THE TIMES 100 : THE BEST PERFORMING COMPANIES IN CALIFORNIA : WHO, WHAT & WHERE : The Meaning of It All: Criteria, Notes : Reverse Spinoffs, Equity and Other Arcana Used to Develop The Times 100
This special section is designed to provide a systematic look into the dynamics of California business by ranking the performance of firms headquartered in the state.
The information was collected and analyzed by MZ Group, a business analysis and database publishing firm in San Francisco (415-885-5551) headed by Mansoor Zakaria and Kevin Colosimo.
MZ Group gathered information on 921 California-based companies whose stock is publicly traded, relying on databases, corporate and government reports, a mail survey and direct telephone contact with company representatives. The tables generated by MZ were reviewed closely by Times editors and reporters. Criteria for the rankings were developed jointly by The Times and MZ Group.
MZ Group used financial data as reported at a company’s fiscal year-end for 1986, 1987 and, if available, 1988. If fiscal 1988 year-end data was unavailable by April 7, 1989, the most recent four quarters were compared to 1987 results. (Exceptions table on page 29 list those companies for which this applies.)
If a company’s fiscal year ends between January and May, its financial results are reported under the previous calendar year. For example, the financial data for a company completing its fiscal year in February, 1987, will be recorded as 1986 results.
Financial data from 1986 and 1987 has not been restated for acquisitions and/or discontinued operations. This allows the reader to see actual historical growth for the company, whether from internal growth or through acquisitions.
A few companies have majority-owned subsidiaries that are publicly traded as separate entities. The financial results for these subsidiaries are presented independently as well as on a consolidated basis in the accounts of the parent company. This applies to: Caesars World (parent) and Caesars New Jersey; ICN Pharmaceuticals (parent) and SPI Pharmaceuticals, ICN Biomedicals and Viratek, and Kaufman & Broad (parent) and Kaufman & Broad Homes. Four California-based companies that are traded as separate entities are majority-owned by firms outside the state; they are: Union Bank (owned by Bank of Tokyo), PhoneMate (Asahi), National Health Laboratories (Revlon Group) and National Sanitary Supply (Chemed).
Companies in bankruptcy proceedings during 1988 were not included in the survey because complete earnings data was not available. They are: Financial Corp. of America, Maxicare, Cardis Corp., Bercor Inc., De Laurentiis Entertainment Group Inc., Engineered Systems & Development Corp., Corvus Systems Inc., and Aca Joe Inc, which has since re-emerged from bankruptcy.
See page 42 for other notes on companies.
General Criteria
All companies must be publicly traded and have their headquarters in California.
1988 income is defined as after-tax income from continuing operations and excludes one-time extraordinary items, and gains or losses from discontinued operations. For insurance companies, income also includes after-tax gains or losses on investments.
1988 sales exclude excise taxes, extraordinary income, revenue from discontinued operations and other income, such as interest. For banks and savings and loan associations, revenue equals the sum of interest and non-interest income. For insurance companies, revenue equals the sum of earned premiums and net investment income.
Section Notes
The Bottom Line--Return on equity measures the profit a company earns for every dollar common stockholders have invested in the firm. Return on equity is defined as income available to common shareholders divided by the average common shareholder’s equity. The Times 100 list ranks companies by the average return on common equity for the past two years.
For The Times 100 table, companies must have met the following criteria: publicly traded since December, 1986; sales in 1988 greater than $50 million; shown a profit from continuing operations in 1988 and 1987; must not have reported negative common equity for the past three fiscal years, and must not have more than twice as much long-term debt as total shareholders’ equity.
Companies in the Top 25 and Bottom 25 in Absolute Profits must have been publicly traded in 1988. Just as the Top 25 in Absolute Profits ranks companies by dollar amount of profits from continuing operations, the Bottom 25 ranks companies by dollar amount of loss.
The Top 25 Banks and S&Ls; tables show return on assets, which measures percentage profit for every dollar in assets. Companies must have been publicly traded in 1988 with total assets exceeding $1 billion.
Real estate investment trusts and limited partnerships were not eligible for inclusion in this section because income for these companies, which is not taxed at the corporate level, is not comparable to after-tax income for corporations.
The Giants--The Sales 100 ranks companies by net revenue. For banks and savings and loans, revenue equals the sum of interest income and non-interest income.
The Biggest Service and Utility Companies ranks service companies by net revenues. The survey of companies to develop the table included retailers, utilities, transportation, wholesalers, business and personal-service companies, investment companies and insurance companies.
View From the Street--Market value is the stock price times the number of outstanding shares and generally reflects the esteem in which investors hold a company’s stock and the confidence they have in its future success. Book value is total shareholders’ equity or assets minus liabilities. A company’s stock must be available for trading on one of the major exchanges and must have traded on April 3, 1989.
Companies on the Favorites and Forlorn tables must have had 1988 sales of at least $10 million.
For the Charging Ahead and Falling Behind tables, a company’s stock must have been available for trading on a major public exchange and have traded in April 4, 1989, and on April 3, 1988. The stock price on April 3, 1988, must have exceeded $2. Stock prices as of that day have been adjusted to reflect stock splits and dividends. Cash dividend is the current annual dividend for the stock. There is no guarantee that the company will actually pay this amount.
For the Lowest Priced and Highest Priced lists, a firm’s market value on April 3, 1989, must have exceeded $100 million.
The Divvying It Up list of dividend yields excludes real estate investment trusts and master limited partnerships, because their dividends often include a return of investors’ capital.
Growth--Sales growth can come either by generating new business or acquiring other firms. A company must have been publicly traded since 1986, with 1986 sales exceeding $30 million.
Companies eligible for the Fast Track to Profits table must have been publicly traded and shown a profit from continuing operations for the past three years. 1986 income from continuing operations must have been at least $10 million.
The Human Factor--California-headquartered employers are ranked according to the number of full- and part-time employees worldwide at fiscal year-end, excluding consultants and contractors. Employment figures are estimates provided by the company. The table does not include companies that are large employers in the state but are not based here.
The Most Productive Employees list ranks only the top three companies in each sector by revenue per employee, but the group average is computed from figures on all the companies in the industry that were surveyed. The company must have had 1988 sales greater than $50 million. Hiring data was obtained from the companies.
Regional Profiles--Same criteria used as for the main tables.
Who, What, Where--All companies on The Times 100 profitability and sales are profiled and listed alphabetically.
Stock exchange symbols are as follows: NYSE, New York Stock Exchange; Amex, American Stock Exchange; NASDAQ, National Assn. Securities Dealers Automated Quotation System, and OTC for Over the Counter.
