Archive: January, 2012
Joseph N. DiStefano
The Pennsylvania State Employees' Retirement System, close to "fully funded" in the early 2000s, is falling farther behind balancing its current assets with its expected future liabilities as it pays pensions to lawmakers, judges, state troopers, social workers and other public employees faster than payroll deductions, investment profits and tax revenues can fill the gap. SERS assets totalled $24.9 billion in market value at Dec. 31, down $1 billion during the year despite what SERS managers say was above-average performance by the highly-compensated buyout fund managers (Mitt Romney's rivals) who manage a large chunk of its total investments. That total is just 61% of the $40.6 billion in actuarial accrued liability SERS faced at Dec. 31. The ratio is down from 66% a year earlier. Taxpayers will make up the difference through bigger payments into the public pension system, unless investment values turn around fast.
Joseph N. DiStefano
Saladworks, the 100-store, Conshohocken-based company that calls itself the nation's "largest fresh-tossed salad" chain, says it plans to open 25 new stores this year, and that it has signed deals to expand beyond the Northeast and open 73 new stores in California, Washington State, Texas, Arizona, Florida, Louisiana, South Carolina, and Washington, DC. Last month founder and chairman John Scardapane said company franchisee plans to open 3 stores in Singapore in the next two years, and eventually a dozen more. "We've got the tools and the drive to grow in other countries," he added.
Saladworks investors include former Commerce Bank boss and longtime Burger King franchisee Vernon Hill of Moorestown.
Joseph N. DiStefano
from Penn Engineering School's Mechatronic Systems class:
Joseph N. DiStefano
Philadelphia City Councilman Bill Green, D-at large, wants to certify Philadelphia-based businesses and give them preference in bidding city-funded jobs. Three bills introduced by Green today would:
- Require Philadelphia residents "perform 100% of the work hours" on all city competitively-bid contracts over $150,000 - "Private-party beneficiaries of public subsidies" must "interview Philadelphia residents first for all new, entry-level jobs"
Joseph N. DiStefano
VIST Financial, based in Wyomissing, says it's agreed to be bought by Tompkins Financial Corp., Ithaca, N.Y., for $86 million, or $12.50 per share. That's almost double the stock's recent trading price, but only about half what it was worth before the banking crisis of the late 2000s.
VIST is at least the third Philadelphia-area bank to be swallowed by an upstate New York bank recently. Other deals include Harleysville National's 2010 acquisition by First Niagara and Wilmington Trust's takeover by M&T Bank last year. Both were been followed by staff cuts. But Tompkins says it will continue to operate VIST as a local bank under president and chief executive Robert D. Davis (name corrected)
What's with all the New York-to-Pa. mergers? There's "geographic arbitrage" between banks in the Philadelphia area and other East Coast centers, where fallen real estate prices and borrower losses continue to drain bank capital, and upstate New York, where prices didn't inflate so much and banks are stronger, Joseph Harenza, boss at Griffin Financial Group, King of Prussia, told bank investors in a report last week. "We introduced (VIST) to Tompkins," he said..
VIST's 21 branches include 10 in Philadelphia and its suburbs, most with less than $50 million in deposits, according to Federal Deposit Insurance Corp. data. List here. VIST, which combined the former Leesport Bank, Madison Bank, Allegiance Bank, Philadelphia Financial Mortgage and other firms, has $1.2 billion in deposits and $960 million in loans; it holds well under 1% of the Philadelphia-area banking market, according to the FDIC.
Joseph N. DiStefano
Shares of J&J Snack Foods slipped again today, a day after the shares fell more than $2, to $50.06, after a quarterly earnings report fell short of investor targets. Boss Gerald B. Shreiber, in a confernece call with investors, blamed "higher ingredient and packaging cost" including "significantly higher gasoline costs" and resistance to raising retail prices. Shreiber also said J&J "hope(s) to be part" of Wawa's Florida expansion. The Delaware County-based chain plans its first Tampa- and Orlando-area stores this summer.
Shreiber "is the Steve Jobs of the food business," in that he demands a lot from his people, Huntingdon Valley asset manager Robert Costello told me later. But there's only so much he can do about the weather: "The last two years there's been bad wheat harvests all over the world," which has driven up food costs; consumer resistance to higher prices has squeezed food processors, he noted.
Joseph N. DiStefano
Apple's profits ($13 billion, after taxes) were greater than Google's sales ($11 billion) last quarter. Verizon, the fastest-growing retailer of Apple phones, actually lost money (-$2 billion, on record sales of $28 billion) last quarter. Apple today matches ExxonMobil as the world's most valuable company (both worth about $416 billion on the stock markets) on expectations it will keep making more and more money.
How does Apple profit while Verizon loses? "With all those iPhones, the question is profitability," writes analyst Craig Moffett in a report to clients of Bernstein Research. The price" of retailing Apple products is "high subsidies" and low profit margins. "All those iPhones!" juice sales, but higher texting and voice transmission costs and the "endeless string of Apple upgrade cycles" keep Verizon (and AT&T) smartphone profits low. Smartphone sales "have lagged projections," and one-time upgrades are no substitute. Selling Apple smartphones "helped further accelerate wireless growth at Verizon... but at a steep margin price," agrees Zhiping Zhao, in a report for bond researchers CreditSights Inc. The cost of updating all those Apple products without selling a lot of new ones means "returning the wireless margin to pre-iPohne levels may be challenging."
Joseph N. DiStefano
The first Marshall's clothing store in Center City Philadelphia will replace the Staples at 1046 Market Street in Center City's shopping district. Metro Commercial Real Estate broker Donna Drew sold Marshall's owner TJX Cos. of Massachusetts on the 26,000 sq.ft. site after Staples declined to renew its lease with landlord Jenel Management Corp. of New York. Staples is consolidating to its stores at 15th and Chestnut and on Delaware Ave. Metro boss Steve Gartner called the switch "a net win for Center City" since Marshall's isn't already in the neighborhood and "everyone shops at Marshall's." The Marshall's in my neighborhood devotes a majority of its space to modestly priced women's clothing and housewares, but also features small men's clothing, book, toy and appliance departments.
Joseph N. DiStefano
Chemical maker PQ Corp. must pay ex- R&D professionals Bonnie Marcus and Roman Wypart at least $2.9 million ($1.9 million in lost wages, $150,000 for "emotional distress" and more than $800,000 in liquidated damages due to willful violations, plus possible future interest, fees and costs) for firing them in violation of the federal Age Discrimination in Employment Act, says a three-judge panel of the US Court of Appeals, Third Circuit, in Philadelphia. PQ had no comment.
According to the decision: PQ (formerly Philadelphia Quartz Co., founded in 1831 and run for most of its history by Philadelphia's Elkinton family) was bought by JPMorgan in 2005 and turned over to CEO Mike Boyce, who fired 30 employees three months after his arrival in a cost-cutting "reduction in force." Among those laid off were Marcus, a manager in the former PQ Research and Development Department in Conshohocken, and Wypart, a scientist who reported to her. They won a 2009 verdict on their complaint under federal and state law, though Judge John P. Fullam cut millions from the original "distress" part of the award.
Joseph N. DiStefano
American private equity and hedge fund managers have done well despite the weak economy of the past decade. But are their millions, taxed at lower rates than earned income, justified by the creation of jobs and economic opportunities - or are they just enriching fund bosses like would-be President Mitt Romney? “If you change the law, we’ll pay the taxes,” David M. Rubenstein, co-founder of Carlyle Group, one of the biggest US private investment firms, told the World Economic Forum, the annual gathering of Western financial and political elites in Davos, Switzerland. NYTimes report here.
"But don’t criticize (GOP Presidential candidate Mitt Romney) for paying the taxes that the law requires him to pay," Rubenstein added, according to Bloomberg here. Romney says he paid less than 14% of his $21M+ income to the federal government last year.
