Bell Industries Reports Third Quarter Financial Results
20 October 1999
Bell Industries Reports Third Quarter Financial Results
EL SEGUNDO, Calif.--Oct. 20, 1999--Bell Industries, Inc. today reported results from continuing operations for the third quarter and nine months ended September 30, 1999.Net sales for the 1999 third quarter increased 35% to $76.6 million from $56.7 million last year. Income from continuing operations was $1.7 million, or $.17 per share. In the third quarter last year, Bell recorded a loss from continuing operations of $8.3 million, or $.88 per share, principally reflecting substantially higher corporate costs and interest expense required to support the company's former businesses.
Additionally, the 1998 results included a $9.9 million special charge related to business system and corporate resizing. Last year, Bell reported a net loss of $7.0 million, or $.74 per share, which included a net gain from discontinued operations of $1.3 million, or $.14 per share.
For the first nine months of 1999, net sales rose to $191.5 million from $160.8 million for the first nine months of 1998. Income from continuing operations for the 1999 period advanced to $4.4 million, equal to $.45 per share, from a loss of $11.2 million, or $1.19 per share, for the prior year period. For the year-to-date period of 1998, the net loss was $2.6 million, or $.28 per share.
Third quarter results for 1999 included a pretax loss of $455,000 on the disposition of an electronics manufacturing business, and a pretax gain of $616,000 on the sale of certain real estate assets. Corporate costs for the 1999 third quarter were reduced 64% to $767,000 from $2.1 million a year ago. The company currently has no bank borrowings.
Tracy A. Edwards, president and chief executive officer, said results for the third quarter reflected a strong performance by the company's principal business unit, its systems integration group. The systems integration group posted sales of $60.9 million for the third quarter, up from $39.8 million last year. Operating income advanced to $2.2 million from $1.9 million a year ago.
Sales of Bell's recreational products group were $13.1 million for the third quarter, compared with $13.0 million a year ago. Operating income amounted to $702,000, compared with $809,000 a year ago. The electronics manufacturing group posted sales of $2.7 million versus $3.8 million last year. Operating income, which included the loss on disposition of a business in 1999, declined to $91,000 from $310,000.
"Our systems integration group reported a solid quarter, primarily due to growth in services and shipments of certain large product orders. Our plan to focus on services has produced tangible results, with revenue and income from services increasing in excess of 30% this year," Edwards said. "While we are pleased with the results of our systems group and are optimistic about current trends, profit margins on products continue to experience downward pressure.
"Moreover, during the next several months customer ordering patterns may vary due to the Y2K transition period. We will continue to emphasize growing our service business to augment overall margins."
Edwards said the company plans to make a cash distribution to shareholders of approximately $1.30 per share during the fourth quarter. During 1999, the company sold four of six real estate properties, including its former corporate office facility.
Edwards also said that subsequent to the close of the quarter, the company received an offer from its largest shareholder to acquire Bell stock for $5.30 per share. Bell's board rejected the bid as not adequately reflecting the company's value, but said it would consider a higher offer.
The company also reported that Bell's board has scheduled the annual meeting of shareholders for Thursday, December 30, 1999. The record date for determination of shareholders to vote at the annual meeting was set for November 5, 1999. Proxy materials are expected to be mailed during November.
Bell's primary business is the systems integration group, a multi-regional provider of integrated computer technology solutions for large and medium-sized organizations. 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 contain forward looking information that involves risks and uncertainties that could cause actual results to differ materially from current trends. These include, but are not limited to, current trends in its systems integration business, its ability to sell the remaining real estate assets, its plan with respect to the cash distribution to shareholders, and other factors described in its public filings.
Bell Industries, Inc.
Consolidated Condensed Balance Sheet
(In thousands)
September 30, December 31,
1999 1998
ASSETS
Current assets:
Cash and cash equivalents $ 11,109 $ 6,699
Accounts receivable, net 46,505 31,340
Inventories 14,562 18,461
Prepaid expenses and other 5,326 8,566
Real estate held for sale 1,918 12,046
Net assets of discontinued operations -- 179,830
Total current assets 79,420 256,942
Properties, net 4,274 5,574
Goodwill 1,416 1,468
Other assets 3,712 6,775
$ 88,822 $270,759
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 25,886 $ 27,778
Accrued liabilities and payroll 18,172 35,207
Current portion of long-term liabilities -- 109,000
Total current liabilities 44,058 171,985
Long-term liabilities 3,989 8,319
Shareholders' equity 40,775 90,455
$ 88,822 $270,759
Bell Industries, Inc.
Consolidated Operating Results
(In thousands, except per share data)
Three months ended Nine months ended
September 30 September 30
1999 1998 1999 1998
Net sales $ 76,586 $ 56,672 $ 191,518 $ 160,835
Costs and expenses
Cost of products sold 64,730 45,754 159,216 128,021
Selling and
administrative 8,793 9,115 23,883 28,165
Depreciation and
amortization 417 910 1,387 3,518
Interest, net 1 2,992 (57) 9,667
Special items, net (a) (161) 9,900 (161) 9,900
73,780 68,671 184,268 179,271
Income (loss) from
continuing operations
before income taxes 2,806 (11,999) 7,250 (18,436)
Income tax expense
(benefit) 1,122 (3,661) 2,899 (7,216)
Income (loss) from
continuing operations 1,684 (8,338) 4,351 (11,220)
Income (loss) from
discontinued operations -- (402) -- 6,832
Gain on sale of
discontinued operations -- 1,748 -- 1,748
Net income (loss) $ 1,684 $ (6,992) $ 4,351 $ (2,640)
Share and per share data
Income (loss) from
continuing operations
Basic $ .17 $ (.88) $ .45 $ (1.19)
Diluted $ .17 $ (.88) $ .45 $ (1.19)
Net income (loss)
Basic $ .17 $ (.74) $ .45 $ (.28)
Diluted $ .17 $ (.74) $ .45 $ (.28)
Weighted average
common stock
Basic 9,608 9,442 9,591 9,385
Diluted 9,672 9,442 9,624 9,385
OPERATING RESULTS BY BUSINESS SEGMENT
Net sales
Systems Integration $ 60,864 $ 39,779 $ 140,104 $ 110,289
Recreational Products 13,067 13,044 39,372 37,897
Electronics
Manufacturing 2,655 3,849 12,042 12,649
$ 76,586 $ 56,672 $ 191,518 $ 160,835
Operating income
Systems Integration $ 2,165 $ 1,885 $ 4,818 $ 5,227
Recreational Products 702 809 2,765 2,717
Electronics
Manufacturing (a) 91 310 1,359 1,597
Special items (a) 616 (9,900) 616 (9,900)
Corporate costs (767) (2,111) (2,365) (8,410)
2,807 (9,007) 7,193 (8,769)
Interest, net (1) (2,992) 57 (9,667)
Income tax (expense)
benefit (1,122) 3,661 (2,899) 7,216
Income (loss)
from continuing
operations $ 1,684 $ (8,338) $ 4,351 $ (11,220)
(a) Operating results for the third quarter of 1999 include a pretax
loss of approximately $455,000 on the disposition of an
electronics manufacturing division and a pretax gain of $616,000
on the disposition of certain real estate assets. For the third
quarter of 1998, the company recorded a special charge of $9.9
million for business system and corporate resizing.