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Equity Research

Special Research Series

January 21, 2005 Portfolio Strategy

SRS Stock Focus List

With slower, below consensus earnings likely but no earnings peak until mid-2006, our strategy focus is for execution/delivery to dominate style and size tilts. PG exited the SRS on Jan. 12 on an analyst downgrade. To rebuild consumer staples, on Jan. 20, we added G, for restructuring delivery.

On Jan. 20, we added BSX (a strong devices play) and TEVA (with its rich generic pipeline) to healthcare in the SRS. We also added strong delivery JNJ (the recent Guidant merger adding leverage to devices) to replace PFE. On Jan. 21, ESV NBR, and NFX were dropped on coverage disruption.

All figures in US dollars, unless otherwise stated. 05-40686 © 2005

CIBC World Markets does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

See "Important Disclosures" section at the end of this report for important required disclosures, including potential conflicts of interest. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report, or at the end of each section hereof, where applicable.

Sector Weighting:

Subodh Kumar, CFA 1 (212) 667-5091 [email protected]

Zubeida Mirza, CFA 1 (416) 594-7907 [email protected]

SRS Stock Focus List - January 21, 2005

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SRS Stock Focus List The Special Research Series (SRS) was established in 1975 to search out timely investment ideas, with an emphasis on companies that appear inefficiently valued on the basis of their earnings quality, undervalued assets, undedicated cash flow and anticipated acceleration in earnings growth or other special characteristics. All CIBC World Markets analysts are encouraged to present documented recommendations to the SRS Committee, which in an advisory capacity assists Subodh Kumar, chief U.S. investment strategist and SRS Committee chairman, give final approval for the inclusion of each security in the SRS. The SRS stock can be part of our focus list with 18 months as an objective unless the SRS committee using its discretion removes the stock in connection with a downgrade to below Sector Outperformer or otherwise. The number of stocks reflects sector weightings and assessments of market conditions as well as our stock coverage universe. This report shows the performance of the Special Research Series and CIBC World Markets Corp.’s Sector Outperformer List. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities previously recommended as part of the Special Research Series. Commission costs are not included in these calculations. Since the Special Research Committee’s first recommendation on July 14, 1975 (and including the changes made with this report), a total of 1,057 stocks have been recommended for purchase; 46 recommendations are currently outstanding.

Total Number of Stock Recommendations as of 1/20/2005

Since 7/14/75 1,057 Number of Stocks Increased: 577 Number of Stocks Declined: 431 Number of Currently Active Stock Recommendations: 46* In developing the SRS Stock Focus List, we expect to benefit from the perspectives of different disciplines and the continued active participation of equity research analysts. The 18-month sunset clause allows time for investment ideas to flourish but also injects a dynamic aspect to list inclusion. The S&P 500 came close to our 1250 fair value target at end 2004, and then pulled back. We believe a narrow range bound market with increased trading volume is likely. We expect markets to come to grips with a fundamentally different environment in 2005, compared to 2002-2004 (which were driven by cyclical leverage and an expansionary Fed). Our S&P 500 earnings estimates for 2002-2004 were above consensus at the start of each of those years. In contrast, we start 2005 with our earnings expectations below consensus and significantly below its 2006 estimate. We believe quality of execution is likely to be a stronger performance driver than investment styles (growth vs. value) or size (large vs. small cap) in this period. The ability to exceed already optimistic consensus is likely to continue to decline from peaks experienced in 1Q04. For rising earnings momentum, telecom and related as well as utilities are some areas to consider. In growth, dispersion within growth is likely giving rise to selectivity. Similarly, within cyclicals, we favor industrials but expect dispersion elsewhere. The additions and deletions since our last report on November 24, 2004, are shown in the left sidebar and discussed further in the report as are all SRS stocks. * As of January 21, three stocks, ESV, NBR and NFX, were dropped on disruption in analyst coverage.

Table of Contents SRS Performance Record p. 4 Strategy p. 9 SRS Focus List p.11 - By Market Cap p.11 - Valuation Summary p. 12 - Pricing Summary p. 13 - Company Commentary p. 14 - Consumer Discretionary - Consumer Staples - Energy - Financials - Healthcare - Industrials - Info Tech - Materials -Telecom Additions p. 54 - Boston Scientific - Gillette - Johnson & Johnson - Teva Pharmaceuticals Deletions p. 55 A) On 18-month Sunset Clause

- None B) On Strategic Realignment - None C) Normal Deletions

- Ensco International - Lincoln National - Nabors Industries - Newfield Exploration - Pfizer Inc. - Procter & Gamble

Company Descriptions p. 56


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Relative Performance Indices⎯Since Inception

Exhibit 4. CIBC World Markets Recommended Stock Lists

Sector

Outperformer Sector Outperformer

Ex SRSSpecial Research

SeriesS&P 500 Absolute

Since Inception date: 5895.2% 4483.1% 12194.3% 1100.7%

Calendar Year: 1976 24.4% 18.0% 62.0% 19.1% 1977 (0.6) (6.4) 17.1 (1.5) 1978 13.3 8.5 29.5 1.1 1979 23.8 19.9 34.5 12.2 1980 33.9 32.3 39.2 26.6 1981 2.4 0.1 9.6 (10.3) 1982 26.5 19.7 51.8 14.8 1983 22.5 17.7 38.9 17.3 1984 1.6 3.5 (3.2) 0.8 1985 31.1 31.5 29.3 26.1 1986 16.1 18.2 13.1 17.8 1987 2.8 (0.3) 3.0 2.1 1988 19.6 14.7 34.6 10.2 1989 29.8 30.7 27.9 27.3 1990 (10.5) (5.3) (18.3) (6.6) 1991 39.3 39.2 37.0 26.3 1992 11.1 5.8 22.1 4.5 1993 14.4 17.3 8.9 7.1 1994 (1.6) (3.7) 2.6 (1.5) 1995 38.2 41.5 29.5 34.1 1996 26.8 26.2 30.2 20.3 1997 27.9 31.1 14.3 31.0 1998 (1.9) 2.9 (6.2) 26.4 1999 61.2 53.0 35.3 19.8 2000 (4.7) (4.8) (2.7) (10.1) 2001 (1.1) (2.2) 4.4 (13.0) 2002 (25.2) (22.1) (24.2) (23.6) 2003 55.0 60.2 47.6 22.2 2004 17.0 21.0 6.2 9.0 2005 YTD* (3.0) (3.3) (2.0) (2.3)

* Based on index data till 1/14/2005

Prior to 1990, the Special Research Series (SRS) annual reflects performance through the last Friday of the year. Beginning in 1990, the SRS annual results are stated on a calendar year basis, except the Since Inception Date numbers, which reflect the cumulative results compounded annually since July 1975. Beginning in June 2002, the S&P 500, rather than the S&P industrials, was used as the benchmark. Note: These results cannot and should not be viewed as an indicator of future performance. See additional disclosures related to this performance record at the end of the report. To find SRS updates or copies of previous issues, visit us on the Web at http://www.cibcwm.com/research/usequities. Source: CIBC World Markets


8

Relative Performance Indices—Past 12 Months

Exhibit 5. CIBC World Markets Recommended Stock Lists

Unweighted Indices Date

Sector Outperformer

Sector Outperformer Ex SRS

Special Research Series

S&P 500 Absolute Sector Outperformer SRS

07/14/75 100.0 100.0 100.0 100.0 94 13

01/09/04 5487.5 4101.0 11995.1 1137.1 203 5201/16/04 5619.2 4211.6 12269.1 1155.3 213 5201/23/04 5656.2 4227.9 12462.4 1157.1 217 5201/30/04 5570.6 4164.6 12312.4 1146.5 223 52

02/06/04 5615.4 4203.6 12388.2 1158.3 215 5102/13/04 5684.8 4260.6 12536.8 1161.4 216 5102/20/04 5635.3 4225.0 12451.1 1159.7 215 5302/27/04 5688.5 4271.1 12523.2 1160.5 218 53

03/05/04 5815.2 4377.6 12696.1 1172.6 218 5203/12/04 5608.4 4210.9 12360.6 1135.8 216 5203/19/04 5581.5 4191.1 12298.1 1124.9 221 5203/26/04 5583.4 4199.3 12259.9 1123.2 226 53

04/02/04 5867.1 4409.6 12915.0 1157.4 228 5304/08/04 5869.9 4410.2 12929.6 1154.8 227 5304/16/04 5740.3 4312.2 12639.5 1150.1 227 5104/23/04 5806.2 4363.6 12796.7 1156.1 229 5204/30/04 5460.8 4083.1 12192.9 1122.4 227 4905/07/04 5393.7 4038.7 11973.8 1113.7 223 4905/14/04 5286.4 3947.4 11851.9 1110.6 225 4905/21/04 5310.8 3972.1 11837.9 1108.5 229 5005/28/04 5529.3 4140.5 12271.8 1135.9 231 5006/04/04 5509.9 4132.2 12161.4 1137.8 231 5006/10/04 5497.7 4128.6 12074.3 1152.0 231 5006/18/04 5491.7 4125.2 12050.2 1150.5 231 5006/25/04 5589.9 4207.5 12187.0 1149.9 232 5007/02/04 5539.5 4162.0 12158.1 1140.7 231 5007/09/04 5389.9 4051.3 11811.2 1128.0 233 5007/16/04 5267.8 3965.1 11485.0 1116.4 229 5007/23/04 5116.2 3852.9 11142.0 1101.0 229 5007/30/04 5203.6 3926.8 11244.3 1116.7 234 50

08/06/04 4926.2 3719.3 10625.6 1078.5 233 5008/13/04 4871.1 3675.3 10532.5 1079.3 234 5008/20/04 5145.9 3890.7 11033.1 1113.3 236 5308/27/04 5167.5 3905.3 11096.4 1122.9 237 5309/03/04 5174.0 3920.1 11011.4 1128.8 239 5309/10/04 5313.3 4035.6 11209.4 1139.2 239 5309/17/04 5387.1 4088.9 11383.0 1143.9 242 5209/24/04 5386.8 4093.1 11341.7 1125.2 243 5210/01/04 5528.9 4208.2 11566.6 1146.9 246 5110/08/04 5498.3 4198.6 11344.8 1137.4 246 4910/15/04 5406.4 4129.8 11140.7 1123.3 242 4910/22/04 5457.4 4173.9 11185.0 1110.7 240 4710/29/04 5591.2 4276.9 11451.8 1145.6 237 4711/05/04 5784.8 4423.6 11863.0 1182.1 233 4511/12/04 5921.6 4526.3 12165.2 1200.3 234 4511/19/04 5914.8 4522.2 12128.5 1186.3 237 4811/26/04 6011.5 4595.5 12334.9 1198.8 239 4812/03/04 6085.5 4657.7 12424.6 1207.4 239 4812/10/04 5985.6 4570.0 12340.3 1204.2 239 4812/17/04 6070.5 4645.9 12393.2 1210.5 242 4812/23/04 6132.5 4699.7 12450.4 1226.6 242 4812/31/04 6182.3 4738.2 12547.9 1228.4 242 4801/07/05 5924.3 4532.0 12115.6 1202.3 240 4701/14/05 5995.2 4583.1 12294.3 1200.7 238 46 YTD % Chg -3.0 -3.3 -2.0 -2.3 Since Inception % Chg 5895.2 4483.1 12194.3 1100.7 Note: These results cannot and should not be viewed as an indicator of future performance. Source: CIBC World Markets


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Portfolio Strategy Politics played a major role in 2004 uncertainty, ranging from the U.S. election and European integration issues to political changes in fast growing India and China—not to mention the war in Iraq and Israeli/Palestinian tensions. Early in its second term, the U.S. administration is making a quick start to mend fences.

Fundamentals should now prevail. Central banks in the Americas and Asia (except Japan) have been raising rates moderately. We see growth leadership from the U.S. and Asia, even post-tsunami, with Europe and Japan weak. Current mid-cycle markets have likely already incorporated global cyclical recovery, making 2005 different from 2002 to 2004. This more quality-driven phase is likely of bifurcation of earnings delivery, increased favor for ability to increase market share⎯ with moderating global growth (according to the IMF from 5% in 2004 to 4% in 2005). We expect quality of delivery to be preferred over style (growth versus value) or size (large-cap versus small/mid-cap) investment tilts. Unlike in 2002-2004 when our earnings estimates were above consensus, our earnings estimates in early 2005 are below consensus for the S&P 500 for both the upcoming year and subsequent year (2006). We expect a quality-based investment scenario to flourish until an earnings peak of mid-2006 comes into focus when a more defensive stance could develop.

Bond yield movements are likely to be more important now, with global flattening of yield curves. The Federal Reserve in its December 2004 minutes, reiterated continued moderate rate hikes toward neutrality. Our equity risk premiums, which calculated using internal rates of return on consensus dividend forecasts versus 10-year T-bonds yields, are now neutral. Equity risk premiums that ranged between reactively high 300-400 bp levels in 2003 (after peaking at 650 bps in deflation fearing October 2002) have now declined to 150-250 bp levels with the S&P 500 close to fair value of 1250.

Our 12- to 18-month S&P 500 fair value target of 1250 is based on a target multiple of 18X–20X, with an earnings peak expected in mid-2006 and moderate declines thereafter. High risk-premiums, (or accentuated risk aversion) during 2002-2004, indicated a propensity for cyclical tilts. Negative risk premiums (or a pricing mismatch), such as in 1987 or 2000, would favor aggressive defensiveness. We expect short rates likely to approach neutral at 3% yields, and 10-year T-note yields to approach 5% yield level by year-end 2005. Global recovery appears to be industrial, characterized by a rising industrial component in the U.S., Asian expansion and Europe continuing to lag into 2005. On operating earnings, the current valuation of the S&P 500 is at 18.0X 2004 earnings. Severe contraction is unlikely but could develop if a sharply weaker U.S dollar and/or sharply higher oil prices resulted in an earlier-than-expected earnings peak owing to margin pressures and weaker global growth or resulted in higher bond yields in the U.S. due to capital market disintermediation (as in 1987).

Exhibit 6. Market Targets

January 20th, 2005Lows Of

October 9, 2002 All-time High Market Targets

12-18 Months Forward S&P 500 1,175 777 1,527 (3/00) 1,250 DJIA 10,471 7,286 11,722 (1/00) 11,000 NASDAQ 2,045 1,114 5,048 (3/00) 2,500 Russell 2000 612 327 606 (1/00) 650 MSCI Global 1,131 704 1,448 (3/00) 1,150

Source: Bloomberg, CIBC World Markets

Rationale

Market Target and Key Risks to Market Target


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U.S. Benchmark Portfolio Variance appears stark even within industries with price power limited in both goods and in services. Oscillation between growth and value is likely to be ongoing. We would be cautious about potential value traps. We expect intra-industry operational lags, as can be seen in staples segments, to be penalized and do not expect poor business models to be able to override low P/E valuations, such as in autos. We are overweight healthcare, but to avoid becoming value traps, drugs and services need to embrace restructuring aggressively, like energy in the 1980s and consumer staples in the 1990s. In growth recovery, we favor diversification, as strong execution appears to be dispersed. Our latest favored restructuring is communications to favor strong and niche telecom, cable, media and communication technology. Options expensing does not change our favored dynamics in info tech but does underscore a focus on stronger companies. We selectively like household/food products for continued delivery. Defense has had strong delivery and appears in favorable growth (despite reported U.S. budget cuts). We see continued sharp dollar declines as posing risks to broadening global growth. Instead of a generic theme of multinationals, for our quality execution theme, we favor secular growth stories with relatively strong growth of foreign operations as in Internet retail, luxury goods, electrical and electronic products and semiconductors.

For corporate recovery, we favor overweighting industrials (diversified capital goods, transport, including defense), where earnings growth is likely to expand into 2005. Underweight consumer discretionary sector, we favor media and strong execution retail. Our financials exposure is neutral, as mid-cycle earnings pressures appear less pronounced than in prior cycles, with reduced consumer finance and higher insurance exposure. Radical change appears unlikely to be forced. With the arguable exception of addressing mortgage finance accounting, finance can be expected to be stable. The Fed remains in moderate tightening. We are commodity neutral, favoring value-added volume growth over sharp commodity price gains. With gold and industrial commodity prices relative to oil low, our energy underweight is offset with materials at overweight (including alternate energy like uranium), with gold favored as a risk hedge. Our underweight in utilities reflects that prior excesses are still being worked out, despite earnings and margins recovering in total. With yield curves yet to stabilize and an S&P 500 earnings peak likely only in 2006, defensiveness seems premature.

Exhibit 7. CIBC World Markets Benchmark Portfolio

Actual S&P 500

1/20/2005 CIBC World Markets

U.S. Benchmark Favored Theme Emphasis Big Capitalization: Top 100 By Weight 67% 62% Selective Not Index TiltSmall- To Mid-Capitalization: 33 38 Earnings Gains Potential From Quality 100% 100%

Sector Weightings Materials 3.1% 3.5% Gold, Value-added Industrial Commodities Industrials 11.7 14.5 Aerospace, Defense, Capital Goods, Freight Telecom Services 3.2 4.0 Strong RBOCs, Niche BusConsumer Discretionary 11.8 7.5 Entertainment/Media, Strong Retail Consumer Staples 10.9 7.0 Household, Food And Personal Products Energy 7.3 6.5 Integrateds, Services, Oil Production Health Care 12.8 16.0 Drugs, Medical Devices and selected Services Information Technology 15.6 19.0 Software, Comm. Tech, Select Internet & SemiconductorsUtilities 3.0 2.0 Selective Strong OnlyFinancials 20.7 20.0 Diversified Financials, Asset Management; Insurance 100.0% 100%Source: CIBC World Markets

Commentary


11

SRS Focus List By Market Capitalization

Exhibit 8.

P/E Ratio on Small-/Mid Cap Stocks (Less than $6.0bn) $

Mkt Cap ($ bn) EPS 2004 E

EPS 2005 E

EPS 2006 E 2004 2005 2006

Ind. Div. (%) Yld.

Book Value (%) ROE

Small Cap: (Under $1.5bn) Health Care ILE ISOLAGEN INC US 0.2 (0.69) (0.45) Na NM NM Na - - 1.8 NA Health Care DOVP DOV PHARMACEUTICAL INC US 0.3 (1.81) (1.45) Na NM NM Na - - 2.0 NA Industrials ABCO ADVISORY BOARD CO US 0.6 1.06 A 1.24 1.40 34.5 29.5 26.1 - - 5.2 17.4 Telecom PGI PREMIERE GLOBAL SERVICES US 0.7 0.61 0.70 Na 15.5 13.5 Na - - 3.3 22.0 Cons Stap CENT CENTRAL GARDEN & PET CO US 0.8 1.99 A 2.48 2.75 20.2 16.2 14.6 - - 21.7 8.0 Info Tech MSCC MICROSEMI CORP US 0.9 0.35 A 0.61 Na 41.8 24.0 Na - - 3.0 3.6 Cons Stap JAH JARDEN CORP US 1.3 2.24 2.80 Na 20.8 16.7 Na - - 8.9 22.8 Health Care LPNT LIFEPOINT HOSPITALS INC US 1.5 2.09 2.36 Na 18.3 16.2 Na - - 12.3 16.6

Mid Cap: $1.5 bn to $6.0 bn Health Care PDLI PROTEIN DESIGN LABS INC US 1.9 (0.51) (0.49) Na NM NM Na - - 4.5 NA Cons Disc FOSL FOSSIL INC US 2.0 1.25 1.51 Na 22.4 18.5 Na - - 6.1 18.0 Cons Disc AEOS AMERN EAGLE OUTFITTERS INC US 3.6 2.83 3.30 Na 17.3 14.8 Na 0.24 0.5 11.1 12.6 Financials AC ALLIANCE CAP MGMT HLDG -LP US 3.3 2.36 2.85 Na 17.6 14.6 Na 2.74 6.6 15.7 12.1 Health Care PHS PACIFICARE HEALTH SYSTEMS US 5.0 3.19 3.95 5.00 18.4 14.9 11.8 - - 21.8 15.5 Info Tech CMVT COMVERSE TECHNOLOGY INC US 4.4 0.29 0.52 Na 76.8 42.8 Na - - 8.7 6.0 Telecom CTL CENTURYTEL INC US 4.5 2.37 2.33 Na 14.0 14.3 Na 0.23 0.7 25.1 10.0 Info Tech CHKP CHECK POINT SOFTWARE TECHN US 6.0 1.07 A 1.21 1.33 22.4 19.8 18.0 - - 6.3 16.0

P/E Ratio on Large Cap Stocks (Greater than $6.0bn) $

Mkt Cap ($ bn)

EPS 2004 E

EPS 2005 E

EPS 2006 E 2004 2005 2006

Ind. Div.

(%) Yld.

Book Value (%) ROE

Info Tech AUO AU OPTRONICS CORP -ADR US 6.9 1.92 1.20 Na 7.3 11.7 Na 0.35 2.5 8.2 18.0 Materials CCO CAMECO CORPORATION C 7.3 1.13 1.71 Na 37.2 24.6 Na 0.20 0.5 33.1 6.4 Info Tech ACS AFFILIATED COMP SVCS -CL A US 7.1 2.61 A 3.13 3.61 21.2 17.6 15.3 - - 19.8 14.7 Industrials CTAS CINTAS CORP US 7.4 1.58 1.76 2.06 27.3 24.5 20.9 0.29 0.7 11.9 15.3 Materials PDG PLACER DOME INC US 7.8 0.52 0.70 Na 34.4 25.5 Na 0.10 0.6 6.4 7.0 Industrials LLL L-3 COMMUNICATIONS HLDGS INC US 8.0 3.34 4.00 Na 20.8 17.4 Na 0.40 0.6 27.8 12.3 Info Tech KLAC KLA-TENCOR CORP US 8.5 1.21 A 2.26 Na 35.9 19.2 Na - - 13.4 1.0 Info Tech BRCM BROADCOM CORP -CL A US 10.5 1.21 1.05 Na 26.4 30.4 Na - - 4.8 18.0 Cons Disc BBBY BED BATH & BEYOND INC US 12.4 1.61 1.89 Na 25.5 21.7 Na - - 7.7 22.0 Energy TLM TALISMAN ENERGY INC C 13.7 7.84 * 8.78 * Na 4.6 ** 4.1 ** Na 0.30 0.8 13.2 14.5 Info Tech SYMC SYMANTEC CORP US 15.2 0.59 A 0.86 1.05 40.7 28.0 22.9 - - 3.7 19.5 Materials AL ALCAN INC US 14.2 2.45 3.05 Na 15.8 12.7 NA 0.60 1.6 28.7 6.6 Health Care TEVA TEVA PHARM INDS -ADR US 17.4 1.43 1.64 Na 19.5 17.0 NA 0.20 0.7 2.9 24.0 Industrials GD GENERAL DYNAMICS CORP US 20.2 6.05 6.75 Na 16.7 14.9 NA 1.44 1.4 33.6 18.6 Industrials LMT LOCKHEED MARTIN CORP US 24.4 2.77 3.40 Na 19.9 16.2 NA 1.00 1.8 15.9 17.0 Info Tech AMAT APPLIED MATERIALS INC US 26.8 0.83 A 0.68 Na 19.2 23.5 NA - - 5.4 5.7 Health Care BSX BOSTON SCIENTIFIC CORP US 28.1 1.63 2.05 Na 20.4 16.2 NA - - 4.7 35.0 Industrials EMR EMERSON ELECTRIC CO US 27.7 2.98 A 3.50 3.90 22.2 18.9 16.9 1.66 2.5 16.6 NA Cons Stap G GILLETTE CO US 44.4 1.67 1.92 2.15 26.8 23.3 20.8 0.65 1.5 2.3 48.0 Info Tech SAP SAP AG -ADR US 49.7 1.30 1.47 Na 30.3 26.8 Na 0.24 0.6 3.3 14.9Info Tech HPQ HEWLETT-PACKARD CO US 58.3 1.34 A 1.58 Na 14.9 12.7 Na 0.32 1.6 12.2 10.8 Financials MWD MORGAN STANLEY US 59.6 3.91 A 4.65 5.23 14.0 11.8 10.5 1.08 2.0 25.0 17.1 Cons Disc CMCSA COMCAST CORP US 72.6 0.36 0.64 1.02 91.2 51.3 32.2 - - 16.9 NA Health Care AMGN AMGEN INC US 79.8 2.47 2.83 Na 25.4 22.2 Na - - 15.0 17.0 Cons Disc TWX TIME WARNER INC US 85.0 0.67 0.80 Na 27.7 23.2 Na - - 12.4 NA Cons Disc HD HOME DEPOT INC US 90.6 2.26 2.52 Na 18.2 16.4 Na 0.34 0.8 10.0 20.2 Telecom VZ VERIZON COMMUNICATIONS US 100.4 2.52 2.58 Na 14.4 14.1 Na 1.54 4.2 12.6 20.3 Info Tech CSCO CISCO SYSTEMS INC US 120.9 0.76 A 0.90 1.03 24.2 20.4 17.8 - - 3.6 4.0 Health Care JNJ JOHNSON & JOHNSON US 185.4 3.07 3.38 Na 20.4 18.5 Na 1.14 1.8 8.7 23.8 Industrials GE GENERAL ELECTRIC CO US 373.5 1.57 1.80 2.00 22.6 19.7 17.8 0.88 2.5 9.3 23.7* Cash Flow Per Share ** Price To Cash. Note: some EPS estimates represents midpoint of range. Estimates for companies with fiscal year ending through May are shown under prior calendars year. Table shows latest SRS composition as of January 21, 2005. See important disclosure footnotes at the end of the report. Source: CIBC World Markets.


12

SRS Focus List⎯Valuation Summary

Exhibit 9.

Earnings Per Share P/E Ratios Relative 2004Symbol Company Name $

1/20/05 Price 2004E 2005E 2006 E 2004 2005 2006 Ind. DIV (%) YLD

Book Value

ROE(%) BV ROE

ABCO ADVISORY BOARD CO US 36.52 1.06 A 1.24 1.40 34.5 29.5 26.1 - - 5.2 17.4 1 70 AC ALLIANCE CAP MGMT HLDG -LP US 41.49 2.36 2.85 Na 17.6 14.6 NA 2.74 6.6 15.7 12.1 4 49 ACS AFFILIATED COMP SVCS -CL A US 55.21 2.61 A 3.13 3.61 21.2 17.6 15.3 - - 19.8 14.7 5 59 AEOS AMERN EAGLE OUTFITTERS INC US 48.84 2.83 3.30 Na 17.3 14.8 NA 0.24 0.5 11.1 12.6 3 51 AL ALCAN INC US 38.59 2.45 3.05 Na 15.8 12.7 NA 0.60 1.6 28.7 6.6 8 27 AMAT APPLIED MATERIALS INC US 15.95 0.83 A 0.68 Na 19.2 23.5 NA - - 5.4 5.7 1 23 AMGN AMGEN INC US 62.82 2.47 2.83 Na 25.4 22.2 NA - - 15.0 17.0 4 69 AUO AU OPTRONICS CORP -ADR US 13.99 1.92 1.20 Na 7.3 11.7 NA 0.35 2.5 8.2 18.0 2 73 BBBY BED BATH & BEYOND INC US 41.00 1.61 1.89 Na 25.5 21.7 NA - - 7.7 22.0 2 89 BRCM BROADCOM CORP -CL A US 31.96 1.21 1.05 Na 26.4 30.4 NA - - 4.8 18.0 1 73 BSX BOSTON SCIENTIFIC CORP US 33.25 1.63 2.05 Na 20.4 16.2 NA - - 4.7 35.0 1 141 CCO CAMECO CORPORATION C 42.07 1.13 1.71 Na 37.2 24.6 NA 0.20 0.5 33.1 6.4 9 26 CENT CENTRAL GARDEN & PET CO US 40.16 1.99 A 2.48 2.75 20.2 16.2 14.6 - - 21.7 8.0 6 32 CHKP CHECK POINT SOFTWARE TECHN US 23.94 1.07 A 1.21 1.33 22.4 19.8 18.0 - - 6.3 16.0 2 65 CMCSA COMCAST CORP US 32.83 0.36 0.64 1.02 91.2 51.3 32.2 - - 16.9 NA 5 NA CMVT COMVERSE TECHNOLOGY INC US 22.27 0.29 0.52 Na 76.8 42.8 NA - - 8.7 6.0 2 24 CSCO CISCO SYSTEMS INC US 18.36 0.76 A 0.90 1.03 24.2 20.4 17.8 - - 3.6 4.0 1 16 CTAS CINTAS CORP US 43.06 1.58 1.76 2.06 27.3 24.5 20.9 0.29 0.7 11.9 15.3 3 62 CTL CENTURYTEL INC US 33.22 2.37 2.33 Na 14.0 14.3 NA 0.23 0.7 25.1 10.0 7 40 DOVP DOV PHARMACEUTICAL INC US 16.31 (1.81) (1.45) Na NM NM NA - - 2.0 NA 1 NA EMR EMERSON ELECTRIC CO US 66.07 2.98 A 3.50 3.90 22.2 18.9 16.9 1.66 2.5 16.6 NA 5 NA FOSL FOSSIL INC US 28.00 1.25 1.51 Na 22.4 18.5 NA - - 6.1 18.0 2 73 G GILLETTE CO US 44.74 1.67 1.92 2.15 26.8 23.3 20.8 0.65 1.5 2.3 48.0 1 194 GD GENERAL DYNAMICS CORP US 100.88 6.05 6.75 Na 16.7 14.9 NA 1.44 1.4 33.6 18.6 9 75 GE GENERAL ELECTRIC CO US 35.33 1.57 1.80 2.00 22.5 19.6 17.7 0.88 2.5 9.3 23.7 3 96 HD HOME DEPOT INC US 41.24 2.26 2.52 Na 18.2 16.4 NA 0.34 0.8 10.0 20.2 3 81 HPQ HEWLETT-PACKARD CO US 20.03 1.34 A 1.58 Na 14.9 12.7 NA 0.32 1.6 12.2 10.8 3 44 ILE ISOLAGEN INC US 7.35 (0.69) (0.45) Na NM NM NA - - 1.8 NA 0 NA JAH JARDEN CORP US 46.63 2.24 2.80 Na 20.8 16.7 NA - - 8.9 22.8 2 92 JNJ JOHNSON & JOHNSON US 62.48 3.07 3.38 Na 20.4 18.5 NA 1.14 1.8 8.7 23.8 2 96 KLAC KLA-TENCOR CORP US 43.42 1.21 A 2.26 Na 35.9 19.2 NA - - 13.4 1.0 4 4 LLL L-3 COMMUNICATIONS HLDGS INC US 69.57 3.34 4.00 Na 20.8 17.4 NA 0.40 0.6 27.8 12.3 8 50 LMT LOCKHEED MARTIN CORP US 55.06 2.77 3.40 Na 19.9 16.2 NA 1.00 1.8 15.9 17.0 4 69 LPNT LIFEPOINT HOSPITALS INC US 38.19 2.09 2.36 Na 18.3 16.2 NA - - 12.3 16.6 3 67 MSCC MICROSEMI CORP US 14.62 0.35 A 0.61 Na 41.8 24.0 NA - - 3.0 3.6 1 15 MWD MORGAN STANLEY US 54.82 3.91 A 4.65 5.23 14.0 11.8 10.5 1.08 2.0 25.0 17.1 7 69 PDG PLACER DOME INC US 17.88 0.52 0.70 Na 34.4 25.5 NA 0.10 0.6 6.4 7.0 2 28 PDLI PROTEIN DESIGN LABS INC US 19.42 (0.51) (0.49) Na NM NM NA - - 4.5 NA 1 NA PGI PREMIERE GLOBAL SERVICES US 9.45 0.61 0.70 Na 15.5 13.5 NA - - 3.3 22.0 1 89 PHS PACIFICARE HEALTH SYSTEMS US 58.82 3.19 3.95 5.00 18.4 14.9 11.8 - - 21.8 15.5 6 63 SAP SAP AG -ADR US 39.36 1.30 A 1.47 2.50 30.3 26.8 15.7 0.24 0.6 3.3 14.9 1 60 SYMC SYMANTEC CORP US 24.04 0.59 A 0.86 1.05 40.7 28.0 22.9 - - 3.7 19.5 1 79 TEVA TEVA PHARM INDS -ADR US 27.92 1.43 1.64 Na 19.5 17.0 NA 0.20 0.7 2.9 24.0 1 97 TLM TALISMAN ENERGY INC C 35.70 7.84 * 8.78 * Na 4.6 ** 4.1 ** NA 0.30 0.8 13.2 14.5 4 58 TWX TIME WARNER INC US 18.55 0.67 0.80 Na 27.7 23.2 NA - - 12.4 NA 3 NA VZ VERIZON COMMUNICATIONS US 36.27 2.52 2.58 Na 14.4 14.1 NA 1.54 4.2 12.6 20.3 3 82 * Cash Flow Per Share ** Price To Cash. Note: some EPS estimates represents midpoint of range. Estimates for companies with fiscal year ending through May are shown under prior calendars year. Table shows latest SRS composition as of January 21, 2005. See important disclosure footnotes at the end of the report. Source: CIBC World Markets


13

SRS Focus List—Pricing Summary

Exhibit 10.

Price Performance (%) Recommended 52 Week Recomm. Date Absolute (%)

Symbol Company Name $ (Mil)

Shares (Bil)

Mkt Cap Date Price1/20/05

Price High Low Abs (%) Rel (100) 12 Mth 6 Mth 3 Mth 1Mth ABCO ADVISORY BOARD CO US 19.4 0.6 02/18/04 38 37 40 30 (2) 95 7 18 19 0 AC ALLIANCE CAP MGMT HLDG -LP US 81.3 3.3 02/18/04 39 41 42 31 8 105 8 20 11 3 ACS AFFILIATED COMP SVCS -CL A US 131.4 7.1 02/18/04 51 55 61 46 11 108 0 3 (1) (5)AEOS AMERN EAGLE OUTFITTERS INC US 74.2 3.6 11/19/04 42 49 51 18 17 116 164 67 25 10 AL ALCAN INC US 368.4 14.2 02/18/04 47 39 47 33 (1) 96 (6) 7 (6) (9)AMAT APPLIED MATERIALS INC US 1,703.0 26.8 09/08/03 22 16 25 15 (25) 65 (34) (8) (1) (5)AMGN AMGEN INC US 1,325.0 79.8 11/06/03 61 63 67 52 4 93 (0) 10 11 (0)AUO AU OPTRONICS CORP -ADR US 465.9 6.9 04/20/04 25 14 27 10 (45) 53 5 12 18 1 BBBY BED BATH & BEYOND INC US 307.6 12.4 11/19/04 43 41 44 34 (4) 96 3 15 5 6 BRCM BROADCOM CORP -CL A US 342.6 10.5 08/19/04 31 32 47 25 4 96 (23) (14) 13 3 BSX BOSTON SCIENTIFIC CORP US 861.0 28.1 01/20/05 33 33 46 31 Na Na (11) (4) (8) (6)CCO CAMECO CORPORATION C 170.1 7.3 11/19/04 37 42 43 19 13 112 85 60 27 5 CENT CENTRAL GARDEN & PET CO US 19.6 0.8 10/22/04 32 40 42 26 24 116 26 29 28 (2)CHKP CHECK POINT SOFTWARE TECHN US 258.3 6.0 02/18/04 24 24 27 16 (3) 94 11 9 15 (1)CMCSA COMCAST CORP US 2,255.0 72.6 04/20/04 30 33 36 26 11 106 (8) 16 16 5 CMVT COMVERSE TECHNOLOGY INC US 202.0 4.4 06/22/04 19 22 25 15 21 116 12 27 13 (7)CSCO CISCO SYSTEMS INC US 6,773.0 120.9 10/22/04 18 18 29 18 2 95 (36) (16) (1) (4)CTAS CINTAS CORP US 172.7 7.4 04/20/04 47 43 48 40 (7) 88 (5) (2) 3 (1)CTL CENTURYTEL INC US 135.7 4.5 09/24/04 34 33 36 26 (1) 93 5 7 (2) (4)DOVP DOV PHARMACEUTICAL INC US 21.3 0.3 11/19/04 18 16 20 12 (11) 88 23 20 (5) (10)EMR EMERSON ELECTRIC CO US 421.8 27.7 08/19/04 62 66 71 56 10 101 (2) 8 6 (5)FOSL FOSSIL INC US 74.5 2.0 11/19/04 26 28 32 18 5 104 42 12 (0) 19 G GILLETTE CO US 1057.7 44.4 01/20/05 45 45 46 35 Na Na 22 8 13 1 GD GENERAL DYNAMICS CORP US 201.9 20.2 09/24/04 99 101 110 85 2 96 8 3 3 (6)GE GENERAL ELECTRIC CO US 10,600.0 373.5 08/19/04 33 35 38 29 9 101 6 6 6 (5)HD HOME DEPOT INC US 2,250.0 90.6 08/19/04 36 41 44 32 15 106 18 21 4 (1)HPQ HEWLETT-PACKARD CO US 3,081.0 58.3 11/19/04 20 20 26 16 (1) 99 (20) 0 10 (5)ILE ISOLAGEN INC US 34.1 0.2 06/22/04 10 7 12 6 (28) 69 26 (15) (16) (7)JAH JARDEN CORP US 28.0 1.3 02/18/04 33 47 47 30 41 137 37 32 39 12 JNJ JOHNSON & JOHNSON US 2,968.1 185.4 01/20/05 63 62 64 49 Na Na 21 11 9 (1)KLAC KLA-TENCOR CORP US 200.0 8.5 11/19/04 46 43 63 35 (3) 97 (31) 3 4 (5)LLL L-3 COMMUNICATIONS HLDGS INC US 115.2 8.0 11/19/04 70 70 77 49 0 100 37 14 11 (8)LMT LOCKHEED MARTIN CORP US 441.4 24.4 09/24/04 54 55 62 43 4 98 9 - 4 (7)LPNT LIFEPOINT HOSPITALS INC US 38.7 1.5 04/20/04 33 38 39 27 15 110 5 (1) 29 13 MSCC MICROSEMI CORP US 62.6 0.9 10/06/03 9 15 19 9 70 148 3 17 (4) (14)MWD MORGAN STANLEY US 1,097.0 59.6 07/22/04 48 55 63 47 17 108 (8) 13 15 2 PDG PLACER DOME INC US 413.5 7.8 02/18/04 17 18 24 13 2 100 7 6 (15) (4)PDLI PROTEIN DESIGN LABS INC US 95.2 1.9 06/22/04 18 19 28 15 10 105 2 21 5 1 PGI PREMIERE GLOBAL SERVICES US 72.0 0.7 02/18/04 10 9 12 7 (2) 95 (11) (20) 2 (16)PHS PACIFICARE HEALTH SYSTEMS US 94.5 5.0 12/03/03 34 59 62 29 80 163 71 64 71 8 SAP SAP AG -ADR US 1,244.0 49.7 09/24/04 39 39 46 35 6 99 (7) (0) (5) (10)SYMC SYMANTEC CORP US 736.5 15.2 10/22/04 30 24 34 18 (19) 75 28 12 (12) (0)TEVA TEVA PHARM INDS -ADR US 560.0 17.4 01/20/05 28 28 35 23 Na Na (5) (13) 13 (5)TLM TALISMAN ENERGY INC C 384.0 13.7 05/20/04 27 36 37 24 31 121 40 14 6 7 TWX TIME WARNER INC US 4,701.0 85.0 10/22/04 16 19 20 15 15 107 1 8 14 (4)VZ VERIZON COMMUNICATIONS US 2,803.0 100.4 11/19/04 41 36 42 34 (11) 89 (3) 4 (9) (11) Note: some EPS estimates represents midpoint of range. Estimates for companies with fiscal year ending through May are shown under prior calendars year. Table shows latest SRS composition as of January 21, 2005. See important disclosure footnotes at the end of the report. Source: CIBC World Markets


14

SRS Focus List Company Commentary By Sector

Consumer Discretionary

American Eagle Outfitters Dorothy S. Lakner 212-667-7255 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthAEOS 48.84 41.78 2.83 3.30 17.26 14.80 0.24 0.49 11.06 12.60 51.4 17.5 164.4 66.6 25.4 9.6 11/19/04 Source: Bloomberg and CIBC World Markets

American Eagle Outfitters had an unprecedented December 2004, with 32.8% comps far exceeding our 18% estimate, driven by a fashion right mix, a solid key item presentation and a strong value message, resulting in lower levels of promotional activity that in turn led to strong full-priced selling. In addition to reporting very positive sales and earnings, AEOS initiated a quarterly dividend, given its strong balance sheet that can also fund internal growth.

As a result of the strong sales and margins in December, we raised our 4Q EPS to $1.30-$1.31 from $1.08-$1.10 and vs. $0.57 in the year-ago quarter. In our view, the AE story has more room to run in 2005, with still easy comps in 1H05 and gross margin benefits from ProfitLogic still to come. With Bluenotes gone, management will likely concentrate on the core business and the new concept still to be announced. We believe AEOS's operating margin will continue to rebound or perhaps exceed its peak of 18% within the next few years.

New concept should further growth, but we believe AE itself still has room to grow. In addition to taking market share from other teen players this fall and holiday, management plans to announce another concept soon, which should enable AEOS to extend its growth in the longer term. AEOS itself has more room to grow, in our view, particularly with the new test of intimates and beauty stores, as well as the expansion of those high-margin categories within existing AEOS stores.

Our 12- to 18-month price target of $56 is based on a multiple of 17X our 2005 EPS estimate of $3.30, above the stock’s five-year median multiple of about 15X, owing to the strong momentum of the business in both men’s and women’s apparel. Although the teen landscape remains competitive, we believe AEOS will continue to take market share into 2005 as the company appears to be hitting its stride in effectively targeting its 20-year-old consumer with the right fashions at value prices, as indicated by the powerful sales and margins it has been generating, leading to upward revisions to estimates that could continue.

Potential risks to our price target include company-specific problems such as fashion risk and other merchandising issues including inventory, risks related to other concepts, competitive risk within the teen retail segment, economic risks including declines in consumer spending and stock market risk.

Rationale

Price Target Calculation and Key Risks to Price Target


15

Bed Bath and Beyond Peter S. Benedict 212-667-8335 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthBBBY 41.00 42.80 1.61 1.89 25.47 21.69 - - 7.70 22.00 44.4 33.9 3.5 14.8 4.9 5.8 11/19/04 Source: Bloomberg and CIBC World Markets

Although we would prefer stronger top-line trends, a 3.1% comp is not exactly poor, given the tough HF environment. BBBY continues to deliver strong bottom-line results. With the buyback program poised to further enhance shareholder value, we reiterate SO.

BBBY's 3Q/04 EPS of $0.40 (up 20% year over year) exceeded our and the Street estimate of $0.39. Stronger-than-expected gross margin expansion and SG&A leverage more than offset a below-plan top-line (11% revenue growth vs. our 13% estimate) to deliver the upside surprise.

Comp gain of 3.1% was at low end of 3%-5% plan, although hurricanes, BBBY's unwillingness to match aggressive promotional environment and delayed store openings clearly affected the top line. The key highlight on call was the $350 million repurchase authorization (expected completion within 12 months).

Management backed $0.55 for 4Q EPS, $1.61 for 2004 and $1.89 for 2005. While our 4Q/04 estimate remains $0.55, we raised our 2004 estimate to $1.61 from $1.59 (3Q upside, rounding). Our 2005 estimate rises to $1.89 from $1.88 to reflect about $0.01 net accretion from buyback program next year.

Our $50 target reflects a P/E of about 26.5X (a 1.34X PEG ratio, in line with the stock’s three-year average of 1.34X) applied to our approximately 20% rate assumption and 2005 EPS estimate of $1.89. Concerns regarding Bed Bath new store productivity could linger as core Bed Bath new store productivity calculations are unlikely to improve much in 2Q04. However, we believe this issue is largely in the stock at current levels, meaning the risk is that the stock trades sideways for a while longer. On the macro front, higher interest rates and a meaningful slowdown in the housing market would likely work against the relative performance of the entire home furnishings retail group, including BBBY.

Comcast Corp. Cannon Carr 212-667-8129 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthCMCSA 32.83 30.27 0.36 0.64 91.19 51.30 - - 16.90 NA 36.5 26.3 (7.9) 15.8 15.8 5.5 4/20/04 Source: Bloomberg and CIBC World Markets

This year should be volatile, as MSO, RBOC and DBS strive to protect mature core businesses while investing for growth in emerging wireless and converged IP. Initial game plans are set, in our view, making 1H05 behavior predictable; the next round in 2H promises higher instability. We expect large-cap cable names with their more convincing game plans (VOIP rollout, wireless resale, better broadband speeds) to outperform DBS and rural cable in 1H05. Our top cable pick remains Comcast.

Rationale


Rationale


16

Our specific 2005 predictions are 1) cable will pursue wireless resale with minor dilution; 2) TelcoTV in current form will fall short by year-end 2005; 3) Comcast will keep VOIP moderate to balance FCF; 4) broadband will remain the key battleground; 5) DBS will revisit its growth strategies during the year.

We expect insight into two key and interrelated events by early February: 1) pace of VOIP rollout and 2) outlook for cap-ex. We do not expect an aggressive VOIP rollout—probably 500,000 in 2005 and shy of 1 million in 2006—which should help balance FCF generation and alleviate RBOC worst fears. We are updating our model to reflect slightly more conservative cap-ex and margin assumptions, but the overall formula is intact: 8% revenue growth, 13% EBITDA growth and 50% FCF growth. Our FCF estimate remains at the high end, but we believe it should be within reach.

We arrived at our $37 price target using a discounted cash flow methodology. We applied a 10X terminal multiple to our 2007 EBITDA estimate of $10.5 billion. We discounted the terminal EBITDA value back to 2004, along with interim free cash flows, using a discount rate of 8.5%. We then subtract net ending-2004 debt and add in other assets/investments to arrive at our price target. We assign a higher terminal multiple and a lower discount rate to Comcast relative to the industry based on our view that Comcast will obtain scale more effectively, garnering a premium valuation over time.

Risks to our investment thesis and price target are: 1) a slower-than-expected rollout of new services (e.g., telephony and VOD), 2) increased penetration by competitive service providers, 3) unfavorable regulatory controls from the government, 4) an unexpected increase in programming costs and 5) unexpected difficulties in integrating AT&T Broadband.

Fossil Inc. Dorothy S. Lakner 212-667-7255 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthFOSL 28.00 26.46 1.25 1.51 22.40 18.54 - - 6.12 18.00 32.4 18.3 42.4 12.1 (0.3) 18.6 11/19/04 Source: Bloomberg and CIBC World Markets

Positives include a strong brand portfolio—including the value-priced Fossil brand and designer labels such as DKNY, Diesel, Burberry and Michele. The recently announced licensing agreement with Adidas-Salomon provides Fossil with a strong and diverse portfolio of brands that span a wide spectrum of price points.

We forecast EPS growth of 15%-20% in the next several years, based on 15%-20% sales and operating income growth, as Fossil continues to build its portfolio of brands.

Inventory concerns appear overblown and retail is showing strength. FOSL's 3Q EPS rose nearly 35% to $0.31 vs. $0.23 on a 22.5% gain in sales, in line with Street estimates. We believe concerns regarding weakness in the core Fossil brand and high inventories are overdone, given new initiatives, new stores, the funding of uptrending businesses and abnormally low levels last year. While Fossil’s 3Q sales declined in U.S. wholesale and in Europe, it was flat to slightly up in the retail stores, a sign to us that the business is stable


Rationale


17

and can rebound. Sales gains in other brands such as Michele and Burberry demonstrate to us the strength of the portfolio, which continue to grow.

Our $33 price target is based on about 22X our new 2005 EPS estimate of $1.51, a multiple roughly in line with the expected growth rate in earnings in the next several years of 20%-30%.

Risks that could prevent Fossil from reaching our price target include significant changes in consumer spending patterns, a downtrend in the fashion watch business, the effects of terrorism, competition in Fossil’s product areas and international risks.

Home Depot Dan Wewer 404-238-9573 Dan [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthHD 41.24 36.40 2.26 2.52 18.25 16.37 0.34 0.82 9.97 20.20 44.3 32.3 17.7 21.2 4.4 (1.3) 8/19/04 Source: Bloomberg and CIBC World Markets

We believe Home Depot is better positioned to improve gross margins in the short term than Lowe’s. HD'S ROIC of 21% is the highest in hardline retail and poised to improve further through the pro business push. HD is targeting rational sq. footage growth of 8.5% (175 stores). Store modernization (enhanced lighting display) and technology investment (upgraded flooring order and measurement system) are key components of the $3.7 billion cap-ex plan, besides new stores.

HD is becoming increasingly dependent on the pro customer. While the ROIC for HD Supply is 200 bps higher, the business is also more cyclical. We believe the planned pilot of a regional DC system by end 2005 is a wise move and will help improve margins, labor productivity and turns in the long term.

Expected results for 4Q and 2004 remain on track. HD reiterated guidance of 5% same-store sales and 20% 2004 EPS growth to $2.26. For 2005, HD estimates 10%-14% EPS growth ($2.49- $2.57). Higher SGA and SSS plan of 4%-7% are key elements. We are reducing our 2005 EPS estimate to $2.52 from $2.57 given the higher expenses.

Our price target of $49 implies a P/E multiple of 19.4X our 2005 EPS estimate of $2.52. We believe a $49 price target and 19.4X multiple is justified, given the comparative P/E multiples of other hardline retail companies.

Key risks to our HD price target include 1) rising interest rates; 2) decelerating growth in existing home sales; 3) tougher same-store sales growth comparisons in 2H04; 4) declining benefit from lumber inflation; 5) growing overlap with competitor stores; 6) pending saturation and weak new store productivity; 7) rising dependency on the cyclical appliance business; and 8) sector rotation out of retailing stocks.


Rationale



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Time Warner Inc. Michael Gallant 212-667-7080 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthTWX 18.55 16.36 0.67 0.80 27.69 23.19 - - 12.37 NA 19.9 15.4 1.0 8.5 13.5 (4.3) 10/22/04 Source: Bloomberg and CIBC World Markets

For TWX, we believe the long-term bear case is overstated, resulting in shares being under-owned institutionally. However, there are plenty of catalysts for 2005 that should lead to peer-group outperformance. Specifically, 1) we believe there is still uncertainly regarding AOL’s long-term outlook, which once settled should lead to upward re-valuations from the present $8-$9 billion to $16 billion, 2) the concerns surrounding the Adelphia (ADELQ-Not Rated) auction will begin to pass as the company likely won’t overpay for subs, 3) the company will begin to return capital and, 4) that estimates remain too low for 2005, particularly if the company begins to buy back stock.

Given the material price appreciation in TWX shares toward year-end 2004, we have some reason for near-term pause. We see three upcoming events that may restrict further appreciation in the near term but should ultimately blow over longer term. Specifically, 1) while we believe management’s discipline regarding the Adelphia auction will be an incremental positive for the stock, increased news flow may restrict upside in the near term, 2) we don’t anticipate the company materially beating consensus EBITDA when it reports 4Q results, as it did the first three quarters of 2004, though should come in ahead given below-the-line items, and 3) we expect management to guide conservatively for 2005, as it has for the past few years.

For 2005, we believe Street estimates are still too low. We are projecting above-consensus EBITDA growth in the double digits and our $0.80 EPS estimate remains 5% ahead of Street estimates. We would add that while our estimate has remained flat, the gap relative to consensus has narrowed as our competitors begin to appreciate the 2004/2005 growth potential at AOL and Cable Networks. In addition, valuation for TWX shares is attractive, in our view, with the stock trading at 9.6X our 2005 EBITDA estimate, a discount to the group average of 10.7X, supported by a peer-leading unlevered free cash flow yield of 5.5% (vs. 4.2% for its peers).

Our $22 price target is based on a sum-of-the-parts analysis, but implies TWX can trade at 11X EBITDA, 28X EPS and 33X fully taxed free cash flow on our 2005 estimates.

The key risks to our price target include 1) high advertising exposure; 2) economic sensitivity in key businesses; 3) film and TV production being capital intensive and inherently risky; and 4) perceived improprieties in the companies corporate image.

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Consumer Staples

Central Garden & Pet Joseph Altobello 212-667-8085 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 A 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthCENT 40.16 31.87 1.99 2.48 20.18 16.19 - - 21.69 8.00 42.0 26.1 26.1 29.3 27.6 (1.7) 10/22/04 Source: Bloomberg, CIBC World Markets

We continue to believe Central Garden & Pet is well-positioned in two demographically attractive categories, with ample consolidation opportunities and the ability to take pricing. At the same time, management has set the bar for FY05 to what we believe is an achievable level, while valuation seems compelling.

CENT announced on January 13 that it had filed a $300 million universal shelf registration. According to the prospectus, proceeds from any future offering would likely be used for such purposes as acquisitions and debt repayment, as well as working capital and capital expenditures.

In its press release, CENT described the filing as "a strategic decision to position the company for internal growth and acquisition initiatives." Hence, we would expect the company to continue on its acquisitive path, which we believe could significantly supplement CENT's organic top- and bottom-line growth and act as a potential catalyst for the stock.

We would expect CENT management to maintain the acquisition discipline it has displayed recently, targeting valuation multiples of roughly 5X-7X EBITDA, or slightly north of this for the right asset.

We arrived at our 12- to 18-month price target of $44 for CENT through our discounted cash flow (DCF) analysis, using a weighted average cost of capital (WACC) of 9.6%, a terminal (FY09) unlevered free cash flow estimate of $87 million and a free cash flow growth rate into perpetuity of 2%.

Risks to the stock achieving our price target include, but are not limited to, weather, acquisition/integration risk, increased raw materials costs, and heightened competition in either the pet or garden products industries.

Gillette Joseph Altobello 212-667-8085 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 A 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthG 44.74 44.89 1.67 1.92 26.79 23.30 0.65 1.45 2.25 48.00 45.7 35.0 22.5 8.5 12.9 0.5 1/20/05 Source: Bloomberg, CIBC World Markets

We expect 2005 to be marked by heightened competitive activity in a number of consumer products categories. In that context, we believe investors will look to what we like to refer to as “fortress franchises”—companies with a dominant and nearly unassailable market position in large and healthy categories.

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Investors’ concerns about a more competitive Schick, a commoditizing alkaline battery market and G’s valuation now appear to us to be sufficiently contained in the near term, while ongoing savings programs should continue to offset rising commodity costs.

Although the shares trade at a premium to the group, this is below the stock’s recent historical average valuation multiple. Further, we believe this premium is justified by G’s competitive positioning and potential earnings upside from the company’s ongoing, and thus far successful, cost savings and streamlining initiatives, which are helping offset rising commodity costs.

Our 12- to 18-month target price for Gillette of $52 is derived from our five-year discounted cash flow valuation, using a weighted average cost of capital of 6.6%, terminal (2009) unlevered free cash flow estimate of $2.6 billion and a residual free cash flow growth rate into perpetuity of 2%.

Risks to the shares’ achieving our target price include, but are not limited to, stiffer competition—particularly in the company’s core blades and razors business—as well as a commoditization in the alkaline battery market and a negative foreign currency impact from a strengthening dollar.

Jarden Corp. Joseph Altobello 212-667-8085 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthJAH 46.63 32.85 2.24 2.80 20.82 16.65 - - 8.93 22.80 47.1 29.9 37.0 31.7 38.5 12.2 2/18/04 Source: Bloomberg, CIBC World Markets

We continue to believe JAH is well-positioned as the dominant player in a number of niche household product categories, characterized by minimal competition, strong free cash flow generation and consistent growth opportunities.

Jarden vice chairman and CFO highlighted two important positive during a recent presentation. First, the company expects to exceed analyst expectations for sales growth in 4Q (we are at $230 million, up 20%, versus the Street's $227 million, up 19%), while hinting that cash flow for the quarter would also be strong. This outperformance should be driven in part by stronger-than-expected top-line results in its Consumer Solutions segment, including the FoodSaver home vacuum packaging product, which has seen increased competition throughout 2004.

Second, management expects first-year cost savings from its previously announced acquisition of American Household (expected to close later this month) to be at the high end of its previously announced range of $10-$20 million. Our current estimate for 2005 implicitly assumes roughly the midpoint of this range. The company will provide partial 4Q and full-year 2004 results (sales and cash flow) at its analyst and investor day in New York City on February 1, followed by more comprehensive results on February 17.

We are temporarily suspending our price target for JAH (was $42); our revised target should be published sometime after the close of the acquisition of American Household, expected in January. We are, however, maintaining our Sector Outperformer rating on the shares. The stock has


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exceeded our prior price target and the magnitude of the acquisition is such that it essentially triples Jarden's size. CIBC World Markets Corp. is acting as financial advisor to Jarden Corp. in connection with its acquisition of American Household.

CIBC World Markets Corp is acting as financial advisor to Jarden Corp. in its acquisition of American Household.


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Energy

Talisman Energy Robert Plexman 416-956-6218 [email protected]

1/20/05 Recommended CFPS CFPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/CF 04 P/CF 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 Mth*TLM 35.70 27.02 7.84 8.78 4.55 4.07 0.30 0.84 13.23 14.50 36.8 23.5 40.2 14.3 5.9 6.6 5/20/04 Source: Bloomberg and CIBC World Markets

Note: All figures for TLM in Canadian dollars.

We favor TLM on account of its strong production per share growth outlook, a solid financial position, the active share buyback program, and the potential for successful exploration news from wells currently drilling in Peru and Colombia, plus wells planned in the North Sea, Southeast Asia, North America (including Alaska in 2006) and Qatar (2005).

TLM appears to be in a position to generate healthy production growth from its portfolio of new projects, and production per share growth from its share buyback program. In addition, there is an active exploration program, which could substantially increase reserves. In contrast some producing companies are cutting back on exploration and development projects, which foster organic production growth, in order to ensure sufficient cash flow to buy back shares.

Operations are strategically focused in politically secure regions where the fiscal regime is stable, financial returns are attractive, and markets are nearby. TLM is targeting for 10% production per share growth in 2005. The company expects combined oil and natural gas production to increase 2%-9% this year. Some 9.0 million shares have been repurchased under the current Normal Course Issue Bid program, which enables the company to acquire up to 19.2 million shares (5%) prior to March 25, 2005. The program is continuing, and TLM expects to complete the program by the deadline.

For TLM, we capitalize estimated 2005 CFPS of $8.78 at 5.1X to reach our $45 price target. The target multiple is appropriate given the prospects for healthy production growth, an active exploration program, which could result in substantial reserve revisions, a highly seasoned and motivated management team, a solid financial position, and a focused asset base.

The stock could fail to meet our price target if commodity prices decline sharply for a prolonged period of time. Further, if the company is unable to achieve target production growth, experiences a much higher cost structure or writes down reserves, our price target would likely not be attained.

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Financials

Alliance Capital Ken Worthington 212-667-6185 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthAC 41.49 38.77 2.36 2.85 17.58 14.56 2.74 6.60 15.67 12.10 42.4 31.5 8.0 20.4 10.6 2.6 2/18/04 Source: Bloomberg, CIBC World Markets

AC announced that total AUM grew 4.7%, to $538 billion from $514 billion, in December. With strong AUM growth in December and management's encouraging statement that AC expected to "substantially exceed" the current Street consensus EPS of $0.64 for 4Q, we raised our estimate from our Street-high $0.67 to $0.73. Our 2004E rose to $2.36 from $2.30; our 2005E increased to $2.85 from $2.73.

We recently increased our estimate for performance fees Alliance likely collected in 4Q to $60 million from $40 million, based on improved 2004 performance across funds. AC is especially well-positioned for outperformance in its international equity and domestic value funds, in our view.

Our $46 price target is approximately 16X our 2005 estimate. There is potential upside here, likely to 17X, but we wait for better visibility from the 4Q EPS release.

We arrive at our $46 price target for AC by capitalizing our 2005 EPS estimate of $2.85 by 16X. As a result of AC’s MLP status, our valuation multiple typically has been a 20% discount to the asset management group, trading now between 18X and 23X 2004E EPS. However, with new regulations in effect that enable long-only mutual fund managers to own MLPs, we suspect this discount will fall. Accordingly, we expect AC will trade closer to a 10% discount rather than is 20% discount in the future.

Risks to the achievement of our price target include, but are not limited to, the following: Alliance Capital has considerable exposure to the equity markets. A prolonged downturn with weak equity valuations and continued fund outflows may negatively affect earnings. Alliance faces numerous competitors in vying for clients and their assets, and if competition increases this may affect Alliance’s ability to meet our earnings estimates. Even if none of the above negative factors arise, our price target may still not be realized because of events pertaining to the company, the equity markets and/or the economic environment in general.

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Morgan Stanley Ken Worthington 212-667-6185 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 A 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthMWD 54.82 47.88 3.91 4.65 14.02 11.79 1.08 1.97 24.98 17.10 62.8 46.5 (8.5) 13.1 14.7 2.2 7/22/04 Source: Bloomberg and CIBC World Markets

Morgan Stanley reported 4Q04 EPS of $1.09 vs. our estimate of $1.00 and Street consensus of $1.01. Weaker-than-anticipated trading revenues were offset by a greater-than-expected compensation true-up. Non-institutional businesses showed some positive growth indications.

Fixed income trading revenues disappointed again, with revenues more than $200 million lower than an already weak 3Q04. Management attributed falling interest rate and credit related trading that was somewhat offset by a strong commodities and FX quarter.

Discover showed continued if modest improvement in its core business drivers with credit balances growing and credit quality continuing to improve. Flat revenues were offset by higher marketing expenses as the business focuses on growth. Retail investor activity is also picking up.

We maintain our Sector Outperformer. We believe that MWD's fixed income trading revenues can deliver in the seasonally stronger 1H05, while its M&A and retail investors are levered favorably to developing industry trends. We increased our price target to $66 (from $65) on higher EPS estimates.

We arrive at $66 our price target primarily using a price earnings multiple of 14.2X on our expectation of 2005 earnings per share of $4.65. This multiple is below MWD’s five-year median of 15.4X, which we believe to be appropriate given that the entire broker sector is moving out of a period of record fixed income trading revenues driving strong growth.

Risks to the achievement of our price target include adverse developments surrounding MWD’s capital markets exposure, increased competition and airline industry exposure. MWD is also the subject of legal and regulatory investigations and litigation, the outcome of which is still uncertain; it could have a negatively effect.

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Healthcare

Amgen Inc. Matthew Geller 212-667-7034 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthAMGN 62.82 61.16 2.47 2.83 25.43 22.20 - - 14.95 17.00 66.9 52.0 (0.2) 10.2 11.4 (0.2) 11/6/03 Source: Bloomberg, CIBC World Markets

We believe the biotech sector will perform well in 2005. We believe the sector will experience strong leadership, as positive results from targeted therapies translate into growing revenues. The fundamentals for virtually all of the large-cap companies, excluding Chiron (CHIR-Not Rated), were strong in 2004. We believe the strong positive clinical trial data in 2004 will result in strong sales growth in 2005. We could see additional upside surprise in Amgen (AMGN-Sector Outperformer), based on diminishing concerns over changes in reimbursement and increasing enthusiasm over its pipeline.

Beginning in 1Q05, reimbursement rates will be based on average selling price +6%, which we believe will have minimal impact on Amgen’s sales. The December 2004 announcement of the final CMS reimbursement rates reduced concerns over the effect of reimbursement changes for Aranesp, Epogen, and Neupogen/Neulasta on sales. Amgen will conduct an analyst meeting January 27 in New York to discuss the effect of these reimbursement changes on sales, the pipeline, and to give guidance for 2005. We believe this meeting will further ease remaining concerns regarding reimbursement changes.

We believe the pipeline discussion will focus on late-stage products. Kepivance, Amgen’s recently approved drug for chemotherapy-related oral mucositis, is set for pricing and launch in January 2005. We believe AMG-162, in a phase III trial for osteoporosis, is a key potential blockbuster in the AMGN pipeline.

Our 12- to 18-month price target of $69 is based on a multiple of 24.4X applied to our 2005 EPS estimate of $2.83. This multiple is based on a blended average of large-cap profitable biotech companies and large pharmaceutical companies. We believe such a blended growth rate appropriately reflects the market’s valuation of Amgen as a hybrid pharma/biotech stock.

Risks to our price target and investment thesis include poor sales of Amgen’s marketed products, cuts or delays in reimbursement, and litigation with Transkaryotic Therapies (TKTX, Not Rated) regarding its Dynepo version of Amgen’s anemia drug Epogen.

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Boston Scientific John P. Calcagnini 310-446-3694 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthBSX 33.25 33.47 1.63 2.05 20.40 16.22 - - 4.65 35.00 46.1 31.3 (10.6) (4.2) (8.3) (6.3) 1/20/05 Source: Bloomberg and CIBC World Markets .

BSX remains our top large-cap pick. On January 10, BSX announced preliminary revenue for 4Q04 of $1.6 billion, in line with our and the Street estimates. Worldwide coronary stent revenues are expected to be $730 million, with worldwide TAXUS sales of $691 million, exceeding our estimate of $683 million. We remain comfortable with our 2005 EPS estimate of $2.05 per share, which we anticipate is where the company will end up when it gives guidance February 1, 2005. Although market may be concerned regarding U.S. Taxus stent sales being a little light, we will have to wait and see where JNJ’s numbers shake out to see whether they lost market share.

We certainly expected it to lose some share with JNJ adding production capacity, and so far it does not appear that JNJ has had a dramatic impact. We expect that once TAXUS is approved in Japan in 2006, BSX will gain market share, much as it did in the U.S. BSX expects to launch TAXUS Liberte in non-CE Mark countries by the end of January. We expect to learn more about product updates and 2005 financials at the company's February 1 analyst meeting.

Distraction associated with the JNJ/GDT acquisition could also help BSX gain ground during the next two quarters, especially if the Justice Department requires divestitures and there is employee turnover. In any event, we continue to expect that BSX will invest its $4 billion in expected cash over the next few years wisely and would not be surprised to see them become a significant player in ICDs, arterial sealing, AAA grafts, carotid stents and gastroenterology (they already have a major business here, but the disposable flexible scope could be a major catalyst for growth).

Our price target of $56 represents a 28X P/E multiple on our 2005 earnings estimate of $2.05, which is where the company’s large-cap peers Guidant (GDT-NR), Medtronic (MDT-SU) and St. Jude (STJ-SP) currently trade on average of 2005 earnings estimates.

Product recall risk, intellectual property lawsuits and risk of competitive product introductions are also issues ever-present risk in medical device investing. BSX is also the subject of a Department of Justice investigation that could have unknown consequences should an indictment be forthcoming.

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DOV Pharmaceutical Matt Geller 212-667-7034 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthDOVP 16.31 18.39 (1.81) (1.45) NM NM - - 2.03 NA 20.2 11.6 22.5 19.9 (5.2) (9.9) 11/19/04 Source: Bloomberg and CIBC World Markets

We believe the biotech sector will perform well in 2005, and that some of the most substantial upside potential in the sector will be found in the mid- and small-cap stocks, which, despite positive fundamentals, have not yet benefited from the 4Q sector rally. Often, the large-cap stocks are the first to move, followed by a broadening of a rally to include smaller cap stocks.

We believe that indiplon remains on target for a potential 4Q05 approval. This could lead to upside surprise for DOVP, which will receive a 3½% royalty. DOVP’s extensive phase III program for novel pain medication bicifidine will continue throughout 2005, with results from some of the initial trials in bunionectomy available by 1H05. We believe that with safety issues plaguing existing pain medications, alternative non-narcotic analgesics such as bicifidine have significant potential. We also believe that progress with DOV216,303 for depression, recently licensed to Merck with up to $460 million in upfront and milestone payments, will be an important driver for the stock.

Our 12- to 18-month price target of $23 is based on 2009 probability-adjusted EPS of $1.88, discounted five years at 20%. We believe a 20% discount rate accurately reflects the risks associated with smaller biotechnology companies. We are assuming 35 million shares outstanding in 2009, based on at least two additional raises of common stock. In 2009, we believe indiplon will be well-established in the marketplace and, if successful, DOVP’s other products will be entering the market.

Risks to our price target include, but are not limited to, failure of any of DOV’s compounds in clinical trials; failure of DOV or its partners to obtain FDA approval for any of its product candidates; failure of DOV to obtain or maintain collaborative agreements with partners; and the potential inability of DOV to access the capital markets to maintain adequate cash to fund operations before the company becomes cash flow positive.

Isolagen John P. Calcagnini 310-446-3694 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthILE 7.35 10.22 (0.69) (0.45) NM NM - - 1.79 NA 12.1 5.7 26.0 (14.7) (15.9) (7.4) 6/22/04 Source: Bloomberg and CIBC World Markets .

We believe that Isolagen could have the solution to treating wrinkles and scars on a longer-lasting basis. This technology addresses a large market opportunity in facial injections for treating wrinkles, which we estimate could be more than $6 billion. In addition, the market opportunity in treating acne scarring could reach $5 billion.

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We checked in with Isolagen contacts and were told that the company continues to be comfortable with 2005 revenue guidance of $20 million, based on production and sales from the company's London-based manufacturing facility.

Isolagen has added a second manual manufacturing suite in London and began installing prototype automated cell expansion (ACE) systems in that facility last month. The company will run this ACE system in tandem with the manual process as it works to optimize it. ILE expects to have London operational on the ACE system by the second half of 2005 and presently has a team of engineers working on this. The company will do a comparative study to make sure that cells derived from ACE are comparable to that from the manual Flask system.

Isolagen will maintain the clinical manufacturing site in Houston, Texas, for the purpose of providing cells to the U.S. clinical sites. We believe that all U.S. pivotal trial patients received the final injections before year-end 2004.

Our $13 price target is based on applying a median 2006 P/E multiple of the company’s medical device industry peers in cosmetic surgery (22X) as well as emerging growth niche medical device companies (25X). We then applied the median 2006 P/E multiples from the comp groups to our 2007 EPS estimate for Isolagen of $1.20. We then discounted these values at 30% to arrive at a price target range of $12 to $14. We have chosen to use a price target in the middle of this range.

Failure to meet quarterly revenue and earnings objectives set by either Wall Street or the company could lead to disappointment and stock price declines. This could be caused by weaker-than-expected demand, an inability to produce enough product, failure to reduce manufacturing expenses, higher-than-expected raw materials or recruiting costs, etc. Product liability lawsuits are risks inherent in the medical device industry. These and other risks make this an appropriate investment only for those willing to assume above-average levels of risk. The company has stated that there is no litigation outstanding against it. We believe that the use of autologous cells should help mitigate risk because the patient’s own cells are being injected rather than a foreign substance.

Johnson & Johnson Mara Goldstein 212-667-8112 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthJNJ 62.48 62.67 3.07 3.38 20.35 18.49 1.14 1.82 8.67 23.80 64.3 49.3 21.3 10.9 8.6 (1.0) 1/20/05 Source: Bloomberg, CIBC World Markets

Johnson & Johnson appears to have sealed higher growth expectations through the announcement of the planned acquisition of Guidant (Not Rated), a player in the cardiac rhythm management and stent markets. In spite of competitive challenges in the drug eluting stent market in 2004, Johnson & Johnson has managed to deliver on EPS growth, courtesy of in-line top-line growth and operating leverage. Guidant’s acquisition appears to be the antidote for decelerating top- and bottom-line growth over the next few years, and vaults the company into the cardiac rhythm management


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business, which is experiencing faster growth than Johnson & Johnson’s business at a higher gross profit margin vs. the corporate base.

While Johnson & Johnson has not fully addressed weakness in the pharmaceutical segment (owing to patent expirations and product maturation), it has rebalanced the portfolio to a higher growth, high margin medical technology business, and possibly created sales synergies between its interventional cardiology business (i.e., Cordis/Cypher) and Guidant’s business as well as addressed the possibility of near-term technological obsolescence.

Looking at 4Q04, though the company will still face tough comparisons in the medical technology (Professional) business, easier expense-related comparisons and stronger-than-expected growth from products such as Risperdal, Topamax and Remicade are likely to deliver EPS gains. The company, upon its announced acquisition of Guidant, has confirmed the strength of the operating business and leverage, and this could deliver a bit of upside surprise—as could the tax rate, which has historically dropped in the fourth quarter. Further, modest increases in market share for Cypher (drug eluting stent) could have a favorable effect given the positive impact on product mix.

Our price target on Johnson & Johnson is $70. This is based on a 19X multiple on our pro forma 2006 EPS forecast of $3.68. Our assumptions include generic competition for pharmaceutical products Duragesic in 1Q05 and Concerta in 3Q05 as well accretion from the Guidant transaction. Johnson & Johnson has given guidance that the transaction will be neutral to accretive in 2006, should it close June 2005 and require only minimal divestiture. We believe that the combination of the two companies will drive sales synergies in 2006.

Share appreciation for Johnson & Johnson may not be realized if one or more of the following negative factors arise: significant market share loss for Cypher, greater-than-expected erosion in the anemia market, loss of exclusivity for products such as Sporanox owing to patent challenges, adverse currency movements and failure for the Guidant transaction to be completed and/or to be executed well. Even if none of the above negative factors arises, our price target may still not be realized as a result of events pertaining to the pharmaceutical industry and/or the broader market.

LifePoint Hospital Inc. Charles W. Lynch, CFA 212-667-7012 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthLPNT 38.19 32.60 2.09 2.36 18.27 16.18 - - 12.34 16.60 39.2 26.6 5.4 (0.6) 29.0 13.1 4/20/04 Source: Bloomberg and CIBC World Markets .

Historically, rural-hospital companies have commanded premium multiples to their urban peers. With a more highly visible top-line outlook for rural operators (more favorable Medicare pricing, less reliance on managed-care payments) and meaningful margin opportunities, LPNT is among our top picks in the rural-hospital space.

LPNT reported 3Q04 EPS of $0.51, well ahead of our estimate of $0.45 and consensus of $0.46. Overall, same-store revenue rose a very solid 8.4%, pushing consolidated revenue up 11.6% to $254 million vs. our estimate of


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$242 million. Margin trends were very good as well, with labor and supplies well below our model and bad debt/other only modestly above. Generally speaking, though, we view the quarter's results as stellar particularly given this period's headwinds for LPNT's Southeastern hospitals.

Procedurally, the PRV deal is still on track for 1Q05 close. SEC notified LPNT in early November that it will do a full review, as expected, and proxies likely mailed out in December following that review. Strong results from PRV brighten the 2005 post acquisition story, and we continue to believe LPNT's pending acquisition of PRV can prove measurably accretive.

Our price target of $43 is based on a target EV multiple of roughly 9X our 2004 EBITDA estimate of $210 million, toward the low end of the rural hospital group’s historical EBITDA multiple range of 7X-20X.

Risks exist such that our price target may not be realized, including but not limited to changes in government regulations and reimbursement policies; changes in non-governmental pricing; failure to control variable costs such as supplies and labor; a slowdown in collections activity and cash flow generation; and failure to identify, complete and integrate acquisitions.

PacifiCare Health Systems John Szabo 212-667-6660 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthPHS 58.82 33.85 3.19 3.95 18.44 14.89 - - 21.81 15.50 62.2 28.6 71.1 64.5 71.0 7.5 12/3/03 Source: Bloomberg, CIBC World Markets

PacifiCare is the best-positioned player to take advantage of upcoming changes in Medicare, in our view. The additional funding injected into Medicare by the MMA should finance the most significant expansion of the program since inception and provide investors with a once-in-a-lifetime opportunity. In our view, the market is only beginning to recognize the company's government business as a growth engine for the future.

On January 11, PacifiCare provided detailed 2005 guidance. The company expects to earn between $360 million and $375 million in net income, unchanged from previous guidance. Current consensus EPS of $3.76 is within the company's new guidance range of $3.64-$3.80. The range is approximately 2%.

Membership growth in 2005 appears solid. Commercial membership is expected to grow by 3%-3.5%. Medicare Advantage membership guidance was left unchanged from previous guidance at 743,000, an increase of 5.5%. It appears as though 2005 is gearing up to be a good year for PHS. Guidance calls for top-line growth of 15% and EPS growth of 17%, which we view favorably. We expect guidance to move higher as the company realizes cross-selling opportunities from the AMZ and PacLife acquisitions.

Based on our discounted free cash flow model, our price target on PHS is $75. Our key assumptions for PHS include 35% near-term growth in operating income and a 4% long-term growth rate. We assumed a 13.5% return on invested capital. Our $75 target equates to 15X our 2006 estimate of $5.00.


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Key risks include an inability of PacifiCare to forecast medical cost trends in future periods and price products appropriately. A relatively high percentage of PacifiCare’s operating income continues to be dependent on Medicare+Choice program. Potential for changes to the legislation could hurt PHS earnings, as could problems with the implementation of the legislation.

Protein Design Labs Matthew Geller 212-667-7034 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthPDLI 19.42 17.85 (0.51) (0.49) NM NM - - 4.45 NA 27.6 14.6 2.4 20.7 5.1 0.8 6/22/04 Source: Bloomberg and CIBC World Markets .

On January 12, PDL raised guidance for 2004 to a loss of $0.50-$0.55 from $0.55-$0.60. PDL announced that M200, its anti-angiogenic and pro-apoptotic antibody, showed a partial response in phase I trials for kidney cancer. M200 will be moved into phase II trials for various solid tumors.

PDL will meet with the FDA in 1Q05 to discuss an SPA for Nuvion, its antibody for steroid-resistant ulcerative colitis. PDL expects to begin two phase III trials in 4Q05, each enrolling about 150-200 patients. Phase I/II data will be presented at the Digestive Disease Week conference, May 2005.

A single-dose phase I of subcutaneous daclizumab in healthy volunteers is set to begin 1Q05, with a multiple dose study in 2H05 and a phase IIb in moderate-to-severe asthma by 1Q06. PDL expects a partnership for daclizumab for MS in 2005 and will begin phase II MS trials.

We believe that clinical response for M200 clearly demonstrates activity and promise for the drug in solid tumors. We believe royalties will show strong growth in 2005 based on the Tysabri launch.

Our $38 price target is 30X our risk-adjusted, fully diluted 2009 EPS estimate of $2.56 discounted five years at 15%. This target multiple is in line with those of its peers.

Our risk-adjusted EPS estimate already seeks to account for clinical risk. Potential risks to our price target and investment thesis include (but are not limited to) the failure of clinical or research pipeline products, failure of licensed products, disappointing sales of approved products, and expiration (or a finding of invalidity) of PDL’s antibody humanization patents.

Teva Pharmaceuticals Elliot Wilbur 212 667-7599 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthTEVA 27.92 28.10 1.43 1.64 19.52 17.02 0.20 0.72 2.94 24.00 34.7 22.8 (4.9) (13.4) 12.5 (5.0) 1/20/05 Source: Bloomberg and CIBC World Markets .

We continue to believe that Teva has the richest generic pipeline (120 ANDAs) in the generic drug sector, with an estimated 25 first-to-file products generating $20 billion in annual brand sales, and that the 12-18

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month risk/reward ratio is one of the most favorable in our generic drug stock universe.

The FDA has granted tentative approval for Teva's generic version of 10, 20, and 40 mg of OxyContin, Purdue's $1.2 billion brand for moderate-to-severe pain. Final approval is only subject to the expiration of Endo's (ENDP-NR) exclusivity period for these strengths. To date, Endo has not launched. Recall that Teva received final FDA approval and 180 days of market exclusivity for oxycodone HCl (OxyContin) 80 mg in March of this year. Brand sales for this strength were $700 million, and Teva's current market share for the 80 mg tablets is north of 44%. While Teva launched its generic OxyContin 80 mg with only a favorable lower court decision, Endo appears to be awaiting a decision on Purdue's appeal. Thus far, only Endo and Teva have final approval to market the 10, 20, and 40mg doses of oxycodone; IPXL (NR) has tentative FDA approval.

Also, financial consequences of "at risk" launch of generic Univasc are insignificant from the Teva perspective. The development does highlight what we think is one of the most underappreciated risk factors in the generic drug group—the possibility of unfavorable appellate court rulings on a substantial number of products that have been launched in the past three years with only lower court rulings or no court decisions at all.

In light of the company's strong recent financial performance and the potential upside to our out-year financial projections based on new product events from Teva's substantial ANDA arsenal, we believe shares should command a multiple at the high end of our target range for generic drug makers of 15.0X-20.0X forward EPS. Our 12- to 18-month share price objective of $33 assumes 20.0X multiple applied to our 2005 EPS forecast of $1.64.

Risks to our investment thesis include systematic third-party reimbursement and pricing pressures; further consolidation of the pharmaceutical industry distribution channels, increasing generic competition for product market share and consequential lower pricing, and regulatory submission and approval process delays for new and abbreviate drug applications. Any of these risks, as well as others unforeseen, could prevent the stock from attaining our published price target.



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Industrials

Advisory Board Company Thatcher Thompson 212-667-8114 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 A 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthABCO 36.52 38.35 1.06 1.24 34.45 29.45 - - 5.17 17.40 40.5 29.8 6.7 17.8 18.9 0.1 2/18/04 Source: Bloomberg, CIBC World Markets

We still view ABCO as having one of the strongest businesses in our space, marked by high visibility, 15%-plus growth, significant operating leverage and impressive cash flows. Coupled with the stock's valuation (approximately 6.5% FCF yield on our fully taxed FY05 estimate), we think ABCO presents a compelling opportunity, and maintain our Sector Outperformer rating, with a 12- to 18-month price target of $48.

Revenue and EPS for 2QFY05 rose 15.8% to $34.7 million and 23.0% to $0.31, respectively, and ahead of our estimates (revenue of $34.5 million and EPS of $0.30). Despite concerns over tight conditions in healthcare, ABCO has continued to post 15%-plus revenue and EPS growth, and exceed expectations. Year-to-date cash flows were strong: OCF of $9.3 million and FCF of $7.2 million. ABCO spent $16.7 million to buy back 529,122 shares in F2Q, and upped its total buyback authorization to $100 million ($61.2 million remaining). Even after this, it ended F2Q with $117.7 million ($6.22 per share) in cash and equivalents.

We think the market had been concerned about another dire outlook, which did not match the actual environment. Management stated that the environment has largely been the same for the past 12 months. We think investors can now breathe a sigh of relief over the lower likelihood of another disappointing outlook.

We arrive at our $48 price target, by applying a 20X multiple to our FY05 FCF per share estimate of $1.83 (ex-tax shield) to get a price of $37.18. To this we add the present value of the tax shield of $2.03 per share and the increased cash balance of $9.28 per share (assuming the exercise of stock options).

Risks to our price target include possible underperformance in the company's operating results, leading to less-than-expected cash flow generation and potential changes in the accounting treatment for stock option compensation.

Affiliated Computer Services Thatcher Thompson 212-667-8114 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 A 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthACS 55.21 50.85 2.61 3.13 21.15 17.64 - - 19.76 14.70 61.2 46.0 0.1 3.4 (1.0) (4.6) 2/18/04 Source: Bloomberg, CIBC World Markets

Revenue in 1QFY05 of $1.05 billion (up 22%, 11% organically) and EPS of $0.72 (up 16%, 20% ex-dep. adjusted) beat our expectations of $1.04

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billion and $0.71, respectively, while operating margins hit a record high of 14.8%. Commercial drove the growth, with revenue up 22% (internal).

Despite the generally strong results, however, investors focused on a few weak points in the release, including weak bookings ($127 million), poor government internal growth (4%) and slowing commercial growth. We believe that most of these issues, though making the FY05 target outlook more weighted toward the back half of the year, are timing related issues that should improve near term, and therefore do not meaningfully concern us.

ACS remains one of our top picks in the business services space. We believe it generates predictable revenue, strong organic growth and healthy profitability, run by superior management, and trades at only 17.5X our forward-12-month EPS estimate of $3.23, vs. its historical average of 21.1X.

Our price target of $70 per share is based on a DCF analysis, assuming a 9.5% discount rate and a conservative terminal growth rate of 3.0%. We forecast 10 years of projections for ACS, assuming tempering of both top- and bottom-line growth in the later periods. Further, we have not modeled in any further acquisitions and assume capital expenditure levels remain at a relatively stable 5% of annual revenue. Our target represents a multiple of 22.4X our 2005 EPS estimate of $3.13.

Risks to our price target include integration-related difficulties, problems arising from larger contract awards, including GA Medicaid, potential penalties from an ongoing Department of Justice inquiry and negative investor perception over other potential news items.

Cintas Corp Thatcher Thompson 212-667-8114 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthCTAS 43.06 46.69 1.58 1.76 27.25 24.47 0.29 0.67 11.90 15.30 48.1 39.5 (5.1) (2.2) 2.7 (1.3) 4/20/04 Source: Bloomberg and CIBC World Markets .

Cintas released F2Q results on December 16. While EPS just missed our estimate by $0.02 and consensus by a penny, we think the conference call and tone of business were much stronger than the income statement reflected.

We characterize Cintas’s F2Q performance as a slow and steady march upward. Internal revenue growth continues to improve on a sequential basis, with organic rental growth strengthening each quarter. In addition, add/stops—the most profitable source of revenue for Cintas—are starting to edge closer into positive territory.

We like Cintas for three reasons: 1) rental growth continues to climb; 2) it is a late-cycle labor market beneficiary; and 3) it has a robust balance sheet with room for flexibility. We believe there is still upside potential from current levels, as the shares remain at the low end of their historical valuation ranges.


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Our price target of $55 is based on a 26X multiple applied to our FY06 EPS estimate of $2.06. This valuation is also supported by our DCF analysis, which assumes a 9% discount rate and 5% terminal growth.

Risks to our price target include 1) a reversal of the positive labor market trends we have seen in recent months; 2) a longer-than-expected time lag before the labor market recovery has an impact on Cintas's results; and 3) efforts by UNITE and the Teamsters to unionize the company's workforce.

Emerson Rob McCarthy 212-667-7698 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 A 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthEMR 66.07 61.87 2.98 3.50 22.17 18.88 1.66 2.51 16.60 NA 70.9 56.2 (1.9) 8.2 6.5 (5.1) 8/19/04 Source: Bloomberg and CIBC World Markets

We expect EMR to meet our FY1Q05 EPS estimate of $0.71, up 22% year-over-year. Our estimates for this year and next are based on continued strong order trends, signs of significant operating leverage in key segments (Process Management and Industrial Automation), and upward earnings revisions at companies serving similar end markets.

Orders continue to trend favorably, and we note a reasonable opportunity for sustained growth and margin improvement in Process Management (PM), Industrial Automation (IA), and Network Power (NP). In addition to strong orders, we note a sizable upward earnings revision for FY1Q05 from ROK (to $0.65 from $0.48 prior guidance), which serves roughly similar end markets to EMR’s Process Management and Industrial Automation segments. Orders for EMR’s Climate Technologies segment have trended below our estimates, and could present a modest negative impact. We believe that downside to our margin assumption (13.5%) could be limited, as we already incorporate a significant impact from lower volumes.

Our $76 price target for Emerson is based on EMR trading at 19.5X our FY06E EPS of $3.90. This valuation is supported by our discounted cash flow calculation ($81 per share), and Emerson’s prospects for dividend and free cash flow (FCF) growth. Emerson currently trades at a 6.4% FCF yield based on our FY06E FCF.

Key risks to our price target include 1) leverage to the housing market, consumer confidence levels, and telecom capital spending; 2) dependence on Asia for growth; and 3) an inflation-induced weakening of the overall industrial economy.

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General Dynamics Myles Walton 617 428-5967 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthGD 100.88 99.26 6.05 6.75 16.67 14.95 1.44 1.43 33.57 18.60 110.0 85.0 7.5 3.3 2.5 (5.7) 9/24/04 Source: Bloomberg and CIBC World Markets

Record December weapons spending outlays of $13.8 billion, +9.4%, should bode well for defense contractors' 4Q earnings. Total 4Q weapons spending rose a solid 12% year over year, with most of the strength coming from Army and Air Force spending. While the recent attention in defense on proposed budget cuts likely continues to cause the group to tread water until some uncertainty is lifted in the next couple of months, this data point is further evidence that near-term earnings and estimates are intact. GD remains among our favorite large-cap names on leverage to bizjet up-cycle and army spending.

We see GD's industry-leading capabilities in soldier systems and land combat as likely beneficiaries of lessons learned in Iraq/Afghanistan. Its leadership in high-end business jets provides the potential for multiple expansion as that cycle improves. Although the outlook for marine business is probably a real but manageable risk, the other segments should be rolling ahead with a full head of steam, making the flat prospects for ships less and less of concern.

Our price target assumes 17.8X our 2005 EPS estimate or 16.2X our 2006 EPS estimate vs. GD’s 16.8X five-year average and is further supported by our sum-of-the-parts analysis. Our $120 price target is driven in part by peer multiple appreciation that feeds into our sum-of-the-parts analysis, which we think is particularly relevant for General Dynamics given the diversity in the portfolio. The upward revision in price target is also driven by what we see as more opportunity than peers for multiple expansion from the company’s business jet leverage.

Risks to this target are 1) the A-12 litigation could result in an after-tax charge of $715 million to discontinued operations; 2) marine business sales peaking in 2004, implying limited opportunity for profitability improvements post commercial tankers; 3) stalling economic recovery; and 4) headline risk with Stryker on weight issues and Future Combat System on technology readiness likely continues.

General Electric Rob McCarthy (212) 667-7698 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthGE 35.33 32.54 1.57 1.80 22.50 19.63 0.88 2.49 9.27 23.70 37.8 28.9 5.9 6.4 6.4 (4.8) 8/19/04 Source: Bloomberg and CIBC World Markets

We maintain our Overweight stance on industrials given continued strong macroeconomic industrial fundamentals, sustained solid order trends, late-cycle end-market recovery on track (aerospace, nonresidential construction) and solid free cash flow generation (approximately 6.3% yield for our coverage universe). GE remains among our top picks based on strong fundamentals, sustained earnings quality and solid dividend yields.

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We expect strong results across the board from the companies in our coverage universe. Our opinion is informed by continued strong order trends from a number of industrial names (EMR, CBE, GE, ITW and PH) and recent upward EPS guidance revisions.

Key risks remain commodity prices, oil, possible accelerated Fed tightening, as well as greater-than-expected deceleration in the overall industrial recovery. To us, China remains more of a long-term opportunity than a threat.

We maintain our $41 price target for GE. Our price target is based on GE’s trading at approximately 20.5X (approximately 121% of the S&P 500 relative P/E) applied to our 2006 EPS estimate of $2.00. We expect that solid 2006 earnings growth (up 11% year over year, in our estimation) will continue to put the long-term growth potential of the newly forged portfolio on display, and that GE shares will close the gap on the historical forward P/E ratio.

Key risks to price target include portfolio execution risk, execution of exit from certain insurance businesses, the overall health of the GE Capital balance sheet, a general downturn in the industrial economy, an inability to offset higher input costs and potentially lower margins on equipment sales in favor of long-term customer service agreements (CSAs).

L-3 Communications Myles Walton 617-428-5967 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthLLL 69.57 69.96 3.34 4.00 20.83 17.39 0.40 0.57 27.82 12.30 77.3 49.3 36.7 14.1 11.2 (7.7) 11/19/04 Source: Bloomberg and CIBC World Markets

We continue to see L-3 as attractively positioned relative to peers owing to three factors: 1) low exposure and headline risk to big-ticket programs, 2) leadership in secure communications, homeland security and long-tail logistics work for the DoD, and 3) the best track record as a defense consolidator. Moreover, L-3 provides the clearest near-term opportunities for raising estimates, given it has $350 million in acquisitions pending (potentially $0.10 add to 2005 EPS) scheduled to close by the end of 1Q05.

Our 12- to 18-month price target for LLL of $86 is supported by historical multiples on price/earnings and EV/EBITDA, as well as our discounted cash flow. We are not building in any future accretive acquisition, which is probably conservative given the company’s track record for deals and the fact that three acquisitions are now pending.

The potential vertical integration by the primes could serve as headwind to growth if the big-five defense primes choose to in-source more of their work. L-3 has steadily risen up the supply chain from its beginnings as a merchant supplier of defense equipment to its current status of sub-system and systems supplier. As L-3 grows, the company is beginning to dig into more and more work that primes may have historically done in-house. Further, if budgets start to become tighter, a natural defensive posture of the big-five defense primes would be to reevaluate their make-buy decisions against their available capacity. Chairman and CEO Frank Lanza, age 72, and President and CFO Robert Lapenta, 58, are the founders of the company and the brains behind the organization’s success. While Mr. Lapenta appears to


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be the most likely successor to Mr. Lanza when he decides to leave, we view succession planning as a key question on investors’ minds.

Lockheed Martin Myles Walton 617-428-5967 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthLMT 55.06 53.88 2.77 3.40 19.88 16.19 1.00 1.82 15.94 17.00 61.8 43.1 8.6 - 4.3 (6.7) 9/24/04 Source: Bloomberg and CIBC World Markets

Record December weapons spending outlays of $13.8 billion, +9.4%, should bode well for defense contractors' 4Q earnings. Total 4Q weapons spending rose a solid 12% year over year, with most of the strength coming from Army and Air Force spending. Although the recent attention in defense on proposed budget cuts likely continues to cause the group to tread water until some uncertainty is lifted in the next couple of months, this data point is further evidence that near-term earnings and estimates are intact. In large-caps, our favorite name remains LMT on valuation.

Our $69 price target is based on 2005 GAAP and economic EPS estimates to $3.40 and $4.09 respectively, as well as peer multiple appreciation, which influences our sum-of-the-parts analysis. The stock currently trades at 15.0X our 2005E economic EPS, vs. the peer average of 16.8X, a discount we see as unwarranted. Our price target assumes a 16.9X multiple on our 2005 economic EPS estimate, in line with current trading range of peer multiples and is further supported by our sum-of-the-parts analysis.

F/A-22 and JSF will likely continue to draw negative headlines as they’re big (the No. 1 and No. 4 largest DoD programs) and easy targets for shaving off funds. We would also not be surprised by further technical difficulties and cost growth/delays in SBIRS owing to its checkered track record. Pension volatility could also play a role in where GAAP earnings end up in 2005, though our valuation is more closely tied to economic earnings.

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Information Technology

Applied Materials Inc. Ali Irani 212-667-8141 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 A 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthAMAT 15.95 21.94 0.83 0.68 19.22 23.46 - - 5.44 5.70 24.6 15.4 (34.5) (7.5) (1.0) (4.8) 9/8/03 Source: Bloomberg, CIBC World Markets

We maintain our Sector Outperformer on AMAT shares despite worse-than-expected (and below peer group) F1Q/Jan guidance to 35% bookings drop and 25% sales erosion. We believe "biting the bullet" increases odds for improvement ahead, including flattish F2Q/April orders and uptick in F3Q/July.

We recommend a contrarian stance, given expected improvement ahead in second derivative pace of bookings. Near-term fundamentals (a sharp inventory correction and related tooling slowdown) are likely already factored in AMAT shares, which should prove more forward-looking through cyclical patterns.

Aside from a modest headline-related pullback, we expect AMAT to buck general low visibility and correlate to relative health in end-demand as well as continued reduction in IC inventories. These continue to suggest the mild nature of present correction.

We expect an eventual upswing in 90nm/65nm technology retooling & significant 300mm asset replacement cycle ahead. We expect AMAT to again gain share through reacceleration into 2H05.

Our price target remains $26, or 25X our forward CY05 EPS estimate of $0.86 plus $3.86 in cash per share. This would compare with the historical range, which has surpassed 25X-45X in every prior upturn.

We see mix shifts as the greatest risk to AMAT’s future earnings, which could negatively affect margins and our EPS estimates. Fundamentals could be further restrained by geopolitical risks, limiting a potential renewed business cycle expansion. If fundamentals do not gather momentum, or are restrained by further geopolitical risks, our assumptions for CY04 & CY05 would have to be altered materially.

AU Optronics Matthew Smith 212-667-7905 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthAUO 13.99 24.67 1.92 1.20 7.29 11.66 0.35 2.50 8.19 18.00 27.1 9.7 4.6 11.6 18.2 1.4 4/20/04 Source: Bloomberg and CIBC World Markets

Revenues for 4Q04 were slightly better than we had expected, completing the return to quarter-over-quarter demand growth for AUO. Price elasticity and favorable mix-shifts appear to have offset average panel ASP decline of approximately 15% quarter-over-quarter in 4Q04. In the near term, 1Q05

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seasonality is not ideal, suggesting scope for some degree of volatility in shares. That said, we believe our expectations for sustained quarter-over-quarter volume growth and the potential for mainstream (15" and 17") panel ASPs to stabilize in 1Q05 bodes well for gradually improving sentiment toward AUO shares ahead of tighter supply-demand equilibrium in 2H05.

AUO appears to be leveraging its competitive position and scale as a Tier 1 panel manufacturer. Price elasticity of demand for monitors is clearly accelerating, and is expected to drive mix-shifts to larger 19" formats in 1Q05. Channel inventory appears healthy, and an incremental demand lift from Chinese New Year lies ahead. We expect sustained quarter-over-quarter volume growth in monitors and LCD TVs to offset typical seasonal weakness in notebook PC panels during 1Q05.

Our price target of $18 is struck on a price/book multiple of 2.2X current book value of $8.24. We believe our target multiple of 2.2X is achievable given our expectation for gradually improving FPD industry fundamentals through CY05. Our multiple sits between the historical mean of 1.6X and the historical peak of 3.8X (set in April 2004) for AUO.

Key risks to our price target are slower-than-modeled growth in notebook PCs, FPD desktop monitor or the emerging LCD TV market; aggravated factory pricing pressure through in the FPD market, possibly as a result of faster-than-expected production ramp-ups at Korean and Taiwanese manufacturers or better-than-expected yields; and technical problems encountered in the ramp-up of AUO’s next generation production lines, thereby resulting in slower-than-anticipated throughput or inferior yields, or multiple contraction owing to poor equity markets.

Broadcom Corp. Allan Mishan 212-667-7756 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthBRCM 31.96 30.59 1.21 1.05 26.41 30.44 - - 4.77 18.00 47.1 25.3 (22.6) (14.2) 13.3 2.9 8/19/04 Source: Bloomberg and CIBC World Markets

We think Broadcom has a convincing growth story for 2005. Key growth areas would be Bluetooth, wireless LAN in peripherals, new handsets (like palmOne’s [Not Rated] Treo 650 and NEC’s EDGE phones), PVR, high-end set-top boxes and GigE switching. Storage, digital TV and VoIP also loom as potential accelerators later in the year. Our estimates remain unchanged. For 4Q04, we expect revenue of $535 million and EPS of $0.22. For 2005, we expect revenue of $2.4 billion and EPS of $1.05. For 2006, we expect revenue of $2.7 billion and EPS of $1.25.

Our price target on BRCM is $32, based on a 2005E P/E multiple of 30X, which we believe is appropriate, given Broadcom’s strong growth profile and the potential for upside from one or more of its emerging businesses. Momentum is still a key investment theme, and we believe a premium to the peer group is therefore justified.

The key risks to our price target are 1) investors failing to embrace the positive momentum and premium valuations associated with growth stocks in the current semi cycle; 2) weakening in end demand for cable or DSL modems, set-top boxes, enterprise networking equipment, wireless LAN equipment, Bluetooth, handsets or servers; 3) losses of key design wins in


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Broadcom’s key markets, most of which are characterized by heavy customer concentration; 4) a negative ruling by one of the many standards bodies that serve Broadcom’s end markets; and 5) price competition by peers, which could pressure ASPs and margins.

Check Point Software Ltd. Shaul Eyal 212-667-8411 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthCHKP 23.94 23.75 1.07 1.21 22.37 19.79 - - 6.33 16.00 27.2 16.5 10.8 8.5 15.4 (1.2) 2/18/04 Source: Bloomberg, CIBC World Markets

Check Point continues to see strength and growing demand for both its new and core products as rising security concerns drive increased demand. In terms of emerging products, we believe InterSpect (Check Point’s internal security product) and Connectra (its Web security product) are both gaining solid traction as the dangers they protect against become greater areas of concern among enterprises of all size. At the same time, traditional VPN and firewall products continue to grow and find incremental new opportunities in the marketplace as a result of Check Point’s historical competitive strength and its success at releasing upgrades and new versions. The consumer products brought in through the Zone Labs acquisition are also performing well and continue to benefit from the higher degree of security awareness generated by Microsoft’s (MSFT-Sector Outperformer) SP2 announcements.

CHKP reported 4Q04 revenue of $143 million (up 10.6% QoQ, 24.1% YoY), in line with our estimate and above the Consensus $141 million. Improved gross margins (95.8% vs. 95%), tax rate and a lower share count generated an EPS of $0.31, topping our and Street's expectations of $0.29. Both core and new products continued to see strong demand with license revenue of $77 million (up 14% QoQ) and deferred revenue growing 12.8%, supporting solid visibility into 1Q05. CHKP generated $73.6 million of cash from operations and bought back 1.9 million shares out of its roughly 9 million plan.

CHKP guided 1Q05 at $136-$140 million (down 2%-5%) and $0.28-$0.29 – in line with typical seasonality trends. Mgmt provided initial FY05 revenue and EPS guidance of $585-600M (up ~15% YoY) and $1.18-$1.24 (up approximately 13%). We are leaving our FY05 estimates unchanged at $593 million and $1.21

In determining our price target of $30, we have applied a P/E multiple of 25X to our revised 2005 EPS estimate of $1.21. Even this multiple is at a discount to its peers’, reflecting the still challenging spending environment and the integration of Zone Labs into CHKP.

Risks to our price target include the sluggish pace of IT expenditures, which may cause deals to be delayed and/or downsized; a difficult competitive landscape; and the integration of Zone Labs as well as additional acquisitions.

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Cisco Systems Steve Kamman 212-667-8146 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 A 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthCSCO 18.36 18.47 0.76 0.90 24.16 20.40 - - 3.63 4.00 29.4 17.5 (36.4) (16.1) (0.5) (3.7) 10/22/04 Source: Bloomberg, CIBC World Markets

On a relative value basis, Cisco is our top pick in networking and data infrastructure for 2005. Cisco set a very low bar for its 2QFY05 (January) results (+1% to +3% vs. more “normal” sequential growth of 5%-10%). In the past, a cautious outlook from Cisco has proved to be correct regardless of how much we might hope otherwise. Cisco is already performing strongly, but we expect to hear a more aggressive tone and see stronger growth as Cisco kicks its operations up a gear—breaking away from erstwhile competitors and challenging new ones. We expect to hear a more optimistic tone regarding the 2005 outlook from Cisco but continuing caution as the macro environment remains unclear (especially overseas).

We remain perplexed at investors’ apparent indifference to a $120 billion plus market cap company guiding to 12%-15% revenue growth and EPS growth well north of that. How this translates into a valuation just slightly greater than the S&P 500 multiple (with 6% forecast EPS growth in 2005 and 8% in 2006) is a mystery to us, especially as Cisco’s rock-solid revenue and EPS delivery suggests a fairly low-risk investment profile. We do not expect this valuation discount to continue and recommend taking advantage of it while it lasts.

We expect Cisco to continue to flesh out its faster-than-market growth strategy, with the negative implications for the growth of players in adjacent sectors starting to become clearer throughout 2005. This should also highlight Cisco’s value relative to the sector.

We have a price target of $25 for Cisco. This is based on a multiple of 24X our FY06 EPS estimate of $1.03 (FY06 ends July 2006). This also represents a multiple of 28X our FY04 EPS estimate of $0.90. Historically, CSCO has traded in the 25X–30X range. Although some argue that its maturity deserves a lower multiple, we believe this misses the medium-term likelihood that Cisco posts strong revenue growth via share gains in current and new markets, as well as strong profit growth on greater operating leverage.

The risks facing Cisco are more macroeconomic and/or valuation related than company-specific. Cisco could fail to gain traction in its new growth markets. Cisco management may also not succeed in delivering the strong operating leverage it has promised.

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Comverse Technology Shaul Eyal 212-667-8411 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthCMVT 22.27 18.73 0.29 0.52 76.79 42.83 - - 8.70 6.00 25.1 15.3 11.7 27.1 13.5 (7.1) 6/22/04 Source: Bloomberg and CIBC World Markets .

We believe current prices offer a good entry point for the stock. Comverse’s market leadership, stabilizing indicators, and strong capital structure have made it a core telecom software holding, in our view. We are encouraged by the company’s continued progress, strong visibility, and consistently growing backlog.

Our checks suggest that CMVT could be winding up another strong quarter, with demand in its CNS, VRNT and ULCM divisions all solid. We reiterate our 4Q04 estimates of $251.1 million in revenue and $0.08 in EPS, though positive industry and seasonal trends make upside likely.

CMVT's backlog stood at a strong $476 million heading into 4Q04. We believe backlog could continue trending up sequentially, supporting potential upward revenue revisions throughout 2005. We believe CMVT will continue growing its backlog rather than blowing out a specific quarter.

We maintain our 12- to 18-month price target of $28. Our price target is based on a target multiple of 3.7X EV/revenue on 2005 estimates, and factors in CMVT’s net cash balance of $1.68 billion. Our 3.7X multiple is higher than that of CMVT’s peer group, which trades in the range of 2.2X to 2.6X EV/revenue. We believe this premium is justified by the company’s strong position and wide exposure to the enhanced services market, which is now gaining traction.

This price target may not be achieved if one or more of the following negative events occur: a decline in communications service provider capital budgets, slower new subscriber growth, increased price competition, poor financial performance of competitors, continued decline in voicemail business and/or deterioration in the broader stock markets. Even if none of the above-mentioned negative events occurs, our price target may not be achieved because of unforeseen company-specific issues.

Hewlett-Packard Ali Irani 212-667-8141 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance (%)Ticker Price Price/ Date 2004 A 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthHPQ 20.03 20.21 1.34 1.58 14.95 12.68 0.32 1.60 12.19 10.80 26.3 16.1 (20.1) 0.2 9.9 (4.5) 11/19/04 Source: Bloomberg and CIBC World Markets

We believe there is ample evidence that HP has finally found the right recipe to achieve rising returns on its IT portfolio. In an excellent quarter, HPQ delivered upside surprise by capturing better-than-expected revenues and strictly controlling op-ex costs. Although it is not yet a track record, we believe such a combination (the recipe) may be sustainable, setting HPQ finally on course to deliver on its long-term turnaround. An unusual two quarters of guidance aid visibility (supported by a well-balanced mix that

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reflects ongoing strength in corporate demand offsetting pockets of weakness in consumer markets).

We see HP as prime beneficiary of top-three consolidation in IT markets (a central pillar of our thesis). Its F4Q results demonstrate that while competition remains intense, there is no either/or case (as many skeptics have suggested) and that HP can gain share in hardware, software & IT services segments. With superior breadth of products, superior buying power, superior R&D budget, better technology road map and the insurance provided in its $6 billion annual cash flows, Hewlett raises the question: why would customers want or need to do business outside the top-three vendors?

Our 12- to 18-month price target of $30 is struck on a P/E multiple of 18X our CY05 EPS estimate of $1.65. Our target P/E multiple of 18X derives from the weighted average combination of four valuation approaches, including: forward looking market multiple analysis relative to the S&P 500, based on HPQ’s average ranges for the past eight and three years; discounted cash flow (DCF) analysis; HPQ’s average price/TTM sales & TTM earnings and enterprise value (EV)/TTM EBITDA multiples over the past three years.

We believe potential for ASP and margin pressure in HP’s enterprise and services businesses are among the greatest risk to earnings and achievement of share price target at the present time. HP’s dominant share of the imaging and printing market, while a strength, also leaves the company at risk of market share losses from new entrants such as DELL. Other risks include the general level of IT spending, further declines in which would impact HP’s overall earnings. Adverse macroeconomic factors may also drive overall contraction in equity market valuation multiples, directly impacting achievement of our share price target.

KLA-Tencor Corp. Ali Irani 212-667-8141 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance (%)Ticker Price Price/ Date 2004 A 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthKLAC 43.42 46.14 1.21 2.26 35.88 19.21 - - 13.43 1.00 62.8 35.0 (30.9) 3.2 4.3 (5.0) 11/19/04 Source: Bloomberg and CIBC World Markets

Fiscal first-quarter upside surprise and flat quarter-over-quarter F2Q (December) guidance at KLAC provide confirmation that it can buck the current downdraft in tooling as it benefits from a robust backlog and stronger-than-average demand for its process diagnostic and control equipment and favorable mix shifts into 90nm.

With little competition in PDC⎯thus superior pricing power⎯KLAC is benefiting from challenging fab migrations to 90nm & rising number of 65nm pilot lines that require earlier demand for its newest tool-sets, setting it as prime beneficiary of relative strength in technology retooling.

We expect stable sales in F2Q and best-in-class margins (exceeding 58%) to hold steady in CY05, when we see KLAC growing revenues 10% year over year in a flat cap-ex environment. We are thus maintaining our CY05 EPS estimate of $2.30, for 17% year-over-year earnings growth, exceeding S&P 500 peer group average.


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Our 12- to 18-month price target of $66 is struck on a target P/E multiple of 25X estimated CY05 EPS of $2.30 plus cash per share of $9. A lack of visibility to timing and magnitude of the next upswing in demand for capital equipment limits any P/E valuation. That said, a 25X P/E multiple is at a slightly premium to peers, but we believe that a premium should be afforded to KLAC as the company continues to buck order trends seen with other OEM vendors given its bellwether status as arguably the leading process diagnostic vendor⎯benefiting from tech migrations to 0.13mu/90nm.

Risks to our price target include longer-than-expected sluggishness in macroeconomic conditions, increased competitions from other leading OEMs ramping process diagnostic tools (e.g., AMAT) and increased pricing pressures.

Microsemi Corp. Rick Schafer 720-554-1119 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 A 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthMSCC 14.62 8.84 0.35 0.61 41.77 23.97 - - 2.95 3.60 19.0 9.4 3.2 17.1 (4.4) (14.3) 10/6/03 Source: Bloomberg, CIBC World Markets

Microsemi is a strong margin expansion story, in our opinion, with strong earnings visibility offering a great leveraged play on analog. MSCC reported in-line F4Q (September) sales and EPS of $68 million and $0.13, respectively. Alone in its group, MSCC provided a positive outlook for 1Q (December), expecting sales up 2%-3% and $0.13-$0.14 EPS.

Strength was again evident essentially across the board as book-bill remains above one. Gross margins were up 150 bps sequentially and are expected to rise another 70-130 bps in 1Q as military price increases and consolidation efforts continue to bear fruit. Efficiency improvements continue at the company with its Santa Ana fab consolidation progressing ahead of its scheduled completion date of March 2005. The Santa Ana closure is expected to ultimately contribute margin improvement of 400-600 bps. By management’s estimation, two-thirds to three-fourths of that expected benefit is already baked into the numbers. Book to bill was reported at a healthy 1.05, the eighth quarter in a row exceeding one. DSOs were within the standard range of 56 days, and inventories decreased slightly to $54.6 million owing to inventory abandonments during the consolidation period.

While MSCC had traded at a slight discount to its peers’ 27X, the multiple gap is closing. The company continues to prove itself by beating Street expectations each quarter and raising guidance amid the interim industry slump. With additional consolidation efforts under way, more leverage remains in the model for improved execution in CY05. Our $ 22 price target equates to 34X our new $0.65 EPS estimate for CY05. In light of the company’s bright margin expansion prospects and a highly levered model, we think Microsemi deserves this group-premium multiple, in our view.

Risks associated with our price target include, but are not limited to 1) a halt in military activity and defense spending, which would quickly impair component level silicon revenues; 2) continued weakness in the commercial aerospace markets; 3) a Medicare non-approval of ICD reimbursement; and 4) an inability to introduce new high-margin products and gain relatively quick market traction.


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SAP AG Brad Reback 404-238-9572 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 A 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthSAP 39.36 38.84 1.30 1.47 30.28 26.78 0.24 0.61 3.30 14.90 45.8 35.0 (7.0) (0.0) (4.6) (9.6) 9/24/04 Source: Bloomberg, CIBC World Markets

SAP continues to power through the economic malaise while making investments in future growth. SAP announced preliminary 4Q results that were generally in line with our top-line forecasts and slightly better than expected operating margin. FY04 license revenue, however, is expected to be slightly below company's 15% CC growth target. In-line results disappointed after positive Street chatter in recent weeks.

We believe that SAP is gaining market share as it benefits from a full-product suite, market confusion (Oracle/PeopleSoft acquisition) and a dedicated drive down-market. In terms of software revenues, the U.S. region grew 30% in constant currency to €233 million, representing almost three-quarters of the Americas business (€318 million). EMEA and Asia/Pac were essentially flat.

We calculate our $45 price target by applying a 30X multiple to our cash-adjusted 2005 EPS estimate of $1.43 (subtract $0.04 of interest income from our estimate of $1.47) and add back about $3.00 per share in cash. Given the company’s growth characteristics and our belief that it is taking share from other application vendors, we believe a peer-group premium is warranted.

Key risks to our price target include unforeseen changes in the Euro/U.S. dollar exchange rate, a slowdown in the IT growth, and a general deterioration of the macroeconomic environment.

Symantec Corporation Curtis Shauger 415-399-5730 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 A 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthSYMC 24.04 30.21 0.59 0.86 40.75 27.95 - - 3.70 19.50 34.1 18.4 28.0 11.5 (11.7) (0.0) 10/22/04 Source: Bloomberg and CIBC World Markets

Symantec and VERITAS held a joint meeting on January 5 to discuss the proposed merger in more detail. Management indicated the combined companies will be able to better address their “customers’ desire to reduce the complexity of their IT infrastructure and consolidate suppliers.” With the combination of the two entities, the new Symantec will have a broader product portfolio across heterogeneous platforms and most tiers of IT infrastructure, including database management, clustering, storage software, security appliances, security

This new addressable market is expected to grow 12% annually to $56 billion in 2007, according to IDC. Comparatively, the new Symantec will be the fourth-largest software company in the world and, based upon its initial guidance, should grow 18% next fiscal year, faster than the industry and 10% ahead of the next fastest company.

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The combined heft should create an enormous profit and cash generating machine, growing at 2X-3X the industry rate. With more than $5 billion in pro forma combined net revenue projected in fiscal 2006 and roughly $30 billion in market cap, the combination will be the fourth largest independent software company (behind Microsoft, Oracle, and SAP) and the largest infrastructure management company (just ahead of Computer Associates).

Applying a multiple of 20X to our CY05 free cash flow estimate of $1.55 and adding the $2.64 in net cash per share yields a price target of approximately $33. Our base multiple assumption of 15X FCF is predicated on our analysis of historical valuation trading ranges for infrastructure software stocks.

We believe that investors may be factoring in an upward bias for revenue and earnings revisions. As such, even meeting consensus estimates could result in the compression of trading multiples. In addition, the looming threat of Microsoft could keep multiples from expanding, particularly once the company releases its AV product. Another risk to Symantec’s shares achieving our price target is the recent slowdown in viral outbreaks, which could reduce investor expectations for future AV software sales.



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Materials

Alcan Stephen Bonnyman 416-594-7284 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthAL 38.59 47.49 2.45 3.05 15.75 12.65 0.60 1.55 28.67 6.60 47.1 32.9 (6.3) 6.9 (6.2) (8.9) 2/18/04 Source: Bloomberg, CIBC World Markets

With its Novelis spin-off, Alcan offers greater business leverage to aluminum. While relative earnings leverage to key commodities remains unchanged, the overall leverage of the firm has risen with the reduction in non-aluminum businesses.

On January 14, Alcan provided a F3Q earnings warning, which implied F3Q earnings will be roughly one-third below consensus forecasts. Despite the near-term warnings, we continue to like Alcan common equity, for several reasons. First, we believe that the new business composition still offers the bets opportunities for synergy gains and costs reductions and second, we view the remaining non-aluminum business and industries as less mature, and thus amenable to growth by acquisition and market penetration.

Our $49 per share price target reflects a target P/E multiple of roughly 16X our 2005 EPS forecast of $3.05 per share. The 16X reflects the company’s more streamlined ex-Novelis business model and our expectation of organic earnings growth in the packaging and engineered products group.

Aside from the operating risks of an integrated multinational metals and fabricating and packaging company, Alcan remains exposed to energy and resin costs in its downstream businesses, and fluctuations in foreign exchange rates, which can impact earnings. Our price target is also at risk of the company’s potential inability to achieve its targeted operating synergies from the Pechiney acquisition.

Cameco Corporation Stephen Bonnyman, 416-594-7284 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthCCO 42.07 36.85 1.13 1.71 37.23 24.55 0.20 0.48 33.07 6.40 42.7 19.1 84.9 59.6 27.1 4.7 11/19/04 Source: Bloomberg and CIBC World Markets

In our view, Cameco remains the best public market investment in the uranium market and is poised to capture the benefit of already high uranium prices.

Cameco announced that it has received approval to proceed with construction of the Cigar Lake mine in northern Saskatchewan. The announcement should come as no surprise to the market, as Cigar Lake has been in development/review/permitting for more than half a decade. The long timeframe for development of the project reflected both the onerous review process necessary to permit a uranium mine, and a conscious effort

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on Cameco’s part not to rush new production into the market during a period of weak prices.

While Cameco has released limited information on the potential cost structure at Cigar Lake, as one of the largest and higher grade deposits in the world, we expect costs to be similar to Cameco’s McArthur River mine, sub US$7 per pound.

Despite the addition of (what could be substantial) new supply in the 2007-2010 period, we doubt that supply will be able to even fill the existing supply deficit in the uranium market. The uranium market continues to operate under a structural deficit that was created two decades ago, and resulted in the accumulation of substantial excess inventories that are being reduced each year.

Our price target of $43.3 per share was generated off of a 17x multiple of the $2.56 (2006 estimate) in theoretical earnings. This target continues to reflect the historical relationship between Cameco’s share price and the uranium price.

From an operating perspective, Cameco carries slightly higher risk than its mining company peers owing to the highly regulated nature of the uranium industry. As a unique company within both the mining and power industries, Cameco also lacks simple valuation comparisons and, as such, carries increased market risk. This is compounded by the cycle peak pricing beginning in the uranium market and the uncertainty surrounding price assumptions over the next several years.

Placer Dome Barry Cooper 416-956-6787 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthPDG 17.88 17.32 0.52 0.70 34.38 25.54 0.10 0.56 6.38 7.00 23.7 12.9 7.1 6.4 (14.8) (4.3) 2/18/04 Source: Bloomberg, CIBC World Markets

Placer Dome trades at lower multiples than the average for North American gold producers and much lower than its peers of comparable size. The company offers good reserve growth prospects with its Cortez Hills discovery in Nevada and will be reporting updated results at the end of February. Placer trades at the lowest resource ounce multiple of any intermediate or senior North American producer.

The company owns three of the 10 largest undeveloped gold deposits in the world. In an era of increasing difficult challenges for finding key projects, the company is well positioned to take advantage of the dearth of new discoveries that could be developed and lead to higher production levels. We expect to receive feasibility figures for Cortez Hills and Pueblo Viejo this year as well as a production decision on Cerro Casale. The combined resources at these projects are approximately 35 million ounces attributable to Placer's account.

We are forecasting production of just more than 3.7 million ounces of gold for 2005 at costs of $251 per ounce. Both figures are up marginally more than 2004 estimates. Placer Dome offers good leverage with each $25/oz

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move in the gold price affecting 2005 cash flow by $0.08 per share and each $0.10/lb move in copper prices impacting cash flow by $0.05 per share

Our $27 price target is derived using an option pricing method for gold in the ground using our forecast gold price of $475/oz for 2005. Our option pricing method is based on a Black-Scholes equation accompanied by a calculation of the company's risk adjusted net asset value (NAV). Placer Dome is trading at a 10% discount to its "fair value" using the current gold price of $422 per ounce. The group as a whole is trading at an 8% discount to "fair value." Our NAV for Placer at variable discount rates from 8% to 15% and a $375/oz. gold price stands at $5.78/share. At a 5% discount rate, the NAV increases to $8.08 per share.

One of the greatest risks to our target price is our forecast for gold prices to average $475 /oz. in 2005. Gold equities have a strong correlation to gold price movements. Further risks include mine operations continuing without interruptions. Mining is an inherently risky industry, where technical, political, and human issues can influence operations.

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Telecommunication Services

Century Tel Inc. Timothy Horan 212-667-8137 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthCTL 33.22 33.65 2.37 2.33 14.02 14.26 0.23 0.69 25.11 10.00 35.5 26.2 4.6 7.4 (2.4) (3.7) 9/24/04 Source: Bloomberg, CIBC World Markets

We believe that the RLEC sector represents the most compelling investment opportunity in telecom, as rural carriers benefit from multiple expansion as companies adopt more efficient capital structures, lower their cost of capital and return cash to shareowners. In our view, it is only a matter of time before CTL management adopts a more shareholder friendly dividend payout and efficient capital structure.

Historically, CTL’s focus has been growth through acquisition, with the company doubling in size to 2.3 million lines since 1998, and up from 75 customers in 1930. The risk of dilutive deals has been a large overhang, but diminishing, as the RBOCs now contemplate rural split-offs versus one-off sales (constricting supply), while CTL has said it would not buy lines valued at more than $3,000 per line or more than 7X EBITDA (problematic since a dividend payer like CZN trades at 8X).

There has been some uncertainty surrounding CTL’s rural subsidies (10% of revenue), but it appears increasingly likely that the general regulatory environment, and the intertwined issues of intercarrier compensation (access charges), voice over IP (VOIP), and the Universal Service Fund will be resolved positively, albeit slowly. Clearly, the 44 senators and 178 House congressmen that represent CTL’s operating territory are strong advocates.

CTL’s valuation looks compelling at 6X our 2006E EBITDA, a sharp discount to peer CZN’s 8X. CTL has the superior rural franchise (25% of CZN’s lines are urban and more exposed to competition), but Citizens pays out 70% of its free cash flows in dividends and is more appropriately levered. We believe holding CTL enables investors to have a “call option” on the company potentially adopting a similar structure. While management has been vocal about being opposed to paying a large dividend in the near term, it is creating value through stock buybacks, while also benefiting from the overall lift in sector valuations.

We have a $40 per share price target on CenturyTel based on 7X our 2005 EBITDA estimate of $1.2 billion, a discount to rural peer Citizens’ current valuation. At $40 per share, CTL would trade at an 8.5% free cash flow yield, which is understated owing to the company’s relatively low leverage.

The largest risk facing CTL is the potential for dilutive acquisitions and possible cuts to its regulatory subsidies (41% of revenue), which may impact the company’s profitability and ability to operate in its higher cost rural markets. Mitigating this risk is the company’s excellent relationship with lawmakers and regulators. Other risks facing CenturyTel, and the RLECs in general, are increasing substitution from wireless and voice over IP, as well as relatively less exposure to an economic rebound.

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Premiere Global Industries Timothy Horan 212-667-8137 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthPGI 9.45 10.16 0.61 0.70 15.49 13.50 - - 3.34 22.00 12.3 6.6 (10.8) (20.1) 2.4 (16.1) 2/18/04 Source: Bloomberg, CIBC World Markets

We see the company continuing to post strong profitable growth, benefiting from overall robust messaging and conferencing industry fundamentals (double-digit organic revenue growth), market share gains, and expansion into under penetrated international markets, as well as the introduction of new innovative services (encrypted email, fax to email, web conferencing) and industry consolidation.

We continue to expect the conferencing space to consolidate. We believe that there are too many competitors in the conferencing space, and several factors are coming together that should enable the industry to rationalize. Additionally, scope and scale are becoming critical to success in this industry, and consolidation is the best way to recognize this and drive some pricing stability. In our view, PGI is in a perfect position to improve its fundamentals through consolidation.

PGI is producing more than $1 per share in annual free cash flow, giving it a free cash flow yield to equity of over 12% on our 2005 estimates, while the company is virtually debt free. We believe that management will continue to use its strong balance sheet to make accretive, incremental investments and acquisitions. The company is executing well, and the risk premium is declining significantly, which is positive for the stock

We have a $13 price target on PGI, which equates to 19X our 2005 EPS estimate of $0.70. This multiple is based on a PGI’s getting a 20% premium to the market multiple, which we believe is reasonable given expectations of EPS growth above 15% in the next few years, well above the market rate.

There are substantial risks to our price target; hence our rating of Sector Outperformer is modified Speculative. The company has a limited operating history and management has had limited visibility on its financial outlook in the past. Pricing remains one of the biggest areas of concern in the conferencing space; although the company has priced down more than 65% of its revenue base, pricing pressure will remain a concern until the industry consolidates. Long-term conferencing services could become a bundled component of a communications package. In addition, its blast fax business could continue to be cannibalized by email and other products. PGI approved 10B5-1 plans for Boland T. Jones, chairman and CEO, and Jeffrey A. Allred, president and COO, to sell a portion of their holdings of PGI common stock to pay back prior company loans. While we believe it is never a positive when managements are selling stock, this is the most attractive way to execute such sales and should help governance issues, in our opinion.

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Verizon Communications Timothy Horan 212-667-8137 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthVZ 36.27 41.25 2.52 2.58 14.39 14.06 1.54 4.25 12.55 20.30 42.3 34.1 (2.6) 4.3 (9.5) (11.0) 11/19/04 Source: Bloomberg and CIBC World Markets

Our bedrock themes of horizontal segmentation and network centric computing are unchanged. We believe companies will continue to consolidate and streamline assets, preparing for unprecedented change in their business models. Verizon has already confirmed that it is mulling possible strategic transactions, such as tax-free split-offs, which could create shareowner value, in our opinion.

We believe wireless pricing and data will surprise to the upside, but the industry will prove to be more economically sensitive than in the past. Among the RBOCs, Verizon has the most exposure to wireless, and should benefit from the continued growth in wireless data services. In 2006, Verizon Wireless is expected to contribute 44% and 45% of revenue and EBITDA, respectively.

In our opinion, VZ’s valuation remains attractive at 14X our 2005E EPS, a 20% discount to the market multiple, and 4% dividend yield (9% free cash flow yield), while revenue growth is positive and margins stable. Going forward, we expect the traditional six- to nine-month lag between payrolls growth and increased telecom demand to contribute to revenue growth, while strong momentum in wireless, LD, enterprise, and DSL should allow volume gains to continue to exceed expectations.

Verizon is a moderate-risk equity investment, in our opinion. We believe that the company has visible free cash flows, and is strategically better positioned than its peers in wireless and long-distance. Our $46 price target is based on a market multiple on our 2005 EPS estimate. Historically, the RBOCs have traded at as much as a 40% discount to as high as a slight premium to the market multiple. We believe the stock will trade at the higher range of its relative valuations as fundamentals improve from current trough levels.

The largest company-specific risks to our price target are higher levels of debt than SBC and BellSouth; potential liabilities because of Vodafone’s (Not Rated) put on Verizon Wireless assets (although we believe the risk of this option being exercised is currently low); more competition in its region; and slower economic growth in its territories than BellSouth. The largest risks facing all the local exchange companies include competition and technology substitution.

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SRS Focus List—Additions The following additions were effective January 20, 2005.

Boston Scientific John P. Calcagnini 310-446-3694 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthBSX 33.25 33.47 1.63 2.05 20.40 16.22 - - 4.65 35.00 46.1 31.3 (10.6) (4.2) (8.3) (6.3)

1/20/05 Source: Bloomberg and CIBC World Markets .

Gillette Joseph Altobello 212-667-8085 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 A 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthG 44.74 44.89 1.67 1.92 26.79 23.30 0.65 1.45 2.25 48.00 45.7 35.0 22.5 8.5 12.9 0.5

1/20/05 Source: Bloomberg, CIBC World Markets

Johnson & Johnson Mara Goldstein 212-667-8112 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthJNJ 62.48 62.67 3.07 3.38 20.35 18.49 1.14 1.82 8.67 23.80 64.3 49.3 21.3 10.9 8.6 (1.0)

1/20/05 Source: Bloomberg, CIBC World Markets

Teva Pharmaceuticals Elliot Wilbur 212 667-7599 [email protected]

1/20/05 Recommended EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price Price/ Date 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthTEVA 27.92 28.10 1.43 1.64 19.52 17.02 0.20 0.72 2.94 24.00 34.7 22.8 (4.9) (13.4) 12.5 (5.0)

1/20/05 Source: Bloomberg and CIBC World Markets .


55

Deletions A) Deletions on the 18-month Sunset Clause To enhance the focus of the SRS on the market cycle, we introduced an 18-consecutive-month limit for which a stock may remain on the list (i.e., a sunset clause). Deletion of a stock because of this time limit is not a reflection on the particular stock. Rather, it reflects our view that no one stock is appropriate for all seasons and all investment climates. Removal as a result of the sunset clause will not prevent us from returning to the stock, after some time, if the investment climate changes in its favor.

None.

B) Deletions on Strategic Realignment None.

C) Normal Deletions Effective January 20, 2005, we removed Pfizer from the SRS Focus List for price/performance reasons. Pfizer remains Sector Outperformer–rated by our equity research analyst.

Pfizer Mara Goldstein 212-667-8112 [email protected]

1/20/05 EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price 2004 E 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthPFE 24.91 2.12 2.23 11.75 11.17 0.76 3.05 2.60 45.80 38.9 22.0 (27.8) (22.9) (11.9) 2.6 Source: Bloomberg, CIBC World Markets

Effective January 12, we removed Procter & Gamble (PG) from the SRS Stock Focus List because our analyst downgraded below Sector Outperformer. All SRS stocks must be Sector Outperformer rated.

Procter & Gamble Joseph Altobello 212-667-8085 [email protected]

1/20/05 EPS EPS Ind. Yield Book 52 Week 52 Week Price Performance Abs (%)Ticker Price 2004 A 2005 E P/E 04 P/E 05 Dividend (%) Value ROE (%) High Low 12 Mth 6 Mth 3 Mth 1 MthPG 56.68 2.30 2.60 24.4 21.8 1.0 1.76 4.6 44.0 57.4 49.0 14.9 4.0 5.8 1.9 Source: Bloomberg, CIBC World Markets

Since publication of our last report (November 24, 2004), we dropped Lincoln National (LNC) effective January 7, 2005, on a disruption in analyst coverage.

Effective January 21, we dropped Ensco International (ESV), Nabors Industries (NBR) and Newfield Exploration (NFX) from the Special Research Series Focus List due to disruption in analyst coverage.


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Company Descriptions

Advisory Board Company Advisory Board Company is the leading provider of "best practices" research to the healthcare industry.

Alcan Alcan is the second-largest producer of aluminum in the western world and the largest producer of flat-rolled aluminum products.

Alliance Capital Alliance Capital is an asset management company. The company provides investment management services to both institutional and retail clients.

American Eagle AEOS is a specialty retailer of its own brand of casual apparel, footwear and accessories for men and women.

Amgen Amgen, a fully integrated biotechnology company, discovers, develops, manufactures and markets human therapeutics based on advances in cellular and molecular biology.

Applied Materials Applied Materials is the dominant vendor of semi. equipment including CMP, CVD, PVD, RTP, silicon epitaxy, implant and inspection. It also supplies FPD and maskmaking equipment.

AU Optronics AUO is Taiwan's leading manufacturer of TFT-LCD panels for notebook PCs, desktop monitors and TVs.

Bed Bath And Beyond BBBY is a specialty retailer of quality domestic merchandise and home furnishings.

Boston Scientific Boston Scientific is the worldwide leader in the manufacture of catheter-based devices for the treatment of cardiovascular, neurovascular, and peripheral vascular disease.

Broadcom Corp. Broadcom is a bellwether Comm IC company providing solutions for LANs, cable and DSL modems, set-top boxes, servers, and wireless networks.

Cameco Corp. Cameco is producer and converter of uranium, and holds an interest in a nuclear generation facility and interest in gold miner Centerra.

Century Tel CenturyTel, Inc. is an incumbent local exchange carrier, providing various telecom services in several rural markets.

Central Garden And Pet Central Garden & Pet manufactures and markets lawn and garden supply products and pet supply products.

Check Point Check Point Software develops Internet security solutions including firewalls for enterprise networks, Telcos, ISPs, ASPs, MSPs, and Virtual Private Networks (VPNs).

Cintas Corp. Cintas is the world’s largest provider of corporate identity uniforms, with $2.0+bn in revenue.

Cisco Systems Cisco Systems is currently the largest vendor of data networking equipment and the leading global supplier of internetworking solutions.

Comcast Corporation With 22 million basic subs, Comcast is the largest cable operator in the world and a partial owner of QVC.

Comverse Technology Comverse is a leading provider of enhanced services platforms to large communications service providers.


57

DOV Pharmaceutical DOV Pharmaceutical develops drugs for neurological and other conditions.

Emerson Emerson is a diversified global manufacturer of power equipment, HVAC gear, industrial and process automation equipment, and appliances and tools.

Fossil Inc. Fossil, Inc. designs, develops, markets and distributes watches, fashion accessories, apparel and other products.

General Dynamics GD builds military ships and combat vehicles and is a leading provider of IT/ISR solutions. It also makes the Gulfstream business jets.

General Electric General Electric is a diversified industrial company engaged in developing, manufacturing and marketing a wide variety of products.

Gillette Gillette is a global leader in blades and razors, alkaline batteries (Duracell) and oral care (Oral B).

Hewlett Packard HPQ provides IT products, technologies and solutions to consumers and businesses, including PC, imaging and printing, enterprise systems and global services

Home Depot The world's largest home improvement retailer and one of nation's 10 largest retailers.

Isolagen Isolagen, Inc., develops autologous cellular technology for hard and soft tissue regeneration for use in cosmetic dermatology, periodontal disease and other health-related markets.

Jarden Corporation Jarden Corporation is a leading provider of niche consumer products used in home food preservation.

Johnson & Johnson A diversified healthcare company with strengths in pharmaceuticals, medical devices, and consumer health.

KLA Tencor KLA-Tencor Corporation is the dominant supplier of process diagnostics equipment to the semiconductor industry.

L-3 Communications L-3 Communications is a leading defense electronics supplier and a prime contractor in aircraft modernization and ISR, and has a strong presence in the explosives detection market.

Life Point Hospitals LifePoint Hospitals owns and operates acute-care hospitals in growing non-urban areas.

Lockheed Martin Lockheed Martin is the world’s #1 defense contractor and the #1 provider of IT services, systems integration, and training to the US Government.

Microsemi Corp. Based in Irvine, California, Microsemi is long-time supplier to the military and aerospace markets. The company has expanded into value-added analog supplies focused on high-growth power management, transient suppression and Radio/Frequency/Microwave markets. FY02 sales were $213 million.

Morgan Stanley Morgan Stanley Dean Witter is a global investment bank, global asset manager and a credit-card company.

Pacific Healthcare Systems PacifiCare is a leading managed care company serving more than 2.5 million commercial and Medicare customers.

Placer Dome Placer Dome is Canada's second-largest gold producer with 18 mines on five continents.

Protein Design Labs Protein Design Labs is the leading developer of human and humanized monoclonal antibodies for the prevention and treatment of human diseases.


58

Premiere Global Industries PGI (formerly PTEK) is a leading conferencing and enhanced multimedia group communications services provider.

SAP SAP is one of the world's largest providers of enterprise software.

Symantec Symantec provides a broad range of solutions, including virus protection, vulnerability assessment, intrusion prevention, and remote management.

Talisman Energy Talisman is a large, internationally diversified E & P company based in Canada.

Teva Pharmaceuticals Israeli-based leader in the global generics market and largest U.S. generic company. Proprietary products include MS drug Copaxone.

Time Warner Time Warner is an integrated Media, Internet and communications company with Internet access services, cable systems, cable network, film and publishing operations.

Verizon Verizon is incumbent local telecom carrier in the Northeast and in several smaller regions, covering one-third of the U.S. It is also the largest wireless carrier in the U.S., with 40 million subscribers.


59

Notes

Description The unweighted series of our Sector Outperformer and Special Research Series represents the percentage change that would have occurred in a group of continuous equal-share investments in all recommended issues. This measure seems most reflective of the performance for a group of stocks chosen on their individual merits but without consideration of overall portfolio design. Performance of this unweighted series is also shown in relation to the S&P 500.

Method of Pricing The performance figure takes into account any changes in the status of each recommendation on the day following the recommendation, i.e., only outstanding Sector Outperformer–rated recommendations are included in the performance measure; securities are excluded from the measure and priced on the day following a recommendation to downgrade below Sector Outperformer. The data do not take into account dividends or transaction costs.

Qualifications The record of the past performance is not necessarily indicative of future results. The SRS Focus List record has been achieved over a period in which secondary stocks of the type here involved (both larger and smaller capitalization stocks) generally performed relatively better than recognized larger companies that are included in the S&P 500. In addition, this performance could have been achieved only if all stocks were bought at the prices recommended and held either to the date the recommendation was terminated or to the most recent pricing date. Accordingly, the SRS Focus List stocks may not be suitable for investors with limited resources. The performance comparison with the S&P 500 is being used as it is a broad-based and widely recognized index of stock market performance extensively used to benchmark institutional equity portfolio performance. However, the capitalization of companies in the S&P 500 is typically greater and the market volatility of their securities is typically less than those in the SRS Focus List, and the two are, therefore, not strictly comparable. It should also be noted that the average volatility of the market prices of the securities recommended in the SRS Focus List could be expected to exceed that of the S&P 500, which could favorably influence performance in a rising market and unfavorably influence performance in a declining market. Stocks in the SRS Focus List could be less marketable than S&P 500 stocks. The historical unweighting of stocks in the SRS Focus List differs from the market capitalization weighting of stocks in the S&P 500. The SRS Focus List is not intended to represent a diversified model portfolio. We also compare CIBC World Market’s Sector Outperformer List and Sector Outperformer –ex SRS Focus List to the S&P 500 and similar considerations may apply.

Upon request, CIBC World Markets will be pleased to furnish a list of all recommendations made by it and the Special Research Committee during the past five years, as well as copies of research reports on the individual recommendations.


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CIBC World Markets: Equity Research Sectors and Analysts

Canadian Enterprise Software Paul Lechem & IT Services Communications Software Shaul Eyal, Ittai Kidron Electronics Manufacturing Todd Coupland, Hai Ying (Grace) Ding

Services Enterprise Software Brad Reback, Woo Jin Ho, Brendan McCabe Infrastructure Management Curtis Shauger, Renaud DeVreker

Software FPD Food Chain Matthew Smith, Ali Irani, Mary Brixie, Peter Wright Hardware Ali Irani, Mary Brixie, Matthew Smith, Peter Wright Hardware - Canadian Todd Coupland, Hai Ying (Grace) Ding Israeli Technology Shaul Eyal, Ittai Kidron Networking & Data Infrastructure; Steve Kamman, Jeff Osborne

Cable Equipment/Broadband Access Semiconductor & Electronics Ali Irani, Mary Brixie,

Capital Equipment Matthew Smith, Peter Wright Semiconductors & Components Rick Schafer, Daniel Gelbtuch, Allan Mishan, Eddie Woo, Sam Dubinsky, Daniel Morris Software Paul Lechem Wireless Technology – U.S. Ittai Kidron, George Iwanyc

Broadcasting & Advertising Jason Helfstein, Ofer Elyakim Cable Services & Satellite Cannon Carr Media & Entertainment Michael Gallant, John Stewart

Communications & Media Bob Bek, Amy Glading

Wireless Services & CLECs Cannon Carr Wireline Telecom Services; Timothy Horan, Edward Yang,

Emerging Telecom/RLECs Srinivas Anantha

Telecommunications & Dvai Ghose, Corey Dias Cable Services

Technology

Media & Entertainment

Communications

Telecommunications Services

Telecommunications &

Cable Services


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Biotechnology Matthew Geller, Bret Holley, Tariq Kassum Biotechnology & Health Sciences Lennox Gibbs, John Di Re Healthcare Facilities Charles Lynch, Michael Wiederhorn Healthcare Services John Szabo, James Naklicki Healthcare Services - Lennox Gibbs, John Di Re

Canada Medical Devices John Calcagnini, Chad Suggs Pharmaceuticals Mara Goldstein, Kent McCrea Specialty Pharmaceuticals Elliot Wilbur, Colleen Lahey,

Kent McCrea Specialty Pharmaceuticals - Lennox Gibbs, John Di Re

Canada

Canadian Pipelines & Utilities Matthew Akman, Alda Pavao Oil & Gas—Integrated Robert Plexman, Olivia Chen, Victor Ponce De Leon Oil & Gas—E&P Andrew Potter, Robert Plexman, Olivia Chen, Michael Rimell Oil & Gas Royalty Trusts Brad Borggard, Mark Bridges, Clayton Paradis U.S Pipelines & Utilities Matthew Akman, Alda Pavao

Asset Managers Ken Worthington, Rick Bennett Brokers Ken Worthington, Niamh Guinan Canadian Banks Quentin Broad, Mohammad Saleem Canadian Property & Quentin Broad,

Casualty Insurance Mohammad Saleem Diversified Financial Mohammad Saleem, Quentin Broad

Real Estate Rossa O’Reilly, Nelson Mah

Broadlines/Home Furnishings Peter Benedict Retailing Business Services Thatcher Thompson, Larry Lee, Crista Lewis Consumer & Household Products Joseph Altobello, Art Bascomb Gaming & Lodging William Schmitt, David Katz Hardlines Retailing Dan Wewer, Vivian Ma, Sujata Shekar Internet & E-Commerce Paul Keung, Peter Benedict, Apurva Shah Leisure & Travel Services Paul Keung, Apurva Shah Restaurants John Glass, Jeffrey Farmer Specialty Retailing - Softlines Dorothy Lakner, Roxanne Meyer

Healthcare

Energy

Financial Institutions

Real Estate & Related

Consumer & Business Services


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Consumer Products & Services Michael Van Aelst, Evan Frantzeskos Merchandising Perry Caicco, Kathleen Wong, Richard Piticco

Chemicals & Fertilizers Jacob Bout, Stephen Bonnyman

Metals & Minerals Stephen Bonnyman, Barry Cooper, Michael Curran, Jacob Bout Precious Metals Barry Cooper, Michael Curran, Stephen Bonnyman, Jacob Bout

Defense Myles Walton, Ed Keller Industrial Diversified/Machinery Robert LaGaipa Industrial Multi-Industry Robert McCarthy, Christopher Glynn

Automotive John Novak, Michael Willemse Building Products John Novak, Michael Willemse Capital Equipment John Novak, Michael Willemse Steel John Novak, Michael Willemse

Paper & Forest Products Don Roberts, Herve Carreau, Jonathan Lethbridge

Income Trusts Alice Sun Dunning Business Trusts Petro Panarites, Mary McKee, Paul Holden, Natalia Zalba

Special Situations Ron Schwarz, Jacqueline Boland, Robert Stabile, Stephen Kammermayer

Consumer Products

Chemicals & Fertilizers

Mining

Industrial/Capital Goods

Industrial Products

Paper & Forest Products

Income Trusts

Special Situations


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IMPORTANT DISCLOSURES:

Analyst Certification: Each CIBC World Markets research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

Potential Conflicts of Interest: Equity research analysts employed by CIBC World Markets are compensated from revenues generated by various CIBC World Markets businesses, including the CIBC World Markets Investment Banking Department within the Corporate and Leveraged Finance Division. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. CIBC World Markets generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers. Additionally, CIBC World Markets generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers.

In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, CIBC World Markets may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon.

Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.


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Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by CIBC World Markets: Stock Prices as of 01/21/2005: Affiliated Computer Services (2f) (ACS-NYSE, US$52.05, Sector Outperformer) Alcan Inc. (2a, 2d, 7) (AL-NYSE, US$38.91, Sector Outperformer) Alliance Capital (5a) (AC-NYSE, US$41.15, Sector Outperformer) American Eagle Outfitters (1, 2f) (AEOS-OTC, US$48.01, Sector Outperformer) Amgen (1, 2f, 4a, 4b) (AMGN-OTC, US$62.57, Sector Outperformer) Applied Materials (1) (AMAT-OTC, US$15.59, Sector Outperformer) AU Optronics (AUO-NYSE, US$14.24, Sector Outperformer) Bed, Bath & Beyond (1) (BBBY-OTC, US$40.15, Sector Outperformer) BellSouth (2f) (BLS-NYSE, US$26.65, Sector Outperformer) Boston Scientific Corp. (BSX-NYSE, US$32.91, Sector Outperformer) Broadcom Corp. (1) (BRCM-NASDAQ, US$30.49, Sector Outperformer - Speculative) Cameco Corporation (CCO-TSX, C$42.25, Sector Outperformer) Central Garden & Pet (1, 2a, 2b, 2d, 2f, 4a, 4b) (CENT-OTC, US$40.56, Sector Outperformer) CenturyTel (2f) (CTL-NYSE, US$32.79, Sector Outperformer) Check Point Software Tech. (1) (CHKP-OTC, US$24.23, Sector Outperformer) Cintas Corporation (1) (CTAS-OTC, US$42.83, Sector Outperformer) Cisco Systems (1, 3a, 3b) (CSCO-OTC, US$18.01, Sector Outperformer) Citizens Communications (CZN-NYSE, US$13.23, Sector Performer) Comcast (1) (CMCSA-OTC, US$32.56, Sector Outperformer) Computer Associates (CA-NYSE, US$28.12, Sector Performer) Comverse Technology (1) (CMVT-OTC, US$22.52, Sector Outperformer) Cooper Industries Ltd. (CBE-NYSE, US$66.35, Sector Performer) Dell Computer Corp. (1) (DELL-NASDAQ, US$40.04, Sector Outperformer) DOV Pharmaceutical (1, 2a, 2b, 2d, 2f, 8) (DOVP-OTC, US$16.30, Sector Outperformer) EchoStar Communications (1) (DISH-OTC, US$32.54, Sector Underperformer) Emerson (EMR-NYSE, US$65.19, Sector Outperformer) Fossil, Inc. (1, 2a, 2b, 2d) (FOSL-OTC, US$27.83, Sector Outperformer) General Dynamics Corporation (GD-NYSE, US$100.51, Sector Outperformer) General Electric (4a, 4b) (GE-NYSE, US$35.13, Sector Outperformer) Genesys Conferencing (2a, 2f) (GNSY-OTC, US$1.01, Sector Performer - Speculative) Gillette (G-NYSE, US$44.08, Sector Outperformer) Guidant Corp. (GDT-NYSE, US$70.93, Not Rated) Hewlett-Packard (2g, 3a, 3b) (HPQ-NYSE, US$19.99, Sector Outperformer) Home Depot (HD-NYSE, US$40.90, Sector Outperformer) Intel Corporation (1) (INTC-NASDAQ, US$22.42, Sector Performer) International Business Machines (2g, 4a, 4b) (IBM-NYSE, US$92.38, Sector Outperformer) Isolagen, Inc. (2a, 2b, 2d, 2f) (ILE-AMEX, US$7.20, Sector Outperformer - Speculative) Jarden Corporation (2f, 4a, 4b) (JAH-NYSE, US$45.57, Sector Outperformer) Johnson & Johnson (JNJ-NYSE, US$61.85, Sector Outperformer) KLA-Tencor Corp. (1) (KLAC-OTC, US$44.41, Sector Outperformer) L-3 Communications Holdings Inc (LLL-NYSE, US$69.60, Sector Outperformer) LifePoint Hospitals, Inc. (1, 2f) (LPNT-OTC, US$38.01, Sector Outperformer) Lockheed Martin Corporation (LMT-NYSE, US$54.75, Sector Outperformer) Lowe's Companies (LOW-NYSE, US$55.91, Sector Outperformer) Medtronic, Inc. (4a, 4b) (MDT-NYSE, US$51.99, Sector Underperformer) Merck & Co. (5a) (MRK-NYSE, US$30.36, Sector Performer) Microsemi Corp. (1, 2f) (MSCC-OTC, US$14.75, Sector Outperformer)


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Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by CIBC World Markets: (Continued) Stock Prices as of 01/21/2005: Morgan Stanley (MWD-NYSE, US$54.48, Sector Outperformer) Oracle Corporation (1) (ORCL-OTC, US$13.31, Sector Outperformer) PacifiCare Health Systems (2f, 4a, 4b) (PHS-NYSE, US$59.95, Sector Outperformer) PeopleSoft (1) (PSFT-OTC, US$26.49, Sector Performer) Pfizer Inc. (PFE-NYSE, US$24.48, Sector Outperformer) Placer Dome Inc. (2a, 2c, 2e, 2f, 7) (PDG-NYSE, US$18.34, Sector Outperformer) Premiere Global Services (2f) (PGI-NYSE, US$9.45, Sector Outperformer - Speculative) Procter & Gamble (PG-NYSE, US$55.65, Sector Performer) Protein Design Labs (1, 2f, 5a) (PDLI-OTC, US$19.13, Sector Outperformer) Raindance Communications (1, 2f) (RNDC-OTC, US$2.25, Sector Outperformer - Speculative) SAP AG (SAP-NYSE, US$39.33, Sector Outperformer) SBC Communications (2f) (SBC-NYSE, US$24.58, Sector Outperformer) St. Jude Medical, Inc. (STJ-NYSE, US$37.48, Sector Performer) Symantec Corporation (1) (SYMC-OTC, US$23.39, Sector Outperformer) Talisman Energy Inc. (2g, 6a, 7, 9) (TLM-TSX, C$35.91, Sector Outperformer) Teva Pharmaceutical (1, 2f) (TEVA-OTC, US$27.44, Sector Outperformer) The Advisory Board Company (1, 2f, 3a, 3b) (ABCO-OTC, US$35.52, Sector Outperformer) Time Warner Inc. (4a, 4b) (TWX-NYSE, US$18.59, Sector Outperformer) Verint Systems (1) (VRNT-OTC, US$35.16, Sector Outperformer) VERITAS Software (1) (VRTS-OTC, US$25.72, Sector Performer) Verizon (2f) (VZ-NYSE, US$36.50, Sector Outperformer)

Companies Mentioned in this Report that Are Not Covered by CIBC World Markets: Stock Prices as of 01/21/2005: Chiron (CHIR-OTC, US$34.09, Not Rated) ENSCO International (ESV-NYSE, US$33.25, Not Rated) GlobalSantaFe (GSF-NYSE, US$34.95, Not Rated) Illinois Tool Works Inc. (ITW-NYSE, US$87.70, Not Rated) Lincoln National Corp. (LNC-NYSE, US$45.51, Not Rated) Nabors Industries (NBR-AMEX, US$49.15, Not Rated) Newfield Exploration Company (NFX-NYSE, US$59.34, Not Rated) Noble Drilling Corporation (NE-NYSE, US$52.41, Not Rated) Novellus Systems, Inc. (NVLS-OTC, US$25.27, Not Rated) Tivo Inc. (TIVO-OTC, US$4.08, Not Rated) Transkaryotic Therapies Inc. (TKTX-OTC, US$24.00, Not Rated) Transocean, Inc. (RIG-NYSE, US$43.27, Not Rated) Ulticom (ULCM-OTC, US$14.45, Not Rated) Vodafone (VOD-NYSE, US$26.01, Not Rated) Important disclosure footnotes that correspond to the footnotes in this table may be found in the "Key to Important Disclosure Footnotes" section of this report.


66

Key to Important Disclosure Footnotes: 1 CIBC World Markets Corp. makes a market in the securities of this company. 2a This company is a client for which a CIBC World Markets company has performed investment banking services

in the past 12 months. 2b CIBC World Markets Corp. has managed or co-managed a public offering of securities for this company in the

past 12 months. 2c CIBC World Markets Inc. has managed or co-managed a public offering of securities for this company in the

past 12 months. 2d CIBC World Markets Corp. has received compensation for investment banking services from this company in

the past 12 months. 2e CIBC World Markets Inc. has received compensation for investment banking services from this company in the

past 12 months. 2f CIBC World Markets Corp. expects to receive or intends to seek compensation for investment banking services

from this company in the next 3 months. 2g CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services

from this company in the next 3 months. 3a This company is a client for which a CIBC World Markets company has performed non-investment banking,

securities-related services in the past 12 months. 3b CIBC World Markets Corp. has received compensation for non-investment banking, securities-related services

from this company in the past 12 months. 3c CIBC World Markets Inc. has received compensation for non-investment banking, securities-related services

from this company in the past 12 months. 4a This company is a client for which a CIBC World Markets company has performed non-investment banking,

non-securities-related services in the past 12 months. 4b CIBC World Markets Corp. has received compensation for non-investment banking, non-securities-related

services from this company in the past 12 months. 4c CIBC World Markets Inc. has received compensation for non-investment banking, non-securities-related

services from this company in the past 12 months. 5a The CIBC World Markets Corp. analyst(s) who covers this company also has a long position in its common

equity securities. 5b A member of the household of a CIBC World Markets Corp. research analyst who covers this company has a

long position in the common equity securities of this company. 6a The CIBC World Markets Inc. analyst(s) who covers this company also has a long position in its common

equity securities. 6b A member of the household of a CIBC World Markets Inc. research analyst who covers this company has a

long position in the common equity securities of this company. 7 CIBC World Markets Corp., CIBC World Markets Inc., and their affiliates, in the aggregate, beneficially own 1%

or more of a class of equity securities issued by this company. 8 A partner, director or officer of CIBC World Markets Inc. or any analyst involved in the preparation of this

research report has provided services to this company for remuneration in the past 12 months. 9 A senior executive member or director of Canadian Imperial Bank of Commerce ("CIBC"), the parent company

to CIBC World Markets Inc. and CIBC World Markets Corp., or a member of his/her household is an officer, director or advisory board member of this company or one of its subsidiaries.

10 Canadian Imperial Bank of Commerce ("CIBC"), the parent company to CIBC World Markets Inc. and CIBC World Markets Corp., has a significant credit relationship with this company.

11 The equity securities of this company are restricted voting shares. 12 The equity securities of this company are subordinate voting shares. 13 The equity securities of this company are non-voting shares. 14 The equity securities of this company are limited voting shares.


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CIBC World Markets Price Chart

For price and performance information charts required under NYSE and NASD rules, please visit CIBC on the web at http://www.cibcwm.com/research/sec2711 or write to CIBC World Markets Corp., 300 Madison Avenue, 7th Floor, New York, NY 10017-6204, Attn: Research Disclosure Chart Request.

CIBC World Markets' Stock Rating System

Abbreviation Rating Description

Stock Ratings

SO Sector Outperformer Stock is expected to outperform the sector during the next 12-18 months. SP Sector Performer Stock is expected to perform in line with the sector during the next 12-18 months. SU Sector Underperformer Stock is expected to underperform the sector during the next 12-18 months. NR Not Rated CIBC does not maintain an investment recommendation on the stock. R Restricted CIBC World Markets is restricted*** from rating the stock. Stock Ratings Prior To August 26, 2002 SB Strong Buy Expected total return over 12 months of at least 25%. B Buy Expected total return over 12 months of at least 15%. H Hold Expected total return over 12 months of at least 0%-15%. UP Underperform Expected negative total return over 12 months. S Suspended Stock coverage is temporarily halted. DR Dropped Stock coverage is discontinued. R Restricted Restricted UR Under Review Under Review

Sector Weightings** O Overweight Sector is expected to outperform the broader market averages. M Market Weight Sector is expected to equal the performance of the broader market averages. U Underweight Sector is expected to underperform the broader market averages. NA None Sector rating is not applicable.

**Broader market averages refer to the S&P 500 in the U.S. and the S&P/TSX Composite in Canada. "Speculative" indicates that an investment in this security involves a high amount of risk due to volatility and/or liquidity issues. ***Restricted due to a potential conflict of interest. "CC" indicates Commencement of Coverage. The analyst named started covering the security on the date specified.

Ratings Distribution*: CIBC World Markets' Coverage Universe

(as of 21 Jan 2005) Count Percent Inv. Banking Relationships Count Percent

Sector Outperformer (Buy) 305 33.2% Sector Outperformer (Buy) 196 64.3%

Sector Performer (Hold/Neutral) 428 46.6% Sector Performer (Hold/Neutral) 247 57.7%

Sector Underperformer (Sell) 184 20.0% Sector Underperformer (Sell) 90 48.9%

Restricted 0 0.0% Restricted 0 0.0%

*Although the investment recommendations within the three-tiered, relative stock rating system utilized by CIBC World Markets do not correlate to buy, hold and sell recommendations, for the purposes of complying with NYSE and NASD rules, CIBC World Markets has assigned buy ratings to securities rated Sector Outperformer, hold ratings to securities rated Sector Performer, and sell ratings to securities rated Sector Underperformer without taking into consideration the analyst's sector weighting.

Important disclosures required by IDA Policy 11, including potential conflicts of interest information, our system for rating investment opportunities and our dissemination policy can be obtained by visiting CIBC on the web at http://research.cibcwm.com/res/Policies/Policies.html or by writing to CIBC World Markets Inc., BCE Place, 161 Bay Street, 4th Floor, Toronto, Ontario M5J 2S8, Attention: Research Disclosures Request.


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This report is issued and approved for distribution by (i) in the United States, CIBC World Markets Corp., a member of the New York Stock Exchange ("NYSE"), NASD and SIPC, (ii) in Canada, CIBC World Markets Inc., a member of the Investment Dealers Association ("IDA"), the Toronto Stock Exchange, the TSX Venture Exchange and CIPF, (iii) in the United Kingdom, CIBC World Markets plc, which is regulated by the Financial Services Authority ("FSA"), and (iv) in Australia, CIBC World Markets Australia Limited, a member of the Australian Stock Exchange and regulated by the ASIC (collectively, "CIBC World Markets"). This report is provided, for informational purposes only, to institutional investor clients of CIBC World Markets in the United States and Canada and retail clients of CIBC World Markets in Canada, and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such offer or solicitation would be prohibited. 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Equity Research

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Documents

Portfolio Strategy Sector Weighting: SRS Stock Focus Listresearch.cibcwm.com/general_public/download/srs_012105.pdf · Find CIBC research on Bloomberg, firstcall.com, multex.com,