Dear friends:
Have you taken advantage of our Online Will Planner? If you have been considering an update to your estate plan (or creating one for the first time), we have a free Will Planner that will help you record your personal information and make plans for the distribution of your estate through a will or trust.
By completing this worksheet in advance, you will compile all of the information required by an estate planning attorney while also giving yourself the opportunity to consider and pray about the many important decisions regarding your estate. Click here to create an online account and begin making your plans for the future.
If you would prefer to receive a paper copy of the Will Planner, just visit nazarenefoundation.org/willplanner or email us at info@nazarenefoundation.org. If you are considering leaving a gift to ministry as part of your estate plan, we would be happy to speak with you about your available options.
Blessings,
Ken Roney
President
WASHINGTON NEWS
IRS Taxpayer Support in 2016Each year the IRS alerts taxpayers about potential tax problems and scams. Four of the 2016 “Dirty Dozen” scams were described in IRS letters this week. First, unscrupulous tax preparers may plan to file an inflated tax refund for you. IRS Commissioner John Koskinen stated, “Be wary of tax preparers that tout outlandish refunds based on federal benefits or tax credits you have never heard of or were not eligible to claim in the past.”
Some tax scammers promise large refunds from “fictitious rebates, benefits or tax credits.” You can seek qualified tax preparers in order to avoid any unusual or excessive tax refund claim.
Second, some tax preparers will “pad” or overstate your deductions. The IRS examines numerous returns each year with excessive and unsupported deductions. The most frequent excessive deductions are claimed for improper business expenses or unsupported charitable contributions. The Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) also are subject to frequent errors. If you file a “padded” deduction and underpay your taxes, you may be subject to additional payments of tax, interest and penalties. It is best to protect yourself by using programs such as IRS Free File or contact a volunteer tax assistance person in your local community.
Third, scammers may attempt to use excessive business credits. Koskinen reports, “The IRS is committed to stopping the improper use of business credits and catching the promoters of erroneous claims.” The most common business credit scam is use of the fuel tax credit. Individuals who are engaged in farming or off-road construction may obtain a fuel credit, but most Americans who use public roads do not qualify. Other tax scammers have improperly suggested that you could qualify for the business research credit. Most taxpayers do not qualify for either the business research credit or the off-road fuel credit.
Fourth, gifts to organizations with names similar to respected, legitimate charities may lead to problems. Koskinen reports, “Fake charities set up by scam artists to steal your money or personal information are a recurring problem. Taxpayers should take the time to research organizations before giving their hard-earned money.” You should take care to make gifts and receive receipts from recognized charities. All public charities are willing to provide you with their Federal Tax Identification Number.
The week after President’s Day is the busiest time of the year for calls to the IRS. Koskinen notes, “The entire week of the President’s Day holiday marks a peak time for the IRS. We are keeping our phones open over part of the holiday weekend to manage the increased demand.” He also urges taxpayers to go to www.irs.gov first to obtain information. After you file, you may use “Where’s My Refund” on IRS.gov or the phone app “IRS2Go” to check on your refund status.
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PERSONAL PLANNER
Irrevocable Life Insurance Trust (ILIT)Susan and Steve had been talking to their tax attorney, Elizabeth, about plans for their family. Susan is very concerned about their family.
Susan: "I wish that we had a perfect family, but we must admit we don't. We have three children. Our first child is out on his own, has a good job and is doing fine. But our second child has had substance abuse problems and recently was released from rehabilitation. He now seems fine but he has had relapses before. Our third child is a very sweet young woman who unfortunately has been married, divorced and is now remarried. But she is now going through some real rough spots in her new marriage. How can we protect our three children with so many risks?"
Steve: "We've been very fortunate and our business has grown quite large. We have an offer for the business and have been told that we could sell it tax free through a special charitable trust. That sounds like a great idea, but we need to set up an inheritance for the children and it must be done in a way that protects them. How can we do this? What's the best way to sell our business tax free and replace the inheritance for the children?"
Elizabeth: "We have a great plan that achieves all of those goals. You will be able to sell your business tax free and set up a special trust that holds an insurance policy for the benefit of your children. After both of you pass away, the trust will receive the insurance proceeds income and estate tax free. The full amount can be invested to provide new taxable income for the lives of your children."
When to Use a Life Insurance Trust
A very beneficial estate planning strategy to protect your "less-than-perfect" family is to create a trust that owns life insurance. To gain the maximum benefit from this trust, it is irrevocable after it is created. Your advisor will usually call this an irrevocable life insurance trust (ILIT).
Benefits of an ILIT
Management. If you have a substantial estate and plan to pass a significant inheritance to children, a trust enables you to select the child or the financial institution that will be best qualified to manage significant assets.
Income Rather Than Principal. Many parents are faced with Steve and Susan's problem. They have one or more children who will act in harmful ways with a substantial amount of principal. So the best solution is to provide income to everyone for a term of years or for life. A trust is an excellent method for this purpose. The trustee can also have discretion to distribute principal, or at an age you select the trust property can be given to your children.
Tax Savings. If your estate is more than the federal exemption, it may in future years be subject to taxes at a very high rate. For individuals who support charity, a great plan is to create a trust or make charitable gifts with the majority of the estate and replace the gifted property with an insurance trust. Steve and Susan can create a two-life charitable remainder trust and benefit from a tax-free sale and life income for themselves. After they pass away, their children will benefit from the insurance proceeds in the ILIT.
How Does the ILIT Work?
ILIT Goals. If you have a large estate, a very important goal is to make sure the ILIT is not subject to estate tax. In order to protect the ILIT from taxes, Steve and Susan cannot retain specific powers over the trust or the life insurance. Specifically, they cannot have the right to cash in the policy, to borrow against it, or even to designate the beneficiaries. The policy is purchased with the trust as the beneficiary and will not be changed after it is first acquired by the trust.
Gift of Premiums. Steve and Susan will need to make annual gifts to the ILIT to pay the insurance premiums. Because they can use their annual exclusion, they are able to fund a very substantial policy ($14,000 for each parent times three children equals as much as $84,000 per year in 2016—with indexing of the annual exclusion, it may be more in future years). When they transfer the premium amount to the trustee, their children each receive a special right known as a "Crummey" power, named after the first person to use this concept. Under their Crummey power, the children have 30 days to spend the money. With appropriate parental guidance, the children do not spend the money and it may then be used for payment of insurance premiums. Because the annual exclusion gift of $14,000 requires the child to be able to spend the money for a short period of time, the Crummey power is an essential part of the ILIT.
ILIT Insurance Policies. There are two ways for the insurance policy to be transferred to the ILIT. The first and preferred method is for the ILIT to actually purchase a new policy. However, if you or your spouse are not insurable, in some cases an existing policy is given to the ILIT. If you give an existing policy to the ILIT, in order for the ILIT to be estate tax free you must survive for at least three years.
Trustee
Child as Trustee. Many parents will select one of the children as trustee, preferably one with good financial skills. The child frequently serves for a reduced fee or no fee. The disadvantage for the child serving as trustee is that he or she may have conflicts with other siblings.
Financial Institution as Trustee. The second option is for a bank or trust company to serve as trustee. If the insurance trust is quite large, the objective nature of the bank or trust institution may make this a good option. In considering a bank or financial institution as trustee, Steve and Susan should understand the costs for the investment and administration services of the bank after the insurance proceeds have been received and the trust is funded.
ILIT Options
Income. After the demise of Steve and Susan, the trustee will invest the insurance proceeds and pay income to the beneficiaries. Some trusts last until the beneficiary has reached a specific age, or the trust may last for their lifetimes. With the concern about protecting a child with a substance abuse problem and the marital relationship problems of their daughter, Steve and Susan decided to continue the income stream for the lives of their children. The primary goal of many parents is to provide an additional level of economic security for the children. This income stream will provide payouts for the rest of their lifetimes.
Ability to Distribute Principal. The trustee may be given permission to distribute principal. This could be based upon such standards as health, education, maintenance and support, or may be discretionary with the trustee. Steve and Susan permitted their trustee to make distributions for medical care but not for enhanced lifestyle. Steve asked, "What is likely to be the result if two of our children receive principal?" Based on the belief that principal distributions will be used for unneeded and perhaps unhealthy purposes, their trust will pay income and, if required, medical expenses.
Income Taxes on New Trust Income. While the insurance proceeds are tax free to the trust as long as there has been no violation of the insurance guidelines, the new income that is earned and distributed to the children will be taxable. If the income were retained in the trust, the trust would pay the tax. However, because most income would be distributed to the children, they will pay the ordinary income or capital gains tax on their trust distributions.
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PERSONAL PLANNER
Irrevocable Life Insurance Trust (ILIT)Susan and Steve had been talking to their tax attorney, Elizabeth, about plans for their family. Susan is very concerned about their family.
Susan: "I wish that we had a perfect family, but we must admit we don't. We have three children. Our first child is out on his own, has a good job and is doing fine. But our second child has had substance abuse problems and recently was released from rehabilitation. He now seems fine but he has had relapses before. Our third child is a very sweet young woman who unfortunately has been married, divorced and is now remarried. But she is now going through some real rough spots in her new marriage. How can we protect our three children with so many risks?"
Steve: "We've been very fortunate and our business has grown quite large. We have an offer for the business and have been told that we could sell it tax free through a special charitable trust. That sounds like a great idea, but we need to set up an inheritance for the children and it must be done in a way that protects them. How can we do this? What's the best way to sell our business tax free and replace the inheritance for the children?"
Elizabeth: "We have a great plan that achieves all of those goals. You will be able to sell your business tax free and set up a special trust that holds an insurance policy for the benefit of your children. After both of you pass away, the trust will receive the insurance proceeds income and estate tax free. The full amount can be invested to provide new taxable income for the lives of your children."
When to Use a Life Insurance Trust
A very beneficial estate planning strategy to protect your "less-than-perfect" family is to create a trust that owns life insurance. To gain the maximum benefit from this trust, it is irrevocable after it is created. Your advisor will usually call this an irrevocable life insurance trust (ILIT).
Benefits of an ILIT
Management. If you have a substantial estate and plan to pass a significant inheritance to children, a trust enables you to select the child or the financial institution that will be best qualified to manage significant assets.
Income Rather Than Principal. Many parents are faced with Steve and Susan's problem. They have one or more children who will act in harmful ways with a substantial amount of principal. So the best solution is to provide income to everyone for a term of years or for life. A trust is an excellent method for this purpose. The trustee can also have discretion to distribute principal, or at an age you select the trust property can be given to your children.
Tax Savings. If your estate is more than the federal exemption, it may in future years be subject to taxes at a very high rate. For individuals who support charity, a great plan is to create a trust or make charitable gifts with the majority of the estate and replace the gifted property with an insurance trust. Steve and Susan can create a two-life charitable remainder trust and benefit from a tax-free sale and life income for themselves. After they pass away, their children will benefit from the insurance proceeds in the ILIT.
How Does the ILIT Work?
ILIT Goals. If you have a large estate, a very important goal is to make sure the ILIT is not subject to estate tax. In order to protect the ILIT from taxes, Steve and Susan cannot retain specific powers over the trust or the life insurance. Specifically, they cannot have the right to cash in the policy, to borrow against it, or even to designate the beneficiaries. The policy is purchased with the trust as the beneficiary and will not be changed after it is first acquired by the trust.
Gift of Premiums. Steve and Susan will need to make annual gifts to the ILIT to pay the insurance premiums. Because they can use their annual exclusion, they are able to fund a very substantial policy ($14,000 for each parent times three children equals as much as $84,000 per year in 2016—with indexing of the annual exclusion, it may be more in future years). When they transfer the premium amount to the trustee, their children each receive a special right known as a "Crummey" power, named after the first person to use this concept. Under their Crummey power, the children have 30 days to spend the money. With appropriate parental guidance, the children do not spend the money and it may then be used for payment of insurance premiums. Because the annual exclusion gift of $14,000 requires the child to be able to spend the money for a short period of time, the Crummey power is an essential part of the ILIT.
ILIT Insurance Policies. There are two ways for the insurance policy to be transferred to the ILIT. The first and preferred method is for the ILIT to actually purchase a new policy. However, if you or your spouse are not insurable, in some cases an existing policy is given to the ILIT. If you give an existing policy to the ILIT, in order for the ILIT to be estate tax free you must survive for at least three years.
Trustee
Child as Trustee. Many parents will select one of the children as trustee, preferably one with good financial skills. The child frequently serves for a reduced fee or no fee. The disadvantage for the child serving as trustee is that he or she may have conflicts with other siblings.
Financial Institution as Trustee. The second option is for a bank or trust company to serve as trustee. If the insurance trust is quite large, the objective nature of the bank or trust institution may make this a good option. In considering a bank or financial institution as trustee, Steve and Susan should understand the costs for the investment and administration services of the bank after the insurance proceeds have been received and the trust is funded.
ILIT Options
Income. After the demise of Steve and Susan, the trustee will invest the insurance proceeds and pay income to the beneficiaries. Some trusts last until the beneficiary has reached a specific age, or the trust may last for their lifetimes. With the concern about protecting a child with a substance abuse problem and the marital relationship problems of their daughter, Steve and Susan decided to continue the income stream for the lives of their children. The primary goal of many parents is to provide an additional level of economic security for the children. This income stream will provide payouts for the rest of their lifetimes.
Ability to Distribute Principal. The trustee may be given permission to distribute principal. This could be based upon such standards as health, education, maintenance and support, or may be discretionary with the trustee. Steve and Susan permitted their trustee to make distributions for medical care but not for enhanced lifestyle. Steve asked, "What is likely to be the result if two of our children receive principal?" Based on the belief that principal distributions will be used for unneeded and perhaps unhealthy purposes, their trust will pay income and, if required, medical expenses.
Income Taxes on New Trust Income. While the insurance proceeds are tax free to the trust as long as there has been no violation of the insurance guidelines, the new income that is earned and distributed to the children will be taxable. If the income were retained in the trust, the trust would pay the tax. However, because most income would be distributed to the children, they will pay the ordinary income or capital gains tax on their trust distributions.
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SAVVY LIVING
How to Calculate Your Retirement NumberCan you help me calculate about how much my wife and I need to save for retirement? We are both in out late-50s and want to see where we stand.
Calculating the approximate amount of funds you'll need to save for a comfortable retirement is actually pretty easy and doesn't take long to do. It's a simple, three-step process that includes estimating your future living expenses, tallying up your retirement income and calculating the difference. There are even a host of online calculators that can help you with this.
Living Expenses
The first step is the most difficult—estimating your living expenses when you retire. If you want a quick ballpark estimate, figure around 75% - 85% of your current gross income. That's what most people find they need to maintain their current lifestyle in retirement.
If you want a more precise estimate, track your current living expenses on a worksheet and deduct any costs you expect to go away or decline when you retire. Then add whatever new costs you anticipate.
Costs that you can deduct from this worksheet include work-related expenses, like commuting or lunches out, as well as the amount you're putting away for retirement. You may also be able to deduct your kids' college payments and your mortgage if you expect to have those costs paid off by retirement. Your income taxes will likely decrease, so that might lead to a deduction as well.
On the other hand, some costs will probably go up when you retire, like healthcare. Additionally, depending on your interests, you may spend a lot more on travel, golf or other hobbies. If you're going to be retired for 20 or 30 years you also need to factor in the occasional big budget items, like a new roof, furnace or car.
Tally Income
Step two is to calculate your retirement income. If you or your wife contribute to Social Security, go to ssa.gov/myaccount to get your personalized statement. That statement estimates what your retirement benefits will be at age 62, full retirement age and age 70.
In addition to Social Security, if you or your wife has a traditional pension plan from an employer, find out from the plan administrator how much you are likely to receive when you retire. You should also add any other income from other sources that you expect to receive, such as rental properties, part-time work, etc.
Calculate the Difference
The final step is to do the calculations. Subtract your annual living expenses from your annual retirement income. If your income alone can cover your bills, then you're all set. If not, you'll need to tap your savings (including your 401(k) plans, IRAs or other investments) to make up the difference.
For example, let's say you need around $55,000 a year to meet your living expenses and pay taxes. Let's also assume that you and your wife expect to receive $30,000 a year from Social Security and other income. That leaves a $25,000 shortfall that you'll need to pull from your nest egg each year ($55,000 - $30,000 = $25,000).
Then, depending on what age you want to retire, you need to multiply your shortfall by at least 25 if you want to retire at age 60, 20 if you want to retire at age 65 or 17 if you want to retire at age 70. In this case, that would equate to $625,000, $500,000 and $425,000, respectively.
Why multiply the shortfall by 25, 20 or 17? You want to do so because that would allow you to pull 4% a year from your savings. That would be a safe withdrawal strategy that, in most cases, will let your money last as long as you do.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.
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SAVVY LIVING
How to Calculate Your Retirement NumberCan you help me calculate about how much my wife and I need to save for retirement? We are both in out late-50s and want to see where we stand.
Calculating the approximate amount of funds you'll need to save for a comfortable retirement is actually pretty easy and doesn't take long to do. It's a simple, three-step process that includes estimating your future living expenses, tallying up your retirement income and calculating the difference. There are even a host of online calculators that can help you with this.
Living Expenses
The first step is the most difficult—estimating your living expenses when you retire. If you want a quick ballpark estimate, figure around 75% - 85% of your current gross income. That's what most people find they need to maintain their current lifestyle in retirement.
If you want a more precise estimate, track your current living expenses on a worksheet and deduct any costs you expect to go away or decline when you retire. Then add whatever new costs you anticipate.
Costs that you can deduct from this worksheet include work-related expenses, like commuting or lunches out, as well as the amount you're putting away for retirement. You may also be able to deduct your kids' college payments and your mortgage if you expect to have those costs paid off by retirement. Your income taxes will likely decrease, so that might lead to a deduction as well.
On the other hand, some costs will probably go up when you retire, like healthcare. Additionally, depending on your interests, you may spend a lot more on travel, golf or other hobbies. If you're going to be retired for 20 or 30 years you also need to factor in the occasional big budget items, like a new roof, furnace or car.
Tally Income
Step two is to calculate your retirement income. If you or your wife contribute to Social Security, go to ssa.gov/myaccount to get your personalized statement. That statement estimates what your retirement benefits will be at age 62, full retirement age and age 70.
In addition to Social Security, if you or your wife has a traditional pension plan from an employer, find out from the plan administrator how much you are likely to receive when you retire. You should also add any other income from other sources that you expect to receive, such as rental properties, part-time work, etc.
Calculate the Difference
The final step is to do the calculations. Subtract your annual living expenses from your annual retirement income. If your income alone can cover your bills, then you're all set. If not, you'll need to tap your savings (including your 401(k) plans, IRAs or other investments) to make up the difference.
For example, let's say you need around $55,000 a year to meet your living expenses and pay taxes. Let's also assume that you and your wife expect to receive $30,000 a year from Social Security and other income. That leaves a $25,000 shortfall that you'll need to pull from your nest egg each year ($55,000 - $30,000 = $25,000).
Then, depending on what age you want to retire, you need to multiply your shortfall by at least 25 if you want to retire at age 60, 20 if you want to retire at age 65 or 17 if you want to retire at age 70. In this case, that would equate to $625,000, $500,000 and $425,000, respectively.
Why multiply the shortfall by 25, 20 or 17? You want to do so because that would allow you to pull 4% a year from your savings. That would be a safe withdrawal strategy that, in most cases, will let your money last as long as you do.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.
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YOUR PLAN
A Gift that Lasts More than a Lifetime
When remembering his parents Robert and Mozelle Chason, their son Steve speaks fondly of the godly example they set for him.
"They were very giving, very selfless, spirit-filled people," says Steve.
A talented writer, Mozelle authored the book When Sweat Turns to Tears: The story of one woman's courage during the Great Depression and war years in the Mississippi Delta. Born in Humphreys County, Mississippi in 1933, Mozelle was the third of fifteen children of parents who were sharecroppers. Robert was a pastor in the Church of the Nazarene, and Steve notes, "He was the quintessential dad, pastor, friend. He was a shining example for me as a dad and as a Christian."
Married for fifty-seven years, Robert and Mozelle passed away just a few months apart in April and August of 2014, respectively. Earlier this year, the proceeds of the sale of their house that Steve received went to Nazarene Compassionate Ministries (NCM) to build a well in Haiti and to establish a child sponsorship endowment.
"The donation came directly as a result of talking mom and dad and before they passed," says Steve.
The Chasons' passion for helping people in Haiti developed when Robert went there on a Work and Witness trip. After this trip, Robert and Mozelle gave through NCM to help those in Haiti.
The portion of the donation leftover after the well was built went to a fund an NCM child sponsorship endowment through the Church of the Nazarene Foundation.
"The money will last into perpetuity to help the kids for a long time," commented Steve.
An NCM child sponsorship endowment can be established with a one-time donation of $8,000 or more. This amount will fund a sponsorship throughout the life of the child. After the child ages out of the program those dollars are used to sponsor another child. Donations to the NCM child sponsorship endowment are invested by the Church of the Nazarene Foundation, and the income earned is distributed to fund the sponsorship. The principal is preserved, and therefore, the endowment sponsors child after child, year after year.
Additionally, linked-together ministries through the Church of the Nazarene increase the ministry impact on children in the NCM child sponsorship program. Gifts are supported by:
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YOUR PLAN
A Gift that Lasts More than a Lifetime
When remembering his parents Robert and Mozelle Chason, their son Steve speaks fondly of the godly example they set for him.
"They were very giving, very selfless, spirit-filled people," says Steve.
A talented writer, Mozelle authored the book When Sweat Turns to Tears: The story of one woman's courage during the Great Depression and war years in the Mississippi Delta. Born in Humphreys County, Mississippi in 1933, Mozelle was the third of fifteen children of parents who were sharecroppers. Robert was a pastor in the Church of the Nazarene, and Steve notes, "He was the quintessential dad, pastor, friend. He was a shining example for me as a dad and as a Christian."
Married for fifty-seven years, Robert and Mozelle passed away just a few months apart in April and August of 2014, respectively. Earlier this year, the proceeds of the sale of their house that Steve received went to Nazarene Compassionate Ministries (NCM) to build a well in Haiti and to establish a child sponsorship endowment.
"The donation came directly as a result of talking mom and dad and before they passed," says Steve.
The Chasons' passion for helping people in Haiti developed when Robert went there on a Work and Witness trip. After this trip, Robert and Mozelle gave through NCM to help those in Haiti.
The portion of the donation leftover after the well was built went to a fund an NCM child sponsorship endowment through the Church of the Nazarene Foundation.
"The money will last into perpetuity to help the kids for a long time," commented Steve.
An NCM child sponsorship endowment can be established with a one-time donation of $8,000 or more. This amount will fund a sponsorship throughout the life of the child. After the child ages out of the program those dollars are used to sponsor another child. Donations to the NCM child sponsorship endowment are invested by the Church of the Nazarene Foundation, and the income earned is distributed to fund the sponsorship. The principal is preserved, and therefore, the endowment sponsors child after child, year after year.
Additionally, linked-together ministries through the Church of the Nazarene increase the ministry impact on children in the NCM child sponsorship program. Gifts are supported by:
- Nazarene disaster relief
- Nazarene community development relief
- Nazarene ministry in war-torn nations
- Shown the JESUS film by a Nazarene evangelism team
- Discipled in a Nazarene Sunday school
- Strengthened by a Nazarene healthcare volunteer
- Taught to read using Scripture and Nazarene literature
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FINANCES
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FINANCES
Stocks - Coca-Cola Releases Quarterly Earnings
The Coca-Cola Company (KO) released its quarterly earnings on Tuesday, February 9. The Atlanta-based soft drink giant beat earnings estimates but was unable to match last year's numbers.Revenue for the quarter was $10 billion, beating analyst expectations. The company reported revenue of $10.8 billion for the same quarter last year.
"In late 2014, we laid out a clear five-point plan to reinvigorate growth and increase profitability. In 2015, a transition year, we delivered on this plan despite an increasingly challenging global macroeconomic environment," said Muhtar Kent, CEO of The Coca-Cola Company. "Our fourth quarter performance was a testament to the action we took as the Company continued to deliver solid pricing and unit case volume growth, culminating in 4% organic revenue growth for the full year."
The company reported net income of $1.24 billion or $0.28 per share. This is up from $770 million or $0.17 per share during the same quarter last year.
The Coca-Cola Company continues to maneuver through a rough environment for soda companies. Many consumers are shifting away from sugary snacks and drinks and looking for healthier alternatives. In response, Coke has looked for ways to increase revenue and cut costs. It has seen growth in its non-carbonated product lines including a line of ultra-filtered milk, known as Fairlife. The company's effort to refranchise its North American bottlers over a period of several years should serve to cut costs.
The Coca-Cola Company (KO) shares ended the week at $43.11, up 2% for the week.
Walt Disney Company Reports Earnings
The Walt Disney Company (DIS) reported quarterly earnings on Tuesday, February 9. The company posted a strong profit for the quarter.
The entertainment company reported revenue of $15.2 billion for the quarter. This was an increase of 14% from the same quarter last year.
"Driven by the phenomenal success of Star Wars, we delivered the highest quarterly earnings in the history of our company, marking our 10th consecutive quarter of double-digit EPS growth," said Disney Chairman and CEO Robert A. Iger. "We're very pleased with our results, which continue to validate our strategic focus and investments in brands and franchises to drive long-term growth across the entire company."
Disney reported net income of $2.9 billion for the fourth quarter, up 32% from a year ago. The company posted net income of $2.2 billion during the same quarter last year.
The Walt Disney Company owes much of its quarterly success to the December release of the latest installment in the "Star Wars" series. The film's box office success has helped offset the company's struggles with its television division. ESPN, a major part of Disney's television offering, has seen a steady decrease in subscriptions as many consumers are moving away from traditional cable packages to online streaming services.
The Walt Disney Company (DIS) shares ended the week at $91.15, down 2% for the week.
Yelp Posts Quarterly Net Loss
Yelp, Inc. (YELP) released its quarterly results on Monday, February 8. The company reported higher revenue than last year but a net loss for the quarter.
The company reported revenue of $153.7 million. This is up 40% from the same quarter last year when revenue was $109 million.
"We are pleased with the progress we made on the key initiatives we set at the beginning of 2015," said Yelp CEO Jeremy Stoppelman. "We have evolved to a mobile-centric company and have successfully completed our transition to a performance-based advertising business."
Yelp sustained a net loss of $22.2 million or $0.29 per share. During the same period last year the company reported net income of $32.7 million or $0.42 per share.
Yelp is known for its mobile app, which helps users search for and review local restaurants and other businesses. The company relies heavily on local advertisements for revenue. With the company posting mixed results for the quarter, Yelp CFO Rob Krolik has announced his resignation. Going forward, the company will be looking for someone to step in and bring the income numbers into the black.
Yelp, Inc. (YELP) shares ended the week at $15.56, down 11% for the week.
The Dow started the week of 2/8 at 16,148 and closed at 15,974 on 2/12. The S&P 500 started the week at 1,873 and closed at 1,865. The NASDAQ started the week at 4,288 and closed at 4,338.
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Bonds - Treasury Yields Rise After Hitting 3-Year Low
After hitting their lowest return since September 2012 on Thursday, Treasury yields rose slightly on Friday, pushing prices lower. Despite the slight gain, the yields are still lingering around a one-year low.The slight improvement came after a report indicated that January's retail sales rose slightly above analysts' expectations. The news caused some investors to shift gears—selling safer assets, like government bonds, in favor of riskier assets. As a result, the 10-year Treasury note gained 3.6 basis points following the news.
"I'm not at all surprised to see the Treasury market take a breather here after the torrid pace we've seen," said Christopher Keith, fixed income manager at Adviser Investments. Friday broke a six-day streak of declining yields.
The report indicated that U.S. retail sales rose by 0.2% in January, while December's sales were revised to show a 0.2% gain. Last month, reports incorrectly stated that December sale's experienced a 0.1% decline. The rise in sales is attributed to increased online shopping traffic, auto sales and grocery shopping.
"It relieves some of the unrelenting bad news versus expectations that has been the norm this year outside labor market indicators," said Jim Vogel, interest-rate strategist at FTN Financial.
However, despite the slight increase, analysts caution that investors should not expect yields to continue climbing higher. Due to negative interest rates in Europe and Japan, yields are expected to remain low as global investors seek out safe, secure returns.
In addition, Federal Reserve Chair Janet Yellen's comments have caused many investors to suppress their optimism. On Wednesday, Yellen testified to the House Financial Services Committee that she doesn't expect the central bank to cut interest rates any time soon. This course of action seems to be due in large part to the weakening overseas markets, as she noted that current financial conditions have become "less supportive of growth."
The 10-year Treasury note yield finished the week of 2/8 at 1.75% while the 30-year Treasury note yield was 2.60%.
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CDs and Mortgages - Mortgage Rates Continue Slide
Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, February 11. Interest rates have fallen for the sixth consecutive week.The 30-year fixed rate mortgage averaged 3.65% for the week. This is a decrease from last week when it averaged 3.72%. Last year at this time, the 30-year fixed rate mortgage averaged 3.69%.
This week, the 15-year fixed rate mortgage averaged 2.95%. This is down from last week's average of 3.01%. The 15-year fixed rate mortgage averaged 2.99% during the same period last year.
"In a falling rate environment, mortgage rates often adjust more slowly than capital market rates, and the early-2016 flight-to-quality has run true to form," said Freddie Mac Chief Economist Sean Becketti. "The 30-year mortgage rate has dropped 36 basis points since the start of the year, while the yield on the 10-year Treasury has dropped 59 basis points over the same period. If Treasury yields were to hold at current levels, mortgage rates might well sink a little further before stabilizing."
The money market fund finished the week of 2/8 at 0.3%. The 1-year CD finished at 0.6%.
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To model generosity inspires others to do the same. Thank you for your interest in the Foundation as we strive to partner with churches, ministries, and Christians around the world to fund the important work of God's Kingdom.
To access updated financial and gift planning information, please visit our website, www.nazarenefoundation.org. If you would like more information about your charitable giving options or about how a Foundation representative can visit your church, contact us by phone at (913) 577-2983 or by email at info@nazarenefoundation.org.
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Church of the Nazarene Foundation
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To model generosity inspires others to do the same. Thank you for your interest in the Foundation as we strive to partner with churches, ministries, and Christians around the world to fund the important work of God's Kingdom.
To access updated financial and gift planning information, please visit our website, www.nazarenefoundation.org. If you would like more information about your charitable giving options or about how a Foundation representative can visit your church, contact us by phone at (913) 577-2983 or by email at info@nazarenefoundation.org.
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Church of the Nazarene Foundation
17001 Prairie Star Parkway, Suite 200, Lenexa, Kansas 66220, United States
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