Payout Yield

Tellabs (NASDAQ: TLAB) announced an increase of $600 million for the company’s common stock repurchase program, in addition to a remaining $176 million under a repurchase program authorized in July 2006. Together, the authorizations cover about 22% of Tellabs shares outstanding.

Since 2005, Tellabs has repurchased 50.9 million shares at a cost of $513.9 million (about 12% of shares outstanding).  Tellabs plans to use about half of its nearly $1.4 billion in cash, cash equivalents and marketable securities for the program.

In addition, the company announced that Krish A. Prabhu, Tellabs president, chief executive officer and member of the Board, has informed the board of his decision to resign from these positions by March 1, 2008.

Tellabs advances telecommunications networks to meet the evolving needs of users.

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PAYOUT YIELD ANALYSIS

At $8 per share, the $776 million repurchase authorization will buy back 97 million shares or 22% of the 439 million shares outstanding.

The company has almost $4 per share of cash on the balance sheet, so the $776 million repurchase is easily within reach, the only question is the timing.

The company’s repurchase activity has been inconsistent.  Tellabs repurchased $272 million of stock in 2006 and only $21 million net of options programs in the first 9 months of 2007.

Assuming that the company averages $275 milllion per year going forward, the projected Total Payout will be $0.63 per share.   At an $8 share price, the projected Total Payout Yield would be 7.9%. 

- Payout Yield Staff

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The Boeing Company (NYSE: BA) board approved a new repurchase plan for up to $7 billion of common stock.

Boeing has bought approximately $8 billion of its stock since resuming repurchases during 2004. This new plan follows the $3 billion buy back that the board approved in August 2006. The company is nearing completion of the repurchases authorized under that plan.

The company cited strong financial performance as the basis for both the repurchase and continued investment in growth and productivity.

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PAYOUT YIELD ANALYSIS

The company did not provide specific details on the timing of the  repurchase. Therefore, we estimate that the buyback pattern will continue at rate of approximately $2 billion per year.  With 775 million shares outstanding, the repurchase promises to return $2.58 per share per year.

Combined with the annualized dividend of $1.40, the Total Payout is projected to be $3.98 per share over the next 4 quarters.  At a share price of $98, the Total Payout Yield is projected to be 4.1%.

- Payout Yield Staff

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Rohm and Haas Company (NYSE: ROH) today filed SEC form 10Q for the quarter ending September 30, 2007.

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PAYOUT YIELD ANALYSIS

In July, Rohm and Haas announced an accelerated share repurchase (ASR) program of $1 billion and a target of 195 million shares outstanding by the end of the third quarter. According to the 10Q filed today, the company spent a net $1.4 billion in the first nine months of 2007 to repurchase 23 million shares net of options exercised. The number of common shares outstanding as of September 30 was 195.8 million, down from 218.8 million at the beginning of the year.

Also according to the 10Q, if the volume-weighted price of the stock for the term of the ASR remains the same as in September, then the counterparty (Goldman Sachs) will owe the company an additional 2.6 million shares.

- Payout Yield Staff

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The Sherwin-Williams Company (NYSE:SHW) authorized a new program to purchase 30 million shares, replacing the existing program.

The company provided no details on timing or funding of the program.

Founded in 1866, The Sherwin-Williams Company is a world leader in the manufacture, development, distribution and sale of coatings and related products to professional, industrial, commercial and retail customers.

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PAYOUT YIELD ANALYSIS

With 131 million shares outstanding and a $63 share price, the 30 million share repurchase represents a 23% share reduction or a return to shareholders of $1.9 billion or $14 per share.

Based on the company’s track record and current operating cash flow, we estimate that the company will repurchase a minimum of $300 million per year and return $2.29 per share for the forseeable future.  This rate can go higher if management decides to return a higher percentage of operating cash flow or borrow to accelerate the buyback program.

Combined with the annualized dividend of $1.26, the Total Payout is projected to be $3.55 per share over the next 4 quarters.  At a share price of $63, the Total Payout Yield is projected to be 5.6%.

- Payout Yield Staff

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Hartmarx Corporation (NYSE:HMX) announced a new share repurchase program to acquire up to 3 million of the Company’s common shares. Repurchases will be made from time-to-time in the open market or in privately negotiated transactions based on prevailing market conditions and other factors. This authorization is in addition to the 2 million shares repurchase authorization approved by the Board of Directors in October 2005. As of October 18, 2007, 58,268 shares remain to be purchased under the 2005 authorization.

Hartmarx produces and markets business, casual and golf apparel.

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PAYOUT YIELD ANALYSIS

The 3 million share repurchase represents 8% of the company’s current outstanding share count of 37 million. Based on the 2 years that it took the company to complete the last authorization and approximate annual operating cash flow of $20 - 25 million, we project that the company could comfortably complete this repurchase program at a rate of 1.5 million shares or approximately $7.5 million per year.

However, options and restricted stock grants have mostly offset the effect of previous repurchase programs. For example, despite near completion of the 2005 repurchase program, the average diluted share count for the third quarter of 2007 remained almost the same as the prior year count. (See the August 31, 2007 10Q at www.sec.gov)

Assuming no change in company practices and with no dividend in place, we project a Net Total Payout of $0 and Total Payout Yield of 0% over the next 4 quarters.

- Payout Yield Staff

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