Most Valley Firms Report Robust Quarterly Profits
Major publicly held companies in the San Fernando Valley generally reported higher earnings for the second three months of the year, with high-technology companies posting particularly strong results.
But despite the improved profit picture overall, some companies had severe problems in the quarter. Hefty, multimillion-dollar losses were posted by three companies--Valley Federal Savings & Loan, American Ecology and Terminal Data--and a major drop in profit was reported by MCA.
Earnings Up Nationwide
Of 44 major companies, 28 reported higher profits from year-earlier periods or profits compared to year-earlier losses. Nine companies reported lower profits, and seven posted losses.
Companies included in the survey are those with headquarters from Camarillo to Glendale. Nearly all results were for fiscal quarters that ended in June.
Earnings nationwide were up as well. A Wall Street Journal survey said that earnings of 487 major companies nationwide rose 103% in the second quarter from a year earlier, mostly because of bigger profits at the nation’s largest banks. Excluding the banks, profits of companies still climbed 22%, the Journal said.
Walt Disney Co. made more money in the quarter than any other Valley-area company. Disney’s net income rose 29% to $165 million, in part because of its string of successful films such as “Good Morning, Vietnam” and brisk business at its theme parks.
Another entertainment giant, MCA in Universal City, had the biggest drop in profit because some of its investments in the toy business went sour. MCA’s net income fell 80% to $8.1 million, stemming from a $35-million charge to its earnings from write-offs, which are accounting adjustments that reduce the value of assets on a company’s books and also reduce profits.
The $35 million charge stemmed from two problems. MCA wrote down its investment in Coleco, a West Hartford, Conn.-based toy maker that filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code. MCA also wrote down its investment in Gotcha! guns made by MCA’s LJN Toy unit. The $30 guns were frequently returned by customers, who complained they didn’t work.
Lockheed Corp., a Calabasas aerospace giant that is the area’s largest company in revenue, reported that its earnings rose 6% to $106 million on $2.7 billion in sales. The company said the profit increase was mainly due to lower taxes.
High-technology profits continued to rebound, in part showing the effects of previous cost- cutting programs and also because of improved orders.
Micom Systems, a Simi Valley maker of computer communications equipment, said its profit rose 164% to $3.7 million, in part because of cost-cutting and increased sales of its equipment, which links computers together in offices.
Tandon Corp.’s profit from its personal-computer operations rose 32% to $6 million in the quarter. The company, which is moving its headquarters from Chatsworth to Moorpark, continues to enjoy strong demand for its personal computers in Europe.
One of the biggest turnarounds among area technology companies has been by Tekelec, a Calabasas maker of testing equipment for telecommunications systems. The company posted a $1.3 million profit, from a loss of $178,000 a year earlier, as sales soared 86% to $7.4 million.
Likewise, Dataproducts, a Woodland Hills computer printer maker that has been cutting costs, reported its earnings rose 142% to $810,000 from a year earlier.
Micropolis, which has been one of the Valley’s most profitable high-technology companies the past three years, saw its earnings fall 83% to $1.2 million in the quarter.
The Chatsworth company attributed the drop to development costs for new high-performance disk drives and competition among producers of low-end disk drives.
Among some of the area’s smaller, fast-growing companies, Martin Lawrence Limited Editions earnings more than doubled to $1.5 million. The Van Nuys chain of art galleries attributed the increase to its expansion last year from 13 to 22 galleries.
Large losses were posted by two companies--Valley Federal Savings & Loan and American Ecology--from lawsuit settlements.
Valley Federal’s $4.7 million quarterly loss stemmed from several one-time events, including $2 million in legal fees spent in part by the Van Nuys savings and loan to block a takeover bid by Citadel Holding Corp. in Glendale.
The loss also was caused in part by a $3.5 million settlement of a lawsuit filed by several other savings and loans, including Sun Savings in San Diego, Guaranty Savings of Arkansas and First Federal Savings of Hanover, Pa. Valley Federal was the lead lender of a consortium that advanced $17 million to Investment Mortgage International, a San Francisco real estate loan company headed by mortgage broker J. William Oldenburg, that later collapsed. Oldenburg once owned the now-defunct Los Angeles Express team in the United States Football League.
American Ecology, a Calabasas-based hazardous-waste disposal firm, lost $2 million. The loss was due to $3.9 million set aside as a reserve to settle a lawsuit filed by the state of Illinois over leaks at a low-level radioactive waste dump the company once operated there.
Another large loss was posted by Terminal Data, a Moorpark maker of equipment used to convert documents to images stored on disks and microfilm. The firm lost $2.2 million, compared to a year-earlier loss of $856,000. The company cited expenses involved with relocating its headquarters from Simi Valley, severance agreements as part of a management shake-up and a write-down of inventory.
Superior Industries, a Van Nuys company that supplies automotive parts to car manufacturers, reported that its earnings climbed 32% to $3.2 million because of continued demand for its aluminum wheel rims.
Amgen, a Thousand Oaks biotechnology company, reported a 38% drop in profit to $305,000. Research and development expenses rose 27% to $11.3 million in the quarter.
Glenfed, the holding company for Glendale Federal Savings & Loan, reported that earnings rose 33% to $52.1 million, in part because of stronger demand for mortgage loans.
Insurance company profits were generally flat or down as claims costs continued to rise. Zenith National, based in Woodland Hills, posted a 5% drop in profit to $12.3 million, while Encino-based Republic American’s profit fell 1% to $6.8 million.
20th Century Industries in Woodland Hills reported a 15% rise in net income to $16.2 million, although the automobile and property insurer’s operating profit rose only 4% to $3.3 million.
But Amwest Insurance, a Woodland Hills company specializing in writing bail bonds and other surety bonds, reported a 17% increase in profit to $880,000 as its revenue rose 5% to $5.2 million.
QUARTERLY PROFITS
Net Income Company (loss) % Change* Amgen $305,000 -38% Dataproducts $810,000 +142% Walt Disney $165.0 million +29% Glenfed $52.1 million +33% Lockheed $106.0 million +6% Martin Lawrence $1.5 million 102% MCA $8.1 million -80% Micom Systems $3.7 million +164% Micropolis $1.2 million -83% Republic American $6.8 million -1% Superior Industries $3.2 million +32% Tandon $6 million +32% 20th Cent. Inds. $16.2 million +15% Valley Federal ($4.7 million) N/A Zenith National $12.3 million -5%
* From year earlier quarter
N/A: Not applicable
