www.dailytelegraph.news.com.au By Scott Murdoch 25feb03

QUEENSLAND medical technology company PanBio is basing its hopes of reversing yet another poor result on the success of its new diagnostic test for a mosquito-transmitted virus in the US. The Brisbane-based outfit revealed yesterday it recorded a net loss of $577,000 for the first half – a better outcome than the $1.27 million loss in the previous corresponding period.

Jim Porter, appointed chief executive officer three weeks ago, has a massive task in pulling the company back into the black but is confident it can turn around within the next 12 months.

PanBio's interim revenue from ordinary activities also fell to $8.43 million, from $8.53 million a year earlier while its borrowing costs jumped from $127 million to $172 million.

No dividend will be paid and earnings a share dropped from a loss of 2.48¢ to 1.13¢.

An appreciating Australian dollar and lack of demand for dengue fever diagnostics in Brazil and Venezuela, Mr Porter said, contributed to the poor result.

PanBio expects the new test for the West Nile virus in the United States to start delivering profit in the year ahead.

"There has been a lot happening in a year-on-year comparison," Mr Porter said.

"I think we will achieve the growth in the next year that we have been pursuing for some time."

PanBio has recently undergone a management shake-up.

This included the appointments of Dr Stuart Hazell as vice-president of research and development and Nicholas Thliveris as vice-president of strategic marketing.

PanBio shares remained steady at 75¢ yesterday.

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The Motley Fool Take on Monday, February 24, 2003

Have you checked the prices at the pump these days? Yowzers! The cost of gasoline jumped seven pennies over the past two weeks to an average of $1.70 per gallon, pushing March 2001's all-time high of $1.77. That's enough to drive anyone to the poorhouse.

Relief may be in sight, however. Warmer weather, increased production in Venezuela, and the reopening of several American refineries should mitigate the costs. Fear of war with Iraq has bumped prices higher, but a resolution -- be it war or not -- should help stabilize concerns.

In the meantime, we offer 18 ways to cut your fuel bills (and fend off road rage!).

In today's Motley Fool Take:

• Lowe's Raises the Roof
• Shameless Plug: Refinance and Save
• Save for College or Retirement?
• Quote of Note
• Fear Grabs Ahold
• Discussion Board of the Day: Current Events
• Quick Takes: Federated Department Stores, Merck, Fidelity Investments, more
• And Finally...

Lowe's Raises the Roof

Whoa, Lowe's (NYSE: LOW). The nation's second-largest home-improvement retailer reported outstanding fourth-quarter and year-end results this morning. One thing's for sure -- this is no shabby fixer-upper.

Quarterly sales improved 16.5% to $6.12 billion, and for the entire year, Lowe's sales shot up 19.8% to $26.5 billion. Comp sales were also positive, up 4.1% for the quarter and 5.6% for the year.

The retailer nailed its earnings as well. It netted $319.4 million in the fourth quarter, ahead of the previous quarter's $218.4 million by a fat 46.2%. Annual income grew almost as much, up 43.8% to $1.47 billion. Lowe's diluted earnings per share shook out at $0.40 for the quarter, and $1.85 for the year. Analysts were expecting $0.33 a share for Q4.

The company also strengthened in other areas. Its long-term debt remained stable at $3.7 billion. Gross margins improved to 30.3% from 2001's 28.8%, and net margins grew to 5.56% from 4.63%.

As for free cash flow, Lowe's created about $335 million for the year, an impressive change from both fiscal 2001 and 2000, when it was free cash flow negative. It generated $2.7 billion in cash from operations.

Looking ahead, Lowe's hopes to keep the party going. It expects to open 130 new stores this year, spending $2.9 billion in capital expenditures. It will finance the vast majority of that expansion from operating cash flow, which says a great deal about the strength it anticipates in fiscal 2003.

Shameless Plug: Refinance and Save

Does saving potentially hundreds of dollars per month on your mortgage sound good to you? Mortgage rates remain historically low, so now might be the time to refinance and save yourself some dough. First, read Tom Jacobs' What Does It Cost to Refinance? Then check out our Home Center.

Save for College or Retirement? Being the good parent that you are, you want to send your little Einstein (or little Norah Jones) to the college of his or her choice. But does that mean saving for school should be your No. 1 financial priority?

Paying for school is an important goal, but it's only part of a broader financial plan. While developing your saving-for-school strategy, keep these other priorities in mind.

Pay off high-interest debt: It doesn't make sense to earn 4% to 10% on your college savings when you're paying 11% to 20% on your credit card debt. If you owe more than $500 on any loan that charges double-digit interest, pay that off first.

Build an emergency fund: You need a stash of accessible cash available to extinguish the potential hazards of unexpected expenses. If you don't have the money available when the furnace blows up, the roof falls in, or your department gets "downsized," then you'll have to turn to the credit card, retirement fund, or college cookie jar. This is not good. Keep three to six months' worth of expenses in a money market investment.

Get adequately insured: Purchase a 10- or 20-year term life insurance policy to replace the income (or child-rearing and home-keeping services) of any members of the family who join that great frat party in the sky. Also, look into disability insurance, since it is more likely that a worker will be temporarily out of work (due to an injury or illness) than permanently (due to kicking the bucket).

Save for retirement: Do not sacrifice retirement savings for college savings. If you don't have enough to cover tuition, your student can apply for financial aid and borrow money. However, there are no scholarships or loans for retirees. If you haven't saved enough to retire, then you can't.

For more information, check out The Motley Fool's Guide to Paying for School: How Cover Education Costs From K to Ph.D.

Quote of Note

"Without education we are in a horrible and deadly danger of taking educated people seriously." -- G.K. Chesterton (1874-1936), English author

Fear Grabs Ahold

Shares of Royal Ahold (NYSE: AHO) plunged over 65% this morning after the retail giant unveiled "significant accounting irregularities," forced out its chief executive and chief financial officer, and warned of much lower earnings ahead.

Ahold, based in the Netherlands, has interests in 9,000 discount and grocery stores worldwide. With trailing-12-month sales of $78 billion, it's the world's third-largest retailer, second-largest food seller, and -- with the BI-LO, Giant Food, and Stop & Shop chains -- the No. 1 supermarket operator in the U.S.

The problems stem mostly from the U.S. Foodservice unit, which may have overstated earnings by more than $500 million over the past two fiscal years. That will force restatements for 2001 and the first three quarters of 2002, and it also delays this year's earnings announcement, which had been scheduled for March 5. According to the company, the only other problems come from "the legality of certain transactions and the accounting treatment" at its Disco Argentine subsidiary.

But wait; there's more. Standard & Poor's cut Ahold's credit rating to "junk" status today, and the whole scenario is bringing back unpleasant memories. One equity dealer is quoted in Reuters as asking, "Is 'Ahold' Dutch for 'Enron'?"

The answer at this point seems to be, "Not likely." However, as the plunging share price reflects, many investors aren't taking the chance today.

Discussion Board of the Day: Current Events

Did you catch the Grammy Awards last night, or does the current state of the music industry leave you unmoved? Is Eminem good, bad, or ugly? Will digital distribution ever replace physical CD sales? All this and more -- in the Current Events discussion board. Only on Fool.com. 

Quick Takes

During last week's big snowstorm, people were not only stuck and unable to get to work, they also didn't get much shopping done. The news wires are full of many retailers reporting that they'll have to reduce their February sales expectations, including Federated Department Stores (NYSE: FD) and J.C. Penney (NYSE: JCP). Wal-Mart (NYSE: WMT) was more optimistic. In other retail news, Gap (NYSE: GPS) seems to be gradually getting back on its feet, which isn't good news for its competitors.

The nation's employment outlook remains lackluster, according to the Associated Press, which reports continued hiring hesitation among many companies due to the sluggish economy and looming war in the Middle East. In other economic news, gas prices inched up seven more cents in the past two weeks, flirting with record levels, and CEOs are suggesting that war will hurt the economy.

Medicaid, along with Medicare, is in the news today. The Bush administration is pushing states to reduce Medicaid spending, while Democrats are calling for the government to find ways to cover the 41 uninsured million Americans, many of whom are employed. Read about President Bush's new vision for Medicare and Medicaid. Meanwhile, The Wall Street Journal reports some big pharmaceutical companies are violating a 1990 law requiring them to report to Medicaid the lowest prices they charge anyone. Merck (NYSE: MRK), for example, has been named by a whistle-blower lawsuit.

Privately owned Fidelity Investments, the nation's largest mutual fund company, has reported its 2002 net income plunged 39% (to $808 million) over year-ago levels, due largely to the stock market's three-year swoon. It also noted that its average assets under management were down 7%, and that in 2002, Fidelity funds outperformed 70% of their competitors on an asset-weighted basis, up from 66% in 2001. (Of course, many or most of those competitors likely had mediocre results, which is why we Fools recommend index funds for the investing masses.)

And Finally...

Today on Fool.com:

• For updated stories throughout the day, bookmark our ever-changing News section.
• Devon Energy will buy rival Ocean Energy in a deal that will create America's largest independent energy exploration and production company.
• Despite a rockin' Grammy Awards ceremony, record sales need to pump up the volume.
• Matt Richey follows up on a small growth company that continues to offer solid value.
• Readers share stock tips, company information, and industry ideas on our Fool discussion boards.
• In Fool's School, slimming your food budget can fatten your bank account.

Contributors: Bob Bobala, Robert Brokamp, Mathew Emmert, Jeff Fischer, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Jackie Ross, Reggie Santiago, Dayana Yochim

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