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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 trends are you currently seeing in the leisure industry?

Mr. Hovorka: We’re seeing a few different trends in the leisure industry. We are seeing, one, some trade-down in demand because of the softer economic environment. We’re also seeing a bit of softness in price, particularly in the cruise industry, where pricing has been very difficult. So from an investor’s standpoint, we’re using more of a longer-term outlook for the companies and basing our investment decisions on that, as opposed to what might happen over the next couple of quarters.

TWST: How is the industry responding to the economic environment?

Mr. Hovorka: Because we are seeing consumers trading down and a softening in prices, we’re clearly not at the peak we were at 18 months ago. We are coming off that peak, and with that we are seeing the pricing pressure and, as I said, the trading down to lower price points.

TWST: What challenges does the industry face over the next six months or a year?

Mr. Hovorka: Certainly the macroeconomy is a large factor at this point. On the cruise side, we’re also seeing quite a bit of capacity coming online in the industry, not only this year but for the next three or four years. We’re expecting part of that capacity to be moderated somewhat by ships being moved outside of the North American market into secondary markets like Europe and Asia, which will reduce that growth rate in the North American market.

TWST: What’s your rating on Dover Downs (NYSE:DVD)?

Mr. Hovorka: Our rating on Dover Downs is a buy. That’s because, as I said, they do have a gaming component to their business model, so it’s not a pure play on this whole fundamental shift in the motor sports industry. Also, they’ve got a couple of company-specific issues that I think — in the near term, anyway — will probably hold back their returns and their earnings. They have built a track in Nashville that currently does not have a Winston Cup event. Winston Cup events are really what drive the returns on a new facility, and without that event we estimate that the track will lose a small amount of money on a GAAP basis, and on a cash basis its returns will be quite low relative to what Dover is currently earning. So there is a near-term issue of a drag on returns and on earnings from a new capital project.

TWST: How should investors approach the leisure industry at the end of 2001 and the beginning of 2002?

Mr. Hovorka: In that time frame — we’re talking about three quarters — you should be cautious but opportunistic. I say that because there are some near-term difficulties in the cruise lines and, to a lesser extent, in the motor sports industry because of the softer macroeconomic environment that we have. But the long-term fundamentals of both groups that we follow are very positive, in our opinion, and there have been and continue to be some very attractive entry points for all of these stocks.

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.