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					Consumer Discretionary/Staples
 Mike Becher
 Julie Berens
 Beth Blue
 Sanaata Brown
 Brian Creek
 Mick Kozlowski
      Industry/Sector Overview
   Due to cyclicality of the economy we
    suggest:
    – Overweight Consumer Discretionary
    – Underweight Consumer Staples
            Recommendation
 Buy: Wal-Mart 0%  1.73%
 Buy: Harley Davidson 0%  1.21%
 Trim: Altria 1.56%  .95%
 Trim: McDonald’s 6.58%  3.25%


    – Overall, Consumer stocks decrease by 1% of
      portfolio value.
                       Wal-Mart
                    Business Analysis
   Catalysts:
    •   Wal-Mart’s Business Plan
           Move into rural areas
           Supply Chain Management
    •   Purchasing Power
        •   Economies of scale
    •   Size
           Market capitalization
                                            Wal-Mart
                                                    Analysis
                                      Financial Analysis
                                          Cash Flow
 WAL-MART STORES INCORPORATED (WMT)                                                                           StockVal ®
 FYE Jan

                                   2003    % Chg     2002    % Chg     2001    % Chg      2000    % Chg     1999    % Chg

Net Income Reported ($ Mil)       8039.0      21    6671.0       6   6295.0       17    5377.0       21   4430.0       26
  Accounting Adjustment              0.0             235.0       0    235.0      -29     332.0                0.0
Net Income Adjusted               8039.0      16    6906.0       6   6530.0       14    5709.0       29   4430.0       24
  Depreciation & Amort            3432.0       4    3290.0      15   2868.0       21    2375.0       27   1872.0       15
Cash Flow Adjusted               11471.0      13   10196.0       8   9398.0       16    8084.0       28   6302.0       21
  Capital Expenditures            9355.0      12    8383.0       4   8042.0       30    6183.0       66   3734.0       42
Free Cash Flow Adjusted           2116.0      17    1813.0      34   1356.0      -29    1901.0      -26   2568.0        0
  Dividends Common ($ Mil)        1333.8       6    1254.7      17   1076.2       20     894.8       25    717.6       13
Free Cash Flow After Dividends     782.2      40     558.3     100    279.8      -72    1006.2      -46   1850.4       -4


Net Cash From Operations         12532.0      22   10260.0       7   9604.0       17    8194.0        8   7580.0        6
Net Cash From Investing          -9709.0     -36   -7146.0      18   -8714.0      48   -16846.0    -281   -4418.0       0
Net Cash From Financing          -2222.0      25   -2978.0    -574    -442.0            8553.0            -2756.0     -29
Other Cash Flow s                   -4.0      86     -29.0      88    -250.0               76.0     192      26.0
Change In Cash & Equiv             597.0     458     107.0     -46    198.0               -23.0            432.0      -23


   • Net Income is increasing
   • Free cash flows are increasing by a greater percent than net income
                                     Wal-Mart
                                 Financial Analysis
                                              DuPont Analytics
WAL-MART STORES INCORPORATED (WMT)                                                         StockV
Price 56.190 07/25/03 FYE Jan
                       INT         TAX           ASSET
        MARGIN%      BURDEN      BURDEN%          TURN      LEVERAGE


            EBIT       EBT              T         Sales       Assets
           -------     -------     1 - ----       -------        -------   ROE     Acct    ROE
           Sales       EBIT           EBT        Assets          Equity    Rpt%    Adj%    Adj%


 2003        5.69        0.91        64.72          2.74           2.39    21.60    0.00   21.60
 2002        5.62        0.88        63.75          2.69           2.43    20.08    0.71   20.79
 2001        6.06        0.87        63.50          2.58           2.60    22.02    0.82   22.84
 2000        6.16        0.89        63.25          2.74           2.56    22.91    1.41   24.32
 1999        5.93        0.90        62.58          2.89           2.41    22.37    0.00   22.37


 1998        5.54        0.88        63.02          2.78           2.38    19.78    0.19   19.97
 1997        5.47        0.85        63.01          2.72           2.42    19.16    0.00   19.16
 1996        5.64        0.82        63.05          2.66           2.56    19.94    0.00   19.94
 1995        6.11        0.85        62.90          2.78           2.52    22.84    0.00   22.84
 1994        6.35        0.86        63.21          2.87           2.41    23.92    0.00   23.92



 • ROE is stable
 1993
 1992
             6.43
             6.53
                       0.89
                       0.89
                                     63.00
                                     63.00
                                                    3.08
                                                    3.27
                                                                   2.29
                                                                   2.17
                                                                           25.33
                                                                           26.04
                                                                                    0.00
                                                                                    0.00
                                                                                           25.33
                                                                                           26.04
 • Margins are also stable
 1991        6.88      0.91          63.20          3.33           2.10    27.67    0.00   27.67
 1990        7.15        0.93        63.01          3.55           2.09    30.86    0.00   30.86
                                        Wal-Mart
                                   Financial Analysis
                              First Call FY1 & FY2 Revision Trend                            StockVal®
             WAL-MART STORES INCORPORATED (WMT)
                                             FY1 JAN 2004
                              CURRENT EST 2.03 DOWN 1.46% FROM JUL 2002

 1%
             2.07   2.07
      2.06                 2.06
 0%

                                      2.05     2.05
-1%                                                    2.04    2.04           2.04
                                                                       2.03          2.03   2.03   2.03
-2%

      7/02   8/02   9/02   10/02      11/02   12/02    1/03    2/03    3/03   4/03   5/03   6/03   LAST


                                                FY2 JAN 2005
                                   CURRENT EST 2.31 UP 2.21% FROM OCT 2002

 3%
                                                                              2.32   2.32

                                                               2.31    2.31                 2.31   2.31
 2%
                                      2.30



 1%

                                               2.27    2.27

                           2.26
 0%
      7/02   8/02   9/02   10/02      11/02   12/02    1/03    2/03    3/03   4/03   5/03   6/03   LAST




• Earnings estimate revisions are stable
                                                   Wal-Mart
                               Growth & Margin Check                                                                    StockVal ®
WAL-MART STORES INCORPORATED (WMT)                                                          Default Growth Rate Estimate 12.0%
Price 56.190 07/25/03                                                                       Analyst Growth Rate Estimate 12.0%
                                        Percent Change                   Actual     Year         Profit               Momentum %
 Quarter    Revenue       REV           RPS        EARN       EPS         EPS       Ago         Margin %     SF        REV       EPS
   Jul 01    52,799.0           15            15          0          0     0.37        0.37           3.1         0        +14      0
   Oct 01    52,738.0           15            16          6          6     0.34        0.32           2.9         0        +14     +5
  Jan 02    64,210.0           14            14          8          9     0.50        0.46           3.5         0        +15    +11
   Apr 02    54,960.0           14            15         15         16     0.37        0.32           3.0         0        +13    +13
   Jul 02    59,694.0           13            14         23         24     0.46        0.37           3.4         0        +12    +23
   Oct 02    58,797.0           11            13         19         21     0.41        0.34           3.1         0        +10    +17
  Jan 03    71,073.0           11            12         13         14     0.57        0.50           3.5         0        +12    +16
   Apr 03    57,224.0            4             6          9         11     0.41        0.37           3.1         0        +4      +9
     T4Q    246,788.0           10            11         16         17     1.85                       3.3
   Jul 03               Mean Estimate Next Quarter                   9     0.50      Long-Term Growth Rate Estimates
                        High Estimate                               11     0.51   Median Estimate                                14.0%
                        Low Estimate                                 7     0.49   Number of Estimates                               21
                        Number of Estimates                         25            Standard Deviation                                 2
                             Point-to-Point Growth Rates (%)                          Least Squares Growth Rates (%)
             Years        REV           RPS        EARN       EPS        Years      REV           RPS        EARN            EPS
               1                10            11         16         17     1                9           11            13           15
               3                13            13         11         11     3               13           13            10           11
               5                15            15         17         18     5               16           16            15           15
               7                14            15         17         17     7               16           16            18           19
              10                16            16         15         15    10               15           16            16           16
              15                20            20         18         18    15               19           19            17           17
              20                24            23         22         22    20               23           23            21           21
                                         Wal-Mart
                                     Valuation Analysis
WAL-MART STORES INCORPORATED (WMT) Price 56.2                                               StockVal®
      1993   1994    1995     1996    1997     1998    1999     2000    2001     2002   2003        2004
2.2

2.0

1.8
                                                                                               HI      2.05
1.6                                                                                            LO      0.66
                                                                                               ME      1.28
1.4                                                                                            CU      1.46
1.2

1.0

0.8
                                                                                               07-23-1993
                                                                                               07-25-2003
0.6
   PRICE / YEAR-FORWARD EARNINGS RELATIVE TO S&P CONS. STAPLES SECTOR COMPOSITE A (SP-30)
2.2

1.8

1.5
                                                                                               HI      1.93
1.2                                                                                            LO      0.47
1.0                                                                                            ME      1.00
                                                                                               CU      1.61
0.8


0.6

0.5
                                                                                               07-23-1993
                                                                                               07-25-2003
0.4
              PRICE RELATIVE TO S&P CONS. STAPLES SECTOR COMPOSITE A (SP-30) M-Wtd



      • Both are trending upward
                   Wal-Mart
                Recommendation
   Buy: Wal-Mart 0%  1.73%

   Risks:
    – Future growth is already priced into stock
    – International growth may not be successful
    – May over-diversify their product offerings
             Harley Davidson
               Business Analysis
Catalysts:
  •   Returns Have Been Increasing and are
      Projected to Continue
  •   High Long-Term Growth Rate Estimates
  •   Mid-life Crisis & Early Retirees (excess cash)
                                 Harley Davidson
                                       Financial Analysis
                                                   Cash Flow Analysis
 HARLEY-DAVIDSON INCORPORATED (HDI)                                                                          StockVal ®
 FYE Dec

                                   2002    % Chg       2001    % Chg     2000    % Chg    1999    % Chg    1998    % Chg

Net Incom e Reported ($ Mil)      580.2       33       437.7      26    347.7       30   267.2       25   213.5       23
  Accounting Adjustm ent             0.0                 0.0              -6.9              0.0              0.0
Net Incom e Adjusted              580.2       33       437.7      28    340.8       28   267.2       25   213.5       23
  Depreciation & Am ort           175.8       15       153.1      15    133.3       17   113.8       30    87.4       25
Cash Flow Adjusted                756.0       28       590.8      25    474.2       24   381.0       27   300.9       23
  Capital Expenditures            323.9       12       290.4      43    203.6       23   165.8       -9   182.8       -2
Free Cash Flow Adjusted           432.1       44       300.4      11    270.6       26   215.2       82   118.2      103
  Dividends Com m on ($ Mil)        41.2      17        35.2      17     30.1       11    27.3       13    24.1       15
Free Cash Flow After Dividends    390.9       47       265.2      10    240.4       28   188.0      100    94.0      153


Net Cash From Operations          779.5        3       756.8      34    565.3       31   431.6       31   330.7        7
Net Cash From Investing          -1018.0     -32      -771.5    -351    -170.9      43   -299.6      12   -340.2      16
Net Cash From Financing             79.9     132        34.4            -158.1     -39   -113.8            27.1      -73
Other Cash Flow s                    0.0                 0.0               0.0              0.0      40      0.0     -55
Change In Cash & Equiv            -158.5                19.7     -92    236.3     1195    18.2        3    17.7      255

    • Income Increasing by 33%!!!
    • Free Cash Flow Increasing by 47%!!!!
    • Increased Capital Expenditures
                             Harley Davidson
                                 Financial Analysis
                                              DuPont Analytics
HARLEY-DAVIDSON INCORPORATED (HDI)                                                           StockV
Price 45.700 07/25/03 FYE Dec
                       INT         TAX           ASSET
        MARGIN%      BURDEN      BURDEN%          TURN      LEVERAGE


            EBIT       EBT              T         Sales       Assets
           -------     -------     1 - ----       -------        -------   ROE      Acct     ROE
           Sales       EBIT           EBT        Assets          Equity    Rpt%     Adj%     Adj%


 2002       21.65        1.00        65.50          1.17           1.75    29.09     0.00    29.09
 2001       19.77        1.00        65.00          1.23           1.76    27.69     0.00    27.69
 2000       18.64        1.00        63.39          1.29           1.77    27.09     -0.53   26.56
 1999       16.95        1.00        63.50          1.23           1.84    24.39     0.00    24.39
 1998       16.11        1.00        63.50          1.19           1.90    23.00     0.00    23.00


 1997       15.68        1.00        63.00          1.21           1.96    23.37     0.00    23.37
 1996       14.87        1.00        63.00          1.32           2.01    28.69     -3.91   24.78
 1995       13.13        0.99        63.10          1.61           1.81    24.25     -0.31   23.94
 1994       13.56        1.00        61.51          1.92           1.59    27.51     -2.13   25.38
 1993       13.66        1.00        60.05          1.86           1.52     -3.60   26.72    23.12

  • Margins have been increasing since 1995
 1992       11.79      0.94    62.13       1.83                    1.57    18.76     1.00    19.76
  • ROE continues to rise
 1991       12.19      0.90    62.44       1.69                    1.90    16.93     5.18    22.11
 1990        8.57        0.85        61.18          2.20           2.22    21.31     2.69    24.00
 1989        8.97        0.75        61.52          2.03           2.81    23.71     -0.24   23.47
 1988        9.68        0.67        59.02          1.81           4.24    25.91     7.05    32.96
                           Harley Davidson
                                   Financial Analysis
                              First Call FY1 & FY2 Revision Trend                            StockVal®
              HARLEY-DAVIDSON INCORPORATED (HDI)
                                                FY1 DEC 2003
                                   CURRENT EST 2.41 UP 18.72% FROM JUL 2002

20%                                                                                                2.41


15%                                                                                  2.32   2.32

                                                                              2.26
10%                                    2.21    2.22    2.22    2.22    2.22


5%                         2.13

             2.07   2.08
      2.03
0%
      7/02   8/02   9/02   10/02      11/02   12/02    1/03    2/03    3/03   4/03   5/03   6/03   LAST


                                                FY2 DEC 2004
                                   CURRENT EST 2.67 UP 0.00% FROM DEC 2002
                                              2.67                                                 2.67
0%



-1%

                                                                                     2.63   2.63
-2%                                                    2.62
                                                                              2.61
                                                               2.60
-3%
                                                                       2.59
      7/02   8/02   9/02   10/02      11/02   12/02    1/03    2/03    3/03   4/03   5/03   6/03   LAST




• Earnings estimates revised to increase 18.72% for 2003
                                   Harley Davidson
                                Growth & Margin Check                                                                      StockVal ®
HARLEY-DAVIDSON INCORPORATED (HDI)                                                                  Default Growth Rate Estimate 16.0%
Price 45.700 07/25/03                                                                               Analyst Growth Rate Estimate 16.0%
                                           Percent Change                   Actual      Year           Profit            Momentum %
 Quarter    Revenue          REV           RPS        EARN       EPS         EPS        Ago          Margin %      SF     REV       EPS
  Sep 01           861.6           19            19         33         33     0.36         0.27            12.8     +1        +18    +29
  Dec 01          905.9           18            19         25         26     0.39         0.31            13.2     +1        +17    +24
  Mar 02           927.8           19            20         30         30     0.39         0.30            12.8     +1        +18    +25
  Jun 02      1,001.1              16            17         23         24     0.47         0.38            14.3     +1        +16    +24
  Sep 02      1,135.5              32            33         49         50     0.54         0.36            14.5     +1        +30    +45
  Dec 02     1,026.5              13            13         25         26     0.49         0.39            14.6     +1        +12    +22
  Mar 03      1,113.7              20            20         56         56     0.61         0.39            16.7     +2        +18    +47
  Jun 03      1,218.9              22            22         40         40     0.66         0.47            16.5     +1        +20    +36
     T4Q      4,494.6              22            22         42         43     2.30                         15.6
  Sep 03                   Mean Estimate Next Quarter                   4     0.56      Long-Term Growth Rate Estimates
                           High Estimate                               19     0.64    Median Estimate                               18.0%
                           Low Estimate                                -4     0.52    Number of Estimates                              13
                           Number of Estimates                         14             Standard Deviation                                2
                                Point-to-Point Growth Rates (%)                           Least Squares Growth Rates (%)
             Years           REV           RPS        EARN       EPS        Years       REV             RPS        EARN         EPS
               1                   22            22         42         43     1                18             18         41           41
               3                   18            18         32         33     3                18             19         32           33
               5                   19            19         31         31     5                18             19         29           30
               7                   17            17         28         27     7                18             18         26           26
              10                   17            17         26         26    10                17             17         25           25
              15                   14            11         25         23    15                14             13         23           22
              20                                                             20
                               Harley Davidson
                                     Valuation Analysis
HARLEY-DAVIDSON INCORPORATED (HDI) Price 45.7                                               StockVal®
      1993   1994    1995     1996    1997     1998    1999     2000    2001     2002   2003        2004
1.7

1.6

1.5

1.4                                                                                            HI      1.63
                                                                                               LO      0.83
1.3                                                                                            ME      1.15
                                                                                               CU      1.00
1.2

1.1

1.0

0.9                                                                                            07-23-1993
                                                                                               07-25-2003
0.8
   PRICE / YEAR-FORWARD EARNINGS RELATIVE TO S&P CONSUMER DIS. SECTOR COMPOSITE A (SP-25)
7.3
5.8
4.6

3.6                                                                                            HI      6.20
                                                                                               LO      0.94
2.8                                                                                            ME      1.75
2.2                                                                                            CU      4.53

1.7

1.3

1.0                                                                                            07-23-1993
                                                                                               07-25-2003
0.8
              PRICE RELATIVE TO S&P CONSUMER DIS. SECTOR COMPOSITE A (SP-25) M-Wtd


  • Both graphs are trending upward and are off their highs
             Harley Davidson
                Recommendation
   Buy: Harley Davidson 0%  1.21%

   Risks:
    – If economy does not recover, sales volume
      may decline
    – Money could be spent on a new trend
                          Altria
                   Business Analysis
   Catalysts:
    •   Pending Future Litigation
    •   Decrease in Earnings Projections
    •   Decrease in Domestic Sales
           Pressure from Generics
           Fewer New Addicts
                                                    Altria
                                      Financial Analysis
                                                   Cash Flow Analysis
 ALTRIA GROUP INCORPORATED (MO)                                                                                 StockVal ®
 FYE Dec

                                   2002    % Chg       2001    % Chg      2000    % Chg     1999    % Chg     1998    % Chg

Net Incom e Reported ($ Mil)     11102.0      30      8560.0       1     8510.0      11    7675.0      43   5372.0      -15
  Accounting Adjustm ent         -1371.3              1328.5     208      431.0      31     327.9     -87   2485.8      216
Net Incom e Adjusted              9730.7      -2      9888.5      11     8941.0      12    8002.9       2   7857.8       11
  Depreciation & Am ort           1331.0     -43      2337.0      36     1717.0       1    1702.0       1   1690.0       -1
Cash Flow Adjusted               11061.7     -10     12225.5      15    10658.0      10    9704.9       2   9547.8        9
  Capital Expenditures            2009.0       5      1922.0      14     1682.0      -4    1749.0      -3   1804.0       -4
Free Cash Flow Adjusted           9052.7     -12     10303.5      15     8976.0      13    7955.9       3   7743.8       12
  Dividends Com m on ($ Mil)      5194.8       6      4906.2       7     4589.4       4    4421.5       8   4109.3        5
Free Cash Flow After Dividends    3857.9     -29      5397.3      23     4386.6      24    3534.4      -3   3634.5       21


Net Cash From Operations         10612.0      19      8893.0     -19    11044.0      -3   11375.0      40   8120.0       -3
Net Cash From Investing          -2471.0      15     -2916.0      83   -17506.0    -553   -2682.0      -5   -2554.0    -313
Net Cash From Financing          -8165.0     -27     -6440.0             2658.0           -7497.0     -93   -3894.0      29
Other Cash Flow s                  136.0               -21.0      94     -359.0    -103    -177.0            127.0
Change In Cash & Equiv             112.0              -484.0      88    -4163.0            1019.0     -43   1799.0      -12

    • Strong Cash Flows from Operations
    • Losses Due to Litigation  Future Implications
                                              Altria
                                 Financial Analysis
                                              DuPont Analytics
ALTRIA GROUP INCORPORATED (M O)                                                             StockV
Price 40.280 07/18/03 FYE De c
                       INT         TAX           ASSET
        MARGIN%      BURDEN      BURDEN%          TURN      LEVERAGE


            EBIT       EBT              T         Sales       Assets
           -------     -------     1 - ----       -------        -------   ROE     Acct     ROE
           Sales       EBIT           EBT        Assets          Equity    Rpt%    Adj%     Adj%


 2002       24.16        0.93        64.50          0.93           4.41    56.79    -7.01   49.78
 2001       19.71        0.90        62.15          0.99           4.74    49.44    7.68    57.12
 2000       20.63        0.93        61.31          1.05           4.63    56.15    2.85    59.00
 1999       19.27        0.92        60.85          1.20           3.85    48.73    2.08    50.81
 1998       15.04        0.88        59.69          1.20           3.72    34.53   15.97    50.50


 1997       16.58        0.90        59.80          1.30           3.80    43.31    5.40    48.71
 1996       17.26        0.89        59.00          1.27           3.85    44.70    0.00    44.70
 1995       16.18        0.87        58.61          1.24           3.98    40.72    0.20    40.92
 1994       14.71        0.86        57.51          1.25           4.25    38.71    0.00    38.71
 1993       12.74        0.80        57.59          1.20           4.18    25.56    7.72    33.28


 1992       17.28        0.84        57.38          1.21           3.88    39.39    0.00    39.39
  • Strong ROE Due to 0.80
 1991        15.50      Leveraged Position 1.20
                                  56.33                 3.84        24.58      9.78         34.36
 1990
 1989
       •Over 15.74 of Non-Current 58.24
             15.93
              70%       0.77
                        0.73
                                  56.09        1.20
                                               1.17
                                                        3.95
                                   assets (including good will) are 34.16
                                                        4.38
                                                                    32.90      0.00
                                                                    funded by -1.77
                                                                              LTD           32.90
                                                                                            32.39
 1988  •Over 14.58
              112% of Productive assets (not including good will) funded by LTD
                        0.82      55.38        1.07     4.03        32.23     -0.84         31.39

  • Accounting Adjustment Due to Litigation  One Time Expense?
 1987        14.93      0.81      55.08        1.35     3.28        29.52      0.36         29.88
 1986       14.23        0.76        53.45          1.34           3.68    28.44    0.00    28.44
                                               Altria
                                     Financial Analysis
                                First Call FY1 & FY2 Revision Trend                         StockVal®
                     ALTRIA GROUP INCORPORATED (MO)
                                               FY1 DEC 2003
                                CURRENT EST 4.63 DOWN 15.36% FROM JUL 2002
       5.47
 0%
              5.40    5.39
-4%


-8%
                             4.99

-12%                                  4.86
                                             4.77
                                                     4.73
-16%                                                         4.63    4.62    4.62   4.61   4.62   4.63

       7/02   8/02    9/02   10/02   11/02   12/02   1/03    2/03    3/03    4/03   5/03   6/03   LAST


                                               FY2 DEC 2004
                                CURRENT EST 4.95 DOWN 20.93% FROM JUL 2002
       6.26
 0%
              6.24    6.23

-6%                          5.92


-12%
                                      5.46

-18%                                         5.25    5.22
                                                                             5.10
                                                             5.02    5.02           4.97   4.96   4.95
-24%

       7/02   8/02    9/02   10/02   11/02   12/02   1/03    2/03    3/03    4/03   5/03   6/03   LAST




 • Earnings revisions have decreased each quarter
                                                      Altria
                                                   Growth & Margin Check                                                     StockVal ®
ALTRIA GROUP INCORPORATED (MO)                                                                     Default Growth Rate Estimate 8.0%
Price 40.990 07/25/03                                                                              Analyst Growth Rate Estimate 8.0%
                                        Percent Change                     Actual      Year          Profit                Momentum %
 Quarter    Revenue       REV           RPS         EARN        EPS         EPS        Ago         Margin %       SF        REV        EPS
  Sep 01     20,249.0           10            13         10           12     1.19         1.06           12.9      +1            +10   +12
  Dec 01    19,882.0           12            15         12           15     1.08         0.94           11.9      +1            +11   +13
  Mar 02     20,535.0            3             6           4           7     1.14         1.07           12.1          0         +3     +6
  Jun 02     21,103.0            2             4           6           9     1.24         1.14           12.7          0         +2     +9
  Sep 02     19,996.0           -1             3           2           6     1.26         1.19           13.4          0          -1    +6
  Dec 02    18,774.0           -6             0        -18       -14        0.93         1.08           10.2          0          -5   -13
  Mar 03     19,371.0           -6             0        -12           -6     1.07         1.14           11.3          0          -6     -6
  Jun 03     20,831.0           -1             5           -5          2     1.26         1.24           12.3      +1             -1    +2
     T4Q     78,972.0           -3             2           -8         -3     4.52                        11.8
  Sep 03                Mean Estimate Next Quarter                    -2     1.23      Long-Term Growth Rate Estimates
                        High Estimate                                  0     1.26    Median Estimate                                   9.0%
                        Low Estimate                                  -6     1.19    Number of Estimates                                  9
                        Number of Estimates                           10             Standard Deviation                                   1
                             Point-to-Point Growth Rates (%)                             Least Squares Growth Rates (%)
             Years        REV           RPS         EARN        EPS        Years       REV            RPS         EARN             EPS
               1                -3             2           -8         -3     1                -4              2            -11           -6
               3                 2             7           4           8     3                 3              7             3            7
               5                 2             6           5           8     5                 4              8             6           10
               7                 2             5           7          10     7                 3              5             7           10
              10                 3             5           7          10    10                 3              5            10           13
              15                 7             9         10           13    15                 5              7            10           12
              20                10            12         13           15    20                10            11             13           15
                                            Altria
                                   Valuation Analysis
ALTRIA GROUP INCORPORATED (MO) Price 40.3                                                   StockVal®
   1993    1994    1995     1996    1997     1998    1999     2000    2001     2002    2003         2004
0.72

0.66

0.60

0.54                                                                                           HI      0.67
                                                                                               LO      0.23
0.48                                                                                           ME      0.54
                                                                                               CU      0.46
0.42

0.36

0.30

0.24                                                                                           07-16-1993
                                                                                               07-18-2003
0.18
   PRICE / YEAR-FORWARD EARNINGS RELATIVE TO S&P CONS. STAPLES SECTOR COMPOSITE A (SP-30)
1.6
1.4

1.2
                                                                                               HI      1.43
1.0
                                                                                               LO      0.48
                                                                                               ME      1.11
0.8                                                                                            CU      0.93
0.7

0.6

0.5
                                                                                               07-16-1993
                                                                                               07-18-2003
0.4
            PRICE RELATIVE TO S&P CONS. STAPLES SECTOR COMPOSITE A (SP-30) M-Wtd


  • Historically Inexpensive Relative to Consumer Staples due to unpredictability
    of litigation
                     Altria
                Recommendation
   Trim: Altria 1.56%  .95% (market
    weight)
    – See what happens next quarter


   Risks:
    – Favorable Lawsuit Rulings
    – Foreign Expansion Opportunities
             McDonald’s
            Business Analysis
Catalysts:
1. Current growth expected to continue due
   to new menu items and extended hours
2. Dividend increase and stock repurchase
   planned for fall 2003
3. Stock is currently undervalued
                                     McDonald’s
                                  Financial Analysis
                                                   Cash Flow Analysis
MCDONALDS CORPORATION (MCD)                                                                                     Sto
FYE Dec
                                   2002    % Chg        2001    % Chg     2000    % Chg     1999    % Chg     1998

Net Income Reported ($ Mil)       893.5      -45      1636.6      -17   1977.3        2   1947.9       26   1550.1
  Accounting Adjustment           798.5      460       142.5                0.0             12.3      -94    219.0
Net Income Adjusted              1692.0       -5      1779.1      -10   1977.3        1   1960.2       11   1769.1
  Depreciation & Amort           1050.8       -3      1086.3        7   1010.7        6    956.3        9    881.1
Cash Flow Adjusted               2742.8       -4      2865.4       -4   2988.0        2   2916.5       10   2650.2
  Capital Expenditures           2003.8        5      1906.2       -2   1945.1        4   1867.8       -1   1879.3
Free Cash Flow Adjusted           739.0      -23       959.2       -8   1042.9       -1   1048.7       36    770.9
  Dividends Common ($ Mil)        307.6        2       301.1        1    298.4        6    280.8       11    253.0
Free Cash Flow After Dividends    431.4      -34       658.1      -12    744.5       -3    767.9       48    517.9


Net Cash From Operations         2890.1        8      2688.3       -2   2751.5       -9   3008.9        9   2766.3
Net Cash From Investing          -2466.6     -19      -2068.2       7   -2212.6       2   -2261.8     -16   -1948.2
Net Cash From Financing           -511.2      18       -623.7     -16    -536.7      14    -626.8      27    -860.3
Other Cash Flows                     0.0                  0.0               0.0     -20       0.0               0.0
Change In Cash & Equiv             -87.7   -2336         -3.6               2.2     -98    120.3              -42.2


    • Decrease in 2002 net income and free cash flows not indicative of current and future
    performance
                                          McDonald’s
                                                   Growth & Margin Check                                                    StockVal ®
MCDONALDS CORPORATION (MCD)                                                                       Default Growth Rate Estimate 6.7%
Price 21.440 07/25/03                                                                             Analyst Growth Rate Estimate 6.7%
                                        Percent Change                     Actual      Year         Profit                Momentum %
 Quarter    Revenue       REV           RPS         EARN        EPS         EPS        Ago        Margin %       SF        REV       EPS
  Jun 01      3,707.5           4              8        -11           -8     0.36         0.39          12.7      +1            +4     -8
  Sep 01      3,879.3           3              7        -10           -7     0.38         0.41          12.8      -1            +4     -9
  Dec 01     3,771.5           5              8           -3          0     0.34         0.34          11.7          0         +5     0
  Mar 02      3,597.4           2              5           1           3     0.30         0.29          10.8          0         +2    +3
  Jun 02      3,862.1           4              6           7           8     0.39         0.36          13.0          0         +4    +9
  Sep 02      4,047.0           4              6           -1          0     0.38         0.38          12.1          0         +4     0
  Dec 02     3,899.2           3              6        -28       -26        0.25         0.34           8.1          0         +3   -26
  Mar 03      3,799.7           6              7           -5         -3     0.29         0.30           9.7          0         +5     -3
     T4Q     15,608.0           4              6           -7         -5     1.31                       10.8
  Jun 03                Mean Estimate Next Quarter                    -5     0.37      Long-Term Growth Rate Estimates
                        High Estimate                                 -3     0.38    Median Estimate                                 8.7%
                        Low Estimate                                  -5     0.37    Number of Estimates                               12
                        Number of Estimates                           15             Standard Deviation                                 2
                             Point-to-Point Growth Rates (%)                             Least Squares Growth Rates (%)
             Years        REV           RPS         EARN        EPS        Years       REV           RPS         EARN            EPS
               1                4              6           -7         -5     1                4              6            -12        -11
               3                5              8           -6         -3     3                4              7             -6          -4
               5                6              8           0           2     5                6              8             -1          2
               7                6              8           2           4     7                7              8             3           4
              10                8              9           6           7    10                8              9             7           8
              15                8              9           7           9    15                8              9             9          10
              20                9             10           9          10    20                9            10             10          11
                                     McDonald’s
                                    Financial Analysis
                                                  DuPont Analytics
MCDONALDS CORPORATION (MCD)                                                                     StockV
Price 21.440 07/25/03 FYE Dec
                         INT           TAX           ASSET
         MARGIN%       BURDEN       BURDEN%           TURN        LEVERAGE


            EBIT         EBT                T          Sales         Assets
             -------      -------      1 - ----         -------       -------   ROE     Acct    ROE
            Sales        EBIT            EBT          Assets         Equity     Rpt%    Adj%    Adj%


  2002       13.31         0.81         59.69            0.66          2.35      9.04    8.08   17.12
  2001       18.81         0.83         70.25            0.67          2.37     17.51    1.53   19.04
  2000       23.37         0.87         68.60            0.67          2.26     20.99    0.00   20.99
  1999       24.85         0.88         67.54            0.65          2.13     20.39    0.13   20.52
  1998       22.05         0.84         67.18            0.65          2.08     16.93    2.39   19.32


  1997       24.49         0.86         68.23            0.64          2.03     18.70    0.00   18.70
  1996       24.48         0.86         69.86            0.65          1.98     18.97    0.17   19.14
  1995       25.85         0.86         65.80            0.68          1.97     19.36    0.00   19.36
  1994       26.59         0.85         64.90            0.65          1.95     18.61    0.00   18.61
  1993       27.16         0.83         64.60            0.62          1.95     17.79    0.23   18.02


  1992       25.81         0.79         66.20            0.62          2.15     17.87    0.00   17.87
  1991       25.65         0.76         66.15            0.61          2.44     19.07    0.00   19.07
  • First quarter 2003 analytics outperformed 0.67
  1990       25.05      0.75      64.37        2002                    2.57     20.75    0.00   20.75
  1989       24.55         0.78         62.80            0.70          2.49     20.87    0.00   20.87
                                    McDonald’s
                                    Financial Analysis
                               First Call FY1 & FY2 Revision Trend                         StockVal®
                     MCDONALDS CORPORATION (MCD)
                                              FY1 DEC 2003
                               CURRENT EST 1.33 DOWN 17.90% FROM JUL 2002

 8%

       1.62   1.63
 0%
                     1.59
                            1.54
-8%                                  1.50
                                             1.43
-16%
                                                     1.36
                                                            1.33    1.33    1.32   1.31   1.32   1.33
-24%

       7/02   8/02   9/02   10/02    11/02   12/02   1/03   2/03    3/03    4/03   5/03   6/03   LAST


                                              FY2 DEC 2004
                               CURRENT EST 1.41 DOWN 20.34% FROM JUL 2002
       1.77   1.77   1.77   1.77    1.77    1.77
 0%


-6%
                                                     1.64

-12%


-18%
                                                            1.41                                 1.41
                                                                    1.39           1.39   1.39
-24%                                                                        1.37

       7/02   8/02   9/02   10/02    11/02   12/02   1/03   2/03    3/03    4/03   5/03   6/03   LAST




  • Since beginning of 2003, revisions estimates have remained steady
                                     McDonald’s
                                    Valuation Analysis
MCDONALDS CORPORATION (MCD) Price 21.4                                                      StockVal®
      1993   1994   1995     1996    1997     1998    1999     2000    2001     2002   2003      2004
1.6


1.4


1.2                                                                                            HI    1.49
                                                                                               LO    0.59
                                                                                               ME    1.10
1.0                                                                                            CU    0.88

0.8


0.6
                                                                                               07-23-1993
                                                                                               07-25-2003
0.4
   PRICE / YEAR-FORWARD EARNINGS RELATIVE TO S&P CONSUMER DIS. SECTOR COMPOSITE A (SP-25)
1.8
1.6

1.4
                                                                                               HI    1.72
1.2                                                                                            LO    0.67
                                                                                               ME    1.16
1.0                                                                                            CU    0.87

0.9
0.8

0.7
                                                                                               07-23-1993
                                                                                               07-25-2003
0.6
             PRICE RELATIVE TO S&P CONSUMER DIS. SECTOR COMPOSITE A (SP-25) M-Wtd



  • Stock is currently undervalued
                 McDonald’s
                Recommendation
   Trim: 6.58%  3.25%

   Risks:
    – Growth due to company’s revitalizations could
      be short-lived
    – Foreign sales could continue to weaken
            Recommendation
 Buy: Wal-Mart 0%  1.73%
 Buy: Harley Davidson 0%  1.21%
 Trim: Altria 1.56%  .95%
 Trim: McDonald’s 6.58%  3.25%


    – Overall, Consumer stocks decrease by 1% of
      portfolio value.

				
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