Consumer Discretionary

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Consumer Discretionary
Tires and Auto Components

Media and Advertising
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Sector Recommendation Action

• Maintain 2-3 overweight
• Generally has outperformed SP 500
• Mostly mature cyclical with a few exceptions
  (Some signs of defensive)
• Retail Media largest industries
• Focus on growth industries within the sector

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Current SIM Holdings
Closing Price as of 2-15-02 17.71
Shares Owned 53,500
Position Market Value as of 2-15-02 947,500
Percentage of Portfolio 5.79
Percentage of Sector W/I SIM 36.2
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Recommendation
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Products Services

• Monster.com
• Recruitment advertising
• Executive search selection
• Yellow pages advertising

• Auto, truck, motorcycle, and racing tires
• Fluid systems, NVH control systems, and sealing
  systems

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Geographic Sales Comparison
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Segment Sales Comparison
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Demand Side Analysis

• Tire volume declined 13 in 4Q 2001
• Demand for replacement tires for 2002 is expected
  to decline 2
• A 3.2 decline expected in light vehicle
  production

• Record postings and hits on Monster.com
• Increased demand in Europe in 2001
• Demand for advertising and human capital is
  expected to fall 2-3 worldwide, but partially
  offset by cost saving measures (outsourcing)

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Supply Side Analysis

• The number of new Eresourcing firms entering the
  industry has declined dramatically
• Consolidation through vertical integration is a
  growing trend
• Advertising expenses expected to grow in the
  long-term but decline in 2002

• Large industry overcapacity in spite of GT recent
  plant closings
• Production slowdowns reduced inventories by
  600,000 units in 2001
• Prices of raw materials have declined but future
  is highly uncertain (oil)

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Financial Analysis
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Financial Analysis Cont.
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Financial Analysis Cont.
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Financial Analysis Cont.
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Valuation Analysis
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Valuation Analysis
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Valuation Analysis Cont.

• Catalysts
• Improving efficiency of Automotive Group
• New business from Automotive Group
• Beginning to gain access to mass merchandisers
  and auto supply stores (highest growth)

• Risks
• Relatively high leverage
• Expected decline in vehicle production
• Expected decline in replacement tire demand
• Large inventories and overcapacity
• High geographic concentration

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Valuation Analysis Cont.

• Catalysts
• High demand for processes that increase H.R.
  efficiency help cut hiring costs
• Expected shortage of talented executives
• High expected demand for public relations
  specialists

• Risks
• Greater emphasis on reducing SGA
• Accounting Issues surrounding Goodwill
• Growing unemployment rates and layoffs
• Foreign exchange exposure from four geographic
  regions (no hedging activity)