2014 Q2 Form 10-K Financial Statement

#000119312515094027 Filed on March 16, 2015

View on sec.gov

Income Statement

Concept 2014 Q2 2014 2013 Q4
Revenue $96.59M $547.4M $52.20M
YoY Change 64.76% 137.31% -16.62%
Cost Of Revenue $82.86M $177.8M $50.61M
YoY Change 49.47% -19.29% -14.42%
Gross Profit $13.73M $369.6M $1.588M
YoY Change 330.96% 3464.03% -54.2%
Gross Profit Margin 14.21% 67.52% 3.04%
Selling, General & Admin $14.03M $80.24M $18.30M
YoY Change -4.39% 131.29% -29.89%
% of Gross Profit 102.23% 21.71% 1152.39%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $800.0K $11.07M $12.00M
YoY Change -84.91% -53.81% 50.0%
% of Gross Profit 5.83% 2.99% 755.67%
Operating Expenses $97.68M $561.4M $30.30M
YoY Change 39.32% 108.07% 3.41%
Operating Profit -$116.0K -$13.99M -$18.03M
YoY Change -98.99% -64.25% 10.11%
Interest Expense $1.012M $12.35M -$1.500M
YoY Change 20140.0% 154237.5% -126.79%
% of Operating Profit
Other Income/Expense, Net $702.0K
YoY Change -186.24%
Pretax Income -$583.0K -$34.56M -$24.30M
YoY Change -119.26% 37.92% -10.66%
Income Tax $1.946M -$22.87M -$4.400M
% Of Pretax Income
Net Earnings -$3.561M -$14.39M -$15.80M
YoY Change -102.59% -112.89% 73.63%
Net Earnings / Revenue -3.69% -2.63% -30.27%
Basic Earnings Per Share -$0.24 -$0.83 -$1.11
Diluted Earnings Per Share -$0.24 -$0.83 -$1.11
COMMON SHARES
Basic Shares Outstanding 16.91M shares 19.73M shares 14.22M shares
Diluted Shares Outstanding 16.91M shares 19.73M shares 14.22M shares

Balance Sheet

Concept 2014 Q2 2014 2013 Q4
SHORT-TERM ASSETS
Cash & Short-Term Investments $40.80M $108.0M $9.000M
YoY Change -76.17% 1100.0% -61.21%
Cash & Equivalents $40.83M $108.0M $8.997M
Short-Term Investments
Other Short-Term Assets $63.30M $50.60M $40.60M
YoY Change 208.78% 24.63% 600.0%
Inventory $16.99M $15.00M $0.00
Prepaid Expenses
Receivables $138.0M $151.6M $18.98M
Other Receivables $300.0K $0.00 $0.00
Total Short-Term Assets $269.4M $325.1M $74.90M
YoY Change -32.21% 373.91% -13.83%
LONG-TERM ASSETS
Property, Plant & Equipment $83.23M $239.9M $2.962M
YoY Change 12067.54% 7896.67% -95.47%
Goodwill $27.91M $3.378M
YoY Change -94.44%
Intangibles
YoY Change
Long-Term Investments $800.0K $53.50M
YoY Change
Other Assets $6.568M $46.50M $6.440M
YoY Change 350.17% 263.28% -73.53%
Total Long-Term Assets $122.3M $398.9M $12.78M
YoY Change 5607.89% 1988.48% -94.04%
TOTAL ASSETS
Total Short-Term Assets $269.4M $325.1M $74.90M
Total Long-Term Assets $122.3M $398.9M $12.78M
Total Assets $391.8M $724.0M $87.68M
YoY Change -1.96% 725.54% -70.89%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $51.25M $79.80M $6.964M
YoY Change 1040.0% -43.0%
Accrued Expenses $41.60M $72.90M $19.50M
YoY Change 914.63% 273.85% -22.92%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due $36.78M $10.40M $0.00
YoY Change -70.87% -100.0%
Total Short-Term Liabilities $192.1M $205.6M $31.70M
YoY Change -4.64% 664.31% -59.58%
LONG-TERM LIABILITIES
Long-Term Debt $49.17M $332.9M $0.00
YoY Change -100.0%
Other Long-Term Liabilities $1.028M $32.90M $1.571M
YoY Change 406.4% 414.06% 65.89%
Total Long-Term Liabilities $50.20M $365.8M $1.571M
YoY Change 24628.08% 5615.63% 65.89%
TOTAL LIABILITIES
Total Short-Term Liabilities $192.1M $205.6M $31.70M
Total Long-Term Liabilities $50.20M $365.8M $1.571M
Total Liabilities $250.1M $594.5M $33.27M
YoY Change 24.03% 1685.29% -85.7%
SHAREHOLDERS EQUITY
Retained Earnings -$38.28M -$29.77M
YoY Change -134.5% 28.34%
Common Stock $119.7M $98.61M
YoY Change 20.48% 0.06%
Preferred Stock
YoY Change
Treasury Stock (at cost) $378.0K $378.0K
YoY Change 0.0% 0.0%
Treasury Stock Shares 31.63K shares 31.63K shares
Shareholders Equity $66.90M $129.5M $54.41M
YoY Change
Total Liabilities & Shareholders Equity $391.8M $724.0M $87.68M
YoY Change -1.96% 725.54% -70.89%

Cashflow Statement

Concept 2014 Q2 2014 2013 Q4
OPERATING ACTIVITIES
Net Income -$3.561M -$14.39M -$15.80M
YoY Change -102.59% -112.89% 73.63%
Depreciation, Depletion And Amortization $800.0K $11.07M $12.00M
YoY Change -84.91% -53.81% 50.0%
Cash From Operating Activities $3.800M $5.744M -$5.600M
YoY Change -150.0% -128.27% 1766.67%
INVESTING ACTIVITIES
Capital Expenditures $600.0K $5.819M $600.0K
YoY Change -82.86% -53.73% -90.91%
Acquisitions $146.0M
YoY Change 36682.37%
Other Investing Activities -$87.00M $0.00 $0.00
YoY Change -151.24% -100.0% -100.0%
Cash From Investing Activities -$87.60M -$148.9M -$600.0K
YoY Change -152.68% -157.68% -45.45%
FINANCING ACTIVITIES
Cash Dividend Paid $777.0K
YoY Change -99.35%
Common Stock Issuance & Retirement, Net $6.000M $6.000M
YoY Change 418.13%
Debt Paid & Issued, Net $148.7M
YoY Change 16.11%
Cash From Financing Activities 111.4M $244.1M -100.0K
YoY Change -16014.29% -197.62% -99.76%
NET CHANGE
Cash From Operating Activities 3.800M $5.744M -5.600M
Cash From Investing Activities -87.60M -$148.9M -600.0K
Cash From Financing Activities 111.4M $244.1M -100.0K
Net Change In Cash 27.60M $101.0M -6.300M
YoY Change -82.53% -922.8% -85.55%
FREE CASH FLOW
Cash From Operating Activities $3.800M $5.744M -$5.600M
Capital Expenditures $600.0K $5.819M $600.0K
Free Cash Flow $3.200M -$75.00K -$6.200M
YoY Change -128.83% -99.77% -10.14%

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CY2013 us-gaap Unrecognized Tax Benefits Decreases Resulting From Foreign Currency Translation
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-171000
CY2013 us-gaap Income Tax Reconciliation Change In Deferred Tax Assets Valuation Allowance
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6642000
CY2013 hchc Income Tax Reconciliation Contingent Value Rights
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-5216000
CY2013 hchc Income Tax Reconciliation Uk Sterwardship Costs
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1455000
CY2013 hchc Income Tax Reconciliation Reversing Deferred Taxes
IncomeTaxReconciliationReversingDeferredTaxes
-365000
CY2014 us-gaap Business Acquisition Date Of Acquisition Agreement1
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2014-05-29
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CY2014 us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
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CY2014 us-gaap Equity Method Investment Description Of Principal Activities
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Investments in non-wholly-owned companies are generally consolidated if the Company's interest exceeds 50% or if the Company has the power to direct the economic activities of the entity and the obligation to absorb losses, or accounted for under the equity method of accounting when the Company exercises significant influence over the venture.
CY2014 us-gaap Segment Reporting Disclosure Of Major Customers
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The Company has no single customer representing greater than 10% of its revenues.
CY2014 dei Document Type
DocumentType
10-K
CY2014 dei Entity Registrant Name
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HC2 Holdings, Inc.
CY2014 dei Entity Well Known Seasoned Issuer
EntityWellKnownSeasonedIssuer
No
CY2014 dei Trading Symbol
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HCHC
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CY2014 us-gaap Nature Of Operations
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<div> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"> <b>1. ORGANIZATION AND BUSINESS</b></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%"> On April&#xA0;9, 2014, we changed our name from PTGi Holding, Inc. to HC2 Holdings, Inc. (&#x201C;HC2&#x201D; and, together with its subsidiaries, the &#x201C;Company&#x201D;, &#x201C;we&#x201D; and &#x201C;our&#x201D;). The name change was effected pursuant to Section&#xA0;253 of the General Corporation Law of the State of Delaware by the merger of our wholly owned subsidiary, HC2 Name Change, Inc., into us. In connection with the name change, we changed the ticker symbol of our common stock from &#x201C;PTGI&#x201D; to &#x201C;HCHC&#x201D;.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> On May&#xA0;29, 2014, the Company completed the acquisition of 2.5&#xA0;million shares of common stock of Schuff International, Inc. (&#x201C;Schuff&#x201D;), a steel fabrication and erection company, and negotiated an agreement to purchase an additional 198,411 shares, representing an approximately 65% interest in Schuff. The aggregate consideration for the shares of Schuff acquired was approximately $85 million, which was funded using the net proceeds from (i)&#xA0;the issuance of $30 million of Series A Convertible Participating Preferred Stock of HC2 (the &#x201C;Series A Preferred Stock&#x201D;) and $6 million of common stock of HC2, and (ii)&#xA0;the entry into a senior secured credit facility providing for an eighteen month, floating interest rate term loan of $80 million (the &#x201C;May Credit Facility&#x201D;), each of which was also completed on May&#xA0;29, 2014. Schuff repurchased a portion of its outstanding common stock in June 2014, which had the effect of increasing the Company&#x2019;s ownership interest to 70%. During the fourth quarter, the final results of a tender offer for all outstanding shares of Schuff were announced and various open-market purchases were made, which resulted in the acquisition of 809,043 shares and an increase in our ownership interest to 91%. We intend to execute a short-form merger, which will increase our ownership of Schuff shares to 100%.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> Schuff and its wholly-owned subsidiaries primarily operate as integrated fabricators and erectors of structural steel and heavy steel plates with headquarters in Phoenix, Arizona and operations in Arizona, Georgia, Texas, Kansas and California. Schuff&#x2019;s construction projects are primarily in the aforementioned states. In addition, Schuff has construction projects in select international markets, primarily Panama. Schuff has a 49% interest in Schuff Hopsa Engineering, Inc. (&#x201C;SHE&#x201D;), a Panamanian joint venture with Empresas Hopsa, S.A., that provides steel fabrication services. Schuff controls the operations of SHE, as provided in the operating agreement. Therefore, the assets, liabilities, revenues and expenses of SHE are included in the consolidated financial statements of Schuff. Empresas Hopsa, S.A.&#x2019;s 51% interest in SHE is presented as a noncontrolling interest component of total equity.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> On August&#xA0;1, 2014, the Company paid $15.5 million to acquire 15,500 shares of Series A Convertible Preferred Stock of American Natural Gas (&#x201C;ANG&#x201D;), representing an approximately 51% interest in ANG. ANG is a premier distributor of natural gas motor fuel headquartered in the Northeast that designs, builds, owns, acquires, operates and maintains compressed natural gas fueling stations for transportation.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> On September&#xA0;22, 2014, the Company completed the acquisition of Bridgehouse Marine Limited (&#x201C;Bridgehouse&#x201D;), the parent holding company of Global Marine Systems Limited (&#x201C;GMSL&#x201D;). The purchase price reflects an enterprise value of approximately $260 million, including assumed indebtedness, and was funded using a portion of the net proceeds from (i)&#xA0;the issuance of $11 million of Series A-1 Convertible Participating Preferred Stock of HC2 (the &#x201C;Series A-1 Preferred Stock&#x201D;) and (ii)&#xA0;a senior secured credit facility providing for a twelve month, floating interest rate term loan of $214 million and a delayed draw term loan of $36&#xA0;million (the &#x201C;September Credit Facility&#x201D;), each of which was also completed on September&#xA0;22, 2014. The September Credit Facility was subsequently repaid using the proceeds from HC2&#x2019;s issuance of its 11% Notes discussed below under Note 9&#x2014;&#x201C;Long-Term Obligations&#x201D;. With a portion of the proceeds from the September Credit Facility, the Company paid off its May Credit Facility and its senior unsecured credit facility consisting of a term loan of $17&#xA0;million entered into on September&#xA0;8, 2014 (the &#x201C;Novatel Acquisition Term Loan&#x201D;) for the purpose of acquiring an ownership interest in Novatel Wireless, Inc. GMSL is a leading provider of engineering and underwater services on submarine cables. In conjunction with the acquisition, approximately 3% of the Company&#x2019;s interest in GMSL was purchased by a group of individuals, leaving the Company&#x2019;s controlling interest as of December&#xA0;31, 2014 at approximately 97%.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> We have historically operated a telecommunications business including a network of direct routes and provided premium voice communication services for national telecom operators, mobile operators, wholesale carriers, prepaid operators, Voice over Internet Protocol (&#x201C;VoIP&#x201D;) service operators and Internet service providers (&#x201C;ISPs&#x201D;). The Company has provided telecommunications service from its North America Telecom and International Carrier Services (&#x201C;ICS&#x201D;) business units. In the second quarter of 2013, the Company entered into a definitive purchase agreement to sell its North America Telecom business and sought shareholder approval of such transaction. On July&#xA0;31, 2013, the Company completed the initial closing of the sale of substantially all of its North&#xA0;America Telecom business. The sale of Primus Telecommunications, Inc. (&#x201C;PTI&#x201D;) was also contemplated as part of this transaction, and subject to regulatory approval. On July&#xA0;31, 2014, having received the necessary regulatory approvals for the sale of PTI, we completed the divestiture of the remainder of our North America Telecom business.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> In our Life Sciences segment, we operate Pansend, LLC (&#x201C;Pansend&#x201D;), which has an 80% interest in Genovel Orthopedics, Inc., which seeks to develop products to treat early osteoarthritis of the knee, and a 61% interest in GemDerm Aesthetics, Inc., which develops skin lightening technology.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> Additionally, we acquired a 100% ownership interest in DMi, Inc. (&#x201C;DMi&#x201D;) which owns licenses to create and distribute NASCAR<sup style="FONT-SIZE: 85%; VERTICAL-ALIGN: top">&#xAE;</sup> video games.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> During 2013, we also provided data center services in Canada through our BLACKIRON Data business unit. On April&#xA0;17, 2013, we consummated the divestiture of BLACKIRON Data. During 2012, we sold our Australian segment.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> The Company currently has six reportable operating segments based on management&#x2019;s organization of the enterprise&#x2014;Manufacturing (Schuff), Marine Services (GMSL), Utilities (ANG), Telecommunications (ICS), Life Sciences and Other, which includes operations that do not meet the separately reportable segment thresholds.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> HC2 was formed as a corporation under the laws of Delaware in 1994 and operates as a holding company of operating subsidiaries primarily in the United States and the United Kingdom.</p> </div>
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2019-04-30
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CY2014 us-gaap Use Of Estimates
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<div> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> <i>Use of Estimates</i>&#x2014;The preparation of consolidated financial statements in conformity with U.S.&#xA0;GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of net revenue and expenses during the reporting period. Actual results may differ from these estimates. Significant estimates include allowance for doubtful accounts receivable, the extent of progress towards completion on contracts, contract revenue and costs on long-term contracts, market assumptions used in estimating the fair values of certain assets and liabilities, the calculation used in determining the fair value of HC2&#x2019;s stock options required by ASC No.&#xA0;718, &#x201C;Compensation&#x2014;Stock Compensation&#x201D; (&#x201C;ASC&#xA0;718&#x201D;), income taxes and various other contingencies.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> Estimates of fair value represent the Company&#x2019;s best estimates developed with the assistance of independent appraisals or various valuation techniques and, where the foregoing have not yet been completed or are not available, industry data and trends and by reference to relevant market rates and transactions. The estimates and assumptions are inherently subject to significant uncertainties and contingencies beyond the control of the Company. Accordingly, the Company cannot provide assurance that the estimates, assumptions, and values reflected in the valuations will be realized, and actual results could vary materially.</p> </div>
CY2014 dei Document Period End Date
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2014-12-31
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CY2014 dei Entity Central Index Key
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CY2014 us-gaap Loss Contingency Lawsuit Filing Date
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2014-11-17
CY2014 dei Document Fiscal Period Focus
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CY2014 us-gaap Concentration Risk Credit Risk
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<div> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> <i>Concentration of Credit Risk</i>&#x2014;Financial instruments that potentially subject the Company to concentration of credit risk principally consist of trade accounts receivable. The Company performs ongoing credit evaluations of its customers but generally does not require collateral to support customer receivables. The Company maintains its cash with high quality credit institutions, and its cash equivalents are in high quality securities.</p> </div>
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CY2014 dei Entity Current Reporting Status
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CY2013Q2 us-gaap Income Loss From Continuing Operations Including Portion Attributable To Noncontrolling Interest
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2921000
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CostOfServices
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CY2013Q3 us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
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CY2013Q3 us-gaap Discontinued Operation Gain Loss On Disposal Of Discontinued Operation Net Of Tax Per Basic Share
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CY2013Q3 us-gaap Income Loss From Continuing Operations Per Diluted Share
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CY2013Q3 us-gaap Income Loss From Discontinued Operations Net Of Tax Per Basic Share
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CY2013Q3 us-gaap Weighted Average Number Of Diluted Shares Outstanding
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14077000 shares
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CY2013Q3 us-gaap Income Loss From Continuing Operations Per Basic Share
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1.11
CY2013Q3 us-gaap Weighted Average Number Of Shares Outstanding Basic
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CY2013Q3 us-gaap Discontinued Operation Gain Loss On Disposal Of Discontinued Operation Net Of Tax
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CY2014Q3 us-gaap Revenues
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CY2014Q3 us-gaap Net Income Loss Available To Common Stockholders Basic
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CY2012Q4 us-gaap Escrow Deposit Disbursements Related To Property Acquisition1
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5400000
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CY2013Q4 us-gaap Weighted Average Number Of Diluted Shares Outstanding
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CY2013Q4 us-gaap Discontinued Operation Gain Loss On Disposal Of Discontinued Operation Net Of Tax
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CY2013Q4 us-gaap Sales Revenue Services Net
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CY2013Q4 us-gaap Income Loss From Continuing Operations Including Portion Attributable To Noncontrolling Interest
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50611000

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