The Akron Beacon Journal from Akron, Ohio • Page 12

THE BEACON JOURNAL THURSDAY, JUNE 16, 1988 D9 GenCoro earnin million for quarter By Larry Pantages Beacon Journal business writer GENCORP EARNINGS i $300 $250 $200 $150 Sales were up for the quarter in all three GenCorp business units. Sales at Aerojet were up 1 percent from $250 million to $253 million. Sales were up 8.1 percent at GenCorp Automotive from $86 million to $93 million and up 13 percent at GenCorp Polymer Products from $114 million to $129 million. Segment operating profit rose the highest at Aerojet with a 41 percent increase from $13 million a year ago to $22 million. At GenCorp Polymer Products, operating income rose 14 percent from $14 million to $16 million.

GenCorp Automotive posted a decrease in operating income, falling 16 percent from $12 million to $10 million. GenCorp said the automotive division's earnings were lower because of start-up expenses related to the construction of a new plastics plant being built in Shelbyville, plus higher raw materials costs. Analyst Millis said the figures were "a little better" than earlier projections. He said estimates had been revised after a first-quarter report that was disappointing. The company reported that its expense for interest payments totaled $14 million, nearly triple the $5 million reported in the same period a year ago.

GenCorp said the increase was attributable to costs of the restructuring. For its first six months, GenCorp's net income was $38 million, or $1.19 a share. That was down from $204 million, or $3.28 a share for the first half of 1987. Sales were up 25 percent from $752 million a year ago to $943 million. Business segment operating profits totaled $87 million compared with $40 million a year earlier and income from continuing operations totaled $36 million compared with a loss of $14 million in 1987.

been $39 million for the same period a year ago, but the company took a $24 million charge for restructuring and recapitalizing. As industry analyst Harry Millis of McDonald Co. in Cleveland said, "GenCorp has a balance sheet that's hard to understand." Millis was referring to a myriad of changes that took place in 1987, including a $1.6 billion stock a 3-for-1 stock split and the sale of General Tire and some RKO General business properties. Other RKO properties awaiting disposition are being carried as discontinued operations for accounting purposes. Overall, GenCorp's income from continuing operations was $20 million for the period.

The corresponding figure a year ago would have been $19 million, except for a $44 million charge related to the financial reorganization of the firm. GenCorp on Wednesday reported earnings of $21 million, or 65 cents a share, for its second quarter ended May 31. That was down from $187 million, or $3.19 a share, for the same period a year ago, but that period included a $212 million one-time gain from the sale of WOR-TV, one of the company's premier broadcasting properties that served the New York City market. Sales were up 5.5 percent during the period from $450 million a year ago to $475 million. Overall, however, analyzing the company's earnings performance requires a detailed look at the individual business segments Aerojet General, GenCorp Automotive and GenCorp Polymer Products.

There, operating profits for the period were $48 million. Segment operating profits would have $100 GO $50 $0 2nd 3rd qtr. 87 qtr. '87 1 st 2nd qtr. qtr.

qtr. '87 '88 '88 Source: GenCorp ft 5i ,1 1 i i bVjiT' i fekA 5 1 r-rv? xv, sWA El I Ll' I 1 1 c1 1 'F- "Jl i 'NV 7 'i "S4 ft v7tA 1 1 1 Beacon Journal photos Michael Good Ad folks show their wares Christopher Wiles (above) clowns around with the "Logo Lion" and Erin Moyle (right) passes some slow time with a yoyo at the trade show for specialty advertisers Wednesday at the Cleveland Convention Center. The show featured products such as coffee mugs, T-shirts, pens and key chains. Wiles is vice president, sales, of Ocean Specialty Mfg. Corp.

of Canoga Park, and Moyle was representing Rata U.S.A. Inc. of Provo, Utah, which markets leather goods. payment Be patient, suppliers told By Greg Gardner Beacon Journal business writer Revco D.S. which failed Wednesday to make a $46 million interest payment on $703.5 million of debt, is asking suppliers to bear with it as it tries to restructure that debt.

In a letter to Revco suppliers, Jim Adamson, the company's ex- ecutive vice president of marketing, said Revco has not filed for bankruptcy protection and doesn't intend to. The letter was similar to the one that Revco Chairman and Chief Executive Officer Boake A. Sells sent employees last week. "We have more debt than we can service," Adamson wrote. "This is a serious problem, but not one that must lead to an unhappy ending." Both Sells' letter to employees and Adamson's to suppliers compared Revco's problem to a consumer who continues earning a paycheck but finds it difficult to meet payments on a three-year car loan.

"You might go to the bank and say, 'I still have income. I can afford to make a payment every month, but not as much as I'd originally thought. Can we change my car loan so that I can pay it back in four years instead of Sells wrote. However, a $10,000 car loan is one thing. More than $1 billion of high-yield junk bonds aggressively marketed to major institutional investors is another.

Of two suppliers contacted Wednesday, one expressed moderate concern while another said Revco is paying it on time. "I definitely wouldn't call it real chipper and good," said an official of Central News an Akron company that supplies newspapers, magazines and paperback books to Revco. "They See PAYMENT, page D15 1 1 7 points to post crash hig ow mas nearly Associated Press bond market, but some traders were surprised it did not move lower. At the day's low, the Dow was off only about 6 points. Analysts said the profit-taking that occurred appeared light and orderly throughout the session, and most agreed it would not harm the so-called summer rally.

"There was some pausing and some restraint rather than any heavy profit-taking," said Eugene Peroni, a technical analyst at Janney Montgomery Scott in Philadelphia. "The selling pressure is quite low," he noted. "Volume dries up considerably when any selling comes in." The overall tone in the market re- mained cautiously optimistic. Traders said that money managers, who have an unusually high amount of cash on hand, are under pressure to purchase equities for their portfolios before the end of the quarter. These institutional investors have had little opportunity to jump into the market over the last few weeks and are anxious to "get money into the market," said Alfred Goldman, director of technical market analysis at A.G.

Edwards Sons Inc. in St. Louis. "That momentum will keep the market rallying moderately higher," he said. Dealers said the market had little inter-See DOW, page D12 to 150.26 million shares, down from 227.15 million in the previous session.

Nationwide, consolidated volume in NYSE-listed issues, including trading at regional exchanges and on the over-the-counter market, totaled 175.70 million shares. The market was expected to retreat as traders cashed in on Tuesday's run, which was sparked by a better-than-expected trade report for April. "We're overdue for a pretty nice correction," said Charles Jensen, chief technical analyst at MKI Securities who noted that the Dow has climbed 200 points in the past few weeks. The market was off for most of the session, mirroring some softness in the New York The stock market finished higher Wednesday as a spurt of buying minutes before the close helped to solidify the sharp gains posted in the previous session. The Dow Jones average of 30 industrials, which jumped 25 points Tuesday, managed to inch past that level by 6.93 points to close at 2,131.40, its second post-crash high in as many days.

Advancing issues outnumbered declines by about 8-to-7 in nationwide trading of New York Stock Exchange-listed stocks, with 772 issues up, 669 down and 530 unchanged. Volume on the floor of the NYSE came RETAIL SALES soap erny Seasonally adjusted billions of dollars Slow May retail sales calm inflation fears $140- I to be televised $130- By Larry Pantages Beacon Journal business writer Associated Press $120- $110- RetaB sales gained 0.1 "f.tiiy a 6.4 April slide, i i i i I i i i i i i i i i I i i i i i I $100- 1988 1987 1986 Advance retail sales figures are adjusted for seasonal, holiday and trading day variations. They are revised twice before being considered final. SOURCE: Bureau of Labor Statistics INDUSTRIAL PRODUCTION INDEX Index is seasonally adjusted percent of 1977 level. Soap Box Derby: An All-American Classic, and run for 90 minutes.

A four-person telecast team is to be announced. WVIZ officials said the final heats of the junior and senior divisions of the race will be covered. In addition to racing, other stories to be reported will be derby history, events of derby week, the building of a car and a driver holding a camera going down the race course. Bridgestone said its American subsidiary, Bridgestone USA is the sponsor, not Firestone. Executive vice president James McCann said the company was promoting the program on behalf of independent tire dealers in the United States, but he said the objective "is not to sell tires but to become actively involved in the community." "The Soap Box Derby represents the very heart of American values ingenuity, hard work, family and sportsmanship," said McCann in a statement.

"Those are the same values that guide us as a corporation. Bridgestone USA is very much an American company and we are proud to be associated with the broadcast of this ail-American event." and 1.1 percent in February fueled concern that prices would rise as manufacturers found it difficult to meet demand from both foreign and American consumers. Two other reports issued Wednesday fit the pattern of a shift from consumer-led growth to an export-driven economy. The Federal Reserve Board said production at the nation's factories, mines and utilities rose a moderate 0.4 percent in May, the eighth consecutive month without a decline. Economists said the increase was evidence that manufacturers continue to produce more goods for export.

Production of business equipment was particularly robust, the Fed said. As part of the export boom, businesses are spending more to modernize and expand their factories. Meanwhile, the Commerce Department said a 9.8 percent climb in exports in the first three months of 1988 from the previous quarter helped shrink the merchandise trade deficit by 12.7 percent to $35.9 billion. However, the current account the broadest measure of U.S. transactions with other nations widened by a sharp 18.6 percent to $39.75 billion as the United States recorded its first quar- See RETAIL, pae D15 140 Washington Retail sales grew a lackluster 0.1 percent in May, the government said Wednesday in a report analysts predicted should help ease fears of inflationary pressures in the economy.

The Commerce Department said sales by retailers, which represent about one-third of U.S. economic activity, edged up a scant 0.1 percent in May to $131.9 billion, after a 0.4 percent drop in April. Much of the slowdown came from two successive drops in auto sales, but other categories, including department store, sales, also were anemic. "If you put the two months together, there is not much evidence of strength," said Sandra Shaber, an economist with The Futures Group, a Washington-based consulting firm. "Department store sales, which are a major barometer, continue to be very weak." But Shaber and other analysts said slack consumer spending, while bad for retailers, is good for the economy as a whole because it should calm the inflation jitters that had troubled financial markets earlier this year.

Economists have been looking toward rising export sales as a cure for the swollen U.S. trade deficit. However, retail sales jumps of 1.6 percent in March Bridgestone Corp. officials, saying they wish to "become actively involved in the community," disclosed that the company would sponsor the first live national telecast of the All-Amer-ican Soap Box Derby when the 51st edition is held Aug. 13 in Akron.

The telecast will be over the Public Broadcasting Service, with WVIZ (Channel 25) in Cleveland as the originating station. A Bridgestone spokesman declined to discuss whether the television program could lead to a wider sponsorship of the derby events. "Talks are continuing but we don't want to tip our hand at this point," he said. Last month, Tokyo-based Bridgestone completed a $2.6 billion takeover of Firestone, making it the second-largest tire and rubber company in the world in sales behind Goodyear. The telecast will be offered by satellite nationwide to PBS affiliates.

A Bridgestone spokesman said selected markets had shown "a tentative interest" in carrying the program. The program will be titled, Output at USi factories, mhes and utilities rose 0.4V. in toy 135" after a 0.67o gain in April. 130 -f 125-' I I I I I I I I I I I I I I I I I I I I I 1986 1987 1983 Industrial production index measures output at U.S. mines, factories and utilities as a percent of 1977 level of output.

Adjusted for seasonally variation. SOURCE: Federal Reserve Board.