Power Corporation of Canada - Financial results for 2009 and dividends
Readers are referred to the sections entitled "Forward-looking Statements" and "Non-GAAP Financial Measures" at the end of this release.
MONTREAL, March 11 /CNW Telbec/ - Power Corporation of Canada reported today operating earnings of $867 million or $1.81 per participating share for the year ended December 31, 2009, compared with $1,271 million or $2.70 per share in 2008.
The decrease in operating earnings reflects a lower contribution from Power Financial Corporation and also reflects a lower level of income from investments compared with 2008.
Other items, not included in operating earnings, were a net charge of $185 million or $0.41 per share in 2009. Other items in the period in 2009 include the Corporation's share of other items recorded by Power Financial, discussed below, as well as a non-cash impairment charge of $110 million related to the Corporation's investment in CITIC Pacific.
In 2008, other items, not included in operating earnings, were a net charge of $403 million or $0.89 per share. Other items in the period in 2008 include the Corporation's share of other items recorded by Power Financial, as well as other items recorded by the Corporation and by Power Technology Investment Corporation, a subsidiary.
As a result, net earnings were $682 million or $1.40 per share in 2009, compared with $868 million or $1.81 per share in 2008.
FOURTH-QUARTER RESULTS
----------------------
The Corporation's operating earnings for the three-month period ended December 31, 2009 were $203 million or $0.42 per share, compared with $252 million or $0.53 per share in the same period in 2008.
Other items in the fourth quarter of 2009 were a net charge of $149 million or $0.32 per share, consisting mainly of the non-cash impairment charge on CITIC Pacific, compared with a net charge of $787 million or $1.73 per share in the same period in 2008, as described below.
As a result, net earnings for the fourth quarter of 2009 were $54 million or $0.10 per share, compared with a net loss of $535 million or $1.20 per share for the same period in 2008.
RESULTS OF POWER FINANCIAL CORPORATION
--------------------------------------
Power Financial Corporation's operating earnings for the year ended December 31, 2009 were $1,533 million or $2.05 per share, compared with $1,974 million or $2.69 per share in 2008.
The decrease in operating earnings reflects primarily the decrease in the contribution from the Power Financial's subsidiaries and Parjointco.
Other items, not included in operating earnings, were a net charge of $94 million or $0.13 per share in 2009, compared with a net charge of $637 million or $0.90 in 2008. Other items in 2009 essentially consisted of the share of non-recurring amounts recorded by IGM and Pargesa. The main components of other items in 2009 included a non-cash impairment charge of $66 million after tax on available for sale equity securities related to the market environment, a non-cash income tax benefit of $18 million resulting from decreases in Ontario corporate income tax rates and their effect on the future income tax liability related to indefinite life intangible assets arising from the acquisition of Mackenzie Financial Corporation in 2001, and a premium of $14 million paid on the redemption of the Series A preferred shares on December 31, 2009 recorded by IGM. Also, other items in 2009 included the charge resulting from the adjustment of the carrying value of Pernod Ricard and Iberdrola recorded by Pargesa in the first quarter of 2009.
The main components of other items in 2008 included the write-down of intangible assets and goodwill relating to the acquisition of Putnam in 2007 for an amount of $983 million; the gain from the sale of health business at Great-West Life & Annuity for an amount of $472 million, and the write-down of Pargesa's investments in Lafarge and Pernod Ricard for an amount of $328 million for 2008.
As a result, net earnings were $1,439 million or $1.92 per share in 2009, compared with $1,337 million or $1.79 per share in 2008.
Power Financial's operating earnings for the three-month period ended December 31, 2009 were $384 million or $0.51 per share, compared with $434 million or $0.59 per share in the same period in 2008.
Other items in the fourth quarter of 2009 were a charge of $44 million or $0.06 per share, compared with a charge of $1,207 million or $1.71 per share in the same period in 2008. The 2009 charge consists mainly of non-operating items of IGM. The 2008 charge is mainly composed of the write-down of intangible assets and goodwill relating to the acquisition of Putnam and the write-down of certain of Pargesa's investments, as discussed above.
As a result, net earnings for the fourth quarter of 2009 were $340 million or $0.45 per share, compared with a net loss of $773 million or $1.12 per share for the same period in 2008.
DIVIDENDS ON PREFERRED SHARES
-----------------------------
The Board of Directors today declared quarterly dividends on the Corporation's preferred shares, as follows:
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Type of
Shares Record Date Payment Date Amount
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1986 Series March 25, 2010 April 15, 2010 To be determined in
accordance with the
articles of the
Corporation
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Series A March 25, 2010 April 15, 2010 35 cents
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Series B March 25, 2010 April 15, 2010 33.4375 cents
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Series C March 25, 2010 April 15, 2010 36.25 cents
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Series D March 25, 2010 April 15, 2010 31.25 cents
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DIVIDENDS ON PARTICIPATING SHARES
---------------------------------
The Board of Directors also declared a quarterly dividend of 29 cents on the Participating Preferred and Subordinate Voting Shares of the Corporation, payable March 31, 2010 to shareholders of record March 23, 2010.
For purposes of the Income Tax Act (Canada) and any similar provincial legislation, all of the above dividends of the Corporation's preferred and subordinate voting shares are eligible dividends.
Forward-looking Statements
--------------------------
Certain statements in this press release, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect the Corporation's and its subsidiaries' current expectations. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Corporation's financial position and results of operations as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and the reader is cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of the Corporation and its subsidiaries, as well as the outlook for North American and international economies, for the current fiscal year and subsequent periods. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "plans", "believes", "estimates", "seeks", "intends", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could".
By its nature, this information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, many of which are beyond the Corporation's and its subsidiaries' control, affect the operations, performance and results of the Corporation and its subsidiaries and their businesses, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, management of market liquidity and funding risks, changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates) the effect of applying future accounting changes (including adoption of International Financial Reporting Standards), business competition, operational and reputational risks, technological change, changes in government regulation and legislation, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, the Corporation's and its subsidiaries' ability to complete strategic transactions, integrate acquisitions and implement other growth strategies, and the Corporation's and its subsidiaries' success in anticipating and managing the foregoing factors.
The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements. Information contained in forward-looking statements is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including that the foregoing list of factors, collectively, are not expected to have a material impact on the Corporation and its subsidiaries. While the Corporation considers these assumptions to be reasonable base on information currently available to management, they may prove to be incorrect.
Other than as specifically required by law, the Corporation undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.
Additional information about the risks and uncertainties of the Corporation's business is provided in its disclosure materials, including its most recent Management's Discussion and Analysis and Annual Information Form, filed with the securities regulatory authorities in Canada, available at www.sedar.com.
Non-GAAP Financial Measures
---------------------------
In analysing the financial results of the Corporation and consistent with the presentation in previous years, net earnings are subdivided into the following components:
- operating earnings; and
- other items, which include the after-tax impact of any item that
management considers to be of a non recurring nature or that could make
the period-over-period comparison of results from operations less
meaningful, and also include the Corporation's share of any such item
presented in a comparable item manner by its subsidiaries.
Management has used these financial measures for many years in its presentation and analysis of the financial performance of Power Corporation, and believes that they provide additional meaningful information to readers in their analysis of the results of the Corporation.
Following the announcement in 2007 of GWL&A's sale of its health care business, which closed on April 1, 2008, the results from Lifeco's U.S. health care business are presented in the consolidated financial statements as "discontinued operations", in accordance with GAAP. Power Corporation's share of these results is included in operating earnings, while the Corporation's share of the gain realized on the sale is included in other items.
Operating earnings and operating earnings per share are non-GAAP financial measures that do not have a standard meaning and may not be comparable to similar measures used by other entities.
Attachments: Financial Information
POWER CORPORATION OF CANADA
CONSOLIDATED BALANCE SHEETS
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As at December 31
(in millions of Canadian dollars) 2009 2008
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Assets
Cash and cash equivalents 5,385 5,323
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Investments
Shares 7,463 6,098
Bonds 67,942 66,943
Mortgages and other loans 17,356 18,034
Loans to policyholders 6,957 7,622
Real estate 3,101 3,190
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102,819 101,887
Funds held by ceding insurers 10,839 11,447
Investments at equity 2,677 2,820
Intangible assets 4,502 4,794
Goodwill 8,760 8,712
Future income taxes 1,281 1,796
Other assets 6,744 6,921
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143,007 143,700
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Liabilities
Policy liabilities
Actuarial liabilities 98,059 97,895
Other 4,592 4,732
Deposits and certificates 907 959
Funds held under reinsurance contracts 186 192
Debentures and other borrowings 6,375 5,745
Preferred shares of subsidiaries 660 1,569
Capital trust securities and debentures 540 658
Future income taxes 1,136 808
Other liabilities 6,402 7,405
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118,857 119,963
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Non-controlling interests 14,321 13,980
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Shareholders' Equity
Stated capital
Non-participating shares 787 791
Participating shares 526 509
Contributed surplus 117 103
Retained earnings 8,742 8,612
Accumulated other comprehensive income (loss) (343) (258)
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9,829 9,757
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143,007 143,700
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For additional information, refer to the 2009 Audited Consolidated
Financial Statements.
CONSOLIDATED STATEMENTS OF EARNINGS
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Three months ended For the years
December 31 ended
(unaudited) December 31
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(in millions of Canadian dollars,
except per share amounts) 2009 2008 2009 2008
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Revenues
Premium income 4,324 4,782 18,033 30,007
Net investment income
Regular net investment income 1,388 1,472 6,254 6,262
Change in fair value on
held-for-trading assets (566) (359) 3,453 (5,148)
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822 1,113 9,707 1,114
Fee and media income 1,467 1,366 5,412 5,978
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6,613 7,261 33,152 37,099
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Expenses
Policyholder benefits,
dividends and experience
refunds, and change in
actuarial liabilities 4,283 4,815 23,809 26,774
Commissions 579 526 2,088 2,172
Operating expenses 1,069 1,057 4,153 4,147
Financing charges 112 76 523 445
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6,043 6,474 30,573 33,538
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570 787 2,579 3,561
Share of earnings (losses)
of investments at equity 1 (2) 136 169
Other income (charges), net (128) (2,401) (180) (2,383)
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Earnings from continuing
operations before income
taxes and non-controlling
interests 443 (1,616) 2,535 1,347
Income taxes 76 (690) 531 38
Non-controlling interests 313 (391) 1,322 775
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Earnings from continuing
operations 54 (535) 682 534
Earnings from discontinued
operations - - - 334
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Net earnings 54 (535) 682 868
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Earnings per participating share
- Basic 0.10 (1.20) 1.40 1.81
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- Diluted 0.10 (1.20) 1.40 1.80
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SEGMENTED INFORMATION
INFORMATION ON PROFIT MEASURE
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For the
three months ended
December 31, 2009
(unaudited)
(in millions of Par-
Canadian dollars) Lifeco IGM jointco Other Total
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Revenues
Premium income 4,324 - - - 4,324
Net investment income
Regular net
investment income 1,461 (59) - (14) 1,388
Change in fair value
on held-for-trading
assets (549) (7) - (10) (566)
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912 (66) - (24) 822
Fee and media income 765 609 - 93 1,467
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6,001 543 - 69 6,613
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Expenses
Policyholder benefits,
dividends and
experience refunds,
and change in
actuarial liabilities 4,283 - - - 4,283
Commissions 391 213 - (25) 579
Operating expenses 759 149 - 161 1,069
Financing charges 62 29 - 21 112
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5,495 391 - 157 6,043
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506 152 - (88) 570
Share of earnings of
investments at equity - - 1 - 1
Other income (charges),
net - - (8) (120) (128)
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Earnings from
continuing operations
before income taxes
and non-controlling
interests 506 152 (7) (208) 443
Income taxes 47 38 - (9) 76
Non-controlling
interests 259 71 (2) (15) 313
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Contribution to
consolidated earnings
from continuing
operations 200 43 (5) (184) 54
Contribution to
consolidated earnings
from discontinued
operations - - - - -
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Contribution to
consolidated net
earnings 200 43 (5) (184) 54
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For the
three months ended
December 31, 2008
(unaudited)
(in millions of Par-
Canadian dollars) Lifeco IGM jointco Other Total
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Revenues
Premium income 4,782 - - - 4,782
Net investment income
Regular net
investment income 1,423 36 - 13 1,472
Change in fair value
on held-for-trading
assets (368) - - 9 (359)
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1,055 36 - 22 1,113
Fee and media income 743 549 - 74 1,366
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6,580 585 - 96 7,261
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Expenses
Policyholder benefits,
dividends and
experience refunds,
and change in
actuarial liabilities 4,815 - - - 4,815
Commissions 360 206 - (40) 526
Operating expenses 746 163 - 148 1,057
Financing charges 37 25 - 14 76
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5,958 394 - 122 6,474
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622 191 - (26) 787
Share of earnings of
investments at equity - - 2 (4) (2)
Other income (charges),
net (2,248) - (376) 223 (2,401)
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Earnings from
continuing operations
before income taxes
and non-controlling
interests (1,626) 191 (374) 193 (1,616)
Income taxes (744) 51 - 3 (690)
Non-controlling
interests (459) 110 (126) 84 (391)
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Contribution to
consolidated earnings
from continuing
operations (423) 30 (248) 106 (535)
Contribution to
consolidated earnings
from discontinued
operations - - - - -
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Contribution to
consolidated net
earnings (423) 30 (248) 106 (535)
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For the year ended
December 31, 2009
(in millions of Par-
Canadian dollars) Lifeco IGM jointco Other Total
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Revenues
Premium income 18,033 - - - 18,033
Net investment income
Regular net
investment income 6,179 89 - (14) 6,254
Change in fair value
on held-for-trading
assets 3,490 (27) - (10) 3,453
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9,669 62 - (24) 9,707
Fee and media income 2,839 2,250 - 323 5,412
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30,541 2,312 - 299 33,152
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Expenses
Policyholder benefits,
dividends and
experience refunds,
and change in
actuarial liabilities 23,809 - - - 23,809
Commissions 1,370 808 - (90) 2,088
Operating expenses 2,946 614 - 593 4,153
Financing charges 336 110 - 77 523
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28,461 1,532 - 580 30,573
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2,080 780 - (281) 2,579
Share of earnings of
investments at equity - - 141 (5) 136
Other income (charges),
net - - (70) (110) (180)
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Earnings from
continuing operations
before income taxes
and non-controlling
interests 2,080 780 71 (396) 2,535
Income taxes 345 221 - (35) 531
Non-controlling
interests 994 353 25 (50) 1,322
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Contribution to
consolidated earnings
from continuing
operations 741 206 46 (311) 682
Contribution to
consolidated earnings
from discontinued
operations - - - - -
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Contribution to
consolidated net
earnings 741 206 46 (311) 682
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For the year ended
December 31, 2008
(in millions of Par-
Canadian dollars) Lifeco IGM jointco Other Total
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Revenues
Premium income 30,007 - - - 30,007
Net investment income
Regular net
investment income 5,962 202 - 98 6,262
Change in fair
value on
held-for-trading
assets (5,161) - - 13 (5,148)
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801 202 - 111 1,114
Fee and media income 3,124 2,503 - 351 5,978
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33,932 2,705 - 462 37,099
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Expenses
Policyholder benefits,
dividends and
experience refunds,
and change in
actuarial liabilities 26,774 - - - 26,774
Commissions 1,353 906 - (87) 2,172
Operating expenses 2,886 648 - 613 4,147
Financing charges 296 91 - 58 445
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31,309 1,645 - 584 33,538
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2,623 1,060 - (122) 3,561
Share of earnings of
investments at equity - - 183 (14) 169
Other income (charges),
net (2,248) - (364) 229 (2,383)
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Earnings from
continuing operations
before income taxes
and non-controlling
interests 375 1,060 (181) 93 1,347
Income taxes (278) 293 - 23 38
Non-controlling interests 334 494 (61) 8 775
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Contribution to
consolidated earnings
from continuing
operations 319 273 (120) 62 534
Contribution to
consolidated earnings
from discontinued
operations 334 - - - 334
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Contribution to
consolidated net
earnings 653 273 (120) 62 868
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For further information: Mr. Edward Johnson, Senior Vice-President, General Counsel and Secretary, (514) 286-7400
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