The Inc. 100;

 

The year 1984 marks a time of dramatic change in the INC. 100. Nineteen eighty-three was a record year for new issues, with 888 initial public offerings generating $12.6 billion, and this year's INC. 100, our annual ranking of the fastest-growing public companies in America, reflects this. Ten years ago, 3 out of 4 companies on this year's list didn't even exist. Five years ago, most were still in the start-up stage -- small, struggling, and privately held. Today, they are the pacesetters of American business; as a group, this year's 100 -- including 43 companies that went public during 1983 -- is the fastest-growing in the six-year history of the list. They are also the youngest, the smallest, the leanest, the most productive -- and the least profitable.

Unchanged, however, is the spirit of risk-taking and adventure that lies behind each of these companies. James L. Jaeger, chief executive officer of Cincinnati Microwave Inc. (#33), was an electrical engineer who was intrigued by the sales figures for the Fuzzbuster, a car-mounted radar detector. When he bought one and took it apart in his garage, he decided he could do better. Last year his business, long since out of the garage stage, grossed $57.1 million, with a five-year growth rate of 2,644%. Walter A. Forbes was a restless consultant who got the idea for his electronic shopping service in a conversation with some Harvard Business School professors -- then built Comp-U-Card International Inc. (#87) into a $4.2-million business with a five-year growth rate of 919%. Parker Petit's business began in tragedy -- the 1970 loss of his son to sudden infant-death syndrome. To spare others that pain, he invented the home monitoring devices that helped lead Healthdyne Inc. (#5) to 1983 sales of $134 million and a staggering 10,336% five-year growth rate.

But fast growth is the sine qua non of membership on the INC. 100. Led by Endevco Inc. (#1), a Dallas energy company, and anchored by Lane Telecommunications Inc. (#100), a Houston maker of microprocessor-based terminal systems, the 100 companies are ranked according to sales, based on 1979 and 1983 fiscal year results. Over that five-year period, sales of the 100 companies soared by 2,030%, a compound annual growth rate of 115%. Five years ago, the 100 companies averaged $2.1 million in sales. None had even reached $16 million in revenues, and only 4 topped $10 million. Today, the INC. 100's average volume is $44.6 million, with 43 of the companies surpassing the $25-million mark. All but 2 of the 100 registered at least a ninefold increase in sales during the base period.

This remarkable growth rate marks a new historical high for the INC. 100. Last year the average growth for members of the list was 1,177%; during the first five years of the INC. 100, the growth rate has averaged 973%. Last year's cutoff point was 500% growth; this year, the cutoff mark was 783%, a figure that would have disqualified some 33 members of last year's list. In 1983 alone the INC. 100 chalked up a vigorous 67% sales increase, far surpassing the 4% sales growth of the "Corporate Giants of 1983" as recently reported in Business Week magazine.

As always, the ranking represents a diverse range of manufacturing, service, and energy-related industries. Computer and comuter-related product companies continue to dominate the list, up from 17 representatives last year to 21 this year. The number of data processing and software companies increased from 8 last year to 13 this year. The number of health-care providers and medical-equipment suppliers grew from 20 to 24, while the number of energy companies fell from 11 on last year's list to 7. Twenty-seven alumni from last year were able to earn places on this year's list, an historical low (see "Whatever Happened to the Class of '83?" page 158).

The members of this year's list are substantially younger than in previous years, largely because of 1983's rush to go public. On average, the 1984 INC. 100 companies have been in business less than 10 years; in past years the average has been more than 12 years. In 79 of the companies the original founder still serves as CEO, compared with the 76 founder/CEOs on last year's list. Founders hold an average of 20% of the equity, compared with 21% last year.

Not only are the 100 companies younger, they are also significantly smaller than in past years. The average volume of 1984's members is $44.6 million, compared with last year's average of $53.3 million and the historical average over the first five years of the ranking of $45.9 million. By aggressively combining internal growth and new ventures with a series of acquisitions in the piggyback trailer, trucking, and offshore marine services area, BRAE Corp. (#11), which topped last year's growth list, tops this year's sales list, with total sales of $322.5 million. Tandon Corp. (#20), a four-year veteran of the INC. 100, is number two in total sales, with a volume of $303.4 million. The Home Depot Inc. (#26), a string of retail do-it-yourself home supermarkets, has the highest total sales of any newcomer to the list, with a volume of $256.1 million (see "New Faces of 1984").

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