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The Times 10: Out of the spotlight

Our public stage has fewer players as more big companies go private or become subsidiaries of out-of-town corporations.

By Helen Huntley, Times Personal Finance Editor
Published May 14, 2007


[Times illustration: Steve Madden]
ADVERTISEMENT
Times 10 Annual revenue in billions
1. Tech Data $21.4
2. Jabil Circuit *
3. OSI Restaurant Partners + $3.9
4. WellCare Health Plans $3.8
5. TECO Energy $3.4
6. Raymond James $2.3
7. Lincare Holdings $1.4
8. Walter Industries $1.3
9. MarineMax $1.2
10. Global Imaging ++ $1.1
* Current information not available;
$7.5-billion in revenue reported for 2005
+ Buyout pending
++Acquired by Xerox Corp.


Tampa Bay companies are stepping out of the public spotlight and reshaping the corporate landscape.

In the past year, seven have agreed to buyouts that will make them private companies or units of big public companies based elsewhere. The collective price tag for the transactions is more than $7-billion.

The shake-up extends to this year's annual ranking of the Times 10, which is expected to lose two of its public members in Tampa. OSI Restaurant Partners, the parent of Outback Steakhouse and other prominent restaurant chains, has a pending deal to go private, while Global Imaging became part of Xerox Corp. on Friday.

Their departure from the public arena will mean an even lower profile for the Tampa Bay area as a community lean on corporate headquarters. However, the deals at Global with Xerox and at Tampa's Maritrans with buyer Overseas Shipholding Group will bring bigger players into the area with more capital and global connections.

"This is a natural evolution that's occurring every day, " said Stuart Rogel, president of the Tampa Bay Partnership, a regional economic development group. "You're going to gain some and lose some. Success makes companies a target. It suggests we're doing something right and growing those companies."

However, Rogel said, "Having a headquarters of a company here has vast benefits to the community. ... A company is generally more focused on helping grow the community it calls home than some of the other communities that it's involved in."

History shows that changes in corporate ownership play out in lots of different ways. Employment, corporate philanthropy and community sponsorships may rise or fall. Executive turnover is a given. Those who once took leadership roles in the community may be axed, be transferred or lose some of their clout.

"From a selfish perspective, I always hate to see corporate headquarters leave the area, " said Robert Forsythe, dean of the College of Business at the University of South Florida's Tampa campus.

Building closer ties to the business community is one of Forsythe's goals. Last year USF developed a warm relationship with executives at Checkers Drive-In Restaurants, even focusing on the company as a case study in an accounting class last fall. But after the company's recent buyout, many of those executives are gone, including chief executive officer Keith Sirois, who spoke to USF students in January, just weeks before the company abruptly announced his retirement. Forsythe said the college hopes to connect with the new management team.

Sometimes a change in control gives a boost to philanthropy, especially if the new owner wants to increase visibility in the community.

Progress Energy says it donated $5-million to Florida charities last year, twice what homegrown Florida Power Corp. was giving annually before being bought by the North Carolina utility in 2000.

But for Eckerd Corp., once the Tampa Bay area's largest public company, being purchased by J.C. Penney Co. led to a pullback in community donations and sponsorships.

Penney's focus "was more on getting the company ready for sale than it was to build market share, " said Ken Banks, Eckerd's former vice president of marketing. "The management they brought in, the whole strategy was to drive next-day sales rather than long-term sales. When you do community programs, you're never going to see the results in the store in two weeks."

Some acquirers are interested in nothing more than grabbing the other company's customers. However, others are willing to invest money building a business.

"We lost some of our identity with the name change, but it's been quite overshadowed by the fact that the company is doing so well, " said Jonathan Whitworth, former president of Maritrans, now senior vice president of Maritrans' New York owner, Overseas Shipholding Group.

The company recently announced it will spend nearly $300-million to build three tug barges, doing most of the work in Tampa. "That's probably not a move we could have done as a small $250-million market cap company, " Whitworth said.

Of course, some Tampa Bay public companies are continuing to grow and prosper on their own, none more notably than WellCare Health Plans. The managed care company based in Tampa doubled in size last year and moved up from seventh to fourth place on the Times 10 list. Clearwater boat retailer MarineMax climbed onto the list for the first time this year, replacing Danka Business Systems.

Business dean Forsythe said it's important to keep in mind that public companies are just the most visible part of the business community.

"I've been amazed in my 10 months here at the number of small companies, most of which aren't public, " he said. "It seems we have a great incubator going on."

Helen Huntley can be reached at hhuntley@sptimes.com or 727 893-8230.

About this story

-To be included, a company had to have its headquarters in Hillsborough, Pinellas, Pasco or Hernando county and have stock traded on the New York or American stock exchanges or the Nasdaq Stock Market.

-Financial results are for the most recently completed fiscal year with two exceptions. Global Imaging completed its fiscal year March 31, but has not yet reported. We used the past four reported quarters. Jabil Circuit has not reported financial results for the past year while investigating the way it accounted for stock options. The Times decided to keep Jabil in second place on its list based on results from the previous year.

-A percent change in net income is shown only for companies that were profitable for the past two fiscal years.

-Return on equity is net income divided by average equity. It is shown only for companies that were profitable last year.

-Two-year stock return is based on change in share price between April 29, 2005, and April 30, 2007.

-Market capitalization is the value of the company's outstanding shares based on the April 30 closing price.

About the dealmaking

- The activity in the Tampa Bay area is a reflection of a global boom in such deals. Already this year, $2-trillion worth of mergers and acquisitions have been announced worldwide.

- We're on pace to eclipse last year's $4-trillion record, according to statistics compiled by the research firm Dealogic.

- A big change is the role of private equity firms, which accounted for only 3 or 4 percent of deal volume a decade ago, but 30 percent of U.S. volume so far this year.

Next in line

Companies that just missed the Times 10 this year.

Annual revenue in millions

1. Danka Business Systems $978*

2. Kforce $938.4

3. Brown & Brown $864.7

4. First Advantage $817.6

5. Quality Distribution $730.2

*For 12 months ending in December

Leaving the spotlight through buyouts

Pending

Company, (acquirer), value of deal

OSI Restaurant Partners (Group of private equity firms) $3.2-billion

Catalina Marketing (Hellman & Friedman LLC) $1.7-billion

Ablest Inc. (Koosharem Corp.) $32.5-million

Completed in the last year

Global Imaging (Xerox Corp.) $1.5-billion

Maritrans Inc. (Overseas Shipholding Group) $455-million

Checkers Drive-In Restaurants (Wellspring Capital Management) $188-million

Reptron Electronics (Kimball Electronics) $50-million

The Times 10

1. Tech Data Corp.

5350 Tech Data Drive, Clearwater, FL 33760; (727) 539-7429; www.techdata.com

Business: Computer products distributor

Ticker, market: TECD, Nasdaq-NM

Stock price: $36.85

Top officers: Steven A. Raymund, chairman; Robert Dutkowsky, president/CEO; Nestor Cano, president, worldwide operations; Jeffery P. Howells, executive vice president and chief financial officer

Employees: 8, 000

Financials (Year ended Jan. 31)

Revenue: $21.4-billion, up 4.7%

Net loss: $97-million

Per share: -$1.76

Two-year return to shareholders: -1.7%

Market capitalization: $1.9-billion

Biggest challenge: To continue profitable growth and the turnaround in European operations. The company rolled out a series of new strategies such as revving up its sales division and creating a separate segment for advanced infrastructure solutions. The challenge will be to keep a momentum going in a business that has unenviable margins.

2. Jabil Circuit Inc.

10560 Dr. Martin Luther King Jr. St. N, St. Petersburg, FL 33716; (727) 577-9749; www.jabil.com

Business: Contract electronics manufacturer

Ticker symbol, market: JBL, NYSE

Stock price: $23.40

Annual dividend: 28 cents

Top officers: Timothy L. Main, president/CEO; Mark T. Mondello, chief operating officer; Forbes I.J. Alexander, chief financial officer

Employees: 90, 000

Financials (Year ended Aug. 31)

Revenue: NA

Net income: NA

Per share: NA

Return on equity: NA

Two-year return to shareholders: -14.7%

Market capitalization: $4.9-billion

Biggest challenge: Producing a clean set of financial statements properly accounting for stock options. No numbers are listed above because Jabil has delayed reporting. Once that hurdle is overcome, Jabil will need to reassure investors whose patience has worn thin waiting for details about the company's finances.

3. OSI Restaurant Partners Inc.

(formerly Outback Steakhouse Inc.) 2202 N West Shore Blvd., Tampa, FL 33607; (813) 282-1225; www.osirestaurantpartners.com

Business: Restaurant chains

Ticker symbol, market: OSI, NYSE

Stock price: $40.44

Annual dividend: 52 cents

Top officers: William Allen III, CEO; Paul Avery, chief operating officer

Employees: 116, 000

Financials (Year ended Dec. 31)

Revenue: $3.9-billion, up 9.1%

Net income: $100.2-million, down 31.8%

Per share: $1.31, down 31.8%

Return on equity: 8.5%

Two-year return to shareholders: 1.2%

Market capitalization: $3-billion

Biggest challenge: Reviving its Outback Steakhouse chain. Though going private will spare it the distraction of having to woo Wall Street, nothing short of a substantial investment in its biggest chain's menu, decor, marketing and business plan will reverse decline in same-store sales. One of eight OSI concepts, Outback accounts for roughly 70 percent of earnings.

4. WellCare Health Plans Inc.

8725 Henderson Road, Renaissance One, Tampa, FL 33634; (813) 290-6200; www.wellcare.com

Business: Managed health care

Ticker symbol, market: WCG, NYSE

Stock price: $90.02

Top officers: Todd Farha, chairman/president/CEO; Paul Behrens, senior vice president/chief financial officer; Thaddeus Bereday, senior vice president/general counsel

Employees: 3, 200

Financials (Year ended Dec. 31)

Revenue: $3.8-billion, up 100.2%

Net income: $139.2-million, up 168%

Per share: $3.43, up 159.8%

Return on equity: 29.8%

Two-year return to shareholders: 73.2%

Market capitalization: $3.3-billion

Biggest challenge: Managing rapid growth to avoid a decline in service and managing the political process to avoid a decline in Medicare or Medicaid funding. WellCare is proactive on the latter, contributing to political campaigns and recently adding former Sen. Bob Graham to its board. But since HMO reimbursements cost the government more than traditional Medicare, there's a potential for cutbacks.

5. Teco Energy Inc.

702 N Franklin St., Tampa, FL 33602; (813) 228-1111; www.tecoenergy.com

Business: Electric and gas utility holding company

Ticker symbol, market: TE, NYSE

Stock price: $18.12

Annual dividend: 78 cents

Top officers: Sherrill W. Hudson, chair-man/CEO; John B. Ramil, president/chief operating officer; Gordon L. Gillette, executive vice president/chief financial officer

Employees: 5, 092

Financials (Year ended Dec. 31)

Revenue: $3.4-billion, up 14.6%

Net income: $246.3-million, down 10.3%

Per share: $1.18, down 9.9%

Return on equity: 14.8%

Two-year return to shareholders: 18.3%

Market capitalization: $3.8-billion

Biggest challenge: Gearing up for Tampa Electric to build a new base-load "clean-coal" electric generating plant in Polk County by 2013. TECO Energy expects to pay off corporate debt early, freeing cash for the $1.5-billion Tampa Electric plant and improvements to its power distribution system.

6. Raymond James Financial Inc.

880 Carillon Parkway, St. Petersburg, FL 33716; (727) 567-1000; www.raymondjames.com

Business: Stock broker, money manager

Ticker symbol, market: RJF, NYSE

Stock price: $31.02

Annual dividend: 40 cents

Top officers: Thomas A. James, chairman/CEO; Chester B. Helck, president/chief operating officer

Employees: 6, 197, plus 3, 408 independent contractors

Financials (Year ended Sept. 30)

Revenue: $2.3-billion, up 14.6%

Net income: $214.3-million, up 41.9%

Per share: $1.85, up 39.1%

Return on equity: 15.8%

Two-year return to shareholders: 74.7%

Market capitalization: $3.6-billion

Biggest challenge: Recruiting top producing brokers and staying out of regulators' cross-hairs. The company also sees big profit potential in Raymond James Bank, which has nearly tripled its assets in the past year. Raymond James is moving brokerage customer deposits from money-market funds to the bank, where they can earn the company a higher return.

7. Lincare Holdings Inc.

19387 U.S. 19 N, Clearwater, FL 33764; (727) 530-7700; www.lincare.com

Business: Oxygen, respiratory therapy services

Ticker symbol, market: LNCR, Nasdaq-NM

Stock price: $38.80

Top officers: John P. Byrnes, CEO; Shawn Schabel, president/chief operating officer; Paul Gabos, chief financial officer

Employees: 9, 070

Financials (Year ended Dec. 31)

Revenue: $1.4-billion, up 11.3%

Net income: $213-million, down 0.3%

Per share: $2.16, up 4.9%

Return on equity: 18.9%

Two-year return to shareholders: -7.6%

Market capitalization: $3.5-billion

Biggest challenge: Maintaining profit margins in an era of declining government payments. Lincare continues to grow internally and through acquisitions and has about 670, 000 customers. However, Medicare is capping equipment rental fees and cutting reimbursements for equipment, medications and dispensing fees. As each rule change takes effect, Lincare feels the effect, but much less so than smaller competitors.

8. Walter Industries Inc.

4211 W Boy Scout Blvd., Tampa, FL 33607; (813) 871-4811; www.walterind.com

Business: Coal and natural gas, home building and finance

Ticker symbol, market: WLT, NYSE

Stock price: $28.55

Annual dividend: 20 cents

Top officers: Vic Patrick, vice chairman and general counsel; Joe Troy, chief financial officer

Employees: 2, 800

Financials (Year ended Dec. 31)

Revenue: $1.3-billion, up 15.1%

Net income: $198.4-million, up 2, 715.3%

Per share: $3.87, up 1, 582.6%

Return on equity: 4.9%

Two-year return to shareholders: 73.1%

Market capitalization: $1.5-billion

Biggest challenge: What to do about its struggling homebuilding unit. Though losses at Jim Walter Homes historically have been offset by its profitable mortgage affiliate, the question remains as to whether the pair are a drag on Walter's stock price - and should be divested. A positive note: New house orders at Jim Walter rose 26 percent in the first quarter of 2007.

9. MarineMax Inc.

18167 U.S. 19 N, Suite 300, Clearwater, FL 33764; (727) 531-1700; www.marinemax.com

Business: Recreational boat, yacht sales

Ticker symbol, market: HZO, NYSE

Stock price: $21.09

Top officers: William McGill Jr., chair-man/president/CEO; Michael McLamb, executive vice president/CFO

Employees: 2, 130

Financials (Year ended Dec. 31)

Revenue: $1.2-billion, up 28.1%

Net income: $39.4-million, up 16.4%

Per share: $2.08, up 10.6%

Return on equity: 12.4%

Two-year return to shareholders: -26.7%

Market capitalization: $367.5-million

Biggest challenge: Safely navigating a downturn in the boating industry. The company says it expects earnings to be substantially lower this fiscal year with same-store sales flat or increasing by low single digits. Competitors are suffering from the decline in consumer demand for boats, and MarineMax says it is gaining market share. Aggressive expansion has given the company 88 retail locations.

10. Global Imaging Systems Inc.

3820 Northdale Blvd., Suite 200A, Tampa, FL 33624; (813) 960-5508; www.global-imaging.com

Business: Office equipment distributor

Ticker symbol, market: GISX, Nasdaq-NM (Friday was the final day of trading)

Stock price: $29.02

Top officers: Thomas S. Johnson, chair-man/CEO; Michael Shea, president/chief operating officer; Raymond Schilling, executive vice president/CFO

Employees: 4, 500

Financials (12 months ended Dec. 31)

Revenue: $1.1-billion, up 8.7%

Net income: $67-million, up 10.6%

Per share: $1.62, up 9.5%

Return on equity: 10.8%

Two-year return to shareholders: 66.6%

Market capitalization: $1.5-billion

Biggest challenge: Maintaining credibility with customers. Historically, its clients have trusted its salespeople to recommend the best copiers and printers for their needs. But as the company morphs from independent reseller to manufacturer's subsidiary - it was acquired by Xerox Corp. on Friday - Global risks being seen as just another captive sales network.

Compiled by Helen Huntley, Scott Barancik, Madhusmita Bora and Steve Huettel

[Last modified May 11, 2007, 22:33:41]


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