To accommodate differences in operating profiles, separate scoring algorithms were applied to companies falling into one of the four groups according to fiscal 2011 revenues.

Ratios Selected From Regression Procedure

The scoring algorithms used to rank this year’s Top-Performing Companies were last revised for FY2009 results. They were compiled from an initial sampling of test ratios assigned to the four performance categories. Test ratios were calculated for most companies surveyed in the study over the 12-year period of 1998-2009 and subjected to an extensive compilation that generated preliminary values for total score. Preliminary results were then analyzed using a regression procedure that identified test ratios most closely supporting the preliminary values. Those ratios were selected to build the scoring algorithms that generated the rankings.

Computational Rules

Calculations are based on the latest operating results reported for fiscal years ended no later than Jan. 31. Mark-to-market asset impairment write-downs, gains/losses from currency-related derivatives and other non-operating transactions are excluded from all cash flow-related computations to normalize current and prior years’ results.

Where possible, companies with fiscal year-ends prior to Dec. 31 have been scored, using interim quarterly data, to the calendar year-end to better match operating performance between companies.

For non-U.S. companies, income statement data presented in native currencies have been converted to U.S. dollars on an averaged, annual basis. Balance sheet data have been adjusted to year-end currency conversion rates.

To be included in this survey, companies had to derive at least 30% of revenues from the aerospace and defense sector and have direct and/or indirect state ownership of less than 50%.

Further Review Opportunity Gained From Methodology Design

In addition to facilitating company rankings, total score and results shown in the tables for the four performance categories can also be interpreted as percentiles of performance for fiscal 2011, compared to peer results over the 12-year test period. A score of 85, for example, indicates that a company’s performance is within 14 points of the best result earned by a company in its peer group during the 1998-2009 period.