#11. FAIRCHILD INDUSTRIES INC.

300 West Service Rd. P.O. Box 10803 Washington Dulles International Airport Chantilly, Virginia 22021 REVENUE: $860.8 million LOSS: $167 million LOSS PER SHARE: $13.17 DIVIDEND: 35 cents ASSETS: $702.2 million STOCKHOLDERS' EQUITY: $45.4 million RETURN ON EQUITY: NA EXCHANGE: NYSE EMPLOYES: 12,380 TOP EXECUTIVE: Emanuel Fthenakis, chairman, president and chief executive officer. FOUNDED: 1936

DESCRIPTION: Fairchild is a leading aerospace and electronics company, with major positions also in communications and in commercial and industrial activities. Fairchild, which once counted heavily on government contracts for most of its business, is beginning to rely increasingly on commercial and industrial customers.

Fairchild's communications and electronics division includes operations involved in the design, manufacture and marketing of avionics, electronics and telecommunications products and systems for government and commercial customers. Its space operations involve production of hardware, electronics and systems for space applications and aircraft. The aerospace business encompasses the design, production and marketing of commercial turboprop aircraft, subassemblies for military and commercial airplanes and the development and production of the T-46A military jet aircraft trainer. The commercial/industrial division produces aerospace fasteners, tooling for plastics, computer cabinetry, seamless metal doorknobs, and various types of process controls for industry.

DEVELOPMENTS: Fairchild continues to face considerable uncertainty in its aerospace division, having recently received another serious setback in efforts to continue its T-46A jet trainer aircraft program. The Air Force recently announced that it would not seek funding in fiscal 1987 for the T-46A program, the loss of which could place the parent company's Fairchild Republic Co. in jeopardy.

The Reagan administration had called for cancellation of the $3.5 billion jet trainer program in its proposed fiscal 1987 budget. Fairchild had hoped to reach a compromise with the Air Force by selling it 11 trainers for $105 million. The program already had been hurt by production delays and cost overruns totaling about $100 million. All of the costs exceeding the ceiling on the original fixed-price contract have been absorbed by Fairchild.

In a related development, Fairchild's independent auditor, Ernst & Whinney, issued a qualified opinion of the company's 1985 financial statements because of uncertainties related to the T-46A program.

Fairchild itself has expressed uncertainty about the possible effects of federal budget constraints on its government-related businesses. The company noted similar uncertainty about the possible effect delays in the space shuttle program could have on its space programs.

In the meantime, Fairchild is pursuing a strategy of limiting its participation in the aircraft business, choosing to concentrate more of its resources in growth areas such as communications and electronics. As part of that strategy, Fairchild has actively pursued buyers for its Fairchild Republic and Fairchild Aircraft units, or partners that would share the costs of those operations. No agreement has been reached with anyone, however.

Fairchild's other businesses generally performed well in 1985, though the company reported a loss of $194.5 million from continuing operations and sales of $856 million, compared with $819 million in 1984.

In a major personnel change at Fairchild, Emanuel Fthenakis was named chief executive officer in October 1985 and became chairman in January 1986, succeeding Edward G. Uhl, who retired. #12. WASHINGTON GAS LIGHT CO.

1100 H St. NW Washington, D.C. 20080 REVENUE: $764 million PROFITS: $41.8 million EARNINGS PER SHARE: $2.46 DIVIDEND: $1.66 ASSETS: $799.6 million STOCKHOLDERS' EQUITY: $295.1 million RETURN ON EQUITY: 14 percent EXCHANGE: NYSE EMPLOYES: 3,282 TOP EXECUTIVE: Donald J. Heim, chairman and president. FOUNDED: 1848

DESCRIPTION: Washington Gas Light Co. distributes natural gas to customers in the District of Columbia and adjacent areas of Maryland and Virginia. In addition, two wholly owned subsidiaries, Frederick Gas Co. and Shenandoah Gas Co., serve customers in Frederick County, Md., and the Shenandoah Valley area of Virginia and West Virginia.

Another subsidiary, Hampshire Gas Co., operates gas storage facilities. Other subsidiaries sell and install insulation and other residential and commercial energy-conservation products and facilities. Together, the latter companies had sales of $34 million and net income of $1.5 million last year.

Crab Run Gas Co. is a subsidiary participating in oil and gas exploration and production in several states. It had revenue of about $2 million in 1985.

DEVELOPMENTS: Washington Gas Light Co.'s operating revenue dropped 4.6 percent in 1985 to $764 million as a result of declining costs of natural gas it purchased for resale to its customers. Its net income nevertheless rose 3 percent to $40.1 million, and the number of metered customers 1.9 percent to 593,345.

With the issuance of additional common stock, earnings per share inched up from $2.45 to $2.46. The dividend was increased from $1.52 to $1.66.

The company continued to emphasize cost control, and between 1982 and last year achieved a 9 percent reduction in utility personnel while the number of customers rose 4 percent.

Capital expenditures rose 25 percent last year to slightly more than $50 million, with about half spent in connection with new business. Capital spending will rise even more sharply in 1986, to about $74 million, with most of the increase going for replacement of distribution facilities during street reconstruction in several jurisdictions.

For the second year in a row, Washington Gas generated sufficient internal funds to finance its needs and plans to do so again this year -- other than for common stock issued through dividend reinvestment and employe stock-ownership plans. During the year, Standard & Poor's Corp. increased the company's bond rating from A+ to AA-.

Part of the lower cost for natural gas was achieved by buying directly from independent gas producers rather than exclusively from the two interstate pipelines the company has used in the past. In addition, a contract has been signed with a third pipeline to provide still more diversity of supply beginning next year.

Retail rates for gas were increased by 2 percent last year in the Virginia areas served by the company, and a request for a 9 percent rate increase is pending in the District. However, to meet new competitive problems caused by falling oil prices, Washington Gas is lowering prices to large customers that have the capacity to switch to that fuel. #13. SMITHFIELD FOODS INC.

1777 N. Kent St. Suite 811 Arlington, Va. 22209 REVENUE: $669.1 million PROFITS: $3.5 million EARNINGS PER SHARE: $1.22 DIVIDEND: None ASSETS: $119.2 million STOCKHOLDERS' EQUITY: $20.4 million RETURN ON EQUITY: 17.9 percent EXCHANGE: OTC EMPLOYES: 4,300 TOP EXECUTIVES: Joseph W. Luter III, chairman, president and chief executive officer; Aaron D. Trub, vice president, secretary and treasurer. FOUNDED: 1962

DESCRIPTION: Smithfield, No. 398 on Fortune magazine's list of the largest 500 U.S. industrial companies, is the biggest East Coast producer of ham, bacon, sausage, luncheon meats and hot dogs. Its products are sold under the brand names Luter, Smithfield, Gwaltney, Esskay, Williamsburg and Patrick Cudahy. The company has operations in Virginia, Maryland, North Carolina and Wisconsin.

DEVELOPMENTS: Smithfield, which in the past has acquired several of its competitors, last year bought Esskay, the ailing Baltimore meatpacking firm whose corporate name is Schluderberg Kurdle Co. Inc., for $3.5 million. After Smithfield extracted contract concessions from Esskay workers and initially laid off 100, it began moving production back to the Baltimore plant.

Today, the plant is rehiring and employs more than 400 people. All of its former production lines have been restarted, with one exception: The hot dogs sold at Baltimore Orioles games are now produced at Smithfield's plant in Portsmouth, Va., the world's largest hot dog facility.

The purchase of Esskay enhanced an acquisition program that in 1984 included buying pork processor Patrick Cudahy Inc. of Cudahy, Wis. Last year, Smithfield also ratified a new labor contract at its Smithfield, Va., plant.

Profits soared 42 percent from fiscal 1984 to fiscal 1985, which ended April 28, 1985. Revenue was up 23.5 percent, a considerable increase in an industry facing declining demand and stiff foreign competition. However, a federal court last year fined the company $1.3 million as a civil penalty for allegedly violating federal water-pollution regulations in its hog-processing operations. The company is appealing the decision. #14. KAY CORP.

320 King St. Alexandria, Va. 22314 REVENUE: $666.3 million PROFITS: $14 million EARNINGS PER SHARE: $2.76 DIVIDEND: 16 cents ASSETS: $441 million STOCKHOLDERS' EQUITY: $50 million RETURN ON EQUITY: 40 percent EXCHANGE: Amex EMPLOYES: 3,855 TOP EXECUTIVE: Anthonie C. van Ekris, president. FOUNDED: 1912

DESCRIPTION: Kay Corp. consists of two entirely different companies in one: an international trading company that contributes most of Kay's revenue, and 80 percent of a retail jewelry firm that in the past has contributed most of its profits. The jewelry operations consist of two chains: Kay Jewelers, the nation's third-largest, and Black, Starr & Frost, which is smaller and more upscale. Kay also runs jewelry operations in major U.S. department stores. The trading company, Balfour, Maclaine International Ltd., imports and exports a variety of commodities and food products and acts as a commodities broker.

DEVELOPMENTS: Concerned that its split personality is hurting investor and financial interest in the jewelry side of the business, Kay is moving to divest completely the jewelry subsidiary, Kay Jewelers Inc. Last year, Kay sold about 20 percent of the stock in the jewelry chain to the public. This year, if the Internal Revenue Service approves the tax implication of its divestiture scheme, Kay plans to distribute the rest of Kay Corp.'s interest in Kay Jewelers, with each Kay Corp. stockholder receiving about one share of the jewelry chain for every Kay share held. When the deal is completed, Kay Corp. probably will move its headquarters to New York, while the jewelry company would remain in Alexandria.

Kay had an exceptionally good year in 1985, with earnings exceeding the previous highs set in 1980 and 1979 -- even though revenue was down 19 percent from 1984 when it totaled $827.7 million. Profits from the commodity operations were markedly improved, accounting this year for more than half of the company's operating profits. Kay attributes the improved earnings to the company's coffee unit, Van Ekris & Stoett Inc., one of the leading coffee trading houses in the country. The sharp increase in coffee prices, caused by severe drought in Brazil, helped push prices -- and profits -- higher on the commodities market.

While moving to divest the jewelry chain, Kay has, at the same time, been acquiring some commodities operations here and abroad to build up what will be its core, and only, business once the jewelry chain has been spun off. Among other actions in 1985, the company acquired a major livestock futures commission merchant, set up a futures commission merchant firm in London to serve European clients, acquired a corn planting seed company and founded a new metals and minerals trading business. #15. DYNALECTRON CORP.

1313 Dolley Madison Blvd. McLean, Va. 22101 REVENUE: $640.3 million PROFITS: $3.3 million EARNINGS PER SHARE: 34 cents DIVIDEND: 27 cents ASSETS: $277.3 million STOCKHOLDERS' EQUITY: $103.9 million RETURN ON EQUITY: 3.3 percent EXCHANGE: NYSE EMPLOYES: 13,000 TOP EXECUTIVES: Jorge Carnicero, chairman of the board; Daniel R. Bannister, president and chief executive officer. FOUNDED: 1946

DESCRIPTION: Dynalectron provides a variety of services for both corporate and government customers, including the Defense Department. After a major restructuring in 1985, which saw the discontinuation of some unprofitable lines, the company is now divided into Technical Services and Specialty Contracting segments.

The Technical Services segment includes Dynalectron's government-services businesses, which provide such services as ship repair for the U.S. Navy or radar services for the U.S. Army. This segment also is involved in ground support for commercial airlines and other aviation lines, as well as a recent expansion into computer services.

Specialty Contracting, previously Dynalectron's largest business segment, has been restructured, but it continues to provide electrical and mechanical contracting for industrial and commercial customers.

DEVELOPMENTS: 1985 was a year of transition for Dynalectron. At midyear, its chief executive, Merlon F. Richards, retired after 33 years with the company and was replaced by Daniel R. Bannister. Later in the year, the company announced a major restructuring that substantially reduced its 1985 earnings compared with the previous year.

The thrust of the restructuring is to move the company away from its traditional emphasis on construction, which at one time represented as much as 64 percent of total revenue, in favor of its various service lines.

In February, Dynalectron announced it would shut down HRI Inc. and Dyn Construction Corp., two unprofitable subsidiaries, and take a $3.2 million write-down. The company also said it would close or consolidate several unprofitable or marginally profitable insulation, electrical and mechanical contracting offices in the United States and Canada.

While the Specialty Contracting segment experienced woes, the company said the Technical Services operations enjoyed a banner year with a substantial upsurge in contracts. The company added $275 million in new government contracts alone, and its new work includes providing base engineering and maintenance services for the Army at Ft. McClellan in Alabama and the operation of a Pacific Coast anti-submarine-warfare range for the Navy.

A final area of expansion was in the field of service and repair of computer parts, a venture that started in 1984 with the acquisition of two West Coast firms. Two more acquisitions were consummated in 1985, and the company said it plans to expand in the next few years into a nationwide service organization for this market.