Publicly Held Companies Report Improved Profits in 2nd Quarter

Two-thirds of the San Fernando Valley area’s largest public companies reported improved profits in the second quarter of this year compared to last year’s second-quarter results, thus continuing a surge in earnings that started in early 1986.

Of 48 major publicly held companies that reported earnings, 28 posted higher profits compared to a year earlier. Four other companies reported profits compared to year-earlier losses.

Eight companies reported quarterly profit declines, with three of them due mostly to special gains that boosted year-earlier results. Eight companies, nearly all of them among the area’s smallest publicly held companies, reported losses.

Companies included in the survey are those with corporate headquarters from Burbank to Camarillo. Nearly all of the reporting periods were for quarters ending in June.

Nationwide in the second quarter, most industry groups reported profit gains from a year earlier.

In the Valley area, Walt Disney continued to lead as the top profit maker. The Burbank entertainment conglomerate, which has benefited from increased profit from its theme parks and films, earned $128.4 million in the quarter ended June 30, up 60% from a year earlier.

Strong Gains

Also continuing to post strong earnings gains were Micropolis, the Chatsworth disk drive maker, and Cherokee Group, a North Hollywood women’s clothing firm.

Micropolis, which has successfully found a niche making high-capacity disk drives used to store data for computers, reported its earnings rose 53% to $6.8 million in the quarter ended June 26. Cherokee, which continues to expand its line of moderately priced casual clothing, posted a 54% increase in profit to $2.6 million compared to a year earlier for the quarter ended May 30. Cherokee’s sales rose 33%.

The biggest loser was SFE Technologies, a San Fernando electronics concern that lost $971,000 in the quarter ended May 1, although that was an improvement over the year-earlier quarter, when SFE lost $3.1 million. SFE, which makes ceramic components that regulate electrical impulses to semiconductors, has suffered the past three years because of slowdowns in the semiconductor and computer businesses.

Another big loser was Olson Industries, the Sherman Oaks maker of plastic packages. The company lost $861,000 in the quarter ended June 30, compared to a $256,000 profit a year earlier. Olson said the quarter’s results, which included a $331,000 loss from discontinued operations, was largely due to its decision to shed its egg-production business.

The area’s largest companies posted higher profits for the quarter.

MCA, the Universal City entertainment firm, reported a 38% increase in profit to $38.8 million in the quarter ended June 30. The company reported a 77% increase in television revenue, mostly due to syndication of “The A-Team” to non-network stations.

Lockheed, the giant aerospace firm headquartered in Calabasas, reported a 4% rise in earnings to $100 million in the quarter ended June 28. The company cited higher sales resulting from the inclusion of results from Sanders Associates, a Nashua, N.H., aerospace company it acquired last year, and lower taxes as reasons for the slight gain.

Tandon Turnaround

High-technology companies generally reported higher profits, with Tandon showing the biggest turnaround. The Chatsworth maker of IBM-compatible personal computers and disk drives earned $5.6 million in the quarter ended June 28 compared to a $20.3-million loss a year earlier caused by problems at a now-closed San Jose disk-drive plant.

Micom Systems, a Simi Valley maker of computer communications equipment that is showing improved earnings because of cost cutting, earned $2.9 million in the quarter ended June 30, nearly double what it earned in the second quarter last year.

But Dataproducts, a Woodland Hills computer printer maker, continues to struggle with start-up costs for new products. The company’s earnings fell 87% in the quarter ended June 27 to $335,000, largely because of $2 million spent to help launch a new ink-jet printer.

Superior Industries, a Van Nuys maker of car wheel rims, reported an 11% drop in earnings to $2.4 million in the quarter ended June 30. In last year’s second quarter, the company had a special $230,000 gain from the sale of land and a building in Van Nuys.

Two of the area’s largest publicly held insurance companies--Zenith National and Republic American, both workers’ compensation companies based in Encino--reported drops in net income from a year earlier because special gains boosted year-earlier results.

Zenith said that it earned $13 million in the quarter ended June 30, down 7% from $14 million earned a year earlier, when the company had a gain of $3.5 million from tax benefits. Republic American’s net income fell to $6.9 million from $16.7 million in the year-earlier period, when the company posted $12 million in gains from the sale of securities.

Earnings Doubled

Twentieth Century Industries, however, reported that its earnings more than doubled to $14.1 million in the quarter ended June 30. The Woodland Hills car and home insurance company said that its gains from investments climbed 40% to $10.2 million.

Fairmont Financial, a Burbank workers’ compensation insurance company that ranked as one of the fastest-growing insurance companies, is no longer public because it was bought earlier this year by Transamerica Insurance Group.

Among smaller, fast-growing companies, Martin Lawrence Limited Editions, a Van Nuys operator of art galleries, reported that its net income more than doubled to $755,000 in the quarter ended June 30, with revenue also doubling to $6 million. The company continues to expand by adding art galleries.

TransTechnology, a Sherman Oaks aerospace company that has shown big profit increases since last year’s purchase of Lundy Electronics in Glen Head, N.Y., earned $1.6 million in the quarter ended June 30, up 207% from a year earlier.

House of Fabrics, a Sherman Oaks-based chain of fabric stores, reported its earnings rose 251% to $404,000 in the quarter ended July 31 from the year-earlier quarter. The company cited lower taxes and strong sales at its largest stores.

The area’s financial institutions reported mixed results. Valley Federal Savings in Van Nuys, citing an increase in demand for new mortgage loans with adjustable rates, reported that its earnings rose 15% to $4.7 million in the quarter ended June 30. Lincoln Bancorp in Encino reported that it earned $408,250 in the quarter ended June 30, a 37% increase from a year earlier, because of an increase in new loans and deposits.

QUARTERLY PROFITS Results are for most recent fiscal quarters ended May through July.

Company Net Income % Change Cherokee $2.6 million +54% Dataproducts $335,000 -87% House of Fabrics $404,000 +251% Lockheed $100 million +4% Micom Systems $2.9 million +93% Micropolis $6.8 million +53% MCA $38.8 million +38% Newhall Land & Farming $6.7 million -30% Superior Industries $2.4 million -11% Tandon $5.6 million N/A* Valley Federal $4.7 million +15% Walt Disney $128.4 million +60% Zenith National $13 million -7%

* Not applicable