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VOL. 7 | NO. 26 | Saturday, June 21, 2014

Daily Digest

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Plastics Recycler Receives Incentives

A company that recycles and manufactures post-industrial plastics was awarded incentives to relocate from Arkansas to Memphis.

RE-CY, or RE-CY Plastics, was awarded a four-year payment-in-lieu-of-taxes incentive from the board of the Economic Development Growth Engine of Memphis and Shelby County to relocate its plastics recycling and manufacturing operations to Memphis from Searcy, Ark.

The project would create 36 jobs with an annual average salary of around $41,000. Capital investment would reach $8.1 million.

RE-CY would acquire a 233,060-square-foot industrial building at 611 Winchester Road for $1.3 million.

The business, which has 15 employees now, has the ability to process around 20 million pounds of material each year and would like to increase that to 35 million pounds.

According to an EDGE analysis, the four-year PILOT would save the company around $443,170 in taxes while producing a local tax benefit of $758,006.

Armstrong Appointed to Appeals Court

Shelby County Chancellor Kenny Armstrong has been appointed to the Tennessee Court of Appeals by Tennessee Gov. Bill Haslam.

Haslam announced his selection Wednesday, June 18.

Armstrong’s appointment to the Western Division seat on the civil appellate court is effective Sept. 1, which is when he would begin a new eight-year term as one of three Chancery Court judges. He is running unopposed in his August re-election bid for Chancery Court Part 3.

The Judicial Nominating Commission will take applications to fill the Chancery Court vacancy, interview applicants, then submit a list of finalists to Haslam, who will make the appointment. As of Thursday, no dates had been set for applications and interviews.

Armstrong’s appointment means two of the three incumbent chancellors will be leaving the court with the new term of office that begins Sept. 1.

In August, Haslam appointed Chancellor Arnold Goldin to the same appeals court, also effective Sept. 1. As a result, Goldin did not seek re-election to Chancery Court Part 2.

Incumbent Chancellor Walter Evans is seeking re-election on the August ballot and is being challenged by attorney Michael Richards.

AutoZone Adds to Stock Buyback

The board of AutoZone Inc. has authorized the company’s repurchase of an additional $750 million of the company’s common stock in connection with its ongoing share repurchase program.

Since the inception of the repurchase program in 1998, and including the new amount, AutoZone’s board has authorized $14.9 billion in share buybacks.

AutoZone chief financial officer Bill Giles said the company’s continued strong financial performance makes the buybacks possible and allow the company to repurchase its stock while maintaining its investment-grade credit rating.

Nikki Giovanni to Speak at Civil Rights Museum

Nikki Giovanni, an acclaimed poet and civil rights activist, will be at the National Civil Rights Museum in Memphis on Sunday, June 22.

She is scheduled to speak at 2 p.m. in Hooks Hyde Hall on the second floor of the museum.

Giovanni will discuss her works, her life and her perspective on topics shaping American culture.

She will read from and perform several of her poems. She’ll also discuss her latest book, “Chasing Utopia,” followed by a book signing.

The main section of the newly renovated museum reopened April 5, the day after the 46th anniversary of Martin Luther King Jr.’s assassination in Memphis.

King was killed on April 4, 1968, while standing on the balcony of the old Lorraine Motel, which was later converted into the museum in Downtown Memphis.

Gauge of US Economy Gains 0.5 Percent in May

A gauge designed to predict the economy’s future health increased for a fourth month in May, providing further evidence that the economy is gaining strength after a harsh winter caused activity to go into reverse.

The Conference Board said Thursday that its index of leading indicators increased 0.5 percent last month, an improvement from a revised 0.3 percent gain in April. The strength was broadly based with positive contributions from all the financial and labor components of the index.

“Recent data suggest the economy is finally moving up from a 2 percent growth trend to a more robust expansion,” said Conference Board economist Ken Goldstein. “Going forward, the biggest challenge is to sustain the rise in income growth which will drive consumption.”

The overall economy actually shrank at an annual rate of 1 percent in the January-March quarter, the victim of a severe winter which crimped activity in a number of areas.

But analysts believe growth rebounded strongly in the April-June quarter to possibly as much as a 4 percent growth rate. They are forecasting a solid performance in the second half of around 3 percent growth.

The expectation is that rising employment will fuel further gains in consumer spending.

The leading index is composed of 10 forward-pointing indicators. For May, seven of the 10 showed gains with the largest positive contributions coming from low interest rates, falling weekly unemployment claims and gains in manufacturing hours.

The biggest negative factor holding the index back was a drop in applications for building permits.

Fewer Americans Apply for Jobless Aid

Fewer Americans sought unemployment benefits last week, as the number of people collecting jobless aid fell to its lowest level in more than six years.

The Labor Department said Thursday that weekly applications for unemployment benefits fell 6,000 to a seasonally adjusted 312,000. The four-week average, a less volatile measure, declined to 311,750.

There are 2.56 million people receiving benefits. That’s the lowest total since October 2007, about two months before the recession began.

Jennifer Lee, a senior economist at BMO Capital Markets, said the report in a “blinding glimpse of the obvious” is clearly “good news.”

Applications are a proxy for layoffs, so the relatively low number of people seeking benefits shows that employers are letting go of fewer workers. When businesses are confident enough to keep staff, they may also hire more workers. Job gains should feed stronger economic growth.

Earlier this month, the Labor Department said employers added a solid 217,000 jobs in May.

Monthly job gains have averaged 234,000 for the past three months, up sharply from 150,000 in the previous three. The unemployment rate, which is derived from a separate survey, remained at 6.3 percent in May. That’s the lowest rate in more than five years.

The data in Thursday’s unemployment benefits report overlaps with the survey for the June jobs report. The low level of applications would suggest similarly strong hiring this month, Lee said.

Steady gains after the economy shrank during the first quarter because of the winter weather point to faster growth ahead.

LeMoyne-Owen President to Retire

LeMoyne-Owen College President Johnnie Watson will retire a year from now, following nine years at the helm of the city’s only historically black college.

Watson announced this week he will retire effective June 30, 2015, ending a storied career as an educator and administrator.

Watson is the first LeMoyne-Owen alumnus to serve as its president. He was picked by the college’s board of directors in 2006 as an interim leader to straighten out the school’s finances and problems that threatened its accreditation.

The board had begun a search for a permanent leader when its members approached Watson about becoming the institution’s permanent president.

Watson’s career began in 1960 as a history teacher at Carver High School and saw him rise through the ranks of the Memphis City Schools system to become deputy superintendent and then return as an interim superintendent in 2000.

Between the two positions at Memphis City Schools, he served in his first higher education post as dean of the college of education at Rhodes College.

The LeMoyne-Owen board is in the process of forming a search committee.

Gibson Joins Airport Authority Board

Local businessman and former Shelby County Commissioner J.W. Gibson was appointed Wednesday, June 18, to the Memphis and Shelby County Airport Authority board.

Gibson, CEO of the Gibson Cos., was nominated to the post by Memphis Mayor A C Wharton Jr. Two board vacancies were created by departures of John W. Stokes and Ruby Wharton, an attorney and Wharton’s wife.

Repertory Orchestra Plans Summer Concert

For the first time in its three-year history, the Memphis Repertory Orchestra will perform a world premiere piece at a special summer concert July 12.

The free performance will take place at 8 pm. at the Buckman Performing Arts Center.

The group will perform a new piano concerto by Utah composer Stephen Mitton, and the program also will include selections from John Williams’ famous “Star Wars” music and Nikolai Rimsky-Korsakov’s “Scheherazade.”

Tennessee Human Services Lays Off 121 Workers

The Tennessee Department of Human Services has cut 121 employees from its rolls.

The Tennessean reports the workers were responsible for administering welfare payments and food stamps.

The agency says the cuts made Friday are part of its efforts to reorganize its Temporary Family Assistance program. It also said caseloads have decreased and 256 vacant positions have been eliminated.

DHS says more cuts are planned, but officials are still determining details.

BankTennessee Adds Commercial Lender

Jay Crews has joined BankTennessee as a vice president and commercial lender.

According to BankTennessee President and CEO Jim Rout, Crews has 25 years of experience as a national bank examiner and in lending and management roles for regional and national banks.

Before joining BankTennessee, Crews served as executive vice president and chief credit officer for Trust Company Bank and senior vice president for Bank of Bartlett.

Pan Am Flight Academy Building Sold

A private investment group has purchased the Pan Am International Flight Academy office building.

Valhalla Financial bought the Memphis property, which is occupied by Pan Am’s local flight academy, for $4.9 million from Road Bay Investments LLC, a subsidiary of The Allstate Corp.

The 61,418-square-foot building is at 8150 T&B Blvd., north of the FedEx Express world headquarters.

Johnny Lamberson and Terry Radford of CB Richard Ellis Memphis LLC, a subsidiary of CBRE Group Inc., represented the seller

Horseshoe Tunica Undergoes Upgrades

Extensive renovations are underway at Horseshoe Tunica, with the tweaks including more games featuring state-of-the-art technology, and an expanded and rebranded steakhouse.

Scott Barber, regional president of Caesars Mid-South, said the renovations will bring new slot games, highly integrated technology, dining and lounge improvements and a more player-friendly floor configuration.

Renovations have been underway for almost four weeks, with plans to continue through mid-July. Horseshoe Tunica already has added more than 430 slot games, new carpeting, and new signage and fixtures, including more than 100 LCD screens.

Guests can now enjoy new slot chairs and the addition of new table games. Jack Binion’s Steak House is currently being refurbished and will be rebranded as Jack Binion’s Steak upon completion. The new restaurant will include an expanded and contemporary dining area along with a refreshed menu.

Among other changes, the second-story hotel pool area has been upgraded. It features new decking, a full-service bar, cabanas and landscaping.

CEOs More Optimistic on Hiring, Sales

Optimism among chief executives of large U.S. companies has reached a two-year high, driven by a more positive outlook toward hiring and sales.

The Business Roundtable said Tuesday that its CEO outlook index rose to 95.4 in the second quarter, up from 92.1 in the first quarter. That is the highest level since the second quarter of 2012.

The positive sentiment among CEOs of some of the largest U.S. companies could bode well for hiring and growth. The U.S. economy has been adding jobs at a steady pace this year and the unemployment rate has fallen to 6.3 percent, a five-year low.

The proportion of CEOs expecting to hire in the next six months rose to 43 percent, up from just 37 percent in the first quarter.

Still, the outlook was not all rosy: the percentage of CEOs planning to invest more in their businesses fell to 44 percent from 48 percent.

The CEOs also forecast that the economy will grow at just a 2.3 percent pace in 2014. That would be better than last year’s 1.9 percent growth, but below many economists’ hopes at the beginning of this year that growth would reach 3 percent.

Pyro’s Adding Third Memphis Location

Pyro’s Fire Fresh Pizza will be opening a third Memphis-area location in the next several months.

Pyro’s is leasing 3,200 square feet at 2286 N. Germantown Parkway, which is being developed by Utley Properties.

Pyro’s currently has locations at Park Place Center in East Memphis and at 2035 Union Ave. in Midtown.

Shawn Massey of The Shopping Center Group brokered the Pyro’s lease.

Fire Museum Opens Arcade Renovation

As part of a Federal Emergency Management Agency grant awarded in 2012, the Fire Museum of Memphis has completed renovations to its arcade room exhibit with help from local businesses Mind Over Data and Design 500.

According to museum general manager Penny McKinney Smith, benefits of the exhibit include the ability to track data to test the effectiveness of the museum’s and Memphis Fire Department’s public education program. While visiting school students are playing educational games at the museum, for example, the museum is extrapolating information that will help continue to save lives and property, information that also can be shared with teachers.

The arcade exhibit, which has been undergoing renovations for the past 12 months, is located on the second floor of old Fire House No. 1.

Medtronic to Buy Irish Medical-Device Maker

U.S. medical device manufacturer Medtronic has agreed to buy Ireland-based competitor Covidien for $42.9 billion in cash and stock.

The combined company would have its executive offices in Dublin, where it could benefit from Ireland’s lower corporate tax rates. But the merged company would continue to operate in Minneapolis, where Medtronic employs more than 8,000, the companies said late Sunday in a statement.

Medtronic is paying a 29 percent premium on Covidien’s stock price as of Friday. The shares had closed at $72.02 on the New York Stock Exchange.

The deal is the latest in a series of acquisitions by medical-device manufacturers. The companies are seeking to expand their offerings and contain costs in response to price curbs forced by the nation’s new health care law.

In April, Zimmer Holdings, an orthopedic device maker, announced that it was buying Biomet in a $13 billion deal.

As a result of savings from the deal, Medtronic said it would spend an additional $10 billion over the next decade in investments, acquisitions and research and development in the United States.

“The medical technology industry is critical to the U.S. economy, and we will continue to invest and innovate and create well-paying jobs,” Omar Ishrak, Medtronic’s CEO, said in a statement.

Efforts by domestic companies to use mergers to reincorporate overseas for tax reasons have raised concern among some U.S. lawmakers. Ireland taxes corporate income at 12.5 percent, compared with a top marginal rate of 39.6 percent in the United States, according to the tax advisory firm KPMG.

Tennessee Bar Poll Calls for Judge Retention

A first-ever poll of Tennessee Bar Association members shows those the majority of those polled recommend the retention of three of the state’s Supreme Court justices on the Aug. 7 statewide ballot.

The 12,000 bar association members were asked to rate each of the three justices as “highly recommend,” “recommend” or “do not recommend.”

The bar association did not say how many of the attorneys responded.

For Chief Justice Gary Wade, 76.7 percent of those responding chose “highly recommend,” with 75.9 percent highly recommending Justice Sharon Lee and 74.4 percent highly recommending Justice Connie Clark.

The three justices are up for a yes/no retention vote on the August ballot and face organized opposition including Lt. Gov. Ron Ramsey.

Evolve Bank Adds Compliance Officer

Evolve Bank & Trust has added a new name to its compliance department.

Janet Hendrix is a new officer in the department, bringing 25 years of banking and compliance experience with her. In a statement about Hendrix’s addition to the company, Evolve President and CEO Scott Stafford said her expertise will be vital to Evolve as it continues to grow and expand.

Headquartered in Memphis, Evolve currently operates six full-service branches and loan production offices in Arkansas and Tennessee, with more than 30 loan production offices around the country.

Senate Candidate Ball to Spend $400,000 on Ads

U.S. Senate candidate Gordon Ball says he is pouring up to $400,000 of his own money into a statewide television advertising campaign to bolster his bid for the Democratic nomination.

Ball, a Knoxville attorney, told reporters in Nashville on Friday that he will emphasize his moderate political leanings, which he said stand in contrast with what he called the more liberal position of his chief rival Terry Adams.

Ball, who estimated his net worth as between $10 million and $20 million, said he plans to self-fund much of his Senate campaign.

Republican Sen. Lamar Alexander is running for a third term this year. His chief campaign adviser, Tom Ingram, is shrugging off any Tennessee implications of the surprise GOP primary defeat this week of House Majority Leader Eric Cantor in Virginia.

Cheaper Gas, Food Push Down Producer Prices

The prices U.S. companies receive for their goods and services fell in May, offering evidence that inflation is mild.

The producer price index, which measures the cost of goods and services before they reach the consumer, dropped 0.2 percent last month, the Labor Department said Friday. The decline was driven lower by cheaper food and gas, and follows two months of strong gains that had suggested inflation might be perking up after being dormant for two years.

In the past 12 months, producer prices have risen 2 percent, matching the Federal Reserve’s inflation target. That’s down from an annual gain of 2.1 percent in April.

“The underlying details of the report suggest that producer price inflation is still fairly contained despite the big increases in the last few months,” Omair Sharif, an economist at RBS Securities, said in a research note.

Excluding the volatile food, energy and profit margin categories, core producer prices were unchanged in May. The result comes after a 0.3 percent gain in each of the two preceding months. Core prices have risen 2 percent in the past year.

Wholesale food prices fell 0.2 percent after four months of steep increases. And wholesale gas prices dropped 0.9 percent, suggesting consumers may see some relief at the gas pump in coming months.

Another reason producer prices fell: retailer and wholesaler profit margins declined 0.5 percent after two months of strong gains.

The drop in profit margins comes after robust increases in April and March. Retailer and wholesaler profit margins had fallen in the winter as companies rolled out discounts to lure shoppers through the doors during harsh winter storms.

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 72 206 16,619
MORTGAGES 84 228 21,660
FORECLOSURE NOTICES 21 56 4,322
BUILDING PERMITS 0 209 39,587
BANKRUPTCIES 73 222 15,764
BUSINESS LICENSES 23 51 5,542
UTILITY CONNECTIONS 86 287 23,860
MARRIAGE LICENSES 21 72 5,107

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