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December 8, 2009 Written
by Bob Meyer, Editor of BarterNews
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From the desk of Bob Meyer...12/08/2009
$1 Billion Cash Loan To Be Paid Off In
Airline Miles
It there was ever a question of whether the airlines have
established their own currency of frequent flier miles or
not, it is no longer. For years airlines have bolstered
their balance sheets by pre-selling billions of miles (for
about 1� a mile) to other merchants.
Citigroup Inc., which gives away American AAdvantage miles
to credit-card customers, agreed in September to lend
American $1 billion. This loan will be repaid between 2012
and 2016�not in cash but in airline miles.
IRTA�s Suplizio Leads European Barter
Congress
The re-establishment of Europe as a chapter of the
International Reciprocal Trade Association (IRTA) took place
early December in Istanbul, Turkey. It was sponsored by Turk
Barter and Paul Suplizio (the original executive director of
IRTA and present IRTA board member) led the conference for
the European exchanges.
Consumers � Key To Job Creation
The largest impediment to new hiring is weak sales. Since
January 2008, more owners have reported lower sales (quarter
over quarter) in every month, mostly by double digit
margins. In November, a small 15% reported gains in sales,
while 43% reported sales were still declining.
In short, consumers are the key to job creation. When
businesses have more customers, they will hire more workers.
WSJ Publishes Article On Restaurants Using
Trade Exchanges
Restaurant owners are embracing barter (via trade exchanges)
according to an extensive article in the December 3 issue of
The Wall Street Journal. Bartering is especially
useful for independent restaurants that, unlike some chains,
lack access to corporate credit lines or cash. Trading food
for needed services from trade exchange members is
especially valuable in a tight economy.
Named and quoted in the article were Rob Miller, president
of the Arizona Trade Exchange, and Ric Zampatti, CEO of The
Barter Company based in Atlanta.
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Sandra Bullock Barters Way To Small
Fortune
The Blind Side,
a football movie starring Sandra Bullock, has been in theaters less
than two weeks. The family-friendly film has grossed nearly $107
million at the box office�more than triple the $30 million needed
for production costs. It was produced and marketed by Alcon
Entertainment, a small 12-year-old production company owned by FedEx
CEO Frederick W. Smith.
The
entrepreneurial production company persuaded Ms. Bullock to accept a
small upfront payment (far below her usual multimillion-dollar fee)
in exchange for a substantial percentage of the company�s profits�in
the neighborhood of 25%.
The
company expects to pay box-office bonuses to many actors, as well as
the movie�s director, all of whom claimed a percentage of the film�s
profits in exchange for reduced payments upfront.
Attention Trade Exchange Owners. . .It�s GROW OR GO!
The magic bullet for growth is sales, always has been and always
will be...yet the industry�s overall growth is anemic. Why? Maybe
it�s because we�re not providing on-going education about our unique
way of doing business. Knowledge is always a pre-requisite to taking
sustained action.
And for those newcomers, the lifeblood of an exchange, awareness of
and understanding about the value of trading is even more important.
If you expect prospects to come aboard and your members to be more
active traders, but you are perplexed when the results are less than
you desire...there�s a good reason. You must continually educate
and motivate every month--month after month after month!
Such action is necessary because, let�s face it, more cash business,
not trade, is of paramount importance to your members. You must
break through this �cash only� focus and redirect their thinking
toward barter. Although most exchanges don�t see the importance of
doing so, many industry leaders are taking action and so can you.
As the owner of your own operation, there is an easy and
inexpensive solution for moving forward...look
into using The Competitive Edge newsletter. It�s a
camera-ready, 4-page, professionally written, informational
marketing tool...available in PDF format as well as print. So
regardless of how you reach your prospects and clients, you will
have the necessary vehicle.
Written especially for you, the busy trade exchange owner, I am
certain it will be the best investment you ever make.
For more information about The Competitive Edge, and how it
can benefit you
click
here.
Cruise Industry Adds
Capacity Despite Slow Economy
The
Cruise Lines International Association estimates North American
capacity will grow 8% in 2010 and 5% in 2011, despite our current
economic malaise. The growth of capacity is due to the cruise
industry having to take the long view, as ships take about three
years to build. (They have a lifespan of 30 years or more.)
Just launched is the largest cruise ship ever built, Oasis of the
Seas, by Royal Caribbean Cruises. With 5,400 passengers aboard, it
towers 20 stories above the sea and is almost four football fields
long (400 yards). The 225,000 gross-ton ship is about double the
tonnage of a typical cruise ship and has 13 retail shops, 21 pools,
and 24 restaurants plus a 300-foot water slide.
Given the 2009 fourth quarter�s soft cruise demand, 2010 should be
good for cruise barter-inventory as this capacity expansion sparks
barter deals.
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International visitors look for BARTER CONTACTS in our Global Barter
Section. If YOUR exchange isn�t listed see the forms on the lower
left of the page. (Click
here.)
�
Attention trade exchange owners...thousands of visitors every month
visit our BARTER CONTACTS section on our web site where we have
names & addresses of barter companies in the USA. If YOUR exchange
isn�t listed, or the information is incorrect, you can correct the
situation by using the forms to the lower left of the USA map. (Click
here.)
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ITEX CEO Steven White
Reviews 2009
(An open letter to
the stock-holders)
This past year has certainly strained many companies throughout the
world and I am pleased to report that ITEX has remained focused,
executed well on its core business, implemented several strategic
investments and experienced growth during a very difficult economic
time.
As
in my past letters to you, I can once again boast that our company
is moving in a positive direction. In particular, our financial
condition continued to improve over the past year and has never been
stronger. We increased revenues when many companies in the U.S.
experienced declines; we retired all long-term debt when many
businesses have become more burdened with debt; and we increased
cash and assets when many saw their balance sheets contract.
We
ended the fiscal year with more than $2.5 million in cash and almost
$2.9 million in operational cash flow. Our operational income
increased in each of the four quarters of last year, from $22,000 in
the first quarter to $426,000 in the fourth quarter. Our credit
facility with U.S. Bank recently increased from $1.5 million to $2.5
million, with an exceptional 2.25% interest rate (adjustable),
displaying the bank�s confidence in us.
We
attribute our financial success in part to our disciplined,
conservative and astute management of our finances, our ability to
run the company with a lean, smart and dedicated staff, and our
understanding that in order make forward leaps, we need to follow
our entrepreneurial drive and fearlessly pursue opportunities.
The
four acquisitions we have undertaken since August 2005 were
calculated risks that have made us a larger and stronger company.
Our strategic initiatives, commenced in the past two years, have
been gaining momentum; adding revenues, cash flow, more brand
recognition and strengthening our position as the de facto industry
leader for barter and trading communities.
During fiscal 2009, we continued to allocate resources to personnel,
franchisee support and development, as well as technology; and
toward a number of strategic initiatives such as developing our Web
Services program, executing a national strategic partnership
strategy, launching ITEX Media Services, and beginning a national
advertisement campaign in premier business publications. Many of the
expenses incurred were for start up and one-time costs. However, we
do expect to continue to further invest in some of these initiatives
in 2010.
As
unemployment and under-employment continues to impact more than 17
million nationwide, we believe many of these individuals will take
the future into their own hands. As entrepreneurs they will start
their own businesses and search for innovative ways to generate
sales. ITEX continues to be a perfect solution for these new
business owners.
Stockholder Value
We
work very hard to create value for our stockholders. Since 2005,
stockholder equity has increased more than 182%. Though we are
pleased with this result, we understand for many stockholders the
most important metric is share price.
As
a smaller public company, we continually seek to balance our desire
to create value for stockholders with the need to use our resources
wisely. We are cognizant of the burdensome costs of being a public
company. We seek to establish effective internal control over our
financial reporting in a cost-effective manner.
But
primarily, we seek to emphasize corporate performance. Focusing on
our core customers, ITEX members and franchisees, and managing the
resources our customers generate is paramount to me and the
corporate staff. While corporate governance ratings are increasingly
important to investors, having the highest corporate governance
quotient or the most rigorous internal control system is not my
primary goal, particularly if such efforts impact our service to our
customers or significantly deplete our resources.
Organizational Priorities
Our
corporate headquarters employ 20 dedicated individuals who are
responsible for strategy and long term planning, branding,
technology, accounting, legal, investor relations, processing
transactions for the trading community, and customer relations. For
20 individuals to manage 90 offices (who collectively employ some
400 individuals), generating $16.5 million in annual revenue spreads
everyone quite thin. We have no time to waste and expect
extraordinary performance from everyone on our team. My priorities
for running the organization are:
�
Increase
the value proposition to our members by making participation in the
ITEX Marketplace cost effective, easy and profitable;
�
Provide
exceptional service to our franchisees and pay an equitable revenue
share to help them succeed;
�
Fairly
compensate our employees and provide a secure, innovative work
environment that provides opportunity for professional advancement;
�
Increase
stockholder value by improving operating performance, building net
assets and long-term potential.
For
more information on ITEX go to
www.itex.com.
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