Democrat and Chronicle from Rochester, New York on September 12, 1985 · Page 45
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Democrat and Chronicle from Rochester, New York · Page 45

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Rochester, New York
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Thursday, September 12, 1985
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120 DEMOCRAT AND CHRONICLE, ROCHESTER. N.Y., THURSDAY, SEPTEMBER 12, 1985 LAUGHTER SELLS Television advertising is a laughing matter these days as more agencies rely on humor to get their messages across, in tommorrow's Business. . Democrat an& (fbrontrk jo) 1 u IM vi J TODOOI Worried market falls Associated Press Stocks tumbled to their worst loss in five weeks yesterday as Wall Street grew increasingly worried about the economy's strength and corporate earnings. Declining issues overwhelmed advances by 4 to 1 on the New York Stock Exchange, and only two of the Big Board's 15 most-active issues moved ahead. Technology, financial, telephone and aerospace stocks were among those hardest hit. x The Dow Jones average of 30 industrials skidded 14.01 to 1,319.44, with none of the 30 stocks gaining ground. It was the measure's worst decline since dropping 21.73 points Aug. 6. Heavy selling related to stock-index futures, which contributed to Tuesday's broad loss, was again a factor in yesterday's decline. But dealers said their impact was magnified by the existing weakness of the market. Thomas Czech, director of research at Blunt Ellis & Loewi in Milwaukee, said the market also was disappointed by the Commerce Department's report that " American business plans to spend 5.8 percent more on new plant and equipment this year than in 1984. SCM fell 37.5 cents to $72.75 and topped the NYSE's active list. SCM agreed to a $74-a-share leveraged buyout by SCM management and Merrill Lynch, after which rival bidder Hanson Trust PLC of Britain dropped its offer. Merrill Lynch lost 75 cents to $30,125. Sybron asks firm to evaluate buyout The board of directors of Sybron Corp. announced yesterday it has retained Salomon Brothers, a New York investment banking firm, to help it evaluate a leveraged buyout offer. Sullivan & Cromwell will be the board's legal counsel. The offer is being evaluated by the eight outside directors. They expect the evaluation to take at least four weeks. The board also announced it has agreed to pay Shearson Lehman Brothers a topping fee of $3.5 million if it agrees to a different acquisition or merger in which Sybron stockholders get more than $23 a common share. Sybron spokesman B.H. Dumbleton said such agreements are common and would ensure that Shearson Lehman Brothers is compensated for its efforts in researching and setting up the buyout offer. Under the offer, Sybron common share-sholders would receive $20 in cash and cumulative exchangeable preferred stock supposedly worth $3. The leveraged buyout offer, announced Sept. 6, has been made on behalf of a corporation to be formed by Shearson Lehman Brothers, Hillside Capital Inc. and Sybron's five top officers. Record earnings for GCCI Genesee Computer Center Inc., 20 University Ave., reported record profits and a 50 percent increase in sales for the year ended May 31. The company said increased profits were partly due to its new GENII-PC optical design software for IBM personal computers. Previous optical design software packages were made available through time-sharing a hookup by telephone to Genesee Computer's own computers. Although sales to each customer are smaller, profit margins are larger and the number of customers also has increased, the company said. Genesee Computer also reported a big increase in sales in its employee attitude survey processing software. Genesee Computer reported a profit of $101,509, or 16 cents a share, on $1.42 million sales for fiscal 1985, versus a year-before profit of $40,202, or 6 cents a share, on $943,057 sales. Briefly The government accepted a plea-bargain by Eli Lilly & Co. to charges of failing to disclose the harmful effects of Oraflex because of the risk of losing the case in a trial, the Justice Department's No. 2 official says. Telephone companies had an 8 percent gain in operating revenues for the first half of the year. Telephone stock prices averaged growth of 14.7 percent. Norstar Bancorp announced yester-daty it has agreed to acquire Intercounty Mortgage Corp., New York's largest independent mortgage banker, officials said. Intercounty is headquartered in Hempstead and has offices in Woodbridge, N.J. and Danbury, Conn. The state Banking Board has voted to bar state-chartered banking institutions from investing in real estate in South Africa, concluding that such investments "pose an unacceptable economic risk." Xerox Corp. has awarded an equipment grant worth approximately $635,000 to the College of Applied Science and Technology at Rochester Institute of Technology. The equipment includes 15 professional computer work stations for use by students of computer science and computer engineering. Free-Lance Network, Inc., of Pitts-ford, now matches free-lance computer talent with clients in need of consultation or computer work. The company is based in Buffalo. Tele-Connect Systems Inc., 320 South Ave., has agreed to take over ITTBCCTerry Phone Division, formerly on Brooks Avenue. Both companies provide business telephone systems in Monroe County and parts of surrounding counties. Bond prices: dropped. Silver price: Handy & Harman, $6,045 per troy ounce; New York Commodity Exchange, $6,054 per troy ounce. Compiled from reports by Democrat and Chronicle. Associated Press. Wall Street Journal LOCAL STOCKS 1984-85 Sale High Low in 100 High Low Close Chg 60 40 American Can 692 58 57 57 'A - 'A 69 45 AMOC.Dry Good 1238 33 33 33 35 17 BauachftLomb 2061 28 28 28 - V, 66 48 Burrough 3619 65 64 64 -1 35 25 Canandaigua Win 16 34 33 33- 17 12 Champion Prod. 16 13 13 13 51 27 Citicorp 5324' 44 42 42 -1 72 53 Coca-Cola 3288 68 67 68 65 39 Colt 46. 61 61 61- 19 4 Computer Contole 373 8 7 7 - 30 21 Curtice-Burn 1 27 27 27 -- 61 43 DuPont 2768 55 54 55- 52 41 Eastman Kodak 3858 44 43 43- 13 8 Fay' 170 9 8 8 - 66 36 Gannett 575 57 57 57- 85 61 General Motor 4267 68 67 67 -1 53 39 General Signal 382 43 43. 43- 15 11 Gleason 47 12 12 12 - 16 . 8 Graham 10 9 9 9 35 22 Harri 273 25 25 25 38 23 Hartmarx 414 32 31 32 - 86 72 Minn. MiningMlg 2282 76 75 76 - 34 23 Mobil 3659 29 29 29 - 41 31 Pennwalt 42 38 37 38 - 24 13 RG&E 399 22 22 22 - 42 27 RocheiterTel 77 36 36 36- 39 29 Sear 4078 35 34 34 - 22 16 Sybron 784 20 20 20 - 12 8 Voplex , 3 9 9 9 55 33 Xerox 1455 52 51 51- u 52 week high; d 52 week low; x ex-dividend Steam system takeover County must first pass crucial bill allowing it to join steam system By John Campbell Democrat and Chronicle Business The takeover of Rochester Gas and Electric Corp.'s downtown steam system by a cooperative has been delayed until mid-November at the earliest The group of downtown property owners that wants to take over the steam system had hoped the Monroe County Legislature would pass a crucial bill Tuesday. The bill allows the county to participate in the Rochester District Heating Cooperative. Homemade Lines of clothing tags that say "Made in City label factory. The tags have begun since Sept. 1, as required by law. Vif. ' Jfg-- I " " " I'm' " I 44 " - ritf -1- r itgg SCM Corp. agrees to acquisition by investment group Associated Press NEW YORK SCM Corp. announced a new agreement yesterday to be acquired by an investment group that includes SCM's senior managers for about $906.5 million, fending off a hostile bid by Hanson Trust PLC. The offer from a group led by Merrill Lynch & Co. and SCM executives is $74 a share for SCM stock, $2 higher than the most recent offer from Hanson, which said it was dropping out of the bidding. SCM said it granted the Merrill Lynch Magazine survey Once again, your best and cheapest guide to mutual funds is on the newsstands: Forbes magazine's annual Mutual Funds Survey. Even if you're not in the market for a fund investment right now, it's worth getting the magazine (Sept. , 16 issue) and putting it away. You'll be glad to have it for reference, whenever you decide that it's time to buy. Choosing a mutual fund can be extraordinarily difficult. "Read the prospectus," the sages advise, and that's certainly okay. But every single fund has a past-performance chart that makes it look as if all its investors made millions. Obviously they didn't, and you can drive yourself crazy trying to sort them out. You can get advice from stockbrokers or financial planners. But they are apt to sell you a mutual fund with an 8.5 percent sales commission (or an equally hefty hidden charge). The fund might have a perfectly good investment history. But there are equally good, or better, funds that don't cost anything to buy. That's where the Forbes survey comes in. It helps you find good funds that you can buy directly from the fund organization, at no sales charge (no-load). You even get the phone numbers and addresses. Ducking the fee on a $10,000 investment saves you $850. But more than ever today, you have to. watch out for Dow Jones Industrials 1,319.44 14.01 points But the bill was merely referred to two committees, Public Works and Ways and Means. Lillian Silver, project director for RDH, said yesterday she expects the legislature to vote on the bill at its next meeting on Oct. 1. No legislators have publicly voiced opposition to the bill. "We're disappointed it was delayed three more weeks," Silver said, "but we're encouraged that (County Executive Lu-cien) Morin came through." Morin supports the county's joining RDH. Silver has said that without the county's participation, the proposed steam system takeover would not be economically feasible. Two buildings owned by the county, the Civic Center and the County Office Building, use about one-third of the projected steam load the coopera Associated Press the U.S.A." are inspected at a New York to appear in all American-made clothing group what are known as "lock-up op tions" to buy its Durkee foods and spices business for $80 million and its chemical pigments business for $350 million. Such an agreement enables a friendly bidder to acquire essential portions of a business, making the acquisition of the remaining portion of the company less attractive to a hostile suitor. SCM also makes Smith-Corona type-writters and Glidden paints and it has interests in paper products. Previously, Hanson Trust had said its winnows out mutual funds' fees and performance IAHE BRYAHT QU1HH the fake no-loads. As I've warned you before, dozens of funds now have hidden sales commissions. Your financial planner may assure you that you're getting your investment at no charge, but he is simply getting his sales fee (and you're paying it) in a less obvious way. Fake no-loads have something called a "12b-l plan." You'll find them in almost half of the money-market funds, Forbes reports, and in one-quarter of the rest. When you buy such a fund from a planner, he or she gets a sales commission up front. But instead of your covering that cost directly, the money is gradually taken out of the fund's assets. Effectively, then, every investor in the fund is constantly paying, year after year, for the cost of selling the fund to new people. Also watch out for funds that charge fees when you withdraw your money; funds that assess sales charges (typically 7.25 percent) on every dividend you reinvest; ' and funds that have comparatively high expenses. Another thing I like about the Forbes survey is the way it analyzes mutual funds. It goes back over three stock-market cycles and shows you how well each fund does in both up markets and down. Some funds ride the crest of every bull-market rise, then get wiped out on Employment will be static Democrat and Chronicle Business The Rochester-area job market won't change much in the last quarter of the year, a Manpower Inc. survey reports. Of the employers who answered the survey, 20 percent said they planned to hire during the fourth quarter, 17 percent foresaw job cuts and 63 percent said payrolls wouldn't change. s For the third quarter, 17 percent thought they would add more workers and 13 percent planned cuts. In 1984's fourth quarter, additions were expected by 17 percent of the employers and staff reductions at 3 percent Sectors that foresee more jobs in the upcoming quarter are wholesale-retail merchandising, services and construction. Transportation and public utility employers will have fewer jobs. Manpower'snational survey, encompassing more than 12,000 employers, showed 25 percent predict hiring and 10 percent plan reductions. For the Northeast, additions are planned by 25 percent and cuts by 9 percent. Wilshire value of 5,000 stocks $1,913,101 billion w- $20,138 billion Prime interest rate 9.5 percent t unchanged delayed to tive would provide during its first year. RDH was formed in response to RG&E's decision to abandon the 95-year-old steam system on Oct. 1 due to high fuel costs and fewer customers. About 30 corporations, landlords and governmental steam users have made commitments to join the cooperative instead of using their own boilers. Silver said RDH plans to install temporary boilers for the first year's operations next to RG&E's Station 8 on Lawn Street That will take six weeks, she said, so the earliest the boilers would be on line is mid-November. Permanent boilers would be constructed inside Station 8 during that year. RG&E has agreed to serve current steam users for the necessary period after Oct. 1. Capital spending cools in sluggish Businesses to boost expansion at slower rate compared to 1984 Associated Press WASHINGTON American businesses are planning to boost spending on expansion and modernization in 1985 by just about one-third of the increase of 1984, the government said yesterday. The Commerce Department said the gain this year would be 5.8 percent after removing the effects of inflation. That compares to a 15.3 percent increase in 1984, the biggest surge in 20 years. The jump in capital spending last year was a key force powering the economic recovery. Analysts had been expecting capital spending would cool off somewhat this year, but the slowdown has been even sharper than expected as businessmen have scaled back expansion plans in the face of sluggish overall economic growth. The economy, as measured by the gross national product, grew at a slight 1.1 percent annual rate in the first six months of this year as a flood of imports cut into sales by domestic producers. While the Reagan administration is predicting growth will rebound sharply to an annual rate of 5 percent in the second takeover offer was conditioned on SCM not granting any lock-up options to other bidders. On Wednesday, Edward Collins, a spokesman for Hanson Trust, said his company was dropping its offer. When Hanson Trust first launched its bid with a $60-a-share offer on Aug. 21, SCM stock was trading at $55. SCM closed Wednesday at $72.75 a share, down 37 Vi cents, on the New York Stock Exchange. Merrill Lynch had agreed earlier to form a company that would acquire SCM B3CSE3TE3 EMPLOYEES' EISIEG PLA83 . In percent 90 80 70 60 50 40 30 20 10 0 Add m&s&s&& " ' Reduce mimmii No change WBMM I I I" ii w Id m m Iff 1 4 T1 I 2 I 3 14 I '84 Quarters '85 Source of data Rochester office of Manpower (rtc . Democrat and Chronicle Federal funds rate, at close 7.5 percent 0.25 point Gold price, New York $321.00 90 cents November RDH projects it can operate the system for $13.59 per 1,000 pounds of steam, compared with the current average of $20. The county has estimated it would cost $12.56 per 1,000 pounds of steam if it installed its own boiler system for the -Civic Center. But RDH projects it can lower its rate over the next two or three years, Silver said. Interest on a capital reserve fund maintained by the cooperative could be applied to the rates instead of invested in a bank account. The cooperative could hire a separate company to cogenerate electric power to sell back to RG&E. . And as more customers sign up for the cooperative, the rate would further decrease, Silver said. economy half of the year, that is about double what most private economists are estimating. The latest prediction of 5.8 percent growth in 1985 represented a downward revision from a June report that businesses were planning spending increases of 6.2 percent this year. At the beginning of the year, businesses were even more optimistic, forecasting a capital spending increase of 7.3 percent. However, the U.S. manufacturing sector has been particularly hard hit this year by foreign competition. The new report said that spending plans in the manufacturing sector dropped from a 10 percent increase in the previous survey to 7.9 percent in the current survey. Spending plans of nonmanufacturing businesses actually gained strength, rising to 4.4 percent from a 3.8 percent gain reported in the previous survey. The department's information about 1985 plans came from a survey conducted in July and August. The 1984 gain of 15.3 percent, the largest since a 16.2 percent 1964 rise, followed a decline in business spending of 0.8 percent in 1983. Before removing the effects of inflation, capital spending rose 16.3 percent in 1984 and is projected to rise 8.3 percent this year. for $70 a share, but broke off that agreement last week after Hanson Trust increased its offer by $12 a share. Under the latest merger agreement, SCM said a cash offer would begin within five business days for up to 10 million shares, or about 80 percent, of SCM's outstanding shares. If successful, the offer will be followed by a merger in which the remaining snares will be converted into bonds of the new corporation also valued at $74 a share. the downside. Others rise more slowly, but lose less of your money when the market falls and the latter funds are almost always the real winners, long term. The best pickings come from Forbes' annual Honor Roll of mutual funds (23 this year) with good ratings in both up and down markets and long-term average yields of 20 percent or more a year. All are growth-stock funds, and most have had the same investment manager for a long period of time. Of the funds on the list now open to new investors, there are six true no-loads: Acorn, Evergreen, Janus, Nicholas, Scudder Development and Twentieth Century Select. The Tudor Fund charges a redemption fee. Three other Honor Roll no-loads are currently closed to new investors, in part because they can't find enough bargain stocks right now. But at some point in the future these funds will open up again: Explorer, Loomis-Sayles Capital Development and Pennsylvania Mutual. The current fad in mutual funds is to specialize in a single industry. Separate funds for health, leisure, financial and service-industry stocks have led the performance race so far this year. Write to consumer columnist Jane Bryant Quinn care of the Washington Post Writers Group, 1150 15th St. N.W., Washington, DC. 20071.

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