Democrat and Chronicle from Rochester, New York • Page 40

IQD DEMOCRAT AND CHRONICLE, ROCHESTER. N.Y., WEDNESDAY. FEBRUARY 20. 1985 QJ i a i ft I nnn norjEY r.iinrrE7 ni7ES This weeks money market account interest rates offered at area institutions will be listed tomorrow in Business. Democrat and (Chronicle no v.

T-bill rates fall a) kMSMWWM CHI CS7Z3 Associated Press Yields on short-term Treasury securities dropped in yesterday's auctions to their lowest levels since last month. The Treasury Department sold $7 billion in three-month bills at an average discount rate of 8.15 percent, down from 8.20 percent last week. Another $7 billion was sold in six-month bills at an average rate of 8.25 percent, down from 8.28 percent. The rates were the lowest since Jan. 28, when three- month bills were sold at 7.76 percent and six-month bills averaged 7.97 percent.

Interest rates have generally been dropping since early September, when they reached peaks of 10.63 percent for three-month bills and 10.75 percent for six-month bills. The new discount rates understate the actual return to investors 8.44 percent for three-month bills and 8.73 percent for six-month bills. In the secondary market, yields on three-month Treasury bills fell 1 basis point to 8.18 percent. A basis point is one-hundredth of a percentage point Six-month bills fell 1 basis point to 8.26 percent and onejyear bills were up 2 basis points at 8.45 percent. Market's losses continue Associated Press The stock market posted its third straight loss yesterday with a modest decline in the slowest trading in more than six weeks.

The Dow Jones average of 30 industrials, down 15.90 points Thursday and Friday before the long Washington's Birthday weekend, slipped another 1.43 to 1,280.59. Volume on the New York Stock Exchange came to 90.40 million shares, down from 106.47 million last Friday and the lightest total since an 86.19 million-share day on Jan. 7. That broke a record stretch of 27 consecutive sessions in which at least 100 million shares changed hands on the Big Board. The economic news has been generally upbeat during the market's recent period of retrenchment.

With all the positive statistics, however, Wall Streeters have developed some doubts lately about the chances for further declines in interest rates. Brokers say that question mark has been enough to prompt many traders to cash in their profits from the recent rise in stock prices. Stauffer Chemical led the active list, jumping $5,375 to $27 on turnover of more than 8.2 million shares. Chesebrough-Pond's, also active, tumbled $3,875 to The two companies said they agreed on a $28-a-share takeover of Stauffer by Chesebrough-Pond's. LOCAL STOCKS 1984-85 SalM High Low 100s High Low Clot Chg 65 40 AmtricanCtn 748 534 52 53 'A 1VI 61 Vi 45Vi Auoc.Dry Good 416 57V.

57 57 28'. 17 Vi Biuieh ft Lomb 1284 27 26 27- 65 44 Burroughs 1594 6 59 60 V. 36 25 Cmandaigui Win 17 12 Champion Prod. 48 14 14 14- 47 27 Citicorp 2591 44 44 44- 66 49 Coca-Cola 1188 62 61 62 63 39 Col! 170 61 61 61 19 7 Computer ConsolM 445 10 10 10 28 21 Curtict-Burni 19 25 25 25 54 42 DuPonl 2442 53 53 53- 78 60 Eastman Kodak 3334 69 68 68- 13 8 Fay's 168 11 11 11 56 33 Gannett 769 u67 56 57 65 61 Gansral Motors 5794 78 77 78 53' 39 Ctnaral Signal 364 50 50 50 17 11 Glsaion 62 13 13 13 16 8 Graham 61 15 14 14 36 22 Harris 942 33 32 33- 86 69 Minn. MiningMlg 1613 82 82 62 32 23 Mobil 4516 28 27 27 39 31 Ptnnwalt 318 39 38 39 19 12 RGaE 231 u20 19 20 35 27 Rochester Ttl 115 34 33 33 37 29 Sears 2684 35 34 35 22 16 Sybron 241 20 20 20 12 8 Voplei 21 10 10 10 46 33 Xerox 2162 45 45 45 52 week high; 52 weeK low; ex-dividend Kodak acquisition of NutraSweet business rumored Analyst Says deal makes more sense than it may seem By Phil Ebersole Democrat and Chronicle Business Eastman Kodak Co.

may be trying to acquire the NutraSweet low-calorie sweetener business of G.D. Searle a securities analyst said yesterday. Rumors about negotiations have been circulating for about a month, Richard D. Schwarz, of E.F. Hutton said.

"I really suspect they have looked at it," he said. "I'm not saying it will go through." 3 mo. 6 mo. In percent 11 10.5 This week: 3 month: 8.15 10 6 month; 8.25 7 9.5- 7.5- 0 I I i 1221 122 I 24 1 219 1228 28 114 128 211 Source ortlala S' Treasury Department "TDemocrTanTTrKOnlcfe Federal funds rate, near close 8.5 percent 0.125 point Gold price, New York $303.75 50 cents and produces sweetener in factories in Harbor Beach, University Park, i 111., and Augusta, Ga. Kodak spokesman Henry J.

Kaska and Searle spokeswoman Toly Jones both said their companies have policies of not commenting on acquisition rumors. "If we commented on some and refused to comment oh others, you would have the perfect formula for figuring out what we're doing," Kaska said. He did say that Kodak has discussed acquisitions unrelated to its photographic and imaging businesses. But discussions don't necessarily lead to deals, he noted. Such negotiations "could be worrisome to investors," Schwarz wrote in a report.

"If bulls (optimists) are right and Kodak is A-OK, why is (the) company contemplating an acquisition?" realize that the tax proposal was a long way from being approved by Congress. Other analysts said the surge may have been an effort to get projects started before current benefits are taken away. Most analysts credited a six-month decline in mortgage interest rates with helping to spur the construction boomi Fixed-rate mortgages were down to 13.67 percent in early January, from a peak of 15.23 percent in July. Warren Lasko, executive vice president of the Mortgage Bankers Association, said rates have fallen more in recent weeks with fixed-rate loans of 12 percent or less becoming more common. The decline in rates is likely to spur further home sales and thus more production in coming months, analysts said.

i Associated Press B-I II 1 0 1 UasMiSHMBMHeBBMHMl Housing construction posts 20-month high Wilshire value of 5,000 stocks $1,873,729 billion $4,095 billion Prime interest rate 10.5 percent unchanged Meanwhile, he said, Kodak's basic business, photographic film and paper, is under pressure, and its new electronics imaging venture is riskier and less profitable than its older business. So it's logical for Kodak to acquire safer growth businesses, he said. G.D. Searle with headquarters in Skokie, 111., reported a 1984 profit of $161.6 million, up 7 percent from 1983, on sales of $1.25 billion, up 32 percent. Its NutraSweet information center said sweetener sales were $585 "million in 1984, up 74 percent from 1983.

For comparison, Kodak's Eastman Chemicals Division sales were $2.46 billion in 1984, up 8 percent, and its overall sales were $10.6 billion, up 4 percent. The NutraSweet division employs 750, Builders, said even with the decline, the single-family rate was still an "excellent number" which would support strong construction activity through the spring. He said a survey of builder sentiment showed expectations for sales in the next six months are at the highest level in eight years. Jack Carlson, chief economist of the National Association of Realtors, said the big surge in apartment construction may have reflected efforts by builders to catch up with plans delayed in December because of concern about the Treasury Department's proposed overhaul of the tax code. The changes would take away some real estate tax benefits.

Carlson said those fears could have subsided in January as builders began to I tit" Valve job Dow Jones Industrials 1.280.59 1.43 Spokesmen for both Kodak and Searle refused to comment. Last September the Searle company announced that members of the Searle family, who own 34 percent of the drug and chemical company's stock, had asked management to "explore in a deliberate manner" ways in which the family holdings could be "diversified." The Chicago Tribune reported several weeks ago that Monsanto Co. planned to acquire Searle's drug business and Pfizer Inc. its NutraSweet business. But Garo H.

Armen, a Hutton analyst who follows Monsanto, said he doesn't believe that deal has been struck. Schwarz said a Kodak entry into the artificial sweetener business makes more sense than it may seem at first glance. Kodak has always regarded high quali-I ty chemicals as a good business, he said. Presidential spokesman Larry Speakes called the figures a "remarkable January surge" which showed that "housing and the economy are off to good starts" in 1985. The housing increase was due to a giant surge in construction of apartments with five or more units, which shot up 76.1 percent in January to an annual rate of 692,000 units.

It was the highest annual figure since a rate of 750,000 units in September 1973. Construction of single-family homes declined 4 percent last month to an annual rate of 1.04 million units. Construction of apartments with two to four units was also down, dropping 15.3 percent Michael Sumichrast, chief economist for the National Association of Home erage of $20, said Jean G. Boles, treasurer of the cooperative and regional manager of the real estate division of Xerox Corp. Xerox is a member of the cooperative, as is Chase Lincoln First Bank, the city, Monroe County and about 55 other customers.

Boles said the cooperative estimates it would invest $8 million (possibly using tax-exempt industrial development bonds) to buy the steam system from and also build a new boiler plant The reconfigured steam system, if proved by the state Public Service Com- mission, would encompass most customers within the Inner Loop, although Kodak Park and Genesee Hospital would also be included. Some 40 other customers, mostly small businesses and property owners, would be excluded, and must install their own heating systems. Apartment starts up, houses down Associated Press WASHINGTON Housing construe- tion in January posted its biggest increase in 20 months, a 14.9 percent jump seen by the Reagan administration and private economists as a signal of future economic growth. The Commerce Department said in yesterday's report that housing was started at a seasonally adjusted annual rate of 1.83 million units in January, up from the December rate of 1.60 million units. It was the biggest monthly increase since a 17.7 percent advance in May 1983.

Steam system study says cooperative of local firms could charge lower rates Plan to kill SBA gets first support The Reagan administration's plan to eliminate the Small Business Administration received its first support from a member of a congressional panel that oversees the targeted agency. "The best thing we can do for American small business is to take a good hard look at the small business programs administered by the SBA," Rep. David Dreier, a member of the House Small Business Committee, said yesterday. Dreier said he supported eliminating the $9 billion-a-year agency by moving some programs into the Commerce Department and eliminating others, as proposed in President Reagan's fiscal 1986 budget Giles named adviser Robert H. Giles, editor of the Democrat and Chronicle and the Times-Union, has been named an adviser to the new Center for Contemporary Media at De-Pauw University in Greencastle, Ind.

Multimillion-dollar gifts have been made to establish the center and a companion scholarship program, the university said. The donors were not named. The center, which will be designed to benefit all of DePauw's 2,300 liberal arts undergraduates regardless of academic interest, will offer more intensive experience for those planning media careers. Giles, recently named a uror for this year's Pulitzer prizes, and three other professional journalists will work with the center's yet-to-be-named director to establish the program. DePauw does not have a journalism major or department.

It does offer limited work in print journalism and a major in writing in its English department. The new center will be housed in a sep arate building. Une will be built or an existing structure will be renovated. Briefly Chesebrough-Pond's maker of Vaseline, Q-tips, Ragu spaghetti sauce and other consumer products, announced yesterday that it would buy the Stauffer Chemical Co. for $1.25 billion in cash.

The deal got unanimous approval of both corporate boards and calls for Chese-brough to pay $28 a share in a public tender offer to begin today. The operating rate at the nation's factories, mines and utilities rose mo-derately in January, the third consecutive increase following last summer's slow down, the government reported yesterday. I he ederal Keserve Board said industries operated at 81.9 percent of capacity in January, a gain of 0.2 percentage points from the December level of 81.7 percent. Coca-Cola Co. introduced yesterday a canned and bottled version of a longtime soda fountain favorite, cherry-flavored Coke.

The Atlanta-based company's domestic unit, Coca-Cola USA, said it plans to begin test marketing cherry Coke next month. The Buffalo News will raise the cost of its Sunday newspaper by 20 cents for home-delivery customers and 25 cents for newsstand copies March 3. The price will jump from 75 cents to 95 cent for home-delivered copies, while newsstand prices will rise from 75 cents to $1 a copy. i General Signal Corp. will hold its annual shareholders meeting in Rochester April 18, the first time the company based in Stamford, has held an annual meeting outside New York City.

The meeting will start in the Chase Lincoln First Bank auditorium at 1 1 a.m. General Signal has three operations in the Rochester area General Railway Signal Mixing Equipment Co. and Kayex Corp. Together the three businesses employ about 2,000 people. Maaco Auto Painting and Bodyworks has closed its estimating center at 749 Panorama Trail, Penfield.

Estimates made there will be honored at 40 Mushroom Henrietta. Bonds fell in light trading. Silver price: Handy Harman, $6,190 per troy ounce; New York Commodity Exchange, $6,282 per troy ounce. Complied from reports by the Democrat and Chronicle. ssociated Press.

United Press International and New York Times Democrat and Chronicle Business A group of major companies and landlords in downtown Rochester that now buy steam from Rochester Gas and Electric Corp. could operate the system as, a cooperative and charge lower rates, an engineering study has concluded. The $82,500 study, released yesterday, was done by Resource Development Associates of Dayton, Ohio, and funded primarily by the New York State Energy Research and Development Authority and plans to abandon the system by October, saying a spiral of problems higher oil and natural gas costs spread over fewer customers has made it uneconomical to continue. The non-profit Rochester District Heating Cooperative could operate the system by charging $14 per 1,000 pounds of steam, compared with the current av- Municipal bonds' Some old municipal bonds have become or Worker examines test valves on an assembly rack. The valves are to be installed in diesel locomotives for the Norfolk Southern Railroad.

value can rise with backing from federal securities are about nODECT r.IETZ to become pure gold by in effect being backed by U.S. government securities. In this period of falling interest rates, municipal issuers offer new bqnd issues and use the proceeds to service existing bonds until those high-cost older bonds can be retired in seven to 10 years. Municipal Issuers use proceeds from the new issues to purchase U.S. securities directly from the Treasury in "slugs." Typically, the municipal issuer will buy enough federal government bonds to obtain the necessary income stream to pay the interest on the old mu- nicipals until they can be retired.

Then, the federal government bonds mature in an amount precisely equal to face value and any premium on the municipals. The old municipal bonds are suddenly worth a great deal more than before because they are now backed by direct obligations of the U.S. government Federal backing gives the old bonds Triple-A status, regardless of prior rating. Market value usually rises hv 10 tn 15 nnints tn reflwt Maturities are important in the refunding issues. The long-term bonds with good call protection have greater potential for price gains than intermediate-term bonds.

But Bernstein of Merrill Lynch notes that this is true only in times of falling interest rates. In periods of rising interest, investors prefer shorter maturities and they lose less ground. Remember: In no case will pre-refunded bonds be worth more than their call price (101 to 103) when they are called. Feldstein and Bernstein say the refundings usually help investors. The new bond brings maximum yield on an A-rated security and.

offers long maturity and good protection against a call. By buying the old bonds, conservative investors get Triple-A quality but lower net yield on an intermediate-term maturity seven to 10 years as most of these high-yield bonds were issued in 1981 and have 10-year call provisions. Before you consider a swap, remember that it usually results in a taxable capital gain. Consult a tax adviser. The investor will probably want new bonds of the same credit quality as the original bonds the issuer is-refunding.

One added safeguard is available to investors whose brokers do their own municipal-bond research. The investor can use this service as a supplement to the research done by the standard rating services. Robert Metz is New York bureau chief of Financial News Network. Write to him care of United Feature Syndicate, 200 Park New York, N.Y. 10017.

issuer and own more of them with no added cost Remember, though, that the new bpnds will not carry the Triple-A rating the old bonds suddenly have. Merrill Lynch vice presidents Debbie Bernstein', municipal bond sales manager, and Sylvan Feldstein, Merrill's head of --municipal-bond research, warn that investors should make sure that the characteristics on the new bonds are still suitable to their investment needs and risk profiles. Speculators can go further by picking out issues that seem ripe for refunding. Refundings totaled $24 billion in 1983 and 1984 or 14 percent of the issues sold in those years. In 1985 the municipal market has reached a two-year high so that yields are down enough to trigger advance refunding by municipal issuers to save the high interest costs.

This is not so much a game for professionals as for individuals. In 1984, between individual issues and the bond funds, individuals purchased 90 percent of the new' issues brought to market Assuming interest rates keep going down, the new bonds will offer greater potential for price gains. On the other hand, if interest rates go up, as Henry Kaufman of Salomon Brothers forecasts, the price of the bonds will retreat to reflect the yields offered by new municipal bonds of similar quality and maturity. higher credit quality and shorter maturity. (The 20- to 30-year maturities are irrelevant because the bond will be retired in seven to 10 years.) The owners of these "refunded" munirinals can hold them or sell them and use the cash for other investments.

Merrill Lynch savs some clients mav want tn swap the old bonds for the new bonds of the municipal.