Investment Club Fall 2017

Transcription

1 Investment Club Fall 2017 President Sarah Graney Vice President Devon Krapcho Board Member Alyssa Loffredo Board Member Rafa Campos Board Member Niko Martinovic Treasurer Christian Brunner-Lopez Secretary Alex Kruszewski Mentorship Director Steve Nash Mentorship Director Carl Schiro Website Coordinator Lauren Weetman

2 Agenda! Workshop! Market & Portfolio Update! Pitch! Announcements 2

3 Basic & Advanced Data Analysis and Financial Valuation Niko Martinovic

4 The Three Financial Statements! Income Statement! Balance Sheet! Statement of Cash Flows! Where do I find this information?! EDGAR in Company 10-K (Annual) and 10-Q (Quarterly) ( arch.html) 4

5 Income Statement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

6 Balance Sheet!"#$!"#% &''()' **+,--./0*&11.01!!!!"#$% +!!!!!!!!!!!!!!!! &'()*** +!!!!!!!!!!!!!!!!!!!,()***!!!!-../012$!34.456#784 +!!!!!!!!!!!!!!!! 9*9)*** +!!!!!!!!!!!!!!!!!,:9)***!!!!;4<.%#1=5$4!>16412/<? +!!!!!!!!!!!!! &),&9)*** +!!!!!!!!!!!!!! +!!!!!!!!!!!!!!!!!! B*)*** +!!!!!!!!!!!!!!!!! &**)*** **)2034*+,--./0*& *************!5#6!5""" 7************** #58#95"""!!>164$2C412$ +!!!!!!!!!!!!! &),**)*** +!!!!!!!!!!!!!! &)(**)*** +!!!!!!!!!!!!!!!! E:*)*** +!!!!!!!!!!!!!!!!!,9*)***!!!!FG05AC412 +!!!!!!!!!!!!!!!! H'*)*** +!!!!!!!!!!!!!!!!! HE*)***!!!!I058=51J +!!!!!!!!!!!!! &)B**)*** +!!!!!!!!!!!!!! &),**)***!!!!-..0C08#24=!K4A<4.5#25/1 +!!!!!!!!!!!!!!! L(99)***M +!!!!!!!!!!!!!!!! L&:9)***M 7*************!5$6%5""" 7**************!5A"%5""" )B)&C*&''()' 7************* $5!895""" 7************** %5A!!5""" CD&EDCD)D('*=*')B+FGBCH(I'J*(KLD)M **+,--./0*C?3N?4?0?.1!!!!-../012$!N#?#784 +!!!!!!!!!!!!!!!! (B*)*** +!!!!!!!!!!!!!!!!! +!!!!!!!!!!!!!!!!!! H9)*** +!!!!!!!!!!!!!!!!!!! :9)***!!!!>1./C4!P#Q4$!N#?#784 +!!!!!!!!!!!!!!!! &B')*** +!!!!!!!!!!!!!!!!!!! B*)***!!!!R2%4<!FQA41$4$!N#?#784 +!!!!!!!!!!!!!!!! &:9)*** +!!!!!!!!!!!!!!!!! &E*)***!!!!S/24$!N#?#784 +!!!!!!!!!!!!!!!! (:9)*** +!!!!!!!!!!!!!!!!! (**)*** **)2034*+,--./0*C?3N?4?0?.1 7************* #5""A5""" 7***************** 8!"5""" **E2/O1*:3<3N4. 7*************!5"""5""" 7**************!5"""5""" +!!!!!!!!!!!!!!!! &&*)*** +!!!!!!!!!!!!!!!!! &**)***!!!!"/12<57024=!"#A52#8!51!FQ.4$$!/U!N#< +!!!!!!!!!!!!! &)9,*)*** +!!!!!!!!!!!!!! +!!!!!!!!!!!!!!! LH9*)***M +!!!!!!!!!!!!!!!! LH9*)***M!!!!342#514=!F#<151J$ +!!!!!!!!!!!!! ()(',)*** +!!!!!!!!!!!!!! &)'9()*** **)2034*'02PQR24O.-1J*(>,?0< 7************* A5!8S5""" 7**************!5%"!5""" )B)&C*CD&EDCD)D('*=*')B+FGBCH(I'J*(KLD)M 7************* $5!895""" 7************** %5A!!5""" 6

7 Cash Flow Statement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

8 Enterprise Value(EV), EBITDA! EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization! Why do we care about this?! It s a PROXY for Free Cash Flow (FCF)! It is not free cash flow, but it is a great way to standardized your analysis of various companies! Enterprise Value(EV) of a Firm! = Common Stock + Preferred Stock + Debt + Minority Interest - Cash! =Total Debt + Total Equity Cash! EV/EBITDA! When you compare EV/EBITDA of various firms, you can see which firms have higher and lower multiples " What does this mean? 8

9 Relative Valuation/Comps Valuation Statistics Market Net Enterprise EV / Revenue EV / EBITDA EV / EBIT Company Ticker apitalizatio Debt Value 2015A 2016E 2017E 2015A 2016E 2017E 2015A Teradata Corporation TDC 3,889 (413) 3, x 1.5x 1.6x 9.2x 5.9x 7.9x 12.3x NetApp, Inc. NTAP 10,693 (2,87 1) 7, x 1.4x 1.4x 8.1x 7.9x 7.1x 10.9x Seagate Technology plc STX 13,608 2,377 15, x 1.4x 1.4x 7.1x 9.3x 6.9x 10.9x Hewlett Packard Enterprise Compa HPE 39,440 3,153 42, x 0.8x 0.9x 5.6x 5.1x 5.3x 11.4x Tech Data Corporation TECD 2,984 (326) 2, x 0.1x 0.1x 8.0x 7.3x 7.0x 10.1x Western Digital Corporation WDC $22,567 $7,97 2 $30, x 2.4x 1.6x 1 0.6x x 5.6x 1 7.3x Low $2,984 ($2,87 1 ) $2,658 $0 $0 $0 $6 $5 $5 $1 0 Mean 14, , x 1.1x 1.1x 7.6x 7.1x 6.8x 11.1x Median 10,693 (326) 7, x 1.4x 1.4x 8.0x 7.3x 7.0x 10.9x High $39,440 $3,1 53 $42,593 $1 $2 $2 $9 $9 $8 $1 2 Operating Statistics Revenue Revenue Growth EBITDA EBITDA Growt h EBIT Company Ticker 2015A 2016E 2017E '15-16 ' A 2016E 2017E '15-16 ' A Teradata Corporation TDC 2,530 2,257 2,116 (1 0.8%) (6.2%) % (25.5%) 283 NetApp, Inc. NTAP 6,123 5,576 5,434 (8.9%) (2.5%) , % 12.0% 716 Seagate Technology plc STX 13,739 11,155 11,046 (18.8%) (1.0%) 2,261 1,720 2,331 NM 35.6% 1,471 Hewlett Packard Enterprise Compa HPE 52,107 50,441 48,721 (3.2%) (3.4%) 7,671 8,284 8, % NM 3,724 Tech Data Corporation TECD 27,671 26,010 26,311 (6.0%) 1.2% % 5.0% 264 Western Digital Corporation WDC $1 4,57 2 $1 2,958 $1 8,691 (1 1.1%) 44.2% $2,87 9 $2,524 $5,47 0 NM % $1,7 65 Low $2,530 $2,257 $2,116 (18.8%) (6.2%) $37 7 $588 $ % (25.5%) $283 Mean 18,625 17,357 16,829 (1 0.4%) (3.3%) 2,817 2,895 2, % 7.4% 1,549 Median 9,931 8,365 8,240 (9.9%) (3.0%) 1,611 1,354 1, % 12.0% 1,094 High $52,1 07 $50,441 $48,7 21 (3.2%) (1.0%) $7,671 $8,284 $8, % 35.6% $3,7 24 7

10 PPE and D&A (in millions of $) PPE 2,224 4,067 3,700 3,293 2,965 3,503 3,769 4,145 4,560 5,016 5,518 % of Revenue 23.3% 32.6% 24.1% 21.8% 20.3% 27.0% 24.9% 24.9% 24.9% 24.9% 24.9% CapEx % of Revenue 8.2% 5.7% 6.2% 4.2% 4.2% 4.5% 4.3% 4.3% 4.3% 4.3% 4.3% D&A ,233 1,244 1,114 1,154 1,334 1,468 1,614 1,776 1,953 % of PPE 27.1% 20.3% 33.3% 37.8% 37.6% 32.9% 35.4% 35.4% 35.4% 35.4% 35.4% Metrics and Drivers Revenue 9,526 12,478 15,351 15,130 14,572 12,994 15,164 16,680 18,348 20,183 22,202! Property Plant and Equipment-Fixed Assets! Capital Expenditures (CapEx)! Capital spent on acquiring fixed assets! Depreciation and Amortization! Assets lose value overtime (D)! Spreading payments over multiple periods (A) 8

11 Net Working Capital (in millions of $) Accounts Receivables 1,206 2,364 1,793 1,989 1,532 1,461 1,976 2,174 2,391 2,630 2,893 As % of Revenue 12.7% 18.9% 11.7% 13.1% 10.5% 11.2% 13.0% 13.0% 13.0% 13.0% 13.0% Inventories 577 1,210 1,188 1,226 1,368 2,129 2,497 3,715 4,087 4,495 4,945 As % of Cost of Revenue 7.5% 13.7% 10.8% 11.4% 13.2% 22.3% 22.3% 22.3% 22.3% 22.3% 22.3% Other Current Assets As % of Revenue 2.2% 2.9% 2.0% 2.8% 2.2% 4.7% 2.8% 2.8% 2.8% 2.8% 2.8% Current Assets 1,997 3,933 3,289 3,632 3,227 4,206 4,899 6,358 6,994 7,693 8,462 Accounts Payable 1,545 2,773 1,990 1,971 1,881 2,056 2,130 2,355 2,603 2,878 3,182 As % of Cost of Revenue 20.0% 31.4% 18.1% 18.3% 18.2% 21.5% 19.0% 19.0% 19.0% 19.0% 19.0% Accrued Expenses As % of Cost of Revenue 4.5% 5.2% 4.4% 3.8% 4.5% 10.4% 4.5% 4.5% 4.5% 4.5% 4.5% Accrued Compensation As % of Cost of Revenue 0.0% 4.3% 4.1% 4.3% 3.2% 4.1% 4.0% 4.0% 4.0% 4.0% 4.0% Accrued Warranty As % of Revenue 1.4% 1.4% 0.7% 0.8% 1.0% 1.3% 1.4% 1.4% 1.4% 1.4% 1.5% Current Liabilities 2,026 3,777 3,037 2,962 2,831 3,615 3,284 3,634 4,022 4,450 4,924 NWC (29) ,615 2,723 2,972 3,243 3,538 Increases in NWC (274) 195 1,024 1, Metrics and Drivers Revenue 9,526 12,478 15,351 15,130 14,572 12,994 15,164 16,680 18,348 20,183 22,202 Cost of Revenue 7,735 8,840 10,988 10,770 10,351 9,559 11,211 12,394 13,701 15,147 16,745! Working Capital=Current Assets-Current Liabilities! Why do we care? Sources and Uses of Cash! 9

12 Time Value of Money! A dollar today is better than a dollar tomorrow! Because you can invest!! Classic Lottery Example! Do you want 500,000 at the end of this year and next year! Or 900,000 dollars right now?! Well let s assume you invest in the Stock Market and expect a return of 10%! You need to discount back the two 500,000 payments to the present time period " That will help you discern which one to choose! After some simple math you find that you want the 900,000 right now! So what is the Value of Firm " The present value of a firms future cash flows! This of the cash flows as payments like the lottery example 12

13 FCF (in millions of $) Revenue 9,526 12,478 15,351 15,130 14,572 12,994 15,164 16,680 18,348 20,183 22,202 % Growth 31.0% 23.0% -1.4% -3.7% -10.8% 16.7% 10.0% 10.0% 10.0% 10.0% Expenses Cost of Revenues 7,735 8,840 10,988 10,770 10,351 9,559 11,211 12,394 13,701 15,147 16,745 As % of Revenue 81.2% 70.8% 71.6% 71.2% 71.0% 73.6% 73.9% 74.3% 74.7% 75.0% 75.4% Gross Profit 1,791 3,638 4,363 4,360 4,221 3,435 3,953 4,286 4,647 5,036 5,457 Gross Margin 18.8% 29.2% 28.4% 28.8% 29.0% 26.4% 26.1% 25.7% 25.3% 25.0% 24.6% Selling, General and Administrative ,001 1,101 1,211 1,332 As % of Revenue 3.0% 4.2% 4.6% 5.4% 5.4% 7.7% 6.0% 6.0% 6.0% 6.0% 6.0% R&D 703 1,055 1,572 1,661 1,646 1,627 1,908 2,110 2,332 2,578 2,850 As % of Revenue 7.4% 8.5% 10.2% 11.0% 11.3% 12.5% 12.6% 12.6% 12.7% 12.8% 12.8% Other Unique As % of Revenue 0.0% 0.6% 0.9% 0.6% 1.2% 2.7% 2.9% 1.0% 1.0% 1.0% 1.0% EBIT 806 1,985 1,947 1,791 1, ,009 1,031 1,045 1,052 EBIT Margin 8.5% 15.9% 12.7% 11.8% 11.1% 3.6% 4.6% 6.1% 5.6% 5.2% 4.7% Tax Rate 8.3% 19.8% 7.7% 7.1% 0.0% 0.0% 13.0% 16.6% 21.3% 27.3% 34.9% EBIAT 739 1,592 1,797 1,664 1, Increases in NWC (274) 195 1,024 1, CapEx D&A ,233 1,244 1,114 1,154 1,334 1,468 1,614 1,776 1,953 FCF 563 1,515 1,982 1,862 2, ,391 1,401 1, % 30.8% -6.1% 28.2% -64.8% -68.7% 84.9% 186.0% 0.7% -0.6%! WACC=Weighted Average Cost of Capital 11

14 DCF EBITDA Exit Multiple PV of Projected Period 4,006 Perpetuity Growth Model PV of Projected Period 4, EBITDA 3,006 Multiple 7.0x Terminal Value 21,041 Years 5 PV of Terminal Value 15, FCF 1,393 Perp. FCF Growth Rate 3% Terminal Value 31,982 Years 5 PV of Terminal 22,840 Total Enterprise Value 19,033 Less: Total Debt 13,073 Add: Cash and Equivalents 4,940 Total Enterprise Value 26,846 Less: Total Debt 13,073 Add: Cash and Cash Equivalents 4,940 Total Equity 10,900 Shares Outstanding 285 Total Equity 18,713 Shares Outstanding 285 Implied Share Price $38.18 Implied Share Price $65.55 Implied Share Price Method Price Weight Multiple $ Perp $ Implied Share Price $55.97 Implied Premium (Discount) (27.4%) Downside: (27.4%) Recommendation: Sell 12

15 Glossary of Terms! Enterprise Value (EV)! EBITDA! Earnings Before Interest, Taxes, Depreciation and Amortization! Net Debt! Market Capitalization! FCF! DCF! WACC/Discount Rate! Cost of Equity! Cost of Debt! Net Working Capital= Current Assets-Liabilities! Accounts Receivable, Inventory, Accounts Payable! Capital Expenditures! Property Plant and Equipment 15

16 MARKET & PORTFOLIO UPDATE 16

17 Market Update! Hurricane Irma hit Florida Saturday night and continued through Monday leaving many without power and with damaged homes! Last Thursday a major Chinese announced that it would stop trading Bitcoin by the end of the month, a huge blow to the industry! At its high, China accounted for 90% of Bitcoin trading volume!! Apple unveiled its new line of iphones, Apple Watches and Apple TVs on Tuesday! The iphone X will start at $999, Apple s most expensive phone to date! The UN ratcheted up sanctions on North Korea on Monday! But the U.S. had to settle for weaker penalties to appease Russia and China! Democrats announced that they had reached an agreement to protect Dreamers earlier this week, however the White House claims that while talks were constructive, they remain short of a deal leading to increased uncertainty for millions of illegal immigrants in the US! Martin Shkreli had his bail revoked yesterday after posting an offer to pay $5,000 per strand Hillary Clinton s hair 17

18 Portfolio Update 16.0% 14.0% S&P 500 NDIC YTD Performance 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Weekly Return NDIC 1.0% S&P 1.3% YTD Return NDIC 15.2% S&P 11.5%

19 STOCK: CANADA GOOSE RECOMMENDATION: SELL TEAM: UNIVERSITY OF NOTRE DAME RAFAEL CAMPOS ALYSSA LOFFREDO STEVEN NASH

20 Investment Consideration: Canada Goose (TSX: GOOS) Recommendation: Canada Goose (TSX: GOOS) is not an attractive investment at its current price, therefore we recommend a sell on the position Rationale: Canada Goose s main competitive advantage is the strength and exclusivity of its brand! 1 Management s expansion plans could compromise brand! 2 Revenue is driven by durable, non-consumable products! 3 Industry transformations not beneficial to Canada Goose Price Target: CAD$ % downside to current price of CAD$23.13!

21 Company Overview Company overview! Canada Goose is a global outerwear brand! Strengths include authentic heritage and superior warmth and quality! Products sold through outdoor and luxury retailers, e-commerce, and two retail stores! Headquartered in Toronto Financial summary Ownership summary 22% Bain Capital 23% 55% Dani Reiss Public Recent stock price performance (in millions of CAD$) $450 $300 $150 $0 $403.8 $290.8 $218.4 $ % 52.5% 41.9% 38.6% Revenue Gross Margin 60% 50% 40% 30% Share Price (CAD$) '()*+, -.)*+, '(/*+, 012*+, 013*+, -14*+, :;<36=8 & % $! # Volume (in millions) "

22 1 Risk of losing focus through expansion Expansion strategies Build brand awareness internationally and expand geographic footprint Expand product offering beyond outerwear to Spring and Fall Accelerate Direct to Consumer growth by focusing on e-commerce and opening retail stores Moving away from competitive advantage Exclusivity Authenticity Functionality Worries with retail Kevin Plank, Under Armour CEO, claims the company will open 200 stores in 2016 Under Armour announces in Q that they are closing 33 factory outlets and 23 branded stores in FY2017 Geographic expansion could erode brand 100% 76% Brand awareness Key competitive advantage is their exclusivity, which could be threatened by excessive expansion Canada Goose s main competitive advantage is their brand, but it is risky to assume that their brand will be able to support various paths of growths 0% Canada 16% USA 4

23 2 Lack of recurring revenues High price limits multiple purchases Apparel Parka $1,000 $350 $320 $250 $400 $100 $75 $80 Days in inventory Revenue ($) Flat growth in outerwear CAGR 3.6% % % 2.1% 2.0% Tops Bottom Swimwear Intimates Outerwear Brand equity less beneficial Canada Goose Lululemon Columbia Under Armour Canada Goose jackets last several years, limiting replacement purchases Most people only have one parka in their closet, limiting the number of purchases per customer 5

24 3 Shifting industry Recent shift away from luxury goods Spending more on experiences Purchases of luxury goods ($ billions)! Luxury cruises! Luxury hospitality! Fine food and wine! Luxury jackets and backpacks! Personal luxury goods! Luxury jewelry Shifting consumer preferences CH;F1/;31I1)/;.)691J@=;F8J(1=8;H;3?K8;@6;=A6L;@A87;6MMG $!# %%# %%# CD6);78;?@E=;?7.6)@(2@;@6;F1/;@A8;3(@8=@;@)829G!"# %&# "# -4)88 >8?@A8);(4)88;26);9?=(4)88 B?=(4)88 Growth of fast fashion % growth Leading fast fashion brands Total global apparel and footwear %

25 Valuation summary FCF Build (Base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evenue: slowdown in wholesale growth due to pricing pressure from e-commerce and retail struggles; DTC growth associated to new e-commerce channels and retail store openings COGS: decrease as % of revenue driven by shift to DTC channels SG&A: increase due to overhead costs associated with new retail stores EBIT: 320 bps margin expansion driven by large shift to DTC, partially offset by increase in SG&A Capex: held between 6-8% of revenue per management guidance; increase due to retail openings,

26 Key risks with recommendation Profitability can improve Movement to direct to consumer channels will help improve profitability, but even margin expansion doesn t justify current valuation Expansion efforts can be successful GOOS can see significant revenue growth from expansion efforts, but this is also reflected in current stock price 2016 revenue 2017 revenue Gross margin by channel 11% 29% 80% 60% 47% 73% 40% 89% 71% 20% Wholesale Direct to consumer Wholesale Direct to consumer 0% Wholesale Direct to consumer &

27 Recommendation Downside Base Upside Price Target: $9.80 Downside: 57.63% Price Target: $17.28 Downside: 25.29% Price Target: $23.06 Downside: 0.30% Recommendation: Canada Goose (TSX: GOOS) is not an attractive investment at its current price, therefore we recommend a sell on the position R

28 Appendix +#

29 Appendix DCF (Base) & WACC calculations d8();q;[bhvb- P!Q"; +"^QI; V8)7?2(3;5(318 P"]$!&; Q$^"_; a5;6m;v8)7?2(3;5(318 P+]&%#; a5;6m;d<d!!!; [5 P!]#&!; [IJ8==;<(=A W [\1?@/;5(318 P+]&$R; B?31@89;UA()8=;S1@=@(29?24 +#,; H7.3?89;UA()8;a)?J8 P+,^!&; 7,-K<9*@,LM9,:*C9-?.9?-< [\1?@/ P!]$$&; R+^"_; B8F@!"$; &^,_; V6@(3 P!]%&!; `?=K;D)88 '`a <6=@;6M;B8F@c V(I!^+_; Q^#_;!^",; $^+_;!Q^#_; +$^#_; "^+_; T4@@R +"^#_; ++

30 Appendix FCF (Downside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

31 Appendix DCF (Downside) d8();q;[bhvb- P+Q%; +"^QI; V8)7?2(3;5(318 P!]++,; Q$^"_; a5;6m;v8)7?2(3;5(318 P+]+$R; a5;6m;d<d +""; [5 P+]!&!; [IJ8==;<(=A W [\1?@/;5(318 P+]#$&; B?31@89;UA()8=;S1@=@(29?24 +#,; H7.3?89;UA()8;a)?J8 PR^&#; +"

32 Appendix FCF (Upside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

33 Appendix DCF (Upside) d8();q;[bhvb- P""#; +"^QI; V8)7?2(3;5(318 P$]$%%; Q$^"_; a5;6m;v8)7?2(3;5(318 P!]$!$; a5;6m;d<d!,&; [5 P!],#+; [IJ8==;<(=A W [\1?@/;5(318 P!]$%,; B?31@89;UA()8=;S1@=@(29?24 +#,; H7.3?89;UA()8;a)?J8 P!"^#%; +Q

34 Appendix Comparable Companies Analysis +,-W<9* X<9 )>9<-L-MN< )Y*Z*;<=<>?< )Y*Z*)FG7E4 E<S9 Y,:?< %31!4 %315) %31") %31!4 %315) %31") %31!4 >-UB-fcegeg P&]$$#; XP,!+Y; P,],+R; "^,I; "^"I; "^#I; +,^RI; +Q^+I; +"^QI;!+^%I; >-UB-fc<Se' $]#%"; X%!!Y; "]$$+; +^$I; +^$I; +^"I; +#^,I; +#^%I; R^&I; +"^!I; >du[c5d<!$]qr";!]%+$;!,]!#,;!^"i;!^"i;!^+i; +$^+I; +$^"I; +"^!I; +%^%I; '62J38);U^.^-^ bhvc's>< %]!""; X+!!Y; %]++#; Q^RI; Q^!I; $^%I; +,^$I; +Q^!I; +"^RI; +R^QI; g298);-)761)];h2j^ >du[cg--,]"r$;,&r; &]+&"; +^,I; +^%I; +^$I; +$^%I; +,^RI; +Q^$I; 7C_RBAAC H%2&&"* H%%1* H%2!!6* 6^%V* 5^3V* $^0V* $3^!V* 0$^!V* %!^!V* $$^"V* e6l P$]#%"; XP,!+Y; P"]$$+; +^$I; +^$I; +^"I; +#^,I; +#^%I; R^&I; +"^!I; '8(2 +#]+$Q; "&,; +#]Q"!; "^#I;!^,I;!^QI; +$^RI; +$^%I; +"^!I; +&^+I; '89?(2,]"R$; X+!!Y;,],+R;!^"I;!^"I;!^+I; +$^%I; +Q^+I; +"^QI; +R^QI; h?4a P!$]QR"; P!]%+$; P!,]!#,; Q^RI; Q^!I; $^%I; +,^RI; +,^RI; +Q^$I;!+^%I; AL<-,9M>K*C9,9MN9M.N ;<=<>?< ;<=<>?<*B-8`9/ )FG7E4 )FG7E4*B-8`9/ 7M.W<- %31!4 %315) %31") 1!a15 15a1" %31!4 %315) %31") 1!a15 15a1" %31!4 >-UB-fcegeg P!]#%+; P!]""R; P!]Q&%; +"^Q_; +#^%_; P$"#; PQ++; PQ,#; +&^,_; ++^%_; P"Q,; >-UB-fc<Se'!]",,;!]$$Q;!]Q%";!^R_; $^&_; "!+; "!$; "Q!; +^#_; &^%_;!%+; >du[c5d< +!]#+R; ++]&Q%; +!]RR!; X+^$_Y R^%_; +]R!Q; +]R#!;!]#%Q; X+^!_Y &^Q_; +]%$$; '62J38);U^.^-^ bhvc's>< +]#$#; +]+&Q; +]"+,; +"^R_; ++^+_; "Q!; $#!; $$+; +$^+_; R^,_; "+"; g298);-)761)];h2j^ >du[cg-- $]&!Q; Q]!Q&; Q]&$#; R^#_; ++^+_; Q%!; $Q,; Q"#; X+&^%_Y +Q^R_; 7C_RBAAC H%61* H0"&* H&66* 01^6#* 03^1#* H$0* H5$* H133* &1^6#* 0&^%#* H&"* e6l P+]#$#; P+]+&Q; P+]"+,; X+^$_Y $^&_; P"!+; P"!$; P"Q!; X+&^%_Y &^Q_; P!%+; '8(2 $]$%$; $]%+,; Q]#%#;,^%_; R^$_;,+&;,+R;,R!;!^&_; +#^R_; QR&; '89?(2!]",,;!]$$Q;!]Q&%; R^#_; +#^%_; $"#; $Q,; Q"#; +^#_; R^,_; "Q,; h?4a P+!]#+R; P++]&Q%; P+!]RR!; +"^R_; ++^+_; P+]R!Q; P+]R#!; P!]#%Q; +&^,_; +Q^R_; P+]%$$; +%