ACCURIDE CORP - FORM 8-K - EX-99.01 - EX-99.1 - November 1, 2016

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Media Relations Contact
  
Investor Relations Contact
Timothy G. Weir, APR
  
Todd Taylor
Director of Public Affairs, Communications & Marketing
  
Vice President and Treasurer
(812) 962-5128 | tweir@accuridecorp.com
  
(812) 962-5105 | ttaylor@accuridecorp.com




FOR IMMEDIATE RELEASE


Accuride Reports Third Quarter 2016 Results
·
Net loss of $28.6 million, or a negative $0.59 per share
·
Net loss from continuing operations of $6.8 million, or a negative $0.14 per share
·
Net sales from continuing operations of $125.2 million, down 14.0 percent from the third quarter of 2015

EVANSVILLE, Ind. – November 1, 2016 – Accuride Corporation (NYSE: ACW) ("Accuride" or the "Company") – a leading supplier of components to the North American and European commercial vehicle industries – today reported financial results for the third quarter ended September 30, 2016.

Third Quarter 2016 Results
Third quarter 2016 net sales were $125.2 million, which represented a decrease of $20.5 million, or 14.0 percent, compared with net sales of $145.7 million for the third quarter of 2015. The decrease was driven by $24.5 million from lower-than-anticipated demand for wheels and brake drums in North America, and $4.3 million in pricing that was primarily related to the pass-through of lower raw material costs. Partially offsetting the decrease was an $8.3 million increase in net sales from Gianetti Ruote, in which Accuride took a majority stake in November 2015.

Accuride's operating income was $1.5 million, down $9.6 million compared to operating income of $11.1 million in the third quarter of 2015. This was primarily due to the incremental margin loss on the lower product demand, which was partially offset by lower corporate spending. The Company reported a net loss of $28.6 million, or a negative $0.59 per share, including a loss from discontinued operations, net of tax, of $21.9 million related to the sale of the Brillion Iron Works subsidiary during the third quarter. The Company's net loss from continuing operations attributable to shareholders was $6.8 million, or a negative $0.14 per share, compared to net income of $5.4 million, or $0.11 per share, in the third quarter of 2015. Third quarter Adjusted EBITDA from continuing operations was $13.5 million, or 10.8 percent of net sales, compared to $21.6 million, or 14.8 percent of net sales, in the same quarter of 2015.

Third Quarter Business Segment Results

Wheels
Wheels segment net sales were $90.9 million, down $10.9 million, or 10.7 percent, from the same period in 2015. The third quarter of 2016 included $8.3 million in net sales from Gianetti. Excluding Gianetti, Wheels segment net sales were down $19.2 million, or 18.9 percent, from the same period in 2015. This decrease was primarily related to lower production volume from North American OEM customers and reduced aftermarket customer demand totaling $15.3 million, plus the pass-through of lower material costs of $3.9 million. Wheels' Adjusted EBITDA was $14.7 million, a decrease of $7.7 million, or 34.3 percent, from the third quarter of 2015.

Gunite
Gunite segment net sales were $34.3 million, down $9.5 million, or 21.7 percent, from the third quarter of 2015. This decrease is largely attributable to lower North American Class 8 OEM production and reduced aftermarket demand totaling $9.1 million, coupled with the pass-through of lower material costs of $0.4 million. Gunite's Adjusted EBITDA was $4.9 million, a decrease of $1.6 million, or 24.7 percent, from the third quarter of 2015.

Liquidity and Debt
As of September 30, 2016, total debt was $318.1 million, consisting of $305.8 million of the outstanding 9.5% senior secured notes, net of discount and debt issuance costs, and $12.3 million in debt obligations related to the Company's majority stake in Gianetti. As of September 30, 2016, Accuride had $27.0 million of cash and $37.0 million in availability under its ABL Credit Facility for total liquidity of $64.0 million. Cash included $11.7 million in net proceeds from the sale of Brillion.

In light of the previously announced merger agreement pursuant to which Accuride is to be acquired by affiliates of Crestview Partners, Accuride will not be hosting a conference call to discuss its third quarter 2016 financial results.

About Accuride Corporation
With headquarters in Evansville, Ind., USA, Accuride Corporation is a leading supplier of components to the North American and European commercial vehicle industries. The company's products include commercial vehicle wheels and wheel-end components and assemblies. The company's products are marketed under its brand names, which include Accuride®, Accuride Wheel End Solutions™, Gunite® and Gianetti Ruote™. Accuride's common stock trades on the New York Stock Exchange under the ticker symbol ACW. For more information: www.AccurideCorp.com.

Forward-Looking Statements
Certain statements contained in this document may be considered forward-looking statements within the meaning of the U.S. securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the proposed merger contemplated by the Agreement and Plan of Merger, dated September 2, 2016, by and among the Company, Armor Parent Corp. and Armor Merger Sub Corp. (such merger, the "proposed transaction" and such agreement, the "Merger Agreement")and the ability to consummate the proposed transaction. These forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as "believes," "plans," "anticipates," "projects," "estimates," "expects," "intends," "strategy," "future," "opportunity," "may," "will," "should," "could," "potential," or similar expressions. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: (1) Accuride may be unable to obtain shareholder approval for the proposed transaction; (2) the conditions to the closing of the proposed transaction may not be satisfied and required regulatory approvals may not be obtained; (3) the proposed transaction may involve unexpected costs, liabilities or delays; (4) the business of Accuride may suffer as a result of uncertainty surrounding the proposed transaction; (5) the outcome of any legal proceedings related to the proposed transaction; (6) Accuride may be adversely affected by other economic, business, legislative, regulatory and/or competitive factors; (7) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; (8) risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the proposed transaction; (9) the failure by Armor Parent Corp. or Armor Merger Sub Corp. to obtain the necessary debt and equity financing arrangements set forth in the commitment letters received in connection with the proposed transaction; and (10) other risks to consummation of the proposed transaction, including the risk that the proposed transaction will not be consummated within the expected time period or at all. If the proposed transaction is consummated, Accuride's shareholders will cease to have any equity interest in Accuride and will have no right to participate in its earnings and future growth. The foregoing review of important factors that could cause actual results to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including Accuride's filings with the Securities and Exchange Commission (the "SEC"), including its Annual Report on Form 10-K for the year ended December 31, 2015 and recent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC, which are available on the SEC's website at www.sec.gov. Except as required by applicable law, Accuride undertakes no obligation to update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. Accuride does not intend, and assumes no obligation, to update any forward-looking statements. Accuride's filings with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2015, its definitive proxy statement for its 2016 Annual Meeting of Stockholders, which was filed with the SEC on March 18, 2016, and recent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC, are available on the SEC's website at www.sec.gov.




Important Additional Information
In connection with the proposed transaction, on October 17, 2016, the Company filed with the SEC and sent to its stockholders a definitive proxy statement. INVESTORS OF THE COMPANY ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT MATERIALS CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, ARMOR PARENT CORP., ARMOR MERGER SUB CORP. AND THE PROPOSED TRANSACTION. Investors may obtain a free copy of these materials and other documents filed by the Company with the SEC at the SEC's website at www.sec.gov, at the Company's website at www.accuridecorp.com or by sending a written request to the Company at 7140 Office Circle, Evansville, Indiana 47715, Attention: General Counsel and Corporate Secretary.

Participants in the Solicitation
The Company and its directors, executive officers and certain other members of management and employees may be deemed to be participants in soliciting proxies from its stockholders in connection with the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be considered to be participants in the solicitation of the Company's stockholders in connection with the proposed transaction, as well as any direct or indirect interests such persons may have in the proposed transaction, is set forth in the annual proxy statement for the Company's 2016 Annual Meeting of Stockholders and the definitive proxy statement filed in connection with the proposed transaction.



Three Months Operating Results
(UNAUDITED)

       
   
Three Months Ended September 30,
  
(Dollars in thousands)
  
2016
    
2015
  
                         
Net Sales:
                        
Wheels                                                                                              
  
$
90,923
      
72.6
%
  
$
101,833
      
69.9
%
Gunite                                                                                              
    
34,279
      
27.4
%
    
43,823
      
30.1
%
Total Net Sales from Continuing Operations
  
$
125,202
      
100.0
%
  
$
145,656
      
100.0
%
                                 
Gross Profit from Continuing Operations
  
$
11,943
      
9.5
%
  
$
21,623
      
14.8
%
                                 
Income (Loss) from Continuing Operations:
                                
Wheels                                                                                              
  
$
4,658
      
5.1
%
  
$
13,715
      
13.5
%
Gunite                                                                                              
    
3,435
      
10.0
%
    
5,061
      
11.5
%
Corporate / Other                                                                                              
    
(6,610
)
    
—
      
(7,658
)
    
—
  
Consolidated Total                                                                                                  
  
$
1,483
      
1.2
%
  
$
11,118
      
7.6
%
                                 
Net Income (Loss) from Continuing Operations – Attributable to Stockholders
  
$
(6,751
)
    
(5.4
)%
  
$
5,398
      
3.7
%
                                 
Adjusted EBITDA:
                                
Wheels                                                                                              
  
$
14,698
      
16.2
%
  
$
22,384
      
22.0
%
Gunite                                                                                              
    
4,870
      
14.2
%
    
6,468
      
14.8
%
Corporate / Other                                                                                              
    
(6,051
)
    
—
      
(7,256
)
    
—
  
Adjusted EBITDA from Continuing Operations
    
13,517
      
10.8
%
    
21,596
      
14.8
%
   Discontinued Operations
    
(1,791
)
    
—
      
(2,443
)
    
—
  
Consolidated Total                                                                                                  
  
$
11,726
      
9.4
%
  
$
19,153
      
13.1
%







-more-
Nine Months Operating Results
(UNAUDITED)

       
   
Nine Months Ended September 30,
  
(Dollars in thousands)
  
2016
    
2015
  
                         
Net Sales:
                        
Wheels                                                                                              
  
$
300,713
      
72.1
%
  
$
324,525
      
71.6
%
Gunite                                                                                              
    
116,517
      
27.9
%
    
128,569
      
28.4
%
Total Net Sales from Continuing Operations
  
$
417,230
      
100.0
%
  
$
453,094
      
100.0
%
                                 
Gross Profit from Continuing Operations
  
$
56,111
      
13.4
%
  
$
67,088
      
14.8
%
                                 
Income (Loss) from Continuing Operations:
                                
Wheels                                                                                              
  
$
30,773
      
10.2
%
  
$
44,372
      
13.7
%
Gunite                                                                                              
    
13,321
      
11.4
%
    
15,140
      
11.8
%
Corporate / Other                                                                                              
    
(22,548
)
    
—
      
(25,668
)
    
—
  
Consolidated Total                                                                                                  
  
$
21,546
      
5.2
%
  
$
33,844
      
7.5
%
                                 
Net Income (Loss) from Continuing Operations – Attributable to Stockholders
  
$
(2,852
)
    
(0.7
)%
  
$
10,156
      
2.2
%
                                 
Adjusted EBITDA:
                                
Wheels                                                                                              
  
$
60,136
      
20.0
%
  
$
70,703
      
21.8
%
Gunite                                                                                              
    
17,606
      
15.0
%
    
19,238
      
15.0
%
Corporate / Other                                                                                              
    
(21,416
)
    
—
      
(24,282
)
    
—
  
Adjusted EBITDA from Continuing Operations
  
$
56,326
      
14.0
%
  
$
65,659
      
14.5
%
   Discontinued Operations
    
(5,688
)
    
—
      
682
      
0.1
%
Consolidated Total                                                                                                  
  
$
50,638
      
12.0
%
  
$
66,341
      
14.6
%







-more-



ACCURIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

   
Three Months Ended September 30,
    
Nine Months Ended September 30,
  
(In thousands except per share data)
  
2016
    
2015
    
2016
    
2015
  
                         
NET SALES
  
$
125,202
    
$
145,656
    
$
417,230
    
$
453,094
  
COST OF GOODS SOLD
    
113,259
      
124,033
      
361,119
      
386,006
  
GROSS PROFIT
    
11,943
      
21,623
      
56,111
      
67,088
  
OPERATING EXPENSES:
                                
Selling, general and administrative
    
10,460
      
10,505
      
34,565
      
33,244
  
INCOME FROM OPERATIONS
    
1,483
      
11,118
      
21,546
      
33,844
  
OTHER INCOME (EXPENSE):
                                
Interest expense, net
    
(8,442
)
    
(8,249
)
    
(25,248
)
    
(24,953
)
Other income (loss), net
    
(9
)
    
(1,142
)
    
582
      
(2,398
)
INCOME (LOSS) BEFORE INCOME TAXES FROM CONTINUING OPERATIONS
    
(6,968
)
    
1,727
      
(3,120
)
    
6,493
  
INCOME TAX EXPENSE (BENEFIT)
    
410
      
(3,671
)
    
1,166
      
(3,663
)
INCOME (LOSS) FROM CONTINUING OPERATIONS
    
(7,378
)
    
5,398
      
(4,286
)
    
10,156
  
DISCONTINUED OPERATIONS, NET OF TAX
    
(21,861
)
    
(3,578
)
    
(28,042
)
    
(2,585
)
NET INCOME (LOSS)
    
(29,239
)
    
1,820
      
(32,328
)
    
7,571
  
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST
    
(627
)
    
—
      
(1,434
)
    
—
  
NET INCOME (LOSS) ATTRIBUTABLE TO STOCKHOLDERS
  
$
(28,612
)
  
$
1,820
    
$
(30,894
)
  
$
7,571
  
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
                                
Defined benefit plans and foreign currency
    
(2,128
)
    
(3,259
)
    
(3,182
)
    
15,581
  
COMPREHENSIVE INCOME (LOSS)
  
$
(30,740
)
  
$
(1,439
)
  
$
(34,076
)
  
$
23,152
  
                                 
EARNINGS PER SHARE ATTRIBUTABLE TO STOCKHOLDERS
                                
Weighted average common shares outstanding—basic
    
48,332
      
48,015
      
48,247
      
47,943
  
Basic income (loss) per share-continuing operations
    
(0.14
)
    
0.11
      
(0.06
)
    
0.21
  
Basic loss per share-discontinued operations
    
(0.45
)
    
(0.07
)
    
(0.58
)
    
(0.05
)
Basic income (loss) per share
  
$
(0.59
)
  
$
0.04
    
$
(0.64
)
  
$
0.16
  
Weighted average common shares outstanding—diluted
    
48,332
      
49,422
      
48,247
      
48,844
  
Diluted income (loss) per share-continuing operations
    
(0.14
)
    
0.11
      
(0.06
)
    
0.21
  
Diluted loss per share-discontinued operations
    
(0.45
)
    
(0.07
)
    
(0.58
)
    
(0.05
)
Diluted income (loss) per share
  
$
(0.59
)
  
$
0.04
    
$
(0.64
)
  
$
0.16
  




-more-

ACCURIDE CORPORATION
CONSOLIDATED ADJUSTED EBITDA
(UNAUDITED)

   
Three Months Ended September 30,
  
(In thousands)
  
2016
    
2015
  
             
Net income  
  
$
(29,239
)
  
$
1,820
  
Income tax expense (benefit)  
    
410
      
(3,671
)
Interest expense, net  
    
8,442
      
8,249
  
Depreciation and amortization  
    
10,536
      
10,491
  
Loss on disposal of discontinued operation
    
19,280
      
—
  
Noncontrolling interest  
    
504
      
—
  
Restructuring, severance and other charges1
    
1,063
      
476
  
Other items related to our credit agreement2
    
730
      
1,788
  
Adjusted EBITDA  
  
$
11,726
    
$
19,153
  

Note:
1)    
For the three months ended September 30, 2016, Adjusted EBITDA represents net income before net interest expense, income tax expense, depreciation and amortization, noncontrolling interest in subsidiaries, plus $1.1 million in costs associated with restructuring items. For the three months ended September 30, 2015, Adjusted EBITDA represents net income before net interest expense, income tax benefit, depreciation and amortization, plus $0.5 million in costs associated with restructuring items.
2)    
Items related to our credit agreement refer to amounts utilized in the calculation of financial covenants in Accuride's senior credit facility. For the three months ended September 30, 2016, items related to our credit agreement consisted of foreign currency losses/(gains) and other income or expenses of $0.7 million. For the three months ended September 30, 2015, items related to our credit agreement consisted of foreign currency losses/(gains) and other income or expenses of $1.8 million.

   
Nine Months Ended September 30,
  
(In thousands)
  
2016
    
2015
  
             
Net income (loss)  
  
$
(32,328
)
  
$
7,571
  
Income tax expense (benefit)  
    
1,166
      
(3,663
)
Interest expense, net  
    
25,248
      
24,953
  
Depreciation and amortization  
    
32,893
      
31,500
  
Loss on disposal of discontinued operation
    
19,280
      
—
  
Noncontrolling interest  
    
1,073
      
—
  
Restructuring, severance and other charges1
    
2,072
      
1,715
  
Other items related to our credit agreement2
    
1,234
      
4,265
  
Adjusted EBITDA  
  
$
50,638
    
$
66,341
  

Note:
3)    
For the nine months ended September 30, 2016, Adjusted EBITDA represents net income before net interest expense, income tax expense, depreciation and amortization, noncontrolling interest in subsidiaries, plus $2.1 million in costs associated with restructuring items. For the nine months ended September 30, 2015, Adjusted EBITDA represents net income before net interest expense, income tax benefit, depreciation and amortization, plus $1.7 million in costs associated with restructuring items.
4)    
Items related to our credit agreement refer to amounts utilized in the calculation of financial covenants in Accuride's senior credit facility. For the nine months ended September 30, 2016, items related to our credit agreement consisted of foreign currency losses/(gains) and other income or expenses of $1.2 million. For the nine months ended September 30, 2015, items related to our credit agreement consisted of foreign currency losses/(gains) and other income or expenses of $4.3 million.
-more-
ACCURIDE CORPORATION
SEGMENT ADJUSTED EBITDA RECONCILIATION
(UNAUDITED)


   
Three Months Ended September 30, 2016
  
(In thousands)
  
Income (loss) from Operations
    
Depreciation and Amortization
    
Other
    
Adjusted EBITDA
  
Wheels  
  
$
4,658
    
$
7,890
    
$
2,150
    
$
14,698
  
Gunite  
    
3,435
      
1,185
      
250
      
4,870
  
Corporate / Other  
    
(6,610
)
    
711
      
(152
)
    
(6,051
)
Discontinued Operations
    
(2,530
)
    
750
      
(11
)
    
(1,791
)
Consolidated Total  
  
$
(1,047
)
  
$
10,536
    
$
2,237
    
$
11,726
  




   
Three Months Ended September 30, 2015
  
(In thousands)
  
Income (loss) from Operations
    
Depreciation and Amortization
    
Other
    
Adjusted EBITDA
  
Wheels  
  
$
13,715
    
$
7,469
    
$
1,200
    
$
22,384
  
Gunite  
    
5,061
      
1,157
      
250
      
6,468
  
Corporate / Other  
    
(7,658
)
    
678
      
(276
)
    
(7,256
)
Discontinued Operations  
    
(3,630
)
    
1,187
      
—
      
(2,443
)
Consolidated Total  
  
$
7,488
    
$
10,491
    
$
1,174
    
$
19,153
  




-more-

   
Nine Months Ended September 30, 2016
  
(In thousands)
  
Income (loss) from Operations
    
Depreciation and Amortization
    
Other
    
Adjusted EBITDA
  
Wheels  
  
$
30,773
    
$
24,245
    
$
5,118
    
$
60,136
  
Gunite  
    
13,321
      
3,535
      
750
      
17,606
  
Corporate / Other  
    
(22,548
)
    
2,115
      
(983
)
    
(21,416
)
Discontinued Operations
    
(8,672
)
    
2,988
      
(4
)
    
(5,688
)
Consolidated Total  
  
$
12,874
    
$
32,883
    
$
4,881
    
$
50,638
  




   
Nine Months Ended September 30, 2015
  
(In thousands)
  
Income (loss) from Operations
    
Depreciation and Amortization
    
Other
    
Adjusted EBITDA
  
Wheels  
  
$
44,372
    
$
22,731
    
$
3,600
    
$
70,703
  
Gunite  
    
15,140
      
3,348
      
750
      
19,238
  
Corporate / Other  
    
(25,668
)
    
1,874
      
(488
)
    
(24,282
)
Discontinued Operations  
    
(2,865
)
    
3,547
      
—
      
682
  
Consolidated Total  
  
$
30,979
    
$
31,500
    
$
3,862
    
$
66,341
  

We define Adjusted EBITDA as our net income or loss before income tax expense or benefit, interest expense, net, depreciation and amortization, noncontrolling interest in subsidiaries, restructuring, severance, and other charges, impairment, and currency losses, net. Adjusted EBITDA has been included because we believe that it is useful for us and our investors to measure our ability to provide cash flows to meet debt service. Adjusted EBITDA should not be considered an alternative to net income (loss) or other traditional indicators of operating performance and cash flows determined in accordance with accounting principles generally accepted in the United States ("GAAP"). We present the table of Adjusted EBITDA because covenants in the agreements governing our material indebtedness contain ratios based on this measure on a quarterly basis. While Adjusted EBITDA is used as a measure of liquidity and the ability to meet debt service requirements, it is not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculations.








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ACCURIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)


   
September 30,
    
December 31,
  
(In thousands)
  
2016
    
2015
  
             
ASSETS
            
CURRENT ASSETS:
            
Cash and cash equivalents  
  
$
26,954
    
$
29,759
  
Customer and other receivables  
    
56,383
      
60,075
  
Inventories  
    
35,213
      
41,761
  
Other current assets  
    
8,180
      
7,347
  
Current assets of discontinued operations  
    
—
      
12,988
  
Total current assets  
    
126,730
      
151,930
  
PROPERTY, PLANT AND EQUIPMENT, net  
    
184,814
      
194,821
  
OTHER ASSETS:
                
Goodwill and other assets  
    
221,674
      
224,597
  
Non-current assets of discontinued operations  
    
—
      
32,271
  
TOTAL  
  
$
533,218
    
$
603,619
  
LIABILITIES AND STOCKHOLDERS' EQUITY
                
CURRENT LIABILITIES:
                
Accounts payable  
  
$
51,089
    
$
63,870
  
Short term debt obligations  
    
10,635
      
10,286
  
Other current liabilities  
    
26,172
      
34,690
  
Current liabilities of discontinued operations  
    
—
      
13,052
  
Total current liabilities  
    
87,896
      
121,898
  
LONG-TERM DEBT  
    
307,435
      
304,254
  
OTHER LIABILITIES  
    
101,009
      
105,680
  
NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS
    
—
      
933
  
STOCKHOLDERS' EQUITY:
                
Total stockholders' equity  
    
36,878
      
70,854
  
TOTAL  
  
$
533,218
    
$
603,619
  





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