Arizona Daily Star from Tucson, Arizona • Page 24

Uht Arfeona Bailg Star Tucson, Thursday, April 1, 1993 Page Four Leading indicators post fifth climb in six months Index of leading indicators Seasonally adjusted index. 1962-100 156 154. 152 Factory orders increase 1.4, reach new high WASHINGTON (AP) The government provided fresh evidence yesterday that the third year of a slow but sustainable recovery is under way, as it reported February gains in two key economic barometers. The Commerce Department said its Index of Leading Economic Indicators rose 0.5 percent, the fifth advance in six months. At the same time, it said orders to U.S.

factories increased 1 .4 percent to a new record. The index is designed to forecast the overall economy six to nine months in advance. Factory orders are a key gauge of future manufacturing activity. "In a sense, all systems are go" for continued but modest growth, said economist David Jones, of Aubrey G. Lanston a New York securities dealer.

"The recovery is now past the two-year mark and there seems to be little risk of a $135.3 billion, even more than the 2.2 percent in the department's initial estimate last week. Transportation orders shot up 10.8 percent, erasing an 8.3 percent drop a month earlier. The department said commercial aircraft orders represented more than half of the 10.8 percent advance, although there also were increased sales of automobiles and railroad equipment Excluding this volatile category, however, orders were unchanged from January. Orders for non-durable goods such as food and fuel gained 0.3 percent to $123.3 billion, the third increase in four months. They declined 0.1 percent in January.

The report also suggested possible new factory hiring. The backlog of unfilled orders grew 0.3 percent, the fourth advance in the last five months, which suggested factories were unable to meet demand. "It will encourage some gradual increase in hiring along with continued gains in production," Reaser said. Factory inventories inched up 0.1 percent, the first increase since last August. Smaller inventories mean factories may have to step up production to meet new orders.

mand and suggesting the possibility of new hiring. Other positive contributors were an increase in orders for new plants and equipment, fewer new claims for unemployment insurance, rising prices for raw materials that suggested growing demand, rising stock prices and a longer average workweek. Offsetting the advance were a smaller money supply, a decline in building permits, falling consumer confidence and a drop in new orders to factories for consumer goods. Virtually unchanged were product delivery times, a measure of business ability to meet demand. The various changes left the index at a seasonally adjusted 153.6.

In its other report, the Commerce Department said factory orders totaled a seasonally adjusted $258.6 billion, up from $255 billion in January and breaking the previous record of $258.3 billion set last December. It was the fourth increase in the last six months. Orders dropped 1.3 percent in January. Orders for durable goods items such aircraft and appliances expected to last more than three years rose 2.4 percent to a record fallback into recession," concurred Lynn Reaser, an economist with First Interstate Bancorp, in Los Angeles. The economy has grown slowly following the end of the recession in March 1991.

But while most analysts believe it continues to expand, they project growth of just 3 percent this year, half that of previous recoveries. In fact, only six of the 11 forward-looking statistics in the leading indicators index were positive in February. Four pointed down and another was virtually neutral. Although the performance was better than during January, when the index was unchanged, it was far less than a 1.7 percent surge in December. "It's consistent with our contention that the growth rate in late 1992 was unsustainably rapid," said Stephen S.

Roach, an economist with Morgan Stanley in New York. "The combination of the two reports say the recovery is still intact, but the rate of advance is likely to slow." Among the indicators contributing to the index was a growing backlog of unfilled orders, meaning current production facilities and manpower were unable to keep up with de 15D 148 146 A 1892 1993 Fob. '92 Jan. '93 Feb. 93 TP I Finance restructuring snag delays sale of Caliber Bank GTEC founding member Tom Wilson quits group By LA.

Mitchell The Arizona DaRy Star Tom Wilson, Greater Tucson Economic Council senior vice president and a founding member of the economic development agency, resigned yesterday. Wilson, the third GTEC staff member to resign in the last four months, began working in economic development in 1988 with the Mayor's Task Force on Economic Development, led by then-Mayor Tom Volgy. The task force helped create GTEC in March of 1989. The public-private agency assists companies in relocating to Tucson and provides services to local businesses. Wilson served as GTEC's first interim executive director and most recently as senior vice president of marketing, a position he filled in July 1992.

The resignation, effective April 15, stemmed from a desire to find employment in the private sector, he said. Wilson, who would not disclose his salary, said he is leaving the 4-year-old agency on good terms. "Great experience" "We have had some phenomenal success in Tucson," Wilson said. "It's been a great experience. Robert Gonzales, the agency's new president, will decide whether to hire an economic development professional to fill the position or divide the duties among staff members.

Wilson managed the agency's external marketing efforts in job creation. After finishing his term at GTEC, Wilson said he is considering several positions in Tucson but also may move to the East Coast. As a founding member of GTEC, he originally committed to working there for only four months but remained with the agency as it grew. Although he wanted to leave last year, Wilson said, he made a commitment to former chairman and board member Larry Hecker to remain until the agency finished its restructuring. Cost-cutting plan The restructuring is part of the agency's plan to cut costs.

Two staff positions have been eliminated and a third held by Neil Shpritz who resigned last year will not be filled. Barry Burdett, the agency's vice president of investor relations and communications, is 1989 Star photo Tom Wilson working on loan from Tucson Electric Power and draws no GTEC salary. Although board members are not paid, Hecker advocates trimming the 48-member group to make it more effective. The agency also is stepping up fund-raising efforts and trimming expenses. Gonzales will be paid $89,000 annually.

Former president Andy Flores was paid about $95,000. She said "Independent is continuing to talk to BankAmerica Corp. But in the interim, the corporation has entered into discussions with a small number of well-capi-. talized banks." Suitors not Identified She would not identify any of Caliber's new potential suitors. BankAmerica Corp.

also will miss today's -deadline for completing the Caliber divesti- -ture, Riess said. BankAmerica Corp. was required to divest itself of Caliber to gain regulatory approval to take over Security Pacific Corp. last April. That merger created the nation's second largest bank holding company.

BankAmerica originally agreed to complete the divestiture designed to preserve banking competition in several Arizona cities after the Security Pacific acquisition within 180 days of the merger, Riess said. Since last April, when the merger was, completed, the bank has obtained several extensions of that deadline from the Federal Reserve Board so Independent Bancorp could line up investors and obtain state and federal approval of the purchase. "We have tried very hard to complete the sale and we are hopeful that the regulators will take that into consideration," she said. Piecemeal If necessary Riess said BankAmerica Corp. would like to sell Caliber as a single bank, but would sell off the branches piecemeal if necessary.

"Our intent is to produce a bank that will be a viable competitor," she said. Independent Bancorp would appear to have the inside track on the purchase because it has all the necessary regulatory approvals. Any new buyer would have to retrace Indpendent's steps through the regulatory process. Since the divestiture plan was announced, Caliber has operated as a subsidiary of BankAmerica Corp. and in competition with the San Francisco banking giant's 1 main Arizona operation, Bank of America Arizona.

By Walt Nett The Arizona Dally Star BankAmerica sale of Caliber Bank hit a snag yesterday when the expected buyer announced that it was restructuring its financing of the purchase. Independent Bancorp of Arizona, which agreed 11 months ago to buy the 49-branch bank spinoff, said the investment group still intends to close the deal. The delay comes at the end of a 30-day waiting period mandated by the Justice Department, which must review the deal for compliance with antitrust requirements. But BankAmerica Corp. which must sell Caliber to satisfy federal antitrust requirements is considering offerings from other banks, a vice president of the San Francisco-based bank holding company said.

Caliber has nine branches in Tucson, two in Green Valley and one each in Casa Grande, Douglas and Sierra Vista. Independent Bancorp an investment group headed by former Postmaster General Anthony M. Frank and sports entrepreneur Peter Ueberroth had agreed to close the deal by yesterday. Working toward closing "We believe IBA remains in the best position for an early close of the purchase of Caliber Bank. While the process has been delayed, we are continuing to work toward a closing of the transaction, Frank said.

Independent Bancorp announced last April that it had agreed to spend at least $221 million on the acquisition. That would include the branches, $2.1 billion in deposits and $229 million in branch-related loans. Frank, in a press release, said Independent Bancorp is not only overcoming the delay, but has found that "our financing appears to be oversubscribed." While Independent described the situta-tion as a financial restructuring, Betty Riess, BankAmerica Corp. vice president, said the closing was delayed because "IBA has not met certain conditions." She declined to detail the conditions and would not say if the issue was limited to financing. Evening Post Publishing to buy KVOA-TV By LA.

Mitchell The Arizona Daily Star Evening Post Publishing of Charleston, S.C., yesterday announced an agreement in principle to acquire KVOA-TV Channel 4 in Tucson. The purchase price and closing date of the sale, subject to Federal Communications Commission approval, were not released. KVOA general manager Jon Ruby said he expects no organizational changes at the station. "I would assume they're buying a successful TV station with a strong news opera tion and that they'll leave things the same," said Ruby, Communications of Houston, purchased KVOA in 1982 from local investors Donald Diamond and Donald Pitt and a California partner for $30 million. The trio had purchased KVOA, which went on the air in September 1953, from Pulitzer Publishing Co.

in 1972 for $3.5 million. Pulitzer owns The Arizona Daily Star. Communications owns and operates several stations, three of which Including KVOA were put up for sale. sales of two stations KCCI-TV in Des Moines, Iowa, and WESH-TV in Day- tona BeachOrlando, Fla. to Pulitzer Broadcasting Co.

in St. Louis, are pending FCC approval. The company owns and operates KOAA-TV in PuebloColorado Springs, KIVI-TV in NampaBoiseCaldwell, Idaho; KXLF-TV in Butte, KRTV in Great Falls, Mont; and KPAX-TV in Missoula, Mont. It also owns The Post and Courier in Charleston, S.C.; the Aiken Standard in Aiken, S.C.; the Georgetown Times in Georgetown, S.C.; The News, in Kingstree, S.C.; and the Buenos Aires Herald, in Buenos Aires, Argentina. Herman's seeks OK to close up to half of its stores TRENTON, N.J.

(AP) The new management of Herman's World of Sporting Goods petitioned a Bankruptcy Court on Tuesday for permission to close up to half the chain's stores to cut costs and focus on Northeast markets. The new directors filed a voluntary Chap ter 11 petition March 15, three days after the Carteret, N.J.-based chain was acquired by a group led by New York merchant bankers Carl Marks Co. and Whitman Heffer-nan Rhein Co. Herman's, unveiling a plan to return to profitability, said it wants to close up to 132 of its 253 stores. (The company operates two stores in Tucson, at 6230 E.

Speedway and 4646 N. Oracle Road. An employee at Herman's Oracle Road store said yesterday that workers had already been told the Arizona stores were for sale and that there had been inquiries from prospective buyers. (The company employs about 50 people at its two Tucson stores and a total of about 175 at seven locations around the state, Frietag said in New York.) INVESTING Lull in The Gap earnings growth is temporary, analysts say 1 Tribune Media Services Since The Gap Inc. has taken a bruising on earnings, does this mean its day has passed? Should I sell or hold my shares? This famous retailer's recent gap in earnings growth won't be prolonged.

Hold shares of The Gap Inc. (around $33 a share. New York Stock Exchange), even though company profits are unlikely to revive until the second half of the year, Andrew Leckey recently awarding $25 million to a woman for complications resulting from silicone breast implants. That business was discontinued in 1991, but lawsuits will take several years to resolve, Buermann said. "Right now, I'm basically neutral on Bristol-Myers Squibb, as I am the entire drug group," concluded Buermann.

"I'm not actively promoting its stock." What is your opinion of Anheuser-Busch? I own 300 shares and wonder if now would be a good time to add to my portfolio. The beer industry Is thirsting for good news. Flat production prospects, pricing constraints from promotional activity and worry about the federal government levying an excise tax increase on alcoholic beverages are all negatives for Anheuser-Busch Cos. Inc. (around $53, NYSE), said Joseph Doyle, managing director of Smith Barney, Harris Upham Co.

Because of the poor intermediate-term outlook for company volume and pricing, Doyle recently downgraded Anheuser-Busch stock from 'buy" to "hold." Anheuser-Busch does remain an impressive company, controlling 44 percent of the domestic brewing industry. It produced 87 million barrels of beer last year, including famous brands such as Budweiser, Michelob and Busch. Its baking subsidiary, Campbell Taggart, produces and distributes baked goods, frozen dough, salad dressings and toppings. Despite that positive franchise, however, Doyle points out that "its industry remains weak." I have a 1969 stock certificate of Coast to currently gives stock of The Gap an "accumulate" rating, which isn't his firm's strongest buy recommendation. Meanwhile, Jeffrey Edelman, an analyst with C.J.

Lawrence, also predicts The Gap's fortunes will revive by fall, especially if some popular new fashion lines boost sales figures. "The Gap is still in an expansion mode, adding new units each year and also adding larger stores," observed Edelman, who has assigned the stock his "neutral" rating for the next two quarters. "Though profit margins are declining, this retailer remains very profitable and can afford to expand." My Bristol-Myers Squibb stock has fallen substantially in price, like so many drug stocks these days. What's the outlook? Should I hold on, or get out and take my loss? The road ahead for pharmaceutical firms won't be easy. Hold shares of Bristol Myers Squibb Co.

(around $56, NYSE), keeping in mind that prospects aren't very positive unless you take a longer-term 12- to 24-month outlook, said Stephen Buermann, analyst with Merrill Lynch Co. The attractiveness of this company is that it's diversified and features a relatively high dividend yield at this time. A real worry is that Bristol-Myers Squibb's Capoten, a key cardiovascular medicine, is coming off patent in 1995. While the firm does have new drugs coming on line, overcoming the loss of Capoten will be a big hurdle. Bristol-Myers Squibb also has negative exposure from past breast implant products, with a jury Coast Co.

Does it have any value? Bottled-water firm Coast to Coast Co. Inc. still exists, but its stock hasn't been actively traded in a long time. Listed on the over-the-counter market, Coast to Coast is quoted at 5 cents per share with no bid. When there's no bid for a stock, it generaly has no value, explained Robert Fisher, vice president with the New York-based R.M.

Smythe Co. stock-search firm. The company's transfer agent remains Nationwide Register Transfer 4 Nassau SL, Massapequa, N.Y. 1 1 758. What is your opinion of Checkers Drive-in Restaurant? I'm considering the purchase of stock in this industry.

Pull on in. Checkers Drive-In Restaurant (around $19, over-the-counter) does a good job of developing, operating and franchising its double-line drive-through hamburger restaurants in 17 states. The company's 1992 earnings more than doubled, as did its revenues. Its stock has traded as high as $26 a share, but lately has been hampered by a weakening restaurant industry and the sale of some shares by its president "Everything appears back on track at Checkers Drive-In Restaurant with 155 restaurants to open this year and next year," said Sharon Conway, based in Chicago with A.G. Edwards Sons.

"For more aggressive, diversified investors, the stock's a worthwhile candidate for long-term growth." Andrew Leckey' column on investing appears on this page every Thursday. Questions may be addressed to Leckey at the Chicago Tribune, 435 N. Michigan Chicago, 1U. 60611. advised Donald Trott, analyst with Dean Witter Reynolds Inc.

An operator of casual apparel specialty stores that include Gap, GapKids and Banana Republic, the company did phenomenally well two years ago as each month's sales significantly exceeded all expectations. Unfortunately, yesterday's gone: The Gap is now settling down to more "normal" levels of profitability, Trott believes. "I think we've also seen a peaking out of the basic denim cycle, resulting in a glut of denim everywhere, and that means everyone in the industry is taking markdowns," added Trott "Expect those negative circumstances to end this spring, however." Beginning in the second half of the year, underlying earnings growth should start moving ahead at a 20 percent annual clip, he predicted. He i f-in.