Summary Business: Entertainment software developer Headquarters: Calabasas Hills CEO: Brian Farrell Market Cap: $1.17 billion Dividend Yield: N/A* Total Liabilities: $1.17 billion P/E: 82.08 Long-Term Debt: $0.0 *THQ does not pay dividends If there is one company in Calabasas Hills that’s ready for the game, it’s THQ Inc. Along with the game platform makers it supplies software to, like Sony Corp., Microsoft Corp. and Nintendo Co., THQ is ready to take advantage of an expected boom in interactive games. The game maker is prepared to supply software for no less than four new game platforms, including Sony’s PlayStation 2, before the end of the year. The interactive game industry appears to be experiencing the calm before the storm. Sony released PlayStation 2 last fall, Nintendo released its handheld Advanced GameBoy last month and, in time for the Christmas shopping season, Microsoft will introduce Xbox and Nintendo its GameCube. “This is the beginning of a three- or four-year growth cycle for the industry,” said Arvind Bhatia, an analyst with Southwest Securities Inc. Analyst Robert DeLean of Morgan Keegan and Co. went so far as to say, “Over the next four or five years, this industry doubles again.” As the race to supply what is expected to be a very high demand for new games gets serious, THQ also is prepared to take a commanding position in a field developing interactive software for game systems that has been relatively easy for even small companies to maneuver through. “But we’re getting to the point where development is getting very expensive,” DeLean said. “The weaker players will fall out or get acquired.” With plenty of cash on hand and plans to raise more with a stock offering in the fall, THQ is expected to be a full participant in a round of consolidation analysts anticipate in the near future. Having acquired four companies already this year, THQ still has about $70 million in cash on hand for more and is preparing to ask for shareholder approval to increase the number of authorized common shares by 40 million. THQ now has 21.3 million outstanding shares. Its stock price closed at $56.40 on July 20. Electronic Arts Inc. (according to DeLean, “clearly the 800-pound gorilla here”) is about three times the size of THQ, which many consider to occupy the second tier of interactive video game companies with Activision Inc. “THQ wants to be a much bigger, stronger company,” Bhatia said. “It will get there too.” While THQ is happy enough to supply games for all the platforms this Christmas in fact, it will introduce 60 new game titles before the end of the year it is Christmas 2002 the company is most interested in, when the hardware supply is expected to catch up with consumer demand. Little of this comes as a surprise to the stock market. THQ’s stock price has been on a steady upward trajectory since April 2000 when it traded as low as $14 a share. That is in spite of the zigzag nature of its quarterly earnings statements, tied closely to the vagaries of the computer game market. Many investors clearly find THQ an attractive stock. “Investors are looking for companies that are not going to miss their earnings marks,” DeLean said. “They’ve got the brands and they’ve got very good management. We’re now going up this new peak of growth and the stock is ahead of that.” Net income for the second quarter of this year was $3.5 million on revenue of $55.2 million By comparison, THQ recorded a net income of $3.9 million on revenues of $32.4 million in the second quarter of 2000. “Last year was an anomaly,” Bhatia said. “You had no PlayStation 1 availability. That impacted the top and bottom line for many companies, not just THQ.”

Aerospace Woodland Hills-based UNOVA Inc. announced that Alton J. Brann would retire as chairman and a member of the board of directors effective July 31. The board elected Larry D. Brady, UNOVA’s current chief executive officer, to also become its chairman effective the following day. Brann served as chairman and CEO of UNOVA from October 1997 until September 2000, when Brady was named CEO. Prior to UNOVA, Brann was chairman and CEO of Western Atlas and president and CEO of Litton Industries Inc. Brady joined UNOVA in August 1999 as president and chief operating officer. He was elected a director of UNOVA one month later and was subsequently named CEO in September 2000. Prior to joining UNOVA, Brady was president of FMC Corp. He serves as a director of Pactiv Corp. and is a member of the executive committee of the National Association of Manufacturers. Entertainment Eric Hollreiser has been named senior vice president, media relations for ABC Cable Networks Group. Hollreiser will direct all public relations activities for the group, which includes the Disney Channel, Toon Disney, SoapNet and the recently announced Playhouse Disney. He will manage the department responsible for network relations, strategic publicity and long-term planning on behalf of the group’s sales, marketing, programming and affiliate relations divisions. Most recently, Hollreiser served as vice president of Tierney Communications. Eliot Sekuler has been appointed vice president, public relations and television development/production for Universal Studios Hollywood. In his new role, he will be responsible for developing public relations strategies as well as managing efforts to expand use of Universal Studios Hollywood and Universal CityWalk as locations for film and video production. Coinciding with Sekuler’s appointment, Audrey Eig has been promoted to director, domestic publicity. In her newly expanded role, Eig will be responsible for managing all domestic print and electronic media for Universal Studios Hollywood. Eig joined the company in 1998 as publicity manager responsible for securing print and broadcast media in California. Health Care John Raudsep was named vice president of marketing for IPC The Hospitalist Company, an acute-care specialists organization. In his new role, Raudsep will provide oversight and direction to the marketing of the company. Immediately before joining IPC, Raudsep was vice president of business development and sales for DestinationRx.com, an online comparison-shopping site for pharmaceuticals and health products. Raudsep has also been health systems management director and later business director/outcomes director for Bristol-Myers Squibb in New Jersey. Banking and Finance R.J. Arnett was promoted to senior vice president of production for the Western Division of Countrywide Home Loans. A 16-year veteran of the mortgage banking industry, including six years with Countrywide, Arnett succeeds Brian Robinett, who was named executive vice president of production earlier this year. Arnett will have responsibility for production and operations in the Countrywide Wholesale Lending Division’s four Western regions encompassing 25 branch offices. He joined Countrywide in 1995 as a branch manager in Westlake Village and was promoted to regional vice president for Southern California in 1998. Succeeding Arnett as regional vice president overseeing Countrywide’s six wholesale branches in Southern California is Jeff Garrison. He has been with the company for nine years, most recently as branch manager in Pasadena and previously as account executive and branch manager in Santa Barbara. Pharmaceuticals Mitchell H. Saranow has joined the board of directors of North American Scientific Inc. As founder of The Saranow Group, he acquired and served as CEO of companies with operations in the United States, Europe and Australia. Prior to that, he served as the CFO of CFS Continental Inc., then the second largest food services company in the United States. Saranow is a director of Lawson Products Inc. and a director and recently elected president of the Juvenile Protective Association. Public Relations Encino-based public relations specialist Rhonda Rees was awarded first place in the writing category as the Public Communicators of Los Angeles (PCLA) awarded their 2001 PRo Awards at a ceremony held at the Friars Club in Beverly Hills. The award was for her op-ed piece, “Sex and the Synagogue,” about a sexually explicit forum held at Stephen S. Wise Temple. Software Charles Ramey has joined Sonicport Inc.’s board of directors. Ramey most recently was president and a founding partner of PaymentNet Inc., now Signio Inc., which was acquired last year by VeriSign Inc. Prior to his tenure at PaymentNet, he served as chairman, president and CEO of Multidata Corporation.

Alex Padilla Title: Los Angeles City Council president; councilman representing the Seventh District Age: 28 Education: Bachelor of Science, mechanical engineering, MIT Most Admired Persons: His mother, Lupe, and father, Santos Career-turning Point: Joining CORO, a leadership training foundation, in 1995 Personal: Single Alex padilla, who many People perceive as a political newcomer, has suddenly become one of the most powerful politicians in los angeles Alex Padilla insists his age should not be an issue. But it’s hard to ignore the fact that, at 28, the Northeast Valley city councilman is taking over as Los Angeles City Council president after the April 17 death of former council President John Ferraro, who was first elected to office before Padilla was even born. Shortly after Padilla reached the age of 22, the MIT graduate turned his back on a promising engineering career for the political arena instead, getting his feet wet by running campaigns for Assemblyman Tony Cardenas, state Sen. Richard Alarcon and Assemblyman Gil Cedillo. In 1999, he took the plunge himself and won a seat on the city council representing the Seventh District one of the most economically distressed in the Valley which includes his hometown and current residence, Pacoima. He’s been on a fast track ever since, serving as chairman of the council’s information technology and general services committee and vice chairman of public works, winning reelection this year while running unopposed, betting on the right horse by supporting James Hahn in his successful mayoral bid, and recently beating 14-year veteran Councilwoman Ruth Galanter for the second most powerful position in city government. Not only is Padilla the youngest member to ever hold the title of council president, he is the first Latino to be chosen for the post in more than a century. But if he has loftier political aspirations, Padilla is not telling. (Because he was elected to fill a vacant seat part way through a term the first time, Padilla has eight years before he has to worry about term limits.) For now, the soft-spoken son of Mexican immigrants says he is “humbled” by his colleagues’ support and intends to prove to critics that foresight in youth can be just as powerful a tool for change as hindsight after years of experience. Padilla spoke to Business Journal reporter Jacqueline Fox recently about his new position, how he plans to use it to make good on promises to improve the quality of life in the Northeast Valley, his strategy for keeping secessionists from breaking up Los Angeles, and why he chose to back James Hahn in the race for mayor instead of Latino candidate Antonio Villaraigosa. Question: Mayor Hahn said he hopes to quash the secession drive and you have said you oppose a breakup of Los Angeles. What is the strategy for keeping the city whole? Answer: As an engineer, I’m looking at solving problems. So if the problem has been that government hasn’t been responding to the needs of the citizens in the Valley, then let’s make it more responsive. I know that there is a gap in the level of basic services being provided and we will be working to improve in those areas. Q: You’ve called secessionists’ views “rumblings.” But given the fact that the LAFCO report shows a Valley city could survive on its own, and the fact that a 2002 ballot initiative on secession is possible, shouldn’t the drive be taken more seriously? A: Rumblings come at all volumes and this rumbling is being heard, loud and clear. My view is we need to get at the root of these rumblings in order to fully address them. Q: If Valley secession was approved by voters, would you run for mayor of the new city? A: I honestly haven’t thought that far ahead. But what I can say is my heart is in the San Fernando Valley, so however I can best serve my community, that is first and foremost in my heart. Q: Why did you back Hahn over Antonio Villaraigosa in the mayoral election campaign? A: I supported Hahn because we had a great working relationship already and two years of a track record together. He’s been very supportive of (programs) in our district and we have a very similar interest in providing more of those programs. I also felt his 20 years of experience were, hands down, a positive for the community. Q: Business taxes and traffic are among the key concerns for Valley business owners across the board. What are your plans for addressing these? A: We’ve had for two years now a business tax advocacy committee and they have come forward with some very positive recommendations for change, and I’m looking forward to more complex and specific recommendations to come out of that committee. When it comes to traffic issues, the goal will be to work with the mayor and address them as a regional concern, including issues of safety posed by some residents. Q: How do you see the Valley business community changing over the next five years? A: I would like to think that we will see a wave of new people coming in that will reflect a stronger diversity in groups like VICA (Valley Industry and Commerce Association) and the Economic Alliance (of the San Fernando Valley). But I think we will also see new institutions like those come in as well and I hope to be able to help act as a bridge between them (and the older organizations). Q: Programs targeting Latino and lower-income communities have traditionally gone to East Los Angeles rather than the Northeast Valley. What do you plan to do to balance those scales? A: The recent census report tells us that the Northeast Valley has the largest concentration of Latinos in Los Angeles, so those figures are going to help us make a case for a more equitable distribution of services. Q: Some have observed that it’s not the availability of jobs, but the lack of adequate job training that is holding back the economy of the Northeast Valley. What’s your assessment of that? A: In part, I would disagree because the economics in the area have been changing as new technologies have come in. There are many ways in which these companies have contributed, on top of the institutions we’ve helped set up to provide training assistance. But I agree that we need to make sure that the training for these new technologies continues. Q: What are your top priorities for your district? A: I’m strictly a back-to-basics kind of guy. We need to focus on the quality-of-life issues: schools, sidewalks, graffiti removal. But public safety will always be at the top of my list. And I hope to leverage my position as president of the council to bring a focus on the business needs of that part of the community.

With a prime rate that’s been cut six times in the past year, you might expect businesses to be lining up for loans. You’d be wrong. “We’re having one hell of a time getting people to borrow,” said Carl Schatz, chairman and chief executive officer of Encino State Bank. “We’re fighting every inch of the way for loans.” Cheap money, it seems, isn’t worth much when business prospects are muddy and, with an uncertain economic climate, small business owners are reluctant to take on debt, no matter what the cost, local bank executives say. Bankers report that lending, particularly small business lending, is about even with, or somewhat down from, this time last year, in spite of the Fed’s numerous interest rate cuts. But banks are finding another source of added revenues, thanks to the economy: an increase in good, old-fashioned savings deposits. “What I think has happened is people are taking their money out of the market, and it’s flowing back into traditional investments,” said Richard Taylor, president and chief executive officer at Bank of Granada Hills. When the bulls were running in the stock market, many investors pulled their money from traditional savings accounts to take advantage of the upswing. With the downturn, many have taken what’s left of their shirts and put it back into the banks. Encino State Bank has seen its deposits soar 18 percent to $124 million since the beginning of the year, an increase that Schatz, a banking industry veteran, says is astounding. “Most people start paying their real property and income taxes and, as a result, in the first three months you’re dead, and in the next three months you’re dead,” said Schatz, of the traditional lack of investment activity in the first half of the year. “You don’t start growing until August or September.” For Encino State Bank, the increases have not translated into higher net income because of a heavy tax liability. And because the bank has spent large sums on advertising in hopes of attracting more lending business. But borrowing has remained virtually unchanged in spite of the lower interest rates. Some 994 Small Business Administration loans totaling $316 million were made in the Los Angeles district, which includes Orange County and Ventura County through March of this year, a slight change from 978 loans totaling $329 million made for the period last year, said John Tumpak, spokesman for the SBA’s Los Angeles district office. “So you can see the figures are pretty much the same,” Tumpak said. Those seeking loans seem to be motivated more by their business needs than any interest in taking advantage of lower interest rates. And many potential lenders are thinking twice about taking on additional debt in the current economy. “We definitely see a slowing in loan demand,” Taylor said. “I think it’s basically from the standpoint that, because revenues are down, the capital expenditures are down. They’re not putting out a lot of money to boost something they can’t realize immediately because sales aren’t there.” Many community banks like Granada Hills have not had to adjust their lending requirements as a result of the uncertain economy because their criteria had already been fairly stringent. But some of the banks that once aggressively sought borrowers, even with marginal credit, when the economy was good are now pulling back their efforts. “I have seen a difference (in lending criteria),” said Miguel Ju & #225;rez, a loan consultant for the Small Business Development Center of the Valley Economic Development Corp. “Six months ago, a loan would be approved if it had a certain delinquent item on the credit report. About a month ago, the loan was not taken because it had the same delinquent item, even though it had been resolved.” Ju & #225;rez and others at the VEDC, which helps small business owners who might not have “A” credit ratings secure loans, point out that the change is not solely the result of the economic downturn. Some banks disproportionately filled up their portfolios with so-called “B” paper loans when the economy was good and are now less interested in that segment of the business. Still, lenders have put up some red flags as a result of the softer economy. They are scrutinizing business plans more carefully, and they have become particularly averse to financing startups. “The impact is that individuals that don’t have a strong business plan or some level of collateral may find it a very difficult time to borrow money,” said Roberto Barragan, president of the VEDC. “This is not the best time to start up a new business, unless you have a very clear market niche.” Barragan believes that the tightening of lending requirements could actually boost the economy because it gives businesses with good prospects the chance to expand while limiting the potential number of failures. “In an uncertain economy, certain businesses will do well and grow no matter what,” Barragan said. “We want those companies that have an advantage bread-and-butter companies. They’ll be able to mitigate the (economic) impact of those companies who are really caught.” Indeed, bankers too see an opportunity in the current economic climate to build their lending business with companies that are worthwhile risks. “We look at this as an opportunity to gain market share,” said Todd Hollander, senior vice president and division manager for small business lending at Wells Fargo & Co. Wells Fargo entered the small business lending arena during the recession of the 1990s and it designed its policies to protect against the economic climate at the time. With the current downturn, Hollander said, borrowers are out looking for new banking relationships that Wells Fargo can capitalize on without assuming undue risk. The bank is even increasing its lending staff by 15 percent to assist in the effort. “We figured out some ways to make loans that others haven’t,” Hollander said. “We were different to begin with in how we manage risk, so it’s not giving us that much heartburn. But I’d be lying to you if I said it didn’t give us a little heartburn.”

A recently released U.S. Commerce Department report, “The Migration of U.S. Film and Television Production,” estimated that television production flight (runaway production) increased 230 percent from 1990 to 1998 and that up to $10 billion in film and television production has been lost to other countries in the last five years. Runaway production has significantly impacted California, which accounts for 81 percent of all motion picture starts in the U.S. and 80 percent of all television programming. The potential impact of runaway production on the San Fernando Valley is enormous. According to information provided by Jack Kyser, chief economist with the L.A. Economic Development Corp., the film industry is the largest in the San Fernando Valley. Approximately 54,000 (or 19 percent) of California’s 283,000 film industry employees work in the Valley. The most significant flight appears to be from California to Canada, and the productions most affected are those with budgets between $1 million and $5 million. Statistics released in February by Toronto’s Film & Television Office revealed that last year U.S. companies spent $890.3 million in Toronto on major projects, which include feature films, television movies, mini-series and specials. Additionally, $300 million was spent on 451 commercials and $125 million on animation. In 1999, California had a total of 152 weeks of “Movie of the Week” production compared to Canada’s 696 weeks. There are a number of reasons for the ever-increasing flight, including significant foreign tax incentives, a friendlier filming environment, lower labor costs and fewer union issues, favorable monetary exchange rates and provisions for buy-out of residuals. There are, of course, compelling reasons to film in California instead of Canada or elsewhere: significantly better year-round weather, availability of quality film crews, more infrastructure to support the filming and the avoidance of travel. Statistics, however, clearly show that the compelling reasons to stay in California do not carry as much weight as the incentives to leave. Thus far, the U.S. and California have taken baby steps to avert runaway production. A new three-year California program called “Film California First” provides $15 million annually, with a maximum of $300,000 per production, to reimburse certain costs incurred by qualified production companies when filming on public property in California. This program, although an excellent step, is considered by many to be far too small to impact the problem. It is time for action! Runaway production affects many employees and businesses. The hardest hit are the below-the-line workers (art, construction, costumes, props, camera, grips, sound, stage & studio and special effects) and small ancillary service businesses (caterers, dry cleaners, transportation companies, janitorial services, security services, short-term crew lodging, private residence rentals, camera rentals and many more). The Valley Industry and Commerce Association is currently conducting a survey of independent production, post-production and ancillary service companies to gather input as to incentives that could be offered by the U.S. and California to tip the scales and bring our production back home. Preliminary information gathered from several independent production companies indicates that tax incentives similar to those provided by Canada may be enough. Several congressmen, led by U.S. Rep. Xavier Becerra (D-Los Angeles), have drafted a tax incentive runaway production bill and asked VICA for help. In May, I traveled to Washington, D.C. as part of a VICA delegation to advocate on several business issues, runaway production among them. Our delegation was welcomed, with encouragement, by U.S. Representatives Xavier Becerra, Howard Berman, Brad Sherman and Henry Waxman as well as U.S. Sen. Dianne Feinstein and the legislative staff of U.S. Rep. Bill Thomas, chairman of the House Ways and Means Committee. The valuable information being obtained from the VICA survey will help provide these and other elected officials with a strong basis to enable the passage of remedial legislation. As chairman of VICA’s Subcommittee on Runaway Production, I encourage owners of independent production, post-production and ancillary service companies who wish to take part in the VICA survey and have not received a mailing, to complete one on VICA’s website: www.vica.com. Gregory N. Lippe, CPA, is managing partner of the Woodland Hills-based CPA firm of Lever, Lippe, Hellie & Russell LLP, and chairman of the VICA Subcommittee on Runaway Production.

For some time now, brokers in the San Fernando Valley have insisted that, faced with rising real estate prices on the Westside, companies will turn to the Valley as an alternative location for their offices. But it has always sounded more like a sales pitch than a reality. While there has not been any mass exodus to Valley office space, some recent indications suggest that, at the very least, dyed-in-the-wool Westsiders are taking a hard look at real estate over the hill. The latest is restaurant chain Sizzler International Inc., which has just signed a lease to move its corporate headquarters to the office garden in the Sherman Oaks Galleria. The company, currently located in Culver City, will occupy 22,000 square feet in the complex, a mixed-use facility currently under renovation. Sources peg the value of the 10-year lease at $7.5 million. Sizzler officials said they decided to explore a Valley location in an effort to find the most cost-effective solution to their space needs. The company has made its home on the Westside of L.A. since the 1960s. “It was probably, number one, value for the quality of the space,” said Chuck Boppell, president and chief executive officer of Sizzler. “Number two is a large portion of our employees have found the housing values and the schools were attractive on the other side of the hill and this cuts down the commute.” Sizzler employs 60-odd workers at its corporate headquarters, and in recent years a large percentage of them have been Valley residents. Rental rates have come down significantly on the Westside, due in large part to the demise of the dot-com industry. But much of the real estate that has become available is sublease space. “In the last six months, we’re seeing a lot of space come back on the market that’s much more competitive with the Valley, but because it’s sublet, it doesn’t include tenant improvements, so when you net it out, it’s a significantly more expensive proposition to be here (on the Westside),” said Boppell. The Sherman Oaks Galleria, which will include a number of restaurants and shops when it is completed, also offered the kinds of amenities the company was seeking. Sizzler, with sales of about $245 million, operates 350 Sizzler restaurants in the U.S. and other countries, 100 KFC outlets in Australia and 10 Oscar’s units domestically. The company returned to profitability after a restructuring in 1996. Tom Festa, Mike Hobbs and Drew Rifkin, brokers with Grubb & Ellis, represented Sizzler in the deal. A Swedish technology company, Digital Vision, has also decided to make the move from West Los Angeles to the Valley. Digital Vision has signed a lease for 3,390 square feet at 4605 Lankershim Blvd. in North Hollywood. The five-year lease is valued at $400,000. Digital Vision, which provides post-production, telecommunications and digital cinema products, will locate its North American headquarters offices in the new space. Robert D. Erickson with Cushman & Wakefield represented the tenant and the landlord, VDA Property Co. Westlake Sale What better way to celebrate a grand opening than with a sale? Investment Development Services Inc. has sold one of the Westlake North Business Park buildings to a Calabasas-based investment company. The largest of the three buildings in the park, a 137,760-square-foot office facility that houses Homestore.com, sold for $27 million. IDS recently held the ribbon-cutting ceremony for the complex, which is 60 percent leased. The other two buildings are not on the block, a spokesman for IDS said. Kevin Shannon at Grubb & Ellis represented the buyers, Miller Bros. Investments LLC, and the seller. New Tenant at Marquardt Moulton Logistics Management, a fulfillment services firm, has leased 108,000 square foot at Marquardt Industrial Park, the Van Nuys complex being renovated by Trammell Crow Co. Moulton will move its corporate headquarters from North Hollywood. The company, with 230 employees, anticipates expanding its workforce by about 20 percent over the next 12 to 18 months. Moulton moves into a building that was to have been leased to an Internet startup. That company, Enson Inc., abandoned its plans when it failed to launch as a result of the dot-com demise. Baxter Lands in TO Baxter Healthcare Corp. has leased 60,000 square feet at Conejo Spectrum, the Thousand Oaks business park under development by Investment Development Services Inc. Baxter will occupy a portion of a 130,000-square-foot building currently under construction in the complex. The company’s 10-year lease is valued at $5 million. Mark O. Leonard, an independent broker, represented Baxter in the deal. Dan Sibson and Rob Fuelling of IDS, along with John DeGrinis at Colliers Seeley, represented the landlord, Conejo Spectrum Building Associates LLC. Baxter will use the new facility, which it plans to occupy in 2002, for storage. Four Advance in Burbank Burbank city officials have narrowed the list of bidders for the redevelopment of the city’s old police station headquarters to four companies. Slated to make presentations to a subcommittee of the Burbank City Council are: a joint venture between CIM Group and Olson Development, L.A. and Seal Beach; Opus West Corp., L.A.; Trammell Crow Co., L.A.; and Avalon Bay Communities Inc. in Newport Beach. Eliminated were: Urban Residential Partners, L.A.; Chandler Partners in Burbank; Lambert Gangi Development, an L.A.- and Glendale-based partnership; and Southland Cos., Pasadena. The four finalists are expected to complete their presentations in the next few weeks, and a final decision is expected by early September. Burbank hopes to redevelop the 3.2-acre site bordered by Olive Avenue, San Fernando Boulevard, Angeleno Avenue and Third Street for residential and commercial use. Senior reporter Shelly Garcia can be reached at (818) 676-1750, ext. 14 or by e-mail at [email protected].

Guitar Center to Issue More Stock Guitar Center Inc. has filed with the Securities and Exchange Commission to sell up to $100 million in stock. In addition to tightening financial matters, the company plans to allocate the proceeds toward future acquisitions and other general corporate purposes The filing, known as a universal shelf registration statement, or S-3, entitles a company to sell common stock, preferred stock and debt securities from time to time with approval from the SEC. The company said the net proceeds obtained from the shares will be used to repay or refinance obligations under the credit facility and senior notes due 2006. Guitar Center’s move came about a week after the company forecast second-quarter results below estimates. The company said second-quarter net sales totaled $213 million, including $6 million in sales from American Music Group, with net income expected between 17 cents and 18 cents a diluted share. Homestore.com Probe Ends The U.S. Justice Department has halted its investigation into possible anti-competitive business practices by Homestore.com Inc. without taking any action against the Internet’s largest single source of home sale listings. Since April 2000, the agency’s antitrust unit had been investigating the Thousand Oaks-based firm’s business strategy, which includes exclusive contracts with residential property listing services Homestore has secured information on about 1.5 million homes for sale, more than 90 percent of the nation’s real estate listings, largely because of its relationship with the National Assn. of Realtors. Amgen, J & J; Settle Patent Dispute Johnson & Johnson and its licensing partner, Amgen Inc., have settled a long-standing patent dispute with Roche Holding and an American Home Products Corp. unit over their anemia drug, erythropoietin. Financial terms weren’t disclosed. J & J; and Amgen had sued Roche, which sells a version of the drug in Europe called NeoRecormon. Roche licenses the drug from American Home Products’ Genetics Institute Inc. The settlement allows Roche to continue selling its product in Europe. The agreement comes three months after Amgen won a British court ruling that Roche, Aventis SA and Transkaryotic Therapies Inc. had infringed the biotechnology company’s patent. All lawsuits, which were pending in about 30 countries, will be dropped. Thousand Oaks-based Amgen sells the drug as Epogen in the U.S. and J & J; sells it as Procrit in the U.S. and Eprex in Europe. Youbet.com Dodges Delisting The Nasdaq Listing Qualifications Panel has informed Youbet.com Inc. that its common stock will continue to be listed on The Nasdaq National Market. The Woodland Hills company was told May 22 that it failed to comply with minimum bid price requirements, and that its securities were, therefore, subject to delisting. Youbet.com argued its case for continued listing at a hearing on June 21 and was notified recently that Nasdaq would continue listing its common stock. Youbet.com provides network members the ability to watch and, in most states, wager on a wide selection of coast-to-coast thoroughbred and harness horse races via its exclusive closed-loop network. Youbet.com recently formed a strategic relationship with TVG, a wholly owned subsidiary of Gemstar-TV Guide International, Inc. The agreement gives Youbet.com a license to utilize TVG’s patented wagering technology for online and automated telephone applications and the right to video stream and accept online pari-mutuel wagers on horse racing from virtually all of TVG’s exclusive partner racetracks. Verdugo Bank Proposes Stock Split The Verdugo Banking Company’s board of directors has proposed a three-for-one stock split of its common stock. The split is subject to the approval of the California Department of Financial Institutions and the required filings with the California Secretary of State. It is anticipated that the split will become effective in August or September. Oakmont Review Extended Glendale residents will have an extra month to study a revised environmental impact report on the widely debated Oakmont V hillside project. The development calls for up to 572 new homes on the north face of the Verdugo Mountains. Responding to residents’ pleas that the original 45-day review period is not enough time to wade through the 1,000-page report, the Glendale City Council extended the period to 75 days. The city plans to hold a public hearing on the project Aug. 16 in the Glendale High School auditorium.

Valley Stores Recording Modest Increases Over First Half of Last Year Other Valley-based companies may be reporting lower-than-expected earnings for the first two quarters, but local shopping centers and their tenants say retail sales have exceeded comparable 2000 figures and they remain “cautiously optimistic” headed into the second half of the year. Although some retailers are reporting only modest increases over last year at this time as little as 2 percent they will settle for it. Throughout the Valley, increases in sales for the first six months of this year compared to last range from 1.2 percent to as much as 8 percent. The national average as of May 1 is 1.4 percent, according to the U.S. Census Bureau. But the numbers get even higher when you factor in figures from new or newly remodeled stores. So, although other business sectors are suffering and there have been some layoffs in the Valley as a result of the weak economy, the slump has not eroded consumer confidence. And, based on retailers’ expectations for the third and fourth quarters, there is little indication retailers believe shoppers will stop reaching for their wallets. “With the exception of maybe Disney (4,000 workers worldwide have received pink slips since January) and some other companies, there really have not been the kinds of big layoffs here in Southern California or the Valley that we are seeing in the northern part of the state and the rest of the country,” said Jack Kyser, chief economist for the Los Angeles Economic Development Corp. “So yes, there is still a strong level of confidence out there and we are seeing this not only in retail, but also the housing market and with automobile sales.” In addition to retail sales increases, mall representatives say leasing activity for the year so far remains brisk even though some leasing agents may have put a momentary hold on expansion plans. Although second-quarter revenues have not been tallied, comparable store sales figures through the end of May were up 6 percent at the Northridge Fashion Center. Several new stores, including top performers like GAP Body, have opened since January and, according to Joey Char, the mall’s marketing director, plugging in their numbers would push year-to-date figures up 13 percent over last year. “We are having a good year and we are cautiously optimistic that this trend is going to stick with us for the remainder of the year,” said Char. Here’s another indicator: foot traffic. Char said that, through the end of June, 10.7 million people visited the mall, up 11 percent from 9.6 million for the same period in 2000. The mall is projecting a 97-percent occupancy rate through year’s end, up from 93 percent in 2000. At the Sherman Oaks Fashion Square, average comparable store sales were up 1.5 percent over 2000. But those figures do not include sales from high-volume stores such as GAP, which reopened this year as GAP Body, and Coldwater Creek, an apparel and accessory specialty store which opened in June. Several stores are planning openings or expansions by year’s end. Victoria’s Secret is moving from a 4,880-square-foot space to a 9,728-square-foot space. jjill, also an apparel store, will lease out Victoria’s Secret’s old space sometime in late October and jcrew is scheduled to open in August in a 6,000 square-foot space. Fashion Square general manager Ruth Tewalt said, while retailers are doing well amidst the economic slowdown, she has seen indications that some are taking a wait-and-see approach before making expansion plans for 2002. “The read I’m getting from leasing representatives is retailers are feeling cautious, and I think a lot of them are probably sitting tight right now,” said Tewalt. “If the economy really picks up in the third and fourth quarter, they will likely pick up for the next year. But right now you almost need a crystal ball to know what’s going on.” Jackie Fernandez, an analyst with Deloitte and Touche in Los Angles, said consumer confidence may be high, but so is consumer debt. According to the Census Bureau’s report, the percentage of disposable personal income tied up by consumer debt as of June 22 is 21.9 percent, compared to 21.5 percent for the previous year. As a result, increases in consumer spending are equally difficult to predict. “Consumer debt is at an all-time high, so it’s possible that no spending increases will come in the third or fourth quarters,” said Fernandez. Fernandez agreed retailers are showing some signs of holding off on new contracts, particularly prospective anchor store tenants. She also thinks retailers have drawn from their experiences during the last recession of the 1990s and keeping a closer eye on inventories and consumer trends. But she also said that, as bad as the 2000 Christmas shopping season may have been for most retailers, there is plenty of reason for optimism, cautious as it may be. “I’m not sure we are close to the situation we were in during the 1990s, but we are seeing vacancies around anchors and that’s the last thing you want to see happen,” said Hernandez. While many retailers are reporting sales increases over 2000, that doesn’t mean they are immune from factors affecting all businesses, particularly energy costs and higher workers compensation fees. “I’m in full agreement with the retailers here about sales,” said Fred Levine, owner of M. Frederic. “We are up about 11 percent for the first two quarters, and that’s considerable,” said Levine. Four of his 18 stores are in the Valley, but two of them, and his company’s warehouse, are in Southern California Edison country, where they are not only prone to rolling blackouts, but have also been hit by increased electricity bills. So, while sales are up, earnings have been flattened to some degree by increases in overhead. “It’s the price we pay for increased volume, but the fact that it’s keeping us on pace means we are on track and I’m optimistic about the third and fourth quarters,” said Levine. Janine Baker, marketing director for the Westfield Shoppingtown Topanga, said mid-year sales for the center are trending upward although she said the parent company, Australian-based Westfield Holdings, which is publicly traded, won’t release figures for specific facilities. She said promotional campaigns, such as the recent rollout of the Westfield cash card, have helped foot traffic, although it’s hard to be sure since the center does not have a traffic counter. “Obviously, we are being very strategic about promotions, especially as we head into the holidays,” she said. Denise Romance, owner of Jay’s Luggage, at Westfield Topanga since the mid-1980s, said she considered pulling back on advertising this year because of the threat of a full-scale recession. That recession has not materialized so far. Instead she is reporting increases in sales of between 2 and 3 percent, and she recently mailed out an annual holiday catalogue to 350,000 households. She said she even hired additional staff for summer. “When we started hearing about all the doom and gloom we thought maybe we would not do (the catalogue) this year, but we are because we see increases,” said Romance. “It may not seem like a lot, but to me it’s great, and we are heading into the next two quarters feeling very optimistic.” The long-awaited expansion of the Westfield Shoppingtown Promenade just a few blocks away will wrap up this fall. Newcomers include Barnes & Noble Books & Caf & #233;, Chick’s Sporting Goods and Total Woman Gym & Day Spa. “The fact that these retailers are coming in is testimony to the level of confidence they have in our centers and in the economy in general,” said Baker.

Pressed4Time Core Business: Mobile dry cleaning pick-up and delivery service Projected Revenue in 2001: $40,000 Estimated Revenues for 2002: $80,000-plus Employees in 2000: 1 Projected Employees in 2001: Goal: Establish in-house dry cleaning plant; expand corporate client base Driving Force: To provide a service for busy workers An entrepreneur is hoping that extra time is worth a few extra dollars to Valley workers who still need to make sure their clothes are cleaned and pressed If Stuart Weinstein eventually has his way, you’ll never set foot inside a dry cleaner again. Eight months ago, Weinstein took $14,000 in cash and substantial experience in grocery retail sales and management and opened the first San Fernando Valley-based Pressed4Time franchise, a mobile dry cleaning pick-up-and-delivery service that also provides shoe and handbag repair. Weinstein hopes to make life a little easier for those 9-to-5ers who often spend their Saturday mornings running errands they don’t have time for during the workweek. “I once used a service like this myself when I was living on the East Coast and I thought, what a great concept for a business,” said Weinstein. “You give people a great service and, on top of that, give them something back they value most of all: their time.” Weinstein said he investigated other franchise opportunities, but this one was particularly alluring because the licensing fee (about $13,000) was within his budget, and he knew he would be pioneering the Valley-based P4T network. But after start-up fees, marketing costs and the somewhat unexpected expense of a new van for the business, revenues for the first year have not been exactly red hot. He anticipates gross sales for this first year should be around $40,000, but added, “I fully expect to double that in the next year.” “I’ve really spent much of this year slowly setting up the business and carefully mapping out where I wanted to go and who I wanted to target,” said Weinstein. “So, although I may not have brought in what I know I can do, I have managed to do a lot of work establishing myself and I anticipate the business to grow very rapidly beginning my second year.” By the end of the first year in operation, most P4T franchises are pulling in about $12,000 in sales, he said. All Pressed4Time franchises run on a two-day schedule, meaning they visit a company twice a week: once for pick-up, once for delivery. Customers are given their own laundry bags and order forms. Bills are sent with delivery two days later and can either be mailed in or paid on the next scheduled visit. Weinstein so far has no paid employees, but his father, who is retired, is assisting him with sales and marketing. He anticipates hiring his first employee in about six months. While anyone can use the service, corporate clients are a key target market because of the potential core of repeat and word-of-mouth customers. But getting past the gatekeepers is often a challenge as he pounds through Valley office buildings trying to drum up business. “I’m carefully putting together proposals for some big companies in the Valley, like Blue Cross,” said Weinstein. “It can be rough. I get reactions from people when I walk into a businesses that range from complete ‘no, not another salesman’ looks, to people jumping up and down and thanking me for being there.” The first Pressed4Time service was actually based here in the Valley. It was started by a Westlake accountant named Ken Levinson in 1987. In 1991 Kent Issenberg bought the business and the franchise headquarters are now based in Sudbury, Mass. Issenberg said Weinstein may have some minor competition from local dry cleaning businesses that will pick up and deliver on request. But his franchise is primed for rapid growth because, for now, he owns the Valley market. A second Valley-based franchise is set to open by Labor Day. “For the length of the business, he’s been pretty aggressive on the marketing side,” Issenberg said. Of the roughly 85 franchises spread across 32 states, Canada and Australia, only five are in Southern California. Franchisee territories are organized to include roughly 30,000 “white-collar” workers. Weinstein uses the services of a Valley-based dry cleaning plant and a local shoe and handbag repair business. But eventually he’d like to open his own plant where dry cleaning, alterations and repair work are all done under his supervision. “I’d ultimately enjoy and prefer having much more control over the quality of the work we stand by,” said Weinstein. “Although we are providing an excellent quality of service now, I would prefer to be more hands on in the future.” Issenberg said about 15 percent of the franchisees have moved on to own and run their own plants. Before they do however, he said, they must be sure they are ready to take on the additional challenge that goes along with the increase in control. “The complexion of the business changes dramatically once you go into providing your own plant services,” said Issenberg. Brian Millar, a branch client services representative with CharlesSchwab in Woodland Hills, said he and three other co-workers use the service regularly. Millar admitted the prices may be slightly higher than what he pays at the counter of a local dry cleaner, but for the time he saves, and because there is no charge for pick-up or delivery, he says it’s worth every penny. “I’ve used the company for about five months now and I can tell you that they do a very good job,” said Millar. “Stuart and I’ve gotten to know each other very well and he’s running a great business. And, aside from the convenience, anytime I need an alteration or something isn’t right and mistakes do happen sometimes he takes care of it right away.”

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