Bramwell's Lunch Beat: Farewell, OfficeMax
Leaders in Congress unveil two-year budget deal
It doesn’t look like we need to worry about a federal government shutdown next month, as budget negotiators announced on December 10 a bipartisan deal to set spending levels for the US government for two years and partially replace unpopular spending cuts with other savings, the USA Today reported.
House Budget Chairman Paul Ryan (R-WI) and Senate Budget Chairwoman Patty Murray (D-WA) said the deal would stop the government “lurching from crisis to crisis” and prevent a shutdown of the government like the one that occurred in October. The current stopgap funding measure is scheduled to run out again on January 15, 2014.
Among the highlights of the proposed deal, overall federal spending for fiscal year 2014 will be $1.012 trillion and $1.014 trillion for fiscal year 2015. The agreement replaces $63 billion in sequester cuts with a combination of other savings and includes an additional $22.5 billion in deficit reduction, according to the article.
President Obama said he would sign the proposed deal if it is approved by Congress.
Office Depot move raises tax-break issue again
I live in Naperville, Illinois, which is approximately thirty miles west of Chicago. For many years, Naperville has been the headquarters of office products retailer OfficeMax – but not anymore.
Last month, OfficeMax, the number-three office products retailer in the United States, was bought by rival Office Depot, which ranks second behind Staples. On December 10, Office Depot announced it would keep its headquarters in Boca Raton, Florida, instead of moving its home base to Naperville, the Associated Press reported in an article published by the Sarasota Herald-Tribune. It is expected 1,600 jobs will be lost in Illinois due to the merger.
“The move comes just a week after the [Illinois] state Legislature declined to give [Office Depot] millions in tax breaks,” the article stated. “The state senator [Tom Cullerton] who sponsored the bill that would have given Office Depot a tax package worth $53 million regretted that lawmakers didn’t agree to the deal. But some experts said that, given the state’s bad financial situation, not offering tax breaks might have been a smart move.”
The article noted that Office Depot has an existing incentives package from the state of Florida, but it is not known whether the company received any additional tax breaks or other perks to stay in Florida.
SEC task force probes use of non-GAAP metrics
The new US Securities and Exchange Commission (SEC) Financial Reporting and Audit Task Force will be investigating companies’ use of their own tailor-made performance measures instead of US Generally Accepted Accounting Principles (GAAP), Michael Rapoport of the Wall Street Journal reported on December 10.
Speaking at an American Institute of CPAs (AICPA) conference on Tuesday, task force chairman David Woodcock didn’t mention any specific companies that the task force is investigating. However, his comments are the first indication that the SEC is looking at these metrics with an eye toward possible enforcement cases.
“Technology companies have long used such nonstandard performance measures that strip out expenses like interest, taxes, depreciation, and stock payments to employees to enable them to tout a profit, rather than the loss they report under GAAP,” Rapoport wrote. “Regulators allow companies to use the nonstandard measurements as long as they clearly disclose that the measures don’t follow accounting rules and they show how the measures are reconciled to standard measurements like net income.”
Rapoport added SEC officials and other critics have recently expressed concern that the nonstandard metrics have the potential to mislead investors.
Republicans balk with delays to protest Senate nominees rule
Stripped of their ability last month to stop confirmation of almost all of President Obama’s nominees, including his pick for the next commissioner of the IRS, John Koskinen, Senate Republicans are putting the breaks on them instead.
Kathleen Hunter and Richard Rubin of Bloomberg reported on December 11 why Republicans are clogging the Senate calendar as a way of preventing Democrats from advancing their legislative priorities.