Page 17 business. The aggregate operating results for all seven were $35.3 million income on $3.8 billion sales in 1969, and $7.6 million income on (over) $4 billion sales in 1970. (Never mind the immediately-noted discrepancy between those numbers and the ones from Fortune; we'll save discussion of that for another time and 9/ another working paper. > The seven lines of business and their operating results were as follows: Steel and ferrous metal products: $17.3 million income on $1.056 billion sales in 1969; $13.1 million net loss on $994.8 million sales in 1970. Meat and foods: $8 million income on $1.264 billion sales in 1969; $11.3 million income on $1.463 billion sales in 1970. Aerospace: $10.9 million income on $712.6 million sales in 1969; $7.6 million income on $820.2 million sales in 1970. Electronics: $3.6 million net loss on $247.3 million sales in 1969; $1.3 million income on $243.3 million sales in 1970. Air transportation: $3.5 million income on $325.6 million sales in 1969; $1.5 million net loss on $325.6 million sales in 1970. Wire and cable: $0.2 million net loss on $94.8 million sales in 1969; $2.3 million income on $100.3 million sales in 1970. Page 18 Floor Covering: $0.6 million net loss on $109.3 million sales in 1969; $0.3 million net loss on $104.7 million sales in 1970. So, we turn to our QFR to compare LTV's operating results with "the average performance of companies in the same line of business." Since our company is in seven major lines of business (at least!), you might think we would check seven different industry groups in the QFR to get our comparisons. a minute! Seems logical. But wait Disappointment no. 2: the "Explanatory Notes" tell us * * ** * Industry classification. After a corporation has been introduced into the sample, its industry /sic/ is classified according to the latest information at hand. 10/ Emphasis supplied, except for paragraph heading emphasized in original7 consolidated financial data are all assigned to just one industry group in the QFR? Aghast at the thought, we hasten to other sources, hoping to find out it isn't so. Unfortunately, it seems that it is so, or nearly so. Inquiry reveals that there is one official list published by 11/ of the major corporations whose financial results are included in the QFR. It is called Directory of Companies Filing SEC, naming most 69-133 O 72 pt. 2 - 3 Page 19 Annual Reports With the Securities and Exchange Commission Under the Securities Exchange Act of 1934, Alphabetically and By Industry Groups. (For sale by the Superintendent of Documents, Government Printing Office: $3.) In the "Introduction" to the latest issue (December 1970), our darkest fears are confirmed. Definition of Reporting Unit We read: The organization or unit classified consists of the company and all subsidiaries included in the consolidated financial statements submitted to the Securities and Exchange Commission. Basis of Company Classification In general each company was classified on the basis of its major activity as determined by the product or group of products produced or handled, or services rendered. The major line of activity as reflected by the gross revenues of the company was the principal criterion used in classifying the company. * * * The classification of multi-product or multi- Parent and Subsidiary Registrants To the degree that information is known, sub- Page 20 It is apparent from the data on seven "lines of business" supplied by LTV in its 1970 Form 10-K that the line it called "Meats and foods" was most important to it in the most recent full year, accounting for 36 percent of our company's consolidated sales and 149 percent of its consolidated operating income. The "Alphabetical Listing of Companies" in the SEC Directory confirms our conclusion. We find for our company the following starkly simple listing: Industry group 20.1, in the Enterprise Standard Industrial Classification (1968), is: "Meat products." However, that is a narrower classification than is used in the QFR, so we may begin to suspect that the consolidated operating results of Ling-TemcoVought, Inc.--the great pharmaceutical and chemical manufacturer, defense contractor, aerospace giant, steel producer, electronics and electrical equipment manufacturer, and (at least for parts of the period 1969-early 1971) sporting goods manufacturer, rug Page 21 manufacturer, wire and cable manufacturer, major domestic and international air carrier, operator directly or through sub sidiaries of 757 establishments in 47 States, 29 foreign countries, D. C., Puerto Rico and Guam--were all classified "on consolidated basis" in the QFR issues appearing in 1969--early 1971 under the heading: indeed! "Industry code 20, Food and kindred products." In the words of the SEC Directory, "somewhat subjective" firm conclusion. However, a little closer study of LTV's corporate structure and of the Directory leaves this suspicion something less than a When interrogated on the subject, the responsible staff chief at the FTC refers the inquirer to the responsible staff chief at the SEC, and the latter declines to answer on the ground that the information requested is confidential. are left with such questions as these unsettled in our minds: (Question 3-4.) The SEC Directory lists Jones & So we Laughlin Steel Corp. and Jones & Laughlin Industries, Inc. in the alphabetical and industry-classification |