The Cincinnati Enquirer from Cincinnati, Ohio • Page 22

B-8 BUSINESS THE CINCINNATI ENQUIRER Thursday, July 4, 1 985 fo) ysiM Portfolio CBS's Proposal May Tune Turner Out Thnmoi wvman rBS's chairman CBS assets to pay down the debt he would incur In acquiring CBS, and CBS's plan would make that job more difficult, the analysts said. ALSO, THE preferred stock CBS plans to Issue places a limit on how much additional debt CBS can accumulate. And since Turner's bid Includes lots of debt, his acquisition of CBS likely would run afoul of that limit, the analysts said. "It's a classic poison pill," said Fred Anschel of Dean Witter Reynolds using the term that refers to corporate moves aimed at thwarting unwelcome takeovers. John S.

Reldy of Drexel Burnham Lambert Inc. asserted that once the CBS offer was completed, "the present Turner offer could not take place, so there would have to be a change in the nature of that offer," namely that Turner would have to put up some cash for each CBS share. The analysts' comments came after they were given a hastily arranged briefing by CBS officials. $175 a share. But because the offer Involves debt and stock and no cash-some CBS trackers on Wall Street have valued the offer at around $150 a share.

CBS also values its offer for 6.365 million shares at $150 a share $40 in cash and $110 In 10-year senior notes bearing 10.875 annual Interest. CBS's stock rose cents a share to on the New York Stock Exchange. To pay for its stock, CBS said it would issue $123 million of convertible preferred stock and raise $137 million through short-term borrowing. An additional $700 million would come from longer-term notes. Analysts said that while they had not read all the details of CBS's offer, it appeared to contain two key Ingredients that could spoil Turner's effort.

First, CBS's need to borrow heavily to buy back its shares would load more debt on its balance sheet, making the company less attractive financially. Turner has said he would sell certain 1 7 JT'TjF i' fen rr v7. LIU ysC" sTr.z 1340. ftfHbr mMbU 1320 1300 JOU 1280 1260J 1240. 20 2124 25 26 27 28 1 2 3 June July Dow Jones 30 Industrials High And CIom (by white dot) Market Drifts On Holiday.

Eve The stock market was mixed Wednesday in a drifting preholiday session marked by weakness in some of the blue chips. Auto Issues were a notable weak spot on news of sharply lower car sales in late June. The Dow Jones average of 30 industrials dropped 7.62 to 1,326.39, while other, broader market measures painted a picture of steady to slightly lower stock prices. Volume on the New York Stock Exchange tailed off to 98.41 million shares from 111.07 million Tuesday. ACQUISITIONS ELDER-BEERMAN BUYING: El-der-Beerman Stores Corp.

said it agreed to buy four Macy's department stores and a warehouse building in Toledo and Findlay, Ohio. Terms weren't disclosed. Elder-Beerman said it expects the transfer to take place during the first week in August, although the stores will still carry the Macy's name for a short period thereafter. PURCHASE IN COMPLIANCE: Hospital Corp. of America said it has been advised by the Justice Department that it was found in compliance with the requirements of the Hart-Scott-Rodino Act and that its pending merger with American Hospital Supply Corp.

isn't in violation of antitrust provisions. PETROLEUM S0HI0, QATAR IN DEAL: Sohlo Petroleum a unit of Standard Oil Co. of Ohio, said its wholly owned sub sldlary, Sohio Qatar Petroleum signed a production-sharing contract with Qatar, an Arabian Gulf country. Sohlo Petroleum said the contract covers a period of 25 years and encompasses an area of three million off-shore acres east of the Qatar Pensinsula In the Gulf of Arabia. PRODUCTS CHERRY COKE COMING: Coca-Cola Co.

says Its new Cherry Coke will be sold nationally after four months of successful results In test markets. "Record high numbers In test markets told us now Is the time to make Cherry Coke available to our bottlers in the U.S.," Bryon Dyson, president of Coca-Cola USA, said. Dyson said that because of the "large number of bottler requests," the soft-drink giant expects to have bottled and canned Cherry Coke in 75 of the country by the end of August and throughout the nation by the end of the year. TRANSPORTATION ICAHN PLEASED: Financier Carl Icahn said Wednesday he is pleased with the support of the pilots' union for a possible bid to gain control of Trans World Airlines, and he set deadlines for reaching agreements with two other unions. The Air Line Pilots Association said Tuesday that its 3,100 member pilots at TWA had agreed to accept cuts of 20 In pay and benefits for three years if Icahn successfully outmaneuvered a bid by Texas Air Corp.

to acquire TWA for $925 million. In return, they would get an ownership stake. Neither TWA nor Texas Air would comment Wednesday on the pilots' agreement with Icahn. AIRLINE DATA GIVEN: Delta Air Lines Inc. said It flew 2,853,800,000 revenue passenger miles in June, up 19 from 2,399,100,000 in June 1984.

Load factor in June was 63.12, compared with 56.67 In June 1984 People Express Airlines Inc. said it flew 970,318,000 revenue passenger miles in June, compared with 604,928,000 in June 1984. Load factor In June was 67.6, compared with 72.8 in June 1984 Piedmont Airlines said it flew 794,583,825 revenue passenger miles in June, a 46.4 increase from 542,651,514 miles In June 1984. Load factor for the month was 65.1 up, from 55.19 a year ago. FINANCE DOLLAR VALUE DROPS: The dollar fell broadly In quiet preholiday trading Wednesday, buffeted by rumors about oil price cuts and concern about the strength of the exonomy in the United States.

The price of gold nudged higher. Republic National Bank of New York said gold bullion was bid at $310 a troy ounce as of 4 p.m. EDT, up 25 cents from the late bid Tuesday. Currency and bullion dealers said trading was extremely light In advance of the Independence Day holiday Thursday in the United States. Compiled By Dick Benson from staff and wire reports r- I SOHtO BY JAMES F.

PELTZ The Associated Press NEW YORK-CBS Inc. threw a major curve at broadcaster Ted Turner's bid to acquire the network, offering Wednesday to buy 21 of its own stock from shareholders for $954.8 million. Analysts said certain terms of the CBS proposal placed Turner's offer in serious jeopardy and suggested he would be forced to alter the bid if he wanted to continue pursuing CBS. CBS's offer "stops Turner cold In his tracks," said Edward J. Atorlno of the investment firm of Smith Barney, Harris Upham Co.

But In Atlanta, Turner Broadcasting System Inc. said that while it was still reviewing details of the CBS plan, "we Intend to pursue our offer vigorously" while challenging CBS's offer "in the courts and at the appropriate regulatory agencies." TURNER HAS valued his CBS bid at Domestic Car Sales Fall 3.2 Foreign Importers Show Increases BY EDWARD MILLER The Associated Press DETROIT Domestic car sales fell 3.2 in June compared with a year ago while Japanese and European importers made solid increases, grabbing nearly 27 of the U.S. car market, according to sales reports Wednesday. Japanese-made cars took 21 of the market, up from 19.3 in May, reflecting the relaxation of import quotas. European Importers took 5.9 of the American market, up from May's 5.6.

That meant the combined import share Jumped more than two percentage points in just one month. In May, the share was 24.9. Under the new Japanese quotas, General Motors Corp. and Chrysler Corp. have been able to Increase their imports from Japan and that helped push up the Japanese market share.

THE BIGGEST factor in the sharp fall in domestic car sales was the final 10-day selling period, with the seven manufacturers suffering an 11.8 decline compared with a year ago. That showing led market analysts to conclude that U.S. carmakers may have trouble this summer holding on to the brisk sales they've enjoyed for nearly two years. Industry leader GM ended the month poorly, with sales off 15 In the last 10-day period, causing its sales for the month to finish 5.7 down from a year ago. GM also suffered a drop in Its market share lead, losing ground to No.

2 Ford Motor Co. and No. 3 Chrysler. Ford sales were down 8.1 In the June 21-30 reporting period, finishing the month up 1. Chrysler sales were off 7.7 In the final selling period, and were up 1.5 in the month compared with June a year Importers report sales only once a month, so no June 21-30 comparison can be made for them.

Joseph Phillippi, an automotive industry analyst at E.F. Hutton In New York, said the showing by domestic carmakers -was no surprise. "This is not unexpected, now that sales Incentives are gone and Inventories of imported cars are starting to be rebuilt," Phillippi said. "There's also a manufacturing recession in this country right now, so it's not surprising that sales were a little sloppy." Among the smaller U.S. automakers, No.

4 American Honda Motor Co. Inc. sales for June 21-30 were up 12.6 and were up 4.9 for the month. No. 5 American Motors Corp.

sales con tin- ued in a rut, down 48.3 in the final period and 43.5 off for the month. Volkswagen of America Inc. sales of U.S.-made cars were down 0.1 for the period and 3.9 for the month. No year-to-year comparison was available for No. 7 Nissan Motor Co.

since its U.S. car production began in March. THE SEASONALLY adjusted annual rate of domestic sales was 7.3 million In the final selling period and 7.9 million for the month, compared with a normal 8 million. "This showing is In line with predictions that It would be an 8 million year," said an analyst at a major automaker who requested anonymity. "The year started strong, so we may see it below 8 million for a few months.

Reality is setting in." 0 hat ARTHUR their West BY The For red, Day. National supplying flags 2-inch business, flag. Schaller, now his some stock Minnesota. "We back, "I guess Last been business. "It's years also firm's June with his native "The Schaller downs coming dollars worked accountant of good.

profit and chief executive, told them that the restrictions contained In the offer were primarily meant to protect the quality of the notes being offered to CBS shareholders for their stock. But when asked specifically If the restrictions were designed mainly to stop Turner, Wyman said, "It would seem to us it would be extremely difficult to imagine the present Turner offer being implemented If these are in place." WYMAN ALSO said CBS would reduce the added debt It would incur by cutting expenses and by selling assets over the next 12 months that would yield about $300 million after taxes. He declined to identify which assets might be sold. CBS operates a television and radio network and owns 14 radio and five TV stations. Its other businesses include the world's largest record company, toys, publishing, movies and videotapes.

National ContVact A Mddel GE-Evendale Units Bargain Locally BY GREGG FIELDS The Cincinnati Enquirer A national contract between General Electric Co. and the International Union of Electrical Workers will likely provide the model for an agreement between GE and two large unions at its Evendale plant, sources say. GE-Evendale has been in negotiations with the United Auto Workers and International Association of Machinists since May 29. The UAW represents 4,800 workers at Evendale's aircraft engine plant. The IAM has about 1,200 members.

"HISTORICALLY, SETTLEMENTS reached in national negotiations have established the pattern for local contract wage and benefit provisions," said Bill Black, a spokesman for GE-Evendale. Joan Man, an executive assistant to John Bywater, president of the IUE, agreed. Although the IUE has no members at the Evendale plant, officials of the two large unions there took part in the IUE negotiations, she said In an interview from New York. She said both unions are represented on the Coordinated Bargaining Committee of General Electric, a coalition of 13 unions with GE membership. The UAW and IAM also had representatives in New York, where the IUE contract was negotiated, Man said.

"There was a recommendation by both of those bodies in favor of this contract," she said. SAID BLACK, the GE spokesman: "That's an Interesting comment, and I'm glad to hear it." The new contract will now be voted on by rank and file workers. If approved, It will represent a new milestone in union Influence at GE. That's because the contract calls for the establishment of agency shops. An agency shop means employees covered by the contract at a plant must either join the union or pay a service fee equivalent to annual dues.

GE has never had agency shops before, said Bywater, the IUE president. The contract also calls for an immediate cash payment of 3 of projected wages for the next 12 months. Workers will also get 3 annual raises. FURTHER, THE pact addresses Job security by giving lald-off workers preferential hiring at other GE plants and by establishing a $5,000 retirement bonus for those displaced by automation. In other areas, workers who retire at age 60 would be given a $200-a-month supplement until they turn 62, and employees will make no contribution to the pension fund for the first $14,000 of earnings, up from $12,000 now.

Life Longer For The Rich THE ASSOCIATED PRESS WASHINGTON The World Bank reported Wednesday that people can expect to live longer in richer countries. In 1983, it said, the average American earned $14,110 and a baby born that year in the United States could expect to live for 75 years. Residents of the United Arab Emirates, Kuwait and Switzerland in 1983 had even bigger average incomes, the World Bank said, and children born in those nations during that year also had a long life expectancy. The Cincinnati EnquirerGerry Wolter SCHALLER Is flanked by his sons, Arthur, left, and Lawrence in the production area of factory. National Flag Keeps Flying End Business A Fourth Of July Fixture What's more important to him, however, is the flags.

National Flag-made flags fly over Fountain Square and above the Procter Gamble plaza. "Just about all the flags around town are ours, by hook or crook," he said. AS THE nation's sixth-largest flag manufacturer, National also sends its Polish and Puerto Rlcan flags to Chicago for ethnic festivals, and French Tri-colors to groups celebrating Bastille Day, and keeps enough German flags at home for Cincinnati's Oktoberfest. Chevrolet and Cadillac dealers fly banners made by National, as do Kodak camera dealers. National also makes flags for some of the larger flag manufacturers who can't keep up with their own orders, Schaller said.

Schaller is particularly proud of his role in welcoming Great Britain's sovereign to California a few years ago, when National produced a 20- by 30-foot Union Jack to welcome Queen Elizabeth II. "No one else would tackle It," he said. "It's a hard flag to make." SCHALLER JOINED National Flag, which was then his uncle's firm, in 1953, after the Korean war. He said he's seen a few changes in flag making nylon, for instance, is now used In 95 of all flags, replacing cotton and wool as the former chief fabrics. But most everything in the West End factory has stayed pretty much the same.

The firm still uses a printing press for its small printed flags that was brought from England by the company's immigrant founders. Schaller estimated it as being 200 years old It was brought over used and said replacement parts are "artistically" custom-made. He said the two-sided printer still does the job, although a break-down last Friday was slowing production of "stick flags" for local Independence Day parades. Schaller's sentimental feelings are shared by his employees. Verna Jurgens, who started with National in 1945, said she likes her work, the company and the people.

She said National Flag has become a family for her. "As long as they'll have me, I'll have them," said said. Jurgens doesn't need to worry. The Schaller's don't plan any changes at the city's festive factory. Schaller's uncle worked well into his 80s, and Schaller, 54, wouldn't mind duplicating that pre-formance.

But even when he does retire, the family at National will carry on. "I'll be here," said production manager Arthur Schaller Jr. ROB HEIDENREICH Cincinnati Enquirer 209 years, Americans have celebrated a white and blue, flag-waving Independence And for 116 of those festive occasions, the Flag Co. has been there to do Its part by Old Glory herself. Cincinnati's National Flag 1819 Freeman West End, produces more than five million annually, ranging in size from a 1W- by miniature to a huge 30- by 50-foot flag.

United States flags make up 75 of the firm's but the company will make any type of "If It can be sown in a flag," said Arthur president, "we can make it." Founded in 1869 by two English immigrants-Frederick Spencer and Walton Craig-the firm Is run almost as a family business by Schaller, wife and two sons. The company employs 30 other workers. SCHALLER'S FAMILY holds all of National's except for shares held by a Spencer de-scendent in England and a Craig descendent In contacted them and tried to buy the stock but they didn't want to sell," Schaller said. it's sentimental." year, Schaller's firm had sales of $1.5 million, which represents what Schaller said has a slow but steady increase in the firm's been excellent for us for almost a dozen ever since the Bicentennial," he said. Schaller said the Iranian hostage crisis In 1980 increased his business, as has a general Increase in American patriotism.

Summer is his seasonal peak begmnlng with the Memorial Day rush in May, continuing with Flag Day 14, then the Fourth of July, and winding up Labor Day in September. SCHALLER TURNS sentimental when reviewing business. The casual, friendly Cincinnati likes his company, his work and his employees. flag company has been good to me," relates. "Maybe we've had ups and and I just try to forget them.

I never regret to work." Schaller doesn't seem too worried about the and cents of his business, leaving that for secretarytreasurer-son Lawrence Schaller, who for a short time with Peat Marwlck as an after graduating from the University Cincinnati in 1982. Arthur Schaller Just knows his business is "I don't know why," he said, "but I'm not complaining." The company provides enough for him to "make a living at it." I.