Spx Technologies, Inc. · NYSE:SPXC
Spx Technologies — Investor Day (March 2005)
82 slides from Spx Technologies's investor day presentation, Mar 4, 2005
Slide 1: SPX Corporation 2005 Investor Conference
SPX Corporation 2005 Investor Conference SPX | Corporation March 3, 2005 Grand Hyatt Hotel, NY
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements contained in this presentation that are not historical facts are forward-looking statements and are thus prospective. These forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materi
Slide 3: Introductions
Introductions Chris Kearney President, Chief Executive Officer Jay Caraviello EVP, Co-Chief Operating Officer Patrick O'Leary EVP, Chief Financial Officer Tom Riordan EVP, Co-Chief Operating Officer Jeremy Smeltser Director of Corporate Finance SPX Leadership Team
Slide 4: Agenda
Agenda Chris Kearney Key Messages
Slide 5: Key Messages
= Key Messages > Good corporate governance and transparency for the benefit of all stakeholders > Mainstream executive compensation plan > Centralized operational management structure > Focus on operational improvement > Disciplined approach to acquisitions and capital investment
Slide 6: Corporate Governance Improvements
Corporate Governance Improvements 2002 through 2004 > Actions Taken = Independent Nominating and Governance Committee = Independent Directors Meet Without CEO = Corporate Governance Guidelines = Independence Standards = New Committee Charters = Split Chairman and CEO roles > Continuing Process = Sea
Slide 7: Recent Changes in Corporate Governance
Recent Changes in Corporate Governance Chairman and CEO roles split - December 2004 Independent Board members removed from EVA compensation plan to fixed cash and equity-based compensation Compensation committee retained Watson Wyatt Worldwide to conduct comprehensive study of executive compensation
Slide 8: Organization Update
Organization Update New Organization Structure Designed to Increase Focus on Operations
Slide 9: 2004 Overview
2004 Overview Positives: > Positive organic revenue growth: 4% > Strong market share positions in each business segment > Pockets of operational excellence Challenge: > Margins have eroded > Significant decline in free cash flow > Decentralized structure: = Autonomous business culture = Decentralize
Slide 10: 2005 Improvement Goals
= 2005 Improvement Goals > Stabilize and increase segment margins = Target 100 bps improvement > Challenging first quarter: - Segment income declines + Improved cash flow + Significant gains on asset sales > Achieve steady incremental growth in net income and cash flow as the year progresses > Lever
Slide 11: Long-Term Objectives
Long-Term Objectives Expand Lean manufacturing and improve supply chain management Apply lessons from competitive benchmarking Focus on executing growth strategy Disciplined and consistent capital allocation Long-term double-digit EPS growth target: = 2005 pro forma EPS: $2.70 per share = 2006 and b
Slide 12: Strategic Overview
= Strategic Overview > Operating difficulties led to a thorough strategy and Strategic Assessment portfolio review 2005E Revenues Niche Businesses » Identified need to centralize and focus long-term growth strategy > Organized portfolio into two categories: = 3 Core Growth Platforms 3.Core Growth «
Slide 13: Core Growth Platforms
Core Growth Platforms > Globalized SPX platforms New Segments 2005E Revenues » Achieved critical mass > Participate in large, fragmented, global end 7 markets Technology, > Attractive acquisition opportunities Test & Measurement Nickie > 3% - 5% organic growth Businesses characteristics of 2005E Rev
Slide 14: Niche Businesses
Niche Businesses New Segments > Strong market positions 2005E Revenues > Diverse end markets Thermal > Good cash flow Flow characteristics Technology, > Lack global scale > Acquisitions unlikely Test & Measurement Niche: > Sustainable strategic positioning Harvest Cash Flow and Evaluate Future Strat
Slide 15: Agenda
Agenda Jay Caraviello & Operational Review Tom Riordan and Operating Initiatives
Slide 16: New Operational Structure
New Operational Structure Jay Caraviello Tom Riordan Thermal Equipment Flow Test & Industrial Products & Services Technology Measurement. & Services * Cooling + Process Equipment: * Service Solutions * Contech Technologies and Filtran Services + Air Treatment + Radiodetection + Waukesha Electric * D
Slide 17: Segment Strategies
Segment Strategies Other Niche Core Platforms for Focused Growth Businesses Thermal Equipment Flow Test & Services Technology Measurement + Large scale player | | + Fragmented, + Acquisitions tn + strong franchises in global heat diverse global broaden end + Depressed margins exchanger market market
Slide 18: Thermal Equipment & Services
= Thermal Equipment & Services > Unique position as only full line cooling tower company > Increased cooling and service backlog from $440m to $699m > Large addressable market Dry Cooling wet Cooling > Significant exposure to Asian infrastructure (China / India) > Leading brands in niche lt) heating
Slide 19: Thermal Equipment & Services Financial Summary
Thermal Equipment & Services Financial Summary Operating Focus > Improve cooling equipment margins: = China sourcing (5 nmllons) 2003 2004 _2005E me en Sn0es sess = Package and dry tower pricing oe = New product intros: Air2Air, Fluid Cooler Organic Growth 6% 300 119% ecueearee ee CCC > Successful t
Slide 20: Thermal Equipment & Services Revenue Growth
Thermal Equipment & Services Revenue Growth (45 in millions) S101 g4aes | at, allie i ae eailin is ——~Orremiy—oamkSS—*ke Ce 2004 2005E > Hamon cooling acquisition > 119% organic growth driven by completed December 2003 Thermal services > Currency benefit > Increased dry cooling project mix > Pricing
Slide 21: Thermal Equipment & Services Margin Development
Thermal Equipment & Services Margin Development 1.8% (23%) 13.4% ‘ms 18% aH) = B.. 10.7% 2003 Acquisition Price Commoudties fx 2004 Price Commodities Mi 206E 23Vr Target 2004 2005E > Hamon acquisition diluted > Lean manufacturing improvements margins by 196 at Weil McLain > Pricing actions did not r
Slide 22: Flow Technology
Flow Technology Branded, engineered products Focus on niche end markets Mixers Dryers Increasing solutions (multi-product) sales ‘ =—s Growing aftermarket revenues Attractive acquisition opportunities valves Process Pumps iverse Products and Brands Sharing a Common Platform
Slide 23: Flow Technology Financial Summary
Flow Technology (Gs iniliors) / > Valves lean manufacturing 2003 2004 2005E initiatives Revenue $733 $869 $900 > 5 oe avout ane — ane Address European softness in mixer market Organic Growth (2%) 3% > Improve dehydration and filtration margins: Segment Income $105 % margin 121% Price * China sourcin
Slide 24: Flow Technology Revenue Growth
Flow Technology en clone) Revenue Growth 1 $18 $12 7 —= sip =] 2 — $733, 2003 Acquisition Price Currency Volume 2004 Acquisition Price Volume 2005E 2004 2005E > McLeod Russell acquisition > Implemented price actions should completed in January 2004 drive top-line growth > Soft oil and gas demand in
Slide 25: Flow Technology Margin Development
Flow Technology 173% (28%) M Development asm 02% (1.6%) = eat | a 02%) oom a) eae ost ee oon |_| Bo - 5 a" as 2004 2005E > McLeod Russell restructuring > Pricing actions expected to actions restored profitability to exceed commodity cost increases break-even > Lean manufacturing initiatives > Operat
Slide 26: 2005 Segment Targets
2005 Segment Targets Full Year ($5 in millions) 2004 2005E Comments Thermal Revenues $1,065 $1,185 * Asia and services market expansion Segment Income $127 $127 “Increased mix of lower margin dry cooling Segment margin 11.9% 10.7% towers Flow Technology Revenues $869 $900 * Mid single-digit organic
Slide 27: Test & Measurement
= Test & Measurement > Branded, engineered products » Diverse end markets including: Rotating Electrical Tester Vibration Test System = Transportation = Telecom/Utilities = Defense/Aerospace = Research and Testing
Slide 28: Test & Measurement Financial Summary
Test & Measurement Financial Summary Operating Focus (@s inmllons) > Strengthen market leadership 20032004 _2005E ee oS a “ay > Execute key manufacturing gre initiatives (e.g. Lean) Organic Growth 5M% 9% (1%) > Improve back offices and Segment Income $117, $128 $131 systems % margin 12.6% 11.7% 11.8
Slide 29: Test & Measurement Revenue Growth
Test & Measurement Revenue Growth (45 in millions) 45 sor $21 $1,093 = $30 (528) $1,110 an 2 2008 ‘Fequatons Valine ‘Poe ” Curenoy 04 eqisiions lume Poe Curenoy 2008E 2004 > Growth driven by bolt-on acquisitions in the automotive and data acquisition markets > Volume up substantially on OE auto plat
Slide 30: Test & Measurement Margin Development
Test & Measurement Margin Development 13.15% » Strong volume > Pricing strength > Telecom product discontinuance > Unfavorable mix, driven by > Higher labor and commission costs Transportation Bill delay > Telecom recovery ong-Term Margin Target of 13% - 15%
Slide 31: Industrial Products and Services
Industrial Products and Services > Strong franchises Market leaders Solid cash flow Niche businesses North American focus HDTY Broadcast Hydraulic Pump Antenna iche Businesses
Slide 32: Industrial Products and Services Financial Summary
Industrial Products and Services Financial Summary Operating Focus Genie) 2003 2004 _2005E > Strengthen business Revenue $1,268 $1,346 $1,275 processes: “back to basics” % growth (6%) 6% (5%) Organic Growth (17%) 5% (3%) > Execute key manufacturing initiatives (e.g. Lean) Segment Income gs $57 $95 %
Slide 33: Industrial Products and Services Revenue Growth
Industrial Products and Services Revenue Growth (45 in millions) 952, $1946 ht $1268 S22, it | ee sts 2008 Acquisitons Price — Yolume 2004 Acuuistions Price Divestitures Volume "2005 2004 2005E » Volume increase impacted by Volume decline driven by = Transformer market = Targeted reduction in unprof
Slide 34: Industrial Products and Services Margin Development
Industrial Products and Services Margin Development I 60” OE oct? gh wes ae ca ot pie 2004 > Strong volume > Pricing strength expected to offset commodity increases > Dock Products recovery > Cost reduction initiatives > Unfavorable commodity costs > Dock Products restructuring > Higher benefit and
Slide 35: 2005 Segment Targets
2005 Segment Targets Full Year ($5 in millions) 2004 2005E Comments Thermal Revenues $1,065 $1,185 “Asia and services market expansion Segment Income $127 $127 “Increased mix of lower margin dry cooling Segment margin 11.9% ie Ete Flow Technology Revenues $069 $900 *Mid single-digit organic growth S
Slide 36: Operating Initiatives
Operating Initiatives Le Manufacturing Supply Chain Management Information New Product Technology Focus Development Emerging Organizational Markets:China Development ives are Focused on Operational Improvement
Slide 37: Lean Manufacturing - Implementation
Lean Manufacturing -— Implementation Determine each individual business’ ability to Assess apply Lean Manufacturing in an accelerated environment. Early projects will be cost focused Identify projects to improve productivity and identi! eliminate waste. Project selection based on fy potential to app
Slide 38: Supply Chain Management
Supply Chain Management OBJECTIVE Drive sustained year-over-year improvements in entire Supply Chain process PROCESS Functional Area Major Goal Demand Management Streamline Sales and Operations Planning Materials Management Lower Inventory Optimize Customer Order Fill Rates Sourcing Optimize spend a
Slide 39: New Product Development
= New Product Development Business Review Assessment: > New product development focus and R&D spend are not consistent across SPX > Stable and growing businesses have more clearly defined processes in place Strategy: > Strengthen links between commercial and development portions of the businesses >
Slide 40: New Product Development
= New Product Development
Slide 41: Organizational Development
Organizational Development Leadership Development > Develop leaders at all levels > Strengthen functional talent > attract and retain talent PROMOTE CONTINUOUS LEARNING ACROSS ORGANIZATION Lean Manufacturing and Focus on Solutions Supply Chain Training for Customers > continuo utitibravenene Dee te
Slide 42: SPX in China
SPX in China Key Indicators: 2002 2003 = 2004 * Sales $56m = $115m $170m * Sourcing $6om $90m = $110m * Headcount 1,350 L711 * Production sq. ft. 800k 850k Strategy: « Continue aggressive sales and sourcing growth « Leverage back-office infrastructure « Migrate Lean and Supply Chain best practices «
Slide 43: SPX Entities in China
[SPX SPX Entities in China Hebe *Coatina Tech Sen Tianjin + Coating Tech Serv Baijing = Fitran + Semvice Solutone Lbs Shandong + Process Equipment iangeu * Service Solutone Shanghai * Process Equipment + MEP * Dock Products + SPX Airtreatmant + SPX China thaliana *TPSI Kayex *SPXAlrtreatment Guangdo
Slide 44: Information Technology
= Information Technology Business Review Assessment: > Business units with solid systems have consistently better financial performance and predictability Strategy: > Consolidate decentralized data centers into three regional platforms > Provide solid ERP platforms to reduce costs and enhance busine
Slide 45: Capital Spending Analysis
Capital Spending Analysis 2000-2001 : Significant systems and new plant investments 2002-2004: Bolt-on acquisition activity and manufacturing footprint growth in low cost countries kept spending low 2005+: Modeling 100% of depreciation, committed to investing in core growth platforms and to improve
Slide 46: Agenda
Agenda Patrick O'Leary 2004 Financial Results 2005 Financial Strategy and Guidance
Slide 47: 2004 Q4 Review
2004 Q4 Review (Bs in millons, except per share data) Revenues Segment income % Margin Corporate Expense Asset impairments Other Income/ (Expense) Free Cash Flow Three months ended Dec. 31, 2003 $1,120 $149 13.3% $17 $43 $324 6) 114% Comments * Acquisition growth * Valves inefficiencies, raw materia
Slide 48: 2004 Full Year Review
2004 Full Year Review 2003 2004 v& Comments 8s in ilions, except per share data) Revenues $3,816 $4,372 15% © * 4% organic growth Segmentincome $459 $416 8% | * Raw material cost increases, operating % Margin 12.0% 9.5% inefficiencies at Dock Products, Vales Corporate Expense $53 $101 89% * Lewal ex
Slide 49: SFAS Asset Impairments
= SFAS 142 Asset Impairments 1) Annual impairment testing of all goodwill and indefinite lived intangible assets performed in Q4 in connection with long-range forecasting process 2) Change in market condition or estimates can trigger impairment in any period that the change becomes known 3) Impairme
Slide 50: 2004 Segment Results
2004 Segment Results (2 inmilione) December Expectations Actual___ Change _ Comments Technical Reverue 9935 $564 | ($371) Kerdromoved to dscentinued cperatiore: Segment Inoome $109 HE | ($63) Pereioninpact +513 % Margin 11.6% 8.1% Industrial Reverie $1,090 $1,091 $1 Operatingineffviencies at Dock ae
Slide 51: Bridge to December Expectations
Bridge to December Expectations 5 nmillons) Free Cash Flow December Expectations $80 Accounts Receivable 45 Timing of receipts 2004 Actual $125 Segment Income December Expectations $486 Discontinued Operations (71) Kendro, Cofimeo & 2 small product lines Pension exclusion 7 Reported as a separate li
Slide 52: 2004 Annual Cash Flow
2004 Annual Cash Flow > 2004 free cash flow of $125m ™ > Significantly lower than prior year and historical strong performance > Driven by $195m working capital investment: = $250m working capital increase through nine months = Q4 working capital decrease of $55m > 2004 capital expenditures of $55m
Slide 53: 2004 Working Capital Analysis
2004 Working Capital Analysis (5 nmillons) Working Capital Investment Overview 2004 Working Capital Investment > Organic revenue growth of 4% Thermal ($80) = Led to increase in receivables * Inventory build Test & Measurement (54) > Concentrated in two businesses Hamon Working Capital (30) * Thermal
Slide 54: 2004 Divestiture Strategy
2004 Divestiture Strategy ET TE Favorable M&A Identified as attractive —_> Ryramiczied fo decision niche businesses to engage in sale processes > Strong market positions J > Technology leadership Attractive returns and » Lack significant scale improved financial flexibility > High operating margins
Slide 55: Major Divestitures Summary
Major Divestitures Summary Gams) Revenue OP Proceeds Gain“ EST $438 $73 $900 $605 Kendo a 66 ers 285 Bomag 506 a3 400 140 Total $1,315 $182 $1,975 $1,030 After taxes
Slide 56: Expected 2005 Available Capital
Expected 2005 Available Capital $in millions Availability Cash at 12/81/04 $581 Unused revolving loan (net of LOC's) 325 AVR secutitization facility, net 100 2005E free cash flow 200 Net cash proceeds from BOMAG sale 1/3/2005 400 Expected net cash proceeds from EST/Kendro sales 1575 Total Projected
Slide 57: Financial Strategy
Financial Strategy Debt / Cash Flow Statist > Maintain leverage within target range: = Gross debt to adjusted EBITDA: 1.5x - 2.0x » Focus on free cash flow conversion: = Target 100% of net income with appropriate capital expenditures Dividend Policy > Prudent cash dividend, while maintaining leverag
Slide 58: Pro Forma Balance Sheet
Pro Forma Balance Sheet Discontinued Debt Share (1) ($s inmiliors) 12/31/04 Operations __Reduction__Repurchase__Proforma cash qs81 $1975 ($1,825) (9450) 4280 Other Current assets 3,333 (L567) - - 1766 Goodwill 2,078 - - - 2,078 Other Assets 1636 - = = 1635, Tota Assets 47.628, 08 ($1,825) (450) 45,7
Slide 59: Debt Retirement Schedule
Debt Retirement Schedule 3's in millions Projected 1231/2004 Retirements Pro forma Revolving Credit Loan $ - Tranch 4 Term Loan 191 $ $ Tranch 8 Term Loan 882 7.50% senior nates 473 6.25% senior nates 249 LYONs (zero coupon) 659 Other Debt 73 Total 2,526 © Potential LYONs put dates: $18m May 2005, $
Slide 60: Capital Allocation Methodology
Capital Allocation Methodology Gross Debt to EBITDA| | Excess Capital / Free Cash Flow Usage Debt reduction to retum to leverage in > 2.0x | 1.5x - 2.0% targeted range > Return of capital to equity holders + Share repurchases based on internal fair value methodology < 2.0x > Acquisitions + Strategic
Slide 61: SPX Peer Group Credit Analysis
SPX Peer Group Credit Analysis Total Debt/EBITDA sig tame nme nett re Total Debt/Book Capitalization Source: PMergan anabsis Peers: Pentair, ITT, Textron, Eaton, Crane, Parker Hannifin ine with Investment Grade Peers
Slide 62: New Capital Structure
= New Capital Structure > Significantly less leverage: « Total Debt/Book Capital expected to be 23% down from 54% « Total Debt/EBITDA target of 1.81x down from 3.85x > Use cash asset sales proceeds and free cash flow: = Pay down $1.7 billion debt: ~ Retire senior notes and term loans = Total cash co
Slide 63: Modeling Information
Modeling Information > Moving to Pro Forma EPS: = Plan to exclude items such as: — Discontinued operations Gain or loss on sale of business unit or product line Deferred tax gains Agset impairments Debt retirement costs > Modeling Assumptions: = Debt retirement effective 1/1/2005: = Total of $1.7 bi
Slide 64: Q1 2005 Segment Targets
Q1 2005 Segment Targets First Quarter (¥'s in millions) 2004 2005E Comments Thermal Revenues $225 $246 *Increase in service projects Segment Income $21 $16 *New facllity start-up costs, product mix Segment margin 9.3% 6.5% Flow Technology Revenues $201 $216 *McLeod Russel acquisition Segment Income
Slide 65: 2005 Segment Targets
2005 Segment Targets Full Year ($5 in millions) 2004 2005E Comments Thermal Revenues $1,065 $1,185 * Asia and services market expansion Segment Income $127 $127 “Increased mix of lower margin dry cooling Segment margin 11.9% 10.7% towers Flow Technology Revenues $869 $900 * Mid single-digit organic
Slide 66: Pro Forma 2005E and 2006E
Pro Forma 2005E and 2006E (Fin millons, except per share data) Actual _2005¢ () 2006E Revenues $4,572 44470 +20to 300 Segment Income 416 467 Sof reverues 9.5% 10.5% +100 bps Corporate overhead (101) (78) Persion income (@perse) (23) @) Stock-based compensation Q @) Asset Impair ments (247) - Special
Slide 67: Pro Forma 2005E and 2006E
Pro Forma 2005E and 2006E ($n mlions, except pr share da) 2004 Proforma Actual _2005¢ () 2006E Equity Earnings in NV 6 28 Other Income/(Expense) ® ® Interest Expense as4) fe) Pre-Tax Income $148) $288 Taxes 28 (115) (Lose) income fram continuing operations iy $178 Weighted Shares 743 64.0 Earnings P
Slide 68: Free Cash Flow
Free Cash Flow > 2005E target free cash flow of ~$200m = Targeting working capital improvement over the next 12-24 months > 2005E includes $80m of capital spending = 100% of depreciation > Targeting 100% conversion to net income long-term ng-Tern Target 100% Conversion of Net Income
Slide 69: Agenda
Agenda Chris Kearney Closing
Slide 70: SPX in 2005
SPX in 2005 Key Attributes of SPX > Leading Market Share Positions > Solid Free Cash Flow and Return on Capital Profile > Positive Organic Growth > Diverse End Markets > 3 Scalable, Global Platforms for Future Growth > Strong Balance Sheet with Significant Financial Flexibility > Strong Values and C
Slide 71: Key Messages
= Key Messages > Good corporate governance and transparency for the benefit of all stakeholders > Mainstream executive compensation plan > Centralized operational management structure > Focus on operational improvement > Disciplined approach to acquisitions and capital investment
Slide 72: Agenda
Agenda All Q&A
Slide 73: Appendix
Appendix
Slide 74: Executive Biographies
Executive Biographies Christopher 3. Kearney, 49, was named President and Chief Executive Officer of SPX on December 8, 2004. He joined the company in ‘February 1997 as Vice President, Secretary and General Counsel and an officer of the company. Prior Joining SPX he was Santor tiePresdere and Ganera
Slide 75: 2005 Organic Revenue Growth Reconciliation
2005 Organic Revenue Growth Reconciliation Projected Year ended December 31, 2005 Net Revenue Acquisitions’ Foreign Organic Revenue Growth(Decline) __Divestitures Currenc: Growthy (Decline) Thermal Equipment and Senices 10% 1% 0% 11% Flow Technology 5% 2% 0% 3% Test and Measurement 1% 2% 0% 1% Indus
Slide 76: 2004 Organic Revenue Growth Reconciliation
2004 Organic Revenue Growth Reconciliation Thermal Equipment and Senices Flow Technology Test and Measurement Industrial Products and Senices Consolidated ‘Year ended December 31, 201 04 Net Revenue Acquisitions? Foreign Organic Revenue Growth Dixestitures Currency Growth(Decline) 21% 11% 4% 6% 18%
Slide 77: 2003 Organic Revenue Growth Reconciliation
2003 Organic Revenue Growth Reconciliation ‘Year ended December 31, 2008 Net Revenue Acquisitions Foreign Organic Revenue Growth(Decline) _Divestitures Cumenc Growthi(Decline) Thermal Equipment, and Senices 29% 20% 4% 6% Flaw Technology 8% 8% 5% -5% Test and Measurement 6% -3% 4% 5% Industrial Produ
Slide 78: Free Cash Flow Reconciliations
Free Cash Flow Reconciliations to GAAP Financial Measures (6 in milfions) Twelve Months Ended Quarter Ended December 31, December 31, 2003" 2004 2005E 2003" 2004 Net cash from continuing operations § 4188 § 198 § 2600 § 2695 § 963 Capital expenditures 30) (40.2) 20.0) (18) 3) § 3798 § (04 $ 100 § 25
Slide 79: Adjusted EBITDA Reconciliations
Adjusted EBITDA Reconciliations to GAAP Financial Measures Twelve Montte Ended December 91, in lions) 2008 2008 2008: Net (loss) income 92360 ei.) st730 Income from discontinued op erations G88) too.) Income tax provéion (benefit) 1058 88) 1150 Interast expense 1877 1540 370 Earnings from continuing
Slide 80: Adjusted EBITDA from Discontinued Operations
Adjusted EBITDA from Discontinued Operations Year Ended December 31, 2004 Operating profit fram discontinued aperations $189.5 Depreciation and amortization from discontinued aperations 24.9 Adjusted EBITDA from discontinued operations $214.
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Slide 82: Searchable text section of graphics shown above
Searchable text section of graphics shown above SPX Corporation 2005 Investor Conference [GRAPHIC] [LOGO] March 3, 2005 Grand Hyatt Hotel, NY [ LOG O] Forward-Looking Statements Certain statements contained in this presentation that are not historical facts are forward-looking statements and are thu