The Los Angeles Times from Los Angeles, California • 52

2 Pari IV Thursday, February 25, 1982 I) Cos Angeles (Times Dow Jones 30 Industrials Marine Midland Banker Urges Defense Cuts 4th-Quarter Deficit Less Than Expected Chrysler Posts Loss of $475.6 Million for '81 San Diego to Take Over San Joaquin 1st i Writer VVIIK INI llll IhO l.i lH HI', I 920 Hl'iM i.l'iM ma 880 It! nil 860 840 New York Composite Volume By DONALD WOUTAT, Times Staff DETROIT Chrysler Corp. Wednesday reported a smaller-than-ex-pected loss of $66.9 million for the fourth quarter and $475.6 million for 1981, but the deficit for the year was nearly double the size predicted a year earlier. The 1981 results mean Chrysler trimmed its losses by more than two-thirds from the record $1.7 billion deficit of the previous year, despite the weakest U.S. automobile market in 20 years. The figures from Chrysler, the last auto company to report results for last year, brought the U.S.

auto industry's 1981 red ink to more than $1.3 billion. In the last 24 months, the four U.S. companies have lost more than $5.5 billion. The fourth -quarter loss compares with a deficit of $235 million in the same period the previous year. Sales were $2.74 billion, virtually unchanged from a year ago.

Sales for all of last year totaled $10.8 billion, up 17.2 from 1980 sales of $9.2 billion. Chrysler's loss in the October-December period, when the recession sent already weak car sales plummeting to early 1960 levels, was only half as large as some analysts had been predicting in recent weeks. Depreciation Expenses Down However, the quarterly deficit would have approached $100 million, except for a change in accounting procedures and the sale of tax credits that together improved Chrysler's balance sheet by about $36 million. Likewise, the full-year loss would have slightly exceeded $500 million without the accounting change. Chrysler said it changed its method of depreciating certain assets, reducing 1981 depreciation expenses by $9.1 million a quarter, or $36.5 million for the year.

"In the perspective of current economic conditions, Chrysler's performance is impressive," Chairman Lee A. Iacocca declared in a letter to shareholders. "Given even a modest upturn in the economy in 1982, we look forward to a year of full recovery." Touche Ross Chrysler's auditors, were less enthusiastic, warning in the report: "The deterioration in the corporation's financial condition has diminished its ability to absorb future losses, which, if incurred, could adversely affect its ability to continue as a going concern." But the auditors added: "The business and financial progress made by the corporation in 1981 has reduced the need for ongoing restructuring." Chrysler's improvement is credited to major cost-cutting, such as a wage freeze, supplier price cuts and internal efficiencies, rather than to any major improvment in car and truck sales. By improving its share of the car market in 1981, Chrysler nearly The chief of the nation's Hth-largcst bank said here Wednesday that something has to give in President Reagan's budget for the 1983 fiscal year beginning Oct. 1, and that the something ought to be defense spending and personal income-tax cuts.

Edward W. Duffy, chairman of New York's Marine Midland Bank, in Los Angeles for the opening of Edge Act, realty-credit and representative offices for the bank, its first in the state, told a group of business executives at a luncheon that fear of huge deficits during the next several years is holding back recovery from the current recession. While saying he agreed with Reagan's assessment of defense needs, Duffy argued that "perhaps the allocations are too ambitious for fiscal year '83, given the environment. Additionally, some adjustment in the personal tax-cut program should be considered." Duffy thus joined a small but growing number of business executives who had parted company with Reagan in his determination to maintain the full scale of his planned military buildup, despite the pressures the resulting deficit expectations are putting on interest rates. "Mr.

and Mrs. America have a real fear of substantial deficit financing," Duffy said. He declined to specify how much he would defer of Reagan's planned defense spending and next year's already enacted income-tax cuts. Rusco Files for Protection By AL DELUGACH, Times Staff Writer Rusco Industries which quietly vacated its corporate headquarters in Westwood nearly three weeks ago, disclosed Wednesday that it has filed a Chapter 11 bankruptcy petition in Georgia. While under court protection from creditors, the diversified building-products company will continue operations at plants in Mil-len, Meadville, and Los Angeles.

The long-troubled company has had four presidents in two years. Its former chairman, Jack M. Catain, resigned in July, 1980, to settle federal civil securities fraud charges. A federal grand jury here indicted Catain last month on counterfeit conspiracy charges. In a brief news release given out at its Georgia plant, Rusco said it Please see BANKRUPT, Page 3 charges and has sued Missouri officials for harassment.

International Diamond last week said it filed for protection from creditors under Chapter 11 of the federal bankruptcy laws. Union Bank must pay damages of $7.5 million, a judge ordered. Sonoma County Superior Court Judge Kenneth Eymann upheld a jury's verdict that the bank was guilty of fraud in obtaining payment of a $700,000 letter of credit taken out by Lumbermans Mortgage Lumbermans Acceptance Co. and Ian T. Allison of Santa Rosa.

The judge said there was "very substantial evidence" to support the jury's finding that the bank was liable fcr forcing the companies into bankruptcy. Charles Kenny, an attorney for the bank, said the bank intends to appeal the Feb. 16 ruling. Hourly workers at Ford are approving tentative concessions negotiated by the auto maker and UAW by about a 4-1 margin, the union reported The Amex approved for original listing 5.57 million shares of Berry Industries, Long Beach Honeywell said it will buy up to 15 of Pasadena-based Tetra Tech's 1.75 million out- standing shares in the open market- in connection with its previously announced acquisition agreement Areata said completion of its acquisition by a group formed by Kohlberg, Kravis, Roberts is delayed pending a review Whit-taker extended its tender offer for Brunswick common to March 12 from Feb. 26.

It also expects to extend withdrawal rights from its offer from March 2 to a date after an appeals court decision Frontier Airlines said it laid off 400 workers in a cost-cutting move Elixir Industries shareholders approved the takeover of the company by its chairman and major shareholder, Roland R. Sahm, for $10 a share Average yield on the Treasury's of five-year, two-month notes at auction was 14.01 Boise Cascade Canada cited clumping newsprint demand for closing its Kcnora. Ontario, pulp and paper mill for eight days. By ANTHONY RAMIREZ, San Diego County Business Editor Great American Federal Savings Loan Assn. said Wednesday that it plans to absorb San Joaquin First Federal Savings Loan Assn.

in what will be its eighth merger since December, 1980. Great American, which recently changed its name from San Diego Federal Savings Loan said the merger will add $275 million in assets and 16 branches, 12 of which are in San Joaquin County. The others are in Solano, Stanislaus, Contra Costa and Sacramento counties. The proposed merger, which is subject to federal regulatory approval, "fills up a very big gap that we've had," said Michael Kinsman, spokesman for Great American. "Between Fresno and Sacramento we didn't have any branches." Great American has 92 offices, including six in Sacramento and two in Fresno.

Great American's assets last year grew 21 to $2.97 billion. It is the 14th-largest savings and loan in the state and the 20th -largest in the country in terms of assets, according to Great American. With the San Joaquin first merger scheduled to be completed in September and five other pending mergers scheduled for completion by July, Great American will have more than 140 offices statewide and $4.3 billion in assets. William S. Chapman, chairman and president of Stockton-based San Joaquin First, said he had been discussing possible mergers with 12 other suitors for the last year before reaching agreement with great American.

"I'm convinced," said Chapman, "that Great American is going to be one of the 10 largest savings and loans in the country one of these days. "With so many new financial products coming out, it's going to take a lot of financial muscle to compete," Chapman added. He acknowledged that San Joaquin First lost money in 1981, but declined to be more specific. "We have the savings and loan disease, if you will," Chapman said. Like other savings and loans, San Joaquin has been saddled with relatively low-yielding mortgages, while paying out increasingly higher interest rates to attract depositors.

No cash is exchanged in the merger between San Joaquin First and Great American because both associations are owned by their depositors rather than by shareholders, and thus all depositors become owners of the combined firm. San Joaquin First's Chapman will join Great American as a director, as will Jack Fisher, an outside director for San Joaquin First. Business in Brief Dome Pete and Hudson's Bay left the Alsands project. Both companies cited the unsatisfactory economic terms of the project in announcing their withdrawal, but said they would consider rejoining if the economic structure is changed. Dome Petroleum Ltd.

holds a 4.4 interest in the project to convert tar sands to crude oil, and Hudson's Bay Oil Gas share is 8. That brings to four the number of companies that have withdrawn from the $13-bil-lion energy project and leaves four companies still participating. A spokesman for Alsands Energy Ltd. in Calgary, Alberta, said plans haven't changed to proceed with the project, and that its status will be discussed at a meeting today of Alsands executives and officials of the Alberta and Canadian federal government. Commodity fraud victims get little help, GAO says.

The General Accounting Office said a federal program that is designed to act as a small claims court for victims of commodity fraud has been little more than an empty promise to investors who have lost tens of thousands of dollars to commodity swindlers. According to a GAO spokesman, a typical reparations claim by an investor takes three years to process. As of August, 1981, only 53 individuals actually received any money from their claims. Testifying before a Senate subcommittee, Henry Eschwege of the GAO said, "The program was to provide an expeditious, inexpensive and easy-to-use process. Our work revealed that the reparations program is not meeting its objectives." Cal Fed and a smaller in Santa Ana plan to merge.

California Federal Savings Loan based in Los Angeles, signed a letter of agreement to merge with Santa Ana First Federal Savings Loan Assn. The plan calls for Santa Ana First Federal, with $84 million in assets, to operate under its current management as a Cal Fed division. Clifford L. Benson, Santa Ana First Federal's president, said the purpose of the mer matched its sales targets. The company was the only U.S.

auto maker to sell more cars and trucks last year than it did the year before, posting an 11 year-to-year increase in this country and Canada. But the federal board that has overseen U.S. guarantees for $1.2 billion in loans to Chrysler says the cost of a virtually year-long rebate program, and the sale of more stripped -down cars than expected, caused the company to exceed its initial forecast of a $253-million loss in 1981. In its latest report to the government loan board, Chrysler projected a $150-million profit for 1982. Some analysts say the company will lose $200 million to $300 million this year.

The company has not posted a full-year profit since 1977. Iacocca said Wednesday that an "internal asset management program" begun in the fourth quarter has raised $200 million through more effective inventory control and other steps, helping to generate $404 million in cash on hand by year's end. CAR: Sales Off Continued from First Page ler Corp. fell 14.2 to 16,556, while Volkswagen of America plunged 61.8 to 2,090 cars. Sales at American Motors which officially reports its results only monthly, were estimated at 2,700 cars, a drop of 41.6.

Until the latest period, Ford had not reported a year-to-year gain since late September and GM had not had an increase since mid-September. Since Jan. 1, each of the U.S. manufacturers trails its previous year's pace. The five domestic firms have sold 677,706 cars so far this year, off 12.6 from the same period in 1981.

By contrast, the Big Three firms sought to bring attention to an improvement in truck sales in mid-February and for the year to date. Industry truck sales are up about 13 since the start of the year. More Commercial Activity GM truck sales, compared to an especially weak showing in mid-February of last year, soared nearly 56 in the latest period and are up 29.4 for the year. Ford and Chrysler truck sales were up more modestly, as they have been for several weeks. An improvement in truck sales is sometimes regarded as an early indicator of increased commercial activity, such as in heavy construction.

But sales of purely commercial medium- and heavy-duty trucks are off 10 since Jan. 1, while sales of light trucks which are 90 of the truck market have improved 16. lion," Levy said. James W. Cozad, executive vice president of Standard Oil Co.

of Indiana, advocated patience with the President's economic program but acknowledged that "1982 will be a very difficult year for the economy, the public and for business in general." Cozad said oil companies will become major borrowers in credit markets this year, adding to pressure on interest rates. William B. Franklin, an economist and chief outlook editor of Business Week, said the economy may have entered "the worst recession in the past half century," mainly because of Federal Reserve policy. "This is the first time in memory that the Fed has been tight and got a gold star for its conduct from the executive branch, even when the economy went into the tank," Franklin said. "Business planning for 1982 (and later) must take into account the unusually high degree of uncertainty that now exists," he said.

"Nobody really has a firm grip on the way events will unfold, although it seems certain not to follow Washington's road map." resulting power will be fed into Edison's electric network. The amount of power generated can serve the equivalent of 3,500 homes, a tiny fraction of Edison's customers, who total 3 million residential, industrial and commercial users. But a successful commercial demonstration of the conversion process would enable Edison to build additional units to meet the mounting demand for electricity. The project is called the Cool Water Gasification Program, a name derived from the site where Edison already operates a generating station, now using natural gas and oil as fuels. 860 (ft I Mill IONS OF SHARIS.

4 50 45 4(1 35 30 44 t- 25 20 129 25 212 219 Mines Ch.nl Lead Gain were down 16 basis points to 12.36. Federal funds, the overnight loans of uncommitted reserves among commercial banks, closed at 12V and had slipped below 10 during earlier trading. Wednesday is the day banks must settle reserve accounts with the Federal Reserve Board, and federal funds rates often fluctuate widely on that day. But the rate still was well below the average 15.61 of the previous banking week. The Treasury auctioned $3.25 billion in five-year, two-month notes at an average yield of 14.01.

That compared with an average yield of 12.83 at the previous auction last Nov. 24, and was the highest level since the 16.14 average yield in the auction last Aug. 27. Blue chips making sizable contributions to the Dow's gain included General Motors, up at 37; International Paper, up 1 at 35V6, and Union Carbide, up at 44. Denny's purchased 35 VIP'S family style restaurants.

Vern Curtis, president of La Mir-ada-based Denny's said the restaurant chain entered an agreement to acquire 35 of the 53 VIP'S units operated by Salem, VIP'S Restaurants Inc. The purchase price was $11.9 million. The restaurants, located in Washington, Oregon, Northern California, Idaho and Nevada, will operate as VIP'S until they are remodeled and converted into Denny's between mid-April to May. Curtis said the sales at the VIP'S units average about $900,000 a year. The VIP'S acquisition, along with 12 Sambo's units acquired in November, bring Denny's total worldwide chain of restaurants to 1,067.

Orange Coast Publishing will launch a second free paper. In an effort to boost advertising sales and circulation, Costa-Mesa-based Orange Coast Publishing Co. will begin publication of the Mission Viejo Mirror March 10. Orange Coast, a subsidiary of Times Mirror four months ago began Wednesday delivery of the free Irvine Mirror to most of that city's 26,150 households. Addition of the Mission Viejo publication will allow Pilot advertisers, for some additional cost, to reach an estimated 95,000 households in some of Orange County's most affluent communities, an Orange Coast spokesman said.

The Pilot, which publishes daily zoned editions in six Orange County cities, does not have a separate Mission Viejo edition. International Diamond officers faced formal fraud charges. Three current and two former officials of financially ailing International Diamond Corp. were formally charged in a Missouri court with securities fraud, stealing by deceit and other violations. The formal action follows a grand jury indictment of the five in December charging the five with creating an arif'cial price structure and making promises the firm couldn't keep.

San Rafael-based International Diamond, a large retailer of investment diamonds, already has denied the 70 65 60 55 1 50 45 40 35 30 25 20 1218 1225 11 115 STOCKS: Oils Continued from First Page short-term interest rates continued to fall. The bond-market rally picked up steam from rumors that the influential Salomon Bros, economist Henry Kaufman had eased his bearish stand on interest rates. A spokesman for Kaufman in Los Angeles, where the economist was speaking to Salomon clients, said that Kaufman's position on interest rates is unchanged. The spokesman reiterated Kaufman's position that interest rates will continue to be volatile, that short-term rates won't climb back to their record highs, but that long-term rates will move irregularly higher and may threaten previous record levels. Interest rates on three-month Treasury bills, which traded at 14.40 a week ago, were off 41 basis points at 11.93.

A basis point is one -hundredth of a percentage point. Six-month bills fell 16 basis points to 12.62, and one-year bills ger is to allow his institution to offer a broad range of new services to customers. The merger of assets doesn't involve any exchange of stock or cash because both are mutual associations owned by their depositors. The new division will include six current Santa Ana First Federal offices and four Cal Fed offices. After the merger, Cal Fed's assets will exceed $8.4 billion.

Earlier this month, Cal Fed merged with four associations in Florida and Georgia. It has 135 offices. Despite Dally News losses, Tribune Co. posted a record net. Chicago-based Tribune which is privately held, said its net income for the fourth quarter of 1982 was a record $30 million, $56 above $19.2 million a year earlier.

Revenues totaled $389.9 million, up 16 from the fourth quarter of 1980. Net income for the full year was $89.1 million, up 14 from 1980's $78 million. Yearly revenues were $1.4 billion, also a 14 increase. Stanton R. Cook, the Tribune's president and chief executive, said strong performances by the firm's Chicago and Florida newspapers and by television stations in Chicago, Denver and New York more than offset drops in paper and forest products divisions and losses at the New York Daily News, which the Tribune Co.

is trying to sell. Hewlett-Packard Introduced a new personal computer. The new HP-87 is Hewlett Packard second model of the desktop devices, and will be offered at list prices of $3,995 to $7,995. The Palo Alto-based company said it has signed an agreement in principle with Computerland the gest chain of personal-computer stores, to carry the Hewlett Packard machine, along with the larger-selling models made by Apple Computer Inc. and International Business Machines Corp.

The company said the new machine has the largest data-storage capacity of any personal computer now on the market. Hewlett-Packard's first model, the HP 85, along with peripheral equipment and software, generated $130 million of the company's fiscal 1981 revenue of $3.58 billion. i22 OUTLOOK: Bleak Picture Continued from First Page Leonard J. Santow, senior vice president of New York -based J. Henry Schroder Bank Trust also forecast an upturn in the last half of the year.

"The question is can you sustain it?" he asked. "If interest rates stay at the level they are, the answer is he concluded. Several of the panelists said they believe that interest rates both short-term and long-term will stay near the current high levels. Martin E. Zweig, a stock market analyst who heads his own firm, was bearish about the future.

"We're in something worse than a recession but not as bad as the Great Depression," Zweig said. "We are a long way from seeing this economy turning up The best assessment may be, more of the same," he added. Michael E. Levy, director of economic policy research for the Conference Board, expressed skepticism about Reagan's projection of a deficit for fiscal 1983. "If budget history repeats itself, the 1983 budget deficit could easily be raised to $120 billion to $130 bil- AID: From Japanese Continued from First Page In return for their financial contribution, the Japanese will be given the details involved in designing and operating the coal gasification process.

Coal from Utah will be carried to the area by train. One thousand tons of coal daily, pulverized and mixed with water, will be fed through a special burner into a vessel called a "gasificr." Oxygen is pumped in at very high temperatures, and the reaction converts the coal Into gas. After cleaning for contaminants, the gas is burned in a turbine that drives an electric generator. The.