The Los Angeles Times from Los Angeles, California • 69

HWWMLSTiS' Cos Angeles Slimee irestone Considers 1 4 i Business ,1 Is A org-Warner lieup i I. Ml I IVFI ATlflll pfjipcq SEASONALLY ADJUSTED 1.0- A A MONTH 10 MONTH PERCENTAGE CHANGE 1977 I I I I I I I I I OJFMAMJJASOND MEAD TAKEOVER BID IN JEOPARDY? 1 4 Part III WEDNESDAY, NOVEMBER 29, 1978 Stocks Skid in Late Trading; Dow Off 9.70 From Tlm Wirt Strains NEW YORK Glamor stocks and blue-chip issues, which led a late rally in the previous session were the driving forces Tuesday behind a stock market decline in the final two hours of trading. The Dow Jones industrial average tumbled 9.70 to 804.14 after hovering more or less unchanged at the 813-point level for most of the day. The decline was the Dow's biggest since Nov. 13.

Volume on the New York Stock Exchange totaled 22.74 million shares compared with 19.79 million on Monday. Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 25.98 million shares. Standard Poor's 500-stock index fell 0.84 to 95.15, and the NYSE composite index dipped 0.43 to 53.13. The American Stock Exchange market-value index fell 1.40 to 147.44, and the Nasdaq composite index of OTC stocks slipped 0.37 to 115.60. Big block trades of 10,000 or more shares on the NYSE totaled 255 compared with 175 on Monday.

In London, the Financial Times index of 30 stocks closed at 489.9, up 5.0. The 1978 high of 535.5 was set Sept. 14. The 1978 low of 433.4 was Please Turn to Page 15, Col. 2 Merger of No.

2 Parts Firm Could NEW YORK GB-Firestone Tire Rubber the nation's second largest tire maker, is considering a $1.35 billion merger with Borg-Warner the diversified auto parts and industrial equipment maker, the two companies announced Tuesday. Richard A. Riley, chairman of the Akron, Ohio-based Firestone, and James F. Bere, chairman of the Chicago-based Borg-Warner, said in a joint announcement that the merger plan calls for formation of a holding company. Riley will serve as chairman of the new company and Bere-already a Firestone director will be president and chief executive.

No name has been picked for the holding company, which will be located in Chicago. Asked if the 68-year-old Firestone name would disappear if the merger is consummated, Bob Kelly, a spokesman for both firms, said, "Oh no, nothing like that." According to the announcement by Riley and Bere, Firestone and Borg-Warner would operate as "separate entities." However, terms of the planned deal appeared to give the balance of power to Borg-Warner, at least initially. Firestone, which ranks second in the tire industry behind Goodyear Tire Rubber has faced prolonged difficulties with its now-discontinued line of Firestone 500 steel-belted radial tires. Complaints over the safety of the tires have forced a recall of 7.5 million 500-series tires still on the road. In addition, Firestone was plagued earlier this year by heavy expenses incurred in shutting down some tire-making facilities.

But Bere, in a prepared statement, said he views "Firestone's difficulties as temporary." Firestone, ranked 46th on Fortune magazine's list of America's 500 largest industrial firms, had sales in the year ended Oct 31, 1977, of $4.4 billion. Its profits totaled $110.2 million or $1.92 a share. Its stock closed Tuesday in New York Stock Exchange consolidated trading at $12.50 a share. SEC Opens Occidental I I I 1978 I I I I I I I I I I FNAMJJAS0 old who also is chief executive officer of Occidental, "obtained undated resignations from a small number of past management directors," the firm said in a statement filed with the SEC last Friday and made public Tuesday. The SEC is trying to discover whether Occidental or its officers made misleading statements or failed to disclose adequately any arrangements with past or present members of its board concerning their length of employment.

It also is checking the accuracy of Occidental's claims for its domestic and international oil and gas production and reserves, as well as the firm's auditing and accounting practices. Occidental's arrangements with foreign governments and their agents also are being examined by the SEC, according to the firm's statement, along with the firm's compliance with federal environmental standards. "Occidental does not believe that it made any misleading statements or omissions of material facts," the firm said. But, it added, the SEC might file a lawsuit challenging the firm's compliance with securities laws and said that any such litigation might block its attempted takeover of Mead, begun last August despite the opposition of Mead's board of directors. The Justice Department already has filed an antitrust suit to block the takeover bid.

Hutton Unit Introduces New Life Insurance Package BY JOHN A. JONES Timet Staff WrHff Business Gains Continue, Purchasing Agents Claim BT HARRY ANDERSON Tlnwt Staff Wrltar Tire Maker and Auto Be Worth $1.35 ion Borg-Warner, ranked 127th on the Fortune list, had 1977 sales of $2 billion and earned profits of $104 million, or $4.93 a share. On the NYSE consolidated tape Tuesday, Borg-Warner shares closed at $29.25. Borg-Warner has considerable expertise in the automobile parts business and is well known for its trans -Please Turn to Page 24, Col. 2 Can't Meet Fuel Economy Goals, Chrysler Warns DETROIT (UPI) -Chrysler Corp.

has told federal officials it cannot meet the government's fuel economy standards for 1981-model vans and light trucks and that huge layoffs and production cuts are likely unless the rules are changed. A Chrysler spokesman said Tuesday the company has asked the National Highway Traffic Safety Administration to lower the standard requiring vans and light trucks of 6,000 to 8,500 pounds to achieve 18 miles per gallon by 1981. He said the company requested the standard be dropped to 16.5 m.p.g. Chrysler officials believe their trucks can meet the 16 m.p.g. standard on the books for 1980, the spokesman said.

A top Chrysler official was quoted as saying production cutbacks "anywhere from 100,000 to 300,000 units" could result if the 1981 standard isn't changed. The company built about 400,000 units in the range in the 1978 model year. "It is very clear that with the components we will have to work with, we cannot meet the 1981 standard," Chrysler Vice President Sydney Terry said in an interview with the De-Please Turn to Page 21, Col. 4 were worse. Improved production was reported by 25 of those in the survey, with 67 saying it was the same as in October and 8 saying it was worse.

Perhaps signaling the increased caution among -business officials, the survey found that more purchasing agents were liquidating their inventory of raw materials in November than were adding to it. It is the first survey this year in which more agents told of lowering their stocks than of adding to them -except for March, when bad weather caused involuntary reductions. Employment continued to improve this month, the survey found. The 22 who said they increased payrolls is unchanged from October, but the 7 who said they reduced employment is down from 12 last month. Although industrial prices continued to increase in November, the rate of price hikes slowed, the survey disclosed.

Higher price tags were reported by 63 of those polled, compared with 69 in October. Lower prices were reported by just 1 for the fourth consecutive month. The NAPM said the decline in those reporting higher prices is only the third drop this year but somewhat sharper than the previous two. Some agents said they believe President Carter's price guidelines may be helping. has been scheduled for Dec.

6 on its motion for a permanent injunction against Uarco Arden-Mayfair reached an agreement in principle to sell its dairy division operations in eastern Washington state to an unnamed buyer at an undisclosed price Dart Industries extended until 5 p.m. (EST) Jan. 10 the expiration date of its tender offer for any and all shares of P.R. Mallory Co. Shareholders of HMO International will vote at a special meeting scheduled for Dec.

19 on a proposal to merge the company into INA's health care management group filed a proposal with the FCC to reduce rates by 10 to 11 for calls between Alaska and the U.S. mainland The Air Transport Assn. said domestic and international airline traffic increased 16.7 in October, 1978, compared with October, 1977 Sharp Corp. will build a $20 million electronic manufacturing plant in Memphis The Treasury will offer $2.7 billion of 91-day bills and $2.9 billion of 182 -day bills at its regular weekly auction Monday The Conference Board's help-wanted advertising index (1967 equals 100) was at 161 in October, 9 points above September's reading and 11 points over the revised figure for August. It stands 33 points above its level a year ago.

ft) i i HIGH COST OF LIVING-A 0.8 rise in consumer prices for October means that food is 118 more expensive than it was in 1967 and housing is 109 more expensive. The chart reflects the month by month progression since 1977. STOHY IN PART I MM 1. Tlmtl clwrt The SEC's inquiries also may delay Occidental's plans for a $677.4 million stock offering which it registered with the commission last August. The SEC is the federal agency that regulates the sale of securities to make sure potential buyers are given a truthful and accurate picture of the offering firm's financial condition.

Occidental signed three consent decrees with the SEC after other investigations into its financial disclosures without admitting or denying wrongdoing. Hammer personally was involved in two of these legal settlements. In 1971, Occidental and Hammer were accused of giving the SEC and others misleading information on oil and projected coal production and concealing the origin of some income. In 1973, the SEC accused the firm and Hammer of omitting or misrepresenting facts about its oil tanker fleet. In 1977, the SEC charged that Occidental had failed to disclose questionable or illegal use of corporate funds totalling $1.2 million in 1969-75.

In each case, the firm neither admitted nor denied the allegations but consented to an injunction barring any such conduct in the future. The firm reported last April that it made gifts to the presidential reelection campaign of Richard M. Nixon in 1972 as well as to South Korean businessman Tongsun Park and former Rep. Richard Hanna area east of Tokyo. The park would be somewhat larger than its counterpart in Orange County and feature five theme areas: World Bazaar, Ad-ventureland, Frontierland, Fantasy-land and Tomorrowland.

Negotiations to build the park have been delayed by a corporate reorganization of Oriental Land and by problems in building the Tokyo Bay Expressway, which would serve the amusement park. Oriental Land said it expected the facility to be open by 1982. The Japanese firm owns the 204 acres on which the park would be built. Oriental Land formerly was owned by Keisei Electric Railway but corporate control is being shifted to Mitsui Real Estate Development with Keisei retaining a minority interest. The Japanese firm would build and operate the amusement park, Bagnall said, with Disney providing its management expertise in return for a percentage of the revenue.

unpaid dividends on those shares. White said that because of restrictions imposed by its creditors it failed to pay the specified dividends on the preferred stock starting in 1975 and, beginning in 1976, failed to make scheduled redemptions of the shares. A U.S. official said a trade surplus with Japan is unlikely. Although the United States will be able to narrow its trade deficit with Japan in 1979, Commerce Department Asst.

Secretary Frank A. Weil said, it is unlikely that this country will ever achieve a trade surplus with Japan. He told a press conference in New York that the American goal is to reduce the current trade deficit with Japan to a "manageable size" and that a deficit of less than $4 billion to $5 billion would be regarded as manageable. The trade deficit with Japan this year is expected to be about $13 billion. The world merchant shipping fleet grew only 3 this year.

Lloyd's Register in London reported the world merchant shipping fleet increased by only 3 to 406 million gross tons, the smallest rise since 1968. Total tonnage was 406 million tons in 69,020 ships, up from a 1977 total of 394 million tons in 67,945 Probe Disney to Help Build Long Planned Tokyo Park, Japanese Firm Says BT PATRICK BOYLE Tlnwt Staff Wrrtar BY WILLIAM J. EATON limn StH writer WASHINGTON The Securities Exchange Commission has started a wide-ranging new investigation of Occidental Petroleum Corp. and Chairman Armand Hammer's control over some members of the board of directors, it was disclosed Tuesday. The SEC inquiry also centers on Occidental's overseas oil and natural gas operations and financial dealings with agents of foreign governments over the last four years.

The firm acknowledged that the latest SEC investigation of its affairs the fourth in seven years-may delay or prevent its attempted $1 billion takeover of Mead a forest products firm based in Dayton, Ohio. Hammer, the flamboyant 80-year- depending on changing rates in the bond and money markets. The investment fund now is earning 9 for the company, Barger said, making the 7 payout possible after meeting expenses and profits. Barger quoted from testimony before Congress last August by Albert H. Kramer, director of the Bureau of Consumer Protection of the Federal Trade Commission, that a 1974 study of whole life policies showed an average return of about 3V4 after 20 years.

Barger said the Total Life policy also offers flexibility in premium payments, which can be raised or lowered at the consumer's choice as long as the term protection costs are met; and offers the right to borrow or redeem parts of the cash value. Other brokerage firms also sell insurance, often in the form of annuity policies, to swell the firm's income. Hutton previously has sold other kinds of insurance, including the split-life form. The higher yield on the Total Life policy is made possible in part because securities salesmen can sell insurance for lower commissions than insurance company salesmen who sell nothing else, Barger said. An insurance salesman's commission often takes the whole of the first year's premium on a traditional whole-life policy, but Hutton officials said their salesmen will get only about 10 of that amount.

It will be worth their while, however, because the salesmen also will be able to seek securities trading and other investment business from insurance customers. in Brief average yield for conventional mortgage commitments those not backed by the government rose to 10.638 from 10.486 at the previous sale and was the highest since 10.662 on Sept. 23, 1974. Georgia-Pacific said its 1977 statement is now qualified. The Portland, company announced it has been advised by its independent public accountants, Arthur Andersen that the previously issued unqualified report on the 1977 financial statements will now be qualified pending the outcome of certain litigation.

Georgia-Pacific Corp. said the qualification results from the previously announced jury verdict that a conspiracy existed to inflate prices between Georgia-Pacific and other producers of softwood plywood in class action antitrust suits in a federal court in New Orleans. Georgia-Pacific intends to continue to fight the class action in additional proceedings. Construction contracts were up 40 during October. The F.

W. Dodge division of McGraw-Hill Inc. reported overall con A new life insurance package was introduced in California Tuesday by a subsidiary of E. F. Hutton Co.

a nationwide investment firm, to meet what it called growing consumer objections to traditional whole-life insurance policies. Called Total Life, the policy combines low-cost term insurance protection with an investment fund similar to the cash-value portion of a whole-life policy. The insurance, to be sold by E. F. Hutton account executives, is written by the firm's subsidiary, Life Insurance Co.

of California, based in La Jolla. The policy is similar in some ways to the "split life" insurance pioneered several years ago by the same company, which combined low-cost term insurance with an annuity policy. But the new product is a single whole-life policy and the death benefits are free of income tax, unlike the proceeds of an annuity, Hutton officials said. Jack P. Barger, senior vice president of Life Insurance Co.

of California, said the Total Life policy includes the advantages of both term and permanent insurance in a package easier for consumers to understand. An annual statement shows how much of the premiums go into insurance protection and how much into the investment program and exactly how much the investment yields. The program guarantees a yield of at least 4, he said, but the current yield is 734. "There is no other life insurance policy available today that is producing that kind of return," Barger said. The total yield will vary, however, Business National An Indianapolis TV station switched to ABC from NBC.

ABC Television Network and McGraw-Hill Broadcasting which owns WRTV in Indianapolis, jointly announced that the station will become a primary affiliate of ABC Television Network. WRTV has been an NBC affiliate since July 15, 1955. Jerry R. Chapman, vice president of McGraw-Hill and general manager of WRTV, said, "We feel ABC's programming is more representative of the attitudes and interests of today's Indianapolis WRTV is the second McGraw-Hill station to become a primary affiliate of ABC. The other, KGTV in San Diego, left NBC to join the ABC Television Network in 1977.

Yields rose at Fannie Mae's latest auction of home loans. At the Federal National Mortgage latest auction of four-month commitments to buy home loans, the average yield for government-backed FHA-VA mortgage commitments rose to 10.325 from 10.268 at the previous auction. It was the highest since 10.559 on Sept. 23, 1974. The Despite increasing concern about a recession next year, business continues to improve generally, according to a poll of corporate purchasing agents which is being released today.

Production schedules and new orders have remained "very acceptable" in November, and 65 of those surveyed expect Christmas sales this year to exceed last year's with only 4 expecting a decline, the National Assn. of Purchasing Management Inc. said in releasing its monthly poll of members. Despite the optimistic findings, however, only 33 of those surveyed this month said they believe the first quarter of 1979 will be better than the fourth quarter this year and 18 think it will be worse. That compares with 76 who expected a better first quarter when asked the same question last May.

Only 9 expected a decline at that time. The results are based on a monthly poll of about 200 purchasing agents from a selected sample of U.S. industry. Purchasing agents are the executives within a company who place orders for raw materials their firms believe they will need to meet the future level of business. The NAPM said 30 of those polled this month said new orders were better than in October; 58 said they were the same, and 12 said they ships, Lloyd's said.

The Greek fleet expanded the most by 4.4 million tons, with Panama second with an increase of 1.3 million tons, and China third with a 1 million ton boost. The largest national fleet reduction this year was that of Norway with a decrease of 1.7 million tons. California California mortgage lending may decline, an regulator said. Milton Feinerman, president of the Federal Home Loan Bank of San Francisco, told securities analysts that mortgage lending by California savings and loan associations may fall about 5 next year from the $24.2 billion estimated for 1978, largely because of anticipated slower growth in personal income and employment in the state, and a slight easing in the demand for housing. Feinerman predicted that savings flows to will rebound in 1979, however, with a 15 to 20 improvement over this year.

SoCal Edison's electricity production for the week ended Nov. 25 totaled 1.08 billion kwh, 6.9 less than the week before, but 6.7 more than a year ago Daylln said a hearing A Japanese real estate firm said Tuesday it has reached a tentative agreement with Walt Disney Productions under which the Burbank-based entertainment company will help build the long-planned "Tokyo Disneyland." Oriental Land Corp. Ltd. said a final agreement to begin work on the $305 million project is expected by the end of the year. Michael L.

Bagnall, Disney treasurer and vice president-finance, declined to discuss the report that agreement has been reached with Oriental and its two owners in the cooperative venture. However, he added, a delegation of Disney officials now is in Tokyo "to negotiate a final, definitive agreement" and he said the firm would make an announcement when those talks are completed. Disney has been talking with the Japanese firm since late 1974 about building an amusement park on a 600-acre peninsula in the Tokyo Bay struction contracts awarded in October came to $14.9 billion, up from $10.6 billion a year earlier. The "extraordinary flow of new projects" means the construction industry will be working at full capacity well into 1979," said George A. Christie, chief economist for Dodge.

The biggest percentage gain last month came in contracting for nonbuilding construction which jumped 98 to $3.9 billion from $2 billion in October, 1977. Last month's figure included $2 billion in contracts for three coal-fired electric power plants in Indiana, Texas and Kentucky. White Motor Corp. settled a suit for about $15.8 million. The settlement stems from a suit which Studebaker-Worthington Corp.

filed in federal court in New York over White's alleged failure to make the scheduled dividend payments and redemptions relating to the latter's purchase of Alco Engines from Studebaker-Worthington in 1969. Cleveland-based White said that under terms of the settlement it will issue 1.05 million common shares on March 20, 1979, in redemption of 126,138 shares of a $6.75 per share preferred stock, which was used by White in 1969 to purchase Alco Engines. The settlement also is to satisfy I.