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April 7, 2010
TODAY'S HIGHLIGHTS
Canada/Int'l
Estimates/Targets Raised Cairn Energy Wajax Income Fund Estimates/Targets Lowered Deutsche Borse AG Sector Revisions
Services & Equipment: Time to Focus on Defence Rating Downgrades: Pioneer Drilling Company
FINANCIALS
Exchanges Int'l Deutsche Borse AG Lowering Estimates on 2010 Restructuring Costs
ENERGY & UTILITIES
International E&P Int'l Cairn Energy Increasing Target Price; Included Greenland Exploration
Services & Equipment Sector Comment Time to Focus on Defence
MATERIALS
Metals & Mining Canada Inmet Mining Temasek Investment Improves Funding Outlook for Cobre...
Mining Expl. & Dev. Canada Ivanhoe Mines Conditions Precedent to Investment Agreement Satisfied...
CAPITAL GOODS & SERVICES
Equipment Distribution Canada Wajax Income Fund Target Increased to $31.00 and Outperform Maintained...
Please r cluding the Analyst's Certification.
Deutsche Borse AG (DB1-FWB) Stock Rating: Market PerformI ndustry Rating: Market Perform
April 6, 2010
Exchanges
Michael Vinciquerra, CFABMO Capital Markets Corp.
Jillian Miller Richard Fellinger [email protected] [email protected] 404-926-1581 404-926-1582
Securities Info Pr ice (6-Apr) €55.75 Target Price €5252-Wk High/Low €66/€44 Dividend €2.10Mkt Cap (mm) €10,871 Yield 3.8%Shs O/S (mm, BASIC) 195.0 Float O/S (mm) 180.1Options O/S (mm) na ADVol (30-day, 000s) 7
Price Performance
Lowering Estimates on 2010 Restructuring Costs
Event We are lowering estimates primarily related to the incorporation of the company’s recently announced restructuring plan.
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03-07 07-07 11-07 03-08 07-08 11-08 03-09 07-09 11-09 03-10
Deutsc he Borse AG (DB1-FWB)
Valuation/Financial Data
(FY-Dec.) 2008A 2009A 2010E 2011E
Impact We’ve made several modeling changes, but most important, we’ve incorporated the execution costs of the new operating efficiency program. DB will recognize up to EUR200 million in 2010 expenses while reducingoverall costs by EUR100 million annually by 2013. Our model now assumesEUR170 million in 2010 plan-related costs, with EUR10 million recognized in 2Q, EUR60 million in 3Q and EUR100 million in 4Q. Our model also assumes a roughly EUR20 million benefit from the plan in 2011. Separately, we have baked in assumed further depreciation of the euro vs. the dollar(slightly positive to DB owing to the ISE operation) based on theexpectations of BMO economists. Finally, we’ve made minor tweaks to ourvarious volume drivers using first quarter actuals. In particular, we havelowered US options volumes to reflect the lower share at ISE. EPS Pro Forma €5.33 €3.75 €2.72 €4.33
P/E 20.5x 12.9x First Call Cons. EPS IFRS €5.43 €2.67 €2.72 €4.33
FCF €5.70 €5.28 €2.75 €4.50 FCF Yield 4.9% 8.1% Pretax Margin (%) 52.7% 24.0% 32.0% 46.7% Rev. (€mm) €2,787 €2,323 €2,226 €2,359
Quarter ly EPS 1Q 2Q 3Q 4Q
Forecasts Our new estimates are EUR0.75 for 1Q10, EUR2.72 for FY2010 and EUR4.33 for FY2011. Excluding the EUR210 million in total expected 2010 restructuring costs (from both of the company’s ongoing efficiency plans),our estimates would be EUR0.85 for 1Q10 and EUR3.86 for FY2010. Consensus expectations are EUR0.95 and EUR3.96, indicating that mostanalysts have not yet incorporated the efficiency program expenses.
2009A €1.09 €0.89 €0.85 €0.92 2010E €0.75 €0.76 €0.67 €0.53
Balance Sheet Data (na) Net Debt (€mm) €958 ROE 20.3% Total Debt (€mm) €1,503 Debt/Cap. nm Notes: IFRS: International Financial Reporting Standards. Source: BMO Capital Markets estimates, Bloomberg, FactSet, Global Insight, Reuters, and Thomson Financial.
Valuation Our target price is €52.00, or 19x our new 2010 estimate.
Recommendation We rate these shares MARKET PERFORM.
Changes Annual EPS Annual FCF Quarterly EPS 2010E €3.43 to €2.72 2010E €3.68 to €2.75 Q1/10E €0.76 to €0.75 2011E €4.22 to €4.33 2011E €4.49 to €4.50 Q2/10E €0.81 to €0.76 Q3/10E €0.92 to €0.67 Q4/10E €0.94 to €0.53
efer to pages 3 to 5 for Important Disclosures, in
This report was prepared by an analyst(s) employ d as a research analyst(s) under FINRA rules. For disclosure statements, including
Cairn Energy (CNE-LSE) Stock Rating: Market PerformIndustry Rating: Market Perform
April 6, 2010 Research Comment Calgary, Alberta
Christopher Brown, P.Eng. BMO Nesbitt Burns Inc. (403) 515-1574 [email protected] Assoc: Arnold Wong
Price (5-Apr) ₤4.34 52-Week High ₤4.42 Target Price ₤4.10 52-Week Low ₤1.99 Increasing Target Price; Included Greenland
Exploration Cairn Energy(CNE)
Price: High,Low,Close
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Event With the recent increase in share price and subsequent discussions with clients,
there is a general optimism that Greenland will be successful for Cairn and
investors are willing to pay in advance for that exposure. Greenland has an
approximate 10% chance of success for which investors are willing to recognize
to date. We have updated our target to £4.10 from £3.10 to account for this
probability of success and used the Husky White Rose offshore project as our
most reasonable analogy.
ed by BMO Nesbitt Burns Inc., and who is (are) not registerethe Analyst's Certification, please refer to pages 4 to 6.
Impact
Neutral.
Forecasts We have Cairn’s Greenland first commercial oil production of 55,000 b/d
scheduled for 2016 ramping up to 110,000 b/d in 2017, and a second
commercial projected phased in for 2018. The Brent price deck (per barrel) used
in the evaluation was US$74.00 for 2010E, US$78.50 for 2011E, US$83.50 for
2012E, US$88.50 thereafter.
Valuation Our updated target is based on a Husky White Rose project model using
Greenland's fiscal regime, which is integrated with our Cairn base model. The
2010E NAV is £4.10, which we use as the basis of our target price.
Recommendation We maintain our Market Perform recommendation and increase the target price
to £4.10 from £3.10.
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400CNE Relative to FT 100 Index
Last Data Point: March 26, 2010
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(FY-Dec.) 2008A 2009A 2010E 2011E CFPS ₤0.06 ₤0.05 ₤0.57 ₤1.24P/CFPS 7.6x 3.5x EPS ₤0.14 ₤0.01 ₤0.26 ₤0.72P/E 16.7x 6.0x CF/boe £11.58 £10.47 £37.69 £40.99 Prod'n (boe/d) 20,885 27,008 63,507 128,480 EV (£mm) £542 £1,699 £1,934 £1,713 C
apex (£mm) £68 £82 £229 £63
Bi-annual CFPS H1 H2 2008A ₤0.04 ₤0.02 2009A -₤0.01 ₤0.06 2010E ₤0.16 ₤0.41 Dividend ₤0.00 Yield 0.0% Book Value ₤0.89 Price/Book 4.9x Shares O/S (mm) 1,397.5 Mkt. Cap (mm) ₤6,058 Float O/S (mm) 1,389.4 Float Cap (mm) ₤6,023 Wkly Vol (000s) 36,093 Wkly ₤ Vol (mm) ₤100.0 Net Debt (£mm) -₤1,735 Next Rep. Date Jun (E)
Notes: All values in £ Major Shareholders: Blackrock (11.0%), HSBC (8.0%) First Call Mean Estimates: Not Available
Changes Annual EPS Annual CFPS Quarterly CFPS Target 2010E ₤0.31 to ₤0.26 2010E ₤0.71 to ₤0.57 Q2/10E ₤0.22 to ₤0.16 ₤3.10 to ₤4.10 2011E ₤0.55 to ₤0.72 2011E ₤1.12 to ₤1.24 Q4/10E ₤0.49 to ₤0.41
This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 8 to 9.
Energy - Oil & Gas Services
Industry Rating: Market Perform Rating Change: PDC to Mkt from OP
April 6, 2010 Research Comment Calgary, Alberta Michael Mazar, CFA (403) 515-1538 [email protected] Assoc: Jason A. Zhang
Time to Focus on Defence Despite persistently weak natural gas prices and continuing scepticism
regarding supply and demand fundamentals, North American rig counts have
rebounded nicely over the last several months. U.S. rig counts have climbed
to over 1,400 units operating from a trough of fewer than 900 in the summer
of 2009 driven in part by strong crude directed activity but also by the
continued pursuit of unconventional gas resources. The Canadian drilling
season was also generally better than expected, albeit still well below
historical levels.
Summary
Continued weakness in North American
natural gas price fundamentals has shed some
doubt on the outlook for North American
drilling activity for the balance of 2010.
While we expect substantial improvement
over 2009 levels, what was once believed to
be a fait accompli that rig counts would
continue to rise indefinitely is no longer such
a sure thing. Several E&P customers have
either announced plans to reduce expected rig
utilization or have indicated that they are
prepared to do so quickly in the absence of
stronger natural gas prices.
While we are not predicting a sharp decline to
mid-2009 drilling levels, we do expect the
recent ramp-up to decelerate and even begin
to roll over in the coming weeks unless
natural gas prices improve meaningfully;
crude activity has almost taken us as far as it
can. Accordingly, we are recommending that
investors look for companies with defensive
characteristics like balance sheet strength,
long-term contract coverage, high spec rig
fleets and commodity diversification.
We have tweaked our investment
recommendations to reflect this view and
updated our pair-trade ideas. Our favoured
names among the land drilling group, which is
the focus of this piece, are H&P, Ensign and
Trinidad.
However, in recent days signs and data points have emerged that indicate that
the ramp up in activity is likely to decelerate in the absence of stronger natural
gas prices. Chesapeake recently announced that it will likely idle about 20
rigs from its 2010 drilling program unless gas prices rebound to the US$5/Mcf
level while Devon Energy said it stands ready to cut back on drilling activity
if prices remain weak. While these are just two examples, these companies
have a presence in a large swath of North American onshore plays and their
expectations of reduced rig utilization speaks to the economics of the various
North American basins in the current gas price environment.
Given our expectation for natural gas to average US$4.75/Mcf in 2010, we
see current U.S. rig activity as nearing peak levels. While crude directed
activity should continue to climb modestly, this will largely be offset by a
deceleration of the increase, or even the start of a decline, in the gas rig count
over the next several weeks. For Canada, this means that we anticipate a
slower recovery in activity levels following spring break-up than most people
expect. This should make the bifurcation in the North American drilling
market between high-spec and legacy equipment (and deep and shallow rigs)
that has been evolving over the last year even more pronounced. While crude
activity should help rig activity levels, it is interesting to note that crude
directed activity is roughly 15% higher now than when crude prices were last
over $100/bbl in 2008.
Against this backdrop we are tweaking our hierarchy of investment ideas to an
increased emphasis on the defensive characteristics of commodity
diversification, long-term contract coverage, balance sheet strength and high-
spec rig fleets. We are also updating our pair-trade ideas to reflect these
attributes.
This report was prepared by an analyst(s) employ y the Financial Services Authority in the UK. The analyst(s) is (are) not registered as ements, including the Analyst's Certification, please refer to pages 5 to 8.
Inmet Mining (IMN-TSX) Stock Rating: Market PerformIndustry Rating: Market Perform
M ember of: Top 15 Quantitative Stock Selections
April 7, 2010 Research Comment London, UK
David Cotterell BMO Capital Markets Ltd. +44 (0)20 7246 5430 [email protected]
Price (6-Apr) $60.50 52-Week High $78.00 Target Price $65.00 52-Week Low $32.66
Temasek Investment Improves Funding Outlook for Cobre Panama, but Project Risks Remain
ed by BMO Capital Markets Ltd., authorised and regulated b a research analyst(s) under FINRA rules. For disclosure stat
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Inmet Mining Corp (IMN)Price: High,Low,Close Earnings/Share
Event Inmet announced the results of the front-end engineering and design (FEED)
study for the Cobre Panama Project in Panama. Separately, the company
announced a C$500M private placement with Temasek Holdings (a Singapore
sovereign wealth fund), giving Temasek a 14.2% stake in Inmet.
Impact Mixed. The investment by Temasek provides additional equity needed for
funding Cobre Panama. The study results show an impressive production
profile, but also a 23% increase to US$4.3B in capital costs (from US$3.5B),
with proposed funding of US$5B (including working capital) split 50/50 debt
equity. The result is a large portion of debt (up to US$1B) and US$375M in
equity still to be financed.
Forecasts BMO Research assumes that the Temasek subscription receipts are converted to
shares in Q3/10. The financing reduces EPS estimates for 2010 to C$6.02 (down
6%) and in 2011 to $7.73 (down 14%).
Valuation BMO Research has increased NPV to C$65.33/share (from C$55.94) due to a
higher valuation for Cobre Panama of C$618M (previously C$150M).
Recommendation The completed study on Cobre Panama indicates the large-scale potential of the
project that could see Inmet producing ~300ktpa of copper within eight years.
However, capital costs of US$4.3B, financial and operational risks combined
with the lead time of six years requires renewed patience from investors before
returns are seen. BMO Research maintains a Market Perform rating, with a
target price of C$65, representing 1.0x NPV.
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(FY-Dec.) 2008A 2009A 2010E 2011E EPS $4.49 $5.13 $6.02 $7.73P/E 10.0x 7.8x CFPS $6.69 $5.75 $7.79 $8.85P/CFPS 7.8x 6.8x Rev. ($mm) $949 $974 $1,173 $1,383 EV ($mm) 2636 2788 2966 2951 EBITDA ($mm) $643 $534 $805 $836 EV/EBITDA 4.1x 5.2x 3.7x 3.5x Quarterly EPS Q1 Q2 Q3 Q4 2008A $2.21 $1.40 $1.55 -$0.67 2009A $1.06 $1.37 $1.10 $1.60 2010E $1.54 $1.54 $1.45 $1.49 Dividend $0.20 Yield 0.3% Book Value $39.15 Price/Book 1.5x Shares O/S (mm) 56.1 Mkt. Cap ($mm) $3,394 Float O/S (mm) 50.3 Float Cap ($mm) $3,041 Wkly Vol (000s) 2,074 Wkly $ Vol (mm) $108.0 Net Debt ($mm) -$433.8 Next Rep. Date May (E)
Notes: Share price and capitalization in C$, all other values in US$; 2009 quarterlies do not sum to annual Major Shareholders: MK Resources (10%), Capital Group (7.8%) First Call Mean Estimates: INMET MINING CORPORATION (C$) 2010E: $7.06; 2011E: $8.53
Changes Annual EPS Annual CFPS Quarterly EPS 2010E $6.40 to $6.02 2010E $8.37 to $7.79 Q3/10E $1.66 to $1.45 2011E $8.96 to $7.73 2011E $10.29 to $8.85 Q4/10E $1.66 to $1.49
This report was prepared by an analyst(s) employ d as a research analyst(s) under FINRA rules. For disclosure statements, including
Ivanhoe Mines (IVN-TSX; IVN-NYSE) Stock Rating: Outperform(S)Industry Rating: Market Perform
April 6, 2010 Research Comment Toronto, Ontario
John Hayes, P.Geo. BMO Nesbitt Burns Inc. (416) 359-6189 [email protected] Assoc: Peter Lam, CA / David Pryor, CFA
Price (6-Apr) $17.57 52-Week High $18.49 Target Price na 52-Week Low $5.51 Conditions Precedent to Investment Agreement
Satisfied; Awaiting the IDP
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Ivanhoe Mines (IVN)Price: High,Low,Close Earnings/Share(US$)
Event Ivanhoe announced that the conditions precedent to the Oyu Tolgoi Investment
Agreement have been satisfied. Consequently, the IA is now binding and in full
effect. As we await the release of the updated Integrated Development Plan, we
have examined a number of potential operating and financing scenarios for the
Oyu Tolgoi project.
ed by BMO Nesbitt Burns Inc., and who is (are) not registerethe Analyst's Certification, please refer to pages 16 to 18.
Impact Positive. With the passing of this milestone, full scale construction at Oyu
Tolgoi is expected to commence in Q2/10 as part of the previously announced
US$758M 2010 work plan. The changes to our estimates and valuation
assumptions increased our 10% NAV by 15% or US$2.71/share.
Forecasts We estimate LOM production of approximately 38.0Blbs of copper and
16.4Moz of gold at an average total cash cost of US$0.59/lb of copper on a co-
product basis and US$200/oz of gold. Ivanhoe’s share is expected to be 25.3Blb
and 11.1Moz gold.
Valuation Based on our financial, resource and operating assumptions, Ivanhoe’s shares
are trading at a 37% discount to our 10% NAV estimate of US$27.36 per share
at spot gold and copper prices of US$1,131/oz and US$3.56/lb, respectively.
The shares are trading at a 16% discount to our 10% NAV estimate of US$20.70
per share using BMO CM’s metals price forecast, which include long-term gold
and copper prices of US$850/oz and US$2.50/lb, respectively.
Recommendation
We are maintaining our Outperform (Speculative) rating.
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Dividend $0.00 Yield 0.0% Book Value $1.12 Price/Book 15.2x Shares O/S (mm) 441.1 Mkt. Cap ($mm) $7,750 Float O/S (mm) 244.5 Float Cap ($mm) $4,296 Wkly Vol (000s) 14,970 Wkly $ Vol (mm) $160.1 Net Debt ($mm) -$365.3 Next Rep. Date 14-May (E)
Notes: Share price and market capitalization in C$, all other values in US$; (S) in rating denotes Speculative Major Shareholders: Goldamere Holdings 12.2%; Rio Tinto 9.8%; Tradewinds Global 8.9%; Newstar Holdings 8.1% First Call Mean Estimates: IVANHOE MINES LTD (US$) 2009E: -$0.49; 2010E: -$0.27; 2011E: -$0.27
This report was prepared by an analyst(s) employ d as a research analyst(s) under FINRA rules. For disclosure statements, including
Wajax Income Fund (WJX.UN-TSX) Stock Rating: OutperformIndustry Rating: Outperform
April 6, 2010 Research Comment Toronto, Ontario
Bert Powell, CFA BMO Nesbitt Burns Inc. (416) 359-5301 [email protected] Assoc: Luigi Di Pede, CFA
Price (5-Apr) $28.21 52-Week High $28.28 Target Price $31.00 52-Week Low $12.55 Target Increased to $31.00 and Outperform
Maintained; Expect Greater Leverage to a Stronger Than Anticipated Recovery
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Wajax Limited A (WJX.UN)Price: High,Low,Close Earnings/Share
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Event We are increasing our EPU/EPS estimates for 2010 and 2011 reflecting two
points. First, we are increasingly confident that the costs Wajax has taken out
during the recession will result in better leverage to a recovery than we initially
anticipated. Second, we believe that the recovery in the heavy equipment sector
may be stronger than we initially anticipated. Accordingly, we are increasing
our target price to $31.00 from $26.00 and maintaining our Outperform rating.
ed by BMO Nesbitt Burns Inc., and who is (are) not registerethe Analyst's Certification, please refer to pages 3 to 5.
Impact
Positive.
Forecasts For 2010, we forecast revenues of $985.1 million and EPU of $2.58. For 2011,
we forecast revenues of $1,109.6 million and EPS of $2.78. Our target payout
ratio for 2010 and 2011 is 72% and 68%, respectively.
Valuation Our target price one year from now is based on applying a 12.5x P/E multiple to
our 2011E EPS estimate of $2.78 and using a discount rate of 11.25%.
Recommendation
We rate Wajax Outperform with a $31.00 target price.
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(FY-Dec.) 2008A 2009A 2010E 2011E CDPU $4.14 $2.47 $1.80 $1.80 P/CDPU 15.7x 15.7x DCPU $4.42 $2.58 $2.50 $2.65P/DCPU 11.3x 10.6x Payout % 94% 96% 72% 68% EV ($mm) $455 $464 $547 $545 EBITDA ($mm) $92 $51 $57 $80 E
V/EBITDA 4.9x 9.1x 9.5x 6.8x
Quarterly CDPU Q1 Q2 Q3 Q4 2008A $0.99 $1.07 $1.06 $1.08 2009A $0.92 $0.60 $0.50 $0.45 2010E $0.45 $0.45 $0.45 $0.45 Distribution $1.80 Yield 6.4% Book Value $11.90 Price/Book 2.4x Units O/S (mm) 16.8 Mkt. Cap ($mm) $474 Float O/S (mm) 11.9 Float Cap ($mm) $336 Wkly Vol (000s) 214 Wkly $ Vol (mm) $3.9 Net Debt ($mm) $70.3 Next Rep. Date 20-May (E)
Notes: All values in C$ Major Unitholders: Empire Company (27.6%), Seamark Asset Management (11.6%) and RBC Global (4.6%) First Call Mean Estimates: WAJAX INCOME FUND (C$) 2010E: $2.63; 2011E: $2.56
Changes Annual DCPU Target 2010E $2.41 to $2.50 $26.00 to $31.00 2011E $2.25 to $2.65
Important Disclosures Analyst's Certification As to each company covered in this report, the analyst hereby certifies that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients. Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Ltd. are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Company Specific Disclosures For Important Disclosures on the stocks discussed in this report, please go http://researchglobal.bmocapitalmarkets.com/Company_Disclosure_ Public.asp.
Distribution of Ratings (Dec. 31, 2009) Rating
Category
BMO Rating BMOCM US
Universe* BMOCM USIB Clients**
BMOCM USIB Clients***
BMOCM Universe****
BMOCM IB Clients*****
First Call Universe
Buy Outperform 32.2% 12.3% 38.3% 36.1% 47.9% 50% Hold Market Perform 62.6% 10.2% 61.7% 56.9% 48.9% 43% Sell Underperform 5.3% 0% 0% 6.9% 3.2% 7%
* Reflects rating distribution of all companies covered by BMO Capital Markets Corp. equity research analysts. ** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking services as
percentage within ratings category. *** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking
services as percentage of Investment Banking clients. **** Reflects rating distribution of all companies covered by BMO Capital Markets equity research analysts. ***** Reflects rating distribution of all companies from which BMO Capital Markets has received compensation for Investment Banking services as
percentage of Investment Banking clients.
Ratings and Sector Key We use the following ratings system definitions: OP = Outperform - Forecast to outperform the market; Mkt = Market Perform - Forecast to perform roughly in line with the market; Und = Underperform - Forecast to underperform the market; (S) = speculative investment; NR = No rating at this time; R = Restricted – Dissemination of research is currently restricted.
Market performance is measured by a benchmark index such as the S&P/TSX Composite Index, S&P 500, Nasdaq Composite, as appropriate for each company. BMO Capital Markets eight Top 15 lists guide investors to our best ideas according to different objectives (Canadian large, small, growth, value, income, quantitative; and US large, US small) have replaced the Top Pick rating.
Other Important Disclosures For Other Important Disclosures on the stocks discussed in this report, please go to http://researchglobal.bmocapitalmarkets.com/Company_Disclosure_ Public.asp or write to Editorial Department, BMO Capital Markets, 3 Times Square, New York, NY 10036 or Editorial Department, BMO Capital Markets, 1 First Canadian Place, Toronto, Ontario, M5X 1H3.
Prior BMO Capital Markets Ratings Systems http://researchglobal.bmocapitalmarkets.com/documents/2009/prior_rating_systems.pdf
Dissemination of Research Our research publications are available via our web site http://bmocapitalmarkets.com/research/. Institutional clients may also receive our research via FIRST CALL, FIRST CALL Research Direct, Reuters, Bloomberg, FactSet, Capital IQ, and TheMarkets.com. All of our research is made widely available at the same time to all BMO Capital Markets client groups entitled to our research. Additional dissemination may occur via email or regular mail. Please contact your investment advisor or institutional salesperson for more information.
Conflict Statement A general description of how BMO Financial Group identifies and manages conflicts of interest is contained in our public facing policy for managing conflicts of interest in connection with investment research which is available at http://researchglobal.bmocapitalmarkets.com/Conflict_Statement_ Public.asp.
General Disclaimer “BMO Capital Markets” is a trade name used by the BMO Investment Banking Group, which includes the wholesale arm of Bank of Montreal and its subsidiaries BMO Nesbitt Burns Inc. and BMO Nesbitt Burns Ltée./Ltd., BMO Capital Markets Ltd. in the U.K. and BMO Capital Markets Corp. in the U.S. BMO Nesbitt Burns Inc., BMO Capital Markets Ltd. and BMO Capital Markets Corp are affiliates. Bank of Montreal or its subsidiaries (“BMO
BMO Capital Markets
Financial Group”) has lending arrangements with, or provide other remunerated services to, many issuers covered by BMO Capital Markets. The opinions, estimates and projections contained in this report are those of BMO Capital Markets as of the date of this report and are subject to change without notice. BMO Capital Markets endeavours to ensure that the contents have been compiled or derived from sources that we believe are reliable and contain information and opinions that are accurate and complete. However, BMO Capital Markets makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions contained herein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this report or its contents. Information may be available to BMO Capital Markets or its affiliates that is not reflected in this report. The information in this report is not intended to be used as the primary basis of investment decisions, and because of individual client objectives, should not be construed as advice designed to meet the particular investment needs of any investor. This material is for information purposes only and is not an offer to sell or the solicitation of an offer to buy any security. BMO Capital Markets or its affiliates will buy from or sell to customers the securities of issuers mentioned in this report on a principal basis. BMO Capital Markets or its affiliates, officers, directors or employees have a long or short position in many of the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. The reader should assume that BMO Capital Markets or its affiliates may have a conflict of interest and should not rely solely on this report in evaluating whether or not to buy or sell securities of issuers discussed herein.
Additional Matters
To Canadian Residents: BMO Nesbitt Burns Inc. and BMO Nesbitt Burns Ltee/Ltd., affiliates of BMO Capital Markets Corp., furnish this report to Canadian residents and accept responsibility for the contents herein subject to the terms set out above. Any Canadian person wishing to effect transactions in any of the securities included in this report should do so through BMO Nesbitt Burns Inc. and/or BMO Nesbitt Burns Ltee/Ltd.
To U.S. Residents: BMO Capital Markets Corp. and/or BMO Nesbitt Burns Securities Ltd., affiliates of BMO NB, furnish this report to U.S. residents and accept responsibility for the contents herein, except to the extent that it refers to securities of Bank of Montreal. Any U.S. person wishing to effect transactions in any security discussed herein should do so through BMO Capital Markets Corp. and/or BMO Nesbitt Burns Securities Ltd.
To U.K. Residents: In the UK this document is published by BMO Capital Markets Limited which is authorised and regulated by the Financial Services Authority. The contents hereof are intended solely for the use of, and may only be issued or passed on to, (I) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (II) high net worth entities falling within Article 49(2)(a) to (d) of the Order (all such persons together referred to as “relevant persons”). The contents hereof are not intended for the use of and may not be issued or passed on to, retail clients.
ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST BMO Financial Group (NYSE, TSX: BMO) is an integrated financial services provider offering a range of retail banking, wealth management, and investment and corporate banking products. BMO serves Canadian retail clients through BMO Bank of Montreal and BMO Nesbitt Burns. In the United States, retail clients are served through Harris N.A. Investment and corporate banking services are provided in Canada and the US through BMO Capital Markets.
BMO Capital Markets is a trade name used by BMO Financial Group for the wholesale banking businesses of Bank of Montreal, Harris N.A. and BMO Ireland Plc, and the institutional broker dealer businesses of BMO Capital Markets Corp. (Member SIPC), BMO Nesbitt Burns Trading Corp. and BMO Capital Markets GKST Inc. (Member SIPC) in the U.S., BMO Nesbitt Burns Inc. (Member CIPF) in Canada, Europe and Asia, BMO Nesbitt Burns Securities Limited (U.S. registered and member of FINRA), and BMO Nesbitt Burns Ltée/Ltd. (Member CIPF) in Canada, and BMO Capital Markets Limited in Europe and Australia. “Nesbitt Burns” is a registered trademark of BMO Nesbitt Burns Corporation Limited, used under license. “BMO Capital Markets” is a trademark of Bank of Montreal, used under license. "BMO (M-Bar roundel symbol)" is a registered trademark of Bank of Montreal, used under license.
® Registered trademark of Bank of Montreal in the United States, Canada and elsewhere. TM Trademark Bank of Montreal
©COPYRIGHT 2010 BMO CAPITAL MARKETS CORP.
Financial GroupA member of BMO
Page 2 February 17, 2010
