AMP 2011 Annual Report

P o l a N c s e ’ e L r i ke e h T

2011 ANNUAL REPOR T

Mission Statement Applied Measurement Professionals, Inc. (AMP) is a private stock corporation located in the greater Kansas City area. It was incorporated in the state of Kansas in 1982 as a wholly owned subsidiary of the National Board for Respiratory Care, Inc. AMP’s corporate mission is to provide certification organizations, governmental agencies and private industry with assessment, management, communications and technology services that meet the highest professional and ethical standards; tailor these services to fulfill the unique requirements of each business partner; and personalize the delivery of these services by providing innovative and accessible professional and managerial staffs serving business partner organizations throughout all phases of the program.

S

ver the o e r e wh e om Rainbow…

“A place where there isn’t any trouble,

do you suppose there is such a place?”

A

n innocent enough question when Dorothy asks it of Toto. We wish there was such a place, but we all know that obstacles befall us along our way and 2011 was certainly no exception. The world saw an unprecedented number of natural disasters, including our neighbor in Joplin, MO. The testing world was rocked by numerous cheating scandals, which appear to be getting more prevalent and devious each day. I’m sure you can think of a few more that had special impact to your year. At AMP, we realize you can’t eliminate all troubles but we also believe it is how you prepare for and respond to obstacles in business and in life that set you apart.

Being a good Kansas company, we see the relevance in Dorothy’s journey, first to experience her place over the rainbow but, more importantly, then to find her way home. She too had many obstacles to overcome – “lions and tigers and bears, oh my” – but luckily had a lot of help from her friends the Scarecrow, the Tin Man and the Lion. Over the years, we have found that smart, caring and courageous people working together can do great things, overcome difficult obstacles and get you to where you want to go. We believe this describes our relationship with our valued business partners and is the essence of this year’s annual report.

Journey with me as we let the spirit of the Scarecrow (brains), Tin Man (heart) and Lion (courage) narrate the adventures of 2011. I think you’ll find we may have had a few obstacles thrown our way, but working together, we found some pretty creative ways to keep us all moving down the right road. We added numerous new technologies and security features to speed, strengthen and protect your programs and confidential information. We also celebrated many important client and staff anniversaries, including seven more clients that have now been with us for 20 years and 12 staff members that found a home at AMP for 20, 25, 30 and even 35 years!!

Finally, as is our tradition of corporate transparency, we discuss our current financial situation.

We are again proud to say that, due mainly to your trust in the quality of our products and services; we remain on solid financial ground. While these are still challenging financial times, our income statement remains consistent and the balance sheet is strong. Thanks to your support, we were once again able to give back generously to our community and many worthy causes that make working and living worthwhile.

Please enjoy this year’s annual report and remember, “There’s no place like home”…or AMP. As always, if you have any questions or would just like to visit, please do not hesitate to call me.

Gary Smith President and CEO

If I Only Had a

Brain…

N

avigating certification, licensure and association issues often feels like having your house uprooted and dropped into a strange world filled with wonderful sites and scary, unexpected twists. You know where you want to end up, but how do you get there?

We’ve found through years of experience that

“It’s always best

to start at the beginning” and take things one brick at a time. There will be obstacles along the way, perhaps ones you can’t even imagine, but with proper planning, they are all surmountable. AMP has the brains to plan and lead you down the right road, from the very beginning. We’ve been there before and will look out for you all the way.

When our clients feel overwhelmed, we want them to call on us. Pick up the phone and say

“I’ve got a plan and

you’re going to lead us.”

And we will. That’s just what we did in 2011. We helped current clients start up nine new certification programs, transitioned another five existing programs to AMP, added three associations to AMP Management Services, conducted 15 job analyses, and handled many special projects, such as an executive director search, validity studies, recertification database development, website design, self-assessment examinations, and software programming.

We also used our brains to lead the way and make “business as usual” even better for our clients. How? We launched an enhanced My Home Page for testing candidates.

This customized webpage allows candidates to use a simple, single log-in process to access copies of correspondence from AMP (e.g., confirmation emails), print a receipt and even add their testing appointment to an online calendar.

If they are a real estate candidate attempting to test in multiple states, a construction candidate working through multiple levels of licensure or a nurse hoping to gain certification in multiple specialty areas, they can manage multiple examinations, from different sponsoring organizations, from this one location. We listened to your candidates’ needs, then we put our brains together and came up with something great.

This year also brought upgrades to existing systems. Our online voucher and coupon system was enhanced, allowing program sponsors more flexibility with group orders and promotions.

Completion of broadband roll out in the AMP Assessment Center Network now lets us handle even higher resolution graphics and larger video files.

We also made significant improvements and broader availability of two products in 2011. First, we enhanced the services we were providing a few select clients and began officially offering the development, hosting and maintenance of recertification databases for our assessment and association management clients. Our testing and association database management experience allow us to offer a flexible database platform with quality support services. Our management services division, with the support of our information technology staff, is now also offering website design and secure website hosting internally. We are proud to offer this service to association management clients, helping control costs and bring more services under one umbrella.

“Anybody can have a brain – that’s a very mediocre commodity.”

The important thing about brains is that you need to use them.

It’s education and continuing challenge that keeps the brain focused and functioning at top capacity. AMP staff had their share of educational achievements, brainy projects and honors in 2011: Dede Gish-Panjada, MBA, Senior Vice President, Management Services, was named Secretary of the AMC Institute Board of Directors.

Lori Tinkler, MBA, Chief Operating Officer, was named Chair of the Olathe Chamber of Commerce.

Robert C. Shaw, Jr., PhD, AMP Program Director was published in the CLEAR Review.

Lawrence J. Fabrey, PhD, Senior Vice President, Psychometrics, worked with other industry experts to publish Practical Examination Guidelines for the Institute for Credentialing Excellence (ICE).

Steven S. Nettles, EdD, Senior Vice President, Psychometrics, and Lily Chuang, MS, Research Associate, completed a study monitoring the stability of item statistics in programs with low candidate volume.

Jesse Irvin, MA, Test Development Specialist, earned her Master of Fine Arts from the University of Wichita.

If I Only Had a

Heart…

M

aybe all companies don’t have a heart, but AMP sure does. We have the empathy to understand and care about our clients, our employees and our community. Having a heart doesn’t make the road to success any less fraught with obstacles, but it does make the accomplishments much sweeter. And really,

“We’ve come such

a long way already.”

However, the “witches” in our realm might taunt us now and then, shouting out

“You call that a long way, you’ve just begun!”

Some days it feels like that. Just as we’ve increased security in the AMP Assessment Center Network, we read about a new cheating technique. As soon as we’ve launched a new software product, we begin work on the next version. And when we’ve completed another large project to a client’s satisfaction, we may feel the creep of that ever present obstacle – complacency. It’s all too easy to give in and fall asleep in the poppy field, but at AMP we fight the curse of complacency, let today’s accomplishments revive us, and reach for new goals.

In 2011, AMP was pleased to have renewed contracts with all six of our current clients who went out for competitive bid. We feel this is a testament to our continued quality approach and caring staff. Our unprecedented client retention translates to great loyalty and long term clients. In fact, we have 18 clients who have been with us for more than 20 years and another 29 that have been with us for more than 10 years. Wow! We feel so honored with the confidence our clients put in AMP that we’ve started showing our thanks more freely. We recently began sending tokens of our appreciation to clients on key anniversaries. Hopefully we’ll be sending one to your organization soon.

“My, people come and go

so quickly around here.”

Not at AMP! Our clients aren’t the only example of commitment at AMP. Our caring culture keeps our staff happy and loyal. Our Management Team has an average of 23 years with the company, Department Managers average 19 years and all staff average 10 years. It’s easy to see that we care about the work we do, which helps us serve you better.

We also welcomed some new hearts (with brains and courage, too) to our team in 2011. Twenty-two in fact. That included seven new employees in management services, five in information technology, three in psychometrics, three in test development/scoring, two in regional offices, one in publications and one in the Candidate Support Center. We welcome them to the journey!

“Nobody can see the great and powerful Oz, not nobody, not no how!”

That doesn’t seem like a very caring way to run a company, and certainly not how its done at AMP. We give our clients direct access to the individual in charge, whether it be the Program Director of their testing program or the Executive Director of their association. Or maybe even the man in charge. Gary Smith, our CEO, is always available to clients needing to discuss contract issues or seek advice from a long-time industry veteran. We believe in open communication. If an obstacle ever appears, despite our best efforts to keep the road clear, you’ll hear about it. Right away and from the top. If needed, we’ll find a new road, maybe of a different color, to follow together.

We also feel businesses have a responsibility to their greater community, whether it be Munchkinland or Olathe, Kansas. 2011 was the fourth year for our participation in the Kansas City Power & Light Power Curtailment Program (allowing companies to help conserve energy at peak times) and Olathe Celebrates Earth Day festivities. We recycled 25.43 tons of waste and held an e-waste recycling event that collected and properly disposed of more than 140 electronic items. Through volunteer hours and charitable donations, we also supported the Ronald McDonald House, American Heart Association, Care of Poor People, VFW Unmet Needs, Joplin tornado victims, Harvesters, Cancer Month, Olathe Mayor’s Christmas Tree Fund, Toys for Tots and the Arthritis Foundation.

Let’s not forget our own internal community! AMP brought many fun and educational programs to our staff this year, including quarterly staff lunches and breakfasts, a salsa contest, a chili cook off, company picnic, cool treats during the hot Kansas summer months, a company pot luck, a Halloween costume contest and a variety of lunch and learn topics (e.g., organ donation, healthy living). Just a few ways we encourage a caring, social company culture.

I

n 2011, we celebrated some impressive staff anniversaries:

35 Years Barbi Rossi, Senior Examination Services Specialist

30 Years Mark Biewer, Lead Software Engineer Jody Burns, Senior Examination Services Specialist Bill Lair, Manager, System and Network Security Sue Prine, Lead Software Engineer Rhett Tindall, Chief Information Officer

25 Years Melanie Thomas, Manager, Examination Services

20 Years Vicki Fayard, Senior Test Development Specialist Cathy Johnson, PhD, Director, Test Development and Scoring Sheryl Parris, Test Center Supervisor Lori Tinkler, MBA, Chief Operating Officer Sharon Wayland, Accounting Associate

15 Years Georgia Lasley, Candidate Support Specialist Debbie Farrow, Accounting Associate Jennifer Hayzlett, Test Center Supervisor

10 Years Bridget Coiner, Manager, Candidate Support Center Monica Evans-Lombe, Association Manager Nate Hagemann, Test Development Coordinator Tracy Pierron, Test Development Coordinator Lori Van Bibber, Test Scoring Specialist

If I Only Had the

Courage…

C

ourage is a highly sought after trait in our society, but all too often individuals and companies are found lacking. Of course, it helps to know courage when you see it, and it’s not always easy.

There are many flashing promises being made in today’s testing world – shiny bells and whistles that promise faster, easier and less expensive – being touted by seemingly courageous pioneers on the cutting edge. We know all about the hype. To be sure, we’ve even tested the next generation of hype. And we have chosen, carefully and with great wisdom, which amenities to offer and which are simply fancy distractions with no real value. You might think AMP less courageous for our measured approach, but

“you’re confusing courage for wisdom.”

True courage is having the wisdom to do what is right, even under great pressure.

AMP has the courage to take the right path even when others are led astray. We have a constant dedication to doing what is right for our clients. We consider new technological advances,

candidate/member requests and stakeholders’ desires, and we weigh them against the validity of your examination or the efficacy of your association’s strategic plan. Sometimes saying no and coming up with an alternate plan is the courageous path. For certification and licensure programs, meeting industry standards and ensuring legal defensibility are the building blocks for a sound program that will stand the test of time. For associations, IRS requirements and generally accepted accounting principles must be in place or all the member benefits in the world won’t make an association successful. It would be great if there were a brightly colored brick road to follow and a catchy tune to hum along the way, but since there isn’t, let AMP lead the way. Our A+ Better Business Bureau rating demonstrates we won’t lead you astray.

There is no shortage of obstacles to doing things the right way. Just when you eliminate the Wicked Witch of the East, the Wicked Witch of the West appears. And

“she’s worse than the other one.”

This is never more true than in the realm of examination security. We are constantly on the lookout for new cheating schemes and effective counterintelligence. We purchase and use the latest cheating devices ourselves, so we recognize them, know how they can be concealed and understand how they can be used to subvert security measures. Our information technology and network operations staff regularly attend industry conferences aimed at security practices, ensuring that AMP stays on the cutting-edge of cheating deterrence. We are also diligent to continually monitor and upgrade our security software solutions. Our systems undergo quarterly scans to maintain our PCI compliance status, which ensures that our firewalls remains effective against online intruders.

While we have the wisdom to remain true to our ideals and industry best practices, that doesn’t mean we shy away from a challenge. We also have the courage to take on unique projects and venture off the beaten path. In 2011, we programmed a massive upgrade to the Georgia Core Licensing System, a dedicated same-day licensing system AMP developed specifically for the Georgia Real Estate Commission (GREC). This latest upgrade allowed GREC to redesign the staff interface, update their business rules, add additional application and renewal functionality, upgrade public website search, and benefit from increased co-location and failover technology. We also assisted the Illinois Department of Financial and Professional Regulation with the development and delivery of unique transition and proficiency examinations for the conversion from Sales and Broker to Broker and Managing Broker licenses.

No doubt, it’s difficult to navigate the obstacles these days. It seems the hurdles are getting higher and more frequent each year – the sharing of test content is easier than ever through social media, there is constant pressure to launch an association faster in a competitive market, test security breaches are in the news with frightening frequency and an increased urgency for new credentials exists in the depressed job market. AMP stays ahead of the game with our eyes firmly locked on the real prize – the sustainability and effectiveness of our clients’ products and services. What will the next hurdle be? Will it be flying monkeys? Probably not, but the point is, you don’t have to worry about it. Let us handle that.

Financial Statements

U

“Pay no attention to the man behind the curtain.”

nlike the “great and powerful Oz,” financial planning is not smoke and mirrors. At AMP, it’s just sound business and accounting principles.

We believe in being open and transparent, which is why we share our financial information, even though we are not required to do so as a privately held organization. Economic times remain challenging and obstacles to growth are numerous.

However, AMP’s steadfast approach to prudent financial strategy has allowed us to again strengthen our fiscal position, while continuing to build infrastructure and exploring new technologies to better serve our valued business partners.

As the Statement of Income shows, AMP’s revenue and expenses were fairly consistent across all major line items. Revenue was up slightly but net income before taxes and bonuses dropped a touch, due to higher expenses. While we would naturally like to see more substantial growth, our first priority is maintaining and expanding the quality of our product/service offerings. Our sound financial position provides the foundation to reach that goal and invest in future upgrades with current cash flow.

STATEMENT OF INCOME (unaudited) Years ended December 31, 2011 and 2010

REVENUE Testing Revenue

2011

2010

19,063,094

18,447,293

Applied Research Products

1,277,368

1,207,656

Association Management

2,901,671

3,075,545

Software Products

663,981

641,605

Publishing and Other Income

517,351

590,564

$24,423,465

$23,962,663

7,241,902

7,127,058

Personnel - Before Bonuses

11,483,158

11,143,077

General and Administrative

3,308,720

3,183,023

—

—

181,853

215,743

$22,215,633

$21,668,901

$2,207,832

$2,293,762

TOTAL REVENUE

EXPENSES Test Development and Administration

Interest Expense Publishing Expense TOTAL EXPENSES (before taxes and bonuses)

NET INCOME (before taxes and bonuses)

“There’s We understand that nothing in business, or life for that matter, is given to you.

It’s not whether you get knocked down from time to time but how you respond that matters most. When obstacles come, and they will, we believe sound stewardship and a strong balance sheet will best prepare us to weather any storm.

Much like Dorothy’s journey; a defined purpose, determined attitude and good friends along the way, make reaching one’s primary goals possible.

a storm blowin’ up – a whopper...”

As you can see in the Balance Sheet below, AMP continues to increase our cash positions and remain free of long term debt. We were pleased to once again increase stockholders’ equity and hold the line on liabilities, which resulted in an excellent debt-equity ratio (measure of financial leverage) of 0.59. The current ratio (ability to meet obligations for the coming year) also continued to rise to above 2.3 at the end of 2011. As a privately held company, we use these strong financial indicators to invest wisely in our infrastructure with the intent of better serving our loyal business partners.

BALANCE SHEET (unaudited) December 31, 2011 and 2010

ASSETS

2011

Current Assets Other Assets

2010 6,324,765

5,831,958

768,286

690,056

Property and Equipment

5,974,567

6,112,471

Less Accumulated Depreciation

4,230,062

4,231,617

Net Property and Equipment TOTAL ASSETS

1,744,505

1,880,854

$8,837,556

$8,402,868

LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Long-Term Debt Other Long-Term Liabilities Stockholders’ Equity TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

2,717,771

2,662,253

—

—

554,942

516,487

5,564,843

5,224,128

$8,837,556

$8,402,868

AMP Clients 360 Training AACN Certification Corporation Alabama Real Estate Appraisers Board Alabama Real Estate Commission American Academy of Pain Management American Association of Colleges of Nursing American Association for Respiratory Care American Association of Heart Failure Nurses American Association of Oral and Maxillofacial Surgeons American Board for Occupational Health Nurses American Board for Transplant Certification American Board of Audiology American Board of Genetic Counseling American Board of Histocompatibility and Immunogenetics American Board of Medical Genetics American Board of Veterinary Practitioners American Board of Wound Management American Case Management Association American College for Advancement in Medicine American College of Chest Physicians American College of Healthcare Architects American College of Veterinary Emergency and Critical Care American College of Veterinary Internal Medicine American Hospital Association Certification Center American Midwifery Certification Board American Organization of Nurse Executives

American Public Works Association American Society for Healthcare Engineering American Society for Healthcare Food Service Administration American Society for Pain Management Nursing American Society of Anesthesia Technologists and Technicians American Sports Builders Association American Veterinary Dental College ASHR AE Association for Driver Rehabilitation Specialists Association of Boards of Certification Association of College and University Auditors Association of Genetic Technologists

Certification Board for Music Therapists Certification Board for Professionals in Patient Safety Certification Board of Infection Control and Epidemiology Chartered Realty Investor Society COACH: Canada’s Health Informatics Association Commission for Certification in Geriatric Pharmacy Commission on Dietetic Registration Employee Assistance Certification Commission Entertainment Services and Technology Association Georgia Construction Industry Licensing Board

“There’s no place like home...”

Association of Pulmonary and Critical Care Medicine Program Directors Association of Strategic Alliance Professionals Association of Certified AntiMoney Laundering Specialists Automotive Lift Institute AXIOM Resource Management Board for Critical Care Transport Paramedic Certification Board of Ambulatory Surgery Certification Board of Certification for Emergency Nursing Board of Certification/ Accreditation, International Breining Institute California Office of Real Estate Appraisers California State Board of Pharmacy Center for Health Design Center for Interviewer Standards and Assessment

Georgia Real Estate Appraiser Board Georgia Real Estate Commission Hand Therapy Certification Commission HCPro Health Care Compliance Association Healthcare Information and Management Systems Society Healthcare Quality Certification Commission Illinois Department of Financial and Professional Regulation Infusion Nurses Certification Corporation Institute of Internal Auditors International Association of Electrical Inspectors interNational Association of Lighting Management Companies International Board of Lactation Consultant Examiners International Nurses Society on Addictions Investment Management Consultants Association

A

ll our clients have a special place in our heart, and we want to make sure you know. Anniversaries celebrated in 2011 include:

20 Years Joint Commission on Allied Health Personnel in Ophthalmology Kentucky Real Estate Appraisers Board Lambda Beta Society Missouri Real Estate Appraisers Commission Missouri Real Estate Commission Missouri Veterinary Medical Board Montana Board of Real Estate Appraisers Montana Board of Realty Regulation NATCO: The Organization for Transplant Professionals National Association for Healthcare Recruitment National Association of EMS Physicians National Association of Graduate Admissions Professionals National Association of Health Unit Coordinators National Asthma Educator Certification Board National Board for Certification of Hospice & Palliative Nurses National Board for Certified Counselors National Board for Respiratory Care National Board of Boiler and Pressure Vessel Inspectors National Board of Surgical Technology and Surgical Assisting National Certification Board for Diabetes Educators National Certification Corporation for the Obstetric, Gynecologic and Neonatal Nursing Specialties National Conference of Bar Examiners National Council on Qualifications for the Lighting Professions National Enrichment Teachers Association National League for Nursing National Marrow Donor Program

National Strength and Conditioning Association Nebraska Real Estate Appraiser Board Nebraska Real Estate Commission New Hampshire Real Estate Commission New York State Board of Real Estate Appraisal North American Electric Reliability Corporation North American Menopause Society North Carolina Real Estate Commission North Dakota Real Estate Appraisal Qualifications and Ethics Board North Dakota Real Estate Commission Oak Park Homes Association OASIS Answers Inc. Office of Indiana State Chemist Oncology Nursing Certification Corporation Orthopaedic Nurses Certification Board Pediatric Endocrinology Nursing Society PJM Interconnection SABA University School of Medicine Sam M. Walton College of Business South Dakota Real Estate Appraiser Board South Dakota Real Estate Commission State Pain Policy Action Coalition Sudden Cardiac Arrest Association The American Association of Nurse Attorneys The American Association of Nurse Attorneys Foundation Transportation Lawyers Association Virginia Board for Waste Management Facility Operators Washington Real Estate Commission Web Analytics Association

Alabama Real Estate Commission American Board of Histocompatibility and Immunogenetics Board of Certification/Accreditation, International Certification Board of Infection Control and Epidemiology Georgia Real Estate Commission Missouri Real Estate Commission Nebraska Real Estate Commission

15 Years Commission for Certification in Geriatric Pharmacy National Council on Qualifications for the Lighting Professions

10 Years AACN Certification Corporation Board of Ambulatory Surgery Certification Center for Interviewer Standards and Assessment Employee Assistance Certification Commission National Asthma Educator Certification Board National Marrow Donor Program

5 Years Association of Pulmonary and Critical Care Medicine Program Directors Association of Strategic Alliance Professionals Investment Management Consultants Association National Association of Graduate Admissions Professionals National Association of Health Unit Coordinators National Board of Surgical Technology and Surgical Assisting Nebraska Real Estate Appraiser Board SABA University School of Medicine

Wyoming Certified Real Estate Appraiser Board Wyoming Real Estate Commission

Our Team 2011 Board of Directors Gary A. Smith President Olathe, KS James H. Hayes, MHA Chairman of the Board San Antonio, TX Paul L. Goldiner, MD Vice Chairman Larchmont, NY

Gregg L. Ruppel, MEd, RRT, RPFT, FAARC Secretary St. Louis, MO Harry E. Jordan Treasurer Leawood, KS

Theodore Oslick, MD, FCCP, FAARC Glenside, PA Robert D. Regnier Overland Park, KS Barbara G. Wilson, MEd, RRT Chapel Hill, NC

Kerry E. George, MEd, RRT, FAARC Ankeny, lA

William W. Burgin, Jr., MD, FCCP Director Emeritus Corpus Christi, TX

Steven S. Nettles, EdD Senior Vice President, Psychometrics

Deidre Gish-Panjada, MBA Senior Vice President, Management Services

Lawrence J. Fabrey, PhD Senior Vice President, Psychometrics

Patrick Gallagher, MBA Vice President, Sales & Marketing

Management Team Gary A. Smith President & Chief Executive Officer Lori M. Tinkler, MBA Executive Vice President & Chief Operating Officer Scott M. Hermansen, CPA Chief Financial Officer & Senior Vice President, Finance

J.E. (“Rhett�) Tindall Jr. Chief Information Officer & President & Founder, LXR Division

Department Managers Cathy Berra, MBA Director, Management Services

Larry D. Flint Director, Operations

Nisha Bhagchandani, MBA Manager, Technology Planning & Development

Donna K. Howard, FMP Manager, Facilities

Bridget Coiner Manager, Candidate Support Center Wade Delk Director, Government Affairs Andrew J. Falcone, PhD Director, Psychometrics Karen S. Flint Director, Internal Development & Systems Integration

Catherine B. Johnson, PhD Director, Test Development & Scoring Cuong D. Luu Manager, Technology Operations & Support Alicia G. Nentwig, MS Manager, Operations/Assessment Center Support Melanie C. Thomas Manager, Examination Services

Executive Office

Regional Offices

18000 W. 105th Street

Atlanta, GA (Lilburn and Marietta)

Olathe, Kansas 66061.7543 913.895.4600 913.895.4650 FAX info@goAMP.com www.goAMP.com

Georgetown, SC Jefferson City, MO Macon, GA Savannah, GA Springfield, IL Springfield, MO St. Louis, MO Washington, DC

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People Who Care

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