Finance Blog number 1

Long-term care provider Assisted Living Concepts Inc. of Menomonee Falls continued to boost revenue in the second quarter by increasing occupancy at its assisted living homes by more profitable private-pay residents.

Total revenue increased to $58.3 million from $56.7 million over the second quarter of 2009.

Assisted Living Concepts (NYSE: ALC) reported a decline, however, in net income for the quarter with $2.9 million, or 25 cents per share, compared with $3.9 million, or 33 cents per share, in the same period the year before.

The decline is the result of one-time charges totaling $1.7 million related to income tax benefits and expenses associated with the realignment of divisions, said John Buono, senior vice president and chief financial officer.

Net income would have been $4.6 million, or 39 cents per share, without those one-time charges, Buono said during a conference call Tuesday with investors.

Staffing needs have decreased because of the lower number of Medicaid residents the company is accepting and general economic conditions have allowed Assisted Living to hire employees at lower wage rates, Buono said.

At the same time, general administrative costs increased $800,000 compared with the last year.

Assisted Living increased average private-pay occupancy by 122 and eight units over the second quarter of 2009 and the first quarter of 2010, respectively payday loan.

The company does not expect to renew Medicaid contracts in 2010, which will reduce Medicaid occupancy by about 40 people in the third quarter of 2010, Laurie Bebo, president and CEO, said in a conference call.

Assisted Living gets less money in reimbursements from Medicaid residents than it does from private-pay residents and has made a conscious decision to decrease the number of Medicaid residents and replace them with private-pay residents.

The company has been offering discounts such as no new residency fees or one-month free after six months to make its facilities more attractive to private-pay residents, Bebo said.

Private-pay residents increased from 92.3 percent in 2009 to 97.1 percent in 2010. Revenues from those residents increased from 93 percent to 98 percent in 2010.

“Our strategy of reducing our reliance on government funding continues to increase our margins,” Bebo said.

Assisted Living Concepts and its subsidiaries operate 211 senior living residences comprising 9,280 residents in 20 states.

The company is looking at the acquisition of other properties, but was not ready to discuss details, Buono said.

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A call center for 21st Century Insurance and Financial Services Inc. will be filling 40 positions at a job fair on Monday.

The company, which has about 200 people at its call center in Phoenix that it shares with its parent, Farmers Group Inc., plans to split the positions among customers service and sales, said Deb West, the company’s director of operations.

The jobs will be full-time, and the company also is looking for some people with bilingual skills.

The job fair runs from 11 a.m. to 2 p.m. and again from 4 to 7 p.m. at the call center, 16001 N. 28th Ave.

Those interested also can apply online at www.farmers.com and clicking on “corporate careers.”

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Smurfit-Stone Container Corp. reported Tuesday adjusted net income of $2 million for the second quarter, compared with a loss of $21 million a year earlier, excluding $1.4 billion in income and tax benefits from the company's emergence from bankruptcy.

Including the impact of the bankruptcy income, Smurfi reported net income attributable to common stockholders of $1.41 billion for the second quarter, compared with a net income of $155 million a year earlier.

The company reported sales of $1.6 billion for the three months ended June 30, up 14 percent from $1.4 billion in the prior-year quarter.

Smurfit, which is dually headquartered in Creve Coeur, Mo., and Chicago, exited from Chapter 11 bankruptcy in June. Smurfit has nearly all of the firm’s executives based in St. Louis. The company operates corrugated container, folding carton, recovered paper and recycling services facilities. Smurfit-Stone has 30 recycling plants in the U.S. The company reported $5.57 billion in 2009 revenue.

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Florida International University’s Herbert Wertheim College of Medicine secured its ninth clinical partner by signing an affiliation agreement with Cleveland Clinic Florida.

The 150-bed hospital in Weston has 922 employees, including 166 physicians on staff. The nonprofit admitted more than 12,000 patients last year.

With the agreement, fourth-year FIU medical students could get clinical training from specialist physicians at Cleveland Clinic Florida.

“We are very excited to be affiliated with such a respected institution that has an excellent national reputation,” FIU College of Medicine Dean Dr. John Rock said in a news release same day payday loans. “Cleveland Clinic is world renowned for providing quality health care at an affordable cost, and we are proud to partner with them to train the next generation of doctors.”

The state university’s medical program also has affiliation agreements with Baptist Health South Florida, Jackson Health System, Mount Sinai Medical Center, Miami Children’s Hospital, Mercy Hospital, Leon Medical Centers, Broward Health and Memorial Healthcare System.

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BP’s stock price has fallen far enough for the oil company to become an attractive takeover target for its biggest rivals, according to industry analysts.

BP’s (BP) stock finished at $28.88 Wednesday, a plunge of more than 50% from its close of $60.09 on April 19, the day before its leased oil rig, the Deepwater Horizon, exploded and sank in the Gulf of Mexico.

Fred Lucas of JPMorgan believes that investors have overdone it, making the stock an attractive value for buyers — including other companies.

"In theory, either Exxon Mobil or RD Shell could consider a bid for BP," wrote Lucas in a note to investors. "We focus on these two names because they have similar business models and similar global asset structures. They also bear the lowest political risk to a potential combination with BP."

Lucas said that his idea of a proposed takeover of BP was "prompted by the gap between the current market value of BP and the intrinsic value that we see in BP."

Another oil industry analyst, Douglas Youngson of Arbuthnot Securities, told CNNMoney last month that if BP’s stock dropped below $30 a share, it would become an attractive takeover target.

"If the share price continues to fall, other companies may see this for the bargain it will be," said Youngson on June 2, when BP’s stock closed at $37.66.

Of the various big players in the oil industry — including Gazprom and PetroChina (PTR) — Lucas believes that ExxonMobil (XOM, Fortune 500) is in the best position to be the acquirer.

He wrote that Exxon Mobil "has the largest rating advantage and strongest balance sheet," providing it with enough cash to handle the deal.

"Exxon Mobil has also proven its ability to integrate a very large transaction successfully — its merger with Mobil was a resounding success," added Lucas low fee cash advance. "RD Shell has no large-scale merger integration experience."

Gazprom wouldn’t be a contender because of a "low stock market rating," he said, while PetroChina "would encounter major political barriers given its controlling shareholder - the Chinese government."

BP has been purging itself of cash to try and fix the environmental and economic aftermath of the disaster.

The company said it has paid out $2.65 billion for the clean-up, and another $130 million on 41,000 claims from workers and business owners who lost their livelihoods in the wake of the spill. More than 80,000 claims have been submitted so far. Bowing to pressure from the U.S. government, BP has put $20 billion in escrow to cover damages.

Lucas figures that the leak will stop sometime in July, meaning a finite cap to the liabilities. So this might be a good time for Exxon Mobil to swoop in, especially since the oil giant has had its own experiences with catastrophic oil spills.

Before BP’s environmental disaster in the Gulf, Exxon had the dubious distinction of causing the nation’s worst oil spill, when the Exxon Valdez oil tanker ran aground off the coast of Alaska in 1989.

"In many respects, an accurate valuation of BP today depends less on a valuation of its assets, but more on an accurate value of its potential liabilities," wrote Lucas. "Who knows better how to price potential clean-up costs and associated civil claims than Exxon Mobil?"

Spokesmen for BP and RD Shell declined to comment on this story. Exxon Mobil did not respond to messages from CNNMoney.com. 

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Stocks got pummeled Thursday, with the Dow, Nasdaq and S&P 500 losing enough to fall into "correction territory" - marked by a drop of more than 10% off the rally highs.

Worries about how the European debt crisis and slump in the euro will impact the global recovery fueled the selling, extending the month-long declines.

The Dow Jones industrial average (INDU) fell 376 points, seeing its biggest one-day point loss since February 10, 2009. Thursday’s point loss was equivalent to 3.6%, the biggest one-day percentage loss since March 5 of 2009.

The loss was bigger than that in the so-called "flash crash" earlier this month in which the Dow lost nearly 1000 points during the session, but ended up closing down just shy of 348 points or 3.2%.

The Nasdaq (COMP) fell 94 points, seeing its biggest one-day point loss since December 1, 2008. The point loss Thursday was equivalent to 4.1%, its biggest one-day percentage loss since Feb. 17, 2009.

The S&P 500 (SPX) declined 43 points, its biggest one-day point loss since January 20, 2009. It was equivalent to a percentage loss of 3.9, the S&P’s worst since April 20, 2009. Thursday’s point and percentage drops for the Nasdaq and S&P were bigger than those made on the day of the flash crash.

The CBOE Volatility index, the VIX (VIX), Wall Street’s fear gauge, spiked 30% to a 14-month high of 45.48.

Stocks slumped in the morning, trimmed losses in the afternoon as the euro turned positive and then resumed the selling, ending just above the lows of the day. The afternoon selloff intensified after the Wall Street reform bill cleared a key hurdle in the Senate. The bill is expected to pass the Senate. Investors also kept an eye on the escalating conflict between North Korea and South Korea.

After weeks of selling, all three major gauges are now officially in a "correction," technically defined as a loss of more than 10% from the rally highs. The Dow is now down 10.2% from its April 26 high, the S&P 500 is down 12% from its April 23 high and the Nasdaq is down 12.9% from its April 23 high. The Nasdaq was already in a correction prior to Thursday’s selloff.

The correction does not reflect any change in the fundamentals of the U.S. economy or corporate profit outlook, but rather a confluence of events, said Timothy Ghriskey, chief investment officer at Solaris Asset Management.

"I don’t think people are worrying about a double-dip recession in the United States," Ghriskey said. "But there is uncertainty about Europe’s economy and the sustainability of the euro."

In addition to being in a correction, the S&P 500 closed below the 200-day moving average, a key technical level market pros monitor. These events tend to have a big impact one way or the other on market direction, Ghriskey said.

Falling below these technical levels could put a floor under the selling, said Steven Goldman, market strategist at Weeden & Co. He said investors may be better able to tolerate all the uncertainty about Europe when the market has pulled back from the 2010 highs.

"If we are still in a bull market, these might be levels where someone would want to get in," he said. "But we’ve done a lot of damage technically and the pendulum hasn’t swung yet to where we’re seeing a healing."

Beyond the reaction to the immediate headlines, the stock market may have already been vulnerable to selling, said Brett Hammond, chief investment strategist at TIAA-CREF no credit check payday loans.

"The European debt issues and the euro are very important," he said. "But the market was already poised for a pullback after the enormous run up in the stock market since March of 2009."

He said that the historic rally was partly fueled by anticipation that an economic and corporate profit recovery would take hold and that the consumer would take over from the government as an engine of growth. While some of that has happened, market participants may have been betting on a bigger comeback.

Market breadth was negative. On the New York Stock Exchange, losers beat winners 19 to one on volume of 2.13 billion shares. On the Nasdaq, decliners beat advancers 11 to 1 on volume of 3.37 billion shares.

Euro: The euro was little changed versus the dollar after falling in the morning and gaining through the late afternoon. The euro has seesawed over the last few days after plunging to a four-year low of $1.2234 on Monday. The dollar fell 0.2% versus the yen, erasing bigger morning losses.

Economy: Reports on jobless claims and leading economic indicators (LEI) disappointed, while the Philadelphia Fed index, a regional reading on manufacturing, topped forecasts.

The number of Americans filing new claims for unemployment rose last week to 471,000 from 446,000 the prior week. Economists surveyed by Briefing.com expected claims to fall to 439,000.

Continuing claims, the number of Americans who have been receiving benefits for a week or more, fell to 4,625,000 from 4,665,000 in the previous week. Economists thought claims would fall to 4,600,000.

After the start of trading, the Conference Board released its index of leading economic indicators. LEI fell 0.1% in April after rising 1.3% in March. The index was expected to have risen 0.2%.

The Philadelphia Fed index rose to 21.4 in May from 20.2 in April, topping predictions for a rise to 20.7.

After the mini-crash: New rules continue to be proposed in the wake of the May 6 stock market selloff, in which erroneous trading in hundreds of issues created a panic that dragged down the broad market. Since then, most of the trades have been cancelled, but regulators remain unclear as to what exactly caused the selloff.

Out-of-control computer trading may have caused the slump, Securities and Exchange Commission chairwoman Mary Schapiro told a Senate panel Thursday.

On Tuesday, the SEC proposed new rules that would impose circuit breakers, or a temporary pause, on individual stocks that experience extreme swings. There are already circuit breakers in place for the broad markets, but this would impact individual stocks.

World markets: Markets in Europe slumped, as the euro continued its slide versus the dollar. The British FTSE 100 fell 1.7%, the German DAX lost 2% and the French CAC 40 fell 2.3%.

Asian markets tumbled. The Japanese Nikkei fell 1.5%, while the Hong Kong Hang Seng fell 0.2%.

Commodities: U.S. light crude oil for June delivery fell $1.86 to settle at $68.01 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $4.50 to settle at $1,188.60 an ounce.

Bonds: Treasury prices rallied, lowering the yield on the 10-year note to 3.24% from 3.36% late Wednesday. Treasury prices and yields move in opposite directions. 

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Aryx Therapeutics Inc. lost $6.4 million in the March quarter, down from a loss of $9.8 million a year earlier.

The Fremont drug business (NASDAQ: ARYX), which cut itself down to 17 workers in February, had no revenue during the quarter. It also had no revenue a year ago in the first quarter.

Since it started, Aryx has accumulated a deficit of $193,499,000. Drug companies often run up big deficits while seeking and testing possible treatments.

At quarter’s end, Aryx had $6.3 million in cash and near money. That’s just enough money to operate until September.

Aryx has hired investment bank Cowen to help it figure out its future.

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Henry Paulson and Timothy Geithner, two key players in the government’s bailout of the financial system, said Thursday that steps should be taken to shed light on the darker corners of Wall Street in order to prevent another crisis from happening.

Paulson, who was Treasury Secretary at the height of the 2008 financial meltdown, and his successor, Geithner, who was president of the Federal Reserve Bank of New York at the time, both testified before the Financial Crisis Inquiry Commission in Washington.

The commission, which is holding a series of hearings this year to investigate the causes of the crisis, is probing unconventional and lightly regulated lending practices known as "the shadow banking system."

"The lesson of this crisis, and of the parallel financial system, is that we cannot make the economy safe by taking functions central to the business of banking, functions necessary to help raise capital for businesses and help businesses hedge risk, and move them outside banks, and outside the reach of strong regulation," " Geithner said in prepared remarks.

Geithner said the parallel, or shadow, banking system grew rapidly over the last few decades, reaching about $8 trillion in assets at its peak and rivaling the traditional banking system.

But the nation’s regulatory framework, which is designed to limit excessive-risk taking in a traditional setting, did not keep pace with the innovations in the shadow banking system, he said.

As the crisis intensified, Geithner added, the system became instable and investors panicked. In response, the government implemented "aggressive policy measures" to avert a second Great Depression, he said.

"This was a pure failure of market discipline," said Geithner, referring to the rapid buildup of risk in the shadow banking system. If regulators had broader authority to curb risky bank behavior, "such a large emergency response would not have been necessary."

"That is a key reason why financial reform is necessary," he said.

The Senate on Wednesday took a major step forward in the push to create a Wall Street reform package by approving a bipartisan deal to unwind big financial firms that are considered too big to fail. But lawmakers are still debating a number of other proposals, including new rules for the derivatives market and new consumer protections.

While Paulson’s testimony echoed many of Geithner’s comments, the former Treasury Secretary and Goldman Sachs alum cautioned against over-regulating the non-traditional banking system.

The shadow banking system, which he described as large credit and capital markets, helps provide short and long-term funding for municipal governments, corporations and individuals savings account payday loans. These credit markets "have greatly benefited our nation, spurring growth and prosperity at all levels of our economy," he said.

Paulson acknowledged that the system was marred by "global excesses and regulatory flaws," but he said lawmakers should not throw the baby out with the bathwater.

"In our haste to deal with the flaws in the non-bank financial system, we should not move ourselves back to a system of consolidated, monolithic commercial banks," said Paulson.

Still, Paulson identified four areas where tighter regulation is needed, including securitization, commercial paper, derivatives and money market mutual funds.

Paulson also took the opportunity to offer his explanation of the factors that led up to the crisis. He said the housing bubble, at the heart of the problem, was exacerbated by government policy and irresponsibility on the part of both borrowers and lenders, namely Fannie Mae and Freddie Mac.

But the crisis was also rooted in imbalances in global capital flows, over-leveraged financial institutions, poor consumer protection and "an archaic and outmoded financial regulatory system," he said.

"Many mistakes were made by all market participants, including financial institutions, investors, regulators, and the rating agencies, as well as by policy makers," said Paulson.

He supported the steps policy makers have taken to safeguard the system, but added that risks remain. "A number of the root causes are not being addressed and remain sources of danger to our country," Paulson said.

The testimony came one day after the commission heard from former Bear Stearns executives, including the former chief executive, James Cayne, who argued that the failure of the Wall Street bank was due to market volatility, spurred by unfounded speculation, and not risky behavior.

In his comments Thursday, Geithner said Bear Stearns and Lehman Brothers, two of the main casualties of the crisis, were among the main players in the market for overnight repurchase, or "repo," agreements, asset-backed commercial paper and other structured investment vehicles that make up the shadow banking system.

Bear Stearns was crippled in March 2008 as investors and creditors fled the bank amid fears about its exposure to risky mortgage-backed securities. The investment bank was bought by JPMorgan for about $2.2 billion, or $10 a share, in a fire sale orchestrated by the government.

Lehman Brothers, meanwhile, became the largest bank failure in history when it succumbed to losses in September 2008. 

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Emerson Electric Co., the electrical products maker seeking to acquire Chloride Group Plc, fell the most in more than a year after second-quarter sales trailed estimates and data showed Chinese manufacturing was slowing.

Ferguson-based Emerson dropped $3.44, or 6.4 percent, to $50.18 in New York Stock Exchange composite trading, the biggest percentage decline since Feb. 17, 2009. The shares have gained 18 percent this year.

Revenue for the quarter was $5.14 billion, compared with an average estimate of $5.22 billion from 12 analysts surveyed by Bloomberg. Net income climbed 8.6 percent to $405 million, or 53 cents a share, from $373 million, or 49 cents, a year ago.

"Revenues came in light, which is different than most diversified industrials," Joel Levington, a managing director of corporate credit for Brookfield Investment Management Inc. in New York, said in an e-mail. Concern that Chinese manufacturing is slowing pulled some stocks lower, "and China has been an area of growth," he said.

Emerson last week made a $1.1 billion (723 million pound) offer to buy Chloride, Britain’s largest maker of backup power equipment, to expand its network power division.

Ferguson Chief Executive David Farr declined to discuss Emerson’s efforts to acquire Chloride, citing U.K takeover panel rules, on a conference call with analysts Tuesday.

"We are investing in the emerging markets, we are investing in new products, and we are positioning ourselves for what I would call a slow, steady recovery," he said.

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CHARLESTON, W.Va. — The federal government says it has conducted surprise inspections at 57 problem coal mines across the country in hopes of preventing another explosion like the one that killed 29 miners in West Virginia.

Investigators suspect methane gas and coal dust in the April 5 blast at Massey Energy’s Upper Big Branch mine.

The Mine Safety and Health Administration said Wednesday that the weekend inspections targeted mines known to have problems with methane. Inspectors also went to mines known for allowing too much coal dust to pile up as well as those with ventilation problems.

The agency says it sent 275 inspectors on the raids that included 23 mines in West Virginia and 14 in Kentucky. The rest were scattered across the country.

The agency did not say how many citations it issued.

Three Peabody Energy Corp. mines were among those inspected. They included the company’s Willow Lake mine in Saline County, Illinois, as well as the Air Quality No. 1 mine in Indiana and Twentymile mine in Colorado.

Other Illinois mines that were part of the inspection blitz were Tri County Coal LLC’s Crown III mine in Macoupin County and American Coal Co.’s Galatia mine in Saline County.

Jeffrey Tomich of the Post-Dispatch contributed to this report.

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