0001193125-14-316489.txt : 20140821 0001193125-14-316489.hdr.sgml : 20140821 20140821080659 ACCESSION NUMBER: 0001193125-14-316489 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20140821 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20140821 DATE AS OF CHANGE: 20140821 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PATTERSON COMPANIES, INC. CENTRAL INDEX KEY: 0000891024 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MEDICAL, DENTAL & HOSPITAL EQUIPMENT & SUPPLIES [5047] IRS NUMBER: 410886515 STATE OF INCORPORATION: MN FISCAL YEAR END: 0426 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20572 FILM NUMBER: 141056578 BUSINESS ADDRESS: STREET 1: 1031 MENDOTA HEIGHTS RD CITY: ST PAUL STATE: MN ZIP: 55120-1401 BUSINESS PHONE: 6516861600 MAIL ADDRESS: STREET 1: 1031 MENDOTA HEIGHTS RD CITY: ST PAUL STATE: MN ZIP: 55120-1401 FORMER COMPANY: FORMER CONFORMED NAME: PATTERSON DENTAL CO DATE OF NAME CHANGE: 19950111 8-K 1 d778317d8k.htm 8-K 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report August 21, 2014

 

 

PATTERSON COMPANIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Minnesota   0-20572   41-0886515

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

1031 Mendota Heights Road

St. Paul, Minnesota 55120

(Address of Principal Executive Offices, including Zip Code)

(651) 686-1600

(Registrant’s Telephone Number, including Area Code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ 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))

 

 

 


Item 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On August 21, 2014 Patterson Companies, Inc. issued a press release announcing its financial results for the first quarter of fiscal year 2015 ended July 26, 2014. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.

Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d) EXHIBITS

 

99.1    Press release of Patterson Companies, Inc., dated August 21, 2014.


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 hereunto duly authorized.

 

    PATTERSON COMPANIES, INC.
Date: August 21, 2014     By:  

/s/ R. Stephen Armstrong

      R. Stephen Armstrong
      Executive Vice President, Treasurer and Chief Financial Officer
      (Principal Financial Officer and Principal Accounting Officer)


EXHIBIT INDEX

 

Exhibit
Number

  

Description

99.1    Press release of Patterson Companies, Inc., dated August 21, 2014.
EX-99.1 2 d778317dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

Patterson Companies Reports Fiscal 2015 First Quarter Operating Results

 

    Diluted EPS of $0.50, up more than 11 percent from the prior year;

 

    National Veterinary Services Limited (NVS) acquisition contributed $174 million to consolidated sales and $0.02 per diluted share to net earnings;

 

    Solid growth in sales of consumables in both the dental and veterinary businesses; and

 

    Company reaffirms prior guidance for fiscal 2015 of $2.20 to $2.30 per diluted share.

St. Paul, Minn—August 21, 2014—Patterson Companies, Inc. (Nasdaq: PDCO) today reported that consolidated sales totaled $1,059.5 million in its fiscal first quarter, ended July 26, 2014, an increase of more than 20 percent from $880.1 million in the year-earlier period. Net income was $50.3 million, or $0.50 per diluted share, compared to net income of $45.9 million, or $0.45 per diluted share, in the year-ago period. Fiscal 2015 first quarter results included $173.6 million of consolidated sales and an earnings contribution of $0.02 per diluted share from the acquisition in the United Kingdom of National Veterinary Services Limited (NVS), which closed on August 16, 2013.

“We are pleased with the trends we saw in the fiscal first quarter and the business generally performed within our expectations,” said Scott Anderson, chairman and chief executive officer. “With the actions we took in fiscal 2014 to increase our efficiency, coupled with the long-term investments we are making to build on our capabilities, we believe we have better positioned the company for success through fiscal 2015 and for the long-term. Aided by the investments, we are focused on improving our execution against those strategies to generate consistent performance and maximize shareholder value.”

Patterson Dental

During the fiscal 2015 first quarter, the Dental unit generated sales growth in both consumables and basic equipment. Sales for Patterson Dental improved slightly from the year earlier period, on a constant currency basis, to $556.0 million, while the negative impact of currency exchange reduced reported sales to $552.7 million. Patterson Dental comprised a little more than half of total company sales in the period. By category, again on a constant currency basis, versus the year-ago quarter, sales of:

 

    Consumable dental supplies rose 2.5 percent;

 

    Dental equipment declined 7.3 percent overall, but rose by high-single digits excluding CEREC trade-ups in the prior year; and

 

    Other services and products, consisting primarily of technical service, parts and labor, software support services and artificial teeth, increased 7.8 percent.

Anderson stated: “In the fiscal first quarter we saw positive trends in sales of dental consumables. We are the proven leader in the dental equipment market, offering best-in-class technology and basic equipment that is wrapped with Patterson’s industry-leading after-sales support platform. We saw this continue to play out during the first quarter as we performed well in new unit sales of the CEREC Omnicam® and basic dental equipment. Growth in these product categories did not offset the successful Omnicam trade-up program from the prior fiscal year. We remain confident in the growth prospects for our dental equipment for fiscal 2015.”

(more)


Patterson Veterinary

First quarter fiscal 2015 sales for the Veterinary unit increased nearly 94 percent from the prior year period to $386.3 million. Patterson Veterinary now constitutes more than one-third of the company’s total sales. U.S. sales, which exclude NVS, were up nearly 7 percent from the previous year, totaling approximately $212.8 million. For U.S. veterinary sales, versus the year-ago first quarter:

 

    Consumable sales totaled $201.5 million, up more than 7 percent from prior year levels;

 

    Equipment sales declined slightly to $7.4 million; and

 

    Other services and products, consisting primarily of technical service, parts and labor, and software support services, increased nearly 12 percent.

Anderson said, “We saw strong growth in consumable sales, reflecting an improved selling environment in North America, as well as the addition of new product lines. We also continue to be very pleased with NVS, our U.K.-based veterinary business, and its contribution to our performance. First quarter results for that business exceeded our expectations and were aided by a more intense flea and tick season in the U.K. We are confident that we will continue to take advantage of the growth opportunities that result from our expanded geographic footprint.”

Patterson Medical

Sales for Patterson Medical, the rehabilitation supply and equipment business, totaled $120.6 million in the fiscal first quarter. During fiscal 2014, the company divested certain non-core assets in this segment. Excluding the impact from these divestitures, year-over-year sales performance was essentially flat. Patterson Medical represented a little more than 11 percent of total company sales.

Commented Anderson: “Fiscal first quarter performance in our medical business was in line with our expectations. With the divestitures behind us and a new management team in place, we are positioned to execute on our growth strategies. We have aligned our business around those areas with strategic value and where we have core competency. We are confident in our future success.”

Share Repurchases and Dividends

During the fiscal 2015 first quarter, Patterson repurchased approximately 1.1 million shares of its outstanding common stock, with a value of $43.9 million, leaving approximately 21 million shares for repurchase under the current authorization. The company also paid $20 million in cash dividends to shareholders.

Business Outlook

Commented Anderson: “We are maintaining our earnings guidance range for fiscal 2015 of $2.20-$2.30 per diluted share. We believe that the recent change announced by IDEXX Laboratories, Inc., to move to a direct sales and distribution model in the veterinary market effective January 1, 2015, does not materially impact our fiscal 2015 outlook and we expect to mitigate the potential reduction in net income from this move. Again, this year we are focused on execution in order to capitalize on the growth opportunities that will come from the investments we are making and the strategies we are implementing to further enhance our product and service offering.”

First Quarter Conference Call and Replay

Patterson’s fiscal first quarter earnings conference call will start at 10 a.m. Eastern today. A slide presentation reviewing the company’s operational performance for the quarter and a link to the audio webcast will be posted at www.pattersoncompanies.com. The conference call will be

 

(more)


archived on Patterson’s website. The first-quarter fiscal 2015 earnings conference call replay will be available beginning at 12 p.m. CT (1:00 p.m. ET) today, through 12:00 p.m. CT (1:00 p.m. ET) on Thursday, August 28, 2014. Interested persons may dial 888-203-1112 and provide the Conference ID 1392199, when prompted.

About Patterson Companies, Inc.

Patterson Companies, Inc. is a value-added distributor serving the dental, companion-pet veterinarian and rehabilitation supply markets.

Dental Market

As Patterson’s largest business, Patterson Dental provides a virtually complete range of consumable dental products, equipment and software, turnkey digital solutions and value-added services to dentists and dental laboratories throughout North America.

Veterinary Market

Patterson Veterinary is a leading distributor in the U.S. and U.K. of consumable veterinary supplies, equipment and software, diagnostic products, vaccines and pharmaceuticals predominantly to companion-pet veterinary clinics.

Rehabilitation Market

Patterson Medical is the world’s leading distributor of rehabilitation supplies and non-wheelchair assistive patient products to the physical and occupational therapy markets. The unit’s global customer base includes hospitals, long-term care facilities, clinics and dealers.

This release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are information of a non-historical nature and are subject to risks and uncertainties that are beyond the Company’s ability to control. The Company cautions shareholders and prospective investors that the following factors, among others, may cause actual results to differ materially from those indicated by the forward-looking statements: competition within the dental, veterinary, and rehabilitative and assistive living supply industries; changes in the economics of dentistry, including reduced growth in expenditures by private dental insurance plans, the effects of economic conditions and the effects of healthcare reform, which may affect future per capita expenditures for dental services and the ability and willingness of dentists to invest in high-technology products; the effects of healthcare related legislation and regulation which may affect expenditures or reimbursements for rehabilitative and assistive products; changes in the economics of the veterinary supply market, including reduced growth in per capita expenditures for veterinary services and reduced growth in the number of households owning pets; the ability of the Company to maintain satisfactory relationships with its sales force; unexpected loss of key senior management personnel; unforeseen operating risks; risks associated with the dependence on manufacturers of the Company’s products; potential disruptions in our operations during our enterprise resource planning implementation; and the ability of the Company to successfully integrate the recent acquisitions into its existing business. Forward-looking statements are qualified in their entirety by the cautionary language set forth in the Company’s filings with the Securities and Exchange Commission.

For additional information contact:

 

Ann Gugino    R. Stephen Armstrong

Vice President, Planning and Strategy

   Executive Vice President & CFO

651-686-1600

   651-686-1600

 

(more)


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for per share amounts)

(Unaudited)

 

     Three Months Ended  
     July 26,     July 27,  
     2014     2013  

Net sales

   $ 1,059,529      $ 880,125   

Gross profit

     296,225        281,518   

Operating expenses

     211,471        200,237   
  

 

 

   

 

 

 

Operating income

     84,754        81,281   

Other expense, net

     (7,266     (9,124
  

 

 

   

 

 

 

Income before taxes

     77,488        72,157   

Income taxes

     27,199        26,265   
  

 

 

   

 

 

 

Net income

   $ 50,289      $ 45,892   
  

 

 

   

 

 

 

Earnings per share:

    

Basic

   $ 0.51      $ 0.45   

Diluted

   $ 0.50      $ 0.45   

Shares:

    

Basic

     99,329        101,027   

Diluted

     100,182        101,919   

Dividends declared per common share

   $ 0.20      $ 0.16   

Gross margin—adjusted

     32.3     32.0

NVS

     -4.3        —     
  

 

 

   

 

 

 

Gross margin—reported

     28.0     32.0

Operating expenses as a % of net sales—adjusted

     23.2     22.8

NVS

     -3.2        —     
  

 

 

   

 

 

 

Operating expenses as a % of net sales—reported

     20.0     22.8

Operating income as a % of net sales—adjusted

     9.1     9.2

NVS

     -1.1        —     
  

 

 

   

 

 

 

Operating income as a % of net sales—reported

     8.0     9.2

Effective tax rate—adjusted

     35.6     36.4

NVS

     -0.5        —     
  

 

 

   

 

 

 

Effective tax rate—reported

     35.1     36.4

 

(more)


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

     July 26,      April 26,  
     2014      2014  
     (Unaudited)         

ASSETS

     

Current assets:

     

Cash and short term investments

   $ 302,347       $ 305,683   

Receivables, net

     564,458         607,580   

Inventory

     518,857         436,463   

Prepaid expenses and other current assets

     59,524         65,991   
  

 

 

    

 

 

 

Total current assets

     1,445,186         1,415,717   

Property and equipment, net

     214,453         204,939   

Goodwill and other intangible assets

     1,064,411         1,067,583   

Investments and other

     175,122         176,438   
  

 

 

    

 

 

 

Total Assets

   $ 2,899,172       $ 2,864,677   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 388,171       $ 342,056   

Other accrued liabilities

     190,395         201,407   
  

 

 

    

 

 

 

Total current liabilities

     578,566         543,463   

Long-term debt

     725,000         725,000   

Other non-current liabilities

     123,105         124,550   
  

 

 

    

 

 

 

Total liabilities

     1,426,671         1,393,013   

Stockholders’ equity

     1,472,501         1,471,664   
  

 

 

    

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 2,899,172       $ 2,864,677   
  

 

 

    

 

 

 

 

(more)


PATTERSON COMPANIES, INC.

SUPPLEMENTARY FINANCIAL DATA

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended  
     July 26,     July 27,  
     2014     2013  

Consolidated Net Sales

    

Consumable and printed products 1

   $ 796,777      $ 609,949   

Equipment and software 1

     179,429        196,143   

Other

     83,323        74,033   
  

 

 

   

 

 

 

Total

   $ 1,059,529      $ 880,125   
  

 

 

   

 

 

 

Dental Supply

    

Consumable and printed products 1

   $ 334,338      $ 328,008   

Equipment and software 1

     148,783        161,825   

Other

     69,533        64,400   
  

 

 

   

 

 

 

Total

   $ 552,654      $ 554,233   
  

 

 

   

 

 

 

Veterinary Supply

    

Consumable and printed products

   $ 370,886      $ 188,201   

Equipment and software

     7,611        8,063   

Other

     7,805        3,419   
  

 

 

   

 

 

 

Total

   $ 386,302      $ 199,683   
  

 

 

   

 

 

 

Rehabilitation Supply

    

Consumable and printed products

   $ 91,553      $ 93,740   

Equipment and software

     23,035        26,255   

Other

     5,985        6,214   
  

 

 

   

 

 

 

Total

   $ 120,573      $ 126,209   
  

 

 

   

 

 

 

Operating Income

    

Dental Supply

   $ 53,213      $ 55,490   

Veterinary Supply

     13,987        9,047   

Rehabilitation Supply

     17,554        16,744   
  

 

 

   

 

 

 
   $ 84,754      $ 81,281   
  

 

 

   

 

 

 

Other (Expense) Income, net

    

Interest income

   $ 1,561      $ 1,161   

Interest expense

     (8,768     (8,567

Other

     (59     (1,718
  

 

 

   

 

 

 
   $ (7,266   $ (9,124
  

 

 

   

 

 

 

 

1  Certain products, primarily dental handpieces, were reclassed from equipment to consumables in current and prior periods

 

(more)


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended  
     July 26,     July 27,  
     2014     2013  

Operating activities:

    

Net income

   $ 50,289      $ 45,892   

Depreciation & amortization

     11,491        10,976   

Non-cash employee compensation

     6,412        4,462   

Change in assets and liabilities, net of acquired

     578        (40,205
  

 

 

   

 

 

 

Net cash provided by operating activities

     68,770        21,125   

Investing activities:

    

Additions to property and equipment, net of disposals

     (16,681     (5,564

Proceeds from sale

     5,594        —     

Purchase of investments

     (359     —     
  

 

 

   

 

 

 

Net Cash used in investing activities

     (11,446     (5,564

Financing activities:

    

Dividends paid

     (20,062     (29,773

Share repurchases

     (42,877     (22,199

Draw on revolver

     130,000        135,000   

Payment on revolver

     (130,000     —     

Retirement of long-term debt

     —          —     

Other financing activities

     (811     1,732   
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (63,750     84,760   

Effect of exchange rate changes on cash

     2,258        (2,180
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

   $ (4,168   $ 98,141   
  

 

 

   

 

 

 

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