Star Tribune from Minneapolis, Minnesota · Page 40

2D SpotlightSmall Toy Soldiers the deal but said that five of his company's 12 employees will be laid off. The other seven will move to Cerritos, Calif., where Bandai America has its headquarters. Feely will become president of Bandai America and of Toy Soldiers, and he and other Toy Soldiers executives will retain a minority ownership stake. "After two years of autonomy, I've decided that autonomy has its pitfalls," said Feely, a former executive with both Mattel and Tonka Corp. "In looking at our own careers and goals, we felt our future would be better served under the umbrella of a larger company, particularly if that ensured we had the ability to manage the situation." Although Feely said he and the other founders of Toy Soldiers had hoped "to do something important in the market," the consolidation of the toy industry plus a recessionary economy persuaded them to seek stronger financial backing. Bandai "is not leveraged at all," he said, describing it as the world's third-largest toy company after Hasbro Inc. and Mattel Inc. Although Nintendo also is larger than Bandai, he said it's an electronic games company, not a broadly based toys and games manufacturer. The departure of Toy Soldiers follows the sale, departure or demise of such Minnesota toy companies as Schaper Manufacturing Co., Leisure Dynamics and, potentially, Tonka. But the steady shrinkage of toy companies is no reflection on the state, Feely said. "Minneapolis is a great town to do a toy company in. There are so many people who know how to do toys here," he said. But the surviving companies, such as Animal Fair Inc., Carousel Inc. and Spearhead Industries Inc., are relatively small. Denny Sharkey, senior vice president of operations for Toy Soldiers, held similar jobs at Schaper, Leisure Dynamics and Tonka. The cause of each company's decline was different but each contributed to the industry's consolidation, he said. Nor is the momentum spent, he said: "I doubt that Mattel will stand by and let Hasbro make this (Tonka) acquisition" without trying to make a . purchase of its own, he said. NWA Continued from page ID $400 million equity stake in Northwest Airlines, totaled $42.7 million. KLM, which recently received U.S. government permission to hold a 49 percent equity stake in Northwest and a 10.5 percent voting stake, said it lost $130.4 million in its third fiscal quarter ended Dec. 31 in contrast to a profit of $35.7 million a year earlier. The Standard & Poor's report said Northwest and its parent continued to have adequate cash and lines of credit. S&P also said that the airline's owners have paid down more than half of the original $3.1 billion in acquisition debt and that they are attempting to reduce expenses through employee contract conces-sions.( But, S&P noted, "The drop in international travel following the outbreak of war in the Persian Gulf, plus sluggish domestic traffic and high fuel prices, have hurt Northwest's earnings and cash flow." Northwest is expected to announce today or early next week that it in Midway Continued from with its creditors about restructuring its debt and expects to resume the payments in May. Analysts saw the talks as a possible attempt by Midway to avoid filing Chapter 11 bankruptcy filing. "The only way (Midway) will not file Chapter 1 1 is if the creditors go along with it. My guess is they will," Karos said of the restructuring. Midway said it lost $8.32 per share for the quarter, compared with a loss of 26.9 million, or $2.78 per share, for the year-ago quarter. For the year ended Dec. 31, 1990, Midway reported a net loss of $139.2 million, or $13.98 per share, compared with a net loss in 1989 of $20.7 million, or $2.15 per share. "Midway's 1990 results reflect the extraordinary pressures brought to bear on the airline industry during the year," company Chairman David Hinson said in a statement. "The Dividends Washington Scientific Industries Iifci '5C, regular quarterly, payable 4-26-91 to shareholders of record 4-10-91. FridayFebruary 81991 Star Tribune business Continued from page ID The shrinking number of toy companies stems partly from the shrinking number of youngsters who demand and use toys and partly from the shrinking number of toy retailers. Producing a hit toy requires $1 million to $1.5 million in development and marketing, Sharkey said, and toy retailers are "getting more pressure from the big guys who have the promotional dollars to spend. The big guy will prevail." The price, however, could be growing conservatism in the choice of toys to put on the market, he said. Feely said that Bandai is better known outside the United States, partly because its best-known products have been distributed here by other companies. GoBots, for example, the first transformable robot toys, were made by Bandai and distributed by Tonka. Bandai's Mapletown line of action figures also was distributed by Tonka. Mattel distributed Bandai's Shogun Warriors and M.U.S.C.L.E. action figures. Feely said his goal is to increase Bandai's U.S. sales to $300 million, about the same amount that Bandai sells elsewhere in the world outside Japan. Meanwhile, Toy Soldiers will display its new line of toys next week at the American International Toy Fair in New York. It includes two kinds of male action figures named "Little Dracula" and "Ultra Man," which he described as "the Superman of Japan." A Baby Lullaby doll boasts a face that glows and it sings when moved. A Cuddle Bright dolj holds a battery that illuminates strands of fiberoptic hair. Although the company never has sold toy soldiers, it will reintroduce Stompers, a line of tanks and trucks formerly marketed, ironically, by Minnesota's Schaper. Feely is excited about that. Like other toy executives searching for the next big hit, he said, "What we're hearing is that there's a big demand for military (toys). ... Anything that smells of Desert Shield is selling like hotcakes." Staff librarian Linda Sack contributed research for this article. curred substantial losses during the fourth quarter of 1990. The S&P report covers single-B-plus ratings on $200 million of NWA Inc. senior notes and $7.7 million of Northwest Airlines special revenue bonds. Paul Karos, an analyst for First Boston Corp., said the S&P action was not surprising, given the turmoil in the airline industry. "There is a downward revision of many credit ratings because of losses, and a lack Df clarity for 1991 and 1992," he said. Karos said the action could increase the cost of capital for NWA in the future. Northwest spokeswoman Christy Clapp indicated that the airline was not disturbed by the report. "We've got adequate liquidity, we have relatively light capital expenditures planned for 1991 and we're developing contingency plans to deal with the future," she said. This article contains material from the Associated Press. page ID unprecedented rise in the cost of aviation fuel, especially after the onset of the Mideast crisis . . . increased Midway's 1990 cost of operations by approximately $30 million over 1989 experience." Hinson said cutting the size of the company's system's operations has also led to an excess number of aircraft, "and the company is actively engaged in the disposition of these aircraft." In October, the Chicago-based carrier said it would sell its year-old Philadelphia hub to USAir Group Inc. for $68 million. Midway employs 5,700 nationwide, 1,600 in Chicago. To our readers: The Other National over the Counter stock table now appears on page 5D. The Star Tribune receives trading Information for these stocks in the table from the Associated Press, consequently, the stock symbols are slightly different Also, stocks that did not trade the previous day will not be listed in the table. Hidden numbers boost budget plan The key to understanding the $1.45 trillion federal budget and what it means for the economy is the numbers you don't see. The budget deficit is larger than the $280 billion acknowledged Monday; by the Bush administration as it submitted its fiscal 1992 spending plan to Congress. That deficit calculation for the fiscal year beginning Oct. 1 includes about $75 billion borrowed from the Social Security trust fund's reserve for future retirees. If the government hadrft borrowed Social Security reserves for current expenditures, the deficit would be about $355 billion. Another number you don't see is the assumption made about the economy's future growth. After predicting less than 1 percent growth for the rest of fiscal 1991, the Office of Management and Budget (OMB) assumes growth of 3.6 percent in fiscal '92 and more than 3 percent growth annually through the mid-1990s. That assumption is important because OMB uses it to estimate future government revenues and the shape of budgets and deficits through 1996, when the government predicts a federal budget surplus. The estimates are hard to believe. Economic growth of 3 percent is difficult for the U.S. economy at this point, most economists say. They expect that 2.5 percent growth per year in the '90s is about all the economy can sustain. And a half-percent difference in growth for the U.S. economy is substantial the equivalent of adding 1.04 million jobs a year pay- Retail sales Dayton's department store division, which includes its Marshall Field's stores, saw comparable-store sales decrease 2 percent. Richard Pyle, a managing director for Piper, Jaffray & Hopwood, said Dayton's department store division numbers are an indicator that consumer confidence is slipping in the Twin Cities, Chicago and Detroit areas. Dayton's Target Stores saw total sales increase 2 percent, but comparable-store sales decreased 2 percent. Historically, consumers shop more at discount stores or lower-priced stores during recessionary times. For example, same-store sales at Wal-Mart Stores Inc. rose 1 1 percent in January with overall sales of $2.5 billion. Discounter K mart Corp. said same-store sales rose 3.8 percent for overall sales of $2.42 billion for the five weeks ending Jan. 30. Barkelew said the Target numbers are perhaps skewed since the division had a particularly strong January last year. In contrast, Mervyn's, Dayton's chain in California, showed that total sales increased 15 percent and comparable-store sales increased 13 percent. Also locally, Best Buy Co., a large consumer electronics and appliance retailer, reported January sales of $45 million, an increase of 7 percent over last year. However, of the company's 57 stores throughout the Midwest and Texas, 49 are considered comparable. Those stores registered a 6 percent decrease from last year. Pyle said the decline was not surprising, since they sell more consumer durables and higher ticket items, which consumers may fear they can- Tonka Continued from page ID man Stephen Shank "on several occasions between January 1988 and June 1990 .. . and suggested that the companies explore the possibility of a business combination." Tonka said it declined those overtures. Talks between representatives of each company occurred last June, and in late October Shank and Hasbro Chairman Alan Hassenfeld renewed the discussions. Subsequent talks in November and December did not produce "a mutually acceptable procedure for Hasbro to obtain the due diligence information it required," but a Jan. 15 letter from Hasbro to Tonka's board of directors indicated Hasbro's "serious interest in acquiring the company," the filing says. On Jan. 16, Tonka's board authorized providing information about the company to Hasbro. That led to intensive negotiations that culminated in the merger agreement approved by both companies' boards on Jan. 31. Local over-the-counter stocks Bid Ask Bid 'Atk AgChtmEeuip 9ft 11 ConceurssCe ft ft AlaoMti ft DacotahBk 14 None AHMsdla ft DaHCorp 3ft 4ft AtNihnlnwo 3 two DataMap 3 4 AnutHH 1ft 2ft DSCNorttdl ft ft Aorttcti Inc. 4 4 DvnmlcHms 1 AppRacvdng 3 4 EMC Com 110 130 AtrlnlntlUntt ft I EIWVctMal BerbirHalr 2ft 3ft EvtTtck Mi ft BioManufadur 3 3ft GarmfflGraphlc 1 2ft BltoNnsIr i 3ft GenkiiTsch ft ft CamaraPtaitrm 14 2 GrtcLDWoundCr ft ft ChrHtnBros 2ft Jft HeawDulvAIr ft ft Chrome 2ft 3ft K-TeINtw ft I CxwalHndl I II Lamcorlnc ft 1ft Local stock quotellon are compiled by Summit Investment Corp. of Minneapolis, and Indicate Inderdeeler prkes from a markat miker In each security at of 3 p.m. vetterdav. . . -, Jcmos Flisnifgssii ing $25,000 each. Allen Sinai, chief economist of Boston Co., said the economy would need a burst of productivity gains to achieve the growth OMB is predicting. Of course, the budget submitted Monday doesn't include any cost estimate for the Persian Gulf war, on the ground that accurate calculations are difficult now. But for a tough estimate, U.S. allies are kicking in $51 billion, so the United States will pay that much and probably more. The unwritten message is clear financing the government will be a burden on the economy in the years ahead. You can better understand if you think in terms of your household spending. Say you're going to live beyond your income for a while on the assumption that you'll get a sizable pay raise every year from now through 1996, and at the same time Continued from page ID not afford right now. Meanwhile, January made times even tougher for some retailers. Sears, Roebuck and Co., struggling to remain the nation's largest retailer, reported that comparable-store sales fell 3.2 percent while total sales fell 3.4 percent. Sears also saw some of its bond ratings fall, making it more expensive for it to borrow money. Carter Hawley Hale Inc., one of the nation's biggest and most indebted retailers, lost $26 million last year and had more troubles today. Amid rumors that the retailer is about to file for bankruptcy protection, the New York Stock Exchange halted trading in its bonds as it sought confirmation from the company of its ability to meet $22 million in interest payments on its junk bonds next week. t This report contains material from the Associated Press. January retail sales ' 1991- 1990 Percent (la milllotu) lata sale change Sears $2,570 $2,660 -3.4 Wal-Mart 2,500 1340 36.0 Kmart 2,420 2,220 8.9 J. C. Penney 982 996 -1.4 Dayton Hudson 988 884 11.8 May 613 568 8.0 Melville Corp. 657 531 23.8 Woolworth 780 739 5.5 Limited 824 690 19.0 TJX Cos. 293 245 19.4 Year-to-date Sean $33,950 $33,430 1.5 Wal-Mart 32,600 25,810 26.0 Kmart 32,070 29,170 9.9 J. C. Penney 15,270 15,120 1.0 Dayton Hudson 14,500 12,780 13.5 May 10,040 9,340 7.5 Melville Corp. 8,680 7,550 14.9 Woolworth 5,110 4,770 7.1 Limited 4,840 4,110 17 X TJXCo. 2,290 2,020 13.6 Avon announces special $3 dividend Associated Press New York, N.Y. Avon Products Inc., under pressure to raise its stock price, said Thursday that it would issue a special $3-a-share dividend to common shareholders and increase the regular annual dividend by 40 cents a share. Chartwell Associates LP, dissident stockholders who have been hound-'ing the cosmetic maker's management for more than a year, called the moves insufficient and said Avon must begin a stock buyback to increase the stock value. Chartwell also repeated in a Securities and Exchange Commission filing its plans to nominate four candidates for openings on Avon's board and to solicit shareholder proxies for votes for its nominees. Avon said a special committee, set up last year after Chartwell threatened a proxy fight for seats on the company's board, rejected the stock buyback called for by Chartwell. Bid NorAlttnTdi ft Nortlmlmtru ft Northgatt In) ft NorltHlrCmotr 5 NorttitlrUmpW 70 Novacon ft O-Jey Inc 1 Onwlcoffl 1 OxboroMwM 4' PirunMlCitr ft PreciwOptCorp 3ft QuirtumUb I RtventEnMrpre RtoPHito S RoctwtNr Med I Ask Bid Ask ft ScKoltcNRG ft ft ft SoUdClhlnc 1ft 2ft 1 SptsmnsGuldt ft ft i Surgktvnt ft ft 1090 TtMlKUIS ift M ft TtrtmiiK ft I 2ft Unltourct ft I ft WeslAnwrkJ ft t 5ft WlnHndEKc ft ft ft WoodmlnGrp ft Ift 4ft WrktCMCIasA t 3 3 WndCntwcom ft ft ft 7 you're taking money out of a retirement fund to use for current expenses. You've also just had accidental damage to the car or house that will cost you beyond what insurance will pay. You'd be pretty close to the edge, and if the raises you counted on didn't come through, you could be pushed to personal bankruptcy, to the point where lenders didn't allow you to borrow any more. Now consider the government, which will be borrowing about $350 billion this year and next and maybe the year after, too. The pressure on capital markets will be substantial and likely to push up interest rates. That's an eventuality that bullish investors these days may not be counting on. But that's the logical outlook: Treasury bonds buyers will demand higher interest rates if they fear inflation. Foreign investors, fearing depreciation of the dollar, will demand higher interest rates or want to buy U.S. assets land, buildings, companies. This disturbs Americans politically. Yet cutting the federal budget is easier said than done. What do you cut? In the new budget, OMB director Richard Darman charts the flow of benefits to middle-class and wealthy Americans and suggests cutting such benefits. And the new budget introduces the principle of means testing in an attempt to cut Medicare for taxpayers earning more than $125,000. In future budgets, the earnings limit can be lowered to cut benefits for much of the middle class. Company news Hopkins company sells sensor unit Innovex Inc., Hopkins, said it has agreed in principle to sell its sensor market group for an undisclosed amount of cash to an investment group based in Milwaukee. The investment group will buy the fixed assets and technology of the sensor market group, which makes solid-state pressure sensors primarily for the commercial energy management market. Innovex said that the sensor business had developed slower than anticipated and that it had been considering alternatives for it for some time. The sensor group had sales of $687,000 in fiscal 1990, or less than 2 percent of total sales, and is not expected to have a material impact on Innovex's financial results in fiscal 1991. - Wisconsin firm to buy local shops Cousins Submarine Sandwich Shop Systems Inc. of Menomonee Falls, Wis., said it intends to buy four local Clark's Submarine Sandwiches shops. Terms were not disclosed. Clark's filed in October for protection under Chapter 1 1 of the Bankruptcy Code. Cousins is awaiting approval of the sale from the bankruptcy court, which is to hand down a decision in early March. Two of the stores are in Minneapolis, one in St. Paul and one in Coon Rapids. The company plans to franchise one of them. With the sale Cousins will have 85 stores in Illinois, Wisconsin and Minnesota. Earnings Arctcolnc. 3rd Qtr. 1231 1990 1989 Revenue $63,673,000 $67,085,000 Percent Change -5.1 Net $4,948,000 $7,534,000 Percent Change -34.3 NetShr $.39 $.68 9 Months Revenue $145,371,000 $132330,000 Percent Change 9.9 Net $14,563,000 $14,188,000 Percent Change 2.6 NetShr $1.20 $1.29 Arctco Inc., a snowmobile manufacturer In Thief River Falls, Minn., attributed the decrease in quarterly revenues to a planned shift of first- and second-quarter shipments to dealers and distri Foreign exchange Fgn. currency Dollar In In dollars Fgn. currency Yester- Day Yesler- Day day before day before .000111.000112 9000.0 8916.0 .7815 .7775 1.2795 1.282 .0971 .0978 10.22 10.23 .0334 .0334 29.94 29.95 .0044 .0045 220.00 223.10 1.9918 2.0030 .5021 .4933 f-Arowttina Australia Austria c-Belgium Brazil Britain 30-day fwd 60-day fwd 90-day fwd Canada 30-day fwd M-day fwd 90-day fwd V-Chlk Colombia ' Denmark i-Ecuador ECU d-Esvpf Finland France Germany 30-day fwd to-day fwd 90-day fwd Greece Hong Kono y-lndla Ireland Israel Italy Japan 30-dv fwd 60-dv fwd 90-dy fwd Lebanon . i 1.9805 1.9918 " 1.9697 1.9809 1.9596 1.9709 .5049 .5021 .5077 .5048 .5103 .5073 .8627 .8598 .8571 .8641 1.1591 1.1573 .8611 1.1631 1.1613 .8584 1.1667 1.1650 .8548 .002967.003055 337.00 327.29 .001724 .001769 580.00 565.40 .1785 .1785 5.6025 5.6025 .001050.001050 952.50 952.50 1.4061 1.40860 .7112 .7112 .3404 .3404 2.9373 2.9373 .2827 .2835 3.5375 3.5270 .2018 .2018 4.9548 4.9560 .6875 .6908 1.4545 1.4475 .8562 l.ltyg 1.1600 .6921 1.4517 1.4448 .6903 .6918 .6935 1.4487 1.4419 .006433.006462 155.45 154.75 .1282 .1282 7.7985 7.8003 .0535 .0537 18.691 18.622 1.8270 1.8340 .5473 .5453 .4998 .4998 2.0008 2.0008 .000915 .000913 1092.50 1094.90 .007790.007806 128.37 128.10 .007799.007815 128.22 127.96 .007809.007825 128.05 127.80 .007817.007832 127.92 127.68 . .000955 .000955 104.00 1047.00 .6950 1.4455 1.4989 V BP But Darman's charts are otherwise misleading. Social Security, whicll is, paid for directly through the payroll tax, makes up most of the benefits shown. If Social Security benefits were to be cut, the tax would haved be cut as well. It's also easy to say that defense can be cut. But in the decade of the '90s, ; perhaps 15 to 20 small countries will; acquire nuclear weapons and missiles i capable of delivering them. In an unsafe world, defense budgets won be cut that much. "Jis So what will be done? "I think there i will be a new tax bracket added,'? said economist Barry Bosworthiofi Brookings Institution. It won't beo discussed this year or maybe evqtv next year when there is a presidential election. But watch for talk of a' new bracket to raise taxes on upper) middle income taxpayers, those eani ing above, say, $60,000. -ni.it icfi Is the economic future unrelievedlyi grim? Not if after the gulf war we actually do the things the budget is talking about: repairing roads and bridges, improving education, fund- ing research and development THaG would provide a boost to productive; ty a needed increase to the ecc nomic pie so all could snare. Si Here attain the kev Jies in what vOu can't yet see: whether the new budii get's numbers contain political substance or political lip service. James Flanigan is a columnist for the ' Los Angeles Times. A u,r! V:, RlsrviIllor mill hi lit1 mciviiiiiiaii vin wujr Dillon Press Inc. Z Dillon Press Inc., a publisher of chil-dren's nonfiction books for the library market, will be bought by Mac-millan Inc., a unit of Maxwell Communication Corp. Terms were itpfc disclosed. Macmillan announced that all of Dillon's operations will move from ft present location in Minneapolis to Macmillan's New York and New Jer-w sey locations. Dillon will become part of the Macmillan Children's Book Group. Multifbods unit buys four centers International Multifoods Corp., Min-" neapolis, announced Thursday that its subsidiary VSA Inc. has complel-' ed the purchase of four distribution1 centers of Servatron, Inc., a distribution company based in Long Beach,1 Calif. Terms.were not disclosed. 'mi J.'IV! The acquisition expands the geographic coverage of VSA, the nation's leading vending distributor, to all 48 states in the continental United, States. The purchase includes distribution centers in Seattle, a market' previously not served by VSA; Da' las; Tampa, Fla., and Fairfield, N.J1 The distribution centers employ about 85 people and have combined annual sales of about $40 million. ,; 1 ' In brief Duff & Phelps has assigned a ratJ ing of single-A-plus to Dayton Hudson Corporation's offering of $100 " million of 9.4 percent notes due Feb. 15, 2001. This rating is identical to' Duff & Phelps current rating for the Minneapolis retailer's senior debt. ; Compiled by Glenn Howatt butions traditionally delivered in the third quarter!; The company said It expects fourth-quarter re-., suits to be consistent with the results of prevlouV years. ili,H Oxboro Medical International 1st Qtr. 1231 1990 Revenue . $637,316 Percent Change 17.8 Net $144,585 Percent Change 47.9 NetShr $.12 Jib! 1989" $541,225' $97,748 .O'i. $.69 O'HI AwkMA tJarlUal Dlwmlrvttwi etHrlHi rtoH thai In, crease in revenues to a combination of new customers, increased volume and the lrrtroduo- tlon of products. .Ml." Ul! ill)' Y.I Fgn. currency Dollar In' ,k In dollars Fgn. currency Yester- Day Yesler- Day , day before day before' .3711 .3719 2.6898 3.6890. .000331 .000338 2963.00 2963.00 ' .410.1 .6100 1.6386 1.6393, .6020 .6005 1.6611 1.6653 .1757 .1755 5.6920 5.6975 .0454 .0454 22.02 22.02. 1.8868 1.9153 .53000 .52211' .036) .0361 27.72 27.72 .007788.007788 128.40 128.43 .2666 .2666 3.7503 3.7504 1 .5841 .5839 1.7120 1.7125 .001386.001381 721.30 720.60 .3967 .3995 2.5210 2.5030 .010947 .010941 91.35 91.40 .1830 .1835 5.4640 5.4507 .8039 J! 17 1.2440 1.2320, .8049 .8127 1.2424 1.2305 .$059 .8137 1.2409 1.2290-.8067 .6144 1.2396 1.2279 .0370 .0376 27.00 26,63 .03982 .03982 25.11 25.11 .000328 .000333 3050.00 3001.00 .2723 .2723 3.6726 3.6711. .000603 .000603 1658 00 1658 00 .0188 .0188 53.2000 53.2000 .07508 J17508 13.32 13.32. Malaysia i-Mexlco Netherlands New Zealand Norway .Pakistan y-Peru i-PMllpplnes Portugal Saudi Arabia Singapore South Korea South Africa Spain Sweden Switzerland 30-day fwd 60-day 90-day fwd fwd Taiwan Thailand Turkey U.A.E. f-Urueuav z-Vartaiuela Yugoslav ECU: Eurooean Currency Unit, a basket of Eura- pean currencies. The Federal Reserve Board's Jnr, dex of the value of the dollar against 10 other cur' rencles weighted on the basis of trade was 8041, Thursday, up 0.29 points or 0.36 percent from Wednesday's (0.52. A year ago the Index was 91.59. " Lale closing prices as of 3:00 p.m. Eastern Time from Tolerate Systems and other sources. - c-commerclal rate; d-free market rate; f-flnan-Clal rate; y-offlclal rate; l-noatlne rate; r-javlsed.