Recession Takes Toll on Firms’ Earnings : Regional survey: Only 24 of 62 publicly owned companies posted higher second-quarter profits compared with a year earlier.

The sluggish economy took its toll among local businesses in the second quarter, with less than half of the publicly owned companies in a regional survey reporting higher earnings compared with a year earlier.

In The Times survey of 62 local companies with headquarters from Ventura to Glendale, only 24 posted higher profits compared with a year earlier. An additional six rebounded from year-earlier losses and reported profits in the latest quarter.

Nineteen companies posted lower earnings and 12 reported losses, which in some cases were substantial. One company showed no earnings change from a year earlier.

Most of the companies surveyed reported results for their fiscal quarters that ended June 30, although in a few cases, the companies’ latest quarters ended in April or May.

Companies in recession-prone industries such as art, real estate and banking generally fared the worst. Glenfed Inc., for example, lost $137.1 million--the biggest loss among local companies--because of a big jump in its loan-loss reserves for its commercial finance operations and investment lending business.

Glenfed, the parent of Glendale Federal Bank, also set aside $90 million for losses on the sale of foreclosed real estate and assets in its real estate development subsidiary. It was Glenfed’s second huge loss in less than a year; in December, it posted a quarterly loss of $140.8 million--a record quarterly deficit for the company--mainly because of sharply increased reserve provisions against commercial real estate loan troubles. For its fiscal year that ended June 30, Glenfed lost $231.7 million.

The company with the second-biggest loss in the quarter was Amgen Inc. in Thousand Oaks, but that was only because the high-flying biotechnology concern had some extraordinary charges. The company lost $48.4 million after taking a pretax charge of $129 million to cover damages assessed against it by an arbitrator who ruled that Amgen violated a marketing agreement with Johnson & Johnson. Not counting the charge, Amgen would have earned $40.1 million.

Amgen’s revenue, meanwhile, surged 115% in the latest quarter to $153.9 million from $71.7 million a year earlier, mainly on the strength of sales of its patented drug erythropoietin, or EPO, on which Amgen has a near monopoly in the U. S. market.

Several regional companies showed turnarounds from last year, including Nu-Med Inc., an Encino-based hospital operator that turned in a $28.4-million profit contrasted with a $1.92-million loss a year earlier. Nu-Med said the comeback reflected gains from its sale of three hospitals, a benefit from its early retirement of some debt and a tax credit.

Alpharel Inc., a Camarillo computer imaging company, continued a comeback begun last year under the direction of chief executive Robert T. Bruce. In the latest quarter, Alpharel earned $403,000, contrasted with a year-earlier loss of $77,000.

Bruce, a former General Electric vice president, slashed costs and helped snag several big contracts, helping Alpharel post its fourth quarterly profit in a row. Largely because of Bruce’s restructuring, Alpharel last year reported its first yearly profit since 1986.

Profits also returned to Foothill Group Inc., a financial services concern with executive offices in Agoura Hills and West Los Angeles. The company earned $1.28 million, overcoming a year-earlier loss of $3.97 million. Foothill, which specializes in loans to new or troubled companies, attributed the turnaround to the company’s continued recovery from losses on its junk-bond portfolio.

As for local giants Walt Disney Co. and Lockheed Corp., both had lower earnings compared with the same quarter a year earlier.

Disney’s profit dropped 31%, to $165.5 million from $238.4 million a year earlier, largely because the Persian Gulf War cut travel to its theme parks and because it has been unable to come up with a hit film since last summer’s “Dick Tracy” release. It was the third consecutive quarter that Burbank-based Disney posted a decline in year-to-year profit.

Lockheed, the Calabasas-based aerospace concern, saw its second-quarter profit fall 14%, to $70 million from $81 million a year earlier, mainly because its corporate tax rate jumped to 35% in 1991 from 21% in 1990 due to changes in accounting rules. Before taxes, Lockheed’s operating profit rose to $134 million in the second quarter from $128 million a year earlier.

Lockheed attributed the pretax gain to cost savings due to the completion of developing and testing advanced tactical fighter prototypes. In April, a Lockheed-led team was awarded a $73-million contract from the Pentagon for the advanced tactical fighter, or ATF, program.

Some of the biggest profit gainers locally were insurance companies.

For example, 20th Century Industries, the Woodland Hills-based insurance holding company, said its profit jumped 46%, to $28.4 million from $19.4 million a year earlier, due to continued growth in its automobile and homeowner insurance lines.

Under the long-held guidelines of founder and chairman Louis W. Foster, the company’s primary operating unit, 20th Century Insurance Co., has always focused on insuring low-risk customers, keeping costs down by not using outside agents and offering relatively low prices.

Profit at CII Financial Inc., a workers compensation insurer based in Burbank, soared 94% as the company continued to focus on the market for small- to medium-sized accounts--employers that generate less than $50,000 in annual premiums. That market, the company said, has less competition than the market for larger accounts.

For the quarter that ended June 30, CII’s net income climbed to $3.24 million from $1.67 million a year earlier on a 23% increase in revenue, to $25.4 million from $20.6 million.

Encino-based Pac Rim Holding, another workers compensation insurer, also reported higher profit. Its earnings surged 72%, to $1.84 million, on a 41% rise in revenue--gains that the company attributed to its focus on providing insurance to service-oriented businesses, which it says carry less risk than other businesses hit harder by the recession.

Another insurance company, Zenith National Insurance Corp. in Woodland Hills, said its profit increased 11% in the second quarter, to $11.5 million, on a 6% increase in revenue to $135.4 million. Zenith attributed the higher profit to improvement in its investment portfolio.

Reduced costs helped companies in a variety of industries post big gains. TransTechnology Corp., a Sherman Oaks-based defense and industrial products concern, said lower costs helped triple its second-quarter earnings, to $847,000 from $294,000 a year earlier.

But while local insurers and others made it through the recession unscathed, companies more dependent on consumer spending for non-essential items were hit hard.

Van Nuys-based Martin Lawrence Limited Editions Inc., a once fast-growing chain of shopping mall art galleries, lost $1.68 million in the quarter, contrasted with a $506,000 profit a year earlier. The recession and the art market’s slump were to blame, the company said, and in April, the chain announced that it would close six galleries.

The travel industry didn’t fare much better, making it a difficult quarter for Calabasas-based Players International Inc., which sells discount packages for gaming resorts. Players saw its profit sink 77% from a year earlier, to $71,000. The company said its costs of attracting new members went up, and fewer members renewed.

But with the economy now on the rebound, new memberships began to pick up in July and Players said it expects August to be its best month since January.

The recession also put the brakes on sales of new recreational vehicles, causing profit at motor-home maker Rexhall Industries Inc. to plunge 80% in the latest quarter, to $242,000 from $1.22 million a year earlier. For the first half of 1991, the Santa Clarita company lost $217,000, contrasted with year-earlier earnings of $1.7 million.

In addition to Glenfed, the quarter ended badly for most of the area’s other large financial institutions, which generally saw lower earnings because of declining interest rates and the continuing need to bolster reserves against losses from troubled real estate loans.

CU Bancorp’s earnings, for example, dropped 40% from the year-earlier quarter, to $1.1 million, in large part because it doubled its loan-loss provisions to $900,000 contrasted with $450,000 for the second quarter of 1990. CU, the Encino parent of California United Bank, said its non-performing loans totaled 4.6% of total loans as of June 30, contrasted with 1.8% last year.

Valley Federal Savings, which for the last 18 months has been under government orders to boost its capital, had better-than-expected results in the latest quarter but still saw its profit drop 19%, to $5.1 million from $6.3 million a year earlier.

One exception to the problems afflicting the savings and loan industry was Citadel Holding Corp., the Glendale-based parent of Fidelity Federal Bank. Citadel credited its focus on residential loans--which it said carry less risk than commercial loans--for a 4% rise in earnings in the latest quarter, to $7.09 million.

Quarterly Profits For publicly held companies with headquarters from Ventura to Glendale. Figures are for fiscal quarters ending during April to June.

Profit Company Industry (Loss) % Change* Amgen Biotechnology ($48.4 million) N/A CII Financial Insurance $3.24 million +94% Walt Disney Entertainment $165.5 million -31% Glenfed Banking ($137.1 million) N/A IHOP Restaurants $1.1 million +103% Lockheed Aerospace $70 million -14% Micropolis Disk drives $253,000 -89% Newhall Land Real estate $3.97 million -39% Pinkerton’s Security $2.76 million N/A Rexhall Industries Motor homes $242,000 -80% 20th Century Inds. Insurance $28.4 million +46% Zenith National Insurance $11.5 million +11%

* Compared with the year-earlier quarter.

N/A: Not applicable for comparison due to current or year-earlier losses.