The San Fernando Valley fell on hard times in the early ’90s. Economic recession led to the closure of many of the Valley’s biggest employers, including the General Motors plant in Van Nuys. Then there was the Northridge earthquake in 1994, which inflicted damage so severe and widespread that some of it still persists today. While the rest of L.A.’s economy boomed this year, the Valley is only now starting to regain its former prosperity. The San Fernando Valley Business Journal asks: Do you think business in the Valley will be better in 1998 than it has been in 1997? Donald Hudson senior vice president Warner Center Properties Woodland Hills That’s an easy call. Our business has been getting better for the last 24 to 30 months and I think that will continue. If 1997 was a good year, ’98 will be great. Other (commercial property) markets in the city are hot and we are benefiting from that. We expect our vacancy rates to fall into single digits in early 1998. As for retail, it is harder for me to say. But across the board, discretionary spending by the people I meet is way up. Frederic Boyer chief financial officer Software Dynamics Inc. Chatsworth I think conditions will continue to improve. It is evidenced by the occupancy rate in industrial and commercial property. It should continue through the millennium. I see a lot of new companies coming in, especially in the 101 Corridor in Westlake Village. I know of three startup companies in four months that have received venture capital. That is going to continue. Companies like it out here because the environment is better and there is a good labor pool. John Merlo president Premier American Federal Credit Union We think it will improve a little bit, but it won’t be dramatic. We will see our own business stay in the same general range as now. We think interest rates will remain low, which will make lending affordable. So real estate should be positive. We are also starting to see a slowing of bankruptcy-related filings. The bankruptcy rate is still high but the growth rate is slowing. We will have a similar year for consumer lending. Vehicle lending will be up about 10 to 12 percent. It reflects that more people are confident enough in the economy to buy cars. Sharon Berman marketing consultant Berbay Corp. Tarzana Overall, things are heating up in the Valley. I would like to think it will continue. People seem to have gotten over the earthquake and are now looking forward. There seem to be fewer empty stores on Ventura Boulevard. Especially here in Tarzana, there have been a lot of new shops and restaurants. It’s taking on quite a trendy feel. Dr. Barry Pascal owner Northridge Pharmacy Northridge I am part of the medical provider market. So we are taking a bad hit because the managed care movement is squeezing the providers so much. So that business is not going to get better. My gift store, on the other hand, it getting better. Our area of the Valley is rebuilding after the earthquake. As apartment buildings are rebuilt and more people move in, I expect all retail activity to pick up. Isaac Starkman chief executive officer Jerry’s Famous Deli Studio City Yes. The overall environment in the Valley is improving. People are coming back. There is more traffic on the street, more people going in and out of the shops. Our numbers have started to improve over the last few months, but I don’t think it will really start to be reflected until 1998 and 1999.

By HILDY MEDINA Staff Reporter San Fernando Valley malls are reporting an unusually early turnout of holiday shoppers this year, and while retailers hope this will translate into robust sales for the season, industry observers aren’t quite as optimistic. “What we’re hearing from consumers is that they’re looking for sales and they’re shopping wiser,” said Greg Tarmin, vice president at American Express’ Retail Marketing Group, which released a survey recently on the upcoming holiday shopping season. According to the American Express Retail Index survey, nearly three in 10 respondents said they had begun their holiday shopping by Oct. 1. That jibes with reports from Valley retailers, many of whom so far are enjoying year-over-year increases. “We saw traffic up (in mid-November). I didn’t expect to see that so early,” said Rachel Mandel, mall director at Sherman Oaks Fashion Square. On Nov. 20, year-to-date sales at Fashion Square were up 6 percent over the same period last year, she added. “We expect this trend to continue for the holiday shopping season,” Mandel said. Other Valley retailers also reported an early rush, and were typically optimistic about the season. “I think there is a certain amount of pent-up demand,” said Lloyd Miller, general manager of the Northridge Fashion Center. “(Sales) have been going positively. We expect that to continue.” While merchants see early holiday shoppers as a positive indicator for the coming season, industry observers say consumers are doing their buying early in order to take advantage of bargains and thus spend less money. According to a Deloitte & Touche LLP survey released last month, national gift spending is expected to average $743, down from $764 last year. Locally, the survey found that Los Angeles consumers plan to spend less than shoppers in most other parts of the country. Nonetheless, the survey found that 90 percent of Southern California retailers expect holiday sales to increase or hold level. And some analysts agree with that assessment, predicting sales in the Valley and throughout L.A. County to rise anywhere from 3 percent to 6 percent over last year. “I think it will be a 5 to 6 percent increase, which is a real good, solid increase,” said Richard Giss, managing partner at Deloitte & Touche. Holiday spending remains vitally important to retailers, in some cases accounting for as much as half of a merchant’s annual sales. Fourth-quarter department-store profits have nevertheless fallen every year since 1992, according to an analysis by BT Alex. Brown & Sons. This could be because a majority of consumers are now making their Christmas purchases at stores offering heavy discounts. Nonetheless, even merchants at high-end stores remain optimistic about the coming season. “We’re very excited about going into our second Christmas season,” said Michael Lindblad, regional vice president for California with Bloomingdale’s. The New York-based chain opened three Southern California stores at this time last year, including one at Sherman Oaks’ Fashion Square. Since opening the Sherman Oaks store, sales have “exceeded expectations,” said Lindblad. “We’re actually looking forward to a strong season here,” said Ken Stephens, marketing director for The Promenade at Woodland Hills. Part of the strategy for Valley malls is to open a varied assortment of temporary retailers for the holidays. The retailers, primarily specialty stores, move in on a month-to-month basis through specialty leasing programs. “It’s brought in some very interesting new retail that we feel will be giving consumers a good selection this year,” said Stephens. At Northridge Fashion Center, Hickory Farms and V Mail, a computer gift store, will be moving in for the month of December. And at Fashion Square Sherman Oaks, the mall will feature toy and game retailer The Game Keeper and a music, clothing and accessories shop called Ultra Lounge. Both opened the day after Thanksgiving. Temporary stores like these are “a very important component for the mall’s rental stream,” said John Konarski III, director of research at the International Council of Shopping Centers. “They also provide a lot of holiday excitement to the mall … consumers love that variety.”

By JOYZELLE DAVIS Staff Reporter Valley Crest has re-sodded stadiums, landscaped entire communities and even planted the Las Vegas strip with 1,300 palm trees. But its most challenging project could be a two-acre azalea garden just a short drive from the company’s Calabasas headquarters. It’s not just any garden it’s a concentric maze of red and pink flowering plants floating in a reflecting pool at the new Getty Center in Brentwood. “It’s a work of art,” said Valley Crest owner Burton Sperber. “That garden is going to be as beautiful and astounding as the billion-dollar buildings that surround it.” The azalea pool is just a portion of the center’s 130 acres of landscaped grounds, where Valley Crest’s seven-year, $10 million contract also calls for installation of elaborate irrigation systems and the planting of several thousand trees. Sperber is quick to point out that Valley Crest did not design the Getty Center’s gardens (L.A. environmental artist Robert Irwin did). “We’re just builders,” he said. “We’re not designers; we’re implementers.” Sperber notes that the garden’s “pristine, structured” appearance is by careful design. In 1993, Valley Crest prepared a 154-page document that broke the job site into 56 individual planting sequences. It’s a complicated process, but Valley Crest, the nation’s largest landscape and site construction firm, is accustomed to implementing landscape designs on a grand scale. Sperber started the company in 1949 when he bought a retail nursery and residential landscape company in North Hollywood for $250. Today, closely held Valley Crest has nine regional offices and projected 1997 revenues of $300 million. Its operations include gas-recovery systems, golf course development and maintenance, and providing and decorating Christmas trees for corporate clients. Some of its major jobs have included the indoor landscaping of the Denver International Airport, constructing the “Africa” and “Asia” sections of the new Animal Kingdom attraction at Disney World in Florida and installing the artificial turf on the playing field of Texas Stadium. Several recent contracts have been closer to home. Along with the Getty Center contract, Valley Crest is about to begin a 10-month, $19.2-million project for Phase II of its Queensway Bay Rainbow Harbor project, a seaside entertainment and retail development in Long Beach. Unlike many landscape companies, Valley Crest does not subcontract its labor. It maintains a staff of 4,700 who can provide everything from initial proprietary estimates through long-term maintenance. That vertically integrated approach gives Valley Crest an advantage in getting contracts like the Getty. “It’s easier to coordinate when you have one company that controls all the aspects,” said Kip Drabeck of Dinwiddie Construction, who is on-site manager at the Getty Center. “It’s more efficient than having to send out for numerous, small contracts.” The Getty’s 134,000-square-foot Central Garden, which cradles the azalea pool, is designed to be the visual centerpiece of all the landscaped terraces. The garden begins with a walkway that traverses a creek flowing from a cut-stone grotto that gradually descends into a plaza planted with bougainvillea arbors. The stream ends in a cascade of water into a central reflecting pool. Within the pool is a series of concentric, circular planters resembling Native American designs, filled with azaleas to create the illusion of a floating hedge. The azaleas had been growing in full-scale mockup at the Getty Villa in Malibu for the past four years in order to fit into the environmental artist’s design. Valley Crest’s involvement with the Getty began in 1990, when it relocated existing oak trees out of the way of construction and performed erosion control planting and slope repair work. About 50 percent of Valley Crest’s work has involved the planting of the slope areas of the site, which have been reforested with 8,000 native oaks and 1,800 other trees, including eucalyptus, citrus and jacaranda. Valley Crest has shared the landscaping work with Canoga Park-based American Landscape Inc. The company is largely a family affair: Burt Sperber, 68, is president and chief executive of the parent company; his son, Richard, is president of the landscape construction division; his brother, Stuart, is president of the nursery; and Bruce Wilson, who is not related to Sperber, is president of the maintenance division. Sperber said he intends to stay at the helm of his company “until my head falls on the desk.” “We pretty much do exactly the same thing we did when we started 48 years ago,” Sperber said. “We just do more of it.”

Traffic Solutions A recent Southern California Association of Governments report predicted that commuting in the Southland will get worse as the population increases. However, the emphasis on traffic counts along specific sections of freeway and at key interchanges overlooks how commuters adapt to changing conditions. The report argues that in 2020, a commute from Chino to downtown L.A. will be much longer than it is today but it is likely that fewer people will choose to make that commute. Keep in mind that the growth in employment between 1980 and today was similar to that projected in the SCAG report, but average commute times in the Southland have remained static at 21 to 22 minutes. Why? Because people have moved closer to their jobs, or taken jobs closer to where they live. None of this is to say that most of the SCAG report’s recommendations are not a good idea. Expanding mobility will expand the choices commuters have in where to live and work. Additional toll roads make a lot of sense, as well as allowing single-occupancy vehicles to pay a toll to use existing HOV lanes. Those who are worried about the equity of toll lanes should look at the data from the SR91 lanes that shows all income groups are using and benefiting from the toll lanes. And, a recent Reason Public Policy Institute study has demonstrated that busways have tremendous potential to improve mobility, and have been successful in Houston, Ottawa and other cities. ADRIAN MOORE Director of Economic Studies Reason Public Policy Insititute Los Angeles

Advertising Stuart Smith has been named chief financial officer and chief operations officer at Van Nuys-based J.J. Grace Inc. In this newly created position, Smith will be responsible for the company’s finances and oversee day-to-day operations. He previously served as plant manager at Poster Display Inc. Banking & Finance Priscilla B. Hoffer has been promoted to senior vice president at Glendale-based Glendale Federal Bank. Hoffer will serve as manager of the bank’s Project Office of Technology Services, and will be responsible for implementation and management of strategic technology. She previously served as vice president and technical service program manager. Entertainment Richard Wolpert has been promoted to executive vice president of Burbank-based Disney Online. Wolpert will be responsible for content development, production and technology. He previously was senior vice president of technology. Greg Probert has been promoted to executive vice president of Burbank-based Buena Vista Home Entertainment Worldwide. Some of Probert’s responsibilities will include worldwide finance, manufacturing and distribution, and administration. He previously was senior vice president and managing director of Buena Vista Home Entertainment Asia. Bill Simon has been named chief accounting officer at Burbank-based Dick Clark Productions Inc. In addition to his duties in his new position, Simon will continue to serve as treasurer and controller of the company. He was named controller in 1996, and treasurer earlier this year. Tony Cruz has been named vice president of project development at Burbank-based BRC Imagination Arts. Cruz will be responsible for overseeing the company’s marketing, promotion and public relations activities. He previously was president and general manager at Jack Morton Co. Angie Diehl Jacobs has been named vice president of marketing, Universal Concerts, at Universal Music Group. Diehl Jacobs will oversee the company’s marketing operations in North America, and will be responsible for advertising, promotion and publicity in the Los Angeles market for Universal Amphitheatre in Universal City. She previously served as a director of marketing at Blockbuster/Pace Concerts. Paul Santos has been named national director of marketing and sales at Hip-O Records, a division of Universal City-based Universal Music Group. Santos will oversee advertising, retail marketing and creative services. He previously was national director of sales and field marketing at Concord Records. Burbank-based Disney TeleVentures has promoted three vice presidents to the position of senior vice president. Diana Ritchie will oversee new media development, Maureen Whalen will oversee legal affairs and Barry Cottle will oversee marketing. Health Care Robert P. White has joined Woodland Hills-based Health Net as executive vice president. White will oversee the merger integration of Health Net and Foundation Health, and will manage several Health Net and Foundation Health operations including Medi-Cal, Information Systems and Provider Services. He previously was president and CEO of CareAmerica Health Plans. Nancy L. Gaymon has been promoted to vice president of human resources at Woodland Hills-based Litton Industries Inc. Gaymon will oversee the human resource functions of Litton’s 24 departments on a consulting basis. She previously was director of human resources. Woodland Hills-based WellPoint Health Networks Inc. has announced the appointment of three new executives. Barbara McNamara has been promoted to vice president of employment and employee relations. In her newly created position, McNamara will be responsible for development and implementation of corporate-wide human resources policies and practices. Louise McCrary has been promoted to senior vice president from vice president, and will continue to serve as chief accounting officer and controller. Some of McCrary’s responsibilities will include financial reporting, accounting operations and corporate accounting. Carol J. Burt has been named senior vice president of finance and treasury. Burt will oversee the company’s funds and financial assets. She previously was senior vice president of finance and treasury at American Response Inc. Cheryl Pope has been named regional vice president of the Los Angeles sales office of Woodland Hills-based Blue Cross of California. Pope will oversee development of sales and marketing strategies designed to boost market share. She previously served as senior vice president of health care delivery systems at Prudential Healthcare. Woodland Hills-based Health Net has promoted Joseph E. Smith to vice president of special accounts, Southern California. Smith previously served as director of special accounts underwriting. High Tech Isaac Kerlow has been promoted to director of digital talent at Burbank-based Walt Disney Co. Kerlow will work with all Disney business units on talent development and training, recruitment activities and internship programs to expand and improve digital talent. He previously was vice president of creative resources. Sylmar-based Spectrolab Inc. has announced two senior-level promotions. Jerry R. Kukulka has been promoted to vice president of operations. Kukulka will oversee activities for improved operational performance. He previously was engineering manager. Paul K. Ballew has been promoted to chief financial officer. Ballew will oversee all financial operational and planning activities. He previously was financial controller. Gordon L. Almquist has been named chief financial officer at Chatsworth-based ChatCom Inc. Almquist will oversee the company’s financial matters. He previously served as vice president of finance and chief financial officer at 3D Systems Corp. Real Estate Dan Verdin has been named sales manager in the Tarzana office of Fred Sands Realtors. Verdin will oversee operations of the Tarzana office. He previously served as senior director of the Sands Group, a division of the company.

FINANCIAL PERSPECTIVE: INCENTIVE STOCK OPTIONS LOSE WITH NEW TAX LAW! By Alan Ungar For anybody who has Incentive Stock Options, the law of unintended consequences certainly reared its ugly head when Congress lowered the Capital Gains rate to 20% from 28%. The problem is that anybody who exercises ISO’s and holds on to them for 18 months still pays 28% instead of 20% capital gains. Ken’s case illustrates the problem. He works for a high tech firm and some time ago was granted options on 16,000 shares at 37 cents. His goal is to diversify his portfolio so that his total wealth is not with one company. He wants to do it in the most cash efficient and tax efficient way he can. Table 1 illustrates his problem. Description Old Law New Law Amount of Tax Preference $354,080 $354,080 Alternative minimum tax at 28% 99,142 99,142 Capital Gains Tax Due at Time of Sale 99,142 70,816 Tax Offset (Max Minimum Tax Credit Allowed) 99,142 70,816 Tax “Overpaid” $ 0 $ 28,324 In English, at the time you exercise a stock option it is subject to an Alternative Minimum Tax of 28% on the difference between the exercise price and the market price at the time of exercise. Under old law, that total amount was fully credited. Under new law, the full amount of AMT is not credited, so Ken pays at 28%, not 20%. Should he sell the stock immediately and pay the higher ordinary income tax? From a tax standpoint the answer is definitely no. On the other hand, he has to finance the AMT and he wants very much not to be so vulnerable by holding just one stock. The answer would be a no-brainer if he paid 20% capital gains instead of 28%. But, he should not be faced with this dillema in the first place. The problem needs to be fixed! And it can be! The solution is easy! The problem has surfaced because there is a flaw on IRS form 8801 and because the AMT rate is 28% instead of 20%. To fix it, the IRS has to change its instructions on line 2 of form 8801 so that a negative number on line 9 of the prior year is picked up—or in the Technical Corrections act, the rate of AMT is changed to 20% from 28%. Getting the powers that be to make this fix is not so easy. When we talked to the Ways and Means committee the answer was,”that is a forms problem you need to call the IRS.” NOT! This is an American problem! ISO’s have contributed immensely to our productivity. This incentive needs to be encouraged not discouraged! After peeling ourselves off the wall and restoring our equanimity, we asked “So who do we call at the IRS?” “Don’t ask me,” said the bureaucrat!” Gag us with a spoon! So we decided not to ask him. Instead we called Brad Sherman, our congressman and Brad’s people got on it right away. However, more pressure needs to be applied,the old “the squeaky wheel gets the grease” maxim holds. You can help by contacting your congressman or writing to Chairman of the Ways and Means Committee, Bill Archer, 1236 LHOB Washington D.C. 20515,or Fax him at 202 225 4381. Just ask him to make the changes talked about above. There is a deeper question. Why should ISO’s be subject to the Alternative Minimum Tax? What happens if the stock price goes down after exercise? Taxes for anticipated profits have been paid in advance and those profits are not forthcoming. Why should tax payers have to finance their AMT create “opportunity” losses because the taxes are paid with money that could have been invested? ISO’s should not be subject to Alternative Minimum Tax,and you can help get this changed too! Just call or write those same congressmen and tell them what you think. Your actions will very definitely make a difference. In the meantime, be careful about exercising those stock options! Alan B. Ungar is President of Financial Counsel, a fee-based Financial Planning and Investment Management firm in Calabasas. He is Co-Chair of VICA’s Federal Issues committee and is the Valley chair for the Concord Coalition.

By JASON BOOTH Staff Reporter In the four months since Great Western Financial Corp. was bought by Washington Mutual, 387 employees at Great Western’s Chatsworth headquarters campus have been handed pink slips. But Great Western’s new bosses are insisting that they are moving cautiously with respect to future cuts, seeking to avoid the kind of rapid staff cutting that occurred following Wells Fargo & Co.’s acquisition of First Interstate a year earlier. While the first 220 jobs cut in July and August were all among Great Western’s senior-level executives, the latest 167 cuts were spread across nearly all levels of the company, said Great Western spokesman Tim McGarry. Hardest hit last month was the data-processing department, from which 22 positions were cut. Despite the cuts, Washington Mutual says it intends to retain the Great Western nameplate in California and Florida and could eventually expand the franchise by merging it with American Savings, which Washington Mutual purchased in December 1996. With regard to the ongoing job cuts, McGarry said: “It’s being decided on the ground, with each business manager making recommendations on the cuts. The primary reason is duplication of services due to the merger.” Analysts and officials with Washinton Mutual agree that the bank is making efforts to ingratiate itself with Great Western employees, even those about to lose their jobs. “Washington Mutual is going out of its way to communicate as well as it can with Great Western employees. They don’t want to make the same mistakes Wells Fargo did with First Interstate,” said Charlotte Chamberlain, banking analyst at Jefferies & Co. Heavy-handed layoffs by Wells not only prompted other First Interstate employees to jump ship, it compelled thousands of account holders to shift their business to other banks, analysts say. Washington Mutual does not want to replicate that scenario. “They are coming in here and doing these things very carefully. The feeling is that doing it right is more important than doing it rapidly,” McGarry said. To soften the pain of job losses, employees receiving pink slips are getting severance packages granting them their regular pay for six months to 18 months after separation. If there has been a complaint by employees, it is that the downsizing is going too slowly, creating a companywide sense of uncertainty. “It’s not an easy experience for people here, especially for those who don’t know their fate,” McGarry said. He said the hard-fought battle between Washington Mutual and H.F. Ahmanson & Co. over acquiring Great Western is partially to blame. “Because the takeover fight was so intensive, they (Washington Mutual) couldn’t make too many plans,” he said. As part of a damage-control campaign, Washington Mutual’s Chairman and Chief Executive Kerry Killinger has been touring Great Western facilities to meet and speak with employees. Washington Mutual has said it might close as many as 100 branches of Great Western and American Savings out of a total of 416. The closures will be made among branches of the two franchises that are within close proximity of each other, McGarry said. An announcement on closures will be made early this month, while a clearer picture of the long-term staffing situation at the Valley headquarters campus should be available by the end of the year, he said. While conceding that the total number of positions eliminated through the closures will probably exceed the job cuts seen so far, McGarry stressed that staff attrition should minimize the need for layoffs by the time they are carried out next year. With all those newly vacant offices at Great Western’s sprawling 15-building campus in Northridge and Chatsworth, questions are being raised about the future of the facility. The 10-story tower that dominates the local skyline still bears the Great Western nameplate and there are no plans to remove it any time soon, McGarry said. He did not rule out the possibility, however, that other tenants might lease part of the headquarters campus property in the months to come. And with the bulk of the job cuts hitting senior staff, most of vacancies are in the tower’s executive offices. Any tenant renting such premier space may well want its name on the tower. Real estate agents say Great Western is still in the process of evaluating how much property it will eventually put on the market. There is also the possibility that the layoffs will in time be offset by new hires in other functional areas due to improved business performance. According to Washington Mutual, Great Western has seen a net increase of 25,000 accounts since it began offering free checking at the start of October. Analysts concur with the numbers. “Washington Mutual is excellent at marketing. They have done well in generating new accounts in Washington and I’m sure they will do well in Los Angeles,” said Joe Morford at Alex. Brown & Associates in San Francisco.

By DANIEL TAUB Staff Reporter It’s certainly attention-getting: The 1984 Ford Thunderbird parked in front of Jammin’ Jersey Music & Pro Audio is painted windows and all to resemble a cow. But there’s more to the store’s marketing approach than “Cowbird” as Jammin’ Jersey owner Mark Leonard calls the car. The store’s logo is a cartoon cow wearing shades and playing a Fender electric guitar. In an increasingly competitive market, where long-time establishments like Nadine’s Music are shutting their doors and retailers like Guitar Center Inc. dominate the scene, the owners of Jammin’ Jersey know how important it is to market their store. “You sort of have to see yourself as an underdog to push for more growth and success,” Leonard said. “We are comfortable seeing ourselves as underdogs.” In 1992, Jammin’ Jersey’s first full year of business, the Reseda store had $175,000 in sales. Last year, the store which has since moved to Northridge had $400,000 in sales, and Leonard expects this year’s number to be around $460,000. Jammin’ Jersey sells a wide variety of supplies for musicians everything from recording and mixing equipment costing thousands of dollars, to guitar picks costing pocket change. The store also sells acoustic and electric guitars, drum sets, equipment stands, instructional videos, and books featuring sheet music from such groups as Alice in Chains, the Beatles, Elmore James, Meatloaf, Megadeth, Weird “Al” Yankovic and others. The store also repairs and rents out music equipment including a transparent red drum set that was used in a photo shoot for defunct Seattle band Nirvana. Combined, repairs and rentals account for less than 10 percent of the store’s revenues. Duane Waider, a drummer who plays in local bands Bob’s Your Uncle and the Brian Brothers, said he prefers Jammin’ Jersey to other retailers “because it’s more personal and I’ve known Mark for years. (The equipment is) here and he makes you a great deal.” Leonard, 45, a former sound engineer who worked with ’70s Bay area band Spirit and ’80s glam rockers Ratt, did not originally intend to open a music store. In 1988, he opened Target Studios in Reseda. At the time in the Guns ‘n’ Roses-era of Los Angeles rock aspiring rockers from across the country were heading west to start bands, and rehearsal studios were in demand. Leonard opened Target with 10 rehearsal studios, and even had plans to add a recording studio. But in 1990, he started seeing a slowdown in business; musicians were coming in to practice once a week rather than several times a week, and were having a harder time paying their bills. “Every month we could see that business was slowing down,” Leonard said. So Leonard converted his largest rehearsal studio into an accessory store, selling drumheads, drumsticks, guitar strings and used sound equipment. “To this day, that’s sort of what our core business is,” Leonard said. The store started doing better than the rehearsal studios, So Leonard devoted more and more space to it. By 1992, the store encompassed four former studios and had 2,500 square feet of floor space. But the location, on Canby Avenue off Sherman Way, was difficult for new customers to find, and Leonard started looking for a new location. On April 29, 1996, Jammin’ Jersey moved into a 4,500-square-foot building in Northridge that Leonard bought earlier in the year. Leonard said he survives in a market dominated by the Guitar Center, which went public earlier this year, by selling products the large chain either doesn’t sell or doesn’t emphasize: Hohner guitars, Ludwig drums, used guitars and such accessories as guitar strings and distortion pedals. “You don’t want to get in a hand-to-hand combat with (Guitar Center),” he said. “You present yourselves as an alternative to them.” But Leonard added that Guitar Center is not his real competition. Rather, it is non-music, recreation-oriented stores that appeal to men in their 30s, 40s and 50s who have disposable income and time for recreation a group that accounts for about 80 percent of his customers, he said. “Our competition isn’t necessarily other music stores,” Leonard said. “It’s Roger Dunn Golf Shops. It’s Sportmarts. Anything going for disposable income is our competition, not just other music stores.” Spotlight Jammin’ Jersey Music & Pro Audio Year Founded: 1991 Core Business: Selling, repairing and renting music instruments and equipment Top Executive: Mark Leonard, owner and operator Sales in 1992: $175,000 Sales in 1996: $400,000 Employees in 1992: 3 Employees in 1997: 4 Goal: To survive in a competitive, non-growth market Driving Force: A preference among musicians to buy and rent equipment from a personal-touch retailer rather than a mass-market retailer.

Banking/Finance George Sladoje has been named executive vice president at Alhambra-based California Power Exchange. Sladoje will oversee marketing, trading and scheduling operations. He previously was executive vice president at the Chicago Stock Exchange. Calabasas-based Countrywide Home Loans Inc. has made two appointments in its Correspondent Lending division. Doug Jones has been named executive vice president. Jones will oversee the entire division and will work to expand the product base to move the equity, subprime and expanded criteria forward. He previously was chief executive officer at Cub Funding Corp. Ed Young has been named senior vice president. Young will oversee national sales at Countrywide’s regional operation centers. He previously worked at Prism Mortgage in Chicago. Richard Wilkinson has been named vice president and director of cash management services at Agoura Hills-based Charter Pacific Bank. Wilkinson will oversee development and maintenance of the bank’s cash management products. He previously was vice president and cashier at Trans World Bank. Malcolm T. Hill has been named managing director of sales at Santa Monica-based Barrister Executive Suites Inc. Hill will oversee broker relations and leasing for Woodland Hills, Sherman Oaks, Glendale, Pasadena and Encino suite locations. He previously was managing director of office properties at Charles Dunn Co. Ariel Remler has joined Glendale Federal Bank as communications and regional public relations consultant. Remler will communicate to the local media about products, services and events surrounding the company’s regional branches. She previously was public relations manager at Chatsworth-based Great Western Financial Corp. Entertainment Scott Roth has been named executive director at the Studio City-based Society of Motion Picture and Television Art Directors Local 876. Roth will be responsible for enhancing employment opportunities for the union’s members. He previously ran his own labor law practice. Burbank-based Warner Bros. has promoted two marketing executives. Fiona Watts has been named vice president of international publicity. Watts will oversee publicity campaigns for all motion pictures distributed internationally by the studio. She previously was vice president of European publicity. Juliana Olinka has been named vice president of international promotions. Olinka will oversee the strategy and execution of various aspects of Warner Bros.’ promotional tie-in campaigns for its motion pictures distributed overseas. Olivia Cohen-Cutler has been named vice president of business affairs at Burbank-based Walt Disney Television. Cohen-Cutler will be responsible for overall negotiation of deals and above-the-line deals for network development and production. She previously was vice president of labor relations, West Coast at ABC Inc. Sylvia Krask has been promoted to vice president of music business and legal affairs at Burbank-based Walt Disney Pictures and Television. Krask will negotiate soundtrack-album agreements and talent contracts for recording artists, songwriters, record producers and composers for the company’s motion pictures. She previously was director of music business and legal affairs. Tom McGovern has been promoted to senior vice president at Burbank-based Warner Bros. Studio Stores International. McGovern will oversee business development, store operations, real estate and marketing. He previously was vice president of operations for the division. Mel Bilbo has been named vice president and general manager at DisneyQuest. Bilbo will oversee operations of the company’s new interactive entertainment attractions, which are scheduled to open soon in several major domestic and international cities. He previously was corporate vice president of operations at Busch Entertainment Corp. James M. Horowitz has been promoted to vice president of business affairs at Universal City-based Universal Pictures. Horowitz will negotiate above-the-line talent agreements, and handle the daily business affairs for Image Entertainment, Jersey Films and Jonathan Demme. He previously was director of business affairs. Health Care Cora M. Tellez has been named president of Prudential HealthCare’s Western division. Tellez will be oversee the company’s health plan operations in California, Colorado, Utah and Arizona. She previously served as senior vice president and regional chief executive of the Bay region at Blue Shield of California. She will be based in Woodland Hills. Robert P. White has joined Woodland Hills-based Health Net as executive vice president. White will oversee the merger integration of Health Net and Foundation Health, and will manage several Health Net and Foundation Health operations including Medi-Cal, information systems and provider services. He previously was president and chief executive officer of CareAmerica Health Plans. High Tech Nancy L. Gaymon has been promoted to vice president of human resources at Woodland Hills-based Litton Industries Inc. Gaymon will oversee the human resources functions of Litton’s 24 departments, managing employee training, human resource policies and employee relations. She previously was director of human resources.

HOW TO CUT COSTS WITHOUT CUTTING PEOPLE By Todd Gavin The way most companies deal with cost-cutting is to fire people. But there are alternatives. One that’s very effective, though usually ignored, is attacking discretionary overhead costs. Much of what organizations think of as fixed overhead is actually variable. Overlooked Overhead Going into an organization, we look for non-people ways to cut costs. We’ve come up with a checklist of dozens of ways to do that. They include: printing, business forms, office products, maintenance contracts, Federal Express, and office coffee service. These are some of the overhead areas that few firms look at. I just worked with a bank in New York that has 14 branches. They buy the regular #10 envelopes all the time. Each branch bought its own envelopes any time it wanted. They would order individually whatever they needed – 5,000 or 15,000 – depending on the branch. Simply by requiring these branches to all order in one coordinated effort at one time, the cost dropped by 40 percent. Another example: a credit union we worked with did a lot of photo- copying. They should’ve used printing. It’s cheaper, looks better, and doesn’t wear out your photocopying machine. They were using more than 60 different forms. They photocopied one form more than 200,000 times in one year. By printing instead, we saved them $8,000 a year on their photocopying costs alone. We worked with a bank with 20 branches that ordered 30,000 calendars each year. The calendars were competitively priced, but we discovered that freight charges were $4,000 (calendars were being shipped to each branch). By sending all the calendars to the bank’s headquarters and allowing the bank’s own couriers to make the branch deliveries, we reduced their shipping costs to $1,000, saving them $3,000. Employees Take Ownership To get people to care about saving on overhead, you’ve got to get them to spend the company’s money as if it were their own. A strong incen- tive is an executive compensation plan. For example, a financial institution in Queens, NY, with 18 branches, has a plan based on executive performance. People are rewarded for cutting overhead expenses, costs not tied to interest-sensitive earnings or firing people. If you don’t have such a compensation plan, you’re overlooking a good chance to reduce costs. Procurement Procedures One of the first things we provide to a company is a Procurement Procedures and Policy Manual. What goes on in purchasing needs to be codified. Purchasing agents are often not trained. In fact, in most organizations, there’s no single purchaser. Buying office supplies is handled by a secretary. Someone else buys bolts and wire. A Procurement Manual guides whomever does the buying through the maze or purchasing issues: * Where’s the buying authority? * What’s the annual bid policy? * Who’s watching freight costs? * Who takes care of inventory? * How do you negotiate maintenance contracts? * How do you do an 80-20 analysis? 80-20 Analysis We always recommend an 80-20 analysis. You take the invoices of everything bought and separate out the 20 percent that represents 80 percent of the purchases. Put that out for bid every year and you’ll knock your annual costs down 25 to 40 percent. Todd Gavin is a Valley-based financial analyst.