Bell Industries Reports 1999 Financial Results
10 February 2000
Bell Industries Reports 1999 Financial Results; Announces Stock Repurchase Program
EL SEGUNDO, Calif.--Feb. 10, 2000--Bell Industries, Inc. today reported results from continuing operations for the year and fourth quarter ended December 31, 1999.For the year ended December 31, 1999, net sales rose to $240.4 million from $212.5 million for 1998. Income from continuing operations for 1999 advanced to $5.5 million, or $.57 per share, including a net pretax gain on sales of real estate and a business totaling $1.0 million (after-tax $630,000 or $.07 per share).
In 1998, the company reported a loss from continuing operations of $13.2 million, or $1.40 per share, which included a special pretax charge of $9.9 million (after-tax $6.3 million, or $.67 per share) relating to business system and corporate resizing. Net income for 1999 was $6.9 million, or $.71 per share, including a reserve recovery relating to discontinued operations totaling $1.4 million, or $.14 per share.
In 1998, Bell reported a net loss of $62.8 million, or $6.67 per share, which included income from discontinued operations totaling $7.3 million, or $.77 per share, and a loss on disposal of discontinued operations totaling $56.8 million, or $6.04 per share.
For the fourth quarter, sales were $48.9 million compared with $51.6 million last year. Income from continuing operations was $1.1 million or $.12 per share, compared with a loss from continuing operations of $2.0 million, or $.21 per share for the same period last year.
Results for the 1999 fourth quarter included a pretax gain on sale of real estate totaling $881,000 (after-tax $549,000, or $.06 per share). Net income for the fourth quarter was $2.5 million or $.26 per share, including the discontinued operations reserve recovery. In 1998, after including a loss of $58.2 million, or $6.13 per share, from discontinued operations, Bell reported a net loss of $60.1 million, or $6.34 per share.
"We are pleased to report a successful repositioning of Bell from a company primarily involved in the electronics distribution market to one focused on systems integration," said Tracy A. Edwards, president and chief executive officer. "The senior management team's principal objectives in 1999 were to strengthen our continuing businesses by restructuring our operations in line with our smaller size and to return to shareholders the net cash proceeds from the business and property sales arising from this strategic repositioning."
The company sold its electronics distribution business in January 1999 to Arrow Electronics for $185 million. In addition, Bell sold five real estate properties including its former corporate office facility, and a manufacturing business for an aggregate $15 million. After paying off all outstanding debt, the company returned $67 million in cash to shareholders, $5.70 per share in June 1999, and $1.30 per share in December 1999.
Edwards stated that results from continuing operations improved throughout 1999, however, as anticipated, the fourth quarter performance reflected the effects of slower systems integration sales due to the Y2K transition, and unfavorable weather conditions that affected the recreational products group.
"Despite an industry-wide slowdown in product sales relating to the Y2K transition which affected our systems integration results in the fourth quarter, we continue to show positive performance in our efforts to grow systems integration services," Edwards said. "While gross profit margins on products continue to experience downward pressure, revenue and income from services grew more than 30 percent in 1999. We will continue to emphasize growing our service business to augment overall margins."
Gross profit from systems integration services represented 21 percent of Bell's consolidated gross profit in 1999 compared with 14 percent in 1998.
The company also announced that its board of directors has authorized a stock repurchase program of up to 1,000,000 shares of the company's outstanding common stock during the year 2000.
"Bell is initiating this repurchase program because we believe that the current stock price does not adequately reflect the value of the company, as supported by our solid earnings performance and strong financial position," said Edwards. "This program underscores the board's confidence in the long-term prospects and opportunities for the company."
The common stock may be repurchased in the open market at varying prices depending on market conditions and other factors. Bell Industries currently has 9,608,000 common shares outstanding.
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, the effects of the proposed stock repurchase program, and other factors described in its public filings.
Bell Industries, Inc.
Consolidated Operating Results
(In thousands, except per share data)
Three months ended Year ended
December 31 December 31
1999 1998 1999 1998
Net sales $ 48,902 $ 51,633 $240,420 $212,468
Costs and expenses
Cost of products sold 39,795 42,223 199,012 170,244
Selling and
administrative 8,245 9,288 33,514 40,971
Interest, net (82) 2,371 (139) 12,038
Special items, net (a) (881) -- (1,042) 9,900
47,077 53,882 231,345 233,153
Income (loss) from
continuing operations
before income taxes 1,825 (2,249) 9,075 (20,685)
Income tax expense
(benefit) 688 (280) 3,587 (7,496)
Income (loss) from
continuing operations 1,137 (1,969) 5,488 (13,189)
Income from discontinued
operations -- 443 -- 7,275
Reserve recovery (loss)
on sale of discontinued
operations 1,379 (58,597) 1,379 (56,849)
Net income (loss) $ 2,516 $(60,123) $ 6,867 $(62,763)
Share and per share data
Income (loss) from
continuing operations
Basic $ .12 $ (.21) $ .57 $ (1.40)
Diluted $ .12 $ (.21) $ .57 $ (1.40)
Net income (loss)
Basic $ .26 $ (6.34) $ .72 $ (6.67)
Diluted $ .26 $ (6.34) $ .71 $ (6.67)
Weighted average
common stock
Basic 9,608 9,488 9,595 9,411
Diluted 9,713 9,488 9,646 9,411
OPERATING RESULTS
BY BUSINESS SEGMENT
Net sales
Systems Integration $ 37,426 $ 38,869 $177,530 $149,158
Recreational Products 9,613 9,173 48,985 47,070
Electronics
Manufacturing 1,863 3,591 13,905 16,240
$ 48,902 $ 51,633 $240,420 $212,468
Operating income
Systems Integration $ 908 $ 1,377 $ 5,726 $ 6,604
Recreational Products 264 572 3,029 3,289
Electronics
Manufacturing (a) 406 193 1,765 1,790
Special items (a) 881 -- 1,497 (9,900)
Corporate costs (716) (2,020) (3,081) (10,430)
1,743 122 8,936 (8,647)
Interest, net 82 (2,371) 139 (12,038)
Income tax (expense)
benefit (688) 280 (3,587) 7,496
Income (loss) from
continuing operations $ 1,137 $ (1,969) $ 5,488 $(13,189)
(a) Operating results for the fourth quarter and year ended 1999
include pretax gains of $881,000 and $1,497,000 on the
disposition of certain real estate assets, respectively.
Additionally, operating results for the year ended 1999 include a
pretax loss of $455,000 on the disposition of an electronics
manufacturing division. For the year ended 1998, the company
recorded a special charge of $9.9 million for business system and
corporate resizing.
Bell Industries, Inc.
Consolidated Condensed Balance Sheet
(In thousands)
December 31 1999 1998
Assets
Current assets:
Cash and cash equivalents $ 8,550 $ 6,699
Accounts receivable, net 33,980 31,340
Inventories 19,588 18,461
Prepaid expenses and other 4,363 8,566
Real estate held for sale 109 12,046
Net assets of discontinued operations -- 179,830
Total current assets 66,590 256,942
Properties, net 4,239 5,574
Goodwill 1,394 1,468
Other assets 3,728 6,775
$ 75,951 $270,759
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 23,444 $ 27,778
Accrued liabilities and payroll 17,660 35,207
Current portion of long-term liabilities -- 109,000
Total current liabilities 41,104 171,985
Long-term liabilities 4,051 8,319
Shareholders' equity 30,796 90,455
$ 75,951 $270,759