Insurance Spearheads Quarterly Upturn
Nearly three-fourths of the leading publicly held companies in the San Fernando Valley area reported improved financial results in their most recently completed quarters, with insurance concerns continuing to lead the way.
The overall gains were in line with the third-quarter performance of corporations nationwide, which generally disclosed higher profits because of a pickup in the economy.
A Times survey of 45 companies based in the area from Burbank to Camarillo showed that 22 had higher quarterly earnings in their latest three-month periods than in the same quarter last year. Another nine bounced back from losses in 1985 to profits this year.
Eight companies reported lower earnings. Losses were posted at six companies that for the most part were among the smaller firms in the survey, two of which made money a year earlier. In most cases, the companies’ latest results are for quarters that ended in August or September.
Lockheed Records Gain
Calabasas-based Lockheed, by far the biggest company in the area, reported a 12.7% increase in earnings to $115 million for its third quarter. The defense and aerospace concern said earnings were held down by the cost of its $1.18-billion acquisition in August of Sanders Associates of Nashua, N.H.
The area’s next two biggest companies, entertainment giants Walt Disney and MCA, also were profitable. Burbank-based Disney, benefiting from improved performance at its theme parks and resorts, reported a 51% increase, to $81.1 million.
But earnings at Universal City’s MCA were up only 10%, to $74.5 million. Theatrical revenue declined 56.6%, to $57.4 million, from 1985, when the company was awash in income from the highly successful movie “Back to the Future.”
On the other hand, MCA cited improvement at its music entertainment and toy operations, as well as at a unit that includes real estate development and a cable television venture.
Insurance Firms Benefit
Insurance companies, which have posted big earnings increases all year, benefited from rising investment income in their most recent quarters. 20th Century Industries in Woodland Hills, the parent of 20th Century Insurance, was up 45.9%, to $10.8 million, as its investment income climbed 67.3%, to $9.2 million.
Among workers’ compensation insurers, Encino-based Republic American enjoyed a 33.9% increase in profit, to $8.3 million. Zenith National Insurance, also of Encino, posted a 278% gain in earnings, to $12 million, on revenue that climbed 46.4%, to $103.7 million. Burbank-based Fairmont Insurance’s net income rose 31.8%, to $2.9 million, on revenue that was up 112%, to $41.8 million.
The area’s computer-equipment companies posted improved profits despite the industry’s overall weakness. Dataproducts, a computer-printer manufacturer based in Woodland Hills, earned $2.7 million in its most recent quarter versus a loss of $13.8 million a year earlier. The company cited cost-cutting moves made last year.
Micom, a Simi Valley-based maker of computer communications equipment that also reduced expenses last year, reported a 5% rise in net income, to $2.8 million. That was its first quarterly earnings increase in nearly two years.
Micropolis, a Chatsworth manufacturer of high-capacity data storage equipment, continued its string of big earnings increases, reporting a more-than-elevenfold rise in profit to $4.9 million from $453,000 a year earlier.
Defense and aerospace companies besides Lockheed also showed improvement. TransTechnology, based in Sherman Oaks, said its profit rose 22%, to $2 million, largely because of its acquisition earlier this year of Lundy Electronics & Systems of Glen Head, N.Y.
Sylmar-based Sierracin, citing the sale of unprofitable divisions, earned $489,000, a reversal from a loss of $707,000 a year earlier.
The area’s biggest thrift institution, Valley Federal Savings & Loan, of Van Nuys, posted a 47.8% rise in earnings, to $4.4 million. It wrote a record $401 million in new mortgages, up from $186 million a year earlier.
The biggest bank, Independence Bank of Encino, which has grown rapidly since being bought by Saudi businessman Ghaith Pharaon last year, reported a profit of $469,000. A year earlier, it lost $156,000.
Perhaps the most dramatic turnaround was achieved by Malibu Grand Prix, a Woodland Hills-based operator of amusement outlets. It reported a profit of $6.8 million, rebounding from a year-earlier loss of $358,000. A debt restructuring, which produced an extraordinary gain of $6.2 million, accounted for most of the profit.
Olson Industries, the Sherman Oaks-based plastics packaging and egg company, reported net income of $400,000. That was up from a loss of $1.7 million a year earlier, when the company had $1.8 million in losses from discontinued operations. As a result of divesting operations last year, Olson’s revenue dropped 22.1%, to $22.7 million.
Superior Industries, a Van Nuys maker of auto wheel rims, reported flat earnings of $1.4 million, primarily because auto plant shutdowns delayed orders for its products.
Some Slumps
Some companies that reported big gains early this year slumped in the most recent quarter. Amgen, a Newbury Park biotechnology company, said its earnings fell 87%, to $295,000. Company officials said the year-earlier period was unusually strong.
Likewise, Newhall Land & Farming’s net was off 27.9%, to $12.9 million. A year earlier, the company said, it had one of its best quarters because of some unusually large land sales.
Zero Corp., a Burbank-based maker of enclosures and accessories for electronic equipment, said its profit was off 16.8%, to $2.5 million, in part because of charges stemming from cutbacks at a Northern California facility.
The biggest money-loser was Marantz, which posted a third-quarter loss of $3.0 million on sales that fell 23.5%, to $10.9 million. The Chatsworth home electronics company, which a year earlier earned $95,000, said its profit margin was hurt by the higher cost of Japanese products resulting from the rise in the yen versus the dollar.
Several of the area’s larger companies have yet to report results for their most recent quarters. Tandon, the Chatsworth-based maker of personal computers and disk drives, has yet to report its fourth quarter results, but company executives have said they expect the company to suffer losses through early next year in part because of the cost of introducing its personal computers.
Redken, the Canoga Park maker of hair care products, reported its earnings were off 87%, to $311,000, in the quarter ended July 31. It cited the costs of heavy television advertising.
The most recently disclosed results for House of Fabrics, a Sherman Oaks-based chain of fabrics stores, and Nu-Med, an Encino-based hospital chain, also were for quarters that ended July 31. House of Fabrics, benefiting from higher sales at its largest stores, said it earned $115,000 during the period versus a year-earlier loss of $621,000.
Nu-Med, an Encino-based hospital chain, posted a 43% rise in net income, to $1.7 million, largely because of improved operations at its acute-care hospitals as well as extra revenue from its psychiatric facilities.
QUARTERLY PROFITS Results are for quarters ended in September.
Net Income Company (loss) % Change Dataproducts $2.7 million N/A Walt Disney $51.1 million +51% Fairmont $2.9 million +32% Independence Bank $469,000 N/A Lockheed $115 million +13% MCA $74.5 million +10% Micom Systems $2.8 million +5% Micropolis $4.9 million +982% Newhall Land $12.9 million -28% Olson Industries $400,000 N/A Republic American $8.3 million +34% Sierracin $489,000 NA Superior $1.4 million +0.1% TransTechnology $2.0 million +22% 20th Century $10.8 million +46% Valley Federal $4.4 million +48% Zenith National $12.0 million +278% Zero $2.5 million -17%
