Concepts Direct, Inc. Reports First-Quarter Sales and Earnings.Business Editors LONGMONT Longmont, city (1990 pop. 51,555), Boulder co., N Colo.; inc. 1885. It is a trade and processing center for a rich farm area irrigated by the Colorado–Big Thompson project. Vitamins, primary metal products, and manufacturing equipment are produced. , Colo.--(BUSINESS WIRE)--May 8, 2001 Concepts Direct, Inc. (Nasdaq: CDIR CDIR Cumulative Damage Index Right Engine CDIR Chemical Demilitarization and Installation Restoration CDIR Channel Distribution Information at the Receiver ) announced today its results for the quarter ended March 31, 2001. Sales for the quarter ended March 31, 2001, were $12,092,000, a 5% decrease from sales of $12,743,000 for the same period in 2000. The Company had a net loss of $1,166,000, or $0.23 per share, for the quarter ended March 31, 2001, as compared to a net loss of $1,755,000, or $0.35 per share, in the same period of 2000. The Company's net loss of $1,166,000 for the quarter ended March 31, 2001, is from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the , as compared to a net loss from continuing operations for the quarter ended March 31, 2000, of $259,000, or $0.05 per share. J. Michael Wolfe Michael Wolfe (Born 3 April, 1945, United States) is a poet, author, and the President and Executive Producer of Unity Productions Foundation. He is also a frequent lecturer on Islamic issues at universities across the United States including Harvard, Georgetown, Stanford, SUNY , President and Chief Executive Officer of Concepts Direct, commenting on first-quarter results, said: "Response to our first-quarter catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. efforts were in line with internal expectations and historical results, but were below the high levels achieved last year during the same time period. Coming into 2001, we knew we would be facing increased postage POSTAGE. The money charged by law for carrying letters, packets and documents by mail. By act of congress of March 3, 1851, Minot's Statute at Large, U. S. 587, it is enacted as follows: 2.-Sec. 1. and paper costs and a somewhat weaker economy. In addition, we have higher real estate costs this year as a result of the sale/leaseback of our facility completed in the fourth quarter of last year. We have taken a number of measures to reduce our expenses, including streamlining catalog production, optimizing our circulation strategies, renegotiating certain vendor contracts, and reducing payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. . None of the benefit of these cost saving initiatives was realized in the first quarter, but we do expect to begin realizing benefit during the second quarter and to have full benefit during the second half of the year. "We have experienced some softness in our late March and April campaigns but, provided that consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. does not deteriorate de·te·ri·o·rate v. 1. To grow worse in function or condition. 2. To weaken or disintegrate. further, we expect our financial performance to improve during the second half of the year. Given our situation and the current business environment, we are focusing on improvement in net income at this time, even if it comes at the expense of revenue growth. If 2001 unfolds as we have forecast, it will represent another important step in our return to profitability and, ultimately, a return to growing our top line as well."
First-Quarter Financial Results
Three Months Ended March 31,
2001 2000
----------------------------
Sales $12,092,000 $12,743,000
Loss from Continuing Operations (1,166,000) (259,000)
Loss from Discontinued Operations (0) (1,496,000)
Net Loss $(1,166,000) $(1,755,000)
Basic/Diluted Loss Per Share from
Continuing Operations $(0.23) $(0.05)
Basic/Diluted Loss Per Share from
Discontinued Operations $(0.00) $(0.30)
Average Shares Outstanding 4,998,379 4,985,618
Key Developments ---------------- The Colorful Images Business Given its circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or , management believes the Colorful Images brand had a solid quarter. Revenues were up compared to the same period in 2000, although contribution was down. Catalog circulation was increased in the first quarter and response rates held up reasonably well despite the weakness in the economy, especially in the first part of the quarter. Contribution was adversely affected by higher paper and postage costs. In addition, the results from the first quarter of 2000 were exceptional (the best in the history of the brand) and that also is a factor in the unfavorable comparison. The performance of the brand in the first quarter of 2001 is in line with historical averages. Management's plan called for an increased emphasis on external prospecting and external prospecting revenue increased by 108%. Furthermore, management believes that these prospecting efforts have been immediately profitable. Management conducted a test of a new niche niche: see ecology. niche Smallest unit of a habitat that is occupied by an organism. A habitat niche is the physical space occupied by the organism; an ecological niche is the role the organism plays in the community of organisms found in the program in the first quarter of 2001, building upon the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. results from the Colorful Christmas Christmas [Christ's Mass], in the Christian calendar, feast of the nativity of Jesus, celebrated in Roman Catholic and Protestant Churches on Dec. 25. In liturgical importance it ranks after Easter, Pentecost, and Epiphany (Jan. 6). niche program in the fall of 2000. The tests involved the mailing of special versions of the Colorful Images catalog made for cat and PEANUTS pea·nut n. 1. A prostrate southern Brazilian plant (Arachis hypogaea) widely cultivated in tropical and warm temperate regions, having yellow flowers on stalks that bend over so that the seed pods ripen underground. 2. (R) niche buyers. Each group received an additional 16 pages of merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain targeted to their demonstrated interest. The incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. revenue generated was considerably greater than the incremental cost Incremental Cost The encompassing change that a company experiences within its balance sheet due to one additional unit of production. Notes: Incremental cost is the overall change that a company experiences by producing one additional unit of good. of adding the additional 16 pages. Management has identified additional niches within the Colorful Images database and intends to expand upon this marketing program. A price increase test for paper products was also conducted in January January: see month. and proved successful. This was the second such test of a price increase for paper products. Response rates remained essentially stable while Revenue Per Thousand catalogs mailed increased. Management plans to roll out the price increase to all customers during the summer of this year in an effort to realize the financial benefits during the fall season. ColorfulImages.com, in its first full quarter of operation, was responsible for just over 12% of total brand sales. As a result of efficiencies associated with processing orders from the Internet, the Internet, the, international computer network linking together thousands of individual networks at military and government agencies, educational institutions, nonprofit organizations, industrial and financial corporations of all sizes, and commercial enterprises Company has been able to lower fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. expenses associated with the brand. The Specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. Brands Business The Linda A set of parallel processing functions added to languages, such as C and C++, that allows data to be created and transferred between processes. It was developed by Yale professor David Gelernter, when he was a 23-year old graduate student. Anderson Anderson, river, Canada Anderson, river, c.465 mi (750 km) long, rising in several lakes in N central Northwest Territories, Canada. It meanders north and west before receiving the Carnwath River and flowing north to Liverpool Bay, an arm of the Arctic brand had lower revenue but improved contribution when comparing the first quarter of 2001 to the first quarter of 2000. From a contribution standpoint The Standpoint is a newspaper published in the British Virgin Islands. It was originally published under the name Pennysaver, largely as a shopping-coupon promotional newspaper, but since emerged as one of the most influential sources of journalism in the , Linda Anderson had its best first quarter ever. Circulation was reduced 64% but revenues declined only 42%. The brand has historically contributed most of its contribution in the fourth quarter of the year. All brands, other than Colorful Images, are in the process of moving to a magazine size format, primarily to achieve economies in print production and postage. Customers for Linda Anderson are responding favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. to the new format. The Snoopy Snoopy world’s most famous beagle. [Comics: “Peanuts” in Horn, 542] See : Dogs Snoopy imaginative dog. [Comics: “Peanuts” in Horn, 542–543] See : Illusion (TM) brand continues to perform well. Revenues are down compared to the first quarter of 2000. However, the first quarter of 2000 had unusually high consumer demand related to news generated by the passing of PEANUTS(R) creator Creator may refer to:
Charles Munroe Schulz, Charles Schulz, Schulz in February February: see month. of last year. Excluding the first quarter of 2000, the brand posted its best first quarter ever in 2001; the number of active (12 month) buyers grew by 22% over the prior year. The SnoopyStore.com website was responsible for more than 14% of total brand sales and customers acquired via the web appear to be converting effectively to catalog buyers as well. The Collectibles brand experienced a soft first quarter. Both revenue and contribution declined compared to the prior year's first quarter. This brand has been hit hard by the general weakness in the collectibles market as a whole and by the decreased circulation of the Linda Anderson catalog, traditionally a strong source of new names for this brand. Management believes the brand could be enhanced by having its own Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the site and plans to create a unique site for Collectibles; all Collectibles merchandise is currently sold via LindaAnderson.com. The Company conducted a successful mailing of its first ever continuity program, whereby a consumer places an order for a series of collectible collectible An asset of limited supply that is sought for a variety of reasons including, it is hoped, an increase in value. Stamps, antiques, coins, and works of art are among the many things usually classified as collectibles. figurines and the product is shipped to the consumer quarterly. This campaign, which featured the Charming charm n. 1. The power or quality of pleasing or delighting; attractiveness: a breezy tropical setting of great charm. 2. Tails line, posted an extraordinary response rate -- among the highest ever experienced by the Company. The Music Stand appears to be a brand that is far more seasonal than the Company's other brands; it is a brand that performs far better in the fall season than at other times of the year. With that in mind, circulation for the Music Stand was reduced by 75% in the first quarter of 2001 compared to the first quarter of 2000. Revenues decreased only 37% as a result and contribution was greatly improved. Management currently plans to increase circulation in the fall of 2001 as compared to the fall of 2000 and is optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that the course that has been set for this brand will prove successful. Business Outlook For the year 2001, management is emphasizing improvement in net income even if pursuing this course comes at the expense of top line growth. Management views achieving consistent profitability as its top priority. Nevertheless, management believes that achieving profitability in the short term will be difficult in the face of high costs and what is perceived per·ceive tr.v. per·ceived, per·ceiv·ing, per·ceives 1. To become aware of directly through any of the senses, especially sight or hearing. 2. To achieve understanding of; apprehend. to be a soft consumer market. The Company is incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. higher costs from postage rate increases, the increased cost of paper required to print its catalogs, lease expenses resulting from a sale/leaseback of its building in the fourth quarter of 2000, and the assumption of increased expenses related to the Company's Internet infrastructure. This will continue to place increased pressure on net income in 2001, particularly in the second quarter. Management is pursuing various initiatives to mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. the impact
of the cost increases. They include:
-- Re-sizing several of the Company's catalogs to take advantage of print efficiencies associated with production of "magazine" size catalogs. -- Operational efficiencies, including reduced customer service expense as an increasing number of consumers place orders via the Internet. -- Reduction in lease expenses and rates for various equipment and supplies. -- Reduction in payroll through attrition and the elimination of selected positions. Cash The Company had $2,391,000 in cash as of 3/31/01. This compares to a zero cash balance in addition to borrowing against its line of credit at the same time last year. Management believes the cash position will allow it to achieve its operational objectives, including its desired inventory levels for the fall season. Inventory Inventory for gift, home decorative, collectible, and casual apparel items was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $4,283,000 as of 3/31/01, compared to approximately $7,946,000 as of 3/31/00. This represents a decrease of over $3,600,000 during the past year. This improvement is the result of inventory liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy at the Company's retail outlets retail outlet n → punto de venta retail outlet n → point m de vente retail outlet retail n → and NewBargains.com as well as vendor returns and what management believes to be more effective purchasing. Backorder Backorder is a distribution term that refers to the status of items on a purchase order in the event that some or all of the inventory required to fulfill the order is out of stock. for the quarter ended 3/31/01 was 14.0%, compared to 17.0% during the quarter ended 3/31/00. The backorder rate decreased in a period in which the Company substantially reduced inventory levels, indicating that the inventory reduction was achieved without adversely impacting customer satisfaction. Excess inventory had been a significant problem for the Company since 1998 but is now approaching acceptable levels. Management anticipates continued improvement in this area. Key Statistics The Company releases selected Key Statistics regarding its brands. These statistics are intended to provide an indication of trends related to the brand. The Key Statistics summary page can be found at the end of this press release. Management Conference Call In conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the first-quarter earnings release for Concepts Direct, Inc., management will conduct a conference call on Wednesday Wednesday: see week. , May 9, 2001, at 9:00 a.m. Mountain Time. J. Michael Wolfe, President & CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , will host the call. To participate in the conference call, dial 800/450-0819 just prior to 9:00 a.m. Mountain Time, Wednesday and reference Concepts Direct, Inc. Q1 Financial Results. If you are unable to participate during the call, the call will be available via digitized replay between 2:00 p.m. MDT MDT abbr. Mountain Daylight Time MDT (in the US and Canada) Mountain Daylight Time MDT n abbr (US) (= mountain daylight time) → , May 9, 2001, and 11:59 p.m. MDT, May 16, 2001, by calling 800/475-6701, access code: 585197. About Concepts Direct, Inc. Concepts Direct is a direct retailing company focused on building its multiple catalog brands and associated websites. The Company sells personalized per·son·al·ize tr.v. per·son·al·ized, per·son·al·iz·ing, per·son·al·iz·es 1. To take (a general remark or characterization) in a personal manner. 2. To attribute human or personal qualities to; personify. paper products and a diverse line of merchandise, including gift items, home decorative items, collectibles and apparel. Concepts Direct sells its merchandise via the Colorful Images, Linda Anderson, Snoopy(TM) etc., Linda Anderson's Collectibles and the Music Stand catalogs. In addition, the Company owns and operates associated websites, including www.ColorfulImages.com, www.LindaAnderson.com, www.SnoopyStore.com, and www.theMusicStand.com. Cautionary Statement This press release contains certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. as such term is defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Company statements that are not historical facts, including statements about the Company's expectations, beliefs, plans and objectives, are forward-looking statements and involve various risks and uncertainties, including the risks associated with starting new businesses. Additional discussion of factors that could cause actual results to differ materially from management's expectations, beliefs, plans and objectives is contained in the Company's SEC filings. The Company considers a brand's contribution to be revenue from the brand minus advertising expenses, certain product, delivery, and brand-related general and administrative expenses which management believes would be eliminated if the brand was discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: .
Selected Key Statistics -- Concepts Direct, Inc.
(in thousands except percentage and average order amounts)
Q1-01 2000 Q4-00 Q3-00 Q2-00 Q1-00
----- ----- ----- ----- ----- -----
Approx. Catalogs Circulated (1)
---------------------------
Colorful Images 8,968 30,751 5,227 9,636 7,604 8,284
Linda Anderson 676 5,291 1,472 1,398 534 1,887
Snoopy(TM) etc. 431 1,497 235 548 534 180
Collectibles 389 1,633 589 176 399 469
the Music Stand 106 2,028 692 463 448 425
Totals 10,570 41,200 8,215 12,221 9,519 11,245
Customer Database Size (2) (8)
----------------------
Colorful Images 9,612 9,445 9,287 9,144 9,037
Linda Anderson 850 834 795 770 750
Snoopy(TM) etc. 270 252 225 214 193
Collectibles 221 213 202 196 188
the Music Stand 2,170 2,163 2,147 2,141 2,135
Totals 12,240 12,050 11,844 11,652 11,523
Active Customers (3) (8)
-----------------
Colorful Images 1,122 1,101 1,087 1,060 1,054
Linda Anderson 95 107 134 149 167
Snoopy(TM) etc. 50 48 44 41 39
Collectibles 35 38 42 46 48
the Music Stand 39 43 52 49 43
Totals 1,309 1,302 1,293 1,293 1,295
Average Order Amount
--------------------
Colorful Images $28 $27 $28 $27 $27 $27
Linda Anderson $59 $58 $58 $58 $58 $57
Snoopy(TM) etc. $72 $76 $81 $76 $75 $73
Collectibles $61 $57 $57 $55 $56 $57
the Music Stand $59 $58 $58 $58 $58 $58
Catalog Merchandise Mix (4)
------------------------
Paper Products 54% 47% 46% 54% 45% 45%
Other Merchandise 46% 53% 54% 46% 55% 55%
Catalog Customer Marketing (6)
---------------------------
Sales $8,232 $40,173 $14,259 $8,296 $8,146 $9,563
Advertising Expense $2,593 $10,670 $3,477 $2,651 $2,280 $2,273
% of Sales 31.50% 26.60% 24.40% 32.00% 28.00% 23.80%
Catalog Prospect Marketing (7)
---------------------------
Sales $3,042 $12,086 $4,591 $2,365 $2,240 $2,821
Advertising Expense $1,560 $5,478 $1,927 $1,279 $1,088 $1,158
% of Sales 51.28% 45.30% 42.00% 54.10% 48.60% 41.00%
E-Commerce Sales as a % of Total Brand Sales (9)
---------------------------------------------
ColorfulImages.com 12.02%
LindaAnderson.com 8.68%
SnoopyStore.com 14.31%
theMusicStand.com 10.07%
All websites combined 12.64%
Gross Profit
-------------
Margin (5)(10) 42.20% 41.12% 45.87% 39.36% 36.91% 38.85%
-------
SG&A costs as % of
------------------
sales (10) 50.16% 43.10% 37.62% 52.17% 46.87% 40.32%
------
Balance Sheet Information
-------------------------
Cash $2,391 $2,789 $0 $0 $0
Deferred Advertising $3,108 $3,747 $4,811 $3,369 $2,804
Inventories $4,688 $4,841 $5,545 $5,941 $5,664
Property and Equipment $9,417 $9,607 $10,706 $11,880 $12,232
Long-Term Liabilities $10,941 $10,910 $5,421 $4,531 $4,627
Total Liabilities $16,307 $16,476 $18,282 $15,650 $13,481
Stockholders' Equity $9,895 $11,156 $7,446 $10,283 $12,133
Effective Income tax rate 0% 0% 0% 0% 0% 0%
-------------------------
1999 Q4-99 Q3-99 Q2-99 Q1-99
----- ----- ----- ----- -----
Approx. Catalogs Circulated (1)
---------------------------
Colorful Images 26,550 5,329 8,152 6,361 6,708
Linda Anderson 9,701 3,001 2,073 1,520 3,107
Snoopy(TM) etc. 1,579 150 204 361 864
Collectibles 2,085 430 444 551 660
the Music Stand 1,202 580 622 0 0
Totals 41,416 9,490 11,495 9,092 11,339
Customer Database Size
----------------------
Colorful Images 8,899 8,640 8,507 8,293
Linda Anderson 713 644 595 513
Snoopy(TM) etc. 176 164 150 122
Collectibles 176 161 146 122
the Music Stand 2,127 2,110 0 0
Totals 11,338 11,121 8,979 8,956
Active Customers (3) (8)
----------------
Colorful Images 1,024 1,170 1,331 1,429
Linda Anderson 185 255 287 308
Snoopy(TM) etc. 41 56 60 57
Collectibles 49 81 89 92
the Music Stand 37 142
Totals 1,282 1,611 1,660 1,758
Average Order Amount
-------------------
Colorful Images $28 $27 $28 $29 $29
Linda Anderson $58 $57 $58 $59 $59
Snoopy(TM) etc. $64 $66 $62 $62 $62
Collectibles $61 $58 $62 $62 $63
the Music Stand $55 $58 $49
Catalog Merchandise Mix (4)
------------------------
Paper Products 41% 40% 45% 40% 38%
Other Merchandise 59% 60% 55% 60% 62%
Catalog Customer Marketing (6)
---------------------------
Sales $37,521 $14,372 $7,531 $7,472 $8,146
Advertising Expense $9,228 $3,276 $1,934 $1,958 $2,060
% of Sales 24.60% 22.80% 25.70% 26.20% 25.30%
Catalog Prospect Marketing (7)
---------------------------
Sales $16,760 $5,622 $3,274 $3,446 $4,418
Advertising Expense $7,163 $2,138 $1,294 $1,677 $2,054
% of Sales 42.70% 38.00% 39.50% 48.70% 46.50%
E-Commerce Sales as a % of Total Brand Sales (9)
---------------------------------------------
Colorful Images - - - - -
Linda Anderson - - - - -
Snoopy(TM) etc. - - - - -
Collectibles - - - - -
the Music Stand - - - - -
All websites combined - - - - -
Gross Profit Margin (5)(10) 34.46% 28.67% 36.50% 37.41% 36.25%
-------------------
SG&A costs as % of sales (10) 40.84% 34.13% 43.78% 46.44% 41.00%
------------------------
Balance Sheet Information
-------------------------
Cash $1,231 $0 $481 $3,402
Deferred Advertising $2,115 $4,256 $2,726 $3,088
Inventories $5,221 $9,115 $8,933 $9,256
Property and Equipment $12,484 $12,328 $11,807 $12,691
Long-Term Liabilities $4,818 $5,681 $5,881 $5,967
Total Liabilities $12,305 $15,545 $12,296 $12,687
Stockholders' Equity $13,889 $15,572 $16,307 $17,036
Effective Income tax rate -20% 4% -34% -34% -34%
-------------------------
(1) Includes approximate number of catalogs mailed and catalogs
distributed in product shipments. Microniche mailings are
attributed to the related catalog title.
(2) Approximate size of proprietary customer database, including
customers, catalog requesters, gift recipients and catalog
referrals, at period end.
(3) Approximate number of prior-12-month buyers at period end.
(4) Estimated percentage of Company catalog sales attributable to
major merchandise categories.
(5) Net Sales less product cost, order fulfillment cost and order
shipping cost.
(6) Gross catalog sales and the related advertising expense to
customers of the same catalog title, prior to refunds.
(7) Gross catalog sales and the related advertising expense to
individuals not previously classified as customers of the
catalog title, prior to refunds.
(8) Counts for a period may vary from one report to another due to
factors such as elimination of duplicate customer records,
elimination of undeliverable address records, changes in
classification, etc.
(9) Includes only sales not directly attributable to specific
catalog advertising programs.
(10) Certain historical amounts have been restated to conform to
the current financial presentation.
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