespecttotheindentureorthedebtsecurities,orfortheappointmentofareceiveroratrustee,orforanyotherremedythereunder,unless(i)suchholderhaspreviouslygiventothetrusteewrittennoticeofacontinuingEventofDefaultwithrespecttothedebtsecuritiesofthatseries,(ii)theholdersofatleast25%inaggregateprincipalamountofthedebtsecuritiesofthatseriesthenoutstandinghavemadewrittenrequesttothetrusteetoinstitutesuchproceeding,(iii)suchholderorholdershaveofferedpre-funding,securityand/orindemnitysatisfactorytothetrusteeand(iv)thetrusteehasfailedtoinstitutesuchproceeding,andhasnotreceivedfromtheholdersofamajorityinaggregateprincipalamountofthedebtsecuritiesofthatseriesthenoutstandingadirectioninconsistentwithsuchrequest,within60daysaftersuchnotice,requestandoffer.
However,suchlimitationsdonotapplytoasuitinstitutedbyaholderofadebtsecurityfortheenforcementoftherighttoreceivepaymentoftheprincipalof,premium(ifany)orinterestonsuchdebtsecurityonoraftertheapplicableduedatespecifiedinsuchdebtsecurity.
LegalDefeasanceandCovenantDefeasanceTheindenturewillprovidethatwemayatouroptionandatanytimeelecttohaveallofourobligationsdischargedwithrespecttotheoutstandingdebtsecuritiesofaseries("LegalDefeasance")exceptfor:(1)therightsofholdersofthedebtsecuritiesofthatseriesthatarethenoutstandingtoreceivepaymentsinrespectoftheprincipalof,orinterestorpremiumonsuchdebtsecuritieswhensuchpaymentsareduefromthetrustreferredtobelow;(2)ourobligationswithrespecttothedebtsecuritiesofthatseriesconcerningissuingtemporarynotes,registrationofnotes,mutilated,destroyed,lostorstolennotesandthemaintenanceofanofficeoragencyforpaymentandmoneyforsecuritypaymentsheldintrust;(3)therights,powers,trusts,dutiesandimmunitiesofthetrusteeforthedebtsecuritiesofthatseries,andourobligationsinconnectiontherewith;and(4)theLegalDefeasanceandCovenantDefeasance(asdefinedbelow)provisionsoftheindentureforthedebtsecuritiesofthatseries.
Theindenturewillprovidethat,wemay,atouroptionandatanytime,electtohaveourobligationswithrespecttotheoutstandingdebtsecuritiesofaseriesreleasedwithrespecttocertaincovenants(includingourobligationsundertheheadings"Consolidation,MergerandSaleofAssets"and"PaymentsforConsents")thataredescribedintheindenture("CovenantDefeasance")andthereafteranyomissiontocomplywiththosecovenantswillnotconstituteaDefaultorEventofDefault.
IntheeventCovenantDefeasanceoccurs,certainevents(notincludingnon-payment,bankruptcy,receivership,rehabilitationandinsolvencyevents)describedunderthecaption"—EventsofDefault"willnolongerconstituteanEventofDefault.
Theindenturewillalsoprovidethat,inordertoexerciseeitherLegalDefeasanceorCovenantDefeasance:(1)wemustirrevocablydepositwiththetrusteeorthepayingagent,intrust,forthebenefitoftheholdersofalldebtsecuritiesofthatseriessubjecttoLegalDefeasanceorCovenantDefeasance,cashinU.
S.
dollars,U.
S.
GovernmentObligation,oracombinationofcashinU.
S.
dollarsandU.
S.
GovernmentObligation,inamountsaswillbesufficient,intheopinionofanationallyrecognizedinvestmentbank,appraisalfirmorfirmofindependentpublicaccountantstopaytheprincipalof,orinterestandpremiumonsuchnotesthatarethenoutstandingontheStatedMaturityorontheapplicableredemptiondate,asthecasemaybe,andwemustspecifywhethersuchdebtsecuritiesarebeingdefeasedtomaturityortoaparticularredemptiondate;20TableofContents(2)inthecaseofLegalDefeasance,wemustdelivertothetrusteeanopinionofexternallegalcounselofrecognizedstandingwithrespecttoU.
S.
federalincometaxmattersthatisacceptabletothetrusteeconfirmingthat(a)wehavereceivedfrom,ortherehasbeenpublishedby,theInternalRevenueServicearulingor(b)sincethedateoftheindenture,therehasbeenachangeintheapplicablefederalincometaxlaw,ineithercasetotheeffectthat,andbasedthereonsuchopinionofexternallegalcounselwillconfirmthat,thebeneficialownersofthethenoutstandingdebtsecuritiesofthatserieswillnotrecognizeincome,gainorlossforfederalincometaxpurposesasaresultofsuchLegalDefeasanceandwillbesubjecttofederalincometaxonthesameamounts,inthesamemannerandatthesametimesaswouldhavebeenthecaseifsuchLegalDefeasancehadnotoccurred;(3)inthecaseofCovenantDefeasance,wemustdelivertothetrusteeanopinionofexternallegalcounselofrecognizedstandingwithrespecttoU.
S.
federalincometaxmattersthatisacceptabletothetrusteeconfirmingthatthebeneficialownersofthethenoutstandingdebtsecuritiesofthatserieswillnotrecognizeincome,gainorlossforfederalincometaxpurposesasaresultofsuchCovenantDefeasanceandwillbesubjecttofederalincometaxonthesameamounts,inthesamemannerandatthesametimesaswouldhavebeenthecaseifsuchCovenantDefeasancehadnotoccurred;(4)noDefaultorEventofDefaultwithrespecttothedebtsecuritiesofthatseriesmusthaveoccurredandbecontinuingonthedateofsuchdeposit(otherthanaDefaultorEventofDefaultresultingfromtheborrowingoffundstobeappliedtosuchdeposit);(5)wemustdelivertothetrusteeanofficers'certificatestatingthatthedepositwasnotmadebyuswiththeintentofpreferringtheholdersofdebtsecuritiesofthatseriesoverourothercreditorswiththeintentofdefeating,hindering,delayingordefraudingourcreditorsorothers;and(6)wemustdelivertothetrusteeanofficers'certificateandanopinionofexternallegalcounsel,eachstatingthatallconditionsprecedentrelatingtotheLegalDefeasanceortheCovenantDefeasancehavebeencompliedwith.
SatisfactionandDischargeTheindenturewillbedischargedandwillceasetobeoffurthereffectwithrespecttodebtsecuritiesofaserieswhen:(1)either:(a)alldebtsecuritiesofthatseriesthathavebeenauthenticated,exceptlost,stolenordestroyeddebtsecuritiesthathavebeenreplacedorpaidandnotesforwhosepaymentmoneyhasbeendepositedintrustandthereafterrepaidtous,havebeendeliveredtothepayingagentforcancellation;or(b)alldebtsecuritiesofthatseriesthathavenotbeendeliveredtothepayingagentforcancellationhavebecomedueandpayablebyreasonofthemailingofanoticeofredemptionorotherwiseorwillbecomedueandpayablewithinoneyearandwehaveirrevocablydepositedorcausedtobedepositedwiththetrusteeorthepayingagentastrustfundsintrustsolelyforthebenefitoftheholdersofthedebtsecuritiesofsuchseries,cashinU.
S.
dollars,U.
S.
GovernmentObligation,oracombinationofcashinU.
S.
dollarsandU.
S.
GovernmentObligation,inamountsaswillbesufficient(inthecaseofadepositnotentirelyincash,intheopinionofaninternationallyrecognizedinvestmentbank,appraisalfirmorfirmofindependentpublicaccountants),withoutconsiderationofanyreinvestmentofinterest,topayanddischargetheentireindebtednessonsuchdebtsecuritiesnotdeliveredtothepayingagentforcancellationforprincipal,premiumandaccruedinteresttothedateofmaturityorredemption;(2)noDefaultorEventofDefaultundertheindenturehasoccurredandiscontinuingwithrespecttothedebtsecuritiesofthatseriesonthedateofthedeposit(otherthanaDefaultorEventofDefaultresultingfromtheborrowingoffundstobeappliedtosuchdeposit)andthedepositwillnotresultinabreachorviolationof,orconstituteadefaultunder,anyotherinstrumenttowhichweareapartyorbywhichwearebound;21TableofContents(3)wehavepaidorcausedtobepaidallsumspayablebyusundertheindenturewithrespecttothedebtsecuritiesofthatseries;and(4)wehavedeliveredirrevocableinstructionstothetrusteeorthepayingagent(asthecasemaybe)undertheindenturetoapplythedepositedmoneytowardthepaymentofthedebtsecuritiesofthatseriesatmaturityortheredemptiondate,asthecasemaybe.
Inaddition,weshalldeliveranofficers'certificateandanopinionofexternallegalcounseltothetrusteestatingthatallconditionsprecedenttosatisfactionanddischargehavebeensatisfied.
ConcerningtheTrusteeThetrusteeundertheindentureisTheBankofNewYorkMellon.
Pursuanttotheindenture,thetrusteewillbedesignatedbyusastheinitialpayingandtransferagentandregistrarforthedebtsecurities.
Thecorporatetrustofficeofthetrusteeiscurrentlylocatedat240GreenwichStreet,NewYork,NewYork10286,U.
S.
A.
Theindentureprovidesthatthetrustee,exceptduringthecontinuanceofanEventofDefault,undertakestoperformsuchdutiesandonlysuchdutiesasarespecificallysetforththerein.
IfanEventofDefaulthasoccurredandiscontinuing,thetrusteewillexercisesuchoftherightsandpowersvestedinitbytheindenture,andusethesamedegreeofcareandskillinitsexercise,asaprudentpersonwouldexerciseoruseunderthecircumstancesintheconductofsuchperson'sownaffairs.
Wheneverthetrusteeshallhavediscretionorpermissivepowerinaccordancewiththeindentureorthelaw,thetrusteemaydeclinetoexercisethesameintheabsenceofapprovalbytheholdersandshallhavenoobligationtoexercisethesameunlessithasreceivedpre-funding,beenindemnifiedand/orprovidedwithsecuritytoitssatisfactionagainstallactions,proceedings,claims,actionsordemandstowhichitmayrenderitselfliableandallcosts,damages,charges,expensesandliabilitieswhichitmayincurbysodoing.
Thetrusteeinitsvariouscapacitiesshallinnoeventberesponsibleforspecial,indirect,punitiveorconsequentiallossordamageofanykindwhatsoever(including,butnotlimitedto,lossofprofit,goodwilloropportunity),whetherornotforeseeable,evenifthetrusteehasbeenadvisedofthepossibilityofsuchlossordamageandregardlessoftheformofaction.
SubjecttothetermsoftheindentureandtheTrustIndentureAct,thetrusteeispermittedtoengageinothertransactionswiththeCompanyanditsaffiliatesandcanprofittherefromwithoutbeingobligedtoaccountforsuchprofit;andthetrusteeshallnotbeunderanyobligationtomonitoranyconflictofinterest,ifany,whichmayarisebetweenitselfandsuchotherparties.
Thetrusteemayhaveinterestin,ormaybeproviding,ormayinthefutureprovidefinancialservicestootherparties.
CurrencyIndemnityTothefullestextentpermittedbylaw,ourobligationstoanyholderofdebtsecuritiesundertheindentureortheapplicableseriesofdebtsecurities,asthecasemaybe,shall,notwithstandinganyjudgmentinacurrency(the"JudgmentCurrency")otherthanU.
S.
dollars(the"AgreementCurrency"),bedischargedonlytotheextentthatontheBusinessDayfollowingreceiptbysuchholderorthetrustee,asthecasemaybe,ofanyamountintheJudgmentCurrency,suchholderorthetrustee,asthecasemaybe,mayinaccordancewithnormalbankingprocedurespurchasetheAgreementCurrencywiththeJudgmentCurrency.
IftheamountoftheAgreementCurrencysopurchasedislessthantheamountoriginallytobepaidtosuchholderorthetrustee,asthecasemaybe,intheAgreementCurrency,weagree,asaseparateobligationandnotwithstandingsuchjudgment,topaythedifferenceandiftheamountoftheAgreementCurrencysopurchasedexceedstheamountoriginallytobepaidtosuchholder,suchholderorthetrustee,asthecasemaybe,agreestopaytoorforouraccountsuchexcess,providedthatsuchholdershallnothaveanyobligationtopayanysuchexcessaslongasadefaultbyusinourobligationsundertheindentureorthedebtsecuritiesofsuchserieshasoccurredandiscontinuing,inwhichcasesuchexcessmaybeappliedbysuchholdertosuchobligations.
22TableofContentsNoticesNoticestoholdersofdebtsecuritieswillbemailedtothem(orthefirstnamedofjointholders)byfirstclassmail(or,iffirstclassmailisunavailable,byairmail)attheirrespectiveaddressesintheregister.
GoverningLawandConsenttoJurisdictionTheindentureandthedebtsecuritieswillbegovernedbyandwillbeconstruedinaccordancewiththelawsoftheStateofNewYork.
WehaveagreedthatanyactionarisingoutoforbasedupontheindenturemaybeinstitutedinanyU.
S.
federalorNewYorkStatecourtlocatedintheBoroughofManhattan,TheCityofNewYork,andhaveirrevocablysubmittedtothenon-exclusivejurisdictionofanysuchcourtinanysuchaction.
WehaveappointedPuglisi&Associates,locatedat850LibraryAvenue,Suite204,Newark,Delaware19711,asouragentuponwhichprocessmaybeservedinanysuchaction.
Wehaveagreedthat,totheextentthatweareorbecomeentitledtoanysovereignorotherimmunity,wewillwaivesuchimmunityinrespectofourobligationsundertheindenture.
CertainDefinitionsSetforthbelowaredefinitionsofcertainofthetermsusedherein.
Additionaltermsaredefinedelsewhereaboveorintheindenture.
"BusinessDay"meansadayotherthanaSaturday,SundayoradayonwhichbankinginstitutionsortrustcompaniesinTheCityofNewYork,HongKongorBeijingareauthorizedorobligatedbylaw,regulationorexecutiveordertoremainclosed.
"CapitalStock"ofanyPersonmeansanyandallshares,interests,rightstopurchase,warrants,options,participationsorotherequivalentsoforinterestsin(howeverdesignated)equityofsuchPerson,includinganyPreferredSharesandlimitedliabilityorpartnershipinterests(whethergeneralorlimited),butexcludinganydebtsecuritiesconvertibleorexchangeableintosuchequity.
"Company"meansJD.
com,Inc.
"ConsolidatedAffiliatedEntity"ofanyPersonmeansanycorporation,associationorotherentitywhichisorisrequiredtobeconsolidatedwithsuchPersonunderAccountingStandardsCodificationsubtopic810-10,Consolidation:Overall(includinganychanges,amendmentsorsupplementsthereto)or,ifsuchPersonpreparesitsfinancialstatementsinaccordancewithaccountingprinciplesotherthanU.
S.
GAAP,theequivalentofAccountingStandardsCodificationsubtopic810-10,Consolidation:Overallundersuchaccountingprinciples.
Unlessotherwisespecifiedherein,eachreferencetoaConsolidatedAffiliatedEntitywillrefertoaConsolidatedAffiliatedEntityofours.
"ControlledEntity"ofanyPersonmeansaSubsidiaryoraConsolidatedAffiliatedEntityofsuchPerson.
"Default"meansanyeventthatis,orwiththepassageoftimeorthegivingofnoticeorbothwouldbe,anEventofDefault.
"DollarEquivalent"means,withrespecttoanymonetaryamountinacurrencyotherthanU.
S.
dollars,atanytimeforthedeterminationthereof,theamountofU.
S.
dollarsobtainedbyconvertingsuchforeigncurrencyinvolvedinsuchcomputationintoU.
S.
dollarsatthebaserateforthepurchaseofU.
S.
dollarswiththeapplicableforeigncurrencyasquotedbytheFederalReserveBankofNewYorkonthedateofdetermination.
"holder"inrelationtoadebtsecurity,meansthePersoninwhosenameadebtsecurityisregisteredinthesecurityregisterfortheregistrationandtheregistrationoftransferorofexchangeoftheapplicableseriesofsecurities.
23TableofContents"Person"meansanyindividual,corporation,firm,limitedliabilitycompany,partnership,jointventure,undertaking,association,jointstockcompany,trust,unincorporatedorganization,trust,state,governmentoranyagencyorpoliticalsubdivisionthereoforanyotherentity(ineachcasewhetherornotbeingaseparatelegalentity).
"PRC"meansthePeople'sRepublicofChina,excluding,forpurposesofthisdefinition,theHongKongSpecialAdministrativeRegion,theMacauSpecialAdministrativeRegionandTaiwan.
"PreferredShares,"asappliedtotheCapitalStockofanycorporation,meansCapitalStockofanyclassorclasses(howeverdesignated)thatispreferredastothepaymentofdividendsuponliquidation,dissolutionorwindingup.
"PrincipalControlledEntities"atanytimeshallmeanoneofourControlledEntities(i)astowhichoneormoreofthefollowingconditionsis/aresatisfied:(a)itstotalrevenueor(inthecaseofoneofourControlledEntitieswhichhasoneormoreControlledEntities)consolidatedtotalrevenueattributabletousisatleast10%ofourconsolidatedtotalrevenue;(b)itsnetprofitor(inthecaseofoneofourControlledEntitieswhichhasoneormoreControlledEntities)consolidatednetprofitattributabletous(ineachcasebeforetaxationandexceptionalitems)isatleast10%ofourconsolidatednetprofit(beforetaxationandexceptionalitems);or(c)itsnetassetsor(inthecaseofoneofourControlledEntitieswhichhasoneormoreControlledEntities)consolidatednetassetsattributabletous(ineachcaseafterdeductingminorityinterestsinSubsidiaries)areatleast10%ofourconsolidatednetassets(afterdeductingminorityinterestsinSubsidiaries);allascalculatedbyreferencetothethenlatestauditedfinancialstatements(consolidatedor,asthecasemaybe,unconsolidated)ofourControlledEntityandourthenlatestauditedconsolidatedfinancialstatements;providedthat,inrelationtoparagraphs(a),(b)and(c)above:(1)inthecaseofacorporationorotherbusinessentitybecomingaControlledEntityaftertheendofthefinancialperiodtowhichourlatestconsolidatedauditedaccountsrelate,thereferencetoourthenlatestconsolidatedauditedaccountsandourControlledEntitiesforthepurposesofthecalculationaboveshall,untilourconsolidatedauditedaccountsforthefinancialperiodinwhichtherelevantcorporationorotherbusinessentitybecomesaControlledEntityareissued,bedeemedtobeareferencetothethenlatestconsolidatedauditedaccountsofusandourControlledEntitiesadjustedtoconsolidatethelatestauditedaccounts(consolidatedinthecaseofaControlledEntitywhichitselfhasControlledEntities)ofsuchControlledEntityinsuchaccounts;(2)ifatanyrelevanttimeinrelationtousoranyControlledEntitywhichitselfhasControlledEntities,noconsolidatedaccountsarepreparedandaudited,totalrevenue,netprofitornetassetsofusand/oranysuchControlledEntityshallbedeterminedonthebasisofproformaconsolidatedaccountspreparedforthispurposebyoronbehalfofus;(3)ifatanyrelevanttimeinrelationtoanyControlledEntity,noaccountsareaudited,itsnetassets(consolidated,ifappropriate)shallbedeterminedonthebasisofproformaaccounts(consolidated,ifappropriate)oftherelevantControlledEntitypreparedforthispurposebyoronbehalfofus;and(4)iftheaccountsofanyControlledEntity(notbeingaControlledEntityreferredtoinproviso(1)above)arenotconsolidatedwithouraccounts,thenthedeterminationofwhetherornotsuchControlledEntityisaPrincipalControlledEntityshallbebasedonaproformaconsolidationofitsaccounts(consolidated,ifappropriate)withourconsolidatedaccounts(determinedonthebasisoftheforegoing);or24TableofContents(ii)towhichistransferredallorsubstantiallyalloftheassetsofaControlledEntitywhichimmediatelypriortothetransferwasaPrincipalControlledEntity;providedthat,witheffectfromsuchtransfer,theControlledEntitywhichsotransfersitsassetsandundertakingsshallceasetobeaPrincipalControlledEntity(butwithoutprejudicetoparagraph(i)above)andtheControlledEntitytowhichtheassetsaresotransferredshallbecomeaPrincipalControlledEntity.
Anofficers'certificatedeliveredtothetrusteecertifyingingoodfaithastowhetherornotaControlledEntityisaPrincipalControlledEntityshallbeconclusiveintheabsenceofmanifesterrorandthetrusteeshallbeentitledtorelyconclusivelyuponsuchofficers'certificate(withoutfurtherinvestigationorenquiry)andshallnotbeliabletoanypersonforsoacceptingandrelyingonsuchofficers'certificate.
"StatedMaturity"means,whenusedwithrespecttoanydebtsecurityoranyinstallmentofinterestthereon,thedatespecifiedinsuchdebtsecurityasthefixeddateonwhichtheprincipal(oranyportionthereof)oforpremium,ifany,onsuchdebtsecurityorsuchinstallmentofinterestisdueandpayable.
"Subsidiary"ofanyPersonmeans(a)anycorporation,associationorotherbusinessentity(otherthanapartnership,jointventure,limitedliabilitycompanyorsimilarentity)ofwhichmorethan50%ofthetotalordinaryvotingpowerofsharesofCapitalStockentitled(withoutregardtotheoccurrenceofanycontingency)tovoteintheelectionofdirectors,managersortrusteesthereof(orPersonsperformingsimilarfunctions)or(b)anypartnership,jointventurelimitedliabilitycompanyorsimilarentityofwhichmorethan50%ofthecapitalaccounts,distributionrights,totalequityandvotinginterestsorgeneralorlimitedpartnershipinterests,asapplicable,is,inthecaseofclauses(a)and(b),votingatthetimeownedorcontrolled,directlyorindirectly,by(1)suchPerson,(2)suchPersonandoneormoreSubsidiariesofsuchPersonor(3)oneormoreSubsidiariesofsuchPerson.
Unlessotherwisespecifiedherein,eachreferencetoaSubsidiarywillrefertoaSubsidiaryoftheCompany.
"TotalEquity"asofanydate,meansthetotalequityattributabletoourshareholdersonaconsolidatedbasisdeterminedinaccordancewithU.
S.
GAAP,asshownonourconsolidatedbalancesheetforthemostrecentfiscalquarter.
"U.
S.
GAAP"referstogenerallyacceptedaccountingprinciplesintheUnitedStatesofAmerica.
"U.
S.
GovernmentObligations"meanssecuritiesthatare(i)directobligationsoftheUnitedStatesofAmericaforthepaymentofwhichitsfullfaithandcreditispledgedor(ii)obligationsofanagencyorinstrumentalityoftheUnitedStatesofAmericathepaymentofwhichisunconditionallyguaranteedasafullfaithandcreditobligationbytheUnitedStatesofAmerica,andshallalsoincludeadepositaryreceiptissuedbyabankortrustcompanyascustodianwithrespecttoanysuchU.
S.
GovernmentObligationoraspecificpaymentofinterestonorprincipalofanysuchU.
S.
GovernmentObligationheldbysuchcustodianfortheaccountoftheholderofadepositaryreceipt;providedthat(exceptasrequiredbylaw)suchcustodianisnotauthorizedtomakeanydeductionfromtheamountpayabletotheholderofsuchdepositaryreceiptfromanyamountreceivedbythecustodianinrespectoftheU.
S.
GovernmentObligationorthespecificpaymentofinterestonorprincipaloftheU.
S.
GovernmentObligationevidencedbysuchdepositaryreceipt.
25TableofContentsLEGALOWNERSHIPOFDEBTSECURITIESInthisprospectusandtheapplicableprospectussupplement,whenwerefertothe"holders"ofdebtsecuritiesasbeingentitledtospecifiedrightsorpayments,wemeanonlytheactuallegalholdersofthedebtsecurities.
Whileyouwillbetheholderifyouholdasecurityregisteredinyourname,moreoftenthannottheregisteredholderwillactuallybeabroker,bank,otherfinancialinstitutionor,inthecaseofaglobalsecurity,adepositary.
Ourobligations,aswellastheobligationsofthetrustee,anypayingandtransferagent,anyregistrar,anydepositaryandanythirdpartiesemployedbyusortheotherentitieslistedabove,runonlytopersonswhoareregisteredasholdersofourdebtsecurities,exceptasmaybespecificallyprovidedforinacontractgoverningthedebtsecurities.
Forexample,oncewemakepaymenttotheregisteredholder,wehavenofurtherresponsibilityforthepaymentevenifthatregisteredholderislegallyrequiredtopassthepaymentalongtoyouasastreetnamecustomerbutdoesnotdoso.
StreetNameandOtherIndirectHoldersHoldingdebtsecuritiesinaccountsatbanksorbrokersiscalledholdingin"streetname.
"Ifyouholdourdebtsecuritiesinstreetname,wewillrecognizeonlythebankorbroker,orthefinancialinstitutionthatthebankorbrokerusestoholdthedebtsecurities,asaholder.
Theseintermediarybanks,brokers,otherfinancialinstitutionsanddepositariespassalongprincipal,interest,dividendsandotherpayments,ifany,onthedebtsecurities,eitherbecausetheyagreetodosointheircustomeragreementsorbecausetheyarelegallyrequiredtodoso.
Thismeansthatifyouareanindirectholder,youwillneedtocoordinatewiththeinstitutionthroughwhichyouholdyourinterestinasecurityinordertodeterminehowtheprovisionsinvolvingholdersdescribedinthisprospectusandanyapplicableprospectussupplementwillactuallyapplytoyou.
Forexample,ifthedebtsecurityinwhichyouholdabeneficialinterestinstreetnamecanberepaidattheoptionoftheholder,youcannotredeemityourselfbyfollowingtheproceduresdescribedintheprospectussupplementrelatingtothatsecurity.
Instead,youwouldneedtocausetheinstitutionthroughwhichyouholdyourinteresttotakethoseactionsonyourbehalf.
Yourinstitutionmayhaveproceduresanddeadlinesdifferentfromoradditionaltothosedescribedintheapplicableprospectussupplement.
Ifyouholdourdebtsecuritiesinstreetnameorthroughotherindirectmeans,youshouldcheckwiththeinstitutionthroughwhichyouholdyourinterestinasecuritytofindout,amongotherthings:howithandlespaymentsandnoticeswithrespecttothedebtsecurities;whetheritimposesfeesorcharges;howithandlesvoting,ifapplicable;howandwhenyoushouldnotifyittoexerciseanyrightsoroptionsthatmayexistunderthedebtsecuritiesonyourbehalf;whetherandhowyoucaninstructittosendyoudebtsecuritiesregisteredinyourownnamesoyoucanbeadirectholder;andhowitwouldpursuerightsunderthedebtsecuritiesiftherewereadefaultorothereventtriggeringtheneedforholderstoacttoprotecttheirinterests.
GlobalSecuritiesAglobalsecurityisaspecialtypeofindirectlyheldsecurity.
Ifweissuedebtsecuritiesintheformofglobalsecurities,theultimatebeneficialownerscanonlybeindirectholders.
Wedothisbyrequiringthattheglobalsecurityberegisteredinthenameofafinancialinstitutionweselectandbyrequiringthatthedebtsecuritiesincludedintheglobalsecuritynotbetransferredtothenameofanyotherdirectholderunlessthespecialcircumstancesdescribedbelowoccur.
Thefinancialinstitutionthatactsasthesoledirectholderoftheglobalsecurityiscalledthe"depositary.
"Anypersonwishingtoownasecurityissuedinglobalformmustdoso26TableofContentsindirectlythroughanaccountwithabroker,bankorotherfinancialinstitutionthatinturnhasanaccountwiththedepositary.
Theapplicableprospectussupplementwillindicatewhetherthedebtsecuritieswillbeissuedonlyasglobalsecurities.
Asanindirectholder,yourrightsrelatingtoaglobalsecuritywillbegovernedbytheaccountrulesofyourfinancialinstitutionandofthedepositary,aswellasgenerallawsrelatingtosecuritiestransfers.
Wewillnotrecognizeyouasaholderofthedebtsecuritiesandinsteadwilldealonlywiththedepositarythatholdstheglobalsecurity.
Youshouldbeawarethatifourdebtsecuritiesareissuedonlyintheformofglobalsecurities:youcannothavethedebtsecuritiesregisteredinyourownname;youcannotreceivephysicalcertificatesforyourinterestinthedebtsecurities;youwillbeastreetnameholderandmustlooktoyourownbankorbrokerforpaymentsonthedebtsecuritiesandprotectionofyourlegalrightsrelatingtothedebtsecurities;youmaynotbeabletosellinterestsinthedebtsecuritiestosomeinsurancecompaniesandotherinstitutionsthatarerequiredbylawtoowntheirdebtsecuritiesintheformofphysicalcertificates;thedepositary'spolicieswillgovernpayments,dividends,transfers,exchangeandothermattersrelatingtoyourinterestintheglobalsecurity.
We,thetrusteeandanyregistrarhavenoresponsibilityforanyaspectofthedepositary'sactionsorforitsrecordsofownershipinterestsintheglobalsecurity.
We,thetrustee,anypayingandtransferagentandanyregistraralsodonotsupervisethedepositaryinanyway;andthedepositarywillrequirethatinterestsinaglobalsecuritybepurchasedorsoldwithinitssystemusingsame-dayfundsforsettlement.
Inafewspecialsituationsdescribedbelow,aglobalsecurityrepresentingourdebtsecuritieswillterminateandinterestsinitwillbeexchangedforphysicalcertificatesrepresentingthedebtsecurities.
Afterthatexchange,thechoiceofwhethertoholddebtsecuritiesdirectlyorinstreetnamewillbeuptoyou.
Youmustconsultyourbankorbrokertofindouthowtohaveyourinterestsinthedebtsecuritiestransferredtoyournameifyouwishtobecomeadirectholder.
Unlesswespecifyotherwiseintheapplicableprospectussupplement,thespecialsituationsforterminationofaglobalsecurityrepresentingourdebtsecuritiesare:thedepositaryhasnotifiedusthatitisunwillingorunabletocontinueasdepositaryforsuchglobalsecurityorthedepositaryceasestobeaclearingagencyregisteredundertheSecuritiesExchangeActof1934,asamended,ortheExchangeAct,atatimewhensuchdepositaryisrequiredtobesoregisteredinordertoactasdepositary,andineachcasewedonotorcannotappointasuccessordepositarywithin90days;oruponrequestbyholders,incasethataneventofdefaultwithrespecttothedebtsecuritiesoftheapplicableserieshasoccurredandiscontinuing.
Theapplicableprospectussupplementmayalsolistadditionalsituationsforterminatingaglobalsecuritythatwouldapplyonlytotheparticularseriesofdebtsecuritiescoveredbythatprospectussupplement.
Whenaglobalsecurityterminates,thedepositary(andnotus,thetrustee,anypayingandtransferagentoranyregistrar)isresponsiblefordecidingthenamesoftheinstitutionsthatwillbetheinitialdirectholders.
27TableofContentsENFORCEABILITYOFCIVILLIABILITIESWeareincorporatedintheCaymanIslandsbecauseofthefollowingbenefitsfoundthere:politicalandeconomicstability;aneffectivejudicialsystem;afavorabletaxsystem;theabsenceofexchangecontrolorcurrencyrestrictions;andtheavailabilityofprofessionalandsupportservices.
However,certaindisadvantagesaccompanyincorporationintheCaymanIslands.
Thesedisadvantagesinclude:theCaymanIslandshasalessdevelopedbodyofsecuritieslawsascomparedtotheUnitedStatesandthesesecuritieslawsprovidesignificantlylessprotectiontoinvestors;andCaymanIslandscompaniesmaynothavestandingtosuebeforethefederalcourtsoftheUnitedStates.
Ourconstituentdocumentsdonotcontainprovisionsrequiringthatdisputes,includingthosearisingunderthesecuritieslawsoftheUnitedStates,betweenus,ourofficers,directorsandshareholders,bearbitrated.
SubstantiallyallofourcurrentoperationsareconductedinChina,andsubstantiallyallofourassetsarelocatedinChina.
WehaveappointedPuglisi&Associates,locatedat850LibraryAvenue,Suite204,Newark,Delaware19711,asouragentuponwhomprocessmaybeservedinanyactionbroughtagainstusunderthesecuritieslawsoftheUnitedStatesinconnectionwithanofferingofsecuritiesregisteredbytheregistrationstatementofwhichthisprospectusisapart.
AmajorityofourdirectorsandofficersarenationalsorresidentsofjurisdictionsotherthantheUnitedStatesandasubstantialportionoftheirassetsarelocatedoutsidetheUnitedStates.
Asaresult,itmaybedifficultforaninvestortoeffectserviceofprocesswithintheUnitedStatesuponthesepersons,ortoenforceagainstusorthemjudgmentsobtainedinUnitedStatescourts,includingjudgmentspredicateduponthecivilliabilityprovisionsofthesecuritieslawsoftheUnitedStatesoranystateintheUnitedStates.
MaplesandCalder(HongKong)LLP,ourcounselastoCaymanIslandslaw,andZhongLunLawFirm,ourcounselastoPRClaw,haveadvisedusthatthereisuncertaintyastowhetherthecourtsoftheCaymanIslandsandChina,respectively,would:recognizeorenforcejudgmentsofUnitedStatescourtsobtainedagainstusorourdirectorsorofficerspredicateduponthecivilliabilityprovisionsofthesecuritieslawsoftheUnitedStatesoranystateintheUnitedStates;orentertainoriginalactionsbroughtineachrespectivejurisdictionagainstusorourdirectorsorofficerspredicateduponthesecuritieslawsoftheUnitedStatesoranystateintheUnitedStates.
MaplesandCalder(HongKong)LLPhasadvisedusthatthereisnostatutoryrecognitionintheCaymanIslandsofjudgmentsobtainedintheUnitedStates,althoughthecourtsoftheCaymanIslandswillrecognizeandenforceanon-penaljudgmentofaforeigncourtofcompetentjurisdictionwithoutretrialonthemeritsinthecircumstancesdescribedbelow.
Whilethereisnobindingauthorityonthispoint,thisislikelytoinclude,incertaincircumstances,anon-penaljudgmentofaUnitedStatescourtimposingamonetaryawardbasedonthecivilliabilityprovisionsoftheU.
S.
federalsecuritieslaws.
MaplesandCalder(HongKong)LLPhasfurtheradvisedusthatajudgmentobtainedintheUnitedStateswillberecognizedandenforcedinthecourtsoftheCaymanIslandsatcommonlaw,withoutanyre-examinationofthemeritsoftheunderlyingdispute,byanactioncommencedontheforeignjudgmentdebtintheGrandCourt28TableofContentsoftheCaymanIslands,providedsuchjudgment(1)isgivenbyaforeigncourtofcompetentjurisdiction;(2)imposesonthejudgmentdebtoraliabilitytopayaliquidatedsumforwhichthejudgmenthasbeengiven;(3)isfinal;(4)isnotinrespectoftaxes,afineorapenalty;and(5)wasnotobtainedinamannerandisnotofakindtheenforcementofwhichiscontrarytonaturaljusticeorthepublicpolicyoftheCaymanIslands.
TheGrandCourtoftheCaymanIslandsmaystayproceedingsifconcurrentproceedingsarebeingbroughtelsewhere.
NeithertheUnitedStatesnorthePRChasatreatywiththeCaymanIslandsprovidingforreciprocalrecognitionandenforcementofjudgmentsofcourtsoftheUnitedStatesorthePRC,respectively,incivilandcommercialmatters.
ZhongLunLawFirmhasfurtheradvisedusthattherecognitionandenforcementofforeignjudgmentsareprovidedforunderthePRCCivilProceduresLaw.
PRCcourtsmayrecognizeandenforceforeignjudgmentsinaccordancewiththerequirementsofthePRCCivilProceduresLawbasedeitherontreatiesbetweenChinaandthecountrywherethejudgmentismadeoronprinciplesofreciprocitybetweenjurisdictions.
ChinadoesnothaveanytreatiesorotherformofreciprocitywiththeUnitedStatesthatprovideforthereciprocalrecognitionandenforcementofforeignjudgments.
Inaddition,accordingtothePRCCivilProceduresLaw,courtsinthePRCwillnotenforceaforeignjudgmentagainstusorourdirectorsandofficersiftheydecidethatthejudgmentviolatesthebasicprinciplesofPRClawornationalsovereignty,securityorpublicinterest.
Asaresult,itisuncertainwhetherandonwhatbasisaPRCcourtwouldenforceajudgmentrenderedbyacourtintheUnitedStates.
29TableofContentsPLANOFDISTRIBUTIONWemaysellthesecuritiesdescribedinthisprospectusfromtimetotimeinoneormoreofthefollowingways:toorthroughunderwritersordealers;throughagents;directlytooneormorepurchasers;orthroughacombinationofanyofthesemethodsofsale.
Theprospectussupplementwithrespecttotheofferedsecuritieswilldescribethetermsoftheoffering,includingthefollowing:thenameornamesofanyunderwriters,dealersoragents;anypublicofferingprice;theproceedsfromsuchsale;anyunderwritingdiscountsoragencyfeesandotheritemsconstitutingunderwriters'oragents'compensation;anyover-allotmentoptionsunderwhichunderwritersmaypurchaseadditionalsecuritiesfromus;anydiscountsorconcessionsallowedorreallowedorpaidtodealers;andanysecuritiesexchangesonwhichthesecuritiesmaybelisted.
Wemaydistributethesecuritiesfromtimetotimeinoneormoreofthefollowingways:atafixedpriceorprices,whichmaybechanged;atpricesrelatingtoprevailingmarketpricesatthetimeofsale;atvaryingpricesdeterminedatthetimeofsale;oratnegotiatedprices.
ByUnderwritersorDealersIfweuseunderwritersforthesaleofsecurities,theywillacquiresecuritiesfortheirownaccount.
Theunderwritersmayresellthesecuritiesfromtimetotimeinoneormoretransactions,includingnegotiatedtransactions,atafixedpublicofferingpriceoratvaryingpricesdeterminedatthetimeofsale.
Unlessweotherwisestateintheapplicableprospectussupplement,variousconditionswillapplytotheunderwriters'obligationtopurchasesecurities,andtheunderwriterswillbeobligatedtopurchaseallofthesecuritiescontemplatedinanofferingiftheypurchaseanyofsuchsecurities.
Anyinitialpublicofferingpriceandanydiscountsorconcessionsallowedorreallowedorpaidtodealersmaybechangedfromtimetotime.
Theunderwriterorunderwritersofaparticularunderwrittenofferingofsecurities,or,ifanunderwritingsyndicateisused,themanagingunderwriterorunderwriters,willbesetforthonthecoveroftheapplicableprospectussupplement.
Ifweusedealersinthesale,unlessweotherwiseindicateintheapplicableprospectussupplement,wewillsellsecuritiestothedealersasprincipals.
Thedealersmaythenresellthesecuritiestothepublicatvaryingpricesthatthedealersmaydetermineatthetimeofresale.
30TableofContentsByAgentsWemaydesignateagentswhoagreetousetheirreasonableeffortstosolicitpurchasesfortheperiodoftheirappointmentortosellsecuritiesonacontinuingbasis.
Anyagentinvolvedwillbenamed,andanycommissionspayablebyustosuchagentwillbesetforth,intheapplicableprospectussupplement.
DirectSalesWemayalsosellsecuritiesdirectlywithoutusingagents,underwriters,ordealers.
GeneralInformationWemayenterintoagreementswithunderwriters,dealersandagentsthatentitlethemtoindemnificationagainstcertaincivilliabilities,includingliabilitiesundertheSecuritiesAct,ortocontributionwithrespecttopaymentswhichtheunderwriters,dealersoragentsmayberequiredtomake.
Underwriters,dealersandagentsmaybecustomersof,mayengageintransactionswith,orperformservicesfor,usoroursubsidiariesintheordinarycourseofbusiness.
Underwriters,dealersandagentsthatparticipateinthedistributionofthesecuritiesmaybeunderwritersasdefinedintheSecuritiesAct,andanydiscountsorcommissionsreceivedbythemfromusandanyprofitontheresaleofthesecuritiesbythemmaybetreatedasunderwritingdiscountsandcommissionsundertheSecuritiesAct.
Anyunderwriters,dealersoragentsusedintheofferorsaleofsecuritieswillbeidentifiedandtheircompensationdescribedinanapplicableprospectussupplement.
31TableofContentsLEGALMATTERSWearebeingrepresentedbySkadden,Arps,Slate,Meagher&FlomLLPwithrespecttolegalmattersofUnitedStatesfederalsecuritiesandNewYorkStatelaw,byMaplesandCalder(HongKong)LLPwithrespecttolegalmattersofCaymanIslandslawandbyZhongLunLawFirmwithrespecttolegalmattersofPRClaw.
ThevalidityofthedebtsecuritieswillbepasseduponforusbySkadden,Arps,Slate,Meagher&FlomLLP.
Skadden,Arps,Slate,Meagher&FlomLLPmayrelyuponMaplesandCalder(HongKong)LLPwithrespecttomattersgovernedbyCaymanIslandslawandZhongLunLawFirmwithrespecttomattersgovernedbyPRClaw.
Legalmattersinconnectionwiththedebtsecuritiestobeofferedherebywillbepasseduponforanyunderwritersoragentsbycounseltobenamedintheapplicableprospectussupplement.
32TableofContentsEXPERTSThefinancialstatementsandmanagement'sassessmentoftheeffectivenessofinternalcontroloverfinancialreporting(whichisincludedinManagement'sReportonInternalControloverFinancialReporting)incorporatedinthisProspectusbyreferencetotheAnnualReportonForm20-FfortheyearendedDecember31,2018havebeensoincorporatedinrelianceonthereportofPricewaterhouseCoopersZhongTianLLP,anindependentregisteredpublicaccountingfirm,givenontheauthorityofsaidfirmasexpertsinauditingandaccounting.
TheofficesofPricewaterhouseCoopersZhongTianLLParelocatedat6/FDBSBankTower,1318LuJiaZuiRingRoad,PudongNewArea,Shanghai200120,People'sRepublicofChina.
33TableofContentsWHEREYOUCANFINDMOREINFORMATIONWearesubjecttothereportingrequirementsoftheExchangeAct,andinaccordancewiththeExchangeAct,wefileannualreportsandotherinformationwiththeSEC.
InformationwefilewiththeSECcanbeobtainedovertheinternetattheSEC'swebsiteatwww.
sec.
gov.
ThisprospectusispartofaregistrationstatementwehavefiledwiththeSEC.
ThisprospectusomitssomeinformationcontainedintheregistrationstatementinaccordancewithSECrulesandregulations.
Youshouldreviewtheinformationandexhibitsintheregistrationstatementforfurtherinformationonusandthesecuritiesweareoffering.
StatementsinthisprospectusconcerninganydocumentwefiledasanexhibittotheregistrationstatementorthatweotherwisefiledwiththeSECarenotintendedtobecomprehensiveandarequalifiedbyreferencetothesefilings.
Youshouldreviewthecompletedocumenttoevaluatethesestatements.
34TableofContentsINCORPORATIONOFCERTAINDOCUMENTSBYREFERENCETheSECallowsusto"incorporatebyreference"theinformationwefilewiththem.
Thismeansthatwecandiscloseimportantinformationtoyoubyreferringyoutothosedocuments.
Eachdocumentincorporatedbyreferenceiscurrentonlyasofthedateofsuchdocument,andtheincorporationbyreferenceofsuchdocumentsshallnotcreateanyimplicationthattherehasbeennochangeinouraffairssincethedatethereoforthattheinformationcontainedthereiniscurrentasofanytimesubsequenttoitsdate.
Theinformationincorporatedbyreferenceisconsideredtobeapartofthisprospectusandshouldbereadwiththesamecare.
WhenweupdatetheinformationcontainedindocumentsthathavebeenincorporatedbyreferencebymakingfuturefilingswiththeSEC,theinformationincorporatedbyreferenceinthisprospectusisconsideredtobeautomaticallyupdatedandsuperseded.
Inotherwords,inthecaseofaconflictorinconsistencybetweeninformationcontainedinthisprospectusandinformationincorporatedbyreferenceintothisprospectus,orbetweeninformationincorporatedbyreferenceintothisprospectusfromdifferentdocuments,youshouldrelyontheinformationcontainedinthedocumentthatwasfiledlater.
Weincorporatebyreferencethedocumentslistedbelow:ourannualreportonForm20-FforthefiscalyearendedDecember31,2018,asamendedbyAmendmentNo.
1thereto,filedwiththeSEConApril15,2019andJune28,2019,respectively(FileNo.
001-36450);anyfutureannualreportsonForm20-FfiledwiththeSECafterthedateofthisprospectusandpriortotheterminationoftheofferingofthesecuritiesofferedbythisprospectus;ourcurrentreportonForm6-KfurnishedtotheSEConDecember3,2019(FileNo.
001-36450);andanyfuturereportsonForm6-KthatwefurnishtotheSECafterthedateofthisprospectusthatareidentifiedinsuchreportsasbeingincorporatedbyreferenceinthisprospectus.
Copiesofalldocumentsincorporatedbyreferenceinthisprospectus,otherthanexhibitstothosedocumentsunlesssuchexhibitsarespeciallyincorporatedbyreferenceinthisprospectus,willbeprovidedatnocosttoeachperson,includinganybeneficialowner,whoreceivesacopyofthisprospectusonthewrittenororalrequestofthatpersonmadeto:JD.
com,Inc.
20thFloor,BuildingA,No.
18Kechuang11StreetYizhuangEconomicandTechnologicalDevelopmentZoneDaxingDistrict,Beijing101111ThePeople'sRepublicofChina+86108911-8888Attention:InvestorRelations35TableofContentsUS$JD.
com,Inc.
US$%Notesdue20US$%Notesdue20JointBookrunnersandJointLeadManagersBofASecuritiesUBSJointLeadManagersBofASecuritiesUBSHSBCCo-ManagersBankofChinaDBSBankLtd.
StandardCharteredBank