Lawyers for civilian fuel truckers who drove into a deadly ambush in Iraq nearly four years ago may have their claim against KBR revived. They're set to try to have their case revived in a rare closed federal appeals hearing. Former KBR truck drivers and families of those killed say the Houston-based former Halliburton subsidiary knowingly sent the truckers into a deadly combat zone. That's where they were attacked by Iraqi insurgents in April 2004. The ambush killed six KBR drivers and two soldiers and seriously injured numerous others. One KBR trucker and a plaintiff, Reginald Lane, had an arm blown off and suffered irreparable brain damage. In September 2006, a federal judge in Houston threw out the lawsuit against Halliburton. U.S. District Judge Gray Miller ruled that the army played an integral part in decisions to deploy such convoys and he had no authority to second-guess the military. But several former drivers and families have appealed Miller's ruling to the 5th U.S. Circuit Court of Appeals in New Orleans. A three-judge panel is scheduled to hear arguments in the case behind closed doors today.
The Federal Reserve says it has auctioned $30 billion in funds to commercial banks at an interest rate of 3.12 percent. It is working to combat the effects of the credit crisis. It marks the fourth in a series of innovative auctions the Fed began last month in an effort to provide cash-strapped banks with extra reserves. The Fed's hope is that the increased resources will keep banks lending and prevent a severe credit squeeze from pushing the country into a recession. The latest auction results indicated that the Fed's program is having success. The interest rate for the $30 billion in short-term loans marks the lowest rate of any of the four actions. Fed Chairman Ben Bernanke has said that the current auction process will continue for as long as needed to make sure that banks have sufficient reserves. He said the auctions might become a permanent addition to the Fed's "tool box'' of strategies it can employ when credit markets have seized up. The Fed went to the auction process in December after it had had only limited success in encouraging banks to use its "discount window'' where the Fed makes direct loans to commercial banks. Banks had been reluctant to use the discount window out of concern they would be perceived as having trouble raising money through other avenues.
Mid-market companies in Houston are reporting success in global expansion efforts, and many plan further expansion, according to a survey by KPMG's Global Enterprise Institute. KPMG partner Mike Moore says the survey of 105 executives indicates how important global expansion has become.
"Houston has got a lot of momentum in their global expansion efforts. We got half of the companies we talked to are currently focused on global expansion and it's an integral part of their business. Over 60 percent of them said that they expect to expand globally over the next two years, and another 25 percent say that they intend to maintain their level of global presence, over the next two years. So that's 85 percent of the companies that are going to either stay or grow their global presence over the next two years."
Moore says Houston companies have long been involved internationally, and there's a trickle-down effect.
"And the middle-market companies serve those businesses and are going where they are. They're following their customers, so they've gotta be where their customers are. So if you look at the—a lot of it is driven by the oil service industry and the exploration and production industry. They're going where their customers are. Ed: "Did the respondents have the opportunity to talk about their views on the economy?" "Yes, they did, as a matter of fact. Four in ten believe the local economy is better than it was last year, and another 40 percent say it's about the same as it was last year, and a like amount expect the economy to do better in the next year."
Moore says more companies will recognize the opportunities and "get hit with the overseas bug" in terms of generating new business. Houston mid-market leaders point to operations issues and management of financial risks as the top two challenges to growing their international operations.
Sixty-five contract workers from Mexico are seeking more than $177,000 in damages after they traveled to Colorado on the promise of jobs that never materialized. The lawsuit says the men paid $650 each for paperwork and transportation. Their attorney says they arrived in Glenwood Springs with valid passports, identification and H2b visas. Those visas allow companies to employ foreign workers if efforts to hire locally are unsuccessful. The lawsuit names JNS Construction Services of Austin and Leno and Company in Denton.
The Blackstone Group said regulators are getting in the way of its proposed $6.4 billion purchase of credit card provider Alliance Data Systems. But Blackstone says it might still go ahead with a renegotiated deal. Alliance shares slumped in recent weeks on fears that Blackstone wouldn't close the sale. The two sides missed a goal of completing the transaction by December 31st. Alliance says Blackstone last week told it the Office of the Comptroller of the Currency had slapped unprecedented and unacceptable financial and operational requirements on the deal. Dallas-based Alliance disputed Blackstone's claims that regulators had taken a final position on acceptable terms and that the terms were insurmountable. Alliance directors are mulling their next step. Spokeswoman Shelley Whiddon said the company wouldn't comment further.
A Mississippi homeowner says he won't appeal a federal jury verdict against his lawsuit against his insurance company. The jury ruled in Gulfport, Mississippi, that USAA Casualty Insurance must pay an additional $64,000 to David and Marilyn Aiken. That's for Hurricane Katrina wind damage to their Pass Christian, Mississippi, vacation home and its contents. But U.S. District Judge L.T. Senter, Jr., refused to let jurors consider punitive damages against the San Antonio-based insurance company. The Aikens had accused San Antonio-based USAA and the Houston engineering firm Rimkus Consulting Group of conspiring to deny the couple's damage claim. USAA already has paid $178,204 to the Aikens, who had total coverage limits of $582,750 for the dwelling and its contents. The couple also had a separate, federally subsidized flood policy that paid them $278,000.
Continental Airlines will offer 36 channels of live television to all passengers on new planes that are expected to join the fleet next January. Houston-based Continental announced an agreement with LiveTV for satellite-based programming provided from DirecTV. Continental also will introduce onboard wi-fi services including e-mail and instant messaging, subject to LiveTV being able to offer the service--which is in testing. A growing list of carriers are planning or testing such services. The lineup will include CBS, NBC, Fox News, CNN Headline News, ESPN and MTV. The service will be free to first-class customers--and cost $6 in coach. The systems are planned for Continental's new Boeing 737s and Boeing 757-300s.
Edelstein's Better Furniture, which has operated in the Rio Grande Valley for 102 years, is being sold to Famsa. That's the U.S. subsidiary of Monterrey, Mexico-based Grupo Famsa. Famsa will take over Edelstein's 12 furniture stores in the Valley. The Edelstein family will retain its designer's showroom locations in Brownsville and McAllen. The Brownsville Herald reports that Famsa is expected to retain most Edelstein employees but will replace the office staff with its own. The acquisition is effective February 1st. Morris Edelstein was a Lithuanian immigrant who founded Edelstein's Better Furniture in 1906. He peddled his wares door-to-door in Brownsville, and his sales increased dramatically when he began to offer payment plans on furniture.
Valero Energy reports fourth-quarter earnings of $567 million. That's about half of what the San Antonio-based oil refiner earned during the same period last year. Valero says higher crude prices squeezed margins this time around. Operating revenue rose 52 percent to $28.67 billion, but margins were lower. Valero says product margins continue to be squeezed by the failure of gasoline and other refined product prices to keep up with higher crude prices. The company also had higher expenses for maintenance and energy costs that ate at sales. Still, the company performed better than analysts had expected during the quarter. For the year, Valero's earnings fell 4.2 percent to $5.23 billion.
Burlington Northern Santa Fe said its fourth-quarter earnings fell modestly as one-time costs offset increased freight revenue. The nation's second-largest railroad earned $517 million. That's a fraction of a percentage point lower than the year-ago profit of $519 million. Last year's quarter included $81 million in environmental expenses and a technology system write-off. Burlington had 11 million fewer shares outstanding last year. That accounted for the higher per-share earnings despite the lower net result. Revenue rose nine percent to $4.24 billion. Analysts surveyed by Thomson financial had expected revenue of $4.06 billion. Agricultural products and coal shipments boosted freight revenues increased nine percent to $4.12 billion. But Fort Worth-based BNSF says significant fuel costs and continued softness in the industrial products and consumer products businesses hurt results. It says fuel surcharges rose by $120 million in the quarter.
American Electric Power said that its fourth quarter earnings rose 28 percent. The Columbus, Ohio-based electric utility says its quarter got a lift from favorable weather, higher rates across much of its service area and fruitful marketing efforts. AEP says it made $231 million for the quarter ended December 31st. Revenue rose ten percent to $3.3 billion. Analysts surveyed by Thomson Financial had expected revenue of $3.4 billion. AEP has more than five million customers in 11 states, including Texas. Among the Texas cities AEP serves are Corpus Christi, Kingsville, Abilene, McAllen, Harlingen, Uvalde, San Angelo, Victoria and Laredo. Michael Morris is chairman, president and CEO of Columbus, Ohio-based AEP, which is one of the nation's largest power generators. He says AEP's marketing efforts reached new long-term deals to supply power to municipal electric systems and rural electric cooperatives.
Chicken producer Pilgrim's Pride reported that its first-quarter loss widened, largely due to soaring costs for grain that have hurt profits throughout the industry. The Pittsburg-based company reports a loss of $32.3 million, for the October-Ddecember period. That's a 31 percent wider loss than the one reported in last year's quarter. Pilgrim's Pride said a 24 percent boost in animal feed ingredient prices contributed to the loss. The higher prices are mostly a function of skyrocketing costs for corn, which is used to make the feed as well as the alternative fuel ethanol. Revenue rose nearly 57 percent to $2.09 billion. Analysts predicted revenue of $2.08 billion.