Second-quarter sales, earnings are up. (Up Front).

If the economy is headed toward a double-dip recession, you wouldn't know it from second-quarter results in the greater San Fernando Valley.

The vast majority of the Valley's largest public companies saw revenues and earnings increase in the second quarter.

Perhaps even more encouraging, several Valley companies revised their guidance upward for the rest of the year. And, among the top 25 at least, there were no downward revisions in earnings or revenues.

The news was not all good, however.

Some of the increases came at companies that were up against very weak numbers in the comparable quarter last year. And some of those that had been among the Valley's most solid performers stumbled in significant ways.

Seventeen of the Valley's 25 largest public companies reported earnings and sales increases in the second quarter of 2002, touching, for the most part, on all industry sectors.

Zenith National Insurance Corp., Dole Food Co. Inc., Wellpoint Health Networks Inc., 21st Century Insurance Group, Unilab Corp. and Ixia were among those firms that turned in the strongest improvements in earnings, registering gains of 70 percent and more.

For the three insurance companies and Unilab, a Tarzana-based operator of clinical testing laboratories owned by Quest Diagnostics, the second quarter reflected a continuing upward trend. But at Dole and Ixia, the strong second quarter appeared part of a long climb back from a downturn that bottomed out last year.

Ixia, the Calabasas-based tech equipment testing company, for example, saw earnings jump fifteen-fold to $1.1 million or $0.02 a share, from $66,000. But Ixia's second-quarter earnings per share, at $0.02, merely brought it back to the EPS levels of 2000 when the company earned $940,000.

Dole, which in the second quarter of 2002 reported earnings doubled to $66.8 million or $1.18 per share on flat revenues of $1.1 billion, had seen net income drop 21 percent in last year's second quarter to $37 million, from $45 million in the comparable quarter of 2000. The company's second-quarter 2002 revenues reflected a dip from $1.2 billion reported in the second quarter of both 2001 and 2000.

The second quarter of 2002 also saw several reversals at companies that had been among the Valley's strongest performers.

Chief among them was Newhall Land and Farming Co., where earnings plummeted 87 percent to $9.4 million or $0.38 per share on revenues of $52.5 million in the second quarter. In the comparable quarter last year, Newhall recorded earnings of $75.3 million or $2.91 a share on revenues of $105.2 million.

"Demand for industrial land remains weak," Newhall said in reporting its results, noting that the company had not recorded any industrial land sales and just 16.7 acres of commercial land sales, during the period. The company also said Valencia's industrial properties were experiencing higher vacancy rates and third-party developers, those that had previously acquired land from the company, were seeing lower sales and leasing rates for their industrial buildings.

Similarly, Public Storage Inc. saw a modest dip in earnings for the second quarter of 2002 to $80.7 million or $.30 per share from $81.8 million or $.39 per share in the comparable period last year, with a slight jump in revenues to $212.5 million, from $197.6 million in the second quarter of 2001. The Glendale company's performance fell short of expectations and led to downgrades by several analysts earlier in the month.

Public Storage, which seemed impervious to the recessionary climate that held sway last year, noted however that its revenues in the second quarter were influenced by a discount program Public Storage instituted in March and discontinued in June. Once the company discontinued the discounts in mid-May, Public Storage said that rental activity declined and, as of July 31, occupancy levels at its storage facilities had dropped 5.5 percent.

Public Storage has again resumed its discounts, but the company warned that the cost of the program could negatively impact earnings in the third quarter.

The Walt Disney Co., which experienced a highly publicized dismal quarter that ended June 30 with a 7-percent decline in earnings to $364 million or $.18 a share, said it expects earnings for its next quarter to be "somewhat lower than prior-year pro-forma amounts."

"The downturn in the international and domestic travel and tourism industry, as well as the economy as a whole, is impacting the company's businesses and accordingly, attendance and occupancy at its domestic parks and resorts continues to be negatively impacted," Disney said. As of the beginning of the month, advance bookings at Disney's theme parks were already down about 10 percent.

Many other Valley companies, however, issued encouraging prognostications for the balance of 2002.

Thousand Oaks-based Amgen, which reported earnings increased 28 percent in the second quarter to $41.2 million or $.38 per share, revised its full-year earnings per share and sales guidance to reflect expected increases in the mid-20-percent range from the low 20-percent range.

The Ryland Group, a Calabasas-based homebuilder, bumped its full-year earnings per share guidance to $5.50 from $5.12. Ryland saw a 32-percent boost in earnings in the second quarter of 2002 to $44.7 million or $1.56 per share on revenues of $675.3 million.

Guitar Center Inc., the musical instrument and recording equipment retailer based in Westlake Village, increased its earnings per share projections to $1.02 to $1.07 for the full year, from its previous forecast of $.97 to $1.03, based on what the company said were better than expected results in the second quarter of 2002.

Guitar Center reported net income was relatively flat in the second quarter at $4.1 million or $.18 per share on an 18-percent sales increase to $254 million.

Even Newhall bumped its forecast for the full year to $1.50 to $1.60 from a previous range of $1.10 to $1.15, based on deals currently in the pipeline.

Looking Up

Best Performers in the Second Quarter

Company              Earnings        % Change

                 6/02       6/01

Ixia            $1.1M    $66,000     +1,567

Zenith          $6.5M      $2.9M       +124

Dole Food Co.  $66.8M     $33.3M       +100

Unilab           $11M      $1.3M        +87

Wellpoint       $170M      $100M        +70

21st Century    $9.9M      $5.8M        +70

Source: San Fernando Valley Business Journal Staff