by Arkansas Business Staff on Monday, Dec. 22, 2008 12:00 am
John Glasgow, CFO of CDI Contractors, disappeared on Jan. 28. Dillard's owned a half-interest in CDI and was embroiled in a bookkeeping dispute with CDI management when Glasgow, of Little Rock, vanished.
A Gallup poll in mid-December showed that the economy is the No. 1 issue, with 55 percent of Americans believing it is the top problem facing the United States.
The country has been in a recession since December 2007, but the economy, which had been sputtering along most of the year, almost ground to a complete halt in the last quarter as job losses mounted and Americans cut back on nonessential spending.
The economic woes mushroomed as hundreds of billions of dollars in home loans – and the investments they secured – soured. The resulting credit crisis caused the collapse of several large financial institutions, affecting all sectors of the economy. The federal government jumped in to bail out some. Despite the action, the latest government data forecast a serious recession.
Indebted America's wakeup call has had less of an impact on Arkansas, which rarely feels the full brunt of any downturn, just as it rarely feels the euphoria of a boom. The state government is now a rarity in the U.S.: It has a budget surplus while most states are in debt and some are asking Congress for help.
Through November, five months into the state's fiscal year, the Arkansas Department of Finance & Administration said net available general revenue was 5.1 percent above last year and 0.6 percent above its revised general revenue forecast.
The only potential problem with the latest report was the decline in gross receipts, which include the sales and use tax. That indicates that Arkansans, as are other Americans, are spending less, a development that the General Assembly will need to consider as it begins to make spending plans.
That's not to suggest that all the state's economic news was good. Layoffs erased many of the jobs created in 2008. The Arkansas Economic Development Commission, which doesn't track all job creation, says at least 9,588 jobs will be created by new projects or expansions announced since Jan. 1. The Governor's Dislocated Worker Task Force, which tracks only those companies that seek its help, recorded layoffs of 8,950 workers at 114 companies since the first of the year. Both figures are through the middle of December.
The Arkansas Department of Work-force Services says the civilian labor force in October was 1,385,700 – an increase of 15,900 people over the labor force of 1,369,800 in October 2007.
Although the unemployment rate of 5.4 percent in the state has remained well below the national jobless rate of 6.7 percent, significant layoffs took place in every sector – telecommunications, manufacturing, forest products, agribusiness, retail, financial, health care and transportation.
The troubles for Pilgrim's Pride, the nation's biggest chicken producer, now in bankruptcy, led to the layoffs of more than 1,000 in the state in 2008. Baldor Electric Co. of Fort Smith plans to cut 900 jobs by June 2009, but didn't say how many would be in Arkansas.
Whirlpool has laid off 700 workers, and Riverside Furniture let 250 workers go at Fort Smith. Franklin Electric Co. at Siloam Springs shed 200 jobs. American Railcar Industries at Paragould could lay off some 600 workers. Looming on the horizon is the loss of 1,000 jobs or more at Alltel Corp. of Little Rock when the deal with Verizon Wireless is completed. AT&T and Bank of America have also announced huge layoffs, but there's been no word on how many Arkansans will be affected.
However, the state also made numerous big-time job announcements.
Among the larger ones:
• Hewlett-Packard, Conway, customer service and technical support center, 1,200 workers.
• Nordex USA Inc., Jonesboro, a wind turbine manufacturer, 700.
• Nice-Pak Products Inc., Jonesboro, pre-moistened wipes, 300.
• Polymarin Composites, Little Rock, a wind blade manufacturer, 630; and Wind Water Technology, Little Rock, a supplier to Emergya Wind Technologies, parent of Polymarin, 200.
• Man Industries, Little Rock, a pipe manufacturer based in India, 250.
• N.E.W. Customer Service Cos., Russellville, customer care center, 250.
• Aviation Repair Technologies, Blytheville, airframe and engine repair facility, 310.
2.) Alltel Resold
When news broke in June that Alltel Corp. planned to sell to Verizon Wireless for $28.1 billion, topping its own recent record as the biggest deal in Arkansas history, few saw it coming.
It wasn't the sale that caught everyone off guard. That was inevitable because its owners, TPG Capital and Goldman Sachs Capital Partners, are private equity firms, and buying and selling companies is what private equity firms do.
It was the quickness of the deal that left Arkansas breathless. The investors had paid $27.5 billion for Alltel in November 2007 and barely six months later seemed anxious to unload their investment for only $28.1 billion.
The firms actually cleared a larger profit than meets the eye. TPG and Goldman Sachs paid $4.6 billion for Alltel's equity in November 2007 and are now clearing about 30 percent profit from selling the equity to Verizon for $5.9 billion.
A letter to the Federal Communications Commission in October, however, unveiled the motive behind the swift resale.
Atlantis Holdings LLC, Alltel's parent company, which is controlled by TPG and Goldman Sachs, revealed uncertainty about its ability to properly grow the company.
"However, due to the financial pressures from the ongoing credit crunch that has plagued the U.S. economy since the fall of 2007, Atlantis Holdings now believes that it will be difficult to raise the capital to make the necessary future investments in the company," Atlantis' legal counsel, Wilkinson Barker Knauer LLP, wrote.
So when Verizon approached Alltel in April, the firms decided to take the gain and deleverage rather than hang onto the exorbitant amount of debt and run the risk of a Lehman-like demise.
Verizon agreed to assume Alltel's $22.2 billion of debt and to pay cash for the $5.9 billion of equity.
The agreement kicked off a race against the time left in a business-friendly presidential administration to obtain regulatory approval of an acquisition that would create the largest wireless company in America, eclipsing AT&T by more than 7 million subscribers.
The U.S. Department of Justice all but signed off on the deal when it issued a statement on Oct. 30 that Verizon must divest assets in 100 cellular market areas, five fewer than Verizon had anticipated having to sell.
The five-member FCC, dominated by a scant Republican majority, finally arrived nearly five hours late to the Nov. 4 meeting because of last-minute deliberations on the merger conditions.
The commission's consensus? Verizon must divest 105 markets and offer four-year roaming agreements or fulfill the life of the existing roaming contract, whichever comes latest.
On Dec. 9, Verizon cleared its last regulatory hurdle with a nod from the Federal Trade Commission, which granted "early termination" to an antitrust review of the merger.
One day later, Verizon revealed in a filing with the Securities & Exchange Commission that it had "received commitments from eight financial institutions to provide $17 billion in financing," which Verizon said would provide sufficient capital to complete the deal by "early to mid-January."
3.) Dillard's Horrible Year
Bad news poured on Dillard's Inc. in 2008. The Little Rock retailer's stock price dwindled, its sales continued to fall and its management was hounded by an activist shareholder group with the intensity of a bill collector.
The company was also caught up in the middle of a persistent mystery: the disappearance of John Glasgow, chief financial officer of CDI Contractors LLC of Little Rock.
Dillard's owned a half-interest in CDI and was embroiled in a bookkeeping dispute with the CDI management when Glasgow vanished on Jan. 28. A few weeks later, Dillard's made a modest restatement of earnings – $7.1 million over the course of several years – and cited an "error" in accounting by CDI.
On Aug. 28, Dillard's bought the remaining half of CDI from the family of the late Bill Clark for $9.8 million. Glasgow is still missing.
Throughout the year, Dillard's was dogged by James Mitarotonda, chairman and CEO of Barington Capital Group LP, and George Hall, chairman and CEO of the Clinton Group Inc. of New York – activist shareholders who had begun their assault in the summer of 2007.
In January, Mitarotonda sent Dillard's directors a letter blasting the management and said he was "committed to taking all actions necessary to enhance shareholder value," which was taken as a sign that a proxy fight was looming.
To avoid a proxy fight, Dillard's in April agreed to allow the hedge fund to pick the four directors who would represent the Class A shareholders. The Dillard family, though, still controls the company through the dual-stock arrangement that allows their Class B shares to elect eight of the 12 directors.
As the country sank deeper into recession, Dillard's sales slid further. Same-store sales, a key indicator of a retailer's health, were down in 10 of the first 11 months of the year. For the second quarter that ended Aug. 2, Dillard's reported a loss of $38.3 million on sales of $1.6 billion. In the third quarter, Dillard's reported a loss of $56 million on sales of $1.63 billion.
Sales weren't the only numbers going south. Dillard's stock price, which had topped $40 in May 2007, started the year above $18. By Oct. 21, when it was dropped from the Standard & Poor's 500 Index, Dillard's stock was barely above $6, and it continued to slide until hitting a low of $2.50 on Nov. 21.
On Oct. 27, Mitarotonda and Hall lobbied the three independent Class B directors to remove Dillard family members from management positions. The letter included a veiled threat to sue the directors for breach of fiduciary duty if the management was allowed to remain in place.
If Mitarotonda and Hall could combine the three independent directors with the four votes that they already had, William Dillard II could be removed as CEO. But the three Class B directors announced their loyalty to the Dillard family.
Dillard's has tried to satisfy critics by closing 21 underperforming stores in 2008. It also slashed 500 of its approximately 60,000 jobs in November.
The company also issued a statement that said, "We believe the best way to serve the long-term interest of all shareholders is to concentrate our efforts on running our business conservatively and on navigating the near-term economic uncertainty while focusing on the important upcoming holiday selling season."
4.) ANB Financial Fails
In the second half of 2008, the arrival of Friday meant there was a better than even chance of a bank failure somewhere in the United States – sometimes two or three on the same Friday. Twenty-five banks had failed by mid-December, 21 since mid-year.
But when the Office of the Comptroller of the Currency shut down ANB Financial of Bentonville on May 9, bank failures had not yet become a staple of the weekend business section. ANB was only the third bank failure of 2008 and the first in Arkansas since regulators shut down Sinclair National Bank of Gravette on Friday, Sept. 7, 2001 (news that was dwarfed by the 9/11 terrorist attacks the following Tuesday).
Larger and much higher profile failures would follow – including IndyMac Bank of Pasadena, Calif., and the bank and thrift charters of Washington Mutual Inc. of Seattle.
While IndyMac and WaMu symbolized the subprime mortgage lending crisis that paralyzed the U.S. economy in 2008, ANB would become the poster child for regulatory failure.
Its woes were not associated with the exotic mortgages that characterized the housing bubble; instead, ANB had used high-cost brokered deposits to fund breathtaking asset growth: 27 percent in 2004, 53 percent in 2005, 70 percent in 2006 and 18 percent in 2007. And its $1.95 billion in assets were, in a pattern familiar to students of the S&L crisis two decades earlier, mostly commercial real estate loans on properties far from home.
ANB Financial, founded in 1994 as Arkansas National Bank, originally told the Federal Deposit Insurance Corp. that it lost $59 million in 2007, a figure that was revised to $81 million and ultimately to $120.4 million just days before the FDIC swooped in as receiver. It had $589.3 million in non-accruing loans as of March 31.
Pulaski Bank & Trust of Little Rock, a thrift owned by IberiaBank Corp. of Lafayette, La., paid a little over $2 million to purchase $212.9 million of ANB's insured, non-brokered deposits and also bought eight of ANB's nine branches, quickly establishing a presence in northwest Arkansas. But ANB's failure was still expected to cost the FDIC's bank insurance fund $214 million. The owners of nearly $40 million in uninsured deposits were expected to receive only about 60 cents on the dollar.
In November, the U.S. Treasury Department's Inspector General issued a 60-page postmortem of the ANB debacle. The report concluded that the Office of the Comptroller of the Currency, the primary regulator of national bank charters, waited years to intervene even though ANB was a textbook example of risky growth. (According to the Inspector General, four of eight red flags in the standard OCC Examiner's Guide "clearly existed when OCC conducted the 2006 examination." And "OCC identified most of ANB's problems in 2005; however, it took no forceful action until 2007.")
In a conference call in October, according to the Inspector General's report, the OCC instructed its 1,500 examiners to take enforcement actions earlier, "while problems are still manageable." However, examiners working in Arkansas seemed to get that message months sooner. Formal agreements between the OCC and Legacy National Bank of Springdale and Metropolitan National Bank of Little Rock were revealed in June, and the FDIC cracked down on Parkway Bank of Rogers in August.
5.) UCA's Horrible Year
One man's effort to raise his pay now appears likely to affect every public institution of higher learning in Arkansas.
The year 2008 started out well for the University of Central Arkansas in Conway. Bequests were announced, events were hosted and ground was broken for an $18 million business college building.
But the second half of the year began with controversy that evolved into scandal that evolved into revelations of serious financial problems that evolved into serious belt-tightening. That string of woes was compounded by the totally unrelated murder of two students on campus in October.
Next year has to be better, right? Not necessarily. At the rate the revelations have been coming, we can't promise that this little article isn't already obsolete as you read it.
Press reports in July concerning a secret $300,000 bonus for then-UCA President Lu Hardin started the avalanche of bad publicity, which led to revelations about operating deficits. Although Hardin returned the bonus, his attempt to boost his compensation led to his downfall and resignation (with a severance package worth nearly $1 million). The scandal's snowball effect resulted in the departures of several other high-ranking administrators.
It was a sad end to what appeared to have been Hardin's brilliant six-year career at UCA, during which enrollment grew by about 4,000 to 12,500, the quality of the school's entering freshmen (as measured by their ACT scores) improved and the university's profile soared.
The Board of Trustees promoted Tom Courtway from general counsel to interim president. He disclosed earlier this month that UCA faced a cash-flow deficit of $5.5 million.
The money troubles stemmed from a combination of factors, among them:
• About $5.5 million in debt owed by students and former students;
• A $4.5 million cut in state funding;
• Overspending on scholarships, including almost $1.6 million in taxpayer-funded scholarships awarded by Hardin with little oversight and no apparent relationship to the student's academic merit or financial need;
• A $1.5 million judgment against the school after a fatal accident involving a professor driving a UCA-owned vehicle; and
• The freezing in late September of millions of dollars of the school's money in the Common Fund, administered by Wachovia Corp., because of turmoil in the credit markets.
Adding insult to injury, Moody's Investors Service in November downgraded $83.9 million of UCA's debt to A3 from A2 – though that remains an investment-grade rating – citing the school's cash problems.
Mixed in were complaints that Hardin provided UCA-owned housing to students on a preferential basis – for example, to the son and daughter-in-law of state Sen. Gilbert Baker, R-Conway.
Courtway has announced a number of budget-trimming measures, including salary and hiring freezes and pay cuts for some administrators.
The Arkansas Democrat-Gazette quoted Baker, chairman of the Legislative Council's Subcommittee on Higher Education, as saying he expected the General Assembly, which convenes Jan. 12, to address some of the university's problems, including compensation packages for high-level administrators and discretionary scholarships. Any such action likely would apply to all public colleges and universities in Arkansas.
6.) Energy Roller Coaster
The natural gas formation known as the Fayetteville Shale Play remained one of Arkansas' major energy stories in 2008, but it certainly wasn't the only one.
Windmill-turbine makers breezed into the state in a big way; gasoline prices roller-coastered from record highs to inflation-adjusted lows; a $1.5 billion coal-fired power plant remained tied up in legal wrangling with environmentalists; and the state's largest publicly owned energy company is getting a new boss.
The state moved toward becoming the wind energy capital of the United States. After the arrival of Danish-based LM Glasfiber in Little Rock last year, two more wind energy-related firms announced plans to locate here. In mid-December, Gov. Mike Beebe hinted at the possibility of a fourth windmill operation headed for Arkansas.
In October, Polymarin Composites, a Dutch company that makes rotor blades for the wind industry and is a wholly owned subsidiary of Emergya Wind Technologies, announced it would put a manufacturing facility in Little Rock. The plant initially would employ 630. Also, Wind Water Technology, a supplier to Emergya, said it would put an operation in the same facility and employ 200. The companies expect to begin operation in early 2009.
Rep. Vic Snyder, D-Ark., said lawmakers have identified energy as a top priority. "The No. 1 national security issue facing this country is energy," Snyder said. And Congress has approved tax credits for renewable energy companies.
Also in October, Nordex USA Inc., another manufacturer of wind turbines, said it would locate its U.S. manufacturing facility at Jonesboro. The German company said it would invest about $100 million in the new facility, which will employ 700. Production is expected to begin by January 2010.
LM Glasfiber Inc. officially opened its new North American headquarters in Little Rock. The company said it would invest about $150 million in the plant. Randy Fox, Glasfiber's North American general manager, said the wind power industry is expected to double in the next eight years and that energy demands will double by 2030.
In another energy development, an updated study by the Center for Business & Economic Research at the University of Arkansas at Fayetteville predicted that the production of natural gas in the Fayetteville Shale Play could result in an economic impact of $17.9 billion in Arkansas and 11,000 jobs during the next five years. The study also projected investment in the shale play could contribute about $1.8 billion in taxes through direct investment and indirect impact during the five-year period.
In a special session of the state Legislature, a compromise measure increased the severance tax on oil and gas from three-tenths of 1 cent per 1,000 cubic feet of gas to a base rate of 5 percent on proceeds, with lower rates for new and low-producing wells. Beebe estimated the measure would increase severance tax collections from about $600,000 a year to $57 million in 2009 and $101 million by 2014. Topping it off, a 187-mile natural gas pipeline is in the works for the Fayetteville Shale Play. Kinder Morgan Energy Partners LP of Houston and Energy Transfer Partners LP of Dallas are building the pipeline at an estimated cost of $1.3 billion.
Southwestern Electric Power Co.'s $1.5 billion, 600-megawatt power plant in Hempstead County has received approval at each step in a process that has taken more than two years, but environmental groups have slowed progress. They claim that the Arkansas Department of Environmental Quality failed to do an adequate analysis of the possible air pollution from the plant. Public service commissions in Arkansas, Texas and Louisiana have approved the proposed power plant, and a federal judge gave the go-ahead to continue work on the plant while the project moves through the appeals process. An administrative judge plans to hold a trial beginning March 9 on the latest appeal
Claiborne Deming, president and CEO of Murphy Oil Corp. of El Dorado, announced in August that he would retire on Dec. 31. David Wood, currently EVP of worldwide exploration and production operations, was chosen as his successor. Deming will remain on Murphy's board and will succeed William Nolan as chairman of the board's executive committee while Nolan will remain chairman of the board.
Gasoline and diesel prices ballooned in the spring and summer, causing ripple effects throughout the economy. By year's end however, prices had fallen to lows unseen in more than five years.
As hard as high fuel prices were on consumers, they were harder on the state's trucking companies, forcing several to shut down and leading the Arkansas Trucking Association to seek congressional hearings on the high diesel prices.
7.) Voters Approve Lottery
Although Arkansas voters were not in a generous about Barack Obama during November's General Election, the electorate was more forgiving with two ballot amendments that could have broad implications.
Measures in favor of a state lottery and annual sessions of the legislature passed Nov. 4 – with the voters supporting each by more than 60 percent.
Now, Arkansas' legislators are charged with writing legislation to establish a lottery. In addition, legislation could quickly change Arkansas' amendment implementing annual sessions. One bill would allow voters to overturn the annual-sessions amendment, and another hopes to swap the years in which the legislature meets. All must be done during the 87th General Assembly, which begins Jan. 12.
Several lottery proposals have failed in the past, but thanks to a cleaner proposal and relentless lobbying by Lt. Gov. Bill Halter, Arkansans passed a lottery amendment with about 64 percent of the vote.
Arkansans rejected amendments in 1996 and 2000 that would have created a lottery and permitted casinos in specific circumstances. More than 60 percent of Arkansans voted against each measure.
Halter modeled his proposal after a similar measure that Georgia voters approved in 1993. Omitting casinos and devoting all lottery proceeds to scholarships seemed to be the winning elements.
The lottery will also benefit many others, however. A study released by incoming Speaker of the House Robbie Wills, D-Conway, estimated that the 10 highest-grossing lotteries paid about 7 percent in commission to retailers selling lottery tickets, 4 percent for administration, 69 percent to prize-winners and 30 percent to the assigned government use. Wills will head the House's efforts to write legislation to establish a lottery.
If the lottery nets $400 million in gross revenue annually, as Halter has estimated, as much as $120 million could go to scholarships.
While the lottery amendment had Halter and many other supporters, the amendment proposing annual legislative sessions had few public backers. The amendment called for the General Assembly to continue meeting in odd-numbered years to conduct all business, but add a session in even-numbered years for budgeting only.
The amendment's passage surprised even veteran politicians, including Gov. Mike Beebe.
"Arkansas is one of the most restrictive states in the Union on legislative term limits, and yet we voted for the annual session. That was the most shocking thing to me," Beebe said, according to a Stephens Media report.
The amendment faces two possible changes during the coming session.
So far, one legislator has filed a new bill in the House that, if passed, would allow Arkansans to vote to repeal the annual-sessions amendment. Another legislator has filed a bill altering the order in which the new sessions take place.
The bill would move budget-only sessions to odd-numbered years. By swapping the order, freshmen legislators would first experience the budgeting session, then take part in the broader general session during the second year of their terms.
Only 20 states now budget biennially, and Arkansas is the first state to switch from biennial to annual budgeting in the last two decades, according to the National Conference of State Legislatures.
8.) Gwatney Murdered
While 2008 has been a difficult year on many fronts, one of the most tragic and stunning business news stories was the slaying of Arkansas Democratic Party Chairman Bill Gwatney.
When news broke on Aug. 13 of the shooting of the 48-year-old party chairman, shock reverberated throughout the state's business and political communities.
"There is deep pain in Arkansas tonight because of the sheer number of people who knew, respected and loved Bill Gwatney. Along with thousands of other Arkansans, Ginger and I are trying to come to terms with such a shocking and senseless attack," Gov. Mike Beebe said in a statement.
Timothy Dale Johnson, 50, of Searcy entered the party headquarters near the state Capitol just before noon on that Wednesday, asked to see Gwatney and, after introducing himself, fatally shot the former state senator.
Gwatney, CEO of Gwatney's Little Rock Auto Group and owner of three dealerships, died at the University of Arkansas for Medical Sciences at 3:59 p.m.
Johnson fled the scene, leading law enforcement officials on a 30-mile chase that ended in Grant County. Officers shot the armed Johnson to death after he emerged from his vehicle.
The Little Rock Police Department later reported that Johnson had quit his job at Target in Conway on the morning of the attack after being confronted about writing profanity on a storeroom wall. Johnson took antidepressants, according to his autopsy.
LRPD closed the case in October with no idea of Johnson's motive. What was at first a tantalizing clue – the Gwatney name and a phone number written on a slip of paper at Johnson's home – turned out to be a dead end. The number was for a Gwatney towing service that had long been closed.
Just over two months after Gwatney's murder, another high-profile slaying shook Little Rock.
Patricia Cannady found her daughter Anne Pressly, news anchor for KATV, Channel 7, and a bit player in the recent theatrical release "W.," beaten and unconscious at Pressly's Heights home on the morning of Oct. 20. Pressly, 26, never regained consciousness and died five days later, but the case remained in the national news until Curtis Lavelle Vance, 28, of Marianna was charged with capital murder five weeks later.
Only then did Pressly's parents confirm that their daughter had also been sexually assaulted.
9.) Housing Dominoes
The domino effect of a national housing slump produced unwelcome news for hundreds of Arkansas workers during 2008. Cuts and plant closings dotted the state as companies tried to bring financial order to their operations.
Potlatch Corp. of Spokane, Wash., closed its Prescott sawmill and put 182 employees out of work. Rheem Air Conditioning Products laid off 185 workers at its Fort Smith plant, nearly 15 percent of its work force there.
Nuvell Financial Services slated about 165 jobs for cutting at its west Little Rock office, according to its parent company, GMAC Financial Services.
Black & Decker Corp., of Towson, Md., is closing its Decatur plant and laying off all 82 employees as part of a companywide cutback that will eliminate 3 percent of its work force.
Whirlpool Corp. announced the layoffs of 700 workers at its Fort Smith refrigeration plant. Riverside Furniture Corp. announced a layoff of 250 workers at its plants in Fort Smith and Russellville.
North American Pipe Corp. announced the closing of its Van Buren PVC pipe plant, a move destined to lay off 62. Trane Inc. announced the layoffs of 101 workers at its heating and cooling equipment plant in Fort Smith.
Despite the growing number of layoffs, the state held its own with job gains more or less offsetting losses among manufacturers – manufacturers that aren't directly dependent on the housing industry, that is.
Northwest Arkansas remained the poster child for residential overbuilding in the state. However, the market in Benton and Washington counties was a far, far cry from the war zones of overbuilt and overvalued markets around the nation.
The northwest Arkansas market continued to absorb new homes amid low unemployment (3.5 percent in October) and favorable interest rates.
The tally of unoccupied homes in the Benton and Washington County markets continued to decline, with 1,343 units on the market on Sept. 30, 2008, compared with 1,594 in the second quarter.
Mixed in with the sunshine were clouds in the form of increasing foreclosure rates, according to RealtyTrac of Irvine, Calif.
In Benton County, there were 491 foreclosure filings in October (one in every 165 houses), 20 percent higher than in September and 72 percent higher than in October 2007.
In Washington County, there were 278 foreclosure filings in October (one in every 287 houses), 34 percent higher than September and 126 percent higher than in October 2007.
Combined new and existing home sales in Arkansas remained on a three-year slide, according to the Arkansas Realtors Association.
In a year-to-year October comparison, home sales in a 42-county area of the state fell by 18 percent, 4,805 fewer than 2007.
Accompanying declining sales, the number of real estate agents in Arkansas dropped about 7 percent in November compared with a year earlier. That attrition is expected to continue into 2009.
While some observers hope that the residential markets will stabilize in 2009, others believe it may be 2010 before upward trends return to the scene.
10.) Wal-Mart's New CEO
The news on Nov. 21 that H. Lee Scott Jr. was stepping down as CEO and president of Wal-Mart Stores Inc. took retail analysts by surprise.
The 59-year-old, who has led the world's largest company for nearly nine years, said he would retire at the end of January. Scott said, however, that he would remain as chairman of the executive committee of the board of directors.
Wal-Mart's board of directors said its international division president, Mike Duke, 58, would replace Scott on Feb. 1. Duke has been with Wal-Mart since 1995 and also has spent time in logistics and as CEO of Wal-Mart U.S.
Naming Duke fit into Wal-Mart's plans to expand its international presence, which is the company's fastest-growing sector.
Wal-Mart's international division now accounts for about 25 percent of the company's total sales, up from 16.8 percent of sales in 2000.
Under Duke's leadership, Wal-Mart's international sales have jumped from $59.2 billion in 2005 to an estimated $103 billion for the company's fiscal year that ends Jan. 31, according to an Oct. 30 research report by Morgan Stanley.
The research report also shows Wal-Mart is projected to shatter another revenue record with $404.6 billion in revenue and $13.6 billion in net income when its fiscal year ends on Jan. 31, 2009. For the year ending Jan. 31, 2008, Wal-Mart reported $378.8 billion in revenue and net income of $12.7 billion.
But the Bentonville retailer is outgrowing the U.S. market. Wal-Mart operates more than 4,000 stores and Sam's Clubs in the United States and has a presence in almost every market. By the end of 2005, nearly half of all Americans lived within five miles of the nearest Wal-Mart or Sam's Club and 88 percent lived within 15 miles.
Each time Wal-Mart opened a new store, it risked cannibalizing its own sales. During the fiscal year that ends on Jan. 31, Wal-Mart will have added 23 million SF to its U.S. market. However, for the following fiscal year, Wal-Mart plans to add only 14 million SF.
Wal-Mart isn't trimming its overseas markets. In the upcoming fiscal year, Wal-Mart will be adding between 19 million and 20 million SF in overseas markets.
Scott said during the company's annual shareholders meeting in June that the international market was going to be an even bigger part of the company and that he sees a "tremendous opportunity" for the company and that division.
On Jan. 31, Scott will leave Wal-Mart on a high note. While other retailers' stock prices tanked in 2008, Wal-Mart's stock was still up more than 15 percent for the year – and had been up almost 35 percent before the big Wall Street selloff started in October.
Also during his tenure as CEO, Scott introduced several initiatives that quieted the company's critics. Wal-Mart's $4 prescription drug plan, introduced in 2006, was followed in 2007 by Scott's announcement that Wal-Mart would open 400 in-store health clinics by 2010. Scott also pushed environmentally friendly products while building more "green" stores.
In addition, between 2002 and 2008, Wal-Mart has been No. 1 in Fortune magazine's list of the largest companies ranked by revenue except in 2006, when it finished No. 2.
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