Electronic Design

Methodology: The Top 50 Companies

For our Fiscal 2014 line score rankings (Fiscal 2014 vs. Fiscal 2013 data), we used a total pool of 92 public companies:

1. Data was gathered for both 2014 and 2013, mainly from company 10-K reports filed with the SEC, reflecting a company’s 2014 fiscal year.  In many cases, this did not mirror the calendar year of January to December 2014.   

Changes in the company pool this year were as follows:

Deleted:

Dell – officially taken private by Michael Dell, Silver Lake Partners, and Microsoft.

ITT Exelis – acquired by competitor Harris Corporation.

Molex – acquired by Koch Industries.

RFMD – merged with Triquint to form Qorvo.

TRW Automotive – acquired by German car parts maker ZF Friedrichshafen.

All financial data is shown in millions.

2. Employee data was mostly gathered from 10-K reports.  In the few instances where it could not be found, annual reports or company websites were used.  In most cases, the 2013 data had to be gathered from the 2013 10-K report, as the previous year’s employee count is not included on the 2014 10-K for most companies.  Employee count is typically reflected as of the last day of the fiscal calendar year being reported.

When employees were broken out separately by U.S. and International, both numbers were added together as long as a comparable breakout was available for the prior comparison year.

In the case of acquisitions or divestitures, our best guess was used, so as not to severely credit or penalize a company based on year over year changes.  Employee data pertaining to the unit acquired or divested is typically not separated out for the time frames required, if available at all.

In cases where a reasonable assumption could not be made, the line score was adjusted, again in the spirit of not severely penalizing or crediting a company.

3. Sales or total revenues was gathered from 2014 10K reports. 

4-Pretax Income was gathered from 2014 10K reports.  The emphasis was on comparing the profit/loss generated solely by the operations of the company but to also include interest expense, which is a result of business strategy or the nature of the business.  We also wanted to be as consistent as possible across companies.

5. Pretax Income Margin is simply Pretax Income divided by Sales.

6. Long Term Debt and Stockholder’s Equity data was taken from the 2014 balance sheets, reasonably trying to include all debt of a non-current nature, even though at times it is not specifically labeled “long term debt” on the balance sheet. 

With respect to stockholder’s equity, the previous year’s balance (2013) is always taken from the current year’s (2014) 10K, as prior year restatements can be made that affect that balance, unless any differences are minor.

7. Long Term Debt to Shareholder’s Equity ratio is simply the former divided by the latter.  In cases where a company has a negative stockholder’s equity position as of the balance sheet date, the resulting negative number does not have much meaning, other than a negative equity position is never a good situation.

8. 2014 Total Patents Issued data was taken from a report sorted by company generated by the U.S. Patent and Trademark Office.

9. High and closing stock prices for 2014 were taken from Yahoo Finance for all companies. Stock data was gathered on a calendar year basis, so the time frame may differ from that of the financial data, for those companies who don’t report on a calendar-year basis, but at least it’s a consistent approach for all companies. 

Closing prices (on 12/31/2014) were not adjusted for dividends and splits so as to be comparable to the “high” price.

10. Research and development expenses came mainly from a separate note contained within the 10-K or in some cases, a line on the Income Statement.  Most companies do not separate R & D as a separate line on the Income Statement.

For Comcast and Verizon only, capital expenditures were used for the comparison instead of R & D, as they are more relevant for these companies.

11. Our final rankings are determined by what we call our Total Line Score.  Our line score methodology is as follows:

a-Each of the following 9 categories is ranked for each company:

Employee growth % (2014 v. 2013)

Sales growth % (2014 v.2013)

Pretax Income growth % (2014 v. 2013)

Pretax Margin improvement Pts. (2014 v. 2013)

LT Debt to S/H Equity Ratio Improvement Pts. (2014 v. 2013)

2014 Total # of Patents Issued

Change in Total # of Patents Issued (2014 v. 2013)

2014 Stock Price Closing as a % of 2014 Stock Price High

R&D Expense change % (2014 v. 2013)

Line score points are then given to each category ranking as follows:

Rank in a

Particular Category

Points Given

01-10

11-20

21-30

31-40

41-50

51-60

61-70

71-80

81-90

91-92

10

9

8

7

6

5

4

3

2

1

Bonus 10th Category: A maximum of 10 bonus points are given based on company responses to 5 key questions on the Electronic Design 2015 Reader Survey.  Points are accumulated based on individual employee responses to each question and then averaged by the total number of respondents for a particular company.

B5. How satisfied are you in your current position? 

(a) Extremely satisfied  

(b) Very satisfied

(c) Satisfied

(d) Not very satisfied

(e) Not at all satisfied 

B7. Do you feel that you are being challenged intellectually with the engineering projects you work on at your present job?

(a) Sufficiently challenged

(b) Somewhat challenged

(c) Not challenged enough

C1. To the best of your knowledge, what is the engineering employment outlook at your company in the coming year?

(a) My company plans to increase the number of engineering jobs

(b) My company plans to maintain the current level of engineering jobs

(c) My company plans to scale back engineering staff

C4. Do you feel that your organization is more focused on employee retention this year as compared to a year ago?

(a) Yes

(b) No

C15. How concerned are you with the prospect of losing your job to outsourcing?

(a) Very concerned

(b) Somewhat concerned

(c) Not very concerned

(d) Not at all concerned

Maximum total line score points possible are 100.  Nine categories with a maximum of 10 pts. each plus a bonus 10th category with a maximum 10 bonus points.  Highest actual total equaling our No. 1, 2015 (based on fiscal 2014 data) ranking, was the 84 pts. awarded to Micron Technology.  Last year’s #1 ranked company was Sandisk with 86 pts.

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