(FORTUNE Magazine) – SHOPPERS supplied most of the oomph in the service economy last year. By keeping cash registers ringing even after many economists thought they would be immobilized by the stock market crash, consumers carried the 50 largest retailers to a 9% jump in total profits. But aside from that and some gains by diversified service companies, life insurers, and the transportation sector, the FORTUNE Service 500 had a rough time in 1987. The dazzling results of an elite group of service companies were overwhelmed by a post-crash slump in the brokerage business, sour loans at savings institutions, and huge write-offs in Third World debt that produced a $5.3 billion loss for the largest commercial banks. Overall profits for the Service 500 plunged 22%. Compare that with the FORTUNE 500 industrial corporations -- those smoke-stack companies that had suffered so long -- whose profits rose a remarkable 41% last year (see FORTUNE, April 25). Retailing had several standout performers, but the champ was Wal-Mart, whose sales go right on doubling every three years or so. Last year the Arkansas discount chain moved up from No. 7 to No. 5 among retailers, with $16 billion in sales. Wal-Mart placed even better -- No. 3 -- in profits and in return on stockholders' equity. It is still a long way from toppling league leader Sears, which managed a 22% jump in profits despite the high cost of promoting its Discover charge card. Sears chief Edward Brennan can at least take comfort that the card turned a small profit in the first quarter of 1988 after $400 million of pretax losses in two years. Even as they kept the aisles filled with customers, some retailers found themselves on shopping lists. Canada's Robert Campeau, who picked up Allied Stores (No. 27), got into a bidding war early this year with R.H. Macy (No. 20) for Federated (No. 8). Campeau's winning bid of $6.6 billion leaves him with a mountain of debt, which he will retire by selling some of Federated's operations. Rebirth and restructuring put a glow on some of the 100 largest diversified service companies, whose total earnings rose 7%. Walt Disney's formerly lackluster movie studios have become hit factories under the three-year reign of CEO Michael Eisner, and revenues from theme parks have rocketed following steep increases in admission prices. Disney moved up the diversified service list from No. 28 to No. 20 in sales, delivering profits the way the sorcerer's apprentice delivered water in the movie Fantasia. On an 80% increase in profits last year, Disney jumped all the way from No. 8 by that ranking to No. 2. CBS's story, by contrast, was one of retrenchment. The television network plunged from No. 4 in sales to No. 25 as cost-cutting boss Laurence Tisch shucked businesses. The good news? CBS's profits, up 21%, were the highest in the group. For all its profit growth, the diversified service sector had some significant losers. Michael Dingman at least managed to pare the huge losses at Henley Group (No. 14), a collection of companies also known as Dingman's Dogs, by one-third, to $278 million. But the shakeout in health care left some other companies worse off than they had been. Hospital Corp. of America (No. 4), a moneymaker in the previous year, recorded a $58 million loss. Maxicare Health Plans (No. 39) had a $256 million hemorrhage. Diversified financial companies squeaked through 1987 with a mere 2.8% increase in total profits. Federal National Mortgage Association (No. 2), as well as Transamerica (No. 13) and insurer American International Group (No. 10), posted laudable gains. But profits dipped at other big insurers and a host of brokerage firms. Even top-ranked American Express endured a 57% decline, with earnings partly dragged down by a bad showing at the Shearson Lehman brokerage firm, 62% owned by the travel titan. The profit news looked good at two other service groups last year, but it was not really much to cheer about. The 50 largest life insurers together scored an 11% increase in net gain from operations, a measure akin to profits. But because of the nature of the business, year-to-year fluctuations, even of this magnitude, prove little. Earnings of the 50 biggest transportation companies were up nearly ninefold in 1987. But it was easy to rebound from the previous year, when a rash of restructurings and write-offs on the eve of tax law changes had virtually wiped out earnings. Burlington Northern, for example, had shown an $860 million loss. Last year the railroad (No. 6) was back on the profitability express with earnings of $369 million. + From here, the news is all downhill. Profits of the largest 50 utilities were off somewhat, partly because state regulators barred several electric companies from passing on all of the costs of nuclear plants to customers. That helped create a $557 million loss at Niagara Mohawk Power (No. 32). The 50 largest savings institutions suffered a horrendous 63% drop in profits as more and more bad loans were written off. The 100 largest commercial banks took the real bath, with the top 19 companies on the list all reporting pinched earnings or towering losses. Leading the losers were Manufacturers Hanover (No. 7) and top-ranked Citicorp, both of which set aside enormous reserves for a chunk of their Third World loans and wound up more than $1 billion in the deficit column. These losses far outweighed solid profit gains at robust regional banks.

CHART: BIGGEST GAINERS THE TEN LARGEST INCREASES IN SALES

RANK MAXICARE HEALTH PLANS S-39 97.2% TEXAS AIR T-3 92.3 AMERICA WEST AIRLINES T-35 74.9 LOMAS & NETTLETON FINAN. F-35 68.0 USAIR GROUP T-16 63.5 SOUTHMARK F-40 62.5 PHH GROUP S-53 57.3 RITE AID R-38 56.3 ALASKA AIR GROUP T-27 51.2 BINDLEY WESTERN S-68 48.4

THE TEN LARGEST INCREASES IN PROFITS

RANK TEXAS EASTERN U-44 7,482.6% ALLEGIS T-1 2,788.9 DELTA AIR LINES T-9 457.7 FIRST COMMERCE CORP. B-98 440.8 FIRST SECURITY CORP. B-90 430.8 KROGER R-4 379.0 AMERICAN PRESIDENT COS. T-19 340.3 FARM HOUSE FOODS S-92 293.3 HUMANA S-22 235.8 TW SERVICES S-31 200.8

CREDIT: NO CREDIT CAPTION: NO CAPTION DESCRIPTION: See above.

CHART: BIGGEST LOSERS THE TEN LARGEST DECREASES IN SALES

AON F-30 89.8% CBS S-25 43.6 CARTER HAWLEY HALE STORES R-33 29.8 CHARTER S-74 28.9 GELCO S-98 28.4 SOUTHLAND R-12 27.1 BENEFICIAL F-31 25.2 ENRON U-28 24.7 CULBRO S-88 23.7 PS GROUP S-99 23.2

THE FIVE LARGEST DECREASES IN PROFITS

BANKERS TRUST N.Y. CORP. B-8 99.7% AMERICAN CAPITAL CORP. I-29 98.0 RIGGS NATIONAL CORP. B-69 97.2 UNITED BANKS OF COLORADO B-82 97.0 SECURITY PACIFIC CORP. B-6 95.9

THE FIVE LARGEST LOSSES $ MIL. MAN. HAN. CORP. B-7 $1,140 CITICORP B-1 $1,138 FST. CITY BANCORP. OF TEX. B-46 $1,130 BANKAMERICA CORP. B-3 $955 CHASE MANHATTAN CORP. B-2 $895

Sales comparisons exclude commercial and savings banks, diversified financial and life insurance companies. Profit comparisons exclude life insurance companies and money losers.

KEY B COMMERCIAL BANKING COMPANIES page D13 F DIVERSIFIED FINANCIAL COMPANIES page D19 I SAVINGS INSTITUTIONS page D21 L LIFE INSURANCE COMPANIES page D25 R RETAILING COMPANIES page D29 S DIVERSIFIED SERVICE COMPANIES page D7 T TRANSPORTATION COMPANIES page D31 U UTILITIES page D33

CREDIT: NO CREDIT CAPTION: NO CAPTION DESCRIPTION: See above.

CHART: PROFIT LEADERS THE TEN HIGHEST RETURNS ON SALES

RANK AON F-30 84.4% ARGONAUT GROUP F-50 40.1 ILLINOIS POWER U-39 23.7 FARMERS GROUP F-39 23.7 OHIO EDISON U-27 23.2 PINNACLE WEST U-33 21.7 CENTERIOR ENERGY U-16 20.1 DETROIT EDISON U-18 19.4 COMMONWEALTH EDISON U-11 19.1 ALEXANDER & BALDWIN T-28 18.4

THE SERVICE 500 MEDIAN 2.9

Commercial banks, savings institutions, and life insurance compa nies are not included.

THE TEN HIGHEST RETURNS ON STOCKHOLDERS' EQUITY

RANK TIGER INTERNATIONAL T-22 287.7% MISSOURI-KANSAS-TEXAS R.R. T-48 155.7 SERVICEMASTER S-50 142.2 AMERICAN FINANCIAL F-28 77.0 CHARTER S-74 56.0 SUN CARRIERS T-34 49.5 LUCKY STORES R-15 46.3 ARGONAUT GROUP F-50 42.2 AIR EXPRESS INTERNATIONAL T-41 41.0 RELIANCE GROUP HOLDINGS F-29 40.6

THE SERVICE 500 MEDIAN 11.5

Life insurance companies are not included.

KEY B COMMERCIAL BANKING COMPANIES page D13 F DIVERSIFIED FINANCIAL COMPANIES page D19 I SAVINGS INSTITUTIONS page D21 L LIFE INSURANCE COMPANIES page D25 R RETAILING COMPANIES page D29 S DIVERSIFIED SERVICE COMPANIES page D7 T TRANSPORTATION COMPANIES page D31 U UTILITIES page D33

CREDIT: NO CREDIT CAPTION: NO CAPTION DESCRIPTION: See above.

CHART: INVESTMENT PERFORMANCE THE TEN HIGHEST TOTAL RETURNS TO INVESTORS, 1977-87 ANNUAL AVERAGE*

RANK CHARTER MEDICAL S-86 52.1% FOOD LION R-32 51.4 WAL-MART STORES R-5 46.0 COMDISCO S-61 43.4 M.D.C. HOLDINGS S-93 39.9 STATE STREET BOSTON CORP. B-68 39.7 WASTE MANAGEMENT S-26 39.3 GIANT FOOD R-37 38.2 DCNY F-41 36.3 BROWNING-FERRIS IND. S-46 35.9

THE FIVE LOWEST FIRST CITY BANCORP. OF TEX B-46 -27.7 MCORP B-33 -12.0 TEXAS AMER BANCSHARES B-88 -11.5 TRANSCON T-44 -10.5 EQUIMARK CORP. B-100 -10.3

THE SERVICE 500 MEDIAN 16.9

*Life insurance companies are not included.

| THE TEN HIGHEST TOTAL RETURNS TO INVESTORS, 1987*

RANK FOOD LION R-32 111.1% HOLIDAY S-45 70.1 NIKE S-76 70.0 GREAT A & P TEA R-13 61.7 SANTA FE SOUTHERN PACIFIC T-8 58.9 MCI COMMUNICATIONS U-43 50.0 VALLEY FEDERAL S&L ASS'N I-47 48.9 AMFAC S-33 46.0 OGDEN S-79 43.3 GIANT FOOD R-37 42.4

THE FIVE LOWEST FIRST CITY BANCORP. OF TEX. B-46 -87.9 FINANCIAL CORP. OF AMERICA I-1 -85.0 FIRST REPUBLICBANK CORP. B-13 -79.1 MAXICARE HEALTH PLANS S-39 -77.6 TEXAS AMER. BANCSHARES B-88 -77.2

THE SERVICE 500 MEDIAN -11.5

*Life insurance companies are not included.

CREDIT: NO CREDIT CAPTION: NO CAPTION DESCRIPTION: See above.

CHART: PRODUCTIVITY THE TEN HIGHEST IN SALES PER DOLLAR OF STOCKHOLDERS' EQUITY

RANK TIGER INTERNATIONAL T-22 $61.33 TURNER S-24 55.97 ROUNDY'S S-42 36.98 SERVICEMASTER S-50 33.79 FARM HOUSE FOODS S-92 25.84 LEASEWAY TRANS. T-21 25.73 ARA HOLDING S-9 25.59 MAYFLOWER GROUP T-29 25.27 AMERICAN FINANCIAL F-28 24.49 BINDLEY WEST. IND. S-68 24.17

THE FIVE LOWEST PINNACLE WEST CAPITAL U-33 $.57 ILLINOIS POWER U-39 .57 LONG ISLAND LIGHTING U-25 .55 OVERSEAS SHIPHOLDING GP. T-46 .44 AON F-30 .16

THE SERVICE 500 MEDIAN 3.10

*Commercial banks, savings institutions, and life insurance companies are not included.

THE TEN HIGHEST IN SALES PER EMPLOYEE

RANK $THOU. FED. NAT'L MORT. ASS'N F-2 $4,031 GELCO S-98 3,715 BINDLEY WEST. IND. S-68 2,814 SUBARU OF AMERICA S-40 1,700 GENERAL RE F-25 1,430 STUD LOAN MARKETING F-14 1,397 EMERSON RADIO S-87 1,157 COMDISCO S-61 1,068 KAY S-96 1,017 ENRON U-28 879

THE FIVE LOWEST OGDEN S-79 $23 SOUTHMARK F-40 22 TW SERVICES S-31 21 AON F-30 20 BEVERLY ENTERPRISES S-35 19

THE SERVICE 500 MEDIAN 157

*Commercial banks, savings institutions, and life insurance companies are not included.

CREDIT: NO CREDIT CAPTION: NO CAPTION DESCRIPTION: See above.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: THE 100 LARGEST DIVISIFIED SERVICE COMPANIES DESCRIPTION: Companies ranked by sales for 1987.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: THE 100 LARGEST COMMERCIAL BANKING COMPANIES DESCRIPTION: Companies ranked by assets for 1987.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: THE 50 LARGEST DIVERSIFIED FINANCIAL COMPANIES DESCRIPTION: Companies ranked by assets for 1987.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: THE 50 LARGEST SAVINGS INSTITUTIONS DESCRIPTION: Companies ranked by assets for 1987.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: THE 50 LARGEST LIFE INSURANCE COMPANIES DESCRIPTION: Companies ranked by assests for 1987.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: THE 50 LARGEST RETAILING COMPANIES DESCRIPTION: Companies ranked by sales for 1987.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: THE 50 LARGEST TRANSPORTATION COMPANIES DESCRIPTION: Companies ranked by revenues for 1987.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: THE 50 LARGEST UTILITIES DESCRIPTION: Companies ranked by assets for 1987.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: HIGHLIGHTS INDUSTRY MEDIANS DESCRIPTON: Ranking by industry of Service 500 companies, in nine areas of financial activity.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: HIGHLIGHTS THE MONEY LOSERS DESCRIPTION: Ranking of money-losing Service 500 companies.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: HIGHLIGHTS ARRIVALS AND DEPARTURES DESCRIPTION: List of companies, newly added, returned from earlier year, displaced from 1988 list.