þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the Quarterly Period Ended June 30, 2013 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 61-1488595 | |
(State or other jurisdiction of | (I.R.S. Employer Identification No.) | |
incorporation or organization) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands, except per share information) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Net sales | $ | 367,887 | $ | 373,512 | $ | 740,886 | $ | 737,001 | |||||||
Cost of sales | 253,404 | 250,710 | 511,597 | 487,756 | |||||||||||
Gross profit | 114,483 | 122,802 | 229,289 | 249,245 | |||||||||||
Operating expenses | |||||||||||||||
Selling, general and administrative expenses | 65,654 | 56,205 | 131,103 | 111,059 | |||||||||||
Contingent consideration expense | — | (4,900 | ) | — | (3,900 | ) | |||||||||
Impairment of intangible assets | — | 1,161 | — | 1,161 | |||||||||||
Transaction expenses | 1,806 | 442 | 1,815 | 797 | |||||||||||
Loss (gain) on sale of assets and other | (115 | ) | 56 | 20 | 77 | ||||||||||
Total operating expenses | 67,345 | 52,964 | 132,938 | 109,194 | |||||||||||
Operating income | 47,138 | 69,838 | 96,351 | 140,051 | |||||||||||
Other expense (income) | |||||||||||||||
Interest expense | 3,111 | 3,623 | 6,474 | 9,409 | |||||||||||
Foreign exchange (gains) losses and other, net | 1,019 | 335 | (448 | ) | 366 | ||||||||||
Total other expense | 4,130 | 3,958 | 6,026 | 9,775 | |||||||||||
Income before income taxes | 43,008 | 65,880 | 90,325 | 130,276 | |||||||||||
Provision for income tax expense | 13,068 | 21,742 | 28,447 | 43,627 | |||||||||||
Net income | 29,940 | 44,138 | 61,878 | 86,649 | |||||||||||
Less: Income attributable to noncontrolling interest | 21 | 17 | 19 | 46 | |||||||||||
Net income attributable to common stockholders | 29,919 | 44,121 | 61,859 | 86,603 | |||||||||||
Weighted average shares outstanding | |||||||||||||||
Basic | 91,032 | 82,495 | 89,790 | 75,248 | |||||||||||
Diluted | 94,606 | 89,794 | 94,501 | 81,990 | |||||||||||
Earnings per share | |||||||||||||||
Basic | $ | 0.33 | $ | 0.53 | $ | 0.69 | $ | 1.15 | |||||||
Diluted | $ | 0.32 | $ | 0.49 | $ | 0.65 | $ | 1.06 | |||||||
Other comprehensive income, net of tax: | |||||||||||||||
Net income | 29,940 | 44,138 | 61,878 | 86,649 | |||||||||||
Change in foreign currency translation, net of tax of $0 | (2,154 | ) | (6,740 | ) | (24,903 | ) | 3,767 | ||||||||
Comprehensive income | 27,786 | 37,398 | 36,975 | 90,416 | |||||||||||
Less: comprehensive loss (income) attributable to noncontrolling interests | 20 | 28 | 82 | (36 | ) | ||||||||||
Comprehensive income attributable to common stockholders | $ | 27,806 | $ | 37,426 | $ | 37,057 | $ | 90,380 |
(in thousands, except share information) | June 30, 2013 | December 31, 2012 | |||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 199,480 | $ | 41,063 | |||
Accounts receivable—trade, net | 245,668 | 228,947 | |||||
Inventories | 425,085 | 455,129 | |||||
Prepaid expenses and other current assets | 15,281 | 12,744 | |||||
Costs and estimated profits in excess of billings | 17,200 | 6,551 | |||||
Deferred income taxes, net | 31,898 | 30,443 | |||||
Total current assets | 934,612 | 774,877 | |||||
Property and equipment, net of accumulated depreciation | 162,594 | 152,983 | |||||
Deferred financing costs, net | 6,985 | 8,045 | |||||
Intangibles | 244,519 | 257,419 | |||||
Goodwill | 684,375 | 695,799 | |||||
Other long-term assets | 4,135 | 3,857 | |||||
Total assets | $ | 2,037,220 | $ | 1,892,980 | |||
Liabilities and equity | |||||||
Current liabilities | |||||||
Current portion of long-term debt | $ | 26,338 | $ | 20,504 | |||
Accounts payable—trade | 97,481 | 98,990 | |||||
Accrued liabilities | 86,434 | 93,701 | |||||
Contingent consideration liability | — | 15,664 | |||||
Deferred revenue | 28,709 | 33,720 | |||||
Billings in excess of costs and profits recognized | 22,547 | 17,582 | |||||
Derivative instruments | 115 | 714 | |||||
Total current liabilities | 261,624 | 280,875 | |||||
Long-term debt, net of current portion | 504,207 | 400,201 | |||||
Deferred income taxes, net | 54,357 | 49,749 | |||||
Other long-term liabilities | 81 | — | |||||
Total liabilities | 820,269 | 730,825 | |||||
Commitments and contingencies | |||||||
Equity | |||||||
Common stock, $0.01 par value, 296,000,000 shares authorized, 92,373,751 and 87,543,173 shares issued | 924 | 875 | |||||
Additional paid-in capital | 808,616 | 764,635 | |||||
Treasury stock at cost, 3,397,097 and 3,377,599 shares | (26,464 | ) | (25,933 | ) | |||
Warrants | 716 | 26,394 | |||||
Retained earnings | 457,460 | 395,601 | |||||
Accumulated other comprehensive loss | (24,902 | ) | (100 | ) | |||
Total stockholders’ equity | 1,216,350 | 1,161,472 | |||||
Noncontrolling interest in subsidiary | 601 | 683 | |||||
Total equity | 1,216,951 | 1,162,155 | |||||
Total liabilities and equity | $ | 2,037,220 | $ | 1,892,980 |
Six Months Ended June 30, | |||||||
(in thousands, except share information) | 2013 | 2012 | |||||
Cash flows from operating activities | |||||||
Net income | $ | 61,878 | $ | 86,649 | |||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||
Depreciation expense | 17,191 | 15,030 | |||||
Amortization of intangible assets | 11,060 | 10,075 | |||||
Payment of contingent consideration included in operating activities | — | (7,127 | ) | ||||
Share-based compensation expense | 8,173 | 3,161 | |||||
Change in contingent consideration | — | (3,900 | ) | ||||
Deferred income taxes | 3,153 | 1,194 | |||||
Impairment of intangible assets | — | 1,161 | |||||
Other | 907 | 1,558 | |||||
Changes in operating assets and liabilities | |||||||
Accounts receivable—trade | (20,325 | ) | (24,121 | ) | |||
Inventories | 23,905 | (77,531 | ) | ||||
Prepaid expenses and other current assets | (2,840 | ) | 5,798 | ||||
Accounts payable, deferred revenue and other accrued liabilities | (8,362 | ) | 19,581 | ||||
Billings in excess of costs and estimated profits earned, net | (5,285 | ) | (6,476 | ) | |||
Net cash provided by operating activities | $ | 89,455 | $ | 25,052 | |||
Cash flows from investing activities | |||||||
Acquisition of businesses, net of cash acquired | (2,611 | ) | (2,839 | ) | |||
Capital expenditures for property and equipment | (30,065 | ) | (25,137 | ) | |||
Proceeds from sale of property and equipment | 382 | 2,678 | |||||
Net cash used in investing activities | $ | (32,294 | ) | $ | (25,298 | ) | |
Cash flows from financing activities | |||||||
Borrowings on long-term debt | 177,923 | 78,464 | |||||
Repayment of long-term debt | (68,083 | ) | (383,797 | ) | |||
Proceeds of IPO, net of offering costs | — | 256,880 | |||||
Proceeds from concurrent private placement | — | 50,000 | |||||
Payment of contingent consideration | (11,435 | ) | (11,100 | ) | |||
Excess tax benefits from stock based compensation | 2,791 | 89 | |||||
Repurchases of stock | (531 | ) | — | ||||
Proceeds from stock issuance | 3,314 | 3,991 | |||||
Deferred financing costs | (13 | ) | (15 | ) | |||
Net cash provided by (used in) financing activities | $ | 103,966 | $ | (5,488 | ) | ||
Effect of exchange rate changes on cash | (2,710 | ) | (12 | ) | |||
Net increase (decrease) in cash and cash equivalents | 158,417 | (5,746 | ) | ||||
Cash and cash equivalents | |||||||
Beginning of period | 41,063 | 20,548 | |||||
End of period | $ | 199,480 | $ | 14,802 | |||
Noncash investing and financing activities | |||||||
Payment of contingent consideration via stock | $ | 4,075 | $ | 3,341 | |||
Insurance policy financed through notes payable | — | 6,348 |
• | Blohm + Voss Oil Tools GmbH and related entities ("B+V"), a manufacturer of pipe handling equipment used on offshore and onshore drilling rigs with locations in Hamburg, Germany and Willis, Texas. B+V will be included in the Drilling & Subsea segment; |
• | Moffat 2000 Ltd. ("Moffat"), a Newcastle, England based manufacturer of subsea pipeline inspection gauge launching and receiving systems, and subsea connectors. Moffat will be included in the Drilling & Subsea segment; and |
• | The joint purchase of Global Tubing, LLC ("Global Tubing") with an equal partner, with management retaining a small interest. Global Tubing is a Dayton, Texas based provider of coiled tubing strings and related services. The Company's equity investment will be reported in the Production & Infrastructure segment and will be accounted for using the equity method of accounting. |
• | Syntech Technology, Inc. ("Syntech"), a Lorton, Virgina based manufacturer of syntactic foam buoyancy materials used for ROVs and other deepwater flotation applications; |
• | Wireline Solutions, LLC ("Wireline"), a Sanger, Texas based manufacturer of downhole completion tools, including composite plugs used for plug, perforate and fracture applications and wireline flow control products; |
• | Dynacon, Inc. ("Dynacon"), a Bryan, Texas based provider of launch and recovery systems used for the deployment of ROVs and high quality specialized cable and umbilical handling equipment; and |
• | Merrimac Manufacturing, Inc. ("Merrimac"), a Plantersville, Texas based manufacturer of consumable parts for drilling, well servicing and pressure pumping applications, including mud pump parts, power swivel parts and valves and seats for hydraulic fracturing pumps. |
June 30, 2013 | December 31, 2012 | ||||||
Raw materials and parts | $ | 131,510 | $ | 145,970 | |||
Work in process | 78,880 | 86,558 | |||||
Finished goods | 235,615 | 243,726 | |||||
Gross inventories | 446,005 | 476,254 | |||||
Inventory reserve | (20,920 | ) | (21,125 | ) | |||
Inventories | $ | 425,085 | $ | 455,129 |
Drilling & Subsea | Production & Infrastructure | Total | |||||||||
Goodwill Balance at January 1, 2013 net | $ | 616,520 | $ | 79,279 | $ | 695,799 | |||||
Purchase accounting adjustment | 97 | — | 97 | ||||||||
Impact of non-U.S. local currency translation | (11,254 | ) | (267 | ) | (11,521 | ) | |||||
Goodwill Balance at June 30, 2013 net | $ | 605,363 | $ | 79,012 | $ | 684,375 |
June 30, 2013 | |||||||||||||
Gross carrying amount | Accumulated amortization | Net amortizable intangibles | Amortization period (in years) | ||||||||||
Customer relationships | $ | 237,536 | $ | (55,406 | ) | $ | 182,130 | 4-15 | |||||
Patents and technology | 19,703 | (5,179 | ) | 14,524 | 5-17 | ||||||||
Non-compete agreements | 5,793 | (4,729 | ) | 1,064 | 3-6 | ||||||||
Trade names | 39,612 | (9,549 | ) | 30,063 | 10-15 | ||||||||
Distributor relationships | 22,160 | (10,652 | ) | 11,508 | 8-15 | ||||||||
Trademark | 5,230 | — | 5,230 | Indefinite | |||||||||
Intangible Assets Total | $ | 330,034 | $ | (85,515 | ) | $ | 244,519 |
December 31, 2012 | |||||||||||||
Gross carrying amount | Accumulated amortization | Net amortizable intangibles | Amortization period (in years) | ||||||||||
Customer relationships | $ | 241,358 | $ | (49,766 | ) | $ | 191,592 | 4-15 | |||||
Patents and technology | 19,780 | (4,360 | ) | 15,420 | 5-17 | ||||||||
Non-compete agreements | 5,880 | (4,420 | ) | 1,460 | 3-6 | ||||||||
Trade names | 40,255 | (8,680 | ) | 31,575 | 10-15 | ||||||||
Distributor relationships | 22,160 | (10,018 | ) | 12,142 | 8-15 | ||||||||
Trademark | 5,230 | — | 5,230 | Indefinite | |||||||||
Intangible Assets Total | $ | 334,663 | $ | (77,244 | ) | $ | 257,419 |
June 30, 2013 | December 31, 2012 | ||||||
Senior secured revolving credit facility | $ | 241,500 | $ | 122,480 | |||
Term loan | 288,750 | 296,250 | |||||
Other debt | 295 | 1,975 | |||||
Total debt | 530,545 | 420,705 | |||||
Less: current maturities | (26,338 | ) | (20,504 | ) | |||
Long-term debt | $ | 504,207 | $ | 400,201 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenue: | |||||||||||||||
Drilling & Subsea | $ | 209,198 | $ | 222,651 | $ | 431,137 | $ | 435,715 | |||||||
Production & Infrastructure | 158,905 | 151,080 | 310,115 | 301,675 | |||||||||||
Intersegment eliminations | (216 | ) | (219 | ) | (366 | ) | (389 | ) | |||||||
Total Revenue | $ | 367,887 | $ | 373,512 | $ | 740,886 | $ | 737,001 | |||||||
Operating income: | |||||||||||||||
Drilling & Subsea | $ | 32,906 | $ | 46,382 | $ | 68,062 | $ | 92,378 | |||||||
Production & Infrastructure | 22,824 | 24,859 | 44,198 | 54,551 | |||||||||||
Corporate | (6,901 | ) | (4,644 | ) | (14,074 | ) | (8,743 | ) | |||||||
Total segment operating income | 48,829 | 66,597 | 98,186 | 138,186 | |||||||||||
Contingent consideration expense | — | (4,900 | ) | — | (3,900 | ) | |||||||||
Intangible asset impairment | — | 1,161 | — | 1,161 | |||||||||||
Transaction expenses | 1,806 | 442 | 1,815 | 797 | |||||||||||
Loss (gain) on sale of assets and other | (115 | ) | 56 | 20 | 77 | ||||||||||
Income from operations | $ | 47,138 | $ | 69,838 | $ | 96,351 | $ | 140,051 |
June 30, 2013 | December 31, 2012 | |||||||
Assets | ||||||||
Drilling & Subsea | $ | 1,420,287 | $ | 1,413,944 | ||||
Production & Infrastructure | 425,212 | 435,496 | ||||||
Corporate | 191,721 | 43,540 | ||||||
Total assets | $ | 2,037,220 | $ | 1,892,980 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net Income attributable to common stockholders | $ | 29,919 | $ | 44,121 | $ | 61,859 | $ | 86,603 | |||||||
Average shares outstanding (basic) | 91,032 | 82,495 | 89,790 | 75,248 | |||||||||||
Common stock equivalents | 3,574 | 7,299 | 4,711 | 6,742 | |||||||||||
Diluted shares | 94,606 | 89,794 | 94,501 | 81,990 | |||||||||||
Earnings per share | |||||||||||||||
Basic earnings per share | $ | 0.33 | $ | 0.53 | $ | 0.69 | $ | 1.15 | |||||||
Diluted earnings per share | $ | 0.32 | $ | 0.49 | $ | 0.65 | $ | 1.06 |
• | Drilling & Subsea segment. We design and manufacture products and provide related services to the subsea, drilling, well construction, completion and intervention markets. Through this segment, we offer Subsea Technologies, including robotic vehicles and other capital equipment, specialty components and tooling, a broad suite of complementary subsea technical services and rental items, and applied products for subsea pipelines; Drilling Technologies, including capital equipment and a broad line of products consumed in the drilling and well intervention process; and Downhole Technologies, including cementing and casing tools, completion products, and a range of downhole protection solutions. |
• | Production & Infrastructure segment. We design and manufacture products and provide related equipment and services to the well stimulation, completion, production and infrastructure markets. Through this segment, we supply Flow Equipment, including well stimulation consumable products and related recertification and refurbishment services; Production Equipment, including well site production equipment, process equipment and specialty pipeline construction equipment; and Valve Solutions, which includes a broad range of industrial and process valves. |
Three months ended | ||||||||||||
June 30, | March 31, | June 30, | ||||||||||
2013 | 2013 | 2012 | ||||||||||
Average global oil, $/bbl | ||||||||||||
West Texas Intermediate | $ | 94.14 | $ | 94.30 | $ | 93.30 | ||||||
United Kingdom Brent | $ | 103.43 | $ | 111.36 | $ | 109.29 | ||||||
Average North American Natural Gas, $/Mcf | ||||||||||||
Henry Hub | $ | 4.02 | $ | 3.48 | $ | 2.28 |
Three months ended | |||||||||
June 30, | March 31, | June 30, | |||||||
2013 | 2013 | 2012 | |||||||
Active Rigs by Location | |||||||||
United States | 1,761 | 1,758 | 1,970 | ||||||
Canada | 152 | 531 | 177 | ||||||
International | 1,306 | 1,274 | 1,229 | ||||||
Global Active Rigs | 3,219 | 3,563 | 3,376 | ||||||
Land vs. Offshore Rigs | |||||||||
Land | 2,834 | 3,194 | 3,020 | ||||||
Offshore | 385 | 369 | 356 | ||||||
Global Active Rigs | 3,219 | 3,563 | 3,376 | ||||||
U.S. Commodity Target | |||||||||
Oil/Gas | 1,396 | 1,330 | 1,373 | ||||||
Gas | 359 | 424 | 593 | ||||||
Unclassified | 6 | 4 | 4 | ||||||
Total U.S. Rigs | 1,761 | 1,758 | 1,970 | ||||||
U.S. Well Path | |||||||||
Horizontal | 1,098 | 1,126 | 1,169 | ||||||
Vertical | 450 | 440 | 572 | ||||||
Directional | 213 | 192 | 229 | ||||||
Total U.S. Active Rigs | 1,761 | 1,758 | 1,970 |
Three Months Ended June 30, | Favorable / (Unfavorable) | |||||||||||||
2013 | 2012 | $ | % | |||||||||||
(in thousands of dollars, except per share information) | ||||||||||||||
Revenue: | ||||||||||||||
Drilling & Subsea | $ | 209,198 | $ | 222,651 | $ | (13,453 | ) | (6.0 | )% | |||||
Production & Infrastructure | 158,905 | 151,080 | 7,825 | 5.2 | % | |||||||||
Eliminations | (216 | ) | (219 | ) | 3 | 1.4 | % | |||||||
Total revenue | $ | 367,887 | $ | 373,512 | $ | (5,625 | ) | (1.5 | )% | |||||
Operating income: | ||||||||||||||
Drilling & Subsea | $ | 32,906 | $ | 46,382 | $ | (13,476 | ) | (29.1 | )% | |||||
Operating income margin % | 15.7 | % | 20.8 | % | ||||||||||
Production & Infrastructure | 22,824 | 24,859 | (2,035 | ) | (8.2 | )% | ||||||||
Operating income margin % | 14.4 | % | 16.5 | % | ||||||||||
Corporate | (6,901 | ) | (4,644 | ) | (2,257 | ) | (48.6 | )% | ||||||
Total segment operating income | $ | 48,829 | $ | 66,597 | $ | (17,768 | ) | (26.7 | )% | |||||
Operating income margin % | 13.3 | % | 17.8 | % | ||||||||||
Contingent consideration expense | — | (4,900 | ) | (4,900 | ) | 100.0 | % | |||||||
Impairment of intangible assets | — | 1,161 | 1,161 | 100.0 | % | |||||||||
Transaction expenses | 1,806 | 442 | (1,364 | ) | (308.6 | )% | ||||||||
Loss (gain) on sale of assets and other | (115 | ) | 56 | 171 | * | |||||||||
Income from operations | 47,138 | 69,838 | (22,700 | ) | (32.5 | )% | ||||||||
Interest expense, net | 3,111 | 3,623 | 512 | 14.1 | % | |||||||||
Foreign exchange (gains) losses and other, net | 1,019 | 335 | (684 | ) | * | |||||||||
Other (income) expense, net | 4,130 | 3,958 | (172 | ) | (4.3 | )% | ||||||||
Income before income taxes | 43,008 | 65,880 | (22,872 | ) | (34.7 | )% | ||||||||
Income tax expense | 13,068 | 21,742 | 8,674 | 39.9 | % | |||||||||
Net income | 29,940 | 44,138 | (14,198 | ) | (32.2 | )% | ||||||||
Less: Income attributable to non-controlling interest | 21 | 17 | 4 | * | ||||||||||
Income attributable to common stockholders | $ | 29,919 | $ | 44,121 | $ | (14,202 | ) | (32.2 | )% | |||||
Weighted average shares outstanding | ||||||||||||||
Basic | 91,032 | 82,495 | ||||||||||||
Diluted | 94,606 | 89,794 | ||||||||||||
Earnings per share | ||||||||||||||
Basic | $ | 0.33 | $ | 0.53 | ||||||||||
Diluted | $ | 0.32 | $ | 0.49 | ||||||||||
* not meaningful |
Six Months Ended June 30, | Favorable / (Unfavorable) | |||||||||||||
2013 | 2012 | $ | % | |||||||||||
(in thousands of dollars, except per share information) | ||||||||||||||
Revenue: | ||||||||||||||
Drilling & Subsea | $ | 431,137 | $ | 435,715 | $ | (4,578 | ) | (1.1 | )% | |||||
Production & Infrastructure | 310,115 | 301,675 | 8,440 | 2.8 | % | |||||||||
Eliminations | (366 | ) | (389 | ) | 23 | 5.9 | % | |||||||
Total revenue | $ | 740,886 | $ | 737,001 | $ | 3,885 | 0.5 | % | ||||||
Operating income: | ||||||||||||||
Drilling & Subsea | $ | 68,062 | $ | 92,378 | $ | (24,316 | ) | (26.3 | )% | |||||
Operating income margin % | 15.8 | % | 21.2 | % | ||||||||||
Production & Infrastructure | 44,198 | 54,551 | (10,353 | ) | (19.0 | )% | ||||||||
Operating income margin % | 14.3 | % | 18.1 | % | ||||||||||
Corporate | (14,074 | ) | (8,743 | ) | (5,331 | ) | (61.0 | )% | ||||||
Total segment operating income | $ | 98,186 | $ | 138,186 | $ | (40,000 | ) | (28.9 | )% | |||||
Operating income margin % | 13.3 | % | 18.7 | % | ||||||||||
Contingent consideration expense | — | (3,900 | ) | (3,900 | ) | 100.0 | % | |||||||
Impairment of intangible assets | — | 1,161 | 1,161 | 100.0 | % | |||||||||
Transaction expenses | 1,815 | 797 | (1,018 | ) | (127.7 | )% | ||||||||
Loss (gain) on sale of assets and other | 20 | 77 | 57 | 74.0 | % | |||||||||
Income from operations | 96,351 | 140,051 | (43,700 | ) | (31.2 | )% | ||||||||
Interest expense, net | 6,474 | 9,409 | 2,935 | 31.2 | % | |||||||||
Foreign exchange (gains) losses and other, net | (448 | ) | 366 | 814 | * | |||||||||
Other (income) expense, net | 6,026 | 9,775 | 3,749 | 38.4 | % | |||||||||
Income before income taxes | 90,325 | 130,276 | (39,951 | ) | (30.7 | )% | ||||||||
Income tax expense | 28,447 | 43,627 | 15,180 | 34.8 | % | |||||||||
Net income | 61,878 | 86,649 | (24,771 | ) | (28.6 | )% | ||||||||
Less: Income attributable to non-controlling interest | 19 | 46 | (27 | ) | * | |||||||||
Income attributable to common stockholders | $ | 61,859 | $ | 86,603 | $ | (24,744 | ) | (28.6 | )% | |||||
Weighted average shares outstanding | ||||||||||||||
Basic | 89,790 | 75,248 | ||||||||||||
Diluted | 94,501 | 81,990 | ||||||||||||
Earnings per share | ||||||||||||||
Basic | $ | 0.69 | $ | 1.15 | ||||||||||
Diluted | $ | 0.65 | $ | 1.06 | ||||||||||
* not meaningful |
• | Blohm + Voss Oil Tools GmbH and related entities ("B+V"), a manufacturer of pipe handling equipment used on offshore and onshore drilling rigs with locations in Hamburg, Germany and Willis, Texas. B+V will be included in the Drilling & Subsea segment; |
• | Moffat 2000 Ltd. ("Moffat"), a Newcastle, England based manufacturer of subsea pipeline inspection gauge launching and receiving systems, and subsea connectors. Moffat will be included in the Drilling & Subsea segment; and |
• | The joint purchase of Global Tubing, LLC ("Global Tubing") with an equal partner, with management retaining a small interest. Global Tubing is a Dayton, Texas based provider of coiled tubing strings and related services. The Company's equity investment will be reported in the Production & Infrastructure segment and will be accounted for using the equity method of accounting. |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Net cash provided by operating activities | $ | 89.5 | $ | 25.1 | |||
Net cash used in investing activities | (32.3 | ) | (25.3 | ) | |||
Net cash provided by (used in) financing activities | 104.0 | (5.5 | ) | ||||
Net increase (decrease) in cash and cash equivalents | $ | 158.4 | $ | (5.7 | ) |
Period | Total number of shares purchased (a) | Average price paid per share | Total number of shares purchased as part of publicly announced plan or programs | Maximum number of shares that may yet be purchased under the plan or program (b) | |||||||||
April 1, 2013 - April 30, 2013 | 19,498 | $ | 27.23 | — | — | ||||||||
May 1, 2013 - May 31, 2013 | — | $ | — | — | — | ||||||||
June 1, 2013 - June 30, 2013 | — | $ | — | — | — | ||||||||
Total | 19,498 | $ | 27.23 | — | — |
Exhibit | ||
Number | DESCRIPTION | |
10.1* | — | Employee Stock Purchase Plan |
31.1* | — | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2* | — | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1** | — | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2** | — | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS**† | — | XBRL Instance Document. |
101.SCH**† | — | XBRL Taxonomy Extension Schema Document. |
101.CAL**† | — | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.LAB**† | — | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE**† | — | XBRL Taxonomy Extension Presentation Linkbase Document. |
101.DEF**† | — | XBRL Taxonomy Extension Definition Linkbase Document. |
FORUM ENERGY TECHNOLOGIES, INC. | |||||
Date: | August 2, 2013 | By: | /s/ James W. Harris | ||
James W. Harris | |||||
Senior Vice President and Chief Financial Officer | |||||
(As Duly Authorized Officer and Principal Financial Officer) | |||||
By: | /s/ Tylar K. Schmitt | ||||
Tylar K. Schmitt | |||||
Vice President and Corporate Controller | |||||
(As Duly Authorized Officer and Principal Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Forum Energy Technologies, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
c. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 2, 2013 | By: /s/ C. Christopher Gaut | |
C. Christopher Gaut | |||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Forum Energy Technologies, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
c. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 2, 2013 | By: _/s/ James W. Harris_________________ | |
James W. Harris | |||
Chief Financial Officer |
Dated: | August 2, 2013 | By: /s/ C. Christopher Gaut | |
C. Christopher Gaut | |||
Chief Executive Officer |
Dated: | August 2, 2013 | By: /s/ James W. Harris | |
James W. Harris | |||
Chief Financial Officer |
Commitments and contingencies
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and contingencies In the ordinary course of business, the Company is, and in the future, could be involved in various pending or threatened legal actions, some of which may or may not be covered by insurance. Management has reviewed such pending judicial and legal proceedings, the reasonably anticipated costs and expenses in connection with such proceedings, and the availability and limits of insurance coverage, and has established reserves that are believed to be appropriate in light of those outcomes that are considered to be probable and can be reasonably estimated. The reserves accrued at June 30, 2013 and 2012, respectively, are immaterial. In the opinion of management, the Company's ultimate liability, if any, with respect to these actions is not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows. |
Inventories
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories The Company's significant components of inventory at June 30, 2013 and December 31, 2012 were as follows (in thousands):
|
Business segments (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | Summary financial data by segment follows (in thousands):
A summary of consolidated assets by reportable segment is as follows (in thousands):
|
Stockholders' equity
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Equity [Abstract] | |
Stockholders' equity | Stockholders' equity Warrants During the six months ended June 30, 2013, the Company's largest shareholder converted all of its 6,366,072 warrants pursuant to the terms of a warrant agreement and received 4,227,358 shares the Company's common stock. As of June 30, 2013, approximately 370,000 warrants remained outstanding and were recorded to stockholders' equity at their fair value of $1.94 per warrant, which was determined at the time of issuance. The remaining warrants expire the earlier of October 11, 2014 or upon the occurrence of certain other events. Share-based compensation During the six months ended June 30, 2013, the Company granted 342,880 options and 492,140 restricted stock and restricted stock units, which includes 110,720 performance share awards with a market condition. The stock options were granted on February 21, 2013 with an exercise price of $26.05. Of the restricted stock and restricted stock units granted, 359,820 vest ratably over four years on the anniversary of the grant date. On February 21, 2013, 21,600 restricted stock and restricted stock units were granted to the non-employee members of the Board of Directors, which have a thirteen month vesting period from the date of grant. The performance share awards granted may settle for between zero and two shares of the Company's common stock. The number of shares issued pursuant to the performance share awards will be determined based on the total shareholder return of the Company's common stock as compared to a group of peer companies, measured annually over a three-year performance period. |
Stockholders' equity (Share-based compensation) (Details) (USD $)
|
6 Months Ended | 0 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2013
Restricted Stock and Restricted Stock Units [Member]
|
Jun. 30, 2013
Restricted Stock and Restricted Stock Units with Specified Vesting Period [Member]
|
Jun. 30, 2013
Performance Shares [Member]
|
Feb. 21, 2013
Board of Directors [Member]
Restricted Stock and Restricted Stock Units [Member]
|
Jun. 30, 2013
Minimum [Member]
Performance Shares [Member]
|
Jun. 30, 2013
Maximum [Member]
Performance Shares [Member]
|
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of options granted (in shares) | 342,880 | ||||||
Number of equity instruments other than options granted (in shares) | 492,140 | 359,820 | 110,720 | 21,600 | |||
Granted stock options, exercise price (in dollars per share) | $ 26.05 | ||||||
Award vesting period | 4 years | ||||||
Share conversion ratio | 0 | 2 | |||||
Performance measurement period | 3 years |
Inventories (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials and parts | $ 131,510 | $ 145,970 |
Work in process | 78,880 | 86,558 |
Finished goods | 235,615 | 243,726 |
Gross inventories | 446,005 | 476,254 |
Inventory reserve | (20,920) | (21,125) |
Inventories | $ 425,085 | $ 455,129 |
Acquisitions (Details) (USD $)
In Millions, unless otherwise specified |
1 Months Ended | 3 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
Series of Individually Immaterial Business Acquisitions [Member]
|
Dec. 31, 2012
Series of Individually Immaterial Business Acquisitions [Member]
|
May 31, 2013
Wood Flowline Products, LLC [Member]
|
Mar. 31, 2012
Wood Flowline Products, LLC [Member]
|
Feb. 28, 2011
Wood Flowline Products, LLC [Member]
payments
|
Jun. 30, 2013
Wood Flowline Products, LLC [Member]
|
Jun. 30, 2012
Wood Flowline Products, LLC [Member]
|
Jun. 30, 2013
Phoinix Global LLC [Member]
|
Jun. 30, 2012
Phoinix Global LLC [Member]
|
|
Business Acquisition [Line Items] | |||||||||
Aggregate consideration | $ 232.0 | $ 139.5 | |||||||
Number of contingent consideration payments (in payments) | 2 | ||||||||
Reclassification from liability to equity | 4.1 | 3.3 | |||||||
Contingent consideration cash payment | $ 3.5 | $ 6.1 | $ 7.9 | $ 12.1 |
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