Q Economic Recession Forecast and Trends

Transcription

1 Zurich, February 12, 2009 ABB Q4 and full-year 2008 results Joe Hogan, CEO Michel Demaré, CFO February 12, 2009 Slide 1

2 Agenda Summary of full-year and Q results Financial review Adjusting cost base and seizing opportunities Summary and outlook Joe Hogan Michel Demaré Joe Hogan Q&A February 12, 2009 Chart 2

3 2008 was the strongest year ever for ABB Record orders, revenue and EBIT Double-digit organic revenue growth in every division EBIT at a record $4.6 billion ($5.4 billion when adjusted for ca. $870 million in Q4 provisions*) Cash flow from operations at a record high of $4 billion ROCE reached 31% (36% when adjusted for provisions*) Steps taken to address outstanding compliance matters Several bolt-on acquisitions in line with our focused M&A strategy Solid opening backlog of $24 billion to start 2009 Dividend unchanged at CHF 0.48 a share share buyback program inactive * Comprises compliance, restructuring, VAT charge, write-offs and other operational provisions February 12, 2009 Chart 3

4 The fourth quarter shows underlying operational strength Revenue growth continues, solid cash flow despite global slowdown Steady double-digit revenue growth on successful execution of order backlog Cash flow from operations healthy despite pressure on working capital needs Earnings reduced by provision for compliance costs, tax-related charges and restructuring Orders down 11% (local currency) on lower large orders, base orders 2% lower Orders up 9% in the Americas, 12% higher in the U.S. Power Products and Automation Products divisions with stable orders Power grid upgrades continue in U.S. and Europe Orders for energy-efficient technologies also higher Power Systems and Process Automation down on weak large order intake No significant order cancellations Cost take-out program announced to meet challenging market environment February 12, 2009 Chart 4

5 Q4 and full-year 2008 key figures 1 After provisions of ca. $870 million for compliance, restructuring, VAT charges, write-offs and other operational provisions Key figures Q4 and full year 2008 vs 2007 Record earnings and cash flow Change Change US$ millions unless otherwise stated Q Q US$ Local FY 2008 FY 2007 US$ Local Orders received 7,183 8,868-19% -11% 38,282 34,348 11% 7% Revenues 9,140 8,713 5% 15% 34,912 29,183 20% 16% Order backlog 23,837 22,715 5% 14% EBIT ,145-60% 4,5521 4,023 13% as % of revenues 5.0% % % 13.8% Net income 213 1,753-88% 3,118 3,757-17% Basic earnings per share (US$) Dividend per share (CHF) Cash from operations 1,395 1,469 3,958 3,054 Free cash flow 2,888 2,429 as % of net income 93% 65% Return on capital employed 31% 35% February 12, 2009 Chart 5

6 Large orders decreased in H in worsening lending environment But the tender backlog in Power Systems continues to grow ABB base vs large orders 2006 to Q Power Systems tender backlog Q to Q Large orders Base orders rebased to % 17% 16% 19% 16% 22% 11% % Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Full year Quarterly 50 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Large order volumes declined Base orders held up better Significant new projects being tendered Further delays in converting them to orders February 12, 2009 Chart 6

7 Order backlog down $3.4 billion from Q3 08 One-third from currency translation, two-thirds from book-to-bill Order backlog at end of period, Q to Q US$ millions 30'000 25'000 20'000 15'000 10'000 U.S. dollars Local currencies As reported -12% -8% In local currencies Down $2 billion on book-to-bill, $1 billion on currency 5'000 0 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 February 12, 2009 Chart 7

8 Order backlog contribution to 2009 revenues Expected conversion of year-end 2008 order backlog to revenues '000 Order backlog at end of period, US$ millions 20'000 15'000 10'000 5'000 65% 25% 0 10% February 12, 2009 Chart 8

9 Service revenues outpaced total growth rates in 2008 Strategy in place to drive growth further Growth in service revenues vs total revenues Revenue growth rates, % Service revenues 17% Total revenues 16% February 12, 2009 Chart 9

10 Power Products Q4 and full-year 2008 summary Strong revenue growth, Q4 EBIT impacted by one-offs Key data Q4 and full year 2008 US$ millions unless otherwise stated Change Q Q US$ Local FY 2008 FY 2007 US$ Local Orders received 2,615 2,751-5% 2% 13,627 11,320 20% 15% Order backlog (end Dec.) 7,977 6,932 15% 24% Revenues 3,208 2,910 10% 19% 11,890 9,777 22% 18% EBIT % 2'100 1'596 32% as % of revenues 13.8% 16.0% 17.7% 16.3% Cash from operations '575 1'279 Q4 orders stable up in the Americas and Middle East, lower in Asia and Europe Large new projects were delayed but grid upgrades continued Revenues continue double-digit growth on strength of backlog EBIT incl. $35 million restructuring costs and more than $100 million in one-off items Excluding one-offs and restructuring, Q4 EBIT up 34%, EBIT margin exceeded 19% Change February 12, 2009 Chart 10

11 Power Systems Q4 and full-year 2008 summary Tender backlog conversion critical over next 24 months Key data Q4 and full year 2008 US$ millions unless otherwise stated Base orders steady, decreased large orders, mainly in grid systems and substations Tender backlog at high levels with new projects still coming in Grid upgrades in U.S. and Europe, less new infrastructure in Asia and Middle East Revenues increased on the strength of the order backlog Record full-year EBIT margin benefited from improved project execution Cash flow reflects lower customer advances on fewer large orders February 12, 2009 Chart 11 Change Change Q Q US$ Local FY 2008 FY 2007 US$ Local Orders received 1,456 1,902-23% -14% 7,408 7,744-4% -8% Order backlog (end Dec.) 7,704 8,209-6% 4% Revenues 1,902 1,977-4% 7% 6,912 5,832 19% 16% EBIT % % as % of revenues 9.5% 9.1% 8.6% 8.4% Cash from operations

12 Automation Products Q4 and full-year 2008 summary Steady revenue and EBIT growth Key data Q4 and full year 2008 US$ millions unless otherwise stated Change Change Q Q US$ Local FY 2008 FY 2007 US$ Local Orders received 2,094 2,360-11% -3% 10,872 9,314 17% 11% Order backlog (end Dec.) 3,863 3,490 11% 18% Revenues 2,484 2,396 4% 13% 10,250 8,644 19% 13% EBIT % 1'908 1'477 29% as % of revenues 17.0% 17.1% 18.6% 17.1% Cash from operations '343 1'257 Orders for energy efficiency and renewable energy technologies increased Standard product orders for industry and construction were down Revenues were higher service grew significantly faster than divisional average Cash flow impacted by increased working capital, mainly higher inventories February 12, 2009 Chart 12

13 Process Automation Q4 and full-year 2008 summary Revenues up, EBIT margin continues to improve, fewer large orders Key data Q4 and full year 2008 US$ millions unless otherwise stated Q4 orders decreased across most segments and regions on reduction in large orders Service and product orders remained steady Strong revenues reflect order backlog and current-quarter service and product sales Higher revenue and improved project execution lifted the EBIT margin Cash flow mainly reflects timing of project payments February 12, 2009 Chart 13 Change Change Q Q US$ Local FY 2008 FY 2007 US$ Local Orders received 1,452 2,343-38% -30% 8,657 7,935 9% 4% Order backlog (end Dec.) 6,111 5,951 3% 12% Revenues 2,088 1,939 8% 20% 7,815 6,420 22% 18% EBIT % % as % of revenues 11.5% 11.3% 11.8% 10.6% Cash from operations '

14 Robotics Q4 and full-year 2008 summary Aggressive restructuring in a weakening demand environment Key data Q4 and full year 2008 US$ millions unless otherwise stated Change Change Q Q US$ Local FY 2008 FY 2007 US$ Local Orders received % -10% 1,658 1,488 11% 5% Order backlog (end Dec.) % 6% Revenues % 3% 1,642 1,407 17% 11% EBIT % as % of revenues -17.9% 6.0% 0.5% 5.6% Cash from operations Further weakening in automotive, also in general industry - orders lower in all regions Revenues steady on execution of the order backlog EBIT reduced by restructuring charges ($70 million) Aggressive drive to shift capacity to low-cost emerging countries February 12, 2009 Chart 14

15 ABB continued smaller acquisitions to fill technology and geographic gaps Fuelling profitable growth while maintaining our financial strength In line with strategy to focus on smaller bolt-ons Mainly in product businesses where we can integrate quickly Total of approx. $650 million spent on acquisitions in 2008 Acquisition Country Division Strategic rationale Vektec Electronics N.Z. Automation Products Power electronics technology Kuhlman Electric U.S. Power Products Transformer technology, regional scope Ber-Mac Electrical Canada Process Automation Service, engineering and regional scope February 12, 2009 Chart 15

16 Summary of 2008 full-year and Q4 operational performance ABB benefited from lead position in power infrastructure and energy efficiency Strong revenue growth, both on product sales and successful order execution Record EBIT, even after provisions Record cash flow from operations Q4 orders down mainly due to absence of large orders Tender backlog conversion critical for business over next several quarters Order backlog will provide significant support into 2009 February 12, 2009 Chart 16

17 Agenda Summary of full-year and Q results Financial review Adjusting cost base and seizing opportunities Summary and outlook Q&A February 12, 2009 Chart 17

18 Record full-year EBIT and EBIT margin Strong demand, high capacity, improved cost base EBIT margin 15.5% * 5.4% 19.3% 16.7% SG&A as % of revenues Lower G&A on simplified processes Higher sales expenses to drive growth Cost base 74.9% 68.7% Cost of sales as % of revenues Low-cost sourcing Footprint measures Strong markets * Adjusted for provisions in Q February 12, 2009 Chart 18

19 ABB has built a solid balance sheet foundation A definite competitive advantage in an uncertain market Gearing* Net cash (debt)* US$ billions, end of period $5.4 bn 82% 17% years -$6 bn Strong balance sheet with substantial net cash provides strong base in a downturn Among the lowest credit default spreads in the industry Financial flexibility to act quickly both restructuring and growth opportunities * Total debt divided by the sum of total debt plus equity, incl. minority interest * Cash & equivalents plus marketable securities & short-term investments, less total debt February 12, 2009 Chart 19

20 ABB s balance sheet is among the strongest in the industry Significant improvement over the past five years ,806 Credit ratings* S&P: BB+ (negative watch) Moodys: Ba3 (negative outlook) 4,613 1,013 7,952 Cash & marketable securities Stockholders equity 11,158 2,363 Credit ratings* S&P: A- Moodys: A3 (both outlook stable) Total debt * on long-term unsecured debt February 12, 2009 Chart 20

21 Return on capital employed growing steadily High capital efficiency ROCE after tax (%) 1 and capital employed (US$ bn) 16 36% 2 EBIT up 67% CAGR since % 1 Capital employed, US$ billion 8 4 3% 8% 14% 21% Capital employed CAGR 7% Revenue CAGR 14% Adjusted for one-time items (deferred tax assets and gain from the sale of ABB Lummus Global); 2 Adjusted for $870-million in provisions; on reported EBIT, 2008 ROCE = 31% February 12, 2009 Chart 21

22 Balance sheet protected by ABB s conservative cash management Cash & marketable securities $7.8 billion conservatively invested More than 50 well-rated institutions, treasuries, corporates and government securities Near-term debt maturity $354 million due in the next 12 months next major maturities in 2011 and 2013 Bank support $2-billion revolving credit facility due in 2010 no draw-down Commercial paper 3 programs (USD, EUR, SEK) but unused in last 6 years Strong bank relationship management credit facility and multi-billion-dollar bonding lines in place to support the business February 12, 2009 Chart 22

23 Sufficient cash generation to fuel growth, benefit shareholders and maintain a strong balance sheet $5.4 bn Cash from operations $4 bn Capex $1.2 bn M&A $650 mill Dividend $1 bn Share buyback $620 mill $5.4 bn Dec add cash less capex less acqui less div less shares Dec Net cash February 12, 2009 Chart 23 Net cash

24 Cash is king Managed centrally cautious investment policy driven by capital preservation Capital efficiency program in place Focus on collecting from customers active credit risk management Strict monitoring of inventories Capital spending reduced by ca. 20% Dividend maintained, but share buyback inactive No large M&A activity until financial markets have stabilized cash bolt-ons are a major opportunity Investment-grade rating remains a key priority Bank relationship management is essential February 12, 2009 Chart 24

25 Agenda Summary of full-year and Q results Financial review Adjusting cost base and seizing opportunities Summary and outlook Q&A February 12, 2009 Chart 25

26 Orders softening, revenues still rising on strong backlog We are moving now with $1.3-billion cost take-out to stay ahead Orders, revenues and book-to-bill development, Q to Q '000 Orders Revenues Book-to-bill Orders and revenues, US$ millions 9'000 6'000 3' Book-to-bill ratio 0 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q February 12, 2009 Chart 26

27 While demand environment is changing fast and is difficult to forecast there are cost and growth opportunities to keep us on target EBIT as % of revenues * EBIT margin target corridor 11-16% 16% 14% 12% 10% 8% 6% Revenues 4% 2% % * 2008 EBIT margin adjusted for provisions February 12, 2009 Chart 27

28 Cost take-out: Program overview Goal: To reduce costs from 2008 levels by a total of $1.3 billion by 2010 Total program cost >$600 million 2008: >$100 million 2009: >$300 million 2010: >$200 million Over half of savings to be realized in 2009 Four main cost levers: Global sourcing Operational excellence Footprint G&A February 12, 2009 Chart 28

29 Four main levers: Sourcing, footprint, operational excellence, and G&A ABB is accelerating these programs across the board EM = Emerging markets Sourcing Footprint Operational excellence G&A > 40 cross-business commodity and supply teams in place Focus on high laborcost components Optimize logistics globally >40% of total sourcing from emerging markets (EM) by 2010 EM sourcing up more than $5 bn since 2005 Expand both manufacturing and engineering capacity in EMs All capex for new capacity will be in EMs Drive exports from EMs >30 new plants and expansions in EMs in past 12 months >45% of manufacturing employees already in EMs Additional productivity measures Improve process quality and efficiency Collaborative planning with key suppliers Improved engineering & product development to drive cost lower Even tighter focus on project and risk management Take full benefits from One Simple ABB More shared services, also in emerging markets Leaner head office operations 10% G&A reduction by 2010 February 12, 2009 Chart 29

30 Low order backlog businesses feel the downturn first Order backlog as a share of 2008 revenues Power Systems Process Automation Automation Products Marine Metals Minerals Power Products Robotics Machines Power Electronics Oil & Gas Pulp & Paper Close to short-cycle markets, e.g., automotive, commercial and residential construction Grid Systems Substations Network Mgmt Power Gen Power Products Robotics Construction and discrete markets > 200% > 100% > 50% > 20% < 20% February 12, 2009 Chart 30

31 Electricity Consumption Set To Double By 2030 Growing twice as fast as energy consumption Source: IEA, World Energy Outlook 2008 Terrawatt hours (TWh) 40,000 30,000 20,000 10,000 12,000 17,500 25,000 34, February 12, 2009 Chart 31

32 Massive investments in power infrastructure Source: IEA, World Energy Outlook 2008 $ 11 trillion investments projected between % required just to maintain current level of power supply Transmission taking more than 50% share of investments in electricity infrastructure Aging grids in mature economies require upgrades Interconnectivity, especially in Europe Coping with new forms of electricity generation (e.g. further away from consumption, renewables) February 12, 2009 Chart 32

33 Fiscal stimulus measures directed towards power infrastructure Some 155 bn aimed at improving T&D U.S. $19 bn direct spending and loan guarantees for power transmission, distribution and generation, of which $8 bn loan guarantees for renewable energy, power transmission $6.5 bn loan guarantees to specified utilities for new power lines and transmission upgrades $4.5 bn for smart grid systems China $132 bn to expand power grids by 26,000 km, incl. new equipment by Europe India 5 bn in to support trans-european infrastructure, including energy interconnections with a focus on energy trading 1.3 bn additional funding for the power development program to reduce T&D losses below 15% February 12, 2009 Chart 33

34 Examples of near-term growth opportunities Power transmission, oil & gas expected to show greater resilience EU incentives to promote greater interconnectivity, energy trading HVDC will play a major role Integrating wind and hydro into existing grids will drive further investments Oil capex is lower but still at high historical levels State oil companies expected to continue investing ABB well positioned New market opportunities opening from technology advances: ABB remote sensor and service capability for offshore platforms Polymer pumps to optimize end-of-life well output February 12, 2009 Chart 34

35 Climate protection is here to stay CO 2 emissions up 52% from Sources: IEA, World Energy Outlook 2008, EU commission report 2007, P.R. China 5-year plan 2006 EU targets to improve energy efficiency by 20 % from Germany targets to double share of alternative energy power sources by 2020 China targets to improve energy efficiency by 20% from New US government identifies climate protection as a top priority February 12, 2009 Chart 35

36 Energy savings means savings in CO 2 and costs ABB is world leader in motors and drives Source: European Copper Institute, Energy Efficient Motor Driven Systems Electric motors account for ca. 65% of electricity consumed by industry February 12, 2009 Chart 36 The impacts of switching to high-efficiency motor systems, including variable-speed drives: Payback time for energy efficient motors can be as low as one year. Initial investment may account for only 1% of total life cycle costs For EU industrial electricity costs can be cut by up to 202 billion kwh = ca. 10 billion a year lower for EU-25 Additional reduction in operating cost of 5-10 billion a year through reduced maintenance and improved operations CO 2 emissions cut by 79 million tons = 25% of EU s Kyoto target In 2008, ABB drives saved more than 150,000 MW/h and more than 140,000 tons of CO 2 emissions

37 Renewables: Wind energy growth to continue Global Cumulative Capacity & Forecast GW Growth rate: 27% 25% 22% 20% Source: GWEC Global Wind Energy Council, Global Wind 2006 Report February 12, 2009 Chart 37

38 World leader in power and automation technology for windpower Transformers Compact substations (can also be used offshore) Converters (handling intermittent power supply for storage, changing power frequency for conventional grids) Power electronics (control unstable power flows) HVDC Light (underground or subsea connections to the grid) Switches & breakers Control products Transformers Permanent magnet generators (maintenance free) Static var compensation February 12, 2009 Chart 38

39 Technology milestones in 2008 Successfully tested 800-kilovolt transformer for the ultrahigh-voltage direct current transmission corridor from the Xiangjiaba hydropower plant to Shanghai, 2,000 km away World s highest-voltage power link with record capacity of 6,400 megawatts, capable of supplying 30 million people February 12, 2009 Chart 39

40 Technology milestones in 2008 Completed the world s longest (580 km) and most powerful (700 MW) power link between Norway and the Netherlands CO 2 emissions reduced by 1.7 million tons/year by transmitting electricity from hydropower February 12, 2009 Chart 40

41 Regional and country opportunities Strong local presence in all geographies China North America World s largest market for ABB scope Large installed base in power and automation Power: Aging infrastructure and renewables, smart grids Automation: Energy efficiency in industry product opportunities Services and service outsourcing in both power and automation China Will remain a key global growth driver Strong local presence, seen as a reliable local partner Growth opportunities across all businesses China grid investments continue to expand Europe Power transmission and renewables are key Lead technology with excellent track record and market strength Government funding and export support for infrastructure expected to support growth Smart grids will also play an important role in future market deregulation Middle East Untapped opportunities across most ABB businesses Diversification into downstream oil & gas, chemicals and petrochemicals electrification needed Water infrastructure becoming increasingly important Large number of opportunities also in Africa February 12, 2009 Chart 41

42 We will aggressively pursue further growth opportunities Sector Performance ABB scope Wind Power $3-3.5 bn global market, growing ca. 16% a year ABB orders in 2008: $900 million 50% CAGR since 2004 Transformers Generators Converters Control products HVDC Light Substations Railway $14 bn global market, growing ca. 3% a year ABB orders in 2008: > $800 million 40% CAGR since 2004 Power electronics Transformers Motors Electrification Water $ bn global market, growing ca. 5% a year ABB orders in 2008: > $600m 50% CAGR since 2004 Instrumentation Motors & drives Electrical & control systems Pumping stations SCADA systems February 12, 2009 Chart 42

43 Service business will add stability in a slowdown Service revenues (est.) % change in local currencies 8.5 Revenues (US$ billions) % 3.8 8% % % CAGR Robotics Process Automation Automation Products Power Systems Power Products est February 12, 2009 Chart 43

44 Agenda Summary of full-year and Q results Financial review Adjusting cost base and seizing opportunities Summary and outlook Q&A February 12, 2009 Chart 44

45 GDP projections for 2009 have decreased dramatically since September 2008 World GDP growth (real, yearly % change); Source: Global Insight, Jan 09 % 4 Forecast July 08 Forecast Sept 08 % 3 2 Forecast Nov 08 Forecast Jan February 12, 2009 Chart 45 Source: Global Insight

46 ABB has reached record levels of revenues and profitability All organic value creation through a focus on our core businesses 15.5%* EBIT margin 40'000 30'000 20'000 10' % Robotics Process Automation Automation Products Power Systems Power Products * 2008 EBIT margin adjusted for provisionss February 12, 2009 Chart 46

47 We will continue to expand our presence in emerging economies Leveraging both growth and cost opportunities Employees in emerging markets Share of employees, '820 52' Capital expenditure in low-cost countries ,500 employees added in emerging economies in 2007 and % Emerging markets Mature markets 56% Key new capacity in Mexico Bulgaria Estonia Poland Brazil Egypt Vietnam February 12, 2009 Chart 47

48 A commitment to R&D is vital to our future competitiveness Focus on breakthrough technology Example: Power transmission in China Distributed and renewable power Smart power grids Advanced materials (e.g., insulation, superconductors) Power electronics Wireless communication Energy efficiency ABB s record of steadily increasing R&D over the cycle has paid off in market-leading technologies in every business Successful test of 800-kV transformer for ultrahighvoltage direct current transmission corridor (Xiangjiaba hydro plant to Shanghai = 2,000 km) World s highest-voltage power link with record capacity of 6,400 megawatts, capable of supplying 30 million people February 12, 2009 Chart 48

49 Key integrity focus for ABB going forward Zero tolerance is here to stay Moving to the next step of maturity Driving from mere compliance to an integrity culture Rolling out an Ombuds program as an enabler Integrity, as a fully integrated business process Clear Accountability Profile February 12, 2009 Chart 49

50 Preparing for 2009: Maximum flexibility External factors: Beyond our control Internal factors: In our own hands Timing and effectiveness of government stimulus programs Availability of funding for large projects Commodity prices Housing and consumer demand Business confidence Cost competitiveness Operational excellence Financial strength Staying alert to growth opportunities Energy efficiency focus Leverage global/local opportunities Leading market share and technology February 12, 2009 Chart 50

51 Summary Market outlook for 2009 and 2010 is very uncertain $24-billion backlog gives us some buffer heading into 2009 Short-term planning $1.3 bn cost-cutting program in place, full savings by 2010 Ready to move fast to take growth opportunities as they arise ABB aims to emerge from the downturn in a stronger position: Flexible and competitive cost base, with significant opportunities for more cost take-out Solid balance sheet to support the business in a downturn Leading position in the right markets with the right products Long-term market outlook remains positive power infrastructure and energy efficiency are the right markets for future profitable growth We confirm our 2011 targets 2009 will be a challenge but ABB well positioned to come out ahead February 12, 2009 Chart 51

52 Safe-harbor statement This presentation includes forward-looking information and statements including statements concerning the outlook for our businesses. These statements are based on current expectations, estimates and projections about the factors that may affect our future performance, including global economic conditions, the economic conditions of the regions and industries that are major markets for ABB Ltd. These expectations, estimates and projections are generally identifiable by statements containing words such as expects, believes, estimates, targets, plans or similar expressions. However, there are many risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking information and statements made in this press release and which could affect our ability to achieve any or all of our stated targets. The important factors that could cause such differences include, among others, business risks related to the financial crisis, costs associated with compliance activities, the amount of revenues we are able to generate from backlog and orders received, raw materials prices, market acceptance of new products and services, changes in governmental regulations and currency exchange rates and such other factors as may be discussed from time to time in ABB Ltd s filings with the U.S. Securities and Exchange Commission, including its Annual Reports on Form 20-F. Although ABB Ltd believes that its expectations reflected in any such forward-looking statement are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved. February 12, 2009 Chart 52

53 February 12, 2009 Chart 53