This bidding for breakfast sausage could get expensive. What began as a $6.5 billion bid by Pilgrim’s Pride for Hillshire Brands, has now seen Pilgrim’s up its bid to $7.7 billion to counter a $6.8 billion counter offer by Springdale-based Tyson Foods.

Tyson Foods’ officials would not comment Tuesday about a next move, but the company, in a better financial position than Pilgrim’s, can afford to push the bidding higher.

In an era of higher competition in the low-margin commodity chicken business it’s no wonder Pilgrim’s Pride and Tyson Foods are each actively pursuing Hillshire Brands. Pilgrim’s upped the ante introducing a higher bid of $7.7 billion on Tuesday (June 3) in a deal that would pay Hillshire shareholders $55 per share, a $5 premium over Tyson Foods $50 cash bid offering on May 29.

Pilgrim's revised proposal is not subject to any financing conditions or contingencies, according to the company release. 

“Pilgrim's is confident the transaction is strategically and financially compelling, and creates considerable value for the shareholders of both Pilgrim's and Hillshire. Pilgrim's anticipates run-rate cost synergies in excess of $300 million annually to come from operational and value-chain efficiencies and, in addition, significant growth opportunities in higher margin branded products, both in North America and internationally,” Pilgrim’s CEO Bill Lovette noted in the release. 

He said Pilgrim's expects the increased cash flow from the combined company and the realization of synergies will allow it to rapidly pay down the initial acquisition debt. 

The winners to date have been Hillshire investors as the stock price has rallied another 9% on Tuesday (June 3) to $58.45, up $4.88 on Pilgrim’s counter offer. Shares of Hillshire Brands are up 65% in the past month from the acquisition offers by Pilgrim’s and Tyson Foods.

The offers were unsolicited by Hillshire Brands who had already planned to acquire Pinnacle Foods, a $4.3 billion deal announced May 12. Pilgrim’s and Tyson have both said their offers do not include Pinnacle Foods. 

Tyson hinted during its calls with media and analysts last week that it is financially able to raise the stakes of the offer if necessary. Wall Street is waiting to see if Tyson management will counter the $55 per share bid laid down by Pilgrim’s today.

Hillshire’s Board of Directors said Tuesday it will enter into formal talks with Pilgrim’s Pride and Tyson Foods.

“Hillshire Brands is party to a merger agreement with Pinnacle Foods pursuant to which Hillshire Brands agreed to acquire Pinnacle Foods for per share consideration of $18 in cash and 0.5 shares of Hillshire Brands common stock,” the company said in a statement.

Hillshire also noted that its Board of Directors is not withdrawing, modifying, withholding or qualifying its recommendation with respect to the Pinnacle merger agreement and the merger, or proposing to do so, and is not making any recommendation with respect to either the Pilgrim’s Pride or Tyson Foods proposals.

“Hillshire Brands does not have the right to terminate the Pinnacle Foods merger agreement on the basis of either of these proposals or enter into an alternative acquisition agreement with either of these parties prior to termination. There can be no assurance that any transaction will result from these proposals,” the company noted.

Officials with Pilgrim’s Pride and Tyson Foods said they would pay the $163 million termination fee payable to Pinnacle Foods if one of their offers is accepted.

Alexia Howard, senior research analyst at Sanford Bernstein, said last week the deal make sense for Tyson because its gives them more brands at the end of the of supply chain. Those “value added” products deliver higher margins than food service and commodity meat sales at Tyson Foods.

“It could be a deal of lifetime for Tyson,” she said.

She said the Tyson offer at 13.4 times earnings was the priciest merger and acquisition offer seen this year in the food sector. That was before Pilgrim’s counter offer on Tuesday.

Howard said the fit with Tyson is solid given its diversified protein businesses. It’s not as good of a fit with Pilgrim’s who does not have a domestic pork business. 

TheStreet's Jim Cramer said he does not recommend Hillshire Brands to sell because he thinks the stock could move higher in the bidding war between Tyson and Pilgrim’s who want to move into higher margin offerings. 

Tyson shares (NYSE: TSN) were trading down more than 3% on the news of the higher Pilgrim’s bid. Tyson shares were trading at $42.07 in the heavy volume in the afternoon session (June 3). Pilgrim’s shares (NASDAQ: PPC) also lost ground trading around $25.34 down more than 2% in the afternoon session.

Wal-Mart is often in the center of a battle between the Wal-Mart insiders and any number of outside groups seeking change from and within the insiders, and shareholder week usually involves public displays of dissatisfaction from hourly workers and labor unions. This year is no different. 

Institutional Shareholder Services, an advisor to big shareholders such as mutual funds, recently issued a scathing report on Wal-Mart’s corporate board of directors, namely chairman Rob Walton, son of founders Helen and Sam Walton. The report also took to task former Wal-Mart Stores CEO Mike Duke.

ISS in a shareholder proposal opposes Walton and Duke’s re-election and criticizes the board for doing little to rectify possible violations of foreign bribery probes. They also believe the directors have failed to address the issue of fair executive pay.

Because Wal-Mart’s U.S. sales have dropped for five consecutive quarters and future guidance is also muted with profit struggles internationally, ISS recommended that shareholders vote “No” on the proposed executive pay plan and consider appointing an independent chairman during the company’s annual shareholder meeting on June 6. 

WAL-MART RESPONSE
Wal-Mart defended its position on executive pay, board selection and efforts to confront the Foreign Corrupt Practices Act violations in a recent filing with the Securities and Exchange Commission. Randy Hargrove, Wal-Mart spokesman, said there was a strong correlation between executive pay and company performance, and that named executive officers were interested in aligning with the interests of shareholders. 

He also said Wal-Mart had spent more than $400 million in cooperating with government prosecutors to look into whether overseas executives had violated the Foreign Corrupt Practices Act, which prevented American companies from offering money or services as a bribe to foreign government authorities.

“We believe that ISS’s analysis misconstrues the nature and operation of Walmart’s executive compensation program,” Wal-Mart noted in the filing.

The retailer said there are a number of misrepresentations about its executive compensation plan which was the basis of the ISS recommendation.

“We believe ISS’s recommendations are incorrect and inconsistent with prior years’ analyses. The primary difference this year appears to be the submission of a letter, dated May 19, from CtW Investment Group which contains a number of misrepresentations and intentionally misconstrues our executive compensation program. CtW is a union-affiliated group that has a long and consistent track record of opposing Walmart, with its sole motive being to undermine the company in an attempt to organize Walmart’s associates,” Wal-Mart noted in the filing.  

Wal-Mart points to ISS’s own quantitative analysis which shows Wal-Mart’s executive pay is of “low concern” with pay aligned with performance and low relative to the median of its peers. The retailer noted that performance-based pay in 2014 reflects lower than expected sales and is fitting with company’s protocol to tie company performance to bonus pay.

In fiscal 2014 Wal-Mart notes its named executive officer earned less in bonuses than in the prior because the company failed to meet financial expectations. Following are top Wal-Mart execs and their 2014 reduction in bonuses, according to Wal-Mart:
• Mike Duke: $1.5 million less,
• Doug McMillon: $520,000 less, 
• Bill Simon: $658,000 less, 
• Charles Holley: $418,000 less,
• Neil Ashe: $226,000 less, and
• Rosalind Brewer: $182,000 less.

FCPA MATTERS 
ISS asked shareholders to oust Walton and Duke from their board seats because they do not feel the company has given enough disclosure into the ongoing FCPA probe.

Wal-Mart said its audit committee and the company are following the appropriate protocol for an independent, thorough investigation. Wal-Mart said it voluntarily disclosed the audit committee’s investigations to the U.S. Department of Justice and the U.S. Securities and Exchange Commission, both of which are conducting their own external investigations.

The retailer said the release of “specific findings” related to the ongoing investigations would be contrary to the company’s best interest as well as its shareholders. Wal-Mart also notes that Walton and Duke have been instrumental in the new compliance programs in all countries where Wal-Mart does business which have resulted from the investigation.

DISGRUNTLED MOMS
Another group taking aim at Walton this week are a faction dubbed real-life “Walmart Moms” who began striking this week in 20 cities with a demonstration in Phoenix held Tuesday (June 3).

“I came to Phoenix to tell Rob Walton what it’s like being a working mom at Walmart. While his family is the richest in the world, my son and I depend on family and public assistance to keep our heads above water. ... Women at Walmart need the company to end the retaliation and pay us a minimum of $25,000 a year for full-time work so we can support our families,” Bene’t Homes, a 25-year-old Walmart worker and OUR Walmart member from Chicago, said in the group’s press release.

Wal-Mart has said these groups are backed by union efforts. The retailer continues to emphasize that it promotes more than 180,000 employees each year and three out of four managers within the company started as an hourly worker, including Wal-Mart Stores CEO Doug McMillon.

McMillon, who presides over his first shareholder meeting as the Wal-Mart CEO, recently said Wal-Mart has no problem promoting cashiers into better paying jobs. The problem Wal-Mart faces is when it hires a cashier who remains in that position, for whatever reason, for 15 years. He said store managers make on average $150,000 or more and the majority began their career as an hourly worker. 

Sherry Curtis-Swenson, manager of the Wal-Mart Supercenter in Jane, Mo., told The City Wire last summer that she began her Walmart career as cashier 20 years ago. She oversees 450 employees in a store that is open 24-hours a day. She began as store manager 10 years ago when the supercenter opened. Prior to that she worked in the Bentonville supercenter, the store her husband now manages.

“I can’t imagine doing anything else. I love working with people. Just recently I was able to promote a stocker into an assistant manager position and know firsthand how this will change his life,” Curtis-Swenson said.

The U.S. Marshals Museum's Finance Committee advanced a proposed $3.176 million budget Tuesday (June 3) that includes funding for architecture and exhibit design for the museum.

According to Marshals Museum President and CEO Jim Dunn, the proposed budget includes $1.6 million for a three phase architectural design phase to take place during fiscal year 2015, as well as $808,000 for three phases of exhibit design.

The exhibit design has been awarded to Brent Johnson design of Boston, Dunn said, while the museum is in contract negotiations with Polk Stanley Wilcox of Little Rock and Cambridge Seven and Associations of Cambridge, Mass., for architecture design the firms will complete for the museum.

Beyond the combined $2.408 million in design fees included in next year's budget, Dunn said an additional $768,000 has been budgeted for operations for the year. The budget will come up for a vote before the annual meeting of the Marshals Museum's board of directors on June 10.

With design work soon expected to get underway, Dunn said the museum still plans to officially break ground on Sept. 24, with a targeted opening date of 2017.

"We hope to have some preliminary conceptual designs from exhibit designers later this year," he said, adding that the conceptual drawings will give the public its first glimpse into the long-awaited museum to be built along the banks of the Arkansas River.

But Dunn said breaking ground and hiring designers does not signify the end of the museum's fundraising efforts. Quite the opposite, in fact.

"We still have a lot of money (to raise). Just because we're breaking ground doesn't mean the job is done. Still a lot (to raise) and a lot in the pipeline."

When reached for comment Tuesday, Dunn said he could not recall exactly how much the museum had raised to date, though he said fundraising has continued in order to break ground as expected in September.

He said in August 2013 that the museum would need to raise an additional $10 million to $15 million"to reach the 'threshold' of between $30 million and $35 million needed to break ground and begin construction. Dunn is also banking on new market tax credits for partial funding of the museum, which he said should bring in nearly $10 million."

The museum is also counting on banking $4 million to $5 million on the sale of commemorative U.S. Marshals Service coins to be marketed by the U.S. Mint.

Dunn said the overall cost of the building itself was in excess of $50 million, but said up to this point the figure was just an estimate without hard data to back it up. With the money set aside to pay the design firms, he said the numbers should start coming together to better reflect the final totals that need to be raised in order for the museum to be completed on time.

"The capital goal is $50 million. We've still got startup, staffing and expenses and operations and fundraising fees in addition to that. What we're going to be able to do reasonably soon is now that we have exhibit designers under contract and architects almost under contract, we'll be able to work on a budget instead of project goals."

The June 10 meeting of the Marshals Museum board will take place at the River Park Events Building, 121 Riverfront Drive, at 11 a.m.

The Fort Smith Board of Directors will hear the city's side of recent allegations by attorney Matt Campbell that the city was billed for legal services never provided in its defense of a lawsuit brought by Campbell.

Campbell, a Little Rock-based attorney and counsel for a group of police officers engaged in a whistleblower lawsuit against the city, made the claims on his Blue Hog Report blog.

City Director Philip Merry brought the issue to the forefront at the end of Tuesday's (June 3) Board meeting, where he asked for a certified public accountant (CPA) to do a review of the Daily and Woods Law Firm's billing to the city. He had also proposed forming a five-member council to evaluate whether the city should continue paying an outside law firm to represent the city on a contract basis or whether the city should employ its own staff attorney(s).

In announcing his desire to see an accounting firm review the billing by Daily and Woods, Merry said it was not based on an assumption of guilt.

"No wrong doing is assumed in any way on this motion," he said. "As stewards of other people's money — that being the taxpayer's money — we must assure an open air, objective full review of the process to our taxpayers."

As Merry was making his proposal for the independent committee to review the city's employment or contracting with attorneys for services, Mayor Sandy Sanders cut Merry off and said since he had not presented the items at the beginning of the meeting when directors were asked whether they had items to add to the agenda, it was not a proper motion.

Instead, it was decided that the city's contract with Daily and Woods, as well as the firm's billing of the city, would be reviewed at a June 10 study session of the Board.

LIBRARY MILLAGE ELECTION
In other business, the Board set a special meeting for June 10 prior to the study session to consider a special election in August for a millage increase for the library. According to state law, the city must authorize the library's ability to hold an election to raise its millage.

According to Fort Smith Public Library Executive Director Jennifer Goodson, the library has not had a millage increase in more than 50 years. The library's board of directors is seeking a two mil increase, which would raise the rate on Fort Smith landowners to three mils, or what she said was about $60 per year on a $100,000 home.

The Board balked at holding a special election when no other elections would be held in conjunction to the library vote.

"You know Jennifer, I think the timing is bad," said City Director George Catsavis. "You know how the economy is around here and how people are struggling to pay their bills, including me. I've had to raise the deductible on my insurance to keep my escrow in balance. Two mils doesn't sound like much, but this is a bad time for it."

In response, Goodson said the library wanted to add services, including streaming video, and could not without the millage increase.

In addition to the point of adding services, Goodson said the library has had to dip into strategic reserves during the last two years at a time when it was serving a larger number of patrons, another reason why the library wanted to ask for a millage increase.

City Director Mike Lorenz asked why the library could not wait to hold the election until November in order to save money. Goodson said such a delay could mean the millage vote would get overlooked by the partisan elections locally and at a state level that would be on November's ballot.

In all, she said the cost of an election would be $30,000 and would be paid for out of library funding, meaning the city would not be out any money on the election, nor would the county election commission.

The special Board meeting will take place June 10 at noon in the library, with the study session on Daily and Woods to follow.

SUSTAINABILITY PUSHBACK
The Board also tabled a resolution expressing support for a sustainability initiative proposed by the University of Arkansas at a study session last week.

The Board tabled the resolution following outcry from citizens who fear the resolution was part of a United Nations act that pushed for more sustainable growth on a global level. Attorney Joey McCutchen told the Board that the resolution would also put unnecessary regulation on Fort Smith citizens.

The resolution will be investigated in more detail at a later study session as a result of Tuesday's tabling.

The Board also failed to make a motion to adopt a new governing policy, with the proposed governance policy dying due to a lack of a motion. City Clerk Sherri Gard said as a result, the item would not be brought up for another vote.

Van Buren municipal employees, including police officers and firefighters, could face increasing costs associated with health insurance for spouses and dependents when next year's city budget is created following a rate increase for the city.

The rate increase first came to light during May's city council meeting, when Freeman told city aldermen that the city's municipal health insurance had increased in cost by $133,596 annually, or $11,133 per month. The city's health care plan covers 148 people. No action was taken at the meeting, though Freeman has made a recommendation to the council of increasing the amount paid by city staff to cover for dependents. The city now covers 100% of the premiums for staff and dependents.

While many insurance plan providers have blamed rate increases on the Affordable Care Act, Freeman said the city's increase is simply due to a few catastrophic claims by covered individuals.

To highlight the point, Freeman points to premiums paid by the city of $711,560.10 from Nov. 1, 2013, to April 30, 2014. During the same period, claims paid for individuals covered under the plan amounted to $959,112.94. Incurred but unreported claims amounted to $159,855.35.

In all, the total loss reported by the Municipal Health Benefit Fund for the city was $1.14 million, which amounts to a loss ratio of 160.26%. It was that loss ratio that pushed Van Buren into a higher risk class with the MHBF, resulting in the higher premiums.

Freeman said the city will cover the increase out of reserve funds, but he said it is not sustainable for the long term.

"You come to a certain point that you go, ‘Well, it's been great that the city has always paid for employees and their families 100%.’ But as rates have increased and as the city has grown its employees, those increases in stages go up exponentially. So at some point, yeah, as they continue to go (up), we are going to have to say OK, where's our stopping point? Because we can't continue to absorb this. It's going to cause problems."

The only real way to have the city's premium drop is to have the number of claims go down to where the loss ratio would even out.

According to Arkansas Municipal League Executive Director Don Zimmerman, that has happened for 39 cities across Arkansas last year that take part in the AML's health benefit fund.

"We've got six classes of rates," he said. "Cities work their way up or down depending on their own utilization, as well as utilization of the group."

One way to help reduce the number of claims would be for the city's insured to take part in a wellness program in hopes that it would be a preventative measure.

Another way to try to save the city money is to look elsewhere for coverage, as suggested by Alderman Max Blake.

Freeman said Arkansas Blue Cross and Blue Shield is preparing a quote for the city, though it is unknown at this time whether the provider could give the city lower rates.

While neither Freeman or Zimmerman blamed the ACA for the rate increase on Van Buren and the 22 other cities across the state that saw increases, Zimmerman did say that the health plan was hit with higher fees this year.

"Overall, the impact on our plan is a 1% increase overall. That's the largest increase we've had in seven years. …I think that's got more to do with (catastrophic events), although the new (law) has required some things we had not had to have before such as unlimited caps and adult age dependents to age 26."

Such moves increases risk, Zimmerman said.

Freeman said even if the city gets a better rate from Blue Cross, the city could still stay on the Municipal Health Benefit Fund plan since it does not know whether the rates will stay lower in the long term.

"…that has happened with some municipalities, being part of the Municipal League System, we've seen that happen with some municipal governments where they've switched to somebody and then a year or two years later, they're right back because who they switched to really came in and underbid to get the business and I don't want to do that. I want to make sure we have a good provider and we're not just making a silly decision, I guess you could say."

Whatever happens, Freeman said something must be done and his recommendation to the city council will be limiting in some way how much the city pays for dependent coverage.

Arkansas Attorney General Dustin McDaniel approved the popular name and ballot title for a proposed constitutional amendment that would decriminalize marijuana. The measure is one of two marijuana related initiatives that could make the November ballot.

The “Arkansas Hemp and Cannabis Amendment” would allow for the “cultivation, manufacturing, distribution, sale, possession and use of the cannabis plant” and products derived from it.

The proposal would also allow the General Assembly to regulate the amendment, if it were to pass voter approval, but it states that federal law would still trump state law.

Robert Reed of Dennard, Ark., is listed as the pursuer of the proposed amendment. With the AG’s approval, Reed and his supporters may begin collecting signatures to qualify for ballot access this November. The group must submit more than 78,000 valid voter signatures by July 7 to qualify for the November election.

Officials with Arkansans for Compassionate Care are also working to get signatures to place their medical marijuana question on the November ballot. The petition circulated this year is largely the same as the one that made it to the ballot in 2012 – a ballot initiative that failed by a vote of 48.56% for and 51.44% against.

While the Compassionate Care petition closely mirrors 2012's proposal, there were a few changes. The key difference that is what is known as the “hardship clause,” which ACC Campaign Director Melissa Fults has said would allow individuals who live too far to receive deliveries of medical marijuana or have medical issues that prevent them from driving to grow up to three marijuana plants in the privacy of their own home for personal, medical uses. But she said such a provision in the law is not intended to just let people freely grow pot with no supervision.

"A health department representative can go to your house, ask to see your (medical marijuana) license, ask to see your grow room, to see that you are only growing the three mature plants you're qualified to grow," she said in this previous report by The City Wire.

Also, the medical marijuana effort is an initiated Act, different than the state Constitutional Amendment that Reed is pushing.

Opinions among Arkansas voters on an outright decriminalization of marijuana are unknown, but a recent poll of likely voters found that a medical marijuana initiative could be approved by voters. The Talk Business-Hendrix College poll asked the following question.
Q: A proposal to allow the use of medical marijuana may also be on the ballot through the petition process. It 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. If the election were held today and the measure were on the ballot, how would you vote?
• 45% Yes
• 45.5% No
• 9.5% Don’t Know

In terms of partisanship, Democrats are solidly supportive (56%-33%), Republicans are in solid opposition (60%-28%), and, appropriately, independents split right down the middle.

“Once again, assuming that the voters get the opportunity to speak on the issue in November, it appears we’re once again on our way to a close vote on the legalization of medical marijuana,” Dr. Jay Barth, professor of political science at Hendrix College, said in his analysis of the April 2014 poll.

Possibly more troubling for those who believe marijuana should not be legalized in any way is that voters in the historically conservative belt that stretches from Fort Smith to Northwest Arkansas supported the 2012 measure. Combined, the proposal to allow medical marijuana was supported by 51.5% in Benton, Crawford, Sebastian and Washington counties. However, the measure failed in Benton County (47.4% for, 52.2% against) and Crawford County (47.7% for, 52.6% against).

Sales tax revenues for the city of Fort Smith were up in April, with the revenue gap narrowing in the city for the first four months of the year.

The city's sales taxes (1% for streets and 0.75% for water and sewer projects) collected $2.979 million in the April report, up 3.38% from the same period in 2013.

The total in the April report represents an increase of 0.92% over budget. (Because the state of Arkansas has a two-month delay in reporting collections back to the cities, the city of Fort Smith — for budgeting purposes — has historically reflected the collections on a one-month delay. Which is to say, the tax collections remitted to cities in April are from taxes collected in February and transferred by merchants to the state in March.)

Collections so far in the 2014 reporting period of the two taxes were $11.688 million, while the same period in 2013 saw collections of $11.702 million. The same period in 2012 saw $13.586 million and $12.932 million in 2011.

Total collections in the year 2013 of the two taxes plus the 0.25% fire and parks sales tax were $38.937 million. Collections in 2012 of the two 1% taxes totaled $39.21 million, slightly ahead of the $38.683 million during 2011. The 2011 collections were 3.9% above 2010 collections.

Fort Smith's share of the countywide 1% sales tax in the April report was $1.294 million, up 3.5% from last year's total during the same period of $1.277 million. The collection was up 3.02%, or $38,708, compared to a revenue estimate of $1.283 million for the month.

The countywide tax generated $15.353 million for Fort Smith during 2013, up 0.49% compared to 2012 and down 1.99% compared to budget forecasts. The countywide tax generated $15.279 million in 2012, just ahead of the $15.15 million in 2011, but lower than the peak collection of $16.61 million in 2008.

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

The prospect of any budget cuts similar to what happened last year seems to have dimmed with the April report, with revenues appearing to have stabilized. Finance Director Kara Bushkuhl said the report "has a positive trend and is helping to close the gap on the annual revenues."

Bushkuhl said last month that a reduction would be unnecessary, though she said the fire and parks department budgets may need to be adjusted slightly if trends continued, though the April figures appear to show a reversal in trends, at least in the short term.

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

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

Wal-Mart Stores has made no secret of its need to innovate. By some outside estimates the retailer has spent around $2 billion on 10 tech startups since 2011. But the retailer rarely allows the media inside its expansive innovation lab in Bentonville where about 3,500 employees work to transform the shopping experience.

The media got a rare peak at some of the innovation consumers can expect to see in the coming months to years. Items revealed included 3-D digital printers in stores that allow shoppers to replicate their own images for wedding cake toppers and digital watermarks in print circulars that allow shoppers to scan the item on the page into their phone to glean a host of additional product information including reviews.

Wal-Mart’s chief technology officer Suju Chandrasekaran said the innovation lab and its collaboration with a Wal-Mart employees in San Bruno, Calif., Bangladore, India, and Sao Paulo, Brazil, have become a formidable technology company within the world’s largest retailer. She said the amount of data Wal-Mart collects and analyzes daily is so large that the company created a “Data Cafe” which merges point-of-sale data with social media feeds and syndicated market share data.

This real-time data is used to impact store staffing, on-shelf availability, merchandising and a host of other applications.

Cory Gundberg, vice president of strategic planning at Walmart Technology, said the retailer is looking at wearable technology and, with its suppliers, hopes to find that item that will become as common as the cell phone.

The retailers’s innovation lab has held eight hackathons in the past two years which has yielded scalable ideas such as “Amazing on a Budget” – a shopping tool that allows a shopper to get help stretching a food budget. The innovation came from a real-life situation when a shopper in Chicago asked the store manager to help feed her family of four on a limited budget. She gave the manager the budget and the store gave her list of items.

“Amazing on a Budget” does the same thing in a seamless manner while also allowing the shopper to stay within a budget. It can refer a private label or access a manufacturer coupon if available to help the shopper access savings.

Gibu Thomas, senior vice president of mobile and global e-commerce for Wal-Mart, said  Wal-Mart is using technology to get closer to the customer.

“We know 65% of our shoppers have smartphones, 80% of Millennial shoppers. This an incredible opportunity for help improve the shopping experience giving them more tools,” Thomas said.

He talked about e-receipts, which are created by scanning the QSR code on the bottom of the receipt or typing in a phone number into the terminal when cashing out. While e-receipts are not a new innovation, he said it is pa latform that can be expanded. Thomas said the e-receipts can be stored in e-mail locker and then used to create predictive shopping lists which may be accessed as the shopper enters the store. He said Scan & Go, which is now being tested in about 300 stores is more appreciated for its budgeting capabilities than the time savings, which is why it was originally created.

“We are testing lots of things, learning fast and willing to fail fast which is part of the startup mindset.” Thomas said.

A Tuesday (June 3) letter from the city of Fort Smith's attorney disputes allegations made by attorney and blogger Matt Campbell against the city. Campbell had claimed the law firm billed the city for services not rendered and had excessively billed the city for work completed related to a Freedom of Information Act request by Campbell.

Campbell, who represents a group of Fort Smith officers involved in lawsuits against the city, made the allegations in a post on his Blue Hog Report blog, alleging that Daily and Woods had billed the city for phone calls to Campbell that were never made.

Campbell had requested documents tied to one of the cases through a FOIA request, but was denied, prompting him to eventually file a lawsuit. The lawsuit was eventually settled, with the city providing the documents requested and Campbell only being out about $315 (costs and filing fee for the lawsuit). But as a result of another FOIA request filed earlier this year, Campbell was able to track billing from the law firm to the city related to his first FOIA request, with the city on the hook to Daily and Woods for a total of $6,778.75.

In adding up the billing from the firm, Campbell noted an unusual number of meetings or telephone conversations between the firm and city officials. Campbell also noted several phone conversations listed by Daily and Woods that did not happen. City Attorney Jerry Canfield of Daily and Woods has said he believes the firm's records to be accurate, though he said the firm would investigate the claims made by Campbell.

"Our records are accurate and we're still in the process of looking at the details that are mentioned in the blog, but our comment is again it's a regular, ongoing monthly process. It's been going on for years. They're subject to public inspection. They've always been subject to public inspection. We're taking the time to evaluate the individual assertions in the blog to make sure we know what all the appropriate facts are."

‘TIME REASONABLY SPENT’
In his letter to City Administrator Ray Gosack on Tuesday, Canfield stood by his firm's billing.

"The billings to the City reflect the actual time reasonably spent on matters we were asked to handle," he said, adding that "time spent by members of our firm preparing responses at the request of the City is accurately reflected in the billings to the City."

Canfield also challenged with documentation six different phone calls Campbell said had never occurred. The documentation includes copies of the corresponding phone bills, as well as handwritten notes by Rick Wade, though Canfield notes that Wade's notes indicate the wrong date, which could have explained the assertion by Campbell that he had not received a call on November 22. In fact, Canfield said, the call took place on November 21.

Without providing additional documentation, Canfield said calls were made to Campbell at his Little Rock office that went unanswered.

"Apparently, the Little Rock attorney does not have a full-time secretary and, consequently, a number of phone calls were placed to his office that were not answered by a human or were not answered at all. Calls were sometimes 'answered' at his office by a voice message indicating his message box was full. In those instances, it is customary for our firm's attorneys to document the attempted call(s) in order to keep an accurate record of legal services."

CAMPBELL REBUTTAL
In response, Campbell said the claims about his voicemail, or lack thereof, were not true.

"That never happened. There was a one day period a week ago where I switched to another phone, but there's never been a time when my voicemail was full."

He also said his allegations initially claimed that at least nine phone calls the city was charged for were not made, meaning the letter from Canfield to Gosack does not answer the allegations in their entirety.

"Yeah, if they want to say there were a couple of additional calls from numbers I didn't recognize, I'll say that. But you still didn't make all the calls you charge for in November. But if this is your evidence, you're practically admitting that there are phone calls you can't account for."

Campbell also said the documentation from Canfield accounts for only six phone calls.

"What about the other three," Campbell asked. "Their own invoice is not evidence of anything. That is what I had and was pointing out. Most of (the calls accounted for by Canfield) were missed calls and that still doesn't get you to the number of phone calls they were charging the city for."

In an e-mail to the Board of Directors Tuesday, Gosack said the record did not show certain calls because of the alleged full voicemail.

"There were some calls made by Daily & Woods attorneys to Mr. Campbell for which there is no record from Daily & Woods’ phone company. There is no record because Mr. Campbell’s inbox/voice mail box was full and wasn’t accepting any more calls. Daily & Woods has confirmed with its telephone service provider that, in this instance, the attempted call wouldn’t appear on the telephone billing record. Nonetheless, Daily & Woods’ work records show the attempted call to Mr. Campbell," Gosack wrote. "I trust this information and documentation demonstrates that Daily & Woods hasn’t improperly billed the city."

In discussing the report by Daily and Woods, Campbell said even if the calls were made as claimed, it was still difficult to detail any work done associated with the calls due to the billing style of Daily and Woods.

"No one can verify that because they bill (clients) with block billing. When (attorney) Doug Carson lists like 6.8 hours of total time spent and puts eight or nine things in a block, it's impossible to know how much time he spent on any one of those things. When you do anything in block, no one can tell what you did."

In an e-mail to The City Wire, Gosack referred back to his e-mailed comments to the Board of Directors.

The letter to Gosack came the same day City Director Philip Merry had requested a CPA audit of billing by Daily and Woods to the city, as well as a formation of a committee to review whether the city should keep its contract with the firm or hire independent counsel that would be on the city payroll, therefore eliminating billing errors in the future.

Campbell said the proposals by Merry are worth pursuing.

"I think the independent (review) of their bills is necessary if you base it on what they sent (to the city)," he said. "In the bigger picture, the committee to look at the relationship between the city and Daily and Woods needs to be done every few years to make sure this is still in the city's best interest."

Link here for the PDF of the June 3 letter from Daily & Woods to Fort Smith City Administrator Ray Gosack.

Three months after Wal-Mart first announced the testing of a new savings tool to help drive more in-store traffic, the retailer said it’s expanding the guidelines and rolling out its Savings Catcher program nationwide later this summer.

The receipt comparison tool looks at competitors ads and gives customers an e-gift card for the difference when a competitor’s price is lower than what a Wal-Mart customer paid. Duncan Mac Naughton, chief merchandising officer at Walmart U.S., said Wednesday (June 4) that Savings Catcher automatically compares 80,000 grocery items, but in the coming months produce and general merchandise are to be added to the mix.

The program does not compare private label prices and there is no plan to include them, Wal-Mart said Wednesday.

“Our customers are savvier than ever when it comes to finding the best deals — they are using technology to do their research and spending hours clipping coupons. We knew there had to be an easier way,” Mac Naughton said. “Wal-Mart Savings Catcher offers customers yet another reason to trust us when it comes to help them save money. It brings greater price transparency to the market and gives our customers confidence that they are finding some of the best deals available in retail.”

Wal-Mart said the program has only been available on Walmart.com, but it will be accessible on Walmart’s mobile app.

Since March, in limited test cities, Mac Naughton said nearly one million receipts have been processed using Savings Catcher, making it the top rated concept tested to date by the retailer.

Gibu Thomas, senior vice president of Walmart mobile and global e-commerce, said Savings Catcher will also work in tandem with e-receipts that will allow the automatic uploading of receipts into Savings Catcher. With this data, predictive shopping lists will also be a possibility as the retailer continues to find ways to interact with its customers via technology. 

CUSTOMER IS KING
Wal-Mart spends a lot resources studying its customers and it gathers survey data from roughly 500,000 customers each month, according to Cindy Davis, director of global customer insights at Wal-Mart.

Davis said billions of data is constantly collected from point of sale, to syndicated market data and social listening platforms. The retailer collects 250 million social posts a month, which it uses to gain insights into shopping patterns and consumer mindsets.

“This data collection and analysis helps us to understand customers faster and be able to react better to their wants and needs. We conduct online focus groups through internet chats rooms with a moderator which gives us access to authentic shopper voices, which are shared across the company,” Davis said.

MILLENNIAL FOCUS
One group the retailer is focusing on are the Millennials, because of their future buying power — an estimated $5.3 trillion over the next four years. Wal-Mart's research indicates Millennial moms are planners, more so than their mothers. Savvy Millennials shop from a list with a detailed budget and price is a huge factor in their decision to buy, according to Davis.

This generation – typically born between 1982 and 2004 – is looking for more choices of healthier and fresh foods at an affordable price. 

Jane Ewing, senior vice president of baby at Walmart U.S., said Millennials are informed shoppers, doing a lot of research online and talking with friends and families before buying larger items.

She said one of the criticisms Wal-Mart heard a while back from this generation was a lack of assortment of organic baby food, something the retailer is addressing with more products now in the pipeline.

A February 2010 report from Pew Research said this of Millennials: “They are more ethnically and racially diverse than older adults. They’re less religious, less likely to have served in the military, and are on track to become the most educated generation in American history.”

As the dream of a regional trail system is rapidly becoming a reality, Northwest Arkansas businesses are reaping the benefits from the Razorback Regional Greenway.

The Greenway should be “substantially complete” by the end of 2014, said John McLarty, transportation study director at the Northwest Arkansas Regional Planning Commission. That means the ribbons of concrete will be connected with only minor improvements and landscaping remaining to complete, weather permitting.

Full build-out of the Northwest Arkansas Razorback Regional Greenway is expected to cost approximately $38 million with majority of necessary funds already pledged from two different grant sources: a federal transportation grant and a matching grant and gift from the Walton Family Foundation, according to the NWA Trails website.

The trail is already complete from Walker Park in Fayetteville to Lake Fayetteville and from the northern end of Lake Bella Vista to Garrett Avenue in Rogers. Work began recently in Lowell and Springdale, which will complete the trail system.

“We are seeing tremendous use, lots of traffic and lots of good comments,” McLarty said. “It’s really filling a need in the community.”

And local businesses are thrilled to help the community fill that need.

Several local bike and outdoor stores are reporting a noticeable increase in sales due to people wanting to get active on the Greenway. Phat Tire Bike Shop, which has locations in Bentonville and Fayetteville, is seeing a “definite increase in bike sales, both in cruisers and hybrids,” said manager Haley McCurry from the Bentonville location.

Hybrids alone have seen a 10% increase since the Greenway opened, McCurry said.

“In the bike industry, that’s a lot,” she added.

The Greenway opening has changed how they do business, McCurry said.

“We are seeing more first-time riders and families,” she said. “They just want to get out there and start riding as a family. We think that’s awesome more people want to get exercise and get involved.”

Another change is that people are purchasing more bike accessories that lend themselves to commuting such as racks and baskets for people to carry groceries and other items to their destination.

Rob Potts, co-owner of Lewis & Clark Outfitters, which has locations in Rogers, Springdale and Fayetteville, said his company is also seeing a rise in business. Potts declined to give a specific growth percentage, but “it has been great for business and we have seen a huge increase in the number of people that are interested in getting into cycling.”

The company offers bike sales and repair, as well as other outdoor enthusiast gear. The increase in demand required them to increase their maintenance staff to increase their ability to do timely bicycle repairs.

“People who had never thought about riding before the trails were built are now seeing the benefits in cycling and having an overall healthier lifestyle and are coming into the stores,” Potts said. “We are seeing a combination of people riding for recreation and for commuting, though the majority are recreational riders.

“(The Greenway) is definitely the most impactful thing that has happened to cycling here in NWA.”

Potts added that when all the cities are connected, he expects to see a considerable increase in the number of people interested in using the trails for commuting and pleasure. He also sees the Greenway as a popular tourist attraction.

“A lot of people are going to be traveling here to ride that trail,” he said.

While the Greenway is promoting more bicycling and running in Northwest Arkansas, it’s also a national trend. According to the U.S. Census Bureau, commuting to work by bicycle has increase by 60% over the last decade. According to Bicycle Retailer and Industry News, which is an online trade publication, the sales of new people-powered two-wheelers were more than $3.66 billion in the United States in 2012 (most recent available figures).

Not all of the businesses seeing better sales because of the Greenway are related to outdoor sports. Apple Blossom Brewing Company in Fayetteville normally sees traffic from bikes, but it’s increased with the opening of the trail and the better weather, co-owner Ching Mong said.

“They end up here a lot as a destination spot,” he said. “It’s noticeably different from winter. Foot traffic and bike traffic probably account for up to 25% to 30% of our business.”

Bike Bentonville is a nonprofit organization dedicated to growing community involvement in healthy outdoor activities. Kyla Templeton coordinates the Safe Routes to School Program and the women’s cycling program. She said the new trails are especially good for the Safe Routes program and that volunteer parent-led bike chains travel from Bella Vista to arrive at R.E. Baker Elementary School and Old High Middle School.

She also leads women cycling groups. While most prefer to use the roads, the trail system allows for a multi-generational experience, Templeton said.

“It’s a way of getting out and enjoying the outdoors and each other without being scared of being on the road,” she said.

Once the Greenway is complete, Templeton anticipates hosting an annual ride to Fayetteville and back.

Bill Simon, CEO of Walmart U.S., said the retailer is excited about the interest from about 500 U.S. companies who want to sell American-made products in its stores. Many of those companies have secured a date to meet with Wal-Mart at its July 8, open call, Simon said.

“I am excited about the possibilities for these U.S. manufacturing jobs and to see what new U.S.-made products will be presented at these meetings. In these meetings we will look at possibilities of supplying Wal-Mart, Sam’s Club and or Walmart.com, whatever fits the best,” Simon said.

He said the retailer has 180 active projects with manufacturers in the pipeline toward moving operations onshore.

‘This is not a Wal-mart initiative. It is a macro-economic fact that is evolving from trends in the marketplace today. … These U.S. made goods do not cost more. If you drive past our home office you will see these silly pink flamingos out front. Last year we sold a ton of those that were made in China, there are two pink flamingos out there this year that we made in the U.S. that cost less and allow for more flexibility inventory ordering on demand,” Simon said during the question and answer session with executives on Thursday (June 5) at the Embassy Suites in Rogers for the Wal-Mart shareholders week.

LESSONS LEARNED
He said the multiple formats are essential in Wal-Mart’s ability to meet consumer’s diverse shopping needs. Simon added that the learnings from the Walmart to Go convenience store format in the past 90 days have been huge. On area is in the fountain beverages from milkshakes to coffee and soda.

“We took these fountains out of our supercenters and we are now evaluating the feasibility of bringing them back,” Simon said.

He added that the Bentonville store has some expensive features like the covered awning from the gas pumps to the front door, which may or may not be duplicated in future iterations of this concept store.

Simon told the group that the hybrid neighborhood market store is also a convenience play and comparable sales are on par with other top grocery retailers like Kroger.

“The past quarter marked the 46th consecutive positive same-store sales reading, with sales growing incrementally in every year since they were introduced in 1999 till now. These are hybrid stores that are performing very well,” Simon said.

Simon will need more of the stores in the Walmart U.S. universe to perform well. The company’s first quarter earnings were ugly. The retailer reported per share net income for the first fiscal quarter of $1.11, below the consensus estimate of $1.15. The company earned $1.10 per share from continuing operations. Total revenue of $114.96 billion was up slightly over the $114.07 billion in first quarter of 2013 and was below the consensus estimate of $116.27 billion.

Company officials said the first quarter was hit hard by unusual winter weather in the U.S. during January.

Comp traffic for Walmart U.S. was down 1.4% in the quarter, despite a 1.3% uptick in the average shopper ticket. This marks the fifth consecutive quarter of negative to flat comparable sales, the benchmark metric used to measure retail performance.

And the second quarter may not be a big improvement. The company is predicting earnings per share in the range of $1.15 and $1.25. The company hit $1.24 per share in the second quarter of the previous fiscal year.

HEALTH CARE TEST
Another area Wal-Mart is testing is company-owned health care clinics to be located in up to 12 supercenters this year, according to Simon. The first clinic opened last month in Coppers Cove, Texas, providing primary care access to Wal-Mart employees and customers.

“Associates on the Wal-Mart health plan have a $4 co-pay and customers pay a flat $40,” Simon said.

Wal-Mart is contracting with QuadMed staffing company who will provide two licensed nurse practitioners for the clinic. As a self insured company, Simon said getting its own employees to use the service is key to its success and the response in the one pilot test is strong.

The retailer has about 180 health clinics in stores, which are operated by local health care professionals or hospitals on a lease arrangement, and this is retailer’s first company-owned clinic.

“Our Walmart Care Clinic pilot is creating a new price position for retail health services that aims to give our associates and customers greater access to quality, affordable health care that will improve their lives,” said Labeed Diab, president of Health and Wellness for Wal-Mart.

Following are some stats pushed out during several Thursday meetings with the media.
• $3.2 million: The savings money transfer fees since April.
• 115,000: The number of games exchanged for cash since March.
• 7 million: The number of online items at walmart.com.
• 1,000 new hires: The number of technology jobs added @WalmartLabs this year.

The 21st Annual Jack White Legislative Golf Tournament to be held Monday, June 16, will involve more than golfers trying to prove their skills on the course – it will involve a robot trying to do the same.

That's right. An IRB 120 robot, the brainchild of a robotics team at ABB, parent company of Fort Smith-based Baldor Electric, will be on hand at the golf tournament.

And while the robot will wow and dazzle the crowd, Baldor Marketing Vice President Tracy Long said the purpose of having the robot on hand June 16 is to highlight the partnership between Baldor and the University of Arkansas at Fort Smith, which announced the creation of a new robotics certification in February.

"With the help of ABB and Baldor, they are installing a whole new series of ABB robots in the McFarland Lab over in the technology building. So UAFS has really kind of moved into this next stage and understanding that there's a lot of manufacturers in town like Baldor who are using robotics now in production to improve safety and to improve productivity and to really add value to the job that we have in manufacturing plants,” Long said in a note. “And so it's a really, really cool thing that UAFS is doing and ABB and Baldor are both so excited to be part of that. So to help them celebrate and kind of share that news, ABB is loaning us this robot they've created to take out to the Chamber (of Commerce) golf tournament.”

Fred Carillo of ABB Robotics said the robot uses a few different technologies to sink the perfect put that alludes so many and further demonstrates the types of projects UAFS students can work on if they choose to pursue the robotics certificate.

First, he said the device uses "range finder technology" to locate the hole and then uses "vision technology" to locate the ball and club before eventually picking up the putter and sinking the ball in the hole.

"Based on some other things that go on that we've developed, we're utilizing some technology that is commonly used on different kinds of applications and manufacturing. And you're seeing it deployed in a rather fun way and it's great that people in the community get to see that.”

Carillo said individuals who are not involved in the manufacturing industry often assume that robots are only used in motor manufacturing or some sort of other automobile assembly. But he said companies across Arkansas are starting to use robots in everyday common activities, including packaging and casting. He said factories in Little Rock and Jonesboro are just two of several examples across the state using robots as an essential tool in the manufacturing processes.

It is for that reason that Carillo said ABB/Baldor partnered with UAFS to make sure the school had the tools it needed when it launched the program.

UAFS Chancellor Dr. Paul Beran said in February that in addition to the robot donation from Baldor, Gov. Mike Beebe had also made available $300,000 to the university to launch the program. But Beran added that the decision to go with a robotics certificate was not made "on a whim," but instead was created after much research, adding that the next closest academic robotics program was in Indiana.

Carillo said the need exists in Fort Smith and the entire state for individuals who know how to work with robots and maintain them, adding that some lower-end models can be purchased for as cheap as $25,000, making it far more feasible for local manufacturers than even just five years ago.

And that's why Long said the public needs to make itself aware of the role robots play in the economy today and will continue to play in the economy as time goes on.

"It's really becoming a critical component for manufacturing and there's so much manufacturing that goes on in Arkansas, that we are seeing the need for the students to come out and become part of our teams who can support this type of manufacturing process. And that's why we're so proud of the university for offering another set of skills for students that are going to walk out and have something that we're looking for right now.”

The tournament will start at 1 p.m. with a shotgun start, according to Director of Operations Tamara Fitzpatrick of the Fort Smith Regional Chamber of Commerce. Long said the robot is expected to be set up along the first nine greens.

The Wal-Mart shareholders meetings have become part late-night talk show, part church service/pep rally, part United Nations parade, with a retail Woodstock music festival sans the hippies, mushrooms and mud. And that was the case this year, to include Harry Connick Jr. in what may have been an impromptu performance of “Just a Closer Walk with Thee.”

And it may be a rare year that a change in Wal-Mart CEO is not among the more notable changes or news in the world of retail. This is one of those years. And comments about a plethora of those changes – new ways to reach the consumer, tethering stores to better serve customers, the “Savings Catcher,” new store formats – were part of Friday’s (June 6) shareholder meeting attended by an estimated 14,000.

Doug McMillon moved on Feb. 1 from his Wal-Mart International post to succeed Mike Duke as president and CEO of Wal-Mart Stores. McMillon said during the shareholders meeting, held at Bud Walton Arena on the University of Arkansas campus, that the customer remains the focus through all the new technology and new physical formats.

“Without them (customers) we don’t have jobs,” McMillon said, adding that it’s important that Wal-Mart employees work to keep the customers happy.

To reinforce that point, pop music sensation Pharrell Williams, along with his trademark hat, sang his hit song, “Happy.” His performance was followed by the stage entrance of Harry Connick Jr., who would serve as the celebrity emcee of the shareholders meeting. Other entertainers performing at the meeting included Robin Thicke, Sarah McLachlan, Aloe Blacc and Florida Georgia Line.

CHANGES
The year has delivered several physical changes and experiments in how the world’s largest retailer plans to boost business in what has been a flat U.S. market.

The company unveiled its new convenience store format – Walmart to Go – in March and judging by media and retail industry reaction it seemed that Wal-Mart announced it was selling dimes for 5 cents. This little (relatively speaking) 5,000-square-foot format now open in Bentonville just a short Ford pickup drive from the corporate headquarters is Wal-Mart’s effort to capture more of the $415 billion “quick-trip” market consumers make between their big grocery and shopping runs.

Bill Simon, CEO of Walmart U.S., also announced during the year that the company would invest in pick-up depots that will allow shoppers to drive through and get their online grocery order that was  placed earlier in the day. The “Walmart to Go” grocery delivery test market will also be expanded this year. It is already available in Denver, San Jose, Northern Virginia, Philadelphia and Minneapolis. Wal-Mart also plans to ship product from 50 more of its supercenter locations this year. This effort to tether supercenters to smaller formats and e-commerce fulfillment is key to Wal-Mart being able to better compete for Amazon Prime customers.

Part of Connick’s emcee work was scripted for him to talk about buying a Beignet mix online and then picking it up at his nearby Wal-Mart.

The drive-through pick-up for online orders was tested in 11 stores in the Denver area and are yielding a 90% satisfaction rating with consumers. The test in the Denver market was first announced in October. Shoppers pull into the parking lot and a loader brings the items to the car. Wal-Mart also allows order pick-up through the drive-in pharmacy line. Wal-Mart has obtained approval to build to 15,000 square-foot retail warehouse facility in Bentonville with 52 parking places — 33 for customers driving through to pick up grocery orders and 19 for employee parking.

The drive-in service is more about convenience, and those fill-in trips mid-week, an area that Wal-Mart has lost sales to in recent years from the rise of smaller format dollar stores and convenience stores. Simon said this quick-trip market is worth $415 billion annually and equals some 40% of the U.S. grocery spend. Wal-Mart’s share is just 10%, something the retailer thinks it can improve.

The company is also getting into the organic food business. Sales of organic products rose 11.5% last year to $35.1 billion, the fastest growth rate in five years, according to the Organic Trade Association. It’s anyone’s guess what that number will look like next year as Wal-Mart expands its organic products under the Wild Oats brand.

‘A REVIVAL’
When the early portion of the entertainment wrapped up, Wal-Mart Board Chairman Rob Walton recalled the days when his father, Wal-Mart co-founder Sam Walton, presided over the shareholders meeting. Rob Walton noted that his father referred to the 1985 meeting as “a revival.” That meeting was attended by 400 associates from 20 states.

“Things have changed a bit, folks,” Rob Walton told the estimated crowd of 14,000 from 27 countries.

Rob Walton also preached a “customer-centric” focusing, saying that no matter how technology and formats change the business, the “focus remains on the customer.”

He also welcomed Doug McMillon to the role as CEO, saying that McMillon, who began has an hourly employee at a distribution center, is “truly an associate-CEO.” He added that McMillon is an example that all Wal-Mart employees “can go as far as your hard work and talent will take you.”

In ending his opening remarks, Rob Walton said Sam Walton once ended a note to shareholders with the sentence, “Let’s go for it.” He said that attitude is still needed across all Wal-Mart operations.

“Let’s go and build the Wal-Mart of the future,” Rob Walton said.

SHAREHOLDER PROPOSALS
The meeting was not all rah-rah for Wal-Mart.

A representative of OUR Walmart, a union-funded group that has worked to raise wages and improve working conditions at Wal-Mart, spoke for a shareholder proposal seeking an independent Board Chairman. The representative said “serious scandals” at the company call for someone who is not a Walton family member to lead the board. The call for an independent chairman received a surprising amount of applause throughout the crowd.

Cambria Allen, representing groups who own 2.6 million Wal-Mart shares, asked shareholders to approve a “clawback” provision that would return compensation from executives who caused the company to be assessed fines for corruption or other problems.

“Wal-Mart has a clawback with no teeth,” Allen said.

The two proposals were not supported by Wal-Mart, and did not receive shareholder approval.

Presentation of the shareholders proposals critical of Wal-Mart were followed by pop star Robin Thicke singing “Blurred Lines.”

FINANCIALS
Cutting to the chase, Wal-Mart Chief Financial Officer Charles Holley told the shareholders that the company did have a difficult year in fiscal year 2013.

“It was a pretty rough year by anyone’s standards,” Holley said.

And the company’s first quarter earnings were ugly. The retailer reported per share net income for the first fiscal quarter of $1.11, below the consensus estimate of $1.15. The company earned $1.10 per share from continuing operations. Total revenue of $114.96 billion was up slightly over the $114.07 billion in first quarter of 2013 and was below the consensus estimate of $116.27 billion.

Company officials said the first quarter was hit hard by unusual winter weather in the U.S. during January.

Comp traffic for Walmart U.S. was down 1.4% in the quarter, despite a 1.3% uptick in the average shopper ticket. This marks the fifth consecutive quarter of negative to flat comparable sales, the benchmark metric used to measure retail performance.

And the second quarter may not be a big improvement. The company is predicting earnings per share in the range of $1.15 and $1.25. The company hit $1.24 per share in the second quarter of the previous fiscal year.

But Holley ended his comments with a litany of financial successes. He said the company has recorded $68 billion in sales growth in the past five years, and market value of the company has grown $50 billion in the past five years.

‘PICK UP UP THE PACE’
McMillon closed the executive comments with essentially a sermon about how Wal-Mart will do whatever it can to exceed the expectations of customers with more demanding expectations. He said the company will use a wide variety of technology to meet the customer where they want to do business.

To that point, McMillon said a majority of e-commerce traffic comes from mobile phones than desktop computers or other devices.

A unique product and service Wal-Mart may provide is 3D printing. McMillon said it’s possible, for example, that Wal-Mart can “print small replacement items,” that customers could pick up at a store.

The company will also add “collecting points” in which customers may order products and pick them at a non-store location. For example, the company is experimenting with collecting points in a subway in London and a train car in Ontario. He said someday “a school in Dallas” may be a collecting point to allow parents to pick up items as they pick up their children.

“All of these changes are a good thing for us … (and) only limited by our imaginations,” McMillon said. “We are picking up the pace of our change to better service our customers.”

He also said the company has to change in order to meet employee expectations, noting that new Wal-Mart employees never knew a world without the Internet or smart phones.

“You think they are going to expect more of Wal-Mart?” he said.

The world got a glimpse into the future board leadership for Wal-Mart Stores Inc. on Friday (June 6) as longtime chairman Rob Walton announced Greg Penner, his son-in-law, was chosen to fill a new position of vice chairman.

Penner, 44, has been a company director since 2008, and was re-elected along with the slate of 14 directors during Friday’s annual meeting in Fayetteville.

“One of the board’s most important responsibilities is long-term succession planning, and the company spends considerable time planning for stability and continuity, both at the board and management level,” said Walton, 69, who will remain chairman for the company is parents founded 52 years ago.

“In keeping with this commitment, I’m pleased with Greg’s appointment. Wal-Mart has benefited from his broad expertise in strategic planning, finance and investment matters. I’m excited about Greg working closely with me, the Board and the management team in guiding Wal-Mart into the future.”

Penner is chair of the technology and e-commerce committee and also serves on the global compensation and strategic planning and finance committees.

“I am committed to the long-term success of Wal-Mart,” Penner said in a statement. “My first Walmart experience was in 1994 and over the years I’ve developed a deep appreciation for our associates and their service to our customers. I look forward to contributing to a stronger Walmart in any way possible including how we develop new digital capabilities to add to our store offering. This is an exciting time to be part of Walmart.”

The appointment was announced just minutes after an eight-year employee from Indiana introduced a shareholder proposition asking the board for an independent chairman. Citing her $23,000 low wage and the high number of employees who are on food stamps, she said Mr. Sam founded a great company, but over the years he had help from his associates and part of his vision included a true partnership between the associates and the company leadership.

Walton announced later in the meeting that the proposal seeking an independent board chairman failed. Also failed were two shareholder proposals asking for lobbying disclosure and a report on recoupment of executive pay failed to gain the number of votes needed for adoption.

The Walton Family controls roughly 51% of the voting power in Wal-Mart Stores. The Wal-Mart board of 14 is comprised of nine independent directors, with a diverse range of expertise.

Walton said Penner brings broad technology and international business experience to Wal-Mart’s Board. He has been a general partner of investment management firm Madrone Capital Partners since 2005. He worked for Walmart International from 2002 to 2005, serving as senior vice president and chief financial officer for Japan. Prior to that role, he was senior vice president of finance and strategy for Walmart.com. Penner also worked as a financial analyst for Goldman Sachs & Co.

Wal-Mart said it has always strived to maintain high corporate governance standards. In keeping with this goal, and unlike most other companies in the Fortune 100, the board chose in 1988 to separate the roles of chairman and CEO.

In addition, the company said it has a number of corporate governance measures in place to ensure that the board acts independently of management.

For several years the central message and mission around Wal-Mart’s business strategy was growth, leverage and returns. Analysts from around the country noted a different message at this year’s annual shareholder meeting held Friday (June 6) in Fayetteville.

The notion of change and growth through tech innovation at the expense of lower returns in the midterm was constant throughout the speeches from Wal-Mart’s top executives over the past two days. CEO Doug McMillon, who also addressed the media following the Friday’s meeting, said in this new role assumed in February that he was able to let go of things that happened in the past as the leader of a complex international business and was given the freedom to think about what could be for the world’s largest retailer,

“I have tried to approach this role with high energy, while looking forward to many new possibilities,” he said. “Our people are going to be the magic that makes it happen.”

McMillon said change is inevitable and Wal-Mart, though a large company, is nimble enough to flex its offerings to fit what customers want and need – which is key to continued retail success in an ever-changing world.

“Retail has moved from a push system — where we pushed goods out to stores in hopes that you would buy — into to a pull system where consumers are pulling us along  and telling us what they want and where,” McMillion said.

When Wal-Mart sees something operationally that works well in a test phase the company must be ready to accelerate the pace and work with a sense of urgency to deliver, McMillon said.

“I would like to move a little faster, but not in a reckless manner,” he added.

Neil Ashe, CEO Wal-Mart Global eCommerce, said the talent the retailer has amassed in its WalmartLabs division is raising the bar on reducing cycle times for new platform and program launches from two years down to 20 days, something they recently accomplished on a technology platform for Sam’s Club members.

Bill Simon, CEO of Walmart U.S., said the retailer accelerated its new store projects by 150 additional units in the same fiscal year they were announced. 

“We have to be about the new and the now, and adding 150 additional stores within a year is pretty significant evidence that we move quickly to acceleration when it makes sense,” Simon said.

He was asked to define the limits that Wal-Mart’s infrastructure could handle in terms of speedy expansion. He said adding 300 smaller formats and 150 supercenters and remodels this year the retailer is likely pushing the limits. In a build-to-suit program with the neighborhood markets, Simon said the constraints will be in talent.

Simon was asked if these small formats are a game-changer for a retailer with 4,000 large stores in the U.S. alone.

“If there are 300 of these small stores in the universe it’s not very exciting, but if there is 2,000 (his vision) it gets much more interesting,” Simon said.

This change and tech innovation doesn’t come cheap. In terms of tech talent acquisitions last year the costs shaved 11 cents from the annual per share earnings. This year the company tagged 2 cents to 4 cents in per share earnings which will be sacrificed for more e-commerce acquisitions and growth opportunities in future quarters.

For the top Fortune 500 company, every cent earned or forfeited is highly scrutinized by Wall Street each quarter, but execs with the retailer and emerging tech company say investments in the “now” will be key to their broad goal of seamlessly merging the physical and digital retail worlds.

An analyst also asked if this constant catering to every consumer whim would likely be detrimental to margins in the long run. McMillon said his gut reaction about the investment payoff in the long term is positive because of operational efficiencies that are gleaned overtime. But it’s the mid-term — three to five years — that are the hardest to read as the company goes through transition with many new formats and delivery options.

“It’s not returns that I am worried about. We are a strong company and the returns will be okay overtime. I am concerned to make sure we are positioned for growth and executing what we have today. As long as we take care of that, I think these returns are going to work themselves out,” McMillon said.

When asked what was the most challenging aspect of his new role, McMillon told an analyst in attendance that he has been quoting him since October after a brief conversation the two had at the retailer’s annual analyst meeting.

“In years past when you visited Wal-Mart you said you saw leaders, but now what you see are managers,” McMillon shared. “Had we gotten so big that it took all of our time to manage that there was no time left for leading change?”

Continuing, McMillon said: “That question stuck with me, and it’s clearly one of the most challenging aspects of this new role. As a leadership team we have begun making time to collaborate on central issues and we all contribute so that when we reach the solution it is much better than any one of us could have reached on their own. We are looking forward more today than we have in the past two or three years,” McMillon said.

As the last two A-10 Warthogs departed the Air National Guard base in Fort Smith on Saturday (June 7), a small boy looking to the sky was excited about what might happen next. “Do the drones come now?” he asked his mother.

The child will be as disappointed as those who didn’t want to see the A-10s leave. The drones will not physically come to Fort Smith, at least not those used on the business end of the new mission for the former 188th Fighter Wing. But the “remotely piloted aircraft” mission – don’t call them drones, the media has been told – is officially the new mission for the rebranded 188th Wing.

Several hundred members of the unit, former unit members, their families, dignitaries and the media attended a Saturday morning “Conversion Day” ceremony in which “Fighter” was removed from the 188th Fighter Wing moniker.

Broad cuts in U.S. defense spending – possibly up to $500 billion over 10 years – included the removal of 20 A-10 Thunderbolt fighter planes from the 188th Fighter Wing in Fort Smith. It was announced in 2012 that the A-10 Thunderbolt fighters of the 188th would be lost and the unit’s mission would change to an intelligence, surveillance and reconnaissance (ISR) mission.

188THHISTORY
The unit began in October 1953 as the 184th Tactical Reconnaissance Squadron. The unit has been home to nine aircraft types, beginning with the RB-26, a twin-engine modified bomber. The unit converted in 1956 to the RF-80, a jet aircraft, when the unit was assigned a daylight reconnaissance mission.

The RF-84F arrived in 1957, and was replaced in 1970 by the RF-101 (Voodoo). In 1972 the unit’s recon mission ended with the arrival of the F-100 Super Sabre. The unit was recast as the 188th Tactical Fighter Group. In 1979, the “Flying Razorbacks” handle was adopted by the 188th when it received the F-4C Phantom.

In 1988 the F-16A Fighting Falcon replaced the F-4C, and in 2000 the F-16s were upgraded to the F-16 A variant. A last-minute decision by the Base Realignment and Closure Committee in 2005 replaced the F-16 with the A-10. On April 14, 2007, the 188th received its first A-10.

Col. Mark Anderson, who will continue to command the 188th, said during the Saturday ceremony that the unit with its A-10 planes set several combat theater records for performance, and he also praised the unit’s 2005 history when its F-16 fighter plans flew in Iraq to support Operation Iraqi Freedom.

“We cherish the proud aviation heritage our members have worked so hard to build,” Anderson said.

Col. Brian Burger, commander of the 188th Operations Group, said the 188th is “exiting the manned flying mission at the top of our game.” He said the same performance would be part of the new unmanned mission in which “Arkansas airmen now take the fight to the enemy ... all day, every day.”

Without the A-10 Warthogs, aka “Flying Razorbacks,” to support, the 188th deactivated its Maintenance Group – a group with the unofficial motto, “We Make Pigs Fly.”

NEW UNITS
The primary component of the new mission for the 188th Wing is the 188th ISR (Intelligence, Surveillance and Reconnaissance) Group. The 188th ISR is comprised of the 123rd Intelligence Squadron, the 153rd Intelligence Squadron, the 223rd Intelligence Support Squadron, and the 288th Operations Support Squadron.

The 188th ISR is commanded by Lt. Col. Robert Kinney, a career intelligence officer with more than 24 years in the Air National Guard. In 2012, Kinney was named chief of “ISR Plans and Integration,” a role in which he would lead the planning for more than 20 new ISR Guard units.

The 123rd is commanded by Lt. Col. Tina Lipscomb and has 120 members. The 123rd role is to conduct “near real time exploitation of imagery intelligence data, collected by” ISR units with that info then delivered in a useful manner to “combatant commanders and war fighting forces.”

The 153rd is commanded by Major Sarah Stigler, and will have 107 members. The unit provides “targeting production capability” based on gathering data and other intelligence from “a number of sources.”

Lt. Col. John Easley commands the 223rd, which has 50 members. This group “develops and trains Cyber systems professional and provides critical cyberspace communication services” for the 188th’s missions.

Major Paul Needham commands the 52 members of the 288th. This group “provides support to the daily operations of the 188th ISR Group, including training, plans, mission management, and weapons and tactics functions for the AN/GSQ 272 ‘SENTINEL’ weapons system.” This unit is also part of the Distributed Common Ground System of the U.S. Air Force.

Overall, the 188th ISR Group will have 347 members, and at some point will operate from a planned $12.5 million, 40,000-square-foot facility to be built on the 188th base that Col. Anderson has said could help the 188th become an “ISR Center of Excellence.” Counting operations, security, medical and other groups, the 188th will have more than 900 personnel who will train and operate from the Air National Guard base in Fort Smith.

Anderson said Saturday that the new intel and “space-focused targeting squadrons” are staffed by “highly skilled personnel” with top secret clearances. He also said the Fort Smith metro business community could benefit from those who will staff the new mission.

“I encourage our business leaders to leverage” this new talent pool, Anderson said.

Anderson closed his comments by saying the new mission is an important mission to the nation’s defense.

“We will be relevant. We will succeed.”

That may be, but one of the 188th crew members who worked the flight line as the two A-10’s were prepped for departure was not ready to see the war birds leave.

“Pretty sad,” the airman said when asked what he thought about helping prep the final A-10 to taxi away from the hangar area.

Tyson Foods on Monday (June 9) placed an $8.55 billion bid on the table for Hillshire Brands causing bidding competitor Pilgrim’s Pride to fold. The Tyson offer, the biggest meat deal in U.S. history, has not yet been accepted. Pilgrim’s said it will not make a counter offer.

“The Hillshire Brands acquisition would represent a defining moment for Tyson Foods,” Donnie Smith, Tyson’s president and CEO, said in a statement. “Our strategy has been to grow our prepared foods business, and it has been our aspiration to be a leader in retail prepared foods just as we are in chicken. Now we will have those iconic #1 and #2 brands in numerous categories.”

Officials with Tyson Foods and Hillshire Brands acknowledged the $63 per share cash offer Monday which would require Hillshire to walk away from its pending $6.6 billion acquisition of Pinnacle Foods, a deal announced May 12. 

Pilgrim’s Pride CEO Bill Lovette said $55 was their top offer.

"As a disciplined acquirer, we determined that it was in the best interests of our shareholders not to increase our proposed price of $55.00 per share in cash," Lovette said in a statement. Pilgrim’s Pride is owned by Sao Paulo, Brazil-based JBS S.A.

Hillshire execs confirmed the offer from Tyson, but said the deal is far from a sure thing.

“The Hillshire Brands board of directors has not approved the Tyson Foods offer, has not changed its recommendation regarding the Pinnacle merger and is not making any recommendation with respect to the Tyson offer,” Hillshire management noted in a release on Monday. “Hillshire Brands does not have the right to terminate the merger agreement with Pinnacle Foods on the basis of the Tyson Foods offer or enter into an agreement with Tyson Foods prior to its termination. There can be no assurance that any transaction will result from the Tyson Foods offer.”

Bidding for Hillshire began in late May when Pilgrim’s Pride offered $5.52 billion for the company. Tyson Foods countered a few days later with a $6.8 billion ($50 per share) offer. Pilgrim’s countered that with a $7.7 billion ($55 per share) offer on June 3.

Tyson would also be asked to pay the $163 million termination fee to Pinnacle if Hillshire accepts the Tyson bid which will stand until the termination of the Hillshire/ Pinnacle deal on Dec. 12, 2014.

Jimmy Dean, Ball Park and Hillshire Farm are a few of the brands owned by Hillshire.

“The combination of Tyson and Hillshire Brands would reposition Tyson as a clear leader in the retail sale of prepared foods, with a complementary portfolio of well-recognized brands, including Tyson, Wright Brand, Jimmy Dean, Ball Park, State Fair and Hillshire Farm,” Tyson Foods noted in the statement. “In particular, the strength of Hillshire Brands’ products in the breakfast category would allow Tyson to capture opportunities in this attractive and fast-growing day part.”

The pro forma company would give Tyson the No. 2 market share ($3.3 billion) in the frozen value-added category, leap frogging ConAgra in retail sales, according to Tyson. Tyson now has the No. 3 spot with $2.4 billion, and Hillshire ranks eighth at $1.3 billion.

The prepared foods segment is now 9% of Tyson Foods’ $35.4 billion in annual sales. If the deal happens, the combined companies would annual revenue of around $39.4 billion, with 18% of that coming from prepared food sales.

Alexia Howard, a senior research analyst at Sanford Bernstein, has said the deal at $50 made sense for Tyson because its gives them more brands at the end of the of supply chain. Those “value added” products deliver higher margins than food service and commodity meat sales at Tyson Foods.

Analysts were a bit more concerned with the $63 offering. They quizzed Tyson officials as to why they would offer a hefty price for the maker of Jimmy Dean sausages.

Smith said Tyson scouted Hillshire for “a long time.” Tyson Foods said the deal could boost earnings within the first fiscal year after the deal is completed. Company officials also predict more than $300 million in synergies – savings through reducing or eliminating duplicative tasks, operations and personnel – through purchasing, supply chain and marketing efforts.

Shareholders were uncertain with this latest Tyson bid and began to sell off shares in the morning session with the price tumbling 4.66% to $38.26. In late afternoon trading, the share price fell more than 6.5% and was trading around $37.45. The share price closed Friday at $40.12. During the past 52 weeks, the share price has ranged from a $44.24 high to a $24.74 low.

Contributing analysts on CNBC agreed the 16.7 times earnings valuation for Hillshire in the Tyson deal puts the Springdale meat company on the edge of comfort with retaining its investment grade credit rating. Tyson justified the 16.7 times earnings valuation and said it will decline to 10.5 times when the $300 million in operational synergies are realized over the next three years.

BB&T Analyst Brett Hundley downgraded Tyson Foods from a “buy” to a “hold” citing the bidding between it and Pilgrim's Foods. Hundley noted to investors on Friday that the bids were getting too rich to make the numbers work.

"Bidding wars can sometimes leave casualties. The situation with Hillshire is starting to approach this level," he noted to investors.

Tyson Foods said it is not going to gamble away its investment grade credit rating, but it is prepared to issue debt and equity as needed. The transaction would be funded by cash on hand and a bridge loan from Morgan Stanley Senior Funding Inc., and JP Morgan Securities. Tyson anticipates the substantial cash flow from the combined companies will enable it to rapidly pay down debt.

Community bank soundness is another sign of the local economic recovery in Benton and Washington counties as well as the Fort Smith metro area. Through the first quarter of 2014 the majority of local banks are profitable, but a few remain in troubled waters given their high Texas Ratios — a standard measure of a bank’s credit troubles.

The Texas Ratio looks at a bank’s non-performing assets and loans delinquent 90 days or more divided by tangible capital equity and loan loss reserves. A ratio of more than 100, or 1:1, is considered a warning sign, according to Investopedia.

HIGH AND ELEVATED TEXAS RATIO NUMBERS
222.15% – Pinnacle Bank in Rogers
126.35% – Allied Bank in Mulberry

Other local banks with elevated Texas Ratios of more than 50% include:
57.91% – Signature Bank of Fayetteville
55.59% – First State Bank of Lonoke
61.43% – Chambers Bank of Danville
77.67% – Decatur State Bank, Decatur

Each of the above listed banks remain under enforcement actions by federal regulators because of their higher ratios of non-performing loans to the bank’s overall capital equity levels. That said, all but one of the six banks listed each returned profits in the recent quarter and ended 2013 on a positive note.

NET PROFITS
Signature Bank
1Q 2014: $473,000 
Fiscal 2013: $1.044 million

Chambers Bank
1Q 2014: $2.547 million
Fiscal 2013: $4.349 million

Decatur State
1Q 2014: $1.158 million
Fiscal 2013: $1,100

First State Lonoke
1Q 2014: $164,000
Fiscal 2013: $254,000

Pinnacle Bank
1Q 2014: $8,200
Fiscal 2013: $158,000

Allied Bank Mulberry
1Q 2014: $18,000 loss
Fiscal 2013: $3.121 million loss

SLOW RECOVERY
The financial health of the Northwest Arkansas banking sector is recovering and helping to fuel bank mergers among some of the distressed banks in need of capital infusion. Metropolitan National, Decatur State and First Community Bank of Crawford County were among merger deals completed in 2013.

John Dominick, a bank consultant and professor of finance at the University of Arkansas, has said the banking climate is improving in Northwest Arkansas, the most competitive market in the state. He said it takes time for banks to work through the high levels of real estate remaining on their books following the local housing and commercial building booms and busts in the past decade.

He said local banks are making money again, but some are having to set aside large reserves for potential loan losses and that is expected to continue for a few more quarters. These provisions to reserves come at the expense of higher profits but are required by regulators closely watching a handful of local banks still operating under enforcement actions.

Other banking analysts say more mergers are likely, particularly with smaller family owned banks being bought by larger institutions like Simmons First National, Home Bancshares, Bank of the Ozarks and Arvest, all of which completed acquisitions in recent months.

Mark Saunders, managing director for Bank Street Partners, recently told The City Wire that with fewer bank failure deals to acquire through FDIC actions, aggressive banks are seeking strategic acquisitions to help them grow regional market share. He said the timing is ripe for more consolidations of smaller banks that cropped up in the past decade with plans to sell when valuations rose.

Saunders said the small banks have a tougher time competing on loans, and their regulatory oversight costs are rising to the point where earnings are squeezed.

FIS RATINGS
Another rating indicator for banks on the watch list of federal regulators is the FIS Rating, which evaluates a bank’s liquidity, asset quality, capital adequacy and earnings. 
The overall rating is determined by weighting the individual component ratings. The best score that can be achieved is 1 and the worst score is 5.

By FIS standards Allied Bank and Pinnacle Bank each rank poorly at 4.19 and 4.15, respectively, at the end of the first quarter of 2014. Those rankings were the same to end 2013.

Signature Bank had a FIS Rating of 3.8 at the end of the first quarter. Chambers Bank had a rating of 3.54, the Bank of Fayetteville’s rating was 3.48 and Arvest was 3.52. At the high end of the rating, First Security posted a 1.56.

In the Fort Smith metro area FIS Ratings ranged from 3.59 at Benefit Bank to 2.93 at First National Bank of Fort Smith.

It is no secret that education systems in the 21st century faces an ever-increasing pressure to keep pace with the pace of change. And while students and teachers have seen changes in technology in the classroom, it is nothing compared to what some area schools are starting to implement and on a wide scale.

Springdale Public Schools is getting closer to the fall opening of a new School of Innovation, which Principal Joe Rollins said is an idea that "is actually very simple."

"We're trying to deliver what we see as a 21st century education by delivering the tools to our kids and making it as personable as possible," he said.

The school will begin with a cohort of eighth graders in August and will use what Rollins called a "blended learning environment" to teach students in a new way. Students will have access to tutorials and online access to teachers and advisors, as well, even if the student happens to be out sick or away for an extracurricular activity.

"It allows for flexibility throughout the day, so you can spend more time on certain things and move at your own pace," he said, adding that students will also have online access to teacher lectures day or night.

With educators and guidance counselors so involved, Rollins said they will create "whole learner" profiles for students that will provide more in-depth advisory between the student and counselors they will begin eighth grade with following all the way through to graduation.

And even though the School of Innovation will be a high school, students will have the opportunity to earn college credit from NorthWest Arkansas Community College through concurrent classes, which Rollins said would lead to some students "graduating with an associates degree at the same time as their high school diploma."

The school, to be housed at the Jones Center for Families, is partially funded through a $25.9 million federal Race to the Top grant, which Rollins said has assisted in some technology acquisition necessary to outfit each of the school's incoming students with laptop computers to be used for project-based learning and out of class study.

And even though it will use methods not common in traditional learning environments, Rollins said the state testing requirements will be no different for the School of Innovation than to any other school.

The creation of the School of Innovation could also alleviate the need for the construction of a third traditional high school for the district in the near future, though Rollins said with the School of Innovation enrolling 200 students per year, it will itself be a large school once peak enrollment takes place in five years, maxing out at 1,200 students.

OTHER SCHOOL MOVES
Springdale is just one local district looking at ways to innovate for the 21st century. Rogers and Van Buren launched "New Tech" high schools within their respective districts that focus on project-based learning "heavily infused with technology."

And in Fort Smith, the school district is not waiting until students enter high school to introduce technology and project-based learning to the classroom. According to Dr. Barry Owen, assistant superintendent for instructional services, the district will introduce a one to one computer initiative with three pilot schools — Ramsey Junior High, Morrison Elementary School and Sunnymede Elementary School.

Owen said the program will place computers in the hands of every student at the three schools and would shift focus from textbook-based teaching to technology based learning.

Dr. Benny Gooden, superintendent of Fort Smith Schools, told a gathering of educators at Thursday's (June 5) Partners in Education event that waiting until students were in secondary grades to make an attempt at innovation would simply not cut it when educating the leaders of tomorrow.

"The instructional use of technology is our future," he said. "Some who are pursuing initiatives like this are focusing on only high schools or only on the middle grades, but as you know, that may be a short-sighted approach because by engaging our youngest students, we position them for many years of life-long effective learning."

In making the case, he disputed assertions that what has worked or is being attempted in other districts should be tried in Fort Smith.

"Sometimes I am challenged by those who have read an article or saw a news clip on television or read something on the Internet about some new and supposedly innovative initiative and they tell me we ought to quickly adopt that and board the train to the future. However, anyone who sees what you're doing now must realize that you're on a steady pathway that's reaching students in every school to provide new and rich learning experiences to make them college and career ready."

‘CLOSE THE DIGITAL DIVIDE’
As a way of introducing the pilot program to be introduced next year, Gooden introduced Dr. Scott Smith, chief technology officer at the Mooresville Graded School District in North Carolina, who literally wrote the book on one-to-one technology-based learning and whose model Fort Smith is largely based upon.

Smith said the introduction of technology to students at all levels (third grade through high school) had allowed the district to "close the digital divide," leveling the playing field and giving students access to relevant instruction, though he said what Mooresville did and what Fort Smith will do in the fall is not simply about using technology for technology's sake.

"We joke a little bit and say, 'OK, we drank the Kool Aid,' but we are all in because it's best for kids. What does it look like for us? Again, it's not a technology project. It's an instruction change effort in terms of changing that teaching and learning environment. We put that meaningful instructional tool in the hands of every student."

Smith said instructors can be precise and meet the needs of each student through the technology.

The cost for Mooresville is about $1.50 per student per day and Smith said test results show that the district is getting a good return on investment, adding that while the results are "not miraculous," they do show steady improvement.

He pointed to a variety of examples, though the biggest improvement came in terms of academic achievement, with Mooresville ranked number two in the state in the 2011-2012 school year, where before the one-to-one initiative the district ranked in the middle of North Carolina's more than 100 school districts.

Owen said past attempts at innovation in Fort Smith have included participation in the Western Arkansas Technology Center at the University of Arkansas at Fort Smith, which the school has participated in since its creation in 1998. He said that as many as 200 students are participating in the program from Fort Smith in half-day increments — attending a Fort Smith high school for half the day and UAFS for the other half of the day.

And much like how School of Innovation Students could earn an associates degree at the same time as a high school diploma, Owen said the same thing often happens for participating students in Fort Smith.

LOOK AT MODELS THAT HOLD PROMISE
Attempts by various Northwest Arkansas and Fort Smith area school districts to innovate, whether it be by implementing the "new tech" program, creating the School of Innovation or focusing on technology-based learning with younger students, education advocates are applauding local efforts.

"Innovative traditional school district leaders in Arkansas are finally acknowledging that public education is not either/or, but all," said Gary Newton, president and CEO of Arkansas Learns, a private sector alliance dedicated to excellence in education.

He said the continuing innovations in public schools proves that "one size or method doesn't fit all."

"When public education focuses on the best interests of individual students, instead of protecting the self interests of collective delivery systems, students, families and communities win."

As for what educators and administrators can do in other districts to innovate and adapt, Rollins said they have to figure out what being a 21st century school looks like for their communities.

"This particular model holds promise," he said of the School of Innovation. "I think this is something they should look at and see if it is something they can apply to their own districts."