[20300001] |Battle-tested Japanese industrial managers here always buck up nervous newcomers with the tale of the first of their countrymen to visit Mexico, a boatload of samurai warriors blown ashore 375 years ago.

[20300002] |"From the beginning, it took a man with extraordinary qualities to succeed in Mexico," says Kimihide Takimura, president of Mitsui group's Kensetsu Engineering Inc. unit.

[20300003] |Here in this new center for Japanese assembly plants just across the border from San Diego, turnover is dizzying, infrastructure shoddy, bureaucracy intense.
[20300004] |Even after-hours drag; "karaoke" bars, where Japanese revelers sing over recorded music, are prohibited by Mexico's powerful musicians union.

[20300005] |Still, 20 Japanese companies, including giants such as Sanyo Industries Corp., Matsushita Electronics Components Corp. and Sony Corp. have set up shop in the state of Northern Baja California.
[20300006] |Keeping the Japanese happy will be one of the most important tasks facing conservative leader Ernesto Ruffo when he takes office Nov. 1, as the first opposition governor in Mexico's modern history.

[20300007] |Mexico, with its desperate need for investment, and Japan, with its huge budget surplus, would seem like a perfect match.
[20300008] |But the two countries remain separated by a cultural barrier wider than the ocean.
[20300009] |Conservative Japanese investors are put off by what they consider Mexico's restrictive investment regulations and loose work habits.
[20300010] |From the Mexicans' viewpoint, vaunted tactics of methodical Japanese managers don't count for much in a land where a saying says "there are no fixed rules."

[20300011] |Japan ranks as only the fourth largest foreign investor in Mexico, with 5% of the total investments.
[20300012] |That is just 1% of all the money Japan has invested abroad.

[20300013] |Mexican President Carlos Salinas de Gortari would like to change that.
[20300014] |The young president so admires Japanese discipline that he sends his children to a Japanese school in Mexico City.
[20300015] |He already has finagled a $2 billion loan from the Japanese government.

[20300016] |But Mexico urgently needs more help.
[20300017] |Mr. Salinas's unpopular Institutional Revolutionary Party, or PRI, faces congressional elections in 1991.
[20300018] |For the PRI to stand a chance, Mr. Salinas has to press on with an economic program that so far has succeeded in lowering inflation and providing moderate economic growth.
[20300019] |But maintaining the key components of his strategy -- a stable exchange rate and high level of imports -- will consume enormous amounts of foreign exchange.
[20300020] |Mr. Salinas needs big investment inflows -- quickly.

[20300021] |The problem is that Japanese businesses make decisions with a view well beyond the coming months that weigh so heavily on Mr. Salinas.
[20300022] |"The Japanese will come to Mexico, but not immediately," says Kazushige Suzuki, director-general of the Japanese External Trade Organization in Mexico.
[20300023] |If not now, when?
[20300024] |"When the fruit is ripe, it falls from the tree by itself," he says.
[20300025] |Pressed on the matter, he is more specific.
[20300026] |"There will be big Japanese investments probably five to 10 years from now."

[20300027] |Ryukichi Imai, Japan's ambassador to Mexico, agrees that Mexico may be too eager.
[20300028] |"There seems to be a presumption in some sectors of (Mexico's) government that there is a lot of Japanese money waiting behind the gate, and that by slightly opening the gate, that money will enter Mexico.
[20300029] |I don't think that is the case."

[20300030] |Mexican officials maintain the Japanese reserve is only a result of unfamiliarity.
[20300031] |"Because of distance, it takes a while for them to appreciate the economic stability we've achieved," says one economic policymaker.
[20300032] |Mexico is sending a number of missions to Japan looking for a major breakthrough investment in telecommunications, petrochemicals or tourism.
[20300033] |It is hoped that other Japanese would then follow the leader.

[20300034] |But Japanese investors say that their reluctance to invest stems not only from concerns about Mexico's economic outlook, but also reservations about Mexico's recently revamped investment law.
[20300035] |Unable to get a new law through a congress with a strong leftist bloc, Mexico jury-rigged the existing law's regulations.
[20300036] |It created special 20-year trusts to allow foreigners 100% ownership in some once-closed industries.
[20300037] |It also made artful use of semantics, redefining as non-strategic industries some that had been in the national domain.

[20300038] |"Those devices don't give sufficient certainty to our bosses in Japan," says Yasuo Nakamura, representative of the Industrial Bank of Japan.
[20300039] |Mr. Nakamura cites the case of a customer who wants to build a giant tourism complex in Baja and has been trying for eight years to get around Mexican restrictions on foreign ownership of beachfront property.
[20300040] |He could develop the beach through a trust, but instead is trying have his grandson become a naturalized Mexican so his family gains direct control.

[20300041] |Some say the best hope for the Mexicans is catching the eye of Japan by promoting the one industry the Japanese clearly like -- the border assembly plants, known as "maquiladoras," which are open to 100% foreign control.

[20300042] |"We must do more to help the Japanese here in Baja if we want them to invest elsewhere," says Mr. Ruffo, the governor-elect of the National Action Party and himself a succesful businessman.
[20300043] |Plant operators are heartened by Mr. Ruffo's pledge to cut corruption associated with the ruling party officials.
[20300044] |But Mr. Ruffo frets that an even bigger problem could be protectionism from the U.S., where some politicians oppose what they consider Japanese efforts to use maquiladoras to crack the U.S. market through the back door.

[20301001] |Shaken by tumbling stock prices and pessimistic projections of U.S. economic growth, currency analysts around the world have toned down their assessments of the dollar's near-term performance.

[20301002] |Most of the 10 analysts polled last week by Dow Jones International News Service in Frankfurt, Tokyo, London and New York expect the U.S. dollar to ease only mildly in November.
[20301003] |Opinion is mixed over its three-month prospects.
[20301004] |Half of those polled see the currency trending lower over the next three months, while the others forecast a modest rebound after the New Year.

[20301005] |In late afternoon New York trading yesterday, the dollar stood at 1.8415 West German marks, up from 1.8340 marks late Monday, and at 142.85 yen, up from 141.90 yen late Monday.
[20301006] |A month ago, a similar survey predicted the dollar would be trading at 1.8690 marks and 139.75 yen by the end of October.
[20301007] |Sterling was trading at $1.5805, down from $1.5820 late Monday.

[20301008] |In Tokyo Wednesday, the U.S. currency was trading at about 142.95 yen at midmorning, up from 142.80 yen at the opening and up from Tuesday's Tokyo close of 142.15 yen.

[20301009] |The average of estimates of the 10 economists polled puts the dollar around 1.8200 marks at the end of November and at 141.33 yen.

[20301010] |By late January, the consensus calls for the dollar to be trading around 1.8200 marks and near 142 yen.
[20301011] |Those with a bullish view see the dollar trading up near 1.9000 marks and 145 yen, while the dollar bears see the U.S. currency trading around 1.7600 marks and 138 yen.

[20301012] |A number of those polled predict the dollar will slip as the Federal Reserve eases interest rates.

[20301013] |David Owen, an economist at Kleinwort Benson & Co. in London, said he expects further cuts in short-term U.S. rates in an effort to encourage a narrowing of the trade gap and to ensure a soft landing in the U.S. economy.

[20301014] |Robert White, a vice president and manager of corporate trade at First Interstate of California, agreed with that view and predicted the U.S. federal funds rate will drop to between 7 3/4% and 8% within 60 days from its current level at 8 13/16%.
[20301015] |Fed funds is the rate banks charge each other on overnight loans; the Fed influences the rate by adding or draining reserves from the banking system.

[20301016] |Mr. White also predicted a half-point cut in the U.S. discount rate in the near future.
[20301017] |The discount rate, currently 7%, is the rate the Fed charges member banks for loans, using government securities as collateral.

[20301018] |He expects such a cut "because of problems in several sectors of the economy, particularly real estate and automobiles."

[20301019] |Bolstering his argument, the Commerce Department reported yesterday that new home sales for September were down 14% from August's revised 3.1% fall.
[20301020] |The drop marked the largest monthly tumble since a 19% slide in January 1982.

[20301021] |In last month's survey, a number of currency analysts predicted the dollar would be pressured by a narrowing of interest rate differentials between the U.S. and West Germany.

[20301022] |Indeed, in early October the West German central bank raised its discount and Lombard rates by a full percentage point.
[20301023] |Several other European central banks, notably in Britain, followed the West German Bundesbank's lead by raising their own key rates.
[20301024] |And a week later, Japan raised its official discount rate by a half point to 3.75%.
[20301025] |The Japanese discount rate is the central bank's base rate on loans to commercial banks.

[20301026] |After a surprisingly sharp widening in the U.S. August merchandise trade deficit -- $10.77 billion from a revised $8.24 billion in July and well above expectations -- and a startling 190-point drop in stock prices on Oct. 13, the Federal Reserve relaxed short-term interest rates, knocking fed funds from around 9% to 8 3/4%.

[20301027] |But predictions that central banks of the Group of Seven (G-7) major industrial nations would continue their massive dollar sales went astray, as the market drove the dollar downward on its own, reacting to Wall Street's plunge and subsequent price volatility, lower U.S. interest rates and signs of a slowing U.S. economy.
[20301028] |G-7 consists of the U.S., Japan, Britain, West Germany, Canada, France and Italy.

[20301029] |Tomoshige Kakita, senior deputy manager in the treasury department of Mitsui Bank Ltd. in Tokyo, suggested that uncertainty about U.S. stocks and bonds has made Japanese investors leery of holding those securities in the near term, thus damping dollar demand.

[20301030] |But, Mr. Kakita added, once U.S. equities regain some stability, players will move back into dollar-denominated investments, especially Treasury bonds, whose value rises when interest rates decline.

[20301031] |Mr. Kakita said the key dollar-yen exchange rate is at 135 yen.
[20301032] |"If 135 is broken, some panic will be seen," he predicted, explaining that Japanese institutions are comfortable with the dollar anywhere between current levels and 135 yen.

[20301033] |Jens-Uwe Fischer, a senior trader at Manufacturers Hanover Trust Co. in Frankfurt, said he expects the dollar to recover within the next three months to around 1.88 marks as U.S. economic data, particularly U.S. trade figures, level off.
[20301034] |He contended that the Fed won't ease rates further, but predicted Bundesbank officials will relax key rates in West Germany.

[20301035] |Alfred Zapfel, chief trader at Bank of Boston in Frankfurt, took an opposite stance.
[20301036] |He said he expects U.S. interest rates to decline, dragging the dollar down to around 1.80 marks by the end of January after a short-lived dash to 1.87 marks by the end of November.
[20301037] |West German interest rates, he said, will remain unchanged.

[20301038] |"But I'm not one of these great dollar bears you see more of these days," Mr. Zapfel said.
[20301039] |"I can't really see it dropping far below 1.80 marks."

[20301040] |Scott Greene, chief foreign exchange dealer with Julius Baer & Co. in New York, fits the description of a "great dollar bear."
[20301041] |He predicted the U.S. unit will skid below 1.80 marks to around 1.78 marks this month and 1.75 marks by the beginning of the new year.

[20301042] |"We're finally seeing the culmination of all the recessionary buildup of the last few months," he said, noting a continuing downward trend in U.S. interest rates, a shaky stock market and "gloomier economic times ahead" all signal a significantly lower dollar.

[20301043] |In the wake of British Chancellor of the Exchequer Nigel Lawson's surprise resignation and sterling's subsequent nose-dive, most analysts had little good to say about the pound's near-term prospects.

[20301044] |Mr. Owen of Kleinwort Benson suggested that the new chancellor, John Major, will take a tough line in his autumn statement later this month, helping to underpin the pound.
[20301045] |But, he warned, the currency will remain at risk.

[20301046] |On the Commodity Exchange in New York, gold for current delivery dropped $3.10 to $374.70 an ounce in moderate trading.
[20301047] |Estimated volume was 3.5 million ounces.

[20301048] |In early trading in Hong Kong Wednesday, gold was quoted at $373.80 an ounce.

[20301049] |Christopher Hill in Tokyo, Nicholas Hastings in London, Erik Kirschbaum in Frankfurt and Caitlin Randall and Douglas Appell in New York contributed to this article.

[20302001] |West Germany will repeal the unpopular turnover tax on securities transactions as of Jan. 1, 1991, Economics Minister Helmut Haussmann said.

[20302002] |He said the government will also repeal the 1% transaction tax on the first-time purchase of stakes in companies.

[20302003] |The announcement follows several comments by government officials that the government will speed up the repeal of the tax, which was originally scheduled to fall with the start of the single internal market in the European Community at the end of 1992.

[20302004] |The securities-turnover tax has been long criticized by the West German financial community because it tends to drive securities trading and other banking activities out of Frankfurt into rival financial centers, especially London, where trading transactions isn't taxed.

[20302005] |The tax has raised less than one billion marks ($545.3 million) annually in recent years, but the government has been reluctant to abolish the levy for budgetary concerns.
[20302006] |In the interview, Mr. Haussmann didn't specify the amount of revenue the government will lose after the tax disappears.

[20302007] |The new date means that the tax will be officially repealed before the end of the current parliamentary term at the end of 1990 and guarantees its abolition even if the current center-right coalition loses the elections in December 1990.

[20303001] |Earlier this year, President Bush made a final "take-it-or-leave it" offer on the minimum wage: an increase to $4.25 an hour over three years, and only if accompanied by a lower wage for the first six months of a job.
[20303002] |Now, the White House has decided to accept the higher wage over only two years.
[20303003] |The sub-minimum wage would apply only to first-time teen-age workers for 90 days.
[20303004] |The White House had enough votes to sustain a veto but chose to avoid a confrontation.
[20303005] |The only permanent losers will be the 200,000 or so workers everyone agrees will be priced out of a job at the $4.25 rate Congress is likely to approve today.
[20303006] |It is compromises such as this that convince Washington's liberals that if they simply stay the course, this administration will stray from its own course on this and other issues.

[20304001] |The head trader of Chemical Banking Corp.'s interest-rate options group has left the company, following valuation errors that resulted in a $33 million charge against its third-quarter results.

[20304002] |Chemical said Steven Edelson resigned recently, but one individual close to the situation said the resignation was forced.
[20304003] |Mr. Edelson couldn't be reached for comment.

[20304004] |A separate inquiry by Chemical cleared Mr. Edelson of allegations that he had been lavishly entertained by a New York money broker.
[20304005] |That inquiry hasn't resolved similar allegations involving another Chemical options trader.

[20304006] |In other personnel changes stemming from problems in its options unit:

[20304007] |-- Chemical named James Kennedy, a trader in swaps contracts for the bank, to assume Mr. Edelson's duties and to be trading manager for derivative products, including swaps and interest-rate options.

[20304008] |-- Lee Wakeman, vice president in charge of options research who discovered the valuation errors and was asked by senior management to straighten out the mess, resigned to take a position in asset and liability management at Continental Bank in Chicago.
[20304009] |Mr. Wakeman, whom Chemical tried to keep, didn't return calls for comment.

[20304010] |Separately, Chemical confirmed that it took an undisclosed charge in the second quarter for losses on forward-rate agreements involving foreign currency written by its branch in Frankfurt, West Germany.

[20304011] |A Chemical spokeswoman said the second-quarter charge was "not material" and that no personnel changes were made as a result.
[20304012] |The spokeswoman said the Frankfurt situation was "totally different" from problems in the interest-rate options unit.

[20304013] |According to individuals familiar with the situation, the Frankfurt loss stemmed from a computer program for calculating prices on forward-rate agreements that failed to envision an interest-rate environment where short-term rates were equal to or higher than long-term rates.

[20304014] |While the incidents involving interest-rate options and forward-rate agreements are unrelated, some observers say they echo a 1987 incident in which Bankers Trust New York Corp. restated the value of its foreign exchange options contracts downward by about $80 million.

[20304015] |These complex products require close monitoring because each must be valued separately in light of current market conditions.
[20304016] |In an interest-rate options contract, a client pays a fee to a bank for custom-tailored protection against adverse interest-rate swings for a specified period.
[20304017] |In a forward-rate agreement, a client agrees to an exchange rate on a future currency transaction.

[20304018] |Some competitors maintain the interestrate option loss, in particular, may have resulted more from Chemical's taking large and often contrarian positions than a valuation problem.

[20304019] |Started three years ago, Chemical's interest-rate options group was a leading force in the field.
[20304020] |From 1987 to 1988, the value of Chemical's option contracts outstanding mushroomed to $37 billion from $17 billion.
[20304021] |More importantly, the volume of options written exceeded those purchased by almost 2-to-1.
[20304022] |With such a lopsided book of options, traders say, Chemical was more vulnerable to erroneous valuation assumptions.

[20304023] |The Chemical spokeswoman said the bank has examined its methodologies and internal controls.
[20304024] |"We consider our internal controls to have worked well," she said, adding that some procedures have been strengthened.
[20304025] |Its valuation methodologies, she said, "are recognized as some of the best on the Street.
[20304026] |Not a lot was needed to be done.

[20305001] |When Thomas W. Wathen went big league last year, he acquired a treasure-trove of Americana along with a well-known but ailing security business: Pinkerton's Inc.

[20305002] |There was a wanted poster offering "Rewards for the Arrest of Express and Train Robbers Frank James and Jesse W. James" and the original Pinkerton's logo with an open eye and the inscription "We Never Sleep," which inspired the phrase "private eye."
[20305003] |Then there were two gold watches once owned by Allan Pinkerton, who founded the company in Chicago in 1850.
[20305004] |But there were supposed to be three, Mr. Wathen's company claims.

[20305005] |The missing watch is emblematic of the problems Mr. Wathen encountered in building his closely held California Plant Protection Security Service into the largest detective and security agency in the U.S. through acquisitions.
[20305006] |The ever-optimistic Mr. Wathen has learned that while acquiring a big brand-name company can be a shortcut to growth, it can also bring a host of unforeseen problems.

[20305007] |"We cleared out a lot of rats' nests," says the 60-year-old security veteran.

[20305008] |Mr. Wathen, who started his career as an Air Force investigator and worked as a security officer for several large companies, built his California Plant Protection from a tiny mom-and-pop security patrol firm here in the San Fernando Valley.
[20305009] |He joined the firm in 1963 and bought it from the owners the next year.
[20305010] |Over the next 20 years, California Plant Protection opened 125 offices around the country.

[20305011] |Yet although California Plant Protection was netting bigger and bigger clients -- the firm provided security for the 1984 Summer Olympics in Los Angeles -- it still didn't have the name recognition of Pinkerton's.
[20305012] |So when American Brands Inc. decided to sell the unit in 1987 as part of a divestiture of its food and security industries operations, Mr. Wathen saw a chance to accomplish several objectives.

[20305013] |He decided he could easily merge Pinkerton's operations with his own while slashing overhead costs because the two already operated in many of the same cities.
[20305014] |He could acquire a staff of loyal Pinkerton's employees, many of whom had spent their entire careers with the firm, he could eliminate a competitor and he could get the name recognition he'd wanted.

[20305015] |Mr. Wathen also relished the chance to demonstrate an entrepreneur like himself, who'd spent his whole career in the security business, could run Pinkerton's better than an unfocused conglomerate or investment banker.
[20305016] |"The security business is my favorite subject.
[20305017] |I love this business," he says.
[20305018] |"Most of the LBO guys don't know how to run a business anyway."

[20305019] |But there were hitches, not the least of which was that, Mr. Wathen says, he proceeded almost blindly in doing the $95 million acquisition, which was completed in January 1988.
[20305020] |"We weren't allowed to do any due diligence because of competitive reasons.
[20305021] |If we had, it might have scared us off," he says.

[20305022] |Five years of rapid expansion under American Brands, with an emphasis on marketing the agency's services instead of improving them, had hurt Pinkerton's profits, Mr. Wathen claims.
[20305023] |He says his team couldn't tell whether accounts receivable had been paid or not.
[20305024] |Pinkerton's had locked itself into low-price contracts to win new business, with no hope of profitability until the contracts expired, he adds.
[20305025] |And regional offices were "egregiously overstaffed," he claims.
[20305026] |One office had 19 people doing the work of three, "and half of the employees had company automobiles."

[20305027] |American Brands declined to comment on Mr. Wathen's accusations.

[20305028] |The acquisition combined the country's second-largest security company, Pinkerton's, with 1987 sales of $410 million, and the fourth largest, California Plant Protection, with $250 million in sales, creating the industry's biggest firm, which took on the Pinkerton's name.
[20305029] |Even after divesting itself of $120 million of unprofitable business, the new Pinkerton's will have sales of about $610 million this year and operating profit roughly double the industry average of 2%-3% of sales, says Lloyd Greif of Sutro & Co. in Los Angeles, which arranged the Pinkerton's acquisition.

[20305030] |Mr. Wathen says his turnaround strategy has been simple: just hack away at the fat.
[20305031] |He began by closing 120 of the combined companies' 260 offices in two months, eliminating about 31% of the company's 2,500-person adminstrative staff, including more than 100 sales positions.
[20305032] |He shut down the company's tony New York headquarters.
[20305033] |Pinkerton's world headquarters today is a nondescript, two-story office building across the street from the small Van Nuys Airport.

[20305034] |Next, Mr. Wathen raised Pinkerton's rates, which were 75-cents-an-hour lower than California Plant Protection's average rate of around $8.63.
[20305035] |And he got rid of low-margin businesses that just weren't making money for the company.

[20305036] |Mr. Wathen, who says Pinkerton's had a loss of nearly $8 million in 1987 under American Brands, boasts that he's made Pinkerton's profitable again.
[20305037] |But Mr. Wathen's team still must pay down about $82 million of long-term bank debt from the acquisition within the next four years.
[20305038] |Last year, earnings of the combined companies didn't cover debt service and Pinkerton's was forced to borrow $20 million of subordinated debt.
[20305039] |"We wouldn't have had to refinance if a lot of the problems hadn't been there," Mr. Wathen says.
[20305040] |This year, Mr. Wathen says the firm will be able to service debt and still turn a modest profit.

[20305041] |Now Pinkerton's could become entangled in a protracted legal fracas with its former parent.
[20305042] |The company recently filed suit in state court in Los Angeles against American Brands, seeking at least $40 million in damages from the Old Greenwich, Conn.-based company.

[20305043] |The suit alleges that American Brands misrepresented the financial condition of Pinkerton's before the sale, failed to disclose pending lawsuits and material contracts in which Pinkerton's was in default, hadn't registered the Pinkerton's name and trademark in the United Kingdom and didn't tell California Plant Protection about some labor controversies.

[20305044] |"We have previously had discussions with representatives of Pinkerton's Inc. concerning the {sale of the company} and we concluded that we did not have liability under the contract," says American Brands.
[20305045] |"As this is now a litigation matter, we have no further comment."

[20305046] |And then there's the case of the missing gold watch.

[20305047] |The lawsuit alleges that an inventory of Pinkerton's memorabilia disclosed that one of the watches hadn't been forked over by American Brands.
[20305048] |"American Brand's failure to surrender the gold watch has damaged new Pinkerton's in an amount as yet {to be} determined and deprived it of a valuable artifact for which it had bargained," the suit charges.

[20305049] |The key to Pinkerton's future will be sticking to what it does best -- being a security company, says Mr. Wathen.
[20305050] |The company is also renewing its emphasis on investigations, particularly undercover investigations for corporations.
[20305051] |Although investigations now account for only about 5% of Pinkerton's total revenue, that side of the business has traditionally been the more "glamorous" of the two and it carries historical and sentimental value.
[20305052] |(Author Dashiell Hammett, who wrote "The Maltese Falcon," was a former Pinkerton's detective.)

[20305053] |American Brands "just had a different approach," Mr. Wathen says.
[20305054] |"Their approach didn't work; mine is.

[20306001] |Farm prices in October edged up 0.7% from September as raw milk prices continued their rise, the Agriculture Department said.

[20306002] |Milk sold to the nation's dairy plants and dealers averaged $14.50 for each hundred pounds, up 50 cents from September and up $1.50 from October 1988, the department said.

[20306003] |Commercial vegetables, led by lettuce and tomatoes, rose 19% in October; oranges and other fruits rose 5%.

[20306004] |Broiler prices fell 6.5 cents in October to 30.6 cents a pound, while turkey prices rose 1.2 cents a pound to 38.5 cents.
[20306005] |Egg prices averaged 64.2 cents a dozen, down 0.2 cent from September.

[20306006] |Hogs rose $3.40 to $46.80 a hundredweight in October, while beef cattle slipped 80 cents to $67.40 for each hundred pounds and calves dropped 90 cents to $90.20.

[20306007] |Soybeans averaged $5.28 a bushel, down 42 cents from September; corn averaged $2.20, down seven cents, and sorghum grain averaged $3.61 for each hundred pounds, down 19 cents, according to the department.

[20307001] |Paramount Communications Inc., New York, completed the sale of its Associates Corp. consumer and commercial finance subsidiary to a unit of Ford Motor Co. for $3.35 billion.

[20307002] |Paramount, which agreed to sell the unit in July, said it would realize net proceeds from the sale of $2.6 billion, with an after-tax gain of $1.2 billion.
[20307003] |Paramount said the gain would be recorded in its fourth quarter, which ended yesterday.

[20307004] |Paramount said the sale "completes the strategic restructuring" it began in 1983, and would enable it to focus on its entertainment and publishing businesses.

[20307005] |Ford said in July it planned to operate Associates, based in Dallas, as a separate entity in its Ford Financial Services Group.
[20307006] |Paramount said Associates has about $14 billion in total assets, making it third-largest in terms of assets among independent finance companies in the U.S.

[20308001] |Sea Containers Ltd., in a long-awaited move to repel a hostile takeover bid, said it will sell $1.1 billion of assets and use some of the proceeds to buy about 50% of its common shares for $70 apiece.

[20308002] |Together with the 3.6 million shares currently controlled by management, subsidiaries and directors, the completed tender offer would give Sea Containers a controlling stake.

[20308003] |Describing itself as "asset rich," Sea Containers said it will move immediately to sell two ports, various ferries, ferry services, containers, and other investments.
[20308004] |Of the proceeds, $500 million will be used to fund its tender offer.
[20308005] |Sea Containers added that the recapitalization plan will reduce its debt by more than $500 million.

[20308006] |The company, which has 13.8 million common shares outstanding, said in mid-June that it was considering a restructuring to ward off a hostile takeover attempt by two European shipping concerns.
[20308007] |In late May, Stena Holding AG and Tiphook PLC, launched a $50-a-share, or $777 million, tender offer for the Hamilton, Bermuda-based Sea Containers.
[20308008] |In mid-August, the companies, through their jointly owned holding company, Temple Holdings Ltd., sweetened the offer to $63 a share, or $963 million.

[20308009] |Officials for Temple declined to comment.

[20308010] |News of the restructuring plan sent Sea Containers' shares up $1 to $62 in New York Stock Exchange composite trading.

[20308011] |Walter Kirchberger, an analyst with PaineWebber Inc., said that offering holders a higher, $70-a-share price is "a fairly effective method of blocking" the Stena-Tiphook bid.
[20308012] |Michael Carstens, an analyst with Tucker Anthony & R.L. Day, added that the sale of assets would allow Sea Containers to focus on its core container businesses.

[20308013] |For holders who decide not to tender their shares, Sea Containers will issue one share of preferred stock with a stated value of $25, plus a cash dividend on the common stock.
[20308014] |The company said its directors, management and subsidiaries will remain long-term investors and won't tender any of their shares under the offer.

[20308015] |Sea Containers said the offer will proceed after the Bermuda Supreme Court lifts or modifies an interim injunction restraining the company from buying its shares.
[20308016] |That injunction resulted from litigation between Temple and Sea Containers last May.

[20308017] |The company said the court has indicated it will make a decision on or about Nov. 27.
[20308018] |Sea Containers will soon set a date for its annual shareholder meeting to seek holder approval for the offer.

[20309001] |You'd think all the stories about well-heeled communities and developers getting HUD grants would prompt Congress to tighten up on upscale housing subsidies.
[20309002] |No way.
[20309003] |Congress has just made it easier for the affluent to qualify for insured loans from the deficit-ridden Federal Housing Administration.
[20309004] |It appears that the only thing Congress is learning from the HUD story is how to enlarge its control of the honey pot going to special interests.

[20309005] |Right now, the largest loan the FHA can insure in high-cost housing markets is $101,250.
[20309006] |Last week, housing lobbies persuaded Congress to raise the ceiling to $124,875, making FHA loans more accessible to the well-to-do.
[20309007] |But it does that at the cost of deepening the taxpayer's exposure if the FHA is forced to pay for more loans going sour.
[20309008] |This is no idle fearlast year the FHA lost $4.2 billion in loan defaults.

[20309009] |But the higher mortgage ceiling is only the starter kit for what Senator Alan Cranston and Majority Leader George Mitchell have in mind for housing.
[20309010] |The Senate Banking Committee will begin hearings next week on their proposal to expand existing federal housing programs.
[20309011] |Other Senators want to lower the down payments required on FHA-insured loans.

[20309012] |That would be a formula for ensuring even more FHA red ink.
[20309013] |Experience has shown that the most important element in predicting a housing-loan default is the down payment.
[20309014] |Because a purchaser can use an FHA loan to finance all points and closing costs, the FHA can wind up lending more than a house is worth.
[20309015] |If housing prices continue to fall, many borrowers would be better off walking away from their homes and leaving taxpayers with the losses.
[20309016] |Much the same thing happened with busted S&Ls, a problem Congress just "solved" with a $166 billion bailout.

[20309017] |We hear that HUD Secretary Jack Kemp is toying with going along with some of the Cranston-Mitchell proposals.
[20309018] |That sounds like a formula for ensuring that he gets dragged into the next HUD tar pit.
[20309019] |A group of 27 Senators has written Mr. Kemp urging him to reject Cranston-Mitchell and focus on programs that empower the poor rather than create vast new government obligations.
[20309020] |But even if he agrees, Mr. Kemp doesn't write the nation's housing law -- Congress does.
[20309021] |And the majority of Members cynically view the current discrediting of HUD as mainly a chance to shove through their own slate of projects.

[20309022] |Exhibit A is last week's House vote to fund 40 pet projects out of the same discretionary fund that is at the heart of the HUD scandal.
[20309023] |None of the grants had been requested by HUD, judged competitively or were the subject of a single hearing.

[20309024] |More and more observers now realize that the key to ending future HUD scandals lies in forcing Congress to clean up its own act.
[20309025] |This week, a Baltimore Sun editorial said the Lantos subcommittee on HUD should forget about Sam Pierce's testimony for the moment and call some other witnesses: the various congressional sponsors of the 40 pork-barrel projects.
[20309026] |The Sun concluded that Mr. Pierce is only part of the problem -- and a part that's gone.
[20309027] |"If HUD is to be reformed," it concluded, Members of Congress will "have to start looking into, and doing something about, the practices of their colleagues."

[20309028] |Of course, self-reform is about the last thing this Congress is interested in.
[20309029] |Proponents of expanding FHA programs say they merely want to help home buyers who are frozen out of high-priced markets.
[20309030] |But the FHA program is hemorrhaging bad loans.
[20309031] |Jack Kemp has submitted a package of reforms, and they are surely headed for the Capitol Hill sausage-grinder.
[20309032] |Like the S&L mess before it, this is a problem Congress should be solving, not ignoring.

[20310001] |Gillette Co., Boston, said it is planning to restructure its South African subsidiary.
[20310002] |Under the plan, Gillette South Africa will sell manufacturing facilities in Springs, South Africa, and its business in toiletries and plastic bags to Twins Pharmaceuticals Ltd., an affiliate of Anglo American Corp., a South African company.

[20310003] |Terms were not disclosed.
[20310004] |A final agreement has not been signed, and the moves will not have a material effect on the company, Gillette said.
[20310005] |The company said it is part of a continuing world-wide restructuring in which it has downsized or sold operations in several countries.
[20310006] |Gillette said its continued presence in South Africa "enables it to make meaningful contributions to South African society, to the lives of its employees and to the communities in which it operates."
[20310007] |Gillette South Africa employs about 250 people.
[20310008] |About 60% of the work force will continue with Gillette or transfer to Twins Pharmaceuticals, the company said.

[20311001] |The Soviet legislature approved a 1990 budget yesterday that halves its huge deficit with cuts in defense spending and capital outlays while striving to improve supplies to frustrated consumers.
[20311002] |The vote to approve was

[20311003] |A proposal to raise prices of beer, tobacco and luxuries was rejected 338-44.

[20311004] |Soviet President Mikhail S. Gorbachev told the legislators they had made a good start, but that the most difficult work was still ahead.

[20311005] |The Tass news agency said the 1990 budget anticipates income of 429.9 billion rubles (US$693.4 billion) and expenditures of 489.9 billion rubles (US$790.2 billion).

[20311006] |Those figures are almost exactly what the government proposed to legislators in September.
[20311007] |If the government can stick with them, it will be able to halve this year's 120 billion ruble (US$193 billion) deficit.

[20311008] |Officials proposed a cut in the defense budget this year to 70.9 billion rubles (US$114.3 billion) from 77.3 billion rubles (US$125 billion) as well as large cuts in outlays for new factories and equipment.

[20311009] |Tass said the final budget and economic plan calls for a sharp increase in the production of consumer goods.

[20312001] |Trial and Terror

[20312002] |At times I sequester my mind When I must think with precision, Detached from all other thoughts While trying to reach a decision.

[20312003] |But often nothing's resolved, To my frustration and fury: With pros and cons in limbo, I feel like a hung jury.

[20312004] |-- Arnold J. Zarett.

[20312005] |Daffynition

[20312006] |Rodeo applause: broncs cheer.

[20312007] |-- Marvin Alisky.

[20313001] |Ocean Drilling & Exploration Co. will sell its contract-drilling business, and took a $50.9 million loss from discontinued operations in the third quarter because of the planned sale.

[20313002] |The New Orleans oil and gas exploration and diving operations company added that it doesn't expect any further adverse financial impact from the restructuring.

[20313003] |In the third quarter, the company, which is 61%-owned by Murphy Oil Corp. of Arkansas, had a net loss of $46.9 million, or 91 cents a share, compared with a restated loss of $9 million, or 18 cents a share, a year ago.
[20313004] |The latest period had profit from continuing operations of $4 million.
[20313005] |Revenue gained 13% to $77.3 million from $68.5 million.

[20313006] |Ocean Drilling said it will offer 15% to 20% of the contract-drilling business through an initial public offering in the near future.
[20313007] |It has long been rumored that Ocean Drilling would sell the unit to concentrate on its core oil and gas business.

[20313008] |Ocean Drilling said it won't hold any shares of the new company after the restructuring.

[20314001] |After 20 years of pushing labor proposals to overhaul the nation's health-care system, Bert Seidman of the AFL-CIO is finding interest from an unlikely quarter: big business.

[20314002] |Corporate leaders, frustrated by double-digit increases in health-care costs, are beginning to sound like liberal Democrats.
[20314003] |Failure to check rising medical costs ultimately could "lead some of us who today are free-market advocates to re-examine our thinking and positions with respect to government-sponsored national health insurance," Arthur Puccini, a General Electric Co. vice president, warned earlier this year.

[20314004] |The pocketbook impact of health benefits has driven business and labor to a surprising consensus.
[20314005] |Both the AFL-CIO and the National Association of Manufacturers are calling for measures to control rising costs, improve quality and provide care to the 31 million Americans who currently lack health insurance.

[20314006] |Agreement on these points is a long way from a specific program, and nobody expects the U.S. to rush toward radical restructuring of the health-care system.
[20314007] |But there are signs that labor-management cooperation could change the politics of health-care legislation and the economics of medicine.
[20314008] |"I can't remember a time when virtually everyone can agree on what the problem is," says Mr. Seidman, who heads the AFL-CIO's department dealing with health matters.

[20314009] |Because the Bush administration isn't taking the initiative on health issues, business executives are dealing with congressional Democrats who champion health-care revision.
[20314010] |"Business across the country is spending more time addressing this issue," says Sen. Edward Kennedy (D., Mass.).
[20314011] |"It's a bottom-line issue."
[20314012] |Business complained earlier this year when Sen. Kennedy introduced a bill that would require employers to provide a minimum level of health insurance to workers but doesn't contain cost-control measures.
[20314013] |Partly in response, a bipartisan group of senators from the finance and labor committees is drafting a plan to attract broader support.
[20314014] |It will feature a cost-containment provision designed to keep expanded benefits from fueling higher care prices.

[20314015] |At 11.1% of gross national product, U.S. health costs already are the highest in the world.
[20314016] |By contrast, Japan's equal 6.7% of GNP, a nation's total output of goods and services.
[20314017] |Management and labor worry that the gap makes U.S. companies less competitive.

[20314018] |Chrysler Corp. estimates that health costs add $700 to the price of each of its cars, about $300 to $500 more per car than foreign competitors pay for health.
[20314019] |"The cost of health care is eroding standards of living and sapping industrial strength," complains Walter Maher, a Chrysler health-and-benefits specialist.

[20314020] |Labor is upset because many companies are using higher employee insurance premiums, deductibles and co-payments to deflect surging medical costs to workers.
[20314021] |Health benefits are contentious issues in the strikes against Pittston Co. and Nynex Corp.
[20314022] |In their new contract this year, American Telephone & Telegraph Co. and the Communications Workers of America agreed to look for "prompt and lasting national solutions" to rising health-care costs.

[20314023] |Some analysts are cynical about the new corporate interest in health-care overhaul.
[20314024] |Carl Schramm, president of the Health Insurance Association of America, scoffs at "capitalists who want to socialize the entire financing system" for health.
[20314025] |"They hope they can buy some government cost discipline," but this is a false hope, Mr. Schramm says.
[20314026] |He asserts that government has done an even worse job of controlling its health bill than business.

[20314027] |So far neither the Bush administration nor Congress is prepared to lead the way toward revamping health care.
[20314028] |The administration lacks a comprehensive health-care policy.
[20314029] |Congress still is struggling to dismantle the unpopular Catastrophic Care Act of 1988, which boosted benefits for the elderly and taxed them to pay for the new coverage.

[20314030] |A bipartisan commission established by Congress and headed by Sen. John Rockefeller (D., W.Va.) is scheduled to present new plans for dealing with the uninsured and long-term care for the elderly by next March 1.
[20314031] |A quadrennial commission appointed by Health and Human Services Secretary Louis Sullivan is taking a broad look at the economics of Medicare for the elderly, Medicaid for the poor and the health system in general.
[20314032] |It is expected to report next summer.

[20314033] |"No magic bullet will be discovered next year, an election year," says Rep. Fortney Stark (D., Calif.)
[20314034] |But 1991 could be a window for action.
[20314035] |The pressure for change will rise with costs.
[20314036] |"I think employers are really going to be the ones to push for major change," says Sharon Canner, a health expert at NAM.

[20314037] |Any major attempt to revamp the health-care system is likely to trigger opposition from politically powerful interest groups, particularly the American Medical Association, and perhaps from the public as well, if Congress takes steps that patients fear will limit the availability of care.

[20314038] |The NAM embraces efforts, which both the administration and the medical profession have begun, to measure the effectiveness of medical treatments and then to draft medical-practice guidelines.
[20314039] |Advocates hope that such standards will improve treatment while limiting unnecessary tests and medical procedures.
[20314040] |HHS Secretary Sullivan estimates that as much as 25% of the medical procedures performed each year may be inappropriate or unnecessary.

[20314041] |Limiting care won't be easy or popular.
[20314042] |"To slow the rise in total spending, it will be necessary to reduce per-capita use of services," the NAM warns in a policy statement.
[20314043] |This will "require us to define -- and redefine -- what is `necessary' or `appropriate' care.
[20314044] |This involves trade-offs and {it} cuts against the grain of existing consumer and even provider conceptions of what is `necessary.'"

[20314045] |The AFL-CIO also embraces treatment guidelines.
[20314046] |In addition, it's toying with an approach that would impose health-expenditure ceilings or budgets on the government as a whole and on individual states as a way to slow health-care spending.
[20314047] |At a meeting here on Nov. 15, the labor federation plans to launch a major effort to build grass-roots support for health-care overhaul.

[20315001] |Stelco Inc. said it plans to shut down three Toronto-area plants, moving their fastener operations to a leased facility in Brantford, Ontario.

[20315002] |The company said the fastener business "has been under severe cost pressures for some time."
[20315003] |The fasteners, nuts and bolts, are sold to the North American auto market.

[20315004] |A company spokesman declined to estimate the impact of the closures on earnings.
[20315005] |He said the new facility will employ 500 of the existing 600 employees.
[20315006] |The steelmaker employs about 16,000 people.

[20315007] |Stelco said it has an option to lease a 350,000-square-foot building in Brantford and proposes to spend 24.5 million Canadian dollars (US$20.9 million) on the facility.
[20315008] |The three existing plants and their land will be sold.

[20316001] |First Security Corp. said it tentatively agreed to acquire Deseret Bancorp. for stock valued at about $18 million.

[20316002] |Terms call for First Security to issue about 0.55 share of its stock for each Deseret share held, or a total of about 550,000 First Security shares.
[20316003] |It has about 12.3 million shares outstanding.

[20316004] |Deseret, with about $100 million in assets, is the parent of the Deseret Bank, which has six offices and headquarters at Pleasant Grove, Utah.
[20316005] |The purchase price is equal to about 1.65 times Deseret's roughly $10.7 million book value, or assets less liabilities.

[20316006] |Salt Lake City-based First Security, with $5.4 billion in assets, said the agreement is subject to shareholder and regulatory approval, and that it hopes to complete the transaction early next year.

[20317001] |Georgia-Pacific Corp.'s unsolicited $3.19 billion bid for Great Northern Nekoosa Corp. was hailed by Wall Street despite a cool reception by the target company.

[20317002] |William R. Laidig, Nekoosa's chairman, chief executive officer and president, characterized the $58-a-share bid as "uninvited" and said Nekoosa's board would consider the offer "in due course."

[20317003] |T. Marshall Hahn Jr., Georgia-Pacific's chairman and chief executive, said in an interview that all terms of the offer are negotiable.
[20317004] |He added that he had spoken with Mr. Laidig, whom he referred to as a friend, by telephone Monday evening.
[20317005] |"I'm hopeful that we'll have further discussions," Mr. Hahn said.

[20317006] |On Wall Street, takeover stock traders bid Nekoosa's stock well above the Georgia-Pacific bid, assuming that Nekoosa's will either be sold to a rival bidder or to Georgia-Pacific at a higher price -- as much as $75 a share, according to some estimates.

[20317007] |Yesterday, Nekoosa common closed in composite New York Stock Exchange trading at $62.875, up $20.125, on volume of almost 6.3 million shares.
[20317008] |Georgia-Pacific closed down $2.50, at $50.875 in Big Board trading.

[20317009] |Takeover stock traders noted that with the junk-bond market in disarray, Georgia-Pacific's bid is an indication of where the takeover game is headed: namely, industrial companies can continue bidding for one another, but financial buyers such as leveraged buy-out firms will be at a disadvantage in obtaining financing.

[20317010] |"The way the world is shaping up, the strategic buyer is going to be the rule and the financial buyer is going to be the exception," said one trader.

[20317011] |For the paper industry specifically, most analysts said the deal will spur a wave of paper-company takeovers, possibly involving such companies as Union Camp Corp., Federal Paperboard Co. and Mead Corp.
[20317012] |The analysts argued that Georgia-Pacific's offer, the first hostile bid ever among major players in the paper industry, ends the unwritten taboo on hostile bids, and will push managements to look closely at the industry's several attractive takeover candidates.

[20317013] |"Consolidation has been long overdue.
[20317014] |It was just the culture of the industry that kept it from happening.
[20317015] |The Georgia-Pacific offer has definitely changed the landscape," said Gary Palmero of Oppenheimer & Co.
[20317016] |Added Mark Rogers of Prudential-Bache Securities Inc.: "It's much easier to be second."

[20317017] |A Georgia-Pacific acquisition of Nekoosa would create the largest U.S. forest-products company.
[20317018] |Based on 1988 sales, Georgia-Pacific ranked third at $9.51 billion, behind Weyerhaeuser Co. at $10 billion and International Paper Co. at $9.53 billion.
[20317019] |Nekoosa ranked 11th with sales of $3.59 billion.
[20317020] |The combined company would have had 1988 sales of $13.1 billion.

[20317021] |But such a combination also presents great risks.
[20317022] |At a time when most analysts and industry consultants say pulp and paper prices are heading for a dive, adding capacity and debt could squeeze Georgia-Pacific if the industry declines more than the company expects.
[20317023] |Moreover, any unexpected strengthening of the dollar would hurt Georgia-Pacific because two of Nekoosa's major product lines -- containerboard, which is used to make shipping boxes, and market pulp -- are exported in large quantities.

[20317024] |"Nobody knows how deep the cycle is going to be," said Rod Young, vice president of Resource Information Systems Inc., a Bedford, Mass., economic-forecasting firm.
[20317025] |"Depending on how far down you go, it may be difficult to pay off that debt."

[20317026] |One person familiar with Georgia-Pacific said the acquisition would more than double the company's debt of almost $3 billion.
[20317027] |It also could be a drag on Georgia-Pacific earnings because the roughly $1.5 billion in goodwill -- the amount by which the bid exceeds Nekoosa's book value of $1.5 billion -- will have to be subtracted from earnings over a period of decades.

[20317028] |Georgia-Pacific's Mr. Hahn said that a combined operation would allow savings in many ways.
[20317029] |The two companies each produce market pulp, containerboard and white paper.
[20317030] |That means goods could be manufactured closer to customers, saving shipping costs, he said.

[20317031] |Moreover, production runs would be longer, cutting inefficiencies from adjusting machinery between production cycles.
[20317032] |And Georgia-Pacific could save money in selling pulp, because the company uses its own sales organization while Nekoosa employs higher-cost agents.

[20317033] |Mr. Hahn said Georgia-Pacific has accounted in its strategy for a "significant downturn" in the pulp and paper industry, an event that he said would temporarily dilute earnings.
[20317034] |But he said that even under those conditions, the company still would realize a savings of tens of millions of dollars in the first year following a merger.
[20317035] |"The fit is so good, we see this as a time of opportunity," he said.

[20317036] |Georgia-Pacific, which has suspended its stock-repurchase program, would finance the acquisition with all bank debt, provided by banks led by BankAmerica Corp.
[20317037] |Georgia-Pacific owns 349,900 Nekoosa shares and would need federal antitrust clearance to buy more than $15 million worth.
[20317038] |U.S. clearance also is needed for the proposed acquisition.

[20317039] |For Nekoosa, defense options may be undercut somewhat by the precarious state of the junk-bond market, which limits how much value the target could reach in a debt-financed recapitalization.
[20317040] |The company's chairman, Mr. Laidig, and a group of advisers met at the offices of Wachtel Lipton Rosen & Katz, a law firm specializing in takeover defense.
[20317041] |Nekoosa also is being advised by Goldman, Sachs & Co.

[20317042] |Georgia-Pacific's advisers are Wasserstein, Perella & Co., which stands to receive a $15 million fee if the takeover succeeds, and the law firm of Shearman & Sterling.

[20317043] |People familiar with Nekoosa said its board isn't likely to meet before the week after next to respond to the bid.
[20317044] |The board has 10 business days to respond.

[20317045] |In addition to the usual array of defenses, including a so-called poison pill and a staggered board, Nekoosa has another takeover defense: a Maine state law barring hostile bidders from merging acquired businesses for five years.
[20317046] |Nekoosa is incorporated in Maine.

[20317047] |Georgia-Pacific has filed a lawsuit in federal court in Maine challenging the poison pill and the Maine merger law.

[20317048] |Nekoosa's poison pill allows shareholders to vote to rescind it, but Georgia-Pacific isn't likely to pursue such a course immediately because that would take 90 to 120 days, and wouldn't affect the provisions of the Maine law.

[20317049] |Among companies mentioned by analysts as possible counterbidders for Nekoosa are International Paper, Weyerhaeuser, Canadian Pacific Ltd. and MacMillan Bloedel Ltd.
[20317050] |"I'm sure everybody else is putting pencil to paper," said Kathryn McAuley, an analyst with First Manhattan Co.

[20317051] |International Paper and Weyerhaeuser declined to comment.
[20317052] |Canadian Pacific couldn't be reached for comment, and MacMillan Bloedel said it hasn't any plans to make a bid for Nekoosa.

[20317053] |Investors were quick to spot other potential takeover candidates, all of which have strong cash flows and low-cost operations.
[20317054] |Among paper company stocks that rallied on the Big Board because of the offer were Union Camp, up $2.75 to $37.75, Federal Paperboard, up $1.75 to $27.875, Mead, up $2.375 to $38.75, and Temple Inland Inc., up $3.75 to $62.25.
[20317055] |In over-the-counter national trading, Bowater Inc. jumped $1.50 to $27.50.

[20317056] |Some analysts argued that there won't be a flurry of takeovers because the industry's continuing capacity-expansion program is eating up available cash.
[20317057] |Moreover, some analysts said they expect a foreign paper company with deeper pockets than Georgia-Pacific to end up acquiring Nekoosa, signaling to the rest of the industry that hostile bids are unproductive.

[20317058] |"This is a one-time event," said Lawrence Ross of PaineWebber Inc., referring to the Georgia-Pacific bid.

[20317059] |But many analysts believe that, given the attractiveness of paper companies' cash flows, as well as the frantic consolidation of the paper industry in Europe, there will be at least a few more big hostile bids for U.S. companies within the next several months.
[20317060] |The buyers, these analysts added, could be either foreign or other U.S.concerns.

[20317061] |"The Georgia-Pacific bid may open the door to a new era of consolidation" in the paper industry, said Mark Devario of Shearson Lehman Hutton Inc.

[20317062] |"I don't think anyone is now immune from takeover," said Robert Schneider of Duff & Phelps Inc., Chicago.
[20317063] |He added: "Every paper company management has to be saying to itself, `Before someone comes after me, I'm going to go after somebody.'"

[20317064] |Prudential-Bache's Mr. Rodgers said he doesn't see the industry's capacity-expansion program hindering takeover activity.
[20317065] |Several projects, he said, are still on the drawing board.
[20317066] |Moreover, "it's a lot cheaper and quicker to buy a plant than to build one."

[20317067] |Indeed, a number of analysts said that Japanese paper companies are hungry to acquire additional manufacturing capacity anywhere in the world.
[20317068] |Some predicted that Nekoosa will end up being owned by a Japanese company.

[20317069] |Meanwhile, Shearson Lehman's Mr. Devario said that, to stay competitive, the U.S. paper industry needs to catch up with the European industry.
[20317070] |Since the most-recent wave of friendly takeovers was completed in the U.S. in 1986, there have been more than 100 mergers and acquisitions within the European paper industry, he said.

[20318001] |Lyphomed Inc., Rosemont, Ill., and Medco Research Inc., Los Angeles, said the Food and Drug Administration granted full marketing approval for a new drug for the treatment of a condition in which the heart beats between 150 and 200 beats a minute.

[20318002] |The condition, known as paroxysmal supraventricular tachycardia, leads to dizziness and fainting.
[20318003] |The typical healthy heart beats 70 times a minute.

[20318004] |The drug, called adenocard, returns the heart to a normal rhythm within seconds, according to Lyphomed.

[20318005] |Medco Research developed the drug and licensed it to Lyphomed for sale in the U.S. and Canada.

[20319001] |Private industry's labor costs rose 1.2% in the third quarter, matching the second-quarter pace, as health insurance costs continued to soar, the Labor Department said.

[20319002] |The increase in wage and benefit costs in the third quarter was greater than the 1% rise reported for the third quarter of 1988.

[20319003] |"Wage increases and overall compensation increases are beginning to curl upward a little bit," said Audrey Freedman, a labor economist at the Conference Board, a business research organization.

[20319004] |"One would have thought this would have happened two or three years ago as the labor market tightened.
[20319005] |It is a considerably delayed reaction and it's not a severe one at all," she added.

[20319006] |The new data underscored the severity of the nation's health-care cost problem.
[20319007] |In the 12 months ended in September, wages and salaries of private-sector workers rose 4.4%, while health insurance costs spurted by 13.7%.
[20319008] |The consumer price index climbed 4.3% in the same period.

[20319009] |Despite the big increases in health-care costs, wages still account for a far greater share of overall labor costs.
[20319010] |The overall private-sector employment cost index, which includes both wages and benefits, rose 4.7% in the 12 months ended in September, compared with 4.5% for both the 12 months ended in June and the 12 months ended September 1988.

[20319011] |Labor costs are climbing at a far more rapid pace in the health care industry than in other industries.
[20319012] |For instance, wages of private-sector hospital workers leaped 6.6% in the 12 months ended in September, compared with 4.4% for workers in all industries.

[20319013] |In the third quarter, wages and salaries in all private industry rose 1.2%, compared with 1% increases in both the second quarter and in the third quarter of 1988.

[20319014] |For the past five years, unions haven't managed to win wage increases as large as those granted to nonunion workers.
[20319015] |For private-sector union workers, the cost of wages and benefits rose 0.9% in the third quarter.
[20319016] |For nonunion workers, the costs rose 1.4%.

[20319017] |Labor costs continued to rise more rapidly in service industries than in goods-producing industries, the report showed.
[20319018] |It also found them rising much more in the Northeast than elsewhere.

[20319019] |Including employees of state and local -- but not the federal -- governments, the employment cost index rose 1.6% in the third quarter, compared with a 1.3% rise in the same quarter in 1988.
[20319020] |The index rose 1.1% in the second quarter.

[20319021] |For the 12 months ended in September, this index was up 5.1%.
[20319022] |It rose 4.8% for the 12 months ended in June and 4.7% in the 12 months ended in September 1988.

[20319023] |Unlike most economic indicators, none of these figures are adjusted for seasonal variations.

[20320001] |DeSoto Inc. said it is dismissing 200 employees as part of a restructuring aimed at producing pretax savings of $10 million annually.

[20320002] |Under the plan, DeSoto said it will sell certain assets and businesses that don't meet strategic and profitability objectives.

[20320003] |The Des Plaines, Ill., chemical coatings concern, which has about 2,000 employees world-wide, said it plans to sell its domestic rigid container packaging and flexible adhesives businesses, and its Chicago Heights, Ill., resin plant.

[20320004] |The company said it plans to use the sale proceeds to invest in business opportunities more closely identified with the company's "refocused direction.

[20321001] |StatesWest Airlines, Phoenix, Ariz., said it withdrew its offer to acquire Mesa Airlines because the Farmington, N.M., carrier didn't respond to its offer by the close of business yesterday, a deadline StatesWest had set for a response.

[20321002] |However, StatesWest isn't abandoning its pursuit of the much-larger Mesa.
[20321003] |StatesWest, which has a 7.25% stake in Mesa, said it may purchase more Mesa stock or make a tender offer directly to Mesa shareholders.

[20321004] |StatesWest had proposed acquiring Mesa for $7 a share and one share of a new series of StatesWest 6% convertible preferred stock it values at $3 a share.
[20321005] |Earlier, Mesa had rejected a general proposal from StatesWest to combine the two carriers in some way.

[20321006] |StatesWest serves 10 cities in California, Arizona and Nevada.
[20321007] |Mesa flies to 42 cities in New Mexico, Arizona, Wyoming, Colorado and Texas.

[20322001] |A shiny new takeover deal sparked a big rally in stock prices, which buoyed the dollar.
[20322002] |Bond prices also edged higher.

[20322003] |Georgia-Pacific's $3.18 billion bid for Great Northern Nekoosa helped drive the Dow Jones Industrial Average up 41.60 points, to 2645.08, in active trading.
[20322004] |The dollar drew strength from the stock market's climb.
[20322005] |Long-term bond prices rose despite trepidation about what a key economic report will show today.

[20322006] |Analysts said the offer for Great Northern Nekoosa broke the pall that settled over the takeover business for the past three weeks in the wake of the collapsed UAL Corp. buy-out.
[20322007] |Great Northern Nekoosa soared $20.125 a share, to $62.875, substantially above the $58 a share Georgia-Pacific is offering.
[20322008] |That indicates speculators are betting a higher offer is in the wings.
[20322009] |Prices of other paper makers rose sharply, although Georgia-Pacific fell $2.50 a share, to $50.875.

[20322010] |Despite all the furor over program trading, program trading played a big role in yesterday's rally.
[20322011] |Some traders point out that as the big brokerage firms back out of program trading for their own accounts or for clients, opportunities increase for others to engage in the controversial practice.
[20322012] |That's what happened yesterday.

[20322013] |The rally notwithstanding, there are plenty of worries about the short-term course of stock prices.
[20322014] |A slowing economy and its effect on corporate earnings is the foremost concern of many traders and analysts.
[20322015] |Unless the Federal Reserve eases interest rates soon to stimulate the economy, profits could remain disappointing.

[20322016] |Yesterday's major economic news -- a 0.2% rise in the September index of leading economic indicators -- had little impact on financial markets.
[20322017] |But the next important piece of news on the economy's health -- this morning's release of the national purchasing manager's survey for October -- could prompt investors into action.

[20322018] |A report late yesterday that the Chicago-area purchasing managers survey showed increased economic activity in that part of the country cut into bond-price gains.
[20322019] |If the national survey confirms a pickup in the manufacturing sector, it could further depress bond prices while bolstering stock prices and the dollar.

[20322020] |Meanwhile, bond investors are laboring under the onus of a national debt ceiling debate.
[20322021] |Although the Treasury is expected to announce details of its November quarterly refunding operation today, the Nov. 79 schedule could be delayed unless Congress and the president act soon to lift the nation's debt ceiling.

[20322022] |In major market activity:

[20322023] |Stock prices rallied in active trading.
[20322024] |Volume on the New York Stock Exchange totaled 176.1 million shares.
[20322025] |Advancing issues on the Big Board surged ahead of decliners 1,111 to

[20322026] |Bond prices rose.
[20322027] |The Treasury's benchmark 30-year bond gained less than a quarter of a point, or less than $2.50 for each $1,000 of face amount.
[20322028] |The yield on the issue slipped to 7.91%.

[20322029] |The dollar gained against most foreign currencies.
[20322030] |In late afternoon New York trading, the dollar was at 1.8415 marks and 142.85 yen compared with 1.8340 marks and 141.90 yen late Monday.

[20323001] |Bouygues S.A., a diversified construction concern based in Paris, said its consolidated profit for the 1989 first half, after payments to minority interests, surged to 188 million French francs ($30.2 million) from 65 million francs a year earlier.

[20323002] |Revenue rose 21% to 22.61 billion francs from 18.69 billion francs.

[20323003] |The company didn't specify reasons for the strong earnings gain.
[20323004] |But Bouygues said its first-half profit isn't indicative of the full-year trend because of the highly seasonal nature of many of the company's activities.

[20323005] |For all of 1988, Bouygues had consolidated profit of 519 million francs, after payments to minority interests, on revenue of 50 billion francs.
[20323006] |The group has forecast 1989 revenue of 56.9 billion francs.

[20324001] |QVC Network Inc. said it completed its acquisition of CVN Cos. for about $423 million.

[20324002] |QVC agreed to pay $19 and one-eighth QVC share for each of CVN's 20 million fully diluted shares.

[20324003] |The acquisition brings together the two largest competitors to Home Shopping Network Inc., which now reaches more viewers than any other company in the video shopping industry.
[20324004] |Among them, Home Shopping, QVC and CVN already control most of that young and fast-growing market, which last year had sales of about $1.4 billion.

[20325001] |Coast Savings Financial Inc. reported a third-quarter loss, citing a previously announced capital restructuring program.

[20325002] |The Los Angeles thrift holding company said it had a loss of $92.2 million, or $6.98 a share, for the quarter ended Sept. 30.
[20325003] |Coast earned $10.2 million, or 67 cents a share, in the year-ago quarter.
[20325004] |The year-ago results have been restated to comply with government regulations.

[20325005] |The restructuring program is designed to increase the company's tangible capital ratio.
[20325006] |It includes removing $242 million in good will from the books, issuing $150 million in preferred stock and commencing an exchange offer for $52 million in convertible bonds.

[20325007] |During the third quarter, the company charged about $46 million against earnings in reducing goodwill, added $20 million to its general loan loss reserves and established a $30 million reserve for its high-yield bond portfolio.
[20325008] |The company said its junk-bond portfolio after these moves had been reduced to less than 1% of assets.

[20326001] |Philip Morris Cos. is launching a massive corporate advertising campaign that will put the tobacco giant's name in TV commercials for the first time since the early 1950s, when it stopped advertising its namesake cigarette brand on television.

[20326002] |The campaign, a patriotic celebration of the 200th anniversary of the Bill of Rights, doesn't mention cigarettes or smoking; cigarette ads have been prohibited on television since 1971.
[20326003] |But even before it begins, the campaign is drawing fire from anti-smoking advocates, who criticize Philip Morris's attempt to bolster its beleaguered image by wrapping itself in the document that is a cornerstone of American democracy.

[20326004] |Philip Morris, which became the U.S.'s largest food company last year with its $12.9 billion acquisition of Kraft Inc., seems determined to evolve beyond its roots in Marlboro country.
[20326005] |The company's research suggests that its name recognition among most consumers remains unusually low, although its array of brands -- including Maxwell House coffee, Jell-O, Cheez Whiz, and Miller beer -- blanket supermarket shelves.

[20326006] |The company is expected to spend about $30 million a year on its two-year corporate campaign, created by WPP Group's Ogilvy & Mather unit in New York.
[20326007] |The initial spots will appear during morning and prime-time news shows.
[20326008] |Philip Morris hopes that by taking its Bill of Rights theme to the airwaves, in addition to publications, it will reach the broadest possible audience.
[20326009] |Until now, its corporate ads, mainly promoting its sponsorship of the arts, have appeared almost exclusively in newspapers and magazines.

[20326010] |"Most people -- whether in Toledo, Tucson or Topeka -- haven't got a clue who we are," says Guy L. Smith, Philip Morris's vice president of corporate affairs.
[20326011] |"If they think well of the company through our support of the Bill of Rights, it follows they'll think well of our products."
[20326012] |Mr. Smith says the Bill of Rights commercial, which trumpets the themes of liberty and freedom of expression, isn't designed to have any special appeal for smokers.
[20326013] |Although Philip Morris typically tries to defend the rights of smokers with free-choice arguments, "this has nothing to do with cigarettes, nor will it ever," the spokesman says.

[20326014] |But some anti-smoking activists disagree, expressing anger at what they see as the company's attempt to purchase innocence by association.
[20326015] |"I'm outraged because this company is portraying itself at the heart of American culture and political freedom and in fact it's a killer," says Michael Pertschuk, former chairman of the Federal Trade Commission and a tobacco-industry critic.
[20326016] |"It should be treated like the Medellin {drug} mafia, not the Founding Fathers."

[20326017] |Mr. Pertschuk adds that the new commercial dovetails perfectly with major aspects of Philip Morris's political strategy.
[20326018] |These include trying to protect its print advertising by invoking the First Amendment, and wooing blacks by portraying itself as a protector of civil rights.
[20326019] |(The commercial features, among others, the voice of Martin Luther King Jr., the slain civil rights leader.)

[20326020] |Many marketers say Philip Morris's approach will be effective, but they agree that the ads' implied smoking message is unmistakable.
[20326021] |"This is clever, subliminal advertising that really says, `Smokers have rights, too,'" says Al Ries, chairman of Trout & Ries Inc., a Greenwich, Conn., marketing strategy firm.
[20326022] |"This is designed to get the wagons in a circle and defend the smoking franchise."

[20326023] |Richard Winger, a partner at Boston Consulting Group, adds: "It's very popular to drape yourself in the flag these days.
[20326024] |If you can do that and at the same time send a message that supports your business, that's brilliant."

[20326025] |RJR Nabisco Inc. and American Brands Inc. say they have no plans to follow Philip Morris's lead.
[20326026] |(Indeed, RJR Nabisco is currently under fire for having sent 80-second videotapes touting its Now brand to consumers who smoke American Brands' Carltons.)

[20326027] |Despite the criticism, Philip Morris's corporate campaign runs little risk of getting yanked off the tube.
[20326028] |"They aren't showing James Madison taking a puff or lighting up," says Laurence Tribe, a professor of constitutional law at Harvard University.
[20326029] |"All they are trying to do is borrow some of the legitimacy of the Bill of Rights itself.

[20327001] |Technology stocks woke up, helping the over-the-counter market rise from its recent doldrums.

[20327002] |The Nasdaq Composite Index surged 4.26, or about 0.94%, to 455.63.
[20327003] |It was the market's biggest gain since rising more than 7 points on Oct. 19.
[20327004] |Advancing OTC stocks outpaced decliners by 1,120 to 806.

[20327005] |But the move lagged a stronger rise in New York Stock Exchange issues.
[20327006] |The Big Board's composite index was up more than 1.4%, and the Dow Jones Industrial Average jumped 1.6%.

[20327007] |Nasdaq's gain was led by its biggest industrial stocks.
[20327008] |The Nasdaq 100 rose 7.08 to 445.23.
[20327009] |The Financial Index of 100 biggest banks and insurance issues added 2.19 to 447.76.
[20327010] |Other strong sectors were indicated in gains of the Transportation Index, up 7.55 to 475.35, and the Utility Index, up 8.68 to 730.37.

[20327011] |National Market System volume improved to 94,425,000 shares from 71.7 million Monday.

[20327012] |Many of Nasdaq's biggest technology stocks were in the forefront of the rally.
[20327013] |Microsoft added 2 1/8 to 81 3/4 and Oracle Systems rose 1 1/2 to 23 1/4.
[20327014] |Intel was up 1 3/8 to 33 3/4.

[20327015] |But traders who watch the stocks warned the rise may be yet another "one-day phenomenon."

[20327016] |Technology stocks bore the brunt of the OTC market's recent sell-off, and traders say it's natural that they rebound sharply now that the market has turned around.
[20327017] |But, they caution, conservative investors would do well to sell into the strength.

[20327018] |"They are always the first to be sold when people are taking profits, because people are most scared of the high-technology stocks," said Robin West, director of research for Ladenburg Thalmann's Lanyi division, which specializes in emerging growth stocks.

[20327019] |The technology group includes many of the OTC market's biggest stocks, which dominate the market-weighted Nasdaq Composite Index.
[20327020] |Analysts say rallies in the group historically have lifted the market, while weakness in the sector often sank unlisted share prices broadly.

[20327021] |But increasing volatility in the sector has exhausted investors who try to follow its dips and swings.
[20327022] |The stocks have been pummeled repeatedly by inventory gluts and disappointing earnings as the industry matures and slows.
[20327023] |Some even claim the group has become a lagging, not leading, indicator.

[20327024] |The technology sector of the Dow Jones Equity Market Index has risen only about 6.24% this year, while the Nasdaq Composite Index has gained 18.35%.
[20327025] |While the composite index lost less than a third of its year-to-date gains in the market's recent decline, the technology group's gains were more than halved.

[20327026] |The OTC technology sector is far from a cohesive unit.
[20327027] |The group is divided primarily between software, semiconductors and computers.
[20327028] |While computer stocks have taken the biggest hit from the slowdown in the industry, many software and semiconductor stocks have continued to outperform the market.
[20327029] |Microsoft is up more than 50% this year, while Intel is up more than 40%.

[20327030] |The technology group is also split between large companies and small, with the biggest stocks trading as blue-chip issues in the institutional marketplace, while the smaller stocks churn on their individual merits or faults, analysts say.
[20327031] |The volatility of smaller technology companies has served the group well overall in recent stock trading, according to Hambrecht & Quist's technology stock indexes.

[20327032] |The brokerage firm tracks technology stocks with its Technology Index, which appreciated only 10.59% in the first nine months of this year.
[20327033] |But the firm also tracks smaller technology companies as a subset of the larger group.
[20327034] |That index, which contains technology companies with annual revenues of $200 million or less, gained 17.97% by Sept. 30 this year -- still lagging the S&P 500, but leading larger technology firms.

[20327035] |Yesterday, bank stocks lagged behind the overall OTC market.
[20327036] |The Nasdaq Bank Index rose 0.17 to 432.78.
[20327037] |George Jennison, who trades bank stocks for Shearson Lehman Hutton, said the stocks tend to fall behind because they aren't traded as much as many other issues.
[20327038] |But, he added, interest-rate-sensitive stocks in general are stalled.

[20327039] |"The interest-rate sensitives aren't rallying with the rest of the market because of fears about what the (Federal Reserve) will do," Mr. Jennison said.
[20327040] |He said that investors will scour the October employment report, due out Friday, for clues about the direction of the economy and the immediate outlook for interest rates.

[20327041] |On the other hand, Mr. Jennison noted that the recent slide in bank and thrift stocks was at least halted yesterday.

[20327042] |Shearson Lehman Hutton gave small investors some welcome news by announcing that it would no longer handle index-arbitrage-related program trades for its accounts.
[20327043] |Shearson, with its in-house order execution system, has handled the bulk of such program trades in the over-the-counter market.
[20327044] |The trading has been blamed for much of the market's recent volatility.
[20327045] |Jaguar topped the most-active list, as its American depository receipts climbed 1 3/4 to 13 5/8 with more than 6.6 million ADRs traded.
[20327046] |Britain said it would waive its "golden share" in the luxury auto maker if shareholders vote to allow a suitor to acquire more than 15% of the company.
[20327047] |The announcement effectively removes the British government as an impediment to a takeover of the company, which is being stalked by General Motors and Ford.

[20327048] |Gen-Probe was another active takeover stock.
[20327049] |It surged 2 3/4 to 6 on volume of more than 1.7 million shares after the company agreed to be acquired by Japan's Chugai Pharmaceutical for about $110 million -- almost double the market price of Gen-Probe's stock.

[20327050] |Priam Corp. lost 5/32 to 3/32 after filing for protection from its creditors under Chapter 11 of the federal Bankruptcy Code.

[20327051] |MCI Communications added 1 1/2 to 43 3/8.
[20327052] |The company has toted up over $40 million in contracts in the past two days.
[20327053] |Monday, MCI announced a $27 million multiyear contract with the investment bank Stuart-James.
[20327054] |Yesterday, it received a $15 million, three-year contract from Drexel Burnham Lambert.

[20327055] |Florida National Banks of Fla. slid 1 1/8 to 24 3/4.
[20327056] |Late Monday, the Federal Reserve Board said it is delaying approval of First Union Corp.'s proposed $849 million acquisition of Florida National Banks pending the outcome of an examination into First Union's lending practices in low-income heighborhoods.
[20327057] |Florida National said yesterday that it remains committed to the merger.

[20327058] |Dycom Industries gained 3/4 to 16 3/4 after it said it agreed to buy Ansco & Associates and two affiliates for cash and stock.
[20327059] |The value of the transaction wasn't disclosed.
[20327060] |The companies being acquired provide telecommunications services to the telephone industry.

[20327061] |Willamette Industries, whose stock has suffered steep losses in recent sessions, surged 1 1/2 to 49.
[20327062] |The stock was one of many in the paper products industry that rose following Georgia-Pacific's $3.18 billion bid for Great Northern Nekoosa.

[20328001] |A permanent smoking ban on virtually all domestic airline routes won approval from the House, which separately sent to President Bush a nearly $67 billion fiscal 1990 bill including the first construction funds for the space station.

[20328002] |The smoking prohibition remains attached to a $27.1 billion transportation bill that must still overcome budget obstacles in Congress.
[20328003] |But yesterday's action put to rest any lingering resistance from tobacco interests.
[20328004] |Faced with inevitable defeat, the once dominant industry declined any recorded vote on the ban, which covers all but a fraction of 1% of daily flights in the U.S.

[20328005] |The sole exceptions are an estimated 30 flights of six hours or more beginning or ending in Hawaii and Alaska.
[20328006] |Assuming final enactment this month, the prohibition will take effect 96 days later, or in early February.

[20328007] |On a 394-21 roll call, the House adopted the underlying transportation measure.
[20328008] |But the bill still faces budget questions because it also is the vehicle for an estimated $3.1 billion in supplemental appropriations for law enforcement and anti-drug programs.
[20328009] |The additional spending pushes the measure more than $2 billion above its prescribed budget ceiling, and the House Appropriations Committee leadership must now seek a waiver in hopes of completing action today.

[20328010] |The separate $67 billion bill sent to the White House had budget difficulties, too, but was saved ultimately by its importance to a broad spectrum of interests in Congress and the administration itself.
[20328011] |No single bill this year includes more discretionary spending for domestic programs and, apart from the space station, the measure incorporates far-reaching provisions affecting the federal mortgage market.

[20328012] |The current ceiling on home loans insured by the Federal Housing Administration is increased to $124,875 during fiscal 1990.
[20328013] |And in anticipation of increased lending, the cap on FHA loan guarantees would rise to approximately $73.8 billion.

[20328014] |Separately, the bill gives authority to the Department of Housing and Urban Development to facilitate the refinancing of high-interest loans subsidized by the government under the so-called Section 235 home-ownership program for lower-income families.
[20328015] |This provision met early and strong resistance from investment bankers worried about disruptions in their clients' portfolios.
[20328016] |But the promise of at least $15 million in new savings helped to forge a partnership between HUD Secretary Jack Kemp and lawmakers wanting to protect their projects elsewhere.

[20328017] |The estimated $1.8 billion for the space station would be double last year's level, and total appropriations for the National Aeronautics and Space Administration would grow 16% to nearly $12.4 billion.
[20328018] |A string of costly projects, including the high-speed national aerospace plane and the advanced communications technology satellite, would continue to be developed within these limits.
[20328019] |And while imposing a statutory cap of $1.6 billion on future spending, the bill would give NASA $30 million for the start-up of the CRAF-Cassini mission, a successor to the Voyager space probe.

[20328020] |Separately, the National Science Foundation is promised a 7.7% increase to bring its appropriations to $2.07 billion.
[20328021] |And while pursuing these initiatives, Congress and the White House are squeezed too by steady increases -- $551 million -- in veteran's medical care.

[20328022] |The result is that all sides resort to sleight of hand to make room for competing housing and environmental programs, and the commitments now will drive excess spending into fiscal 1991.

[20328023] |Senior members of the House Budget Committee are reduced in frustration to raising doomed parliamentary obstacles to individual bills, yet admit that much of the disorder now stems from the fiscal legerdemain associated with their own summit agreement with the White House this past spring.
[20328024] |"It's hard to get the administration's attention on anything," said Rep. Bill Frenzel (R., Minn.), "because the whole agreement was built on gimmickry."

[20328025] |Among the subsidies continued in the transportation bill is $30.7 million to maintain commercial air service for an estimated 92 communities, often in rural areas.
[20328026] |Senate Appropriations Committee Chairman Robert Byrd (D., W.Va.) strongly resisted deeper cuts sought by the House.
[20328027] |But at a time when the White House wants to kill the entire program, Republicans have been among its leading champions.

[20328028] |Sen. Pete Domenici (R., N.M.), the ranking Republican on the Senate Budget Committee, used his influence to preserve more than $132,000 in subsidies for air service to Sante Fe, N.M., and more than $2.1 million would go for service to eight communities in the western Nebraska district of GOP Rep. Virginia Smith on the House Appropriations Committee.

[20328029] |GP Express, an independent airline serving much of Nebraska, estimates that nearly 40% of its revenues come from the subsidies that, in some cases, exceed the cost of a ticket.
[20328030] |For example, a passenger can fly from Chardon, Neb., to Denver for as little as $89 to $109, according to prices quoted by the company.
[20328031] |But given the few number of users, the cost to the federal government per passenger is estimated at $193, according to House and Senate appropriations committees.

[20328032] |The House action yesterday came as the Senate remained mired in difficulties over a $17.25 billion measure covering the budgets for the State, Commerce, and Justice departments in fiscal 1990.
[20328033] |The compromise bill passed the House last week but has now provoked jurisdictional fights with the Senate Foreign Relations Committee, which jealously protects its prerogatives over operations at the State Department.

[20328034] |The same jealousy can breed confusion, however, in the absence of any authorization bill this year.
[20328035] |House and Senate appropriators sought to establish a Nov. 30 deadline after which their bill would become the last word on how funds are distributed.
[20328036] |But on a 53-45 roll call this provision was stripped from the bill last night after Foreign Relations Chairman Claiborne Pell (D., R.I.) complained that it was an intrusion on exclusive powers vested in his panel for more than three decades.

[20329001] |Coda Energy Inc. said it arranged a $50 million credit facility with NCNB Texas National Bank, a unit of NCNB Corp., of Charlotte, N.C.

[20329002] |The Dallas oil and gas concern said that $10 million of the facility would be used to consolidate the company's $8.1 million of existing bank debt, to repurchase 4 million of its 4.9 million shares outstanding of Series D convertible preferred stock, and to purchase a 10% net-profits interest in certain oil and gas properties from one of its existing lenders, National Canada Corp.
[20329003] |The remaining $40 million can be used over three years for oil and gas acquisitions, the company said.

[20329004] |Ted Eubank, Coda's president, said the loan carries an interest rate of prime plus one percentage point, with 85% of the company's net oil and gas revenue each month dedicated to repayment.
[20329005] |The company put up "virtually all" of its oil and gas properties as collateral, he said.

[20330001] |General Dynamics Corp. was given an $843 million Air Force contract for F-16 aircraft and related equipment.

[20330002] |Loral Corp.'s defense systems division received a $54.9 million Air Force contract for a F-15 weapons system trainer.

[20330003] |Southern Air Transport Inc. won $47.5 million in Air Force and Navy contracts for transportation services.

[20330004] |International Business Machines Corp. was given a $31.2 million Air Force contract for satellite data systems equipment.

[20330005] |Directed Technologies received a $28.3 million Defense Advanced Research Projects Agency contract for advanced propulsion systems research.

[20330006] |Propper International Inc. got a $22.8 million Defense Logistics Agency contract for combat camouflage trousers.

[20331001] |Santa Fe Pacific was the kind of story Wall Street loved.

[20331002] |Since the value of its assets wasn't known, analysts were free to pick a number.
[20331003] |In one of many rosy scenarios, Bear Stearns's Gary Schneider wrote in March that its real estate alone had a value of $4.5 billion.
[20331004] |Throw in its railroad, minerals, pipeline and oil assets, he and others argued, and the Chicago-based conglomerate should be worth 30 a share.

[20331005] |And why should holders expect to realize that presumed "worth?"
[20331006] |That was another reason the Street loved Santa Fe.
[20331007] |With real estate experts Olympia & York and Samuel Zell's Itel owning close to 40% of Santa Fe's stock, management was under pressure -- in a favored phrase of Wall Street -- to quickly "maximize values."

[20331008] |But value, it turns out, is only what a buyer will pay.
[20331009] |And with the company's recent announcement that it is contemplating a partial sale of its real estate, the values suddenly look poorer.

[20331010] |Santa Fe has disclosed that it is negotiating to sell a 20% interest in its real estate unit to the California Public Employees Retirement System for roughly $400 million.
[20331011] |Since the real estate unit also includes debt, the imputed value of the real estate itself is close to $3 billion.

[20331012] |"The implied current net asset value of 22.70 {per share} is well below the 30 level that the Street believed," PaineWebber says.
[20331013] |"The upside was in the intangible real estate . . . which is no longer an intangible."

[20331014] |So what is Santa Fe worth?

[20331015] |If the railroad is valued on a private market basis -- at the same multiple of earnings as in the recent sale of CNW -- it would have a value of $1.65 billion.
[20331016] |A compromise between bulls and bears puts remaining assets and cash -- including its 44% stake in its publicly traded pipeline -- at $2 billion.
[20331017] |Santa Fe also has $3.7 billion in debt.
[20331018] |In addition, its railroad lost a $750 million antitrust suit, which is on appeal, and which analysts say could be settled for one-third that amount.

[20331019] |That nets out to about $17 a share for the company on a private market basis.
[20331020] |But Santa Fe, currently trading at 18 7/8, isn't likely to realize private market values by selling assets, because the tax against it would be onerous.
[20331021] |Its plan, instead, is to spin off the remainder of its real estate unit and to possibly do the same with its mining and energy assets.

[20331022] |Robert D. Krebs, Santa Fe's chairman, argues that since its businesses are valued in different ways, "the sum of the parts may be greater than the whole."

[20331023] |But it isn't clear why that should be so.
[20331024] |The spinoff argument, after all, reverses the current notion that assets are worth more to private buyers than to public shareholders.
[20331025] |And real estate usually hasn't traded well under public ownership.

[20331026] |Salomon Brothers says, "We believe the real estate properties would trade at a discount . . . after the realty unit is spun off. . . .
[20331027] |And what about the cost, and risk, of waiting to realize the hypothetical private market values?"

[20331028] |Some analysts remain bullish.
[20331029] |Mr. Schneider of Bear Stearns says he is recalculating the worth of the company's assets and, in the meantime, is sticking to his "buy" recommendation on the belief that he will find "values" of 30 a share.
[20331030] |He adds: "If for any reason I don't have the values, then I won't recommend it."

[20331031] |First Boston's Graeme Anne Lidgerwood values Santa Fe at 24, down from her earlier estimate of 29.
[20331032] |Her recent report classifies the stock as a "hold."
[20331033] |But it appears to be the sort of hold one makes while heading for the door.

[20331034] |Quoting from the report: "The stock's narrow discount to asset valuation makes it a relatively unappealing investment at current prices, especially given the risk that our projections could be on the aggressive side."

[20331035] |Chairman Krebs says the California pension fund is getting a bargain price that wouldn't have been offered to others.
[20331036] |In other words: The real estate has a higher value than the pending deal suggests.
[20331037] |Since most of the unit's real estate is in California, the pension fund will be a useful political ally in a state where development is often held hostage to zoning boards.
[20331038] |And, as Mr. Zell says, with Itel and O&Y on the unit's board, the real estate will be run by "a very unusual group" to say the least.

[20331039] |It is possible then that Santa Fe's real estate -- even in a state imperiled by earthquakes -- could, one day, fetch a king's ransom.
[20331040] |But as Drexel analyst Linda Dunn notes, its properties will be developed over 15 to 20 years.
[20331041] |So despite Wall Street's rosy talk of quickly "maximizing values," holders could be in for a long wait.

[20331042] |Santa Fe Pacific (NYSE; Symbol: SFX)

[20331043] |Business: Railroad, natural resources and real estate

[20331044] |Year ended Dec. 31, 1988:

[20331045] |Revenue: $3.14 billion

[20331046] |Net loss: $46.5 million; 30 cents a share

[20331047] |Third quarter, Sept. 30, 1989:

[20331048] |Net income: 21 cents a share vs. net loss of $4.11 a share

[20331049] |Average daily trading volume: 344,354 shares

[20332001] |Orkem S.A., a French state-controlled chemical manufacturer, is making a friendly bid of 470 pence ($7.43) a share for the 59.2% of U.K. specialty chemical group Coates Brothers PLC which it doesn't already own, the two sides said.

[20332002] |The offer, which values the whole of Coates at #301 million, has already been accepted by Coates executives and other shareholders owning 12.4% of the company.
[20332003] |The acceptances give Orkem a controlling 53.2% stake in the company.

[20332004] |Orkem and Coates said last Wednesday that the two were considering a merger, through Orkem's British subsidiary, Orkem Coatings U.K. Ltd.

[20332005] |Orkem, France's third-largest chemical group, said it would fund the acquisition through internal resources.
[20332006] |The takeover would be followed by a restructuring of Orkem's U.K. unit, including the addition of related Orkem businesses and possibly further acquisitions.
[20332007] |Orkem said it eventually would seek to make a public share offering in its U.K. business.

[20333001] |Intelogic Trace Inc. said it is exploring alternatives to maximize shareholder value, including the possible sale of the company.

[20333002] |But Asher B. Edelman, who controls about 16% of the San Antonio, Texas, computer-servicing company, insisted that the announcement didn't have anything to do with the ongoing battle for control of Datapoint Corp.

[20333003] |Any sale of Intelogic could have an impact on the battle between Mr. Edelman and New York attorney Martin Ackerman for control of Datapoint.
[20333004] |Intelogic holds 27.5% of Datapoint's common shares outstanding.

[20333005] |Mr. Edelman said the decision "has nothing to do with Marty Ackerman."
[20333006] |Mr. Ackerman contended that it was a direct response to his efforts to gain control of Datapoint.

[20333007] |Intelogic was spun off from Datapoint four years ago, shortly after Mr. Edelman took control of Datapoint.

[20334001] |Marks & Spencer PLC reported a 12% gain in first-half pretax profit, mainly because of improving performances in the U.K. and continental Europe.

[20334002] |In the six months ended Sept. 30, pretax profit at the British clothing and food retailer rose to #208.7 million ($330.1 million) from #185.5 million a year ago.

[20334003] |The results surpassed analysts' forecasts, which averaged around #200 million, and Marks & Spencer responded in trading on London's Stock Exchange with an eight pence rise to 188 pence.

[20334004] |Profit after tax and minority interest but before extraordinary items rose 12% to #135.2 million; per-share earnings rose to five pence from 4.5 pence.

[20334005] |Marks declared an interim per-share dividend of 1.85 pence, compared with 1.7 pence a year earlier.

[20334006] |Sales increased 11% to #2.5 billion from #2.25 billion, while operating profit climbed 13% to #225.7 million from #199.8 million.

[20334007] |Sales in North America and the Far East were inflated by acquisitions, rising 62% to #278 million.
[20334008] |Operating profit dropped 35%, however, to #3.8 million.
[20334009] |Brooks Brothers, which Marks bought last year, saw operating profit drop in half to #5 million.

[20335001] |Federal and state thrift examiners said they saw evidence of criminal wrongdoing in the collapse of Lincoln Savings & Loan Association, and a California regulator described an attempted "whitewash" by deputies of chief federal regulator Danny Wall.

[20335002] |In a riveting day of hearings before the House Banking Committee, the examiners described finding shredded documents, a mysterious Panamanian subsidiary, millions of dollars funneled into a Swiss bank, and a complacent attitude by Mr. Wall's deputies, one of whom was portrayed as acting more like a public-relations man for the thrift than a federal regulator.

[20335003] |A California official also said he sent the Federal Bureau of Investigation a packet of documents relating to a previously reported $400,000 contribution from Lincoln's parent solicited by Sen. Alan Cranston (D., Calif.).

[20335004] |Federal examiner Alex Barabolak said Lincoln's operations amounted to "pyramiding debt to provide a luxurious life style for its owners."
[20335005] |Another federal examiner, John Meek, said Lincoln's principal owner, Charles Keating Jr., and his family drew off at least $34 million from the thrift in salaries, bonuses and proceeds from securities sales in the 3 1/2 years before federal authorities seized it earlier this year.
[20335006] |Lincoln's collapse may cost taxpayers as much as $2.5 billion, according to estimates, making it the most expensive thrift failure in history.

[20335007] |"I think there's overwhelming evidence to indicate probable criminal activity," said Mr. Meek, who participated last year in an examination of the Irvine, Calif., thrift.
[20335008] |He said the evidence pointed to wrongdoing by Mr. Keating "and others," although he didn't allege any specific violation.

[20335009] |Richard Newsom, a California state official who last year examined Lincoln's parent, American Continental Corp., said he also saw evidence that crimes had been committed.
[20335010] |"It sure smells like it," he said.
[20335011] |He said 30% of the loans he sampled were "dead meat on the day they were made."

[20335012] |The state examiner also said supervisors of a parallel federal examination seemed so reluctant to demand write-downs of Lincoln's bad loans that he immediately grew suspicious.

[20335013] |"Later on, my concerns about a whitewash became even more serious," he said.
[20335014] |He called the sour loans "appalling" and added, "You opened the file up and it just jumped at you."

[20335015] |Leonard Bickwit, a Washington attorney for Lincoln's parent corporation, said in an interview, "We deny any criminal behavior by the association or its officers."

[20335016] |"Those who testified {yesterday} have consistently maintained that anyone who didn't agree with them is part of a coverup, a whitewash, or the subject of excessive influence," Mr. Bickwit said.
[20335017] |"We simply don't agree with that or the findings of their investigation."

[20335018] |Mr. Wall's deputies complained that they hadn't been given an opportunity to respond to the criticism brought out during the Banking Committee's hearings, which Committee Chairman Henry Gonzalez (D., Texas) has used as a forum to flay Mr. Wall's handling of the affair and to demand that he step aside from his job.

[20335019] |"A couple of things Mr. Newsom said were at least misleading," said Kevin O'Connell, one of the Washington regulators responsible for the handling of Lincoln.
[20335020] |In an interview, he said federal regulators eventually declared one of the loans the state regulator cited to be a total loss, and forced Lincoln to make an $18 million downward adjustment on another.

[20335021] |"Our response to the whitewash would simply be, look what happened," another Washington official, Alvin Smuzynski, said in an interview.
[20335022] |Federal officials seized the association in April, a day after the parent corporation entered bankruptcy-law proceedings.
[20335023] |The government later brought a $1.1 billion fraud suit against Mr. Keating and others.

[20335024] |Rep. Gonzalez has complained that regulators waited far too long, however, ignoring a recommendation from regional officials to place Lincoln into receivership two years before it failed.
[20335025] |"He took the reckless course of ignoring the evidence," Rep. Gonzalez said.

[20335026] |State thrift examiner Eugene Stelzer said he found the chief federal examiner Steve Scott to be totally uninterested in one allegedly fraudulent series of transactions.
[20335027] |"Frankly, it was like he worked for the Lincoln public-relations department," Mr. Stelzer testified.
[20335028] |And David Riley, a federal examiner who worked under Mr. Scott, said he found his chief oddly upbeat about Lincoln.
[20335029] |Asked to comment, a spokesman for Mr. Scott said: "Mr. Scott has spoken to his attorney, who has advised him not to talk to anybody."

[20335030] |Mr. Meek said that a day or two before Lincoln's parent entered bankruptcy proceedings, he and other examiners saw "a truck with a sign on it that said it was from the `Document Destruction Center.'
[20335031] |We observed at least two large plastic bags of shredded paper loaded into this truck."

[20335032] |Mr. Bickwit said the paper had been donated to "a charitable organization that sells it for recycling.
[20335033] |They shredded it simply because it contained financial information about their creditors and depositors."

[20335034] |Mr. Meek said his suspicions were aroused by several foreign investments by Lincoln, including $22 million paid to Credit Suisse of Switzerland, an $18 million interest in Saudi European Bank in Paris, a $17.5 million investment in a Bahamas trading company, and a recently discovered holding in a Panama-based company, Southbrook Holdings.
[20335035] |Mr. Bickwit said, "I can see why an S&L examiner would regard these as unusual activities," but said the overseas investments "essentially broke even" for the S&L.

[20336001] |LTV Steel Co. is boosting the prices of flat rolled steel products by an average of 3% following a recent erosion in the prices of such crucial steel products.

[20336002] |The big questions are whether the increase, effective Jan. 1, 1990, will stick, and whether other major steelmakers will follow suit.
[20336003] |It is widely expected that they will.
[20336004] |The increase is on the base price, which is already being discounted by virtually all steel producers.

[20336005] |But LTV's move marks the first effort by a major steelmaker to counter the free fall in spot prices.
[20336006] |Major steel producers are selling cold rolled sheet steel at about $370 a ton, compared with a peak price of $520 a ton in 1988.
[20336007] |Second-tier companies are receiving even less per ton.
[20336008] |LTV's planned increase, which was announced in an Oct. 26 memo to district managers, doesn't affect electrogalvanized steel or tin plate.

[20336009] |LTV confirmed the price-increase plan, saying the move is designed to more accurately reflect the value of products and to put steel on more equal footing with other commodities.
[20336010] |A spokesman for LTV Steel, which is a unit of Dallas-based LTV Corp., noted that steel prices, adjusted for inflation, increased only 1.7% between 1981 and the fourth quarter of 1988, while the prices of other industrial commodities increased nearly five times as much.
[20336011] |At the same time, steelmakers are trying to invest more to modernize technology and make themselves more competitive.

[20336012] |But analysts say the company is also trying to prevent further price drops.
[20336013] |Moreover, they note that LTV may be trying to send a signal to major customers, such as Chrysler Corp. and Whirlpool Corp., that steelmakers need more money.
[20336014] |Both companies are in the process of negotiating contracts with LTV and others.

[20336015] |"They {LTV} may believe this can impact contract negotiations and is their signal to the world that now is the time to get tough on prices," said Peter Marcus, an analyst with PaineWebber Inc.
[20336016] |Mr. Marcus believes spot steel prices will continue to fall through early 1990 and then reverse themselves.
[20336017] |He isn't convinced, though, that the price decline reflects falling demand because the world economy remains relatively strong.
[20336018] |And while customers such as steel service centers are continuing to reduce inventories through the fourth quarter, they eventually will begin stocking up again, he notes.

[20336019] |It won't be clear for months whether the price increase will stick.
[20336020] |Steelmakers announced a round of base-price increases last year, but began offering sizable discounts over the summer.
[20336021] |In fact, LTV was the first steelmaker to publicly boost discounts for buyers of cold rolled sheet steel and hot-dipped galvanized sheet steel.

[20336022] |In composite New York Stock Exchange trading yesterday, LTV common shares fell 12.5 cents to close at $1.50.

[20337001] |The Treasury plans to raise $2.3 billion in new cash with the sale Monday of about $16 billion in short-term bills to redeem $13.71 billion in maturing bills.

[20337002] |However, the Treasury said it will postpone the auction unless it has assurances of enactment of legislation to raise the statutory debt limit before the scheduled auction date.

[20337003] |The offering will be divided evenly between 13-week and 26-week bills maturing on Feb. 8, 1990, and May 10, 1990, respectively.

[20337004] |Tenders for the bills, available in minimum $10,000 denominations, must be received by 1 p.m. EST Monday at the Treasury or at Federal Reserve banks or branches.

[20338001] |J.C. Penney Co. is extending its involvement in a televised home-shopping service by five to 10 years.

[20338002] |Shop Television Network Inc., of Los Angeles, said Penney agreed to continue its exclusive arrangement with Shop Television, which does the production, marketing and cable distribution for the J.C. Penney Television Shopping Channel.
[20338003] |The channel reaches 6.5 million homes, a Penney spokesman said.

[20338004] |Michael Rosen, president of Shop Television, said Penney decided to extend its involvement with the service for at least five years.
[20338005] |If, by that time, the network reaches 14 million homes, the contract will be renewed for five more years.

[20338006] |Earlier this year, Penney abandoned another home shopping venture, Telaction Corp., after investing $106 million in it.
[20338007] |The company took a $20 million charge in the fiscal first quarter ended April 29, related to discontinuing the service.

[20339001] |(During its centennial year, The Wall Street Journal will report events of the past century that stand as milestones of American business history.)

[20339002] |LUTHER BURBANK CROSS-BRED PLANTS to produce the billion-dollar Idaho potato.
[20339003] |Bioengineers set out to duplicate that feat -- scientifically and commercially -- with new life forms.

[20339004] |In 1953, James Watson and his colleagues unlocked the double helix of DNA (deoxyribonucleic acid), the genetic key to heredity.
[20339005] |Twenty years later, two California academics, Stanley Cohen and Herbert Boyer, made "recombinant" DNA, transplanting a toad's gene into bacteria, which then reproduced toad genes.

[20339006] |When Boyer met Robert Swanson, an M.I.T.-trained chemist-turned-entrepreneur in 1976, they saw dollar signs.
[20339007] |With $500 apiece and an injection of outside capital, they formed Genentech Inc.
[20339008] |Commercial gene-splicing was born.

[20339009] |Genentech's first product, a brain protein called somatostatin, proved its technology.
[20339010] |The next to be cloned, human insulin, had market potential and Genentech licensed it to Eli Lilly, which produced 80% of the insulin used by 1.5 million U.S. diabetics.

[20339011] |Their laboratory credentials established, Boyer and Swanson headed for Wall Street in 1980.
[20339012] |At the time, Genentech had only one profitable year behind it (a modest $116,000 on revenue of $2.6 million in 1979) and no product of its own on the market.
[20339013] |Nonetheless, the $36 million issue they floated in 1980 opened at $35 and leaped to $89 within 20 minutes.

[20339014] |The trip from the test tube was not without snags.
[20339015] |Boyer and Cohen, for instance, both still university researchers, had to be talked into applying for a patent on their gene-splicing technique -- and then the Patent Office refused to grant it.
[20339016] |That judgment, in turn, was reversed by the U.S. Supreme Court, leaving Cohen and Boyer holding the first patents for making recombinant DNA (now assigned to their schools).

[20339017] |Gene-splicing now is an integral part of the drug business.
[20339018] |Genentech's 1988 sales were $335 million, both from licensing and its own products.

[20340001] |The portfolio unit of the French bank group Credit Lyonnais told stock market regulators that it bought 43,000 shares of Cie. de Navigation Mixte, apparently to help fend off an unwelcome takeover bid for the company.

[20340002] |Earlier yesterday, the Societe de Bourses Francaises was told that a unit of Framatome S.A. also bought Navigation Mixte shares, this purchase covering more than 160,000 shares.

[20340003] |Both companies are allies of Navigation Mixte in its fight against a hostile takeover bid launched last week by Cie.
[20340004] |Financiere de Paribas at 1,850 French francs ($297) a share.
[20340005] |Navigation Mixte's chairman had suggested that friendly institutions were likely to buy its stock as soon as trading opened Monday.

[20340006] |The Credit Lyonnais purchase, for 33,000 regular common shares and 10,000 newly created shares, is valued at about slightly more than 80 million French francs.

[20341001] |Unocal Corp., Los Angeles, said it and Petroleos de Venezuela S.A. would create a petroleum marketing and refining general partnership in the Midwest.

[20341002] |The joint venture, Uno-Ven Co., would generate total annual revenue of about $500 million and have 1,100 employees, a Unocal spokesman said.
[20341003] |Unocal said the venture would enable it to recover more of its refining and marketing investment and prepare for expected growth in exploration, production, chemicals and other areas.

[20341004] |It said financing would consist of $250 million from a private placement obtained through Shearson Lehman Hutton Inc. and a $150 million revolving credit line underwritten by Chase Manhattan Bank.

[20341005] |In addition to Unocal's 153,000 barrel-a-day refinery near Lemont, Ill., the new venture would control 17 distribution terminals, a lubricating-oil blending and packaging plant, and 131 company-owned Unocal service stations.
[20341006] |It said the venture, expected to take control of the facilities Dec. 1, would also serve another 3,300 independent Unocal gasoline stations.
[20341007] |Petroleos will supply 135,000 barrels of oil a day for the refinery, Unocal said.

[20342001] |Mitsubishi Heavy Industries Ltd. said unconsolidated pretax earnings in the fiscal first half surged 79% to a record 63.25 billion yen ($445.7 million), reflecting strong demand for a variety of products.

[20342002] |In the period ended Sept. 30, net income rose 90% to 31.18 billion yen, or 9.34 yen a share, from 16.38 billion yen, or 5.05 yen a share.
[20342003] |A year ago, the Tokyo company had pretax profit of 35.38 billion yen.

[20342004] |Sales amounted to 1.011 trillion yen, climbing 29% from 787.02 billion yen.

[20342005] |Encouraged by the brisk performance, Mitsubishi plans to raise its per-share dividend to 3.50 yen from three yen.

[20342006] |Company officials said the current robust domestic demand that has been fueling sustained economic expansion helped push up sales of products like ships, steel structures, power systems and machinery and resulted in sharply higher profit.

[20343001] |Senate leaders traded proposals aimed at speeding action on legislation to narrow the deficit and raise the federal government's debt limit -- but the major stumbling block remains President Bush's proposal to cut the capital-gains tax rate.

[20343002] |Democrats want the tax provision to be a separate bill, subject to the usual procedural obstacles.
[20343003] |Republicans, meanwhile, want to try to protect the measure by combining it with two politically popular issues that Democrats could find hard to block.

[20343004] |The talks between Senate Majority Leader George Mitchell of Maine and his GOP counterpart, Sen. Robert Dole of Kansas, are expected to resume today.

[20343005] |Last night, after meeting with Mr. Bush and administration officials at the White House, Mr. Dole proposed streamlining the fiscal 1990 deficit-reduction bill, now stalled in a House-Senate conference committee, and passing a long-term extension of the federal debt ceiling without any accompanying amendments.

[20343006] |Under this plan, two provisions currently in the House version of the deficit-cutting bill -- repeal of both the catastrophic-illness insurance program and a controversial 1986 tax provision intended to counter discrimination in employee-benefit plans -- would be made into a separate bill.

[20343007] |Republicans would try to attach a capital-gains provision to that legislation, hoping the political popularity of its other two parts would dissuade Democrats from blocking it.

[20343008] |Democrats want to avoid having to make that choice by making the capital-gains tax cut an individual bill.
[20343009] |Sen. Mitchell is confident he has sufficient votes to block such a measure with procedural actions.

[20343010] |Both plans would drop child-care provisions from the House version of the deficit-reduction legislation and let it progress as a separate bill.
[20343011] |While that could make it vulnerable to a veto by Mr. Bush, Democrats argue that a presidential rejection would give their party a valuable issue in next year's congressional elections.

[20343012] |Senate Democrats are to meet today to consider the GOP proposal.

[20343013] |Yesterday, Mr. Dole seemed weary of the Bush administration's strategy of pushing the capital-gains measure at every chance in the face of Democratic procedural hurdles.
[20343014] |Pushing the issue on legislation needed to avoid default by the federal government, he told reporters, "doesn't seem to be very good strategy to me."

[20343015] |At 12:01 a.m. EST today, the federal government's temporary $2.87 trillion debt limit expired.
[20343016] |To avoid default, lawmakers must pass legislation raising the limit to $3.12 trillion from $2.80 trillion by next Wednesday, according to the Treasury.

[20343017] |Pressed by Chairman Dan Rostenkowski (D., Ill.) of the House Ways and Means Committee, Treasury Undersecretary Robert Glauber told a congressional hearing that the administration would give up its demand for the capital-gains tax cut if faced with a potential default.

[20344001] |Price Stern Sloan Inc. said it hired an investment banking firm to assist in evaluating restructuring or merger alternatives and reported a net loss of $8.1 million, or $2.14 a share, for the third quarter ended Sept.

[20344002] |These results compare with net income of $1.8 million, or 44 cents a share, for the corresponding period last year.
[20344003] |This quarter's loss includes pretax charges of $4.9 million on the proposed discontinuation of the company's troubled British subsidiary, and $3.7 million of other write-offs the company said were non-recurring and principally related to inventory, publishing advances and pre-publication costs.
[20344004] |The publishing concern said it retained the investment banking firm of Donaldson, Lufkin & Jenrette Securities Inc. to act as its financial adviser, assisting in the evaluation of various financial and strategic alternatives, including debt refinancing, raising capital, recapitalization, a merger or sale of the company.

[20344005] |The company also retained attorney Martin P. Levin, a director of the company and former head of the Times-Mirror Publishing Group, as an adviser.

[20344006] |Net sales for this year's third quarter were $14 million, down from $21.4 million last year.
[20344007] |The company attributed the decrease in part to the exclusion of the company's British sales from the current year's figures as a result of the subsidiary's status as a proposed discontinued operation and, in part, to lower sales in certain key foreign and domestic accounts.
[20344008] |U.K. sales for last year's quarter were about $3 million.

[20345001] |Stock prices surged as a multibillion-dollar takeover proposal helped restore market players' confidence about the prospects for further deal-making.

[20345002] |Paper and forest-products stocks were especially strong, as the offer for Great Northern Nekoosa by Georgia-Pacific triggered speculation that the industry could be in for a wave of merger activity.

[20345003] |The Dow Jones Industrial Average climbed 41.60 to 2645.08 even though some late selling caused the market to retreat from session highs.
[20345004] |Trading was moderate, with 176,100,000 shares changing hands on the New York Stock Exchange.

[20345005] |Aside from the takeover news, big buy orders were placed for blue-chip shares in afternoon trading.
[20345006] |Traders said the buy programs came from very large institutional accounts that were also active in the stock-index futures markets.
[20345007] |At one point, almost all of the shares in the 20-stock Major Market Index, which mimics the industrial average, were sharply higher.

[20345008] |Some 1,111 Big Board issues advanced in price and only 448 declined, while broader market averages rose sharply.
[20345009] |Standard & Poor's 500-Stock Index climbed 5.29 to 340.36, the Dow Jones Equity Market Index added 4.70 to 318.79 and the New York Stock Exchange Composite Index climbed 2.65 to

[20345010] |Great Northern surged 20 1/8 to 62 7/8, well above Georgia-Pacific's offering price of $58 a share, amid speculation that other suitors for the company would surface or that the bid would be raised.
[20345011] |Nearly 6.3 million shares, or about 11.5% of the company's shares outstanding, changed hands in Big Board composite trading.

[20345012] |With stocks having been battered lately because of the collapse of takeover offers for UAL, the parent company of United Airlines, and AMR, the parent of American Airlines, analysts viewed the proposal as a psychological lift for the market.

[20345013] |The $3.18 billion bid, which had been rumored since last week, "creates a better feeling that there's value in the market at current levels and renews prospects for a hot tape," says A.C. Moore, director of research at Argus Research Corp.

[20345014] |Traders and analysts alike said the market's surge also reflected an easing of concerns about volatility because of moves by a number of brokerage firms to curtail or cease stock-index arbitrage.
[20345015] |Much of the instability in stock prices lately has been blamed on arbitrage trading, designed to profit from differences in prices between stocks and index futures.

[20345016] |"People are looking for an ability to try and read the market, rather than be manipulated," said Dudley A. Eppel, manager of equity trading at Donaldson, Lufkin & Jenrette.
[20345017] |He noted that institutional investors showed "pretty general" interest in stocks in the latest session.

[20345018] |But traders also said arbitrage-related trading contributed to the market's surge, as buy programs boosted prices shortly after the opening and sporadically through the remainder of the session.

[20345019] |Georgia-Pacific fell 2 1/2 to 50 7/8, but most paper and forest-products stocks firmed as market players speculated about other potential industry takeover targets.

[20345020] |Within the paper sector, Mead climbed 2 3/8 to 38 3/4 on 1.3 million shares, Union Camp rose 2 3/4 to 37 3/4, Federal Paper Board added 1 3/4 to 23 7/8, Bowater gained 1 1/2 to 27 1/2, Stone Container rose 1 to 26 1/8 and Temple-Inland jumped 3 3/4 to 62 1/4.

[20345021] |Forest-products issues showing strength included Champion International, which went up 1 3/8 to 31 7/8; Weyerhaeuser, up 3/4 to 27 1/4; Louisiana-Pacific, up 1 1/8 to 40 3/8, and Boise Cascade, up 5/8 to 42.

[20345022] |The theme of industry consolidation had surfaced earlier this year among drug stocks, which posted solid gains in the latest session.
[20345023] |Pfizer gained 1 7/8 to 67 5/8, Schering-Plough added 2 1/4 to 75 3/4, Eli Lilly rose 1 3/8 to 62 1/8 and Upjohn firmed 3/4 to 38.

[20345024] |Also, SmithKline Beecham rose 1 3/8 to 39 1/2.
[20345025] |An advisory committee of the Food and Drug Administration recommended that the agency approve Eminase, the company's heart drug.

[20345026] |Two rumored restructuring candidates in the oil industry moved higher: Chevron, which rose 1 3/4 to 68 1/4 on 3.5 million shares, and USX, which gained 1 1/4 to 34 5/8.
[20345027] |Pennzoil is rumored to be accumulating a stake in Chevron in order to push for a revamping of the company; investor Carl Icahn has recently increased his stake in USX, which separately reported earnings that were in line with expectations.

[20345028] |Paramount Communications, which completed the $3.35 billion sale of its Associates Corp. financial-services unit to Ford Motor, gained 1 1/8 to 55 7/8 after losing one point Monday amid rumors of a delay.
[20345029] |The company said the sale would produce a $1.2 billion gain in the fourth quarter.

[20345030] |BankAmerica climbed 1 3/4 to 30 after PaineWebber boosted its investment opinion on the stock to its highest rating.
[20345031] |The upgrade reflected the 20% decline in shares of the bank since the firm lowered its rating in early October, based on the belief the stock had become expensive.
[20345032] |Sea Containers, which unveiled a proposed restructuring, advanced 1 to 62.
[20345033] |The company said it would repurchase half of its common shares at $70 each, sell an estimated $1.1 billion in assets and pay a special preferred-stock dividend to common-stock holders.

[20345034] |Shaw Industries, which agreed to acquire Armstrong World Industries' carpet operations for an undisclosed price, rose 2 1/4 to 26 1/8.
[20345035] |Armstrong added 1/8 to 39 1/8.

[20345036] |ERC Corp. rose 7/8 to 12.
[20345037] |The company agreed definitively to be acquired by Ogden Corp. in a stock swap valued at about $82.5 million.
[20345038] |Ogden gained 1 1/4 to 32 7/8.

[20345039] |Ocean Drilling & Research dropped 1 1/4 to 21 1/2 following news of a restructuring plan that calls for the company to reorganize its drilling business into a separate company and offer a 15% to 20% stake to the public.

[20345040] |The American Stock Exchange Market Value Index rose 1.71 to 370.58.
[20345041] |Volume totaled 11,820,000 shares.

[20345042] |Imperial Holly fell 1 5/8 to 27 1/8 in the wake of its third-quarter earnings report.
[20345043] |Net income was down from a year ago, when a gain from the restructuring of a retirement plan boosted earnigs.

[20346001] |Cilcorp Inc., Peoria, Ill., said it agreed to acquire the environmental consulting and analytical service businesses of Hunter Environmental Services Inc. of Southport, Conn.

[20346002] |The utility holding company said Hunter will receive 390,000 shares of a new series of Cilcorp convertible preferred stock with a face value of $39 million for the businesses.
[20346003] |Cilcorp will also assume $22 million of Hunter's existing debt.
[20346004] |As part of the agreement, Cilcorp said it will pay Hunter $4 million in exchange for agreements not to compete.

[20346005] |Cilcorp said the businesses to be acquired had revenue of $76 million for the year ended March 31.

[20346006] |Separately, Cilcorp said it plans to purchase as many as 1.4 million shares, or 10% of its common stock outstanding from time to time on the open market and through privately negotiated transactions.

[20346007] |The company, which currently has 13.5 million common shares outstanding, said it has no specific plans for the shares.

[20347001] |BUSH AND GORBACHEV WILL HOLD two days of informal talks next month.

[20347002] |The president said that he and the Kremlin leader would meet Dec. 2-3 aboard U.S. and Soviet naval vessels in the Mediterranean to discuss a wide range of issues without a formal agenda.
[20347003] |A simultaneous announcement was made in Moscow.
[20347004] |Bush said that neither he nor Gorbachev expected any "substantial decisions or agreements."
[20347005] |The seaborne meetings won't disrupt plans for a formal summit next spring or summer, at which an arms-control treaty is likely to be completed.

[20347006] |The two leaders are expected to discuss changes sweeping the East bloc as well as human-rights issues, regional disputes and economic cooperation.

[20347007] |Israel's army lifted a blockade around a Palestinian town in the occupied West Bank, ending a 42-day campaign of seizing cars, furniture and other goods to crush a tax boycott.
[20347008] |While residents claimed a victory, military authorities said they had confiscated the equivalent of more than $1.5 million to make up for the unpaid taxes.

[20347009] |East German leader Krenz arrived in Moscow for talks today with Gorbachev on restructuring proposals.
[20347010] |In East Berlin, Communist Party officials considered legalizing New Forum, the country's largest opposition alliance, as about 20,000 demonstrators staged protests in three cities to press demands for democratic freedoms.

[20347011] |The House approved a permanent smoking ban on nearly all domestic airline routes as part of a $27.1 billion transportation bill that must still overcome budget obstacles in Congress.
[20347012] |The chamber also sent to Bush a nearly $67 billion fiscal 1990 measure that includes the first construction funds for a space station.

[20347013] |Nicaragua's Ortega postponed until today a decision on whether to end a 19-month-old cease-fire in the conflict with the Contra rebels.
[20347014] |In Washington, the Senate voted to condemn Ortega's threat to cancel the truce, and Bush said he would review U.S. policy toward Managua, including the possibility of renewing military aid to the rebels.

[20347015] |Chinese leader Deng told former President Nixon that the U.S. was deeply involved in "the turmoil and counterrevolutionary rebellion" that gripped Beijing last spring.
[20347016] |Nixon, on the fourth day of a private visit to China, said that damage to Sino-U.S. relations was "very great," calling the situation "the most serious" since 1972.

[20347017] |Afghanistan's troops broke through a guerrilla blockade on the strategic Salang Highway, allowing trucks carrying food and other necessities to reach Kabul after a missile attack on rebel strongholds.
[20347018] |The convoy of about 100 vehicles was the first to make deliveries to the capital in about 10 days.

[20347019] |Turkey's legislature elected Prime Minister Ozal as the country's first civilian president since 1960, opening the way for a change of government under a new premier he will select.
[20347020] |The vote in Ankara was boycotted by opposition politicians, who vowed to oust Ozal.
[20347021] |He begins his seven-year term Nov. 9, succeeding Kenan Evren.

[20347022] |South Africa's government dismissed demands by right-wing Conservatives, the nation's main opposition party, for emergency talks on Pretoria's recent tolerance of dissent.
[20347023] |The government also urged whites to refrain from panic over growing black protests, such as the massive anti-apartheid rally Sunday on the outskirts of Soweto.

[20347024] |Researchers in Belgium said they have developed a genetic engineering technique for creating hybrid plants for a number of crops, such as cotton, soybeans and rice.
[20347025] |The scientists at Plant Genetic Systems N.V. isolated a gene that could lead to a generation of plants possessing a high-production trait.

[20347026] |A bomb exploded at a leftist union hall in San Salvador, killing at least eight people and injuring about 30 others, including two Americans, authorities said.
[20347027] |The blast, which wrecked the opposition labor group's offices, was the latest in a series of attacks in El Salvador's 10-year-old civil war.

[20347028] |Hungary's Parliament voted to hold a national referendum on an election to fill the new post of president.
[20347029] |The balloting to decide when and how to fill the position, which replaces a collective presidency under a pact signed by the ruling Socialists and opposition groups, is to be held Nov.

[20347030] |The State Department denied asylum to a Vietnamese man who escaped from his homeland by lashing himself to the rudder housing of a tanker for two days in monsoon seas.
[20347031] |A spokesman for Democratic Sen. Pell of Rhode Island said, however, that the Immigration and Naturalization Service would review the stowaway's request.

[20348001] |Ogden Projects Inc. said net income jumped to $6.6 million, or 18 cents a share, in the third quarter.

[20348002] |The Fairfield, N.J., company, which is 92%-owned by Ogden Corp., New York, had net of $1.1 million, or four cents a share, a year ago.
[20348003] |Revenue soared to $101.7 million from $39.5 million.

[20348004] |Ogden Projects, whose shares began trading on the New York Stock Exchange in August, closed yesterday at $26.875, down 75 cents.
[20348005] |The stock began trading this summer at $14 apiece.

[20348006] |Ogden Projects, which has interests in solid-waste recovery and hazardous-waste cleanup, said it has 13 facilities in operation, up from seven a year ago.

[20348007] |Meanwhile, Ogden Corp., which also has interests in building maintenance and management, reported third-quarter net income of $27.1 million, or 67 cents a share, more than twice the $13.5 million, or 34 cents a share, a year earlier.
[20348008] |Revenue rose 33% to $378.1 million from $283.8 million.

[20349001] |Under attack by its own listed companies and powerful floor traders, the New York Stock Exchange is considering reinstituting a "collar" on program trading that it abandoned last year, according to people familiar with the Big Board.

[20349002] |The exchange also may step up its disclosure of firms engaged in program trading, these people said.

[20349003] |Big Board officials wouldn't comment publicly.
[20349004] |But in an interview in which he called the stock market's volatility a "national problem," Big Board Chairman John J. Phelan Jr. said, "We are going to try to do some things in the short intermediate term" to help the situation.

[20349005] |Mr. Phelan has been viewed by many exchange members as being indifferent to stock-price swings caused by program trades.
[20349006] |He said he is "very surprised" by the furor over program trading and the exchange's role in it that has raged in recent days.

[20349007] |Mr. Phelan said that the Big Board has been trying to deal quietly with the issue, but that banning computer-assisted trading strategies entirely, as some investors want, would be like "taking everybody out of an automobile and making them ride a horse."

[20349008] |The exchange has a board meeting scheduled for tomorrow, and it is expected that some public announcement could be made after that.

[20349009] |Big Board officials have been under seige from both investors and the exchange's own floor traders since the Dow Jones Industrial Average's 190-point tumble on Oct. 13.
[20349010] |Mr. Phelan hasn't been making public remarks in recent days, and many people have urged him to take more of a leadership role on the program trading issue.

[20349011] |What the Big Board is considering is re-establishing a "collar" on program trading when the market moves significantly.
[20349012] |Early last year, after a 140-point, one-day drop in the Dow, the Big Board instituted the collar, which banned program trading through the Big Board's computers whenever the Dow moved 50 points up or down in a day.
[20349013] |It didn't work.

[20349014] |"The collar was penetrated on a number of occasions," meaning securities firms figured out ways to conduct program trades to circumvent the collar and use the Big Board's electronic trading system, Mr. Phelan said.
[20349015] |That was when the exchange took a new tack by publishing monthly statistics listing the top 15 program trading firms.

[20349016] |Exchange officials emphasized that the Big Board is considering a variety of actions to deal with program trading.
[20349017] |People familiar with the exchange said another idea likely to be approved is expanding the monthly reports on program trading to cover specific days or even hours of heavy program trading and who was doing it.

[20349018] |Meanwhile, another big Wall Street brokerage firm joined others that have been pulling back from program trading.
[20349019] |American Express Co.'s Shearson Lehman Hutton Inc. unit said it ceased all index-arbitrage program trading for client accounts.
[20349020] |In stock-index arbitrage, traders buy and sell large amounts of stock with offsetting trades in stock-index futures to profit from fleeting price discrepancies between the two markets.

[20349021] |Shearson, which in September was the 11th-biggest program trader on the Big Board, had already suspended stock-index arbitrage for its own account.

[20349022] |Also, CS First Boston Inc.'s First Boston Corp. unit, the fifth-biggest program trader in September, is "preparing a response" to the program-trading outcry, officials of the firm said.
[20349023] |First Boston is one of the few major Wall Street firms that haven't pulled back from program trading in recent days.

[20349024] |Mr. Phelan is an adroit diplomat who normally appears to be solidly in control of the Big Board's factions.
[20349025] |But he has been getting heat from all sides over program trading.

[20349026] |Mr. Phelan's recent remarks that investors simply must get used to the stock-market volatility from program trading have drawn criticism from both the exchange's stock specialists, who make markets in individual stocks, and from many companies that have shares listed on the Big Board.

[20349027] |Mr. Phelan said that his predicting continued volatility is just "how the world is.
[20349028] |If bringing the message is a crime, I'm guilty of it."
[20349029] |But he said this doesn't mean he is satisfied with the market's big swings.

[20349030] |"We're trying to take care of a heck of a lot of constituents," Mr. Phelan said.
[20349031] |"Each one has a different agenda."

[20349032] |For example, in a special meeting Monday with Mr. Phelan, senior officials of some of the Big Board's 49 stock specialist firms complained that the exchange is no longer representing their interests.
[20349033] |"We are looking for representation we haven't had," a specialist said.
[20349034] |"We've had dictation."

[20349035] |After another session Mr. Phelan held yesterday with major brokerage firms such as Morgan Stanley & Co., Goldman, Sachs & Co., PaineWebber Group Inc. and First Boston -- all of which have engaged in program trading -- an executive of a top brokerage firm said, "Clearly, the firms want the exchange to take leadership."

[20349036] |Many specialist firms resent the Big Board's new "basket" product that allows institutions to buy or sell all stocks in the Standard & Poor's 500-stock index in one shot.
[20349037] |Ultimately, the specialists view this as yet another step toward electronic trading that could eventually destroy their franchise.

[20349038] |"His {Phelan's} own interests are in building an electronic marketplace," said a market maker.

[20349039] |The basket product, while it has got off to a slow start, is being supported by some big brokerage firms -- another member of Mr. Phelan's splintered constituency.

[20349040] |Mr. Phelan has had difficulty convincing the public that the Big Board is serious about curbing volatility, especially as the exchange clearly relishes its role as the home for $200 billion in stock-index funds, which buy huge baskets of stocks to mimic popular stock-market indexes like the Standard & Poor's 500, and which sometimes employ program trading.
[20349041] |The Big Board wants to keep such index funds from fleeing to overseas markets, but only as long as it "handles it intelligently," Mr. Phelan said.

[20349042] |Despite what some investors are suggesting, the Big Board isn't even considering a total ban on program trading or stock futures, exchange officials said.
[20349043] |Most revisions it will propose will be geared toward slowing down program trading during stressful periods, said officials working with the exchange.
[20349044] |Computers have made trading more rapid, but that can be fixed with some fine-tuning.
[20349045] |"I think if you {can} speed things up, you can slow them down," Mr. Phelan said.
[20349046] |"That's different than wrecking them."

[20349047] |While volatility won't go away, he said, "Volatility is greater than program trading.
[20349048] |What I'm trying to say to people is, it's proper to worry about program trading, but it's only a piece of the business."

[20349049] |For example, Mr. Phelan said that big institutions have so much control over public investments that they can cause big swings in the market, regardless of index arbitrage.
[20349050] |"A lot of people would like to go back to 1970," before program trading, he said.
[20349051] |"I would like to go back to 1970.
[20349052] |But we're not going back to 1970."

[20349053] |Indeed, Mr. Phelan said that if stock-market volatility persists, the U.S. may lose its edge as being the best place to raise capital.
[20349054] |"Japan's markets are more stable," he said.
[20349055] |"If that continues, a significant number of {U.S.} companies will go over there to raise money."

[20349056] |In coming days, when the Big Board formulates its responses to the program-trading problem, Mr. Phelan may take a more public role in the issue.

[20349057] |Lewis L. Glucksman, vice chairman of Smith Barney, Harris Upham & Co., said: "This is a problem that's taking on a life of its own.
[20349058] |The program trading situation seems to have driven individual investors as well as others out of the market, and even Europeans are suspicious.
[20349059] |The exchange should take a pro-active position."

[20349060] |For now, however, Mr. Phelan said: "I refuse to get out there and tell everybody everything is hunky-dory.
[20349061] |We have a major problem, and that problem is volatility."

[20349062] |Craig Torres contributed to this article.

[20350001] |A NEW MINIMUM-WAGE PLAN has been worked out by Congress and Bush, opening the way for the first increase in over nine years.
[20350002] |The compromise proposal, ending a long impasse between Democrats and the president, would boost the minimum wage to $4.25 an hour by April 1991 from $3.35 now.
[20350003] |The legislation also includes a lower "training wage" for new workers who are teen-agers.

[20350004] |The Big Board is considering reviving a curb on program trading when the market is volatile.
[20350005] |The exchange, which abandoned such a "collar" last year because it didn't prevent sharp price swings, has been under attack recently for not taking action against program trading.

[20350006] |Great Northern Nekoosa reacted coolly to Georgia-Pacific's takeover bid of $58 a share, or $3.19 billion, though the suitor said all terms are negotiable.
[20350007] |Great Northern's stock soared $20.125, to $62.875, on speculation that a higher bid would emerge.

[20350008] |Stock prices rallied as the Georgia-Pacific bid broke the market's recent gloom.
[20350009] |The Dow Jones industrials finished up 41.60, at 2645.08.
[20350010] |The dollar and bond prices also closed higher.

[20350011] |Leading indicators rose a slight 0.2% in September, a further indication the economy is slowing but without any clear sign of whether a recession looms.
[20350012] |Meanwhile, new-home sales plunged 14% in the month.

[20350013] |Labor costs climbed 1.2% in private industry during the third quarter, matching the second-quarter rise.
[20350014] |Health-insurance costs soared.

[20350015] |Time Warner and Sony could end up becoming partners in several business ventures as part of a settlement of their dispute over Hollywood producers Peter Guber and Jon Peters.

[20350016] |A bidding war for Jaguar became more likely as Britain unexpectedly decided to end restrictions blocking a takeover of the luxury car maker.

[20350017] |Sea Containers plans to sell $1.1 billion of assets and use some of the proceeds to buy about 50% of its common shares for $70 each.
[20350018] |The company is trying to fend off a hostile bid by two European shipping firms.

[20350019] |Eastern Airlines pilots were awarded between $60 million and $100 million in back pay by an arbitrator, a decision that could complicate the carrier's bankruptcy reorganization.

[20350020] |LTV Steel is boosting prices of flat rolled steel products an average 3%, but it's unclear whether the increases, set for Jan. 1, 1990, will stick.

[20350021] |Southern's Gulf Power unit paid $500,000 in fines after pleading guilty to conspiracy to make illegal political contributions and tax evasion.

[20350022] |More big Japanese investors are buying U.S. mortgage-backed securities, reversing a recent trend.

[20350023] |USX's profit dropped 23% in the third quarter as improved oil results failed to offset weakness in the firm's steel and natural gas operations.

[20350024] |Miniscribe reported a negative net worth and hinted it may file for Chapter 11.
[20350025] |The disk-drive maker disclosed a major fraud two months ago.

[20350026] |Markets --

[20350027] |Stocks: Volume 176,100,000 shares.
[20350028] |Dow Jones industrials 2645.08, up 41.60; transportation 1205.01, up 13.15; utilities 219.19, up 2.45.

[20350029] |Bonds: Shearson Lehman Hutton Treasury index 3426.33, up

[20350030] |Commodities: Dow Jones futures index 129.63, up 0.25; spot index 129.84, off 0.25.

[20350031] |Dollar: 142.85 yen, up 0.95; 1.8415 marks, up 0.0075.

[20351001] |Bond prices staggered in seesaw trading, rising on reports of economic weakness and falling on reports of economic strength.

[20351002] |Treasury bonds got off to a strong start, advancing modestly during overnight trading on foreign markets.

[20351003] |"We saw good buying in Japan and excellent buying in London," said Jay Goldinger, market strategist and trader at Capital Insight Inc., Beverly Hills, Calif.
[20351004] |The market's tempo was helped by the dollar's resiliency, he said.
[20351005] |Late in London, the dollar was quoted at 1.8410 West German marks and 142.70 Japanese yen, up from late Monday in New York.
[20351006] |British sterling eased to $1.5775 from $1.5825.

[20351007] |When U.S. trading began, Treasury bonds received an additional boost from news that sales of new single-family homes fell 14% in September.
[20351008] |The contraction was twice as large as economists projected and was the sharpest decline since a 19% drop in January 1982.

[20351009] |Economists said the report raised speculation that the economic slowdown could turn into a recession, which would pave the way for the Federal Reserve to lower interest rates.
[20351010] |But later in the day, a report by the Purchasing Management Association of Chicago cast doubt on the recession scenario.
[20351011] |The association said its October index of economic activity rose to 51.6% after having been below 50% for three consecutive months.
[20351012] |A reading below 50% indicates that the manufacturing industry is slowing while a reading above 50% suggests that the industry is expanding.
[20351013] |Bond prices fell after the Chicago report was released.

[20351014] |By the end of the day, bond prices were mixed.
[20351015] |The benchmark 30-year bond was nearly 1/4 point higher, or up about $2.50 for each $1,000 face amount.
[20351016] |New two-year notes ended unchanged while three-year and four-year notes were slightly lower.
[20351017] |Municipal bonds ended unchanged to as much as 1/2 point higher while mortgage-backed securities were up about 1/8 point.
[20351018] |Corporate bonds were unchanged.

[20351019] |In the corporate market, an expected debt offering today by International Business Machines Corp. generated considerable attention.

[20351020] |The giant computer maker is slated to offer $500 million of 30-year non-callable debentures through underwriters led by Salomon Brothers Inc.
[20351021] |Traders expect the bonds to yield about 0.60 to 0.65 percentage point above the Treasury's benchmark 30-year bond, which ended Tuesday with a yield of about 7.90%.

[20351022] |The last time IBM tapped the corporate debt market was in April 1988, when it offered $500 million of debt securities.

[20351023] |IBM's visits to the debt market are closely watched by treasurers at other corporations and by credit market analysts.
[20351024] |Some analysts believe the company has the ability to pinpoint the trough in interest-rate cycles.

[20351025] |In October 1979, just days before the Federal Reserve raised interest rates, IBM offered $1 billion in debt securities.
[20351026] |The boost in rates sent IBM's bonds tumbling, leaving underwriters with millions of dollars of losses and triggering a sell-off in the overall market.

[20351027] |The company "can't be bullish if they're doing a sizable 30-year bullet," said one analyst.

[20351028] |Others said IBM might increase the size of the offering to as much as $1 billion if investor demand is strong.
[20351029] |The company has $1 billion in debt filed with the Securities and Exchange Commission.

[20351030] |"I think the $500 million is a little bit of a fire drill," said Jim Ednee, head of the industrial bond department at Drexel Burnham Lambert Inc.
[20351031] |"I think as the pricing time arrives, the bonds will come a little richer and in a larger amount."

[20351032] |Treasury Securities

[20351033] |Treasury prices ended mixed in light trading.

[20351034] |The benchmark 30-year bond was quoted late at 102 12/32 to yield 7.90% compared with 102 7/32 to yield 7.92% Monday.
[20351035] |The latest 10-year notes were unchanged at 100 16/32 to yield 7.904%.

[20351036] |Short-term rates also were mixed.
[20351037] |The discount rate on three-month Treasury bills rose slightly from the average rate at Monday's auction to 7.79% for a bond-equivalent yield of 8.04%.
[20351038] |The discount rate on six-month Treasury bills fell slightly to 7.60% for a bond-equivalent yield of 7.99%.

[20351039] |Corporate Issues

[20351040] |Two junk bond issues were priced yesterday, including a scaled-backed offering by Beatrice Co.

[20351041] |A spokesman for underwriters Salomon Brothers Inc. said Beatrice cut its high-yield offering to $251 million from a planned $350 million after it became clear the company would have to give investors higher yields.

[20351042] |In the two-part offering, $151 million of senior subordinated reset notes were priced at 99.75 and carried a rate of 13 3/4%, while the $100 million of senior subordinated floating rate notes were priced to float at 4.25 percentage points above the London Interbank Offered Rate, or LIBOR.
[20351043] |The one-year LIBOR rate yesterday was 8 7/16%.

[20351044] |Since the recent deterioration of the junk-bond market, at least two other junk issuers have said they plan to scale back planned high-yield offerings, and several issues have been postponed.

[20351045] |William Carmichael, Beatrice chief financial officer, said favorable market conditions in September prompted the company to plan more debt than necessary.

[20351046] |"However, given the changes in the market conditions that have occurred since then, we decided to sell only the amount needed to proceed with our contemplated recapitalization," he said.

[20351047] |Under the firm's original bank credit agreement, it was required to raise $250 million of subordinated debt to be used to repay some of the bank borrowings drawn to redeem $526.3 million of increasing rate debentures in August.

[20351048] |A month ago, when Beatrice first filed to sell debt, the company had planned to offer $200 million of its senior subordinated reset notes at a yield of 12 3/4%.
[20351049] |The $150 million in senior subordinated floating-rate notes were targeted to be offered at a price to float four percentage points above the three-month LIBOR.
[20351050] |By October, however, market conditions had deteriorated and the reset notes were targeted to be offered at a yield of between 13 1/4% and 13 1/2%.

[20351051] |Mr. Carmichael said investors also demanded stricter convenants.

[20351052] |Continental Cablevision Inc., via underwriters at Morgan Stanley & Co., priced $350 million of junk bonds at par to yield 12 7/8%.

[20351053] |Mortgage-Backed Securities

[20351054] |J.C. Penney & Co. issued $350 million of securities backed by credit-card receivables.
[20351055] |The securities were priced at 99.1875 to yield about 9.19%.
[20351056] |Underwriters at First Boston Corp. said the J.C. Penney credit-card securities are the first with a 10-year average life, which is much longer than previous such issues.

[20351057] |Elsewhere, Ginnie Mae's 9% issue for November delivery was quoted at 98 18/32 bid, up 5/32 from late Monday, to yield about 9.333% to a 12-year average life assumption.

[20351058] |Freddie Mac's 9 1/2% issue was quoted at 99 20/32, up 3/32 from Monday.
[20351059] |Fannie Mae's 9% issue was at 98 7/32, up 1/8.

[20351060] |On the pricing front, an 11-class issue of $500 million Federal Home Loan Mortgage Corp.
[20351061] |Remic mortgage securities was launched by a Morgan Stanley group.
[20351062] |The offering is backed by Freddie Mac's 10% issue with a weighted average term to maturity of 29.583 months.

[20351063] |Municipal Issues

[20351064] |Municipal bonds were little changed to 1/2 point higher in late dealings.

[20351065] |"We were oversold and today we bounced back.
[20351066] |Some accounts came in for some blocks in the secondary {market}, which we haven't seen for a while," said one trader.

[20351067] |"There were no {sell} lists and the calendar is lightening up a bit.
[20351068] |There's light at the end of the tunnel for municipals," he said, adding that he expects prices to "inch up" in the near term.

[20351069] |The market's tone improved after Monday's pricing of $813 million New York City general obligation bonds.
[20351070] |The issue's smooth absorption eased fears that supply would overwhelm demand in coming sessions, traders said.
[20351071] |Demand for the bonds was strong enough to permit underwriters to trim some yields in the tax-exempt portion of the offering late Monday.

[20351072] |A two-part $75.1 million offering of wastewater treatment bonds by the New Jersey Wastewater Treatment Trust was more than half sold by late in the session, according to lead underwriter Merrill Lynch Capital Markets.

[20351073] |The debt was reoffered priced to yield from 6% in 1991 to 7.15% in 2008-2009.

[20351074] |Foreign Bonds

[20351075] |Most foreign government bonds markets were quiet.

[20351076] |West German bonds firmed a bit after Monday's fall, but traders said the market remains bearish due to speculation that interest rates could rise again.

[20351077] |In a speech given Friday but released late Monday, Bundesbank Vice President Helmut Schlesinger suggested that it was risky to claim that the booming German economy has reached the peak of its cycle.
[20351078] |His comments were interpreted as a sign that higher interest rates are possible.
[20351079] |On Oct. 5, the Bundesbank raised the Lombard and discount rates by one percentage point to 8% and 6%, respectively, the highest levels in seven years.

[20351080] |Germany's 7% bond due October 1999 was unchanged at 99.35 to yield 7.09% while the 6 3/4% notes due July 1994 rose 0.025 point to 97.275 to yield 7.445%.
[20351081] |Japanese government bonds showed little change.

[20351082] |Japan's benchmark No. 111 issue due 1998 ended on brokers' screens at 95.90, down 0.02 point, to yield 5.435%.

[20351083] |British government bonds were little changed as investors awaited an address on economic policy by John Major, the new Chancellor of the Exchequer.
[20351084] |Britain's benchmark 11 3/4% bond due 2003/2007 rose 2/32 to 111 1/2 to yield 10.14% while the 11 3/4% notes due 1991 were unchanged at 98 21/32 to yield 12.95%.

[20352001] |Paramount Communications Inc. said it sold two Simon & Schuster information services units to Macmillan Inc., a subsidiary of Maxwell Communication Corp.

[20352002] |The two units are Prentice Hall Information Services, which publishes tax, financial planning and business law information, among other services, and Prentice Hall Information Network, which electronically delivers tax information.

[20352003] |Terms weren't disclosed, but industry executives said the units were sold for $40 million.

[20352004] |Arthur H. Rosenfeld, previously president of the Prentice Hall Tax and Professional Services division, was named president of the newly formed Macmillan Professional and Business Reference division.

[20352005] |Simon & Schuster retains the Corporation Law looseleaf service, which will become part of its Prentice Hall Law & Business unit.

[20353001] |A governing body of both the Financial Accounting Standards Board and the Governmental Accounting Standards Board voted to give the FASB jurisdiction over accounting standards for certain government-owned entities.

[20353002] |The Financial Accounting Foundation voted 12-2 that FASB accounting rules supercede GASB rules in regard to utilities, hospitals, and colleges and universities owned by the government.
[20353003] |GASB rules still apply for other government units.

[20353004] |After the GASB was founded in 1984, 11 years after the FASB, the government-owned entities were supposed to follow FASB rules unless the GASB superceded them.
[20353005] |The GASB had told governments they didn't have to follow FASB rules on depreciation, making it difficult for bond-rating agencies to compare private and state-owned schools, which compete in the public bond market.

[20353006] |The foundation vote is effective for the affected government entities with fiscal years that begin starting next Jan. 1 and makes the financial results of the hospitals, colleges and schools easier to compare with for-profit businesses.
[20353007] |But it may lead to separate financial reports based on different rules for the government entities under FASB rules and those still under GASB rules.

[20353008] |"Managers of government entities are often more concerned with the political and legal structure and financial-report comparability with profit-making businesses isn't always as high a priority," a foundation spokesman said.

[20354001] |Avery Inc. said it completed the sale of Uniroyal Chemical Holding Co. to a group led by management of Uniroyal Chemical Co., the unit's main business.
[20354002] |It valued the transaction at $800 million.

[20354003] |Avery, which continues to operate a coal company it expects to sell at a loss, said in proxy materials it intends to seek control of one or more companies.
[20354004] |After fees and repayment of debt, Avery is left with about $24 million in cash and securities from the Uniroyal sale.
[20354005] |Avery paid $750 million, including various legal and financing fees, to acquire Uniroyal Chemical, Middlebury, Conn., in 1986 -- a move that burdened Avery with debt.

[20354006] |In over-the-counter trading, Avery shares were quoted yesterday at a bid price of 93.75 cents a share.

[20354007] |According to Avery, for the year ended Sept. 30, 1988, Uniroyal Chemical had sales of $734.2 million and a net loss of $47.1 million.
[20354008] |An Avery spokesman said that the loss was magnified by accounting adjustments and that the company's loss was smaller on a cash basis.
[20354009] |Uniroyal has 2,600 employees and facilities in the U.S., Canada, Brazil, Italy and Taiwan.

[20354010] |In a related development, Avery said it completed a recapitalization in which its controlling shareholders and top officers, Nelson Peltz and Peter W. May, surrendered warrants and preferred stock in exchange for a larger stake in Avery's common shares.
[20354011] |On a fully diluted basis, the two raised their stake to 68% from 51%.

[20354012] |In December 1988, Messrs. Peltz and May sold their stock in Triangle Industries Inc., a packaging company they controlled, to Pechiney Corp. of France.
[20354013] |The executives had profited handsomely by building American National Can Co., Triangle's chief asset.

[20354014] |In January 1989, the two men acquired the non-packaging assets of Triangle, including a controlling stake in Avery and, by extension, Uniroyal Chemical.
[20354015] |In the August proxy material, Avery said that unless it sold Uniroyal, its ability to service debt would be hurt and Avery's shareholder value would "continue to erode."
[20354016] |Until Avery makes an acquisition, Messrs. Peltz and May will waive their direct salaries and bonuses, the company said.
[20354017] |For at least the next six months, however, Avery will continue to pay $200,000 a month for management services to a company controlled by Messrs. Peltz and May, according to the proxy material.

[20355001] |Clarcor Inc. said a plan to sell its J.L. Clark Inc. subsidiary to a group headed by Anderson Industries Inc. for $70.3 million has been terminated.

[20355002] |Clarcor, a maker of packaging and filtration products, said the two companies couldn't agree on terms of a definitive agreement.
[20355003] |The sale price of the unit, which makes packaging products, was to consist of cash, notes and an amount to be determined by the unit's future performance.

[20355004] |Clarcor said it is inviting proposals from other prospective purchasers of the unit.

[20355005] |Both Clarcor and Anderson are based in Rockford, Ill.

[20356001] |Rally's Inc. said it adopted a shareholders rights plan to protect shareholders from an inadequately priced takeover offer.

[20356002] |The plan provides for the distribution of one common stock-purchase right as a dividend for each share of common outstanding.
[20356003] |Each right entitles shareholders to buy one-half share of common for $30.

[20356004] |Earlier this month, a group led by three of the company's directors, Burt Sugarman, James M. Trotter III and Willam E. Trotter II, indicated it had a 45.2% stake in the Louisville, Ky., fast-food company and that it planned to seek a majority of seats on Rally's nine-member board.

[20356005] |The company said it was "concerned about the announced intent to acquire control of the company" by a Sugarman-led group.

[20357001] |Fujitsu Ltd. said it wants to withdraw its controversial one-yen bid to design a waterworks computer system for the city of Hiroshima.

[20357002] |Meanwhile, Japan's Fair Trade Commission said it was considering launching an investigation into whether the bid, the equivalent of less than a penny, violates anti-monopoly laws.

[20357003] |Hiroshima last week held an auction to pick the contractor, expecting to pay about 11 million yen for the project.
[20357004] |Eight companies submitted bids, but Fujitsu won the contract by essentially saying it would do the job for free.

[20357005] |News of the bid drew sharp criticism from other computer companies and industry observers.
[20357006] |Fujitsu itself, which said the bid hadn't been approved by its headquarters, was clearly embarrassed.
[20357007] |The bid wasn't "socially acceptable," a company spokeswoman said.

[20357008] |Hiroshima officials said they still consider the contract in effect and had no immediate plans to cancel it.
[20357009] |They said they wanted to wait for the outcome of any government investigation before deciding what to do.

[20358001] |The city's Department of Consumer Affairs charged Newmark & Lewis Inc. with failing to deliver on its promise of lowering prices.

[20358002] |In a civil suit commenced in state Supreme Court in New York, the agency alleged that the consumer-electronics and appliance discount-retailing chain engaged in deceptive advertising by claiming to have "lowered every price on every item" as part of an advertising campaign that began June 1.

[20358003] |The agency said it monitored Newmark & Lewis's advertised prices before and after the ad campaign, and found that the prices of at least 50 different items either increased or stayed the same.

[20358004] |In late May, Newmark & Lewis announced a plan to cut prices 5% to 20% and eliminate what it called a "standard discount-retailing practice" of negotiating individual deals with customers.

[20358005] |The consumer agency also disputed Newmark & Lewis's continuing strategy of advertising "new lower prices" when allgedly there haven't been price reductions since June 1.

[20358006] |Richard D. Lewis, president of the 47-store chain, defended the company's pricing campaign, saying it didn't use "the misleading expression `reduced from original prices.'"
[20358007] |Mr. Lewis said the company marked price tags and advertised at its "lowest possible prices" for all its merchandise to reduce public confusion.

[20358008] |Mr. Lewis said the company gave the Consumer Affairs department "volumes of documents" to substantiate its statements, and made "every effort to comply" with all the agency's policies.

[20358009] |In its suit, the consumer agency seeks fines of $1,000 per violation of the city's Consumer Protection Law, costs of investigation, and an injunction to prevent Newmark & Lewis from continuing its allegedly deceptive advertising.

[20359001] |Wary investors have been running for the stock market's equivalent of bomb shelters, buying shares of gold-mining and utility companies.

[20359002] |Those two groups have recently been leading the list of stocks setting new highs.
[20359003] |On Friday, when only a dozen common stocks hit 52-week highs on the New York Stock Exchange, five were gold-mining issues, and another four were utilities.
[20359004] |On Monday, when a mere seven common stocks managed new highs, six were utilities or golds.

[20359005] |At first glance, gold and utilities seem strange bedfellows.
[20359006] |After all, gold prices usually soar when inflation is high.
[20359007] |Utility stocks, on the other hand, thrive on disinflation, because the fat dividends utilities pay look more attractive when prices are falling (or rising slowly).

[20359008] |But the two groups have something very important in common: They are both havens for scared money, stocks for people who hate stocks.
[20359009] |It's as if investors, the past few days, are betting that something is going to go wrong -- even if they don't know what.

[20359010] |If the stock market and the economy catch their breath and show that they're on firmer footing, these stocks might well fall back.
[20359011] |Indeed, that happened to some extent yesterday, as industrial stocks rebounded, partly on news of takeovers in the paper industry.

[20359012] |Still, a lot of investors clearly have revived their interest in gold and utility shares.
[20359013] |"The primary overriding thing is that people are frightened," says Martin Sass, a New York money manager.
[20359014] |"The aftershocks of Oct. 13 (when the Dow Jones Industrial Average dropped 190 points) are still reverberating."

[20359015] |Certainly, the Oct. 13 sell-off didn't settle any stomachs.
[20359016] |Beyond that, money managers and analysts see other problems.
[20359017] |Inventories are creeping up; car inventories are already high, and big auto makers are idling plants.
[20359018] |Takeover fever has cooled, removing a major horse from the market's cart.

[20359019] |Britain's unsettled political scene also worries some investors.
[20359020] |"The gyrations in the British government" add political uncertainty on top of high inflation and a ragged stock market, says John Hoffman, assistant director of research at Smith Barney, Harris Upham & Co.
[20359021] |"One of the three major markets in the world is getting chewed up pretty bad."

[20359022] |"If the Fed does not come to the rescue and produce lower short-term interest rates over the next 30 days, the market's going to flounder," says Larry Wachtel, a market analyst with Prudential-Bache Securities.

[20359023] |With this sort of sentiment common, it's natural for investors to seek out "defensive" investments.
[20359024] |Utilities are a classic example: Even in recessions, people continue to use electric power, water and gas at a fairly steady rate.

[20359025] |Such defensive issues as food, tobacco, and drug stocks have been in favor for some time.
[20359026] |But many of these stocks have now become expensive.
[20359027] |Mr. Wachtel points to Coca-Cola Co. and PepsiCo Inc. as examples: They're selling for 18 to 22 times estimated 1990 per-share earnings.

[20359028] |Gold stocks aren't cheap on this basis, either, with many selling for 20 times earnings or more.
[20359029] |Even utility stocks aren't all that inexpensive, at an average of 14 times earnings.
[20359030] |But the two groups represent a further step in defensiveness.
[20359031] |If gold stocks and utilities continue to lead, it may signal that the market is in for rough times.

[20359032] |That's just what Joseph Granville expects.
[20359033] |"We are going to explode lower," says the flamboyant market seer, who had a huge following a few years back.
[20359034] |"Anyone telling you to buy stocks in this market is technically irresponsible.
[20359035] |You don't want to own anything long except gold stocks."

[20359036] |One reason for his gloom is a weekly tally he keeps of stocks within a point of hitting new highs or lows.
[20359037] |Last Friday, 96 stocks on the Big Board hit new 12-month lows.
[20359038] |But by Mr. Granville's count, 493 issues were within one point of such lows.

[20359039] |Robert Stovall, a veteran New York money manager and president of Stovall/Twenty-First Securities, has money in both gold and utility issues.
[20359040] |"I think we could very well have {an economic} slowdown, beginning very soon if not already," he says.

[20359041] |Mr. Stovall doesn't expect an actual recession.
[20359042] |But he does expect "a muffler dragger" of an economy, with "very slow growth, maybe one quarter of no growth at all."
[20359043] |In such a climate, utility stocks look good to him.
[20359044] |He favors FPL Group Inc., Florida Progress Corp., TECO Energy Inc., Wisconsin Energy Corp., and Dominion Resources Inc.

[20359045] |The appeal of gold issues, Mr. Stovall says, is that "they're a counter group.
[20359046] |You go into them because they move counter to the general market."
[20359047] |He adds that gold stocks had been down so long they were "ready for a bounce."
[20359048] |His favorites are American Barrick Resources Corp., Echo Bay Mines Ltd. and Coeur d'Alene Mines Corp.

[20359049] |Nevertheless, Mr. Stovall emphasizes that "you don't buy {gold stocks} based on powerful fundamentals."
[20359050] |In addition to having high price-earnings ratios, most pay puny dividends, if any.
[20359051] |"The earning power {of gold mining companies} is restricted unless the gold price hops up over $425 an ounce," he says.

[20359052] |Abby Cohen, an investment strategist for Drexel Burnham Lambert, also thinks it makes sense to have some money in both utilities and gold.
[20359053] |"My outlook is for a decline of about 10% in corporate profits" in 1990, she says.
[20359054] |But "a bunch of utilities" should post profit increases.
[20359055] |Among utilities, Drexel currently favors Entergy Corp. and General Public Utilities Corp.

[20359056] |As for gold, she notes that it usually rises when the dollar is weak, as it has been lately.
[20359057] |Among gold stocks, Drexel likes Battle Mountain Gold Co., Newmont Gold Co. and Freeport-McMoRan Gold Co.

[20360001] |It never ceases to amaze me how the business world continues to trivialize the world's environmental problems ("Is Science, or Private Gain, Driving Ozone Policy?" by George Melloan, Business World, Oct. 24).
[20360002] |To suggest that a 10% drop in ozone by the middle of the next century would be negligible is irresponsible and shortsighted.
[20360003] |Consider the fact that a mere 2% drop in ozone would increase birth defects and mutations by allowing solar radiation to alter the DNA structure.
[20360004] |Even a small reduction is unacceptable and to suggest otherwise is penny-wise and pound-foolish.

[20360005] |The reason environmentalists "don't mind seeing new crises arise" is because there are new crises.
[20360006] |Crises larger and more dangerous to the quality of life than they were 10 years ago.
[20360007] |If you are doubtful, consider for a moment that the Pomton Lakes Reservoirs in northern New Jersey, which supply the tristate area with drinking water, are riddled with toxic PCBs.
[20360008] |This is a fact and not the product of some environmental doomsayer or a group's ploy to create a market.

[20360009] |It's time business leaders and the general public learn that mankind does not rule over this natural environment but is rather the integral, symbiotic player within nature's workings.

[20360010] |Mark T. Kuiper Jersey City, N.J.

[20360011] |Mr. Melloan's column was right on the money, but I wish it could have gone one step further.
[20360012] |As an employee of a major refrigerator and freezer manufacturer, I have been heavily involved in dealing with the political manifestations of the Rowland-Molina theory (named after the researchers who found in 1974 that chlorofluorocarbons contributed to the depletion of ozone in the earth's atmosphere) and the Montreal Protocol.
[20360013] |An important part of my effort has been to understand the science so I can explain it to corporate colleagues facing major changes in product design.

[20360014] |In my research, I have found a paper by Joseph Scotto of the National Cancer Institute and several colleagues reporting an 11-year decrease in UV-B radiation at eight U.S. measurement sites.

[20360015] |Our concern for the ozone layer, of course, grows out of the potential for increasing UV-B radiation, which could damage flora and fauna.
[20360016] |The last of the measurements reported was in 1985, but recent conversations with Mr. Scotto indicated that he knew of no recent changes in the trend.
[20360017] |I understand, but haven't yet verified, that there are studies by Norwegians, Russians and the Max Planck Institute that show either unchanging or declining UV-B at the surface.

[20360018] |To me, this calls into question the validity of the Rowland-Molina theory and hence the whole chlorofluorocarbons replacement effort.
[20360019] |This, in turn, threatens the massive vested interests of which you have written.
[20360020] |My questions on this subject at a recent meeting at the World Resources Institute with representatives of the National Resource Development Commission, the Environmental Protection Agency, Friends of the Earth, etc. were greeted with derision and some mumbled comments about that report being discredited.
[20360021] |When I expressed amazement that no one was undertaking a more current and credible UV-B study, I was urged to get back to the agenda topic, which was, ironically, a schedule for getting rid of HCFCs, the so-called soft CFCs that are such an important part of the CFC substitution scenario.

[20360022] |Subsequently, I have learned that a private group, of which Du Pont is a part, is funding a modest program to continue data gathering at the Scotto report stations as well as to develop more sophisticated UVB measuring instruments.
[20360023] |But this is almost an underground activity.
[20360024] |To my knowledge, no government entities, including the EPA, are pursuing UV-B measurements.
[20360025] |The topic never comes up in ozonedepletion "establishment" meetings, of which I have attended many.

[20360026] |It seems to me that such measurements are a vital part of any intellectually honest evaluation of the threat posed by CFCs.
[20360027] |While recognizing that professional environmentalists may feel threatened, I intend to urge that UV-B be monitored whenever I can.

[20360028] |Frederick H. Hallett Vice President Industry and Government Relations White Consolidated Industries Inc. Washington

[20360029] |The relationship between surface release of CFCs and global stratospheric ozone loss was identified back in 1974.
[20360030] |Although, like all scientific theories, it had its initial opponents, few experts question the connection now.
[20360031] |The discovery of the ozone "hole" over Antarctica and the results of ground-based and high-altitude aircraft experiments conducted over the past several years serve as evidence that ozone depletion is related to CFC concentrations.

[20360032] |In the September issue of Scientific American, Thomas E. Graedel, distinguished member of the technical staff at AT&T Bell Laboratories, and Paul J. Crutzen, director of the air chemistry division of the Max Planck Institute for Chemistry in Mainz, West Germany, wrote, "It is now quite evident that chlorofluorocarbons, particularly CFC-11 and CFC-12 are the major culprits responsible for ozone depletion."
[20360033] |Mr. Melloan quotes Peter Teagan and invokes the name of Arthur D. Little Inc. to support his statement.
[20360034] |However, unlike Messrs. Graedel and Crutzen, who are both pioneers in the study of atmospheric chemistry, Mr. Teagan has no special expertise in the area.
[20360035] |He is a mechanical engineer, not an atmospheric chemist.

[20360036] |It is insulting and demeaning to say that scientists "needed new crises to generate new grants and contracts" and that environmental groups need them to stay in business.
[20360037] |Solving the global environmental problems we all face will require an unprecedented level of cooperation and communication among industry, policy makers and the scientific community world-wide.

[20360038] |Karen Fine Coburn Publisher Global Environmental Change Report Arlington, Mass.

[20361001] |Nearly two months after saying it had been the victim of widespread fraud, MiniScribe Corp. disclosed it had a negative net worth of $88 million as of July 2 and hinted that it might be forced to file for protection under bankruptcy laws.

[20361002] |Richard Rifenburgh, chairman and chief executive of the Longmont, Colo., disk-drive maker, also said the company continued losing money in the third quarter and expects to sustain further losses through the end of the year.

[20361003] |Mr. Rifenburgh told industry analysts he is moving "aggressively" to negotiate out-of-court settlements on a number of shareholder lawsuits, but noted that the company could file for bankruptcy-law protection if settlement talks fail.
[20361004] |Mr. Rifenburgh also noted that 150 million shares of MiniScribe common stock were traded during the past three years, "so there's a tremendous amount of exposure."

[20361005] |MiniScribe has said that its financial results for the past three fiscal years would have to be restated because of the allegedly fraudulent accounting and marketing practices that inflated revenues and net income.

[20361006] |MiniScribe also hasn't filed any financial statements for 1989.
[20361007] |Mr. Rifenburgh said such statements should be ready by the end of November.
[20361008] |He said he expects the company to have $500 million in sales for this year.
[20361009] |He didn't say what the company expected to report for year-earlier sales, which will be restated from the previously reported $603 million.

[20361010] |The release of MiniScribe's new balance sheet came one day after it introduced its new line of one-inch disk drives, on which it is pinning much of its hope for survival.
[20361011] |Although it is not the first company to produce the thinner drives, which store information in personal computers, MiniScribe says it is the first with an 80-megabyte drive; the company plans to introduce a 120-megabyte drive next year.

[20361012] |Analysts and consultants had mixed reactions to yesterday's announcements, praising Mr. Rifenburgh's efforts but questioning whether the company can survive in a highly competitive marketplace.
[20361013] |"It's a wait-and-see attitude," said Dave Vellante, vice president of storage research for International Data Corp.
[20361014] |Others pointed out that at least four other disk-drive makers will have competitive one-inch drives early next year and that the industry already operates on very thin margins.

[20361015] |The company also faces delisting by the National Association of Securities Dealers.
[20361016] |The company continues to trade in the over-the-counter market with an exception to listing requirements.
[20361017] |MiniScribe filed a status report with the NASD on Monday, detailing its efforts to comply with listing requirements and requesting an extension of the exception, but hasn't received a response.
[20361018] |MiniScribe common closed yesterday at $1.9375, down 6.25 cents, and has been trading for several months at less than $3 a share.

[20361019] |Meanwhile, U.S. Attorney Jerry Rafferty in Denver is reviewing the report prepared by MiniScribe's outside directors, to determine if criminal charges should be brought before a grand jury.

[20361020] |The MiniScribe report outlines a host of allegedly fraudulent practices, including the shipment of bricks and defective disk drives that were booked as sales, and inventory forgeries in accounting records.
[20361021] |The internal investigation also criticized MiniScribe's auditors, Coopers & Lybrand, for allegedly ignoring numerous red flags.

[20361022] |Mr. Rifenburgh said the board still hasn't acted on most of the internal report's recommendations, pending restatement of the balance sheet.
[20361023] |He added that he expects to make a recommendation within a few weeks on whether MiniScribe should file its own lawsuits against former company officers and directors.

[20362001] |American Enterprise Institute scholar Norman Ornstein in the Oct. 21 TV Guide on "What TV News Doesn't Report About Congress -- and Should":

[20362002] |By concentrating all their resources on the pay raise, Wright and Tower, the networks actually overlooked some major stories that showed the flaws and shortcomings of the institution. . . .
[20362003] |An imaginative producer could easily have created a fast-moving and interesting piece about how Congress really works -- and why voters in, say, West Virginia got a federally funded university project and building while voters in Arkansas did not.
[20362004] |But nobody did such a piece, reflecting a contemporary axiom: the more a scandal has to do with a congressman's duties as a congressman, the less likely it is to catch the fancy of a network.

[20362005] |Ethicist Michael Josephson, in one of his institute's recent publications on "Journalism: In the Year 2000":

[20362006] |The operative definition of newsworthiness will favor virtually unrestrained use of personal, sensitive and intimate facts.
[20362007] |Traditional standards of relevancy and importance ("is this something the public ought to know") will be replaced by a much broader test ("is this something the public is interested in knowing").
[20362008] |And, since the public has always been fascinated by gossip and voyeurism, reporters and editors will strain for creative angles to justify the inclusion of collateral facts about private lives including sexual activities and domestic relationships, activities of family members, and all matters about mental and physical health.
[20362009] |Similarly, visual images will be more vivid, sensational and, sometimes, gruesome.
[20362010] |One consequence of the trend toward tabloid standards of taste will be fierce attacks from politicians who will find sufficient evidence of abuse to arouse an already cynical public to control the press.

[20363001] |Bankers Trust New York Corp. won permission from the Federal Reserve Board to move the company's private placement department to its fledgling securities subsidiary.

[20363002] |The seemingly mundane action, which was opposed by the Securities Industry Association, a trade group, has important implications for banks' recent entry into the underwriting of corporate securities.
[20363003] |The Fed's action increases the volume of publicly registered securities that banks' securities affiliates will be able to underwrite.
[20363004] |Several other banks have similar applications pending.

[20363005] |Over the past two years, the Fed has given a handful of banks' securities affiliates permission to underwrite and deal in a variety of corporate, asset-backed and municipal securities that had previously been the sole domain of securities firms.
[20363006] |Securities firms have challenged those Fed approvals, saying they violate federal laws separating the banking and securities businesses.

[20363007] |However, the Fed limited the revenue that banks could earn from these new underwriting activities to no more than 10% of the revenue earned from other securities activities long open to banks, such as dealing in U.S. Treasurys.

[20363008] |For some banks that 10% ceiling created problems.
[20363009] |But, by allowing BT Securities Inc. to handle private placements, the Fed boosted the volume of new types of underwriting that the unit can do.

[20363010] |Private placements involve debt and equity securities, typically in denominations of $1 million, that are sold to institutional investors and aren't registered with the Securities and Exchange Commission.
[20363011] |Last year, Bankers Trust said it placed $10 billion of corporate debt and equities privately.

[20364001] |Companies listed below reported quarterly profit substantially different from the average of analysts' estimates.
[20364002] |The companies are followed by at least three analysts, and had a minimum five-cent change in actual earnings per share.
[20364003] |Estimated and actual results involving losses are omitted.

[20364004] |The percent difference compares actual profit with the 30-day estimate where at least three analysts have issues forecasts in the past 30 days.
[20364005] |Otherwise, actual profit is compared with the 300-day estimate.

[20365001] |Bonnie J. Stedt was named an executive vice president of the American Express Travel Related Services Co. unit of this travel and financial services firm.
[20365002] |She retains her duties of human-resources director.

[20366001] |Joe F. Lynch, the 56-year-old chairman and chief executive officer of First Continental Real Estate Investment Trust, was named to the new post of vice chairman of this bank holding company.

[20367001] |Every workday at 11 a.m., 40-year-old Mike Sinyard dons cycling clothes, hops on a bike he keeps at his Morgan Hill, Calif., office and sets out to cover a distance most people would travel only by car.
[20367002] |As many as 50 of his employees at Specialized Bicycle Components Inc. ride with him.
[20367003] |When they return to their desks at 1 p.m., they have pedaled 20 miles.

[20367004] |Such fervor for cycling helped Mr. Sinyard build a creative company at the forefront of its industry.
[20367005] |Founded by bike enthusiasts rather than businessmen, Specialized spotted the appeal of fat-tired bikes that go almost anywhere and began mass-producing them in 1981.
[20367006] |In the past five years, the company's sales have grown to $80 million from $26 million.
[20367007] |Today, so-called mountain bikes account for two-thirds of the $2 billion spent annually on all bicycles in the U.S.
[20367008] |With 65% of its sales coming from mountain bikes, Specialized is widely considered to be a market leader.
[20367009] |(Accessories, largely for mountain-bike users, account for much of the rest of sales.)

[20367010] |But today, the company needs its entrepreneurial spirit more than ever.
[20367011] |One large competitor after another is leaping into the booming market Specialized helped create, turning out mountain bikes with such well-known names as Schwinn, Peugeot, Raleigh and Nishiki.

[20367012] |Thus, Mr. Sinyard's company must innovate more than ever to stay ahead of them, by developing new products specifically for mountain biking.
[20367013] |At the same time, though, it must become more structured to better manage its growth.
[20367014] |Accomplishing both will be a balancing act as challenging as riding a unicycle.

[20367015] |It is a problem common to small companies that have grown fast -- especially when their success attracts big-time competitors.
[20367016] |"The big word around Specialized is passion," says Erik Eidsmo, a former ski-industry executive whom Mr. Sinyard recruited from Citicorp to run marketing and sales.
[20367017] |"What I hope to bring to this is another word: process.
[20367018] |That's my challenge.
[20367019] |It's Mike's challenge as well."

[20367020] |Mr. Eidsmo is one of several key people from outside the cycling industry who were hired to bring the free-wheeling, fast-growing company under tighter control.
[20367021] |"We had a lot of problems," Mr. Sinyard says.
[20367022] |While the company's sales were soaring, "We still had a system that was probably appropriate for $10 million to $20 million in sales."
[20367023] |Adds Mr. Eidsmo, "What felt good that day was done that day."

[20367024] |Since his arrival in May, Mr. Eidsmo has put in place techniques learned while working for Citicorp, such as management-by-objective, detailed project plans and forecasts of company sales and product trends.
[20367025] |"We're finally getting -- and it's been very painful -- some understanding of what the company's long-term horizon should begin to look like," Mr. Eidsmo says.
[20367026] |"But it's risky," he says of Specialized's attempt to adopt a corporate structure.
[20367027] |"You don't want to lose the magic" of the company's creative drive.

[20367028] |Hoping to stay ahead of the pack, the company is emphasizing innovation.
[20367029] |At a recent trade show, convention-goers lined up to view a new Specialized bike frame that weighs just 2.7 pounds -- a pound less than the lightest mountain-bike frame on the market.
[20367030] |By replacing the frame's steel lugs with titanium ones, Mr. Sinyard's company plans to make its next generation of frames even lighter.

[20367031] |At the trade show, Specialized also unveiled a revolutionary three-spoked bike wheel developed jointly by Specialized and Du Pont Co.
[20367032] |Made of space-age materials, the wheel spokes are designed like airplane wings to shave 10 minutes off the time of a rider in a 100-mile race, the company claims.
[20367033] |It currently costs $750, though Mr. Sinyard thinks the price can be reduced within three years to between $200 and $250.
[20367034] |He was able to slash the price of the company's least expensive mountain bike to $279 from $750 in

[20367035] |But demands on the company's creativity are certain to grow.
[20367036] |Competition is intensifying as larger companies invade a mountain-bike market Mr. Sinyard's company once had virtually all to itself.
[20367037] |U.S. Cycling Federation official Philip Milburn says mountain biking is "growing at such a monstrous rate that a lot of companies are getting into this."

[20367038] |One especially coveted Specialized market the new players are targeting is mountain-bike accessories, which Mr. Eidsmo calls "the future of our business."
[20367039] |Accessories not only sell faster than whole bikes, they also offer profit margins nearly double the 25% to 30% or so on sales of complete cycles.
[20367040] |To get a piece of the business, Nike Inc., Beaverton, Ore., introduced a line of mountain-bike shoes.
[20367041] |About a month ago, Michelin Tire Corp., Greenville, S.C., began selling mountain-bike tires, for years a Specialized stronghold.

[20367042] |Competition in the sale of complete bikes is heating up too.
[20367043] |Trek Bicycle Corp., which accounts for one-quarter of the $400 million in annual sales at its Milwaukee-based parent, Intrepid Corp., entered the mountain-bike business in 1983.
[20367044] |Trek previously made only traditional road bikes, but "it didn't take a rocket scientist to change a road bike into a mountain bike," says Trek's president, Dick Burke.
[20367045] |The segment now makes up roughly two-thirds of his company's total sales.

[20367046] |At Giant Bicycle Inc., Rancho Dominguez, Calif., sales have tripled since the company entered the U.S. mountain-bike business in 1987.
[20367047] |A subsidiary of a Taiwanese holding company with world-wide sales of $150 million, Giant is one example of the sudden globalization of Mr. Sinyard's once-cozy market niche.
[20367048] |Schwinn Bicycle Co., Chicago, established joint ventures with bike companies in mainland China and Hungary to sell bikes.
[20367049] |In the past year, Derby International Corp., Luxembourg, has acquired such major brands as Peugeot, Raleigh and Nishiki.

[20367050] |In response to the internationalization of the business, Mr. Sinyard's company is replacing independent distributors overseas with wholly owned subsidiaries.
[20367051] |The move will cut out the cost of a middleman and give Specialized more control over marketing and sales.
[20367052] |But as Bill Austin, Giant's president, puts it, "With some of the bigger players consolidating their strength, the game has changed.

[20368001] |Carl E. Pfeiffer, chief executive officer, was named to the additional post of chairman of this specialty-metals manufacturing concern.
[20368002] |Robert C. Snyder, a director and chief operating officer of the company, succeeds Mr. Pfeiffer as president.

[20369001] |Roger M. Marino, president, was named to the new post of vice chairman.
[20369002] |Michael Ruettgers, who had been executive vice president, operations, was named president and chief operating officer.
[20369003] |EMC manufactures data-storage systems for mainframes and minicomputers.

[20370001] |Richard J. Riordan was elected a director of this single-family home builder, increasing the board to nine.
[20370002] |He is a senior partner with the law firm of Riordan & McKinzie and is a partner in Riordan Venture Management.

[20371001] |John Franco, 47 years old, formerly vice chairman of Capital Holding Corp. and president of its Accumulation Investment Group, was named chief executive officer of this insurance holding company, effective Dec. 1, succeeding Robert T. Shaw, who remains chairman.
[20371002] |I.C.H. also named Steven B. Bing, 42, senior vice president since 1986, as president, succeeding John W. Gardiner, who will join the HMS Acquisition Corp. division of Hicks, Muse & Co., which has agreed to buy most of I.C.H.'s Denver-based subsidiaries.

[20372001] |MCI Communications Corp. said it won a $27 million contract from Stuart-James Co., a Denver investment banking concern, to provide voice and data telecommunications services.

[20372002] |The agreement calls for MCI to provide data service, 800 and Vnet service, a virtual private network service.
[20372003] |The companies wouldn't disclose the length of the contract except to say it was a multiyear agreement.

[20373001] |The head of British Satellite Broadcasting Ltd. said he hopes to raise about #450 million ($711 million) before the satellite-TV venture makes its delayed debut next spring -- with a major chunk coming from new investors.

[20373002] |"We'll raise it through bank loans.
[20373003] |We'll raise it through {new} equity.
[20373004] |And we'll raise it through existing shareholders" as well as through junk bonds, said Anthony Simonds-Gooding, the private consortium's chief executive.
[20373005] |He said he believes the bank loan, to be arranged by February, will supply about half of the financing.
[20373006] |British Satellite, which already has raised #423.5 million from 10 backers, initially expected to seek an additional #400 million.

[20373007] |Mr. Simonds-Gooding said the additional financing may leave British Satellite owned by about 20 investors, including Australian entrepreneur Alan Bond, whose nearly 36% stake would be reduced to as little as 20%.

[20373008] |Bond Corp., British Satellite's biggest investor, would like to withdraw from the satellite-TV consortium, and analysts have speculated Hollywood studios might buy the Bond stake.
[20373009] |But Mr. Simonds-Gooding said he isn't talking to any studios about investing.

[20373010] |Besides Bond Corp., British Satellite's other backers include Pearson PLC, Reed International PLC and Granada Group PLC.
[20373011] |The consortium faced a setback in May when technical problems forced it to postpone the September launch until next spring.
[20373012] |Continued uncertainty about the timing of the consortium's debut could make it hard to find a #450 million cash injection.

[20373013] |Mr. Simonds-Gooding conceded that British Satellite's potential U.K. lenders "are saying, `When you're on the air, you'll {actually} get the money.'"
[20373014] |The bankers also insist that the loans depend on the consortium raising more money from new and existing backers.

[20373015] |British Satellite today is unveiling a #30 million advertising and promotional drive for the consortium's planned five channels of movies, sports, entertainment and news shows.
[20373016] |As part of the drive, the first 50,000 viewers who put up #10 each will get a package valued at #170 -- including a satellite receiving dish, equipment installation and a three-month subscription to its pay-movie service.

[20373017] |British Satellite faces competition from Sky Television, a satellite-TV venture begun last February and owned by Rupert Murdoch's News Corp.
[20373018] |The rivals currently are locked in a costly bidding contest for Hollywood film rights.

[20374001] |Shares closed sharply higher in London in the year's thinnest volume Monday, supported largely by a technical bounce after last week's sharp declines.

[20374002] |Tokyo stocks posted a second-consecutive loss Monday, while trading in Frankfurt, West Germany, was mixed.

[20374003] |In London, the Financial Times 100-share index finished 30.1 points higher at 2112.2.
[20374004] |The index settled off the high of 2117.1 posted after Wall Street opened stronger.
[20374005] |But it showed strength throughout the session, hitting a low of only 2102.2 within the first few minutes of dealings.

[20374006] |The 30-share index settled 23.2 points higher at 1701.7.
[20374007] |Volume was only 256.6 million shares, breaking the previous 1989 low of 276.8 million shares recorded Oct. 23.
[20374008] |Turnover was also down substantially from 840.8 million shares on Friday.

[20374009] |Dealers said the market was supported to some extent by a firmer pound, gains on Wall Street and shopping by market-makers to cover internal requirements for selected stocks in the 100-share index.

[20374010] |Dealers attributed most of the day's gains to market-makers moving prices higher, rather than an outbreak of significant buying interest.
[20374011] |Prices were up across the board, with most blue-chip stocks registering solid gains.

[20374012] |Though the market was stronger, dealers said fresh buying interest was sidelined ahead of a potential market-affecting debate in the House of Commons set for Tuesday.
[20374013] |It will be Chancellor of the Exchequer John Major's first appearance before the opposition Labor Party.
[20374014] |The market is keenly interested in hearing what he has to say about the status of the current 15% base lending rate.

[20374015] |In London trading, Courtaulds, a chemicals and textiles company, increased 15 pence to 362 after it disclosed plans to spin off its textiles operations into a separately listed company on Jan. 1.
[20374016] |It was the most active of the 100-share index at 8.3 million shares, 6.5 million of which were traded by midday.

[20374017] |Jaguar ended 22 higher at 747.
[20374018] |Dealers said fresh buying was drawn into Jaguar after a senior executive of Daimler-Benz, the auto maker, told a British television interviewer during the weekend that the West German company held talks with the luxury auto maker over possible joint ventures.
[20374019] |Although Daimler has said it isn't interested in mounting a bid for Jaguar, dealers said its name further underlined the growing interest in the British concern.

[20374020] |Glaxo was the biggest gainer, jumping 35 to #13.78 ($21.72) on anticipation of a stock split next week.
[20374021] |Total turnover in Glaxo was a thin 975,000 shares.

[20374022] |In Tokyo, stocks had a second-consecutive loss Monday in quiet trading with the exception of concentrated buying in some incentive-backed issues.

[20374023] |The Nikkei index of 225 selected issues fell 109.85 points to 35417.44.

[20374024] |The index fell 151.20 Friday.

[20374025] |In early trading in Tokyo Tuesday, the Nikkei index rose 35.28 points to 35452.72.

[20374026] |On Monday, volume on the First Section was estimated at 600 million shares, down from 1.24 billion shares Friday.
[20374027] |Declining issues outnumbered advancers 551 to 349; 224 issues were unchanged.
[20374028] |Investors, who took profits Friday, mostly took a wait-and-see attitude Monday amid uncertainty in the foreign-currency market and New York stocks, traders said.

[20374029] |Takamori Matsuda, an analyst at Dresdner-ABD Securities, said fading expectation for lower interest rates made investors step back from real-estate shares, which advanced last week.
[20374030] |Some traders said institutions were waiting to see the U.S. jobless rate to be issued Friday.

[20374031] |The Tokyo Stock Price Index of all issues listed in the First Section, which fell 15.82 points Friday, was down 5.16 points, or 0.19%, at 2676.60.
[20374032] |The Second Section index, which fell 36.87 points Friday, was down 21.44 points, or 0.59%, to close at 3636.06.
[20374033] |Second Section volume was estimated at 15 million shares, down from 24.5 million shares Friday.

[20374034] |Monday's losers included railway, electric-utility and high-technology issues.

[20374035] |The energy of participating investors streamed into Tokyu Group shares, pushing prices of its companies up across the board.
[20374036] |Tokyu Group announced during the weekend that each Group company will buy the others' stocks to defend themselves against a rumored takeover.
[20374037] |The announcement fueled speculation for future advances in the shares.
[20374038] |Tokyu Department Store advanced 260 to 2410.
[20374039] |Tokyu Corp. was up 150 at 2890.
[20374040] |Tokyu Construction gained 170 to 1610.

[20374041] |Other winners Monday included nonferrous metals, which attracted investors because of a surge in gold prices on the back of the unstable dollar.
[20374042] |Petroleum companies were also popular because of expectations of a weaker dollar, which cuts dollar-denominated crude-oil prices.

[20374043] |Share prices in Frankfurt closed narrowly mixed after listless and directionless trading.
[20374044] |The DAX index closed at 1466.29, up only 3.36.

[20374045] |Traders said turnover was particularly thin as investors waited for Wall Street to set the direction for the week.
[20374046] |Most expect the decline in New York stock prices to continue this week.

[20374047] |Another factor weighing on the Frankfurt market involves fears about the impending wage talks between the IG Metall metal-workers union and industry representatives, which could result in a wave of strikes next spring, traders said.

[20374048] |A few blue-chip stocks posted strong gains, boosted by special factors, while the majority of shares ended little changed.

[20374049] |Elsewhere, stock prices were lower in Brussels, Milan and Stockholm, and mixed in Amsterdam, Paris and Zurich.

[20374050] |Stocks closed higher in Hong Kong, Manila, Seoul, Sydney, Taipei and Wellington, but were lower in Singapore.

[20374051] |Here are price trends on the world's major stock markets, as calculated by Morgan Stanley Capital International Perspective, Geneva.
[20374052] |To make them directly comparable, each index is based on the close of 1969 equaling 100.
[20374053] |The percentage change is since year-end.

[20375001] |Deere & Co. said it reached a tentative agreement with the machinists' union at its Horicon, Wis., plant, ending a month-old strike by workers at the facility.

[20375002] |The maker of farm equipment said the three-year labor agreement with the International Association of Machinists and Aerospace Workers at John Deere Horicon Works, Deere's primary facility for producing lawn and grounds-care equipment, takes effect immediately and extends through Oct. 1, 1992.
[20375003] |About 1,150 employees are covered by the new agreement, Deere said.

[20376001] |Courtaulds PLC announced plans to spin off its textiles operations to existing shareholders in a restructuring to boost shareholder value.

[20376002] |The British chemical and textile company's plan, which requires shareholder approval, would create a new, listed U.K. stock with a probable market capitalization between #300 million ($473 million) and #400 million, analysts said.
[20376003] |The establishment of the separate company, to be called Courtaulds Textiles, could be effective as early as next year's first quarter.

[20376004] |Investors welcomed the move.
[20376005] |Courtaulds' shares rose 15 pence to 362 pence, valuing the entire company at about #1.44 billion.

[20376006] |Courtaulds' spinoff reflects pressure on British industry to boost share prices beyond the reach of corporate raiders.
[20376007] |Courtaulds' restructuring is among the largest thus far in Britain, though it is dwarfed by B.A.T Industries PLC's plans to spin off roughly #4 billion in assets to help fend off a takeover bid from Anglo-French financier Sir James Goldsmith.
[20376008] |The divested Courtaulds textile operations had operating profit of #50 million on #980 million in revenue in the year ended March 31.

[20376009] |Some analysts have said Courtaulds' moves could boost the company's value by 5% to 10%, because the two entities separately will carry a higher price earnings multiple than they did combined.
[20376010] |In addition, Courtaulds said the moves are logical because they will allow both the chemicals and textile businesses to focus more closely on core activities.

[20376011] |Courtaulds has been under pressure to enhance shareholder value since takeover speculators -- including Australian financier Kerry Packer -- surfaced holding small stakes last year.
[20376012] |Though Mr. Packer has since sold his stake, Courtaulds is moving to keep its institutional shareholders happy.
[20376013] |Even without a specific takeover threat, Courtaulds is giving shareholders "choice and value," said Julia Blake, an analyst at London stockbrokers Barclays de Zoete Wedd.

[20376014] |In a statement, the company said: "Both parts can only realize their full potential and be appropriately valued by the market if they are separately quoted companies.
[20376015] |The sharper definition and the autonomy which each will thereby gain will benefit shareholders, customers and employees."

[20376016] |Courtaulds Chairman and Chief Executive Sir Christopher Hogg will remain in both posts at the surviving chemical company after the spinoff.

[20377001] |Sanwa Shutter Corp. said its affiliated company in Malaysia, established this April, will begin manufacturing steel doors Wednesday.

[20377002] |Its partner in the joint venture is Sin Kean Boon Metal Industries, Penang, Malaysia.

[20377003] |Company officials said the new company, Sin Kean Boon-Sanwa (J.V.) is capitalized at the equivalent of 54 million yen ($381,000).
[20377004] |The Japanese concern has a 40% stake, while the local partner has a 60% stake.

[20377005] |The new company was created to meet growing demand for steel doors, concurrent with increasing local concern about fire prevention, the company said.

[20378001] |Barbara Hackman Franklin, president of Franklin Associates, was elected a director of this building products maker.
[20378002] |Ms. Franklin, 49 years old, fills the position vacated by Naomi G. Albanese, who retired earlier this year at age 72.

[20379001] |NEC Corp. said it plans to more than double its British subsidiary's capacity for the production of semiconductor wafers.

[20379002] |Officials at the Japanese semiconductor maker said the company intends to increase investment in plant and equipment by 10 billion yen ($70.6 million), to 90 billion yen, in the year ending March 31, with the extra funds used to increase production overseas.

[20379003] |Officials said they weren't sure how the money will be distributed among overseas units, but added that NEC Semiconductors U.K. Ltd. will receive priority.

[20379004] |Officials also disclosed it's possible that NEC may reduce domestic production of one-megabit chips to five million a month from six million, beginning January, because of deteriorating market prices.

[20380001] |Japan's steel exports fell 12.2% in September from a year earlier and were down 1.1% from the previous month, the Japan Iron and Steel Federation reported.

[20380002] |September was the 10th consecutive month in which steel exports failed to reach the year-earlier level.

[20380003] |A federation official attributed the decline to brisk demand from domestic industries backed by continuing economic expansion in Japan.

[20380004] |Japanese steel companies are apparently focusing on domestic sales, but the official said it doesn't necessarily mean that local sales contracts are increasing that markedly.

[20380005] |"They are just too busy to meet domestic demand and have little room for overseas shipments," the official said.