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Globe 100

Globe 100 methodology

May 19, 2009
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The Globe 100 ranks the best-performing publicly traded corporations based in Massachusetts by how well they increased sales, profits, and returns for shareholders during 2008.

Standard & Poor's Compustat gathered information on 225 Bay State companies from sources that included Securities and Exchange Commission filings, commercial news services, and corporate and government reports.

To be considered for the Globe 100 a company must:

• Maintain its corporate headquarters in Massachusetts;

• Trade its shares on the New York Stock Exchange, the Nasdaq Stock Market, or the American Stock Exchange;

• Have been a public company for all of 2008; and

• Report revenue and profit for both 2007 and 2008 by April 6, 2009.

Royalty trusts and closed-end and exchange-traded funds are excluded. Real estate investment trusts and limited partnerships are included in Globe 100 calculations, but excluded from certain other charts, such as dividend yields, because of the methods used to account for income.

Rankings are derived from financial data for the four quarters ending closest to December 31, 2008, and for corresponding quarters a year earlier.

The companies are then ranked on four criteria:

1) Return on average equity, a measure of how effectively shareholder money is employed;

2) One-year percentage change in revenue;

3) One-year percentage change in profit margin; and

4) 2008 revenue.

Companies are assigned a score in each of the four categories, based on their rankings; the four scores are then added together. Companies are ranked highest to lowest, based on their total score. Ties are broken based on 2008 revenue.

For example, this year's top performer, Cubist Pharmaceuticals of Lexington, ranked second in return on equity; third in change in revenue; eighth in change in profit margin; and 45th in revenue, giving the company a total score of 58.

Return on shareholder equity is determined by dividing 2008 net income by the average of 2007 and 2008 shareholder equity.

Revenue for banks is calculated by adding net interest income after loan-loss provisions to total noninterest income.

Profit margin is determined by dividing net income by revenue. The one-year change in profit margin is calculated by computing the percentage change in profit margin between 2007 and 2008.

Net income, or profit, equals net income from continuing operations, before extraordinary or nonrecurring items, as filed on the company's income statement. Net income reflects income available to common shareholders. If a company includes special charges, such as merger costs, in its pretax figures, the numbers will not be considered extraordinary and will be included in net income. (This occurs most often in a pooling of interests.)

Stock prices in all tables and stories have been adjusted for splits.

To be considered for the Growth 50 chart, a company must be based in Massachusetts and have been public in both 2007 and 2008. Companies are ranked by a composite score of two-year average annual sales and profit growth rates.

For the fourth year, the Globe also used the same criteria to rank the top performers among publicly traded companies that are based outside Massachusetts but are among the state's 200 largest employers.