#51. E. C. ERNST INC.
9602-F George Palmer Hwy. Lanham, Md. 20706 REVENUE: $45.7 million LOSS: $7.9 million LOSS PER SHARE: $1.97 DIVIDEND: None ASSETS: $11.2 million STOCKHOLDERS' DEFICIT: $59.2 million RETURN ON EQUITY: NA EXCHANGE: OTC EMPLOYES: 606 TOP EXECUTIVES: John Hozik, chairman and chief executive officer; Robert P. Anthony, president and chief operating officer. FOUNDED: 1915
DESCRIPTION: E. C. Ernst is an electrical construction contracting firm that has been operating under Chapter 11 of the federal bankruptcy code since 1978.
DEVELOPMENTS: Ernst's financial position improved significantly in the 12 months ended last March 31. The company's net loss decreased 41 percent and approached the break-even point in the first half of the current fiscal year. For the six months ended Dec. 31, Ernst reported revenue of $25.1 million against $37.4 million for the same period a year earlier. However, the company's net loss for the period was $1 million (27 cents a share), compared with a loss of $9.4 million ($2.34) for the previous year.
The company's legal counsel says Ernst has successfully negotiated agreements to satisfy two of its major creditors, Travelers Indemnity Co. and Philadelphia Bourse Inc., pending final confirmation of Chapter 11 arrangements by officials directing the backruptcy proceedings.
Under terms of the agreement, Philadelphia Bourse will own 92 percent of Ernst common stock following confirmation of the arrangements.
The company was able to improve its financial position in recent months by cutting overhead, reducing personnel and trimming operations in two cities -- Miami and Pittsburgh -- where it had encountered large cost overruns for labor. #52. QUESTECH INC.
6858 Old Dominion Dr. McLean, Va. 22101 REVENUE: $43.6 million PROFITS: $857,006 EARNINGS PER SHARE: 56 cents DIVIDEND: None ASSETS: $21.9 million STOCKHOLDERS' EQUITY: $7.2 million RETURN ON EQUITY: 13 percent EXCHANGE: OTC EMPLOYES: 695 TOP EXECUTIVES: Herbert W. Klotz, president and chairman of the board; Vincent L. Salvatori, executive vice president-technology and planning. FOUNDED: 1969
DESCRIPTION: QuesTech is a diversified high-technology holding company with four operating subsidiaries specializing in electronic warfare technology, intelligence systems, aerospace industry modernization, materials research, aeronautical analysis and wind-tunnel research. The company's major customer is the Department of Defense.
DEVELOPMENTS: Despite a 32 percent increase in revenue for the fiscal year ended Dec. 31, QuesTech reported a 24 percent drop in net income. The decline in earnings is attributed to pressure on company resources as the result of a joint venture with Shell Oil Co., the funding of new operations and poor operating results by several of the holding company's subsidiaries.
QuesTech's reported income for fiscal 1985 includes $720,242 related to final adjudication of the company's claims against Iran. #53. COMPUTER ENTRY SYSTEMS CORP.
2141 Industrial Pkwy. Silver Spring, Md. 20904 REVENUE: $39.1 million PROFITS: $1.9 million EARNINGS PER SHARE: 45 cents DIVIDEND: None ASSETS: $26.8 million STOCKHOLDERS' EQUITY: $12.7 million RETURN ON EQUITY: 16 percent EXCHANGE: OTC EMPLOYES: 507 TOP EXECUTIVES: Brian T. Cunningham, chairman; Michael J. King, president. FOUNDED: 1969
DESCRIPTION: Computer Entry Systems designs, develops, manufactures and services systems for cash management and payment processing. The company supplies hardware and software, including advanced technologies such as optical character recognition and high resolution imaging.
DEVELOPMENTS: Net income for the fiscal year ended Dec. 31 increased 29 percent over the previous year, while revenue jumped 46 percent. Company officials report strong results for the first quarter of the current fiscal year, which started with a backlog of customer orders exceeding $17 million, about $2 million more than at the same time the previous year.
Computer Entry recently completed a move to new facilities in Silver Spring. In January, the company acquired a portion of the business-systems division of General Instrument, a Hunt Valley, Md., company. The combined sales figures for Computer Entry and its new acquisition are projected by management to be in the range of $70 million to $80 million this year. The acquisition diversifies the company's customer base in addition to increasing revenue. #54. HOTEL INVESTORS
5530 Wisconsin Ave. Chevy Chase, Md. 20815 REVENUE: $38.7 million PROFITS: $5.3 million EARNINGS PER SHARE: $1.33 DIVIDEND: $1.72 ASSETS: $97.6 million STOCKHOLDERS' EQUITY: $48.8 million RETURN ON EQUITY: 10.8 percent EXCHANGE: NYSE EMPLOYES: 1,600 TOP EXECUTIVE: Kurt W. Schneider, president and chief executive officer. FOUNDED: 1969
DESCRIPTION: Hotel Investors is the name for Hotel Investors Trust and Hotel Investors Corp., two operations jointly owned by the same stockholders. The trust, which owns and finances hotels, has an interest in 20 properties. The corporation operates nine hotels leased from the trust and manages eight hotels leased from other owners.
DEVELOPMENTS: During 1985, the trust sold the Milwaukee Marriott Hotel, realizing a gain of about $14 million ($3.50 a share). The corporation will continue to manage the hotel. Under a program to sell some of its older hotels, it also sold its Ramada Inn in Columbia, Mo. Hotel Investors said the success of its Residence Inn at Tysons Corner encouraged it to acquire sites for future Residence Inns in Greenbelt near the Capital Beltway and Herndon near Washington Dulles International Airport. Residence Inns feature suites with kitchen facilities instead of traditional hotel rooms. During 1985, the trust invested $5.4 million in the University Hilton in Charlottesville and $12 million in the Hilton Hotel in Merrimack, N.H.
The company reported revenue of $38.7 million in fiscal 1985, ended Aug. 31, up from $31.5 million in fiscal 1984. Profits rose slightly to $5.291 million ($1.33) from $5.278 million ($1.33) a year earlier. In both years, profits lagged behind the 1981-to-1983 period, when they topped $6 million. Cash flow from operations in 1985 moved up to $7.4 million, from $7 million in 1984. For the first six months of fiscal 1986, profits were $1.5 million (39 cents), compared with $2.6 million (66 cents) the previous year.
Hotel Investors recently agreed to be merged with Hotel Properties Inc., a real estate investment trust in Woodland Hills, Calif. The merger, subject to approval by stockholders, would take place under the name of Hotel Investors but under the control of Hotel Properties' management, headed by President John F. Rothman. Previously, Hotel Investors had been a takeover target by the Eastover Group real estate firms of Jackson, Miss. #55. CLASSIC CORP.
8214 Wellmoor Ct. Jessup, Md. 20794 REVENUE: $37.6 million PROFITS: $513,000 EARNINGS PER SHARE: 27 cents DIVIDEND: None ASSETS: $17.8 million STOCKHOLDERS' EQUITY: $10.7 million RETURN ON EQUITY: 5 percent EXCHANGE: OTC EMPLOYES: 650 TOP EXECUTIVE: Isaac Fogel, chairman, president and chief executive officer. FOUNDED: 1971
DESCRIPTION: Classic Corp. manufactures waterbed and flotation sleep products such as mattresses, liners and heaters. The company wholesales its products to independent furniture retailers, waterbed specialty stores, national furniture chains and mass merchandisers nationwide.
DEVELOPMENTS: Price cutting and increased competition in the fiscal year ended June 30 depressed revenue for Classic Corp. and resulted in a 36 percent drop in net income. Revenue was up a modest 10 percent. Management describes its market position as "shifting" with ever greater price and product competition.
Early last year, the company established a new manufacturing facility near its offices in Jessup and continues to operate its heater manufacturing plant in Portland, Maine, and a West Coast manufacturing and distribution facility in Carson, Calif.
For the six months ended Dec. 31, the company reported revenue of $20.5 million against revenue of $19.5 million for the same period last year. Classic reported a net loss of $335,000 (17 cents a share) for the first half of the current year, compared with net income for the same period last year of $515,000 (27 cents).
Management believes the company's stock is underpriced and, in January, authorized the repurchase of 250,000 shares. In the first quarter of this year, the company bought approximately 50,000 shares and expects to purchase more if they remain near the current price -- between $3.74 and $4.25 a share. recently completed a move to new facilities in Silver Spring. In January, the company acquired a portion of the business-systems division of General Instrument, a Hunt Valley, Md., company. The combined sales figures for Computer Entry and its new acquisition are projected by management to be in the range of $70 million to $80 million this year. The acquisition diversifies the company's customer base in addition to increasing revenue.