Ukiah Daily Journal from Ukiah, California on January 26, 2000 · Page 3
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Ukiah Daily Journal from Ukiah, California · Page 3

Ukiah, California
Issue Date:
Wednesday, January 26, 2000
Page 3
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MONEY MATTERS " — —^^^^^^^M^Hi^MH^^HM^HHM^HHH^H Retech lays off some 50 employees By BARBARA REID Taxes can hurt your return A jump in the value of stocks, mutual funds, or other investments is great, but why settle for that when you could also reduce, defer, or eliminate Uncle Sam's take of the profit? Taxes can be a huge drag on long-term accumulation of wealth. ;What to do? As a start, it's generally a good idea to maximize contributions to a 401(k), individual retirement account, or :prher tax-sheltered retirement •account because dividends, 'interest, and sales of securities in -them aren't immediately taxed. ;When selling stocks outside •ihose accounts, the tax blow can :be softened if you wait until •you've owned the issue longer -than a year because such long-term capital gains at a maximum •fate of 20 percent compared with [ordinary income tax rates of up tli>-39.6 percent. Cull the Losers. Another good idea: Culling losers when you cash in on a gain allows you to trim taxable profit by deducting losses. Some experts advocate keeping income generators in-a sheltered retirement profit bjj deducting losses. Some Experts advocate keeping income generators in a sheltered retirement account and focusing oh low-taxed capital gains in taxable accounts. ;>Btu.:• many. . mutual 7fun«j * investors holding money outside retirement plansndon't have the.... option of deciding when and Kow to pay tax on investment g^ajns. They can face a capital gain or regular tax hit even when sitting tight with a goal of delaying tax or, with a good estate pjaii, possibly escaping it forev- errThat's because of what happens when a fund's manager sejjs shares to freshen the portfolio; Any profits - minus trading lolses - are taxable to fund holdeirs: even if they don't withdraw jhfr gains. Taxable dividends and interest earned by a fund are also gassed along. «i?jMutual funds are responding to .such concerns. Companies are creating special tax-managed funds - roughly three dozen so far; and growing - that pledge to mjjike taxes a primary concern ^hen deciding what and when to trflde, a consideration that's <>|t£n a blind spot for portfolio managers intent on chalking up the; best raw performance. Investors are increasingly look- utgj at after-tax returns, which is die; money they keep. . i:iax-control tactics used by flietse funds include holding stocks that pay little or no divi- (jfepds, not trading often, avoiding short-term gains, and timing sales so that gains are offset by losses from the current year or carried over from past years. Jofne funds, such as index funds and others that trade infrequently,-may generate little taxable income even when that isn't a stated goal. On the other hand, funds that emphasize income or aggressive trading - such as Some tech funds - typically aren't tax avoiders. ;;• The gap between pretax and after-tax returns vanes widely #mbng funds, but it's common fora stock fund's after-tax return ii> be 15 percent to 20 percent less than its pretax return. One example of how taxes can hurt: A $10,000 deposit in Vanguard's $00 Index fund grew to $46,700 in the 10 years ended last September 30, which is $1,000 less Jjiafi Vanguard's Growth and income fund. But when taxes tyefe figured in, the lesser-taxed fridex fund was ahead by $4,600. II The taxes fund holders face on their investments have ballooned. Capital gains distribV $ons for 1998 totaled $166 bil- lf {>n, or about 4 percent of assets, f 1 ~ * See MONEY, Page S The Daily Journal Retech of Ukiah will lay off 50 of its 270 employees at the end of the week, a move that company officials say is the result of a downturn in the company's 1999 orders. "These decisions have been incredibly painful for all of those involved, and we sincerely regret the impact to our employees, as well as the community, that accompany these difficult measures," said James E. Crouch, Retech president. "We are, however, at a point where we have no choice but to control costs and lower overhead in order to position Retech for the future." Crouch hinted at new products the company has in the making but not exactly what they are and he said the company remains optimistic about its future. The company's high-temperature metal melting furnaces for the aerospace and titani- um industries did not sell as well as expected in 1999 and the company told employees in an in-house memo that it had "pulled certain outsourced work back inside the company and attempted to ride out the slump in business" to no avail. In addition to layoffs, the memo explained, the company is also looking for other cost-cutting measures. It will shut down its swing shift, which it says will save energy and operations costs, although some swing shift employees will retain jobs on the day shift. The layoffs bring the number of employees at Retech to 220, about 27 fewer than it had at this time last year, but higher than the company average. The layoffs are not concentrated in any one area, and will not be made according to seniority. According to the in-house memo, those affected will be notified Friday and that will be their last day of work. Exit interviews will be held with laid off employees Feb. 4 and all employees will get at least a week's severance, some more depending on the length of service. The company is also working with local employment agencies to try to find work for those laid off. "We hope that the generally healthy state of the economy will help absorb these employees back into the work force in Mendocino County," Crouch said. According to the company the layoff has nothing to do with its parent company, Lockheed Martin, or the fact that Retech is up for sale. THE COMMERCE FILE LA VAE'S New restaurant open for business By LOIS O'ROURKE The Dally Journal G me is the big, green restaurant that tood on the corner of South State Itreet and Lewis Lane near Talmage Road. In its place is a fresh, newly whitewashed building with a bright sign inviting diners to come inside and enjoy a meal. It's called La Vae's Fine Dining, and in a little less than a month, it's already becoming a popular spot for lunch and dinner. Owned by native Ukiahans Robert and Carla Clare, La Vae's made its dinner debut Dec. 28. A sous chef with experience at the Groveland Hotel at the Pine Mountain Lake Country Club in Groveland, Robert Clare had always wanted to open his own restaurant. He once told his high school buddies in Ukiah that someday he would open a restaurant here. "It's something I love," Clare said, adding that he has been cooking since he * \-After he had spent several years- in the military, his mother-in-law called him and ^"told-him there-was a restaurant in-Ukiali for sale. Clare and his wife decided the time was right. "Ukiah is growing in leaps and bounds," Clare said. "For better or worse, it's happening." So the Clares purchased the building and after five months of major renovations, they opened La Vae's. Robert insists he is not trying to compete with other restaurants in town but instead, wants to carve out his own niche. "Hopefully it will catch on," he said. Describing his menu as "California Cuisine with a Mediterranean flair," Clare loves saute cooking and grilling. His staff of chefs get together every week and bounce ideas off of each other. All the food is fresh, he said, and everything is made there, from the sauces and soups to salad dressings and croutons. "For example, we got a big batch of celery in one day and made cream of celery soup. The next day we made chicken and cream of celery soup," Clare said. • Other times, Clare and his two chefs, Jim Ketchell and Ron Howard, experiment with making different sauces that are all made from scratch. They will taste each other's sauces and decide which one is best. Dinners at La Vae's include something for everyone: pasta, steak, seafood, chicken, rack of lamb, duck and salads. "The dinners are meant to be a dining experience," Evelyn Philis, La Vae's pastry chef, said. Lunches are designed so people can get in and out rather quickly, Philis said. The lunch menu includes salads, sandwiches, pasta and hamburgers. Both lunches and dinners include vegetarian items. La Vae's also serves Sunday Brunch Uirfaira VucoacelkM/The Daily Journal La Vae's chef Jim Ketchell cooks chicken for a recent lunch. which includes about eight different entrees, as well as baked goods and fruit platters, Philis said. The inside of La Vae's hardly resembles the old Green Barn, the former tenant of the building. Gone is the bar with the Jack Daniels bottle collection, as well as the dark, wood-paneled interior. Instead, the dining area has been opened up with a lighter interior. In place of the old bar are booths and tables for smaller parties. Tables for larger parties are on the opposite side of the room. The restaurant also kept the railing from the old bar, but moved it closer to the kitchen. La Vae's has an alcohol license for wine and beer only. For reservations or more information, call 462-6620. By K.C. MEADOWS mericans were feeling /\ pretty generous this year 2. JLaccording to the American Express Retail Index whjch tracks the spending habits • of Americans at Christmas using surveys of 500 heads of house* holds and 275 retailers. ' '. \ According to the index: ' • Shoppers spent an average' of $1,558 on total holiday expendi- • tures including gifts, travel, decorations and entertainment • Of that amount, $1,199 was for gifts (up from $865 in 1998); $167 went to entertaining (up from $134); $96 was spent,on travel (up from $45); and $60 went to decorations (about the same as 1998 at $64). • Some 46 percent of retailers reported increased sales this yoar., • Online shopping grew from 6 percent in 1998 to 16 percent in 1999, although online shopping was limited primarily to toys, electronics, books and maga j zines. • People still prefer to shop, at department stores (60 percent),followed by discount stores (35 percent), specialty stores (21 per> cent) toy stores (17 percent), electronics stores (15 percent) and music/video stores (7 per-, cent). • The most popular gifts among adults are clothing (56 percent), followed by electronics (45 percent), then gift certificates (21 percent) and women's accessories/jewelry (19 percent). '•'••'* ••• Arid of course, 55 percent of the shoppers used credit cards, i 'The annual US Bank Territory 2000 economic report .is out and has some interesting 'information about our region, which as we all know has. seen a major economic boom following the recession of the early 1990s. .. Some .of you who read this column regularly may remember that the report discusses the west- em region of the nation made up of Idaho, Nevada, Oregon, Utah, Washington and the 34 northern California counties where US Bank had branches. ' This year, however, the report' includes the entire state of Calji- fornia since US Bank has now acquired the Bank of Commerce and The Peninsula Bank, both of San Diego and Western Bancorp- in Newport Beach. ; The report looks at some of the • economic events in the Territory '. between 1982 and 1999. ; "There have been major- national events including the; defense buildup and builddown, • the placing of the Northern Spot-; ted Owl and various salmon runs • on the Endangered Species List;! and the rapid growth of industries' and occupations only dreamed of! in the, 1980s. Mergers and acqui-' sitions have reshaped the busi- • ness landscape amidst a changing; regulatory structure and new technology." " ; California's experience of the 90s recession was deeper arid more prolonged and it, along with all the states in the Territory, saw out-migration of their populations. See COMMERCE, Page 5 The symptom that hasn't returned despite forewarnings By JOHN CUNNIFF AP Business Analyst NEW YORK-With so many noteworthy economic events having occurred during the past year, it's ironic that probably the most words were spent on something that didn't happened. The reference is to inflation. And to it can be added that, at least as some see it, rarely in economic history have more words been wasted if measured by their effectiveness. Warnings about inflation are intended to be taken seriously, especially when they come from recognized financial sources. They are intended to frighten, to slow down economic activity. Not only did inflation fail to appear, as threatened, but the seriousness of the threat was all but ignored. Both consumers and businesses spent lavishly, and stocks rose to investor heaven. The greatest number of warnings were issued by Alan Greenspan, whose position as chairman of the Federal Reserve also put him in position to raise interest rates. He did, but with little reaction. A more generous point of view would credit Greenspan's jawing as a reason why inflation remained hidden - that the economy would have been even more exuberant had he not issued his warnings. That view, however, is hard to document. Retail sales tripled 1998's figure. Sales of cars and other passenger vehicles set a record at 16.9 million units last year. Housing starts at 1.66 million units were the highest since 1986. And industrial production rose at a 7 percent rate in the fourth quarter. That's exuberance. Or, in the lingo of the stock market, it's momentum, a definition of which is the property of a moving body that determines the length of time need to bring it to rest. In Greenspan's view, the sensible braking mechanism would be higher interest rates, and so he applied them three times at a quarter-point each during late 1999. The effect, at least on stocks, may have been volatility, or the word used to describe the bouncing around of stocks - up one week, down the next. When the economy appeared to weaken, it was reasoned that Greenspan wouldn't act; when it strength^ ened, he would. It's still that way in the new year, with never a day passing without reference to the chair^ man's state of mind. His fears of inflation play a role in every business and investment deci : : sion. • Still, business is planning tq spend heavily, consumers are buying and investors are said to have megamillions to plunge into stocks. The most visible Set ANALYSIS, Page 5 '

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