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'Baldrige Index' Outperforms S&P 500 for Fourth Year

For Immediate Release: February 9, 1998

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Contact: Jan Kosko
301-975-2767

For the fourth year in a row, the fictitious "Baldrige Index" has outperformed the Standard & Poor’s 500 by almost 3 to 1, says the Commerce Department’s National Institute of Standards and Technology.

The "Baldrige Index" is made up of publicly-traded U.S. companies that have received the Malcolm Baldrige National Quality Award during the years 1988 to 1996. NIST "invested" a hypothetical $1,000 in each of the six whole company winners of the Baldrige Award—ADAC Laboratories, Eastman Chemical Co., Federal Express Corp., Motorola Inc., Solectron Corp. and Zytec Corp. The investments were tracked from the first business day of the month following the announcement of award recipients (or the date they began public trading) to Dec. 1, 1997. Adjustments were made for stock splits. Another $1,000 was hypothetically invested in the S&P 500 at the same time.

NIST found that the group of six outperformed the S&P 500 by more than 2.7 to 1, achieving a 394.5 percent return on investment compared to a 146.9 percent return for the S&P 500.

NIST also tracked a similar hypothetical investment in a group made up of the six whole company Baldrige Award winners and the parent companies of 12 subsidiary winners. This group of 18 companies outperformed the S&P 500 by 2.4 to 1, a 362.3 percent return on investment compared to a 148.3 percent return for the S&P 500.

Since the past few years have been one of the stock market’s most profitable periods in the 20th century, NIST also tracked an "investment" in Baldrige Award winning companies for the period starting Jan. 2, 1997, and ending Dec. 1, 1997. In this study as well, the six whole company winners outperformed the S&P 500 by 1.4 to 1, achieving a 46.3 percent return compared to a 32.3 percent return for the S&P 500. Similar NIST studies since 1994 also found that Baldrige Award winning companies outperformed the S&P 500.

The Baldrige Award is presented to U.S. companies in recognition of their achievements in quality and business performance. Typically, Baldrige Award winners show improvements in all aspects of their business, including customer satisfaction and retention, financial and marketplace performance, productivity, product and service quality and human resource performance and development.

"The Baldrige assessment process helps a company focus on what’s important, including its key strategies, processes and business results," said Harry Hertz, director of the Baldrige National Quality Program at NIST. NIST manages the award program in conjunction with the private sector.

"Companies committed to ongoing performance improvement and performance excellence say the feedback report that each Baldrige Award applicant receives provides a solid basis for achieving overall business success," said Hertz.

The Malcolm Baldrige National Quality Award was established by Congress in 1987 to enhance U.S. competitiveness by promoting quality awareness, recognizing quality achievements of U.S. companies and publicizing successful performance strategies. The award is not given for specific products or services. Since 1988, 31 companies have won the award.

As a non-regulatory agency of the Commerce Department's Technology Administration, NIST promotes U.S. economic growth by working with industry to develop and apply technology, measurements and standards. NIST was selected by Congress to design and manage the Baldrige Award program because of its role in helping U.S. companies compete, its world-renowned expertise in quality control and assurance, and its reputation as an impartial third party.

NOTE TO EDITORS: A copy of the 3-page stock study is available, reporters can call NIST Public and Business Affairs at (301) 975-2762 to get a copy. Others should call the NIST Baldrige Award office at (301) 975-2036 or fax a request to (301) 948-3716.