FAQ Definitions and Explanations
The 2006 Fortune 500
All companies on the list must publish financial data and must report part or all of their figures to a government agency. Private companies and cooperatives that produce a 10-K are, therefore, included; subsidiaries of foreign companies incorporated in the U.S. are excluded. Revenues are as reported, including revenues from discontinued operations when they are published on a consolidated basis (except when the divested company's revenues equal 50% or more of the surviving company's revenues on an annualized basis). The revenues for commercial banks and savings institutions are interest and noninterest revenues. Revenues for insurance companies include premium and annuity income, investment income, and capital gains or losses, but exclude deposits. Revenues figures for all companies include consolidated subsidiaries and exclude excise taxes. Data shown are for the fiscal year ended on or before Jan. 31, 2006. Unless otherwise noted, all figures are for the year ended Dec. 31, 2005.
Profits are shown after taxes, after extraordinary credits or charges, if any, appear on the income statement, and after cumulative effects of accounting changes. Figures in parentheses indicate a loss. Profit declines of more than 100% reflect swings from 2004 profits to 2005 losses. Profits for real estate investment trusts, partnerships, and cooperatives are reported but are not comparable with those of the other companies on the list because they are not taxed on a comparable basis. Profits for mutual insurance companies are based on statutory accounting.
Assets are company's year-end total.
Stockholders' equity is the sum of all capital stock, paid-in capital, and retained earnings at the company's year-end. Redeemable preferred stock whose redemption is either mandatory or outside the control of the company is excluded. Dividends paid on such stock have been subtracted from the profit figures used in calculating the return on equity.
The market-value figure shown was arrived at by multiplying the number of common shares outstanding by the price per common share as of March 17, 2006. If companies have more than one class of shares outstanding and an equivalent share number is not available, the respective market values for each share class are calculated and combined.
EARNINGS PER SHARE
The figure shown for each company is diluted earnings per share that appears on the income statement. The reporting of diluted EPS started on Dec. 15, 1997, when the Financial Accounting Standards Board began to implement standard 128, requiring companies to change the way they report earnings per share. The 1995 figure used for the ten-year earnings-growth calculation is primary earnings per share. Per share earnings are adjusted for stock splits and stock dividends. They are not restated for mergers, acquisitions, or accounting changes (other than FASB 128). Though earnings-pershare numbers are not marked by footnotes, if a company's profits are footnoted it can be assumed that earnings per share are affected as well. The five-year and ten-year earnings-growth rates are the annual rates, compounded.
TOTAL RETURN TO INVESTORS
Total return to investors includes both price appreciation and dividend yield to an investor in the company's stock. The figures shown assume sales at the end of 2005 of stock owned at the end of 1995, 2000, and 2004, respectively. It has been assumed that any proceeds from cash dividends and stock received in spinoffs were reinvested when they were paid. Returns are adjusted for stock splits, stock dividends, recapitalizations, and corporate reorganizations as they occur; however, no effort has been made to reflect the cost of brokerage commissions or of taxes. Results are not listed if shares are not publicly traded or are traded on a limited basis. If companies have more than one class of shares outstanding, only the most widely held and actively traded class has been considered. Total return percentages shown are the returns received by the hypothetical investor described above. The five-year and ten-year returns are the annual rates, compounded.
The median figures in the tables refer only to results of companies in the FORTUNE 500 (or 1,000 for industry categories), and no attempt has been made to calculate them in groups of fewer than four companies. The medians for profit changes from 2004 do not include companies that lost money in 2004 or lost money in both 2004 and 2005, because no meaningful percentage changes can be calculated in such cases.
This FORTUNE 500 Directory was prepared under the direction of senior list editor L. Michael Cacace and senior reporter Richard K. Tucksmith. Income statement and balance sheet data were reviewed and verified against published earnings releases, 10-K filings, and annual reports by reporter Douglas G. Elam and accounting specialists Rhona Altschuler and Kathleen Lyons. Market specialist Kathleen Smyth used the same sources to check earnings per share data. In addition, she used data provided by SunGard Market Data Services Inc. to calculate total returns and market capitalization. Database administrator Larry Shine provided technical support. Debra Turner assisted with the data gathering and verification. The data verification process was aided by information provided by SNL Financial LC on commercial banks, savings banks, and real estate investment trusts, and by Mergent Inc., Thomson Corp., and 10-K Wizard on all companies filing 10-Ks.
CHANGES SINCE PUBLICATION