Star 40

May 5, 2014

These companies don’t qualify for our rankings

They’re outside the universe of Kansas and Missouri companies that meet U.S. filing requirements, though some have made the rankings in the past.

AgJunction Inc., based in Hiawatha, Kan., trades publicly and releases audited financial information. Still, it doesn’t qualify for Star 40.

Neither do Liberty Bancorp Inc., which ownsBankLiberty in the Kansas City area, or Paul Mueller Co. in Springfield, though their shares trade and they release audited financials.

None of them meets the filing requirements set by the Securities and Exchange Commission — a key requirement to make the Star 40 universe. Meeting those requirements means more disclosures and extra costs.

Wes Dittmer, chief financial officer of AgJunction, said as an SEC filer the company would have to hire an internal auditor earning “six figures” and incur other costs under the 2002 Sarbanes-Oxley Act that grew out of scandals at Enron Corp. and WorldCom Inc.

With $60 million in revenues, AgJunction could not justify the cost. Its shares continue to trade in Canada, which had been the company’s home before moving the headquarters to Kansas last year.

Similar reasons led other companies already in the Star 40 universe to stop filing with the SEC, a decision to “go dark.” Liberty Bancorp and Paul Mueller each did so years ago.

Blue Valley Ban Corp., which owns the Bank of Blue Valley in Overland Park, went dark in January but had met the SEC’s reporting requirements through the end of 2013, the period Star 40 covers.

This year’s rankings take in 43 businesses based in Kansas or Missouri (excluding the St. Louis area) that publicly report financial results with the SEC and whose shares trade publicly.

The Star 40 formula, in its 14th year, focuses on business basics, using yardsticks that measure any public enterprise’s success.

We gathered data from the companies’ SEC filings with help from Bloomberg. The rankings compared the eight quarters of financial data for each company that most closely matched calendar years 2013 and 2012.

Star 40 ranks companies by their revenues, their earnings and their stock market value, and by the changes in each of those values from the previous year. A company’s Star 40 score consists of its average rank in the six categories. A perfect score would be 1, ranking first in every category.

To calculate a company’s growth in net income, we compared the change in its earnings with the absolute value of its 2012 net income. We use net income attributable to the company when appropriate.

The formula subtracts the 2012 results from the 2013 results. We divided the result by 2012 income. If a company lost money in 2012, the minus sign produced nonsensical results, so we stripped away the minus sign before the division.

Analysts faced with such nonsense typically ignore the result, but that would force us to knock a company out of Star 40 contention if it had a loss in the prior year, even if it had posted a fabulous 2013 profit.

Our approach gives that company credit for rebounding after a bad year.

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