-----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, F+VtgmXn7Bis6H7dI3QuqxHKNBLLiUc3zln2fdS27cqKk/uQ/qGa90HqV9QujaBU X0Dz6dvyH4+xdqN0X28aEw== 0000950152-01-001385.txt : 20010322 0000950152-01-001385.hdr.sgml : 20010322 ACCESSION NUMBER: 0000950152-01-001385 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010321 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010321 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KROGER CO CENTRAL INDEX KEY: 0000056873 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 310345740 STATE OF INCORPORATION: OH FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-00303 FILM NUMBER: 1573925 BUSINESS ADDRESS: STREET 1: 1014 VINE ST CITY: CINCINNATI STATE: OH ZIP: 45201 BUSINESS PHONE: 5137624000 8-K 1 l87270ae8-k.txt THE KROGER CO. CURRENT REPORT ON FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: March 21, 2001 THE KROGER CO. (Exact name of registrant as specified in its charter) An Ohio Corporation No. 1-303 31-0345740 (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) Number) 1014 Vine Street Cincinnati, OH 45201 (Address of principal executive offices) Registrant's telephone number: (513) 762-4000 2 Item 5. Other Events On March 15, 2001, the Company was advised by Deloitte & Touche LLP ("D&T") that D&T declined to reissue and consent to the inclusion of its report, dated March 10, 1999, on the Fred Meyer, Inc. consolidated statements of income, changes in stockholder's equity and cash flows for the fiscal year ended January 30, 1999, in the Company's Annual Report on Form 10-K for the year ended February 3, 2001. Fred Meyer, Inc. is a consolidated subsidiary of the Company that was acquired in May 1999 in a transaction that was accounted for as a pooling of interest. D&T has not conducted any audit procedures at the Company or Fred Meyer, Inc. subsequent to the date of its March 10, 1999 audit report; however, D&T has consented to the reissuance of its March 10, 1999 audit report from time to time subsequent to that date, most recently in the Company's Form S-8 dated September 15, 2000. The Company's current auditors, PricewaterhouseCoopers LLP ("PwC") have referred to the report of D&T on its audits of Fred Meyer, Inc. for the periods audited by D&T, as a basis, in part, for its reports on the consolidated financial statements of the Company. In connection with the Company's current request that D&T consent to the reissuance of its report dated March 10, 1999, the Company advised D&T that it believed that the financial statements of Fred Meyer, Inc. and subsidiaries as of and for the year ended January 30, 1999, as originally issued, should be restated as a result of certain improper accounting practices at its Ralphs Grocery Company subsidiary, which was acquired as a part of the Company's merger with Fred Meyer in May 1999. D&T advised the Company that it believes the work required to review the proposed changes would constitute a reaudit of Ralphs. D&T further advised the Company that it would not be in a position to perform such audit procedures because it could not ensure whether it was currently independent of the Company due to the extended period of time since it had served as auditors of Fred Meyer, Inc. The Company's current auditors, PwC, have been engaged to perform the reaudit of the Fred Meyer, Inc. financial statements for fiscal year 1998, necessary to complete the restatement. 3 Item 9. Regulation FD Disclosure Upon completion of restated comparative financial statements for the first, second, and third fiscal quarters of 2000, and for fiscal years 1999 and 1998, Kroger will file same with the SEC on amended Forms 10-Q and 10-K, or other appropriate forms. Attached hereto as Exhibit 99.1 are Kroger's preliminary restated financial statements for the first, second, and third fiscal quarters of 2000 and 1999. While these statements reflect Kroger's current beliefs as to the nature of the restatement, they should not be relied on for any purpose. Kroger's actual restated financial statements could materially differ from the preliminary statements, primarily due to accounting work to be performed by PricewaterhouseCoopers LLP in connection with the reaudit of Fred Meyer, Inc. for fiscal year 1998. 4 SIGNATURE 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 hereto duly authorized. THE KROGER CO. March 21, 2001 By: /s/ Paul Heldman ---------------------------- Paul Heldman Senior Vice President, Secretary and General Counsel 5 EXHIBIT INDEX Exhibit No. Exhibit - ----------- ------- 99.1 Preliminary restated financial statements. EX-99.1 2 l87270aex99-1.txt EXHIBIT 99.1 1 EXHIBIT 99.1 THE KROGER CO. AND SUBSIDIARIES PRELIMINARY CONSOLIDATED STATEMENTS OF EARNINGS-AS RESTATED WITHOUT ONE-TIME ITEMS (in millions, except per share amounts) (unaudited)
First Quarter Ended ----------------------- May 20, May 22, 2000 1999 ------- ------- Sales ........................................................................ $14,329 $13,493 Merchandise costs, including advertising, warehousing, and transportation..... 10,485 9,951 Operating, general and administrative ........................................ 2,676 2,468 Rent ......................................................................... 208 199 Depreciation and amortization ................................................ 307 281 ------- ------- Operating profit ........................................................ 653 594 Interest expense ............................................................. 206 199 ------- ------- Earnings before income tax expense ...................................... 447 395 Income tax expense ........................................................... 177 160 ------- ------- Net earnings ............................................................ $ 270 $ 235 ======= ======= Basic earnings per common share: Net earnings ....................................................... $ 0.33 $ 0.28 ------- ------- Average number of common shares used in basic calculation .................... 831 827 Diluted earnings per common share: Net earnings ....................................................... $ 0.32 $ 0.27 ------- ------- Average number of common shares used in diluted calculation .................. 850 863 OTHER INCOME STATEMENT INFORMATION One-time items excluded from merchandise costs ............................... $ 15 $ 6 One-time items excluded from operating, general and administrative costs ..... $ 66 $ -- LIFO charge .................................................................. $ 12 $ 12 Gross profit rate excluding LIFO charge ...................................... 26.91% 26.34% Operating, general and administrative costs as a % to sales .................. 18.68% 18.29%
2 THE KROGER CO. AND SUBSIDIARIES PRELIMINARY CONSOLIDATED STATEMENT OF EARNINGS-AS RESTATED WITH ONE-TIME ITEMS (in millions, except per share amounts) (unaudited)
First Quarter Ended ------------------------ May 20, May 22, 2000 1999 -------- ------- Sales ............................................................... $14,329 $13,493 ------- ------- Merchandise costs, including advertising, warehousing, and transportation .................................................... 10,500 9,957 Operating, general and administrative ............................... 2,742 2,468 Rent ................................................................ 208 199 Depreciation and amortization ....................................... 307 281 Asset impairment charges ............................................ 191 -- Merger related costs ................................................ 9 35 ------- ------- Operating profit .................................................. 372 553 Interest expense .................................................... 206 199 ------- ------- Earnings before income tax expense ................................ 166 354 Income tax expense .................................................. 67 143 ------- ------- Net Earnings ...................................................... $ 99 $ 211 ------- ------- Earnings per basic common share: Net earnings ................................................... $ 0.12 $ 0.26 ------- ------- Average number of common shares used in basic calculation ........... 831 827 Earnings per diluted common share: Net earnings ................................................... $ 0.12 $ 0.25 ------- ------- Average number of common shares used in diluted calculation ......... 850 863 OTHER INCOME STATEMENT INFORMATION Gross profit rate excluding LIFO charge ................................... 26.81% 26.29% Operating, general and administrative costs as a % to sales ............... 19.14% 18.29%
3 THE KROGER CO. AND SUBSIDIARIES PRELIMINARY CONSOLIDATED BALANCE SHEET-AS RESTATED (in millions, except per share amounts) (unaudited)
May 20, January 29, 2000 2000 -------- ----------- ASSETS Current assets Cash ........................................................ $ 163 $ 281 Receivables ................................................. 622 636 Inventories ................................................. 3,903 3,938 Prepaid and other current assets ............................ 435 690 ------- ------- Total current assets .................................... 5,123 5,545 Property, plant and equipment, net ............................. 8,351 8,266 Goodwill, net .................................................. 3,682 3,718 Other assets ................................................... 430 403 ------- ------- Total Assets ............................................ $17,586 $17,932 ======= ======= LIABILITIES Current liabilities Current portion of long-term debt ........................... $ 536 $ 536 Accounts payable ............................................ 2,994 2,773 Salaries and wages .......................................... 657 695 Other current liabilities ................................... 1,577 1,660 ------- ------- Total current liabilities ............................... 5,764 5,664 Long-term debt ................................................. 7,619 8,045 Other long-term liabilities .................................... 1,607 1,542 ------- ------- Total Liabilities ....................................... 14,990 15,251 ------- ------- Commitments and contingent liabilities ......................... -- -- SHAREOWNERS' EQUITY Preferred stock, $100 par, 5 shares authorized and unissued ................................................ -- -- Common stock, $1 par, 1,000 shares authorized: 888 shares issued in 2000 and 885 shares issued in 1999 ....................... 888 885 Additional paid-in capital ..................................... 2,044 2,023 Retained earnings .............................................. 330 230 Common stock in treasury, at cost, 61 shares in 2000 and 50 shares in 1999 ........................................... (666) (457) ------- ------- Total Shareowners' Equity ............................... 2,596 2,681 ------- ------- Total Liabilities and Shareowners' Equity ............... $17,586 $17,932 ======= =======
4 THE KROGER CO. AND SUBSIDIARIES PRELIMINARY CONSOLIDATED STATEMENTS OF EARNINGS-AS RESTATED WITHOUT ONE-TIME ITEMS (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
Second Quarter Ended Two Quarters Ended ----------------------- ----------------------- August 12, August 14, August 12, August 14, 2000 1999 2000 1999 ---------- ---------- ---------- ---------- Sales .......................................................................... $11,017 $10,289 $25,346 $23,782 Merchandise costs, including advertising, warehousing, and transportation ...... 8,047 7,576 18,532 17,527 Operating, general and administrative .......................................... 2,062 1,888 4,738 4,356 Rent ........................................................................... 148 137 356 336 Depreciation and amortization .................................................. 234 216 541 497 ------- ------- ------- ------- Operating profit .......................................................... 526 472 1,179 1,066 Interest expense ............................................................... 155 143 361 342 ------- ------- ------- ------- Earnings before income tax expense and extraordinary loss ................. 371 329 818 724 Income tax expense ............................................................. 145 131 322 291 ------- ------- ------- ------- Earnings before extraordinary loss ........................................ 226 198 496 433 Extraordinary loss, net of income tax benefit .................................. (2) (10) (2) (10) ------- ------- ------- ------- Net earnings .............................................................. $ 224 $ 188 $ 494 $ 423 ======= ======= ======= ======= Basic earnings per common share: Earnings before extraordinary loss ........................................ $ 0.27 $ 0.24 $ 0.60 $ 0.52 Extraordinary loss ........................................................ -- (0.01) -- (0.01) ------- ------- ------- ------- Net earnings .......................................................... $ 0.27 $ 0.23 $ 0.60 $ 0.51 ======= ======= ======= ======= Average number of common shares used in basic calculation ...................... 824 829 828 828 Diluted earnings per common share: Earnings before extraordinary loss ........................................ $ 0.27 $ 0.23 $ 0.58 $ 0.50 Extraordinary loss ........................................................ -- (0.01) -- (0.01) ------- ------- ------- ------- Net earnings .......................................................... $ 0.27 $ 0.22 $ 0.58 $ 0.49 ======= ======= ======= ======= Average number of common shares used in diluted calculation .................... 847 860 849 861 OTHER INCOME STATEMENT INFORMATION One-time items excluded from merchandise costs ................................. $ 4 $ 12 $ 19 $ 18 One-time items excluded from operating, general and administrative costs........ $ 4 $ 17 $ 70 $ 17 LIFO charge .................................................................... $ 4 $ -- $ 16 $ 12 Gross profit rate excluding LIFO charge ........................................ 26.99% 26.37% 26.94% 26.35% Operating, general and administrative costs as a % to sales .................... 18.72% 18.34% 18.70% 18.31%
5 THE KROGER CO. AND SUBSIDIARIES PRELIMINARY CONSOLIDATED STATEMENT OF EARNINGS-AS RESTATED WITH ONE-TIME ITEMS (in millions, except per share amounts) (unaudited)
Second Quarter Ended Two Quarters Ended ------------------------- -------------------------- August 12, August 14, August 12, August 14, 2000 1999 2000 1999 ---------- ---------- ---------- ---------- Sales ..................................................... $11,017 $10,289 $25,346 $23,782 ------- ------- ------- ------- Merchandise costs, including advertising, warehousing, and transportation ...................................... 8,051 7,588 18,551 17,545 Operating, general and administrative ..................... 2,066 1,905 4,808 4,373 Rent ...................................................... 148 137 356 336 Depreciation and amortization ............................. 234 216 541 497 Asset impairment charges .................................. -- -- 191 -- Merger related costs ...................................... 2 200 11 235 ------- ------- ------- ------- Operating profit ........................................ 516 243 888 796 Interest expense .......................................... 155 143 361 342 ------- ------- ------- ------- Earnings before income tax expense and extraordinary loss 361 100 527 454 Income tax expense ........................................ 151 47 218 190 ------- ------- ------- ------- Earnings before extraordinary loss ...................... $ 210 $ 53 $ 309 $ 264 Extraordinary loss, net of income tax benefit ............. (2) (10) (2) (10) ------- ------- ------- ------- Net earnings ............................................ $ 208 $ 43 $ 307 $ 254 ======= ======= ======= ======= Earnings per basic common share: Earnings before extraordinary loss ...................... $ 0.25 $ 0.06 $ 0.37 $ 0.32 Extraordinary loss ...................................... -- (0.01) -- (0.01) ------- ------- ------- ------- Net earnings ......................................... $ 0.25 $ 0.05 $ 0.37 $ 0.31 ======= ======= ======= ======= Average number of common shares used in basic calculation.. 824 829 828 828 Earnings per diluted common share: Earnings before extraordinary loss ...................... $ 0.25 $ 0.06 $ 0.36 $ 0.31 Extraordinary loss ...................................... -- (0.01) -- (0.01) ------- ------- ------- ------- Net earnings ......................................... $ 0.25 $ 0.05 $ 0.36 $ 0.30 ======= ======= ======= ======= Average number of common shares used in diluted calculation 847 860 849 861 OTHER INCOME STATEMENT INFORMATION Gross profit rate excluding LIFO charge ................... 26.96% 26.25% 26.87% 26.27% Operating, general and administrative costs as a % to sales ......................................... 18.75% 18.51% 18.97% 18.39%
6 THE KROGER CO. AND SUBSIDIARIES PRELIMINARY CONSOLIDATED BALANCE SHEET-AS RESTATED (in millions, except per share amounts) (unaudited)
August 12, January 29, 2000 2000 ---------- ----------- ASSETS Current assets Cash.................................................................. $ 155 $ 281 Receivables........................................................... 583 636 Inventories........................................................... 3,795 3,938 Prepaid and other current assets...................................... 261 690 ------- ------- Total current assets.............................................. 4,794 5,545 Property, plant and equipment, net....................................... 8,525 8,266 Goodwill, net............................................................ 3,683 3,718 Other assets............................................................. 312 403 ------- ------- Total assets...................................................... $17,314 $17,932 ======= ======= LIABILITIES Current liabilities Current portion of long-term debt..................................... $ 586 $ 536 Accounts payable...................................................... 2,908 2,773 Accrued salaries and wages............................................ 638 695 Other current liabilities............................................. 1,675 1,660 ------- ------- Total current liabilities......................................... 5,807 5,664 Long-term debt........................................................... 7,222 8,045 Other long-term liabilities.............................................. 1,564 1,542 ------- ------- Total liabilities................................................. 14,593 15,251 ------- ------- Commitments and contingent liabilities -- -- SHAREOWNERS' EQUITY Preferred stock, $100 par, 5 shares authorized and unissued.......................................................... -- -- Common stock, $1 par, 1,000 shares authorized: 888 shares issued in 2000 and 885 shares issued in 1999................................. 888 885 Additional paid-in capital............................................... 2,063 2,023 Retained earnings........................................................ 538 230 Common stock in treasury, at cost, 66 shares in 2000 and 50 shares in 1999..................................................... (768) (457) ------- ------- Total shareowners' equity......................................... 2,721 2,681 ------- ------- Total liabilities and shareowners' equity......................... $17,314 $17,932 ======= =======
7 THE KROGER CO. AND SUBSIDIARIES PRELIMINARY CONSOLIDATED STATEMENTS OF EARNINGS-AS RESTATED WITHOUT ONE-TIME ITEMS (in millions, except per share amounts) (unaudited)
Third Quarter Ended Three Quarters Ended ------------------------- ------------------------- November 4, November 6, November 4, November 6, 2000 1999 2000 1999 ----------- ----------- ----------- ----------- Sales ........................................................................ $10,962 $10,329 $36,308 $34,111 Merchandise costs, including advertising, warehousing, and transportation..... 8,039 7,585 26,571 25,112 Operating, general and administrative ........................................ 2,013 1,902 6,751 6,258 Rent ......................................................................... 147 153 503 489 Depreciation and amortization ................................................ 234 217 775 714 ------- ------- ------- ------- Operating profit ........................................................ 529 472 1,708 1,538 Interest expense ............................................................. 146 143 508 485 ------- ------- ------- ------- Earnings before income tax expense and extraordinary loss ............... 383 329 1,200 1,053 Income tax expense ........................................................... 150 129 472 420 ------- ------- ------- ------- Earnings before extraordinary loss ...................................... 233 200 728 633 Extraordinary loss, net of income tax benefit ................................ (2) -- (3) (10) ------- ------- ------- ------- Net earnings ............................................................ $ 231 $ 200 $ 725 $ 623 ======= ======= ======= ======= Basic earnings per common share: Earnings before extraordinary loss ...................................... $ 0.28 $ 0.24 $ 0.88 $ 0.76 Extraordinary loss ...................................................... -- -- -- (0.01) ------- ------- ------- ------- Net earnings ........................................................ $ 0.28 $ 0.24 $ 0.88 $ 0.75 ======= ======= ======= ======= Average number of common shares used in basic calculation .................... 821 832 825 829 Diluted earnings per common share: Earnings before extraordinary loss ...................................... $ 0.28 $ 0.23 $ 0.86 $ 0.74 Extraordinary loss ...................................................... -- -- -- (0.01) ------- ------- ------- ------- Net earnings ........................................................ $ 0.28 $ 0.23 $ 0.86 $ 0.73 ======= ======= ======= ======= Average number of common shares used in diluted calculation .................. 845 857 848 860 OTHER INCOME STATEMENT INFORMATION One-time items excluded from merchandise costs ............................... $ 8 $ 18 $ 27 $ 36 One-time items excluded from operating, general and administrative costs ..... $ 24 $ 6 $ 94 $ 23 LIFO (credit)/charge ......................................................... $ (6) $ (6) $ 10 $ 6 Gross profit rate excluding LIFO (credit)/charge ............................. 26.61% 26.51% 26.84% 26.40% Operating, general and administrative costs as a % to sales .................. 18.36% 18.42% 18.60% 18.34%
8 THE KROGER CO. AND SUBSIDIARIES PRELIMINARY CONSOLIDATED STATEMENT OF EARNINGS-AS RESTATED WITH ONE-TIME ITEMS (in millions, except per share amounts) (unaudited)
Third Quarter Ended Three Quarters Ended ------------------------ -------------------------- November 4, November 6, November 4, November 6, 2000 1999 2000 1999 ----------- ---------- ----------- ----------- Sales......................................................................... $10,962 $10,329 $36,308 $34,111 ------- ------- ------- ------- Merchandise costs, including advertising, warehousing, and transportation..... 8,047 7,603 26,598 25,148 Operating, general and administrative......................................... 2,037 1,908 6,846 6,281 Rent.......................................................................... 147 153 503 489 Depreciation and amortization................................................. 234 217 775 714 Asset impairment charges...................................................... -- -- 191 -- Merger related costs.......................................................... 2 69 13 304 ------- ------- ------- ------- Operating profit............................................................ 495 379 1,382 1,175 Interest expense.............................................................. 146 143 508 485 ------- ------- ------- ------- Earnings before income tax expense and extraordinary loss................... 348 236 874 690 Income tax expense............................................................ 146 109 364 299 ------- ------- ------- ------- Earnings before extraordinary loss.......................................... $ 203 $ 127 $ 510 $ 391 Extraordinary loss, net of income tax benefit................................. (2) -- (3) (10) ------- ------- ------- ------- Net earnings ............................................................... $ 201 $ 127 $ 507 $ 381 ======= ======= ======= ======= Earnings per basic common share: Earnings before extraordinary loss.......................................... $ 0.25 $ 0.15 $ 0.62 $ 0.47 Extraordinary loss.......................................................... -- -- (0.01) ------- ------- ------- ------- Net earnings ............................................................ $ 0.25 $ 0.15 $ 0.62 $ 0.46 ======= ======= ======= ======= Average number of common shares used in basic calculation..................... 821 832 825 829 Earnings per diluted common share: Earnings before extraordinary loss.......................................... $ 0.24 $ 0.15 $ 0.60 $ 0.45 Extraordinary loss ......................................................... -- -- -- (0.01) ------- ------- ------- ------- Net earnings............................................................. $ 0.24 $ 0.15 $ 0.60 $ 0.44 ======= ======= ======= ======= Average number of common shares used in diluted calculation................... 845 857 848 860 OTHER INCOME STATEMENT INFORMATION Gross profit rate excluding LIFO (credit)/charge ............................. $ 26.54% $ 26.33% $ 26.77% $ 26.29% Operating, general and administrative costs as a % to sales .................. 18.59% 18.47% 18.85% 18.41%
9 THE KROGER CO. AND SUBSIDIARIES PRELIMINARY CONSOLIDATED BALANCE SHEET-AS RESTATED (in millions, except per share amounts) (unaudited)
November 4, January 29, 2000 2000 ----------- ----------- ASSETS Current assets Cash ............................................................. $ 131 $ 281 Receivables ...................................................... 629 636 Inventories ...................................................... 4,412 3,938 Prepaid and other current assets ................................. 197 690 ------- ------- Total current assets ......................................... 5,369 5,545 Property, plant and equipment, net .................................. 8,689 8,266 Goodwill, net ....................................................... 3,664 3,718 Other assets ........................................................ 344 403 ------- ------- Total assets ................................................. $18,066 $17,932 ======= ======= LIABILITIES Current liabilities Current portion of long-term debt ................................ $ 309 $ 536 Accounts payable ................................................. 3,272 2,773 Accrued salaries and wages ....................................... 651 695 Other current liabilities ........................................ 1,731 1,660 ------- ------- Total current liabilities .................................... 5,963 5,664 Long-term debt ...................................................... 7,746 8,045 Other long-term liabilities ......................................... 1,528 1,542 ------- ------- Total liabilities ............................................ 15,237 15,251 ------- ------- Commitments and contingent liabilities .............................. -- -- SHAREOWNERS' EQUITY Preferred stock, $100 par, 5 million shares authorized and unissued ..................................................... -- -- Common stock, $1 par, 1 billion shares authorized: 889 million shares issued in 2000 and 885 million shares issued in 1999 ............. 889 885 Additional paid-in capital .......................................... 2,073 2,023 Retained earnings ................................................... 738 230 Common stock in treasury, at cost, 71 million shares in 2000 and 50 million shares in 1999 ........................................ (871) (457) ------- ------- Total shareowners' equity .................................... 2,829 2,681 ------- ------- Total liabilities and shareowners' equity .................... $18,066 $17,932 ======= =======
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