-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Sk5tBtPF/+0yBmDbiDQ9Z+yqEvWy+7L4qW8OqKI0QsOUykFj6CSN32kVvpU5e5DI //OMOM92bx/wrZM+NDXo6w== 0000318140-96-000006.txt : 19960816 0000318140-96-000006.hdr.sgml : 19960816 ACCESSION NUMBER: 0000318140-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCNEIL REAL ESTATE FUND XI LTD CENTRAL INDEX KEY: 0000318140 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 942669577 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09783 FILM NUMBER: 96612864 BUSINESS ADDRESS: STREET 1: 13760 NOEL ROAD STREET 2: SUITE 700 LB70 CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 2144485800 MAIL ADDRESS: STREET 1: 13760 NOEL ROAD SUITE 700 LB70 CITY: DALLAS STATE: TX ZIP: 75240 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended June 30, 1996 ------------------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to_____________ Commission file number 0-9783 -------- MCNEIL REAL ESTATE FUND XI, LTD. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 94-2669577 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (214) 448-5800 ----------------------------- Indicate by check mark whether the registrant, (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- MCNEIL REAL ESTATE FUND XI, LTD. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- BALANCE SHEETS
June 30, December 31, 1996 1995 --------------- -------------- ASSETS - ------ Real estate investments: Land..................................................... $ 5,938,464 $ 5,938,464 Buildings and improvements............................... 59,316,218 58,408,551 -------------- ------------- 65,254,682 64,347,015 Less: Accumulated depreciation.......................... (38,343,937) (37,095,184) -------------- ------------- 26,910,745 27,251,831 Cash and cash equivalents................................... 2,686,044 2,030,544 Cash segregated for security deposits....................... 380,968 386,125 Accounts receivable......................................... 186,439 31,327 Prepaid expenses and other assets........................... 132,429 276,785 Escrow deposits............................................. 1,145,021 904,523 Deferred borrowing costs (net of accumulated amortization of $570,915 and $507,241 at June 30, 1996 and December 31, 1995, respectively)............................................ 1,563,955 1,627,629 -------------- ------------- $ 33,005,601 $ 32,508,764 ============== ============= LIABILITIES AND PARTNERS' DEFICIT - --------------------------------- Mortgage notes payable, net................................. $ 39,456,796 $ 39,684,440 Accounts payable............................................ 111,875 62,056 Accrued interest............................................ 300,488 302,329 Accrued property taxes...................................... 401,781 100,959 Accrued expenses............................................ 277,498 356,025 Deferred gain - storm damage................................ 67,016 67,016 Payable to affiliates - General Partner..................... 3,331,997 2,851,851 Security deposits and deferred rental revenue............... 436,092 407,466 -------------- ------------- 44,383,543 43,832,142 -------------- ------------- Partners' deficit: Limited partners - 159,813 limited partnership units authorized and outstanding at June 30, 1996 and December 31, 1995............................. (4,615,747) (4,983,492) General Partner.......................................... (6,762,195) (6,339,886) -------------- ------------- (11,377,942) (11,323,378) -------------- ------------- $ 33,005,601 $ 32,508,764 ============== =============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. MCNEIL REAL ESTATE FUND XI, LTD. STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, --------------------------------- --------------------------------- 1996 1995 1996 1995 -------------- --------------- -------------- -------------- Revenue: Rent revenue.................. $ 3,660,607 $ 3,523,916 $ 7,329,367 $ 7,013,905 Interest...................... 31,667 35,415 58,629 66,516 ------------- ------------- ------------- ------------- Total revenue............... 3,692,274 3,559,331 7,387,996 7,080,421 ------------- ------------- ------------- ------------- Expenses: Interest...................... 948,783 1,007,043 1,909,949 1,953,797 Depreciation.................. 593,040 616,517 1,248,753 1,214,774 Property taxes................ 214,521 240,570 439,182 481,140 Personnel expenses............ 395,593 397,093 881,605 901,865 Utilities..................... 246,637 256,607 516,572 490,144 Repair and maintenance........ 542,460 502,306 974,943 901,580 Property management fees - affiliates........... 182,218 175,692 364,392 351,919 Other property operating expenses.................... 198,146 237,334 389,758 444,798 General and administrative.... 31,674 20,800 81,891 55,094 General and administrative - affiliates.................. 96,525 155,214 193,851 271,796 ------------- ------------- ------------- ------------- Total expenses.............. 3,449,597 3,609,176 7,000,896 7,066,907 ------------- ------------- ------------- ------------- Net income (loss)................ $ 242,677 $ (49,845) $ 387,100 $ 13,514 ============= ============= ============= ============= Net income (loss) allocable to limited partners.............. $ 230,543 $ (47,353) $ 367,745 $ 12,838 Net income (loss) allocable to General Partner............ 12,134 (2,492) 19,355 676 ------------- ------------- ------------- ------------- Net income (loss)................ $ 242,677 $ (49,845) $ 387,100 $ 13,514 ============= ============= ============= ============= Net income (loss) per limited partnership unit.............. $ 1.44 $ (.30) $ 2.30 $ .08 ============= ============= ============= =============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. MCNEIL REAL ESTATE FUND XI, LTD. STATEMENTS OF PARTNERS' DEFICIT (Unaudited) For the Six Months Ended June 30, 1996 and 1995
Total General Limited Partners' Partner Partners Deficit --------------- --------------- --------------- Balance at December 31, 1994.............. $ (5,484,195) $ (5,275,373) $ (10,759,568) Net income................................ 676 12,838 13,514 Management Incentive Distribution......... (406,451) - (406,451) ------------- ------------- ------------- Balance at June 30, 1995.................. $ (5,889,970) $ (5,262,535) $ (11,152,505) ============= ============= ============= Balance at December 31, 1995.............. $ (6,339,886) $ (4,983,492) $ (11,323,378) Net income................................ 19,355 367,745 387,100 Management Incentive Distribution......... (441,664) - (441,664) ------------- ------------- ------------- Balance at June 30, 1996.................. $ (6,762,195) $ (4,615,747) $ (11,377,942) ============= ============= =============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. MCNEIL REAL ESTATE FUND XI, LTD. STATEMENTS OF CASH FLOWS (Unaudited) Increase (Decrease) in Cash and Cash Equivalents
Six Months Ended June 30, ------------------------------------------- 1996 1995 ------------------- ---------------- Cash flows from operating activities: Cash received from tenants........................ $ 7,375,490 $ 7,056,377 Cash paid to suppliers............................ (2,789,291) (2,468,728) Cash paid to affiliates........................... (519,761) (571,728) Interest received................................. 58,629 66,516 Interest paid..................................... (1,838,588) (1,806,492) Property taxes paid............................... (486,140) (510,558) ----------------- -------------- Net cash provided by operating activities............ 1,800,339 1,765,387 ----------------- -------------- Net cash used in investing activities: Additions to real estate investments.............. (907,667) (835,356) ----------------- -------------- Net cash used in financing activities: Principal payments on mortgage notes payable......................................... (237,172) (206,076) ----------------- -------------- Net increase in cash and cash equivalents............ 655,500 723,955 Cash and cash equivalents at beginning of period............................................ 2,030,544 1,932,351 ----------------- -------------- Cash and cash equivalents at end of period........... $ 2,686,044 $ 2,656,306 ================= ==============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. MCNEIL REAL ESTATE FUND XI, LTD. STATEMENTS OF CASH FLOWS (Unaudited) Reconciliation of Net Income to Net Cash Provided by Operating Activities
Six Months Ended June 30, ---------------------------------------- 1996 1995 ---------------- --------------- Net income........................................... $ 387,100 $ 13,514 --------------- -------------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation...................................... 1,248,753 1,214,774 Amortization of discounts on mortgage notes payable................................... 9,528 10,834 Amortization of deferred borrowing costs.......... 63,674 72,749 Changes in assets and liabilities: Cash segregated for security deposits........... 5,157 15,312 Accounts receivable............................. (155,112) 8,527 Prepaid expenses and other assets............... 144,356 190,951 Escrow deposits................................. (240,498) (169,741) Accounts payable................................ 49,819 7,614 Accrued interest................................ (1,841) 63,722 Accrued property taxes.......................... 300,822 306,954 Accrued expenses................................ (78,527) (43,510) Payable to affiliates - General Partner......... 38,482 51,987 Security deposits and deferred rental revenue....................................... 28,626 21,700 --------------- -------------- Total adjustments............................. 1,413,239 1,751,873 --------------- -------------- Net cash provided by operating activities............ $ 1,800,339 $ 1,765,387 =============== ==============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. McNEIL REAL ESTATE FUND XI, LTD. Notes to Financial Statements (Unaudited) June 30, 1996 NOTE 1. - ------- McNeil Real Estate Fund XI, Ltd. (the "Partnership") was organized June 2, 1980 as a limited partnership under the provisions of the California Uniform Limited Partnership Act. The general partner of the Partnership is McNeil Partners, L.P. (the "General Partner"), a Delaware limited partnership, an affiliate of Robert A. McNeil. The Partnership is governed by an amended and restated limited partnership agreement, dated August 6, 1991 (the "Amended Partnership Agreement"). The principal place of business for the Partnership and for the General Partner is 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240. In the opinion of management, the financial statements reflect all adjustments necessary for a fair presentation of the financial position and results of operations of the Partnership. All adjustments were of a normal recurring nature. However, the results of operations for the six months ended June 30, 1996 are not necessarily indicative of the results to be expected for the year ending December 31, 1996. NOTE 2. - ------- The financial statements should be read in conjunction with the financial statements contained in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995, and the notes thereto, as filed with the Securities and Exchange Commission, which is available upon request by writing to McNeil Real Estate Fund XI, Ltd. c/o McNeil Real Estate Management, Inc., Investor Services, 13760 Noel Road, Suite 700, LB70, Dallas, Texas 75240. NOTE 3. - ------- The Partnership pays property management fees equal to 5% of gross rental receipts of the Partnership's properties to McNeil Real Estate Management, Inc. ("McREMI"), an affiliate of the General Partner, for providing property management and leasing services. The Partnership reimburses McREMI for its costs, including overhead, of administering the Partnership's affairs. Under terms of the Amended Partnership Agreement, the Partnership is paying a Management Incentive Distribution ("MID") to the General Partner. The maximum MID is calculated as 1% of the tangible asset value of the Partnership. The maximum MID percentage decreases subsequent to 1999. Tangible asset value is determined by using the greater of (i) an amount calculated by applying a capitalization rate of 9% to the annualized net operating income of each property or (ii) a value of $10,000 per apartment unit to arrive at the property tangible asset value. The property tangible asset value is then added to the book value of all other assets excluding intangible items. MID will be paid to the extent of the lesser of the Partnership's excess cash flow, as defined, or net operating income, as defined ("the Entitlement Amount"), and may be paid (i) in cash, unless there is insufficient cash to pay the distribution in which event any unpaid portion not taken in Units will be deferred and is payable, without interest, from the first available cash and/or (ii) in Units. A maximum of 50% of the MID may be paid in Units. The number of Units issued in payment of the MID is based on the greater of $50 per Unit or the net tangible asset value, as defined, per Unit. Any amount of the MID that is paid to the General Partner in Units will be treated as if cash is distributed to the General Partner and is then contributed to the Partnership by the General Partner. The MID represents a return of equity to the General Partner for increasing cash flow, as defined, and accordingly is treated as a distribution. Compensation, reimbursements and distributions paid to or accrued for the benefit of the General Partner and its affiliates are as follows: Six Months Ended June 30, ----------------------- 1996 1995 ---------- --------- Property management fees - affiliates........... $ 364,392 $ 351,919 Charged to general and administrative - affiliates: Partnership administration................... 193,851 271,796 --------- -------- $ 558,243 $ 623,715 ========= ======== Charged to General Partner's deficit: MID.......................................... $ 441,664 $ 406,451 ========= ======== ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - ------- --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- FINANCIAL CONDITION - ------------------- The Partnership was formed to acquire, operate and ultimately dispose of a portfolio of income-producing real properties. At June 30, 1996, the Partnership owned eight apartment properties, which are all subject to mortgage notes. RESULTS OF OPERATIONS - --------------------- Revenue: Partnership revenues increased by $307,575 or 4% for the period ended June 30, 1996, as compared to the same period last year. Rental revenue increased $315,462 and $136,691 or 4% for the six and three months ended June 30, 1996, respectively, while interest income decreased by $7,887 or 12% and $3,748 or 11%, respectively, for the same six and three month periods. Rental revenue for the first six months of 1996 was $7,329,367 as compared to $7,013,905 for the same period in 1995. The increase in rental revenue is due to an increase in the rental rates at six of the Partnership's properties. Interest income for the first six months of 1996 decreased due to smaller average cash balances invested in interest-bearing accounts. Expenses: Total Partnership expenses decreased by $66,011 or 1% for the period ending June 30, 1996 as compared to the same period in 1995. Decreases in property taxes, other operating expenses, and general and administrative affiliates were offset by increases in repairs and maintenance and general and administrative expenses. Property tax expense for the six and three months ended June 30, 1996 decreased by $41,958 or 9% and $26,049 or 11%, respectively, compared to the same periods in 1995. This is due to decreases in the estimated tax liabilities at Knollwood, The Park, and The Village. Repairs and maintenance expense for the six and three months ended June 30, 1996, increased by $73,363 and $40,154, respectively, or 8% compared to the same periods in 1995. This increase can be attributed to the replacement of carpeting, which met the Partnership's criteria for capitalization based on the magnitude of replacements in 1995, but were expensed in 1996. Other property operating expense for the six and three months ended June 30, 1996 decreased by $55,040 or 12% and $39,188 or 17%, respectively. This decrease is primarily due to a decrease in hazard insurance, with additional decreases in training and seminars and bad debts in 1996. General and administrative expenses increased $26,797 or 49% and $10,874 or 52% for the six and three months ended June 30, 1996, respectively, as compared to the same periods in 1995. The increase is due to costs incurred, by the Partnership, to defend class action litigation. General and administrative - affiliates expenses decreased $77,945 or 29% and $58,689 or 38% for the six and three months ended June 30, 1996, respectively, as compared to the same periods last year. This decrease is due to the reduction of overhead expenses allocable to the Partnership. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Partnership generated $1,800,339 through operating activities for the period ending June 30, 1996 as compared to $1,765,387 for the same period in 1995. This increase can be attributed to the decrease in cash paid to affiliates and property taxes paid. The Partnership funded $907,667 in additions to real estate investments for the six months ending June 30, 1996. All of the Partnership's properties continued capital improvements projects to enhance the value of the properties so they can remain competitive in the market. Financing activities included principal payments on mortgage notes of $237,172, in 1996, as compared to $206,076 in 1995. Short-term liquidity: At June 30, 1996, the Partnership held cash and cash equivalents of $2,686,044. The General Partner considers this level of cash reserves to be adequate to meet the Partnership's operating needs. The General Partner anticipates resuming MID payments if the Partnership's properties continue to perform as projected. The General Partner believes that anticipated operating results for 1996 will be sufficient to fund the Partnership's budgeted $1.3 million in capital improvements for 1996 and to repay the current portion of the Partnership's mortgage notes. During 1996, the Partnership is faced with a mortgage maturity on The Village totaling approximately $2,564,000. It is management's policy to negotiate extensions or arrange refinancings for the mortgage notes due. The General Partner has established a revolving credit facility not to exceed $5,000,000 in the aggregate which is available on a "first-come, first-served" basis to the Partnership and other affiliated partnerships if certain conditions are met. Borrowings under the facility may be used to fund deferred maintenance, refinancing obligations and working capital needs. The Partnership has repaid all the advances received from this facility, and there is no assurance that the Partnership will receive additional funds under the facility because no amounts will be reserved for any particular partnership. As of June 30, 1996, $4,082,159 remained available for borrowing under the facility; however, additional funds could become available as other partnerships repay borrowings. This commitment will terminate on August 6, 1996. Long-term liquidity: For the long term, property operations will remain the primary source of funds. While the present outlook for the Partnership's liquidity is favorable, market conditions may change and property operations can deteriorate. In that event, the Partnership would require other sources of working capital. No such other sources have been identified, and the Partnership has no established lines of credit. Other possible actions to resolve working capital deficiencies include refinancing or renegotiating terms of existing loans, deferring major capital expenditures on Partnership properties except where improvements are expected to enhance the competitiveness or marketability of the properties, or arranging working capital support from affiliates. All or a combination of these steps may be inadequate or unfeasible in resolving such potential working capital deficiencies. Affiliate support has been required in the past, but there is no assurance that support would be provided in the future, since neither the General Partner nor any affiliates have any obligation in this regard in excess of the $5,000,000 revolving credit facility discussed above. Income allocation and distributions: Terms of the Amended Partnership Agreement specify that income before depreciation is allocated to the General Partner to the extent of MID paid in cash. Depreciation is allocated in the ratio of 95:5 to the limited partners and the General Partner, respectively. Therefore, for the six months ended June 30, 1996 and 1995, $19,355 and $676, respectively, were allocated to the General Partner. The limited partners received allocations of net income of $367,745 and $12,838 for the six months ended June 30, 1996 and 1995, respectively. With the exception of the MID, distributions to partners have been suspended since 1986 as part of the General Partner's policy of maintaining adequate cash reserves. Distributions to the limited partners will remain suspended for the foreseeable future. The General Partner will continue to monitor the cash reserves and working capital needs of the Partnership to determine when cash flows will support distributions to the limited partners. A distribution of $441,664 for the MID has been accrued by the Partnership for the six month period ending June 30, 1996 for the General Partner. PART II. - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- Two class action lawsuits styled Robert Lewis vs. McNeil Partners, L.P., et. al., filed in the District Court of Dallas County, Texas, and James F. Schofield, et. al. vs. McNeil Partners, L.P., et. al., filed in the United States District Court, Southern District of New York, have been voluntarily dismissed without prejudice by the respective plaintiffs in such actions. ITEM 5. OTHER INFORMATION - ------- ----------------- On August 5, 1996, High River Limited Partnership ("High River"), a partnership controlled by Carl Icahn ("Icahn"), and certain Icahn's affiliates, filed documents with the Securities and Exchange Commission disclosing that High River had entered into a letter agreement dated August 2, 1996 with the attorneys for the plaintiffs in the case styled James F. Schofield, et. al. ("Plaintiffs") v. McNeil Partners, L.P., et. al. The letter agreement provided, among other things, that (i) High River will commence, as soon as possible, but in no event more than six months, a tender offer for any and all of the outstanding Units of the Partnership and other affiliated partnerships (the "Partnerships") at a price that is not less than 75% of the estimated liquidation value of the Units (as determined by utilizing the same methodology that was used to determine the liquidation values in High River's previous tender offers for the Partnerships, as previously disclosed), which tender offer may be subject to such other terms and conditions as High River determines in its sole discretion; (ii) in the event that High River attains the position of general partner in any of the Partnerships: (a) High River will take all actions necessary to cause a 25% reduction of fees of such Partnerships, (b) High River will not cause such Partnerships to take any action to discontinue the litigation with respect to receivable claims and (c) High River and Plaintiffs' counsel will in good faith execute an appropriate Stipulation of Settlement based upon the terms of the letter agreement, which stipulation shall not include a settlement or provide a release of the receivable claims; and (iii) from and after the date of the letter agreement, Plaintiffs' counsel agreed they will not enter into any settlement of the claims asserted in such litigation that does not provide for all consideration contained in a demand letter dated June 24, 1996. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------- -------------------------------- (a) Exhibits. Exhibit Number Description ------- ----------- 4. Amended and Restated Limited Partnership Agreement dated as of August 6, 1991. (Incorporated by reference to the Quarterly Report on Form 10-Q, for the quarter ended June 30, 1991). 11. Statement regarding computation of net loss per limited partnership unit: Net loss per limited partnership unit is computed by dividing net loss allocated to the limited partners by the number of limited partnership units outstanding. Per unit information has been computed based on 159,813 limited partnership units outstanding in 1996 and 1995, respectively. 27. Financial Data Schedule for the quarter ended June 30, 1996. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended June 30, 1996. McNEIL REAL ESTATE FUND XI, LTD. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized: McNEIL REAL ESTATE FUND XI, Ltd. By: McNeil Partners, L.P., General Partner By: McNeil Investors, Inc., General Partner August 14, 1996 By: /s/ Donald K. Reed - ---------------------- ---------------------------------------- Date Donald K. Reed President and Chief Executive Officer August 14, 1996 By: /s/ Ron K. Taylor - ---------------------- --------------------------------------- Date Ron K. Taylor Acting Chief Financial Officer of McNeil Investors, Inc. August 14, 1996 By: /s/ Brandon K. Flaming - ----------------------- ---------------------------------------- Date Brandon K. Flaming Chief Accounting Officer of McNeil Real Estate Management, Inc. EX-27 2
5 6-MOS DEC-31-1996 JUN-30-1996 2,686,044 0 186,439 0 0 0 65,254,682 (38,343,937) 33,005,601 0 39,456,796 0 0 0 0 33,005,601 7,329,367 7,387,996 0 0 5,090,947 0 1,909,949 0 0 387,100 0 0 0 387,100 0 0
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