The Tough Get Going - Page 3 of 4

The Tough Get Going

he sold Def Jam Recordings for more than $100 million. In that deal, he retained the post of chairman of the record label. “Def Jam had pretty much leveled off at $180 million and within two years it was doing $600 million,” explains Simmons from his cell phone en route to work. “I don’t regret it because I don’t know if I could have given [Def Jam] the same opportunity.”

He expects to duplicate the same type of success through the Phat Farm deal. “Phat Farm is near $350 million, which is great, but now the opportunity to do a billion dollars is much closer,” asserts Simmons, who is focusing on the UniRush financial services division and Run Athletics apparel unit to drive revenues. In April, UniRush launched the Rush Card, a prepaid Visa debit card that generated more than 240,000 customers. Run Athletics’ sneaker line produced gross sales of $130 million.

Some say that the government’s attempt to rebound the economy with tax and interest rate cuts has had little impact on the fortunes of the BE 100S. Some industrial/service CEOs may beg to differ. A number of firms have proven to be beneficiaries of the Federal Reserve’s low interest rate posture. For example, the Fed’s policy has been able to keep real estate a prime growth sector, maintains Michael Russell, the newly-m
inted CEO of H.J. Russell & Co. (In one of the most historic management moves among BE 100S companies last year, construction magnate Herman Russell passed the torch to his youngest son.) “The economy was struggling in 2003, but as an organization we did well,” Russell says of the Atlanta-based construction and real estate development firm that grossed $303 million and earned the No. 12 spot on this year’s list. Contributing to the company’s success: its participation in the construction of Atlanta’s High Museum of Art and the Phoenix Civic Center Plaza.

President George W. Bush’s Jobs and Growth Tax Relief Reconciliation Act of 2003 didn’t exactly stimulate corporate spending like he had hoped. However, some BE 100S companies did take advantage of tax cuts to realize productivity gains and an increase in revenues. CEO Rodney P. Hunt of RS Information Systems (No. 15 on the BE INDUSTRIAL/SERVICE 100 list with sales of $260 million) says it encouraged him to upgrade equipment for the McLean, Virginia-based information technology and engineering support firm.

But the Bush administration’s emphasis on security will have a more lasting impact on RS Information System’s bottom line than its tax policy. Last year, the U.S. Department of Energy awarded RS Information Systems a five-year, $409 million contract to provide, among other things, computer security and network engineering services. It represents the largest contract ever awarded to a small business, defined by the federal government as one with fewer than 1,500 employees. As a result, 2003 gross sales grew an impressive 36.8%. And over the next few years, RS Information Systems is expected to add $80 million to $100 million in annual revenues.