Herbalife is global giant with business model in question

Stock spotlight is a new weekly feature that will profile a notable, public company.

The company: Herbalife Ltd.

Headquarters: Los Angeles

Ticker: HLF

Employees: 6,200 employees and 3.2 million independent distributors worldwide

Revenue: $4.1 billion in 2012

Net Income: $477 million in 2012

Stock Price: $36.79 at Friday's close

52-week range: $24.24 to $73

Annual dividend: $1.20 a share annually, a current yield of about 3%

P/E Ratio: $7.87, based on 2013 estimated earnings

The business: The company sells weight-loss, nutrition, hair- and skin-care products in more than 80 countries, utilizing independent distributors who profit from their own sales and sales from others they recruit into the business. Its top-selling product is cookies and cream flavor Formula 1, a high-protein, meal-replacement shake mix. Herbalife does very little mainstream advertising and does not sell products in retail stores. Instead it relies on a network of independent distributors who recruit customers, counsel them about nutrition and fitness and sell them products. The company recently agreed to a $44-million, 10-year deal to sponsor the Los Angeles Galaxy professional soccer team, one of many professional sports clubs it supports around the world.

The latest: Wall Street veterans say they've never seen a fight like this. Noted hedge fund managers Bill Ackman and Carl Icahn have engaged in a heated debate about Herbalife's business model, with billions of dollars at stake. Ackman has taken a $1-billion "short position" against the company's shares, meaning he'll profit if the stock price drops. In a slick, multimedia pitch on Wall Street, Ackman contended that the company is a well-disguised pyramid scheme. He said the vast majority of the company's independent distributors make little money or lose money, while a fortunate few get rich off commissions they receive for recruiting others into the business. Ackman said he expects Herbalife's shares to hit zero. Icahn said he has purchased nearly 13% of the company's shares and planned to talk to executives about strategies to increase its profitability, including taking it private. Herbalife acknowledged discussions with Icahn but did not elaborate. The company insists its business model is completely legal. Herbalife said it sells products that help people live healthy lives while giving entrepreneurs an opportunity to build their own businesses.

Accomplishments: The company reported record sales and profit in 2012 and said it expects things to improve in 2013. It has mountains of available cash, pays a decent dividend and repurchased 15 million — or more than 10% — of its shares in little more than a year.

Challenges: Herbalife shares have been extremely volatile in the last nine months, plunging more than 40% in the days after Ackman's attack, and falling 20% in a single day in May after hedge fund manager David Einhorn questioned the company's business model. Herbalife has acknowledged it is under review by the Securities and Exchange Commission. The Federal Trade Commission released dozens of complaints it has received about Herbalife in recent years. Neither agency has confirmed an investigation.

Analyst opinions: Seven analysts have the stock as a buy or strong buy, while four have it as hold. The average one-year target price is about $58 a share.

Voices: "Our belief remains steadfast that Herbalife operates a perfectly legal multilevel marketing model that has proven particularly efficacious in the weight-loss category.... Herbalife's sustained growth and 30-plus year history in a highly regulated industry indicate a legitimate business [because] pyramid schemes are unsustainable." — Scott Van Winkle, analyst, Canaccord Genuity;

"Buckle up, it's going to be bumpy.... We are maintaining our overweight, but recognize that the stock is not for the faint of heart. We expect Mr. Ackman to continue to make noise on his short thesis, however, and for the potential for an FTC investigation to be an overhang on the stock for the indefinite future." — Brian Wang, analyst, Barclays Capital;

"It is clear that over time Herbalife is answering the questions that need to be answered and providing greater clarity around their business model — one that we see as simple but effective. We think it logical that, as these questions are finally answered to the investment community's satisfaction, the shares will trade, finally to the premium valuation we believe it deserves. The scarlet letter it wears today in the minds of the short seller community will be removed." — Timothy Ramey, analyst, D.A. Davidson & Co.

stuart.pfeifer@latimes.com

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Paroled sex offenders disarming tracking devices

SACRAMENTO — Thousands of paroled child molesters, rapists and other high-risk sex offenders in California are removing or disarming their court-ordered GPS tracking devices — and some have been charged with new crimes including sexual battery, kidnapping and attempted manslaughter.

The offenders have discovered that they can disable the monitors, often with little risk of serving time for it, a Times investigation has found. The jails are too full to hold them.

"It's a huge problem," said Fresno parole agent Matt Hill. "If the public knew, they'd be shocked."

More than 3,400 arrest warrants for GPS tamperers have been issued since October 2011, when the state began referring parole violators to county jails instead of returning them to its packed prisons. Warrants increased 28% in 2012 compared to the 12 months before the change in custody began. Nearly all of the warrants were for sex offenders, who are the vast majority of convicts with monitors, and many were for repeat violations.

The custody shift is part of Gov. Jerry Brown and the legislature's "realignment" program, to comply with court orders to reduce overcrowding in state prisons. But many counties have been under their own court orders to ease crowding in their jails.

Some have freed parole violators within days, or even hours, of arrest rather than keep them in custody. Some have refused to accept them at all.

Before prison realignment took effect, sex offenders who breached parole remained behind bars, awaiting hearings that could send them back to prison for up to a year. Now, the maximum penalty is 180 days in jail, but many never serve that time.

With so little deterrent, parolees "certainly are feeling more bold," said Jack Wallace, an executive at the California Sex Offender Management Board.

Rithy Mam, a convicted child stalker, was arrested three times in two months after skipping parole and was freed almost immediately each time. After his third release, his GPS alarm went off and he vanished, law enforcement records show.

The next day, he turned up in a Stockton living room where a 15-year-old girl was asleep on the couch, police said. The girl told police she awoke to find the stranger staring at her and that he asked "Wanna date?" before leaving the home.

Police say Mam went back twice more that week and menaced the girl and her 13-year-old sister, getting in by giving candy to a toddler, before authorities recaptured him in a local park. He is in custody on new charges of child molestation.

Californians voted in 2006 to require that high-risk sex offenders be tracked for life with GPS monitors strapped to their bodies.

The devices are programmed to record offenders' movements and are intended, at least in part, to deter them from committing crimes. The devices, attached to rubber ankle straps embedded with fiber-optic cable, transmit signals monitored by a private contractor.

They are easy to cut off, but an alarm is triggered when that happens, as it is when they are interfered with in other ways or go dead, or when an offender enters a forbidden area such as a school zone or playground. The monitoring company alerts parole agents by text message or email.

Arrest warrants for GPS tamperers are automatically published online. The Times reviewed that data as well as thousands of jail logs, court documents and criminal histories provided by confidential sources. The records show that the way authorities handle violators can vary significantly by county.

San Bernardino County releases more inmates early from its cramped jails than any other county in California, according to state reports. But sex offenders who violate parole there generally serve their terms. A spokeswoman said the county closely reviews criminal histories, and those with past sex offenses are ineligible for early release.

By contrast, parole violators in San Joaquin County are often set free within a day of arrest.

A review of the county's jail logs shows that nine of the 15 sex offenders arrested for violating parole in December and January were let out within 24 hours, including seven who immediately tampered with their trackers and disappeared. One of the nine, a convicted rapist named Robert Stone, was arrested two weeks later on kidnapping charges and returned to jail, where he remains.

Raoul Leyva, a sex offender with a history of beating women, was arrested in April for fleeing parole and ordered to remain jailed for 100 days. He was out in 16 days and soon bolted again, after allowing the battery on his device to go dead, according to the documents reviewed by The Times.

Less than two weeks later, a drug dealer led police to a Stockton apartment where Leyva's girlfriend, 20-year-old Brandy Arreola, had lain for days on the floor, severely beaten and in a coma. Now brain damaged and confined to a wheelchair, Arreola spends her time watching cartoons.

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The Texas Tribune: Advocates Seek Mental Health Changes, Including Power to Detain

Matt Rainwaters for Texas Monthly

The Sherman grave of Andre Thomas’s victims.

SHERMAN — A worried call from his daughter’s boyfriend sent Paul Boren rushing to her apartment on the morning of March 27, 2004. He drove the eight blocks to her apartment, peering into his neighbors’ yards, searching for Andre Thomas, Laura Boren’s estranged husband.

Expanded coverage of Texas is produced by The Texas Tribune, a nonprofit news organization. To join the conversation about this article, go to texastribune.org.

For more articles on mental health and criminal justice in Texas, as well as a timeline of the Andre Thomas case: texastribune.org

Matt Rainwaters for Texas Monthly

Laura Boren

He drove past the brightly colored slides, swings and bouncy plastic animals in Fairview Park across the street from the apartment where Ms. Boren, 20, and her two children lived. He pulled into a parking spot below and immediately saw that her door was broken. As his heart raced, Mr. Boren, a white-haired giant of a man, bounded up the stairwell, calling out for his daughter.

He found her on the white carpet, smeared with blood, a gaping hole in her chest. Beside her left leg, a one-dollar bill was folded lengthwise, the radiating eye of the pyramid facing up. Mr. Boren knew she was gone.

In a panic, he rushed past the stuffed animals, dolls and plastic toys strewn along the hallway to the bedroom shared by his two grandchildren. The body of 13-month-old Leyha Hughes lay on the floor next to a blood-spattered doll nearly as big as she was.

Andre Boren, 4, lay on his back in his white children’s bed just above Leyha. He looked as if he could have been sleeping — a moment away from revealing the toothy grin that typically spread from one of his round cheeks to the other — except for the massive chest wound that matched the ones his father, Andre Thomas (the boy was also known as Andre Jr.), had inflicted on his mother and his half-sister as he tried to remove their hearts.

“You just can’t believe that it’s real,” said Sherry Boren, Laura Boren’s mother. “You’re hoping that it’s not, that it’s a dream or something, that you’re going to wake up at any minute.”

Mr. Thomas, who confessed to the murders of his wife, their son and her daughter by another man, was convicted in 2005 and sentenced to death at age 21. While awaiting trial in 2004, he gouged out one of his eyes, and in 2008 on death row, he removed the other and ate it.

At least twice in the three weeks before the crime, Mr. Thomas had sought mental health treatment, babbling illogically and threatening to commit suicide. On two occasions, staff members at the medical facilities were so worried that his psychosis made him a threat to himself or others that they sought emergency detention warrants for him.

Despite talk of suicide and bizarre biblical delusions, he was not detained for treatment. Mr. Thomas later told the police that he was convinced that Ms. Boren was the wicked Jezebel from the Bible, that his own son was the Antichrist and that Leyha was involved in an evil conspiracy with them.

He was on a mission from God, he said, to free their hearts of demons.

Hospitals do not have legal authority to detain people who voluntarily enter their facilities in search of mental health care but then decide to leave. It is one of many holes in the state’s nearly 30-year-old mental health code that advocates, police officers and judges say lawmakers need to fix. In a report last year, Texas Appleseed, a nonprofit advocacy organization, called on lawmakers to replace the existing code with one that reflects contemporary mental health needs.

“It was last fully revised in 1985, and clearly the mental health system has changed drastically since then,” said Susan Stone, a lawyer and psychiatrist who led the two-year Texas Appleseed project to study and recommend reforms to the code. Lawmakers have said that although the code may need to be revamped, it will not happen in this year’s legislative session. Such an undertaking requires legislative studies that have not been conducted. But advocates are urging legislators to make a few critical changes that they say could prevent tragedies, including giving hospitals the right to detain someone who is having a mental health crisis.

From the time Mr. Thomas was 10, he had told friends he heard demons in his head instructing him to do bad things. The cacophony drove him to attempt suicide repeatedly as an adolescent, according to court records. He drank and abused drugs to try to quiet the noise.

bgrissom@texastribune.org

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Genetically modified foods: Who has to tell?

Consumers who believe they have a right to know whether their food contains genetically modified ingredients are pressing lawmakers, regulators and voters to require labels on altered foods. But even if they succeed, experts say there's no guarantee that labels identifying genetically engineered foods would ever appear on packages.

"People are usually surprised to learn that there is no legal right to know," said Michael Rodemeyer, an expert on biotechnology policy at the University of Virginia in Charlottesville.

A variety of rules and regulations control the words that appear on food packages. Such rules must be balanced against companies' constitutionally protected right of commercial speech, experts said.

"It's an unsettled area in the law," said Hank Greely, director of the Stanford Center for Law and the Biosciences in Palo Alto. "If I were a betting man, I think the odds are good that the Supreme Court would ... strike down a GMO labeling requirement."

Consumers do have the right to know some things about foods, and it's the job of the Food and Drug Administration to enforce the various rules. Labels must carry an accurate name for the food, as well as its weight and manufacturer, a list of ingredients and, since 1990, that panel of calories and breakdown of basic nutrients that some people pore over and others blithely ignore.

And labels cannot be false or misleading. Consumers have a right to know that a product contains the nutrients they'd reasonably expect to find in a food with that name: An orange lacking vitamin C (should anyone desire to create such a thing) would have to be labeled as such.

They also have the right to know when a food contains something new that makes it materially different, such as an allergen or unexpected nutrient. Soybean varieties that are genetically engineered to contain high amounts of the monounsaturated fat oleic acid must bear labels that make that property clear, said FDA spokesperson Morgan Liscinsky.

But there is no requirement that food producers use those labels to say how they raised those oleic acid levels, according to the FDA. They could have done it through conventional breeding or by irradiating plant tissue to create mutations or by fusing cells together in a dish — or with genetic engineering.

When Flavr Savr tomatoes became the first genetically modified plants sold in supermarkets in 1994, they had stickers that informed shoppers that they were "made from genetically engineered seeds." Calgene Inc., the company that produced the tomatoes, even provided brochures and a toll-free number that consumers could call to learn more about the product, said Belinda Martineau, a geneticist at UC Davis who worked at Calgene in the 1990s.

But those labels were there only because Calgene decided to put them there. The FDA had scrutinized the process by which the company engineered the DNA in the tomatoes and decided that the technology itself didn't amount to a material change. Regulators concluded that Flavr Savr had the appearance, nutrients, flavor and texture of a tomato (although not, as it turned out, an especially tasty one).

"It was still a tomato," said Fred Degnan, a food lawyer with the firm King & Spalding in Washington, D.C., who has worked on biotechnology and labeling issues at the FDA. "They couldn't require it to be labeled in a way that implied it was different from a regular tomato."

Courts have ruled that forcing companies to label GM products violates their 1st Amendment right of free speech. In a 1996 case, a federal appeals court blocked a Vermont law that required dairy producers to label milk from cows that had been treated with a growth hormone made by genetically engineered bacteria. The hormone helped cows produce more milk, but the milk itself was the same as milk from untreated cows, the FDA determined. Because the law required labels to contain information that wasn't "material" to the product, it was unconstitutional, the 2nd Circuit Court of Appeals ruled in a 2-1 decision.

Labels can be required only if they alert consumers to a change that affects a food's composition or nutrition, its physical properties (such as shelf life), or the qualities that influence the sensory experience of smelling, tasting and eating it, the FDA says.

It is not a definition that sits well with all.

Andrew Kimbrell, executive director of the Washington-based advocacy group Center for Food Safety, said that approach reflects "19th century science." His group has petitioned the FDA to update its rules so that any product created via genetic engineering would be considered altered enough to require a label.

Such a change would also give companies more leeway to label their products as free of genetically modified ingredients: Today they can do so only if the label doesn't imply that there's something wrong with GM foods or that GMO-free foods are superior (although many companies skirt the rules).

"We need to know we have an agency using 21st century regulations to deal with 21st century technology," Kimbrell said.

The FDA's stance on labeling genetically modified foods differs starkly from that of European regulators, who require foods with genetically engineered ingredients to bear labels. Most scientists believe that the FDA's approach is rational — but perhaps it's too rational if the goal is to encourage public acceptance of the technology, said Jennifer Kuzma, a science policy expert at the Humphrey School of Public Affairs at the University of Minnesota.

"This is something that people want to see on labels," Kuzma said. "My view is that consumers deserve a choice when it comes to something that is important to them, even though there may not be a scientific basis for doing it."

Rodemeyer, the expert on biotechnology policy, says he thinks food producers made a tactical mistake by deciding not to label their genetically modified products voluntarily.

"When you don't label, you're always raising suspicion you're trying to hide something," he said.

Since most processed foods contain oil, sugar, syrups, emulsifiers, flour, cornmeal and protein that are derived from GM crops, virtually every product sold in the last 15 years would have carried a label. By now, those labels would have lost all meaning, Rodemeyer said: "If they would have all held their noses and jumped together, this wouldn't be an issue."

science@latimes.com

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Adele, 'Les Miserables' cast sing on Oscar stage

LOS ANGELES (AP) — It was an extra starry, musical day at the Dolby Theatre.

Adele took the stage first Friday, followed by the cast of "Les Miserables," singing together of the first time.

Oscar nominees Hugh Jackman and Anne Hathaway, along with co-stars Russell Crowe, Amanda Seyfried, Helena Bonham-Carter, Sasha Baron-Cohen, Eddie Redmayne, Aaron Tveit and Samantha Barks rehearsed their performances on the Oscar stage. They were backed by members of the musical's stage productions from London and Broadway.

"Les Miserables" director Tom Hooper sat in the front row of the theater as his cast sang.

Moments earlier, Adele dazzled the tiny audience of show workers with her performance of the James Bond theme "Skyfall."

"I need a lot more reverb on me," she said after her first run. "You might need to get a new reverb machine."

The 24-year-old multiple Grammy winner arrived wearing a black tunic, black leggings and flats, with no makeup and her hair in a ponytail.

"I'm going to have very high heels on the night, guys," she announced from the microphone, sipping tea between verses.

"Do you need the dresses?" she asked, and a team of stylists brought out the gowns Adele is considering for her Oscar performance.

The dress producers favored? "It's very heavy — I mean I struggle to stand in it," Adele said. "Come and feel how heavy it is, so you don't think I'm a wimp!"

She performed her Oscar-nominated song five times before leaving the theater. "It's been good, yeah?" she asked producer Neil Meron, who nodded in approval.

Just after Adele wrapped, the star-studded "Les Miserables" cast took the stage. Hathaway chatted with Bonham-Carter as Jackman sang a capella. Then Hathaway checked her microphone with a quick verse.

"Ooh, that was flat," she said.

The entire cast assembled for a final run-through when Jackman spontaneously began singing "My Bonny Lies over the Ocean."

"My bonny lies over my daddy," the ensemble responded, breaking into laughter.

Other stars rehearsing Friday included Jennifer Hudson, who is set to perform a song from "Dreamgirls" at Sunday's ceremony.

___

AP Entertainment Writer Sandy Cohen is on Twitter: www.twitter.com/APSandy .

___

Online:

www.oscar.com

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Drone Pilots Found to Get Stress Disorders Much as Those in Combat Do

U.S. Air Force/Master Sgt. Steve Horton

Capt. Richard Koll, left, and Airman First Class Mike Eulo monitored a drone aircraft after launching it in Iraq.

The study affirms a growing body of research finding health hazards even for those piloting machines from bases far from actual combat zones.

“Though it might be thousands of miles from the battlefield, this work still involves tough stressors and has tough consequences for those crews,” said Peter W. Singer, a scholar at the Brookings Institution who has written extensively about drones. He was not involved in the new research.

That study, by the Armed Forces Health Surveillance Center, which analyzes health trends among military personnel, did not try to explain the sources of mental health problems among drone pilots.

But Air Force officials and independent experts have suggested several potential causes, among them witnessing combat violence on live video feeds, working in isolation or under inflexible shift hours, juggling the simultaneous demands of home life with combat operations and dealing with intense stress because of crew shortages.

“Remotely piloted aircraft pilots may stare at the same piece of ground for days,” said Jean Lin Otto, an epidemiologist who was a co-author of the study. “They witness the carnage. Manned aircraft pilots don’t do that. They get out of there as soon as possible.”

Dr. Otto said she had begun the study expecting that drone pilots would actually have a higher rate of mental health problems because of the unique pressures of their job.

Since 2008, the number of pilots of remotely piloted aircraft — the Air Force’s preferred term for drones — has grown fourfold, to nearly 1,300. The Air Force is now training more pilots for its drones than for its fighter jets and bombers combined. And by 2015, it expects to have more drone pilots than bomber pilots, although fighter pilots will remain a larger group.

Those figures do not include drones operated by the C.I.A. in counterterrorism operations over Pakistan, Yemen and other countries.

The Pentagon has begun taking steps to keep pace with the rapid expansion of drone operations. It recently created a new medal to honor troops involved in both drone warfare and cyberwarfare. And the Air Force has expanded access to chaplains and therapists for drone operators, said Col. William M. Tart, who commanded remotely piloted aircraft crews at Creech Air Force Base in Nevada.

The Air Force has also conducted research into the health issues of drone crew members. In a 2011 survey of nearly 840 drone operators, it found that 46 percent of Reaper and Predator pilots, and 48 percent of Global Hawk sensor operators, reported “high operational stress.” Those crews cited long hours and frequent shift changes as major causes.

That study found the stress among drone operators to be much higher than that reported by Air Force members in logistics or support jobs. But it did not compare the stress levels of the drone operators with those of traditional pilots.

The new study looked at the electronic health records of 709 drone pilots and 5,256 manned aircraft pilots between October 2003 and December 2011. Those records included information about clinical diagnoses by medical professionals and not just self-reported symptoms.

After analyzing diagnosis and treatment records, the researchers initially found that the drone pilots had higher incidence rates for 12 conditions, including anxiety disorder, depressive disorder, post-traumatic stress disorder, substance abuse and suicidal ideation.

But after the data were adjusted for age, number of deployments, time in service and history of previous mental health problems, the rates were similar, said Dr. Otto, who was scheduled to present her findings in Arizona on Saturday at a conference of the American College of Preventive Medicine.

The study also found that the incidence rates of mental heath problems among drone pilots spiked in 2009. Dr. Otto speculated that the increase might have been the result of intense pressure on pilots during the Iraq surge in the preceding years.

The study found that pilots of both manned and unmanned aircraft had lower rates of mental health problems than other Air Force personnel. But Dr. Otto conceded that her study might underestimate problems among both manned and unmanned aircraft pilots, who may feel pressure not to report mental health symptoms to doctors out of fears that they will be grounded.

She said she planned to conduct two follow-up studies: one that tries to compensate for possible underreporting of mental health problems by pilots and another that analyzes mental health issues among sensor operators, who control drone cameras while sitting next to the pilots.

“The increasing use of remotely piloted aircraft for war fighting as well as humanitarian relief should prompt increased surveillance,” she said.

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2013 Mustang GT: Does retro have a future?

A decade ago, as Ford engineers prepared the next-generation Mustang, they stared down an inescapable truth: The best Mustangs were built in the 1960s.

So they set out to build a brand-new 1968 Mustang fastback, wrapping modern technology in retro sheet metal. That strategy carried its own risks, like asking the Rolling Stones to rerecord "Exile on Main Street."

It's clear now that it worked brilliantly, setting off an unlikely second coming of the muscle car era. In a familiar stampede, Chevrolet and Dodge — which scrambled in the '60s to make their own "pony cars" — followed Ford's lead again with refried versions of the original Camaro and Challenger.

Photos: Mustangs through the years

The 2013 Mustang GT we tested recently, a drag-strip beast that could smoke most anything from the '60s, may be among the last of the retro breed. With the Mustang's 50th anniversary approaching next year, the engineers in Dearborn, Mich., are again feverishly designing the next-generation Mustang. They face an even tougher challenge: How do you take a car into the future after you've taken it a half-century into the past?

However wonderful the next Mustang may be, it will be a shame to see this one pass into history, whence it came. The successful remake of the 1967-68 car represents a kind of redemption for dumb decisions Ford made when it abandoned the early Mustangs in the first place, leading to a series of putrid pony cars throughout the 1970s. (Note to Ford: DO NOT bring back the Mustang II.)

A week in the old-school cockpit of the latest GT confirms that its ride, handling and shifting are an upgrade over both ancient and recent Mustangs, which have always been a bit crude — endearingly so.

Ford has also pulled off a subtle but substantial evolution of its retro design. A mid-cycle refresh in 2010 added a sharpened belt line and a rear end pinched in on both sides. For 2013, Ford added a more prominent front grille and other tweaks. The updates somehow made the car look simultaneously less dated and more like the old car.

But only one option really matters on this car: the 302-cubic-inch, 5.0-liter V-8, a direct descendant of the first 302 small-block introduced in the 1968 Mustang, now with a ludicrous 420 horsepower and 390 pound-feet of torque. The first retro Mustang GT, a 2005 model, was impressive enough with 300 horses. Piling on 120 more is like deep-frying bacon in pork fat.

With the optional six-speed manual, it's difficult to launch the GT without roasting enough rubber to set off neighborhood smoke alarms. Shifts into second gear provoke another loud bark from the rear tires. Pushing the 7,000-rpm redline in higher gears requires acres of open highway.

The car's least-expected quality is a near-optimal trade-off between aggressive handling and a comfortable ride, both of which came in handy on the twisty, pockmarked Pasadena Freeway.

The GT has its issues. All Mustangs do. Their point has never been perfection, but rather the proper ratio of performance to price. The car can be a handful to drive in town, and feels a tad too big and heavy. Its center console is awkwardly angled up toward the back seat, making manual shifting an elbow-bumping affair.

Proper flogging of the GT also exposes a drawback to the whole '60s motif. The retro thing extends to the tall, skinny numbers on the circular analog speedometer. They're cool but hard to read, especially in the split second you have to look down, past your white knuckles, as the horizon starts to blur.

The GT dispenses with zero to 60 mph in 4.3 seconds on its way to 12.7-second quarter mile, according to Motor Trend. If you want something just a hair faster, plunk down $190,000 on an Aston Martin DB9.

Our loaded test car came to $40,255, a bit high for the quintessential affordable fast car. But GTs start at $31,545, and the V-6 base model — with a more-than-respectable 305 horsepower — brings the price down to $22,995.

All this sets a high bar for the next-generation Mustang. If Ford has learned anything from history, it will take care to avoid repeating what happened after the 1960s, a textbook case of messing with success. The first Mustang, a 1965 model unveiled on April 17, 1964, at the New York World's Fair, lasted just two model years — even though Ford sold more than a million of the cars. Feeling competitive pressure from Chevy and Dodge, the automaker rushed out two more generations before 1970. They were larger, faster cars, but respectful of the original.

Then Ford drove the Mustang into a ditch. The stretched and bloated 1971 Mustang, stripped of its trademark side-panel scoops, was a misguided attempt to turn the pony car into a luxury coupe. By 1973, as new emissions standards and an oil crisis took hold, horsepower had plummeted to a measly 150 for the strongest available V-8, according to a history of the Mustang by auto information company Edmunds.com.

That mere mistake was compounded by the crime against transportation known as the Mustang II, sold from the 1974 to 1978 model years. The mini-Mustang, which shared a chassis and engines with the lowly Pinto, today ranks second on Edmunds.com's list of 100 all-time worst cars.

The Mustang didn't fully recover until 1985, when Ford finally dropped a respectable version of its 5.0-liter V-8 into the long-running sixth-generation pony car. Horsepower topped 200 for the first time since 1971, and the "five-point-oh" models proved quite popular. (Today's GT gives a nod to this era with a small "5.0" badge just behind the front-wheel hub.)

The history no doubt weighs heavily on Mustang engineers now holed up in top-secret design sessions, walking the line between traditional and innovation. Whatever emerges will be the product of much pride and many arguments, says Jim Owens, a marketing manager for the Shelby line of ultra-performance Mustangs.

"There's a billboard on the plant that builds Mustangs. It says, 'We love taking our work home with us,'" Owens said, describing the factory in Flat Rock, Mich. "We will argue over a single pound of tire pressure and what it means at the apex of Turn 11 at Laguna Seca."

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Gunfire and deadly crash rattle the Las Vegas Strip

LAS VEGAS — A spectacular predawn crash on the Strip — triggered when bullets fired from a black Range Rover peppered a Maserati — hit this resort city right between the eyes. In the end, three people were dead and a major intersection under lockdown during a three-state manhunt for the shooters, leaving even casino veterans used to the extraordinary scratching their heads.

The mayhem was sparked, witnesses told police, by a quarrel early Thursday at a hotel valet stand.

The two vehicles left the Aria resort hotel and were heading north on Las Vegas Boulevard at 4:20 a.m., an hour when the casino marquees shine brightly but the gambling thoroughfare is largely empty. At Harmon Avenue, occupants inside the Range Rover opened fire on the Maserati, police said.

The silver-gray sports car, which was struck several times, sped into the intersection at Flamingo Road, ramming a Yellow cab. The taxi exploded, killing the driver and a passenger. Four other vehicles in the intersection were also involved in the crash and explosion, but officers offered no details.

"Omg Omg Omg that car just blew up!" one witness tweeted shortly after the crash, posting a photo of the wreckage. "God Bless their Souls! Omg!"

The driver of the Maserati died later at a hospital, police said. A passenger in the vehicle received minor injuries and was being interviewed by investigators. At least three others were also injured.

Police in Nevada, California, Arizona and Utah were on alert for the distinctive black Range Rover SUV, described as having dark-tinted windows, black rims and out-of-state paper dealer plates.

"We are going to pursue these individuals and prosecute them," Clark County Sheriff Doug Gillespie said at an afternoon news conference. "This act was totally unacceptable. It's not just tragic but unnecessary — the level of violence we see here in Las Vegas and across America."

Authorities had not publicly identified the dead. But a Las Vegas television station late Thursday identified the taxi driver as Michael Boldon, 62, who the station said had recently moved here from Michigan to care for his 93-year-old mother.

The victim's son, who drives a limousine, told Fox News 5 that he last talked with his father after 3 a.m., and later called his cellphone shortly after the crash to warn him to avoid the Strip. But there was no answer.

The station also identified the driver of the Maserati as Ken Cherry, a rap artist from Oakland who also is known as "Kenny Clutch." The station quoted family members identifying Cherry as the driver. An Internet video of a Cherry song called "Stay Schemin" shows two men in a vehicle on the Strip.

Police had more questions than answers.

"It began with a dispute at a nearby hotel and spilled onto the streets," said Capt. Chris Jones of the Las Vegas Police Robbery and Homicide Division.

The morning's events threw the Strip into disarray all day. The gambling boulevard's busiest and best-known intersection was cordoned off by yellow police tape until nightfall, keeping traffic and curious pedestrians away from the carnage. Even skywalks were blocked off.

While slot machines beeped and card games continued inside casinos around the accident scene — including the Bellagio, Caesars Palace and Paris Las Vegas — hotel bell captains were fielding questions from tourists who had awakened to news of the crash and the Strip shutdown. The alleys and side streets between nearby hotels were clogged with pedestrians who inched along on narrow sidewalks, past delivery doors, many making their own paths between the landscaped bushes and palm trees.

Even casino industry workers were thrown into turmoil. Hotel maids and dealers who finished their midnight shifts after dawn were left without bus service home. "I'm stranded," said Tiruselam Kefyalew, 25, a maid. "What a day to leave my cellphone at home."

Limousine drivers who normally prowl the city's gambling core improvised detours. Some said the police blockade would cost them $500 or more in lost business and tips.

"Most people understand, but you have your complainers," said Jim DeSanto, a limo driver who waited for fares outside Bally's casino. "Those people will complain, even when everything is perfect."

Well after noon, guests peered out nearby hotel windows and others leaned into the street to glimpse the crime scene.

"Hey, honey, it must have happened right here," one man told his wife as they left Caesars around noon. The tourist, who would only say that he had arrived from Tampa, Fla., the previous evening, had looked out his hotel window at 4:30 to see a vehicle in flames.

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Oscar animators ready to be taken seriously

BEVERLY HILLS, Calif. (AP) — In the animated feature film category at this year's Oscars, there's a film set in medieval Scotland, another that features old-school video game characters, one that relies heavily on dry British humor, while the other two take inspiration from the supernatural.

It's not exactly kid stuff — and that's how the directors like it.

"I think this year with these films — and so many more — the envelope for animation is being pushed," said "Brave" director Mark Andrews at an Academy Awards event Thursday night honoring the animated feature film nominees. "We keep seeing more risky, deep films that we wouldn't have seen 10 years ago coming out. I wanna be one of those guys pushing it more and more and more because it's not only an awesome medium, but there's so many more stories that we can tell."

The Scotland-set "Brave," a darker fable from Pixar about a rebellious red-headed princess named Merida, will face off against four other animated films at Sunday's 85th annual Academy Awards. The category was first introduced at the 2002 ceremony, with "Shrek" winning the inaugural trophy.

Despite the less lighthearted tone of this year's animated nominees, none cracked the best picture category for a spot alongside the likes of "Argo," ''Lincoln" and "Zero Dark Thirty." (Only three animated films have ever been nominated for best picture at the Oscars: "Beauty and the Beast," ''Up" and "Toy Story 3.")

"Edward Scissorhands" and "The Nightmare Before Christmas" mastermind Tim Burton could take home his first-ever Oscar at the Dolby Theatre ceremony for "Frankenweenie," his black-and-white stop-motion film based on his 1984 live-action short film of the same name.

"Frankenweenie" is among three of the five Oscar nominated films this year that employ stop-motion, the intricate and time consuming animation method that use miniature sculptures and sets. Despite a strong stop-motion presence at this year's Oscars, Burton cited finances, not the omnipresence of computer animation, as the reason that more stop-motion films aren't produced.

"In the case of 'Frankenweenie,' it's not like it was a studio wish-list to-do: 'Let's make black-and-white stop-motion animation,'" said Burton. "You hope it can survive. We all love it."

The other stop-motion nominees are the English seafaring comedy "Pirates! Band of Misfits" from director Peter Lord and the undead tale "ParaNorman" from directors Sam Fell and Chris Butler.

"Wreck-It Ralph" director Rich Moore told the crowd at the motion picture academy's Beverly Hills headquarters that he never envisioned the video game adventure from Disney as a musical, but "Book of Mormon" co-writer Robert Lopez and his wife Kristen Anderson-Lopez did create an original song for the film.

"It didn't work, so it's not in the movie," said Moore. "That's our process. We try lots of stuff. We throw it against the wall, and the stuff that sticks stays in the movie. It's a very organic process making films like this."

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Follow AP Entertainment Writer Derrik J. Lang on Twitter at http://www.twitter.com/derrikjlang.

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Governors Fall Away in G.O.P. Fight Against More Medicaid

Under pressure from the health care industry and consumer advocates, seven Republican governors are cautiously moving to expand Medicaid, giving an unexpected boost to President Obama’s plan to insure some 30 million more Americans.

The Supreme Court ruled last year that expanding Medicaid to include many more low-income people was an option under the new federal health care law, not a requirement, tossing the decision to the states and touching off battles in many capitols.

The federal government will pay the entire cost of covering newly eligible beneficiaries from 2014 to 2016, and 90 percent or more later. But many Republican governors and lawmakers immediately questioned whether that commitment would last, and whether increased spending on Medicaid makes sense, given the size of the federal budget deficit. Some flatly declared they would not consider it.

In Florida, where Gov. Rick Scott reversed his position and on Wednesday announced his support for expanding Medicaid, proponents say that doing so will not only save lives, but also create jobs and stimulate the economy. Similar arguments have swayed the Republican governors of Arizona, Michigan, Nevada, New Mexico, North Dakota and Ohio, who in recent months have announced their intention to expand Medicaid.

The shift has delighted supporters of the law.

“I think this means the dominoes are falling,” said Ronald F. Pollack, the executive director of Families USA, a consumer group. “The message is, ‘Even though I may not have supported and even strongly opposed the Affordable Care Act, it would be harmful to the citizens of my state if I didn’t opt into taking these very substantial federal dollars to help people who truly need it.’ ”

 Nationwide, Medicaid covers 60 million people, most of them low-income or disabled. The Congressional Budget Office has estimated that 17 million more people could be enrolled if all states took the expansion option. So far, 22 states have said they will expand the program, 17 have opted against it, and 11 have not yet decided, according to Avalere Health, a consulting firm.

Some Republican governors remain firmly opposed to the expansion of Medicaid. In her State of the State address, Gov. Nikki R. Haley said, “As long as I am governor, South Carolina will not implement the public policy disaster that is Obamacare’s Medicaid expansion.”

Gov. Rick Perry affirmed that “Texas will not expand Medicaid” and said he was proud that Texas did not follow other states “scrambling to grab every tax dollar they can.”

The change of heart for some Republican governors has come after vigorous lobbying by health industry players, particularly hospitals. Hospital associations around the country signed off on Medicaid cuts under the health care law on the assumption that their losses would be more than offset by new paying customers, including many insured by Medicaid.

Politics could also be a factor in states where Republican governors have decided to expand Medicaid. Mr. Obama won all of those states except Arizona and North Dakota in last year’s election, a fact that may have influenced several of the governors’ decisions. Some of the seven are also up for re-election next year.

Religious leaders have added a moral dimension to the campaign in some states. The Roman Catholic bishops of Salt Lake City and Little Rock, Ark., for example, have urged state officials to expand Medicaid.

The Obama administration has tried to win over skeptical state officials by offering new flexibility to manage Medicaid as they like. On the same day that he agreed to expand Medicaid in Florida, Mr. Scott got federal permission to move more Medicaid beneficiaries into private managed care plans.

Mr. Scott’s support for expanding Medicaid is particularly significant — Florida is the fourth most populous state — and surprising. A onetime hospital executive, he has been among the most strident critics of the health care law, and his opposition to it was a cornerstone of his 2010 campaign for governor.

The battle is not over, however. In Florida, as in many other states, expansion is subject to approval by the Legislature, whose Republican leaders have expressed misgivings. The legislative session begins next month, and advocates say they plan to press ahead with a lobbying campaign.

Leah Barber-Heinz, a spokeswoman for Florida Chain, a health advocacy group, said it was trying to inform lawmakers and the public about who would benefit from an expansion of Medicaid. More than one-fifth of Florida residents, roughly 4 million of 19 million people, lack health insurance.

“There are so many misperceptions about the uninsured,” Ms. Barber-Heinz said. “So we’re trying to show faces of who would be impacted: people who have been hit by the recession, people who have been laid off, educated people, people who own homes.”

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