Delaware | 001-33816 | 26-0287117 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer 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)) |
¨ | Emerging growth company |
¨ | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
Exhibit Number | Description | ||
99.1 | Press Release, dated May 8, 2019 |
Exhibit Number | Description | ||
99.1 |
NUVERRA ENVIRONMENTAL SOLUTIONS, INC. | ||||||
Date: May 8, 2019 | By: | /s/ Joseph M. Crabb | ||||
Name: | Joseph M. Crabb | |||||
Title: | Executive Vice President and Chief Legal Officer |
• | First quarter revenue was $42.6 million, a decrease of approximately 13.4%, or $6.6 million, when compared with revenue of $49.2 million in the fourth quarter of 2018. |
• | When compared to the same period in the prior year, first quarter revenue decreased 14.2%, or $7.0 million. |
• | Net loss for the first quarter was $6.4 million as compared to $8.8 million in the fourth quarter of 2018 and $32.2 million in the first quarter of 2018. |
• | Adjusted EBITDA for the first quarter was $4.5 million, a decrease of $1.6 million compared with $6.1 million in the fourth quarter of 2018. |
• | Adjusted EBITDA for the first quarter increased by $2.1 million over the same period in the prior year. |
• | Total liquidity available for capital spending and other purposes as of March 31, 2019 was $18.7 million. |
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
Revenue: | |||||||
Service revenue | $ | 39,001 | $ | 45,527 | |||
Rental revenue | 3,626 | 4,142 | |||||
Total revenue | 42,627 | 49,669 | |||||
Costs and expenses: | |||||||
Direct operating expenses | 32,557 | 41,627 | |||||
General and administrative expenses | 5,475 | 19,320 | |||||
Depreciation and amortization | 9,135 | 14,744 | |||||
Impairment of long-lived assets | 117 | 4,131 | |||||
Other, net | — | 599 | |||||
Total costs and expenses | 47,284 | 80,421 | |||||
Operating loss | (4,657 | ) | (30,752 | ) | |||
Interest expense, net | (1,421 | ) | (1,250 | ) | |||
Other income (expense), net | 25 | (73 | ) | ||||
Reorganization items, net | (223 | ) | (92 | ) | |||
Loss before income taxes | (6,276 | ) | (32,167 | ) | |||
Income tax expense | (79 | ) | — | ||||
Net loss | $ | (6,355 | ) | $ | (32,167 | ) | |
Earnings per common share: | |||||||
Net loss per basic common share | $ | (0.41 | ) | $ | (2.75 | ) | |
Net loss per diluted common share | $ | (0.41 | ) | $ | (2.75 | ) | |
Weighted average shares outstanding: | |||||||
Basic | 15,550 | 11,696 | |||||
Diluted | 15,550 | 11,696 |
March 31, | December 31, | ||||||
2019 | 2018 | ||||||
Assets | |||||||
Cash | $ | 3,949 | $ | 7,302 | |||
Restricted cash | 1,329 | 656 | |||||
Accounts receivable, net | 28,689 | 31,392 | |||||
Inventories | 3,352 | 3,358 | |||||
Prepaid expenses and other receivables | 3,539 | 2,435 | |||||
Other current assets | 283 | 1,582 | |||||
Assets held for sale | 4,604 | 2,782 | |||||
Total current assets | 45,745 | 49,507 | |||||
Property, plant and equipment, net | 208,520 | 215,640 | |||||
Operating lease assets | 4,103 | — | |||||
Equity investments | 38 | 41 | |||||
Intangibles, net | 997 | 1,112 | |||||
Goodwill | 29,518 | 29,518 | |||||
Other assets | 130 | 118 | |||||
Total assets | $ | 289,051 | $ | 295,936 | |||
Liabilities and Shareholders’ Equity | |||||||
Accounts payable | $ | 5,980 | $ | 9,061 | |||
Accrued and other current liabilities | 14,733 | 16,670 | |||||
Current portion of long-term debt | 6,450 | 38,305 | |||||
Current contingent consideration | 500 | 500 | |||||
Derivative warrant liability | 75 | 34 | |||||
Total current liabilities | 27,738 | 64,570 | |||||
Long-term debt | 29,656 | 27,628 | |||||
Noncurrent operating lease liabilities | 2,180 | — | |||||
Deferred income taxes | 251 | 181 | |||||
Other long-term liabilities | 7,323 | 7,130 | |||||
Total liabilities | 67,148 | 99,509 | |||||
Commitments and contingencies | |||||||
Shareholders’ equity: | |||||||
Common stock | 157 | 122 | |||||
Additional paid-in capital | 336,455 | 303,463 | |||||
Treasury stock | (373 | ) | — | ||||
Accumulated deficit | (114,336 | ) | (107,158 | ) | |||
Total shareholders’ equity | 221,903 | 196,427 | |||||
Total liabilities and shareholders’ equity | $ | 289,051 | $ | 295,936 |
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (6,355 | ) | $ | (32,167 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation and amortization | 9,135 | 14,744 | |||||
Amortization of debt issuance costs, net | 206 | — | |||||
Accrued interest added to debt principal | — | 119 | |||||
Stock-based compensation | 852 | 10,978 | |||||
Impairment of long-lived assets | 117 | 4,131 | |||||
Gain on sale of UGSI | — | (75 | ) | ||||
Gain on disposal of property, plant and equipment | (858 | ) | (8 | ) | |||
Bad debt (recoveries) expense | (141 | ) | 313 | ||||
Change in fair value of derivative warrant liability | 41 | 192 | |||||
Deferred income taxes | 70 | — | |||||
Other, net | 29 | 149 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 2,944 | (5,534 | ) | ||||
Prepaid expenses and other receivables | (1,104 | ) | (2,573 | ) | |||
Accounts payable and accrued liabilities | (6,735 | ) | 2,110 | ||||
Other assets and liabilities, net | 1,294 | 368 | |||||
Net cash used in operating activities | (505 | ) | (7,253 | ) | |||
Cash flows from investing activities: | |||||||
Proceeds from the sale of property, plant and equipment | 3,665 | 11,881 | |||||
Purchases of property, plant and equipment | (3,626 | ) | (3,380 | ) | |||
Proceeds from the sale of UGSI | — | 75 | |||||
Net cash provided by investing activities | 39 | 8,576 | |||||
Cash flows from financing activities: | |||||||
Payments on First and Second Lien Term Loans | (1,102 | ) | (799 | ) | |||
Proceeds from Revolving Facility | 51,037 | 55,321 | |||||
Payments on Revolving Facility | (51,037 | ) | (56,001 | ) | |||
Payments on Bridge Term Loan | (31,382 | ) | — | ||||
Proceeds from the issuance of stock | 31,057 | — | |||||
Payments on finance leases and other financing activities | (787 | ) | (456 | ) | |||
Net cash used in financing activities | (2,214 | ) | (1,935 | ) | |||
Change in cash and restricted cash | (2,680 | ) | (612 | ) | |||
Cash, beginning of period | 7,302 | 5,488 | |||||
Restricted cash, beginning of period | 656 | 1,296 | |||||
Cash and restricted cash, beginning of period | 7,958 | 6,784 | |||||
Cash, end of period | 3,949 | 4,088 | |||||
Restricted cash, end of period | 1,329 | 2,084 | |||||
Cash and restricted cash, end of period | $ | 5,278 | $ | 6,172 |
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
Net loss | $ | (6,355 | ) | $ | (32,167 | ) | |
Depreciation and amortization | 9,135 | 14,744 | |||||
Interest expense, net | 1,421 | 1,250 | |||||
Income tax expense | 79 | — | |||||
EBITDA | 4,280 | (16,173 | ) | ||||
Adjustments: | |||||||
Transaction-related costs, net | (208 | ) | — | ||||
Stock-based compensation | 852 | 10,978 | |||||
Change in fair value of derivative warrant liability | 41 | 192 | |||||
Reorganization items, net [1] | 223 | 118 | |||||
Legal and environmental costs, net | 53 | (347 | ) | ||||
Impairment of long-lived assets | 117 | 4,131 | |||||
Restructuring, exit and other costs | — | 599 | |||||
Gain on sale of UGSI | — | (75 | ) | ||||
Executive and severance costs | — | 2,937 | |||||
Gain on disposal of assets | (858 | ) | (8 | ) | |||
Total Adjusted EBITDA | $ | 4,500 | $ | 2,352 |
Three months ended March 31, 2019 | Rocky Mountain | Northeast | Southern | Corporate | Total | |||||||||||||||
Revenue | $ | 24,877 | $ | 11,840 | $ | 5,910 | $ | — | $ | 42,627 | ||||||||||
Direct operating expenses | 19,828 | 9,715 | 3,014 | — | 32,557 | |||||||||||||||
General and administrative expenses | 1,046 | 846 | 399 | 3,184 | 5,475 | |||||||||||||||
Depreciation and amortization | 4,299 | 2,664 | 2,160 | 12 | 9,135 | |||||||||||||||
Operating (loss) income | (296 | ) | (1,502 | ) | 337 | (3,196 | ) | (4,657 | ) | |||||||||||
Operating margin % | (1.2 | )% | (12.7 | )% | 5.7 | % | N/A | (10.9 | )% | |||||||||||
(Loss) income before income taxes | (358 | ) | (1,595 | ) | 291 | (4,614 | ) | (6,276 | ) | |||||||||||
Net (loss) income | (358 | ) | (1,595 | ) | 291 | (4,693 | ) | (6,355 | ) | |||||||||||
Depreciation and amortization | 4,299 | 2,664 | 2,160 | 12 | 9,135 | |||||||||||||||
Interest expense, net | 128 | 93 | 46 | 1,154 | 1,421 | |||||||||||||||
Income tax expense | — | — | — | 79 | 79 | |||||||||||||||
EBITDA | $ | 4,069 | $ | 1,162 | $ | 2,497 | $ | (3,448 | ) | $ | 4,280 | |||||||||
Adjustments, net | (746 | ) | (95 | ) | 153 | 908 | 220 | |||||||||||||
Adjusted EBITDA | $ | 3,323 | $ | 1,067 | $ | 2,650 | $ | (2,540 | ) | $ | 4,500 | |||||||||
Adjusted EBITDA margin % | 13.4 | % | 9.0 | % | 44.8 | % | N/A | 10.6 | % |
Three months ended March 31, 2018 | Rocky Mountain | Northeast | Southern | Corporate | Total | |||||||||||||||
Revenue | $ | 30,770 | $ | 9,113 | $ | 9,786 | $ | — | $ | 49,669 | ||||||||||
Direct operating expenses | 26,346 | 7,814 | 7,467 | — | 41,627 | |||||||||||||||
General and administrative expenses | 1,276 | 762 | 578 | 16,704 | 19,320 | |||||||||||||||
Depreciation and amortization | 6,289 | 4,306 | 4,124 | 25 | 14,744 | |||||||||||||||
Operating loss | (3,141 | ) | (3,838 | ) | (7,044 | ) | (16,729 | ) | (30,752 | ) | ||||||||||
Operating margin % | (10.2 | )% | (42.1 | )% | (72.0 | )% | N/A | (61.9 | )% | |||||||||||
Loss before income taxes | (3,202 | ) | (3,899 | ) | (7,111 | ) | (17,955 | ) | (32,167 | ) | ||||||||||
Net loss | (3,202 | ) | (3,899 | ) | (7,111 | ) | (17,955 | ) | (32,167 | ) | ||||||||||
Depreciation and amortization | 6,289 | 4,306 | 4,124 | 25 | 14,744 | |||||||||||||||
Interest expense, net | 105 | 62 | 67 | 1,016 | 1,250 | |||||||||||||||
Income tax expense | — | — | — | — | — | |||||||||||||||
EBITDA | $ | 3,192 | $ | 469 | $ | (2,920 | ) | $ | (16,914 | ) | $ | (16,173 | ) | |||||||
Adjustments, net | 97 | (918 | ) | 5,172 | 14,174 | 18,525 | ||||||||||||||
Adjusted EBITDA | $ | 3,289 | $ | (449 | ) | $ | 2,252 | $ | (2,740 | ) | $ | 2,352 | ||||||||
Adjusted EBITDA margin % | 10.7 | % | (4.9 | )% | 23.0 | % | N/A | 4.7 | % |
Three months ended March 31, 2019 | ||||||||||||
As Reported | Special Items | As Adjusted | ||||||||||
Revenue | $ | 42,627 | $ | — | $ | 42,627 | ||||||
Direct operating expenses | 32,557 | 858 | [A] | 33,415 | ||||||||
General and administrative expenses | 5,475 | (697 | ) | [B] | 4,778 | |||||||
Total costs and expenses | 47,284 | 44 | [C] | 47,328 | ||||||||
Operating loss | (4,657 | ) | (44 | ) | [C] | (4,701 | ) | |||||
Net loss | (6,355 | ) | 223 | [D] | (6,132 | ) | ||||||
Net loss | $ | (6,355 | ) | $ | (6,132 | ) | ||||||
Depreciation and amortization | 9,135 | 9,135 | ||||||||||
Interest expense, net | 1,421 | 1,421 | ||||||||||
Income tax expense | 79 | 76 | ||||||||||
EBITDA and Adjusted EBITDA | $ | 4,280 | $ | 4,500 |
Description of 2019 Special Items: | ||||
[A] | Special items primarily relates to the gain on the sale of underutilized assets. | |||
[B] | Primarily attributable to stock-based compensation and non-routine litigation expenses, offset by an adjustment to capitalize certain of our transaction costs for our acquisition of Clearwater Solutions in the fourth quarter of 2018. | |||
[C] | Primarily includes the aforementioned adjustments along with long-lived asset impairment charges of $0.1 million for assets classified as held-for-sale in the Northeast division. | |||
[D] | Primarily includes the aforementioned adjustments along with a loss of $41.0 thousand associated with the change in fair value of the derivative warrant liability. Additionally, our effective tax rate for the three months ended March 31, 2019 was (1.3%) percent and was applied to the special items accordingly. |
Three months ended March 31, 2018 | ||||||||||||
As Reported | Special Items | As Adjusted | ||||||||||
Revenue | $ | 49,669 | $ | — | $ | 49,669 | ||||||
Direct operating expenses | 41,627 | (54 | ) | [E] | 41,573 | |||||||
General and administrative expenses | 19,320 | (13,506 | ) | [F] | 5,814 | |||||||
Total costs and expenses | 80,421 | (18,290 | ) | [G] | 62,131 | |||||||
Operating loss | (30,752 | ) | 18,290 | [G] | (12,462 | ) | ||||||
Net loss | (32,167 | ) | 18,525 | [H] | (13,642 | ) | ||||||
Net loss | $ | (32,167 | ) | $ | (13,642 | ) | ||||||
Depreciation and amortization | 14,744 | 14,744 | ||||||||||
Interest expense, net | 1,250 | 1,250 | ||||||||||
Income tax expense | — | — | ||||||||||
EBITDA and Adjusted EBITDA | $ | (16,173 | ) | $ | 2,352 |
Description of 2018 Special Items: | ||||
[E] | Special items primarily relates to the loss on the sale of underutilized assets. | |||
[F] | Primarily attributable to severance, stock-based compensation and non-routine litigation expenses. | |||
[G] | Primarily includes the aforementioned adjustments along with long-lived asset impairment charges of $4.1 million for assets classified as held-for-sale primarily in the Southern division. | |||
[H] | Primarily includes the aforementioned adjustments along with a loss of $0.2 million associated with the change in fair value of the derivative warrant liability. Additionally, our effective tax rate for the three months ended March 31, 2018 was zero percent and was applied to the special items accordingly. |
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
Net cash used in operating activities | $ | (505 | ) | $ | (7,253 | ) | |
Net cash capital expenditures [1] | 39 | 8,501 | |||||
Free Cash Flow | $ | (466 | ) | $ | 1,248 |
[1] | Net cash capital expenditures is defined as proceeds received from sales of property, plant and equipment, net of purchases of property, plant and equipment. |
Revenue | Adjusted EBITDA | ||||||||||||
Q1 2019 vs Q4 2018 | Q1 2019 vs Q4 2018 | ||||||||||||
Breakdown of Decline: | |||||||||||||
Price | $ | (430 | ) | (0.9 | )% | $ | (445 | ) | (7.3 | )% | |||
Activity | (6,144 | ) | (12.5 | ) | (1,097 | ) | (18.0 | ) | |||||
Acquisition/Closure | — | — | — | — | |||||||||
Corporate | — | — | (55 | ) | (0.9 | ) | |||||||
Total Sequential Decline | $ | (6,574 | ) | (13.4 | )% | $ | (1,597 | ) | (26.2 | )% |
Three Months Ended | ||||||
March 31, 2019 | ||||||
Breakdown of Total Revenue Decline: | ||||||
Price | $ | (878 | ) | (1.8 | )% | |
Activity | (6,304 | ) | (12.7 | ) | ||
Acquisition/Closure (a) | 140 | 0.3 | ||||
Total Revenue Decline | $ | (7,042 | ) | (14.2 | )% |
(a) | Represents the combined impact of the Clearwater Solutions acquisition on October 5, 2018 and management’s decision to exit the Eagle Ford Shale area as of March 1, 2018. |
Three Months Ended | ||||||
March 31, 2019 | ||||||
Breakdown of Total Adjusted EBITDA Growth: | ||||||
Price | $ | (887 | ) | (37.7 | )% | |
Activity/Expense | (385 | ) | (16.4 | ) | ||
Acquisition/Closure (a) | 3,220 | 136.9 | ||||
Corporate | 200 | 8.5 | ||||
Total Adjusted EBITDA Growth | $ | 2,148 | 91.3 | % |
(a) | Represents the combined impact of the Clearwater Solutions acquisition on October 5, 2018 and management’s decision to exit the Eagle Ford Shale area as of March 1, 2018. |
Three Months Ended | ||
March 31, 2019 | ||
Water Trucks: | ||
Count (approximate) | 450 | |
% Utilized [1] | 48 | % |
Salt Water Disposal Wells: | ||
Count | 48 | |
% Utilized [2] | 56 | % |
Haynesville Pipeline: | ||
% Utilized [2] | 81% |
[1] | Trucking utilization assumes a five day work-week and running twelve hours per day. |
[2] | Salt Water Disposal Well and Pipeline utilization is calculated based on daily functional capacity rather than permitted capacity. Functional capacity reflects any factors limiting volume such as pressure limits, pump or tank capacity, etc. and can potentially be increased with additional capital investment. |
Average for the Three Months Ended March 31, | Year-Over-Year | |||||||||
2019 | 2018 | Growth % | ||||||||
Pricing: | ||||||||||
Oil price per barrel [1] | $ | 54.82 | $ | 62.91 | (12.9 | )% | ||||
Natural gas price per tcf [2] | $ | 2.92 | $ | 3.08 | (5.2 | )% | ||||
Operating Rigs [3] | 192 | 176 | 9.1 | % | ||||||
Oil Production (barrels in thousands) [4] | 1,603 | 1,317 | 21.7 | % | ||||||
Natural Gas Production (Mcf/d) [4] | 43,827 | 36,747 | 19.3 | % | ||||||
Wells Completed [4] | 870 | 691 | 25.9 | % | ||||||
Drilled Uncompleted Ending Inventory [4] | 1,449 | 1,677 | (13.6 | )% |
[1] | Source: West Texas Intermediate (“WTI”) Crude Oil Spot Price |
[2] | Source: Henry Hub (“HH”) Natural Gas Spot Price |
[3] | Source: Baker Hughes |
[4] | Source: US Energy Information Association (“EIA”) |
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