The Ottawa Citizen from Ottawa, Ontario, Canada • 43

fl 0 )fj rff HPr Pages C9-C13 VmumJ LJ LmJ LJ X.ai' rf The Citizen, Ottawa, Wednesday, February 26, 1986, Page C9 9 Stocks Canada efro- Computer retail companies plan to join forces By Greg Barr Citizen staff writer write-offs near Computer Innovations Distribution Inc. of Toronto, Canada's No. 2 independent computer retail company, will acquire the Canadian franchise operations and Canadian subsidiary of ComputerLand Corp. of Hayward, the companies announced billion mark In the deal, 1 1 The Canadian Press 'uesday. The merger, which will see omputer Innovations acquire 'omputerLand's nine franchisees and the ComputerLand Canada small and large companies are coming together, so we're not conceding anything James Yeates Inc.

subsidiary in Brampton for $14 million and 2.5 million common shares of the company, is effective Mar. 29. Although the recently-redesigned, bright-red Computer Innovations logo will disappear in favor of the royal-blue ComputerLand logo as a result of the business centre on Slater Street. "We haven't finalized any plans yet, but we will likely be repositioning some stores towards a service rather than sales orientation in areas where market saturation could occur. Some stores could close, but I can't say where or when." Bell Canada Enterprises (BCE) Inc.

of Montreal, which now holds about 48 per cent of Computer Innovations shares, could see its holdings drop to a'-out 32 per cent if certain options are exercised by existing ComputerLand franchises. The nine franchises have the right to buy an additional 10 million shares over three years on an "earn-out" basis, depending upon the total earnings of Computer Innovations during that period. Effective Apr. 1, the franchisees will hold nine per cent of CI shares, with BCE's holdings dropping to 43 per cent and company employees, institutional and retail investors 48 per cent. If the rights are fully exercised by Apr.

1, 1989, the franchisees and BCE would each hold 32 per cent of CI common shares, with company employees, institutional and retail investors holding 36 per cent. Trading in CI shares, which was halted Monday afternoon on the Toronto Stock Exchange pending the announcement, resumed Tuesday in heavier than usual volume. Some 282,000 shares changed hands, with CI shares gaining 15 cents to close at $3.05 a share, following Monday's jump of 29 cents a share in anticipation of the merger. proposed merger, Computer In COMPUTER. irjfjoiffiTiorjs finance exploration and development activities.

The additional write-offs relate to frontier costs, international exploration and Petro-Canada's involvement in research and development of non-conventional energy sources. "In light of the decline in world oil prices, it has become appropriate to write down these assets," the company's statement said. Since coming to power, the Conservative government has told Petro-Canada chief Bill Hopper his company has to act like every other oil company. Under the Liberals, it was supposed to serve the national interest by investing in such things as oil and gas properties in Baffin Island. Petro-Canada says the writeoffs reflect its new mandate.

The Tories want to sell common shares in Petro-Canada, although the government has not yet decided when. A write down of properties that will not necessarily make money gives the company a cleaner, more representative balance sheet and could make it more attractive to investors. The company says the writedown does not mean its investments were a waste of time and money. It is, however, a "recognition that in the current and anticipated energy environment, there will be some period of time before such reserves are brought to market." Petro-Canada says it will put its corporate emphasis on the most promising offshore developments on the East Coast and on oil sands and heavy crude oil. Government-owned Petro-Cana-da has cut almost $1 billion from its balance sheet for last year, cutting its earnings by 25 per cent, the company announced Tuesday.

The company, which became the biggest oil company in the land with the purchase last year of the western and Ontario retail and refining assets of Gulf Canada, says it wrote off $347 million in costs for frontier exploration and development of non-conventional energy sources. This followed a write-off of $518 million announced last summer in its financial statement for the first six months of 1985. Earnings for the year came to $174 million, down from $232 million in 1984. Earnings are stated before payment of dividends for deferred shares and other special charges. A detailed financial statement will be provided when Petro-Can-ada's annual report is presented to Parliament in early April, the company says.

The company generated slightly less cash last year than in 1984, $828 million compared to $868 million. Dividends for preferred shares, issued to investors to raise money for its acquisition of Pacific Petroleums in 1979, were $78 million, down from $100 million the year before. The company also notes it paid the government a $50-million dividend last year, the first time it returned a profit to its sole owner. As well, it no longer receives contributions from the treasury to novations (CI) president James Yeates says the deal does not present a win-lose situation for either company. "In the deal, 11 small and large companies are coming together so we're not really conceding anything.

The merger will result in customers getting a better selection of services," Yeates said in an interview. ComputerLand's nine franchise operations include 66 stores across Canada, with 625 employees and sales of approximately $145 million. ComputerLand Canada's U.S. parent is the world's largest personal computer retailer with more than 800 outlets in 40 countries. Combined with Computer Innovations' 36 stores, 530 employ- small independents, though analysts say the smaller firms will not benefit from the increased buying power such a large chain as the new ComputerLand giant will have.

However, Yeates did not rule out the possibility that the new ComputerLand, which will operate as a division of publicly-traded Computer Innovations, could close some stores as part of an overall rationalization. Ironically, Yeates flew to Ottawa Tuesday afternoon to attend the official opening of CI's ees and sales of over $100 million, the new ComputerLand division of CI will be by far the dominant independent Canadian computer retail company, with lock on more than 25 per cent of the market. CI has four retail outlets and two service centres in the Ottawa-Hull region, while ComputerLand has two business center outlets. Yeates said the merger would not have an adverse affect on Canada's remaining regional computer retail chains and Worst of insurance industry crisis over: spokesman More gas price reductions unwarranted, say analysts similar to that in Quebec. The Quebec law sets out precise criteria for awards in automobile accident cases, specifying that the award should replace income lost as a result of the accident plus medical costs.

Ontario courts are free to assign awards as they see fit, said Drouin, and there is a trend to larger settlements which caused his company record losses in Ontario last year. He said the trend will inevitably lead to higher premiums for Ontario motorists. Drouin said there was exaggerated alarm about steep increases in insurance premiums which hit many Canadian municipalities this year. He said many of these municipalities had been insured with discount companies which have since gone bankrupt or been forced to withdraw from the market. Such companies were offering insurance below its real cost, he said.

He said that the dramatic premium hikes were confined to a small fraction of municipalities, and claimed that his company's longtime clients received moderate increases only. In some cases, said Drouin, increases in municipalities' insurance premiums result from specific deficiencies in services such as fire protection. They can bring down insurance costs by improving services, he said. Laurentian General reported a volume growth of 24 per cent in 1985, with gross premiums increasing to $262 million from $211 million the previous year, yet profit fell substantially to $3.6 million from $5.9 million the previous year. The company is the largest Quebec-based general insurer.

Its Toronto-based subsidiary, The Personal, is the largest group general insurer in Canada, while a Vancouver-based subsidiary, Laurentian Pacific, serves the Western Canadian market. MONTREAL (CP) The Canadian general insurance industry has begun to recover from last year's crisis, and premiums should not rise much this year except in problem areas such as Ontario auto insurance, says Jacques Drouin, president of Laurentian General. Speaking at a news conference before Lau-rentian's annual meeting Tuesday, Drouin said last year was the worst in history for Canadian property and casualty insurers, but the market began to recover in late 1985 and the corrective swing should continue. He said the federal government is studying legislation which would keep discount insurers from wreaking havoc in the market by offering unrealistically low rates then going bankrupt, as happened with Northumberland Insurance last year. He also expressed hope that the Ontario government will introduce legislation to predetermine awards in automobile injury cases, The Canadian Press Eight Simpsons to become Bay stores E3fIgs oline prices will start to fall within a month or so.

"Considering the changes in world prices, the CAC challenges the oil industry and the government to demonstrate that energy pricing is a two-way street," Sally Hall, president of the association, said in a statement. Hall also says the government should avoid the temptation to raise federal taxes on gasoline in today's budget. Imperial Oil and Petro-Canada, the country's two biggest gasoline retailers, did lead a minor price cut last week of between one and two cents a litre. However, Don Penrose, Esso's vice-president for planning and administration, says that price decline had little to do with falling world oil prices. The company made the cut to meet competitive pressures, he says.

Oil industry analysts say consumers should not expect retail gasoline prices to fall simply because crude oil prices are dropping. People who think prices at the corner service station should fall right away are "particularly ignorant" about the way the market works, said Richard Carl, an oil industry analyst with McCarthy Securities Ltd. of Toronto, in response to calls by consumer groups to lower the price of gas at the pumps. "There is no short-term relationship between the cost of the oil feedstock and the price of gas at the pump," he said. The Consumers Association of Canada said Tuesday that retail gasoline prices should be reduced immediately by as much as 11 cents a litre.

However, analysts expect gas Citizen news services department-store operations and to reinforce the position of Simpsons as a world-class high-fashion retailer, said executive vice-president G.J. Kosich. "We have Simpsons at the high-fashion, premium-quality level in our two largest markets, the Bay department stores to cover the broad mid-range urban and suburban markets across Canada, Bay Northern Stores for northern rural and resource communities and Zellers for value image leadership in promotional markets from coast to coast." TORONTO (CP) In a move designed to free Simpsons to concentrate on the upscale market, Hudson's Bay Co. announced Tuesday that it is converting eight of Simpsons's 24 department stores to Bay stores on Aug. 1.

The eight stores are in London, Kitchener, Kingston and Windsor in Ontario and Halifax, Dartmouth and Sydney in Nova Scotia. Two stores involved are in London The conversions reflect the company's decision to realign its Supersalesman sets out to sell secrets of his success By Norman Provencher Citizen staff writer Mean reports $180-million loss MONTREAL Alcan Aluminum Inc. says that a price recovery appears to be under way in the aluminum business, but the company will continue the cost-cutting strategy which eliminated 1,100 people from its North American payroll in 1985. Alcan shipped a record 2,218,000 million tonnes of aluminum in 1985, up by 23.9 per cent from 1,790,000 tonnes it shipped in 1984, according to figures in the company's annual report released Tuesday. Despite the record volume, Alcan reported a $180-million loss last year as international spot prices for aluminum ingots fell to a monthly average of $972 per tonne in November, an all-time low in real terms.

The $180-million loss, reported by the company last month, includes special charges associated with early retirement incentives and separation packages for the 1,100 employes who lost their jobs, and write-downs in the value of some assets. Profits slide at Hydro Quebec MONTREAL The slumping Canadian dollar was the main reason Hydro-Quebec's profits tumbled to $209 million last year from $301 million in 1984, the provincially-owned utility said Tuesday. Hydro's income rose 7.9 per cent to $4.4 billion, while its assets last Dec. 31 stood at $29.2 billion. The Canadian dollar last year fell more than four cents against its U.S.

counterpart, boosting the utility's interest payments on loans taken in U.S. dollars and other currencies. Profits up 24 at Bank of Montreal TORONTO The Bank of Montreal has reported net income of $98.3 million for the quarter ended Jan. 31, up 24 per cent or $19.3 million more than the corresponding period a year ago. Net income per common share was $1.07, an increase of 18 cents.

The improvement in earnings resulted from strong growth in the bank's loan portfolio, increased customer deposits and higher fee and foreign exchange income, as well as from continuing control of expenses, the bank said in a news release Tuesday. Bank officials reported they are paying close attention to the impact of volatile oil prices. Earnings down at Bank of N.S. TORONTO The Bank of Nova Scotia reported Tuesday that its net income was down $1.2 million or 1.6 per cent to $73.8 million for the three months ending Jan. 31, from the same period a year earlier.

Net income per share was 46 cents, compared with 48 cents a share last year. Net income also declined 14 per cent or $12 million from the fourth quarter of 1985, the bank said in a news release. The decline in earnings was primarily due to an increase in the provision for loan losses and higher non-interest expenses. Return on assets declined in both domestic and international operations as the interest profit margin narrowed. Algoma Steel's share rating lowered SAULT STE.

MARIE In the wake of a falling market for tube products, Canadian Bond Rating Service has cut Algoma Steel rating on preference shares and debentures. The reduction reflects Algoma's dismal financial state. For the ailing steelmaker, it means borrowing costs will be higher. And in the case of preference shares, a rating reduction could make it virtually impossible to raise capital by issuing such shares. "We don't know because we haven't tested the market yet," said company secretary James Melville.

The rating on debentures was cut to plus from doub-li-plus low. i agement skills and referral possibilities. As the unabashed "Canadian Connection" for Bartlett, Thomas brought both the Triexcel-lence Inc. (or Triex) car-vending franchises, and Mr. Build International home-repair centres to this country.

Even with three money-making franchise operations on the go, Thomas was still not busy enough. With these successes under his belt, he figured he was qualified to join the growing list of executives who've put their theories and philosophies to print. Predictably, his Windows of Opportunity, published by Toronto-based Key Porter Books, has sold 20,000 copies and has been reprinted in German and French. A book's one thing, Thomas discovered, but executives and management types are also very interested in personalized advice. Hence the recent rounds of seminars and speeches on his favorite theme of "Implementing Excellence," a probably-unintentionally close resemblance to the book In Search of Excellence, by his reverse namesake Thomas Peters.

Thomas said he finds managers are more willing to share their ideas with an informed insider, from whom they have no fear of competition in the constant power struggles within a company. Demand far outstrips supply in this part of Thomas's life. He accepts very few seminar or speaking engagements such as his recent keynote address to the Ontario Real Estate Association meetings in Ottawa. For the record, the next open date is next January. Success has meant Thomas is free to cut back on his travel schedule down to about one week per month, as opposed to the "constant red-eye" flights of the 1970s.

And it's opened his schedule for six-week vacations with his wife of 23 years and his two children in their 20s. "Maybe it's me, but I relate much better to my kids now that they're wider and they Qan relate back to me," he "I'll probably be a terrific grandfather." He "retired" at the ripe old age of 35, an even dozen years ago now, but Peter Thomas still sells things. Lots and lots of things from land to used cars, home-renovation services to books. He's pretty good at it. On his left wrist, the chairman and founder of billion-dollar franchise company Century 21 Real Estate Canada Ltd.

sports a chique solid-gold Patek watch, bought 18 years ago. Both crisp white shirt cuffs are bound with gold links in a stylized "PHT" design. And if there's one guiding principle in Peter Thomas's life, it's that everyone from doctors and lawyers to reporters and real estate agents could stand to be a little better salesperson. Not, mind you, the MBA graduate marketing-sales type, living in that strange world of demographics and market penetration. And certainly not your stereotypical plaid-jacket type, who'll "pester, badger and bother," clients until they make a sale.

Or are shot dead trying. "Of course, the last thing you need is some guy flogging hernia operations or something grotesque like that," said Vancouver's super-salesman. "But everyone's work requires selling of themselves and learning how to deal with others almost as if they were families and friends, instead of pieces of meat," he said. That's the concept Thomas hopes to sell, in the form of a six-cassette series called the Peter Thomas Sales Course, via the cable-TV networks in the U.S. For $150 U.S., American go-getters can expect to cull some of the innermost secrets of one of Canada's most successful entrepreneurs.

Thomas admits he's good at his calling. He also admits there was a bit of luck and some handy contacts involved in his first real career break in 1974, when he bought the Canadian rights to the Century 21 Real Estate Peter Thomas Luck played role in his accomplishments Corp. franchise system from Irvine, real estate guru Art Bartlett for $100,000, with a mere $5,000 down. Last year, Vancouver-based Century 21 turned over $4.5 billion in sales. Each of its 325 Canadian offices paid a minimum $15,000 to get into the system in the first place.

And each dollar in gross sales paid an undisclosed royalty back to head office. But Bartlett next came up with the idea of listing used cars like real estate, ensuring top price for the seller with a commission to the vendor. And then he thought up a money-making system for organizing home-repair" tradesmen, providing them with much-needed man.