Ryan Cos. lands $88M Whipple rehab job: Ryan Cos. won an $88 million construction-management contract for the Bishop Henry Whipple Federal Building at Fort Snelling. The project gives Minneapolis-based Ryan the largest share of one of the largest construction projects, public or private, in the Twin Cities pipeline today. Read full story

Petters: Employees 'set me up'; closing arguments Monday: Tom Petters' testimony in his own defense wrapped up this morning, with Petters claiming that former employee and key government witness Deanna Coleman set him up with “prefabricated questions” in secretly recorded conversations. Read full story 

FICO loses credit score trademark fight: Minnetonka-based Fair Isaac Corp., also known as FICO, lost its lawsuit today against some of its competitors over the use of credit scores. A federal district court jury in Minneapolis ruled in favor of the defendants Costa Mesa, Calif.-based Experian Information Solutions Inc., Chicago-based Trans Union and Stamford, Conn.-based VantageScore Solutions. FICO said it plans to appeal the ruling. Read full story

Target, General Mills, 3M rank on Fortune's 'leadership' list: Fortune magazine released its 2009 list of Top Companies for Leaders, and it included several local corporations. The highest-ranked Twin Cities-based company was General Mills, which came in third in the Global Top 25. 3M Co. was 16th, and Cargill placed 17th. Read full story

Shubert Theater renovation begins: Minneapolis city officials Thursday celebrated the start of construction on the Shubert Theater renovation project on Hennepin Avenue in downtown. Read full story

Cafe Brenda closing Warehouse District restaurant: Cafe Brenda, a vegetarian-themed restaurant in the Minneapolis Warehouse District for the past 23 years, is closing. Owner Brenda Langton announced her decision on the restaurant’s website. Read full story

Minnesota property tax levies up 3.5% in 2010: Minnesota taxpayers will see, on average, a 3.5 percent increase in their property tax rates if proposed tax levies are adopted later this year, according to the Minnesota Department of Revenue. Read full story

ADC Q4 sales down 37 percent, stock slides after hours: ADC Telecommunications on Thursday reported sales of $183.9 million for its fourth quarter of fiscal 2009, down 37 percent from the same period a year earlier. Fourth-quarter net loss was $19.8 million, or 20 cents per share. Read full story

“Diversify or die!” was the mantra in 2001, when Custom Fab Solutions was created as a spinoff from semiconductor equipment manufacturer FSI International.

Applying its custom fabrication and plastics machining expertise to new industries and customers, the privately held Chanhassen-based company moved into bio-pharmaceuticals, food and beverage, solar energy and disk drive markets, as well as the core semiconductor market.

But when the recession hit in 2008, the company, with revenue in the range of $10 million, had to learn some new tricks as well.

“Stay lean,” “think global” and “hire carefully” have all been added to the lexicon, according to Larry M. Vortherms, VP and general manager. Vortherms was speaking Thursday in St. Paul on a Minnesota Chamber of Commerce panel titled “Surviving the Recession: Ready to Grow.”

As they saw orders soften, the company started adjusting.

A financial controller by training, Vortherms focused on conserving cash and maintaining positive cash flow. Management took voluntary pay cuts of 25 to 50 percent and imposed lesser cuts on rank-and-file employees. They instituted furloughs and reduced hours, renegotiated credit agreements and leases, scrutinized vendors and scrubbed operating expenses.

At the depth of the recession earlier this year, revenue was off 60 percent from the previous year. Now as they see signs of some hope, revenue is “only” off 25 percent.

The recession also forced employees to take on multiple roles.

“We’re small, we’re lean. We all wear many new hats,” Vortherms said. “If you try to do things like you did two or three years ago, you won’t survive. You’ve got to focus on service,” as well as cost and quality, he said.

With inventories low and supply chain extended, his customers are demanding shorter delivery times, making the current environment “very, very challenging,” he said. “It’s made us a better company. We realize we have to react quickly to market changes. No job is too small.”

Even a small company “has to understand you’re dealing with a global economy. The business is outside the U.S. so you have to sell outside the U.S.”

Not only are his customers overseas but so are his competitors. He recalled a bid where they could not meet the customer’s cost requirement so the product went to an Asian competitor.

The recent unemployment numbers show Minnesota unemployment continues to rise. If Custom Fab’s experience is any indication, the path to employment growth will be slow indeed.

Custom Fab’s employment rolls had peaked at 52 and hit a low of 31 earlier this year with an additional 10 on furlough at the nadir. They were able to retain four key engineering positions with funding from a Pohlad Family Foundation grant. The foundation had created a $5 million pool in April to help small businesses retain jobs and plan for future growth.

Employment is now back up to 47, and the firm is looking to hire three key positions that are revenue-related: a designer/bidder, a quality engineer and an operations and facilities manager who will free up Vortherms, currently playing that role as well as his business management role.

He expects to see a pickup beginning in mid-2010, but as demand picks up, the company will be “careful to hire,” he explained. Instead of hiring permanent production workers, they intend to meet rising production needs with contract employees.

Vortherms passed an unexpected test in flexibility and keeping one’s cool recently when both the Minnesota Occupational Safety and Health Administration and Hennepin County Environmental Service inspectors showed up unannounced on the same day.“We made it through OK,” he deadpanned.

Cross-examination of Tom Petters begins: Assistant U.S. Attorney Joe Dixon began his cross examination of Tom Petters Thursday morning, grilling him about his claim that he knew nothing of the fraud at Petters Co. Inc., a company he owned and led as CEO. Dixon began his examination by pointing out that Petters was owner and CEO of PCI and asked him to confirm he was the “heart and soul” of the company. Read full story

Hecker found in contempt of court: A U.S. bankruptcy judge held Denny Hecker in contempt of court Wednesday morning for failing to turn over financial documents requested by the trustee, according to media reports. Read full story

Donaldson earnings decline but beat expectations: Shares of Donaldson Co. Inc. soared more than 8 percent Thursday, after the company announced fiscal first-quarter results that beat Wall Street’s expectations and raised its annual earnings guidance. The company late Wednesday reported earnings of $34.6 million, or 44 cents per share. Read full story

Medspira gets license to sell Mayo Clinic products: Medspira announced Wednesday it has entered into an agreement with Mayo Clinic to market and manufacture several products developed by the Rochester-based medical clinic. The agreement includes two radiology products invented and developed by Mayo physicians currently available in the market, and two technologies. Read full story

ValuVision stock declines as 3Q losses narrow: Eden Prairie-based ValueVision Media Inc., the parent company of ShopNBC, on Wednesday said its third quarter losses narrowed as it cut operating expenses. Third quarter revenues were $119.4 million, down 4.2 percent from $124.8 million in the same quarter a year ago. Read full story

Report: Chanhassen Dinner Theaters sale is off: A Minneapolis businessman’s plan to buy the Chanhassen Dinner Theatres is apparently off, at least for now. The deal apparently fell apart over contract negotiations with the musicians’ union. Read full story

HCMC budget slashes positions, programs: Hennepin County Medical Center plans to cut more positions, and close a clinic and a cardiac rehabilitation program, as it seeks to make up for millions of lost state funding. The Minneapolis-based hospital and clinics chain Wednesday approved a proposed annual budget that would save $15 million. Read full story

Medtronic receives FDA warning letter: Medtronic Inc. announced Wednesday that it received a warning letter from the U.S. Food and Drug Administration following an August inspection of the company’s Cardiac Rhythm Disease Management facility in Mounds View. Fridley-based Medtronic said the FDA’s observations fell into four general categories and that it would reply to the warning letter within 15 days, as required. Read full story

Target to add ‘PFresh’ grocery concept at 350 stores: Target Corp. plans to expand 350 stores in 2010 to accommodate its new “PFresh” grocery concept, the discount retailer announced as part of Tuesday’s third-quarter earnings announcement. The Minnneapolis-based retailer first tested the new format last year at its stores in downtown Minneapolis and Minnetonka. It now has 108 "PFresh" stores. Read full story

While the worst of the financial crisis may have passed, Twin Cities area consumers are not ready to jump back into a holiday shopping frenzy, according to the eighth annual “Holiday Spending Sentiment Survey,” released by University of St. Thomas’ marketing professor David Brennan.

“The overall picture remains uncertain and pretty bleak for retailers as consumers hunker down and look for promotions,” Brennan told reporters Wednesday in a telephone call discussing the survey results.

Brennan, who teaches at the University’s Opus College of Business and is co-director of its Institute for Retailing Excellence, projects that spending in the important holiday period will drop 3.9 percent to an average of $637 per household from $663 in 2008. This is the lowest level of holiday spending projected since St. Thomas began the study in 2002.

Consumers in the 13-county metro area will pump an estimated $810 million in aggregate spending into the regional economy, down 2.7 percent from $832 million last year, and “on the heels of a significant 10.9 percent decrease that was predicted the previous holiday shopping season,” the survey reported.

Brennan offered slim solace for retailers, pointing out that the decline in aggregate spending was not as bleak as the 10.9 percent decrease predicted in the 2008 holiday shopping season. Retailers, he noted, are sitting on lower levels of inventory this year, having been caught last year with too many goods and too few shoppers.

Metro area shoppers who plan to hold out for last-minute deals may be disappointed.

“We’re going to see promotions rolling out on a very logical and systematic basis throughout holiday spending period, unlike what we saw last November when retailers just started liquidating,” Brennan said. “They [retailers] were scared after the financial meltdown and stock market crash. We’re not going to see that kind of panic, but Black Friday will still offer lots of deals that will drive traffic to the stores,” he predicted. (Black Friday, the day after Thanksgiving, gets its name from holiday spending that traditionally pushes retailers into profitability.)

The survey found that more than half of shoppers, 53.8 percent, plan to spend less than last year -- evenly divided between “spend a little less” and “spend much less.” Only 7.6 percent plan to spend more. Sixty percent of households plan to spend less than $500 this year, while 27.7 percent said they would spend between $501 and $1,000.

Regional malls and downtown shopping districts were named by 38 percent of respondents as a planned destination, up a bit from last year but down significantly from the 50 percent who chose it in 2005.

Almost 22 percent of households plan to shop online, nearly triple the number from the first survey eight years ago. Mega-site Amazon.com is favored by more than 37 percent of online shoppers, three times that of eBay, the next most mentioned destination.

Continuing a multi-year trend, catalog, TV and phone sales “continue to significantly decline” with less than 5 percent of shoppers planning to use those channels.

Gift certificates are predicted to be the most popular purchase for holiday shopping, followed by clothing and accessories and books. Perhaps reflecting the lack of any “must have” new gizmo, technology-related gifts such as video games, computers and consumer electronics did not make the top five, though they are in the top 10.

Target stores remain the hometown favorite destination favored by 38 percent of respondents, followed by Wal-Mart, Kohl’s, J.C. Penney and Macy’s. One in five respondents plans to shop at the Mall of America, putting the Bloomington megamall on top the second year in a row. Rounding out the top five shopping destinations in order were, Rosedale, Ridgedale, downtown Minneapolis, Southdale and Burnsville malls. Downtown St. Paul scored ninth, with 2.6 percent of respondents planning to shop there.

Asked about the laggard position of downtown St. Paul as an intended shopping destination, Dr. Lorman Lundsten, chair of the St. Thomas Marketing Department, said it was not surprising. “How do you compete with the Mall of America? ... What is a surprise is that Macy’s still is still open in downtown St. Paul.

“What is clear is that people are spending less because of layoffs, wages being cut, hours being cut,” Lundsten said. “No mystery about that.”

He also credits the diverse regional economy with immunizing the metro area from a “double whammy” of reduced consumer spending and local layoffs at national retail giants Target and Best Buy. He pointed out that other major Minnesota industries, such as medical devices and agriculture, remain relatively healthy.

The metro area “is not like Detroit that has been crushed by the automotive industry collapse, or New York with the banks,” he concluded.

This year’s holiday spending survey included 303 responses from households in the 13-county Minneapolis-St. Paul Metropolitan Statistical Area, which includes two counties in western Wisconsin. It has a 4.5 percent margin of error.

Minnesota turkeys will be the featured attraction at millions of holiday dinners all over the country in coming weeks, keeping Minnesota No. 1 in the nation in terms of turkey production, according to the latest statistics (PDF) at the Minnesota Turkey Growers Association.

The U.S Department of Agriculture projects that 45.5 million birds will be processed in Minnesota this year, about 22 percent of the total U.S. production. That number, though, is down about 5 percent in Minnesota, and the total is down 8 percent nationally this year, compared with last year, according to Lara Durben, communications director at the association.

Prices are down, too, according to the USDA market survey for last week that reports: “Compared to a year ago, average prices trend a few cents lower on frozen and are sharply lower on fresh. ... More stores offer specialty turkeys ranging from organic to kosher.” Turkey production is expected to bring in about $600 million in revenue for producers and processors in the state, according to the association.

Minnesota keeps its top slot overall with three large, local processing companies: Jennie-O Turkey Store Inc. in Willmar, Turkey Valley Farms in Marshall and Northern Pride Co-Op in Thief River Falls.

Production cuts, however, were made in response to rising feed and fuel costs last year, Durben said, while per capita consumption has remained relatively flat overall.

The association is trying to heat up turkey consumption by reminding consumers that the bird can be substituted for other meats, and by keeping on top of emerging consumer preference for turkey products beyond the big bird.

One-third of all turkey consumed in the United States is eaten in the fourth quarter, and half of that ends up on Thanksgiving and Christmas dinner tables, Durben pointed out. Processed turkey products such as turkey burgers, hot dogs, sausage and meatloaf have been fighting for shelf space in grocery stores.

But the whole bird is also taking on a new look beyond the major producers. Smaller-scale and specialty farms, promising more flavor and less guilt than the mass produced birds in grocery stores, offer free-range turkeys and organically raised turkeys.

While the growers association does not track production by breed, the market is seeing an increasing presence of “heirloom” or “heritage” turkeys as well, Durben acknowledged. These breeds — such as the Broad Breasted Bronze, Standard Bronze, Bourbon Red, Jersey Buff, Slate, Black Spanish, Narragansett and White Holland — were more common before mass production shifted to the familiar Broad Breasted Whites, which are heavy on breast meat and constitute the vast majority of commercially produced turkeys today.

Rumor has it that the Broad Breasted Bronze is best paired with Long Island Cheese heirloom pumpkin pie and German Johnson heirloom tomato salad.

The Minnesota Turkey Growers Association offers these “Minnesota Turkey Facts”:

• Minnesota ranks No. 1 in the nation for turkey production with 250 turkey producers operating 600 turkey farms.
• Minnesota has more independent turkey farmers than any other state.
• Many of these farmers are third-, fourth- and even fifth-generation family farmers.
• Ninety percent of turkey products processed in state are shipped out of Minnesota.
• Of that 90 percent, about 15 percent goes to international markets.
• The top five export markets for U.S. turkey meat (in 2007) were: Mexico, China, Russia, Canada and Hong Kong.

Canterbury Park racetrack crossed the Q3 finish line in the black by a nose.

With reduced attendance and lower wagering dogging the entire gaming industry, the Shakopee track swung to a slight profit of $16,395, compared with a loss of $40,795 a year ago on $12.2 million in revenue, a drop of 8 percent. For the first nine months of the year, the park earned $160,000 in profit, compared with $423,000 a year ago, while its nine-month revenue of $31.7 million was down 15 percent.

While still significantly down in profits for the year, the company continued to reduce costs and debt to weather the economic storm that threatens the entire gaming industry and has hit casino-dependent Las Vegas particularly hard.

“Our business continues to be severely affected by reduced discretionary spending caused by the weak economy, which has had a particularly significant impact on the gaming and entertainment industries,” Randy Sampson, president and CEO, said in the track’s Q3 press release.

One of the few publicly held racetracks in the country, Canterbury’s operation (NASDAQ:CPHC), which includes a card club, provides a window into the financial pressure the gaming industry faces in the current economic downturn.

So far in 2009, wagering on races totaled $10.5 billion across 100 tracks in the United States. This is down 10 percent, “which is better than most of our brethren in the gaming industry. Still it’s down 10 percent nonetheless,” said Eric Wing, spokesman for the National Thoroughbred Racing Association, Lexington, Ky.

Less discretionary spending has hammered park attendance, Wing asserts, and tracks are running fewer race days (5,191 vs. 5,298 in 2008 year to date) as a way to hold down costs.

He credits a trifecta of factors with the relatively slower decline in thoroughbred racing revenues than other gaming industry sectors. 2009 has been a year of upsets and “the year of the female” with a long-shot winner in the Kentucky Derby (Mine That Bird) and two female horses running away with important wins. Zenyatta was the first female to win the $5 million purse at the Breeders’ Cup, and Rachel Alexandra won the Kentucky Oaks, the filly version of the Derby, then went on to upset the surprise Derby winner at the Preakness.

The upsets and the entrance of the female winners have added “excitement and electricity,” Wing said, bringing fans to the tracks. Now the two ladies, Rachel Alexandra and Zenyatta, are squared off for “Horse of the Year honors, an unprecedented matchup, Wing said, giving fans and the racing news media soemething new to talk about.

"Let me tell you about the very rich. They are different from you and me.” — F. Scott Fitzgerald, “The Rich Boy,” 1926

St. Paul native and famed American author F. Scott Fitzgerald wrote about the rich and those aspiring to be in the 1920s. He made a lot of money himself and spent a lot, or so the legend goes.

Now his income and spending have been as carefully deconstructed as his prose, thanks to a trove of Fitzgerald’s tax returns and financial records covering his entire working life, and they show ... well, the “old sport” wanted to save but just couldn’t seem to hang onto a buck.

The current issue of The American Scholar Magazine, examines two decades of Fitzgerald’s tax returns and financial records. Fitzgerald’s daughter, Scottie, gave the records to Matthew Bruccoli, a noted Fitzgerald biographer and a trustee for a fund benefitting Scottie’s children. Upon Bruccoli’s death last year, friend and collaborator William Quirk was left with the task of writing an article the two had planned to co-author about the tax returns.

The publication of “This Side of Paradise” in 1920 “immediately put Fitzgerald’s income in the top 2 percent of American taxpayers,” Quirk reports. “Fitzgerald’s annual income was remarkably consistent, although some years were better (1938, $58,783) and some worse (1931, $9,765). But most years were pretty close to $24,000 ... which put him in the top 1 percent of those filing returns. Today, a taxpayer would have to earn at least $500,000 to be in the top 1 percent.”

An honest taxpayer
Among the observations, Fitzgerald was a meticulous record keeper and an honest taxpayer, and he had hoped to save but could not comprehend how, despite careful budgeting, “leakage” drained his accounts. The returns also show how little the noted Jazz Age author earned in his lifetime from the novels he is now best remembered for.

Fitzgerald “kept a ledger — as if he were a grocer — a meticulous record of his earnings from each short story, play, and novel he sold,” Quirk writes. “The ledger for 1919 shows earnings from short-story sales of $879, an amount below that required for a tax return. But the next year Fitzgerald was suddenly rich. In 1920 he earned $17,055 and paid $1,444 in taxes — an overall effective tax rate of about 8 percent.”

While acknowledging that budget-busting trips to New York drained his accounts, Fitzgerald also blamed price-gouging tradesmen and pocket-lining servants. But still he could not account for all his spending.

“You don’t mean to say that every month we lose $1,000?” Quirk reports Fitzgerald lamenting in 1924: “People don’t lose $12,000 in a year, it’s just missing.” Somehow, a “mysterious third of our income had vanished into thin air.”

In addition, Fitzgerald’s wife, Zelda, became ill in 1929, remaining in poor health for the rest of their lives. Quirk reports that “in 1930-31, a 15-month stay for Zelda in a sanatorium on Lake Geneva cost $13,000. He [Fitzgerald] felt obliged to provide the best care, but because of doctor and sanatorium bills, he lost hope of controlling his finances.”

Over Fitzgerald’s working life, he reported a total of $449,713 in gross income, and he paid $24,666 in taxes — thus the effective tax rate of 5.5 percent. Most of his earnings ($386,383) came from his 160 short stories and, later, movie scripts. His best novels, “The Great Gatsby” (1925) and “Tender Is the Night” (1934), did not produce much income during his lifetime.

“Fitzgerald, had he relied on the income from the novels, would have had to live on less than $5,000 a year — a good income for the time but not suitable for Fitzgerald,” Quirk reports.

And despite his hard drinking and hard partying ways, Fitzgerald also remained an honest taxpayer, according to Quirk. At a time before W2 forms or withholding taxes, when less than 10 percent of the population filed tax returns, all on the honor system, “Fitzgerald reported every dollar he had entered in his ledger. He was impeccably honest in his reporting,” Quirk writes.

But the author also pushed the IRS on some of his deductions, “On his 1924 tax return, he deducted $2,450 as a business expense for a ‘trip to Europe for the purpose of obtaining material for stories, etc.’ ” Quirk recounts. When the IRS objected to the deduction, Fitzgerald relented.

A modest estate
When he died in December 1940 of alcoholism, Fitzgerald’s estate “was solvent but modest — around $35,000, mostly from an insurance policy. The tax appraisers considered the copyrights worthless. Today, even multiplying Fitzgerald’s estate by 30, it would not require an estate tax return,” Quirk concludes.

Biographer Bruscolli, in a 1992 anniversary edition of “The Great Gatsby,” recounted the tragic irony of Fitzgerald’s economic life. “Commercially the novel [“Gatsby”] was a disappointment to Fitzgerald ... The first printing of slightly over 20,000 copies sold slowly.”

A second printing of 3,000 copies did not sell well either, “and when Fitzgerald died fifteen years later (1940) here were still unsold copies ... The novel was never out of print; it had simply stopped selling ... Royalties from ‘The Great Gatsby’ totaled only $8,397 during Fitzgerald’s lifetime ... Today ‘Gatsby’ is read in nearly every high school and college and regularly produces $500,000 a year in Scottie’s trust for her children.”

"F. Scott Fitzgerald died believing himself a failure,” Bruccoli wrote. “The obituaries were condescending and he seemed destined for literary obscurity. The first phase of the Fitzgerald resurrection ... occurred between 1945 and 1950. By 1960 he had achieved a securing place among America’s enduring writers.”