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What Ever Happened To The Class Of '84?
 

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Looking back, the most remarkable thing about the class of 1984 is its staying power: Last year's growth leaders are mostly still growing.

Led by ComputerCraft Inc; the computer retailer that ranks #8 this year, and by Endevco Inc., the oil and gas company that ranks #9, 36 of the 1984 INC. 100 companies graduated to the 1985 list. Of those 36, 7 moved up in the rankings, 1 stayed in the same place, and 28 moved down.

The higher growth rate required to qualify for this year's list -- the highest, in fact, in the seven-year history of the ranking -- was the major cause of attrition among the '84 alumni. Forty-one companies from last year's list reported continuing sales growth but were unable to reach 1985's 1,086% cutoff. Among these were 4 with a five-year-growth rate of more than 1,000% -- Helionetics, BSN, Cincinnati Microwave, and United States Health Care Systems -- plus another 14 with growth rates over last year's cutoff of 783%.

Only 14 companies didn't make the list because their sales fell in 1984. Applied Circuit Technology Inc., a manufacturer of testing equipment for harddisk drives, and Onyx-IMI Inc., which makes the drives themselves, both saw sales drops of more than 30%. The biggest loser was Chemfix Technologies Inc., a Louisiana-based processor of hazardous and nonhazardous wastes, with sales off 44%. The villain in this case, says Chemfix president Daniel Silverman III, was government regulation. One $4-million program in Maryland was canceled because Chemfix couldn't get the last in a long list of permits required to transport its sludge-treatment product, while a $7-million refinery waste program was held up by regulatory delays. Silverman remains optimistic, however, convinced that tougher government regulation will eventually work to his company's benefit.

Two companies from 1984's list were disqualified because their sales for the base year of 1980 fell below the $100,000 cutoff. Ciprico Inc., last year's #37, saw its sales drop from $145,000 in 1979 to $89,000 in 1980, although by 1984 it was up to $7.6 million. The Forum Group Inc., the health-care company that was last year's #98, witnessed an even more dramatic drop; thanks to a financial restatement, it went from $9.8 million in 1979 to only $47,000 in 1980. But Forum also recorded the most spectacular growth of any company considered, soaring to almost $116 million in 1984, a 246,302% increase. Were it not for the disqualification, Forum would have topped this year's list.

Three other companies from 1984 were counted out because their sales in 1980 were already over the $25-million mark.BRAE Corp., the transportation/leasing company that ranked #1 in 1983 and #11 last year, grew from $30.2 million in 1980 to $485 million in 1984. NBI Inc., a manufacturer of word-processing systems that has appeared on the list every year since 1980, went from $33 million in 1980 to $177 million in 1984, a 442% growth rate. Diasonics Inc., the medical imaging company that ranked #27 last year, was up to $35.6 million in sales by 1980 and more than $135 million by 1984.

Only one company from last year's roster was acquired. By September 1984, 51% of Independence Health Plan Inc.'s stock had been sold to Great West Hospitals Inc. It was partly a marriage of necessity: One of the early investors in Independence was searching for a way to cash out. But, says Independence's president M. Donald Kowitz, it was a positive strategic move as well. Independence (last year's #7) remains separate, with its management team intact; by joining with Great West, Kowitz says, it gains national marketing potential and additional financial resources.

Finally, the class of '84 was not without its dramatic casualties. The crash of Pizza Time Theatre Inc. -- which, when it filed for Chapter 11 in March 1984, left 5,000 creditors and more than $100 million in debts -- has been widely chronicled (see INC., October 1984, page 82). Nautilus Enviromedical Systems Inc., although it was still registering a high rate of growth at the end of 1984, filed for protection in early 1985.

Then there was Psych Systems Inc., a Baltimore developer of computerized psychological testing systems, which came within a hairbreadth of staying alive. Psych Systems had been suffering from sharply higher operating costs, declining sales, and write-offs for bad debts. Last June, Charter Medical Corp. bought out three of the company's six directors and announced plans to acquire all remaining outstanding stock at $5 a share. In September, however, Charter replaced its $5 offer with a $1.50 per-share bid. Finally, in October, it rescinded even that offer, a change of heart attributed to accounting discrepancies and poor prospects for renewal of the company's testing license. On October 24 time ran out: The company had to file for protection under Chapter 11.

Last updated: May 1, 1985




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