THE TIMES 100 : The Best Performing Companies in California : REGIONAL PROFILES : For L.A. Firms, the New Rule Is Cut Cut Cut
For Los Angeles County’s larger companies, 1990 was a year of difficult adjustments. Many had to shift into a cutting mode to cope with the recession that began last year--chopping prices to stimulate sales, slashing costs to minimize losses or trimming dividends in line with shrinking profits.
Ironically, as many businesses struggled in the difficult economic environment, one troubled industry--aerospace--recovered, at least for the year.
After watching their profits plunge in 1989, defense contractors Lockheed and Northrop rebounded in 1990 in part by cutting their work forces in the face of Pentagon cutbacks.
Similarly, those companies that fared best in 1990 were often those whose managers proved nimble at adjusting to hard times.
The record is mixed: Of the 199 companies in L.A. County that appear on the various lists throughout The Times 100 as compiled by MZ Group of San Francisco, 98 reported profits, 90 posted losses and 11 reported no clear change. Total revenue for the 199 firms rose 6.2%, but their combined profits fell 27% in 1990.
And of the 10 companies on this year’s “Nose Dive” list--firms with the greatest profit-to-loss plunge from 1989 to 1990--four make their home in the county. On the other hand, five of the 10 on the “Born Again” list--companies with the best earnings improvements--are also in the county.
A separate analysis shows that, despite the weakness of almost half of the 199 firms, their median stock price rose 8.9%.
Finally, Los Angeles County had the most companies--28--on The Times 100 ranking of firms by two-year average return on equity. Santa Clara County, with 26, was second.
A look at The Times 100 tally reflects the diverse nature of the area’s corporate base. From the entertainment industry is Walt Disney Co., the movie and theme park powerhouse, which edged up to No. 31 from No. 35. From the recession-racked retail industry is the successful specialty clothier Fredericks of Hollywood, at No. 55. From the more recession-resistant cosmetics industry is soap and cosmetics maker Neutrogena, which lost ground from previous years’s lists, but remained in the top 20. From the computer software field is MacNeal-Schwendler Corp.--debuting at No. 35--and in manufacturing is International Aluminum, the maker of fabricated metal products, a newcomer on The Times 100 list that captured the No. 94 spot.
The strength of some of the county’s firms is evident in other statewide measurements. For example, of the Top 25 Firms in Absolute Profits, 12 call Los Angeles County home. Some energy companies--Atlantic Richfield Co. and Unocal are based here--fared especially well. Arco ranked second, with nearly $1.7 billion in 1990; Unocal, No. 14 with $401 million.
Significantly, back among the leaders statewide in absolute profits in 1990--after falling off the list last year--were Northrop and Lockheed.
Lockheed, which had earnings of only $6 million in 1989, earned $335 million in 1990. Northrop went from a loss of about $80 million in 1989 to earnings of $210 million last year.
Northrop’s resurgence also earned it the No. 2 spot on the “Born Again” list of firms ranked by absolute dollar change from loss to profit in one year.
Howard Rubel, an industry analyst at C. J. Lawrence in New York, noted that “Both companies . . . cut costs and eliminated some waste. Both recognized that downsizing was a key to profitability.”
Lockheed and Northrop gave the local economy a needed boost during difficult times by rejoining the ranks of highly profitable defense contractors, said Jack Kyser, senior economist at the Los Angeles Area Chamber of Commerce. Two other Defense Department suppliers--Rockwell International and Litton Industries--were also among the county’s most profitable firms.
However, the layoffs of thousands of workers, although providing a boost to the firms this year, will no doubt have an effect on consumer spending, a large component of the state and national economy.
In addition, Pentagon spending cutbacks could mean more costly downsizing or production shifts among contractors.
Moreover, the high rankings on the county tables don’t tell the whole story. Rockwell shows up as a profit, revenue and market value leader within the county, yet it has posted earnings declines for three years in a row. Occidental Petroleum increased its revenue 8% from last year--but posted a $1.68-billion loss during the year because of a major restructuring and fell from the county profit list altogether. Atlantic Richfield managed to hold on to the No. 1 spot among profit leaders, and the No. 2 spot statewide--behind Chevron--yet its income was off $265 million.
Rebounding to rank among the county’s 15 profit leaders in 1990 was First Interstate Bancorp, which landed at No. 5 after failing to make the list the previous two years. Great Western Financial returned to the same list, ranking 10th after falling off list year. Both had lost money on real estate transactions in 1989.
But Security Pacific, which had troubled loans in Australia and writedowns related to the closing of its lackluster merchant bank, dropped from No. 3 to No. 15 this year.
In addition, Times Mirror Co., experiencing a recession-related drop in advertising revenue, dropped to No. 12 from No. 7 on that list.
Making debuts on the county stock leader list is the No. 1 Micropolis Corp., which benefited from increased demand for computer disk drives, and No. 3-ranked Syncor International Corp., which made share gains in the pharmaceutical market.
LOS ANGELES COUNTY PROFIT LEADERS
Companies ranked by profit from continuing operations.
1990 Change income in income Rank Company ($ millions) ($ millions) 1 Atlantic Richfield Co. 1,688.0 (265.0) 2 SCEcorp 830.5 7.7 3 Walt Disney Co.* 824.0 120.7 4 Rockwell Intl. Corp.* 624.3 (110.6) 5 First Interstate Bancorp 438.7 590.6 6 Unocal Corp. 401.0 43.0 7 Lockheed Corp. 335.0 329.0 8 National Medical Enterprises* 259.5 17.5 9 Northrop Corp. 210.4 290.9 10 Great Western Financial 193.1 93.0 11 H.F. Ahmanson & Co. 191.0 (2.9) 12 Times Mirror Co. 180.5 (117.5) 13 Litton Industries Inc.* 178.8 0.5 14 Union Exploration Corp. 162.6 (91.1) 15 Security Pacific Corp. 161.3 (579.3)
* See exceptions, page 55.
LOS ANGELES REVENUE LEADERS Companies ranked by overall revenue.
1990 revenue % change Rank Company ($ millions) from 1989 1 Occidental Petroleum Corp. 21,694.0 8 2 Atlantic Richfield Co. 18.008.0 17 3 Rockwell Intl. Corp.* 12,378.7 -1 4 Unocal Corp. 10,645.0 6 5 Security Pacific Corp. 10,327.4 3 6 Lockheed Corp. 9,958.0 1 7 SCEcorp 7,198.5 4 8 Pacific Enterprises 6,923.0 2 9 First Interstate Bancorp 6,024.3 -8 10 Walt Disney Co.* 5,843.7 27 11 Northrop Corp. 5,489.8 5 12 Vons Companies Inc. 5,333.9 2 13 Litton Industries Inc.* 5,156.4 3 14 H.F. Ahmanson & Co. 4,788.3 9 15 Great Western Financial 4,211.9 9
* See exceptions, page 55.
Source: MZ Group. Certain historical data is from Standard & Poor’s Compustat Inc.
L. A. COUNTY REVENUE GROWTH LEADERS Companies ranked by two-year average annual sales growth rate.
2-year avg. 1990 annual sales revenue Rank Company growth % ($ millions) 1 L.A. Gear Inc.* 100.8 902.2 2 Teradata Corp.* 58.3 224.2 3 Com Systems Inc. 52.7 129.8 4 Herbalife International Inc. 46.8 137.8 5 Live Entertainment 45.2 742.5 6 Pathe Communications* ** 43.7 766.8 7 Salick Health Care Inc.* 35.2 69.7 8 Walt Disney Co.* 30.4 5,843.7 9 Carolco Pictures Inc. 30.2 269.1 10 Imperial Bancorp 29.4 297.9 11 Avery Dennison Corp. 28.0 2,590.2 12 Diagnostic Products Corp. 27.1 75.9 13 Western Waste Industries* 23.5 172.0 14 Fredericks of Hollywood* 23.1 98.6 15 Kaufman & Broad Home* 23.0 1,366.3
1990 income (loss) Rank ($ millions) 1 31.338 2 18.758 3 (1.261) 4 (2.382) 5 25.548 6 (141.231) 7 3.622 8 824.000 9 17.298 10 23.625 11 5.900 12 17.628 13 9.692 14 4.242 15 39.943
* See exceptions, page 55. ** See company notes, page 55.
LOS ANGELES COUNTY MARKET VALUE LEADERS
Companies ranked by stock market valuation.
4/12/91 market value Book value Rank Company ($ millions) ($ millions) 1 Atlantic Richfield Co. 20,479.9 7,149.0 2 Walt Disney Company* 15,005.2 3,488.6 3 SCEcorp 8,438.6 6,071.9 4 Rockwell Intl. Corp.* 6,743.3 4,185.9 5 Unocal Corp. 6,411.4 2,550.0 6 Occidental Petroleum Corp. 5,742.0 4,112.0 7 National Medical Enterprises* 3,930.1 1,366.2 8 Times Mirror Co. 3,743.0 1,917.4 9 Security Pacific Corp. 3,008.0 4,708.0 10 Unocal Exploration Corp. 2,766.3 736.4 11 Lockheed Corp. 2,709.6 2,309.0 12 Pacific Enterprises 2,598.2 1,938.0 13 Great Western Financial 2,249.2 2,075.8 14 Castle & Cooke Inc. 2,126.0 928.6 15 First Interstate Bancorp 2,064.7 2,868.0
Market as Rank % of book 1 286 2 430 3 139 4 161 5 251 6 140 7 288 8 195 9 64 10 376 11 117 12 134 13 108 14 229 15 72
* See exceptions, page 55.
LOS ANGELES COUNTY STOCK LEADERS
Companies ranked by percent gain in stock price.
% change 4/12/91 4/12/90 stock stock stock Rank Company price price price 1 Micropolis Corp. 317.6 17.75 4.25 2 Sunrise Medical Inc. 163.9 23.75 9.00 3 Syncor International Corp. 156.6 17.00 6.63 4 Intl. Rectifier Corp. 149.3 22.75 9.13 5 Countrywide Credit Ind. Inc. 136.4 16.25 6.88 6 Mercury General Corp. 134.8 33.75 14.38 7 House of Fabrics Inc. 122.2 43.88 19.75 8 Fredericks of Hollywood 101.6 21.00 10.42 9 Countrywide Mortgage Invts. 88.5 6.13 3.25 10 20th Century Industries 84.2 42.13 22.88 11 Pinkertons Inc. 72.4 26.50 15.38 12 Northrop Corp. 69.9 28.25 16.63 13 Amwest Insurance Group Inc. 68.5 15.38 9.13 14 Computer Sciences Corp. 66.9 70.50 42.25 15 MacNeal-Schwendler Corp. 60.5 16.25 10.13
