Exhibit 99.1
Corporate Headquarters 40W267 Keslinger Road PO Box 393 | ||||||||
For Immediate Release | ||||||||
For Details Contact: | ||||||||
Edward J. Richardson | Kathleen S. Dvorak | LaFox, IL 60147-0393 | ||||||
Chairman and CEO | EVP & CFO | USA | ||||||
Phone: | (630) 208-2340 | (630) 208-2208 | Phone: | (630) 208-2200 | ||||
E-mail: | info@rell.com | Fax: | (630) 208-2550 |
RICHARDSON ELECTRONICS REPORTS FOURTH QUARTER AND
FULL-YEAR FISCAL 2009 RESULTS AND DECLARES CASH DIVIDEND
LaFox, IL, July 22, 2009:Richardson Electronics, Ltd. (NASDAQ: RELL) today reported net sales during the fourth quarter ended May 30, 2009, of $114.6 million, a 26.1% decrease from net sales of $155.1 million during the fourth quarter last year. Operating loss and net loss during the fourth quarter of fiscal 2009 were $7.8 million and $10.4 million, respectively, including $11.2 million of significant charges. Excluding these charges, on a non-GAAP basis, operating income was $3.4 million and net income was $0.2 million during the fourth quarter of fiscal 2009.
Significant charges included in the fourth quarter of fiscal 2009 were $7.5 million of inventory reserves related to a decline in projected future sales for certain products due to the downturn in the economy; $2.2 million of severance expense related to headcount reductions; and $1.5 million of non-cash goodwill impairment charges.
Full-Year Fiscal 2009
Net sales during fiscal 2009 were $496.4 million, a 12.7% decrease from net sales of $568.4 million during fiscal 2008. Operating loss for fiscal 2009 and fiscal 2008 was $8.1 million and $1.3 million, respectively. Net loss for fiscal 2009 and fiscal 2008 was $12.2 million and $8.4 million, respectively.
The Company’s results for fiscal years 2009 and 2008 include significant charges that impact the comparability of the results from operations. Excluding these significant charges, on a non-GAAP basis, operating income was $14.1 million during fiscal 2009, compared to $16.3 million during fiscal 2008. Net income was $8.7 million during fiscal 2009, compared to net income of $6.6 million during fiscal 2008, excluding these significant charges. A complete reconciliation of these items is provided within this press release under the heading “Certain Non-GAAP Financial Information.”
Gross profit for fiscal 2009 was $109.6 million as compared to $135.6 million for fiscal 2008. Excluding inventory reserves, on a non-GAAP basis, gross margin as a percent of net sales declined to 24.0% during fiscal 2009, compared to 24.3% during fiscal 2008.
Selling, general, and administrative (“SG&A”) costs during fiscal 2009 were $110.4 million, or 22.3% of net sales, compared to $125.3 million, or 22.0% of net sales during
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fiscal 2008. SG&A costs include severance expense during fiscal 2009 and fiscal 2008 of $4.6 million and $3.3 million, respectively. Excluding severance expense, on a non-GAAP basis, SG&A costs were $105.8 million, or 21.3% of net sales, during fiscal 2009, compared to $122.0 million, or 21.5% of net sales, during fiscal 2008.
“During the fiscal year, we have been very successful in taking costs out of our company. Excluding significant charges our operating income was $14.1 million for the 2009 fiscal year. We are continuing to pursue additional cost cutting opportunities that will position us to achieve improved operating performance in fiscal 2010 despite the current economic environment,” said Edward J. Richardson, Chairman, Chief Executive Officer and President of Richardson Electronics, Ltd.
FINANCIAL SUMMARY — THREE MONTHS ENDED MAY 30, 2009
• | Net sales for the fourth quarter of fiscal 2009 were $114.6 million, down 26.1%, compared to net sales of $155.1 million during the fourth quarter of last year. |
• | Gross margin as a percent of net sales decreased to 17.5% during the fourth quarter of fiscal 2009, compared to 24.4% during the fourth quarter of last year. The gross margin percent of 17.5% during the fourth quarter of fiscal 2009 includes $7.5 million of additional inventory reserves. |
• | SG&A expenses decreased to $26.4 million during the fourth quarter of fiscal 2009, compared to $32.0 million during the fourth quarter of last year. The $26.4 million includes $2.2 million of severance expense. |
• | Operating loss during the fourth quarter of fiscal 2009 was $7.8 million, compared to an operating loss of $5.7 million during the fourth quarter of last year. |
• | Net loss during the fourth quarter of fiscal 2009 was $10.4 million versus a net loss of $5.2 million during the fourth quarter of last year. |
FINANCIAL SUMMARY — FISCAL YEAR ENDED MAY 30, 2009
• | Net sales for fiscal 2009 were $496.4 million, down 12.7%, compared to net sales of $568.4 million during last year. |
• | Gross margin as a percent of net sales decreased to 22.1% during fiscal 2009, compared to 23.9% last year. The gross margin percent of 22.1% includes $9.5 million of inventory reserves recorded during fiscal 2009. |
• | SG&A expenses decreased to $110.4 million during fiscal 2009, including $4.6 million of severance expense and $0.7 million of expense related to the write-off of a note receivable, compared to $125.3 million during last year. |
• | Operating loss during fiscal 2009 was $8.1 million, compared to an operating loss of $1.3 million during last year. |
• | Net loss during fiscal 2009 was $12.2 million versus a net loss of $8.4 million during last year. |
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FOCUS ON WORKING CAPITAL MANAGEMENT AND CASH FLOWS
Cash flows provided by operating activities were $11.1 million during fiscal 2009, compared to cash flows provided by operating activities of $27.9 million during fiscal 2008. Our debt less cash as of the end of fiscal 2009 was $8.5 million, a $7.1 million improvement, compared to $15.6 million at the end of fiscal 2008.
“Despite the continuing challenges of the global economy, we were able to generate positive cash flow during the year. Our balance sheet continues to be the strongest it has been in years. We will continue to manage working capital to ensure we have adequate flexibility and liquidity to manage our business,” said Kathleen S. Dvorak, Executive Vice President and Chief Financial Officer.
During the fourth quarter, the Company did not repurchase any shares of its common stock under its share repurchase program. The share repurchase program was approved by the Company’s Board of Directors in January 2009. The share repurchase program does not have an expiration date and may be cancelled at any time.
OUTLOOK
“While sales have declined, we are beginning to see our backlog stabilize, our customers are becoming more optimistic, and we are seeing pockets of good news in terms of projects that are getting back on track. We are continuing to aggressively take costs out of the business. We are making permanent fundamental changes to the way we operate that will position us to return to profitability during fiscal 2010,” concluded Mr. Richardson.
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CERTAIN NON-GAAP FINANCIAL INFORMATION
Richardson Electronics, Ltd.
Unaudited Gross Profit, Operating Loss, and Net Loss Reconciliations
(in millions)
Three Months Ended | Twelve Months Ended | |||||||||||||||
May 30, 2009 | May 31, 2008 | May 30, 2009 | May 31, 2008 | |||||||||||||
GAAP Gross Profit | $ | 20.0 | $ | 37.9 | $ | 109.6 | $ | 135.6 | ||||||||
Adjustments: | ||||||||||||||||
Inventory write-downs | 7.5 | — | 9.5 | 2.8 | ||||||||||||
Adjusted Gross Profit | $ | 27.5 | $ | 37.9 | $ | 119.1 | $ | 138.4 | ||||||||
GAAP Operating Loss | $ | (7.8 | ) | $ | (5.7 | ) | $ | (8.1 | ) | $ | (1.3 | ) | ||||
Adjustments: | ||||||||||||||||
Inventory write-downs | 7.5 | — | 9.5 | 2.8 | ||||||||||||
Write-off of long-term note receivable | — | — | 0.7 | — | ||||||||||||
Impairment of goodwill | 1.5 | 11.5 | 1.5 | 11.5 | ||||||||||||
Severance expense | 2.2 | 0.3 | 4.6 | 3.3 | ||||||||||||
(Gain) loss on disposal of assets | (0.0 | ) | 0.0 | 5.9 | 0.0 | |||||||||||
Adjusted Operating Income | $ | 3.4 | $ | 6.1 | $ | 14.1 | $ | 16.3 | ||||||||
GAAP Net Loss | $ | (10.4 | ) | $ | (5.2 | ) | $ | (12.2 | ) | $ | (8.4 | ) | ||||
Adjustments, net of tax: | ||||||||||||||||
Inventory write-downs | 7.3 | — | 9.2 | 2.8 | ||||||||||||
Write-off of long-term note receivable | — | — | 0.5 | — | ||||||||||||
Impairment of goodwill | 1.3 | 9.2 | 1.3 | 9.2 | ||||||||||||
Severance expense | 2.0 | 0.3 | 4.0 | 3.0 | ||||||||||||
(Gain) loss on disposal of assets | (0.0 | ) | 0.0 | 5.9 | 0.0 | |||||||||||
Adjusted Net Income | $ | 0.2 | $ | 4.3 | $ | 8.7 | $ | 6.6 | ||||||||
In addition to disclosing results that are determined in accordance with Generally Accepted Accounting Principles (“GAAP”), we provide certain non-GAAP financial information relating to gross profit, operating income (loss), and net income (loss) adjusted for certain charges, credits and losses that we believe impact the comparability of our results of operations.
CASH DIVIDEND
The Company today also announced that its Board of Directors voted to declare a $0.02 cash dividend per share to all holders of common stock and a $0.018 cash dividend per share to all holders of Class B common stock. The dividend will be payable on August 20, 2009, to all common stockholders of record on August 8, 2009. The Company currently has 14,866,774 outstanding shares of common stock and 3,048,258 outstanding shares of Class B common stock.
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CONFERENCE CALL INFORMATION
On Thursday, July 23, 2009, at 9:00 a.m. CT, Edward J. Richardson, Chairman and Chief Executive Officer, and Kathleen S. Dvorak, Chief Financial Officer, will host a conference call to discuss the Company’s fiscal 2009 results. A question and answer session will be included as part of the call’s agenda. To listen to the call, please dial 888-419-5570 and enter passcode 11598124 approximately five minutes prior to the start of the call. A replay of the call will be available beginning at 11:00 a.m. CT on July 23, 2009, for seven days. The telephone numbers for the replay are (USA) 888-286-8010 and (International) 617-801-6888; access code 65512525.
FORWARD-LOOKING STATEMENTS
This release includes certain “forward-looking” statements as defined by the Securities and Exchange Commission. Statements in this press release regarding the Company’s business which are not historical facts represent “forward-looking” statements that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see Item 1A, “Risk Factors” in the Company’s 2009 Annual Report on Form 10-K. The Company assumes no responsibility to update the forward-looking statements in this release as a result of new information, future events, or otherwise.
ABOUT RICHARDSON ELECTRONICS, LTD.
Richardson Electronics, Ltd. is a global provider of engineered solutions and a global distributor of electronic components to the radio frequency (“RF”), wireless and power conversion, electron device, and display systems markets. Utilizing its core engineering and manufacturing capabilities, the Company’s strategy is to provide specialized technical expertise and value-add, or “engineered solutions.” The Company provides solutions and adds value through design-in support, systems integration, prototype design and manufacturing, testing, and logistics for end products of its customers. More information is available online atwww.rell.com.
Richardson Electronics common stock trades on the NASDAQ Global Market under the ticker symbol RELL.
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Richardson Electronics, Ltd.
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended | Twelve Months Ended | |||||||||||||||
May 30, 2009 | May 31, 2008 | May 30, 2009 | May 31, 2008 | |||||||||||||
Statements of Operations | ||||||||||||||||
Net sales | $ | 114,565 | $ | 155,093 | $ | 496,379 | $ | 568,409 | ||||||||
Cost of sales | 94,558 | 117,173 | 386,749 | 432,810 | ||||||||||||
Gross profit | 20,007 | 37,920 | 109,630 | 135,599 | ||||||||||||
Selling, general, and administrative expenses | 26,359 | 32,018 | 110,448 | 125,330 | ||||||||||||
Impairment of goodwill | 1,472 | 11,506 | 1,472 | 11,506 | ||||||||||||
(Gain) loss on disposal of assets | (2 | ) | 97 | 5,854 | 27 | |||||||||||
Operating loss | (7,822 | ) | (5,701 | ) | (8,144 | ) | (1,264 | ) | ||||||||
Other (income) expense: | ||||||||||||||||
Interest expense | 1,111 | 1,239 | 4,600 | 6,854 | ||||||||||||
Investment (income) expense | 8 | (357 | ) | (329 | ) | (928 | ) | |||||||||
Foreign exchange (gain) loss | 1,320 | (67 | ) | (1,316 | ) | 1,485 | ||||||||||
Gain on retirement of long-term debt | — | — | (849 | ) | — | |||||||||||
Other, net | 256 | (19 | ) | 164 | 14 | |||||||||||
Total other expense | 2,695 | 796 | 2,270 | 7,425 | ||||||||||||
Loss from continuing operations before income taxes | (10,517 | ) | (6,497 | ) | (10,414 | ) | (8,689 | ) | ||||||||
Income tax provision (benefit) | (111 | ) | (1,263 | ) | 1,750 | (218 | ) | |||||||||
Loss from continuing operations | (10,406 | ) | (5,234 | ) | (12,164 | ) | (8,471 | ) | ||||||||
Income from discontinued operations, net of tax | — | — | — | 45 | ||||||||||||
Net loss | $ | (10,406 | ) | $ | (5,234 | ) | $ | (12,164 | ) | $ | (8,426 | ) | ||||
Net loss per common share – basic | $ | (0.59 | ) | $ | (0.30 | ) | $ | (0.69 | ) | $ | (0.48 | ) | ||||
Net loss per common share – diluted | $ | (0.59 | ) | $ | (0.30 | ) | $ | (0.69 | ) | $ | (0.48 | ) | ||||
Weighted average number of shares: | ||||||||||||||||
Common shares – basic | 14,858 | 14,806 | 14,857 | 14,794 | ||||||||||||
Class B common shares – basic | 3,048 | 3,048 | 3,048 | 3,048 | ||||||||||||
Common shares – diluted | 14,858 | 14,806 | 14,857 | 14,794 | ||||||||||||
Class B common shares – diluted | 3,048 | 3,048 | 3,048 | 3,048 | ||||||||||||
Dividends per common share | $ | 0.020 | $ | 0.020 | $ | 0.080 | $ | 0.120 | ||||||||
Dividends per Class B common share | $ | 0.018 | $ | 0.018 | $ | 0.072 | $ | 0.108 | ||||||||
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Richardson Electronics, Ltd.
Consolidated Balance Sheets
(in thousands, except per share amounts)
May 30, 2009 | May 31, 2008 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 43,887 | $ | 40,042 | ||||
Receivables, less allowance of $2,396 and $1,635 | 92,449 | 109,520 | ||||||
Inventories | 81,165 | 93,858 | ||||||
Prepaid expenses | 5,245 | 4,300 | ||||||
Deferred income taxes | 2,591 | 2,121 | ||||||
Total current assets | 225,337 | 249,841 | ||||||
Non-current assets: | ||||||||
Property, plant and equipment, net | 19,371 | 28,635 | ||||||
Goodwill | — | 1,483 | ||||||
Deferred financing costs, net | 432 | 758 | ||||||
Non-current deferred income taxes | 3,385 | 3,875 | ||||||
Assets held for sale | — | 105 | ||||||
Other non-current assets | 290 | 1,538 | ||||||
Total non-current assets | 23,478 | 36,394 | ||||||
Total assets | $ | 248,815 | $ | 286,235 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 52,996 | $ | 58,860 | ||||
Accrued liabilities | 18,371 | 21,818 | ||||||
Total current liabilities | 71,367 | 80,678 | ||||||
Non-current liabilities: | ||||||||
Long-term debt | 52,353 | 55,683 | ||||||
Long-term income tax liabilities | 5,016 | 6,768 | ||||||
Other non-current liabilities | 1,386 | 1,676 | ||||||
Total non-current liabilities | 58,755 | 64,127 | ||||||
Total liabilities | 130,122 | 144,805 | ||||||
Commitments and contingencies | — | — | ||||||
Stockholders’ equity | ||||||||
Common stock, $0.05 par value; issued 15,930 shares at May 30, 2009, and 15,929 shares at May 31, 2008 | 797 | 797 | ||||||
Class B common stock, convertible, $0.05 par value; issued 3,048 shares at May 30, 2009, and at May 31, 2008 | 152 | 152 | ||||||
Preferred stock, $1.00 par value, no shares issued | — | — | ||||||
Additional paid-in-capital | 120,370 | 119,735 | ||||||
Common stock in treasury, at cost, 1,065 shares at May 30, 2009, and at May 31, 2008 | (6,310 | ) | (6,310 | ) | ||||
Retained earnings (accumulated deficit) | (2,475 | ) | 11,098 | |||||
Accumulated other comprehensive income | 6,159 | 15,958 | ||||||
Total stockholders’ equity | 118,693 | 141,430 | ||||||
Total liabilities and stockholders’ equity | $ | 248,815 | $ | 286,235 | ||||
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Richardson Electronics, Ltd.
Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended | Twelve Months Ended | |||||||||||||||
May 30, 2009 | May 31, 2008 | May 30, 2009 | May 31, 2008 | |||||||||||||
Operating activities: | ||||||||||||||||
Net loss | $ | (10,406 | ) | $ | (5,234 | ) | $ | (12,164 | ) | $ | (8,426 | ) | ||||
Adjustments to reconcile net loss to cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 1,084 | 1,317 | 4,546 | 5,257 | ||||||||||||
Inventory provisions | 6,950 | 677 | 9,835 | 3,977 | ||||||||||||
(Gain) loss on disposal of assets | (2 | ) | 97 | 5,854 | 27 | |||||||||||
Gain on retirement of long-term debt | — | — | (849 | ) | — | |||||||||||
Impairment of goodwill | 1,472 | 11,506 | 1,472 | 11,506 | ||||||||||||
Write-off of deferred financing costs | — | — | — | 643 | ||||||||||||
Stock compensation expense | 162 | 164 | 630 | 687 | ||||||||||||
Deferred income taxes | (385 | ) | (2,096 | ) | (126 | ) | (3,026 | ) | ||||||||
Accounts receivable | 3,500 | (4,266 | ) | 12,219 | 3,535 | |||||||||||
Inventories | 8,680 | 14,040 | 244 | 19,426 | ||||||||||||
Prepaid expenses | (206 | ) | 1,315 | (620 | ) | 2,532 | ||||||||||
Accounts payable | (1,480 | ) | 663 | (4,950 | ) | 2,344 | ||||||||||
Accrued liabilities | 388 | 1,662 | (3,349 | ) | (6,928 | ) | ||||||||||
Other | (233 | ) | (187 | ) | (1,661 | ) | (3,638 | ) | ||||||||
Net cash provided by operating activities | 9,524 | 19,658 | 11,081 | 27,916 | ||||||||||||
Investing activities: | ||||||||||||||||
Capital expenditures | (310 | ) | (271 | ) | (1,197 | ) | (4,464 | ) | ||||||||
Proceeds from sale of assets | 14 | 130 | 189 | 1,137 | ||||||||||||
Contingent purchase price consideration | (24 | ) | (96 | ) | 2 | (256 | ) | |||||||||
(Gain) loss on sale of investments | 9 | (253 | ) | 1 | (124 | ) | ||||||||||
Proceeds from sales of available-for-sale securities | 37 | 362 | 161 | 707 | ||||||||||||
Purchases of available-for-sale securities | (37 | ) | (8 | ) | (161 | ) | (196 | ) | ||||||||
Net cash used in investing activities | (311 | ) | (136 | ) | (1,005 | ) | (3,196 | ) | ||||||||
Financing activities: | ||||||||||||||||
Proceeds from borrowings | 27,700 | 34,500 | 120,000 | 197,700 | ||||||||||||
Payments on debt | (27,700 | ) | (44,500 | ) | (120,000 | ) | (263,340 | ) | ||||||||
Restricted cash | — | — | — | 61,899 | ||||||||||||
Proceeds from issuance of common stock | — | — | 5 | 69 | ||||||||||||
Cash dividends | (352 | ) | (351 | ) | (1,409 | ) | (2,107 | ) | ||||||||
Payments on retirement of long-term debt | — | — | (2,364 | ) | — | |||||||||||
Other | — | — | — | (95 | ) | |||||||||||
Net cash used in financing activities | (352 | ) | (10,351 | ) | (3,768 | ) | (5,874 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 2,441 | 329 | (2,463 | ) | 3,760 | |||||||||||
Increase in cash and cash equivalents | 11,302 | 9,500 | 3,845 | 22,606 | ||||||||||||
Cash and cash equivalents at beginning of period | 32,585 | 30,542 | 40,042 | 17,436 | ||||||||||||
Cash and cash equivalents at end of period | $ | 43,887 | $ | 40,042 | $ | 43,887 | $ | 40,042 | ||||||||
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Richardson Electronics, Ltd.
Net Sales and Gross Profit
For Fiscal 2009 and 2008
(in thousands)
By Business Unit:
Net Sales | Gross Profit (1) | ||||||||||||||||||||||
Fourth Quarter | FY 2009 | FY 2008 | % Change | FY 2009 | % of Sales | FY 2008 | % of Sales | ||||||||||||||||
RF, Wireless & Power Division | $ | 84,307 | $ | 102,996 | (18.1 | )% | $ | 16,076 | 19.1 | % | $ | 22,866 | 22.2 | % | |||||||||
Electron Device Group | 16,914 | 27,507 | (38.5 | )% | 689 | 4.1 | % | 8,972 | 32.6 | % | |||||||||||||
Canvys | 13,343 | 23,775 | (43.9 | )% | 3,283 | 24.6 | % | 5,712 | 24.0 | % | |||||||||||||
Corporate | 1 | 815 | (41 | ) | 370 | ||||||||||||||||||
Total | $ | 114,565 | $ | 155,093 | (26.1 | )% | $ | 20,007 | 17.5 | % | $ | 37,920 | 24.4 | % | |||||||||
Twelve Months | Net Sales | Gross Profit (2) | |||||||||||||||||||||
FY 2009 | FY 2008 | % Change | FY 2009 | % of Sales | FY 2008 | % of Sales | |||||||||||||||||
RF, Wireless & Power Division | $ | 355,189 | $ | 376,203 | (5.6 | )% | $ | 76,031 | 21.4 | % | $ | 85,323 | 22.7 | % | |||||||||
Electron Device Group | 82,168 | 108,272 | (24.1 | )% | 21,512 | 26.2 | % | 35,049 | 32.4 | % | |||||||||||||
Canvys | 59,019 | 79,655 | (25.9 | )% | 12,405 | 21.0 | % | 15,740 | 19.8 | % | |||||||||||||
Corporate | 3 | 4,279 | (318 | ) | (513 | ) | |||||||||||||||||
Total | $ | 496,379 | $ | 568,409 | (12.7 | )% | $ | 109,630 | 22.1 | % | $ | 135,599 | 23.9 | % | |||||||||
(1) | - Included in gross profit during fiscal 2009 are inventory write-downs of $2.3 million for the RF, Wireless & Power Division, $4.6 million for the Electron Device Group, and $0.6 million for Canvys. |
(2) | - Included in gross profit during fiscal 2009 are inventory write-downs of $2.3 million for the RF, Wireless & Power Division, $4.8 million for the Electron Device Group, and $2.4 million for Canvys. Gross profit during fiscal 2008 included inventory write-downs of $0.9 million for the RF, Wireless &Power Division, and $1.9 million for Canvys. |
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