Cabela’s has three sources of revenue: merchandise sales, financial services revenue and other, which accounts for revenue that cannot be classified in the first two categories. The percentage of total revenue generated by these sources remained relatively unchanged year over year. Additionally the major expense accounts associated with generating revenue are cost of goods sold and selling, general and administrative expenses. The Company was able to reduce it COGS from 59.1% to 58.4% while maintaining its general and administrative expenses at 34%.
The Company’s net sales increased by 14.7%, while gross profit margin increased by 16.8% for the same period from 2005 to 2006. The accounts receivable turnover ratio change was negligible with a 48.3 versus 47.1 for the previous year. The company is growing its sales and profit margin at a steady pace without giving any ground to the amount of time required to collect on receivables.
Inventory increased 22% in 2006 and accounted for 28% of total assets; however, this was a decrease from 29% for 2005. The Company is improving their ability to manage inventory levels which can be substantiated not only by the decrease in percentage of total assets but also by the increase in inventory turnover from 2.63 to 2.72. The company will need to continue to focus on inventory management in order to improve turnover and return on assets.
Cabela’s has improved sales by 14.7% and translated that into 3.2% growth in net profit. The aggressive growth of the brick and mortar retail business has led to an increase in assets primarily in inventories and buildings which has led to degradation in all ratios relating to assets. The company has been able to use this leverage to improve profitability by delivering higher gross, operating and net profit margins and increasing return on equity from 11.34% to 11.69%.
Ratio Analysis
Income Statement Horizontal Analysis
Income Statement Vertical Analysis
Balanace Sheet Horizontal Analysis
Balance Sheet Vertical Analysis
Tuesday, December 11, 2007
Monday, December 10, 2007
Analysis of Operating Activities: Dick's Sporting Goods, Inc.
Dick’s has three sources of revenue: hardlines, apparel and footwear. These sources accounted for 57%, 26% and 17% of total revenue in 2006, respectively. These figures showed relatively no change from 2005 numbers. Revenue is recognized from the point of sale, net of sales tax. A provision for anticipated returns is provided through a reduction in sales and cost of sales. Cost of goods sold includes the cost of merchandise, inventory shrinkage, freight, distribution and store occupancy costs. Selling, general and administrative expenses include payroll, advertising, information systems, legal, etc. There were no major changes in these expense accounts as they remained at 71% and 28% of sales, respectively.
The Company’s net sales increased 19% from 2005 to 2006 while accounts receivable remained at 2% of total assets. The accounts receivable turnover ratio weakened during 2006, falling to 78.47 from 89.39 the previous year. Though the Company is collecting at a slower rate, its turnover ratio still remains well above industry average.
Inventories improved to 42% of total assets from 45% the previous year. The Company’s inventories are stated at the lower of weighted average cost or market. Inventories are net of shrinkage and obsolescence and costs consist of the direct cost of merchandise including freight. Inventory turnover weakened to 4.85 during 2006 from 4.90 the previous year.
The Company is a specialty retailer which offers both premium and private brand label. The margins improved to 28.79% and 6.35% from 28.10% and 5.06% during 2005. The company improved its return on assets and net profit margin to 7.39% and 3.62%, respectively from 6.14% and 2.14% the previous year. Return on assets weakened to 2.04 from 2.21 the previous year. The Company is centered between a product differentiation strategy and a cost leadership strategy.
For complete vertical and horizontal analysis please click on the links below:
Income statement vertical analysis
Income statement horizontal analysis
Balance sheet vertical analysis
Balance sheet horizontal analysis
Ratios
The Company’s net sales increased 19% from 2005 to 2006 while accounts receivable remained at 2% of total assets. The accounts receivable turnover ratio weakened during 2006, falling to 78.47 from 89.39 the previous year. Though the Company is collecting at a slower rate, its turnover ratio still remains well above industry average.
Inventories improved to 42% of total assets from 45% the previous year. The Company’s inventories are stated at the lower of weighted average cost or market. Inventories are net of shrinkage and obsolescence and costs consist of the direct cost of merchandise including freight. Inventory turnover weakened to 4.85 during 2006 from 4.90 the previous year.
The Company is a specialty retailer which offers both premium and private brand label. The margins improved to 28.79% and 6.35% from 28.10% and 5.06% during 2005. The company improved its return on assets and net profit margin to 7.39% and 3.62%, respectively from 6.14% and 2.14% the previous year. Return on assets weakened to 2.04 from 2.21 the previous year. The Company is centered between a product differentiation strategy and a cost leadership strategy.
For complete vertical and horizontal analysis please click on the links below:
Income statement vertical analysis
Income statement horizontal analysis
Balance sheet vertical analysis
Balance sheet horizontal analysis
Ratios
Saturday, December 8, 2007
Analysis of Operating Activities Costco
Costco has five sources of revenue. Four traditional discount store categories: Sundries, Hardlines, Softlines, Food, and Fresh Food; as well as a category for all other sources of revenue, Ancillary.
Ancillary includes pharmacies, gas station, optical, and other services not normally found in the business model of a discount store. From 2004 to 2006 Costco has increased its percentage of overall sales in the ancillary category from 11% to 14%. It remains to be seen if this divergence from the traditional model will benefit the company. However it is clear that ancillary operations are becoming more integral to Costco’s Business model. Possible reasons for the increased concentrations may include more demand for the services or the market for the other categories is seeing decreasing growth of profits.
Although gross profit increased by 12% from 2005 to 2006, total revenue increased by 13.6%. Indicating a disproportionably greater increase in the costs of merchandise relative to the amount of revenue earned, as shown by the 1.30% decrease in gross profit as a percentage of total revenue. This decrease may be indicative of rising merchandise costs, or it may indicate diseconomies of scale created by the continued growth of the corporation. If the latter is true, investors should be weary of purchasing Costco stock, as diseconomies of scale may indicate the peak of the growth phase in a corporation.
Friday, December 7, 2007
TP3: Analysis and Comparision of Companies Based on Financing Activities
Each of the three companies analyzed improved its liquidity during 2006 with each posting a current ratio of 1.5. The improved ratios can be attributed to increased sales and tremendous growth of the companies. Cabela’s experienced the greatest growth in working capital at 130%, while Costco experienced the worst with a 72% decline.
The three companies approach financing of long-term debt in different ways. Costco’s old debt is becoming current as evident by a 69.70% decrease in long-term debt and a 9466% increase in the current portion of long-term debt. Cabela’s increased its long-term debt by 214% from the issuance of a large note. Dick’s long-term debt increased 12.26%, primarily due to increases in non-cash obligations and deferred revenue. The ratios of assets-to-long-term debt for Costco, Cabela’s and Dick’s were 38.22, 4.40 and 3.93, respectively.
Costco has the lowest ratio of assets-to-equity of 1.91 revealing the company’s ability to fund asset expenditures internally, while Dick’s had the highest at 2.46 revealing its use of debt and other instruments for financing. Costco had the highest earnings per share at $2.37, while Cabela’s had the lowest of $1.32. Costco, Dick’s and Cabela’s all trade on the New York Stock Exchange and the current price per share of each company’s stock is $71.84, $31.98 and $15.94, respectively.
Dick’s had the highest return on equity at 18.14%, but the company also had the highest debt to assets ratio which could be boosting return on equity inflating debt figures. But, overall Dick’s could arguably be the most attractive company because of its maturity and internal growth. Costco’s weakening operating capital and Cabela’s large note that increased its long-term debt all warrant red flags in the financing section of the cash flow statements. Dick’s has stayed away from high-risk financing activities and has grown from funds generated internally while, for the most part, still posting numbers at or better than the competition.
Review company specific analysis:
Cabela's
Dick's Sporting Goods
Costco
The three companies approach financing of long-term debt in different ways. Costco’s old debt is becoming current as evident by a 69.70% decrease in long-term debt and a 9466% increase in the current portion of long-term debt. Cabela’s increased its long-term debt by 214% from the issuance of a large note. Dick’s long-term debt increased 12.26%, primarily due to increases in non-cash obligations and deferred revenue. The ratios of assets-to-long-term debt for Costco, Cabela’s and Dick’s were 38.22, 4.40 and 3.93, respectively.
Costco has the lowest ratio of assets-to-equity of 1.91 revealing the company’s ability to fund asset expenditures internally, while Dick’s had the highest at 2.46 revealing its use of debt and other instruments for financing. Costco had the highest earnings per share at $2.37, while Cabela’s had the lowest of $1.32. Costco, Dick’s and Cabela’s all trade on the New York Stock Exchange and the current price per share of each company’s stock is $71.84, $31.98 and $15.94, respectively.
Dick’s had the highest return on equity at 18.14%, but the company also had the highest debt to assets ratio which could be boosting return on equity inflating debt figures. But, overall Dick’s could arguably be the most attractive company because of its maturity and internal growth. Costco’s weakening operating capital and Cabela’s large note that increased its long-term debt all warrant red flags in the financing section of the cash flow statements. Dick’s has stayed away from high-risk financing activities and has grown from funds generated internally while, for the most part, still posting numbers at or better than the competition.
Review company specific analysis:
Cabela's
Dick's Sporting Goods
Costco
Analysis of Financing Activities: Cabela's
Current Liabilities
The working capital of Cabela’s increased year over year from 2005 to 2006 by 130% providing for more available funds for operations. The company was able to achieve this increase in working capital by increasing its current assets by 37%, primarily in the increase of cash and cash equivalents, while only increasing current liabilities by 13% over the same period. The company increased its deferred income taxes, gift certificates and credit card reward points and accounts payable by 350%, 19% and 47% respectively which were responsible for the year over year increase in current liabilities. The increase in deferred income taxes and accounts payable can be attributed to the growth in inventory levels as a result of the growth in its destination retail locations. The increase in rewards liabilities can also be attributed to the growth of its retail destination stores which provide for additional customer traffic and increased sales. The ability of the company to improve its working capital position provided for an increase in its current ratio from 1.3 to 1.5 while maintaining its quick ratio of .5 over the same period. The company has improved its ability to fund operational activities and its ability to pay its short-term debt commitments.
Long-Term Liabilities
The company increased its long-term liabilities by 124% from the previous year. This increase is due to the issuance of a 5.99% 10 year note in the amount of 215,000,000 which was responsible for the majority of the 214% increase in long-term debt over the previous year. The company currently has four unsecured notes payable in the amount of $297,434,000 due between the current year and 2016 with an average rate of 5.8%. Additionally, the company has capital leases for its Boise, Idaho retail store and its Wheeling, West Virginia distribution facility. The current obligation for these capital leases is $13,948,000 through 2036. The significant increase in long-term liabilities resulted in the ratio assets-to-long-term-liabilities to decrease from 7.7 to 4.4 year over year. The decrease in this ratio due to the increase in long-term debt brings the company more in line with its competition in does not expose it to an unacceptable level of risk.
Stockholders’ Equity
At fiscal year end 2006, the Company has 59,556,431 and 56,691,249 shares of Class A Voting issued and outstanding. It also has 5,807,305 and 8,073,205 shares of Class B Non-voting issued and outstanding. During 2006, the Company sold an additional 2.8 million shares of Class A and bought back 2.2 million shares of Class B resulting in a net increase in paid-in capital of 3.3%. The Company trades on the NYSE under ticker symbol CAB currently trading at $16.15 and with a 52 week price range of $15.41 to $28.80. Earning per share of $1.32 was reported for 2006, up $0.20, or 17.8% from 2005. The company improved its assets-to-equity position over this period as evidenced by the ratio improving from 2.14 in 2005 to 2.39 in 2006.
Capital Structure Issues
The Company has improved its performance in profitability for stockholders by improving its return on equity from 11.3% to 11.7% for 2006. The Company was able to achieve this result by increasing its financial leverage. The percentage of assets financed by debt increased from 53.2% to 58.1% in 2006 and the amount of liabilities per dollar of stockholders’ equity increased by 0.25. The Company is funding its expansion by taking on additional long-term debt.
The working capital of Cabela’s increased year over year from 2005 to 2006 by 130% providing for more available funds for operations. The company was able to achieve this increase in working capital by increasing its current assets by 37%, primarily in the increase of cash and cash equivalents, while only increasing current liabilities by 13% over the same period. The company increased its deferred income taxes, gift certificates and credit card reward points and accounts payable by 350%, 19% and 47% respectively which were responsible for the year over year increase in current liabilities. The increase in deferred income taxes and accounts payable can be attributed to the growth in inventory levels as a result of the growth in its destination retail locations. The increase in rewards liabilities can also be attributed to the growth of its retail destination stores which provide for additional customer traffic and increased sales. The ability of the company to improve its working capital position provided for an increase in its current ratio from 1.3 to 1.5 while maintaining its quick ratio of .5 over the same period. The company has improved its ability to fund operational activities and its ability to pay its short-term debt commitments.
Long-Term Liabilities
The company increased its long-term liabilities by 124% from the previous year. This increase is due to the issuance of a 5.99% 10 year note in the amount of 215,000,000 which was responsible for the majority of the 214% increase in long-term debt over the previous year. The company currently has four unsecured notes payable in the amount of $297,434,000 due between the current year and 2016 with an average rate of 5.8%. Additionally, the company has capital leases for its Boise, Idaho retail store and its Wheeling, West Virginia distribution facility. The current obligation for these capital leases is $13,948,000 through 2036. The significant increase in long-term liabilities resulted in the ratio assets-to-long-term-liabilities to decrease from 7.7 to 4.4 year over year. The decrease in this ratio due to the increase in long-term debt brings the company more in line with its competition in does not expose it to an unacceptable level of risk.
Stockholders’ Equity
At fiscal year end 2006, the Company has 59,556,431 and 56,691,249 shares of Class A Voting issued and outstanding. It also has 5,807,305 and 8,073,205 shares of Class B Non-voting issued and outstanding. During 2006, the Company sold an additional 2.8 million shares of Class A and bought back 2.2 million shares of Class B resulting in a net increase in paid-in capital of 3.3%. The Company trades on the NYSE under ticker symbol CAB currently trading at $16.15 and with a 52 week price range of $15.41 to $28.80. Earning per share of $1.32 was reported for 2006, up $0.20, or 17.8% from 2005. The company improved its assets-to-equity position over this period as evidenced by the ratio improving from 2.14 in 2005 to 2.39 in 2006.
Capital Structure Issues
The Company has improved its performance in profitability for stockholders by improving its return on equity from 11.3% to 11.7% for 2006. The Company was able to achieve this result by increasing its financial leverage. The percentage of assets financed by debt increased from 53.2% to 58.1% in 2006 and the amount of liabilities per dollar of stockholders’ equity increased by 0.25. The Company is funding its expansion by taking on additional long-term debt.
Thursday, December 6, 2007
Analysis and Comparison of Financing Activities: Dick's Sporting Goods
Please click for complete balance sheet vertical and horizontal analysis.
Current Liabilities
Accounts payable increased 13.13% from 2005 to 2006 which can be expected from a sales increase of 18.64%. Accounts payable actually decreased 2.52% as a percentage of total liabilities and equity which shows the company is paying its bills quicker than it did the previous year. Accrued expenses and deferred revenue both increased by approximately 39% in 2006 which was much higher than the sales increase. Accrued expenses consist of accrued payroll, accrued property and equipment and other accrued expenses which increased 43.76%, 49.76% and 34.26%, respectively, from 2005 to 2006. These increases can be attributed to the opening of 39 new stores during 2006. Construction allowances and capitalized rent increased 36.56% during 2006, from $73.3 million to $100.1 million. Deferred revenue related to gift cards increased 24.44%, from $58.1 million in 2005 to $72.3 million in 2006. These accounts account for 74.13% of the total deferred expense accounts. Increases can be attributed to expansion and increases in sales revenue. The Company’s current ratio was 1.30 and 1.54 for years 2005 and 2006, respectively, which reveals improved liquidity during 2006.
Long-term Liabilities
The only account that showed significant change from 2005 to 2006 was non-cash obligations for construction in progress – leased facilities which can also be attributed to the Company’s expansion. All long-term liability accounts remained relatively identical as a percent of total liabilities and equity. Senior convertible notes account for 50.93% of the Company’s total long-term liabilities. On February 18, 2004, the Company completed a private offering of $172.5 million issue price of senior unsecured convertible notes due February 18, 2024. The notes were sold at an $82.6 million discount and have a total face amount of $255.1 million. The Company’s other debt includes a note payable in the amount of $708,000, including $46,000 of the current portion. The terms of this note are monthly installment of $4,000, including interest at 4%, through 2020. Two buildings are leased under a capital lease that was entered into May 1, 1986 and expires April 2021. The Company also has a capital lease for a store location with a fixed interest rate of 10.6% which matures ion 2024. The Company’s commitment and contingencies include licensing agreements for the exclusive rights to use certain trademarks which the company will pay a minimum annual royalty fee of $1 million. The Company’s ratio of assets-to-long-term liabilities was 3.93 and 4.50 for years 2005 and 2006, respectively. The company improved its liquidity position in 2006 as long-term accounted for 22.22% of assets, as compared to 25.40% in 2005.
Stockholders’ Equity
At fiscal year end 2006, the Company has 39,691,277 shares of common stock issued and outstanding, 13,393,840 of Class B common stock and no shares of preferred. The Company’s shares trade on the New York Stock Exchange with the ticker symbol DKS. The average trade volume is 1,974,200 and the 52 week stock price range is $24.00 to $36.78. Earning per share of $2.03 were reported for 2006, up $0.68, or 50.37%, from 2005. The Company financed more of its assets with equity during 2006 as witnessed by a assets-to-equity ratio of 2.46, as compared to 2.86 during 2005.
Capital Structure Issues
The Company’s overall capital structure improved during 2006. Return on equity improved from 11.76% in 2005 to 18.14% in 2006. The debt-to-equity ratio improved from 2.86 in 2005 to 1.46 in 2006 and the debt-to-assets ratio improved from 65.08% to 59.29%. The Company is growing its asset base using heavier amounts of equity and less debt than in the recent past.
Current Liabilities
Accounts payable increased 13.13% from 2005 to 2006 which can be expected from a sales increase of 18.64%. Accounts payable actually decreased 2.52% as a percentage of total liabilities and equity which shows the company is paying its bills quicker than it did the previous year. Accrued expenses and deferred revenue both increased by approximately 39% in 2006 which was much higher than the sales increase. Accrued expenses consist of accrued payroll, accrued property and equipment and other accrued expenses which increased 43.76%, 49.76% and 34.26%, respectively, from 2005 to 2006. These increases can be attributed to the opening of 39 new stores during 2006. Construction allowances and capitalized rent increased 36.56% during 2006, from $73.3 million to $100.1 million. Deferred revenue related to gift cards increased 24.44%, from $58.1 million in 2005 to $72.3 million in 2006. These accounts account for 74.13% of the total deferred expense accounts. Increases can be attributed to expansion and increases in sales revenue. The Company’s current ratio was 1.30 and 1.54 for years 2005 and 2006, respectively, which reveals improved liquidity during 2006.
Long-term Liabilities
The only account that showed significant change from 2005 to 2006 was non-cash obligations for construction in progress – leased facilities which can also be attributed to the Company’s expansion. All long-term liability accounts remained relatively identical as a percent of total liabilities and equity. Senior convertible notes account for 50.93% of the Company’s total long-term liabilities. On February 18, 2004, the Company completed a private offering of $172.5 million issue price of senior unsecured convertible notes due February 18, 2024. The notes were sold at an $82.6 million discount and have a total face amount of $255.1 million. The Company’s other debt includes a note payable in the amount of $708,000, including $46,000 of the current portion. The terms of this note are monthly installment of $4,000, including interest at 4%, through 2020. Two buildings are leased under a capital lease that was entered into May 1, 1986 and expires April 2021. The Company also has a capital lease for a store location with a fixed interest rate of 10.6% which matures ion 2024. The Company’s commitment and contingencies include licensing agreements for the exclusive rights to use certain trademarks which the company will pay a minimum annual royalty fee of $1 million. The Company’s ratio of assets-to-long-term liabilities was 3.93 and 4.50 for years 2005 and 2006, respectively. The company improved its liquidity position in 2006 as long-term accounted for 22.22% of assets, as compared to 25.40% in 2005.
Stockholders’ Equity
At fiscal year end 2006, the Company has 39,691,277 shares of common stock issued and outstanding, 13,393,840 of Class B common stock and no shares of preferred. The Company’s shares trade on the New York Stock Exchange with the ticker symbol DKS. The average trade volume is 1,974,200 and the 52 week stock price range is $24.00 to $36.78. Earning per share of $2.03 were reported for 2006, up $0.68, or 50.37%, from 2005. The Company financed more of its assets with equity during 2006 as witnessed by a assets-to-equity ratio of 2.46, as compared to 2.86 during 2005.
Capital Structure Issues
The Company’s overall capital structure improved during 2006. Return on equity improved from 11.76% in 2005 to 18.14% in 2006. The debt-to-equity ratio improved from 2.86 in 2005 to 1.46 in 2006 and the debt-to-assets ratio improved from 65.08% to 59.29%. The Company is growing its asset base using heavier amounts of equity and less debt than in the recent past.
Analysis of Financing Activities: Costco
For a full overview of Costco’s balance sheet with vertical and horizontal analysis as well as pertinent financial ratios click here.
Costco saw a large decrease in several of its short term assets. Cash decreased by 26.7% from 2005 to 2006 and short term investments decreased by 5.37%. This substantial decrease in short term assets probably reflects the massive 9466.6% increase in current portion of long-term debt.
Such an increase in current long-term debt would normally be cause for concern, except long term debt decreased by $495,306,000 while current portion of long-term debt increased by “only” $305,298,000. This is indicative of old debt becoming due. Also, the fact that long term debt decreased by more than the amount due this year indicates that Costco is paying down its debt earlier than it is due, which is always a good sign.
The financial effects of Costco’s decreased Debt may be seen on the income statement as a 63.5% decrease in interest expense and an associated increase in the “times interest earned” ratio of 205%. This indicates that Costco is in a position where it can easily repay its lenders, showing that the corporation presents little chance of bankruptcy.
A wholly owned Canadian subsidiary of Costco has a $181 million commercial paper program. The corporation may be able to use the increasing strength of the Canadian dollar relative to the U.S. dollar to their advantage by borrowing from Canadians to purchase U.S. goods.
The corporation also owns a Japanese subsidiary with two $13 million lines of credit with applicable interest rates of 0.95% and 0.84%. Once again, Costco may use the strength of the Japanese Yen to purchase U.S. goods. Coupled with the remarkably low interest rate, Costco is in an excellent position to take advantage of the growing Japanese market. However, in April 2003, the Japanese subsidiary issued $34 million in promissory notes bearing interest payable semiannually at 0.92% with principle due in April 2010. If the Japanese subsidiary were not able to cover the cost of the principle, Costco would lose more money by having to pay with the relatively weaker (compared to the yen/dollar relationship of 2003) U.S. dollar.
Costco does not hold treasury stock. Any shares repurchased are retired. The Corporation's board has authorized the repurchase of $3 billion worth of common stock over the next three years beginning in January 2006. Although the repurchase is contingent on the economic status of the corporation, given the current growth exceeding the acquirement of assets, there exists a high probability of the buy-backs occurring. If the buy-back does occur, the market price of the stock may increase due to higher earnings per share value and a resulting lower PE and PEG.
Costco saw a large decrease in several of its short term assets. Cash decreased by 26.7% from 2005 to 2006 and short term investments decreased by 5.37%. This substantial decrease in short term assets probably reflects the massive 9466.6% increase in current portion of long-term debt.
Such an increase in current long-term debt would normally be cause for concern, except long term debt decreased by $495,306,000 while current portion of long-term debt increased by “only” $305,298,000. This is indicative of old debt becoming due. Also, the fact that long term debt decreased by more than the amount due this year indicates that Costco is paying down its debt earlier than it is due, which is always a good sign.
The financial effects of Costco’s decreased Debt may be seen on the income statement as a 63.5% decrease in interest expense and an associated increase in the “times interest earned” ratio of 205%. This indicates that Costco is in a position where it can easily repay its lenders, showing that the corporation presents little chance of bankruptcy.
A wholly owned Canadian subsidiary of Costco has a $181 million commercial paper program. The corporation may be able to use the increasing strength of the Canadian dollar relative to the U.S. dollar to their advantage by borrowing from Canadians to purchase U.S. goods.
The corporation also owns a Japanese subsidiary with two $13 million lines of credit with applicable interest rates of 0.95% and 0.84%. Once again, Costco may use the strength of the Japanese Yen to purchase U.S. goods. Coupled with the remarkably low interest rate, Costco is in an excellent position to take advantage of the growing Japanese market. However, in April 2003, the Japanese subsidiary issued $34 million in promissory notes bearing interest payable semiannually at 0.92% with principle due in April 2010. If the Japanese subsidiary were not able to cover the cost of the principle, Costco would lose more money by having to pay with the relatively weaker (compared to the yen/dollar relationship of 2003) U.S. dollar.
Costco does not hold treasury stock. Any shares repurchased are retired. The Corporation's board has authorized the repurchase of $3 billion worth of common stock over the next three years beginning in January 2006. Although the repurchase is contingent on the economic status of the corporation, given the current growth exceeding the acquirement of assets, there exists a high probability of the buy-backs occurring. If the buy-back does occur, the market price of the stock may increase due to higher earnings per share value and a resulting lower PE and PEG.
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