Recently when I was out for Customer call this was the question raised by the DBA, incidentally Microsoft has released a KBA http://go.microsoft.com/?linkid=6109703 that explains the cause and solution.
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For the first time I have got a chance to work with SQLCMD utility in SQL Server 2005 and I was keen to use the variables and in previous versions of SQL this was controlled by declaring them explicitly. Now in SQL Server this is not the case, using SQLCMD
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