Report created Jan 23, 2012 Page 1 OF 6 Schlumberger is the world's leading oilfield services company, supplying technology, information solutions and integrated project management services that optimize reservoir performance. It employs more than 80,000 people in approximately 80 countries. Schlumberger supplies a wide range of products and services from seismic acquisition and processing; formation evaluation; well testing and directional drilling to well cementing and stimulation; artificial lift and well completions; and consulting, software, and information management. It is present in nearly all major oilfield sectors, and typically generates higher returns on investment than peers. In fact, Schlumberger is the world's only truly vertically integrated oil services firm. Analyst's Notes Analysis by Philip H. Weiss, CFA, CPA, January 20, 2012 ARGUS RATING: HOLD Solid 4Q, but cautious outlook for 1Q12 Schlumberger reported 4Q11 operating earnings of $1.11 per share (excluding merger-related charges and a Libyan asset write-off), up from $0.98 in 3Q11. Revenues rose 7% sequentially to $11.0 billion. We are lowering our 2012 EPS forecast from $5.05 to $4.85 and establishing a preliminary 2013 estimate of $5.40. During the 4Q11 conference call, management said that it felt the current 1Q consensus ($1.08 per share) was 'somewhat optimistic.' Schlumberger expects 2012 capex of $4.5 billion versus $4.0 billion in 2011. However, it expects to spend in line with 2011 levels in the first half of the year. INVESTMENT THESIS We are reiterating our HOLD rating on Schlumberger Ltd. (NYSE: SLB), which underperformed in 2011. While the oil price environment remains positive, the natural gas market is much less constructive, and there is still considerable uncertainty about the impact of the European debt crisis. While SLB shares appear to be trading modestly below fair value, we do not yet see a catalyst that would drive them higher. Longer term, we are more sanguine about oil prices. We believe that SLB's long-term outlook remains solid. The company has a strong product and technology portfolio and offers a wide range of services. It is also the acknowledged leader in the international market and should be at the forefront of international demand growth. SLB also benefits from a strong balance sheet, which can be helpful when competing for business. There are some early signs of strength in international markets and the deepwater Data Pricing reflects previous trading week's closing price. 200-Day Moving Average Price ($) Rating EPS ($) 80 60 52 Week High: $95.53 BUY HOLD SELL 52 Week Low: $54.79 Quarterly 0.58 0.68 0.50 0.79 0.71 0.84 0.98 1.11 1.03 1.16 1.22 1.43 Annual 2.57 3.79 4.85 ( Estimate) Revenue ($ in Bil.) Quarterly 5.6 5.9 6.8 9.1 8.7 9.6 10.2 11.0 10.3 11.3 11.4 12.1 11.5 Annual 27.4 39.5 45.0 ( Estimate) FY ends Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Dec 31 2010 2011 2012 1.16 Closed at $68.42 on 4/6 1.31 1.36 1.57 5.40 ( Estimate) 12.6 12.6 13.3 50.0 ( Estimate) Q2 Q3 Q4 2013 Argus Recommendations Twelve Month Rating SELL HOLD BUY Five Year Rating SELL HOLD BUY Rating Weight Under Over Weight Weight Argus assigns a 12-month BUY, HOLD, or SELL rating to each stock under coverage. BUY-rated stocks are expected to outperform the market (the benchmark S&P 500 Index) on a risk-adjusted basis over the next year. HOLD-rated stocks are expected to perform in line with the market. SELL-rated stocks are expected to underperform the market on a risk-adjusted basis. The distribution of ratings across Argus' entire company universe is: 46% Buy, 49% Hold, 5% Sell. Key Statistics Key Statistics pricing data reflects previous trading day's closing price. Other applicable data are trailing 12-months unless otherwise specified Overview Price $73.80 Target Price -- 52 Week Price Range $54.79 to $95.53 Shares Outstanding 1.43 Billion Dividend $1.00 Overview Energy Rating OVER WEIGHT Total % of S&P 500 Cap. 12.00% Financial Strength Financial Strength Rating HIGH Debt/Capital Ratio 20.5% Return on Equity 16.2% Net Margin 12.6% Payout Ratio 0.22 Current Ratio 1.67 Revenue $39.54 Billion After-Tax Income $5.00 Billion Valuation Current FY P/E 15.22 Prior FY P/E 19.47 Price/Sales 2.68 Price/Book 3.14 Book Value/Share $23.47 Capitalization $105.84 Billion Forecasted Growth 1 Year EPS Growth Forecast 27.97% 5 Year EPS Growth Forecast 8.00% 1 Year Dividend Growth Forecast 9.00% Risk Beta 1.37 Institutional Ownership 70.36%
Report created Jan 23, 2012 Page 2 OF 6 outlook looks positive; however, we believe these benefits are largely offset by the uncertain outlook in the North American natural gas market. While oil prices have fallen from their highs, they remain well above levels required to justify project economics, especially when considering crudes priced similarly to Brent, which trades at a meaningful premium to the more commonly quoted WTI. In a high-priced oil environment, customers are more willing to spend, particularly on technology that benefits productivity; by contrast, when prices are lower, spending is more focused on lowering absolute costs. The company should also benefit from its international exposure and long-term contracts, as well as from the shift toward performance-based contracts and their impact on margin growth. We believe that this trend, which has also been highlighted by a major competitor, is in its early stages. RECENT DEVELOPMENTS Schlumberger reported 4Q11 operating earnings of $1.11 per share (excluding merger-related charges and a Libyan asset write-off), up from $0.98 in 3Q11. Revenues rose 7% sequentially to $11.0 billion. EPS fell between the Street consensus of $1.09 and our $1.13 per share forecast. Relative to our outlook, results were hampered by weaker gross margins, partially mitigated by lower general and administrative expenses. SLB's 4Q11 delivered solid sequential gains, driven by stronger activity both on land and offshore for most technologies, and stronger product sales for completions, software and multiclient seismic. All Areas and Product Groups delivered sequential growth. For 2011, SLB's operating earnings were $3.79 per share, versus $2.57 in 2010. Revenues were $39.5 billion, up sharply from $27.4 billion in 2010. The stronger results were driven by significantly improved worldwide activity; In North America, pricing was better and asset efficiency improved as the market continued to shift to liquids-rich plays. International markets benefited from growth in deepwater and exploration work and there were additional signs of early pricing traction for Wireline and Drilling Measurement services. Further gains were attributable to the full-year impact of the Smith International and Geoservices businesses acquired in 2010, the resumption of deepwater operations in the U.S. Gulf of Mexico, and higher Western Geco marine activity and worldwide multiclient sales. In 4Q11 Oilfield Services revenues rose 8% sequentially and 21% year-over-year as revenue gains were realized across all groups and geographic areas; pretax operating income rose 12% sequentially and 28% versus 4Q10. In the Reservoir Characterization Group, revenue improved primarily due to higher WesternGeco multiclient sales in the U.S. Gulf of Mexico and the Angola Geo, combined with robust end-of-year Schlumberger Information Solutions (SIS) software sales across all areas. WesternGeco also benefited from the resumption of land seismic activity in the Middle East and new surveys in North Africa. Drilling revenue grew due to higher M-I SWACO activity in North America Land, the U.S. Gulf of Mexico and Latin America. Growth & Valuation Analysis GROWTH ANALYSIS ($ in Millions, except per share data) 2007 2008 2009 2010 2011 Revenue 23,708 27,967 22,975 28,931 39,669 COGS 15,482 18,968 17,245 21,843 31,418 Gross Profit 8,226 8,999 5,730 7,088 8,251 SG&A 599 679 535 311 427 R&D 728 819 802 919 1,073 Operating Income 6,624 7,254 3,934 5,156 6,338 Interest Expense -157 128-52 -7 169 Pretax Income 6,624 6,852 3,934 5,156 6,338 Income Taxes 1,448 1,430 770 890 1,545 Tax Rate (%) 22 21 20 17 24 Net Income 5,177 5,435 3,134 4,267 4,997 Diluted Shares Outstanding 1,239 1,224 1,214 1,263 1,361 EPS 4.20 4.45 2.59 3.38 3.67 Dividend 0.63 1.00 GROWTH RATES (%) Revenue 21.0 16.7-16.4 20.9 44.1 Operating Income 35.3 9.5-45.8 31.1 22.9 Net Income 39.5 5.0-42.3 36.2 17.1 EPS 39.5 5.2-41.0 29.5 3.8 Dividend 58.7 Sustainable Growth Rate 13.8 11.4 VALUATION ANALYSIS Price: High $79.46 $82.33 $94.95 Price: Low $62.38 $53.00 $56.35 Price/Sales: High-Low - - 4.2-3.3 3.6-2.3 3.3-1.9 P/E: High-Low - - 30.7-24.1 24.4-15.7 25.9-15.4 Price/Cash Flow: High-Low - - 18.3-14.4 18.9-12.2 21.0-12.5 Financial & Risk Analysis FINANCIAL STRENGTH 2009 2010 2011 Cash ($ in Millions) 617 1,764 1,705 Working Capital ($ in Millions) 6,391 7,233 10,001 Current Ratio 1.88 1.67 1.95 LT Debt/Equity Ratio (%) 22.8 17.7 27.4 Total Debt/Equity Ratio (%) 28.7 26.0 31.8 RATIOS (%) Gross Profit Margin 24.9 24.5 20.8 Operating Margin 17.1 17.8 16.0 Net Margin 13.6 14.7 12.6 Return On Assets 9.6 10.0 9.3 Return On Equity 17.4 17.0 16.0 RISK ANALYSIS Cash Cycle (days) Cash Flow/Cap Ex Oper. Income/Int. Exp. (ratio) Payout Ratio 20.3 20.3 The data contained on this page of this report has been provided by Morningstar, Inc. ( 2012 Morningstar, Inc. All Rights Reserved). This data (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. This data is set forth herein for historical reference only and is not necessarily used in Argus analysis of the stock set forth on this page of this report or any other stock or other security. All earnings figures are in GAAP.
Report created Jan 23, 2012 Page 3 OF 6 IPM revenue also showed significant gains, mostly from projects in Mexico and Iraq. Reservoir Production revenue also grew, driven by stronger Completions and Artificial Lift product sales in all areas. Geographically, North American Oilfield Services revenue grew from the prior quarter, aided by increasing deepwater work in the U.S. Gulf of Mexico, higher rig count and land activity in the U.S. and Canada, and significant WesternGeco multiclient sales. In Latin America, revenue benefited from higher IPM project activities and SIS software sales in the Mexico & Central America Geo. In the Europe/CIS/Africa Area, strong results were led by the Angola Geo, which saw robust WesternGeco multiclient sales in addition to expanded presalt offshore activity for Wireline, Testing Services and Drilling & Measurements. In the Middle East & Asia Area, strong Completions and Artificial Lift product sales and robust SIS sales drove results, particularly in the India Geo, Oilfield Services pretax operating income in 4Q11 rose 82 basis points to 21.1%, largely due to strong sales of WesternGeco multiclient licenses, SIS and Completions products. In SLB's Reservoir Characterization Group, 4Q11 revenue was $2.79 billion, up 12% both sequentially and year-over-year. Pretax operating income rose to $777 million, up 28% from 3Q11 and 16% from 4Q10. Pretax operation margins jumped 340 basis points to 27.9%, benefiting from strong sales of WesternGeco multiclient licenses and SIS. Increasing higher margin Wireline exploration activities also contributed to the growth. Fourth-quarter Drilling Group revenue was $3.91 billion, a 6% improvement from the prior quarter and a 22% gain from last year. Pretax operating income increased 7% sequentially and 41% year-over-year. Sequential revenue growth was driven by sharp gains for M-I SWACO, a higher rig count on land in the U.S. and Canada, sustained growth in U.S. GOM deepwater activity, and strong contributions from Latin America. Pretax operating margin increased 0.1% sequentially to 16.8%. In the Reservoir Characterization Group, SLB completed the purchase of ThruBit during the quarter. ThruBit's technology offers a means of obtaining wireline logs in horizontal shale wells. Today, more than 90% of the horizontal shale wells in North America are not logged due to the total cost of operations and the lack of an on-site product that can guide operators in selecting the optimal completion intervals. Building on the ThruBit technology, SLB believes it can offer a cost-effective solution as an integral part of its shale reservoir characterization workflow to help open up this market. EARNINGS & GROWTH ANALYSIS We are lowering our 2012 EPS forecast from $5.05 to $4.85 and establishing a preliminary 2013 estimate of $5.40. We note that on SLB's 4Q11 conference call, management indicated that it felt the 1Q consensus ($1.08 per share) was 'somewhat optimistic.' While our outlook was $0.04 below consensus, we have slightly Peer & Industry Analysis The graphics in this section are designed to allow investors to compare SLB versus its industry peers, the broader sector, and the market as a whole, as defined by the Argus Universe of Coverage. The scatterplot shows how SLB stacks up versus its peers on two key characteristics: long-term growth and value. In general, companies in the lower left-hand corner are more value-oriented, while those in the upper right-hand corner are more growth-oriented. The table builds on the scatterplot by displaying more financial information. The bar charts on the right take the analysis two steps further, by broadening the comparison groups into the sector level and the market as a whole. This tool is designed to help investors understand how SLB might fit into or modify a diversified portfolio. P/E 30 20 10 NOV Value SLB HAL BHI 5-yr Growth Rate(%) NBR HP TDW 7.5 10 12.5 15 Growth 5-yr Net 1-yr EPS Cap Growth Current Margin Growth Argus Ticker Company ($ in Millions) Rate (%) FY P/E (%) (%) Rating SLB Schlumberger Ltd 105,845 8.0 15.2 12.6 11.3 HOLD HAL Halliburton Co 33,310 8.0 10.7 11.1 30.2 BUY NOV National Oilwell Varco Inc 31,703 7.0 16.1 13.7 22.6 BUY BHI Baker Hughes Inc 21,509 8.0 11.5 9.3 27.9 HOLD RIG Transocean Ltd 16,329 15.0 32.4-4.6 110.1 HOLD NE Noble Corporation 9,233 15.0 22.4 13.2 148.4 BUY HP Helmerich & Payne Inc 6,379 10.0 11.7 17.1 17.6 HOLD NBR Nabors Industries Ltd 4,842 10.0 12.0 7.1 58.5 HOLD TDW Tidewater Inc 2,786 12.0 26.2 6.4 126.8 HOLD Peer Average 25,771 10.3 17.6 9.6 61.5 RIG NE P/E Price/Sales Price/Book PEG 5 Year Growth Debt/Capital
Report created Jan 23, 2012 Page 4 OF 6 scaled back our growth and margin expectations and now forecast 1Q12 earnings of $1.03. We have also modestly reduced our expectations for revenue growth and margin improvement for the balance of 2012. While our expectations for 2012 oil prices have increased, our outlook for natural gas prices has weakened. Based on current market conditions and fundamentals, it appears that 2012 natural gas prices could drop significantly. In North America, we expect more equipment to move from dry gas basins to liquids-rich plays. At this point, it is too early to fully determine the pricing impact. We note that SLB's equipment is standardized, allowing it to be moved across geographies. As a result, if SLB had overcapacity in North America and such conditions were expected to persist, it could move some of its equipment to other markets. Expectations for 2012 GDP growth continued to be revised downwards during 4Q11. While there were some positive signs from the U.S. and Japan on the economic front, these were at least partly offset by concerns about the Eurozone. SLB expects the resulting uncertainties in the global financial markets to continue in the near term. In conjunction with the projections for slower GDP growth, the outlook for oil demand has declined. Most recently, the IEA lowered its forecast for 2012 demand growth from 1.3 to 1.1 million boe/d. Despite this backdrop, emerging market demand growth, combined with the weakness in non-opec supply and geopolitical concerns, have helped to keep oil prices elevated. Unless there is a global recession, prices are unlikely to weaken significantly. The natural gas markets are very different. The continued increase in unconventional gas production, modest demand growth, and mild weather at the beginning of the heating season have resulted in very high storage levels and low natural gas prices in North America. In Asia, on the other hand, the need for alternative energy sources following the Fukushima incident, along with fast-growing demand in non-oecd countries, is maintaining high prices and significantly increasing LNG demand. In this environment, it is anticipated that E&P spending will rise in 2012. Most surveys indicate increases in the 10%-15% range. Exploration spending is also expected to grow. Schlumberger expects 2012 capex of $4.5 billion versus $4.0 billion in 2011. We note, however, that it expects to spend in line with 2011 levels in the first half of the year. Spending in the first half should be around $2 billion. Expenditures in 2H12 are currently expected to increase about 25%. If conditions deteriorate, SLB has the ability to slow spending in 2H12. Longer term, any potential activity reductions are likely to be short-lived, as the supply-demand balance for oil is relatively tight and international natural gas demand is growing. SLB's business should also be aided by the breadth of its technology offering and the strength of its international footprint and contract portfolio. SLB's strong position in a growing worldwide deepwater market should also be advantageous. Unless there is a major market impact from the European debt crisis, more oil reserves are needed. As a result, exploration activity must continue as successful results can ultimately lead to the development of new reserves. Trends on the exploration front remain positive and operators are showing an increasing willingness to deploy capital in search of new hydrocarbons. Over the next five years, SLB's goals are to (1) continue to grow faster than the markets in which it participates, on the basis of technology and global infrastructure; (2) continue to lead in international margins and become the North American leader; (3) make a step-change in operational excellence; (4) continue to grow EPS faster than revenue after normalizing for acquisitions; (5) continue a progressive dividend policy (while not increasing the payout to a level that would require a cut in the event of a future recession); and (6) use any excess cash beyond the business' needs for growth, dividends, and share repurchases. FINANCIAL STRENGTH & DIVIDEND We rate Schlumberger's financial strength as High. S&P rates the company's long-term debt as A+. Schlumberger's total debt/total cap ratio at December 31, 2011 was about 29%. Unlike most other analysts on the Street, when determining SLB's total debt, we include its obligations under operating leases and the excess of its defined benefit pension obligations over the fair value of the underlying assets. While the operating leases are not on the balance sheet, we take a conservative approach and include both figures in our computations. As of December 31, 2011, it held approximately $4.8 billion in cash and investments and net debt of approximately $4.9 billion, down about $0.3 billion from the end of the previous quarter. Schlumberger's 2012 capex budget is $4.5 billion, up from roughly $4 billion in 2010. We expect spending to be weighted more toward international than North American markets given that the current outlook for growth favors the former over the latter. Spending should ramp up as the year progresses. In 4Q11, SLB repurchased $636 million of its stock. For the full year, it repurchased 36.9 million shares at an average price of $81.15 for a total of $3 billion. We have two concerns about these buybacks. First, we think the shares are trading modestly below fair value, and that they reached that point only after the recent pullback, making the repurchase decision a poor allocation of capital. Second, based on previous management comments, the repurchase activity appears intended, at least in part, to offset dilution from shares issued as part of the company's stock-based compensation program and the Smith acquisition. Management plans to be aggressive and opportunistic with its buyback program going forward. We view share repurchase activity as part of a company's capital allocation policy; as such, we think that shares should be repurchased only when management views them as undervalued. We think a rational capital allocation program, in all regards, is more important than the negative effect that results when new shares are issued. We note that at the January 20 closing price of $73.80 per share, and using the average repurchase price of $81.15, SLB destroyed more than $270 million of capital with its repurchase activity in 2011. On January 19, Schlumberger announced plans to increase its quarterly dividend by 10% beginning with its April 13 payment. The increase was in line with our expectations. Our dividend estimates are $1.09 for 2012 and $1.18 for 2013. MANAGEMENT & RISKS On August 1, Paal Kibsgaard, a 14-year SLB veteran, became SLB's CEO following the retirement of Andrew Gould after 36 years with the company. Given the company's acquisition of Smith International about 18 months ago, we do not expect additional large acquisitions in the near term. As such, Mr. Kibsgaard's focus will be on keeping the company's operations running smoothly. We prefer to see companies promote from within and do not expect
Report created Jan 23, 2012 Page 5 OF 6 many changes under Mr. Kibsgaard's leadership. SLB's business is primarily dependent on activity levels in the oil and gas industry, which can be volatile. Demand for its services is largely dependent on the number of oil rigs in operation, the number of oil and gas wells being drilled, the depth and condition of those wells, production volumes, and well completions. In addition, it is also dependent on operator capital spending. This is in turn dependent on commodity prices, which have been highly volatile in the last few years. We believe the biggest risk to SLB would be sustained commodity-price weakness, leading to smaller increases in E&P spending than we currently anticipate, or to a greater-than-expected drop in the North American rig count. Schlumberger has operations in politically unstable countries that are heavily dependent on oil exports. Although these operations are not large, the company may at some point be forced to close them as a result of sanctions or political instability. VALUATION Over the past 52 weeks, SLB shares have traded between $54.79 and $95.64. The high was reached in midday trading on February 22, 2011. The shares touched a new 52-week low on October 4, as energy shares suffered under the weight of growing concerns about the global economic outlook and its potential impact on oil demand. They have recovered quickly from this low as oil prices have also rebounded. The trailing price/sales ratio of 2.5 is below the midpoint of the five-year range of 1.3-6.4; the trailing P/E of 19.2 is also in the lower half of the range of 6.7-40.5, and the price/cash flow multiple of 14.2 is close to the midpoint of the historical range of 4.6-24.7. The price/book multiple is 3.1, compared to a five-year range of 2.5-10.5. While most of these multiples are in the lower half of their historical range, we note that the best time to buy shares of cyclical companies is often when relative value metrics are toward the top of the ranges, as the latter indicates a belief that better times are ahead. On January 20, HOLD-rated SLB closed at $73.80, up $0.94.
METHODOLOGY & DISCLAIMERS Report created Jan 23, 2012 Page 6 OF 6 About Argus Argus Research, founded by Economist Harold Dorsey in 1934, has built a top-down, fundamental system that is used by Argus analysts. This six-point system includes Industry Analysis, Growth Analysis, Financial Strength Analysis, Management Assessment, Risk Analysis and Valuation Analysis. Utilizing forecasts from Argus Economist, the Industry Analysis identifies industries expected to perform well over the next one-to-two years. The Growth Analysis generates proprietary estimates for companies under coverage. In the Financial Strength Analysis, analysts study ratios to understand profitability, liquidity and capital structure. During the Management Assessment, analysts meet with and familiarize themselves with the processes of corporate management teams. Quantitative trends and qualitative threats are assessed under the Risk Analysis. And finally, Argus Valuation Analysis model integrates a historical ratio matrix, discounted cash flow modeling, and peer comparison. THE ARGUS RESEARCH RATING SYSTEM Argus uses three ratings for stocks: BUY, HOLD, and SELL. Stocks are rated relative to a benchmark, the S&P 500. A BUY-rated stock is expected to outperform the S&P 500 on a risk-adjusted basis over a 12-month period. To make this determination, Argus Analysts set target prices, use beta as the measure of risk, and compare expected risk-adjusted stock returns to the S&P 500 forecasts set by the Argus Strategist. A HOLD-rated stock is expected to perform in line with the S&P 500. A SELL-rated stock is expected to underperform the S&P 500. Argus Research Disclaimer Argus Research is an independent investment research provider and is not a member of the FINRA or the SIPC. Argus Research is not a registered broker dealer and does not have investment banking operations. The Argus trademark, service mark and logo are the intellectual property of Argus Group Inc. The information contained in this research report is produced and copyrighted by Argus, and any unauthorized use, duplication, redistribution or disclosure is prohibited by law and can result in prosecution. The content of this report may be derived from Argus research reports, notes, or analyses. The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but Argus makes no representation as to their timeliness, accuracy or completeness or for their fitness for any particular purpose. This report is not an offer to sell or a solicitation of an offer to buy any security. The information and material presented in this report are for general information only and do not specifically address individual investment objectives, financial situations or the particular needs of any specific person who may receive this report. Investing in any security or investment strategies discussed may not be suitable for you and it is recommended that you consult an independent investment advisor. Nothing in this report constitutes individual investment, legal or tax advice. Argus may issue or may have issued other reports that are inconsistent with or may reach different conclusions than those represented in this report, and all opinions are reflective of judgments made on the original date of publication. Argus is under no obligation to ensure that other reports are brought to the attention of any recipient of this report. Argus shall accept no liability for any loss arising from the use of this report, nor shall Argus treat all recipients of this report as customers simply by virtue of their receipt of this material. Investments involve risk and an investor may incur either profits or losses. Past performance should not be taken as an indication or guarantee of future performance. Argus has provided independent research since 1934. Argus officers, employees, agents and/or affiliates may have positions in stocks discussed in this report. No Argus officers, employees, agents and/or affiliates may serve as officers or directors of covered companies, or may own more than one percent of a covered company s stock. Morningstar Disclaimer 2012 Morningstar, Inc. All Rights Reserved. Certain financial information included in this report: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.