THE TIMES 100 : The Best Performing Companies in California : WHO, WHAT & WHERE : How the Pieces of the Puzzle Came Together
This fourth edition of The Times 100 is designed to provide a systematic look into the dynamics of California business by ranking the performance of companies headquartered in the state.
The data was collected and analyzed by MZ Group, a business analysis and database publishing firm in San Francisco (415-543-8290) headed by Mansoor Zakaria and Kevin Colosimo. Research was coordinated by Helen Arrick under the direction of Laurence G. Fishkin. Robert Favreau assisted in the research.
MZ Group gathered information on 619 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. Certain historical and other selected data is provided by Standard & Poor’s Compustat, Warner Computer Systems and IDD Information Services.
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 years 1988, 1989 and, if available, 1990. If 1990 fiscal year-end data had not been reported to the SEC, the most recently reported four quarters were used. (Exceptions table on page 55 lists 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, 1990, will be reported as 1989 results.
Financial data from 1989 and 1988 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 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 companies. This applies to: Unocal (parent) and Union Exploration Partners; ICN Pharmaceuticals (parent) and SPI Pharmaceuticals.
Two California-based companies included in the analysis for The Times 100 supplement are majority owned by firms outside California but are traded as separate entities. Union Bank is 80% owned by Bank of Tokyo and National Health Laboratories is 95% owned by Revlon Group.
General Criteria
All companies must be publicly traded on one of the major exchanges--New York, American or NASDAQ/OTC--and have their headquarters in California.
Income is defined as after-tax income from continuing operations and excludes extraordinary items, and gains or losses from discontinued operations.
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 firms, revenue equals the sum of earned premiums, realized gains or losses from investments, and net investment income. For all charts except the stock market performance charts, companies must have had at least $50 million in 1990 sales.
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. Income available to common shareholders is calculated by subtracting preferred dividends (if any) from income from continuing operations. The Times 100 table ranks companies by the average return on common equity for the past two years.
For The Times 100 table, companies must have met these criteria: publicly traded since December, 1988; sales in 1990 greater than $50 million; a profit from continuing operations in 1990 and 1989; no negative common equity for each of the past three fiscal years, and not 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 1990. 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; table shows return on assets, which measures the percentage profit for every dollar in assets. Companies must have been publicly traded in 1990 with total assets exceeding $1 billion.
The return on asset figure on The Times’ list may differ from those disclosed by the institutions themselves, because MZ computes them by averaging the figures for previous year-end assets and the current year-end assets, and dividing that by income. The figure thus reflects profit earned on a constantly growing asset base.
The Top 25 in Profit Margins measures the percentage profit for every dollar in sales. Companies must have been publicly traded in 1990 with total sales exceeding $50 million.
The Born Again table shows companies that have had the greatest turnaround from a loss in 1989 to a profit in 1990.
The Nose Dives table shows companies that have suffered the greatest decrease in earnings from a profit in 1989 to a loss in 1990.
As with the other charts shown in the study, results for previous years have not been restated.
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 company 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 loan associations, revenue equals the sum of interest and non-interest income.
The Biggest Service companies ranks service companies by net revenues. Service companies include entertainment, leisure, media, retail, utility, transportation, wholesale, business and personal-service, investment, real estate and insurance companies.
View From the Street--To be included, a company’s stock must be available for trading on one of the major exchanges: New York, American, NASDAQ or major OTC listings, and must have been available for trading on April 12, 1991.
Market value is the company’s 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 stockholder’s equity or assets minus liabilities. Book value is shown as of the latest fiscal year-end, or if not available, the most recently reported quarter.
Companies on the Favorites and Forlorn tables must have had 1990 sales of at least $10 million.
For the Charging Ahead and Falling Behind tables, a company’s stock price on April 12, 1990, must have exceeded $2. Stock prices as of April 12, 1990, have been adjusted to reflect stock splits and stock dividends.
For the Lowest Priced and Highest Priced lists, a firm’s market value on April 12, 1991, must have exceeded $100 million.
The Divvying It Up list of dividend yields ranks companies on the ratio of their current indicated annual dividend to their stock price as of April 12, 1991. In most cases this figure is the latest quarterly dividend multiplied by four. There is no guarantee that the same amount of cash dividend will be declared for subsequent quarters this fiscal year or that a dividend will be declared every quarter. The list excludes real estate investment trusts and master limited partnerships because their dividends often include a return of capital.
The Top Performing IPOs table ranks companies that had their initial public common stock offering in 1990 by the stock price appreciation between the initial offering date and April 12, 1991.
Growth--Sales growth can come either by generating new business or acquiring other firms. A company must have been publicly traded since 1988, with 1988 sales exceeding $30 million.
Companies eligible for the Fastest Profit Growth table must have been publicly traded and shown a profit from continuing operations for the past three years. 1988 income from continuing operations must have been at least $10 million.
The Human Factor--California headquartered companies are ranked by 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. If fiscal year-end results were not available, employee estimates are from the latest completed quarter. The table does not include companies that are large employers in the state but are not headquartered here.
The Most Productive Employees list ranks only the top companies in each sector by revenue per employee (worldwide), but the group average is computed from figures on all the companies in the industry that were surveyed.
Hiring trends were obtained from the companies, which used the following guideline when responding to the question: “What is your hiring outlook for the upcoming 12 months?”: Increasing (up more than 5%), neutral (between 5% up or down), reducing (down more than 5%).
Regional Profiles--Same criteria used for the main tables.
Who, What, Where--All companies on The Times 100 profitability list are profiled and listed alphabetically.
Stock exchange symbols are as follows: NYSE/New York Stock Exchange, Amex/American Stock Exchange, NAS/National Assn. Securities Dealers Automated Quotation System and OTC/Over-the-counter. The company stock symbol refers to its stock ticker symbol and is not necessarily the way the company is listed in stock tables in this newspaper.
