0001701732false00017017322024-05-022024-05-02

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 02, 2024

 

 

Altair Engineering Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware			001-38263	38-2591828
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
1820 E. Big Beaver Road
Troy, Michigan				48083
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (248) 614-2400

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A Common Stock $0.0001 par value per share		ALTR		The Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

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Item 2.02. Results of Operations and Financial Condition.

 

On May 2, 2024, Altair Engineering Inc. issued a press release disclosing its financial information and operating metrics for its first quarter ended March 31, 2024. A copy of the press release is being furnished as Exhibit 99.1 to this Report on Form 8-K.

 

The information in this Report on Form 8-K and Exhibit 99.1 attached hereto is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

 

Item 9.01. Financial Statements and Exhibits.

 

Exhibit 99.1		Press Release issued by Altair Engineering Inc. dated May 2, 2024, furnished hereto.
Exhibit 104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ALTAIR ENGINEERING INC.
Date: May 2, 2024	By:	/s/ Matthew Brown
		Matthew Brown
		Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

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Exhibit 99.1

Altair Announces First Quarter 2024 Financial Results

Altair Achieves Record Software Revenue and Total Revenue for the First Quarter

TROY, Mich. – May 2, 2024 – Altair (Nasdaq: ALTR), a global leader in computational science and artificial intelligence, today released its financial results for the first quarter ended March 31, 2024.

“Altair continued its positive momentum into the start of 2024, with record-high quarterly software revenue and total revenue,” said James Scapa, founder, chairman and chief executive officer of Altair. “The first quarter exceeded our expectations and demonstrates the strength of our product portfolio in bringing computational intelligence to our customers.”

“The start of this year has been marked by strong execution, setting new records in software revenue and total revenue in the first quarter 2024,” said Matt Brown, Chief Financial Officer of Altair. “Revenues and profit were ahead of expectations for the quarter, driven by growth across all three major geographies and multiple verticals.”

First Quarter 2024 Financial Highlights

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Business Outlook

Based on information available as of today, Altair is issuing the following guidance for the second quarter and full year 2024:

 

(in millions, except %)		Second Quarter 2024								Full Year 2024
Software Revenue		$	131		to	$	134			$	590		to	$	600
Growth Rate			4.5	%			6.9	%			7.3	%			9.1	%
Growth Rate - Constant Currency			6.7	%			9.2	%			8.3	%			10.1	%
Total Revenue		$	145			$	148			$	652			$	662
Growth Rate			2.7	%			4.8	%			6.4	%			8.0	%
Growth Rate - Constant Currency			4.7	%			6.8	%			7.5	%			9.1	%
Net (Loss) Income		$	(12.3	)		$	(9.4	)		$	23.2			$	30.9
Non-GAAP Net Income		$	12.7			$	15.0			$	109.9			$	115.9
Adjusted EBITDA		$	15			$	18			$	138			$	146
Net Cash Provided by Operating Activities										$	135			$	143
Free Cash Flow										$	124			$	132

The following table provides a reconciliation of Full Year 2024 guidance to the last guidance provided in February

 

		(Unaudited)
		Full Year 2024
(in millions)		Midpoint of Guidance in February				Increase/ (Decrease)				Currency Fluctuations from Prior Guidance				Midpoint of Guidance in May
Software Revenue		$	605.0			$	—			$	(10.0	)		$	595.0
Total Revenue		$	668.0			$	—			$	(11.0	)		$	657.0
Adjusted EBITDA		$	147.0			$	—			$	(5.0	)		$	142.0

Conference Call Information

 

What: Altair’s First Quarter 2024 Financial Results Conference Call
When: Thursday, May 2, 2024

Time: 5 p.m. ET
Webcast: http://investor.altair.com (live & replay)

***

 

Non-GAAP Financial Measures

 

This press release contains the following non-GAAP financial measures: Non-GAAP Net Income, Non-GAAP Net Income Per Share, Billings, Adjusted EBITDA, Free Cash Flow, Non-GAAP Gross Profit and Non-GAAP Operating Expense.

Altair believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company also believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions, asset impairment charges, non-cash interest expense, other special items as identified by management and described elsewhere in this press release, and the impact of non-GAAP tax rate to income tax expense, which approximates our tax rate excluding discrete items and other specific events that can fluctuate from period to period.

Non-GAAP diluted common shares includes the diluted weighted average shares outstanding per GAAP regardless of whether the Company is in a loss position.

Billings consists of total revenue plus the change in deferred revenue, excluding deferred revenue from acquisitions.

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Adjusted EBITDA represents net income adjusted for income tax expense, interest expense, interest income and other, depreciation and amortization, stock-based compensation expense, asset impairment charges and other special items as identified by management and described elsewhere in this press release.

Free cash flow consists of cash flow from operations less capital expenditures.

Non-GAAP gross profit represents gross profit adjusted for stock-based compensation expense and other special items as identified by management and described elsewhere in this press release.

Non-GAAP operating expense represents operating expense excluding stock-based compensation expense, amortization, asset impairment charges and other special items as identified by management and described elsewhere in this press release.

 

Company management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Altair urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business.

 

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.

 

About Altair

Altair is a global leader in computational intelligence that provides software and cloud solutions in simulation, high-performance computing (HPC), data analytics and AI. Altair enables organizations across all industries to compete more effectively and drive smarter decisions in an increasingly connected world – all while creating a greener, more sustainable future. To learn more, please visit https://www.altair.com.

 

Cautionary Language Concerning Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, our guidance for the second quarter and full year 2024, our statements regarding our expectations for 2024, and our reconciliations of projected non-GAAP financial measures. These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Altair’s control. Altair’s actual results could differ materially from those stated or implied in our forward-looking statements due to a number of factors, including but not limited to, the risks detailed in Altair’s quarterly and annual reports filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Altair’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Altair undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Altair’s views as of any date subsequent to the date of this press release.

 

Media Relations

Altair

Jennifer Ristic

216-849-3109

jristic@altair.com

 

Investor Relations

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Altair

Stephen Palmtag

669-328-9111

spalmtag@altair.com

The Blueshirt Group

Monica Gould

212-871-3927

ir@altair.com

 

 

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ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

		March 31, 2024				December 31, 2023
(In thousands)		(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	557,605			$	467,459
Accounts receivable, net			127,870				190,461
Income tax receivable			18,898				16,650
Prepaid expenses and other current assets			26,026				26,053
Total current assets			730,399				700,623
Property and equipment, net			38,837				39,803
Operating lease right of use assets			30,175				30,759
Goodwill			454,953				458,125
Other intangible assets, net			75,357				83,550
Deferred tax assets			9,699				9,955
Other long-term assets			40,491				40,678
TOTAL ASSETS		$	1,379,911			$	1,363,493
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	6,522			$	8,995
Accrued compensation and benefits			35,911				45,081
Current portion of operating lease liabilities			8,330				8,825
Other accrued expenses and current liabilities			43,820				48,398
Deferred revenue			120,554				131,356
Current portion of convertible senior notes, net			81,617				81,455
Total current liabilities			296,754				324,110
Convertible senior notes, net			226,223				225,929
Operating lease liabilities, net of current portion			22,508				22,625
Deferred revenue, non-current			24,385				32,347
Other long-term liabilities			47,113				47,151
TOTAL LIABILITIES			616,983				652,162
Commitments and contingencies
STOCKHOLDERS’ EQUITY:
Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and outstanding			—				—
Common stock ($0.0001 par value)
Class A common stock, authorized 513,797 shares, issued and outstanding 56,912    and 55,240 shares as of March 31, 2024, and December 31, 2023, respectively			5				5
Class B common stock, authorized 41,203 shares, issued and outstanding 26,084    and 26,814 shares as of March 31, 2024, and December 31, 2023, respectively			3				3
Additional paid-in capital			904,180				864,135
Accumulated deficit			(113,956	)			(130,503	)
Accumulated other comprehensive loss			(27,304	)			(22,309	)
TOTAL STOCKHOLDERS’ EQUITY			762,928				711,331
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	1,379,911			$	1,363,493

 

 

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ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

		Three Months Ended March 31,
(in thousands, except per share data)		2024				2023
Revenue
License		$	117,707			$	112,409
Maintenance and other services			40,722				37,234
Total software			158,429				149,643
Engineering services and other			14,483				16,391
Total revenue			172,912				166,034
Cost of revenue
License			4,490				4,824
Maintenance and other services			14,166				14,426
Total software *			18,656				19,250
Engineering services and other			12,237				13,485
Total cost of revenue			30,893				32,735
Gross profit			142,019				133,299
Operating expenses:
Research and development *			52,333				53,251
Sales and marketing *			44,434				43,492
General and administrative *			17,761				17,951
Amortization of intangible assets			7,438				7,814
Other operating (income) expense, net			(882	)			5,605
Total operating expenses			121,084				128,113
Operating income			20,935				5,186
Interest expense			1,576				1,526
Other income, net			(3,957	)			(3,613	)
Income before income taxes			23,316				7,273
Income tax expense			6,769				9,232
Net income (loss)		$	16,547			$	(1,959	)
Income (loss) per share:
Net income (loss) per share attributable to common   stockholders, basic		$	0.20			$	(0.02	)
Net income (loss) per share attributable to common   stockholders, diluted		$	0.20			$	(0.02	)
Weighted average shares outstanding:
Weighted average number of shares used in computing   net income (loss) per share, basic			82,587				80,191
Weighted average number of shares used in computing   net income (loss) per share, diluted			89,806				80,191

 

 

 

 

 

 

 

 

 

* Amounts include stock-based compensation expense as follows (in thousands):

 

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		(Unaudited)
		Three Months Ended March 31,
(in thousands)		2024				2023
Cost of revenue – software		$	2,002			$	2,752
Research and development			6,360				8,743
Sales and marketing			4,520				7,591
General and administrative			3,117				3,075
Total stock-based compensation expense		$	15,999			$	22,161

 

 

 

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ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

 

		Three Months Ended March 31,
(In thousands)		2024				2023
OPERATING ACTIVITIES:
Net income (loss)		$	16,547			$	(1,959	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			9,619				9,750
Stock-based compensation expense			15,999				22,161
Loss on mark-to-market adjustment of contingent consideration			145				7,006
Other, net			580				640
Changes in assets and liabilities:
Accounts receivable, net			60,245				39,872
Prepaid expenses and other current assets			(2,679	)			1,981
Other long-term assets			9				(1,944	)
Accounts payable			(1,667	)			(5,362	)
Accrued compensation and benefits			(8,503	)			(12,283	)
Other accrued expenses and current liabilities			(199	)			2,015
Deferred revenue			(16,646	)			(2,678	)
Net cash provided by operating activities			73,450				59,199
INVESTING ACTIVITIES:
Capital expenditures			(2,766	)			(1,727	)
Other investing activities, net			2				(1,405	)
Net cash used in investing activities			(2,764	)			(3,132	)
FINANCING ACTIVITIES:
Proceeds from the exercise of common stock options			19,844				9,872
Proceeds from employee stock purchase plan contributions			2,182				1,868
Payments for repurchase and retirement of common stock			—				(6,255	)
Other financing activities			—				(29	)
Net cash provided by financing activities			22,026				5,456
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(2,592	)			379
Net increase in cash, cash equivalents and restricted cash			90,120				61,902
Cash, cash equivalents and restricted cash at beginning of year			467,576				316,958
Cash, cash equivalents and restricted cash at end of period		$	557,696			$	378,860

 

 

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Change in Presentation of Revenue and Cost of Revenue

Effective in the first quarter of 2024, the Company changed the presentation of revenue and cost of revenue in its Consolidated Statements of Operations to combine the financial statement line items (“FSLIs”) labeled “Software related services”, “Client engineering services” and “Other” into one FSLI labeled “Engineering services and other”. The change in presentation has been applied retrospectively and does not affect the software revenue, total revenue, software cost of revenue or total cost of revenue amounts previously reported or have any effect on segment reporting.

 

Financial Results

The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net income (loss) and net income (loss) per share – diluted, the most comparable GAAP financial measures:

 

		(Unaudited)
		Three Months Ended March 31,
(in thousands, except per share amounts)		2024				2023
Net income (loss)		$	16,547			$	(1,959	)
Stock-based compensation expense			15,999				22,161
Amortization of intangible assets			7,438				7,814
Non-cash interest expense			472				465
Impact of non-GAAP tax rate (1)			(5,295	)			(1,933	)
Special adjustments and other (2)			1,030				5,231
Non-GAAP net income		$	36,191			$	31,779
Net income (loss) per share, diluted		$	0.20			$	(0.02	)
Non-GAAP net income per share, diluted		$	0.40			$	0.36
GAAP diluted shares outstanding			89,806				80,191
Non-GAAP diluted shares outstanding			89,806				88,041

The following table provides a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure:

 

		(Unaudited)
		Three Months Ended March 31,
(in thousands)		2024				2023
Net income (loss)		$	16,547			$	(1,959	)
Income tax expense			6,769				9,232
Stock-based compensation expense			15,999				22,161
Interest expense			1,576				1,526
Depreciation and amortization			9,619				9,750
Special adjustments, interest income and other (1)			(4,692	)			2,345
Adjusted EBITDA		$	45,818			$	43,055

 

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The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure:

		(Unaudited)
		Three Months Ended March 31,
(in thousands)		2024				2023
Net cash provided by operating activities		$	73,450			$	59,199
Capital expenditures			(2,766	)			(1,727	)
Free cash flow		$	70,684			$	57,472

The following table provides a reconciliation of Non-GAAP gross profit to gross profit, the most comparable GAAP financial measure, and a comparison of Non-GAAP gross margin (Non-GAAP gross profit as a percentage of total revenue) to gross margin (gross profit as a percentage of total revenue), the most comparable GAAP financial measure:

 

		(Unaudited)
		Three Months Ended March 31,
(in thousands)		2024				2023
Gross profit		$	142,019			$	133,299
Stock-based compensation expense			2,002				2,752
Non-GAAP gross profit		$	144,021			$	136,051
Gross profit margin			82.1	%			80.3	%
Non-GAAP gross margin			83.3	%			81.9	%

The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure:

 

		(Unaudited)
		Three Months Ended March 31,
(in thousands)		2024				2023
Total operating expense		$	121,084			$	128,113
Stock-based compensation expense			(13,997	)			(19,409	)
Amortization			(7,438	)			(7,814	)
Loss on mark-to-market adjustment of contingent consideration			(145	)			(7,006	)
Non-GAAP operating expense		$	99,504			$	93,884

The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure:

		(Unaudited)
		Three Months Ended March 31,
(in thousands)		2024				2023
Revenue		$	172,912			$	166,034
Ending deferred revenue			144,939				141,943
Beginning deferred revenue			(163,703	)			(144,460	)
Billings		$	154,148			$	163,517

 

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The following table provides Software revenue, Total revenue, Billings and Adjusted EBITDA on a constant currency basis:

		(Unaudited)
		Three Months Ended March 31, 2024												Three Months Ended  March 31, 2023				Increase/ (Decrease) %
(in thousands)		As reported				Currency changes				As adjusted for constant currency				As reported				As reported				As adjusted for constant currency
Software revenue		$	158.4			$	1.5			$	159.9			$	149.6				5.9	%			6.9	%
Total revenue		$	172.9			$	1.6			$	174.5			$	166.0				4.1	%			5.1	%
Billings		$	154.1			$	0.8			$	154.9			$	163.5				-5.7	%			-5.3	%
Adjusted EBITDA		$	45.8			$	1.3			$	47.1			$	43.1				6.4	%			9.5	%

 

 

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Business Outlook

The following table provides a reconciliation of projected Non-GAAP net income to projected net (loss) income, the most comparable GAAP financial measure:

 

		(Unaudited)
		Three Months Ending June 30, 2024								Year Ending  December 31, 2024
(in thousands)		Low				High				Low				High
Net (loss) income		$	(12,300	)		$	(9,400	)		$	23,200			$	30,900
Stock-based compensation expense			17,800				17,800				72,500				72,500
Amortization of intangible assets			7,300				7,300				28,900				28,900
Non-cash interest expense			400				400				1,500				1,500
Impact of non-GAAP tax rate(1)			(500	)			(1,100	)			(17,200	)			(18,900	)
Special adjustments and other(2)			—				—				1,000				1,000
Non-GAAP net income		$	12,700			$	15,000			$	109,900			$	115,900

 

The following table provides a reconciliation of projected Adjusted EBITDA to projected net (loss) income, the most comparable GAAP financial measure:

 

		(Unaudited)
		Three Months Ending June 30, 2024								Year Ending  December 31, 2024
(in thousands)		Low				High				Low				High
Net (loss) income		$	(12,300	)		$	(9,400	)		$	23,200			$	30,900
Income tax expense			3,800				3,900				19,500				19,800
Stock-based compensation expense			17,800				17,800				72,500				72,500
Interest (income) expense			(3,800	)			(3,800	)			(15,800	)			(15,800	)
Depreciation and amortization			9,500				9,500				37,600				37,600
Special adjustments and other(1)			—				—				1,000				1,000
Adjusted EBITDA		$	15,000			$	18,000			$	138,000			$	146,000

 

The following table provides a reconciliation of projected Free Cash Flow to projected net cash provided by operating activities, the most comparable GAAP financial measure:

 

						(Unaudited)
						Year Ending  December 31, 2024
(in thousands)						Low				High
Net cash provided by operating activities						$	135,300			$	143,300
Capital expenditures							(11,300	)			(11,300	)
Free cash flow						$	124,000			$	132,000

 

 

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