St. Louis Post-Dispatch from St. Louis, Missouri on February 18, 1987 · Page 13
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St. Louis Post-Dispatch from St. Louis, Missouri · Page 13

St. Louis, Missouri
Issue Date:
Wednesday, February 18, 1987
Page 13
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SECTION CLASSIFIEDPages 8-13 GENERAL NEWSPage 14 B Wed., Feb. 18, 1987 ST. LOUIS POST-DISPATCH VfBill Kester - LI Prnnnmix Comment Economy Shoivs Signs Of Stability The nation's expanding economy .seems to be on a more solid base these days. Inflation is low. Industrial production, employment and income are increasing. And the unemployment rate last month held at the low-' est level in years. Of course, January's 6.7 percent '.unemployment is above the rate generally considered compatible with "full employment. But nobody seems ; to get excited about it, probably because it's much lower than it was during the last recession. One of the bases for a sounder 'economy is the expected reduction in the huge federal budget deficit and the prospect of lowering it further, i Interest rates will be lower as a ; result of the government's reduced 'demand for funds, improving the ability of corporations to finance capital projects and individuals to buy .homes. .. Another basis for a sounder economy will be the decrease in the trade deficit, resulting from expanding exports and reducing imports. That will help U.S. firms expand output and employment, especially in the hard-hit manufacturing sector. Federal Reserve Chairman Paul Volcker recently told Congress that closing the $150 billion trade deficit would result in the coming years in a 15 to 20 percent increase in industrial output over that required to meet domestic growth. A quick increase of that magnitude in output would result in a refueling of inflationary pressures along with the increase in employment. So, a gradual reduction in the trade deficit providing more jobs without increasing inflation seems to be the best solution. But Volcker says that will require continuing restraint on costs, more modernization and, in time, more capacity. Happily, labor unions have got the message that U.S. manufacturers must be competitive in world markets to provide secure jobs. Employment costs in private industry rose 3.2 percent in 1986, down from 3.9 percent in 1985. And further moderation may be ahead. Major collective bargaining settlements in private industry last year provided wage increases averaging 1.8 percent a year over the life of the contracts, down from 3.2 percent a year in the previous settlements of the same parties. Productivity improvements would reduce unit costs even more. Unfortunately, they amounted to only 0.7 percent last year for the non-farm sector. Productivity usually rises when output is being expanded and declines when it contracts. So last year's productivity gains were disappointing; they were no more than the average since 1973. Greater investment in new plant and equipment would be one way of increasing productivity. But corporations seem more intent on spending funds to buy back stock and invest in purchasing existing businesses than on increasing capital outlays. Corporate officials are under pressure to keep stock prices high to prevent a takeover of their companies. Volcker said that, "unhappily there is no solid evidence" that productivity gains will increase dramatically. The two-year decline of the dollar should make U.S. firms more competitive in world markets. The cheaper dollar has lowered the price of U.S. exports and raised the price of imports. As a result, there was in December some decrease In the trade deficit and economists expect the declines to continue, especially if the dollar weakens further. But signs that the corner has been turned are not decisive, Volcker said. Moreover, he warned that "a declining dollar at some point has high costs and risks as well." Inflationary pressures are generated by the rise in the price of imports and by the ability of domestic producers to raise their prices as import prices rise. In addition, the uncertainty about future currency values could dampen the willingness of foreigners to place or maintain funds in the United States, Volcker said. Foreign funds have provided the means for paying the federal deficit and the net trade deficit. Volcker warned that currency depreciation alone can not be a sub- stitute for restoring balance and competitiveness to our economy. Volcker called for countries with large trade surpluses with the United States to reduce trade barriers and to step up their economic growth, thereby improving the prospects for U.S. exports. Another basis for a sound economy is a very low rate of inflation. Monetary policy, which the Fed sets, must "avoid any sense of cumulating inflationary pressures," Volcker said. The Fed is apparently resigned to accepting some increase in inflation this year as a result of higher oil and import prices. But he didn't say how much more inflation the Fed will ac cept before tightening monetary policy. Achieving a firmer foundation for the U.S. economy will take more than a year. But moving toward it will lay the base for sustained non-inflationary growth for years ahead, Volcker said. r Lawyer Accused In $1.5 Million Insider Case NEW YORK (AP) A lawyer accused of passing confidential corporate information to friends and relatives who allegedly made $1.5 million in illegal profits was arrested Tuesday on insider trading charges. In a three-count criminal complaint, federal prosecutors accused Israel G. Grossman of securities fraud and mail fraud for allegedly passing confidential information about the recapitalization of Colt Industries Inc. to his uncle, cousins, brother-in-law and friends. At a news conference, U.S. Attorney Rudolph Giuliani said the case was not connected to the more widely publicized insider trading investigation involving such Wall Street leaders as Dennis Levine, Ivan F. Boesky and Martin A. Siegel. "This is a problem that is very extensive and that we're going to have to deal with in a fundamental way," said Giuliani. "Our investigations have revealed a substantial number of attorneys who have been involved in insider trading. It's not limited to investment bankers." The complaint charged that Grossman, then a pension specialist at the Manhattan law firm of Kramer, Levin, Nessen, Kamin & Frankel, surreptitiously obtained information last July about the Colt recapitalization plan, which was expected to increase the value of Colt common stock once it was announced. Grossman then allegedly called his relatives who purchased $38,273 worth of options in Colt stock between July 11 and 18. On July 18, Colt common stock closed at $66.75 a share. It jumped to $93.62 after the recapitalization was announced July 20, allowing Gross American Dropping 1987, Reuters News Service NEW YORK American Airlines said Tuesday that it would end the recently introduced deep discount fares, which offered tickets anywhere in the domestic 48 states at prices of $19 to $99. The move chips away at the industry's newest deep-discount fares, introduced last month to rid it of one of its biggest problems, the empty airplane seat. Analysts said it was too early to tell if the concept of Max-Saver fares would collapse. 17. i & , . P : . ! Interstate Merger Dan Dawson and Cliff Honaker of Maguire Signs Inc. install a "Mercantile Bank" sign outside First National Bank's branch at Mather and State streets in Alton on Tuesday, the day that Mercantile Bancorporation Railroad Bids WINSTON-SALEM, N.C. (AP) -Railroad giant Norfolk Southern Corp. has proposed a $1.49 billion takeover offer for Piedmont Aviation Inc., parent of fast-growing and profitable Piedmont Airlines, the companies said Tuesday. Piedmont also disclosed it had received two alternate takeover proposals from rival USAir Group Inc. but was leaning toward Norfolk Southern's offer, which would pay $65 a share cash. Norfolk Southern, which has owned a stake of Piedmont for more than five years, said last month that it had about 19.4 percent of Piedmont's 23 million shares outstanding and was considering a bi'd for the airline. Kay Seeks Dismissal Of Involuntary Bankruptcy By Barbara B. Buchholz Of the Post-Dispatch Staff David C. Kay sought Tuesday to dismiss a petition to throw his liquor chain into an involuntary bankruptcy. The petition had been filed against David Kay's Wine and Spirits Co. in the U.S. Bankruptcy Court here last month by three savings and loan associations. Each holds partial interest in a $2.7 million loan made to the Kay company in 1985. No date has been set by Judge David McDonald to hear Kay's motion. Kay's motion asks for dismissal on several grounds. It says that the mon- man's friends and relatives to realize nearly $1.5 million in profits, prosecutors claimed. At the news conference, Giuliani said the unusual trading activity was spotted by the market surveillance committee of the Philadelphia Stock Exchange, which referred the matter to the Securities and Exchange Commission. Giuliani also said Grossman's former employers at Kramer, Levin had cooperated with investigators. A Kramer, Levin spokesman said Grossman had been asked to leave the firm at least three months before the alleged illegal activity took place. "Our firm adheres to a number of (confidentiality) policies which we followed in the Colt matter," said the spokesman, Jeffrey Kalmus. He added, "We're continuing our efforts to ensure the confidentiality of our clients." Grossman, 34, was arrested Tuesday at the law firm of Carter, Ledyard & Milburn, where he now works. U.S. Magistrate Nina Gershon released Grossman on $1 million bond secured by his homes in Brooklyn and New Jersey. Neither he nor his attorney, Irving P. Seidman, would comment to reporters after the proceeding. If convicted, Grossman faces a maximum penalty of five years in prison and a $250,000 fine on each of the three counts. In a related matter, the SEC filed a civil action against Grossman and six other people, seeking surrender of the $1.5 million in alleged illegal profits and as much as three times that amount in fines. MaxSaver Fares American said it would end sales of the fares between March 2 and March 15. Tickets sold until those dates will be good until May 20, the airline said. "But those rates (MaxSaver) were never intended to be permanent, we did it to be competitive," American spokesman Steve McGregor said. A United Airlines spokesman said Tuesday that it will match any moves made by American. But he added that United will also be watching to see if the rest of the industry follows. 1 1 ' H-TlT'.- it, For Piedmont Aviation The latest development came against a background of rapid consolidation in the deregulated airline industry and raised the prospect that other bidders would emerge for Piedmont. Besides USAir, speculation on possible suitors focused on Trans World Airlines and Northwest Airlines. Some analysts said Norfolk Southern's proposal also reflected aggressive efforts by the big U.S. railroads to expand into different forms of transportation. But others questioned whether the Virginia-based railroad was serious about acquiring Piedmont or was simply trying to boost its . stock price. "I just can't see Norfolk Southern ey is owed by a Missouri corporation that no longer exists. David Kay's Wine and Spirits Co. lost its corporate charter around Oct. 29 of last year, according to Kay's petition. A spokeswoman in the office of the Secretary of State said Kay's company lost its charter because it had not paid its annual franchise tax, required of all corporations. Kay's motion also argues that the alleged debt was a business loan. Kay could not be reached for comment. The savings and loans filing the petition were Liberty Federal Savings & Loan Association in Leesville, La., 4 i Vehicle No. 4 Million Officials at the Ford Motor Co. St. Louis Plant celebrated the production of the plant's 4 millionth vehicle Tuesday with a "roll-off" of a purple Aerostar minivan. Plant manager John Akins joined United Auto Workers officials Willis Bartlett and Ford's Profits Top 6. 1987, Reuters News Service DETROIT Ford Motor Co. reported record 1986 earnings of $3.29 billion Tuesday, marking the first time the No. 2 automaker outearned rival General Motors since 1924, when founder Henry Ford was selling his famous Model T. The 30.6 percent jump in earnings from 1985 s $2.52 billion came as no surprise and was attributed to better results from both the United States and Europe, Ford's two most important operations. "Ford's profits came from strong product momentum, strengthened European operations and their vigilance in keeping costs under control," said Gary Glaser, an automotive analyst for the Wall Street firm First Boston Corp. "I expect them to outdo GM again in 1987 even though profits will probably be flat." v. ua TtiL.. L.T. SpencePost-Dispatch completed its acquisition of First Banc-shares Corp. of Illinois. First Bancshares owned First National, now called Alton Mercantile Bank, and Airport National Bank of Bethalto, now Bethalto Mercantile Bank. being that serious about owning Piedmont as a long-term on-going operation," said Louis Marckesano, airline analyst for the Philadelphia investment firm Janney Montgomery Scott Inc. "I could see this if we were talking trucking company and ocean-going shipping," he said. "But for 40 years the railroads have run from passenger traffic and this would mark a complete turnaround from that philosophy." On Wall Street, the prospect of a bidding war for Piedmont rocketed its stock $6.25 a share higher to close at $65.37'2. Norfolk Southern dropped 87 2 cents a share to $93.75. Mercury Savings Association of Houston and Ben Milam Savings & Loan Association of Cameron, Texas. Jacob W. Reby, a partner with Pop-kin & Stern, which represents Liberty Federal, said several people had expressed interest in buying the chain's remaining assets. "But, so far," he said, "we haven't sold any of the stores. We're still hoping to make a deal, but it's difficult. I think a trustee eventually will be appointed and be charged with liquidating the chain's assets." the nine David Kay wine and liquor stores were closed Oct. 2. ( $4 1 J W j The company's earnings would have been even higher had it not been for the 1986 Tax Reform Act, which cut Ford's fourth-quarter earnings by $116 million to $785 million. But that was still a 9 percent gain from the $720 million posted for the fourth quarter of 1985. Ford's was the last of the Detroit Big Three profit statements for 1986 and brought their total earnings for the year to $7.65 billion, a 6.25 percent decline from 1985's $8.16 billion, but still the industry's third best year in history. Earlier this month, industry giant General Motors Corp. said a 70 percent plunge in fourth-quarter profits cut 1986 earnings to $2.95 billion from $4 billion in 1985. Chrysler Corp.'s earnings eased to $1.4 billion from $1.64 billion. At the beginning of the 1980s, Ford was foundering in red ink as its North American business was hit by reces- Earnings Reports Profit Rises At Sigma-Aldrich Corp. has reported profit increases of 18.9 percent for the fourth quarter and 17.7 percent for all of 1986. The chemical company earned $8.41 million, or 34 cents a share, in the quarter, compared with $7.08 million, or 29 cents a share, a year earlier. For 1986, it earned $34.0 million, or $1.38 a share, compared with $28.9 million, or $1.13 a share, a year earlier. Sales rose 18.9 percent in the fourth quarter, to $64.2 million from $54.0 million, and 17.8 percent for the year, to $253.1 million from $214.8 million. Kellwood Profit, Kellwood Co. racked up a record third quarter net profit of $4.5 million, or 38 cents a share, up 66 percent from $2.7 million, or 25 cents a share, in the quarter ending Jan. 31, 1986. The company's board also raised the dividend to 15 cents a share from 14 cents. The dividend is payable March 17 to stock of record March 3. Kellwood's earnings from continuing operations in the third quarter of fiscal 1986 were $3.5 million, or 33 cents a share. An $807,000 loss from One-Time Gain Puts Bionomic Sciences International Inc. of Fenton reported a profit of $278,000, or 7 cents a share, in the quarter that ended Oct. 31, compared with a loss of $133,700, or 4 cents a share, in the comparable 1985 period. The earnings were produced in large part by an extraordinary item sale of stock in another company said Stephen W. Conger, president. The company makes and sells products for use by dental, medical and veterinary professionals. Its main operating unit here is Olympic Trading Co. Bionomic also reported a loss of KV RePrls A Break"En Third Quarter Q I nilK-hfKPrl KV PhnrmnrpiiHrol nf tfi 5 million St. Louis-based KV Pharmaceutical Co. barely broke even on a 19 percent drop in sales during the third quarter ended Dec. 31. The company earned $12,321, or nothing a share, on sales of $5.3 million. During the third quarter of the prior year, KV earned $221,640, or 5 cents a share, on sales Auto Parts Firm Earns Harvard Industries Inc. had a profit of $1.8 million, or 21 cents a share, in the quarter that ended Dec. 31, compared with a loss of nearly $2 million a year earlier. Sales rose 62 percent, to $83.9 mil- Robert LaRouchePost-Dispatch Phil Vaughn in the vehicle. The plant, at 6250 North Lindbergh Boulevard, Hazel-wood, has produced vehicles since 1948, and is now the sole source of the Aerostar. The plant is being expanded to allow for increased production beginning in 1988. M's sion at a time when its product line suffered from declining popularity. But the company said it sliced overhead by $5 billion since 1980 and new products, including the profitable TaurusSable line of midsized cars, helped Ford boost its market share among the domestic makers. By contrast, General Motors has seen its profits decline for two consecutive years as it struggles to restructure and reduce manufacturing costs estimated to be the highest in the American auto industry. The last time Ford outearned GM was 1924, when the company's profits were $109 million on sales of $914 million while GM earned $52 million on sales of $568 million. But GM firmly established its industry dominance in the late twenties and held it. Even last year, GM had , worldwide revenues of more than $102 billion, compared with Ford's ' $62.7 billion. Sigma Aldrich Sigma-Aldrich said new-product introductions boosted its chemical sales, both in the United States and abroad. It said metal product sales of its B-Line Systems subsidiary showed "modest growth" for the year, but slowed in the second half of 1986 "with the reduced level of industrial construction." The company said changes in the : federal tax law "will produce beneficial results in future years." Sigma-Aldrich's board declared a regular quarterly dividend of 7 cents '. a share, payable March 13 to stock of record Feb. 27. Dividend Rise discontinued operations reduced Kellwood's net profit in that quarter.; Kellwood's third-quarter sales were $133.3 million, up 7 percent from $124.7 million in the third quarter of fiscal 1986. The company's nme-month earnings wer up 39 percent to $18.0 million, or $1.49 a share, from $13.0 million or $1.17 a share in the first three quarters of fiscal 1986. Sales in the first nine months were up 10 percent to $429.7 million from $389.2 million a year ago. Bionomic In The Black $533,100, or 17 cents a share, for the fiscal year that ended July 31. The ; company had been several months ; behind in filing its earnings reports with the Securities and Exchange Commission. " Sales were $380,300 in the fiscal ; year and $228,500 in the August-Octo- ber quarter, but Conger said sales now are running at about $150,000 a . month. Conger said the company has had increasing sales to hospitals and den- ; tists in China. He said the company expects its growth and profitability to continue. of $6.5 million. For the first nine months of fiscal 1987, KV said it earned $568,163, or 11 cents a share, on sales of $16.8 million. During the comparable three quarters of fiscal 1986, KV earned $3,926, or nothing per share, on sales of $17.6 million. $1.8 Million In Quarter lion from nearly $52 million. The results don't include Kingston-Warren Corp. and Hayes-Albion Corp., which Harvard acquired at the end of December 1986. St. Louis-based Harvard makes automotive parts.

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