The Times 100 : The Best Performing Companies in California : REGIONAL PROFILES : Hard Knocks--but No Knockout--in L.A. : Weakness in the aerospace, S&L; and computer sectors resulted in a 25% fall in income for the county’s publicly traded firms.

Los Angeles County suffered some heavy blows last year.

First was the nation’s worst financial fiasco: the savings and loan industry. The county is a center for big S&Ls;, and by year-end some were reporting the biggest losses in the industry. The most notable: Columbia Savings, with its stash of junk bonds shrinking in value by the day.

Second was the assault on Defense spending: The county learned the price of peace--and perhaps more important, the price of having foolishly entered into fixed-price contracts with the federal government. Profits tumbled at the huge aerospace companies headquartered in Los Angeles County as development contracts racked up losses and as weapons programs were cut.

But the county hardly suffered a knockout. Amid the troubles of 1989, Los Angeles County was sustained by an entrepreneurial spirit and a diverse industrial base.

Thirty-three of the companies on The Times 100 list, a ranking of the most profitable companies in California, were based in Los Angeles County. They were a motley but fascinating lot. Among them: Neutrogena, a soap maker; Mattel, the comeback story in toys, and FirstFed Financial, of all things a savings and loan.

MZ Group, the San Francisco consulting firm that prepared the data for this special section, did some additional work to calculate the overall performance of the county’s public companies. As a group, things weren’t great.

Profits for the county’s firms fell 25% in 1989. And the median price of local companies’ stocks fell 0.8%.

“The dependency of the county on aerospace, defense and financial services has led to a poor year overall for Los Angeles County-based companies,” said Kevin Colosimo, vice president of MZ Group.

One surprise was a weak performance by the county’s largest computer companies. Overall, profits from Los Angeles County computer products companies slid from $110 million in 1988 to just $2 million in 1989, according to MZ Group.

But there was good news, too. Energy companies--among the county’s largest enterprises, with such firms as Atlantic Richfield and Unocal--fared well as oil prices gushed upward. Arco topped the list of absolute profits, with $1.9 billion in 1989. SCEcorp., parent of Southern California Edison, was second, with $822.7 million in profit.

Movie and amusement park powerhouse Walt Disney Co. proved to be the brightest star in a generally healthy sector. Disney’s revenue increased 34% over 1988, reaching $4.6 billion in 1989. In response to a string of hit movies and solid performance in other areas, Disney stock rose from $79.88 a share in mid-April of 1989 to close at $114 a share on April 10, 1990.

Companies producing consumer items such as shoes, clothing and toys were also strong performers last year. L.A. Gear Inc., the trendy shoe and sportswear firm, ranked second in two-year average sales growth, with sales increasing 195.7%. L.A. Gear stock, which fluctuated a few times in recent months, increased 84.3% in price, from $19.94 per share in April, 1989, to $36.75 on April 10, 1990.

Last year was painful for the county’s aerospace companies. Led by giants such as Lockheed, Teledyne, Rockwell International and Northrop, the average profits of firms heavily involved in aerospace dived 45.4% to $982 million in 1989.

Cuts in the overall defense budget and the delayed effects of fixed-price development contracts hurt the big companies, according to Lawrence M. Harris, analyst with Bateman Eichler, Hill Richards. Under a fixed-price contract, a firm must bear any costs over those specified in an agreement with the government.

Harris said a decline in purchases of all types of weapons, missiles in particular, will also affect Southern California defense contractors. Rockwell, having diversified, is expected to fare better than most.

Some smaller companies--and the county has lots--were star performers.

Leo’s Industries, Long Beach parent of the Leo’s Stereo chain and a major provider of cellular phone service in Southern California, posted a 302.9% increase in its stock price. The stock, traded on the American Stock Exchange, soared from $4.38 a share on April 10, 1989, to $17.63 each on April 10, 1990.

Paul Cohen, Leo’s chairman and chief executive, cited the demand for cellular phone service, especially in Southern California. Cohen said Leo’s is the only company in the country that provides both cellular equipment and phone service to customers. Last May, after realizing the tremendous market potential, Leo’s bought Twentieth Century Cellular, which owned a license to provide cellular service.

“The cellular operation gives the company a forward flow of earnings that is significant,” said Cohen, predicting that earnings from the cellular side of the business will overtake those in electronics. Leo’s has 42 stores, mostly in Southern California.

Frederick’s of Hollywood, famous (or infamous) for its provocative lingerie, was another local top stock performer, posting a 113% increase during the past year. Company officials attributed the gain to a combination of increased earnings and the availability of new shares created by stock splits. When the third split takes effect in June, there will be a total of 5.6 million shares outstanding, an increase from 1.6 million shares, according to executive vice president John Hatfield. The family of company founder Frederick Mellinger still owns 58% of the shares.

In recent months, Frederick’s has dramatically updated its retail stores and catalogue merchandise, moving away from selling what many considered raunchy lingerie to selling products that suggest soft, feminine sensuality.

Across the county in Gardena, Western Waste Industries ranked sixth on the list of top county stock performers, with an 88.7% increase.

Western Waste, once considered a sleeper in the solid waste disposal industry, has watched its stock price increase from $17.75 in mid-April, 1989, to $33.50 in April, 1990.

Analysts who track the waste disposal industry said the company previously had received little attention from Wall Street. In a move to raise the company’s profile, Western Waste executives went on the road in December last year, visiting brokers and fund managers in 10 cities from San Francisco to Boston.

“The whole waste disposal industry is getting more attention now,” said Larry McQuaide, chief financial officer. “You can hardly go a day without hearing about environmental stocks.” The company, which employs 1,500, has operations in seven states. It has more than 60 municipal waste disposal contracts, many in Southern California.

LOS ANGELES COUNTY PROFIT LEADERS

Los Angeles-based companies ranked by profit from continuing operations.

1989 Change income in income Rank Company ($ millions) ($ millions) 1 Atlantic Richfield 1,953.0 370.0 2 SCEcorp 822.7 14.2 3 Security Pacific 740.6 101.7 4 Rockwell International* 734.9 (77.0) 5 Walt Disney* 703.3 181.3 6 Unocal 358.0 334.0 7 Times Mirror 298.0 (33.9) 8 Occidental Petroleum 256.0 (57.0) 9 MCA 244.8 79.8 10 National Medical Enterprises* 213.0 21.0 11 Pacific Enterprises 211.0 (11.0) 12 H.F. Ahmanson 193.9 (8.9) 13 Litton Industries* 178.3 11.2 14 Teledyne 150.3 (241.5) 15 Maxxam 116.8 113.1

* See exceptions, page 46.

LOS ANGELES COUNTY REVENUE GROWTH LEADERS

Los Angeles-based companies ranked by two-year average annual sales growth rate.

2-year avg. 1989 annual sales revenue Rank Company growth % ($ millions) 1 Maxxam 736.5 2,423.3 2 L.A. Gear* 195.7 617.1 3 Jacobs Engineering Group* 57.4 793.6 4 First Capital Holdings 47.9 972.9 5 Com Systems* 45.7 84.1 6 MGM/UA Communications* 43.2 876.5 7 Leiner Nutritional Products* 42.2 145.9 8 Imperial Bancorp 40.2 263.4 9 Mercury General 39.7 515.2 10 Kaufman & Broad Home* ** 33.9 1,210.2 11 Intl. Lease Finance* 32.2 302.5 12 Traditional Industries* 31.8 62.3 13 H.F. Ahmanson 28.4 4,371.5 14 Diagnostic Products 27.8 60.3 15 Walt Disney* 26.4 4,594.3

1989 income (loss) Rank ($ millions) 1 116.800 2 55.059 3 10.220 4 69.467 5 (14.168) 6 (74.673) 7 3.319 8 23.405 9 33.853 10 81.398 11 61.164 12 (4.324) 13 193.943 14 15.195 15 703.300

* See exceptions, page 46.

** See company notes, page 45.

LOS ANGELES COUNTY REVENUE LEADERS

Los Angeles-based companies ranked by overall revenue.

1989 revenue % change Rank Company ($ millions) from 1988 1 Occidental Petroleum 20,068.0 3 2 Atlantic Richfield 15,351.0 -13 3 Rockwell International* 12,518.1 5 4 Unocal 10,056.0 14 5 Security Pacific 10,018.4 18 6 Lockheed 9,891.0 -7 7 SCEcorp 6,904.4 10 8 Pacific Enterprises 6,762.0 14 9 First Interstate Bancorp** 6,534.6 10 10 Northrop 5,248.8 -9 11 Vons 5,220.7 33 12 Litton Industries* 5,022.8 3 13 Walt Disney* 4,594.3 34 14 H.F. Ahmanson 4,371.5 24 15 National Medical Enterprises* 3,963.0 8

* See exceptions, page 46.

Source: MZ Group. Certain historical data is from Standard & Poor’s Compustat Inc.

LOS ANGELES COUNTY MARKET VALUE LEADERS

Los Angeles-based companies ranked by stock market valuation.

4/10/90 market value Book value Rank Company ($ millions) ($ millions) 1 Atlantic Richfield 18,902.0 6,562.0 2 Walt Disney* 15,432.6 3,044.0 3 SCEcorp 8,165.0 5,871.2 4 Occidental Petroleum 7,970.3 5,912.0 5 Unocal 7,077.5 2,300.0 6 Rockwell International* 5,554.5 3,977.6 7 Union Exploration Partners 4,575.9 885.4 8 Security Pacific 4,203.3 4,637.0 9 Times Mirror 4,167.3 1,877.2 10 Teledyne 3,955.2 2,326.9 11 MCA 3,810.9 1,860.9 12 Pacific Enterprises 3,139.8 2,169.0 13 National Medical Enterprises* 2,769.1 1,391.9 14 Hilton Hotels 2,483.5 883.0 15 Lockheed 2,393.4 2,062.0

Market as Rank % of book 1 288 2 507 3 139 4 135 5 308 6 140 7 517 8 91 9 222 10 170 11 205 12 145 13 199 14 281 15 116

* See exceptions, page 46.

LOS ANGELES COUNTY STOCK LEADERS

Los Angeles-based companies ranked by percent gain in stock price.

% change 4/10/90 4/10/89 stock stock stock Rank Company price price price 1 Leo’s Industries 302.9 17.63 4.38 2 Sunrise Medical 155.2 9.25 3.63 3 International Rectifier 115.6 8.63 4.00 4 Fredericks of Hollywood 113.2 15.75 7.39 5 Optical Radiation 101.0 26.13 13.00 6 Western Waste Industries 88.7 33.50 17.75 7 Jacobs Engineering Group 84.4 23.63 12.81 8 L.A. Gear 84.3 36.75 19.94 9 Diagnostic Products 73.8 34.75 20.00 10 Mattel 67.0 21.50 12.88 11 Maxxam 47.2 39.75 27.00 12 Marshall Industries 47.1 25.00 17.00 13 Walt Disney 42.7 114.00 79.88 14 Farr 41.3 14.13 10.00 15 Unocal 37.5 30.25 22.00