Delaware | 1-10235 | 36-3555336 | ||
(State or other jurisdiction | (Commission File Number) | (IRS Employer | ||
of incorporation) | Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(a) | Exhibits |
99.1 | Press release dated April 25, 2019 announcing IDEX Corporation’s quarterly operating results |
99.2 | Presentation slides of IDEX Corporation’s quarterly operating results |
IDEX CORPORATION | ||
By: | /s/ WILLIAM K. GROGAN | |
William K. Grogan | ||
Senior Vice President and Chief Financial Officer | ||
April 25, 2019 |
• | Orders were up 4 percent overall and 6 percent organically |
• | Sales were up 2 percent overall and 4 percent organically |
• | Operating margin was 23.8 percent, up 120 bps |
• | EPS was $1.44, up 12 percent |
“Strong execution drove a solid start to the year for IDEX. First quarter organic orders and sales grew 6 and 4 percent, respectively. We generated $33 million of backlog during the quarter led by strong organic order growth of 10 percent in FMT and 9 percent in FSDP. Sales within most of our end markets remain strong, led by our industrial businesses. However, we continue to see softness in our agriculture and semiconductor markets, along with some volatility in our dispensing and MPT project-related businesses. Operating margin continues to be a great story, increasing 120 basis points with expansion across all three segments in the quarter. Overall, we delivered record first quarter EPS of $1.44, which was approximately 7 cents above the midpoint of our previous guidance, 2 cents of which was operational over achievement, with the remaining 5 cents due to a lower effective tax rate compared to our previous estimate. | |
We continue to invest in resources for our best organic growth opportunities. These investments are paying dividends as evidenced by 11 consecutive quarters of organic order expansion and 9 consecutive quarters of organic sales growth. M&A remains a key priority for the Company and our balance sheet is in a very good position to support the right opportunities. In the meantime, we keep deploying capital in line with our framework, with $33 million returned to shareholders through dividends, and we repurchased 370 thousand shares of our stock for approximately $52 million. | |
Taking into consideration our solid start to the year and favorability from tax, while keeping a cautious eye on the global economy, we are raising full year EPS guidance while maintaining our organic revenue projection. We now expect full year 2019 EPS of $5.70 to $5.85, with projected second quarter EPS of $1.47 to $1.50. Organic revenue growth expectation for both the second quarter and full year is 4 to 5 percent.” | |
Andrew K. Silvernail | |
Chairman and Chief Executive Officer |
• | Sales of $242.5 million reflected a 4 percent increase compared to the first quarter of 2018 (+6 percent organic and -2 percent foreign currency translation). |
• | Operating income of $71.9 million resulted in an operating margin of 29.6 percent, a 110 basis point increase compared to the adjusted prior year period primarily due to higher volume and productivity initiatives. |
• | EBITDA of $77.3 million resulted in an EBITDA margin of 31.9 percent, a 100 basis point increase compared to the adjusted prior year period. |
• | Sales of $225.3 million reflected a 2 percent increase compared to the first quarter of 2018 (+3 percent organic, +1 percent acquisition and -2 percent foreign currency translation). |
• | Operating income of $54.2 million resulted in an operating margin of 24.0 percent, a 10 basis point increase compared to the adjusted prior year period primarily due to lower amortization, partially offset by higher engineering investments. |
• | EBITDA of $63.4 million resulted in an EBITDA margin of 28.1 percent, a 120 basis point decrease compared to the adjusted prior year period primarily due to business mix and a negative impact from foreign currency. |
• | Sales of $156.2 million reflected a 2 percent decrease compared to the first quarter of 2018 (+1 percent organic and -3 percent foreign currency translation). |
• | Operating income of $40.3 million resulted in an operating margin of 25.8 percent, a 90 basis point increase compared to the adjusted prior year period primarily due to productivity initiatives. |
• | EBITDA of $43.3 million resulted in an EBITDA margin of 27.7 percent, a 190 basis point decrease compared to the adjusted prior year period primarily due to transaction gains included in Other (income) expense in the prior year period. |
• | Organic orders and sales are calculated excluding amounts from acquired or divested businesses during the first twelve months of ownership or divestiture and the impact of foreign currency translation. |
• | Adjusted operating income is calculated as operating income plus restructuring expenses. |
• | Adjusted operating margin is calculated as adjusted operating income divided by net sales. |
• | Adjusted net income is calculated as net income plus restructuring expenses, net of the statutory tax expense or benefit. |
• | EBITDA is calculated as net income plus interest expense plus provision for income taxes plus depreciation and amortization. We reconciled EBITDA to net income on a consolidated basis as we do not allocate consolidated interest expense or consolidated provision for income taxes to our segments. |
• | Adjusted EBITDA is calculated as EBITDA plus restructuring expenses. |
• | Free cash flow is calculated as cash flow from operating activities less capital expenditures. |
Three Months Ended March 31, 2019 | |||||||||||
FMT | HST | FSDP | IDEX | ||||||||
Change in net sales | 4 | % | 2 | % | (2 | )% | 2 | % | |||
- Net impact from acquisitions | — | % | 1 | % | — | % | — | % | |||
- Impact from FX | (2 | )% | (2 | )% | (3 | )% | (2 | )% | |||
Change in organic net sales | 6 | % | 3 | % | 1 | % | 4 | % |
Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||||||||||||
FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||
Reported operating income (loss) | $ | 71,866 | $ | 54,154 | $ | 40,328 | $ | (18,566 | ) | $ | 147,782 | $ | 66,166 | $ | 51,806 | $ | 39,554 | $ | (20,843 | ) | $ | 136,683 | |||||||||||||||||
+ Restructuring expenses | — | — | — | — | — | 143 | 1,059 | 100 | 340 | 1,642 | |||||||||||||||||||||||||||||
Adjusted operating income (loss) | $ | 71,866 | $ | 54,154 | $ | 40,328 | $ | (18,566 | ) | $ | 147,782 | $ | 66,309 | $ | 52,865 | $ | 39,654 | $ | (20,503 | ) | $ | 138,325 | |||||||||||||||||
Net sales (eliminations) | $ | 242,522 | $ | 225,290 | $ | 156,159 | $ | (1,740 | ) | $ | 622,231 | $ | 232,333 | $ | 221,075 | $ | 159,173 | $ | (257 | ) | $ | 612,324 | |||||||||||||||||
Reported operating margin | 29.6 | % | 24.0 | % | 25.8 | % | n/m | 23.8 | % | 28.5 | % | 23.4 | % | 24.8 | % | n/m | 22.3 | % | |||||||||||||||||||||
Adjusted operating margin | 29.6 | % | 24.0 | % | 25.8 | % | n/m | 23.8 | % | 28.5 | % | 23.9 | % | 24.9 | % | n/m | 22.6 | % |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Reported net income | $ | 110,268 | $ | 98,958 | |||
+ Restructuring expenses | — | 1,642 | |||||
+ Tax impact on restructuring expenses | — | (379 | ) | ||||
Adjusted net income | $ | 110,268 | $ | 100,221 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Reported diluted EPS | $ | 1.44 | $ | 1.27 | |||
+ Restructuring expenses | — | 0.02 | |||||
+ Tax impact on restructuring expenses | — | — | |||||
Adjusted diluted EPS | $ | 1.44 | $ | 1.29 | |||
Diluted weighted average shares outstanding | 76,284 | 77,739 |
Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||||||||||||
FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||
Reported operating income (loss) | $ | 71,866 | $ | 54,154 | $ | 40,328 | $ | (18,566 | ) | $ | 147,782 | $ | 66,166 | $ | 51,806 | $ | 39,554 | $ | (20,843 | ) | $ | 136,683 | |||||||||||||||||
- Other (income) expense - net | 78 | 284 | 505 | (1,007 | ) | (140 | ) | 134 | (597 | ) | (3,621 | ) | (365 | ) | (4,449 | ) | |||||||||||||||||||||||
+ Depreciation and amortization | 5,506 | 9,507 | 3,462 | 184 | 18,659 | 5,694 | 11,389 | 3,774 | 197 | 21,054 | |||||||||||||||||||||||||||||
EBITDA | 77,294 | 63,377 | 43,285 | (17,375 | ) | 166,581 | 71,726 | 63,792 | 46,949 | (20,281 | ) | 162,186 | |||||||||||||||||||||||||||
- Interest expense | 10,921 | 11,000 | |||||||||||||||||||||||||||||||||||||
- Provision for income taxes | 26,733 | 31,174 | |||||||||||||||||||||||||||||||||||||
- Depreciation and amortization | 18,659 | 21,054 | |||||||||||||||||||||||||||||||||||||
Reported net income | $ | 110,268 | $ | 98,958 | |||||||||||||||||||||||||||||||||||
Net sales (eliminations) | $ | 242,522 | $ | 225,290 | $ | 156,159 | $ | (1,740 | ) | $ | 622,231 | $ | 232,333 | $ | 221,075 | $ | 159,173 | $ | (257 | ) | $ | 612,324 | |||||||||||||||||
Reported operating margin | 29.6 | % | 24.0 | % | 25.8 | % | n/m | 23.8 | % | 28.5 | % | 23.4 | % | 24.8 | % | n/m | 22.3 | % | |||||||||||||||||||||
EBITDA margin | 31.9 | % | 28.1 | % | 27.7 | % | n/m | 26.8 | % | 30.9 | % | 28.9 | % | 29.5 | % | n/m | 26.5 | % |
Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||||||||||||
FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||
EBITDA | $ | 77,294 | $ | 63,377 | $ | 43,285 | $ | (17,375 | ) | $ | 166,581 | $ | 71,726 | $ | 63,792 | $ | 46,949 | $ | (20,281 | ) | $ | 162,186 | |||||||||||||||||
+ Restructuring expenses | — | — | — | — | — | 143 | 1,059 | 100 | 340 | 1,642 | |||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 77,294 | $ | 63,377 | $ | 43,285 | $ | (17,375 | ) | $ | 166,581 | $ | 71,869 | $ | 64,851 | $ | 47,049 | $ | (19,941 | ) | $ | 163,828 | |||||||||||||||||
Adjusted EBITDA margin | 31.9 | % | 28.1 | % | 27.7 | % | n/m | 26.8 | % | 30.9 | % | 29.3 | % | 29.6 | % | n/m | 26.8 | % |
Three Months Ended | |||||||||||
March 31, | December 31, | ||||||||||
2019 | 2018 | 2018 | |||||||||
Cash flows from operating activities | $ | 88,663 | $ | 71,729 | $ | 153,592 | |||||
- Capital expenditures | 12,875 | 10,009 | 16,233 | ||||||||
Free cash flow | $ | 75,788 | $ | 61,720 | $ | 137,359 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net sales | $ | 622,231 | $ | 612,324 | |||
Cost of sales | 338,397 | 335,672 | |||||
Gross profit | 283,834 | 276,652 | |||||
Selling, general and administrative expenses | 136,052 | 138,327 | |||||
Restructuring expenses | — | 1,642 | |||||
Operating income | 147,782 | 136,683 | |||||
Other (income) expense - net | (140 | ) | (4,449 | ) | |||
Interest expense | 10,921 | 11,000 | |||||
Income before income taxes | 137,001 | 130,132 | |||||
Provision for income taxes | 26,733 | 31,174 | |||||
Net income | $ | 110,268 | $ | 98,958 | |||
Earnings per Common Share: | |||||||
Basic earnings per common share | $ | 1.46 | $ | 1.29 | |||
Diluted earnings per common share | $ | 1.44 | $ | 1.27 | |||
Share Data: | |||||||
Basic weighted average common shares outstanding | 75,442 | 76,419 | |||||
Diluted weighted average common shares outstanding | 76,284 | 77,739 |
March 31, 2019 | December 31, 2018 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 456,130 | $ | 466,407 | |||
Receivables - net | 333,782 | 312,192 | |||||
Inventories | 298,327 | 279,995 | |||||
Other current assets | 40,989 | 33,938 | |||||
Total current assets | 1,129,228 | 1,092,532 | |||||
Property, plant and equipment - net | 271,920 | 281,220 | |||||
Goodwill and intangible assets | 2,067,148 | 2,081,282 | |||||
Other noncurrent assets | 83,164 | 18,823 | |||||
Total assets | $ | 3,551,460 | $ | 3,473,857 | |||
Liabilities and shareholders' equity | |||||||
Current liabilities | |||||||
Trade accounts payable | $ | 160,594 | $ | 143,196 | |||
Accrued expenses | 178,198 | 187,536 | |||||
Short-term borrowings | 455 | 483 | |||||
Dividends payable | — | 33,446 | |||||
Total current liabilities | 339,247 | 364,661 | |||||
Long-term borrowings | 848,437 | 848,335 | |||||
Other noncurrent liabilities | 308,544 | 266,221 | |||||
Total liabilities | 1,496,228 | 1,479,217 | |||||
Shareholders' equity | 2,055,232 | 1,994,640 | |||||
Total liabilities and shareholders' equity | $ | 3,551,460 | $ | 3,473,857 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 110,268 | $ | 98,958 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 9,660 | 10,183 | |||||
Amortization of intangible assets | 8,999 | 10,871 | |||||
Amortization of debt issuance expenses | 335 | 332 | |||||
Share-based compensation expense | 7,560 | 7,652 | |||||
Deferred income taxes | 3,027 | (2,041 | ) | ||||
Non-cash interest expense associated with forward starting swaps | 1,588 | 1,632 | |||||
Changes in (net of the effect from acquisitions): | |||||||
Receivables | (21,402 | ) | (30,816 | ) | |||
Inventories | (18,548 | ) | (21,116 | ) | |||
Other current assets | (7,119 | ) | 16,881 | ||||
Trade accounts payable | 17,488 | 8,215 | |||||
Accrued expenses | (24,606 | ) | (27,273 | ) | |||
Other - net | 1,413 | (1,749 | ) | ||||
Net cash flows provided by operating activities | 88,663 | 71,729 | |||||
Cash flows from investing activities | |||||||
Purchases of property, plant and equipment | (12,875 | ) | (10,009 | ) | |||
Proceeds from disposal of fixed assets | 629 | — | |||||
Other - net | (195 | ) | (184 | ) | |||
Net cash flows used in investing activities | (12,441 | ) | (10,193 | ) | |||
Cash flows from financing activities | |||||||
Dividends paid | (33,446 | ) | (28,945 | ) | |||
Proceeds from stock option exercises | 8,870 | 6,590 | |||||
Purchases of common stock | (50,797 | ) | — | ||||
Shares surrendered for tax withholding | (11,479 | ) | (10,750 | ) | |||
Settlement of foreign exchange contracts | — | 6,618 | |||||
Other | (129 | ) | — | ||||
Net cash flows used in financing activities | (86,981 | ) | (26,487 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 482 | 1,974 | |||||
Net increase (decrease) in cash | (10,277 | ) | 37,023 | ||||
Cash and cash equivalents at beginning of year | 466,407 | 375,950 | |||||
Cash and cash equivalents at end of period | $ | 456,130 | $ | 412,973 |
Three Months Ended March 31, (a) | ||||||||
2019 | 2018 | |||||||
Fluid & Metering Technologies | ||||||||
Net sales | $ | 242,522 | $ | 232,333 | ||||
Operating income (b) | 71,866 | 66,166 | ||||||
Operating margin | 29.6 | % | 28.5 | % | ||||
EBITDA | $ | 77,294 | $ | 71,726 | ||||
EBITDA margin | 31.9 | % | 30.9 | % | ||||
Depreciation and amortization | $ | 5,506 | $ | 5,694 | ||||
Capital expenditures | 3,230 | 4,674 | ||||||
Health & Science Technologies | ||||||||
Net sales | $ | 225,290 | $ | 221,075 | ||||
Operating income (b) | 54,154 | 51,806 | ||||||
Operating margin | 24.0 | % | 23.4 | % | ||||
EBITDA | $ | 63,377 | $ | 63,792 | ||||
EBITDA margin | 28.1 | % | 28.9 | % | ||||
Depreciation and amortization | $ | 9,507 | $ | 11,389 | ||||
Capital expenditures | 5,304 | 3,331 | ||||||
Fire & Safety/Diversified Products | ||||||||
Net sales | $ | 156,159 | $ | 159,173 | ||||
Operating income (b) | 40,328 | 39,554 | ||||||
Operating margin | 25.8 | % | 24.8 | % | ||||
EBITDA | $ | 43,285 | $ | 46,949 | ||||
EBITDA margin | 27.7 | % | 29.5 | % | ||||
Depreciation and amortization | $ | 3,462 | $ | 3,774 | ||||
Capital expenditures | 2,953 | 1,818 | ||||||
Corporate Office and Eliminations | ||||||||
Intersegment sales eliminations | $ | (1,740 | ) | $ | (257 | ) | ||
Operating income (b) | (18,566 | ) | (20,843 | ) | ||||
EBITDA | (17,375 | ) | (20,281 | ) | ||||
Depreciation and amortization | 184 | 197 | ||||||
Capital expenditures | 1,388 | 186 | ||||||
Company | ||||||||
Net sales | $ | 622,231 | $ | 612,324 | ||||
Operating income | 147,782 | 136,683 | ||||||
Operating margin | 23.8 | % | 22.3 | % | ||||
EBITDA | $ | 166,581 | $ | 162,186 | ||||
EBITDA margin | 26.8 | % | 26.5 | % | ||||
Depreciation and amortization (c) | $ | 18,659 | $ | 21,054 | ||||
Capital expenditures | 12,875 | 10,009 |
Three Months Ended March 31, (a) | ||||||||
2019 | 2018 | |||||||
Fluid & Metering Technologies | ||||||||
Net sales | $ | 242,522 | $ | 232,333 | ||||
Adjusted operating income (b) | 71,866 | 66,309 | ||||||
Adjusted operating margin | 29.6 | % | 28.5 | % | ||||
Adjusted EBITDA | $ | 77,294 | $ | 71,869 | ||||
Adjusted EBITDA margin | 31.9 | % | 30.9 | % | ||||
Depreciation and amortization | $ | 5,506 | $ | 5,694 | ||||
Capital expenditures | 3,230 | 4,674 | ||||||
Health & Science Technologies | ||||||||
Net sales | $ | 225,290 | $ | 221,075 | ||||
Adjusted operating income (b) | 54,154 | 52,865 | ||||||
Adjusted operating margin | 24.0 | % | 23.9 | % | ||||
Adjusted EBITDA | $ | 63,377 | $ | 64,851 | ||||
Adjusted EBITDA margin | 28.1 | % | 29.3 | % | ||||
Depreciation and amortization | $ | 9,507 | $ | 11,389 | ||||
Capital expenditures | 5,304 | 3,331 | ||||||
Fire & Safety/Diversified Products | ||||||||
Net sales | $ | 156,159 | $ | 159,173 | ||||
Adjusted operating income (b) | 40,328 | 39,654 | ||||||
Adjusted operating margin | 25.8 | % | 24.9 | % | ||||
Adjusted EBITDA | $ | 43,285 | $ | 47,049 | ||||
Adjusted EBITDA margin | 27.7 | % | 29.6 | % | ||||
Depreciation and amortization | $ | 3,462 | $ | 3,774 | ||||
Capital expenditures | 2,953 | 1,818 | ||||||
Corporate Office and Eliminations | ||||||||
Intersegment sales eliminations | $ | (1,740 | ) | $ | (257 | ) | ||
Adjusted operating income (b) | (18,566 | ) | (20,503 | ) | ||||
Adjusted EBITDA | (17,375 | ) | (19,941 | ) | ||||
Depreciation and amortization | 184 | 197 | ||||||
Capital expenditures | 1,388 | 186 | ||||||
Company | ||||||||
Net sales | $ | 622,231 | $ | 612,324 | ||||
Adjusted operating income | 147,782 | 138,325 | ||||||
Adjusted operating margin | 23.8 | % | 22.6 | % | ||||
Adjusted EBITDA | $ | 166,581 | $ | 163,828 | ||||
Adjusted EBITDA margin | 26.8 | % | 26.8 | % | ||||
Depreciation and amortization (c) | $ | 18,659 | $ | 21,054 | ||||
Capital expenditures | 12,875 | 10,009 | ||||||
(a) | Three month data includes the results of Finger Lakes Instrumentation (July 2018) in the Health & Science Technologies segment from the date of acquisition. | |||||||
(b) | Segment operating income excludes unallocated corporate operating expenses which are included in Corporate Office and Eliminations. | |||||||
(c) | Depreciation and amortization excludes amortization of debt issuance costs. |
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