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(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F:   ý      Form 40-F:   o 

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)):

Yes:   o      No:   ý 

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)):

Yes:   o      No:   ý 

(Indicate by check mark whether the registrant by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes:   o      No:   ý 

 

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André Machado Mastrobuono
CEO, CFO and Head of Investor Relations
Ricardo Antunes Agostini
Finance Executive Director
Renata Pantoja
Investor Relations Manager
Phone: +55 31 9933-3535

 

 

TELEMIG CELULAR PARTICIPAÇÕES S.A.

REPORTS THIRD QUARTER 2007 RESULTS

 

- EBITDA of R$112.4 million or 34.8% of net service revenues in the 3Q07
- Net income of R$38.2 million in the quarter
- Net addition of 70,037 clients in the period
- Increase in postpaid base, emphasizing the reversal of the downward trend observed since the 1Q06
- Highest prepaid ARPU since the 3Q04

- Market share in the Triângulo Mineiro region estimated at 19.5%

 

 

Belo Horizonte, Brazil, November 7, 2007 – Telemig Celular Participações S.A. (BOVESPA: TMCP3 (Common)/TMCP4 (Preferred); NYSE: TMB), the holding company of the wireless telecommunications service provider in the State of Minas Gerais, today announced its results for the third quarter of 2007. The Company’s net additions in the quarter reached 70,037 clients , increasing its client base to 3,615,397. EBITDA totaled R$112.4 million in the 3Q07, representing 34.8% of net service revenues. Year-to-date EBITDA reached at R$361.5 million, representing 38.4% of net service revenues. When compared to the same period of previous year, the Company registered an increase of 33.9% in the year-to-date EBITDA and 3.7 p.p. in EBITDA margin.

 

Operating Highlights:

 

Client base reached 3,615,397 in the quarter

The Company’s client base reached 3,615,397 in the third quarter of 2007, representing an increase of 191,420 clients when compared to the same quarter of the previous year. Net additions amounted to 70,037 in the quarter. Year-to-date client base increased 5.2%.

 

Net additions in the prepaid segment, during the 3Q07, amounted to 65,016, bringing the total prepaid base to 2,833,724, or 78% of the total base. The postpaid base increased by 5,021 clients, emphasizing the reversal of the downward trend observed since the 1Q06. The postpaid segment ended the quarter with 781,673 clients, or 22% of the total base.

 

www.telemigholding.com.br - 1/12

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CLIENT BASE (000s)

 

 

Churn rate

In the third quarter of the year, blended annualized churn rate decreased by 4.4 percentage points, reaching 35.7% against the 40.1% registered in the previous quarter, mainly due to the decrease of the prepaid churn rate. When compared to the same quarter of the previous year, blended annualized churn rate decreased by 1.1 percentage point, due to the reduction of the postpaid churn rate.

Annualized churn rate for the postpaid segment decreased by 3.0 percentage points when compared to the 2Q07, reaching 18.9%, due to the initiatives for retention of high value clients. Despite the increasingly competitive environment, the Company registered the lowest postpaid churn rate since the 1Q06. When compared to the third quarter of 2006, annualized postpaid churn rate decreased by 2.9 percentage points, due to the establishment of stricter rules for acquiring new clients, focused on credit analysis.

 

In the 3Q07, annualized prepaid churn rate decreased by 5.0 percentage points, reaching 40.3% versus 45.3% registered in the 2Q07. This reduction reflects the actions for acquisition and retention of high value clients. When compared to the 3Q06, prepaid churn rate decreased by 1.2 percentage point due to the client retention strategy.

 

CHURN RATE (annualized)

 

 

 

www.telemigholding.com.br - 2/12

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Operating revenues

Net service revenues totaled R$323.3 million in the quarter, R$4.4 million higher than the previous quarter, primarily resulting from the 4.7% increase in total traffic (2.5% in incoming and 6.8% in outgoing traffics), as a consequence of seasonal factors.

When compared to the 3Q06, the first quarter with the adoption of the full billing, net service revenues increased by R$38.1 million or 13.4%, mainly due to the growth of a better quality client base and return of campaigns to stimulate use of cellular phones.

 

Data revenues totaled R$21.2 million in the 3Q07, representing an increase of R$1.0 million compared to the R$20.1 million recorded in the 2Q07 and a slight reduction when compared to the R$21.7 million posted in the 3Q06.

 

Net equipment revenues totaled R$19.5 million in the 3Q07, R$3.0 million lower than the R$22.5 million recorded in the 2Q07 due to lower number of handsets sold in the new acquisitions during the quarter. When compared to the same quarter of the previous year, net equipment revenues decreased by R$1.8 million.

 

Handset subsidies for client acquisitions totaled R$8.6 million or R$22.1 per gross addition, practically in line with the R$8.8 million or R$21.9 per gross addition recorded in the 2Q07. When compared to the 3Q06, handset subsidies for client acquisitions decreased by R$1.0 million as a result of the commercial strategy to reduce handset subsidies.

 

As a result, total net revenues in the 3Q07 reached R$342.8 million, 0.4% up on the previous quarter and R$36.3 million or 11.8% higher than the 3Q06.

 

Operating costs and expenses

Cost of services totaled R$107.0 million in the third quarter of 2007, 5.3% and 4.5% higher than the 2Q07 and 3Q06, respectively. This increase is mainly due to the reversal of provisions for infrastructure contracts registered in the 2Q07.

Selling and marketing expenses totaled R$68.5 million in the 3Q07, 20.0% higher than the R$57.1 million recorded in the 2Q07 and 3Q06. This increase is a result of higher expenses related to client retention subsidies and adjustment of inventories to market value.

 

Customer acquisition cost reached R$127 in the 3Q07 versus R$120 in the 2Q07, as a consequence of higher expenses related to acquisition campaigns to face the increasingly competition. When compared to the third quarter of 2006, customer acquisition cost decreased by R$8 as a result of more rational acquisition campaigns with lower subsidies and a more effective commissioning policy.

 

Retention costs reached R$69.1 million in the 3Q07, higher than the R$50.5 million registered in the 2Q07 due to higher expenses related to discounts and relationship programs. When compared to the 3Q06, retention costs in the quarter increased by R$24.9 million due to greater efforts to retain the best and most profitable clients in the base.

 

General and administrative expenses totaled R$27.4 million in the 3Q07, a 42.8% increase compared to the R$19.2 million recorded in the previous quarter. This growth was mainly due to higher administrative consulting services, contingencies and personnel expenses. When compared to the 3Q06, general and administrative expenses increased by R$6.1 million in the quarter, also due to administrative consulting services, contingencies and personnel expenses.

 

www.telemigholding.com.br - 3/12

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Other operating revenues reached R$6.8 million and are related to recognition of tax credits (mainly PIS/Cofins).

 

Bad debt provisions totaled R$6.2 million in the 3Q07, 6.1% lower than the R$6.6 million registered in the previous quarter. This reduction is a result of better performance of the collection actions. When compared to the 3Q06, bad debt provisions were significantly reduced by 12.5%, due to the introduction of stricter rules governing the client acquisition process, focused on credit analysis and new collection actions. As a percentage of net service revenues, bad debt provisions reached 1.9%, versus 2.1% in the 2Q07 and 2.5% in the 3Q06. As a percentage of total net revenues, bad debt provisions reached 1.8% in the 3Q07.

 

BAD DEBT PROVISIONS (R$ million)

 

 

Average Revenue Per User (ARPU)

Postpaid MOU (minutes of use) totaled 202 in the 3Q07, 2.5% higher than the 197 minutes posted in the previous quarter, due to period seasonality. When compared to the 3Q06, postpaid MOU increased by 6.4% as a consequence of a better quality client base and campaigns to stimulate use of cellular phones.

Postpaid ARPU reached R$79.7 in the 3Q07, basically in line with the R$80.3 recorded in the 2Q07. When compared to the third quarter of 2006, postpaid ARPU in the 3Q07 registered a 9.7% increase due to a better quality client base and campaigns to stimulate use of cellular phones.

 

In the third quarter of 2007, minutes of use in the prepaid segment reached 36, higher than the 34 and 31 registered in the 2Q07 and 3Q06, respectively. This increase is a result of a better quality client base and campaigns to stimulate the use and recharge of prepaid credits.

 

Prepaid ARPU reached R$15.1 in the 3Q07, higher than the R$14.7 and R$12.3 recorded in the 2Q07 and the 3Q06, respectively. This growth is due to a better quality client base and campaigns to stimulate the use and recharge of prepaid credits.

 

As a result, total blended MOU reached 72 minutes in the 3Q07, higher than the 70 and

69 recorded in the 2Q07 and 3Q06, respectively. Blended ARPU totaled R$29.1 in the quarter, in line with the previous quarter and R$ 2.5 higher than the R$26.6 recorded in the 3Q06.

 

 

www.telemigholding.com.br - 4/12

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ARPU (R$)

 

Estimated market share of 29.3% in the quarter

 

Total market share was estimated at 29.3% in the third quarter, versus 30.4% in the 2Q07. Excluding the Triângulo Mineiro region, market share was estimated at 30.3%, compared to 31.6% in the previous quarter. For the Triângulo Mineiro region, where the company was the fourth player to enter in the market, the market share is still growing and was estimated at 19.5%, higher than the 19.1% estimated in the previous quarter. In a year-to-date basis, the company reduced its market share in 2.3 p.p., less than a half of the reduction registered in the same period of the previous year, reflecting the successful change in company strategy.

 

Total gross sales share in the 3Q07 was estimated at 27.2%, lower than the 31.5% registered in the previous quarter. Excluding the Triângulo Mineiro region, gross sales share was estimated at 26.8%, compared to 31.2% in the 2Q07. For the Triângulo Mineiro region, gross sales share was estimated at 31.8%, against 32.1% in the 2Q07.

 

EBITDA margin of 34.8% of net service revenues in the 3Q07

EBITDA and EBITDA margin (excluding handset revenues) totaled R$112.4 million and 34.8%, respectively, in the 3Q07, compared to R$127.8 million and 40.1% in the previous quarter. When compared to the 3Q06, EBITDA and EBITDA margin increased by R$21.1 million and 2.8 percentage points, respectively.

 

EBITDA (R$ million)

 

 

 

www.telemigholding.com.br - 5/12

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Depreciation and amortization

Depreciation and amortization expenses totaled R$49.7 million in the 3Q07, slightly lower than the R$50.1 million registered in the 2Q07 and higher than the R$41.2 million recorded in the 3Q06, reflecting site activations and acceptance.

Net financial result of R$7.6 million

 

Note: a) Interest expense: includes financial expenses related to debt, losses on hedging operations (if any), taxes on gains with hedge operations and revenues from interest on own capital (if any); b) Interest income: includes results of cash investing activities, clients’ interest and gains on hedging operations (if any); and, c) Foreign exchange gain (loss): almost exclusively reflects currency devaluation changes on debt principal and interest payable.

 

DETAILED FINANCIAL INCOME INFORMATION

 

 

 

Net income of R$38.2 million in the quarter

Net income in the 3Q07 totaled R$38.2 million, or R$2.108 per ADS (R$1.054 per share). Net income was 20.0% lower than the previous quarter and 8.1% higher than the 3Q06.

 

Total debt of R$228.8 million

As of September 30, 2007, the Company’s total debt amounted to R$228.8 million, of which R$147.1 million related to long-term debt and R$81.7 million referring to accounts payable from hedging operations. Long-term debt (R$147.1 million) was entirely denominated in US Dollars and hedged.

 

 

www.telemigholding.com.br - 6/12

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Negative net debt of R$416.7 million

As of September 30, 2007, the Company’s total debt was offset by cash (cash equivalents and short-term investments) in the amount of R$645.5 million, resulting in a negative net debt of R$416.7 million.

 

NET DEBT (R$ million)

 

 

 

Investments totaled R$39.9 million in the quarter

During the third quarter of 2007, Telemig Celular’s capital expenditures reached R$39.9 million. The breakdown of such investments is as follows:

 

CAPEX BREAKDOWN

 

 

 

 

Debt payment schedule

 

 

 

 

www.telemigholding.com.br - 7/12

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Sound financial ratios

 

(1) Last twelve months

 

 

****************

 

 

For further information, please contact:

 

Telemig Celular Participações S.A.

Investor Relations Department

André Mastrobuono / Ricardo Agostini / Renata Pantoja / Carolina Anastasia

Phone: (+55 31) 9933-3535

E-mail: ri@telepart.com.br

 

This press release contains forward-looking statements. Such statements are not statements of historical fact, and reflect the beliefs and expectations of the Company's management. The words "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "predicts," "projects" and "targets" and similar words are intended to identify these statements, which necessarily involve known and unknown risks and uncertainties. Accordingly, the actual results of operations of the Company may be different from the Company's current expectations, and the reader should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update them in light of new information or future developments.

 

www.telemigholding.com.br - 8/12

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OPERATIONAL DATA

 

		2006				2007								Var. % (3Q07/2Q07)
		3rd Quarter		4th Quarter		1st Quarter		2nd Quarter		3rd Quarter		YTD
Licensed Pops (in millions)		19.5		19.5		19.5		19.5		19.5		19.5		0.0%
Clients		3,423,977		3,435,562		3,495,940		3,545,360		3,615,397		3,615,397		2.0%
Postpaid		804,911		798,180		779,155		776,652		781,673		781,673		0.6%
Prepaid		2,619,066		2,637,382		2,716,785		2,768,708		2,833,724		2,833,724		2.3%
MOU Incoming
Postpaid		73		75		72		75		77		74		1.8%
Prepaid		21		22		21		22		23		22		1.0%
MOU Outgoing
Postpaid		117		122		116		122		126		121		3.0%
Prepaid		10		12		13		12		14		13		15.6%
Total Outgoing Traffic (Million of Minutes)		362.3		385.8		372.9		380.6		406.6		1160.0		6.8%
Total Incoming Traffic (Million of Minutes)		339.9		353.2		342.0		360.6		369.6		1072.3		2.5%
Average Revenue per User - ARPU (R$)		26.6		29.0		27.6		29.2		29.1		28.7		-0.1%
Postpaid		72.6		79.7		76.8		80.3		79.7		78.9		-0.8%
Prepaid		12.3		13.5		13.2		14.7		15.1		14.3		2.8%
Service Revenues (R$ millions)
Monthly Fee		48,217		50,555		50,993		50,676		51,988		153,658		2.6%
Outgoing Traffic		97,722		107,349		100,563		113,257		111,376		325,196		-1.7%
Incoming Traffic		126,540		139,117		136,371		144,167		149,350		429,888		3.6%
Other		12,703		12,232		11,825		10,777		10,548		33,151		-2.1%
TOTAL		285,181		309,253		299,753		318,877		323,263		941,893		1.4%
Data Revenues (% of net serv. revenues)		7.6%		7.1%		6.6%		6.3%		6.6%		6.5%		+0.3 p.p.
Cost of Services (R$ millions)
Leased lines		18,100		14,177		14,021		13,870		14,216		42,107		2.5%
Interconnection		52,528		56,113		49,362		52,585		53,566		155,513		1.9%
Rent and network maintenance		14,853		18,334		19,188		17,698		20,484		57,369		15.7%
FISTEL and other taxes		13,776		13,783		15,538		15,091		15,797		46,426		4.7%
Other		3,092		216		1,160		2,348		2,900		6,408		23.5%
TOTAL		102,349		102,624		99,269		101,592		106,962		307,823		5.3%
Churn - Annualized Rate		36.8%		54.1%		29.5%		40.1%		35.7%		35.1%		- 4.4 p.p.
Postpaid		21.8%		24.2%		22.1%		21.9%		18.9%		21.0%		- 3,0 p.p.
Prepaid		41.5%		63.3%		31.6%		45.3%		40.3%		39.2%		- 5,0 p.p.
Cost of Acquisition (R$)		135		129		124		120		127		123		6.4%
Retention Costs (% of net serv. revenues)		15.5%		13.8%		15.2%		15.8%		21.4%		17.5%		5,6 p.p.
CAPEX (R$ millions)		80.9		130.5		11.5		23.3		39.9		74.6		71.1%
Number of locations served		562		587		590		592		593		593		0.2%
Number of cell sites		1741		1822		1818		1819		1829		1829		0.5%
Number of switches		18		18		18		18		18		18		0.0%
Headcount		2,328		2,388		2,738		2,743		2,864		2,864		4.4%
Estimated Market Share
Total		32.7%		31.6%		31.1%		30.4%		29.3%		30.4%		-1,1 p.p
Minas Market - excluding Triângulo
		34.4%		33.1%		32.4%		31.6%		30.3%		31.6%
Mineiro region														-1,3 p.p
Triângulo Mineiro region		16.4%		17.3%		18.1%		19.1%		19.5%		19.1%		0.4 p.p

 

 

www.telemigholding.com.br - 9/12

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INCOME STATEMENT (BR GAAP)

 

														(in R$ 000)
		2006						2007						Var. % (3Q07/2Q07)
		3rd Quarter		4th Quarter		1st Quarter		2nd Quarter		3rd Quarter		YTD
Service Revenues - GROSS		442,173		486,890		478,131		486,594		521,918		1,486,643		7.3%
Equipment Revenues - GROSS		25,229		36,430		20,290		26,544		22,624		69,458		-14.8%
Total Revenues - GROSS		467,402		523,320		498,421		513,138		544,542		1,556,101		6.1%
Taxes		(160,931)		(182,738)		(181,680)		(171,742)		(201,790)		(555,212)		17.5%
Service Revenues - NET		285,181		309,253		299,753		318,877		323,263		941,893		1.4%
Equipment Revenues - NET		21,290		31,329		16,988		22,519		19,489		58,996		-13.5%
Total Revenues - NET		306,471		340,582		316,741		341,396		342,752		1,000,889		0.4%
Cost of Services		102,349		102,624		99,269		101,592		106,962		307,823		5.3%
Cost of Equipment		30,873		50,593		23,981		31,319		28,078		83,378		-10.3%
Selling & Marketing Expenses		57,096		65,050		45,089		57,136		68,539		170,764		20.0%
Bad Debt Expense		7,044		9,383		10,504		6,626		6,162		23,292		-7.0%
General & Administrative Expenses		21,296		34,145		20,220		19,217		27,439		66,876		42.8%
Other operating expenses (income)		(3,474)		82		(3,557)		(2,342)		(6,803)		(12,702)		190.5%
EBITDA		91,287		78,705		121,235		127,848		112,375		361,458		-12.1%
%		32.0%		25.5%		40.4%		40.1%		34.8%		38.4%		-5,3 p.p.
Depreciation & Amortization		41,229		47,689		50,633		50,082		49,670		150,385		-0.8%
Interest Expense (1)		11,987		16,180		18,685		22,048		19,479		60,212		-11.7%
Interest Income		(20,411)		(22,125)		(20,298)		(20,217)		(19,838)		(60,353)		-1.9%
Foreign Exchange Loss (Gain)		938		(3,217)		(7,102)		(10,175)		(7,280)		(24,557)		-28.5%
Others		3,957		4,232		3,735		3,239		3,074		10,048		-5.1%
Income Taxes		12,546		4,083		25,498		26,643		22,293		74,434		-16.3%
Minority Interests		5,727		3,846		7,497		8,504		6,814		22,815		-19.9%
Net Income		35,314		28,017		42,587		47,724		38,163		128,474		-20.0%
Number of shares (thousand)		357,706,556		357,706,556		357,706,556		362,070,615		36,207,061		36,207,061		n/a
Earnings per thousands shares (R$)		0.099		0.078		0.119		0.132		1.054		3.548		n/a
Earnings per ADS (R$)		1.974		1.566		2.381		2.636		2.108		7.097		n/a
(1) Interest paid: 3Q06 - R$8,806 thousand; 4Q06 - R$0 thousand; 1Q07 - R$8,576 thousand; 2Q07 - R$0 thousand; and, 3Q07 - R$7,448 thousand.
* 3Q07 and YTD 2007: number of shares.
** 3Q07 and YTD 2007: earnings per share (R$).
N/A - share grouping

 

 

 

www.telemigholding.com.br - 10/12

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BALANCE SHEET (BR GAAP)

 

						(in R$ 000)
	3Q07	2Q07			3Q07	2Q07
Current Assets				Current Liabilities
Cash & cash equivalents	30,927	39,630		Loans & Financing	(0)	0
Tempory Cash Investments	614,566	532,353		Loan Interest	2,452	6,421
Accounts Receivable	207,899	192,348		Suppliers	211,601	174,016
Taxes Receivable	108,111	93,754		Taxes Payable	25,921	25,848
Other Assets	43,994	44,466		Dividends	11,892	12,067
	1,005,497	902,551		Other Current Liabilities	66,752	60,858
					318,618	279,211
Long-term Assets	347,005	346,640		Loans & Financing	147,112	154,096
Deferred Assets	7,414	8,018		Other Long-term Liabilities	140,163	124,520
Plant & Equipment				Minority Interest	182,506	175,692
Cost	2,202,893	2,164,748
Accumulated Depreciation	(1,525,974) (1,478,165)			Shareholders' Equity	1,248,436	1,210,273
	676,919	686,583
	2,036,835	1,943,792			2,036,835	1,943,792

 

 

CASH FLOW (BR GAAP)

 

	3Q07	YTD
Operating Activities
Net income	38,163	128,474
Adjustments to reconcile net income to net cash from
operating activities	-	-
Depreciation and amortization	49,670	150,385
Foreign exchange gains and indexation (principal)	(2,512)	(23,928)
Unrealized losses on cross-currency interest swaps	11,647	38,189
Deferred income taxes	(9,279)	(9,728)
Minority interest	6,814	22,815
Unrealized gains on temporary cash investments	(15,115)	(43,941)
Other	2,514	3,738
Changes in operating assets and liabilities	(51,561)	(148,973)
Cash provided by operating activities	30,341	117,031
Investing activities:
Cash proceeds from disposals of property and equipment	993	1,061
Additions to property and equipment	(39,862)	(74,641)
Additions to deferred assets	-	(473)
Cash used in investing activities	(38,869)	(74,053)
Financing activities
Dividends and interest on capital paid	(175)	(33,419)
Cash used in financing activities	(175)	(33,419)
	-	-
Increase (decrease) in cash and cash equivalents	(8,703)	9,559
Cash and cash equivalents, beginning of the period	39,630	21,368
Cash and cash equivalents, end of the period	30,927	30,927

 

 

 

www.telemigholding.com.br - 11/12

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GLOSSARY OF KEY INDICATORS

 

I) Average Clients

 

a) Average clients – monthly

 

Sum of clients at the beginning and the end of the month

2

b) Average clients – quarterly and year-to-date

 

Sum of the average clients for each month of the period

Number of months in the period

 

II) Churn Rate (Annualized)

 

a) Churn % quarterly

 

Sum of deactivations / Sum of average monthly opening clients for the 3 months x 12

3

b) Churn % - year to date

 

YTD deactivations / Sum of average monthly opening clients since the beginning of the year x 12

Number of months in the period

 

III) MOU – Minutes of Use (Monthly)

 

Number of total billable minutes for the period / Average clients for the period

Number of months in the periods

 

IV) ARPU – Average Revenue per User

 

Net service revenues for the period (excluding roaming-in revenues)

Average clients for the period

 

V) Client Acquisition Cost

 

(Sum of Marketing salaries, Selling salaries, Consulting (Sales and Marketing),

Commissions, Handsets subsidies, Advertising and promotions,

FISTEL tax (activation tax), less Activation fee for the period)

Number of gross activations in the period

 

VI) Free Cash Flow

 

Free Cash Flow = (EBITDA – CAPEX – Taxes – Net Financial Expenses*

* Considers interest paid.

 

VII) Working Capital Variation

 

Working Capital Variation = (D Current Assets – D Cash & Cash Equivalents) –

(D Current Liabilities – D Short Term Loans and Financing -D Loan Interest -D Dividends)

 

VIII) Interest Coverage Ratio

 

Interest Coverage Ratio = EBITDA / Interest Paid

 

IX) Current Liquidity Ratio

 

Current Liquidity Ratio = Current Assets / Current Liabilities

 

X) EBITDA

 

EBITDA = Operational Revenues - Operational Costs - Operational Expenses* - Bad Debts

* Does not include profit sharing.

 

www.telemigholding.com.br - 12/12

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This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

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