Commercial vacancy rates are improving across Northwest Arkansas with positive absorption of existing space but there is still too much unoccupied space not generating income for owners, according to the Skyline Report released Tuesday (April 8). 

Vacancy rates in the second half of 2013 decreased slightly in all submarkets of commercial real estate except for the medical office submarket.

COMMERCIAL VACANCY RATES
Office: 15.2%, down 0.1%
Office/Retail: 14.2%, down 0.1%
Office/ Warehouse: 13.4%, down 1.1%
Retail: 9%, down 1.6%
Warehouse: 17.3%, down 0.3%
Medical Office: 12.8%, up 0.1%

“We continue to see new development happening in the ‘hot spots’ of activity — Bentonville and the I-540 corridor in Rogers,” said Kathy Deck, director for The Center for Business and Economic Research at the University of Arkansas. Deck is the lead researcher for the report which is sponsored by Arvest Bank.

“We know that the activity is concentrated, but we are seeing increasing levels of building from more than just a couple of development companies. The plans in place mean that we are going to see a number of new developments come on line in the coming year,” she added.

In the second half of 2013, 492,006 total square feet of commercial space were absorbed, while 106,399 new square feet were added, netting positive absorption of 385,607 square feet in Northwest Arkansas. The largest gains in absorption came in the retail submarket with 140,357 square feet, the office/warehouse submarket with net positive absorption of 83,495 square feet and the warehouse submarket with net positive absorption of 65,767 square feet.

The office and industrial submarkets had positive net absorption of 33,471 square feet and 33,051 square feet respectively, while the retail/warehouse submarket had positive net absorption of 28,653 square feet and the office/retail submarket had positive net absorption of 813 square feet.  

“As more businesses and developers are examining the market for opportunities, we remain cautiously optimistic for controlled, measured growth in Northwest Arkansas,” said Kent Williamson, loan manager with Arvest Bank in Springdale. “

Conversations by CBER researchers with commercial developers and property managers during the second half of 2013 tended to be optimistic as to the growth opportunities of the economy in Northwest Arkansas. Panelists said that Class A office and retail markets continue to have the most potential for new growth, particularly in established “hot” locations. Multiple developers are ready and willing to build. 

Panelists also noted that oversupply of Class B office/retail space and inadequate infrastructure development for the region’s needs are each negative factors in Northwest Arkansas’ economy. 

The City Wire has reported on numerous commercial projects under way and nearing completion. David Erstine and Clinton Bennett of CBRE Northwest Arkansas recently launched the I-540 Interchange Report.

The first edition (January 2014) reveals more than 24 new projects in the planning stage, some of those have since moved into the construction phase over the past month. At the same time, the region also has seen the opening of several other projects including Dunkin Donuts in Bentonville and Planet Fitness in Fayetteville. Bennett and Estine said the climate is ripe for more commercial deals as local infrastructure projects are starting to catch up.

MIXED MULTIFAMILY 
The Skyline Report indicates vacancy rates increased in Fayetteville and Bentonville to end 2013, because of new projects coming online

Overall, Northwest Arkansas’ vacancy rate increased to 5.8% in the second half of 2013 from the 4.3% reported in the same period of 2012 and up from the 4% reported in the first half of 2013, according to Skyline data.

Fayetteville experienced a large jump in vacancy rates, up to 7.7% from 4.6% in the second half of 2012, as 1,989 new bedrooms were added to the market in the last six months of 2013. Bentonville’s vacancy rate increased to 6.3% from the 2.4% reported in the second half of 2012.

“The multifamily market continues to be very tight in Northwest Arkansas and that will continue until new units are added across the region,” Deck said.. “A tight market presents opportunities for developers across the communities of the region and we expect to see continuing announcements of additional units in the coming months.”

While the new student-driven multifamily complexes added to Fayetteville’s available supply of large-scale multifamily housing, the rise in Bentonville’s vacancy rate seems to be localized primarily in the complexes near the Northwest Arkansas Regional Airport, Deck said. 

“We have also seen an increase in single family housing construction and absorption in that area, so the shift in the two areas may be related,” she added.

Tighter capacity is prompting higher lease rates. The Skyline reported the average lease rate across the region was $556.72 in the second half of 2013, rents rose 2.14% from the first half of the year.

The City Wire reported on the multifamily market in March following at report from CBRE. That data found stable occupancy rates, despite the active building in Fayetteville.

The Fort Smith Planning Commission approved a conditional use Tuesday (April 8), removing the final road block in what has been a long and winding road in the city and Sebastian County's attempts to build the $10.9 million Ben Geren Aquatics Center.

The conditional use permit approved by the commission by a vote of 8-0 was necessary, according to Deputy City Administrator Jeff Dingman, due to the commercial zoning of the land on which the aquatics center will sit along Zero Street.

"Well, every property has an underlying zone and there's certain uses that are just outright permitted in the zone, there's certain uses that are permitted by a conditional use permit. I think the underlying zone for this property is C-5, whatever it is," he said. "But a water park is not necessarily a direct permitted use for any zone that we have in town. Certainly, it's allowable for conditional use and that's what the application here is. Any time you put a park, a school or a church or those types of things, their underlying zoning is one thing, but their conditional use allow them to be there."

Senior City Planner Brenda Andrews said a public meeting was held in March regarding the conditional use permit, but no residents attended the meeting. No opposition was presented during the commission meeting Tuesday.

With the conditional use approved for the site, Dingman said the city and county can now move forward with the bid process, a process already underway and will culminate Thursday (April 10) with the public unsealing of bids in the Sebastian County Quorum Courtroom on the second floor of the county courthouse in downtown Fort Smith.

While the bidding process is intended to secure the lowest costs for local governments, Dingman said the city and county were prepared should any bids on various aspects of the project come in at totals higher than expected.

"Each bid package — and there's 30 plus bid packages — each of them is built with a set of alternate deductions. Hopefully if one piece comes in more than we expect, hopefully we can alter it by deductions on its own piece or deductions on other pieces to take some alternate deductions and make it fit within the budget."

Barring any unforeseen circumstances, city and county leaders are still expecting an opening date of Memorial Day 2015, according to Dingman.

"Yes. We're still on schedule for that (Memorial Day 2015). Hopefully we'll get the good bids in this week and contracts awarded here before the end of the month and get them going."

FIANNAHILLS CLUB REACTION
The commission meeting held Tuesday was the first since developer Lance Beaty of Fort Smith-based FSM Redevelopment Partners pulled out of a planned $20 million development that would have revitalized Fianna Hills Country Club.

A planned zoning district Beaty had applied for as part of the project was approved by the Fort Smith Planning Commission by a vote of 9-0, though a vote by the Board of Directors was tabled until a later date due to Beaty's withdrawing from the project.

Commissioner Rett Howard said the fact that Beaty pulled out of the project was "sad," adding that he "would have liked to have seen it happen." Richard Spearman, another member of the commission, said the project would have benefitted the neighborhood and the city, adding that he was surprised at the level of opposition to the project that showed to the city Board meeting the day Beaty pulled out of the project.

"From up here, I thought actually that those…there were more people in favor of the project than against it (when the planning commission voted on the project). And when people got up to speak, some of those who were opposed actually wound up being in favor of it (after having questions answered by Beaty)."

As for what happens next, Commissioner Brandon Cox said he had not heard of any plans for the Fianna PZD, but said it was important that the commission be open to any developer who may want to invest in the country club, which its owners say could close within the next one to three months.

"I mean, you know, all we can do is give the developer the opportunity and whether the business plan plays out or not, we just have to see. I don't know. I don't know other than that."

Howard said he just wants something good for the city and the neighborhood.

"I'm open to what anyone wants to suggest. But I hope it's something good. Anything for growth. Something that the neighbors can agree to and something that can be good, positive growth for our area."

Andrews said she had not heard from anyone associated with Fianna Hills Country Club regarding the PZD. Dingman said he did not have anything new regarding the PZD application, either.

"I haven't heard anything new about it other than it's on the agenda again May 6th."

It’s been a big week for downtown Rogers with two major investment announcements, a Wal-Mart Neighborhood Market and a new Mercy health clinic. Mercy and Wal-Mart are each laying down major investments across Benton County this year. 

In the past nine months, Mercy NWA has invested about $20 million into three new clinics and more than 40,000 square feet of expanded health care across Northwest Arkansas. The clinics are in Bella Vista and Centerto, with a behaviorial health center at the Rogers hospital. Wednesday’s (April 9) groundbreaking marks Mercy’s fourth new clinic in recent months. Mercy said it has signed a long-term lease with Mathias Properties who will own the new building.

“Our shovels are being put to use, that’s for sure,” said Dr. Steve Goss, Mercy Clinic president.

The new downtown Rogers clinic is located at 613 N. Second St. Plans call for a 7,500-square-feet facility that will employ three doctors, one nurse practitioner and 15 other healthcare and support staff. The new clinic is expected to open this fall.

“It’s an exciting time at Mercy. We tell our doctors and co-workers to hold on, because as long as the needs in our community grow, so shall we. And here we are breaking ground again today with the goal of placing healthcare closer to home for our patients and their families,” Goss told the crowd at Wednesday’s groundbreaking.

The facility also will house radiology and laboratory services in addition to primary care.

“When a patients comes to see us, the goal is to be able to meet all of their needs right there,” Goss said. “If they need a lab drawn or an x-ray taken, being able to say, ‘step right into this room,’ versus drive five miles across town is a good thing, and it is the right thing to do in providing true patient care. To keep our community healthy, we must make health care as convenient as it can possibly be.” 

Rogers Mayor Greg Hines said this is a major anchor for the downtown area and falls within the city’s plan to redevelop the neighborhood just north of the brick street district.

Harps Foods invested in that area several years ago, Casey General Store followed and the new Mercy Clinic site is adjacent to those businesses. He said the city needs to do more infrastructure work in the immediate area north of downtown, adding that the city could partner with businesses who plan new or redevelopments to get this done.

“As we continue to grow, it is vitally important for the success of Rogers as a sustainable community to have a strong and vibrant and downtown. One that allows folks to not only work downtown but to live downtown. This is key to attract the new people who are coming to Rogers and wanting to live downtown,” Hines said.

A recent survey completed by the Rogers-Lowell Area Chamber of Commerce indicated that residents want to see more housing and businesses local downtown. Steve Cox, economic development director for the Rogers-Lowell Chamber, said the new Mercy clinic and the Walmart grocery are the kind of the investments that can ignite other developments. He said some of the older buildings downtown are getting a facelift and there is a new sense of awareness about the importance of the downtown heritage.

“I firmly believe Northwest Arkansas can be a healthcare destination. Just like retail, supply chain or food processing, I believe healthcare can be a major pillar for future growth in this region. I am waiting for the day I get on a plane and read in an airline magazine about some new doctor or healthcare treatment that can be gotten here in Northwest Arkansas,” Hines said.

Hines joked that the new clinic that was dedicated to Dick and Nancy Trammel, will be the closest to their home.

Mercy honored the Trammels for their service over the years in helping to raise funds for the nonprofit healthcare provider. Dick Trammel has been on the hospital board during the building campaign and he serves on the foundation and hospital board of directors. Nancy has served on the Women with a Mission steering committee.

Fort Smith attorney Kyle Parker, who has been named president and CEO of the planned Fort Smith-based Arkansas College of Osteopathic Medicine, said Wednesday they “are moving quickly” on what will be a $58 million college that when fully operational will house 600 students.

Parker, as chairman of the Fort Smith Regional Healthcare Foundation (FSRHF), has been the lead on pushing for the college that was announced Feb. 18. The media was notified Wednesday (April 9) of Parker’s new role with the college.

“Kyle Parker brings vision, passion and years of business experience and expertise to the role of CEO of the Arkansas Colleges of Health Education,” John Taylor, chairman of the Fort Smith Regional Healthcare Foundation, said in a statement. “We are very fortunate to have Kyle serve as CEO as we develop a medical campus beginning with a proposed College of Osteopathic Medicine. Kyle also served on the board of Sparks Hospital when the hospital was sold. Kyle and the board are committed to reinvesting the proceeds from the sale of community owned Sparks Hospital for the maximum good of our area.”

Parker recently has worked in private banking investments and mergers and acquisitions. Prior to 2011, Parker served as vice chancellor of operations with the University of Arkansas at Fort Smith, where he was initially responsible for the technology needs of 8,000 students and 1,000 staff and faculty. His role expanded in 2010 to include the strategic direction for growth at UAFS.

“I’m excited to accept the challenge of bringing this community’s vision to life,” Parker said in the statement. “Fort Smith is the perfect home for a school of this caliber and we will focus our efforts on being able to fill gaps in healthcare and provide care for the medically underserved. We’ve said it before; it’s not about building a school, it’s about recognizing needs in our area, in Arkansas and Oklahoma, and across the U.S., and using our resources to fulfill that need.”

THE COLLEGE
A fully operational school is expected to serve about 600 students, and employ around 65 (full-time equivalent jobs) with an average salary of $103,000. That impact does not include adjunct professors that will be needed for the school, he said. The school, to be located on Chaffee Crossing land (200 acres) donated by the Fort Chaffee Redevelopment Authority, is targeted to accept its first cohort of students in the fall of 2017.

There are 30 colleges of osteopathic medicine (COMs), offering instruction at 40 locations in 28 states. There is not an osteopathy school in Arkansas. Should the development of an osteopathic school in Fort Smith happen, it would be a private, non-profit institution and not dependent on continuous public funds from the state.

Parker said Wednesday that the Chaffee Crossing land has been appraised at $5 million, above the initial estimate of $4 million.

“We just continue to be grateful for their (FCRA) gift,” Parker said.

HIRING OTHER KEY PERSONNEL
He also said members of the FSRHF have interviewed seven candidates “with very very strong” medical backgrounds for the chief academic officer job. Filling the job is critical to the process because a detailed feasibility study cannot be submitted to the Commission on Osteopathic College Accreditation until six months after the CAO is hired. The foundation is set to interview four more candidates, and then narrow the list down and invite the top candidates and their spouse to Fort Smith.

“It’s my plan, at this stage, to get our dean (CAO) hired by May 15 for a start date of July 1,” Parker explained.

He said the FSRHF has hired a consultant who is helping prep for the feasibility study, and he expects the first priority of the new CAO will be to soon hire assistant deans and so they may all work on the feasibility study and develop curriculum.

“This is not a simple report. ... This feasibility study will be several hundred pages long when it is finished,” Parker said.

The FSRHF also expects on April 22 to meet with architects for the purpose of selecting a firm to work with the CAO on the design of the new college campus. Parker said the city of Fort Smith has committed $1.8 million for street, water, sewer and other infrastructure work, and Arkansas Oklahoma Gas Corp. and OG&E are donating a portion of their work to bring utilities to the campus.

“At this stage we see nothing that will slow down our timeline,” Parker told The City Wire during a Wednesday interview. “We’re moving quite quickly. I believe now that we will be able to break ground on the building in late spring of next year.”

COLLEGE, PARKER HISTORY
Revenue from the 2009 purchase of Fort Smith-based Sparks Health System is being used to build and operate the planned college. When Naples, Fla.-based Health Management Associates (HMA) acquired Sparks in a deal valued at $138 million, part of the money was used to create the Fort Smith Regional Healthcare Foundation. Foundation initiatives include supporting scholarships for individuals seeking advanced medical training, the Community Dental Clinic in Fort Smith, health education programs in area schools, and other medical training options.

The new college may help in a small way alleviate the U.S. physician shortage. Parker has said there are about 3,000 applications for every opening in U.S. medical schools. He also said the country will have to produce more doctors to push back against a possible shortage of 140,000 doctors by 2030. That number could rise to 250,000 if the federal Affordable Health Care Act if fully implemented.

Parker earned a bachelor’s degree from Arkansas Tech University and a juris doctorate from Franklin Pierce law Center in New Hampshire. He is married and the father of two children.

During his years as a private practice attorney, Parker wrote the first artificial intelligence software (CLARA) ever granted a registered copyright for the legal profession while in law school. He then created a word search engine, and digitized the Arkansas legal case opinions, statutory and regulatory laws in 1989 to release the first legal CD-ROM in history (CaseBase). In 1994, he conceived and created the first searchable legal information internet site (Loislaw.com) and continued to grow Loislaw.com into a successful publicly traded company. The company was sold Wolters Kluwer in 2001.

It may be early, but 2014 is shaping up to be a great year for Little Rock-based Balm Innovations thanks to the test underway with Wal-Mart Stores Inc. The University of Arkansas for Medical Sciences bio ventures startup recently gained approval to test sales of its Omnibalm Daily Foot Therapy cream in 130 Wal-Mart Stores across seven states.

The product has had the most success in the Arkansas Wal-Mart locations because of the strong brand recognition the product carries throughout the state, according to Lydia Carson, founder of Balm Innovations. She also cites testimonials, word-of-mouth advertising and improved packaging as contributing factors to the growing success of Omnibalm inside and outside the state.

Founded in 2004, Balm Innovations manufactures and holds the licensing for both Omnibalm products, and pays a royalty to UAMS, which helps to fund further additional medical research at the University.

PRODUCT BACKSTORY
Balm Innovations manufactures Omnibalm Daily Foot Therapy, a non-greasy foot cream intended to repair general and diabetic skin problems. The product was developed nearly 30 years ago by Dr. Bill Gurley, a UAMS pharmaceutical researcher at the time.

Gurley created Omnibalm to soothe his own severe sunburn, but it wasn’t long until he realized the product successfully provided relief for a wide variety of skin maladies, including xeroderma, cracking and itching, cold sores, shingles, chafing, and more.
www.omnibalm.com.

Carson said Omnibalm is formulated using 13% authentic tea tree oil, the highest percentage of any skincare cream on the market. She said the product is well-received by diabetics who report in multiple studies healthier feet when using the product once or twice daily.

Because of Omnibalm’s appeal to diabetics, the product recently split into two –Omnibalm Daily Foot Therapy, specially formulated for those with specific foot care needs, and Omnibalm Skin Relief Cream. As for an addition to the Omnibalm skincare line?

“(Dr. Gurley) is not currently focused on developing a specific product, but is always tinkering around in the lab,” Carson said. 

RETAIL SALES
The product made its initial retail debut in USA Drug stores in central Arkansas. The drugstore chain has since been bought by Walgreens. Prior to this debut, Gurley gave away the cream for free.

Carson said Balm Innovations is now waiting on the results of the Wal-Mart product test and of an ongoing clinical study before pushing Omnibalm Daily Foot Therapy with other national retailers. 

The independent clinical study, expected to continue through 2014, focuses on the use of Omnibalm Daily Foot Therapy as preventative method for diabetic foot ulcers. Initial research indicates that the cream does reduce the percentage of foot ulcers experienced by diabetics. 

“While we are not actively pursuing getting into other retailers at this time, we do have a list of possible opportunities to pursue, depending on the results of the clinical study,” Carson said.  

HEALTHCARE OPPORTUNITIES
Health and wellness is big business for Wal-Mart Stores, garnering roughly $30 billion in sales, which was 11% of the retailer’s total U.S. sales in fiscal 2013. Sales grew 3.8% from the prior year but the retailer is barely scratching the surface of opportunities as there are major shifts underway in this segment.

Dr. John Agwunobi, president of health and wellness for Walmart U.S., said during a recent speech in Rogers there are ample opportunities to grow market share. One area of huge potential is over-the-counter (OTC) wellness and nutrition innovation, he said.

“There is room for product innovation across multiple categories in both private label and branded,” he said.

The retailer also is seeing older seniors and demand growth in diabetes and incontinence products. Agwunobi extended an invitation to suppliers to bring those innovation solutions to the table.

A bipartisan House panel unanimously rejected an ethics complaint filed months ago by the Democratic Party of Arkansas against GOP Senate hopeful U.S. Rep. Tom Cotton, but a new complaint has surfaced that has the two camps in another testy battle.

On Wednesday (April 9), Cotton’s Senate campaign released copies of the ethics complaint dismissal from allegations made in October 2013. Democrats claimed Cotton violated House rules by soliciting funds in the U.S. House of Representatives – which is prohibited – when he conducted a radio interview asking for listeners to contribute at his Senate campaign web site.

Cotton said he was outside of the U.S. Capitol building during that interview. On a 6-0 vote, the Office of Congressional Ethics (OCE) recommended dismissal of the complaint after it investigated the charge saying “there is not substantial reason to believe that Representative Cotton was inside a House office, room or building when he solicited campaign funds.”

A subsequent letter from the House Committee on Ethics reported, “As a result of its review, the Committee unanimously voted to dismiss the matter, consistent with the recommendation in OCE’s referral,” the letter said. “Therefore, the committee considers this matter closed.”

Cotton’s campaign said it did not have to disclose the ethics committee findings, but it chose to after the latest allegation coming from former Arkansas Supreme Court Chief Justice Jack Holt, a Democrat.

A spokesman for the Democratic Party of Arkansas, Patrick Burgwinkle, tells Talk Business, “Congressman Cotton has yet to provide a shred of evidence that he was not fundraising inside the Capitol on the eve of the government shutdown he caused that cost taxpayers $24 billion. Serious questions still remain about Congressman Cotton’s commitment to ethical behavior, as former Chief Justice Holt’s ethics complaint demonstrates.”

Holt filed a complaint that Cotton did not properly disclose clients that he worked for as a consultant at McKinsey & Co. prior to his Congressional service.

“Specifically, Mr. Cotton failed to fully identify his sources of compensation on the Personal Financial Disclosure Statement he filed as a House candidate on May 31, 2012. Although he identified McKinsey & Company, Inc. as a source of income, he did not identify any of the clients for whom he provided services in excess of $5,000,” Holt’s complaint reads. “Mr. Cotton’s lack of disclosure demands further investigation by the Office of Congressional Ethics.”

“This is a serious matter of transparency and public accountability,” said Democratic Party of Arkansas attorney Benton Smith. “Arkansans deserve to know whether Congressman Cotton sees himself as above the law. Congressman Cotton should give a full accounting of the clients from his time as a Washington consultant so that the people of Arkansas have the information they are entitled to when they cast their votes in November.”

But Cotton spokesman David Ray said his candidate is prohibited from disclosing private clients from his 13 months at McKinsey due to a confidentiality agreement. He added that House disclosure rules are very clear, and that the Congressman did not violate any ethics rules and went beyond what was required in his Personal Financial Disclosure Statement by including his separation certification from McKinsey.

Ray pointed to the House of Representatives instruction manual which states, “You do not have to disclose the names of clients whose identities are prohibited from disclosure as a result of a …confidentiality agreement entered into with the client at the time your services were retained.”

Cotton’s “separation certification” from McKinsey and Co. states that he will not “disclose, release, or make available to any person, entity, Firm or otherwise, without the Firm’s express written consent, any such information whatsoever (not generally available to the public), including, without limitation, the contents of any reports, memoranda, or other material covering the operations and affairs of the clients or the Firm.”

Ray said Cotton would be willing to provide “sanitized descriptions” of his work done during his tenure at McKinsey. Those descriptions would provide the scope of his services and the general work he performed, but would protect clients’ identities.

Cotton has disclosed one client he performed work for at McKinsey – the Federal Housing Authority.  Ray said that information had already been disclosed by McKinsey in a public report.

“Just like the Democratic Party’s previous complaints, this one is frivolous, false, and wholly without merit,” Ray tells Talk Business. “Tom has not only followed all ethics rules regarding financial disclosure, he has gone above and beyond the listed requirements by providing more information than he had to. The last time the Democratic Party filed one of these politically-motivated claims, the Office of Congressional Ethics and the Congressional Committee on Ethics both dismissed this matter in a unanimous, bipartisan fashion. Senator Pryor is desperate because he knows he will lose any comparison of his record as a rubber stamp for Obama with Tom’s common-sense conservative record. That’s why they keep trumping up phony complaints.”

New internal polling obtained by The City Wire in the race for the District 9 Senate seat shows one candidate with a distinct lead, while his GOP primary opponent is questioning its accuracy and flatly denying that he has any ground to make up in the race.

The poll, conducted by Rep. Terry Rice's consulting firm — Little Rock-based Impact Management Group — shows Rice, R-Waldron, leading incumbent Sen. Bruce Holland, R-Greenwood, among likely Republican voters. The poll also had Rice ahead in favorability versus Holland.

On the question of how favorable 362 likely Republican voters across Crawford, Franklin, Scott and Sebastian Counties found Holland, 34% had a favorable view of him, while 22% had an unfavorable view and the remaining 44% "don't know" their view of him.

The same question of Rice showed him with a 40% favorable, 9% unfavorable and 51% "don't know." On the question of which candidate the respondents would vote for if the May 20 primary were held today, 42% said Rice while only 30% said Holland. Twenty-eight percent are still undecided.

The poll, with a margin of error of +/- 5.15%, sampled individuals who have voted in at least one of the last five Republican primaries, according to a memo from Impact Management Partner Clint Reed to Rice dated Wednesday (April 9). In explaining the key findings of the poll to Rice, Reed pointed to the poll showing Rice's strong showing despite Holland's first mailer being received by residents in the last week.

The memo also noted that the firm running Rice's campaign feels confident he is positioned to defeat Holland next month, though Reed warned Rice to expect a shift in the campaign.

"It is very important that we prepare our campaign and supporters for an onslaught of negative advertising from the opposition and 3rd party groups in the final days of this campaign," he wrote. "I assure you they will leave no stone unturned in an attempt to win this race."

As a result, Reed said the campaign "must not hesitate to set the record straight and draw sharp contrast on the numerous conservative issues that resonate with Republican Primary voters."

Reached by telephone Wednesday, Holland dismissed the poll.

"It's really not surprising that they would present the poll like this after what has happened in the race this week," he said. "I got endorsed by one of the largest, most organized Tea Party groups in the state (Conservative Arkansas). This is just trying to generate interest in the race for them."

Though declining to go into specifics, Holland said his own internal polling showed different results in the race and attacked Impact Management's past polling.

"Well, we have our own polling methodology that we've used. My polls have consistently been good in the past. I know the group that did this poll has had some problems in the past in Northwest Arkansas, the primary season two years ago that had bad numbers for Rep. (Tim) Summers running against Bart Hester. ... (That race) turned out to be different from (its) polling."

Hester won the election by nearly seven points.

Reached for comment, Reed declined to respond to Holland's jabs. For his part, Rice said he was excited about the results of his poll numbers and would continue pushing issues that he feels are important to voters.

“We are pleased with the progress we have made in a short period of time, but there is a lot of work to do,” Rice stated. “I know that the only poll that matters is Election Day. We’ve got great support across the district, and I’m getting a great reception from voters as we talk about my small business experience and my conservative values.”

In declining to discuss his own internal polling, Holland said he wanted to catch Rice and his consulting team by surprise on May 20.

"Again, I'm not going to discuss my poll numbers. I think I know exactly where we are in this race. I don't want them to have any idea. If they are confident with their numbers and go with them, then I am happy with that."

Officials with Van Buren-based USA Truck Inc. have pulled the plug on their poison pill provision now that a hostile takeover attempt is far in the rear-view mirror and the company’s share price continues to push toward a more historic trading range.

In a statement issued early Thursday (April 10), USA Board Chairman Robert Peiser said a “Stockholders’ Rights Plan” approved in November 2012 had served its purpose by protecting the company during a vulnerable time so the company could “ execute our turnaround without unnecessary distractions, including unsolicited and inadequate takeover offers.”

The remainder of Peiser’s statement noted: "Over the past 18 months, under the leadership of President and CEO John Simone, we expanded our senior management team and began capitalizing on USA Truck's blue-chip customer base, dedicated employees and substantial assets. With the turnaround well underway, and with our stock price having appreciated well above the price existing at the time of the Plan's adoption, the Plan has served its intended purpose. The Board's decision to terminate the Plan demonstrates our confidence in the Company's management team, ongoing strategy and employees."

USA Truck hired John Simone in February 2013 to design and implement a turnaround plan for a trucking company had posted four consecutive years of losses. Simone has more than 30 years of experience in the industry. He’s worked with freight companies such as UPS, Ryder, and Greatwide Logistics. Most recently, he was the CEO of LinkAmerica. 

Enacted in November 2012, the sought to block a company or individual from owning more than 15% of USA Truck shares. The plan – essentially a poison pill provision – also put in place a 10-day “redemption period” to give USA Truck officials “the opportunity to negotiate” with anyone who seeks to buy shares beyond the 15% cap.

USA Truck survived a late 2013-early 2014 hostile takeover attempt by Phoenix-based Knight Transportation in which the poison pill plan did prevent Knight from acquiring enough shares to force the acquisition. Before Knight and USA Truck agreed on Feb. 4 to a standstill in the takeover action, Knight held 11.3% of USA Truck shares (NASDAQ: USAK).

Brad Delco, a transportation industry analyst with Little Rock-based Stephens Inc., said the USA Truck Board decision makes sense.

“It is probably a prudent move for the Board to acknowledge that the use of the poison pill served its purpose, and now they see an ability to go forward with a management team that is having some success in its turnaround effort, and the stock is at a price that they don’t think it could essentially be stolen at an unfair value,” Delco explained.

Stephens Inc. has a market position USA Truck, and does investment and non-investment business with the company.

The value of the company plummeted in 2012 when the share price hit a low of $2.80 on Nov. 6, 2012. Following the September 2013 takeover push by Knight, USA Truck shares have steadily risen, and closed on Wednesday (April 9) at $15.82. The market appeared to like removal of the poison pill provision. Share prices in early morning trading set a new 52-week high of $16.99, and the price moderated to around $16.60 by early afternoon.

The plan allowed shareholders the right to “extinguish” the plan during the 2014 annual meeting. Historically, poison pill plans have not been popular with the large institutional investors that often own a large percentage of a company’s equity. By removing the provision before a shareholders’ vote, USA Truck management avoids a shareholder vote on the issue at the upcoming shareholders’ meeting.

Simone acknowledged that the provision “likely” would have been voted down, but added that the provision worked as it was supposed to by preventing the company from being acquired when the stock price was so low.

“The move is a sign of the confidence in our turnaround,” Simone told The City Wire. “This is a textbook case for how the pill is designed to work. ... We still have a lot of work to do, but the plan is working and the stock price has reacted.”

Large shareholders remain interested in what’s next for USA Truck. South Africa-based Stone House Capital, which owns 14.7% of USA Truck shares, has been in direct talks with “with senior management and members of the board of USA Truck regarding various matters related to the company, including discussions regarding the its operations, business, strategies and strategic direction,” the investment company noted in a federal filing.

The company said the ongoing discussions “have reviewed, and may continue to review, options for enhancing shareholder value through various strategic alternatives, including highlighting and maximizing the value of Strategic Capacity Solutions, the USA Truck's freight brokerage division, capital allocation, and general corporate matters.”

Although metrics have improved for the company in recent quarters, USA Truck still posted a net loss of $9.11 million in 2013. While an improvement compared to the net loss of $17.671 million in 2012, it marked the fifth consecutive year of losses for the trucking company.

The Easter Bunny is a welcome sight for retailers hoping to shake off winter blues. One of the largest holiday spends of the year, Easter shopping is expected to top $15.8 billion this year, according the National Retail Federation.

That said, consumers won’t indulge themselves for this first holiday of spring. According to NRF's Easter spending survey conducted by Prosper Insights & Analytics, the average American celebrating the holiday will spend an average of $137.46 on apparel, food, candy, gifts and more, slightly less than the $145.13 spent last year. 

“The winter doldrums left consumers with a lot of pent-up demand, and though many Americans may take a cautious approach to spending on Easter items this year, retailers are anticipating that warmer weather will easily put consumers in the mood to buy bright clothes, holiday decorations and more,” NRF President and CEO Matthew Shay said in the statement.

He said retailers look forward to increased customer traffic in stores and online, and will roll out promotions on everything from garden supplies and patio sets to apparel and grocery items as they help their customers prepare for the holiday.

The study also showed 3% fewer Americans plan to celebrate this year. But, those families planning a Sunday Easter dinner or brunch out will spend an average of $43 on the meal, which should result in $5 billion in aggregate sales.

Easter traditionally marks the shift into spring and boosts apparel sales in the process. Consumers are expected to dole out $2.6 billion in new Easter clothes for their kids.

Additionally, nine in 10 consumers celebrating will stock up on Easter candy, spending $2.2 billion on their children’s favorite sweet treats. Families also will spend on gifts ($2.4 billion), flowers ($1.1 billion) and decorations ($1.1 billion).

Pam Goodfellow, director at Prosper Insights, said many Americans look forward the holiday, but they don’t plan to break the bank to celebrate. The survey found consumers are trimming back spending on food, clothes and gifts, compared to last year.

Ken Perkins of Retail Metrics Inc., said March same-store retail sales rose 3.5% from a year earlier, beating expectations for a 2.5%. But when stripping out a surprisingly high 5% sales upswing at Costco, which tends to close on Easter, overall retail sales increased just 1.6%.

Because of the the slow start to the spring selling season, “April results take on added meaning this year,” Perkins noted in his report.

He said retailers are making strong marketing pushes to woo consumers into their stores or virtual sites hoping to rebound from a long winter season.

Retailers like Wal-Mart have aggressively marketed with e-mail “Baskets of Savings” blasts to consumers for several weeks. Apparel stores Belk and Old Navy have been sending daily online coupons for the past three weeks on deals for dresses, shoes and other spring clothing. J.C Penney, Kohl’s have been all over social media touting Easter values.

The Northwest Arkansas metro jobless rate fell to 5.6% in February, but the size of the regional workforce and number of employed trailed that of February 2013. However, the number of unemployed fell 3.8% in February compared to February 2013.

Metro employment of 220,738 was up from the 216,617 in January, but was down from the 221,344 in February 2013, according to figures released by the U.S. Bureau of Labor Statistics.

Seven of the eight metro areas in or connected to Arkansas had a jobless rate decline in February compared to January, with only the Memphis-West Memphis area unchanged at 8.4%. Two areas had jobless rate increases (Pine Bluff and Texarkana, Ark.-Texas) compared to February 2013, and the remainder were lower than their respective February 2013 rate. For perspective, 90.8% of the 372 U.S. metro areas had year-over-year-over-year jobless rate declines in February, while 87.5% of Arkansas’ eight metro areas posted year-over-year declines.

During February, the lowest metro jobless rate in the state was in Northwest Arkansas and the highest rate was 10.2% in the Pine Bluff area.

NWAMETRO NUMBERS
The size of the Northwest Arkansas regional workforce during February was estimated at 233,767, up from the 230,079 during January, but below the 234,891 during February 2013. June 2013 was the first month the region’s workforce topped 240,000. The average annual monthly labor size was 234,792 during 2012, 229,950 during 2011 and 226,593 during 2010.

Following are other key figures from the BLS metro report.
Unemployed persons in the region totaled 13,029 during February, down from the 13,462 during January and below the 13,547 during February 2013.

The Northwest Arkansas manufacturing sector employed an estimated 26,200 in February, unchanged compared to January, and down from the 26,500 during February 2013. Sector employment is down almost 22% from more than a decade ago when February 2004 manufacturing employment in the metro area stood at 33,700.

Jobs in the Trade, Transportation and Utilities sector — the region’s largest job sector —  totaled 47,800 in February, down from 48,300 during January, and up from the 47,200 during February 2013. The sector reached record employment of 50,500 in December 2006.

Employment in the region’s tourism industry was 20,900 during February, up from 20,600 in January and up from 20,100 during February 2013. Employment in the sector set a record of 22,000 in June 2013.

In Education & Health Services, employment was 24,700 during February, up from 24,500 during January and up from 24,100 during February 2013.

In the Government sector, employment was 32,500 during February, up from 30,900 in January and up compared to 31,600 during February 2013.

NATIONAL NUMBERS
Unemployment rates were lower in January than a year earlier in 338 of the 372 metropolitan areas, higher in 25 areas, and unchanged in nine areas, noted the broad BLS report.

The U.S. unemployment rate in February was 6.7%, down from 7.7% from a year earlier. Arkansas’ jobless rate was 7.1% in February, down from 7.3% in January and down from 7.5% in February 2013.

Oklahoma’s jobless rate during February was 5%, down from 5.2% in January, and down compared to 5.3% in February 2013. The Missouri jobless rate during February was 6.4%, up from 6% in January but better than the 6.7% in February 2013.

ARKANSAS METRO AREAS
Fayetteville-Springdale-Rogers
February 2014: 5.6%
January 2014: 5.9%
February 2013: 5.8%

Fort Smith
February 2014: 7.4%
January 2014: 7.8%
February 2013: 8.4%

Hot Springs
February 2014: 7.7%
January 2014: 8.1%
February 2013: 8.2%

Jonesboro
February 2014: 7.1%
January 2014: 7.8%
February 2013: 7.3%

Little Rock-North Little Rock-Conway
February 2014: 6.7%
January 2014: 7.1%
February 2013: 7%

Memphis-West Memphis
February 2014: 8.4%
January 2014: 8.4%
February 2013: 9.3%

Pine Bluff
February 2014: 10.2%
January 2014: 10.8%
February 2013: 10.1%

Texarkana
February 2014: 7.2%
January 2014: 7.4%
February 2013: 6.9%

NORTHWEST ARKANSAS METRO AREA HISTORY
Past annual average unemployment rates
2012: 5.6%
2011: 6.2%
2010: 6.4%
2009: 6.2%
2008: 4.1%
2007: 3.8%
2006: 3.6%
2005: 3.3%
2004: 3.8%
2003: 3.7%
2002: 3.3%
2001: 3%
2000: 2.9%

The Fort Smith regional metro jobless rate fell to 7.4% in February, but the size of the regional workforce and number of employed trailed that of February 2013. The February jobless figure also marked 62 consecutive months the rate has been at or above 7%.

Metro employment of 119,041 was better than the 117,664 in January, and was down slightly from the 119,799 in February 2013, according to figures released by the U.S. Bureau of Labor Statistics.

Seven of the eight metro areas in or connected to Arkansas had a jobless rate decline in February compared to January, with only the Memphis-West Memphis area unchanged at 8.4%. Two areas had jobless rate increases (Pine Bluff and Texarkana, Ark.-Texas) compared to February 2013, and the remainder were lower than their respective February 2013 rate. For perspective, 90.8% of the 372 U.S. metro areas had year-over-year-over-year jobless rate declines in February, while 87.5% of Arkansas’ eight metro areas posted year-over-year declines.

During February, the lowest metro jobless rate in the state was 5.6% in Northwest Arkansas and the highest rate was 10.2% in the Pine Bluff area.

FORT SMITH METRO NUMBERS
The size of the Fort Smith regional workforce during January was 128,558, up from 127,557 during January, and down from the 130,739 during February 2013. The labor force reached a revised high of 140,253 in June 2007.

Unemployed persons in the region totaled an estimated 9,5,17 during February, down from the 9,893 during January, and more than 13.5% below the 10,940 during February 2013.

The Fort Smith area manufacturing sector employed an estimated 18,200 in February, unchanged compared to January, and above the 18,100 during February 2013. Sector employment is down almost 36% from a decade ago when February 2004 manufacturing employment in the metro area stood at 28,400. Also, the annual average monthly employment in manufacturing has fallen from 28,900 in 2005, 19,200 in 2012, and to 18,300 in 2013.

Jobs in the Trade, Transportation and Utilities sector — the region’s largest job sector —  totaled 24,000 in February, down from the 24,100 in January, and above the 23,400 during February 2013. Employment in the sector reached a high of 25,700 in December 2007.

Employment in the region’s tourism industry was 9,000 during February, down from 9,100 in January and above the 8,900 in February 2013. The sector reached an employment high of 9,800 in August 2008.

In Education & Health Services, employment was 16,400 during February, unchanged from January and below the 16,900 during February 2013. Annual average monthly employment in the sector has steadily grown since 2005 when it reached 14,000. In 2012 the average was 17,000, but fell slightly to 16,800 in 2013. Employment in the sector reached a record 17,300 in October 2012.

In the Government sector, employment was 19,400 during February, up from 18,800 in January and unchanged compared to February 2013.

NATIONAL NUMBERS
Unemployment rates were lower in January than a year earlier in 338 of the 372 metropolitan areas, higher in 25 areas, and unchanged in nine areas, noted the broad BLS report.

The U.S. unemployment rate in February was 6.7%, down from 7.7% from a year earlier. Arkansas’ jobless rate was 7.1% in February, down from 7.3% in January and down from 7.5% in February 2013.

Oklahoma’s jobless rate during February was 5%, down from 5.2% in January, and down compared to 5.3% in February 2013. The Missouri jobless rate during February was 6.4%, up from 6% in January but better than the 6.7% in February 2013.

ARKANSAS METRO AREAS
Fayetteville-Springdale-Rogers
February 2014: 5.6%
January 2014: 5.9%
February 2013: 5.8%

Fort Smith
February 2014: 7.4%
January 2014: 7.8%
February 2013: 8.4%

Hot Springs
February 2014: 7.7%
January 2014: 8.1%
February 2013: 8.2%

Jonesboro
February 2014: 7.1%
January 2014: 7.8%
February 2013: 7.3%

Little Rock-North Little Rock-Conway
February 2014: 6.7%
January 2014: 7.1%
February 2013: 7%

Memphis-West Memphis
February 2014: 8.4%
January 2014: 8.4%
February 2013: 9.3%

Pine Bluff
February 2014: 10.2%
January 2014: 10.8%
February 2013: 10.1%

Texarkana
February 2014: 7.2%
January 2014: 7.4%
February 2013: 6.9%

FORT SMITH METRO AREA HISTORY
Past annual average unemployment rates
2012: 7.7%
2011: 8.3%
2010: 8.2%
2009: 7.9%
2008: 4.8%
2007: 5.3%
2006: 4.9%
2005: 4.5%
2004: 5.2%
2003: 5.5%
2002: 5%
2001: 4.2%
2000: 3.7%

Diversity is usually a good business strategy and one to which execs at J.B. Hunt Transport have in recent decades wholeheartedly subscribed. Whether it’s delivering big screen televisions directly to a home with their “Final Mile” service or hauling live chickens to a slaughter house, J.B. Hunt Transport’s Dedicated Contract Services (DCS) segment has been configured to handle a wide range of business.

Jim Crowell, director of the Supply Chain Management Research Center at the University of Arkansas, said Hunt continues to add services that go well beyond the scope of transportation provider helping transform the company into a full-solution, logistics leader.

Hunt’s burgeoning intermodal division and its growing brokerage operation garner most of the headlines for this logistics carrier. But driving the back roads in Benton and Washington counties you don’t have too look far to see J.B. Hunt trucks hauling live poultry – an indication the giant has not strayed too far away from its roots.

POULTRY PARTNERS
Serving the local poultry industry was the bread and butter of J.B. Hunt’s young trucking firm. He and his wife Johnelle bootstrapped he business in 1961 with loans secured by local poultry pioneers Bill Simmons, Red Hudson, Gene George, Lloyd Peterson and Don Tyson.

Johnelle Hunt, recently shared her gratitude regarding the help the company received from the local poultry industry all those years ago. She said Northwest Arkansas people invested in J.B. Hunt and it will never be forgotten.

Over the past several months Hunt’s Agri Transportation Services division, which is part of the Dedicated Contract Services segments, began converting the private fleet an of unnamed poultry company. The City Wire has learned that is Tyson Foods. Hunt also mentioned other fleet conversions in two past earnings announcements.

Tyson Foods did not respond to a request for comment. Sources close to Tyson told The City Wire that Tyson recently began using J.B. Hunt Agri Transport for part of its live haul. Growers confirmed Tyson is in the midst of converting its live haul, feed and hatchery deliveries to J.B. Hunt. The sources said Tyson expects the transition to take several more months.

Hunt notes on its website that its agricultural service offers experienced, drivers and management. They deliver to farms, mills, or retailers, saying no transportation need is too difficult or complex.

Cargill said they also use J.B. Hunt’s agri services.

“They move provide transport for all aspects of our turkey business,” said Michael Martin, spokesman for Cargill Meat Solutions.

Todd Simmons, CEO of Simmons Foods, said they and several other poultry companies use J.B. Hunt Agri Transport to haul feed for them.

One new live haul contract for J.B. Hunt won’t likely move the needle in terms of annual earnings but it’s interesting to see a business relationship come full circle over three decades.

In the early years Hunt hauled rice hulls from eastern Arkansas to local poultry farms. The rice hulls were used as bedding in the chicken houses. Today Hunt delivers feed to the local mills that finds its way to grower farms and now with live haul it’s picking up the grown chickens and hauling them to slaughter.

EARNINGS FORECAST
J.B. Hunt Transport is slated to report first quarter earnings on Monday (April 14). Several analysts have already warned that the company’s growth was likely tempered by an unusually hard winter.

Wall Street consensus is 63 cents per share on revenue of $1.41 billion as sales are expected to rise 9.3% from a year ago. Consensus net income projections are $74.9 million, up 2% from a year ago.

Stephens Inc. still ranks J.B. Hunt shares as a “buy” with a target price of $87. On Thursday, shares (NASDAQ: JBHT) closed well off that mark at $71.96, down 1.18%. Wall Street’s consensus target price is $82.41.

“We are lowering our first quarter estimates based on weather related service disruptions that we believe are having a meaningful impact on JBHT's intermodal (IMC) operations,” noted Brad Delco, a transportation industry analyst with Stephens Inc. (Stephens conducts investment banking services for J.B. Hunt Transport and is compensated accordingly.)

The Stephens first quarter estimate is 60 cents a share, lowered from 70 cents.

“While lower than expected first quarter results will make it difficult for Hunt to finish the year near the higher end of previously announced guidance ranges ... we believe that the long-term secular growth story remains intact.,” Delco said.

He expects to see more load conversion into intermodal and DCS to pick up more new contracts based on increased regulations and tightening capacity. Delco said the company’s restructuring of its truckload division should help this laggard segment.

Voter opinions on medical marijuana, Whole Food’s interest in Fayetteville, medical sector expansions in Benton County and a banker shift in Benton County are part of the Northwest Arkansas Friday Wire for April 11.

NOTES & ANALYSIS
• Herbal medicine
Don’t be surprised when your fellow Arkansans vote in November to add the Natural State to a roster of 20 states that allow some form of marijuana use for medical purposes.

A recent Talk Business-Hendrix College poll of more than 1,000 likely Arkansas voters showed 45% oppose medical marijuana and 45% support the idea.

A ballot item likely to make the Arkansas ballot in November would provide Arkansans the ability to use medical marijuana for debilitating medical conditions with a doctor’s recommendation and to allow patients to purchase medical marijuana at a regulated not-for-profit dispensary.

Are we witnessing something similar to the polling for the 2012 medical marijuana question when a wide margin of Arkansans said they would oppose it? When the votes were tallied after that vote, the question was defeated by less than 3%, and it passed in conservative areas like Sebastian County.

Although polls are anonymous, it may be that poll respondents have a hard time admitting to themselves that they would support medical marijuana. While all drugs come with problems, the decades of brainwashing from government, religious and other societal leaders about the dangers of marijuana is hard to overcome. But when folks get in the poll booth, they may vote more in line with their conscience.

If nothing else, a favorable vote would likely boost the economy in Newton County.

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 ...

• A new banker
Arvest Bank has chosen Fort Smith banker Craig Rivaldo to head up its Benton County market operations. Jason Kincy, spokesman for the bank made the announcement in an email release this afternoon (April 8), just shy of one month after Dennis Smiley’s resignation on March 13.

• Whole Foods coming to Fayetteville?
Whole Foods Market appears to have taken one more baby step toward a Fayetteville location. Plans submitted to the city of Fayetteville this week show what appears to be a Whole Foods Market planned for 3535 North College Avenue.

• Real estate market improvements
Commercial vacancy rates are improving across Northwest Arkansas with positive absorption of existing space but there is still too much unoccupied space not generating income for owners, according to the Skyline Report.

NUMBERS ON THE WIRE
$20 million: The investment by Mercy NWA for new clinics and expanded healthcare in Benton County over the past nine months

260: The number of vendors registered at area farmers markets in Fayetteville, Springdale, Rogers and Bentonville

35%: The drop in harassment and discrimination charges filed by the U.S. Equal Employment Opportunity Commission from 2012 to 2013. Industry professionals told The City Wire that the numbers for 2013 were not all that low, but instead equated the drop to an unusually high number of sex-related harassment and discrimination charges filed in 2012.

OUTSIDE THE WIRE
• Alaska Dispatch to purchase Anchorage Daily News
In what amounts to a stunning media shakeup in the 49th state, the still-young online news organization Alaska Dispatch announced on Tuesday it has signed a deal with the nation’s second-largest newspaper chain to purchase the Anchorage Daily News, a 68-year-old publication with two Pulitzer Prizes.

• Whole Foods takes over America?
Whole Foods' vision is a bold gambit when you consider the state of its competition. Supermarkets lost 10 points of share between 2001 and 2013 to the slew of nontraditional players that have gotten into the food game, according to Nielsen.

WORD ON THE WIRE
“If Democrats can squeeze an extra percentage point or two out of their base or Republicans do the same, it could swing the election if it remains this competitive. It is also interesting to note that the undecided margin in this race has shrunk considerably from six months ago.”
– Talk Business & Politics editor-in-chief Roby Brock, discussing new poll numbers in the race for Arkansas governor in a dead heat

"There are incredibly talented, capable, high achieving – dare I say wealthy – people who don't have a four-year bachelor’s degree. It's not the end all and be all. Now do we need more Arkansans with four-year bachelor degrees? Sure we do. We're last, or second to last, depending (on different rankings). That's unacceptable. We've got to have more. But do we need an increasingly large population of specifically skilled individuals who have helped make our industrial and manufacturing (industry) efficient and productive? Absolutely. It's not either/or, which is the choice I think a lot of folks were laboring under for a long time."
– Grant Tennille, executive director of the Arkansas Economic Development Commission, in a speech to the Fort Smith Regional Chamber of Commerce

Voter opinions on medical marijuana, a new medical college chief, development in downtown Fort Smith, and less harassment in the workplace are part of the April 11 Friday Wire for the Fort Smith region.

NOTES & ANALYSIS
• Herbal medicine
Don’t be surprised when your fellow Arkansans vote in November to add the Natural State to a roster of 20 states that allow some form of marijuana use for medical purposes.

A recent Talk Business-Hendrix College poll of more than 1,000 likely Arkansas voters showed 45% oppose medical marijuana and 45% support the idea.

A ballot item likely to make the Arkansas ballot in November would provide Arkansans the ability to use medical marijuana for debilitating medical conditions with a doctor’s recommendation and to allow patients to purchase medical marijuana at a regulated not-for-profit dispensary.

Are we witnessing something similar to the polling for the 2012 medical marijuana question when a wide margin of Arkansans said they would oppose it? When the votes were tallied after that vote, the question was defeated by less than 3%, and it passed in conservative areas like Sebastian County.

Although polls are anonymous, it may be that poll respondents have a hard time admitting to themselves that they would support medical marijuana. While all drugs come with problems, the decades of brainwashing from government, religious and other societal leaders about the dangers of marijuana is hard to overcome. But when folks get in the poll booth, they may vote more in line with their conscience.

If nothing else, a favorable vote would likely boost the economy in Newton County.

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 ...

• New college chief
Fort Smith attorney Kyle Parker, who has been named president and CEO of the planned Fort Smith-based Arkansas College of Osteopathic Medicine, said Wednesday they “are moving quickly” on what will be a $58 million college that when fully operational will house 600 students.

• Water park progress
The Fort Smith Planning Commission approved a conditional use Tuesday (April 8), removing the final road block in what has been a long and winding road in the city and Sebastian County's attempts to build the $10.9 million Ben Geren Aquatics Center.

• Deed restrictions placed on Whirlpool site
The Whirlpool site in Fort Smith that has been the center of a pollution cleanup has now had deed restrictions put in place, limiting certain future activities at the site for not only Whirlpool, but any individual or company that may purchase the site.

NUMBERS ON THE WIRE
35%: The drop in harassment and discrimination charges filed by the U.S. Equal Employment Opportunity Commission from 2012 to 2013. Industry professionals told The City Wire that the numbers for 2013 were not all that low, but instead equated the drop to an unusually high number of sex-related harassment and discrimination charges filed in 2012.

$3 million: The cost of the new Garrison Pointe West development that officially started construction this week. The project by Griffin Properties of Fort Smith will transform six buildings into a mixed-use property, with 12 luxury apartments, as well as five commercial units on the ground floor. Funding from the project comes from a mix of state and federal tax credits coupled with private capital.

$5 million: Appraisal of land donated by the Fort Chaffee Redevelopment Authority to the planned Arkansas College of Osteopathic Medicine. The initial estimate on the land was $4 million. The college is scheduled to open in the fall of 2017.

OUTSIDE THE WIRE
• Alaska Dispatch to purchase Anchorage Daily News
In what amounts to a stunning media shakeup in the 49th state, the still-young online news organization Alaska Dispatch announced on Tuesday it has signed a deal with the nation’s second-largest newspaper chain to purchase the Anchorage Daily News, a 68-year-old publication with two Pulitzer Prizes.

• Whole Foods takes over America?
Whole Foods' vision is a bold gambit when you consider the state of its competition. Supermarkets lost 10 points of share between 2001 and 2013 to the slew of nontraditional players that have gotten into the food game, according to Nielsen.

WORD ON THE WIRE
“If Democrats can squeeze an extra percentage point or two out of their base or Republicans do the same, it could swing the election if it remains this competitive. It is also interesting to note that the undecided margin in this race has shrunk considerably from six months ago.”
– Talk Business & Politics editor-in-chief Roby Brock, discussing new poll numbers in the race for Arkansas governor in a dead heat

"It is very important that we prepare our campaign and supporters for an onslaught of negative advertising from the opposition and 3rd party groups in the final days of this campaign. I assure you they will leave no stone unturned in an attempt to win this race."
– Clint Reed, a partner at Little Rock-based Impact Management Group, explaining in a memo to Rep. Terry Rice, R-Waldron, what to expect throughout the rest of his primary race against incumbent Sen. Bruce Holland, R-Greenwood

"There are incredibly talented, capable, high achieving – dare I say wealthy – people who don't have a four-year bachelor’s degree. It's not the end all and be all. Now do we need more Arkansans with four-year bachelor degrees? Sure we do. We're last, or second to last, depending (on different rankings). That's unacceptable. We've got to have more. But do we need an increasingly large population of specifically skilled individuals who have helped make our industrial and manufacturing (industry) efficient and productive? Absolutely. It's not either/or, which is the choice I think a lot of folks were laboring under for a long time."
– Grant Tennille, executive director of the Arkansas Economic Development Commission, in a speech to the Fort Smith Regional Chamber of Commerce

The Bank of Fayetteville won’t likely be the last one to file suit against H. Dennis Smiley Jr., who owes more than $4.5 million to about 20 Arkansas banks. The big question is who else may be liable for Smiley’s debts?

Bank of Fayetteville officials believe Smiley’s former employer, Arvest Bank, should pay, claiming the bank allowed Smiley to reportedly pledge the same stock/options plan as collateral. That’s what the bank said it in an April 7 response/countersuit filed against Smiley and Arvest for defaulting on nearly $480,000 in loans made and renewed over the past seven years.

Roughly $215,000 of that debt comes from loans made to HDS Holdings LLC, a business entity of Smiley. H. Dennis Smiley Sr., bank chairman at First State Bank of DeQueen, also is implicated in this case. The Bank of Fayetteville claims he borrowed $50,000 in March 2013 and owes $42,000 of that amount.

There are 20 banks named in Arvest’s interpleading filed with the Benton County Circuit Court on April 2. The Bank of Fayetteville was the first to respond to the interpleading and file a counter complaint against Arvest Bank, Henry Dennis Smiley, HDS Holdings LLC, and H. Dennis Smiley Sr. as trustee of a revocable trust.

The Bank of Fayetteville claims it had secured the loans made to Smiley over the years and produced a Control Agreements to the court as evidence. The Control Agreements list interests in Arvest Bank shares worth an estimated $299,811 and signed by Euva Phillips, senior vice president of Arvest operations on 1/10/2012, 11/09/2010

There was also a Jan. 9, 2012 signed letter by Phillips addressed to the Bank of Fayetteville confirming that the bank held a first and primary assignment of the stock account belonging to Henry Dennis Smiley Jr. These and other documents were included among the 195 pages filed with the court this week.

Jason Kincy, spokesman for Arvest, told The City Wire the bank cannot comment on pending litigation. He said he’s not aware of any further resignations related to the Smiley situation.

"Euva Phillips is currently an active Arvest associate," Kincy noted.

Shortly after Dennis Smiley’s resignation, the Bank of Fayetteville said it asked Arvest to repay the debts owed and backed by the collateral assigned at underwriting. Arvest declined request for payment and filed the April 2 interpleading with Benton County Circuit Court asking the court to decide who gets paid given there are more claims than there is money, according to court records.

The Arvest interpleading placed $552,000 — the value of Smiley’s stock —with the Benton County Court and noted in the filing that Arvest bank stock and options were never to be pledged as loan collateral, something Smiley and other bank officials knew.

However, the Arvest response does not explain the signature of an Arvest official produced by the Bank of Fayetteville that suggests the options were pledged as collateral.

Legal experts told The City Wire that the fastest way to repayment under state law is a “race to the courthouse” – to be the first to get judgments against the debtor’s assets. If that holds to be true, more banks may file suit in the coming days, especially now that Circuit Judge John Scott granted Arvest’s interpleading request on April 4.

Other sources told The City Wire that federal criminal charges are likely to be filed. If a guilty plea is made, and sentenced is passed, fines and restitution could be also ordered. The restitution order would provide a means of repayment of funds received in a fraudulent manner.

A personal bankruptcy filing also is not out of the question given Smiley’s financial insolvency. The bankruptcy courts are an organized way for debtors to liquidate assets for a fresh start or work out a restructuring of those debts. But, debt occurred through fraudulent means cannot usually be discharged by bankruptcy. That was the case in the Brandon Barber bankruptcy proceedings. Barber, a Northwest Arkansas real estate developer, subsequently faced criminal charges after fraud was uncovered during his bankruptcy proceedings. 

Legal sources said it’s more likely banks seeking money from Smiley will get pennies on the dollar after considering what their legal costs will be during what may be a lengthy recovery phase. The Bank of Fayetteville asked the court for full payment from the Arvest bank stock fund or judgments against the debtors until the bank is repaid in full.

PAPER TRAIL
• Bank of Fayetteville loans to H. Dennis Smiley Jr.
July 2009
$38,500 loaned to H. Dennis Smiley Jr.

October 2010
$125,000 loaned to Smiley Jr. (refinance, more money loaned)

March 2011
$75,000 loaned to Smiley Jr. (extended in November 2011)

January 2012
$170,000 loaned to Smiley Jr.. (extended to January 2014)

January 2014
$264,847.15 loaned to Smiley Jr. (refinancing the prior loans)

April 2014
Pending status: $263,869.23 owed and payment demand made

• Bank of Fayetteville loans to HDS Holdings
May 2007
$50,000 loaned to HDS Holdings

June 2007
$42,000 loaned to HDS Holdings

October 2007
$100,000 loaned to HDS (refinancing one loan, added funds)

September 2008
$45,393 loaned to HDS (refinancing one loan, added funds)

February 2009
$250,000 loaned to HDS (refinancing prior loans, extended twice)

April 2014
Pending status: $152,507 owed by HDS Holdings and payment demand made

• Bank of Fayetteville loans to HDS Holdings (secured by a Trust)
August 2012
$37,500 loaned to HDS

March 2013
$75,000 loaned to HDS

March 2014
Pending status: $62,503.94 owed and demand made

• Bank of Fayetteville loans to H. Dennis Smiley Sr. (Dennis Smiley’s father)
March 2009
$50,000 loaned to H. Dennis Smiley Sr.

March 2013
The loan maturity extended to 2016

March 2014
Pending status: $42,005 owed and payment demand made.

Source: Benton County Circuit Court records

At the behest of Sen. Jason Rapert, R-Bigelow, Attorney General Dustin McDaniel (D) said he would appeal a federal judge’s ruling on a controversial 12-week abortion ban.

The law was passed in the 2013 legislative session over a veto from Gov. Mike Beebe (D), who declared the measure was unconstitutional.

Federal judge Susan Webber Wright ruled that the abortion prohibition at 12 weeks was unconstitutional and in violation of the 1973 Roe v. Wade decision.

Wright’s ruling did leave a provision of the law intact that requires a doctor to notify a pregnant woman when a fetal heartbeat is detected.

McDaniel said he agreed to appeal the decision as long as a state agency involved in the lawsuit was left financially unharmed and he said he warned the bill’s supporters that they could jeopardize losing the concessions they made by the lower court ruling.

McDaniel issued this note: “I have spoken candidly with Sen. Rapert about the risks and costs associated with an appeal.

“Sen. Rapert has specifically asked me to appeal. I agreed to do so as long as there would be no impact on the budget of the Arkansas State Medical Board, the defendant in this matter, should the state be required to pay attorneys’ fees to the plaintiffs. I have been personally assured by Senate President Pro Tempore-designate Dismang and House Speaker-designate Gillam that the Medical Board budget will not be affected, and that any costs borne from this litigation will be paid through a separate appropriation.

“Therefore, the notice of appeal was filed today and this office will diligently litigate this matter to its conclusion.

“I have also committed to Sen. Rapert, Jerry Cox and the Liberty Counsel our continued cooperation and transparency in the course of this litigation.”

Three more banks filed counter complaints against former bank executive H. Dennis Smiley in Benton County Circuit Court on Friday (April 11).

Smiley was the president of Arvest Bank Benton County until he resigned on March 13. Following his resignation, 20 Arkansas banks have been trying to get repaid the $4.5 million they lent Smiley over the past seven years.

Simmons First National, First State Bank of Northwest Arkansas and First National Bank of Fort Smith are the latest to stake their claims against Smiley and his business interests, alleging fraud and deception to the tune of $440,000. This is on top of the $480,000 being sought by the Bank of Fayetteville, who counter-sued Arvest and Smiley on April 7.

FIRST NATIONAL BANK
First National Bank’s counter-suit filed Friday also names Arvest Bank and Smiley’s father, Henry Dennis Smiley Sr., as co-defendants claiming they are jointly and severally liable for the debt.

The filing submitted by First National Bank included a Securities Entitlement Control Agreement dated Dec. 4, 2013. This agreement pledged Smiley’s Arvest stock account as collateral and was signed by Smiley, the debtor, and Arvest EVP Chad Evans as Arvest’s intermediary. Rob Husong, regional president for First National Fort Smith, signed for the lender.

The documents included a signed letter (Dec. 4, 2013) by Evans on Arvest letterhead that states: “This letter is to acknowledge the first and priority security position of First National Bank on the 4,262.33 shares of Arvest common stock, listing attached ... The Arvest stock has a value equal to the value of the company and would be able to be sold at that price. The valuation as of Sept. 30, 2013 is $393,384.33. The proceeds will not be released by Arvest without your consent.”

Jason Kincy, spokesman for Arvest Bank, said there have been no other resignations related to the Smiley situation. He declined further comment on pending litigation.

SIMMONS FIRST
The counter claim filed by Simmons First National named HDS Holdings LLC., and Henry Dennis Smiley Sr. of DeQueen as co-defendants. Simmons claims it lent $85,000 to HDS Holdings in May 2008. The debtor was to make 9 monthly payments beginning in June 2008. That loan was extended on March 2009 with $85,000 still owed. It was extended again on April 28, 2010 with $76,744 still owed.

Again in May 2011 and May 2012 the loan was extended with $65,000 still owed each time. The final extension was granted in December 2013 in the amount of $56,936, with quarterly payments required.

Simmons made HDS a second loan for $30,750 in May 2013. Monthly payments were due beginning January 2014. This loan went into default in March and demand for full payment was made.

Simmons asked the court for judgments against HDS Holdings and Henry Dennis Smiley Sr., jointly and severally for $84,816 plus interest.

FIRST STATE BANK (NWA)
Henry Dennis Smiley Jr., Cynthia Smiley and Design for the Home LLC were each named as defendants in the counter fraud claim filed by First State Bank.

Three different loans were made to Smiley by the bank between December 2011 and 2013. The first loan made in December 2011 was for $65,000. The bank required collateral for the loan to which Smiley pledged 3,940 shares of Arvest Bank stock.

An Assignment of Investment Securities document was signed on Dec. 2, 2011, by Smiley as the debtor, with Euva Phillips signing on behalf of Arvest Bank as the senior vice president of operations. Phillips is still employed by Arvest Bank, according to Kincy.

On March 17 there was still $40,450 owed on this loan. The bank has asked the court for judgments in that amount against all three defendants.

One more time Smiley went back to the well and got $76,000 loaned to him in April 2012. This loan became delinquent in March with $38,336 still owed. Again the stock was pledged and a judgment has been sought.

Smiley was able to borrow more money from First State Bank in October 2012 —$87,300. The bank again asked for a collateral pledge of the Arvest shares, which they got. This loan defaulted in March with $80,298 still owed. The bank asked the court for a judgment in that amount.

Count IV in this suit alleges fraud against Smith and his wife Cynthia. The bank said it asked for personal financial statements before the each loan was granted. The Smiley’s estimate their net worth in excess of $1.6 million. In 2012, Smiley told the bank his contingent liabilities were $1.739 million and his assets were $2.467 million. In 2013, the couple reported liabilities of $1.075 million against assets of $3.259 million, according to the filing.

“The Smiley defendants knew they had more liabilities than they represented to the First State Bank in their financial statements. Smiley also knew he did not possess (free and clear) the collateral pledged in all three loans,” the filing states.

DELTA BANK & TRUST
More fraud claims were raised by Delta Bank & Trust in their answer filed with the court on April 11. Delta Bank was the first to file against Smiley Jr. and Sr. for loan default.

The bank has since said “Dennis Smiley Sr. did not sign any of the subject loan documents. Upon information and belief, an individual other than Henry Dennis Smiley Sr. signed his name without his knowledge,” the filing states.

WHAT'S NEXT

Legal experts told The City Wire that if federal fraud charges are filed these complaints could be consolidated into the federal court system. There have been no criminal charges filed at this time, but it has been widely reported that a federal investigation is ongoing. Sources believe there is enough evidence to waive a grand jury seating, moving straight to a plea bargain with the U.S. Attorney’s Office.

Acts of individual employee fraud can protect companies to a certain extent. But, the Federal Deposit Insurance Corporation notes in its regulations that bank management is responsible for preventing and detecting fraud and insider abuse.

“The primary responsibility to prevent fraud and insider abuse rests with the board of directors and senior management.”

Smiley was senior management, but the FDIC states there should be checks and balances in place to circumvent and detect suspicious activities at the executive level.

A legislative-referred proposed constitutional amendment is opposed more than two-to-one by voters, in large part due to a proposed change in the state’s term limits law.

The latest Talk Business-Hendrix College Poll of more than 1,000 likely voters shows that 57% oppose the measure that would curtail gifts and contributions to legislators but allow them to serve up to 16 years in the General Assembly. Only 25% support the proposal and 18% are undecided.

“The term limits addition to this proposal appears to be a deal-breaker for voters as our previous polling has shown,” said Talk Business & Politics executive editor Roby Brock. “Without term limits, ethics reform seems to have widespread support, but that’s not the case with this combo amendment.”

The 2013 General Assembly referred three proposals for voter consideration in the 2014 general election. The ethics-term limits proposal, called “The Arkansas Elected Officials Ethics, Transparency, and Financial Reform Amendment of 2014,” will be on the November ballot.

Q: The legislature also referred a constitutional amendment to voters in 2014. It would ban gifts, meals, and trips provide to legislators by lobbyists except in limited circumstances and would also ban corporations from making contributions to Arkansas state candidates. In addition, it would extend term limits to allow legislators to serve up to 16 years and would create a commission to evaluate whether government officials’ salaries should be increased. If the election were held today, would you vote to approve or disapprove such a constitutional amendment?
25% Approve
57% Disapprove
18% Don’t Know

Currently, a gift or expense to a legislator by a lobbyist must be disclosed if the dollar amount exceeds $50. There is no limit on the amount of money that can be spent by a lobbyist, but it must be fully disclosed on reporting forms to the state.

Lawmakers are also allowed to serve six years (three terms) in the Arkansas House and two terms (eight years) in the Arkansas State Senate under the state’s current term limits law. The proposal would allow for a maximum of 16 years to be served by a legislator regardless of which chamber.

When Talk Business-Hendrix College surveyed this question in October 2013, the poll had similar voter disapproval. Roughly 32% supported the measure then, while 50% disapproved.

In 2012 when a proposal to limit gift giving and strengthen ethics rules was being considered, a Talk Business-Hendrix College Poll showed 69% supported the concept while 18% opposed.

ANALYSIS
Dr. Jay Barth, professor of political science at Hendrix College, helped craft and analyze the latest poll. He offered this analysis of the poll results.

Ethics
Reaffirming our results from our October 2013 survey, Arkansas voters remain opposed to the measure sent by the General Assembly that would do several things: ban gifts, meals, and trips provide to legislators by lobbyists except in limited circumstances, ban corporations from making contributions to Arkansas state candidates, extend term limits to allow legislators to serve up to 16 years, and create a commission to evaluate whether government officials’ salaries should be increased.

The proposal is opposed by a comfortable majority of voters (57% oppose and only 25% supporting). The opposition is consistent across political, geographical, and demographic groups with the minor exception that Democratic voters are marginally less opposed (the opposition rate goes down to 49% among Democrats, among whom there is 33% support).

METHODOLOGY
This survey was conducted by Talk Business Research and Hendrix College on Thursday and Friday, April 3-4, 2014. The poll, which has a margin of error of +/-3%, was completed using IVR survey technology among 1,068 Arkansas frequent voters statewide.

Approximately 9% of the voters in our sample were contacted via cell phone with live callers. This is in response to the increased reliance by voters on cell phones. Additionally, we applied our standard weighting to the poll results based on age, gender, and Congressional district.

Net profits of Lowell-based J.B. Hunt Transport Services declined in the first quarter to $68.664 million, down 6.38% from the same period last year. The logistics giant cited rail service disruptions, a series of winter storms in the Midwest and Northeast and more losses in its trucking segment for the slimmer bottom line.

Wall Street had forecast net earnings at $74.9 million or 63 cents per share. Hunt narrowly missed those projections posting 58 cents per share, weaker than the 61 cents per share recorded in the same period of 2013.

On a positive note, Hunt did improve its top line revenue from a year ago. Total operating revenue for the quarter ending March 31 was $1.41 billion, compared with $1.29 billion last year.

The company sited a 5% load increase in its intermodal segment and robust 29% growth in the brokerage revenues from its Integrated Capacity Solutions segment. The Dedicated Contract Services division also had a strong quarter with revenue rising 15% from the prior year period. Those results were offset by a 9% decrease in trucking revenue amid the ongoing fleet reduction linked to a lack of independent contractors.

“It was evident that the weather in the first quarter, particularly in January and February, played a significant role in both our growth and profitability,” John Roberts III, president and CEO of J.B. Hunt Transport, noted in the release.

He expects better performance for the remainder of this year but said even though the weather disruptions have subsided, there are still increased driver costs, rising insurance and equipment costs that are likely to persist. Roberts said those expenses will have to be recovered with higher bids and customer contract discussions in the marketplace.

“Feedback from our customers about their business expectations for the remainder of the year gives us encouragement that growth should return to our previously announced ranges,” Roberts said.

While the overall freight segment is improving, some analysts believe Hunt shares are trading near the top of their projected range, which prompted a recent downgrade to neutral from Bank of America. Stephens Inc. analyst Brad Delco sees the weather disruption issues as a short term blip, but notes that Hunt lost some potential pricing momentum in the process, which is going to take longer to recover. (Stephens Inc. conducts investment services for J.B. Hunt Transport and is compensated accordingly.)

Delco reduced his full year earnings projections for Hunt to $3.15 per share, down from $3.25 stated earlier. He said this new estimate could prove to be conservative if the truckload market continues to tighten up, which could spill over into higher rates for Hunt’s brokerage division.
 Longer term, Delco is bullish on Hunt as he believes the short term weather impact on Hunt’s stock pricing is an opportunity for investors to increase their stake in the company.

Shares of J.B.Hunt were trading higher on Monday (April 14) following the earnings report. Hunt shares (NASDAQ: JBHT) were active at $73.60, up $2.09 in the morning session. During the past 52 weeks shares have ranged from a low $67.97 to a high $79.89.

MIXED INTERMODAL
Segment Revenue: $835 million; up 5%
Operating Income: $93.2 million; down 4%

Hunt reports its Eastern network realized load growth of 9% and Transcontinental loads grew 2% compared to prior year dispute sluggish metrics in the Midwest.

“We began to realize more normalized customer demand and network balance in March and remain confident our original 2014 growth expectations are realistic. Overall revenue grew 5% reflecting the lower volume growth and a flat revenue per load, which is the combination of customer rates, fuel surcharges and freight mix. Revenue per load excluding fuel surcharge revenue increased 1.2% year over year,” the company noted in  its release.

Hunt said winter weather caused a shortage of about 13,000 loads and ultimately dinged the segment’s operating income by $9 million. Hunt ended the quarter with approximately 67,500 units of trailing capacity and 4,300 power units available to the dray fleet.

DEDICATED CONTRACT SERVICES
Segment Revenue: $322 million; up 15%
Operating Income: $15.6 million; down 29%

DCS revenue increased 15% during the quarter over the same period 2013. But revenue on a per truck per week basis was down approximately 5.7% versus 2013 due to the large number of Midwestern and Northeastern customer accounts affected by the winter weather and a significant increase in unseated trucks in the current period. Since last year the company added a net 1,014 of revenue producing trucks primarily from new accounts.

Operating income decreased by 29% from a year ago. Lower productivity, higher equipment and maintenance costs and increased safety costs from the severe weather affected operating income by approximately $8 million in the current quarter.

INTEGRATED CAPACITY SOLUTIONS
Segment Revenue: $163 million; up 33%
Operating Income: $6.1 million; up 18%


Revenue grew faster than volume due to a change in freight mix driven by customer demand. Contractual business was approximately 59% of total load volume, but only 50% of total revenue in the period compared to 69% and 63%, respectively, in first quarter 2013.

“We were encouraged by the response our ICS business showed in dealing with the tighter truck market created by the weather, rail service disruptions and a very real driver shortage,” Roberts said.

Hunt continues to invest in this segment adding 13% more employees and total branch count increased to 24 from 16 over the same period 2013. ICS’s carrier base also increased 7% compared to first quarter 2013.

TRUCKLOAD
Segment Revenue: $92 million; down 9%
Operating Income: $2.4 million; up 124%

This segment revenue decreased 9% from the same quarter 2013, primarily from a 9% reduction in fleet size and lower utilization per truck from the winter weather in January and February. At the end of the quarter, Hunt’s tractor count was 1,917 compared to 2,011 in 2013.

Operating income for the quarter increased by 124% compared to the same quarter of 2013. Benefits from lower personnel costs, a smaller trailer fleet and gains on equipment sales were offset by increased driver hiring costs and higher maintenance and equipment costs per unit.

“We were encouraged by the trucking segment’s improvements this quarter even as they dealt with a smaller independent contractor fleet that affected their revenue expectations," Roberts said.

The company said productivity in March recovered to March 2013 levels, however driver recruiting challenges will likely remain in future periods.

THE NUMBERS
Total Revenue
Q1 2014: $1.406 billion
Q1 2013: $1.291 billion
9%

Net Income
Q1 2014: $68.664 million
Q1 2013: $73.349 million
-6.38%

Earnings Per Share
Q1 2014: 58 cents
Q1 2013: 61 cents
-4.9%

March was a good month for retailers spurred on by warmer weather and pent-up demand from consumers wanting to shake off the winter blues. The National Retail Federation reported a 1.6% increase in March sales compared to a year ago. These sales exclude autos, fuel and restaurants.

“Consumers shed their winter coats last month for fresh, spring merchandise,” NRF President and CEO Matthew Shay said. “Retail sales increased in most categories and sectors as consumers took to stores to purchase new spring attire and home furnishings in hopeful expectation of warmer weather. Sales should continue to remain positive this spring with the approach of Easter and expected tax refunds.”

The U.S. Census Bureau data, which includes automobiles, gas stations and restaurants rose 1.1% from the prior month to $433.9 billion. This was the biggest increase since 2012. Sales rose a whopping 3.8% from a year ago, according to the commerce department.

“Improving economic conditions and consumer confidence should push consumers to return to spending habits this spring,” NRF Chief Economist Jack Kleinhenz said.

He said March was a rebounding month after tepid sales in January and February. Wal-Mart said recently that its sales also bounced back in March after a roughly January and February. That said, the retail giant expects negative to flat same store comparable sales for this quarter which ends April 30.

Segment Sales Increases (year-over-year)
• Building material and garden equipment sales increased 6.2%
• Clothing and accessories sales decreased 2.3%
• Electronics and appliance sales decreased 2%
• Furniture and home furnishing sales increased 1%
• General merchandise sales decreased 0.2%
• Health and personal care sales increased 4%
• Online retailers’ sales increased 8%
• Sporting goods, hobby, book and music sales decreased 5.5%