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VOL. 124 | NO. 169 | Friday, August 28, 2009

Daily Digest

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U Store It Buys Germantown Home

Alexandria, Va.-based U Store It, a national owner and operator of self-storage facilities, has bought a 5,744-square-foot home on Belle Fleurs Cove in Germantown. Operating as U Store It LP, the company on Aug. 19 paid $985,000 for the home from Jonathan L. and Angela J. Perry.

Though the company is based in Virginia, its CEO is Memphian Dean Jernigan, former head of Storage USA. A call to U Store It’s corporate headquarters was not immediately returned.

The five-bedroom home was built in 2007 and sits on 0.65 acres. The Shelby County Assessor of Property’s 2009 appraisal is $1 million.

It’s the second high-profile transaction the storage company has made of late. On Aug. 19, it quitclaimed, or transferred, its property at 9275 Macon Road in unincorporated Shelby County near Cordova to its trust division, operating in the transaction as YSI XXX LLC. That entity then filed a $2.6 million loan on the facility through First Capital Bank.

U Store It had bought the property for $4 million in 2006 from Macon Road Partnership.

Source: The Daily News Online & Chandler Reports

Fred’s Q2 Profit Triples; Outlook Within Expectations

Memphis-based Fred’s Inc. reported Thursday its second-quarter profit tripled as the discount store operator cut expenses, more than offsetting a decline in sales.

For the three months ended Aug. 1, profit jumped to $4.2 million, or 11 cents per share, from $1 million, or 3 cents per share, in the year-earlier period.

Excluding one-time items, the company earned 13 cents per share in the latest quarter, meeting the average estimate of analysts polled by Thomson Reuters.

Selling, general and administrative expenses, including depreciation and amortization, fell to 25.9 percent of sales from 27.3 percent of sales in the year-earlier period.

“The 140-basis-point expense leverage came from managing store and distribution costs throughout the quarter and costs associated with store closings incurred during the second quarter last year,” CEO Bruce A. Efird said.

Sales slipped 3 percent to $434.2 million from $447.1 million. Analysts expected $437.6 million in revenue.

On a same-store basis, second-quarter sales declined 1.3 percent. Same-store sales are an important indicator or retailer performance because they measure growth at existing stores rather than newly opened ones.

The company, which runs about 670 stores, also issued third-quarter and full-year guidance within range of Wall Street expectations. The company expects third-quarter profit of 18 cents to 21 cents per share. On average, analysts polled by Thomson Reuters expect profit of 20 cents per share.

Fred’s also said it expects earnings per share of 73 cents to 80 cents for the fiscal year ending in January. Analysts expect profit of 77 cents per share.

St. Jude, Quest Diagnostics Consider Lawsuit Settlement

St. Jude Children’s Research Hospital and Quest Diagnostics Inc. have begun talks to settle a lawsuit the hospital filed against the company for an alleged patent infringement.

The dispute is over a procedure for checking if children have genetic characteristics that would make them have toxic reactions to certain cancer drugs.

St. Jude filed a complaint in May 2008 in Memphis federal court. Quest Diagnostics then made counterclaims in its response.

This week, U.S. District Judge S. Thomas Anderson signed an order granting a stay on proceeding while the parties negotiate. In filing a joint motion for the stay, attorneys for St. Jude and Quest Diagnostics stated, “The parties are continuing settlement discussions and believe that they are close to reaching a settlement of the matter.”

City Gov’t. Announces Discount Drug Plan

The city of Memphis unveiled a discount prescription plan Thursday offered through the National League of Cities.

Mayor Pro Tem Myron Lowery said in a statement that the discount cards offer an average savings of 20 percent off the retail price of commonly prescribed drugs. There is no cost to individuals for the drug cards, the mayor’s office said. The cards are available to city residents at all city of Memphis buildings, including various community centers.

Bank Insurance Fund Down 20 Percent

The agency that guarantees bank deposits reported Thursday there are no immediate plans to borrow money from the government to bolster its insurance fund, which has shrunk under the weight of collapsing banks.

The fund fell 20 percent to $10.4 billion in the second quarter as U.S. banks overall lost $3.7 billion, the Federal Deposit Insurance Corp. said. That’s the fund’s lowest point since 1992 at the height of the savings-and-loan crisis. Some analysts have warned the fund could fall below zero by year’s end.

The FDIC estimates bank failures will cost the fund around $70 billion through 2013. It’s slipped to 0.22 percent of insured deposits, below a congressionally mandated minimum of 1.15 percent.

Asked about a possibility of tapping the Treasury, FDIC Chairwoman Sheila Bair said: “Not at this point in time. I never say never, but not at this point in time, no.”

At the same time, Bair reaffirmed the likelihood of an additional fee on U.S. banks this year to help replenish the fund.

Despite the shrinking insurance fund, customers have nothing to worry about. The FDIC is fully backed by the government, which means depositors’ money is guaranteed up to $250,000 per account. And the agency still has billions in loss reserves apart from the insurance fund.

Still, the FDIC needs to replenish its fund. It can do so by charging banks higher fees or by taking the more radical step of borrowing from the U.S. Treasury.

It’s also opened the door wider for private investors to buy failed financial institutions. The FDIC’s board voted Wednesday to reduce the cash that private equity funds must maintain in banks they acquire.

John Ford’s Appeal Denied by Federal Judges

Federal appellate judges have rejected former state Sen. John Ford’s appeal of his public corruption conviction in Memphis.

A three-judge panel of the 6th U.S. Circuit Court of Appeals in Cincinnati upheld a district court judge’s ruling that Ford be sent to prison for 5 1/2 years.

The appellate court ruled, in a decision posted Wednesday, that District Court Judge J. Daniel Breen’s decision was well within federal sentencing guidelines and rejected Ford’s contention that payments he accepted from an undercover FBI agent were not separate bribes.

Ford is serving his sentence at a federal prison in Yazoo City, Miss.

In a separate case, a Nashville federal judge sentenced Ford in September to 14 years in a wire fraud case against him.

MIFA Plans Feed the Soul Event

Metropolitan Inter-Faith Association will hold, for the second year in a row, its community event Feed the Soul Oct. 1.

Presented by SunTrust, Feed the Soul will be held from 6 p.m. to 10 p.m. at The Warehouse, 36 G. E. Patterson Ave.

The celebration will take place inside the South Main Historic Arts District venue and on its patio and surrounding grounds. It will include food and live entertainment by Robert “Hollywood” Raiford.

Tickets are $40 per person and may be purchased online at www.mifa.org or by calling 529-4525.

MIFA serves more than 60,000 people annually through programs that support seniors, families in crisis and teens.

PROPERTY SALES 50 389 12,758
MORTGAGES 21 248 8,003
BUILDING PERMITS 295 813 29,934
BANKRUPTCIES 35 164 6,064