THE TIMES 100 : THE BEST PERFORMING COMPANIES IN CALIFORNIA : SECTOR BY SECTOR : Health Care Services and Pharmaceuticals Show Resilience : Orange County: Even in a recession, people get sick. The truth of that adage can be seen in some earnings.

When it comes to a recession, Orange County’s best-performing companies show that conventional wisdom holds true: Health care firms do well.

After all, people still get sick and need medication and treatment, whether it strains their pocketbooks or not.

Of the 15 Orange County companies that made The Times 100--which is based on average return on equity over a two-year period--five were in health-related fields, including hospitals, insurers and drug manufacturers. Seven health-related firms dominated the list of Orange County companies ranked by stock market value.

Topping the health firms was PacifiCare Health Systems, the Cypress-based health maintenance organization, ranked No. 11 on The Times 100. During the year, its earnings rose 45%, and revenue topped $1 billion for the first time.

“We knew 1991 would be a really tough, competitive year,” company President Terry Hartshorn said. “We really stressed to doctors to control costs.”

The company also gained on competitors by merging with Health Plan of America, a 130,000-member HMO in Orange.

Although the merger cost $50 million, “they’re a cash-generating machine,” said Mark Matheson, an analyst for Cruttenden & Co. in Newport Beach.

To a lesser extent, the same holds true for FHP International Corp., a Fountain Valley-based competitor in the HMO market. It fell from 27th to 45th in The Times 100. While the company’s earnings rose, it also made $61 million in capital expenditures, including more than half a dozen new medical centers.

“We hope to see the return on the investment in the next year,” company President and Chief Executive Wescott W. Price III said. “Hopefully we’ll be back up there next year.”

FHP, like PacifiCare, has also reined in health care costs. But unlike its competitors, FHP has its own medical staff, laboratory, hospitals and clinics.

Elsewhere in the health field, the hot commodity on the 1991 stock market--biotech firms--was no exception in Orange County. SPI Pharmaceuticals and its holding company, ICN Pharmaceuticals, both based in Costa Mesa, “made a lot of good acquisitions and their revenues have boomed,” Matheson said.

SPI ranked 24th on the Times 100, up from 80th a year ago. The company, which makes vitamins, skin products and other drugs, added a partnership with a Yugoslavian drug maker to its existing ventures in Spain and the Netherlands. The company also was No. 2 among firms statewide in one-year average sales growth, with revenue jumping 159% to $364.4 million.

“We made dramatic gains in terms of every standard financial measurement--sales, operating income, net income, earnings per share and return on equity,” said Milan Panic, chairman and chief executive officer of ICN.

ICN Pharmaceuticals, meanwhile, bounced back from a 1990 loss and was red hot. It ranked at the top of Orange County companies in stock price growth, going from just $5.50 per share a year ago to $14.00 early this month. The company also cracked Orange County’s top 15 revenue performers with $460.4 million in sales, ranking 12th in the county.

Meanwhile, makers and inventors of medical devices--heavily concentrated in Orange County--also fared well. Santa Ana-based Tokos Medical Corp., which provides uterine monitors and nursing services to pregnant women at high risk of premature delivery, was eighth on the list of the county’s top stock gainers, and Fullerton-based Beckman Instruments Inc., which makes and sells biological laboratory systems, was 15th.

“If there is a recession-proof industry, this is it,” said David G. Anast, the publisher and editor of Biomedical Market Newsletter in Costa Mesa. “The bottom line is, hospitals have to replace old, broken equipment or (buy) equipment that cuts down on the cost to staff it. That’s going to translate into major cost savings, and that’s really where the growth is.”

Outside of health care, the top Orange County companies are a diverse lot. Once again, surfwear-maker Quiksilver Inc. of Costa Mesa, food-products maker Bridgford Foods Corp. of Anaheim and fast-food giant Carl Karcher Enterprises of Anaheim made it to the list. Also on the list again are Irvine-based insurance firms UniCare Financial Corp. and Fidelity National Financial Inc.

Clothestime, the Anaheim off-price women’s clothing retailer, didn’t make the list in a year when consumers turned to low-cost apparel, but it ranked third among Orange County’s top stock performers.

Only a few computer firms--bucking a personal-computer industry slump--made it to the list. On top was AST Research, the Irvine-based computer products manufacturer, which benefited somewhat as more customers bypassed IBM and Compaq for matching power at a lower price.

AST not only made it to The Times 100 after being off the list last year, but was the highest-ranked Orange County firm at No. 8. The company also made it to the recent Fortune 500 rankings.

The only other Orange County computer firm on The Times 100 list was Amplicon, the Santa Ana computer leasing company. It has a stable revenue stream coming in from leasing contracts.

National Education Corp., the Irvine computer and vocational training firm, paid off all its outstanding debt and came back from losses in 1990 to rank among the top Orange County firms in market value. The company also was sixth among top stock gainers.

On the down side, two firms in the computer storage systems industry--manufacturer Archive Corp. in Costa Mesa and distributor CMS Enhancements Inc. in Irvine--fell off the list. Both firms recorded losses during the year in the flooded market and plan to revise their product lines.

Meanwhile, Western Digital Corp., the Irvine-based semiconductor and disk-drive manufacturer, was second among Orange County firms with the most losses.

“They have had trouble keeping up with the semiconductor products,” said Jim Porter, president of Disk/Trend Inc., a market research firm in Mountain View. “They’ve fallen behind their competitors. They’ve had some growth in their disk drives, but not as much as expected.”

J. M. Peters Co., the Newport Beach builder of luxury homes, lost $109 million in 1991 to top the list of Orange County firms with the worst losses. Only two years ago, the company ranked among Orange County’s most profitable.

Peters specializes in selling homes worth more than $300,000, the segment hardest hit by the recession, and it was further hampered when the Resolution Trust Corp. took control of its biggest stockholder, San Jacinto Savings.

“Once they get their financial condition in order, I expect them to take off,” said Robert McFarland, senior vice president of the residential division of Market Profiles, a Costa Mesa research firm. “They have a reputation for quality, and they are very astute people. Some top-notch firms have shown interest in acquiring the company.”

Among larger companies, Irvine industrial and construction giant Fluor Corp. was once again near the top of the Orange County lists in revenue and profit, in absolute terms. But after years in the No. 1 spot, it was edged out this year by aerospace conglomerate Rockwell International. The change has a simple explanation: During 1991, Rockwell moved its headquarters from El Segundo in Los Angeles County to Seal Beach in Orange County.

Orange County Profit Leaders

Companies ranked by profit from continuing operations.

1991 Change Income in Income Rank Company ($ millions) ($ millions) 1 Rockwell International Corp. * 582.3 (37.7) 2 Fluor Corp. * 149.1 10.2 3 AST Research Inc. * 70.2 17.6 4 Bergen Brunswig Corp. * 56.1 (12.1) 5 Community Psychiatric Centers * 45.3 (37.9) 6 Beckman Instruments Inc. 38.1 1.9 7 FHP International Corp. * 33.3 1.1 8 SPI Pharmaceuticals Inc. 30.1 15.2 9 Pacificare Health Systems * 29.8 12.6 10 Downey Savings & Loan Assn. 24.9 (17.1) 11 Westcorp 21.1 9.4 12 Varco International 14.0 5.3 13 Carl Karcher Enterprises Inc. * 13.0 0.0 14 Advanced Logic Research Inc. 12.1 0.5 15 Wahlco Environmental Systems 11.6 2.5

* See exceptions, Page 54.

Source: MZ Group.

Orange County Revenue Leaders

Companies ranked by overall revenue.

1991 Revenue % Change Rank Company ($ Millions) From 1990 1 Rockwell International Corp. * 11,549.4 -7 2 Fluor Corp. 6,741.7 -9 3 Bergen Brunswig Corp. * 4,960.5 9 4 FHP International Corp. * 1,430.1 24 5 Pacificare Health Systems * 1,312.9 26 6 Western Digital Corp. * 915.9 -14 7 Beckman Instruments Inc. 857.9 5 8 Allergan Inc. 839.3 -5 9 AST Research Inc. * 827.3 41 10 First American Financial Corp. 756.8 7 11 Carl Karcher Enterprises Inc. 531.6 2 12 ICN Pharmaceuticals Inc. 460.4 69 13 Community Psychiatric Centers 396.6 6 14 Downey Savings & Loan Assn. 392.8 -18 15 National Education Corp. 385.4 4

* See exceptions, Page 54.

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

Orange County Revenue Growth Leaders

Companies ranked by one-year average annual sales growth rate.

1-Year Avg. 1991 Annual Sales Revenue Rank Company Growth % ($ millions) 1 ICN Pharmaceuticals Inc. 69.3 460.4 2 Varco International 65.1 216.2 3 SysteMed Inc. 43.3 86.6 4 AST Research Inc. * 41.1 827.3 5 Nichols Institute 35.2 236.3 6 UniCare Financial Corp. 30.0 126.3 7 Pacificare Health Systems * 25.8 1,312.9 8 Clothestime Inc. * 24.0 244.6 9 FHP International Corp. * 23.9 1,430.1 10 Fidelity National Financial Inc. 23.0 220.6 11 Newport Corp. * 21.1 72.9 12 FileNet Corp. 19.0 122.5 13 Emulex Corp. * 12.5 146.7 14 Vestro Foods Inc. * 11.6 37.1 15 Bergen Brunswig Corp. * 9.4 4,960.5

1991 Profit/(Loss) Rank ($ millions) 1 5.855 2 14.031 3 1.401 4 70.152 5 3.403 6 7.459 7 29.825 8 4.172 9 33.340 10 6.235 11 2.556 12 8.126 13 (.817) 14 (1.056) 15 56.059

* See exceptions, page 54.

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

Orange County Market Value Leaders

Companies ranked by stock market valuation.

4/10/92 Market Value Book Value Market as Rank Company ($ millions) ($ millions) % of Book 1 Rockwell International * 5,529.4 4,230.7 131 2 Fluor Corp. 3,182.4 1,020.0 312 3 Allergan Inc. 1,548.0 444.9 348 4 Bergen Brunswig Corp. * 767.1 403.8 190 5 Pacificare Health Systems * 687.4 107.0 643 6 Community Psychiatric Ctrs 571.6 483.9 118 7 Beckman Instruments Inc. 567.9 343.0 166 8 AST Research Inc. * 498.6 324.5 154 9 FHP International Corp. * 480.5 285.9 168 10 Tokos Medical Corp. 437.2 54.1 808 11 SPI Pharmaceuticals Inc. 425.6 88.1 483 12 Standard Pacific Corp. 365.2 253.6 144 13 Nationwide Health Properties 345.6 189.1 183 14 National Education Corp. 313.1 152.8 205 15 Armor All Products Corp. * 230.4 92.3 250

*See exceptions, page 54.

Source: MZ Group.

Orange County Stock Leaders

Companies ranked by percent gain in stock price.

% Change 4/10/92 4/12/91 Stock Stock Stock Rank Company Price Price Price 1 ICN Pharmaceuticals Inc. 154.5 14.00 5.50 2 Pacificare Health Systems 122.2 60.00 27.00 3 Clothestime Inc. 92.3 9.38 4.88 4 Safeguard Health Enterprises 74.5 12.00 6.88 5 Bridgford Foods Corp. 72.9 20.75 12.00 6 National Education Corp. 64.7 10.50 6.38 7 Westcorp 48.2 12.88 8.69 8 Tokos Medical Corp. 44.3 28.50 19.75 9 Standard Pacific Corp. 19.8 12.13 10.13 10 SysteMed Inc. 17.5 5.88 5.00 11 Archive Corp. 9.0 9.13 8.38 12 Comarco Inc. 7.0 5.75 5.38 13 Carl Karcher Enterprises Inc. 5.9 9.00 8.50 14 Pacific Scientific Co. 4.4 11.75 11.25 15 Beckman Instruments Inc. 4.0 19.50 18.75

* See exceptions, Page 54.

Source: MZ Group.