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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: Are there any common themes that are driving these companies? How economically vulnerable are they?

Ms. Kissel: There is one overarching theme — the aging baby boomer — that provides a long-term positive demand backdrop for the industry. As you get older, your family obligations moderate and you have more time and more disposable income. The biggest constraint for consumption of leisure is time. Furthermore, per capita spending on leisure is highest for people between the ages of 45 and 54 and second highest for those between the ages of 55 and 64. So as people age, it is good for companies that sell boats, golf clubs, vacations and resort real estate. The economic sensitivity varies by sector and company. The companies that manufacture big-ticket discretionary items have a tremendous amount of economic sensitivity. In particular, Brunswick (NYSE:BC), which is the leading manufacturer of marine products, was really the first to see its earnings come under pressure from the weakening economy. But then it runs to the other end of the spectrum, where there are companies that do well in a slowing economy, such as theme-park operator Six Flags (NYSE:PKS) — and even the toy companies hold up well during economic downturns. So it’s very difficult to come up with a common macroeconomic theme that would drive the business. That said, the stocks are influenced by trends in consumer sentiment and consumer spending perhaps more so than the earnings of the companies.

TWST: What’s the demographic profile of visitors to Six Flags?

Ms. Kissel: It’s mostly young people. Roughly 55% of the visitors are under the age of 24 — and obviously the parents accompanying the children account for the remainder.

TWST: How do you value a company such as a theme park — and more specifically a Six Flags?

Ms. Kissel: We’ve looked at the enterprise value to EBITDA in valuing the company. We’ve looked at the multiples that are used on the theme park segments of the larger conglomerates, whether it’s a Disney (NYSE:DIS) or a Viacom (NYSE:VIA), and made some adjustments for the more attractive rate of growth that Six Flags has been able to generate, the quality of the brand, the breadth of its operations, and also the fact that it does perform better in an economic downturn.

TWST: So that suggests that the outlook is pretty good, going forward.

Ms. Kissel: Yes. Once we get past these concerns over weather-related issues, the outlook is strong. Given that the consumer still wants to take vacations this summer but stay closer to home and potentially spend less, Six Flags, with its tremendous geographic footprint and low-cost entertainment (per capita spending equals 27 per day including in-park spend), is very well positioned for that trend.

TWST: Has Six Flags taken its theme parks overseas at all?

Ms. Kissel: Yes.

TWST: How successful have they been?

Ms. Kissel: So far, they’ve been very successful. Last year they converted two parks to Six Flags, one in Holland and one in Mexico. Attendance at the park in Holland was up by 800,000.

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.