In 2007 you shared some financial projections beyond 2008. Please help me understand how you will achieve 9 to 11% growth in earnings per share?

BOB > I’d like to explain how we developed the longer-term financial projections for the business and why we decided to communicate them to investors. Fiscal year 2007 marked the mid-way point in our three-year restructuring program. During this period, sales and profits were somewhat curtailed by our rationalization of smaller and less profitable customers and products.
    As part of our strategic planning process we asked our leadership team to take a look ahead at their portfolio of products, growth prospects and supply chain initiatives. With good visibility, each operating group developed projections for sales growth, margin improvement and increased operating income that were then consolidated for the total Company.
    We recognized that many of our shareholders would benefit from learning and understanding our longer-term outlook.

GORDON > Investors have asked if we think some of our projections are overly ambitious. We don’t think so.     We expect to grow sales 4 to 6% annually. As Alan indicated earlier, we have achieved average annual sales growth of 7% for the past five years, with one-fourth of this increase coming from acquisitions.

MARK > The largest part of the 4 to 6% sales increase will come from a 2 to 3% increase in our “base business.” Our revitalization of packaging, products and merchandising is lifting sales of the entire category for our core consumer businesses. In addition, we are working to build our market share with more effective advertising. The introduction of new products will add another 1 to 2% to sales.

GORDON > Over time, we believe we can increase gross profit margins by half a percentage point per year. About half of this increase will come from our supply chain initiatives. The other half will result from the faster growth of our consumer business, which has a higher margin than the industrial business.
    As part of our growth strategy, we intend to invest a portion of this margin improvement back in the business to build for the future. Higher margins will also contribute to a 9 to 11% annual increase in earnings per share.