Editor’s Note: This is the Paw Print Rewind, a daily look at the top news headlines.
U.S. strikes deal with four more banks in Swiss program
Four additional Swiss banks have cut deals with the U.S. Department of Justice to avoid possible prosecution for helping Americans evade taxes, according to the apartments.
The banks are Societe Generale Private Banking, MediBank, LBBW, and Scobag Privatbank, agreeing to pay penalties ranging from $9,090 to $1.36 million.
They settled under a voluntary program launched by the Justice Department in 2013 to allow Swiss banks to resolve potential criminal charges by disclosing cross-border activities that helped U.S. account holders conceal assets.
Under the program, banks also must provide detailed information on the accounts of U.S. taxpayers under investigation.
Three banks settled under the program earlier this year and dozens more are expected to do so in the coming months.
Banks that were already under criminal investigation like Julius Baer and HSBC’s Swiss private bank, were excluded from the program.
The department is now investigating account holders, bank employees and others based on information supplied, in part, by the banks participating in the program, according to Acting Assistant Attorney General Caroline Ciraolo.
“There is no safe haven.”
-Caroline Ciraolo, acting assistant attorney general
Societe Generale, based in Lugano, will pay $1.36 million after managing over 100 U.S.-related accounts worth about $8.6 million under management since 2008.
LBBW, based in Zurich, held 35 U.S.-related accounts with $128 million in assets under management since August 2008, according to the department. It will pay $34,000.
Scobag Privatbank, based in Basel, held 13 U.S.-related accounts worth nearly $7 million since 2008 and will pay a $9,090 penalty, according to the Justice Department.
The banks mitigated their penalties by encouraging U.S. taxpayers to meet their obligations, according to the department.
Abercrombie signals better year as Hollister sales improve
Abercrombie & Finch’s business is showing signs of recovery as sales of its Hollister brand improved, according to the company.
Abercrombie’s comparable sales fell less than expected in the first quarter that ended May 2, as revamped Hollister stores and lower prices drove traffic.
The company has cut prices in some international markets for its Hollister line, which offers Southern California-inspired t-shirts, skirts, tops, and hoodies.
Abercrombie’s music, lighting, and clothes-stacking process changes in several Hollister stores have resulted in slightly higher sales, according to executive chairman Arthur Martines.
The company expects comparable sales to improve through the year and forecast full-year gross margins to be flat with or slightly higher than a year earlier, helped by lower costs.
However, company-wide same-store sales still fell eight percent in the quarter.
“There’s really a lot of things they’re working on right now, but [a turnaround] is not going to really happen overnight.
“But I think we’ll continue to see incremental improvement throughout the year.”
-Susan Anderson, FBR Capital Markets analyst
Comparable Hollister sales fell six percent.
Net sales fell 14 percent to $709.4 million and net loss nearly tripled to $63.2 million ($0.91 per share).
Abercrombie, which gets nearly 37 percent of its revenue internationally, expects a stronger dollar to continue eating into revenues this year, according to the company.
The dollar lowered Abercrombie’s sales by about six percent in the latest quarter.
Citigroup CEO defends Costco credit card deal
Citigroup’s deal with Costco to replace American Express as the credit card issuer for its store will be profitable for shareholders, according to Citigroup CEO Mike Corbat.
The deal is “without a doubt accretive” to shareholders, according to Corbat, and would be even if his company did not defer tax assets it can use to shelter income from taxes.
Citigroup’s second-quarter revenue from capital markets trading is “very similar” to the same period a year ago so far, according to Corbat.
Dollar Tree sells 330 Family Dollar stores to Sycamore Partners
Dollar Tree has agreed to sell 330 Family Dollar stores to private equity firm Sycamore Partners to get antitrust approval for its $8.5 billion Family Dollar takeover.
The stores represent about $45.5 million of operating income for Family Dollar, according to the discount retailer. Sycamore intends to operate the stores under the Dollar Express brand.
Intel buys Altera for $16.7 billion
Intel has agreed to buy Altera for $16.7 billion.
The company will be able to bundle its processing chips with Altera’s programmable chips, which are used to speed up web searches, among other things.
Intel will offer $54 per share for the San Jose, CA- based company, a 10.5 percent premium on Friday’s close.
“It seems very high to me. The last one I remember that was close was Broadcom buying NetLogic at eight times forward revenues, and that didn’t turn out very well for Broadcom.”
-Kevin Cassidy, Stifer, Nicolaus & Co analyst
The merger will create a new class of products giving customers a significant performance improvement, lower costs, and a lot more flexibility, according to Intel CFO Stacy Smith.
“That’s the piece that’s pretty exciting about it.”
-Stacy Smith, Intel CFO
Altera’s programmable chips will allow Intel to increase its Xeon server chip’s computational capability, according to Summit Research analyst Srinivasan Sundararajan.
Arthur Minson leaves Time Warner Cable to join WeWork
Time Warner Cable’s CFO Arthur Minson will step down from the company, less than a week after Charter bought the company for $56 billion.
Minson will join WeWork as its president and COO, but will remain with Time Warner Cable until the Charter deal closes.
WeWork provides creative office and meeting spaces for professionals.
The 44-year-old was a deputy CFO at Time Warner Cable from 2007 to 2009, when he left to be CFO and COO at AOL.
He oversaw the company’s spinoff from Time Warner in 2009, following their 2000 merger.
Minson received $13 million in compensation during 2014.
Chief Accounting Officer William Osbourn Jr. and Treasurer Matthew Siegel will be acting co-CFOs, according to Time Warner Cable.
Both men will also retain their current titles and responsibilities.
Uber targeted by Toronto amid cabbie protest
Taxi drivers packed a Toronto courtroom as the city stated its case for why Uber should be regulated like the traditional cab companies it competes with.
Canada’s largest city is seeking an injunction to halt the ride-sharing service’s operations unless Uber and its drivers are licensed.
The San Francisco-based company is fighting for legal status worldwide as authorities weigh the legality of the mobile app, and Uber drivers argue they should be treated as employees rather than independent contractors.
Outside Toronto’s city hall, taxi drivers parked three-deep and honked their horns, while others moved in a slow procession through downtown, clogging much of the city’s business district.
“Some people support Uber, the mayor supports Uber. I don’t mind Uber, I think it’s a beautiful idea, to whoever did it, very nice. But do it legal.”
-Akhbar Banijamaat, Toronto taxi driver
“Both [Uber and the taxi industry] are going to have to adapt themselves to the reality of a fair and fairly-regulated industry that focuses on serving the public better as opposed to suiting themselves.”
-John Tory, Toronto mayor
The Toronto taxi-driving protesters focused their ire on UberX, a budget tier where drivers use their personal vehicles, calling it a threat to public safety. Uber’s other tiers use licensed drivers.
“Rather than blocking roads and preventing people from getting where they need to be, we’re focused on meeting the needs of Toronto’s riders and drivers, who are all too often left out of the debate.”
-Susie Heath, Uber Canada spokeswoman
Uber wants to help “create a sensible regulatory framework for ridesharing,” according to Heath.
Etihad Airways rejects subsidy claims, attacks U.S. airline ‘oligopoly’
Etihad Airways has issued its strongest response yet to claims that it received market-distorting subsidies, saying that they are required to repay loans and that its U.S. competitors have a “condescending” view of international law.
The Abu Dhabi-based carrier’s comments mark its latest move to deter the Obama administration from revisiting aviation agreements with the United Arab Emirates and Qatar.
U.S. Open Skies policy did not prohibit airlines from receiving shareholders loans, according to Etihad’s 60-page U.S. government submission. Abu Dhabi’s government, Ethiad’s sole shareholder, gave $5.2 billion with “the express requirement that such loans be repaid by Etihad.”
No international trade rules or precedent by the United States exists for addressing airline subsidy claims, which complicates the country’s government review of the matter.
Open Skies policy does not define subsidy, according to Etihad, but its main concern is to stop subsidies from lowering airline artificially.
The carrier’s published fares from April 2013 to this March fell “generally” within the range of the fares of its opponents like Delta, United, Continental, and American Airlines, according to a study commissioned by Etihad.
Other airline complaints “take a very condescending view of non-U.S. law,” according to the carrier.
Etihad funded its Manchester City sponsorship from its own liquidity, according to the carrier, countering claims that Abu Dhabi paid for the deal.
They called the allegations “little more than a regulatory attempt to further cement [U.S. airlines’] oligopoly.”
“Government to government consultations are entirely appropriate given that Etihad has taken billions of dollars in subsidies.”
-Jill Zuckman, Partnership for Open & Fair Skies airline union spokeswoman