Bell Industries Reports Third Quarter Results
31 October 2000
Bell Industries Reports Third Quarter Results; Company Completes Strategy Development Phase for Bell Tech.logix
EL SEGUNDO, Calif.--Oct. 31, 2000--Bell Industries Inc. (AMEX:BI) today reported results for the third quarter and nine months ended September 30, 2000.Net sales for the three-month period were $72.7 million compared with $76.6 million for the same period last year. Net income for the third quarter was $509,000, or $.06 per diluted share, versus $1.7 million, or $.17 per diluted share, for last year. Results for the most recent third quarter include incremental corporate costs of approximately $490,000 related to the company's strategic planning and realignment initiatives.
"We continue to push forward with the transformation of the business model for Bell Tech.logix, our information technology business," said Tracy A. Edwards, chairman, president and chief executive officer. "While we continue to support technology products, a services-focused model holds the best longer-term prospects for Bell's future. The transition from our current product-centric culture to a services orientation will require time and a thoughtful and energetic approach.
"During the quarter, with the assistance of our consulting firm, PricewaterhouseCoopers LLP, we completed a comprehensive strategy development initiative which included market analyses and internal assessments as part of Bell's ongoing planning processes. In view of our current position and general technology market trends, we believe our capabilities in IT outsourcing and network engineering provide outstanding prospects for growth and value to Bell. Our next steps will be focused on the detailed implementation of initiatives directed toward building these strategic services.
"The implementation process will cover a number of areas involving organizational change, optimization of delivery models, and infrastructure investments. We are convinced this is the right direction for the company."
For the 2000 third quarter, Bell Tech.logix recorded sales of $55.3 million, compared with $60.9 million last year. Operating income for the group totaled $451,000, compared with $2.2 million last year. Operating results continue to be impacted by degradation in product gross margins and decreased demand for certain technology services.
The Recreational Products Group posted sales of $13.0 million for the 2000 third quarter and operating income of $255,000, compared with sales of $13.1 million and operating income of $702,000 million last year. The 2000 results reflect a shift in the sales mix toward lower margin product lines and generally higher selling and administrative expenses. Bell's electronics manufacturing group reported sales of $4.4 million versus $2.7 million a year ago. The group recorded operating income of $1.1 million, compared with $91,000, including a $455,000 pretax loss from the sale of a business, in the prior year. Results for this group have been favorably impacted by strong market conditions in the electronics industry.
For the nine month period, Bell's net sales were $188.7 million, compared with $191.5 million the previous year. Net income amounted to $1.7 million, or $.19 per share, compared with $4.4 million, or $.45 per share, last year.
The company reported net working capital of $24.6 million and no long-term bank borrowings at Sept. 30, 2000. Shareholders' equity totaled $29.9 million, or $3.40 per share, compared with a recent market price of $1.75 per share.
Bell Industries Inc.
Consolidated Condensed Balance Sheet
(In thousands)
September 30, December 31,
2000 1999
Assets
Current assets:
Cash and cash equivalents $ 6,884 $ 8,550
Accounts receivable, net 39,604 33,980
Inventories 14,133 19,588
Prepaid expenses and other 2,946 4,363
Real estate held for sale 109
Total current assets 63,567 66,590
Properties, net 4,132 4,239
Goodwill 1,557 1,394
Other assets 3,310 3,728
$ 72,566 $ 75,951
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 24,302 $ 23,444
Accrued liabilities
and payroll 14,696 17,660
Total current liabilities 38,998 41,104
Long-term liabilities 3,701 4,051
Shareholders' equity 29,867 30,796
$ 72,566 $ 75,951
Bell Industries Inc.
Consolidated Operating Results
(In thousands, except per share data)
Three months ended Nine months ended
September 30 September 30
2000 1999 2000 1999
Net sales $ 72,718 $ 76,586 $188,709 $191,518
Costs and expenses
Cost of products sold 62,985 64,730 161,040 159,216
Selling and
administrative 8,995 9,210 25,381 25,270
Interest, net (104) 1 (168) (57)
Special items, net (a) (161) (437) (161)
71,876 73,780 185,816 184,268
Income before
income taxes 842 2,806 2,893 7,250
Income tax expense 333 1,122 1,144 2,899
Net income $ 509 $ 1,684 $ 1,749 $ 4,351
Share and per share data
Net income
Basic $ .06 $ .17 $ .19 $ .45
Diluted $ .06 $ .17 $ .19 $ .45
Weighted average common stock
Basic 8,835 9,608 9,075 9,591
Diluted 8,836 9,672 9,109 9,624
Operating results by business segment
Net sales
Systems Integration $ 55,320 $ 60,864 $139,250 $140,104
Recreational Products 13,018 13,067 39,994 39,372
Electronics Manufacturing 4,380 2,655 9,465 12,042
$ 72,718 $ 76,586 $188,709 $191,518
Operating income
Systems Integration (a)$ 451 $ 2,165 $ (797) $ 4,818
Recreational Products 255 702 1,528 2,765
Electronics
Manufacturing (b) 1,097 91 2,361 1,359
Special items (a) (b) 616 2,242 616
Corporate costs (c) (1,065) (767) (2,609) (2,365)
738 2,807 2,725 7,193
Interest, net 104 (1) 168 57
Income tax expense (333) (1,122) (1,144) (2,899)
Net income $ 509 $ 1,684 $ 1,749 $ 4,351
(a) Operating results for the nine month period ended Sept.
30, 2000 include a pre-tax charge of $2,405,000 for facilities
consolidation and staff relocation costs, asset write-downs and a
corporate identity program. Approximately, $1,805,000 of the charge
has been included in the operating results of Systems Integration.
Additionally, the 2000 operating results include a pre-tax gain of
$2,842,000 from the disposition of a real estate asset.
(b) Operating results for the three and nine month periods ended
Sept. 30, 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.
(c) Corporate costs for the three and nine month periods ended
Sept. 30, 2000 include $490,000 of costs associated with the
company's strategic planning and realignment initiatives.