February 10, 1993

U.N. Chief Backs Bosnia Plan The United Nations Secretary General backed a peace proposal for Bosnia and Herzegovina, and differed with President Clinton. Page A7. Gay Russians and Fears After decades of persecution, homosexuals in Russia are emerging into the open, even though they say they continue to feel threatened. Page A3. On Patrol in Woodstock Why is a decorated big-city police officer now chief in a small town that chafes at authority? Page B1.

Swallowing $5.48 billion worth of restructuring charges, accounting changes and extraordinary insurance claims, Sears, Roebuck & Company yesterday reported a $1.8 billion loss for the fourth quarter and a $3.9 billion loss for the year. Sears had forewarned Wall Street that its 1992 financial statements would be awash in red ink, so few were surprised at the results. Sears stock fell only 12.5 cents a share on the New York Stock Exchange yesterday, closing at $49.375. Factors Cited in Losses Among the factors causing the losses was a $1.65 billion loss at the Allstate Insurance unit, which was battered by Hurricane Andrew and other natural disasters; a $1.72 billion charge against earnings at the the merchandising group, which announced plans last month to close its catalogue operations, shutter 113 stores and eliminate 50,000 jobs, and a $1.87 billion noncash charge to adopt new accounting methods for the cost of employee retirement and other benefits.

In the first transaction of its kind, a telephone company has acquired a cable television system, signaling the start of a race between the two industries to dominate the delivery of communication services of all kinds to the home. Both industries want to use their elaborate networks to provide movies on demand, hundreds of channels of television programming and on-line electronic libraries. And advances in technologies, blurring the distinctions between what the two industries can do, have set off a Darwinian contest.

President Clinton, saying he wanted a "leaner but more effective" White House, announced today that he was keeping a campaign promise to trim his staff by 25 percent. His cuts will save $10 million, a 5 percent reduction in White House costs, and fall most heavily on the staff's lowest paid employees, who do not hold political posts. The cut of 350 jobs allowed Mr. Clinton to achieve the 25 percent rate because he exempted hundreds of military communications personnel at to the White House, as well as the Trade Representative's Office and the Office of Management and Budget. Both offices are part of the executive office of the President.

With the fate of Schools Chancellor Joseph A. Fernandez hanging in the balance yesterday, his supporters and opponents waged a last-minute campaign through public demonstrations and private persuasion to influence votes on the New York City Board of Education. Mayor David N. Dinkins declared at a news conference at City Hall that Mr. Fernandez was one of the "best educators in the country" but then acknowledged that in the face of mounting opposition to the Chancellor, the administration was now asking only for a one-year extension of Mr. Fernandez's contract.

THIS Sunday, some sweethearts will open heart-shaped boxes of chocolates, pick one, take a bite and taste -- not caramel, cordial cherry or raspberry cream, but curry. Or Earl Grey tea. Or black pepper. This is not a lover's prank but an example of freewheeling, unexpected flavoring. Ice cream, cakes, tarts and hot chocolate drinks are also being flavored with surprising herbs and spices. Some chefs are even anointing savory dishes like duck and lobster with hints of vanilla and chocolate.

Companies A telephone company acquired a cable television system for the first time, starting a race by the two industries to dominate home communication services. Southwestern Bell will pay $650 million to Hauser Communications for two systems. [ Page A1. ] NBC settled a defamation lawsuit brought by General Motors. The network apologized on the air for an improper "demonstration" of how G.M. pickup trucks caught fire in crashes. [ A1. ]

In an extraordinary public confession, NBC acknowledged last night that it had erred in broadcasting a report that purported to show a General Motors truck bursting into flame as a result of a collision. On Monday, the General Motors Corporation sued the network over the report, which was broadcast in November on "Dateline NBC," saying the report was defamatory because "sparking devices" were used.

In what would be one of the largest leveraged buyouts so far this decade, a unit of the Blackstone Group, an American investment bank, said yesterday that it and a Montreal-based group were seeking to acquire Univa, the second-largest supermarket chain in Canada, for about $1.25 billion in cash and debt. Blackstone Capital Partners L.P. and Unigesco Inc., the Montreal group, are the principals in the transaction. Blackstone Capital is a New York-based investment fund. Unigesco is Univa's largest shareholder, with a 26 percent stake.

NEW YORK CITY BATTLE RAGES OVER FERNANDEZ With the fate of Schools Chancellor Fernandez hanging in the balance, his supporters and opponents waged a last-minute campaign through public demonstrations and private persuasion to influence votes on the Board of Education. A1. DINKINS CRITICIZES STEIN ON MAILING Mayor Dinkins criticized City Council President Stein after Mr. Stein acknowledged that his campaign organization had mailed an anonymous pamphlet to gay-rights advocates attacking the Mayor's record. Mr. Dinkins asserted that when the two men ran against each other for Manhattan Borough President in 1981, Mr. Stein also sent out campaign literature without his name attached to it. Mr. Stein defended his actions in both cases. B3. TRUMP TOWER, TIFFANY'S AND BUGS BUNNY The long-vacant fourth corner of New York's retail epicenter -- Fifth Avenue and 57th Street -- has been leased to an incongruous newcomer: the Warner Bros. Studio Store, which will brim with Tweety Bird sequined jackets, Daffy Duck golf balls and other products. B3. POST SUITOR'S FINANCIAL ARRANGEMENT If S.E.C. allegations are true, Towers Financial, whose chairman wants to take over The New York Post, may resemble a classic Ponzi scheme, in which initial investors are paid with the proceeds from subsequent investors. Business Day, page D8. Prospective Post owner accused by former employee of being prejudiced. B4. Letterman producers say they will stay in New York if some questions can be resolved. C15. REGION SURVIVAL IN CONNECTICUT Connecticut is home to an estimated 1,800 to 3,100 military contractors and subcontractors, and all are struggling to figure out how to survive the end of the cold war. Many will shrink; some will disappear, unable to find a new niche. Dozens have already perished. Every company has its own strategy for survival. B6. HARSH WORDS IN GLEN RIDGE CASE A defense lawyer sharply criticized the mother of the mildly retarded woman at the center of the Glen Ridge sex assault trial, contending that she was partly to blame for the sexual encounter that led to the trial of four former high school football players. B8. FLORIO'S AGENDA, BUDGET AND OTHERWISE In a year in which both he and all 120 members of the State Legislature face re-election, Governor Florio used much of his annual budget address to trumpet the successes of his first term in office and to set the platform on which he is expected to seek a second term. B8. COURT TO HEAR ROOSEVELT RACEWAY CASE After almost six years of controversy, a Federal court will hear claims that the owners of Roosevelt Raceway engaged in fraud when they obtained tax-free bonds to buy the property. B8. DEATH SENTENCE UPHELD IN NEW JERSEY For only the third time in 34 opinions, the New Jersey Supreme Court has upheld a death sentence under the state's death penalty statute. B8. About New York by Michael T. Kaufman B3 Neediest Cases B4 Chronicle B9

New York City Councilman Noach Dear has agreed to repay more than $37,000 to a private foundation that paid for expenses like telephones in his home and trips abroad by his children, under a civil settlement announced yesterday by Robert Abrams, the New York Attorney General. Richard Barr, a spokesman for Mr. Abrams, said yesterday that Mr. Dear, a conservative Brooklyn Democrat elected in 1982, broke laws governing charities when he used money from a foundation he helped create to pay for expenses ranging from calls from his car phone to a plane ticket for his wife. Mr. Dear set up the foundation to assist Jews in the Soviet Union. No Criminal Charges In a news conference yesterday, Mr. Dear played down the civil settlement, emphasizing that the investigation had not resulted in criminal charges. "They found that I did nothing criminally wrong," he said, adding that the settlement meant the issue of possible misconduct was "over with."

Poverty and civil war, from Yugoslavia to Somalia to Sri Lanka, have led hundreds of thousands of people to flee to Western Europe. In the last 10 years, the number of migrants seeking asylum in Western Europe has risen tenfold. But the prosperous countries, caught in a global recession, are increasingly unwilling to accept ever larger numbers of migrants. They are tightening immigration procedures and defining with greater rigor the concept of "asylum," traditionally a safe haven abroad from political or social persecution at home.