Re: AHP

Fellows:
OK, here's the beginning of the memo. I'm still working on it, but work
cratered on me and I have to switch back to that now. I'll have a draft
finished by tomorrow night and I'll redistribute. Couple things.

Check the DuPont. Asset turn needed to be changed, because the pro form
calcs hadn't taken the cash out of the assets. That bumps the ROE up some.
See my attached file, I decompose ROE using an alternative method (Mark, the
one Tasker used in class) just to do a check, and the numbers turn out the
same. I also ran some turnover ratios for AHP and Warner (understanding the
limitations of one year's numbers.)

Questions:
Don't we have to assume that covenants will force AHP to dump its divident
payout? Folks likely to get unhappy about that? Should we care, or should
we just expect a rotation out of the stock by dividend-loving investors and
rotation in by capital-gains loving investors?

Could we persuade the new management to lever up with an argument that with
all that cash on the books, AHP is ripe for takeover?

Anyway just some thoughts. I'll finish it up tomorrow and re-distribute.

Herr Jackson: I haven't had a chance to review your comments, but I'll
incorporate those in tomorrow as well.

Best,
Jeff