2016 Q4 Form 10-Q Financial Statement

#000082667516000071 Filed on November 07, 2016

View on sec.gov

Income Statement

Concept 2016 Q4 2016 Q3 2015 Q4
Revenue $22.90M $21.10M $25.50M
YoY Change -10.2% -19.16% 4.94%
Cost Of Revenue $6.800M $6.100M $5.800M
YoY Change 17.24% 3.39% 1.75%
Gross Profit $16.10M $15.10M $19.70M
YoY Change -18.27% -25.25% 5.91%
Gross Profit Margin 70.31% 71.56% 77.25%
Selling, General & Admin $3.600M $3.400M $4.300M
YoY Change -16.28% -22.73% 2.38%
% of Gross Profit 22.36% 22.52% 21.83%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $300.0K $300.0K $1.200M
YoY Change -75.0% -76.92% -36.84%
% of Gross Profit 1.86% 1.99% 6.09%
Operating Expenses $3.600M $2.700M $4.200M
YoY Change -14.29% -41.3% 0.0%
Operating Profit $12.50M $12.40M $15.50M
YoY Change -19.35% -20.51% 7.64%
Interest Expense $6.753M $6.068M $5.833M
YoY Change 15.77% 3.57% 3.2%
% of Operating Profit 54.02% 48.94% 37.63%
Other Income/Expense, Net -$1.000K $579.0K $174.0K
YoY Change -100.57% -390.95% -1123.53%
Pretax Income $69.10M $14.70M $32.50M
YoY Change 112.62% -139.73% 778.38%
Income Tax
% Of Pretax Income
Net Earnings $69.10M $14.70M $32.50M
YoY Change 112.62% -139.75% 778.38%
Net Earnings / Revenue 301.75% 69.67% 127.45%
Basic Earnings Per Share
Diluted Earnings Per Share $4.213M $896.3K $1.982M
COMMON SHARES
Basic Shares Outstanding 49.15M shares 49.15M shares 49.17M shares
Diluted Shares Outstanding

Balance Sheet

Concept 2016 Q4 2016 Q3 2015 Q4
SHORT-TERM ASSETS
Cash & Short-Term Investments $74.10M $73.40M $33.90M
YoY Change 118.58% 482.54% -22.78%
Cash & Equivalents $74.12M $73.41M $33.94M
Short-Term Investments
Other Short-Term Assets
YoY Change
Inventory
Prepaid Expenses
Receivables $32.40M $29.10M $29.00M
Other Receivables $0.00 $0.00 $0.00
Total Short-Term Assets $106.5M $102.5M $62.90M
YoY Change 69.32% 129.82% -13.24%
LONG-TERM ASSETS
Property, Plant & Equipment
YoY Change
Goodwill
YoY Change
Intangibles
YoY Change
Long-Term Investments $0.00 $0.00 $10.84M
YoY Change -100.0% -100.0% 170.88%
Other Assets $24.80M $84.70M $51.20M
YoY Change -51.56% 8.31% 21.04%
Total Long-Term Assets $3.291B $3.241B $3.607B
YoY Change -8.76% -16.55% -0.24%
TOTAL ASSETS
Total Short-Term Assets $106.5M $102.5M $62.90M
Total Long-Term Assets $3.291B $3.241B $3.607B
Total Assets $3.398B $3.344B $3.670B
YoY Change -7.42% -14.88% -0.5%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable
YoY Change
Accrued Expenses $3.200M $2.200M $1.700M
YoY Change 88.24% 46.67% -10.53%
Deferred Revenue
YoY Change
Short-Term Debt $2.899B $2.741B $3.109B
YoY Change -6.77% -17.18% 3.2%
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $2.915B $2.756B $3.125B
YoY Change -6.73% -17.13% 3.11%
LONG-TERM LIABILITIES
Long-Term Debt $6.400M $7.000M $8.400M
YoY Change -23.81% -18.6% -22.22%
Other Long-Term Liabilities $9.700M $85.90M $44.70M
YoY Change -78.3% 29.56% 13.16%
Total Long-Term Liabilities $16.10M $92.90M $53.10M
YoY Change -69.68% 24.03% 5.57%
TOTAL LIABILITIES
Total Short-Term Liabilities $2.915B $2.756B $3.125B
Total Long-Term Liabilities $16.10M $92.90M $53.10M
Total Liabilities $2.931B $2.849B $3.178B
YoY Change -7.79% -16.23% 3.15%
SHAREHOLDERS EQUITY
Retained Earnings -$338.1M -$394.5M -$330.7M
YoY Change 2.23% 12.97% 14.77%
Common Stock $727.4M $727.2M $725.8M
YoY Change 0.21% -1.09% -5.05%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $467.2M $494.9M $492.0M
YoY Change
Total Liabilities & Shareholders Equity $3.398B $3.344B $3.670B
YoY Change -7.42% -14.88% -0.5%

Cashflow Statement

Concept 2016 Q4 2016 Q3 2015 Q4
OPERATING ACTIVITIES
Net Income $69.10M $14.70M $32.50M
YoY Change 112.62% -139.75% 778.38%
Depreciation, Depletion And Amortization $300.0K $300.0K $1.200M
YoY Change -75.0% -76.92% -36.84%
Cash From Operating Activities $52.90M $51.40M $54.50M
YoY Change -2.94% -4.99% -0.73%
INVESTING ACTIVITIES
Capital Expenditures
YoY Change
Acquisitions
YoY Change
Other Investing Activities -$256.9M $61.40M $165.1M
YoY Change -255.6% -62.33% 73.06%
Cash From Investing Activities -$256.9M $61.40M $165.1M
YoY Change -255.6% -62.33% 73.06%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 178.4M -136.3M -189.3M
YoY Change -194.24% -47.78% 16.13%
NET CHANGE
Cash From Operating Activities 52.90M 51.40M 54.50M
Cash From Investing Activities -256.9M 61.40M 165.1M
Cash From Financing Activities 178.4M -136.3M -189.3M
Net Change In Cash -25.60M -23.50M 30.30M
YoY Change -184.49% -46.47% -338.58%
FREE CASH FLOW
Cash From Operating Activities $52.90M $51.40M $54.50M
Capital Expenditures
Free Cash Flow
YoY Change

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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Organization</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Dynex Capital, Inc., ("Company&#8221;) was incorporated in the Commonwealth of Virginia on December 18, 1987 and commenced operations in February 1988. The Company primarily earns income from investing on a leveraged basis in mortgage-backed securities ("MBS") that are issued or guaranteed by the U.S. Government or U.S. Government sponsored agencies ("Agency MBS") and MBS issued by others ("non-Agency MBS").</font></div></div>
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Recent Accounting Pronouncements</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Leases</font><font style="font-family:inherit;font-size:10pt;">, which includes the following amendments:</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:24px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">for operating and finance leases, a lessee is required to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments in its consolidated balance sheet;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:24px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">for finance leases, a lessee is required to recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of comprehensive income;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:24px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">for finance leases, a lessee is required to classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:24px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">for operating leases, a lessee is required to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis in the statement of comprehensive income; and</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:24px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">for operating leases, a lessee is required to classify all cash payments within operating activities in the statement of cash flows.</font></div></td></tr></table><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Under the new guidance, lessor accounting is largely unchanged. ASU No. 2016-02 is effective for public companies for fiscal years beginning after December 15, 2018, and early adoption is permitted. The Company does not expect this ASU to have a material impact on the Company's consolidated financial statements.</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The FASB issued ASU No. 2016-09, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Compensation - Stock Compensation,</font><font style="font-family:inherit;font-size:10pt;"> which simplifies several aspects of the accounting for share-based payment award transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement cash flows. The amendments are effective for public companies for fiscal years beginning after December 15, 2016, and early adoption is permitted. The Company does not expect this ASU to have a material impact on the Company's consolidated financial statements.</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The FASB issued ASU No. 2016-13, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Financial Instruments - Credit Losses,</font><font style="font-family:inherit;font-size:10pt;"> which replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For assets measured at amortized cost, the amendments in this ASU eliminate the probable initial recognition threshold in current GAAP and broaden the information that an entity must consider in developing its expected credit loss estimate to include the use of forecasted information. For assets classified as available-for-sale with changes in fair value recorded in other comprehensive income, measurement of credit losses will be similar to current GAAP. However, the amendments in this ASU require that credit losses be presented as an allowance rather than as a write-down, which is referred to in current GAAP as an other-than-temporary impairment. An entity will be able to record reversals of credit losses, if credit loss estimates decline, in net income for the current period. The amendments in this ASU will not permit an entity to use the length of time a debt security has been in an unrealized loss position to avoid recording a credit loss and removes the requirements to consider historical and implied volatility of the fair value of a security as well as recoveries or declines in fair value after the balance sheet date. The amendments in this ASU will affect an entity by varying degrees depending on the credit quality of the assets held by the entity, their duration, and how the entity applies current GAAP. These amendments will become effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption will be permitted as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. An entity will apply the amendments in this ASU through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company does not currently anticipate this ASU having an impact on its consolidated financial statements.</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The FASB issued ASU No. 2016-15, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Statement of Cash Flows (Topic 320) - Classification of Certain Cash Receipts and Cash Payments, </font><font style="font-family:inherit;font-size:10pt;">in order to provide guidance for eight cash flow classification issues which are either unclear or do not have specific guidance under current GAAP. The issues identified are as follows:</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:24px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">debt prepayment or debt extinguishment costs;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:24px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates insignificant in relation to the effective interest rate of the borrowing;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:24px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">contingent consideration payments made after a business combination;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:24px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">proceeds from the settlement of insurance claims;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:24px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">proceeds from settlement of corporate-owned life insurance policies;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:24px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">distributions received from equity method investees;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:24px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">beneficial interests in securitization transactions; and</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:24px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">separately identifiable cash flows and application of the predominance principle.</font></div></td></tr></table><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The amendments in this ASU will become effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and early adoption is permitted. The amendments in this ASU should be applied using a retrospective transition method to each period presented. The Company does not expect this ASU to have a material impact on the Company's consolidated financial statements.</font></div></div>
us-gaap Reclassifications
Reclassifications
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Reclassifications</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Certain items in the prior periods' consolidated financial statements have been reclassified to conform to the current period's presentation. The Company's equity in income of limited partnership for the </font><font style="font-family:inherit;font-size:10pt;">three and nine months ended</font><font style="font-family:inherit;font-size:10pt;"> </font><font style="font-family:inherit;font-size:10pt;">September&#160;30, 2015</font><font style="font-family:inherit;font-size:10pt;"> is now included within "other income (expense), net" on the Company's consolidated statements of comprehensive income. This presentation change has no effect on reported total assets, total liabilities, results of operations, or cash flow activities.</font></div></div>
us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Use of Estimates</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenue and expenses during the reported period.&#160;Actual results could differ from those estimates.&#160;The most significant estimates used by management include, but are not limited to, fair value measurements of its investments, other-than-temporary impairments, contingencies, and amortization of premiums and discounts. These items are discussed further below within this note to the consolidated financial statements.</font></div><div style="line-height:120%;text-align:right;font-size:8pt;"><font style="font-family:inherit;font-size:8pt;"><br clear="none"/></font></div></div>

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