Kiger's Notebook

FTC OKs 'early termination' of Hormel/ Skippy deal

It looks like the Hormel folks in Spamtown USA might be able start spreading the peanut butter goodness in the near future.

Remember the deal where Austin-based Hormel made a deal with Unilever to buy the Skippy peanut butter brand for $700 million?

Well, the Federal Trade Commission granted Hormel's request for "early termination" this week. In case, like myself, you aren't sure what 'early termination' means, here's what that means:

Any person filing an HSR form may request that the waiting period be terminated before the statutory period expires. Such a request for "early termination" will be granted only after compliance with the rules and if both the Federal Trade Commission and Department of Justice Antitrust Division have completed their review and determined not to take any enforcement action during the waiting period. In some instances, after a Request for Additional Information and Documentary Material has been issued, the investigating agency will determine that no further action is necessary and terminate the waiting period before full compliance with the Second Request is made.

So it sounds like a good thing. The deal has been given the green light to speed ahead.

Can the new peanut butter favored Spam be far away? Heh.

Hormel Foods issues $250 bond notes

The only Fortune 500 company based in Austin - Hormel Foods -issued $250 million in bonds today.

It seems Moody's Investors Service sees Hormel as a solid investment, because it rated the offering at A2. An A2 rating means the bonds are judged to be high quality.

Here's some from Moody's announcement of this rating and the Hormel bond offering.

Moody's Investors Service assigned an A2 rating to $250 million of 10-year senior unsecured notes issued today by Hormel Foods Corp. The rating outlook is stable.

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Hormel intends to use the proceeds from the notes offering for general corporate purposes. Hormel has $350 million of senior unsecured notes coming due on June 1, 2011, but has enough cash and marketable securities (about $650 million at the end of January 2011) to retire the maturing notes without refinancing.

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Hormel remains lightly leveraged with over $750 million of EBITDA, and on a proforma basis, only $250 million of funded debt and over $500 million of cash and marketable securities.

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Having worked though an industry over-supply of turkey meat last year in the Jennie-O-Turkey Store segment, Hormel is likely to generate strong performance in most of its five operating segments.

However, Moody's remains cautious about the operating environment this year for Hormel's Grocery Products segment.

While we expect that economic conditions will continue to improve gradually in 2011, price competition is likely to remain intense even as input costs rise as consumers remain sensitive to retailer prices. Thus, some of Hormel's premium categories -- such as the highly-competitive convenience meals -- could experience flat sales growth and further margin pressure in the near-term.

 

Rochester Medical gets green light

Stewartville's favorite silcone catheter maker, Rochester Medical, got a green light Wednesday for its $10.5 million purchase of a medical supplies company in the Netherlands.

Back in January, Rochester Medical announced an acquistion deal to buy a company called Laprolan B.V. from its parent firm of Fornix N.V.

Shareholders of Fornix voted to approve that deal this week. The sale is expected to close soon.

The acquisition fits with the international focus at Rochester Medical, which tallied about $42 million in sales last year.
The company exports the majority of the catheters it makes in Stewartville to European markets.

When asked if this addition could spur any expansion to the facilities in Stewartville,  Rochester Medical's CEO and president said back in January that it could eventual drive growth.

We will definitely will be expanding in Stewartville," Jim Conway said in January. "We'll need it. Just this quarter, we've expanded our domestic sales staff (based in the United States) from 12 people to 40."

IBM gives $1,000 bonuses for good 2010

 Spotted a couple articles today on InformationWeek and Bloomberg today about IBM giving non-execs $1,000 stock bonuses last year's performance.

A memo from the Big Blue Boss Sam Palmisano is reported as stating all non-executive employees who performed consistently during the execution of the company’s 2010 strategic plan will get the bonus.

I wonder how many of the IBMers in Rochester will get this bonus?

IBM, which doesn't release any specific employee numbers any more, is not saying how many of its about 400,000 staffers will get this.

The shares will vest in 2015.

Spam execs moved lots of stocks in 2011 for big $

Here's some from a great piece by the Post-Bulletin's Mike Klein. The full story was in print in the weekend edition.

I posted last month that Hormel's CEO saw a 43 percent bump in his paycheck in 2010.

It was a good year to be an executive for Hormel Foods.

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Hormel Foods executives struck while the iron was hot in 2010, exercising their stock options en masse.

For all of 2010, a total of
29 of the Austin-based food giant's executives and directors exercised 753,250 worth of stock options, according to Inside-Monitor.com, which tracks insider stock activity. Those were worth $18.7 million.

That's more than double the 338,370 options exercised by insiders in 2009.

There were 315,605 in 2008 and 285,350 in 2007.

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Hormel stock

52-week low: $37.77 on 1/7/10

52-week high: $52.27 on 12/23/10

Ownership: Funds, 13.41 percent; institutional, 30.52%); other 48.48 percent.

Split coming: In December, the board approved a 2-for-1 stock split, which would be its first in a decade, based on its strong performance. The proposed stock split must be approved by Hormel's shareholders and will be voted on at the company's annual meeting on Jan. 31.

Hormel CEO + 43 percent paycheck bump in 2010

Here's a little tidbit from Spamtown, USA, 2010 was a good year for the CEO of Hormel Foods.

His compensation spiked by about 43 percent this year over last last year.

Here's some from an AP piece on this. The full piece is posted here.

The CEO of Hormel Foods Corp. got a 43 percent increase in compensation this year, outpacing gains in the company's profit and stock price.

An analysis by The Associated Press shows that Jeffrey M. Ettinger received compensation worth nearly $9 million for the fiscal year ended Oct. 31. That's up from nearly $6.3 million last year.

The increase was due to incentives and stock options.

Ettinger got $4.6 million in incentive pay in fiscal 2010, up from $2.9 million last year. And he got stock options valued at $3.3 million when they were granted, up from options worth $2.4 million last year.

Ettinger, 52, is also chairman and president of the prepared-foods company. He has been CEO since 2006.

Ettinger got a salary increase in fiscal 2010 of just over 3 percent, to $989,430. Like the year before, he received no bonus. He got $57,416 in other compensation, mostly in profit-sharing.

Hormel's profit rose 15 percent in fiscal 2010, to $395.6 million. Revenue climbed to $7.22 billion from $6.53 billion the year before.

Good IBM 3Q earnings expected

Big Blue is rolling out its 3Q earnings report today after the market closes.

It looks like the general concensus among analysts is that IBM will show decent gains in this report.

Some are pointing to the new Enterprise Z mainframe, which is made in Rochester, as a boost for this quarter.

Here's some from a piece by Reuters about this:

A new mainframe computer and a recovery in global tech spending likely buoyed IBM's third quarter, giving its shares room to rise.

The shares climbed to record levels this week, but a stronger outlook, particularly in IT services, could nudge them even higher, analysts and investors said.

"The shares have risen quite a bit lately. But I still view it as a very solid, long-term story because they have strong growth in services, software and hardware," said Standard & Poor's analyst Thomas Smith.

Over the past decade, IBM has shifted its focus to profitable software and IT services, away from low-margin computer hardware. Its increasing profitability has been a major attraction for investors.

But for the third quarter, analysts said they will be focusing on how customers responded to new hardware products, including a new "System z" mainframe computer able to process vast amounts of data and financial transactions.

"Hardware has recently gone to less than 20 percent of revenue, so people begin to ignore that. However, in this quarter, one thing I'm looking for is how the launch goes with new hardware products," said Smith, adding that servers and other hardware products were crucial as they often spur sales of IBM's services and software.

Here's some from what John Letzing of Marketwatch says about it:

Analysts polled by FactSet Research expect the Armonk, N.Y. information-technology giant  to report earnings for the period ended in September of $2.76 a share, on $24.2 billion in revenue.

That would compare with earnings of $2.40 share on $23.6 billion in revenue in the same period last year.

Shares of IBM recently hit an all-time high of $142.10. The shares closed Friday at $141.06.

Analysts covering IBM generally expect the company to post significant growth in the sales of software, hardware and services during the third quarter — thanks in part to easy comparisons to the same period last year.

Stumbling in Plainview

Change is stumbling in the door of a Plainview bar and restaurant.

  Troy and Joy Stock are taking over the The Hill Supper Club and Lounge at the Plainview Golf Course on Oct. 1 from Dorothy and Orrin “Puddin” Haugen.

The Stocks are re-naming the club as The Stumble Inn 2 after the bar they own in nearby Millville. It's called, of course, The Stumble Inn.

"We want to build up the business. It is a challenge," Troy Stock says. "We've looked at this for years. It was finally time to pull the trigger."

The Stocks are revamping the place to make it more "user friendly." They're moving the bar to a better location within the restaurant for both the customers and the staff, and they're also expanding hours. The Stocks plan to be open every day starting in the morning. Hiring a chef is in the works.

"It is a fantastic location. It is the prime spot for snowmobilers to stop," he says.

Troy Stock estimates that he'll probably staff the Stumble Inn's new sibling with roughly six to eight people.

Biotech firm with Mayo Clinic ties eyes $86M IPO

An Indiana-based biotech firm developing possible cancer therapies - Endocyte - is gearing up for a public offering with the goal to raise as estimated $86.3 million public.

The Lafayette, Ind. firm (mere miles from my hometown) says plans to use the money pay for clinical trials and repay debt.

Mayo Clinic has worked with this company on cancer research and clinical trials in the past. Not sure if there is ongoing connection.

The biotech venture capital company, Burrill & Co., has helped Endocycte with funding in the past, including being one of the investment companies behind a $26 million round in January.

Burrill, lead by biotech investing guru Stephen Burrill, is known locally for its involvement with the proposed Elk Run biotech park.

For the six months ended June 30, Endocyte reported no revenue and saw its loss widen on higher expenses, according to Wall Street Journal.

Mayo Clinic-linked anti-obesity device firm fat with promise

EnteroMedics signed a deal with Mayo Clinic back in 2005 to work together to develop a weight control device and to license some of Mayo Clinic's patents.

The St. Paul company doubled the weight of its stocks Tuesday after the resulting medical device - the Maestro System - showed positive results from two medical studies.

This kind of turns things around for the company after not-so-good news last fall.

Here's some of what Reuters news service wrote about this:

Shares of EnteroMedics Inc. more than doubled in value after the

company reported positive data from two studies of its device for treating obesity.

The company said obese patient with Type-2 diabetes, who were treated with its device Maestro System, showed sustained improvements in blood sugar, excess weight loss and blood pressure in a feasibility study called Enable.

The results from the study raised hopes about the development path for the Maestro System, which in October failed to meet its main goal.

EnteroMedics also said additional results from the Empower study of Maestro System in obese patients showed sustained reduction in weight loss over 20 months. The system continues to meet all of its safety goals, and no therapy-related serious adverse events were

reported, the company said.

EnteroMedics' device is implanted laparoscopically to periodically block vagus nerves, which control multiple digestive functions, using high-frequency, low-energy electrical impulses.
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Here's some of what stock analyst Debbie Wang of Morningstar Research wrote on this:

EnteroMedics shared favorable data on its obesity reduction device from two studies at a bariatric conference--keeping the slim hopes for continued development of its Maestro system alive.
However, we are leaving our fair value estimate unchanged until the firm can translate the positive data into cash that can keep the firm viable beyond the fourth quarter, which is when we expect EnteroMedics will run out of cash.

We're not getting too excited about the new data coming out of the ENABLE feasibility study because it is only a small-scale study with fewer than 30 patients

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We remain wary of the good news out of the small-scale ENABLE study, as it could be a replay of what happened several years ago, when EnteroMedics reported impressive weight loss results from an earlier small-scale single-arm feasibility study, followed by extremely disappointing results from its subsequent randomized, controlled EMPOWER trial

Either way, the firm still faces the challenge of raising more cash in order to sustain development of Maestro. We also anticipate the newly vigilant FDA's medical device department will ask for another randomized, controlled pivotal trial of Maestro.

While the favorable ENABLE data won't hurt the firm's efforts to gain more financing, EnteroMedics still has a very long road ahead, and its first critical goal will be to obtain enough cash to remain in operation beyond 2010.