The Palm Beach Post from West Palm Beach, Florida on March 26, 1998 · Page 49
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March 26, 1998

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The Palm Beach Post from West Palm Beach, Florida · Page 49

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West Palm Beach, Florida
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Thursday, March 26, 1998
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Page 49
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THE PALM BEACH POST THURSDAY, MARCH 26, 1998 7D Homes appreciating again, but no guarantee THUR8DA Y ers sell sooner than that, according to data developed by the National Rpaltnna in Wash in ff- l V w - ton. probably lose money, whether they realize it or not Over short pen- . oris, it's almost alwavs better to - In greater Detroit, prices for mid-market homes jumped 7.2 percent last year. In the Hartford, Conn., area, they gained just 2.3 percent. Any single sale is just as much a lottery as is trading stocks. Jane Bryant Quinn Staying Ahead rent than buy. TVq rro linmo that miorht nnt be worth your money is a condo- . minium. Young people often buy one as a cheap way of building . . 1 ! . - Ul 4. 1 n( nnAnc . Short Course Auditor's report Financial statements and annual reports sent to investors contain a brief report from the accounting .firm that audited the company's books. Here's what those reports mean: A clean or unqualified opinion noine equity, uui a im ui wjiuw get even cheaper," says economist . Jack Harris of the Real Estate Center at Texas A&M University in . College Station, Texas. :; When you're ready to trade up, you may not be able to sell the con- An frt- t h t t-vfW-O xrnil npin It Q OPTl- means auauors Deneve ,,s NEW YORK Home values are definitely looking up. Rising prices are the rule almost everywhere. Home sales jumped a big 10.3 percent in January. Owners are daring to dream that homes might be a good investment again. Standard & Poor's DRI, an economic forecasting firm in Lexington, Mass., expects an average increase of 5.8 percent this year on existing homes. That doesn't match the profits you've captured in mutual funds, but mutual funds don't give you a place to sleep. The booming demand for homes is no inflationary blip. It's grounded in job growth, income growth and a forgiving credit market. At 7.5 percent interest, mortgages look incredibly cheap. Thanks to low down payments (under 10 percent), buyers don't need a lot of cash. A raft of special programs is putting people with lower incomes in homes of their own. Young people, too, are rediscovering the joys of mortgage payments. Of the households headed by people under 25, 18 percent owned homes last year. That's the highest rate since 1983, according to Harvard's Joint Center for Housing Studies. Nationally, homeownership stands at a record 66 percent, up from a low of 63.7 percent in 1988. Minority buyers account for a huge 42 percent of the growth. Home buying also jumped among the never-married, widowed and divorced. In a random group of cities I eraiiy oetter to rem unui you can , afford a private house. Condos have two natural mar- ments are proper- SjJ s y presented, in "V j? accordance with generally checked, the fastest-rising prices were for smaller homes, as measured by the Case-Shiller Home Price Index. On the high end, prices jumped the most in places that have seen housing booms before, says economist Karl Case of Wellesley, Mass. Owners in Boston, Los Angeles and San Francisco are sitting on piles of home equity, which they're using to trade up. But will your house be a good investment? Despite the positive national trend, you can't predict. In greater Detroit, prices for mid-market homes jumped 7.2 percent last year, on Case-Shiller's index. In the Hartford, Conn., area, they gained just 2.3 percent. Any single sale is just as much a lottery as is trading stocks. It's true that even small gains look good compared with the amount of money you invest Take a $200,000 house with a 10 percent down payment ($20,000) rising in value by 2.3 percent ($4,600). The gain on your original equity comes to a fat 23 percent But the cost of buying and selling could easily exceed $20,000, af- No. 1: Residents of cities where " land is so expensive that private houses aren't an option. There, the ; price appreciation could be pretty . good. '. No. 2: Older people who no accepted accounting principles. This is a ' statement on the 'company's book- keeping, not its financial strength, ter closing costs and sales commissions. You'll need super-gains, or many years of smaller gains, to climb out of that hole. Meanwhile, your down payment might have been racking up profits in stocks or bonds. Homeowners also have to pony up money for maintenance and repairs. You probably never measure this, but it cuts into your net return. Tax deductions for property taxes and mortgage interest help a bit that is, if you can use them. On modest homes, they might not exceed the standard deduction that you'd get in any case. In short, this "investment" is not a slam-dunk. For decent returns on any home, you need either stupendous luck or a holding period long enough to amortize your many costs. In average markets, it takes at least four years just to break even. Yet more than a third of home buy longer want the bother oi Keeping . up a house, but prefer to own where they live. They're not planning to trade up, so appreciation isn't an issue. Their heirs will sell. ; the condo, and then it's found mon- pv at anv nrire. ' Auditors issue a qualified opinion if they believe the company has deviated from standard accounting procedures. An adverse opinion is issued if the company is not ; accurately presenting its results or financial position. A firm is subject to opinion when there is some major unresolved event like a pending lawsuit that could .have a material impact on the financials. The Boston Globe Jane Bryant Quinn welcomes let-.-, ters on money issues and problems but cannot offer individual financial FPL nuclear plant fined $88,000 Big Sugar says it can compete In brief and has an annual economic impact of $8 billion,' said growers wouldn't welcome the volume of a il 4 -..I 1J A tUa TT C ciirus uiai vuua tuuiu seuu iu uic kj.j. Tom Kirby, government affairs director for the Miami-Dade County Farm Bureau in Home- i r . 1 1 1 . f U Sieau, SOUUl Ol IVliami, Suu lie onaico manj ui u". same concerns. He added, however, that lifting the trade embargo, in place for nearly 40 years, could provide some opportunities for Florida farmers. "If there are guarantees by this government CUBA From ID ed States Sugar Corp., disputed that assumption. The outcome would depend on whether Cuba continued to produce sugar through a government-owned system and whether the United States would lift its restrictions on imported sugar, a company executive said. If Cuban farmers were required to produce sugar without government intervention, "We would win, because we are far more efficient," said Bob Buker, a senior vice president with U.S. Sugar. "But if we are foolish enough to force Florida farmers to compete with the Cuban government, then, yes, they could put us all out of business." State officials who promote Florida's huge citrus industry, which employs 100,000 residents see people willing to go offshore, and in joint ventures in Cuba," Kirby said. "South Florida farmers have the technology,' UWUltUlUl glUilV MIMfc ifc ' ' - " - Staff writer Michael Utley and The Associated r . i .'1 i.Ji. il.' t. tress coninouiea w mis repvn. Center at Boca Raton, the Boyn-ton Beach Mall, the Palm Beach Mall and the Treasure Coast Square Mall in Jensen Beach. Sunbeam sells $2 billion in convertible bonds DELRAY BEACH Sunbeam Corp. (NYSE: SOC, $45.44) said Wednesday that it sold more than $2 billion in zero-coupon convertible bonds bonds that carry no periodic interest payments and instead are sold at a deep discount from their face value. Proceeds to the company will be $727 million, and Sunbeam said part of it will be used to pay for its $2.5 billion deal to buy Coleman Co. Inc., First Alert Inc. and Signature Brands USA Inc. Money from the bond sale, made to institutional investors only, also will be used for other purposes, including the repayment of debt. Motorola begins purchase of NetSpeak stock BOCA RATON Motorola Inc. (NYSE: MOT, $56.50) announced Wednesday that it has begun a cash tender offer for 3 million shares of NetSpeak Corp. (Nasdaq: NSPK, $31) stock at $30 a share. The offer is part of a recently expanded relationship between the companies that will combine NetSpeak's Internet telephone technology with Motorola's wireless and wire communications technology. NetSpeak is based in Boca Raton. Motorola's pager operation is based in Boynton Beach. Palm Beach Post Staff and Wire Reports . ATLANTA The Nuclear Regulatory Commission fined the St Lucie Nuclear Power Plant $88,000 Wednesday, citing a calibration error in a backup cooling system. The error could have damaged a pumping system needed to cool the reactor in an emergency, said Roger Hannah, a spokesman in the NRC's Region II office in Atlanta. The error would have created a problem only if the plant lost core coolant and needed to rely on a backup water tank to cool the reactor, Hannah said. If there had been an emergency, there could have been a delay in activating the backup system. Also, air could have been pumped into the system and damaged pumps, Hannah said. "This actually was a fairly significant increase in risk had there been an accident." The error went unnoticed for four years before Florida Power & Light Co. discovered it last fall, Hannah said. The problem has since been corrected, he said. The fine would have been much higher if FPUs employees had not caught the error and if FPL had not acted quickly to fix it, the NRC said. - "The violations resulted in a significant increase in risk over the more than four-year period in which the conditions existed," NRC's Region II Administrator Lois Reyes wrote to FPL "If not for the questioning attitudes displayed by your staff ... a more substantial civil penalty would have been imposed." Wednesday to close at $105.50 in consolidated New York Stock Exchange trading. Lockheed Martin shares rose 6 cents to $115.31. Northrop Grumman builds control mechanisms for business and commercial jets in Stuart, where it employs about 400 people. Lockheed Martin makes underwater robots in Riviera Beach, where it employs 75 people. Another arm of the company recently was chosen to run Palm Beach County's welfare system. Edward J. DeBartolo Jr. resigns from firm's board INDIANAPOLIS Simon DeBartolo Group said Wednesday that Edward J. DeBartolo Jr. resigned from the company's board to pursue other interests. DeBartolo, who formerly ran the NFL's San Francisco 49ers, is the target of a federal grand jury investigation into his casino interests, although he hasn't been indicted. Simon DeBartolo, based in Indianapolis, is a real estate investment trust. The company, controlled by part-time Manala-pan resident Mel Simon, had 1997 revenues of $1.05 billion. Simon DeBartolo was formed in 1996 when Simon Property Group Inc. bought the bulk of the late Edward DeBartolo Sr.'s huge mall empire for $3 billion. Members of the DeBartolo family sit on Simon DeBartolo's board. The company owns the Town SEC: Scheme involved many workers and Thomas Pike, former director of management information systems. Schneider knew the company misstated earnings and recognized revenue prematurely, the SEC said. But she withheld the information from independent auditors. Pike supervised employees who reset computer clocks to falsify dates on shipping records, the SEC said. Company spokeswoman Debbie Coller said Wednesday that Sensormatic has changed many of its accounting practices. " ; The market reacted favorably to the settlement of the SEC complaints. Sensormatic (NYSE: SRM) closed at $17.06 Wednesday, up 69 cents a share. "It puts the final wrap on an ugly event" said analyst Paul Mathans of Robinson-Humphrey in Atlanta. SENS0RMATIC From ID systems. According to SEC documents, Assaf signed off on quarterly and annual reports while being "generally aware that these reports were false and misleading." Pardue and Simmons engineered the falsifying of financial records, made false statements to independent auditors and circumvented the company's own internal controls to inflate earnings and revenue, the documents said. The scheme involved employees throughout the company, the SEC said. But the agency singled out two other ex-managers: Joy Lynn Schneider, former controller of U.S. operations, . The company has 30 days to either pay the fine, its first of the year, or protest it. ' "We just got the notice frMninnilNMn-rl aBODaiffiRHBar Wow. Vbu're seeing A4s everywhere these days. vIPst Three years ago, we introduced the blast to drive Audi A4 2.8. And it made Car and Driver's list. Last year it appeared on the list again. Along with the new turbo-charged Audi A4 1.8T. This year the award also includes the new A4 Avant. (A serious sports sedan with a fanny pack.) Wow. Explains 3 why Car and Driver says they're "smitten." Along with all the A4 drivers you're seeing these days. Get ready for the ride of your life! Audi i (Wednesday) and it's several I pages long, so I'm sure it will be a ; little while before we decide," ; said Dale Thomas, an FPL spokesman. Next week, FPL representatives travel to Atlanta to discuss other possible violations at the twin reactor plant on Hutchinson fsland. That NRC investigation could trigger more fines. FPL, a subsidiary of Juno Beach-based FPL Group, paid $100,000 in NRC fines last year. Northrop Grumman to take $180 million charge LOS ANGELES Northrop Grumman Corp. said Wednesday it will take a $180 million pretax charge to help pay for its proposed merger with rival Lockheed Martin Corp., a move that iodustry analysts said likely fould result in a loss as the companies face continued government opposition to their $8.3 billion merger. ' In the meantime, a federal court scheduled the first hearing for this morning to consider the government's case against the defense contractors. ; The aerospace companies said they will fight the government's effort to block their merger. 1 . Analysts said the charge, equal to' $1.70 a share after tax. Would likely lead to a first-quarter kss of about 25 cents a share for the maker of the IV2 stealth bomber. Northrop shares ft 11 $144 p -rvsss zz v-i3 The Audi A4. From $24,290 BRAMAN MOTORCARS 2901 Okeechobee Blvd. West Palm Beach, FL 561-684-6666 Wanutscturer i Suaowted Retail PfK of 1996 Audi A 1 8 T Sedan of $?3 790. including 5 speed manual transmisson. plu $500 destmat.on charpe limited avaysfr. '-tv A"f'J Pf8 Dv a" Z. Tae. license, title, documentation fees, dealer prep . finance cnarpes and options additional "Audi" "A4" & the four rinos emblem are rei stered tradema'ts of ALUI At. C .58 Audi ot Amenca. ir Inc To find otrt more ahoirt Audi call V BOO FOH Al IDI or virr our wrxife m www oikIii ' mm

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