#41. GENERAL PHYSICS CORP.

10650 Hickory Ridge Rd. Columbia, Md. 21044 REVENUE: $66.5 million PROFITS: $4.3 million EARNINGS PER SHARE: $1.16 DIVIDEND: 15 cents ASSETS: $40.1 million STOCKHOLDERS' EQUITY: $20.5 million RETURN ON EQUITY: 25.5 percent EXCHANGE: OTC EMPLOYES: 1,038 TOP EXECUTIVE: Robert W. Deutsch, chairman and president. FOUNDED: 1966

DESCRIPTION: General Physics, a service company for Navy and industrial firms, trains technical personnel and develops and implements operational procedures and maintenance programs. It puts particular emphasis on increasing the safety and reliability of nuclear power plants and on improving the availability and efficiency of fossil-fuel power plants.

DEVELOPMENTS: Forbes magazine has ranked General Physics 43rd among the 300 best small companies, citing its 24.5 percent five-year average return on equity (last year's return on equity of 25.5 percent was 4.7 points over 1984's).

A 1985 development heavily emphasized by the company was its acquisition of Taurio Corp., a defense-service company in Alexandria, and the related integration of all of General Physics' defense activities into a single organization with a staff of about 400. The organization accounted for 32 percent of revenue and 14 percent of earnings.

Revenue derived from the provision of training, maintenance and engineering services for coal-fired and oil-fired power plants more than doubled in 1985.

Business related to the operation of nuclear power plants accounted for 55 percent of revenue and 75 percent of earnings.

The company formed two new subsidiaries. One, Power Management Associates Inc., retains retired utility executives on a part-time basis. The other, General Technical Services Inc., hires experts on a temporary basis, primarily for power-plant services. #42. B. F. SAUL REAL ESTATE INVESTMENT TRUST

8401 Conn. Ave. Chevy Chase, Md. 20815 REVENUE: $65.3 million LOSS: $13.9 million LOSS PER SHARE: $2.51 DIVIDEND: 20 cents ASSETS: $396.1 million STOCKHOLDERS' EQUITY: $10 million RETURN ON EQUITY: NA EXCHANGE: NYSE EMPLOYES: 1,500 TOP EXECUTIVE: B. Francis Saul II, chairman. FOUNDED: 1962

DESCRIPTION: B. F. Saul buys and develops income-producing commercial and residential properties, hotels and shopping centers, largely in the mid-Atlantic, southeastern and southwestern regions of the United States. It channels most of its property-management and financial business to the privately held B. F. Saul Co.

Franklin Property Co., part of B. F. Saul Co., leases and manages most of the trust's properties.

DEVELOPMENTS: B. F. Saul REIT lost money in 1985 for the second year in a row -- $13.9 million compared with $5.1 million in 1984 -- but the company continued its acquisition and development program. It said the growth over the past two years, involving $69 million in purchases and $86 million in new development or expansion of existing properties, contributed to the losses last year. These investments will begin paying off in 1987, 1988 and 1989 with substantial cash flow and strong earnings, the company said. Among the properties bought by B. F. Saul REIT is a 60 percent interest in Chevy Chase Savings and Loan Inc., the largest thrift in Maryland and the second-largest in the Washington area. #43. SCHWARTZ BROS. INC.

4901 Forbes Blvd. Lanham, Md. 20706 REVENUE: $64.5 million PROFITS: $766,897 EARNINGS PER SHARE: 95 cents DIVIDEND: None ASSETS: $22.3 million STOCKHOLDERS' EQUITY: $6.3 million RETURN ON EQUITY: 13.8 percent EXCHANGE: OTC EMPLOYES: 180 TOP EXECUTIVES: Stuart Schwartz, chairman; James Schwartz, president. FOUNDED: 1946

DESCRIPTION: Schwartz Bros. is a wholesaler of pre-recorded and blank music and video tapes and cassettes, phonograph records, computer software and accessories.

DEVELOPMENTS: Largely on the strength of market demand for its inventory, Schwartz Bros. increased revenue 53 percent in the fiscal year ended Jan. 31. Net income for the year jumped dramatically from the $195,000 reported in the previous fiscal year.

One factor related to the increased revenue was expansion of the company's marketing area beyond the mid-Atlantic states to include Ohio. Last November, the company opened a distribution office in Cleveland, and in April it opened a similar new office in Caldwell, N.J., to serve New York and the New England states.

Increased sales volume reflects continued consumer interest in video tapes, which the firm distributes to independent retail outlets throughout its marketing area.

The company also reports increasing demand for compact discs due to a sharp drop in the price of compact-disc players. A new distribution center for CDs is being built at the company's Lanham headquarters and is scheduled for completion in June. #44. VIE DE FRANCE CORP.

8201 Greensboro Dr. McLean, Va. 22102 REVENUE: $63.1 million PROFITS: $5.6 million EARNINGS PER SHARE: 52 cents DIVIDEND: 22 1/2 cents ASSETS: $37.6 million STOCKHOLDERS' EQUITY: $28.7 million RETURN ON EQUITY: 21 percent EXCHANGE: OTC EMPLOYES: 1,400 TOP EXECUTIVES: Jean-Louis Vilgrain, chairman and chief executive officer; Lloyd J. Faul, president and chief operating officer. FOUNDED: 1972

DESCRIPTION: Vie de France is a specialty baking company with a wholesale division that produces fresh and frozen premium-priced French breads, croissants and related products. It has 25 wholesale facilities in 19 states and the District that supply 1,400 in-store bakeries nationwide. It has 30 retail self-service bakery cafes that offer a light menu.

DEVELOPMENTS: Despite a gain in sales, net income slipped 4.6 percent in the fiscal year ended in June 1985. Between July and December, profits were off 36 percent as the company went through what it called a period of consolidation and transition, still digesting a major expansion. The January-March period showed a slight improvement.

The company has closed two unprofitable full-service restaurants in the past year and plans to concentrate henceforth on expanding self-service cafes. It ended its franchise agreements with independent outlets in order to supply in-store bakeries, a rapidly growing feature of supermarkets. It withdrew its line of products from supermarket freezer cases because of poor sales, but plans to reintroduce them this year.

Last year, Vie de France opened five new wholesale bakeries and soon it will open another in Atlantic City. Faced with increased competition, the company has restructured its marketing and distribution systems for multi-unit operators. It has hired a new sales staff and plans more advertising in trade publications.

The company introduced 20 new products last year, including French-bread pizza dough, gourmet cookies, muffins, brioches, multigrain breads and sourdough bread. #45. ERC INTERNATIONAL

2070 Chain Bridge Rd. Vienna, Va. 22180 REVENUE: $62.8 million PROFITS: $2.2 million EARNINGS PER SHARE: 56 cents DIVIDEND: None ASSETS: $28 million STOCKHOLDERS' EQUITY: $16.7 million RETURN ON EQUITY: 14.7 percent EXCHANGE: Amex EMPLOYES: 900 TOP EXECUTIVES: Jack E. Aalseth, chairman; John E. Gray, president. FOUNDED: 1976

DESCRIPTION: Established in 1976 to provide software, engineering, technical and consulting services for the Department of Defense, ERC International's business mix is now 60 percent government and 40 percent commercial. The company is organized into four marketing groups: defense, energy and the environment, computer systems and logistics and facilities management. ERC's clients include commercial and government agencies overseas.

DEVELOPMENTS: In mid-1985, ERCI acquired International Energy Associates Limited, an energy-consulting company, and named its president, John E. Gray, president of the merged company. With the addition of IEAL, revenue increased to $62.8 million from $39 million, while profits rose to $2.2 million (56 cents a share) from $1.5 million (39 cents).

ERCI said that 75 percent of its increased revenue in 1985 was attributable to a new engineering specialty involving the safety of nuclear power generating plants.

ERCI failed to realize its expectations for the operations of its InterCAD division, which lost $1.7 million in 1985, the company said. ERCI hopes InterCAD, which develops electronic technical-illustration systems, will become a leading computer-graphics producer in electronic-technical publishing this year.

ERCI won a $15 million contract to support the Air Force's Joint Service Worldwide Military Command and Control System computer modernization effort. It also won a contract, expected to be worth about $30 million, to conduct a quality-assurance and quality-control program at the Texas Utilities Generating Company nuclear power plant at Comanche Peak.

During 1985, ERCI purchased the stock of D-K Associates Inc. of Rockville, Md. The purchase price is expected to range from $3.2 million to $3.8 million, with payments being made during a five-year period. D-K Associates provides audiovisual services and management services for technical publications. from the $195,000 reported in the previous fiscal year.

One factor related to the increased revenue was expansion of the company's marketing area beyond the mid-Atlantic states to include Ohio. Last November, the company opened a distribution office in Cleveland, and in April it opened a similar new office in Caldwell, N.J., to serve New York and the New England states.

Increased sales volume reflects continued consumer interest in video tapes, which the firm distributes to independent retail outlets throughout its marketing area.

The company also reports increasing demand for compact discs due to a sharp drop in the price of compact-disc players. A new distribution center for CDs is being built at the company's Lanham headquarters and is scheduled for completion in June.