Earnings by Most Firms Increase in Last Quarter
Most San Fernando Valley-area companies posted higher earnings in their most recent quarters compared to year-earlier levels, although several key companies showed disappointing results or losses.
Out of 56 major, publicly-held companies in the area, 36 businesses, or more than 60%, posted either higher earnings or a profit after a year-earlier loss in the most recent fiscal quarter.
Lower earnings were posted by 11 companies, eight companies lost money, and one showed flat results from a year earlier. Companies whose results were surveyed are those with headquarters from Glendale to Camarillo. Nearly all of their fiscal quarters ended in September.
Profits Rise 12%
Nationwide, earnings as a whole increased in the third quarter. A Wall Street Journal survey of 490 major corporations found profits rose 12% in the quarter, although that increase was smaller than those shown in previous quarters this year.
In the Valley area, Lockheed, which posted net income of $300 million, enjoyed by far the largest profit of any company during its recently completed fiscal quarter. The amount is nearly triple the $101 million the Calabasas-headquartered aerospace giant earned a year earlier, but came mainly from a $177-million gain from discontinued operations. Lockheed’s continuing operations earned $123 million, up 15% from a year earlier, but that increase was attributed largely to lower income taxes.
Consistently Profitable
Banks were the Valley area’s most consistently profitable companies, mostly because of higher net interest income and surging deposits caused by the area’s continuing growth. Five of six major banks posted higher profits, led by Independence Bank of Encino with a profit of $1.7 million, in contrast to a $109,000 loss a year earlier.
Fast-growing Lincoln Bancorp, the parent of Lincoln National Bank in Encino, saw its profit surge 113% to $1.3 million. Sherman Oaks-based TransWorld Bancorp, parent of TransWorld Bank, showed a 44% increase in profit to $456,000, while Santa Clarita National Bank in Valencia posted a 91% jump in earnings, to $946,000.
Savings and loans fared worse because interest rates on mortgages failed to keep up with rising money-market rates. Profit for Glendale-based Glenfed, the parent of Glendale Federal Savings, fell 29% to $31.4 million. Citadel Holding, the Glendale-based parent of Fidelity Federal Savings, dropped 40% to $5.3 million, while the earnings of Valley Federal Savings in Van Nuys slid 98% to $132,000.
High-technology companies also reported disappointing results.
Micropolis, a Chatsworth disk-drive maker, lost $12.7 million in the quarter, the biggest loss for any company in the Valley area. The once-hot company recently suffered higher-than-expected manufacturing costs for a new product and increased competition from some disk-drive makers.
Tandon, a Moorpark personal computer maker, lost $12 million in the quarter, contrasted with a $1.3-million profit earned a year earlier. Tandon has suffered from slower sales of its personal computers in Europe, the main market for its computers. It also was hurt by the industrywide shortage of computer chips.
Dataproducts reported a $1.1-million profit, a 1% profit margin on the company’s $88 million in sales in the quarter. Still, the results for the Woodland Hills computer-printer maker were an improvement over the $6.7-million loss it posted in the year-earlier quarter.
Entertainment Profits
In entertainment, MCA’s third-quarter profit rose nearly 15% to $54.3 million. The Universal City movie, theme park and music company had particularly strong results from its music business, which has been boosted by the expansion of amphitheater operations in Denver and Dallas. The company’s amphitheaters bring in concert revenue and help showcase MCA artists.
On Monday, Walt Disney Co., the Burbank entertainment giant, said its net income rose 1% to $136.4 million from $135.3 million a year earlier, when the company’s results included results from discontinued operations of Arvida Corp., a Florida-based real estate developer.
Based on continuing operations, Disney’s income jumped 23% to $136.4 million in the period. The company attributed the increase to profits from its theme parks, hit movies such as “Who Framed Roger Rabbit,” and its consumer products business, which sells such items as Disney toys and clothes.
Dick Clark Productions, which has been hurt in recent quarters by the soft television market, posted a $435,000 profit, up from $94,000 a year earlier. Profits rose even though the Burbank company’s revenue plunged 35% to $4.9 million, in part because of contributions from a network series, “Dick Clark Presents,” and revenue from the television movie, “Liberace.”
Mixed Postings
Insurance profits for Valley-area companies were mixed. Zenith National Insurance, a Woodland Hills workers’ compensation insurance firm, posted a 3% increase in profit to $12.1 million. But the profit of Republic American, an Encino workers’ compensation firm, fell 34% in the quarter to $4.7 million, in part because of a $1.2-million underwriting loss caused by higher overhead costs for paying claims and a slowdown in new business.
20th Century Industries in Woodland Hills, a major auto insurer, posted an 88% increase in profit to $20 million, the result of a turnaround in its basic insurance business, as well as higher investment income. Amwest Insurance Group, a Woodland Hills company that specializes in underwriting bail bonds and other surety bonds, posted a 40% increase in profit to $1.1 million, which the company attributed to its expansion programs.
Superior Industries continued to benefit from increasing demand by domestic auto makers for parts. The Van Nuys company, which supplies auto companies with wheels and other equipment, earned $2.5 million in the quarter, up 53% from a year earlier.
Smaller Companies
Among the Valley area’s smaller, fast-growing companies, Martin Lawrence Limited Editions posted a 74% increase in profit to $1.3 million as it continues to benefit from expansion. The Van Nuys company operates a chain of art galleries, mostly in shopping malls. Traditional Industries, an Agoura Hills company that sells photo supplies, such as cameras, photo albums and discount coupons for film processing, showed a 17% increase in profit to $1.4 million.
Another small company, Amgen, a Thousand Oaks biotechnology concern, saw its profit fall 23% to $320,000. The company is increasing its manufacturing and marketing expenses as it awaits Food and Drug Administration approval to sell erythropoietin, an anti-anemia drug. The drug would be the firm’s first commercial product for sale in this country.
Most of Amgen’s sales to date stem from research and development funds advanced by its partners, while most of its income derives from investments.
QUARTERLY PROFITS
Net Income Company (loss) % Change* Amgen $320,000 -23% Citadel Holding $5.3 million -40% Dataproducts $1.1 million N/A Walt Disney $136.4 million +1% Glenfed $31.4 million -29% Lincoln Bancorp $1.3 million +113% Lockheed $300 million +197% Martin Lawrence $1.3 million +74% MCA $54.3 million +15% Micropolis ($12.7 million) N/A Superior Industries $2.5 million +53% Tandon ($12 million) N/A 20th Cent. Inds. $20 million +88% Valley Federal $132,000 -98% Zenith National $12.1 million +3%
* From year earlier quarter
N/A: Not applicable
