Consumer/Conglomerates

Brokerage	Recommendation	Sentiment
Goldman Sachs
JP Morgan

Allied Domecq PLC (AED) UK CEO Philip Bowman http://www.allieddomecq.co.uk/

· World’s 2^nd largest drink company – No.3 in Spirits (No.1 Diageo, No.2 Pernod Ricard)

· Has 9% US market share for spirits

· 2004 – 10% market share

· Brands: Beefeaters, Convousier, Ballantines, Kahlua, Sauza Tequila, Tia Maria, Makers Mark, Canadian Club, Teachers, Clous du Bois, Callaway Vineyards and Winery, Atlas Winery, Malibu, Mumm’s Champagne, Perrier Jouet, Montana Winery

· Quick Serve Restaurants: Baskin Robbins, Togo’s Deli's, Dunkin Donuts

· Michael Domecq – Former President and co-owner of US operations busted for diverting $14M from the company to offshore bank accounts - 2000

Allied Domecq Acquisitions:

Bought Mumm’s and Perrier-Jouet from Hicks, Muse, Tate, and First for $505M

· Bought Bodegas y Bebidas of Spain

· Won bid for 50.01% of New Zealand wine maker Montana

· Has spent $1.66B on wine vintners – Now third largest wine distributor

Allied Domecq General Info:

· Gets 15% of operating profit from wine (Diageo 3%, Pernod 10%)

· Convousier cognac brand launching a high end clothing line – 2004

· Claims to be looking for an acquisition in or around 2006 and an increase in its dividend

· Return on tangible assets – 21% in 2004 (Diageo –38%)

· Allied Domecq being acquired by Fortune Brands and Pernod Ricard for $14B – April 2005

· Brands will be split between the two companies with Pernod Ricard taking the lion share

· Pernod gets Ballantines Scotch, Kahlua, Malibu, Tia Maria, Beefeater Gin, the marketing rights of Stolichnaya Vodka, and most of Allied’s wine portfolio

· Pernod will now have 20 of the top 100 brands (Diageo has 17 of the top 100)

· Stoli is Allied’s biggest sales driver

· Fortune gets Maker’s Mark, Canadian Club, Sauza Tequila, Courvoisier and Clos du Bois wine brands

· Takeover needs to be fully financed due to UK takeover laws

· Allied Domecq competitors include: Diageo (DEO), Bacardi (privately held), Pernod Ricard (privately held)

Allied Signal (ALD) (HON) CEO Lawrence Bossidy Morristown N.J

· Aerospace, automotive, and chemicals

· Aerospace – from engines to wheels and brakes – huge in repair and overhaul

· Safety and restraint division

· Conducted a hostile takeover of AMP – 9.9B Tender Offer

· Amp makes multi-pinned “Plugs” used to link computer components and other types of connectors

· Didn’t go through – TYCO acquired AMP

· Merged with Honeywell on Dec. 1 1999 and is now called Honeywell International - $15.50B merger

Brokerage	Recommendation	Sentiment
Merrill Lynch
UBS
Prudential

Altria (MO) NY, NY CEO Louis C. Camilleri http://www.philipmorris.com/

· Formerly called Philip Morris – Changed name January 2003

· World’s largest producer and marketer of consumer packaged goods

Philip Morris USA:

· Domestic Tobacco

· Largest cigarette company in the US

· Brands: Marlboro, Basic, Virginia Slims, L&M, Parliament, Merit, Benson & Hedges, Lark, Chesterfield, Cambridge

· Philip Morris US retail market share

· 2001 – 51%

· 2004 – 50%

· Marlboro is the No. 1 brand in the US

• 38.2% market share

· Worldwide Cigarette Market Share:

· 15.5% - March 2005

· Basic - Their discount cigarette - has a 5.1% market share

· US business concentrates on the higher-margin premium category

· 1 in 3 cigarettes sold in the US is Marlboro

· Marlboro Blend No.27 – Out April 2003

· Smokers in the US:

• 2005 – 22.1% of the US population are considered “smokers” and rates are thought to be declining 2% to 3% annually

· The lawsuits against Philip Morris:

• In 1999, Philip Morris faced 670 suits making Altria (PM) the worst performing stock in the DOW in 1999
• In 2003, company flirted with the idea of going into Chapter 11 bankruptcy
• 2005:

· Down to 273 suits

· Only 30 new cases were filed in 2004 with four of those already being dismissed in 2005

• Facing government civil racketeer suit

· Appeal court ruling – government cannot seize $280B in past profits from the cigarette companies

• “Light Cigarette” suit

· $10.1B judgment on appeal in 2005

· 20 class action lawsuits pending in 2005

· September 2006 – Federal Judge of New York approved class action suit regarding “light cigarettes” up to $200B in damages

• “The days of huge industry killer suits are over. It’s not going to happen anymore. Nothing has really stuck” – John P. Cole – Plaintiff Attorney – May 2005

Philip Morris International:

· International Tobacco

· Most profitable company in the international tobacco industry

· Marlboro’s volume is larger than the next seven competitive international brands combines

· PM’s Marlboro is the No.1 international brand and L&M brand is the No.3 international brand

· Acquiring Hanjaya Mandala Sampoerna of Indonesia for roughly $5.2B – March 2005

· Bought a 40% stake for $2B then will make an offer for the remaining shares for roughly$3.2B

· Hanjaya Mandala Sampoerna is the No.3 clove cigarette maker in Indonesia – 92% of the cigarettes sold in Indonesia are clove cigarettes

· Acquisition will increase Altria’s cigarette market share world-wide to 15.5% from 14.5% - not including duty free purchases

Kraft Foods Inc: (KFT) – CEO Irene Rosenfeld

· Altria owns 83.9% of Kraft

· June 2000 - $8.4B IPO

· CEO Roger Deromedi was succeeded by Irene Rosenfeld

· North American and International unit

· Largest branded food company in North America

· Integrated Nabisco Foods

· Cheese, Meals and Enhancers:

o Cheese – Athenos, Cheez Whiz, Churny, Cracker Barrel, Deli Deluxe, Easy Cheese, Hoffman’s, Kraft, Philadelphia Cream Cheese, Polly-O, Velveeta

o Dairy Products – Blackstone sour cream and cottage cheese, Knudsen sour cream and cottage cheese, Kraft dips, Light n’ Lively cottage cheese

o Meals – Kraft macaroni and cheese, Minute, Stove Top, Taco Bell, It’s Pasta Anytime, Velveeta shells &cheese

o Enhancers – A.1., Bull’s-Eye, Good Seasons, Grey Poupon, Kraft barbecue sauces, mayonnaise, salad dressings, and mustard, Miracle Whip, Oven Fry, Seven Seas, Shake N’ Bake

· Biscuits, Snacks and Confectionery

o Cookies and Crackers – Barnum’s Animal, Better Cheddars, Kraft Cheese Nips, Chips Ahoy!, Handi-Snacks, Honey Maid, Newtons, Nila, Nutter butter, Oreo, Premium, Ritz, SnackWell’s, Stella D’Ora, Teddy grahams, Triscuit, Wheat Thins

o Snacks – Cornnuts, Planters nuts

o Pet Snacks – Milk-Bone

o Confectionery – Altoids, Callard & Bowser, Crème Savers, Fruit Snacks, Gummi Savers, Jet-puffed, Kraft Caramels, Life Savers, Milka, Now and Laters, Terry’s, Toblerone, Traoli

· Beverages Desserts and Cereals

o Beverages – Capri Sun, Country Time, Crystal Light, Kool-Aid, Tang

o Coffee - General Foods International Coffees, Gevalia, Maxwell House, Sanks, Yuban

o Desserts – Baker’s, balance Bar, Breyers yogurt, Calumet, Certo, Cool Whip, Dream Whip, Ever-Fresh, Handi-Snacks, Jell-O, Light n’ Lively yogurt, Sure-Jell

o Cereals – Alpha-bits, Banana Nut Crunch, Blueberry Morning, Bran Flakes, Cinna-Cluster, Cranberry Almond Crunch, cream of Wheat, Cream of rice, Fruit and Fiber, Golden Crisp, Grape-nuts, Great Grains, Honey Bunches of Oats, Honeycomb, Oreo O’s, Pebbles, Raisin Bran, Shredded Wheat, Toasties, Waffle Crips

· Oscar Mayer and Pizza

o Oscar Mayer cold cuts, Louis Rich, Lunchables, DiGiorno, Tombstone, Jack’s Pizza, Claussen pickles, Boca soy-based meat alternatives, California Pizza Kitchen frozen pizza’s

Kraft General Info:

· Cheese:

· Has 537 cheese products and controls 40% of the US cheese market

· 20% of Kraft’s earnings is from cheese

· Controls 40% of the retail market for cheese in North America

· Post Cereal – 100% Bran, Shredded Wheat, Raisin Bran, Pebbles, Honey Comb, AlphaBits

· Using proceeds from its IPO to pay off debt from its December 2000 $19.2B merger with Nabisco

· Kraft Notables:

o Has a 3% volume growth target

o Operating margin 2002 – 21.7%

o Kraft operating earnings in 2002 – 21.7%, In 2003 – 20.1% - Average in the food industry – 17%

· Kraft Confectionary – Has a 4.7% market share for confectionary market

· Coffee:

· Kraft sells more coffee than any other company in the world

· Has see slower growth to Starbucks and other Coffee retailers

· Tassimo – Kraft’s new single serve coffee machine that uses their coffee refill cartridges called T-discs – Machines cost roughly $200

· June 2003 – now capping the portion size of its foods and help low fat and sugar content to help fit America’s obesity

· Kraft hasn’t had a new brand success since DiGiornio in the mid 1990’s

· “Higher commodity prices will be key challenge for both Kraft and the food industry in 2004 “ – CEO Roger Deromedi

· Demoted co-CEO Betsy Holden December 2003 and CEO Roger Deromedi became acting CEO of Kraft

· 2005 – Commodity costs are considered to be the “wild card” in 2005

· Sold Life Savers and Altoids to Wm. Wrigley Jr. for $1.48B – November 2004

• Crème Savers, Trolli Gummy Candies, Sugus brands also included in the sales
• All bands brought in less than $500M in sales and under $100M in EBITDA

· Sold their yogurt business to CoolBrands for $59M – December 2004

· Full Spin-off of Kraft on hold till legal challenges are resolved.

SABMiller plc

· Miller, Milwaukee’s Best, Fosters, Lech, Snowflake, Tyskie, Castle, Pilsner Urquell

· Miller Brewing – Sharp, Milwaukee’s Best, Meister Brau, Magnum Malt, Henry Weinhards, Hamm’s, Olde English 800, Mickey’s Big Mouth, Red Dog, Ice House

· Altria sold Miller to South African Brewery for $5.6B (No.2 Beer company in the world) – July 2002

· Renamed SAB Miller

· Altria will have a 36% stake in the venture

· Second largest brewer behind Anheuser-Busch (Heineken No.3, Interbrew No.4)

· 20% market share in the US

· Has a 36% stake and 24.9% voting interest

· Altria can’t sell any shares until after June 30^th 2005

Altria General Info:

· Philip Morris Capital Corp. - Financial Services

· Changed their name to Altria Corp. January 2003

· Louis C. Camilleri replaced Geoffrey Bible as CEO in August of 2002

· The Tobacco Company Agreement (Tobacco Litigation Master Settlement)

· MO paying $246B to the states – Phillip Morris will pay half of that over a 25 year period and will continue to pay as long as they’re in business

· Will cover public health costs and smoking prevention

· No billboards, Advertisements, T-shirts or Hats

· Has yet to pay a dime to any individual smokers who are suing the company

· October 2002 – Los Angeles jury awarded plaintiff $28B in punitive damages

· December 2002 – Judge threw out the $28B award – looking for $28M

· States now addicted to the money!

· The money is also being used toward general budget needs to finance their operations

· States floating bonds that are backed by these funds

· Altria must now pay the states $3.5B annually under the 1998 Master Settlement Agreement

· Tobacco companies are paying $206B in annual payment for the next two decades

· 2002/2003 pressures:

· Faced price wars with cigarettes and Kraft products

· Expected earnings per share to increase 1%-3% in 2003

· Kraft – increasing pension costs and problems in Latin America

· Facing tough competition from private label cheese which consumers a more likely to purchase in slowdowns in the economy

· “In a weak economy private label does generally increase” – CEO Louis Camilleri

· Altria can be thought as a three legged stool – US Tobacco, International Tobacco, and Kraft

· March 2003 - $10.1 ($11.88B) Illinois verdict over “light” cigarettes – claimed to have deceived smokers with “light” cigarettes that they were less harmful than regular cigarettes – lawsuit claimed smokers puffed harder and got the same amount of tar and nicotine none the less.

· Judge requiring that MO post a $12B bond to appeal

· Has till April 21^st to boast the $12B bond – MO claims it will put the company in bankruptcy

· Judge now saying MO just needs to put a pre-existing $6B long-term note into escrow

· Cash machine! – Generated $7B in free cash flow in 2001 - $10.6B in 2002

· Using it’s $1.7B from sale of Miller to accelerate share repurchase program

· Aided by weak dollar

· Shipped 46.3B cigarettes in 4Q2003

· 2004 – Expecting profit of $4.57 to $4.67 a share

· Will Altria Split up the company?:

· “Altria management appears to be more inclined than ever to embark on a breakup of its pieces once the legal conditions allow it” – Judy Hong, Goldman Sachs- January 2004 – Thinks the company value is around $70 a share

· CEO Camilleri outspokenly very enthusiastic about breaking up the company into two or three companies after the main tobacco litigation environment improves

· May 2004 – Federal Court ruled that the US Justice Department can seek disgorgements from the tobacco industry

· China:

· Altria (PM) looking to market and sell Marlboro’s to China’s 320 million smokers – that’s more than the whole US population (22.5% of US adults smoke)

· Chinese government controls cigarette production and put high tariffs on imported cigarettes – PM is looking at ways to deal with the high tariffs that Marlboro faces in China

· Altria’s competitors include: R.J. Reynolds Tobacco Holding (RJR), British American Tobacco (BTI), Nestle (NSRGY.PK)

Brokerage	Recommendation	Sentiment
Merrill Lynch
Goldman Sachs
Bear Stearns

Anheuser-Busch (BUD) St. Louis, MO Chrmn. August Busch III http://www.anheuser-busch.com/

· World’s largest brewer

· Brands: Budweiser, Natural, Michelob, Busch, O’Douls, 180, Killarney’s Ziegenbock, Pacific Ridge, King Cobra, Hurricane, Tequiza, Doc’s Hard Lemonade, Brews Kirin in Los Angeles

Busch Entertainment Corp:

· Sea World – San Diego, San Antonio, Orlando

· Busch Gardens – Tampa Bay FL, Williamsburg VA

· Sesame Place – Langhorne, PA

· Discovery Cove – Sea World Orlando

· Water Country – Williamsburg, VA

· Adventure Island – Tampa Bay, FL

Anheuser-Busch Stakes:

· Has stakes in Red Hook Brewery and Widmer Brothers

· 50.2% stake in Grupo Modelo

· Brands: Corona, Pacifico, Victoria, Estrella, Leon, Montejo, Modelo

· Tsingtao – China

· Started with a 4.5% stake in Tsingtao

· Has increased its stake to 9.9% and has an agreement to raise its stake to 27% at a later date

· Increased stake to 27% April 2005 giving BUD two directors on Tsingtao’s board and a 20% voting stake

· Harbin Brewery of Hong Kong - Acquired a 29% stake in Harbin Brewery of Hong Kong – May 2004

· China’ s fourth largest brewer

· SAB Miller has a 29.4% stake as well

· Successfully acquired the whole company from the hands of SAB Miller for $720M – June 2004

· China has annual beer sales of $6B with 9% annual growth

· Why the play on Harbin? – Harbin makes low end beer in China, and with BUD entering the market, they will not worry about Harbin introducing higher end beers

· Harbin control one half or the beer market share in Northeast China where consumption of beer is two times that of other regions in China

· In 2004 – China surpassed the US as the largest beer consumer in the world

· Anheuser-Busch has not been profitable in China since 2001 due to distribution problems

Anheuser-Busch General Info:

· Sold 22.5M barrels of beer in 4^th Q2001

· Expected 12% rise in earnings per share for 2002 and 2003

· US beer market share:

· 1980 – 28% US beer market share

· 2003 – 52%

· 2004 – 51.2%

· Advertising budget - $520.3M in 2003

· Bud Light – No.1 Light beer in America - 2004

· Bud Net – Data mining network

· Uses Laptops and PDA’s to report every detail on sales of its products and then cross references it with US census ethnic and economic data on the area

· Uses the data to refine how to successfully market initiatives for the area

· Reports on what’s going off the shelves in each micro region and how to tailor their products to the demographics of the area

· “They’re better at this game than anyone- even coca-cola” – Joe Thompson – Independent Beverage Group – September 2004

· Contracts with wholesalers requires that this data to be taken

· 2005 – Claims that they will only raise prices once in 2006 rather than their typical twice a year price increase

· Seeing weak volume sales to near flat volume sales in its brands in the first half of 2005

· Facing increased competition from SAB Miller

· Now claims that 2005 sales will be below 2004 sales

· Anheuser Busch competitors include: Interbrew (IBRWF), Adolph Coors (RKY), Heineken (HINKY.PK), SAB Miller (SBMRY.PK)

Brokerage	Recommendation	Sentiment
Smith Barney
CSFB
Merrill Lynch

Archer Daniel’s Midland (ADM) Decatur IL CEO G. Allen Andreas http://www.admworld.com/

· Grain producing giant

· Produces high-fructose corn syrup - soft drinks use fructose as sweetener

· Fructose is 1/3 of profits

· Process soybeans, corn, coca, wheat, peanuts, rice, canola, barley, sunflower, cottonseeds

· Corn processing division is staggering from industry due to their wide building spree of fructose refining plants,

· Owns a London based futures brokerage house and has one in the US

· Andreas’ family has run for 30 yrs.

· Busted for price fixing in 1999 with Lysine – a nutritional additive in livestock feed

· Produces Vegetable oil, Lecithin from soybeans, citric acid from corn, flour, and cocoa powder

· Tryptosine – amino acid blend for livestock

· Producing Ethanol – Has 50% of the market and 41%of the US Ethanol production capacity

· New York and Connecticut may switch to Ethanol as an additive in 2004

· Expanding seven plants in North America for bio-diesel production – expected to be done by mid-2008

· Due to the Mad Cow Disease – profit are soaring through the sale of their soybean farm meal

· 2003 – Expecting good crop for late 2003/2004 season thus lower prices for soybeans and corn in which they process into many of their products like ethanol, high fructose corn syrup, soybean oil, and animal foods

· See China as a big growth market

· New joint venture in China for processing Soybeans instead of shipping them from the US

· Busted for price fixing:

· In 1997 was busted for price fixing Lysine and Citric Acid

· Paying $400M to settle charges on price fixing for high-fructose corn syrup – June 2004

· Archer-Daniels-Midland competitors include: Cargill (privately held), ConAgra Foods (CAG), Bunge (BG)

Bass (BAS) UK CEO Sir Ian Prosser http://www.bass.com/

· Lodging company – 2^nd largest in the world

· Acquired Inter Continental Hotels from Seibu Saison (owns Marriott) of Japan, Japans 2nd largest brewer

· In London owns Crown Plaza chain of hotels

· Holiday Inn

· Stay Bridge Suites

· Strong in US – 2000 of its 2400 hotels are in the US

· Sold Brewing division to Interbrew (IBRWF), on Aug, 22, 2000 for 2.3B pounds

Brokerage	Recommendation	Sentiment
CSFB
Goldman Sachs
BofA Securities

Best Buy (BBY) Elden Prairie, MN CEO Brad Anderson www.bestbuy.com

· US’s largest consumer-electronic retailer

· Stores include Media Play, On Cue, Music Land, Sam Goody, Sun Coast, Magnolia Hi-Fi, Future Shop, and their respective dot com’s

Best Buy Acquisitions and Divestitures:

· Bought Future Shops of Canada for $377M

· 2003 – Closing 110 stores (Musicland – 90 Sam Goody’s and 20 Suncoast Video’s) – Brings total to 160

· Sold Musicland to Sun Capital Partners in exchange for assumption of liabilities

· Best Buy paid $425M for Musicland in 2001 and assumed $271M in debt

Best Buy General Info:

· 2002 - Expected income to grow 18%-21%

· Appliance market share - (#1 Sears 40.7%, #2 Lowe’s 11.4%, Best Buy 6.2%, #4 Home Depot 3.9%)

· 2004 – 629 stores in North America

· CEO Succession:

· Brad Anderson replaced Richard Schulze

· Best Buy sales approach:

· CARE Plus – C “Contact”, A “Ask Questions”, R “Recommend”, E “Encourage the sale”

· Most profitable lines – High Def TV and portable electronics

· Felling pressure from Wal-Mart and Dell in these lines in 2004

· CEO Brad Anderson feels the two have an advantage over Best Buy because of the are larger, have lower overhead and are more profitable than Best Buy

· Concerned about becoming stuck in the “unprofitable middle” – in a situation similar to Toys R Us

· Concept stores:

· Studio D – Best Buy concept stores

· Introduced in 2005 and are small (3500 to 5000 sqft.) compared to their big box stores

· Focused towards women

· Escape – Tech geared store smaller in size than their big box stores

· Best Buy competitors include: Circuit City (CC), Sears (S), CompUSA (privately held)

Best Foods (BFO) (UN) (UL) Englewood NJ CEO Charles R. Shoemate http://www.bestfoods.com/

· Largest premium baker in the US

· Thomas English Muffins, OroWheat, Boboli, Sahara Pita

· Hellmann’s Mayonnaise, Skippy, Entenmanns

· Formerly CPC International and spun off its corn refining business

· 60% of sales came from international operations in 1999

· Being bought out by Unilever for $20.3B plus the assumption of $4B in debt – both will have an estimated annual sales of $422M

· Unilever Combined Best Foods with their Lipton Brand – now calling it Unilever Best Foods

· See Unilever below

Brokerage	Recommendation	Sentiment
Merrill Lynch
Smith Barney
JP Morgan

Cadbury Schweppes (CSG) UK CEO Todd Stitzer http://www.cadburyschweppes.com/

Brands/Units:

· Dr. Pepper/Seven Up (DPSU)

· Brands include: Dr. Pepper, 7Up, Schweppes, Canada Dry, A&W, Hawaiian Punch, and Squirt

· Licenses: Sunkist, Crystal Light, Country Time, Welch’s, Clamato, Cactus Cooler, Mr. & Mrs. T, IBC, Hires, Roses, Motts, Allen candy, 7UP

· Deja Blue Water – Has royalty free rights

· Motts: Motts Apple juice, Clamato Juices

· Snapple: Snapple, Mistic, Stewarts, Orangina, Yoo-Hoo, Nantucket Nectars

· Dr. Pepper/Seven Up Bottling Group (DPSUBG)

· Cadbury has a 40% stake in the bottler

· Cadbury Confectionary – Cadbury, Peter Paul and York Brands, Dandy Chewing gum

· Confectionary now 45% of their annual profit

Cadbury Schweppes Acquisitions, Stakes, etc:

· Acquired beverage unit of Triarc for $910M – includes Snapple and RC Cola, Mistic, and Stewarts

· Sold off the International division of RC Cola

· Acquired Orangina from Pernod Ricard for 700M Euros

· Owns Penafiel in Mexico

· Acquired Slush Puppies Frozen Drinks for $16.6M

· Acquired Adams Confectionary from Pfizer for $4.2B in 2002

· Adams makes Trident, Halls, Clorets, Dentyne, Chiclets, Certs, and Bubblicious

· Will have a 9.7% global confectionary market share and No. 1 producer (Mars 9.4%, Nestle 9%)

· Adams is their biggest purchase in their history and makes them the largest candy company that has chocolate, sugar confectionary and gum in their lineup

· Sold its European Soft-drink operations to two-private equity groups (Blackstone Group and Lion Capital) for $2.18B – Announced November 2005

· Does not include US operations

· Tired in 1998 to sell the European operations to Coke but European antitrust authorities blocked the deal

Cadbury Schweppes General Info:

· Drink Segment:

· Drink Operations – No.3 soft-drink maker in the US

· Market share in 2000 – KO 44.1%, PEP 31.4%, Cadbury 14.7%

· Has a 6% market share in Mexico (Coke 72% Pepsi 20%) – Consumers in Mexico consume more soda per capita than any other country

· 2003 – Reorganized its US drink business – Combining Dr.Pepper/7Up, Motts and Snapple into a single beverage unit

· Clamato – Had sales of $35.4M in 2002 excluding sales figures from Wal-Mart

· Clamato was created in a bar in Mexicali in 1969

· Newer drinks:

· Red Fusion

· “Raging Cow” – new milk based diary drink – doesn’t need refrigeration

· 7-Up plus – 7-Up that has been fortified with Vitamin C and calcium which will marketed as “Bubbles with Benefits”

· Will contain 5% fruit juice and uses Splenda instead of sugar and be a 10 calorie drink in an 8 oz. container

· CEO Todd Stitzer became CEO May 2003 from former CEO was J. Sunderland

· Candy operations – 10% global market share in a very fragmented industry

· 2003 – Net fell 33% - due to restructuring costs and charges and the integration of Adams

· 2004 – 80% of revenue derived from outside of the UK

· Announced that their splitting the company in two in late 2007

· One company will be the candy business and the other will be their drink business

· Cadbury Schweppes competitors include: Coca Cola (KO), Pepsi (PEP), Hershey Foods (HSY), WM Wrigley Jr. (WWY)

Brokerage	Recommendation	Sentiment
JP Morgan
Merrill Lynch
UBS

Campbell Soup Company (CPB) Camden, NJ CEO Douglas R. Conant www.campbellsoup.com

· Brands: Campbell Soup line, V8, Prego, Pace, Pepperidge Farms, Swanson’s soup, Franco-American

· Four Segments: North American Soup, Away from Home, Biscuit and Confectionary, and International

Campbell History and Acquisitions:

· In 1897, John Dorrance figured out a way to make soup and can it without a lot of water thus allowing cans to be smaller and lighter and thus cost less to package and ship

· Spun off its specialty food division including Swanson frozen food, Vlasic pickles and Swift Meats - under the name of Vlasic Foods International

· Vlasic Foods International (VLFIQ.PK)

· Bought Unilever's dry soups for $925M – Includes Bachelors in the UK, Royco in Belgium, Super Noodles, Bean Feast, and OXO Bouillon

· Will add $414M in sales to their already global $568M in 2000

· Will give them a 30% market share from 20% worldwide and leading dry soup in the UK, Belgium, France, Germany, and Sweden

Campbell General Info:

· Sales of condensed soup peaked in 1970 and have declined ever since

· Market Share:

· Has a 70% market share of all soup sold in US grocery stores

· Wet soup:

· 70% market share for all wet soup

· Condensed soup – 84% market share – July 2003

· Ready to Serve

· 2002 - 68.6% market share - was 74.5% in 2001 – Progresso – 13.5% (2002)

· Domestic soup business represents 83% of profits

· 2/3rds of its sales are from condensed soups

· Starting in 2003 expects revenue growth of 3% to 4% annually with earnings growth at 8%

· CEO Douglas Conant has replaced about half of the companies top management

· Three year restructuring program began July 2001

· Wants to revive declining sales of its mainstay soups

· Pepperidge Farms is their bright spot

· Soup At Hand – On-the-go soups in microwave container – one handed and portable

· Operating margin 2002 – 16.4%

· North American Soup Segment – 35% of sales and 45% of operating margins in 2003

· Biscuit and Confectionary Segment – 9.5% of operating earnings but 47% of Campbell sales – 2003

· Former American Express CEO, Harvey Golub, became Chairman September 2004

· Spaghetti-O’s – Campbell’s is removing the Fanco-American name from Spagetti-O’s and will replace with Campbell’s – November 2004

· China:

· China is the world’s largest consumers of soup followed by Russia. The Chinese and Russians eat soup 5 times a week.

· The Chinese consumer over 320 billion bowls of soup a year, Russians consumer 32 billion, while American have 14 billion a year.

· The Chinese and Russians take great pride in making their soup thus nearly all are made from scratch

· In the 1990’s Campbell’s introduced ready-to-eat soups in China but they did not sell at all and were shunned due to the Chinese and Russians soup making pride. Plus, Campbell’s basically just exported their Western soups other there which are quite different from the eastern variety. Campbell’s finally gave up trying to market ready-to-eat soups to the east.

· 2007 – Campbell’s reentering the Chinese’s and Russian market after lots of research and will market at “starter soup” or base soup (stock) in which other ingredients will be added. The Chinese frequently use MSG as a base knowing it is unhealthy in which Campbell’s will use to market as a healthier base without MSG. Will begin with a big marketing and advertising push with their Swanson brand name and offer strong chicken stocks and another base with chicken, pork and ham.

Brokerage	Recommendation	Sentiment
Bear Stearns
Merrill Lynch
Deutsche Securities

Caterpillar (CAT) Peoria IL CEO James Owens http://www.cat.com/

· World’s largest manufacturer of construction and mining equipment and used in everything from coal mining, dam building, to grading a lot

· Divisions include: Solar Turbines, Cat Logistics (Inventory management), Rental, Cat Financial

· CAT Financial – Products Division – Lends money to customers, dealers and provides insurance coverage

· 2003 – Produced 23% of Caterpillar’s overall profits

Caterpillar General Info:

· 51% of their revenue is produced from foreign markets, 14 % from Asia

· 2002:

· 8% of 2002 revenue was derived from the sale of generators

· Expected 2003 profit to be 5% lower than 2002’s flat year

· 2004 – Expected earnings to grow 40% to $4.38 a share

· 2005 – Expects sales to increase 12% to 15% over 2004 levels and earnings to increase 35%to 40% over 2004’s earnings

· 2005 said by the company to be “another record year”

· Seeing strong global markets in the first half of 2005 and not adjusting forecasts higher for full year 2005

· Increased its eps to $4.00 to $4.20 a share from $3.84 to $4.03

· Caterpillar Notables and Insight:

· With interest rates low in the US - Making financing of Cat’s giant and expensive machines much easier to obtain

· “It appears the world economy will have one of the strongest, broadest recoveries in years” –CEO James Owens – April 2004

· “We are likely in the early stages of the growth cycle from many key markets we serve in the third year of the industrial recovery” – CEO James Owen, April 2005

· “The last two recoveries that followed prolonged downturns lasted seven years. If economic history is any guide, we should be moving from a strong cyclical recovery into a solid expansion phase.” – CEO Jim Owens, April 2005

· “We are projecting global economic growth to be relatively robust over the next five years” – CEO Jim Owens – April 2005

· Sales of Machinery - It’s largest business

· Sales of Engines – It’s second largest business

· Acquired MG Rover’s parts Unit for $185.1M – supplies auto parts to MG dealers – July 2004

· Spikes in commodity prices

· Caterpillar usually adjusts their prices once a year but had to boost it three time in 2004 due to higher costs associated with basic materials

· “A bit of inflation is actually the optimum” – CEO Jim Owens

· During a commodity boom, Cat usually benefits

· When commodities increases, big equipment increases

· Its biggest commodity cost – Steel – Steel prices were up 106% in 2004

· Rising cost of material equals smaller profit margins

· Caterpillar’s main competitors: Timken & Co., Bucyrus, Joy Global, Terex

Brokerage	Recommendation	Sentiment
Morgan Stanley
CIBC World Mkts

Cendant (CD) NY, NY CEO Henry Silverman http://www.cendant.com/

· Franchising and Marketing powerhouse

· Formed in December 1997 from $11.4B merger of HFS Inc. (Henry Silverman) and CUC International (Walter Forbes)

· Cendant in Latin means “to rise up”

Real Estate:

• Franchises Century 21, Coldwell Banker, ERA
• NRT INC and Clearwater Residential Real Estate Brokerage Firms
• Cendant Mobility – Relocation
• Cendant Mortgage

Hospitality:

· Hotels: Days Inn, Howard Johnson, Knights Inn, Ramada Inn, Super 8, Travelodge, Villager, Wingate Inn, Amerihost, Hearthside, Holiday Cottage