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Arraignment held Monday for man who stole Southside Band money

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A Utah man who allegedly took $272,500 from the Southside High School band that was intended to pay for a 2012 band trip to Hawaii was in Fort Smith on Monday (June 9) where he was handed a three-count indictment for wire fraud.

Calliope “Ope” Rocky Saaga, 40, of Saratoga Springs, Utah, was arraigned Monday before U.S. Magistrage Judge James Marschewski on charges that were handed down May 7 by a Federal Grand Jury.

According to the indictment, Saaga in August 2011 contracted with Southside High School to provide travel arrangements for a spring 2012 band trip to Hawaii. Band officials sent Saaga, operating as Performing Hawaii Tours and Present America Tours, three payments for the trip. However, Saaga used the money for personal use and the band trip was eventually cancelled.

“The scheme resulted in defrauding the Fort Smith Southside Band, students, and parents of approximately $272,500,” noted the statement from the office of Connor Eldridge, U.S. Attorney for the Western District of Arkansas.

Saaga could face up to 20 years in prison if convicted.

Dr. Gordon Floyd, deputy superintendent of Fort Smith Public Schools, said the parents, students and faculty harmed by the fraud will likely “never see full justice in terms of restitution,” but at least they will know Saage now faces the legal consequence of his actions.

“We are happy he is being brought to justice. He cheated a lot of students out of money that was a result of their hard work and deprived them of a chance to take a trip that would have been for them the trip of a lifetime,” Floyd said.

Saaga also faces indictments on 12 charges of wire fraud and three counts of money laundering from a Federal Grand Jury in Springfield, Mo.

In that case, Saaga is charged with stealing $360,000 from the Willard High School Band Boosters, which forced the cancellation of a trip to Hawaii for more than 300 students and chaperones. This case was investigated by the FBI. Assistant United States Attorney Mark Webb is prosecuting the case for the United States.

“As alleged, this case involves defrauding high school students and their parents out of money set aside to take a once-in-a-lifetime band trip,” Eldridge noted in his statement. “It is unfathomable that someone would take money from students seeking to do something worthwhile – in this case travel to perform as part of the Southside High School Band. We will continue to prosecute this case to the fullest extent of the law.”

Five Star Votes: 
Average: 4.6(8 votes)

Fort Smith Public Library director advocates for millage increase

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story by Ryan Saylor
rsaylor@thecitywire.com

A decision has not yet been made on if or when voters may decide on whether to approve a millage increase for the Fort Smith Public Library, but it is not keeping supporters of the library from drumming up support for their cause.

At a noon meeting of the Fort Smith chapter of the League of Women Voters on Monday (June 9), Library Director Jennifer Goodson made her pitch, explaining what the money would be used for should voters approve taking the millage from one mil to three mils.

Goodson said the library would focus on offering more of "nearly everything" offered by the library, including an expanded selection of traditional books, audiobooks and DVDs, in addition to a larger selection of eBooks, online magazine, Spanish language and large print books. The increased millage would also provide the library with faster Internet speeds, as well as more WiFi and on-site computers for library patrons.

"For one thing, traditional library services are still very well utilized in our libraries," she said, pointing to statistics that show nearly 434,000 visits to Fort Smith Public Library branches last year, as well as nearly half a million checkouts of books, videos, audiobooks, music CDs and magazines.

She said on average, 414 library cards are issued to Fort Smith residents each month, with 4,973 issued during all of 2013, including 635 issued to non-residents at a cost of $35 per year.

But according to Goodson, while traditional use of the library is still being utilized, patrons of the library are in need of new offerings available in other libraries around the country. Some of these could be available at Fort Smith's library in coming years with the approval of the millage increase, she said.

Among the items included in the library's vision presented Monday are offering live online tutoring for students resume and job hunting assistance, as well as online video software tutorial videos and offering new online video streaming to library members, similar to a Netflix-type service.

"There are a couple of products out there for libraries," she said. "So how about we buy Hoopla (a streaming video provider for libraries) and/or Freegal movies ... let's say we buy Hoopla and we buy Freegal movies and you just get your streaming video for free through your library card? How's that sound? That sounds like a pretty good idea. Well, that's part of the plan, too. Those are all digital services offered 24/7 that we're not currently offering and in some cases we're actually referring to other libraries because we don't have them."

The increased property tax revenue would also go toward digitizing microfilm offerings, as well as creating Redbox-style kiosks for books and DVDs all over Fort Smith. Another idea is creating a "maker space" that would offer all sorts of resources to residents, including 3D printing, video filming and editing, and media conversion services.

No building projects have yet been proposed as part of the millage increase discussed by Goodson and other library supporters. All the monies would go to expand services.

The budget for the library sits at $2.7 million, Goodson said, $1.4 million of which comes from one mil of property taxes passed in 1957. By increasing the millage rate by two mils, the library would increase the operating budget to $5.5 million assuming collection of an additional $2.8 million in property taxes to support the library.

What it means for the typical Fort Smith resident is an increase of property taxes on a $100,000 home of about $40 per year, brining total taxes paid per home to the library to about $60.

In the most recent home sales report for Sebastian County, the average home sale price was $129,284, meaning the average person just moving to Fort Smith or purchasing a new home in the city could expect paying an average of $78 in property taxes to the library.

Additional funding for the library includes 6% of the city's share of the county sales tax, which amounts to nearly $900,000; about $200,000 in state funding; grants; and about $100,000 in fines and fees, including non-resident fees, which Goodson conceded could triple should the millage pass, bringing the non-resident fee in line with what residents of the city would pay in property taxes. The library now uses about $100,000 from its capital reserves to fund operations, Goodson added.

Library board member Ben Shipley said residents who constantly compare Fort Smith to the more prosperous Northwest Arkansas should consider the value libraries add to communities, as well as the economic impact libraries make on communities as explained in a Gates Foundation study commissioned in 2007.

"This is a wonderful opportunity to become state of the art in terms of library services that are offered to folks," he said.

The Fort Smith Board of Directors will hold a special meeting Tuesday (June 10) to determine whether to hold an election for the millage increase. If approved, the city Board will also determine the date of the election. If the election is held August 12 as the library board has requested, Goodson said it would front the $30,000 cost of the election.

Five Star Votes: 
Average: 3.8(12 votes)

Fort Smith area, Northwest Arkansas foreclosure filings continue to dwindle

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story by Kim Souza
ksouza@thecitywire.com

Arkansas is among the majority of states where foreclosure fillings are subsiding to five or six year lows as the housing market recovery shows strength in a slowly improving economy. There were 391 foreclosure filings across the Natural State in May, down 53.89% from a year ago, according to Irvine, Calif.,-based RealtyTrac.

Nationwide, there were 109,824 filings for default notices, trustee sales, and bank repossessions in May, down 26% from a year ago and the lowest monthly level since December 2006, RealtyTrac reports.

All but 11 states posted annual decreases in their foreclosure filings in May.

“It’s not surprising that some of the states with the longest foreclosure timelines are those with markets still dealing with increasing foreclosure activity even as the country as a whole continues to hit new lows,” said Daren Blomquist, vice president at RealtyTrac. “On the other hand, the increase in bank repossessions in some states with shorter foreclosure timelines like California and Oregon demonstrates there is still some pent-up foreclosure activity in those states as well.”

Arkansas is a non-judicial state, which means there is typically a shorter foreclosure timeline as a judge does not have to sign the order. The average foreclosure time in Arkansas is around 290 days, but it can happen as soon as 120 days if there is no second lien and the homeowners vacate the property prior to the scheduled sale date.

Sebastian County reported five new foreclosure filings in May, down 80% from a year ago. The rate of incident last month was one in every 10,934 households in Sebastian County. At the market peak the rate was one in every 739 households.

In smaller Crawford County, RealtyTrac reports six new foreclosure filing in May, a 33% reduction from a year ago. The incident rate was one in every 4,331 households in May, down sharply from one in every 562 housing units in December 2009 deemed near the market foreclosure peak.

In recent years Benton County consistently led the rest of the state in foreclosure activity fueled in part because of the rising home prices and easier loans made in a hyper competitive banking climate. Local real estate experts believe those days are gone as the number of new foreclosures are getter fewer and farther between.

RealtyTrac reports there were 42 filings in Benton County during May, down 74.39% from a year ago and ranking No. 10 in the state. In the height of the real estate market correction in January 2009, Benton County had 559 new foreclosures pending, according to RealtyTrac – or one in nearly 145 local households during all of 2009.

Filings per household in Benton County are down to one in every 2,213 mortgages in May, RealtyTrac reports.

In Washington County, there were were just 13 new filings in May, down 79% from the year-ago period. At the market height the county reported 235 new filings in January 2009. The rate of incident is down from one in every 340 households at the market peak in January 2009 to one in 6,728 households in May.

Jim Long, a real estate agent with Crye-Leike Real Estate in Bentonville, said there are 205 foreclosure for sales in the local multiple listing service, which includes all four of the counties in this report. The number of listed homes are up from 153 in the listing service last month, but have trended lower over the past year. In December 2013, there were 322 listings of foreclosures in Northwest Arkansas and the Fort Smith metro area.

Five Star Votes: 
Average: 2.3(3 votes)

The Supply Side: Crossmark offers a peak at new collaboration center

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story by Kim Souza
ksouza@thecitywire.com

Collaboration between the retailer and supplier is nothing new, but a new facility recently opened by Crossmark in Bentonville is designed to offer a new level of technology and virtual planning for suppliers doing business with Wal-Mart Stores. The new center is located at ground zero for retail – directly across the street from Wal-Mart’s corporate office.

The Crossmark Center for Collaboration is 19,000-square-feet of meeting space that is equipped with technology throughout, a test kitchen for food suppliers, and a catering kitchen. The center also provides two separate lab spaces with a high resolution touch screen that covers one full wall.

The two labs can be used for modular space planning in the virtual world and for shopper marketing tests. Planning in the virtual space can save time and labor of multiple modular reconfigurations when trying to get the right set-up.

There are nine conference rooms with large screens that are connected directly to the Internet, which are much more functional for Wal-Mart suppliers involved in joint business planning with the retail giant. Crossmark did not give the exact cost of this new center, but planning records projected the cost between $5 million an $8 million. 

“Most meetings between supplier and retailer occur in these small rooms at the Wal-Mart home office. These rooms are not large enough to accommodate larger groups like the joint business plan meetings and they are not equipped with the latest technology,” said Mike Graen, vice president of collaboration at Crossmark. 

Graen spent 25 years at Proctor & Gamble calling on Wal-Mart, and then five years at Wal-Mart working on supplier collaboration. He joined Crossmark in October to head up this new collaboration lab which was just completed and is now giving tours to local suppliers and potential members.

“This new center is not a corporate office for Crossmark. There are three people who work in this building including me. We see this center as a neutral facility where Wal-Mart and suppliers large and small can come together to collaborate on their business relationships to better serve their customers,” Graen said.

Duncan Mac Naughton, chief merchandising officer for Walmart U.S., said recently that the retailer’s goal is to do 300 joint business plans with suppliers each year. Wal-Mart has been completing about half that amount in recent years.

Graen said the center will help suppliers focus on core items, conduct shopper research and test new concepts that could positively impact their respective businesses. It’s also a training center and offers a large open space that can accommodate about 100 people. 

He said the building capacity is about 450 and with the large screens in each room the full house could be connected via technology. There is also a separate work room to accommodate suppliers who have presentations in the building when they are not in the meeting. Graen said they have piped in the flight schedules to Northwest Arkansas Regional Airport and have a printer set up for boarding passes to accommodate suppliers who will work out of the center while in town to see Wal-Mart.

Graen’s Wal-Mart years included work on the SPARC (Supplier Portal Allowing Retail Coverage) project, which was a collaboration between the retailer and several suppliers aimed at providing more info on inventory and to improve on-shelf availability.

Graen said there is a training lab in the new collaboration center to help merchandisers and suppliers with improving on-shelf availability.

“The initial reaction from Wal-Mart and suppliers who have toured is quite positive. I foresee this building being used a lot. Any supplier can use the space if they are a member. We charge memberships for certain hour usage. For instance $10,000 a year will get you 100 hours up to $50,000 a year for 500 hours,” he said. “You don’t have to be a Crossmark customer to use the space.”

Five Star Votes: 
Average: 5(1 vote)

Walton family invests in downtown Springdale, ‘legitimizes’ area work

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story by Kim Souza
ksouza@thecitywire.com

Excitement is brewing in downtown Springdale with news that an entity funded by the Walton family — Downtown Springdale LLC — has acquired a major landmark building at 202 E. Emma Ave. The San Jose Manor building was home to Ryan’s Clothing for more than 50 years before the retailer closed in 2013.

Max and Robert Ryan sold their interest in the building for $250,000 in May to Downtown Springdale LLC. Mid-America Management Associates just closed the sale of their majority interest in the property for $970,000, according to county real estate records.

The $1.22 million Walton family investment is a catalyst to help spur more development in downtown Springdale, according to city leaders. The Walton family has not announced plans for the purchased site which runs along Emma Avenue from Spring Street to N. Commercial Street.

Perhaps a mixed used space anchored with a Walmart Neighborhood Market is possible, like the one under construction in downtown Bentonville. Dity officials said it’s anybody’s guess what the Walton’s have planned at this time.

“When I came down here to Springdale I told the Jones Trust board that I could help the environment in the Jones Center, but we needed to work on improving the surrounding area because downtown Springdale has the greatest potential of all the area downtowns,” said Ed Clifford, CEO of the Jones Center.

For years Clifford, as CEO of the Bentonville Chamber of Commerce, had a front row seat to witness community investment toward downtown revitalization. Support from Wal-Mart, Walton family and a plethora of smaller investors has transformed the Bentonville square and is ow adding two new downtown initiatives — the Market and Arts districts.

“The Walton family investment in Springdale sent a signal to lots of people that this development is really going to happen,” Clifford said.

The interest in downtown Springdale is a long time coming, said Mayor Doug Sprouse, adding that the Razorback Greenway work which runs through the middle of downtown Springdale creates momentum for development. Sprouse said the Walton Family Foundation and their vision for the Razorback Greenway helped breathe new life into downtown Springdale with $10 million in matching funds toward the city’s leg of Greenway.

The city recently purchased two buildings along Mill Street and is tearing them down to make room for Turnbow Plaza, a downtown park that will be located on the banks of Spring Creek along the Razorback Greenway, which is about one block from the site purchased by the Walton family.

“This recent investment from the Walton family, Tyson Foods and the Care Foundation in our downtown legitimizes the revitalization efforts that have started and failed so many times before,” Sprouse said.

Last month the Care Foundation gave the city $493,000 to build Turnbow Plaza and Tyson Foods anted up $100,000 for the building demolition and debris removal. Tyson is also in the process of acquiring the Jeff Brown Building at 317 E. Emma Ave. The meat giant recently announced plans to relocate some of its corporate staff to downtown Springdale into one of its corporate buildings along Emma Avenue, but gave no timeline for that move.

“I can’t say enough about the importance of Tyson’s plan to house some corporate staff downtown. It’s a huge deal because this will mean foot traffic that can help spur more retail and restaurant growth as the trail work is completed over the next year,” Sprouse said.

Clifford stands by his belief that when all is said is done, downtown Springdale will shine brighter than the rest. He said the trailhead at the Jones Center is halfway between Bella Vista and Fayetteville along the Razorback Greenway. The Jones Center will be the parking area and rest room facility for hundreds who will use the Greenway each week. 

Clifford and Sprouse agree that having Spring Creek, the railroad and the Jones Center  attractions along Emma Avenue in downtown Springdale, will set the city apart.

“We are on our way and it’s exciting to think about the possibilities,” Clifford said. 

Springdale City Council will decide on Tuesday (June 10) if they want to approve an $825,051 matching grant from the Walton Family Foundation to build a mountain bike trail in the northern part of the city near J.B. Hunt Park. The total cost of the 2.6 mile mountain bike trail is expected to be $1.65 million. City officials said if built the trail will connect to the Razorback Greenway. If approved, construction will begin immediately in hope of completion by the end of the year.

Five Star Votes: 
Average: 5(1 vote)

Arkansas Special Session nears on public school insurance changes

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story from Talk Business, a content partner with The City Wire

All part-time school and state employees as well as many spouses of full-time employees would be ineligible for insurance benefits under two draft bills discussed during a meeting of the House and Senate Education Committees Tuesday.

If consensus can be achieved, a special session could be held “in the next few weeks,” said Sen. Jim Hendren, R-Gravette, who is chairing a task force charged with drafting the legislation.

Hendren said legislators could expect to see final drafts “hopefully tomorrow” with a special session occurring in the next few weeks. Consensus support would have to be obtained by majorities in the House and Senate before Gov. Mike Beebe would call a special session.

A special session would have to be held by the end of August because school insurance operates on a calendar year.

The task force was created after the Legislature met in a special session in October to address soaring public school employee health insurance rates. Legislators poured $43 million in one-time money into the plan and added another $36 million annually from other sources as a quick fix. The task force was created to find more permanent solutions to the continuing problem.

The recommendations also would affect state employees, whose health insurance system is in better shape financially.

In one bill, which Hendren said is more controversial, employees who work less than 30 hours per week would not be eligible, saving the school employee plan $10.2 million and the state plan $2 million.

That drew opposition from two Republican lawmakers. Rep. Bruce Cozart, R-Hot Springs, said he grew up in his father’s school bus shop and was concerned about how the legislation would affect part-time employees. Rep. Sue Scott, R-Rogers, said that bus drivers may offer a student the first smile they see each day and that cafeteria workers offer extra food to students they know need it.

Hendren said state and public school employees were being offered health benefits not offered in the private sector. After the meeting, he said, “I think we’re on the right path. I think people understand the alternative is our teachers are going to take a big hit, and that was our task is to stop that from happening.”

In the other bill, employee spouses who have health coverage through another group health plan would not be eligible for school and state benefits. That would save up to $4 million in both the public school and state plans. The bill also would require verification of dependent eligibility, which would save each plan up to $4 million. It also would require employees with high-deductible plans to be enrolled in a health savings account.

The final draft of that bill also would provide more flexibility in covering bariatric surgeries, such as gastric bypass surgery. That change would save the school and state employee plans $8 million each.

The task force is charged with meeting until June 2015. These two bills focused on “the quick changes that will make a cash difference immediately,” Hendren said. Other options, such as combining the state and school employee plans, will be considered in future sessions.

Five Star Votes: 
Average: 5(1 vote)

U.S. Marshals Museum to boost public relations budget, efforts

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story by Michael Tilley
mtilley@thecitywire.com

The U.S. Marshals Museum Board is boosting its 2015 public relations budget more than 500% as the museum staff prepares for several events geared toward raising money and awareness for the planned Marshals Museum in downtown Fort Smith.

Board members met Tuesday (June 10) in Fort Smith to approve an operating budget of $3.556 million, up 54.5% compared to the 2014 budget. The budget included staff expenses estimated at $467,255, up 18.89% over 2014, and a marketing budget $138,500, well ahead of the $23,000 budgeted in 2014. Denver Peacock, owner of Little Rock-based The Peacock Group, has been hired to help the museum with public relations and marketing.

Marshals Museum President and CEO Jim Dunn said the budget changes reflect an upcoming cycle of “very high profile events” as the effort to build the museum begins to ramp up to a scheduled opening of 2017. Funding issues – primarily related to the timing of $10 million in a tax credit program – the museum opening was delayed one year.

In January 2007, the U.S. Marshals Service selected Fort Smith as the site for the estimated 20,000-square-foot national museum. The cost to build the museum — including exhibit work — is estimated at around $53 million. Although the announcement was made in 2007, formal fundraising activities did not begin until the latter part of 2009.

One of the high profile events includes the museum groundbreaking on the riverfront in downtown Fort Smith set for Sept. 24, 2014. The date coincides with the 225th anniversary of the creation of the service in 1789. The U.S. Marshals Service is the oldest American federal law enforcement agency and was established by President George Washington.

Other events include the unveiling of the a U.S. Marshals commemorative coin that will be sold in 2015 to market the 225th anniversary year of the service. The museum could collect up to $5 million from sales of the coin. Money from the coin directed to the museum is restricted to fund “the preservation, maintenance, and display of artifacts and documents” at the Marshals Museum. Revenue from coin sales will also go to the Federal Law Enforcement Officers Association, the National Law Enforcement Museum, and the National Center for Missing and Exploited Children.

“Denver is in touch with local people ... and others to help with unveiling of the coin,” Dunn told the Board, adding that coin designs could be unveiled soon.

Public relations is also a focus of the Winthrop Rockefeller Distinguished Lecture Series. The three-year series, funded by a $100,000 gift from Mrs. Listene Rockefeller, will welcome leaders from the executive, judiciary and legislative branches of the U.S. government to Fort Smith to speak about the Marshal’s history as it connects to each branch. A schedule has not yet been set for when the series will begin.

Dunn said it is “crucial” that the right speakers are chosen for the series and that “public relations is lined up for that” in order to increase awareness of the mission of the Marshals Service and the museum.

Another of the events is a fundraising gala to be held in early 2014 in Fort Smith. Dunn said philanthropists Mary Young and Kathy Babb – Young is the wife of ArcBest Board Chairman Robert A. Young III, and Babb is the wife of Doug Babb, CEO of Cooper Clinic – are organizing the gala. Dunn teased that the gala may be attended by well-known out-of-town guest.

Pat Lile, a member of the Marshals Museum Board and the board’s marketing committee, said Crystal Bridges Museum of American Art Deputy Director Sandy Edwards has pledged to help the Marshals Museum staff on efforts related to museum awareness and operations.

In closing Tuesday’s business portion of the Board meeting, Marshals Museum Board Chair Judge Jim Spears said all efforts to promote and build the museum should be considered a “big deal.” He noted that the museum, when built, will be an “economic development engine that will benefit this area and this state more than people understand.”

EASEMENT LINE ISSUE
Marshals Museum Board member Rick Griffin said there is a small chance an easement held by the U.S. Corps of Engineers could change where the museum is built. If the easement, first marked in the 1960s, is not relinquished or altered, the museum may have to be built further away from the Arkansas River (McClellan-Kerr Arkansas River Navigation System) instead of near the river. Griffin said the issue was recently discovered, and the Corps has been asked for information about the easement.

“(Because of dealing with the Corps) I can’t imagine that that process is going to be fast,” Griffin said when asked about a timeline on getting an answer to the easement.

Griffin also said Arkansas’ state and federal political leaders may be asked to intervene.

“We may have to have some top down help,” Griffin said.

“I think we can probably arrange that,” Spears responded.

Five Star Votes: 
Average: 5(1 vote)

Fort Smith Board not likely to audit Daily and Woods’ legal billings

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story by Ryan Saylor
rsaylor@thecitywire.com

Any chances of an auditing firm reviewing billing by the Daily and Woods Law Firm to the city of Fort Smith appear dimmer after a Tuesday (June 10) study session of the Fort Smith Board of Directors.

When the issue was brought up for discussion, City Director Philip Merry again made his motion to request an independent audit of billings from the law firm to the city, as well as appointing a committee to review whether the contracted arrangement with Daily and Woods was the best for the city, or whether hiring counsel onto the city's staff was the best route. He had previously made a motion at the conclusion of the June 3 regular meeting of the Board, but Mayor Sandy Sanders said the motion was not proper since Merry had not added it during the beginning of the meeting, when the mayor had asked for additional items.

Merry had made clear that he was not accusing the firm of wrongdoing, but instead wanted a neutral group to review allegations brought to light by a series of posts by attorney Matt Campbell on his Blue Hog Report blog. Campbell, it was pointed out several times during the study session, represents clients in three different lawsuits either against the city or involving the city.

"We are stewards of other people's money. It is not our money. The challenge for a Board member is when to just go and when to pursue the transparency. I feel quite certain there's nothing wrong. More importantly, it doesn't matter what I think or what this Board thinks. I'm recommending and what I've had many a citizen to recommend is a neutral, transparent approach to the dialogue."

He also said the Board was "too close to the rhetoric" to make any judgments on the questions of whether the firm was over-billing the city or billing for work not completed, as Campbell accused the firm of charging the city for phone calls he said were never made in the first place. City Attorney Jerry Canfield and City Administrator Ray Gosack have said there was nothing to Campbell's allegations following an internal investigation by Daily and Woods into its billings of the city.

In challenging the need for an independent audit, City Director Keith Lau said directors must look at the "bigger picture."

"We've got a city attorney who's been with us for 40 years of service, impeccable service. There's no tarnish on his firm's record or his record. We've got a city administrator who has given view of the situation and said there's no improprieties. On the other side I see Matt Campbell. …The one thing that comes to mind is no matter where you stand on those reports, Matt Campbell is not an unbiased participant. He represents an interest which is counter to what we're trying to do, which is be good stewards of our taxpayers' money."

Lau continued, saying Campbell was "wagging our tail" by making the allegations, with the Board possibly acting based upon said allegations.

"Do I want Matt Campbell to wag my tail and make me go into an analysis of whether or not we're going to have a third party or an in-house attorney? I don't want him to wag my tail. And to be quite honest, with all the information, I can't make a decision. I'm not qualified to review those phone records or to say (what the city should pay for an attorney). And all I know is I feel like my tail is being wagged and I don't like it."

City Director Mike Lorenz said conducting an audit based on Campbell's allegations would set a bad precedent for the Board.

"If we were to go ahead with a three year audit, we as a board would be taking something that is being claimed on a blog by some by definitely non-partial third party that has everything to gain by distracting the real issues of his lawsuits, we're taking that and spending taxpayer money for a very expensive audit over an accusation of a couple of phone calls. We're not talking (about) an accusation of millions of dollars in ill-conceived bills. We're talking about a couple of phone calls. … I think it sets a huge, hugely bad precedent if we were to say we're going to react to that comment and that accusation by this attorney by auditing Daily and Woods. I just think it sets the wrong precedent because you've got people and attorneys that would take advantage of that in the future because you can distract attention from what our attention needs to be on. Now from a purely budget standpoint on whether or not we're better off with a contracted service or an in-house service, that's a whole different conversation. To me, that's a budget conversation."

Vice Mayor Kevin Settle, who officiated the study session in the absence of Sanders, conducted an impromptu poll of the Board and found only Merry and City Director Pam Weber in favor of moving forward with an audit. But with Tuesday's meeting only being a study session, the vote does not stand and a motion by Merry and a second by Weber placed a vote on the agenda for the June 17 Board meeting.

City Director George Catsavis, who said he had complete trust in Daily and Woods and specifically City Attorney Jerry Canfield, said he would have questions if the allegations were proven to be true and it was a repeated occurrence, but he said at this point, he is skeptical and against an independent audit.

"I know Jerry personally and I just feel this is just being blown out of proportion. This could be an honest mistake, you know? But in 40 years, for the first time for something like this to come up, I'm questioning this."

Speaking after the meeting, Gosack said he was pleased that the Board largely expressed confidence in the city administration and the billings of Daily and Woods.

Campbell’s past investigations have resulted in the resignation of former Lt. Gov. Mark Darr for misspending official funds and the withdrawal of Circuit Judge Mike Maggio from a Court of Appeals race this year after some questionable online activities were outed. Gosack said neither of the previous instances should matter with this situation with the city and Daily and Woods in terms of credibility for Campbell.

"I think each case stands on its own. Just because you were successful on a previous case does not automatically make you successful on the next one," he said. "Each case lives or dies on its own merits."

Gosack said if the Board ultimately decides to appoint a review committee to look into the hiring of in-house counsel for the city or keep current contracted representation, he said it would likely take the Board about two months to advertise for appointments and form the committee, with an additional few months of work. He said the city administration would offer staff assistance as requested. Such a review, he said, could be completed by the time the city begins review of the Fiscal Year 2015 budget later this year.

In other business, the Board approved an Aug. 12 special election on a millage increase for the Fort Smith Public Library. Library Executive Director Jennifer Goodson said private funds were secured to fund the $30,000 election.

Five Star Votes: 
Average: 4.2(10 votes)

Rutledge captures GOP primary bid in Attorney General race

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story by Ryan Saylor
rsaylor@thecitywire.com

The long and bitter battle for the Republican nomination for Arkansas attorney general has come to an end, with Leslie Rutledge pulling out a victory against challenger David Sterling.

Unofficial election results late Tuesday (June 10) show Rutledge won with 59.07% of the vote to Sterling's 40.93%.

Being the only major race on the runoff ballot, turnout was predictably low for the election required under state law after neither Rutledge or Sterling were able to garner 50% of the vote to avoid a runoff in the May 20 primary. Rutledge came closest, with 47% of the vote to Sterling's 39%.

In the final days of the campaign, the election turned nasty with both candidates going after the other's Republican bonafides.

Talk Business, a content partner with The City Wire, reported June 2 about Sterling's charges that Rutledge had voted in Democratic primaries from 1998 through 2008 and had not voted in Arkansas elections during both 2010 and 2012. He also pointed out a political donation by Rutledge to the Democratic Party of Arkansas.

Talk Business reports that Rutledge fired back, saying Sterling represented in his legal practice a company peddling pornography, an act she says contradicts his Christian and family values platform which she said should be troubling for someone seeking office to oversee a division dedicated to Internet predators.

The race also saw big spending by outside groups in support of Sterling.

A June 5 mailer by the Judicial Crisis Network is just one example of an outside group that involved itself in the race, with the JCN sending out an "Arkansas Conservative Attorney General Guide" that compares and contrasts seven "principals" between the two candidates, Talk Business reported.

The direct mail piece went after Rutledge on many topics, including the charge that she was not a supporter of a stand your ground law. But she hit back, saying it was not true and touting her rating by the NRA, as well as revealing that she is a concealed carry license holder.

In the end, the attacks were not enough to defeat Rutledge, who spoke with Talk Business after her victory.

“Although we were outspent 10-to-1, our grassroots hard work prevailed and Arkansans were not fooled by D.C. beltway bandits,” Rutledge tells Talk Business & Politics. “As Attorney General, I will always stand my ground to protect Arkansans.”

In a telephone call to The City Wire, Sterling said he was "fine" with the outcome of the election even though he did not pull out a win.

"It's fine with me. I did everything I could. I don't have any regrets about what I did or didn't do in the race. I feel like I left it all out on the field. I turned it over to God 16 months ago to follow his will and I feel like I've done that the last 16 months. I put it all in His hands and I will do that tonight and see what he has in store for me."

Sterling was not ready to endorse Rutledge's run for attorney general Tuesday, but he said conversations would take place between the two about an endorsement.

"She and I will talk about that later this week," he said. "I just need to process what has gone on the last few weeks and the election results."

The Republican Attorney Generals Association Chairman Alan Wilson also congratulated Rutledge, who tied Democratic Sen. Nate Steel of Nashville, his party's nominee, to the Obama administration.

“I want to congratulate Leslie Rutledge on securing the Republican Party nomination in tonight’s Arkansas Runoff Election for attorney general.  I am looking forward to joining Leslie on the campaign trail this year to help him become the first Republican attorney general in Arkansas history," Wilson said. “Voters in Arkansas have a clear choice in this year’s election. They can either vote for Leslie, who will be a great advocate for states’ rights and a strong protector of the Constitution, or vote for Democrat Nate Steel, who will serve as a rubber-stamp for Obama and Eric Holder’s liberal agenda. Leslie will fight against an overreaching Federal government and stand up for all Arkansans. I have all the confidence that Leslie will make a great Attorney General for the people of Arkansas.”

Another runoff of note on the far edge of Northwest Arkansas involved Rep. John Burris, R-Harrison, and opponent Scott Flippo, who were fighting for the District 17 Senate seat. Burris, who is term limited in the Arkansas House, lost with 47.71% of the vote to Flippo's 52.29%.

The only local runoff was for Benton County Justice of the Peace District 1. Republican Ron Easley beat opponent Mike McKenzie 49 votes to 34.

Five Star Votes: 
Average: 5(2 votes)

Arkansas GDP grew at 2.4% clip in 2013, ahead of U.S. rate

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story by Wesley Brown
wesbrocomm@gmail.com

Arkansas’ economy gained strength in 2013 as the state’s gross domestic product (GDP) grew at 2.4% in 2013, ranking The Natural State 16th among the 50 states, according to new statistics released Wednesday by the Bureau of Economic Analysis (BEA).

Arkansas’ growth was well ahead of the U.S. average in 2013, which slowed to 1.8% in 2013 after increasing 2.5% in 2012, according to the statistics from the U.S. Labor Department analysis arm.

Still, real gross domestic product (GDP) increased in 49 states in 2013, but the surprise takeaway from the yearly report is that U.S. growth was widespread but lost momentum. Per capita real GDP ranged from a high of $70,113 in Alaska to a low of $32,421 in Mississippi. Per capita real GDP for the U.S. was $49,115.

In the Southeast region, Arkansas only trailed West Virginia – which grew at a whopping 5.1%. Virginia had the lowest GDP at 0.1%, while the entire 12-state region came in at 1.6%.

‘UNUSUAL’ GROWTH
John Shelnutt, head of the Arkansas Department of Finance and Administration’s Economic Analysis and Tax Research division, called the sources of growth in Arkansas “a little unusual.” He said the state experienced robust gains in the service and agriculture sectors, but saw contraction in construction and manufacturing. The government sector in Arkansas also lost momentum, mainly in the number of federal and Postal Service jobs.

But the most unusual source of growth came in the mining sector, which saw a huge decline in 2012 as natural gas prices and low rig counts buffeted the Fayetteville Shale. This year, that sector rebounded with vigor.

“That is a little odd because it is a volatile sector where (growth) doesn’t persist year after year, or multiple years,” Shelnutt said. “It could be seen as a one-time contribution. It is a rebound from the negative year in 2012, but goes beyond a simple recovery.”

Just last month, severance tax collections in 2014 set new record highs as Arkansas continues to reap the benefits from higher natural gas prices and steady production levels primarily in the Fayetteville Shale, state revenue statistics show.

For the first three months of 2014, gross natural gas severance tax revenue came in at $19.9 million, up 29% from $15.4 million in the same period of 2013. At the same time, monthly collections of $7.3 million and $9.1 million in March and April, respectively, were the highest severance tax revenue totals posted since the state began keeping such records.

Overall, severance tax collections for January, February, March and April all came in well above $6 million, also a first for the state of Arkansas. The fiscal year for the state of Arkansas begins on July 1, 2013 and ends on June 30, 2014. In fiscal 2013, the highest monthly severance tax collection was $5.8 million in June. The severance tax data is compiled by the Revenue Division of the Arkansas Department of Finance & Administration using monthly tax reports filed by producers.

Shelnutt added that Arkansas’ growth in 2013 could be an anomaly.

“It is nice to get those,” said the state’s chief economist, noting the growth in the mining sector. “But you can’t count on them.”

Growth in GDP does not necessarily translate to job growth. The number of employed in Arkansas stood at 1.228 million in December 2013, down 0.19% compared to December 2012, and down 2.19% compared to December 2011. The number was also down 5.76% – or more than 70,000 employed – compared to peak employment of 1.299 million in March 2008.

The number of employed in Arkansas during April 2014, the latest month data is available, was 1.235 million, down from 1.238 million in March, but up from the 1.227 million in April 2013.

MANUFACTURING STRENGTH
GDP by state is the state counterpart of the Nation’s gross domestic product (GDP), the Bureau’s featured and most comprehensive measure of U.S. economic activity. Real GDP by state is an inflation–adjusted measure of each state’s production based on national prices for those goods and services produced within each state.

Overall, nondurable-goods manufacturing; real estate and rental and leasing; and agriculture, forestry, fishing, and hunting were the leading contributors to real U.S. economic growth.

And although mining was not a significant contributor to real GDP growth for the nation, it did play a key role in several states, including Arkansas. This industry was a large contributor in five of the fastest growing states: North Dakota, Wyoming, West Virginia, Oklahoma, and Colorado. Growth in those states was propelled by the recent development in liquids-rich shale plays that are attracting billions in new investment.

Meanwhile, real GDP increased in all eight BEA regions. Growth accelerated in the Rocky Mountain and Plains regions. The Rocky Mountain region grew the fastest, led by Wyoming, which increased 7.6%.

Nondurable–goods manufacturing was the largest contributor to U.S. real GDP by state growth in 2013. This industry increased 5.3% in 2013 after declining 0.5% in 2012. It was the leading contributor to growth in three of the eight BEA regions and in 10 states. Nondurable–goods manufacturing contributed 2.65 percentage points to growth in Louisiana and 1.19 percentage points to growth in Texas.

Real estate and rental and leasing were also a leading contributor to U.S. real GDP by state growth. This industry increased 1.6% in 2013, down slightly from 2.2% in 2012. It contributed to growth in all eight BEA regions and was the leading contributor to growth in the New England region. Real estate and rental and leasing contributed 0.5% or more to growth in North Dakota, Nevada, and Massachusetts.

Agriculture, forestry, fishing, and hunting contributed to real GDP growth in all eight BEA regions and in 49 states and the District of Columbia. It was the largest contributor to the growth of GDP in the Plains region. This industry contributed 1.36 percentage points or more to growth in North Dakota, South Dakota, Iowa, and Nebraska.

POTENTIAL FOR 2014
Looking ahead, GDP growth may also be strong in 2014 for Arkansas. Mark Zandi, chief economist for Moody’s Analytics, also reported Wednesday that U.S. economic growth “looks set to accelerate in the coming months, although significant challenges still remain.”

He said real GDP is tracking near 4% in the second quarter, with some of the strength coming from the rebound in activity from the unusual first quarter winter weather. And while Zandi does not anticipate continued 4% real GDP growth, he said second quarter results suggest “consistently stronger growth in coming quarters.”

However, Zandi also noted that U.S. employment is not keeping pace with GDP growth.

“Although the labor market has improved, unemployment and underemployment remain frustratingly high,” Zandi said in his report. “Job‐market slack is estimated at nearly 2% of the labor force. For context, in the wake of the tech‐bust in 2000, job‐market slack peaked at no more than 1% of the labor force.”

Continuing, Zandi wrote: “The U.S. recovery completes its fifth year this month. This is significant, as the average expansion since World War II has been about as long. But it is also a disappointment, because the economy has yet to experience the rapid growth that has characterized past recoveries.”

Five Star Votes: 
Average: 5(1 vote)

Wal-Mart truck crash hits amid effort to amend hours-of-service rules

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story by Michael Tilley and Kim Souza
mtilley@thecitywire.com

There is never a good time for a high-profile and deadly traffic accident involving a tractor-trailer rig, but efforts by the trucking industry to amend federal hours-of-service rules likely became more difficult when a Wal-Mart rig caused an accident in New Jersey that killed comedian James McNair and critically injured Saturday Night Live alum Tracy Morgan.

Morgan remains in critical condition following the June 7, 1 a.m., accident. Walmart driver Kevin Roper, 35, has been charged on several counts related to the accident. Some media reports suggest that authorities believe Roper was sleep deprived.

Wal-Mart officials have said they will cooperate with the investigation and help the victims.

“Safety is our absolute highest priority, but that is no comfort whatsoever to the families and friends who are suffering today,” Walmart U.S. CEO Bill Simon said in a statement on June 8. “We offer them our deepest condolences. We can’t change what happened, but we will do what’s right for the family of the victim and the survivors in the days and weeks ahead.”

But Wal-Mart is not conceding claims that Roper was driving beyond the legal limits.

“With regards to news reports that suggest Mr. Roper was working for 24 hours, it is our belief that Mr. Roper was operating within the federal hours of service regulations,” said Wal-Mart spokeswoman Brooke Buchanan. “The details are the subject of the ongoing investigation and we are cooperating fully with the appropriate law enforcement agencies. The investigation is ongoing and unfortunately we can’t comment further on the specifics.”

Wal-Mart also declined to provide The City Wire info on changes made within their truck fleet following the accident.

COLLINS’ AMENDMENT
Just days prior to the accident in New Jersey, U.S. Sen. Susan Collins, R-Maine, successfully pushed an amendment through the Senate Appropriations Committee that would block certain provisions – primarily the 34-hour restart rule – of the new hours-of-service rules implemented in July.

In pushing the amendment, Collins said it is “clear that the rules have had unintended consequences that are not in best interest of carriers, shippers and the public.” Collins’ effort would block what is known as the “two-night rest” rule.

Broadly, the Department of Transportation rules reduce a driver’s average maximum allowable hours of work per week from 82 hours to 70 hours, a 15% reduction.

“The 15% reduction in the average maximum allowable hours of work based on the new rule results from the restrictions on the use of the restart period,” explained DOT language on rule.

The DOT estimates that the new rule will boost annual trucking industry expenses by about $470 million, but said benefits from safety, driver health and other factors will produce an overall net economic gain of up to $280 million a year.

“The goal of this rulemaking is to reduce excessively long work hours that increase both the risk of fatigue-related crashes and long-term health problems for drivers,” noted a statement from the federal Department of Transportation.

Officials in the trucking industry have said the rules do nothing to promote safety and instead drive up costs for the industry which are then passed on to consumers.

Kevin Kelly, a spokesman for Collins, took issue with criticism of Collin’s amendment following the accident involving Morgan.

“To infer that the proposal that is being considered by the Senate had anything to do with the horrific crash is inaccurate,” Kelly told the Bangor Daily News in this report.

He added that the amendment would not have changed the fundamental rules that seek to prevent truck drivers from being sleep deprived.

TRUCKING INDUSTRY RESPONSE
American Trucking Associations President and CEO Bill Graves issued a statement following the accident designed to separate the push to amend hours-of-service rules with what happened to Morgan.

“The issue of highway safety, and in particular the safety of the trucking industry, has been at the forefront of the national conversation for several days due to a high profile incident in New Jersey,” Graves noted. “Second, I want to address several issues regarding the hours-of-service rules and driver fatigue generally. The hours-of-service rules – whether they are the current regulations, the pre-2013 rules, or the rules with changes we hope to see as a result of Congressional action – only place limits on driving and on-duty time and require that between work periods drivers take a minimum of 10 consecutive hours off-duty. But they do not dictate what drivers do during that off-duty period. No rule can address what a driver does in his or her off-duty time. The industry – including ATA, our member fleets, our state associations and the millions of safe, professional truck drivers on the road today – strongly believes that drivers must take advantage of their off-duty periods for rest and that drivers should not drive if they are fatigued.”

Chris Spear, the chief of legislative affairs for the American Trucking Associations’, said in a May 14 interview with The City Wire that one consequence of the new rule is that it places drivers on the road at peak times instead of letting them drive at hours when the general public is not on the road. Spear argued that the consequence is counter to the claim of federal regulators that safety is the focus.

The ATA declined to provide comment to The City Wire about how the Morgan accident has changed the hours-of-service debate among federal lawmakers.

Graves’ statement of June 8 also included the following measures the ATA supports to improve highway safety.
• We support a suspension of the controversial and unjustified restrictions on use of the hours-of-service restart provision, which alters driver sleep patterns and puts more trucks on the road during more risky daylight hours.

• We support mandatory use of electronic logging devices to track drivers’ compliance with the hours of service requirements.

• We support more aggressive enforcement of traffic laws to combat distracted and aggressive driving as well as restricting the speeds of large trucks to 65 mph with mandatory electronic speed governors.

• Fatigue, while an important safety issue, is a causal factor in less than 10% of all truck crashes, and ATA believes we need to do far more to address the other 90% of crashes.”

CRASH DATA
Large trucks accounted for 8% of the vehicles in fatal crashes, but only 3% of the vehicles involved in injury crashes and 4% of the vehicles involved in property-damage-only crashes, according to the most recent DOT report on highway safety. The report also found that 39.6% of fatalities are in passenger cars, 37.8% in light trucks and 11.1% from motorcycle accidents.

Graves has been on record saying that the truck driver was not at fault in a majority of accidents between large trucks and other vehicles.

The number killed in accidents involving large trucks during 2012 was 697, up from 640 in 2011, but below historical trends. The average annual number of deaths between 2012 and 2000 was 700.38. Deaths involving large trucks hit a record 1,432 in 1979

Following are the number killed in accidents (2012-2003) involving large trucks.
2012: 697
2011: 640
2010: 530
2009: 499
2008: 682
2007: 805
2006: 805
2005: 804
2004: 766
2003: 726

WAL-MART FLEET SAFETY
Wal-Mart, with the largest private fleet in the U.S., is closely watched when it comes to highway safety legislation and data. The company reports having at least 7,400 drivers, more than 6,100 tractors and 713 million miles driven in 2010 (most recent year the company provided data).

According to the Federal Motor Carrier Safety Administration, Walmart trucks were involved in 375 crashes in the past two years, with nine deaths and 129 injured. The federal data does not indicate who is at fault in the accidents.

The federal data also shows that Wal-Mart had 667.425 million vehicle miles traveled in 2013, among 7,222 drivers and 6,239 trucks.

The Bentonville-based retailer says it has one of the best fleet safety records in the U.S.

“Walmart is recognized by the industry as having one of the safest fleets in the country, driving 2.11 million miles per preventable accident. Walmart is also proud to have a DOT Recordable Accident Frequency of 0.342 per million miles,” the company notes on its website. “Walmart drivers must meet stringent pre-hire standards that include a minimum of 250,000 miles of driving tractor trailers and no preventable accidents in the last three years.”

Five Star Votes: 
Average: 5(1 vote)

Analysts say Tyson overpaid for Hillshire, investment grade could suffer

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story by Kim Souza
ksouza@thecitywire.com

Few reviews of the move by Springdale-based Tyson Foods to acquire Hillshire Brands for $8.55 billion are favorable. Several analysts say Tyson overbid at $63 per share for Hillshire Brands at the expense of existing Tyson investors, and that the 70% per-share premium could take years for Tyson to recover.

“We believe Tyson stock will be dead money at best for the next 12 months as it copes with the hangover of paying such a big price including an issuance perhaps of $1.6 billion of equity,” noted Robert Moskow, an analyst with Credit Suisse.

Tyson Foods shares (NYSE: TSN) closed at $36.09 on Wednesday (June 11), up two cents. The share price entered June at $42.56, and have fallen more than $7 in response to the bidding war with Pilgrim’s Pride to buy Hillshire. For the past 52 weeks the share price has ranged from a $44.24 high to a $24.74 low.

Moskow was one of two Wall Street analysts to downgrade Tyson stock following the bidding war for Hillshire. Moskow downgraded Tyson from neutral to underperform. BB&T Capital analyst Brett Hundley downgraded Tyson Foods from a buy to a neutral position on Friday (June 6) citing the bids were getting to rich to make the numbers work.

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

He said a bid over $60 by Tyson Foods would run the risk of ruining its investment grade status.

“At the price of $63 per share, we believe Tyson destroyed $2 billion in value. We believe fair value for Hillshire was $47 per share including the $1.3 billion value of synergies,” Moskow said.

Standard & Poor’s put Tyson Foods on credit watch with negative implications following its winning bid for Hillshire Brands because Tyson will assume more debt to finance the high-priced deal.

Tyson now has investment grade credit, two full levels above junk status, but analysts believe the meat giant could teeter on the edge of more downgrades if commodity price increases crimp margins and cash flow needed for debt repayment.

Officials with Tyson Foods say they are prepared to issue debt and equity to cover the purchase but will not sacrifice the investment grade credit rating. Fitch Rating noted Monday (June 10) that a new equity issue is the most favorable option for the company. Tyson’s ratings will take into consideration the equity used to finance the purchase as well as Fitch’s view regarding the pace of reducing debt and Tyson’s ability to garner its projected $300 million in savings

Tyson filed papers June 9 with the Securities and Exchange Commission outlining an extension of a bridge loan for $8.2 billion with a $1 billion “backstop” agreement to cover any contingencies.

BIG APPETITE
Analysts drilled Tyson executives earlier this week about why the bidding went so high for Hillshire Brands. Tyson management said Hillshire is a once-in-a-lifetime deal that will help moderate the volatility of the core commodity business, accelerate its growth rate, improve the value-added mix while also creating operational synergies – improved margins – over time.

Tyson Foods CEO Donnie Smith said culturally the companies are also a great fit and the deal will pay off for shareholders over the next five years. That timeline was extended from three years to five years after Tyson raised its offer for Hillshire from $50 to $63 per share, which made it the most expensive meat deal in industry history.

Stephens Inc. analyst Farha Aslam told Bloomberg Radio this week that growth among U.S. food companies is hard to achieve because Americans are spending about all they are able on food. She said the food industry is seeing several consolidations because interest rates are low and food companies generate lots of cash.

“Hillshire is a strategic fit for Tyson Foods, the largest acquisition in Tyson’s history and it will take some time for them to digest it all.” Aslam said.

Tyson believes adding HIllshire to its portfolio would create a larger market share in the breakfast category the fastest growing segment in food. Tyson said there is also more room to expand margins on Hillshire’s business –  assumption to which Moskow agreed.

ASSET SALES
Moskow said Hillshire presents opportunities for Tyson to generate cash for debt paydown. For example, Credit Suisse believes Tyson will sell off Hillshire’s bakery division which generates about $500 million in annual sales. However, Moskow said it would still be a drop in the bucket given the overpayment for the Hillshire business.

Tyson Foods could also adjust capital expenditures to reduce spending, namely in China, where they have also slowed expansion.

Tyson also just completed the sale of its 50% interest in Dynamic Fuels to Renewable Energy Group. The renewable fuel plant in Geismar, La., was a costly venture for Tyson and partner Syntroleum since the project came online in 2010.

REG paid Tyson approximately $16.5 million in cash at closing on June 9 and retired approximately $13.5 million of Dynamic Fuels’ indebtedness to Tyson, according to a company release. REG has also agreed to make up to $35 million in future payments to Tyson tied to product volumes at the Geismar biorefinery over a period of up to 11.5 years.

Five Star Votes: 
Average: 5(1 vote)

Wal-Mart reconfiguring electronics space, product mix in supercenters

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story by Kim Souza
ksouza@thecitywire.com

Gigantic screen televisions are fun to look at in a store, but on a space-to-sales ratio they rank well below tablets and mobile phones. That is why consumers can expect to see fewer big screens in their local Walmart Supercenter in the future and more space dedicated to faster-selling mobile phones, tablets and other digital accessories.

“Electronics are a great piece of business for us, albeit a challenging category for some time now,” Bill Simon CEO of Wal-Mart U.S., said during the recent question and answer session with the media in conjunction to the retailer’s shareholder events (June 3-6).

Simon was asked how the retailer is managing its entertainment category, which remains challenged because of deflationary margins and slowed innovation. While Simon admits the ongoing challenges, the retailer is not making radical changes. They are actively tweaking the space dedicated to certain entertainment items.

“We are trying to look at this segment more holistically. Forget online and offline and think more about assortment offering and connectivity. There are certain items we can show in the store, that we could sell more breadth of online and there are other items that we can sell and deliver immediately to the customer in-store,” Simon said.

Stephen Quinn, executive vice president of marketing at Walmart U.S., said the retailer is launching net modular sets within its electronics and entertainment departments. These sets have already been placed inside local supercenters in Northwest Arkansas.

“One of the most vital things we do is make sure our in-store presentations fit customer needs. Electronics are a challenging industry,” Quinn said. “The new sets in our local stores adjust our space-to-sales ratio better and we are leaning in toward the growth areas.”

CHANGING THE MIX, PRESENTATION
Wal-Mart said wireless devices, tablets and mobile connectivity items will have more dominant presentation space in its stores. The space also will include bigger brand presentations, and newer and more popular brands. Those brands will be featured in more prominent store locations to better ensure customer awareness.

“We are looking at the physical space dedicated to the electronics and we see there are some items in the category growing twice as fast as those items in decline, so we are making sure the product mix and assortment is right for what customers want. We are also working closely with our partners at Walmart.com to try and figure out what is the best way to present our online offerings to the customer when they are in-store,” Quinn said.

Simon said the dedicated space for entertainment in a supercenter is not changing, but they are adjusting the product displays within that dedicated area. He said there is still value in the $5 DVD and music CD bins as the retailers sells a ton of those items each week.

“Overall it’s a difficult, challenging business, but we feel good about the share position we are in and we are going to try and build upon that share going forward,” Quinn said.

Jason Long, CEO of Shift Marketing Group, said in many ways Wal-Mart is a victim of its own success in the electronics space and now they are victims of the latest, greatest thing.

“There was a time when Wal-Mart was not competitive in electronics, but they began to pull in the best brands and broad selections with better pricing than other competitors, taking market share. But how many big screen televisions do families really need. The lack of innovation from Apple and everyone else has stagnated this category,” Long said.

He said giving top brands more prominence in the store is like a hybrid version of the store-within-a-store format that has been popular at Best Buy. 

One area Long believes Wal-Mart could step up its game is through theme displays around some pop culture phenomenons like “Frozen” or “Star Wars,” especially if there is more room to spare. 

“At Target, ‘Frozen’ outsold in a month more copies than ‘Finding Nemo’ sold in a full year. They said the soundtrack from ‘Frozen’ outsold all other CDs in total in that month. You would have to think this kind of popularity would be a huge traffic driver in stores,” Long said.

SELLING SERVICES, APPLIANCES
In the past Wal-Mart looked to sell services to help boost entertainment sales. One of the more recent programs is a game trade-in service. It has been mildly successful with 115,000 games traded in for cash at Walmart stores, according to Duncan Mac Naughton, chief merchandising officer for Walmart U.S.

Wal-Mart said there were roughly 880 million video games sitting in homes collecting dust, when the program was announced. This buy-back program is designed to get traffic in-stores trading and then spending the money paid on new games or upgraded video gaming equipment. The refurbished games are slated to make their way to Wal-Mart shelves this summer.

Mac Naughton said new game releases drive heavy traffic into the store, and the buyback program will allow more gamers to trade-up over time and increase the overall size of the $2 billion market. Other retailers like Radio Shack recently announced new services as a way to drive traffic into their electronics stores. Dallas-based Radio Shack unveiled a new smartphone “fix it” service last week in its stores. The in-store, same-day service on popular mobile devices is performed at “Fix It Here” stations while the customer waits. Radio Shack has added stations to more than 284 company and franchise stores as part of a pilot program. Results are encouraging enough to expand it to 700 stores by year-end, said CEO Joe Magnacca.

Long said he is not sure how many people go to Radio Shack to buy their smartphones and service plans. But they do sell phones and if the repair job costs more than a new phone, Radio Shack will likely sell more of them.

“You have to figure that some Radio Shack sales people already possess the know-how to repair electronics. I am not sure that could be said for other mass retailers,” Long said.

Simon also set the record straight about selling household appliances within a supercenter setting. He said Wal-Mart piloted selling appliances in a number of markets, including Texas, in recent years. He said sales were good in certain locations but the process of selling appliances is not scalable.

“Our business model requires frequency in turns for items to be productive and effective and while white goods (appliances) sales where effective in a few locations, we have decided to evaluate now how we might sell these items online and deliver to store,” Simon said.

Five Star Votes: 
Average: 5(2 votes)

U.S. House leadership moves after Cantor loss do not appeal to Womack

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story by Ryan Saylor and Michael Tilley
rsaylor@thecitywire.com

With the surprise primary loss of U.S. House Majority Leader Eric Cantor Tuesday night (June 10) and his announcement Wednesday (June 11) that he would resign his post as majority leader, there has been plenty of talk about who might be next in line and how the leadership shuffle could impact Congressional Republicans further down the food chain – like U.S. Rep. Steve Womack, R-Rogers.

POLITICO reports that Majority Whip Kevin McCarthy of California will run for majority leader in an election that could happen as quickly as next week. The publication said McCarthy's move would mean two positions would be open in the leadership team.


But for anyone expecting Womack, himself a deputy whip in the House, to make a move to a higher position, he told The City Wire it was was not going to happen.

“Look, it’s flattering whenever your name gets associated with a potential leadership move, no matter what the circumstances are. ... But there is a tremendous trade off that you have to give when you serve in a leadership position in either chamber, and your ability to take care of your constituents.”

Womack said demands on House leaders to raise money, make appearances and keep an “awful travel schedule” require the Representative to “almost have an understanding with their constituency” that they will not spend a lot of time in the district. That type of understanding, Womack said, is not an option he prefers.

“In my calculus, my work and the commitment I’ve made to my constituents, it limits my leadership options,” Womack said, adding that he is comfortable with that limitation.

Also, Womack said his position as a deputy whip on the House Whip Team provides him the best of both worlds.

“With that (whip team), I get to be at the table for a lot of important discussions, but at the end of the day, I can come home” and see family and “hear directly from” constituents in the district, Womack explained. “If I’m in a leadership position, I’m not going to have a lot of those opportunities.”

One of those opportunities happened Tuesday when Womack provided a tour of the House chambers to a 10-year-old “young lady” from Rogers. Womack said he gets “more of a charge from that” than dealing with what is required by leadership positions.

“She was able to come on the (House) floor for a vote. ... That’s the best part of my job, and if I’m in a leadership position, I can’t do that,” he said.
Womack also said that he is in the “middle of the pack” with respect to seniority on the powerful House Appropriations Committee. Womack said his possibility to advance with Appropriations, and his seat on the Defense appropriations subcommittee, will have more of a positive benefit to Arkansas and the 3rd District than a House leadership post.

David Olive, founder of Washington, D.C.-based Catalyst Partners, and former chief of staff to then U.S. Rep. Asa Hutchison, said Womack is smart to “avoid getting into the Cantor aftermath and stick with the Appropriations pathway he is on.”

Olive said Womack is on the path to becoming an Appropriations “Cardinal” in the coming years.

“That would be HUGE for Arkansas,” Olive noted in an e-mail interview.

A source on Capitol Hill who spoke to The City Wire on condition of anonymity said U.S. Rep. Pete Sessions of Texas, chairman of the House Rules Committee, is already campaigning for the majority leader position, with fellow Texan Jeb Hensarling also a likely contender for the position. But POLITICO reports should Hensarling jump into the race, Sessions would likely step aside.

The same source said U.S. Rep. Peter Roskam of Illinois has been floating the idea of running for whip should McCarthy run for majority leader as expected.

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Fort Smith Board pulls agenda items related to law firm review

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story by Ryan Saylor
rsaylor@thecitywire.com

Fort Smith City Directors were true to their straw poll from Tuesday (June 10) and have withdrawn two resolutions that would have directed the city to hire an auditor to look into legal billings by the Daily and Woods Law Firm to the city, as well as establish a commission to review how the city receives legal counsel.

According to City Clerk Sherri Gard, she was contacted by City Director Mike Lorenz regarding the removal of both items from the June 17 regular meeting agenda even though the two items received a motion and a second by City Directors Philip Merry and Pam Weber, respectively.

Gard quoted Fort smith Municipal Code Section 2-31(4) as allowing any director to request removal of items from the agenda.

"Any item of business may be denied a place on or removed from the agenda by notice of four (4) directors to the city clerk prior to the date of the meeting of the proposed consideration. The city clerk shall immediately notify the city administrator, the mayor, the directors and other interested persons of such action."

Merry had requested the review at the June 3 regular meeting, which was tabled by the mayor as an improper motion until the June 10 study session. The request by Merry came after a series of posts by attorney Matt Campbell on the Blue Hog Report blog questioned billing practices by the Daily and Woods firm to the city, alleging the firm had over-billed for some services and billed for others that never occurred, such as phone calls to Campbell as part of a set of lawsuits against the city in which he serves as legal counsel.

City Attorney Jerry Canfield and City Administrator Ray Gosack have both said the billings were above board, with Canfield providing some documentation to Gosack showing a sampling of phone calls he said were made to Campbell.

Merry's motion regarding a review of billings by Daily and Woods would have contracted a firm to audit the billings for the last three and a half years. His motion for the commission would have appointed an attorney, a CPA and three members of the business community to review whether the city should still contract with Daily and Woods like it has since 1967 or whether it should hire in-house counsel and support staff to handle its legal billings.

Voting to remove the audit from the agenda were Lorenz, City Directors Keith Lau, André Good, George Catsavis and Vice Mayor Kevin Settle. Merry and Weber were the only two who wanted to keep the item on the agenda were Merry and Weber.

Voting to remove the commission proposal was Lorenz, Lau, Catsavis and Settle, while Good, Merry and Weber were in favor of keeping it on the agenda.

In an e-mail to The City Wire, Campbell said he was disappointed by the move, saying it lacked transparency for Fort Smith citizens.

"This should give the citizens of Fort Smith a great deal of concern. This is twice now that a procedural maneuver has been used to keep these issues away from a meeting where members of the public could make their opinions known.  I can only assume they are doing this because they, like I, have seen that the overwhelming response from the public is in support of both an audit and a review of the contractual relationship with Daily & Woods."

Campell also called Gosack and Canfield to task for Canfield's response to the allegations made by Campbell.

"It's also troubling to me that the city administrator and others continue to pretend like Jerry Canfield's response to the phone-records issue was anything but absurd.  He addressed five phone calls, out of twenty-three, then gave such a transparent "explanation" for the remaining eighteen calls that anyone who has ever looked a phone bill should have known it was a lie."

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Ross unveils Arkansas job creation plan during a stop in Fort Smith (Updated)

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story by Ryan Saylor
rsaylor@thecitywire.com

Editor's note: Story updated with response from GOP gubernatorial candidate Asa Hutchinson.

Former U.S. Rep. Mike Ross announced his five-part job creation plan Thursday (June 12) during a visit to Chaffee Crossing, which Ross touted as having brought more than 1,000 jobs to the Fort Smith area since the Fort Chaffee Redevelopment Authority was formed by the Arkansas legislature.

The 46-page plan focuses on improving education, implementing tax cuts, eliminating bureaucratic red tape, and implementing a five-part economic development plan.

“My comprehensive job creation and economic development plan is called Jobs First, because putting jobs first is exactly what I will do as governor,” said Ross. “By prioritizing education and workforce training, tax cuts, government efficiency and economic development, my job creation plan outlines my positive vision for the future of this great state and will guide my work as your next governor.  And, we will do all of this by putting an end to the partisan bickering and start working with one another to put jobs first.”

CUTTING RED TAPE
Ross's plan says the state needs to eliminate "burdensome government regulations" by focusing on the areas of accessibility, transparency and efficiency.

“While government can help, it doesn’t have all the answers, and it can’t solve all our problems.  Government should help where it can, and it should get out of the way where it can’t,” he said.  “As a former small business owner, I know that taxes are too high and that overly burdensome government regulations can stifle economic growth. That’s why my plan will cut taxes in a fiscally responsible way and will bring more efficiency, transparency and accountability to government.”

On the accessibility front, Ross proposed the creation of an online central business licensing system that would simplify the licensing process by having a one-stop shop for all businesses and entrepreneurs.

"The goal of the new central business licensing system will be to reduce the time it takes to start a small business in Arkansas, and to make the process easier, smoother and less confusing for our entrepreneurs," the plan states.

Regarding transparency, Ross is proposing the publication of all rules and regulations issued by state agencies, boards and commissions in a "centralized location and in a user-friendly format.”

To improve efficiencies in state government and small business creation, Ross proposed the creation of a task force that would examine all policies in place in the state for longer than three years and make recommendations on changes that should be made, either revising regulations or repealing regulations.

ECONOMIC DEVELOPMENT PLAN
The first of the parts to Ross's economic development plan includes the creation of the Governor's Cabinet for Economic Development, which he announced in 2013 when he endorsed Democrat John Burkhalter, a former highway commission, in his bid for lieutenant governor.

"The Cabinet will serve as an advisory group for the entire state of Arkansas - to become an engine for new, innovative ideas that help businesses of all sizes start, grow or move to Arkansas," the plan reads, adding that the work of the proposed group could be done at zero cost to the state.

The second part of Ross's economic development plan involves the full $50 million funding of the Governor's Quick Action Closing Fund, created under current Democratic Gov. Mike Beebe as a way for the state to quickly close deals with job prospects. Ross said the fund was not replenished for the 2015 budget, leaving it with a balance of only $7 million.

The third part of the economic development plan includes the creation of grants to "encourage non-profit organizations, economic development partnerships and local communities all over Arkansas to replicate some of the same components that make up the Arkansas Regional Innovation Hub. …" The ARIH is under construction in North Little Rock and will serve as a business incubator in Central Arkansas.

Ross proposed using $3 million in surplus funds to make grants available for groups and communities for up to two years that would "implement programming, resources or initiatives that encourage innovation, foster technical and skills training or provide support and resources for entrepreneurial activity. Grants may also be used to build, update or refurbish facilities or purchase high-tech equipment relevant to those communities' business and entrepreneurial needs.”

Fourth in Ross's economic development plan is creating a "crowdsourcing" campaign to encourage agencies in state government to get creative "about how to harness the ideas and entrepreneurial talents of Arkansas and give Arkansas' budding entrepreneurs opportunities to be recognized and rewarded for their skills and talents.” The plan also calls for the launch of a website entitled "Engage Arkansas to partner the private sector and state government to find solutions for state challenges.”

The final proposal as part of Ross's economic development plan includes creating the "Arkansas Work Ready Community Initiative," which the campaign said would be defined as a "community, county or regional partnership certified as having a skilled and trained workforce ready to meet the needs of job creators." The program would be based on the national ACT Work Ready Community certification program, which would incentivize participation in the program.

EDUCATION
Ross's education plan was announced earlier this year and focuses heavily on universal pre-K and technical education as an alternative to college.

The plan for universal pre-K specifically will run $37.48 million per year once full implemented, Ross's 46-page jobs plan says, though the campaign touts the reported return on investment as a positive.

"In fact, the average return on investment for pre-kindergarten programs is $10.83 for every dollar invested, according to research reported in the 2013 Policy Report by the National Institute for Early Education Research (NIEER)," the plan reads.

Ross's plan also calls for expanding programs already in place, including the Arkansas School Recognition and Rewards Program, which rewards schools based on student performance and improvement ratings.

The former 4th District Congressman is also proposing the creation of a Innovation Laboratory (InLab) Fund, using $5 million from the state's surplus funds each year to fund the program. InLab will be available for educators to implement what the campaign said were innovative, yet proven, learning strategies.

Fully funding the Governor's Distinguished Scholarship, which is designed to pay $10,000 in scholarships for 300 students who meet eligibility to stay in-state for their college education. The annual cost is $3 million, though Ross said the program always has a higher number of students apply for the grant each year, which could mean an additional $1.6 million in needed funding for the program.

According to Ross, education is key component of developing the state's workforce, which is why it is featured so prominently in his jobs plan.

“I know that education and job creation go hand in hand, which is why I want to be the education governor and why my plan is so focused on improving education and workforce training in Arkansas,” Ross said.

TAX CUTS
Ross's previously announced tax cut plan is also featured prominently, with the Democratic gubernatorial candidate again pushing for lowering the overall tax rate for most Arkansas families to a peak rate of 4.4%, though individuals earning over $75,100 would be taxed at a 6.9% rate, just under the state's current 7% max.

Overall, the plan will reduce state revenues by more than $574 million once it is fully phased in, while saving the average Arkansas family about $665 per year, he said. Simply put, Ross's plan states that Arkansas' current income tax structure is stifling job growth, which is why a change is needed.

"This tax cut plan will create more good-paying jobs and help save the ones we already have; it will help our small businesses grow; it will encourage more investments in manufacturing jobs; it will help keep the next generation right here in Arkansas working at good jobs and raising their families here; and it will put more of people's hard-earned money back into their pockets," the plan reads.

COSTS AND POLITICAL REALITIES
Standing with Ross has he announced the jobs plan, Burkhalter called Ross's proposal "visionary" and said it would move Arkansas' economy forward by helping businesses create jobs and bringing a national spotlight to the Natural State.

"This plan for job creation in Arkansas is bold, it's comprehensive, it's visionary and will move Arkansas into the national spotlight as a serious player in the economic development community."

Speaking to The City Wire about his jobs plan, Ross said he did not feel like the multi-part plan was too ambitious to be achieved and said he feels like even if the General Assembly stays under Republican control should he be elected governor in the fall, it would be approved by a majority of legislators.

"When it comes to improving education, cutting taxes, creating more and better paying jobs, those should not be partisan issues," he said. "I've made it clear that I'm proud to be the nominee for governor of the Democratic Party, but I'm running to be the governor of all the people of this state. I've spend my life working in a non-partisan manner. I've got the temperament, experience and leadership skills to work with both parties to put Arkansas first.”

He said funding for new programming such as the InLab and fully funding of scholarships would not add much cost to programs and initiatives included in the plan that he had previously announced. Ross added that costs would amount to about $3.6 million annually out of the general fund, with another $8 million in "one-time surplus funds.”

“The bottom line is this: my job creation plan will strengthen public education and workforce training, cut taxes, reduce government regulations, and position Arkansas to become a national leader in the economic development community – all of which will create more and better-paying jobs, grow the Arkansas economy for everyone and tell the nation that Arkansas is open for business.”

Link here to the PDF (large file) of the 46-page Ross plan.

HUTCHINSON STATEMENTS
• Following is the statement from the Asa Hutchinson campaign.

Longtime Democratic Congressman Mike Ross has zero credibility in terms of job creation.

He has zero credibility in job creation in the congressional district he represented for more than a decade in congress. While Arkansas’s 4th Congressional District struggled with job loss overall, Mike Ross’s own home county saw unemployment increase by nearly 50% during the time Ross was in Washington, D.C. Furthermore, when Mike Ross took office, national unemployment was 4.2%. After twelve years in Washington, D.C., Ross left office with unemployment at 7.9%.

Mike Ross has zero credibility on job creation when he helped lay the groundwork for Obamacare.

He has zero credibility in reducing the burden of government regulations when almost 40,000 new federal rules were published during Ross’s years in Washington, D.C.,  
He has zero credibility on reducing wasteful government spending when he voted for the “cash for clunkers” program and the stimulus package. All of this spending helped to add than more than $10 trillion dollars to the federal debt while Ross was in Washington D.C.

• Asa Hutchinson issued the following statement:
“When it comes to job creation, there are fundamental differences between myself and my Democratic opponent, Mike Ross. I released the The Asa Plan - Making Arkansas Competitive: A New Jobs Plan for 2015 & Beyond in April of this year.  Job creation is so vitally important that, as governor, I will lead our economic development and not delegate it to another office.  Mike Ross wants his running mate, John Burkhalter, to lead his effort.  I have said from the beginning that my top priority is job creation and economic growth.  I will be the jobs governor; Mike Ross is not sure what his priority will be.  Last month he claimed that he would be the education governor and that was his top priority. This month he says “jobs first”. What will his top priority be next month?”

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Car-Mart execs forego bonuses and raises amid softer sales

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story by Kim Souza
ksouza@thecitywire.com

The top two executives at Bentonville-based America’s Car-Mart did without bonuses and incentive performance pay in fiscal 2014 to the tune of $126,338 for CEO Hank Henderson and $76,749 for chief financial officer Jeff Williams, according to a recent proxy filing with federal regulators.

Henderson earned a total of $467,859 last year, which included car usage, country club membership, insurance premiums and matching retirement funds. The base salary of $440,000 was unchanged from fiscal 2013, and there was no performance bonus pay.

Williams’ total income in fiscal 2014 was $373,268, comprised on a base salary totaling $346,500. The base salary increased 5% from the prior year and other compensation for car usage and retirement funding decreased 14% from the prior year.

Former chief operating office Eddie Hight, who stepped back from that role in November, earned a total of $309,491 in fiscal 2014. Hight did receive a $10,000 bonus and he now serves as associate development manager and a board member.

ANNUAL MEETING
Car-Mart plans to hold its annual shareholder meeting at its corporate offices in Bentonville on July 30. The business agenda will include the election of seven directors to a one year term. Board candidates are:
• Daniel Englander, 47, managing partner with Ursula Investors;
• Kenny Gunderman, 43, executive vice president with Stephens Inc.;
• Hank Henderson, 50, CEO at Car-Mart;
• Eddie Hight, 51, associate development manager at Car-Mart;
• John David SImmons, 78, president of Simmons & Associates;
• Cameron Smith, 63, CEO of Cameron Smith & Associates; and
• Jeff Williams, 51, chief financial officer at Car-Mart.

Independent directors earn $40,000 base annual retainer for their services, stipends of $5,000 and $10,000 are paid to the lead director (Simmons) and the chairman of the audit committee (Englander), respectively. Each director also receives stock option awards which were valued at $96,435 last year.

In related party transactions last year Car-Mart states that on Dec. 12,  it repurchased 100,000 shares for one of its directors, William Sams, for $4.101 million, and 100,000 shares from the Marlin Sams Fund, in which William Sams was a general partner. That purchase was also valued at $4.101 million. The company notes the repurchased price paid was determined according to the conditions of Rule 10b-19 under the Exchange act. 

For the fiscal year ending April 30, 2014, Car-Mart says it had no other related-party transactions.

INVESTOR RIDE
Car-Mart investors have had a bumpy ride this past year with the share price losing 13.6% of its value over the past 52-week period. Shares traded down 1.5% on Thursday (June 12) at $36.28. The bulk of that decline occurred following the recent earnings miss reported May 28. That one day shares sunk 12.4%, or $5.03, to $35.50.

The buy-here, pay-here used-car company reported fiscal year net income of $21.1 million, down 34% compared to the previous fiscal year. Total revenue rose 5.3% to $489 million, despite slightly negative same-store sales for the year. The company sold and financed 42,551 cars and trucks in fiscal 2014, up 4.4% more than in the prior year. The average sales price rose less than 1% to $9,768. 

Shares rallied to $40.53 ahead of the May 27 earnings report, but retreated immediately following the disappointing financial report. Fiscal year income was $2.25 per share, which missed the consensus estimate of $2.31. The company was also estimated to earn $499.97 million, which was below the reported $489 million.

CORPORATE GAME PLAN
Henderson was upbeat in the earnings call in part because of the company’s clean balance sheet. He did say the company would slow its expansion pace this year from earlier projections as it works to improve sagging sales in many of its dealerships.

The sluggish sales growth has been attributed to an onslaught on competition in the subprime auto finance sector as more lenders are chasing the higher yields. Car-Mart charges 15% on its car loans, and says the rate is justified because of the risk involved lending to consumers with very low credit scores.

Part of the reason Car-Mart’s total results slid was because the company experienced a higher-than-normal rate of repossessions and delinquencies brought on by consumers taking their Car-Mart purchases back to the dealership and then going with another lender offering a better interest rate.

Henderson said Car-Mart has been in the business long enough to know what it takes to make a deal work and that’s the plan they are sticking with despite the competition.
Car-Mart seeks to keep the terms below 36 months (29 months on average) in order for the customer have build quicker equity in their purchase. 

The automobiles sold by Car-Mart have between 90,000 and 140,000 miles and range in age from six to 10 years old with an average wholesale price between $3,000 and $7,000. Given these metrics, Car-Mart said it believes the 36 month term is as long as it can go, and believes the business model has served the company well for the past three decades as nearly 20% of its new business comes from referrals. 

WIlliams said stretching the term longer like some competitors allows for lower monthly payments which look good on the front-end but leave the borrower with little to no equity for a long time.

Car-Mart’s core mission involves getting repeat business, which it does largely because its customers get their vehicles paid for much sooner while there is still life left in the car.

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Tyson Foods’ bid for Hillshire could be held up by Pinnacle

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story by Kim Souza
ksouza@thecitywire.com

The largest deal in meat history — Tyson Foods’s $8.55 billion offer to acquire HIllshire Brands — may soon reach the Hillshire board for approval, according to persons close to the situation. But execs with Pinnacle Foods could delay the mega deal.

Tyson Foods offered to pay $63 per share for Hillshire Brands and cover the $163 million break-up fee to Pinnacle Foods, if Hillshire walked away from its plans to buy Pinnacle Foods — a $4.3 billion deal announced May 12.

Pinnacle Foods said Thursday (June 12) that it is considering its options to hold Hillshire Brands to its agreement or secure more money in exchange for the deal termination.

Hillshire privately notified Pinnacle earlier this week that it doesn't plan to recommend the Pinnacle acquisition to its shareholders.

“Now, any arguments about its rights under its agreement with Hillshire could ultimately be pursued as leverage in a settlement,” according to a Wall Street Journal report.

Market watchers have said the Tyson bid was overvalued. Tyson execs counter by saying that acquiring Hillshire’s retail brand share was an opportunity of a lifetime. The pro forma company would take a major share in the breakfast foods market and rise to No. 2 in the frozen foods categories, behind Nestle, according to Tyson projections.

Hillshire Brands has not formally accepted Tyson’s deal, which was contingent on the break-up with Pinnacle. Analysts said the notification to Pinnacle this week sets the ball in motion for Hillshire to now fully consider Tyson’s generous offer, which represents a 70% premium price for its investors.

Pinnacle claims the merger agreement has a “force the vote” provision which requires Hillshire to hold a shareholder vote on the Pinnacle deal. Only if Hillshire shareholders reject the deal, can Hillshire terminate the agreement. 

Hillshire’s language in the June 9 release that acknowledged Tyson’s offer indicated the sausage maker understood that it had no right to entertain Tyson’s offer because of is agreement with Pinnacle Foods. Under the terms of the Pinnacle-Hillshire agreement, there is a clause that would allow both parties to work toward an amicable termination, with Pinnacle receiving the $163 million break up fee from Hillshire, who would then be able to negotiate the acceptance of the Tyson deal.

Analysts believe Hillshire shareholders would approve the Tyson deal as it represents a substantial cash premium over all other offers. Tyson extended its offer deadline to Dec. 12,  giving Hillshire time to work through its options. 

Shares of Hillshire Brands (NYSE: HSH) closed Thursday at $61.87, down 4 cents. Shares recently set a 52-week high of $62.04 on news of the Tyson offer. Tyson investors have not fared so well. Tyson shares (NYSE: TSN) closed Thursday at $35.17, down 92 cents. Tyson shares have decreased in value more than 13% in the past five trading days.

Tyson Foods CEO Donnie Smith said culturally and operationally the companies are a great fit and the deal will pay off for shareholders over the next five years. That timeline was extended from three years to five years after Tyson raised its offer for Hillshire from $50 to $63 per share.

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Medical marijuana director: ‘Uphill battle’ to get enough signatures

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Two marijuana questions are now seeking signatures to appear on the November ballot in Arkansas, but at least one of the leaders involved in the pro-medical marijuana movement thinks legalized weed is not going anywhere in November.

David Couch, co-chair of the pro-medical marijuana group Arkansans for Responsible Medicine and an attorney, said he pulled his group's ballot questions from consideration because he said 2014 was not the year grass could pass.

"I pulled it down about a month ago or two months ago because the people who want to fund it would rather fund it for 2016 because it is a presidential election year and turnout will be higher," he said. "Political science says it never passes in non-presidential (election years)."

He said even if he changes his mind and decides to pursue a ballot question this year, it was already too late since he had missed the deadline to publish the ballot questions in a local newspaper 30 days prior to tentative approval of a ballot by the attorney general's office.

One group that is pursuing medical marijuana on the ballot this year is Arkansans for Compassionate Care, which came close to getting medical marijuana legalized in 2012.


ACC Campaign Director Melissa Fults said even if though it would likely be a challenge, her group would keep working on collecting the 62,507 signatures needed to get the item back on the ballot this year. But it is going to be an uphill battle, she admitted.

"We're still gathering signatures. We still have a ways to go, but there's still a chance we'll make it (by the July 7 deadline to qualify for the November ballot)," she said. "It's still strictly volunteers after work and on weekends (collecting signatures), and the weekends have not been kind to us."

She said the weather has not been cooperative and the public, it appears, is starting to be less and less cooperative. Fults said the push back her canvassers have faced in many communities across the state has been a result of another marijuana issue looking to get on the 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, Talk Business reported June 4.

The amendment must collect more than 78,000 valid signatures to appear on the ballot because it is a constitutional amendment. And it is the group's attempt to collect signatures that is causing a problem for ACC, Fults said.

"I'll be real honest, it will hurt us. We asked him (Robert Reed of Dennard, Ark.) not to do it. People immediately think… he has a name so close to us. People are confused. They think we're going for full legalization."

She said ACC is wanting to only allow regulated medical marijuana to be sold in the state with a prescription, while she accused Reed's amendment of going all out for recreational marijuana. Another telephone number or e-mail address could not be located for Reed to comment in this story.

"I don't think Arkansas is ready for full legalization," Fults said. "Number two, Robert has nothing in there at all to protect the patient. If full legalization comes in, patients will have to pay sales tax on it just like everybody else. In Colorado, they put a clause in full legalization to still keep protections for patients."

She said patient protections include various prescription strengths of marijuana, along with pesticide-free weed and no sales tax on weed purchases. Fults said of her and Reed, "We both want the same thing, for people to be allowed to use the product, but mine is strictly to help patients. His if for everybody to get it. Personally, I don't care if somebody does it recreationally, but not at the expense of the patient."

With the medical marijuana proposals, Couch said voters should not expect to see either on this year's ballot.

"No, I don't believe you will. They're doing good with 30,000 or 35,000 (signatures) if you give them a liberal number, but they've got 30 days (to collect the remaining signatures)."

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Smith Auto Group to move 20 jobs to Town Club in downtown Fort Smith

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story by Michael Tilley
mtilley@thecitywire.com

The former Town Club building in downtown Fort Smith has been acquired by Smith Auto Group for the purposes of locating corporate operations with up to 20 employees in the building that has been without a permanent occupant since the club folded in January 2010.

John Smith Jr., grandson of the automotive group founder and now the head of Smith Auto Group, said in a Thursday (June 12) interview with The City Wire that the about 13,000-square-foot, two-story building will undergo minor renovations before housing “centralized” accounting staff and other corporate functions.

Smith Auto Group is a third generation, family-owned dealership that has been based in Fort Smith since 1938. The first location was in downtown Fort Smith. In 1963, the facility was moved to 1215 U.S. 71 South, “on the curve” at Towson and Zero. The group has a Chevrolet-Cadillac dealership and a Nissan brand. The group has five dealerships, eight brands and around 160 employees.

“We are so happy to go downtown. … I am hoping we are the first of many more to move downtown,” Smith said, adding that the Town Club is near the car lot the Smith company first opened in 1938. “We are moving about a block away from where we started.”

First National Bank of Fort Smith has held the note on the Town Club for the past several years. Sam Sicard, president and CEO of the bank, said it was an added bonus to sell the building to a company that will put it to immediate use.

“We are extremely pleased to sell the Town Club to a buyer who will bring jobs to our downtown. Smith Auto Group has been a great community partner in so many ways and they will be a great addition to the downtown community,” Sicard said.

SMITH EXPANSION
The auto dealer has made several moves since 1938, and in the past few years the company has invested around $15 million in the construction and ongoing construction of new dealership facilities in Fort Smith. A building for the company's Nissan dealership valued at $4 million was completed at 6520 Autopark Drive (near the Fort Smith Harley Davidson) in early 2012. A relocated Chevy-Cadillac facility, valued at around $11 million, is under construction adjacent to the new Nissan dealership.

In May 2012, Smith Auto Group acquired Jane, Mo.-based Hendren Auto Group, a move that more than doubled the number of dealerships owned by and brands sold by the auto dealer. Terms of the deal were not disclosed.

“Nothing’s been easy,” Smith joked Thursday when asked about the easy and hard parts of absorbing a new dealership while at the same time building new facilities.

He said the Northwest Arkansas dealership puts Smith Auto Group “in very good market. We feel very bullish about where we are, and there is a lot of growth heading north to Bentonville and Bella Vista.” He said one of the toughest parts of being in Northwest Arkansas is “trying to build our brand” in a region with many large auto dealerships.

“But it’s been a good move for us, it really has,” he said.

Smith admits that the Fort Smith market has been tougher in terms of auto sales, “but we’ve been able to grow, and it was through a lot of sweat and determination of the people who work here (Smith Auto Group).”

OTHER RECENT DOWNTOWN MOVES
Smith Auto Group is not alone in moving downtown. Steve Clark, founder and president of Propak, purchased the historic and white-tiled Friedman-Mincer building in May 2013 – also known as the OTASCO building – in downtown Fort Smith. With an acquisition and renovation estimate of about $2 million, Clark is in the process of converting the three-story, 24,000-square-foot building into offices for the about 40 employees of Propak. The company provides logistics, transportation and supply-chain management services.

On June 10, Fiery Moon Global announced plans to acquire the Masonic Temple in downtown Fort Smith from the Western Arkansas Scottish Rite Bodies. The facility, a three story concrete structure located at 200 N. 11th St. that includes an auditorium capable of seating 900, was initially listed for $750,000.

Fiery Moon, a media and event company, said the Temple Theatre, offices and dining area should be fully restored to their original grandeur and condition within 36 months.

“We are ecstatic to have found an existing site which will support our vertically integrated media and live event organization with all departments being housed in one location,” Fiery Moon Co-owner Dan Robinson said in a statement. “Not only have we found a building which meets our corporate needs, but to be part of restoring and maintaining a historic site is truly priceless.”

Officials with Fiery Moon did not disclose terms of the deal or costs of renovation.

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