The News Journal from Wilmington, Delaware • Page 27

imumi I 1 i i I 0 1 The News Journal, Wilmington, Del. Friday, April 1 7, 1 998 B7 INSIDE: Merck's earnings report gives Dow a scare. B10 Have a Business tip? Call 324-2876. Dow Jonas Industrial averags Thursday 9,076.57 Close 1,858.24 Changs NASDAQ d) 4P- 500 1,108.17 RUSSELL 2000 484.41 -Or JAPANESE YENS 131.74 1.38 GOLD (WILM TRUST SPOT) 307.50 0.80 30-YEAR T-B0ND (Yld) 5.87 NYSE, AMEX, Nasdaq and mutual fund reports B8-1 0 a Bank gets out of precious metals business Business Roundup Compiled from staff and wire reports Regional cial storage for such buyers and sellers of metals, while Kentucky's Fort Knox is famous for its government depository. But unlike the other storage providers, the $6.4 billion-asset Wilmington Trust was not heavily active in trading and finance of the metals, the more profitable part of the business, and thus didn't derive much of its revenues from the business.

Also in late February, Wilmington Trust agreed to spin off its retail precious metals investment business to FideliTrade, a Delaware company started by Jonathan E. Potts. Potts is a former Wilmington Trust official own internal trading and finance, leaving Republic virtually free to dictate service level and fees for the rest of the industry. "They can call the shots," said Potts. "There's not a whole lot of competition." As part of the sale agreement, signed Feb.

20 but never announced, Republic is buying one of Wilmington Trust's three storage facilities for the metals in Wilmington. That facility, which stores silver, will remain in Wilmington. Wilmington Trust has not determined what to do with two smaller buildings. The price for the purchase was not disclosed. The sale is expected to be completed by May.

By JONATHAN D. EPSTEIN Staff reporter Wilmington Trust Corp. has quietly gotten out of its precious metals business, spinning off its retail unit while selling its commercial storage operation to Republic New York Corp. The sale to Republic one of three precious metals purchases the New York bank has made in recent months will allow it to become the nation's largest private storage provider for banks' and brokerages' holdings in gold, silver, platinum and palladium. Wilmington Trust had previously been the leader in commer ELL i i' JHL 1 American storage businesses of Chase Manhattan Corp.

and Swiss Bank Corp. in the fourth quarter of last year. The sale by Wilmington Trust which was a depository for 15 years would thus effectively consolidate the U.S. commercial depository business under $54.8 billion-asset Republic. It now controls more than half of the gold storage and 74 percent of the silver.

Besides Republic, only Morgan Guaranty and Canada's Bank of Nova Scotia are still approved by the Commodities Exchange as U.S. depositories. However, the other two banks mostly provide storage for their By JONATHAN D. EPSTEIN Staff reporter Wilmington Trust Corp. reported record first-quarter earnings of $27.31 million Thursday, on the strength of a 16 percent increase in fees from its strong trust and asset management businesses.

But a $5.5 million pre-tax charge to cover an expected settlement of a 6-year-old class-action lawsuit hurt the bank's earnings per share, which were 79 cents on a fully diluted basis. That's a 10 percent increase over last year. Without the charge, earnings per share would have been almost 10 cents higher. Wilmington Trust stock lost 93.8 cents, closing at $66.50. Companies are required to report earnings on a fully diluted basis, which includes the impact of stock options and preferred stock that is convertible to common shares.

On an undiluted basis taking into account only the bank's common shares outstanding Wilmington Trust earned 82 cents a share, an 11 percent increase over last year and on target with Wall Street estimates, according to a survey by IBES International. The bank's net income was 10 percent higher than the $24.9 million earned in the first quarter of last year. "It's a good strong quarter," said company spokesman Charles King. "It clearly is indicative of the performance of the company." Returns on assets and equity benchmark measurements of bank performance were 1.81 percent and 21.81 percent, respectively. Last year, the figures were 1.87 percent and 21.67 percent, respectively.

Returns of more than 1.5 percent on assets and 15 percent on equity are generally considered good. The $6.4 billion-asset bank the largest based in Delaware Fi Fi FT iDiiipil Mire The News JoumaVBRIAN BRANCH-PRICE Netta Gilboa of Broomall, peruses movies available on digital video discs Thursday at Digitainment Inc. in the Independence Mall, Brandywine Hundred. Divx, a new video disc technology, is coming in August. Remember the Betamax! DVD vs.

Divx battle looms who had run the bank's own precious metals operation since 1988. The bank still will provide metals investment services to its individual and business customers through an agreement with FideliTrade, which also serves customers of Citibank and PNC Bank, Delaware. Gerard Cassidy, bank analyst at Tucker Anthony in Portland, Maine, said owning precious metals is not as common an investment for consumers or businesses as it was in the late 1970s, when inflation and metals prices were high. Republic, which has acted as a depository since 1969, bought the With parent Digital Video Express the clearinghouse for all Divx transactions, "it's a very bad idea to give one company power over the entire country," she said. "If I were a computer hacker, I'd go after that company." Digital Video Express "has no intention of providing the names or viewing habits of any Divx customer," Dare said.

Still, "within months of Divx' introduction, hackers will come up with a way to circumvent all of Divx's security," predicted DVD owner Paul Keene, a network specialist at Delaware Technical Community College. Divx is a hot topic at Hayward's store. "We talk about it every day with customers," he said. "They don't find it desirable." Divx discs will have the same picture quality as non-Divx DVDs. But the first batch of Divx discs will lack some DVD features favored by movie buffs for instance, the "letterbox" format that follows the wider dimensions of movie screens.

Film and video enthusiasts gave an early boost to DVD. But now, Hayward sees the technology going mainstream. "It's not just the videophiles," he said. "In the beginning, we had almost nothing but male customers who were all into it as their own toy. Now, we're seeing families come in and picking out movies together." See DVD back page first quarter, economists expect a drop in export orders from Asia to cool growth to a non-inflationary pace later this year.

In addition, warmer-than-usual weather in the first three months of the year boosted housing activity and growth overall. Companies surveyed by the Philadelphia Fed have appeared to be largely immune to declining currencies and economies in Asia. That's not surprising, since mid-Atlantic companies don't export much to the region, according to economists at Lehman Brothers in New York. Ar--- ilk iB I 1 OFFICIAL WANTS OVERHAUL: Federal Reserve governor Laurence H. Meyer Thursday called on Congress to pass legislation to overhaul the nation's Depression-era banking laws.

Technology and globalization will deregulate the financial services business whether Congress acts or not, he said in a lecture at Widener University. A bill that stalled in the House this month would lift barriers keeping banks out of the insurance and brokerage businesses. SMOKING WORKSHOP SET: The Delaware Center for Wellness will sponsor a smoking workshop for companies trying to implement or enforce smoking policies or have plans to offer smoking cessation programs. The session will be from 8:15 to 10 a.m. April 21 at the American Heart Association office in Newark.

The workshop is free for center members and $10 for others. For more information, call 369-4111. BANK WORKERS GET HELP: A consortium of Philadelphia-area colleges formed to help shipyard workers find new jobs now faces another challenge placing bank workers laid off because of the $19 billion buyout of CoreStates Financial Corp. The Shipyard College, founded before the Philadelphia Naval Shipyard closed in 1995, plans to help 7,840 bank employees who will lose their jobs following the purchase by First Union Corp. North Carolina-based First Union has set aside $16 million to fund the program.

OFFICE PARKS PURCHASED: Fox Cos. agreed to buy most of the buildings in the Chesterbrook and Glenhardie office parks in Wayne, for $172.8 million. Closely held Fox, also based in Wayne, is buying the properties from public limited partnerships managed by the real estate unit of Morgan Stanley, Dean Witter Co. National HOUSING STARTS SLOW: Housing construction declined slightly in March from a 10-year high the month before as builders struggled to keep up with buying demand fueled by plentiful jobs and low mortgage rates. Housing starts were down 2.8 percent from February, the Commerce Department said.

But it was the seventh consecutive month that total starts exceeded 1.5 million, the longest such string in nearly 11 years. MORTGAGE RATES RISE: The average rate on 30-year fixed-rate mortgages rose to 7.17 percent this week, the highest level since early March, Freddie Mac, the mortgage company, said. The increase, from 7.09 percent the week before, brings the average nearly to its four-month high of 7.19 percent, reached six weeks ago. It had hit a four-year low of 6.89 percent in mid-January as investors transferred money from Asia to the United States. MAGELLAN FUND SCORES: The nation's largest mutual fund, Fidelity Investment's Magellan Fund, made a technology stock bet during the first quarter and won.

According to Fidelity's quarter-end mutual fund guide, the fund invested 15.2 percent of its assets in the tech sector by the end of March, compared with 12.9 percent at the end of 1997. Magellan, gaining 14.22 percent in the first quarter, beat the average index fund investing in the Standard Poor's 500 Stock Index, which gained 13.77 percent. International KIA WORKERS STRIKE: Thousands of workers at Kia Motors Corp. put down their tools to protest what they suspect are South Korean government moves to sell the debt-ridden firm to a third party. The strike by 13,300 unionized Kia workers halted production at the nation's third largest automaker.

The strike came a day after a Seoul court placed the bankrupt Kia under receivership. JAPAN CAR SALES FALL: Japan's domestic new car sales fell 8 percent in the first 15 days of April, according to the Japan Automobile Manufacturers' Association. In the same period last year sales slumped 15 percent after the government boosted the national sales tax to 5 percent from 3 percent. Vehicle sales in Japan have fallen every month since the tax'increase. Jm lines to the computers of Divx parent Digital Video Express.

The Herndon, company is two-thirds owned by Circuit City, which will sell the Divx players and discs. DVD players now cost as little as $500; consumers will pay about $100 more for a Divx-equipped player. After a consumer's Divx machine phones into Digital Video Express to report on movie viewing, the company will bill consumers' credit cards for movies watched. "This is the most convenient way ever devised to rent a movie," Divx spokesman Josh Dare said. He foresees the 48-hour discs being sold at supermarkets and convenience stores, as well as video stores.

Indeed, the system promises convenience: No trips to return rented videos, and no late fees. But the task of selling consumers on Divx may be a tough one. A $100 million ad campaign will go nationwide this summer, after Divx debuts next month in San Francisco and Circuit City's hometown of Richmond, Va. For one thing, some consumers "don't like the concept of movie studios knowing what they're watching and when," said Paul Hayward, owner of Digitainment Inc. on Concord Pike, which sells and rents digital video discs.

"It raises all sorts of privacy concerns," said Netta Gilboa, a DVD owner in Broomall, Pa. Wilmington Trust Corp. Delaware's largest bank reported record first-quarter earnings. Figures in millions $30 1998 1st quarter: $27.31 million 1ST 2ND 3RD 4TH 1ST 1997 1998 Source: Bloomberg The News Journal reported a 15 percent increase in revenues to $105 million, including $30 million from trust and asset management fees. Net interest income from loans increased 7 percent to $59.4 million.

Countering that was a 20 percent rise in expenses to $59.5 million, mostly from the charge to cover a 1992 lawsuit that accused the bank of imposing unnecessary or excessive cash management fees on sweep accounts from 1982 to 1987. Sweep accounts are investment accounts in which dividends or interest are automatically "swept" into another account. The suit carried a potential claim of more than $22 million. King said the bank settled the case because it was "very time-consuming and expensive for something that happened a long time ago." However, he noted that such fees were common practice in the industry. Wilmington Trust changed the account after 1987.

during the quarter for the second year in a row. A strong first quarter was followed by a 40 percent increase in profits and an 8.4 increase in revenues in the second quarter last year. That six-month performance, which saw profits grow 27 percent, set the stage for a record year in fiscal 1997. Net earnings for the first six months of fiscal 1998 were $22.8 million, compared with $17.5 million the year before, representing a 31 percent increase. Rollins earned 37 cents a share, compared with 27 cents the year before.

Six-month revenues increased 10.5 percent to $294.1 million from $266.1 million. If Rollins is able to maintain that pace through 1998, it will be the first year of double- digit revenue growth for Rollins since 1994. Company officials do not comment on quarterly earnings reports. Rollins stock clqsed Thursday, at $13,375, down 6.3 tents. 28 26 22 III 20 1 I I 18 Rollins Thick Leasing has a record quarter By DALE DALLABRIDA Staff reporter Get ready for a volley of ads trumpeting the next generation of home video.

Get ready to get confused. And if you're like some consumers, get ready to get mad. The latest word in home video is Divx, pronounced "divvix," a technology due to hit Delaware stores in August. Some consumers worry that Divx threatens their privacy, since it would let the movie industry keep detailed records of customers' viewing habits. Others see Divx as the death knell for the digital video disc or DVD, a home video technology just catching on after a year in the marketplace.

Like DVD, Divx will carry movies on compact discs viewed with special players, offering images sharper than videotape in a format that doesn't wear out. Divx uses DVD's video technology, but adds an extra spin. Movies on Divx discs will sell for about $4.50. But once consumers get a disc home and press the play button, the movie will be viewable for only 48 hours. After the clock runs out, consumers can throw the disc away or pay $3.25 to watch the movie again.

The machines that play Divx discs will keep track of movie viewing and report via phone By VINCE GOLLE Bloomberg News PHILADELPHIA Business at Philadelphia-area manufacturers increased at a slower rate in April than it did in March, a sign the region's economy may be shifting into a lower gear. The Federal Reserve Bank of Philadelphia said Thursday its general economic index compiled from a survey of about 150 manufacturers in Delaware, eastern Pennsylvania and southern New Jersey fell to 13.4 in April from 16.1 in March. economy may be slowing By CHRIS AREGOOD Staff reporter Rollins Truck Leasing Corp. posted record earnings in its fiscal second quarter, as the company kept costs down during a period of strong revenue growth. The Fairfax-based company said Thursday net earnings for the three months ended March 31 jumped 30 percent to $9.9 million from $7.6 million a year ago.

Earnings per share grew to 16 cents from 12 cents, as the company's share repurchase program accelerated per-share growth to 33 percent. Revenues for the quarter increased 10 percent to $145.1 million, as the company's truck leasing, commercial rental and logistics services business segments all had gains. At the same time, expenses grew by just 7.6 percent. The winter typically is the worst time of year for Rollins, but a healthy U.S. economv and warm weather helped keep demand high fi flhiiHiiHi ifc Jfcii fill JHfBi)fi)i ft, ffl rff Analysts had expected an index of 16.5 this month.

The positive reading means the number of companies reporting stepped-up activity surpassed those reporting weakening business. Manufacturers in the region said they remain optimistic about business prospects for the next six months. The Philadelphia Fed bank's index of future economic activity decreased to 28.4 in April from 38.1 in March. The Fed also said its new orders index fell to 16.6 this month from 18.8 in March. While U.S.

growth overall has been stronger than expected in the 01 1f tkn0 fit if iff fAiffl.