Waco Tribune-Herald from Waco, Texas • 58

I BE TRIBUNE-HERALD SUNDAY, JUNE 15. 1986 MARKETPLACE Despite setbacks, Mann Utilities may shift gears still growing After meeting with the investors, Mann determined there already were too many investors in that gffeup. Through friends is Washington, D.C Mann inquired about and eventually applied for a permit himself. He ended up competing with three other invekmeni groups, including the me that initially approached him, for apr proval from the Federal Communications Commission. einpire From Page IE WoodviDe simply because we had gotten so large, a town that size doesn't havq the staff.

We couldnt get stenographers, clerical help we couldnt get the kind of people that had the expertise to operate this holding company as I envisioned it at that time. In a smaller town, you just can't get enough people to operate a very sophisticated company like that It needed to be in a larger city." Mann came to Waco in January-1970. The deal included a SI per interest in First National, Bellmead State Bank and- a 25.1 percent ownership in Westview National Bank, Those three banks would raise his holdings to nine industry shows about $2 in debt for each $1 in equity. So management has by necessity had experience in the area of financjpg. This scenario, if, it -comes about, has considerable implication for investors intending to buy or those now holding stocks of utility companies.

Cash flow can be expected to become -mow important than ever before. Earnings will be of higher quality; that is, they will -be represented more in the form of cash and less as a result of bookkeeping. Investors probably' will pay more attention to cash position as an investment consideration. A company which has a large, amount left after paying dividends and interest is perhaps going to be valued higher in the market than one whose payout is skimpily coveted. And a particular utility's policy on expansion and acquisi-: tions may become a more significant put of the investment equation.

Are utilities the conglomerates of the future? This staid old group of stocks, -which has. been extremely good to investors the past few years, may be in the process of shifting its philosophical gears. An intriguing possibility, which some analysts and investors believe may be around the comer, is that a wave of. diversification is about to occur. Why is this thought likely, in a sector, which has always been rigidly oriented to one product? Because the construction cycle" for many of them is about to run its course.

As massive installations are finally paid for, they become cash cows. Cash-rich" is a term which is heard more often today in any discussion of utilities. And in a few spots around the 48 states, have gone into the ex-pansion-and-acqulsition business. There are three basic ways in which -management of a utility use its' excess. dollars for -s'-' Improve services and tech-' nology, thereby becoming more competitive for the revenue dollar.

7 Expand geographically within the industry. A merger of two operating companies which are a geographical fit" could be expected to bring about econo-. mies of scale, thus improving the bottom line for both. Diversify into other areas. And this is really where the action is likely to be.

Some utilities are known to' have a taste for the financial services area. One or two mergers have already taken place be- tween electric utilities and sav-- ings and loan associations. What is interesting is that the matchups were speedily consummated, indicating a relaxed regulatory. stance for future moves of this makes investment sense. Utilities have always been in the financing business that is, raising money for large proj-ects, and handling a lot of debt issues.

7 Average balance sheet in the '-'i I 4 1 1 But Mann: ran into problems with the Justice Department over the purchase of First Nation- iitude.1 als stock. As. chairman of the' So in 1978, Mann started again Texas Finance Commission, which with the formation of United Bank-makes the rules and regulations era Inc. governing Texas banks, Mann His strategy has been to target made an interestingtarget. mid-size markets throughout the Borrowing criticized including Austin, Marlin, to get up and go on to something better, and maintain a positive at- IHiwtdb'f' 'a A Hobart Marti la an I fluriUaa brofcar in Waca.

The tiaeriaa nrafniMna "TlieJiBtit Department ei itl- caileine ctad an to make a bank acquisition, sugar, 7 -The Associated Press Jolt has 98J percent of the caf-. feine 5.9 milligrams out of 6.0 allowed by the federal Food and Drug Administration per. Quid, ounce of soft drink. That is about twice the amount in leading brands, but one-fifth coffees wal-. lop.

Jolt also is made with 100 percent sugar, spurning Coke and Pepsis preferred sweetener, the less expensive corn syrup, Rapp said. 1 Who said soft drinks are supposed to be a health product? he said. Im not saying it's an unhealthy one, but its supposed to be a treat when Mom grabbed your arm and took you into the soda fountain for a treat thats what we wanted. BRIGHTON. N.Y.

The makers of Jolt Cola are seeking an unusual niche in the highly frag-. mented American soft drink Promoting Jolt as more das1 sic" than Coca-Cola, they proclaim that Jolt offers all the sugar and twice the caffeine of mainstream colas. Were definitely going to have a lot of fun, said CJ. (who developed Jolt Cola with nis father. Our product is naughty and bold and we dont mind that image, 'With a yellow lightning bolt slashing through its red and white logo, Jolt's label looks like it was.

taken from -a Batman- and Robin comic bode charged him with -misapplication of funds, and would not. let -him and the others proceed with their plan: That was in 1971 Lera Jaworsid, who would later become the prosecuting attorney in the Watergate hearings, served as Mann's defense lawyer. The trial, which was held in 1976, lasted 10 days and cost Mann more than 8300,000 in legal fees. A seven-man, five-woman jury found him innocent of the charge. By the Department's own there were 300 loans similar to Manns particular case, Mann said.

But they were going to use us to set a precedent in stopping borrowing money to make bank ac- -quisitions," he said. Although Mann won, it was the cost of years j)f work, millions of dollars, and his infant holding company. In addition, he also lost momentum in leading the bank holding -company movement in Mann had to sell his interests in First National Bank and Bellmead State Bank, and virtually had ta start all over again. I won the battle, but I lost the war, because the litigation took roughly three years, Mann said With that going on, we had to dismantle holding company be cause we couldnt proceed with that series of criticisms of us-by the Justice Department" After the smoke cleared, Mann was left with the controlling interest In the First State Bank and Trust Co. in Bryan, the Sabine Bank in Port Arthur and the Citizens Bank in WoodviUe, and a 25 percent interest in the Westview National Bank (now United Bank Waco).

He admitted he was bitter for some time. 1 was bitter for a while Nobody says life is supposed to be fair," Mann said. Some people go to and some people dont Some people get killed in war, and some people dont Nobody guaran-. tees anything in this life. I was bit- ter for a while, but you dont get anywhere with that BesttMng is Waca Another is pend-- ing in Sherman.

-v We like to stay in areas' which are small town oriented or community bank oriented, Mann said Were not interested in being, in downtown Dallas or Houston or San Antonio. We cater to the small commercial customer and to the retail customer in the communities were in, and that's the kind of customers they have. Those customers are being forgotten -and ignored by the huger bank holding companies." Mann's success in other ventures stems from his banking skills. -First Financial Corp was targeted toward the mobile home loan industry in 1978, and toward financing mobile home mortgages through General National Mortgage Association securities Backed into TV business Mann backed into the television business when a Fort Worth investment group approached him in 1977 about investing in a construction permit for a broadcast license. At the time, Waco had only two television stations, and only two of the major networks were represented.

Mann was interested but only if he could own enough of the station to where it would be meaningful" he said WEEK IN BUSINESS can have only negative effects on the overall economy Industrial production fell 0.6 percent in May, its first decline in four months, as the 'oil slump continued to affect exploration and drilling activities. Retail sales fell one-tenth of 1 percent in May as droves of consumers stayed out of most stores. Business inventories rose three-tenths of 1 percent in April and sales rose 1.4 percent That helped, the inventory-to-sales ratio fall to 1.38, from 1.40." A record drop of 45.75 prints in the Dow Jones industrial average on Monday was attributed to program trading and profit-taking that got out of hand. But the Dow rebounded sharply on Friday, finishing the week at 1,874.19, down only 11.71. Brad prices jumped on the uninspiring economic news.

M-l rose 817 billion. 1 A Commerce Department leak will lead to the dismissal of three employees who, investigators said, traded in bond futures using advance knowledge of the fourth-quarter flash GNP report The Commerce Department said it had beep investigating leaks of the GNP data when it discovered the hiding, but found no smoking gun to point to who. was doing the leaking. The department said the employees -made only 81083 in profits ra the trades, 1 1 1 Financial Crap, wont regain its health this year, its chairman, William J. POpejoy, said.

Most analysts. had expected the troubled thrift unit to return to profitability soon. But Popejoy said its delinquent loans might continue to escalate. Union Pacific is Mexicos woes set wheels The application was filed in October 1977, and it was not approved untfi the summer of 1985, when KXXV already had been on the air a few months. Lawyers representing Blake-Potash and 1 Heart (T Texas Broadcasting fought, the granting of the license for several months.

The station's original cense was awarded to Blake-Pot-1 ash, but was appealed by Mann. The. license was later withdrawn from Blake-Potash by the FCC which said Mann had the superior application. Subsequent appeals by Black-Potash failed, and Mann, whose only previous media expert-. ence was as owner of The Tyler County Booster, is now competing 111111 rival stations KWTX -Channel- lOand.KCENChannelL:.

10 and KCEN Channel 6. Television no different Mann said he finds television no different than any -other venture. In any business, youve, got to -take in more than you pay out" Mann said Banking and the broadcast industry have -'some-', thing in common -r both public, service institutions, both public-spirited and public-minded" Part of Mann's strategy has been to hire the best people h4 can -afford While other bankers have termed Mann's hiring tactics as raiding. Mann believes his policy is sound- "You've got to have top-notch people with high ideals, who are capable, well-trained and have a good deal of ability, he said The rest of his philosophy in -banking and business is basic: Make friends and contacts, and remember the customer comes first. I would say that Ive always tried to associate myself with people Ive admired and respect and always felt the most important person in any business was the customer, whether it is the televi-sion viewer or the bank depositor" Mann said You focus on provid- ing the best service that can possibly be provided and be a good citizen in your community." motion because its oil operations havi been hurt by the price slump II will cut a significant" number jobs, -accelerate and more that double its stock buyback program and write down some oil assets But the company dearly is not Si desperate as it might appear it said it was conserving cash in cast it happens upon an irresistible ac quisition.

Union Carbide accepted the conditions imposed by a federal judge to transfer the Bhopal lawsuits to India. But Carbide said it still -might appeal the conditions 'which require it to abide by U.S. -rules on exchanging information and to pay any judgments awarded in India. TWA ousted Richard D. Pearson as its president, apparently at the behest of D.

Joseph Corr, a vice chairman brought in when Carl C. Icahn took control of the airline tai ApriL Analysts say Cor has turned around other companies for Icahn, but worry that such a summary disnuseafM a longtime exec Stive could increase tensions. A Delaware court blocked Anderson, Clayton's recapitalization eui, saying the company may ye misled stockholders. Thai leaves the door ajar for Gross and Bear; Stearns, which have offered 854 a share for Anderson. Bui Anderson said it would resolicit prox- IGSb B.

Edelmah plans a 844 1 share tender offer fra Fruehauf in art attempt to thwart manage ment'S attempts to thwart him. Igt his original offer to do a leveraged buyout at 842 a share still stands. Z'- Saga accepted a bid by Marriotl after it was sweetened to g390 1 share, or 8501.7 million, from 834.1 share. i( -v j- -'-v I s- i ti ft 7 of rescue plan in Rapp contends the combination of high caffeine and sugar tastes better. Jolt was introduced in upstate New York markets hi mid-April, 1 aqd the Rapps have hopes of expanding.

They signed franchise agreements in early June covering 14 Midwestern and the six New England states. But in this day of Perrier, healthy eating and hard bodies, there are skeptics. I think they're nuts. I think they're going to have to buck a trend and I doubt Coke or Pepsi will' take them seriously," said Sally L. Schadt, a beverage industry analyst, with Fourteen Research Corp.

in New York. Sjilmnc-2raUi New York Times News Service A rescue dan fra Mexico was' hurriedly formulated in light of that nations 97 billion in foreign debt, the dramatic drop of the peso and the drop in the price of oil, its major hard currency generator. Discussions on ways to solve the debt problem had been under way for months, but the crisis was precipitated by the plunge of the peso, which fell 30 percent in six day! The rescue package would require Mexico to sign a letter of intent with the IMF, promising to -take steps to expand its economy. In return, Mexico would get 86 billion in new" loans, including some from the IMF and the World Bank. Some of the loans would have to come from commercial banks in the United States, and the Fed-chairman, Paul A.

Volcker, said lenders should be lenienL But many commercial bankers, seeing their problem loans mount up, say they are reluctant to throw good money after bad and will require some guarantees beyond the letter of intent with the IMF. The juggernaut of a tax' bin stormed its way through the Senate, flinging, off attempts to attach amendments. The refusal of sena-. tors to approve even most-popular of measures the restoration of IRA deductions is an indication of show serious they have become about tax revision, and how deeply they have taken to heart President Reagan's pleas to get the bill Into conference com-: mitteq. Of course, race the bill is there, special interests are to go to work.

Producer prices spurted up six- tenths of 1 percent in May; revets- -ing four months of declines! Analysts said oil prices, which had been responsible fra of the drops, have stalled: back up. The most say, Need a new ear? Looking for a good used truck? A racing blka or an exercise blcyclc7 Roller skates or a baby stroller7 A motorcycle or a motor home? kind of wheels you're buying. Grab a Whatever Trlbl The classified advertising pages of the Tribune-' Herald are filled every day with every kind of wheel Imaginable, How about a lawn mower7 Or a trailer to tow your boat? Need a moped to ride to summer school or a mlnl-van to take on vacatlon7 From the area's leading new car dealers to Individuals whose castoff can become your carriage, you'll 1nd It all In the Trlb classified pages, everyday. So when you're wheelin' and dealln' about buying v. 30ar Grab a Trlb! -TA --W i -Vrt "I I.