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LinkedIn, Pinterest more popular than Twitter: study

SAN FRANCISCO (Reuters) – More U.S. adults use LinkedIn and Pinterest than Twitter, but that website attracts a greater proportion of blacks and young adults than do its social media peers, a Pew Research Center study released on Monday showed.

Photo pin-up site Pinterest spiked in popularity over the past year, according to the survey, a poll of 1,445 Internet users aged 18 and older. About 21 percent of respondents said they employ the service, up sharply from 15 percent in a similar survey conducted a year ago.

The figure was 22 percent for LinkedIn and 18 percent for Twitter, holding roughly steady from a year ago. About 29 percent of the blacks surveyed by Pew made use of Twitter, well above 16 percent for whites and Hispanics, the study showed. (

Twitter ranks higher than Pinterest in terms of engagement, however: 46 percent of users surveyed go onto the online messaging service daily, versus 23 percent for Pinterest and just 13 percent for LinkedIn.

Industry experts have said Twitter is less intuitive than Facebook and thus can turn off users, curtailing its growth as a mainstream social media platform.

According to a Reuters/Ipsos poll conducted in October, 36 percent of 1,067 people who have joined Twitter say they do not use it, and 7 percent say they have shut their account. In contrast, only 7 percent of 2,449 Facebook members report not using the online social network, and 5 percent say they have shut down their account.

The Pew study polled users of Facebook, Instagram, Twitter, LinkedIn and Pinterest – five of the largest U.S. social media services.

About 71 percent of respondents said they used Facebook, up from 67 percent a year earlier and granting it the highest popularity ranking. But some analysts speculate that younger users are gravitating away from Facebook, the world’s largest social network, and toward newer services such as SnapChat or Instagram.

“Facebook is the dominant social networking platform in the number of users, but a striking number of users are now diversifying onto other platforms,” the Pew study read.

“Pinterest holds particular appeal to female users (women are four times as likely as men to be Pinterest users), and LinkedIn is especially popular among college graduates and Internet users in higher-income households.”

(Reporting by Eddie Chan; Editing by Steve Orlofsky)

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Merrill taps rich investors for ex-convict social-impact bond

NEW YORK (Reuters) – Merrill Lynch and U.S. Trust reached out to some high-powered clients this quarter to invest in a social-impact bond whose proceeds finance a program to lower recidivism rates among ex-convicts in New York.

The project raised $13.5 million over 60 days from clients of the Bank of America Corp-owned brokerage and wealth management firms. Investors included former U.S. Treasury Secretary Lawrence Sommers, Utah philanthropist James Sorenson, hedge fund founder Bill Ackman’s Pershing Square Foundation and billionaire investor and oil trader John Arnold, according to the bank.

“They are looking for new and creative ways … to have a more direct connection between the dollars they are investing and the impact it is having on a social problem that they care about,” Andy Sieg, head of global wealth and retirement solutions at Merrill Lynch said during a telephone news conference on Monday.

Investors can realize annual returns of up to 12.5 percent over five-and-a-half years, although the probable return is in the high single digits, he said. Actual returns depend on the success of job-training programs for 2,000 newly released prisoners administered by the Center for Employment Opportunities. Success rates will be determined by Chesapeake Research Associates.

The social impact bond is the first pay-for-success instrument in which Bank of America participated, and the first in which a state, New York, is participating. Reducing recidivism will help control prison costs, the fastest growing budget item in New York in 2012 after Medicaid, Gov. Andrew Cuomo said in a news release.

About 20 pay-for-success bonds have been issued in programs worldwide, but more than 10 U.S. states are considering the programs, said Tracy Palandjian, chief executive of Social Finance Inc, a nonprofit that structures such investments.

The new issue attracted an average order of $350,000 from 40 high-net-worth individuals and from family and other foundations. Capital from investors will come in two stages, this June and again in early 2016.

The funds raised are minuscule compared with the about $12 trillion in U.S. individual investor assets under management and the billions raised weekly in capital markets, Palandjian and Sieg said.

But the Merrill executive said he is confident more transactions will follow at Bank of America and other institutions because of, “strong interest by clients in impact investing.”

The Rockefeller Foundation provided a $1.32 million guaranty that covers 10 percent of investors’ principal should it fail to repay 100 percent of their investment. The Robin Hood Foundation, a nonprofit with strong support from Wall Street and private equity, invested $300,000 in the project.

(Reporting by Jed Horowitz. Editing by Andre Grenon)

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Berkshire Hathaway to buy Phillips 66 unit for around $1.4 billion

NEW YORK (Reuters) – Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) struck a deal to buy a Phillips 66 (PSX.N) business that makes chemicals to improve the flow potential of pipelines for around $1.4 billion of stock.

Phillips 66 said on Monday that Berkshire will pay for the unit, Phillips Specialty Products Inc, using about 19 million shares of Phillips 66 stock that it currently owns.

“I have long been impressed by the strength of the Phillips 66 business portfolio,” Buffett said in a statement. “The flow improver business is a high-quality business with consistently strong financial performance.”

The exact number of shares Berkshire will pay for the unit will be determined by their price on the closing date, the companies said.

James Hambrick, CEO of Berkshire’s specialty chemicals unit Lubrizol Corp, will oversee the business, Buffett said. Berkshire bought Lubrizol for about $9 billion in 2011.

Phillips 66 CEO Greg Garland said the company decided to sell the business because Berkshire Hathaway made a strong offer. He said the company will now focus its growth on its oil and natural gas transportation and processing business, as well as its other chemicals businesses.

Phillips 66 said it expects the Phillips Specialty Products unit to have about $450 million of cash and cash equivalents on its balance sheet at closing. It expects the deal to close in the first half of 2014.

Berkshire favors larger companies with consistent earnings power and easy-to-understand businesses.

In June, it paid $12.3 billion for half of ketchup maker H.J. Heinz Co, and in May said it paid $2.05 billion for the 20 percent it did not already own of Israeli toolmaker Iscar.

Earlier this month, Berkshire’s MidAmerican Energy unit paid $5.6 billion for the Nevada utility NV Energy Inc.

Omaha, Neb.-based Berkshire still has the capacity to make one or more large purchases, which Buffett calls “elephants.”

Berkshire ended September with $42.08 billion of cash and equivalents, and generates significant cash from the insurance operations for which it is perhaps best known.

(Reporting by Michael Erman and Jonathan Stempel; editing by Andrew Hay)

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Fisker founders, managers sued for misleading investor

(Reuters) – The founders and top managers of now-bankrupt Fisker Automotive never told potential investors that the green car startup lost access to federal funds that were crucial to the company’s financial strength, according to an investor lawsuit.

Co-founder Henrik Fisker, board members and executives kept quiet that the U.S. Department of Energy cut access to a $529 million green-technology loan in June 2011, according to the lawsuit, filed on Friday by Atlas Capital Management LP.

As a result, the firm wants a federal court in Delaware to order the defendants to repay the nearly $2 million Atlas invested in Fisker, which filed for Chapter 11 bankruptcy protection in late November.

Other defendants include Kleiner Perkins Caufield Byers, a venture capital firm and early Fisker backer, Ray Lane, the former Fisker chairman and Kleiner partner emeritus, and Richard Li, an investor poised to buy Fisker out of bankruptcy.

Fisker raised more than $1.4 billion in public and private funds after its founding in 2007, but lavish spending, quality and engineering blunders and other mistakes drained Fisker’s coffers and delayed the launch of its Karma plug-in hybrid, several people close to the company told Reuters earlier this year.

Much of Fisker’s funds came after it won an Energy Department loan in September 2009. This government loan was continually used to entice investors to back the company and to generate favorable press, according to the Atlas lawsuit.

Fisker tapped $192 million from its Energy Department loan but lost access to the remainder in June 2011 after it privately disclosed to U.S. officials that it failed to meet a Karma production milestone required by the government. This was never disclosed to investors, the Atlas lawsuit said.

Atlas also said that Fisker used an “obscure” provision of its previous offering to carry out a “pay to play” capital call. If investors did not participate in follow-on rounds, their previous investment would be severely diluted.

Just one day after closing on a “pay to play” round of financing in late 2012, Atlas said, Fisker disclosed it was recalling hundreds of its Karmas because of a potential for battery fires, a problem the carmaker had known about for weeks.

“Had plaintiff known the truth regarding the default of the ATVM (government) loan covenants, the December 2011 recall due to battery fires and Fisker’s default of the DOE confidential ‘key personnel’ loan covenant, which were not disclosed, plaintiff would not have purchased or otherwise acquired its Fisker securities, or if it had purchased such securities, it would not have done so at the artificially inflated prices which it paid,” Atlas said in the complaint.

A Fisker spokesman, Kleiner and an attorney who represents Li’s affiliate in the bankruptcy did not immediately return requests for comment.

Fisker’s finances began to unravel after the loss of the Energy Department funding in mid-2011, but the company kept this and other troubling information from potential investors for several months, Reuters reported in June.

Fisker’s financial woes worsened this year after a botched attempt to find a buyer and the exit of executives, including Henrik Fisker. In April, Fisker fired the bulk of its workforce to save cash.

Just prior to Fisker’s November bankruptcy filing, a company affiliated with Li bought the Energy Department’s loan for $30 million. Li is using the money owed on that loan, about $168 million, to acquire Fisker’s assets in a bankruptcy court-supervised sale.

The U.S. bankruptcy court in Wilmington, Delaware, will hold a hearing Friday to approve the sale and the company’s plan to repay its creditors, which are likely to collect next to nothing.

Monday was the deadline to object to the repayment plan and sale, and Atlas asked the court to block both unless Fisker established a way to preserve the company’s books and records.

More than a dozen other objections were filed, mostly by suppliers unhappy with the handling of their contracts.

A Karma owner, Robert Diamond of Syosset, New York, objected because the sale would leave Karma owners without the ability to obtain warranty service on their cars.

“It is patently unfair to sell the assets and business of the debtors without requiring the purchaser to assume warranty obligations arising in the ordinary course of business,” wrote Diamond.

(Reporting by Tom Hals in Wilmington, Delaware and Deepa Seetharaman in Detroit; Editing by Steve Orlofsky)

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Boeing wins deal worth up to $750 million for B-1 bomber work

WASHINGTON (Reuters) – Boeing Co (BA.N) has won a contract valued at up to $750 million over five years for continued work on the U.S. Air Force’s fleet of B-1 bombers, the Pentagon announced on Monday.

The contract, which includes a one-year base period and four one-year options, covers integrated engineering services such as computer network support, technical analysis, flight safety analysis and possible work on enhancements, the U.S. Defense Department said in its daily digest of major contracts.

(Reporting by Andrea Shalal-Esa; Editing by Diane Craft)

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Hertz adopts shareholder rights plan

(Reuters) – Hertz Global Holdings Inc (HTZ.N), the No. 2 U.S. car rental company, said it adopted a shareholder rights plan as it had observed “unusual and substantial activity” in its shares.

Hertz said the plan will come into effect if a person or group acquires 10 percent or more of the company’s stock.

The company said the plan was not adopted in response to any specific bid to take over control of the company.

Shares of Hertz rose 3 percent in extended trading after closing at $25.91 on the New York Stock Exchange on Monday.

Although Hertz’s shares have risen 58 percent this year, they have failed to match the performance of smaller rival Avis Budget Group Inc’s (CAR.O) shares, which have nearly doubled during the same period.

Park Ridge, New Jersey-based Hertz fought a long, hard battle with Avis to buy Dollar Thrifty, which serves the leisure market and has lower-priced rental options compared with Hertz, which primarily serves corporate customers.

The $2.6 billion acquisition helped Hertz consolidate its position as No. 2 in the U.S. car rental market behind privately held Enterprise Holdings.

BofA Merrill Lynch and Barclays are acting as financial advisers to Hertz.

(Reporting by Soham Chatterjee in Bangalore; Editing by Maju Samuel)

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NYC sues FedEx for illegally shipping cigarettes to homes

NEW YORK (Reuters) – New York City has sued FedEx Corp, accusing it of illegally delivering millions of contraband cigarettes to people’s homes and seeking $52 million in fines and unpaid taxes.

The lawsuit, filed in U.S. District Court in Manhattan, marks one of the last acts by the administration of Mayor Michael Bloomberg, whose more than decade-old campaign to ban smoking in various public and private places has been credited with saving thousands of lives and become a blueprint for other cities.

According to the city, package delivery company FedEx created a “public nuisance” through its partnership with Shinnecock Smoke Shop, located on the Shinnecock Indian Nation reservation in Southampton, New York, to ship untaxed cigarettes to residential homes.

FedEx allegedly did so despite, and even while negotiating, a February 2006 agreement with New York State’s then attorney general, Eliot Spitzer, to stop such deliveries in the state, an agreement later expanded to cover deliveries throughout the country.

The city said FedEx delivered about 19.5 tons, or 55,000 cartons, of cigarettes to city residents in 9,900 shipments from 2005 to 2012 and deprived it of a $15 excise tax on each carton. A typical carton has 200 cigarettes.

FedEx’s activity violated various federal and state laws, including an anti-racketeering statute, the complaint said.

The city wants FedEx to pay a $49.5 million fine, equal to $5,000 per shipment, plus $2.48 million representing triple the lost tax revenue. It also wants FedEx to hire an independent monitor to ensure future compliance and provide training.

In a statement, Memphis, Tennessee-based FedEx said it has stopped doing business with known shippers of untaxed cigarettes.

“Through its contracts with customers, FedEx prohibits the shipment of tobacco direct to consumers and believes the claims made by the city are overstated and not founded in law,” it said. “FedEx intends to defend this case while continuing to work with authorities to stop prohibited tobacco shipments.”

Eric Proshansky, deputy chief of the New York City Law Department’s affirmative litigation division, called the case “part of our comprehensive efforts to end the trafficking of contraband cigarettes into the city and to hold accountable any business that contributes to that illegal trade.”

City and state officials have long fought in court to collect taxes on cigarettes sold by Indian-owned businesses.

The Shinnecock Indian Nation did not immediately respond to a request for comment. Neither it nor the smoke shop are defendants in the lawsuit against FedEx.

The lawsuit comes two days before New York Mayor-elect Bill de Blasio takes office, ending Bloomberg’s 12-year mayoralty.

De Blasio has named Zachary Carter, the former U.S. attorney in Brooklyn, to succeed Michael Cardozo as corporation counsel, the city’s top lawyer. Cardozo filed the FedEx lawsuit.

The case is City of New York v. FedEx Ground Package System Inc et al, U.S. District Court, Southern District of New York, No. 13-09173.

(Reporting by Jonathan Stempel in New York; Additional reporting by Nate Raymond; Editing by Dan Grebler and Leslie Adler)

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Special Report: Lost hooves, dead cattle before Merck halted Zilmax sales

WALLA WALLA COUNTY, WASHINGTON (Reuters) – The U.S. beef industry’s dependence on the muscle-building drug Zilmax began unraveling here, on a sweltering summer day, in the dusty cattle pens outside a Tyson Foods Inc slaughterhouse in southeastern Washington state.

As cattle trailers that had traveled up to four hours in 95-degree heat began to unload, 15 heifers and steers hobbled down the ramps on August 5, barely able to walk. The reason: The animals had lost their hooves, according to U.S. Department of Agriculture documents reviewed by Reuters. The documents show the 15 animals were destroyed.

The next day, the hottest day of the month, two more animals with missing hooves arrived by truck. Again, the animals were destroyed, the documents show.

The animals’ feet were “basically coming apart,” said Keith Belk, a professor of animal science at Colorado State University. Belk said he reviewed photos of the lame cattle, though he declined to say who showed them to him.

The 17 animals had a factor in common, according to an examination of U.S. government documents and interviews with people who had direct knowledge of the events. In the weeks before the cattle were shipped to Tyson’s slaughterhouse, outside the city limits of Pasco, all had been fed Merck Co Inc’s profit-enhancing animal feed additive, Zilmax.

The day after the hoofless animals were euthanized on August 6, Tyson told its feedlot customers it would stop accepting Zilmax-fed cattle. After Reuters reported the existence of a videotape of apparently lame Zilmax-fed animals – shown by an official of meatpacking giant JBS USA LLC at a trade meeting in Colorado – Merck itself temporarily suspended sales of the drug in the U.S. and Canada. The rest of the nation’s leading meatpackers soon followed Tyson, the largest U.S. meat processor.

Merck, in a statement to Reuters, stressed the safety of its product. It said the company investigates all reports of adverse reactions to its drugs, and did so after the deaths near Pasco.

“Several third-party experts were brought in to evaluate the situation, review the data and identify potential causes for the hoof issue,” Merck’s statement said. “The findings from the investigation showed that the hoof loss was not due to the fact these animals had received Zilmax.”

Merck declined to identify the names of the third-party investigators or provide more detail on the research findings.

After temporarily halting Zilmax sales, Merck continues to state Zilmax is safe when used as directed, with no welfare concerns discovered in 30 research studies since the product was introduced in the United States in 2007. In addition, Merck said, the company is planning more field evaluations of Zilmax, using “a well-designed collection and analysis of data by third-party industry experts.” A “prominent” epidemiologist and veterinarian will oversee the work, Merck said.

Tyson Foods spokesman Gary Mickelson said his company doesn’t know exactly what happened to the small group of cattle that were destroyed at the plant near Pasco. Some animal health experts have told Tyson the use of Zilmax is a possible cause, he said.

Tyson had seen some cattle mobility issues in the past, but “the issues at Pasco this summer were more severe” than the company had seen before, Mickelson said.


Scientists say they have yet to determine whether Zilmax causes ailments so severe that cattle must be euthanized. One theory is that the federally approved feed additive may compound the effects of common feedlot nutritional disorders such as acidosis, which can affect animals that consume too much starch (primarily grain) or sugar in a short period of time. Heat and animal genetics, too, may be factors.

Regardless, the episode at the Tyson plant – which hasn’t been publicly disclosed until now – is coming to light at a time of growing concern over risks to animal and human health posed by the increased use of pharmaceuticals in food production. Livestock pharmaceuticals use is expanding as part of the push to produce more meat at lower cost.

Earlier this month, in an effort to combat antibiotic-resistant bacteria that threatens human health, the U.S. Food and Drug Administration rolled out new policies to phase out the use of antibiotics that make cows, pigs and chickens plumper. The FDA has said that meat produced from cattle fed with Zilmax is safe for human consumption.

The cases of hoofless cattle also raise ethical questions about whether the drive by modern agriculture to produce greater volumes of food, as cheaply as possible, is coming at the cost of animal welfare.

Of the more than 30 million beef cattle slaughtered in the U.S. annually, most move smoothly through a mechanized system that is among the most efficient in the world.

Reports that Zilmax causes lameness in some animals have raised concerns about the tradeoffs associated with a drug that adds up to 33 pounds of marketable meat to a 1,300-pound steer and has helped some feedlots stay in business at a time of punishing industry consolidation.

Livestock nutritionists, veterinarians and cattle researchers told Reuters that cattle losing hooves would be in great pain. Animals that have lost their hooves may take tentative steps, as if walking on glass, they said. Even when prodded, they sometimes refuse to rise back to their feet.

Livestock researcher Temple Grandin, who has pioneered humane slaughterhouse practices as a consultant to major beef processors, said it would be like a person having their toe nails yanked off.

“It would hurt a whole lot,” said Grandin, who said she has not witnessed any of the incidents of Zilmax-fed cattle with lost hooves.

When animals delivered to slaughterhouses are unable to walk on their own, Agriculture Department regulations require such “downer” cattle be destroyed and their meat prevented from reaching consumers.

Federal law requires Merck to report all animal deaths, as well as any other adverse reactions, in connection with use of its products. A review of reports submitted by Merck and others to the FDA shows at least 285 cattle have died unexpectedly or been destroyed in the United States after being fed Zilmax since the drug was introduced in 2007. The FDA reports specify the ailments that led to the unexpected deaths, but do not consistently state whether the animals expired on their own or were euthanized.

According to the reports, reviewed by Reuters through a Freedom of Information Act request, at least 75 animals lost hooves and were euthanized after being fed Zilmax over the past two years. The reports show pneumonia was a factor in the death of 94 Zilmax-fed cattle. And a build-up of gas in bovine stomachs, referred to as bloat, was listed as a cause in 41 cases of cattle fed Zilmax.

Of the 285 animals that died, 113 were fed either an animal-based antibiotic, or another medication to boost weight, or both, in conjunction with Zilmax.


Some veterinarians and animal experts say there is no proof Zilmax was the chief cause of any cattle deaths.

“My assessment is that I do not see data supporting the concerns today, at least the data that I have reviewed and been aware of,” said University of Nebraska-Lincoln animal science professor Galen Erickson, in response to questions from Reuters about Zilmax’s safety.

But some previously staunch supporters of Merck’s innovative growth drug are beginning to question the product’s safety record.

“Maybe we found the point where we pushed the cattle just so hard in the sake of making a buck that we exceeded the biological limits of the cattle,” said Abe Turgeon, a prominent livestock nutritionist, who had previously recommended Zilmax to some customers.

Merck Animal Health, the unit that markets the additive, said proper use of Zilmax “does not affect the safety or well-being of cattle.” Moving beyond the 30 studies it cited at the time it suspended Zilmax sales, Merck in August launched an audit of how the product was being used in the field, created an advisory board to review management practices in the feedlot and animal nutrition industries, and provided new funds for field research on Zilmax-fed cattle.

Today, the company has said it plans to reintroduce Zilmax, but noted it is too soon to know when sales to U.S. and Canadian customers may resume.

Merck has begun approaching cattle nutritionists, livestock academics and other professionals who influence opinion in an effort to gain industry insight and win support for the return of the drug, according to several people who have met with the company.

The FDA regulates livestock feed additives sold in the United States, and is charged with intervening when a pharmaceutical product it has approved causes harm when used as directed.

The agency said it has taken no action related to Zilmax. When asked for comment about the adverse-event reports filed by Merck, an FDA spokeswoman in a statement said the agency “has not reached any conclusions on the safety of Zilmax but the agency is continuing to receive and evaluate data. As part of this process, the agency is always interested in new information.”

The Merck suspension of Zilmax sales is voluntary, and at this point the company could return Zilmax to the market without seeking permission from the FDA.


Zilmax is a medicated feed supplement for beef cattle that belongs to a class of drugs known as beta-agonists, which are also used in humans to ease asthma symptoms. Zilmax, with its active ingredient zilpaterol hydrochloride, is a federally approved weight-gaining supplement. It is added to cattle feed in the weeks before slaughter to add extra pounds of profit-producing meat.

Zilmax was worth nearly $160 million in annual sales in the United States and Canada last year, and was a steady cash generator for Merck’s animal health business, which has about $3.3 billion in global sales.

The additive served as a go-to solution for a troubled cattle industry, as one-fifth of the nation’s feedlots went out of business over the last decade. With cattle herds in sharp decline, Zilmax worked along with improved animal genetics and feed to produce more meat with fewer animals.

The United States produced nearly 26 billion pounds of beef from a herd of 91 million cattle in 2012, according to USDA data. In 1975, when the nation’s cattle herd hit a peak of 135 million head, the industry produced nearly 24 billion pounds of beef.

Last month, beef cattle walking into a U.S. packing plant on average weighed a record 1,346 pounds — up more than 20 percent in the last two decades.

Merck’s Zilmax quickly developed a loyal customer base. Its popularity spread even to the show circuit, where ranchers’ children today can win prizes exceeding $100,000 for raising big-girth bovines.


Tyson and rival beef processor Cargill Inc have told Reuters they will not accept Zilmax-fed cattle until Merck can provide a scientific vetting of Zilmax’s safety to animals and the companies are confident any animal welfare issues are resolved. (Cargill says it didn’t see the cattle lameness problems cited by JBS and Tyson.)

Both companies, too, have cited concerns about China and other nations that have barred the importation of meat produced from Zilmax-fed cattle. They fear that if such meat is accidentally sent to these countries, it could hurt their export businesses.

FDA records based on 59 adverse event reports filed since 2008 by Merck and Intervet Inc – the original developer of Zilmax before Merck acquired the firm in 2009 – chronicle incidents of Zilmax-fed cattle experiencing stomach ulcers, brain lesions and blindness. Merck also has reported incidents of Zilmax-fed animals showing signs of lethargy, bloody noses, respiratory problems and heart failure.

In September 2011, an unidentified veterinarian at an Oregon feedlot reported “unusual hoof loss in cattle being fed Zilmax,” according to one adverse event report reviewed by Reuters.

In August this year, Merck reported an additional five episodes involving 66 cattle in Oregon and Idaho that lost their hooves after a Zilmax feeding regimen. In some cases, a consulting veterinarian also cited high ambient temperature and a cement-and-rebar floor that may have exacerbated the hoof damage.

Also in August, one Nebraska cattle producer, who is not named in the FDA documents, reported he had more dead cattle when he used Zilmax than when he didn’t, according to the documents.

A Reuters review of data kept by the U.S. Agriculture Department show that euthanizations of cattle have risen substantially since Zilmax came on the market.

In the two years after Zilmax was introduced, the number of beef steers and heifers euthanized prior to slaughter at U.S. packing plants rose nearly 175 percent from previous levels. The number of euthanized steers and heifers has ranged between 1,600 and 2,300 cattle each year since then. That new plateau is well above the average of 670 a year in the four years before Zilmax came on the market in 2007.

The government data does not, though, draw a link between Zilmax or any other possible factors and the increase in euthanized cattle at meatpacking plants.

The number of euthanized cattle and the other reports of cattle dying is also quite small relative to the more than 30 million cattle slaughtered each year. It is small enough that it likely hasn’t raised significant red flags with the FDA, said David Acheson, the agency’s former Associate Commissioner for Food.

“I suspect that that’s not going to trigger them to do much,” Acheson said.


Tyson’s plant, about 14 miles southeast of Pasco, is an integrated modern-day packing operation, stretching the length of several football fields. Five days a week, more than 1,300 workers arrive and walk past security guards toward a mechanical rumble emanating from the plant’s gunmetal gray walls.

Tyson acquired the operation, one of its smaller plants, in 2001. It processes roughly 2,000 cattle a day, according to workers and local residents. Tyson would not comment on the number.

Washington state lies in the Pacific Northwest, with its soaring mountains and chilly rain. But the eastern flatlands around Pasco more closely resemble the Southwest’s desert – and sometimes share its soaring summer temperatures.

To guard against the heat, Tyson has provided cover or shade for some holding pens at the plant. Overhead sprinkler systems help cool the cattle, too.

But 2013 saw one of the hottest summers in a quarter century, with at least three heat waves in which temperatures in the area topped 100 degrees, according to National Climatic Data Center. Temperatures were spiking on many of the dates when a total of 37 cattle were euthanized this summer due to lameness associated with Zilmax.

According to USDA documents and people knowledgeable about the events, some of the animals were shipped from Beef Northwest of North Powder, Oregon.

On August 5, of 17 cattle that were euthanized at Tyson’s plant, the USDA inspector who condemned the animals noted that 15 had “lost toes.” Two were destroyed for other reasons. The inspector identified at least one of the animals in the group that was put down as a heifer originating from Nyssa, Oregon.

Beef Northwest operates a feedlot in Nyssa. Animals making the trip to Pasco would have stood in a trailer for four hours on a 95-degree day as it traveled to Tyson’s plant.

John Wilson, managing partner of Beef Northwest, confirmed that his company was using a Zilmax feed regimen this summer. About 40 of Beef Northwest’s animals “developed lameness after arriving at a packing plant in two incidents in July and August of this year,” he said. Wilson declined to identify the slaughterhouse and would not confirm the animals were destroyed.

Wilson said Beef Northwest had never faced lameness problems with its Zilmax-fed animals before this summer. While Beef Northwest was dispensing Zilmax, Wilson said, the company strictly followed Merck’s dosage and other instructions.

Beef Northwest says it frequently conducted internal and third-party audits to ensure employees were not over-feeding Zilmax to the animals.

“In our cases, dosages were not an issue, never an issue,” Wilson said in a phone interview. “I’d like to think that we were on the upper edge of the industry as far as heavy oversight of all of our protocols.”


As feed-grain prices soared amid strong demand among livestock and ethanol producers in recent years, and with drought ravaging the U.S. crop belt, Zilmax seemed like an attractive solution. Some feedlot owners nicknamed it “Vitamin Z.”

“We couldn’t find feed cheap enough to make any money” on raising cattle, said Turgeon, the cattle nutritionist who works with Beef Northwest.

Many clients had adopted another beta-agonist – Optaflexx, made by Eli Lilly and Co’s Elanco Animal Health unit. Elanco is Merck’s biggest rival in the animal health business.

The two products use different active ingredients: Optaflexx is based on ractopamine, while Zilmax uses zilpaterol. But Zilmax added more weight to cattle than Optaflexx did, say industry nutritionists and feedlot owners. That perceived advantage helped Zilmax gain market share and sales faster than Optaflexx in recent years, say industry experts.

Turgeon had heard from his customers about lameness problems associated with Zilmax, and a colleague this summer showed him photos of animals with hooves peeling off, he said. Reuters has not seen any photos of cattle with missing hooves.

Merck is now trying to win the industry back. At a closed-door session of an Academy of Veterinary Consultants conference in Denver on December 5, some 300 cattle veterinarians sparred over Zilmax.

During the debate, they broke into informal camps of “believers” who think Zilmax hurts cattle, and “disbelievers” who discount its negative effects, according to Larry Moczygemba, president of the academy.

The veterinarians debated the effects of Zilmax and other beta-agonist drugs, Moczygemba said, without reaching a conclusion. Merck employees stayed in the room, mostly remaining silent.

“Few, if any, think this is just a beta-agonist problem all on its own,” Moczygemba said. “But our role as vets puts animal well being first.”

(Reporting By P.J. Huffstutter in Pasco, Washington, and Chicago, and Tom Polansek in North Powder, Oregon, and Chicago.; Additional reporting by Eric M. Johnson in Pasco, Brian Grow in Atlanta and Lisa Baertlein in Los Angeles.; Edited by David Greising and Martin Howell.)

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U.S. December auto sales seen up 4 percent

DETROIT (Reuters) – December U.S. auto sales, spurred by end-of-the-year bargains, likely rose about 4 percent from a year earlier, industry analysts said.

If confirmed, that would mean 2013 will end as the best for U.S. auto sales since pre-recession 2007, at around 15.6 million new cars and trucks sold, which would be an increase of about 8 percent from 2012.

Major automakers report December sales on Friday.

U.S. consumers are expected to spend more than $34 billion on new vehicles in December, a historic high for the month, said J.D. Power Associates, which said the annual sales haul would also be a record at more than $370 billion.

Auto sales continue to outpace the recovery of the U.S. economy. While auto sales are expected to rise again in 2014, the pace of the sales climb is expected to slow.

Factors that contributed to higher sales throughout 2013 were at play again in December, including low interest rates on loans, attractive lease deals and consumers wanting to replace older vehicles.

Plus, in December, there were manufacturer discounts as shoppers had time off during the holidays to visit a dealership, said Alec Gutierrez, analyst with auto research firm Kelley Blue Book.

December is one of the strongest months for U.S. auto sales, in part because of the bargains available, but also because consumers have developed over decades behaviors that favor end-of-the year buying, said Thomas King, senior director at J.D. Power Associates.

December’s typical rise in auto sales is often followed by a drop in sales in January. This past January, U.S. retail auto sales were down 40 percent from December.

Larry Dominique, president of auto industry research firm ALG, said discounts as deep as 25 percent from manufacturers’ list prices were seen in December, including $5,000 off the price of a 2014 Ford Motor Co (F.N) Focus hatchback.

The Ford F-Series pickup truck, the top-selling vehicle in America, has been discounted by 23 percent for a new F-150 Super Cab, Dominique said.

Economists surveyed by Thomson Reuters see the annual sales rate for December U.S. auto sales at 16 million vehicles, a level that has been topped only in November and August.

Incentives paid by manufacturers in December rose only about $100, while the average transaction price per vehicle rose to about $31,000 from about $30,200, which should help the profit margins for auto manufacturers, said Jesse Toprak, president of Topak Consulting in California.

General Motors Co (GM.N), will see auto sales slide about 3 percent from a year earlier, while No. 2 Ford Motor Co (F.N), will sell about 5 percent more vehicles this month than a year ago, according to auto research firm

TrueCar also predicted that Toyota Motor Corp (7203.T) December sales will rise 3 percent, and Chrysler Group’s will increase 4 percent. Chrysler’s majority owner is Italy’s Fiat SpA (FIA.MI).

(Editing by Bob Burgdorfer)

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