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Five analysts and top management from sixteen sector firms examine the Leisure Goods & Services sector in this special 89-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info384.htm

TWST: What has been driving these companies? And to what extent are consumers likely to cut back on spending on recreation and leisure in a weaker economy?

Mr. Conder: To a great extent this sector is a demographic play on a generation with more disposable income. Secondly, you referred to the influence of spending on leisure. Each of these companies manufactures products or provides services which are discretionary items that are used to provide recreation and relieve stress. Because of the uniqueness of the product/service provided, there is a wide degree of cyclical variance among these companies. So at times when we’re witnessing a slowdown in the revenue streams for some of these companies, others are performing quite well.

TWST: Moving on to Polaris (NYSE:PII), on which you have a Maintain rating, is there any encouraging note about the company?

Mr. Conder: What we like about Polaris is that approximately three years ago, Tom Tiller joined the company as President and CEO. He came from a background of 15-20 years at GE. Tom has brought in manufacturing disciplines and incorporated them into an already good company. These include reducing work and process inventories, working with PII’s distribution base to limit the amount of inventory in the channel by instituting a very quick turnaround replenishment method. Those are continuing to be implemented. The company’s strength has been its ATVs, which generate approximately 60% of revenues. We are seeing some additional competitive pressures there from the Japanese competitors, primarily Honda (NYSE:HMC) and Yamaha over the last couple of years, as those companies have reintensified their efforts in that market. These competitors have also been able to use the dollar/yen relationship to their advantage to offer competitive financing and, of late, more aggressive dealer rebates, which are in many cases being passed through the consumer. So the ATV market has become more competitive for Polaris over the last couple of years, and is the primary reason why we have the Maintain rating. But we continue to like management’s overall philosophy, strategic approach, and execution. We like the cash generation ability of the company. It’s just a near-term matter of what’s going on in the largest segment of their business.

TWST: What’s the outlook for growth for Polaris?

Mr. Conder: We continue to think that they can generate high single-digit top-line growth, and low double-digit earnings growth going forward. But again, the near term is somewhat more clouded, given the increasing competition on the ATV front. The company continues to have opportunities in the parts and accessories side of the business, which has grown very nicely, and on the international front. Tiller has focused on those areas and, again, he has executed very nicely there.

TWST: In conclusion, what’s your message to investors who are looking at the leisure and recreation products and services companies?

Mr. Conder: As you can see, we have somewhat of a neutral outlook on most of our coverage. We think that as evidence that the economy is picking up starts to materialize, investors should look to gravitate toward several of the respected leaders in these sub industries. In particular, we think that Brunswick, from a cyclical approach, is an opportunity for a very nice cyclical play, incorporating new management with a turnaround and good cash flow story. Also, we continue to favor Harley-Davidson due to their unique supply/demand and balance situation. And as I said, we would look to get more positive on a couple of the motor sports and cruise companies as we start to see an upturn in the economy, which would breed higher consumer confidence, disposable income, and therefore should fuel the top and bottom lines of these companies.

This special issue includes:

1) Leisure Goods & Services - In an in-depth (4,100 words) Analyst Interview, Timothy Conder, Vice President at A.G. Edwards & Sons, Inc., examines the outlook for the sector and shares specific stock recommendations.

2) Leisure Industry Overview - In an in-depth (3,700 words) Analyst Interview, Hayley Kissel, Director of Merrill Lynch's Global Securities Research and Economics Division, examines the outlook for the sector and shares specific stock recommendations.

3) Outlook for Leisure Stocks - In an in-depth (3,900 words) Analyst Interview, Scott Barry, Director in Credit Suisse First Boston's Equity Research group, examines the outlook for the sector and shares specific stock recommendations.

4) Cruise Lines & Motor Sports - In an in-depth (2,600 words) Analyst Interview, Joseph Hovorka, Senior Analyst at Raymond James & Associates, examines the outlook for the sector and shares specific stock recommendations.

5) Outlook for Cruise Lines - In an in-depth (4,100 words) Analyst Interview, Robin Farley, Executive Director in the equity research division of UBS Warburg, examines the outlook for the sector and shares specific stock recommendations.

6) CEO interviews (average 2,500 words). Top management of sixteen sector firms examine the outlook for their firm and the sector.