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Three analysts and top management from seven sector firms examine the sector in this special 41-page Home Furnishing issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info450.htm

TWST: Are there any other companies that you would like to highlight in the group? They don’t have to be companies that are necessarily on your buy list today.

Mr. Hughes: I still like Leggett & Platt. Leggett is often described as a furniture company and included with the group. That’s because, historically, its business roots came from supplying the bedding industry and the furniture industry. They’ve been on an acquisition strategy to move into other product categories, specifically the store fixtures business. Near term we have an outperform on the stock but expect the company to feel some pressure in its other product categories, specifically its fixtures business, which supplies retail businesses with racks and point-of-purchase fixtures. They’ve had problems integrating the acquisitions, and now I think the segment is going to feel some pressure here in the next couple of quarters as retailers slow down conversions and store openings. But it’s a well-managed company. That industry is so fragmented that I think the residential side of their business is going to hold up in the near term, and I believe they’re going to turn around that fixtures business. That’s one we have our eye on, moving forward.

TWST: What kind of guidance are you giving to investors?

Mr. Hughes: Near term (by “near term,” I mean for the next several months), I think these stocks are going to move with the market, whichever way that is, depending on various macroeconomic data. I think investors have to remember that some sectors that have held up better through this year are now seeing pressure. These industries are not among them. They were among the first to start to see declines — in fact, we saw the industry starting to slow down in May 2000 — so we’re close to a year and a half into the slowdown. I think that’s one of the reasons why these sectors, in terms of demand trends pre- and post-attack, have held up better than other parts of the economy: they’ve been in a recession for a very long time. In terms of the stock price, I think that once we get any signs that the economy is getting better, whenever that occurs, these companies will be among the first ones to go up. Their comparisons are very easy heading into next year, and they’ve done a lot of cost cutting, which will really help the bottom line once they get volume running back through their plants.

TWST: Are there any other companies you’d like to highlight?

Mr. Hughes: This is a little different, but we’re ramping up coverage on industrial products, and one company, Roper (NYSE:ROP), based here in Georgia, had its historical roots in the pump business, which is a very profitable but slow-growing area. They’ve done some very interesting acquisitions, moving into two areas — industrial controls and analytical instrumentation. It’s a company that buys very small businesses that are not always great money-makers but are very innovative in terms of developing products. Roper has done an excellent job buying these producers, developing and flushing them out. It’s a very difficult story to describe in three sentences — which can be a hindrance at times, but if you take a little time to look at it, it’s a very well managed company. We believe Roper has a lot faster top-line potential than most industrial product producers.

This special issue includes:

1) Furniture & Floor Covering Stocks - In an in-depth (4,600 words) Analyst Interview, John A. Baugh, Managing Director at First Union Securities, Inc., examines the outlook for the sector and shares specific stock recommendations.

2) Furniture & Home Furnishing Companies - In an in-depth (4,300 words) Analyst Interview, Keith Hughes, a Vice President at SunTrust Robinson Humphrey Capital Markets, examines the outlook for the sector and shares specific stock recommendations.

3) Outlook for US Residential Furniture Stocks - In an in-depth (3,500 words) Analyst Interview, Margaret M. Whelan, Associate Director at UBS Warburg, examines the outlook for the sector and shares specific stock recommendations.

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