St. Louis Post-Dispatch from St. Louis, Missouri • Page 33

femsinessthe economy Jan. 18, 1986 ST. LOUIS POST-DISPATCH Tom Ralston Adopts 'Poison PilP Defenses monly called "golden parachutes," with certain executives. Greenmail occurs when an investor buys a substantial amount of a company's shares, and then demands that the company buy back the stock for more than the market price. Ralston's policy prohibits the company from paying more than the market price to any owner of more than 5 percent of the company's outstanding stock.

Under Ralston's golden parachutes, Stiritz would continue to receive his $600,000 annual salary plus benefits for four years after a change in control of Ralston whether he left the company voluntarily or was fired. Seven other officers would receive their salaries and benefits for three years. The other executives include Paul H. Hatfield, group vice president and president of protein technologies and Ralston Purina International; William change offer approved by Ralston's board, stockholders would have the right to buy shares at a third of the market price. The one-third-price offer also would be good if the acquirer merged into or recapitalized Ralston.

If Ralston merged with or transferred half or more of its assets or earnings to anyone after the rights became exercisable, persons holding the rights could pay $150 and receive common stock of the acquiring firm worth $300. The board reserved the right to redeem the shareholder rights under certain conditions. The rights expire on Jan. 27,1996. The "poison pill" plan adds to Ralston's already well-stocked anti-takeover arsenal.

A little over a year ago, the company's board adopted a policy designed, to discourage so-called "greenmail." And in November 1983, the company signed "management continuity agreements," more com M. "Dub" Jones, group vice presjdeflt and president of Purina Mills and William H. Lacey, group vice president and president of the grocery products group. Hatfield, Jones and Lacey each were paid $285,00,0 in fiscal 1985, according to the proxy statement for Thursday's annual meeting. The agreements cover three other executives whom Ralston declined to name.

In other action, Ralston's board raised the dividend 2'2 cents to 27'2 cents. The dividend is payable March 7 to stock of record Feb. 3. The board also authorized the company to buy back up to 5 million of the company's shares at prevailing market prices. The share buyback plan is the latest in a series of such efforts dating to January 1982.

Since that time, Ralston has bought back 40 million of its shares. As of Friday, the total number of shares outstanding stood at 75.5 million. New Homes er share for $150. Under certain takeover conditions, stockholders would be able to buy shares at one-third the market value. Ralston's stock closed Friday at 50'8, up 1 Vi on news of Ralston's plan to increase its dividend and a new plan for the company to buy back up to 5 million shares.

The "poison pill" plan was announced after the New York Stock Exchange closed. The "poison pill" rights can be exercised 10 days after an outsider acquires 20 percent or more of the company's outstanding stock. They also can be exercised 10 days after the announcement orbeginning of a tender or exchange offer for 30 percent of the stock. The rights become separate from the stock in any of those circumstances. If a hostile group acquires 40 percent or more of Ralston's stock and does not propose to buy the remaining stock through a tender or ex 1 S4iL" 10th Year i By Jerri Stroud Of the Post-Dispatch Staff Ralston Purina board beefed up its anti-takeover defenses Friday with a plan to issue "poison pill" securities in the event of a hostile takeover attempt.

"Poison pill" securities are designed to make an acquired company too expensive to swallow. The plan "is designed to safeguard the interests of our shareholders should anyone attempt to purchase a controlling stock interest in the company without making an offer to purchase all outstanding shares at a fair market price," said William P. Stiritz, chairman and chief executive. He added the board was not aware of any such attempt under way at the moment. Under the plan, each holder of one share of Ralston common stock as of Jan.

27 will receive the right to anoth 1 2-- Concorde Marks ft. I Air France and British Airways are celebrating the 10th anni- versary of supersonic service with Concorde jetliners. The planes fly from New York to Paris in 3 hours and 45 minutes, The first Air France flight was Jan. 21, 1976. Since then the four-engine jets have made 10,500 flights at a usual cruising speed of 1,370 miles an hour for a distance equal to 1,740 times the circumference of the Earth.

Air France says Con- corde operations have been profitable since 1983. i a On Excellence Five Bold Objectives For 1986 in it I am an avowed incrementalist. "Try," "test" and "experiment" are among my favorite words. I still fervently believe that a pragmatic, Incrementalist approach to progress is sound. But I also believe the visions to whlgh we aspire must be grand ones.

Not so much because inspiring visions are superb motivators (which they are), but because we must markedly pick up the pace of change in our businesses over the next five years. If we don't, we face the prospect of a permanently reduced standard of living. A recent Wall Street Journal article proclaimed the textile and apparel industries are testing productivity tools that will reduce their product development cycle (from gleam in the eye to fully stocked on the retail shelf) by two-thirds to 21 weeks from 66 weeks. If we are to master the new competitive environment, shortening the product development cycle is imperative in every industry. Raychem a Menlo Park, maker of high-technology connectors, regularly develops fully-tested new product prototypes in one or two Veeks.

That's one-tenth to one-twentieth of the industry average. The Limited Stores Inc. of Columbus, Ohio, radically changes the variety and displays of goods offered in its more than 600 outlets weekly more than 10 times faster than the industry average. BOLD OBJECTIVE NO. 1: Whether you are a retailer, a banker or a science-based company, reduce your product development cycle time this year by 50 percent.

Curtis Mathes Corp. of Dallas offers unparalleled service and often commands a 25 percent unit-price premium in television sales. And the company's growing rapidly. Perdue Farms slavish devotion to quality permits the fresh chicken producer to garner a 10 percent to 15 percent price premium in that commodity-like business. The specialty steel, specialty retail, specialty chemical and specialty forest product companies outperform the' diversified and generalist members of their industries by 50 percent or more.

BOLD OBJECTIVE NO. 2: Through service, quality and enhanced innovation, shift half of your product or service portfolio to differentiated, higher priced and higher value-added plateaus in the next two years. Nucor the highly profitable Charlotte, N.C., mini-steel mill company; runs a three-quarter-billion-dollar business with just three layers of Management and a corporate headquarters staff that numbers only nine. Ford Motor Co. and General Motors Corp.

have successfully eliminated the first-line supervisor's job in large parts of their companies, often replacing it with elected team coordinators. AtjWorthington Industries the successful Columbus, Ohio, specialty steel maker, 40 percent of the average- employee's paycheck comes from a profit-sharing program. BOLD OBJECTIVE NO. 3: Reduce the number of layers of management at any operating activity to two. Pare corporate staff by 80 percent in the next three years.

Eliminate all first-line supervision jobs in the next three years. Get 100 percent of the people on the. payroll into a profit-sharing program in the next 18 months. Al longtime colleague runs 25 remarkably profitable Burger King franchises. To enhance service, he believes that minimizing distracting paperwork is vital.

Last year he reduced the length of his restaurant manuals by two-thirds. He plans to repeat the process again this year, to reduce the manuals by another BOLD OBJECTIVE No. 4: Reduce the paperwork and procedures in every operation by half in the next year. Sam Walton," America's richest man; according to Forbes, has created efficiency and friendliness to customers throughout his 800-store, $8 billion Wal-Mart Stores Inc. To underscore, ther importance he places on every store, Walton, age 67, visits eacfi one annually.

Three years ago, Milliken Chairman Roger Milliken demonstrated his renewed commitment to his fustomers in the only way that counts. He began spending two-thirds of his time with customers. BOLD OBJECTIVE NO. 5: This year, devote fully half of your time, as measured by a retrospective weekly calendar analysis, to the single strategic priority that is most vital for you to achieve lasting distinction in your markets. Any of these five goals is imposing, especially for an older or large firm.

YeW-I strongly believe that these or similar objectives are essential to the survival of most firms high- or low-tech, service or manufacturing. 1 986, Not Just Another Publishing Ca Dividend Lindner Dividend Fond Inc. raised its quarterly dividend to 44 cents a share from 42 cents. The next dividend is payable Jan. 20 to stock of record Jan.

9. Royal Crown Are Mixing Again Construction Takes Off WASHINGTON (UPI) Construe" tion of new housing jumped 17.5 per? cent in December to the highest level in eight months, the government said Friday, prompting the White House to hail the figures as further proofjof strong U.S. economy this year. Building permits also increased, ll percent for the month to the highest level since February 1984, a virtual guarantee that the growth prompted in part by falling interest rates. will continue through the next few months.

"With more Americans working now than ever before, the U.S. econo? my's continued growth should served as a lesson for the world of what carr happen when free markets are 'allowed to operate with a minimum of restraint," White House spokesman, Larry Speakes said. "Anyone who doubts that 1986 will be a good year clearly is not abreast of the continuing good economic news." Cnpakpc ritpH a 7 nprppnt Hqp in industrial production and a 1.9 percent hike in retail sales, both announced this week, as further signs of a stronger economy. Preliminary estimates from the Commerce Department showed 1.73 million houses were started in 1985,. down an average 1 percent front 1984, which had 1.75 million starts.

The results, however, were far better than the 5 percent drop forecast by economists. Starts in. 1984 showed a 2.7 percent gain over 1983. The 17.5 percent increase for De cember 13 percent above December 1984 and the highest level since April 1985 represented 1.84 million-housing starts, seasonally adjusted, on an annual basis. The December gain made up for a revised 11.6 percent drop in November, when record cold weather caused manv building delays.

Builders broke more ground in ev- ery region of the country in Decern ber, but the most starts were in the Midwest, where 41 percent more new! homes were begun than the month' before. The year-end figures also show construction dropped off in the "Sun' Belt in 1985 and boomed in the Northeast, where housing starts swelled by, 23 percent. "But I don't see that as a long-term-trend," said Glenn Crellin, an analyst for the National Association of Real-' tors. "The South is coming on strong-again in December." December's biggest building, increase was in multifamily apartments, which rose 20.2 trend that should continue because most of the month's building permits, were also for multifamily The increase in single-family homes was 15.8 percent over November. Private analysts, housing industry officials and bankers said the in4 crease had been expected and pointed to lower interest rates as the reason for increased building.

-Fixed-rate home mortgages dropped for the third straight rrionth in December to 12.08 percent. "A number of home buyers have' decided that rates are not going to go any lower," said Warren Lasko of the Mortgage Bankers Association of, America. Week Seven-Up, By Judith Vandewater Of the Post-Dispatch Staff Fresh out of a court battle, Seven-Up Co. and Royal Crown Cola are bottling their beverages at the same plants again. In October, Royal Crown settled a suit brought against it by Seven-Up.

Less than a month later Seven-Up began bottling Royal Crown products at four of the 15 company-owned franchises. The arrangement signals the end of a rift that dates to December 1982, when RC withdrew its product line from Seven-Up-owned bottling plants in Texas and Connecticut. The break was related to Seven-Up's plans to introduce Like, a caffeine-free cola, in areas where Royal Crown market Air France Photo line late in 1981 at a cost of $18 million, was considered a showplace. Seven-Up planned to use the plant regarded as one of the most efficient bottling plants in the country to demonstrate new technologies to its franchisees. Seven-Up had found a buyer last year but that deal fell through when the buyer failed to secure financing.

The Dr Pepper Bottling Co." of Houston Inc. is negotiating to buy the Seven-Up franchise. Ray Snyder is general manager of the plant owned by Charles Patel Jr. and Charles Pa-tel Sr. Snyder said his company has not decided whether it will buy Seven-Up's plant as part of the deal.

"We're in negotiations now. We'd like to have a decision by the end of the month," he said. Month High to the drop in the value of the dollar," he said. Overall, manufacturing showed a 0.4 percentage point rise to 80.3 percent of capacity. Production of durable goods such as automobiles was up 0.3 percentage point.

Production in the mining industry rose 0.2 percentage point to 79.4 percent of capacity, while the operating rate at utilities jumped to 84 percent of capacity, up sharply from 83.1 percent in November. and in Omaha, began bottling Royal Crown Cola. Larry Jabbonsky, editor of the trade publication Beverage World, said the arrangement is a further indication that Seven-Up is backing away from Like. "The hard truth is that it is more of a statement about the failure of Like" than an indication that Royal Crown now believes a bottler can effectively distribute RC products when it carries a competing cola, Jabbonsky said. Meanwhile, Seven-Up appears to" have found another buyer for its Houston-area franchise.

The company currently makes and markets its own products there, but it has been trying to sell the business for some time. The Houston plant, which went on But some analysts viewed the recent increases in factory operating rates as a good sign for the future. John Albertine, president of the American Business Conference, a coalition of high-growth companies, predicted the operating rate would climb at least through the first half of this year as recent declines in the dollar help boost domestic sales. "American manufacturing, which nearly stopped in its tracks last summer, is now picking up speed, thanks ed a caffeine-free cola product of its own. Seven-Up filed suit in state District Court of Harris County, Texas.

In May, a Houston jury awarded $34.6 million to Seven-Up. In October, the soft drink makers settled out of court for $11.5 million. DWG the Miami-based corporate parent of Royal Crown Cos. said in a filing with the Securities and Exchange Commission that its Royal Crown Cola Co. subsidiary paid Seven-Up $8 million in cash plus a $2 million promissory note payable in April.

In addition, Royal Crown forgave a $1.5 million promissory note owed by a subsidiary of Seven-Up to an affiliate of the RC Cola Co. In November, Seven-Up company-owned franchises in Des Moines and Cedar Rapids, Iowa, in Kansas City, October. Despite the gains in November and December, the operating level was still 0.6 percentage point below where it was a year ago, reflecting U.S. industry's being hobbled all last year by the country's disastrous trading performance. U.S.

manufacturers lost sales at home and abroad because the high value of the dollar put U.S. products at a price disadvantage to foreign goods. In Review Factory Operating Rate Climbs To Four WASHINGTON (AP) The operating rate at U.S. factories, mines and utilities climbed to 80.5 percent of capacity in December, the best gain in four months, the government said Friday. The Federal Reserve Board said the 0.4 percentage point increase was led by a sharp rise in production at automobile plants.

The operating rate had risen by 0.3 percentage point in November after falling a sharp 0.7 percentage point in Week's Business St. Louis ANHEUSER-BUSCH Inc. said it sold 68 million barrels of beer in 1985, a 6.3 percent increase over its 1984 volume of 64 million barrels. National GTE Corp. and United Telecommunications Inc.

an-. nounced plans to merge their money-losing long-dis-i tance telephone businesses in hopes of challenging dominant and No. 2 MCI. RETAIL SALES rose 1.9 percent in December, their strongest gain in three months, the Commerce Department reported. The return of attractive auto loan rates was called the biggest factor in the increase.

E.F. HUTTON Group Inc. announced a major reorga- nization and several top management changes, all said to be aimed at improving the company's efficiency. SEVEN-UP Co. was withholding comment on widespread reports in the gossipy soft-drink industry that a sale or management buyout of the company was imminent MONSANTO and its G.D.

Searle Co. subsidiary said they would consolidate their research efforts a move that will eliminate between 400 and 500 jobs worldwide. CLC OF AMERICA Inc. filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code on behalf of itself and its river transportation subsidiaries.

The company's main river business is SL Louis-based Wisconsin Barge Line Inc. STIFEL, NICOLAUS Co. agreed to contribute about $1.8 million to a fund to compensate investors who bought annuities of the bankrupt Baldwin-United Corp. The brokerage firm became the 24th to add to the fund, which now contains more than $140 million. 1 Quote Of The PRESIDENT RONALD REAGAN is preparing proposals for sweeping changing in the nation's antitrust laws to ease restrictions on corporate mergers, Treasury Secretary James A.

Baker III said. MISSOURI PACIFIC Railroad's proposed acquisition of the Missouri-Kansas-Texas Railroad was called off. The companies blamed the M-K-Ts inability to satisfy a provision of the merger agreement that it retire 60 percent of its outstanding income certificates. HAL BAY.48, announced his resignation as president and chief operating officer of D'Arcy Masius Benton Bowles. It was Bay, as chairman and chief executive of D'Arcy MacManus Masius, who initiated the firm's merger last year with Benton Bowles.

"There is nobody to stop them. Anheuser-Busch is on a roll and it looks like it will be on a roll for quite a while." Emanuel Goldman, analyst, Montgomery Securities.