Delaware | 001-34025 | 26-1501877 | ||
(State or other jurisdiction of incorporation) | (Commission file number) | (IRS employer identification no.) |
Exhibit No. | Description | |
Press Release of Intrepid Potash, Inc. dated October 30, 2017. |
INTREPID POTASH, INC. | ||
Dated: October 30, 2017 | By: | /s/ Margaret E. McCandless |
Margaret E. McCandless | ||
Vice President, General Counsel, and Secretary |
• | Solid financial results and a reduced debt balance led to a 400 basis points reduction in interest rates on senior notes beginning in the fourth quarter, with an expected annualized interest savings of $2.4 million. |
• | Principal reduction of $6.0 million during the third quarter brings total reduction on senior notes to $90.0 million since September 30, 2016. |
• | Potash segment gross margin of $5.0 million during the third quarter of 2017, a $12.3 million improvement compared to the prior-year period. |
• | Trio® sales volume in the third quarter increased 72% compared to the previous year, while pricing environment continued to challenge Trio® segment gross margin. |
• | Cash from operations increased to $14.1 million for the first nine months of 2017, a $27.6 million improvement compared to the first nine months of 2016. |
• | Net loss was $1.9 million, or $0.02 per share, compared with net loss of $18.2 million, or $0.24 per share, in the third quarter of 2016. |
• | Water sales generated $2.1 million in the third quarter. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(in thousands, except per ton data) | ||||||||||||||||
Potash sales | $ | 20,711 | $ | 35,357 | $ | 75,745 | $ | 128,248 | ||||||||
Potash gross margin (deficit) | $ | 5,027 | $ | (7,320 | ) | $ | 11,371 | $ | (24,525 | ) | ||||||
Potash production volume (in tons) | 56 | 52 | 237 | 383 | ||||||||||||
Potash sales volume (in tons) | 77 | 161 | 281 | 547 | ||||||||||||
Average potash net realized sales price per ton(1) | $ | 232 | $ | 178 | $ | 236 | $ | 198 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(in thousands, except per ton data) | ||||||||||||||||
Trio® sales | $ | 11,349 | $ | 8,286 | $ | 48,557 | $ | 40,512 | ||||||||
Trio® gross (deficit) margin | $ | (1,235 | ) | $ | (304 | ) | $ | (6,738 | ) | $ | 2,282 | |||||
Trio® production volume (in tons) | 51 | 85 | 192 | 200 | ||||||||||||
Trio® sales volume (in tons) | 43 | 25 | 178 | 108 | ||||||||||||
Average Trio® net realized sales price per ton(1) | $ | 187 | $ | 274 | $ | 197 | $ | 308 |
• | the Company's ability to successfully identify and implement any opportunities to expand sales of water, by-products, and other non-potassium related products or other revenue diversification activities; |
• | the Company's ability to successfully identify and consummate profitable growth opportunities; |
• | the Company's ability to expand Trio® sales internationally and manage risks associated with international sales, including pricing pressure; |
• | the Company's ability to comply with the terms of its senior notes and its revolving credit facility, including the underlying covenants, to avoid a default under those agreements; |
• | changes in the price, demand, or supply of the Company's products; |
• | the costs of, and the Company's ability to successfully execute, any strategic projects; |
• | declines or changes in agricultural production or fertilizer application rates; |
• | further write-downs of the carrying value of assets, including inventories; |
• | circumstances that disrupt or limit production, including operational difficulties or variances, geological or geotechnical variances, equipment failures, environmental hazards, and other unexpected events or problems; |
• | changes in reserve estimates; |
• | currency fluctuations; |
• | adverse changes in economic conditions or credit markets; |
• | the impact of governmental regulations, including environmental and mining regulations, the enforcement of those regulations, and governmental policy changes; |
• | challenges to the Company's water rights; |
• | adverse weather events, including events affecting precipitation and evaporation rates at the Company's solar solution mines; |
• | increased labor costs or difficulties in hiring and retaining qualified employees and contractors, including workers with mining, mineral processing, or construction expertise; |
• | changes in the prices of raw materials, including chemicals, natural gas, and power; |
• | the Company's ability to obtain and maintain any necessary governmental permits or leases relating to current or future operations; |
• | declines in the use of potassium-related products or water by oil and gas companies in their drilling operations; |
• | interruptions in rail or truck transportation services, or fluctuations in the costs of these services; |
• | the Company's inability to fund necessary capital investments; and |
• | the other risks, uncertainties, and assumptions described in the Company's periodic filings with the Securities and Exchange Commission, including in "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, as updated by its subsequent Quarterly Reports on Form 10-Q. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Sales | $ | 32,060 | $ | 43,643 | $ | 124,302 | $ | 168,760 | ||||||||
Less: | ||||||||||||||||
Freight costs | 6,160 | 8,187 | 22,867 | 27,450 | ||||||||||||
Warehousing and handling costs | 2,046 | 2,616 | 7,013 | 7,818 | ||||||||||||
Cost of goods sold | 19,395 | 35,272 | 84,981 | 136,899 | ||||||||||||
Lower-of-cost-or-market inventory adjustments | 667 | 5,192 | 4,808 | 17,129 | ||||||||||||
Costs associated with abnormal production | — | — | — | 1,707 | ||||||||||||
Gross Margin (Deficit) | 3,792 | (7,624 | ) | 4,633 | (22,243 | ) | ||||||||||
Selling and administrative | 4,782 | 4,731 | 13,951 | 15,837 | ||||||||||||
Accretion of asset retirement obligation | 390 | 442 | 1,168 | 1,326 | ||||||||||||
Restructuring expense | — | — | 266 | 2,314 | ||||||||||||
Care and maintenance expense | 293 | 1,719 | 1,404 | 1,719 | ||||||||||||
Other operating (income) expense | (1,501 | ) | 94 | (631 | ) | (1,811 | ) | |||||||||
Operating Loss | (172 | ) | (14,610 | ) | (11,525 | ) | (41,628 | ) | ||||||||
Other Income (Expense) | ||||||||||||||||
Interest expense, net | (1,994 | ) | (3,905 | ) | (10,631 | ) | (9,134 | ) | ||||||||
Interest income | — | 57 | 5 | 281 | ||||||||||||
Other income | 128 | 218 | 514 | 419 | ||||||||||||
Loss Before Income Taxes | (2,038 | ) | (18,240 | ) | (21,637 | ) | (50,062 | ) | ||||||||
Income Tax Benefit (Expense) | 130 | (1 | ) | 117 | (4 | ) | ||||||||||
Net Loss | $ | (1,908 | ) | $ | (18,241 | ) | $ | (21,520 | ) | $ | (50,066 | ) | ||||
Weighted Average Shares Outstanding: | ||||||||||||||||
Basic and diluted | 126,601,580 | 75,871,774 | 111,768,336 | 75,882,544 | ||||||||||||
Loss Per Share: | ||||||||||||||||
Basic and diluted | $ | (0.02 | ) | $ | (0.24 | ) | $ | (0.19 | ) | $ | (0.66 | ) |
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 1,694 | $ | 4,464 | ||||
Accounts receivable: | ||||||||
Trade, net | 17,866 | 10,343 | ||||||
Other receivables, net | 853 | 492 | ||||||
Refundable income taxes | — | 1,379 | ||||||
Inventory, net | 83,802 | 94,355 | ||||||
Prepaid expenses and other current assets | 7,323 | 12,710 | ||||||
Total current assets | 111,538 | 123,743 | ||||||
Property, plant, equipment, and mineral properties, net | 363,287 | 388,490 | ||||||
Long-term parts inventory, net | 28,890 | 21,037 | ||||||
Other assets, net | 4,110 | 7,631 | ||||||
Total Assets | $ | 507,825 | $ | 540,901 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Accounts payable: | ||||||||
Trade | $ | 8,352 | $ | 10,210 | ||||
Related parties | 31 | 31 | ||||||
Accrued liabilities | 12,070 | 8,690 | ||||||
Accrued employee compensation and benefits | 3,140 | 4,225 | ||||||
Other current liabilities | 83 | 964 | ||||||
Total current liabilities | 23,676 | 24,120 | ||||||
Long-term debt, net | 59,404 | 133,434 | ||||||
Asset retirement obligation | 21,144 | 19,976 | ||||||
Other non-current liabilities | 100 | — | ||||||
Total Liabilities | 104,324 | 177,530 | ||||||
Commitments and Contingencies | ||||||||
Common stock, $0.001 par value; 400,000,000 shares authorized; | ||||||||
and 127,075,201 and 75,839,998 shares outstanding | ||||||||
at September 30, 2017, and December 31, 2016, respectively | 127 | 76 | ||||||
Additional paid-in capital | 645,372 | 583,653 | ||||||
Retained deficit | (241,998 | ) | (220,358 | ) | ||||
Total Stockholders' Equity | 403,501 | 363,371 | ||||||
Total Liabilities and Stockholders' Equity | $ | 507,825 | $ | 540,901 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||
Net loss | $ | (1,908 | ) | $ | (18,241 | ) | $ | (21,520 | ) | $ | (50,066 | ) | ||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||||||
Depreciation, depletion, and accretion | 8,270 | 8,756 | 25,890 | 32,965 | ||||||||||||
Amortization of deferred financing costs | 246 | 562 | 1,596 | 2,228 | ||||||||||||
Stock-based compensation | 993 | 852 | 2,678 | 2,552 | ||||||||||||
Lower-of-cost-or-market inventory adjustments | 667 | 5,192 | 4,808 | 17,129 | ||||||||||||
Loss on disposal of assets | 185 | 109 | 1,749 | 94 | ||||||||||||
Allowance for doubtful accounts | 420 | — | 420 | — | ||||||||||||
Allowance for parts inventory obsolescence | (20 | ) | (104 | ) | (20 | ) | 514 | |||||||||
Other | — | (74 | ) | — | 376 | |||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Trade accounts receivable, net | (6,810 | ) | (8,143 | ) | (7,944 | ) | (7,386 | ) | ||||||||
Other receivables, net | 530 | (469 | ) | (360 | ) | (1,195 | ) | |||||||||
Refundable income taxes | 1,376 | 1 | 1,379 | 92 | ||||||||||||
Inventory, net | (7,070 | ) | 438 | (2,086 | ) | (16,200 | ) | |||||||||
Prepaid expenses and other current assets | 276 | (2,703 | ) | 8,392 | 11,974 | |||||||||||
Accounts payable, accrued liabilities, and accrued employee compensation and benefits | 5,417 | 244 | (143 | ) | (5,157 | ) | ||||||||||
Other liabilities | (23 | ) | (377 | ) | (781 | ) | (1,474 | ) | ||||||||
Net cash provided by (used in) operating activities | 2,549 | (13,957 | ) | 14,058 | (13,554 | ) | ||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||
Additions to property, plant, equipment, and mineral properties | (2,667 | ) | (2,481 | ) | (6,226 | ) | (14,256 | ) | ||||||||
Proceeds from sale of property, plant, equipment, and mineral properties | — | — | 5,553 | — | ||||||||||||
Purchases of investments | — | (8,825 | ) | — | (10,325 | ) | ||||||||||
Proceeds from sale of investments | — | 18,447 | 1 | 55,822 | ||||||||||||
Net cash (used in) provided by investing activities | (2,667 | ) | 7,141 | (672 | ) | 31,241 | ||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||
Issuance of common stock, net of transaction costs | 1,651 | — | 59,130 | — | ||||||||||||
Repayments of long-term debt | (6,000 | ) | — | (75,000 | ) | — | ||||||||||
Proceeds from short-term borrowings on credit facility | 1,500 | — | 9,000 | — | ||||||||||||
Repayments of short-term borrowings on credit facility | (1,500 | ) | — | (9,000 | ) | — | ||||||||||
Debt issuance costs | (29 | ) | (1,189 | ) | (128 | ) | (3,843 | ) | ||||||||
Employee tax withholding paid for restricted stock upon vesting | — | — | (158 | ) | (172 | ) | ||||||||||
Net cash used in financing activities | (4,378 | ) | (1,189 | ) | (16,156 | ) | (4,015 | ) | ||||||||
Net Change in Cash and Cash Equivalents | (4,496 | ) | (8,005 | ) | (2,770 | ) | 13,672 | |||||||||
Cash and Cash Equivalents, beginning of period | 6,190 | 30,984 | 4,464 | 9,307 | ||||||||||||
Cash and Cash Equivalents, end of period | $ | 1,694 | $ | 22,979 | $ | 1,694 | $ | 22,979 | ||||||||
Supplemental disclosure of cash flow information | ||||||||||||||||
Net cash paid (refunded) during the period for: | ||||||||||||||||
Interest | $ | 711 | $ | 26 | $ | 9,088 | $ | 3,247 | ||||||||
Income taxes | $ | (1,506 | ) | $ | — | $ | (1,496 | ) | $ | (88 | ) | |||||
Accrued purchases for property, plant, equipment, and mineral properties | $ | 1,373 | $ | 801 | $ | 1,373 | $ | 801 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Production volume (in thousands of tons): | ||||||||||||||||
Potash | 56 | 52 | 237 | 383 | ||||||||||||
Langbeinite | 51 | 85 | 192 | 200 | ||||||||||||
Sales volume (in thousands of tons): | ||||||||||||||||
Potash | 77 | 161 | 281 | 547 | ||||||||||||
Trio® | 43 | 25 | 178 | 108 | ||||||||||||
Average net realized sales price per ton (1) | ||||||||||||||||
Potash | $ | 232 | $ | 178 | $ | 236 | $ | 198 | ||||||||
Trio® | $ | 187 | $ | 274 | $ | 197 | $ | 308 |
Three Months Ended September 30, 2017 (in thousands): | Potash | Trio® | Corporate | Consolidated | ||||||||||||
Sales | $ | 20,711 | $ | 11,349 | $ | — | $ | 32,060 | ||||||||
Less: Freight costs | 2,864 | 3,296 | — | 6,160 | ||||||||||||
Warehousing and handling costs | 1,173 | 873 | — | 2,046 | ||||||||||||
Cost of goods sold | 11,534 | 7,861 | — | 19,395 | ||||||||||||
Lower-of-cost-or-market inventory adjustments | 113 | 554 | — | 667 | ||||||||||||
Gross Margin (Deficit) | $ | 5,027 | $ | (1,235 | ) | $ | — | $ | 3,792 | |||||||
Depreciation, depletion and amortization incurred(2) | $ | 6,567 | $ | 1,687 | $ | 16 | $ | 8,270 | ||||||||
Nine Months Ended September 30, 2017 (in thousands): | Potash | Trio® | Corporate | Consolidated | ||||||||||||
Sales | $ | 75,745 | $ | 48,557 | $ | — | $ | 124,302 | ||||||||
Less: Freight costs | 9,401 | 13,466 | — | 22,867 | ||||||||||||
Warehousing and handling costs | 4,051 | 2,962 | — | 7,013 | ||||||||||||
Cost of goods sold | 50,776 | 34,205 | — | 84,981 | ||||||||||||
Lower-of-cost-or-market inventory adjustments | 146 | 4,662 | — | 4,808 | ||||||||||||
Gross Margin (Deficit) | $ | 11,371 | $ | (6,738 | ) | $ | — | $ | 4,633 | |||||||
Depreciation, depletion and amortization incurred(2) | $ | 20,685 | $ | 5,091 | $ | 114 | $ | 25,890 | ||||||||
Three Months Ended September 30, 2016 (in thousands): | Potash | Trio® | Corporate | Consolidated | ||||||||||||
Sales | $ | 35,357 | $ | 8,286 | $ | — | $ | 43,643 | ||||||||
Less: Freight costs | 6,722 | 1,465 | — | 8,187 | ||||||||||||
Warehousing and handling costs | 2,072 | 544 | — | 2,616 | ||||||||||||
Cost of goods sold | 29,027 | 6,245 | — | 35,272 | ||||||||||||
Lower-of-cost-or-market inventory adjustments | 4,856 | 336 | — | 5,192 | ||||||||||||
Gross Deficit | $ | (7,320 | ) | $ | (304 | ) | $ | — | $ | (7,624 | ) | |||||
Depreciation, depletion and amortization incurred(2) | $ | 8,090 | $ | 597 | $ | 69 | $ | 8,756 | ||||||||
Nine Months Ended September 30, 2016 (in thousands): | Potash | Trio® | Corporate | Consolidated | ||||||||||||
Sales | $ | 128,248 | $ | 40,512 | $ | — | $ | 168,760 | ||||||||
Less: Freight costs | 20,156 | 7,294 | — | 27,450 | ||||||||||||
Warehousing and handling costs | 6,358 | 1,460 | — | 7,818 | ||||||||||||
Cost of goods sold | 108,816 | 28,083 | — | 136,899 | ||||||||||||
Lower-of-cost-or-market inventory adjustments | 16,793 | 336 | — | 17,129 | ||||||||||||
Costs associated with abnormal production and other | 650 | 1,057 | — | 1,707 | ||||||||||||
Gross (Deficit) Margin | $ | (24,525 | ) | $ | 2,282 | $ | — | $ | (22,243 | ) | ||||||
Depreciation, depletion and amortization incurred(2) | $ | 28,970 | $ | 3,150 | $ | 845 | $ | 32,965 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in thousands) | |||||||||||||||
Net Loss | $ | (1,908 | ) | $ | (18,241 | ) | $ | (21,520 | ) | $ | (50,066 | ) | |||
Adjustments | |||||||||||||||
Costs associated with abnormal production(1) | — | — | — | 1,707 | |||||||||||
Restructuring expense(2) | — | — | 266 | 2,314 | |||||||||||
Compensating tax adjustment(3) | — | — | — | (1,086 | ) | ||||||||||
Insurance proceeds(4) | — | — | — | (1,211 | ) | ||||||||||
Write-off of deferred financing fees(5) | 60 | 431 | 819 | 1,883 | |||||||||||
Make-whole payment(6) | 448 | 806 | 3,001 | 806 | |||||||||||
Calculated income tax effect(7) | — | — | — | — | |||||||||||
Total adjustments | 508 | 1,237 | 4,086 | 4,413 | |||||||||||
Adjusted Net Loss | $ | (1,400 | ) | $ | (17,004 | ) | $ | (17,434 | ) | $ | (45,653 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net Loss Per Diluted Share | $ | (0.02 | ) | $ | (0.24 | ) | $ | (0.19 | ) | $ | (0.66 | ) | |||
Adjustments | |||||||||||||||
Costs associated with abnormal production(1) | — | — | — | 0.02 | |||||||||||
Restructuring expense(2) | — | — | — | 0.03 | |||||||||||
Compensating tax adjustment(3) | — | — | — | (0.01 | ) | ||||||||||
Insurance proceeds(4) | — | — | — | (0.02 | ) | ||||||||||
Write-off of deferred financing fees(5) | — | 0.01 | 0.01 | 0.02 | |||||||||||
Make-whole payment(6) | — | 0.01 | 0.02 | 0.01 | |||||||||||
Calculated income tax effect(7) | — | — | — | — | |||||||||||
Total adjustments | — | 0.02 | 0.03 | 0.05 | |||||||||||
Adjusted Net Loss Per Diluted Share | $ | (0.02 | ) | $ | (0.22 | ) | $ | (0.16 | ) | $ | (0.61 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(in thousands) | ||||||||||||||||
Net Loss | $ | (1,908 | ) | $ | (18,241 | ) | $ | (21,520 | ) | $ | (50,066 | ) | ||||
Costs associated with abnormal production(1) | — | — | — | 1,707 | ||||||||||||
Restructuring expense(2) | — | — | 266 | 2,314 | ||||||||||||
Compensating tax adjustment(3) | — | — | — | (1,086 | ) | |||||||||||
Insurance proceeds(4) | — | — | — | (1,211 | ) | |||||||||||
Interest expense | 1,994 | 3,905 | 10,631 | 9,134 | ||||||||||||
Income tax (benefit) expense | (130 | ) | 1 | (117 | ) | 4 | ||||||||||
Depreciation, depletion, and accretion | 8,270 | 8,756 | 25,890 | 32,965 | ||||||||||||
Total adjustments | 10,134 | 12,662 | 36,670 | 43,827 | ||||||||||||
Adjusted EBITDA | $ | 8,226 | $ | (5,579 | ) | $ | 15,150 | $ | (6,239 | ) |
Three Months Ended September 30, | ||||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||||
(in thousands, except per ton data) | ||||||||||||||||||||||||
Potash | Trio® | Total | Potash | Trio® | Total | |||||||||||||||||||
Sales | $ | 20,711 | $ | 11,349 | $ | 32,060 | $ | 35,357 | $ | 8,286 | $ | 43,643 | ||||||||||||
Freight costs | 2,864 | 3,296 | 6,160 | 6,722 | 1,465 | 8,187 | ||||||||||||||||||
Subtotal | $ | 17,847 | $ | 8,053 | $ | 25,900 | $ | 28,635 | $ | 6,821 | $ | 35,456 | ||||||||||||
Divided by: | ||||||||||||||||||||||||
Tons sold | 77 | 43 | 161 | 25 | ||||||||||||||||||||
Average net realized sales price per ton | $ | 232 | $ | 187 | $ | 178 | $ | 274 | ||||||||||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||||
(in thousands, except per ton data) | ||||||||||||||||||||||||
Potash | Trio® | Total | Potash | Trio® | Total | |||||||||||||||||||
Sales | $ | 75,745 | $ | 48,557 | $ | 124,302 | $ | 128,248 | $ | 40,512 | $ | 168,760 | ||||||||||||
Freight costs | 9,401 | 13,466 | 22,867 | 20,156 | 7,294 | 27,450 | ||||||||||||||||||
Subtotal | $ | 66,344 | $ | 35,091 | $ | 101,435 | $ | 108,092 | $ | 33,218 | $ | 141,310 | ||||||||||||
Divided by: | ||||||||||||||||||||||||
Tons sold | 281 | 178 | 547 | 108 | ||||||||||||||||||||
Average net realized sales price per ton | $ | 236 | $ | 197 | $ | 198 | $ | 308 |
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