This month we feature the top 25 publicly-traded companies headquartered in Nevada. These firms are traded on the New York Stock Exchange, the National Association of Securities Dealers automated quotations (NASDAQ) composite index or the American Stock Exchange. The first list shows the largest companies, ranked by revenue as declared in the annual report filed for their 2000 fiscal year. The second list ranks these companies by their total assets. Our thanks to the Las Vegas office of Deloitte & Touche CPAs for providing the preliminary information for this report.
The top 11 companies on each list are the same, with slight variations in ranking. These leaders were also the top 11 firms on the list we published in the 2000 TopRank Nevada Book of Lists, which ranked Nevada public companies by their 1999 revenue. Despite the current economic uncertainty, it is likely the Big Eleven will still be leading the pack when the 2001 numbers are tallied up. They include six gaming/resort companies, one gaming supply firm, two public utilities and two firms in the insurance/financial services field.
Gaming Leads the Pack
As might be predicted by anyone familiar with Nevada’s economy, gaming companies and their suppliers made up the bulk of the revenue and the assets in both Top 25 lists. Sixteen of the Top 25 firms either own resort properties or supply them with gaming devices and software. Of the $26.3 billion total annual revenue for the Top 25 public companies, $19.3 billion, or 73 percent, is directly related to the gaming and resort industry. Of the $51.6 billion total assets listed, $38.2 billion, or 74 percent, belong to these firms.
As of November 2000, Nevada’s gaming industry directly employed nearly 250,000 people, roughly 25.8 percent of Nevada’s workforce, according to the Nevada Resort Association. Of the 15 largest employers in Nevada, 11 are gaming companies. The health of this industry is therefore of vital concern to the state’s economy and employment. Nevada is also dependent on gaming taxes for a great deal of its state funds. In fiscal year 2000, the gaming industry was assessed more than $707 million in state gaming taxes and fees. More than $650 million was allocated directly to the state’s general fund, with an additional $57 million being dedicated to schools and counties. These do not include sales, property and activity taxes, which are also significantly affected by the resort/gaming industry.
One transaction that will affect the makeup of next year’s list is the upcoming merger between International Game Technology (IGT) and Anchor Gaming. Under this deal, announced in July, one share of IGT stock will be exchanged for each share of Anchor Gaming stock, and IGT will assume $430 million in debt from Anchor. The combined firm is expected to have a greater market value (calculated at shares outstanding times individual share price) than MGM Mirage, which is currently the largest public company in the state, ranked by market value. The merger is expected to be completed in the first quarter of 2002.
Public Utilities
Southwest Gas Corporation, an investor-owned utility with more than 1.3 million customers in Arizona, Nevada and California, added 63,000 customers last year, making it the fastest-growing natural gas distribution company in the nation. In 2000, significant increases in natural gas prices presented challenges for Southwest Gas and its customers. Although anticipated to some degree, the severity of the price increases came as a shock, and by year-end, the price of natural gas had tripled, sending customers’ winter bills to unprecedented heights. As another winter approaches, more rate hikes are planned.
Sierra Pacific Resources merged with Nevada Power in 1999 to become a statewide utility company, handling not only electrical power statewide, but also natural gas and water services in Northern Nevada. In June of this year, it sold its Northern Nevada water operation to the Truckee Meadows Water Authority, a coalition of local government agencies. Stock prices have rebounded somewhat from earlier lows caused by concerns about increased wholesale fuel prices, and company officials are hopeful that measures enacted by the Legislature will enable them to pass their costs along to consumers in an efficient manner.
Financial Services/Insurance
Through a comprehensive network of subsidiaries, Sierra Health Services offers health and life indemnity insurance, behavioral healthcare services, workers’ compensation, third-party administration for self-insured companies, hospice and home health programs and military health services. Its subsidiaries include: Southwest Medical Associates, Nevada’s largest medical group; Health Plan of Nevada, its largest HMO; Texas Health Choice; Sierra Health and Life Insurance Co.; Sierra Military Health Services; Family Home Hospice; Northern Nevada Health Network and several other companies.
Number six on our list, AMERCO, is the Reno-based holding company for U-Haul International, Inc. U-Haul, now in its 55th year, is familiar for its ubiquitous orange trucks and trailers, which are available at close to 17,000 locations nationwide. AMERCO’s other subsidiaries include: Oxford Life Insurance Company; Republic Western Insurance Company, which sells commercial and personal property and casualty policies; and Amerco Real Estate Company.
Mego Financial Corporation is a financial services company that provides consumer financing to purchasers of its timeshare interests and land parcels. Its major subsidiary is Preferred Equities Corporation, which markets eight interval-ownership resorts under the Ramada Vacation Suites banner. Other subsidiaries include Calvada Country, an 18,000-acre planned community in Pahrump; Central Nevada Utilities Company, which provides services to a large portion of the Pahrump Valley; and three ranch resort properties in Colorado.
The Rest of the Pack
American Pacific Corporation (AMPAC) manufactures specialty chemicals used in aerospace, military systems, explosives, fire extinguishing systems, automotive airbag systems and other fields. AMPAC is familiar to long-time Southern Nevada residents as the parent company of the ill-fated PEPCON rocket fuel plant, which exploded in 1988 in Henderson. After the disaster, manufacturing operations were moved to a remote location in Utah, but headquarters remained in Las Vegas. AMPAC is also involved in Southern Nevada real estate through one of its subsidiaries, Ampac Development, which is developing the Gibson Business Park and has an interest in the Ventana Canyon residential project.
Reno-based iGo Corporation develops and markets accessories including batteries, adapters and chargers for mobile technology products such as notebooks, cell phones and wireless devices. iGo develops its own line of mobile accessories under the Xtend and Road Warrior brands. Valence Technology, based in Henderson, serves a similar market with rechargeable batteries for portable communications devices. It manufactures lithium polymer batteries, which are less bulky than liquid lithium ion batteries and also less costly to produce.
Reno-based Meridian Gold is the only mining company to make our Top 25 list, even though mining, especially gold mining, remains an important part of Nevada’s economy. The depressed price of gold and other precious metals in the world market has led to a rash of mergers and acquisitions in recent years, so that most of the mining companies that operate in Nevada today are multinational firms based elsewhere. Meridian, established in 1981, is developing mines in Chile and Idaho in addition to its Rossi property near Carlin and a joint venture at Jerritt Canyon, northwest of Elko.
One-Hit Wonder Dept.
As veteran disc jockey Casey Kasem would say, PurchasePro.com made its first appearance on our list as “Number 22 with a bullet.” Unfortunately, the bullet in question was directed at itself. After its initial public offering in 1999, the online business-to-business marketplace reported sales of $6 million in its first year, and its stock price soared to $79.18. This was followed by a phenomenal growth rate of almost 1000 percent, leading to a sales figure the next year of $65 million. However, first quarter earnings for 2001 were extremely disappointing, and included a decline in revenue, a loss from operations and disclosure that further “adjustments” to the company’s past financial results would be required. Outraged stockholders initiated a class action suit, claiming the company’s executives had made statements causing the company’s stock to trade at artificially inflated levels. The firm’s flamboyant founder, Charles “Junior” Johnson, was forced out as CEO. With a stock price at press time of 67 cents, it is unlikely that PurchasePro.com will appear on another Top 25 list anytime soon.
Outlook for the Future
In the week following the September 11 terrorist strikes, when airline service was shut down and the future of tourism looked bleak, gaming stocks took a nosedive. Stock prices for the six largest public gaming companies, taken as a group, declined 33 percent from Friday, September 10 to Friday, Sept. 21, compared to an overall drop in the Dow of 14.2 percent, according to Mick Birge of Fair, Anderson & Langerman Investment Advisors. As the market began to rebound, gaming stocks began to improve as well. Just as no one can predict what will happen in the political arena in the coming year, it is equally impossible to make any accurate predictions as to the future of the resort industry, or to the Nevada economy in general. “In the long run,” said Birge, “people want to be entertained.” For the present, visitor volume is down, and the convention industry is also suffering, as several smaller conventions have been cancelled because of uncertainty about travel arrangements and the threat of war. Executives at the largest publicly-traded gaming firms face a challenge in the months ahead, attracting tourists and locals alike to their properties, in order to keep their stockholders satisfied.
Ripple effects from the gaming and tourism segment can be expected to impact other publicly-owned companies. Hardest-hit would be the gaming support companies, but if gaming employment declines and gaming taxes dry up, the entire state will suffer. Until true economic diversification comes to Nevada, it behooves each of us to visit our local casino buffet for dinner, take Granny to Bingo and invite our out-of-town friends and relatives to visit – and bring their gambling money with them.
