Friday, March 31, 2006

Arkansas Best Names New Executive

Arkansas Best Corp. of Fort Smith on Friday named David R. Cobb as the company's new vice president and controller.

Cobb previously worked as vice president and corporate controller for Smith International Inc., a publicly traded international oil field service company based in Houston. Cobb has also worked for PricewaterhouseCoopers in Houston and is a certified public accountant.

Judy McReynolds, Arkansas Best’s senior vice president, CFO and treasurer, said Cobb's experience with public companies and their financial reporting and controls will bring knowledge and depth to the company's financial operations.

Arkansas Best is a transportation holding company with two operating subsidiaries, ABF Freight System Inc. and Clipper. Shares of the company (Nasdaq: ABFS) were trading at $39.17 on Friday after closing at $40.37 on Thursday.

Labor board moves to collect fines against courier

The National Labor Relations Board is moving forward to collect thousands of dollars in penalties from a Virginia Beach subcontractor for transporter DHL Express.

The labor board registered its case against Tap Express Inc. this week in U.S. District Court here – a step to enforce more than $20,000 in fines stemming from a finding of the company’s illegal anti-union activities.

According to case documents issued by the NLRB, Tap Express in the summer of 2004 illegally intimidated workers interested in unionizing under Teamsters Local 822, one of the largest unions in Hampton Roads.

Tap Express is a courier service that shared space with DHL Express at the larger company’s Virginia Beach facility and its contract work topped $50,000 in 2004, the NLRB said.

According to records on the NLRB Web site, Tap Express owner Monica Broadnax told employees in June 2004 that they could not have a union and created the impression that their union activities were under surveillance. Broadnax also warned employees that “there would soon be a lot of new faces and a lot of change,” the NLRB said.

Broadnax later interrogated workers in the DHL parking lot, asking them about their union membership, activities and sympathies, according to the filings. Then, Tap Express fired four workers within about a week for their union leanings.

“I proved that it was because of union activities,” James Wright, president of Local 822, said of the firings. He added that the company has about 20 employees.

Broadnax declined to comment when reached at her home this week.

The National Labor Relations Act bars employers from discriminating in hiring and employment in order to discourage membership in unions. Employers also cannot interfere with organizing activities nor coerce employees who are seeking union affiliation.

Local 822 filed charges in fall 2004, and the NLRB issued a formal complaint Dec. 22, 2004. Tap Express reached an informal agreement with Local 822, which required back pay and reinstatement offers for fired employees. It also called for the company to delete references to discipline of union activities in personnel files. But the company repeatedly failed to hold up its end of the agreement, the NLRB determined. The agency issued a formal order, which was approved March 6 by the U.S. Court of Appeals for the Fourth Circuit in Richmond.

Tap Express was ordered to stop questioning employees about union affiliation, threatening firings on those grounds, coercing employees and targeting them for drug testing because of union support. The company was also mandated to pay $20,000 plus interest to the NLRB to be disbursed to six employees who were illegally fired or suspended.

Wright said he told Broadnax at the time that her company would run afoul of regulators for union-busting.

“I was saying, 'Look, you’re going to get in trouble with this,’” Wright said. “'You’ve got to bring those workers back.’”

DHL is not involved in the legal proceedings, spokesman Richard Gibbs said in a statement. “Neither allegations nor findings have been made against DHL,” he said.

Gibbs said that DHL employs more than 10,000 Teamsters. The company allows independent contractors such as Tap Express to use DHL-branded uniforms and trucks.

The Teamsters succeeded in organizing Tap Express a year ago, Wright said.

Wednesday, March 29, 2006

YRC drops as rate increase pressures stocks

Shares of YRC Worldwide Inc., battered recently after a deep cut in the transportation giant’s first-quarter earnings guidance, on Tuesday reached their lowest point in almost two years.

The drop to a 52-week low of $37.11 — the lowest point since shares were at $36.60 on June 8, 2004 — came on the heels of a trucking industry report that showed shipments declined in February.

Shares of Overland Park-based YRC have lost almost $8 since March 22, when the company cut its first-quarter earnings forecast to a range of 65 cents to 70 cents per share, from a previous guidance of $1 to $1.05. The company cited cost overruns at its Yellow Transportation subsidiary and lower volume overall.

YRC Worldwide closed at $37.41 on Tuesday, down 57 cents, or 1.5 percent.

YRC’s drop coincided with a major down day on Wall Street as investors responded to the 15th consecutive increase to short-term interest rates by the Federal Reserve. Although the increase had been expected, investors who had hoped for signals that the increases were nearing an end were disappointed by Fed language that indicated additional increases would be considered.

The Dow Jones industrial average fell 95.57 points, or 0.85 percent, and closed at 11,154.54. The Nasdaq composite index dropped 11.12 points, or 0.48 percent, and closed at 2,304.46. The Standard & Poor’s 500 index was down 8.38 points, or 0.64 percent, and closed at 1,293.23.

Early in the session, stocks received a boost from a strong report on consumer confidence.

Tuesday, March 28, 2006

How Monsters Grow

Jonathan Tasini | Blog: Working LIfe
March 27, 2006

We have a deadly mix in the economy: start with so-called "free trade" and globalization, add in a good helping of the disappearance of anti-trust laws, mix in the collapsing health care system and, then, for good measure, add a little dash of political parties rushing to please big corporations and, presto, you have corporations that rampage through communities.

I thought about this after I came upon the strike at Sikorsky Aircraft. The mainstream media has basically ignored this on-going strike of 3,600 Teamsters, now in its fifth week. What the company wants is sounding like the usual demand: health care givebacks.

But, check this out. This is no General Motors: Sikorsky made $2.8 billion last year. And it is part of the huge conglomerate United Technologies, which has grown partly because the government has adopted a "bigger is better" attitude for corporations, essentially burying anti-trust laws. According to the AFL-CIO's Executive Pay Watch (a very useful tool), UT's CEO George David "raked in $13,356,928 in total compensation including stock option grants from United Technologies. From previous years' stock option grants, the United Technologies executive cashed out $83,621,610 in stock option exercises. And George David has another $155,630,600 in unexercised stock options from previous years." This is not a poor company.

Want more evidence of greed-gone-mad? The workers even agreed to give up a $2,000-per-person signing bonus and cut back the wage increases it had negotiated (from 10.5 percent to 9 percent over three years) just to keep the current health plan. The company refused and won't even come back to the negotiating table.

No, what we have here is a company that is essentially preying on 3,600 workers. In one sense, Sikorsky smells blood--it is waving the banner of rising health care costs to wring out more money from workers, even though the company is financially healthy. In fact, the nasty nature of this corporate abuser is obvious: the workers said, "here, take back our wages, we just want to keep our health plan so we and our families are protected." Nope, said the company. Of course, if we had a national health the company wouldn't be able to play these games.

At another level, this is a perfect story of what the political system, aided and abetted by the two parties, has spawned. It's where flag-waving patriotism is exposed as phony and where love of your country ends at the water's edge of the pursuit of profits, globalization and so-called "free trade."

When it's convenient, Sikorsky portrays itself as a critical part of the country's national defense. It promotes its well-known Black Hawk helicopter on its website: "Take a closer look at the many faces of BLACK HAWK, and see why it has become and will continue to be 'America's helicopter.'...That's why, wherever they fly, BLACK HAWKs share a common heritage. Of power. Survivability. Crashworthiness. And victory." In fact, partly by waving the flag, the Teamsters lobbied hard for Sikorsky to get the contract to build the next generation of Marine One, the presidential helicopter. The company ultimately lost the bid to a British-Italian company (a political payoff from George Bush to Tony Blair).

But, when it comes to lining its pockets, United Technologies, which calls the shots on such issues for its divisions, thumbs its nose. It has even dissed Rep. Curt Weldon, the Republican Vice Chairman of the Armed Services Committee and chairman of the Tactical Air and Land Forces Subcommittee, who has his hand solidly on a $100 billion contract to sole source engines for the Joint Strike aircraft--a contract UT would dearly love to have. Weldon tried to wade into the strike but George David has refused to return his calls. Seems like a lot of money to risk for UT to risk, no?

Add in the globalization of the economy and you have a monster: an arrogant company with a management that is all about enriching itself at the expense of the people who make the company its money. It has no allegiance to the communities that supply the workforce because its interests span the globe.

But, this is what our political system has created. The companies are simply taking advantage of the rules politicians have set up. We can fault the CEOs of these companies but, at least in this case, they aren't, as far as I can tell, breaking the law--they are simply using the system as it has been handed to them, albeit in a most dastardly and disgusting fashion.

YRC Chairman Zollars' pay declines in 2005

YRC Worldwide Inc. paid Chairman Bill Zollars a base salary of $956,250 and a bonus of $936,169 in 2005, according to a filing Tuesday with the Securities and Exchange Commission.

Zollars received a 6 percent raise in his base salary in 2005 compared with his base salary of $900,000 in 2004, the Overland Park-based company (Nasdaq: YRCW) said in its annual proxy filing with the SEC. His bonus in 2005, however, was 48 percent less than his $1.8 million bonus in 2004, according to the filing.

Zollars' total compensation, including long-term incentive payouts, was $6.18 million in 2005, down 6 percent from $6.57 million in 2004, the filing said.

Other company executives' 2005 compensation:

Donald Barger Jr., senior vice president and CFO of YRC Worldwide -- base salary of $422,500, up 5.6 percent from $400,000 in 2004; bonus of $227,495, down 48 percent from $440,000 in 2004.
Michael Smid, president and CEO of Roadway Express -- base salary of $391,652, up 17 percent from $335,000 in 2004; bonus of $210,831, down 43 percent from $368,500 in 2004.
James Staley, president and CEO of YRC Regional Transportation -- base salary of $518,750, up 5 percent from $494,230 in 2004; bonus of $480,881, down 48 percent from $921,245 in 2004.
James Welch, president and CEO of Yellow Transportation -- base salary of $456,250, up 10 percent from $415,000 in 2004; bonus of $259,971, down 31 percent from $378,895 in 2004.

U.S. trucking industry reports reduced shipments for first time in five months

U.S. trucking industry shipments declined in February for the first time in five months, a trade group said Tuesday.

The American Trucking Associations said in a monthly report that its seasonally adjusted truck tonnage index fell by 2.5 percent in February versus the previous month.

Also on Tuesday, shares of trucker Marten Transport Ltd. of Mondovi, Wis., plummeted 15 percent after the company said it expects to earn between 19 cents and 22 cents a share in the first quarter, below the forecast of 25 cents per share by analysts polled by Thomson Financial. The company, which earned 22 cents per share in the year-ago period, blamed "a slowdown in customer demand compared to expectations, particularly late in the quarter."

Because more than two-thirds of all manufactured and retail goods in the U.S. are carried by truck, the industry is considered an important economic bellwether.

The Alexandria, Va.-based trucking group said its tonnage index stood at 115.1 in February, the lowest level since September and 0.2 percent below year ago levels. The index, which stood at 100 in 2000, measures the weight of freight hauled by U.S. truckers, based on surveys from its membership.

"We continue to believe that motor carriers should expect modest growth in volumes going forward and that the latest decrease should not alarm the industry," Bob Costello, the association's chief economist, said in a prepared statement.

Last Wednesday, trucking company YRC Worldwide Inc. of Overland, Kan., reduced its first-quarter earnings expectations, saying smaller volumes and cost overruns were crimping its bottom line. The company said it anticipates earnings of 65 cents to 70 cents per share, instead of previous estimates calling for $1 to $1.05 per share.

YRC's CEO Bill Zollars explained last week that "some of our large retail customers have made significant inventory adjustments in the quarter, which have impacted our business levels."

On Tuesday, shares of YRC fell 57 cents, or 1.5 percent, to end at $37.41 on the Nasdaq Stock Market, at the bottom of its 52-week range. Marten Transport's Nasdaq-traded shares fell $3.43, to close at $19.90, still near the top of its 52-week trading range.

Shares of trucking concern CNF Inc. slid $1.45, or 2.8 percent, to end at $51.09, in the middle of its 52-week trading range on the New York Stock Exchange.

Truckers have seen their fuel costs surge in the past few years, though unlike airlines they have been able to pass most of those extra expenses through to customers.

In an interview, Costello said of industrywide conditions: "Essentially what I'm hearing from members is that it's not gangbusters, and it's not real bad. It sort of fits with the rest of the economy."

Teamsters urge bus drivers to join

A local union is courting more than 100 school bus drivers in Iowa City and is expected to ask the district to not renew its contract with busing company First Student Inc.

"This is a critical situation," said Jesse Case, a member of Teamsters Local 238 and national campaign coordinator for the International Brotherhood of Teamsters. "We have drivers who are concerned with safety issues that are being ignored, and these drivers are not going to be ignored anymore.

"We're talking days not weeks to address these problems," Case added. "We're going to be asking parents to prepare for alternative transportation so these drivers can be heard."

Case said he and a group of drivers will attend today's Iowa City School Board meeting to ask the district to not renew its contract with First Student until the busing company recognizes its bus drivers and monitors as a collective bargaining unit. The Cincinnati-based First Student has had the contract for busing services in the school district in some form since 1986.

Iowa City School District superintendent Lane Plugge said the teamsters contacted his office a couple of weeks ago about unionization. First Student and the district agreed to a $3.07 million deal last June.

"Our official position is we have no preference whether the drivers for First Student are part of a formal organization or they're not," Plugge said Monday. "We look at this as an issue between the company First Student and the drivers who are trying to organize, and we would encourage them to follow the process that is set out."

Case said there are 116 bus drivers and monitors in the Iowa City School District and more than 80 percent of them signed representation cards in favor of joining the union. In order to organize, the teamsters must show that at least 30 percent of the bargaining unit would support the union, according to rules set out by the National Labor Relations Board.

From the time a petition is filed with the NLRB, an election would be scheduled to take place within six weeks. However, Case said the teamsters think First Student would not run a fair election and might fire drivers who try to unionize.

First Student labor relations director Tom Secrest called Case's claim "ridiculous."

"That's against the law, and if they had any evidence of that, I am sure they would tell you, and there would be no evidence of that because it doesn't happen," Secrest said of Case's firing claim. "Whatever the NLRB needs from us, we cooperate with the process."

Mike Johnson, vice president of First Student's regional office in St. Louis, said three out of 18 locations in his region are unionized. Johnson said he planned to attend tonight's school board meeting "mostly to observe and see where we go from here."

"We're not anti-union," Johnson said. "We just want the employees to be able to decide and what the teamsters are trying to do right now is force us to do this."

Class Action Filed Against Pfizer by Union and Employee Health Plans over Alleged Off-Labeling Marketing of Lipitor

Lawsuit by union and other health care payors challenging billions of dollars
in unwarranted Lipitor prescriptions; plaintiffs claim Pfizer marketed drug
outside approved FDA treatment guidelines for lowering cholesterol.
For large drug companies, the holiest
of grails is the blockbuster medication that makes a market and leads all
other treatments in brand recognition and sales, typically generating billions
of dollars. Such is the case with Pfizer, Inc's best-selling cholesterol-
lowering drug, Lipitor, the blockbuster of all blockbusters.
But now, a group of union and employee insurance plans is charging that
Lipitor achieved its blockbuster clout in part through an ongoing fraudulent
scheme that marketed the drug for off-label uses that are not approved by the
Food & Drug Administration for treatment of high cholesterol.
Health care payors filed suit against Pfizer, asserting that as a result
of the company's off-label promotion of Lipitor that they, along with other
third-party drug plans and state Medicaid plans, have paid for billions of
dollars in unwarranted Lipitor prescriptions over the last five years. In
addition to charging Pfizer with fraud, violation of state consumer protection
statutes and other state laws, plaintiffs assert claims under the federal
anti-racketeering RICO statute.
The Welfare Fund of Teamsters Local Union 863 filed suit in New Jersey
federal court. Other plaintiff drug plans expected to join the class action
are located in New York, Pennsylvania, Florida, Illinois, Ohio, and Indiana.
As a group they are represented by noted securities litigation firm Grant &
Eisenhofer, P.A. (See list of current plaintiffs below.)
There is no question that Lipitor is a certified blockbuster - "the most
widely used treatment for lowering cholesterol and the best-selling
pharmaceutical product in the world," Pfizer touted in its 2005 annual report.
The first drug to achieve $10 billion in worldwide sales, Lipitor has
generated more than $46 billion in revenue for Pfizer since 2000.
However, according to the drug plans' lawsuit, "a significant portion of
Lipitor's sales" flows from Pfizer's improper off-label marketing tactics that
breached federal guidelines for treating cholesterol.
A statin drug that works by blocking certain cholesterol-producing
enzymes, Lipitor received FDA approval in 1996. But it wasn't until 2001 that
Pfizer launched a broad marketing and advertising campaign to increase
awareness among physicians and consumers. The drug plans allege that
Lipitor's dramatic spike in sales - from $5 billion in 2000 to $12.1 billion
in 2005 - reflects Pfizer's aggressive off-label promotion of the drug during
that period.
As noted in the plaintiffs' complaint, "if a drug's manufacturer
advertises uses not on its FDA-approved label, the drug is considered
misbranded and its distribution in interstate commerce is prohibited."
The FDA has on two separate occasions cited Pfizer for improperly
marketing Lipitor, including the way in which the company downplayed the
drug's harmful side effects as well as for ignoring the critical role played
by exercise and diet in lowering cholesterol. The complaint notes that
Pfizer's physician and hospital marketing materials have misrepresented
treatment protocols established by the National Cholesterol Education Program,
a set of evidence-based guidelines established in 2002 and known as Adult
Treatment Plan III (ATP III).
Although the FDA does not regulate how doctors prescribe medications, the
agency sets strict guidelines for approved treatments. As the complaint
notes, "the FDA has approved Lipitor for use only in accordance with ATP III
.... Any marketing of Lipitor that runs afoul of ATP III is considered off-
label marketing and violates FDA regulations."
Elsewhere, the complaint notes that "Pfizer also employed purported
'independent' third parties ... to promote Lipitor's off-label use." In
addition to paid consultants and marketing firms, the company engaged
organizations such as Emerging Science in Lipid Management and the National
Lipid Education Council to offer physicians continuing medical education
courses as well as to publish articles extolling Lipitor's off-label usage.
As the complaint notes, "both organizations are fully funded by Pfizer" and
have become an active part of the marketing plan for Lipitor.
"Once you connect the dots and see the elaborate sophistication and reach
of Pfizer's plan to go way beyond the federally mandated guidelines for
prescribing Lipitor, there is no other way to describe it except as a
fraudulent scheme, whose true purpose has been to extract illegal payments
from third-party payors for Lipitor's off-label use," said Jay Eisenhofer of
Grant & Eisenhofer in explaining the racketeering claims.
"Between the company's own off-label marketing and the coordinated
campaign by its various consultants and captive physician education groups,
Pfizer has reaped billions of dollars in insurance payments to cover
prescriptions for patients for whom Lipitor therapy is not recommended under
FDA approved usage standards," Mr. Eisenhofer noted.
"This is a classic case of unjust enrichment," he added. "Pfizer has
built colossal sales of Lipitor through the pipeline of third-party payors
such as our clients and countless other drug plans - including Medicaid and
Medicare - much of it based on prescriptions that the FDA's guidelines say
never should have been written in the first place."
Mr. Eisenhofer said that the plaintiff drug plans are seeking several
layers of relief, including a court order enjoining Pfizer from continuing its
deceptive off-label marketing. The plans are also asking for compensatory and
punitive damages based on Pfizer's alleged practices, including treble damages
in accordance with the RICO claims.

List of Initial Plaintiff Drug Plans Participating in Class Action

Welfare Fund of Teamsters Local Union 863 (New Jersey)
Southern Illinois Laborers and Employers Health and Welfare Fund
Midwestern Teamsters Heath & Welfare Fund (Illinois)
NECA-IBEW Health and Welfare Fund (Illinois)
Cleveland Bakers and Teamsters Health and Welfare Fund (Ohio)
Electrical Workers Benefit Trust Fund (Indiana)
Sidney Hillman Health Center of Rochester (New York State)