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Executives

Robert Gannicott – Chairman and CEO

Alan Mayne – CFO

Frederic de Narp – President and CEO, Harry Winston Inc.

Analysts

Irene Nattel - RBC Capital Markets

Des Kilalea - Royal Bank of Canada

John Hughes - Desjardins Securities

David Christie - Scotia Capital

Harry Winston Diamond Corporation (HWD) F2Q11 Earnings Call September 2, 1969 8:30 AM ET

Operator

Good day ladies and gentlemen and welcome to the Harry Winston Diamonds conference call. [Operator instructions.] Please note that we will be making some forward-looking comments today. Various factors and assumptions were applied in deriving these comments and actual results could differ materially. The principal factors and assumptions that were applied, and risks that could cause our results to differ materially from our current expectations, are detailed in our OSC and SEC filings. I would now like to turn the presentation over to your host for today's call, your chairman and CEO, Mr. Robert Gannicot. Please proceed sir.

Bob Gannicott

Thank you. Well, good morning ladies and gentlemen and welcome to the Harry Winston earnings call for the second quarter of our 2011 financial year. Following my brief introduction, I'm going to ask Alan Mayne, our CFO, to present the headline numbers. Alan will then be followed by Frederic de Narp, the CEO of the luxury brand segment of our business. I'm going to then return to discuss the rough diamond business segment.

This quarter reflects the progression of recovery in the international diamond business generally, as well as improvements specific to both of our business segments. We have produced and sold more rough diamonds into a market that has paid higher prices for them. This is driven by demand for more diamond jewelry, which is in return reflected in our international jewelry and watch sales.

It's not simply a recovery of the diamond world as it used to be, though, but rather a broadened demand, especially from expanding economies in Asia at the expense of still-muted recovery in the U.S. and in the general diamond business, although not our own, in Europe as well.

As a subsequent event of the quarter, we have effectively brought back the interest in the Diavik joint venture that we sold to Kinross Gold Corporation during the depths of the economic collapse. This gives us full control again over our 40% interest in the Diavik joint venture and the revenue that flows from it. We continue to seek acquisition opportunities in the diamond mining sector of our business, and see no better opportunity than owning more of Diavik itself.

So I'm going to turn the call over to Alan, and see you later.

Alan Mayne

Thank you Bob, and good morning. As Bob mentioned in his opening remarks, the company's consolidated results for the second quarter reflected the continuing impact of the recovery in the global economy. Consolidated sales increased over 60% from the comparable quarter last year, and the company recorded earnings from operations of $28.9 million compared to a loss from operations of $3.9 million.

Our foreign currency exposure has a material influence on our reported earnings. During the second quarter ended July 31, 2010 the Canadian dollar weakened against the U.S. dollar. This resulted in a net $3.3 million foreign exchange gain in the quarter compared to a net $25.3 million foreign exchange loss in the same period last year.

Taking into account this foreign exchange gain, our interest expenses, other income, and tax expense, we recorded net earnings of $16.5 million, or $0.22 per share, compared to a net loss of $24.5 million, or $0.32 per share in the second quarter last year.

Now let me spend a few minutes on the financial review of our business segments. As highlighted in our results release yesterday, rough diamond sales for the quarter increased considerably from the same period last year, resulting from a combination of the 62% increase in rough diamond prices and a 17% increase in volume of karats sold.

This increase in sales resulted in a significant improvement in gross margin and earnings from operations. Revenue at Harry Winston Inc. increased to $66.9 million from $48.8 million in the comparable quarter of the prior year. This 37% increase in revenue drove an improvement in gross margin and resulted in earnings from operations of $2.3 million compared with a loss from operations of $5.6 million in the second quarter last year.

During the financial crisis, management significantly reduced discretionary SG&A expenses at Harry Winston Inc. In line with the improvement in the global economy and the financial results of the business, management will be increasing the amount of advertising, marketing, and promotional investment in the Harry Winston brand. This reinvestment in the brand was a significant component of the increase in SG&A expenses in the quarter.

Before turning the presentation over to Frederic, I just want to make a comment about our cash and long-term debt balances as at July 31, 2010. Included in cash and debt is $50 million from a draw down on the new mining credit facility that was made in connection with the purchase of Kinross' indirect interest in Diavik.

Frederic?

Frederic de Narp

Yes, thank you Alan. The Harry Winston brand generated sales of $67 million during the quarter, representing an increase of 37% over the prior year comparable quarter. The results achieved by the company during the second quarter confirmed the positive trend that started in the fourth quarter of fiscal 2010.

The increase in sales was broad-based, across all geographic regions. Demand for luxury brands continues to strengthen globally, especially by consumers in China, supported by the rapidly expanding wealth of its consumers, and in the Middle East, as a result of high energy price. The strong results achieved during the first half of the year validate the strength of our brand and the quality of our product.

The U.S. market recorded sales of $20 million during the quarter, which was 31% above the comparable quarter of the prior year. The U.S. market has improved, although the economic environment remains challenging.

Sales in Asia were $22.5 million, which was 40% above the prior year period. The Japan market continues to be a strong performer for the company, and our Asian business is increasingly becoming more important to the company and is a major focus of our future growth plans.

The business in Europe generated sales of $25 million, which was 40% above the prior year. Although business conditions in Europe remain difficult, sales have been strong to Asian, Middle Eastern, and Russian clients. The strength of the Harry Winston brand, combined with our global distribution network and high quality products provide the company with a solid platform to benefit from the continuing global economic recovery.

We are confident that there are enormous opportunities to expand our brand in developing countries while we continue to expand in our core markets in the United States, Europe, and Japan. We have many exciting sales events and a new advertising campaign planned for the holiday season. We believe that the retail segment will continue to generate positive sales growth through the remainder of the fiscal year.

So now let me turn it back over to Bob.

Bob Gannicott

Thanks Frederic. The diamond mine is now successfully beginning its transition to underground mining. Pit production will continue from the A418 pipe for the next two years or so, but in declining amounts as underground tonnage increasingly replaces it.

As the underground mining areas are dewatered, it provides the opportunity to better understand the rock stability conditions to be encountered in production mining. This has led to the consideration of alternative, lower cost and higher velocity mining methods that might be employed to, in part, replace the comparatively slow and expensive cut and fill techniques that are currently in the mine plan.

Following sharp recovery in rough diamond demand and pricing in the first quarter of this year, the second quarter has been characterized by more stable conditions, as renewed stocks of polished diamonds work their way through the retail businesses of a diamond world changed by aggressive demand from the Far East and to a lesser extent, India.

The United States, which consumed half of the world's diamonds before the recession, is still struggling to regain its retail confidence. Almost half of Harry Winston sales through our salons are now in the Far East, in which we include Japan.

Looking forward, then, we expect our third quarter to continue the path of recovery in our branded luxury business while the Diavik mine continues to deliver against its mine plan for the calendar year, as global demand for our diamond products in jewelry, watches, and rough diamond raw material increases.

Thanks for listening to us, and we're now ready to respond to your questions.

Question-and-Answer Session

Operator

[Operator instructions.] Your first question comes from the line of Irene Nattel with RBC Capital Markets.

Irene Nattel - RBC Capital Markets.

Clearly retail is recovering nicely, and we are continuing to see, as you noted, the buildup in expenses at the SG&A line. As we're thinking about this on a go-forward basis, if in fact about close to 90% of SG&A is still fixed, should we be looking at the Q2 level as sort of the base run rate, or something in the low 30s for SG&A and retail?

Bob Gannicott

I think I would say that's probably on the light side. It depends on how the business continues to evolve, but to give you some context, we took over $12 million out of discretionary SG&A between 2009 and 2010. And as you well know, we were never big spenders in advertising, marketing, and promotion before that. So I would caution against using $33 million as a run rate. We will gauge how much we're going to invest in line with how the business continues to evolve. So if we continue to perform better than we expect, then I think we will continue to put our money behind the branding and continue to develop it. So I think that's probably on the low side, given our outlook, certainly for the balance of this year.

Alan Mayne

There's also a seasonality to this, of course. There's a significant additional expenditure in the latter part of the year as we get into the holiday season in the traditional U.S. and European markets.

Irene Nattel

Understood, which I guess brings me to my next question. As you increase your SG&A investment, how are you monitoring the impact that it's having on both the spending of existing customers, tracking new customers. How are you thinking about that?

Frederic de Narp

To add to the point before, we will spend on marketing, the third quarter also, related to the fact that we are celebrating. It's a moment of celebration. We are tonight celebrating the 10th anniversary of the [Opus] event with a worldwide press conference and meeting tonight in Geneva. And mid-November we will celebrate the 50th anniversary of the Hope Diamond donation to the Smithsonian Museum with a press conference and many events in New York. So that's also justifying and explaining why we expect ourselves to spend in that.

Today, it is pretty difficult to track the return on investment on the marketing dollar. We have to do what we have to do in launching an ad campaign. That is already prepared and exciting. And also we are surprised every day with special orders and demands from the Middle East and China of very very specific high-end, unique pieces that surprise us every day. That is difficult to track and anticipate, but we are happily fulfilling and that are happening and many more to happen in the third and fourth quarter.

Bob Gannicott

Irene, if I could just add - not putting words in Frederic's mouth - but in his experience in doing these events before, that we can track. So when we have 50 of our largest clients from around the world in the room at an event then we certainly expect to have sales come from those events. Obviously advertising, general advertising, is a little tougher, but when we have events where clients are in the room celebrating something specific, then yes we do have expectations for sales and that is easy to track through our salon management system. So it's, as you know, the return on general advertising is difficult to monitor, but when we do events we do have expectations and we will monitor and follow up.

Irene Nattel

That's great. And then finally, one last question if I might, the merchandise inventory levels really were up sharply from prior quarter, and I was wondering if you could just talk a little bit about what's happening there.

Bob Gannicott

It's up for very good reasons. We have a very significant pipeline of high jewelry sales at the moment. It's very significant. It's probably more significant than we've had since I've been with the company. And that inventory has been purchased to support largely this pipeline.

Irene Nattel

How very interesting. Thank you.

Operator

[Operator instructions.] And your next question comes from the line of Des Kilalea with the Royal Bank of Canada.

Des Kilalea - Royal Bank of Canada

Nice figures. Very pleasant mining figures. Thank you. The price increase that you got, the 81%, six months on six months if you exclude the 400,000 karats carried over from inventory in the previous period, which would appear to be cheap goods. That, I think Bob you said last time that you thought prices were about 5% or 10% below peak when we spoke 3 months ago. I think I'm right in saying that. Where would you put prices now versus the end of the third quarter 2008?

Bob Gannicott

We've gone past the peak, by a measurable margin. The only thing is, Des, as I'm sure you're aware it's sort of become somewhat uneven. Thankfully, our production is very focused in value from white goods, typical Canadian production. Obviously the appearance of large volumes of production from Zimbabwe has held back the price increases and in fact probably depressed prices somewhat in smaller, cheaper, off color goods. So for our average production we have gone past the peak that was achieved before the recession.

Des Kilalea

And I guess, leading on from that, did you close the period with any material inventory that is likely to - I'm trying to get a feel on price levels now and over the next, say, six months, and no amount of simultaneous equations really help on that. But can you give an idea whether you carried over any and what sorts you carried over and what you might expect prices to look like in the next six months.

Bob Gannicott

We've always got inventory going over the end of the quarter. Some of it we're still sorting, so we don't even know, if you like. At this stage we don't really have any definition of what it is, but we've always got some going over. If anything, I guess off the top of my head I'd say the stuff that we're carrying over is better than average rather than lower price than average. That's as close as we can get.

Des Kilalea

And then just one last thing before I stop stealing all the time. The investigation into other mining methods, i.e. block caving in the main, can you give us any idea on timing?

Bob Gannicott

I think by the end of the year this will have some definition to it and my expectation would be that two of the three pipes we're going to be able to use significantly cheaper mining methods on. And the third pipe, which is closer to the dike, A854 north, I think just conservatism in mining practice with respect to the dike, will probably mean that we're - certainly not doing cut and fill but there will be some form of fill used in the mining method employed on that one. And of course the other good news about it - cheaper mining methods, higher velocity, also if we can mine at lower cost than we can actually get deeper into those other identified areas of minimalized kimberlite that are not part of the resources or reserves at the moment. That's a general sort of non-numeric steer on this, and I'm afraid the numeric part will have to wait until later.

Des Kilalea

So we may expect a resource statement extension depending on the result of these mining method examinations?

Bob Gannicott

I'm not sure the resource extension is going to occur this year. I think it will be the mining methods that get dealt with this year, but I'll just say has that long term implication.

Operator

And your next question comes from the line of John Hughes with Desjardins Securities.

John Hughes - Desjardins Securities

Great stuff on the mine side. I've got to say it surprised me and I like to get surprised. Just a quick one, again specific to the mine and some of the guidance you're providing on that change in the ore mix going forward. I'll throw some numbers out for you for the second half of the year and maybe you can tell me if I'm right or wrong, but I'm looking, based on your guidance, at about 1.4 million tons of kimberlite ore to be released in the second half, and I have an average grade that's back calculated of 3.3 karats a ton for that same timeframe, which brings me back to the A418 average reserve grade. And I'm just wondering if those tonnages and grades are reasonable for the second half of the year.

Bob Gannicott

John, I think to be as specific as that we're going to have to call you back. You've obviously done a fair amount of math there that we would have to check - check on specific numbers. I don't think it's fair to be trying to do that in a public phone call.

John Hughes

Sorry, I didn't want to - what about on a karat level? Could we move to that for the next several quarters? Because I'm coming up with some pretty big increases in terms of karat releases relative to the first two quarters of the year.

Bob Gannicott

Yeah, I think that's probably accurate. That's where we are as well in terms of what we would be forecasting for karats sold. So we would see the back half karats being up from the front half.

Alan Mayne

I'd like to add a bit of caution to that John. The 418B ore is finer grained and the diamond population in it is also finer grained. In other words, the average size in there, for the average price of those diamonds is lower. So as well as the grade changes that we've always dealt with in reporting, for the next while, in fact I suppose for the next life of the mine in a way, we've now got different types of ore with different price per karat of diamonds in them. So it's not going to be that easy to just extrapolate as it were. So you probably need to have a specific conversation, come in and have a specific conversation with us at some time.

John Hughes

That would be good because there's some significant upside here on the mine side going forward.

Alan Mayne

Absolutely, yeah.

John Hughes

Last point, expiration at Diavik. Can you bring us up to date? Is there anything happening, whether it be from underground or anything new going on?

Alan Mayne

Yeah, there is. Well, underground released a - relevant to underground is the further definition of these extensions of the kimberlite pipes that go down below the current reserve and resource base. So that work continues, but on the surface there are a couple of good targets that are being investigated, but they're targets. They're nothing that's potential [mill feed] by any means yet. But yeah, there is certainly an ongoing expiration program. It got kind of stopped last year when virtually everything got stopped everywhere. But it's back and running again now, and going in a pretty full-blooded way here actually now.

John Hughes

Okay. Just one last one Bob, just on, you noted the interest in ultimately a points in kind perhaps owning more of Diavik. And what I'm just wondering is that your principal focus in terms of growth strategy -

Bob Gannicott

No. It's a focus that we've always had. I was referring actually, retrospectively, John. I should have made it clear that the fact that we bought in Kinross interest. Not much point in going and looking at more marginal things if you're not even going to take the opportunity to buy back in interest in a mine that you already understand very well and delivers you good results. But we are continually evaluating other things. We're conscious of the potential damage to brand image that's going into some of the more wild and wooly places of the world might suggest or imply, and we are certainly very focused on Canada because naturally enough we think we understand it better. But yeah, it's a continuing effort, and we do still sort of have conversations of course all the time about whether or not there's something more that could be done with Diavik ownership.

John Hughes

Right, yeah. There's lots happening in Quebec, that's for sure on that front. Sorry, last one, and then I'll get off the line. The budget for next year in terms of [REO] and when we're going to be able to forecast karat production with a reasonable degree of accuracy depending on kimberlite release and etc. Can you guide us for any type of karats that we should be using in terms of production? We'll adjust our sales, but production for next year?

Bob Gannicott

We'd happily guide you if we were guided, but we are waiting on a new mine plan. You appreciate the transition between [unintelligible] underground does leave some uncertainties because it allows the flexibility to go and take more muck from the open pit for a couple of years here if necessary. Three different working phases underground and none of this has been built into a new mine plan yet. Obviously my expectation is that even though one can always say going underground is working out. It is, it's working out fine, it's going to be smooth. But I think probably the sensible view would be to say, well, there might be some strain on karat production for the first year of complete underground production, maybe next year. But after that we'll come up to the full capacity of the mill, so it will only then be dictated by what grade of muck is going into the mill and what kind of diamonds are in the muck.

Operator

[Operator instructions.] And your next question comes from the line of David Christie with Scotia Capital

David Christie - Scotia Capital

Just a couple quick questions. On your balance sheet you have some debt now and the mine is running a lot better than it was and prices are better, so cash flow is improved. And the retail side's actually making money here, the EBIT is actually sort of strong. So I'm just wondering what your priorities are as far as using your cash flow going forward. Are we going to work on the debt, or are we going to look at acquisitions like John was talking about? Where are we going to go with our cash flow?

Bob Gannicott

From my point at least we - obviously one thing we're looking at is - the Kinross transaction requires us to repay a note next year, so we deal with that. We keep our debt levels at a reasonable level. We're beginning to get the good, strong feeling that Frederic is really getting this retail business kicked into gear and if there was a good opportunity to expand that. We're all conscious of the rapid changes that are occurring in the Far East, particularly mainland China, and it may be that it would be a sensible thing to make some investment on the retail side there. Now that we're developing this real confidence that we've got a platform that really does work. Alan have you got anything to add to that?

Alan Mayne

No, I think the only thing I would add is that clearly we've got significant growth opportunities on retail. On the mining side, as you well know, it's more opportunistic, and I think the only thing I would add is after the redemption of the Kinross note we would look to make further investments in retail, and the retail business can fund most of that out of its credit facility. And I think we would then probably look and say, okay, if the cash flow profile is going to continue to be sufficiently robust, then does it make sense to consider a dividend policy again.

Bob Gannicott

Sure, or share buybacks, or some of both.

David Christie

Just to expand a little bit, so does retail expansion supersede wholesale expansion? Which one do you figure as your priority of increasing cash flows?

Alan Mayne

When you say wholesale what do you mean?

David Christie

Mining.

Alan Mayne

Oh, rough diamonds. No, I don't think - there's not a specific priority here. I view the two as having different profiles in expansion. There's one that we can do predictably, is the way I'd put it, and there's one that you've got to do opportunistically. We'd certainly love to buy some more rough diamond production because we've got a very good marketing platform for it. But there have to be willing sellers of things that are worthy purchases.

Bob Gannicott

Yeah, it's organic. The same message different words. Organic versus acquisition. We've got a long runway of organic opportunities in the retail business, whereas on the rough side there's visibility on how we grow that, is more difficult.

David Christie

Yeah I agree. On the mining side, are you still sticking with the theme that you would only really look at things that are near production?

Alan Mayne

No, not at all. I'd be happy to look at something that was way back on the expiration pipeline. I think we feel that having been through it we kind of know what a good one looks like.

Operator

And you have a follow up question from the line of Des Kilalea with the Royal Bank of Canada.

Des Kilalea

Three questions, and the first is retail, and I'm aware I'm stepping into something I don't know very much about. Just a point that was made about Japan and the success you're having in Japan. As I understand it, you've changed the mix to a little more bridal jewelry, although not doing away with the Harry Winston image. Is there a suggestion that this will be rolled out into many more stores, and that we'd see price points dropping over time? I mean not going to, say, Tiffany price points but dropping over time?

And then I've got a couple of mining questions. The one is another project is being partly kind of promoted, partly I'll say, promoted on the potential for electrical power being run in, I think from the McKenzie Valley Authority or something like that. And it would be run in all the way to Diavik, Ekati, Snap Lake. Could you address that, and if it is possible it's going to happen, what sort of timing and what it might do to costs given that you're going underground and [unintelligible] become less important.

And then finally, on costs at Diavik, do you believe that costs could be brought down? Are there things you can see as partners rather than operators that you would like to see happening to bring down the costs at Diavik?

Alan Mayne

Okay, we'll go through the list and we'll start with Frederic on the retail question.

Frederic de Narp

Bridal. Of course for Harry Winston being famous for being the king of diamonds, and using the best quality diamonds actually, has this reputation. It is natural for us that we develop the bridal activity. So the first thing we did is absolutely reorient and push as much as we can of our existing inventory in the best performing market, Japan. Japan is a bridal market by definition, so it was natural for us to reorient our inventory, existing inventory again, towards Japan, immediately bringing some great results. That, together with a marketing campaign and some strategic action plans, proactive action plans, to create, in store even, extremely successful in Japan. Of course bridal is one of our main destinations. It is a natural fit for Harry Winston to develop bridal corners, bridal specialists, bridal inventory in every of our salons, which is not necessarily something we have currently. And together with that we are building a team, and we have developed a team, of bridal experts in the head office in New York to develop a worldwide integrated marketing strategy around bridal.

Alan Mayne

Does that deal with that one? And I'll move on to power?

Des Kilalea

Yes please.

Alan Mayne

Electrical power. Actually I've been fairly involved in that. This really stems from - Des if you remember Pine Point Mines, operated by Cominco, on the south shore of Great Slave Lake, for 20 odd years, which is now closed, was powered by a hydro-power development that was actually built by Cominco at a site called Talison. So obviously the customer for that power disappeared when the mine closed. That power is available. However, it's on the south side of Great Slave Lake and requires a very long transmission line to get it all the way around the east arm of Great Slave Lake, which is a, not formally a national park yet, is certainly a protected area, so as well as the hurdle of the distance there's also some other issues there. It inevitably means that it's passing through very different territories with different aboriginal groups who feel differently about having power lines strung across their land. Frankly, the required take or pay contracts from customers being the mines that weren't able to provide them. Obviously the only way to develop this is to have like 15 or 20 year take or pay power contracts. Well, none of us have got the ability to make 20 year commitments, because of ore reserve life and so on. So it was then talked about as something that maybe the GNWT might seek federal government help with, but then they had financial problems with the bridge project crossing the McKenzie River, which basically sucked up any loose money that the federal government might have thought about for the Northwest Territories. So in my view it's pretty much dead at this point.

So that was that one. Cost savings at Diavik. Yeah, there certainly is potential for cost savings, particularly as I say again, in these new underground mining methods. I mean it's obvious if you don't have to produce backfill in a location like that, particularly when you can't use your own tailings for backfill, so it's a very expensive process to actually take lumps of granite and turn them into sand, and then that cement addition, where the cement has to come up a winter road. Anything that avoids that is obviously a big win and so we are definitely optimistic that there will be some significant savings to what was the existing mine plan.

Des Kilalea

And I know the areas of cost - you're fairly comfortable as a partner that the mine is being operated optimally. That's a big area of cost.

Alan Mayne

Yes, we value Rio Tinto as a partner. They certainly operate in a safe and conservative way, but it's not inappropriate to the environment that we're in or to the fact that we also operate a branded business. So we are certainly happy with Rio as a partner.

Operator

You also have a follow up question from the line of Irene Nattel with RBC Capital Markets.

Irene Nattel

Just looking for more color on this demand for significant pieces. I presume it's coming, as you said, from Asia, from the Middle East. Is it your sense that these are for investment purposes, that it really is more for - as the wealth is really starting to be generated. People are wanting to wear them out and about. And how do you see this evolving as we move forward?

Frederic de Narp

First of all I think the wealthy people of the world are growing. In 2009, taking statistics of Merrill Lynch or Capgemini, the [ultra] net worth in the world grew by 19.6% and the high net worth has grown by more than 17% in '09 to start with. So there are more wealthy people around the world. Second, it is true that in this volatile world we note that people would rather spend a million dollars on a necklace for the person they love as an investment. Said investment is a glamorous investment, something that they can enjoy instead of some other investments that they don't really know. Also because unique stones and unique pieces have proven to be extremely profitable and the price has been growing tremendously during the last five years. And last, it's a moment where people do not hesitate to celebrate the meaningful moments of their life, investing in some authentic, true value, craftsmanship pieces, and this is what Harry Winston stands for. So we have an offer and we have a brand position and we do with that correspond exactly, precisely to this quest for authentic, unique pieces that people want. So we see it growing exponentially and growing for the next quarters, and growing as a trend to [unintelligible]. Yes.

Irene Nattel

Wow. Can I get you to talk to my husband?

Frederic de Narp

Yes, with pleasure.

Operator

And that concludes the Q&A portion of today's conference. I'd now like to turn it back over to management for closing remarks.

Bob Gannicott

Well thank you very much for joining us. It's obviously a pleasure to be able to report a quarter of this type. We're glad to be coming out into the sunshine again and look forward to many more like them. Thank you all for joining us.

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Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

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