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8-K - FORM 8-K - ExOne Cod165332d8k.htm

Exhibit 99.1

 

LOGO

 

   NEWS
RELEASE

 

127 Industry Boulevard ● North Huntingdon, PA 15642 ● (724) 863-9663

FOR IMMEDIATE RELEASE

The ExOne Company Reports Second Quarter 2015 Results

 

    Revenue was $8.5 million; Non-machine revenue was $6.1 million, up 26% excluding foreign currency impact

 

    Shipped twelve machines; Seven machines qualified as second quarter sales

 

    Maintaining 2015 revenue guidance, subject to customer requirements impacting revenue recognition

 

    Adjusting gross margin guidance range to 30% to 34% excluding non-recurring facility integration expenses

NORTH HUNTINGDON, PA, August 10, 2015 – The ExOne Company (NASDAQ: XONE) (“ExOne” or “the Company”), a global provider of three-dimensional (“3D”) printing machines and 3D printed and other products, materials and services to industrial customers, reported financial results today for the second quarter and six-month period ended June 30, 2015.

Second Quarter Revenue – Non-machine Growth Affirms Growing Acceptance

 

     Quarter Ended     Six Months Ended  
     June 30,     June 30,  
(in millions)    2015     2014     2015     2014  

Revenue by Product Line

                    

3D Printing Machines:

                    

3D Printing Machines - third parties

   $ 1.3         15   $ 6.0         53   $ 2.4         16   $ 8.4         45

3D Printing Machines - related parties

     1.1         13     —           0     1.1         7     —           0
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
     2.4         29     6.0         53     3.5         23     8.4         45
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

3D Printed and Other Products, Materials and Services (“Non-machine”):

                    

3D Printed and Other Products, Materials and Services - third parties

     6.1         71     5.2         47     11.8         77     10.1         55

3D Printed and Other Products, Materials and Services - related parties

     0.0         0     0.0         0     0.0         0     0.0         0
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
     6.1         71     5.2         47     11.8         77     10.1         55
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total Revenue

   $ 8.5         100   $ 11.2         100   $ 15.3         100   $ 18.5         100
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Consolidated sales for the second quarter were $8.5 million. Non-machine revenue grew 16% to $6.1 million, representing 26% growth excluding the effects of changes in foreign currency exchange rates. Consolidated sales in the 2015 second quarter were unfavorably impacted by approximately $0.6 million, or 5%, due to changes in foreign currency exchange rates compared with the 2014 second quarter.

S. Kent Rockwell, Chairman and Chief Executive Officer, commented, “ExOne is differentiated from its 3D printing peers by its principal emphasis on industrial manufacturing of metal components through binder-jetting technology. It is important to realize that we are impacted by different market conditions from those recently reported by other 3D printing companies. We currently believe that a primary indicator of demand for our technology is machines placed into service, rather than solely revenue recognition of sales. We shipped twelve machines in the second quarter, including six of our larger machines, five of our smallest, research-oriented Innovent™ machines, and one M-Flex™.”

 

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The ExOne Company Reports Second Quarter 2015 Results

August 10, 2015

Page 2 of 9

 

Mr. Rockwell continued, “We are pleased to see that our new machine introductions are gaining traction in the market, evidence that we are listening to our customers and evolving as necessary to meet their needs. We are allocating our resources to machine sales efforts and continue to monitor and improve visibility into order timing. Our anticipated shipments for the second half of the year will lead us to meet our guidance expectations; however, responsiveness to our customers’ requirements has the potential to impact the period in which we recognize revenue.”

Given the long sales cycle and significance of a machine’s average selling price relative to total revenue, fluctuations in machine-sale revenue vary from quarter to quarter. ExOne does not believe that such quarter-to-quarter fluctuations are necessarily indicative of larger trends.

Second Quarter Operations – Mix, Volume and Expansions Impact Results

Gross profit was approximately $1.1 million, or 13.0% gross margin, in the 2015 second quarter, compared with $2.5 million, or 22.3% gross margin, in the 2014 second quarter. The 2015 quarter was unfavorably impacted by the mix of sales including the amount of machine sales in the quarter, compounded by higher fixed costs and inefficiencies. These inefficiencies included costs incurred in connection with the Company’s global facilities transition and expansion in Germany and the U.S., ERP system implementation expenses and development of its Italy PSC.

Operating loss was $6.9 million compared with operating loss of $4.7 million in the second quarter of 2014. SG&A expenses were $6.3 million, including $0.6 million for bad debt expense and ERP implementation costs, compared with $5.3 million in the prior-year quarter. R&D expenses for the quarter decreased by $0.2 million to $1.7 million. Net loss for the reported quarter was $6.9 million, or $0.48 per diluted share, compared with a net loss of $4.7 million, or $0.32 loss per diluted share, for the prior-year period.

Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) was a $5.2 million loss in the 2015 quarter, compared with a $3.6 million loss during last year’s second quarter. ExOne management believes that when used in conjunction with other measures prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), that adjusted EBITDA, a non-GAAP measure, assists in the understanding of operating performance. See the attached tables for important disclosures regarding the Company’s use of adjusted EBITDA as well as a reconciliation of net loss to adjusted EBITDA for the quarters and six months ended June 30, 2015 and 2014.

First Half 2015 Review – Positioning for Second Half

For the first six months of 2015, consolidated sales were $15.3 million. Non-machine revenue grew 17% to $11.8 million in the first half of 2015, representing 26% growth excluding the effects of changes in foreign currency exchange rates. Consolidated sales in the 2015 first half were unfavorably impacted by approximately $1.2 million, or 6%, due to changes in foreign currency exchange rates compared with the first half of 2014.

First half gross profit was $1.1 million, compared with $4.1 million in last year’s first half. Gross profit as a percentage of sales was 7.2% in the first half of 2015 compared with 22.3% in last year’s first half. SG&A expense for the first six months of 2015 was $12.5 million, up $2.0 million from the prior-year period, of which $1.0 million pertains to bad debt expense, employee termination costs and ERP implementation costs. R&D expense was $3.4 million in the first half of 2015, compared with $3.8 million in the first half of 2014, as 2014 included considerable machine development expenses.

 

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The ExOne Company Reports Second Quarter 2015 Results

August 10, 2015

Page 3 of 9

 

Operating loss for the first half of 2015 was $14.7 million compared with a loss of $10.1 million during the prior-year period. Net loss was $14.6 million, or $1.01 loss per diluted share, for the first half of 2015 compared with $10.2 million, or $0.71 loss per diluted share, for the first half of 2014.

Adjusted EBITDA was a $11.4 million loss in the 2015 first half, compared with a $7.6 million loss during last year’s first half. ExOne management believes that when used in conjunction with other measures prepared in accordance with GAAP, that adjusted EBITDA, a non-GAAP measure, assists in the understanding of operating performance. See the attached tables for important disclosures regarding the Company’s use of adjusted EBITDA as well as a reconciliation of net loss to adjusted EBITDA for the quarters and six months ended June 30, 2015 and 2014.

Outlook and Strategy – Maintaining 2015 Revenue Expectations, Adjusting Gross Margin

 

    Revenue expected to grow approximately 32% to 50%, to about $58 million to $66 million

 

    Gross margin now expected to be between 30% and 34% (from prior guidance range of 36% to 40%), excluding anticipated non-recurring costs estimated at $0.5 million to $1.0 million to complete facility integrations; revision reflects significant under absorption of overhead costs in the first half of 2015

 

    SG&A expenses expected to be in a range of $21 million to $23 million, excluding approximately $0.5 million to $1.0 million of costs associated with ongoing implementation of the Company’s enterprise resource planning system

 

    R&D expenses expected to be in a range of $6.5 million to $7.5 million

 

    Capital expenditures expected to be between $6 million and $7 million

S. Kent Rockwell, Chairman and CEO, concluded, “Given our sales outlook, we are encouraged by the operating leverage anticipated in the second half, which we believe will drive profitability. It is always a lengthy process to initiate momentum in industrial markets. As it occurs, we anticipate a broad scale increase in market penetration by our products.”

Webcast and Conference Call

ExOne will host a conference call and live webcast Tuesday, August 11th at 8:30 a.m. Eastern Time. During the conference call and webcast, management will review the financial and operating results for the second quarter and discuss ExOne’s corporate strategies and outlook. A question-and-answer session will follow. The teleconference can be accessed by calling (201) 689-8470. The webcast can be monitored on the Company’s website at www.exone.com.

A telephonic replay will be available from 11:30 a.m. ET on the day of the teleconference through Tuesday, August 18, 2015. To listen to a replay of the call, dial (858) 384-5517 and enter the conference ID number 13614136. An archive of the webcast will be available on the Company’s website at www.exone.com and will include a transcript, once available.

About ExOne

ExOne is a global provider of 3D printing machines and 3D printed and other products, materials and services to industrial customers. ExOne’s business primarily consists of manufacturing and selling 3D printing machines and printing products to specification for its customers using its in-house 3D printing machines. ExOne offers pre-production collaboration and print products for customers through its eight PSCs, which are located in the United States, Germany, Italy and Japan. ExOne builds 3D printing machines at its facilities in the United States and Germany. ExOne also supplies the associated materials, including consumables and replacement parts, and other services, including training and technical support, necessary for purchasers of its machines to print products.

 

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The ExOne Company Reports Second Quarter 2015 Results

August 10, 2015

Page 4 of 9

 

Safe Harbor Regarding Forward Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Forward-looking statements are subject to risks, uncertainties and assumptions and are identified by words such as “expects,” “estimates,” “projects,” “typically,” “anticipates,” “believes,” “appears,” “could,” “plan,” and other similar words. Such statements include, but are not limited to, statements concerning future revenue and earnings, involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, which include our ability to qualify more materials in which we can print; the availability of skilled personnel; the impact of increased operating expenses and expenses relating to proposed acquisitions, investments and alliances; our strategy, including the expansion and growth of our operations; the impact of loss of key management; our plans regarding increased international operations in additional international locations; sufficiency of funds for required capital expenditures, working capital, and debt service; the adequacy of sources of liquidity; expectations regarding demand for our industrial products, operating revenues, operating and maintenance expenses, insurance expenses and deductibles, interest expenses, debt levels, and other matters with regard to outlook; demand for aerospace, automotive, heavy equipment, energy/oil/gas and other industrial products; the scope, nature or impact of acquisitions, alliances and strategic investments and our ability to integrate acquisitions and strategic investments; liabilities under laws and regulations protecting the environment; the impact of governmental laws and regulations including the related challenges of conducting business in international locations such as Russia; operating hazards, war, terrorism and cancellation or unavailability of insurance coverage; the effect of litigation and contingencies; the impact of disruption of our manufacturing facilities or PSCs; the adequacy of our protection of our intellectual property; material weaknesses in our internal control over financial reporting; the impact of customer specific terms in machine purchase agreements on the period in which we recognize revenue and other factors disclosed in the Company’s Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission. Because they are forward-looking, these statements should be evaluated in light of important risk factors and uncertainties.

Should one or more of these risks or uncertainties materialize, or should any of ExOne’s underlying assumptions prove incorrect, actual results may vary materially from those currently anticipated. The Company disclaims any obligation to update or publicly announce any revisions to any of the forward-looking statements contained in this news release.

For more information, contact:

 

Brian Smith    Deborah K. Pawlowski / Karen L. Howard
Chief Financial Officer    Kei Advisors LLC
(724) 765-1350    (716) 843-3908 / (716) 843-3942
brian.smith@exone.com    dpawlowski@keiadvisors.com / khoward@keiadvisors.com

FINANCIAL TABLES FOLLOW.

 

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The ExOne Company Reports Second Quarter 2015 Results

August 10, 2015

Page 5 of 9

 

The ExOne Company and Subsidiaries

Condensed Statement of Consolidated Operations

($ in thousands, except per-share amounts)

(unaudited)

 

     Quarter Ended
June 30,
    %
Change
    Six Months Ended
June 30,
    %
Change
 
     2015     2014           2015     2014        

Revenue

            

Revenue - third parties

   $ 7,358      $ 11,200        $ 14,149      $ 18,463     

Revenue - related parties *

     1,140        1          1,142        23     
  

 

 

   

 

 

     

 

 

   

 

 

   
     8,498        11,201        (24 %)      15,291        18,486        (17 %) 

Cost of sales

     7,393        8,705        (15 %)      14,186        14,371        (1 %) 
  

 

 

   

 

 

     

 

 

   

 

 

   

Gross profit

     1,105        2,496        (56 %)      1,105        4,115        (73 %) 
  

 

 

   

 

 

     

 

 

   

 

 

   

Gross margin

     13.0     22.3       7.2     22.3  

Research and development

     1,659        1,909        (13 %)      3,393        3,753        (10 %) 

Selling, general and administrative

     6,343        5,267        20     12,461        10,468        19
  

 

 

   

 

 

     

 

 

   

 

 

   
     8,002        7,176        12     15,854        14,221        11
  

 

 

   

 

 

     

 

 

   

 

 

   

Operating loss

     (6,897     (4,680     47     (14,749     (10,106     46

Interest expense

     30        45        (33 %)      58        74        (22 %) 

Other expense (income) – net

     71        (63     NM        (79     (155     (49 %) 
  

 

 

   

 

 

     

 

 

   

 

 

   
     101        (18     NM        (21     (81     (74 %) 
  

 

 

   

 

 

     

 

 

   

 

 

   

Loss before income taxes

     (6,998     (4,662     50     (14,728     (10,025     47

(Benefit) provision for income taxes

     (100     3        NM        (159     167        NM   
  

 

 

   

 

 

     

 

 

   

 

 

   

Net loss

   $ (6,898   $ (4,665     48   $ (14,569   $ (10,192     43
  

 

 

   

 

 

     

 

 

   

 

 

   

Net loss per common share:

            

Basic

   $ (0.48   $ (0.32     $ (1.01   $ (0.71  

Diluted

   $ (0.48   $ (0.32     $ (1.01   $ (0.71  

Weighted average shares outstanding (basic and diluted)

     14,429        14,417          14,426        14,405     

 

* The quarter and six months ended June 30, 2015 reflect sales of: (1) a 3D printing machine and other related equipment and products/services at fair market value selling prices to a powdered metal company with proprietary powders determined to be a related entity based on common control by the Chairman and CEO of the Company; and (2) a 3D printing machine at a fair market value selling price to a multi-national, diversified metals company determined to be a related entity on the basis that a member of the Board of Directors of the Company also receives his principal compensation from the entity. All transactions were approved prior to execution by the Audit Committee of the Board of Directors of the Company.

NM Not Meaningful

 

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The ExOne Company Reports Second Quarter 2015 Results

August 10, 2015

Page 6 of 9

 

The ExOne Company and Subsidiaries

Condensed Consolidated Balance Sheet

($ in thousands, except share amounts)

(unaudited)

 

     June 30,     December 31,  
     2015     2014  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 24,780      $ 36,202   

Accounts receivable – net

     7,240        14,238   

Inventories – net

     21,858        17,014   

Prepaid expenses and other current assets

     2,966        3,138   
  

 

 

   

 

 

 

Total current assets

     56,844        70,592   

Property and equipment – net

     54,727        55,298   

Goodwill

     4,381        4,665   

Other noncurrent assets

     2,218        2,875   
  

 

 

   

 

 

 

Total assets

   $ 118,170      $ 133,430   
  

 

 

   

 

 

 

Liabilities

    

Current liabilities:

    

Current portion of long-term debt

   $ 135      $ 132   

Current portion of capital and financing leases

     171        346   

Accounts payable

     3,748        2,553   

Accrued expenses and other current liabilities

     7,063        8,424   

Deferred revenue and customer prepayments

     4,826        902   
  

 

 

   

 

 

 

Total current liabilities

     15,943        12,357   

Long-term debt – net of current portion

     1,882        1,950   

Capital and financing leases - net of current portion

     123        164   

Other noncurrent liabilities

     87        414   
  

 

 

   

 

 

 

Total liabilities

     18,035        14,885   
  

 

 

   

 

 

 

Commitments and contingencies

    

Stockholders’ equity

    

Common stock, $0.01 par value, 200,000,000 shares authorized, 14,428,634 (2015) and 14,417,803 (2014) shares issued and outstanding

     144        144   

Additional paid-in capital

     155,724        154,902   

Accumulated deficit

     (42,867     (28,298

Accumulated other comprehensive loss

     (12,866     (8,203
  

 

 

   

 

 

 

Total stockholders’ equity

     100,135        118,545   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 118,170      $ 133,430   
  

 

 

   

 

 

 

 

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The ExOne Company Reports Second Quarter 2015 Results

August 10, 2015

Page 7 of 9

 

The ExOne Company and Subsidiaries

Condensed Statement of Consolidated Cash Flows

($ in thousands)

(unaudited)

 

     Six Months Ended  
     June 30,  
     2015     2014  

Operating activities

    

Net loss

   $ (14,569   $ (10,192

Adjustments to reconcile net loss to cash used for operations:

    

Depreciation and amortization

     2,489        1,602   

Deferred income taxes

     (206     —     

Equity-based compensation

     822        693   

Provision for bad debts

     324        44   

Changes in fair value of contingent consideration

     (193     (197

Changes in assets and liabilities, excluding effects of acquisitions and foreign currency translation adjustments:

    

Decrease (increase) in accounts receivable

     6,134        (4,436

Increase in inventories

     (8,357     (7,103

Decrease (increase) in prepaid expenses and other assets

     89        (3

Increase in accounts payable

     1,914        1,422   

Decrease in accrued expenses and other liabilities

     (527     (255

Increase in deferred revenue and customer prepayments

     3,974        42   
  

 

 

   

 

 

 

Cash used for operating activities

     (8,106     (18,383

Investing activities

    

Capital expenditures

     (2,831     (14,501

Acquisitions, net of cash acquired of $201

     —          (9,230
  

 

 

   

 

 

 

Cash used for investing activities

     (2,831     (23,731

Financing activities

    

Proceeds from exercise of employee stock options

     —          318   

Payments on long-term debt

     (65     (400

Payments on capital and financing leases

     (194     (272
  

 

 

   

 

 

 

Cash used for financing activities

     (259     (354

Effect of exchange rate changes on cash and cash equivalents

     (226     35   
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     (11,422     (42,433

Cash and cash equivalents at beginning of period

     36,202        98,445   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 24,780      $ 56,012   
  

 

 

   

 

 

 

Supplemental disclosure of noncash investing and financing activities

    

Property and equipment included in accounts payable

   $ 234      $ 992   
  

 

 

   

 

 

 

Transfer of inventories to property and equipment for internal use

   $ 2,506      $ 3,368   
  

 

 

   

 

 

 

Transfer of property and equipment to inventories for sale

   $ 149      $ 332   
  

 

 

   

 

 

 

Property and equipment acquired through financing arrangements

   $ —        $ 89   
  

 

 

   

 

 

 

Net assets acquired through acquisitions, net of cash acquired of $201

   $ —        $ 9,685   
  

 

 

   

 

 

 

Noncash consideration for acquisitions

   $ —        $ 455   
  

 

 

   

 

 

 

 

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The ExOne Company Reports Second Quarter 2015 Results

August 10, 2015

Page 8 of 9

 

The ExOne Company and Subsidiaries

Additional Information

Machine Sales by Type

(unaudited)

 

     Quarter Ended
June 30,
     Six Months Ended
June 30,
 
     2015      2014      2015      2014  

S-Max™

     —           3         —           4   

S-15™

     —           —           —           1   

S-Print™

     —           1         —           1   

M-Print™ *

     1         —           1         —     

M-Flex™

     1         1         2         2   

X1-Lab™

     —           1         1         1   

Innovent™ *

     5         —           5         —     
  

 

 

    

 

 

    

 

 

    

 

 

 
     7         6         9         9   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

* For both the quarter and six months ended June 30, 2015, one M-Print and one Innovent unit were sold to related parties.

Significant Components of the Change in Revenue by Product Line

($ in thousands)

(unaudited)

 

           3D Printed and        
           Other Products,        
     3D Printing     Materials and        
     Machines     Services     Total  

Quarter Ended June 30, 2014

   $ 5,959      $ 5,242      $ 11,201   

Change in revenue attributed to:

      

Volume

     349        1,352        1,701   

Pricing and sales mix

     (3,811     —          (3,811

Foreign currency

     (56     (537     (593
  

 

 

   

 

 

   

 

 

 
     (3,518     815        (2,703
  

 

 

   

 

 

   

 

 

 

Quarter Ended June 30, 2015

   $ 2,441      $ 6,057      $ 8,498   
  

 

 

   

 

 

   

 

 

 
           3D Printed and        
           Other Products,        
     3D Printing     Materials and        
     Machines     Services     Total  

Six Months Ended June 30, 2014

   $ 8,398      $ 10,088      $ 18,486   

Change in revenue attributed to:

      

Volume

     —          2,595        2,595   

Pricing and sales mix

     (4,629     —          (4,629

Foreign currency

     (246     (915     (1,161
  

 

 

   

 

 

   

 

 

 
     (4,875     1,680        (3,195
  

 

 

   

 

 

   

 

 

 

Six Months Ended June 30, 2015

   $ 3,523      $ 11,768      $ 15,291   
  

 

 

   

 

 

   

 

 

 

 

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The ExOne Company Reports Second Quarter 2015 Results

August 10, 2015

Page 9 of 9

 

The ExOne Company and Subsidiaries

Adjusted EBITDA Reconciliation

($ in millions)

(unaudited)

 

     Quarter Ended      Six Months Ended  
     June 30,      June 30,  
     2015      2014      2015      2014  

Net loss

   $ (6.9    $ (4.7    $ (14.6    $ (10.2

Interest expense

     0.0         0.0         0.1         0.1   

(Benefit) provision for income taxes

     (0.1      0.0         (0.1      0.2   

Depreciation and amortization

     1.3         0.9         2.5         1.6   

Equity-based compensation

     0.4         0.3         0.8         0.7   

Acquisition-related expenses

     —           —           —           0.2   

Other expense (income) - net

     0.1         (0.1      (0.1      (0.2
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ (5.2    $ (3.6    $ (11.4    $ (7.6
  

 

 

    

 

 

    

 

 

    

 

 

 

ExOne defines Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) as net loss (as calculated under accounting principles generally accepted in the United States (“GAAP”)) plus interest expense, (benefit) provision for income taxes, depreciation and amortization, equity-based compensation, acquisition-related expenses, and other expense (income) - net. Use of Adjusted EBITDA, which is a non-GAAP financial measure, as defined under the rules of the U.S. Securities and Exchange Commission, is intended as a supplemental measure of ExOne’s performance that is not required by, or presented in accordance with, GAAP. Adjusted EBITDA should not be considered as an alternative to net loss or any other performance measure derived in accordance with GAAP. The Company’s presentation of Adjusted EBITDA should not be construed to imply that its future results will be unaffected by unusual or non-recurring items.

The Company believes Adjusted EBITDA is meaningful to its investors to enhance their understanding of ExOne’s financial performance. Although Adjusted EBITDA is not necessarily a measure of the Company’s ability to fund its cash needs, the Company understands that it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance and to compare ExOne’s performance with the performance of other companies that report Adjusted EBITDA. ExOne’s calculation of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

 

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