#16. THE RYLAND GROUP INC.
10221 Wincopin Circle Columbia, Md. 21044 REVENUE: $497 million PROFITS: $16 million EARNINGS PER SHARE: $2.54 DIVIDEND: 64 1/2 cents ASSETS: $172.7 million STOCKHOLDERS' EQUITY: $81 million RETURN ON EQUITY: 21.6 percent EXCHANGE: NYSE EMPLOYES: 1,300 TOP EXECUTIVE: Charles E. Peck, chairman of the board, president and chief executive officer. FOUNDED: 1967
DESCRIPTION: The Ryland Group builds and sells single-family houses, town houses, condominiums and modular homes in the $50,000 to $170,000 price range throughout the mid-Atlantic, Southwest and Midwest regions. Ryland also owns a mortgage company that provides financing for about 75 percent of the homes sold.
DEVELOPMENTS: Declining mortgage interest rates and emerging demand for upgraded housing combined to drive Ryland earnings sharply higher in the fiscal year ended Dec. 31. The firm reported a 70 percent increase in net income and a 24 percent rise in revenue compared with the year earlier. In addition to the drop in interest rates, the company's strong performance last year was helped by a management decision to diversify its product line. After years of building homes targeted primarily for first-time buyers, Ryland has started offering a line of homes designed for homeowners who want to move into larger, more expensive dwellings. The company also has added condominiums to its product line.
As a result of the changes in marketing strategy, about 53 percent of the company's sales are now to homeowners making a move to larger quarters, and only 47 percent are to first-time buyers.
The company's modular-home building division shipped more than 1,000 units in 1985, 54 percent more than in 1984, and reported a year-end backlog of 491 units, 14 percent more than at the end of 1984.
In the first quarter of the current fiscal year, Ryland reported revenue of $120 million, compared with $78 million in the same quarter a year ago. Net income for the quarter was $2.6 million (40 cents a share), compared with $848,000 (14 cents) for the same period last year. #17. ALLEGHENY BEVERAGE CORP.
Macke Circle Cheverly, Md. 20781 REVENUE: $495.6 million LOSS: $1.8 million LOSS PER SHARE: 28 cents DIVIDEND: 40 cents ASSETS: $364 million STOCKHOLDERS' EQUITY: $57.1 million RETURN ON EQUITY: NA EXCHANGE: OTC EMPLOYES: 40,000 TOP EXECUTIVES: Morton M. Lapides, chairman; Edward A. Weisman, president. FOUNDED: 1960
DESCRIPTION: In 1985, Allegheny Beverage became the largest publicly owned food-service and vending-machine company in the nation, following its acquisition of Servomation Corp. for $225 million last May. By combining Servomation with its Macke food-service subsidiary, Allegheny has the capacity to serve 1 million meals a day at office and industrial plant cafeterias and employe dining rooms. It also runs one of the 10 largest building-maintenance services in the country, a coin-operated laundry business, and sells business furniture and furnishings through its subsidiary, Desk and Furnishings Inc.
DEVELOPMENTS: The Servomation acquisition completed a fundamental restructuring of Allegheny Beverage, the business that Lapides founded in 1960 when he purchased the central Pennsylvania Pepsi-Cola franchise. In May, the company cut its ties to the beverage business by selling Allegheny Pepsi-Cola Bottling Co. for an after-tax gain of $62 million.
The purchase of Servomation from City Investing Co. and other acquisitions required a substantial increase in Allegheny's long-term debt and financing charges last year. Long-term debt stands at $330 million, up nearly $100 million from a year ago. But the company's revenue has grown rapidly since then, led by its food-service business, which now operates under the name Service America Corp.
Allegheny expects to report sales of $1.1 billion for fiscal 1986, which ended March 31. Revenue for the first nine months of that fiscal year totaled $828 million, up 126 percent from the comparable period the year before, while earnings were $14 million, a 1,475 percent increase. Because of the increased cash flow, the company said it does not expect to need further long-term borrowing.
This year, Lapides relinquished the title of president to Edward A. Weisman, his longtime colleague, and appointed David Barr as executive vice president. Barr was recruited from Perpetual American Bank, where he handled the financing arrangements used by Allegheny in the Servomatic purchase. #18. HECHINGER CO.
3500 Pennsy Dr. Landover, Md. 20785 REVENUE: $479 million PROFITS: $23.1 million EARNINGS PER SHARE: 94 cents DIVIDEND: 16 cents (Class A); 8 cents (Class B) ASSETS: $353.1 million STOCKHOLDERS' EQUITY: $171.7 million RETURN ON EQUITY: 15.8 percent EXCHANGE: OTC EMPLOYES: 7,500 TOP EXECUTIVES: John W. Hechinger and Richard England, cochairmen of the board; John W. Hechinger Jr., president; Philip J. Mansfield, executive vice president; Stephen E. Bachand, executive vice president. FOUNDED: 1911
DESCRIPTION: Hechinger's operates 54 do-it-yourself home-center stores in the District, Maryland, Virginia, North Carolina, Pennsylvania, Ohio and upstate New York.
DEVELOPMENTS: Hechinger's continued its aggressive expansion drive last year, adding eight new stores, including some in brand new markets: Pittsburgh, Columbus, Ohio, and Rochester, N.Y. Its expansion helped keep revenue growing at a time when the entire do-it-yourself industry was faced with sluggish sales. While stores that were open more than a year saw sales increase by only 5 percent in 1985, the chain's total revenue increased by 18 percent, from $405 million to $479 million, thanks to the new stores. Profits increased by 10 percent, from $20.9 million to $23.1 million.
Hechinger's plans to continue its expansion this year, opening 14 stores in 1986, with some again in new marketing areas, including South Carolina and New Jersey.
Meanwhile, preparing for a smooth transition when the second generation Hechinger members -- John W. Hechinger and brother-in-law Richard England, both 65 -- step down, the company named John W. Hechinger Jr., 35, as president, to fill the post his father has held for 28 years.
Hechinger Sr. and England will continue as cochairmen, remain actively involved in the company and develop long-term strategy, while the younger Hechinger will oversee the day-to-day operations of the chain. #19. COMMUNICATIONS SATELLITE CORP.
950 L'Enfant Plaza SW Washington, D.C. 20024 REVENUE: $459 million LOSS: $41.5 million LOSS PER SHARE: $2.29 DIVIDEND: $1.20 ASSETS: $1.2 billion STOCKHOLDERS' EQUITY: $536.4 million RETURN ON EQUITY: NA EXCHANGE: NYSE EMPLOYES: 2,667 TOP EXECUTIVES: Irving Goldstein, chairman and chief executive officer; Marcel P. Joseph, president and chief operating officer. FOUNDED: 1963
DESCRIPTION: Comsat is the U.S. signatory to the International Telecommunications Satellite Organization (Intelsat), a 109-nation global consortium that carries the bulk of the world's international television and telephone traffic. In addition to marketing Intelsat services in the United States, Comsat provides a number of domestic satellite-based telecommunications services.
DEVELOPMENTS: Chastened by its failures to diversify into business communications through Satellite Business Systems and into consumer markets through its abortive Satellite Television Corp. subsidiary, Comsat continues to undergo a painful consolidation of its business.
For the first time in its history, the company reported a yearly loss -- $41.5 million -- compared with 1985 net income of more than $51 million. Earnings per share collapsed from $2.52 in 1984 to a loss of $2.29 per share last year.
The company attributed the losses primarily to $84 million in reserves set aside for its direct broadcast satellites that were to have been Comsat's key to entering the pay-television markletplace.
The company also discontinued its TVRO earth-station business, resulting in a further after-tax loss of $20 million.
The company eliminated several other small businesses, including a computer software effort, environmental consulting and a partnership in international video teleconferencing. These amounted to $2.5 million in after-tax losses.
In addition, Comsat chopped its overhead some 15 percent last year and let several hundred employes go.
On the brighter side, Comsat revenue from its regulated international telecommunications services continued to rise, and its HI-NET pay-television network, a joint venture with Holiday Inn, is set to beam four channels of programming into more than 150,000 hotel rooms across the country.
However, Comsat will face growing competitive pressures as undersea cables linking Europe to the United States are set to go into operation and as major customers seek to bypass Comsat and link to Intelsat directly. #20. MANOR CARE INC.
10750 Columbia Pike Silver Spring, Md. 20901 REVENUE: $454.4 million PROFITS: $30.2 million EARNINGS PER SHARE: 76 cents DIVIDEND: 10 cents ASSETS: $578.7 million STOCKHOLDERS' EQUITY: $137.9 million RETURN ON EQUITY: 24.2 percent EXCHANGE: NYSE EMPLOYES: 18,000 TOP EXECUTIVES: Stewart Bainum Sr., chairman; C. Arnold Renschler, president. FOUNDED: 1968
DESCRIPTION: Manor Care is a diversified owner and operator of nursing homes and hotels. It owns, leases or manages 142 health-care facilities containing about 18,300 beds. Manor Care's nursing homes target upper-income, privately paying patients, and the company is the nation's second-biggest publicly held nursing home operator.
The company also owns or franchises 667 Quality Inn hotels with about 76,000 rooms.
DEVELOPMENTS: After growing in recent years through acquisitions, Manor Care's strategy has shifted to building new nursing homes. The company has four facilities with 500 beds under construction and has plans to begin construction on another 2,000 beds later this year. Manor Care recently sold eight marginally profitable nursing centers.
In September, for the seventh time in less than six years, Manor Care declared a split of its common stock to encourage wider distribution of its shares. By lowering the price of individual shares, the stock split puts Manor Care's stock within reach of a broader group of investors. The financial data above has been adjusted to reflect the 3-for-2 stock split last September.
Manor Care is continuing efforts to reduce its debt by selling certain Quality Inn hotels. As part of its debt reduction program, the company announced in March that it would redeem $27.3 million of high-cost debt. That redemption is expected to increase future earnings by $1.1 million annually and result in a special one-time charge of $2 million.
In the fiscal year ended May 31, 1985, Manor Care reported an increase in revenue of 24.8 percent and a jump in net income of 31.9 percent. Revenue and net income have continued to rise in Manor Care's 1986 fiscal year. In the nine months ended Feb. 28, 1986, the company reported revenue of $358.8 million and net income of $27.1 million, increases of 7.3 percent and 22.6 percent, respectively, over the prior year.