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dover Q407_Transcript

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dover Q407_Transcript

  1. 1. FINAL TRANSCRIPT DOV - Q4 2007 Dover Corporation Earnings Conference Call Event Date/Time: Jan. 30. 2008 / 8:00AM ET www.streetevents.com Contact Us © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  2. 2. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call CORPORATE PARTICIPANTS Paul Goldberg Dover Corporation - Treasurer & Director, IR Ron Hoffman Dover Corporation - President & CEO Rob Kuhbach Dover Corporation - VP & CFO CONFERENCE CALL PARTICIPANTS Alex Blanton Ingalls & Snyder - Analyst Robert McCarthy Robert W. Baird - Analyst John Inch Merrill Lynch - Analyst Terry Darling Goldman Sachs - Analyst Steve Tusa JPMorgan - Analyst Scott Davis Morgan Stanley - Analyst Wendy Caplan Wachovia - Analyst PRESENTATION Operator Good morning and welcome to the fourth-quarter and full fiscal year 2007 Dover Corporation earnings call. With us today we have Ron Hoffman, President and Chief Executive Officer of Dover Corporation, and Rob Kuhbach, Vice President and Chief Financial Officer of Dover Corporation, and Paul Goldberg, Treasurer and Director of Investor Relations of Dover Corporation. (OPERATOR INSTRUCTIONS). As a reminder, ladies and gentlemen, this conference call is being recorded, and your participation implies consent to our recording of this call. If you do not agree with these terms, please disconnect at this time. Thank you. I would now like to turn the call over to Mr. Paul Goldberg. Mr. Goldberg, please go ahead sir. Paul Goldberg - Dover Corporation - Treasurer & Director, IR Thank you. Good morning and welcome to Dover's fourth-quarter earnings call. With me today are Ron Hoffman, Dover's President and Chief Executive Officer, and Rob Kuhbach, Dover's VP of Finance and CFO. Today's call will begin with some comments from Ron on Dover's operating and financial performance both for the quarter and the full year. We will then open the call up to questions. In the interest of time, we kindly ask that you limit your questions to one with a follow-up. www.streetevents.com Contact Us 1 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  3. 3. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call Please note that our current earnings release, investor supplement and associated presentation can be found on our website, www.DoverCorporation.com. This call will be available for playback through 5:00 PM February 13, and the audio portion of this call will be archived on our website for three months. The replay telephone number is 800-642-1687. When accessing the playback, you will need to supply the following reservation code, 30323962. Before we get started, I would like to remind everyone that our comments today, which are intended to supplement your understanding of Dover, may contain certain forward-looking statements that are inherently subject to uncertainties. We caution everyone to be guided in their analysis of Dover Corporation by referring to our Form 10-K for a list of factors that could cause our results to differ from those anticipated in any such forward-looking statement. Also, we undertake no obligation to publicly update or revise any forward-looking statements except as required by law. We would also direct your attention to our website where considerably more information can be found. With that, I would like to turn this call over to Ron. Ron Hoffman - Dover Corporation - President & CEO Thanks, Paul. Good morning, everyone. Thank you for joining today's conference call. We are pleased to report that Dover's 2007 revenue increased to $7.2 billion, up 14%, and diluted earnings per share from continuing operations was $3.22, up 12% over the prior year. Before getting into additional financial information, let me start by commenting that 2007 was a year of significant progress at Dover as we implemented several strategic initiatives to enhance the success of our Company longer-term. First, we optimized Dover's organization structure by aligning our operating companies into four defined industry segments with six core business platforms. In addition to simplifying Dover's strategic direction, this new structure provides sharper focus for Dover's acquisition program, enhances the opportunities to capture synergistic savings and advances the development of Dover's executive talent. Second, our strong free cash flow allowed us to reevaluate our capital allocation priorities, resulting in an 8% increase in our annual shareholder dividend and the announcement of two successive share repurchase programs totaling approximately $1 billion. When completed, these share repurchase programs will reduce Dover's outstanding share count by roughly 10%. In 2007 the Company repurchased 12.4 million shares for $591 million and has added another 1 million shares to that total in early 2008. Additionally, Dover spent $274 million on strategic add-on acquisitions that offered synergistic products and expanded markets for existing platforms. Lastly, we launched a new initiative to capture significant synergies throughout the organization. We are highly encouraged that these actions, which will include aggregated global sourcing, facility consolidations and business integrations, will improve Dover's operating earnings by 4% to 6% over the next two years. Turning to the financial results, Dover announced fourth-quarter net earnings from continuing operations of $169 million or $0.86 per share, up 9% and 14% respectively over the prior year. Quarterly revenue was $1.86 billion, up 11% with operational earnings of $266 million, up 12% over the prior year. Operating margins for the quarter were 14.3%, up 20 basis points over the prior year. www.streetevents.com Contact Us 2 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  4. 4. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call Double-digit earnings improvement was posted in the Product Identification, Energy and Fluid Solutions platforms. Bookings were $1.78 billion during the quarter, up 10% over the prior year. All segments and platforms posted year-over-year gains, and four of the six platforms posted sequential gains. Dover ended the year with a record backlog, up 13% over last year with double-digit gains at four of the six platforms. For the full year, net earnings were $661 million or $3.26 EPS, up 19% including income from discontinued operations of $7.8 million or $0.04 EPS. The reduction in share count accounted for $0.02 of the annual EPS gain. Double-digit sales and earnings gains were posted by the Industrial Products, Engineered Systems, and Fluid Management segments. Operating margins for the year were down 70 basis points as improvements in the Mobile Equipment and Energy platforms were offset with declines related to the integration of MARKEM in Product Identification, volume and mix issues related to the semicon companies in Electronic Technologies and the rightsizing initiatives at Paladin in the Material Handling platform. Bookings for the year were $7.3 billion, up 14% over the prior year with double-digit increases at the Industrial Products, Fluid Management and Engineered Systems segments. During 2007 Dover expanded its global footprint with an add-on acquisition in China and opened or expanded facilities in Mexico, Slovakia, the Czech Republic, India, China and Malaysia. Dover generated strong free cash flow of $728 million, 10% of annual revenue, driven by increased earnings and continued improvements in working capital. Fourth-quarter free cash flow was very strong at $321 million, 17% of quarterly revenue. Dover exercised discipline in the high-priced acquisition climate of 2007 and invested $274 million on value-creating add-on acquisitions to broaden its existing platforms. Pole/Zero, an add-on to the Microwave Products Group, is off to a very nice start, and its focus on defense communication products helps to reduce the volatility of the Electronic Technologies segment. Rotary Lift, a mobile equipment platform company, acquired Hanmecson in China to expand its presence in this fast-growing region, as well as offering a value price product for the domestic market. The recent Camco add-on to DE-STA-CO in the Material Handling platform will broaden its automation product offerings and expand the served markets beyond its historic automotive focus. Wilden's acquisition of Griswold Pump is making an immediate impact in the Fluid Solutions platform by adding a centrifugal ANSI pump offering to its global distribution network. Looking forward, we believe the acquisition pipeline will favor well-funded strategic buyers like Dover, and we are encouraged with the current strategic add-on projects under review. Dover's 14% annual revenue growth included 9.7% from acquisitions, organic growth of 2.3% and 2.1% attributed to foreign exchange. The organic revenue growth rate was negatively impacted by the decline in the semicon markets served by the Electronic Technologies segment. Organic growth for the core industrial companies was 5.2%, in line with our 5% to 7% target. We anticipate organic growth for 2008 to be in the mid-single digit range. Our business leaders forecast 2008 to be another year of growth for Dover. The majority of our companies enter the year with a positive outlook, solid backlogs and exciting new products to serve their customers. We are encouraged by this optimism, but we are also keeping a keen eye on the unsettled economic climate and trends of Dover's global markets. Our segment leaders have reviewed contingency plans and are prepared to react quickly and decisively to keep our businesses properly aligned with the pace of their respective markets. Material cost trends are being anticipated with planned price increases, fixed-price contracts on key materials and consolidated global purchasing initiatives. Let me add some color to this outlook by segment and operating platform. Looking at the Industrial Products segment, the Material Handling platform recorded solid sales and earnings gains with its broad engagement in light construction, demolition equipment and utility equipment. Challenges in heavy construction equipment will continue, and we don't foresee any volume www.streetevents.com Contact Us 3 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  5. 5. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call improvement. But we're anticipating performance enhancements from the integration initiatives that were implemented in 2007. Our Winch companies continue to grow with military contracts, new products and oilfield demand. Warn Winch received the Best New Product Award at the 2007 SEMA Show for its new compact and portable PullzAll tool, which provides lifting and pulling capabilities for a variety of tradesmen applications. The recent acquisition of Camco will provide positive growth in sales and earnings at our factory automation company. The Mobile Equipment platform is bolstered by its transportation equipment companies. These are fuel tankers and aerospace companies that have long-term contracts in its backlog that account for nearly 50% of annual sales. Waste handling equipment should benefit from improved chassis deliveries that impacted 2007 performance. Vehicle service equipment, though forecasting positive growth and entering the year with increased backlogs, would be impacted early if the domestic economy slows. Turning to the Engineered Systems segment, the integration of MARKEM and Imaje will continue to produce positive results to fuel future growth within the product identification platform. Margins at MARKEM improved 700 basis points during 2007, and significant synergy initiatives between direct coating companies are being implemented. Over 50% of the platform revenue is tied to consumables used primarily in the fast-moving consumer goods arena like food, beverage, cosmetics, pharmaceutical and other consumer staples. In the Engineered Products platform, food display equipment continues to gain sales with new customers, utilizing its market-leading sustainability products and is poised to produce another year of growth despite the impact of reduced new store construction at Wal-Mart. In 2007 Hill PHOENIX was a founding member of the US EPA's GreenChill Advanced Refrigeration Partnership, an initiative that advances the environmental commitment of companies to go beyond regulatory requirements in protecting the ozone layer and reducing greenhouse gas emissions. Brazed heat exchanger revenue, which grew 48% in 2007, will continue to expand its global footprint and anticipates growth above global GDP rates. A new management team and product rationalizing decisions drove significant Q4 headcount reductions in the ATM business, which will provide the improved results going forward. The Fluid Management segment is forecasting continued growth and positive leverage for the year. Within the Energy platform, we expect a continuation of high energy prices, coupled with strong global fuel consumption, natural gas transmission requirements and new power generation projects to provide additional growth. Dover's broad exposure to global oil and gas drilling, new offerings in well automation equipment, increased adoption of specialty court sensors and optimization of gas transmission equipment provides a broad base of engagement in this important sector of the economy. Our pump and dispensing companies in the Fluid Solutions platform have a very global footprint with strong recurring revenues. Capital budgets and MRO spending of chemical, pharmaceutical and waste water processing drive their growth opportunities. Clean air regulations and state-driven initiatives continue to provide long-term growth opportunities for service station equipment. In general, the Fluid Solutions companies are low volatility companies with sustainable margins. At Electronic Technologies equipment sales related to testing and fabrication of semiconductor and PC boards was down 11% in 2007 relative to a very strong 2006. Consumer electronic spending and the telecom market are barometers for our semicon equipment activity. Even though we anticipate some improvement over the year, headcount reductions are currently being initiated to optimize quarterly results and align the businesses with current market trends. The hearing aid market is forecasting mid single digit growth and historically has shown low volatility relative to the general economy, driven by the increased demands of an aging population and the technical advancements that improve the adaptability of hearing aids. We continue to believe that the hearing aid market will exhibit above-average growth rates for many years. www.streetevents.com Contact Us 4 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  6. 6. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call In 2007, MEMS microphone unit sales grew with a broader mix of customers offsetting the market share declines of a major customer. We anticipate additional cellphone growth in 2008 based on consumer demand trends for enhanced audio and video features. New product opportunities with audio headsets and microphones for PC manufacturers will provide growth. Typically this market has a slower first quarter and builds volume over the later quarters. New product applications targeted to military, space, medical and specialty sensors will continue to broaden the customer base of our specialty electronic component companies. Lastly, it is very important that I acknowledge and say thank you to the highly talented and creative employees that produced Dover's record results in 2007. Their sincere dedication in proving Dover's performance and adapting to change give me great confidence in their ability to meet the unique challenges of 2008. We strongly believe in the positive direction Dover is headed and are confident our new structure, capital allocation model and synergy initiatives lay a solid framework for future growth. We anticipate increased opportunities to expand our platforms through value creating add-on acquisitions. The broad diversity of Dover's operating companies and their global engagement will serve our shareholders well over the coming year. We foresee a quarterly distribution pattern of Dover's revenue and earnings similar to 2007 and anticipate a 10% plus increase in earnings per share for 2008. Overall Dover looks forward to continuing its track record of generating significant cash flow, building value with its strategic initiatives and delivering another year of record growth for our shareholders. With that, I will turn it back to Paul Goldberg. Paul Goldberg - Dover Corporation - Treasurer & Director, IR Thanks, Ron. And once again, I would like to remind everybody if you can please limit your question to one with a follow-up, we will be able to take everybody in the queue. With that, I would like to turn it over to Marquetta to queue the questions. QUESTIONS AND ANSWERS Operator (OPERATOR INSTRUCTIONS). Alex Blanton, Ingalls & Snyder. Alex Blanton - Ingalls & Snyder - Analyst In looking at 2008, what are your largest concerns? And related to that, is the fact that you said organic growth mid single digits, but what do you think will be added by acquisitions in 2008? Ron Hoffman - Dover Corporation - President & CEO Well, let me take your question maybe in reverse order. As far as acquisitions in 2008, certainly the things that will be added to those acquisitions that we did that I referenced in my words which will have some impact to '08's growth. I think as far as the acquisitions going forward for the year, we will have to kind of see what comes through the pipeline. We are encouraged that strategic buyers like Dover will probably fare better in '08. We certainly see some of the high auctions starting to take a turn. We will see how that develops over the course of the year. But we're going to be focusing predominately on strategic add-ons to the platforms that we have announced. So I think the acquisitions will be kind of self-explanatory as we www.streetevents.com Contact Us 5 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  7. 7. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call do them. I think you will see that they will be adding diversity or products or impact into our global footprint in the existing platforms on a go-forward basis. So I -- hopefully that helps you in that regard. (multiple speakers). As we talk about 2008, you ask what my largest concerns were. At this point in time, I am really very optimistic from the standpoint of the significant backlogs that we have and the plans that we have reviewed from our companies. Now certainly if you listen to what we hear on the TV and what we read, it is a lot more ominous than what our backlogs tend to tell us. So we're keeping a wary eye on that to see if there's going to be trickle down further into the economy to impact our companies. But right now we certainly are not seeing devastation in our order rates that would mimic what we hear. Alex Blanton - Ingalls & Snyder - Analyst On the acquisition point you made, I was really thinking of the earnings added by acquisitions that those would be those mainly that you made in 2007. You had some integration costs that are going to go away. So there's going to be some earnings added by those acquisitions above and beyond the organic growth. So I am trying to get a sense of that. Ron Hoffman - Dover Corporation - President & CEO Yes, I think that number -- we're kind of pulling this together here as we talk -- it is not going to be a large number because the acquisitions were small in nature that we did in 2007. We will have a little bit of acquisition-related expense on the Camco acquisition that was done late in the year, but that will not be large rolling into '08. So we're probably talking about a number that is -- I don't know, Rob, do you have that in hand? Rob Kuhbach - Dover Corporation - VP & CFO I would say that given the size and what Ron described as the factors, I would say the earnings impact in a percentage term would be in the 2% to 3% range. Operator Robert McCarthy, R.W. Baird. Robert McCarthy - Robert W. Baird - Analyst I am sort of struck by -- the first thing that strikes me about your outlook is the acceleration in organic growth that you've got included in it. From you know what, I guess what you would call low single digits this year to mid single digits in '08. Could you talk about what specific pieces of the business you see accelerating? Ron Hoffman - Dover Corporation - President & CEO Well, first of all, I would like to say that again as we look at our industrial core businesses, we believe that our organic growth was in that mid single digit target of 5% to 7% as we said. I think we said 5.2% was the number for industrial core. So we're really talking about those companies maintaining their organic growth rates. And I think we're going to have comps in electronics that will be less impacting in '08 than they were in '07. Certainly, as we look forward to that, as I mentioned on the call, we think Heil Environmental that was impacted by deliveries of chassis last year is going to have a much better year in our material -- excuse me, in our Mobile Equipment sector. We think the fuel trader business that grew quite solidly in '07 continues to show growth and has some nice military contract to support www.streetevents.com Contact Us 6 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  8. 8. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call that going forward. We believe Sargent is going to perform better in the Aerospace group from the standpoint of the backlogs that they have queued up, and just the strong level of orders and activity going on there. I think we're also still optimistic about our global footprint engagement with our Product Identification companies. And then Energy is certainly one that continues to show growth, and our engagement there is very broad whether it be drilling activity or whether it be maintenance of existing wells or optimization of existing wells. So those are the things that tend to give us comfort level that we will continue to display organic growth. Rob, did you have anything to add? Rob Kuhbach - Dover Corporation - VP & CFO I think the other thing to keep in mind is last year the Electronic Technologies area segment was negative, meaningfully negative. So it would take relatively little -- I hate to say modest improvement in that area -- will show a significant impact on the organic number. So it is a little bit of the math. Robert McCarthy - Robert W. Baird - Analyst Sure. And just to make sure I understood your tour, Ron, my takeaway is that you expect sort of comparable organic growth rates from all three of the non-tech segments perhaps somewhat slower in tech but improved from '07? Ron Hoffman - Dover Corporation - President & CEO Yes, but I would not totally discount tech either. I think it is certainly going to depend on what happens in the consumer goods market that will drive that area. But I would also say that we continue to be very buoyed by our hearing aid company, as well as the activity with the MEMS microphone. The cellphone market is continued to forecast to grow in '08. I think there are some figures out by some of the companies in that marketplace that are forecasting as much as 9% growth for next year. Robert McCarthy - Robert W. Baird - Analyst Okay. And for a follow-up, if I could, regarding the Energy business, roughly what is the geographic split there now between US and Canada and rest of world? Ron Hoffman - Dover Corporation - President & CEO Well, certainly we're more domestic US-based than anywhere else. Canada would be the second-largest region. From there, South America, certainly Venezuela, countries in that region are important. We're seeing more and more activity even into Russia and developments into China. I think we're going to have to expand our footprint of locations at some point in time to serve the global world even better. We will evaluate that when it is appropriate. But very broad engagement across the board, and you have to kind of keep in mind if you think about the bigger companies in there, it is going to be the companies that are manufacturing sucker rods and manufacturing the inserts for the drillheads as such. And those companies continue to be a little bit more domestic-related. However, the inserts that we manufacture could be used for any type of well application wherever they might be. Today I would say the US number is probably as high as 70%. www.streetevents.com Contact Us 7 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  9. 9. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call Operator John Inch, Merrill Lynch. John Inch - Merrill Lynch - Analyst Just to go back to the guidance of the mid single digit, I mean Rob suggested that the delta is going to be Electronic Technologies. Now help me understand, why do you feel optimistic that that business can actually begin to grow? I guess Everett Charles was down what, double-digits this year? Why couldn't it be down if the US heads into a recession, a comparable amount in 2008? Ron Hoffman - Dover Corporation - President & CEO John, I think you might have misinterpreted Rob's comments just slightly. He did not say that was going to be the leading driver of it. He just said that it is going to have less headwind. Rob Kuhbach - Dover Corporation - VP & CFO The way to put it, John, is that if you assume it does not even -- let's assume it is flat year-over-year. That itself will show a positive impact on the organic number. John Inch - Merrill Lynch - Analyst Okay. And are you expecting it to be flat, or do you think it can still go down? Rob Kuhbach - Dover Corporation - VP & CFO We're expecting it to be flat, but to some degree when you're trying to figure out what the organic rate is given the number of businesses we try to analyze, I would say that we expect improvement at Everett Charles or modest improvement I guess is the way I would characterize it. But that alone will cause a fairly significant impact on the organic growth rate calculation. Because last year they were significantly negative. They were high single digits negative. So, as a practical matter, I think, [in fact], even if they do not show (inaudible) improvement, we're going to see a pickup in our overall organic growth rate. Ron Hoffman - Dover Corporation - President & CEO John, I also hate to be redundant because we have said this in past years also. We're kind of in that time of year where the electronics activity level is a little bit less clear. I mean you come out of the year where you supplied components for, let's say, either inventory builds, summer season for manufacturers. You go into that kind of period of time where you have Chinese New Year impacting China. You kind of have to wait and get the signals back from the customers to really see the true activity level of electronics. Well, what we are saying is we are buoyed by the forecast that we had. We're going to get much more clarity on that probably by late February into March as to where the activity level picks up to what our forecast levels anticipate. www.streetevents.com Contact Us 8 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  10. 10. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call John Inch - Merrill Lynch - Analyst Ron, you also I think on your comments talked about, and again still with electronics, some semicon headcount reductions. First thing is that, as you kind of look into 2008, has your staffing -- is it at sort of what you would call a rightsized level? And what did actually that cost you, or is there still some cost to come in terms of some headcount reductions? Ron Hoffman - Dover Corporation - President & CEO Well, some of those headcount reductions, again this is a company with a very international footprint, or this is a group of companies I should say with a very international footprint. As a result, as you make cuts, certainly in Europe those are going to be expensive cuts, and there will be some -- certainly it will impact the first quarter in that regard. We're still accumulating those numbers and magnitudes. I think what we're saying, John, is that we are going to leverage in '08, and we are not going to set back and kind of wait on the signals before we act. We're acting earlier. We typically see this bit of a slowdown period. I think we're reading the signals of semicon versus test equipment versus other component opportunities in the electronics market and just adjusting so that we don't have too much false optimism. We can always dial back up if we have overstepped, but I think it is important that we get our capacity in line with what we see as today's demand. John Inch - Merrill Lynch - Analyst But you're going to eat these charges, right? You are not going to call those out separately? Those will be part of the ongoing ops reported results? Rob Kuhbach - Dover Corporation - VP & CFO That will be part of the ongoing ops report. That is correct. John Inch - Merrill Lynch - Analyst Just one more if I could. Ron, as you look to the fact that prices for prospective acquisitions in 2008 have obviously since come down, should we be looking for 2008 to be a year of acceleration off the 270 you spent in M&A in 2007? I'm thinking you know possibly opportunities to add to Paladin, maybe even get into some other areas that look pretty cheap on a multiple basis, whether it be, I don't know, automotive or something like that, just to add to some of the portfolio. How would you like us to think about the way you are thinking about M&A in 2008? Ron Hoffman - Dover Corporation - President & CEO Well, John, I'm not certain automotive would hit our focus area, but I think what we will do is certainly -- we believe that the platforms that we have now and the focuses we have give us the opportunities to leverage our acquisitions maybe more effectively than what we have done historically. I think we like some of the opportunities that might flow into our Fluid Management group over the course of the year, whether they be energy-related, whether they be pump-related. I think we continue to like the Product ID space very much. I think the MARKEM acquisition last year has been very value creating for Dover to make the significant strides in operating margins we made at MARKEM. Certainly I think the accolades go to the MARKEM team. But I think also the fact that we're able to find significant (inaudible) in that group will help Dover, and we will also look for opportunities there. www.streetevents.com Contact Us 9 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  11. 11. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call So those are the ones we will tend to target in on. I think right now we are engaged in a number of processes that we will see where they go to term, but they are encouraging, and they will be very synergistic add-ons in the markets we like. During the course of the year, if, indeed, properties stay on the market and if the expectations of sellers are reasonable to what we believe values are, then I think we will step our acquisitions spending up in '08. Operator Terry Darling, Goldman Sachs. Terry Darling - Goldman Sachs - Analyst The first question, just we are looking for an update if anything has changed with regards to your thinking on magnitude and timing of cost savings efforts here relative to where we were at your analyst meeting? Ron Hoffman - Dover Corporation - President & CEO Well, I don't know that I would say anything has changed in terms of timing. I think we're doing a very rigorous task right now in each of our segments. Our segment leaders are meeting with their companies to really fine-tune and hone the opportunities that we have so we can get those properly prioritized and make those realities. There will be some costs associated with that, that upfront as we do some facility consolidations. We will see how that plays out over the course of time. But I would say that once you get those formulated, once you get them implemented, once you get to the true savings of those, it will probably be more towards the back part of the year than the front part of the year. But we are encouraged in the 4% to 6% commitment we made at Dover Day is one that we're reiterating today. Terry Darling - Goldman Sachs - Analyst So no change there? And then, Ron, I wonder if you can think longer-term with me about your strategy in Asia. I guess if I look at the geographic revenue mix pie chart you had in the slide package with your growth for Dover overall, 14% including acquisitions and growth of only 5.3% in Asia and presumably that relates to Asia having a lot more exposure in the electronics area, which got some cyclical effect just in '07. As you think about your competitive positioning versus other diversified industrials longer-term, I think probably most would agree that you will be able to grow more rapidly, and Asia is going to be a key competitive differentiator. I'm wondering if you can talk to us about how you are thinking about attacking that market more holistically across Dover going forward? Ron Hoffman - Dover Corporation - President & CEO Well, we have established more footprints in Dover across each of our segments, and I think those footprints were small in nature, but they were such to engage us in that arena. Certainly we did an acquisition in China this year in our Mobile Equipment group to engage ourselves not only on that continent but also to supply back to the domestic economy. We have just put a footprint down for our heat exchanger business that we think will grow over time because we think that technology will be well utilized in the growth of China. Our pump group has set down footprints over there that I think will allow us to grow. I think the lower growth rate, I think you categorized it properly, was impacted by the pullback in the electronics world last year. If that picks back up, that will certainly help us. We have probably got 4300 employees in China right now, so we have a significant structure there, and we continue to make investments there. www.streetevents.com Contact Us 10 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  12. 12. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call But we have also channeled many of our companies that were looking at China to supply the domestic economy and kind of moved some of those companies more to Mexico because it was closer to our domestic economy and helped our ability to control our inventory and really ended up being a better cost picture for us. But Asia is still important, and we need to find our way to continue to engage more there. We are encouraged by the companies that have gone there that it takes a few years to get yourself established, to get yourself to have the right distribution channels to reach out to the customers. And also I think a fighting that we have had is we have typically gone to new locales, new geographies as individual entities. I think when you go to China, it is more important that Dover show a presence there and that Dover has a much more supportive structure. And I think we will be doing that over the course of '08. Terry Darling - Goldman Sachs - Analyst I guess, Ron, if we narrow that question in on just China specifically, maybe it would be helpful to me anyway if you could give a sense as to which of your major platforms do you feel has got the most opportunity longer-term and which one has got the most work to do to achieve whatever opportunity you think exists for it? I'm just trying to get a sense for the relative positioning of your major platforms versus where you want to be, and obviously the opportunity in that context will be the key driver. Ron Hoffman - Dover Corporation - President & CEO Well, electronics is already very well-positioned on that continent. So I think other than relocating facilities maybe in different locales in the continent, I think we have a nice footprint there. I think if we look at Product Identification again, it has a nice footprint that started there. I think they have the ability to really expand and serve that continent on a stronger basis going forward. I think they will do that. Certainly there's opportunities for our pump group to expand its platform in China and serve those needs. Energy is one that we think there's opportunities in China that we probably have not taken full advantage of. We have had teams over there to evaluate that, and we're hopeful that we will see maybe some footprint in that arena. Because we think Energy in Asia and Russia are growth opportunities for us. Terry Darling - Goldman Sachs - Analyst That's helpful, and lastly, you haven't mentioned potential divestitures in the context here at all. Is there anything we should be thinking about there? Ron Hoffman - Dover Corporation - President & CEO Well, I think that there's not any large ones out there looming on the horizon right now, other than the ones that we discontinued and commented on previously. I again think that some of the churn we have done over the last couple of years in our portfolio, that work is pretty much behind us now. I think if there is any further pruning, it will probably be lesser in scope than what we have done for the last two years. I think we're very comfortable with the platforms we have now, and we just want to build on those. Operator Steve Tusa, JPMorgan. www.streetevents.com Contact Us 11 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  13. 13. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call Steve Tusa - JPMorgan - Analyst I'm not named after your hometown. It is Tusa, but that is okay. So I just wanted to walk through a couple of the numbers here, and just correct me if I'm wrong. But share count you have said adds about $0.15 to $0.20 to the '08 outlook? Rob Kuhbach - Dover Corporation - VP & CFO I would say, Steve, that if you look at '08 standalone, it is more like 7 to 9. If you look at it accumulatively over the two-year period, it is more like 11 to 13. (multiple speakers). Depending on timing of how quickly we're -- some of this will depend on how quickly we end up completing the repurchase, but I would say and that includes imputed interest. Steve Tusa - JPMorgan - Analyst Right. That includes the imputed interest, right. Okay. And some of the cost saves are going to hit this year, so that is roughly $0.10? Rob Kuhbach - Dover Corporation - VP & CFO I would say the costs right now we would anticipate on a cost basis like $0.03 to $0.04. Steve Tusa - JPMorgan - Analyst Okay. Rob Kuhbach - Dover Corporation - VP & CFO But I mean that is a moving -- we are going to give you some updates on that because, as you can imagine, most of the synergies are going to ultimately pay off as you have the costs. So this is a frontloaded phenomenon as Ron alluded to earlier, and some of these things like Norris, AOT, there are a number of specific projects we have a pretty good handle on. There are some other things that are, frankly, still a work-in-process that companies are really embracing the process much more rapidly than we probably anticipated. But I would say right now we would think of ourselves as having $0.03 to $0.04 on a full-year basis. But that number could move up some over time. Steve Tusa - JPMorgan - Analyst Okay. And then the acquisition? So you said 2% to 3% growth. What was that, on revenues or was that on EPS? Rob Kuhbach - Dover Corporation - VP & CFO I'm not sure I understand -- Steve Tusa - JPMorgan - Analyst You said acquisitions will contribute 2% to 3% of growth, kind of the leftover impact of acquisitions from previous years. (multiple speakers) www.streetevents.com Contact Us 12 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  14. 14. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call Ron Hoffman - Dover Corporation - President & CEO He is thinking revenue, not EPS. Rob Kuhbach - Dover Corporation - VP & CFO Revenue. Steve Tusa - JPMorgan - Analyst Okay, so that is like a $0.05 or so? Rob Kuhbach - Dover Corporation - VP & CFO No, a little bit less. Steve Tusa - JPMorgan - Analyst Okay. I guess what I'm trying to get to here is just to buildup from your base, it would seem to me with all these nonfundamental items building it up, you kind of get close to that 10%, and then whatever kind of core growth falls through, and if you're assuming a mid single digit rate, that is about $0.20 on the bottom line of incremental. Is that kind of how we should be thinking that to hit the 10% you do not necessarily need to do your 5% core growth, so that 10% plus really is kind of the base case? Rob Kuhbach - Dover Corporation - VP & CFO I would say 10% is a fairly conservative estimate. I mean I think the variability gets into, we do have an expected improvement in margin, which we talked about, and to some degree when that occurs, that will probably be midyear more a second and third-quarter impact. So this is not, as you well know, this is not an exact science, but I think we think that that the 10% plus improvement is a fairly conservative estimate based on the assumptions that we have laid out in the slides and that Ron has talked about. Ron Hoffman - Dover Corporation - President & CEO I would also, Steve, say that I strongly feel that we should leverage better in '08. I think our portfolio of companies probably are even better performers than what we exhibit with some of the specialty charges or write-offs we have from time to time. I want to continue to believe that we have got our hands around those much better now and would anticipate less activity like that in '08, but we will see what the year unfolds. Steve Tusa - JPMorgan - Analyst Right. And so if that is kind of a conservative number and I don't want you to comment on your stock price here, but you're currently trading at just below 11 times earnings. The last time that Dover ever traded there was back in the early '90s right before that recession. So there is obviously a view out there that your earnings are higher than where they are actually going to end up. www.streetevents.com Contact Us 13 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  15. 15. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call How long did it really have to stay at these levels for you to take some sort of action? Because even back then when people thought the world was coming to an end, the stock had a pretty -- actually a pretty incredible performance over the next year and a half up 40%. So there was value to be unlocked even at that time. So I'm just curious with what looks like a better portfolio that should be a little more recession resistant, how long before you think about something a little bit more than maybe just the standard $500 million buyback you guys have announced? Ron Hoffman - Dover Corporation - President & CEO Well, I think we're comfortable with that number, Steve. We don't want to commit, overcommit in that arena and miss the opportunity to grow with some nice value-creating acquisitions over time. I think you always have to balance what is the right use of your capital. I think you also touched on why do we feel better -- Dover is a, let's say, better company going forward than it was in the past recession or past downturn. And, quite candidly, I think there is a lot of change. I think the Dover that people own today is a different more focused Dover. I think we have reduced the exposure into the volatile semicon market from where it was arguably over 25% a few years ago, it is down below 10%. Recurring revenues are now approximately 25% of our total revenue. We strategically reduced our capital goods exposure, so we sell more through a larger portion of the business cycle than we did in the past. And also Product Identification and Energy, which are both nice high-growth high margin groups, now make up over 25% of Dover. So I would say that the Dover story is one of not only growth but a much stronger portfolio. The metrics that we have kicked in have certainly made this a better company. I think it is a real value opportunity to own Dover. Steve Tusa - JPMorgan - Analyst Right. So if you get the 5%, that is great, and if you don't, you are prepared? Ron Hoffman - Dover Corporation - President & CEO Absolutely. Operator Scott Davis, Morgan Stanley. Scott Davis - Morgan Stanley - Analyst I'm encouraged by the level of share count reduction, so congrats there. I wanted to follow-up on Steve's question a little bit because I think he is touching on an interesting point that you do have some tailwinds to offset some of these macro headwinds. One thing that was not mentioned on the call was currency or pension. Was there a change -- is there a tailwind from pension at all? Certainly I want to also talk about currency, and if you have hedges or not hedged and what kind of an impact currency had on you in the fourth quarter so we might have a view of what it might do in 2008. Ron Hoffman - Dover Corporation - President & CEO I will see if Rob can help you with those. www.streetevents.com Contact Us 14 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  16. 16. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call Rob Kuhbach - Dover Corporation - VP & CFO I would say on the pension that, frankly, we don't expect anything to impact earnings at all this year. If anything, we're probably going to show some modest pickup. On the currency front, we probably had a higher positive impact from FX in the fourth quarter than we did the prior three quarters, you know modestly more of a positive impact. And I think that reflected the continued deterioration of the dollar, which has benefited us all year but, frankly, more in the fourth quarter than the prior three-quarters. So we anticipate if anybody can tell where our currency is going to go, we are assuming neutrality. But if the currency rates continue in the direction they have in the last year, we will probably continue to see another pickup in '08. Scott Davis - Morgan Stanley - Analyst In the 2.3%, let's say 2.8% organic growth Q4 number you posted, how much of that was currency? Rob Kuhbach - Dover Corporation - VP & CFO It is not in there. Currency is a separate item. Scott Davis - Morgan Stanley - Analyst Okay. I'm just trying to see if this adds up. Yes, okay, I get you. All right. Moving on to the next question, I think one of the big key variables clearly in our models are going to be whether Electronic Technologies can turn the corner and the timing of that. You talk about bookings and backlog up 14 to 13%. Can you talk more specifically about Electronic Technologies and maybe a book-to-bill or some way that you might think about that business since organic in 4Q is down 4%, for the full year down 7%. We are moving in the right direction, but when do we hit a crossover point where your book-to-bill exceeds 1? Ron Hoffman - Dover Corporation - President & CEO Well, it has exceeded 1 at times during the year. I think the fourth quarter as we said always tends to slow as you head into the start of the next year. I think you need to kind of think about the Electronics Technology group kind of in two buckets so to speak. And one is, those companies that relate to semicon that are more dependent, let's say, on consumer electronics, on things of that type that are related to the consumer spending patterns. I think the other part of electronic you need to think of is really the hearing aid components, the microphone support for cellphones, as well as the various electronic components. And there we've added a military play, which typically has long contracts. It is a whole different business cycle than, say, the semicon-related items. So I think we have strengthened that portfolio. I would say the most volatile side continues to be the semicon-related side. Again, the thing that I really like that has changed in that group is their ability to hold their margins even in a down period. Certainly there's some volatility as it relates to the size impact of the group period to period. But we are not losing money in that group anymore. It is maintaining nice double-digit margins. It is remaining nice engagement in its marketplace, and it has also increased its recurring revenue. So I like the fact that it is not -- the downside is more limited than it has ever been. And I think the potential for, let's say, growth within a lower band of volatility in the other electronic areas is certainly a reality. www.streetevents.com Contact Us 15 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  17. 17. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call Scott Davis - Morgan Stanley - Analyst Okay. I think I get it. So maybe we can talk off-line. The last question, just on tax rate. You had a nice improvement in your tax rate this quarter. Are you still guiding to 2008 tax rate being higher? I think you said 27 to 29, somewhere in that range? Rob Kuhbach - Dover Corporation - VP & CFO I said 20. I think we said 26 to 28. Scott Davis - Morgan Stanley - Analyst 26 to 28? Rob Kuhbach - Dover Corporation - VP & CFO I think, Scott, that the challenge, without getting unduly complicated with, you know, GAAP accounting for taxes, as you are required by GAAP to start your year at the what I will call effectively the statutory rate and you're not allowed to take into account what you might otherwise expect to be positive adjustments that you in our case typically will only see in the third and fourth quarter. So we give you -- we give you our guidance, which if you look at our history is probably pretty directionally spot on. But you will not see those -- necessarily those exact rates in the first two and three quarters of the year. They will be different, and they will probably be somewhat higher, and they will come down over the year just as they have in the last two years. Ron Hoffman - Dover Corporation - President & CEO I think Rob certainly has more color on taxes than what I could begin to offer. But I think if you look at Dover's performance over an extended period of time, it has really been in a pretty narrow band. And the difference is just being kind of our taxation country to country and then also whatever happens in the tax laws. Scott Davis - Morgan Stanley - Analyst Okay. And last -- sorry to go on here -- but if Congress does, in fact, pass this accelerated depreciation tax credit, can you give us a little color? I know we went through this in 2002. Did it help you out much in 2002? Is there a tangible kind of difference that you see in customers' activity when you have this type of a tax break thrown out there, or does it not impact you guys as much? Ron Hoffman - Dover Corporation - President & CEO Well, I don't know that we could quantify it for you, Scott. But anything like that certainly always has a positive bias to the market, and I think it causes customers that do look at that as an advantage in their business to act. So I would say a positive bias, but I am sorry, I'm not going to be able to quantify it for you. It is going to be small, though. www.streetevents.com Contact Us 16 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  18. 18. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call Scott Davis - Morgan Stanley - Analyst Okay. Understood. Thank you, guys. Operator Wendy Caplan, Wachovia. Wendy Caplan - Wachovia - Analyst Given that free cash flow is so important to Dover, can you -- I'm looking at the working capital numbers, inventory specifically, which has moved down through the year despite some acquisitions. Can you I guess, Rob, speak to whether there are areas of greater opportunity on the inventory side as we head into '08, or is it simply a question of acquisitions? And if you have calculated the term number without acquisitions, that would be helpful as well. Ron Hoffman - Dover Corporation - President & CEO I will let Rob answer the question more specifically, but I would say some of the acquisitions we did such as Paladin, even MARKEM to a degree, we acquire companies that have a, let's say, a low inventory turn that we have to work to improve. So that does impact our year-to-year number just off what we acquired. Typically, and certainly I was guilty of this as I own Tulsa Winch, managers are running companies out of the cash of their pocket of their own generation sometimes don't focus on inventory the same way that we're certainly focusing on it today. We view inventory turns as a barometer of the health of a company and its engagement and its market. So that is why we put great emphasis on it. So we believe that there are considerable opportunities to continue to improve at Dover's inventory turn, and our Companies are very committed to that. But, Rob, I will let you add from there. Rob Kuhbach - Dover Corporation - VP & CFO I guess, Wendy, your question is, do we continue to see opportunity broadly across Dover? The answer is obviously yes because we are still at 6.5 turns, and we do expect to get to 8 in time. Typically that takes probably a year to two in many cases for the companies, particularly the acquisitions to get there, and there are some companies that have some structural challenges. But I would say on balance we will continue to see improvement in working capital. We're not obviously done yet on metrics, but we are very committed, and I think the operating companies over the last really two years since this program was launched have shown a lot of energy and put a lot of emphasis on it. Wendy Caplan - Wachovia - Analyst Thank you. And have you calculated that number, the turn number, excluding the recent acquisitions? Rob Kuhbach - Dover Corporation - VP & CFO We can get you that number. www.streetevents.com Contact Us 17 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  19. 19. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call Wendy Caplan - Wachovia - Analyst That would be helpful. Just one more cash question as a follow-on. Can you review, Ron, your and the board's thoughts on cash deployment and priorities as we head into '08? Ron Hoffman - Dover Corporation - President & CEO Well, I think we have certainly shown flexibility in our strategic capital allocation in '07. In '05, '06 we had great acquisition opportunities, and we deployed our dollars there. I think certainly we have a long record of increasing our dividend year-over-year. I cannot speak for the board, but certainly that is a long-term record that is likely to be sustained. I think as we look at then at our allocation of capital between share buybacks, CapEx and acquisitions, certainly our capital equipment requirements declined in '07. I would anticipate them maybe being on par to slightly down as we look at '08. That means that then the dollars will be allocated between share buybacks and acquisitions. We have kind of already committed to a share buyback program that if it is the right economic use of those dollars, we will continue to stay deployed in that program. If we have some acquisition opportunities that significantly outweigh those opportunities, then we will take advantage of those. So it is kind of hard to call the exact number, other than I think Dover's posture on capital allocation is much more value-oriented and much more looking at where can we create the most value relative to the risk involved in the spending of those dollars. So I guess I would like to say if you have to make a judgment call there, judge us on the flexibility we showed this year. Wendy Caplan - Wachovia - Analyst Thanks very much, Ron. Ron Hoffman - Dover Corporation - President & CEO I would like to thank everyone for joining our call today. I would like to comment that the 2000 year was a very positive year of progress in Dover. We had record EPS performance. We continued to build on a nice track record of growth year-over-year for a number of years now that we have sustained that. We're generating strong cash flow. We have exhibited nice capital allocation discipline, and we're excited about the opportunities of 2008 and look forward to chatting with you over the course of the year about our progress in that area. Thank you very much. Operator Thank you. This does conclude today's teleconference. You may now disconnect. www.streetevents.com Contact Us 18 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.
  20. 20. FINAL TRANSCRIPT Jan. 30. 2008 / 8:00AM, DOV - Q4 2007 Dover Corporation Earnings Conference Call DISCLAIMER Thomson Financial reserves the right to make changes to documents, content, or other information on this web site without obligation to notify any person of such changes. In the conference calls upon which Event Transcripts are based, companies may make projections or other forward-looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks, which are more specifically identified in the companies' most recent SEC filings. Although the companies may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized. THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS. IN NO WAY DOES THOMSON FINANCIAL OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. ©2008, Thomson Financial. All Rights Reserved. 1737004-2008-04-11T09:21:09.070 www.streetevents.com Contact Us 19 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.

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