Monsanto Delivers on Q1 Guidance, Confirms Full-Year Earnings Per Share and Cash Flow Targets

Company Advances 11 Projects With Record-Breaking R&D Pipeline Update

Jan 06, 2010, 08:00 ET from Monsanto Company

ST. LOUIS, Jan. 6, 2010 /PRNewswire-FirstCall/ -- Monsanto Company (NYSE: MON) has delivered on its financial targets for the first quarter of 2010, which ended Nov. 30, 2009, and recommitted to its full-year guidance. With its quarterly earnings results today the company also announced its annual research and development pipeline update, showcasing a record-breaking 11 phase advancements.

Early indicators of the seeds and traits business show the company on track to meet its 2010 financial commitments and with its operational plan through 2011 and 2012.





    ($ in millions)                                     First      First
    ---------------                                    Quarter    Quarter
                                                        2010        2009
                                                        ----        ----
    Net Sales By Segment
      Corn seed and traits                              $569        $628
      Soybean seed and traits                            201         212
      Vegetable seeds                                    173         157
    ---------------                                      ---         ---
      Cotton seed and traits                              59          47
      All other crops seeds and traits                    29          55
                                                         ---         ---
    TOTAL Seeds and Genomics                          $1,031      $1,099

      Roundup and other glyphosate-based herbicides     $509      $1,359
      All other agricultural productivity products       157         191
                                                         ---         ---
    TOTAL Agricultural Productivity                     $666      $1,550


    TOTAL Net Sales                                   $1,697      $2,649
    ---------------                                   ------      ------


    Gross Profit                                        $739      $1,550
    ------------                                         ---      ------


    Operating Expenses                                  $777        $802
    ------------------                                   ---         ---

    Interest Expense (Income) - Net                      $28         $(2)
    Other (Income) Expense - Net                        $(12)        $26


    Net (Loss) Income Attributable to Monsanto
     Company                                            $(19)       $556
    ------------------------------------------          ----         ---


    Diluted (Loss) Earnings per Share (See note 1.)   $(0.03)      $1.00
    -----------------------------------------------   ------       -----
    Items Affecting Comparability - EPS Impact
      Restructuring charges                             0.02           -
      Income on discontinued operations                (0.01)      (0.02)
    ---------------------------------                  -----       -----
    Diluted (Loss) Earnings per Share from Ongoing
     Business (For the definition of ongoing EPS,
     see note 1.)                                     $(0.02)      $0.98
    ----------------------------------------------    ------       -----

    Effective Tax Rate                                    56%         24%
    ------------------                                   ---         ---





                                                     First          First
                                                    Quarter        Quarter
                                                     2010           2009
                                                     ----           ----
    Comparison as a Percent of Net Sales:
    -------------------------------------
      Gross profit                                    44%            59%
      Selling, general and administrative
       expenses (SG&A)                                29%            21%
      Research and development expenses
       (excluding acquired in-process R&D)            16%            10%
      (Loss) income from continuing operations
       before income taxes                           (3)%            27%
      Net (loss) income                              (1)%            21%
    -----------------                                ---            ---


"Our first quarter is a small but important quarter as it sets the foundation for the year ahead, which we see as a critical year in propelling us to reach our 2011 and 2012 commitments," said Hugh Grant, chairman, president and chief executive officer for Monsanto. "We've delivered on our targets for the quarter and this year we are confident that we will achieve the milestones necessary to reach our financial commitment to our shareowners. Today, we also take a closer look at our R&D pipeline and bring 11 new technologies that will deliver real value to farmers closer to the field. With our selling season well underway and the demand we see for Genuity(TM) SmartStax(TM) corn and Genuity(TM) Roundup Ready 2 Yield® soybeans, we believe it will only get better from here. These winning products are the platform for many of the technologies in early phases in our pipeline, and we're closer to demonstrating what those new technologies can do on the farm."

Results of Operations

Net sales decreased $952 million, or 36 percent, in the three-month comparison primarily as a result of decreased sales of glyphosate-based herbicides, primarily in Brazil and Europe. Gross profit percentage for the total company decreased 15 percentage points to 44 percent in the first quarter, largely driven by pricing adjustments for Roundup and other glyphosate-based herbicides.

Operating expenses decreased 3 percent, or $25 million, in the first quarter 2010 compared to the prior year. In the three-month comparison, selling, general and administrative (SG&A) expenses decreased 10 percent primarily because of lower spending for marketing, administrative functions and incentives. R&D expenses increased 6 percent related to the increase in the company's investment in its product pipeline as it manages more projects in advanced pipeline phases. As a percent of net sales, SG&A expenses were 29 percent and R&D expenses increased to 16 percent.

Net income in the first quarter was a loss of $0.03 per share, compared with income of $1.00 per share in first quarter 2009.

Cash Flow

For the first quarter of fiscal 2010, net cash required by operating activities was $1.4 billion, compared to a source of $114 million in the first quarter last year. Net cash required by investing activities for the first quarter of fiscal 2010 was $197 million, compared with a source of $10 million for the year-ago quarter. Net cash provided by financing activities for the first quarter of 2010 was $113 million, compared to net cash required of $258 million for the prior year's first quarter.

Free cash flow was a use of $1.6 billion for the first quarter of fiscal 2010, compared to a source of $124 million for the first quarter in fiscal 2009. (For a reconciliation of free cash flow, see note 1.) The reset of the Roundup business accounted for roughly 30 percent of this shift, and some working capital changes that altered the timing of cash flow in the quarter accounted for approximately half. The working capital changes are primarily driven by a timing adjustment for payments from seed licensees, which traditionally had been collected in the first quarter and are now collected in the fourth quarter. The remaining balance in fiscal 2009 came from the proceeds from the divestiture of the dairy business, which was $300 million.

Outlook

The company affirmed its previously announced cash flow guidance. The company expects free cash flow for fiscal year 2010 will be in the range of $900 million to $1 billion, including the after-tax cash effect from a restructuring charge of approximately $250 million. The company expects net cash provided by operating activities to be $2 billion to $2.2 billion, and net cash required by investing activities to be approximately $1.1 billion to $1.2 billion for fiscal year 2010. (For a reconciliation of free cash flow, see note 1.)

The company confirmed full-year 2010 ongoing earnings per share (EPS) guidance is in the range of $3.10 to $3.30. Full-year 2010 EPS guidance on an as-reported basis is in the range of $2.85 to $3.11. (For a reconciliation of EPS, see note 1.)

Seeds and Genomics Segment Detail




    ($ in millions)                  Net Sales           Gross Profit
    Seeds and Genomics               ---------           ------------
    ------------------            First     First     First     First
                                 Quarter   Quarter   Quarter   Quarter
                                   2010      2009      2010      2009
                                   ----      ----      ----      ----
    Corn seed and traits           $569      $628      $304      $403
    --------------------           ----      ----      ----      ----
    Soybean seed and traits         201       212       139       145
    -----------------------         ---       ---       ---       ---
    Vegetable seeds                 173       157       112        80
    ---------------                 ---       ---       ---       ---
    Cotton seed and traits           59        47        33        26
    ----------------------          ---       ---       ---       ---
    All other crops seeds and
     traits                          29        55         9        24
    -------------------------       ---       ---       ---       ---
    TOTAL Seeds and Genomics     $1,031    $1,099      $597      $678
    ------------------------     ------    ------      ----      ----




                                              Earnings (Loss)
    ($ in millions)                               Before
                                             Interest & Taxes
                                                   (EBIT)
    Seeds and Genomics                        First     First
                                             Quarter   Quarter
                                              2010      2009
    EBIT (For a reconciliation of EBIT,
     see note 1.)                             $(57)      $65
    Unusual Items Affecting EBIT:
     Restructuring                             $(3)     None


The Seeds and Genomics segment consists of the company's global seeds and related traits business, and biotechnology platforms.

Sales for Monsanto's Seeds and Genomics segment in the first quarter of fiscal 2010 decreased 6 percent or $68 million compared to the same period last year.

Corn seed and traits net sales decreased 9 percent or $59 million due in large part to a decrease in planted acres in Brazil and Argentina as a result of drought, governmental policies and commodity prices. With the second season still ahead in Brazil, there may be some rebound in total acres, but all-in planted acres are expected to be down for the year in both Brazil and Argentina.

This year marks the launch of Genuity SmartStax corn, which is expected to be on more than 4 million acres. Given the early orders, the early-adopter uptake for Genuity SmartStax has been good and the company is on pace to meet the more than 4 million-acre target.

Overall, soybean gross profit is down 4 percent compared with last year, with relatively flat margins, due to a timing effect. Delays in harvesting last year's soybean crop have put the company's seed shipments slightly behind, with this volume expected to shift into the second quarter. The company previously increased its acre targets for Genuity Roundup Ready 2 Yield to 8 million to 10 million acres, and sales to date are on pace to meet that target.

The vegetable business performed well, with sales growing $16 million or 10 percent, driven in part by better product availability.

Agricultural Productivity Segment Detail



    ($ in millions)                  Net Sales           Gross Profit
    Agricultural Productivity      First     First     First     First
                                  Quarter   Quarter   Quarter   Quarter
                                   2010      2009      2010      2009
    Roundup and other
     glyphosate-based
     herbicides                    $509    $1,359       $87      $804
    All other agricultural          157       191        55        68
    productivity products
    TOTAL Agricultural
     Productivity                  $666    $1,550      $142      $872




    ($ in millions)                             Earnings Before
                                                Interest & Taxes
                                                     (EBIT)
    Agricultural Productivity                    First      First
                                                Quarter    Quarter
                                                 2010       2009
    EBIT (For a reconciliation of EBIT, see
     note 1.)                                     $34       $673
    Unusual Items Affecting EBIT:
          EBIT from Discontinued Operations         5        $18
          Restructuring                          $(11)      None


The Agricultural Productivity segment consists of the crop protection products and lawn-and-garden herbicide products.

Sales in the first quarter of fiscal 2010 for Monsanto's Agricultural Productivity segment declined 57 percent or $884 million compared with the same period last year. Addressing the global supply-demand imbalance, the company continues to execute on its plan by resetting branded prices to bring premiums more in line with historical norms, increasing overall volumes and optimizing its low-cost production advantage.

Webcast Information

In conjunction with this announcement, Monsanto will hold a conference call at 8:30 a.m. central time (9:30 a.m. eastern time) today. The call will focus on these results, future expectations and an update of projects within the company's R&D pipeline, including the record-breaking 11 phase advancements. The call also may include a discussion of Monsanto's strategic initiatives, product performance and other matters related to the company's business.

Presentation slides and a simultaneous audio webcast of the conference call may be accessed by visiting the company's web site at www.monsanto.com and clicking on "Investor Information." Visitors may need to download Windows Media Player(TM) prior to listening to the webcast. Following the live broadcast, a replay of the webcast will be available on the Monsanto Web site for three weeks.

About Monsanto Company

Monsanto Company is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality. Monsanto remains focused on enabling both small-holder and large-scale farmers to produce more from their land while conserving more of our world's natural resources such as water and energy. To learn more about our business and our commitments, please visit: www.monsanto.com . Follow our business on Twitter at www.twitter.com/MonsantoCo on Facebook at www.facebook.com/MonsantoCo, or subscribe to our News Release RSS Feed .

Cautionary Statements Regarding Forward-Looking Information:

Certain statements contained in this release are "forward-looking statements," such as statements concerning the company's anticipated financial results, current and future product performance, regulatory approvals, business and financial plans and other non-historical facts. These statements are based on current expectations and currently available information. However, since these statements are based on factors that involve risks and uncertainties, the company's actual performance and results may differ materially from those described or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, among others: continued competition in seeds, traits and agricultural chemicals; the company's exposure to various contingencies, including those related to intellectual property protection, regulatory compliance and the speed with which approvals are received, and public acceptance of biotechnology products; the success of the company's research and development activities; the outcomes of major lawsuits; developments related to foreign currencies and economies; successful operation of recent acquisitions; fluctuations in commodity prices; compliance with regulations affecting our manufacturing; the accuracy of the company's estimates related to distribution inventory levels; the company's ability to fund its short-term financing needs and to obtain payment for the products that it sells; the effect of weather conditions, natural disasters and accidents on the agriculture business or the company's facilities; and other risks and factors detailed in the company's most recent Form 10-K Report to the SEC. Undue reliance should not be placed on these forward-looking statements, which are current only as of the date of this release. The company disclaims any current intention or obligation to update any forward-looking statements or any of the factors that may affect actual results.

Notes to editors: Genuity, YieldGard, Roundup, Roundup Ready 2 Yield and SmartStax are trademarks of Monsanto Company and its wholly-owned subsidiaries.

References to Roundup herbicides in this release mean Roundup-branded herbicides, excluding lawn-and-garden herbicide products.



    Contact   Media:      Kelli Powers  (314-694-4003)
              Analysts:   Bryan Hurley  (314-694-8148)


                                   Monsanto Company
                            Selected Financial Information
                   (Dollars in millions, except per share amounts)
                                      Unaudited

    Statements of Consolidated Operations                 Three Months Ended
    -------------------------------------                 ------------------
                                                                Nov. 30,
                                                                --------
                                                             2009       2008
                                                             ----       ----
    Net Sales                                               $1,697     $2,649
    Cost of Goods Sold                                         958      1,099
                                                               ---      -----
    Gross Profit                                               739      1,550
    Operating Expenses:
         Selling, General and Administrative Expenses          496        550
         Research and Development Expenses                     267        252
         Restructuring Charges, Net                             14          -
                                                               ---        ---
    Total Operating Expenses                                   777        802
    (Loss) Income From Operations                              (38)       748
    Interest Expense                                            39         23
    Interest Income                                            (11)       (25)
    Other (Income) Expense, Net                                (12)        26
                                                               ---        ---
    (Loss) Income from Continuing Operations
     Before Income Taxes                                       (54)       724
    Income Tax (Benefit) Provision                             (30)       176
                                                               ---        ---
    (Loss) Income from Continuing Operations
     Including Portion Attributable to
     Noncontrolling Interest                                  $(24)      $548
                                                              ----       ----
    Discontinued Operations:
    Income from Operations of Discontinued
     Businesses                                                  5         18
    Income Tax Provision                                         -          8
                                                               ---        ---
    Income on Discontinued Operations                            5         10
                                                               ---        ---
    Net (Loss) Income                                         $(19)      $558
                                                              ====       ====
    Less: Net Income Attributable to
     Noncontrolling Interest                                     -          2
                                                               ---        ---
    Net (Loss) Income Attributable to Monsanto
     Company                                                  $(19)      $556
                                                              ====       ====
    EBIT (see note 1)                                         $(23)      $738
                                                              ====       ====
    Basic Earnings (Loss) per Share:
    (Loss) Income from Continuing Operations                $(0.04)     $0.99
    Income on Discontinued Operations                         0.01       0.02
                                                              ----       ----
    Net (Loss) Income                                       $(0.03)     $1.01
                                                            ======      =====

    Diluted Earnings (Loss) per Share:
    (Loss) Income from Continuing Operations                $(0.04)     $0.98
    Income on Discontinued Operations                         0.01       0.02
                                                              ----       ----
    Net (Loss) Income                                       $(0.03)     $1.00
                                                            ======      =====

    Weighted Average Shares Outstanding:
         Basic                                               545.6      548.8
         Diluted                                             545.6      557.6
                                                             -----      -----



                                   Monsanto Company
                            Selected Financial Information
                                (Dollars in millions)
                                      Unaudited

    Condensed Statements of Consolidated
     Financial Position
    ------------------------------------                   As of       As of
                                                          Nov. 30,    Aug. 31,
                                                            2009        2009
                                                         --------    --------
    Assets
    Current Assets:
        Cash and Cash Equivalents                            $471      $1,956
        Trade Receivables, Net                              2,012       1,556
        Miscellaneous Receivables                             716         654
        Deferred Tax Assets                                   574         662
        Inventory, Net                                      3,560       2,934
        Other Current Assets                                   98         121
                                                              ---         ---
    Total Current Assets                                    7,431       7,883

    Property, Plant and Equipment, Net                      3,720       3,609
    Goodwill                                                3,272       3,218
    Other Intangible Assets, Net                            1,370       1,371
    Noncurrent Deferred Tax Assets                            804         743
    Long-Term Receivables, Net                                488         557
    Other Assets                                              521         496
                                                              ---         ---
    Total Assets                                          $17,606     $17,877
                                                          =======     =======

    Liabilities and Shareowners' Equity
    Current Liabilities:
        Short-Term Debt, Including Current
         Portion of Long-Term Debt                           $281         $79
        Accounts Payable                                      765         676
        Income Taxes Payable                                   52          79
        Accrued Compensation and Benefits                     223         263
        Accrued Marketing Programs                            367         934
        Deferred Revenues                                     368         219
        Grower Production Accruals                            386         139
        Dividends Payable                                       -         145
        Customer Payable                                        -         307
        Restructuring Reserves                                221         286
        Miscellaneous Short-Term Accruals                     691         629
                                                              ---         ---
    Total Current Liabilities                               3,354       3,756

    Long-Term Debt                                          1,724       1,724
    Postretirement Liabilities                                729         793
    Long-Term Deferred Revenue                                466         488
    Noncurrent Deferred Tax Liabilities                       159         153
    Long-Term Portion of Environmental and
     Litigation Reserves                                      203         197
    Other Liabilities                                         628         641
    Monsanto Shareowners' Equity                           10,286      10,056
    Noncontrolling Interest                                    57          69
                                                              ---         ---
    Total Shareowners' Equity                              10,343      10,125
                                                           ======      ======
    Total Liabilities and Shareowners' Equity             $17,606     $17,877
                                                          =======     =======

    Debt to Capital Ratio:                                     16%         15%



                                    Monsanto Company
                             Selected Financial Information
                                 (Dollars in millions)
                                       Unaudited

    Statements of Consolidated Cash Flows
    -------------------------------------                   Three Months Ended
                                                                 Nov. 30,
                                                                 --------
                                                            2009          2008
                                                            ----          ----
    Operating Activities:
      Net (Loss) Income                                    $(19)         $558
      Adjustments to Reconcile Cash Provided
       by Operating Activities:
      Items That Did Not Require (Provide) Cash:
       Depreciation and Amortization                        144           135
       Bad-Debt Expense                                      14            36
       Stock-Based Compensation Expense                      24            26
       Excess Tax Benefits from Stock-Based
        Compensation                                        (13)           (5)
       Deferred Income Taxes                                (58)           52
       Restructuring Charges, Net                            14             -
       Equity Affiliate Income, Net                         (14)           (6)
       Net Gain on Sales of a Business or Other Assets       (1)           (6)
       Other Items                                            2             5
      Changes in Assets and Liabilities That
       Provided (Required) Cash,
      Net of Acquisitions:
       Trade Receivables, Net                              (343)          165
       Inventory, Net                                      (539)         (832)
       Deferred Revenues                                    126          (238)
       Accounts Payable and Other Accrued
        Liabilities                                        (573)          195
       Restructuring Cash Payments                          (79)            -
       Pension Contributions                                (78)          (15)
       Net Investment Hedge Settlement                       (4)           18
       Other Items                                          (17)           26
    -----------                                             ---           ---
    Net Cash (Required) Provided by
     Operating Activities                                (1,414)          114
    -------------------------------                      ------           ---

    Cash Flows (Required) Provided by
     Investing Activities:
      Capital Expenditures                                 (192)         (264)
      Acquisitions of Businesses, Net of Cash
       Acquired                                             (20)           (2)
      Purchases of Long-Term Equity
       Securities                                            (2)           (7)
      Technology and Other Investments                       (9)          (18)
      Proceeds From Divestiture of a Business                 -           300
      Other Investments and Property Disposal
       Proceeds                                              26             1
      ---------------------------------------               ---           ---
    Net Cash (Required) Provided by
     Investing Activities                                  (197)           10
    -------------------------------                        ----           ---

    Cash Flows Provided (Required) by
     Financing Activities:
      Net Change in Financing With Less Than
       90-Day Maturities                                    299           (90)
      Short-Term Debt Proceeds                               25            31
      Short-Term Debt Reductions                            (29)            -
      Long-Term Debt Reductions                              (1)           (4)
      Payments on Other Financing                            (1)            -
      Treasury Stock Purchases                              (64)          (75)
      Stock Option Exercises                                 16             7
      Excess Tax Benefits from Stock-Based
       Compensation                                          13             5
      Dividend Payments                                    (145)         (132)
    -----------------                                      ----          ----
    Net Cash Provided (Required) by
     Financing Activities                                   113          (258)
    -------------------------------                         ---          ----
    Effect of Exchange Rate Changes on Cash
     and Cash Equivalents                                    13          (137)
    ---------------------------------------                 ---          ----
    Net Decrease in Cash and Cash
     Equivalents                                         (1,485)         (271)
    Cash and Cash Equivalents at Beginning
     of Period                                            1,956         1,613
    --------------------------------------                -----         -----
    Cash and Cash Equivalents at End of Period             $471        $1,342
    ------------------------------------------             ====        ======




                                   Monsanto Company
                            Selected Financial Information
                                 (Dollars in millions)
                                       Unaudited



    1.  EBIT, Ongoing EPS and Free Cash Flow:  The presentations of EBIT,
        ongoing EPS and free cash flow are not intended to replace net
        income (loss), cash flows, financial position or comprehensive
        income (loss), and they are not measures of financial performance
        as determined in accordance with generally accepted accounting
        principles (GAAP) in the United States. The following tables
        reconcile EBIT, ongoing EPS and free cash flow to the respective
        most directly comparable financial measure calculated in
        accordance with GAAP.

        Reconciliation of EBIT to Net Income (Loss):  EBIT is defined as
        earnings (loss) before interest and taxes. Earnings (loss) is
        intended to mean net income (loss) as presented in the Statements
        of Consolidated Operations under GAAP. The following table
        reconciles EBIT to the most directly comparable financial measure,
        which is net income (loss).



                                                     Three Months Ended
                                                           Nov. 30,
                                                           --------
                                                        2009       2008
                                                        ----       ----
    EBIT - Seeds and Genomics Segment                   $(57)       $65
    EBIT - Agricultural Productivity Segment              34        673
                                                         ---        ---
    EBIT- Total                                          (23)       738
    Interest Expense (Income), Net                        28         (2)
    Income Tax (Benefit) Provision(A)                    (32)       184
                                                         ---        ---
    Net (Loss) Income Attributable to Monsanto
     Company                                            $(19)      $556
    ------------------------------------------          ====       ====
    (A) Includes the income tax benefit from continuing operations, the income
        tax provision (benefit) on noncontrolling interest, and the income tax
        provision on discontinued operations.



        Reconciliation of EPS to Ongoing EPS:  Ongoing EPS is calculated
        excluding certain after-tax items which Monsanto does not
        consider part of ongoing operations.





                                          Fiscal Year    Three months
                                              2010           ended
                                            Guidance      Nov. 30, 2009
                                            --------      -------------
    Diluted (Loss) Earnings per Share      $2.85-$3.11       $(0.03)
    Restructuring Charges                  $0.19-$0.25        $0.02
    Income on Discontinued Operations                -       $(0.01)
                                                   ---       ------
    Diluted (Loss) Earnings per Share from
     Ongoing Business                      $3.10-$3.30       $(0.02)
    -------------------------------------- -----------       ------



        Reconciliation of Free Cash Flow: Free cash flow represents the
        total of cash flows from operating activities and investing
        activities, as reflected in the Statements of Consolidated Cash
        Flows presented in this release. With respect to the fiscal year
        2010 free cash flow target, Monsanto does not include any
        estimates or projections of Net Cash Provided (Required) by
        Financing Activities because in order to prepare any such
        estimate or projection, Monsanto would need to rely on market
        factors and conditions that are outside of its control.



                                        Fiscal Year     Three Months Ended
                                            2010             Nov. 30,
                                          Guidance      2009          2008
                                          --------      ----          ----
    Net Cash (Required) Provided
     by Operating Activities            $2,000-2,200 $(1,414)         $114
    Net Cash (Required) Provided
     by Investing Activities         (1,100)-(1,200)    (197)           10
                                     ---------------    ----           ---
    Free Cash Flow                        $900-1,000  (1,611)          124
    Net Cash Provided (Required)
     by Financing Activities                     N/A     113          (258)
    Effect of Exchange Rate
     Changes on Cash and Cash
     Equivalents                                 N/A      13          (137)
                                                 ---     ---          ----
    Net Decrease in Cash and Cash
     Equivalents                                 N/A  (1,485)         (271)
    Cash and Cash Equivalents at
     Beginning of Period                         N/A   1,956         1,613
                                                 ---   -----         -----
    Cash and Cash Equivalents at
     End of Period                               N/A    $471        $1,342
    ----------------------------                 ===    ====        ======


SOURCE Monsanto Company



RELATED LINKS

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