/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER U.S. NEWSWIRES/
(TSX: KBL)
Q3, 2012 Financial Results
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Revenue for the three months ended September 30, 2012 was $33.0 million,
an increase of 6.0% over the comparable 2011 period.
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EBITDA for the third quarter increased by $0.7 million or by 11.5% to
$6.7 million compared to $6.0 million in Q3, 2011.
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EBITDA margin increased in the quarter to 20.4% from 19.4% in the
comparative period of 2011 due to the flow through of increased volumes
and revenues coupled with favorable variances in commodity costs.
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Net earnings after taxes for the third quarter increased by $0.23
million to $2.96 million compared to $2.73 million in Q3, 2011.
EDMONTON, Nov. 7, 2012 /CNW/ - K-Bro Linen Inc. ("K-Bro" or the
"Corporation") today announced revenue of $33.0 million and EBITDA of
$6.7 million for the three-months ended September 30, 2012. Net
earnings after tax were $3.0 million, diluted earnings were $0.42 per
share, and distributable cash was $0.750 per diluted share for the
quarter.
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| (thousands, except per share amounts |
| For the three months ended September 30 |
| and percentages) |
| 2012 |
| 2011 | $ Change | % Change |
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Revenue
| $ | 33,013 |
$
|
31,144
|
1,869
|
6.0%
|
|
Operating expenses
|
| 26,274 |
|
25,098
|
1,176
|
4.7%
|
|
EBITDA(1) |
| 6,739 |
|
6,046
|
693
|
11.5%
|
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EBITDA(1) as a % of revenue
|
| 20.4% |
|
19.4%
|
-
|
1.0%
|
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Earnings before income taxes
|
| 4,183 |
|
3,679
|
504
|
13.7%
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Income tax expense
|
| 1,224 |
|
953
|
271
|
28.4%
|
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Net earnings
|
| 2,959 |
|
2,726
|
233
|
8.5%
|
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Basic earnings per Share
| $ | 0.42 |
$
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0.39
|
0.03
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7.7%
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Diluted earnings per Share
| $ | 0.42 |
$
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0.39
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0.03
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7.7%
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Total assets
|
| 94,166 |
|
90,350
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3,816
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4.2%
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Long-term debt, end of period
|
| 7,787 |
|
7,224
|
563
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7.8%
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Cash provided by operating activities
|
| 6,223 |
|
8,217
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(1,994)
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-24.3%
|
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Net change in non-cash working capital items
|
| 775 |
|
2,928
|
(2,153)
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-69.9%
|
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Maintenance capital expenditures
|
| 168 |
|
9
|
159
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1820.4%
|
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Distributable cash flow(1) |
| 5,280 |
|
5,280
|
-
|
0.0%
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Dividends declared
|
| 2,028 |
|
1,927
|
101
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5.3%
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Payout ratio(1) |
| 38.3% |
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36.4%
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-
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2.0%
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| (1) Refer to the Terminology section for further details
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| (thousands, except per share amounts |
| For the nine months ended September 30 |
| and percentages) |
| 2012 |
| 2011 | $ Change | % Change |
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Revenue
| $ | 94,704 |
$
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87,701
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7,003
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8.0%
|
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Operating expenses
|
| 75,964 |
|
72,310
|
3,654
|
5.1%
|
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EBITDA(1) |
| 18,740 |
|
15,391
|
3,349
|
21.8%
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EBITDA(1) as a % of revenue
|
| 19.8% |
|
17.5%
|
-
|
2.2%
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Earnings before income taxes
|
| 11,444 |
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8,557
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2,887
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33.7%
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Income tax expense
|
| 3,053 |
|
2,272
|
781
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34.4%
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Net earnings
|
| 8,391 |
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6,285
|
2,106
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33.5%
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Basic earnings per Share
| $ | 1.20 |
$
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0.91
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0.29
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31.9%
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Diluted earnings per Share
| $ | 1.20 |
$
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0.90
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0.30
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33.2%
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Total assets
|
| 94,166 |
|
90,350
|
3,816
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4.2%
|
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Long-term debt, end of year
|
| 7,787 |
|
7,224
|
563
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7.8%
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Cash provided by operating activities
|
| 12,881 |
|
14,931
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(2,050)
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-13.7%
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Net change in non-cash working capital items
|
| (2,358) |
|
1,322
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(3,680)
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-278.4%
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Maintenance capital expenditures
|
| 534 |
|
656
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(122)
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-18.6%
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Distributable cash flow(1) |
| 14,704 |
|
12,953
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1,751
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13.5%
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Dividends declared
|
| 5,949 |
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5,780
|
169
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2.9%
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Payout ratio(1) |
| 40.3% |
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44.4%
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-
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-4.1%
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| (1) Refer to the Terminology section for further details
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In the third quarter of 2012, revenue was $33.0 million which was 6.0%
higher than the $31.1 million generated in the comparable period in
2011. This year-over-year increase was due to the new volume from the
Saskatoon Health Region contract, organic growth from new volume and
price increases at existing customers across the remainder of the
plants. EBITDA increased from $6.0 million in Q3, 2011 to $6.7 million
in Q3, 2012, from the organic growth from our existing businesses, and
the addition of the Saskatoon Health Region.
OUTLOOK
"Revenues, EBITDA, net earnings and operating margin experienced record
highs during the third quarter of 2012 and we are pleased with the
results," said Linda McCurdy, President & Chief Executive Officer.
"Through the first three quarters of the year we have seen strong
demand for our services and have been successful at developing new
business and renewing with our long-term clientele. Our focus going
forward is to commission our new Edmonton facility and complete the
transition by the end of the third quarter 2013. During the transition
we expect a temporary impact on margins until the relocation is
complete and the anticipated efficiencies from our new location are
fully realized."
CORPORATE PROFILE
K-Bro is the largest owner and operator of laundry and linen processing
facilities in Canada. K-Bro provides a comprehensive range of general
linen and operating room linen processing, management and distribution
services to healthcare institutions, hotels and other commercial
accounts. K-Bro currently operates eight processing facilities under
three distinctive brands, including K-Bro Linen Systems Inc., Buanderie
HMR and Les Buanderies Dextraze, in seven Canadian cities: Victoria,
Vancouver, Calgary, Edmonton, Toronto, Montréal and Québec City.
Additional information regarding the Corporation including required
securities filings are available on our website at www.k-brolinen.com and on the Canadian Securities Administrators' website at www.sedar.com; the System for Electronic Document Analysis and Retrieval ("SEDAR").
K-Bro est le plus important propriétaire et exploitant de buanderies au
Canada. K-Bro fournit une gamme étendue de services de buanderie aux
établissements de soins de santé, hôtels et autres clients commerciaux.
K-Bro exploite actuellement huit usines sous trois marques
distinctives, incluant K-Bro Linen Systems Inc., Buanderie HMR et Les
Buanderies Dextraze, dans sept villes canadiennes: Québec, Montréal,
Toronto, Edmonton, Calgary, Vancouver et Victoria.
Vous pouvez obtenir des renseignements supplémentaires sur la Société, y
compris les documents déposés auprès des autorités de réglementation,
sur notre site Web, au www.k-brolinen.com et sur le site Web des autorités canadiennes en valeurs mobilières au www.sedar.com, le site Web du Système électronique de données, d'analyse et de
recherche (« SEDAR »).
TERMINOLOGY
Throughout this news release, and other documents referred to, and in
order to provide a better understanding of the financial results, K-Bro
uses the terms "EBITDA", "distributable cash" and "payout ratio". These
terms do not have any standardized meaning under International
Financial Reporting Standards ("IFRS") as set out in the CICA Handbook.
Therefore, EBITDA, distributable cash and payout ratio may not be
comparable to similar measures presented by other issuers.
Specifically, the terms "EBITDA", "distributable cash", and "payout
ratio" have been defined as:
EBITDA is defined as earnings before interest, income taxes, depreciation, and
amortization. EBITDA is not a recognized measure for financial
statement presentation under IFRS. EBITDA is not intended to represent
cash flow from operations, as defined by IFRS, and it should not be
considered as an alternative to net earnings, cash flow from
operations, or any other measure of performance prescribed by IFRS. The
Corporation's EBITDA may also not be comparable to EBITDA used by other
corporations, which may be calculated differently. The Corporation
considers EBITDA to be a meaningful measure to assess its operating
performance in addition to standardized IFRS measures. It is included
because the Corporation believes it can be useful in measuring its
ability to service debt, fund capital expenditures, and expand its
business.
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Three Months Ended
September 30,
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Nine Months Ended
September 30,
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| (thousands)
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| 2012 |
|
2011
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| 2012 |
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2011
|
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Net earnings
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| $ | 2,959 |
$
|
2,726
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| $ | 8,391 |
$
|
6,285
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| Add: |
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| |
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| |
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Income tax expense
|
|
|
| 1,224 |
|
953
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|
| 3,053 |
|
2,272
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Interest expense and financial charges, net
|
|
|
| 272 |
|
131
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|
| 422 |
|
319
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Depreciation of property, plant and equipment
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|
| 1,609 |
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1,559
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|
| 4,734 |
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4,530
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Amortization of intangible assets
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|
| 674 |
|
673
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|
| 2,020 |
|
1,955
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Loss (gain) on disposal of property, plant and equipment
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|
| 1 |
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4
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|
| 120 |
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30
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| |
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| |
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EBITDA
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| $ | 6,739 |
$
|
6,046
|
| $ | 18,740 |
$
|
15,391
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Distributable cash flow is defined by management as cash provided by operating activities, plus
or minus the net change in non-cash working capital items, less
maintenance capital expenditures and less cash taxes. Management
believes this measure reflects the cash generated from the ongoing
operation of the business. Distributable cash is an additional GAAP
measure generally used by dividend paying corporations as an indicator
of financial performance and it should not be seen as a measurement of
liquidity or a substitute for comparable metrics prepared in accordance
with IFRS.
Payout ratio is defined by management as the actual cash dividends divided by
distributable cash. This is a key measure used by investors to value
K-Bro, assess its performance and provide an indication of the
sustainability of dividends. The payout ratio depends on the
distributable cash and the Corporation's dividend policy.
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Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
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| (thousands)
|
| 2012 |
|
2011
|
|
| 2012 |
|
2011
|
|
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Cash provided by operating activities
| $ | 6,223 |
$
|
8,217
|
| $ | 12,881 |
$
|
14,931
|
| Deduct: |
| |
|
|
|
| |
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Net changes in non-cash working capital items
|
|
| 775 |
|
2,928
|
|
| (2,358) |
|
1,322
|
|
Maintenance capital expenditures
|
|
| 168 |
|
9
|
|
| 534 |
|
656
|
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| |
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| |
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Distributable cash flow
| $ | 5,280 |
$
|
5,280
|
| $ | 14,705 |
$
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12,953
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Figures expressed in percentages are calculated from amounts rounded in
thousands of dollars.
FORWARD LOOKING STATEMENTS
This news release contains forward-looking information that represents
internal expectations, estimates or beliefs concerning, among other
things, future activities or future operating results and various
components thereof. The use of any of the words "anticipate",
"continue", "expect", "may", "will", "project", "should", "believe",
and similar expressions suggesting future outcomes or events are
intended to identify forward-looking information. Statements regarding
such forward-looking information reflect management's current beliefs
and are based on information currently available to management.
These statements are not guarantees of future performance and are based
on management's estimates and assumptions that are subject to inherent
risks and uncertainties, which could cause K-Bro's actual performance
and financial results in future periods to differ materially from the
forward-looking information contained in this news release. These
risks and uncertainties include, among other things, (i) risks
associated with acquisitions, including the possibility of undisclosed
material liabilities; (ii) K-Bro's competitive environment; (iii)
utility and labour costs; (iv) K-Bro's dependence on long-term
contracts with the associated renewal risk, (v) increased capital
expenditure requirements; (vi) reliance on key personnel; and (vii) the
availability of future financing. Material factors or assumptions that
were applied in drawing a conclusion or making an estimate set out in
the forward-looking information include: (i) volumes and pricing
assumptions; (ii) utility costs; (iii) expected impact of labour cost
initiatives; and (iv) the level of capital expenditures. Although the
forward-looking information contained in this news release is based
upon what management believes are reasonable assumptions, there can be
no assurance that actual results will be consistent with these
forward-looking statements. Certain statements regarding
forward-looking information included in this news release may be
considered "financial outlook" for purposes of applicable securities
laws, and such financial outlook may not be appropriate for purposes
other than this news release.
All forward-looking information in this news release is qualified by
these cautionary statements. Forward-looking information in this news
release is presented only as of the date made. Except as required by
law, the Corporation disclaims any intention or obligation to update or
revise any forward-looking statements to reflect subsequent events or
circumstances.