The Cincinnati Enquirer from Cincinnati, Ohio on October 22, 1991 · Page 35
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October 22, 1991

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The Cincinnati Enquirer from Cincinnati, Ohio · Page 35

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Cincinnati, Ohio
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Tuesday, October 22, 1991
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THE CINCINNATI ENQUIRER EDITOR: JACK SEAMONDS, 369-1962 o)n Amex stocksD-5 Mutual fundsD-6 NASDAQ selectD-8 NYSE stocksD-7 iiauiaMiiiMril Portfolio Numbers look bad for Big Three Automakers expected to announce third-quarter loss of billions PI -4 TUESDAY, OCTOBER 22, 1 991 3100 3050 3000 2950 2900 ENQUIRER NEWS SERVICES DETROIT General Motors Corp.'s three major subsidiaries Monday reported profits during the third quarter, a far cry from what is forecast when the parent company figures in its automotive 2850 UUUUU UUUU W4V r-, in 4 4 4 A 4 r 4 l 4 4 n 4 The world's largest automaker was ex third-quarter losses. It appears that the three companies might be on their way to their worst financial year since 1980, when they lost a combined $4.5 billion. This year's gloomy financial picture indicated that any recovery in the profit-starved industry won't be coming soon. The Big Three lost a combined $3.2 billion during the first half of this year, compared with a $3.1 billion profit during the same period last year. Analysts forecast that GM could lose about $1.2 billion in the July-September period this year, Ford could lose about $478 million and Chrysler could lose about $191 million. During the third quarter last year, when the current profit slide began, the Big Three lost $2.1 billion. GM Hughes Electronics Corp., the automaker's electronics and defense contractor, said it earned $38.2 million excluding an accounting change, down substantially from last year but still in the black. The subsidiaries' profits were expected to be more than offset when GM reports its corporate-wide financial results today. Ford also reports today Ford Motor Co., the world's No. 2 automaker, also was due to report its third-quarter results today. Chrysler Corp., the Big Three automaker in the worst financial shape, wasn't expected to report its third-quarter figures until next week. Together, the Big Three were expected to report somewhere around $2 billion in New models coming Predictions of the third-quarter losses contained nothing startling, but they underscored the profound pain rippling through an industry that is critical to the American manufacturing economy. "In the third quarter, you have a combination of a deep auto recession and a seasonally weak time as the companies change over for the new models," auto analyst John Casesa of Wertheim Schroder & Co. of New York said. Automakers function like wholesalers, making their money when cars and trucks are sold to dealers. One of the problems they face these days is that dealers are very conservative in their ordering, hoping to save money needed to insure and finance large inventories of unsold cars. pected to report a $1.1 -billion overall third-quarter loss today, caused mainly by an obstinate recession and cautious con sumers. 9 iv ii it 19 ig ii io.ii OCt; Dow Jones 30 Industrials Daily highs, with closes at arrow tip Area-Interest stocks In industrial average (NYSE change from previous day) AT&T - 38 GE-38 P&G-12 Cincinnati Stock Exchange volume Monday 1,456,700 Mondav. the comoanv's General Motors AcceDtance Com. financing oDeration re ported a record $346 million third-quarter profit. CiMs Electronic Data Systems Corp. computer services subsidiary said it earned $145.5 million, a 13.3 increase compared with a year ago. Economy hasn't sunk riverfront ,4 Profits rise; new projects scheduled Prices soften on Wall Street The stock market retreated Monday, weighted down by a battered bond market and traders determined to cash in on last week's impressive gains. The Dow Jones average of 30 industrials, which surged almost 94 points last week and closed at a record high Friday, slipped 16.77 to 3,060.38. Volume on the floor of the Big Board came to 153.78 million shares as of 4 p.m., down from 204.72 million in the previous session. T-bill rates increase Interest rates on short-term Treasury securities rose in Monday's auction. The Treasury Department sold $10.6 billion in three-month bills at an average discount rate of 5.04, up from 4.99 last week. Another $10.6 billion was sold in six-month bills at an average discount rate of 5.11, up from 5.03. McHenry rejoins law firm Powell McHenry, who retired as senior vice president and general counsel of Procter & Gamble Co. in May, has rejoined the Cincinnati law firm of Dins-more & Shohl. McHenry will be an attorney of counsel with the firm, where Gear firm to expand into Ky. Erlanger plant will add 73 jobs BY MIKE BOYER The Cincinnati Enquirer Cincinnati Gear Co., Marie-mont-based maker of large gear systems, is planning an $8 million expansion into a partly vacant plant in Erlanger, Ky. The company has a lease with an option to buy the 70,000-square-foot plant owned by Klockner Ferromatik Desma Inc., a German maker of plastic injection molding equipment. Cincinnati Gear said it plans to expand in three phases, eventually employing 73 people. The company employs about 200 at its Mariemont plant. It also has a plant in Lebanon, N.J. Klockner stopped production in the plant in September, 1990, but continues to operate KFD Sales and Service Inc., a 50-per-son sales operation. KFD plans to continue that operation in the building. Cincinnati Gear plans to expand the building by 7,300 square feet to accommodate heavy-duty lift cranes used to assemble and test the large power transmission gears, some weighing up to 100 tons. Frank Posinski, Cincinnati Gear president, declined to comment on what prompted the expansion. Walter L. Rye, company owner, couldn't be reached for comment. "It's our understanding they needed additional space to accommodate added sales," said Fred Troutman, spokesman for the Kentucky Economic Development Cabinet. He said the company might finance part of the expansion through state bonds. H I T T """'! lint. .A L''ZZ Til f VF" I 4 he worked from McHenry 1951 until joining P&G in 1975. McHenry, 65, is currently chairman of a citizens' commission studying options for a Hamilton County jail. At Dinsmore & Shohl, he will focus his practice on general corporate and corporate litigation matters. Union issues shadow merger Integrating the non-union work force at Continental Airlines with union-organized Northwest Airlines is the main sticking point in merger talks between the two carriers, Continental's chairman says. "The primary element holding up a Northwest deal, if one is ultimately to be completed, is an agreement with air-labor groups to ensure a smooth and equitable transition and the integration of our work force with theirs," Continental Chairman Robert Ferguson said in a recorded message to workers. "We all know that this is critical for a successful merger between the two carriers." Continental spokesman Art Kent said Monday that talks have not BY JEFF HARRINGTON The Cincinnati Enquirer You'd think Greater Cincinnati's row of riverfront restaurants would want to throw in the kitchen towel. They're battling a recession that has kept consumers nationwide eating in and eating cheap. They're in the middle of October, the start of the slowest season for restaurants. Unlike last year at this time when the draw of a World Series was bringing people to Cincinnati, the Reds already have wrapped up a disappointing season, and the Bengals are mired in an 0-6 start. Then there's dreary news from the Covington side of the river, where owners of the Covington Landing are trying to sell the unprofitable Spirit of America paddleboat, and owners of The Waterfront barge are thinking of pulling up stakes and moving. So what's riverfront restaurateur Evan Andrews doing these days? Celebrating. Revenues at the restaurant he manages on the Cincinnati side of the river, Montgomery Inn at The Boathouse, are up 8 compared with last October. That keeps up a two-year streak of rising profits. "I was hoping just to do the numbers we did last year with the World Series and the playoff games. It's unbelievable," Evans said. "Business has been up every month in 1991 over 1990." Montgomery Inn isn't the only evidence of new hope on the riverfront: Hooters Restaurant, a casual eaterybar, plans to move into the former Newport Beach site by next summer. RMD Corp., a Louisville-based franchisee of the Hooters chain, has signed a lease calling for a second restaurant and nightclub as part of the floating entertainment complex. Kentucky earlier this month approved a $2.6 million grant to start the Harbor Town Project along Newport's Riverboat Row. Eventually, the land-based development is to include a hotel, a pair of restaurants, a marina, 120 apartments and an office building. Newport's two mainstays on the river, Crockett's and Barleycorn's, have continued to hold their own. The city of Newport estimates its combined revenues at $6.9 million for the year ended June 30, down slightly from the $7.05 million a year before. All of this has Newport City Manager Jim Parsons convinced that concerns of a drought in river business are unwarranted. "We haven't seen any real . g - f'S tTjP jf"1 iff:. M(t N "iti'B i .l?.ri' r2y t-;t" "3',-fl- .H - t, . .. "aft" bogged down over the issue. A Northwest spokesman would not acknowledge the talks. Wal-Mart to drop workers mv m Mi. I fen. Wal-Mart Stores Inc. said Monday that it was laying off up to 1,200 workers in what the nation's largest retailer called a normal payroll adjustment and not a re sponse to the weak economy. It appeared likely that Wal-Mart, which has a work 3 1 s i!i'feSS-S23? ..... J.L.r. .IS & ? force of 367,000, took the step to keep costs in line. Wal-Mart has built its reputation and success on lower prices, which in turn are dependent on reduced ex ' - - The Cincinnati EnquirerJim Callaway Ben Bernstein and Gary Wachs, controlling partners, might have to sell the Spirit of America riverboat, foreground, while Jeff Ruby is considering moving his Waterfront restaurant, top. . penses. Don Shinkle, a Wal-Mart spokesman, said from the company's headquarters in Bentonville, Ark., that the cuts were made in the Sam's Clubs warehouse division. About 25 jobs were cut at Sam's headquarters, while the others were spread out among the 192 Sam's outlets, he said. Shinkle said the recession and slow economic recovery were not behind the city because of a dredging dispute, Ruby said revenue at his Covington eaterynight spot is up 15 from a year ago. He credits it to the menu addition of pastas and chicken to entice the more prevalent casual diner. "People aren't dining out as much now; they're eating out," he said. negative downturn . . . and, in fact, there's still quite a bit of interest in development here," Parsons said. "You may find an emphasis away from more formal dining, but that's the only major trend." Jeff Ruby, majority owner of The Waterfront, agrees. Although he's considering leaving Whether there's enough riverfront traffic to stomach additional restaurants like Hooters, though, is debatable. Ruby thinks that the city is an over-served restaurant market. But Andrews, of Montgomery Inn, contends the riverfront isn't saturated yet. His philosophy: "Competition breeds business." the move. "In good times, bad times, not so good times, you make these payroll Delta deal satisfies Air Force THE ASSOCIATED PRESS NEW YORK After successfully wrangling in bankruptcy court to buy most of Pan American World Airways, Delta Air Lines has cut a deal to satisfy one widely overlooked creditor the Air Force. Queuing up with bondholders, noteholders and banks, Air Force officials entered Pan Am's bankruptcy case with a complaint that the carrier had reneged on a deal to give the government access to aircraft outfitted for emergency military use. Delta, which assumed Pan Am's debt as part of the purchase, and the Pentagon reached an agreement in principle through which Delta will pay the Air Force $5 million and provide $20 million in credits for future plane use. adjustments, he said. Compiled by Dick Benson from staff and news service reports Chiquita shareholders take third-quarter loss in stride mates of 1991 place the first half contribution to total year earnings at over 95. Furthermore, the third and fourth quarters individually are generally not significant earnings contributors." In the first half, Chiquita earned $121 million, or $2.46 a share, on revenues of $2.44 billion. THE CINCINNATI ENQUIRER Chiquita Brands International expects to report a small loss of between It and 9t a share for the recently concluded third quarter, but shareholders are not panicked by the news. Chiquita shares closed down 12'2t at $40.75 a share in New York Stock Exchange trading still positioned for strong growth," he said. Because bananas are seasonal, the bulk of Chiquita's banana earnings are in the first half. "Chiquita generally makes in excess of 90 of its earnings in the first half of the year," Steve War-shaw, executive vice president and chief administrative officer, said in a statement. "Consensus Wall Street esti ter loss, Chiquita said last week that it remained comfortable with analysts' full-year earnings estimates of about $2.55 a share. Third quarter numbers will be released Nov. 5, Chiquita said. John McMillin, analyst with Prudential Bache Research, said he's forecasting a third quarter loss of 5t a share and earnings of $2.55 for the full year. "The company is Friday, rival Dole Food's stock tumbled 14, closing at $36 a share, after reporting third quarter earnings slipped 42, to 43t a share, due to lower banana prices. Chiquita's shares Friday closed down $1.62'2 at $40.87'2. Bananas account for more than one-third of Chiquita's annual revenues and two-thirds of its profits. Despite the expected third quar More earnings reportsD-8.

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