Rare Glimpse at Linens 'n Things Financials

Linens 'n Things provided an unexpected public posting of its financial results under private equity firm Apollo Management when it recently posted its 10-k report for 2007 in conjunction with the desire of some of its private shareholders to sell shares on the NYSE. Linens 'n Things posted a $242 million net loss in 2007 on revenue of $2.8 billion. The company had a $36 million net profit in 2005 on revenue of $2.7 billion in 2005, the last full year of public ownership (Apollo Management took the company private in February, 2006.) Linens 'n Things gross profit margin slipped from 40.8% to 37.5% over the two year period; Selling, General & Administrative Expense increased from 38.5% to 43.7% of revenue; and interest expense increased from 0.2% to 3.9% of revenue. By comparison, publicly-owned segment leader Bed, Bath & Beyond has 2007 gross profit margin of 41.6%; Selling, General & Administrative Expense at 30.4% of revenue; and no interest expense. The Linens 'n Things 3/20/2008 10-k report lists numerous risks, including the following: "despite current indebtedness levels the Company and its subsidiaries may still be able to incur substantially more indebtedness. This could further exacerbate the risks associated with its substantial leverage." On April 15th, Linens 'n Things announced that it had decided to defer $16 million quarterly interest payments due to the holders of its senior secured floating rate notes.

10 Things Your Credit Card Processor Doesn't Want You To Know

Kevin Scott Rizer, founder of Trade Days Processing, provides insights into the world of credit card processing fees in this informative podcast. According to Rizer, there are ten things that credit card processors don't want merchants to know. Here are eight of them:

1. Credit card processors don't care about the "ins and outs" of your business, and are not in a good position to recommend products that will best fit your needs.

2. Credit card processors are not telling merchants all of the fees that they will be charged. For example, some merchants are quoted the rate for "qualified" transactions, and fail to mention the higher rate for "non-qualified" transactions (those where the cards are not present)

3. Credit card processors can hold or take back a merchant's money if there is a "charge-back."

4. Merchants can often save a lot of money by purchasing the (inexpensive) credit card equipment they wind up leasing.

5. Credit card processors neglect to inform merchants about programs such as "pen-based debit" and "electronic check acceptance" that can save merchants money, and simplify their business processes.

6. Credit card processors have power to unilaterally raise or lower rates.

7. Merchants need to understand if the person who is signing them up for a credit card processing agreement will be reachable a few months later, to provide support.

8. If you cancel the contract with a credit card processors, there will be a cancellation fee; these can range from $150 to several thousand dollars.

Entrepreneurs' Earnings Gap

Even successful business founders typically earn 35% less than they would have working for others, according to Case Western University Professor Scott Shane, author of "The Illusions of Entrepreneurship," reports BusinessWeek.com. "People who run their own businesses have greater job satisfaction," states Shane, but then we create a "myth (of entrepreneurship) that says because we like it and it makes us happy, it must also make financial sense."

Prediction Markets Gaining Popularity

Best Buy, General Electric, Hewlett-Packard and others are having their own employees participate in "prediction markets" to gain insight into product demand, store opening dates, and other future events, the "NY Times" reported. The notion that the opinion of a large group of well-informed individuals will be more accurate than one or a few "experts" was popularized by James Surowiecki's book "The Wisdom of Crowds," and is now being tested by dozens of major corporations, including Google, Cisco Systems and General Mills. Small service providers like Consensus Point, NewsFutures and Xpree are assisting companies that don't have the in-house expertise to establish prediction markets on their own.

New Insights Into Wall Street Mortgage Meltdown

In this enlightening podcast, University of Maryland Professor Michael Greenberger explains to Fresh Air's Terry Gross some of the origins of the current mortgage-related losses and write-downs impacting Wall Street. Credit default swaps, or bets on whether mortgage holders would default, are today unregulated at both the Federal and State level due to the Commodity Futures Modernization Act, a 262 page bill passed by Congress in 2000, right before its 2000 Christmas recess. According to Greenberger, banks have also been careful to word their credit default swap contracts to avoid falling under insurance industry regulations. "It's as if a bunch of Las Vegas bookies started taking bets, and never bothered to write them down or record them......here, these banks didn't bother to hedge themselves.....we would have been better off if Las Vegas had handled this operation, than having Bear Stearns handle it," asserted Greenberger.