St. Louis Post-Dispatch from St. Louis, Missouri • Page 32

ST. LOUIS POST-DISPATCH 6C TUESDAY, MAY 2, 1989 Polaroid Seeks $4 Billion From Kodak ANDREW LECKEY SUCCESSFUL INVESTING David Mazzone that Polaroid, which pioneered instant photography, lost film and camera sales of $2.4 billion between 1976 and 1985, the period during which a federal court previously ruled that Kodak violated Polaroid's patents. The vast majority of that amount was in film sales, with just $684 million put down to lost camera sales. Because competition from Kodak held down film prices, he contended, Polaroid would lose an additional $1.5 billion in revenue through 1990, the year its patents expire. "Kodak felt It had to get into the business and would lose billions of dollars If it did not," Schwartz told the court.

Kodak, he said, "adopted a coming cheaper, simpler and faster. Carlton also cited Polaroid officials' statements indicating that Polaroid was working at excess capacity and had recurring back orders. "It is not true Polaroid could have manufactured everything it says it could have," Carlton said. "The issue Is not what they could have in theory produced." Judge Mazzone made the unusual request of asking the attorneys to consider presenting their cases in segments, then resting and allowing the other side to call witnesses on the same Issue. Both Schwartz and Carlton indicated that they would consider such a procedure.

"Because of the enormous scope of this case, we have our work cut out for us, don't we?" Mazzone said. In Washington, the U.S. Supreme Court refused a motion by Kodak to have the entire verdict thrown out because a relative of the trial judge owned Kodak stock. Lower courts also had rejected the request, saying that the amount of stock was not substantial and noting that Kodak waited more than 6y2 years before seeking to remove the judge. A federal court forced Kodak out of the instant photography market in 1985 by ruling that Kodak violated Polaroid's patents.

But it left the matter of damages to be decided later. strategy to block any barrier in its way." "These are excessive claims," Kodak attorney Carlton said in his two-hour opening remarks. "It is always easy to look back and theorize how wonderful things would have been." Carlton said Polaroid had painted a far-too rosy picture of Its ability to have matched Kodak's instant photography business for the relevant period. He said Polaroid was in no position to gear up for the manufacturing capacity that would have been required. He said that Kodak's presence in the instant photography market expanded the overall market and that both companies' losses were due to increased competition with conventional photography, which was be- Study Backs Drug Made By Searle 1 989, Reuten News Service BOSTON Polaroid seeking one of the biggest financial judgments ever, told a federal judge Monday it suffered losses of nearly $4 billion when Eastman Kodak Co.

infringed upon its instant photography patents for a decade. But Kodak lawyer Richard Carlton said Kodak had cost Polaroid $343 million at most. Attorney Herbert Schwartz, presenting his opening argument in what is expected to be a months-long trial to determine damages, said Polaroid suffered severely at Kodak's hands through loss of market share and unfair pricing competition. Schwartz told U.S. District Judge Raking Hay By Robert Steyer Of the Post-Dispatch Staff A new drug made by G.D.

Searle Co. has shown an ability to heal as well as prevent ulcers In persons who ingest large amounts of aspirin to treat arthritis pain, according to study published in a leading scientific journal. The study financed by Searle, the drug subsidiary of Monsanto Co. could be the foundation for expanding the use of the drug, Cytotec, which was launched In the United States in February. Cytotec has been approved by the Food and Drug Administration for preventing stomach ulcers caused by aspirin and other pain killers known as nonsteroidal anti-inflammatory drugs (NSAIDs).

Several companies make drugs for treating ulcers, but only Cytotec has FDA approval for preventing NSAID-induced ulcers. Extending Cytotec's use to healing NSAID-caused ulcers In the stomach and the duodenum, the tube connecting the stomach and small intestine, would be a marketing coup for Searle. No drug has FDA approval for healing ulcers caused by pain killers. Researchers said further tests are needed to confirm the findings of the study, which is printed in the April issue of Archives of Internal Medicine, a journal published by the American Medical Association. "This study has important potential Implications for the estimated 13 million persons with arthritis who depend on aspirin and other NSAIDs to relieve debilitating pain and inflammation, said Dr.

Naurang M. Agrawal, professor of medicine at Tulane University in New Orleans. "Cytotec does not interfere with aspirin's effectiveness as an analgesic and anti-inflammatory agent," said Agrawal, one of the study's coordinators, in a prepared statement. "Since the study demonstrated that Doing Good Makes Good Investing SAN FRANCISCO Ethical Invest ing has come uptown. Jerome Dodson, president of the social concern-driven Parnassus Fund, was strolling through his not-yet-completed new office toward a window that overlooks the trolley cars of one of the financial district's classiest streets.

"I guess this new location overlooking California Street is a big deal, even if it's possible only because the glut of office space means good rental deals," Dodson said as he poked at some loose carpet padding on the floor. "It's an even bigger deal when you realize that five years ago I was running this fund out of the basement of my home." The Parnassus Fund, which won't invest in stocks of companies involved in defense, tobacco, alcohol, gambling, nuclear power or South Africa, this year has ballooned in assets to $16 million from $10 million. Performance is the reason. The fund jumped 42 percent in value last year. It was boosted by Best Products (chosen in part because it made quality products and had black former tennis pro Arthur Ashe on its board), Convergent Technologies (good employee relations, sensitivity to its Vietnamese workers) and ASK Computer (started by a woman).

The first two stocks were the subject of buyouts. "We look for positive reasons to invest, such as how companies deal with environmental or minority concerns," said Dodson, a Harvard MBA and former president of San Francisco-based Continental Savings and the socially conscious Working Assets Money Fund. "We also use a contrarian approach, selecting undervalued, out-of-favor growth stocks." Dodson, just back from giving a talk on productivity to businesspeople in Marmaris, Turkey, on behalf of the U.S. Information Agency, was never an activist. While he doesn't drink or smoke, he says he isn't "fanatic about it" Because of heavy emphasis on undervalued technology stocks, the Parnassus Fund thus far in 1989 is up a modest 7.5 percent.

Dodson says he'd be happy with 15 percent for the year. He's still concerned about the nation's budget and trade deficits and believes that, while the market isn't overvalued, it doesn't have a lot of upside. Current favorites include: H.B. Fuller, which makes industrial adhesives. It's careful in auditing firms that dispose of its toxic wastes and its headquarters is located within a game preserve.

Southwest Airlines. Offers regular low-cost fares and receives few passenger complaints. Good employee relations and no fancy management hierarchy. Tandem Computers, which makes fail-safe computers that slow down but don't stop If there's a breakdown. The New York Stock Exchange and automated teller networks are among the customers of this down-to-earth company devoted to quality.

Cummins Engine is dedicated to improvement of the town of Columbus, where it's based. It pays architectural fees in construction of new public buildings, has blacks in management and donates money to charitable causes. "The Investor can search out socially responsible companies, but it takes some time," explained Dodson, a slim, dapper man sporting a mono-grammed shirt and a dark blue tie. Dodson's "worst company" list includes Texas Air (because of treatment of employees and its service); Kerr-McGee (health and safety complaints); Unocal (for its handling of flourocarbons in the San Francisco area); Sundstrand and Lockheed (both because of bribes and overcharging the government); Beverly Enterprises (alleged mistreatment of patients); Monsanto (price-fixing and environmental negligence); and Waste Management (price-fixing, fraud and environmental problems). The Parnassus Fund, 244 California Street, San Francisco, Calif 94 1 1 1 has a 3.5 percent initial "load" (sales commission).

It is sold both directly and through selected brokers. Parnassus, incidentally, is the name of a mountain in Greece well-known in mythology because Delphi, site of the oracle of the god Apollo, is on its southern slope. However, the name was chosen for the fund because Dod-son's home was in the Parnassus Heights neighborhood of San Francis- co, He still lives there with his wife and two children. 1 989 Tribune Media Services Inc. St.

Louis Group Buys The St. Louis-based group that recently bought KDNL-TV, Channel 30, has signed an agreement to buy KABB-TV In San Antonio, Texas, for between $10 million and $15 million. River City Television Partners will buy KABB-TV from Alamo Broadcasting a family-run company that started the independent station 16 months ago. The sale is awaiting approval by the Federal Communica -A -ft 8 To Pay $1.8 Million In Revco Insider Case .,,.1 Cytotec significantly healed injury caused by aspirin in both the stomach and duodenum, it also suggests that It may heal similar ulcers caused by less injurious anti-inflammatory drugs," added Dr. Sanford Roth, chief investigator of the study and director of the Arthritis Center in Phoenix, Ariz.

The study examined 239 patients who had rheumatoid arthritis and had gastrointestinal ailments ranging from inflammation to full-fledged ulcers. About half of the group was given Cytotec; the others were given a placebo, a pill that contains no medicine. Cytotec's healing rate for persons with stomach or duodenal ulcers was 67 percent during eight weeks of treatment, compared with 25 percent for the placebo. Cytotec's healing impact on stomach ulcers was statistically superior to that of the placebo. Cytotec also outperformed the placebo in healing duodenal ulcers, but the number of patients tested was too small to provide a statistically significant result.

Cytotec also scored significant gains over the placebo In healing lesser NSAID-induced injuries to the linings of the stomach and duodenum. The study noted that arthritis, which now affects nearly 40 million U.S. citizens, is expected to strike more people as the population ages. Taking Cytotec "may provide a useful therapeutic option especially for those (arthritis patients) who are at high risk" of developing ulcers and other gastrointestinal ailments caused by NSAIDs. Companies sold about $1.3 billion worth of prescription ulcer drugs in the United States last year, according to Pharmaceutical Data Services, a Scottsdale, medical market research firm.

Searle says that $500 million In ulcer drugs are sold in conjunction with prescriptions for NSAIDs Ray H. Dan Brought franchise here SEC filed the complaint. "It was constantly on my mind, something I lived and breathed. Regrettably, I talked about it with a few people who did not have any right to know what was going on. I now realize the seriousness of that lapse of judgment." The SEC also accused Golenberg of providing information to Steve S.

Saltzman of Cleveland about the proposed merger of two smaller firms, Magnetics International Inc. and H.K. Porter Inc. The commission said Saltzman made $6,850 buying and selling 2,000 shares of Magnetics common stock and made $27,326 purchasing and selling Revco stock. Saltzman agreed to repay the money and an equal fine.

"I should have known better," Golenberg said of the portion of the complaint dealing with Magnetics. The other defendants, accused of profiting from inside information about the Revco buyout, are: Bernard Shavitz of Woodcliff Lake, N.J., a business associate of Go-lenberg's. The SEC said Shavitz made $214,000 buying and selling Revco stock and is asking that Shavitz repay the money along with a fine of $214,000. Van S. Weinberg of Memphis, described as a friend of Golen-berg's and a childhood friend of Lan's.

Weinberg is accused of earning $ee REVCO, Page 8 AP implements, irrigation) show last week in Garden City, Kan. The show drew about 600 exhibitors from 33 states and Canada. Ken Bartley, an employee of Dixon Distributors at Columbia, tightening bolts on a hay rake in advance of the 3-1 (industry, Building Lull In Third Month CLEVELAND (AP) Eight people, including a St. Louis restaurateur, have agreed to surrender profits and pay fines totaling $1.8 million for alleged insider trading in the stock of drugstore giant Revco D.S. the Securities and Exchange Commission said Monday.

In a civil complaint filed in U.S. District Court, the SEC said Glenn Go-lenberg, head of an Investment firm that advised Revco management, told outsiders that management was considering a debt-financed takeover of the company before the public announcement of the proposed deal three years ago. The Information spread, with seven people or their clients eventually earning $735,000 by trading in Revco stock, the SEC said. It Is Illegal under federal securities laws to trade stocks on the basis of non-public information. One of the seven settling with the.

SEC was Ray H. Dan, who last year brought the Rally's Inc. drive-through burger franchise to St. Louis. Dan has since sold the franchise.

Before coming to St. Louis, Dan owned a Wendy's franchise in New Orleans. Dan is accused of making $31,000 trading Revco stock. He has agreed to repay the money and an equal fine, according to the SEC. Dan could not be reached for comment Tuesday afternoon at his home in Creve Coeur.

The SEC said Golenberg and the others accused have agreed to repay the illicit profits and nearly $1 million in fines, without admitting or denying guilt. Revco, based In Twinsburg, Ohio, filed for bankruptcy protection last July because it couldn't pay a $1.5 billion debt stemming from its management-led takeover, a deal known as a leveraged buyout that was financed mostly with borrowed money. Revco became the first big LBO to run into such serious debt trouble. Golenberg is a member of Revco's board of directors because of his stock holdings, amounting to 150,000 Revco shares as of last May 28, said Kathleen Obert, Revco spokeswoman. Golenberg agreed to pay a $470,000 penalty and consented to an SEC order barring him from acting as a broker, dealer or investment adviser for at least four years.

"Revco was the biggest deal of my life," he said in a statement after the rgi'V 'i 'k tivity to high interest rates, has often been one of the sectors leading the country into a downturn. Michael Sumichrast, an economist and publisher of a construction newsletter, said that history could repeat itself unless the Federal Reserve Board soon stops pushing interest rates up in an effort to fight inflation. Economists have been looking for building activity to be weak this year because of higher Interest rates. "There is no strength anywhere in construction," Sumichrast said. "We have problems with high interest rates and a sharp run-up in prices of single-family homes." The weakness In March resulted from a 9.1 percent plunge in public construction, which fell to an annual rate of $74.1 billion.

Much of that decline reflected an 18.8 percent drop in spending for highways and streets. Construction of new housing was down as well, dropping 1.4 percent to an annual rate of $143.3 billion. Spending on single-family homes fell 1.7 percent to an annual rate of $120.1 billion while multi-family construction was up 0.9 percent to a rate of $23.3 billion. Non-residential construction rose 4.1 percent to an annual rate of $101.9 billion. Factory construction surged 12.1 percent and hotel construction was up 7 percent.

But Sumichrast said he believed this was a temporary spurt in activity. For the year as a whole, he predicted that construction in the non-residential category would drop by about 6 percent from the 1988 level, led by continued weakness in office construction. Construction Spending Billions of dollars, seasonally adjusted 430 420 410 AMJJASOND JFM 1988 1989 Mar. '88 Feb. '89 Mar.

'89 413.5 Source: U.S. Dept ot Comrmce AP Westinghouse Picks MCI For Network 1 989, Reuters Newt Service WASHINGTON MCI Communications Corp. said Monday that Westinghouse Electric Corp. has selected it for a five-year contract worth $75 million to $100 million to expand and enhance its voice and digital communications network. MCI officials said the new system will support MCI's SS-7 network technology, reducing telephone connection time, and the coming industry standard Integrated Services Digital Network, designed to improve efficiency.

400 pj I ill WASHINGTON (AP) Construction spending, hit by a sharp drop in the highway category, suffered its third consecutive monthly decline in March, the first time building activity has shown such weakness since just before the last recession, the government said Monday. The Commerce Department said that spending on public and private building projects declined by 0.3 percent in March, following declines of 0.8 percent in February and 0.7 percent in January. The February decline represented a sharp revision from the original report a month ago, when the government had reported that construction spending was unchanged from the January level. The three consecutive declines pushed activity down to a seasonally adjusted annual rate of $413.5 billion. It marked the longest string of setbacks since five months of declines-between February and June of 1981, right before the 1981-82 recession.

Construction, because of its sensi- TV Station In Texas tions Commission. River City Television Partners is a unit of Atlantic Broadcasting. The principals of Atlantic are Barry Baker and Larry Marcus, both former executives of Koplar Communications, which owns and operates KPLR-TV here. They also are the principal owners of Better Communications which recently bought KDNL. ii ilii iJirnrSif-nV -fir- A Vti ftjA itiii nrii.