Dawn of the Black millennium.

The B.E. 100s have ridden the wave of economic prosperity to great heights, but will the good times continue into the next century?

America's largest black-owned businesses have been in perpetual motion. With activities ranging from massive divestitures to major acquisitions, the chief executives of the Black Enterprise 100s have dramatically altered the landscape of black business for years to come. For one, total sales for the BE 100s were $13.19 billion in 1997, a 6.49% drop from $14.1 billion in 1996. This marks the first time the combined sales of the BE INDUSTRIAL/SERVICE 100 and the BE AUTO DEALER 100 have declined since the two lists were created in 1988.

Last year, one of the most significant developments among BE 100s companies was the radical restructuring of the assets of TLC Beatrice International Holdings Inc., the perennial list reader with 1996 gross sales of $2.2 billion. The New York-based concern hawked its French food distribution business, which accounted for a substantial $1.9 billion of gross revenues, to a major French food retailer for $573 million. Because the division was sold in 1997, the revenues it generated up until the sale were more than enough for TLC Beatrice to remain the nation's largest black-owned business with $1.4 billion in sales. TLC Beatrice now maintains a snack food company in Ireland, ice cream manufacturers in Spain and the Canary Islands and bottlers in Europe and Thailand. The projected gross sales for the ultra-lean entity: $344 million in 1998.

As a result, Mel Farr Automotive Group (No. 1 on the BE AUTO DEALER 100 list with $573.1 million in gross sales) is in the driver's seat of the nation's largest black-owned enterprise. And the transaction creates an interesting battle between Chicago-based Johnson Publishing Co., with $361.1 million in gross sales. and Philadelphia Coca-Cola Bottling Co., with gross sales of $357 million.

The asset sale and the departure of several companies from the list significantly changes the revenue and employee base for the BE INDUSTRIAL/SERVICE 100. Collective revenues plunged 6.65%, from $8.18 billion in 1996 to $7.64 billion in 1997. But the industrial/service companies show a net increase of 1,971 jobs, up 4.28% from '96. So how can jobs increase when sales plummet? The sales drop of the industrial/service list was disproportionately impacted by TLC Beatrice Holdings' sale of its French food division. In fact, if you factor out the sales of the No. 1 company on the list over the last two years, the remaining 99 companies actually experienced sales growth in 1997 to the tune of 4.8%.

Since no one auto company accounts for 25% of total sales, one would think that the Be Auto DEALER 100 list would not undergo such a downward shift in revenues. Unfortunately, the volatility of the auto industry contributed to 22 new auto dealers making our listing. What accounts for the massive exodus of auto dealers? Many simply did not make this year's ranking. And at least eight dealers sold their franchises and are no longer black-owned. Among the biggest casualties, Alvin Smith Chevrolet-Oldsmobile Inc. in Brighton, Colorado--No.2 on our list last year with $388 million in sales--who decided to retire.

Collectively, the BE AUTO DEALER 100 list experienced a 6.26% decline in sales growth, from $5.93 billion in 1996 to $5.55 billion in 1997. And 9,111 employees received paychecks from the BE AUTO DEALER 100 list--a 1.05% decrease from the previous year. Several auto dealers suffered significant sales losses. CEO Jesse A. Moore saw sales for his Warner Robins Oldsmobile Cadillac Pontiac GMC-Truck franchise, based in Warner Robins, Georgia, fall from $356 million in 1996 to $136 million in 1997. Declining fleet sales were a major culprit.

Observers should not read this as a gloom-and-doom scenario. The aforementioned figures reflect not a seismic economic event but a structural change. Most of the BE INDUSTRIAL/SERVICE 100 list companies demonstrated stellar corporate performance. As with Fortune 500 companies, they were propelled, in part, by "Clintonomics," an economy marked by robust growth, low interest rates and strong consumer confidence. As the economy continues its expansion for a remarkable seventh year--gross domestic product (GDP) grew at an impressive 3.8% in 1997, the best showing in a decade. The BE 100s CEOs have spent the past few years strategically positioning their companies by bolstering internal operations and identifying external growth opportunities. In short, they have prepped their companies for the next millennium.

CHANGE IS CONSTANT

As always, the BE INDUSTRIAL/SERVICE 100 list has experienced significant comings and goings. Ten companies left the list last year because of divestitures or bankruptcies, or they simply did not meet the $18 million minimum to make the cut. Some companies, however, leave as quickly as they arrive. Take West Palm Beach, Florida-based Convenience Corp. of America Inc. (CCA), last year's rising freshman that ranked No. 8 with sales of $137.4 million from its chain of 150 convenience stores and gasoline stations. Last year, CEO Leslie M. Corley sold a majority interest for an undisclosed sum to a group of investors, apparently because of its troubled operations. Although terms of the deal prohibited Corley from revealing the name of the investment group and the value of the sale, an official for Contemporary Industries Corp., the operator of the 7-Eleven franchises that CCA owns, "filed for voluntary bankruptcy" on Feb. 17 and has sent prospectuses "to over 100 parties as part of a bankruptcy sale of assets." (See "7-Eleven Acquisition Sours," Newspoints, this issue.)

Another concern, Am-Pro Protection Agency Inc., was bounced off the list after first filing for Chapter 11 bankruptcy last May and then being forced by Nations-Bank, its main creditor, to liquidate its holdings after the bank won a petition to lift the company's protected status.

Top performer Sylvest Management Systems Corp., the Lanham, Maryland, computer and network integration firm that grossed $107.5 million in 1996, was sold to majority-owned Federal Data Corp., a systems integration firm in Bethesda, Maryland. CEO Gary Murray said the company was not sold because of a financial short circuit. He believed the merger could reprogram Sylvest into a full-service Goliath that could provide both products and services to federal agencies.

Some new arrivals are vying for leadership of the pack. One such company is World Wide Technology Inc., a St. Louis-based marketer of integrated technical solutions for corporate clients (No. 11 with sales of $135 million). Its most recent coup was signing--along with two other minority-owned companies--a $150 million contract with Southwestern Bell and Lucent Technologies to test, distribute and assemble electronic components. Says CEO David L. Steward about its phenomenal growth over the past seven years: "We always look for opportunities. We are poised to take advantage of the industrial revolution in today's Information Age."

MAKING ADJUSTMENTS AND GAINING CONTROL

Many BE 100s CEOs have boosted their company's value and put their operations on an even keel. At the heart of the TLC Beatrice divestiture was its management's mandate to meet the objective of late CEO Reginald Lewis--the brilliant financier who orchestrated the historic $985 million acquisition in 1987--to increase shareholder value. The funds enabled the company to successfully complete a $175 million tender offer for its outstanding 11.5% senior secured notes due 2005. "We significantly reduced our debt obligations," CEO Loida Lewis told BE. "We have an excellent collection of companies and we will continue our program of maximizing value and increasing liquidity."

The sale means the No. 1 spot could well be up for grabs next year. Waiting in the wings is Philadelphia Coca-Cola. which posted an impressive revenue growth of more than 9% by gulping new territory in Northern New Jersey and unveiling such new products as Surge and Cool Nestea. "With the new customers and brands, we realized a significant increase in sales over the past year," says CEO J. Bruce Llewellyn. "We intend to continue to grow our franchise through such expansion."

Johnson Publishing Co. Inc. (JPC), the Chicago-based publishing, cosmetics and hair care monolith, showed a gain largely due to advertising growth in its long-standing publications, Ebony and Jet, and sales of its Fashion Fair cosmetics line. The concern, however, spent much of last year restructuring its major businesses. JPC suspended publication of decade-old Ebony Man; discontinued E-Style, its catalogue venture with Spiegel; installed new management within its hair-care division; and increased its ownership stake of Ebony South Africa from 51% to 85%, buying out the publication's white individual investors. "Ebony and Jet had their best years ever in 1997," asserts CEO John H. Johnson. "I am cautiously optimistic about 1998. We have made changes, however, that will keep us well positioned."

Other BE 100s CEOs simply sought to take back control of the companies that they built. Last September, CEO Robert L. Johnson and Liberty Media Corp., a subsidiary of TeleCommunications Inc. (TCI), announced their intentions to take BET Holdings Inc. (No. 7 on the BE INDUSTRIAL/SERVICE 100 list with 5170 million in gross sales) private in a $288 million bid. The proposed buyback resulted in a class-action lawsuit by minority shareholders against Johnson; John Malone, CEO of TCI; and the BET board of directors. In late January, the board's special independent committee determined that the proposed $48-a-share offer "was not adequate," forcing Johnson and others back in the drawing board. After regrouping and upping the ante, Johnson got the BET board to approve a revised offer of $378 million, or $63 a share.

Johnson has continued to strengthen and expand his franchise through the creation of a new BET on Jazz, a music-themed restaurant in Washington, D.C., and a dance/entertainment club on Disney's Pleasure Island called BET SoundStage Club. Also on the list of acquisitions is Heart and Soul magazine, the black-oriented health and fitness publication, from Rodale Press, the majority-owned magazine publisher based in Emmaus, Pennsylvania. A Las Vegas casino is also being planned.

BENEFITING FROM THE ASIAN CRISIS

While the Asian financial crisis roiled international money markets last year, several BE 100s companies reaped benefits from the turmoil. One such company was Northbrook, Illinois-based Fuci Metals USA Inc. (No. 22 on the BE INDUSTRIAL/SERVICE 100 list with $86.5 million in gross sales). "As Asian currencies weakened, there was an increased volatility in the prices of all commodities," says CEO A. Demetrius Brown. "They were trying to establish fixed-priced contracts to minimize the downside. Most of my customers placed orders quickly in order to lock in lower prices."

Fuci's 31% sales growth did not rise from Asia's financial woes. It continues to be one of the largest distributors of Russian silicon in the United States. And, the concern entered into a deal that could push it into the top 10 of the BE INDUSTRIAL/SERVICE list. Fuci will supply Ford Motor Co. with 80,000 tons of aluminum. Says Brown: "Because of this deal, we will see our revenues grow to as much as $130 million in 1998."

Fair Oaks Farms, a Kenosha, Wiconsin-based food processor (No. 44 on the BE INDUSTRIAL/SERVICE 100 list with $44 million in sales) increased its volume orders with customers in Hong Kong and Japan between 40% to 50% at the beginning of the Asian crisis. "The initial panic was short-lived," says CEO David Duerson. "But it worked to our advantage."

Duerson beefed up sales on the domestic front as well. He invested roughly $7.5 million to upgrade operations and complete a new sausage linking and bacon production facility in Iowa Now, Fair Oaks Farms is really cooking the concern snared a contract to serve White Castle's 303 outlets with sausage and bacon products for its breakfast trade as well as supply Burger King's three Midwestern distribution centers. "It's like our field of dreams." says Duerson. "We built the facility and the business came. Doors have opened up for us to pursue the military and hospitals as well."

The former defensive back is dearly taking the offensive. He has arranged for the restaurants to test-market his new line of retail food products, multi-flavored Double D Sausages.

SEEKING OUT NEW NICHES

Terry Manufacturing Co. Inc.. the apparel manufacturer (No. 59 on the BE INDUSTRIAL/SERVICE list with gross sales of $35.3 million), is also busting at the seams. Beyond producing uniforms for the military and fast-food outfits like McDonald's Corp., which currently comprise 60% of total sales, CEO Roy Terry has moved into consumer-oriented licensed apparel. Last year, the company snagged such lucrative licenses as the Jackie Robinson 50th anniversary celebration and T-shirts of a stamp collection based on The Munsters. He is currently wooing the National Hockey League and the National Football League.

To bolster the company's capital reserves for this major undertaking, he initiated a $7.5 million private placement of convertible preferred stock. Investors include gridiron superstar Warren Moon and actor Samuel L. Jackson. "I view it as the creation of strategic alliances," Terry told BE. "The investors bring additional business like Sam Jackson's golf-tournament or Warren Moon's connection with J.C. Penney, and we, in turn, pay them royalty income and dividends."

For Soft Sheen Products Inc. (No. 18 on the BE INDUSTRIAL/SERVICE 100 List) the opportunities come from pulling in new consumers. In addition to its traditional brands--Soft Sheen, Optimum Care, Mizani--the company created Alternatives, a new relaxer product for Generation Y consumers. To reach the burgeoning urban youth market, Soft Sheen promoted Alternatives on local television in the top 25 markets populated by African Americans.

AN APPETITE FOR ACQUISITIONS

A number of BE 100s companies continue to buy growth. Take Milwaukee-based V&J Foods, Inc. (No. 28 on the BE INDUSTRIAL/SERVICE 100 list) grew a phenomenal 89.2%, from gross sales of $36 million in 1996 to $70 million in 1997, by buying 61 Pizza Hut franchises located in the New York suburbs of Rochester and Syracuse. V&J has started the process of co-branding the Pizza Hut franchises with the Burger King outlets that it currently owns.

Grocer Jonathan Johnson took another track. After his deal to purchase a supermarket in Virginia's Tidewater area fell through, the president of Community Pride Food Stores (No. 43 on the BE INDUSTRIAL/SERVICE 100 list with $46.7 million) decided to build one from scratch. He entered into an $4 million agreement with the City of Richmond to develop a 45,000-sq.-ft. combo grocery store to service a high-traffic, affluent neighborhood. The new store, complete with an indoor cafe and a government-operated liquor store, is expected to ring up another $20 million in annual revenues. Additionally, the supermarket chain is getting a $6.8 million facelift to its eight existing outlets.

NEW OPPORTUNITIES THROUGH CLINTON

Besides the healthy economy, some BE 100s companies are getting ready to take advantage of an agreement that the Clinton administration has reached with the Big Three automakers to increase minority procurement activity to 5% from the current 4.2%. The value of the new vending initiative: roughly $3 billion by the year 2001. (Federal law requires automakers that sell vehicles to the government to use minority firms as suppliers.)

In fact, some BE 100s CEOs like Jon Barfield of The Bartech Group (No. 31 on the BE INDUSTRIAL/SERVICE 100 list with $62 million in gross sales) believes the action will eventually drive his Livonia, Michigan-based temporary services firm to go public. "This program will increase our opportunity to do business with the large suppliers to the Big Three," said Barfield at Vice President Albert Gore's press conference about the initiative. "This program will open opportunities to source new capital, enabling Bartech to build or lease facilities within the minority community. Also, we are being given the same opportunity as our majority-owned counterparts to raise capital in public markets in order to keep pace with the Big Three's expansion around the world."

Engineered Plastic Products (No. 76 on the BE INDUSTRIAL/SERVICE 100 list with $28.7 million in sales) will make a grab for such contracting opportunities. For the past few years, CEO Gerald Edwards has fine-tuned the operation as the Big Three--like other Fortune 500 companies--have consolidated their supplier pool. Handling plastic interior trim for such vehicles as the new Corvette and the Dodge Dakota Truck, Edwards has invested $600,000 in the latest injection molding equipment as well as beefed up his warehousing operation. "I have maintained myself as a tier-one supplier," he says of the vending status to manufacture and ship parts directly to automakers instead of handling subcontract work. "The automakers have already acknowledged my company as a top vendor. The Clinton program will be icing on the cake."

Cimarron Express, which hauls cars for the Big Three (No. 72 on the BE INDUSTRIAL/ SERVICE 100 list with $30.1 million in gross sales) seeks to acquire another trucking operation that will be compatible with its current operations. Business has been brisk for the Genoa, Ohio-based firm, and it expects to gain additional contracts from the new agreement. Ironically, CEO Glenn Grady says that Clintonomics has been responsible for a manpower shortage. "Our biggest challenge is finding drivers," says Grady. "When the economy is flush, workers find other opportunities. The last thing they want to do is sit behind a truck."

FACING INDUSTRIAL CHALLENGES

While the policies of the Clinton administration have been bountiful for some concerns, others like Baltimore-based Stop Shop Save Food Markets (No. 22 on the BE INDUSTRIAL/SERVICE 100 list) have been minding empty baskets. When the Clinton administration completed welfare reform last year, it clipped the food stamp program. The super market chain, which serves a low-income consumer base, lost a significant part of its revenue stream from the redemption of the currency. Over the past few months, CEO Henry T. Baines Sr. has been forced to consolidate operations because of a sharp reduction in sales. So far, he has shut down two stores and cut the company's workforce from 800 to 650. "In addition to the loss of revenues, we found that twelve locations were too many. We were starting to cannibalize ourselves," he says. "We are also feeling competitive pressures from the big chains that are returning to the inner city."

BE advertising firms are confronted by a different threat. Increasingly, majority firms continue to tread on its turf through urban marketing boutiques. UniWorld Group Inc. (No. 2 on the BE ADVERTISING AGENCIES list with gross sales of $162 million) is taking a two-prong approach to fighting off this well-heeled crop of competitors: holding on to its existing marketing thrust with a vise-like grip and grabbing its share of lucrative general-market accounts.

UniWorld has increased its use of event marketing to deliver African American consumers to its clients. Through such programs as the UniverSoul Circus and the home-grown Acapulco Black Film Festival, the agency has established new venues where companies can connect with such consumer segments as black families and upwardly mobile African Americans. And, at the same time, UniWorld has extended its reach into the general market. Its Three Musketeers print and television ad campaign, featuring The Nanny's Fran Drescher, has become the most prominent. "We have developed opportunities for our clients that these ethnic boutiques can't match," says CEO Byron Lewis. "We just have to continue to show them that we can do it better."

CREATING THE NEXT 100

The greatest challenge for all black-owned business--BE 100s included--is actually seeing the money. Last year, Earl G. Graves Ltd., the parent of BLACK ENTERPRISE magazine (No. 58 on the BE INDUSTRIAL/SERVICE 100 list with $36.9 million in gross sales), launched the Black Enterprise/Greenwich Street Fund, a private equity investment vehicle, to finance black-owned companies with gross sales between $10 and $100 million. The fund--in which Earl G. Graves Ltd. Owns 51% and Travelers Group, the New York-based financial services conglomerate, owns 49%--is expected to have a capital base of at least $60 million and enable concerns to position themselves to move into the $50-$100 million range--and, eventually, go public.

Carlton L. Guthrie, the CEO of Lansing, Michigan-based Trumark Inc., one of the nation's largest black auto suppliers (No. 55 on the BE INDUSTRIAL/SERVICE 100 list with $38.1 million in gross sales), took a different approach. Last year, he teamed up with CEOs, bankers and corporate professionals to create The Runners Club, an advisory group focused on transforming small black businesses into BE 100s companies.

The instruction includes the mechanics of structuring successful business deals, making internal operations more efficient and finding and keeping corporate clients. The entrepreneurs heard from the organization's top-notch brain trust, which includes BE 100s CEOs like Guthrie; William M. Buford III, CEO of Reliant Industries Inc. (No. 30 on the BE INDUSTRIAL/SERVICE 100 list with gross sales of $68 million) and Loida Lewis, CEO of TLC Beatrice. "The BE 100s companies must take the lead in creating more large black-owned businesses," asserts Guthrie. "That's what we are trying to do with this program."

It will be interesting to see which of these companies emerge on the BE 100s -- and, better yet, crack the billion-dollar mark.

[ILLUSTRATION OMITTED]

1998 B.E. 100s
                                                          PERCENT
                    1996          1997       DIFFERENCE   CHANGE

Total Sales(*)   $17,107.600   $13,192.545   -915.055     -6.49%
Total Staff           55,242        57,116      1,874      3.39%

1998 B.E. INDUSTRIAL/SERVICE 100

Total Sales(*)    $8,182.356    $7,637.958   -544.398     -6.65%
Total Staff           46,034        48,005      1,971      4.28%

1998 B.E. AUTO DEALER 100

Total Sales(*)    $5,925.244    $5,554.587   -370.657     -6.26%
Total Staff            9,208         9,111        -97     -1.50%

(*) In millions of dollars, to the nearest thousand. Prepared by B.E. Research. Reviewed by Mitchell & Titus L.L.P.

TOP TEN GROWTH LEADERS

                                                          1996
COMPANY                              LOCATION             SALES(*)

Simi VAlley Pontiac GMC Buick        Simi Valley, CA       4.913
Fidelity Group                       Great Neck, NY        6.000
Davis Automotive Inc.                Dallas, TX           23.375
Ray Wilkinson Buick-Cadillac Inc.    Racine, WI           39.679
Adams McClure Inc.                   Denver, CO            7.800
United Communications Systems Inc.   McLean, VA           10.400
Barnett Pontiac Buick-GMC            Fredericksburg, VA    8,448
Calhoun Enterprises                  Montgomery, AL       39.841
V&J Foods                            Milwaukee, WI        36.000
Rodgers Chevrolet                    Woodhaven, MI        19.815

                                      1997      PERCENT
COMPANY                              SALES(*)   INCREASE

Simi VAlley Pontiac GMC Buick         95.009     1833.8
Fidelity Group                        18.000      200.0
Davis Automotive Inc.                 64.293      175.1
Ray Wilkinson Buick-Cadillac Inc.    107.804      171.7
Adams McClure Inc.                    20.100      157.7
United Communications Systems Inc.    24.000      130.8
Barnett Pontiac Buick-GMC             19.201      127.3
Calhoun Enterprises                   79.800      100.3
V&J Foods                             70.000       94.4
Rodgers Chevrolet                     37.194       87.7

(*) In millions of dollars, to the nearest thousand. Prepared by B.E. Research. Reviewed by Mitchell & Titus L.L.P.

TOP TEN EMPLOYMENT LEADERS

                                                             EMPLO-
COMPANY                                    LOCATION          YEES

TLC Beatrice International Holdings Inc.   New York, NY      1,500
Johnson Publishing Co. Inc.                Chicago, IL       2,677
La-Van Hawkins Urban City Foods L.L.C.     Baltimore, MD     2,643
V & J Foods Inc.                           Milwaukee, WI     2,400
H.J. Russell & Co.                         Atlanta, GA       1,862
Lundy Enterprises LLC./Pizza Hut           New Orleans, LA   1,710
The Bartech Group                          Livonia, MI       1,640
Active Transportation                      Louisville, KY    1,600
Barden Companies Inc.                      Detroit, MI       1,600
Philadelphia Coca-Cola Bottling Co. Inc.   New York, NY      1,500

                                                      EMPLOYEE-
                                           1997       TO-SALE
COMPANY                                    SALES(*)   RATIO(**)

TLC Beatrice International Holdings Inc.   1400.00     1:311
Johnson Publishing Co. Inc.                361.112     1:135
La-Van Hawkins Urban City Foods L.L.C.      86.422     1:33
V & J Foods Inc.                            70.000     1:29
H.J Russell & Co.                          155.300     1:83
Lundy Enterprises LLC./Pizza Hut            26.000     1:15
The Bartech Group                           62.000     1:38
Active Transportation                      250.000     1:156
Barden Companies Inc.                      110.000     1:69
Philadelphia Coca-Cola Bottling Co. Inc.   357.000     1:238

(*) In millions of dollars, to the nearest thousand.

(**) In thousands of dollars, as of December 31, 1997.

Prepared by B.E. Research. Reviewed by Mitchell & Titus L.L.P.

RELATED ARTICLE: ELIGIBILITY FOR THE B.E. 100S

The BE 100s are comprised of the BE INDUSTRIAL/SERVICE 100 and the BE AUTO DEALER 100. To be eligible for the INDUSTRIAL/SERVICE 100, a company must have been fully operational in the previous calendar year and be at least 51% black-owned. It must manufacture or own the product it sells or provide industrial or consumer services. Brokerages, real estate firms and firms that provide professional services (accountants, lawyers, etc.) are not eligible. To qualify for the AUTO DEALER 100, A dealership must have been fully operational in the previous year and be at least 51% black-owned.

BLACK ENTERPRISE consults industry analysts and other sources to verify the information contained in the lists. All data are reviewed by the accounting firm Mitchell & Titus, L.L.P. companies not appearing on this year's list (but previously listed) have been excluded because they are no longer black-owned or their gross sales have dropped below the minimum level required to make the list.

The BE 100s, as well as other business lists compiled by BE, are available on computer disk, in both DOS and Mac formats. TopList Software provides mailing addresses and phone numbers of the companies listed as well as other software features.

For more information, contact B.E. Unlimited at 212-886-9576.