DJIA:            8799.81   +17.69      (+0.20%) 
 S&P 500:         1101.75    +8.20      (+0.75%) 
 Nasdaq:          1835.68   +16.98      (+0.93%) 
 Value Line ndx    978.32    +7.81      (+0.80%) 
 30-Year Bond   102 21/32   +20/32  5.93% Yield 
 

HEROES

Microprocessor maker Advanced Micro Devices <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMD)") else Response.Write("(NYSE: AMD)") end if %> rose another $2 1/2 to $29 1/16 today after advancing 7.5% yesterday on an upgrade from Volpe, Brown Whelan. Today, Prudential Securities and BancAmerica Robertson Stephens upgraded their ratings to "buy." AMD's main problem over the last year has not been demand related -- almost all PC makers want alternatives to Intel -- but yield related. The analysts at BancAmerica and Volpe Brown suggested the yields on the company's K6 chip are improving, possibly moving up to the 60% to 80% range this quarter from around 20% last quarter (which means that fixed costs can be leveraged over more revenue from more chips). Speed geek reports like a recent PC World article indicating that AMD's K6 chip is faster than Intel Corp.'s <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> soon-to-be released Celeron processor for the sub-$1,000 PC market probably won't make much difference until more processing power is needed in software applications. Until then, Intel can compete pretty effectively in the price arena, thus thwarting AMD's attempts to grab market share.

Athletic and active-wear shoe retailer The Finish Line <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FINL)") else Response.Write("(Nasdaq: FINL)") end if %> sprinted $3 higher to $23 3/4 after reporting Q4 EPS of $0.37, up 42% from a year ago and beating the First Call mean estimate of $0.34. Morgan Stanley Dean Witter raised its rating on the stock to "strong buy" from "outperform." Excellent inventory management through point-of-sale data capture and automated distribution centers that ship "sneaks" to stores every third day insulated the company from the tales of woe told by Nike <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NKE)") else Response.Write("(NYSE: NKE)") end if %>, Fila Holdings <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FLH)") else Response.Write("(NYSE: FLH)") end if %>, and Reebok <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RBK)") else Response.Write("(NYSE: RBK)") end if %>. Despite the industrywide sneaker slowdown and the move by trendy kiddies to "brown shoes," the company opened 53 new stores in fiscal 1997, with 50 to 60 new stores on the way this year. The new stores will be about 44% larger than the company's earlier locations, allowing for the display of more activewear and accessories. An increased focus on these items, which have higher margins than sneakers and accounted for nearly a third of total sales in fiscal 1996, should further cushion Finish Line from the sneaker-makers' problems.

Several banking stocks picked up some ground today on renewed sentiment that inflation is not picking up in the U.S. economy. Bankers Trust <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BT)") else Response.Write("(NYSE: BT)") end if %> gained $4 11/16 to $120 5/16, J.P. Morgan <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JPM)") else Response.Write("(NYSE: JPM)") end if %> picked up $1 7/8 to $134 5/16, Citicorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %> added $2 5/16 to $142, and Chase Manhattan <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CMB)") else Response.Write("(NYSE: CMB)") end if %> moved up $1 1/8 to $134 7/8. Alan Greenspan and his compatriots at the Federal Reserve decided to leave the economic punch bowl on the table for a little while longer by not increasing the key Federal Funds short-term interest rate today, suggesting the Fed is still waiting for a clear indication of higher inflation before hiking rates. Adding to the rosy inflation outlook is oil prices, which continued to drop despite yesterday's agreement by the OPEC member nations to curb production.

QUICK TAKES: Wireless communications equipment, satellite system operator, and semiconductor manufacturer Motorola Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOT)") else Response.Write("(NYSE: MOT)") end if %> climbed $3 5/16 to $60 3/4 after the Wall Street Journal said the firm is planning to restructure its operations by merging six separate businesses into two mega-divisions, one for consumer products and one for industrial products... Nextel Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NXTL)") else Response.Write("(Nasdaq: NXTL)") end if %> rose $3 11/16 to $33 3/4 after the wireless communications company was selected to replace Safety-Kleen Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SK)") else Response.Write("(NYSE: SK)") end if %> on the S&P 500 index. Safety-Kleen recently agreed to a merger with Laidlaw Environmental Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LLE)") else Response.Write("(NYSE: LLE)") end if %>... Qualcomm Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QCOM)") else Response.Write("(Nasdaq: QCOM)") end if %> advanced $3 15/16 to $53 1/2 after the wireless phone company was added to the S&P MidCap 400 index to replace Nextel Communications.

Computer keyboard, monitor, and mouse switch extension products maker Cybex Computer Products <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CBXC)") else Response.Write("(Nasdaq: CBXC)") end if %> gained $5 7/16 to $32 9/16 after saying it expects Q4 sales and earnings to come in above the Street's expectations due to strong sales of its new switch product and higher international sales. The company also declared a three-for-two stock split... Pawn shop operator Cash America International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PWN)") else Response.Write("(NYSE: PWN)") end if %> gained $1 5/16 to $16 1/4 after agreeing to buy a privately held company that owns 40 "Doc Holliday's" pawn shops in six states... Power amplifier and conversion systems maker Thermo Voltek Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: TVL)") else Response.Write("(AMEX: TVL)") end if %> added $2 3/16 to $7 after electronics testing and microweighing products manufacturer Thermedics Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: TMD)") else Response.Write("(AMEX: TMD)") end if %> offered to buy the 33% stake in the company that it does not already own for $7 per share in cash. Thermedics moved up $1 11/16 to $17 13/16.

Duty free shop operator King Power International Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: KPG)") else Response.Write("(AMEX: KPG)") end if %> rose $7/8 to $5 5/16 after reporting Q4 EPS of $0.30 yesterday, more than twice the $0.14 earned a year ago... Drug delivery systems developer Andrx Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADRX)") else Response.Write("(Nasdaq: ADRX)") end if %> climbed $2 3/4 to $27 7/8 after saying it is suing staffing and medical information management company Medix Resources <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MDIX)") else Response.Write("(Nasdaq: MDIX)") end if %> for libel and slander. The suit relates to a Medix press release that alleges Andrx stole Medix's computer medical software... Self-adhesive decorative products manufacturer Decora Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DECO)") else Response.Write("(Nasdaq: DECO)") end if %> moved up $9/16 to $5 11/16 after agreeing to buy the shelf-liner products business of Rubbermaid Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RBD)") else Response.Write("(NYSE: RBD)") end if %> for $57.5 million in cash, in addition to nine monthly payments of $5 million.

Plastic bottle maker PVC Container Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PVCC)") else Response.Write("(Nasdaq: PVCC)") end if %> climbed $1 1/4 to $7 after agreeing to buy the plastic container business of McKechnie Investments Inc. for an undisclosed sum... Ambulatory surgery centers operator National Surgery Centers <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSCI)") else Response.Write("(Nasdaq: NSCI)") end if %> picked up $1 15/16 to $25 9/16 after agreeing to acquire two surgery centers in California and Oklahoma for an undisclosed amount. Piper Jaffray started coverage of the stock with a "strong buy" rating... Fashion clothing maker Farah Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FRA)") else Response.Write("(NYSE: FRA)") end if %> picked up $11/16 to $6 5/16 after the company hired Financo Inc. to evaluate strategic alternatives, including the possible sale of the company... Real estate and energy businesses manager and developer SLH Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SLHO)") else Response.Write("(Nasdaq: SLHO)") end if %> climbed $4 to $32 after agreeing to merge with privately held Syntroleum Corp. in a stock swap transaction. Syntroleum is the owner of a process for converting natural gas into synthetic crude oil and is currently 31% owned by SLH.

Flat panel display maker PixTech Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PIXT)") else Response.Write("(Nasdaq: PIXT)") end if %> added $21/32 to $6 9/32 after the company placed 1 million common shares with The Kaufmann Fund in a private placement transaction yesterday at a price of $4 per share. The fund now owns an 11.4% stake in the company... Biomatrix Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BIOX)") else Response.Write("(Nasdaq: BIOX)") end if %> rose $1 7/8 to $29 7/8 after Prudential Securities began coverage of the biomedical company with a "buy" rating... Medical devices maker Bionx Implants <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BINX)") else Response.Write("(Nasdaq: BINX)") end if %> gained $1 3/4 to $21 1/2 after its absorbable cannulated screw and endoscopic browlift screw products were approved by the FDA... Century Business Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CBIZ)") else Response.Write("(Nasdaq: CBIZ)") end if %> advanced $1 7/16 to $17 11/16 after the business services outsourcing firm bought four diverse companies, which will contribute $20 million to its annual revenues.

Emmis Broadcasting Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EMMS)") else Response.Write("(Nasdaq: EMMS)") end if %> picked up $2 7/8 to $52 3/4 after the radio station operator expanded into television through the acquisition of six TV stations for $397 million in cash and stock... Wireless communications filter products developer Superconductor Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SCON)") else Response.Write("(Nasdaq: SCON)") end if %> was lifted $1 27/32 to $5 9/32 after signing an agreement with 20 different wireless carriers to provide its SuperFilter system to more than 25 cellsites over the next four months... Iron Mountain <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IMTN)") else Response.Write("(Nasdaq: IMTN)") end if %> tacked on $2 1/2 to $37 1/2. The information management company sold 3.5 million shares in a public offering at $34 3/4 per share today.

Ratings Movers

HBO & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HBOC)") else Response.Write("(Nasdaq: HBOC)") end if %> gained $3 5/8 to $60 3/8 after Merrill Lynch upgraded the healthcare software developer to "buy" from "near-term accumulate"... Healthcare software support and consulting firm MECON Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MECN)") else Response.Write("(Nasdaq: MECN)") end if %> added $1 1/4 to $11 after being upgraded to "buy" from "attractive" by Adams Harkness... Rambus <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RMBS)") else Response.Write("(Nasdaq: RMBS)") end if %> jumped $4 7/16 to $43 3/4 after Morgan Stanley Dean Witter upgraded the high-speed chip interface technology company to "outperform" from "neutral"... Safety Components <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ABAG)") else Response.Write("(Nasdaq: ABAG)") end if %> popped up $1 1/2 to $15 3/4 after BT Alex. Brown started coverage of the air bag maker with a "strong buy" rating... Neomagic Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NMGC)") else Response.Write("(Nasdaq: NMGC)") end if %> gained $1 5/8 to $18 7/8 after Morgan Stanley Dean Witter upgraded the graphics chip company to "strong buy" from "outperform."

Oil and natural gas exploration firm Abraxas Petroleum <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AXAS)") else Response.Write("(NYSE: AXAS)") end if %> advanced $1/16 to $8 3/8 after being upgraded to "outperform" from "neutral" by SBC Warburg Dillon Read... Cabot Oil & Gas Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COG)") else Response.Write("(NYSE: COG)") end if %> climbed $1 3/8 to $22 5/8 after Goldman Sachs upgraded the natural gas and oil exploration company to "trading buy" from "market outperformer"... Asset Investors Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AIC)") else Response.Write("(NYSE: AIC)") end if %> added $1 1/16 to $18 13/16 after BancAmerica Robertson Stephens started coverage of the real estate investment trust (REIT) with a "buy" rating.

GOATS

Cigarette makers were burned today after Senate Commerce Committee Chairman John McCain yesterday introduced a bill that is far less favorable for tobacco companies than the agreement they reached last June to settle most health-related lawsuits. The McCain bill would require higher payments from the industry -- $506 billion over 25 years versus $368.5 billion -- and would not protect tobacco companies from class-action suits. The bill also gives the government explicit authority to regulate tobacco, restrict marketing and advertising, and impose fines if teenage smoking reduction targets aren't met. The fees imposed on tobacco companies would be passed on to consumers, progressively driving the average price of a pack of cigarettes up $1.10 by 2003. The June 20 settlement would have raised prices by $0.62 to $0.73 a pack. What's most worrying for cigarette makers, who already claim that the McCain bill would "jeopardize the financial viability of the tobacco industry," is that the bill may be the best compromise considering that many Democrats say the bill doesn't go far enough. Philip Morris <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %> fell $1 5/16 to $41 11/16; RJR Nabisco <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RN)") else Response.Write("(NYSE: RN)") end if %> was down $1 7/8 to $31 5/16; and Loews Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LTR)") else Response.Write("(NYSE: LTR)") end if %> lost $1/2 to $104 1/4.

Oil prices continued to decline despite the agreement reached by members of the Organization of Petroleum Exporting Countries (OPEC) to cut total crude oil production by 1.25 million barrels a day. Add that to the additional quarter-million barrel reduction pledged by non-OPEC countries, and the 1.5 million total still falls short of the 1.6 million to 2 million barrels a day promised on March 22. With the International Energy Agency estimating that oil supply exceeds demand by 3.7 million barrels a day, the recent moves may take longer than expected to drive up flagging oil prices. Oil drilling and services companies fell with the decline in oil prices. Cliffs Drilling <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CDG)") else Response.Write("(NYSE: CDG)") end if %> dropped $1 3/16 to $41 5/16. Schlumberger <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SLB)") else Response.Write("(NYSE: SLB)") end if %> lost $1 1/4 to $75 3/4. Noble Drilling <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NE)") else Response.Write("(NYSE: NE)") end if %> sank $1 3/8 to $30 9/16. BJ Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BJS)") else Response.Write("(NYSE: BJS)") end if %> shed $1 1/2 to $36 7/16. Ensco International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ESV)") else Response.Write("(NYSE: ESV)") end if %> retreated $1 1/4 to $27 17/8. Diamond Offshore Drilling <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DO)") else Response.Write("(NYSE: DO)") end if %> fell $1 3/8 to $45 3/8. Rowan Companies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RDC)") else Response.Write("(NYSE: RDC)") end if %> was cut $1 to $29. Patterson Energy <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PTEN)") else Response.Write("(Nasdaq: PTEN)") end if %> dropped $15/16 to $11 1/2, and Bayard Drilling Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: BDI)") else Response.Write("(AMEX: BDI)") end if %> slipped $7/8 to $14 5/8.

QUICK CUTS: AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> lost $1 3/16 to $65 3/4 as the long-distance behemoth announced it is spending $91 million on a new 198,000-square-foot network operations center three times the size of its current center on the company's 200-acre campus in Bedminster, N.J... Human tissue engineering company Advanced Tissue Sciences <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ATIS)") else Response.Write("(Nasdaq: ATIS)") end if %> dropped $2 13/32 to $9 11/32 on announcing that it has received a warning letter from the FDA requiring the company to correct aspects of its manufacturing and quality assurance for Dermagraft tissues used for the treatment of diabetic ulcers and Dermagraft-TC tissues used for treating severe burns. The company is also voluntarily recalling certain lots of tissues that complied with finished product specifications but contained a raw material that was out of specification.

Embedded computer components and subsystems maker RadiSys Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RSYS)") else Response.Write("(Nasdaq: RSYS)") end if %> plunged $6 1/2 to $25 1/8 after announcing yesterday that it expects its first and second quarter results to be below market expectations, primarily due to order push-outs and a decline in orders... Medical Resources <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MRII)") else Response.Write("(Nasdaq: MRII)") end if %> lost $1 15/32 to $5 9/32 after announcing that it has filed for a 15-day extension for filing its Q4 and 1997 results with the SEC. The company stated that no assurance can be given that it will be able to file its 10-K by the extended April 15 due date. Separately, the company is also exploring strategic alternatives for its StarMed Staffing subsidiary, including selling the business... OSI Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OSIS)") else Response.Write("(Nasdaq: OSIS)") end if %>, which makes devices, subsystems, and end-products based on optoelectronic technology, was cut $1 1/8 to $11 5/8 after announcing late yesterday that it anticipates lower-than-expected Q3 sales and earnings due to the delayed shipment of over $3 million in large cargo scanning machines to the government of a foreign country.

Biopharmaceutical company OXiGENE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OXGN)") else Response.Write("(Nasdaq: OXGN)") end if %> dropped $2 5/8 to $14 7/8 after reporting that patient dropouts in its clinical trials of Sensamide and Neu-Sensamide have prevented researchers from drawing definitive conclusions. The dropouts are attributable to central nervous system side effects associated with Sensamide, disease progression, and failure to comply with the treatment protocol... Semiconductor maker International Rectifier <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IRF)") else Response.Write("(NYSE: IRF)") end if %> shed $3/4 to $11 3/4 after announcing late yesterday that it expects third quarter earnings of between $0.06 and $0.08 per share on sales of about $140 million, less than the First Call mean estimate of $0.14. The shortfall is due to weakness in the computer-related and consumer electronics business, which will result in lower sales in Japan and flat revenues in North America.

Lehman Brothers lowered its ratings on telecommunications services companies Intermedia Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ICIX)") else Response.Write("(Nasdaq: ICIX)") end if %> and ICG Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ICGX)") else Response.Write("(Nasdaq: ICGX)") end if %> to "neutral" from "outperform," saying that the companies' stocks are up 300% to 500% over year-ago levels and now represent a different balance of risk and reward than they did last year. Intermedia fell $3 13/16 to $79 5/8, and ICG lost $2 1/2 to $37 1/4.

Biotechnology company Gilead Sciences <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GILD)") else Response.Write("(Nasdaq: GILD)") end if %> dropped $2 7/8 to $36 on concerns that the company won't present research results on its developmental HIV drug Preveon at a major medical conference next week. Preveon is in the latter stages of testing and is expected to file an application for FDA approval this summer... Medical technology manufacturer Baxter international <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BAX)") else Response.Write("(NYSE: BAX)") end if %> fell $1 5/8 to $55 1/8 after announcing it has ended a clinical trial of its blood substitute HemAssist in trauma patients after more patients getting the treatment died than patients in the control group. The company is continuing tests of the product in trauma cases in Europe and surgery cases in the U.S. Baxter will likely seek FDA approval for just using HemAssist in surgeries, which make up about 40% of all transfusions worldwide... Debit card and merchant credit card processor BA Merchant Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BPI)") else Response.Write("(NYSE: BPI)") end if %> shed $1 3/8 to $18 1/8 after Robinson-Humphrey downgraded the company to "market perform" from "buy" but kept its "long-term buy" rating.

FOOL ON THE HILL
An Investment Opinion
by Dale Wettlaufer

More on Share Buybacks

Last Friday, we started to look at how share buybacks work. In the first two examples we looked at, we saw that in cases where a company's after-tax return on capital was greater than its cost of capital, then shareholder value can be destroyed if a company blindly chooses share buybacks over new investments. The cost of share buybacks is a function of opportunity cost of capital (or the opportunities foregone in choosing another investment), the price at which the share buyback can be accomplished, and the cost of capital funding the buybacks, among other things.

The base case assumption is the same for all examples. The company starts with capital of $1 billion, earnings of $150 million, shares outstanding of 100 million, a growth rate in capital employed of approximately 15% per year, an after-tax return of 15% on the first $1 billion in capital, and a 12% after-tax return on all capital past $1 billion. The cost of debt in all examples is 7% and the tax rate is 35%. Also, where debt is part of the equation, we look at the enterprise value-to-earnings ratio rather than just the standard price-to-earnings (P/E) ratio. Where there is no debt, there is no difference between the enterprise value-to-earnings ratio and the P/E ratio because there is no cash on the balance sheet in any example. (Most figures have had digits to the right of the decimal truncated for ease of presentation. AOL users should expand window to view tables).

In the first example below, the company plows back all earnings into its capital expenditures. The difference between capital investment that it requires and the prior year's earnings, it makes up via the issuance of debt.

       Capital    Erns.  Debt       EV    Share Pr.  Shrhlder Ret. 
  
 Base  $1,000    $150   $0      $3,000    $30.00 
 1      1,150     168    0       3,360     33.60         12.00% 
 2      1,321     188    3.68    3,768     37.65         12.05 
 3      1,518     211   11.73    4,232     42.21         12.12 
 4      1,743     238   24.96    4,760     47.36         12.19 
 5      2,000     268   44.3     5,360     53.16         12.26

         Capital   Erns.    Debt   Shares      EV/E     EV    Share Pr.  Shrhlder Ret. 
  
 Base   $1,000     $150     ----       100       20     $3,000   $30           ---- 
 Yr. 1   1,150      161     $150        95       20      3,223    32.35        7.8% 
 Yr. 2   1,321      173      321        90       20      3,478    35.07        8.4 
 Yr. 3   1,518      224      518        85       20      3,771    38.28        9.2 
 Yr. 4   1,743      188      743        80       20      4,107     42.05       9.8 
 Yr. 5   2,000      224    1,000        75       20      4,490     46.53      10.6

       Capital      Erns.     Debt   Shares     EV    Share Pr.  Shrhlder Ret. 
  
 Base    $1,000    $150         $0    100       $3,000    $12.45 
 1        1,150     161        150     87        1,341     13.56          8.9% 
 2        1,322     173        321     75        1,441     14.91         10.5  
 3        1,518     188        518     63        1,556     16.48         10.5 
 4        1,743     205        743     51        1,707     18.90         14.7 
 5        2,000     224      1,000     40        1,865     21.62         14.4

         Shares   Share Pr. Shareholder Return 
  
 Base      100         $12.50             --- 
 Yr. 1      87.99      14.20            13.64% 
 Yr. 2      77.43      16.14            13.64 
 Yr. 3      68.13      18.34            13.64 
 Yr. 4      59.96      20.84            13.64 
 Yr. 5      52.76      23.68            13.64

CONFERENCE CALLS

Please see the Motley Fool's Conference Calls page for call information and links to synopses.

WE DELIVER - Get The Evening News delivered
to your e-mailbox every evening!

ANOTHER FOOLISH THING

See something moving a stock that we didn't cover?
E-mail the Fool News Team
and we will start working on the story.
Unfortunately, we cannot answer every e-mail
or respond to individual questions.

Yi-Hsin Chang (TMF Puck), a Fool
Brian Graney (TMF Panic), Fool Two
Alex Schay (TMF Nexus6), Fool, too
Dale Wettlaufer (TMF Ralegh), Final Fool
Contributing Writers

Brian Bauer (TMF Hoops), another Fool
Jennifer Silber (TMF Amused), Fool at last
Editing