Top 100 public companies: success under duress.

• Author: Price, Tom
• Position: Cover Story - Utah Business discusses five leaders in various sectors - Cover Story

By now we're all familiar with the story line: A lingering hangover from the dot-com collapse was dragging the country down into a mild recession last year, and then came 9/11. If a company was just clinging to the vine last summer, chances were the attacks of September knocked them loose. For others, cash flow and marketing problems were common, with no one (including bankers) seeming quite sure when or if the economy would recover.

Not surprisingly, reactions to the attacks were all over the map. Some companies seized the chance to buy out their smaller competitors, while others were themselves swallowed up by bigger fish. Some diversified their product mix, while others fell back and regrouped. Whatever the response, last year offered a good object lesson in crisis management, and a peek at how companies would face other unavoidable challenges on the road to success.

As we do every year, Utah Business looked at the top 100 public companies in the state, and selected five leaders in the healthcare, transportation, information technology, nutrition and telecommunications sectors to highlight. Reviewing our five picks, a few common themes emerged: In tough times, seek strategic partnerships to leverage your company's strengths. Innovate to keep customers interested, and as one of our respondents noted, make sure you keep pace with what your customers want. "We're always out in the marketplace, talking to the doctors and clinicians who are using our products everyday," says Nancy Schultz of Merit Medical.

Clear One Communications

Even with the downturn in the fortunes of Silicon Valley, technology was still a major player in the U.S. economy, and when you get right down to 0s and 1s, the technological revolution of the last several years is really about communication. ClearOne Communications Inc. (CLRO, formerly GNTR), has a growing lock on the space where the talk meets the tech. Formerly known as Gentner Communications, ClearOne provides audio, video and web conferencing tools and the services to run them. "We are, in effect, offering the total package," explains Bryce Benson, manager of Investor Relations.

They've built that package with aggressive acquisitions, such as the pending acquisition of E.Mergent Inc. (EMRT), fueled by a healthy $25 million round of private stock placement in Q4 '01. Providing one-stop shopping a la IBM has been very profitable: they've had 19 straight quarters of growth, and saw sales jump from $28.1 million in 2000 to $39.9 in 2001, and earnings hopped from .49 to .69 cents per share. ClearOne is also among the few companies that saw a bounce coming out of 9/11. "By virtue of the fact that we offer a service/product mix that is an alternative to travel," Benson explains. And Benson sees more growth ahead. "We have a proven management team, significant market opportunities, and are well positioned to take advantage of both," he opines.

Global Web

At the other end of the tech revolution is Global Web Inc. (ZWEB). Surprising as it may seem, tens of thousands of companies still need a push start onto the information superhighway. If you know your small business needs a web presence and online sales capability, but don't have time to figure out how to get from web novice to native speaker, then you're just the person Global Web is looking for.

"If you build widgets, and want to sell them online, you need a web site. You would also need a way for someone to buy them," explains secretary/treasurer Lee Burbidge. Global web does both, by, providing web design, hosting and e-commerce support, exclusively targeting small entrepreneurs. Because locking in the charge commission can be so lucrative, Global Web gives away the web design and hosting as a loss leader for the e-commerce traffic. Last fall's terror attacks may have slowed Global Web's growth, but the company still posted a healthy 17 percent growth in revenue, from $10 million in 2000 to $12 million in 2001. Burbidge and staff retrenched, cutting costly seminars and focusing instead on infomercials and partnerships with banks to gain access to small business owners. Burbidge is confident their niche approach of pursuing small business entrepreneurs will pay rich rewards. "There are millions of opportunities out there," he effuses.

Motor Cargo

Focusing on the small fry has also been the key to success for Motor Cargo Industries Inc. (CRGO). Rather than approaching the major companies head-on, Motor Cargo focuses on a niche in the massive transportation sector. "We're a little unique, in that we offer less than truckload" refrigerated service, says CFO Lynn Wheeler, "in fact we're the only one." Although the company experienced a dip, last fall wasn't too hard on Motor Cargo. After all, "as the economy goes so does transportation; however, there will always be a certain amount of traffic," says Wheeler. Revenue edged up from $131.1 million in 2000 to $138.3 in 2001.

Their continued strength after almost 80 years in business, combined with their highly focused business model, caught the eye of a suitor looking to enhance its own market position. In November, Motor Cargo was bought out by rail shipping powerhouse Union Pacific, which was looking to offer its customers a full range of transit options.

Although now a unit of company, Motor Cargo holds on to the same attributes that made it such a solid performer, namely the ability to meet customers' needs. "The thing that probably has allowed us to compete is our sensitivity to our customers, and being small enough to customize to meet their needs, and add value without compromising profitability." Wheelers says.

Nature's Sunshine

Meeting the needs of individual customers produces positive results regardless of the industry. For the same reason people like to talk face-to-face with their doctor, they also, prefer individual attention in their other healthcare choices. "People are always interested in their own health," says Doug Faggioli, COO of Nature's Sunshine Products (NATR), which has built success by talking to customers one-on-one Reyenues climbed from $314.8 million in 2000 to $318.7 in 2001, while earnings stayed steady. Faggioli pegs their success to a continually updated product mix and an aggressive sales team. Just this spring, for example, Nature's Sunshine Products became the first company to market the Healthetech, a device for measuring resting metabolic rates, which was previously available only in expensive clinics.

Their real strength though, is in their sales force. Nature's Sunshine Products has a staggering 600,000 distributors worldwide, with 18,000 "sales leaders" each selling a minimum of $1,000 per month. "This last year, overall, our field sales force grew by 12 percent," says Faggioli. "We've done a number of things to incentivize our sales force," to keep them motivated during tough economic times.

Merit Medical

Having a motivated sales force will occasionally carry a weak product line, and vice versa, but it's the race company that has both a great product line and sales team to match it South Jordan-based Merit Medical Systems (MMSI) manufactures disposable diagnostic and therapeutic devices used in cardiology and radiology, and posts impressive gains thanks to a winning combination of top-quality products, a substantial sales force, and the repositioning of their main competition. How impressive is their growth. Try explosive. Their net income rose a staggering 80 percent, from $827,000 to $6.7 million on revenue of $91 million in 2000 and $104 million in 2001. During the same period, earnings per share leapt from 8 cents to 58 cents. Success depends on the value offered to customers, says Director of Corporate Communications Nancy Schultz, who adds, "We sell for about the same price as other companies, but are of a higher quality. Meanwhile, when their former main competitor was taken over and refocused, the door was wide open for Merit's robust field staff move in. "We can make a call on a customer weekly, rather than every couple months," says Schultz, who believes more growth for Merit. "Our unit sales are growing quite a bit faster than the procedural growth rate, which tells me we re growing market share."

Whatever their response to last year's challenges, all of these companies were optimistic about the future and confident in their ability to continue to grow and to deliver profits for their investors. They also shared a belief in the benefits of being located in the Beehive State. "There are a lot of positives for being in Utah," says NSP's Fragiolli. "We have a very highly educated workforce, (and that has) given us the ability to expand both our manufacturing and sales force." By sticking to the basics of solid customer service, product and service value, and responsiveness to market conditions, these companies are weathering the current economic storm with aplomb. Check out the chart on the next page to see how the rest of Utah's Top 100 Public Businesses handled their challenges.

Top Public Companies BY SALES REVENUE FROM MOST RECENT 10-K FILINGS WITH THE SEC THIS YEAR'S RANK COMPANY ADDRESS/WEBSITE 1 Zions Bancorp. 100 S. Main St., (801) 524-4787 P Ste. 1380 (801) 524-2646 F Salt Lake City, Utah 84111 www.zionsbank.com 2 Questar Corp. 180 E. 100 South (801) 324-5555 P Salt Lake City, (801) 324-5483 F Utah 84111 www.questar.com 3 Novell Inc. 1800 S. Novell Place (801) 861-7000 P Pravo, Utah 84606 (801) 228-5077 F www.novell.com 4 Nu Skin Enterprises Inc. 75 W. Center St. (801) 345-1000 P Pravo, Utah 84601 (801) 345-5999 F www.nuskin.com 5 Skywest Inc. 444 S. River Rd. (435) 634-3000 P St. George, Utah 84790 (435) 634-3305 F www.skywest.com 6 Franklin Covery Corp. 2200 Parkway Blvd. (801) 975-1776 P West Valley City, (801) 817-8747 F Utah 84119 www.franklincovery.com 7 Weider Nutrition 2002 S. 5070 West International Inc. Salt Lake City, (801) 975-5000 P Utah 84104 (801) 975-7687 F www.weider.com 8 Nature's Sunshine 75 E...