UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM SD

SPECIALIZED DISCLOSURE REPORT

VERIZON COMMUNICATIONS INC.

(Exact name of the registrant as specified in its charter)

 

Delaware   1-8606   23-2259884

(State or other jurisdiction of incorporation

or organization)

  (Commission File Number)   (IRS Employer Identification No.)

 

1095 Avenue of the Americas

New York, New York

  10036
(Address of principal executive offices)   (Zip code)

Mary Louise Weber, Esq.                                                                     (908) 559-5636

(Name and telephone number, including area code, of the

person to contact in connection with this report.)

Check the appropriate box to indicate the rule pursuant to which this form is being filed, and provide the period to which the information in this form applies:

 

x Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1 to December 31, 2014.

 

 

 


Section 1 – Conflict Minerals Disclosure

Item 1.01 Conflict Minerals Disclosure and Report

Verizon Communications Inc. has issued a Conflict Minerals Report for the period from January 1, 2014 to December 31, 2014. A copy of the Conflict Minerals Report is filed herewith as Exhibit 1.01 and is available at http://www.verizon.com/about/financial-reporting-summary.

Item 1.02 Exhibit

See Item 2.01

Section 2 – Exhibits

Item 2.01 Exhibits

Exhibit 1.01 – Conflict Minerals Report as required by Items 1.01 and 1.02 of this Form.


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, thereunto duly authorized.

 

Verizon Communications Inc.

(Registrant)
Date:                    May 29, 2015            

/s/ Francis J. Shammo

     Francis J. Shammo
     Executive Vice President and Chief Financial Officer


Exhibit 1.01

Verizon Communications Inc. Conflict Minerals Report for Calendar Year 2014

This is the Conflict Minerals Report (“CMR”) of Verizon Communications Inc. (“Verizon”, “Company” or “we”) for the reporting period covering January 1, 2014 through December 31, 2014 in accordance with Rule 13p-1 under the Securities Exchange Act of 1934 (the “Conflict Minerals Rule”) and Form SD.

Introduction

The Conflict Minerals Rule requires issuers to annually file a Form SD with the United States Securities and Exchange Commission to disclose information regarding the use and origin of “Conflict Minerals” necessary for the functionality or production of products manufactured or contracted to be manufactured by such issuer. Under the Conflict Minerals Rule, “Conflict Minerals” currently include columbite-tantalite (coltan), cassiterite, gold, wolframite, and also their derivatives tantalum, tin and tungsten. We refer to gold, tantalum, tin and tungsten collectively as “3TG”. The purpose of the Conflict Minerals Rule is to discover if covered issuers’ use of 3TG may have directly or indirectly financed or benefitted armed groups in the Democratic Republic of Congo and its adjoining countries (the “DRC Region”).

This CMR describes how Verizon’s Conflict Minerals due diligence program is designed, as well as what steps have been taken to implement the due diligence program and determine in good faith the country of origin, source, and chain of custody of the minerals used in the Verizon products that are within the scope of the Conflict Minerals Rule (see “Product Description and Determination”).

This CMR is based on information available at the time of filing. This CMR may contain forward-looking statements regarding steps to be taken in the future as we improve our due diligence measures with respect to 3TG, and those statements are subject to risks and uncertainties. References to any website in this Form SD or CMR do not incorporate information from that website within this filing.

Forward-looking statements are subject to risks and uncertainties that could cause actual actions or performance to differ materially from those expressed in the forward-looking statements. These risks and uncertainties include, but are not limited to, (1) the implementation of satisfactory traceability and other compliance measures by our direct and indirect suppliers on a timely basis or at all, (2) whether smelters and refiners and other market participants responsibly source Conflict Minerals, (3) internal and external resource constraints, and (4) political and regulatory developments, whether in the DRC Region, the United States or elsewhere. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of filing of this CMR. We do not intend, and undertake no obligation, to publish revised forward-looking statements to reflect events or circumstances after the date of filing of this CMR or to reflect the occurrence of unanticipated events.

Reasonable Country of Origin Inquiry

In accordance with the Conflict Minerals Rule, Verizon’s compliance process includes a “reasonable country of origin inquiry” (“RCOI”) seeking the location of the smelters or refiners used to refine or process the 3TG used in products that are within the scope of the Conflict Minerals Rule. Verizon requested that its relevant supplier complete a Conflict Minerals Reporting Template (the “CFSI Template”) to support our Conflict Minerals due diligence program. The CFSI Template was developed by the Conflict Free Sourcing Initiative (the “CFSI,” see http://www.conflictfreesourcing.org) to assist companies in determining the smelters or refiners contributing 3TG to their products.


With respect to the products described in the “Product Description and Determination” section of this CMR (the “Covered Products”), Verizon received a CFSI Template response from its supplier that jointly covered both products. Therefore Verizon could not definitely determine which smelter/refiner contributed to which specific Verizon product. Certain areas of the CFSI Template submission we received were incomplete.

Verizon is a member of the CFSI. As a CFSI member, Verizon has access to country of origin information for smelters/refiners known to CFSI. Some of the smelters/refiners disclosed by our supplier were indicated by the CFSI country of origin data to source 3TG from the DRC Region. Accordingly, Verizon is required to exercise due diligence on the source and chain of custody of the 3TG within the affected Verizon products. Verizon’s due diligence process is described below.

Due Diligence Framework

Verizon designed its due diligence process to conform, in all material respects, with the Organization for Economic Cooperation and Development’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas and accompanying Supplements (the “OECD Framework”) as applicable for “downstream companies” (as defined in the OECD Framework), taking into account Verizon’s position in the 3TG supply chain and the fact that Verizon does not typically contract to manufacture the products associated with its business, and typically has limited engagement with suppliers beyond its direct suppliers.

The OECD Framework recommends a five step process for Conflict Minerals due diligence. Verizon’s implementation of these five steps is described below.

STEP 1: ESTABLISHING STRONG COMPANY MANAGEMENT SYSTEMS

Verizon has taken the following steps to strengthen its company management systems with respect to Conflict Minerals matters:

• Established a Conflict Minerals Policy. Our Conflict Minerals policy communicates Verizon’s perspective regarding the use of Conflict Minerals, our support of certain cross-industry efforts to address them, and our intent to avoid sourcing 3TG that directly or indirectly benefit non-state armed groups. It also references (and excerpts) a section within our Supplier Code of Conduct devoted to Conflict Minerals. That Supplier Code of Conduct subsection sets forth expectations for our suppliers, including the need for suppliers to assist us with any required RCOI investigations, and the requirement that suppliers of applicable products complete a CFSI Template to support our Conflict Minerals due diligence programs.

Our Conflict Minerals policy can be found on the web at:

http://www.verizon.com/about/responsibility/policies/

• Created a Team of Appropriate Personnel to Support Conflict Minerals Due Diligence. We assembled an internal team to support our compliance plan. The team includes representatives from our Legal, Sustainability, Global Corporate Citizenship, Supply Chain, External Communications and Internal Audit functions, as well as the appropriate Sourcing teams responsible for managing relevant supplier relationships. Team members periodically review the goals for our Conflict Minerals compliance program, with Legal, Sourcing, Internal Audit and Supply Chain teams taking primary responsibility for supplier-facing diligence and compliance measures.


Established a System of Controls and Transparency Over the Mineral Supply Chain.

Because Verizon does not typically contract to manufacture the products associated with our business, much of our visibility into the mineral supply chain must necessarily come via our suppliers. Verizon has inserted a detailed set of contractual provisions in its supply contracts for products within the scope of Verizon’s reporting obligations under the Conflict Minerals Rule. The provisions require the supplier to establish processes consistent with the Conflict Minerals Rule and the OECD Framework in order to determine the smelters or refiners from which the 3TG originates. The contract provision also requires Supplier’s periodic engagement with Verizon with respect to Conflict Minerals due diligence. The provision requires that the supplier complete and submit a CFSI Template for review by Verizon.

The contractual provisions described above are detailed and collaborative, requiring periodic meetings and resource dedication to assure that due diligence proceeds throughout each reporting period. The collaborative nature of the provisions is designed to strengthen engagement with our suppliers in accordance with the OECD Framework. The contractual provisions are separate and in addition to the Conflict Minerals-related obligations contained within our Supplier Code of Conduct and our Conflict Minerals policy.

• Provided a Company-level Grievance Mechanism. — In accordance with our public Supplier Code of Conduct, issues with respect to Conflict Minerals can be reported at any time to our Office of Ethics and Business Conduct through the VZ Compliance Guideline at 844-VZGUIDE (844.894.8433) (within the U.S.), (+)800.0.624.0007 (outside the U.S.), or online at www.verizonguideline.com.

STEP 2: IDENTIFYING AND ASSESSING RISKS

We use the CSFI Template for data collection. The contractual provisions referred to in Step 1 provide a schedule for delivery of the CFSI Template by suppliers first in draft and then final form, allowing additional time to address any ‘red flags’ as required by the Conflict Minerals Rule. Typically, the CFSI Template reflects the list of smelters or refiners known by the supplier, or reported to our direct supplier by its own sub-tier suppliers, that contribute 3TG contained in the product to which the CFSI Template relates. We then compare this list with CFSI’s smelter/refiner information.

STEP 3: RESPONDING TO IDENTIFIED RISKS

We conducted our first round of Conflict Minerals sourcing data collection in the third quarter of 2014. Upon receipt of CFSI Templates from our supplier, we analyzed the responses and where smelters/refiners were not listed as compliant with the CFSI audit protocols or were not listed as “active” (that is, having committed to undergo a CFSI facility audit) within CFSI’s audit program, we engaged our supplier for further information and a strategy to manage and mitigate identified risks. In response, we received a limited number of certifications with respect to several of those smelters not indicated to be compliant. We reported to management on the findings derived from the measures taken under Step 2 above. We also took or will take the additional steps described in the section below titled “Steps Taken Or To Be Taken in 2015 To Mitigate Risk And Improve Due Diligence.” Due to our downstream position in the supply chain, we believe that seeking information about 3TG smelters/refiners in our supply chain and otherwise participating in the CFSI program as described represents a reasonable effort to determine the mines or locations of origin of 3TG in our supply chain.


STEP 4: AUDITING SUPPLY CHAIN DUE DILIGENCE.

Because we do not have a direct relationship with any smelter or refiner for minerals contained in our products, we are unable to conduct audits of these entities. Instead, as recommended by the OECD Framework, we participate in industry initiatives for the development and implementation of a smelter/refiner audit program through our membership in the CFSI, which administers the Conflict Free Smelter audit program.

STEP 5: PUBLICALLY REPORTING ON SUPPLY CHAIN DUE DILIGENCE.

Our Form SD and CMR for 2014 are publicly available on Verizon’s website at http://www.verizon.com/about/financial-reporting-summary.

Results of Due Diligence. As a result of the due diligence described above, we identified, based on data we received from our supplier, 162 unique smelters or refiners contributing 3TG contained in our Covered Products for 2014.

Based on data we received from our supplier, we believe that the smelters/refiners listed (with their geographic location) on Annex I may have contributed 3TG to our Covered Products.

Of the 162 smelters or refiners identified, 82 were included on the CFSI list of certified Conflict Free Smelters as of February 2015. Based on data we have access to as members of the CFSI regarding compliant smelters/refiners, we believe that the 3TG used in our Covered Products from those smelters or refiners may have come from the countries listed on Annex II, or from recycled or scrap materials. Certain of the CFSI-compliant smelters/refiners have not disclosed their sourcing locations to CFSI, so additional countries may have contributed 3TG to those smelters/refiners.

Of the remaining 80 smelters or refiners, an additional 18 facilities were reflected as “active” within the CFSI audit program as of February 2015.

Consistent with our Conflict Minerals Policy, which encourages the responsible sourcing of minerals from within the DRC Region, five CFSI-compliant smelters or refiners sourced from within the DRC Region, and an additional four CFSI-compliant smelters or refiners sourced from the Democratic Republic of Congo itself.

We do not have additional information regarding the smelters/refiners not identified as compliant by the CFSI.

Steps Taken Or To Be Taken In 2015 To Mitigate Risk And Improve Due Diligence:

During the first quarter of 2015, members of Verizon’s Internal Audit team travelled to certain of our supplier’s locations in Taiwan and China and performed a review of certain aspects of our supplier’s Conflict Minerals practices as described in their CFSI Template submission to us. We obtained copies of our supplier’s Conflict Minerals policy and found that our supplier requires its second-tier suppliers to avoid the use of 3TG that may finance armed groups in the DRC Region, and to disclose the country of origin for all Conflict Minerals used, and further requires its second tier suppliers to provide their upstream suppliers with a copy of supplier’s Conflict Minerals policy. Additionally, as part of this review, our team also selected a sample of seven second-tier component

suppliers to confirm that each of those seven provided a CFSI Template to our direct supplier, and that all smelters reported by such second tier suppliers (a total of 16) within their CFSI Template submissions were also present on our direct supplier’s CFSI Template.


We will continue to mitigate risk and improve our due diligence process including, but not limited to, taking the following steps:

In 2015, we will continue to engage with suppliers to gain better visibility into our 3TG supply chains, and encourage the further adoption of the CFSI Template.

In 2015, we will continue to be an active member of the CFSI.

In 2015, we will continue to work with direct suppliers and engage with our supply chain to increase the quality of the data provided to us.

As smelter/refiner auditing regimes mature, we will refine and improve contractual provisions that direct suppliers to prefer sources from smelters/refiners that are listed as certified by the CFSI.

We will send letters to smelters/refiners identified in our supply chains that are not yet compliant with the CFSI program, and for which we are able to verify contact information, expressing Verizon’s concerns in regards to Conflict Minerals and encouraging those smelters/refiners to participate in the CFSI program.


PRODUCT DESCRIPTION AND DETERMINATION

The due diligence measures set forth above, including the RCOI, were undertaken with respect to suppliers of products that Verizon contracts to manufacture listed below. The products described below are complex devices with many subcomponents contributed by sub-suppliers at multiple tiers within the supply chain. As a result of such measures, the below products are “DRC Conflict Undeterminable” as defined in the Conflict Minerals Rule:

 

    FiOS Quantum Gateway Router
    FiOS uIPC (This equipment will be used to provide a consumer Verizon service not yet deployed in 2014 that is to be returned to Verizon by the customer once the service terminates)


Annex I

 

3TG

Metal

Smelter Name

Smelter Country

Gold

Heraeus Ltd. Hong Kong Hong Kong

Gold

Mitsui Mining and Smelting Co., Ltd. Japan

Gold

Mitsubishi Materials Corporation Japan

Gold

Sumitomo Metal Mining Co., Ltd. Japan

Gold

Kojima Chemicals Co., Ltd Japan

Gold

Heraeus Precious Metals GmbH & Co. KG Germany

Gold

Asahi Pretec Corporation Japan

Gold

Eco-System Recycling Co., Ltd. Japan

Gold

Ishifuku Metal Industry Co., Ltd. Japan

Gold

Jiangxi Copper Company Limited China

Gold

JX Nippon Mining & Metals Co., Ltd. Japan

Gold

Matsuda Sangyo Co., Ltd. Japan

Gold

Nihon Material Co. LTD Japan

Gold

Solar Applied Materials Technology Corp. Taiwan

Gold

Tanaka Kikinzoku Kogyo K.K. Japan

Gold

Tokuriki Honten Co., Ltd Japan

Gold

Johnson Matthey Inc. United States

Gold

Japan Mint Japan

Gold

The Refinery of Shandong Gold Mining Co. Ltd China

Gold

Zhongyuan Gold Smelter of Zhongjin Gold Corporation China

Gold

China National Gold Group Corporation China

Gold

Guangdong Jinding Gold Limited China

Gold

Shandong Zhaojin Gold & Silver Refinery Co. Ltd China

Gold

Metalor Technologies SA Switzerland

Gold

Heimerle + Meule GmbH Germany

Gold

Navoi Mining and Metallurgical Combinat Uzbekistan

Gold

Western Australian Mint trading as The Perth Mint Australia

Gold

LS-NIKKO Copper Inc. Korea, Republic of

Gold

Argor-Heraeus SA Switzerland

Gold

Dowa Japan

Gold

Metalor USA Refining Corporation United States

Gold

Royal Canadian Mint Canada

Gold

CCR Refinery – Glencore Canada Corporation Canada

Gold

Inner Mongolia Qiankun Gold and Silver Refinery Share Company Limited China

Gold

Umicore SA Business Unit Precious Metals Refining Belgium


Gold

United Precious Metal Refining, Inc. United States

Gold

Allgemeine Gold-und Silberscheideanstalt A.G. Germany

Gold

Materion United States

Gold

Chugai Mining Japan

Gold

Johnson Matthey Ltd Canada

Gold

Valcambi SA Switzerland

Gold

Caridad Mexico

Gold

Metalor Technologies (Hong Kong) Ltd Hong Kong

Gold

Aida Chemical Industries Co. Ltd. Japan

Gold

Yokohama Metal Co. Ltd Japan

Gold

Sabin Metal Corp. United States

Gold

Rand Refinery (Pty) Ltd South Africa

Gold

Ohio Precious Metals, LLC United States

Gold

So Accurate Group, Inc. United States

Gold

Chimet S.p.A. Italy

Gold

Asaka Riken Co. Ltd Japan

Gold

Torecom Korea, Republic of

Gold

Hwasung CJ Co. Ltd Korea, Republic of

Gold

AngloGold Ashanti Córrego do Sítio Minerção Brazil

Gold

PAMP SA Switzerland

Gold

SEMPSA Joyería Platería SA Spain

Gold

Daejin Indus Co. Ltd Korea, Republic of

Gold

Do Sung Corporation Korea, Republic of

Gold

Korea Metal Co. Ltd Korea, Republic of

Gold

SAMWON METALS Corp. Korea, Republic of

Gold

Almalyk Mining and Metallurgical Complex (AMMC) Uzbekistan

Gold

Aurubis AG Germany

Gold

Kazzinc Ltd Kazakhstan

Gold

FSE Novosibirsk Refinery Russian Federation

Gold

DaeryongENC Korea, Republic of

Gold

Kennecott Utah Copper LLC United States

Gold

Umicore Brasil Ltda Brazil

Gold

Cendres & Métaux SA Switzerland

Gold

The Great Wall Gold and Silver Refinery of China China

Gold

Zijin Mining Group Co. Ltd China

Gold

PT Aneka Tambang (Persero) Tbk Indonesia

Gold

Prioksky Plant of Non-Ferrous Metals Russian Federation


Gold

L’ azurde Company For Jewelry Saudi Arabia

Gold

Atasay Kuyumculuk Sanayi Ve Ticaret A.S. Turkey

Gold

YAMAMOTO PRECIOUS METAL CO., LTD. Japan

Gold

Daye Non-Ferrous Metals Mining Ltd. China

Gold

Luoyang Zijin Yinhui Metal Smelt Co. Ltd China

Gold

Yunnan Copper Industry Co. Ltd China

Tin

PT Bukit Timah Indonesia

Tin

Thaisarco Thailand

Tin

Malaysia Smelting Corporation (MSC) Malaysia

Tin

PT Timah (Persero), Tbk Indonesia

Tin

Mitsubishi Materials Corporation Japan

Tin

Yunnan Tin Company, Ltd. China

Tin

EM Vinto Bolivia

Tin

Minsur Peru

Tin

OMSA Bolivia

Tin

China Tin Group Co., Ltd. China

Tin

Yunnan Chengfeng Non-ferrous Metals Co., Ltd. China

Tin

Gejiu Zi-Li China

Tin

Huichang Jinshunda Tin Co. Ltd China

Tin

PT Bangka Putra Karya Indonesia

Tin

PT Stanindo Inti Perkasa Indonesia

Tin

Metallo Chimique Belgium

Tin

PT Tambang Timah Indonesia

Tin

PT Belitung Industri Sejahtera Indonesia

Tin

Mineração Taboca S.A. Brazil

Tin

CV United Smelting Indonesia

Tin

Gejiu Non-Ferrous Metal Processing Co. Ltd. China

Tin

PT REFINED BANGKA TIN Indonesia

Tin

Fenix Metals Poland

Tin

PT Artha Cipta Langgeng Indonesia

Tin

PT Babel Inti Perkasa Indonesia

Tin

Alpha United States

Tin

CV Serumpun Sebalai Indonesia

Tin

PT Mitra Stania Prima Indonesia

Tin

PT Tinindo Inter Nusa Indonesia

Tin

Jiangxi Nanshan China

Tin

Kai Unita Trade Limited Liability Company China

Tin

PT Eunindo Usaha Mandiri Indonesia


Tin

PT Sariwiguna Binasentosa Indonesia

Tin

PT DS Jaya Abadi Indonesia

Tin

Novosibirsk Integrated Tin Works Russian Federation

Tin

Linwu Xianggui Smelter Co. China

Tin

PT Bangka Tin Industry Indonesia

Tin

CNMC (Guangxi) PGMA Co. Ltd. China

Tin

Minmetals Ganzhou Tin Co. Ltd. China

Tin

Cooper Santa Brazil

Tin

PT Prima Timah Utama Indonesia

Tin

Soft Metais, Ltda. Brazil

Tin

Rui Da Hung Taiwan

Tin

Estanho de Rondônia S.A. Brazil

Tantalum

H.C. Starck Group Germany

Tantalum

Global Advanced Metals United States

Tantalum

Ulba Kazakhstan

Tantalum

Exotech Inc. United States

Tantalum

Ningxia Orient Tantalum Industry Co., Ltd. China

Tantalum

Zhuzhou Cement Carbide China

Tantalum

F&X Electro-Materials Ltd. China

Tantalum

Duoluoshan China

Tantalum

Plansee Austria

Tantalum

Mitsui Mining & Smelting Japan

Tantalum

Hi-Temp United States

Tantalum

Conghua Tantalum and Niobium Smeltry China

Tantalum

JiuJiang JinXin Nonferrous Metals Co., Ltd. China

Tantalum

Solikamsk Metal Works Russian Federation

Tantalum

Kemet Blue Powder United States

Tantalum

Telex United States

Tantalum

Tantalite Resources South Africa

Tantalum

LSM Brasil S.A. Brazil

Tantalum

Taki Chemicals Japan

Tungsten

Zhuzhou Cemented Carbide Group Co. Ltd China

Tungsten

Global Tungsten & Powders Corp. United States

Tungsten

Ganzhou Huaxing Tungsten Products Co., Ltd. China

Tungsten

Xiamen Tungsten (H.C.) Co., Ltd. China

Tungsten

Wolfram Company CJSC Russian Federation

Tungsten

Guangdong Xianglu Tungsten Industry Co., Ltd. China

Tungsten

Chongyi Zhangyuan Tungsten Co. Ltd China

Tungsten

Hunan Chun-Chang Nonferrous Smelting & Concentrating Co., Ltd. China

Tungsten

HC Starck GmbH Germany

Tungsten

Wolfram Bergbau und Hütten AG Austria

Tungsten

Ganzhou Non-ferrous Metals Smelting Co., Ltd. China

Tungsten

Fujian Jinxin Tungsten Co., Ltd. China

Tungsten

Kennametal Huntsville United States

Tungsten

Hunan Chenzhou Mining Group Co. China

Tungsten

Japan New Metals Co. Ltd Japan

Tungsten

Tejing (Vietnam) Tungsten Co., Ltd. Vietnam

Tungsten

A.L.M.T. Corp. Japan

Tungsten

Dayu Weiliang Tungsten Co., Ltd. China

Tungsten

Kennametal Fallon United States

Tungsten

Xiamen Tungsten Co., Ltd China

Tungsten

Ganzhou Seadragon W & Mo Co., Ltd. China


Annex II

Argentina

Australia

Austria

Belgium

Bolivia

Brazil

Burma

Canada

Chile

China

Colombia

Czech Republic

Djibouti

Egypt

Estonia

Ethiopia

France

Germany

Guyana

Hungary

India

Indonesia

Ireland

Israel

Ivory Coast

Japan

Kazakhstan

Laos

Luxembourg

Madagascar

Malaysia

Mongolia

Burma

Netherlands

Nigeria

Peru

Portugal

Russia


Sierra Leone

Singapore

Slovakia

South Korea

Spain

Suriname

Switzerland

Taiwan

Thailand

United Kingdom

Kenya

Mozambique

South Africa

Angola

Burundi

Central African Republic

Republic of Congo

Rwanda

South Sudan

Tanzania

Uganda

Zambia

The Democratic Republic of Congo

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