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Gulf & Western Net Drops 33% in 2nd Quarter

March 07, 1985|JOHN BRODER

Gulf & Western Industries Inc., citing sharply higher interest expenses resulting from its acquisition of the publisher Prentice-Hall Inc., said Wednesday that its net earnings fell 33% in its fiscal second quarter and 31% in the six months.

Net in the three months ended Jan. 31 totaled $46 million, compared to $68.4 million in the same period a year ago, the company said. Revenue for the quarter rose 8.2% to $1.07 billion from $989.2 million.

For the first six months, net earnings came to $103.2 million, down from $149.6 million a year earlier. Revenue rose 6.1% to $2.1 billion from $1.98 billion.

The company, which acquired Prentice-Hall for $700 million last December, said its interest expense rose to $31.3 million in the second quarter from $17.5 million in the same period a year earlier. The six month's interest expense increased to $52.7 million from $34.1 million.

The New York-based company said its motion pictures and television segment registered a substantial gain as a result of revenue generated by a successful holiday videocassette promotion by Paramount Television and of increased licensing fees related to the television program "Happy Days."

The success of the film "Beverly Hills Cop" more than offset the poor showing of other movies released in the quarter, the company said. "Beverly Hills Cop" was a smash hit during the Christmas holidays and has grossed $174.6 million in the 13 weeks since it opened.

The publishing segment registered significant gains in operating income, largely reflecting the inclusion of Prentice-Hall's results, Gulf & Western said.

Negative results were recorded by the group's other activities, resulting partly from further deterioration of the video-game business, it said.

The financial-services group registered a strong gain in operating income, but income from the consumer and industrial products group and from Madison Square Garden were flat, it said.

Midland Bank's Full-Year Earnings Declined 65%

Midland Bank Group PLC, the London-based parent of Crocker National Corp., announced 1984 earnings of $142 million, down significantly from 1983 because of massive losses at Crocker National Bank.

Midland Bank owns 57% of Crocker's common stock and is seeking shareholder approval to increase its stake to 100%.

Midland officers attributed the bank's lower 1984 earnings, down 65% from 1983's profits of $237 million, to a $234-million write-off of Crocker's 1984 losses. Crocker earlier announced losses of $324 million for the year but differences in British accounting practices allowed Midland to take a lesser charge.

San Francisco-based Crocker's losses resulted primarily from bad loans in agriculture, real estate and Latin America.

"Midland Group's results for 1984 were, as previously announced, substantially affected by Crocker's losses," Chairman Sir Donald Barron said. "These losses resulted from the writing off of loans made in earlier years which had deteriorated subsequently, largely from creation of additional provisions for possible future loan losses."

Midland Bank nearly doubled its bad-loan provision, from $336 million to $651 million, to cover anticipated future losses in Crocker's loan portfolio. Crocker's loan-loss provision at year-end was $527 million.

Midland's profits were further eroded by a $375-million cash transfer to Crocker at the end of 1984 to improve the subsidiary bank's capital position.

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