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Business ReviewGULF COAST July 22 - July 28, 2011

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GoodGrowthLow taxes help local governmentsgrow their tax base in Florida.

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+ Surf versus turf: thebattle for a fresh slogan

A corporate food fight has erupted between a Naples sea-food-restaurant chain and burger giant Wendy’s International.

Phelan Holdings, which owns the Pincher’s Crab Shack restau-rants on the Gulf Coast, is suing Wendy’s in federal court for illegal use of its registered trademark slogan: “You can’t fake fresh.”

The lawsuit by Phelan, which seeks unspecified damages, charg-es Wendy’s used the slogan and others that were nearly identical in its restaurant promotions.

Still, despite the litigation, we’ll bet you a steaming tray of blue crabs this gets resolved before going to trial. They’ll be freshly caught.

+ firm that finds others work finds going good

With unemployment high statewide, Karen Rehn, who runs a staffing and job placement busi-ness, is an odd candidate to report sales growth of 200% over the past 18 months.

But Rehn has done just that with Bradenton-based HH Staff-ing. After an overhaul of the busi-ness model, revenues have grown 200% since 2009, even in the face of double-digit unemployment. The firm’s total annual revenues are less than $5 million.

“There are jobs out there,” says Rehn, despite the daily barrage of news that says otherwise. “They are not coming all at the same time, but they didn’t all go down at the same time, either.”

Rehn bought the firm, then called Helping Hands Staffing Services, in 2009. She had been in the job placement business for 10 years in her native Wisconsin and sought two new dynamics in her life: An ability to have more control than the stock market pro-vides for her retirement savings and warmer weather.

The firm, founded in 1988, mostly provided day laborers for

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See COffEE Talk on page 3

a technology consulting firm giant plans to double its work force in fort Myers. It provides a lesson in attracting companies for other cities.

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Gulf coast Business ReviewJULY 22 – JULY 28, 2011 www.review.net 3

the construction in-dustry before Rehn bought it.

But Rehn didn’t believe that model was a sound long-term strategy. So she set up four divisions for the revamped HH Staffing. One is light industrial, which was her spe-cialty in Wisconsin. The three other divisions are hospitality, professional-clerical, and property management/maintenance.

Rehn also grew the business geo-graphically. She opened an office in Clearwater last year and plans to expand to Orlando later this year.

Finally, Rehn redid the firm’s website. It’s an employment-services portal, with daily tips on everything from cover letters to interview dos and don’ts. Says Rehn: “We’ve done some remarkable things.”

+ company keeps the faith in construction

The mission of Sarasota-based Gravitas, a group of investors with high confidence in the comeback potential of the Gulf Coast construction market, has turned to mason.

That’s the core behind Gravitas’ latest reclamation project: a masonry block manufacturing facility in LaBelle, the county seat of Hendry County. Led by longtime Sarasota banker Susan Flynn, Gravitas bought the masonry firm, formerly Kenton Industries, in a deal announced July 12.

Gravitas executive Randy Whitmer declined to elaborate on what the firm paid for Kenton, only to say it was “a fraction of what was left on the debt.” Gravitas bought the business from Synovus Bank.

Moreover, Gravitas didn’t receive any county or state subsidies for the acqui-sition. That’s a rarity these days, when taxpayer-funded incentives are doled out with increasing speed in the name of economic development.

Kenton shut down its operations last year, according to Gravitas, including all

work at its 25,000-square-foot facility built in 2007. Kenton officials couldn’t be reached for comment.

The new Gravitas-owned firm, now Industria Block Company, rehired most of the Kenton employees. Indu-stria executives also bought new equip-ment and repaired other machines.

Whitmer will run operations at Industria. He says even though the construction industry is in a sizeable downturn, there are niche opportunities for companies with the right combina-tion of low overhead and low prices. “It’s still an extremely challenging mar-ket,” Whitmer tells Coffee Talk. “But we think this is a good time be aggressive.

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coffee talKseeKinG 40 undeR 40

The Review is scouting for bright, young business leaders for the 12th year of the popular “40 under 40” is-sue. It’s open to entrepreneurs, execu-tives and professionals in any field or industry from Tampa to Naples.

And of course, the winners must be under age 40 by the time this issue publishes Oct. 7.

The rules are simple. Please email the name, age, city of residence and short biography or resume of the per-son you are nominating to [email protected]. You may nominate yourself, too. The nominee must work and live in the Review’s coverage area, which includes Pasco, Pinellas, Hillsborough, Manatee, Sarasota, Charlotte, Lee and Collier counties.

The Review editors will then select finalists, who must agree to answer a questionnaire and provide a high-resolution photo for publication. The photo and the answers to the questions may be published if they’re selected as a winner.

Include a telephone number and an email address for the nominee, as well as contact information for the nominator. The deadline for nomina-tions is Aug. 12. For questions, call Lee-Collier Editor Jean Gruss at 239-415-4422.

econoMic snaPsHot

what the data show: Tax-able sales in the tourism and recreation category include hotels, motels, bars, restaurants, liquor stores, art stores, gift shops, admissions, sport-ing goods, rentals and jewelry stores. The data is for April, the latest avail-able.

what it means: Tourism and recreation taxable sales confirm a much-improved April compared with the same month a year ago. Hoteliers and restaurants reported higher sales this spring as visitors boosted spending compared to 2010.

However, the Easter holiday fell much later this year than in 2010, benefiting businesses in the tourism industry.

forecast: Comparisons will be much easier this summer because of last year’s BP oil spill in the Gulf of Mexico. While very little oil washed up from Pasco to Col-

lier counties, many tourists stayed away. Meanwhile, the economies

of summer drive-in markets such as Florida and neighboring states have

stabilized. One concern is whether European tourists will cut back on travel to the U.S. this summer because of the financial crisis in their countries.

Gulf coast touRisM & RecReation

aPRil touRisM sales($ in millions)

area tourism sales %annual changeSarasota-Bradenton $197 10.2%Cape Coral-Fort Myers $212.6 8.1%Punta Gorda $32.1 5.4%Tampa-St. Petersburg $652.1 5%Naples $160.9 4.4%

Source: Florida Legislature Office of Economic & Business Research

see coffee talK on page 5

Karen Rehn


JULY 22 – JULY 28, 2011

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SARASOTA-MANATEEFirm plans growth

Sarasota-based Octex, a plastic injection mold manufacturing firm, plans to hire 80 employees by 2016, according to local eco-nomic development officials.

Octex will receive a $200,000 performance-based incentive grant for the expansion.

The company was founded in 1990. It has 61 employees and plans to add positions in admin-istration and manufacturing, ac-cording to an Economic Devel-opment Corp. of Sarasota County release. The firm currently occu-pies 33,000 square feet and will add 26,000 square feet at the same location.

Octex has clients in the con-sumer products, medical, aero-space and industrial industries.

Sarasota native Jim Westman bought Octex in 2009, after a 20-year investment banking career in Atlanta.

Local official resigns Sarasota County Chief Finan-

cial Planning Officer Jeff Seward resigned his position July 18, the latest in a string of departures since a procurement scandal was uncovered earlier this year.

Seward had been with the county since 2003. His resigna-tion now marks 10 county em-ployees who resigned or who were fired because of the scandal. County Administrator Jim Ley resigned in May.

Seward was placed on a two-day administrative leave ear-lier this month after a Sarasota County Clerk of the Circuit Court audit showed more misconduct in the county’s purchasing prac-tices. Several county officials will now handle Seward’s former re-sponsibilities.

Bank’s problems highlightedThe postmortem on the failure

of Century Bank of Sarasota, con-ducted by U.S. Treasury Depart-ment officials, found that flaws in the bank’s lending structure par-tially led to its failure.

The Office of the Inspector General of the Treasury Depart-ment wrote the report. It blamed ineffective management for the bank’s issues, and, in a somewhat unusual move, placed some of the responsibility on the bank’s primary federal regulator, the Of-

fice of Thrift Supervision. Century executives were ac-

cused in the report of setting up an overly aggressive lending en-vironment. The OTS, meanwhile, was too patient in its oversight of the bank and in handing out pos-sible correction orders, the report stated.

Century failed Nov. 13, 2009. Louisiana-based IberiaBank as-sumed the bank’s assets and de-posits.

TAMpA BAyTraditional sales increase

Traditional home sales in Hill-sborough increased between March and June, albeit slightly, according to Lance Mohr, a real estate professional with Keller Williams.

Of all homes sold in the month of March in Hillsborough Coun-ty, 57% of those were traditional sales, Mohr says. In June, that ratio increased to 63%, based on Mid Florida Regional MLS data.

Over that same time, the num-ber of homes listed for sale in Hillsborough decreased by 18%, from 6,412 listings to 5,281.

port director on hot seatRichard Wainio, the executive

director for the Port of Tampa since 2006, faces criticism for the reduction in port tonnage during the recession.

From fiscal year 2006 to 2010, cargo by weight fell 24% to 37.1 tons. Ship arrivals sank 19% from 3,699 to 3,009 for the same period.

The Port of Tampa Maritime Industries Association sent a critical letter to Port Authority governing board members not-ing that port earnings declined from roughly $5 million in 2006 to $1.1 million last year. “This can best be described as a vote of no confidence,” wrote association President Timothy Shusta.

Last December, Wainio re-ceived favorable reviews from the authority. Wainio, 61, earns $251,118 a year.

LEE-COLLIERNaples sales fall

Sales of existing single-family homes in June fell 13% to 370 but the median price rose 6% to $249,000 compared with June 2010, according to the Naples Area Board of Realtors.

The number of sales of single-family homes in June fell in ev-ery category except those priced at more than $1 million. Homes priced $300,000 or less showed the largest percentage drop in the number of sales in June com-

pared with the same month a year ago, down nearly 20%.

By contrast, sales of existing condos rose 7% to 381 in June compared with June 2010. The median price in June, $165,000, was identical to the same month a year ago.

Rib City growthRestaurant Business magazine

recently identified Rib City as the 11th fastest-growing restaurant chain in the country.

The industry trade publication cited data from food industry re-search and consulting firm Tech-nomic, which showed Rib City as one of the fastest-growing restau-rant chains in the country based on the percent change in 2010 sales compared with the previous year in the $25 million to $50 million sales category.

Father-and-son entrepreneurs Paul and Craig Peden founded the Fort Myers-based barbecue chain in 1989. There are 13 cor-porate-owned stores and 16 fran-chises located in eight states.

GULF COAST WEEKREGIONAL BUSINESS NEWS AT A GLANCE

Discount airlines helped the Charlotte County airport in Punta Gorda grow passenger traffic by nearly 72% to 14,130 people in June compared with the same month a year ago, ac-cording to figures from the Char-lotte County Airport Au-thority.

Allegiant, the travel and airline operator, posted the biggest jump in passenger traffic in June. Al-

legiant’s 10,129 passengers in June represented a 110% in-crease over the same month a year ago.

Other discount airlines that operate at the Punta Gorda air-port include Direct Air and Vi-sion Airlines.

EXECUTIVE DECISIONDo you think airline fees have gotten out of hand?

To vote in this week’s poll question, visit review.net/decision.

Results from last week’s poll:

Is your company budget starting to loosen up for meetings and events?

Charlotte airport grows

71%

29%yES

NO

Gulf coast Business ReviewJULY 22 – JULY 28, 2011Gulf coast Business ReviewJULY 22 – JULY 28, 2011 www.review.net 5

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coffee talKWe think long-term the market is going to turn around.”

This is the second time Gravitas has saved a Gulf Coast construction indus-try firm.

In February, Gravitas bought the debts of Charlotte County-based Colo-nial Construction Co., which filed for bankruptcy in 2010. Colonial produces pre-stressed structural floor and roof concrete. Gravitas turned it into two firms, and just like with Kenton, most of the jobs were saved when Gravitas took over. (See Business Review, March 11, 2011.)

+ Making the transition to caring

Entrepreneurs are made in a reces-sion.

Consider Wanda Bishop, who recent-ly invested $28,000 to buy the franchise rights in Fort Myers for Caring Transi-tions, a company that helps the elderly and their family move and sell a home.

Two years ago, Bishop was laid off from a media-buying company in At-lanta and moved to North Fort Myers to be closer to her aging mother.

With job prospects slim, Bishop be-came an entrepreneur and started her own business by buying a Caring Transi-tions franchise.

“I’m never going to get downsized again,” says Bishop.

Making the transition from employee to entrepreneur “can be somewhat scary,” Bishop acknowledges. “I’d like to see a little more income coming in, but I feel so in control of what I can do.”

After just two months in business, Bishop has landed several new clients and is actively seeking new business by venturing to networking functions.

“There are days it’s a challenge. I have to make sure that I stay focused,” she says.

+ tampa General comes out on top in region

When it comes to the best hospitals, the Tampa area is well stocked with high-performing health care, according to the latest rankings by U.S. News & World Report.

In its 2011 regional rankings of hos-pitals and health care facilities, Tampa General Hospital received the No. 1 spot in the Tampa-St. Petersburg area, followed by Moffitt Cancer Center as No. 2.

U.S. News’ website states that seven of Tampa General Hospital’s specialties have top 50 rankings nationally, and five are “high performing.”

It noted that Moffitt’s specialty in can-cer is No. 18 in the nation, and the hos-pital is recognized for high-performing specialties in gastroenterology, gynecol-ogy and nephrology.

The area also received recognition for All Children’s Hospital in St. Petersburg, which was listed as a top children’s hospital. All Children’s also ranked in the top 50 for pediatric spe-cialties including cancer, and cardiology and heart surgery.

Farther south, Sarasota Memorial Hospital was recognized as having high-performing specialties in six areas. Although it was not ranked nationally, it had an 81% patient satisfaction rate, compared to a 65% state average and Tampa General’s 71% satisfaction rate.

Naples Community Hospital had four high-performing specialties, but only a 61% patient satisfaction rate, ac-cording to the list.

Tampa entrepreneur Josiah Osi-bodu discovered a wealth of opportu-nities in a foreign economy that grew nearly 8% last year.

The catch is that Osibodu had to go halfway across the world, to his native Nigeria, for the discovery. Even so, Osibodu is the latest Gulf Coast business owner to seek opportunities overseas.

Osibodu’s business, Osibodu & Associates Exporting USA, is also in position to benefit from good timing. Nigeria is one of the most populated countries in Africa according to the U.S. Department of Commerce. Plus, its economy, with 7.85% growth last year, is one of fastest-growing econo-mies on the continent. That growth, says Osibodu, means the West Afri-can nation is in need of construction materials — something in abundance

in Florida. “There are huge infrastructure needs

going on in Nigeria,” Osibodu tells Coffee Talk.

Osibodu aims to meet those de-mands with his startup export busi-ness, which he launched late last year. Osibodu has lived in America for 25 years, and he recently relocated to Tampa from Pittsburgh. He was a CPA for a global accounting firm prior to Osibodu & Associates.

The firm’s first shipment of build-ing and construction materials set sail for Nigeria from the Port of Tampa July 14. Osibodu worked with Lymfad Limited, a Lagos, Nigeria, construc-tion and project management firm.

Osibodu hopes the shipment is the first of many. “We have the supply in Florida,” says Osibodu, “and they have the demand in Nigeria.”

out of aMeRica: GoinG oveRseas foR Business


JULY 22 – JULY 28, 2011

FIRST UP

When PGT Inc. CEO Rod Hersh-berger wanted to expand pro-duction for the North Venice

custom windows and doors manufactur-er, he needed skilled workers — and he needed them fast.

With 1,200 current employees, the company, which earned $176 million in 2010 revenues, already had a base of per-sonnel who could be trained for the work. But when it chose to close its North Caro-lina plant and combine it with its Florida operations, Sarasota County’s largest manufacturer needed new skilled labor.

Enter the CareerEdge Funders Col-laborative, a nonprofit work force train-ing program based on a flexible national model developed in the Northeast and based in Boston. CareerEdge aims to build career paths for lower income em-ployees by focusing on growth industries and assisting employers looking to fill positions with skilled workers.

Since opening an office in Bradenton in September, CareerEdge has trained 682 employees — including 289 new hires — according to its director, Mireya Eavey. The Sarasota/Manatee program is one of 31 similar ones around the country, but so far the only one in Florida.

Unlike bureaucratic public work force boards that focus on services for the un-employed, CareerEdge contracts directly with targeted employers in high-demand industries including manufacturing, health care, transportation and technol-ogy. “They’re about serving the employ-ees,” says Eavey, about work force boards. “We’re about serving the employers. We’re an enhancement.”

CareerEdge, however, does work close-ly with the Suncoast Workforce Board and staff, says Eavey, who says the two organizations complement one another.

Sally Hill, spokeswoman for the board, agrees. “We absolutely work in partner-ship,” she says. “There’s areas where we may not be able to provide training un-der the Workforce Investment Act, where CareerEdge can.”

Ted Ehrlichman, the board’s COO, says there’s no overlap, it’s just that Career-Edge is sector-specific. The program also fills a gap, he says. “They’re about train-ing for the next better job and the next better job.”

Hershberger likes seeing the train-ing gap being filled at PGT. “I think the program’s been wonderful. We take them though an extensive program,” he says about the trainees. “We want them ready to work. Using CareerEdge they’re able to do all that training ahead of time. We definitely recommend them.”

That training includes the Florida Ready-To-Work assessment and certifi-cation. It also includes “observation test-ing,” which evaluates workers on the use of equipment they’ll be operating in their jobs. At PGT, 195 workers completed the certification and another 85 employees will be going through observation testing soon, Eavey says.

Despite nearly 16,700 unemployed

Employers’ New EdgeCareerEdge, a new job-training program in Manatee and Sarasota counties, shifts the model from employee to employer and from public to partnership.

Rod Millington

CareerEdge Executive Director Mireya Eavey, with Michelle Callan, PGT’s university manager, distributer education. The company, a win-dows and doors manufacturer in North Venice, is pleased with the employee-training programs offered by the Bradenton-based nonprofit.

in Sarasota County and a 10.4% unem-ployment rate as of May, finding skilled workers can still be a challenge for man-ufacturers and other industries in need of technical know-how or professional expertise. That’s a common problem around the country that the National Fund for Workforce Solutions sought to solve when it formed in 2007.

The fund is a collaboration between top foundations and a national network of companies, work force groups and government agencies. Big backers in-clude the Ford Foundation, JP Morgan Chase & Co., Microsoft and the John S. and James L. Knight Foundation.

The national funders provide seed money — $23 million so far — to region-al sites to develop localized solutions. CareerEdge’s funding includes $1 million from the Knight Foundation, $450,000 from the National Fund, $209,000 from

Microsoft (plus a $30,000 software do-nation), $450,000 from the Gulf Coast Community Foundation of Venice, plus $200,000 from Sarasota County and ad-ditional funds from the cities of Sarasota ($120,000) and Bradenton ($400,000 divided among two community redevel-opment agencies and the downtown de-velopment authority).

In each of the 31 regions where the National Fund is working, regional col-laboratives bring together government agencies, foundations and other phil-anthropic organizations to target finan-cial resources and strategic thinking on creating jobs and careers. Together, the regional collaboratives committed an ad-ditional $100 million to the effort.

Mark Pritchett, the Gulf Coast Com-munity Foundation’s senior vice presi-dent of community investment, says the foundation bumped up its initial $150,000 investment in CareerEdge to target health care worker training.

Blake Hospital in Bradenton has put 239 employees through the training, nearly all for trauma certification, but several also received surgical technician training, says Eavey. “The key is working

FOR MORE INFORMATION

Visit the CareerEdge website at: www.careeredgefunders.orgVisit the National Fund for Workforce Solutions website at: http://nfwsolutions.org

“

“Rod Hershberger, CEO of PGT Inc.: ‘We want them ready to work. Using CareerEdge they’re able to do all that training ahead of time.’

with employers that know where the jobs are that makes this successful,” Pritchett says. “It’s the dollars following the em-ployees to these places that makes them get hired.”

Eavey has raised $1.25 million locally so far, and says the program now has funding totaling nearly $4 million. She expects that should keep CareerEdge running for almost four years.

That suits PGT’s Hershberger, who says the CareerEdge program helps his company’s bottom line. “Normally the training process to bring someone up to speed can take three to six months,” he says. “It cuts a month off.”

Looking ahead, Hershberger adds, “Yes, as we hire people, we’ll use it.”

— Jay Brady


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No VacancyThe hotel market in the Naples area is the strongest on the Gulf Coast, but data show a lack of pricing power.

Steve McIntire likes to tell the story of farmers who get together to decide at what prices they’ll sell their pigs.

Problem is, he chuckles, it never works because there’s always one farmer who undercuts the others and sells his pigs at a lower price.

McIntire, president of the Collier County Lodging & Tourism Alliance and general manager of Bellasera hotel in Naples, says the hotel business is similar.

Consider the month of March, when Naples-area hotels were nearly 90% full, according to data from the local conven-tion and visitors bureau. Despite the highest occupancy rate in years, the aver-age daily rate rose just 2% that month, to $240.60 compared with the same month a year earlier. In fact, it was lower than the $241 Naples hoteliers charged on av-erage in March 2009.

“I think we all got caught flat-footed, but we were happy to see [visitors],” Mc-Intire says. In essence, the data show ho-teliers traded higher occupancy for lower rates.

Like every other business in tough economic times, generating sales is the order of the day. To make sure they got heads in beds, Naples-area hoteliers dis-counted heavily for the traditionally busy winter season. To their surprise, many people didn’t wait until the last minute as they have for the last few years. “Ev-eryone pre-booked at lower rates,” Mc-Intire. “There was a shift in the buying pattern.”

Naples hoteliers underestimated the advanced bookings and were left with few rooms for higher-margin walk-in traffic. Group business was especially strong because larger hotels in the area pushed hard to land that business, filling lots of rooms at a discount. “We’re back very close to 2009 numbers,” McIntire says.

The good news is that corporate busi-ness travel is finally coming back after having been demonized by politicians in Congress. The so-called “AIG effect” is wearing off. “It’s not such a taboo sub-ject,” McIntire says.

What’s more, the affluent visitor to Na-ples returned to the area, especially be-cause horrendous winter storms chased them to Florida. Summer bookings look promising, too. “We’re way ahead of last year,” he says.

Still, hoteliers aren’t ready to raise rates in a big way despite an improved out-

Nancy DeNike

steve Mcintire, president of the Collier County Lodging & Tourism Alliance, says hoteliers aren’t likely to raise rates significantly despite improved occupancies.

FIRST UP [Collier County]

look. “Until everybody feels good about the economy, we’re going to be cautious about rates,” McIntire says. Unfortunate-ly, McIntire says that situation may linger until the presidential election next year.

Meanwhile, McIntire is making a push to expand the alliance’s membership be-yond the 40 hotels that currently make up the organization. He estimates there are at least 1,100 businesses in Collier

““steve Mcintire, Collier County Lodging & Tourism Alliance: ‘There was a shift in the buying pattern.’

County that are directly related to tour-ism, from local attractions to restaurants and charter boats.

The idea is to broaden the organiza-tion’s network so members can work to-gether or refer business to one another. In addition, a larger group would be more effective politically on matters re-lated to tourist-tax spending.

—Jean Gruss

aBout

organization: Collier County Lodging & Tourism Alliancenext meeting date: 8 a.m., Aug. 24subject: Marketing your business to area hotelslocation: Bellasera Hotel, Naplescost: Free to business owners and individuals in the tourism industryRegistration: Email [email protected]. Deadline is Aug. 17

fiRst uP


JULY 22 – JULY 28, 2011

The final mission for space shuttle Atlantis signals an end to the space shuttle program, but the beginning

of a new venture for Craig Technologies.The Melbourne-based company re-

cently added a machine and tool division as other companies with those capabilities on the Space Coast have closed. The loss of NASA-related contracts, combined with the economy, is responsible for the clos-ings of these specialty shops.

Craig Technologies is a software and systems engineering firm that provides project management, infrastructure in-stallation and modeling and simulation services for the aerospace and military in-dustries. It seems a machine and tool divi-sion would seem out of place at a company that began as a software firm, yet it was a logical expansion to Carol Craig, the com-pany’s founder and CEO.

“Diversity has always been my friend as I’ve grown my company,” Craig says. “We’ve tried to add new services that com-plement our existing skill sets.”

Craig points out that machine and tool work often involves design.

“Rarely do you have an instance where you just simply machine a part,” says Craig, who spent a summer during college working at a machine shop. “Your custom-er comes to you with a problem and a set of specs, and you have to design the actual part. We have a lot of experience on the de-sign end.”

Because her company’s primary busi-ness is outside of the machine and tool industry, Craig says she has time to grow the new division without the pressure of a stand-alone shop.

Still, she expects to turn a profit because the venture is being funded with Craig Technologies’ profits, not debt or outside investors.

“We’re on track to recoup all of our costs and turn a profit by the end of the year,” says Craig, adding that the new division began operating in January.

The closing of local machine shops not only provides Craig with a new opportu-nity, the company has also been able to purchase used equipment at a discount price. She estimates she has invested about $500,000 in capital costs.

Craig also expects to tap into the skilled labor force along the Space Coast.

“Not all of the NASA jobs were engineers and rocket scientists,” says Craig. “There are a lot of skilled craftsmen and high-tech workers who are now out of work.”

Brevard County officials estimate the end of the shuttle program will result in the loss of some 8,000 NASA-related jobs. Craig has already hired 15 employees for the new division and expects to add about 10 more by the end of the year. These new employees join the company’s current work force of 240 people in 26 locations.

“I’d like to have about 500 employees, but then I tend to think big,” Craig laughs. “Realistically, I think we could add several dozen jobs in the next couple of years.”

Craig Technologies, which posted rev-enues of $28 million in 2010, has several government contracts, and the CEO says she will pursue similar deals for the ma-chine and tool division. She also plans to push into the commercial market, not-ing that the division’s closest competitor with similar capabilities will be about 200 miles away.

“We’ll target the automotive market, commercial aerospace and maritime, es-pecially since we’re located at Port Canav-eral,” says Craig.

The company already is working with Rivian, a startup car company in Rock-ledge that plans to build a fuel-efficient sports car.

Craig says opening a machine shop is not unusual given her background. She earned degrees in computer engineering and science before working for the U.S. Defense Department’s Naval Air Warfare Center. She left the defense department to become a Naval Flight Officer through the U.S. Navy’s Aviation Officer Candidate School and was the first woman aviator in her P-3 squadron.

“I’m used to being the only woman,” she says.

— Dan Ping

Many Space Coast companies see gloom as the shuttle program

comes to an end. Carol Craig sees opportunity as she starts

a new venture.

Courtesy Craig Technologies

Craig Technologies CEO Carol Craig is finding opportunity to launch a new division as NASA’s Space Shuttle program comes to an end. The company has opened a machine and tool division that will provide jobs for recently unemployed NASA workers.

FIRST UP


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JULY 22 – JULY 28, 2011

Nancy DeNike

Christopher Lafond, executive vice president and chief financial officer at Gartner, says the technology consulting firm will double its operations in Fort Myers.

ECONOMIC DEVELOPMENT by Jean Gruss | Editor/Lee-Collier

GardeningGartner

AT A GLANCE

Gartner Headquarters: Stamford, Conn.CEO: Eugene HallStock symbol: ITRecent price: $3952-week high: $43Dividend: Nil

Gulf coast Business ReviewJULY 22 – JULY 28, 2011

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TAMPA, Florida

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LINDELL CAPITAL claimed its share of the market by show-ing a willingness to expand beyond pure lending guidelines practiced by most banks and lending institu-tions.

“The lingering financial crisis, which led to the pullback by many leaders, has created more opportu-nities for LINDELL CAPITAL,” says company founder and long time business leader, Carl Lindell. “We have structured and funded more than $5 million in new loans since January first. We are focus-ing on short to medium term se-cured debt transactions, primarily with individuals and small business owners.”

Dennis Slater, the company’s vice president and CFO, confirmed the rapid rise in the new loan pack-age applications. “Our lending committee performs a deal analy-sis and investment review, and we make immediate decisions. The capital is readily available and the transactions can be closed within short time frames.”

Lindell added, “Our loans are secured by real estate, inventories or accounts receivables, supported by a solid business plan and the professional character of the busi-ness owner. If the request makes good business sense, we will con-sider the loan.”

Lindell Capital creates lending opportunities

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www.review.net 11

christopher lafond, Gartner: ‘We moved our entire accounting operation down here.’

Jean Gruss covers the Lee-Collier region. He can be reached at [email protected], or at 239-415-4422

econoMic DeveloPMent by Jean Gruss | Editor/Lee-Collier

How Fort Myers landed technology consulting firm Gartner is a lesson in how to recruit companies to the Gulf Coast. Now, the company is doubling its presence here.

plans to relocate its accounting opera-tions from Stamford to the Gateway area of Fort Myers.

But Gartner didn’t pick Fort Myers just because the CEO had a house nearby. “At the beginning there were 15 or 20 cities,

and we narrowed it down to four,” Fernandez says. “We looked at Austin, Texas, near Atlanta, Or-lando and Fort Myers.”

In the end, the choices narrowed to Atlanta and Fort Myers. “It became a decision of cost, friendli-ness and quality of life,” Fernandez says.

Gartner’s initial expan-sion here only involved the relocation of its accounting functions. “The techie need wasn’t what was on the list,” says Fernandez.

And Gartner wasn’t the pioneer in this regard. General Electric and Sony already had similar, well-established ac-counting back-office operations in Fort Myers. That fact proved to Gartner that there was a labor force in town with which to build a finance operation.

The decision to establish the account-ing operations in Fort Myers turned out well. The company employs about 400 people here and has added a sales divi-sion that focuses on smaller companies that have less than $1 billion in revenues. “It turned out to be very successful,” Fer-nandez says. “We continued to expand that sales area to a point that we have now maxed out the building.”

For business recruiters, this is a clas-sic example of the latest tactic in busi-ness recruitment: “economic gardening,” or finding prospects within your com-munity instead of chasing them blindly around the country. “All you want is a chance,” says Moore.

expansion plansThe responsibility to build Gartner’s op-

eration from scratch fell on Christopher Lafond, who has since risen through the ranks and is now the company’s executive vice president and chief financial officer.

But from 1998 to 2002, Lafond worked

in Naples as an assistant control-ler. In 1998, the company’s annual revenues were about $250 mil-lion and the company needed to expand in a lower-cost area such as Fort Myers. “Connecticut is a pretty expensive place to operate a business,” he says. “We moved our entire accounting operation down here.”

Lafond says recruiting people in Fort Myers wasn’t too hard, especially among local residents. “A lot of people grew up here and want to stay here,” he says. What’s more, people continue to move to Florida. “There’s a lot of people coming down here for lifestyle purposes,” he says.

Gartner actively recruits from campus-es at the University of Florida in Gaines-ville and Florida Gulf Coast University in Fort Myers. It hires students as interns and then offers them jobs if they prove their worth.

Gartner had so much success building the accounting operation in Fort Myers that it started another business, selling its services by phone to smaller compa-nies with less than $1 billion in revenues. Until then, Gartner had been focused on selling its analysis and consulting to much larger enterprises.

The new sales effort was a success. “Ev-ery company in the world uses technolo-gy in some meaningful way,” says Lafond. “The people here are selling all over the U.S. The main thing they’re selling is core research.”

Gartner plans to expand both its sales operation and the finance back-office to 800 people in a new $14 million, 120,000-square-foot facility that Mc-Garvey Development is building in Fort Myers. Besides offices, the building will house a 200-person cafeteria and gym. “We have the core base of people down here; we’re expanding all over the world,” says Lafond.

Gartner decided to keep these jobs in the U.S. rather than expand them in back-office meccas such as India. “Are they cheaper than Fort Myers? Sure. But operationally, the benefits outweighed the costs of other locations,” Lafond says.

It helped that Florida and Lee County offered incentives for the company to grow here. In all, Gartner will receive $4.2 million in subsidies to offset the ex-pansion costs.

With the cost advantages of Fort My-ers, why not entice Gartner to move its headquarters to Florida? As much as La-fond likes the idea, he says such a move would be too disruptive. “When you think about moving operations, you lose good people,” Lafond says. “We’ll expand where it works well.”

In the world of technology research and consulting, it’s fair to say Gartner is a dominant player.

Larger companies turn to Gartner’s army of 775 analysts to help them stay on top of the lat-est technology trends and figure out where best to spend IT bud-gets.

Gartner, a publicly traded com-pany, reported nearly $1.3 billion in revenues last year and profits rose 16% to $96.3 million. Includ-ing its Stamford, Conn., head-quarters, Gartner has 19 domestic and 42 international offices.

So how did Fort Myers become Gartner’s third-largest office? Af-ter all, this Gulf Coast town isn’t known as a hub of technology, and the firm’s cli-ents are scattered all over the world.

Already, Gartner’s Fort Myers of-fice houses nearly 10% of the compa-ny’s worldwide staff of 4,500 people. And it’s going to get big-ger. Gartner is building a 120,000-square-foot build-ing, roughly the size of two football fields, where it plans to double its staff to about 800 people.

The answer to Gartner’s choice of Fort Myers for its growth has to do with population migration, life-style choices, lower costs of doing business and the fact that Manny Fernandez, the chairman, president and CEO of Gartner at the time, has a home on Sanibel Island.

That last criteria carries so much weight that the Fort Myers Regional Partnership, the county’s business re-cruitment arm, has made it a priority to identify CEOs of large companies who have second homes in Southwest Flori-da. “It’s certainly a good strategy for us to deploy,” says Jim Moore, executive di-rector of the Fort Myers Regional Part-nership, Lee County’s economic develop-ment arm. “We have that advantage that many places don’t. It gives us a chance at a company like Gartner that we wouldn’t otherwise have.”

find the ceosThe Fort Myers area has long been a

destination for corporate CEOs, especial-ly in winter months. Thomas Edison and Henry Ford are perhaps the most famous and earliest captains of industry to own second homes in Fort Myers.

Fernandez, who remains chairman emeritus of Gartner, grew up in Daytona and attended the University of Florida but had never visited the Fort Myers area until the early 1990s. “Gartner had an in-dustry analyst who lived in Sanibel, so I came over to visit him,” Fernandez recalls.

Fernandez liked Sanibel so much he bought a home there in 1996. A year lat-er, in August 1997, Gartner announced

Courtesy

Gartner plans to build a 120,000-square-foot facility in Fort Myers to expand its work force there to 800 people.

Review suMMaRY

company. Gartnerindustry. TechnologyKey. CEOs with second homes on the Gulf Coast may be enticed to establish operations in the region.


JULY 22 – JULY 28, 2011

Low taxation by state and local gov-ernments may not cause growth in an area’s population, employment

or income — and high taxation may not explain why many regions produce low numbers — but one thing’s now more certain than ever: taxes and economic growth tend to move in opposite directions.

That’s the key finding of a recently published study done by Florida Gulf Coast University economics Pro-fessor Dean Stansel.

“It’s where my interest has always lied; how spend-ing and taxes vary in differ-ent areas and have an affect on growth,” says the Wake Forest and George Mason University-educated professor. The Cato Institute, a Washington, D.C.-based free market public policy research institute, published the paper in its spring/sum-mer issue of the Cato Journal.

Stansel, a Miami native who also lived in Arcadia before coming to FGCU in 2004, analyzed the relationship of tax burdens to economic growth of the 100 largest metropolitan areas in the U.S. during the last three decades. Those ar-eas include a half dozen in Florida and several from the Gulf Coast.

“What my research shows,” says Stan-sel, “is that metro areas with lower taxes have tended to have faster growth of pop-ulation, employment and income. So for struggling local governments, the lesson is: reduce taxes, keep spending in check, and watch your economy prosper.”

For example, the combined state and local tax burden for the Tampa-St. Pe-tersburg-Clearwater metropolitan sta-tistical area, or MSA, averaged 8.4% as a percentage of personal income from 1977 to 2002. That compares to a 10% aver-age tax rate for all 100 metro areas. And the Tampa Bay metro area easily outper-formed the group of 100 in population, employment and real personal income growth.

In fact, compared to the 10 lowest-tax large metro areas, the Tampa area fares well. The average tax rate of those 10 is 8.3%, nearly equal to Tampa’s. Florida and Texas, because they don’t tax per-sonal income, account for five of the 10 lowest-tax metro areas.

Tampa exceeds that top 10 group’s av-erage growth rates for both population and employment, and comes close to the group average increase in real personal income: 152% compared with 157% from 1980 to 2007. Employment has the high-est negative correlation to taxes, mean-ing that higher employment is more of-ten found where taxes are low.

The difference in the timeframes for the tax burden and the growth factors is intentional says Stansel. “The lag in there is that the effects [of taxes] comes after a few years,” he explains.

Two other Florida metro areas also ranked in the 10 lowest-tax group, in-cluding one from the Gulf Coast, the Bradenton-Sarasota-Venice area. Its 8% tax burden was only bettered by the Jack-sonville area at 7.9%.

From 1980 to 2007 the Bradenton-Sarasota-Venice saw population rise 93%, employment climb nearly 159%, and real personal income jump 221%. “If you want growth, you have to keep taxes

GOVERNMENT WATCHBY JAY BRADY | Government Editor

Growth and TaxesA new Florida Gulf Coast University study shows that metropolitan areas with higher taxes had lower growth and high-growth areas had lower taxes.

REVIEW SUMMARY

What. FGCU study shows inverse relation of growth and taxes.Issue. Do high taxes cause low growth, or vice versa?Impact. Evidence to help declining cities turn around.

low,” says Sarasota City Commissioner Shannon Snyder, whose city hasn’t seen much of the growth in the area.

Stansel cites other similar research, a popular subject among economists, and writes in his paper, “Although there are numerous factors that can influence the growth of individual economies, one finds a consistent relationship between

low taxes and high economic growth in metropolitan areas, in states and in na-tions.”

Business impedimentsStansel also looked at the 10 highest-

tax metro areas and found that the av-erage state and local tax burden added up to 12.4% of personal income. For the

1980 to 2007 period, those communities, nearly all in the Northeast and Midwest — places like New York City, Syracuse, Albany, Milwaukee and Minneapolis — averaged 21% growth in population, 40% growth in employment, and 75.5% growth in real personal income.

The state of New York, which has the highest state income tax in the U.S.,

Nancy DeNike

Dean Stansel, associate professor of economics at Florida Gulf Coast University, helps answer the question, “Why Are Some Cities Growing While Others Are Shrinking,” the title to his recently published study.


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Jacksonville Low-taxarea average


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Professor Dean stansel: ‘For struggling local governments, the lesson is: reduce taxes, keep spending in check,

and watch your economy prosper.’claims seven of the highest-tax areas. New York City, with its own local income tax, has the highest tax rate, 14%.

And then there’s Buffalo. Although three of its New York state neighbors had higher tax rates, Buffalo had the lowest growth in employment (10.5%) and per-sonal income (27.2%), and saw its popu-lation fall 9.2%.

Former Buffalo resident John Swee-ney, who helps run his family’s carpet and draperies business, Sweeney Cleaning, in Sarasota, says he’s happy that his father moved the family south in the mid-80s.

“You have a better house for less money and less taxes,” says Sweeney. He points out that in Buffalo real estate taxes on a home comparable to his Sarasota home would be nearly six times the roughly $2,500 a year he now pays in property taxes.

Professor Stansel also examined high-growth metro areas and found those communities had lower taxes than low-growth metro areas.

Three Florida areas made Stansel’s list of the 10 highest-population-growth large metro areas.

Cape-Coral-Fort Myers came in second to Las Vegas, growing nearly 183% from 1980 to 2007, about the time growth and the economy peaked. But the Gulf Coast communities’ growth rates of employ-ment and personal income exceeded that figure, growing 225.7% and 364.5%, re-spectively.

The average tax rate for Cape Coral-Fort Myers for the 25-year period to 2002 was 9%. But that still puts it in the lower half of the group, which averaged 9.4%.

“Fort Myers has been lucky in a sense,” says Mayor Randy Henderson, “in that we haven’t had to raise our taxes dramati-cally.” Now mired in a recover too slow for his tastes, Henderson wants to remove roadblocks to growth, specifically impact fees, which rank among the highest in the state. “If I could get rid of them I would,” says Henderson. “Anything we can do to knock down impediments to expanding business, I’m for.”

Orlando-Kissimmee, at 8.7%, had the lowest tax rate among the high-growth group. Its population grew 14.5% dur-ing the 27-year period, ranking seventh nationally. Employment grew 272% and personal income grew nearly 263%.

The West Palm Beach-Boca Raton-Boynton Beach area grew the least of the top 10 high-growth areas, rising 115% in population from 1980 to 2007 with an average tax rate of 8.9%. Employment grew 173% and personal income rose nearly 291% during the period.

tampa vs. Miami,Another interesting aspect of the study is Stansel’s comparison of selected pairs of similarly sized metro areas. For instance, he compares the Tampa area to Milwaukee, and the Orlando area to Santa Ana-Anaheim-Irvine, Calif.

In 1980, the Tampa and Milwaukee area’s population were comparable, 1.6 million and 1.4 million, respectively. But Milwaukee’s tax rate as a percentage of personal income was 11.7% and Tampa’s was just 8.4%. The result: Tampa’s popu-lation grew 67% to Milwaukee’s 10.5%, employment grew 126% vs. 30%, and personal income grew 152% vs. 60%.

The outcome for Orlando with its 8.7% tax rate against its California comparable and its 10.2% tax rate is similar. Orlando grew at nearly three times the rate of the Santa Ana area, and had more than twice the employment and income growth.

Another comparison pairs metro ar-eas that are within the same or a nearby state. Stansel measures Tampa-St. Pete against the Miami metro area, for which 1.6 million people each called home in 1980. From 1980 to 2007, the Tampa area’s 67% growth bested Miami’s 45%.

But the big contrasts show in the dif-ferences in employment and income growth. Again, the metro area with the higher tax rate — Miami at 9.6% vs. Tampa’s 8.4% — had far less economic growth. Tampa area employment grew more than twice as fast as Miami’s (126% to 60%), and income grew one-and-a-half times as fast (152% to 99%).

Stansel speculates that one reason may be the Miami-Dade County consolidated form of government. “It reduces com-petition between local governments,” he says. “You get monopoly power, so taxes seem to grow more.”

The professor offers some direct ad-vice to high-tax and low-growth areas in the conclusion to his study: “If high-tax, low-growth metro areas like Detroit, Milwaukee, Buffalo and Syracuse want to be more like high-growth areas such as Dallas, Tampa, San Antonio and Austin, they should lower their onerous burden of taxation and bring spending under control.”

Sarasota’s Snyder agrees, while offer-ing the view of a local official dealing with budget cuts and property tax rates this summer. “It’s becoming more a common-knowledge fact you can’t just increase your taxes, you have to increase your tax base. You have to create an environment in which the tax base can grow.”

charter board rejects voter approval measure

ST. PETERSBURG — At the urging of business leaders, the nine-member Charter Review Commis-sion rejected a proposal July 12 that would have required voters’ approval for the construction of convention centers, museums, theaters, professional sports facili-ties, parking garages and of-fice buildings on downtown waterfront parks and on the approach to the city’s pier.

Last month, the commis-sion denied a proposal that would have required voters to approve public projects that cost more than $100 million, an idea that op-ponents claimed targeted a future new Tampa Bay Rays stadium. The commission, however, tentatively ap-proved placing a measure on the ballot to require the city prepare a downtown waterfront master plan that would define criteria for development in the area. The proposal requires the city council to review the plan every seven years. The commission plans to con-

sider the measure again at its July 26 meeting.

u.s. House targets ePa water quality standards

WASHINGTON, D.C. — The U.S. House passed a bill July 13 that would restrict the Environmental Protection Agency’s power to require tougher water-quality standards, known as numeric nutrient crite-ria. U.S. Rep. John Mica, R-Winter Park, was a key sponsor of the measure, which passed 239-184. Mica and other supporters argue the EPA has overstepped its authority in Clean Water Act disputes with states. The Obama administration has signaled that the presi-dent will likely veto it if it gets to the White House. The measure also faces dif-ficulty in the Senate.

Water-quality standards have been a major issue in Florida during the past couple of years as business groups and many state and local leaders have fought EPA efforts to impose strict numeric standards. Op-ponents, including many

Florida municipalities, con-tend that the criteria would require expensive upgrades of facilities such as sewage-treatment plants, which discharge water into rivers and streams. Ratepayers would bear the added cost. But supporters say the standards would help clean up the state’s waterways, in-cluding the Caloosahatchee River, preventing harmful algal blooms and other health and environmental problems.

sarasota bonds down, florida’s rating is up

SARASOTA/TAL-LAHASSEE — Moody’s Investor Service reduced its rating from Aa2 to Baa2 on $93 million of Sarasota County’s bonds to finance the purchase of environ-mentally sensitive lands. The new rating is at the low end of investment-grade ratings and comes with a negative outlook reflecting the drop in the tax base. The county property ap-praiser’s office’s preliminary estimate for the Jan. 1, 2011 tax roll shows a 6.5% de-cline from last year to $39.5 billion. That’s down from a 2007 peak of $62.4 billion.

Issued in 2005 and 2008, the bonds are secured by a limited property tax of 0.25 mills due to expire in 2029.

As Sarasota County’s rating drops, Florida’s rating recently improved. Standard & Poor’s Rating Services upgraded the state of Florida’s outlook from negative to stable, citing the new state budget, which includes increased reserves. The change means the state will be able to borrow at lower interest rates and have easier access to credit “The outlook revision re-flects our view of the state’s improved revenue envi-ronment and a fiscal 2012 budget that is structurally balanced and improves reserve funding levels,” concludes the report.

The state holds a AAA rating, the highest possible credit rating. The revised outlook indicates that a credit rating downgrade is not likely to occur imme-diately. The rating agency gave the state’s long-term education bonds a AAA rating while maintaining a AA+ rating for legislative bond issues. The state’s general obligation bond rating remains at AAA.

GoveRnMent DiGest

Jay Brady covers state and local government issues. He can be reached at [email protected], or at 941-362-4848.

The charts above show the percentage change in population, employment and real personal income from 1980 to 2007, according to Florida Gulf Coast University Professor Dean stansel’s research. The line above the bars represents the average of state and local taxes as a percentage of personal income, from 1977 to 2002.


JULY 22 – JULY 28, 2011

St. Petersburg-based Infrax Systems Inc. has reached an agreement to acquire Tampa electrical contractor Southern Power & Controls.

Under the terms of the agreement, In-frax Systems will acquire Southern Power & Controls for $4.9 million, primarily in cash along with notes and stock at closing. Infrax will continue to support Southern Power & Controls’ customer base and ex-pand its offerings with the addition of In-frax’s smart grid product portfolio.

Infrax says Southern Power & Controls generated revenue of more than $22 mil-lion in 2010 and has had annual revenue of $18 million for the last five years. The con-tractor also offers Infrax a reputation with water utilities and treatment facilities and a work force with high voltage and substa-tion certifications.

“SPC is a recognized leader in the imple-mentation of complex performance critical systems and has an impressive track record of operational and financial per-formance with over 15 years of increasing profit-ability,” Paul Ai-ello, CEO of In-frax Systems, says in a press release. “Their established customer rela-tionships make them a perfect addition to the Infrax Family, particularly at the moment (when) smart grid technology is on the top of the utility industry agenda.”

At the same time, Infrax Systems Inc. says it has completed the reduction of 20% of issued and outstanding common shares.

Infrax’s board of directors approved the conversion of 500 million common shares held by related parties to preferred shares.

Infrax Systems offers a line of interre-lated operational management, communi-cations and grid security-related products and services.

Versatile Packagers offering call center services

Tampa-based contract packaging com-pany Versatile Packagers has extended its line of services to include call center support. The company plans to offer cus-tomer service, order processing and first-call resolution. In addition, it says agents will also be available to support clients in up-selling and cross-selling their existing customers.

Versatile Packagers provides several distribution and related services includ-ing packaging, warehousing and fulfill-ment.

The customer contact center will offer

24-hour, seven-day support. Although call center services will

be performed outside of Versatile’s 150,000-square-foot facility, Versatile also is planning to open a second facility, another 85,000 square feet devoted to packaging, warehousing, fulfillment and distribution services.

“In addition to reducing costs, out-sourcing lessens the need for an internal supply of specialists and training, and eliminates peak staffing problems,” Rick Shave, CEO of Versatile Packagers, says in a press release.

Walter Investment completes Green Tree acquisition

Tampa-based Walter Investment Management Corp. has completed its previously purchase of GTCS Holdings LLC (Green Tree).

Green Tree, based in St. Paul, Minn., is an independent, fee-based third-party servicer of credit-sensitive consumer loans. Walter Investment says Green Tree is a high-growth platform that has long-standing relationships with a di-verse, blue chip customer base.

“It is apparent that we are at the begin-ning of a secular transformation in the mortgage services sector, and with the addition of Green Tree’s business services capabilities, we believe that the company is uniquely positioned to execute on op-portunities from this transformation and capture a significant share of this growing specialty services sector,” Mark O’Brien, Walter Investment’s chairman and CEO, says in a press release.

As a result of this acquisition, Walter Investment will no longer qualify as a real estate investment trust.

Walter Investment Management Corp. is an asset manager, mortgage servicer and mortgage portfolio owner special-izing in sub-prime, non-conforming and other credit-challenged mortgage assets. The company holds a diverse $38 bil-lion loan portfolio of more than 770,000 loans.

Lincare Holdings declares new quarterly dividend

The board of directors of Clearwater-based Lincare Holdings Inc. has de-clared a quarterly cash dividend of 20 cents per common share.

The dividend is payable on July 29 to stockholders of record as of the close of business on July 15.

The company reported 6.3% growth in net income in the first quarter, to $46.38 million from $43.64 million in the first quarter of 2010. Diluted earnings per com-mon share grew from 45 cents to 49 cents.

Lincare is one of the nation’s largest pro-viders of respiratory therapy and other ser-vices to patients in the home. The company

provides services and equipment to more than 785,000 customers in 48 states.

Arbitration Forumsexpands E-Subro Hub system

The Tampa-based nonprofit Arbitra-tion Forums Inc. has completed its na-tional rollout of the E-Subro Hub, an electronic national subrogation system for the insurance industry.

Subrogation is the process an insurer goes through when it attempts to recover funds it paid that should have been at least partially paid by someone else.

The new electronic network is de-signed to offer insurance companies a free paperless document management and communications tool to centralize the claims process. Users can electroni-cally send and receive subrogation de-mands, attach supporting documents, manage claims and electronically file for arbitration where necessary.

In 2010, nearly 115,000 subrogation demands valued at almost $206 million were resolved by E-Subro Hub, while it operated in 23 states.

Early users say the process has accom-plished in days interactions that would have taken weeks or months to accom-plish all while avoiding printing and mailing costs. On an annual basis, the nonprofit projects the paperless system will save a total of more than 44 mil-lion sheets of paper weighing more than 586,000 pounds.

“Already, E-Subro Hub has vividly dem-onstrated to participating carriers and self-insured that the electronic system can manage their subrogation workflow more effectively, reduce subrogation-re-lated expenses and lower cycle times,” W. Russ Smith, president and CEO of Ar-bitration Forums, says in a press release.

Founded by the insurance industry in 1943, Arbitration Forums now has more than 4,400 members. It is the nation’s largest arbitration and subrogation ser-vices provider, resolving some 500,000 disputes worth nearly $2.3 billion in claims each year.

ValCom board announces stock buy-back plan

The board of directors of Clearwater-based ValCom Inc. has approved buying back portions of its common stock. The board declined to specify the exact num-ber of stock shares it plans to acquire, but it set an initial purchase period of six months.

“ValCom has recently paid down a sig-nificant portion of all short-term debt and the board of directors believes that the current share price does not reflect the company’s true market value and has therefore approved a share buyback pro-gram,” Vince Vellardita, president and CEO of ValCom, says in a press release. “The recent appraisal of the ValCom li-brary, the value of our assets, the growth

of My Family TV, and the recent distribu-tion agreements we have signed for the library are all factors we have used to de-termine that ValCom stock is underval-ued at its current levels.”

ValCom is a diversified entertainment company that operates television and film production, broadcasting, distribu-tion and live theatre divisions.

TPG Capital partnershipbuys Taylor Morrison/Monarch

Homebuilder Taylor Morrison has been purchased by TMM Holdings Limited Partnership, which is owned indirectly by investment funds separately managed by TPG Capital and Oaktree Capital Man-agement LP, as well as JH Investments, for $955 million.

The sale included two homebuilding companies: Taylor Morrison in the United States and Monarch in Canada.

Taylor Morrison currently has 24 active communities from Tampa to Naples and plans to break ground this summer on Es-planade in Lakewood Ranch.

“The sale is a tremendous opportunity for us to grow our already strong presence in the market,” Steve Kempton, division president for Taylor Morrison, says in a press release.

Taylor Morrison builds single-family residences and townhomes in Arizona, California, Colorado, Florida and Texas, while Monarch, one of Canada’s most recognizable real estate brands, builds both high- and low-rise products in To-ronto and Ottawa. A third division, Tay-lor Morrison Communities, focuses sole-ly on land acquisition.

CORPORATE REPORT by Sean Roth | Real Estate Editor

St. Petersburg-based HSN sold more than 51,000 units of the Love and Light fragrance in its debut of the ac-tress/singer Jennifer Lopez’s 17th fra-grance. The multimedia retailer says the launch was one of her most suc-cessful ever.

JLo’s fragrance bringsHSN successful launch

Naples-based Innovative Food Holdings Inc. has received trademark approval for its Artistre line of molec-ular gastronomy products.

Molecular gastronomy is a new sci-ence that focuses on the chemical in-teractions that happen during cooking.

The trademark, which was awarded to the company’s subsidiary, Food New Media Group Inc., is currently being used in connection with a line of 27 var-ious molecular gastronomy products as well as the company’s popular molecu-lar gastronomy experimental kits.

“We plan on further leveraging the acceptance of the Artistre brand to ex-pand our offerings within molecular gastronomy and are continuing to ex-plore synergistic private label oppor-

tunities in additional select gourmet products and gourmet product catego-ries,” Justin Wiernasz, president of In-novative Food Holdings, says in a press release.

Innovative Food Holdings markets and sells gourmet food and related products.

Innovative Food Holdings awarded trademark

Infrax signs deal to buySouthern Power & Controls

Paul Aiello

Coastal Or-thopedics & Sports Medi-cine | Pain Ma n a g e m e n t has named Don-na Holm the company’s chief financial officer.

With nearly 30 years expe-rience in vari-ous accounting, operations and financial management roles, Holm has developed a niche in health care finan-cial management and tax operations.

Prior to joining Coastal Orthopedics, Holm served as vice president of fi-nance for Florida Community Health Centers Inc., and as chief financial of-

ficer and later, chief operations officer for the Palm Beach Orthopaedic In-stitute. She was also an adjunct profes-sor with Florida Atlantic University’s School of Accounting. As a Certified Public Accountant, she owned and op-erated an accounting firm for the past decade.

“We are fortunate to have someone with Donna’s accounting management and tax operations knowledge lead our company’s financial operations,” Paul Duck, CEO for Coastal Orthope-dics, says in a press release. “With her healthcare background and finance ex-perience, we can effectively continue to execute and build on our growth strat-egy.”

Coastal Orthopedics operates three offices and two surgery centers along the west coast of Florida.

Coastal Orthopedics & Sports Medicinehires new chief financial officer


6088

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commeRcial Real estate tamPa BaY by sean Roth | Real Estate Editor

BuYeR: 5650 Tampa Acquisitions LLC (B&L Management Group Corp.), MiamiselleR: Branch Banking & Trust Co. vs. Southpoint SDM LLC, et al.,PRoPeRtY: 5650 Breckenridge Parkway, Tampa,PRice: $2.4 millionPRevious PRice: $7.74 million, November 2005

Plans, DescRiPtion: Miami-based B Developments LLC purchased the 63,812-square-foot Southpoint at Breckenridge Park office building for

$2.4 million. The price equated to $38 per square

foot.The three-story office building in

Breckenridge Ridge Office Park was 30% occupied at the time of the sale. It fea-tures an exercise facility.

The new ownership says it plans to reposition the property by updating the common areas and other improvements to increase its appeal.

B Development President Miguel Bar-bagallo says the developer was attracted

to the building’s location and visibility, condition and layout.

Affiliates of B Development, Real Es-tate International Transactions LLC and Smart Acquisitions LLC, own more than 104 units in the Autumn Chase Condominium in Largo.

Along the east coast of Florida, the company recently purchased more than 100 units in the Sabal Pointe Condo-minium in Palm Springs, more than 35 units in Palm Aire Garden in Pompano Beach and several commercial vacant lots and single-family homes in Dade County.

intown Housing Bvbuys Bay villaBuYeR: Intown Housing BV LLC (T. Truett and Stephen Gardner, Shirin Kanji, Russ Versaggi and Steven Gold), TampaselleR: Bay Villa Soho LLCPRoPeRtY: 1402 S. Bay Villa Place, TampaPRice: $1.45 millionPRevious PRice: $2.02 million, May 2007law fiRm on DeeD: Johnson Pope Bokor Ruppel & Burns LLP, Clearwater

Plans, DescRiPtion: Tampa developer/investment group Intown Housing LLC purchased the 24-unit Bay Villa apart-ments for $1.45 million.

The price equated to $60,417 per unit or a payoff ratio based on income (capi-talization rate) of 10%. It was sold as a short sale.

The Hyde Park/South Howard three-building apartment complex was origi-nally built in 1924. Nelson Steiner pur-chased it in 2007 for a condominium conversion. Only one the apartment’s buildings was renovated.

The apartment complex was 100% oc-cupied at the time of the sale, but cur-rently has a single vacancy.

“Our intention is to bring the other two buildings up to the same level as that building and then to keep them as rentals,” says Truett Gardner, one of the partners in the new ownership. “One of the partners in the deal [Russ Versaggi] owns and manages several apartments. He previously owned Bay Villa. So he knows the property inside and out.”

Intown Housing has budgeted about $400,000 for the improvements.

The developer is comprised of a num-ber of prominent Tampa real estate pro-fessionals. Versaggi is a developer and owner of numerous apartment com-plexes throughout Tampa. Another In-town Housing partner is Shirin Kanji, vice president of acquisitions for Tam-pa-based hotel operator/owner Impact Properties Inc. Steve and his son Truett Gardner are attorneys with the Tampa law firm of Gardner Brewer Martinez-Monfort and were also partners with Novare Development in the develop-ment of the Skypoint and Element con-dominiums.

Truett Gardner says Intown Housing plans to target quality rental properties that are considered too small for the na-tional institutional buyers.

etc…• Cycle Reapers LLC leased 3,000

square feet of industrial space at 5555 W. Linebaugh Ave., Tampa. Dennis Bush of The Ross Realty Group represented the lessor.

miami-based llc buys southpoint offices

Costar


JULY 22 – JULY 28, 2011

BUYER: Mirsko Ringling Holdings LLC (princi-pal: Itzchak Miron), AtlantaSELLER: Bayrock Ringling LLCPROPERTY: 243 S. Orange Ave., 1595 State St. and 1549 Ringling Blvd., SarasotaPRICE: $13.25 millionLAW FIRM ON DEED: Norton Hammerlsey Lopez & Skokos PA, Sarasota

PLANS, DESCRIPTION: A limited liability company led by Itzchak Miron of At-lanta purchased the 55,160-square-foot RBC Bank office building in downtown Sarasota for $13.25 million.

The price equated to $240 per leasable square foot.

Miron and his company Mirsko Ring-ling Holdings LLC assumed a $10.9 mil-lion mortgage on the property from its former owner, Bayrock Investment Co.

Building tenants include RBC Cen-tura Bank, which occupies four levels, and the International Union of Police Associations. The six-story building was 80% occupied at the time of the sale, according DeLieto & Associates of Mi-chael Saunders & Co. commercial group, which served as an informal consultants in the future marketing of the property.

Lee DeLieto Jr. says the common areas of the building were recently remodeled.

Michael Saunders & Co. handles the property management for the building.

Etc…• Darrell Hoke of Pelican Cottage

New and Used Furniture leased 10,980 square feet of retail and warehouse space at 820 S. Tamiami Trail, Osprey from Douglas Smith. Barry Seidel of Ameri-can Property Group of Sarasota Inc. han-dled the transaction.

• O’Connors Irish Pub leased a 4,200-square-foot fully equipped res-taurant located at 1359 Main St., Sara-sota from the Briad Trust. Barry Seidel of American Property Group of Sarasota Inc. handled the transaction.

• Ocean Blues Entertainment LLC leased a 5,000-square-foot restaurant at 1934 and 1936 Hillview St., Sarasota from Hillview Properties LLC. Barry Seidel of American Property Group of Sarasota Inc. handled the transaction.

• The American Cancer Society leased 8,000 square feet of office space at 2970 University Parkway, Sarasota from Manasota Medical Associates. Barry Seidel of American Property Group of Sarasota Inc. handled the transaction.

• Beans & Machines LLC purchased a vacant 5,000-square-foot lot at 1458 First St., Sarasota from Cook Siesta Inc. for $405,000. Ian Black of Ian Black Real Estate represented the buyer and Russ Tilton of the Re/Max Alliance

Group represented the seller.• Pharmaceutical company Cam-

phor Technologies Inc. purchased a 9,165-square-foot office and warehouse building at 1584 Independence Blvd., Sarasota in Northgate Industrial Park from Michael E. Tilton for $490,000. Jon Kleiber and Terry Eastman of James Buchanan Realty represented the seller.

• Crescendo Audio LLC leased 2,000 square feet of office and warehouse space at 7220 21st St. E., Sarasota from Sara-sota Investments LLC. Terry Eastman and Jon Kleiber of James Buchanan Re-alty represented the Landlord.

• A Slice of Heaven leased 2,700 square feet of light industrial space at 5632 and 5636 Palmer Blvd., Sarasota

from Paul Marchese. Jon Kleiber and Terry Eastman of James Buchanan Re-alty represented the tenant.

• J B Property Group LLC purchased the industrial property at 2950 59th Ave. Drive E., Bradenton from SCB Florida McBride Return LLC for $510,000. Carl Wise of Preferred Commercial Inc. represented the buyer and Don Swartz of Wagner Realty represented the seller.

• The church Igreja Assembleia de Deus De Oracion Y Adoracion leased 3,400 square feet of office space in Sixth Street Plaza at 1941 Sixth St., Sarasota from Southby Partnership Ltd. Marcia Cuttler of American Property Group of Sarasota Florida Inc. handled the trans-action.

• Atlantic Coast West Inc. (Internet Café) leased 4,641 square feet of retail space at The Fountains, 4808 14th St. W., Bradenton. LandQwest Commercial agents: Jason Sepanski, Tom Strauss and Matt Yaniglos, represented the landlord.

• Gibraltar Homes reports its has re-corded 30 home sales during the first six months. The average home sale price was $450,000 for a total of $13.5 million.

Lakewood Ranch managementraising home-lot prices

For the first time since the real estate market crash in 2006, the Lakewood Ranch management team says it will in-crease home-lot prices.

“The demand has just been so high since the beginning of this year that we are going where the market takes us,” Milt Flinn, LWR Communities’ presi-dent, says in a press release. “The pace of our sales is creating a sense of urgency and a domino effect—people want to get the best lots and the best value.”

The increase will be from $8,000 to $18,000 per lot.

At The Lake Club and Country Club East, sales are up 142% from last year with $11 million in sales so far this year in these two neighborhoods alone.

• Robert Medred purchased a 1,508-square-foot office building at 408 30th St. W., Bradenton from M&I Bank. Stan Rutstein of Re/Max Alliance Group handled the transaction.

COMMERCIAL REAL ESTATE SARASOTA-MANATEE by Sean Roth | Real Estate Editor

Atlanta real estate companybuys RBC bank building

After three years of speculation, Lakeland-based Publix Super Markets Inc. revealed plans for the aging and mostly empty Avenue of the Flowers plaza on Longboat Key. Publix submitted a preliminary ap-plication to the Longboat Key Planning, Zoning and Building Department.

The plans, detailed in a Bay Isles outline develop-ment plan amendment and a site plan review, call for

tearing down the center. In its place, at 525 Bay Isles Parkway, Publix wants to develop a 49,533-square-foot Publix grocery store that will be connected to an 11,700-square-foot retail plaza with 360 nearby park-ing spaces. The plan also calls for a 14,528-square-foot CVS Pharmacy with 59 parking spaces and a stand-alone, 4,000-square-foot office/retail building in the northeastern corner of the property with another 24

parking spaces.The rest of the 9.7-acre plaza will include walking

trails, brick pavers, bicycle racks, a gazebo and more landscaping and trees.

The total redevelopment would feature 79,761 square feet of retail and office space, which is 20,000 square feet less than the current Town Plaza I.

The application also reveals that Publix is under con-tract with real estate agent/ investor Howard Rooks for Town Plaza II, a 1.52-acre site and plaza, which includes tenants Nosh-A-Rye and Your Fitness In-structor. The purchase, however, does not include the restaurant site Rooks owns that was formerly occupied by Mattison’s Restaurant.

Rooks, who confirmed he is under contract to sell the property to Publix, declined to disclose the pur-chase price.

“It’s going to be a fabulous center once it’s complete,” Rooks says. “They are keeping a large chunk of the property as open space. I’m really excited about it, and the town’s residents will be, too.”

Publix is also under contract to buy a 0.97-acre piece of property near Bay Isles Road, where its office/retail building will be located. Longboat Key-based Bay Isles Enclave Acquisition LLC owns the property.

Publix wants to close the shopping center, with the exception of CVS, after Easter of 2012 and re-open in late December 2012.

Publix purchased the plaza in September 2008 from Dead River Properties for $14 million.

Town Plaza I’s current tenants include Pruden-tial Palms Realty, Patchington, Antony V’s Packaged Wines and Spirits, Nails of Longboat Key, CVS Phar-macy and White Sands Cleaners. Currently, the plaza is more than half-empty.

Reporting by Kurt Schultheis, correspondent

Publix redeveloping Longboat’s Avenue of the Flowers

The new Avenue of the Flowers plaza will feature a 49,533-square-foot grocery store, a 14,528-square-foot CVS Phar-macy, and more than 15,000 square feet of additional office and retail space.


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commeRcial Real estate lee-collieR by sean Roth | Real Estate Editor

terracap Partnersbuys Palmira village landBuYeR: Palmira Village LLC, (principal: W. Stephen Hagenbuckle), Cape CoralselleR: Parklands Lee CDD Holdings LLCPRoPeRtY: a portion of Bonita Beach Road in the center of Palmira Golf & Country Club, Bonita SpringsPRice: $1.46 millionPRevious PRice: $1 million, April 2011law fiRm on DeeD: Kevin A Denti PA, Naples

Plans, DescRiPtion: Cape Coral and New York City-based TerraCap Part-ners purchased 20.73-acre Palmira Vil-lage land for $1.46 million.

The price equated to $70,650 per acre.The vacant property is entitled to serve

as a town center mixed-used develop-ment for the surrounding Palmira Golf & Country Club community. The land has vested concurrencies for up to 275 multifamily units and up to 100,000 square feet of commercial space.

The real estate investment firm consid-ers the property a long-term hold, says TerraCap Partners’ general partner W. Stephen Hagenbuckle.

“We’re inventorying it for the moment,” Hagenbuckle says. “It’s a great site. The Palmira [Golf &] Country Club is a fan-tastic community. This is the last devel-opable piece in Palmira.”

TerraCap partners recently purchased a similar 26.31 acres of vacant land north of Emerson Square Boulevard near Alico Road and U.S. 41 in Fort Myers for $1.7 million.

etc…• Construction has started on the

50,000-square-foot cardiac expansion to Peace River Regional Medical Center in Port Charlotte. The $25 million project is scheduled for completion in December. It calls for creation of a two-story addition over the medical center’s existing emer-

gency room that will house a full-service cardiology department. The facility will feature private patient rooms, three open heart surgery suites, three cath labs and one electrophysiology cath lab.

It will also include a 19-bed cardiovas-cular intensive care unit, 16-bed post in-tervention cardiac cath unit and an eight-bed pre/post intervention cardiac holding unit.

• Andrea Horky and Linda Cardinale purchased a 2,128-square-foot office con-dominium at 1510 Royal Palm Square Blvd., Unit 105, Fort Myers from Pre-ferred Community Bank for $160,000. Jim Boback of Boback Commercial Group handled the transaction.

• Neil Heuer leased 6,000 square feet of industrial office/warehouse space at 2385 Trade Center Way, Naples from 2385 Trade Center Way LLC. William Gonnering of Investment Properties Corp. handled the transaction.

• Mattress Xpress leased 21,898 square feet of retail space at 13140 Metro Park-way, Fort Myers from Aarons Inc. Patrick Fraley of Investment Properties Corp. handled the transaction.

• Shamrock Bank of Florida leased 3,000 square feet of office space at 9955 Tamiami Trail N., Units 3 and 4, Naples from Patton Avenue Holdings LLC. Craig Timmins of Investment Properties Corp. handled the transaction.

• D2K Huynh LLC purchased three medical condo units totaling 6,122 square feet within the Goodlette Profes-sional Center on Goodlette-Frank Road North, Naples for $887,690. George At-kinson and Doris Taylor of CB Richard Ellis represented the buyer, and Robert Morgan of Colonial Square Realty repre-sented the seller.

lennar Homes buys 96 lotsin copper cove PreserveBuYeR: Lennar Homes LLC, Fort Myers

selleR: Colonial Homes Inc.

PRoPeRtY: lots 32-37, 39-47, 50, 51, 55, 56, 58, 59, 78, 80, 85-87, 89, 95-103, 113, 115 and 116, Copper Cove Preserve, north of Championship Road between U.S. 41 and Collier Boulevard, Naples

PRice: $2.83 million

law fiRm on DeeD: Henderson Franklin Starnes & Holt PA, Fort Myers

Plans, DescRiPtion: Miami-based homebuilder Lennar Corp. purchased 96 single-family home lots in the 137-lot Copper Cove Preserve community for $2.83 million.

The price equated to $29,445 per lot.Randy Thibaut and William Rollins

of Land Solutions represented the sell-er, Colonial Homes.

Lennar Homes previously pur-chased 24 lots in the community to sell new homes, according to Thibaut.

“They liked the location enough that they elected to purchase the entire community,” he says.

Thibaut attributed at least a portion of the success of the community to a general recovery in the residential real estate market.

The infrastructure for the commu-nity, including roadways and utilities, is already in place.


JULY 22 – JULY 28, 2011

If battery-powered vehicles are to become practical for consumers, battery technology has to become smaller, cheaper and more powerful. Planar Energy believes it has created a technology to build it.

ThE I-4 CORRIdOR by dan Ping | Editor-Orlando

Power Packed

The future of printing presses may be in question for the newspaper industry, but an Orlando company

believes the process they use is key to de-veloping new batteries that could power electric vehicles.

Planar Energy is developing a tech-nology called Streaming Protocol for Electroless Electrochemical Deposition (SPEED) to create thin-film batteries us-ing a roll-to-roll manufacturing process similar to the printing press-es used to produce newspa-pers.

Planar engineers and sci-entists are still refining the SPEED process. If successful, the result will be batteries that are 75% smaller, store up to three times more energy and last substantially longer than traditional batteries.

“If we can solve this prob-lem, it’s a multi-billion dollar industry,” says Planar Founder and CEO Scott Faris.

Funded by venture capitalFaris is a serial entrepreneur who has

been involved in more than 20 startup and emerging-growth technology companies. He co-founded Planar Energy in 2007 with Princeton, N.J.-based Battelle Ven-tures LP, the $220 million venture capital division of Battelle Memorial Institute, which manages four of the U.S. Depart-ment of Energy’s National Laboratories.

To date, Planar has received about $12 million in venture capital and grants, an important lifeline for a company with 18 employees focused on research, not rev-enues.

Battelle Ventures has provided $4 mil-lion in funding to Planar. The company has received another $4 million from the Department of Energy, as part of its Ad-vanced Research Project Agency.

In addition, Planar has received $50,000 from the Florida High Tech Cor-ridor Council, as well as another $4 mil-lion in capital funding that Faris declined to identify.

“This is not for angel investors,” says Faris, noting that for Planar to succeed it needs investors who are experienced in fi-nancing emerging technologies.

Faris says Battelle Ventures, in particu-lar, has been a valuable partner because of its deep pockets and, as importantly, its ex-perience with technical companies.

“You need very knowledge investors who understand how these companies need to be funded,” says Faris.

For instance, Planar originally received $1.3 million up front, with the remaining $2.7 million being released as the compa-ny achieved specific milestones.

Going forward, Planar will need sub-stantial investment from equity firms if the company plans to build or acquire a large-scale manufacturing facility.

Follow the marketsPlanar’s investors are willing to cover

the company’s cost as it perfects its tech-nology because of its earnings potential but also because Faris focused on deter-mining the market he wanted to serve, not the technology he wanted to use.

“We didn’t start with the technology, we defined the market. Money follows the market, not the technology,” says Faris. “We wanted to know the market and where it needed to be in five years, 10 years.”

For batteries, the market needs sub-stantially better performance for smart phones and a host of other energy-drain-ing devices.

“The consumer electronics industry, for instance, has found it can’t live with the 3% increase in battery performance that has typically been the norm,” says Faris.

Those small increases in performance are magnified when it comes to automo-

biles. Despite advances, batteries capable of producing enough energy to power a vehicle are large and heavy.

In addition, the chemical reaction that occurs inside a battery produces heat, which drains up to 30% of the battery’s potential energy. That chemical reaction also shortens the lifespan, requiring bat-tery-powered car owners to replace the costly batteries every two to three years.

Creating a lighter, smaller battery with more energy and efficiency was the idea market to follow. Plus, very few compa-nies are investing in research to improve performance.

“It’s a market that is under invested and ready for huge change,” says Faris, com-paring it to the shift from vacuum tubes to transistors.

Solid researchDefining a market is one thing. Devel-

oping a technology that can fill that mar-

ket is quite another.Planar’s research is focused on produc-

ing solid-state batteries.“Battery technology hasn’t changed

in 150 years,” says Faris. “The chemistry has gotten better, but the basics haven’t changed.”

Traditional batteries work by com-bining liquids and reactive materials to produce a series of electromagnetic re-actions between an anode, cathode and a liquid electrolyte, usually a lithium ion.

A solid-state battery works the same way, but replaces the liquid electrolyte with a solid electrolyte. By doing so, you eliminate extra materials, such as bind-ers, that add bulk, cost and inefficiency.

Using technology first developed by the Department of Energy’s National Re-newable Energy Laboratory, Planar has created a ceramic electrolyte that works as well as liquid electrolytes.

The technology of solid-state batteries

REVIEW SUMMARY

Issue. Improving bat-tery performanceIndustry. TechnologyKey. Planar Energy has developed technol-ogy that could make battery-powered cars more feasible.

Kurt LeBlanc

Planar Energy CEO Scott Faris stands in the company’s manufacturing area. Engineers and scientists at Planar have developed a solid-state battery that weighs 75% less than traditional batteries and delivers three times the energy.


Toronto- and Tampa-based Cott Corp.’s profit fell 40.9% in the first quarter ended April 2. Net income attributable to Cott stockholders fell by $4.7 million to $6.8 million (seven cents per diluted share) down from $11.5 million (14 cents per di-luted share) in the first quarter of 2010.

At the same time, revenue jumped 47.2%, or $171.2 million, to $534.1 million compared to $362.9 million. The majority of that revenue jump, $166 million worth, came from the Cliffstar business, which Cott acquired in the third quarter of 2010.

Operating income was flat at $25 mil-lion. Without including Cliffstar’s integra-tion expenses and purchase accounting ad-justments, adjusted operating income was $26 million.

Excluding Cliffstar’s expenses and ad-justments, the company’s net income would have been $8 million (nine cents per diluted share) compared to $11 million (14 per diluted share) for the earlier first quarter.

Cost of sales exceeded most of the com-pany’s sales gains, growing 51.9%, or $158.8 million.

Selling, general and administrative ex-penses also increased by 39.2%, or $12.7 million. The increased SG&A costs were attributed to higher information technol-ogy costs associated with the implemen-tation of a new SAP software system, em-ployee related costs and professional fees.

“Our first quarter results included the impact of substantially higher commod-ity costs without the full benefit of higher 2011 prices, which were only in place for part of the quarter,” Jerry Fowden, Cott’s CEO, says in a press release. “This pricing lag eroded our gross margins, particularly in the U.S. While commodity inflation will remain a headwind, we remain committed to doing all we can to mitigate these in-creases as we continue to work to success-fully integrate Cliffstar.”

Excluding Cliffstar, filled beverage case volume increased 22% as slightly higher volumes in North America, higher volumes in Mexico and stable volumes in the Unit-ed Kingdom / Europe operating segment (“U.K.”) were offset by lower concentrate volumes in Royal Crown International.

Cott is the world’s largest retailer brand beverage company. It markets beverage concentrates in more than 40 countries.

cott coRp.consoliDateD stateMents of opeRations (In millions except earnings per share and share data)

three-months ended three-months ended april 2, april 3, 2011 2010Revenue, net $534.10 $362.90 Cost of sales 464.5 305.7Gross profit 69.6 57.2Selling, general and administrative expenses 45.1 32.4Loss on disposal of property, plant & equipment — 0.2Restructuring — -0.5Operating income 24.5 25.1Other expense, net 0.8 1.8Interest expense, net 14.4 6.2Income before income taxes 9.3 17.1Income tax expense 1.6 4.4Net income $7.70 $12.70 Less: Net income attributable to non-controlling interests 0.9 1.2Net income attributed to Cott Corp. $6.80 $11.50 Net income per common share attributed to Cott Corp. Basic $0.07 $0.14 Diluted $0.07 $0.14 Weighted average shares (thousands) attributed to Cott Basic 94,076 80,374Diluted 95,328 80,840

consoliDateD Balance sHeets april 2, Jan. 1, 2011 2011assets Current assets Cash & cash equivalents $35.80 $48.20 Accounts receivable 245.8 213.6Income taxes recoverable 4.8 0.3Inventories 223.1 215.5Prepaid expenses and other assets 31 32.7Total current assets 540.5 510.3Property, plant & equipment 506.6 503.8Goodwill 131.1 130.2Intangibles and other assets 362.3 371.1Deferred income taxes 2.2 2.5Other tax receivable 10.1 11.3Total assets $1,552.80 $1,529.20 liabilities and equity Current liabilities Short-term borrowings $35.20 $7.90 Current maturities of long-term debt 5.9 6Contingent consideration earn-out 32.9 32.2Accounts payable and accrued liabilities 257.8 276.6Total current liabilities 331.8 322.7Long-term debt 604.4 605.5Deferred income taxes 43 43.6Other long-term liabilities 21.3 22.2Total liabilities 1,000.50 994equity Capital stock 395.6 395.6Treasury stock -2.1 -3.2Additional paid-in-capital 40.8 40.8Retained earnings 113.3 106.5Accumulated other comprehensive loss -7.6 -17.5Total Cott Corp. equity 540 522.2Non-controlling interests 12.3 13Total equity 552.3 535.2Total liabilities and equity $1,552.80 $1,529.20

Higher costs hurt cott’squarterly net income

10/4/10 7/3/10

REVENUE COST OF REVENUE OPERATING EXPENSES NET INCOME

4/2/11 1/1/11

$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

MaRKet stocK pRice

4/4/11 1/3/11 10/4/10 7/6/10$8

.61

$8.8

7

$7.7

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$8

$6

$4

$2

is not new. They can be manufactured using a process called vacuum deposition that builds up atomic layers of material on a substrate. However, vacuum deposi-tion is complex and costly.

“I don’t think anyone wants to pay $15,000 for a cell phone battery,” Faris chuckles. “It’s not an option for manu-facturing batteries for the automotive industry.”

the process requires speeDPlanar scientists know they have a

much smaller solid-state battery that de-livers three times the energy at half the cost of traditional batteries. A study by researchers at the University of Central Florida’s Advanced Materials Process-ing and Analysis Center verified Planar’s findings.

The challenge is manufacturing the batteries on a large scale. That’s where SPEED comes in.

Solar cells and display screens are manufactured using a “thin-film” print-ing process. The process requires a liquid precursor chemical to be applied onto a metal or plastic substrate that passes from one roll to another similar to a tra-ditional printing press. Those chemicals then react to form a solid film.

To manufacture batteries using this

method, the “solid” film, actually needs to be a honeycomb-like structure that is one-billionth of a meter in scale so that the ceramic electrolytes can move back and forth to generate electricity.

That process is the heart of SPEED, a proprietary mix of chemicals and concen-trations to create these structures within the film. The process is the creation of Dr. Isaiah O. Oladeji, who discovered it while earning his doctoral degree in con-densed matter physics. He joined Planar as the company’s principal investigator.

“This is a homegrown technology that was created here in Central Florida,” says Faris.

Combining Oladeji’s SPEED process with the proper battery chemistries was a process of trial and error that resulted in some frustrating moments. Progress did not always move up in a straight line.

“There were times we would make changes and actually make things worse,”

says Faris. “But that’s where you build the value of the company. We are learning about what to do, and more importantly what not to do.”

More work to doDeveloping SPEED was an important

break through, says Faris, but there is more work to be done. Planar has proven it can build its battery using new technol-ogy, but the company still has to prove it can manufacture them with consistent quality and quantity.

While Faris won’t say the challenge is easy, he does admit the most difficult phase appears to be solved.

“We’re past solving the chemistry part. We’ve solved the fundamentals and now we’re down to engineering,” says Faris. “At this point it’s about refining the man-ufacturing process.”

Planar is in pilot production of the batteries and will ramp up production

over the next year. The company is in talks with electronics companies to be-gin making small batteries for high-tech, hand-held devices. Gradually Planar will pursue contracts for larger applications that require larger batteries. The compa-ny expects to be producing batteries for cars in about five years.

As production ramps up, Planar will need to purchase or build a facility to manufacture batteries on a large scale, as its current 47,000-square-foot building near downtown Orlando is too small.

Purchasing a large manufacturing fa-cility would require a substantial invest-ment. In 2009, the Planar applied for $56 million in federal stimulus funds to purchase a shuttered battery plant near Gainesville to purchase for $130 million.

In its application, the company said it had commitments from private investors to match the governments’ $56 million in private investment.

An independent anaylsis of the propos-al projected the plant would create 600 high tech jobs at wages above the average in Alachua County. The economic impact was estimated at $2 billion annually.

Planar did not receive the grant and the plant was reopened in 2010 by New York-based Bren-Tronics Energy Sys-tems Inc.

scott faris, Planar Energy: ‘We didn’t start with the technology,

we defined the market. Money follows the market, not the technology.’


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