Name that company

Born in 1995, today I’m “The World’s Online Marketplace,” with 95 million registered members. People spend more time on me than any other online site. In 2003 I sported nearly a billion listings and handled $14 billion in gross merchandise sales in the United States. I bought the online payment specialist PayPal, and it now processes $475 in spending per second (one in three online users has a PayPal account). My stock has advanced more than 1,700 percent in 5 1/2 years. I’m America’s 11th largest product retailer, operating in 28 nations. Who am I?

(Last week’s answer: Fisher Scientific International)

Smart investment: Glass works

I bought into Corning and set up a DRIP account in 1998, buying 100 shares at $40 each because it was a local company and I was very familiar with its past history. Also, I had been taking visitors that came to our factory to the Corning museum and Steuben glass plant for many years and was very impressed with the operation. I sold 100 shares in 2000 at $211 per share for a nice profit and still have more than 100 shares remaining in the DRIP account. — S. Burdick, Binghamton, N.Y.

The Fool Responds: You sold at the right time. Shares ultimately fell more than 95 percent from their 2000 peak, as the demand for Corning’s fiber-optic wares plunged. Shares have been rebounding a bit lately, though. Buying local companies can be smart. You can learn a lot about them just from people in your neighborhood who work there. Investors who want to learn about DRIP investing, which lets you bypass brokers, reinvest dividends and buy into companies in small amounts over time, can click over to www.fool.com/School/DRIPs.htm and www.DripCentral.com.

Ask the fool: Pro forma follies

What does “pro forma” mean? — S.D., Hartford, Conn.

If you see “pro forma” on a financial statement, it means that you’re looking at some “what if” numbers. Imagine that Moose Inc. merged with Squirrel Co. last April. At the end of the merged company’s fiscal year in December, you might see some pro forma financial statements in the Moose-Squirrel annual report. These would show you the state of the firm over the year as if it had been a combined company all year long.

Pro forma results can be useful. If you were researching Moose-Squirrel, it wouldn’t be too insightful to contrast one period’s results, pre-merger, with post-merger results. By examining combined results, you can get a clearer idea of the company’s financial health.

In recent years, though, many companies have gotten carried away with pro forma numbers, showing positive earnings results that they would have had if various bad things hadn’t happened. The Securities and Exchange Commission has warned firms to watch it. Learn more at www.sec.gov/investor/pubs/proforma08-11.htm.

The fool take: Rayovac in charge

Rayovac (NYSE: ROV) is the No. 3 battery manufacturer in America and No. 1 in rechargeable batteries in North America and Europe. Its Remington brand is No.1 in North America for foil electric razors. And Rayovac is No. 1 in hearing aid batteries.

Management recently upped its earnings expectations as it reduced costs. Initiatives at Remington are expected to save $30 million to $35 million by 2006. The VARTA unit (European batteries) is expected to contribute $45 million.

Rayovac is not without problems, though. Its 71 percent year-over-year increase in total debt — to $829 million — was mostly fueled by the $322 million purchase of Remington. That’s a lot of debt when a great quarter’s net income is $22.2 million.

And while operating profit margins increased sharply to 11 percent, that pales to Gillette’s 21.8 percent margins. The company needs to shave costs further and to energize growth.

Still, Rayovac’s battery business is nicely poised for the long term. It’s poised for growth, and its free cash flow is increasing. At its current price it’s no slam dunk, but it’s worth a closer look.

The fool school: Debit vs. Credit

Not all cards that say Visa and Mastercard are “credit” cards. Debit cards, for example, work very differently.

Debit cards, which debuted in 1989, withdraw money directly from your checking account and are meant to replace checks. When you use a debit card, you’re paying with cash. Using a debit card can keep you from spending beyond your means, provided you don’t accidentally spend your rent on dog toys and frothy beverages.

But debit cards don’t always offer the same conveniences, services and protections as conventional credit cards. For instance, there is no grace period from the time you buy something with a debit card to the time you actually pay for it. And some banks even charge you each time you use your debit card.

Many debit cards limit the amount you may purchase on the card to $1,000 per day, even if you have a checking account flush with cash. And if you don’t have sufficient funds to cover what you buy, you’ll be liable for the transaction and be slapped with some pretty vicious overdraft fees.

Debit cards also may not offer the same rights consumers have with credit cards regarding purchase problems. Say the Chia Pet Menagerie you purchase during a late-night TV shopping spree turns out to be a single Chia guinea pig with seeds that never bloom. If you paid for it with a debit card, you may have no way to stop payment to Chias R Us.

If a stranger in dark glasses takes down your debit card number as you’re phoning Chias R Us, you may be stuck with unlimited liabilities for losses, should you fail to report the theft within a certain period of time (anywhere from two to 60 days).

A lost debit card is like cash to a thief. And your fraud liability is currently $50 for credit cards but up to $500 for debit cards. Read the fine print to learn what protections your lender is offering you.

Learn more about payment cards at www.fool.com/ccc, www.ftc.gov/ftc/consumer.htm and www.ftc.gov/ftc/consumer.htm.