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First Central Financial Corp said it
expects earnings to rise significantly in 1987 and said it is
actively seeking an acquisition.
The property and casualty insurance company's chairman and
chief executive officer, Martin J. Simon, told Reuters in an
interview that he expects earnings of 33 cts a share in 1987
compared with 25 cts a year ago.
He said, "the company currently has the sufficient momentum
to achieve those earnings and the successful completion of
licensing applications to operate in Pennsylvania, Delaware,
Connecticut and Ohio should fuel our earnings."
The company is currently licenced to operate only in New
York state.
Simon estimated that the company would earn seven cts a
share in the first quarter compared to three cts in the same
quarter a year ago, and eight cts a share in the second quarter
compared to five cts earned in 1986. He expects the company to
earn nine cts a share for each of the final two quarters of
1987.
In addition, Simon said, First Central Financial "is
actively looking for, and has several acquisition brokers
looking for a small life insurance company to acquire."
He said the acquisition should be in the 10 mln dlr range
and will be part of a strategy of expanding the company into a
"wide spectrum of insurance services." No specific company has
been targeted as yet, "but I would like to make my first
acquisition in 1987," he said.
He said First Central Financial would not itself be an easy
takeover target. It wants to remain independent, he said, and
has implemented a staggered board of directors system. In
addition, Simon, the company's biggest shareholder, holds about
960,000 of the 6.2 mln ouitstanding shares.
Reuter
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Imperial Oil Ltd, 70 pct-owned by Exxon
Corp <XON>, is negotiating with it major crude oil suppliers
concerning the effects of a trial deregulation of Alberta's
shut-in crude oil production, scheduled to be implemented on
June 1, a company spokesman said.
"From our point of view, it's a question of entering into
negotiations or discussions to make appropriate changes to
contracts to reflect the changes that are going to take place
on June 1," spokesman John Cote told Reuters in reply to a
query.
Commenting on published reports that Imperial had suspended
its oil supply contracts, Cote said: "It's not a question of
cancelling or suspending any of the agreements at this point."
On June 1, Alberta's Energy Resources Conservation Board
will lift its crude oil marketing prorationing system,
regulating shut-in light and medium crude production, on a
trial basis to the end of 1987.
Under the new system, producers and refiners will be
allowed to negotiate volumes of shut-in oil to be delivered
under purchase contracts.
Shut-in crude is the surplus between the total amount of
oil being produced and the amount being purchased by refiners.
"We have talked to a number of our major suppliers, and
we've discussed the upcoming change with them, but nothing has
been finalized," Imperial's manager of western crude supply Gary
Strong said.
Under Alberta's trial system, Imperial wants to match a
reasonable supply of crude against the company's forecast
demand for its refineries, Strong said.
"We have to know what they have and how that relates to what
we need in total," he said.
Strong said figures on the amount of crude production
Imperial purchases from outside suppliers were not immediately
available.
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The U.S. Agriculture Department said
it has extended until April 17 the date by which Agricultural
Stabilization and Conservation county offices must determine
eligibility of individuals or other entities for payments under
1987 farm programs.
Jerome Sitter, director of ASCS's Cotton, Grain and Rice
Price Support Division, said the decision meant farmers have
until April 17 to file a farm operating plan indicating how
many persons would be involved in their farming operations.
Earlier this year USDA extended the deadline to April 1
from March 1, Sitter said.
ASCA Administrator Milton Hertz said in a statement that
the extension was necessary because of heavy workloads at
county ASCS offices.
Hertz said ASCS county officials "have had to make a large
number of eligibility determinations for individuals and other
entities, such as corporations and partnerships, in preparation
for imposing the 50,000-dlr-per-entity cap."
"These offices already had a very heavy workload due to the
large number of applications for both the 1987 farm programs
and the Conservation Reserve Program," Hertz said.
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Harvard Industries Inc said its board
approved a two-for-one stock split in the form of a special
stock dividend of its outstanding common stock.
The special dividend is payable May 28, 1987, to
stockholders of record April 24, 1987.
The split will be effected by one additional share for each
common share held, the company said.
Reuter
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Shr loss 9.31 dlrs vs loss 1.62 dlrs
Net loss 16.2 mln vs loss 2.8 mln
Revs 99.4 mln vs 96.5 mln
NOTE: 1986 includes loss of 3.9 mln dlrs from
restructuring.
NOTE: loss 1986 includes 3.9 mln dlrs for restructuring
costs associated with disposal of property.
Loss also includes the sale-at-a-loss of the company's
aircraft.
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The U.S. Agriculture Department said
it had accepted a bid for an export bonus to cover a sale of
durum wheat to Algeria.
USDA General Sales Manager Melvin Sims said the Commodity
Credit Corp accepted one bid from Cam USA Inc on a sale of
18,000 tonnes of durum wheat.
Sims said the bonus was 42.44 dlrs per tonne and shipment
was scheduled for June 20-30, 1987.
An additional 246,000 tonnes of durum wheat are still
available to Algeria under the export enhancement program.
Reuter
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Oper shr loss 1.60 dlrs vs loss 1.17 dlrs
Oper net loss 4,261,000 vs loss 2,816,000
Revs 28.9 mln vs 11.7 mln
Avg shrs 2,817,616 vs 2,685,592
Year
Oper shr profit 23 cts vs loss 1.10 dlrs
Oper net profit 863,000 vs loss 2,390,000
Revs 85.9 mln vs 60.4 mln
Avg shrs 2,754,258 vs 2,541,967
NOTE: Excludes loss of 1.9 mln dlrs vs loss 3.5 mln dlrs in
qtr and gain 46,000 dlrs vs loss 3.9 mln dlrs in year from
discontinued operations.
Also excludes loss of 1.7 mln dlrs in current qtr from
reversal of tax loss carryforwards.
Includes gain of 6.6 mln dlrs in current year from purchase
of Envirodyne Industries Inc shares and charge of 1.4 mln dlrs
in current qtr from research and development costs.
1986 both periods includes operations of Sargent-Welch
Scientific Co, acquired on Nov 30, 1986 and interest in
Rosecraft Inc since June 4 and Lawrence Jewelry Corp since Oct
22.
1985 both periods includes interest in R.N. Koch Inc since
Feb 8, 1985.
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The Commodity Credit Corporation
(CCC) has switched 10 mln dlrs in credit guarantees to Mexico
to cover purchases of U.S. wheat, the U.S. Agriculture
Department said.
The credit guarantees were previously earmarked for sales
of U.S. dry edible beans and rice, it said.
The action reduces the guarantee lines previously
authorized of dry edible beans to by five mln dlrs to 45 mln
dlrs and for rice from five mln to zero and increases coverage
for wheat sales from five mln to 15 mln dlrs.
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Allied-Signal Inc said it
completed the previously announced sale of its Linotype Group
to Commerzbank AG of West Germany.
The purchase price was not disclosed.
Eschborn, West Germany-based Linotype had 1986 sales of
more than 200 mln dlrs, the company said.
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Beryl Sprinkel, chairman of the
White House Council of Economic Advisers, said he sees "growing
but incomplete evidence that (U.S.) export volumes are finally
strengthening."
In remarks prepared for a speech today in Los Angeles,
Sprinkel said the decline in the dollar's value since 1985 had
"largely" restored U.S. cost competitiveness in world markets and
appeared to signal an end to U.S. trade imbalances.
"I am confident that further improvements in our trade
performance will contribute significantly to U.S. growth in
1987," he said.
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GAF Corp chairman Samuel Heyman told
Reuters he did not foresee major changes in Borg-Warner <BOR>
if GAF's 46 dlr-per-share offer to acquire Borg-Warner is
successful.
"We have great respect for Borg-Warner mangagement," Heyman
said, following a speech at the American Institute of Chemical
Engineers annual meeting. "We don't have any particular changes
in mind."
Earlier today, GAF announced that a 3.16-billion-dlr-offer
was presented to the board of directors of the Chicago-based
company.
Last week, GAF had purchased additional shares of the
company for 40-1/8 dlrs, increasing its stake in Borg-Warner to
19.9 pct.
In 1985, GAF made an unsuccessful effort to acquire Union
Carbide Corp for five billion dlrs, and has since expressed an
interest in acquiring a chemical company that would complement
its own chemical business.
When asked whether GAF would consider selling the
non-chemical assets of Borg-Warner if its takeover offer is
accepted, Heyman declined to comment.
He also refused to say whether GAF would consider
increasing its the dollar value of its takeover offer if the
initial proposal is rejected.
Heyman emphasized that he considered the GAF offer to
Borg-Warner to be a friendly one.
"We think we made a fair offer that is good for Borg-Warner
management and good for its shareholders," Heyman said.
In his speech, Heyman said he feared too many chemical
companies were attempting to specialize in the same high margin
niche products.
He said they were turning their backs on core commodity
chemical businesses.
Heyman said the chemical industry has taken a total of
seven billion dlrs in pre-tax writeoffs during the past two
years to trim balance sheets.
He predicted that the U.S. chemical industry, which
reported a total of 13 billion dlrs in 1986 profits, would see
a 20 pct gain in earnings this year because of increasing
exports, cheaper feedstock costs and the weakened U.S. dlr.
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Transworld Corp Liquidating Trust said
it expects to make an initial distribution to beneficiaries
valued at 20.10 dlrs per unit from the proceeds of the sale of
Hilton International Co.
The value of the distribution assumes yesterday's closing
price of UAL's common stock of 56.50 dlrs per share.
Earlier, UAL announced that it completed the purchase of
Hilton International Co for 835.7 mln dlrs in cash and 2.5 mln
shares of UAL Inc common stock.
Total value of the sale is about 977.2 mln dlrs, Transworld
said.
Pursuant to the sale, UAL exercised its option to
substitute cash for 200 mln dlrs of debentures and 55,493
shares of common stock, Transworld Liquidating said.
Each unit of beneficial interest in the trust will be
allocated 0.051675 shares of UAL common stock.
The aggregate value of the distribution is 975.8 mln dlrs.
The balance of the cash in the trust will be held by the Trust
until April 29 and will be used to satisfy all ouststanding
liabilities and obligations of the trust.
After satisfaction of its liabilities and obligations, the
trust would make a second distribution to its beneficiaries of
any remaining cash on or about April 29.
Trading in the beneficial interests, which are listed on
the New York Stock Exchange, will cease after today. In order
to receive the distribution, beneficiaries must surrender the
certificates representing their beneficial interests.
The trust was formed at year end 1986 to facilitate the
sale of Hilton International.
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Shr 2.25 dlrs vs 1.35 dlr
Net 1,199,791 vs 724,755
Revs 11.7 mln vs 9,105,952
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Ended February 28.
Shr 18 cts vs 13 cts
Net 1,706,601 vs 1,226,609
Rev 42.7 mln vs 36.3 mln
Avg shares 9,695,444 vs 9,537,043
NOTE: Company's full name is International Dairy Queen Inc.
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Shr 2.90 dlrs vs 1.44 dlrs
Net 8,862,000 vs 4,391,000
Revs 221.6 mln vs 265.3 mln
NOTE: Translated from Italian lire in U.S. dollar
equivalents at the exchange rate prevailing at Dec 31, 1986.
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The Commodity Credit Corporation
(CCC) switched five mln dlrs in credit guarantees to Ecuador to
provide for more sales of U.S. vegetable oil, the U.S.
Agriculture Department said.
The credit guarantees were previously earmarked for sales
of U.S. cotton, feedgrains and wheat.
The action reduces the guarantee lines previously
authorized for sales of cotton from 1.5 mln dlrs to 500,000
dlrs, for feedgrains from four mln to two mln and for wheat
from 45 mln dlrs to 43 mln dlrs and increases coverage for
vegetable oil sales from two mln to seven mln dlrs, the
department said.
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Coleman Co said it expects a
first-quarter charge against earnings of 1.6 mln dlrs, or 23
cts a share, as a result of its voluntary program to replace
condensing heat exchangers in its early Model 90 series
high-efficiency residential gas furnaces.
The company said extensive testing indicates a problem
found in the furnaces is not safety related. Coleman said it
noted an increasing number of heat exchangers in certain
furnaces made from March 1984 through December 1985 were
returned because of corrosion.
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Philadelphia Suburban Corp said
it acquired Mentor Systems Inc, a Lexington, Ky., computer
software company, for common stock.
Detailed terms were not disclosed.
Mentor specializes in public sector accounting systems. It
has 73 employees at its Lexington facility, four branch offices
in the Midwest and one in New York.
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Shr loss 15 cts vs nil
Net loss 4,356,285 vs profit 300,000
Year
Shr loss 12 cts vs profit five cts
Net loss 2,744,826 vs profit 2,490,262
NOTE: 1985 earnings restated for discontinued operations
Per-share results reflect payment of preferred dividends
Company did not release revenues
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Shr profit 70 cts vs loss 33 cts
Net profit 2,598,000 vs loss 687,000
Revs 7,438,000 vs 6,467,000
NOTE: 1986 net includes 2,168,000 dlrs or 61 cts a share
for gain on cancellation of long-term debt through a debenture
offer.
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Ended March one
Oper shr 47 cts vs 41 cts
Oper net 840,484 vs 732,000
Revs 36.6 mln vs 31.1 mln
Six mths
Oper shr 77 cts vs 75 cts
Oper net 1,379,453 vs 1,338,346
Revs 68.2 mln vs 58.5 mln
NOTE: Excludes net gain of 27,000 dlrs or 15 cts/shr in
current qtr and six mths from disposal of discontinued
operations.
Year-ago excludes loss of 54,808 dlrs or three cts in qtr
and 126,749 dlrs or seven cts in six mths from discontinued
operations.
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Shr loss 30 cts vs loss 44 cts
Net loss 1,135,805 vs loss 1,461,792
Sales 3,398,893 vs 2,075,260
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Shr loss 26 cts vs loss six cts
Net loss 535,110 vs loss 129,433
Revs 787,000 vs 622,130
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Oper shr loss 14 cts vs loss 49 cts
Oper net loss 22,000 vs loss 441,000
Revs 22.6 mln vs 13.6 mln
Year
Oper shr profit 14 cts vs profit 47 cts
Oper net profit 1,952,000 vs profit 2,794,000
Revs 76.2 mln vs 56.4 mln
NOTE: 1986 4th qtr and year oper net excludes a loss of
54,000 dlrs for discontinued operations, and a a gain of
218,000 dlrs and 2,393,000 dlrs, respecitvely, for
extraordinary item.
1985 4th qtr and year oper net excludes a loss of 77,000
dlrs and about 54,000 dlrs, respectively, for discontinued
operations and a loss of 285,000 dlrs and a gain of 2,757,000
dlrs, respectively, for extraordinary item.
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Honduras will tender April 2 for
U.S. and non-U.S. flag vessels to import 19,369 tonnes of wheat
in bulk, an agent for the country said.
The agent said Honduras is seeking vessels to deliver
7,369 tonnes during a period that includes laydays of April
15-30, and 12,000 tonnes with laydays of May 15-30.
Offers are due no later than 1200 hrs EST, April 2, and
will remain valid through the close of business the following
day, the agent said.
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Shr profit 28 cts vs loss 32 cts
Net profit 1,190,000 vs loss 686,000
Revs 40.8 mln vs 2.2 mln
Year
Shr profit 20 cts vs loss 49 cts
Net profit 2,021,000 vs loss 1,162,000
Revs 103 mln vs 9.5 mln
Avg shrs 4,206,371 vs 2,124,967
REUTER
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Shr loss 1.82 dlrs vs loss 16 cts
Net loss 2,285,000 vs loss 264,000
Revs 23.0 mln vs 14.6 mln
Year
Shr loss 1.59 dlrs vs profit seven cts
Net loss 2,467,000 vs profit 112,000
Revs 77.3 mln vs 75.8 mln
NOTE: Includes loss of 1.1 mln dlrs or 70 cts/shr from
asset writedowns and cost reductions.
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Shr loss 6.94 dlrs vs loss two cts
Net loss 2.20 billion vs profit 7.0 mln
Revs 1.55 billion vs 2.44 billion
Note: 1986 shr and net include writedowns totalling 2.08
billion dlrs before a reduction in deferred income taxes of 571
mln dlrs. Net also includes 214 mln dlrs in accumulated foreign
exchange losses
Canadian funds
Note continued: shr after preferred dividends
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Holder Communications Corp said it
agreed to buy five privately held companies with combined 1987
revenues expected to be about 25 mln dlrs.
Holder plans to issue 32 mln common shares to buy the
Nashville-based companies, all of which are owned by Jack
Norman and Joe Shaw, their families and employees.
The companies include radio stations WKXC-AM and WWKZ-FM,
which operate in the New Albany/Tupelo, Miss., market, and
General Masonry Inc, a contractor in the Southeast.
The acquisitions are subject to approval by Holder
shareholders and the Federal Communications Commission.
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Chelsea Industries Inc said earnings for
its fiscal second quarter ended March 30 will be "sharply
lower" than the 1,414,000 dlrs or 55 cts a share it earned for
the same quarter last year.
It also said it lowered its earnings forecasts for the
remainder of the fiscal year. In fiscal 1986, the company
earned 7,206,000 dlrs or 2.78 dlrs a share.
The company cited intensely competitive market conditions
in its polyethelyne trash liner business and startup costs
related to its acquisition of Artisan Plastic for the reduced
earnings outlook.
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Dome Petroleum Ltd, earlier
reporting a 2.20 billion dlr 1986 loss compared to year-earlier
profit of 7.0 mln dlrs, said the loss was mainly due to write
downs totalling 2.084 billion dlrs before a reduction in
deferred income taxes of 571 mln dlrs.
The loss also includes 214 mln dlrs in accumulated foreign
exchange losses, the company said.
"The dramatic drop in energy prices in early 1986 reverses
much of the progress the company has made in the two previous
years," Dome chairman J. Howard Macdonald said in a statement.
"But even a net loss of this magnitude has very little
bearing on the day-to-day operations of Dome," chairman
Macdonald said.
"It merely reflects the realistic carrying value of the
company's assets in today's economic environment, and the
absolute need for reaching a timely agreement with our lenders
on a debt restructuring plan to assure the company's continued
existence," he added.
Dome is now trying to reach agreement on a complex plan for
restructuring debt of more than 6.10 billion dlrs.
Dome said it charged the 214 mln dlrs in accumulated
foreign exchange losses to current expenses because of the
uncertainty arising from its proposed restructuring plan.
Normally the expenses would be amortized over the remaining
period of the loans to which they apply, it said.
Dome also said the write downs included a fourth quarter
reduction in the value of its oil and gas properties of 1.20
billion dlrs, before a reduction in deferred income taxes of
305 mln dlrs. The fourth quarter writedown was in addition to a
charge of 880 mln dlrs on certain other assets, taken mainly in
the third quarter.
Dome said the 1.20 billion dlr fourth quarter charge
resulted from a year-end accounting change made under new full
cost accounting guidelines by the Canadian Institute of
Chartered Accountants.
The company said it previously determined a write down of
conventional oil and gas properties was not required at
September 30, under the previous method of calculating the
limitation of oil and gas values.
Dome said the most significant accounting change under the
new guidelines is using current oil and gas prices in
calculations instead of escalating price forecasts.
Terms of Dome's proposed debt restructuring plan preclude
the company from making an accurate estimate of future
financing costs, which are used in the new accounting
calculations, it said.
As a result, Dome adopted current prices and costs and a 10
pct discount factor in the calculations, which substantially
conform with accounting rules prescribed by the U.S. Securities
and Exchange Commission, the company said.
Dome said operating income from its crude oil and natural
gas segments fell by 2.50 billion dlrs to a 1986 loss of 1.71
billion dlrs from prior year earnings of 737.0 mln dlrs.
Dome said the steep drop in crude oil and natural gas
operating income was due to write downs totalling 1.93 billion
dlrs and lower energy prices that sharply reduced revenue.
Reduced production of natural gas and lower utilization of
Dome's offshore drilling fleet in the Beaufort Sea also
contributed to the decline, it said.
Earnings from its natural gas liquids business fell by 79
pct to 42.0 mln dlrs from 199 mln dlrs in 1985.
Cash from operations dropped to 5.0 mln dlrs from year-ago
542.0 mln dlrs and unrestricted cash balance declined to 202.0
mln dlrs from 466.0 mln dlrs.
Dome said 1986 crude oil production in 1986 was maintained
at prior year's levels through new drilling activity and
improvements in productivity.
Natural gas production fell by nine pct as a result of
lower domestic and export sales, it said.
Oil and field natural gas liquids production totalled
86,000 barrels a day, compared to 87,000 bpd in the prior year.
Natural gas production fell to 536.0 mln cubic feet a day
from 591.0 mcf a day.
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Shr loss 9.42 dlrs vs loss 3.85 dlrs
Net loss 55.5 mln vs loss 21.4 mln
Revs 114.9 mln vs 120.0 mln
Avg shrs 6,460,000 vs 5,719,000
Year
Shr loss 6.80 dlrs vs loss 4.77 dlrs
Net loss 36.0 mln vs loss 26.2 mln
Revs 478.9 mln vs 437.9 mln
Avg shrs 6,016,000 vs 5,713,000
Note: Net includes realized capital gains of 2,610,000 vs
2,442,000 for qtr and 18.1 mln vs 13.6 mln for year.
1986 net also includes gain on termination of pension plan
of 2,614,000 for qtr and year, and tax loss of 3,605,000 for
qtr. Includes pretax gain from sale of common stock in Guaranty
National Corp of 5,722,000 for year.
Revised estimated calculation of workers compensation
earned premiums decreased 1986 earned premiums by 10 mln.
Year-ago results restated to reflect deconsolidation of
Guaranty National.
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Avon Products Inc, the diversifed
conglomerate that had a strong turn around in 1986, said it
expects sales and earnings to climb higher this year.
In its annual report, the company also said it expects to
maintain its current annual two dlr dividend on the basis of
continued upward earnings.
In 1986, Avon's operational earnings rose 24 pct to 158.7
mln dlrs from 128.2 mln dlrs a year earlier, and sales rose 17
pct to 2.88 billion dlrs. It said the 2.23 dlrs a share earned
last year was the highest in five years, but still well below
the company's all-time high of 4.06 dlrs a share in 1979.
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Pacific Gas and Electric Co said
it expects to record a 470 mln dlr, or 1.25 dlr per share,
reduction in 1987 earnings because of the company's decision to
change the method used to record Diablo Canyon Nuclear Power
Plant revenues.
The accounting change will not affect the company's cash
position and the company intends to continue paying its
dividend at the annual rate of 1.92 dlrs per share.
Last year Pacific Gas reported earnings of 925 mln dlrs, or
2.60 dlrs per share.
Pacific Gas said the accounting change was prompted by
delays in the receipt of a California Public Utilities
Commission decision on the company's 1984 application for rate
relief to recover the 5.8 billion dlr cost of constructing
units one and two of the Diablo Canyon Nuclear Power Project.
It said the commission is currently allowing the company to
recover 40 pct of the cost of owning and operating the plants.
As a result, 63 mln dlrs has been accumulating each month
as deferred non-cash account receivable, which has been
included in current income.
But the accounting change, effective January 1, will
reflect only cash received through interim rates approved by
the commission, Pacific Gas and Electric said.
It also said the commission is now awaiting its Public
Staff Division's report which will recommend how much of the
5.8 billion dlr investment Pacific Gas should be allowed to
recover in rates.
The company further stated that it is confident it will
receive an objective review of the facts.
It also said it intends to seek additional interim rates.
Pacific Gas began construction of the two nuclear power
units in 1969. After a number of construction delays, unit one
went into operation in May 1985 and unit two went on line in
March last year.
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Shr 50 cts vs 66 cts
Net 15.0 mln vs 20.0 mln
Revs 861.2 mln vs 725.9 mln
Year
Shr 1.55 dlrs vsd 1.90 dlrs
Net 46.5 mln vs 57.0 mln
Revs 2.53 billion vs 2.25 billion
Note: 1986 had 53 weeks vs 52 weeks in 1985. 4th qtr 1986
had 17 weeks vs 16 weeks in 1985.
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Innovex Inc said it has completed
the purchase of substantially of the interest in Lucht
Engineering Inc that it did not already own.
Prior to this move Innovex owned 79 pct of Lucht, the
company said.
Innovex said it bought the shares by exchanging 293,101
shares of unregistered Innovex common stock. Innovex president,
Thomas Haley, said the exchange is non-dilutive and will cause
a slight increase in Innovex's fully diluted earnings per share
during the last half of fiscal 1987.
Lucht will continue to function as a unit of Innovex,
Innovex said.
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Energy futures now set the
standard for oil pricing, said Arnold Safer, president of The
Energy Futures Group Inc, a consulting firm.
"Petroleum futures trading at the New York Mercantile
Exchange literally set spot market prices in the U.S.," he
said, adding that some oil products sellers now offer contracts
based on a daily average of NYMEX prices.
He also said that petroleum futures are a major market for
oil companies as well as for commodity traders. His remarks
were made at the National Petroleum Refiners Association.
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Shr loss 1.37 dlrs vs 1.59 dlrs
Net loss 38.6 mln vs 42.5 mln
Revs 31.4 mln vs 59.4 mln
Note: 1986 net includes pretax writedown of 23 mln on oil
and gas properties and a 30.3 mln non-cash provision for
impairment of geothermal property.
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Linear Films Inc said it sees lower
earnings in the fourth quarter ending March 31 compared with a
year ago due to lower profit margins on stretch film from price
increases of polyethelene resin, a key raw material.
In last year's fourth quarter it earned 1,235,000 dlrs or
19 cts a share, a spokesman said.
The company said it is raising its stretch film prices by
six pct as of April 15 to reflect the higher costs of
polyethelene resin. It also said sale volume of stretch film in
the fourth quarter was lower than anticipated, although it has
returned to normal in recent weeks.
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MCO Resources Inc said its independent
auditors have qualified their opinion on the company financial
statements for 1986, in which it posted a net loss of 38.6 mln
dlrs or 1.37 dlrs a share on revenues of 31.4 mln.
MCO said the qualfied opinion related to its realization of
the carrying amount of its geothermal property and its ability
to continue as an ongoing concern, which is dependent upon the
restructuring of the company's bank debt and other obligations,
resolution of the uncertainties surrounding its geothermal
operations and the success of future operations.
The company said its capital spending for 1987 has been
virtually eliminated and that an additional staff reduction of
about 20 pct is being implemented today.
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Shr 22 cts vs 13 cts
Net 7,121,000 vs 4,481,000
Revs 37.4 mln vs 22.8 mln
Avg shrs primary 30,067,000 vs 29,735,000
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Atlantic Richfield Oil Co said it
expects first quarter net income to cover its dividend
requirements in the quarter.
The company paid a quarterly dividend of one dlr a share
earlier this month.
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Egypt will tender Thursday for
200,000 tonnes of optional origin corn, U.S. number two or
equivalent, 14.5 pct moisture, for late April shipment, private
export sources said.
Shipment will be from the Gulf or Great Lakes if U.S.
origin, they said.
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Servotronics Inc said it declared
a 10 pct stock dividend, payable May 15 to shareholders of
record April 21.
The company last declared a stock dividend, also 10 pct, in
March 1986.
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Oper shr 50.4 cts vs 48.7 cts
Oper net 688,000 vs 665,000
Revs 12.3 mln vs 10.7 mln
Note: Oper excludes tax credits of 559,000 vs 537,000
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The surge in currency futures since
Friday on the heels of the Reagan administration's proposed
tariffs on Japanese imports is likely to be curtailed in the
coming week, financial analysts said.
"The market is taking a breather now, and I would expect it
to last a little longer," said Craig Sloane, a currency analyst
with Smith Barney, Harris, Upham and Co.
Profit-taking, which robbed the currency futures of some
momentum today, is likely to continue, he said.
Central banks are likely to play a role in halting the
advance in currencies through intervention, the analysts said,
even though the dollar fell to a 40-year low against the
Japanese yen on Monday despite Bank of Japan intervention.
Treasury Secretary James Baker's comments that the G-6
nations remain committed to the Paris accord, coupled with his
refusal to give any targets for exchange rates, provided a note
of stability to the market Tuesday, the analysts said.
Furthermore, Merrill Lynch Economics analyst David Horner
said G-6 central banks haven't yet shown the full force of
their commitment to the Paris accord.
"I'm among those who believe the G-6 have a plan behind the
scenes," Horner said.
Horner said more forceful central bank intervention will
firm the dollar and cap the rise in currency futures.
"Coordinated, punishing intervention" by the central banks
-- in contrast to the recent rolling intervention which has
only smoothed out the market -- is in the offing, according to
Horner.
"I think we're near the top of the range in the Europeans
(currencies)," he said.
On the other hand, the upside target for the yen, which
set a new contract high today at 0.006916 in the June contract,
is at 0.007050, Horner said.
Still, other analysts believe currency futures have yet to
peak.
"The basic trend in the currencies is higher," said Anne
Parker Mills, currency analyst with Shearson Lehman Brothers
Inc. "The market wants to take the dollar lower."
Uncertainty over central bank action and nervousness over a
G-5 meeting next week in advance of a meeting of the
International Monetary Fund could make for choppy price
activity the remainder of the week, Mills said.
In addition, although the market shrugged off relatively
healthy gains in February U.S. leading economic indicators and
factory orders Tuesday, economic data could play a larger role
in coming sessions, the analysts said.
Friday's employment statistics in particular will be
closely watched, Sloane said, adding that a forecast rise of
250,000 in non-farm payroll jobs should underpin the dollar.
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Shr eight cts vs 30 cts
Net 1,100,000 vs 3,900,000
Revs 14.9 mln vs 20.7 mln
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Eli Lilly and Co told the Securities
and Exchange Commission it cut its stake in Liposome Co Inc to
500,000 shares, or 4.0 pct of the total outstanding common
stock, from 900,000 shares or 7.3 pct.
Lilly said it sold 400,000 Liposome common shares on March
17 at eight dlrs each.
As long as Lilly's stake in Liposome is below five pct, it
is not required to report any further dealings it has in the
company's stock.
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The U.S. grain planting intentions and
stocks reports bear optimistic news for U.S agriculture, a
grain analyst on a Chicago Board of Trade panel said.
The decline in intended soybean acreage and lower stocks
are "the first report we've had for a long time that shows any
optimism for anybody," said John "Bud" Frazier, grain analyst
and executive vice president for Balfour MacLaine, Inc.
"I'm really excited about it," Frazier said.
The U.S. Department of Agriculture said farmers intend to
plant 67.6 mln acres of corn, down from 76.7 mln planted last
year, and 56.8 mln acres of soybeans, down from 61.5 mln.
The report showed March 1 stocks of 1.4 billion bushels of
soybeans, 8.3 billion bushels of corn, and 2.3 billion bushels
of wheat, all below trade guesses.
Frazier was joined by Susan Hackmann, senior grain analyst
with AgriAnalysis, and Mark Meyer, a grain analyst with
Shearson Lehman Brothers, Inc., on a Chicago Board of Trade
panel to discuss the reports.
Frazier said the stocks reports in particular were friendly
for the market, and soybean prices would jump three to five
cents a bushel "if the bell rang right now."
"We're getting our disappearance up. We have less (corn and
soybeans) than we thought we had," he said, noting that hog and
poultry production is up.
"We're seeing low prices generate some interest in demand,"
said Meyer, adding that feed use was up 13 pct last quarter and
15 pct in the preceding quarter.
However, Hackmann said production could continue to exceed
consumption.
She noted that most of the reductions in soybean acres came
in southeastern states, where yields are usually low.
"We have the potential for record breaking soybean yields
this year, (which) will temper the enthusiasm on tomorrow's
opening," she said.
Hackmann said record corn yields also are possible, and the
crop could reach 7.1 billion bushels, which would be down from
last year's 8.25 billion bushels.
"We'll need very good disappearance next year to reduce
stocks," she said. The USDA estimated disappearance last year
at 6.7 billion bushels.
Hackmann said the stocks report was positive for the long
term, "But we still have a long way to go to bring stocks down
to where we could start rebuilding prices."
Frazier also cautioned that the soybean acreage report
could prompt farmers to change their plans and plant more
soybeans.
The panelists agreed that the reports should discourage
talk of revising the 1985 farm bill.
"There seems to be no desire ... to change the farm law
we're working under today, and this report should reinforce
that," Frazier said.
"We are seeing the program beginning to work," said Meyer.
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Acceleration Corp said it sold a
24.9 pct stake in the common stock of <United Coasts Corp> to
the <Sheet Metal Workers' National Pension Fund>.
The company said it agreed to sell the fund an additional
5.1 pct of Hartford, Conn.-based United when the fund receives
approval from the director of insurance of the state of
Arizona.
The company said today's sale reduced its holdings in United
to 25 pct. The second sale, when completed, will lower its
stake to 19.9 pct, Acceleration said.
The company said the proceeds from both sales will be
roughly equal to the 3,330,000 dlrs it originally invested in
United Coasts in late 1985 even though it will retain a 19.9
pct stake.
Acceleration said it plans to include gains from the stock
sales in its results for the first and second quarters of 1987.
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Oppenheimer, the brokerage and
investment subsidiary of Oppenheimer Group Inc, told the
Securities and Exchange Commission it sold its entire 6.0 pct,
stake of Cyclops Corp.
Oppenheimer said it sold the 243,400-share stake on March
27 at 95.00 dlrs a share.
It said it initially bought the stock in connection with
risk arbitrage and other investment activities in the ordinary
course of its business.
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Quarter-point prime rate increases to
7-3/4 pct by Citibank and Chase Manhattan Bank today will be
followed by other banks only after they see clearer signs of
the Federal Reserve's policy intentions, economists said.
"Based on the spread between banks' cost of funds and the
prime rate, it probably makes sense for others to follow, but
no rush is likely," said Paul McCulley of E.F. Hutton and Co.
Citibank's surprise base rate increase, quickly followed by
Chase, sent U.S. bond prices lower and the dollar higher.
McCulley said that once the spread between three-month
certificates of deposit and the prime rate narrows to less than
1-1/2 percentage points, there is a strong chance of a prime
rate increase. It has been under 1-1/4 points recently.
However, banks are likely to hold rate increases until they
see what the Fed intends to do about interest rates in the near
term, analysts said. They noted that banks historically like to
follow Fed rate movements, rather than lead them. For example,
the last prime rate increase occurred in June 1984 when banks
lifted the rate to 13 pct from 12-1/2 pct after a Fed discount
rate increase in April of that year.
Major banks had been posting a 7-1/2 pct prime rate since
last August 26/27, when they lowered the rate from eight pct
shortly after the Fed's half-point discount rate cut to the
current 5-1/2 pct level on August 20.
"The banks will not rush to raise their prime rates. There
should be a split prime for a while with some posting a 7-1/2
pct rate and others 7-3/4 pct," said David Jones of Aubrey G.
Lanston and Co.
Jones said the Federal Open Market Committee at today's
meeting voted no change in Fed policy. But he said the Fed may
well foster higher interest rates soon.
Jones said that, while the FOMC probably voted no policy
change today, it may have decided to apply slight upward rate
pressure later if the dollar weakens, inflation pressures heat
up or the economy shows sign of strong recovery.
"The Fed clearly indicated that they did not intend to
tighten policy when they did today's coupon pass," said Joseph
Liro of S.G. Warburg and Co.
In a move that came a day earlier than most expected, the
Fed today supplied permanent reserves to the banking system by
offering to buy all maturities of Treasury notes and bonds for
its own account. This seasonal reserve add is called a "pass."
"The Fed demonstrated that there has been no policy
change," said Elizabeth Reiners, economist at Dean Witter
Reynolds Inc.
She said the spread between banks' cost of funds and the
prime rate is now around 137 basis points compared with a 153
basis point average in 1986. Reiners said the spread is not
really narrow enough to present a clear need for a prime rate
increase.
The Dean Witter economist said that today's prime rate rise
"may have been less a response to interest rates than an
attempt to enhance the (balance sheet) bottom line."
Reiners said that, given recent problems with loans to
developing countries, large money center banks with heavy
exposures might be the first to match the higher prime rate in
an effort to get more profitable spreads on other loans.
The Federal funds rate at which banks lend overnight money
to one another could help determine how many banks match the
higher prime rate and also how quickly they move.
In raising their prime rates, banks cited a higher cost of
funds. In the three business days through Monday, the Federal
funds rate at which banks lend to one another averaged nearly
6-1/4 pct. But quarter end pressures helped push up funds.
The Fed funds rate was extremely volatile today, reflecting
demand pressure associated with the end of the quarter and the
close of the Japanese fiscal year. Funds traded between five
and 6-3/4 pct.
Once the special distortions end, analysts said the funds
rate probably will return to its recent trading level in the
6-1/8 pct area. They said that, if it stabilizes near there,
banks may not quickly boost their prime rates.
But a consistently higher funds rates would suggest to many
that the Fed was fostering somewhat higher interest rates to
help the dollar. Then banks would lift prime rates quickly.
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An investment partnership led by
four sons of Loews Corp <LTR> Chairman Lawrence Tisch said it
cut its Tosco Corp stake to the equivalent of 1,499,985 shares,
or 4.95 pct of the total, from 1,666,650 shares, or 5.5 pct.
In a filing with the Securities and Exchange Commission,
the partnership, FLF Associates, said it sold 10,000 shares of
Serier E convertible preferred stock on March 26 for 34.125
dlrs each and 5,000 shares of preferred stock on March 27 at
35.25 dlrs each. The sales leave the Tisch brothers with
135,000 shares of preferred stock which can be converted into
1,499,985 shares of common stock.
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Shr loss 10 cts vs loss 38 cts
Net loss 393,241 vs loss 1,384,334
Revs 43.6 mln vs 40.3 mln
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Cominco Ltd said it
sold its 50 pct stake in Canada Metal Co Ltd to Canada Metal
senior management for an undisclosed sum.
Cominco said the sale was part of its previously announced
policy of divesting non-core businesses.
Canada Metal is a Toronto-based producer of lead alloys and
engineered lead products.
Canada Metal production figures were not immediately
available.
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First City Bancorp of Texas, which lost
a record 402 mln dlrs in 1986, said in its annual report it
expected operating losses to continue "for the foreseeable
future" as it continues to search for additional capital or a
merger partner.
The Houston-based bank's 1986 financial statements received
a qualified opinion from its auditors, Arthur Andersen and Co.
The auditors said their opinion was subject to First City
eventually obtaining additional capital.
"The company believes that in order to address its
long-term needs and return to a satisfactory level of
operations, it will ultimately need several hundred million
dollars of additional capital, or a combination with a more
strongly capitalized entity," First City said in a note to its
financial statements included in the annual report.
"Management believes that sufficient resources should be
available to cover interim capital concerns while additional
capital is being sought," the bank said.
To raise cash in the near-term, First City said it may sell
or mortgage non-strategic assets, recover excess contributions
to its pension plan and obtain special dividends from some of
its member banks.
"The losses for 1987 are expected to be substantially less
than in 1986," First City chairman J.A. Elkins said in a letter
included in the annual report. "However, the ultimate return to
satisfactory operating conditions is dependent on the
successful resolution of the related problems of credit
quality, funding and the eventual need for substantial
additional capital."
First City said it anticipated that certain covenants of a
credit agreement with unaffiliated banks requiring most of
First City's excess cash to be applied to debt repayments would
be modified by the end of the first quarter in order to avoid
default.
The banks agreed to similar amendments to the covenants
last year and First City has reduced its borrowings from 120
mln dlrs at 1986 yearend to 68.5 mln dlrs in recent weeks.
Although the parent company's capital adequacy ratios
exceeded regulatory minimum requirements at the end of 1986,
First City said its two largest subsidiaries did not. First
City National Bank of Houston had a primary capital ratio of
5.34 pct and First City Bank of Dallas had a 4.75 pct ratio.
Hard-hit by the collapse in oil and Texas real estate
prices, First City's net loan chargeoffs totaled 366 mln dlrs
last year, up from 261 mln dlrs in 1985. The bank more than
doubled its loan loss provision to 497 mln dlrs at the end of
1986.
First City said chargeoffs and paydowns reduced its total
energy loan portfolio by 32 pct during 1986, to 1.4 billion
dlrs at year-end, adding that future energy chargeoffs "should
be more modest." The amount represented 15 pct of First City's
total loans.
In real estate, First City said its nonperforming assets
nearly doubled last year to 347 mln dlrs at year-end.
Chargeoffs of real estate loans rose to 32 mln dlrs, or nine
pct of total loan chargeoffs, and the bank said the amount
could go higher.
"The company still faces uncertainties in the real estate
market and anticipates further deterioration in the pportfolio
so long as the regional recession persists," First City said.
"Because the carrying value of many of these loans is
collateral dependent, a further decline in the overall value of
the collateral base could cause an increase in the level of
real estate-related chargeoffs."
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The complex task of wielding control
over monetary policy in an increasingly fast-moving global
economy could be aided by tying policy to commodity prices, the
newest member of the Federal Reserve Board says.
Commodity prices are already considered by the Fed in the
making of monetary policy. But they would be given a much
greater role under an idea being floated by Governor Robert
Heller, who joined the board last August.
He conceeds that much more study of the idea is needed, but
argues that such an arrangement, particularly if it were
adopted by other major industrial countries, could reduce the
volatility of exchange rates.
Moreover, it could help stabilize of the prices of
commodities themselves, slowing changes in inflation.
His idea, which many conservative economists find
appealing, has some backing among board members appointed in
recent years by President Reagan.
It would complement the present system of opening or
closing the monetary screws based on the pattern of inflation,
key indicators such as unemployment, and the rise or fall of
the money supply. Changes in the money supply can lead to
changes in interest rates and affect economic activity
directly.
Discussed on and off for a long time, the commodity concept
is part of a growing search for a system that anchors monetary
policy and widely-fluxtuating currency prices to a more solid
base.
"What is needed is an anchor or reference point that can
serve as a guide for both domestic and international monetary
purposes," says Heller.
In the past, this anchor was gold but the United States
went off the gold standard because the global economy had
vastly outstripped gold supplies.
A return to the gold standard is generally dismissed out of
hand by most policymakers on the grounds that the largest
producers of gold are the Soviet Union and South Africa.
The so-called fixed rate system, scuttled in the early
1970s, is still considered unworkable in the present world.
But the current system of floating currencies in which
currencies can fluxtuate widely, adding vast pressures to the
monetary system, is also being widely questioned.
Some have suggested that the system might benefit from a
formal approach that mandates intervention by countries when
currencies wander above or below agreed to levels but there are
major problems with this also.
For one thing, there is justifiable concern that countries
might be relunctant to intervene if they felt it might be
detrimental to their own domestic economy.
Moreover, some question whether concerted intervention can
make much of an inpact if the overall market does not agree
with the fundamental judgement.
The poorest countries have called for a monetary conference
to work out a new system that, not surprisingly, helps them
cope with their overpowering debt problems.
Treasury Secretary James Baker, the Reagan administration's
chief economic architect, has preferred to use the so-called
Group of Five industrial countries or sometimes, Seven, as a
forum to work out cooperative agreements on currency and other
economic matters.
He appears convinced that officials from West Germany,
France, Britain, Japan, Italy and Canada talking quietly behind
closed doors can reached reasoned decisions away from public
posturing.
The Heller approach, while extremely complex, could have a
profound impact on the system, ideally stabalizing prices and
international exchange rates.
As envisioned by Heller, a basket of say, 30 major
commodities ranging from wheat to oil, would be put together
and prices would be measured on a regular basis.
"In times of rising commodity prices, monetary policy might
be tightened and in times of falling commodity prices, montary
policy might be eased," he says.
He notes that commodity prices are traded daily in auction
markets, and a commodity price index can be calculated on a
virtually continuous basis.
Moreover, most commodity prices are produced, consumed and
traded on a world-wide basis, so "that an index has a relevance
for the entire world," he says.
In addition, commodity prices are at the beginning of the
production chain and serve as an imput into virtually all
production processes.
"Focusing on commodity prices as an early and sensitive
indicator of current and perhaps also future prices pressures,
the monetary authorities may take such an index into account in
making their monetary policy decisions," he says.
However, he says that any major change in a basic commodity
such as occurred in oil during the 1970s because of action by
the OPEC cartel, would have to be discounted in such a system.
He says the worst thing that could happen is to allow
monetary policy to spread a freakish increase in one commodity
to the rest of the system and to other commodities.
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Oper shr loss 10 cts vs profit nine cts
Oper net loss 387,000 vs profit 313,000
Revs 6,486,000 vs 5,613,000
Year
Oper shr loss two cts vs profit four cts
Oper net loss 96,000 vs profit 120,000
Revs 23.8 mln vs 21.3 mln
Note: 1986 oper excludes extraordinary gains of 299,000 for
qtr and year.
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A group led by New York investors
David Bellet and Chester Siuda said it lowered its stake in DBA
Systems Inc to 100,000 shares, or 3.7 pct of the total
outstanding, from 170,000 shares, or 6.3 pct.
In a filing with the Securities and Exchange Commission,
the group said it sold 70,000 DBA common shares between Feb 13
and March 23 at prices ranging from 18.25 to 20.00 dlrs a
share.
So long as the group's stake in DBA is below five pct, it
is no longer required to report its further dealings in the
company's common stock.
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Qtly div 7.5 cts vs 7.5 cts prior
Pay May 19
Record April 24
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Oper shr loss 11 cts vs profit two cts
Oper net loss 1,058,585 vs profit 282,998
Revs 24.4 mln vs 23.7 mln
Note: 1986 oper includes accrued interest of 686,914 from
financing of capital goods transaction with Prudential Bache
Trade Corp.
Year-ago oper excludes extraordinary gain of 121,000.
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Emery Air Freight Corp said it
plans to begin tomorrow a 40 dlr a share tender offer for 83
pct of the outstanding common stock of Purolator Courier Corp.
The company said the tender offer is the first step in a
plan to buy 100 pct of the Purolator shares.
Following the tender offer, Emery said it would offer 40
dlrs of junior subordinated debentures for each remaining
Purolator share outstanding.
On March one, Purolator agreed to a 35 dlr a share
leveraged buyout by eight Purolator executives and EF Hutton
LBO Inc, a unit of EF Hutton Group Inc.
Emery said it had tried unsuccessfully to open merger
discussions with Purolator before the company accepted the
management-led buyout offer.
In a letter to Purolator's chairman, Nicholas F. Brady,
Emery's chairman, John C. Emery, said the company would still
prefer to negotiate with Purolator.
But he said the imminent expiration of the leveraged buyout
group's offer has forced the company to make an unsolicited
tender offer of its own.
Emery said its offer is scheduled to expire at 2400 EST on
April 28, unless extended.
The company said conditions of the offer include the
receipt of at least two-thirds of Purolator's shares
outstanding, on a fully diluted basis, and the repeal of its
share purchase rights plan.
Emery said the offer is also subject to completion of the
previously announced sale of Purolator's Canadian operations.
Emery said Chemical Bank, Bankers Trust, Morgan Guaranty
Trust Co and Salomon Bros had agreed to provide financing for
the tender offer.
It said the junior subordinated debentures to be issued in
the subsequent merger will carry a 13 pct annual interest rate,
payable twice a year.
For the first three years after the notes are issued,
interest will be paid, at Emery's option, in cash or in
additional notes, Emery said.
It added that the notes will not be subject to redemption
for one year after they are issued.
Emery said Purolator would operate as a wholly owned unit
of the company after the merger. It said it hoped Purolator's
management would continue with the company.
"We believe that our two companies provide an excellent fit
with each other and that the combination will enable each of us
to better serve our existing customers and meet the challenges
of the future," Emery's chairman said in his letter.
He said a merger would significantly enhance the financial
turnaround that Purolator's management had previously forecast.
Officials at Purolator could not immediately be reached for
comment on the offer, which was released several hours after
the stock market had closed.
Emery's stock closed up 1/2 at 12-5/8.
Purolator closed at 34-7/8, off 5/8.
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"If we go on using up
farmland as we have done since 1980, there will be none left in
20 years to grow grain on."
Xu Jinfeng, a middle-aged official in Fengbang village on
the edge of Shanghai, sums up the dilemma China faces as it
tries to feed its more than one billion people and at the same
time let them get richer by building factories and new homes.
China has to feed one quarter of the world's population,
but only one seventh of its land is arable.
Sharp increases in farm output since 1979 turned China into
a net grain exporter for the first time in 1985, and again in
1986.
But the rapid industrialisation of the countryside which
has occurred at the same time, has gobbled up arable land for
factories and homes for peasants who can now afford them.
Official figures show that China lost just under one pct of
its arable land to other uses in 1985 and a slightly smaller
amount last year. It gained 26 mln new mouths to feed during
the two years.
"We lost very little land prior to 1980 when the
industrialisation began," official Xu said. "Since then, nearly
all the families in the county have built new homes and many
factories have gone up."
"Last year we lost land to a new railway line," Xu said. But
land losses in future should fall because nearly all families
already have new houses, she added.
The issue of land loss is a matter of major concern to the
Peking leadership, which announced earlier this month that
China will issue nationwide quotas for conversion of grain land
for the first time this year.
"The present situation of abusing, occupying unlawfully,
wasting and destroying land and land resources is serious," said
an article in the official press explaining the new measures.
"It has resulted in great losses of cultivated farmland," it
said. "China has a large population and its land resources are
badly deficient."
An official of the Shanghai city government said county
authorities could approve conversion of only 0.3 hectares of
arable land to other uses, while anything more than that must
be approved by the city government.
The Peking government faces another major obstacle in its
efforts to ensure China's people get enough grain to eat. The
prices the state pays to farmers for grain are too low, making
it more profitable for them to grow other crops.
To offset this, the state offers farmers cheap fertiliser
and diesel oil and payment in advance for grain it contracts to
buy. The state then sells the grain at subsidised prices to
China's 200 mln city residents. Rural factories also subsidise
grain output, paying farmers bonuses to grow it.
Some officials argue that the simplest solution to the
problem would be for the state to raise city grain prices.
Chen Zuyuan, Communist Party secretary of a village in the
eastern province of Zhejiang, said the government listened too
much to the demands of "selfish city people" and could raise city
grain prices without any problem.
But the government has ruled out a price rise. "Raising the
price of grain would directly conflict with the goal of social
stability," said a China Daily editorial this month.
The Shanghai official said prices must be reformed over the
long term. "We must be very careful. We have a very large
population which is used to price stability and will object to
price rises," he said. "The problem is how to do it."
The Shanghai official said a rise in grain prices might
also affect the prices of hundreds of food products made with
grain and consumed by city residents.
In addition, the state faces the problem of inadequate
investment by farmers in land and in grain in particular.
The official press has reported that farmers fear farm
policy may change and they are putting their new wealth into
building graves, memorial halls for ancestors and homes.
Under reforms introduced in the late 1970s, farmers sign
contracts with the state requiring them to grow certain crops,
but they have considerable freedom in how to use their land.
"As the expiration date of the 15-year contract is almost at
the halfway mark, farmers are beginning to worry about the
future," the China Daily said in an editorial last month.
Their anxieties stem from the fact that they are allowed to
use the land but not own it. For most of the period of
Communist rule, the land was organised into collectives where
there was little room for individual initiative.
"New measures are needed to reassure them of the consistency
of government policies and make them interested in long-term
investment," the newspaper said.
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The grain output of a major Chinese
grain-producing province is not increasing, because farmers
lack incentives, production costs are rising, storage
facilities are poor and there is not enough state investment in
grain, the province's vice-governor said.
The China Daily quoted Yang Jike, vice-governor of Anhui,
as saying farmers could earn twice as much growing cotton as
they could growing grain, and three times as much growing cash
crops like flax. He said production costs had risen to 40 pct
of farmers' earnings, from 20 pct in 1982, and lower investment
had caused the area of irrigated land to fall.
Yang said investment in agriculture fell in 1985 to 9.9 pct
of the province's total investment, from 26 pct in 1978.
He said an estimated 1.5 billion yuan worth of grain was
hit by mildew or rot in state granaries every year, and a
further 1.5 mln tonnes was eaten annually by rats.
He said government measures to deal with the problem dealt
with trifles, rather than the essentials. He called for more
investment in grain production, an immediate ban on illegal use
of or damage to farmland and a reversal of what he called the
tendency to rely on grain imports.
The New China News Agency quoted Zhang Yan, a delegate to
the National People's Congress, attacking grain policy. He said
the government had cut agricultural investment to three to four
pct from 11 pct.
"With the abundance of grain and cotton in the past few
years, some people got carried away, relaxing their attention
to grain and cotton production," he said.
On Saturday, vice-premier Tian Jiyun said China aimed to be
self-sufficient in grain. Now it exports corn from the
northeast, but it imports wheat.
"Grain consumption is rising every year. Even if we reach
the 1987 target of (405 mln tonnes), it cannot be considered
adequate," Tian said.
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Taiwan's imports in the second quarter of
1987 are expected to rise to 7.75 billion U.S. Dlrs from 5.82
billion a year earlier and from 6.95 billion in the first
quarter of this year, the statistics department said.
A department official attributed the increase to growing
domestic investment by the private and public sectors. It is
expected to rise to 4.68 billion U.S. Dlrs from 3.79 billion a
year earlier and 3.41 billion during the first quarter.
Taiwan's exports in the April-June quarter are expected to
rise to 12.03 billion U.S. Dlrs from 9.63 billion a year
earlier and 11.28 billion in the first quarter.
The official said Taiwan's trade surplus is expected to
climb to 4.28 billion U.S. Dlrs in the second quarter of 1987
from 3.81 billion a year earlier. It was 4.33 billion in the
first quarter of this year.
Most of the surplus is expected to come from trade with the
U.S., Taiwan's largest trading partner and importer of nearly
50 pct of Taiwan's total exports, he said.
He said he expected Taiwan's imports, including grains,
machinery and power plant equipment, from the U.S. To rise
sharply because of government efforts to balance trade with
Washington. He declined to give figures.
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Commerzbank AG <CBKG.F> management
board chairman Walter Seipp said that from the present
viewpoint the bank must expect 1987 full operating profit to be
lower than in 1986.
In the first two months of the year, partial operating
profit -- excluding trading on the bank's own account -
declined, he said, without giving details.
The interest surplus fell 2.8 pct compared with 2/12ths of
1986 results, while the commission surplus, because of the
quiet stock exchange business, fell back still more strongly.
By contrast the personnel and fixed asset expenses increased.
German banks do not report full operating profit. But Seipp
said last year the figure for the first time had topped one
billion marks for the parent bank, and the group result was
around 50 pct higher than this.
Commenting on 1986, Seipp said, "we were able to raise the
full operating profit...Slightly above the record result of
1985 because own account profits increased slightly."
He gave no concrete details but added that in January and
February, good own account trading profits meant that the drop
in full operating earnings was more modest than that in the
partial operating figure.
The bank would, as a result, be more profit-oriented in
future, developing, for example, more into investment banking,
keeping a tight rein on personnel costs and dampening
expenditures on fixed assets.
Turning to 1986 results, Seipp said by year end there had
been a strong growth in business volume.
Over the year business volume rose by 9.9 pct to 93.2
billion marks compared with 1985, Seipp added.
Group balance sheet volume rose by 8.0 pct to 148.15
billion. It would have been around five billion marks higher
still if currency relationships had remained unchanged.
In the parent bank, the interest surplus rose nine pct in
the year, while the interest margin held roughly at 1985's 2.56
pct despite pressure on credit rates.
The surplus on commission business, which had soared by a
quarter in 1985, rose by 11.6 pct last year thanks almost
exclusively to growth in securities commissions, Seipp said.
Personnel expenditure was up 11.9 pct last year, at more
than 1.5 billion marks. Fixed asset expenditure rose by 9.6 pct
to more than 650 mln.
As a result, the parent bank partial operating profit rose
by 3.2 pct to 752 mln marks.
Parent bank tax payment rose to 244 mln marks last year
from 233 mln in 1985.
Seipp said extraordinary earnings included a "high
two-figure million" in profit from the sale of the bank's AEG AG
<AEGG.F> shares to Daimler-Benz AG <DAIG.F> during the latter's
majority stake purchase booked last year.
The ability of the bank to write off depreciations in
credit business against profits from securities trading and
earnings on the sale of stakes had been utilised, as in prior
years, to its full extent.
Because of numerous insolvencies at home, by far the
largest part of the provisions were set aside for individual
write-downs from domestic business. Abroad, the circle of
problem debtor countries rose last year, although the ratio of
credit exposure to provisions improved further.
Seipp said that because about half the group's exposure to
problem nations was in dollars, the bank had swapped into
dollars individual provisions hitherto held primarily in marks.
"This means that no open currency positions exist any longer
on the amount of the provision that is made against an actual
default," he added.
Despite the increase in concern over debtor nations in the
last few weeks, he said, the international banking community is
better armed than it was against payment problems.
All banks had significantly strengthened their capital
base, most European banks had made considerable provisions
against bad debts while goverments and central banks were
better prepared for unforseen difficulties.
He described debt-equity swaps as a very interesting new
approach to indebted nations' problems. There was a lot of
interest in direct investment via an equity participation in
Latin America, particularly from West German firms.
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The Bank of Japan intervened in the market
in the early afternoon, buying dollars around 147.30 yen and
continuing to buy them as high as 147.50 yen, dealers said.
The Bank intervened just after the dollar started rising on
buying by securities houses at around 147.05 yen, and hoped to
accelerate the dollar's advance, they said.
The dollar rose as high as 147.50 yen.
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The Bundesbank should take further
steps to reduce German interest rates to protect the mark from
further appreciation and to persuade investors to bring
long-term yields lower, Commerzbank AG <CBKG.F> management
board chairman Walter Seipp said.
But he told the bank's annual news conference this did not
mean a cut in leading interest rates, rather a reduction in
money market rates through bringing the allocation rates down
for Bundesbank securities repurchase agreements.
"Leading interest rates are not the decisive rates," he said.
"The money market rates are the important ones."
Seipp said the Bundesbank should move away from allocating
money market liquidity at a fixed 3.8 pct as it has in recent
tender allocations.
An easier monetary policy would not mean a loss of
credibility for the Bundesbank in its containment of monetary
growth. A fall in short rates would make the public aware of
the high yields in bonds and lead to a longer-term capital
formation, braking the expansion of money supply.
"Thus, you can have lower rates and also a normalisation of
monetary growth both at the same time," he added.
Seipp said there were no grounds to paint too black a
picture of the German economy, since company profitability had
improved over recent years and domestic oriented firms were
profiting from cheaper imports because of the rise in the mark.
Growth this year should be at least one pct, he said,
describing the downturn in production in the first months as a
false start, unrepresentative of the rest of the year.
After an economic contraction in the first quarter, the
economy should show an uptrend in the last three. "We don't
believe that the economy has tipped over, but see it more as a
'growth dip,'" Seipp said.
But Seipp also called for support for growth from fiscal
policy, saying the top rate of income and corporate tax should
be brought down to 49 pct. The current peak rate is 56 pct.
The additional tax cuts brought forward to next January
were no substitute for support for growth.
Seipp added the federal government should make "further
courageous steps to decrease the state's proportion of the
German economy and to increase its flexibility."
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Bank of Japan Governor Satoshi Sumita said
the present foreign exchange market instability will not last
long as there is caution in the market regarding the rapid
decline of the U.S. Unit.
He told reporters the major currency nations are determined
to continue their concerted intervention whenever necessary to
stave off speculative dollar selling in line with their
February 22 currency stability agreement in Paris.
Sumita also said he did not see the recent dollar drop as
anything like a free-fall.
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Group shr 65.44 yen vs 73.30
Net 4.48 billion vs 4.19 billion
Current 10.85 billion vs 9.77 billion
Operating 9.65 billion vs 9.54 billion
Sales 103.53 billion vs 94.39 billion
NOTE - Company forecast for current year is group shr 70.05
yen, net 4.80 billion, current 11.20 billion and sales 113
billion.
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A U.S. Appeals court last night
blocked the 860 mln dlr merger of Delta Airlines Inc <DAL.N>
and <Western Airlines> just hours before it was to go into
effect because of a dispute over union representation.
The ruling came in a lawsuit in which the Air Transport
Employees union said Western's management should fulfil a
promise to honour union contracts if a merger took place.
The airlines argued that Western's promise could not be
enforced in a takeover by a larger company. Airlines officials
could not be reached for comment on the ruling, which halts the
merger until arbitration on the dispute is completed.
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Boliden AB <BLDS ST> mining and metals
group said it will announce a major foreign corporate takeover
today involving a company with an annual turnover of two
billion crowns.
A Boliden spokesman told Reuters details of the
announcement would be given at a news conference by chairman
Rune Andersson at 1030 gmt today. He said the company involved
employed 4,000 people, but declined to name the takeover price
or say what field the firm operated in.
Share analysts said they expected Boliden to announce it
will be taking over the U.S. Allis-Chalmers Corp <AH.O> but
company officials refused to confirm the reports ahead of the
news conference.
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The Bank of England said it had invited
an early round of bill offers from the discount houses after
forecasting a shortage of around 1.2 billion stg in the money
market today.
Among the main factors affecting liquidity, bills for
repurchase by the market will drain some 526 mln stg while
bills maturing in official hands and the take-up of treasury
bills will remove around 1.79 billion stg. A rise in note
circulation will take out a further 105 mln stg.
Partly offsetting these outflows, exchequer transactions
will add around 1.01 billion stg and bankers' balances above
target some 185 mln stg.
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The Bank of England said it had provided
the money market with early assistance of 689 mln stg in
response to an early round of bill offers from the discount
houses. This compares with the Bank's estimate that the system
would face a shortage of around 1.2 billion stg today.
The central bank made outright purchases of bank bills
comprising 347 mln stg in band one at 9-7/8 pct, 207 mln stg in
band two at 9-13/16 pct and 135 mln stg in band three at 9-3/4
pct.
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Net consolidated profit after deduction
for minorities 6.52 billion francs vs 5.40 billion.
Non-consolidated net profit 3.46 billion francs vs 3.05
billion.
Note - Results for year 1986. Company's full name is Groupe
Bruxelles Lambert SA <LAMB.BR>.
Proposed net final dividend on ordinary shares 70 francs vs
65 to take total net payment for year to 120 francs vs 110.
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Ajinomoto Co Inc <AJIN.T> said it will
sign around end-April to buy the 50 pct of <Knorr Foods Co
Ltd>, capitalised at four billion yen, that it does not already
own from its U.S. Partner <CPC International Inc>.
Ajinomoto will also acquire 50 pct each of CPC's two sales
subsidiaries and six production units in Hong Kong, the
Philippines, Singapore, Malaysia, Taiwan and Thailand, he said.
The total cost of the acquisition is 340 mln dlrs, the
spokesman said.
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The Secretary of State for Trade and
Industry said he had decided not to refer the proposed
acquisition by Reed International Plc <REED.L> of <Technical
Publishing Company Inc> to the Monopolies and Mergers
Commission.
The proposed acquisition by <Rosehaugh Plc> of <The General
Funds Investment Trust Plc> was also cleared.
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Taiwan's shipbreaking industry is
expected to decline sharply this year despite the boom in 1986
because of keener competition from South Korea and China, the
rising Taiwan dollar and U.S. Import curbs on steel products,
industry sources said.
Last year, Taiwanese breakers demolished a record 344
vessels totalling 3.69 million light displacement tons (ldt),
up on 165 of 2.97 million ldt in 1985, Lin Chung-jung, a Taiwan
Shipbreaking Industry Association (TSIA) spokesman, told
Reuters.
China scrapped vessels of some 1.1 mln ldt last year while
South Korea demolished ships of 910,000 ldt, he said.
Yao Liu, president of Chi Shun Hwa Steel Co, a leading
shipbreaker and steel producer in Kaohsiung, told Reuters, "We
expect to scrap fewer ships this year because of an expected
decline in our steel product exports."
Lin said many breakers predicted a 20 pct decline in
scrapping operations this year due to falling demand from the
U.S., Japan and Southeast Asia for Taiwanese steel.
Taiwan agreed last year to voluntarily limit its steel
product exports to the U.S. To 120,000 tonnes in the first half
of 1987 from about 260,000 tonnes in the first half of 1986, a
Taiwan Steel and Iron Association official said.
Yao said the rising Taiwan dollar means Taiwan's steel
exports are more expensive than South Korea's and China's.
The Taiwan dollar has strengthened by some 16 pct against
the U.S. Unit since September 1985 and some bankers and
economists said it could appreciate to 32 to the U.S. Dollar by
the end of the year from 34.23 today, Yao said.
In comparison, the won rose by about five pct and yuan
remained stable during the same period, he added.
"We have lost some orders to South Korea and mainland China
because foreign importers have switched their purchases," he
said.
Taiwan's steel exports to the U.S., Japan and Southeast
Asia slipped to 148,000 tonnes in the first two months of 1987
from about 220,000 tonnes a year earlier, the Taiwan Steel and
Iron Association official said.
He said he expected further declines in later months but
did not give figures.
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Grain traders said they were still
awaiting results of yesterday's U.K. Intervention feed wheat
tender for the home market.
The market sought to buy 340,000 tonnes, more than double
the remaining 150,000 tonnes available under the current
tender. However, some of the tonnage included duplicate bids
for supplies in the same stores.
Since the tenders started last July 861,000 tonnes of
British feed wheat have been sold back to the home market.
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Singapore's United Industrial Corp Ltd
(UIC) has agreed in principle to inject 16 mln dlrs in
convertible loan stock into <Teck Hock and Co (Pte) Ltd>, a
creditor bank official said.
UIC is likely to take a controlling stake in the troubled
international coffee trading firm, but plans are not finalised
and negotiations will continue for another two weeks, he said.
Teck Hock's nine creditor banks have agreed to extend the
company's loan repayment period for 10 years although a
percentage of the new capital injection will be used to pay off
part of the debt.
Teck Hock owes more than 100 mln Singapore dlrs and since
last December the banks have been allowing the company to
postpone loan repayments while they try to find an investor.
The nine banks are Oversea-Chinese Banking Corp Ltd, United
Overseas Bank Ltd, Banque Paribas, Bangkok Bank Ltd, Citibank
N.A., Standard Chartered Bank Ltd, Algemene Bank Nederland NV,
Banque Nationale de Paris and Chase Manhattan Bank NA.
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Banks in Hong Kong are likely to raise
prime rates by half a percentage point to 6-1/2 pct following a
one-quarter point prime rate increase by two major U.S. Banks
yesterday, dealers said.
They told Reuters local banks may decide on the increase at
this weekend's routine meeting of the Hong Kong Association of
Banks.
G.C. Goh, chief dealer of the Standard Chartered Bank, said
prime rate increases by Citibank and Chase Manhattan Bank to
7-3/4 pct from 7-1/2 may prompt Hong Kong banks to follow suit.
Goh said local banks want to restore the prime to 6-1/2
pct, the level at beginning of 1987.
The banks raised the prime to the current six pct from five
pct on February 28 after cutting it 1-1/2 points from 6-1/2 on
January 15 in response to upside pressure on the Hong Kong
dollar, he said.
The medium and longer term interbank rates firmed today,
with three months ending at 5-1/16 to 4-7/8 pct against
yesterday's five to 4-13/16 close. The overnight rate, however,
fell to 3-1/2 to three pct from 4-1/2 to four because of
increased liquidity for a local stock issue.
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Call money rates fell to 3.85/95 pct
from five pct yesterday in moderate trading as month end
tightness disappeared and operators took positions for April.
Dealers said they expected rates to remain within a 3.70 to
four pct range this month. A minor tax payment period on behalf
of customers mid-month, the long Easter weekend and pension
payments were unlikely to tighten rates significantly.
Next Wednesday, 14.9 billion marks are leaving the system
on the expiry of a securities repurchase pact. But dealers said
they expected the Bundesbank to fully replace the outflow with
a new tender at a fixed rate of 3.80 pct.
Commerzbank AG's management board chairman Walter Seipp
called on the Bundesbank to reduce interest rates to protect
the mark through bringing the allocation rate for securities
repurchase agreements down.
But dealers said the Bundesbank was unlikely to ease credit
policies at the moment. There was little domestic and foreign
pressure for lower rates and no signs of a change.
Yesterday one or two large West German banks effectively
drained the domestic money market of liquidity in order to
achieve higher rates from their overnight deposits, dealers
said.
Bundesbank figures showed banks held an average daily 50.7
billion marks in minimum reserves at the central bank over the
first 30 days of March, the exact requirement needed just one
day before the end of the month.
Actual holdings on Monday were 42.0 billion marks.
Because rates soared to the level of the Lombard emergency
funding rate yesterday, banks fell back on the loan facility to
draw down a high 5.3 billion marks in an attempt to meet
Bundesbank needs, the data showed.
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Mitsubishi Heavy Industries Ltd <MITH.T>
(MHI) and C. Itoh and Co Ltd <CITT.T> have decided to sell
their combined 65 pct stake in Indonesia's <Pt Triguna Utama
Machinery Industries> to <Caterpillar Tractor Co>, spokesmen
for the two Japanese companies said.
Triguna, set up in 1982, is owned 40 pct by MHI and 25 pct
by C. Itoh and 35 pct by an Indonesian company. It makes about
10 forklift trucks and a similar number of excavators each
month in technological cooperation with MHI.
The spokesmen said the sale results from an expected
restructuring later this year of the 50/50 Caterpillar/MHI
joint venture Japanese company <Caterpillar Mitsubishi Ltd>,
formed in 1963.
They said the venture will be renamed <Shin Caterpillar
Mitsubishi Ltd> and capitalised at 23 billion yen. It will
still be owned equally by MHI and Caterpillar and will be set
up with the aim of centralising MHI's excavator business.
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Swedish mining and metals group
Boliden AB <BLDS ST> said it would buy the mining equipment
operations of the U.S. Allis-Chalmers Corp <AH.O>, amounting to
more than 50 pct of group sales, for 600 mln crowns.
Boliden president Kjell Nilsson told a news conference the
acquisition of the Allis-Chalmers unit, which he described as
the world's leading producer of equipment for the mineral
processing industry, would yield positive synergy effects for
Boliden mining, metals and engineering operations.
Nilsson said the takeover also will provide opportunities
to cooperate with the mining and materials handling operations
of Boliden's parent company, <Trelleborg AB>.
He said Allis-Chalmers was selling out because it needed
new cash after suffering big losses in its farm equipment
operation.
The deal is subject to approval by Allis-Chalmers' annual
meeting, company officials said.
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The Indian Finance Ministry's
announcement in Parliament yesterday, changing the nation's
interest rate structure, will benefit industry and agriculture
by providing loans at lower interest, bankers and brokers said.
The changes, effective today, included reducing commercial
bank lending rates that have ranged between 15 pct and 17.5 pct
by one percentage point.
New rates, which affect both Indian and foreign banks, also
include a one percentage point gain, to an annual 10 pct, on
deposits of two years or more but less than five.
Bank deposits of five years or more carrying 11 pct
interest have been abolished.
Bankers said the interest rate modifications reflect the
government's concern to reduce the costs of borrowing and help
improve world competitiveness of Indian goods.
There is likely to be a shift to short-term bank deposits
by long-term depositors, bankers predicted. This will create
the flexibility to draw and re-invest funds in either equity
shares or short-term bank deposits, they said.
A merchant banker also said reduced manufacturing costs due
to lower lending rates are likely to boost the share market.
Tata Steel, a trend setter on the Bombay Stock Exchange,
opened today higher at 1,040 rupees against yesterday's closing
of 1,012.50 rupees.
A stockbroker said investors may be less enthusiastic now
to buy convertible and non-convertible debentures because the
Finance Ministry has reduced the annual interest rate to 12.5
pct and 14 pct respectively from 13.5 and 15 pct respectively.
"But overall debenture prospects remain bright because the
rates of interest on them will still be higher than what banks
pay for deposits of similar maturity," a merchant banker said.
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