[20600001] |Spencer J. Volk, president and chief operating officer of this consumer and industrial products company, was elected a director.
[20600002] |Mr. Volk, 55 years old, succeeds Duncan Dwight, who retired in September.

[20601001] |In an age of specialization, the federal judiciary is one of the last bastions of the generalist.
[20601002] |A judge must jump from murder to antitrust cases, from arson to securities fraud, without missing a beat.

[20601003] |But even on the federal bench, specialization is creeping in, and it has become a subject of sharp controversy on the newest federal appeals court.

[20601004] |The Court of Appeals for the Federal Circuit was created in 1982 to serve, among other things, as the court of last resort for most patent disputes.
[20601005] |Previously, patent cases moved through the court system to one of the 12 circuit appeals courts.
[20601006] |There, judges who saw few such cases and had no experience in the field grappled with some of the most technical and complex disputes imaginable.

[20601007] |A new specialty court was sought by patent experts, who believed that the generalists had botched too many important, multimillion-dollar cases.
[20601008] |Some patent lawyers had hoped that such a specialty court would be filled with experts in the field.
[20601009] |But the Reagan administration thought otherwise, and so may the Bush administration.

[20601010] |Since 1984, the president has filled four vacancies in the Federal Circuit court with non-patent lawyers.
[20601011] |Now only three of the 12 judges -- Pauline Newman, Chief Judge Howard T. Markey, 68, and Giles Rich, 85 -- have patent-law backgrounds.
[20601012] |The latter two and Judge Daniel M. Friedman, 73, are approaching senior status or retirement.

[20601013] |Three seats currently are vacant and three others are likely to be filled within a few years, so patent lawyers and research-based industries are making a new push for specialists to be added to the court.
[20601014] |Several organizations, including the Industrial Biotechnical Association and the Pharmaceutical Manufacturers Association, have asked the White House and Justice Department to name candidates with both patent and scientific backgrounds.
[20601015] |The associations would like the court to include between three and six judges with specialized training.

[20601016] |Some of the associations have recommended Dr. Alan D. Lourie, 54, a former patent agent with a doctorate in organic chemistry who now is associate general counsel with SmithKline Beckman Corp. in Philadelphia.
[20601017] |Dr. Lourie says the Justice Department interviewed him last July.

[20601018] |Their effort has received a lukewarm response from the Justice Department.
[20601019] |"We do not feel that seats are reserved (for patent lawyers)," says Justice spokesman David Runkel, who declines to say how soon a candidate will be named.
[20601020] |"But we will take it into consideration."

[20601021] |The Justice Department's view is shared by other lawyers and at least one member of the court, Judge H. Robert Mayer, a former civil litigator who served at the claims court trial level before he was appointed to the Federal Circuit two years ago.
[20601022] |"I believe that any good lawyer should be able to figure out and understand patent law," Judge Mayer says, adding that "it's the responsibility of highly paid lawyers (who argue before the court) to make us understand (complex patent litigation)."

[20601023] |Yet some lawyers point to Eli Lilly & Co. vs. Medtronic, Inc., the patent infringement case the Supreme Court this month agreed to review, as an example of poor legal reasoning by judges who lack patent litigation experience.
[20601024] |(Judge Mayer was not on the three-member panel.)

[20601025] |In the Lilly case, the appeals court broadly construed a federal statute to grant Medtronic, a medical device manufacturer, an exemption to infringe a patent under certain circumstances.
[20601026] |If the Supreme Court holds in Medtronic's favor, the decision will have billion-dollar consequences for the manufacturers of medical devices, color and food additives and all other non-drug products that required Food & Drug Administration approval.

[20601027] |Lisa Raines, a lawyer and director of government relations for the Industrial Biotechnical Association, contends that a judge well-versed in patent law and the concerns of research-based industries would have ruled otherwise.
[20601028] |And Judge Newman, a former patent lawyer, wrote in her dissent when the court denied a motion for a rehearing of the case by the full court, "The panel's judicial legislation has affected an important high-technological industry, without regard to the consequences for research and innovation or the public interest."

[20601029] |Says Ms. Raines, "(The judgment) confirms our concern that the absence of patent lawyers on the court could prove troublesome.

[20602001] |Friday, October 27, 1989

[20602002] |The key U.S. and foreign annual interest rates below are a guide to general levels but don't always represent actual transactions.

[20602003] |PRIME RATE: 10 1/2%.
[20602004] |The base rate on corporate loans at large U.S. money center commercial banks.

[20602005] |FEDERAL FUNDS: 8 3/4% high, 8 11/16% low, 8 5/8% near closing bid, 8 11/16% offered.
[20602006] |Reserves traded among commercial banks for overnight use in amounts of $1 million or more.
[20602007] |Source: Fulton Prebon (U.S.A.) Inc.

[20602008] |DISCOUNT RATE: 7%.
[20602009] |The charge on loans to depository institutions by the New York Federal Reserve Bank.

[20602010] |CALL MONEY: 9 3/4% to 10%.
[20602011] |The charge on loans to brokers on stock exchange collateral.

[20602012] |COMMERCIAL PAPER placed directly by General Motors Acceptance Corp.: 8.50% 30 to 44 days; 8.25% 45 to 65 days; 8.375% 66 to 89 days; 8% 90 to 119 days; 7.875% 120 to 149 days; 7.75% 150 to 179 days; 7.50% 180 to 270 days.

[20602013] |COMMERCIAL PAPER: High-grade unsecured notes sold through dealers by major corporations in multiples of $1,000: 8.575% 30 days; 8.475% 60 days; 8.40% 90 days.

[20602014] |CERTIFICATES OF DEPOSIT: 8.09% one month; 8.04% two months; 8.03% three months; 7.96% six months; 7.92% one year.
[20602015] |Average of top rates paid by major New York banks on primary new issues of negotiable C.D.s, usually on amounts of $1 million and more.
[20602016] |The minimum unit is $100,000.
[20602017] |Typical rates in the secondary market: 8.55% one month; 8.50% three months; 8.40% six months.

[20602018] |BANKERS ACCEPTANCES: 8.52% 30 days; 8.35% 60 days; 8.33% 90 days; 8.17% 120 days; 8.08% 150 days; 8% 180 days.
[20602019] |Negotiable, bank-backed business credit instruments typically financing an import order.

[20602020] |LONDON LATE EURODOLLARS: 8 11/16% to 8 9/16% one month; 8 5/8% to 8 1/2% two months; 8 11/16% to 8 9/16% three months; 8 9/16% to 8 7/16% four months; 8 1/2% to 8 3/8% five months; 8 7/16% to 8 5/16% six months.

[20602021] |LONDON INTERBANK OFFERED RATES (LIBOR): 8 11/16% one month; 8 11/16% three months; 8 7/16% six months; 8 3/8% one year.
[20602022] |The average of interbank offered rates for dollar deposits in the London market based on quotations at five major banks.

[20602023] |FOREIGN PRIME RATES: Canada 13.50%; Germany 9%; Japan 4.875%; Switzerland 8.50%; Britain 15%.
[20602024] |These rate indications aren't directly comparable; lending practices vary widely by location.

[20602025] |TREASURY BILLS: Results of the Monday, October 23, 1989, auction of short-term U.S. government bills, sold at a discount from face value in units of $10,000 to $1 million: 7.52% 13 weeks; 7.50% 26 weeks.

[20602026] |FEDERAL HOME LOAN MORTGAGE CORP. (Freddie Mac):
[20602027] |Posted yields on 30-year mortgage commitments for delivery within 30 days.
[20602028] |9.80%, standard conventional fixed-rate mortgages; 7.875%, 2% rate capped one-year adjustable rate mortgages.
[20602029] |Source: Telerate Systems Inc.

[20602030] |FEDERAL NATIONAL MORTGAGE ASSOCIATION (Fannie Mae):
[20602031] |Posted yields on 30 year mortgage commitments for delivery within 30 days (priced at par) 9.75%, standard conventional fixed-rate mortgages; 8.70%, 6/2 rate capped one-year adjustable rate mortgages.
[20602032] |Source: Telerate Systems Inc.

[20602033] |MERRILL LYNCH READY ASSETS TRUST: 8.65%.
[20602034] |Annualized average rate of return after expenses for the past 30 days; not a forecast of future returns.

[20603001] |THE FINANCIAL ACCOUNTING STANDARDS BOARD'S coming rule on disclosure involving financial instruments will be effective for financial statements with fiscal years ending after June 15, 1990.
[20603002] |The date was misstated in Friday's edition.

[20604001] |Kidder, Peabody & Co. is trying to struggle back.

[20604002] |Only a few months ago, the 124-year-old securities firm seemed to be on the verge of a meltdown, racked by internal squabbles and defections.
[20604003] |Its relationship with parent General Electric Co. had been frayed since a big Kidder insider-trading scandal two years ago.
[20604004] |Chief executives and presidents had come and gone.

[20604005] |Now, the firm says it's at a turning point.
[20604006] |By the end of this year, 63-year-old Chairman Silas Cathcart -- the former chairman of Illinois Tool Works who was derided as a "tool-and-die man" when GE brought him in to clean up Kidder in 1987 -- retires to his Lake Forest, Ill., home, possibly to build a shopping mall on some land he owns.
[20604007] |"I've done what I came to do" at Kidder, he says.

[20604008] |And that means 42-year-old Michael Carpenter, president and chief executive since January, will for the first time take complete control of Kidder and try to make good on some grandiose plans.
[20604009] |Mr. Carpenter says he will return Kidder to prominence as a great investment bank.

[20604010] |Wall Street is understandably skeptical.
[20604011] |Through the first nine months of the year, Kidder ranks a distant 10th among underwriters of U.S. stocks and bonds, with a 2.8% market share, up slightly from 2.5% in the year-earlier period, according to Securities Data Co.
[20604012] |It's quite a fall from the early 1980s, when Kidder still was counted as an investment-banking powerhouse.
[20604013] |Gary S. Goldstein, president of the Whitney Group, an executive search firm, said: "I'd like to see (Kidder) succeed.
[20604014] |But they have to attract good senior bankers who can bring in the business from day one."

[20604015] |In 1988, Kidder eked out a $46 million profit, mainly because of severe cost cutting.
[20604016] |Its 1,400-member brokerage operation reported an estimated $5 million loss last year, although Kidder expects it to turn a profit this year.

[20604017] |In fact, Kidder is a minor player in just about every business it does except computer-driven program trading; in that controversial business, only Morgan Stanley & Co. rivals Kidder.
[20604018] |But even that niche is under attack, as several Wall Street firms pulled back from program trading last week under pressure from big investors.

[20604019] |Mr. Carpenter, a former consulting-firm executive who has a love for "task forces," says he has done a "complete rethink" of Kidder in recent months.
[20604020] |There have been a dizzying parade of studies of the firm's operations.
[20604021] |More than 20 new managing directors and senior vice presidents have been hired since January.
[20604022] |The firm's brokerage force has been trimmed and its mergers-and-acquisitions staff increased to a record 55 people.

[20604023] |Mr. Carpenter says that when he assumes full control, Kidder will finally tap the resources of GE.
[20604024] |One of GE's goals when it bought 80% of Kidder in 1986 was to take advantage of "syngeries" between Kidder and General Electric Capital Corp., GE's corporate-finance unit, which has $42 billion in assets.
[20604025] |The leveraged buy-out group of GE Capital now reports to Mr. Carpenter.

[20604026] |So far, instead of teaming up, GE Capital staffers and Kidder investment bankers have bickered.
[20604027] |Yet, says Mr. Carpenter, "We've really started to exploit the synergy between GE Capital and Kidder Peabody."
[20604028] |The units have worked on 37 investment banking deals this year, he says, though not all of them have panned out.

[20604029] |"We've had a good relationship with GE, which is the first time you could say that -- uh, let me withdraw that.
[20604030] |It's been a steadily improving relationship," says Mr. Carpenter.

[20604031] |Still, without many actual deals to show off, Kidder is left to stress that it finally has "a team" in place, and that everyone works harder.

[20604032] |A month ago, the firm started serving dinner at about 7:30 each night; about 50 to 60 of the 350 people in the investment banking operation have consistently been around that late.
[20604033] |"We are working significantly longer and harder than has been the case in the past," says Scott C. Newquist, Kidder's head of investment banking since June.

[20604034] |Everywhere, Kidder stresses the "always working" theme.
[20604035] |A new in-house magazine, Kidder World -- which will focus on the firm's synergy strategy, says Mr. Carpenter -- confides that on weekends Mr. Newquist "often gets value-added ideas while flying his single-engine Cessna Centurion on the way to Nantucket."

[20604036] |The firm's new head of mergers and acquisitions under Mr. Newquist, B.J. Megargel, talks of the opportunity to "rebuild a franchise" at Kidder.
[20604037] |"The Kidder name is one of only six or seven that every CEO recognizes as a viable alternative" when considering a merger deal, he says.
[20604038] |Now, according to a Kidder World story about Mr. Megargel, all the firm has to do is "position ourselves more in the deal flow."

[20604039] |With investment banking as Kidder's "lead business," where do Kidder's 42-branch brokerage network and its 1,400 brokers fit in?
[20604040] |Mr. Carpenter this month sold off Kidder's eight brokerage offices in Florida and Puerto Rico to Merrill Lynch & Co., refueling speculation that Kidder is getting out of the brokerage business entirely.
[20604041] |Mr. Carpenter denies the speculation.
[20604042] |To answer the brokerage question, Kidder, in typical fashion, completed a task-force study.
[20604043] |The result: Kidder will focus on rich individual investors and small companies, much closer to the clientele of Goldman, Sachs & Co. than a serve-the-world firm like Merrill Lynch or Shearson Lehman Hutton Inc.
[20604044] |Mr. Carpenter notes that these types of investors also are "sophisticated" enough not to complain about Kidder's aggressive use of program trading.

[20604045] |As part of the upscale push, Kidder is putting brokers through a 20-week training course, turning them into "investment counselors" with knowledge of corporate finance.
[20604046] |They will get "new and improved tools to sell, particularly to the affluent investor," says brokerage chief Charles V. Sheehan.

[20604047] |Theoretically, the brokers will then be able to funnel "leads" on corporate finance opportunities to Kidder's investment bankers, possibly easing the longstanding tension between the two camps.
[20604048] |However, skeptics caution that this kind of cross-pollination between brokers and investment bankers looks great on paper, but doesn't always happen.

[20604049] |Kidder competitors aren't outwardly hostile to the firm, as many are to a tough competitor like Drexel Burnham Lambert Inc. that doesn't have Kidder's long history.
[20604050] |However, competitors say that Kidder's hiring binge involving executive-level staffers, some with multiple-year contract guarantees, could backfire unless there are results.

[20604051] |The departing Mr. Cathcart says he has no worries about Kidder's future.
[20604052] |Mr. Cathcart, who will return to the Quaker Oats Co. board of directors, in addition to his personal ventures, is credited with bringing some basic budgeting and planning discipline to traditionally free-wheeling Kidder.
[20604053] |He also improved the firm's compliance procedures for trading.

[20604054] |Mr. Cathcart says he has had "a lot of fun" at Kidder, adding the crack about his being a "tool-and-die man" never bothered him.
[20604055] |"It was an absolutely marvelous line and one I used many times," he says.

[20604056] |Smiling broadly when he talks about Mr. Carpenter, Mr. Cathcart says the new Kidder chief is "going to be recognized shortly as one of the real leaders in the investment-banking business."
[20604057] |In coming years, Mr. Cathcart says, Kidder is "gonna hum."

[20604058] |Or, as Mr. Carpenter, again drawing on his consulting-firm background, puts it: "We're ready to implement at this point.

[20605001] |UNDER A PROPOSAL by Democrats to expand Individual Retirement Accounts, a $2,000 contribution by a taxpayer in the 33% bracket would save $330 on his taxes.
[20605002] |The savings was given incorrectly in Friday's edition.

[20606001] |In what could prove a major addition to the Philippines' foreign-investment portfolio, a Taiwanese company signed a $180 million construction contract to build the centerpiece of a planned petrochemical complex.

[20606002] |Taiwan's USI Far East Corp., a petrochemical company, initialed the agreement with an unidentified Japanese contractor to build a naphtha cracker, according to Alson Lee, who heads the Philippine company set up to build and operate the complex.
[20606003] |Mr. Lee, president of Luzon Petrochemical Corp., said the contract was signed Wednesday in Tokyo with USI Far East officials.
[20606004] |Contract details, however, haven't been made public.
[20606005] |The complex is to be located in Batangas, about 70 miles south of Manila.

[20606006] |USI Far East will hold a 60% stake in Luzon Petrochemical, according to papers signed with the Philippine government's Board of Investments.

[20606007] |The proposed petrochemical plant would use naphtha to manufacture the petrochemicals propylene and ethylene and their resin derivatives, polypropylene and polyethylene.
[20606008] |These are the raw materials used in making plastics.

[20606009] |The contract signing represented a major step in the long-planned petrochemical project.
[20606010] |At an estimated $360 million, the project would represent the single largest foreign investment in the Philippines since President Corazon Aquino took office in February 1986.
[20606011] |It also is considered critical to the country's efforts to both attract other investment from Taiwan and raise heavy industry capabilities.
[20606012] |The project has been in and out of the pipeline for more than a decade.

[20606013] |However, workers can't break ground until legal maneuvers to block the complex are resolved, moves which caused the signing to remain questionable up to the last moment.
[20606014] |As previously reported, a member of the Philippines' House of Representatives has sued to stop the plant.
[20606015] |The legislator, Enrique Garcia, had actively backed the plant, but at the original site in his constituency northwest of Manila.
[20606016] |The country's Supreme Court dismissed the suit, but Mr. Garcia late last month filed for a reconsideration.

[20606017] |In addition, President Aquino has yet to sign into law a bill removing a stiff 48% tax on naphtha, the principal raw material to be used in the cracker.

[20606018] |However, at a news conference Thursday, Mrs. Aquino backed the project and said her government was attempting to soothe the feelings of residents at the original site, adjacent to the government's major petroleum refinery in Bataan province.
[20606019] |"We have tried our best to tell the people in Bataan that maybe this time it will not go to them, but certainly we will do our best to encourage other investors to go to their province," Mrs. Aquino told Manila-based foreign correspondents.

[20606020] |The project appeared to be on the rocks earlier this month when the other major partner in the project, China General Plastics Corp., backed out.
[20606021] |China General Plastics, another Taiwanese petrochemical manufacturer, was to have a 40% stake in Luzon Petrochemical.

[20606022] |However, Mr. Lee said that USI Far East is confident other investors will take up the slack.
[20606023] |He said USI Far East has applied to both the Asian Development Bank and the World Bank's International Finance Corp. for financing that could include equity stakes.

[20607001] |Three new issues begin trading on the New York Stock Exchange today, and one began trading on the Nasdaq/National Market System last week.

[20607002] |On the Big Board, Crawford & Co., Atlanta, (CFD) begins trading today.
[20607003] |Crawford evaluates health care plans, manages medical and disability aspects of worker's compensation injuries and is involved in claims adjustments for insurance companies.

[20607004] |Also beginning trading today on the Big Board are El Paso Refinery Limited Partnership, El Paso, Texas, (ELP) and Franklin Multi-Income Trust, San Mateo, Calif., (FMI).
[20607005] |El Paso owns and operates a petroleum refinery.
[20607006] |Franklin is a closed-end management investment company.

[20607007] |On the Nasdaq over-the-counter system, Allied Capital Corp., Washington, D.C., (ALII) began trading last Thursday.
[20607008] |Allied Capital is a closed-end management investment company that will operate as a business development concern.

[20608001] |THE YALE POLITICAL UNION doesn't pay an honorarium to speakers.
[20608002] |In Thursday's edition, it was incorrectly indicated that the union had paid a fee to former House Speaker Jim Wright.

[20609001] |President Bush insists it would be a great tool for curbing the budget deficit and slicing the lard out of government programs.
[20609002] |He wants it now.

[20609003] |Not so fast, says Rep. Mickey Edwards of Oklahoma, a fellow Republican.
[20609004] |"I consider it one of the stupidest ideas of the 20th century," he says.

[20609005] |It's the line-item veto, a procedure that would allow the president to kill individual items in a big spending bill passed by Congress without vetoing the entire bill.
[20609006] |Whatever one thinks of the idea, it's far more than the budgetary gimmick it may seem at first glance.
[20609007] |Rather, it's a device that could send shock waves through the president's entire relationship with Democrats and Republicans alike in Congress, fundamentally enhance the power of the presidency and transform the way the government does its business.

[20609008] |President Bush badly wants a line-item veto and has long called for a law giving it to the president.
[20609009] |Now the White House is declaring that he might not rely on Congress -- which hasn't shown any willingness to surrender such authority -- to pass the line-item veto law he seeks.
[20609010] |White House spokesmen last week said Mr. Bush is considering simply declaring that the Constitution gives him the power, exercising a line-item veto and inviting a court challenge to decide whether he has the right.

[20609011] |Although that may sound like an arcane maneuver of little interest outside Washington, it would set off a political earthquake.
[20609012] |"The ramifications are enormous," says Rep. Don Edwards, a California Democrat who is a senior member of the House Judiciary Committee.
[20609013] |"It's a real face-to-face arm wrestling challenge to Congress."

[20609014] |White House aides know it's a step that can't be taken lightly -- and for that reason, the president may back down from launching a test case this year.
[20609015] |Some senior advisers argue that with further fights over a capital-gains tax cut and a budget-reduction bill looming, Mr. Bush already has enough pending confrontations with Congress.
[20609016] |They prefer to put off the line-item veto until at least next year.

[20609017] |Still, Mr. Bush and some other aides are strongly drawn to the idea of trying out a line-item veto.
[20609018] |The issue arose last week when Vice President Dan Quayle told an audience in Chicago that Mr. Bush was looking for a test case.
[20609019] |White House Press Secretary Marlin Fitzwater confirmed that Mr. Bush was interested in the idea, but cautioned that there wasn't a firm decision to try it.

[20609020] |Mr. Bush, former President Reagan and a host of conservative activists have been arguing that a line-item veto would go a long way in restoring discipline to the budget process.
[20609021] |They maintain that a president needs the ability to surgically remove pork-barrel spending projects that are attached to big omnibus spending bills.
[20609022] |Those bills can't easily be vetoed in their entirety because they often are needed to keep the government operating.

[20609023] |Conservatives note that 43 governors have the line-item veto to use on state budgets.
[20609024] |More provocatively, some conservative legal theorists have begun arguing that Mr. Bush doesn't need to wait for a law giving him the veto because the power already is implicit in the Constitution.

[20609025] |They base their argument on a clause buried in Article I, Section 7, of the Constitution that states: "Every order, resolution, or vote to which the concurrence of the Senate and House of Representatives may be necessary (except on a question of adjournment) shall be presented to the President of the United States; and before the same shall take effect, shall be approved by him or . . . disapproved by him. . . ."

[20609026] |This clause, they argue, is designed to go beyond an earlier clause specifying that the president can veto a "bill," and is broad enough to allow him to strike out items and riders within bills.
[20609027] |Senate Minority Leader Robert Dole (R., Kan.), for one, accepts this argument and earlier this year publicly urged Mr. Bush "to use the line-item veto and allow the courts to decide whether or not it is constitutional."

[20609028] |There's little doubt that such a move would be immediately challenged in court -- and that it would quickly make its way to the Supreme Court to be ultimately resolved.
[20609029] |"It's a major issue, and they wouldn't want to leave it at a lower level," says Stephen Glazier, a New York attorney whose writings have been instrumental in pushing the idea that a president already has a line-item veto.

[20609030] |Rep. Edwards, the California Democrat, is one who pledges that he would immediately challenge Mr. Bush in the courts, arguing a line-item veto would expand a president's powers far beyond anything the framers of the Constitution had in mind.
[20609031] |"It puts this president in the legislative business," he declares.
[20609032] |"That's not what our fathers had in mind."

[20609033] |In addition to giving a president powers to rewrite spending bills meant to be written in Congress, Rep. Edwards argues, a line-item veto would allow the chief executive to blackmail lawmakers.

[20609034] |He notes that, as a lawmaker from the San Francisco area, he fights each year to preserve federal funds for the Bay Area Rapid Transit system.
[20609035] |If a president had a line-item veto and wanted to force him to support a controversial foreign-policy initiative, Rep. Edwards says, the president could call and declare that he would single-handedly kill the BART funds unless the congressman "shapes up" on the foreign-policy issue.

[20609036] |Proponents maintain that a president would choose to use a line-item veto more judiciously than that.
[20609037] |But there may be another problem with the device: Despite all the political angst it would cause, it mightn't be effective in cutting the deficit.
[20609038] |Big chunks of the government budget, like the entitlement programs of Social Security and Medicare, wouldn't be affected.
[20609039] |Governors have found that they have to use the device sparingly to maintain political comity.
[20609040] |And it isn't even clear that some pork-barrel projects can be hit with a line-item veto because they tend to be listed in informal conference reports accompanying spending bills rather than in the official bills themselves.

[20609041] |Still, proponents contend that the veto would have what Mr. Glazier calls an important "chilling effect" on all manner of appropriations bills.
[20609042] |Lawmakers, they say, would avoid putting many spending projects into legislation in the first place for fear of the embarrassment of having them singled out for a line-item veto later.

[20609043] |Whatever the outcome of a test case, President Bush would have to move cautiously becase the very attempt would "antagonize not just Democrats but Republicans," says Louis Fisher, a scholar at the Congressional Research Service who specializes in executive-legislative relations.
[20609044] |Republicans have as much interest as Democrats in "the way the system works," he notes.

[20609045] |Indeed, although a majority of Republican lawmakers favor a line-item veto, some, ranging from liberal Oregon Sen. Mark Hatfield to conservative Rep. Edwards are opposed.
[20609046] |Rep. Edwards voices the traditional conservative view that it's a mistake to put too much power in the hands of a single person.
[20609047] |Conservatives pushing for a line-item veto now, he notes, may regret it later: "Sometime, you're going to have a Democratic president again" who'll use his expanded powers against those very same conservatives.

[20609048] |"Every order, resolution, or vote to which the concurrence of the Senate and House of Representatives may be necessary (except on a question of adjournment) shall be presented to the President of the United States; and before the same shall take effect, shall be approved by him, or being disapproved by him, shall be repassed by two-thirds of the Senate and House of Representatives, according to the rules and limitations prescribed in the case of a bill."

[20610001] |This hasn't been Kellogg Co. 's year.
[20610002] |The oat-bran craze has cost the world's largest cereal maker market share.
[20610003] |The company's president quit suddenly.
[20610004] |And now Kellogg is indefinitely suspending work on what was to be a $1 billion cereal plant.

[20610005] |The company said it was delaying construction because of current market conditions.
[20610006] |But the Memphis, Tenn., facility wasn't to begin turning out product until 1993, so the decision may reveal a more pessimistic long-term outlook as well.

[20610007] |Kellogg, which hasn't been as successful in capitalizing on the public's health-oriented desire for oat bran as rival General Mills Inc., has been losing share in the $6 billion ready-to-eat cereal market.
[20610008] |Kellogg's current share is believed to be slightly under 40% while General Mills' share is about 27%.

[20610009] |Led by its oat-based Cheerios line, General Mills has gained an estimated 2% share so far this year, mostly at the expense of Kellogg.
[20610010] |Each share point is worth about $60 million in sales.

[20610011] |Analysts say much of Kellogg's erosion has been in such core brands as Corn Flakes, Rice Krispies and Frosted Flakes, which represent nearly one-third of its sales volume.
[20610012] |Kellogg is so anxious to turn around Corn Flakes sales that it soon will begin selling boxes for as little as 99 cents, trade sources say.

[20610013] |"Cheerios and Honey Nut Cheerios have eaten away sales normally going to Kellogg's corn-based lines simply because they are made of oats," says Merrill Lynch food analyst William Maguire.
[20610014] |"They are not a happy group of people at Battle Creek right now."
[20610015] |Kellogg is based in Battle Creek, Mich., a city that calls itself the breakfast capital of the world.

[20610016] |Another analyst, John C. Maxwell Jr. of Wheat, First Securities in Richmond, Va., recently went to a "sell" recommendation on Kellogg stock, which closed Friday at $71.75, down 75 cents, in New York Stock Exchange composite trading.
[20610017] |"I don't think Kellogg can get back to 40% this year," he said.
[20610018] |"Kellogg's main problem is life style.
[20610019] |People are reading the boxes and deciding they want something that's `healthy' for you -- oats, bran."
[20610020] |Mr. Maxwell said he wouldn't be surprised if, over the next two years or so, General Mills' share increased to 30% or more.

[20610021] |In announcing the plant delay, Kellogg Chairman William E. LaMothe said, "Cereal volume growth in the U.S. has not met our expectations for 1989."
[20610022] |He said construction wouldn't resume until market conditions warrant it.

[20610023] |Kellogg indicated that it has room to grow without adding facilities.
[20610024] |The company has five other U.S. plants, including a modern facility at its Battle Creek headquarters known as Building 100, which is to add bran-processing and rice-processing capacity next year.

[20610025] |General Mills, meanwhile, finds itself constrained from boosting sales further because its plants are operating at capacity.
[20610026] |A large plant in Covington, Ga., is to come on line next year.

[20610027] |A Kellogg officer, who asked not to be named, said the Memphis project was "pulled in for a reconsideration of costs," an indication that the ambitious plans might be scaled back in any future construction.
[20610028] |Initial cost estimates for the plant, which was to have been built in phases, ranged from $1 billion to $1.2 billion.

[20610029] |A company spokesman said it was "possible, but highly unlikely," that the plant might never be built.
[20610030] |"As we regain our leadership level where we have been, and as we continue to put new products into the marketplace and need additional capacity, we will look at resuming our involvement with our plan," he said.

[20610031] |The new facility was to have been the world's most advanced cereal manufacturing plant, and Kellogg's largest construction project.
[20610032] |The company had retained the Fluor Daniel unit of Fluor Corp. as general contractor.

[20610033] |But in recent weeks, construction-industry sources reported that early preparation work was slowing at the 185-acre site.
[20610034] |Subcontractors said they were told that equipment orders would be delayed.
[20610035] |Fluor Daniel already has reassigned most of its work crew, the sources said.

[20610036] |Last Friday's announcement was the first official word that the project was in trouble and that the company's plans for a surge in market share may have been overly optimistic.
[20610037] |Until recently, Kellogg had been telling its sales force and Wall Street that by 1992 it intended to achieve a 50% share of market, measured in dollar volume.

[20610038] |Although he called current market conditions "highly competitive," Mr. LaMothe, Kellogg's chairman and chief executive officer, forecast an earnings increase for the full year.
[20610039] |Last year, the company earned $480.4 million, or $3.90 a share, on sales of $4.3 billion.

[20610040] |As expected, Kellogg reported lower third-quarter earnings.
[20610041] |Net fell 16% to $123.1 million, or $1.02 a share, from $145.7 million, or $1.18 a share.
[20610042] |Sales rose 4.8% to $1.20 billion from $1.14 billion.

[20610043] |The company had a one-time charge of $14.8 million in the latest quarter covering the disposition of certain assets.
[20610044] |The company wouldn't elaborate, citing competitive reasons.

[20611001] |PARKER HANNIFIN Corp., which is selling three automotive replacement parts divisions, said it will retain its Automotive Connectors and Cliff Impact divisions.
[20611002] |The divisions that Parker Hannifin is retaining weren't mentioned in Thursday's edition.

[20612001] |The following were among Friday's offerings and pricings in the U.S. and non-U.S. capital markets, with terms and syndicate manager, as compiled by Dow Jones Capital Markets Report:

[20612002] |Sun Microsystems Inc. -- $125 million of 6 3/8% convertible subordinated debentures due Oct. 15, 1999, priced at 84.90 to yield 7.51%.
[20612003] |The debentures are convertible into common stock at $25 a share, representing a 24% conversion premium over Thursday's closing price.
[20612004] |Rated single-B-1 by Moody's Investors Service Inc. and single-B-plus by Standard & Poor's Corp., the issue will be sold through underwriters led by Goldman, Sachs & Co.

[20612005] |Hertz Corp. -- $100 million of senior notes due Nov. 1, 2009, priced at par to yield 9%.
[20612006] |The issue, which is puttable back to the company in 1999, was priced at a spread of 110 basis points above the Treasury's 10-year note.
[20612007] |Rated single-A-3 by Moody's and triple-B by S&P, the issue will be sold through underwriters led by Merrill Lynch Capital Markets.

[20612008] |Canadian Imperial Bank of Commerce (Canada) -- 10 billion yen of 5.7% bonds due Nov. 17, 1992, priced at 101 1/4 to yield 5.75% less full fees, via LTCB International Ltd.
[20612009] |Fees 1 3/8.

[20613001] |The Singapore and Kuala Lumpur stock exchanges are bracing for a turbulent separation, following Malaysian Finance Minister Daim Zainuddin's long-awaited announcement that the exchanges will sever ties.

[20613002] |On Friday, Datuk Daim added spice to an otherwise unremarkable address on Malaysia's proposed budget for 1990 by ordering the Kuala Lumpur Stock Exchange "to take appropriate action immediately" to cut its links with the Stock Exchange of Singapore.

[20613003] |The delisting of Malaysian-based companies from the Singapore exchange may not be a smooth process, analysts say.
[20613004] |Though the split has long been expected, the exchanges aren't fully prepared to go their separate ways.

[20613005] |The finance minister's order wasn't sparked by a single event and doesn't indicate a souring in relations between the neighboring countries.
[20613006] |Rather, the two closely linked exchanges have been drifting apart for some years, with a nearly five-year-old moratorium on new dual listings, separate and different listing requirements, differing trading and settlement guidelines and diverging national-policy aims.

[20614001] |QUANTUM CHEMICAL Corp. 's plant in Morris, Ill., is expected to resume production in early 1990.
[20614002] |The year was misstated in Friday's editions.

[20615001] |Italy's trade deficit narrowed to 2.007 trillion lire ($1.49 billion) in September from 2.616 trillion lire a year earlier, the state statistical office Istat said.

[20615002] |The deficit was 466 billion lire in August.
[20615003] |For the first nine months, the trade deficit was 14.933 trillion lire, compared with 10.485 trillion lire in the year-earlier period.
[20615004] |Istat said the statistics are provisional and aren't seasonally adjusted.

[20615005] |Imports rose 11% to 18.443 trillion lire in September from a year earlier, while exports rose 17% to 16.436 trillion lire.
[20615006] |In the nine months, imports rose 20% to 155.039 trillion lire, while exports grew 18% to 140.106 trillion lire.
[20615007] |Import values are calculated on a cost, insurance and freight (c.i.f.) basis, while exports are accounted for on a free-on-board (f.o.b.) basis.

[20616001] |As competition heats up in Spain's crowded bank market, Banco Exterior de Espana is seeking to shed its image of a state-owned bank and move into new activities.

[20616002] |Under the direction of its new chairman, Francisco Luzon, Spain's seventh largest bank is undergoing a tough restructuring that analysts say may be the first step toward the bank's privatization.

[20616003] |The state-owned industrial holding company Instituto Nacional de Industria and the Bank of Spain jointly hold a 13.94% stake in Banco Exterior.
[20616004] |The government directly owns 51.4% and Factorex, a financial services company, holds 8.42%.
[20616005] |The rest is listed on Spanish stock exchanges.

[20616006] |Some analysts are concerned, however, that Banco Exterior may have waited too long to diversify from its traditional export-related activities.
[20616007] |Catching up with commercial competitors in retail banking and financial services, they argue, will be difficult, particularly if market conditions turn sour.

[20616008] |If that proves true, analysts say Banco Exterior could be a prime partner -- or even a takeover target -- for either a Spanish or foreign bank seeking to increase its market share after 1992, when the European Community plans to dismantle financial barriers.

[20616009] |With 700 branches in Spain and 12 banking subsidiaries, five branches and 12 representative offices abroad, the Banco Exterior group has a lot to offer a potential suitor.

[20616010] |Mr. Luzon and his team, however, say they aren't interested in a merger.
[20616011] |Instead, they are working to transform Banco Exterior into an efficient bank by the end of 1992.
[20616012] |"I want this to be a model of the way a public-owned company should be run," Mr. Luzon says.

[20616013] |Banco Exterior was created in 1929 to provide subsidized credits for Spanish exports.
[20616014] |The market for export financing was liberalized in the mid-1980s, however, forcing the bank to face competition.
[20616015] |At the same time, many of Spain's traditional export markets in Latin America and other developing areas faced a sharp decline in economic growth.

[20616016] |As a result, the volume of Banco Exterior's export credit portfolio plunged from 824 billion pesatas ($7.04 billion) as of Dec. 31, 1986, to its current 522 billion pesetas.

[20616017] |The other two main pillars of Banco Exterior's traditional business -- wholesale banking and foreign currency trading -- also began to crumble under the weight of heavy competition and changing client needs.

[20616018] |The bank was hamstrung in its efforts to face the challenges of a changing market by its links to the government, analysts say.
[20616019] |Until Mr. Luzon took the helm last November, Banco Exterior was run by politicians who lacked either the skills or the will to introduce innovative changes.
[20616020] |But Mr. Luzon has moved swiftly to streamline bureaucracy, cut costs, increase capital and build up new areas of business.

[20616021] |"We've got a lot to do," he acknowledged.
[20616022] |"We've got to move quickly."

[20616023] |In Mr. Luzon's first year, the bank eliminated 800 jobs.
[20616024] |Now it says it'll trim another 1,200 jobs over the next three to four years.
[20616025] |The bank employs 8,000 people in Spain and 2,000 abroad.

[20616026] |To strengthen its capital base, Banco Exterior this year issued $105 million in subordinated debt, launched two rights issues and sold stock held in its treasury to small investors.

[20616027] |The bank is now aggressively marketing retail services at its domestic branches.
[20616028] |Last year's drop in export credit was partially offset by a 15% surge in lending to individuals and small and medium-sized companies.

[20616029] |Though Spain has an excess of banks, analysts say the country still has one of the most profitable markets in Europe, which will aid Banco Exterior with the tough tasks it faces ahead.

[20616030] |Expansion plans also include acquisitions in growing foreign markets.
[20616031] |The bank says it's interested in purchasing banks in Morocco, Portugal and Puerto Rico.
[20616032] |But the bank's retail activities in Latin America are likely to be cut back.

[20616033] |Banco Exterior was one of the last banks to create a brokerage house before the four Spanish stock exchanges underwent sweeping changes in July.
[20616034] |The late start may be a handicap for the bank as Spain continues to open up its market to foreign competition.

[20616035] |But Mr. Luzon contends that the experienced team he brought with him from Banco Bilbao Vizcaya, where he was formerly director general, will whip the bank's capital market division into shape by the end of 1992.
[20616036] |The bank also says it'll use its international network to channel investment from London, Frankfurt, Zurich and Paris into the Spanish stock exchanges.

[20617001] |General Motors Corp. 's general counsel hopes to cut the number of outside law firms the auto maker uses from about 700 to 200 within two years.

[20617002] |Harry J. Pearce, named general counsel in May 1987, says the reduction is a cost-cutting measure and an effort to let the No. 1 auto maker's 134-lawyer in-house legal department take on matters it is better equipped and trained to handle.
[20617003] |GM trimmed about 40 firms from its approved local counsel list, Mr. Pearce says.

[20617004] |The move is consistent with a trend for corporate legal staffs to do more work in-house, instead of farming it out to law firms.
[20617005] |Mr. Pearce set up GM's first in-house litigation group in May with four lawyers, all former assistant U.S. attorneys with extensive trial experience.
[20617006] |He intends to add to the litigation staff.
[20617007] |Among the types of cases the in-house litigators handle are disputes involving companies doing business with GM and product-related actions, including one in which a driver is suing GM for damages resulting from an accident.

[20617008] |Mr. Pearce has also encouraged his staff to work more closely with GM's technical staffs to help prevent future litigation.
[20617009] |GM lawyers have been working with technicians to develop more uniform welding procedures -- the way a vehicle is welded has a lot to do with its durability.
[20617010] |The lawyers also monitor suits to identify specific automobile parts that cause the biggest legal problems.

[20617011] |Mr. Pearce says law firms with the best chance of retaining or winning business with GM will be those providing the highest-quality service at the best cost -- echoing similar directives from GM's auto operations to suppliers.

[20617012] |This doesn't necessarily mean larger firms have an advantage; Mr. Pearce said GM works with a number of smaller firms it regards highly.
[20617013] |Mr. Pearce has shaken up GM's legal staff by eliminating all titles and establishing several new functions, including a special-projects group that has made films on safety and drunk driving.

[20617014] |FEDERAL PROSECUTORS are concluding fewer criminal cases with trials.

[20617015] |That's a finding of a new study of the Justice Department by researchers at Syracuse University.
[20617016] |David Burnham, one of the authors, says fewer trials probably means a growing number of plea bargains.
[20617017] |In 1980, 18% of federal prosecutions concluded at trial; in 1987, only 9% did.

[20617018] |The study covered 11 major U.S. attorneys' offices -- including those in Manhattan and Brooklyn, N.Y., and New Jersey -- from 1980 to 1987.

[20617019] |The Justice Department rejected the implication that its prosecutors are currently more willing to plea bargain.
[20617020] |"Our felony caseloads have been consistent for 20 years," with about 15% of all prosecutions going to trial, a department spokeswoman said.
[20617021] |The discrepancy is somewhat perplexing in that the Syracuse researchers said they based their conclusions on government statistics.

[20617022] |"One possible explanation for this decline" in taking cases to trial, says Mr. Burnham, "is that the number of defendants being charged with crimes by all U.S. attorneys has substantially increased."

[20617023] |In 1980, the study says, prosecutors surveyed filed charges against 25 defendants for each 100,000 people aged 18 years and older.
[20617024] |In 1987, prosecutors filed against 35 defendants for every 100,000 adults.

[20617025] |Another finding from the study: Prosecutors set significantly different priorities.
[20617026] |The Manhattan U.S. attorney's office stressed criminal cases from 1980 to 1987, averaging 43 for every 100,000 adults.
[20617027] |But the New Jersey U.S. attorney averaged 16.
[20617028] |On the civil side, the Manhattan prosecutor filed an average of only 11 cases for every 100,000 adults during the same period; the San Francisco U.S. attorney averaged 79.

[20617029] |The study is to provide reporters, academic experts and others raw data on which to base further inquiries.

[20617030] |IMELDA MARCOS asks for dismissal, says she was kidnapped.

[20617031] |The former first lady of the Philippines, asked a federal court in Manhattan to dismiss an indictment against her, claiming among other things, that she was abducted from her homeland.
[20617032] |Mrs. Marcos and her late husband, former Philippines President Ferdinand Marcos, were charged with embezzling more than $100 million from that country and then fraudulently concealing much of the money through purchases of prime real estate in Manhattan.

[20617033] |Mrs. Marcos's attorneys asked federal Judge John F. Keenan to give them access to all U.S. documents about her alleged abduction.
[20617034] |The U.S. attorney's office, in documents it filed in response, said Mrs. Marcos was making the "fanciful -- and factually unsupported -- claim that she was kidnapped into this country" in order to obtain classified material in the case.
[20617035] |The office also said Mrs. Marcos and her husband weren't brought to the U.S. against their will after Mr. Marcos was ousted as president.
[20617036] |The prosecutor quoted statements from the Marcoses in which they said they were in this country at the invitation of President Reagan and that they were enjoying the hospitality of the U.S.

[20617037] |Lawyers for Mrs. Marcos say that because she was taken to the U.S. against her wishes, the federal court lacks jurisdiction in the case.

[20617038] |THE FEDERAL COURT of appeals in Manhattan ruled that the dismissal of a 1980 indictment against former Bank of Crete owner George Koskotas should be reconsidered.
[20617039] |The indictment, which was sealed and apparently forgotten by investigators until 1987, charges Mr. Koskotas and three others with tax fraud and other violations.
[20617040] |He made numerous trips to the U.S. in the early 1980s, but wasn't arrested until 1987 when he showed up as a guest of then-Vice President George Bush at a government function.
[20617041] |A federal judge in Manhattan threw out the indictment, finding that the seven-year delay violated the defendant's constitutional right to a speedy trial.
[20617042] |The appeals court, however, said the judge didn't adequately consider whether the delay would actually hurt the chances of a fair trial.
[20617043] |Mr. Koskotas is fighting extradition proceedings that would return him to Greece, where he is charged with embezzling more than $250 million from the Bank of Crete.
[20617044] |His attorney couldn't be reached for comment.

[20617045] |PRO BONO VOLUNTARISM: In an effort to stave off a plan that would require all lawyers in New York state to provide twenty hours of free legal aid a year, the state bar recommended an alternative program to increase voluntary participation in pro bono programs.
[20617046] |The state bar association's policy making body, the House of Delegate, voted Saturday to ask Chief Judge Sol Wachtler to give the bar's voluntary program three years to prove its effectiveness before considering mandatory pro bono.
[20617047] |"We believe our suggested plan is more likely to improve the availability of quality legal service to the poor than is the proposed mandatory pro bono plan and will achieve that objective without the divisiveness, distraction, administrative burdens and possible failure that we fear would accompany an attempt to impose a mandatory plan," said Justin L. Vigdor of Rochester, who headed the bar's pro bono study committee.

[20617048] |DALLAS AND HOUSTON law firms merge: Jackson & Walker, a 130-lawyer firm in Dallas and Datson & Scofield, a 70-lawyer firm in Houston said they have agreed in principle to merge.
[20617049] |The consolidated firm, which would rank among the 10 largest in Texas, would operate under the name Jackson & Walker.
[20617050] |The merger must be formally approved by the partners of both firms but is expected to be completed by year end.
[20617051] |Jackson & Walker has an office in Fort Worth, Texas, and Dotson & Scofield has an office in New Orleans.

[20617052] |PILING ON?
[20617053] |Piggybacking on government assertions that General Electric Co. may have covered up fraudulent billings to the Pentagon, two shareholders have filed a civil racketeering suit against the company.
[20617054] |The suit was filed by plaintiffs' securities lawyer Richard D. Greenfield in U.S. District Court in Philadelphia.
[20617055] |He seeks damages from the company's 15 directors on grounds that they either "participated in or condoned the illegal acts . . . or utterly failed to carry out their duties as directors."
[20617056] |GE is defending itself against government criminal charges of fraud and false claims in connection with a logistics-computer contract for the Army.
[20617057] |The trial begins today in federal court in Philadelphia.
[20617058] |The government's assertions of the cover-up were made in last minute pretrial motions.
[20617059] |GE, which vehemently denies the government's allegations, denounced Mr. Greenfield's suit.
[20617060] |"It is a cheap-shot suit -- procedurally defective and thoroughly fallacious -- which was hurriedly filed by a contingency-fee lawyer as a result of newspaper reports," said a GE spokeswoman.
[20617061] |She added that the company was considering bringing sanctions against Mr. Greenfield for making "grossly inaccurate and unsupported allegations.

[20618001] |The head of the nation's largest car-dealers group is telling dealers to "just say no" when auto makers pressure them to stockpile cars on their lots.

[20618002] |In an open letter that will run today in the trade journal Automotive News, Ron Tonkin, president of the National Car Dealers Association, says dealers should cut their inventories to no more than half the level traditionally considered desirable.

[20618003] |Mr. Tonkin, who has been feuding with the Big Three since he took office earlier this year, said that with half of the nation's dealers losing money or breaking even, it was time for "emergency action."

[20618004] |U.S. car dealers had an average of 59 days' supply of cars in their lots at the end of September, according to Ward's Automotive Reports.
[20618005] |But Mr. Tonkin said dealers should slash stocks to between 15 and 30 days to reduce the costs of financing inventory.

[20618006] |His message is getting a chilly reception in Detroit, where the Big Three auto makers are already being forced to close plants because of soft sales and reduced dealer orders.
[20618007] |Even before Mr. Tonkin's broadside, some large dealers said they were cutting inventories.

[20618008] |Ford Motor Co. and Chrysler Corp. representatives criticized Mr. Tonkin's plan as unworkable.
[20618009] |It "is going to sound neat to the dealer except when his 15-day car supply doesn't include the bright red one that the lady wants to buy and she goes up the street to buy one," a Chrysler spokesman said.

[20619001] |Southern Co. 's Gulf Power Co. unit may plead guilty this week to charges that it illegally steered company money to politicians through outside vendors, according to individuals close to an investigation of the utility holding company.

[20619002] |The tentative settlement between Gulf Power, a Pensacola, Fla., electric company, and federal prosecutors would mark the end of one part of a wide-ranging inquiry of Southern Co. in the past year.
[20619003] |A grand jury has been investigating whether officials at Southern Co. conspired to cover up their accounting for spare parts to evade federal income taxes.

[20619004] |The grand jury has also been investigating whether Gulf Power executives violated the federal Utility Holding Company Act, which prohibits certain utilities from making political contributions.

[20619005] |The individuals said Gulf Power and federal prosecutors are considering a settlement under which the company would plead guilty to two felony charges and pay fines totaling between $500,000 and $1.5 million.
[20619006] |Under one count, Gulf Power would plead guilty to conspiring to violate the Utility Holding Company Act.
[20619007] |Under the second count, the company would plead guilty to conspiring to evade taxes.

[20619008] |The guilty pleas would be made solely by Gulf Power, the individuals said.
[20619009] |No employee or vendor would be involved.

[20619010] |A spokesman for Southern Co. would say only that discussions are continuing between Gulf Power and federal prosecutors.
[20619011] |"We have no further developments to report," he said.
[20619012] |Officials at Gulf Power couldn't be reached for comment.
[20619013] |And prosecutors declined to comment.

[20619014] |While Southern Co. has been reluctant to discuss the grand jury investigations, Edward L. Addison, chief executive officer, has said the company is prepared to defend its tax and acccounting practices if any charges are brought against it.
[20619015] |Morever, Mr. Addison has said Southern Co. and its units don't condone illegal political contributions.
[20619016] |Neither Mr. Addison nor any other Southern Co. official has been charged with any wrongdoing in connection with the current inquiries.

[20619017] |The probe of Southern Co. has attracted considerable attention this year because of several events that have befallen the company, including the death of a Gulf Power executive in a plane crash and the disappearance of a company vendor who was to be a key grand jury witness.

[20619018] |Witnesses have said the grand jury has asked numerous questions about Jacob F. "Jake" Horton, the senior vice president of Gulf Power who died in the plane crash in April.
[20619019] |Mr. Horton oversaw Gulf Power's governmental-affairs efforts.
[20619020] |On the morning of the crash, he had been put on notice that an audit committee was recommending his dismissal because of invoicing irregularities in a company audit.
[20619021] |Investigators have been trying to determine whether the crash was an accident, sabotage or suicide.

[20619022] |Gulf Power said in May that an internal audit had disclosed that at least one vendor had used false invoices to fund political causes.
[20619023] |But the company said the political contributions had been made more than five years ago.

[20620001] |Exxon Corp. is resigning from the National Wildlife Federation's corporate advisory panel, saying the conservation group has been unfairly critical of the Exxon Valdez oil spill along the Alaskan coast.

[20620002] |The federation said Friday that it regrets the resignation, but issued a stinging response that called Exxon a "corporate pariah" that should keep an open dialogue with environmentalists.

[20620003] |The federation, with 5.8 million members nationwide, has been one of the sharpest critics of Exxon's handling of the 11 million gallon tanker spill and has accused the company of repeatedly ignoring requests to meet and discuss it.

[20620004] |The March 24 oil spill soiled hundreds of miles of shoreline along Alaska's southern coast and wreaked havoc with wildlife and the fishing industry.

[20620005] |Exxon's Exxon USA unit was one of the charter members of the Corporate Conservation Council, a panel of executives formed in 1982 by the National Wildlife Federation to foster "frank and open discussions" between industry and the federation's leaders.

[20620006] |In a letter to the federation, Raymond Campion, Exxon's environmental coordinator, said: "Recent public actions by you regarding the Valdez oil spill have failed to demonstrate any sense of objectivity or fairness."

[20620007] |The federation was among the plaintiffs in a lawsuit filed in August against Exxon seeking full payment of environmental recovery costs from the spill.

[20621001] |First Tennessee National Corp. said it would take a $4 million charge in the fourth quarter, as a result of plans to expand its systems operation.

[20621002] |The banking company said it reached an agreement in principle with International Business Machines Corp. on a systems operations contract calling for IBM to operate First Tennessee's computer and telecommunications functions.

[20621003] |Further, under the agreement, First Tennesse would continue to develop the software that creates customer products and sevices.

[20621004] |"Because personal computers will soon be on the desks of all of our tellers, and customer service and loan representatives, information will be instantly available to help customers with product decisions and provide them with information about their accounts," according to John Kelley, executive vice president and corporate services group manager at First Tennessee.

[20621005] |However, about 120 employees will be affected by the agreement.
[20621006] |First Tennessee, assisted by IBM, said it will attempt to place the employees within the company, IBM or other companies in Memphis.
[20621007] |The process will take as many as six months to complete, the company said.

[20621008] |The agreement is subject to the banking company's board approval, which is expected next month.

[20622001] |The Treasury Department said the U.S. trade deficit may worsen next year, after two years of significant improvement.

[20622002] |In its report to Congress on international economic policies, the Treasury said that any improvement in the broadest measure of trade, known as the current account, "is likely at best to be very modest," and "the possibility of deterioration in the current account next year cannot be excluded."

[20622003] |The statement was the U.S. government's first acknowledgement of what other groups, such as the International Monetary Fund, have been predicting for months.
[20622004] |Continued strength in the dollar was cited as one reason the trade position may deteriorate.

[20622005] |The Treasury's report, which is required annually by a provision of the 1988 trade act, again took South Korea to task for its exchange-rate policies.
[20622006] |"We believe that there have continued to be indications of exchange-rate `manipulation'" during the past six months, it said, citing the lack of market forces in South Korea's exchange-rate system and the use of capital and interest-rate controls to manipulate exchange rates.

[20622007] |The Treasury expressed pleasure, however, with the government of Taiwan, which was cited for exchange-rate manipulation in last year's report.
[20622008] |The Treasury said Taiwan has liberalized its exchange rate system in the past year.

[20623001] |The fiscal 1989 budget deficit figure came out Friday.
[20623002] |It was down a little.
[20623003] |The next time you hear a Member of Congress moan about the deficit, consider what Congress did Friday.
[20623004] |The Senate, 84-6, voted to increase to $124,000 the ceiling on insured mortgages from the FHA, which lost $4.2 billion in loan defaults last year.

[20623005] |Then, by voice vote, the Senate voted a pork-barrel bill, approved Thursday by the House, for domestic military construction.
[20623006] |Compare the Bush request to what the Senators gave themselves:

[20623007] |For construction in West Virginia, Mr. Bush requested $4.5 million; Congress gave Senator Byrd's state $21.5 million.
[20623008] |Senator Byrd is chairman of the Appropriations Committee.
[20623009] |For Iowa, a $1.8 million request became $12 million for Senator Grassley, ranking minority member of a military construction subcommittee.
[20623010] |Rep. Jamie Whitten of Mississippi and chairman of House Appropriations turned a $20 million Bush request for his state into a $49.7 million bequest.
[20623011] |Senator Sasser of Tennessee is chairman of the Appropriations subcommittee on military construction; Mr. Bush's $87 million request for Tennessee increased to $109 million.
[20623012] |In a remark someone should remember this time next year, Senator Sasser said, "I think we've seen the peak of military construction spending for many years to come."

[20623013] |Tell us about spending restraint.
[20623014] |Tell us about the HUD scandals.
[20623015] |Tell us what measure, short of house arrest, will get this Congress under control.

[20624001] |Costa Rica reached an agreement with its creditor banks that is expected to cut that government's $1.8 billion in bank debt by as much as 60%.

[20624002] |The agreement was announced by Costa Rican President Oscar Arias Friday, as President Bush and other leaders from the Western Hemisphere gathered in the Central American nation for a celebration of democracy.
[20624003] |Costa Rica had been negotiating with the U.S. and other banks for three years, but the debt plan was rushed to completion in order to be announced at the meeting.
[20624004] |The government had fallen $300 million behind in interest payments.

[20624005] |Treasury Secretary Nicholas Brady called the agreement "an important step forward in the strengthened debt strategy," noting that it will "when implemented, provide significant reduction in the level of debt and debt service owed by Costa Rica."

[20624006] |Under the plan, Costa Rica will buy back roughly 60% of its bank debt outstanding at a deeply discounted price, according to officials involved in the agreement.
[20624007] |The remainder of the debt will be exchanged for new Costa Rican bonds with a 6 1/4% interest rate.

[20624008] |The International Monetary Fund and the World Bank are expected to provide approximately $180 million to help support the deal, and additional funds are expected from Japan.

[20624009] |Treasury officials say the Costa Rican agreement demonstrates that the Brady debt plan can benefit small debtor countries as well as big debtors, such as Mexico.

[20625001] |The Treasury said it plans to sell $2 billion of 51-day cash-management bills today, raising all new cash.

[20625002] |The bills will be dated Oct. 31 and will mature Dec. 21,

[20625003] |No non-competitive tenders will be accepted.
[20625004] |Tenders, available in minimum denominations of $1 million, must be received by noon EST today at Federal Reserve Banks or branches.

[20625005] |The Treasury also announced details of this week's unusual bill auction, which has been changed to accommodate the expiration of the federal debt ceiling at midnight tomorrow.

[20625006] |The 13-week and 27-week bills will be issued tomorrow rather than Thursday, Nov. 2, as originally planned.
[20625007] |The three-month bills will still mature Feb. 1, 1990, and the six-month bills on May 3, 1990.

[20625008] |The Treasury also said noncompetitive tenders will be considered timely if postmarked no later than Sunday, Oct. 29, and received no later than tomorrow.

[20625009] |The Treasury said it won't be able to honor reinvestment requests from holders of bills maturing Nov. 2 held in the Treasury's book-entry system.
[20625010] |The department will make payment for bills maturing on Nov. 2 to all investors who have requested reinvestment of their bills on that date, as well as to all account holders who have previously requested payment.

[20626001] |American Pioneer Inc. said it agreed in principle to sell its American Pioneer Life Insurance Co. subsidiary to Harcourt Brace Jovanovich Inc. 's HBJ Insurance Cos. for $27 million.

[20626002] |American Pioneer, parent of American Pioneer Savings Bank, said the sale will add capital and reduce the level of investments in subsidiaries for the thrift holding company.

[20626003] |Recently, the boards of both the parent company and the thrift also voted to suspend dividends on preferred shares of both companies and convert all preferred into common shares.
[20626004] |The company said the move was necessary to meet capital requirements.

[20626005] |The transaction is subject to execution of a definitive purchase agreement and approval by various regulatory agencies, including the insurance departments of the states of Florida and Indiana, the company said.

[20626006] |In the second quarter, American Pioneer reported a loss of $7.3 million, compared with net income of $1.1 million a year earlier.
[20626007] |The banking operation had a loss of $8.7 million in the second quarter, largely because of problem real-estate loans, while the insurance operations earned $884,000.

[20627001] |October employment data -- also could turn out to be the most confusing.

[20627002] |On the surface, the overall unemployment rate is expected to be little changed from September's 5.3%.
[20627003] |But the actual head count of non-farm employment payroll jobs is likely to be muddied by the impact of Hurricane Hugo, strikes, and less-than-perfect seasonal adjustments, economists said.

[20627004] |The consensus view calls for an overall job gain of 155,000 compared with September's 209,000 increase.
[20627005] |But the important factory-jobs segment, which last month plunged by 103,000 positions and raised recession fears, is most likely to be skewed by the month's unusual events.

[20627006] |Several other reports come before Friday's jobs data, including: the September leading indicators index, new-home sales and October agricultural prices reports due out tomorrow; the October purchasing managers' index and September construction spending and manufacturers' orders on Wednesday; and October chain-store sales on Thursday.
[20627007] |Friday brings the final count on October auto sales.

[20627008] |"The employment report is going to be difficult to interpret," said Michael Englund, economist with MMS International, a unit of McGraw-Hill Inc., New York.

[20627009] |Mr. Englund added that next month's data isn't likely to be much better, because it will be distorted by San Francisco's earthquake.
[20627010] |What's more, he believes seasonal swings in the auto industry this year aren't occurring at the same time as in the past, because of production and pricing differences that are curbing the accuracy of seasonal adjustments built into the employment data.

[20627011] |Wednesday's report from the purchasing agents will be watched to see if the index maintains a level below 50%, as it has for the past couple of months.
[20627012] |A reading of less than 50% indicates an economy that is generally contracting while a reading above 50% indicates an economy that's expanding.

[20627013] |Samuel D. Kahan, chief financial economist at Kleinwort Benson Government Securities Inc., Chicago, said that the purchasers' report is valuable because it often presents the first inkling of economic data for the month.
[20627014] |But he added: "Some people use the purchasers' index as a leading indicator, some use it as a coincident indicator.
[20627015] |But the thing it's supposed to measure -- manufacturing strength -- it missed altogether last month."

[20627016] |David Wyss, chief financial economist at Data Resources Inc., Boston, said that the purchasers' index "does miss occasionally," adding: "When it misses one month it tends to miss the next month, too."

[20627017] |The consensus view on September leading indicators calls for a gain of 0.3%, the same as in August.
[20627018] |Economists said greatly increased consumer optimism, a larger money supply and higher stock prices helped lift the index.
[20627019] |All orders-related components, such as consumer-goods orders and building permits, are thought to have been weaker.

[20627020] |Data Resources' Mr. Wyss added that he will be keeping a closer eye than ususal on October chain-store sales.
[20627021] |Usually, October "isn't a very interesting month {for retail figures} because school clothes have been bought and people are waiting for December to buy Christmas presents," he said.
[20627022] |But Mr. Wyss said he will watch the numbers to get an inkling of whether consumers' general buying habits may slack off as much as their auto-buying apparently has.
[20627023] |He noted that higher gasoline prices will help buoy the October totals.

[20627024] |Seasonal factors are also expected to have taken their toll on September new-home sales, which are believed to have fallen sharply from August's 755,000 units.
[20627025] |Construction spending is believed to have slipped about 0.5% from August levels, although economists noted the rate probably will pick up in the months ahead in response to hurricane and earthquake damage.

[20628001] |Factory owners are buying new machinery at a good rate this fall, machine tool makers say, but sluggish sales of new cars and trucks raise questions about fourth-quarter demand from the important automotive industry.

[20628002] |September orders for machine tools rebounded from the summer doldrums, but remained 7.7% below year-earlier levels, according to figures from NMTBA -- the Association for Manufacturing Technology.
[20628003] |Domestic machine tool plants received $303 million of orders last month, up 33% from August's $227.1 million, but still below the $328.2 million of September 1988, NMTBA said.

[20628004] |Machine tools are complex machines ranging from lathes to metal-forming presses that are used to shape most metal parts.

[20628005] |"Overall demand still is very respectable," says Christopher C. Cole, group vice president at Cincinnati Milacron Inc., the nation's largest machine tool producer.
[20628006] |"The outlook is positive for the intermediate to long term."

[20628007] |September orders for all U.S. producers, in fact, were slightly above the monthly average for 1988, a good year for the industry.

[20628008] |"Aerospace orders are very good," Mr. Cole says.
[20628009] |"And export business is still good.
[20628010] |While some automotive programs have been delayed, they haven't been canceled."

[20628011] |"September was one of the biggest order months in our history," says James R. Roberts, vice president, world-wide sales and marketing, for Giddings & Lewis Inc., Fond du Lac, Wis.
[20628012] |At a recent meeting of manufacturing executives, "everybody I talked with was very positive," he says.
[20628013] |Most say they plan to spend more on factory equipment in 1990 than in 1989.

[20628014] |But sales of North American-made 1990-model cars are running at an annual rate of only six million, down from 7.1 million a year earlier.
[20628015] |And truck sales also are off more than 20%.
[20628016] |Auto makers, who began deferring some equipment purchases last spring, can be expected to remain cautious about spending if their sales don't pick up, machine tool builders say.

[20628017] |Machine tool executives are hopeful, however, that recent developments in Eastern Europe will expand markets for U.S.-made machine tools in that region.
[20628018] |There is demand for state-of-the-art machine tools in the Soviet Union and in other Eastern European countries as those nations strive to improve the efficiency of their ailing factories as well as the quality of their goods.

[20628019] |However, there's a continuing dispute between machine tool makers and the Defense Department over whether sophisticated U.S. machine tools would increase the Soviet Union's military might.
[20628020] |"The Commerce Department says go, and the Defense Department says stop," complains one machine tool producer.

[20628021] |If that controversy continues, U.S. machine tool makers say, West German and other foreign producers are likely to grab most of the sales in Eastern Europe.

[20628022] |September orders for machining centers, lathes, milling machines, grinders, boring mills and other machines that shape metal by cutting totaled $192.9 million, down 28% from $266.5 million a year earlier, but a 23% increase from August's $156.3 million, NMTBA said.

[20628023] |Orders last month for metal-forming presses and other machinery to form metal with pressure surged to $110.1 million, a 78% rise from $61.7 million a year earlier and a 55% gain from $70.9 million in August.
[20628024] |Today's presses are large and costly machines, and a few orders can produce a high total for one month that doesn't necessarily indicate a trend.

[20628025] |Machine tool shipments last month were $281.2 million, a 24% rise from a year earlier and a 25% increase from August.
[20628026] |Shipments have run well ahead of 1988 all year, as machine tool builders produce against relatively good backlogs.

[20628027] |U.S. producers had a $2.15 billion backlog of unfilled orders at the end of September.
[20628028] |That was up 2.8% from a year earlier, even though orders for the first nine months of 1989 were down 19% from the comparable 1988 period.

[20628029] |$2,057,750,000.
[20628030] |$675,400,000.
[20628031] |$1,048,500,000.
[20628032] |$588,350,000.

[20629001] |In Bombay stock market circles, the buzzword is "mega."
[20629002] |At least 40 companies are coming to the capital market to raise $6 billion, an amount never thought possible in India.

[20629003] |"When they talk mega-issues, they're truly talking mega," says S.A. Dave, chairman of the Securities and Exchange Board of India.
[20629004] |"The capital market is booming."

[20629005] |But the mega-issues are raising megaquestions about the rapidly evolving Indian capital market.
[20629006] |One is whether there is enough money to fund the new issues without depressing stock trading.

[20629007] |Moreover, in the relatively unregulated Indian stock markets, investors frequently don't know what they are getting when they subscribe to an issue.
[20629008] |A prospectus in India doesn't always tell a potential investor much.
[20629009] |Some of the large amounts are being raised by small firms.
[20629010] |In addition, once money is raised, investors usually have no way of knowing how it is spent.

[20629011] |Some analysts are concerned that the mega-issues, in such an unregulated environment, could lead to a mega-crash.
[20629012] |"The rate of failures will be much more than the rate of successes in the mega-projects," says G.S. Patel, a former chairman of the giant, government-run mutual fund, the Unit Trust of India.
[20629013] |"They're going to have mega-problems."

[20629014] |The Indian stock markets have been on a five-year high, with dips and corrections, since Prime Minister Rajiv Gandhi started liberalizing industry.
[20629015] |But the last stock market boom, in 1986, seems small compared with the current rush to market.

[20629016] |The $6 billion that some 40 companies are looking to raise in the year ending March 31 compares with only $2.7 billion raised on the capital market in the previous fiscal year.
[20629017] |In fiscal 1984, before Mr. Gandhi came to power, only $810 million was raised.

[20629018] |This year's biggest issue, $570 million of convertible debentures by engineering company Larsen & Toubro Ltd., is the largest in Indian history.
[20629019] |And it isn't the only giant issue: together, the top four issues will raise $1.3 billion.
[20629020] |Convertible debentures -- bonds that can later be converted into equity shares -- are the most popular instrument this year, though many companies are also selling nonconvertible bonds or equity shares.

[20629021] |These mega-issues are being propelled by two factors, economic and political.

[20629022] |In the past, the socialist policies of the government strictly limited the size of new steel mills, petrochemical plants, car factories and other industrial concerns to conserve resources and restrict the profits businessmen could make.
[20629023] |As a result, industry operated out of small, expensive, highly inefficient industrial units.

[20629024] |When Mr. Gandhi came to power, he ushered in new rules for business.
[20629025] |He said industry should build plants on the same scale as those outside India and benefit from economies of scale.
[20629026] |If the output was too great for the domestic market, he said, companies should export.

[20629027] |India's overregulated businessmen had to be persuaded, but they have started to think big.
[20629028] |Some of the projects being funded by the new issues are the first fruits of Mr. Gandhi's policy, and they require more capital than the smaller industrial units built in the past.
[20629029] |The industrial revolution has produced an explosion in the capital market, which is a far cheaper source of funds than government-controlled banks, where interest rates for prime borrowers are around 16%.

[20629030] |The second factor spurring mega-issues is political.
[20629031] |Mr. Gandhi has called general elections for November, and many businessmen fear that he and his Congress (I) Party will lose.
[20629032] |Some companies are raising money in anticipation of a government less predictable than Mr. Gandhi's, and possibly more restrictive.

[20629033] |The buoyant Bombay rumor mill also says that some of the money raised in the current spate of issues will be used as campaign donations before the elections.
[20629034] |No one admits to anything, but India's industrialists have a history of making under-the-table campaign donations.

[20629035] |So far, the mega-issues are a hit with investors.
[20629036] |Earlier this year, Tata Iron & Steel Co. 's offer of $355 million of convertible debentures was oversubscribed.
[20629037] |Essar Gujarat Ltd., a marine construction company, had similar success with a slightly smaller issue.
[20629038] |Larsen & Toubro started accepting applications for its giant issue earlier this month; bankers and analysts expect it to be oversubscribed.

[20629039] |Still to come are big issues by Bindal Agro Chem Ltd., a petrochemical and agrochemical company, and Usha Rectifier Corp. (India), a semiconductor maker.
[20629040] |While many investors are selling parts of their portfolios to buy the new issues, prices on India's 16 stock exchanges are holding up so far.

[20629041] |"I don't think it will lead to any chaos in the secondary market," says Mr. Patel, "only a sagging tendency."
[20629042] |Says M.J. Pherwani, chairman of the Unit Trust of India: The "markets are headed for growth unheard of and unseen before."

[20629043] |But with growth come growing pains, and never has this been clearer on the Indian capital market than now.

[20629044] |In the past, the government controlled the markets indirectly, through its tight grip on industry itself.
[20629045] |Various ministries decided the products businessmen could produce and how much; and government-owned banks controlled the financing of projects and monitored whether companies came through on promised plans.

[20629046] |The government has been content with this far-reaching, subtle form of control, exercised on a case-by-case basis with no clear rules or guidelines.
[20629047] |But now, with large amounts being raised from investors, the government's dawdling on regulation and disclosure requirements has a more dangerous aspect.
[20629048] |The Securities and Exchange Board of India was set up earlier this year, along the lines of the U.S. Securities and Exchange Commission, but New Delhi hasn't pushed the legislation to make it operational.
[20629049] |Mr. Dave, its head, acts cheery and patient, but he makes no bones about the need to get to work.

[20629050] |"Mega or non-mega, we feel the prospectus standards need to be considerably improved," he says.
[20629051] |"Disclosures are very poor in India."
[20629052] |He says the big questions -- "Do you really need this much money to put up these investments? Have you told investors what is happening in your sector? What about your track record? -- "aren't asked of companies coming to market.
[20629053] |Instead, he says, most investors have to rely on the rumor-happy Indian press.

[20629054] |An example is the biggest offering of them all, Larsen & Toubro's $570 million bond issue.
[20629055] |The engineering company was acquired in a takeover earlier this year by the giant Reliance textile group.
[20629056] |Although Larsen & Toubro hadn't raised money from the public in 38 years, its new owners frequently raise funds on the local market.
[20629057] |(Reliance floated a $357 million petrochemical company in 1988 that was, at the time, the largest public issue in Indian history.)
[20629058] |The media has raised questions about Larsen & Toubro's issue, pointing out that it exceeds the company's annual sales and its market capitalization.

[20629059] |Even stranger is the case of Usha Rectifier, a semiconductor company with 1988 sales of $28 million that's raising $270 million to build an iron plant.

[20629060] |Once the money is raised, it isn't always certain how it is used.
[20629061] |Larsen & Toubro, for example, says it's raising $570 million to use as supplier credit on large engineering jobs.
[20629062] |Unlike other companies, it hasn't pin-pointed specific projects for the funds.
[20629063] |And even when specific projects are described in prospectuses, the money often is used elsewhere, according to analysts.

[20629064] |"Someone must monitor where the funds are deployed," says Mr. Dave.
[20629065] |Mr. Patel agrees: "There is no proper monitoring and screening of the use of these funds.
[20629066] |They're trying to plug the various loopholes, but they're totally unprepared for this."

[20629067] |Because of the large amounts of money being raised, the loose disclosure requirements and the casual monitoring of how the money is used, some analysts fear that there could be a few mega-crashes, which could hurt market confidence far more than the small bankruptcies that followed the boom of 1986.
[20629068] |The government insists that such a possibility is low.
[20629069] |It says that despite loose regulation of the market itself, its longstanding regulation of industry will prevent such crashes.

[20629070] |T.T. Ram Mohan contributed to this article.

[20630001] |Lion Nathan Ltd., a New Zealand brewing and retail concern, said Friday that Bond Corp. Holdings Ltd. is "committed" to a transaction whereby Lion Nathan would acquire 50% of Bond's Australian brewing assets.

[20630002] |Lion Nathan issued a statement saying it is applying to Australia's National Companies & Securities Commission, the nation's corporate watchdog agency, for a modification to takeover regulations "similar to that obtained by" S.A. Brewing Holdings Ltd.

[20630003] |SA Brewing, an Australian brewer, last Thursday was given approval to acquire an option for up to 20% of Bell Resources Ltd., a unit of Bond Corp.

[20630004] |Bell Resources is acquiring Bond's brewing businesses for 2.5 billion Australian dollars (US$1.9 billion).

[20630005] |S.A. brewing would make a takeover offer for all of Bell Resources if it exercises the option, according to the commission.

[20630006] |Bond Corp., a brewing, property, media and resources company, is selling many of its assets to reduce its debts.

[20630007] |"Lion Nathan has a concluded contract with Bond and Bell Resources," said Douglas Myers, chief executive of Lion Nathan.

[20631001] |Finnair, Finland's state-owned airline, joined the wave of global airline alliances and signed a wide-ranging cooperation agreement with archrival Scandinavian Airlines System.

[20631002] |Under the accord, Finnair agreed to coordinate flights, marketing and other functions with SAS, the 50%-state-owned airline of Denmark, Norway and Sweden.
[20631003] |The pact also calls for coordination between Finnair and Switzerland's national carrier, Swissair, with which SAS entered a similar alliance last month.

[20631004] |Finnair and SAS said they plan to swap stakes in each other.
[20631005] |Neither disclosed details pending board meetings next month.
[20631006] |Officials hinted, however, that SAS would take a stake of at least 6% in Finnair, valued at about $40 million at current market prices.
[20631007] |Finnair would receive SAS shares valued at the same amount, officials said.

[20632001] |General Motors Corp. and Ford Motor Co. are now going head to head in the markets for shares of Jaguar PLC, as GM got early clearance from the Federal Trade Commission to boost its stake in the British luxury car maker.

[20632002] |GM confirmed Friday that it received permission late Thursday from U.S. antitrust regulators to increase its Jaguar holdings past the $15 million level.
[20632003] |Ford got a similar go-ahead earlier in October, and on Friday, Jaguar announced that the No. 2 U.S. auto maker had raised its stake to 13.2%, or 24.2 million shares, from 12.4% earlier in the week.

[20632004] |A spokesman for GM, the No. 1 auto maker, declined to say how many Jaguar shares that company owns.
[20632005] |In late trading Friday, Jaguar shares bucked the downward tide in London's stock market and rose five pence to 725 pence ($11.44).
[20632006] |Trading volume was a moderately heavy 3.1 million shares.
[20632007] |In the U.S., Jaguar's American depositary receipts were among the most active issues Friday in national over-the-counter trading where they closed at $11.625 each, up 62.5 cents.

[20632008] |Analysts expect that the two U.S. auto giants will move quickly to buy up 15% stakes in Jaguar, setting up a potential bidding war for the prestigious Jaguar brand.

[20632009] |British government restrictions prevent any single shareholder from going beyond 15% before the end of 1990 without government permission.
[20632010] |The British government, which owned Jaguar until 1984, still holds a controlling "golden share" in the company.

[20632011] |With the golden share as protection, Jaguar officials have rebuffed Ford's overtures, and moved instead to forge an alliance with GM.
[20632012] |Jaguar officials have indicated they are close to wrapping up a friendly alliance with GM that would preserve Jaguar's independence, but no deal has been announced.
[20632013] |Ford, on the other hand, has said it's willing to bid for all of Jaguar, despite the objections of Jaguar chairman Sir John Egan.
[20632014] |Analysts continued to speculate late last week that Ford may try to force the issue by calling for a special shareholder's meeting and urging that the government and Jaguar holders remove the barriers to a full bidding contest before December 1990.
[20632015] |But a Ford spokeswoman in Dearborn said Friday the company hasn't requested such a meeting yet.

[20632016] |Individuals close to the situation believe Ford officials will seek a meeting this week with Sir John to outline their proposal for a full bid.
[20632017] |Any discussions with Ford could postpone the Jaguar-GM deal, headed for completion within the next two weeks.
[20632018] |The GM agreement is expected to retain Jaguar's independence by involving an eventual 30% stake for the U.S. auto giant as well as joint manufacturing and marketing ventures.

[20632019] |Jaguar and GM hope to win Jaguar shareholders approval for the accord partly by structuring it in a way that wouldn't preclude a full Ford bid once the golden share expires.
[20632020] |"There's either a minority {stake} package capable of getting Jaguar shareholder approval or there isn't," said one knowledgeable individual. "
[20632021] |If there isn't, {the deal} won't be put forward" to shareholders.

[20632022] |Union sentiment also could influence shareholder reaction to a Jaguar-GM accord.
[20632023] |GM's U.K. unit holds crucial talks today with union officials about its consideration of an Ellesmere Port site for its first major engine plant in Britain.
[20632024] |One auto-industry union leader said, "If they try to build it somewhere else {in Europe} besides the U.K., they are going to be in big trouble" with unionists over any Jaguar deal.

[20633001] |These are the last words Abbie Hoffman ever uttered, more or less, before he killed himself.
[20633002] |And You Are There, sort of:

[20633003] |ABBIE: "I'm OK, Jack.
[20633004] |I'm OK."
[20633005] |(listening) "Yeah.
[20633006] |I'm out of bed.
[20633007] |I got my feet on the floor.
[20633008] |Yeah.
[20633009] |Two feet.
[20633010] |I'll see you Wednesday? . . . Thursday."

[20633011] |He listens impassively.

[20633012] |ABBIE (cont'd.): "I'll always be with you, Jack.
[20633013] |Don't worry."

[20633014] |Abbie lies back and leaves the frame empty.

[20633015] |Of course that wasn't the actual conversation the late anti-war activist, protest leader and founder of the Yippies ever had with his brother.
[20633016] |It's a script pieced together from interviews by CBS News for a re-enactment, a dramatic rendering by an actor of Mr. Hoffman's ultimately unsuccessful struggle with depression.

[20633017] |The segment is soon to be broadcast on the CBS News series "Saturday Night With Connie Chung," thus further blurring the distinction between fiction and reality in TV news.
[20633018] |It is the New Journalism come to television.

[20633019] |Ms. Chung's program is just one of several network shows (and many more in syndication) that rely on the controversial technique of reconstructing events, using actors who are supposed to resemble real people, living and dead.
[20633020] |Ms. Chung's, however, is said to be the only network news program in history to employ casting directors.

[20633021] |Abbie Hoffman in this case is to be played by Hollywood actor Paul Lieber, who isn't new to the character.
[20633022] |He was Mr. Hoffman in a 1979 Los Angeles production of a play called "The Chicago Conspiracy Trial."

[20633023] |Television news, of course, has always been part show-biz.
[20633024] |Broadcasters have a healthy appreciation of the role entertainment values play in captivating an audience.
[20633025] |But, as CBS Broadcast Group president Howard Stringer puts it, the network now needs to "broaden the horizons of nonfiction television, and that includes some experimentation."

[20633026] |Since its premiere Sept. 16, the show on which Ms. Chung appears has used an actor to portray the Rev. Vernon Johns, a civil-rights leader, and one to play a teenage drug dealer.
[20633027] |It has depicted the bombing of Pan Am flight 103 over the Scottish town of Lockerbie.
[20633028] |On Oct. 21, it did a rendition of the kidnapping and imprisonment of Associated Press correspondent Terry Anderson, who was abducted in March 1985 and is believed to be held in Lebanon.
[20633029] |The production had actors playing Mr. Anderson and former hostages David Jacobsen, the Rev. Benjamin Weir and Father Lawrence Jenco.

[20633030] |ABC News has similarly branched out into entertainment gimmickry.
[20633031] |"Prime Time Live," a new show this season featuring Sam Donaldson and Diane Sawyer, has a studio audience that applauds and that one night (to the embarrassment of the network) waved at the camera like the crowd on "Let's Make a Deal."
[20633032] |(ABC stops short of using an "applause" sign and a comic to warm up the audience.
[20633033] |The stars do that themselves.)
[20633034] |NBC News has produced three episodes of an occasional series produced by Sid Feders called "Yesterday, Today and Tomorrow," starring Maria Shriver, Chuck Scarborough and Mary Alice Williams, that also gives work to actors.

[20633035] |Call it a fad.
[20633036] |Or call it the wave of the future.

[20633037] |NBC's re-creations are produced by Cosgrove-Meurer Productions, which also makes the successful prime-time NBC Entertainment series "Unsolved Mysteries."

[20633038] |The marriage of news and theater, if not exactly inevitable, has been consummated nonetheless.
[20633039] |News programs, particularly if they score well in the ratings, appeal to the networks' cost-conscious corporate parents because they are so much less expensive to produce than an entertainment show is -- somewhere between $400,000 and $500,000 for a one-hour program.
[20633040] |Entertainment shows tend to cost twice that.
[20633041] |Re-enactments have been used successfully for several seasons on such syndicated "tabloid TV" shows as "A Current Affair," which is produced by the Fox Broadcasting Co. unit of Rupert Murdoch's News Corp.
[20633042] |That show, whose host is Ms. Chung's husband, Maury Povich, has a particular penchant for grisly murders and stories having to do with sex -- the Robert Chambers murder case, the Rob Lowe tapes, what have you.

[20633043] |Gerald Stone, the executive producer of "A Current Affair," says, "We have opened eyes to being a little less conservative and more imaginative in how to present the news."

[20633044] |Nowhere have eyes been opened wider than at CBS News.
[20633045] |At 555 W. 57th St. in Manhattan, one floor below the offices of "60 Minutes," the most successful prime-time news program ever, actors wait in the reception area to audition for "Saturday Night With Connie Chung."

[20633046] |CBS News sends scripts to agents, who pass them along to clients.
[20633047] |The network deals a lot with unknowns, including Scott Wentworth, who portrayed Mr. Anderson, and Bill Alton as Father Jenco, but the network has some big names to contend with, too.
[20633048] |James Earl Jones is cast to play the Rev. Mr. Johns.
[20633049] |Ned Beatty may portray former California Gov. Pat Brown in a forthcoming epsiode on Caryl Chessman, the last man to be executed in California, in 1960.

[20633050] |"Saturday Night" has cast actors to appear in future stories ranging from the abortion rights of teen-agers to a Nov. 4 segment on a man named Willie Bosket, who calls himself a "monster" and is reputed to be the toughest prisoner in New York.

[20633051] |CBS News, which as recently as two years ago fired hundreds of its employees in budget cutbacks, now hires featured actors beginning at $2,700 a week.
[20633052] |That isn't much compared with what Bill Cosby makes, or even Connie Chung for that matter (who is paid $1.6 million a year and who recently did a guest shot of her own on the sitcom "Murphy Brown").
[20633053] |But the money isn't peanuts either, particularly for a news program.

[20633054] |CBS News is also re-enacting the 1979 Three Mile Island nuclear accident in Middletown, Pa., with something less than a cast of thousands.
[20633055] |It is combing the town of 10,000 for about 200 extras.
[20633056] |On Oct. 20, the town's mayor, Robert Reid, made an announcement on behalf of CBS during half-time at the Middletown High School football game asking for volunteers.

[20633057] |"There was a roll of laughter through the stands," says Joe Sukle, the editor of the weekly Press and Journal in Middletown.
[20633058] |"They're filming right now at the bank down the street, and they want shots of people getting out of cars and kids on skateboards.
[20633059] |They are approaching everyone on the street and asking if they want to be in a docudrama."

[20633060] |Mr. Sukle says he wouldn't dream of participating himself:
[20633061] |"No way.
[20633062] |I think re-enactments stink."

[20633063] |Though a re-enactment may have the flavor, Hollywood on the Hudson it isn't.
[20633064] |Some producers seem tentative about the technique, squeamish even.
[20633065] |So the results, while not news, aren't exactly theater either, at least not good theater.
[20633066] |And some people do think that acting out scripts isn't worthy of CBS News, which once lent prestige to the network and set standards for the industry.

[20633067] |In his review of "Saturday Night With Connie Chung," Tom Shales, the TV critic of the Washington Post and generally an admirer of CBS, wrote that while the show is "impressive, . . . one has to wonder if this is the proper direction for a network news division to take."

[20633068] |Re-creating events has, in general, upset news traditionalists, including former CBS News President Richard S. Salant and former NBC News President Reuven Frank, former CBS News anchorman Walter Cronkite and the new dean of the Columbia University Graduate School of Journalism, Joan Konner.
[20633069] |Says she: "Once you add dramatizations, it's no longer news, it's drama, and that has no place on a network news broadcast. . . .
[20633070] |They should never be on.
[20633071] |Never."

[20633072] |Criticism of the Abbie Hoffman segment is particularly scathing among people who knew and loved the man.
[20633073] |That includes his companion of 15 years, Johanna Lawrenson, as well as his former wife, Anita.
[20633074] |Both women say they also find it distasteful that CBS News is apparently concentrating on Mr. Hoffman's problems as a manic-depressive.

[20633075] |"This is dangerous and misrepresents Abbie's life," says Ms. Lawrenson, who has had an advance look at the 36-page script.
[20633076] |"It's a sensational piece about someone who is not here to defend himself."

[20633077] |Mrs. Hoffman says that dramatization "makes the truth flexible.
[20633078] |It takes one person's account and gives it authenticity."

[20633079] |CBS News interviewed Jack Hoffman and his sister, Phyllis, as well as Mr. Hoffman's landlord in Solebury Township, Pa.
[20633080] |Also Jonathan Silvers, who collaborated with Mr. Hoffman on two books.

[20633081] |Mr. Silvers says, "I wanted to be interviewed to get Abbie's story out, and maybe talking about the illness will do some good."

[20633082] |The executive producer of "Saturday Night With Connie Chung," Andrew Lack, declines to discuss re-creactions as a practice or his show, in particular.
[20633083] |"I don't talk about my work," he says.
[20633084] |The president of CBS News, David W. Burke, didn't return numerous telephone calls.

[20633085] |One person close to the process says it would not be in the best interest of CBS News to comment on a "work in progress," such as the Hoffman re-creation, but says CBS News is "aware" of the concerns of Ms. Lawrenson and Mr. Hoffman's former wife.
[20633086] |Neither woman was invited by CBS News to participate in a round-table discussion about Mr. Hoffman that is to follow the re-enactment.

[20633087] |Mr. Lieber, the actor who plays Mr. Hoffman, says he was concerned at first that the script would "misrepresent an astute political mind, one that I admired," but that his concerns were allayed.
[20633088] |The producers, he says, did a good job of depicting someone "who had done so much, but who was also a manic-depressive.

[20634001] |Dentsu Inc., the world's largest advertising agency on the strength of its dominance in the Japanese market, is setting its sights on overseas expansion.

[20634002] |Last year, Dentsu started HDM, a joint network with U.S. ad agency Young & Rubicam and Eurocom of France.
[20634003] |A few months ago, Dentsu acquired 69% of Australian agency Fortune Communication Holdings Ltd. for 5.9 million Australian dollars (US$4.6 million).
[20634004] |Dentsu has U.S. subsidiaries, but they keep low profiles.

[20634005] |Now, the giant marketing company, which holds 25% of Japan's 4.4 trillion yen ($30.96 billion) advertising industry, is considering the acquisition of an advertising network in the U.S. or Europe.
[20634006] |What is driving Dentsu's international expansion largely is the need to keep up with its Japanese clients as they grow in the U.S. and Europe.
[20634007] |"If we don't do something . . . we won't be able to catch up with demand," says a Dentsu spokesman.
[20634008] |"Our president said acquisition is an effective method."

[20634009] |Last year, Dentsu's foreign business accounted for less than 10% of total billings, but the company is aiming at 20% in the near future.
[20634010] |So far, it appears cautious about taking the big step.
[20634011] |For example, the spokesman says Dentsu has been approached by banks and securities companies a number of times to invest in the troubled British marketing group Saatchi & Saatchi PLC.
[20634012] |But he said Dentsu hasn't looked seriously at Saatchi.

[20634013] |Though Dentsu says it has no concrete acquisition plans or deadlines, it is laying the groundwork for international growth.
[20634014] |It is setting up a special team in charge of international markets and training workers to do business abroad.

[20634015] |For the year ended March 31, Dentsu sales rose 19% to $8.9 billion from $7.5 billion, and net income jumped 59% to $102 million from $64 million.
[20634016] |Dentsu's billings last year were larger than those of Young & Rubicam, the world's second-largest ad agency, according to a survey by the publication Advertising Age.

[20634017] |But success overseas in unfamiliar markets could be trickier than for other industries such as manufacturers.
[20634018] |On its own, Dentsu's muscle in Japan may count for little in major foreign markets when seeking non-Japanese clients.
[20634019] |Thus, an acquisition may prove the necessary course.

[20634020] |But Japanese agencies are cautious about expanding abroad because client relationships are different.
[20634021] |Japanese agencies do business with rival clients in the same industry, a practice "that would be unacceptable by traditional Western conflict rules," says Roy Warman, the London chief executive of Saatchi & Saatchi's communications division.

[20634022] |Although acquiring a foreign company would expand Japanese advertising agencies' business to foreign clients, many clients would also be Japanese companies expanding overseas, says the Dentsu spokesman.
[20634023] |But the different business system would make it hard for Dentsu to provide these Japanese companies the same kind of services they do in Japan.

[20635001] |Ciba-Geigy AG, the big Swiss chemicals company, said that it agreed in a letter of intent with Corning Inc. to acquire Corning's 50% share of Ciba Corning Diagnostics Corp., based in Medfield, Mass.

[20635002] |Ciba Corning, which had been a 50-50 venture between Basel-based Ciba-Geigy and Corning, has annual sales of about $300 million, the announcement said.
[20635003] |Terms of the transaction weren't disclosed.
[20635004] |Ciba Corning makes clinical diagnostics systems and related products for the medical-care industry.

[20635005] |The announcement said the acquisition should be completed by December after a definitive agreement is completed and regulatory approval is received.

[20635006] |Ciba-Geigy intends to develop the Ciba Corning unit into a "substantial business," making the unit an "integral part" of Ciba-Geigy's "comprehensive disease management concept.

[20636001] |The NBC network canceled its first new series of the fall TV season, killing Mel Brooks's wacky hotel comedy "The Nutt House."

[20636002] |The show, one of five new NBC series, is the second casualty of the three networks so far this fall.
[20636003] |Last week CBS Inc. canceled "The People Next Door."
[20636004] |NBC's comedy had aired Wednesdays at 9:30 p.m. and in five outings had drawn an average of only 13.2% of homes, lagging behind the Jamie Lee Curtis comedy "Anything But Love" on ABC and CBS's one-hour drama "Jake and the Fatman."
[20636005] |NBC, a unit of General Electric Co., hasn't decided on a permanent replacement for the canceled series.

[20637001] |John Labatt Ltd. said it plans a private placement of 150 million Canadian dollars (US$127.5 million) in preferred shares, to be completed around Nov. 1.

[20637002] |Proceeds will be used to reduce short-term debt at the beer and food concern, said Robert Vaux, vice president, finance.

[20637003] |The preferred shares will carry a floating annual dividend equal to 72% of the 30-day bankers' acceptance rate until Dec. 31, 1994.
[20637004] |Thereafter, the rate will be renegotiated.
[20637005] |Mr. Vaux said that if no agreement is reached, other buyers will be sought by bid or auction.
[20637006] |The shares are redeemable after the end of 1994.

[20637007] |Mr. Vaux said the share issue is part of a strategy to strengthen Labatt's balance sheet in anticipation of acquisitions to be made during the next 12 to 18 months.
[20637008] |Labatt's has no takeover bids outstanding currently, he said.

[20637009] |Lead underwriter to the issue is Toronto Dominion Securities Inc.

[20638001] |Texas Instruments Inc., once a pioneer in portable computer technology, today will make a bid to reassert itself in that business by unveiling three small personal computers.

[20638002] |The announcements are scheduled to be made in Temple, Texas, and include a so-called "notebook" PC that weighs less than seven pounds, has a built-in hard disk drive and is powered by Intel Corp. 's 286 microprocessor.
[20638003] |That introduction comes only two weeks after Compaq Computer Corp., believing it had a lead of three to six months on competitors, introduced the first U.S. notebook computer with such features.

[20638004] |Despite the inevitable comparison with Compaq, however, Texas Instruments' new notebook won't be a direct competitor.
[20638005] |While Compaq sells its machines to businesses through computer retailers, Texas Instruments will be selling most of its machines to the industrial market and to value-added resellers and original-equipment manufacturers.

[20638006] |The introductions also mark Texas Instruments' plunge back into a technology it has all but ignored for the past several years.
[20638007] |Although the Dallas-based computer giant introduced the first portable data terminal in 1971 -- a 38-pound monster -- and the world's first microprocessor-based portable in 1976, the only portable machines it has introduced since the first part of the decade have been "dumb" terminals with limited on-board processing ability.
[20638008] |It stopped selling a standard personal computer a while ago.

[20638009] |Now that is about to change, as Texas Instruments begins marketing two 14-pound laptop PCs with 20 megabyte and 40 megabyte hard drives.
[20638010] |The laptops are not revolutionary and, indeed, are tardy in a market first opened by GRiD Systems Corp., now a unit of Tandy Corp., almost two years ago.

[20638011] |But the notebook, with the more advanced microprocessor and hard disk, is more innovative.
[20638012] |Weighing 6.7 pounds with battery, the notebook measures 8.2 by 11.7 inches, has a 20-megabyte hard disk drive and boasts a backlit screen that is 22% larger than Compaq's.
[20638013] |Its keyboard, according to industry consultants, is better than Compaq's, but its battery life of two to three hours is shorter.
[20638014] |It doesn't have an internal floppy disk drive, although a snap-on drive can be purchased separately.
[20638015] |Its greatest drawback may be its 3-inch thickness, big enough for one consultant to describe it as "clunky."

[20638016] |List prices on the heavier Texas Instrument laptops will be $4,999 for the TI Model 25, with a 20 megabyte disk drive, and $5,599 for the 40-megabyte Model 45.
[20638017] |The notebook, the TI Model 12, will be priced at $4,199.

[20639001] |Shearson Lehman Hutton Inc. said it applied to Taiwanese securities officials for permission to open brokerage offices in Taipei.

[20639002] |Shearson's application is the first since the Taiwan Securities and Exchange Commission announced June 21 that it would allow foreign brokerage firms to do business in that country.
[20639003] |Taiwan officials are expected to review the Shearson application later this year.

[20639004] |Under current rules, investors in Taiwan can buy overseas stocks only through the purchase of mutual funds issued by local and foreign investment trusts.
[20639005] |The new rules will allow investors to buy foreign stocks directly.

[20639006] |A spokesman for Shearson said the brokerage service will be directed at individual investors who want to buy foreign and domestic stocks.
[20639007] |"It's an attractive market with good growth opportunities," he added.

[20640001] |Retailers in the West and parts of the South are entering the critical Christmas shopping season with more momentum than those in other regions.

[20640002] |In a new report, the International Council of Shopping Centers said sales of general merchandise in the West for the first seven months of 1989 rose 6.6% above year-earlier levels.

[20640003] |Sales increased a more modest 4.8% in the South and 4.4% in the Midwest.
[20640004] |But sales in the oil-patch state of Texas surged 12.9% and sales in South Carolina jumped 10.6% in the period, the New York trade group said.

[20640005] |In the Northeast, however, sales declined 0.4% in the period, with sales in New England falling 2.6%.

[20640006] |The numbers show that "we don't have a monolithic economy," said Isaac Lagnado, council research director.
[20640007] |"There are a lot of have and have-not markets."

[20640008] |Sales nationally rose 3.9% through July, the latest month for which the figures are available, the council said.

[20640009] |The Northern California earthquake and Hurricane Hugo are likely to temporarily damp sales growth in the West and South Carolina.
[20640010] |But Mr. Lagnado predicted the regional trends would continue through Christmas.
[20640011] |"The big mo is as much of a factor in retailing as in politics," he said.

[20640012] |The Christmas quarter is important to retailers because it represents roughly a third of their sales and nearly half of their profits.

[20640013] |The council's report is based on data the trade group buys from the U.S. Census Bureau.
[20640014] |The information on 125 metropolitan markets is supplied by retailers such as Sears, Roebuck & Co. and K mart Corp. as well as closely held concerns such as R.H. Macy & Co.
[20640015] |The council plans to release its regional reports monthly.

[20640016] |Mr. Lagnado said strength in employment appears to have the biggest impact on sales growth.
[20640017] |El Paso, Austin and Fort Worth, the three strongest retail markets in the nation, are all located in Texas, where employment grew a relatively strong 2%.
[20640018] |Massachusetts, which has lost jobs in the computer and defense-related industries, was the weakest link in bleak New England.

[20640019] |The results reflect a reversal in the fortunes of the regions during the past two years.
[20640020] |In 1987, the West had the slowest sales growth, and the South and the Midwest were first and second respectively, according to the council.

[20640021] |Mr. Lagnado said that although retailers probably won't ever recover sales lost because of the California quake and Hurricane Hugo, they could see some benefits later on.
[20640022] |Stores such as Sears that sell big-ticket durable goods might actually get a boost as consumers rush to replace items lost in the disasters, he said.

[20641001] |Kerr-McGee Corp. said it will spend $42 million to purchase land and relocate its ammonium perchlorate storage facility to Clark County, Nev., from Henderson, Nev.

[20641002] |The company said it will move the storage and cross-blending operations to a site 23 miles northeast of Las Vegas to distance the operations from residential areas.
[20641003] |Ammonium perchlorate is an oxidizer that is mixed with a propellant to make rocket fuel used in the space shuttle and military rockets.

[20641004] |In May 1988, an ammonium perchlorate plant in Henderson owned by an American Pacific Corp. unit was leveled by a series of explosions.
[20641005] |After the explosion, Kerr-McGee temporarily shut down its facility just south of Las Vegas for a safety inspection.
[20641006] |American Pacific and Kerr-McGee are the only two U.S. manufacturers of ammonium perchlorate.

[20641007] |When the plant was destroyed, "I think everyone got concerned that the same thing would happen at our plant," a KerrMcGee spokeswoman said.
[20641008] |That prompted Kerr-McGee to consider moving the potentially volatile storage facilities and cross-blending operations away from town.

[20641009] |Kerr-McGee said it has purchased 3,350 acres from the federal government in Clark County and plans to begin construction early next year.
[20641010] |The new facility is expected to begin operations in early 1991.
[20641011] |The Henderson plant will continue its other chemical operations, the company said.

[20642001] |This maker of electronic devices said it replaced all five incumbent directors at a special meeting called by Milton B. Hollander, whose High Technology Holding Co. of Stamford, Conn. acquired most of its 49.4% stake in Newport in August.
[20642002] |Elected as directors were Mr. Hollander, Frederick Ezekiel, Frederick Ross, Arthur B. Crozier and Rose Pothier.
[20642003] |Removed from office were George Pratt, Robert E. Davis, Norman Gray, John Virtue, corporate secretary, and Barrett B. Weekes, chairman, president and chief executive officer.
[20642004] |Newport officials didn't respond Friday to requests to discuss the changes at the company but earlier, Mr. Weekes had said Mr. Hollander wanted to have his own team on the board.

[20643001] |Shiseido Co., Japan's leading cosmetics producer, said it had net income of 5.64 billion yen ($39.7 million) in its first half, which ended Sept. 30.

[20643002] |Exact comparisons with the previous year were unavailable because of a change in the company's fiscal calendar.
[20643003] |The Tokyo-based company had net of 3.73 billion yen in the previous reporting period, which was the four months ended March 31.

[20643004] |Sales in the first half came to 159.92 billion yen, compared with 104.79 billion yen in the four-month period.

[20643005] |Shiseido predicted that sales for the year ending next March 31 will be 318 billion yen, compared with 340.83 billion yen in the year ended Nov. 30, 1988.
[20643006] |It said it expects net to rise to 11 billion yen from 8.22 billion yen.

[20644001] |Bruce W. Wilkinson, president and chief executive officer, was named to the additional post of chairman of this architectural and design services concern.
[20644002] |Mr. Wilkinson, 45 years old, succeeds Thomas A. Bullock, 66, who is retiring as chairman but will continue as a director and chairman of the executive committee.

[20645001] |Merger and acquisition activity in the third quarter exceeded the year-earlier pace, said Merrill Lynch & Co. 's W.T. Grimm & Co. unit in Schaumburg, Ill.

[20645002] |A total of 672 transactions were announced during the latest quarter, up 13% from the year-earlier period's 597, Grimm said.
[20645003] |Transactions in which prices were disclosed totaled $71.9 billion, up 36% from $52.9 billion a year earlier, the company added.

[20645004] |Grimm counted 16 transactions valued at $1 billion or more in the latest period, twice as many as a year earlier.
[20645005] |The largest was the $12 billion merger creating Bristol-Myers Squibb Co.

[20645006] |In the first nine months, 1,977 transactions were announced, up 15% from 1,716 in the year-earlier period.
[20645007] |Transactions in which prices were disclosed totaled $188.1 billion, up 15% from $163.2 billion a year earlier.

[20645008] |Citing current stock market conditions and the trend away from highly leveraged transactions, Grimm said it wasn't certain that the total value of transactions for the year will exceed the record $247 billion in 1988.

[20646001] |MEDICINE SHOPPE INTERNATIONAL Inc. declared a 3-for-2 stock split, and substantially boosted the dividend payout.
[20646002] |The franchiser of pharmacies said the added shares will be distributed Dec. 4 to stock of record Nov. 13.
[20646003] |The company also changed its dividend policy, under which holders had received an annual 10 cents-a-share payment, by declaring a four-cents-a-share dividend, to be paid quarterly on post-split shares.

[20647001] |NBI Inc. said that it cannot pay the Oct. 31 dividend on its Series A convertible preferred stock, allowing the stock's holder to convert the shares into as much as 27.7% of NBI's shares outstanding.

[20647002] |NBI said that it has the funds to pay the dividend, but that it doesn't have the surplus or profit required under Delaware law for payment of the dividend.
[20647003] |All the preferred stock is held by the Yukon Office Supply Stock Ownership Plan.

[20647004] |Under terms of the stock, the Yukon ESOP can demand that the stock be redeemed for $4,090,000 on Nov. 30, but NBI said it is legally prohibited from making the redemption.
[20647005] |Failure to pay the dividend allows Yukon to convert all or some of its shares into NBI common after Nov. 30, at a conversion price based on NBI's closing stock price.

[20647006] |NBI, a maker of word-processing systems, said it can't predict if any of the preferred stock will be converted.

[20647007] |NBI also said it has hired Prudential-Bache Securities Inc. as its financial adviser and investment banker to help it restructure financially and improve its balance sheet.

[20648001] |Insurers may see claims resulting from the San Francisco earthquake totaling nearly $1 billion -- far less than the claims they face from Hurricane Hugo -- but the recent spate of catastrophes should jolt property insurance rates in coming months.

[20648002] |The property claims service division of the American Insurance Services Group estimated insured losses from the earthquake at $960 million.
[20648003] |This estimate doesn't include claims under workers' compensation, life, health disability and liability insurance and damage to infrastructure such as bridges, highways and public buildings.

[20648004] |The estimated earthquake losses are low compared with the $4 billion in claims that insurers face from Hurricane Hugo, which ripped through the Caribbean and the Carolinas last month.
[20648005] |That's because only about 30% of California homes and businesses had earthquake insurance to cover the losses.

[20648006] |However, insurance brokers and executives say that the combination of the Bay area earthquake, Hugo and last week's explosion at the Phillips Petroleum Co. 's refinery in Pasadena, Texas, will cause property insurance and reinsurance rates to jump.

[20648007] |Other insurance rates such as casualty insurance, which would cover liability claims, aren't likely to firm right away, says Alice Cornish, an industry analyst with Northington Research in Avon, Conn.
[20648008] |She believes the impact of losses from these catastrophes isn't likely to halt the growth of the industry's surplus capital next year.

[20648009] |Property reinsurance rates are likely to climb first, analysts and brokers believe.
[20648010] |"The reinsurance market has been bloodied by disasters" in the U.S. as well as in Great Britain and Europe, says Thomas Rosencrants, director of research at Interstate/Johnson Lane Inc. in Atlanta.

[20648011] |Insurers typically retain a small percentage of the risks they underwrite and pass on the rest of the losses.
[20648012] |Insurers buy this insurance protection for themselves by giving up a portion of the premiums they collect on a policy to another firm -- a reinsurance company, which, in turn, accepts a portion of any losses resulting from this policy.
[20648013] |Insurers, such as Cigna Corp., Transamerica Corp, and Aetna Life & Casualty Co., buy reinsurance from other U.S.-based companies and Lloyd's of London for one catastrophe at a time.

[20648014] |After Hugo hit, many insurers exhausted their reinsurance coverage and had to tap reinsurers to replace that coverage in case there were any other major disasters before the end of the year.

[20648015] |After the earthquake two weeks ago, brokers say companies scrambled to replace reinsurance coverages again and Lloyd's syndicates turned to the London market excess lines for protection of their own.

[20648016] |James Snedeker, senior vice president of Gill & Roeser Inc., a New York-based reinsurance broker, says insurers who took big losses this fall and had purchased little reinsurance in recent years will be asked to pay some pretty hefty rates if they want to buy reinsurance for 1990.
[20648017] |However, companies with few catastrophe losses this year and already big buyers of reinsurance are likely to see their rates remain flat, or perhaps even decline slightly.
[20648018] |Many companies will be negotiating their 1990 reinsurance contracts in the next few weeks.

[20648019] |"It's a seller's market," said Mr. Snedeker of the reinsurance market right now.

[20648020] |But some large insurers, such as State Farm Mutual Automobile Insurance Co., don't purchase reinsurance, but fund their own program.
[20648021] |A few years ago, State Farm, the nation's largest home insurer, stopped buying reinsurance because no one carrier could provide all the coverage that it needed and the company found it cheaper to self-reinsure.
[20648022] |The $472 million of losses State Farm expects from Hugo and an additional $300 million from the earthquake are less than 5% of State Farm's $16.7 billion total net worth.

[20648023] |Since few insurers have announced what amount of losses they expect to see from the earthquake, it's impossible to get a clear picture of the quake's impact on fourth-quarter earnings, said Herbert Goodfriend at Prudential-Bache Securities Corp.

[20648024] |Transamerica expects an after-tax charge of less than $3 million against fourth-quarter net; Hartford Insurance Group, a unit of ITT Corp., expects a $15 million or 10 cents after-tax charge; and Fireman's Fund Corp. expects a charge of no more than $50 million before taxes and after using its reinsurance.

[20649001] |Sharp Corp., Tokyo, said net income in its first half rose 59% to 18.32 billion yen ($128.9 million) from 11.53 billion yen a year earlier.

[20649002] |The consumer electronics, home appliances and information-processing concern said revenue in the six months ended Sept. 30 rose 8.9% to 517.85 billion yen from 475.6 billion yen.

[20649003] |Sales of information-processing products and electric parts increased a strong 22% to 236.23 billion yen from 194.24 billion yen and accounted for 46% of total sales.

[20649004] |In audio equipment, sales rose 13% to 44.3 billion yen from 39.19 billion yen.
[20649005] |Sales of electric appliances were flat, and sales of electronic equipment declined slightly.

[20649006] |Sharp projected sales for the current year ending March 31 at 1.6 trillion yen, a 7% increase the previous fiscal year.
[20649007] |It said it expects net to rise 45% to 380 billion yen.

[20650001] |Sun Microsystems Inc., a computer maker, announced the effectiveness of its registration statement for $125 million of 6 3/8% convertible subordinated debentures due Oct. 15, 1999.

[20650002] |The company said the debentures are being issued at an issue price of $849 for each $1,000 principal amount and are convertible at any time prior to maturity at a conversion price of $25 a share.

[20650003] |The debentures are available through Goldman, Sachs & Co.

[20651001] |Nelson Holdings International Ltd. shareholders approved a 1-for-10 consolidation of the company's common stock at a special meeting.

[20651002] |At the same time, shareholders approved the adoption of a rights plan and a super-majority voting approval requirement.
[20651003] |They also approved the relocation of the company's registered office to Toronto from Vancouver and a name change to NHI Nelson Holdings International Ltd.

[20651004] |Following the consolidation, the entertainment company, which has film and television operations in Beverly Hills, Calif., will have about 4.1 million shares outstanding.
[20651005] |The number of authorized common shares will remain at 100 million.
[20651006] |Under the rights plan, holders will have one right for each common share held, with each right entitling the purchase of one common share for 100 Canadian dollars.
[20651007] |The rights plan would be triggered if a person or group acquires 20% or more of the common shares outstanding without making an offer to all shareholders.

[20651008] |Under the super-majority amendment, certain mergers and other transactions would require approval of holders of 80% of the company's common shares outstanding.

[20652001] |Wilfred American Educational Corp. said a federal grand jury in Boston indicted the operator of cosmetology and business schools for mail fraud.

[20652002] |The charges in the 12-count indictment, which stem from events that allegedly occurred in late 1984 and early 1985, involve enrollment procedures of six students and the preparation of certain reports, Wilfred said.
[20652003] |No individuals were charged in the indictment.

[20652004] |Wilfred American said it will "vigorously defend" itself against the charges and added that the charges relate to procedures that it has since changed.

[20652005] |Eight admissions representatives at two of Wilfred's former Massachusetts schools previously pleaded guilty to charges of aiding, abetting and counseling students to submit false financial-aid applications.
[20652006] |Wilfred closed its Massachusetts schools earlier this year.

[20652007] |In New York Stock Exchange composite trading Friday, Wilfred fell 6.25 cents to 93.75 cents a share.

[20653001] |Rally's Inc. said it filed suit in U.S. District Court in Delaware against a group led by Burt Sugarman, seeking to block the investors from buying more shares.

[20653002] |Rally's, a Louisville, Ky., fast-food chain, alleges that the three investors, who are directors of the company, broke securities laws because they didn't disclose their intentions to acquire a big Rally's stake.

[20653003] |The group, led by Giant Group Ltd. and its chairman, Mr. Sugarman, owns about 45.2% of Rally's.
[20653004] |In the Securities and Exchange Commission filings, the group has said it may seek control of Rally's.

[20653005] |Mr. Sugarman called the lawsuit "not nice" and said his group will continue to push for control of the company and the removal of certain directors.

[20653006] |He asserts that some directors, who have joined forces with company founder James Patterson, have ties to Wendy's, a competing hamburger chain.
[20653007] |The Patterson group, which controls about 42% of Rally's shares, also may seek control.

[20653008] |Rally's also said it formed a committee of three directors, who aren't associated with either the Patterson or Sugarman groups, to analyze the situation.

[20654001] |Leaseway Transportation Corp. said it will restructure $192.5 million of certain subordinated debentures to reduce its debt obligations and interest expense.

[20654002] |The 13.25% subordinated debentures due 2002 were issued in August 1987 as part of the $690 million financing for a leveraged buy-out of the company.
[20654003] |Leaseway provides transportation services for manufacturers, distributors and retailers.

[20654004] |Leaseway said it has begun discussions with certain institutional debt holders to review the proposed private placement transaction, which would exchange the debt for new subordinated debt instruments and equity securities.

[20654005] |Specific terms are subject to review and a final agreement with debt holders, the company said.
[20654006] |But the proposed transaction calls for an exchange of the debt for new debentures of lower face value and reduced cash interest.
[20654007] |Also, debt holders would be offered an equity position in Leaseway, which in total would represent a controlling interest in the company.

[20654008] |Drexel Burnham Lambert Inc. is the adviser on the transaction.

[20654009] |Company officials said Leaseway fulfilled payment requirements of its debt obligations since the leveraged buy-out, but "our performance since the {buy-out} makes it imperative to implement actions that will further improve our cash flow.

[20655001] |Nicaraguan President Daniel Ortega may have accomplished over the weekend what his U.S. antagonists have failed to do: revive a constituency for the Contra rebels.

[20655002] |Lawmakers haven't publicly raised the possibility of renewing military aid to the Contras, and President Bush parried the question at a news conference here Saturday, saying only that "if there's an all-out military offensive, that's going to change the equation 180 degrees."

[20655003] |But Mr. Ortega's threat over the weekend to end a 19-month cease-fire with the rebels seeking to topple him, effectively elevated the Contras as a policy priority just as they were slipping from the agendas of their most ardent supporters.

[20655004] |Senate Majority Leader George Mitchell (D., Maine) said yesterday on NBC-TV's "Meet the Press" that Mr. Ortega's threat was "a very unwise move, particularly the timing of it."

[20655005] |The threat came during a two-day celebration in Costa Rica to highlight Central America's progress toward democracy in the region, attended by President Bush, Canadian Prime Minister Brian Mulroney and 14 other Western Hemisphere leaders.
[20655006] |Mr. Bush returned to Washington Saturday night.

[20655007] |Mr. Ortega announced on Friday that he would end the cease-fire this week in response to the periodic Contra assaults against his army.
[20655008] |Saturday, he amended his remarks to say that he would continue to abide by the cease-fire if the U.S. ends its financial support for the Contras.
[20655009] |He asked that the remaining U.S. humanitarian aid be diverted to disarming and demobilizing the rebels.

[20655010] |Not only did Mr. Ortega's comments come in the midst of what was intended as a showcase for the region, it came as Nicaragua is under special international scrutiny in anticipation of its planned February elections.
[20655011] |Outside observers are gathering in Nicaragua to monitor the registration and treatment of opposition candidates.
[20655012] |And important U.S. lawmakers must decide at the end of November if the Contras are to receive the rest of the $49 million in so-called humanitarian assistance under a bipartisan agreement reached with the Bush administration in March.

[20655013] |The humanitarian assistance, which pays for supplies such as food and clothing for the rebels amassed along the Nicaraguan border with Honduras, replaced the military aid cut off by Congress in February 1988.
[20655014] |While few lawmakers anticipated that the humanitarian aid would be cut off next month, Mr. Ortega's threat practically guarantees that the humanitarian aid will be continued.

[20655015] |Senate Minority Leader Robert Dole (R., Kan.) said yesterday on "Meet the Press": "I would hope after his {Mr. Ortega's} act yesterday or the day before, we'd have unanimous support for quick action on remaining humanitarian aid."
[20655016] |Sen. Dole also said he hoped for unanimous support for a resolution he plans to offer tomorrow denouncing the Nicaraguan leader.

[20655017] |While renewing military aid had been considered out of the question, rejected by Congress and de-emphasized by the Bush administration, Mr. Ortega's statement provides Contra supporters with the opportunity to press the administration on the issue.

[20655018] |"The administration should now state that if the {February} election is voided by the Sandinistas . . . they should call for military aid," said former Assistant Secretary of State Elliott Abrams.
[20655019] |"In these circumstances, I think they'd win."

[20655020] |Sen. Mitchell said that congressional Democrats intend to honor the March agreement to give non-lethal support to the Contras through the February elections, although he added that the agreement requires that the Contras not initiate any military action.

[20655021] |Mr. Ortega's threat to breach the cease-fire comes as U.S. officials were acknowledging that the Contras have at times violated it themselves.
[20655022] |Secretary of State James Baker, who accompanied President Bush to Costa Rica, told reporters Friday: "I have no reason to deny reports that some Contras ambushed some Sandinista soldiers."

[20655023] |Mr. Baker's assistant for inter-American affairs, Bernard Aronson, while maintaining that the Sandinistas had also broken the cease-fire, acknowledged: "It's never very clear who starts what."
[20655024] |He added that the U.S. has cut off aid to some rebel units when it was determined that those units broke the cease-fire.

[20655025] |In addition to undermining arguments in favor of ending Contra aid, Mr. Ortega's remarks also played to the suspicions of some U.S. officials and conservatives outside the government that he is searching for ways to manipulate or void the February elections.

[20655026] |Administration officials traveling with President Bush in Costa Rica interpreted Mr. Ortega's wavering as a sign that he isn't responding to the military attacks so much as he is searching for ways to strengthen his hand prior to the elections.
[20655027] |Mr. Abrams said that Mr. Ortega is seeking to demobilize the Contras prior to the elections to remove any pressure to hold fair elections.

[20655028] |"My sense is what they have in mind is an excuse for clamping down on campaigning" by creating an atmosphere of a military emergency, he said.

[20656001] |Milton Petrie, chairman of Petrie Stores Corp., said he has agreed to sell his 15.2% stake in Deb Shops Corp. to Petrie Stores.

[20656002] |In a Securities and Exchange Commission filing, Mr. Petrie said that on Oct. 26 Petrie Stores agreed to purchase Mr. Petrie's 2,331,100 Deb Shops shares.
[20656003] |The transaction will take place tomorrow.

[20656004] |The filing said Petrie Stores of Secaucus, N.J., is purchasing Mr. Petrie's Deb Shops stake as an investment.
[20656005] |Although Petrie Stores has considered seeking to acquire the remaining equity of Deb Stores, it has no current intention to pursue such a possibility, the filing said.

[20656006] |Philadelphia-based Deb Shops said it saw little significance in Mr. Petrie selling his stock to Petrie Stores.
[20656007] |"We didn't look at it and say, `Oh my God, something is going to happen, '" said Stanley Uhr, vice president and corporate counsel.

[20656008] |Mr. Uhr said that Mr. Petrie or his company have been accumulating Deb Shops stock for several years, each time issuing a similar regulatory statement.
[20656009] |He said no discussions currently are taking place between the two companies.

[20657001] |Nikon Corp. said unconsolidated pretax profit increased 70% to 12.12 billion yen ($85.3 million) in the first half ended Sept. 30, from 7.12 billion yen a year ago.

[20657002] |The Tokyo camera maker said net income more than doubled to 5.85 billion yen, or 16.08 a share, from 2.63 billion yen, or 7.24 yen a share.

[20657003] |Nikon said sales rose despite the adverse effect of Japan's unpopular consumption tax, introduced in April.
[20657004] |Increasing personal spending and capital investment are fueling growth, the company said.
[20657005] |Rising export sales also contributed to strong growth, Nikon added.

[20657006] |Total sales gained 20% to 122.36 billion yen from 102.01 billion yen.
[20657007] |Exports made up 46.2% of the latest year's total, up from 39.8% a year ago.

[20657008] |Camera sales showed the strongest gains, rising 37% to 50.59 billion yen.

[20657009] |Nikon forecast sales for the year ending March 31 will rise 9.6% to 240 billion yen.
[20657010] |Pretax profit is expected to increase 18% to 22 billion yen and net income is expected to rise 53% to 10.5 billion yen.

[20658001] |Presidio Oil Co. said it signed a definitive agreement to acquire Gulf Canada Resources Ltd. 's U.S. unit for $163 million.

[20658002] |Presidio, a Denver oil and gas concern, said it will acquire the properties and operations of Home Petroleum Corp., which includes two regional gas-gathering systems and proved reserves of about nine million barrels of oil and 72 billion cubic feet of natural gas.

[20658003] |Presidio said the properties are generally situated in Wyoming, North Dakota, Texas, Oklahoma and Louisiana.

[20658004] |Gulf Canada, Calgary, said the transaction is part of its plan to sell non-strategic assets and focus operations on Canada, Indonesia and other international areas.

[20658005] |A spokesman for Gulf Canada, which is controlled by Toronto's Reichmann family, said the properties account for about 6% of the company's assets and produce about 5,000 barrels of oil and 35 million cubic feet of gas a day.
[20658006] |He said Gulf Canada will likely report an extraordinary gain from the sale in the fourth quarter, but he wouldn't offer a specific estimate.

[20658007] |The transaction is expected to close by Nov. 30.

[20659001] |NEC Corp., a Tokyo-based computer and electronics concern, said net income rose 18% to 29.66 billion yen ($208.7 million) in the fiscal first half, ended Sept. 30, from 25.12 billion yen a year earlier.

[20659002] |Sales rose 7.4% to 1.255 trillion yen from 1.168 trillion yen.

[20659003] |NEC said first-half computer sales totaled 555.5 billion yen, up 11% from 500.26 billion yen a year earlier.
[20659004] |Sales of electrical devices rose 13% to 283.8 billion yen from 251.8 billion yen.
[20659005] |It said sales of home electronic products advanced 3.7% to 44.92 billion yen from 43.34 billion yen.

[20659006] |In the period just ended, computers accounted for 44% of total sales, NEC said, and electrical devices made up 23%.

[20659007] |NEC forecast sales for the year ending next March 31 of 2.74 trillion yen, an increase of 27% from the previous fiscal year.
[20659008] |It said net income will rise 25% to 69 billion yen.

[20660001] |Montedison S.p. A. definitively agreed to buy all of the publicly held shares of Erbamont N.V. for $37 each.

[20660002] |Montedison now owns about 72% of Erbamont's shares outstanding.

[20660003] |The companies said the accord was unanimously approved by a special committee of Erbamont directors unaffiliated with Montedison.

[20660004] |Under the pact, Montedision will make a $37-a-share tender offer for Erbamont stock outstanding.
[20660005] |The tender offer will be followed by the sale of all of Erbamont's assets, subject to all of its liabilities, to Montedison.
[20660006] |Erbamont will then be liquidated, with any remaining Erbamont holders receiving a distribution of $37 a share.

[20660007] |The companies said the transaction is being structured this way because the laws of the Netherlands Antilles, under which Erbamont is organized, don't provide for merger transactions.

[20661001] |A unit of DPC Acquisition Partners launched a $10-a-share tender offer for the shares outstanding of Dataproducts Corp., and said it would seek to liquidate the computer-printer maker "as soon as possible," even if a merger isn't consummated.

[20661002] |DPC Acquisition is controlled by Crescott Investment Associates, Wilson Investment Group, Kernel Corp. and Catalyst Partners.
[20661003] |The investor group owns 1,534,600 Dataproducts common shares, or a 7.6% stake.

[20661004] |The offer is based on several conditions, including obtaining financing.
[20661005] |DPC Acquisition said it had received the reasonable assurance of Chase Manhattan Bank N.A. that the financing can be obtained.

[20661006] |In a filing with the Securities and Exchange Commission, DPC Acquisition said it expects it will need about $215 million to buy the shares and pay related fees and expenses.
[20661007] |DPC Acquisition added that it has not begun discussions with financing sources, and said it expected to repay the amounts borrowed through proceeds of the liquidation.

[20661008] |Dataproducts officials declined to comment, and said they had not yet seen a suit filed in federal court by DPC Acquisition that seeks to nullify a standstill agreement between DPC Acquisition and Dataproducts.

[20661009] |Earlier this year, DPC Acquisition made a $15-a-share offer for Dataproducts, which the Dataproducts board said it rejected because the $283.7 million offer was not fully financed.
[20661010] |Dataproducts has since started a restructuring, and has said it is not for sale.

[20662001] |Jayark Corp. agreed to pay $4 million in cash, $2 million of 12% convertible debentures, and 1.6 million common shares to acquire closely held Kofcoh Imports Inc.

[20662002] |In over-the-counter trading Friday, Jayark was quoted at 87.5 cents bid, down 15.625 cents.
[20662003] |At the market price, the transaction has a total indicated value of $7.4 million.

[20662004] |Kofcoh is a New York holding company for Rosalco Inc., which imports furniture and other items.
[20662005] |David L. Koffman, president and chief executive officer of Jayark, holds about 40% of Kofcoh, Jayark said.

[20662006] |Jayark, New York, distributes and rents audio-visual equipment and prints promotional ads for retailers.
[20662007] |In the quarter ended July 31, Jayark had an average of 5.6 million shares outstanding.

[20662008] |The transaction is subject to approval by a panel of disinterested directors, the company said, adding that shareholder approval isn't needed.

[20663001] |Ajinomoto Co., a Tokyo-based food-processing concern, said net income in its first half rose 8.9% to 8.2 billion yen ($57.7 million) from 7.54 billion yen a year earlier.

[20663002] |Sales in the six months ended Sept. 30 were up 4.5% to 229.03 billion yen from 219.27 billion yen.
[20663003] |Sales were higher in all of the company's business categories, with the biggest growth coming in sales of foodstuffs such as margarine, coffee and frozen food, which rose 6.3%.

[20663004] |Oils and fats also did well, posting a 5.3% sales increase.
[20663005] |Sales in the category that includes pharmaceuticals, amino acids and chemicals rose 4.7%.

[20663006] |Ajinomoto predicted sales in the current fiscal year ending next March 31 of 480 billion yen, compared with 460.05 billion yen in fiscal 1989.
[20663007] |It said it expects full-year net of 16 billion yen, compared with 15 billion yen in the latest year.

[20664001] |The New York Mercantile Exchange, the world's chief oil futures marketplace, is at a critical juncture.

[20664002] |Several longtime observers of the commodities industry think the fortunes of the Merc over the next decade will be determined to a large extent by how well its new natural gas futures contract does and how successful its new president is in raising the level of compliance by floor traders with exchange and Commodity Futures Trading Commission rules.
[20664003] |If the exchange falters in these moves, they say, it might once again fall behind its chief New York competitor, the Commodity Exchange.
[20664004] |On Friday, the Merc's board announced that it had approved Sabine Pipe Line Co. 's Henry Hub in Erath, La., as the delivery site for its long-awaited natural gas futures contract.
[20664005] |It also said that it would start trading the contract as soon as the CFTC approved it.
[20664006] |The CFTC has 90 days to respond to such applications.
[20664007] |The Merc first started working on developing this contract in 1984.

[20664008] |Only three weeks earlier, the Merc had turned to one of its own executives, 40-year-old R. Patrick Thompson, to replace Rosemary T. McFadden as president.
[20664009] |Mr. Thompson is believed to have a mandate from the board of directors to help improve the Merc's tarnished reputation as an exchange whose floor traders don't follow the rules very well.

[20664010] |Ms. McFadden had been forced out in July in a bitter power struggle with Z. Lou Guttman, chairman and a longtime floor trader on the exchange.
[20664011] |Mr. Guttman told one person familiar with the New York exchanges during the search for a replacement that he was looking for a president who would be "responsive to the needs of the membership and the board."

[20664012] |Mr. Thompson first came to the exchange in 1981 and has been executive vice president since March 1988.
[20664013] |He previously held posts of senior vice president of compliance and senior vice president and general counsel.

[20664014] |By contrast, the Comex in July imported a highly regarded outsider, Arnold F. Staloff, as its president.
[20664015] |Mr. Staloff, 44, was a senior officer of the Philadelphia Stock Exchange and is considered a specialist in new financial products.

[20664016] |Mr. Thompson isn't bereft of experience with new products, however.
[20664017] |For the past two years, he said, he and the exchange's research department have been working on the new natural gas contract, seeking a good delivery site and studying the natural gas market.

[20664018] |"Our members are eager to begin trading this contract, so we expect no difficulty in attracting locals to the natural gas pit," he said.
[20664019] |The educational effort of teaching companies in the natural gas industry how to use the futures to hedge would have to continue for another a year or two, he added.
[20664020] |The Merc's extremely successful contracts in crude oil, gasoline and heating oil have made it the largest futures exchange in New York, and third behind the Chicago Board of Trade and Chicago Mercantile Exchange.

[20664021] |In a recent interview, Mr. Thompson said the biggest problem facing all commodity exchanges was one of image.
[20664022] |Earlier this year, the U.S. attorney indicted 45 floor traders and one clerk at the two big Chicago exchanges.
[20664023] |Federal authorities in New York started investigating exchanges in May, though no indictments have been handed down there.
[20664024] |So far they have issued scores of subpoenas, some of which went to members of the New York Merc.
[20664025] |Mr. Thompson will have to face some of the consequences of those subpoenas.

[20664026] |In a recent General Accounting Office study, the Merc was found to have been the most lax in enforcing exchange rules.
[20664027] |It levied the smallest number of suspensions of traders and fines of the four largest commodity exchanges studied over the past five years.
[20664028] |It also had both the fewest, and least experienced, investigators per million contracts traded.

[20664029] |The Merc received considerable criticism in 1987 when it was discovered that its compliance director, Kevin P. Conway, who then was responsible for policing the exchange's busy oil and metal pits, "was engaged in other personal business activities on Exchange time," including out-of-state trips, according to a New York Merc report prepared last year.
[20664030] |Mr. Conway is no longer at the exchange.

[20664031] |"We had a management breakdown in 1987 in terms of compliance," Mr. Thompson says.
[20664032] |"We recognized the problem and took care of it."
[20664033] |He says that even if the natural gas contract boosts volume at the exchange strongly, the 1990 business plan calls for having adequate compliance people to ensure that exchange rules are being followed.

[20664034] |For years the five New York exchanges have been talking about cooperating in various aspects of their business in order to improve the efficiency of their operations.
[20664035] |Periodically, there has even been talk of mergers between one or more exchanges.
[20664036] |So far there is little to show for such efforts.

[20664037] |Mr. Thompson believes the case for working together is stronger now than ever.
[20664038] |"The cost of competition has become extremely high," he says.
[20664039] |"We must find ways to save money for the futures commission merchants who do business on our exchanges."
[20664040] |He thinks that progress in cooperation can be made in areas where no vested interests have built up.
[20664041] |One of those areas is the development of a hand-held electronic device that would permit floor traders to enter trades as they make them.
[20664042] |The GAO has recommended the creation of a system to record trade data so that an independent, verifiable audit trail can be established to prevent customer fraud.
[20664043] |The Merc is now cooperating with the Comex in developing such a device to provide such an audit trail.
[20664044] |The Chicago exchanges also are working on such a device.

[20664045] |Another major electronics problem faces Mr. Thompson -- the creation of a 24-hour trading system that can be used outside normal trading hours.
[20664046] |In January, the New York Merc signed a letter of intent with the Chicago Merc as a preliminary step to joining their electronic system called Globex.
[20664047] |But in May, the Chicago Merc said it was looking into creating a common system with the Chicago Board of Trade, and it suspended negotiations with the New York Merc.

[20664048] |Mr. Thompson says his exchange isn't waiting for the results of the Chicago exchanges' cooperation.
[20664049] |It recently began a pilot program to test an electronic trading system called ATS/2, the automated trading system created by the International Commodities Clearing House.

[20664050] |Looking ahead to commodity markets this week:

[20664051] |Copper

[20664052] |Michael Frawley, metals trader for PaineWebber Inc. in New York, said there is good technical support between $1.10 and $1.12 a pound for December copper, which ended Friday at $1.1580 a pound, up 1.6 cents.
[20664053] |He views the $1.10 to $1.12 range as a buying opportunity and considers the market oversold.

[20664054] |"I think the market could pop up to the $1.22 to $1.25 level without too much difficulty," he said.
[20664055] |But he said it won't climb further and he expects it to remain in a trading range between $1.10 and $1.25.
[20664056] |He noted that the equity markets will set the tone for the industrial metals this week and traders should keep an eye on Wall Street.

[20664057] |William O'Neill, research director for Elders Futures Inc. in New York, said for a rally to occur, there must be demand from the Far East.
[20664058] |He added that talk of strike settlements at producing mines has been fully discounted.
[20664059] |However, to resume the bull trend, according to Mr. O'Neill, copper would have to close over $1.19.
[20664060] |He said there are two reports this week that might affect prices: the purchasing managers report on Wednesday and the unemployment report on Friday.

[20664061] |Precious Metals

[20664062] |Friday's strong price gains confirmed a turnaround in the precious metals markets, according to PaineWebber's Mr. Frawley.
[20664063] |"Most traders will be looking to buy {on} pullbacks," he said.

[20664064] |He thought the moves in the metals last week were most influenced by the uncertainty in the equity and other financial markets.
[20664065] |According to Mr. Frawley, floor traders say there is good support for December gold in the $374 to $375 per ounce area, around $5.20 an ounce for December silver and in the $485 to $490 an ounce range for January platinum.

[20664066] |William O'Neill, research director for Elders Futures Inc. in New York, said the price action for all of last week is the best he has seen on a weekly basis in more than a year.
[20664067] |He said last week's activity in gold could portend a move to $390 an ounce for the December contract.

[20664068] |He also said traders should keep an eye on the stock market, because "if the stock market rallies, that could spell trouble for the precious metals."

[20664069] |He said traders should be on the lookout for how metals producers react to this rally.
[20664070] |"I expect to see some selling, but will they kill this one as they have every rally in the recent past" by selling and locking in prices for their production?
[20664071] |He noted that for the first time in months there was some light investor interest in the metals.

[20664072] |Grains And Soybeans

[20664073] |Prices this week will likely be dominated by reports on the progress of the corn and soybean harvest as well as by speculation about more purchases of U.S. crops by the Soviet Union.

[20664074] |In recent weeks, warm and dry weather has sped the Midwest harvest and that is permitting farmers to rebuild the stockpiles that were cut by the 1988 drought.
[20664075] |If the weather allowed farmers to work in their fields over the weekend, many Midwest grain elevators will probably sell futures contracts today at the Chicago Board of Trade in order to hedge their weekend purchases from farmers.
[20664076] |That selling of futures contracts by elevators is what helps keep downward pressure on crop prices during the harvest.

[20664077] |Traders will also watch for whether the Soviet Union continues its traditional fall buying of U.S. grain.
[20664078] |So far this month, the Soviets have bought about 7.2 million metric tons of U.S. corn.

[20664079] |There may be some activity in soybean prices this week as investors try to get rid of the contract for November delivery.
[20664080] |Investors usually don't want to take physical delivery of a contract, preferring instead to profit from its price swings and then end any obligation to take delivery or make delivery as it nears expiration.

[20665001] |Employees of the Globe and Mail, a Thomson Corp. newspaper in Toronto, voted to accept a tentative contract agreement Saturday, averting a strike at Canada's leading daily.

[20665002] |Under the terms of the three-year contract, similar to one reached at Torstar Corp. 's Toronto Star newspaper earlier this month, the 500 Globe and Mail workers will see a raise of 8% in the contract's first year and 7% in each of the following two years.

[20665003] |Lorne Slotnick, vice chairman of the Southern Ontario Newspaper Guild, the union representing the workers, said Thomson made significant concessions in the final round of talks.
[20665004] |In addition to wage increases, the union negotiated improved vacation plans, benefit packages and pension plans, Mr. Slotnick said.

[20665005] |He said more than 70% of the bargaining unit voted in favor of the agreement.

[20666001] |Wall Street is just about ready to line the bird cage with paper stocks.

[20666002] |For three years, a healthy economy and the export-boosting effects of a weak dollar propelled sales and earnings of the big paper companies to record levels.
[20666003] |As the good times rolled they more than doubled their prices for pulp, a raw material used in all sorts of paper, to $830 a metric ton this past spring from $380 a ton at the start of 1986.

[20666004] |But now the companies are getting into trouble because they undertook a record expansion program while they were raising prices sharply.
[20666005] |Third-quarter profits fell at several companies.

[20666006] |"Put your money in a good utility or bank stock, not a paper company," advises George Adler of Smith Barney.

[20666007] |Other analysts are nearly as pessimistic.
[20666008] |Gary Palmero of Oppenheimer & Co. expects a 30% decline in earnings between now and 1991 for "commodity-oriented" paper companies, which account for the majority of the industry.
[20666009] |Robert Schneider of Duff & Phelps sees paper-company stock prices falling 10% to 15% in 1990, perhaps 25% if there's a recession.

[20666010] |Paper companies concede that business has been off recently.
[20666011] |But they attribute much of the weakness to customer inventory reductions.
[20666012] |Generally they maintain that, barring a recession and a further strengthening of the dollar against foreign currencies, the industry isn't headed for a prolonged slump.
[20666013] |"It won't be an earthshaking drop," a Weyerhaeuser spokesman says.

[20666014] |Last week Mr. Adler lowered his rating from hold to "avoid" on Boise Cascade, Champion International, Great Northern Nekoosa, International Paper, Louisiana Pacific and Weyerhaeuser.
[20666015] |Oppenheimer's Mr. Palmero, meanwhile, is steering clear of Gaylord Container, Stone Container and Federal Paper Board.
[20666016] |Mr. Schneider is cool to Georgia Pacific and Abitibi-Price.
[20666017] |Lawrence Ross of PaineWebber would avoid Union Camp.

[20666018] |The companies in question believe the analysts are too pessimistic.
[20666019] |Great Northern Nekoosa said, "The odds of the dire predictions about us being right are small."
[20666020] |International Paper emphasizes that it is better positioned than most companies for the coming overcapacity because its individual mills can make more than one grade of paper.

[20666021] |A Boise-Cascade spokesman referred to a speech by Chairman John Fery, in which he said that markets generally are stable, although some risk of further price deterioration exists.

[20666022] |Stone Container Chairman Roger Stone said that, unlike for some other paper products, demand for Stone's principal commodity, unbleached containerboard, remains strong.
[20666023] |He expects the price for that product to rise even more next year.

[20666024] |Gaylord Container said analysts are skeptical of it because it's carrying a lot of debt.
[20666025] |Champion International said, "We've gotten our costs down and we're better positioned for any cyclical downturn than we've ever been."

[20666026] |Louisiana Pacific and Georgia Pacific said a number of other analysts are recommending them because of their strong wood-products business.

[20666027] |Federal Paper Board said, "We're not as exposed as the popular perception of us."
[20666028] |The company explained that its main product, bleached paperboard, which goes into some advertising materials and white boxes, historically doesn't have sharp price swings.

[20666029] |Because the stock prices of some paper companies already reflect an expected profit slump, PaineWebber's Mr. Ross says he thinks that next year the share prices of some companies may fall at most only 5% to 10%.
[20666030] |A company such as Federal Paper Board may be overly discounted and looks "tempting" to him, he says, though he isn't yet recommending the shares.

[20666031] |Wall Street isn't avoiding everything connected with paper.
[20666032] |Mr. Palmero recommends Temple-Inland, explaining that it is "virtually the sole major paper company not undergoing a major capacity expansion," and thus should be able to lower long-term debt substantially next year.

[20666033] |A Temple-Inland spokesman said the company expects record earnings in 1989, and "we're still pretty bullish" on 1990.

[20666034] |The analysts say their gloomy forecasts have a flip side.
[20666035] |Some take a warm view of consumer-oriented paper companies, which buy pulp from the commodity producers and should benefit from the expected declines in pulp prices.
[20666036] |Estimates on how much pulp prices will fall next year currently run between $150 and $250 a metric ton.

[20666037] |Analysts agree that the price drop should especially benefit the two big tissue makers, Scott Paper and Kimberly-Clark.
[20666038] |A spokesman for Scott says that assuming the price of pulp continues to soften, "We should do well.

[20667001] |Shoney's Inc. said it will report a write-off of $2.5 million, or seven cents a share, for its fourth quarter ended yesterday.
[20667002] |The restaurant operator cited transaction costs from its 1988 recapitalization as a result of a $160 million restructuring of its bank debt.

[20667003] |The write-off will be reported as an extraordinary item in the company's 1989 operating results.

[20667004] |In addition, the effective interest rate on the $410 million of total remaining bank debt after the restructuring is 10.66%.
[20667005] |The combined effect of these changes is expected to save the company about $4 million in interest expenses next year, or six cents a share.

[20667006] |Shoney's said the latest restructuring affected bank indebtedness that was incurred to finance $585 million of the company's $728 million recapitalization that took place in

[20667007] |The company has made payments of $175 million against the original $585 million of bank debt incurred in connection with the recapitalization.
[20667008] |These payments consisted of $54 million in scheduled payments and $121 million in prepayments, funded by $82.8 million from operating cash flow, zero-coupon subordinated debt and assets sales.

[20668001] |ABB Asea Brown Boveri B.V. said it signed a contract for the largest-ever power plant order in the Netherlands.

[20668002] |ABB said the contract, signed with the Dutch utility N.V. Energieproduktiebedrijf UNA, is valued in excess of $200 million.
[20668003] |The accord is for a turbogenerator plant at the coal-fired power station Hemweg in Amsterdam.
[20668004] |ABB Asea Brown Boveri is the Dutch unit of the Swedish-Swiss electrical engineering group ABB Asea Brown Boveri AG.

[20668005] |ABB said a significant portion of the order will be placed with Dutch subcontractors, adding that a group has been set up for this purpose.

[20668006] |The Dutch utility firm serves the Amsterdam and Utrecht areas.
[20668007] |The planned turbogenerator plant is expected to go into operation in 1994.

[20669001] |Nissan Motor Co. expects net income to reach 120 billion yen (U.S. $857 million) in its current fiscal year, up from 114.6 billion yen in the previous year, Yutaka Kume, president, said.

[20669002] |Mr. Kume made the earnings projection for fiscal 1990, ending next March 31, in an interview with U.S. automotive writers attending the Tokyo Motor Show.

[20669003] |The executive said that the anticipated earnings increase is fairly modest because Nissan is spending heavily to bolster its dealership network in Japan and because of currency-exchange fluctuations.

[20669004] |During the next decade, Mr. Kume said, Nissan plans to boost overseas vehicle production sufficiently to account for a majority of sales outside Japan.
[20669005] |Last year, Mr. Kume said, Nissan exported slightly over one million vehicles, and produced 570,000 cars and trucks at its factories in North America, Europe and Australia.
[20669006] |But by 1992, he added, Nissan will build one million vehicles a year outside Japan, or sufficient to equal exports.

[20669007] |"By the end of the 1990s," he said, "we want to be producing roughly two vehicles overseas for every vehicle that we export from Japan."
[20669008] |That will involve a substantial increase in overseas manufacturing capacity, he acknowledged, but didn't provide specific details.

[20670001] |National Intergroup Inc. said it expects to report a charge of $5.3 million related to the sale of its aluminum unit's extrusion division for the third quarter.

[20670002] |The company said it has agreed to sell the extrusion division for $15 million to R.D. Werner Co., a closely held firm based in Greenville, Pa.

[20670003] |The charge is offset by an after-tax gain of about $30 million in the quarter from the previously announced pact to sell National Aluminum's rolling division.

[20670004] |National Intergroup in the year-ago third quarter earned $22.5 million, or 97 cents a share, including a gain of $18 million from the sale of a steel tube company.
[20670005] |Revenue was $778.6 million.

[20670006] |The company also said it continues to explore all options concerning the possible sale of National Aluminum's 54.5% stake in an aluminum smelter in Hawesville, Ky.

[20670007] |The sale of the extrusion division is subject to audit adjustments for working capital changes through the closing.

[20670008] |The agreement also provides for potential payments of additional proceeds to National Aluminum over the next two years, depending on the plant's shipping levels.

[20670009] |The extrusion unit produces bare and painted custom extrusions for building products and construction industries.
[20670010] |In fiscal 1989, it had sales of about $40 million and an operating loss of $1.5 million.

[20671001] |The municipal bond market is bracing for tough times through the end of the year as it struggles to absorb an oversupply of bonds and two of its best customers turn into sellers.

[20671002] |Commercial banks and property/casualty insurers, which together own about 36% of all municipal bonds, have been dumping their securities for weeks.
[20671003] |Last week, traders said, there were three institutional sellers for every buyer.

[20671004] |"Every day we're getting new bid lists" from would-be sellers, one trader said.
[20671005] |"Most dealers cannot continue to absorb this supply."

[20671006] |As a result, yields on long-term muni bonds now stand at about 95% of long-term Treasury yields, the highest such level in more than two years.

[20671007] |"There is incredible negative psychology building in the market," said Donna Avedisian, a vice president at Merrill Lynch & Co.
[20671008] |"People are very concerned about who is going to step up to the plate and buy municipal bonds in the absence of institutional buyers."
[20671009] |The yield on a group of 25 revenue bonds compiled by the Bond Buyer, a trade publication, now exceeds 7.50%.

[20671010] |At this week's New York City bond sale, traders expect yields on the 20-year New York bonds to nearly match the 7.9% yield on 30-year Treasury bonds.
[20671011] |For an investor in the 28% federal tax bracket, 7.9% tax-free is the same as 10.38% on a taxable investment.
[20671012] |That's a taxable-equivalent yield nearly three percentage points more than the current yield on 30-year Treasury bonds.
[20671013] |How quickly things change.
[20671014] |This past summer, investors' appetite for municipal bonds seemed insatiable.
[20671015] |Individuals eager for tax-free income drove up bond prices, making state and local government debt one of the best-performing types of fixed-income investments during the period.

[20671016] |But while analysts say that municipal bonds still offer good value, you wouldn't know it by the way institutional investors are rushing to dump their holdings.

[20671017] |Bond market analysts say the institutional selling was triggered by several factors.
[20671018] |Big banks such as Chemical Bank and Chase Manhattan, which have been taking heavy charges to expand their Third World loan-loss reserves, aren't looking for tax-exempt income.
[20671019] |"We don't need the shelter of tax-free bonds," said a spokeswoman at Chemical.

[20671020] |In recent weeks, traders said, Chemical has sold more than $1 billion of tax-free bonds.
[20671021] |The spokeswoman confirmed that the bank has significantly reduced its muni holdings, but couldn't immediately confirm the amount.

[20671022] |Insurance companies are rushing to sell before the end of the year, when some of their tax benefits associated with municipal bonds will be phased out.
[20671023] |There is speculation that property/casualty firms will sell even more munis as they scramble to raise cash to pay claims related to Hurricane Hugo and the Northern California earthquake.

[20671024] |Fundamental factors are at work as well.
[20671025] |Muni bond holders are worried about the impact of a slowing economy on tax revenue, at a time when many state and local governments already face budget deficits and huge spending needs.
[20671026] |The recent natural disasters, and the need of many other cities to rebuild crumbling infrastructure, suggests that supply of new issues will continue to rise sharply -- even as demand tapers off.

[20671027] |"There is just so much going on that it's difficult to pick just one factor that's driving the market," said Ronald Ian Heller, vice president at First Chicago Capital Markets Inc., a subsidiary of First Chicago Corp.

[20671028] |Some of the recent selling could actually be considered a positive sign.
[20671029] |Mutual funds, for example, are said to be selling existing municipal bonds to raise cash to buy new issues.
[20671030] |Because municipal bonds yields have risen at a time when interest rates generally have fallen, some portfolio managers are assuming that bonds bought now will appreciate in value as the municipal bond market rebounds.

[20671031] |Ms. Avedisian believes that the mutual funds are selling muni bonds that have a negative convexity -- those that have appreciated in price slowly relative to the decline in interest rates.
[20671032] |Such bonds, she says, are those that are nearing their call date.

[20671033] |But traders said the market's tone could pick up this week if New York City's $787 million bond offering goes well.
[20671034] |The offering will include $729 million of 20-year tax-exempt bonds and $57.8 million of taxable bonds.
[20671035] |A few weeks ago, New York sold $750 million of tax-exempts.

[20671036] |New York City bonds have been beaten down for three straight weeks.
[20671037] |On Friday, some issues fell nearly one point, or close to $10 for each $1,000 face amount.

[20671038] |The sell-off in New York City bonds was triggered by concerns about the city's financial health and political uncertainty in view of the impending mayoral election.
[20671039] |The city's economy is growing weaker and expenditures are rising as tax revenue is falling.

[20671040] |"The city has issued so much supply recently that some people are getting a little concerned.
[20671041] |They'd like to see some other names in their portfolios," said Michael S. Appelbaum, first vice president at Shearson Lehman Hutton.

[20671042] |But he thinks investors may be overreacting to the market's problems.
[20671043] |Overall, he says, municipal prices are "very cheap" and represent an "excellent buying opportunity."

[20671044] |Friday's Market Activity

[20671045] |Treasury bonds fell sharply on confusion about this week's Treasury debt auction and rumors that a major Japanese investor was unloading large amounts of long-term bonds.

[20671046] |The Treasury's benchmark 30-year bond ended at a price of 102 2/32, down nearly 5/8 point from Thursday, or about $6.25 for each $1,000 face amount.
[20671047] |The issue's yield rose to 7.93% from 7.88%.

[20671048] |Late Thursday, the Treasury said it needed to raise $17 billion quickly and would do so by issuing new securities this week.

[20671049] |Credit market analysts expected the Treasury to cancel today's three-month and six-month sale and to sell $17 billion of cash management bills.

[20671050] |Instead, the Treasury announced it would sell $2 billion of 51-day cash management bills today and said that the weekly sale of $15.6 billion of three-month and six-month bills will take place today, as usual, but the sale will settle tomorrow instead of Thursday.

[20671051] |By moving the settlement date ahead, the Treasury can raise money under the $2.87 trillion debt ceiling that is in effect through tomorrow, after which it reverts to $2.8 trillion.

[20671052] |The market also was hurt by rumors that Nippon Kangyo Kakumaru, a Japanese brokerage firm, was unloading some of the 30-year bonds it recently purchased.
[20671053] |One dealer said the talk was that the firm sold about $500 million of bellwether 30-year bonds.

[20671054] |The firm is thought to have purchased up to $3 billion of 30-year bonds in a buying spree on Wednesday and the previous Thursday.

[20671055] |Dealers say the firm apparently has wanted to publicize its recent buying and subsequent selling of 30-year bonds by using Cantor Fitzgerald Securities Corp. as a broker.
[20671056] |Cantor provides price quotes to Telerate Systems Inc., a widely used electronic system.

[20671057] |Nippon Kangyo's moves puzzled traders and created confusion among potential investors, many of whom decided to stay out of the market.
[20671058] |As a result of its large-scale buying, some analysts now say that liquidity, or the ability to easily buy and sell, has been constrained in the benchmark Treasury bond issue.

[20671059] |In other markets:

[20671060] |-- The junk bonds of RJR Nabisco Inc. rallied Friday on news that the company is selling its candy bar brands to Nestle Foods Corp. for $370 million.

[20671061] |The sale price, which was above Wall Street expectations, sent many RJR securities up by one point.

[20671062] |"It shows that there are buyers of high-quality assets at high prices in today's market," said Robert Long, managing director and head of the high-yield research department at First Boston Corp.

[20671063] |Many of the RJR securities, which had been trading near their 52-week lows earlier in the session, bounced back after the company's announcement that it agreed to sell its Baby Ruth, Butterfinger and Pearson candy businesses to Nestle Foods, a unit of the Swiss-based food concern.
[20671064] |The sale, expected to close before the end of the year, also includes a manufacturing plant in Franklin Park, Ill.

[20671065] |RJR's subordinated discount debentures of 2001, which traded as low as 45 Friday, finished the day at 46 7/8.
[20671066] |Other RJR securities also closed higher.
[20671067] |RJR Holdings Capital Corp. 's 14.7% convertible pay-in-kind securities maturing in 2009 closed 1/2 higher at 86 1/2 after trading as low as 85 1/4.

[20671068] |Most other junk bond issues finished a quarter-point lower on rumors that Campeau Corp. was filing for protection from creditors under Chapter 11 of the Bankruptcy Code.
[20671069] |A spokesman for Campeau called the rumors "ridiculous."
[20671070] |Most investment-grade bonds fell 3/8 to 1/2 point.

[20671071] |-- Mortgage securities fell 7/32 to 8/32 but held up better than intermediate Treasurys.

[20671072] |Dealers said some defensive investors were buyers of mortgages, as were dealers seeking collateral for REMICs priced earlier last week.
[20671073] |Among major issues, Government National Mortgage Association 9% securities for November delivery ended at 98 12/32, down 8/32 point for a yield of about 9.35% to a 12-year average life assumption.

[20672001] |The premium the elderly pay for coverage of doctor's bills under Part B of the Medicare health insurance plan will rise to $29 a month in 1990 from $27.90, the Department of Health and Human Services said.

[20672002] |In addition, a second Part B premium to cover the cost of the new program of insurance against catastrophic illness will rise to $4.90 a month from $4, if Congress doesn't change the program.

[20672003] |The House has voted to repeal most of the Catastrophic Coverage Act of 1988, however, which would end the monthly catastrophic-care premium, as well as an unpopular income surtax paid by about 40% of the wealthier Medicare beneficiaries.

[20672004] |Under a less-sweeping Senate plan, the catastrophic-care monthly premium would continue, rising to $4.90 next year, but the surtax would be abolished.

[20672005] |Medicare Part B pays 80% of a beneficiary's allowable doctor's bills after an annual deductible of $75.
[20672006] |The Catastrophic Coverage Act would add a stop-loss provision next year to limit the maximum beneficiaries must pay for doctors.
[20672007] |Both the House and Senate bills to reduce the cost and coverage of the catastrophic-care plan would eliminate the cap on doctor's bills.

[20672008] |If the House prevails in its efforts to kill the catastrophic-care plan, the monthly Part B premium will be $29 next year.
[20672009] |If the Senate plan prevails, the premium will be $33.90, with the additional $4.90 going to pay for expanded hospital coverage under Part A of Medicare.
[20672010] |Most of Part A's costs are paid by a payroll tax on workers and employers.

[20673001] |Lockheed Corp. said it will trim its Aeronautical Systems work force in California and Georgia by several hundred workers, reflecting the defense industry's decline.

[20673002] |The Lockheed unit has 24,000 workers; it expects to make the cuts through a combination of furloughs, attrition and retirements.
[20673003] |The reductions should be complete by the end of the year, a spokesman said, adding that the exact number to be cut hasn't been determined.

[20673004] |Lockheed reported a $32 million third-quarter net loss, largely because of cost overruns on fixed-price military contracts.

[20673005] |Noting that other defense contractors are complaining of losses on such contracts, analysts say taxpayers have been getting illusionary bargains on weapons systems in recent years.

[20673006] |Defense contractors "cannot continue to get contracts on that basis," said Howard Rubel, an analyst with C.J. Lawrence, Morgan Grenfell Inc. in New York.
[20673007] |"The pain is too great.

[20674001] |Jim Pattison Industries Ltd., one of a group of closely held companies owned by entrepreneur James Pattison, said it "intends to seek control" of 30%-owned Innopac Inc., a Toronto packaging concern.

[20674002] |Jim Pattison Industries, a holding company with annual sales of about C$1.9 billion, largely from car dealerships and grocery stores, didn't elaborate on the statement, and a company official declined further comment.

[20674003] |The company said it currently holds about 4.2 million of Innopac's 13.8 million common shares outstanding, which have an aggregate market value of about 137.8 million Canadian dollars (US$117.3 million).

[20674004] |Separately, Innopac reported a fourth-quarter loss of about C$2.6 million, or 18 Canadian cents a share, reflecting inventory write-downs.
[20674005] |The results made net income for the year ended Aug. 31 C$2.7 million, or 20 Canadian cents a share, down from C$9.7 million, or 70 Canadian cents a share last year.
[20674006] |Revenue was C$291.6 million, up from C$252 million in 1988.

[20674007] |Martin Fabi, Innopac's president and chief executive, said Innopac viewed Mr. Pattison's decision to seek control as a "very positive" move.
[20674008] |"I'm happy that he feels positively about our company," he said.
[20674009] |Mr. Fabi wouldn't say directly whether Mr. Pattison has disclosed potential terms for his planned bid for control.

[20674010] |Among other things, Innopac is involved in recycling polystyrene foam products that are often used by fast food chains, such as McDonald's Corp., for food packaging.
[20674011] |A joint venture involving units of Innopac and Mobil Corp. earlier this year opened the first U.S. polystyrene recycling plant, in Leominster, Mass.

[20675001] |PROGRAM TRADING is being curbed by more securities firms, but big institutional investors are expected to continue the practice, further roiling the stock market.
[20675002] |Bowing to criticism, Bear Stearns, Morgan Stanley and Oppenheimer joined PaineWebber in suspending stock-index arbitrage trading for their own accounts.
[20675003] |Still, stock-index funds are expected to continue launching big programs through the market.

[20675004] |Several Big Board firms are organizing to complain about program trading and the exchange's role in it.
[20675005] |The effort is being led by Contel.

[20675006] |Personal spending rose 0.2% in September, the smallest gain in a year.
[20675007] |The slowdown raises questions about the economy's strength because spending fueled much of the third-quarter GNP growth.
[20675008] |Meanwhile, personal income edged up 0.3%.

[20675009] |Factory owners are buying new machinery at a healthy rate this fall, machine-tool makers say.
[20675010] |But weak car sales raise questions about future demand from the auto sector.

[20675011] |Southern's Gulf Power unit may plead guilty this week to charges it illegally steered company money to politicians through third parties.
[20675012] |The tentative pact would resolve part of a broad investigation of the Atlanta-based company in the past year.

[20675013] |LIN Broadcasting and BellSouth sweetened their plan to merge cellular phone operations, offering LIN holders a special $42-a-share payout.
[20675014] |But the new pact will force huge debt on the new firm and could still fail to thwart rival suitor McCaw Cellular.

[20675015] |Unisys posted a $648.2 million loss for the third quarter as it moved quickly to take write-offs for various problems and prepare for a turnaround.
[20675016] |But some analysts wonder how strong the recovery will be.

[20675017] |RJR Nabisco agreed to sell three candy businesses to Nestle for $370 million.
[20675018] |The accord helps RJR pay off debt and boosts Nestle's 7% share of the U.S. candy market to 12%.

[20675019] |GM and Ford are expected to go head to head in the markets to buy up rival 15% stakes in Jaguar.
[20675020] |GM confirmed it received U.S. antitrust clearance to boost its holding.

[20675021] |Sansui Electric agreed to sell a 51% stake to Polly Peck of Britain for $110 million.
[20675022] |Still, analysts said the accord doesn't suggest Japan is opening up to more foreign takeovers.

[20675023] |Kellogg suspended work on a $1 billion cereal plant, indicating a pessimistic outlook by the cereal maker, which has been losing market share.

[20675024] |Insurers could see claims totaling nearly $1 billion from the San Francisco earthquake, far less than the $4 billion from Hurricane Hugo.

[20675025] |Nashua strengthened its poison-pill plan after announcing a Dutch firm is seeking to buy up to 25% of the New Hampshire copier company.

[20675026] |Mobil is cutting back its U.S. oil and gas exploration and production group by up to 15% as part of a restructuring of the business.

[20675027] |Markets --

[20675028] |Stocks: Volume 170,330,000 shares.
[20675029] |Dow Jones industrials 2596.72, off 17.01; transportation 1190.43, off 14.76; utilities 215.86, up 0.19.

[20675030] |Bonds: Shearson Lehman Hutton Treasury index 3406.31, off

[20675031] |Commodities: Dow Jones futures index 129.49, up 0.27; spot index 130.80, off 0.24.

[20675032] |Dollar: 141.65 yen, off 0.45; 1.8300 marks, off 0.0100.

[20676001] |(During its centennial year, The Wall Street Journal will report events of the past century that stand as milestones of American business history.)

[20676002] |Thomas Jefferson sold Congress on the idea of the decimal system for currency, thus saving Americans the headaches of pounds, shillings and pence.
[20676003] |But he struck out with the decimal system of metric weights and measures the French had invented.
[20676004] |Instead, Congress opted for the inches, feet and yards the colonists had brought with them.

[20676005] |Americans didn't dislike metrics; they simply ignored them.
[20676006] |Scientists felt differently.
[20676007] |In 1807, the Swiss mathematician who headed the U.S. Coast and Geodetic Survey made an "iron meter" that he had brought from Europe the standard of measure.
[20676008] |By the end of the century scientists had embraced the system.

[20676009] |Businessmen took their cue from the engineers.
[20676010] |When Congress finally passed the Metric Conversion Act in 1975, industry was far ahead.
[20676011] |Because the law made compliance voluntary, it inspired little more than jokes.
[20676012] |(The press had a field day with questions about what would happen to "six-footer," "yardstick" and "inchworm.")

[20676013] |Today, though the public is barely aware, much of U.S. industry, particularly companies manufacturing or selling overseas, have made metrics routine.
[20676014] |General Motors, for example, uses metric terms for its automobile bodies and power trains.
[20676015] |(In auto advertising, however, items such as wheelbases are still described in inches.)
[20676016] |Farm-machine makers such as Caterpillar and Deere work in the metric system.
[20676017] |The liquor industry went metric 10 years ago.

[20676018] |The Pentagon has led the charge, particularly as military alliances spread world-wide.
[20676019] |New weapons systems will be around until the next century, notes John Tascher, the Defense Department's metric coordinator.

[20676020] |Still, like the auto makers, when dealing with Mr. Everyman the Pentagon sticks to the tried and true.
[20676021] |Soldiers and sailors are still measured in inches and pounds.

[20677001] |Whittle Communications L.P., which for months has fought a public relations battle with education leaders, said it has signed 500 schools in 24 states to subscribe to the controversial Channel One news program and its sister programs.

[20677002] |Channel One, a satellite-delivered daily program supported by advertising, is scheduled to be launched next March.
[20677003] |Whittle said its field staff signed up the 500 schools in 238 school districts after only eight weeks and company executives now expect to reach their start-up goal of 1,000 schools before the end of this year.

[20677004] |Christopher Whittle, chairman of the Knoxville, Tenn., media company that is 50% owned by Time Warner Inc., said that by December 1990 he expects to have Channel One installed in about 8,000 schools with a potential audience of six million.
[20677005] |Installation of the TV system, which includes providing free 19-inch TV sets in classrooms, begins in January.

[20677006] |"What we've done in eight weeks shows we won't have enormous difficulties getting to the place we want to be," said Mr. Whittle.
[20677007] |He said his sales force is signing up schools at the rate of 25 a day.

[20677008] |In California and New York, state officials have opposed Channel One.
[20677009] |Mr. Whittle said private and parochial schools in both states will be canvassed to see if they are interested in getting the programs.

[20677010] |Subscribing schools get the 12-minute daily Channel One news program, whose four 30-second TV ads during each show have drawn protests from educators.

[20677011] |Subscribers also get the Classroom Channel, which will feature ad-free educational programming similar to some public-TV shows, and the Educator's Channel, which will offer instructional programming for teachers and school administrators and will be supported by advertising.

[20677012] |Whittle has met some resistance.
[20677013] |The Educational Network, as Mr. Whittle has named the three programs, has been offered to 1,290 school districts and Whittle continues to negotiate with 919 districts.
[20677014] |About 10% of the school districts approached have rejected the network.

[20677015] |Mr. Whittle said that so far, three of the six schools that carried the program in a five-week test last spring have subscribed to the program.
[20677016] |One of the test schools, Withrow High School in Cincinnati, rejected the project.

[20677017] |John Bruner, associate director of communications for Cincinnati Public Schools, said Channel One was rejected because students watching the program didn't fare particularly better on a 28-question current events quiz than a control school without the program and school absences were almost unchanged during the period when the program was being aired.

[20677018] |"The number of correct responses was 45% on the test and school absences didn't change much," said Mr. Bruner.
[20677019] |"The pilot program was received well (by teachers and students), but there wasn't reason enough to sign up.
[20677020] |We even invited the public to stop by and see the program, but there wasn't much interest."

[20677021] |Advertisers are showing interest.
[20677022] |Last month, Whittle announced it had sold $150 million in advertising time on the network to national advertisers.
[20677023] |Mr. Whittle Friday said several more advertisers have been added.
[20677024] |Whittle is spending $150 million initially to launch the network.
[20677025] |Installation of satellite dishes, TVs and videocassette equipment will cost the company about $20,000 per school, Mr. Whittle said.

[20678001] |The following U.S. Treasury, corporate and municipal offerings are tentatively scheduled for sale this week, according to Dow Jones Capital Markets Report:

[20678002] |$15.6 billion of three-month and six-month bills.
[20678003] |$2 billion of 51-day cash management bills.

[20678004] |Associated Natural Gas Corp. -- 1.4 million common shares, via Dillon Read & Co.

[20678005] |B & H Crude Carriers Ltd. -- Four million common shares, via Salomon Brothers Inc.

[20678006] |Chemical Banking Corp. -- 14 million common shares, via Goldman, Sachs & Co.

[20678007] |Chemex Pharmaceuticals Inc. -- 1.2 million units consisting of two shares of common stock and one common warrant, via PaineWebber Inc.

[20678008] |Comcast Corp. -- $150 million convertible debentures, via Merrill Lynch Capital Markets.

[20678009] |Energy Service Co. -- 9.5 million common shares, via Alex.
[20678010] |Brown & Sons Inc.

[20678011] |Harmonia Bancorp Inc. -- 4,750,000 common shares, via Shearson Lehman Hutton Inc.

[20678012] |Healthsource Inc. -- Two million common shares, via Kidder, Peabody & Co.

[20678013] |Immune Response Corp. -- Three million common shares, via Merrill Lynch.

[20678014] |Marsam Pharmaceuticals Inc. -- 1.3 million common shares, via Smith Barney Harris Upham & Co.

[20678015] |Potash Corp. of Saskatchewan Inc. -- 13 million common shares, via Merrill Lynch.

[20678016] |Municipal

[20678017] |New Jersey Wastewater Treatment Trust -- $75,075,000 of various bonds, including $40.86 million Wastewater Treatment insured bonds, Series 1989A, and $34,215,000 Wastewater Treatment bonds, Series 1989B, via competitive bid.

[20678018] |Eastern Municipal Water District, Calif. -- $56,565,000 of 1989 certificates of participation (treatment plant projects), via competitive bid.

[20678019] |California Health Facilities Financing Authority -- $114 million of health facility revenue bonds (Catholic Healthcare West), Series 1989A, via a First Boston Corp. group.

[20678020] |Detroit -- $130 million of distributable state aid bonds, via a Chemical Securities Inc. group.

[20678021] |Maryland Community Development Administration, Department of Housing and Community Development -- $80 million of single-family program bonds, 1989 4th and 5th Series, via a Merrill Lynch group.

[20678022] |Matagorda County Navigation District No. 1, Texas -- $70,315,000 of pollution control revenue Alternative Minimum Tax (AMT) bonds (South Texas Project Units No. 1 and 2), via a Goldman Sachs group.

[20678023] |New York City -- $786,860,000 of bonds, Fiscal 1990 Series C and D, including $729.04 million tax-exempt bonds and $57.82 million taxable bonds, via a Goldman Sachs group.

[20678024] |Santa Ana Redevelopment Agency -- $107 million of tax allocation bonds, 1989 Series A-D, via a Donaldson Lufkin & Jenrette Securities Corp. group.

[20678025] |Pending Shelby County, Tenn. -- $80 million of refunding bonds, Series 1989, via a First Tennessee Bank group.

[20679001] |Hewlett-Packard Co. said it raised its stake in Octel Communications Corp. to 8.5% of the common shares outstanding.

[20679002] |In a Securities and Exchange Commission filing, Hewlett-Packard said it now holds 1,384,119 Octel common shares, including 100,000 shares bought from Aug. 26 to Oct. 20 for $23.31 to $24.25 a share.

[20679003] |Hewlett-Packard, a Palo Alto, Calif., computer company, said it acquired the stock "to develop and maintain a strategic partnership in which each company remains independent while working together to market and sell their products."

[20679004] |Octel said the purchase was expected.
[20679005] |Hewlett-Packard affirmed it doesn't plan to obtain control of Octel, a Milpitas, Calif., maker of voice-processing systems.

[20679006] |According to the filing, Hewlett-Packard acquired 730,070 common shares from Octel as a result of an Aug. 10, 1988, stock purchase agreement.
[20679007] |That accord also called for Hewlett-Packard to buy 730,070 Octel shares in the open market within 18 months.
[20679008] |In addition, Hewlett-Packard acquired a two-year option to buy an extra 10%, of which half may be sold directly to Hewlett-Packard by Octel.

[20680001] |Following is a weekly listing of unadited net asset values of publicly traded investment fund shares, reported by the companies as of Friday's close.
[20680002] |Also shown is the closing listed market price or a dealer-to-dealer asked price of each fund's shares, with the percentage of difference.

[20680003] |Closed End Bond Funds

[20680004] |Flexible Portfolio Funds

[20680005] |Specialized Equity and Convertible Funds

[20680006] |a-Ex-dividend.
[20680007] |b-As of Thursday's close.
[20680008] |c-Translated at Commercial Rand exchange rate.
[20680009] |e-In Canadian dollars.
[20680010] |f-As of Wednesday's close.
[20680011] |z-Not available.

[20681001] |Wham! Bam!
[20681002] |Twice in two weeks the unraveling of the on-again, off-again UAL buy-out slammed the stock market.

[20681003] |Now, stock prices seem to be in a general retreat.
[20681004] |Since peaking at 2791.41 on Oct. 9, the Dow Jones Industrial Average has lost 194.69 points, or 7%, closing Friday at 2596.72, down 17.01.
[20681005] |The number of issues falling on the New York Stock Exchange each day is eclipsing the number of gainers.
[20681006] |And the number of stocks hitting new lows far outstrips the number setting new highs.

[20681007] |But why should an iffy $6.79 billion leveraged buy-out deal shake the foundations of the entire stock market?

[20681008] |Opinions vary about how important the UAL deal was to the market's health, but analysts generally agree that the market gyrations created as the UAL plan crumbled revealed a fundamental change in investor psychology.

[20681009] |"If this had happened a few months ago when the atmosphere was still very positive it wouldn't have been greeted with anything like the impact it has had over the past two weeks," says Dennis Jarrett, a market strategist at Kidder Peabody.

[20681010] |There are, of course, analysts who view the near-panic that briefly swept through investors on Oct. 13 and again on Oct. 24 as momentary lapses of good judgment that have only temporarily undermined a healthy stock market.
[20681011] |Sure, price action is volatile and that's scary, but all-in-all stocks are still a good place to be, they suggest.

[20681012] |The reaction to the UAL debacle "is mindless," says John Connolly, chief market strategist at Dean Witter.
[20681013] |"UAL is a small deal as far as the overall market is concerned.
[20681014] |The only way you can make it a big deal is to draw linkages that just don't make sense."
[20681015] |He suggests, for example, that investors may have assumed that just because UAL couldn't get financing, no leveraged buy-outs can get financing.
[20681016] |Carried even further, some investors assumed that since leveraged buy-outs are the only thing propping up stock prices, the market would collapse if no more LBOs could be done.

[20681017] |"There will still be deals," argues Mr. Connolly.
[20681018] |"There may not be as many and the buyers may not get away with some of the things they've done in the past, but deals won't disappear."
[20681019] |He forecasts that the emphasis in mergers and acquisitions may soon return to what he calls "strategic deals, in which somebody is taking over a company not to milk the cash flow, but because it's a good fit."

[20681020] |And even without deals, Mr. Connolly figures the market would remain healthy.
[20681021] |He notes, for instance, that there hasn't been a merger or acquisition among the 30 stocks in the Dow Jones Industrial Average since 1986, yet that average only three weeks ago hit a record high.

[20681022] |"Those stocks are up because their earnings are up and their dividends are up," he says.

[20681023] |Even the volatility created by stock index arbitrage and other computer-driven trading strategies isn't entirely bad, in Mr. Connolly's view.
[20681024] |For the long-term investor who picks stocks carefully, the price volatility can provide welcome buying opportunities as short-term players scramble frantically to sell stocks in a matter of minutes.
[20681025] |"Who can make the better decision, the guy who has 10 seconds to decide what to do or the guy with all the time in the world?" he says.
[20681026] |"What on earth does the UAL deal have to do with the price of Walmart, which I was able to buy on Oct. 16 at a very attractive price?"

[20681027] |Kidder Peabody's Mr. Jarrett also sees some benefits to the stock market's recent drop.
[20681028] |"We've run into a market that was beginning to run out of steam and get frothy," he says.
[20681029] |"The balloon had been blown up so big that when somebody came along with a pin -- in this case the UAL deal -- we got a little pop."

[20681030] |The pop sobered up investors who had been getting a little too ebullient, says Mr. Jarrett.
[20681031] |"It provided an excuse for people to get back to reality and to look at the economic data, especially the third-quarter economic numbers, and to realize that we can't continue to gloss over what is going on in the junk bond market."

[20681032] |But he figures that at current levels the stock market is comfortably valued, even with the economy obviously slowing.
[20681033] |"Just because we've got some realism back in the market doesn't mean it's going lower from here," he says.
[20681034] |"The bottom line is that it's healthy to have this kind of sideways activity, especially after a 30% gain in stock values over the past 12 months."
[20681035] |He's now estimating that after a period of consolidation, the Dow Jones Industrial Average will once again forge new highs.

[20681036] |Maybe, maybe not.
[20681037] |Abby Joseph Cohen, a market strategist at Drexel Burnham Lambert, isn't nearly so sanguine about the market's chances of surging to new highs anytime soon.
[20681038] |Her view is that stock prices have three major props: merger and buy-out proposals, earnings and the economic outlook.
[20681039] |At current levels of economic activity and earnings, stocks are fairly valued, she says.
[20681040] |But any chance for prices to surge above fair value lies in the speculation that accompanies a vigorous merger and buy-out business, and UAL has obviously put a damper on that.
[20681041] |"Stocks aren't cheap anymore, there have been some judicial and legislative changes in the merger area and all of this changes the arithmetic of deals," she says.
[20681042] |"I'm not saying they've stopped altogether, but future deals are going to be structured differently and bids probably won't be as high."

[20681043] |But that's not the only problem for stocks.
[20681044] |The other two props -- earnings and the economic outlook -- are troubling, too.
[20681045] |"M&A is getting all the headlines right now, but these other things have been building up more gradually," she says.
[20681046] |Third-quarter earnings have been generally disappointing and with economic data showing a clear slowing, the outlook for earnings in the fourth quarter and all of 1990 is getting worse.

[20681047] |"There are a lot more downward than upward revisions and it looks like people are questioning corporate profits as a means of support for stock prices," she says.

[20681048] |With all this, can stock prices hold their own?
[20681049] |"The question is unanswerable at this point," she says.
[20681050] |"It depends on what happens.
[20681051] |If the economy slips into a recession, then this isn't a level that's going to hold."

[20681052] |Friday's Market Activity

[20681053] |Stock prices tumbled for a third consecutive day as earnings disappointments, a sluggish economy and a fragile junk bond market continued to weigh on investors.

[20681054] |The Dow Jones Industrial Average fell 17.01 points to 2596.72 in active trading.
[20681055] |Volume on the New York Stock Exchange totaled 170,330,000 shares.
[20681056] |Declining issues on the Big Board were far ahead of gainers, 1,108 to 416.
[20681057] |For the week the Dow Jones Industrial Average sank 92.42 points, or 3.4%.

[20681058] |Oil stocks escaped the brunt of Friday's selling and several were able to post gains, including Chevron, which rose 5/8 to 66 3/8 in Big Board composite trading of 2.4 million shares.
[20681059] |The stock's advance reflected ongoing speculation that Pennzoil is accumulating a stake in the company, according to Dow Jones Professional Investor Report.

[20681060] |Both companies declined to comment on the rumors, but several industry analysts told the Professional Investor Report they believed it was plausible that Pennzoil may be buying Chevron shares as a prelude to pushing for a restructuring of the company.

[20681061] |USX gained 1/2 to 33 3/8 on a report in Business Week magazine that investor Carl Icahn is said to have raised his stake in the oil and steel company to just about 15%.
[20681062] |Earlier this month, Mr. Icahn boosted his USX stake to 13.4%.

[20681063] |Elsewhere in the oil sector, Exxon rallied 7/8 to 45 3/4; Amoco rose 1/8 to 47; Texaco was unchanged at 51 3/4, and Atlantic Richfield fell 1 5/8 to 99 1/2.
[20681064] |Mobil, which said it plans to cut its exploration and production work force by about 8% in a restructuring, dropped 5/8 to 56 1/8.

[20681065] |The precious metals sector outgained other Dow Jones industry groups by a wide margin for the second consecutive session.
[20681066] |Hecla Mining rose 5/8 to 14; Battle Mountain Gold climbed 3/4 to 16 3/4; Homestake Mining rose 1 1/8 to 16 7/8; Lac Minerals added 5/8 to 11; Placer Dome went up 7/8 to 16 3/4, and ASA Ltd. jumped 3 5/8 to 49 5/8.

[20681067] |Gold mining stocks traded on the American Stock Exchange also showed strength.
[20681068] |Echo Bay Mines rose 5/8 to 15 7/8; Pegasus Gold advanced 1 1/2 to 12, and Corona Class A gained 1/2 to 7 1/2.

[20681069] |Unisys dropped 3/4 to 16 1/4 after posting a third-quarter loss of $4.25 a share, including restructuring charges, but other important technology issues were mixed.

[20681070] |Compaq Computer, which had lost 8 5/8 Thursday following a disappointing quarterly report, gained 5/8 to 100 5/8.
[20681071] |International Business Machines dropped 7/8 to 99 7/8.
[20681072] |Digital Equipment tacked on 1 1/8 to 89 1/8, and Hewlett-Packard fell 3/8 to 49 3/8.

[20681073] |Dividend-related trading swelled volume in Merrill Lynch, which closed unchanged at 28 3/8 as 2.7 million shares changed hands.
[20681074] |The stock has a 3.5% dividend yield and goes ex-dividend today.

[20681075] |Erbamont advanced 1 1/8 to 36 1/2 on 1.9 million shares.
[20681076] |Montedison, which owns about 72% of the company's common stock, agreed to buy the rest for $37 a share.
[20681077] |Himont, another majority-owned unit of Montedison, added 1 1/4 to 47 1/8.

[20681078] |Milton Roy jumped 2 to 18 3/8.
[20681079] |Crane said it holds an 8.9% stake in the company and may seek control.
[20681080] |Crane dropped 1 1/8 to 21 1/8.

[20681081] |Comprehensive Care, which terminated its agreement to merge with First Hospital, dropped 7/8 to 3 7/8.
[20681082] |The company's decision was made after First Hospital failed to obtain financing for its offer.

[20682001] |Federal investigators have identified the problem in last July's crash of a United Airlines flight in Iowa: a structural flaw that developed during the making of a titanium engine disk.

[20682002] |For several months, officials at the Federal Aviation Administration and the National Transportation Safety Board have suspected that a metallurgical flaw in the disk led to a crack that ultimately caused the tail engine to break apart in flight.
[20682003] |The explosion sent shards of metal flying, severing the DC-10's hydraulic or control systems, and led to the crash that killed 112 people.

[20682004] |But investigators could confirm their theory only after the recent retrieval of a big chunk of Flight 232's tail engine from a cornfield near the Sioux City Airport in Iowa.
[20682005] |The safety board will begin four days of hearings on the accident tomorrow in Sioux City.
[20682006] |Among the issues the board will examine is whether United Airlines, a unit of UAL Corp., should have been able to detect the cracks through maintenance checks.
[20682007] |The engine involved was a CF6-6 made by General Electric Co.

[20682008] |Anthony Broderick, the FAA's acting executive director for regulatory standards and compliance, said that recent tests of the failed engine disk indicate that a flaw -- known as "hard alpha" -- occurred in the titanium during its production almost 20 years ago.
[20682009] |He said there wasn't any way to detect the flaw at that time, and that the process has since been changed to decrease the chance that such flaws would occur.

[20682010] |The FAA already has ordered that all 232 disks made by the old process be removed from the planes and subjected to an ultrasonic test in a water-submersion chamber.
[20682011] |Such tests make the FAA confident that a Sioux City-type accident "won't happen again," said Mr. Broderick.
[20682012] |A spokesman for GE said that the company has been working with the FAA all along on this issue and "will comply fully with the required inspections."
[20682013] |But he also pointed out that the recalls will have no impact on GE's engine production.
[20682014] |The CF6-6 series engines aren't being manufactured any more; they are only being used in the DC-10 Series 10 planes currently in service, he said.

[20683001] |A frozen mountaintop in Tibet may offer an important clue about whether the Earth is warming perilously.

[20683002] |Researchers at Ohio State University and Lanzhou Institute of Glaciology and Geocryology in China have analyzed samples of glacial ice in Tibet and say temperatures there have been significantly higher on average over the past half-century than in any similar period in the past 10,000 years.

[20683003] |The ice samples are an important piece of evidence supporting theories that the Earth has warmed considerably in recent times, largely because of pollutants in the air, and will warm far more in the century ahead.
[20683004] |A substantial warming would melt some of the Earth's polar ice caps, raising the level of the oceans and causing widespread flooding of heavily populated coastal areas.

[20683005] |"If you can use data to reconstruct what happened in the past, you have much more confidence in predictions for the future," said Lonnie Thompson, a research scientist at Ohio State who dug for and analyzed the ice samples.

[20683006] |To compare temperatures over the past 10,000 years, researchers analyzed the changes in concentrations of two forms of oxygen.
[20683007] |These measurements can indicate temperature changes, researchers said, because the rates of evaporation of these oxygen atoms differ as temperatures change.

[20683008] |Analysis of ice from the Dunde ice cap, a glacial plateau in Tibet 17,000 feet above sea level, show that average temperatures were higher in 1937-87 than in any other 50-year period since before the last Ice Age, Mr. Thompson said.
[20683009] |Some climate models project that interior regions of Asia would be among the first to heat up in a global warming because they are far from oceans, which moderate temperature changes.

[20683010] |But the ice-core samples aren't definitive proof that the so-called greenhouse effect will lead to further substantial global heating, Mr. Thompson acknowledged.
[20683011] |According to greenhouse theories, increased carbon dioxide emissions, largely caused by burning of fossil fuels, will cause the Earth to warm up because carbon dioxide prevents heat from escaping into space.

[20683012] |Skeptics say that if that's the case, temperatures should have risen fairly uniformly over the past century, reflecting the increase in carbon dioxide.
[20683013] |Instead, the Dunde ice-core record shows increasing temperatures from 1900 through the early 1950s, decreasing temperatures from the late 1950s through the mid-1970s, then higher temperatures again through last year.
[20683014] |Other temperature data show similar unexplained swings.

[20683015] |"Climate varies drastically due to natural causes," said Mr. Thompson.
[20683016] |But he said ice samples from Peru, Greenland and Antarctica all show substantial signs of warming.

[20684001] |Telxon Corp. said its vice president for manufacturing resigned and its Houston work force has been trimmed by 40 people, or about 15%.

[20684002] |The maker of hand-held computers and computer systems said the personnel changes were needed to improve the efficiency of its manufacturing operation.

[20684003] |The company said it hasn't named a successor to Ronald Bufton, the vice president who resigned.
[20684004] |Its Houston work force now totals 230.

[20685001] |CNW Corp. said the final step in the acquisition of the company has been completed with the merger of CNW with a subsidiary of Chicago & North Western Holdings Corp.

[20685002] |As reported, CNW agreed to be acquired by a group of investors led by Blackstone Capital Partners Limited Partnership for $50 a share, or about $950 million.

[20686001] |Congress sent to President Bush an $8.5 billion military construction bill that cuts spending for new installations by 16% while revamping the Pentagon budget to move more than $450 million from foreign bases to home-state projects.

[20686002] |The fiscal 1990 measure builds on a pattern set earlier this year by House and Senate defense authorizing committees, and -- at a time of retrenchment for the military and concern about the U.S.'s standing in the world economy -- overseas spending is most vulnerable.
[20686003] |Total Pentagon requests for installations in West Germany, Japan, South Korea, the United Kingdom and the Philippines, for example, are cut by almost two-thirds, while lawmakers added to the military budget for construction in all but a dozen states at home.

[20686004] |The result is that instead of the Pentagon's proposed split of 60-40 between domestic and foreign bases, the reduced funding is distributed by a ratio of approximately 70-30.
[20686005] |The extra margin for bases in the U.S. enhances the power of the appropriations committees; meanwhile, lawmakers used their positions to garner as much as six times what the Pentagon had requested for their individual states.

[20686006] |House Appropriations Committee Chairman Jamie Whitten (D., Miss.) helped secure $49.7 million for his state, or more than double the Pentagon's budget.
[20686007] |West Virginia, home of Senate Appropriations Committee Chairman Robert Byrd, would receive $21.5 million -- four times the military's request.
[20686008] |Tennessee and North Carolina, home states of the two Democratic chairmen of the House and Senate military construction subcommittees, receive $243.2 million, or 25% above the Pentagon's request.
[20686009] |Though spending for Iowa and Oregon was far less, their increases above Pentagon requests -- 640% and 430%, respectively -- were much greater because of the influence of Republicans at critical junctures.

[20686010] |The swift passage of the bill, which cleared the Senate and House on simple voice votes last week, contrasts with the problems still facing a more cumbersome $66.8 billion measure funding housing, environmental, space and veterans programs.
[20686011] |By an 84-6 margin, the Senate approved the bulk of the spending Friday, but the bill was then sent back to the House to resolve the question of how to address budget limits on credit allocations for the Federal Housing Administration.

[20686012] |The House Democratic leadership could seek to waive these restrictions, but the underlying bill is already under attack for excesses elsewhere.
[20686013] |Appropriations committees have used an assortment of devices to disguise as much as $1 billion in spending, and as critics have awakened to these devices, the bill can seem like a wounded caribou trying to make it past ice and wolves to reach safer winter grazing.

[20686014] |Much of the excess spending will be pushed into fiscal 1991, and in some cases is temporarily parked in slow-spending accounts in anticipation of being transferred to faster-spending areas after the budget scorekeeping is completed.

[20686015] |For example, a House-Senate conference ostensibly increased the National Aeronautics and Space Administration budget for construction of facilities to nearly $592 million, or more than $200 million above what either chamber had previously approved.
[20686016] |Part of the increase would provide $90 million toward ensuring construction of a costly solid rocket-motor facility in Mr. Whitten's Mississippi.
[20686017] |But as much as $177 million, or nearly 30% of the account, is marked for potential transfers to research, management and flight accounts that are spent out at a faster clip.

[20686018] |The bill's managers face criticism, too, for the unusual number of conditions openly imposed on where funds will be spent.
[20686019] |Conservatives, embarrassed by Republican influence-peddling scandals at the Department of Housing and Urban Development, have used the issue in an effort to shift blame onto a Democratic-controlled Congress.
[20686020] |HUD Secretary Jack Kemp backed an unsuccessful effort to strike such language last week, but received little support from the White House budget office, which wants to protect space-station funding in the bill and has tended to turn its eyes from pork-barrel amendments.

[20686021] |Within discretionary funds for community development grants, more than $3.7 million is allocated to six projects in Michigan, home state of a subcommittee chairman, Rep. Bob Traxler.
[20686022] |House Speaker Thomas Foley won $510,000 for a project in his district in Washington state, and $1.3 million, earmarked by Sen. Daniel Inouye, amounts to a business subsidy under the title "Hawaiian sugar mills job retention."

[20686023] |The powerful Democrat had first wanted to add language relaxing environmental restrictions on two mills on the Hamakua coast that are threatening to close.
[20686024] |When this plan met resistance, it was agreed instead to take money from HUD to subsidize needed improvements in two settling ponds for the mills, which employ an estimated 1,500 workers, according to Mr. Inouye's office.

[20687001] |Dennis Farney's Oct. 13 page-one article "River of Despair," about the poverty along the Mississippi, fanned childhood memories of when my parents were sharecroppers in southeastern Arkansas, only a few miles from the river.
[20687002] |Although we were white, the same economic factors affected us as affects the black people Mr. Farney writes about.
[20687003] |Fortunately, an aunt with a college degree bought a small farm and moved us 50 miles north to good schools and an environment that opened the world of opportunity for me as an eight-year-old.

[20687004] |Though I've been blessed with academic degrees and some success in the materialistic world, I've never forgotten or lost contact with those memories of the 1930s.

[20687005] |Most of the land in that and other parts of the Delta are now owned by second, third or fourth generations of the same families.
[20687006] |These are the families who used -- and sometime abused -- their sharecroppers, people who had no encouragement and little access to an education or training for a better life.
[20687007] |Following World War II, when one family with mechanized equipment could farm crops formerly requiring 20 families, the surplus people were dumped into the mainstream of society with no Social Security, no skills in the workplace, no hope for their future except welfare.
[20687008] |And today, many of their children, grandchildren and great-grandchildren remain on welfare.

[20687009] |In the meantime, the landowners continue receiving generous subsidies that began during New Deal days.
[20687010] |Or those who choose not to farm can lease their lands and crop allotments for handsome sums.

[20687011] |Farmers in the Midwest and other areas have suffered, but those along the Mississippi continue to prosper with holdings that were built with the sweat of men and women living in economic slavery.
[20687012] |And when they were no longer needed, they were turned loose unprepared to build lives of their own.

[20687013] |Denton Harris

[20687014] |Chairman

[20687015] |Metro Bank

[20687016] |Atlanta

[20687017] |Because the cycle of poverty along the lower Mississippi goes back so many generations, breaking this cycle will be next to impossible.
[20687018] |Sadly, the cycle appears not as waves but as a downward spiral.
[20687019] |Yet the evidence that we have not hit bottom is found in the fact that we are not yet helping ourselves.
[20687020] |The people of the Delta are waiting for that big factory to open, river traffic to increase, government spending to fund job-training programs or public schools to educate apathetic students.

[20687021] |Because we refuse to face the tough answers, the questions continue as fodder for the commissions and committees, for the media and politicians.
[20687022] |Coffee-shop chatter does not lend itself to solving the problems of racism, teen pregnancy or lack of parental support or guidance.

[20687023] |Does the Delta deserve government help in attracting industry when the majority of residents, black and white, do not realize racism alienates potential employers?
[20687024] |Should we focus on the region's infant-mortality rate when the vocal right-wingers and the school boards, mayors and legislators prohibit schools from teaching the two ways (abstinence or contraceptives) of decreasing teen pregnancy?
[20687025] |Delta problems are difficult, not impossible, to solve -- I am just not convinced that we are ready to solve them yet.

[20687026] |Leslie Falls Humphries

[20687027] |Little Rock, Ark.

[20687028] |I would like to issue a challenge to corporate America.
[20687029] |The next time expansion plans are mentioned at the old company and somebody says, "Aw heck, guys, nobody can do it like Japan or South Korea," I wish you would butt in and say, "Hold it, fellas, why don't we compare prices and use our own little Third World country.
[20687030] |We would even save on freight."

[20687031] |There is no mystery why the Delta originated "Singin' the Blues."

[20687032] |Eugene S. Clarke IV

[20687033] |Hollandale, Miss.

[20687034] |Your story is an insult to the citizens of the Mississippi Delta.
[20687035] |Many of the problems you presented exist in every part of this country.
[20687036] |Poverty is only two blocks from President Bush's residence.
[20687037] |For years, we tried to ignore the problem of poverty, and now that it has gotten out of hand it's a new crusade for the media and our Democratic Congress.

[20687038] |Nobody should have to live in such poor conditions as in "Sugar Ditch," but when you travel to Washington, Boston, Chicago or New York, the same problems exist.
[20687039] |The only difference is, in those cities the poor are housed in high-rise-project apartments each consisting of one room, with rusty pipes called plumbing, rodents and cockroaches everywhere and nonworking elevators -- and with the building patrolled by gangs and drug dealers.

[20687040] |Many middle-class people would love free food, Medicaid insurance, utilities and rent.
[20687041] |Then maybe I could stay home and have seven children and watch Oprah Winfrey, like Beulah in the article, instead of having one child and working constantly just to stay above water, like so many families in this country.

[20687042] |Dee Ann Wilson

[20687043] |Greenville, Miss.

[20688001] |Mobil Corp. is in the midst of cutting back its exploration and production group, which finds and develops oil and gas reserves in the U.S., by as much as 15% as part of a new restructuring of that sector of its business.

[20688002] |Management advised employees Friday that it was going to reduce employment in production operations of the group by 8%, or 400 people.
[20688003] |The exploration side of the unit has recently undergone a similar overhaul, during which it also lost as many as 400 employees, a company spokesman said in response to questions.
[20688004] |Mobil Exploration & Producing U.S. Inc., the group involved, currently has a work force of somewhat less than 5,000.

[20688005] |A few years ago, Mobil restructured the entire company during an industrywide shakeout.
[20688006] |But since then U.S. oil production has declined and Mobil wants to focus its oil-finding efforts overseas.

[20688007] |Mobil alluded to the work-force cuts last week when it took a $40 million charge as part of its third-quarter earnings and attributed it to a restructuring.
[20688008] |Mobil officials said that it is unlikely any additional charges related to this move will be taken in future quarters.

[20688009] |On Wednesday, Mobil will begin offering separation packages and voluntary retirement in its U.S. production operation.
[20688010] |Mobil officials said they have been studying ways of streamlining these operations since early this year.

[20688011] |During the coming months, layers of management will be peeled away and regional offices will become more autonomous.
[20688012] |For greater efficiency, employees at those locations will be reorganized into teams responsible for managing the properties under their jurisdiction, Mobil said.
[20688013] |"The main feature of the new organization is that each local manager will have both the authority and accountability for profitable and technically sound operations," said Charles E. Spruell, president of the Mobil unit.

[20688014] |Field offices at New Orleans; Houston; Denver; Midland, Tex.; Bakersfield, Calif.; Oklahoma City; and Liberal, Kan., will be maintained.
[20688015] |But the staffs at some of those locations will be slashed while at others the work force will be increased.

[20688016] |For instance, employment in Denver will be reduced to 105 from 430.
[20688017] |But on the West Coast, where profitable oil production is more likely than in the midcontinent region, the Bakersfield, Calif., office staff of 130 will grow by 175 to 305.
[20688018] |The reorganization will "focus on the value and potential of assets," Mr. Spruell said.

[20689001] |Wanted: An investment that's as simple and secure as a certificate of deposit but offers a return worth getting excited about.

[20689002] |With $150 billion of CDs maturing this month, a lot of people have been scouring the financial landscape for just such an investment.

[20689003] |In April, when many of them bought their CDs, six-month certificates were yielding more than 9%; investors willing to look could find double-digit yields at some banks and thrifts.
[20689004] |Now, the nationwide average yield on a six-month CD is just under 8%, and 8.5% is about the best around.

[20689005] |But investors looking for alternatives aren't finding it easy.
[20689006] |Yields on most fixed-income securities are lower than several months ago.
[20689007] |And the stock market's recent gyrations are a painful reminder of the dangers there.

[20689008] |"If you're looking for a significantly higher yield with the same level of risk as a CD, you're not going to find it," says Washington financial planner Dennis M. Gurtz.

[20689009] |There are, however, some alternatives that income-oriented investors should consider, investment advisers say.
[20689010] |Short-term municipal bonds, bond funds and tax-deferred annuities are some of the choices they mention -- and not just as a way to get a higher return.

[20689011] |In particular, advisers say, investors may want to look at securities that reduce the risk that CD holders are confronting right now, of having to reinvest the proceeds of maturing short-term certificates at lower rates.

[20689012] |A mix of CDs and other holdings may make the most sense.
[20689013] |"People should remember their money isn't all or nothing -- they don't need to be shopping for the one interest-rate-type investment and putting all their money in it," says Bethesda, Md., adviser Karen Schaeffer.

[20689014] |Here's a look at some of the alternatives:

[20689015] |SHORT-TERM MUNICIPALS:
[20689016] |Investors with a heavy tax load should take out their calculators.
[20689017] |Yields on municipal bonds can be higher than after-tax yields on CDs for maturities of perhaps one to five years.
[20689018] |That's because municipal-bond interest is exempt from federal income tax -- and from state and local taxes too, for in-state investors.

[20689019] |For an investor paying tax at a 33% rate, a seemingly puny 6% yield on a one-year muni is equivalent to a taxable 9%.
[20689020] |Rates approach 6.5% on five-year municipals.

[20689021] |Some of the more cautious CD holders might like "pre-refunded" municipals.
[20689022] |These securities get top credit ratings because the issuers have put aside U.S. bonds that will be sold to pay off holders when the municipals are retired.

[20689023] |"It's a no-brainer: You don't have to worry about diversification; you don't have to worry about quality," says Steven J. Hueglin, executive vice president of the New York bond firm of Gabriele, Hueglin & Cashman Inc.

[20689024] |Consider a "laddered" bond portfolio, with issues maturing in, say, 1992, 1993 and 1994, advises Malcolm A. Makin, a Westerly, R.I., financial planner.
[20689025] |The idea is to have money rolling over each year at prevailing interest rates.

[20689026] |BOND FUNDS:
[20689027] |Bond mutual funds offer diversification and are easy to buy and sell.
[20689028] |That makes them a reasonable option for investors who will accept some risk of price fluctuation in order to make a bet that interest rates will decline over the next year or so.

[20689029] |Buyers can look forward to double-digit annual returns if they are right.
[20689030] |But they will have disappointing returns or even losses if interest rates rise instead.
[20689031] |Bond resale prices, and thus fund share prices, move in the opposite direction from rates.
[20689032] |The price movements get bigger as the maturity of the securities lengthens.

[20689033] |Consider, for instance, two bond funds from Vanguard Group of Investment Cos. that were both yielding 8.6% on a recent day.
[20689034] |The Short Term Bond Fund, with an average maturity of 2 1/2 years, would deliver a total return for one year of about 10.6% if rates drop one percentage point and a one-year return of about 6.6% if rates rise by the same amount.
[20689035] |But, in the same circumstances, the returns would be a more extreme 14.6% and 2.6% for the Vanguard Bond Market Fund, with its 12 1/2-year average maturity.

[20689036] |"You get equity-like returns" from bonds if you guess right on rates, says James E. Wilson, a Columbia, S.C., planner.
[20689037] |If interest rates don't change, bond fund investors' returns will be about equal to the funds' current yields.

[20689038] |DEFERRED ANNUITIES:
[20689039] |These insurance company contracts feature some of the same tax benefits and restrictions as non-deductible individual retirement accounts: Investment gains are compounded without tax consequences until money is withdrawn, but a 10% penalty tax is imposed on withdrawals made before age 59 1/2.
[20689040] |Aimed specifically at CD holders are so-called CD-type annuities, or certificates of annuity.
[20689041] |An interest rate is guaranteed for between one and seven years, after which holders get 30 days to choose another guarantee period or to switch to another insurer's contract without the surrender charges that are common to annuities.

[20689042] |Some current rates exceed those on CDs.
[20689043] |For instance, a CD-type annuity from North American Co. for Life & Health Insurance, Chicago, offers 8.8% interest for one year or a 9% rate for two years.

[20689044] |Annuities are rarely a good idea at age 35 because of the withdrawal restrictions.
[20689045] |But at age 55, "they may be a great deal," says Mr. Wilson, the Columbia, S.C., planner.

[20689046] |MONEY MARKET FUNDS:
[20689047] |That's right, money market mutual funds.
[20689048] |The conventional wisdom is to go into money funds when rates are rising and shift out at times such as the present, when rates seem headed down.
[20689049] |With average maturities of a month or so, money funds offer fixed share prices and floating returns that track market interest rates, with a slight lag.

[20689050] |Still, today's highest-yielding money funds may beat CDs over the next year even if rates fall, says Guy Witman, an editor of the Bond Market Advisor newsletter in Atlanta.
[20689051] |That's because top-yielding funds currently offer yields almost 1 1/2 percentage points above the average CD yield.

[20689052] |Mr. Witman likes the Dreyfus Worldwide Dollar Money Market Fund, with a seven-day compound yield just under 9.5%.
[20689053] |A new fund, its operating expenses are being temporarily subsidized by the sponsor.

[20689054] |Try combining a money fund and an intermediate-term bond fund as a low-risk bet on falling rates, suggests Back Bay Advisors Inc., a mutual fund unit of New England Insurance Co.
[20689055] |If rates unexpectedly rise, the increasing return on the money fund will partly offset the lower-than-expected return from the bond fund.

[20690001] |Federal drug regulators, concerned over British reports that diabetics have died after shifting from animal to human-based insulin, say they are considering a study to see if similar deaths have occurred here.

[20690002] |The United Kingdom reports came from Dr. Patrick Toseland, head of clinical chemistry at Guy's Hospital in London.
[20690003] |In a telephone interview Friday, Dr. Toseland said the number of sudden, unexplained deaths of diabetics he had seen this year was 17 compared with just two in 1985.
[20690004] |At least six of the deaths occurred among relatively young diabetics who had switched from animal to human insulin within the past year, he said.

[20690005] |Dr. Solomon Sobel, director of metabolism and endrocrine drug products for the U.S. Food and Drug Administration, said FDA officials have discussed Dr. Toseland's findings "fairly intensively."
[20690006] |While there have been no reports of similar sudden unexplained deaths among diabetics in the U.S., Dr. Sobel said the FDA plans to examine Dr. Toseland's evidence and is considering its own study here.

[20690007] |Dr. Toseland, a toxicologist, said he was preparing an article for a British forensic medical journal raising the possibility that the deaths may have occurred after human insulin blunted critical warning signs indicating hypoglycemia, or low blood sugar, which can kill diabetics.

[20690008] |The usual warning signs of hypoglycemia include sweating, anxiety and cramps.
[20690009] |With proper warning, diabetics can easily raise their blood sugar to safe levels by eating sugar or sugary food.
[20690010] |"The anecdotal data certainly shows that some of the people were not aware of the rapid onset of hypoglycemia," Dr. Toseland said.

[20690011] |At the U.S. National Institutes of Health, Dr. Robert E. Silverman, chief of the diabetes program branch, said no evidence of unexpected deaths from hypoglycemia had shown up in a study of 1,500 diabetics that has been under way at NIH for five years.
[20690012] |However, he said officials conducting the study hadn't been looking for signs of problems related to hypoglycemia unawareness.
[20690013] |"We are now monitoring for it much more closely," he said.

[20690014] |"We do know there are slight differences in the way human and animal insulins drive down blood sugar," Dr. Sobel said.
[20690015] |The human-based drug starts the blood sugar dropping sooner and drives it down faster, he said.
[20690016] |"But we don't believe there is enough of a difference to be clinically significant," Dr. Sobel said.

[20690017] |Reports of Dr. Toseland's findings in the British press have triggered widespread concern among diabetics there.
[20690018] |Both the British Diabetic Association and the Committee on Safety in Medicines -- Britain's equivalent of the U.S. FDA -- recently issued statements noting the lack of hard scientific evidence to support Dr. Toseland's findings.
[20690019] |On Friday, the American Diabetes Association issued a similar statement urging the six million U.S. diabetics not to overreact to the British report.

[20690020] |"A loss of the warning symptoms of hypoglycemia is a complex problem that is very unlikely to be due simply to the type of insulin used," the American association said.

[20690021] |The FDA already requires drug manufacturers to include warnings with insulin products that symptoms of hypoglycemia are less pronounced with human insulin than with animal-based products.

[20690022] |Eli Lilly & Co., the Indianapolis-based drug manufacturer, dominates the U.S. human insulin market with its product known as Humulin.
[20690023] |Lilly is building plants to make the insulin in Indianapolis and Fagershein, France.
[20690024] |In its latest annual report, Lilly said Humulin sales have shown "excellent growth."

[20690025] |Lilly officials said they had seen reports of hypoglycemic unawareness among some patients making the shift from animal to human insulin, but didn't know if the problem had caused any deaths.
[20690026] |Dr. Leigh Thompson, a Lilly group vice president, said the company's clinical trials of both its animal and human-based insulins indicated no difference in the level of hypoglycemia between users of either product.

[20690027] |Dr. Toseland said most of the British diabetics who died had been taking a human-based insulin made by Novo/Nordisk, a Danish manufacturer.
[20690028] |None of the diabetics were using Lilly's insulin.

[20691001] |SharesBase Corp. said it will reduce its 221-person work force by about 25%, effective tomorrow, in an effort to stem continuing losses.

[20691002] |The company, which makes data base systems and software, said it expects to report a loss for the third quarter ended Sept. 30.

[20692001] |Defense intellectuals have complained for years that the Pentagon cannot determine priorities because it has no strategy.
[20692002] |Last April, the new defense secretary, Richard Cheney, acknowledged that, "given an ideal world, we'd have a nice, neat, orderly process.
[20692003] |We'd do the strategy and then we'd come around and do the budget.
[20692004] |This city doesn't work that way."
[20692005] |With a five-year defense plan costing more than $1.6 trillion, it's about time we put together a defense strategy that works in Washington.

[20692006] |This won't happen until strategists come down from their ivory tower and learn to work in the real world of limited budgets and uncertain futures.
[20692007] |As it is, we identify national goals and the threats to these goals, we shape a strategy to counter these threats, we determine the forces needed to execute the strategy, before finally forging the budgets needed to build and maintain the forces.
[20692008] |These procedures consume millions of man-hours of labor and produce tons of paper, and each year, their end product -- the Five Year Defense Plan -- promptly melts away.

[20692009] |The graph on the left shows how this happens (see accompanying illustration -- WSJ Oct. 30, 1989).
[20692010] |Compare the past eight five-year plans with actual appropriations.
[20692011] |The Pentagon's strategists produce budgets that simply cannot be executed because they assume a defense strategy depends only on goals and threats.
[20692012] |Strategy, however, is about possibilities, not hopes and dreams.
[20692013] |By ignoring costs, U.S. strategists abdicate their responsibility for hard decisions.
[20692014] |That puts the real strategic decisions in the hands of others: bean counters, budgeteers, and pork-barrelers.
[20692015] |These people have different agendas.
[20692016] |And as a result -- as the recent vote by the House to undo Mr. Cheney's program terminations suggests -- the preservation of jobs is becoming the real goal of defense "strategy."

[20692017] |How can we turn this situation around?

[20692018] |Reform starts in the Pentagon.
[20692019] |Strategists should consider the impact of budget uncertainties at the beginning of the planning process.
[20692020] |They ought to examine how a range of optimistic to pessimistic budget scenarios would change the defense program.
[20692021] |They would then develop priorities by identifying the least painful program cuts as they moved from higher to lower budgets.
[20692022] |They would also identify the best way to add programs, should the budget come in at higher levels.
[20692023] |This kind of contingency analysis is common in war planning and business planning.
[20692024] |There is no reason that it can not be done for defense planning.

[20692025] |Two steps are necessary to translate this idea into action.
[20692026] |Step 1 cleans up our books.
[20692027] |Our five-year plan contains three accounting devices -- negative money, an above guidance management reserve and optimistic inflation estimates -- which understate the spending the Pentagon has committed itself to by almost $100 billion.

[20692028] |Negative money was invented in 1988 to make the 1990-94 Five Year Defense Plan conform to the numbers in President Reagan's final budget submission to Congress.
[20692029] |That plan exceeded the numbers contained in his budget message by $45 billion.
[20692030] |To make the books balance, as is required by law, somebody invented a new budget line item that simply subtracted $45 billion.
[20692031] |It is known in the Pentagon as the "negative wedge."

[20692032] |The Pentagon argues that the negative wedge is the net effect of $22 billion in the as-yet unidentified procurement reductions that it intends to find in future years and $23 billion in an "above guidance" management reserve that accounts for undefined programs that will materialize in the future.

[20692033] |The 1990 plan also assumes inflation will decline to 1.7% by 1994.
[20692034] |Most forecasters, including those in the Congressional Budget Office, assume inflation will be in excess of 4% in each of those five years.
[20692035] |At that rate, the defense plan is underfunded by $48 billion.

[20692036] |By adding the negative wedge and recalculating the remaining program using a more probable inflation estimate, we arrive at a baseline program costing $1.7 trillion between 1990 and 1994.

[20692037] |Step 2 examines how four progressively lower budget scenarios would change the baseline and how these changes would affect our national security.
[20692038] |The graph on the right (which assumes a 4% rate of inflation), places these scenarios in the context of recent appropriations (see accompanying illustration -- WSJ Oct. 30, 1989).
[20692039] |Note how the baseline program assumes a sharp increase in future appropriations.
[20692040] |Step 2 will answer the question: What happens if these increases do not materialize?

[20692041] |Scenario 1, known as the "Constant Dollar Freeze," reimburses the Pentagon for inflation only -- it slopes upward at 4% per year.
[20692042] |This scenario has been the rough position of the U.S. Senate since 1985, and it reduces the baseline by $106 billion between 1990 and 1994.

[20692043] |Scenario 3, the "Current Dollar Freeze," has been the approximate position of the House of Representatives for about four years.
[20692044] |It freezes the budget at its current level, and forces the Pentagon to eat the effects of inflation until 1994.
[20692045] |This reduces the baseline by $229 billion.

[20692046] |Scenario 2 extends the recent compromises between the House and the Senate; it splits the difference between Scenarios 1 and 3, by increasing the budget at 2% per year.
[20692047] |It reduces the baseline by $169 billion.

[20692048] |Finally, Scenario 4 reduces the budget by 2% per year for the next five years -- a total reduction of $287 billion.
[20692049] |This can be thought of as a pessimistic prediction, perhaps driven by the sequestering effects of the Gramm-Rudman deficit reduction law or possibly a relaxation of tensions with the Soviet Union.

[20692050] |The strategic planners in the Joint Chiefs of Staff would construct the most effective defense program for each scenario, maximizing strengths and minimizing weaknesses.
[20692051] |They would conclude their efforts by producing a comprehensive net assessment for each plan -- including the assumptions made, an analysis of its deficiencies and limitations, the impact on national security, and the best strategy for working around these limitations.

[20692052] |This exercise would reveal the true cost of a particular program by forcing the strategists to make hard decisions.
[20692053] |If, for example, they choose to keep the B-2 Stealth bomber, they would have to sacrifice more and more other programs -- such as carrier battlegroups or army divisions -- as they moved toward lower budget levels.
[20692054] |These trade-offs would evolve priorities by revealing when the cost of the B-2 became prohibitive.

[20692055] |Some may be tempted to argue that the idea of a strategic review merely resurrects the infamous Zero-Based Budgeting (ZBB) concept of the Carter administration.
[20692056] |But ZBB did not involve the strategic planners in the Joint Chiefs of Staff, and therefore degenerated into a bean-counting drill driven by budget politics.
[20692057] |Anyway, ZBB's procedures were so cumbersome that everyone involved was crushed under a burden of marginalia.
[20692058] |A strategic review is fundamentally different.
[20692059] |It would be run by the joint chiefs under simple directions: Produce the best possible force for each budget scenario and provide the Secretary of Defense with a comprehensive net assessment of how that force could be used to achieve U.S. goals.

[20692060] |It might be feared that even thinking about lower budgets will hurt national security because the door will be opened to opportunistic budget cutting by an irresponsible Congress.
[20692061] |This argument plays well in the atmosphere of gaming and mistrust permeating the Pentagon and Congress, and unfortunately, there is some truth to it.
[20692062] |But in the end, it must be rejected for logical as well as moral reasons.
[20692063] |To say that the Pentagon should act irresponsibly because acting responsibly will provoke Congress into acting irresponsibly leads to the conclusion that the Pentagon should deliberately exaggerate its needs in the national interest; in other words, that it is justified in committing a crime -- lying to Congress -- because it is morally superior.

[20692064] |Strategy is not a game between the Pentagon and Congress; it is the art of the possible in a world where constraints force us to choose between unpleasant or imperfect alternatives.
[20692065] |If we want meaningful priorities, we must understand the trade-offs they imply before we make commitments.
[20692066] |Strategy is not a separate event in an idealized sequence of discrete events; it is a way of thinking that neutralizes threats to our interests in a manner consistent with our financial, cultural and physical limitations.

[20692067] |Mr. Spinney is a permanent Pentagon official.
[20692068] |This is a condensed version of an essay that will appear in the January issue of the Naval Institute Proceedings.
[20692069] |The views expressed do not reflect the official policy of the Department of Defense.

[20693001] |Although bullish dollar sentiment has fizzled, many currency analysts say a massive sell-off probably won't occur in the near future.

[20693002] |While Wall Street's tough times and lower U.S. interest rates continue to undermine the dollar, weakness in the pound and the yen is expected to offset those factors.
[20693003] |"By default," the dollar probably will be able to hold up pretty well in coming days, says Francoise Soares-Kemp, a foreign-exchange adviser at Credit Suisse.
[20693004] |"We're close to the bottom" of the near-term ranges, she contends.

[20693005] |In late Friday afternoon New York trading, the dollar was at 1.8300 marks and 141.65 yen, off from late Thursday's 1.8400 marks and 142.10 yen.
[20693006] |The pound strengthened to $1.5795 from $1.5765.

[20693007] |In Tokyo Monday, the U.S. currency opened for trading at 141.70 yen, down from Friday's Tokyo close of 142.75 yen.

[20693008] |The dollar began Friday on a firm note, gaining against all major currencies in Tokyo dealings and early European trading despite reports that the Bank of Japan was seen unloading dollars around 142.70 yen.
[20693009] |The rise came as traders continued to dump the pound after the sudden resignation Thursday of British Chancellor of the Exchequer Nigel Lawson.

[20693010] |But once the pound steadied with help from purchases by the Bank of England and the Federal Reserve Bank of New York, the dollar was dragged down, traders say, by the stock-market slump that left the Dow Jones Industrial Average with a loss of 17.01 points.

[20693011] |With the stock market wobbly and dollar buyers discouraged by signs of U.S. economic weakness and the recent decline in U.S. interest rates that has diminished the attractiveness of dollar-denominated investments, traders say the dollar is still in a precarious position.
[20693012] |"They'll be looking at levels to sell the dollar," says James Scalfaro, a foreign-exchange marketing representative at Bank of Montreal.

[20693013] |While some analysts say the dollar eventually could test support at 1.75 marks and 135 yen, Mr. Scalfaro and others don't see the currency decisively sliding under support at 1.80 marks and 140 yen soon.

[20693014] |Predictions for limited dollar losses are based largely on the pound's weak state after Mr. Lawson's resignation and the yen's inability to strengthen substantially when there are dollar retreats.
[20693015] |With the pound and the yen lagging behind other major currencies, "you don't have a confirmation" that a sharp dollar downturn is in the works, says Mike Malpede, senior currency analyst at Refco Inc. in Chicago.

[20693016] |As far as the pound goes, some traders say a slide toward support at $1.5500 may be a favorable development for the dollar this week.

[20693017] |While the pound has attempted to stabilize, currency analysts say it is in critical condition.
[20693018] |Sterling plunged about four cents Thursday and hit the week's low of $1.5765 when Mr. Lawson resigned from his six-year post because of a policy squabble with other cabinet members.

[20693019] |He was succeeded by John Major, who Friday expressed a desire for a firm pound and supported the relatively high British interest rates that he said "are working exactly as intended" in reducing inflation.
[20693020] |But the market remains uneasy about Mr. Major's policy strategy and the prospects for the pound, currency analysts contend.

[20693021] |Although the Bank of England's tight monetary policy has fueled worries that Britain's slowing economy is headed for a recession, it is widely believed that Mr. Lawson's willingness to prop up the pound with interest-rate increases helped stem pound selling in recent weeks.
[20693022] |If there are any signs that Mr. Major will be less inclined to use interest-rate boosts to rescue the pound from another plunge, that currency is expected to fall sharply.

[20693023] |"It's fair to say there are more risks for the pound under Major than there were under Lawson," says Malcolm Roberts, a director of international bond market research at Salomon Brothers in London.

[20693024] |"There's very little upside to sterling," Mr. Roberts says, but he adds that near-term losses may be small because the selling wave that followed Mr. Major's appointment apparently has run its course.

[20693025] |But some other analysts have a stormier forecast for the pound, particularly because Britain's inflation is hovering at a relatively lofty annual rate of about 7.6% and the nation is burdened with a struggling government and large current account and trade deficits.

[20693026] |The pound likely will fall in coming days and may trade as low as 2.60 marks within the next year, says Nigel Rendell, an international economist at James Capel & Co. in London.
[20693027] |The pound was at 2.8896 marks late Friday, off sharply from 2.9511 in New York trading a week earlier.

[20693028] |If the pound falls closer to 2.80 marks, the Bank of England may raise Britain's base lending rate by one percentage point to 16%, says Mr. Rendell.
[20693029] |But such an increase, he says, could be viewed by the market as "too little too late."
[20693030] |The Bank of England indicated its desire to leave its monetary policy unchanged Friday by declining to raise the official 15% discount-borrowing rate that it charges discount houses, analysts say.

[20693031] |Pound concerns aside, the lack of strong buying interest in the yen is another boon for the dollar, many traders say.

[20693032] |The dollar has a "natural base of support" around 140 yen because the Japanese currency hasn't been purchased heavily in recent weeks, says Ms. Soares-Kemp of Credit Suisse.
[20693033] |The yen's softness, she says, apparently stems from Japanese investors' interest in buying dollars against the yen to purchase U.S. bond issues and persistent worries about this year's upheaval in the Japanese government.

[20693034] |On New York's Commodity Exchange Friday, gold for current delivery jumped $5.80, to $378.30 an ounce, the highest settlement since July 12.
[20693035] |Estimated volume was a heavy seven million ounces.

[20693036] |In early trading in Hong Kong Monday, gold was quoted at $378.87 an ounce.

[20694001] |We are deeply disturbed that a recent editorial stated that the "Americans With Disabilities Act of 1989" was "crafted primarily by Democratic Senators Kennedy and Harkin" with a premise "based on the presumption that most Americans are hostile to the disabled. . . ."
[20694002] |Perhaps even more offensive is the statement, "It is surprising that George Bush and the White House inner circle would ally themselves with this crabby philosophy."

[20694003] |This legislation was not drafted by a handful of Democratic "do-gooders."
[20694004] |Quite the contrary -- it results from years of work by members of the National Council on the Handicapped, all appointed by President Reagan.
[20694005] |You depict the bill as something Democratic leaders "hoodwinked" the administration into endorsing.
[20694006] |The opposite is true: It's the product of many meetings with administration officials, Senate staffers, advocates, and business and transportation officials.
[20694007] |Many congressmen are citing the compromise on the "Americans With Disabilities Act of 1989" as a model for bipartisan deliberations.

[20694008] |Most National Council members are themselves disabled or are parents of children with disabilities.
[20694009] |We know firsthand the discrimination addressed by the act: to be told there's no place for your child in school; to spend lonely hours at home because there is no transportation for someone in a wheelchair; to be denied employment because you are disabled.

[20694010] |Your editorial mockingly entitles this legislation the "Lawyers' Employment Act."
[20694011] |For the 43 million people with disabilities and their families, this legislation is the "Emancipation Proclamation."

[20694012] |Sandra Swift Parrino

[20694013] |Chairperson

[20694014] |National Council on the Handicapped

[20695001] |A group of investors led by Giant Group Ltd. and its chairman, Burt Sugarman, said it filed with federal antitrust regulators for clearance to buy more than 50% of the stock of Rally's Inc., a fast-food company based in Louisville, Ky.

[20695002] |Rally's operates and franchises about 160 fast-food restaurants throughout the U.S.
[20695003] |The company went public earlier this month, offering 1,745,000 shares of common stock at $15 a share.
[20695004] |Giant has interests in cement making and newsprint.

[20695005] |The investor group includes Restaurant Investment Partnership, a California general partnership, and three Rally's directors: Mr. Sugarman, James M. Trotter III and William E. Trotter II.
[20695006] |The group currently holds 3,027,330 Rally's shares, or 45.2% of its commmon shares outstanding.
[20695007] |Giant Group owned 22% of Rally's shares before the initial public offering.

[20695008] |A second group of three company directors, aligned with Rally's founder James Patterson, also is seeking control of the fast-food chain.
[20695009] |It is estimated that the Patterson group controls more than 40% of Rally's stock.

[20695010] |Rally officials weren't available to comment late yesterday.

[20695011] |For the year ended July 2, Rally had net income of $2.4 million, or 34 cents a share, on revenue of $52.9 million.

[20696001] |Companies listed below reported quarterly profit substantially different from the average of analysts' estimates.
[20696002] |The companies are followed by at least three analysts, and had a minimum five-cent change in actual earnings per share.
[20696003] |Estimated and actual results involving losses are omitted.

[20696004] |The percent difference compares actual profit with the 30-day estimate where at least three analysts have issues forecasts in the past 30 days.
[20696005] |Otherwise, actual profit is compared with the 300-day estimate.

[20697001] |DPC Acquisition Partners, a hostile suitor for Dataproducts Corp., filed a petition in federal district court in Los Angeles seeking to have its standstill agreement with the computer printer maker declared void, and it proceeded with a $10-a-share tender offer for the company.

[20697002] |The offer would give the transaction an indicated value of $189 million, based on the 18.9 million shares the group doesn't already own.
[20697003] |DPC holds about 7.8% of Dataproducts' shares.

[20697004] |Lawyers representing DPC declined to elaborate, saying they didn't have a final copy of the filing.
[20697005] |Jack Davis, Dataproducts' chairman, said he hadn't yet seen the filing and couldn't comment.

[20697006] |DPC made a $15-a-share bid for the company in May, but Dataproducts management considered the $283.7 million proposal unacceptable.
[20697007] |Dataproducts had sought a buyer for several months, but it is now in the midst of a restructuring plan and management says the company is no longer for sale.

[20698001] |Appalachian Power Co., a subsidiary of American Electric Power Co., said it will redeem on Dec. 1 the entire $44.2 million of its 12 7/8% first mortgage bonds due 2013.

[20698002] |The redemption price will be 109.66% of the principal amount of the bonds, plus accrued interest to the date of redemption.

[20699001] |The European Community's consumer price index rose a provisional 0.6% in September from August and was up 5.3% from September 1988, according to Eurostat, the EC's statistical agency.

[20699002] |The month-to-month rise in the index was the largest since April, Eurostat said.