1993: Big Changes in Business
What a year of change it was. Former Lincoln Savings & Loan operator Charles H. Keating Jr. is convicted again, taking his son with him to prison this time. Milan Panic returns quietly from the Yugoslav war room where he was prime minister to a raucous ICN Pharmaceuticals board room where his post as chairman is challenged. Carl N. Karcher’s star falls at the Carl’s Jr. hamburger chain, but the founder is revived in a lesser role. Here are the Orange County business stories that topped the news in 1993.
JANUARY * Unemployment: Orange County jobless rate edges downward from a nine-year high of 7% in November to 6.4%. Despite the drop, the rate is still above the 1992 average of 6.2% and the 1991 average of 4.8%. * Conviction: Charles H. Keating Jr. and his son, Charles H. Keating III, are convicted in federal court of racketeering, conspiracy and fraud charges stemming from the notorious 1989 collapse of Lincoln Savings & Loan in Irvine. * Toontown: Disneyland opens Toontown, the biggest attraction it has built in 20 years and the first built outside the amusement park’s original perimeter. * Sign of the times: More than 700 job seekers form a line around the block outside the North Orange County Regional Occupational Program in Anaheim, hoping to land a spot in one of the agency’s medical career training courses. * OP sold: Irvine-based Ocean Pacific Sunwear Ltd., once the king of surf wear, is released from bankruptcy supervision when it is acquired by Berkeley International Capitol Corp. for $21 million. * Acquisition: Rockwell International Corp. acquires Sundstrand Corp.'s avionics division for $225 million. One of the division’s major products is the “black box” used to record pilot dialogue and data from cockpit instruments. * Layoffs: Carl Karcher Enterprises lays off 60 workers from vice presidents on down as part of a restructuring designed to trim operating costs by $10 million annually. * Raid: Federal immigration authorities raid sneaker maker Vans Inc. in Orange and arrest 233 workers. The raid occurs shortly after U.S. attorney general nominee Zoe Baird admits that she has employed illegal immigrants in her home.
* No smoking: South Coast Plaza becomes one of the first indoor shopping centers to ban tobacco in common areas.
FEBRUARY * Bond sale: AST Research issues bonds to raise about $100 million in working capital. A third shift is added at its Fountain Valley plant to keep up with demand. * Return of USAir: Phoenix-based USAir wins approval to resume service at John Wayne Airport, with two daily flights to its major hub in Pittsburgh. * Suits filed: Investors file suits against Hill Williams Development Corp. The Anaheim firm has stopped making monthly distribution payments to more than 5,000 investors, many of them elderly people who entrusted it with nearly $90 million for residential construction. * Peters retires: Home builder J.M. Peters, who helped pioneer mass construction of high-quality, high-cost homes in Southern California, retires. * Layoffs at Knott’s: Poor economy and bad weather prompts Knott’s Berry Farm to cut 20 jobs, from upper management to hourly workers. * Slump continues: Results of a 1992 study show Orange County with the fifth highest office and industrial vacancy rate in California--and with little improvement expected throughout the year.
MARCH * Bankruptcy: Embattled Hill Williams Development Corp. files a bankruptcy petition seeking protection from creditors as it liquidates under court authority. * Employment: A manpower survey finds Orange County lagging behind the rest of the nation in economic recovery, even though 18% of the employers surveyed plan to increase staffing. * Branching out: Rockwell International Corp. furthers its efforts to diversify by acquiring Sprecher & Schuh A.G., a Swiss company that is Europe’s fourth-largest manufacturer of electronic control devices. * Testimony: Newport Beach financier Steven D. Wymer, who pleaded guilty to bilking government clients of more than $100 million, testifies during a congressional hearing on ways to stop such abuses.
* Founder returns: ICN Pharmaceuticals founder Milan Panic returns to the company helm after serving for eight months as prime minister of his native Yugoslavia in an effort to lift the country from the surrounding Balkan chaos. * Fraud: The California Department of Corporations accuses Hill Williams Development Corp. of operating a classic Ponzi scheme--using new investors’ money to pay monthly distributions to earlier investors--in its residential home building partnerships. * Downsizing: Restaurant Enterprises Group announces a plan to sell 169 of its 587 restaurants. The company will keep its Coco’s, Carrows and El Torito eateries. * Bankruptcy: Del Taco files for bankruptcy protection.
APRIL * Parker verdict: Newport Beach businessman Michael E. Parker, whom prosecutors dubbed the “king of greed,” is convicted of orchestrating an $11-million fraud on Columbia Savings & Loan. * Payment: The national law firm of Jones, Day, Reavis & Pogue pays the Resolution Trust Corp. $51 million to settle the civil case against it for aiding Charles H. Keating Jr.'s wrongdoing at Lincoln Savings & Loan. * Poll findings: The Times Orange County Poll reports that 37% of those surveyed expect to leave the county within five years. Lack of job opportunities is most common reason cited. * Home sales drop: First-quarter home sales drop 11.7% and home prices decline 4.7%, dashing hopes that local economy is recovering. * Air Force contract: Struggling McDonnell Douglas unit in Huntington Beach contracts to build Air Force Delta II rockets. Deal could be worth as much as $1 billion. * Employment up: Orange County jobless rate drops to 5.5%, roughly half that of the region.
MAY * Bank seizure: Federal regulators seize Anaheim’s American Commerce National Bank, accusing officers of lying, concealing records and squandering the bank’s finances. * Super-store: Niketown opens a 29,000-square-foot store devoted to Nike products in Costa Mesa’s Triangle Square. It is the third major Nike facility nationwide. * Wymer sentenced: Newport Beach investment adviser Steven Wymer is sentenced to 14 1/2 years in prison for theft of more than $92 million from his clients, which included numerous city governments. * AST acquisition: Irvine-based AST Research buys Tandy Corp.'s computer manufacturing division, making AST the nation’s fourth largest computer firm in the United States.
JUNE * Contracts: Caltrans freezes contracts with outside contractors, threatening delays on major highway projects and thousands of jobs.
JULY * Wal-Mart is coming: Developers disclosed that Wal-Mart plans to open one of the chain’s discount stores in Anaheim Plaza. The nation’s No. 1 retailer refuses to comment. * Restaurant closings: Rusty Pelican chain closes six restaurants, lays off 400. * Fewer dark offices: Orange County’s office vacancy rate is the lowest in the decade at 19.6%, sparking optimism in the long-depressed commercial market. * Keating sentencing: Charles H. Keating Jr. is sentenced to 12 years, seven months on federal racketeering, conspiracy and fraud convictions. His son, Charles H. Keating III, gets eight years, one month on the same charges.
AUGUST * Power center: Developers say that Wal-Mart and HomeBase will anchor Foothill Ranch Towne Centre, the region’s second-largest retail operation behind only South Coast Plaza. * Mazda layoffs: The Japanese manufacturer cuts 175 jobs at its Irvine sales office as the yen’s surging value batters imports. * Price bias: Community pharmacists file a nationwide class-action lawsuit against Bergen Brunswig and other pharmaceutical wholesalers, accusing them of charging independent pharmacies more than hospitals, mail-order drug companies and health maintenance organizations.
SEPTEMBER * Settlement: After eight years pursuing their claims in court, most recipients of potentially defective Shiley heart valves agree to an out-of-court settlement estimated to be worth $27 million. * Going public: The Irvine Co. offers for the first time to make a portion of its holdings public, establishing a publicly traded real estate investment trust. The REIT consists of the company’s apartment properties, about one-third of its holdings. * Move considered: Taco Bell says it is considering relocating its Irvine headquarters, possibly out of state. The statement sets in motion efforts by state and local officials, as well as business leaders, to try to persuade the company to remain in Orange County. * Restructuring: Bergen Brunswig cuts 500 jobs in response to a leveling off in prices and announces it is rethinking its business strategies. * Caltrans: A new state law allows the state Department of Transportation to contract with outside firms, but the legislation is expected to be challenged in court.
OCTOBER * Karcher ousted: Carl N. Karcher, threatening a shareholder fight against his handpicked board of directors, is ousted as chairman of the Carl’s Jr. hamburger chain. He is replaced at Carl Karcher Enterprises by Elizabeth Sanders. His battle plans are hindered by revelations that personal loans backed by most of his stock holdings are in default as a result of bad real estate investments. * Proxy fight: Dissident ICN Pharmaceuticals shareholder Rafi Khan announces attempts to unseat founder and chairman Milan Panic. * Fires: Hundreds of homes are lost in arson-related fires in Laguna Beach and elsewhere in the county, but little long-term economic impact is expected. Most businesses are left unscathed. * Factory sold: Western Digital Corp. sells its Irvine silicon wafer factory to Motorola Inc. for $115 million, allowing Western Digital to retire half its debt. * Acquisition: The Bolsa Chica Co. announces plans to purchase Koll Real Estate unit. The move is seen as a time-saving way for the Newport Beach developer to take one of its divisions public. * Karcher rescue: Title insurance executive William P. Foley II leads a small group of investors who help hamburger magnate Carl N. Karcher out of part of his financial problems by paying off a $4.8-million loan in return for the stock that backed it. * Lincoln: Regulators reveal that the taxpayer cost of bailing out failed Lincoln Savings & Loan has grown $800 million to $3.4 billion, securing its ignominious title as the nation’s costliest thrift failure ever.
NOVEMBER * Layoffs: AST Research says it will lay off 650 workers from its Fountain Valley plant and relocate some of its manufacturing operations to Texas and Ireland. * Super stores: Openings of Fry’s Electronics, Micro Center and Computer City give Orange County one of the largest concentrations of computer super stores in the nation.
DECEMBER * Layoffs: The Fountain Valley-based FHP health maintenance organization says it will eliminate 140 jobs locally. * He’s back: Way is cleared for Carl N. Karcher’s return to his Carl’s Jr. chain as chairman emeritus after an investor group led by William P. Foley II and Daniel D. (Ron) Lane raises $23.75 million to rescue Karcher from his financial crisis and gain control of most of his stock. Foley and Lane are added to the board of Carl Karcher Enterprises. * Recovery ahead: Chapman University’s annual economic forecast says Orange County will muddle through 1994 and return to prosperity in 1995, but at a much slower rate than 10 years ago when the county shot out of its last recession. * Theaters: AMC Theaters announces plans to build a 24-screen theater complex, one of the largest in the nation, in Foothill Ranch Towne Center retail complex. * Crash: Richard Snyder, president of In-N-Out Burgers Inc., dies with another corporate executive, a consultant and two pilots when their chartered jet crashes on approach to John Wayne Airport. Source: Times reports; Researched by JANICE L. JONES/Los Angeles Times