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MVPs of MVA

Which companies created the most wealth for shareholders last year? Enter MVA -- or market value added.

Like the wicked queen in the tale of Snow White, analysts are forever trying to identify the fairest of them all — the strongest, most innovative, and fastest-growing companies. Finance executives, in turn, are constantly seeking a metric that communicates a company’s financial condition in a way that enables employees to make rational decisions about operations. There is no shortage of metrics, but as the past two years have witnessed, many of them, in particular EBITDA and pro forma, have been vulnerable to distortion.

Enter MVA, or market value added, which measures the amount of wealth a company has created since its inception. MVA is an extension of EVA (economic value added), a metric that became popular in the 1990s, when companies used it to measure profitability not just at the corporate level, but also at the level of business units and individual projects.

EVA is described by Bennett Stewart, senior partner at consulting firm Stern Stewart & Co., which has trademarked the acronym, as an estimate of the amount by which earnings exceed or fall short of the rate of return shareholders and lenders could get by investing in other securities of comparable risk. “EVA is a practical method of estimating the economic profit that is earned, as opposed to the accounting profit,” he says. “It’s really a finance tool for nonfinance executives. Finance execs don’t need EVA.”

“It simplifies everything,” insists Sal Fazzolari, senior vice president, CFO, and treasurer of Harsco Corp., a Camp Hill, Pennsylvania-based industrial-services firm, which began implementing MVA and EVA as financial-measurement tools in 2001. “It’s one measurement for everyone in the company to concentrate on. It takes into consideration all of a company’s financials.”

At the heart of MVA and EVA are the beliefs that (1) the primary objective of management should be to maximize return to shareholders and (2) a company should earn more than its cost of investment.

In a nutshell, EVA is equal to a company’s net operating profits after taxes (NOPAT) minus a capital charge — the amount of capital invested in the business times the cost of capital. EVA converts the balance sheet and income statement into one measurement of profit, Stewart explains.

“It’s as if the company ended up with no assets and leased everything, factored all receivables,” and so on, he says, adding, “it’s the profit that would be reported if all assets were externally financed.” Stewart argues that looking at financials in this way enables a company to truly understand whether it is profitable because it manages assets well or simply because it is an owner of assets.

Fazzolari says that for many years, different business units at Harsco focused on a variety of metrics, such as return on capital, return on sales, net income, and sales. “These metrics can send you in different directions,” he says. “EVA makes you focus on all of the financial statements.”

EVA has enabled Harsco to improve its capital-allocation process by standardizing the way each manager and employee analyzes a project. For example, if a customer requests an extra 30 days to pay its bill, Harsco’s employees can immediately calculate the potential financial impact on the company. Each month, Harsco calculates EVA by business unit. “It is automatically generated,” says Fazzolari. Each employee can then access the tools needed to calculate EVA.

At consulting firm Accenture, EVA performance is linked with compensation for the firm’s partners. “A big portion of our partners’ and units’ compensation is based on EVA generation,” explains CFO Harry You. You likens EVA to a more precise version of return on invested capital. He also uses EVA in doing business with clients. “We look at the way we can create EVA for them,” he says. “We’re selling our business based on how we sell EVA to our clients. A vast majority of our clients may not use it, but they understand it.”

Defining MVA

“EVA is the most important empirical link to MVA,” says Stewart. The change in EVA explains 35 percent of the change in MVA, or seven times more than sales growth, while the change in earnings per share explains only about 3 percent of the change in MVA.

MVA itself is the stock market’s assessment of the net present value (NPV) of EVA. In other words, MVA is the difference between the market value of a company (which includes both equity and debt) and the capital that lenders and shareholders have entrusted to the company over the years. Thus, MVA is a measure of the difference between “cash in” (what investors have contributed) and “cash out” (what they could get by selling at today’s prices), Stewart explains.

If MVA is positive, it means that the company has increased the value of the capital entrusted to it and thus created shareholder wealth. If MVA is negative, the company has destroyed wealth.

Like all other metrics, says Accenture’s You, MVA has its limitations. For one thing, like a company’s price-to-earnings ratio, it is in part captive to the vagaries of the stock market. “Over longer periods, MVA correlates with EVA, but over a shorter time, it may not,” he insists.

On the other hand, MVA is a better measure of a company’s shareholder-wealth creation than simple market capitalization. Take, for example, Verizon Communications. The telecom giant’s market value is $200 billion, nearly the size of Microsoft’s. Although one would think the two companies therefore rewarded their shareholders equally, Microsoft’s MVA is 13 times greater than Verizon’s. This is because Verizon issued $65 billion of stock to buy GTE in 2000, skewing its market value growth.

And this transaction followed by just three years the all-stock merger of Bell Atlantic and Nynex that first created Verizon. In the past 10 years, Verizon’s total return to shareholders has been only 7.84 percent, according to Stewart.

All High Performers Are Not Alike

The top three performers, according to the MVA ranking of Tier-1 companies, are General Electric, Microsoft, and Wal-Mart Stores. (Note: The rankings delineate Tier 1, Tier 2, and Tier 3 companies by size.) Although representing diverse industry sectors and business strategies, all three companies have created nearly the same amount of wealth for their shareholders — GE, $223 billion; Microsoft, $212 billion; and Wal-Mart, $207 billion.

Wal-Mart had $246 billion in sales in the most recent year, while Microsoft had “only” $31 billion. GE has $156 billion in long-term debt, while Microsoft has none. Microsoft’s return on average capital is nearly twice that of the other two companies.

Of the top three companies, GE has the highest MVA and highest EVA. Wal-Mart’s EVA is higher than Microsoft’s, which means that the market is projecting different rates of growth for these companies. The fact that Microsoft has about the same MVA but a much lower EVA than GE means the market believes Microsoft has a greater opportunity to grow. This is partly underscored by its 22 percent return on average capital, which is nearly double that of its two MVA peers.

What does it mean that GE has the highest MVA and EVA? “If the MVA for GE is the same as for the other two companies, that means GE has less prospect for growth compared with the other two,” Stewart explains. In fact, although its EVA has grown somewhat over the past three years, its MVA has eroded by more than 17 times that of Wal-Mart over the three-year period. “[Its MVA score suggests] that GE doesn’t have the same intrinsic growth opportunity.

Wal-Mart has stupendous growth prospects but the lowest return on capital, so it has significant growth at lower margins. Microsoft, on the other hand, is a higher-growth, higher-return company. GE has a low-return, low-growth base, and a modest chance to grow its EVA,” he adds.

Perhaps the most impressive large companies in the Tier-1 ranking are Procter & Gamble and Johnson & Johnson, which show the best three-year improvements in MVA. (Changes in rankings between 1999 and 2002 are shown on the charts beginning on page 62, while three-year averages for EVA and MVA are available at www.cfo.com.) Procter & Gamble leaped from number 32 in 1999 to number 6 in 2002 in terms of MVA. Biopharmaceuticals company Gilead Sciences showed the highest three-year MVA gain among the 25 largest market-cap companies with less than $700 million in revenues, rising to second place from number 174 three years ago.

Technology companies rank high in terms of MVA despite the short life span of many new technology and Internet companies. Six of the 14 top large companies are tech companies; Ebay and Qualcomm fall among the top four midsize (Tier 2) companies, and Linear Technology is the highest company with sales below $700 million (Tier 3). From 1999 to 2002, Ebay, in fact, moved from number 25 to number 2 among companies with sales between $700 million and $7 billion, and now boasts twice the MVA of Amazon.com.

It’s not quite the magic number that will enable a company to understand precisely what it needs to do to maximize shareholder value and increase profitability. But MVA at least offers one of the least deceptive of mirrors for companies seeking to know whether they are the fairest of their peers.

What The Acronyms Mean
MVA Market Value Added The difference between total market value (value of equity and debt) and invested capital (money/cash investors contributed to the business). It measures the difference between what investors “put” into the company and what it is currently worth. MVA is also equal to the present value of all future EVAs.
EVA Economic Value Added Real measure of economic profit. This is calculated by reducing the full cost of capital from NOPAT — net operating profit after taxes. The full cost of capital captures the opportunity cost of all invested capital at the blended cost of equity and debt as applied by the specific business.
P Score A measure of performance based on one-year sales growth; EVA/sales; EVA/capital; and one-year change in EVA over capital.
R Score A measure of riskiness. It looks at stock-return volatility, leverage, cash flow, and size.
2003 MVA Rankings
Tier 1: 45 largest market-cap companies with sales of more than $7 billion
2002 1999 Company name MVA MV Capital EVA Sale Growth1 Performance2 Risk3
1 2 General Electric Co 222,767 322,190 99,423 5,983 73,420 32% 79% 4%
2 4 Microsoft Corp 212,340 237,547 25,207 2,201 30,785 41% 78% 7%
3 6 Wal-Mart Stores 207,346 280,970 73,624 2,928 244,524 48% 79% 8%
4 22 Johnson & Johnson 124,237 171,829 47,592 2,839 36,298 32% 90% 4%
5 12 Merck & Co 107,076 144,624 37,548 3,872 51,790 58% 87% 2%
6 32 Procter & Gamble Co 92,231 133,248 41,017 2,315 42,606 7% 79% 3%
7 8 Intl Business Machines Corp 90,422 193,955 103,533 (8,032) 81,186 -7% 9% 23%
8 13 Exxon Mobil Corp 85,108 273,634 188,526 (2,175) 178,909 11% 30% 1%
9 21 Coca-Cola Co 82,413 107,007 24,594 2,496 19,983 2% 85% 2%
10 3 Intel Corp 77,395 114,574 37,179 (3,736) 26,764 -9% 5% 18%
11 14 Dell Computer Corp 69,425 76,637 7,212 360 33,730 43% 59% 17%
12 16 Citigroup Inc 68,078 176,795 108,716 2,964 92,029 12% 65% 7%
13 1 Cisco Systems Inc 59,702 109,249 49,547 (4,623) 19,209 28% 15% 36%
14 5 Oracle Corp 59,502 60,453 951 1,401 9,417 -3% 77% 27%
15 24 Lilly (Eli) & Co 57,366 74,761 17,395 1,096 11,078 12% 68% 7%
16 29 United Parcel Service Inc 57,036 77,347 20,312 875 31,272 16% 65% 2%
17 38 Fannie Mae 54,181 64,496 10,315 2,457 52,901 43% 92% 0%
18 11 Pfizer Inc 52,683 194,393 141,711 (2,779) 32,373 100% 35% 24%
19 40 Pepsico Inc 49,718 81,184 31,466 1,258 25,541 31% 87% 14%
20 36 Abbott Laboratories 49,181 71,352 22,171 1,562 17,685 34% 88% 11%
21 18 Home Depot Inc 43,955 69,635 25,680 1,346 58,247 52% 85% 11%
22 57 3M Co 41,012 55,768 14,756 817 16,332 4% 75% 2%
23 19 American International Group 40,845 129,056 88,211 (1,249) 67,482 66% 47% 5%
24 37 Medtronic Inc 40,778 60,416 19,639 (26) 7,309 55% 53% 11%
25 33 Pharmacia Corp 40,679 62,897 22,218 (1,078) 13,993 53% 36% 5%
26 31 Wyeth 38,443 66,206 27,763 696 14,584 8% 72% 10%
27 52 Comcast Corp 38,008 112,530 74,522 (3,555) 12,460 101% 19% 62%
28 56 Anheuser-Busch Cos Inc 37,916 50,536 12,620 1,314 13,566 16% 91% 2%
29 46 Du Pont (E I) De Nemours 35,445 59,862 24,417 (96) 24,134 -11% 29% 2%
30 23 Bristol Myers Squibb 33,872 58,015 24,142 777 18,119 7% 58% 3%
31 64 Federal Home Loan Mortg Corp 28,984 36,500 7,516 4,134 36,173 100% NA NA
32 70 Altria Group Inc 28,230 102,082 73,852 6,696 62,182 1% 82% 9%
33 30 American Express 27,539 43,671 16,132 707 24,649 10% 61% 2%
34 54 Colgate-Palmolive Co 26,687 35,686 8,999 734 9,294 2% 83% 7%
35 86 Lowes Cos 25,152 39,665 14,513 226 26,491 67% 75% 33%
36 112 Unitedhealth Group Inc 25,004 31,302 6,298 856 25,020 28% 91% 6%
37 62 Walgreen Co 24,417 40,488 16,071 572 30,564 56% 83% 26%
38 60 Wells Fargo & Co 24,065 75,537 51,473 744 28,473 31% 67% 1%
39 25 Bellsouth Corp 21,787 70,580 48,793 (1,286) 22,711 -10% 17% 11%
40 . Kraft Foods Inc 21,770 73,524 51,754 732 29,723 11% 63% NA
41 92 Bank Of America Corp 20,427 100,418 79,992 341 46,362 -10% 38% 0%
42 63 Target Corp 19,698 42,846 23,148 432 43,917 30% 68% 43%
43 91 First Data Corp 19,323 29,346 10,023 503 7,636 38% 88% 13%
44 61 Gillette Co 17,738 36,771 19,033 (432) 8,453 -15% 24% 6%
46 26 Verizon Communications 16,138 200,132 183,994 (5,612) 67,625 104% 35% 48%
48 34 Schering-Plough 15,930 27,211 11,281 80 10,180 11% 63% 5%
50 72 United Technologies Corp 15,740 42,816 27,076 721 28,541 14% 62% 16%
51 39 Morgan Stanley 15,234 41,790 26,556 86 32,242 -5% 40% 6%
52 188 Lockheed Martin Corp 13,943 35,593 21,650 (549) 26,578 4% 40% 22%
53 53 Automatic Data Processing 13,740 32,339 18,599 (332) 10,084 48% 32% 23%
54 78 Emerson Electric Co 13,734 26,543 12,809 (88) 13,770 -4% 31% 4%
55 17 Texas Instruments Inc 13,346 32,593 19,247 (3,151) 8,383 -11% 4% 47%
57 93 General Mills Inc 12,073 27,358 15,285 72 10,284 56% 71% 49%
58 115 Southern Co 11,817 34,358 22,541 502 10,549 -9% 64% 11%
59 66 Goldman Sachs Group Inc 11,369 32,130 20,761 (322) 22,854 -10% 32% 16%
60 45 Nextel Communications 11,233 28,559 17,326 (1,521) 8,721 162% 47% 80%
62 55 Viacom Inc -Cl B 10,682 99,362 88,680 (5,092) 24,606 91% 21% 45%
65 82 Dow Chemical 10,098 52,968 42,870 (2,145) 27,609 46% 23% 46%
69 28 Disney (Walt) Co 9,282 56,974 47,692 (2,072) 25,779 8% 21% 25%
74 140 Fedex Corp 8,558 31,041 22,483 (596) 22,073 24% 37% 29%
75 44 McDonalds Corp 8,339 38,179 29,840 (39) 15,406 16% 47% 23%
76 85 Clear Channel Communications 8,299 34,966 26,668 (2,040) 8,421 214% 33% 58%
78 122 Dominion Resources Inc 7,897 35,117 27,220 533 10,218 85% 80% 44%
79 98 Fox Entertainment Group Inc 7,721 29,439 21,719 (941) 10,413 31% 35% 29%
80 73 Merrill Lynch & Co 7,697 32,691 24,994 (208) 28,152 -19% 29% 19%
81 144 Exelon Corp 7,532 36,346 28,814 719 14,955 175% 87% 56%
82 76 Kimberly-Clark Corp 7,518 31,210 23,692 (12) 13,566 4% 40% 8%
87 162 Cardinal Health Inc 6,960 27,513 20,553 (386) 53,447 71% 49% 10%
93 77 Alcoa Inc 5,822 33,713 27,891 (1,130) 20,263 24% 21% 49%
95 20 Hewlett-Packard Co 5,476 63,243 57,767 (3,726) 63,082 44% 24% 61%
106 106 Conocophillips 3,963 63,943 59,980 (849) 50,512 272% 61% 45%
108 102 Cigna Corp 3,826 85,436 81,611 (3,967) 19,343 3% 23% 5%
113 48 Ford Motor Co 3,459 69,218 65,758 (4,826) 134,425 0% 12% 67%
117 47 Chevrontexaco Corp 3,135 93,457 90,322 (3,139) 91,685 191% 60% 26%
122 193 Union Pacific Corp 2,637 28,634 25,997 (89) 12,491 11% 45% 21%
124 249 Washington Mutual Inc 2,599 33,135 30,536 1,215 18,755 38% 87% 6%
127 184 Firstenergy Corp 2,515 30,661 28,146 (77) 12,152 92% 63% 48%
133 80 Aes Corp. (The) 2,091 29,803 27,713 (2,207) 8,632 165% 28% 86%
138 240 UAL Corp 1,842 35,659 33,816 (4,219) 14,286 -21% NA NA
140 104 Cendant Corp 1,801 36,497 34,696 (537) 14,088 162% 50% 88%
145 153 U S Bancorp 1,407 36,384 34,977 (28) 15,422 140% 72% 19%
146 169 Pg&E Corp 1,405 27,498 26,093 (1,235) 12,495 -40% 17% 55%
184 232 Intl Paper Co (313) 37,973 38,287 (1,317) 24,976 2% 21% 44%
196 216 Northrop Grumman Corp (748) 34,216 34,965 (721) 17,206 91% 41% 66%
200 186 Delta Air Lines Inc (1,049) 27,445 28,495 (2,161) 13,305 -10% 6% 69%
217 123 Xerox Corp (2,240) 28,170 30,411 (1,123) 15,849 -18% 18% 58%
223 244 AMR Corp/De (2,763) 31,049 33,812 (3,459) 17,326 -2% 5% 82%
228 114 El Paso Corp (3,864) 28,817 32,681 (2,273) 12,194 15% 30% 77%
229 118 Boeing Co (3,871) 48,642 52,513 (542) 54,069 -7% 31% 34%
237 247 Bank One Corp (6,577) 40,164 46,741 (1,597) 22,171 -13% 16% 5%
238 233 Sears Roebuck & Co (6,859) 44,898 51,758 (314) 41,366 1% 39% 59%
240 241 AT&T Wireless Services Inc (7,106) 36,249 43,355 (5,102) 15,631 105% 18% 83%
244 67 Honeywell International Inc (9,231) 32,846 42,078 (833) 22,274 -6% 18% 42%
245 251 Wachovia Corp (10,182) 45,839 56,021 (1,762) 23,591 7% 22% 10%
246 101 General Motors Corp (14,081) 105,697 119,778 (5,065) 155,974 2% 27% 40%
247 27 Motorola Inc (15,904) 30,030 45,934 (5,849) 26,679 -17% 4% 56%
248 50 J P Morgan Chase & Co (25,499) 47,466 72,965 (3,646) 43,372 29% 17% 22%
249 9 AOL Time Warner Inc (27,148) 103,550 130,697 (27,539) 40,961 757% 17% 81%
251 42 SBC Communications Inc (38,372) 118,558 156,930 (8,434) 43,138 -13% 9% 14%
252 65 AT&T Corp (72,674) 75,733 148,406 (27,116) 49,931 -20% 4% 23%
Notes: All values — except for the performance and risk measures — are in millions. MVA rankings are based on all Tier-1 companies. Since some Tier-1 companies have low MVA rankings, numbers are not sequential. 1Three-year cumulative aggregate sales growth. 2Indicates the company’s ranking for operating performance relative to Russell 1,000 companies. The measure runs from 0 to 100. The higher the number, the stronger the company’s operating performance. 3Indicates the company’s ranking for risk relative to Russell 1,000 companies. The measure runs from 0 to 100. The lower the number, the less risky the company.
2003 MVA Rankings
Tier 2: 25 largest market-cap companies with sales between $700 million and $7 billion
2002 1999 Company name MVA MV Capital EVA Sale Growth1 Performance2 Risk3
1 6 Amgen Inc 57,361 80,204 22,844 (103) 5,523 65% 76% 57%
2 25 Ebay Inc 25,489 29,094 3,606 (156) 1,214 440% 32% 90%
3 85 Forest Laboratories -Cl A 17,200 19,006 1,806 307 2,022 156% 99% NA
4 2 Qualcomm Inc 17,167 24,194 7,027 (721) 3,785 -3% 11% 54%
5 92 Slm Corp 15,425 16,820 1,395 589 3,436 5% 99% 8%
6 35 Cox Communications -Cl A 15,324 27,993 12,669 (489) 5,039 117% 51% 16%
7 14 Echostar Commun Corp -Cl A 15,076 19,107 4,031 (583) 4,821 201% 28% 91%
8 36 Fifth Third Bancorp 14,945 28,846 13,901 328 6,317 75% 85% 15%
9 45 Gannett Co 13,989 25,702 11,713 153 6,422 22% 58% 18%
10 61 Avon Products 12,867 16,165 3,298 363 6,228 18% 87% 30%
11 5 Applied Materials Inc 12,546 21,322 8,776 (1,328) 5,116 -15% 4% 52%
12 24 Amazon.Com Inc 11,891 14,079 2,188 (164) 4,169 117% 50% 89%
13 89 Stryker Corp 11,729 14,432 2,703 147 3,012 43% 89% 22%
14 15 Liberty Media Corp -Ser A 11,658 36,530 24,872 NA 2,084 106% NA NA
15 107 Boston Scientific Corp 11,599 19,638 8,039 (143) 2,919 3% 32% 46%
16 50 Harley-Davidson Inc 11,291 13,897 2,607 352 4,302 66% 97% 13%
17 20 Genentech Inc 11,095 19,037 7,942 (621) 2,618 97% 45% 46%
18 82 Wrigley (Wm) Jr Co 10,894 12,848 1,955 283 2,746 33% 95% NA
19 115 Bed Bath & Beyond Inc 10,746 13,496 2,749 93 3,495 103% 88% NA
22 88 Tribune Co 9,633 20,676 11,043 (388) 5,384 67% 26% 47%
23 1 Emc Corp/Ma 9,358 19,646 10,289 (1,652) 5,438 -19% 3% 47%
26 70 Southwest Airlines 8,650 16,546 7,896 (413) 5,580 14% 17% 40%
28 73 Mcgraw-Hill Companies 8,359 13,362 5,003 88 4,788 20% 63% 9%
30 41 Cablevision Sys Corp -Cl A 7,929 17,344 9,414 (706) 4,003 2% 32% 77%
31 22 Bank Of New York Co Inc 7,857 14,888 7,031 421 5,756 -5% 54% 3%
32 37 Guidant Corp 7,847 12,504 4,656 306 3,240 38% 93% 31%
36 142 Praxair Inc 6,836 13,611 6,775 123 5,128 11% 62% 23%
38 71 Pitney Bowes Inc 6,808 13,141 6,333 213 4,410 -1% 70% 19%
39 64 Campbell Soup Co 6,796 12,984 6,189 279 6,217 -6% 59% 19%
45 99 Danaher Corp 6,341 12,676 6,336 17 4,577 43% 60% 49%
54 83 Usa Interactive 5,537 15,364 9,827 1,247 4,621 43% 81% 20%
66 151 Air Products & Chemicals Inc 4,821 12,911 8,090 5 5,532 10% 45% 30%
71 302 Newmont Mining Corp 4,531 14,597 10,066 (185) 2,658 90% 49% 82%
74 165 Apache Corp 4,387 12,575 8,187 86 2,560 97% 86% 65%
78 130 Anadarko Petroleum Corp 4,156 17,686 13,529 20 3,860 451% 77% 78%
81 3 Yahoo Inc 3,906 14,463 10,557 (1,931) 953 62% 20% 74%
88 242 Ppl Corp 3,755 15,180 11,424 306 5,429 18% 74% 58%
110 163 BB&T Corp 2,966 14,775 11,808 157 6,127 58% 72% 10%
118 386 Sempra Energy 2,713 13,146 10,433 244 6,020 12% 63% 37%
133 131 Unocal Corp 2,470 12,689 10,219 (343) 5,224 -11% 18% 28%
185 516 Dte Energy Co 1,826 18,323 16,497 199 6,749 43% 69% 47%
225 223 Devon Energy Corp 1,425 15,227 13,802 (304) 4,316 488% 51% 84%
263 597 Norfolk Southern Corp 1,154 17,746 16,592 (343) 6,270 19% 37% 45%
431 418 Nisource Inc 509 13,687 13,178 79 6,094 94% 62% 66%
451 616 Burlington Resources Inc 448 13,915 13,468 (329) 2,964 44% 34% 50%
489 18 Computer Associates Intl Inc 359 13,477 13,118 (1,924) 3,087 -47% 3% 66%
923 945 Allied Waste Inds Inc (1,546) 13,176 14,722 (295) 5,517 65% 41% 66%
935 53 Williams Cos Inc (2,137) 21,149 23,286 (876) 5,608 -35% 10% 71%
941 75 Dynegy Inc (2,695) 13,779 16,474 (1,267) 5,553 -64% NA NA
949 865 Charter Communications Inc (5,715) 21,169 26,884 (2,429) 4,566 220% 27% 91%
Notes: All values — except for the performance and risk measures — are in millions. MVA rankings are based on all Tier-1 companies. Since some Tier-1 companies have low MVA rankings, numbers are not sequential. 1Three-year cumulative aggregate sales growth. 2Indicates the company’s ranking for operating performance relative to Russell 1,000 companies. The measure runs from 0 to 100. The higher the number, the stronger the company’s operating performance. 3Indicates the company’s ranking for risk relative to Russell 1,000 companies. The measure runs from 0 to 100. The lower the number, the less risky the company.
2003 MVA Rankings
Tier 3: 25 largest market-cap companies with sales below $700 million
2002 1999 Company name MVA MV Capital EVA Sale Growth1 Performance2 Risk3
1 7 Linear Technology Corp 9,025 9,584 559 27 558 -4% 52% 45%
2 174 Gilead Sciences Inc 7,956 9,754 1,798 (135) 467 176% 43% 92%
3 70 Idec Pharmaceuticals Corp 4,077 5,829 1,753 (57) 404 243% 28% 96%
4 47 Microchip Technology Inc 3,133 4,331 1,198 (89) 649 42% 20% NA
6 71 Westwood One Inc 2,879 4,129 1,250 (14) 551 54% 49% 57%
7 157 Pixar 2,709 3,285 577 31 202 67% 98% NA
8 111 Sei Investments Co 2,447 2,766 318 109 621 36% 96% 35%
9 14 Citrix Systems Inc 2,391 3,558 1,167 (197) 527 31% 6% 94%
10 25 Mercury Interactive Corp 2,358 3,016 658 (125) 400 113% 13% 97%
11 23 Qlogic Corp 2,240 3,587 1,347 (163) 411 120% 15% NA
12 1 Juniper Networks Inc 2,126 4,539 2,413 (427) 547 433% 16% 98%
13 384 Memc Electronic Matrials Inc 2,107 2,755 648 (21) 687 -1% NA NA
14 1232 Scios Inc 2,069 2,422 353 (112) 111 83% NA NA
15 286 Patterson-Uti Energy Inc 1,883 2,652 769 (81) 528 248% 57% NA
16 608 Chicos Fas Inc 1,847 2,123 276 38 494 253% 99% 93%
17 67 Ensco International Inc 1,843 4,363 2,521 (117) 698 92% 32% 87%
18 28 Sepracor Inc 1,807 2,577 770 (349) 239 955% NA NA
20 108 Rcn Corp 1,737 4,369 2,632 (1,090) 457 66% NA NA
21 102 Gentex Corp 1,723 2,268 545 37 395 51% 92% NA
22 477 Brown & Brown Inc 1,672 2,132 460 63 456 158% 100% 59%
23 . Jetblue Airways Corp 1,589 3,132 1,543 (15) 635 NA 49% NA
24 474 Fair Isaac Corp 1,562 2,579 1,018 (55) 454 63% 25% 89%
25 185 Entercom Communications Corp 1,547 3,052 1,505 (59) 391 82% 47% 88%
27 49 Hispanic Broadcasting -Cl A 1,520 2,843 1,323 (94) 257 30% 20% 74%
31 141 Cephalon Inc 1,407 3,126 1,719 23 507 1028% 55% 100%
32 173 Intl Speedway Corp -Cl A 1,400 2,380 979 20 556 70% 74% 40%
34 498 Education Management Corp 1,364 2,117 753 30 582 105% 93% 94%
36 287 Sicor Inc 1,351 2,200 849 49 456 99% 97% 90%
37 43 Nextel Partners Inc 1,328 3,005 1,677 (349) 671 1950% NA NA
42 216 Valley National Bancorp 1,233 2,222 989 45 595 25% 80% 22%
46 1491 Capitol Federal Financial 1,201 2,193 992 (1) 587 43% 56% 6%
56 137 Cox Radio Inc -Cl A 1,101 2,929 1,828 (89) 421 40% 49% 85%
65 363 Philadelphia Suburban Corp 1,039 2,497 1,458 12 322 25% 68% 79%
66 427 Paxson Comm Corp -Cl A 1,032 2,256 1,224 (339) 270 28% NA NA
74 62 Ameritrade Holding Corp 955 2,135 1,181 (64) 443 41% NA NA
82 493 Leucadia National Corp 922 2,131 1,208 (111) 242 -66% 3% 43%
84 117 Rowan Cos Inc 919 2,738 1,820 (161) 617 34% 12% 94%
93 369 Getty Images Inc 830 2,153 1,323 (107) 463 87% 35% 93%
99 167 Newfield Exploration Co 789 2,700 1,911 (21) 662 135% 77% 95%
105 392 Lee Enterprises 764 2,185 1,421 20 589 45% 81% 75%
113 84 Checkfree Corp 689 2,634 1,945 (350) 518 88% 13% 96%
359 . Westport Resources Corp 258 2,218 1,960 (131) 428 480% NA NA
502 158 Radio One Inc 167 2,237 2,069 (13) 286 310% 57% 100%
641 88 Intersil Corp -Cl A 112 2,539 2,427 (262) 650 22% 7% 90%
795 1437 Extended Stay America Inc 70 2,337 2,267 (65) 548 31% 27% 90%
929 186 Emmis Communictns Cp -Cl A 37 2,326 2,289 (142) 554 82% 23% 97%
1370 177 Invitrogen Corp (134) 2,204 2,338 (203) 649 849% 18% 99%
1493 1509 Stewart Enterprises -Cl A (866) 2,462 3,328 (127) 559 -27% NA NA
1495 30 Millennium Pharmactcls Inc (920) 3,684 4,604 (653) 353 92% 12% 98%
1506 8 Ciena Corp (2,036) 2,268 4,304 (1,537) 269 -50% 0% 99%
Notes: All values — except for the performance and risk measures — are in millions. MVA rankings are based on all Tier-1 companies. Since some Tier-1 companies have low MVA rankings, numbers are not sequential. 1Three-year cumulative aggregate sales growth. 2Indicates the company’s ranking for operating performance relative to Russell 1,000 companies. The measure runs from 0 to 100. The higher the number, the stronger the company’s operating performance. 3Indicates the company’s ranking for risk relative to Russell 1,000 companies. The measure runs from 0 to 100. The lower the number, the less risky the company.

MVA by Industry

  Number   Ticker   Company name 2002  
AUTOMOBILES & COMPONENTS
TOP 5
  1   HDI   Harley-Davidson Inc 11,291  
  2   PCAR   Paccar Inc 3,816  
  3   F   Ford Motor Co 3,459  
  4   RAY   Raytech Corp/De 2,995  
  5   JCI   Johnson Controls Inc 2,778  
BOTTOM 5
  1   GM   General Motors Corp (14,081)  
  2   VC   Visteon Corp (3,948)  
  3   GT   Goodyear Tire & Rubber Co (3,062)  
  4   DCN   Dana Corp (2,279)  
  5   TEN   Tenneco Automotive Inc (1,237)  
  Number   Ticker   Company name 2002  
BANKS
TOP 5
  1   WFC   Wells Fargo & Co 24,065  
  2   BAC   Bank Of America Corp 20,427  
  3   FITB   Fifth Third Bancorp 14,945  
  4   BK   Bank Of New York Co Inc 7,857  
  5   STI   Suntrust Banks Inc 6,566  
BOTTOM 5
  1   WB   Wachovia Corp (10,182)  
  2   FBF   Fleetboston Financial Corp (8,408)  
  3   ONE   Bank One Corp (6,577)  
  4   CFB   Commercial Federal (568)  
  5   SOV   Sovereign Bancorp Inc (513)  
  Number   Ticker   Company name 2002  
CAPITAL GOODS
TOP 5
  1   GE   General Electric Co 222,767  
  2   MMM   3M Co 41,012  
  3   UTX   United Technologies Corp 15,740  
  4   LMT   Lockheed Martin Corp 13,943  
  5   EMR   Emerson Electric Co 13,734  
BOTTOM 5
  1   HON   Honeywell International Inc (9,231)  
  2   BA   Boeing Co (3,871)  
  3   GR   Goodrich Corp (2,543)  
  4   RTN   Raytheon Co (1,690)  
  5   WLT   Walter Industries Inc (1,262)  
  Number   Ticker   Company name 2002  
COMMERCIAL SVCS & SUPPLIES
TOP 5
  1   FDC   First Data Corp 19,323  
  2   ADP   Automatic Data Processing 13,740  
  3   PAYX   Paychex Inc 10,468  
  4   APOL   Apollo Group Inc -Cl A 8,852  
  5   PBI   Pitney Bowes Inc 6,808  
BOTTOM 5
  1   AW   Allied Waste Inds Inc (1,546)  
  2   POI   Protection One Inc (1,043)  
  3   CPC   Central Parking Corp (680)  
  4   SCS   Steelcase Inc (551)  
  5   SFN   Spherion Corp (440)  
  Number   Ticker   Company name 2002  
CONSUMER DURABLES & APPAREL
TOP 5
  1   NKE   Nike Inc -Cl B 8,906  
  2   COH   Coach Inc 3,559  
  3   LIZ   Liz Claiborne Inc 2,104  
  4   NVR   Nvr Inc 2,123  
  5   LEG   Leggett & Platt Inc 1,885  
BOTTOM 5
  1   EK   Eastman Kodak Co (2,947)  
  2   AM   American Greetings -Cl A (599)  
  3   UFI   Unifi Inc (356)  
  4   IFSIA   Interface Inc -Cl A (301)  
  5   WLM   Wellman Inc (263)  
  Number   Ticker   Company name 2002  
DIVERSIFIED FINANCIALS
TOP 5
  1   C   Citigroup Inc 68,078  
  2   FNM   Fannie Mae 54,181  
  3   FRE   Federal Home Loan Mortg Corp 28,984  
  4   AXP   American Express 27,539  
  5   SLM   Slm Corp 15,425  
BOTTOM 5
  1   JPM   J P Morgan Chase & Co (25,499)  
  2   HI   Household International Inc (5,472)  
  3   ET   E Trade Group Inc (1,355)  
  4   PVN   Providian Financial Corp (1,331)  
  5   NITE   Knight Trading Group Inc (806)  
  Number   Ticker   Company name 2002  
ENERGY
TOP 5
  1   XOM   Exxon Mobil Corp 85,108  
  2   APA   Apache Corp 4,387  
  3   BJS   Bj Services Co 4,232  
  4   APC   Anadarko Petroleum Corp 4,156  
  5   BHI   Baker-Hughes Inc 4,126  
BOTTOM 5
  1   AHC   Amerada Hess Corp (2,315)  
  2   HAL   Halliburton Co (555)  
  3   TSO   Tesoro Petroleum Corp (468)  
  4   ASH   Ashland Inc (415)  
  5   HC   Hanover Compressor Co (370)  
  Number   Ticker   Company name 2002  
FOOD & DRUG RETAILING
TOP 5
  1   WAG   Walgreen Co 24,417  
  2   SYY   Sysco Corp 16,667  
  3   WFMI   Whole Foods Market Inc 2,705  
  4   SWY   Safeway Inc 1,641  
  5   PFGC   Performance Food Group Co 853  
BOTTOM 5
  1   ABS   Albertsons Inc (7,207)  
  2   KR   Kroger Co (2,103)  
  3   3FLMIQ   Fleming Companies Inc (2,005)  
  4   CVS   Cvs Corp (1,667)  
  5   GAP   Great Atlantic & Pac Tea Co (749)  
  Number   Ticker   Company name 2002  
FOOD BEVERAGE & TOBACCO
TOP 5
  1   KO   Coca-Cola Co 82,413  
  2   PEP   Pepsico Inc 49,718  
  3   BUD   Anheuser-Busch Cos Inc 37,916  
  4   MO   Altria Group Inc 28,230  
  5   KFT   Kraft Foods Inc 21,770  
BOTTOM 5
  1   RJR   Rj Reynolds Tobacco Hldgs (5,406)  
  2   TSN   Tyson Foods Inc -Cl A (1,292)  
  3   CQB   Chiquita Brands Intl (444)  
  4   AOR   Aurora Foods Inc (425)  
  5   ADM   Archer-Daniels-Midland Co (395)  
  Number   Ticker   Company name 2002  
HEALTH CARE EQUIPMENT & SVCS
TOP 5
  1   MDT   Medtronic Inc 40,778  
  2   UNH   Unitedhealth Group Inc 25,004  
  3   SYK   Stryker Corp 11,729  
  4   BSX   Boston Scientific Corp 11,599  
  5   HCA   Hca Inc 5,302  
BOTTOM 5
  1   KIND   Kindred Healthcare Inc (12,093)  
  2   MCK   Mckesson Corp (7,852)  
  3   HLTH   Webmd Corp (5,155)  
  4   THC   Tenet Healthcare Corp (3,841)  
  5   SRV   Service Corp International (1,925)  
  Number   Ticker   Company name 2002  
HOTELS RESTAURANTS & LEISURE
TOP 5
  1   SBUX   Starbucks Corp 7,448  
  2   YUM   Yum Brands Inc 5,693  
  3   IGT   Intl Game Technology 5,938  
  4   MCD   McDonalds Corp 8,339  
  5   MAR   Marriott Intl Inc 4,361  
BOTTOM 5
  1   PPE   Park Place Entmt Corp (2,232)  
  2   WBR   Wyndham Intl Inc (2,028)  
  3   PKS   Six Flags Inc (1,168)  
  4   PDQ   Prime Hospitality Corp (673)  
  5   BFT   Bally Total Fitness Hldg Cp (486)  
  Number   Ticker   Company name 2002  
HOUSEHOLD & PERSONAL PRODS
TOP 5
  1   PG   Procter & Gamble Co 92,231  
  2   CL   Colgate-Palmolive Co 26,687  
  3   G   Gillette Co 17,738  
  4   AVP   Avon Products 12,867  
  5   CLX   Clorox Co/De 5,849  
BOTTOM 5
  1   PYX   Playtex Products Inc (94)  
  2   RDEN   Elizabeth Arden Inc 13  
  3   NATR   Natures Sunshine Prods Inc 26  
  4   IPAR   Inter Parfums Inc 53  
  5   ROV   Rayovac Corp 64  
  Number   Ticker   Company name 2002  
INSURANCE
TOP 5
  1   AIG   American International Group 40,845  
  2   MMC   Marsh & Mclennan Cos 16,133  
  3   AFL   Aflac Inc 12,844  
  4   PGR   Progressive Corp-Ohio 9,283  
  5   ALL   Allstate Corp 7,198  
BOTTOM 5
  1   UNM   Unumprovident Corp (6,888)  
  2   PRU   Prudential Financial Inc (6,212)  
  3   LTR   Loews Corp (2,722)  
  4   NFS   Nationwide Finl Svcs -Cl A (2,707)  
  5   AFC   Allmerica Financial Corp (1,633)  
  Number   Ticker   Company name 2002  
MATERIALS
TOP 5
  1   DD   Du Pont (E I) De Nemours 35,445  
  2   PX   Praxair Inc 6,836  
  3   DOW   Dow Chemical 10,098  
  4   ECL   Ecolab Inc 5,393  
  5   APD   Air Products & Chemicals Inc 4,821  
BOTTOM 5
  1   CCK   Crown Holdings Inc (3,000)  
  2   OI   Owens-Illinois Inc (2,832)  
  3   MON   Monsanto Co (2,509)  
  4   IGL   Imc Global Inc (2,228)  
  5   GP   Georgia-Pacific Corp (2,077)  
  Number   Ticker   Company name 2002  
MEDIA
TOP 5
  1   CMCSA   Comcast Corp 38,008  
  2   COX   Cox Communications -Cl A 15,324  
  3   DISH   Echostar Commun Corp -Cl A 15,076  
  4   GCI   Gannett Co 13,989  
  5   L   Liberty Media Corp -Ser A 11,658  
BOTTOM 5
  1   AOL   AOL Time Warner Inc (27,148)  
  2   CHTR   Charter Communications Inc (5,715)  
  3   GMST   Gemstar-Tv Guide Intl Inc (5,125)  
  4   IPG   Interpublic Group Of Cos (1,520)  
  5   SPOT   Panamsat Corp (784)  
  Number   Ticker   Company name 2002  
PHARMACEUTICALS & BIOTECH
TOP 5
  1   JNJ   Johnson & Johnson 124,237  
  2   MRK   Merck & Co 107,076  
  3   PFE   Pfizer Inc 52,683  
  4   AMGN   Amgen Inc 57,361  
  5   LLY   Lilly (Eli) & Co 57,366  
BOTTOM 5
  1   MLNM   Millennium Pharmactcls Inc (920)  
  2   ICN   Icn Pharmaceuticals Inc (782)  
  3   CRA   Applera Corp Celera Genomics (633)  
  4   ALO   Alpharma Inc -Cl A (547)  
  5   CRXA   Corixa Corp (546)  
  Number   Ticker   Company name 2002  
RETAILING
TOP 5
  1   WMT   Wal-Mart Stores 207,346  
  2   HD   Home Depot Inc 43,955  
  3   LOW   Lowes Cos 25,152  
  4   EBAY   Ebay Inc 25,489  
  5   TGT   Target Corp 19,698  
BOTTOM 5
  1   S   Sears Roebuck & Co (6,859)  
  2   BBI   Blockbuster Inc (4,758)  
  3   JCP   Penney (J C) Co (4,557)  
  4   FD   Federated Dept Stores (2,506)  
  5   TOY   Toys R Us Inc (2,321)  
  Number   Ticker   Company name 2002  
SOFTWARE & SERVICES
TOP 5
  1   MSFT   Microsoft Corp 212,340  
  2   ORCL   Oracle Corp 59,502  
  3   ERTS   Electronic Arts Inc 6,783  
  4   ADBE   Adobe Systems Inc. 6,450  
  5   INTU   Intuit Inc 5,476  
BOTTOM 5
  1   VRSN   Verisign Inc (14,805)  
  2   ITWOE   I2 Technologies Inc (7,260)  
  3   EPNY   E.Piphany Inc (2,540)  
  4   UIS   Unisys Corp (1,800)  
  5   AKAM   Akamai Technologies Inc (1,786)  
  Number   Ticker   Company name 2002  
TECHNOLOGY HARDWARE & EQUIP
TOP 5
  1   IBM   Intl Business Machines Corp 90,422  
  2   DELL   Dell Computer Corp 69,425  
  3   INTC   Intel Corp 77,395  
  4   CSCO   Cisco Systems Inc 59,702  
  5   QCOM   Qualcomm Inc 17,167  
BOTTOM 5
  1   JDSU   Jds Uniphase Corp (35,218)  
  2   LU   Lucent Technologies Inc (34,657)  
  3   MOT   Motorola Inc (15,904)  
  4   GLW   Corning Inc (7,921)  
  5   COMS   3Com Corp (7,873)  
  Number   Ticker   Company name 2002  
TELECOMMUNICATION SERVICES
TOP 5
  1   BLS   Bellsouth Corp 21,787  
  2   VZ   Verizon Communications 16,138  
  3   NXTL   Nextel Communications 11,233  
  4   AT   Alltel Corp 4,312  
  5   PCS   Sprint Pcs Group 2,624  
BOTTOM 5
  1   T   AT&T Corp (72,674)  
  2   SBC   SBC Communications Inc (38,372)  
  3   AWE   AT&T Wireless Services Inc (7,106)  
  4   FON   Sprint Fon Group (3,418)  
  5   BRW   Broadwing Inc (1,336)  
  Number   Ticker   Company name 2002  
TRANSPORTATION
TOP 5
  1   UPS   United Parcel Service Inc 57,036  
  2   LUV   Southwest Airlines 8,650  
  3   FDX   Fedex Corp 8,558  
  4   EXPD   Expeditors Intl Wash Inc 3,435  
  5   CHRW   C H Robinson Worldwide Inc 2,691  
BOTTOM 5
  1   AMR   Amr Corp/De (2,763)  
  2   CSX   Csx Corp (1,431)  
  3   DAL   Delta Air Lines Inc (1,049)  
  4   UHAL   Amerco (456)  
  5   DTG   Dollar Thrifty Automotive Gp (411)  
  Number   Ticker   Company name 2002  
UTILITIES
TOP 5
  1   SO   Southern Co 11,817  
  2   D   Dominion Resources Inc 7,897  
  3   EXC   Exelon Corp 7,532  
  4   FPL   FPL Group Inc 4,900  
  5   PPL   PPL Corp 3,755  
BOTTOM 5
  1