| | Methodology/Excerpt INTRODUCTION & METHODOLOGY WHAT DOES THIS REPORT COVER? With the globalization of markets, greater foreign competition, and the reduction of entry barriers, it becomes all the more important to benchmark a company’s financial indicators against other firms on a worldwide basis. This report reflects to two inescapable trends: (1) a return to fundamentals, and (2) globalization. World stock markets have recently witnessed a return to fundamental financial analysis. Sound management as opposed to “hype” will in the long run generate shareholder value. This philosophy has lead to a greater emphasis on financial fundamentals and benchmarking. Not benchmarking in a traditional sense, but benchmarking at the global level as markets become all the more international and firms create transnational and global strategies. How does a firm's asset structure vary compared to global benchmarks? Does it hold more cash and other short term assets, or does it concentrate its assets in physical plant and equipment? On the liability side, does a company have a higher percent of payables compared to the benchmarks, or does it hold a higher concentration of long-term debt? The structure of the income statement is more telling. Does the firm have a relatively higher costs of goods sold, operating costs, or income taxes compared to its global benchmarks? Are their returns on equity higher? Are profit margins greater? Are inventories held longer? While these are the classic questions raised in most graduate MBA courses on managerial finance, in a globalizing economy the method to answer these questions may not be simple. If we consider that an industry spans multiple countries, continents and currencies, how can one perform benchmarking? This report does so by going beyond traditional analyses by considering companies competing in the same or similar industrial classification at a global level. Doing so, however, is not an obvious task. First, one needs to find firms competing in the same sector, but not necessarily competing directly with the company in local markets. These firms should not be perceived, therefore, to be direct competitors to the company in question, but simply those that have been classified by various sources (e.g. EDGAR or similar foreign filings), as competing to serve customers in the same link of the value chain, or broad industrial classification, as identified by SIC, NAICS or similar codes. Second, given the international nature of the task, one needs to control for exchange rate volatility. Finally, one needs use reasonably comparable financial line items or standards. The goal of this report is to save the reader time. It is designed to assist consultants, financial managers, strategic planners, and corporate officers in gauging indicators of a company’s financial structure compared to firms competing or participating in the same economic sector, at the global level. Westside Acquisitions P.L.C., is it financially competitive? There is no absolute answer to this question. This report is not about whether a particular company or industry has performed well or poorly in the past or will do so in the future. Such conclusions are left to the reader. Westside Acquisitions P.L.C. neither sponsored nor endorsed the analysis that follows. METHODOLOGY This report analyzes deviations between Westside Acquisitions P.L.C. (London, United Kingdom) and international industrial benchmarks. Based on the methodology described below, the following chapters report a common-size statement or vertical analysis of Westside Acquisitions P.L.C. vis-à-vis global benchmarks. In contrast to this report, most vertical analyses focus on benchmarking against domestic ratios, often published by government agencies or commercial sources (e.g. Value Line, Dun and Bradstreet, and Standard & Poor’s). This type of analysis is commonly conducted by creditors, prospective investors, chief financial officers, lenders, and a corporation’s strategic management team. For those unfamiliar with this type of analysis, frequently taught in graduate schools of business, the reader is recommended Jae K. Shim and Joel G. Siegel’s recent book titled Financial Management. In their discussion of financial statement analysis and ratios, Skim and Siegel (p. 42-43), describe common-size statement (vertical analysis) as follows: A common-size statement is one that shows each item in percentage terms. Preparation of common-size statements is known as vertical analysis, in which a material financial statement item is used as a base value and all other accounts on the financial statement are compared to it. In the balance sheet, for example, total assets equal 100 percent, and each individual asset is stated as a percentage of total assets. Similarly, total liabilities and stockholders’ equity are assigned a value of 100 percent and each liability or equity account is then stated as a percentage of total liabilities and stockholders’ equity, respectively. … For the income statement, a value of 100 percent is assigned to net sales, and all other revenues and expense accounts are related to it. It is possible to see at a glance how each dollar of sales is distributed among various costs, expenses, and profits. The authors suggest that vertical analyses involve industry-based comparisons. Such a comparison “allows you to answer the question, ‘How does a business fare in the industry?’ You must compare the company’s ratios to… industry norms.” (p. 43-44) In this report, I calculate an industry norm by looking at firms at the global level, as opposed to a local level. In what follows, I will describe the seven-stage methodology used in performing this analysis. Each stage should be seen as a working assumption behind the numbers presented in later chapters. Stage 1. Industry Classification. This stage begins by classifying the company into an industry. For this, I have relied on a combination of the North American Industry Classification System (NAICS pronounced “Nakes”), a relatively new system for classifying business establishments, and the older Standard Industrial Classification (SIC) system. Adopted in 1997, NAICS codes are the new industry classification codes used by statistical agencies of the United States. NAICS was developed jointly by the U.S., Canada, and Mexico to provide comparability in statistics about business activity across North America. After 60 years of service, the outdated SIC system was retired on October 1, 2000, leaving only the NAICS codes for official use. The NAICS classification system adds some 350 new industries and represents a revision to over 60% of the previous SIC industries. Despite its official retirement, the SIC system is still commonly used (and often reported in firm’s financial statements). For most companies in the world, classification within either the new NAICS or older SIC systems is a rather straight forward exercise. For some, however, it can be problematic. This is true for several reasons. The first being that the SIC or NAICS classification systems are rather broad for many product and industry categories (a firm’s products or services may be only a minor aspect of the classification’s definition). The second is that some firms’ activities span multiple codes. Finally, it is possible that a firm is classified by one source using its SIC code, and by another using its NAICS code, and by a third using both. Furthermore, some sources do not report either code, but instead use qualitative statements of the firm’s activities. Nevertheless, if one wishes to pursue a vertical analysis, some classification needs to take place which selects a peer group. In making this classification, one can rely on a number of sources. In some countries, firms must “self” classify in official periodic reports (e.g. annular reports, 10Ks, etc.) to public authorities (such as the Securities and Exchange Commission). These reports are then open for public scrutiny (e.g. EDGAR filings). In other cases, commercial data vendors or private research firms provide SIC/NAICS codes for specific companies. These include:
It is interesting to note that commercial vendors often report different qualitative descriptions and industrial classifications from one to another. These descriptions and classifications may also be different from those reported by the firm itself. Anyone hoping to perform a benchmarking study, therefore, has to make a judgment call across these various sources in order to determine a reasonable classification. In this report, I have decided a meta-analytic process, by combining various sources (including linking a classification’s keywords to qualitative descriptions of the firm’s product line). In cases of inconsistency, the most recent or globally comparable available is chosen. Again, the overall goal is to classify firms, which either produce similar products, offer similar services, or are in the same stage of the value chain for a particular industrial classification. In the case of this report, the SIC code selected is: 73 which is defined as “Business Services”. This classification should be seen as a working assumption. In order to obtain a more detailed discussion of this classification, the reader is referred to the web sites developed by the U.S. Census Bureau: http://www.census.gov/epcd/www/naics.html. Basic definitions and descriptions are provided at: http://www.census.gov/epcd/www/drnaics.htm#q1. A full correspondence table between SIC and NAICS codes, and detailed definitions are given at http://www.census.gov/epcd/www/naicstab.htm. Stage 2. Firm-level Data Collection. A global search is conducted across over 20,000 companies in over 40 major economies for those that (1) may be included in the classification from Stage 1, and (2) report financials (balance sheet and income statements). It should be noted that the public-domain financials can be either historic or projections. It should also be noted that even historic figures can be modified in the future and often represent “estimates” of performance. Stage 3. Standardization. Once collected, public domain financial figures of firms identified in Stage 2 are standardize into comparable categories (assets, liabilities, and income). From there, we eliminate all currency effects by standardizing within each category (creating ratios). In order to maintain comparability over time and across companies and countries, vertical analysis is used. In the case of a firm’s assets, I treat the total assets as equaling 100, irrespective of the value of the local currency. All other assets are then calculated as a percent of total assets. In this way, the structure of the firm’s assets can be easily interpreted and compared with international benchmarks. For liabilities, total liabilities and equity are indexed to equal to 100. For the income statement, total revenue is indexed to equal 100, and all other figures are calculated as a percent of these figures. Stage 4. Filtering. Not all the firms selected in Stage 2 or the ratios calculated in Stage 3 are used for the global benchmarks, as a number of companies are purposely dropped from the analysis, even though they may fall within the classification. This is justified by the “outlier” phenomenon that plagues such analysis. The problem lies in that any given company in the benchmarking pool may be facing some exceptional event or may be organized in an exceptional way so as to make its ratios vastly different from others in the same classification. By including such firms, the global benchmarks can be overly skewed. In many countries, firms are organized into holding groups. These groups nominally have very few employees (e.g. 4 to 25 employees), but have extremely large assets, liabilities, or revenues. As such, the inclusion or exclusion of firms having this form of management can affect the ratios and benchmarks reported. Likewise, some firms have no net sales, no assets, no liabilities, or ratios. Others have ratios that appear implausible for a normal or viable company. In order to not allow these firms to affect the global benchmarks, I have attempted to choose only those firms with reasonable financials. Finally, in some countries, detailed financials are not available or are not comparable to either the company in question or the global norm (e.g. various forms of depreciation). In this case, only those which exist and are comparable are reported. The details, therefore, that comprise a given ratio or set of ratios may not be reported. This may lead to the addition of several ratios, not summing to the whole. Stage 5. Calculation of Global Norms. Once the filtering process has eliminated outliers, a final list of companies included in the global averages is compiled. In this report, the following companies are included (country of headquarters in parentheses, exchanges, and ticker symbols); again this list should be seen as a working assumption: Company (Country) | Exchange | Ticker | Aaron Rents Incorporated (USA) | NAS | RNT A | Ablest, Inc. (USA) | ASE | AIH | ABM Industries Incorporated (USA) | NYSE, BSE, MSE, PBW, | ABM | ACCTON TECHNOLOGY (Taiwan) | TAI | | ACI Telecentrics, Inc. (USA) | OTC | ACIT | Ackerley Group Incorporated (USA) | NYSE | AK | Acxiom Corp. (USA) | NAS | ACXM | ADE Corporation (USA) | NAS | ADEX | Adecco SA (Switzerland) | GVA, OTH, ZHR | ADEN | Admiral Plc (United Kingdom) | | ADC | Adobe Systems Incorporated (USA) | MSE, NAS | ADBE | Advanced Digital Information Corpn (USA) | NAS | ADIC | Advanced Technology Services Limited (South Africa) | JNB | ADT | AdvancePCS (USA) | NAS | ADVP | Advent Software Incorporated (USA) | NAS | ADVS | Aegis Group PLC (United Kingdom) | MAD | AGS | Aggreko plc (United Kingdom) | LON | AGK | Agora SA (Poland) | WAR | AGORA | Aino NV (Netherlands) | AMS | | Algeco (France) | PAR | ALG | Allbecon AG (Germany) | DUS, OTH | ABX | Alliance Data Systems Corp. (USA) | NYSE | ADS | Allied Telesis K.K. (Japan) | TYO | 6835 | Alpha Systems Inc. (Japan) | TYO | 4719 | AMBIT MICROSYSTEMS CORP (Taiwan) | TAI | | American Dental Partners, Inc. (USA) | NAS | ADPI | American Management Systems, Incorporated (USA) | NAS | AMSY | American Software, Inc. (USA) | NAS | AMSWA | Analysts International Corporation (USA) | NAS | ANLY | Anite Group PLC (United Kingdom) | LON | AIE | Anixter International Incorporated (USA) | NYSE | AXE | AOL Time Warner, Inc. (USA) | NYSE | AOL | AremisSoft Corporation (USA) | OTC | AREM | Argo21corp (Japan) | TYO | 4692 | Ariane Group (Belgium) | BRU | ARI | Arinso International NV (Belgium) | BRU | ARIN | Art Technology Group Incorporated (USA) | NAS | ARTG | Articon Integralis AG (Germany) | DUS, OTH | AAG | Asatsu-DK, Inc. (Japan) | TYO | 9747 | Ashtead Group PLC (United Kingdom) | LON | AHT | ASI Solutions Incorporated (USA) | | ASIS | Aspen Technology Incorporated (USA) | NAS | AZPN | ATC Healthcare, Inc. (USA) | OTC | ATCHA | ATI Technologies Inc (Canada) | TOR | ATY | Atos SA (France) | PAR | SAX | Aubay (France) | PAR | AUB | Ausy SA (France) | PAR | OSI | Autodesk Inc (USA) | NAS | ADSK | Avalix Groep N.V. (Netherlands) | | AVALI | Avant! Corporation (USA) | NAS | AVNT | Baldwins Industrial Services Plc (United Kingdom) | LON | BLD | Barra Inc. (USA) | NAS | BARZ | Barrett Business Services, Inc (USA) | NAS | BBSI | BEC World Public Co Limited (Thailand) | BAN | BEC | Bechtle AG (Germany) | DUS, OTH | | Bell Industries Incorporated (USA) | ASE | BI | Bellsystem24 Inc. (Japan) | TYO | 9614 | Biken Techno Corporation (Japan) | OSA | 9791 | Black Box Corporation (USA) | NAS | BBOX | BMC Software Inc. (USA) | NYSE | BMC | Brandon Hire PLC (United Kingdom) | LON | BDH | Brunel International N.V. (Netherlands) | AMS | BRNL | BSQUARE Corporation (USA) | NAS | BSQR | Business Objects (France) | PAR | BOB | CACI International Inc (USA) | NAS | CACI | Cadence Design Systems Inc (USA) | NYSE | CDN | Canon Software Inc. (Japan) | OTH | 9623 | Cap Gemini Ernst & Young S.A. (France) | PAR | CAP | Cap Gemini N.V. (Netherlands) | BRU, GVA, ZHR | CAP | Capcom Co., Ltd. (Japan) | OSA | 9697 | Catalina Marketing Corporation (USA) | NYSE | POS | Cats, Inc. (Japan) | TYO, OTH | 9786 | CCL Industries Incorporated (Canada) | MON, TOR | CCQ B | CDI Corporation (USA) | NYSE, MSE, PBW | CDI | Cenit AG Systemhaus (Germany) | DUS, FRA, OTH | CSH | Central Security Patrols Co., Ltd. (Japan) | TYO | 9740 | Cerner Corporation (USA) | NAS | CERN | CeWe Color Holding (Germany) | FRA, OTH | CWC | Ceyoniq AG (Germany) | DUS, FRA, OTH | CEE | Check Point Software Technologies Ltd. (Israel) | FRA, OTH | | Cheil Communications Inc. (South Korea) | SEO | 30000 | Chiyoda Integre Company Limited (Japan) | OTH | 6915 | Cider Sante SA (France) | PAR | CID | Cisco Systems Incorporated (USA) | NAS | CSCO | Citrix Systems Inc (USA) | NAS | CTXS | CMG PLC (United Kingdom) | LON | CMG | CoActive Marketing Group, Inc. (USA) | NAS | CMKG | Cofidur Societe Anonyme (France) | PAR | COF | Cognizant Technology Solutions Corpn (USA) | NAS | CTSH | Cognos Incorporated (Canada) | NAS, TOR | CSN | COMFORCE Corporation (USA) | ASE | CFS | Comptel Oyj (Finland) | HEL | CTL1V | Compucom Systems Inc (USA) | NAS | CMPC | CompuDyne Corporation (USA) | NAS | CDCY | Computacenter PLC (United Kingdom) | LON | CCC | Computer Engineering & Consulting Ltd. (Japan) | TYO | 9692 | Computer Network Technology Corporation (USA) | NAS | CMNT | Computer Sciences Corporation (USA) | NYSE, BSE, MSE, PBW, | CSC | Compuware Corporation (USA) | NAS | CPWR | Comverse Technology Incorporated (USA) | NAS | CMVT | Copart, Inc. (USA) | NAS | CPRT | Cordiant Communications Group PLC (United Kingdom) | LON | CRI | Corpcom Limited (South Africa) | JNB | CPM | Creo Products Incorporated (Canada) | TOR | CRE | Creyf's NV (Belgium) | BRU | CREI | Crown Group, Inc. (USA) | NAS | CNGR | d+s online AG (Germany) | FRA | | Daiwa Kosho Lease Co., Ltd. (Japan) | OSA, TYO | 9762 | Dassault Systemes SA (France) | PAR, OTH | DSY | Data Communication System Co., Ltd. (Japan) | TYO | 9682 | Deltek Systems Inc (USA) | NAS | DLTK | Dendrite International Inc (USA) | NAS | DRTE | Devoteam SA (France) | PAR | 7379 | Diamond Computer Service Co., Ltd. (Japan) | TYO | 9645 | Diamond Lease Company Limited (Japan) | TYO | 8593 | Digital China Holdings Ltd. (Hong Kong) | HKG | | Dimension Data Holdings Plc (United Kingdom) | LON | | DIS Deutscher Industrie Service AG (Germany) | DUS, FRA, OTH | DDE | Documentum, Inc. (USA) | NAS | DCTM | DST Systems Inc. (USA) | NYSE | DST | Econocom Group SA (Belgium) | BRU | ECON | Ecsoft Group Plc. (United Kingdom) | LON | ECS | EDB Business Partner ASA (Norway) | OSL | EDB | EDB Gruppen A.S. (Denmark) | CPH | EDB | Electro Rent Corp. (USA) | NAS | ELRC | Electronic Arts. Inc. (USA) | NAS | ERTS | Electronic Data Systems Corporation (USA) | NYSE | EDS | Eloyalty Corporation (USA) | NAS | ELOY | Enea Data AB (Sweden) | STO | ENEA | Enterprise Plc (United Kingdom) | LON | ETR | Entra Data AB (Sweden) | | ENTR-A | Equifax, Incorporated (USA) | NYSE, MSE, PBW | EFX | ESR (France) | PAR | 7296 | Eurodirect Marketing S.A. (France) | PAR | 5449 | EuroGuard (France) | PAR | | F.Y.I. Incorporated (USA) | NAS | FYII | Fair Isaac & Co Incorporated (USA) | NYSE | FIC | Filenet Corporation (USA) | NAS | FILE | Fininfo (France) | PAR | FIF | First Data Corporation (USA) | NYSE | FDC | Fiserv Incorporated (USA) | NAS | FISV | FJA AG (Germany) | FRA | FJA | Formula Systems (1985) Ltd. (Israel) | TEL | | Founder (Hong Kong) Limited (Hong Kong) | HKG | 418 | Foundry Networks Inc (USA) | NAS | FDRY | Frontstep, Inc. (USA) | NAS | FSTP | Fuji Soft ABC Incorporation (Japan) | TYO | 9749 | Fujitsu Support and Services Inc. (Japan) | TYO, OTH | 4706 | Galileo International, Inc. (USA) | NYSE | GLC | Gerber Scientific Inc. (USA) | NYSE, BSE, MSE, PBW, | GRB | Getronics NV (Netherlands) | AMS | GTN | GFI Informatique (France) | PAR | GFI | GFT Technologies AG (Germany) | DUS, OTH | GFT | Great Plains Software, Inc. (USA) | NAS | GPSI | Grey Global Group Incorporated (USA) | NAS | GREY | Groupe Crit (France) | PAR | CEN | Groupe Focal (France) | PAR | GFO | Groupe Silicomp (France) | PAR | 6379 | Groupe Sodifrance SA (France) | PAR | 7256 | Groupe Steria (France) | PAR | RIA | Grupo Picking Pack SA (Spain) | OTH | GPP | Gruppo Finmatica SpA (Italy) | ISE | FIN | Hall Kinion & Associates Incorporated (USA) | NAS | HAKI | Harte-Hanks Incorporated (USA) | NYSE | HHS | Harvey Nash Group plc (United Kingdom) | LON | HVN | Headway Corporate Resources, Inc. (USA) | NAS | HEA | Healthcare Services Group Inc (USA) | NAS | HCSG | Heidrick & Struggles International, Inc. (USA) | NAS | HSII | Hewden Stuart Plc (United Kingdom) | LON | HEWS | Hitachi Information Systems, Ltd. (Japan) | TYO | 9741 | Hitachi Software Engineering Co., Ltd. (Japan) | TYO | 9694 | Hotel Reservations Network, Inc. (USA) | NAS | ROOM | Hummingbird Limited (Canada) | TOR, OTH | HUM | Hypercom Corporation (USA) | NYSE | HYC | Hyperion Solutions Corporation (USA) | NAS | HYSL | Hyundai Info.Tech. (South Korea) | SEO | 26180 | I S B Corporation (Japan) | OTH | 9702 | IBS AB Publikt Aktiebolag (Sweden) | STO | IBS-B | ICT Automatisering N.V. (Netherlands) | NZL | ICT | ICT Group, Inc. (USA) | NAS | ICTG | IDS Scheer AG (Germany) | DUS, FRA, OTH | IDS | Igate Capital Corporation (USA) | NAS | IGTE | Imation Corporation (USA) | NYSE | IMN | Impresa S.G.P.S. S.A. (Portugal) | LIS | | IMS Health Incorporated (USA) | NYSE | RX | Incepta Group Plc (United Kingdom) | LON | ITA | Indra Sistemas (Spain) | MAD, OTH | IDR | Ines Corporation (Japan) | OSA, TYO | 9742 | Inet Technologies Incorporated (USA) | NAS | INTI | Infonet Services Corporation (USA) | NYSE | IN | INFORMATION CREATIVE CO., LTD. (Japan) | OTH | 4769 | Information Resources Incorporated (USA) | NAS | IRIC | Infosys Technologies Limited (India) | BOM | INFY | Ing. C. Olivetti & C., S.p.A. (Italy) | BRU, FRA, PAR, ISE, | OL | Inktomi Corporation (USA) | NAS | INKT | Innodata Corporation (USA) | NAS | INOD | Intec Inc. (Japan) | TYO, OTH | 9738 | Integrated Systems, Inc. (USA) | NAS | | Interep National Radio Sales, Inc. (USA) | NAS | IREP | Intergraph Corporation (USA) | NAS | INGR | Interior Services Group Plc (United Kingdom) | LON | ISG | Internet Security Systems, Inc. (USA) | NAS | ISSX | InterVoice-Brite, Inc. (USA) | NAS | INTV | Intrasoft SA (Greece) | ATH | INSOR | Iona Technologies Plc (Ireland) | DUB | | ISS A.S. (Denmark) | CPH | ISS-B | Itautec Philco S/A (Brazil) | SOP | | Itelligence A.G. (Germany) | DUS | | IX Knowledge Incorpoated (Japan) | OTH | 9753 | Japan Information Processing Service Co. (Japan) | TYO | 9777 | Japan Maintenance Co., Ltd. (Japan) | OSA | 9787 | Jastec Co., Ltd. (Japan) | OTH | 9717 | JDA Software Group Incorpated (USA) | NAS | JDAS | Jippii O.Y.J. (Finland) | HEL | | Juniper Networks Inc (USA) | NAS | JNPR | Jurong Technologies Industrial Corpn Ltd (Singapore) | SIN | | Kanamoto Co., Ltd. (Japan) | TYO, OTH | 9678 | KAZ Computer Services Limited (Australia) | SYD | | Keane Incorporated (USA) | ASE | KEA | Kelly Services Incorporated (USA) | NAS | KELYA | Kewill Systems Plc (United Kingdom) | LON | KWL | Kforce Inc. (USA) | NAS | KFRC | Kleindienst Datentechnik AG (Germany) | DUS, OTH | KLD | Korn/Ferry International (USA) | NYSE | KFY | Kronos Incorporated (USA) | NAS | KRON | Labor Ready Inc (USA) | NYSE | LRW | Landis Group NV (Netherlands) | NZL | LANDS | Lason, Inc. (USA) | OTC | LSON | Lavendon Group PLC (United Kingdom) | LON | LVD | LCI Technology Group NV (Netherlands) | AMS | LCI | Lectra Systemes (France) | OTH | LSS | Logica plc (United Kingdom) | LON | LOG | Lusomundo Media SGPS S.A. (Portugal) | LIS | JGT | Lynx Group PLC (United Kingdom) | LON | LNX | M.M.T. Computing plc (United Kingdom) | LON | MMT | M+S Elektronik AG (Germany) | DUS | MUS | MacLellan Group PLC (United Kingdom) | LON | MLG | Macromedia Inc. (USA) | NAS | MACR | Magic Software Enterprises Limited (Israel) | TEL | | Manhattan Associates Incorporated (USA) | NAS | MANH | MapInfo Corporation (USA) | NAS | MAPS | marchFIRST, Inc. (USA) | NAS | MRCHQ | Mastek Limited (India) | BOM | | Mears Group PLC (United Kingdom) | LON | MER | Media 6 (France) | PAR | EDI | MemberWorks Incorporated (USA) | NAS | MBRS | Mentor Graphics Corporation (USA) | MSE, NAS | MENT | Mercury Interactive Corporation (USA) | NAS | MERQ | Metasolv Incorporated (USA) | NAS | MSLV | Metro Information Services Incorporated (USA) | NAS | MISI | Metro One Telecommunications, Inc. (USA) | NAS | MTON | MGX Holdings Limited (South Africa) | JNB | MGX | MICE Group Plc (United Kingdom) | LON | MEG | Micromuse Inc. (USA) | NAS | MUSE | Microsoft Corporation (USA) | MSE, NAS | MSFT | Midway Games, Inc. (USA) | NYSE | MWY | Miroku Jyoho Service Co., Ltd. (Japan) | TYO | 9928 | MKC-STAT Corporation (Japan) | TYO | 9750 | Modis Pro Services Incorporated (USA) | NYSE | MPS | Mphasis BFL Ltd (India) | BOM | | MPW Industrial Services Group, Inc. (USA) | NAS | MPWG | MRO Software Inc. (USA) | NAS | MROI | MSC Software Corporation (USA) | NYSE, MSE | MNS | National Data Corporation (USA) | NYSE | NDC | National Equipment Services, Inc. (USA) | NYSE, BSE, CIN, PBW, | NSV | National Processing Incorporated (USA) | NYSE | NAP | National TechTeam, Inc. (USA) | NAS | TEAM | Navision A.S. (Denmark) | CPH, OTH | NAVI | NCR Corporation (USA) | NYSE | NCR | NEC System Integration & Construction (Japan) | TYO | 1973 | Neff Corp. (USA) | NYSE | NFF | Nemetschek AG (Germany) | DUS, FRA, OTH | NEM | Neopost S.A. (France) | PAR | NEO | Nestor Healthcare Group PLC (United Kingdom) | MAD | NSR | Nice Systems Ltd. (Israel) | TEL | NICE | Nippon Computer System Co., Ltd. (Japan) | OSA | 9709 | Nippon Kanzai Co., Ltd. (Japan) | OSA | 9728 | Nippon System Development Company Limited (Japan) | OSA | 9759 | Nippon Systemware Co., Ltd. (Japan) | TYO, OTH | 9739 | Nishio Rent All Co., Ltd. (Japan) | OSA | 9699 | Nomura Co., Ltd. (Japan) | TYO | 9716 | Novell Inc (USA) | MSE, NAS | NOVL | OAO Technology Solutions, Inc. (USA) | NAS | OAOT | OBIC Co., Ltd. (Japan) | TYO, OTH | 4684 | Observer AB (Sweden) | STO | SIFO-A | Omnicom Group Incorporated (USA) | NYSE | OMC | Omnium de Gestion et de Developpement Immobilier (France) | PAR | CGM | Onyx Software Corporation (USA) | NAS | ONXS | Oracle Corporation (USA) | MSE, NAS | ORCL | Oracle Corporation Japan (Japan) | TYO | 4716 | Ordina NV (Netherlands) | AMS | ORDI | Orix Corporation (Japan) | OSA, TYO, OTH | 8591 | Parity Group plc (United Kingdom) | LON | PTY | Partnertech Ab (Sweden) | STO | PART | PEC Solutions, Inc. (USA) | NAS | PECS | Penton Media Incorporated (USA) | NYSE | PME | Peoplesoft Incorporated (USA) | NAS | PSFT | Personnel Group of America Inc. (USA) | NYSE | PGA | Phoenix Technology (USA) | NAS | PTEC | Photobition Group Plc (United Kingdom) | LON | PHB | PHS Group P.L.C. (United Kingdom) | LON | | Pittston Brink's Group (USA) | NYSE, BSE, CIN, MSE, | PZB | Podnik Vypocetni Techniky AS (Czech Republic) | PRG | | Pomeroy Computer Resources, Inc. (USA) | NAS | PMRY | Poolia Ab (Sweden) | STO | POOL-B | Portal Software Incorporated (USA) | NAS | PRSF | Preferred Employers Holdings, Inc. (USA) | OTC | PEGI | Primetech Electronics Inc (Canada) | TOR | PME | Professional Detailing Incorporated (USA) | NAS | PDII | Proffice AB (Sweden) | STO | PROE-B | Progress Software Corporation (USA) | NAS | PRGS | Prosegur Compania de Seguridad S.A. (Spain) | OTH | PSG | PSI Data Systems Ltd. (India) | BOM | | Publicis S.A. (France) | PAR | PUB | Publigroupe A.G. (Switzerland) | GVA, OTH, ZHR | PUBN | Radiant Systems Inc (USA) | NAS | RADS | Rainbow Rentals, Inc. (USA) | NAS | RBOW | Rainbow Technologies Incorporated (USA) | NAS | RNBO | Rand A Technology Corporation (Canada) | TOR | RND | RCM Technologies, Inc. (USA) | NAS | RCMT | RCO Holdings Plc (United Kingdom) | | RHL | realTech AG (Germany) | FRA | RTC | Reed Executive PLC (United Kingdom) | LON | RDX | Reliance Security Group Plc (United Kingdom) | LON | RSG | Remedy Corporation (USA) | NAS | | Remedytemp Inc (USA) | NAS | REMX | Renaissance Learning, Inc. (USA) | NAS | RLRN | Rent-Way, Inc. (USA) | NYSE | RWY | Reynolds & Reynolds Company (USA) | NYSE, MSE, PBW | REY | Ricoh Leasing Company, Ltd. (Japan) | TYO | 8566 | RM plc (United Kingdom) | LON | RM | Robert Half International Incorporated (USA) | NYSE | RHI | Robotic Technology Systems Plc (United Kingdom) | LON, OTH | RTS | royalblue group plc (United Kingdom) | LON | RYB | Ryoyo Electro Corporation (Japan) | TYO | 8068 | S1 Corporation (South Korea) | SEO | 12750 | Sanix Incorporated (Japan) | OSA, TYO, OTH | 4651 | Sap AG Systeme Anwendungen Produkte in der Datenverarbeitun | DUS, FRA, OTH, ZHR | SAP | Sapient Corporation (USA) | NAS | SAPE | Sapura Telecommunications Berhad (Malaysia) | KUL | STBS | Satyam Computer Services Limited (India) | BOM | | Schawk, Inc. (USA) | NYSE, MSE | SGK | Science Systems Plc (United Kingdom) | LON | SSY | SCM Microsystems, Inc. (USA) | NAS | SCMM | Seartec Limited (South Africa) | JNB | SET | Seat Pagine Gialle S.p.A. (Italy) | ISE | SPG | Secom Co Ltd (Japan) | OSA, TYO | 9735 | Securicor PLC (United Kingdom) | LON | SCR | Securitas AB (Publ) (Sweden) | STO | SECU-B | SEI Investment Co (USA) | NAS | SEIC | Sema Plc (United Kingdom) | LON | SEM | Semcon Ab (Sweden) | STO | SEMC | SER Systeme AG (Germany) | DUS, FRA, OTH | SES | SGS Societe Generale de Surveillance Holding Societe Anonym | GVA | SGSI | Simcorp AS (Denmark) | CPH | SIM | Singapore Computer Systems Limited (Singapore) | SIN | S33 | Sira Business Services Plc (United Kingdom) | LON | SIB | Sitel Corporation (USA) | NYSE | SWW | Skilled Engineering Limited (Australia) | MBE, SYD | | SNT Group NV (Netherlands) | AMS | | Societe Generale D'Affichage (Switzerland) | OTH, ZHR | AFFN | Softbank S.A. (Poland) | OTH, WAR | | Software AG (Germany) | DUS, FRA, OTH | SOW | Software Spectrum, Inc. (USA) | NAS | SSPE | Soleri (France) | PAR | SOI | Sopra Group (France) | PAR | SOP | SOS Staffing Services, Inc. (USA) | NAS | SOSS | SPAR Group, Inc. (USA) | NAS | SGRP | Spector Photo Group SA (Belgium) | BRU | SPE | Spherion Corporation (USA) | NYSE | SFN | SPSS Inc. (USA) | NAS | SPSS | SR Teleperformance (France) | PAR | RCF | Staff Leasing, Inc. (USA) | NAS | GVHR | Startek Incorporated (USA) | NYSE | SRT | Strategic Distribution, Inc. (USA) | NAS | STRD | Strongco Inc (Canada) | TOR | SQP | Sumisho Computer Systems Corporation (Japan) | TYO | 9719 | Sumitomo Corporation's Leasing, Ltd. (Japan) | OSA, TYO | 8592 | SunGard Data Systems Inc. (USA) | NYSE | SDS | Sybase Incorporated (USA) | NYSE | SY | Sycamore Networks, Inc. (USA) | NAS | SCMR | Sykes Enterprises, Inc (USA) | NAS | SYKE | Symantec Corporation (USA) | NAS | SYMC | Synergie S.A. (France) | PAR | SDG | Synergon Informatika Rt (Hungary) | OTH, BUD | | Syntel Incorporated (USA) | NAS | SYNT | Systematics AG (Germany) | DUS, OTH | YYS | Systems & Computer Technology Corp (USA) | NAS | SCTC | Systex Corp. (Taiwan) | TAI | | Tab Products Co. (USA) | BSE, ASE | TBP | Take-Two Interactive Software Incorporated (USA) | NAS | TTWO | TDC SOFTWARE ENGINEERING Inc. (Japan) | OTH | 4687 | TDS Informationstechnologie AG (Germany) | DUS, FRA, VIE, OTH | TDS | Teamlog S.A. (France) | PAR | TLO | Techem AG & Co (Germany) | FRA | TNH | Technisource, Inc. (USA) | NAS | TSRC | Tecnomen Oyj (Finland) | HEL | | Teleca A.B. (Sweden) | STO | SIGM-B | Telefonica Publicidad e Informacion S.A. (Spain) | FRA, MAD, OTH | | Telelogic AB (Sweden) | STO | TLOG | Teleplan International N.V. (Netherlands) | AMS, DUS, FRA | | Teletech Holdings Inc (USA) | NAS | TTEC | Telindus Group NV (Belgium) | BRU | TEL | Tempo Services Limited (Australia) | SYD | TEM | Tempus Group PLC (United Kingdom) | LON | TSG | The Interpublic Group of Cos Inc (USA) | NYSE, MSE, TOR | IPG | The Sage Group PLC (United Kingdom) | LON | SGE | Thiel Logistik AG (Luxembourg) | DUS, LUX | | Tier Technologies, Inc. (USA) | NAS | TIER | Tietoenator Oyj (Finland) | HEL | TIE1V | Timberline Software Corporation (USA) | NAS | TMBS | TKC Corporation (Japan) | TYO | 9746 | TMP Worldwide Inc (USA) | NAS | TMPW | Tokyo Biso Kogyo Corporation (Japan) | TYO | 9615 | Tokyo Leasing Co., Ltd. (Japan) | TYO | 8579 | TOKYO Lithmatic Corporation (Japan) | OTH | 7861 | Torex PLC (United Kingdom) | LON | TOX | Tosnet Corporation (Japan) | OTH | 4754 | Total System Services, Inc. (USA) | NYSE, MSE, PBW | TSS | Toukei Computer Co., Ltd. (Japan) | TYO | 4746 | Toyo Information Systems Inc. (Japan) | OSA, TYO | 9751 | Toyo Tec Co., Ltd. (Japan) | OSA | 9686 | Trans Cosmos Inc. (Japan) | TYO | 9715 | Transaction Systems Architects Inc (USA) | NAS | TSAI | Trend Micro Incorporated (Japan) | OSA, TYO, OTH | 4704 | TV 4 AB (publ) (Sweden) | STO | TV4-A | UBI Soft Entertainment S.A. (France) | PAR | UBI | Unigraphics Solutions Inc (USA) | NYSE | UGS | Unilog (France) | PAR | UNG | United Rentals Inc (USA) | NYSE | URI | United Services Group NV (Netherlands) | AMS | UNIQ | Universal Compression Holdings, Inc. (USA) | NYSE | UCO | Utility Services Corporation (Australia) | SYD | TEC | Vedior NV (Netherlands) | AMS | VDOR | Vestcom International, Inc. (USA) | NAS | VESC | Viad Corporation (USA) | NYSE, BSE, CIN, MSE, | VVI | Vivendi Universal SA (France) | PAR | EX | Volt Information Sciences, Inc. (USA) | NYSE | VOL | VP Plc. (United Kingdom) | MAD | VBRO | Wackenhut Corpn (USA) | NYSE, MSE | WAK | Wall Data Incorporated (USA) | NAS | | Wesco Financial Corporation (USA) | CIN, PCS, ASE | WSC | Westaff Incorporated (USA) | NAS | WSTF | WM-Data AB (Sweden) | STO | WM-B | WPP Group Public Limited Company (United Kingdom) | NAS, LON | WPP | Xansa Plc. (United Kingdom) | LON | FI | XeTel Corporation (USA) | NAS | XTEL | Xpedior Incorporated (USA) | OTC | XPDR | Yahoo! Inc (USA) | NAS | YHOO | Zomax, Inc. (USA) | NAS | ZOMX |
Based on this list, the ratios discussed in Stage 3 are calculated for every firm, and then averaged to create global benchmarks. No weighting is used in this average. Stage 6. Projection of Deviations. The goal of this report is not to present the raw ratios or averages, but to present the difference between the company’s estimated ratio and the projected global average for that same ratio. Furthermore, it can be insightful to know the location of each ratio within the distribution of the companies used in Stage 5. These deviations, in fact, can be seen as projections or likely scenarios for the future. This is often true for two reasons. First, while a company’s financials change from year to year, its ratios are often stable. This is especially true for the global benchmarks which represent averages across many companies. From a purely Bayesian sense, the difference between the company’s recent ratios and the benchmarks are a reasonable prior for future deviations. This is true, even if the entire industry is hit by an external or exogenous shock, such as an oil crisis or economic slowdown. In other words, I assume that the structure of the variance in the industry’s financials remains stable. Second, many of the data are based on preliminary reports that might be changed in future filings. As forecasts, therefore, the numbers derived from these are also forecasts of past and future performance (with associated uncertainties). The calculation of the difference between a company's ratios and the global benchmarks is meant to yield roughly approximate forecasts, or "useful measures". Again, the forecasts are based on the assumption of relative stability. This assumption has proven extremely robust in previous applications of this methodology (i.e. today’s weather is a good predictor of tomorrow’s weather, but not the weather three years from now). |
