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State Senate approves bill to reform WEDC
June 19, 2013 12:00 PM
The Wisconsin State Senate unanimously passed a bill that includes numerous reforms to the Wisconsin Economic Development Corporation (WEDC).
 
Senate Bill 205, authored by Sen. Rob Cowles (R-Green Bay) and Rep. Samantha Kerkman (R-Randall), was the only WEDC reform package that has received bipartisan support this legislative session.

The reforms were proposed after a Legislative Audit Bureau (LAB) report that identified numerous problems with financial management, program administration and accountability at the corporation. “I am happy to see this bill pass through the Senate with unanimous support. Wisconsin needs to stay committed to economic development, but must also ensure that our efforts are measurable and accountable to taxpayers,” Cowles said.

Most notably, the legislation will:

* Increase the frequency of financial audits of WEDC to an annual basis.
* Require that WEDC adopt transparent and appropriate procurement procedures.
* Set term limits for members of the WEDC board.
* Create a governance committee on the WEDC board, led by a new lead director.
* Subject most WEDC employees to state ethics laws.
* Require that WEDC include additional information it its annual report to the Legislature about its economic development programs.

Meanwhile, the WEDC reported today that Wisconsin’s Qualified New Business Venture (QNBV) program helped 63 early stage companies directly leverage more than $48.4 million in private investment in 2012, an increase of 9 percent from 2011.

The report also showed that early stage companies still face a significant financial gap as they try to bring new innovations to market.

“The results of the QNBV program have been overwhelmingly positive,” said Gov. Scott Walker. “This program, which has become a model in other states, has successfully leveraged investment in promising new companies in Wisconsin that are creating high-paying jobs.”

The Wisconsin Assembly is continuing to meet today to discuss the proposed state budget.

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Write-down takes toll on Actuant
June 19, 2013 12:00 PM
Menomonee Falls-based Actuant Corp. today reported a fiscal third quarter loss of $93.0 million, or $1.24 per share, compared with net income of $34.4 million, or 45 cents per share in the same period a year ago.
 
Actuant’s quarterly sales held firm at $344.2 million, up from $343.3 million a year earlier.

During the quarter, the company incurred a $150 million write-down to account for the sale of its Electrical Segment.

Robert Arzbaecher, chairman and chief executive officer of Actuant, said, "As expected, the third quarter represented an inflection point for Actuant as we delivered a 22 increase in EPS from continuing operations and improved sequential sales and profit margins. Solid core growth was achieved in both the Industrial and Energy segments, and the sequentially improved Engineered Solutions sales signal OEM destocking efforts are abating. Due to weak economic conditions, we continue to experience subdued activity in our global industrial markets and inconsistent demand. However, we did a good job balancing cost reduction actions and growth investments, as evidenced by our 19.6 percent EBITDA margins. Our third quarter EPS also benefitted from both lower interest expense and an effective income tax rate. We have asked a lot of our employees this year and I want to thank our world-class global team for their efforts in delivering the results."

On June 3, the company announced its intent to divest the Electrical Segment.

“As we look ahead to fiscal 2014, we face a market environment in which low global GDP and uncertainty are likely to persist. Actuant will continue to focus on taking advantage of our broad product and geographic scope to capitalize on profitable growth opportunities. Based on our current view of economic indicators as well as Actuant's business trends and specific growth drivers, we anticipate fiscal 2014 core sales growth of 3 to 5 percent,” Arzbaecher said. "We remain focused on long-term secular growth drivers which provide exciting organic and acquisition driven growth prospects. Given our healthy acquisition pipeline, the strongest balance sheet in our history and continued robust free cash flow generation, we are well positioned financially to capitalize on these strategic growth opportunities."

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New partnership to boost Port of Milwaukee
June 19, 2013 12:00 PM
A new partnership between the Wisconsin Economic Development Corp. (WEDC) and the Port of Milwaukee will make it easier for state businesses to take full advantage of the regional Foreign-Trade Zone.
 
The unique effort is designed to increase the participation in the Port’s Foreign-Trade Zone and boost international trade by managing tariffs and in some cases reducing or eliminating those fees.

Milwaukee Mayor Tom Barrett signed a resolution this week formalizing the partnership with WEDC.

“The Port of Milwaukee and WEDC have launched this cooperative effort so the businesses we serve can more efficiently and economically access foreign markets,” Barrett said. “As private businesses grow with foreign trade, Milwaukee benefits and so does the entire state. That’s why we started our work with the Foreign-Trade Zone, and that’s why we are advancing this partnership with WEDC.”

The WEDC is providing the Port of Milwaukee a Collaborative Market Access Grant of up to $50,000 to award to businesses to help offset the costs of applying for new or expanded Foreign Trade Zone status and the costs of a current Foreign-Trade Zone operator for ongoing staff education. The maximum a company is eligible to receive is $10,000 per fiscal year.

“To advance the Transform Milwaukee initiative, the Foreign-Trade Zone program was created to facilitate international trade and increase the global competitiveness of US-based companies,” said Gov. Scott Walker. “We’re forming this partnership to give businesses a competitive edge to take advantage of the Foreign-Trade Zone benefits.”

A Foreign-Trade Zone is an area within the United States, in or near a U.S. Customs Port of Entry, which is considered outside the U.S. Custom’s territory.

“Wisconsin is being a national leader in advancing a collaboration like this to simplify the process for businesses to fully utilize the Port of Milwaukee’s Foreign-Trade Zone,” said Lora Klenke, vice president of international development with WEDC.

The Port of Milwaukee was granted Foreign-Trade Zone No. 41 on Aug. 31, 2011.

The Port of Milwaukee is an economic entity of city government governed by the seven-member Board of Harbor Commissioners, a panel appointed by Barrett and confirmed by the Milwaukee Common Council.

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Bryant & Stratton announces children's college
June 19, 2013 12:00 PM
Bryant & Stratton College today announced it will open a Children's College at its Wauwatosa Campus at 10950 W. Potter Road, offering students a unique program for their children while they attend classes.
 
Construction is under way to build the facility, and the new Children's College is set to open for the fall semester starting Sept. 11. The Children's College will be a safe and nurturing environment, promote learning and provide hands-on enrichment activities.

The learning center, for children ages 3-12, will occupy 1,900 square-feet on the Wauwatosa campus. The new Children's College will operate Monday through Saturday during scheduled classes. The campus is planning an open house for Aug. 15.

"Bryant & Stratton College is dedicated to reducing the barriers for access to education, and the new Children's College is an opportunity for parents to attend school while providing 'side-by-side learning' with their child," said Lois Trongard, business office director of the Bryant & Stratton College Wisconsin Campuses. "We continue to look for ways to accommodate our students, and the new Children's College will give parents 'peace of mind' while they attend classes."

According to Trongard, one of the top hurdles for many students wanting to attend or continue college to pursue their career is a lack of child care.

The Children's College will be available to enrolled students during their scheduled classes.

Some of the programs at the Children's College include classes in technology, art, dance, theater, nutrition and health. The cost will be $1,000 per term for full-time students (12 or more credits), $600 for part-time students and emergency hourly rates will be available on a limited basis. In the inaugural term of the Children's College, Bryant & Stratton College is awarding grants of $600 and $800 to continuing and new full-time students, significantly reducing the cost for the fall term.

Bryant & Stratton College's Wauwatosa Campus serves more than 635 students offering bachelor's and associate's degrees in business, criminal justice, human resource specialist, health services administration, information technology, medical administrative assistant, medial assisting, nursing and paralegal studies.

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BizTimes Real Estate Weekly: HSA executive to buy former Blue Cross building
June 19, 2013 12:00 PM
John Mangel III, vice president of business development and acquisitions for Chicago-based HSA Commercial Real Estate, has a contract to purchase the 10-story former Blue Cross Blue Shield office building at 401 W. Michigan St. in downtown Milwaukee.
 
Mangel is buying the building independently of HSA, which is not a part of the deal, according to a commercial real estate source. Mangel is still in the due diligence phase for the deal and told BizTimes Milwaukee he is "exploring different (redevelopment) options right now."

For more, read the BizTimes Real Estate Weekly.

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BizTimes Morning Headlines: Capital Brewery plans major expansion with new brewery 
June 19, 2013 12:00 PM
Capital Brewery will build an $11 million facility in Sauk City that could eventually pump out nearly 10 times the beer it makes at its Middleton brewery, the company said Tuesday.
 
The new brewery would have a capacity of about 100,000 barrels out of the gate, and fermenting tanks could be added in the future to bring it up to 250,000 barrels without expanding the brewhouse. The Middleton facility would remain in use, with a focus on small batches with limited release beers.

For more, read today’s BizTimes Morning Headlines.

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State Legislature approves venture capital bill
June 18, 2013 03:00 PM
In a rare moment of bipartisan support, the Wisconsin Legislature approved a bill today to create a $25 million state venture capital fund for startup companies in the state.
The Senate approved the bill today by a 29-3 vote, and the Assembly followed by concurring with the Senate’s changes to a bill that was approved earlier this month by the Assembly with a 91-2 vote.
The venture capital legislation will use $25 million in taxpayer money and matching private funds to help boost lagging investment in Wisconsin startup companies.
The bill is now headed to the desk of Gov. Scott Walker, who has said he will sign it.
"It might not be a perfect bill, but it's a bill we can all go forward with," said Sen. Alberta Darling (R-River Hills), one of the bill's authors. "I do not want to lose these entrepreneurs. I do not want to lose these smart kids with all their great ideas."
Sen. Majority Leader Scott Fitzgerald (R-Juneau) said, “Today Democrats and Republicans were able to come together to create jobs for the people of Wisconsin and send an important message that here in the legislature, job creation is a top priority.  Investment in a venture capital program will help bring new jobs and new opportunities to the people of this state as well as means to support and encourage new entrepreneurship and expansions of existing companies. This is a great starting point and a means to retain good ideas that will continue to make Wisconsin a pro-jobs and pro-business opportunity state.”
Rep. Mike Kuglitsch (R-New Berlin) said, “After months of compromise, both houses were able to come together on a bipartisan proposal that will assist the needs of our struggling entrepreneurial communities. I believe this legislation is huge step in the right direction and it is sure to be a major help to a number of entrepreneurs that are looking for capital to turn their ideas into companies. I look forward to our venture capital bill being signed by Gov. Walker. As a whole, we have put politics beside us and passed a piece of legislation that will generate many new companies and jobs in the upcoming years.”
Sens. John Lehman (D-Racine), Fred Risser (D-Madison) and Glenn Grothman (R-West Bend) voted against the bill.
Lehman said it was not the proper role for government to "become venture capitalists. We're stepping in as a government... in a way I argue we should not. I wish we had stayed today with a bill that follows our best bets. Our best bets are strong funding for university research, strong funding for technical colleges."
The Senate rejected an amendment proposed by Sen. Dave Hansen (D-Green Bay, who wanted the venture capital investments to be directly tied to the jobs that are created by the funding.
“It is a sham that the venture capital bill has been touted as a job creation initiative without any language in the actual bill directing that investments be made for that purpose,” said Robert Kraig, executive director of Citizen Action of Wisconsin. “As the troubled history of WEDC (Wisconsin Economic Development Corporation) shows, it is highly irresponsible to spend precious job creation dollars without real accountability for creating a tangible expansion of economic opportunity for Wisconsin’s hard pressed working families.”

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PricewaterhouseCoopers study projects low medical inflation for 2014
June 18, 2013 11:00 AM
Medical inflation will remain relatively low in 2014, according to a new report by PricewaterhouseCoopers Health Research Institute (HRI).
 
The study says medical costs will rise 6.5 percent in 2014, but that when other factors are put into the mix, the net increase will be around 4.5 percent.

That’s well below the double-digit range of increase in past years.

Aggressive and creative steps by employers, new venues and models for delivering care and elements of the Affordable Care Act (ACA) are expected to exert continued downward pressure on the health sector, the report concluded.

Individual consumers, bearing more financial responsibility for their medical bills, are questioning and sometimes delaying procedures, imaging, and elective services.

The ACA also play a role in the slowdown in 2014, with hospitals working to hold down expensive readmissions or face the law’s penalties. Employers are being given greater power to influence employee behavior through increased or

For its 2014 projection, the HRI interviewed health plan actuaries, industry executives and health policy experts. HRI also analyzed results from PricewaterhouseCoopers 2013 Touchstone Survey of more than 1,000 employers from 35 industries.

According to the report, four factors will deflate medical costs in 2014:

* Care continues to move outside costly settings such as hospitals to more affordable retail clinics and mobile health. Consumers value the convenience, and costs can be as little as one-third of the bill in a traditional healthcare site.
* Major employers such as Walmart, Boeing and Lowe’s now contract directly with big-name health systems for costly, complicated procedures such as heart surgery and spinal fusion. The employers are making the move to “high performance networks” far away from the home office in the belief that even with travel costs, these networks still deliver overall savings.
* The federal government’s new readmission penalties take direct aim at waste in the health system, estimated to be as high as 30 percent. According to government data, hospital readmissions dropped by nearly 70,000 in 2012, and this trend is expected to accelerate through 2014 as hospitals focus on discharge planning, compliance and the continuum of care.
* Seventeen percent of employers in PwC’s 2013 Touchstone survey today offer a high deductible health plan as the only option for employees. And more than 44 percent are considering offering it as the only option. When consumers pay more for their health care, they often make more cost-conscious choices.

Employer engagement and individual consumers are a powerful and growing force in the health ecosystem, the report concluded.

“Health care cost increases continue to exceed overall growth in wages but the gap is shrinking. While we appear to be making progress in breaking the long term cycle of runaway cost increases, employers can be expected to continue to step up efforts to engage employees more directly in value-based healthcare decision making,” said Mike Thompson, PricewaterhouseCoopers principal.

To view more about the report, click here.

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Exact Sciences launches stock offering
June 18, 2013 11:00 AM
Madison-based Exact Sciences Corp. today announced the pricing of its previously announced underwritten public offering of 5.5 million shares of its common stock, offered at a price of $12.35 per share.
 
The net proceeds to Exact from the offering are expected to be approximately $63.7 million, after deducting underwriting discounts and commissions and other estimated offering expenses.

All of the shares in the offering are to be sold by Exact.

The offering is expected to close on or about June 21, subject to the satisfaction of customary closing conditions. Exact has granted the underwriters a 30-day option to purchase up to an aggregate of 825,000 additional shares of common stock.

Exact anticipates using the net proceeds from the offering for general corporate and working capital purposes, including product development.

Exact is a molecular diagnostics company focused on the early detection and prevention of colorectal cancer.

Jefferies LLC and Milwaukee-based Robert W. Baird & Co. Inc. acted as joint book-running managers for the offering, and William Blair & Company LLC, Canaccord Genuity Inc. and Mizuho Securities USA Inc. acted as co-managers.

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Rexnord leases space in Global Water Center
June 18, 2013 11:00 AM
West Milwaukee-based Rexnord Corp. is the latest company to commit to leasing space at the Global Water Center in Milwaukee.
 
Rexnord will lease 4,300 square feet of space on the third floor of the building. The company will use the space for its water management platform, said Rachel Wilberding, spokeswoman for the Milwaukee Water Council.

Rexnord’s Water Management platform designs, procures, manufactures and markets products that provide and enhance water quality, safety, flow control and conservation.

Rexnord formed its Water Management platform in 2007 with the acquisition of Zurn, a leader across a diverse set of markets and products. They continued to build the platform with three other acquisitions, including VAG Holding GmbH in 2011. The combined businesses generate more than $700 million in revenue and conduct business in 35 countries around the world.

“Our leading brands, broad product portfolio and strong global presence position us as an industry leader in water, wastewater and power generation markets,” said Todd A. Adams,

Rexnord president and CEO. “We are excited to bring this expertise to the Global Water Center.”

Water Council president and CEO Dean Amhaus said he is enthusiastic about Rexnord’s expanded involvement in Milwaukee’s water technology cluster.

“What is particularly exciting is that we can now welcome another large international company into the Global Water Center,” Amhaus said. “It is important for us to create a dynamic ecosystem within the building that is fostering the exchange of ideas and talent that benefit large and small businesses as well as academic commercialization research.”

The Global Water Center is being built in a seven-story, 98,000-square-foot, 106-year-old warehouse at 223 W. Pittsburgh Ave. in Milwaukee’s Walker’s Point neighborhood. The $22 million project is expected to be complete in July. The Water Council will be the first tenant and will move in on July 15, Wilberding said.

The building is more than 75 percent leased, Wilberding said. It is intended to be a water technology business accelerator center, a critical piece of efforts to establish Milwaukee as a global water technology hub.

The tenants will be a mix of larger firms, smaller firms, start-ups, business professional organizations and university researchers. Besides Rexnord and The Water Council, other tenants committed to the building include: Badger Meter Inc., A.O. Smith corp., the University of Wisconsin-Milwaukee, the Greater Milwaukee Committee and the Wisconsin Economic Development Corp.

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Ecklond to oversee SVA’s Milwaukee office
June 18, 2013 11:00 AM
Barbara Ecklond, CPA, has been named principal-in-charge of the Milwaukee office of SVA Certified Public Accountants S.C.
 
Ecklond also is the industry group leader for SVA’s Business Advisory Services (BAS) for the Milwaukee office. Working within BAS, Ecklond helps clients establish internal financial reporting procedures and provides year-end financial reporting services.

Ecklond is a member of the Metropolitan Milwaukee Association of Commerce’s Council of Small Business Executives, (COSBE), as well as a CEO Roundtable member. Ecklond is also a member of the Rotary Club of Milwaukee and TEMPO Milwaukee. She serves on the SVA board of directors, as well as the Better Business Bureau of Wisconsin Inc.

“We are extremely fortunate to have Barbara Ecklond and her hands-on executive experience as principal-in-charge of our Milwaukee office,” said Carl Schultz, president and chief executive officer of SVA. “Barbara’s extensive experience and industry knowledge allows SVA to continue to provide our clients with the measurable results they need to grow their business and meet their individual financial goals.”

SVA is headquartered in Madison and has additional offices in Milwaukee, Appleton and Rockford, Ill.

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BizTimes Morning Headlines: Democrats urge moderate Republicans to join them in opposing state budget
June 18, 2013 11:00 AM
Democrats in the state Legislature called Monday for moderate Republicans to join them in voting against the proposed state budget this week, and one of Wisconsin’s most conservative lawmakers became the first in his party to publicly say he was casting a “no” vote.
 
Democrats were pressuring Republicans in advance of the Assembly debating the $70 billion, two-year spending plan today.

For more, read today’s BizTimes Morning Headlines.

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BizTimes Money: WEDC study documents importance of manufacturing in state’s economy
June 18, 2013 11:00 AM
The Wisconsin Economic Future Study released today by the Wisconsin Economic Development Corporation (WEDC) says manufacturing continues to be the key economic driver industry of Wisconsin.
 
The study encourages the state to develop strategies that further strengthen driver industries.

“We need to reinvest in productivity, workforce development and technology,” said Lee Swindall, vice president of business and industry development for the WEDC.

For more, read the BizTimes Money Weekly.

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Illinois CPA firm to acquire Kolb+Co.
June 17, 2013 05:00 PM
Brookfield-based Kolb+Co., the largest locally owned public accounting and business advisory firm in Wisconsin, will be acquired by Sikich LLP of Naperville, Ill.
The two companies have signed a letter of intent to merge, effective Aug. 1.
This will be Sikich’s first Wisconsin-based office, and it will become the firm’s second-largest office throughout the country. The Kolb corporate name will be dissolved.
“Merging with Kolb+Co. is an exciting opportunity for Sikich, as it will bring the firm into a brand-new geographic market and a wonderful group of clients; add to our top-notch accounting and advisory teams; and help us continue our rapid growth through expanding our offerings,” said Jim Sikich, chief executive officer and managing partner of Sikich. “With more than 50 years of success, Kolb+Co. has received numerous workplace awards, including Top Workplaces in Milwaukee and Best Accounting Firms to Work For, culturally complementing Sikich. We look forward to many more years of success as one unified firm.”
Kolb+Co. will bring 15 partners and more than 60 professionals to Sikich with areas of expertise in auditing and accounting, consulting, mergers and acquisitions advisory, retirement plan administration and design, tax consulting and compliance, and information systems consulting and training for businesses; and financial advisory services and tax planning and compliance for individuals.
Tom Luken, CPA, president of Kolb+Co., will join Sikich as a partner, focusing on expanding the Sikich brand into the Wisconsin market.
“We are very excited to join the Sikich team,” Luken said. “Through this union, we will be able to offer our clients expanded industry capabilities and a full suite of advisory and technology services, as well as access to additional talented and experienced professionals. Sikich’s commitment to service excellence will be a perfect complement to what we have built during the past 53 years. We look forward to utilizing these resources to benefit our clients and to grow our presence in Wisconsin and Northern Illinois.”
Luken and his team are in the process of contacting clients to inform them of the upcoming change and address any questions they may have about the transition or Sikich
Kolb+Co. was founded in 1960 by Bob Kolb and Larry Lauwasser as Kolb Lauwasser & Co. in Milwaukee.

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Investor urges breakup of Smithfield Foods
June 17, 2013 11:00 AM
A major investor in Smithfield Foods Inc., the parent company Patrick Cudahy LLC, is trying to pressure the company to explore a breakup of its subsidiaries, rather than pursue a planned takeover by a Chinese meat producer.
 
In a letter to the Smithfield board, activist investment fund Starboard Value LP says it has taken a 5.7 percent stake in the world’s largest hog farmer and pork processor and urges the company to consider splitting up, rather than be acquired by Shuanghui International Holdings Ltd.

The proposed $4.7 billion deal would be the largest Chinese takeover of a U.S. company.
In the letter, Starboard argues that Smithfield would be worth more if it were broken into three parts – U.S. pork production, hog farming and international sales of fresh and packed meats – and then sold, rather than sold in total to the Chinese company.

“It is our belief that the divisions of Smithfield are easily separable and had the company explored a sale of these businesses in separate transactions, shareholders may have received far more value than the $34 per share consideration contemplated by the Proposed Merger. We question whether the Board gave sufficient consideration to a sale of the divisions in separate transactions, or whether it focused primarily on an all-cash transaction for the company as a whole, which we believe would entail a much more limited universe of potential buyers,” the Starboard letter stated. “We believe the sum of Smithfield's parts in an alternative transaction structure is greater than the $34 cash consideration under the proposed merger. We believe the proposed merger significantly understates a conservative sum-of-the-parts valuation of Smithfield, which we estimate to be worth between $9 billion and $10.8 billion after tax leakage, or approximately $44 to $55 per share, representing an approximate 29-62 percent premium to the Shuanghui deal.”

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