Tyson Foods is expected to release healthy first quarter earnings of 64 cents a share on Friday (Jan. 31) ahead of the market opening. This would equal about $226 million in net income, a 30% gain over earnings in the year-ago period. The 64-cent per share mark is the consensus estimate of 11 analysts who follow the meat company.

Virtually all of that gain is expected to come from improved metrics in the company’s chicken division, with a 5% gain in gross sales revenue — 3.5% more in volume and 1.5% more in price. Total revenue projections of $8.76 billion in sales are 4.3% better than those achieved a year ago.

Analysts with Credit Suisse peg Tyson to report 60 cents per share, with total revenue growth of $8.77 million, up 4.4% year-over-year. They note that consumers continue to trade down from record high beef costs to lower priced chicken.

Tyson is expected to see operating profits of $202 million in its chicken segment, up 88% from the $107 million reported a year ago. Lower grain costs and other internal efficiencies helped to raise the segment’s operating margin to 6.5%, more near historical levels. A year ago the segment ran less efficiently with a 3.8% operating margin.

This looks to be the best first quarter results for Tyson Foods in several years, despite ongoing headwinds in the beef and pork segments.

The beef segment is expected to report $3.642 billion, up 2% in volume sales with 2.5% higher prices than a year ago. Operating income for the beef segment is expected to be $44 million, down from $46 million a year ago. The segment’s operating margin of $25 per head, according to analysts. If that’s the case, Tyson outperformed the beef packer industry as whole. Average margins for the full quarter were likely in a range of negative $30 to $45 per head, according to Derrell Peel, livestock marketing specialist at the Oklahoma State University. 

Tyson’s processing facilities are located closer to their cattle sources which results in a lower delivery cost. In general, it costs 10 cents per head, per mile to ship cattle, analysts note.

Peel said last week, packer margins were likely positive $35 to 45 a head. He said the drop in boxed beef prices the past two days will push packer margins negative again as fed cattle prices are not falling as fast from the recent spike.

Credit Suisse analysts believe the second quarter ending Mar. 31 will the toughest for beef margins with some recovery expected in the back half of the year.

Pork sales for Tyson Foods are expected to be $1.411 billion, up 3.5% from a year go — all of that was price related. Lower operating profits are expected in this segment — $85 million versus $125 a year ago. This decline is linked to a 32% decline in profit per head.

Tyson continues to invest in its prepared foods segment and is updating several plants for better operating efficiencies and acquiring other companies that can help the food company expand its value-added sales in convenience stores.

Prepared Foods sales are expected to be $862 million, up 2.5% from a year ago. However, operating profits are expected to decline to $24 million, some 27% because of the ongoing renovations in some of the larger lunch meat plants.

Last quarter Tyson launched seven new handheld protein items, jumping on the breakfast bandwagon. This follows a trend of consumers shifting away from cereal to protein filled convenient breakfast items. Hillshire Farms, Kellogg and ConAgra have each benefited from this trend. Tyson estimates the frozen handheld breakfast category grew by $1 billion year over year. Tyson hopes capture its share with the Day Starts branded products such as biscuits, flatbreads and wrapped omelets.

Analysts expect an update from Tyson on this push for more convenience food sales during the call on Friday, Jan. 31. 

Shareholders have seen their investment value rise 54% in the past year closing at $34.49 on Thursday (Jan. 30). Given the increased stock price, Credit Suisse is neutral on the shares. 

Motley Fool contributor Daniel Jones notes that sales data from the past three years indicates the company is improving its sales but doing so by means of rising costs and fewer customers and/or lower sales per customer.

“Although it's nice to be able to charge more for your product, a corresponding falloff in sales volume implies that the company could be affected by competitors like Kraft Foods or Pilgrim's Pride,” Jones noted.

There's been another change in the plans for a new jail in Crawford County.

It was just a week ago that County Judge John Hall said the Quorum Court was leaning toward a half-cent sales tax— a half cent for 20 years to build the jail facility and another half cent to permanently fund operations and other law enforcement functions in the county sheriff's office.

Hall said Thursday (Jan. 30) that those plans were scrapped by a meeting of the Quorum Court's Jail Committee on Wednesday (Jan. 29). Now, instead of two quarter cent proposals, Crawford County voters are likely to vote on a half cent tax for nine years and a separate permanent quarter cent sales tax to fund law enforcement and operations, according to Hall.

"With the (original) fourth of a cent (proposal), it was going to be for 20 plus years and it was going to pay $17 million worth of interest on $20 million (in debt)," he said.

By shortening the time frame while increasing the amount the Court would be requesting from county taxpayers, Hall said the county would only pay $3.5 million in interest over those nine years and possible less, depending on the economy.

"It (sales tax revenues) go up, it pays off quicker. All of the money that comes in on debt serve has to be given to the debt, so if it happens to be more than anticipated, it pays off quicker."

While the amount of interest that would have been paid on the sales tax proposal floated last week was a high amount, Hall said other issues weighed on the jail committee meeting beyond the interest to be paid on the debt.

"In 25 years, it will be time to build another (jail) and the tax would probably never cease. We would have to start over and build another one. So we thought the public would be accepting (of a new sales tax) if it went away in nine years."

Now that the ballot titles declaring the tax rates for voters has passed the jail committee, Hall said the entire Quorum Court would vote at its regular February meeting on whether to place the issue on the May 20 primary ballot.

And it is not until that vote happens that any of the proposals are set in stone, meaning changes could still make their way into a proposal to be voted on before the Quorum Court on February 17.

Should both issues gain voter approval in May, the sales tax rate in Alma and Van Buren — Crawford County's two largest cities — would jump from 9.5% to 10.25%. The result would be one of the highest local sales tax rates in the nation.

Van Buren Chamber of Commerce Executive Director Jackie Krutsch said last week that voters should understand that while unpopular, operating a jail is an essential service in any county, on pair with police and fire protection. (It should be noted that Krutsch did not state an opinion for or against the proposed taxes, nor did the Van Buren Chamber of Commerce.)

If the tax is passed by voters on May 20, Hall said sales tax collection would begin in October with the county receiving its first portion of the money in December. In preparation for possible passage of the tax, which will be the county's fourth attempt at securing sales tax funding for a new jail, Hall said architects would likely begin work on the jail's formal design in about March.

"But the project can't start (construction) until the money gets here. So construction would probably start a year from now if they pass it in May."

And as he said last week, Hall hopes the fourth time is a charm.

A piece of Fort Smith history has been on the market for a year, still sitting unsold even with the property listed for only $14.27 per square foot.

The fact that the Masonic Temple at 200 N. 11th St., in downtown Fort Smith is still on the market may be alarming to some, but listing agent Jerry Seiter, Nunnelee Wright Commercial Properties' man tasked with unloading the building for the Free Masons, said it was really no surprise.

"I think I made the statement when it was listed that it could take two years or more to sell this thing," he said. "I think two years is realistic."

The facility, a three story concrete structure that includes an auditorium capable of seating 900, is listed for $750,000. The price, Seiter said, is a bargain.

"I talked to a builder about (what it would cost) building it from the ground up. He said it would probably cost $20 million or more to build it in today's market."

That's right. To build a comparable building to the one for sale, a building built in 1929, the cost would run upward of $20 million.

The price on the facility is one of the selling points for any organization that may look to buy the structure. According to Seiter, so far there have been very few serious considerations.

"Churches, the city of Fort Smith. We talked to them early on about using it as their city offices," he said.

Deputy City Administrator Jeff Dingman knocked down speculation that the city would consider moving into the structure, built the same year as the massive stock market crash that came to be known as Black Tuesday.

"When speculation like that comes up, it's kicked up internally. But no determination has been made as to how it would meet the city's needs," he said.

Besides the nearly century old building not meeting the requirements of the Americans With Disabilities Act, Dingman said the location was also troublesome.

"The location seems good, but it also has a lot of constraints," he said, alluding to the lack of an extensive parking area as well as being in a spot that could cause traffic headaches for workers or citizens coming or going at any given time.

Mayor Sandy Sanders, who recalled watching the movie "Bonnie and Clyde" in the facility's theater as a teenager, confirmed Dingman's statements on how well the facility could work for the city.

"Having been in there years ago, it wouldn't work," he said.

Seiter said another possibility was the University of Arkansas at Fort Smith purchasing the facility, though there is now considerable doubt.

"I wouldn't be surprised if they end up with it down the road, but their purchase of Second Street Live may have hindered that to some degree, at least for a little while. But churches, the city of Fort Smith, UAFS — those are the logical uses of it."

Regardless of who purchases the building, Seiter said the comparatively low price would free up any eventual buyer to invest considerable money in renovations.

"I wouldn't have any idea what costs that would take," he said. "It depends on how extensive they want to go. I wouldn't have any idea."

Whatever happens, residents can at least know that the building will continue thanks to its designation as a historical building.

"There's restrictions to the exterior (due to the designation). I don't think you can do any kind of major changes to the exterior. But I think the interior is pretty much wide open. I think you can do whatever you need to within the codes of the city. But being registered as a historical landmark, you are very limited on what you can do to the exterior. (Making it handicap) accessible, that's pretty much all you can do."

Two members of the Free Masons were contacted a total of six times over three days for comment, but phone calls were not returned.

BUILDING HISTORY
Following are some details of the history and features of the Masonic Temple according to mastermason.com.

• Architects were George Mann of Little Rock, who was assisted by Harlson and Nelson of Fort Smith.

• The general contract was let to Gordon Walker, Little Rock, on a bid of $208,500, on June 11,1927. Ground was broken June 25. Other contracts not included in the general award, together with furnishings and equipment, brought the total cost of the Temple to $385,000.

• The cornerstone was laid Dec. 7, 1928, and the Temple was opened to the general public on Sept. 7-8,1929.

With reappointments by Gov. Mike Beebe (D) of Chester Koprovic and Lee Webb, the Fort Smith region will continue to be home to two of the 16 members of the high-profile Arkansas Economic Development Commission.

Koprovic, who is the board chairman of Boyd Metals, B&C of Fort Smith and Kopco, was first appointed to the commission by Gov. Mike Huckabee (R) in 2001 following the death of Fort Smith businessman Tom Barr. When his fourth full term expires in January 2018, Koprovic will have served almost 17 years as a commissioner.

Boyd Metals is a metal service company with offices and operations in Arkansas, Missouri and Oklahoma. B&C and Kopco are metal fabrication and welding operations in Fort Smith. (Koprovic also has an ownership interest in The City Wire.)

FOCUS SHIFT
The focus of the commission and agency has shifted during his time.

“When I first when on, most of the emphasis was to create jobs, to bring in new jobs,” Koprovic said. “Now we work a  lot on retaining the jobs we have ... and trying to grow those companies.”

Koprovic said incentives offered by the AEDC have improved thanks to support from the Arkansas Legislature and leadership from Beebe’s office. He’s supported Beebe’s focus on connecting education and economic development, but said the state needs to do more with its education efforts.

“Coming out of high school, a high school graduate needs to be prepared to step into a job, and right now I don’t think they are prepared to step into a job,” Koprovic said.

Webb, a member of the Sebastian County Election Commission and co-owner of Economy Trailer in Fort Smith, was first appointed in 2010. This will be his second term on the commission. He said his first surprise as a commissioner was learning that the group “is actually a working commission and not just a ‘show up’ commission.” He also shared Koprovic’s assessment that the agency has been more focused in recent years on the retention and expansion of existing operations.

“Job retention has been a pretty big issue the last few years. I think we’ve been pretty successful with that, and we’ve also been successful in getting some other companies to move here,” Webb said.

‘LAST MINUTE’ FRUSTRATION'
He said a top frustration of serving on the commission is how tough it is to recruit new operations.

“I’m sure we have from 30 to 50 active files, with the staff working to get new jobs to Arkansas. ... I’ll tell you that a frustration for me is when Arkansas may have the best site and the best deal and the (AEDC) staff has really pulled together a great deal, but at the last minute some political thing comes in that we really had no control over,” Webb explained.

While he wouldn’t label it a frustration, Koprovic said he still hopes to see the state land an auto manufacturer.

“I would like to see Arkansas get an automobile plant. We’ve tried to get one almost the entire time I’ve been on the commission. We’re one of the few southern states to not have a plant like that,” Koprovic said, adding that he believes “there will be more auto plants built in America.”

DEVELOPMENT OPTIMISM
It may not be a large auto plant, but Webb is optimistic the agency will announce new jobs or job expansions in the next year. He said the effort by Wal-Mart Stores to return manufacturing to the U.S. has helped generate more prospects for new jobs and expansion in Arkansas.

“We want to create more jobs, and I think we are on the right track for that. They (AEDC staff) are working with a lot of projects right now. I think you’re going to see some good announcements come up in the next year. ... And you also have that initiative from Wal-Mart to bring those (manufacturing) jobs back and that is really helping a lot right now,” Webb said.

Koprovic said his time on the commission has provided him an education on economic activity in Arkansas.

“It’s been one of the most interesting things I’ve ever done. We go to different cities each month, and we get to meet people we’d never get to meet ... and see products we didn’t know were being made in the state,” Koprovic said.

Thoughts on the soon-to-be new top boss at Wal-Mart Stores, the political fight over the federal farm bill, Northwest Arkansas tax collections and Costco wages are part of the Northwest Arkansas Friday Wire for Jan. 31.

NOTES & ANALYSIS
• All eyes on Doug
When 47-year-old Doug McMillon becomes the new Wal-Mart Stores CEO on Feb. 1, he’ll sit in a chair responsible for more than 2.2 million employees and be expected to provide direction for a company under competitive attacks from all fronts and under a legal cloud related to allegations of corruption in foreign markets.

No pressure, right?

McMillon has been described as a “cool character” and a “very appealing leader.” He’ll need those qualities, and a truckload full of luck. To say Wal-Mart faces a unique set of challenges is to ignore the history of a global retail company that has emerged stronger and larger through a long list of challenges that the media often claimed were insurmountable.

What we don’t know about McMillon is if he has an eye for talent. Sam’s success was largely driven by putting the right people in the right place at the right time. That’s a part of the job often overlooked by the Wall Street wizards. It’s the challenge that remains no matter the changes in technology, politics, world markets and the fickle nature of consumers.

Good luck, Doug.

ICYMI
Following are a few stories posted this week on The City Wire that we hope you didn’t miss. But in case you missed it ...
• Political fight to continue on ‘far from a perfect’ federal farm bill
Democrats and U.S. Sen. Mark Pryor, D-Ark., will do all they can to make political hay with U.S. Rep. Tom Cotton’s vote Wednesday (Jan. 29) against the federal farm bill. And while Cotton, a Republican from Dardanelle, was the only member of Arkansas’ U.S. House delegation to post a ‘No’ vote, and while the bill was supported by the politically powerful Arkansas Farm Bureau, the political lines of the farm legislation are not as clear or as straight as the rows of a freshly planted soybean field.

• Impressive job gains
Northwest Arkansas’ nonfarm job growth percentage ranked No. 11 in the nation last year out of 372 metro areas, according to figures posted Tuesday (Jan. 28) by the U.S. Bureau of Labor Statistics. The Jonesboro region wasn’t far behind with a rank of 14.

• The Supply Side: Hispanic market share
In the highly competitive retail climate suppliers and retailers that reach out to Latina shoppers stand to reap huge rewards among this growing demographic, according to Enedina Vega, publisher of Meredith Hispanic Media.

NUMBERS ON THE WIRE
• 7.4%: The Arkansas unemployment rate as of December 2013, the most recent month data was available. The rate is an increase from 7.1% in December 2012, making Arkansas only one of six states to post a year-over-year jobless rate increase.

• 5.6%: Collective increase in sales tax collections in Bentonville, Fayetteville, Rogers and Springdale in the January tax report from the respective cities.

• 133 million: Estimated population of Hispanics in the U.S. by 2050. The number will account for about 30% of the total U.S. population.

OUTSIDE THE WIRE
• The President and Costco
President Obama chose a Costco warehouse store in Maryland on Wednesday to push for a hike in the federal minimum wage, choosing Costco, the White House says, because it is "acting on its own to pay its workers a fair wage."

• Officials discuss Texas-Mexico high-speed rail line
A high-speed rail line connecting San Antonio and Monterrey, Mexico, could be less than a decade away from welcoming its first passengers, according to federal and Texas officials who met with Mexican officials in Washington, D.C., on Thursday to discuss the project.

• More on Hillary and 2016
Former U.S. Secretary of State Hillary Clinton remained vague on Monday about whether she would run for president in 2016 and said the militant attack in Benghazi, Libya, was the biggest regret of her four years as the top U.S. diplomat.

WORD ON THE WIRE
“All of our employment sectors are showing year-over-year growth. That kind of positive environment means that new and existing companies have enormous opportunities to thrive because of a strong regional customer base and increasing incomes.”
– Kathy Deck, director of the Center for Business and Economic Research in the Sam M. Walton College of Business at the University of Arkansas, about job growth in Northwest Arkansas during 2013

“I want to know how I get a Jones Center in my community.”
– Ben & Jerry's Chairman Jeff Furman said as he took the stage Tuesday (Jan. 28) as part of the Serve2perform.com speaker series, hosted at the Jones Center

“Wal-Mart and Sam’s Club are making substantial investments in their online operations and continue to hire people as they should. I wouldn’t be surprised if there is some downsizing of other departments as a result.”
– Ron Loveless, former Wal-Mart executive, about the potential for large job cuts at Wal-Mart corporate headquarters in Bentonville

Changes to the Whirlpool pollution plan, the success of Krutsch, the political fight over the federal farm bill, and State of the Union disappointment are part of the Jan. 31 Friday Wire for the Fort Smith region.

NOTES & ANALYSIS
• Positive and perspective with jobs numbers
The Fort Smith region saw its non-farm job numbers rise from 116,900 in December 2012 to 120,300 in December 2013. That’s a 2.91% gain, and it was enough to see the region rank 34 out of 372 metro areas in terms of percentage growth. The region ranked 327 in 2012, so the move was significant.

Also, the Fort Smith metro jobless rate fell to 6.9% in November and brought to an end 55 consecutive months in which the regional jobless rate was at or above 7%.

And while we should celebrate such numbers, we should also be mindful of how much more improvement is needed just to get the region back to the economic normals of just a few years ago.

The size of the Fort Smith regional workforce during November was 132,163, down from the 132,867 during October, and below the 132,392 during November 2012. The labor force reached a revised high of 140,253 in October 2007. Having more than 8,000 out of the labor force count is not a good thing.

Also, the number of employed was 122,993 in November. And while that is an improvement compared to November 2012, it’s almost 10,000 fewer than the 132,779 employed in 2007.

Things are better in the region, but there is a lot of ground to be made up.

ICYMI
Following are a few stories posted this week on The City Wire that we hope you didn’t miss. But in case you missed it ...
• Political fight to continue on ‘far from a perfect’ federal farm bill
Democrats and U.S. Sen. Mark Pryor, D-Ark., will do all they can to make political hay with U.S. Rep. Tom Cotton’s vote Wednesday (Jan. 29) against the federal farm bill. And while Cotton, a Republican from Dardanelle, was the only member of Arkansas’ U.S. House delegation to post a ‘No’ vote, and while the bill was supported by the politically powerful Arkansas Farm Bureau, the political lines of the farm legislation are not as clear or as straight as the rows of a freshly planted soybean field.

• Convention Center revenue rise
The Fort Smith Convention Center saw a drop in the number of events it hosted in 2013, but that did not stop the event center from having one of its best revenue years since opening.

• Ross and ‘raw politics’
A long pause ensued after Democratic gubernatorial candidate and former Arkansas Congressman Mike Ross was asked his thoughts about President Obama’s State of the Union address. Ross rolled a cough drop around in his mouth and stared ahead for a few seconds before replying: “I think that, you know, it needed more substance.”

NUMBERS ON THE WIRE
• $15.8 million: Full year 2013 net income for Fort Smith-based Arkansas Best Corp., a big improvement over the $7.7 million loss in 2012.

• 7.4%: The Arkansas unemployment rate as of December 2013, the most recent month data was available. The rate is an increase from 7.1% in December 2012, making Arkansas only one of six states to post a year-over-year jobless rate increase.

• 2016: The anticipated year chemical oxidation treatments will begin in and around the former Whirlpool facility in Fort Smith. The treatments are now mandated by the Arkansas Department of Environmental Quality to treatment a spill of toxic trichloroethylene (TCE), a cancer-causing chemical whose plume has migrated to a neighborhood north of the Whirlpool facility.

OUTSIDE THE WIRE
• The President and Costco
President Obama chose a Costco warehouse store in Maryland on Wednesday to push for a hike in the federal minimum wage, choosing Costco, the White House says, because it is "acting on its own to pay its workers a fair wage."

• Officials discuss Texas-Mexico high-speed rail line
A high-speed rail line connecting San Antonio and Monterrey, Mexico, could be less than a decade away from welcoming its first passengers, according to federal and Texas officials who met with Mexican officials in Washington, D.C., on Thursday to discuss the project.

• More on Hillary and 2016
Former U.S. Secretary of State Hillary Clinton remained vague on Monday about whether she would run for president in 2016 and said the militant attack in Benghazi, Libya, was the biggest regret of her four years as the top U.S. diplomat.

WORD ON THE WIRE
"She is the first to  send the success of anything we do to someone other than herself. She will tell you that any Chamber success is due to the volunteers and staff we have, but I will tell you that without her committed leadership it would not be the strong and vibrant organization that it is today."
– Janie Simmons, executive assistant at the Van Buren Chamber of Commerce, speaking about Jackie Krutsch, executive director of the Chamber

"A lot of this is in our alcohol sales. It took us a while to come up with the right procedures, the right equipment. We did have to make purchase of cash registers, a portable safe ... things of that nature. So we also had to get our procedures down. But you can see that we're picking up steam here."
– Executive Director Claude Legris of the Fort Smith Advertising and Promotion Commission discussing the rise in revenue at the Fort Smith Convention Center during a Jan. 28 Fort Smith Board of Directors study session

"Overall, I’m disappointed with the President’s State of the Union address because he was heavy on rhetoric, but light on specifics about how we can move our country forward. I’ve always said that I’ll work with the President when I think he’s right, but oppose him when I think he’s wrong. That’s why I’ve opposed his policies on gun control, the Keystone Pipeline, military action in Syria, regulatory overreach on our farms — to name a few — and why I’ll continue to oppose his agenda when it’s bad for Arkansas and our country.”
– U.S. Sen. Mark Pryor, D-Ark., in his response to President Barack Obama’s State of the Union address

Fiscal first quarter net income for Springdale-based Tyson Foods was $254 million, well ahead of the $173 million in the first quarter of 2013 and outpacing the consensus Wall Street estimate by $28 million.


Total revenue in the quarter was a record $8.761 billion, better than the $8.366 billion in the first quarter of 2013, the company announced in an earnings statement issued early Friday (Jan. 31).
 The per share earnings of 72 cents was much better than the consensus Wall Street estimate of 64 cents per share.


"I'm very pleased with our strong first quarter results, and I'm confident in my expectations for the full year," Donnie Smith, president and CEO of Tyson Foods, said in the earnings statement. "We're growing sales and earnings and executing our strategy - including making our third prepared foods acquisition in less than a year - while reinvesting in our existing businesses and buying back shares.”


Despite sales being higher in all four primary segments of the company, and sales volume up 4.1% in the beef segment and up 3.6% in the chicken segment, overall the company slightly missed top line revenue projections.


BIG CHICKEN

Chicken continues to be the protein of choice among more consumers helping Tyson Foods grow its sales and overall profits. Operating income for the chicken segment rose to $225 million, more than double the $111 million in the same quarter of fiscal year 2013.


The company’s chicken operating margin rose to 7.5%, returning to normalized ranges as lower grain costs helped Tyson save $170 million. Easing grain costs helped to offset some price volatility relating to excess supplies losses of some $28 million from Tyson’s international poultry operations.


China was the largest source of the negative international returns. There has been a change in the market dynamics in China over the past year, demand has not recovered there relating economic slowing and continued concerns of avian influenza.


“We have decided to slow our pace of expansion inside China for now to allow for demand to catch up with supplies,” Smith said. “We’ve taken our foot off of the gas in China, but we are still on the road.”

He said by the end of this year, the two plants in China will be running one shift with company controlled birds, but they will not be buying open market bird in the interim.
 Tyson said it is also handling shorter term challenges related to the "polar vortex" weather event and subsequent propane shortages.
 Smith said the company has made propane purchases from down in the Houston area and has transported that to growers that faced short supplies.

“I am not aware of any Tyson grower that is experiencing propane shortages for their houses. We will continue to work with our growers on pay issues related to these higher costs,” Smith said, during the call.


Tyson expects domestic chicken production to increase around 3% this fiscal year. The company said it expects to save $600 million on grain costs for feed ingredients, compared to last year’s spending. There will be some lag time in these savings being realized.


“We think chicken will be the winner going forward,” Smith said during the earnings call on Friday. “Chicken will see a halo effect because of the higher prices of beef.”


BETTER BEEF

Tyson’s beef segment continues to outperform the packer industry as a whole, reporting better-than-expected operating income of $58 million in the recent quarter, an improvement of $46 million reported a year ago.


Beef sales volumes rose thanks to better demand, despite higher sales prices. Tyson expects to see a reduction in fed cattle supplies between 2% to 3% from last year, but said it generally has adequate supplies in the regions where it operates. 


For the full year, Tyson expects to its operating margins challenged because of higher overall cattle costs. In the recent quarter Tyson beef operated with a 1.9% margin, well below the historical levels — 2.5% to 4.5%.


“Consumers will likely see higher beef prices and fewer grocer promotions this year,” said Jim Lochner, chief operating officer.


LEANER PORK
Tyson’s pork segment was a little leaner in the recent quarter generating $121 million in operating income, down from $125 million in the year-ago period.

Sales volumes in pork decreased as a result of balancing supply with customer demand and reduced exports. Pork sales totaled $1.424 billion, up 6.7% in price, but down 2.1% in total volume. Lochner said the metrics and margins in the pork business have recently improved. He expects industry hog supplies to decrease around 3% in fiscal 2014 compared to fiscal 2013, offset by increased average live weights.

For fiscal 2014, Lochner expects the pork segment will be in its normalized range of 6% to 8%.

Lochner said this will be his last earnings call as he will relocating back to Dakota Dunes, S.D., in anticipation of his retirement in September.

PREPARED FOODS
Tyson views its prepared foods segment as a growth vehicle and continues to invest and tweak these diverse operations to better serve changing consumer demands.

The prepared foods segment posted sales of $907 million, up 3.5% in volume and 4.2% in price, from a year ago.

Operating income fell to $16 million, as a result of $40 million in higher costs of raw materials and investments in the company’s lunch meat business and other growth platforms. Smith said the investments made in this segment, with three recent acquisitions will start to pay dividends toward the back half of this year. He said this category is one that will work to be nimble enough to give consumers the products they want.

He said the company will continue to look for other acquisitions that fit the company’s long term growth goals.

ROSY OUTLOOK
Company officials said they expect fiscal year 2014 revenue to reach $36 billion by “accelerating growth in domestic value-added chicken sales, prepared food sales and international chicken production.” Revenue in 2013 was $34.374 billion.

The rosy outlook provided by Tyson execs was welcome news to Wall Street investors looking for a safe haven play on Friday. Shares of Tyson Foods (NYSE:TSN) rallied more than 5% to $36.23 in heavy early trading, amid a broader market sell off with a 1.31% dip in the Dow Jones Industries and a 0.86% decline in the Nasdaq.

This uptick in Tyson shares set a new 52-week high, intraday. During the past 52 weeks the share price had ranged from a $35.74 high to a $21.79 low.

The earnings report to be issued on Doug McMillon’s 20th day on the job as the new Wal-Mart CEO may not be pretty.

Wal-Mart Stores Chief Financial Officer Charles Holley announced Friday that bad weather, a worse than expected hit from reduced food stamp payments and one-time charges related to international operations will reduce the earnings per share number by 26 cents – that’s almost triple the 10 cents per share negative impact announced Nov. 14.

A 26 cent per share hit is about $842.4 million. The company is set to release full year and fourth quarter earnings on Feb. 20. Doug McMillon, now the CEO of Walmart International, is set to succeed Mike Duke as Wal-Mart Stores CEO on Feb. 1.

The Bentonville-based global retailer said full year earnings per share is likely to hit at or below the previous guidance of $5.11 cents and $5.21. For the fiscal fourth quarter, the earnings per share will hit at or below the range of $1.60 to $1.70.

Also, the company said its comp store sales – a closely watched metric in the retail industry – for Walmart and Sam’s Club will be less than previously expected. Prior to Friday, the comp sales were expected to be flat for Walmart U.S. and between flat and 2% for Sam’s Club.

“Despite a holiday season that delivered positive comps, two factors contributed to lower comp sales performance for the 14-week period for Walmart U.S.,” Holley said in the statement. “First, the sales impact from the reduction in SNAP (the U.S. government Supplemental Nutrition Assistance Program) benefits that went into effect Nov. 1 is greater than we expected. And, second, eight named winter storms resulted in store closures that impacted traffic throughout the quarter.”

SNAP is roughly 10% of the total U.S. grocery business, but benefits go to one in seven Americans, or some 48 million consumers. All of them will see their monthly benefits reduced on Nov. 1. For example, a family of four has been getting $588 per month in SNAP benefits since 2009, but that will be reduced by $36, or 5% after Oct. 31. Arkansas will lose about $52 million in SNAP support from Nov. 1, through September 2014, according to the Center on Budget and Policy Priorities, Washington D.C., a nonpartisan research and policy institute.

Grocery is a $151 billion annual business at Wal-Mart driving 55% of the company’s total U.S. revenue last year. Wal-Mart controls about 25% of nation’s grocery marketshare, according to Michele Simon’s June 2012 report from Eat, Drink, Politics.

Jack Sinclair, executive vice president of grocery for Walmart U.S., said in October that Walmart has an 18% share of the SNAP payments, or about $13.2 billion a year.

The SNAP cuts are essentially a return to the payment formula prior to 2009. Congress approved in 2009 a $45.2 billion stimulus into the program as part of the American Recovery and Reinvestment Act, which bumped up SNAP benefits through October 2013. 

SNAP recipients have seen a 4% dip in their spending, according to shopper metrics, greater than 1% predicted impact.

"Wal-Mart caters to lower-income consumers which have been hit disproportionately hard relative to higher-income consumers," Morningstar analyst Ken Perkins told Reuters.

About 20% of the company's shoppers are food stamp users, analysts have estimated.

CNBC analyst Jim Cramer said Wal-Mart is also not default bell weather it once was, as more and more consumers are chasing lower prices anywhere they can find them — online with Amazon, dollar stores, etc.

Lowered earnings guidance from Wal-Mart coincided with a federal report showing declines in personal income and disposable income in 2013 compared to 2012.

According to Friday’s report by the U.S. Bureau of Economic Analysis, personal income was up by $2.3 billion in December, up less than 0.1%, and disposable personal income for the month was down less than 0.1%,

For the full year, the BEA reported that personal income was up 2.8% compared to a 4.2% gain in 2012. Disposable personal income fell 1.9% compared to a gain of 3.9% in 2012.

Wal-Mart shares (NYSE: WMT) were trading down slightly at $74.41 in the morning session.. During the past 52 weeks the share price has ranged from an $81.37 high to a $68.13 low.

In typical, non-ceremonial fashion Tyson Foods shareholders held their 51st annual meeting in Springdale on Friday morning (Jan.31). The investors had plenty to celebrate with a new record stock price, rallying more than 9.4% to $37.74 and twice the normal shares traded in the morning session.

That said, the entire event lasted just under 23 minutes, and it included the executives taking time to bid farewell to two of its senior leaders.

Chief Operating Officer Jim Lochner is relocating back to South Dakota prior to his retirement in September, and Buddy Wray, a former CEO and special assistant, is retiring a second time in February after coming back into the business in 2008. The retirements were announced in November, but this is the last shareholder meeting they plan to attend as company execs.

Tyson Chairman John Tyson thanked Lochner for his leadership and service throughout the years crediting him as one of the “best” in the industry who learned through experience. He referred to Lochner as a “master professor” saying that he it doesn’t matter what you know if you can’t teach it to others. CEO Donnie Smith also thanked Lochner for the way he has prepared the company’s future leadership and credited him with much of the financial success the company has seen in recent years.

Lochner will continue serve the company in a consultant role through 2017. John Tyson noted this will allow more time for Lochner’s big game hunting out West.

Tyson said Buddy Wray helped raise him, and his expertise has proved invaluable for 50 years, including designing the company’s iconic logo. Wray retired from as president in 2000, but was called back into business by his long-time friend and company pioneer Don Tyson in 2008.

“He has been a trusted advisor to me during a phenomenal period in our company's history," Smith said. "His wisdom and guidance helped us deliver outstanding results and his nearly six decades of experience have been a wonderful gift."

Smith told shareholders that 2014 is off to a great start as the stock set another record high in active trading on the heels of a stellar first quarter performance.

“If you’ve checked your phone in the past few minutes like I have, you can see the share price continues to rally,” he said.

Smith assured shareholders the game always has its challenges, but he’s confident that he has the right people on his team, making the right plays to ensure Tyson Foods wins.

BUSINESS MEETING
Tyson shareholders (95.23%) approved the following directors for a one-year term:
• John Tyson, 60, chairman of the board
• Kathleen M. Bader, 63 president and CEO of NatureWorks LLC
• Gaurdie E. Banister Jr., 56, CEO of Aera Energy
• Jim Kever, 61, founding partner of Voyent Partners

• Kevin M. McNamara, 57, founding principal of McNamara Family Ventures
• Brad T. Sauer, 54, EVP at 3M Industrial Business Group
• Robert Thurber, 66, retired exec from Sysco
• Barbara A. Tyson, 64, former company consultant and VP
• Albert C. Zapanta, 72, CEO of the U.S. Mexico Chamber of Commerce

Tyson shareholders (99.74%) approved the ratification of PricewaterhouseCoopers LLP to serve as the company's independent registered public accounting firm for the fiscal year ending Sept. 27.

The fundraising gap is getting closer for two Hot Springs Republicans vying to replace U.S. Tom Cotton, R-Dardanelle, in Congress.

Businessman Tommy Moll reported raising only $142,000 during the fourth quarter of 2013, a 49.47% decrease from his third quarter total of $281,000.

At the same time, Arkansas House Majority Leader Bruce Westerman showed consistency during a reporting period that typically sees a significant drop in reported donations due to the period falling during the Thanksgiving, Christmas and New Years holidays. Westerman reported raising $107,074.16 during the fourth quarter, only a 3.07% drop from his third quarter fundraising total of $110,466.43.

While Westerman may be closing the fundraising gap, his campaign is still at a distinct disadvantage when it comes to cash on hand. The leader of the Arkansas House Republicans reported $154,992.49 cash on hand. By contrast, Moll — whose strong third quarter totals took him from somewhat obscurity to a formidable candidate in the expansive 4th Congressional district — reported cash on hand of more than $358,000.

Moll said his campaign's first two fundraising quarters, which saw more than $423,000 in donations, would allow him to introduce his message across the district.

“Our campaign is off to a great start, and thanks to our generous supporters we will have the resources to spread our common sense conservative message of constitutionally limited government, individual liberty, and economic freedom.”

Moll's fundraising report comes the same week he was endorsed in his Congressional bid by FreedomWorks PAC, a group strongly associated with the Tea Party movement.

In announcing the endorsement Tuesday (Jan. 28), FreedomWorks President Matt Kibbe said Moll's business background would set him apart in the halls of Congress.

“Tommy Moll’s extensive background in economics and trade policy, combined with his business experience in the energy sector, will be a refreshing addition to Congress. Moll is a committed fiscal conservative who will fight ObamaCare and Medicaid Expansion, and be a strong voice in the next generation of leaders in the Liberty Caucus.”

While Moll may be securing endorsements, Westerman's campaign is taking a different approach, stating that "93% of donations were from Arkansas. Among Arkansas donations, 67% came from the Fourth District with 67% of those contributions coming from Garland County."

The reference by the Westerman campaign draws a contrast between its candidate and Moll, who grew up in the 3rd District city of Fort Smith and attended college in Virginia, graduate school in the United Kingdom and law school in New York.

In a statement on his website, Westerman said he was "especially moved by the large amount of support I have received by the people of my hometown, where I learned the common sense rural conservative values that we need more of in Congress.

Beyond thanking supporters in Hot Springs, he also took effort to address donors across the Fourth District.

“I am very thankful to the large amount of Fourth District supporters who helped us exceed our goal this quarter by making an investment in my campaign to fight the unfair, top-down, centralized government of President Obama and remind him that it is Congress that legislates, not the White House."

Dardanelle Democrat James Lee Witt, the former director of the Federal Emergency Management Agency (FEMA) during the Clinton administration and a former Yell County judge, reported raising $243,946.17 during the fourth quarter. He entered the race on Nov. 5 and is being challenged by community college instructor Janice Percefull of Hot Springs.

The primaries for both Democrats and Republicans statewide will be held May 20, with a general election set for Nov. 4.

Sam’s Club confirmed last week it was restructuring its in-club operations, trimming 2,300 middle management and hourly job across its U.S. operations.

Wal-Mart Stores Inc. said today (Jan. 31) the costs associated with the Sam’s Club restructure will shave about 1 cent per share from corporate earnings reported Feb. 20. In addition, Sam’s said it will shutter its Mas Club located in Houston on Feb. 7. Mas Club opened as a pilot in 2009 to cater to the merchandising needs of the Hispanic community.

“Since opening Mas Club, we’ve gained insights on the best ways to serve the Hispanic community and have implemented what we’ve learned in our 18 locations in the Houston area and more than 100 other Sam’s Club locations in areas with a predominately Hispanic population throughout the U.S.,” said Carrie Foster, Sam’s Club spokeswoman.

She said all Mas Club members will receive a complimentary membership at Sam’s Club valid for 12 months beyond the expiration of their Mas Club card, while Mas Club members who are already Sam’s Club members will receive a $30 gift card or a full membership refund, whichever they chose.

Retail experts recently interviewed by The City WIre indicated that Sam's Club needed to purge some of the operational bloat that was created during more profitable times.

Sam's Club execs have consistently reported that many of it members – small businesses – continue to struggle, which has compromised comparable sales growth for several quarters. The holiday was apparently no better as Wal-Mart gave lower guidance for itself and Sam's Club today (Jan. 31) partly related to weather.

Analysts continue to point to Costco's ability to outperform other big box retailers and note that they all face similar consumer headwinds on a regular basis.

Carol Spieckerman, CEO of New Market Builders, said Costco has evolved as a brand under the longtime leadership of founder Jim Sinegal who has built a loyal customer base. At the same time, she said Sam's Club is s store.

That said, Spieckerman applauded the recent alliance between Sam's Club and the Walmart.com leadership saying this can give them a competitive advantage over Costco which is still mostly a brick and mortar retailer. She said if Sam's Club can figure out a way to leverage Wal-Mart's physical scale with its online service the possibilities are huge.

"Imagine ordering a bundle of products online at Sam's Club but being able to pick it up at local Walmart Neighborhood Market," Spieckerman said.

Sam's Club operates about 600 clubs, a fraction compared to the more than 4,000 Wal-Mart locations across the U.S.

U.S. Attorney General Eric Holder was in Fort Smith on Thursday (Jan. 30) as part of what is an effort by the nation’s top law enforcement officer to visit all 93 U.S. Attorney district offices around the country.

Joyce Snow, a spokeswoman for the office of Conner Eldridge, U.S. Attorney for the Western District of Arkansas, confirmed that Holder was visited the district office in downtown Fort Smith. Snow could only confirm the visit, and did not provide information on the length of the visit, areas toured or other details.

Jim Dunn, executive director of the U.S. Marshals Museum, said Holder did not stop at the planned site of the U.S. Marshals Museum. The Marshals Service is within Holder’s Department of Justice.

Fort Smith Regional Airport Director John Parker said a military aircraft landed at the airport around 9 a.m., with a motorcade picking up the occupants and transporting them to downtown Fort Smith.

A caravan of cars and SUVs transported Holder from TAC Air at the Fort Smith Regional Airport to the U.S. Attorney offices in downtown Fort Smith. Holder’s caravan returned to TAC Air around 1 p.m. on Thursday.

He visited Fort Smith the same day he issued a statement calling for the death penalty in the case of Dzhokhar Tsarnaev, one of the two Boston bombers. Holder’s statement noted: “After consideration of the relevant facts, the applicable regulations and the submissions made by the defendant’s counsel, I have determined that the United States will seek the death penalty in this matter. The nature of the conduct at issue and the resultant harm compel this decision.”

Holder has served as the 82nd U.S. Attorney General since Feb. 3, 2009. Holder was also appointed by President Bill Clinton in 1997 to serve as Deputy Attorney General, and prior to that served as the U.S. Attorney for the District of Columbia.

Eldridge has served as U.S. Attorney for the Western District of Arkansas since March 2011. He was 33 at the time.

Eldridge filled a post vacant since Jan. 4, 2009, when former U.S. Attorney Bob Balfe resigned to serve in the Northwest Arkansas law offices of Mitchell Selig Gates & Woodyard. Balfe served as the U.S. Attorney since November 2004.

Prior to coming to Fort Smith, Eldridge served as a Special Deputy Prosecutor for the Prosecuting Attorney’s Office of Clark County, Arkansas since 2009. Eldridge previously worked for Summit Bank and Summit Bancorp, Inc., serving in various senior management positions.  He was ultimately named CEO in 2008.

The Western District of Arkansas includes 34 counties stretching from Texarkana and El Dorado to Fayetteville and Fort Smith.

A speech by U.S. Sen. Rand Paul, R-Ky., Friday night (Jan. 31) in Hot Springs seemed less like a pep talk to Arkansas Republicans and more like the first of many stump speeches the freshman Senator could make should he jump into the 2016 presidential race.

It was a possibility the candidate addressed head on when asked about it during a question and answer session following his speech, saying that he was in discussions with his family about a run.

"I've jokingly said there are two votes in my household, my wife has both of them and both of them are a no right now. But there's a little truth to that in that my wife and I are a team. We're a family. We do take our family very seriously, whether or not we can withstand the onslaught of what is involved in this. …I don't mind taking body blows from the media, but I don't like when my family is attacked or included. So that is a difficult decision. It is a lot of time away from family."

While Paul said he understood the personal sacrifice he and his family would have to make for a run, he is also keenly aware that he is an oft-discussed candidate who could come into the race with real name ID.

"I do recognize that I am in a position where I could stand a chance, though, so we really are seriously considering it. I also think that if we do the same thing we've always done, we're not going to win. It has to be different. It has to have a different twist."

The different twist was laid out in a nearly 30 minute speech in which Paul outlined his reason for attempting to block increased government spending, laid out new tax policy proposals, addressed income inequality and changing laws relating to drug use.

On the issue of drug use, the freshman Senator from Kentucky said the current set of laws dealing with narcotics had unfairly targeted minorities.

"I personally think criminal justice, particularly the war on drugs in our country, has unfairly treated some people — particularly African-Americans and Hispanics. I'm not saying let's get rid of the drug laws. I'm saying let's get rid of the racial outcome of the drug laws."

Paul cited unsourced statistics, where he said teens, when asked, would admit to drug use nearly fifty percent of the time — a number that held steady for both whites and African-Americans. But the current population of those incarcerated for drug-related crimes is disproportionate, he said.

"But you know what? If you look at who's in prison for these drug crimes, three out of four people in prison are black or Hispanic."

Paul proposed lessening penalties for first time offenders, namely teens and young adults, as well as allowing convicted criminals who have served their time for drug-related offenses to eventually regain their right to vote and contribute in a meaningful way to society.

"I'm not saying encourage it. But let's be the party that's open to having a more just solution for these kids."

In addressing income inequality and tax policy, Paul said the Republican Party would "have to be the party of the middle class and for the middle class." In order to do so, he proposed so-called Economic Freedom Zones, a proposal that would drastically lower tax rates in impoverished areas, leaving that money in the local economy with the hope that it will be used to spur economic growth.

Paul said the perfect example of where one of these zones could work would be Detroit, the largest municipal government in the United States to ever file bankruptcy.

"What it does is it allows people to bail themselves out. Instead of taking money from Little Rock, or Hot Springs, or from Arkansas, or from Houston or Louisville and sending it to Detroit, we just simply let Detroit keep more of their own money. If you do this — and I'm not talking about halfway, I'm not talking about government grants ... I'm talking about dramatically lowering taxes almost to zero in places that are blighted — if you do it in Detroit, it's $1.3 billion over ten years."

The figure, he said, was in addition to any local property, income and sales taxes the municipality may take in.

He said such policies were good for the economy and would go further in alleviating poverty than government assistance programs, such as SNAP (food stamps).

"But we need to step up and be for something. Let's be for alleviating poverty and long-term unemployment."

The evening also featured Paul railing against what he labeled excess government spending, highlighting such perceived wasteful spending as a program designing menus for individuals who could one day live on Mars, a treadmill for shrimp and excess spending on certain programs pertaining to the Department of Homeland Security.

One comment, while a punch line in Arkansas, could surely ruffle feathers should he run for President and campaign in North Dakota.

"We sent $8 million for security to Fargo, North Dakota, and I say, 'You know what? If the terrorists get to Fargo, we might as well just give up.'"

Paul said he was highlighting wasteful spending on all levels, saying that instead of spending money on $500 toilet seats in the military, that money should go to pay service members a living wage.

The speech was already drawing Republican condemnation even before Paul took the stage, with the Democratic Party of Arkansas holding a press conference early Friday criticizing what it said were Paul and Republican U.S. Rep. Tom Cotton's extreme voting record, pointing to Cotton's recent vote against the farm bill. Cotton, a Republican from Dardanelle representing Arkansas’ 4th Congressional District, is running to unseat U.S. Sen. Mark Pryor, D-Ark.

"Farming is the largest industry in Arkansas. It's directly responsible for one in six jobs in Arkansas," said DPA Executive Director Candace Martin. "How Congressman Cotton can justify voting against the hundreds of farmers and their families, I guess I'll just never understand that."

Cotton responded to the criticism of his farm bill vote following Paul's speech, saying that it included what he called too much wasteful spending.

"Look, I listened to Arkansas farmers. About two-thirds of them are cattleman, poultry producers, swine producers, they opposed this legislation in large part because it poses unfair regulations and trade barriers on them. It's going to hurt a lot of crop producers, as well, when Canada and Mexico retaliate against us. But generally, as I learned growing up on a farm in Yell County, farmers know you can't keep spending more money than you take in. This legislation spends nearly a trillion dollars and Arkansas farmers only get one-half of one percent benefit from that, in part because it's 80% food stamps."

Cotton said training programs and other programs should be requirements for anyone receiving nutritional assistance through programs like SNAP.

Republican Party of Arkansas Spokesperson Holly Wilson said Friday's event was not expected to bank the party any additional funds, but instead would break even. The event was previously scheduled for December, but was re-scheduled due to inclement weather.

The weekend's events continue Saturday (Feb. 1) when the RPA will hold its Winter state committee meeting at the Arlington Hotel, beginning at 10 a.m.

Plans to drastically alter the appearance and business model of the Fianna Hills Country Club are continuing to move forward, with plans for a $20 million investment in the property.

Lancy Beaty, a partner with Dr. Stephen Nelson in Fort Smith-based FSM Redevelopment Partners, said one of the biggest hurdles in moving forward with the project so far as been finding a way to zone the revamped country club, which is zoned by the city of Fort Smith as R-2SF, or a residential zoning that permits country clubs.

"Under that definition, a country club is permitted, but it's a conditional use," Beaty said. "There's an existing conditional use as an existing country club, but if you combine the attributes that we are combing there — including the guest suites — there's no definition in the zoning code that defines that particular group of attributes together."

As a result, Beaty is working with the city on the creation of a planned zoning district (PZD) for the country club, which he described as "hybrid zones." It’s only the third time the city has worked with a developer through a PZD process.

The new zone would allow FSM Redevelopment Partners to continue with plans to build an expanded Fianna Hills Country Club on the property's existing footprint while adding features including guest suites, which Beaty said would only be available to members and their guests, not to the general public. The policy will keep the facility from being a bustling hotel open to the general public, and instead will continue serving the needs of club members through the expanded amenities.

NEW LOOK, NEW SERVICES
The overall look of the structure will change with the planned expansion of the facility, Beaty said, with the facility having a "modern rustic" look, which would appear to mimic a lodge. Renovation will including stripping the facility down to steel and concrete and then rebuilding.

The addition of guest suites and a change in appearance are not only meant to modernize the club, it is meant to revolutionize its business model as it expands offerings beyond a golf-focused venue.

Among the offerings at the facility will be an updated menu at the club's restaurant, the addition of an airport concierge service as well as the addition of concierge medical offerings for those who choose that level of membership.

"We have the airport concierge service. Those folks that travel a lot are able to just come to the club and they can leave their car there and we'll be able to carry them to the airport and pick them back up," he said. "That's in our elite membership package, along with the concierge medical that's in the elite package. …It's more wellness management. You know, the ability to have somebody that knows you and can address your concerns with medications or prescription refills."

Beaty is quick to note that the club will not host a full acute care clinic, but he said prescriptions can be delivered to an individual's home while other medical-related issues can be addressed quickly for elite members, a group that will be limited to only 100 individuals.

DIFFERENT FEE STRUCTURE
The changes Beaty and his partners have detailed for current members of Fianna Hills Country Club will result in a more expensive club membership, but he was quick to mention the changes members will get.

"It's more expensive in that it's structured differently. In most clubs, there's that fee-base (for membership), and that's what you pay plus any ancillary costs plus food and beverage. You know, you pay your membership — you know, your key to the door — then whatever you consume."

In the case of the revamped Fianna Hills Country Club, Beaty said there would be "a capital piece that is $30,000 and that capital piece is paid up front. You can write a check for it, or we made arrangements for people to finance that capital piece over various terms, whatever fits their budget."

"So they pay the capital piece to the financial institution and they pay the maintenance fee to us, which will be kind of like your monthly dues. So long story short, if you take that scenario and you blend it through their current costs now versus the new costs, it will cost them about $125 more a month if they financed the $30,000 piece."

The difference? A brand new country club, a vastly improved golf course managed by Scottsdale, Ariz.-based Troon Golf — a world-renowned golf course management company operating golf courses in 32 states and 27 countries — and amenities that set the revamped Fianna Hills Country Club apart from anything offered in the region.

COMMUNITY COMMITMENT
For FSM Redevelopment Partners to feel comfortable moving forward on expanding the facility from 27,000 square feet to its planned 85,000 square feet, Beaty said his would need the commitment of about 500 individuals. Those individuals would place $1,000 deposits on the project, with the deposit sitting in escrow until the company closes its planned purchase of the facility following approval by the city of Fort Smith's planning commission and Board of Directors. The committed members would only pay up once the building is complete and there is a certificate of occupancy hanging in the building. It is a deal that Beaty has assured current and prospective members included no risk to them.

"People are committing that if we build it they're in," he said. "And we're committing that if you're in, we'll build it. It's a reciprocal commitment and we don't get anything until it's a done deal."

While Beaty said about 500 commitments are needed for his company to move forward with the project, he said membership would be limited so that the club’s overall customer base is no more than 2,500 people.

In a statement FSM Redevelopment Partners sent to the media on Monday (Feb. 3), Beaty commented on community reaction to the planned changes at Fianna Hills Country Club: “The proposed changes to the club were met with mixed reactions from the Legacy Members, and there was a bit of sticker shock with the capital investment required. However, I was very pleased with the number of membership reservations that were received and those funds have been placed in escrow at Guaranty Abstract and Title Company in Fort Smith pending the completion the project. We’ve received a positive reaction to our redevelopment plan, especially among area corporations and companies who see the benefit of our innovative approach toward a country club.”

The PZD consideration for Fianna Hills Country Club is scheduled for a hearing before the Fort Smith planning commission in March, with a hearing and vote before the Fort Smith Board of Directors at a later date.

Sales tax collection for the city of Fort Smith were down 0.69% for the 2013 reporting year, ending two years of collection gains and coming in 1.16% below budget estimates. However, the year ended on a positive note with the December report showing gains in city collections and the city’s portion of the countywide 1% sales tax.

Each of the city’s 1% sales taxes (1% for streets and 1% for water and sewer projects) collected $1.595 million in the December report, up 2.26% from the same period in 2012.

The collections in the December report were 8.9% below budget estimates. (Because the state of Arkansas has a two-month delay in reporting collections back to the cities, the city of Fort Smith — for budgeting purposes — has historically reflected the collections on a one-month delay. Which is to say, the tax collections remitted to cities in January are from taxes collected in November and transferred by merchants to the state in December.)

Total collections in the 2013 reporting period of the two 1% taxes were $38.937 million. Collections in 2012 of the two 1% taxes totaled $39.21 million, slightly ahead of the $38.683 million during 2011. The 2011 collections were 3.9% above 2010 collections.

Fort Smith’s share of the county 1% sales tax in the December report was $1.243 million, up 2.52% compared to December 2012. The collection was down just 0.08% compared to the revenue estimate.

The countywide tax has generated $15.353 million for Fort Smith during 2013, up 0.49% compared to 2012 and down 1.99% compared to budget forecasts.

The countywide tax generated $15.279 million in 2012, just ahead of the $15.15 million in 2011, but lower than the peak collection of $16.61 million in 2008.

The countywide tax collection is critical because the revenue is a little more than 40% of the city’s general budget of roughly $42 million. A majority of the general fund budget general supports fire, police and other critical city functions. The dip in collections compared to budget estimates has resulted in city officials seeking 4% budget cuts from all departments.

AREA COLLECTIONS
Following are selected regional tax collection figures provided by the Arkansas Department of Finance and Administration.

Sales tax collections in Crawford County for the first 11 months of 2013 total $5.824 million, up more than 2.3% compared to the $5.691 million in the same period of 2012.

Collections in Van Buren for the first 11 months of 2013 are $6.559 million, well ahead of the $3.219 million in the same period of 2012. The city approved a 1% sales increase in 2012 for infrastructure improvements and emergency services upgrades.

Collections in Franklin County for the first 11 months of 2013 were $2.41 million, down 0.31% compared to the same period in 2012.

Collections in Logan County for the first 11 months of 2013 were $1.861 million, up an impressive 20.3% compared to the same period in 2012.

Collections in Sebastian County for the first 11 months of 2013 were $26.097 million, up 1.24% compared to the same period in 2012. Collections in the Sebastian County city of Greenwood totaled $1.818 million for the first 11 months of 2013, better than the $1.783 million during the same period of 2012.

PREVIOUS ANNUAL COLLECTION INFO (Fort Smith)
2% sales tax collection (1% for streets; 1% for water/sewer bonds)
2013: $38.937 million
2012: $39.210 million
2011: $38.683 million
2010: $37.229 million
2009: $37.554 million
2008: $41.226 million
2007: $37.858 million
2006: $36.840 million

Fort Smith portion of 1% countywide sales tax
2013: $15.353 million
2012: $15.279 million
2011: $15.15 million
2010: $14.89 million
2009: $15.04 million
2008: $16.61 million
2007: $15.15 million
2006: $14.71 million

Rep. Bill Gossage, R-Ozark, has announced that he will seek a second term as the representative for District in the Arkansas House later this year.

Gossage, assistant superintendent of the Ozark Public School System and the president of the Ozark Area Chamber of Commerce, said in a press release that his first term focused on education and tax policy.

“Over the past year I have fought for better education for our children and tax relief for all Arkansans. Though we’ve been successful, there is much more work to do to make Arkansas a better place to work and raise our families.”

The re-election announcement from Gossage goes on to say that he "served on the House Revenue and Taxation Committee, the Aging Children and Youth, Legislative & Military Affairs Committee and was also appointed by Speaker Carter to the State and Public School and Health Insurance Program Legislative Task Force. Gossage served as Republican Chair of the Freshman Caucus and Policy Chairman for the House Republican Caucus."

Gossage is just the latest local politician to announce a run for a House or Senate seat from the Fort Smith area. Following are a list of candidates who have announced for election later this year:

• Justin Boyd: A Republican from Fort Smith, Boyd became the first announced candidate in District 77, currently represented by term-limited Rep. Stephanie Malone, R-Fort Smith.

In his campaign announcement, Boyd made clear that his background in the medical field was going to become a large part of his campaign.

"Without a doubt, (health care) is (an) important issue to me and one I am passionate about," he said. "But running for this office means I can make positive changes in all areas for my family and other families in Arkansas. Being a State Representative isn't a license for mediocrity. (It) means you get in and roll your sleeves up and make things work for your neighbors."

Sebastian County Justice of the Peace Danny Aldridge, R-Fort Smith, has been rumored to be exploring a run for the seat but confirmed Monday (Feb. 3) that he would not seek the seat.

• Rep. Charlene Fite: The freshman Republican from Van Buren is so far the only announced candidate for her District 80 seat, which encompasses parts of western Crawford and Washington Counties.

In announcing her re-election bid, Fite said her short tenure had already resulted in 11 sponsored bills, all passing both the House and Senate.

"Bills sponsored by Fite include one establishing civil penalties for the crime of stalking; an act providing for licensed qualified interpreters for individuals who are deaf; an act strengthening sentence enhancement for domestic battering; an act concerning the required child maltreatment central registry checks for adoption; an act to provide for extended post-conviction no contact orders for certain criminal offenses; and an act to amend the child maltreatment act."

• Rep. Justin Harris: A representative whose district runs from West Fork to Alma, Harris confirmed July 2013 that he would not run for any higher office, instead saying that he felt most effective right where he was.

"I think there's too much at stake in the upcoming legislative session …to look at the private option, to see what we've got to look at for every year it's going to have to be approved. And look at the triggers, and just to see what's going to have to be approved."

The often outspoken Republican will be seeking his third and last term in the Arkansas House of Representatives.

• Sen. Bruce Holland and Rep. Terry Rice: When Sen. Bruce Holland, a Greenwood Republican, ran for re-election to the state senate in 2012, he got a run for his money from then-Rep. Rick Green, R-Van Buren, with the race quickly turning dirty. In the end, Holland came out on top even after Green endorsed Holland's Democratic challenger, Rep. Tracy Pennartz of Fort Smith.

In this latest primary matchup, Rep. Terry Rice, R-Waldron, said he would run for Holland's District 9 seat in order to uphold the values that have guided him as a state representative, he said.

"As a business owner, I understand the pressures of making a payroll, dealing with taxes and excessive government regulations, along with the additional costs passed on to the consumers who already live on a tight budget. I live by the conservative values instilled in me by my father and grandfather — faith, family, hard work, and mature judgment."

For his part, Holland has said he and Rice are friends and he was caught off guard.

• Rep. George McGill: The Fort Smith Democrat (District 78) said he would seek a second term in the Arkansas House back in November 2013, highlighting several different accomplishments in his announcement, including assistance in securing more than $1 million for the U.S. Marshals Museum. McGill also pointed to his leadership in "protecting funding for higher education throughout the state" and having the Arkansas Economic Development Team visit Fort Smith.

• Matt Pitsch: The Republican business owner is making his second run for the District 76 seat, hoping to succeed the man he challenged to a primary in 2012.

Pitsch, who lost that year's primary to Rep. Denny Altes, R-Fort Smith, a term-limited establishment of the Sebastian County Republican Party, touted himself as a fiscal conservative focused on economic development when he announced for this year's run.

Wal-Mart has plenty of fans and critics when it comes to the retailer’s sustainability initiatives. When former CEO Lee Scott boldly announced the retailer’s sustainability platform eight years ago, there were doubters that Wal-Mart would stay the course.

While the journey to a Green Wal-Mart is a long one, there is some progress being made. In fiscal 2013, the retailer said its bottom line benefited $150 million from sustainability initiatives, such as solar and wind energy projects, fuel cell installations and its zero waste program. This was on top of $231 million it saved in 2012 from waste reduction and recycling.

Katie Ware, spokeswoman for the Environmental Defense Fund’s corporate partnership program, said there is a direct correlation between sustainable spending projects helping to boost bottom lines profits over time.

“We have had a partnership with Wal-Mart for the past seven years, and have worked directly with the retailer on multiple projects: developing the sustainability index that it now uses with its suppliers; reducing harmful chemicals in products sold; and optimizing fertilizer use among the agricultural farms that supply produce and other food items,” Ware said in a phone interview.

Wal-Mart is an active member of the Green Power Partnership with with the Environmental Protection Agency. Each year the EPA ranks its Green Power partners on sustainability impact — reducing electricity usage, while also developing new renewable energy capacity generation.

Among Fortune 500 company’s Wal-Mart ranks No. 5 in terms of renewable energy used, according the list released last month. No. 1 Intel Corp. used 3.1 billion kilowatt hours, 100% of its total electricity usage. No. 2 Microsoft used 1.935 billion kilowatt hours, 80% of its total electricity usage. No. 3 Kohl’s Department Store used 1.536 billion kilowatt hours, 105% of its total electricity usage. No. 4 Whole Foods used 800.2 million kilowatt hours, 107% of its total electricity usage.

No. 5 Wal-Mart Stores used 751.4 million kilowatt hours, 4% of its total  electricity usage.

Stacy Mitchell, environmental expert with the Institute for Local Self-Reliance, said there is one glaring difference between the other top four companies and Wal-Mart.

“Just 4% of Wal-Mart’s energy used is renewable. They are quite willing to purchase renewable energy in markets where other electricity rates are already high, but don’t want to discuss core aspects of their business model that are far from efficient, such as their sprawl, land use and construction design,” Mitchell said in a phone interview.

She said another way to evaluate Wal-Mart’s professed leadership on climate is to look at its greenhouse gas emissions intensity — the volume of pollution it produces per $1 million in sales. Wal-Mart’s emissions intensity – 45 metric tons of CO2e per $1 million in sales – is higher than that of competing chains, including Costco (16 metric tons) and Target (42 metric tons), according to the Mitchell.

Costco’s emissions intensity is only about one-third of Wal-Mart’s, in part because Costco’s high-wage workforce generates more sales per square foot and therefore uses less energy to produce the same revenue.

Mitchell said Wal-Mart has received loads of media attention for sustainability efforts when it’s the suppliers doing most of the heavy lifting. But not everyone sees it that way.

EXPONENTIAL EFFECT
Ware said one of the reasons EDF has made it a point to work with Wal-Mart on sustainability goals is because of the exponential effect which can be realized with the the Wal-Mart lever is applied.

“They are huge in terms of scale and when their suppliers – 100,000 strong – all get onboard on issues like reducing harmful chemicals throughout the supply chain, that can be a game changer,” Ware said.

Last fall Wal-Mart announced a new policy on sustainable chemistry in consumables. This was sorely needed across the industry given that some 40% of the products tested by the EDF were found to contain chemical of “concern,” Ware said.

Beginning in January 2015, Wal-Mart will require suppliers to provide online public ingredient disclosure for consumable products sold at Wal-Mart. Consumable products include commonly used items like baby lotion, cosmetics, shampoo, spray cleaners and air fresheners.

The retailer also prioritized a list of 10 chemical ingredients as its initial list of high priority chemicals that are targeted for continuous reduction, restriction, and elimination, using informed substitution principles. Wal-Mart said it would regularly review if additional chemicals should be prioritized. Also, Wal-Mart will begin to label its private brand cleaning products according to EPA safer product labeling program.

Ware said harnessing the massive scale of Wal-Mart's business to move hazardous chemicals out of the supply chain and off store shelves will have ripple effects across the entire industry.

No one argues that consumers today demand safer products and they are reading the labels. EDF said it pushed hard for this policy, which sets a new standard for the retail industry and sends a strong signal to suppliers that it’s time to get serious about phasing out hazardous chemicals in products. Wal-Mart’s largest supplier, Proctor & Gamble, was already onboard making a similar announcement the prior week before the retail giant.


Another area where EDF believes Wal-Mart can move the needle is working with suppliers to reduce nitrogen based fertilizers, which is responsible for nearly half of Wal-Mart’s carbon footprint in its supply chain.



Ware said the EDF has spent several years working with farmers to optimize fertilizer use on farms. Wal-Mart recently announced commitments from 15 suppliers to encourage better fertilizer use in their supply chain. These changes will touch more than 30% of the food and sales in the North America.

“That’s huge,” Ware said.

EDF estimated this agricultural initiative would save seven million metric tons of greenhouse gases, in addition to protecting water and soil quality.

The annual cattle inventory report confirmed that the U.S. cattle herd shrunk 2% from a year ago, according to a U.S. Department of Agriculture annual report. What's more, the 87.7 million head of cattle and calves is the smallest U.S. herd since 1951, according to Derrell Peel, livestock marketing specialist with Oklahoma State University.

The beef cow inventory was 29 million head, down 0.9% from last year and the smallest beef cow herd since 1962. The numbers indicate that the industry is poised to begin rebuilding in 2014, weather permitting, Peel said.

Among the 10 largest beef cow states, the cow herd was up in five states and down in five. The largest decrease in cow numbers occurred in Texas, followed by South Dakota, Montana and Kentucky and Nebraska. Beef cow numbers increased in Arkansas, Kansas, Missouri, Oklahoma, and North Dakota, Peel notes. On net, he said there was a slight increase in beef cow numbers in the top ten beef cow states. 
 
The inventory of beef replacement heifers was up 1.7%, a bit smaller than pre-report expectations. But Peel notes that the number of beef replacement heifers as a percent of the beef cow herd, at 18.8% was the largest in more than 20 years, including the last cyclical expansion in the early 1990s. Beef replacement heifers increased in seven of the top 10 beef cow states, resulting in a 4.1% net gain.

Peel said only Montana, North Dakota and Kentucky had fewer replacement heifers compared to last year while Texas, Missouri, Oklahoma, Nebraska, South Dakota, Kansas and Arkansas had an increase from 2013. Oklahoma led the increase among states with 45,000 more beef replacement heifers, an increase of 16.1% year over year. Arkansas’ beef replacement heifers increased 6.2% year-over-year to 137,000 head, according to the USDA report.

The 2013 U.S. calf crop was 33.93 million head, down 1% from 2012. A smaller calf crop, combined with increased heifer retention and fewer feeder cattle imports, resulted in a 2.7% decrease in estimated feeder cattle supplies. As of Jan. 1, there were 24.8 million head of feeder cattle, down from 25.5 million head one year ago. Inventories of steers over 500 pounds were down 2.5%, calves under 500 pounds were down 3.7% and other (not for replacement) heifers were down 5%, Peel notes.

The fact that cattle on feed was also down 5% limited the decrease in estimated feeder supplies outside of feedlots to 2.7%. Estimated feeder supplies as a percent of the 2013 calf crop was 72.9%, down from 74.2% past year and below the ten year average of 74.4%. This indicates that a smaller than average percent of feeder cattle supplies were carried over from 2013 into 2014. 

The number of cattle grazing small grains pasture on Jan. 1 in Kansas, Oklahoma and Texas was 1.61 million head, up 20% from last year and the highest total for the region since 2010. The share of estimated feeder supplies in these three states on January 1 increased to 25.7% up from the 2013 low of 25.1 percent but still below the ten year average of 28.3 percent.
 
The Jan. 1 cattle inventories for all cattle as well as beef cows can be the lows from which the industry rebuilds over the next several years, Peel said. However, the industry is vulnerable to drought conditions that could re-intensify this spring and postpone herd expansion once again. Market signals for expansion are strong and growing and the industry is poised to respond. 

“We know what we want to do; we just don’t know what Mother Nature is going to let us do,” Peel said.

The percentage increase in year-to-date Arkansas gross tax collections fell to 2.1% in January compared to a 3.4% level in the December report. Also, sales and use tax collections continue to come in below the budget forecast, a potential sign of uncertainty among Arkansas consumers.

Year-to-date gross revenue (July 2013-Jan. 2013) totaled $3.482 billion, 2.1% above the same period last year and above forecast by 0.7%, according to the report issued Tuesday (Feb. 4) by the Arkansas Department of Finance and Administration.

Individual income taxes for the fiscal year totaled $1.68 billion, up 0.5% from last year and 1% above the budget forecast. Year-to-date sales and use tax collections were $1.279 billion, up 3.4% above last year and below forecast by 0.7%. Income taxes and the sales and use tax collections are the two primary sources of state revenue.

“Sales and Use tax represented the major drag on collections in January. Collection growth was only 0.2 percent compared to year ago and 4.0 percent below forecast. Weaker than expected retail sales to consumers accounted for this result,” John Shelnutt, head of the Department of Finance and Administration’s Economic (DFA) Analysis & Tax Research division, noted in his report.

Corporate income tax collections for the first seven reporting months of the fiscal year totaled $234.5 million, up 6.9% compared to last year and 5.5% above forecast.

In a Tuesday morning interview with Roby Brock for a Talk Business Internet broadcast, Gov. Mike Beebe said consumer spending could be weather related but he does watch for trends in the tax collection reports.

“You try to follow trends, and the trend currently is that we’re on forecast,” Beebe explained. “It tells me whether or not i have to cut the forecast. ... You don’t want to get behind the curve and wait too late to have to make adjustments in the forecast, because if you do that, then it compresses in a time period decisions that can be much harder to make, or much harder to live with.”

The revenue forecast for fiscal year 2015 is $6.333 billion, up just 2.1% above the 2014 estimate. The 2015 estimate includes an anticipated reduction of $85.2 million from tax cuts approved in the 2013 Legislative Session.

JANUARY NUMBERS
January gross revenue was $560.5 million, down 3.9% above last year and 0.7% below forecast.

Individual income tax collections during January totaled $320 million, down 6.3% compared to January 2012 and above forecast by 0.2%.

Sales and use tax collections during the month totaled $178.6 million, up just 0.2% from last year and 4% below the forecast.

Corporate income tax collections January totaled $30.9 million, up $3 million from January 2013 and 11.2% above forecast.

OTHER TAX COLLECTIONS
Alcoholic beverage
July 2013 - Jan. 2013: $30.2 million
July 2012 - Jan. 2012: $29.1 million

Games of skill
July 2013 - Jan. 2013: $21.7 million
July 2012 - Jan. 2012: $19.1 million

Tobacco
July 2013 - Jan. 2013: $130.8 million
July 2012 - Jan. 2012: $131.9 million

Insurance
July 2013 - Jan. 2013: $45.3 million
July 2012 - Jan. 2012: $42.8 million

COLLECTIONS HISTORY
Tax collections during fiscal year 2013 (July 2012-June 2013) totaled $6.214 billion, up 4.9% above the previous fiscal year and up 2.5% compared to budget estimates. A result of the gain was a budget surplus of $299.5 million.

Fiscal year 2013 marked the third consecutive year of year-over-year gains. Arkansas tax collections reversed a negative two-year slide in the 2011 fiscal year, with collections up 4.5% in the July 2010-June 2011 period.

State tax collections for fiscal year 2011 totaled $5.673 billion, up 4.5% above the $5.43 billion in the 2010 period.

The biggest declines in the 2009 and 2010 fiscal years were with individual income tax collections and sales and use tax collections.

Mike Duke stepped away from the day-to-day leadership of Wal-Mart Stores Inc. on Saturday, (Feb. 1) after five years and some of the most profitable times for the retailer in decades.

Though Duke did not grant any outside media interviews, the company’s internal communications department did release a question and answer format they conducted with Duke in mid-January. Wal-Mart World made that interview public this week.

Duke said in that interview he will continue as a consultant to Doug McMillon over the next year and he will retain his board seat indefinitely to help with the smooth transition, according to company protocol. When asked about the retailer’s biggest opportunity in the next five years, Duke spoke of urgency.

“We have to move even faster, with real speed and urgency, to exceed the expectations that our customers have in how they want to shop. Technology is driving so much change. It’s at the intersection of e-commerce and physical stores where Walmart can serve customers better than any other global retailer,” Duke said in the interview.

He was asked about any advice he might give Doug McMillon. Duke answered, “You may not have enough ink for my answer. But if I could boil it down to one thing, and this is the best advice I got when I became CEO, it is to be yourself. A different role doesn’t mean you should be a different person. You got the job because of who you are, and you will succeed because of who you are. Doug is a fantastic leader. And he has succeeded because he is real, authentic, and trusted. He just needs to be himself.”

Just four other people on the planet have had the opportunity to follow Sam’s Walton’s lead as CEO of the company he founded a half century ago. Duke was asked what he most admired about Sam Walton?

“I’ll mention two things. First, he led with integrity, which is the foundation for everything. If you have integrity, you can be trusted. Without it, you won’t be able to lead. Second, I admire how Sam was able to put the emphasis on customers and on associates serving customers. He was clearly so good at communicating in an informal, approachable, and meaningful way.,” Duke responded.

Duke was also asked to share his proudest accomplishment in his 19 years at the company.

“I’ve seen so many associates – men and women at all levels across our company – learn, grow, and take on bigger roles. If I made even a tiny contribution to encourage that development, to help someone truly excel in his or her job and better serve our customers then that makes me very proud,” Duke answered.

Lastly, Duke said he plans to be out and about in stores and clubs more, which is has been one his favorite aspects of the job.

“I have great memories of visiting associates in the stores, talking with customers in their homes, and representing the company in front of global leaders. It’s been hard work but a great honor and joy,” he said.