• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Midday Business Report: Former Gold Bank Exec Pleads Guilty

Posted on: Monday, 27 February 2006, 18:00 CST

By Dan Margolies, The Kansas City Star, Mo.

Feb. 27--Former Gold Bank President and Chief Executive Michael Gullion pleaded guilty this morning to stealing $1.9 million from the bank.

Gullion entered his plea in federal court in Topeka during a brief 40-minute hearing before U.S. District Judge Julie Robinson.

He faces a maximum prison sentence of 30 years, although under federal sentencing guidelines, he is likely to receive considerably less.

The government is recommending a reduced sentence based on Gullion's acceptance of responsibility.

Gullion was ousted from the bank nearly 3 years ago after an internal audit uncovered "irregularities" in his personal accounts at the bank. He has since paid back the bank about $3.5 million, including the bank's investigative costs.

For more on this story, please see Tuesday's editions of The Kansas City Star.

To reach Dan Margolies, call (816) 234-4481 or send e-mail to dmargolies@kcstar.com.

STAR BUSINESS ROUNDUP

British utility to buy KeySpan for $7.3 billion

British utility National Grid PLC said it agreed to buy New York-based electricity and natural-gas distributor KeySpan Corp. for $7.3 billion in a deal that would create the third-largest energy delivery utility in the United States.

National Grid said it was paying the $7.3 billion in cash and also taking on debt estimated at $4.5 billion. KeySpan shareholders will receive $42.00 in cash per share.

Upon completion of the deal, National Grid will serve nearly 8 million customers in New York state and New England, the companies said.

National Grid, which owns and operates Britain's power grid, already has a large presence in the United States. It distributes electricity and natural gas to nearly 4 million customers in Massachusetts, New Hampshire, New York and Rhode Island.

KeySpan, based in the Brooklyn borough of New York, is the fifth-largest gas-distribution company in the United States and the largest in the Northeast. It operates the power transmission system for the Long Island Power Authority, bringing electricity to more than 1 million customers in New York's Nassau and Suffolk counties and the Rockaway Peninsula in Queens.

The acquisition is to be completed by early next year.

Moody's Investor Services placed National Grid's debt rating on review for downgrade, expressing concern about the debt the group will acquire if it goes through with the all-cash bid.

Bold sells minority stake in Mutual Fund Store

A California-based private equity group has bought a minority stake in the Mutual Fund Store companies in Overland Park and St. Louis, founder Adam Bold said this morning.

Summit Partners also invested in Bold's franchising company for the Mutual Fund Store, which operates in 28 other markets. Combined, the stores manage $1.7 billion in customer accounts, nearly half of it in the two Missouri stores Bold owns.

Bold would not disclose the amount of the investment or how much of his companies Summit Partners now owns.

Bold said he still retains "a very substantial majority" ownership.

Bold said the investment is part of a restructuring that will create a formal board of directors for his companies. He also anticipates opening more directly owned stores in addition to more franchise stores, which are owned by others.

Harrison B. Miller, a general partner of Summit Partners, will join the 5-member board for Bold's companies.

"They're going to provide strategic guidance at the board level as well as important industry contacts," Bold said of Summit Partners.

The group, formed in 1984, has raised nearly $9 billion and invested in more than 270 businesses, about 100 of which subsequently became publicly traded. It operates private equity funds and makes venture capital investments.

Bold formed the Mutual Fund Store in 1996. Each of the stores relies on his investment advice in choosing mutual funds for customers. Bold has popularized the chain through his weekly radio program that airs in all of its markets.

To reach Mark Davis, call (816) 234-4372 or send e-mail to mdavis@kcstar.com.

NovaStar reports profits for quarter, 2005

NovaStar Financial Inc. today said it posted a profit for the fourth quarter and the year as its portfolio income offset weakness in its mortgage banking business.

The Kansas City-based subprime lender and real estate investment trust reported earnings this morning after it delayed its report of Feb. 10 so it could obtain legal advice on tax issues. NovaStar said the legal opinions confirmed its previous tax positions.

For the fourth quarter ended Dec. 31, net income available to common shareholders grew 16 percent to $26.4 million, or 84 cents a share, from $22.8 million, or 85 cents a year ago.

For the year, net income available to common shareholders grew 21 percent to $132.5 million, or $4.42 a share, from $109.1 million, or $4.24 a year ago. Earnings per share for the fourth quarter and 2005 were impacted by greater shares outstanding than in the previous periods, NovaStar said.

For the year, the company said it originated $9.3 billion in nonconforming loans, up 10 percent from 2004, and that its portfolio of loans under management grew 15 percent to $14 billion. In 2005, the company declared common stock dividends of $5.60 a share. This morning, it said dividends for 2006 are expected to at least match that amount.

NovaStar shares were up $3.95, or 14.97 percent, at $30.34 in midday trading on the New York Stock Exchange. Shares have traded in a 52-week range of $24.08 to $42.55.

UMB completes acquisition of Wornall branch from Pulaski

Pulaski Financial Corp., parent of Pulaski Bank in St. Louis, today said it has completed the sale of its branch at 8442 Wornall Road to UMB Bank.

In the transaction, UMB, a unit of Kansas City-based UMB Financial Corp., assumed $23 million in deposits and acquired the branch's fixed assets and premises. No loans were transferred as part of the transaction.

Pulaski said the sale will enable it to concentrate on expansion in the St. Louis area.

UMB initially announced the deal in October.

At midday UMB Financial shares were up 38 cents at $68.46.

ICOP receives 'largest' order

Shares of Lenexa-based ICOP Digital Inc., a provider of digital in-car video systems for law enforcement, jumped in pre-market trading on news of what the company called its largest order ever.

By midday, however, shares were down 9 cents, or 1.28 percent, at $6.78.

In a news release, ICOP this morning said the police department of Rockville, Md., has ordered 40 of the company's Model 20/20 units at a price of $220,000.

In pre-market trading, ICOP shares jumped 53 cents, or 7.71 percent, to $7.40 after closing Friday at $6.87.

Japanese glass maker plans to buy rest of Pilkington for $3 billion

Nippon Sheet Glass Co., Japan's second biggest sheet glass maker, said that it will pay about $3 billion for the remaining 80 percent stake in Britain's Pilkington PLC, which makes glass for cars and buildings.

The acquisition of the rest of Pilkington, whose main U.S. office is in Toledo, Ohio, will make Nippon Sheet Glass a global leader in the flat glass industry with annual sales of about 760 billion yen ($6.5 billion), the Tokyo-based company said.

Pilkington's board of directors has expressed its support for the plan and will continue to take part in management, Nippon Sheet Glass said. Pilkington had rejected a lower offer last year.

Under terms of the deal, Nippon will pay 340 yen ($3) for each remaining Pilkington share. It already owns 20 percent of Pilkington.

British court hears Miami company's challenge to ports deal

Lawyers for British shipping company Peninsular and Oriental Steam Navigation Co. told Britain's High Court that a U.S. company's legal challenge to P&O's takeover by Dubai Ports World was "woefully thin."

The High Court must approve the 3.9 billion pound ($6.8 billion) takeover -- which has caused consternation among some lawmakers in the United States -- for the deal to go ahead.

Today's hearing had been expected to provide a routine rubber stamp, but Miami-based Eller & Co. filed a last-minute appeal Friday asking the court to deny approval. Eller cited a number of grounds for its objection, including a "real prospect" that U.S. authorities would revoke their approval of the deal.

Martin Moore, a lawyer for P&O, said Eller's case was "woefully thin" and the court should sanction the deal as quickly as possible.

DP World, which is owned by the Dubai government, offered this weekend to submit to a second, broader investigation of its plans to run shipping terminals in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia after opposition to the deal grew in the United States.

Quinn new chairman of Solutia board

Solutia Inc. President and Chief Executive Officer Jeffry Quinn is taking on the added role of chairman of the board, the suburban St. Louis-based company said today.

Paul Hatfield, who had been chairman, will serve as lead director.

Solutia makes a variety of chemical products, from nylon fibers to plastic interlayers used in laminated glass.

Solutia was spun off from Monsanto Co. in 1997 and filed for Chapter 11 bankruptcy protection in 2003, citing financial obligations assigned to it from the spin-off.

On Feb. 14, Solutia announced a plan to emerge from bankruptcy that calls for it to share liability with its former parent for lawsuits and environmental cleanup associated with PCB pollution. The company anticipates emerging from Chapter 11 later this year.

Free answers to your personal finance questions

Members of the Financial Planning Association of Greater Kansas City have volunteered to provide free advice to KansasCity.com users who have personal finance questions. Ask your questions about issues like retirement planning, investing or finding money for higher education. Answers will typically be posted within 48 hours. The personal finance Q&A is for educational purposes only and participants should be aware that a financial planning engagement has not been established.

Oil, gasoline futures fall sharply as Iran concerns ease

Energy futures prices fell sharply today as concerns over Iran's nuclear ambitions eased with an announcement by the Islamic republic and Russia that they would establish a joint uranium enrichment venture.

Also, Saudi security forces shot and killed five militants the government said today were suspects in Friday's foiled suicide bombing of a huge oil processing complex in the kingdom's east.

Still, analysts suggested that -- although markets were well supplied -- the potential for political instability or violence in key producing nations was limiting the price decline.

A barrel of light crude was quoted at $61, down $1.91, on the New York Mercantile Exchange.. April Brent crude futures on London's ICE Futures exchange fell $1.20 to $61.40 a barrel.

On Sunday, Iran and Russia agreed in principle to establish a joint uranium enrichment venture, a breakthrough in talks on a U.S.-backed Kremlin proposal aimed at easing concerns that Tehran wants to build nuclear weapons.

Iran is OPEC's No. 2 oil producer behind Saudi Arabia, and worries that a nuclear standoff could affect Iran's oil output has lifted crude prices in recent weeks.

Financial reports of interest

-- Berkshire Hathaway Inc. of Omaha, Neb., today said it will post its 2005 annual report to the shareholders on its Web site, www.berkshirehathaway.com , at 8 a.m., Saturday, March 4. The report will include Warren E. Buffett's annual letter to shareholders and other information about Berkshire's financial position and results of operations.

-- New York cable operator Cablevision Systems Corp. reported net income in the fourth quarter of $54.1 million, or 19 cents a share, after posting a loss $305.8 million, or $1.06, a year ago. The year-ago loss included a $166.3 million charge associated with the closure of Voom, a high-definition TV business. Revenue rose to $1.49 billion from $1.32 billion. For the year, Cablevision reported earnings of $94.3 million or 33 cents a share versus a loss of $676.1 million or $2.36 in 2004. Revenue for the year rose to $5.18 billion from $4.75 billion.

-- Hormel Foods Corp., maker of Spam, said first-quarter net income grew to $69.3 million, or 50 cents a share, from $64.6 million, or 46 cents, a year earlier. Sales grew to $1.42 billion from $1.27 billion.

-- Lowe's Cos., the second-largest home-improvement retailer behind The Home Depot, said fourth-quarter net income grew to $695 million, or 87 cents a share, from $508 million, or 64 cents, a year ago. Revenue rose 26 percent to $10.81 billion.

-- Gold producer Newmont Mining Corp. said fourth-quarter net income slid to $62 million, or 14 cents a share, from $190 million, or 42 cents, a year ago. Revenue rose to $1.31 billion from $1.2 billion. Net income for the year fell to $322 million, or 72 cents a share, from $443 million, or $1, in 2004. Revenue was essentially flat at $4.41 billion.

-- Luxury sports-car maker Porsche AG said net profit in the first six months of the fiscal year rose to 169.8 million euros ($202 million) from 148.3 million euros. Sales in the Aug. 1-Jan. 31 period rose to 3.26 billion euros ($3.88 billion) from 2.82 billion euros. Porsche does not release quarterly figures.

-- Vodafone Group PLC, the world's largest mobile phone company by revenue, said its assets are overvalued by as much as 28 billion pounds ($49 billion) and warned its revenue growth will slow next fiscal year. The charge comes mainly from its German operations following the company's takeover of rival Mannesmann AG in 2000, but the company said that operations in Italy and possibly Japan are also overvalued.

Armor to buy Stewart & Stevenson for $755 million

Stewart & Stevenson Services Inc. agreed to be acquired by Armor Holdings Inc. in a deal that values the 104-year-old maker of military trucks at $755 million.

Armor Holdings, a Jacksonville, Fla.-based maker of bulletproof vests and vehicle armor, said it is paying $35 a share for Stewart & Stevenson.

Armor said it expects the transaction to close by mid-year.

Shares in Houston-based Stewart & Stevenson have nearly tripled since 2003, when the U.S.-led invasion of Iraq increased the need for the company's line of military trucks, which haul cargo and garbage, and tow other military vehicles.

China approves Avon to resume direct sales after eight-year ban

Avon Products Inc. has received approval to become the first company to resume direct sales in China following an eight-year ban, the Commerce Ministry said today.

China banned direct sales in 1998, saying it was hard for consumers to tell the difference between legitimate sales networks and fraudulent pyramid schemes, which were common then.

The government finally issued rules to regulate direct sales in December, clearing the way for Avon and other companies such as cleaning products maker Amway Corp. to apply for licenses.

The companies had been selling their goods through retail outlets.

Auto-parts supplier Dana meeting with banks

Auto parts maker Dana Corp. of Toledo, Ohio, said it was in talks with banks and other lenders and expects to come to a resolution within two weeks on its financing plans.

The company's stock has been in a downward spiral since announcing last fall that it was restating earnings and lowering its profit forecast for 2005 because of accounting errors.

Dana also has been hurt by soaring energy and steel prices and said in January that it lost nearly $1.3 billion in the third quarter last year while realigning its business.

MONEYWISE CONSUMER NEWS

Applebee's to launch shrimp campaign

Applebee's International Inc. today said it will launch a new advertising campaign in conjunction with its Shrimp Sensations promotion, which begins this week in restaurants across the country.

The Overland Park-based casual dining chain said network television supporting the promotion will begin March 4.

John Cywinski, chief marketing officer, said, "The new campaign is an evolution of our popular commercials featuring fun, parody lyrics, and will feature two recurring characters, simply known as 'The Applebee's Guys.' The musical duo will appear in new ads for each promotion as they draw guests' attention to craveable food served in a friendly, neighborhood setting."

The new ads will be available on the company's Web site ( www.applebees.com) and were created by Foote, Cone & Belding of Chicago.

Applebee's Shrimp Sensations promotion features new items including a Parmesan-Crusted Shrimp Penne pasta and a Shrimp Trio combination.

ECONOMIC NEWS

New home sales fall in January

Sales of new homes fell for the second time in three months in January, providing further evidence that the nation's five-year housing boom is slowing.

The Commerce Department reported that sales of new single-family homes dropped by 5 percent to a seasonally adjusted annual rate of 1.233 million units last month.

That was a bigger drop than analysts had been expecting and provided support to the view that the housing market, after setting sales records for five straight years, is slowing under the impact of rising mortgage rates.

The 5 percent January drop in sales followed a revised 3.8 percent increase in December and was the biggest setback since a 7 percent drop in November.

Despite the fall in sales, the median price of a new home was up in January to $238,100, compared with $229,000 in December. The median is the point where half the homes sold for more and half for less. The January figure was the highest since an all-time high of $243,900 set in October.

Economists had expected sales to be supported last month by the warmest January in more than 100 years of record-keeping. Unusually mild weather had pushed up construction of new homes and apartments by 14.5 percent last month, the biggest increase in more than three decades.

However, the milder weather did not have the same positive impact on sales which fell in all regions of the country except the West.

The biggest decline was a 14.9 percent decrease in sales in the Northeast, which followed an even bigger 23 percent plunge in sales in December. Sales in the Midwest were down 10.8 percent after having risen by 21.2 percent in December.

Sales fell by 10.3 percent in the South in January following a 1.2 percent gain in December.

Bucking the national trend, sales in the West posted an 11.3 percent increase in January after a 6.3 percent gain in December.

Two Koreas show off joint industrial zone

Officials from the divided Koreas today showed off a joint industrial zone, a key project they hope to dramatically expand in coming years in a sign of faith that relations between the two states are moving further toward reconciliation.

"We will bring peace and prosperity to the Korean Peninsula through the Kaesong Industrial Complex," Kim Hyo Jong, a North Korean official serving on the Kaesong Industrial District Management Committee, told foreign journalists.

It marked the first time that non-South Korean reporters from foreign news organizations were allowed to visit the facility, one of the key fruits of a budding detente between the two Cold War rivals.

The communist North and capitalist South have been politically divided since the end of the 1950-53 Korean War, which ended in a truce instead of a peace treaty, leaving them technically at war.

Tensions have eased considerably in recent years, however, particularly after a historic summit between North Korea leader Kim Jong Il and then South Korean President Kim Dae-jung in 2000 fostered increased exchanges and more business deals.

Construction on the Kaesong complex began in June 2003, three years after the summit, and it began operating the following year, led by Hyundai Asan Corp., the Seoul-based company spearheading South Korean business efforts in the North.

So far, a total of 15 South Korean companies have set up shop in this enclave, surrounded mostly by barren hills and dusty fields, less than six miles from the heavily armed border separating the Koreas.

They are shipping manufactured goods ranging from kitchen pots to semiconductor parts to the South, utilizing about 6,000 North Korean workers.

Clothing, footwear and cases for cosmetics are among other products manufactured in the zone, where North Korean workers earn about $57 a month.

Though the project is still in its infancy, Kaesong has already played a major role in boosting inter-Korean trade to historic levels.

Trade surged 51.5 percent in 2005, topping $1 billion for the first time, the Korea International Trade Association, or KITA, said last month.

U.S., Colombia conclude free trade agreement

The United States and Colombia have concluded a trade agreement to eliminate tariffs and other barriers to goods and services flowing between the two countries.

The agreement was announced today by U.S. Trade Representative Rob Portman and Jorge Humberto Botero, Colombia's minister for trade, industry and tourism.

In May 2004, the United States initiated free trade agreements with three Andean nations -- Colombia, Peru and Ecuador. Agreement was reached with Peru in December 2005 and negotiations with Ecuador are continuing. Bolivia has participated as an observer and could become part of the agreement.

Colombia becomes the 15th country to sign a free trade agreement with the United States since 2001 and negotiations are under way or about to begin with 10 more countries.

MARKET NEWS

Stocks higher on Lowe's earnings

Stocks began the week with a moderate advance as strong earnings at home improvement retailer Lowe's Cos. and sharply falling crude oil prices boosted investors' confidence in the economy and corporate earnings.

A bullish outlook and better-than-expected fourth-quarter profits from Lowe's soothed investors' concerns that corporate profits would decline as the economy slowed through the year.

Oil prices tumbled after surging to nearly $63 a barrel Friday in response to a foiled terrorist attack against a Saudi Arabian processing facility. A barrel of light crude was quoted at $61, down $1.91, on the New York Mercantile Exchange.

While a series of economic data is expected later in the week, including a reading on gross domestic product as well as data on manufacturing and the service sector, analysts remain optimistic about the market's resiliency and investors' bullish attitudes.

"I think this is one of those times where it's hard to be bearish," said Chris Johnson, manager of quantitative analysis at Schaeffer's Investment Research in Cincinnati. "We're still in a market that can easily fall prey to all kinds of intraday activity, up or down, but I think we have room to go higher over the next two to three weeks."

In midday trading, the Dow Jones industrial average rose 56.03, or 0.51 percent, to 11,117.88. The Standard & Poor's 500 index added 6.15, or 0.48 percent, to 1,295.58, and the Nasdaq composite index gained 21.54, or 0.94 percent, to 2,308.58.

Bonds slipped lower, with the yield on the 10-year Treasury rising to 4.59 percent from 4.58 percent late Friday. The dollar rose against most major currencies, while gold prices fell.

Wall Street's bullishness was undiminished by a disappointing report on the housing market from the Commerce Department. New home sales dropped 5 percent in January to 1.233 million units. Economists had expected sales of 1.27 million for the month.

Lowe's jumped $2.88, or 4.4 percent, to $68.40 after reporting earnings that beat Wall Street profit forecasts by 7 cents per share. The company also issued a very strong outlook for future earnings that came in well above analysts' forecasts.

Dow industrial The Walt Disney Co. added 37 cents to $28.35 after a report in Barron's over the weekend suggested the media conglomerate could be purchased by Apple Computer Inc. now that Apple founder Steve Jobs sits on Disney's board as its largest individual shareholder. Apple rose 34 cents to $71.80.

Merrill Lynch & Co. Inc. rose $1.36 to $78.12 after the Wall Street firm said it would increase its share repurchase program by $6 billion.

-- For the quickest, most complete local afternoon report on the financial markets, check out The Closing Bell report on www.kansascity.com.

Coming from The Star

-- Tomorrow in Star Business Weekly: H&R Block, perhaps Kansas City's most widely known business icon, is under the gun this tax season.

-- Sunday in MoneyWise: Our Four Big Money Worries: dealing with debt, buying the first home, taking care of the kids, and hitting the retirement number. Our Annual Personal Finance Guide -- a special section.

The Midday Business Report is compiled from staff and wire service reports by Rick Babson. Call him at (816) 234-4880 or send e-mail to rbabson@kcstar.com . For a complete report of the day's events, check out the Business section of The Kansas City Star.

-----

Copyright (c) 2006, The Kansas City Star, Mo.

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

NYSE:KSE, NYSE:NGG, NYSE:MCO, NYSE:NFI, NASDAQ-NMS:PULB, NASDAQ-NMS:UMBF, NASDAQ-SMALL:ICOP, Tokyo:5202, LSE:PILK, LSE:PO, Unknown:DPW, NASDAQ-OTCBB:SOLUQ, NYSE:MON, NYSE:BRKA, NYSE:CVC, Unknown:CBV, NYSE:HRL, NYSE:LOW, NYSE:HD, NYSE:NEM, XETRA:POR3, NYSE:VOD, NYSE:SVC, NYSE:AH, NYSE:AVP, Unknown:ALC, NYSE:DCN, NASDAQ-NMS:APPB, Unknown:SDP, NYSE:DIS, NYSE:DJ, NASDAQ-NMS:AAPL, NYSE:MER, NYSE:HRB,

Source: The Kansas City Star (Kansas City, Missouri)

More News in this Category