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Forest City plans to convert to REIT status

Forest City Enterprises Inc., the real estate developer whose holdings include Brooklyn’s Barclays Center arena, plans to become a real-estate investment trust.

REIT status allow companies to cut their tax rates and has become a popular avenue even for less traditional real-estate companies. Cell-tower, prison and billboard operators, among others, have sought REIT status in recent years.

REITs pay little or no corporate income tax on their earnings, as long as they earn the bulk of their income from rent paid on real property and 90% of those earnings are distributed to investors as dividends.

Forest City owns, develops and manages commercial and residential real estate, focusing on core markets like New York, San Francisco, Boston and Washington, D.C.

The company said the move is expected to take effect for the taxable year beginning Jan. 1, 2016.

On Nov. 3, Forest City said its third-quarter operating funds from operations rose 44% to $61.6 million, reflecting factors include a strong performance from office properties and lower interest expenses.

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SOURCE: http://www.marketwatch.com/story/forest-city-plans-to-convert-to-reit-status-2015-01-13-17485235

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Coach nearing deal to buy Stuart Weitzman

Coach Inc. COH, -1.55% is nearing a deal to bag shoe company Stuart Weitzman, according to people familiar with the matter.

A deal could be announced as soon as this week, the people said. Purse maker and retailer Coach will pay in the $600 million range for the upscale shoe brand, some of the people said. A deal would mark a rare acquisition for Coach, which has historically focused on organic growth. The company’s market capitalization is around $10.3 billion.

Private-equity firm Sycamore Partners is selling Stuart Weitzman, which is one of several brands it inherited when it took Jones Group Inc. private last year. At the time, Sycamore paid $1.2 billion for a collection of brands that included Jones New York apparel, Easy Spirit, Nine West and Stuart Weitzman.

SOURCE: http://www.marketwatch.com/story/coach-nearing-deal-to-buy-stuart-weitzman-2015-01-05-18103379

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American Apparel CEO to be paid $600,000 a year

New American Apparel Inc. Chief Executive Paula Schneider will receive an annual salary of $600,000 when she steps into the role next month.

Ms. Schneider may be faced with deciding whether to work to stem the retailer’s sliding sales or explore a potential sale of the company, following the departure of founder Dov Charney. The Wall Street Journal reported earlier this week that American Apparel was approached by Irving Place Capital about a possible takeover, pushing shares up sharply.

Ms. Schneider, 56 years old, previously worked at a number of retail and apparel companies, including Warnaco Group, Gores Group and BCBG Max Azria.

In addition to her base salary, she is eligible for annual incentive compensations, with a target payment providing for a range of 50% to 75% of her salary. She is eligible to receive a $100,000 bonus if she presents a satisfactory assessment of American Apparel’s 2015 operations by April 5, and can attend board meetings in a nonvoting observer capacity.

Ms. Schneider was appointed to the position on Dec. 15 after American Apparel’s board vote to officially terminate the employment of founder Mr. Charney. He was suspended as president and CEO in June over allegations of misconduct.

Mr. Charney founded American Apparel as a wholesale T-shirt business in 1998 but has found himself at the center of sexual-harassment lawsuits brought by former employees. His lawyers have called the allegations baseless.

American Apparel has struggled with falling sales in recent years. In the three months through Sept. 30, the company lost $19.2 million, compared with a loss of $1.5 million a year earlier. Sales fell 5% to $156 million from a year earlier.

Overall, shares are off about 15% this year.

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SOURCE: http://www.marketwatch.com/story/american-apparel-ceo-to-be-paid-600000-a-year-2014-12-19

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Deere honors CEO’s request to cut his bonus by 25%

Deere & Co. Chief Executive Sam Allen asked the company’s board to cut his cash bonus for 2014 by 25% in the wake of tough conditions in the farm equipment market and the company’s flagging stock price, Deere said in regulatory filing Friday.

The Moline, Ill., company said the board honored Mr. Allen’s request, “resulting in total payments …. of $1.8 million less than the amounts he would have otherwise earned” for meeting the company’s performance goals.

Mr. Allen’s total compensation for the company’s fiscal year ended Oct. 31 rose 5.9% from last year to $20.3 million. Much of the increase stemmed from a change in the value of his pension and deferred compensation, which rose to $3.14 million from $1.19 million in 2013. Excluding the pension, Mr. Allen’s compensation, which also includes awards of stock and options, fell 4.6% to $17.1 million.

His base salary rose 4.1% to $1.49 million, but his incentive-based bonus slipped 19.5% from 2013 to $5.39 million. Without the voluntary reduction, his Mr. Allen’s bonus would have climbed 7.3% to $7.19 million.

Falling crop prices and the curtailment of generous U.S. tax deductions for farmers investing in new machinery have damped demand for farm machinery, particularly for large, high-horsepower models in the U.S. and Canada where Deere dominates the market.

Deere, the world’s sales leader in farm tractors and harvesting combines, reported a 9% decrease in farm machinery sales in fiscal 2014 to $26.4 billion, while operating profit from farm equipment dropped 22% to $3.65 million. Overall net income for the year slipped 10.6% to $3.16 billion, or $8.63 a share, from $3.54 billion, or $9.09 a share in 2013.

For fiscal 2015, Deere forecast profit at $1.9 billion, implying earnings per share of $5.35 to $5.50.

Since the start of the year, Deere stock has slipped 1.1%, while the broader market S&P 500 index is up 11.5%. Deere shares Friday closed 0.58% higher at $90.06.

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SOURCE: http://www.marketwatch.com/story/deere-honors-ceos-request-to-cut-his-bonus-by-25-2014-12-19

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Norbord to buy Ainsworth Lumber in all-stock deal

Norbord Inc. said Monday it will acquire Ainsworth Lumber Co. in a friendly all-stock deal that will create a global wood-panel giant with annual sales exceeding $1.6 billion.

The two Canadian companies said the deal will bring together their geographically complementary, low-cost operations and provide them with more financial flexibility to capitalize on the U.S. housing recovery as well as growing demand for their products in Europe and Asia. The merged company will focus on the production of oriented strand board, an engineered wood panel commonly used in home building.

Norbord will offer 0.1321 of a share for each Ainsworth share in the transaction, which the companies said represents a premium of 15% to Ainsworth’s 20-day volume weighted average price. The transaction will create a company with a market capitalization of about 2 billion Canadian dollars ($1.75 billion). Norbord’s shares closed Friday at C$23.96 on the Toronto Stock Exchange, while Ainsworth’s shares closed at C$2.98.

Norbord operates seven mills in North America, mainly in the U.S. southeast, and four mills in Europe. Ainsworth operates four mills in Canada. The combined entity would have total oriented strand board capacity of about 7.7 billion square feet, making it the largest in the global oriented strand board industry, they said.

The companies said they expect to achieve operating synergies of about $45 million a year mainly through best practices and technology transfers in their mills, sales and logistics improvements and cost-cutting steps.

Norbord Chief Executive Peter Wijnbergen will lead the combined entity, which will continue under the Norbord name. Ainsworth CEO Jim Lake will stay on with the combined company in an advisory capacity for a period of six months.

Brookfield Asset Management Inc. and its affiliated entities, which control approximately 55% and 52% of the outstanding common shares of Ainsworth and Norbord respectively, have agreed to vote in favor of the transaction. Upon closing, the Brookfield entities will control about 53% of the outstanding common shares of the combined company.

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SOURCE: http://www.marketwatch.com/story/norbord-to-buy-ainsworth-lumber-in-all-stock-deal-2014-12-08-9485024

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Newell Rubbermaid plans to sell units

Newell Rubbermaid Inc. said Friday that it will pursue the sale of its Endicia online postage and Calphalon retail outlet stores and kitchen electrics businesses to create a more focused portfolio.

It also reported a decline in earnings, as higher expenses offset a slight gain in revenue.

The consumer-products company has undergone a multiyear revamp in efforts to stoke growth, as annual revenue has been flat recently amid the company revamping its portfolio.

The company said divesting its Endicia online postage unit and Calphalon retail outlet stores and kitchen electrics operation will also create a faster growing, higher margin. The company already is working to cut costs, but on Friday, it also unveiled a fresh, three-year cost-savings effort in the areas of procurement, manufacturing, distribution and further overhead reduction. The company also said it is on track to achieve more than $270 million of total annualized savings by midyear 2015.

Chief Executive and President Michael Polk said Friday such savings will be invested in its brands in the emerging markets of Asia and Latin America.

Newell was founded in 1903 as a maker of curtain rods, and in the 1960s began acquiring other businesses, such as housewares. Today, it owns a hodgepodge of brands, including Calphalon cookware, Graco car seats and baby products, Sharpie and Paper Mate pens, and Rubbermaid containers and commercial products.

The company also reported a profit Newell posted a profit of $122.3 million, or 44 cents a share for the latest quarter, compared with $193.3 million, or 66 cents a share, a year earlier.

Excluding special items, per-share earnings rose to 58 cents from 52 cents a year earlier. Sales rose to $1.48 billion from $1.47 billion.

Analysts expected a profit of 55 cents a share on $1.53 billion in sales.

Last month, the company warned its sales growth for the year is tracking toward the lower end of its earlier guidance, and the consumer-products maker also introduced a sales outlook for next year that fell short of estimates at the time. On Friday, the company backed its full-year outlook.

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SOURCE: http://www.marketwatch.com/story/newell-rubbermaid-plans-to-sell-units-2014-10-31

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Dominion earnings fall due to warm weather

Dominion Resources Inc. said its third-quarter earnings fell 7%, dented by a season of milder-than-usual weather.

Dominion is a Richmond, Va.-based energy company that supplies clients in states such as West Virginia, Ohio, North Carolina, and Pennsylvania. In June, the company said it is seeking U.S. regulatory approval for two projects to move natural gas from the Appalachian region to markets in upstate New York and West Virginia.

It is also is among the companies seeking government approval to export natural gas, aiming to take advantage of increased U.S. production and robust global demand.

“Our service territory experienced one of the mildest summers in the last 30 years,” said Chief Executive Thomas F. Farrell II. “Excluding the 8-cents- per-share impact of the mild weather, third-quarter earnings would have been in the upper end of our range.”

For the latest quarter, Dominion posted a profit of $529 million, or 90 cents a share, down from $569 million, or 98 cents a share, a year earlier.

Operating earnings, which Dominion considers its key metric and which exclude discontinued operations, impairments and other items, were 93 cents a share, down from $1 a share a year earlier.

The company had forecast earnings between 90 cents and $1.05 a share.

For the current quarter, Dominion expects operating profits of 80 cents to 90 cents a share, citing an expected return to normal weather, higher revenues from growth projects and higher earnings from farmout transactions. Analysts had called for 89 cents.

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SOURCE: http://www.marketwatch.com/story/dominion-earnings-fall-due-to-warm-weather-2014-10-31-74855948

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Halliburton CEO: Oil-price drop to be short-lived

Halliburton Corp. beat analyst expectations by boosting third-quarter profit 70%, but shares in the oil-field service company rose only modestly amid persistent worries that low oil prices will slow drilling in the U.S.

Halliburton and its peers, including Schlumberger Ltd., are considered bellwethers for the energy industry because they help oil and gas exploration companies drill and frack wells.

U.S. oil prices are down more than 20% since the start of summer and worries are rife that further declines will be a continued drag on oil-sector stocks such as Halliburton’s. But Chief Executive Dave Lesar told investors on a conference call that he expected lower oil prices would be relatively short-lived.

Still, the recent slide in crude oil prices has raised questions about the sustainability of the North American energy boom. Services companies such as Halliburton are trying to convince investors that their earnings aren’t quickly going away.

Despite some stock-market gains last week, Halliburton shares are down more than 20% from a month ago. The stock was up 35 cents at $52.95 in late trading Monday.

Halliburton on Monday reported net of $1.2 billion, or $1.41 a share, compared with $706 million, or 79 cents a share, a year earlier.

Revenue rose to $8.7 billion from $7.47 billion last year.

Analysts had forecast earnings of $1.10 a share and revenue of $8.53 billion, according to a poll by Thomson Reuters.

Halliburton is a major provider of hydraulic-fracturing services in the U.S. Its North American operations posted the sharpest increase in revenue among the company’s regions, with sales rising 22% to $4.72 billion. The company reported North American profit margins of more than 20% by the end of the quarter–a target that had been out of reach in recent years.

Halliburton and its competitors have said they are putting more drilling and fracking equipment to work in places such as the Permian Basin of West Texas. The number of rigs drilling horizontal wells in the U.S. is up more than 20% from a year ago, and Mr. Lesar said the wells being drilled are bigger and require more service than in the past, something that is good for Halliburton’s business.

Halliburton’s customers show no signs they will stop activity across North America next year, though growth could be slower in other parts of the world because of geopolitical disruptions, he said.

Halliburton’s board approved a 20% increase to the company’s quarterly dividend.

Erin McCarthy contributed to this article.

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SOURCE: http://www.marketwatch.com/story/halliburton-ceo-oil-price-drop-to-be-short-lived-2014-10-20

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Cliffs plans to write down $6 billion in assets

Cliffs Natural Resources Inc. is taking a $6 billion write-down, mostly related to the ill-timed purchase of a Canadian iron ore mine intended to supply the then-booming Chinese steel market.

The hefty write-off by Cleveland-based iron ore and coal miner, announced Friday, is the latest blow to a sector reeling from a 40% drop in iron ore prices from a year earlier due largely to oversupply and slumping demand in China. Iron ore is the main ingredient in the making of steel.

As prices fall, midsize players like Cliffs are getting squeezed by major miners BHP Billion and Rio Tinto Ltd. in Australia, and Vale SA of Brazil, which produce more than 60% of iron-ore exports globally and continue to push production. The big three control massive mines, ports, and railroads, allowing them to produce iron ore at costs of $50 per ton and below.

By comparison, Cliffs’s costs at its Eastern Canadian operations were $87.50 per ton in the second quarter. That division lost $88.2 million in the first six months of 2014, after losing $30.3 million over the same period in 2013.

Cliffs expanded in Canada in 2011 when it bought Consolidated Thompson Iron Mines Ltd. and its Bloom Lake mine in Quebec province for $4.9 billion. “We have one problem child, and that problem child is Bloom Lake,” Chief Executive Lourenco Goncalves said in an interview Friday. “[Cliffs] paid too much, and we are correcting what needs to be corrected.”

At the time, Cliffs officials said they hoped to diversify from their traditional business of mining iron ore in Michigan and Minnesota and selling it to Midwestern steelmakers. Specifically, they wanted to ship ore from Canada to China, which produces around half of the world’s steel and imports around two-thirds of all the iron ore traded on global markets.

But markets have been rocked this year as the big three miners have expanded production while Chinese steel production has eased up, prompting a drop in imports and iron ore prices. The price of iron ore imports into China have fallen 40% from year-ago levels to around $80 per ton, from $134 per ton. Prices for metallurgical coal, the other key ingredient in steelmaking, have also fallen.

The price decline has especially hurt iron ore companies with operations far from China. In the first eight months of 2014, iron ore exports to China from Canada were down 19% at 7.4 million tons. From Australia, exports to China rose 34% to 353.9 million tons.

In 2011, Cliffs “over-paid and over-invested based on high iron ore price,” said John Tumazos, an investor and analyst at Very Independent Research LLC. “The write-off is not a business decision, it’s simply acknowledging what is the status quo.”

In an earlier interview, Mr. Goncalves said the big three producers “can have” the Chinese market, “I don’t want to be a part of it.”

Cliffs is seeking partners for its Canadian operations, and its Australian iron ore mines, which are still profitable but have trouble competing with the major miners. It is also seeking buyers for a chromite project in Canada, and its U.S. coal operations. Mr. Goncalves took office in August after a board coup orchestrated by activist shareholder fund Casablanca Capital LP.

Cliffs’s strategy now is to re-center its business on the five mines in Minnesota and Michigan that supply iron ore to automotive-focused steel mills with operations in the Midwest, such as ArcelorMittal. With the auto industry prospering, those mines have been profitable.

Cliffs’s stock fell 8% to $8.74 on Friday. In the second quarter, the company swung to a net loss of $1.9 million, from a year-earlier profit of $133.1 million. Last week, S&P lowered the miner’s credit rating to BB- from BBB- with a negative outlook, citing falling iron ore prices.

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SOURCE: http://www.marketwatch.com/story/cliffs-plans-to-write-down-6-billion-in-assets-2014-10-17-174855614

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Nucor projects earnings to rise above expectations

Nucor Corp. said Wednesday it expects per-share earnings to rise up to 63% above the prior-year period as the steel manufacturer continues to benefit from stronger energy, automotive and construction markets.

The Charlotte, N.C., company expects per-share earnings for its fiscal third-quarter of 70 cents to 75 cents. Analysts polled by Thomson Reuters had recently expected per-share earnings of 61 cents in the quarter on revenues of $5.3 billion.

The steel industry has benefited from the resurgence of U.S. car makers and increased oil and gas drilling, though lately performance in the sector had been under pressure from a global oversupply that has weighed on prices.

On Monday, Nucor said it would expand its presence in the energy market with a $770 million purchase of Midwestern steel mill Gallatin Steel Co.–a move that will make Nucor the country’s largest steelmaker by capacity.

For the quarter ending Oct. 4, Nucor expects to take a partial write-down of $12 million, or 2 cents a share, on assets in its steel mills segment. Nucor expects the segment to improve in the quarter as sheet, structural and bar steel become more profitable. Nucor has seen strong demand for steel mill products from the automotive and energy industries.

Nucor’s fabricated construction products business, which makes pre-engineered metal buildings and decking, is expected to improve in the quarter on gains in the nonresidential construction market.

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SOURCE: http://www.marketwatch.com/story/nucor-projects-earnings-to-rise-above-expectations-2014-09-17

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