The Des Moines Register from Des Moines, Iowa • Page 13

DOW JONES RICK JOST, business editor, 515-284-8258 Dow Jones industrials closed Monday at 2,124.64 OFF 21.16 Tuesday, November 8, 1988 5S TERRY FARRISThe Register THE BUSINESS TIDE IBS IP IMS 9 i UUJL It's chow time for these cattle along U.S. Highway 169 south of Fort Dodge, and nearly all the available spots have been taken. Pillsbury plans to spin off Burger King Payments set for Fireside depositors making a turnaround less likely. He said the combined value of one share of Burger King stock and one share of Pillsbury stock would be about $40. "It puts Burger King under the gun again," Carnes said.

"Maybe it would be weaker than it already is." Tom Isenberg, an institutional investor in New York City, said he would advise his clients to tender their shares to Grand Met. But with Grand Met's offer conditioned on the dropping of Pillsbury's shareholders' rights plan, or "poison pill," Isenberg said it's likely that Grand Met will extend its offer until a Delaware judge rules on whether the plan should be PILLSBURY not have an immediate reaction to the announcement. "It's just too early for us to say anything on it," Montgomery said. Grand Met executives have indicated they are willing to take on the chain despite its troubles. Steve Carnes, a former Pillsbury executive who is an analyst for Piper Jaffray Hop wood Inc.

in Minneapolis, said the plan is a Band-Aid that may not hold up against the well-financed takeover bid. "This is bizarre," Carnes said. "It doesn't even come close to the $60" a share offered by Grand Met. More Debt He said the plan would add debt to an already troubled Burger King, dend was not disclosed. The board also directed management to "continue to explore additional ways to enhance shareholder values." Repeats Plea Last month Pillsbury's board rejected Grand Metropolitan PLC's $5.23 billion takeover bid as inadequate, and Monday the food and restaurant giant repeated its plea that shareholders not tender their stock to the British company.

Grand Met's $60-a-share offer was set to expire a midnight today, unless extended. Walter Montgomery, a spokesman for Grand Met in New York, said the liquor and gaming conglomerate did MINNEAPOLIS, MINN. (AP) -Pillsbury which is fending off a hostile $5.23 billion takeover bid from a large British conglomerate, announced Monday that it will spin off its troubled Burger King subsidiary. Under a plan approved by Pillsbu-ry's board of directors, the fast-food chain would be spun off to its shareholders as a separate public company. Analysts have said the chain could fetch as much as $2 billion if Pillsbury chose to sell it to an outside party.

Pillsbury said it would distribute one share of Burger King common stock for each common outstanding share of Pillsbury, payable on Jan. 27 or earlier for shareholders of record on Dec. 2. The size of the special divi Please turn to Page 8S By DAVID ELBERT Register Business Writer Depositors of Fireside Credit a bankrupt Dubuque industrial loan company, will get back about 58 cents on the dollar, officials said Monday. A payout by Dubuque Bank Trust the paying agent for Fireside, is expected to begin later this month, with a final payment expected within six months.

Fireside was one of a handful of industrial loan companies operating in Iowa when it filed for reorganization under Chapter 11 of federal bankruptcy laws in October 1986. Larry Kingery of the Iowa Banking Division said Monday that four uninsured industrial loan companies cur-; rently do business in the state. The four firms have less than $20 million in deposits between them and are generally considered in sound condi-' Market falls as investors take election eve off 1 European nations to get Winnebagos Winnebago Industries Inc. of Forest City announced that Winnebago Trading GmbH of Hamburg, West Germany, has been named exclusive distributor for Winnebago and Itasca recreational vehicles for 14 European nations. Officials said Winnebago Trading plans to sign 50 dealerships to handle motor home sales.

"Motor homes are becoming more and more popular in Europe," said Gunnar Gle-saaen, managing director of Winnebago Trading. The West German firm is distributor for Norway, Sweden, Finland, Denmark, West Germany, the Netherlands, Belgium, France, Spain, Switzerland, Austria, Italy, Portugal and Luxembourg. Survey: Iowa natural gas costs vary widely Dillard posts higher profits Dillard Department Stores a retailing giant about to invade the Iowa market, said third-quarter profits increased to $17.4 million from $14.6 million last year. Per-share earnings rose to 54 cents from 45 cents as sales rose to $606.2 million from $535.9 million, ihe Little Rock, department store chain said. For the first nine months, earnings increased to $48.2 million from $41.5 million.

Sales increased to $1.68 billion from $1.43 billion, and per-share earnings rose to $1.49 from $1.29. Dillard, the largest department store chain in the United States, is building its first Iowa outlet at Mall of the Bluffs in Council Bluffs. Dillard wants to open Des Moines outlets at SouthRidge Mall and the proposed NorthRidge Mall, but both projects are in doubt. The NorthRidge shopping center is in limbo while mall developer General Growth Cos. decides whether to re-apply for federal aid to finance the project.

General Growth was turned down before. The SouthRidge store is tied up in a lawsuit filed by Younkers the Des Moines retailer says its lease forbids another department store. EEC makes loan to British Aerospace for Airbus deal The European Investment Bank announced it is lending $267 million to British Aerospace to help the company finance its Airbus A320 project. The bank, which is the European Economic Community's investment agency, said this is the first loan it has made to the Airbus A320 project. The bank has made loans for other aircraft made by Airbus Industrie, a European consortium.

The A320 is a highly advanced, short- to medium-range aircraft designed to carry between 150 and 180 passengers. To date, Airbus has received 625 orders and options for the aircraft. British Aerospace's partners in Airbus Industrie Aerospatiale of France, Messerschmitt-Boelkow-Blohm of West Germany and Con-strucciones Aeronauticas of Spain also are participating in the A320 project. Troubled Dallas bank settles with FDIC MCorp and federal regulators reached a compromise over a planned government bailout that may keep the troubled Dallas company out of bankruptcy court. Under the accord, the Federal Deposit Insurance Corp.

said it wouldn't force MCorp to inject $400 million into several of its subsidiary banks. In return, MCorp agreed to open its books to potential buyers. The company indicated last week that it might have to file for protection from its creditors under Chapter 11 of federal bankruptcy laws to avoid complying with the federal order. TWA president resigns in management scramble Trans World Airlines Inc. said its president has resigned and the company is restructuring its top management.

TWA said President D. Joseph Con-is resigning effective Nov. 30. Corr won't be directly replaced as president, the airline said. A new three-man "office of the chairman" will be created to combine both executive and operational functions.

The new office will consist of TWA's current chairman and owner, financier Carl Icahn; Alfred Kings-ley, a member of the board of directors; and Jerry Nichols, senior vice president for ground operations at TWA. Yields on short-term T-bills soar to 3-year high Interest rates on short-term Treasury securities soared in an auction to the highest levels in more than three years. The Treasury Department sold $7.20 billion in three-month bills at an average discount rate of 7.54 percent, up from 7.37 percent last week. Another $7.20 billion was sold in six-month bills at an average discount rate of 7.71 percent, up from 7.48 percent last week. The rates were the highest since May 13, 1985, when three-month bills sold for 7.69 percent and six-month bills averaged 7.9 percent NEW YORK, N.Y.

(AP) Stock prices tumbled in light trading Monday as weary investors awaited the outcome of the presidential election. The Dow Jones Industrial average lost 21.16 points to close the day at 2,124.64. In the broader market, declining issues outpaced advances by nearly 4 to 1 in nationwide trading of New OW WALL STREET York Stock Exchange-listed stocks, with 1,200 issues down, 314 up and 444 unchanged. Volume on the floor of the NYSE came to 133.9 million shares, down from 143.6 million in Friday's session. Nationwide, consolidated volume in NYSE-listed issues, including trading at regional exchanges and on the over-the-counter market, totaled 171 million shares.

Analysts said investors withdrew from the market early, neither buying nor selling, to await the outcome of today's vote. Analysts said that while Wall Street felt relatively certain of a George Bush victory, investors were cautious after weekend polls suggested Michael Dukakis had narrowed the gap in some areas. In addition, leftover concern from last week's unexpectedly strong unemployment data also kept investors watchful. The drop in the jobless rate revived concern that the economy is stronger than expected, signaling the possibility of higher inflation and a move by the Federal Reserve to tighten credit by raising interest rates. "The market has so baked George Bush into the pie that if he is victorious, it will be anti-climactic and the market will say 'So said Larry WachteL an analyst with Pru-dential-Bache Securities Inc.

The NYSE composite index of all its listed common stocks lost 1.42 to close at 154.28. Among actively traded issues on the NYSE, Sears Roebuck dropped point to 43, IBM fell ltt to 119 and Pillsbury was off 1 at 59. Pillsbury said it was spinning off its Burger King unit. tion, he said. 1,100 Depositors Last week, Dubuque Bank Trust acquired Fireside's non-cash assets, as part of a bankruptcy court plan, and agreed to act as paying agent for the finance company's 1,100 depositors, said Ken Erickson, vice president and senior loan officer for the bank.

Payments will include $2.9 million in cash and $2.4 million in certificates of deposit. Fireside depositors with less than $5,000 in their accounts will get back their 58 cents on the dollar in two cash payments. Those with deposit accounts holding more than $5,000 will receive a cpmbination of cash and certificates of deposit, Erickson said. The Ds will range in length from 18 months to five years. The cash will be paid in two installments.

An initial payment, representing about 70 percent of the cash total, should be mailed before the end of the month, Erickson said. Certificates of deposit will be distributed at about the same time, he said. Stock Distribution A second cash payment will be made when the bankruptcy case is concluded in three to six months. At that time, a distribution of $67,000 of preferred stock in the holding company that owns Dubuque Bank will also be given to a select class of Fireside depositors who held $115,000 of subordinated debentures, Erickson said. The failed loan company had deposit accounts totaling about $10.9 million and assets with a face value of $6.8 million.

These assets included about $2.9 million in cash and about $3.9 million in loans and other assets purchased by Dubuque Bank. Dubuque Bank has set up a new subsidiary, Tri-State Community Credit to handle the Fireside assets, which consist largely of consumer loans, Erickson said. Once the payouts are completed next year, Fireside Credit will-cease to exist, Erickson said. ByDALEKASLER RMisttr Butlntu Wrtttr North Central Public Service Co. was one of the most expensive natural gas utilities in the nation last winter, while Iowa-Illinois Gas Electric Co.

was one of the least expensive, according to a nationwide survey. North Central's 12,600 Iowa customers paid an average of $207.82 for gas from December 1987 through February 1988, the 13th-highest gas bill in the country, according to the study by the National Association of Regulatory Utility Commissioners. But officials of North Central called the figures misleading. The $207.82 figure probably applies only to customers in the Fort Madison area served by ANR, the most expensive of the three pipelines that supply gas to North Central, said of Honolulu, whose customers were billed an average of $387.20, the survey said. The lowest three-month bill was $89.51, charged by KPL Gas Service of Salinas, Kan.

Iowa-Illinois' customers in Iowa paid an average of $122.03 for gas last winter, ranking No. 189 in a survey of 210 companies. The company's Illinois customers paid $105.74, ranking No. 204. Iowa Southern ranked No.

93, with an average three-month bill of $160.26. Peoples Natural Gas was 107th, with $155.58. Iowa Public Service, a sister company of North Central, was 113th, with $153.53. Midwest Gas was 132nd, at $148.89. Iowa Electric Light and Gas was listed No.

137, with $147.49. Interstate Power ranked 140th, at $146.33. James Howard, manager of utility rates and accounting for parent company Midwest Energy of Sioux City. Even then, the $207.82 amount is about $10 higher than figures calculated by the company, he said. Customers supplied by the other two pipelines, Northern Natural Gas and Natural Gas Pipeline, paid $146 and $123, respectively, during the three months, he said.

The rates vary so much because of differences in cost of gas, he said. He said he didn't know why ANR is so much more expensive than the other two. North Central is now part of Midwest Gas Co. under a reorganization implemented this year by Midwest Energy. The highest U.S.

bill was Gasco Inc. Japan still No. 1 in per capita savings Switzerland was followed by Belgium with $17,987. The report said that savings remained at a "good level due to a generally good control of inflation in several countries, the good economic performance average and a small decrease in unemployment." The countries with the lowest per capita savings according to the study, were Niger with $7, Ethiopia with $18 and Senegal with $69. GENEVA, SWITZERLAND (AP) Japan retained its lead as the world's leader in per capita savings last year, beating out the thrifty Swiss for a second straight year, according to an international survey published Monday.

The study by the International Savings Banks Institute said each Japanese citizen on average saved $38,439 by the end of 1987, an increase of $11,136 over the previous year. Switzerland, formerly the longtime leader, recorded per capita savings of $34,763, an increase of about $9,500. The U.S. savings rate is $9,888, up from $9,529 in 1986. The report cited the strong value of the yen and Swiss franc against the dollar as the main factors contributing to the high figures.

The 35-nation survey counted only bank savings. Sears faces tough challenge in discount retail market By ERIC N. BERG New York Times CHICAGO, ILL. Sears, Roebuck Co. will have to do more than change its price tags and reprogram its cash registers to compete with discounters like mart, Wal-Mart and Target Stores.

The nation's largest retailer will have to transform its entire merchandising business, retailing experts say. It will need to retrain staff, redesign stores, build new systems for distribution and inventory control and negotiate contracts with hundreds of new suppliers. Sears announced its intention to compete as a discounter last week as part of a broad restructuring aimed at improving its performance. Never before has a shift of this magnitude been contemplated, say industry experts, who add that it could take years for Sears to succeed. And since its well-established competitors are likely to fight back cutting their own dent, industry experts say.

One thing is certain: Sears cannot succeed merely by underpricing its competitors. Its relatively high overhead will prevent it in most cases from beating the prices of stores like Toys Us in the children's area or Circuit City Stores in electronics, retailing specialists say. Competitors' Wider Variety And if Sears only matches rivals' prices, customers will still not flock to Sears because the other stores will probably have a wider variety of the merchandise they specialize in. Sears executives say their company's reputation for fair dealing will be its strategic advantage. "People have a positive perception of Sears with respect to value, trust, quality and integ- SEARS Please turn to Page SS No one suggests that Sears's survival hangs in the balance; the company, which had sales of $28 billion last year, remains profitable and generates huge amounts of cash.

Its independence is not so secure, however. In recent months, Sears has often been rumored as a takeover target. Lost Market Share Part of the reason for its vulnerability is its steady loss of market share to discounters, especially in home electronics and small appliances. Just last week, the company's stock price spurted on rumors that a merger bid was imminent. It closed on Friday at $44,625, off $1,375 for the day, and on Monday, it fell another 87.5 cents, closing at $43.75.

Sears's new strategy is aimed at arresting the market-share losses and producing the earnings growth and steady increases in stock price that will enable it to remain indepen low prices further success is anything but certain. Complex Process "It's an enormously complex thing they are talking about," said Louis Stern, a professor of marketing at the J.L. Kellogg Graduate School of Management at Northwestern University. "Unless they are merely paying lip service to this new strategy, putting new clothes on an old body, it will be very difficult to pull off." Sears executives acknowledge the enormity of the job but say they are up to it While he would not be specific, Michael C. Bozic, chairman and chief executive of the Sears Merchandising Group, said the strategy would touch all aspects of the business.

"Everything we do at Sears is big," Bozic said. "We are used to dealing with large numbers of resources, peoplend suppliers. The entire organization will be mobilized.".