Santa Cruz Sentinel from Santa Cruz, California • Page 17

DdasQtroess Sentinel Friday, Nov. 22, 1996 B-5 Feds say no new taxes on Internet Sfij DOW(Industrials) NYSE Internet commerce is vague Too many variables define new field The Associated Press WASHINGTON Read its lips. The Clinton administration is telling the cyber world: No new federal taxes on the Internet. In a 46-page policy report Thursday, the Treasury Department said its guiding policy on taxing electronic commerce was neutrality. "Neutrality rejects the imposition of new or additional taxes," it declared.

NASDAQ AMEX nan, senior manager of KPMG-Peat Marwick, a New York-based international financial firm. "International Data Corp. -predicts that Web revenues will exceed $150 billion in the year 2000 within the U.S. It's a huge market," she said from her Se-" attle office. Part of the problem is defini- tions, whether every ATM card use counts as online banking or only purchases actually made online.

Scott Smith, an with Jupiter Communications. in New York, tallied up straight receipts and got $1.24 billion in sales this year, increasing $7.3 billion by the year 2000. Others come up with differ-" ent figures. Forrester Research Inc. of Cambridge, mates that the electronic-commerce market is quite a bit or photograph or musical recording, is converted into an intangible product when it is digitized and transmitted over the Internet.

How should the transaction be taxed? The answers have interstate and international ramifications. The Treasury Department, according to Glen A. Kohl, deputy assistant secretary for tax policy, is seeking to open a discussion on the topic, rather than issue policy pronouncements. Above all, it seeks to make sure government policy doesn't impede growth in the rapidly developing field. "We think electronic commerce is to be encouraged and we want to make sure the tax system doesn't get in the way," he said.

"We don't think electronic commerce justifies new taxes." In the pre-Internet world, two principles have covered assessment of income taxes: the location of the source of the income and the residence of the person receiving the income. If an Australian offers services to U.S. customers from a computer in Canada, what's the location of the source of the income? Kohl said Treasury's goal is to develop rules and international agreements that prevent double taxation and provide certainty. He said the rise of electronic commerce likely will accelerate the current trend to de-emphasize President Clinton doesn't want to impede a growing field's progress. source-based taxation and increase the importance of residence-based taxation.

Kent Johnson of Seattle, a partner in the accounting firm of KPMG-Peat Marwick, praised the Treasury Department for starting by seeking industry opinions but said answers to the questions raised in the report can't wait forever. Last spring, half of nearly 300 business executives surveyed by KPMG-Peat Marwick said tax uncertainty was impeding their companies from entering electronic commerce more aggressively, he said. He added that the development of international inequities in the taxation of electronic commerce could have big ripple effects in the borderless world of cyberspace. The report goes on to discuss a range of difficult questions surrounding the rapid growth of electronic commerce, not the least of which is: If a transaction occurs in cyberspace, where does it occur for tax Traditionally, a service is taxed at the location where it's rendered. But, what if a consultant offers services over the Internet? Is the transaction taxed where the information is posted to a Web page, where the information is down loaded from the Web page or where the computer serving the Web page is located? And how can authorities track such transactions? Another issue concerns whether a tangible product, such as a book The Associated Press SAN FRANCISCO It's hard to get a line on online commerce.

Figures for the potential of business on Internet range from $1.3 billion now to a high of $150 billion by the year 2000 and some characterize those numbers as guesstimates at best. Electronic commerce includes sales of products to consumers, computer-to-computer transactions such as delivery of movies and software, online banking and such business-to-business transactions as orders from department stores to their suppliers. The projected figures for the future of this exploding market are astounding, especially considering that research shows only 2 million people worldwide have used the Internet in some way to help them with a transaction. The potential is enormous for digitized products, including software, movies, games and information, said Catherine Kier- market the Eye of Crosis, a Segment Spinner and Target Spinner, both of which are implants. They'll market others after seeing how they are used in the movie.

Grafix's CyberWear products are sold at gift stores including the Made in Santa Cruz store located on the wharf, the Museum of Television and Radio in New York City and the Tech Museum of Innovation in San Jose. They are also sold through catalogs such as Flax Art Design, Fanfare and Made in Santa Cruz. SC firm assimilates its designs into technology of 'Star Trek' smaller. Senior analyst Karen Epper sees business-to-business commerce at about $600 millions- consumer retail at $530 million and financial services online at $240 million. Age-bias lawsuit settles The Associated Press DENVER A $13 million settlement was reached Thursday to end one of the nation's biggest age-bias lawsuits, affecting 2,000 former employees of Martin Marietta Corp.

forced out in a series of wrenching job cutbacks. The settlement also calls for the rehiring of 450 former employees who were targets of age discrimination at Martin Marietta, now part of Lockheed Martin the leading U.S. defense U.S. District Judge Wiley Y. Daniel gave preliminary approval to the settlement, negotiated by the company and the U.S.

Equal Employment Opportunity Commission. The EEOC lawsuit, originally filed in May 1994, claimed Martin targeted employees age 40 and over for a series of major layoffs and forced retirements over a five-year period beginning in 1990. "This is one of the largest commitments to rehire class members (of a lawsuit) ever obtained," said Gilbert F. Casellas, chairman of the EEOC. "In upholding the rights of older workers, we've made them once again productive, contributing workers of this community," he said.

The $13 million settlement affects an estimated 2,000 former employees who were laid off between Jan. 1, 1990, and Dec. 31, 1994, from non-union jobs at Martin's Astn nautics Group. Payments also will go to affected former workers in the Information and Communications System sector of the company's Information Systems Group in Colorado. The company also agreed to provide free placement services for THURSDAY'S CLOSING NYSE LISTINGS Close American Med.

29Vi Ctig. -Vi -v '4 'A -V, Vi -IV. -1 -Vi BankAmerlca (BAC) Vt Comerlca (CMA) 57' Dean Foods (DF) 28'A Dow Jones Inc. (DJ) 34'i GoNschalks Inc. (GOT) iV, Lockheed Martin (LMT) 93W Pacific Telesls(PAC) 35 Planlronlcs (PLT) 39 Safeway (SWY) Seagate Tech.

(SEG) 76 Texas 54 Watklns-Johnson (WJ) Wt Wells Farso (WFC) 283'. William J. Wrigley (WWY) 59'A NASDAQ LISTINGS Bid Ask Chg, Awle Computer (AAPU24V4 24Vi -'i Borland Intl. (BORL) oft Cisco Systems (CSCO) iSVt Coast Bancorp (CTBP) 17' Last -'A -yi Fractal Design (FRAC) it Granite Const. (GCCO) 18' 18V Intel Corp.

(INTO 118U 118ft -2 Mont. Bay Banc(MBBC) 14'e 15'A 'A Novell (NOVL) 10 Odwalla (ODWA) 14 Pacific Capital Bancorp 27 Santa Cruz Op. (SCOC) iV TCI (TCOMA) 13V West Marine (WMAR) 33 lOVs 14tt 27 Vi o'l 131 -'A 34'i -1 Courtesy: Baikie Alcantara, Inc. Stock market pauses Stocks edged lower In choppy trading Thursday as the November rally paused amid some profit-taking in bellwether technology names and other blue-chip shares. The Dow Jones industrial average fell 1 1 .55 to 6,418.47, marking only the second time in 14 sessions that the blue-chip barometer has declined.

The Dow, which on Wednesday crossed the 6,400 mark for the first time, started the day with a small gain, but fell more than 36 points by late morning before recovering. Boeing contracts with American American Airlines signed up Boeing to be its sole supplier of up to 630 jets to refurbish its fleet over the next 20 years. The unprecedented agreement announced by both comDanies on Thursday adds flexibility that could help smooth out tne Doom ana bust cycles that have plagued airlines and aircraft makers. American is committed to buying 103 jets by 2001 and has the riaht to buv another 527 by 2018. American's deal with Boeing allows it to buy the other 527 as they are needed, rather than according to the rigid delivery schedules that cnaracterize typical airplane deals.

Car lease costs must be displayed Lease a car for just a penny down? Nice, but don't count on it, the government said Thursday in announcing that fiye major automakers have anreerl to stOD burvina important leasing costs in the fine print at tne Donom or their advertisements. From now on. details of those costs such as taxes, title and registration tees must be disDlaved as boldly as the print that blares "Zero nnwn." said Federal Trade Commission chairman Robert Pitofsky. independence Day' tons 1996 video sales Retailers have ordered nearly 22 million video copies of the summer blockouster "Independence Day," the largest ever for a live-action film and the biggest video release of 1996. "Wo'm a hit awed bv the Homanrl." said Bob DeLellis.

president of 20th Century Fox Home tntenainmeni in los Angeles. The video goes on sale Friday. Walt Disney's animated "The Lion King," released lact vaar. holds the record with 27.5 million videos sold. niennv racentlv shiDDed 21 million copies of "Toy Story" to retailers for tne nonaay nlft.nlvlnn season.

By ROBIN MUSITELLI Sentinel staff writer SANTA CRUZ AN ON-SCREEN cyber-battle opens today between the cyber-being race collectively known as the Borg and Starfleet's allied forces. A bit of Santa Cruz is with the villains, who despite being villains, are very popular bad guys in the history of the "Star Trek: The Next Generation" series. The new Paramount film, "First Contact," features the Borg army a humanoid race with cybernetic implants. Those implants adorning the Borg's armor and head gear are electronic displays designed, developed and manufactured by Grafix in Santa Cruz. Other Grafix designs maybe as many as 40 are also used in the movie.

Before moving into outer space, Grafix primarily marketed digital jewelry and watches with bold, graphic images. Its commercial line of CyberWear includes microcomputer-controlled animations in timepieces, electronic pendants, bolo-ties and lapel pins and promotional items. The company first beamed into space with Trekkies several years ago. First, a costume designer for "Star Trek: The Next Generation" TV series bought a Grafix pin and adorned Lt. Worfs sash with it.

It became known as the Klingon Medallion. Then, "Star Trek" makeup artist Michael Westmore used a pair of Paramount Pictures Implants adorning the Borg's armor and head gear are electronic displays designed, developed and manufactured by Grafix in Santa Cruz. Grafix earrings that his wife bought as the Vorgon Transporter, said John Thomas, who co-founded Grafix in 1989 with his wife, Joey. Soon, Crosis, a Borg, was wearing a Grafix design cyber-optic known as the Eye of the Crosis. Grafix, it seemed, was destined for "The Next Generation." But the cyberwear had earthly beginnings as jewelry designed by Joey Thomas.

Using the same liquid crystal display that gives digital readouts, she made jewelry that would burst into pattern on steel, graphite and chrome. The time pieces tell time graphically an image turns on for each hour and the minutes are displayed digitally in the center. The seven-person company, which grossed $1 million last year, is located in the Thomas home on Vine Hill Road. The latest collaboration with "Star Trek," the movie, occurred at warp speed, said John. West-more, the makeup artist, called last spring "and told us briefly what he had going and asked us some questions about what we could do." In three weeks, the company produced 42 designs for West-more to consider, said John.

"It was borderline magic what we had to do. We jumped and accommodated and came up with a nice selection of things." The Thomases still don't know how many and what designs are used in the movie, with the exception of the few they have seen in promotions, said John. They Nod have been told that "most" of their pieces were used. For sure, the digital implants are used by the Borg and Crosis appear to have the same eyepiece, he said. "We're at the edge of our seats to see what and how" Grafix designs were used, said John.

John considers the Borg race "hideous creatures." But, the profits they should bring Grafix with the release of the movie may make them less hideous. The company has three "Star pieces ready to to Seagate iwu yeais iu eveiy iimiuci ciuiiuj- ee who completes a claim form notifying the company of an interest in these services. Moreover, the settlement calls for the company to pay for up to two retraining courses per semester and as many as eight courses for settlement participants. The courses, to be offered at the company's Evening Institute, will be designed to upgrade former workers' engineering and computer skills The settlement also calls for company managers to be retrained in nondiscriminatory decisionmaking and how to handle layoffs. As part of the settlement, the company did not admit discrimination, Casellas said.

The EEOC said it will monitor compliance for five years. EEOC General Counsel C. Gregd: ry Stewart said the settlement means that "valuable employees are being re-employed or retrained" by the company. "But best of all," he said, "the avoidance of a lengthy trial made a real difference in the lives of the real people behind the charges that led to today's consent decree." Daniel scheduled a final hearing on the decree for next March 5. EEOC officials said they could only prove statistically that Martin Marietta discriminated against 330 older workers, and that the company agreed to rehire 450.

They said the choice on which workers to re hire will be left up to the company but that 204 already have been re-1, hired. As for the 1,500 workers not in-; eluded in the rehiring the EEOC said they will share in! the settlement package. The EEOC; said many of the workers already have found other Jobs, and don't' want their old jobs back. Contest on tap to guess date of brewery milestone By ROBIN MUSITELLI Sentinel staff writer SANTA CRUZ In the beer-drinking quarters of Santa Cruz Brewing Co. Front Street Pub, a big event is coming.

The brewery expects to sell its 4 millionth pint of beer before the end of November. And a contest is on to guess exactly when that pint will be served. But, first, a review of how much beer has preceded that 4 millionth pint. According to the calculations of the brewery co-founder and owner Gerry Turgeon, that is 500,000 gallons of beer. That's enough to fill 16,129 beer barrels or 32,258 kegs.

Enough to cover more than 1V4 acres in a foot of beer. Since 1986, some 1,152,070 pounds of malt and 27,648 pounds of hops have been used to brew the 23,000 batches of beer that have led to the 4 millionth pint, says Turgeon. The pub was founded in 1986 by Turgeon, his father Bernie Turgeon, and brewmaster Scott Morgan. The brewery, at 516 Front St. in Santa Cruz, was the fourth In the state and the sixth in the country, said Gerry Turgeon.

Turgeon calculates that the prize pint will be served on Nov. 28, 29 or 30. Guesses on the date and approximate time will be accepted 26. The winning guesser and the lucky beer drinker, will receive prizes. The Associated Press er Industry's largest trade show, in Las Vegas, Nev.

Seagate's consistent growth and history of sustained earnings puts the company's stock on par with that of technology giants IBM and Hewlett-Packard, along with General Electric, Du-Pont and General Motors. LAS VEGAS, Nev. New York Stock Exchange Chairman Richard A. Glasso, on screen at right, congratulates Seagate Technology Chairman and CEO Al Shugart on the company's recent 'blue chip' stock rating. The event was Wednesday at Comdex, the comput- Sentinel wire services.