The Los Angeles Times from Los Angeles, California • 33

ss BUSH Cos Angeles lucsdiiy, February 5, 1985 CCtPart IV Everything's Black and White When It Comes to Ed Gray GM Posts '84 Record Net of $4.5 Billion But 4th Quarter Was Off 32.4; Strikes in U.S., Canada Blamed By TOM FURLONG, Times Staff Writer Mortgage-industry insiders are still talking about the performance that savings and loan regulatory czar Edwin J. Gray gave last March before a prestigious group of about 100 savings executives and attorneys at a private housing conference in Utah. Following his speech, Gray was repeatedly asked to provide proof for a favorite but controversial contention of his: that wider investment powers for savings and loans pose a serious threat to the industry's deposit-insurance fund. According to several at the meeting, Gray repeatedly sidestepped all such queries and succeeded in so angering the audience that it began groaning out loud when he tried to explain his position. "People were yelling at him," said one regulator.

"He, was quite shaken by the reaction." So it goes these days for the 49-year-old Gray, a Ronald Reagan protege who is having a rough time getting much respect as the 20th chairman in the 53-year history of the Federal Home Loan Bank Board. Though he isn't well known to the general public, Gray is the official primarily responsible for ensuring that savers get their money back should a savings and loan association fail. Gray has become arguably the most controversial chairman ever to head the sprawling bureaucracy that regulates the nation's 3,167 savings and loan associations. In 21 months on the job, he has put an indelible stamp on the industry that has endeared him to an influential few but angered the industry at large. In addition to heading the Home Loan Bank Board, Gray is chief of the Federal Savings Loan Insurance Corp.

(FSLIC), which administers the insurance fund that guarantees deposits up to $100,000. And he's chairman of the Federal Home Loan Mort gage Corp. (Freddie Mac), which provides a secondary market for mortgage loans. Gray's supporters say he's a kind of modern-day Hippocrates, administering necessary but foul-tasting medicines to an unhealthy industry. According to this view, the chairman is an absolutely tireless, courageous public servant whose polices are in the best interest of all even if not all of them realize it.

His base of support is the large California which generally believe that industry growth and investments must be better controlled and managed if major failures are to be avoided. Just last Thursday, the three-person bank board adopted two far-reaching and very controversial regulations that will sharply restrict where may invest their deposits and how fast they may grow. "If he weren't controversial, he wouldn't be Please see GRAY, Page 4 it? i 1 OK Los Angeles Times Edwin J. Gray i 'Ujijtot r-J Market Surges in Late Trading; Dow Gains 12 From Times Wire Services NKW YORK-The stock market posted a broad gain Monday, playing an encore to its dramatic January rally. Securities-industry and bank stocks ran up some of the best gains in a session marked by new highs in some of the broad market indicators.

The Dow Jones average of 30 industrials, down more than 3 points in early trading, was up 1 2.36 at 1 ,290.08 by the close. That left the average about 2Vi points below the record close of 1,292.62 that it reached last Tuesday. Volume on the New York Stock Exchange surpassed 100 million shares for the 18th consecutive session, totaling 113.72 million against Friday's 105.44 million. Nationwide turnover in NYSE-listed issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 136.83 million shares. Bank Stocks Advance The combination of heavy volume and rising stock prices attracted new buyers to securities -industry issues like Paine Webber, up 2Vi at 41; Merrill Lynch, up at 34; Phibro-Salomon, up 1 at 40V; First Boston, up 1 at 66, and E.

F. Meanwhile, analysts said news reports of great progress in untangling the debt problems of developing countries helped the market as a whole and bank stocks in particular. Citicorp rose 1 to 43, Chase Manhattan to 52V4 and J. P. Morgan 134 to 45.

Analysts noted that the general market was still being treated to MARY FRAMPTON Los Angeles Times The Limited Inc. reached an agreement to acquire Lerner Stores for about $260 million. Limited Chairman Leslie H. Wexner, above left, said the deal is subject to federal antitrust review. Rapid American Agrees Limited Plans to Buy Lerner Chain By JAMES RISEN, Times Staff Writer DETROIT General Motors continuing to benefit from the boom in car sales brought on by stable fuel prices and the economic recovery, earned a record $4.5 billion in 1984, a 21.6 increase over its previous record of $3.7 billion posted in 1983, the company said Monday.

But GM added that strikes in the United States and Canada caused fourth -quarter earnings to drop 32.4 to $877 million from 1983's record of nearly $1.3 billion. Ironically, those strikes by GM's unionized workers reduced the size of the profit-sharing bonuses that the company paid out to its employees, GM said. Each of GM's 547,000 workers in the United States will receive an average of $515 as their share of GM's 1984 profits, down from the previous year's average of $606, the company said. The United Auto Workers said in a statement that it was "disappointed" by the drop in profit-sharing caused by strikes against GM, but the union noted that its members will continue to "be militant when militancy is required, regardless of the manner in which they are compensated." Losses in European Market The size of the company's profit-sharing pool for U.S. workers, totaling $282 million this year, was determined by a formula based only on profits from GM's U.S.

operations. Nearly $3.9 billion of its earnings came from the United States, GM said. The company was also profitable in Canada and Latin America but lost more than $291 million in the highly competitive European market. GM said it lost a combined total of $450 million in potential worldwide profits in the second, third and fourth quarters of 1984 because of strikes in West Germany, Canada and the United States. Wall Street analysts, who early in 1984 had forecast earnings of more than $5 billion for GM, were not surprised by the strike -related earnings decline at the end of the year.

Most had already reduced their forecasts to take into account the amount of car and truck production lost by GM because of the walkouts. "On the whole, it was still a very good year," said David Healy, automotive analyst with Drexel Burnham Lambert, a New York investment firm. "You can't quarrel with a record high in earnings." GM's profits were buoyed by worldwide car and truck sales to dealers rising to 8.26 million units, up 6.3 from 1983's 7.77 million units. Total dollar sales rose about 12.5 to $83.9 billion from 1983's $74.6 billion. Please see GM, Page 6 ported that it ended 1984 with an profit, its first annual profit since 1981.

The profit represents an turnaround from 1983's loss. However, the fourth quarter's reported net income of $2.4 million was about 27 below the $3.3 million posted in the final period of 1983. The company said the lower earnings resulted from $3.9 million in contributions to a fund to repay employees for the 10 wage cuts that they took in January, 1983, during the worst of the airline's problems. The airline said it accumulated a total of $11.6 million in the fund last year virtually all of the $12.9 million that employees will eventually receive. Company officials said the airline will continue to contribute to the fund this year, Please see EARNINGS, Page 7 optimistic signals on the domestic business outlook for 1985.

A monthly survey of corporate purchasing executives, the results of which were reported over the weekend, found that economic activity rebounded in January after a sluggish final four months of 1984. The National Assn. of Purchasing Management said both new orders and production increased sharply last month. May Focus on Inflation Along with the improved pace of the economy, however, has come a growing belief on Wall Street that the chances have diminished of any further easing of credit by the Federal Reserve. With recession worries calmed, many analysts say, the Fed may be ready to go back to concentrating on keeping inflation at bay by restraining the growth of the money supply.

That prospect, in turn, has brought caution to many interest-rate forecasts. International Business Machines was a standout among the blue chips, rising 2 to 137 and trading at record highs. General Motors picked up to 82, despite the company's report that fourth-quarter earnings slumped to $2.71 a share from $4.11 in the comparable period a year earlier. Student Loan Marketing fell 1V6 to 29V1 Brokers said investors feared that government budget-cutting proposals would curtail activity in federal loans to students. Advancing issues outnumbered declines by more than two to one on the Big Board.

The exchange's Please see MARKET, Page 2 eocassette movie rentals. In late 1981, when the subscription-TV business was at its peak, ON-TV had 380,000 subscribers in Los Angeles and SelecTV had 125,000 subscribers. The purchase, effective last Friday, was made for an undisclosed amount of cash and the assumption by SelecTV of certain unspecified liabilities of ON-TV. Robert J. Hartney, vice president-corporate relations for San Diego-based Oak, said the company had no comment on a report in Daily Variety that the deal consists of SelecTV assuming $15 million in ON-TV liabilities and paying $3 million for ON's subscriber list.

However, a high-ranking SelecTV source said the total figure is "considerably less" than $18 million. Oak's partner when ON-TV was founded in April, 1977, Hollywood entrepreneur Jerry Perenchio, sold Oak his 49 stake in the firm for $55 million in 1981. Although some analysts have Please see ON-TV, Page 3 By NANCY YOSHIHARA, Times The Limited continuing a three -year acquisition binge, said Monday that it has reached an agreement in principle to acquire all 796 Lerner Stores from New York -based Rapid American Corp. for about $260 million. The Columbus, Ohio, company's move into the budget women's apparel business comes less than a year after it made a surprise but unsuccessful attempt to take over Los Angeles-based Carter Hawley Hale Stores which operates the Broadway, Neiman- Marcus, Bergdorf Goodman and other premium chains.

Leslie H. Wexner, who founded The Limited in 1963 and is its chairman, said the purchase, for a combination of cash and subordi EARNINGS Oak Industries Sells Its ON-TV Service to SelecTV to Sell 796 Stores Staff Writer nated notes, is subject to a definitive agreement and review by federal antitrust agencies. "Lerner is the largest and oldest chain of women's stores and is in the budget tier," Wexner said in a telephone interview. "All of our businesses are in the women's apparel store business. There is a great synergism between these two businesses." Lerner, which was founded in 1918, operates in 45 states, including California, but has been suffering declining profits despite annual sales of about $700 million.

It was purchased in 1973 by McCrory which also operates J. J. Newberry and McCrory. McCrory is a subsidiary of privately held Rapid American, offi 1984 at $22.8 billion (including funded and unfunded government business), or almost three years of sales at 1984 levels. The company said it signed a Navy contract to begin full-scale development of the Trident II missile, a program that is expected to generate business through the rest of this century.

It also booked orders for 48 C-130s, a profitable cargo aircraft. "We have some major programs that are taking hold and showing influence," said Vincent Marafino, Lockheed's chief financial officer, in a telephone interview. "1985 ought to be a better year than 1984." In the fourth quarter, Lockheed earned $108.6 million on sales of $2.54 billion, up from profits of $83.6 million on sales of $1.89 billion the year earlier. By ELLEN FARLEY, Times Staff Writer cials of which could not be reached for comment on the Lerner deal. Robert S.

Corea, an analyst with Ohio a brokerage in Columbus, said: "It is my understanding that (Lerner's) sales are about $700 million, with net income at $20 million. That's pretty lousy." He said that, in fiscal 1982, Lerner had sales of about $717 million and profits of $46.8 million. Corea said the addition of Lerner will enhance The Limited's overall concept as an operator of women's specialty apparel stores and added that "the price is very, very good." The Limited's 1984 results are not available, but Wexner said analysts are projecting its sales at $1.4 billion and profits at $90 Please see LIMITED, Page 7 Lockheed continued to strengthen its balance sheet during 1984, adding $326 million in equity to close the year at $1.1 billion in equity, an increase of 28 from the year earlier. Marafino said that equity represents about 73 of total capitalization and is close to the company's target. In June, 1984, the firm also resumed paying regular quarterly dividends for the first time since 1969, when the company entered a financial crisis that took it to the brink of insolvency.

-RALPH VARTABEDIAN AirCal Records First Yearly Profit Since '81 AirCal the once-struggling Newport Beach-based airline, re New Programs Boost Lockheed's Net 31 in '84 After nearly two years of on-again, off-again negotiations, Oak Industries Inc. said Monday that it has sold its ailing ON-TV service in Los Angeles, once the largest over -the -air pay -television operation in the country, to rival SelecTV of America Ltd. The deal means that SelecTV, with about 59,000 subscribers in the Los Angeles area, will absorb the much larger ON-TV, with about 156,000 subscribers. SelecTV is a subsidiary of Clarion Co. Japan's largest independent manufacturer of stereo equipment.

SelecTV said it will continue to operate both services separately, and it said there will be no "immediate changes" in ON-TV's programming, which includes sports events such as the Los Angeles Lakers and Kings games. SelecTV i.s an all -movie service. Both services have suffered heavy subscriber losses recently as part of a general decline in the subscription-television market brought about by competition from cable television and low-cost vid- Propelled by a handful of new multibillion-dollar government programs, Lockheed Corp. on Monday reported a 31 surge in profits and a 24.6 increase in sales in 1984, the third year in a row that the aerospace firm has posted record earnings. The Burbank-based company earned $344 million on sales of $8.1 billion in 1984, up from profits of $263 million on sales of $6.5 billion the year earlier.

Lockheed Chairman Roy Anderson said the increase in profits was attributable to new programs, including the Trident II nuclear missile, the C-5B cargo jet, the Milstar defense communications satellite and the space shuttle ground-processing business. The new business significantly contributed to Lockheed's large and growing backlog, which ended FEBRUARY 4, 1985 nss'Tsn racn racn ncn iweti itw va mi 121 11 Al DOW 30 NYSE AMEX NASDAQ WILSHIRE 12.36 0.92 1.59 2.34 16.492 Sour Outlook for Banks Despite earlier predictions that bank failures would decline this year, a survey now shows that FDIC officials expect them to rise to a record high. Please see Page 2 Manville, 3 Insurers Settle Manville Corp. will receive a $112-million settlement in a case arising from liability claims related to the firm's production of asbestos. Please see Page 2 New York Exchange page 1 2 American Exchange 14 OTC Markets 18 Bonds 19 Commodities 16 Mutual Funds 17 Options 5.