THE TIMES 100 : The Best Performing Companies in California : THE BOTTOM LINE : Occidental Petroleum Sets Pace for Born-Again Companies : Turnarounds: Restructuring helped the oil firm. New products and the Gulf War boosted others.

They were the born-agains of the corporate world--California companies that bounced back to life in 1991 after posting big losses just one year before.

Reasons for the turnarounds are as varied as the companies themselves. Occidental Petroleum Corp., which made the biggest comeback, reported a big loss in 1990 while undergoing an aggressive restructuring that quickly paid off. American President, an Oakland transportation company, reaped $22 million shipping cargo to the Middle East for Operation Desert Storm. A couple of computer companies added lucrative new products.

Many of the born-agains also helped revive themselves through reorganizations that included layoffs.

Here are California’s top 10 comeback companies, listed in the order of absolute dollar change from loss to profit in one year. Profits and losses are based on income from continuing operations.

The Top 10

1) Los Angeles-based Occidental Petroleum, the oil and gas concern, reported a profit of $379 million in 1991 versus a loss of $1.7 billion in 1990.

When Occidental’s longtime chairman, Armand Hammer, died in 1990, his handpicked successor, Ray R. Irani, decided to do things differently. Hammer had turned Occidental into the nation’s sixth-largest oil company but ran up a huge debt and got the company involved in businesses unrelated to energy.

The new chief executive quickly set to selling unprofitable assets so Occidental could focus on its main businesses of oil, gas and chemicals. In the process, Irani eliminated more than 30,000 jobs from Occidental’s payrolls. He also slashed Occidental’s unsupportable quarterly dividend to 25 cents a share from 62.5 cents.

The massive overhaul cost the company $2 billion in restructuring expenses, resulting in 1990’s enormous loss. But by the end of 1991, Occidental was solidly in the black.

Said Irani: “Despite the impact of a weak economy and low energy prices, we have achieved in one year virtually all that we set out to accomplish in two years.”

2) Advanced Micro Devices Inc., a Sunnyvale microprocessor concern, reported a profit of $145.3 million in 1991, versus a loss of $53.6 million in 1990.

Two factors contributed to AMD’s strong showing last year. The company introduced an IBM-compatible microprocessor that brought in $250 million in sales, and it completed a four-year reorganization that reduced its work force by 7,000.

“The 386 microprocessor was the single most important thing that turned our company around,” spokesman John Greenagel said of AMD’s version of Intel’s 386 chip.

3) Genentech Inc., the South San Francisco pharmaceutical maker, reported a profit of $44.3 million in 1991, contrasted with a loss of $98 million in 1990.

Genentech’s big loss in 1990 followed a partial merger in which Switzerland-based Roche Holdings Ltd. bought 60% of its stock.

“The merger cost us $167.7 million in investment banking fees, legal fees and cash-out of employee stock options,” spokeswoman Linda Fitzpatrick said.

While 1990 was an unusually bad year--at least on paper--1991 was an unusually good one, with Genentech posting record revenue of $515.9 million. The company markets three pharmaceuticals, including Activase, a leading drug in the treatment of heart attack patients.

4) American President Cos., an Oakland shipping company, reported a profit of $64 million in 1991, versus a loss of $59.6 million in 1990.

Operation Desert Storm came to the aid of American President as well as Kuwait. The company picked up $22 million in revenue from transporting cargo to the Middle East. It also benefited from a cost-cutting plan implemented the previous year, in which it trimmed 380 jobs.

5) Coast Savings Financial Inc., the Los Angeles-based thrift, reported earnings of $41.7 million in 1991, against a loss of $62.9 million in 1990.

Like a handful of other California thrifts that rebounded in 1991, Coast Savings capitalized on plunging interest rates. It also disposed of $157 million in non-performing assets, primarily out-of-state property on which the thrift had foreclosed.

“Now all that money has been re-loaned, and it’s working for us again,” Chairman Ray Martin said.

6) Zenith National Insurance Corp. of Woodland Hills reported a profit of $42.8 million in 1991, versus a loss of $9.2 million in 1990.

In 1990, Zenith took a $42.6-million charge to reflect losses in its junk bond portfolio. The property and casualty insurer got back on its feet in 1991, which saw improvement in Zenith’s investment transactions. Annual revenue rose 17% from 1990 to $545.3 million.

Still, 1991 could have been better, said Chairman Stanley R. Zax: “The timing of large disasters affects our earnings.” He cited October’s severe windstorms in Fresno, which damaged hundreds of homes and farms, as one catastrophe that diminished Zenith’s profit.

7) Atari Corp., the Sunnyvale video game and computer firm, reported a profit of $23.7 million in 1991, up from a loss of $20.8 in 1990.

Atari is proof that first appearances don’t always tell the whole story.

Its apparent comeback is owed solely to the $40.9 million sale of its manufacturing facility in Taiwan, offsetting an operating loss of $18.7 million.

“It wasn’t a good year, otherwise,” said spokesman August J. Liguori.

Sales actually dropped $153 million from the year before to $258 million.

The rosier news for Atari in 1991 was a reduction in operating loss from 1990’s $25.2 million. “Our sales started weakening, so we began to trim overhead,” Liguori said.

Atari has cut its work force in half over the past year through layoffs and the factory sale.

8) LSI Logic Corp., Milpitas, designs and markets computer chips. It reported earnings of $6.1 million in 1991, versus a loss of $34 million in 1990.

LSI underwent a massive cost-cutting reorganization in 1991, reducing its work force by 10% and closing factories in Canada and England.

Meanwhile, the company boosted sales by introducing new products.

“Although revenue improved, the goal of the company has been to increase profitability,” said spokesman Bruce Entim.

9) Informix Software Inc. of Menlo Park reported a profit of $12.2 million in 1991, against a loss of $23.1 million in 1990.

Informix makes database programs that run on the Unix operating system, which has become popular in office settings where users are hooked into one central system.

“Unix really took off in 1991, and we were in the right place at the right time,” said Chief Executive Phillip White.

The company also underwent a restructuring in 1990 that included laying off 100 employees.

10) ICN Pharmaceuticals Inc. of Costa Mesa reported a profit of $5.9 million in 1991, up from a loss of $26.7 million in 1990.

Its link last year with an Eastern European pharmaceutical company pulled ICN out of foreign debt caused partially by a weak U.S. dollar.

Costa Mesa-based SPI Pharmaceuticals Inc., one of three publicly held companies in which ICN holds a major stake, started a joint venture with Yugoslav drug maker Galenika that doubled SPI’s 1991 profit to a record $30 million.

Born Again

Companies ranked by absolute change from loss to profit in one year.

1991 income 1990 loss Rank Company ($ millions) ($ millions) 1 Occidental Petroleum Corp 379.0 (1,688.0) 2 Unionfed Financial Corp 171.8 (37.4) 3 Advanced Micro Devices Inc. 145.3 (53.6) 4 Genentech Inc 44.3 (98.0) 5 American President Cos 64.0 (59.6) 6 Coast Savings Financial Inc 41.7 (62.9) 7 Atari Corp 23.7 (20.8) 8 Lsi Logic Corp 6.1 (34.0) 9 Informix Corp 12.2 (23.1) 10 VLSI Technology Inc. 12.8 (12.7)

Change in income Rank ($ millions) 1 2,067.0 2 209.1 3 198.8 4 142.4 5 123.6 6 104.6 7 44.5 8 40.1 9 35.3 10 25.5

*See exceptions, page 55.

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