The Enterprise - Utah's Business Journal Oct. 24, 2011 by Vaughn Taylor

UTAH’S BUSINESS JOURNAL www.slenterprise.com

THIS WEEK

Oct. 24-30, 2011

Volume 41, Number 13

$1.44

$80 million apartment GEEX expo attracts large community rising crowd, generates in Murray City $76,000 in revenues

eBay picks site in Draper for new campus Online auctioneer wants to build 500,000 square feet on 37 acres. See page 3.

• Industry Briefs • Begin on page 7.

• Calendar • See page 19.

Focus W UTAH

a sa t c h Fr o n t

Insurance, Group Benefits & Risk Management Begins on page 11.

Artist's conception of the new Murray development, which eventually will include 94,000 square feet of office and retail space. By Barbara Rattle The Enterprise Three buildings in what will become a 25-building apartment complex that eventually will be complemented by 94,000 square feet of mixed-use commercial space are going vertical in Murray as part of an $80 million, 26-acre redevelopment project at 4400 South and 100 West.

Miller Development, Murray, is developing 668 apartments on the site, a mix of market-rate and affordable units financed with the help of the U.S. Department of Housing and Urban Development (HUD). Jay Minnick, CEO of Miller Development, said Lionsgate at Fireclay, the 400-unit marketsee APARTMENTS page 6

105 workforce housing homes to be built in Summit County

Jon Dean, executive producer of Electronic Arts in Salt Lake City, displays a poster for EA's new game 'Risk Factions' which is set to debut in mid-November via FaceBook. EA was one of several high-profile national game manufacturers who were GEEX Expo sponsors. including PC Laptops, Ford, Epic By Brad Fullmer Games/ChAIR Entertainment, The Enterprise The business of geek is Electronic Arts (EA), and Eat, Sleep, Play Inc. and raked in growing in Utah. More than 5,800 people $76,000 in combined revenues swarmed to the South Towne Expo from vendors and ticket sales, Center in Sandy Oct. 14-15 for according to John Sloan, vice presthe third annual GEEX Gaming ident of interactive for MediaOne and Electronics Expo hosted by of Utah. “We’re gaining some nationSalt Lake City-based MediaOne al credibility because of our partof Utah. The event drew several large ners and the success of this year’s local and corporate sponsors, see GEEX page 5

ITT Corp. expands SLC footprint by 395,000 sq. feet

A Colorado architectural firm's vision of Discovery, to be located in Parleys Canyon. By Barbara Rattle The Enterprise After a four-year entitlement process, Summit County has granted approval to Park Citybased Alpine Development LLC to construct a mix of 105 townhomes and single family dwellings on 70 acres near Jeremy Ranch in Parleys Canyon.

Glen K. Lent, P.E., MBA and owner of Alpine Development, said plans call for ground to be broken for the project, named Discovery, in the summer of 2012. Aimed at providing housing for those who work in Park City, Discovery’s units will be clustered see DISCOVERY page 2

By Barbara Rattle The Enterprise ITT Corp., a New York-based leader in the aerospace composites industry, has taken the next step in its 15-year Utah expansion plan that is expected to result in the addition of more than 2,700 new jobs in the state. Currently occupying about 130,000 square feet in the Salt Lake International Center, the firm has leased 395,000 square feet at 5995 W. Amelia Earhart Dr. — roughly a half mile away from its existing facilities on Billy Mitchell Road. Mike Therson, ITT’s director of composite systems, said the company will take a stepped approach toward occupying the

new space. It is expected ITT will occupy about 250,000 square feet of the newly leased space by early first quarter 2012. Therson said ITT began the year with about 180 Utah personnel and should have more than 300 by then, as hiring over the summer has been aggressive. Full occupancy of the space on Amelia Earhart is expected in early 2013. “We’re doing well hiring locally,” Therson said. “Salt Lake see ITT page 2

Oct. 24-30, 2011

The Enterprise

ITT

from page 1 Community College and Davis Applied Technology Center have composite programs, and local governments have had good foresight. Even senior management we’ve been able to hire mostly locally. We’re fortunate to be in the industry that we’re in. Composites for both military and commercial aircraft are in demand because they are lighter weight, have a lower maintenance cost and are durable and corrosion resistant.” ITT traces its roots back to 2007, when it acquired Utah-based EDO Corp.,

which was founded in 1969. In the 1990s, ITT initiated a strategy to focus on larger and more complex external aerospace composite structures. ITT’s current composite production includes several major parts on the CH-53K helicopter, Sikorsky Aircraft’s composite heavy-lift helicopter to support the U. S. Marine Corps, and more than 250 composite parts for all versions of the F-35 “Lightning II” Joint Strike Fighter. ITT leased its new space with the assistance of Commerce Real Estate Solutions and NAI West. The lease takes the effective industrial vacancy rate in the area down to the mid 5 percent range, according to Luke Burbank of NAI West.

“The lots are fairly small; it’s kind of a Daybreak traditional neighborhood from page 1 type design with lots of open space, lots of parks, but smaller footprint lots,” Lent on 20 percent of the site — located between said. “The county has done several needs the new Weilenmann School of Discovery assessments and both of them are showing a and the Gorgoza tubing park — leaving 80 huge demand for this product. That’s one of percent dedicated open space. The site conthe reasons we’re willing to move forward tains many old-growth trees, a stream and a in a market like this. The real intent is to number of trail connections. provide workforce housing for people who Lent said roughly 40 percent of the work [in the Park City area] but we can’t project will be either sold or rented to those discriminate on who can actually purchase making between 50 and 80 percent of the average median income of the Synderville the units.” Lent said he has been talking with Basin — or $93,000 — making the affordseveral of the state’s top builders to gauge able homes’ price point in the $175,000 to $300,000 range. Price points for the remain- their interest in constructing homes in ing homes have not yet been determined, Discovery. “The lots are a perfect size to bring in but “it’s my guess that they’ll be between a D.R. Horton or a Richmond American, a $300,000 and $500,000,” Lent said. top five or top 10 builder in the state,” he “The project has many traditional said. “We are exploring those options and neighborhood elements and the architecwe want to explore the options of just havture will be a mix of Old Town in Park City and Daybreak,” he said, noting Alpine ing them as rentals as well. We are looking Development is working with the architec- at the possibility of building out the affordtural firm of PEL•ONA Architects to design able units and providing them as rentals. That seems to be a pretty strong market Discovery. Townhomes, he said, will likely have right now. Lent said he is talking with capital two to four bedrooms, while single family homes will probably have three to five bed- partners right now and has control over the property. rooms.

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DISCOVERY

THE ENTERPRISE [USPS 891-300] Published weekly by Enterprise Newspaper Group Inc. 825 N. 300 W., Suite C309, Salt Lake City, UT 84103 Telephone: (801) 533-0556 Fax: (801) 533-0684 Website: www.slenterprise.com. For advertising inquiries, e-mail david@slenterprise.com. To contact the newsroom, e-mail barbara@ slenterprise.com. Subscriptions are $55 per year for online only, $65 per year for print only and $75 per year for both the print and online versions. or $1.25 per copy. Opinions expressed by columnists are not necessarily the opinion or policy of The Enterprise Copyright 2011 Enterprise Newspaper Group Inc. All rights reserved Periodicals postage paid at Salt Lake City, UT 84199. POSTMASTER: Send address corrections to P.O. Box 11778, Downtown Station Salt Lake City, UT 84147

eBay selects Draper site for 500,000 square foot, 37-acre corporate campus By Barbara Rattle The Enterprise Online auctioneering giant eBay has selected the site in Draper where it plans to build a $10 million customer service center that eventually will add 2,200 new jobs in the state. The San Jose-based firm was scheduled to go before the Draper City Planning Commission on Oct. 20, after this issue had gone to press, to seek a master area plan for roughly 37 acres at 12880 S. Galena Park Blvd. (550 West.) Documents submitted to the city indicate the project will be constructed in phases. The first phase would consist of a 192,000 square foot, three story customer service building and a 52,000 square foot, single story amenities building with about 1,800 surface parking stalls and 5.46 acres of public use space. It is anticipated the Phase I structure will house approximately 1,900 people. It is slated for completion in April 2013. Phase II would consist of a 128,000 square foot, four-story building, a 1,500-stall structured parking facility and 5,000 square feet of cafeteria space. It is slated for completion in the first quarter

The Enterprise

Oct. 24-30, 2011

of 2015. Phase III would consist of a 128,000 square foot, four-story building slated for completion in the second quarter of 2017. The 37-acre parcel is the largest lot in a six-lot, 145-acre project being pursued by Draper Holdings LLC, an affiliate of Carlsbad, Calif.-based Foursquare Properties, which also developed the Jordan Landing project in West Jordan. Foursquare executives could not be reached for comment. Plans call for the remainder of the acreage, which was been approved by the city as a transit-oriented development, to consist of a mix of commercial, retail and residential buildings near a FrontRunner commuter rail station. Last August, eBay accepted a $38.2 million post-performance tax credit from the state to pursue Utah expansion, which will result in 2,200 new Utah jobs over the next 20 years. eBay already has about 1,400 employees at an existing customer service center in Draper.

Report : when it comes to the Salt Lake area apartment market, landlords are in the driver's seat A new report from Commerce Real Estate Solutions says that within the Greater Salt Lake Area the apartment market is indeed a landlord’s market, with a modest decline in the mid-year 2011 vacancy rate and a 3.5 percent increase in overall rental rates. “Even though we have a good amount of supply coming in to the Greater Salt Lake Area, low vacancy and rental rates continuing to increase will move the apartment market even deeper into the favor of landlords,” said Kip Paul, executive director of investment sales at Commerce Real Estate Solutions. “In this tough economy as foreclosures continue to increase and approvals for home loans are denied the renter pool only grows. So, we expect to see this 3.5 percent increase in overall rental rates double next year.” Vacancy rates have declined over the past year with the exception of studio units, the report states. The improvement in vacancy rates is a result of increased demand for rental units due to a rising number of households unable to qualify for home ownership. In past years, apartment communities west of I-15 have had slightly higher vacancy rates,

which is the case in 2011. All types of apartment units experienced increases in average rental rates, which reflect the rent discounts currently offered by the apartment communities surveyed. The combined average monthly rental rate for all types of units is $754, an increase of 4.7 percent from the average rate of $720 in 2010. Rental rates, on a square foot basis, have increased from 85 cents in 2010 to 88 cents in 2011 (3.5 percent). For those households searching for lower rental rates, the report indicates rental rates are lower in apartment communities west of I-15. The overall rental rate on the west side is $743 compared to $766 for east side properties. The survey results show that overall rental rates for apartment communities built since 1990 are 32 percent higher than in apartment communities built between 1980 and 1990 and those built prior to 1980. Nearly 60 percent of apartment projects are offering move-in specials in 2011. In most cases, the concessions are reduction in deposit and/or reduction in first month’s rent. The Salt Lake County apartment market has an inventory of

about 110,000 rental units. In 2010, permits were issued for 819 new units, an increase in the inventory of less than 1 percent. However, the rental inventory is increasing as more condominium and singlefamily homes have been placed in the rental pool. New apartment construction was down in 2010, and through the first four months of 2011 the number of apartment units receiving permits was only 193. The Greater Salt Lake rental market continues to improve as increasing demand pushes vacancy rates lower and absorbs the for rent condominiums and singlefamily homes. In addition, the level of new apartment construction has been modest over the past 18 months. The report predicts that with increasing demand and limited new supply, vacancy rates will likely pull below 5 percent over the next year and push rental rates up as much as 6 percent, which would signal a return to the peak rental levels of 2008. “With current market conditions in favor of apartment owners, the multi-family investment community stands to benefit the most,” Paul said.

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Oct. 24-30, 2011

Data: Utah merchants saving $198.20 for every $100,000 Visa/MasterCard volume due to Durbin Amendment NOV

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Heartland Payment Systems, a New Jersey-based that is one of the nation’s largest payments processors, has released what is says is the first state-specific data about the Durbin Amendment’s actual effect on business owners. The Durbin Amendment was proposed by Sen. Richard Durbin (D-Ill.) as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to place a cap on interchange or transaction fees. The average fee of 44 cents per debit card transaction charged to merchants by the card brands was considered excessive by supporters of the legislation. Those in opposition worked to stall or defeat the bill, but after much debate and a failed bill to delay interchange regulation, the final rule was handed down in late June. It went into effect on Oct. 1, 2011. According to Heartland, merchants in Utah are saving $198.20 for every $100,000 of Visa/MasterCard signature debit and credit card volume processed. For more information, visit www.getyourdurbindollars.com. The data collected between Oct. 1-16 across Heartland’s portfolio of 250,000 merchant locations shows for every $100,000 of Visa and MasterCard sig-

nature debit and credit card volume processed, the average savings per merchant across all states is $260.24. Washington, D.C. merchants received the highest average savings of $333.94, while Montana merchants saw the least average savings of $127.87. The savings variance from state to state is a result of the number of large versus small banks in the area, as well as the mix of credit and debit card volume processed. These figures represent the averages of actual credit versus debit and regulated versus non-regulated debit transactions for Heartland merchants and do not include the impact of PIN debit volume. “Merchants are wondering how the percentage of regulated versus non-regulated transactions in their states would impact their savings, and this data provides insight into exactly that,” said Bob Baldwin, Heartland’s president. “By providing business owners a frame of reference for how much money, on average, their peers across their state are saving from Durbin, they have an idea of what their own savings may be. Familiarizing themselves with this information is a preliminary step in ensuring they receive the full benefit of the reform.”

Senior care technology firm secures $10 million equity line of credit ActiveCare Inc., a publicly traded Salt Lake City senior care technology firm, has secured a commitment for a $10 million equity line of credit funding from a consortium of European investors led by Sapinda Ltd. Terms of the funding agreement are in the form of an equity line of credit with $5 million being funded by Nov. 15, and the remainder to be taken down by the company at its option once certain business development milestones have been achieved. Pricing of the first $5 million is 50 cents per share. The $10 million equity line of credit is expected to facilitate the execution of the ActiveCare’s business plan, including completion of a significant R&D project, realigning the sales force to take advantage of the economic opportunity and streamlining operations to more effectively service customers. “I am pleased with the support that we have received from the investment community that will enable us to focus our efforts on building ActiveCare into becoming the leader in assisting seniors

in staying in their own homes another three to five years,” said David S. Boone, ActiveCare’s newly appointed CEO. ActiveCare allows elderly, disabled or chronically ill individuals to remain living independently longer. ActiveCare’s technologies include the ActiveCare CareCenter, the ActiveWatch or ActiveOne+ PAL, the Active Home and the ActivePortal. The ActiveCare solution incorporates technologies that allow a member to be monitored on the go or within their own home. ActiveCare’s patented, one button emergency cell phone allows the firm’s members and their family or caregivers to have the peace of mind that ActiveCare’s 24/7 CareCenter is there if needed. ActiveCare’s GPS technology, transmitted through the ActiveWatch or ActiveOne+ PAL ,can track patients’ movements, locate them in times of emergency or crisis, and provides location for emergency response personnel. With the firm technology, members can instantly contact a CareSpecialist with the press of a button or automatically when a fall occurs.

Dan England named chairman of trucking association

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Salt Lake City-based C. R. England’s Dan England has been elected the 67th chairman of American Trucking Associations, the largest national trade association for the trucking industry. Through a federation of 50 affiliated state trucking associations and industryrelated conferences and councils, ATA is the voice of the industry America depends on most to move the nation’s freight. “The last few years have been difficult for our industry and our nation, but

I’m confident that regardless of our challenges, trucking and ATA will continue to lead the country toward economic recovery, England said. “We’re faced with a possible change to the hours-of-service rule, a long overdue highway bill and a mounting stack of regulations on top of a sluggish economic recovery,” England said. “In order to meet these challenges, we need to speak with one voice, remembering that there is more that unites our industry than divides it.”

GEEX from page 1

show,” said Sloan, a self-admitted geek who added the event drew nearly three times as many people as 2010. The first-ever GEEX show in Utah was in 2008 and was so poorly organized and attended it took two years for a follow-up event. “We expect to grow from here and strengthen our relationships with national companies,” Sloan said. “[Sponsors] expressed an interest in participating next year.” He believes GEEX will continue to grow in popularity and expects at least a 50 percent increase in traffic in 2012, although he hopes the event will take place at the Salt Palace Convention Center in downtown Salt Lake City. “The vendors really stepped up and brought a lot of interactive games and events to do this year,” said Marie Bowcut, director of events for MediaOne. Sloan likened the increase in popularity of the GEEX expo to similar electronic and gaming expo events such as PAX in Seattle and BlizzCon in Anaheim, which draw massive crowds of techno-geeks. “PAX in Seattle started with 2,000 people and it sold out this year (Aug. 26-28) at 70,000,” said Sloan. “I’m going to BlizzCon (Oct. 21-22), a consumer expo for World of Warcraft and Starcraft [gamers] and it sold out 25,000 tickets at $175 each in seconds,” said Sloan. “To get a ticket is considered an honor; it’s insane.” PC Laptops CEO Dan “The Laptop Man” Young, who started his company in 1994 in Salt Lake City (then called Elite Systems) and operates seven retail stores along the Wasatch Front that generate between $10 million and $15 million in annual revenues, said he invested more than $30,000 in the event, including a $10,000 sponsorship in addition to giving away a slew of prizes. Young also staffed his vendor area with a revolving staff of up to 20. “Utah has a super-high ratio of people who are nerdy and geeky and hungry to experience the newest things in technology,” said Young, 40, adding that he’s “more of a nerd” than a geek. “Utah has never had anything like PAX or BlizzCON, so [GEEX] offers that flavor locally. A lot of people [in Utah] want to have the most cutting-edge, coolest thing. There are always big waves of [new] technology.” The video game industry is highly lucrative, as evidenced by

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Oct. 24-30, 2011 a report published in July 2011 by Gartner Inc., a technology research firm in Stamford, Conn. According to Gartner, worldwide spending on gaming will exceed $74 billion in 2011, up 10.4 percent from the $67 billion spent last year. By 2015, that figure is expected to reach $112 billion. That explains why nationally recognized companies like Electronic Arts, Epic Games and Eat, Sleep and Play Inc. each had a major presence at the expo. “We were pleased with the results,” said Jon Dean, an executive producer for EA’s Salt Lake City office. “I was a speaker last year [at GEEX Expo] and we asked MediaOne if the show could be more focused on consumers in Utah. It was important for our customers to know we would be there, along with other recognized [video game manufacturers].” “It was a great show,” said Dan Farr, founder of DAZ 3D, a developer and broker of 3D graphics software and content in Salt Lake City. “I feel it has a lot of potential – this market needs to have an annual event like this. Give it a few more years to wind up and having tens of thousands of people attending it isn’t unheard of.” Utah’s youthful demographics are reason enough that a show like the GEEX Expo would be a natural fit for the Wasatch Front market. According to 2009 statistics from the Wall Street Journal, Utah had the highest fertility rate in the nation at 88.4, a full 10 points higher than second-place Alaska at 78.3. And a 2008 study by the American Community Survey showed Utah’s median age at 28.7, nearly five years younger than any other state. In addition, Utah has a highly-educated workforce, many of whom work in the technology sector. “Utah historically has always had a prominent video games development industry,” said Dean, whose company bought out local video game design firm Headgate in December 2006 and established an office in Salt Lake City. “When we came into this market, we knew there was a good talent base. [Utah] has a very skilled workplace. There is a great university pipeline and a very businessfriendly government. When you put all that those things together, it’s a great environment for us to grow in. We put our studios in places where we find those things.” “We’re not Silicon Valley, but we have a lot of technical people in this area,” added Farr.

Variety of new businesses showcase at GEEX expo By Brad Fullmer The Enterprise Both new and established business owners took advantage of the third annual GEEX Gaming and Electronics Expo Oct. 14-15 at South Towne Convention Center in Sandy to showcase their latest and greatest products — everything from new video and board games to 3D software and technology gadget accessories. iStabilizer One unique non-game item that drew considerable attention is a series of flexible tripods designed specifically for smartphone photo and video applications. It was developed by iStabilizer, a fledgling e-commerce business in Kamas. Founder Noah Rasheta started the company in October 2010 when he realized the tripod he purchased for an iPhone 3GS would not work with an iPhone 4 – it was proprietary, even though both were Apple-manufactured devices. “I started brainstorming on how to get around the limitations [of compatibility] and tried to come up with a design that would work for any kind of smartphone, whether it’s an iPhone, Droid, whatever,” said Rasheta, who believes smartphones will ultimately replace handheld DVRs — if they haven’t already — as the most widely used medium for recording digital video. “There are major limitations trying to capture images on a device that is so light.

You’re going to get shakiness or blurriness, there is no way around it.” Rasheta, 30, sent his design to a manufacturer in China and launched the iStabilizer website with the first version of his products on Oct. 8, 2010. He continued to tweak the design and by June 2011 had come up with a universal adapter that would work on any smartphone. iStabilizer currently offers three products: a smartphone adapter that will work on any existing tripod ($19.95), a flexible tripod with adapter ($29.95), and a video stabilizer with adapter ($99.95). “It’s the only tripod in the market that is universal to all [smartphone] models,” Rasheta claimed. “There is no other universal application.” Rasheta applied for a patent in August and hopes it is processed quickly. “It can be a cumbersome process. My lawyer said it typically takes four to six months for a patent to be approved but it could be a couple of years,” he said. As for sales, he said iStabilizer sold roughly $15,000 worth of products from October 2010 to June 2011. That number climbed to $30,000 through September — buoyed by one order for 1,500 tripods by San Francisco company Teachscape Inc. — and Rasheta hopes to hit the $50,000 mark by the end of the year. He has lofty goals of quadrupling his revenue

Noah Rasheta, founder of e-commerce business iStabilizer, displays his flexible tripods designed specifically for smartphone photo and video applications at the GEEX Expo. total in 2012. His business model is simple. Rasheta works full-time as a Web design and development specialist for All West Communications in Kamas and operates iStabilizer out of his basement. Customers view his product online via his see EXPO next page

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APARTMENTS from page 1

rate apartments component of the project, broke ground in May and will take 20 months to complete. Lionsgate will consist of 15 four-story buildings and has been funded by HUD. The project’s second phase will consist of the construction of 10 fourstory apartment buildings known as Brickgate at Fireclay. Ground for Brickgate is expected to be broken in December and Minnick said Brickgate should take 18 months to complete. Brickgate will contain 268 income-restricted apartment units, and Miller said he has a firm commitment from HUD to fund that aspect of the development as well. It is expected that the first Lionsgate building, in addition to a clubhouse and offices for Miller affiliate Millwood Companies, which will manage both properties, will be complete by spring.

The clubhouse will contain a workout facility, pool and hot tub. Designed by ASWN Architects, the project is “definitely Miller’s current flagship,” Minnick said. “It’s very urban, very much a streetscape type community. We’re building the entire project and there’s definite demand for it. You have TRAX to the east, the commuter rail to the west. We built a bridge over 4500 South to give access to both Lionsgate and Brickgate. It’s a beautiful urban design. I believe it is an example for Murray City and its RDA, and for the state of Utah, on market rate and affordable projects being built together and working together.” Strategic Land Development, Centerville, secured and entitled the land for Miller Development. Strategic’s Colin Wright said construction of the mixed-use commercial space within the project is probably about two years away.

Kaufman named president of Aribex Inc. Orem-based Aribex Inc., creator of handheld x-ray technologies, has appointed Ken Kaufman as president and chief financial officer. Dr. Clark Turner, Kaufman founder of Aribex, will retain his title as chairman and CEO, and assume responsibility as chief technical officer. Since 2009, Kaufman has served as the part-time CFO for Aribex through CFOWise, a com-

pany he founded in 2006 that provides CFO services on a contract basis. Kaufman earned a B.S. in business from BYU and an MBA from the University of Georgia in finance and entrepreneurship. In February, Kaufman published Impact Your Business: An Allegory of An Entrepreneur’s Journey To Clarity, Cash, Profit, Family and Success, a financial handbook. He writes a weekly business blog on bestthinking.com, and has also written articles for the American Express Open Forum website.

EXPO

from previous page own website (istabilizer.com) or through a site like eBay or Amazon, place an order, and a fulfillment company — Draper-based Molding Box — stores, packages and ships all orders. His products are also found in some retail outlets, including Simply Mac in Utah. He estimates 60 percent of online purchases come from either California or Canada. “I envision iStabilizer being the company people consider for anything to enhance smartphone capabilities,” Rasheta said. “I see a big market for this. There are a lot of hobbyists out there like me and the smartphone is evolving constantly. The new iPhone 4S can do full 1080P video capture, you can edit on your phone; you basically have a film studio in your pocket.” Fongo Bongo Games Not all geeks play video games. Some prefer all-night marathon sessions plotting, planning, strategizing, scheming — think “Dungeons and Dragons” from back in the day — on one of myriad 21st century designer board games. One man has turned his passion for such games into a fullfledged business, Fongo Bongo Games, which celebrated the grand opening of its first-ever brick and mortar store Oct. 20-22 at 1751 W. 12600 S. #100 in Peterson’s Shopping Center in Riverton. Founder Ernest Bourne, 41,

support

what you

Oct. 24-30, 2011 started the company in August 2009 in his basement with an initial investment of $1,200 and 20 game titles. Fongo Bongo now offers upwards of 200 game titles, ranging in price from $15 to $100, the most expensive being “Rune Wars.” Bourne said he has invested $25,000 opening his 4,200 square foot store, which will have two full-time employees. “The store is focused on families; we designed it to look like someone’s living room, a store you can bring mom into,” said Bourne, 41, who started his company in his Murray basement in August 2009. His company now is willing to special order whatever a customer requests, even special edition classics like “Monopoly,” a game he recalls with some contempt. ‘“Monopoly brings back memories of staying up all night – it’s great because of the memory of spending time with family and friends playing it, but the game is horrible,” he laughed. “It lasts forever and nobody ever wins.” He said today’s designer board games are highly intricate and require a great deal of thought and strategy, unlike classic games of the past that relied on elements of luck — the roll of the dice — to determine who won and lost. “There is a lot more decision-making during games,” said Bourne. “Your choices will determine the outcome, of you or maybe another player, of winning the game. There is a lot more strategy involved, a lot more dialect between players. “We talked to the Utah Librarians Association about the importance of gaming, how it helps people develop different thinking skills that they normally don’t access or teach in school,” he added. “A lot of the games we sell are Mensa-select, awardwinning games. Board games get people to think differently on how they solve a problem, while having fun doing it.” “These aren’t your grandparents’ games,” said Greg Near, Bourne’s friend and fellow gaming enthusiast. “Board games today are designed so incredibly well and are produced with such high quality, and the strategy is much more interesting. It’s easy to see why these board games have become so popular; there is so much thematic variety.” DAZ 3D Dan Farr parlayed an interest in 3D animation and graphics while studying business at the University of Utah into multimillion company DAZ 3D that is nationally renowned for its digital 3D content and software, with

Ernest Bourne founded Fongo Bongo Games two years ago in his basement and opened a brick and mortar store Oct. 20-22 in Riverton.

clients ranging from comic book artists to professional 3D graphic designers to hobbyists who simply want to create something cool to share with friends and family. “There are no typical customers,” said Farr, 44, whose newest product, the Genesis series of figures for DAZ Studio 4, recently won the prestigious “Software Innovation of the Year” from 3D World magazine. “We see a lot of opportunity with professional illustrators who do magazine covers, comic books, movie posters, or hobbyists who just want to create great images and animation for fun. [Genesis] is the ultimate shape-shifter.” Farr said his Draper-based company employs 35 full-time people and has projected sales revenues for 2011 in the neighborhood of $10 million, flat compared to last year. In November 2009, DAZ 3D merged with Israeli firm Gizmoz of Tel Aviv. He believes the Genesis software will fuel greater interest in DAZ 3D products and expects revenue growth between 20 percent and 30 percent in 2012. “3D is starting to move more mainstream as a tool for creativity and expression,” Farr said. “A lot of it is largely from the efforts we’re putting out there. People have been playing games and watching films and experiencing 3D, but not understanding why it changes the experience. The tools and content we have open up the possibility of Pixar to the people.” Farr recently read an article about a man who created an independent four-minute short film that used DAZ software and Adobe Premier for all 3D special effects. Someone also recently sent him a link to an independent 3D animated film that used DAZ 3D stock dinosaur models. “The credits showed one person as the animator,” said Farr. “There is a lot of math involved with 3D graphics and fortunately computers have much greater processing power with multi-processors, better graphics cards. The gaming industry is driving hardware that makes it possible to do amazing things from home.”

Oct. 24-30, 2011

The Enterprise

• Industry Briefs •

next-generation media technology BANKING • The Institute for New Roseman University of Health the Grandeur Peak International services company. Radiate Media • Ogden-based TAB Bank Enterprise at Westminster Sciences, a private, nonprofit, Opportunities Fund. The Grandeur

has appointed Mike Coon as vice president of its newly created commercial equipment leasing division. He will be based out of Grand Rapids, Mich. He has more than 20 years of experience in commercial finance. TAB Bank has assets in excess of $600 million and provides a variety of services, including capital equipment lease financing, accounts receivable financing, asset-based lending and equipment loans. • America First Credit Union (AFCU), Riverdale, has become one of the first financial institutions in the nation to offer a new suite of Visa Platinum Cards that features a rate as low as 6.99 percent and no annual fee. Each of America First’s three new Visa Platinum Cards is specifically designed to help members benefit from the lowest interest rates, choose from many rewards, earn cash back and create their own personalized cards. • Financial technology systems expert Ed Cameron recently joined Bank of Utah as senior vice president of information systems. A 40-year industry veteran, Cameron now oversees implementation and support of the local community bank’s information systems, including networks, phone systems, digital communications and all aspects of the bank’s different software systems. Before coming to Bank of Utah Cameron was CIO at United Savings and Western Mortgage, both based in Ogden. He also served as CIO for Ballard Medical in Salt Lake City and most recently as CEO and president of Premier Data Corp., a provider of technology services for more than 10 banks. • Cyprus Credit Union awarded $25,000 to the 100% For Kids Credit Union Education Foundation at the first annual Soles For Kids 5K fund-raiser. This donation combined with proceeds from the 5K event directly benefits Utah students. 100% For Kids Credit Union Education Foundation provides classroom grants to Utah schools with funds donated by Utah’s credit unions.

COMPUTERS/ SOFTWARE

• Salt Lake City-based Matchbin, a provider of content management, advertising and local marketplace solutions for media companies, has acquired NAVTEQ’s Radio and Television Advertising Group, which as part of NAVTEQ Media Solutions provides content and advertising solutions for broadcast radio and television, forming Radiate Media, a

will utilize the combined companies’ technology platforms and media reach to create an end-toend value chain connecting media partners with their advertisers and ultimately to the consumer. • TechMediaNetwork Inc., Ogden, has appointed Randy Bambrough, former chief financial officer of NextGNetworks, as the company’s new CFO. Bambrough was CFO of NextGNetworks from May 2008 through March 2010. Prior CFO experience also includes six years at InterVideo Inc., and a year at ViewGraphics Inc. Bambrough was also a co-founder of Decide. com, a telecommunications portal website. TechMediaNetwork is a technology media company that produces news and reviews reaching more than 25 million monthly visitors. TechMediaNetwork editors review more than 800 categories of products and services at TopTenREVIEWS, and publish news, features and commentary at LAPTOP, SPACE. com, LiveScience, Newsarama, TechNewsDaily, iPadNewsDaily, OurAmazingPlanet, BusinessNewsDaily, MyHealthNewsDaily, NorthOrion, SecurityNewsDaily, InnovationNewsDaily, IT TechNewsDaily, Herman Street and Life’s Little Mysteries.

College, Salt Lake City, is hosting the third course of the Banking on Women program to begin in January of 2012. Applications are available online through Nov. 15. Launched two years ago, GE Capital’s Banking on Women helps female entrepreneurs to jump-start their own businesses by providing specialized training, mentorship and access to a microenterprise loan. In addition to the 15-week intensive course for low to moderate income women, participants receive continued support once their business is launched. By investing in women entrepreneurs, the program supports job creation, retention and economic development in Salt Lake City. The program is free to applicants. For more information visit www. gecapital.com/en/banking_on_ women.html. •

accredited institution, will dedicate its new College of Dental Medicine in South Jordan on Oct. 27. Roseman opened its South Jordan campus in 2006 with the College of Pharmacy and has continued to grow, adding a College of Nursing in January 2010 and breaking ground on the College of Dental Medicine in April of the same year. Prior to the University launching the new DMD program, any residents interested in pursuing dentistry could not complete their dental education in Utah. • UtahFutures, the state’s education and career planning website, is celebrating its second birthday. Some 400,0000 students and job seekers are using UtahFutures as a one-stop shop to organize training, education and career information online. In September alone, the site got more than four million hits, representing more than 91,000 user sessions. Utah high school students constitute the majority of users. Some 274,000 students are using the site regularly. The second largest user group is job seekers enrolled in programs of the Utah Department of Workforce Services.

FINANCE • Grandeur Peak Global

Advisors, a Salt Lake City firm founded by former Wasatch portfolio managers Robert Gardiner and Blake Walker, has launched two new mutual funds — the Grandeur Peak Global Opportunities Fund and

CONSTRUCTION • Sahara Inc., Bountiful,

recently began construction on a new school in Orem for children with profound autism. The Clear Horizons Academy will be a 30,400 square feet with 11 classrooms for children with autism aged 18 months through age 12. Completion is scheduled for May 2012. Curtis Miner Architecture of Pleasant Grove designed the facility.

Peak Global Opportunities Fund will be a portfolio of 100-150 global equities, with a strong bias toward small and micro cap companies. Investments will include companies based in the U.S., developed foreign countries, and emerging/frontier markets. The Grandeur Peak International Opportunities Fund will be a portfolio comprised of 100-150 small and micro cap growth companies outside of the United States.

HEALTH CARE

• Turning Point Centers, a residential drug and alcohol rehabilitation center, has opened a new facility at 10658 S. Dimple Dell Road in Sandy. The 14,000 square foot facility sits on 5.5 acres and has 12 beds, four of which are in private rooms. • SelectHealth, a nonprofit health insurer, is again ranked Utah’s top HMO health plan, according to NCQA’s Private Health Insurance Plan Rankings, 2011–2012. NCQA (National Committee for Quality Assurance) evaluated nearly 500 private health plans and ranked them based on clinical performance, member satisfaction, and NCQA accreditation. • In two years, Utahns have saved $2,171,425 on prescription drug refills by using the Utah Drug Card. The card is available through the Salt Lake Chamber, offering savings of up to 75 percontinued on page 10

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deserve some perks. That’s why The Gateway, FM100 and The Enterprise have created and exclusive “Office Worker At Work Perk Card” for all of you hardworking people. (Fill out your At Work Perk Card application at The Gateway Concierge desk.) Flash your card and get savings and discounts at participating shops and restaurants at The Gateway. Just keep your card in your wallet and look for special deals throughout The Gateway. FM100 will be e-mailing you ever Monday with the “Perks of the Week.” Log on to www.fm100.com or check out The Enterprise for the most up to date list of specials. Turn in your completed form to The Gateway Concierge, located across from Urban Outfitters or to any participating retailer to be eligible for monthly drawings.

Want to have a great reputation? Earn it!

Your reputation precedes you. consistent help. If you get my weekly Your reputation creates or e-mail magazine, Sales Caffeine, you destroys sales. know it is all about sales help. Each What’s yours? week I provide my customers informa With the onslaught of social tion of value — information that helps media, good and bad actions and com- them learn and grow. And I do it free. ments relating to quality of product, As a result, my customers and followquality of service and quality of expe- ers are loyal, they think of me often rience are at the forefront of corporate in a positive way and they proactively awareness. send me referrals on a regular basis. Many companies are reluctant to 5. Become known as someone get into social media for fear custom- who gets business for customers. ers will say or post negative things While this is not always possible, I about them. can assure you it is the single REALITY: Those commost valuable thing you can do panies and their leaders are to secure loyal relationships, “socially” unaware that the referrals, an incredible reputacustomer is going to post tion and testimonials that will those feelings anyway. flow like Niagara Falls. Figure WORSE REALITY: out a way to help your customer Many companies are under by providing them leads, referthe influence of shallow lawrals and networking opportuniyers warning executives that ties so they have an opportunity Jeffrey the sky is falling if someone to get new business. Gitomer tweets. RESULT: The most incred WORST REALITY: Even more ible reputation will come your way. ridiculous are the companies that “for- Here are a few more things you bid” the use of social media at work can do to create and build reputation: based on the fear their employees will • Create internal WOW! moments waste their time searching for their old for customers. Establish WOW! high school romance. empowerment for employees who face NEWS ALERTS: Social media customer concerns and complaints. — or business social media (as I prefer Give them specific things they can do to refer to it) — is now a mainstay. (offer free product, free gift, gift cerThe floodgates of social freedom are tificate, free shipping). reshaping the world and at the same • Select a random “customer of time reshaping — or at least redefin- the day” from people who call in. Then ing — your company, your product, post in with a photo on your business your service and your people through Facebook page. the voice of your customers. • Create a Wikipedia page that And social media, when com- boasts your accomplishments and genbined with word-of-mouth advertising erates more keywords. and stories that may appear online or • Design and post a YouTube in print, determine your fate and your channel filled with testimonials. Make future. All of that combines to equal sure the titles are searchable and always YOUR REPUTATION. contain the word “testimonial.” Another way of looking at or • Start with YES! Train all people defining reputation is the state or status in your company to tell customers of “becoming known as” or “becoming what you CAN do, not what you known for” something. CAN’T do. 1. Become known for doing • Write an article that contains everything you said you would do – several examples of what you’re doing on time or sooner. To have any prayer to build your reputation. Post it on for a reputation you must be known as your Facebook page and blog it. a person who does and delivers what • Encourage your customers to you promise. Without this fundamental post their opinion of a transaction or element, don’t bother to read the rest. interaction. 2. Become known for being easy When you let your positive words to do business with, and be friendly and actions speak for themselves, your while you are doing it. Customers reputation rise in the process. expect everything and they expect it when they need it — not just when you can offer it. You have to be friendly Jeffrey Gitomer is the author of The when you are there and friendly when Sales Bible, Customer Satisfaction is Worthless Customer Loyalty is you are not there. This means easPriceless, The Little Red Book of ily accessible by telephone and easy Selling, The Little Red Book of Sales accessible by Internet. Answers, The Little Black Book of 3. Become known for being Connections, The Little Gold Book of proactively remarkable. When you YES! Attitude, The Little Green Book of stand out from other vendors, you Getting Your Way, The Little Platinum will be talked about, and earning a Book of Cha-Ching, The Little Teal reputation (and a testimonial) will be Book of Trust, The Little Book of simple. Being remarkable means going Leadership, and Social BOOM! His the extra mile and making service the website, www.gitomer.com, will lead forefront of your business, not an add you to more information about training and seminars, or e-mail him personally on. at salesman@gitomer.com. 4. Become known for providing © 2011 All Rights Reserved

Oct. 24-30, 2011

The Enterprise

Seven ways to kill your future without even knowing it By John Graham No one needs to be told that doing business today is dramatically different from even a few years ago. In spite of what may seem so obvious, many continue to cling to a familiar past with nothing less than stubborn tenacity. While it’s easy to spot others who have fallen behind, it takes almost desperate determination to drown out the noxious notion that we may be out of sync. We’re out of luck, however; there’s no more wiggle-room. There’s no pleading for a second chance. Now, it’s only playing for keeps. While we laud team effort, it becomes clear that individual players are expendable. Even if we’re good at what we do, we may be undermining ourselves without even knowing it. And, more often than not, it’s not the big stuff that sinks us. It’s the little telltale things that silently add up until there comes a tipping point. And then it’s all over. Most of the time we can’t figure out what happened. It wasn’t someone else who had it in for us; we did ourselves in. Before saying, “No one needs such a dark dose of pessimism,” consider several thoughts that may help quantify the idea that our wounds are self-inflicted. Here are just a few: 1. Little words. Big story. One business owner makes it a practice to ask job applicants to include a cover letter with submitting a resume. “I want to see how many times they use such words as ‘I,’ ‘me’ or ‘my,’” he says. “If these pronouns jump off the page, this may be a person who lacks self-awareness and quite possibly lacking in self-confidence.” If you’re scratching your head and wondering if such an idea is totally off the wall (and even unfair), don’t be too sure. What the business owner came upon almost intuitively, James W. Pennebaker of the University of Texas at Austin, arrived at through research, as presented in his book, The Secret Life of Pronouns. It may be more productive to tune out the big content words (jargon, in particular) and pay closer attention to the “little words.” They may be telling us a “big” story. Just think of the times you’ve read letters littered with I, me and my. What do they say about the writer? 2. Inferred incompetence. If a test is needed, here’s a quick one to identify incompetence. Ask someone to prepare a report, develop a meeting agenda, arrange a meeting or write a letter and you’re pleased they embrace the task with interest and enthusiasm (which is what you want to hear, of course). “I’ll have it for you tomorrow,” they tell you. And that’s the end. Whatever the agreed upon schedule, nothing happens. Even two, three or more nudges fail to get a response. Tomorrow never comes. Eventually, it’s clear that nothing is going to happen. This is a classic case of “inferred incompetence,” a case of performance failure. It’s the perfect way to skewer your own future. 3. Optimism’s false positive. Entrepreneurs and salespeople shun negative thoughts faster than they do a skunk on the loose. As far as they’re concerned, it’s always a “done deal,” even though the order isn’t signed or buyer hasn’t said yes. Optimism keeps them going. They live on the upside. Unfortunately, that’s only part of the story. In describing a new product, a company official said, “Everyone will want it. This will be the biggest thing that ever happened to us.”

Unfortunately, it’s no more than a poof of dust. It was all downhill from there. In a study reported in The Journal of Experimental Social Psychology (July 2011), researchers Heather Barry Kappes and Gabrielle Oettingen point out that fantasizing about something very positive, such as “hitting the numbers,” closing a huge account or reaching a particular goal, can make us feel that we have actually done it. When that happens, we tend to relax, let up and back off. The study suggests that too big a dose of optimism causes us to blank out the hurdles — everything that must be faced if we’re to reach the goal. 4. Blinded by success. Sydney Finkelstein, a management professor at Dartmouth’s Tuck School of Business, was asked what CEOs who made monumental mistakes have in common. “That unfortunate combination of believing they’ve got it all figured out while turning a blind eye to early warning signs.” One of Finkelstein’s examples is Andrew Mason, the CEO of Groupon, who turned down Google’s $6 billion offer for the company. Not only did he seem to discount the hundreds of mice nibbling away at his cheese, but it would seem he lost sight of the sick economy and failed to recognize what consumers wanted next to light their buying imagination. By mid-2011, Groupon had lost up 50 percent of its sales and much of its value. 5. Dues paid in full. They say nothing in baseball history comes close to the September 2011 collapse of the Boston Red Sox. Amid the “how-did-it-happen” post-mortem speculation, Boston Globe sports writer Nick Cafardo may have come closest to the explanation. “This was a team that had no fire. It was a team that had no urgency ... It’s a team that needs to be hungry again.” He then wonders how that happens with a team with monster paychecks and incredible success. Whatever else it is, it’s the story of what happens to anyone who decides they’ve paid their dues and don’t need to put in a full day or step up to the plate. That’s just for the rookies. 6. Destructive delusions. If we believe our decisions are well thought out and unquestionably rational, we’re kidding ourselves. One morning a client, who is also the president of his company, called and quickly began complaining about the new iPhone he had been issued. As a confirmed Apple devotee, I instantly found myself arguing with him. “How could anyone believe that?” I said to myself. After a few minutes of bantering, he said, “You’re an Apple person. There’s no discussing this with you.” He was right on both accounts. It happens all the time. In his book, The Believing Brain, Michael Shermer, Ph.D., suggests that the brain develops patterns that shape the way we perceive reality. But then something interesting occurs. We latch on to any information that confirms those beliefs and push aside whatever attempts to challenge them. And there’s the rub. Unless we constantly challenge our thinking, what we assume to be rational thought becomes little more than prejudice. Really, is it possible to believe the Android OS is totally without merit or even a muchdisliked politician is without merit? 7. The ROI card. Businesses can either play or ignore the “ROI card,” depending on the situation. Almost always, they do it inapsee FUTURE page 10

The Misery Index

percent, following a 1.5 percent rise in 2010 and a 2.7 percent rise in 2009. Most forecasts for consumer inflation in 2012 are near 2.2 percent. From Here? One might assume a very slow and consistent decline in the nation’s unemployment rate during the next few years, barring another painful recession. The inflation view is muddied, with massive and unprecedented

monetary stimulus leading many to fear a sharp rise in inflation in coming years. Making forecasting more challenging are those seasoned forecasters who actually see a Japanese-style deflation about to emerge, noting that when Japan’s housing and asset bubble burst in the early 1990s, that island nation entered eight consecutive years of deflation. The misery index is still rel-

evant today, given its pure simplicity and the ease of telling a story of consumer “misery.” The misery index will enter the history books as an interesting political footnote. Jeff Thredgold is the author of econAmerica, released by major publisher Wiley & Sons, and serves as economic consultant to Zions Bank.

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One of the major political unemployment rate actually fell issues that greatly impacted results slightly below 4 percent during of U.S. presidential elections dur- various months in 2000, the lowing 1976 and 1980 was frequent est monthly rate since January reference to “the misery index.” 1970. While true, one actually has This so-called “index” was sim- to go back to the mid-1950s to ply the sum of the nation’s most find a peacetime unemployment recent unemployment rate and the rate as low as 3.9 percent. Later on, the nation’s unemnation’s consumer price index for the most recent 12-month period. ployment rate again declined from the near 6 percent average This combination was a following the mild 2000simple way to measure 2001 recession. The 4.6 the level of “pain” or percent average in 2006 “misery” of the American was its lowest average people when it came to level in five years. the overall level of job The unemployment rate lessness and the loss of has, unfortunately, moved purchasing power due to sharply higher in recent rising inflation. The misery index Jeff Thredgold years as a result of the Great Recession, which was first made politiran from December 2007 cally newsworthy by Democratic Presidential candidate through June 2009. Despite masJimmy Carter in 1976. During sive amounts of fiscal and monthe Presidential election of that etary stimulus, the unemployment year, Carter constantly attacked rate has averaged 9 percent during President Gerald Ford for his mis- the past three years. The rate has been at 9.1 handling of the American econo- percent during the past three my. Candidate Carter frequently months. Most forecasts have the noted during the campaign that rate falling very slowly during the the misery index was in the mid- next few years, with an unemployteens, as compared to much lower ment rate of perhaps 8.5 percent levels during the 1950s, 1960s — 8.8 percent on Election Day in and early 1970s. Carter’s criti- November 2012. As I have noted cism of President Ford’s economic frequently, no American President mismanagement was effective, since the late 1930s has served a helping him defeat the incumbent second four-year term in office Republican president during the when the unemployment rate was above 7.2 percent — a period of November 1976 election. 75 years. What Goes Around Comes On the inflation side, presAround During the 1980 Presidential sures were quite modest in the campaign four years later, first decade of the 21st century Republican candidate Ronald due to (1) fierce domestic and Reagan constantly made refer- global competition in nearly every ence to President Carter’s eco- major industry; (2) more aggresnomic failings — as measured by sive actions by consumers to resist price increases; (3) more effective Carter’s misery index. By November 1980, the corporate utilization of technolmisery index had moved even ogy; and (4) the inflation-fighting higher, with several monthly mea- nature of the Internet. The escalation of numerous surements above 20. Candidate Reagan’s constant battering of commodity prices during the 2004 President Carter with his own to mid-2006 period led inflation index turned out to be effective, pressures higher. Global prices as Reagan handily defeated the for oil, steel, copper, lead, aluminum and the like, tied in part incumbent Democratic president. References to the misery to sharply rising demand from index have clearly waned in recent China and India, led overall inflayears, although it remains a rea- tion pressures higher before eassonable — if simplistic — mea- ing in late 2006. Such upward sure of the American consumer’s pressure on commodity prices was economic well being. The United a key ingredient in the Federal States made enormous progress in Reserve’s elongated monetary reducing this particular measure tightening program of June 2004 of consumer pain, especially dur- through June 2006. More recently, consumer ing the decade of the 1990s. prices have been volatile as comThe Numbers On the employment side modity prices rose and fell, impactof the equation, impressive U.S. ed by serious hits to the domestic economic growth and resultant and global economy. Volatility has strong job creation during much of ranged from the alarming 4.1 perthe past 15 years led the nation’s cent CPI rise in 2007 to the minisunemployment rate to average cule 0.1 percent rise the following 4.1 percent during calendar years year. Consumer prices in 2011 are 1999 and 2000, its lowest annual average in 30 years. The nation’s expected to rise 3.4 percent — 3.7

The Enterprise

Oct. 24-30, 2011

The Enterprise from page 7

Small Business in Utah Making Sense of Letters of Intent and Deal Structure in Selling Businesses By J. Scott Hunter

The third reason for signing an LOI is that even though the LOI is for the most part not an enforceable contract, it does represent something like a handshake. It represents the good faith path a deal will follow. This makes it more difficult for the parties to later “re-trade” on specific deal points. The final definitive terms may depart from the terms set out in the LOI, but the reason will be less likely due to memory failure or initial misunderstanding between the parties. An LOI is especially recommended when there may be a long period between the first discussions and the anticipated closing date or completion of the definitive agreement. Finally, signing an LOI is a way to protect oneself. Potential buyers will need to learn about the seller’s business to determine whether they have an interest in pursuing a deal. An LOI may contain the terms of a non-disclosure agreement (NDA) or supplement the existing NDA. Contents of a Letter of Intent The contents of an LOI can be vague — just an expression of interest by a potential buyer — or extremely specific and set out a lot of the key terms and conditions of a possible transaction. The type of LOI use will need to be customized for each specific deal. Some key terms typically found in an LOI are: ● The form of the deal, e.g., asset sale or stock sale. ● The purchase price. see LOI page 18

Clyde Snow & Sessions welcomes Brent R. Baker, former senior special counsel to the SEC, and D. Loren Washburn, former deputy chief of the White Collar Crime Section at the U.S. Attorney’s Office for the District of Utah, to the firm’s Government Investigations, Corporate Compliance and White Collar Defense Group.

White Collar Criminal Defense Corporate Compliance Internal Investigations

Back Row (left to right): Sarah L. Campbell, D. Loren Washburn, Rodney G. Snow, Brent R. Baker, Jennifer Hunter (paralegal) Front Row (left to right): Katherine E. Judd, Jennifer A. James, Anneli R. Smith, Neil A. Kaplan

ClydeSnow6O

1 1 • 2 0 1 9 5 1

A Bold Move

In connection with the sale of a business, an owner may hear conflicting opinions regarding the use of a letter of intent. First, I’ll define what I mean by “letter of intent.” Sometimes one will hear it referred to as a term sheet or a memorandum of understanding. Regardless of what the letter of intent (LOI) is called, it is a written document that contains a number of unenforceable, preliminary understandings of the parties and a few enforceable provisions. Is a Letter of Intent Absolutely Necessary? There is no hard and fast rule that the buyer and seller must execute a letter of intent. A properly drafted letter of intent will set out the key business points in a deal. The LOI can be valuable as a memo regarding what the seller and the buyer have discussed and how the deal will proceed. I strongly suggest that the parties execute an LOI for a number of reasons. The first and most important reason is that an LOI insures that the buyer and seller are on the same page, that they are communicating with and understanding each other with respect to the terms of the deal. That is, at least as to certain critical terms, the buyer and seller have reached an agreement in principle. The second reason why it’s important to sign a properly drafted LOI is to promote efficiency. It’s much more efficient to draft the definitive agreement if the parties have already agreed to core deal points. Conversely, it is extremely inefficient if they have not agreed to deal terms and the attorneys are drafting an agreement that will be rejected by the seller or the buyer.

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cent on prescription drugs. The program has no restrictions on membership, no income requirements, no age limitations and there are no applications to fill out. Utah Drug Card is accepted at more than 50,000 pharmacy locations across the country. The Utah Drug Card is funded through the participation of pharmacies and pharmaceutical companies. The program is also receiving support from the public and private sectors. Other organizations have also endorsed and will promote the Utah Drug Card available, including the Utah Nonprofits Association and the Utah Hospitals and Health Systems Association.

INSURANCE

• Utah insurance commissioner Neal T. Gooch has appointed a deputy and an assistant insurance commissioner. In August he appointed Brett J. Barratt as deputy commissioner and in September Tanji A. Northrup was appointed assistant commissioner. Barratt earned a law degree from Michigan State University College of Law, joined the Nevada Bar Association, and then a law firm in Las Vegas. In 2005 he started work for the Nevada Insurance Department as counsel and hearing officer. He was made chief insurance assistant to the commissioner in 2009. When Nevada Insurance Commissioner Scott J. Kipper resigned Brett was appointed acting commissioner, then commissioner. Northrup has been a member of the Utah Insurance Department since December of 1994. She has worked as a health insurance analyst, a rate and form analyst, and director of the Health Division. She too graduated from Westminster College with a bach-

FUTURE from page 8

propriately. Does anyone believe that HP took the ROI into account when it splurged a billion plus bucks on Palm? It wanted a tablet product so much, it wrote the check and then scrapped the project less than a year later. That’s an instance when the ROI card should have been played. But that isn’t what the then CEO wanted to hear. It’s easy to “overthink” one’s importance in a culture where contrary views aren’t tolerated. There are other business situations when the “ROI card” deserves being ignored. A good example is a 43-store dry cleaning chain in the Northeast started an annual drive for winter coats more than 15 years ago. The company cleans 60,000 coats each fall at its own expense and supplies them to community agencies for distribution to babies, kids and adults. It also gives more than 250

elor’s degree in business.

LAW

• The Commercial & Financial Institutions Section of Ray Quinney & Nebeker has launched its “Utah Commercial Law” blog at www.utahcommerciallaw.com. The blog is managed by Kevin Glade, chair of the group. Glade said the purpose of the blog is to provide commercial law updates and related information and news to the firm’s lending and commercial clients and others who may be interested in those topics.

MEDIA/MARKETING

• Freestyle Marketing Group, Salt Lake City, has inked deals to provide advertising and design services for two Utahbased companies — DataShield Consulting and Disability Law Center. DataShield is a global management consulting, technology services and outsourcing company headquartered in Park City. Disability Law Center is the only statewide disability agency that provides self-advocacy assistance, legal services, disability rights education and public policy advocacy on behalf of more than 400,000 Utahns with disabilities.

REAL ESTATE

• Coldwell Banker Commercial (CBC) has added two new commercial real estate professionals to its Salt Lake City office — Phillip Dunn and Pete Williams. Hired as a vice president of investments at CBC, Dunn has more than 25 years of experience as a retail and industrial investment specialist, having acquired, leased, developed or sold more than 10 million square feet during continued on page 17 schools and youth groups the chance to earn special rewards for collecting coats. More than 150 businesses and organizations also collect coats. Beyond all that, the company partners with a TV station, a nationally-known furniture company, several radio stations and 100 plus newspapers that help promote the program. Is such a program good business? Probably not, if the cost is taken into account. Even so, some bold leader says, “It’s the right thing to do.” There are occasions companies are best served by failing to play the ROI card. Anyone of these seven examples can put the future of an individual or an organization in jeopardy, whether it’s looking beyond an idea’s ROI or moving forward blinded by our success. John Graham, a marketing and sales consultant and a business writer, lives in Boston. He can be contacted at (617) 774-9759 or johnrg31@me.com.

Prequalifying your business can be money in the bank By David R. Leng & Michael G. Lukart Due to today’s economic conditions, more companies are looking for anything and everything they can do to give themselves a competitive advantage. Often times it’s their Experience Modification Factor (MOD). And easy to overlook it is, since employers tend to be somewhat uninformed when it comes to Workers’ Compensation. Although it’s certainly a significant employee benefit on one hand, it’s also a powerful business benchmark that is carefully scrutinized by those who are evaluating possible business partners. The MOD is the biggest driver of a company’s Workers Compensation rates; the lower the MOD, the lower the rates. Therefore, companies with lower modifiers have a lower productivity cost structure. This lower cost structure leads to being more competitive, which leads to secur-

The Enterprise

Oct. 24-30, 2011

ing more jobs and more profitability. The exact opposite is true as well; higher MOD leads to higher costs, and it is more difficult to compete for work. However, there are more dire consequences for those with high MODs — no work. Let’s face it. In today’s environment companies and risk managers are using the MOD as a significant determining factor to disqualify firms from bidding on projects. If an experience modifier is over 1.00 for example, the company may be viewed as unsafe, and therefore does not get the job. Companies know they need to do something about their MOD, but do not know what to do. The good news is that the MOD is as manageable as any other business function, as long as people are motivated to do so. Here are a few examples of what we’re talking about: see MOD page 14

Whatever the

The ESOP blindside — and how to protect it

By Edward A. Tafaro Since the 1970s, the employee stock ownership plan (ESOP) has proven to be a valuable vehicle for helping employees to own a share of a business. It’s similar to grabbing profit-sharing in that the company establishes a trust fund and contributes either new shares or buys existing shares of its stock. In another version, the ESOP borrows the funds to purchase existing or new shares. In essence, ESOP owners create a reservoir of human capital that drives the success of the company. When employees leave the company, they receive their share options, and the company must buy them back. But what happens to the company if a key employee-owner leaves early due to a disability, creating a critical knowledge and experience gap that could do harm to the

company’s success? True, most ESOPs typically insure in the event of the death of a key shareholder, but during the working years, the risk of disability is a far greater risk than death. Given this fact, why is disability insurance so under-utilized in the ESOP world? Kelly O. Finnell founded Executive Financial Services Inc. in 1981. Based in Germantown, Tenn., Finnell specializes in employer-sponsored retirement plans, including 401(k)s, ESOPs and Nonqualified Plans for executives. Recognized for his retirement planning expertise, he’s keenly aware of the void that’s created by neglecting to put disability insurance into the ESOP mix. “For ESOPs to have life insurance is quite commonplace,” says Finnell. “But see ESOP page 16

We H a v e A

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Oct. 24-30, 2011

The Enterprise

DON’T BLINK

WE’RE GROWING FAST Opticare of Utah is now the 38th fastest growing company in the state. And with over 100 contracted eye care facilities, we’re Utah’s largest vision care provider. Our out-of-state presence is growing, too, with 13,000 (and counting) facilities nationwide. We’re still a family-owned business, and we continue to provide exceptional benefits for both voluntary and group plans. We offer no waiting periods, no deductibles, low co-pays and competitive rates. We have a 24-hour quote return, LASIK discounts and even custom plans. We may be growing fast, but with our vision coverage, you won’t miss a thing.

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Salt Lake City, Utah 84119

1.800.EYECARE

1.801.869.2020

opticareofutah.com

The Enterprise

Oct. 24-30, 2011

Top Commercial Insurance Agencies in Utah Ranked by Premium Volume in Utah in 2010

Company Name

Phone Fax Web

Marsh USA Risk & Insurance Services/ Mercer Health & Benefits 15 W. South Temple Suite 700 Salt Lake City

801-533-3600 801-533-3610 marsh.com mercer.com

Premium volume in 2010

801-535-4330 DND aon.com

$900 million

Moreton & Company 709 E. South Temple Salt Lake City

801-531-1234 801-531-6117 moreton.com

$400 million

Leavitt Group 216 S. 200 W. Cedar City

435-586-6553 DND leavitt.com

$302 million

HUB International Ins. Services, Inc. 6415 S. 3000 E. Suite 220 Salt Lake City

801-942-1430 801-618-4013 DND

801-246-4300 801-467-5690 wfis.wellsfargo.com/slc

Diversified Insurance Group 136 E. South Temple # 2300 Salt Lake City

801-325-5000 801-532-2804 diversifiedinsurance. com

The Presdidio Group 5295 S. 300 W. Suite 550 Salt Lake City

801-924-1400 801-924-1441 presidio-group.com

$86 million

Beehive Insurance Agency Inc. 302 W. 5400 S. Suite 101 Salt Lake City

801-685-6860 801-685-2899 beehiveinsurance.com

$50 million

The Buckner Company 6550 S. Millrock Dr. Suite 300 Salt Lake City

801-937-6700 801-937-6710 buckner.com

DND= Did Not Disclose

N/A= Not Available

# of employees

# of Offices worldwide

DND

420

500

110

125

150

415

105

250

$275 million

Wells Fargo Insurance Services USA, Inc. 1095 E. 2100S. Suite 200 Salt Lake City

801-563-1131 801-563-1141 summitquote.com

# of Offices within Utah

$1.606 billion

Aon Risk Solutions 299 S. Main St. suite 1300 Salt Lake City

Summit Risk Management & Insurance 7430 S. Creek Rd. Suite 300 Sandy

#of licensed agents in Utah

$141 million

$101 million

$31.768 million

$14.56 million

128

113

Specialties

Owner/ Managing Principal

Property, casualty and health and benefits brokerage and consulting

Kim Briggs, Ann Thomas, Jim Payne

DND

Commercial insurance, group employee benefits, surety, voluntary benefits, personal insurance, financial products DND

Employee benefit consulting, risk management accounts, consulting work is performed on a fee basis Enterprise risk management, captive consulting and management, cost control, employee benefits, commercial insurance, personal lines, construction, small business, and technology Emerging growth, technology, life science, management liability, workers compensation programs, PEO, financial institutions Risk management, business insurance, employee benefits, group captives Trucking & transportation, contractors & construction, non-profits, employee benefits, and individual life & health Property, risk management, casualty and health benefits, consulting

General Liability, property, work comp, trucking/transportation, construction/contractors, farms/crops, aviation, employee benefits, bonds, personal, home, & auto, etc.

Earl Hurst

DND

Tom Lanning

Stuart Young

Spencer Hoole, Joe Henroid

Brian Rueckert , John Schlichte

Doug Snow

Matthew D. Hunter, George H. Swan, Brent R. Koplin, Mark R. Hunter

Terry H. Buckner

MOD

from page 11 • A machine shop with a 1.3 MOD six years ago has seen it drop to 0.745, which is the third best in Pennsylvania within its classification, out of 228 companies in the same class code. Before implementing changes to improve their MOD, they were unable to receive a multi-million dollar contract, even as low bidder, as the purchasing company’s risk manager viewed them as an unsafe company and therefore questioned the quality of their work. They now have been able to win that contract, and have grown from 58 to 110 employees due to winning the contract. • An asbestos abatement and insulation contractor had a 1.02 MOD, which is barely above 1.00. Despite being low bidder, they were unable to receive 11 jobs in a three-year period as they were “disqualified” due to being “unsafe.” The contractor could not qualify for private work due to their MOD being over 1.00, and therefore had to try and compete in the very low profit margin, highly competitive government arena. Working with the owner to implement a “zero-accident” safety culture and adding processes to address their lost time injuries, within three years, the contractor had one of the best modifiers in the state. Recently, they were even asked to take over a job from a contractor who was thrown off of it due to that contractor’s MOD going over 1.00. The company went from barely surviving to thriving. • A 55-employee cable and fiber optic line installer with a 1.65 MOD was informed by the telecommunications company that they had two years to attain compliance with their safety guidelines, which included a requirement of being below 1.00. The concern was that this telecommunications company represented 90 percent of their work. Losing the contract most likely meant being put out of business, as they did not qualify for other companies’ line work due to their MOD. Step one was working with the contractor and the telecommunications company. The contractor was given an extension to four years, but they had to hit benchmarks in terms of number of injuries that would be verified through loss runs from their insurance company and their OSHA logs. Second step was putting in an aggressive behavior-based safety program, as their frequency had to be cut by 60 percent to be in compliance in the first year, and 80 percent in two years. Based on their results, they were complaint and actually went 19 months without an injury. They will be in compliance of a MOD below 1.00 in three-years as well. They are looking forward to bidding on work from other telecommunication companies now. Each of these companies is far better positioned to compete by improving its Workers’ Compensation performance. With such striking results, what keeps companies from achieving such stellar performance? Our experience points to two primary factors: • Lack of owner support and commitment for improving the organization’s operations. This includes difficulty in scheduling training sessions, meetings consistently being canceled and an overall company culture that is driven primarily by the owner’s unwillingness to change, focus on productivity issues only, or has “too many irons in the fire.” • The insurance companies’ reluctance to support an appropriate claims management process. Claims adjusters often feel threatened by a consultant’s claims management staff, and avoid communicating with them. Unfortunately, any insurance companies can have “unseasoned” adjusters, ones that don’t fully understand the Workers’ Compensation laws and really don’t have any “skin in the game.” But it doesn’t need to be this way. Things can

Oct. 24-30, 2011

The Enterprise go right under the right conditions: • Obtaining the full support of owner and executive management staff to implement cultural changes within an organization. • Appropriate consultants are given the time necessary to conduct specific training programs with front-line supervisors, and implement necessary policies and procedures. • Conducting a comprehensive loss trending analysis to identify those losses that are driving the companies claim frequency and severity. Then, with an evaluation of the findings, developing and implementing processes to change the negative culture that is driving both claims frequency and severity. There are a number of significant factors that help transform a company’s culture: • Management commitment is the most important factor in changing the attitude of the workforce. Management commitment is the first and most important thing. • Next is installing the necessary elements to achieve the desired results. Usually, business owners fail to recognize the impact accident costs have on the business. This is why they need to see the data to understand that injury prevention and injury management are 100 percent controllable expenses. Since these are employee costs, it starts at hiring, training, monitoring employees for continuous improvement: plan, do, check, act. • Since companies differ, it’s critical to gain an understanding of how to formulate a plan that produces the desired results. • Another important consideration in the whole process is that all companies are different, both culturally and functionally. Identifying these differences in the early stages of engagement is important in order to formulate an effective plan to achieve the desired results. This includes developing standardized operating procedures and then conducting training in hiring, accident investigation, workplace inspections, audits, etc. All of this is anything but an academic exercise. It’s the process for creating a happy, productive and injury-free workforce, along with a business that is successful because it has a competitive advantage that makes it attractive to customers. And behind it all is the Experience Modification Factor. The MOD is used rather than OSHA Recordable and DART (Days Away, Restricted Time) rates by risk managers as a benchmark. Unlike the OSHA log, third parties promulgate the MOD, such as the state Workers’ Compensation rating bureau and insurance companies that create and provide the data, which are viewed as reliable sources. Unfortunately, however, the MOD is subject to the severity of claims or even a single large claim, where frequency (the number of injuries adjusted for individual size for comparison) may be a better indicator as to safety performance. However, many risk managers view these records as unreliable, feeling that they can be altered by a company not reporting all incidents on the report. As a result, the modifier is viewed as a reliable basis for review. The bottom line is clear: making a diligent effort to get a company’s Experience Modification Factor to the lowest allowable level may determine when a company in this economy gets a job or not. David R. Leng is vice president of the Duncan Financial Group in Irwin, Penn.. Leng is part of a select group of advisors nationwide to be awarded Level 5 WorkComp Advisors status by the Institute of WorkComp Professionals because of their demonstrated proficiency and leadership in managing workers’ compensation. He can be contacted at dleng@duncangrp.com. Michael G. Lukart is president of East Coast Risk Management in North Huntingdon, Penn. He can be contacted at mlukart@eastcoastrm.com.

Six actions employers can take to control runaway workers' comp medical costs By Kevin Ring and Teresa Long Rising medical expenses are the culprits driving up Workers’ Compensation costs. While it’s true that Workers’ Comp rates are mostly flat or going down, any savings are being more than eaten up by higher medical bills. With the possible exception of safety issues, many employers feel that Workers’ Comp costs are beyond their control. As it turns out, they can play a key role in controlling medical costs. Here are six actions employers can take to make certain medical costs are appropriate: 1. Medical costs are the leading driver of Workers’ Compensation costs. As a percentage of total comp claims, medical costs rose from 46 percent in 1988 to 58 percent in 2009, the last year for which fully adjusted data is available. A workforce plagued by obesity, diabetes and poor health habits, coupled with demographic trends of an aging workforce that takes longer to heal, offer little relief to combat this disconcerting trend. Action: All bills should be carefully checked as mistakes, inaccurate coding, duplication and fraud happen. Beyond checking the bills, it’s vital to ensure that employees receive the most appropriate — and most cost-effective — care, aimed at returning the employee to work. Established relationships with physicians and clinics trained in occupational medicine will help ensure early, effective treatment and positive outcomes. 2. Workers’ Comp hospital costs inflation high. A recent article in Risk and Insurance by Peter Rousmaniere, an expert on the Workers’ Compensation industry, notes that the rate of inflation for hospital costs appears to be among the highest for Workers’ Comp claims payers. Bill-review professionals say that hospitals take advantage of flawed fee schedules, employing experts to maximize billing. This is consistent with an NCCI Holdings Inc. 2010 report that found the proportion of Workers’ Compensation medical costs subject to physician fee schedules is declining as medical providers shift from charging private practice fees to billing for procedures through hospitals or other facilities that employ them. Billing by hospitals and the other facilities may not fall under a

Workers’ Comp fee schedule. Action: Partnering with the right medical providers is key. Employees who are injured at work are entitled to the highest quality medical care, aimed at returning employees safely back to productive work. There are significant differences between occupational health delivery systems and the general medical community. Establishing relationships with physicians or clinics that use proper diagnostic evaluation and evidenced-based treatment guidelines will improve outcomes, reduce costs and help workers return to their jobs quickly and safely. Understanding red flags of inappropriate treatment (see side bar) and addressing the issues quickly will help stop costs from spiraling. 3. Emergency room wait times put safety at risk. In addition to having costs four or five times higher than clinic or office visits, emergency rooms are jeopardizing patient safety due to high wait times, the American College of Emergency Physicians (ACEP) warns. The increasing number of patients relying on ER for medical care because they lack health care coverage caused the average wait time to rise to four hours, seven minutes. Almost 40 percent of hospital ERs exceed or are at capacity. ACEP said health care reform legislation won’t improve the situation, pointing out that Massachusetts, which passed health care reform in 2006, has seen an increase in ER visits. Action: Only life threatening emergencies should be treated at an emergency room. Having a clearly defined process for medical evaluations, treatment and care when an injury occurs is critical to controlling costs. 4. Misuse and abuse of prescription drugs on the rise. Prescription drugs play a significant role in Workers’ Compensation and while medications can replace expensive surgeries or other invasive procedures, they can also be abused or wrongly prescribed. Workers’ Comp is particularly susceptible because it’s been estimated that 55 percent to 75 percent of drug spend in Workers’ Compensation is related to medications that manage pain. The estimated number of emergency room visits related to see COSTS page 16

The Enterprise

Oct. 24-30, 2011

Top Group Health Insurance Companies in Utah Ranked by Number of Individuals Covered in 2010

Company Name

Phone Fax Web

Select Health 5381 S. Green St. Murray

801-442-5038 DND selecthealth.org

532,000

$1.075 billion

Regence Blue Cross Blue Shield of Utah 2890 E. Cottonwood Parkway Salt Lake City

800-624-6519 DND regence.com

496,965

$1.057 billion

Opticare of Utah, Inc. 1901 W. Parkway Blvd. Salt Lake City

801-869-2020 801-954-0054 opticareofutah.com

250,000

$4.125 million

Altius Health Plans 10421 S. Jordan Gateway, Suite 400 South Jordan

801-355-1234 801-323-6100 altiushealthplans.com

174,404

DND

EMI Health 852 E. Arrowhead Lane Murray

801-262-7476 801-269-9734 emihealth.com

101,290

$ 192 million

Gallagher Benefit Services 6340 S. 3000 E. Suite 500 Salt Lake City

801-453-2212 801-303-7300 gallegherbenefits.com

85,000

$205 million

Molina Healthcare of Utah 7050 S. union Park Center, suite 200 Midvale

801-858-0400 801-858-0409 molinahealthcare.com

79,143

DND

DND= Did Not Disclose

# of individual covered in 2010

Premium Volume in Utah for 2010

# of Offices within Utah

Specialties

# of Utah employees

1 825

1 500

Medical, dental, eyewear, life and disability, children’s health insurance program (CHIP), Federal Employee Health Benefits (FEHB)

Robert A. Hatch, President

Vision insurance plans; eye exams, frames, lenses, contact lenses, LASIK benefit packages

Aaron Schubach, CEO

240

Patricial R. Richards, President and CEO

Individual, group, FEP, ASO, medicare, dental, vision, HSA, life

Top Local Executive

Health, dental, vision, mental, small and large employer groups, self funded arrangements, individuals and families, federal employees, medicare participants

Medical, dental, vision

140

Todd Trettin, President and CEO

Steven Morrison, President and CEO

Medical, dental, life, vision, LTC, STD, accident, ancillary products

CHIP, medicaid, Molina options (a medicare advantage plan). Molina options plus (a medicare special needs plan)

1 158

Ryan Olsen

Paul Muench, Utah Plan President

N/A= Not Available

OU J S ES

A RN

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825 North 300 West, Suite C309 • Salt Lake City, Utah 84103 Phone: (801) 533-0556 • FAX: (801) 533-0684 www.slenterprise.com

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COSTS from page 14

nonmedical use of prescription painkillers increased 111 percent between 2004 and 2008, according to the Centers for Disease Control and Prevention. “The abuse of prescription drugs is our nation’s fastest-growing drug problem,” said Gil Kerlikowske, director of the Office of National Drug Control Policy. Action: When prescriptions are suspicious and do not follow established prescription treatment guidelines, case managers reviewing claims should call doctors. Employers must also educate employees about the personal risks and work-related hazards of misusing and abusing prescription drugs. Supervisors must be trained to act early, while protecting employees’ privacy, when they notice things such as unusual employee behavioral changes or an uncommon increase in absences that may be drug-related. 5. Injuries to older workers can have higher costs. While accident frequency among older workers is lower, the severity of a Workers’ Compensation claim for an older worker can be significant. The BLS estimates that it takes older workers approximately two to three times longer than a younger worker to recover from an injury — an average of 20 days away from work. Action: Since shoulders, backs, and wrists injuries have the highest musculoskeletal claim severity in older workers, take steps to identify causes of strain and fatigue through an ergonomic evaluation of workstations and workspaces, and implement corrections. Consider task rotation. A highly responsive return to work effort can benefit the employer by enabling the worker to be productive while healing. 6. Employees have a role to play in controlling medical costs. Under Workers’ Compensation, employees are not faced with copays, deductibles or employee contributions and often assume that the insurance company pays for the cost of their injuries. There’s little incentive to understand or control the costs of care. Action: Employers are stepping up efforts to educate employees on the costs of care and how it ultimately affects the employees’ compensation. When employees realize that workers’ comp is a benefits cost that ties in directly to what a company can pay in compensation, they also recognize the advantage of helping reduce those costs. Some employers are adopting the process of

The Enterprise sending their injured employees EOBs (Explanation of Benefit Statements). This both raises the injured workers’ awareness and knowledge on the services provided on their behalf as well as provides an opportunity to identify billing mistakes or fraud. When it comes right down to it, employers have a huge stake in helping to manage Workers’ Compensation claims since they are ultimately responsible for the costs incurred. By applying accepted cost control measures to Workers’ Comp medical cost, they can reduce the cost of this employer-provided benefit. Eight Red Flags: When Treatment is Off Track • Medical provider focuses on the injury without sufficient consideration for the medical status of the injured employee. Conditions such as obesity, diabetes and osteoporosis are known to delay recovery and complicate treatment of work-related injuries. • Poor communication on the part of medical provider. The provision of high-quality Workers’ Compensation services requires more physician attention and time to patient education and employer communication than traditional care. • Treatment recommendations and/or drug prescriptions are outside of published guidelines for the injury. • The provider allows the employee to direct the case. Social decisions enter into determining the release to work. • The provider does not take the time to understand the Return to Work options. • The provider broadens the scope of treatment and begins treating symptoms that are unrelated to the injury. • The provider does not provide timely appointments or reports. • The injured employee does not achieve MMI within forecasted time period without sufficient justification. Kevin Ring is the lead Workers’ Compensation analyst for the Institute of WorkComp Professionals, which trains insurance agents to help employers reduce Workers’ Compensation expenses. A licensed property and casualty insurance agent, he can be contacted at (828) 274-0959 or Kevin@workcompprofessionals.com .Teresa A. Long is director of injury management strategies for the Institute of WorkComp Professionals in Asheville, N.C., the largest network of Workers’ Compensation professionals in the nation. She can be contacted at (828) 274-0959 and teresa@ workcompprofessionals.com.

ESOP

from page 11 there’s a definite need to educate investors on how to protect their company against a possible disability risk. If they knew there were ways to do this, they would want to protect their investment against the possibility of a significant loss.” Like other complex financial transactions, no two ESOPs are the same, yet there are common threads that run through most transactions. There’s a key shareholder who is seeking to trade equity for cash. Subsequent to that, there are various forms of financing that the ESOP can deploy. Typically, it will utilize a combination of bank financing (senior debt) coupled with a promissory note (subordinated debt) funded through corporate cash flows. Most frequently, these loans have a five-year duration, although it should be remembered that every ESOP is different. What seems consistent is that once the loan agreement is put into place, a significant sum of key person life insurance is usually purchased to protect the selling shareholder and the lenders against the risk of premature death. However, the greater statistical risk is disability. And there’s the “blindside” that exists in most ESOPs, particularly where the business is highly dependent on the vision, relationships and knowledge held by its owners. For these unique individuals, disability is all but certain to end in disaster for both themselves and their company if the risk is not properly mitigated with the purchase of carefully crafted disability insurance. James Steiker, chairman and CEO of SES Advisors Inc. in Philadelphia, is a corporate, pension and tax attorney with more than 20 years experience with ESOP design, installation and transactions for privately held companies. He believes that disability is an under-insured event in ESOPs because most people fail to focus on the fact that it’s even available, let alone that it’s important. “It makes sense for an ESOP-owned company to have a mixture of life and disability insurance on key ESOP participants that can address payment of significant account balances upon a participant’s death or disability,” explains Steiker. “Unlike traditional disability insurance, which focuses on replacing income for a disabled person, corporate-owned disability insurance addresses the corporate finance and repurchase obligation effect of the disability of a key selling shareholder or ESOP participant. Corporate-owned disability insurance spares the company the double whammy of losing the services of a key employee and needing to fund an accelerated payout of their ESOP stock.” Finnell agrees. “Not having disability coverage on key persons in the ESOP could wreak havoc on the financial structure of the company if the buyout can’t be paid,” he says. While death is a certainty, the likelihood of disability often feels remote. The reality is that during the working years, the risk of disability is far greater than the risk of death. Acquiring disability insurance for key shareholders also helps make traditionally large transactions more palpable to lending institutions, since most are aware of the inherent risk that the disability factor creates and how it could possibly affect their investment. “Most ESOP investors I’ve talked with don’t even think of the possibility that they may become disabled,” adds Finnell. “But if they knew there was up to $75 million of insurance available, that would definitely get their interest.” It definitely caught the interest of a Californiabased insurance advisor consulting with the CEO and founder of a glove manufacturing business who was about to take his company into an ESOP. Prior to the transaction, the founder held 100 percent of the stock. To partially fund the ESOP, the company secured a

Oct. 24-30, 2011 $4 million bank loan, and subsequently loaned the ESOP all of the funds to acquire the founder’s shares. Because of the unusually tight ties between the CEO and his customers, the ESOP trustees and the bank were concerned about his premature death or disability, which it felt would have disastrous effects on the company and its ability to repay the debt. The risk of premature death could be mitigated with the acquisition of a $7.5 million life insurance policy, which was partially assigned to the bank. But the corresponding request for $7.5 million of disability protection was a major challenge because most traditional insurance carriers had neither the capacity nor the appetite to take on that much risk on a selling shareholder. Once it came to light, however, that such a key man disability policy did exist that would protect the $4 million bank loan and, in the event of a catastrophic disability, pay out an additional $3.5 million to the company to cover additional obligations relative to the ESOP transaction, the company was appropriately positioned. Steiker isn’t surprised that ESOP transactions are far different and more complex than many other business dealings. “In conventional companies that don’t have ESOPs and don’t have high amounts of leverage, corporate risk management typically doesn’t address the disability of a key executive,” says Steiker. “In an ESOP company with significant leverage and emerging repurchase obligations, corporate risk management should focus on both mortality and disability risk in connection with key executives and/or ESOP participants with significant account balances.” He points out that it’s often key shareholders who are also key executives who finance ESOP transactions. “If a key selling shareholder/executive becomes disabled,” he notes, “the corporation’s ability to generate the income to pay the ESOP seller’s financing debt may suffer. This is bad for the corporation and bad for the selling shareholder and is why disability insurance covering a selling shareholder/ executive in an ESOP transaction may be important.” That coverage also has to fit an ESOP’s particular situation. As Steiker sees it, with newer ESOP transactions, it’s important to have disability insurance that focuses on coverage around the key seller/ executive who is providing the financing. While for older more mature ESOPs, the focus should be on participants with large account balances. In the ESOP world, as in real life, death is inevitable, while disability is, unfortunately, is an even more likely occurrence. With the ESOP Association reporting that there are approximately 11,500 existing ESOPs in the U.S., covering 10 million employees, with total assets estimated at $901 billion, there’s an enormous potential risk should a major player go down. “If I am selling an investment to my customers, I would do everything I can to protect that investment against a significant loss,” says Finnell. “I would want to protect that nest egg any way I can.” No company, ESOP or otherwise, wants to get blindsided by unforeseen circumstances. So if you equate the successful performance of an ESOP to the high performance of a star quarterback, then think of disability insurance as that hulking right tackle protecting his blindside from the potential of a financial sacking. Edward A. (Ted) Tafaro, president and CEO of Mahwah, N.J.-based Exceptional Risk Advisors LLC, is an expert on high-limit specialty life, accident and disability products for clients with extraordinary insurance needs, including celebrities, athletes, entertainers, highly compensated executives and professionals. By partnering with Lloyd’s of London syndicates, his firm has the largest binding authority available in the U.S. for its products. For more information, contact him at (866) 512-0444.

• Faustina restaurant, Salt Lake City, has introduced a $12 lunch menu Monday through Friday. Everything on Faustina’s menu is $12 and multiple options abound from executive chef Billy Sotelo’s fall harvest menu. Reservations are highly suggested.

RETAIL

• Backcountry.com, a Park City-based online retailer of outdoor gear, has broken ground for an East Coast fulfillment center in Christiansburg, Va. It is slated to open next summer and will be about the same size as the firm’s current fulfillment center in West Valley City. • Golden Braid Books, Salt Lake City, will offer discounted psychic readings Oct. 28-31 in observance of Halloween and Day of the Dead. Psychic readings will be offered for 30, 40 or 60-minute sessions at a 10 percent discount for the four days and will be offered from 10 a.m. to 9 p.m. each day except Sunday Oct. 30, when the store closes at 6 p.m. • Middle market retail executives are bearish on a short-term U.S. economic recovery, even though many expect their own companies to improve faster than the industry, according to the third annual Retail Finance Outlook study released by CIT Group Inc. a provider of financing to small businesses and middle market companies. While a majority of retail executives expect business to improve in the coming months, they remain cautious when it comes to increasing staff levels, building inventory and assessing the availability of credit, especially for their customers.Retail executives remain pessimistic about the U.S. economy, with three-quarters expecting the crisis to extend into 2012 or beyond. A return to growth in the financial markets is also seen as taking some time, as 58 percent of retail executives don’t see growth resuming until

SCIENCE

• Lifetree Clinical Research, a Salt Lake City specialized clinical research organization, has expanded its in-patient capacity from 60 to 75 beds in the early stage research unit at its 35,000 square foot facility at 700 E. 3838 S. 700 E. The expansion represents a greater than 100 percent increase

in size since Lifetree Clinical three racing championships, with Research was founded in 2003 at races being broadcast live over 97 the same address as a 5,000 square television networks to 176 counfoot facility with eight beds. The tries with each race being seen by 25 percent increase in beds will 120 million viewers. The BigM allow Lifetree to conduct larger Weekend will be the only appearPhase I clinical research studies ance in the Western Hemisphere and support expansion into early for the FIM Superbike World stage research in new therapeutic Championship. Support races for TT182961 Job such No.: as experimental areas human the weekend will be announced in Salt Lake UT models, Alzheimer’s hep- City, the near future. Engagement City:disease, atitis C and broadened neuropsyMedia: chiatric capabilities. TRANSPORTATION Insertion Date(s): • Million Air Salt Lake SPORTS/RECREATION City, Utah’s largest provider of • The first major event of general aviation services, has 2012 at Miller Motorsports Park been selected by NetJets Inc., in Tooele Valley will be the sev- a Berkshire Hathaway company enth annual Utah Grand Prix, and the worldwide leader in scheduled for the weekend of private aviation, as the FBO of the April 28-29. The headline attrac- Year for 2011. NetJets presented tion for the event will be the stock cars of the NASCAR K&N Pro Series West, making its sixth appearance at Miller Motorsports Park. Support races for the weekend will include the IMSA GT3 Cup Challenge by Yokohama and Cooper Tires Prototype Lites Powered by Mazda, with other support races to be announced in the near future. Tickets are on sale now. The park’s biggest event of the year returns on Memorial Day weekend, May 26-28, with the FIM World Superbike BigM Weekend. As has been the case for the past two years, Utah’s Memorial Day tradition will feature motorcycles, music and military tributes with the feature races taking place on Memorial Day Monday, May 28. The FIM Superbike World Championship remains one of the world’s top

Million Air Salt Lake City with the NetJets Service Excellence Award, a credit bestowed to the FBO that best meets NetJets needs for safety, service, reliability, effi ciency, facilities, amenities, and maintenance capabilities. • Utah motorists and others who drive vehicles powered by clean-burning natural gas can now Ad Size: avail themselves of a new CNG Section: (compressed natural gas) fueling station called Mountainland One Stop at 1175 S. Main St. in Heber City. Now there are 34 publicaccess CNG stations in the state of Utah, in addition to the 50plus stations located at various businesses where ﬂ eet vehicles refuel with natural gas.

FELD ENTERTAINMENT

STATEMENT OF OWNERSHIP, MANAGEMENT AND CIRCULATION Publication Title: The Enterprise Publication Number: 891-300 Filing Date: 10-24-2011 Issue Frequency: Weekly Number of Issues Published Annually: 52 Annual Subscription Rate: $65 Complete Mailing Address of Publication: 825 N. 300 W. Ste. C309 Salt Lake City, UT 84103 Contact Person: David Gregersen Telephone: (801) 533-0556 Complete Mailing Address of Headquarters or General Business Office of Publisher: 825 N. 300 W. Ste. C309, , Salt Lake City, UT, 84103 Full Names and Complete Mailing Addresses of Publisher, Editor and Managing Editor: Editor: Barbara R. Rattle P.O. Box 11778 Salt Lake City, UT 84101

Publisher: R. George Gregersen P.O. Box 11778 Salt Lake City, UT 84101

Managing Editor: none

Owner: Enterprise Newspaper Group Inc., P.O. Box 11778, Salt Lake City, UT 84101 Known Bondholders, Mortgagees and Other Security Holders Owning or Holding 1 Percent or More of Total Amount of Bonds, Mortgages or Other Securities: none Tax Status: Has Not Changed During Preceding 12 Months Publication Title: The Enterprise Issue Date for Circulation Data Below: 9-30-2011

©Disney

RESTAURANTS

2013 or later. Retail executives remain cautiously optimistic about their outlook for the coming 12 months. Nearly 60 percent predict sales will either grow (51 percent) or grow significantly (8 percent), with just 9 percent of executives predicting a sales decline in the next 12 months. Nearly threequarters of executives see sales improving slightly (38 percent) or staying about the same (36 percent) as last year for the overall holiday season. Sensing that price-conscious consumers will be looking for bargains this year, 37 percent of executives predict an increase in last-minute shopping, while 38 percent expect postChristmas shopping days to be stronger. On a related note, nearly half of executives believe both broad discounting and the price of fuel will be driving factors in consumers’ decision to spend. • Fongo Bongo Games, a new game store specializing in family board games, has opened for business at 1751 W. 12600 S., #100, Riverton. Store hours are Monday through Saturday, 11 a.m. to 9 p.m. and plans are being made for gaming nights and tournaments.

Extent and Nature of Circulation Average No. of Copies Each Issue During Predecing 12 Months Total No. of Copies Mailed Outside-County Paid Subscriptions Stated on PS Form 3541 Mailed In-County Paid Subscriptions Stated on PS Form 3541 Paid Distribution Outside the Mails Including Sales Through Dealers and Carriers, Street Vendors, Counter Sales and Other Paid Distribution Outside USPS Paid Distribution By Other Classes of Mail Through the USPS Total Paid Distribution Free or Nominal Rate Outside-County Copies Included on PS Form 3541 Free or Nominal Rate In-County Copies Included on PS Form 3541 Free or Nominal Rate Copies Mailed at Other Classes Through the USPS Total Free or Nominal Rate Distribution Outside the Mail Total Free or Nominal Rate Distribution Total Distribution Copies Not Distributed Total Percent Paid

The Magic Begins at $12 for Opening Night Tickets!*

No. Copies of Single Issue Published Nearest to Filing Date 2,279 476 1,391

5 3 1,875 41 118 2 0 161 2,036 130 2,166 92.09

Total No. of Copies Mailed Outside-County Paid Subscriptions Stated on PS Form 3541 Mailed In-County Paid Subscriptions Stated on PS Form 3541 Paid Distribution Outside the Mails Including Sales Through Dealers and Carriers, Street Vendors, Counter Sales and Other Paid Distribution Outside USPS Paid Distribution By Other Classes of Mail Through the USPS Total Paid Distribution Free or Nominal Rate Outside-County Copies Included on PS Form 3541 Free or Nominal Rate In-County Copies Included on PS Form 3541 Free or Nominal Rate Copies Mailed at Other Classes Through the USPS Total Free or Nominal Rate Distribution Outside the Mail Total Free or Nominal Rate Distribution Total Distribution Copies Not Distributed Total Percent Paid

3,072 691

NOV. 9 - 13

2,203

0 6 2,900 61 108

Thu. NOV. 10

Fri. NOV. 11

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7:00 PM

4:00 PM 7:30 PM

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Sun. NOV. 13 1:30 PM 5:30 PM

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0 172 3,072 172 3,244 98.29

Signature and Title of Editor, Publisher, Business Manager or Owner: R. George Gregersen, Publisher, 10-24-11

Wed. NOV. 9

*Excludes Rinkside and VIP seats. No double discounts. Additional fees may apply.

EnergySolutions Arena Box Office or call 1-800-888-TIXX Regular Ticket Prices: $13 • $16 • $23 • $35 VIP • $50 Rinkside 182961

from page 10 his commercial real estate career. Dunn is a licensed broker in a number of states and will specialize in distressed property acquisition and redevelopment at CBC. Since 1981, Williams has built a progressive career in the development, acquisition, asset management, brokerage and divestiture of large-scale commercial real estate properties, and has had direct involvement in the brokerage of more than $350 million in investment property. At CBC, Williams will concentrate on investment sales across all disciplines of commercial real estate, as well as offer his expertise in development services.

The Enterprise

Oct. 24-30, 2011

Additional fees may apply.

3 E

LOI

how much due diligence he wants to do, and things like that. The LOI gets the ball rolling and gives the seller a reference point if the ● How and when the pur- buyer comes back and makes an offer that is significantly different chase price will be paid. ● Confidentiality of informa- than what is set out in the LOI. An LOI may have several tion relating to the business or the contractually binding sections. proposed sale. ● Special tax or accounting It may contain provisions that prevent the buyer from stealing considerations. ● Conditions to completing a confidential information and it transaction, such as buyer’s satis- may grant the buyer a period of faction with the results of his due exclusivity during which he is the diligence, approval of a loan by only party with whom the seller the buyer’s lender, and the par- can negotiate. Otherwise, an LOI ties signing a definitive purchase should clearly state that the LOI is an expression of intent only and agreement. Negotiation of an LOI shows that entering into a definitive purthat the buyer is serious. A detailed chase agreement is a condition to LOI lets the parties make a moral selling the company. Typically, an LOI will recite commitment to the deal before either side wastes the other’s time. the structure of the transactionSellers want to know more about deal structure. The goal of a busithe buyer and get a chance to size ness sale is to put the purchase him up. Is he serious or just kick- price in the pocket of the seller ing the tires? Or worse, is he nos- and control of the company in the ing around to steal customer lists hands of the buyer. The method and other trade secrets? If the LOI employed to accomplish that task says the buyer will pay a million is often referred to as the deal form dollars for the business, the seller or deal structure. There are three will want to know where the buyer basic deal forms: stock purchase, is getting the money. They want to asset purchase, and merger. From know when he expects to close, the standpoint of transferring a

from page 10

Oct. 24-30, 2011

The Enterprise business, none of the three basic forms is better than the other two. Each form will allow the seller to be paid the negotiated value of the business and allow the buyer to take control. There are multitudes of variations of each. The structure of the transaction depends upon many factors including the nature of the business, the needs of the buyer and the seller, and many other issues, not the least of which is the tax treatment afforded the deal. This is a very basic overview of deal structure intended to throw some light on the subject for letter of intent purposes. Stock Purchase In a stock purchase, the shareholders of the target company transfer all of their shares of stock to a buyer for cash or other consideration. The buyer takes the target company with its liabilities intact, and the title to the assets of said company remains unchanged. For a stock purchase to work, all of the shareholders of the target company may have to agree to sell their stock. Upon the sale and transfer of target company stock, ownership is transferred under principles of state corporate law

because the buyer becomes the sole shareholder of the target company with all the rights, duties, and powers that the selling shareholders previously had. In other words, the buyer steps into the shoes of the previous shareholders, and all the previous assets and liabilities of the company remain with the company. Generally speaking, a stock sale is probably the least complicated of the three types of deal structures. A stock sale can be taxable to the seller at the time of the transaction or taxes can be deferred if structured properly and certain requirements are met. Asset Purchase In an asset purchase, the target company sells certain assets to the buyer. The buyer may also assume certain liabilities of the target company, although it doesn’t have to and may want to intentionally avoid certain liabilities. During the purchase, the buyer can pick and choose certain assets and liabilities of the target company instead of taking everything, as in a stock purchase. An asset sale does not result in a change of ownership of the target company. After the assets have been sold, however, the principal shareholders of the target company often liquidate or dissolve the company and distribute the cash received from the sale of the assets. An asset sale requires the target company to convey each piece of property or asset to the buyer to the extent such assets can be assigned. Sometimes certain business assets cannot be transferred, like a lease or franchise agreement, without the consent of a third party. The inability to obtain such third party consents may preclude structuring a deal as an asset sale. Merger A merger is a creature of state corporate law. Mergers involve a vote of the shareholders, which results in the merging of one corporate entity into or with another corporate entity. If the deal is structured as a merger, the target company shareholders will surrender their stock in exchange

for stock or cash or other consideration. After the merger, the target company shareholders will no longer own shares of the target company. The target company will either be merged into the buyer’s company or a subsidiary of the buyer’s company or vice-versa. Choosing the Deal Structure There is no “best” way to structure a deal, but it’s important to know the different options. What may be best for the seller may not be what the buyer wants. Similarly, the deal structure proposed by the buyer may have some disadvantages for the seller. It is critical to understand the distinctions between the various types of deal structure before proposing one or accepting the other party’s proposal on deal structure. Ultimately, the contents of the LOI, including the choice of structure, depend on a lot of issues, including the type of business, the state law in which a business is incorporated, and tax treatment. Rather than delegating the determination of these to a business broker, the best thing a business owner can do to effectively draft an LOI and choose the correct deal structure is to involve a lawyer and an accountant. Not only will they be able to provide expert advice, they will also help ensure the smooth sale of a business and protect sellers against potential legal pitfalls. J. Scott Hunter is a shareholder and director at the law firm of Clyde Snow & Sessions in Salt Lake City. He chairs Clyde Snow’s Business and Transactions Practice, using his extensive experience in capital market transactions and start-up companies to provide expert legal representation for clients in matters involving securities, mergers, business planning, complex financing, and compliance. Hunter is a member of the Alliance of Acquisitions Advisors and co-authored a book on related topics entitled, Selling Your Business: How to Sell a Business in Good and Bad Times (BusinessZone Press, 2010). Reprinted with permission. This article was summarized from the book Hunter co-authored.

                                            

                          

                    

 



Oct. 24-30, 2011

• Oct. 25, 8 a.m.-noon: “Dramatically Better Decisions — Every Day,” presented by The Employers Council. Niel Kickolaisen, vice president at EnergySolutions Inc., will teach participants how to harness the power of better decision-making by using his proven decision-making model. Topics to be covered will include decision-making as a process, business value model, purpose alignment, considerations, costs and benefits, application to strategic planning and hands-on application using exercises and case studies. Location is the Radisson Hotel, 215 W. South Temple, Salt Lake City. Cost is $129 for council members, $209 for nonmembers. Price includes materials, full breakfast and parking. Download the registration form at http://ecutah.org/decisions. pdf. • Oct. 26, 11 a.m.-2:30 p.m.: The Building Owners and Managers Association (BOMA Utah) Medical Office Building Symposium. Attendees will explore the dynamic trends that emerge when health care and real estate intersect. Speakers will discuss the key trends and drivers of health care as an industry — from uncertainty about health care reform, to how the state of Utah is working to curb health care costs, to constant pressure on physician’s and health care system’s bottom lines. Location is The Tower at Rice Eccles Stadium, 451 S. 1400 E., Salt Lake City. Cost is $35 for BOMA members and their guests, $60 for nonmembers and visitors. Register at www.BOMAUtah.org. • Oct. 27, 8:30 a.m.-4:30 p.m.: InsideOut Coaching Workshop, presented by InsideOut Development. Attendees will learn how to implement a simple and

The Enterprise

repeatable coaching process which can be applied in a variety of situations; coach others to recognize their true talents and apply them towards greater performance; assist others to maximize potential by creating awareness, setting goals, and creating focused action; help others develop action plans to increase performance, establish accountability and increase productivity, navigate difficult conversations with more confidence and greater accountability; and communicate feedback in fast and effective ways. Location is the Grand America Hotel, 555 S. Main St., Salt Lake City. Cost is $449. Register at www.insideoutdev.com. • Oct. 28-29: Women in Business Conference, sponsored by the BYU Management Society and the Marriott School of Management at BYU. Keynote speakers will be Cathy Chamberlain, managing director of market strategy for Deseret Book Co.; Linda Daines, managing director for private client services at Goldman Sachs; and Jan Saumweber, senior vice president of Global WalmartTeam Sara Lee Corp. There will also be a number of breakout sessions and speakers. The Oct. 28 events run from 5:309 p.m. while the Oct. 29 events run from 7:30 a.m.-4:15 p.m. Location is the BYU campus in Provo. Cost varies depending on number of events attended. Registration deadline is Oct. 14. For more information and to register, visit www.wibc.byu.edu. • Nov. 2, 8:30 a.m.-1 p.m.: Global Commerce Conference, sponsored by MultiLing Corp. Guest Speaker will be Lee Daniels, former President and CEO, AT&T Japan. A panel discussion will include Brian Chandler, vice

• Calendar • president of business development and technology at MultiLing Corp.; Andrew Lewis, consul and head of trade for UK Trade and Investments; Nate Siefert, commercial officer at U.S. Commercial Service; Brett Heimburger, director for Asia at the Governor’s Office of Economic Development; Kent Millington, director of technology commercialization at Utah Valley University; Chris Boyle, president and CEO of Access Technology Solutions; and Warren Osborn, CEO of SPAR. Location is Noah’s, 322 W. 11000 S., Room 100, South Jordan. Free. Register at http://2011globalcommercecon ference.eventbrite.com. • Nov. 4, 7 p.m.: Utah Technology Council 2011 Hall of Fame Gala. Keynote speaker will be Larry Ellison, founder and CEO of Oracle Corp. Location is the Grand America Hotel, 555 S. Main St., Salt Lake City. A networking session will begin at 6 p.m. Cost is $300 for UTC members, $450 for nonmembers. Register at www.utahtech.org. • Nov. 5, 6 p.m.: Utah Manufacturers Association 106th Annual Awards & Installation

Banquet. Utah’s Manufacturer of the Year will be honored. Location is the Little America Hotel, 500 S. Main St., Salt Lake City. Cost is $85 per person or $750 per table, maximum 10 persons. Register at www.umaweb.org or by calling Teresa Thomas at (801) 3633885. • Nov. 10, 8-9:30 a.m.: “Ethics in Leadership: How Putting People First Produces Profitability Best,” sponsored by the Utah Technology Council. UTC CEO David Williams, CEO of Fishbowl, and Mary Scott, president of Fishbowl, will share the lessons learned from their recent company buyback that show how integrity in leadership actually pushes companies farther in meeting their profitability goals. They will provide specific help companies can use to become more successful, both this year and beyond. Location is the Rose Room at Thanksgiving Point, 3003 N. Thanksgiving Way, Lehi. Cost is $25 for UTC members, $50 for nonmembers. Register at www. utahtech.org. • Nov. 15, 7 p.m.: “Climate Capitalism: The Business Case

for Sustainability,” presented by Westminster College and the Utah Council for Citizen Diplomacy. The lecture will be presented by L. Hunter Lovins with sustainability expert Dr. Boyd Cohen. They will tell the stories of inventors, major corporations, communities and Main Street businesses that are cutting their costs, driving innovation, inspiring their employees and building prosperity by investing in energy efficiency and renewable resources. Trained as a sociologist and lawyer, Lovins is also professor of business at Bainbridge Graduate Institute and the chief insurgent of the Madrone Project. Recipient of such honors as the Right Livelihood Award, Lindbergh Award, and Leadership in Business, she was named Time magazine 2000 Hero of the Planet and in 2009, and Newsweek dubbed her a “Green Business Icon.” Lovins has consulted for scores of industries and governments worldwide. Location is the Vieve Gore Concert Hall in the Emma Eccles Jones Conservatory at Westminster College, 1840 S. 1300 E., Salt Lake City. Free.

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The Enterprise

Oct. 24-30, 2011

The Enterprise

Utah on the Rise Wreckers or Builders? By Chris Hipwell, president Associated Builders and Contractors, Utah Chapter

In today’s article we explore the career opportunities of a project superintendent in the construction field. Project superintendents are the frontline managers on the job, directly supervising laborers, craftsman and all other disciplines. They drive the effectiveness and efficiency of the project. They can make or break a project. Superintendents need more than field experience to successfully fulfill their role. They also need management skills in problem solving, planning, communication, quality control, estimating, safety supervision, scheduling, controlling costs and resources and, perhaps most important, managing people. Wayne Hayes, project superintendent for Cameron Construction, talks about his beginning in the construction industry, his philosophy on attitude and the work ethics passed to him by his grandfather.

Hayes Please describe your career path as a project superintendent and how did you get started in the industry. My career path to project superintendent began when I was a youngster. My family consisted of builders engaged primarily in residential homes. Carpentry was a way of life and I believed that everyone knew how to read a tape and drive a nail. Geometry and algebra were all around me. Applying what I had learned to be able to figure concrete, hip and valley rafters, squaring up walls with let in wood sway brace, rise and run of stairs, and later on tracking costs was just the beginning. As I continued on with my carpentry trade, I also learned from other craftsmen and I depended on many trades and they depended on me too. Excavators, electricians, plumbers, lathers, roofers etc., were all were embedded into a project until it was completed. This was my beginning in the construction industry, and

when I was 22 and going to college, I was deemed qualified to be a building inspector for Weber County. I did this for three years before I entered construction once again. I have been working in construction since then, and have enjoyed the challenges most of the time and the headaches all of the time and most of the jobs I have done have had a significant degree of satisfaction. My experience encompasses a broad array of building types including Jack B Parson Corporate Office & Shops; Cactus Pete’s Hotel and Casino; Zions Summit condominiums; Roy High School Gymnasium & Auditorium; public safety building, firing range, culinary arts building, post dormitory at Salt Lake Community College; Maple Springs assisted independent living facility; and numerous LDS chapels in Utah and California, just to name a few. Why do you think training and education are important to the construction industry? Opportunities for continued growth are everywhere. Thirty years ago who would have believed a computer would be a necessity in our line of work? LEED accreditation, new materials and technology are everywhere. Educating one’s self on how to use new materials properly and safely require special training. MSDS, SWPPP, Safety, Sure Track, Fast Track, Expedition, Construct Ware and public awareness are a just a sampling of what we are expected to know more. The fast changing pace of technology requires more all of the time. How do you feel that you positively impact your company and/or the construction industry? What type of optimism we have depends on our expectations. We expect that things will work out well among the crafts. We believe that success is inevitable and that our experiences will be positive. And with a lot of hard work and some really good luck, generally these expectations come true. I have a sign I hang over my desk that states simply [B+]. Most everyone asks me what is so great about a grade of B+. I tell them the sign states B Positive. I use this to help me through difficult situations. Attitude is more important than successes, skills, education,

money or appearances. We are in charge of the attitude or misery on the project. Why would you recommend your career path to someone who is thinking about the construction industry as a career path? I have noticed that currently there are fewer and fewer men and women entering the construction field. My advice to anyone who is the least bit interested is not to delay in choosing a field and pursuing it. There are always places for anyone who has a skill. I heard a talk show the other day stating that for every 10 skilled welders retiring, only one is going into the field. Maintenance opportunities are in every building for plumbers, electricians, HVAC technician, painters, etc. The opportunities continue even after the building is completed. Please describe the responsibilities of your position. To describe my position is easy: controlled chaos. My role is to bring order to the chaos. Chaos is everywhere you look. People are coming and going, the phone is ringing. Demands and requests are coming at you and e-mails —

oh the e-mails that I need to get to. There are RFIs (request for information) and daily reports to process. Even though you try to be fair to everyone in interpreting the contract it never fails that I am a hero to one and a bully to someone else. However, to accept that there is a solution to every situation and an opportunity to find that solution is the role I embrace. At the end of the day, every day, I am glad I am here to help solve those issues. At the end of the day I leave a satisfied and happy person looking forward to the next challenge. Here is a little poem that I often refer to which my grandfather gave to me many years ago. It still brings my mind in to focus. Wrecker or Builders I watched them tearing a building down A gang of men in a busy town With a ho-heave ho and a mighty yell They swung a beam and a sidewall fell. I asked the foreman “Are these men skilled, “As the men you hired if you had to build”?

He gave me a laugh and said “no indeed”! Just common labor is all I need. I can easily wreck in a day or two What builders have taken a year to do. And I thought to myself as I went away, Which of these roles have I tried to play? Am I a builder who works with care? Measuring life with a rule and square? Am I shaping my deeds by a well made plan? Patiently doing the best I can? Or, am I a wrecker who walks the town, Content with the labor of tearing down? — Unknown

Associated Builders and Contractors (ABC) is a national association with 74 chapters representing 23,000 merit shop construction and construction-related firms. For more information call (801) 708-7036 or visit www.abcutah.org.

The tax hikes that Republicans love From the tea parties to the invoked by politicians unworthy corporate boardrooms to the presi- of his legacy. dential debate platforms, we hear However piously they cite a familiar droning whine about the Gipper as their idol, the taxes — except the angry mes- Republican candidates for presisage is no longer simply that taxes dent seem united in their desire are too high. Today, conserva- to repeal the earned income tax tive politicians and puncredit, which he justly dits complain instead that praised in 1986 as “the some people, namely those best anti-poverty, the too poor to owe federal best pro-family, the best income taxes, aren’t paying job creation measure to enough. So what if those come out of Congress.” people can scarcely sustain Now, Reptheir families, like the milublican politicians lions of middle-class famiincreasingly reject the lies doing slightly better Joe Conason earned income credit but struggling, as well? as an immoral form This is the Democratic of “welfare,” because “fairness” argument turned upside its provisions have helped to down, which may prove to have ensure that roughly 47 percent of limited appeal. What will appeal to Americans pay no federal income most Americans even less are the tax, with the poorest receiving a proposed Republican solutions, modest rebate, instead. That stalike a national sales tax. And what tistic has been distorted all too might surprise them is that the often into the false assertion, usufirst president to expand tax relief ally uttered on Fox News Channel for the working poor was that or right-wing talk radio, that the almighty Republican icon, Ronald poorer half of the nation’s populaReagan, whose name is constantly tion “pays no taxes.”

Oct. 24-30, 2011

The Enterprise

Of course the working poor pay lots of taxes. In fact, they tend to pay more as a share of their income than the very rich, plenty of whom do not work at all. The poor pay state and local income tax as well as sales taxes, gas taxes and utility taxes, but above all they pay Social Security and Medicare taxes on the very first dollar of income they earn (and on every dollar up to the $106,000 ceiling that shelters the income of higher earners). To suggest that the working poor receive government benefits without paying anything is a brazen lie. Aside from the earned income credit, there is another very basic reason why the working poor don’t pay income taxes. After decades of falling wages and rising inequality, they literally cannot afford it. As the noted economics reporter David Cay Johnston explained last April 15, the average annual income among the bottom half of American taxpayers was around $15,000. With

the first $9,350 exempt from federal income tax for single people, a figure that rises to $18,700 for married couples, millions of households don’t earn enough to owe anything to the IRS. At the same time, Johnston pointed out that many of the wealthiest families in the country also pay no taxes thanks to loopholes such as the “carried interest” provision, which Republicans fight ferociously to preserve against “socialist” demands that bankers and investors pay the same rate as their secretaries and janitors. Although polls show that most Americans — including most Republican voters — strongly favor raising rates on the wealthiest taxpayers, the GOP leadership is sworn to prevent any such reform. Rather than close the grossest loopholes and deductions exploited by billionaires, Republican politicians want to punish all those families living large on $300 a week by taxing them more.

One way to do that — favored by House Budget Chairman Paul Ryan, R-Wis, and presidential candidate Herman Cain, among others — is to impose a national sales tax or value-added tax. The result, as any tax expert could explain, would shift the national tax burden even further from the wealthy to the working poor and middle class. It is their form of class warfare. And unless the rates were much higher than proposed in Cain’s “9-9-9” plan or Ryan’s original budget, a sales tax would increase deficits and debt instead of reducing them. Why millionaires like Ryan and Cain favor such schemes is obvious enough. What is far less obvious is why they can still pretend that they revere Reagan — or that they want to cut taxes for anybody except themselves. Joe Conason is the editor in chief of NationalMemo.com. Copyright 2001 Creators.com.

Oct. 24-30, 2011

The Enterprise

Random thoughts on the passing scene Random thoughts on the Radical feminists seem to passing scene: assume that men are hostile to Like so many people in so women. But what would they say many countries who started out to the fact that most of the women to “spread the wealth,” Barack on the Titanic were saved, and Obama has ended up spreading most of the men perished — due to poverty. rules written by men and enforced Have you ever heard by men on the sinking anyone as incoherent as ship? the people staging proIf he were debating tests across the country? Barack Obama, Newt Taxpayers ought to be Gingrich could chew protesting against havhim up and spit him ing their money spent to out. educate people who end Whether the particular Thomas up unable to say anything issue is housing, mediSowell beyond repeating political cal care or anything in catch phrases. between, the agenda of It is hard to understand poli- the left is to take the decision tics if you are hung up on reality. out of the hands of those directly Politicians leave reality to others. involved and transfer that decision What matters in politics is what to third parties who pay no price you can get the voters to believe, for making decisions that turn out whether it bears any resemblance to be counterproductive. to reality or not. It is truly the era of the I hate getting bills that show New Math when a couple making a zero balance. If I don’t owe $125,000 a year each are taxed at anything, why bother me with a rates that are said to apply to “milbill? There is too much junk mail lionaires and billionaires.” already. On many issues, the stron-

gest argument of the left is that there is no argument. This has been the left’s party line on the issue of man-made global warming and the calamities they claim will follow. But there are many scientists — some with Nobel Prizes — who have repudiated the global warming hysteria. With professional athletes earning megabucks incomes, it is a farce to punish their violations of rules with fines. When Serena Williams was fined $2,000 for misconduct during a tennis match, that was like fining you or me a nickel or a dime. Suspensions are something that even the highestpaid athletes can feel. Most of us may lament the fact that so many more people are today dependent on food stamps and other government subsidies. But dependency usually translates into votes for whoever is handing out the benefits, so an economic disaster can be a political bonanza, as it was for Franklin D. Roosevelt. Don’t count Obama out in 2012.

Politicians can solve almost any problem — usually by creating a bigger problem. But, so long as the voters are aware of the problem that the politicians have solved, and unaware of the bigger problems they have created, political “solutions” are a political success. Do people who advocate special government programs for blacks realize that the federal government has had special programs for American Indians, including affirmative action, since the early 19th century — and that American Indians remain one of the few groups worse off than blacks? I hope the people who are challenging Obamacare in the Supreme Court point out that the equal application of the laws, mandated by the 14th Amendment to the Constitution, is violated when the president can arbitrarily grant hundreds of waivers to the Obamacare law to his political favorites while everyone else has to follow its costly provisions. People who live within their

means are increasingly being forced to pay for people who didn’t live within their means — whether individual home buyers here or whole nations in Europe. Regardless of how the current Republican presidential nomination process ends, I hope that they will never again have these televised “debates” among a crowd of candidates, which just turn into a circular firing squad — damaging whoever ends up with the nomination and leaving the voters knowing only who is quickest with glib answers. Have you noticed that we no longer seem to be hearing the old familiar argument that illegal aliens are just taking jobs that Americans won’t do? Thomas Sowell is a senior fellow at the Hoover Institution, Stanford University, Stanford, CA 94305. Copyright 2011 Creators.com

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Headquartered in Utah for 25 years, Lifetime manufactures outdoor products including kayaks, basketball hoops, folding tables and sheds. From left: Robert Adams, vice president of plant engineering, and Richard Hendrickson, president.