Bell Industries Reports 2002 Third Quarter Results
EL SEGUNDO, Calif.--Nov. 14, 2002--Bell Industries, Inc. (AMEX:BI) today reported financial results for the third quarter and nine months ended September 30, 2002.For the 2002 third quarter, net sales totaled $40.4 million, compared with $46.2 million in the same prior-year period. Bell sustained a net loss of $416,000, or $0.05 per share, contrasted with net income of $146,000, or $0.02 per share, last year. The company said results were impacted by the continuing industry-wide slow down in IT spending by business enterprises, which affected Bell's Tech.logix Group (BTL). Additionally, continued weakness in the electronics sector impacted Bell's J.W. Miller operations.
For the current third quarter, sales at BTL, the company's largest operating unit, declined to $26.0 million from $32.0 million in the corresponding 2001 period primarily because of decreased technology product deliveries and the continued shift to a direct purchase model for the securing and delivery of computer hardware directly from manufacturers. To further focus its primary emphasis on technology outsourcing services, BTL discontinued certain service lines, primarily application development, in response to weak market demand. As a result of decreased sales and service line exit costs, BTL's operating loss for the 2002 third quarter totaled $481,000, contrasted with operating income of $279,000 a year ago.
"While the difficult technology environment has impacted our results throughout 2002, we have made considerable progress in developing new alliances that are expected to expand the market opportunities for BTL's technology outsourcing services," said Tracy A. Edwards, chairman, president and chief executive officer of Bell Industries. "Through these new relationships, which we expect will benefit results in 2003, and by penetrating existing client accounts, BTL is strengthening its services revenue base."
Bell's Recreational Products Group (RPG) posted sales of $12.9 million for the three months ended September 30, 2002, compared with $12.5 million a year earlier. Operating income was even at $276,000 for both the 2002 and 2001 third quarters. Bell said operating income for the current quarter at RPG included initial expenses related to its relocation to a new facility. Additional costs for the move, to be completed by December 2002, are expected to result in an operating loss for the group in the fourth quarter.
Sales for J.W. Miller continued to be impacted by weakness in the electronics sector and declined to $1.6 million from $1.7 million in the 2001 third quarter. Operating income decreased to $172,000 from $433,000 last year, primarily as a result of shifts in product mix and pricing pressures arising from difficult market conditions.
Since July 1, 2002, Bell repurchased 556,000 shares of the company's common stock under its board-authorized stock repurchase program.
For the first nine months of 2002, net sales for Bell Industries totaled $113.9 million, versus $151.6 million for the comparable 2001 period. The company incurred a net loss of $2.2 million, or $0.25 per share, for the 2002 nine months, which included a write-off of $2.1 million, equal to $1.3 million after tax, or $0.14 per share, of goodwill following the adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets." The effect of this accounting change is reflected in operating results as of January 1, 2002. For the corresponding prior-year period, Bell sustained a net loss of $405,000, or $0.05 per share, which included special pre-tax charges of $1.5 million.
The company continues to maintain a strong balance sheet with no bank debt. At September 30, 2002, Bell had net working capital of $20.9 million and cash of $11.0 million. Shareholders' equity totaled $26.9 million, or $3.17 per share.
Bell's primary business, the Tech.logix Group, provides information technology lifecycle management services including strategic sourcing, technology integration, and product support, principally to middle market companies. Bell also distributes after-market parts and accessories to the recreational vehicle market and manufactures specialized products for the computer and electronics industry.
Certain matters discussed in this news release are forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from current trends. These include, but are not limited to, success in developing new alliances, realizing business opportunities as the economy improves and other factors described in the company's public filings from time to time.
Bell Industries, Inc.
Consolidated Operating Results
(In thousands, except per share data)
(Unaudited)
Three months ended Nine months ended
September 30 September 30
2002 2001 2002 2001
Net sales $40,441 $46,212 $113,907 $151,599
Cost of sales 33,533 37,806 93,394 126,140
Selling and administrative 7,667 8,272 22,176 25,014
Interest, net (71) (108) (164) (380)
Special items, net(a)(b) -- -- -- 1,495
41,129 45,970 115,406 152,269
Income (loss) before income
taxes and cumulative effect
of accounting change (688) 242 (1,499) (670)
Income tax expense (benefit) (272) 96 (591) (265)
Income (loss) before cumulative
effect of accounting change (416) 146 (908) (405)
Cumulative effect of accounting
change, net of income tax
benefit of $836 -- -- (1,280) --
Net income (loss) $(416) $146 $(2,188) $(405)
Share and per share data
Basic and diluted:
Income (loss) before
cumulative effect of
accounting change $(.05) $.02 $(.11) $(.05)
Net income (loss) $(.05) $.02 $(.25) $(.05)
Weighted average common stock:
Basic 8,777 8,867 8,856 8,847
Diluted 8,777 8,867 8,856 8,847
OPERATING RESULTS BY BUSINESS SEGMENT
Net sales
Systems Integration $26,011 $31,994 $72,842 $108,018
Recreational Products 12,880 12,498 36,789 37,650
Electronics Manufacturing 1,550 1,720 4,276 5,931
$40,441 $46,212 $113,907 $151,599
Operating income (loss)
Systems Integration(a) $(481) $279 $(1,253) $(473)
Recreational Products 276 276 1,201 1,220
Electronics Manufacturing 172 433 408 1,367
Special items, net(b) (650)
Corporate costs (726) (854) (2,019) (2,514)
(759) 134 (1,663) (1,050)
Interest, net 71 108 164 380
Income tax benefit (expense) 272 (96) 591 265
Cumulative effect of accounting
change, net -- -- (1,280) --
Net income (loss) $(416) $146 $(2,188) $(405)
(a) Systems Integration operating results for the nine-month period
ended September 30, 2001 include a pre-tax charge of $845,000 for
staff separation and facilities consolidation costs related to the
company's strategy implementation and realignment efforts.
(b) Corporate related special item for the nine-month period ended
September 30, 2001 represents settlement costs associated with an
executive change-in-control contract.
Bell Industries, Inc.
Consolidated Condensed Balance Sheet
(In thousands)
(Unaudited)
September 30, December 31,
2002 2001
ASSETS
Current assets:
Cash and cash equivalents $10,972 $10,418
Accounts receivable, net 16,563 17,827
Inventories 10,501 13,608
Prepaid expenses and other 4,284 3,879
Total current assets 42,320 45,732
Fixed assets, net 5,273 6,319
Goodwill 2,116
Other assets 3,202 2,739
$50,795 $56,906
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $10,753 $11,833
Accrued payroll and liabilities 10,713 12,585
Total current liabilities 21,466 24,418
Long-term liabilities 2,476 2,810
Shareholders' equity 26,853 29,678
$50,795 $56,906