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Item 5. Market for Registrant’s Common Equity

2022-02-25 compared with 2021-02-26 · 241 added, 276 removed, 79 unchanged (87% of the section changed)

1 unchanged sentence

Market Information

Our ADSs have been listed on the Nasdaq Global Select Market under the symbol “CRTO” since October 30, 2013.

Our ADSs have been listed on the Nasdaq Global Select Market ("Nasdaq") under the symbol “CRTO” since October 30, 2013.

Prior to that date, there was no public trading market for ADSs or our ordinary shares.

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Purchases of Equity Securities by the Issuer and Affiliated Purchasers

We completed two ADS repurchase programs in 2020:

our July 2019 program of up to $80 million, which was completed in February 2020, and our April 2020 program of up to $30 million, which was completed in July 2020.

We did not have any share repurchase activity for the three months ended December 31, 2020.

We completed our ADS repurchase program of $100 million in December 2021.

Recent Sales of Unregistered Securities and Use of Proceeds

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This amount may be increased fivefold if the violation is made by a legal entity.

Further, any investment (i) by an individual or entity located in a country that is not a member State of the European Union or of a member State of the European Economic Area having entered into a convention on administrative assistance against tax evasion and fraud with France, or by a French citizen not residing in France, and (ii) that will result in the relevant investor acquiring the control of, all or part of a business of, or more than 33.33% of the share capital or voting rights of, a company registered in France and developing activities in certain strategic industries, such as telecommunications, cybersecurity or data collection, is subject to the prior authorization by the French Minister of Economy.

In the absence of such authorization, the relevant investment shall be deemed null and void.

Further, any investment (i) by (a) an non-French citizen, (b) any French citizen not residing in France, (c) any non-French entity or (d) any French entity controlled by one of the aforementioned persons or entities, (ii) that will result in the relevant investor (a) acquiring control of any entity registered in France, (b) acquiring all or part of a business line of an entity registered in France, or (c) for non-EU or non-EEA investors crossing, directly or indirectly, alone or in concert, a 25% threshold of voting rights in an entity registered in France, and (iii) made in certain strategic industries, such as telecommunication, cybersecurity, data collection or storage.

If an investment requiring the prior authorization of the French Minister of Economy is completed without such authorization having been granted, the relevant investment shall be deemed null and void and the French Minister of Economy further might direct the relevant investor to nonetheless (i) submit a request for authorization, (ii) have the previous situation restored at its own expense or (iii) amend the investment.

The relevant investor further may be found criminally liable and may be sanctioned with a fine not to exceed the greater of the following amounts:

(i) twice the amount of the relevant investment, (ii) 10% of the annual turnover before tax of the target company or (iii) €5 million (for a company) or €1 million (for a natural person).

Further, (a) any non-French citizen, (b) any French citizen not residing in France, (c) any non- French entity or (d) any French entity controlled by one of the aforementioned persons or entities may have to file a declaration for statistical purposes with the Bank of France (Banque de France) within twenty working days following the date of certain direct foreign investments in us, including any purchase of our ADSs.

In particular, such filings are required in connection with investments exceeding €15,000,000 that lead to the acquisition of at least 10% of our share capital or voting rights or cross such 10% threshold.

Violation of this filing requirement may be sanctioned by five years of imprisonment and a fine of up to twice the amount of the relevant investment.

This amount may be increased fivefold if the violation is made by a legal entity.

French Tax Consequences

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For the purposes of this discussion, the term “U.S.

Holder” means a beneficial owner of securities that is (1) an individual who is a U.S.

Holder” means a beneficial owner of securities that is (1) an individual who is not a French tax resident under French domestic rules / applicable double tax treaty provisions and who is a U.S.

citizen or resident for U.S.

federal income tax purposes, (2) a U.S.

domestic corporation or certain other entities created or organized in or under the laws of the United States or any state thereof, including the District of Columbia, or (3) otherwise subject to U.S.

federal income tax purposes, or (2) a U.S.

domestic corporation or certain other entities created or organized in or under the laws of the U.S.

or any state thereof, including the District of Columbia, or (3) otherwise subject to U.S.

federal income taxation on a net income basis in respect of securities.

3 unchanged sentences

This discussion applies only to investors that hold our securities as capital assets that have the U.S.

dollar as their functional currency, that are entitled to treaty benefits under the “Limitation on Benefits” provision contained in the treaty, and whose ownership of the securities is not effectively connected to a permanent establishment or a fixed base in France.

dollar as their functional currency, that are entitled to treaty benefits under the “Limitation on Benefits” provision contained in the tax treaty between the Government of the U.S.

and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital dated August 31, 1994, as amended by additional protocols of December 8, 2004 and January 13, 2009 ("The Treaty"), and whose ownership of the securities is not effectively connected to a permanent establishment or a fixed base in France.

Holders (including, but not limited to, U.S.

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Holders are urged to consult their own tax advisers regarding the tax consequences of the purchase, ownership and disposition of securities in light of their particular circumstances, especially with regard to the “Limitations on Benefits” provision.

Furthermore, in 2011, France introduced a comprehensive set of new tax rules applicable to French assets that are held by or in foreign trusts.

These rules, among other things, provide for the inclusion of trust assets in the settlor’s net assets for purpose of applying the French wealth tax, for the application of French gift and inheritance tax to French assets held in trust, for a specific tax on capital on the French assets of foreign trusts not already subject to the French wealth tax and for a number of French tax reporting and disclosure obligations.

Furthermore, specific rules apply in France with respect to French assets that are held by or in foreign trusts.

These rules, among other things, provide for the inclusion of trust assets in the settlor’s net assets for purpose of applying the French real estate wealth tax, for the application of French gift and inheritance tax to French assets held in trust, for a specific tax on capital on the French assets of foreign trusts not already subject to the French real estate wealth tax and for a number of French tax reporting and disclosure obligations.

The following discussion does not address the French tax consequences applicable to securities held in trusts.

If securities are held in trust, the grantor, trustee and beneficiary are urged to consult their own tax adviser regarding the specific tax consequences of acquiring, owning and disposing of securities.

If securities are held in trust, the settlor, trustee and beneficiary are urged to consult their own tax adviser regarding the specific tax consequences of acquiring, owning and disposing of securities.

Purchasing Consequences

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Pursuant to Article 235 ter ZD of the French Tax Code ("FTC"), purchases of shares or ADSs of a French company listed on a regulated market of the European Union or an exchange formally acknowledged by the French Financial Market Authority ("AMF") are subject to a 0.3% French tax on financial transactions provided that the issuer’s market capitalization exceeds €1 billion as of December 1 of the year preceding the taxation year.

A list of companies whose market capitalization exceeds €1 billion as of December 1 of the year preceding the taxation year within the meaning of Article 235 ter ZD of the French Tax Code is published annually by the French tax authorities.

A list of companies whose market capitalization exceeds €1 billion as of December 1 of the year preceding the taxation year within the meaning of Article 235 ter ZD of the FTC is published annually by the French tax authorities.

Pursuant to Regulations BOI‑ANNX‑000467‑20201223 issued on December 23, 2020, Criteo is currently not included in such list.

Please note that such list may be updated from time to time, or may not be published anymore in the future.

Nasdaq is not currently acknowledged by the French AMF but this may change in the future.

Consequently, Criteo’s securities should not fall within the scope of the tax on financial transactions described above.

Moreover, Nasdaq, on which Criteo's ADSs are listed for trading, is not currently acknowledged by the AMF but this may change in the future.

Consequently, Criteo’s securities should not fall within the scope of the tax on financial transactions described above and purchasers of Criteo's securities in 2021 should not be subject to the tax on financial transactions.

Registration Duties

In the case where Article 235 ter ZD of the FTC is not applicable, transfers of shares which are not listed on a regulated market of the European Union or an exchange formally acknowledged by the French Financial Market Authority (AMF) are subject to uncapped registration duties at the rate of 0.1%.

As ordinary shares of Criteo are not listed on an exchange formally acknowledged by the French Financial Market Authority (AMF) , their transfer should be subject to uncapped registration duties at the rate of 0.1%.

However, although the official guidelines published by the French tax authorities are silent on this point, ADSs should remain outside of the scope of the aforementioned 0.1% registration duties as they cannot be considered as French shares.

In the case where Article 235 ter ZD of the FTC is not applicable, transfers of shares which are not listed on a regulated market of the European Union or an exchange formally acknowledged by the AMF are subject to uncapped registration duties at the rate of 0.1%.

As ordinary shares of Criteo are not listed on an exchange formally acknowledged by the AMF, their transfer should be subject to uncapped registration duties at the rate of 0.1%.

However, although the official guidelines published by the French tax authorities are silent on this point, transfer of ADSs should remain outside of the scope of the aforementioned 0.1% registration duties as they cannot be considered as French shares.

Ownership Consequences

Taxation of Dividends

Dividends paid by a French corporation to non-residents of France are generally subject to French withholding tax at a rate of 28% for corporate bodies or other legal entities (which is expected to be progressively decreased to 25% in 2022) or 12.8% for individuals.

Dividends paid by a French corporation to non-residents of France are generally subject to French withholding tax at a rate of 25% or 12.8% for individuals.

Dividends paid by a French corporation in a non-cooperative State or territory, as set out in the list referred to in Article 238-0 A of the FTC, will generally be subject to French withholding tax at a rate of 75%, except to the extent this French corporation can prove that the main purpose and effect of the distribution is not transfer such dividend income in a non-cooperative State or territory with a view to avoiding taxes.

However, eligible U.S.

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tax residents, as defined pursuant to the provisions of the Treaty may be subject to the withholding tax at a reduced rate (as described below).

Under the tax treaty between the Government of the United States and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital dated August 31, 1994, as amended by additional protocols of December 8, 2004 and January 13, 2009, the rate of French withholding tax on dividends paid to an eligible U.S.

Under the Treaty, the rate of French withholding tax on dividends paid to an eligible U.S.

Holder who is a U.S.

tax resident as defined pursuant to the provisions of the Treaty and whose ownership of the ordinary shares or ADSs is not effectively connected with a permanent establishment or fixed base that such U.S.

tax resident as defined pursuant to the provisions of the Treaty, who is the ultimate owner of the distributed dividends, and whose ownership of the ordinary shares or ADSs is not effectively connected with a permanent establishment or fixed base that such U.S.

Holder has in France, is generally reduced to 15%, or to 5% if such U.S.

Holder is a corporation and owns directly or indirectly at least 10% of the share capital of the issuer;

Holder may claim a refund from the French tax authorities of the amount withheld in excess of the Treaty rates of 15% or 5%, if any.

Holder is a corporation and owns directly or indirectly at least 10% of the share capital of the issuer, subject to certain procedural requirements discussed below.

Holders that are not individuals but are U.S.

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Holder may immediately be subject to the reduced rates of 15% or 5% provided that such holder establishes before the date of payment that it is a U.S.

resident under the Treaty by completing and providing the depositary with a treaty form (Form 5000).

resident under the Treaty by completing and providing the depositary with the applicable treaty forms (Form 5000 and Form 5001).

Dividends paid to a U.S.

Holder that has not filed the Form 5000 before the dividend payment date will be subject to French withholding tax at the rate of 12.8%, 28% in 2020, or 75% if paid in a non-cooperative State or territory (as defined in Article 238-0 A of the FTC), and then reduced at a later date to 5% or 15%, provided that such holder duly completes and provides the French tax authorities with the treaty forms Form 5000 and Form 5001 before December 31 of the second calendar year following the year during which the dividend is paid.

Holder that has not filed the Form 5000 before the dividend payment date will be subject to French withholding tax at the rate of 12.8%, 25% in 2022, or 75% if paid in a non-cooperative State or territory (as defined in Article 238-0 A of the FTC).

Holder may claim a refund from the French tax authorities of the amount withheld in excess of the Treaty rates of 15% or 5%, if any, provided that such holder duly completes and provides the French tax authorities with the treaty forms (Form 5000 and Form 5001) before December 31 of the second calendar year following the year during which the dividend is paid.

Certain qualifying pension funds and certain other tax-exempt entities are subject to the same general filing requirements as other U.S.

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Holders of ordinary shares or ADSs and returned to the depositary in sufficient time so that they may be filed with the French tax authorities before the distribution in order to obtain immediately a reduced withholding tax rate.

The withholding tax refund, if any, ordinarily occurs within 12 months from filing the applicable French Treasury Form, but not before January 15 of the year following the calendar year in which the related dividend was paid.

At last, please note that subject to certain conditions, corporations can obtain a full refund of the withholding tax if they are in loss-making position.

In such case, the taxation is deferred and will occur if and when profits will be made.

As from January 1, 2018, French wealth tax has been replaced by a new real estate wealth tax which applies only to individuals owning French real estate assets or rights, directly or indirectly through one or more legal entities and whose net taxable assets amount to at least 1,300,000 euros.

Real estate assets allocated to an operational activity are excluded from the scope of the real estate wealth tax.

The withholding tax refund, if any, will not occur before January 15 of the year following the calendar year in which the related dividend was paid.

Subject to certain conditions, corporations can obtain a full refund of the withholding tax if they are in loss-making position.

In such case, the taxation is deferred and will occur if and when profits are made.

Because the withholding tax rate applicable under French domestic law to U.S.

holders who are individuals does not exceed the cap provided in the Treaty ( i.e.

15%), the domestic 12.8% withholding tax rate will generally apply to dividends paid to those U.S.

holders, as opposed to the rate provided under the Treaty.

As from January 1, 2018, French wealth tax ( impôt de solidarité sur la fortune ) has been replaced by a new real estate wealth tax ( impôt sur la fortune immobilière ) which applies only to individuals owning French real estate assets or rights, directly or indirectly through one or more legal entities, and whose net taxable assets amount to at least 1,300,000 euros.

Generally, real estate assets allocated to an operational activity are excluded from the scope of the real estate wealth tax, depending on the structuring.

Shares of an operating company holding French real estate assets in which the relevant individual holds, directly and indirectly, less than 10% of the share capital or voting rights, are also exempt from real estate wealth tax.

The tax treaty between the Government of the United States and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital dated August 31, 1994, as amended by additional protocols of December 8, 2004 and January 13, 2009, does not prevent the application of real estate wealth tax to a US Holder who would be a US tax resident.

The Treaty does not prevent the application of real estate wealth tax to a U.S.

Holder who would be a U.S.

tax resident.

However, based on the above domestic provisions and considering that Criteo SA is an operating company, the owning of ADSs or ordinary shares should not be subject to real estate wealth tax.

Disposal Consequences

Taxation on sale or assimilated

As a matter of principle, under French tax law, a foreign.

shareholder should be subject to French tax on any capital gain from the sale, exchange, repurchase or redemption by us of ordinary shares or ADSs, provided that the foreign shareholder is not a French tax resident for French tax purposes;

and either has not held more than 25% of our dividend rights, at any time during the preceding five years, either directly or indirectly, and, as relates to individuals, alone or with relatives (as an exception, a foreign shareholder established, domiciled or incorporated in a non-cooperative State or territory as defined in Article 238-0 A of the FTC should be subject to a 75% withholding tax in France on any such capital gain, regardless of the fraction of the dividend rights it holds) or holds French real estate assets or shares, units or rights in a company at least 50% of the assets of which consist of real estate located in France, or derives at least 50% of its value, directly or indirectly, from real estate located in France.

However, based on the tax treaty between the Government of the United States and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital dated August 31, 1994, as amended by additional protocols of December 8, 2004 and January 13, 2009, a U.S.

Taxation on sale or other disposition

Generally, under French tax law, a foreign shareholder who is not a French tax resident for French tax purposes is not be subject to French tax on any capital gain from the sale, exchange, repurchase or redemption of ordinary shares or ADSs, provided that the foreign shareholder either (i) has not held more than 25% of our dividend rights, at any time during the preceding five years, either directly or indirectly, and, as relates to individuals, alone or with relatives (as an exception, a foreign shareholder established, domiciled or incorporated in a non-cooperative State or territory as defined in Article 238-0 A of the FTC should be subject to a 75% withholding tax in France on any such capital gain, regardless of the fraction of the dividend rights it holds) or (ii) the issuer of the relevant shares or ADSs is a company at least 50% of the assets of which consist of real estate located in France, or derives at least 50% of its value, directly or indirectly, from real estate located in France.

However, based on the Treaty, a U.S.

Holder who is a U.S.

tax resident for purposes of the treaty, has no permanent establishment or fixed base in France and is entitled to treaty benefit will only be subject to French tax on capital gain resulting from the sale of shares, units or rights in a company at least 50% of the assets of which consist of real estate located in France, or derives at least 50% of its value, directly or indirectly, from real estate located in France.

Based on these provisions, capital gain resulting from the sale or assimilated of ADSs and ordinary shares should not be subject to taxation in France.

tax resident for purposes of the Treaty, has no permanent establishment or fixed base in France within the meaning of the Treaty, and is entitled to Treaty benefits will only be subject to French tax on capital gain resulting from the sale of shares, units or rights in a company at least 50% of the assets of which consist of real estate located in France, or derives at least 50% of its value, directly or indirectly, from real estate located in France.

Criteo SA is not expected to meet this standard.

Pursuant to these provisions, capital gain resulting from the sale or other disposition of ADSs and ordinary shares should not be subject to taxation in France.

Holders who own ordinary shares or ADSs through U.S.

partnerships that are not residents for Treaty purposes are advised to consult their own tax advisors regarding their French tax treatment and their eligibility for Treaty benefits in light of their own particular circumstances.

Holder who owns ordinary shares or ADSs through U.S.

Holder that is not a U.S.

resident for Treaty purposes or is not entitled to Treaty benefits (and in both cases is not resident, established or incorporated in a non-cooperative State or territory as defined in Article 238-0 A of the FTC) and has held more than 25% of Criteo's dividend rights at any time during the preceding five years, either directly or indirectly, and, as relates to individuals, alone or with relatives will be subject to a levy in France at the rate of (i) 25% if such U.S.

Holder is a corporate body or a legal entity, or (ii) 12.8% if such U.S.

Holder is an individual.

Special rules apply to U.S.

Holders who are residents of more than one country.

Gift and Inheritance Tax

Under French tax law, the following assets are subject to gift and inheritance tax :

- all movable or immovable property located in France or outside France when the donor or the deceased had his tax residence in France within the meaning of Article 4 B of the FTC;

- movable or immovable property located in France (Included French real estate assets held indirectly), when the donor or the deceased is not domiciled for tax purposes in France;

- movable and immovable property located in France or outside France received from a donor or deceased domiciled outside France by the heir, donee or legatee who is domiciled for tax purposes in France within the meaning of Article 4 B of the CGI and has been so domiciled for at least six years during the last ten years preceding the year in which he receives the property

However, based on the article 5 of the tax treaty between the Government of the United States and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Inheritances and Gifts, dated November 24, 1978 (as amended by the protocol of December 8, 2004), if the US Holder is domiciled in US and has no permanent establishment or fixed base in France , only the French real estate assets and shares, units or other interests in a company or legal entity whose assets consist, directly or through one or more other companies or legal entities, of at least 50% of real property located in France or of rights relating to such property, can be subject to gift and inheritance tax.

Based on these provisions, ADSs or ordinary shares should not be subject to gift and inheritance tax.

Selected Financial Data

Our audited consolidated financial statements have been prepared in accordance with U.S.

We derived the selected consolidated statements of income data for the years ended December 31, 2018, 2019 and 2020 and selected consolidated statements of financial position data as of December 31, 2019 and 2020 from our audited consolidated financial statements included in Part IV, Item 15 “Exhibits and Financial Statements” of this Form 10-K.

The selected consolidated statements of income data for the years ended December 31, 2016 and 2017 and the selected consolidated financial position data as of December 31, 2016, 2017 and 2018 have been derived from our audited consolidated financial statements and notes thereto which are not included in this Form 10-K.

This data should be read together with Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as our audited consolidated financial statements and notes thereto appearing elsewhere in this Form 10-K.

Our historical results are not necessarily indicative of the results to be expected in the future.

Consolidated Statements of Income Data:

Year Ended December 31,

2020 2019 2018 2017 2016

(in thousands, except share and per share data)

Revenue $ 2,072,617 $ 2,261,516 $ 2,300,314 $ 2,296,692 $ 1,799,146

Cost of revenue (1) :

Traffic acquisition costs (1,247,571) (1,314,947) (1,334,334) (1,355,556) (1,068,911)

Other cost of revenue (137,028) (117,533) (131,744) (121,641) (85,260)

Gross profit 688,018 829,036 834,236 819,495 644,975

Operating expenses

Research and development expenses (1)

(132,513) (172,591) (179,263) (173,925) (123,649)

Sales and operations expenses (1)

(330,285) (375,477) (372,707) (380,649) (282,853)

General and administrative expenses (1)

(116,395) (139,754) (135,159) (127,077) (117,469)

Total operating expenses (579,193) (687,822) (687,129) (681,651) (523,971)

Income from operations 108,825 141,214 147,107 137,844 121,004

Financial expense (1,939) (5,749) (5,084) (9,534) (546)

Income before taxes 106,886 135,465 142,023 128,310 120,458

Provision for income taxes (32,197) (39,496) (46,144) (31,651) (33,129)

Net income $ 74,689 $ 95,969 $ 95,879 $ 96,659 $ 87,329

Net income available to shareholders of Criteo S.A.

$ 71,679 $ 90,745 $ 88,644 $ 91,214 $ 82,272

Net income available to shareholders per share:

Basic $ 1.18 $ 1.41 $ 1.33 $ 1.40 $ 1.30

Diluted $ 1.16 $ 1.38 $ 1.31 $ 1.34 $ 1.25

Weighted average shares outstanding used in computing per share amounts:

Basic 60,876,480 64,305,965 66,456,890 65,143,036 63,337,792

Diluted 61,818,593 65,598,588 67,662,904 67,851,971 65,633,470

(1) Cost of revenue and operating expenses include equity awards compensation expense, pension service costs, depreciation and amortization expense, acquisition-related costs, restructuring and transformation related costs and deferred price consideration as follows:

Year Ended December 31,

2020 2019 2018 2017 2016

(in thousands)

Equity awards compensation expense

Research and development expenses $ 10,253 $ 15,036 $ 21,232 $ 21,093 $ 12,108

Sales and operations expenses 12,042 19,301 29,244 31,386 16,838

General and administrative expenses 9,130 14,795 16,600 19,872 14,313

Total equity awards compensation expense (a)

31,425 49,132 67,076 72,351 43,259

Pension service costs

Research and development expenses 1,114 760 844 621 211

Sales and operations expenses 394 283 325 247 144

General and administrative expenses 724 513 522 363 169

Total pension service costs

2,232 1,556 1,691 1,231 524

Depreciation and amortization expense

Cost of revenue 55,935 44,866 67,347 53,988 38,469

Research and development expenses (b)

10,741 16,508 10,602 11,226 7,211

Sales and operations expenses (c)

16,770 24,914 18,245 19,844 7,757

General and administrative expenses 4,792 7,200 7,306 5,738 3,342

Total depreciation and amortization expense

88,238 93,488 103,500 90,796 56,779

Acquisition-related costs

General and administrative expenses 286 — 1,738 6 2,921

Total acquisition-related costs

286 — 1,738 6 2,921

Acquisition-related deferred price consideration

Research and development expense — — — — 85

Sales and operations expenses — — — — —

General and administrative expenses — — — — —

Total acquisition-related deferred price considerations

Restructuring related and transformation costs

Cost of revenue — — 2,497 —

Research and development expenses 4,240 2,000 (332) 2,911 —

Sales and operations expenses 9,398 8,810 290 1,825 —

General and administrative expenses 6,351 2,772 (11) 123 —

Total Restructuring related and transformation costs (d)

$ 19,989 $ 13,582 $ (53) $ 7,356 $ —

(a) Excludes $(2.7) million, $(8.1) million, and $(0.5) million, disclosed as restructuring and transformation related costs as of December 31, 2020, 2019 and 2018 respectively.

(b) Includes acquisition-related amortization of intangible assets of $ 6.8 million, $12.3 million, $15.8 million, $ 17.7 million and $4.1 million, (including the accelerated amortization for Manage technology due to a revised useful life for $4.0 million) as of December 31, 2020, 2019, 2018, 2017 and 2016, respectively.

(c) Includes acquisition-related amortization of intangible assets of $8.7 million, $15.6 million, $9.1 million, $10.0 million and $0.8 million, (including an impairment loss on Manage customers relationships for $6.9 million) as of December 31, 2020, 2019, 2018, 2017 and 2016, respectively.

(d) The Company recognized restructuring related and transformation charges following its new organizational structure implemented to support its multi-product platform strategy and office right sizing policy as detailed below as of December 31, 2020 and 2019:

Year Ended December 31, 2020 Year Ended December 31, 2019

(Gain) from forfeitures of share-based compensation awards (2,655) (8,133)

Depreciation and amortization expense — 1,161

Facilities and impairment related costs 12,975 11,080

Payroll related costs 5,911 9,474

Consulting costs related to transformation 3,758 —

Total restructuring related and transformation costs $ 19,989 $ 13,582

(2) For the years ended December 31, 2020, 2019, 2018, 2017 and 2016, this excludes $3.0 million, $5.2 million, $7.2 million, $5.4 million and $5.1 million, respectively, of net income available to non-controlling interests in our Japanese subsidiary held by Yahoo!

Reconciliation from Non-GAAP Operating Expenses to Operating Expenses under GAAP:

Year Ended December 31,

2020 2019 2018 2017 2016

(in thousands)

Research and development expenses $ (132,513) $ (172,591) $ (179,263) $ (173,925) $ (123,649)

Equity awards compensation expense 10,253 15,036 21,232 21,093 12,108

Depreciation and amortization expense 10,741 16,508 10,602 11,226 7,211

Pension service costs 1,114 760 844 621 211

Acquisition-related deferred price consideration

Restructuring related and transformation costs 4,240 2,000 (332) 2,911 —

Non-GAAP - Research and development expenses $ (106,165) $ (138,287) $ (146,917) $ (138,074) $ (104,034)

Sales and operations expenses (330,285) (375,477) (372,707) (380,649) (282,853)

Equity awards compensation expense 12,042 19,301 29,244 31,386 16,838

Depreciation and amortization expense 16,770 24,914 18,245 19,844 7,757

Pension service costs 394 283 325 247 144

Restructuring related and transformation costs 9,398 8,810 290 1,825 —

Non-GAAP - Sales and operations expenses (291,681) (322,169) (324,603) (327,347) (258,114)

General and administrative expenses (116,395) (139,754) (135,159) (127,077) (117,469)

Equity awards compensation expense 9,130 14,795 16,600 19,872 14,313

Depreciation and amortization expense 4,792 7,200 7,306 5,738 3,342

Pension service costs 724 513 522 363 169

Acquisition-related costs

286 — 1,738 6 2,921

Restructuring related and transformation costs 6,351 2,772 (11) 123 —

Non-GAAP - General and administrative expenses (95,112) (114,474) (109,004) (100,975) (96,724)

Total Operating expenses (579,193) (687,822) (687,129) (681,651) (523,971)

Equity awards compensation expense 31,425 49,132 67,076 72,351 43,259

Depreciation and Amortization expense 32,303 48,622 36,153 36,808 18,310

Pension service costs 2,232 1,556 1,691 1,231 524

Acquisition-related costs 286 — 1,738 6 2,921

Acquisition-related deferred price consideration — — — — 85

Restructuring related and transformation costs 19,989 13,582 (53) 4,859 —

Total Non-GAAP Operating expenses $ (492,958) $ (574,930) $ (580,524) $ (566,396) $ (458,872)

Non-GAAP Operating Expenses are our consolidated operating expenses adjusted to eliminate the impact of depreciation and amortization, equity awards compensation expense, pension service costs, restructuring related and transformation costs, acquisition-related costs and deferred price consideration.

The Company uses Non-GAAP Operating Expenses to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short-term and long-term operational plans, and to assess and measure our financial performance and the ability of our operations to generate cash.

We believe Non-GAAP Operating Expenses reflects our ongoing operating expenses in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business.

As a result, we believe that Non-GAAP Operating Expenses provides useful information to investors in understanding and evaluating our core operating performance and trends in the same manner as our management and in comparing financial results across periods.

In addition, Non-GAAP Operating Expenses is a key component in calculating Adjusted EBITDA, which is one of the key measures we use to provide our quarterly and annual business outlook to the investment community.

Consolidated Statements of Financial Position Data:

Year Ended December 31,

2020 2019 2018 2017 2016

(in thousands)

Cash and cash equivalents $ 488,011 $ 418,763 $ 364,426 $ 414,111 $ 270,317

Total assets $ 1,853,410 $ 1,790,384 $ 1,597,135 $ 1,531,300 $ 1,211,186

Trade receivables, net of allowances for doubtful accounts

$ 474,055 $ 481,732 $ 473,901 $ 484,101 $ 397,244

Total financial liabilities $ 3,275 $ 4,405 $ 3,508 $ 3,657 $ 85,580

Total liabilities $ 700,723 $ 752,396 $ 629,244 $ 633,602 $ 601,309

Total equity $ 1,152,687 $ 1,037,988 $ 967,891 $ 897,698 $ 609,877

Other Financial and Operating Data:

Year Ended December 31,

2020 2019 2018 2017 2016

(in thousands, except number of clients)

Number of clients 21,460 20,247 19,419 18,118 14,468

Revenue ex-TAC (3)

$ 825,046 $ 946,569 $ 965,980 $ 941,136 $ 730,235

Adjusted net income (4)

$ 134,171 $ 175,399 $ 168,738 $ 183,311 $ 136,777

Adjusted EBITDA (5)

$ 250,995 $ 298,972 $ 321,059 $ 309,584 $ 224,572

(3) We define Revenue ex-TAC as our revenue excluding traffic acquisition costs, or TAC, generated over the applicable measurement period.

Revenue ex-TAC is not a measure calculated in accordance with U.S.

We have included Revenue ex-TAC in this Form 10-K because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.

In particular, we believe that the elimination of TAC from revenue can provide a useful measure for period-to-period comparisons of our core business.

Accordingly, we believe that Revenue ex-TAC provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors.

Revenue ex-TAC has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S.

Some of these limitations are:

(a) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently;

and (b) other companies may report Revenue ex-TAC or similarly titled measures but calculate them differently, which reduces their usefulness as a comparative measure.

Because of these and other limitations, you should consider Revenue ex-TAC alongside our U.S.

GAAP financial results, including revenue .

The following table presents a reconciliation of Revenue ex-TAC to revenue, the most directly comparable U.S.

GAAP measure, for each of the periods indicated:

Year Ended December 31,

2020 2019 2018 2017 2016

(in thousands)

Revenue $ 2,072,617 $ 2,261,516 $ 2,300,314 $ 2,296,692 $ 1,799,146

Traffic acquisition costs (1,247,571) (1,314,947) (1,334,334) (1,355,556) (1,068,911)

Revenue ex-TAC $ 825,046 $ 946,569 $ 965,980 $ 941,136 $ 730,235

(4) We define Adjusted Net Income as our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs, acquisition-related costs and deferred price consideration and the tax impact of the foregoing adjustments.

Adjusted Net Income is not a measure calculated in accordance with U.S.

We have included Adjusted Net Income in this Form 10-K because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.

In particular, we believe that the elimination of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs, acquisition-related costs and deferred price consideration and the tax impact of the foregoing adjustments in calculating Adjusted Net Income can provide a useful measure for period-to-period comparisons of our core business.

Accordingly, we believe that Adjusted Net Income provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors.

Our use of Adjusted Net Income has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S.

Some of these limitations are:

(a) Adjusted Net Income does not reflect the potentially dilutive impact of equity-based compensation or the impact of certain acquisition related costs;

and (b) other companies, including companies in our industry, may calculate Adjusted Net Income or similarly titled measures differently, which reduces their usefulness as a comparative measure.

Because of these and other limitations, you should consider Adjusted Net Income alongside our U.S.

GAAP financial results, including net income.

The following table presents a reconciliation of Adjusted Net Income to net income, the most directly comparable U.S.

GAAP measure, for each of the periods indicated:

Year Ended December 31,

2020 2019 2018 2017 2016

(in thousands)

Net income $ 74,689 $ 95,969 $ 95,879 $ 96,659 $ 87,329

Equity awards compensation expense (a)

31,425 49,132 67,076 72,351 43,259

Amortization of acquisition-related intangible assets

15,520 27,906 15,821 17,731 4,131

Acquisition-related costs

286 — 1,738 6 2,921

Acquisition-related deferred price consideration

Restructuring and transformation related costs 19,989 13,582 (53) 7,356 —

Tax impact of the above adjustments

(7,738) (11,190) (11,723) (10,792) (948)

Adjusted net income $ 134,171 $ 175,399 $ 168,738 $ 183,311 $ 136,777

(a) Excludes $(2.7) million, $(8.1) million, and $(0.5) million disclosed as restructuring costs as of December 31, 2020, 2019 and 2018, respectively.

(5) We define Adjusted EBITDA as our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, restructuring related and transformation costs, acquisition-related costs and deferred price consideration.

Adjusted EBITDA is not a measure calculated in accordance with U.S.

We have included Adjusted EBITDA in this Form 10-K because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.

In particular, we believe that the elimination of equity awards compensation expense, pension service costs, restructuring related and transformation costs, acquisition-related costs and deferred price consideration in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business.

Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors.

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S.

Some of these limitations are:

(a) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

(b) Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

(d) Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;

and (e) other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as a comparative measure.

Because of these and other limitations, you should consider Adjusted EBITDA alongside our U.S.

GAAP financial results, including net income.

The following table presents a reconciliation of Adjusted EBITDA to net income, the most directly comparable U.S.

GAAP measure, for each of the periods indicated:

Year Ended December 31,

2020 2019 2018 2017 2016

(in thousands)

Net income $ 74,689 $ 95,969 $ 95,879 $ 96,659 $ 87,329

Financial expense 1,939 5,749 5,084 9,534 546

Provision for income taxes 32,197 39,496 46,144 31,651 33,129

Equity awards compensation expense (a)

31,425 49,132 67,076 72,351 43,259

Pension service costs 2,232 1,556 1,691 1,231 524

Depreciation and amortization expense 88,238 93,488 103,500 90,796 56,779

Acquisition-related costs 286 — 1,738 6 2,921

Acquisition-related deferred price consideration — — — — 85

Restructuring related and transformation costs 19,989 13,582 (53) 7,356 —

Total net adjustments 176,306 203,003 225,180 212,925 137,243

Adjusted EBITDA $ 250,995 $ 298,972 $ 321,059 $ 309,584 $ 224,572

(a) Excludes $(2.7) million, $(8.1) million, and $(0.5) million disclosed as restructuring costs as of December 31, 2020, 2019 and 2018, respectively.

Generally, under French tax law, the following assets are subject to gift and inheritance tax:

• all movable or immovable property located in France or outside France when the donor or the deceased had his or her tax residence in France within the meaning of Article 4 B of the FTC;

• movable or immovable property located in France (including French real estate assets held indirectly), when the donor or the deceased is not domiciled for tax purposes in France;

• movable and immovable property located in France or outside France received from a donor or deceased domiciled outside France by an heir, donee or legatee who is domiciled for tax purposes in France within the meaning of Article 4 B of the FTC and has been so domiciled for at least six years during the last ten years preceding the year in which he or she receives the property.

However, under the Convention between the Government of the U.S.

and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Estates, Inheritances and Gifts, dated November 24, 1978 (as amended by the protocol of December 8, 2004), if the U.S.

Holder is domiciled in the U.S.

and is a U.S.

tax resident for purposes of the Treaty, has no permanent establishment or fixed base in France within the meaning of the Treaty, and is entitled to Treaty benefits, only French real estate assets and shares, units or other interests in a company or legal entity whose assets consist, directly or through one or more other companies or legal entities, of at least 50% of real property located in France or of rights relating to such property can be subject to gift and inheritance tax.

Federal Income Tax Considerations for U.S.

The following section is a summary of the U.S.

federal income tax considerations generally applicable to U.S.

Holders, as defined below, of owning and disposing of ADSs or ordinary shares.

This section applies only to a U.S.

Holder that holds ADSs or ordinary shares as capital assets (generally, property held for investment) for U.S.

federal income tax purposes.

This section does not address the U.S.

federal estate, gift or other non-income tax considerations or any state, local or non-U.S.

tax considerations relating to the ownership or disposition of ADSs or ordinary shares.

In addition, it does not set forth all of the U.S.

federal income tax considerations that may be relevant in light of the U.S.

Holder’s particular circumstances, including alternative minimum tax consequences, the potential application of the provisions of the U.S.

Internal Revenue Code of 1986, as amended (the “Code”) known as the Medicare contribution tax and tax consequences applicable to U.S.

Holders subject to special rules, such as:

• certain banks and other financial institutions;

• dealers in securities or currencies;

• traders that elect to use a mark-to-market method of accounting;

• persons holding ADSs or ordinary shares as part of a hedging transaction, straddle, wash sale, conversion transaction or other integrated transaction or persons entering into a constructive sale with respect to the ADSs or ordinary shares;

• persons whose functional currency for U.S.

federal income tax purposes is not the U.S.

• entities or arrangements classified as partnerships for U.S.

federal income tax purposes;

• insurance companies;

• pension plans;

• cooperatives;

• regulated investment companies;

• real estate investment trusts;

• tax-exempt entities, including private foundations and “individual retirement accounts” or “Roth IRAs”;

• certain former U.S.

citizens or long-term residents;

• persons who acquire their ADSs or ordinary shares pursuant to any employee share option or otherwise as compensation;

• persons required for U.S.

federal income tax purposes to conform the timing of income accruals with respect to the ADSs or ordinary shares to their financial statements under Section 451(b) of the Code;

• persons that directly, indirectly or constructively own 10% or more of our shares (by vote or value);

• persons holding ADSs or ordinary shares in connection with a trade or business conducted outside of the U.S.

If an entity or arrangement that is classified as a partnership for U.S.

federal income tax purposes holds ADSs or ordinary shares, the U.S.

federal income tax treatment of a partner will depend on the status of the partner and the activities of the partnership.

Partnerships holding ADSs or ordinary shares and partners in such partnerships should consult their tax advisers as to the particular U.S.

federal income tax consequences of owning and disposing of the ADSs or ordinary shares.

Holder should consult its tax advisor as to the U.S.

federal, state, local and non-U.S.

tax considerations relevant to it with respect to the ownership and disposition of our ADSs or ordinary shares in light of its particular circumstances.

This section is based on the Code, administrative pronouncements, judicial decisions, final Treasury regulations, and the income tax treaty between France and the U.S.

(the “Treaty”), all as of the date hereof, any of which is subject to change or differing interpretations, possibly with retroactive effect.

Holder” is a holder who, for U.S.

federal income tax purposes, is a beneficial owner of ADSs or ordinary shares and who is:

• a citizen or individual resident of the U.S.;

• a corporation, or other entity classified as a corporation for U.S.

federal income tax purposes, created or organized in or under the laws of the U.S., any state thereof or the District of Columbia;

• an estate the income of which is includible in gross income for U.S.

federal income tax purposes regardless of its source;

• a trust if a court within the U.S.

is able to exercise primary supervision over the administration of the trust and one or more U.S.

persons has or have the authority to control all of the trust’s substantial decisions, or the trust has validly elected to be treated as a domestic trust for U.S.

federal income tax purposes.

In general, it is expected that a U.S.

Holder who owns ADSs will be treated as the owner of the underlying shares represented by those ADSs for U.S.

federal income tax purposes.

The remainder of this discussion assumes that a U.S.

Holder of our ADSs will be treated in this manner.

Accordingly, no gain or loss will be recognized if a U.S.

Holder exchanges ADSs for the underlying shares represented by those ADSs.

Holders should consult their tax advisers concerning the U.S.

federal, state, local and non-U.S.

tax consequences of owning and disposing of ADSs or ordinary shares in their particular circumstances.

Taxation of Distributions

We do not currently expect to make distributions on our ADSs or ordinary shares.

If we are not and have not been a PFIC (as discussed below in the section entitled “—Passive Foreign Investment Company, or PFIC, Rules”), in the event that we do make distributions of cash or other property, the following rules would apply.

The gross amount of any distributions paid on ADSs or ordinary shares, other than certain pro rata distributions of ADSs or ordinary shares, will be treated as dividends to the extent paid out of our current or accumulated earnings and profits (as determined under U.S.

federal income tax principles).

To the extent such amount is treated as a dividend, it will generally be includible in the gross income of a U.S.

Holder as dividend income on the day actually or constructively received by the U.S.

Holder, in the case of ordinary shares, or by the depositary, in the case of ADSs.

If distributions exceed our current and accumulated earnings and profits, such excess distributions will generally constitute a return of capital to the extent of the U.S.

Holder’s tax basis in its ADSs or ordinary shares and will result in a reduction thereof.

To the extent such excess exceeds a U.S.

Holder’s tax basis in the ADSs or ordinary shares, such excess will generally be subject to tax as capital gain.

Because we do not intend to determine our earnings and profits in accordance with U.S.

federal income tax principles, the full amount of any distribution we pay is generally expected to be treated as a dividend for U.S.

federal income tax purposes.

Dividends received on our ADSs or ordinary shares will not be eligible for the dividends received deduction allowed to corporations in respect of dividends received from U.S.

corporations.

Individuals and other non-corporate U.S.

Holders will be subject to tax at the lower capital gains tax rate applicable to “qualified dividend income,” provided that certain conditions are satisfied, including that (1) the ADSs or ordinary shares on which the dividends are paid are readily tradable on an established securities market in the U.S., or we are eligible for the benefit of the Treaty, (2) we are neither a PFIC nor treated as such with respect to a U.S.

Holder (as discussed below) for the taxable year in which the dividend is paid or the preceding taxable year, and (3) certain holding period requirements are met.

If we are eligible for benefits under the Treaty, dividends we pay on our ADSs or ordinary shares, regardless of whether such ADSs or shares are considered readily tradable on an established securities market in the U.S., would be eligible for the reduced rates of taxation described in the preceding paragraph, provided the other conditions described above are satisfied.

Further, as discussed below under “—Passive Foreign Investment Company, or PFIC, Rules”, although there can be no assurance that we will be considered a PFIC for any taxable year, we believe we were not a PFIC for our 2021 taxable year and we do not anticipate that we will be a PFIC in the current and future taxable years.

Holders should consult their tax advisors regarding the availability of the reduced tax rate on dividends in their particular circumstances.

foreign tax credit purposes, dividends paid on our ADSs or ordinary shares generally will be treated as income from foreign sources and generally will constitute passive category income.

The amount of any dividend income paid in euro will be the U.S.

dollar amount calculated by reference to the exchange rate in effect on the date of actual or constructive receipt, regardless of whether the payment is in fact converted into U.S.

dollars at that time.

If the foreign currency received as a dividend is converted into U.S.

dollars on the date it is received, a U.S.

Holder will generally not be required to recognize foreign currency gain or loss in respect of the dividend income.

If the foreign currency received as a dividend is not converted into U.S.

dollars on the date of receipt, a U.S.

Holder will have a basis in the foreign currency equal to its U.S.

dollar value on the date of receipt.

Any gain or loss realized on a subsequent conversion or other disposition of the foreign currency will be treated as U.S.

source ordinary income or loss.

Sale or Other Disposition of ADSs or Ordinary Shares

Subject to the discussion below under “—Passive Foreign Investment Company, or PFIC, Rules”, gain or loss realized on the sale or other disposition of ADSs or ordinary shares will be capital gain or loss, and will be long-term capital gain or loss if the U.S.

Holder held the ADSs or ordinary shares for more than one year.

The amount of the gain or loss will equal the difference between the U.S.

Holder’s tax basis in the ADSs or ordinary shares disposed of and the amount realized on the disposition, in each case as determined in U.S.

Long-term capital gain of individuals and certain other non-corporate U.S.

Holders will generally be eligible for a reduced rate of taxation.

The deductibility of a capital loss may be subject to limitations.

Any capital gain or loss will generally be treated as U.S.-source gain or loss for U.S.

foreign tax credit purposes, which will generally limit the availability of foreign tax credits.

Passive Foreign Investment Company, or PFIC, Rules

Under the Code, we will be a PFIC for any taxable year in which either (i) 75% or more of our gross income consists of “passive income,” or (ii) 50% or more of the average quarterly value of our assets consist of assets that produce, or are held for the production of, “passive income.” For purposes of the above calculations, we will be treated as if we hold our proportionate share of the assets of, and receive directly our proportionate share of the income of, any other corporation in which we directly or indirectly own at least 25%, by value, of the shares of such corporation.

Passive income includes, among other things, interest, dividends, certain non-active rents and royalties, net gains from the sale or exchange of property producing such income and net foreign currency gains.

For this purpose, cash and assets readily convertible into cash are categorized as passive assets, and our goodwill and other unbooked intangibles are taken into account.

The determination of whether we are a PFIC is a fact-intensive determination that must be made on an annual basis applying principles and methodologies that are in some circumstances unclear.

Based on the value and composition of our assets, although not free from doubt, we do not believe we were a PFIC for the taxable year ended December 31, 2021, and we do not expect to be a PFIC in the current taxable year or the foreseeable future.

Since a separate factual determination as to whether we are or have become a PFIC must be made each year (after the close of such year), we cannot assure you that we will not be or become a PFIC in the current year or any future taxable year.

If we are classified as a PFIC for any year during which a U.S.

Holder holds our ADSs or ordinary shares, the PFIC rules discussed below generally will apply to such U.S.

Holder for such taxable year, and unless the U.S.

Holder makes certain elections, will apply in future years even if we cease to be a PFIC.

If we were a PFIC for any taxable year during which a U.S.

Holder held ADSs or ordinary shares (assuming such U.S.

Holder has not made a timely mark-to-market or QEF election, as described below), gain recognized by a U.S.

Holder on a sale or other disposition (including certain pledges) of the ADSs or ordinary shares would be allocated ratably over the U.S.

Holder’s holding period for the ADSs or ordinary shares.

The amounts allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary income.

The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an additional tax based on the interest charge generally applicable to underpayments of tax would be imposed on the amount allocated to that taxable year.

Further, to the extent that any distribution received by a U.S.

Holder on its ADSs or ordinary shares exceeds 125% of the average of the annual distributions on the ADSs or ordinary shares received during the preceding three years or the U.S.

Holder’s holding period, whichever is shorter, that distribution would be subject to taxation in the same manner as gain, described immediately above.

If we are a PFIC for any taxable year during which a U.S.

Holder holds our ADSs or ordinary shares and any of our non-U.S.

affiliated entities are also PFICs, the holder will be treated as owning a proportionate amount (by value) of the shares of each such non-U.S.

affiliate classified as a PFIC for purposes of the application of these rules.

Holders are urged to consult their tax advisors regarding the application of the PFIC rules to any of our subsidiaries.

Holder can avoid certain of the adverse rules described above by making a mark-to-market election with respect to its ADSs or ordinary shares, provided that the ADSs or ordinary shares are “marketable.” ADSs or ordinary shares will be marketable if they are traded in other than de minimis quantities on at least 15 days during each calendar quarter (“regularly traded”) on a “qualified exchange” or other market within the meaning of applicable Treasury regulations.

We expect that our ADSs, but not our ordinary shares, will continue to be listed on the Nasdaq Global Select Market, which is a qualified exchange for these purposes, but no assurances may be given in this regard.

Consequently, assuming that our ADSs are regularly traded, if a U.S.

Holder holds our ADSs, it is expected that the mark-to-market election would be available to such holder were we to be or become a PFIC.

In addition, because, as a technical matter, a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a U.S.

Holder may continue to be subject to the PFIC rules with respect to such holder’s indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S.

federal income tax purposes.

Holder makes the mark-to-market election, it will recognize as ordinary income any excess of the fair market value of the ADSs or ordinary shares at the end of each taxable year over their adjusted tax basis, and will recognize an ordinary loss in respect of any excess of the adjusted tax basis of the ADSs or ordinary shares over their fair market value at the end of the taxable year (but only to the extent of the net amount of income previously included as a result of the mark-to-market election).

Holder makes the election, the U.S.

Holder’s tax basis in the ADSs or ordinary shares will be adjusted to reflect the income or loss amounts recognized.

Any gain recognized on the sale or other disposition of ADSs or ordinary shares in a year when we are a PFIC will be treated as ordinary income and any loss will be treated as an ordinary loss (but only to the extent of the net amount of income previously included as a result of the mark-to-market election).

Holder makes such a mark-to-market election, tax rules that apply to distributions by corporations which are not PFICs would apply to distributions by us (except that the lower applicable capital gains rate for qualified dividend income would not apply).

Holder makes a valid mark-to-market election, and we subsequently cease to be classified as a PFIC, such U.S.

Holder will not be required to take into account the mark-to-market income or loss described above during any period that we are not classified as a PFIC.

In addition, in order to avoid the application of the foregoing rules, a U.S.

person that owns shares in a PFIC for U.S.

federal income tax purposes may make a “qualified electing fund” (“QEF”) election with respect to such PFIC, if the PFIC provides the information necessary for such election to be made.

person makes a QEF election with respect to a PFIC, the U.S.

person will be currently taxable on its pro rata share of the PFIC’s ordinary earnings and net capital gain (at ordinary income and capital gain rates, respectively) for each taxable year that the entity is classified as a PFIC and will not be required to include such amounts in income when actually distributed by the PFIC.

No assurances can be given that we will provide holders with the information necessary for U.S.

Holders to make a QEF election.

In addition, if we were a PFIC or, with respect to a particular U.S.

Holder, were treated as a PFIC for the taxable year in which we paid a dividend or for the prior taxable year, the preferential dividend rates discussed above with respect to dividends paid to certain non-corporate U.S.

Holders would not apply.

Holder owns ADSs or ordinary shares during any year in which we are a PFIC, the U.S.

Holder must file annual reports, containing such information as the U.S.

Treasury may require on IRS Form 8621 (or any successor form) with respect to us, with the U.S.

Holder’s federal income tax return for that year, unless otherwise specified in the instructions with respect to such form.

Holders should consult their tax advisers concerning our potential PFIC status and the potential application of the PFIC rules.

THE PRECEDING SUMMARY OF U.S.

FEDERAL INCOME TAX CONSIDERATIONS IS INTENDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE TAX ADVICE.

HOLDERS SHOULD CONSULT THEIR TAX ADVISORS AS TO THE U.S.

FEDERAL, STATE, LOCAL, AND NON-U.S.

TAX CONSIDERATIONS GENERALLY APPLICABLE TO THEM OF THE OWNERSHIP AND DISPOSITION OF OUR ADSs OR ORDINARY SHARES IN THEIR PARTICULAR CIRCUMSTANCES.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity