Business Briefs: Tractor Supply stock splits

The board of directors for Brentwood-based Tractor Supply Co. approved a two-for-one stock split of the company's common stock. This will increase the number of outstanding shares to 72.6 million from approximately 36.3 million.
"In addition to our third consecutive quarterly cash dividend, we are pleased to announce this stock split, which should further enhance the liquidity of our shares and increase the attractiveness of our stock to a broader range of investors," said Jim Wright, chairman and CEO of Tractor Supply, in a news release Thursday. Tractor Supply is the largest retail farm and ranch store chain in the country.

The company expects to distribute the newly issued shares on Sept. 2.

— BONNA JOHNSON

HealthSpring shares climb

Shares of HealthSpring Inc. rose 11.84 percent Thursday after the company posted a 75 percent jump in its second-quarter earnings and boosted its expectations for full-year 2010 earnings.

Earnings of the Franklin-based managed-care company rose to $55.8 million, or 98 cents a share, from $31.9 million, or 58 cents a share, a year ago.

The recent quarter's results far exceeded the 58 cents a share consensus estimate of analysts polled by Thomson Reuters. HealthSpring said it now expects to earn $3.15 to $3.25 a share for 2010 on revenues of $2.95 billion to $3 billion. Analysts on average had forecast earnings of $2.61 a share.

HealthSpring shares closed at $19.27, up $2.04.

— GETAHN WARD

America Service profit falls

America Service Group saw its second-quarter net income decline to $1.9 million, or 21 cents a share, versus $2 million, or 23 cents a share, a year ago.

On average, analysts polled by Thomson Reuters expected the Brentwood-based prison health-care company to earn 27 cents a share for the recent quarter.

Health-care revenues from continuing contracts rose 2.4 percent to $156.2 million. America Service increased its guidance for full-year 2010 pro-forma net income to $11.5 million on total revenues of $640 million to $650 million.

— GETAHN WARD

Patton House expands

Patton House Entertainment, a full-service entertainment management company, is launching two new divisions.

Patton House Booking will focus on providing clients booking services in nontraditional venues, a news release said. Michael Hare will head the new division.

Patton House Music Publishing will focus on acquiring new publishing clients and acquisitions of existing music catalogs. The division will be led by Adam Edelstein, recently promoted to director of business and strategic development.

Tiffany Rockhold, with the company since 2007, will assume the newly created position of director of content and brand management.

Patton House Entertainment was started in 2005 by Andrew Patton, former head of radio promotion for Word Records and Provident Label Group, according to the news release.

— ANITA WADHWANI

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Deaf patients sue Summit Medical, claim bias

Five people who are deaf are accusing HCA's Summit Medical Center in a lawsuit filed in Nashville federal court Friday of discrimination by denying them sign language interpreters.
A second suit filed by three of the five made similar claims against Summit Primary Care PLLC, a physicians practice that's not a part of the hospital, although its nine doctors admit patients there. One of those doctors discharged one of the plaintiffs from his care because that patient needed a sign language interpreter, according to the suit.

Specifically, the suit that a disability advocate filed on behalf of the plaintiffs against Summit Medical accuses the Hermitage hospital and its outpatient service provider of inconsistency in providing interpreters to deaf patients as required by the Americans with Disabilities Act. The defendants also failed consistently to provide qualified interpreters to the plaintiffs when they were family members of patients, it added.

"This practice is occurring across the state and a lot of professionals need to be aware that under the ADA, they have to provide effective communication (to people with disabilities)," said Sherry Wilds, a staff attorney at the Disability Law and Advocacy Center of Tennessee in Nashville. "For many patients who are deaf, that means a qualified sign language interpreter."

Jeff Whitehorn, Summit Medical's chief executive, said the hospital hadn't yet been served the complaint, but added that it provides services to patients with disabilities, including telephone assistance and interpreters from the League for the Deaf and Hearing Impaired.

"The health, safety and welfare of our patients is our utmost concern," Whitehorn said.

Hospital chain HCA and its local TriStar Health System subsidiary are co-defendants in that suit along with Summit Medical and its outpatient provider, Summit Medical Associates.

The suit against Summit Primary Care cited a Feb. 5 letter in which co-defendant Dr. Edward L. King indicated that he would dismiss co-plaintiff William Homer Amonett from his care within a month "due to the need to interact through an interpreter at (Amonett's) office visits." A call to the practice with offices two blocks east of the hospital wasn't returned.

Both suits request a court order to stop the alleged discrimination, for the defendants to offer at least two hours of mandatory training a year on ADA compliance and disability-related issues to their staff, and an award of plaintiffs' legal costs.

This week marked the 20th anniversary of the ADA.

Getahn Ward covers the business of health care for The Tennessean . He can be reached at 615-726-5968 or at gward@tennessean.com.

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Brunswick halts 2 lines, lays off 135 in Ashland City

ASHLAND CITY — Brunswick Corp. has shut down two of its three boat assembly lines in Ashland City, laying off 135 workers, and is "exploring options" for the third line but will keep it running at least through the end of the year, the company said Friday.
The moves are partially the result of Brunswick's sale on Thursday of its Triton boat line to Fishing Holdings LLC, a unit of Platinum Equity.

One of the three lines at the Ashland City facility produced the Triton fiberglass fishing and recreational boats, but Fishing Holdings will move production of those boats to its own plant in Flippin, Ark., in September.

Separately, Brunswick will transfer production of its Lund fiberglass boats to the Brunswick Boat Group's Tellico fiberglass manufacturing plant in Vonore, Tenn. The Lund brand was not part of the Triton deal.

About 90 people will remain employed making Brunswick's Trophy brand fiberglass boats at the Ashland City plant until the Lake Forest, Ill.-based Brunswick decides what to do with that line. It wasn't included in the Triton sale, either.

"This decision was part of our ongoing strategic review to further refine our product portfolio and best focus our resources on those brands and marine segments that we believe are core to our success going forward," Brunswick Chairman and CEO Dustan E. McCoy said in an announcement of the Triton sale.

"These decisions, while strategic in nature, are never easy or without difficult consequences," he said. "But they are nevertheless required by business realities, and are no reflection upon the dedication and expertise of the men and women at the Ashland City facility."

Triton founder to stay

Brunswick bought Triton Boats in 2005 from Earl Bentz, 58, of Nashville, who founded the company in 1996 and stayed on as CEO after the sale to Brunswick.

Bentz said Friday that he will continue to lead Triton under Platinum Equity as well, a move that reunites him with the Stratos line of boats that he founded in 1983. Platinum Equity bought the Stratos and Ranger brands out of bankruptcy from Genmar Corp. in January and subsequently moved production from Murfreesboro to Flippin.

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CVS Caremark, Aetna strike retail management contract

NEW YORK — CVS Caremark Corp. on Wednesday reported weaker quarterly earnings and lowered its profit forecast, but shares rose as investors approved of a large pharmacy benefit management services contract struck with Aetna.
CVS Caremark will administer Aetna's retail pharmacy store network and manage customer service. It will also handle prescription drug purchasing, manage inventories, and fill prescriptions for Aetna's mail order and specialty pharmacy operations. The contract will bring in revenue of $8.2 billion next year. CEO Tom Ryan said the 12-year contract is the largest and longest contract in the industry.

The contract offsets other major contracts lost in the past year. That lost business pushed second-quarter net income down 7 percent, to $821 million from $886 million. On a per-share basis, profit was unchanged at 60 cents as the company had fewer shares outstanding this quarter.

The Woonsocket, R.I., company's revenue fell 3 percent to $24 billion from $24.87 billion. Revenue from its drugstore network rose 4 percent to $14.31 billion, but because of the contract losses, Caremark's revenue fell 9 percent to $11.84 billion.

The figures add up to more than $24 billion because some revenue is counted under both businesses.

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Veterans with disabilities thrive at business boot camp

LOS ANGELES — Sgt. Neil Avant was headed to a meeting with businessmen in Baghdad last year when a man wearing women's clothes with explosives hidden underneath blew himself up.
Avant's injuries, including nerve damage to both legs, ended his Army career at 33. Looking for a new vocation, he decided to open a green energy business. Earlier this month, he joined 19 other veterans with disabilities at an eight-day crash course in entrepreneurship.

His instructors at UCLA's Anderson School of Management were blunt. Why would anyone consult him, he recalled them asking, when there are numerous firms already offering to help customers convert to renewable energy?

"Man, this really is like boot camp, you know the way they break you down to build you up?" Avant said in between lectures on balance sheets and marketing strategies.

"I think I was a little too cocky. ... We were trying to do microloans and financing in a combat environment, and I was like, 'If I can do that in Iraq, I can do it anywhere, right?' "

With jobs hard to find, starting a business can be an attractive option for veterans returning from Iraq and Afghanistan with debilitating injuries.

Hundreds apply every year for the Entrepreneurship Bootcamp for Veterans with Disabilities, which is offered at six universities nationwide.

The all-expenses-paid program, funded by contributions from the business community, was founded by J. Michael Haynie, who served 14 years in the Air Force before joining the Whitman School of Management at Syracuse University as an assistant professor of entrepreneurship. "If we know anything from history, for veterans with disabilities the path to traditional employment is a challenge," Haynie said.

Flexibility is premium

Program participants say becoming entrepreneurs allows them to craft careers suited to their skills and limitations. In addition to dealing with physical issues, many veterans with disabilities require care that can be difficult to fit into a traditional workweek.

"I probably have on average two to three medical appointments a week," said Patrick Valdez Sr., who suffered back, shoulder and knee injuries during a 33-year Army career. "That's a lot to ask an employer."

By starting a business selling promotional products, Valdez now controls his schedule.

As a command sergeant major, he knew how to handle unruly soldiers. But, he said, when a vendor lets him down, "you can't call the guy in and chew his butt for half an hour."

Haynie said the military cultivates many attributes of successful entrepreneurs, including the ability to assess risk, overcome obstacles, build teams and manage resources.

Of the first class of 20 at Syracuse University in 2007, 14 are running their own businesses full time, Haynie said. Four generated more than $1 million in revenue last year.

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Auto supplier NHK Spring to bring 224 jobs to Murfreesboro

Up to 224 new jobs will be created in Murfreesboro by Japanese auto-parts supplier NHK Spring Ltd. when it opens a $54 million plant in mid-2011 to make seat components for vehicles that Nissan assembles at its Smyrna manufacturing complex.
The plant will be built on a 50-acre site at Joe B. Jackson Parkway and Interstate 24 by NHK's U.S. subsidiary, NHK Seating of America Inc. Construction will begin in October, the company said.

In a separate announcement, Interstate Warehousing said it would expand its refrigerated storage and food-distribution facility, on Joe B. Jackson Parkway near the NHK site, and add 31 jobs to the 57 positions it already has.

The two projects are in an industrial-development area that was created by the city of Murfreesboro and the Tennessee Department of Transportation.

Two other manufacturing companies already are operating in the area: Perfect Equipment Co., which employs 278 people in the manufacture of wheel weights, and Pretoria Engineering, which has 60 workers who make components for mass-transit vehicles.

"The idea was to build that I-24 interchange to create an industrial-development zone, and it has paid off," said Holly Sears, vice president for economic development at the Rutherford County Chamber of Commerce.

NHK's facility will be a so-called "tier one" supplier for the Nissan assembly plant in Smyrna, about 15 miles away, and will be ready to begin production of seat components for Nissan vehicles about the time Nissan starts making its new Leaf electric car at the Smyrna complex in late 2011 or early 2012.

But Sears, Nissan and NHK officials couldn't confirm Wednesday whether the NHK plant would be making parts for the Leaf.

Nissan also is building a $1 billion lithium-ion battery plant at the Smyrna complex to supply batteries for the Leaf, but that's an in-house project and won't be developed by an outside supplier.

The NHK jobs come at the same time Volkswagen is building a plant to produce a mid-size sedan in Chattanooga, and that project also has spawned suppliers' jobs.

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Tennessee Commerce gets hit with regulatory action

CORRECTED VERSION: Franklin-based business bank Tennessee Commerce Bancorp announced this morning that it has an informal agreement with federal banking regulators to stop paying preferred dividends and to get permission from the Federal Reserve before adding to its debt.
Private shareholders and the federal government were getting dividends as part of Troubled Asset Relief Program, or TARP.

The government had invested $30 million in Tennessee Commerce, and like other small and regional banks, Tennessee Commerce has not repaid that money.
Ceasing dividend payments to the government could also trigger a provision in the TARP program that would allow the government to appoint two people to the bank’s board.
The bank’s stock fell by 60 cents this morning to $6.10 per share in trading on the Nasdaq.
“Tennessee banks are last in to some of the problems and hopefully, they’ll be the first out,’’ said Paula Johannsen, managing director for the Tampa office of investment bank The Carson Medlin Co.

The bank is in the middle of trying to raise $60 million in common stock.
The bank has stated that “capital is not being raised out of concerns of potential credit losses in our portfolio.” Instead, the bank said it could use the money for a variety of reasons: including growth, acquisitions of other banks or paying off $8.75 million in debt.
Tennessee Commerce reported Tuesday that credit trends actually are improving and that it made a $1.5 million profit in the second quarter.

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Japanese auto supplier to build Murfreesboro plant, hire 224

A Japanese auto-parts supplier will build a plant in Murfreesboro to manufacture seat components for Nissan vehicles beginning in mid-2011, and eventually will employ up to 224 workers, the company and regional economic-development officials said today.
NHK Seating of America, Inc., a subsidiary of NHK Spring Co., Ltd., of Yokohama, Japan, will invest about $54 million in the new facility, which will be at Interstate 24 and Joe B. Jackson Parkway, said Holly Sears, vice president for economic development at the Rutherford County Chamber of Commerce.

Although NHK did not say what Nissan vehicle it would build the seat components for, the opening of the plant would coincide with the start of production of Nissan’s new Leaf electric car at the automaker’s manufacturing complex in Smyrna, about 15 miles away.

Construction of the building, on a 50-acre site being purchased by NHK, will begin in October, and when the plant is in full operation, by 2015, it is expected to reach its peak employment. The company has an option on an additional 25 acres for future development, as well.

NHK Seating, founded in 1987, originally was a joint venture of the Japanese company and the U.S. auto supplier Lear Corp., based in Southfield, Mich. The Japanese company bought Lear’s interest in 2006.

The U.S. operation's headquarters and only current manufacturing plant is in Frankfort, Ind., where it builds seat assemblies for the Subaru Outback, Legacy and Tribeca and the Toyota Camry, as well as active front headrests for the Camry, to supply a joint Subaru-Toyota assembly plant in nearby Lafayette, Ind.

The Rutherford County site for the new plant is part of an area targeted by the city of Murfreesboro and the Tennessee Department of Transportation for industrial development with the construction of the Joe B. Jackson interchange on I-24 in the early 2000s.

Already, three other facilities are operating at the site, including Perfect Equipment Co., which employs 278 people in the manufacture of wheel weights; Pretoria Engineering, which has 60 workers who make components for mass-transit vehicles, and Interstate Warehousing, a cold food-storage and distribution center with 57 employees.

Interstate Warehousing announced a 135,000 square-foot expansion of its facility on Wednesday, and said it would hire an additional 31 employees when construction is completed, Sears said.

Contact Tennessean automotive writer G. Chambers Williams III at 615-259-8076 or cwilliams1@tennessean.com.

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GMA Dove Awards' move to Atlanta met with shock, disappointment in Nashville

The GMA Dove Awards, Christian and gospel music's equivalent of the Grammy's, is moving to Atlanta next year after 41 years as an annual Nashville event that attracts thousands of artists and a national TV audience each spring.
Ed Leonard, chairman of the board for the Nashville-based Gospel Music Association, called the move a chance to "shake things up" while continuing to "build community" for the awards show that had long showcased Nashville's role as a gospel music capital.

"Atlanta is a great place to go. There's lots of gospel down there. There are a lot of churches down there. It's another way to expose our music. And my hope is that we'll be back," said Leonard, who also is president of Christian label Daywind Records.

"Moving to Atlanta is a way to better embrace the black gospel community," Leonard said.

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The announcement took many Nashville music industry leaders and convention officials by surprise.

"Shock and disappointment" was the terse reaction from Nashville Convention & Visitors Bureau President Butch Spyridon when he learned of the decision Tuesday.

The move by the Doves follows a contract renewal with Atlanta-based GMC, a cable TV channel that has partnered with GMA to broadcast the Dove Awards for the past three years. The three-year contract was renewed for one additional year, although the move to Atlanta was not a specific condition of the extended agreement, Leonard said.

The city of Atlanta also has stepped forward as a partner in the event, although Leonard said the local government offered no financial incentives.

Many of this year's award winners, including bands and musicians such as Casting Crowns, Chris Tomlin and Third Day, also are based in Atlanta.

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HealthStream's Q2 revenues up, net income down

HealthStream Inc. reported second-quarter net income of $1.3 million, down 24 percent from $1.7 million a year ago.
Per share, results were 6 cents vs. 8 cents last year. On average, the two analysts surveyed by Thomson Reuters expected 4 cents a share for the recent quarter.

Revenues rose 14 percent to $16.7 million. Operating income rose 26 percent to $2.3 million, reflecting mostly the strong revenue growth.

HealthStream, meanwhile, said it expects full-year consolidated revenues to grow by 11 percent to 13 percent from last year.

On average, analysts forecast net income of 16 cents a share for this year.

Shares of the Nashville-based learning and research applications provider for the health care industry fell 18 cents to $4.39 in trading Monday. Its financial results were announced after the markets had closed.

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AmMed Direct gets CEO, reaccreditation

AmMed Direct named Dennis Berry, who had been the company’s vice president of reimbursement operations, its chief executive officer.
The Nashville-based mail-order diabetic supply company, meanwhile, said it received Medicare reaccreditation for both its pharmacy and “durable medical equipment” services.

Before joining AmMed a year ago, Berry was vice president of reimbursement operations for CCS Medical Inc. of Clearwater, Fla.

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More roadside chargers needed for electric cars

NEW YORK — The auto industry calls it range anxiety: Drivers want electric cars but worry they won't have enough juice to make long trips. After all, what good is going green if you get stranded with a dead battery?
It's a fear that automakers must overcome as they push to sell more battery-powered cars. So government and business are taking steps to reassure drivers by building up the nation's network of electric charging stations.

The hope is Americans will become more comfortable buying cars such as Nissan's all-electric Leaf, due out late this year, which can travel just 100 miles on a single charge. That's fine for a commute but potentially stressful for longer road trips.

"I think the Leaf is a beautifully designed vehicle, but 50 miles in one direction is just not enough," said Bob Shafron, a former electric car owner in California. "I think they are going to run into problems in markets like L.A., where things are spread out."

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While automakers and electric car advocates expect most charging to be done at home outlets, those won't help drivers running low on power far from their garages or caught in traffic.

Only a few hundred public chargers exist now, but government grants totaling more than $115 million will help add thousands more, including in San Diego, Detroit and Washington.

Electric vehicle advocates hope more will be built by private retailers and restaurants, using the charging stations to draw customers.

Public and privately funded chargers are going up in places like rest stops, hotels, McDonald's and Starbucks. Still, even the rosiest estimates put the number of public charging stations at 16,000 by 2012, compared with 117,000 gas stations on American roads.

Which comes first?

President Barack Obama wants 1 million electric cars on American roads by 2015, but experts say a chicken-and-egg problem is standing in the way. Before enough cars hit the road, private vendors may be reluctant to build many charging stations. And without many charging stations on the road, people may be reluctant to buy the cars.

Most public stations will take eight hours to juice up a car all the way, about the same as home chargers. These plugs could work for people who have chargers near their offices, but wouldn't work for quick refueling. Even a partial charge will take a while — 2½ hours to get 30 miles. A limited number of the chargers will be fast chargers, which will still take 30 minutes for a full power-up.

In 1999, Shafron ran out of power as he was driving his EV1, the all-electric car that General Motors launched in the 1990s and later stopped making. His range meter had told him he had 20 miles left.

Difficulty in gauging remaining charge was an issue with the EV1. Varying road conditions made the range of early electric cars tough to predict. Carmakers say today's range meters are much more accurate.

Whether or not the infrastructure is ready, 146,000 electric cars are expected on the road by the end of 2012.

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Report shows what to expect in consumer recovery

Much has been written about the past, present and future of the consumer economy — but a recent report with the ominous title of "A Darwinian Gale" paints a picture that is simultaneously sobering and encouraging. Marketers should pay attention.
The report is from The Futures Co., the result of the 2008 merger of a London-based research group called Henley Centre HeadlightVision and Yankelovich, a major consumer research firm based in the U.S.

The study concludes that a recovering consumer marketplace is coming. Even with recovery, however, uncertainty about economic risk will remain.

Looking back, the researchers defined the consumer economy as an era of indulgence. This was followed by the consumer recession. Now, the recovery economy is called the consequences era. The study looked at five consumer strategies in each of these economic cycles: ambition, sensibility, mindset, passion and orientation.

Ambition. In the indulgence era, consumers were about trading up. During the recession, the focus became economizing. In the consequences era, the key consumer ambition will be responsibility. Consumers will be inclined to spend, but they will be more mindful about choices and will need better reasons to buy. Consumers will look for products and services that enable them to not be wasteful.

Sensibility. Exuberance, whether rational or irrational, was the watchword for the indulgent consumer. Anxiety replaced exuberance in the recession. In the recovery, consumer vigilance will rule. Part of the sensibility is heightened standards for corporate ethics and responsibility. Plus, marketers need to focus on giving consumers real information to allay their fears. Protection against risk can trump price, according to the report.

Mindset. The consumer has moved from bullish to sober and now to resourceful. The recession has created the belief that we cannot assume that things will always work out. Resourcefulness will be viewed through two lenses. Externally, the impact on the environment, energy and community is important in purchase decisions. Internally, consumers see their resources as time, energy, attention, health and emotions.

Companies that develop brands with tangible proof of thoughtful use of resources will build deeper consumer loyalty.

Passion. The cycle of consumer passion through the three economic cycles has changed from accumulation to frugality to prioritization. A new consideration of limits, not necessarily imposed by the economy, is leading consumers to buy only what matters most. Expect more rational consumer decision-making.

Orientation. Self-expression was the hallmark of the indulgence era. Recession changed that orientation to self-preservation. Now, the recovery consumer will use networks to help avoid consequences.

Networks will help consumers avoid risks — and more. Engagement and connection will provide consumers with a wide variety of sources to help guide their consumer purchases.

So, what's the message for marketers? Companies must seek out new and different ways to connect with consumers in the new world of two-way communication.

David Bohan founded Bohan Advertising|Marketing, a Nashville agency with clients in travel, hospitality, health care and consumer products, in 1990. He has worked in marketing and advertising since earning a degree at the University of Tennessee-Knoxville in 1970.

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Documents detail $4.3B in Goldman Sachs payouts

International banks and financial companies were indirect beneficiaries of the government's 2008 bailout of American International Group Inc., according to newly released documents.
The documents released by Sen. Chuck Grassley, R-Iowa, contain a list of the 27 banks, hedge funds and financial companies that received $4.3 billion from Goldman Sachs Group Inc. The money was to reimburse them for losses on investments called credit default swaps that plunged in value during the financial crisis.

The money trail actually began with AIG, which sold the swaps to Goldman. The big investment bank in turn sold them to its customers, including the international banks and financial companies. When AIG received a bailout worth $182.5 billion, it reimbursed Goldman and other banks, which then repaid their customers.

Credit default swaps are essentially contracts that insure against the default of bonds and corporate debt. Sellers of swaps, such as AIG, are obligated to repay customers if the value of the underlying bonds or debt declines.

Goldman is beneficiary

Much of the federal rescue money for AIG was used to pay its obligations to its Wall Street trading partners on credit default swaps. The biggest beneficiary of the AIG money was Goldman, which received $12.9 billion.

According to Grassley, the documents show that the five banks or companies ultimately receiving the largest amount of taxpayer money were DZ Bank AG in Germany, which received $1.18 billion; Banco Santander Central Hispano SA of Spain, which received $484 million; Ireland's Zulma Finance PLC, which received $416 million; Infinity Finance PLC in Britain, which received $277 million; and Britain's Sierra Finance PLC, which received $223 million.

An additional $173 million went to Hongkong & Shanghai Banking Corp., which has HSBC operations throughout the U.S.

Goldman had previously disclosed that it had made payments to its customers, but it did not say who the recipients were. It gave the information to Grassley after he threatened to subpoena the bank. Grassley released the documents late Friday.

The payments have been controversial because of concerns that the banks should have absorbed more losses on their investments rather than be reimbursed with taxpayer money. Last month, a watchdog panel raised new doubts over the likelihood that taxpayers will be fully repaid for the government's AIG bailout.

"The government determined that a collapse of AIG would be systemically disastrous," Goldman Sachs spokesman Lucas van Praag said. "And of course if a systemic problem had ensued, we along with every company in the world would likely have been affected."

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Business briefs: Cigna Government Services could add jobs, lose others

A Nashville-based company that processes medical claims plans to add 185 jobs here after winning a contract to handle Medicare claims from doctors and hospitals in Kentucky and Ohio.
The contract, awarded to Cigna Government Services after an appeal, is valued at $243 million over five years. It also involves processing home-health and hospice claims from 15 states and the District of Columbia.

But Cigna Government Services also faces the prospect of losing a separate contract to process claims from another region — which could take away other jobs from the Nashville office where an estimated 1,000 people worked last fall. A spokesperson declined to discuss that situation further, citing a pending contract appeal.

— GETAHN WARD

Austin Peay, Ky. school to establish green degree

HOPKINSVILLE, Ky. — A Kentucky community college and Austin Peay State University have received a $1.2 million grant to assist the two schools in creating a chemical engineering technology degree program focusing on green industries.

The Kentucky New Era reported that the money comes from the Kentucky Work Force Development Board. As part of the grant program, the two colleges signed a dual admissions agreement intended to provide a structured approach for Hopkinsville Community College students who wish to transfer to the Clarksville, Tenn., school.

— ASSOCIATED PRESS

Memphis works to prevent Pinnacle Airlines relocation

MEMPHIS — City leaders are working to keep Pinnacle Airlines Corp. from leaving Memphis by trying to get the company to build a new corporate headquarters.

Pinnacle officials have confirmed that Mississippi officials have made a generous offer for the Memphis-based air passenger carrier to move its offices to Olive Branch. Pinnacle flies more than 740 Delta Connection flights daily to 120 airports, employing more than 4,300 people in the process, according to its website.

— ASSOCIATED PRESS

Owensboro, Ky., seeks ways to lure bluegrass musicians

OWENSBORO, Ky. — The sponsors of a Western Kentucky bluegrass music festival are looking for incentives to prompt musicians to move to Owensboro.

International Bluegrass Music Museum Executive Director Gabrielle Gray and museum board Vice Chairman Terry Woodward told the Owensboro Messenger-Inquirer that they are looking at how Paducah brought artists to town as a possible model. The goal, they said, is to create a stable of musicians around the annual River of Music Party. Local officials hope to brand Owensboro as a bluegrass city.

Paducah's Artist Relocation Program offered artists $2,500 plus incentives for moving there to start a business.

— ASSOCIATED PRESS

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Small businesses struggle despite federal money for lending

WASHINGTON — Carl Calhoun makes mattresses for a living, but lately he has been enduring more than his share of sleepless nights.
Calhoun, the president and CEO of the Body Rest Mattress Co. in St. Petersburg, Fla., and his wife, Emma, the vice president and chief financial officer, are struggling to keep their 28-year-old company from becoming another casualty of the Great Recession.

They've laid off half their employees. They've cut the hours and benefits of those who remained. They've even tapped their home equity to pump more money into the business.

Yet without a six-digit bank loan to see them through, the Calhouns and their 31 employees face a very uncertain future.

"We know what we're doing," Carl Calhoun said. "We just ran out of capital. It's only through the grace of God that we're here right now. And I'm not the only one."

He's right. Across the country, thousands of small-business owners are fighting for survival and hurting for cash after getting the cold shoulder from banks over loan requests.

The Troubled Asset Relief Program poured hundreds of billions of dollars into big banks to help spur business lending during the recession, but the cash infusion hasn't prevented thousands of companies from closing their doors as banks have tightened their credit standards and purse strings.

The Obama administration is pushing a $30 billion Small Business Lending Fund to address the problem. The proposal, which passed the House of Representatives in June, would provide smaller community banks with government loans that become cheaper as the banks lend more money to small businesses.

Todd McCracken, president of the National Small Business Association, said the plan should help.

"But it's not a silver bullet," he said. "There isn't a silver bullet."

Overall economy affected

Credit is essential for small businesses to expand their work forces, buy equipment and property, and cover operating costs. For much of the past decade, the nation's big banks were generous providers.

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Book urges job seekers to employ the power of seduction

Seduction is a powerful art form, even in the workplace.
In The Art of Business Seduction , author Mark Jeffries teaches readers how to get ahead by using strategies similar to those employed in the dating world.

With nearly 15 million Americans out of work and unemployment at
9.5 percent, job seekers must stand out these days. Jeffries, a business coach and communications consultant to major corporations, shares tips on how to get an edge, whether it's landing a job or a promotion. As the title suggests, Jeffries emphasizes many of the same skills that can also help attract a mate. For example, there are tips on honing your "elevator pitch," the business world's equivalent of a pickup line in a bar. Other advice focuses on how to own your image, speak persuasively, and translate subtle cues from others' voices, body language and handshakes.

The book pitches a personal program to make behavioral changes over 30 consecutive days and ensure they become ingrained. One obvious target audience: Out-of-work professionals who possess great credentials on paper but lack the personal polish needed to get a foot in the door.

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Music's foreign royalties bring welcome windfall

For musician Sandra McCracken, who has managed to make a comfortable living during the past 10 years as a folk and Americana artist, the $2,500 check that arrived in her East Nashville mailbox was a welcome surprise.
The payment represents royalties for Internet and satellite radio play of McCracken's albums outside the United States. Until this year, those broadcasts had never earned her a dime.

McCracken's windfall is part of an estimated $2.5 million payout for U.S. artists this year for overseas play, after agreements negotiated by SoundExchange, a Washington, D.C.-based nonprofit created by Congress to collect and pay out digital music royalties.

Between 3 percent and 5 percent of those newly collected royalties are expected to flow to Nashville, directly to artists like McCracken and to Nashville-based managers and lawyers representing other artists who live elsewhere, SoundExchange said.

The payouts — putting a cash value on previously untapped overseas play — add one more digital revenue stream for an industry that has seen traditional music sales slump amid increased online music listening by consumers.

For independent artists such as McCracken, who have had to develop flexible business plans as the music industry evolves, the overseas income is one more sign of hope that artists can earn a living in the fast-changing digital era.

"I'm a big believer in new forms of revenue for artists," said McCracken, 33, who along with her husband, Christian music artist Derek Webb, stays busy raising two small children while working out of an East Nashville home studio.

"For me, the name of the game is doing a lot of different things to earn an income — touring, television shows, writing — and this is another way to be sustainable," she said.

SoundExchange collects royalties from digital broadcasts, cable TV and satellite radio. The bulk of the $472 million it has paid out came in fees from satellite radio and online music services such as Pandora, Sirius XM Radio and Last.fm.

Foreign agreements forged

The foreign royalties for digital and satellite radio song broadcasts are a result of reciprocal agreements negotiated within the past year with Brazil, Canada, the United Kingdom and the Netherlands, said John Simson, SoundExchange's executive director. Those agreements apply to recordings made in the United States by U.S. artists.

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Most small businesses in TN can get help for health plans

Nearly 90 percent of small businesses in the state are eligible for a premium tax credit that takes effect this year as part of health-care reform, according to a group that promotes wider access to health coverage.
"This is the very first time I've ever seen a legislative program that actually puts money in my pocket," said Murray Hudson, the owner of an antique map store in Halls, Tenn. "That's not a big enough incentive to add jobs in this economy, but it helps."

In Tennessee, 66,500 small businesses will qualify — including 21,600 eligible for the maximum tax credit of 35 percent this year, according to consumer advocate Families USA and the business advocate Small Business Majority.

"I see a glimmer of hope down the road when the state exchanges allow small businesses to band together to get better insurance prices," Hudson said.

Families USA and the Small Business Majority each see the credits, which vary based on a company's size and average wages, as a big help to business owners who struggle with the costs of offering insurance coverage to their workers.

"This can tip the scale for those who recently got out of the business of providing coverage to their workers to get back in," said Kathleen Stoll, deputy executive director of Families USA.

Small-business owners, employees and their families account for half of the uninsured population in the U.S., Stoll said. Nationwide, the report estimates that more than 83 percent of businesses with 25 or fewer employees could qualify for tax credits. "This is a very targeted way to say that we've got to address this now," said John Arensmeyer, head of the Small Business Majority.

Costs are still a concern

One local critic of health-care reform, however, says the report overstates how many small businesses can benefit. "Some businesses will certainly get a tax credit, but overall this bill is going to increase health insurance costs, increase taxes and increase paperwork on small-business owners," said Bill Rys, tax counsel with the National Federation of Independent Business, another small-business lobbying group.

"Any benefit you get from the tax credit is outweighed by all these increased costs of doing business," Rys said.

Getahn Ward covers the business of health care for The Tennessean . He can be reached at 615-726-5968 or at gward@tennessean.com.

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Chattanooga unlikely to build VW engines

VW officials have said the new midsize sedan to be made in Chattanooga will get its engines, at least initially, from existing facilities in Mexico and Germany.
Chattanooga’s chief job growth group says it’s not surprised by a report that Volkswagen may be leaning toward Mexico as the site for a new engine plant.

But, officials believe the Chattanooga area is still poised for auto sector growth even if it doesn’t land the engine factory.

Read the full report: VW tilts toward Mexico on plant at the Chattanooga Times-Free Press.

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Business briefs: Healthways sees rise in profits

Franklin-based Healthways Inc. said revenues in the second quarter slipped 1.3 percent, but profits per share rose by one-third as the company managed through a series of terminated or renegotiated contracts.
Total revenues for the quarter were $175.5 million compared with $177.8 million for the second quarter a year ago. CEO Ben R. Leedle, Jr., said revenues were "consistent with expectations."

Profits were $11.8 million, or 34 cents per share, up from $8.9 million or
26 cents a share a year ago. Healthways continued to grow its international presence through new or expanded contracts. Earlier this summer, it won an agreement with International SOS Assistance Inc. to provide chronic care management for a Department of Defense overseas program for 15,000 remote active duty service members and their families in 146 countries.

The company also adjusted its projection for revenues for 2010, establishing a new range of $695 million to $718 million compared with an earlier range of $677 million to $718 million. Healthways' stock went up 48 cents a share, or 4 percent, to close at $12.44 per share in Nasdaq trading Thursday.

RelatedMagellan cancels Cumberland Heights contract

— RANDY MCCLAIN

Cumberland Heights files suit

Nashville's oldest in-patient alcohol and drug rehab center, Cumberland Heights, has filed a lawsuit in Davidson County Chancery Court against the health insurance management company it says is threatening its very existence.

Cumberland Heights wants an injunction against Magellan Behavioral Health, which canceled the rehab center's contract earlier this month citing problems with patient care. Magellan manages the claims of insurers such as BlueCross BlueShield of Tennessee, which amounts to control over about 45 percent of Cumberland Heights' $9.7 million in annual revenues, the lawsuit says.

Cumberland Heights, which said it has done nothing wrong, said if the contract dispute isn't resolved, it could become insolvent or have to layoff hundreds of employees. Magellan has declined to comment but said it was taking care of existing patients at the 177-acre facility on River Road.

— NAOMI SNYDER

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Bernanke predicts job market will be slow to recover

WASHINGTON — Federal Reserve Chairman Ben Bernanke, saying the economic outlook was "unusually uncertain," predicted Wednesday that unemployment was likely to remain stubbornly high for several years, straining families and endangering the nation's economic stability and competitiveness.
"Long-term unemployment not only imposes exceptional near-term hardships on workers and their families, it also erodes skills and may have long-lasting effects on workers' employment and earnings prospects," he said.

"This is the worst labor market, the worst episode, since the Great Depression," Bernanke said of long-term unemployment.

"Not only for the sake of the unemployed and for the short-term strength of the economy but also for a long-term viability in international competitiveness," he added, "I think we need to be very seriously concerned."

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While Bernanke, in his semiannual testimony to Congress, painted a bleak picture for the millions of jobless workers, he said the U.S. economy was continuing to recover at a moderate pace. And for now, he said, the central bank was holding off on taking further actions to stimulate the economy.

A series of economic data in recent weeks have pointed to slowing economic growth, fanning fears of a return to recession and prompting speculation that the central bank may be gearing up to buy more securities or initiate other moves in an effort to spur lending by pushing already-low long-term interest rates even lower.

"Are you out of bullets?" asked Sen. Jim Bunning, R-Ky., a member of the Senate Banking Committee and critic of the Fed.

"Well, I don't think so," Bernanke replied, adding however that "we're not prepared to take any specific steps in the near term particularly since we're still also evaluating the recovery and the strength of the recovery."

Bernanke recited the Fed's most recent economic forecast, made in late June, which calls for 3 percent to 3.5 percent economic growth in 2010. That is a slowdown from the 4 percent growth in the second half of 2009, when the economy emerged from the deep recession.

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BlueCross giving Red Cross $500,000 for flood relief

The BlueCross BlueShield of Tennessee Health Foundation is donating $500,000 to the American Red Cross to help victims of the May floods that affected communities across Middle and West Tennessee.
A check presentation event is planned for Friday at the Nashville area Red Cross chapter’s disaster operation center off Charlotte Ave. here.

The foundation is a not-for-profit corporation that promotes the philanthropic mission of Chattanooga- based BlueCross BlueShield of Tennessee, the state’s largest health insurer.

Volunteer Value Sustains the NeighbourhoodBlueCross stockpiles surplus cash while raising premiums

Tractor Supply's sales rise 12.6 percent in 2nd quarter

Brentwood-based Tractor Supply Co.'s sales increased 12.6 percent to $1.07 billion in the second quarter, and the company opened 19 new stores, capping off an "exceptional" first half of the year, chairman and CEO Jim Wright said on Wednesday.
The strong second quarter marks nine straight quarters of increased traffic to the company's 967 stores. Same-store sales increased 6.1 percent. The increase was broad-based and driven by strong sales in animal and pet-related products, as well as agricultural and seasonal products, including outdoor power equipment such as riding lawn mowers, Tractor Supply said.

Profits for the quarter reached $76.5 million, or $2.05 per share. Last year's second-quarter profits were $54.8 million, or $1.50 per share.

The company expects net sales to range from $3.49 billion to $3.53 billion and same-store sales to increase 2.5 percent to 3.5 percent for fiscal 2010. Net income is expected to range from $4 a share to $4.10 per share.

Contact Bonna Johnson at 615-726-5990 or bjohnson@tennessean.com.

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Business briefs: U.S. Bancorp's 2nd quarter profit surges

U.S. Bancorp's second-quarter profit nearly quadrupled and its CEO said the amount of bad loans should shrink in the next quarter, as defaults by consumers and businesses level off.
The bank's profit surged to $862 million, or 45 cents per share, including a gain of 5 cents per share linked to preferred dividends. A year earlier it earned $221 million, or 12 cents per share. Revenue rose almost 9 percent to $4.52 billion on strong growth in interest income and fee revenue.

— ASSOCIATED PRESS

Green Bankshares makes profit, credit quality improves

Green Bankshares, the parent company of GreenBank, made a profit of $1.56 million during the second quarter, or 12 cents per share, compared to a loss of $151.4 million during the same quarter a year ago, as credit quality improved, the Greeneville-based bank reported Wednesday. Deposits fell during the quarter by 2 percent to $1.99 billion and loans fell more than 5 percent from the end of last year to $1.9 billion as the bank reduced its portfolio of residential development and construction loans.

— NAOMI SNYDER

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BlueCross stockpiles surplus cash while raising premiums

Nonprofit BlueCross and BlueShield health plans in several states, including Tennessee, stockpiled billions of dollars during the past decade, yet continued to hit consumers with hefty premium increases that could have been reduced in some cases, a new consumer study contends.
"Consumers are struggling to afford health coverage," said report author Sondra Roberto, who tackled the project for Consumers Union, publisher of Consumer Reports . "Those funds could be used in some cases to mitigate these rate increases."

The report calls on state insurance regulators to scrutinize surpluses and set maximum limits to protect consumers from unreasonable health insurance costs.

But insurance regulators in Tennessee and BlueCross officials say rate increases here were justified, and keeping enough cash in reserve makes financial sense.

"On the day that financial reform legislation is signed in which many provisions are designed to create deeper reserves for financial institutions, it's ironic that we as health plans are being called out for having strong reserves," said Roy Vaughn, a BlueCross spokesman.

Chattanooga-based BlueCross BlueShield of Tennessee covers 3 million members with 87,000 of those in individual insurance plans. Many others have group coverage through their employers.

BlueCross BlueShield of Tennessee had $1.1 billion in surplus cash last year, an amount roughly five times what would be considered appropriate by regulators to protect insurers from insolvency, according to the Consumers Union study to be released today.

Tennessee's plan was among seven of the 10 states surveyed in which surpluses were more than three times the amounts needed, said Laurie Sobel, a senior staff attorney with Consumers Union. Arizona, Massachusetts, Michigan, Oregon, North Carolina and Wyoming also fell into that category.

Last year, individual policyholders in Tennessee saw average rate increases of 7.7 percent, although some people saw premiums go up by as much as 14.9 percent, Blue Cross officials said. In the group market, the average rate increase was 4.6 percent in 2009 after slightly higher average rate hikes the previous two years here.

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Comcast increased lobbying during bid to take over NBC

Comcast Corp., the largest U.S. cable provider, boosted spending on lobbying and increased political donations as it sought approval to take over the operations of General Electric Co.'s NBC Universal.
Comcast spent $6.9 million to lobby the federal government during the first half of the year, up from $6.1 million during the same period in 2009, new congressional filings show.

Comcast also increased its political action committee donations, giving $2.1 million between Jan. 1, 2009, and June 30, 2010, up from $1.6 million during the same period two years earlier. GE, based in Fairfield, Conn., also increased its lobbying expenditures.

"We've come to a period in which money talks with particular force," said Mark Cooper, research director for the Consumer Federation of America, who opposes the NBC deal.

Sena Fitzmaurice, a spokeswoman for Philadelphia-based Comcast, said that many donations were made before the merger was announced Dec. 3 and that there are other telecommunications issues on the table.

The Federal Communications Commission is looking at how it can regulate Internet access. Comcast opposes new rules.

The proposed takeover, subject to Justice Department and FCC approval, would give Comcast control of NBC's television network; broadcast stations in markets including New York, Los Angeles and Miami; cable channels such as USA Network and Bravo, and a library of more than 4,000 movies.

Comcast has said it would not favor NBC in negotiations to carry the signals of other TV networks and has pledged to add a Latino member to its board of directors. The company also promised not to shift major sporting events such as the Olympics or National Football League games to cable.

Opponents say Comcast-NBC will have an incentive to raise prices and withhold programs from rivals.

"Comcast's proposed takeover of NBC will mean higher prices, fewer choices and less competition," said Corie Wright, policy counsel for Free Press, a Washington-based advocacy group.

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Inmates feel pinch of hard times as prison jobs evaporate

The nation's unemployment crisis is now reaching far inside prison walls.
Since 2008, thousands of inmates have lost their jobs as federal authorities shutter and scale back operations at prison recycling, furniture, cable and electronics assembly factories to try to make up $65 million in losses.

The job cuts, prison officials say, mean a dramatic reduction in job training for inmates preparing for release, lost wages for prisoners to pay down child support and other court-ordered fines, and more tension in already overcrowded institutions.

"Anytime we have a loss of inmate jobs ... it becomes more challenging to keep inmates constructively occupied," federal Bureau of Prisons spokeswoman Traci Billingsley said. Bureau records show that the job cuts during the past two years coincide with slight increases in serious inmate assaults on staff and other prisoners.

Slightly more than 7,000 federal prisoners have been cut from the work rolls in the past two years, and up to 800 more are expected to be dropped in the next several months, according to Federal Prison Industries records.

The latest cut, announced last week, will close nine factories scattered from Pennsylvania to California and includes reductions in staff at 11 others, Federal Prison Industries spokeswoman Julie Rozier says.

She says the cuts represent some of the largest reductions in the 75-year history of the federal prison work force. "We're feeling the same pressures that are present in the overall economy," she said. This year, 16,115 of the system's 211,146 inmates are working in the factory jobs, down from 23,152 in 2008.

Federal Prison Industries is a government corporation established by Congress in 1934 that provides training for federal inmates. The industries generate about 80 products and services for sale to the federal government.

In return, inmates are paid up to $1.15 an hour. Much of that goes to child support, fines, restitution and other court-ordered obligations.

Unrest is feared

Prison guards and others fear the cuts could spark inmate unrest in overcrowded institutions where jobs — however menial — have kept prisoners occupied.

Last year, serious assaults on staffers increased to 105, up from 100 in 2008, while inmate-on-inmate assaults totaled 524, up from 475 in 2008. "This is a big concern for us," said Bryan Lowry, president of the federal prison employees association. Because of yearly prison population increases, he says, the federal system is running 37 percent over capacity.

Fewer jobs mean more downtime for inmates and more crowded recreation yards and housing units. In some places, Lowry said, there is only one prison officer for about 150 inmates. "It's not a good situation."

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Oil prices move above $76 as traders eye equities

Oil prices moved above $76 a barrel Monday as traders eyed a modest rebound in stock markets despite continuing economic uncertainty.
By early afternoon in Europe, benchmark crude for August delivery was up 32 cents to $76.33 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 61 cents to settle at $76.01 on Friday.

The price fell as low as $75.88 early Monday, weighed down by a drop in consumer confidence and disappointing corporate results at the end of last week, but rebounded as European stock markets rose and Wall Street was expected to post a slight upturn.

"Uncertainty continues to mark the status quo," JBC Energy in Vienna said in a report.

The U.S. recovery continued during the second quarter of this year with more businesses hiring workers and fewer cutting jobs, but the pace of growth has slowed, according to a survey released Monday by the National Association for Business Economics.

"Persisting concerns about the economy could result in further position squaring and allow prices to fall again in the direction of $70," Commerzbank said in a note to investors.

Later Monday, the National Association of Home Builders was due to release its July housing market index, which tracks industry confidence.

Oil prices fluttered in the mid-$70s last week as investors sought insight into the strength of the global economy from the start of second quarter company results in the U.S.

More key corporate earnings reports are due this week, including from International Business Machines Corp. on Monday, followed by Goldman Sachs Group Inc.. Later in the week come reports from Coca-Cola Co., Amazon.com Inc. and Microsoft Corp.

In other Nymex trading in August contracts, heating oil rose 1.47 cents to $2.026 a gallon, gasoline was up 1 cent to $2.0586 a gallon and natural gas fell 3 cents to $4.489 per 1,000 cubic feet.
Brent crude was up 29 cents to $75.66 a barrel on the ICE futures exchange.

Associated Press writer Alex Kennedy in Singapore contributed to this report.

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Recession fuels flocks of runners who seek cheap exercise

SEATTLE — Alice Lawson dropped her gym membership in early 2009 to save money and prepare for a possible job loss. Rather than let herself go, she took up running and completed her first half-marathon last month in Seattle.
"We don't know economically where things are going," said Lawson, 43, of Shoreline, Wash. "When I finish a run, I feel like: 'Hey, I can do whatever I set my mind to. It doesn't matter what's coming. I'll be OK.' "

Running is booming in the U.S. as more people seek inexpensive ways to manage stress. The June 26 Rock 'n' Roll Marathon, which featured live bands along a 26.2-mile course from Tukwila, Wash., to Seattle, sold out in late March, roughly a month earlier than last year.

Nationally, the number of marathon finishers rose nearly 10 percent between 2008 and 2009 to a record 467,000, according to nonprofit group Running USA. The growth of half-marathon finishers was more impressive, jumping 24 percent from 900,000 in 2008 to 1.1 million in 2009.

The boom also can be seen at running stores, where sales of shoes and other items considered crucial to the sport remain at or above pre-recessionary levels — no small feat, given the economic turmoil of the past two years.

"Running appears to be not recession-proof, but at least it's recession-resistant," said David Willey, editor of Runner's World magazine. "People tend to focus on things they can control, and they want to get healthier, so they start running more."

Last year, nine Rock 'n' Roll Marathon races attracted 219,000 participants in the U.S. Of those, 39 percent were neophytes and 60 percent were women, reflecting the broadening appeal of running. This year, 14 Rock 'n' Roll races are projected to draw 330,000 participants.

"Running is the most convenient, least costly form of exercise," said Jim Weber, president and chief executive officer of Brooks Sports, a running shoe and apparel company. "You can just walk out your door."

Shoe sales rise

Running businesses say they benefit from an affluent customer base who can drop $100 on a new pair of shoes or $85 to enter a race. Running USA figures nearly three-quarters of year-round runners have an annual household income of more than $75,000.

U.S. running-shoe sales rose 2 percent last year to $2.36 billion, while sales of running apparel declined 3 percent to $883 million, according to the National Sporting Goods Association. Store owners say cash-strapped runners are more likely to replace worn-out shoes than faded clothes.

Now, Brooks aims to make inroads with first-time marathoners by traveling to races in a carnival-themed, double-decker bus. "We're spending several million dollars a year on this, which for us is a big investment," said Dave Larson, vice president of marketing at Brooks.

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Auto industry pressure limits safety bill's bite

LOS ANGELES — The sweeping legislation that grew out of Toyota Motor Corp.'s sudden-acceleration crisis, heralded as the most important auto safety bill in a decade, has been scaled back significantly in the face of auto industry opposition.
The bill originally would have given federal officials the power to levy unlimited fines against automakers for safety violations, which regulators said could have resulted in multibillion-dollar penalties. But the House version now caps fines at $200 million.

In addition, a provision to set first-ever safety standards for vehicle electronics was watered down so that the secretary of Transportation would have to only consider them, with the discretion to abandon them altogether. The timetable for automakers to meet any future standard was eliminated.

These and other key revisions to the bill have disappointed, but not entirely surprised, auto safety advocates.

They point out that the auto industry, which has spent about $50 million a year on lobbying over the past decade, has a long track record of weakening federal legislation targeted at vehicle safety. More than a dozen members of the House committee where the bill originated come from auto-producing states in the Midwest and South, including Rep. John D. Dingell, D-Mich., the panel's chairman emeritus.

"The auto industry has had undue influence on this legislation," said Joan Claybrook, former head of the National Highway Traffic Safety Administration, who testified at several congressional hearings. "The industry wanted to change a lot of little words that had a major impact."

Claybrook said she was especially disheartened to see $60 million once designated for improving electronic systems shifted to a drunken-driving research program supported by the auto industry and Mothers Against Drunk Driving.

Robert Strassburger, a vice president at the Alliance of Automobile Manufacturers, praised the legislation, but said some of the original deadlines were too difficult to meet.

He cited a requirement that would have obligated carmakers to install event data recorders, also known as black boxes, within five years and adhere to certain operating standards. The bill no longer sets a deadline.

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Business Briefs: Delta Dental gets TennCare contract

Delta Dental of Nashville has been awarded a contract to be the dental benefits manager for TennCare. State officials said Friday the three-year contract is valued at $11.9 million, assuming enrollment numbers remain the same.
Delta Dental was among six who bid for the contract.

Delta Dental's website describes it as the state's largest dental benefits carrier.

TennCare is Tennessee's managed-care Medicaid program serving approximately 1.2 million low-income children, pregnant women and disabled Tennesseans, with an annual budget of $7 billion.

— ASSOCIATED PRESS

Theft affects 1M BlueCross members

CHATTANOOGA — BlueCross BlueShield of Tennessee has wrapped up its assessment of customer data that was stolen in an October 2009 robbery of its abandoned Eastgate Town Center office here.

The state's largest health insurer has concluded that nearly 1 million BlueCross members were affected by the theft, the same number stated in an earlier report on the incident.

All of those affected will receive free Kroll ID Theft Smart protection for a year, which includes ID consultation and restoration services if a member's information was used fraudulently. At least so far, BlueCross said it hasn't heard of any information being used inappropriately, spokeswoman Mary Thompson said.

— EMILY BREGEL,
CHATTANOOGA TIMES FREE PRESS

Home Warranty FAQGetahn Ward: Insurer’s exit from TN may put small firms in bind

First Horizon ends 2 years of decline

The Memphis-based parent company of First Tennessee Bank reported its first profit in two years on Friday, and bank officials said they see a better economy ahead.
"We have seen significant improvement in credit quality,'' said the company's CEO, Bryan Jordan. "We are just seeing our commercial borrowers track with an economic recovery in Tennessee. I'm optimistic."

The parent company, First Horizon National Corp., said it made a $2.7 million profit, or 1 cent per share, in the second quarter, compared with a loss of $27.7 million in the prior quarter and a $123 million loss in the April-June period a year ago.

Analysts by and large hadn't expected a profit until the end of the year. According to Thomson Reuters, the average analyst's expectation for the second quarter was a loss of 9 cents per share.

First Horizon executives said the turnaround in the quarter was mostly due to borrowers' improved ability to pay their loans, especially commercial clients.

Bank employees have been working for more than a year to get rid of bad construction and mortgage loans made during the height of the housing boom that later turned to bust. Many of those loans were outside Tennessee.

The crisis led to layoffs, office closures and a significantly smaller banking company. The bank had $26.2 billion in assets at the end of the second quarter, about $11 billion less than at the end of 2007.

Jordan said the bank continues to face pressure from low interest rates and diminished demand for loans. Plus, financial reform passed by the Senate on Thursday probably will have some impact on the bank's practices and fees, although much of it is undetermined at this point.

Also, the bank faces possible additional fallout from mortgage loans made before the financial crisis, building a reserve of about $162 million to meet demands by mortgage insurers and others that it buy back bad loans that the clients say didn't meet underwriting standards.

Meanwhile, to save costs, the bank is moving about 60 or 70 employees from outlying offices to its flagship building at 511 Union St. in downtown Nashville, said Middle Tennessee market President Doyle Rippee. He said most of those moving are in the 2525 West End Ave. office complex, mostly wealth management and corporate banking employees.

Loan record brightens

The bank said it shaved its loan loss provision for bad loans by $35 million to $70 million during the quarter. Nonperforming loans also declined for the fifth consecutive quarter, to $790.5 million.

Wunderlich Securities banking analyst Kevin Reynolds predicted Friday in a note to investors that First Horizon would improve its bottom line results "several quarters ahead of its peers."

Sandler O'Neill & Partners analysts said in a note that the company might even buy up smaller regional banks "that will increasingly face a more challenging operating/regulatory environment."

But the news was overshadowed by a downturn in the stock market overall as consumer sentiment faltered and money center giants Bank of America and Citigroup disappointed investors.

First Horizon's stock fell 32 cents to $11.79 per share in New York Stock Exchange trading as major indexes fell 2.5 percent to 3 percent.

Contact Naomi Snyder at 615-259-8284 or nsnyder@tennessean.com.

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Flood repair work fuels drop in TN jobless rate

Hiring for flood-related construction jobs in June helped bring the state's unemployment rate down to 10.1 percent, but that may not be enough to fuel a lasting turnaround in an industry that has lost 35,600 jobs in Tennessee since the recession started.
"You take the flood out of the picture and nobody has plans to hire anybody in the foreseeable future," said John Finch, president and CEO of PBG Builders.

His Goodlettsville-based company repaired LP Field after the May floods, and some subcontractors did a small amount of temporary hiring to finish that work in a short period of time, Finch said.

Moderate employment growth propelled a drop in the state's unemployment rate from 10.4 percent in May. A year ago, unemployment in Tennessee was 10.9 percent.

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About 2,500 jobs were added in construction in June compared with a month earlier, along with 5,000 in the hospitality industry, which is typical for the peak summer travel season.

Growth in construction was a robust 2 percent from May to June, an improvement but not enough to signal a building boom, said economist David Penn, director of the Business and Economic Research Center at Middle Tennessee State University.

"What you're hoping for is sustained activity in the sector," said University of Tennessee economist Bill Fox, adding that sectors such as home construction nationwide remain rocky.

"All those jobs are temporary because of the flood," said John Stites, CEO of J& S Construction in Cookeville, which has done repair work on flooded homes and businesses. "The vast majority of those jobs will disappear by November or December."

Stites blamed a lack of bank financing as the main reason for slow retail, commercial and industrial construction. Finch said he had virtually no projects on the horizon.

"The new work is slow in coming to replace the work we're finishing," Finch said.

For now, though, a handful of large projects around the state appear to be boosting construction employment this summer, which is the prime season for the industry anyway, said Bill Young, executive vice president of the Associated General Contractors of Tennessee.

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Manufacturing cools in June

WASHINGTON — New evidence of a slowing economic rebound emerged Thursday in reports that manufacturing activity is slowing after helping drive the early stages of the recovery.
Factory output fell in June, according to a government report on industrial production. It was the sharpest monthly drop in a year, and two regional manufacturing indexes sank this month.

Production of automobiles, home-building materials and processed food all fell in June. The data sent stocks falling.

Federal Reserve officials took note of the weakening recovery when they met last month and lowered their forecast for economic growth, according to minutes released Wednesday.

Manufacturing helped boost the economy last year when the recession ended and has since been one of the strongest sectors in the recovery. June's decline in output was the first in four months. Overall industrial production ticked up for the month, but that was mainly the result of hot weather that increased demand for electricity from utilities.

"Today's report supports the view that the manufacturing recovery lost some momentum," said Peter Newland of Barclays Capital Research.

The decline in factory output came as new data offered a mixed picture of the recovery. Applications for unemployment benefits fell to 429,000, the lowest level since August 2008, according to the Labor Department. Much of that was the result of seasonal factors. General Motors and other manufacturers skipped their usual summer shutdowns.

Separately, the Labor Department said that wholesale prices fell for a third straight month. Prices were pulled down by a drop in energy costs and the biggest plunge in food costs in eight years. Excluding those two volatile commodities, inflation was nearly flat.

The Federal Reserve report on industrial production showed that overall output at the nation's factories, mines and utilities rose 0.1 percent in June. It was the fourth straight monthly gain. But factory output, the largest component of industrial production, dropped 0.4 percent.

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Goldman set to pay $550M to settle civil fraud charges

WASHINGTON — Goldman Sachs & Co. has agreed to pay $550 million to settle civil fraud charges that the Wall Street giant misled buyers of mortgage-related investments.
The deal calls for Goldman to pay the Securities and Exchange Commission fines of $300 million. The rest of the money will go to compensate those who lost money on their investments.

The fine was the largest against a financial company in SEC history. The settlement amounts to less than 5 percent of Goldman's 2009 net income of $12.2 billion after payment of dividends to preferred shareholders — or a little more than two weeks of net income.

Word that Goldman had settled began leaking about a half hour before the market closed on Thursday and appeared to please investors. Goldman had been trading at about $140 a share. The stock rose to close at $145.22, up $6.16, and shot up to $153.60 in after-hours trading.

The settlement involves charges that Goldman sold mortgage investments without telling buyers that the securities were crafted with input from a client that was betting on them to fail.

The securities cost investors close to $1 billion while helping Goldman client Paulson & Co. capitalize on the housing bust, the SEC said in the charges filed on April 16.

Goldman acknowledged that its marketing materials for the deal at the center of the charges omitted key information for buyers.

But the firm did not admit legal wrongdoing.

In a statement, Goldman acknowledged that "it was a mistake" for the marketing materials to leave out that a Goldman client helped craft the portfolio and that the client's financial interests ran counter to those of investors."

Robert Khuzami, the SEC's enforcement director, called the settlement a "stark lesson to Wall Street firms that no product is too complex, and no investor too sophisticated, to avoid a heavy price if a firm violates the fundamental principles of honest treatment and fair dealing."

The settlement is subject to approval by a federal judge in New York's Southern District.

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Steinbrenner died at good time for taxes

CHICAGO — Born on the Fourth of July, George Steinbrenner left the world stage with a great sense of timing too.
By his dying in 2010, the billionaire and longtime New York Yankees owner's wealth avoids the federal estate tax, probably saving his heirs enough money to field an entire team of Alex Rodriguezes.

Steinbrenner's death Tuesday came during an unplanned yearlong gap in the estate tax, the first since it was enacted in 1916. Political wrangling has stalemated efforts in Congress to replace the tax, which expired in 2009.

That deprives the government of billions of dollars in annual revenue but represents an unexpected bonanza for those who inherit wealth.

"If you're super-wealthy, it's a good year to die," said Jack Nuckolls, an attorney and estate planner with the accounting firm BDO Seidman. "It really is."

The death of the 80-year-old Steinbrenner, who had been in poor health for years, highlights a quirky tax situation that has drawn much scrutiny among the moneyed but little on Main Street. Only those with estates valued at more than $3.5 million had to pay under the old law.

Without knowing the exact details of Steinbrenner's holdings and estate plan, it's impossible to say how much money will be saved. But estate planners and tax experts say it's likely that the estate benefited hugely by the timing of his death.

$328M break possible

A glance at some numbers suggests roughly how it may work.

Forbes magazine has estimated Steinbrenner's estate at $1.1 billion. The federal estate tax in 2009 was 45 percent, with the $3.5 million per-person exemption. If he had died last year, his estate could thus have faced federal taxes of almost $500 million, depending on how the estate was structured.

That doesn't mean his heirs permanently escape all taxes related to his assets. They still will have to ultimately pay a capital gains tax if assets are sold. And because of a change in tax law this year, the tax would be applied to the amount by which the assets have appreciated since Steinbrenner acquired them.

Even if the Steinbrenners sold the assets right away, the top capital gains tax rate is 15 percent. Worst-case scenario, depending on how much the assets appreciated after Steinbrenner acquired them: a $165 million tax bill.

That's a tax break of about $328 million. Alex Rodriquez's 2010 salary: $32 million. The Steinbrenner family has not suggested any sale is planned.

"There are no succession issues, and the team will not be sold," Yankees President Randy Levine said.

The Steinbrenners therefore are expected to avoid what happened to the family of Chicago Cubs owner P.K. Wrigley after he died in 1977. The family was forced to sell the Cubs to the Tribune Co. four years later to pay taxes on Wrigley's estate.

Estate taxes can be reduced through certain planning measures — such as gifts and asset sales to family members at discounted values. However, except for the unusual circumstances of 2010, they cannot be eliminated unless you give it all to charity.

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Part shortage could idle Nissan plant in Smyrna

Nissan Motor Co. said shortage of an electronic component that is installed during the assembly of most of its vehicles could temporarily shut down production at its North American plants, including those in Smyrna and Canton, Miss., as well as one in Mexico.
The engine-control module manufactured for Nissan by Japan's Hitachi Ltd. has prompted Nissan to schedule a pause in production at its plants in Japan for three days this week.

A company official in Japan said the first plants in North America that might be affected would be the Smyrna plant, which assembles the popular Altima mid-size sedan and other vehicles, and the Mexico plant, which makes the compact Sentra sedan.

But no decision has been made on whether to stop production here, said Steve Parrett, a manufacturing spokesman for Franklin-based Nissan North America, Inc.

"Our plants in North America are currently running as scheduled, and we don't anticipate a major impact on production at this time," Parrett said. "However, we are analyzing the details of the situation, as well as the need for any possible counter measures, and will react appropriately."

Hitachi had told Nissan that it could not supply a sufficient number of the modules to sustain production schedules because of a supplier problem of its own.

Nissan said the module, basically a computer chip that controls various functions of the vehicles' engines, is used in the majority of vehicles it assembles in North America.

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Federal plan targets electronic health files

WASHINGTON — The Obama administration on Tuesday rolled out an ambitious five-year plan for moving doctors and hospitals to computerized medical records, promising greater safety for patients and lower costs.
Starting next year, doctors' offices and hospitals can get federal money to help defray the costs of the systems, which can run to millions of dollars for hospitals. Providers who don't comply by 2015 will face cuts in Medicare payments.

Federal incentive payments for doctors and hospitals to buy computerized systems could reach $27 billion over 10 years, and that's only a fraction of what technology vendors stand to take in. It is hoped the investment will streamline the delivery of medical care, yielding long-run savings.

Patients get the benefit of systems that can warn doctors before they make a mistake — prescribing a drug that could cause a severe reaction, for example. And there's also the convenience of being able to access records online.

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The move by the Health and Human Services Department came with the release of two regulations hundreds of pages long.

The main one described how doctors and hospitals can qualify for federal money by acquiring systems that meet certain "meaningful use" standards. A companion rule outlined how the systems will be certified.

Initial reaction from key interest groups was guarded.

As lawyers pored over the text of the regulations, the American Medical Association said it was withholding judgment.

The American Hospital Association said it is concerned about several aspects.

Federal officials said they tried to address doctors' concerns that the initial draft of the rule asked them to do too much, too quickly.

More than half of family doctors practice in groups of four or fewer.

A majority of small and medium offices have opted not to adopt electronic records because of costs and unresolved questions, according to the American Academy of Family Physicians.

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'Better burgers' are sizzling part of restaurant industry

FALLS CHURCH, Va. — With a drive-through seemingly on every corner, you might think the market for burgers long ago reached saturation. But the fastest-growing restaurant chain in America last year was Five Guys, which specializes in double-pattied behemoths the size of a softball.
And that's just the tip of the arugula. So-called "better burger" joints are one of the fastest-growing parts of the restaurant industry. Celebrity chef Bobby Flay launched Bobby's Burger Palace in the Northeast. Elevation Burger is expanding into Kuwait. Mooyah Burgers & Fries, Meatheads and the Shake Shack are looking to expand.

Higher-grade beef, fresher or more creative toppings, and better buns are bringing customers.The Washington, D.C., area has emerged as fertile ground for ground chuck. Five Guys, the earliest success story, is based in Lorton, Va.; Elevation Burger in Arlington; BGR-The Burger Joint in Lansdowne.

Ray's Hell Burger, also in Arlington, is not a chain, but the restaurant run by iconoclastic chef Michael Landrum earned a national profile when President Barack Obama took Vice President Joe Biden and Russian President Dmitry Medvedev there last month. (Medve dev's review: "Not quite healthy, but it's very tasty.")

The market still has room to grow. Such chains represent only about 2 percent of the $65 billion burger market, said Darren Tristano, executive vice president of Chicago-based restaurant consultant Technomic.

"The traditional players — McDonald's, Burger King and Wendy's — have really shifted their focus away from burgers to breakfast, chicken and beverages," Tristano said. He predicts better burger chains will continue to have double-digit sales growth for at least the next few years.

A hunger for quality

The founder of Denver-based Smashburger, fast-food industry veteran Tom Ryan, knew that Americans were hungry for higher-quality fast-food burgers.

The company did extensive research with fast-food customers who reported that the burgers they ate were mostly a matter of convenience. " 'It's not the burger I crave; it's the burger I use,' " Ryan said. Smashburger has expanded to 70 stores in 15 states in just three years.

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